59. Memorandum From Secretary of the Treasury Dillon and the Under Secretary of State
(Ball) to
President Kennedy0
Washington,
September 12,
1962.
Attached is the report which Assistant Secretary of the Treasury
John Leddy and Assistant
Secretary of State Griffith Johnson have made to us on their trip to
Europe to confer with the French and British on the Declaration of Ten.
A copy of the draft communique which the Finance Ministers of the Ten
will issue after their meeting is attached to the report. It has been
approved by us and by the French Minister of Finance and the British
Chancellor of the Exchequer.
The communique is designed to show that the leading countries are
continuing to work closely together in monetary matters; that the IMF standby is readily available for use;
that present resources are adequate to maintain the present price of
gold; that further study of long-range improvements in the monetary
field is desirable, and that meetings of the Ten are not necessarily
concerned with an emergency like a U.S. drawing.
France’s partners in the Common Market agreed during the trip to a
meeting of the Ten, but not to a communique. The French believe that
they will, however, agree to its issuance, possibly with some changes
reflecting their views.
The French Finance Minister said that he had discussed his proposal that
gold takings from the United States be limited with the Chancellor of
the Exchequer, who had agreed with him that high-level secret
discussions should be carried on among the United States, the United
Kingdom, France, Germany and Italy after the Bank-Fund meetings. Their
ideas are still unclear to us and may not be known in full even to the
most trusted subordinates of the two Ministers. We will follow this
matter closely and keep you advised of developments.
- George W.
Ball
- Douglas
Dillon1
[Page 145]
Attachment
Washington,
September 10,
1962.
Memorandum for Secretary of the Treasury and the Under
Secretary of State
In accordance with the President’s memorandum of August 242 we
proceeded to Paris and London during the week of September 3 where
we conferred separately with the French and British on the proposed
“Declaration of Ten” (Section III of the Treasury’s Program for
Further International Monetary Action); and with the French on the
steps they may be contemplating to carry forward Minister Giscard
d’Estaing’s initiative looking toward an arrangement which would
have the effect of limiting unnecessary European takings of U.S.
gold.
Our conversations in Paris were with Minister Giscard d’Estaing; M.
Andre de Lattre, Director of External Affairs of the Ministry of
Finance; and M. Rene Larre, French Financial Counselor in
Washington.
British officials present at our talks in London included Sir
Frank Lee, Joint Permanent Secretary to the
Treasury; Sir Denis Rickett, Second Secretary, Treasury Department;
David Pitblado, U.K. Financial Counselor in Washington and Douglas
Allen, all of the U.K. Treasury; and Maurice Parsons, Lucius
Thompson-McCausland and F. J. Portsmore of the Bank of England. We
did not meet with the Chancellor of the Excheq-uer.
Declaration of Ten
After some initial hesitation both the French and British warmly
welcomed the idea of a ministerial meeting of the group of ten
during the Fund and Bank meeting and the issuance by them of a
communique. The attached draft text, which was approved by
Washington during the course of our negotiations, has been endorsed
by Minister of Finance Giscard d’Estaing, and Chancellor of the
Exchequer Maudling. The significance of the communique lies in these
points:
- 1.
- It would strengthen the public impression of continuing
close monetary cooperation among the leading industrial
countries.
- 2.
- It would make clear the ready availability of the $6
billion IMF standby for
“decisive and prompt action.”
- 3.
- It would emphasize the adequacy of present resources—from
the IMF, from bilateral
arrangements such as swaps and from existing reserves—to
maintain the existing price of gold.
- 4.
- It would set the stage for international study of the
means for long-run improvements in the monetary
field.
- 5.
- It would lay the basis for further meetings of the Ten
without provoking speculation that such meetings must
necessarily be concerned with emergency matters such as a
U.S. drawing.
The attitude of France’s Common Market partners toward the proposed
communique is still unclear. While we were having our first meeting
with the British (Wednesday, September 5) the French discussed the
proposal with the Monetary Committee of the Six. At our second
meeting with the French on Thursday (the first having been on
Tuesday) they reported that while all were agreed on the
desirability of a ministerial meeting of the Ten, the group had not
yet agreed in principle on the desirability of a communique. This
hesitation was attributed primarily to the views of Van Lennep
(Dutch Treasurer-General and chairman of Working Party 3) and de
Stryker of Belgium. The Germans (Emminger of the Bundesbank) seemed
to be on both sides of the question.
Upon hearing this view we informed de Lattre that we saw no point in
a meeting without a communique. He responded by saying the French
now thought a meeting very important; and that the rest of the Six
would no doubt agree on a useful communique along the lines of the
draft now virtually agreed upon by the U.S., U.K. and France.
The upshot is that the French will issue invitations to the meeting
to all of the group of ten and will enclose with the invitation a
copy of the attached draft of the communique. The ministerial
meeting will be held on Tuesday, September 18 with issuance of the
communique scheduled for Wednesday evening or Thursday morning after
the Governors have made their major statements to the Fund.
Officials of the Ten will meet Monday afternoon to work out such
changes in the communique as may be needed to take account of views
expressed by members other than the U.S., U.K. and France.
French Initiative on Limiting Gold
Takings
We raised this question casually at the end of our meeting with
Giscard d’Estaing (Tuesday, September 4) by asking whether he had
any information to give us following his talks with Maudling on July
27. He said he was encouraged by Maudling’s reaction. The two were
in agreement that there should be high level secret discussions of
the subject (which he did not at any time define) after the Fund and
Bank meetings were out of the way; and that France, the U.K.,
Germany, Italy and the U.S. should be represented in these
talks.
We did not press this matter further. Apart from its sensitivity and
the probability that nothing much could be accomplished until after
the Fund and Bank meetings, we had good reason to believe that open
pressure
[Page 147]
from the U.S. on
the French might lead them to think that political questions could
be successfully interjected.
In London on Wednesday the British asked us what the French had said
on this subject and we gave them the essence of Giscard d’Estaing’s
remarks. They observed that the whole affair was mysterious. The
same view was expressed by the French officials the following day.
We conclude that the full scope of the discussions between Giscard
d’Estaing and Maudling may not be known even to their most trusted
subordinates.
- G.
Griffith Johnson
Assistant Secretary of State for
Economic Affairs
- John M.
Leddy
Assistant Secretary of the Treasury for
International Affairs
Enclosure3
Draft Communique of “Group of Ten” (9/6/62)4
In the course of the annual meeting of the International Monetary
Fund, the representatives of the ten countries (the Finance
Ministers of Belgium, France, Italy, Japan, the Netherlands, the
United Kingdom and the United States, the Minister of Justice of
Canada, and the Governors of the Central Banks of Germany and
Sweden) participating in the Agreement to supplement the resources
of the IMF concluded in December
1961,5
met in Washington on September —— together with Mr. Per Jacobsson, Managing Director of
the Fund.
Since not all of the countries concerned have as yet concluded
ratification, this meeting was of an informal character. Under the
Agreement of December 1961, the French Finance Minister is
responsible for arrangements between signature and the first formal
meeting of the group. Accordingly M. Valery Giscard d’Estaing served
as chairman.
The Ministers reviewed the development of the international monetary
situation over the past year and the prospects for the future. They
[Page 148]
also discussed the
international cooperative arrangements which are being brought into
being to meet the developing monetary needs of the new era of
convertible currencies and progressively freer international
trade.
The Ministers were encouraged by the progress which has been made
during the past year towards a better basic balance in international
payments as a result of the measures already adopted in both deficit
and surplus countries. They affirmed the objectives of reaching a
balance at high levels of economic activity and by methods
consistent with vigorous economic growth. While speculative and
other short-term capital movements require continuing scrutiny, the
means for coping with such movements have been reinforced in a
number of ways and the ten Ministers agreed that these means would
be used as necessary.
In this connection the Ministers emphasized the importance of the new
arrangements for supplementing the IMF through the addition of $6 billion of further
resources and stressed that these resources would be available for
decisive and prompt action. They also noted that various techniques
of cooperation are being developed among monetary author-ities of
the various countries in order to facilitate the functioning of the
international payments system and thereby to further the objectives
of the Fund. The additional resources thus provided, together with
world reserves and the existing resources of the IMF, are large enough to assure a
stable exchange rate system and the maintenance of the existing
price of gold.
The Ministers agreed that continuing study of the means for further
improving the international monetary system in the years ahead was
desirable.
The Ministers considered that these discussions were very useful and
they agreed that similar meetings should be held from time to
time.
