351. Message From President Nixon to British Prime Minister Heath1
WH 27140. Dear Mr. Prime Minister:
Thank you very much for your personal messages with respect to your decision on the pound.2
I share your conclusion that this latest episode in a series of monetary crises over recent years illustrates the need for fundamental changes in the monetary framework. To the extent this point is generally grasped, the cause of practical reform will have been reinforced—and, I hope, speeded. This can be a highly constructive by-product of otherwise unfortunate turbulence. I particularly welcome your reaction because so much of my own concern in the period since last August 153 has been directed toward establishing the point that we need to go beyond a simple patching up of the Bretton Woods system.
Frankly, we have felt the point has not been generally accepted in the past, even though certain underlying problems—such as the large mass and volatility of short-term money that you mentioned—have become increasingly evident.
I recognize that our effort to focus thinking on underlying problems could be, and has been, interpreted in some public discussion as an attempt to block or delay progress on specific reform proposals, or to promote purely national goals. Yet, I have accepted that risk in the firm belief that the cause of lasting reform—serving the needs of all—will be advanced only by a willingness to face up to the fundamental [Page 1030] issues, political as well as economic. Any other course invites failure. It is often said that a crisis is required to focus our minds and energies. I am confident we have within our power the ability to grasp this opportunity.
I am the last to underestimate the difficulties ahead. In a situation permitting different avenues of approach and with success totally dependent upon a sense of shared responsibilities and benefits, we have not felt it useful to press for a specific single “American plan”. Similarly, I trust that European thinking will not become frozen prematurely.
Against the background of recent events I do feel the time is ripe for engaging in open-minded and candid exploration of certain basic alternatives with our close partners. We should no longer be inhibited by the fear that certain approaches can be unthinkingly damned by some as too “radical” a departure from the past.
I know that Secretary Shultz looks forward to discussing these matters with the Chancellor at an early date and hope that our thinking can be tested against yours at all stages.
- Source: National Archives, Nixon Presidential Materials, NSC Files, Box 764, Presidential Correspondence, United Kingdom Prime Minister Edward Heath. Confidential.↩
- See Document 350.↩
- Reference to the President’s announcement on August 15, 1971, of the New Economic Policy. The text of his statement is in Public Papers: Nixon, 1971, pp. 886–891. See also Foreign Relations, 1969–1976, volume III, Foreign Economic Policy, 1969–1972; International Monetary Policy, 1969–1972, Document 168.↩