109. National Security Study Memorandum 71


  • The Secretary of State
  • The Secretary of the Treasury
  • Chairman of Council of Economic Advisers
  • Chairman of the Federal Reserve Board


  • U.S. International Monetary Policy

The President has directed the creation of a permanent Working Group to make recommendations on U. S. international monetary policy to the NSC and to implement policy decisions. It will be chaired by the Under Secretary of the Treasury for Monetary Affairs and comprised of the Deputy Under Secretary of State for Economic Affairs, a member of the Council of Economic Advisers, a member of the NSC staff, and a member of the Board of Governors of the Federal Reserve System, and/or their alternates. As appropriate, the chairman of the Working Group may invite other agencies to send representatives to specific meetings.

The President has also directed the preparation by the Working Group of a paper on U. S. international monetary policy for early consideration [Page 291] by the National Security Council.2 It should consider our policy alternatives with regard to the U.S. balance of payments, the functioning of the international monetary system, and contingency plans for response to potential currency crises such as a franc devaluation and/or a British resort to a freely flexible exchange rate for the pound.

The paper should be forwarded to the NSC Review Group by February 15, 1969.

Henry A. Kissinger
  1. Source: National Archives, RG 59, S/S Files: Lot 80 D 212, NSSM 7. Secret. NSSM 7 established what became known as the Volcker Group after its Chairman, Under Secretary of the Treasury for Monetary Affairs Paul A. Volcker. The members were Volcker, Fred Bergsten, Dewey Daane, Henrik Houthakker, and Nathaniel Samuels. The Volcker Group was the successor to the Deming Group in the Johnson administration, chaired by then Under Secretary of the Treasury for Monetary Affairs, Frederick L. Deming. From 1969 to 1974 various U.S. Government, foreign government, IMF, and academic papers were distributed, in several numbered series, to members of the Group for their consideration, often at scheduled meetings. A set of these papers is in the Washington National Records Center, Department of the Treasury, Volcker Group Masters: FRC 56 86 30. A duplicate set of Volcker Group papers, bound into folders and indexed, is ibid., Office of the Assistant Secretary for International Affairs Central Files: FRC 56 86 24, The World/l/555 Volcker Group 1969. The papers were most often distributed under cover of a memorandum from George H. Willis, Deputy to the Assistant Secretary of the Treasury for International Affairs. Willis attended Volcker Group meetings and many international meetings on international monetary issues, such as G-10 and C-20 Deputies meetings. Spiral notebooks with his handwritten notes from some of these meetings are ibid., Deputy to the Assistant Secretary for International Affairs: FRC 56 83 26, Willis Notes.
  2. Drafts of this paper are ibid., Volcker Group Masters:FRC 56 86 30. The drafts were circulated to members of the Group by C. Fred Bergsten, VG/LIM/69-11, on February 5, and by Hendrik Houthakker, VG/LIM/69-26, on February 27. No final text was found and the subject was apparently taken off the NSC agenda; see Document 16.