158. Memorandum From the President’s Special Assistant (Rostow) to President Johnson 1
The gold loss today ended up at $116 million—heavy, but much less than we feared.
Sterling was also under pressure. The UK put $100 million in the market to support the rate. Curiously enough, the franc had some small difficulties, apparently because of rumors.
Attached is the answer Bill Martin received from his approach to our gold pool partners. They have agreed to go along with us but expect us to bail them out of some of their gold losses. Each would make his own pitch to us if he finds it necessary. The UK is replying separately. Bill did a really impressive job.
We are working on a brief statement to clear with the Europeans and release tomorrow.2 It should put a stop to the rumors and quiet things down a bit.
P.S. See also attached Fowler memo.3 Good deed by Canadians.
- Source: Johnson Library, National Security File, Subject File, Balance of Payments, Vol. IV, January 1967 [2 of 2], Box 3. Secret; Sensitive. The time is taken from another copy of the memorandum, which bears the typewritten initials “ERF” at the bottom left, indicating that Fried probably drafted it for Rostow’s signature. (Ibid., NSC History, Gold Crises, Nov. ′67–Mar. ′68, Box 54) A handwritten note on the source text reads: “Rec’d 6:16 p.”↩
- See Document 159.↩
- Fowler’s December 15 memorandum to the President and a note from Fowler to the President, both attached, are not printed. The memorandum reported that Canadian Finance Minister Mitchell Sharp had called Fowler that afternoon to say that the Canadians were prepared to transfer $100 million in gold to the United States. The note added that Sharp “is in serious contention for the Prime Ministership of Canada.”↩
- The postscript is handwritten.↩
- Secret; Sensitive.↩
- On December 18, Senator Mansfield telephoned President Johnson, and the two engaged in a wide-ranging conversation on foreign policy matters. Concerning the gold crisis, President Johnson complained of the desire of the French and Soviets “and all of our enemies” to get U.S. gold and bring the dollar down, and added that the U.S. Government was helping them by not having a tax bill and leaving the impression “with all the bankers and all the money people” that it was irresponsible and could not be believed. Mansfield interjected: “How can they blame you? It’s Wilbur’s fault.” The President continued that there probably would be a tax bill now that Wilbur Mills was coming to recognize that “he’s wrecking the damn world;” but gold reserves were down and there was danger that the dollar would be “busted like the pound was busted.” More positively, he remarked that “the Germans will stay with us” as well as the British and Swiss. He said a bill to remove the gold cover was needed, although “everyone” hoped it could be put off until after the election. (Johnson Library, Recordings and Transcripts, Recording of Telephone Conversation between President Johnson and Senator Mansfield, December 18, 1967, 8:55 a.m., Tape F67.15, Side A, PNO 3)↩