Foreign Relations of the United States, 1961–1963, Volume IX, Foreign Economic Policy

44. Memorandum of Conversation⁰

Washington, April 13, 1961, noon.

ADENAUER VISIT

Washington, April 12-13, 1961

SUBJECT

• Balance of Payments Problem

PARTICIPANTS

• United States
  • The President
  • Secretary Rusk
  • Ambassador Dowling
  • Assistant Secretary Kohler
  • Mrs. Lejins (Interpreter)
• Federal Republic
  • Chancellor Adenauer
  • Foreign Minister von Brentano
  • Ambassador Grewe
  • Dr. Karl Carstens
  • Mr. Weber (Interpreter)

The President brought up the problem of the balance of payments. He stated his great concern about the outflow of gold from the country, which had resulted in the Anderson-Dillon mission of last year.¹ Moreover, the matter had been discussed with the Foreign Minister during his February trip to Washington,² and Ambassador Dowling had been carrying on talks concerning it in Bonn. The President wanted to make three points perfectly clear: (1) Last year the impression had been created abroad that the United States might withdraw one or two divisions from Western Europe. This was the last thing the United States would do. The President hoped that sufficient adjustments would be made to cope with the situation in other ways, and he was definitely not going to withdraw any divisions from Europe. (2) Last year the impression had been created in Western Germany that the United States felt the burden of maintaining its troops was too heavy from the standpoint of its domestic taxation program and was therefore asking help from Germany. Again the President wanted it to be very clearly understood that the United States was prepared to bear its own international burdens. His only concern was the outflow of gold, as previously indicated. (3) Regarding the outflow of gold, during the past three months the United States has lost 1,200,000,000 DM. The largest amount was lost in January. February and March had shown some improvement. If the rate of the last three months were projected for the entire year, the United States would lose 4 billion DM in 1961. As previously indicated, the President hoped that the loss would not be as great as that, since some improvement was in the making. The President indicated that we were losing gold in three ways: (1) Last year part of the loss had been occasioned by the interest differentials. That, he understood, had been brought to an end. (2) The United States was losing gold because of its troop payments and maintenance abroad. (3) A large outflow of gold was occasioned by United States aid to under-developed countries. Understandably enough the United States was reluctant to diminish its aid efforts in any way or to diminish its troop maintenance abroad. That would be very bad for both the security of the United States and the joint security of the Free World. Therefore the President was very anxious to diminish the outflow of gold so as not to decrease either foreign aid or troop maintenance. He was thus very much interested in seeing that everything possible was done to lessen the outflow of gold resulting from our maintenance of troops in the Federal Republic. The joint utilization of facilities should be a very helpful step. Moreover, he hoped that the purchase of supplies in the United States could be encouraged, since this would be a second very significant step forward. Somehow, the President felt, this matter would have to be brought into balance before the end of the year in order to permit the United States to carry out its commitments on a world-wide basis.

The President continued by stating that the United States net deficit each year because of the maintenance of troops, etc., in Germany amounts to 350 million dollars in gold. This constitutes approximately one third of the total gold loss; last year it was one quarter; this year, if the improved trends continue, this sum might possibly constitute one half of the overall gold loss. The President hoped that the Federal Republic would work closely together with the United States to find means of diminishing this deficit.

The Chancellor stated that he well understood the United States position and problem in this respect. He understood that the United States had undertaken steps to improving the situation. It had, for example, introduced compulsory savings among the troops in Germany and had banned the sale of German products in the PXs. The Chancellor welcomed these measures.

The President indicated that he hoped these matters could be explored further through Ambassador Dowling and Under Secretary Ball. It was necessary to strike a better balance since that would improve the overall situation of the United States.

0. Source: Department of State, Presidential Memoranda of Conversation: Lot 66 D 149, January-April 1961. Secret. Drafted by Nora M. Lejins (LS) and approved by B on April 24, S on April 25, and the White House on May 11. The meeting was held at the White House. Chancellor Adenauer and Foreign Minister Heinrich von Brentano visited Washington April 12-13. For a memorandum of President Kennedy’s conversation with Brentano on April 13, on foreign assistance, see Document 104.
1. Dillon and Anderson visited Bonn November 19-23, 1960. For an account of their visit, see Foreign Relations, 1958–1960, vol. IV, pp. 142–147.
2. Brentano visited Washington February 16-17. A memorandum of his conversation with President Kennedy on February 17 is in Department of State, Central Files, 611.62A/2-1761. The portion of the conversation on Berlin is printed in vol. XIV, pp. 8–11. For text of the joint communique issued on February 17, see American Foreign Policy: Current Documents, 1961, p. 475, or Department of State Bulletin, March 13, 1961, pp. 369-370.