234. Message From President Johnson to Prime Minister Wilson 1

Thank you for your frank exposition of the problems you are facing with sterling. You can be sure of our deep interest in your efforts to maintain its integrity.

[Page 474]

As to your Bank rate, we recognize that this is a decision you must take based on your views of what is necessary for the defense of sterling.2 We agree with your concept that more fundamental attacks on the basic problems of your trade deficit are preferable to early and indiscriminate use of Bank rate.

As for our own discount rate, this is a matter for our Federal Reserve Board which, as you know, Congress has made independent in this regard of the Executive Branch. However, I am informed that they do not feel that our domestic economy requires any increase in our discount rate.

We will of course be glad to give all the help we can to Sir Eric Roll in his efforts to obtain an additional IMF standby. I think it is essential to continue the close cooperation between our people on all aspects of your current problem, and I will fully inform you in advance should there be any modification of our present situation.

  1. Source: Johnson Library, National Security File, Head of State Correspondence, UK, Vol. 1. Top Secret.
  2. The United Kingdom raised its bank rate to 7 percent effective November 23.