59. Memorandum From Secretary of the Treasury Dillon and the Under Secretary of State (Ball) to President Kennedy 0

Attached is the report which Assistant Secretary of the Treasury John Leddy and Assistant Secretary of State Griffith Johnson have made to us on their trip to Europe to confer with the French and British on the Declaration of Ten. A copy of the draft communique which the Finance Ministers of the Ten will issue after their meeting is attached to the report. It has been approved by us and by the French Minister of Finance and the British Chancellor of the Exchequer.

The communique is designed to show that the leading countries are continuing to work closely together in monetary matters; that the IMF standby is readily available for use; that present resources are adequate to maintain the present price of gold; that further study of long-range improvements in the monetary field is desirable, and that meetings of the Ten are not necessarily concerned with an emergency like a U.S. drawing.

France’s partners in the Common Market agreed during the trip to a meeting of the Ten, but not to a communique. The French believe that they will, however, agree to its issuance, possibly with some changes reflecting their views.

The French Finance Minister said that he had discussed his proposal that gold takings from the United States be limited with the Chancellor of the Exchequer, who had agreed with him that high-level secret discussions should be carried on among the United States, the United Kingdom, France, Germany and Italy after the Bank-Fund meetings. Their ideas are still unclear to us and may not be known in full even to the most trusted subordinates of the two Ministers. We will follow this matter closely and keep you advised of developments.

  • George W. Ball
  • Douglas Dillon 1
[Page 145]

Attachment

Memorandum for Secretary of the Treasury and the Under Secretary of State

In accordance with the President’s memorandum of August 242 we proceeded to Paris and London during the week of September 3 where we conferred separately with the French and British on the proposed “Declaration of Ten” (Section III of the Treasury’s Program for Further International Monetary Action); and with the French on the steps they may be contemplating to carry forward Minister Giscard d’Estaing’s initiative looking toward an arrangement which would have the effect of limiting unnecessary European takings of U.S. gold.

Our conversations in Paris were with Minister Giscard d’Estaing; M. Andre de Lattre, Director of External Affairs of the Ministry of Finance; and M. Rene Larre, French Financial Counselor in Washington.

British officials present at our talks in London included Sir Frank Lee, Joint Permanent Secretary to the Treasury; Sir Denis Rickett, Second Secretary, Treasury Department; David Pitblado, U.K. Financial Counselor in Washington and Douglas Allen, all of the U.K. Treasury; and Maurice Parsons, Lucius Thompson-McCausland and F. J. Portsmore of the Bank of England. We did not meet with the Chancellor of the Excheq-uer.

Declaration of Ten

After some initial hesitation both the French and British warmly welcomed the idea of a ministerial meeting of the group of ten during the Fund and Bank meeting and the issuance by them of a communique. The attached draft text, which was approved by Washington during the course of our negotiations, has been endorsed by Minister of Finance Giscard d’Estaing, and Chancellor of the Exchequer Maudling. The significance of the communique lies in these points:

1.
It would strengthen the public impression of continuing close monetary cooperation among the leading industrial countries.
2.
It would make clear the ready availability of the $6 billion IMF standby for “decisive and prompt action.”
3.
It would emphasize the adequacy of present resources—from the IMF, from bilateral arrangements such as swaps and from existing reserves—to maintain the existing price of gold.
4.
It would set the stage for international study of the means for long-run improvements in the monetary field.
5.
It would lay the basis for further meetings of the Ten without provoking speculation that such meetings must necessarily be concerned with emergency matters such as a U.S. drawing.

The attitude of France’s Common Market partners toward the proposed communique is still unclear. While we were having our first meeting with the British (Wednesday, September 5) the French discussed the proposal with the Monetary Committee of the Six. At our second meeting with the French on Thursday (the first having been on Tuesday) they reported that while all were agreed on the desirability of a ministerial meeting of the Ten, the group had not yet agreed in principle on the desirability of a communique. This hesitation was attributed primarily to the views of Van Lennep (Dutch Treasurer-General and chairman of Working Party 3) and de Stryker of Belgium. The Germans (Emminger of the Bundesbank) seemed to be on both sides of the question.

Upon hearing this view we informed de Lattre that we saw no point in a meeting without a communique. He responded by saying the French now thought a meeting very important; and that the rest of the Six would no doubt agree on a useful communique along the lines of the draft now virtually agreed upon by the U.S., U.K. and France.

The upshot is that the French will issue invitations to the meeting to all of the group of ten and will enclose with the invitation a copy of the attached draft of the communique. The ministerial meeting will be held on Tuesday, September 18 with issuance of the communique scheduled for Wednesday evening or Thursday morning after the Governors have made their major statements to the Fund. Officials of the Ten will meet Monday afternoon to work out such changes in the communique as may be needed to take account of views expressed by members other than the U.S., U.K. and France.

French Initiative on Limiting Gold Takings

We raised this question casually at the end of our meeting with Giscard d’Estaing (Tuesday, September 4) by asking whether he had any information to give us following his talks with Maudling on July 27. He said he was encouraged by Maudling’s reaction. The two were in agreement that there should be high level secret discussions of the subject (which he did not at any time define) after the Fund and Bank meetings were out of the way; and that France, the U.K., Germany, Italy and the U.S. should be represented in these talks.

We did not press this matter further. Apart from its sensitivity and the probability that nothing much could be accomplished until after the Fund and Bank meetings, we had good reason to believe that open pressure [Page 147] from the U.S. on the French might lead them to think that political questions could be successfully interjected.

In London on Wednesday the British asked us what the French had said on this subject and we gave them the essence of Giscard d’Estaing’s remarks. They observed that the whole affair was mysterious. The same view was expressed by the French officials the following day. We conclude that the full scope of the discussions between Giscard d’Estaing and Maudling may not be known even to their most trusted subordinates.

  • G. Griffith Johnson
    Assistant Secretary of State for Economic Affairs
  • John M. Leddy
    Assistant Secretary of the Treasury for International Affairs

Enclosure3

Draft Communique of “Group of Ten” (9/6/62)4

In the course of the annual meeting of the International Monetary Fund, the representatives of the ten countries (the Finance Ministers of Belgium, France, Italy, Japan, the Netherlands, the United Kingdom and the United States, the Minister of Justice of Canada, and the Governors of the Central Banks of Germany and Sweden) participating in the Agreement to supplement the resources of the IMF concluded in December 1961,5 met in Washington on September —— together with Mr. Per Jacobsson, Managing Director of the Fund.

Since not all of the countries concerned have as yet concluded ratification, this meeting was of an informal character. Under the Agreement of December 1961, the French Finance Minister is responsible for arrangements between signature and the first formal meeting of the group. Accordingly M. Valery Giscard d’Estaing served as chairman.

The Ministers reviewed the development of the international monetary situation over the past year and the prospects for the future. They [Page 148] also discussed the international cooperative arrangements which are being brought into being to meet the developing monetary needs of the new era of convertible currencies and progressively freer international trade.

The Ministers were encouraged by the progress which has been made during the past year towards a better basic balance in international payments as a result of the measures already adopted in both deficit and surplus countries. They affirmed the objectives of reaching a balance at high levels of economic activity and by methods consistent with vigorous economic growth. While speculative and other short-term capital movements require continuing scrutiny, the means for coping with such movements have been reinforced in a number of ways and the ten Ministers agreed that these means would be used as necessary.

In this connection the Ministers emphasized the importance of the new arrangements for supplementing the IMF through the addition of $6 billion of further resources and stressed that these resources would be available for decisive and prompt action. They also noted that various techniques of cooperation are being developed among monetary author-ities of the various countries in order to facilitate the functioning of the international payments system and thereby to further the objectives of the Fund. The additional resources thus provided, together with world reserves and the existing resources of the IMF, are large enough to assure a stable exchange rate system and the maintenance of the existing price of gold.

The Ministers agreed that continuing study of the means for further improving the international monetary system in the years ahead was desirable.

The Ministers considered that these discussions were very useful and they agreed that similar meetings should be held from time to time.

  1. Source: Kennedy Library, National Security Files, Kaysen Series, Balance of Payments, International Monetary Agreement, 9/62-8/63. Confidential; Limited Distribution.
  2. Printed from a copy that indicates both Ball and Dillon signed the original.
  3. Document 58.
  4. No classification marking.
  5. No record of the public release of this communique has been found.
  6. See Documents 54 and 55.