143. Information Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon 1

SUBJECT

  • International Monetary Situation

At Tab A is Paul McCracken’s weekly report on the international financial situation.2 It repeats the points which I have already made to you about events which followed the German revaluation:3

1.
The Netherlands and Austria decided not to follow the German move with revaluations of their own, and speculative money which had entered those countries in anticipation of revaluation has now flowed back out.
2.
$1.25 billion flowed out of Germany as speculators took their profits from the revaluation of the mark.
3.
France and the United Kingdom each picked up about $100 million of this outflow.
4.
The exchange markets are likely to be relatively quiet for some months as a result of the German action.4

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 216, Council of Economic Advisers. Confidential. The date is stamped under the handwritten note: “Back from Pres.”
  2. Not printed.
  3. The Deutschmark, which had been allowed to float on September 30, was formally revalued 9.29 percent from $0.25 to $0.273224 on October 24.
  4. The President wrote at the end of the memorandum: “This again shows we were right in not following Treasury’s recommendation for urgent action.” No Treasury recommendation for urgent action has been found. The President may be thinking back to May when Secretary Kennedy wanted to press hard and Kissinger advised going slow. A November 3 memorandum from Director of the Office of Industrial Nations Widman to Assistant Secretary Petty on “Suspension of Gold Convertibility,” concluded that a large projected balance-of-payments deficit in 1970 could lead to a crisis of confidence in the dollar by mid-1970 and that suspension of the convertibility of the dollar to gold would be “the least undesirable” action, but there was no call for urgent action. (Washington National Records Center, Department of the Treasury, Deputy to the Assistant Secretary for International Affairs: FRC 56 83 26, Contingency Planning 1969)