6. Letter From the West German Chargé d’Affaires Ad Interim in the United States (Noebel) to President Nixon1

Dear Mr. President:

I have the honour to transmit to you the following message from the Federal Chancellor:

“Dear Mr. President:

“The development on the Exchange Markets during the last days, the consequences of which the Federal Republic of Germany more than any other country had to suffer, is of great concern to me. The Federal Republic of Germany has fulfilled its obligations under the Smithsonian Agreement in letter and spirit. You know, Mr. President, that my government has, beyond that, by two revaluations of the DM and by its actions in the institutions of the European Common Market as well as on other occasions shown understanding for the necessities of international solidarity.

“The critical development on the exchange markets is to a large extent based on purely speculative movements. The Federal Government is not prepared to be put under pressure by that and will not take actions which are not appropriate according to the objective data of the German current account.

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“The Government of the Federal Republic of Germany has, therefore, instructed the Deutsche Bundesbank to continue the interventions. By that it became possible to keep the rate of the US $ on the Frankfort Exchange Market at the lower intervention point of 3.15 DM. This policy of the Federal Government would without doubt be facilitated if it would be supported by corresponding actions of the American monetary authorities. I fully appreciate that this has already been done to a certain extent; in spite of this, the Dollar rate at the New York Exchange repeatedly fell below DM 3.14 by which additional incentives for Dollar outflows into the Federal Republic of Germany were created. I would appreciate if the American monetary authorities would, in the future, do everything in their power to support the Dollar rate which—as I believe—would be in the spirit of the Smithsonian Agreement and would certainly contribute to the calming down of the markets.

“Needless to say, that I also deem it urgently necessary that a reform of the international monetary system has to take place. I expressed this again in my message at the beginning of the new term of my Government on January 18, 1973.2 Representatives of the Federal Government have emphasized this constantly, on other occasions and thus emphasized the cooperative attitude of the Federal Republic in this question.

“Furthermore, in my view, decisions are necessary which would contribute to the further liberalization of world trade. I see, however, the danger that instead of this, further restrictions of the free movements of goods and capital will be the consequences of the critical movements on the exchange markets.

“If we do not succeed in stabilizing the present situation on the exchange markets by joint and rapid action, the future development would lead to dangerous political consequences. The cohesion of the Free World would be endangered economically, psychologically and, finally also politically at a moment when in view of the present negotiations between East and West it is of utmost importance to negotiate on the basis of the unity of the Western countries. I believe that those who bear political responsibility have at present a special responsibility to avoid such a development.3

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“Given these reasons, I would propose, Mr. President, that the authorized representatives of our countries should meet if possible immediately in order to discuss the monetary and trade situation and search for solutions. In the meantime, Finance Minister Helmut Schmidt will—this very evening—discuss the situation with the French Government.



s. Willy Brandt.”4

I avail myself of this opportunity to renew to you, Mr. President, the assurance of my highest consideration.

Hans H. Noebel
  1. Source: National Archives, Nixon Presidential Materials, White House Special Files, Staff Member & Office Files, President’s Personal Files, Box 16, Name/Subject File, Volcker, Paul. No classification marking. The original, which is marked “Provisional Translation,” has several handwritten revisions which have been incorporated into the text.
  2. Brandt was re-elected Chancellor of the Federal Republic of Germany in December 1972. There is a report on his government’s January 18, 1973, policy statement in The New York Times, January 19, 1973, p. 10.
  3. In a February 9 conversation with Rogers, West German Foreign Office State Secretary Karl Moersch stressed his government’s “hope that the US will intervene in the current monetary crisis. He said that the Europeans needed the time which this would afford to reach agreement among themselves. If they had to act under great pressure there could be unfortunate political consequences which could prejudice the excellent cooperation which exists in other fields such as CSCE and MBFR.” (Telegram 26260 to Bonn, February 12; National Archives, Nixon Presidential Materials, NSC Files, Box 687, Country Files, Europe, Germany (Bonn), Vol. XIII, January–September 1973)
  4. On February 9, in telegram Tohak 52, Scowcroft sent a copy of this letter to Kissinger, who was traveling from Thailand to Laos. Scowcroft noted that a copy of the letter had been sent to Shultz, who would “be taking action on this problem.” A copy was also sent to Rogers, who was scheduled to meet with West German Foreign Office State Secretary Moersch later that morning (see footnote 3 above). (National Archives, Nixon Presidential Materials, NSC Files, Box 754, Presidential Correspondence 1969–1974, Germany Willy Brandt, 1972)