1. Memorandum for the Record0

[Here follows discussion of seven unrelated issues.]

8. Coordination and Development of Basic Economic, Fiscal and Monetary Policies

Senator Kennedy indicated that he and his people had been thoroughly briefed and asked if Secretary Anderson had anything further to give them. Secretary Anderson made a strong recommendation that public statements on matters as delicate as the balance of payments situation should be confined to the President and his Secretary of the Treas-ury only. This would mean that the government would be speaking with one voice and this would be very helpful to an understanding by foreign governments of the United States position. Secretary Anderson further recommended that communications with the Federal Reserve System be kept in the family and particularly in cases where there were differences of opinions.

The President referred to the morale effect of separating military families brought about by the recent order made in an effort to alleviate the balance of payments situation.1 He pointed out that this was done as a quick move to do something concrete to stop the flow of gold and to show our Allies that we meant business. He expressed the hope that further study of this complicated matter would indicate that other and less drastic means could be used for accomplishing this purpose. He stated, however, that the situation could deteriorate to the point where even more radical measures might become necessary but expressed the hope that the Defense Department would minimize as much as possible the [Page 2] effects on dependents of military men. For example, he discussed the possibility of returning a full division to the United States, pointing out that this would require careful preparation before it was done. He also stated that American troops had been sent to Europe originally as an emergency move to give Europe a chance to recover from the devastation of war and that from the point of view of the United States we would be much stronger militarily if we brought some of these troops home and had them located as a central reserve.

The President indicated that, in his opinion, the State Department should bring back some dependents but thus far State has been recalcitrant. He pointed out that the soldier does not want to be made the goat in this matter and he felt this reaction was justified. The President also stated that there are several agencies of the government which could pick up some of the burden.

Secretary Anderson pointed out that gold erosion is still going on at a rate which we cannot afford—reporting $225 million from January 1, 1961, to January 19, 1961.

Senator Kennedy asked if there is any change in the gold balance among our Allies, and Secretary Anderson pointed out that all of our Allies have dollar surpluses—except Japan which has recently changed its reserve ratio. Secretary Anderson emphasized that the key to the gold problem is confidence on the part of other nations in the stability of the dollar and our willingness and ability to handle our fiscal affairs wisely. At this point, the President pointed out that he had had a study made as to the effect of ICA’s programs on the outflow of gold and found this to be minimal.2

Secretary Anderson indicated that the British had been very helpful in the gold situation and had worked with us very closely. He also pointed out that the Treasury Department keeps a “watch officer” on duty 24 hours a day on this particular matter.

[Here follows a brief discussion of the Presidential transition process.]

  1. Source: Eisenhower Library, Post-Presidential Papers, 1961-1969, John F. Kennedy 1960-1961 (2). No classification marking. Drafted by Wilton B. Persons, Assistant to President Eisenhower. The meeting was held in the Cabinet Room of the White House. A shorter memorandum of this meeting is in a memorandum from Clark M. Clifford to President Kennedy, January 24. (Department of State, Rusk Files: Lot 72 D 192, White House Correspondence, 1/61-11/63)
  2. Reference is to the directive issued by President Eisenhower on November 16, 1960. For documentation on the preparation and issuance of this directive, see Foreign Relations, 1958–1960, vol. IV, pp. 135140
  3. The ICA study has not been found.