44. Minutes of the Cabinet Meeting0

[Here follows a list of 31 persons present, including President Eisenhower, Vice President Nixon, Acting Secretary of State Herter, Secretary of the Treasury Anderson, Secretary of Defense Neil H. McElroy, Attorney General William P. Rogers, Postmaster General Arthur E. Summerfield, Secretary of the Interior Fred A. Seaton, Secretary of Agriculture Ezra Taft Benson, Secretary of Commerce Strauss, Under Secretary of Labor James T. O’Connell, and Secretary of Health, Education, and Welfare Arthur S. Flemming. The first item of discussion concerned an unrelated subject.]

Gold Movements—Sec. Anderson made a lengthy presentation on the history of the relationship of gold to American currency and presented charts showing the ups and downs of American gold holdings and also the outstanding potential claims of foreign nations on our holdings.1 After some $12 billion worth of gold is set aside for the 25% reserve required to back our currency, approximately $81/2 billion remains for meeting foreign claims which actually exceed this amount considerably. Mr. Anderson was not disturbed by this, however, for there is no reason for all of these claims to be presented simultaneously so long as confidence exists in the solidity of the US dollar.

With regard to recent trends of heavier conversions of dollars into gold, Mr. Anderson pointed out that foreign nations are maintaining their established levels of American dollar holdings and that the conversions represent their excess earnings of dollars in any given year.

Regarding agitation for raising the price of gold, Mr. Anderson explained that advocates of this have varying reasons—to make gold mining more profitable, or to provide indirectly (and probably unsuccessfully) a bar to excessive Congressional spending, or merely to provide a windfall to those who hold gold. Raising the price of gold, [Page 104] however, would be a boon to the Russians, would reduce the value of some $20 billion of our currency with only a very insignificant increase in the value of Government gold holdings, and seriously shake the world’s confidence in the US dollar.

Mr. Anderson warned repeatedly against even the slightest hint that the subject might ever be taken under consideration, for this would be sufficient to shake confidence and start a run on our gold holdings. He asked members of the Cabinet to be overly sensitive to this matter because questions on it keep cropping up in strange places.

Related to this whole question was the matter of US fiscal management policies which foreign governments watch closely to judge the strength of our dollar.

There was brief discussion of the mechanics of minting gold under the mark of various countries and of international transfers accomplished in New York banks.

The President recalled the attention he had given to this matter during the 1952 campaign and shortly thereafter prior to putting the question aside.

[Here follows discussion of the remaining items.]

  1. Source: Eisenhower Library, Whitman File, Cabinet Series. Confidential. Drafted by Assistant Staff Secretary L. Arthur Minnich, Jr.
  2. A draft of Anderson’s presentation, with attached tables showing the figures on the charts, is in National Archives and Records Administration, RG 56, Records of the Department of the Treasury, Robert B. Anderson, Subject Files, Gold.