89. Telegram From the Department of State to the Embassy in Japan1
149434. Please deliver as soon as [possible] following personal message from the President to Prime Minister Sato: “Dear Mr. Prime Minister: As I have asked Secretary Rogers to inform you, I am tonight announcing a comprehensive program to curb inflation, increase employment, restore strength and confidence in the United States dollar, and improve the international monetary system. This major action is necessary to preserve confidence in the dollar and to maintain an international monetary system which will serve the world’s needs. It was our responsibility to act and we have done so.
[Page 271]I am imposing a 90-day freeze on wages and prices in the United States. I am cutting certain taxes to stimulate consumption and employment and I am sharply curtailing US Government expenditures. I am also levying a temporary surcharge on all dutiable imports not already subject to quantitative limitations by the United States, and I have directed that the convertibility of the dollar into gold or other reserve assets be suspended. I recognize that these actions will be of concern to Japan as they are vital to us.
What we need now is an early agreement on improvements in the international monetary and trading system. I have asked Treasury Secretary Connally immediately to get in touch with your Finance Minister to consult on how we can bring about these improvements.
I am sure you will find that what we have done will contribute to economic expansion in a world at peace. I look forward to continuing to work with you on these matters of such concern to both of our countries as well as to the rest of the world. Sincerely Richard Nixon.”
FYI: Secretary Connally is calling Finance Minister Mizuta tonight and Paul Volker is also calling Kashiwagi. They are being informed that Paul Volker is proceeding tonight to London for a meeting tomorrow at 1500 London time with selected European countries, Canada, and Japan. In view of time element Japan financial attaché at London will be welcome to meeting and Volker will be prepared to meet Japan Ministry Finance officials here in Washington soonest.
- Source: National Archives, Nixon Presidential Materials, NSC Files, Box 536, Country Files, Far East, Japan, Vol. V, 1 Jul–Sep 71. Confidential; Immediate; Exdis. Drafted by Johnson and approved by Johnson and Eliot. In telegram 8278 from Tokyo, August 24, Meyer summarized the effects of Nixon’s new economic program on Japan. He asserted: “Recent US actions, particularly new economic program, have had constructive effect in Japan, forcing Japan to face realities of 70’s.” (Ibid.) In response to Nixon’s new economic program, the Japanese Ministry of Finance announced on August 27 that it would let the yen float against the dollar.↩