103. Letter From President Carter to West German Chancellor Schmidt 1
I am extremely pleased that you were able to arrange to see Mike Blumenthal. I asked for this meeting because of the concern that I share with you about prospects for the world economy.2 A liberal trade and payments system will be harder to sustain without economic growth to reduce unemployment and to maintain a viable pattern of international payments. The political as well as the economic future of the Atlantic Alliance will be powerfully shaped by the outcome.
We in the United States are doing all we can do to foster necessary growth. Mike will describe what I hope to achieve with the economic policy and tax proposals that I have put before the Congress,3 as well as the status of our efforts to get a strong and effective energy policy. And, as you know, the Treasury and Federal Reserve have, in close cooperation with German monetary authorities, acted forcefully to restore a degree of order to the exchange markets.
But action by the United States, alone, will not be enough. Indeed, there is a real question as to whether we can make meaningful progress in improving our current account position in the absence of faster growth abroad. And it will be difficult to strengthen the dollar without broadly-based growth, which would contribute to exchange rate stability.
I wholeheartedly agree with your recent statement to the Bundestag that this non-inflationary growth can only be achieved if shared [Page 326]by several countries.4 Mike will brief you on the outcome of our recent discussions with the Japanese Government about its efforts to achieve more rapid growth. I hope that you will share with him your view as to future prospects and policies regarding German economic growth, and that both of you can exchange thoughts about how to generate more growth in other countries.
Timing is of the essence, since it is important for all our countries that prospects for broad-based economic growth improve before our Summit meeting. German and American close concert in this endeavor could be the key to its success.
- Source: Carter Library, National Security Affairs, Brzezinski Material, President’s Correspondence with Foreign Leaders File, Box 6, Germany, Federal Republic of: Chancellor Helmut Schmidt, 1–12/78. No classification marking. Sent to Carter for his signature under cover of a February 9 memorandum from Owen, who noted that “Mike Blumenthal would like to carry a letter from you to Schmidt when he sees the Chancellor next week.” (Ibid.) In a January 27 memorandum to Carter, Blumenthal, noting that West Germany’s “very sluggish” growth would likely continue and that Schmidt’s government refused “to consider major new stimulative measures,” reported that the EPG had decided “to bring home to the FRG, in a confidential but firm manner, the world economic need for faster German growth.” (Carter Library, Records of the Office of the Staff Secretary, Presidential File, Box 70, 1/30/78)↩
- Telegram 29128 to Bonn, February 3, transmitted a letter from Carter to Schmidt, in which Carter asked Schmidt to receive Blumenthal in Bonn on February 13 “for a general review of economic prospects, and exchange of views.” (National Archives, RG 59, Central Foreign Policy File, D780052–0212) For Blumenthal’s report on the meeting, see Document 111.↩
- See footnote 5, Document 98.↩
- Apparently a reference to Schmidt’s January 19 policy address before the Bundestag. (John Vinocur, “Schmidt Rebuffs U.S. Anew on Calls to Spur Economy,” The New York Times, January 20, 1978, p. D1)↩
- Below his signature, Carter added the handwritten note: “Best wishes—J.”↩