61. Memorandum From Secretary of the Treasury Dillon to President Kennedy0


  • Your speech to the IMF Board

As I informed Mr. Sorensen, I feel strongly that any reference in your speech to our readiness to discuss new initiatives in the monetary field would be most dangerous for the dollar at the present juncture. This is not a question of substance but one of psychology. At the invitation of Giscard d’Estaing, we have agreed to meet confidentially in Paris during October with the French, the British, the Germans, and possibly the Italians, in order to examine the possibilities for further cooperative steps.

My reasons for recommending against any mention of our willingness to study new proposals are two-fold: First, the general theme of the IMF meeting, very effectively expounded by Per Jacobsson in his opening address, is that the present international monetary structure is strong and capable of weathering any shocks. This line will be taken by everyone, except for the British, and will be just the opposite of the situation last year at Vienna when talk was necessarily centered on the need to strengthen international monetary institutions because of the weakness of the dollar. Since the British are the only ones indicating the need for further steps at this time, your statement could be misinterpreted as indicating a measure of support for the British proposals. Our analysis of these proposals is that they are extremely dangerous for the dollar. This view is shared by those continental European officials to whom the British have confided the general outlines of their scheme. In short, it seems to us that the British proposals fit in very well with the constant, long-term effort by the United Kingdom to undermine the dollar and force its eventual devaluation. For this reason, we should clearly not appear to support Maudling’s ideas.

My second objection relates to the immediate future. A statement by you that we are prepared to study new ideas and welcome new initiatives would in all probability be misinterpreted by the speculative community in New York and Switzerland as indicating a lack of confidence on your part in our ability to handle our balance of payments problem within the framework of the existing monetary system. This could have [Page 153] dangerous and immediate effects this fall. If such a public statement by you should be interpreted in this way, it could well lead to a further run on the dollar similar to those that took place last October and November after the Vienna meeting, and last July after the Canadian crisis. The experience of these two incidents indicates that such runs bring with them the loss of $250 million or more in gold.

The best we could hope for if a statement regarding our readiness to study new initiatives were included in your speech would be that it be looked on as an innocuous statement of readiness to consider any serious proposals put forward by others which naturally would always apply to the United States in its international relations. If this should be the interpretation put on the statement, it would do no harm, but neither would it accomplish anything, since there are no proposals being talked of except for those put forward by the British. On the contrary, if it were taken as a serious desire on our part to explore further new approaches at this time, it would carry with it all the dangers mentioned above. For this reason, I strongly urge that you omit any such statement from your speech.

Douglas Dillon1
  1. Source: Kennedy Library, Dillon Papers, Memos to President, 9/62-10/62. Confidential. Attached to the source text is a memorandum from Evelyn Lincoln to Dillon, September 20, indicating that the President had read Dillon’s memorandum and approved his proposal.
  2. Printed from a copy that indicates Dillon signed the original.