80. Memorandum of Conversation1


  • Valery Giscard d’Estaing, President of the French Republic
  • Jean Sauvagnargues, Minister of Foreign Affairs
  • Jean-Pierre Fourcade, Minister of Economy and Finance (Second Half)
  • President Gerald R. Ford
  • Dr. Henry A. Kissinger, Secretary of State and Assistant to the President for National Security Affairs
  • William Simon, Secretary of the Treasury (Second Half)
  • Lt. General Brent Scowcroft, Deputy Assistant to the President for National Security Affairs


  • Defense Cooperation; CSCE; F–104 Replacement; Monetary Issues

[Omitted here is discussion unrelated to foreign economic policy.]

Monetary Issues

Giscard: [To the Finance Ministers] Did you make economic progress?

Fourcade: We made progress on gold, and on IMF we have a friendly agreement and disagreement. [He hands over a paper.]2

Giscard: On gold, I decided to change the calculation of our reserves to give them the face value. We will have a deficit of $7 billion because of oil. Against this deficit, we have one half gold and one half other currencies. If we value it at the market value, the gold will become $12 billion and the total will be $15 billion. We have delayed it only to get an understanding with the major countries. Schmidt said go ahead. But I thought we would meet and wanted to wait for that.

The monetary question has been one of deep disagreement between the United States and France. There is still American hostility from the ’65 period. I am not a supporter of the gold standard. I tried to achieve some new kind of system, and we were close to it before the oil crisis. The practical point for us is to do it in a way which doesn’t look like we are undermining the foundation of the monetary system. I would like to put out our balance of payments in January and resolve the gold question. Would that be a problem?

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President: There has been recent pressure to authorize American citizens to hold gold and for the Government to sell some gold. The legislation early this year was forced on us as part of an IDA bill.

Simon: They passed it over our objections.

President: They pinned us down to December 31, 1974. The result is the authority is mandatory, so we didn’t want to wait until December 31.

Simon: We will auction two million ounces.

Giscard: To whom?

Simon: It is an auction to citizens.

Giscard: With the objective to sell all your stocks?

Simon: Not at all. We just wanted to supply at least partially some of the demand to ease the balance of payments problem.

Giscard: One of the motives in France for holding gold is the inheritance tax. It is small and can be hidden to escape taxes.

President: My instinct is that we would have no objection to your proceeding.

Giscard: We will let you know two days ahead.

Your people in Treasury are violently opposed to monetizing gold. Why? Five years ago it was protecting the dollar, but now it is floating.

Simon: The concern is that if everyone raised the price and kept it at the center of the system, it would make the system more vulnerable.

President: What would you say in the communiqué?3

Simon: We would leave it out and handle it in the January meeting of the Five. We have no disagreement with you about the ultimate role of gold. The disagreement is how we get there.

Giscard: How will we deal with the questions and answers?

Simon: We can say we agreed on the destinations but in getting there we wanted safeguards. We would prohibit or restrict central bank system purchase of gold. We would not want gold support but would treat it as a commodity.

Giscard: We could mention closer cooperation to reestablish control of the general economic development. If the situation developed in dangerous ways, we would meet in the Five, or at Presidential level, if necessary, to deal with it. We must find a way to avoid offending our other EC partners. We need to have some new approach. The Group of 20 failed.

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President: We agree. And a statement from this meeting would solidify what was done in our communiqué with Schmidt.4

Kissinger: It would have a very positive effect. We don’t have to describe the mechanism.

Giscard: “If needed, we could take the initiative for a meeting to organize cooperation for dealing with economic problems.”

President: We would not go into details.

Simon: The Group of Five meeting would be secret. It would be just before the meeting of the 20.

Giscard: Twenty is perfectly useless except to permit a meeting of the Five.

[The meeting ended.]

  1. Source: Ford Library, National Security Adviser, Memoranda of Conversations, Box 8. Secret; Sensitive. The conversation took place at the Hotel Meridien. All brackets, except those that indicate an omission, are in the original.
  2. Not further identified.
  3. For the text of the joint communiqué issued after President Ford’s and President Giscard’s December 14–16 discussions in Martinique, see Public Papers: Ford, 1974, pp. 754–757.
  4. For the text of the joint communiqué issued after President Ford’s and Chancellor Schmidt’s December 5–6 discussions in Washington, see Public Papers: Ford, 1974, pp. 721–725.