Office of the Historian

355. Memorandum from Sorensen to President Kennedy, August 101

August 10, 1962
[Facsimile Page 1]

SUBJECT

  • Report of Subcommittee on Gold and Monetary Agreement

The Subcommittee you appointed to outline the structure of a new international monetary agreement has decided with gratifying unanimity on the attached approach, worked out by Treasury with assistance from State and the Council of Economic Advisers. Representatives of all three agencies worked long and hard to produce this plan which all agree is large enough to safeguard our gold stock at a clearly sufficient level over the next two years.

This is an interim plan, designed to relieve the gold problem pressures of the next two years while a permanent plan is being negotiated. To start the more controversial deliberations over a permanent plan without some interim protection would only cause further trouble. This plan is primarily an expansion and formalization of the Treasury’s current approach, requires other nations to agree not to convert to gold only their existing (not their future) dollar holdings, and requires a commitment of only two years—and should therefore be more quickly acceptable.

Participants from the Treasury have been careful, in drawing up this plan, not to commit themselves as to whether it would be more preferable to rely on existing efforts. Many of their concerns are, I believe, met by your Subcommittee’s unanimous agreement on three preconditions to this plan: (1) First, that the initiative for such a plan must come from the Europeans and be kept highly confidential until implemented; (2) Second, that the U.S. must use the two-year breathing spell to achieve a balance-of-payments equilibrium, which will increasingly involve both tightening existing procedures and engaging in other difficult negotiations of a burden-sharing nature with Western Europe; and (3) Third, that negotiations for a permanent plan would need to have some prospect for success and begin early in the two-year period.

  1. “Report of Subcommittee on Gold and Monetary Agreement.” No classification marking. 1 p. Kennedy Library, President’s Office Files, Treasury, 8/10/62, Box 94E.↩