90. Editorial Note

On May 16, 1972, the White House announced that George Shultz would replace John Connally as Secretary of the Treasury. In his address to the OECD Ministerial meeting on May 25, Paul Volcker opened by expressing greetings and regrets from Secretary Connally “who, as you know, intended, until a certain event last week, to attend the Council meeting here today.” See Department of State Bulletin, June 19, 1972, pages 827-836, for President Nixon’s May 24 message to the OECD, Stein’s May 24 statement, Volcker’s May 25 statement, Irwin’s May 26 statements, and the final Communique of the May 24-26 Ministerial meeting. A slightly different text of Volcker’s statement was circulated [Page 221]to members of the Volcker Group under cover of a May 31 memorandum from Willis. (Washington National Records Center, Department of the Treasury, Volcker Group Masters: FRC 56 86 30, VG/Uncl. INFO/72-79)

On May 5 Hormats had sent Kissinger a memorandum apprising him of the status of the international economic policy negotiations and recommending that Kissinger discuss the matter with Connally and Flanigan. Hormats told Kissinger that “after much debate, a USG position has been reached on the forum for discussing international monetary and trade reform—the OECD.” He continued: “A related matter, which may be the source of an intense interagency conflict centers on the U.S. posture with regard to future trade negotiations. Treasury regards the major goal of the U.S. in forthcoming trade negotiations as balance of payments improvement for the U.S., i.e., an attempt to bring about changes which do not provide reciprocal benefits to our trading partners. This was the same posture we took in attempting to obtain trade concessions following the August 15 announcement. It produced little real benefit for the U.S. and subjected us to strong foreign criticism for attempting to press our trading partners to undertake measures in the area of trade without our reciprocating.” Hormats indicated that Eberle and Irwin thought Connally’s position untenable. (National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 273, OECD)

On May 25 Under Secretary Irwin sent a cable to Secretary of State Rogers, who was with the President in Moscow, noting that he would probably see sensationalized press reports about differences with other OECD members, particularly France. Irwin concluded, however, that there seemed to be consensus about a link between trade and monetary negotiations and a role for the OECD. (Telegram 10087 from USOECD to Moscow (repeated to the Department of State), May 25; ibid.)