De Gaulle talking about the dollar.
^{Extract from a press conference , February 1965 (machine translation)}

Journalist

Mr. President, by exchanging part of its dollar assets for gold, France provoked reactions that themselves revealed certain flaws in the current international monetary system.

Are you in favor of reforming this system, and if so, how? My question, Mr. President, follows on from the previous one.

Could you clarify your policy regarding foreign investment in France, and particularly American investment?

Charles de Gaulle

Well, I will try to explain my thoughts on these points.

As the Western European states that were ruined and decimated by wars recover their substance, the relative situation they were in tends to appear inadequate and often even abusive and dangerous.

There is nothing here, moreover, in this observation, which implies, on their part, and even more so on the part of France, anything unfriendly towards any country, and in particular, towards America.

But the fact that these states want to act more and more on their own every day, in every area of international relations, is a natural part of things.

This is true of the monetary system that is being put into practice, of the monetary relations, if you will, that have been in practice in the world since the trials undergone by Europe caused it to lose its balance.

I was speaking, of course, of the international monetary system that appeared in the aftermath of the First World War and was established following the Second.

We know that this system, starting with the Genoa Conference in 1922, granted two currencies, the Pound and the Dollar, the privilege of being considered equivalent to gold in foreign trade.

It is true that the Pound was devalued in 1931 and the Dollar in 1933.

And at that time, it was believed that the privilege, this signal privilege, this signal advantage of these two currencies was compromised.

But America was overcoming its great crisis and then, afterward, the Second World War ruined the currencies of Western Europe by unleashing inflation.

Since almost all the world's reserves were then held by the United States, and they were the universal suppliers and consequently they had been able to maintain the value of their currency, it could seem natural that states would indiscriminately include dollars or gold in their foreign exchange reserves.

And that the differences in the balance of payments were settled by transfer of credit or American monetary sign as well as precious metal.

And this international monetary system, this Gold Exchange Standard, has consequently been accepted practically since then.

But it turns out that it no longer corresponds in the same way to the realities of today.

And that consequently it has disadvantages that are becoming more and more serious.

As this question which interests the world must be considered with serenity and with objectivity, what the current situation allows us to do, which in this respect does not contain anything that appears either very pressing or very alarming, it is the moment to do it.

Let us note that the conditions which had created the Gold Exchange Standard have changed profoundly.

The currencies of the Western European states have been restored to such an extent that the gold reserves that these states possess, let's say these six states, the six, the total of their gold reserves is equivalent to that of the Americans.

And it would exceed it even if these states wanted to convert into gold all the dollars they have to their account.

So, this kind of transcendent value that was recognized in the dollar has lost its initial basis, which was America's possession of the largest part of the world's gold.

But in addition, the fact that many States accept dollars in principle as well as gold for the settlement of differences that exist to their advantage in the American balance of payments, this fact leads Americans to get into debt and to get into debt gratuitously vis-à-vis foreign countries because what they owe them, they pay them at least in part with dollars that it is up to them to issue and not with gold which has a real value, which one only possesses because it has been earned, and which one cannot transfer to others without risk and without sacrifice.

But also in this way, this sort of unilateral facility which is attributed to America, contributes to fading the idea that the dollar is an impartial and international sign of exchanges whereas it is a means of credit appropriate to a State.

Obviously there are other consequences to this situation.

There is in particular the fact that the United States, for lack of having settled in gold at least completely, the negative differences of their payment, contrary to the practice which was formerly adopted, and by virtue of which the States were led to take, and if necessary with rigor, if necessary, the measures required to establish their balance, the United States I say, suffer from year to year deficit balances not certainly because the total of their commercial exchanges are to their disadvantage.

Their exports of materials exceed their imports.

But this is also the case for dollars whose outflows always exceed the inflows.

Then there is created in America by means of what must be called inflation, capital which in the form of loans in dollars granted to States or to individuals is exported abroad, and of course this increase in American fiduciary circulation makes investments within the United States less profitable.

Hence a growing propensity among them to invest abroad.

This results in some countries having a sort of expropriation of one or other of their companies.

It must be said that this practice has long encouraged and still encourages to a certain extent the multiple and considerable aid that America provides to many countries.

And from which we ourselves, in other times, have benefited greatly.

But circumstances have changed, and that is why France advocates that the system itself be changed.

That this sort of fundamental imbalance, which is now a fact, be brought to an end.

France advocated this, as you know, at the Tokyo Monetary Conference.

Given the consequences that a crisis that would arise in such an area could have, we believe that measures must be taken in time to avoid it.

We consider it necessary for international trade to be established, as was the case before the world's great misfortunes, on an indisputable monetary basis that bears no mark of any country in particular.

What basis? In truth, we do not see how there can really be any criterion, any standard other than gold.

And yes, gold, which does not change its nature, which can be put into ingots, bars, or coins in different ways, which has no nationality, which is eternally and universally held to be the unalterable and fiduciary value par excellence.

However, in the midst of the immense trials we have all gone through, whatever one may have imagined, or said, or written, or done, the fact remains that today no currency is worth anything except through a direct or indirect, real or supposed relationship with gold.

Naturally, no State can be forced to do what it must do within itself.

But in international trade, the supreme law, the golden rule, it is indeed the case to say it, which must be restored to honor and force, is the obligation to balance the balances of payments resulting from their trade from one monetary zone to another through the effective entry and exit of precious metal.

Certainly, the end without a harsh shock of the Gold Exchange Standard, which is the restoration of the gold standard, as well as the complementary and transitional measure that would be indispensable, in particular, the organization of international credit, on this new basis, all this must be examined calmly between States.

And in particular between those States to which their economic and financial power confers a special responsibility.

Moreover, the appropriate frameworks for these studies and these negotiations already exist.

The International Monetary Fund, which was established to ensure the solidarity of currencies, to ensure it as much as possible, the International Monetary Fund is certainly a very suitable place for such negotiations.

The Committee of Ten, which, as you know, is composed independently of the United States and England on the one hand, and of France, Germany, Italy, Belgium and the Netherlands, on the other hand, from Japan, Sweden and Canada, the Committee of Ten would prepare the necessary proposals and finally it would be up to the six States which appear to be on the way to creating a Western European economic community, it would be up to them to develop among themselves and to promote it abroad, the solid system which would be in accordance with common sense and which would respond to the resurgent economic and financial power of our ancient continent.

France for its part is ready to contribute actively to this great reform which is necessary in the interest of the whole world.

Sir, you asked me something about the United Nations.

For, I was asked about my health, I was also asked about that of the ...

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