Free A History of the Federal Reserve, Volume 2 by Allan H. Meltzer Page A

delay announcement of an action already voted. The Board Minutes do not report on the discussion with President Johnson, but the Board announced the rate increases after the meeting.
    MINTING PAPER GOLD 50
    For the years 1960–67 as a whole, the non-U.S. members of the G-10 (including Switzerland) acquired 150 million ounces of gold, an increase of one-third over their holdings at the end of 1960 (IMF, 1990, 65). Every country except Britain and Canada added to its holdings. Britain sold 38 million ounces, the United States 164 million ounces. France acquired two-thirds of the G-10 increase, 100 million ounces. The following year, it sold 40 million ounces to delay devaluation.
    50. Except as noted, this section follows Solomon (1982, chapter 8) and Meltzer (1991). Solomon was an active participant in most of the meetings. For details of the negotiations, see Solomon (1982).
    The steady decline in the United States’ gold stock pushed the liquidity issue to the forefront. From 1965 to 1968, the major countries discussed changes in the international monetary system to increase the stock of settlement balances (liquidity). The outcome was the special drawing right (SDR) widely described as “paper gold,” a new reserve asset to be used for settlement between countries. The intention was to free the provision of international means of payment between central banks or monetary authorities from dependence on the supply of gold and U.S. dollars. Although most of the emphasis was on finding a solution to the “Triffin problem,” 51 France often tried to get attention to the adjustment problem. The United States usually assumed that its payments deficit would end.
    The French argued, correctly, that there was no reason for the liquidity discussion as long as the United States and Britain had large payments deficits. 52 France opposed any planning for a new reserve asset as long as world dollar balances continued to increase. Its spokesmen wanted to end the special role of the dollar as a reserve currency, what President de Gaulle called its “exorbitant privilege,” but they opposed putting control of a new money at the IMF. They preferred a new form of credit controlled by the G-10.
    On important votes, the other European countries did not support France. This was particularly true of French proposals to increase world reserves by raising the gold price and reestablishing gold as a “neutral currency” (Solomon, 1982, 136). But the principal European countries agreed with France, for a time, that the new source of reserves should be a repayable form of credit, not an addition to international money as the U.S. proposed. 53
    51. Haberler (1965, 46) wrote, “Some of the ingenuity now so lavishly spent on how to guard against the possibility that international liquidity may become scarce could be more profitably applied to the more basic and neglected problem of how to improve the adjustment mechanism.” Policy officials ignored all such comments.
    52. The French position was that the special position of the dollar gave the United States the great advantage that it could settle its payments deficit by printing more of its own currency. The United States’ position accepted the claim that it had a unique position, but recognized that it had committed to maintain convertibility of dollar claims into gold. After March 1968, this response was less prominent (Report of the President’s Task Force on Foreign Economic Policy, Department of State, S/P Files, Lot 70D194, November 25, 1964, 23). The United States also paid interest on the foreign claims.
    53. One early French proposal known as the Collective Reserve Unit (CRU) would have tied growth of international money to the stock of monetary gold, acting as a multiplier of the existing gold stock. The United States wanted increases in reserves to remain independent of the gold stock. The CRU proposal called for action by the Group of Ten. The United States favored action under