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109. Memorandum From the Special Representative for Economic Summits (Owen) to President Carter 1

SUBJECT

  • Package to Strengthen the Dollar

1. I have seen Mike Blumenthal’s memo of February 22, proposing that you now take specified steps in the energy field, and that you ask Germany, Japan, and others to step up their growth policies in return—all with the object of halting the downward drift in the dollar.2

2. I am not competent to judge the merit of the energy steps that Mike proposes, although they sound sensible. If they are, I believe that:

a. we might be able to get some German and Japanese economic pledges in return for a promise to take immediate energy action;

b. the combination of energy action in the US and of stepped up growth pledges abroad would strengthen confidence in economic prospects generally, and in the dollar specifically, at home and abroad;

c. your role as a leader would be enhanced, in the US and overseas.

3. If this idea seems to you worth exploring, I recommend the following scenario:

a. Ask Mike to work urgently with DOE and other agencies to develop a detailed proposal, which could go to you (with any dissents) in the next few days for review and decision.

b. If you approve that proposal, Treasury should urgently consult Germany, Japan, and perhaps other countries, to see if they would pledge to take needed expansionist actions, in return for the promise of quick US energy action.

c. After consultation with these countries and the Congress, we would move simultaneously to take the specified energy actions at [Page 334]home and to have other countries announce these growth actions abroad.

4. There may be a large opportunity here, if the energy steps are feasible—and if we can move quickly.3

  1. Source: Carter Library, Records of the Office of the Staff Secretary, Presidential File, Box 74, 2/27/78 [2]. Secret. Sent for information. Forwarded to Carter under cover of a February 25 note from Hutcheson (ibid.), which also forwarded Schultze’s February 25 memorandum, Document 112.
  2. See Document 108. In a February 22 note to Brzezinski, Owen noted that Blumenthal had given him a copy of his February 22 memorandum, asking that Owen and Brzezinski “do what we can to support this initiative.” Noting his belief that Blumenthal’s proposal “makes sense internationally,” Owen hoped that Brzezinski would endorse his own memorandum to Carter. Owen asserted: “This is urgent and important—an opportunity for effective leadership which could, if exploited urgently, do a lot to enhance the Administration’s standing at home and abroad—in addition to halting the continuing slide of the dollar.” (Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 8, Balance of Payments: 12/77–2/79)
  3. Brzezinski wrote at the bottom of the page: “I concur. ZB.”