It's a tale of silver. By around 1940, the gold standard distinguished two sorts of coins: full value coins (could theoretically be exchanged for gold bars and could freely be melted and minted) and token coins, legal tender up to a determined number of pieces only. The silver 5, 10 and 25 cent coins were token coins. The ½, 1 and 2½ Gulden were full value coins. The ½ Gulden were struck for the colonies and saw very little circulation in the home country until the sea lanes were closed by warfare.
While the units of account in international trade were coins such as the gold franc, gold pound and a few more (including the gold 10 gulden), international payments could well be made in silver. It was of great importance that when Wilhelmina fled the country (taking her cabinet along by their ears), the precious metal reserves of the Dutch central bank went with her. In addition, the staff of the Dutch mint hid their precious metal reserves for the nazis. This meant that the Gulden was no longer covered in the pre-war sense.
Wilhelmina spent a large share of the reserves on uniforms, guns and other equipment to raise a battalion of fugitive soldiers. More silver was spent on the token coins struck in the US. In fact, some of them had to be re-melted to pay our allies so that Dutch soldiers could fight along with them. It was a worthwhile investment into our independence. The net result was, that in 1945, there wasn't enough silver to resume pre-war coins on pre-war standards, all the more because the price of silver had gone high enough for the token coins to become standard coins.
The solution was, as noted above, paper money. There was a precedent. In 1914, 15, 16, 18 and 20 there had been issues of paper 1, 2½ and 5 gulden. The text on these notes made clear that they were a temporary measure. It said silver coupon. Accepted for payment by the central bank and all state offices. Can be exchanged for silver after announcement. As if that wasn't clear enough, the 1 gulden 1920 carried the same portrait as the gulden ermine mantle.
As the threat of war became immediate, full value silver coins were hoarded. The paper gulden 1920 was re-issued in 1938, quaintly with the same portrait, that was now no longer used on the coins. There was a new type 2½ Gulden 1938.* These were supplemented by German army money. As hoarding stopped, this occupation money could be withdrawn relatively quickly.
The railway strike and famine of the winter of 1944 effectively ended the utility of cash. However, the government-in-exile had already prepared a new currency, dated 1943, printed by the American Banknote Company. For some reason, they were found unsuitable (perhaps because they had no watermarks). They circulated only three months in the southernmost part of the country. The series dated 18th May 1945 had a somewhat longer life. They were withdrawn during the "money purification campaign". They were the last of the old gulden notes.
One by one, new denominations appeared from 1948 onwards. They included a 1 and 2½ gulden note. They are carefully named muntbiljet (coin-note), not bankbiljet (banknote). Yet, you can see the influence of Bretton Woods thinking on these notes. There is no promise to redeem them in metal. The notes just say they are issued by royal decree.
Like Germany had its Wirtschaftswunder, the Netherlands saw very fast economic growth in the fifties, kickstarted by Marshall aid. Reserves were healthy and silver had flowed back. The 1949 notes were replaced by silver coins. I remember the satisfaction of my parents that the last memory of the war had been taken out of their daily life. Nobody cared that pre-war coins had been heavier and purer. It was a gesture of luxury, not of necessity. Silver had ceased to be important for Dutch coins.
Peter
* There was also a short-lived host of local paper issues in May 1940.
