Piet Lieftinck
Encyclopedia
Pieter Lieftinck (Muiden
, September 30 1902 – The Hague
, July 9 1989) was a Dutch
civil servant
, chief executive
, professor
and politician
. He became minister of Finance in the following administrations Schermerhorn/Drees
(1945-1946), Beel-1
(1946-1948), Drees/Van Schaik
(1948-1951) and Drees-2
(1951-1952). In this function, he was largely responsible for the monetary recovery of the country and its currency.
, he supported the left wing of the Protestant Christian Democrats (CHU). In 1945, he joined NVB, which failed in the elections of 1946. In 1946, he moved to the socialist party (PvdA) and in 1971 he joined the moderate leftist DS'70 party.
From May 1942, he was a prominent hostage in the Sint-Michielsgestel
prison camp (the former minor seminary of Beekvliet). He worked with other politicians on ideas of a new political constellation after the second world war in the breakthrough committee.
In June 1945, Lieftinck became the first post war minister of Finance
of the Netherlands. He inherited a deeply troubled economy
. A third of the national assets were destroyed. The infrastructure was greatly damaged in war action. Rotterdam
was destroyed, practically all the large bridges were damaged and some large polders had been flooded. On top of that, the Allies demanded an expeditionary Royal Netherlands Army
to fight in the Pacific.
The disastrous situation in the economy was further threatened by a sick financial economy. The government in exile had taken the gold reserves to London
and had, to a significant degree, spent them. In the Netherlands, exports of money, goods and services to nazi Germany
were credited to a Reichsmark account in Berlin
that was, of course, never paid. The government budget was in heavy deficit, which was financed by printing money. The Dutch guilder was linked to the Reichsmark at the fixed rate of 1.327. In this way, the value of the Dutch guilder was completely linked to that of the Reichsmark and in 1945 the Reichsmark wasn’t worth anything. These circumstances fulfilled all the conditions for an outbreak of hyperinflation: the money supply had quadrupled from 2.5 billion gulden to 10.9 billion guilder while the supply of goods was only a fraction of what it had been.
The new minister of Finance started by withdrawing the 100 guilder note in July 1945. Those holding notes were given a blocked bank credit. This note had been the subject of distrust anyway and many were held by war profiteers. On 25 September 1945 it was announced that as of the next day all banknote
s were withdrawn and all bank credits frozen. All paper cash handed in gave rise to a credit on a blocked bank account. For one week, until 2 October 1945 there was no valid paper money in the country with a single exception. Everyone with a distribution card could change ten guilder in withdrawn notes for new money. This action was known as Lieftinck's tenner. Significantly, although the amount was small, it was enough for a week.
In the week of 26 September 1945, banks were supplied with new banknotes, so that people could receive their wages. In the following months, de-blocking started. On 19 September 1946 a special tax was levied on any positive difference in assets between May 1940 and December 1945. Tax rates went from 50 to 70% and 90% for unexplained profits, largely to hit profiteers. An additional tax on liquid assets was introduced on 11 July 1946. Rates went from 4 to 20%. This last measure came in for especially heavy criticism.
The operation of “financial sanitation” was a great success. The money supply
was halved and inflation was kept on a reasonable level. This set the stage for meeting American demands to qualify for Marshall aid. Profiteers had helped to finance reparations of war damage. A great degree of leveling of wealth had occurred and the economy had been put on a new and sound footing; both points had been high on the wish list of the Beekvliet reformers.
Lieftinck introduced a new coinage law in 1948, abrogating gold standard coins. In the same year, he moved a new banking law through parliament. He retired as minister in 1952, but from 1955, he was chief executive officer
of the World Bank
and the International Monetary Fund
. After retirement, he remained active as an advisor
to successive Dutch and Surinam governments on matters of economic and financial reform.
Muiden
Muiden is a municipality and a town in the Netherlands, in the province of North Holland. It lies at the mouth of the Vecht and is in an area called the Vechtstreek.-Population centres :...
, September 30 1902 – The Hague
The Hague
The Hague is the capital city of the province of South Holland in the Netherlands. With a population of 500,000 inhabitants , it is the third largest city of the Netherlands, after Amsterdam and Rotterdam...
, July 9 1989) was a Dutch
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
civil servant
Civil service
The term civil service has two distinct meanings:* A branch of governmental service in which individuals are employed on the basis of professional merit as proven by competitive examinations....
, chief executive
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
, professor
Professor
A professor is a scholarly teacher; the precise meaning of the term varies by country. Literally, professor derives from Latin as a "person who professes" being usually an expert in arts or sciences; a teacher of high rank...
and politician
Politician
A politician, political leader, or political figure is an individual who is involved in influencing public policy and decision making...
. He became minister of Finance in the following administrations Schermerhorn/Drees
Netherlands cabinet Schermerhorn/Drees
The Schermerhorn-Drees cabinet was in office in the Netherlands from 24 June 1945 until 3 July 1946.- Introduction :The Schermerhorn-Drees cabinet, the first Dutch cabinet after World War II, was appointed by Queen Wilhelmina just a month after the Netherlands were liberated by the Allied forces...
(1945-1946), Beel-1
Netherlands cabinet Beel-1
Beel I was the first post-World War II cabinet of the Netherlands that was the result of elections . It consisted of ministers of PvdA and KVP and three independent ministers. The cabinet was headed by Louis Beel.A major issue was the independence of the Dutch East Indies...
(1946-1948), Drees/Van Schaik
Netherlands cabinet Drees-1
Drees-Van Schaik , under prime minister Willem Drees, consisted of ministers of PvdA, KVP, VVD and CHU and two independent ministers.This coalition had a 76% representation in the second chamber of parliament...
(1948-1951) and Drees-2
Netherlands cabinet Drees-2
Drees I , was a Dutch cabinet under PM Willem Drees that consisted of ministers of PvdA, KVP, CHU, VVD and one independent minister. It was a continuation of Drees-Van Schaik after issues over the policy concerning New Guinea led to the fall of the cabinet. However, this did not lead to new...
(1951-1952). In this function, he was largely responsible for the monetary recovery of the country and its currency.
Biography
Lieftinck became professor at the Erasmus University Rotterdam at a relatively low age. Before the second world warWorld War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, he supported the left wing of the Protestant Christian Democrats (CHU). In 1945, he joined NVB, which failed in the elections of 1946. In 1946, he moved to the socialist party (PvdA) and in 1971 he joined the moderate leftist DS'70 party.
From May 1942, he was a prominent hostage in the Sint-Michielsgestel
Sint-Michielsgestel
Sint-Michielsgestel is a municipality and a town in the southern part of the Netherlands.Sint-Michielsgestel is located directly south of 's-Hertogenbosch, the capital of North Brabant province. Its name refers to archangel St...
prison camp (the former minor seminary of Beekvliet). He worked with other politicians on ideas of a new political constellation after the second world war in the breakthrough committee.
In June 1945, Lieftinck became the first post war minister of Finance
Ministry of Finance (Netherlands)
The Ministry of Finance is the Dutch ministry of finance: it is occupied with the national budget, taxation and financial economic policy, including supervision of financial markets...
of the Netherlands. He inherited a deeply troubled economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
. A third of the national assets were destroyed. The infrastructure was greatly damaged in war action. Rotterdam
Rotterdam
Rotterdam is the second-largest city in the Netherlands and one of the largest ports in the world. Starting as a dam on the Rotte river, Rotterdam has grown into a major international commercial centre...
was destroyed, practically all the large bridges were damaged and some large polders had been flooded. On top of that, the Allies demanded an expeditionary Royal Netherlands Army
Royal Netherlands Army
The Royal Netherlands Army is the land forces element of the military of the Netherlands.-Short history:The Royal Netherlands Army was raised on 9 January 1814, but its origins date back to 1572, when the so-called Staatse Leger was raised...
to fight in the Pacific.
The disastrous situation in the economy was further threatened by a sick financial economy. The government in exile had taken the gold reserves to London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
and had, to a significant degree, spent them. In the Netherlands, exports of money, goods and services to nazi Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
were credited to a Reichsmark account in Berlin
Berlin
Berlin is the capital city of Germany and is one of the 16 states of Germany. With a population of 3.45 million people, Berlin is Germany's largest city. It is the second most populous city proper and the seventh most populous urban area in the European Union...
that was, of course, never paid. The government budget was in heavy deficit, which was financed by printing money. The Dutch guilder was linked to the Reichsmark at the fixed rate of 1.327. In this way, the value of the Dutch guilder was completely linked to that of the Reichsmark and in 1945 the Reichsmark wasn’t worth anything. These circumstances fulfilled all the conditions for an outbreak of hyperinflation: the money supply had quadrupled from 2.5 billion gulden to 10.9 billion guilder while the supply of goods was only a fraction of what it had been.
The new minister of Finance started by withdrawing the 100 guilder note in July 1945. Those holding notes were given a blocked bank credit. This note had been the subject of distrust anyway and many were held by war profiteers. On 25 September 1945 it was announced that as of the next day all banknote
Banknote
A banknote is a kind of negotiable instrument, a promissory note made by a bank payable to the bearer on demand, used as money, and in many jurisdictions is legal tender. In addition to coins, banknotes make up the cash or bearer forms of all modern fiat money...
s were withdrawn and all bank credits frozen. All paper cash handed in gave rise to a credit on a blocked bank account. For one week, until 2 October 1945 there was no valid paper money in the country with a single exception. Everyone with a distribution card could change ten guilder in withdrawn notes for new money. This action was known as Lieftinck's tenner. Significantly, although the amount was small, it was enough for a week.
In the week of 26 September 1945, banks were supplied with new banknotes, so that people could receive their wages. In the following months, de-blocking started. On 19 September 1946 a special tax was levied on any positive difference in assets between May 1940 and December 1945. Tax rates went from 50 to 70% and 90% for unexplained profits, largely to hit profiteers. An additional tax on liquid assets was introduced on 11 July 1946. Rates went from 4 to 20%. This last measure came in for especially heavy criticism.
The operation of “financial sanitation” was a great success. The money supply
Money supply
In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits .Money supply data are recorded and published, usually...
was halved and inflation was kept on a reasonable level. This set the stage for meeting American demands to qualify for Marshall aid. Profiteers had helped to finance reparations of war damage. A great degree of leveling of wealth had occurred and the economy had been put on a new and sound footing; both points had been high on the wish list of the Beekvliet reformers.
Lieftinck introduced a new coinage law in 1948, abrogating gold standard coins. In the same year, he moved a new banking law through parliament. He retired as minister in 1952, but from 1955, he was chief executive officer
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
of the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
and the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
. After retirement, he remained active as an advisor
Advisor
An advisor is normally a person with more and deeper knowledge in a specific area i.e. a specialist and may refer to:-Finances:*Commodity trading advisor, any person who engages in the business of advising others...
to successive Dutch and Surinam governments on matters of economic and financial reform.
Political party function
- Member of the executive board of the Christian Historical Union, from 1938 to 1939
Decorations
- Grand Officer in the Order of Orange-NassauOrder of Orange-NassauThe Order of Orange-Nassau is a military and civil order of the Netherlands which was created on 4 April 1892 by the Queen regent Emma of the Netherlands, acting on behalf of her under-age daughter Queen Wilhelmina. The Order is a chivalry order open to "everyone who have earned special merits for...
, September 30 1952 - Commander in the Order of the Netherlands Lion, 1965
- Grand Cross in the Order of Orange-NassauOrder of Orange-NassauThe Order of Orange-Nassau is a military and civil order of the Netherlands which was created on 4 April 1892 by the Queen regent Emma of the Netherlands, acting on behalf of her under-age daughter Queen Wilhelmina. The Order is a chivalry order open to "everyone who have earned special merits for...
, November 24 1976