View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

D epartm ent of State

TftNriOS+tffAU
PAGE; 0j

^ARIS

I 1799

TELEGRAM

013

0520442

87
ACTION SS 7 0
iNFOt OCT 0 U / 0 7 J W

034813

Ri 0514S0Z. a AJG 69
FM: A M E M B A ^ F P A R T s
TO S E C S T A T E W a S H D C 5 9 9 8
INFO* A M E M B A S S Y B O N N
AMEMBASSY BRUSSELS
A M E M B A S S Y THE H A G U E
AMEMBASSY LONDON
AME M b ASSY ROME
U S M l S S I O N EC B R U S S E L S
I O- E N T r~'A~ L ‘ A R I S
P

11799

L I M O IS G R E E N B A C K
C 0 R R El c T E- D c 0 P Y (ADDED: INFO A D D R E S S E E )
S U B J > ECO NO MI CS : MINISTER' G I S C A R D 5 Di»€sTAING ON INT ER N A T I O N A L ^
monetary questions*
D U R I N G L U N c HO N AT A M B A S S A D O R ’ R E S I D E N C E JLjG 4 ^ P 6 r D E P U T Y
S
U N D E R S E C R E T A R Y S A M U E L S / F R E N C H E C O N O M I C S MTfflSTER G I S C A R D
Di'ESTAlNG^ M A D E A N U M B E R OF I N T E R E S T I N G C O M M E N T S ON I N T E R N A T I O N A L
M O N E T A R Y QUESTIONS-. (WE W O U L D E M P H A S I Z E THA T G I S C A R D WA S S P E A K I N G
I N F O R M A L L Y AND V E R Y F R A N k LY# AND T H A T H l S R E M A R K S IN S O M E C A S E S
-• E. G»# ON G O L D P R I C E &ND E X C H A N G E F L E X I B I L I T Y -- V E R Y
LIKELY RE PR ESENT P E R S O N A L !REFL EC TI ON S RATHER THAN FIRM OFFICIAL
POSITIONS*)
l h S D R S . - G I S C A R D SA I D THA T HE P E R S O N A L L Y B E L I E V E D E V O L U T I O N
OF M O N E T A R Y S Y S T E M T O W A R D S R E L I A N C E ON M U L T I L A T E R A L R E S E R V E
I N S T R U M E N T WAS D E S I R A B L E , AND T H A T Hjr E X P E C T E D A N N O U N C E F R E N C H
A D H E R E N C E TO SDR S C H E M E ON O C C A S I O N OF IMF: A N N U A L M E E T I N G IN
W A S H I N G T O N N E X T S E P T E M B E R . AS F O R A M O U N T S TO BE C R E A T E D *
HE F E L T IT WAS I M P O R T A N T THAT u. s» NOT P R E S S FOR TOO L A R G E
A F I G U R E * AS TH I S T E N D E D TO C R E A T E D O U B T S A M O N G I N T E R N A T I O N A L
F I N A N C I A L C O M M U N I T Y S T J. S. D E T E R M I N A T I O N TO B R I N G I N F L A T I O N
I.
U N D E R C O N T R O L AND R E W O R K ' B A L A U t E » 0 F . P A Y M E N T S E Q U I L I B R I U M .




DECLASSIFIED

.

E.O. 1Ii53, ScCt. 3.6

^CONF-I D E N T tALi—

Rv

0 & 1

^

NARA. Data H r f / q b

D epartm ent of State
o*

OTMFIOENrrArb-'
P A G E 02

PARIS

1 1799

0520*42

HE! R E C A L L E D T H A T O N L Y A Y E A R QR SOf'AQO T H E M A X I M U M T a L K E D A B O U T
HlfOf BEEN* D O L S 10 B I L L I O N O V E * A F f V E ^ Y E A R P E R t O D« 1C O M M E N T *
g i s C a r d s p e c i f i c a l l y r e f r a i n e d Pr o m *c o m m e n t i n g o n A G R E i t o r
RE A M O U N T S REA CHE D* BY D E P U T I E S OF G R 0 U P O F ; T E N AT THEtft* * E g T t N G
in Paris on jyuir 2 3 *a#» pROBAfctr because 8 french govt has not
Y E T TAKENi P O S I T I O N ON T H I S M * T T E R * J SAMUELS ? P O I N T E D O U r T H A T
FIGURES' A G R E E D U P O N B Y 1 G R O U P OF TE N d E P U T f E S ^ C O U L D B E ? C L E » R L Y
J U S T I F I E D 5 A S B E I N G W I T H I N R a N G E Off R E S E R V E G R O W T H N E E D E D
TO S U S T A I N DESIRABLE E X P A N S I O N OF W O R L D TRA DE, AND T H A T C R E A T I O N
OF S D R S IN R E S P E C T A B L E A M O U N T S W O U L D A L S O D E M O N S T R A T E TO* W O R L D
F I N A N C I A L ? C O M M U N I T Y D E T E R MINATION OF MONET A R Y AUTHORITIES
TO M A K E E F F E C T I V E USE OF NEW I N S T R U M E N T T O ’ T R E N G T H E N
S
MONETARY SYSTEM#
(21 E X C H A N G E R A T E R E A L I G N M E N T . - G I S C A R D S A I D HE W A S C O N V I N C E D
TH A T G E R M A N S W O U L D NOT R E V A L U E D E U T S C H E M A R K * E V E N F O L L O W I N G
e l e c t i o n s a n d f o r m a t i o n OF NE W GOV T# U N L E S S * OF C O U R S E , S O C I A L
D E M O C R A T S W E R E TO M A K E VERY G O O D E L E C T O R A L S H O W I N G , W H I C H D I D
NOT S E E M TO § IN THE C A R D S * R A T H E R # HE T H O U G H T G E R M A N S W O U L D
E
C O N T I N U E S I M P L Y TO A G I T A T E P R O B L E M , W I T H ONE M I N I S T E R S A Y I N G
h e is i n f a v o r o f r e v a l u a t i o n w h i l e A n o t h e r s t a t e s t h a t - i t w i l l
N E V E R T A K E P L A C E * IN R E S P O N S E TO S P E C I F I C Q U E S T I O N F R O M S A M U E L S #
g i s c a Rd a l s o l e t it b e u n d e r s t o o d t h a t f r e n c h g o v t w a s n o t
L O O K I N G TO D E V A L U A T I O N OF F R A N C AS- A W A Y OU T OF ITS E C O N O M I C
P R O B L E M S . G I S C A R D S T A T E D T h a T IN HI S V I E W M A L A D J U S T M E N T S A M O N G
V A R I O U S E C O N O M I E S S H O U L D BE E L I M I N A T E D T H R O U G H A P P L I C A T I O N OF
P R O P E R D O M E S T I C P O L I C I E S ON P A R T OF q O V T S C O N C E R N E D # R A T H E R T H A N
BY M A N I P U L A T I O N OF E X C H A N G E R A T E S * HE: S T A T E D T H I S WAS I N T E N T I O N
OF F R E N C H GO VT# W H I C H W O U L D IN M I D - S e P T E M B E R U N V E I L ITS 1970
B U D G E T AND A C C O M P A N Y I N G E C O N O M I C P O L I C I E S D E S I G N E D TO B R I N G
I N F L A T I O N U N D E R C O N T R O L AND TO R E S T O R E I N T E R N A L ’ AN D E X T E R N A L
E S U I L I B R I U M . T H I S W O U L D E N T a IL SO M E " D E F L A T I O N # " A L T H O U G H FOR
e v i d e n t r e a s o n s # in p r e s e n t i n g its p r o g r a m to f r e n c h p u b l i c '
,
G O V T W O U L D TA L K IN TE R M S OF " D I S I N F L A T I O N . "
13/ G O L D P R I C E . * G I S C A R D T H O U G H T T H A T O N C E W O R L D I N F L A T I O N A R Y
S I T U A T I O N H AD B E E N B R O U G H T U N D E * C O N T R O L * IT M I G H T - B E
d e s i r a b l e t o M A K E M O D E R A T E UNIFORM; I N C R E A S E I n g o l d p r i c e .
HE Sa i d that he q ID HOT a d v a n c e t h i s i d e a ' f o r r e a s o n s of d o c t r i n e #
BU T t h a t g i v e n W l & E S M E A D E X P E C T A T I O N IN F I N A N C I A L C I R C L E S T H A T
I N C R E A S E IN SO L D PUI CZ W * S I N E V I T A B L E S O O N E R OR L A T E R # HE F E L T
M O D E R A T E A£jJST*£-VT WCWs.0 3£ U S E F U L TO C L E A R THE ATMOSPHERE'#




D epartm ent of State

TELEGRAM

--- -

p a g e 03

Paris

11799

052044*

SO To S P E A K • HE T H O U G H T 10 0« 15 P E R C E N T I N C R E A S E W O U L D BE
SMALL! PRICE. TO PAY IN O R D E R TO D I S P O S E OF: T H I S ISSUE AND'
S T R E N G T H E N C O N F I D E N C E IN C U R R E N C I E S .
U ) E X C H A N G E F L E X I B I L I T Y . - O N C E V A L I D I T Y H A D B EE N R E S T O R E D TO
E X C H A N G E RATE* STRUCTURE, T H R O U G H P R B P e R D O M E S T I C P O L I C Y A C T I O N
ON P A R T OF M A J O R C O U N T R I E S a ND G O L D p R l C E ! IS SUE HAD B E E N D I S P O S E D
OF* G I S C A R O T H O U G H T SOME D E G R E E OF? L I M I T E D E X C H A N G E R A T E F L E X I B I L I T Y
M I G H T BE I N T R O D D C E D INTO R E L A T I O N S H I P B E T W E E N U. So D O L L A R
AND; E U R O P E A N C U R R E N C I E S * T A K E N AS A G R O U P . HE SA I D TH A T B E C A U S E
OF C O M M O N A G R I C U L T U R A L P O L I C Y AND OT ER E F F O R T S W I T H I N EC T O W A R D S
P O L I C Y H A R M O N I Z A T I O N * IT WAS C L E A R T h AT C U R R E N C I E S OF EC C O U N T R I E S
M U S T M A I N T A I N S T A B L E R E L A T I O N S H I P S A M O N G T H E M S E L V E S . THIS- W O U L D *
OF C O U R S E * I N C L U D E S T E R L I N G O N C E U. K« CA M E In TO C O M M O N M A R K E T .
\HO WEvER* HE C O U L D SEE A D V A N T A G E S TO I N T R O D U C T I O N OF L I M I T E D
F L E X I B I L I T Y IN R E L A T I O N S H I P B E T W E E N A G R O U P OF E U R O P E A N
C U R R E N C I E S AND THE D O L LA R.
N O T E T H A T S A M U E L S HAS NOT SE E N TE XT THI S TELEGRAM*. GP«3.
3HRIVER




t - hit- - ’
1
- ,
fA


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102