227. Memorandum From Secretary of the Treasury Miller to President Carter1

The dollar came under very great pressure today and we had to spend almost half a billion dollars. In my view, only much more effective cooperation from the German monetary authorities will enable us to stabilize the market.2

I would like to have my discussions in Hamburg with the Germans this Saturday3 reinforced by a telephone call from you to Chancellor Schmidt along the lines of the attached talking points.4

  1. Source: Carter Library, National Security Affairs, Brzezinski Material, Agency File, Box 22, Treasury Department: 3/79–3/80. No classification marking. Carter wrote at the top of the page: “done. J.” At the bottom of the page, Miller wrote: “I’ll do my best to gain agreement at the Hamburg session. Bill.”
  2. During a September 21 telephone conversation, Schmidt told Carter “that the current unrest in the currency markets gives a great deal of pain to financial managers.” Noting the “good cooperation” enjoyed by West German and American officials, Schmidt said that “the Federal Republic stands ready to continue to loan Deutsche Marks so the U.S. can buy dollars and maintain a steadier exchange relationship in the market.” (Memorandum of conversation, September 21; Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 37, Memcons: President: 7–9/79)
  3. On Saturday, September 29, Miller and Volcker met with Schmidt, Emminger, and Matthoefer in Hamburg for a discussion of international economic issues. According to the joint communiqué issued at the end of the meeting, they discussed recent oil price hikes, U.S. and West German domestic economic policies, and international monetary relations. They also reaffirmed “their resolve to combat unwarranted as well as erratic movements in the foreign exchange markets,” both “promptly and in close cooperation.” (Telegram 7341 from Belgrade, October 1; National Archives, RG 59, Central Foreign Policy File, [no film number]) The New York Times published a report on the meeting on September 30. (John Vinocur, “2 Countries Agree to Bolster Dollar,” The New York Times, September 30, 1979, p. 1) No memorandum of conversation of the meeting was found.
  4. Attached but not printed is a set of talking points dated September 26. The first point noted the forthcoming meeting of U.S. and West German officials in Hamburg, while the second suggested concern that the foreign exchange market “situation appears to be deteriorating rapidly.” The third point asserted the belief that “a very serious problem is developing” that would “require forceful cooperation between the U.S. and Germany.” Carter spoke to Schmidt by telephone on September 27 from 12:34 until 12:38 p.m. Immediately thereafter, he placed a telephone call to Miller, with whom he spoke from 12:42 until 12:44 p.m. (Carter Library, Presidential Materials, President’s Daily Diary) No memorandum of conversation of either telephone conversation was found.