http://history.state.gov/historicaldocuments/frus1969-76v31/d63#fn1
Mr. Enders: It's been very close
to it. It's been in the newspapers now—the EC proposal.2
Secretary Kissinger: On
what—revaluing their gold?
Mr. Enders: Revaluing their
gold—in the individual transaction between the central banks. That's
been in the newspaper. The subject is, obviously, sensitive; but it's
not, I think, more than the usual degree of sensitivity about gold.
Secretary Kissinger: Now, what is
our position?
Mr. Enders: You know what the
EC proposal is.
Secretary Kissinger: Yes.
Mr. Enders: It does not involve a
change in the official price of gold. It would allow purchases and sales
to the private market, provided there was no net purchase from the
private market by an individual central banker in a year. And then there
would be individual sales between the central banks on—
Secretary Kissinger: How can they
permit sale to the private market? Oh, and then they would buy from the
private market?
Mr. Enders: Then they would
buy.
Secretary Kissinger: But they
wouldn't buy more than they sold.
Mr. Enders: They wouldn't buy more
than they sold. There would be no net increase in gold held by the
central banks that was held by the EEC.
It could be held by others.
Secretary Kissinger: What's
Arthur Burns' view?
Mr. Enders: Arthur Burns—I talked to him last night
on it, and he didn't define a general view yet. He was unwilling to do
so. He said he wanted to look more closely on the proposal. Henry Wallich, the international
affairs man, this morning indicated he would probably adopt the
traditional position that we should be for phasing gold out of the
international monetary system; but he wanted to have another look at it.
So Henry Wallich indicated that
they would probably come down opposing this. But he was not prepared to
do so until he got a further look at it.
Secretary Kissinger: But the
practical consequence of this is to revalue their gold supply.
Mr. Enders: Precisely.
Secretary Kissinger: Their gold
reserves.
Mr. Enders: That's right. And it
would be followed quite closely by a proposal within a year to have an
official price of gold—
Secretary Kissinger: It doesn't
make any difference anyway. If they pass gold at the market price, that
in effect establishes a new official price.
Mr. Enders: Correct.
Secretary Kissinger: Now, that's
what we have consistently opposed.
Mr. Enders: Yes, we have. You have
convertibility if they—
Secretary Kissinger: Yes.
Mr. Enders: Both parties have to
agree to this. But it slides towards and would result, within two or
three years, in putting gold back into the centerpiece of the
system—one. Two—at a much higher price. Three—at a price that could be
determined by a few central bankers in deals among themselves.
There are two things wrong with this.
Secretary Kissinger: And we would
be on the outside.
Mr. Enders: We could join this
too, but there are only very few countries in the world that hold large
amounts of gold—United States and Continentals being most of them. The
LDC's and most of the other
countries—to include Japan—have relatively small amounts of gold. So it
would be highly inflationary, on the one hand—and, on the other hand, a
very inequitable means of increasing reserves.
Secretary Kissinger: Why did the
Germans agree to it?
Mr. Enders: The Germans agreed to
it, we've been told, on the basis that it would be discussed with the
United States—conditional on United States approval.
Secretary Kissinger: They would be
penalized for having held dollars.
Mr. Enders: They would be
penalized for having held dollars. That probably doesn't make very much
difference to the Germans at the present time, given their very high
reserves. However, I think that they may have come around to it on the
basis that either we would oppose it—one—or, two, that they would have
to pay up and finance the deficits of France and Italy by some means
anyway; so why not let them try this proposal first?
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