28. Memorandum From the Under Secretary of State for Economic Affairs (Casey) to Secretary of the Treasury Shultz1

What should we be looking for?

No heavy commitment to intervention in support of a fixed rate. We believe it desirable to get rid of a pattern of recurring big crises and to create a moving target and greater risk for speculative money. If there are difficult side effects for trade, we would count on a mutual interest in working them out.
Assurances that we will maintain our last devaluation. For example, an understanding that a short-term loss of reserves by Germany and Japan will not be a basis for devaluation.
A disposition and a climate to accelerate work towards monetary reform. It may be possible to give this concrete form by agreeing to modest interim measures on intervention to avoid sharp changes in rates on the understanding that these measures are to be superseded by publicly recognized rules which will develop greater certainty and predictability by gearing interventions and rates to reserve changes or other objective criteria.
Assurances that the impact of our recent devaluation will not be taken away from our farm exports by changes in the CAP.
Liberalization of European capital outflow restrictions as no longer being justified by the economic situation of European countries [Page 116] and the greater availability of Japanese, Middle East and US long-term funds (as US capital export rules are eased).
An expression of resolve to seek more satisfactory trade relations in the GATT negotiations as scheduled would be a useful indication of continued European–Japanese–US cooperation.
William J.Casey
  1. Source: National Archives, RG 56, Records of Secretary of the Treasury George P. Shultz, 1971–1974, Entry 166, Box 5, GPS State Department 1972/1974. No classification marking.
  2. Casey initialed “WJC” above his typed signature.