108. Memorandum From the President’s Deputy Assistant for National Security Affairs (Scowcroft) to President Ford 1

SUBJECT

  • Responses from Wilson, Schmidt, and Moro to your Letters on Gold

Prime Minister Wilson, Chancellor Schmidt, and Prime Minister Moro have responded to your messages of September 1 conveying a more flexible US position on gold.2 In the Interim Committee, agreement was reached on new IMF quotas, on reducing the vote required for a veto from 20% to 15%, abolition of an official price for gold, elimination of the obligation to use gold in transactions with the IMF, sale of one-sixth of the Fund’s gold (25 million ounces) for benefit of the developing countries, and restitution of the same amount to its original owners.3

Wilson (Tab A) believes that your additional flexibility was an important element in the overall results of the meeting of the Interim Committee. He hopes and believes that it will now be possible to complete in coming months a comprehensive agreement covering, in particular, outstanding issues relating to exchange rates.4

Schmidt (Tab B) also believes that US flexibility was a significant factor in paving the way for progress in the Interim Committee. He states that future progress toward broader agreement should not be impaired by differences of opinion over the future exchange rate system (viz. France vs. the US).5 He expects that the gap between the different views will be narrowed, and warns that an unnecessarily tough [Page 344]discussion could damage present efforts to stimulate economic activity, reduce inflation and fight inflation and payments imbalances. He indicates that he will do all in his power "in an undogmatic spirit" to play a mediating role.

Moro (Tab C)6 states that the positive results obtained in gold and IMF quotas were testimony of the goodwill of the US and the European Community in dealing with world monetary problems. He affirms that Italy intends to pursue discussion concerning exchange rates in the same constructive spirit, with the goal of reaching a formula that will reconcile existing differences. He underlines the point, made to you in Helsinki, that Italy’s ability to play a constructive role on these matters will be made more difficult if major financial issues are discussed in meetings limited to five countries, i.e., excluding Italy.7 Constructive action by Italy "presupposes Italy’s participation in all of the forums in which international policies in the economic and monetary areas are elaborated and agreed upon."

I do not believe that replies to the three heads of government are required.

  1. Source: Ford Library, National Security Adviser, Presidential Subject File, Box 8, Gold. Secret. Sent for information. A stamped notation indicates the President saw the memorandum, which he initialed.
  2. Document 100, Tab A.
  3. See Document 101.
  4. In his September 11 letter to Ford, attached but not printed, Wilson commented on the subject of exchange rates: "As you know, our own position on this question—and indeed that of a majority of EEC countries—is very close to that of the United States. You can be assured of our continued efforts to reach a solution. Meanwhile I am sure that it was right for you to have written to the French President asking him to reconsider the French position."
  5. Attached but not printed at Tab B is von Staden’s September 4 letter to President Ford, transmitting Chancellor Schmidt’s undated letter to President Ford. In his letter, Schmidt wrote of these differences of opinion: "I feel that in a sense this conflict of views if rather too theoretical, one might almost say dogmatic."
  6. Attached but not printed at Tab C is Prime Minister Moro’s September 14 letter to President Ford.
  7. On August 1 in Helsinki, Rumor told President Ford that Italian participation in an economic summit would have beneficial effects on Italian public opinion and strengthen the forces in favor of democracy. (Memorandum of conversation, August 1; Ford Library, National Security Adviser, Memoranda of Conversation, Box 14)