66. Memorandum by Secretary of the Treasury Simon1


  • Secretary Kissinger
  • Chairman Burns
  • Counselor Rush
  • Chairman Stein
  • Assistant to the President Flanigan

U.S. Proposals on Gold

On the basis of our several meetings on this subject, and after extensive further discussions with Chairman Burns, I would like to request your concurrence in my putting forward the position outlined below in my scheduled informal meetings with IMF Managing Director Witteveen and with the senior financial officials of the other major nations over the next few days.

In my view, the proposed position would:

  • —respond constructively to the recent European initiatives and thus reduce the likelihood of a breakdown in international monetary cooperation through decisions by some European governments to go their separate ways in the near future in their monetary treatment of gold;
  • —assist nations in adjusting to the new patterns of payments resulting from the large increases in the prices of oil and some other materials; and
  • —facilitate the further evolution of the international monetary system in directions already generally agreed.

The proposed position would represent a desirable exercise of U.S. leadership at a time when there is an unusually good opportunity to seek agreement with the new financially-sophisticated governments in France and Germany.

The U.S. position would provide that:

Governments should be permitted to sell gold at individually-negotiated, market-related prices to any buyer subject to a limitation—to insure against any inordinate sudden inflationary impact—that no government would sell more than 10% of its present holdings during any twelve-month period during the next three years unless the IMF gave its concurrence to larger sales.
The IMF should be permitted to sell from its gold stocks and would be expected gradually to make such sales to obtain additional resources to assist its members.
Any IMF member government should be able, as an alternative to direct sales, to employ the IMF to act as its agent in selling gold from its government stocks on an orderly basis over time with an appropriate commission to the IMF and with the IMF being prepared to extend assistance to the selling government at the time the gold was transferred into the custody of the IMF; such IMF assistance should be equivalent to a substantial proportion of the current market value of the gold and should not restrict the selling government’s access to other IMF facilities.
Governments should be permitted without restriction to pledge gold as collateral for loans received from other governments or from private lenders.
Each government should be permitted at any time to buy, from the market and from other governments, as much gold as it has sold net during the previous twelve months.
Gold valuation and settlement obligations should be removed from the Articles of the IMF and from other multilateral monetary agreements.
At a time when the change can be introduced without severe risk of market disruption, U.S. citizens should be granted permission to invest in gold, and it should be anticipated that the U.S. Government would sell sufficient gold from its stocks to insure that such permission did not have an undesirable effect on the U.S. international payments position.

Since my meeting with Witteveen is scheduled on Tuesday afternoon,2 I would appreciate your prompt response. When I have your concurrence I’ll arrange with Ken to seek the President’s agreement.

  1. Source: National Archives, Nixon Presidential Materials, White House Central Files, Staff Member & Office Files, Council of Economic Advisers, Herbert Stein, Box 105, Meetings Files, International Monetary System, May–June 1974. Confidential.
  2. June 4.