40. Memorandum From Secretary of the Treasury Dillon to President Johnson1
- Report on my trip to Paris
- After some very plain talk in the meeting of the Finance Ministers of the Group of Ten,2 the elements of a solution satisfactory to the United States appeared regarding the method of gold payment in connection with the forthcoming general increase of quotas in the International Monetary Fund. The next day a detailed agreement was reached by the Deputies of the Ministers which Mr. Roosa has reduced to writing and sent to his colleagues for confirmation of their agreement. The essence of the agreement is that arrangements will be made so that the United States will not suffer any gold loss as a result of the increase in quotas except for our own gold payment to the Fund. This payment is offset by equivalent automatic drawing rights in the Fund so it does not reduce our readily available reserves. If this agreement sticks, as it should, the whole matter of quota increases should be settled within a month or six weeks.
- My bilateral talks with the French Finance Minister were not as promising. After some delay he informed me, in a private meeting at [Page 72] my apartment, that the French government had turned down his suggestion to make a $342 million prepayment of debt to the United States accompanied by a $150 million purchase of gold. The government had decided it would make no prepayment and no exceptional purchase of gold. However, in order to reduce their excess holding of dollars, they would approximately double their regular monthly taking of gold from the United States, increasing the figure to about $65 million. The French Minister said that this matter could be reviewed again in about six months in light of the situation at that time, and that he would continue his efforts within the French government to achieve agreement on a debt prepayment.
It is most important that knowledge of this French decision be held in complete confidence in order to protect the French Finance Minister’s position. He has been, and continues to be, helpful and friendly in all his dealings with the U.S.