International Monetary Policy, 1969-1972


229. Volcker Group Paper

Source: Washington National Records Center, Department of the Treasury, Volcker Group Masters: FRC 56 86 30, VGA/72-1-VGA/72-50. Confidential. Willis’ May 31 cover note circulating the paper to the Volcker Group Alternates indicates the minutes are a revised version of the April 23 discussion in London. See footnote 2, Document 227.


230. Volcker Group Paper

Source: Washington National Records Center, Department of the Treasury, Volcker Group Masters: FRC 56 86 30, 1972, VGA/72-51-VGA/72-107. Limited Official Use. Drafted by Jack F. Bennett. “Draft” is typed above the date. Willis’ June 7 cover memorandum that circulated the paper to members of the VGAs indicated it was the latest version of the paper. Earlier drafts are ibid., and the text printed here seems to be the final revision. After the drafting exercise began in March, members of the VGAs contributed papers on U.S. objectives: Geza Feketekuty at OMB on March 6 (VGA/72-4); Robert Solomon at the Federal Reserve on March 6 (VGA/72-5); Jack Bennett at Treasury on March 13 (VGA/72-12); and Ralph Bryant at the Federal Reserve on April 5 (VGA/72-27). (All ibid., VGA/72-1-VGA/72-50)


231. Telegram From the Embassy in France to the Department of State

Source: National Archives, RG 59, Central Files 1970-73, FN 10. Confidential; Limdis; Greenback. Repeated to Bern, Bonn, Brussels, The Hague, London, Ottawa, Rome, Stockholm, Tokyo, and USEC.


232. Memorandum From the President’s Assistant for International Economic Affairs (Flanigan) to President Nixon

Source: National Archives, Nixon Presidential Materials, NSC Files, Country Files—Europe, Box 729, UK Volume VII 9/71-9/72. No classification marking.


233. Letter From President Nixon to Prime Minister Heath

Source: Washington National Records Center, Department of the Treasury, Files of Under Secretary Volcker: FRC 56 79 15, UK British Float. Confidential. There is no indication of when or how the letter was sent. It is attached to a July 10 note from Hormats to Volcker indicating that the text had been cleared by Flanigan, Kissinger, and the White House speechwriters but that Kissinger wanted Volcker to have “a final crack at it” before it was transmitted to London. The President was responding to June 24 and 26 messages from Prime Minister Heath; see footnote 2, Document 232. On June 30 Hormats had sent Volcker copies of Heath’s messages and stated his assumption, “as in the case of similar missives in the past,” that Volcker would want to draft the reply. (Washington National Records Center, Department of the Treasury, Files of Under Secretary Volcker: FRC 56 79 15, UK British Float) An earlier draft was transmitted to the President in San Clemente under cover of a July 6 memorandum that proposed an equally forthcoming tone to Heath’s acceptance of the need for radical reform. This draft includes language looking to the IMF Autumn 1973 meeting as a useful target date for an agreement, which was dropped in the final text. The final paragraph of the cover memorandum reads: “In general, the British have been one of our major substantive antagonists, while maintaining a facade of wishing to cooperate closely as a mediator between the Common Market and the U.S.” (Ibid.)


234. Memorandum From Secretary of the Treasury Shultz to President Nixon

Source: Washington National Records Center, Department of the Treasury, Files of Under Secretary Volcker: FRC 56 79 15, UK British Float. Confidential. There is no indication that the memorandum was sent to President Nixon. Its probable date is July 18; see footnote 2 below.


235. Information Memorandum for the Record

Source: National Archives, Nixon Presidential Materials, NSC Files, Country Files—Europe, Box 687, Germany Volume XII 5/72-12/72. Secret; Sensitive. Drafted by Robert G. Livingston on July 22. Attached to a July 22 memorandum from Livingston to Kissinger that indicates Kissinger’s approval. As background for Schmidt’s visit to Washington Ambassador Hillenbrand, on July 18, sent a telegram [text not declassified] to the White House that noted that on the economic side Schmidt was keeping his Washington appointments but had missed an EC Finance Ministers’ meeting until he knew his new portfolio better. This gave the United States an opportunity to get across U.S. monetary and trade views before Schmidt was “subject within the EC to French conceptions.” Ambassador Hillenbrand reported that Schmidt “told his Economics Ministry staff that his Washington discussions would be get-acquainted visits in which he himself would not raise specific issues.” (Telegram [document number not declassified] from Bonn; ibid.)


236. Memorandum of Conversation

Source: National Archives, Nixon Presidential Materials, NSC Files, Country Files—Europe, Box 687, Germany Volume XII 5/72-12/72. Secret. No drafting information appears on the memorandum.


238. Telegram From the Embassy in France to the Department of State

Source: National Archives, RG 59, Central Files 1970-73, FN 10. Confidential; Immediate; Limdis; Greenback.


239. Paper Prepared in the Department of the Treasury

Source: Washington National Records Center, Department of the Treasury, Deputy to the Assistant Secretary for International Affairs: FRC 56 83 26, Contingency Planning, 1965-1973. Confidential. The paper bears no drafting information.


240. Telegram From the Embassy in Germany to the Department of State

Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 356, Monetary. Secret; Exdis. Attached to an August 2 memorandum from Hormats to Kissinger apprising Kissinger of the increase in the free market price of gold to $70 per ounce and reminding him of the need to contact Schmidt, pursuant to his July 25 conversation with Arthur Burns, regarding U.S. willingness to defend the dollar lest the Europeans come “to believe that we are returning to Connally’s policy of letting them bear the sole burden of defending the Smithsonian rates.” See Documents 235 and 236. Kissinger wrote on Hormats’ memorandum: “Hormats—Let’s do it. Draft something.” No record of a written reply has been found. On August 9 Hormats sent Kissinger a briefing memorandum for his August 10 breakfast with Shultz, which inter alia, suggested he sound out the Secretary on his agreement with Burns to commit a “sizable amount” to support the dollar. (National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 299, Treasury Volume III) No record of the August 10 meeting was found, but on September 1 Hormats sent Kissinger talking points for his meeting with Ambassador Pauls, indicating that Kissinger had discussed the international monetary system with Burns and Shultz and the United States would cooperate in the effort to defend the dollar rate, including, when appropriate, selling currencies drawn under swap agreements. The talking points continued: “However, the major responsibility for defending present rates should continue to lie with nations whose currencies might be under upward pressure in the market.” (Ibid., Country Files—Europe, Box 687, Germany Volume XII 5/72-12/72)


241. Telegram From the Department of State to the Embassy in France

Source: National Archives, RG 59, Central Files 1970-73, FN 10. Confidential; Priority; Limdis; Greenback. Drafted in Treasury by Under Secretary Volcker on August 4, and cleared in State by Armstrong (E), Weintraub (E/IFD), Springsteen (EUR), and Curran (S/S) and approved by Acting Secretary Irwin.


243. Information Memorandum From Robert Hormats of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)

Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 306, IBRD/IMF. Limited Official Use.