Foreign Relations of the United States, 1969–1976, Volume XXXI, Foreign Economic Policy, 1973–1976

93. Memorandum From Secretary of the Treasury Simon to President Ford¹

Washington, July 26, 1975.

SUBJECT

• Possible Conversation with the President of France on Economic Matters

The President of France, Mr. Giscard d’Estaing, has made known through the press and discussions with European officials that he would like a heads of state meeting among major industrial countries this fall to discuss the monetary system and the world economic outlook. There are reports that during the Helsinki meeting he may seek your agreement to such a conference.

Giscard d’Estaing has launched a campaign to try to force the United States to agree to a fixed exchange rate between the dollar and other currencies—a rate which the U.S. Government would be obligated to maintain even at the cost of our having to borrow from other governments on terms we would not favor, or higher interest rates and restraints on the domestic economy. He would want such a rate for the dollar to be set at a substantially higher level than the rate which now prevails in a generally free market, thereby weakening the competitive position of the United States in international trade and risking future problems for the U.S. balance of payments.

In effect, Giscard would like to restore the conditions which prevailed before August 1971, when there was an overvalued and noncompetitive dollar, as well as a system of rigid exchange rates which kept the monetary system subject to continuous uncertainty, speculation and recurrent crisis.

The French have virtually no support for an early return to par values and fixed exchange rates, although some countries would accept such a system as a long-term goal. I have told the Congress flatly that the U.S. would not agree to any obligation to return to par values. There is strong support for this position in the Congress.

There is no enthusiasm among Giscard’s EC colleagues for the type of summit meeting he has proposed. Nevertheless, because they would not like to block a proposal on which the French President’s prestige is at stake, some of them may concur in the concept of a summit meeting to discuss not the monetary system but “general economic conditions.” It is possible that Chancellor Schmidt may press you for such a meeting while you are in Bonn.² Unfortunately, any conference for this purpose would take on the appearance of a European démarche on the Administration in favor of more expansionary U.S. economic policies—an even larger budgetary deficit. It would constitute interference in U.S. domestic affairs on a politically divisive issue. Also, since the U.S. would almost certainly not be able to agree to the more expansionary moves the Europeans would want us to take, we would appear to be refusing to act cooperatively.

If Giscard or others propose a heads of state conference on either the international monetary situation or general economic issues, I recommend you say that you could not accept a conference on general economic issues because of the domestic political implications, and that the discussion of monetary issues is best continued in existing channels (i.e., Finance Minister committees and informal sessions). Meetings on the monetary issues are scheduled for the end of August.³

William E. Simon

1. Source: Ford Library, William Simon Papers, Drawer 25, Folder 9, Pres—Memos to & from W.E.S., 1975 (May–Aug). No classification marking. Attached to a July 24 memorandum from Department of the Treasury staff member F. Lisle Widman to Simon that reads: “There are reports in the press that Giscard d’Estaing may approach President Ford directly with his proposal for a heads of state conference while the two are in Helsinki next week. There may be no foundation whatsoever to these reports, but you may, nevertheless, wish to alert the President to the possibility of an approach. He certainly needs to be fully aware of the issue. There is attached a memorandum which could be used for this purpose should you desire to do so. I have discussed this proposal by telephone with Chuck Cooper who agrees that the President should be advised of this situation either orally or by memorandum.” President Ford was in Helsinki July 29–August 2 to attend the Conference on Security and Cooperation in Europe.
2. President Ford was in the Federal Republic of Germany from July 26 to 28, visiting Bonn and Linz. See Document 94.
3. The Interim Committee met in Washington on August 31.