212. Editorial Note

When the G-10 Ministers met in Rome November 30-December 1, 1971, Secretary Connally was under some pressure about the issue of the gold price. At a December 2 White House Staff Meeting, which was not attended by the President, Shultz spoke as follows:

“Problem. Connally offered devaluation of the dollar and it now appears Arthur is winning on convertibility. These are both firmly opposite to the President’s directions [see Document 189]. We now have changed the price of gold and the problem is how we get this through Congress. The price of gold doesn’t matter if it is not convertible, but the real problem of devaluing is in the Senate and now everything hangs on this and we have to have Congressional authority.

“Question. Is Connally doing this under pressure of the meeting?

“Now back to a procedural problem. What are we doing? What is our policy? Change in the price of gold is now irretrievable. How do we make it an asset and market it through the Senate?” (Haldeman’s handwritten notes; National Archives, Nixon Presidential Materials, White House Special Files, Haldeman Notes, October-December 1971)

On December 8 Hormats sent a memorandum to Haig regarding Peterson’s November 27 memorandum to the President on the NEP, Document 209. Concerning the gold price issue, Hormats wrote: “given events in Rome, I have sent Peterson a ‘line’ on gold which I have cleared through Treasury” and which “should bring Peterson’s views on gold up to date.” He attached the following two Questions and Answers:

Question: What is the U.S. position on the price of gold?

Answer: The U. S. delegation to the Rome meeting of the Group of Ten made no offer or commitment regarding a change in the official dollar price of gold. However, in discussion of various hypothetical changes in exchange rates, moderate increase in the official gold price was mentioned by the delegation. We have made clear that we don’t want to see an emphasis on gold in the monetary system, and have been opposed to a change in the price of gold for that reason. Several other countries do want a change. The question is whether such a change would contribute to a better all-around solution—and we haven’t seen the evidence on that.

“Certainly it should be clear we do not intend to resume convertibility into gold.

Question: Has the U.S. offered to devalue the dollar by raising the price of gold, in order to help solve the monetary crisis?

[Page 583]

Answer: No. At the Rome Meeting, the U.S. took the position that we could accept an average exchange rate adjustment of 11 percent provided it was accompanied by progress on trade and burden sharing. To facilitate discussion, alternative methods of achieving adjustment of that magnitude were discussed in a purely hypothetical way. Neither the U.S. nor any other country made any offers or any commitments.” (Ibid., NSC Files, Agency Files, Box 218, Council on International Economic Policy)