Office of the Historian

155. Telegram From the President’s Special Assistant (Rostow) to President Johnson in Texas1

Washington, November 22, 1967, 1944Z.

CAP 67967. To the President from Walt Rostow. The gold market continues to be nervous as an aftermath of sterling devaluation. Rumors are circulating that the price of gold will not be held on the London market. These rumors have been fed by leaks out of Paris on the operation of the gold pool and French withdrawal from the pool (which actually took place in June).

We expected substantial gold losses after the devaluation. The gold pool lost $28 million Monday, $45 million Tuesday, and $104 million today. (We supply 60 percent, our European partners the other 40 percent.) Rumors were responsible for the sudden rise.

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Bill Martin is going to call the other Governors of the Central Banks who are partners with us in the gold pool (Germany, Italy, the Netherlands, Belgium, U.K., and Switzerland), to support us in a statement today affirming business as usual.2 If they won’t, Bill Martin would issue a statement that U.S. intends to continue to support the market3 and referring again to your statement of Saturday that the U.S. will buy and sell gold at $35 an ounce.4

We expect further heavy losses this week. An unequivocal statement of our position should calm things down. We will keep you advised.

  1. Source: Johnson Library, National Security File, Subject File, Balance of Payments, Vol. V [2 of 2], Box 3. Secret. The telegram was received at the LBJ Ranch in Texas at 2:10 p.m. on November 22.↩
  2. No such U.S. statement has been found.↩
  3. On November 30, the Federal Reserve System announced that it had increased its credit “swap” lines with foreign central banks by $1.75 billion to a total of $6.8 billion.↩
  4. See footnote 3, Document 154.↩