7. Notes of a Telephone Conversation Between Secretary of the Treasury Shultz and the Under Secretary of the Treasury for Monetary Affairs (Volcker)1

Volcker presented 3 alternatives:
  • a. Joint float
  • b. No action
  • c. Our plan
Schmidt squirmed but attracted to our plan and is now checking with Brandt.
Volcker emphasized German responsibilities to stand still plus be persuasive with others, including gold and capital controls.
Did not pin down precise amounts but talked in terms of 10–20 and loosely in terms of Smithsonian amounts.
Germans want to be sure to stem speculative tide so that favors large change.
Joint float not completely ruled out—not forthcoming on F+ B—B discussion2 but Volcker assumes they talked inclusively about joint float.
Germany still strongly resisting individual float.
G.3 not looking for confrontation with Japan and don’t want to upset Pompidou before election.4 Would prefer problem went away but Volcker emphasized that tough decisions are necessary.
Barber and Giscard being asked to stand by.
Some question in Schmidt’s mind about whether Volcker is speaking for U.S.—may need reassurance, possibly from the President to Brandt.
  1. Source: National Archives, RG 56, Office of the Under Secretary of the Treasury, Files of Under Secretary Volcker, 1969–1974, Accession 56–79–15, Box 1, 1973 Devaluation. No classification marking. Shultz, who was in Washington, drafted these notes on his conversation with Volcker, who was in Bonn.
  2. Not further identified. The reference to the possibility of a joint float implies that this refers to an intra-European discussion. On February 9, the British, French, and West German Ministers of Finance had met in Paris.
  3. Apparently a reference to the Federal Republic of Germany.
  4. National elections in France were scheduled for March 4 and 11.