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156. Summary of a National Security Council Meeting1

IN ATTENDANCE

  • The President, the Vice President,
  • Chairman Miller, Secretary Vance,
  • Secretary Blumenthal, Secretary
  • Schlesinger, Messrs. Brzezinski,
  • Eizenstat, Jordan, Moore, Owen,
  • Powell and Schultze

1. The Secretary of the Treasury and Chairman Miller discussed the dangers posed by the decline in the dollar abroad.2

2. The Secretary suggested a three-stage approach:

(a) a calming statement to be issued now by Chairman Miller and himself;

(b) a program of financial measures to strengthen the dollar in the short term, which could be negotiated in the next few days:

(c) a program of fundamental measures to strengthen the dollar over the longer term, some of which might be announced by the President Friday.3

3. These suggestions were discussed, as were possibilities for Congressional consultation.

4. The President:

(a) authorized Secretary Blumenthal and Chairman Miller to issue a calming statement now.4

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(b) understood that Secretary Blumenthal and Chairman Miller would be negotiating about financial steps;5

(c) directed Secretary Blumenthal to submit to him by mid-Thursday a paper outlining options regarding fundamental measures;6

(d) directed that appropriate steps be taken regarding Congressional consultation.

5. It was agreed that all this should be handled in a way reflecting the highly sensitive nature of the issues involved.

  1. Source: Carter Library, National Security Council, Institutional Files, Box 56, NSC–011, 5/18/78, U.S.-Soviet Relations. Secret. Carter initialed “C” at the top of the page, and Brzezinski signed at the bottom of the page. The meeting, which took place in the Cabinet Room, began at 3:04 p.m. and ended at 4 p.m. (Carter Library, Presidential Materials, President’s Daily Diary)
  2. An August 16 memorandum from Brzezinski to Carter forwarded a report by Robert Hunter, who had recently visited Europe: “In all my [Hunter’s] conversations in Europe, it seems clear that the leadership of the Administration is now being judged—not so much in terms of issues like the neutron bomb or U.S.-Soviet relations—but much more on the management of the U.S. economy, the enactment of energy legislation, and the role of the dollar. Psychologically, the fall of the dollar is having a profound impact in Western Europe (with continual front-page news) and is having an impact on perceptions of our reliability in general.” (Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Subject Chron File, Box 92, Finance/International: 7/78–1980)
  3. August 18.
  4. On August 16, the White House issued a statement expressing Carter’s “deep concern over developments in foreign exchange markets in recent days.” For the text of the statement, see Public Papers of the Presidents of the United States: Jimmy Carter, 1978, Book II, pp. 1426–1427. See also footnote 3, Document 158.
  5. In an August 17 note to Brzezinski on the actions taken in response to the August 15 NSC meeting on the dollar, Owen reported that “Treasury’s discussions about a swap with the Japanese (which is the most important and difficult of the financial measures) are not sufficiently advanced to permit a useful progress report.” (Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Subject Chron File, Box 92, Finance/International: 7/78–1980)
  6. In his August 17 note to Brzezinski on the actions taken in response to this meeting, Owen reported that he expected agency recommendations on energy policy by the end of the day. On inflation, he noted that Schultze and Blumenthal were “still arguing about whether anything useful can be recommended to the President about inflation now. They will meet to settle the argument in early afternoon. My guess is that Charlie will win, and he will then give us the memo of which I spoke to you yesterday: saying that there won’t be any recommendations on inflation to the President for a few weeks.” (Ibid.) No record of a meeting between Schultze and Blumenthal was found.