Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Source Description
This file contains material related to Deutsche Bundesbank.
Scholar Source Context
Document identity
localId
81448543
label
Klasen, Karl (2)
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
81448543
sourceUrl
contentType
document
title
Klasen, Karl (2)
description
This file contains material related to Deutsche Bundesbank.
citationUrl
collections
Arthur F. Burns Papers
Name Correspondence Files
subjects
Germany (West)
Banks and banking
Foreign exchange
thumbnailUrl
largeImageUrl
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
81448543
coverageEndDate
logicalDate
1975-09-30
month
9
year
1975
coverageStartDate
day
1
logicalDate
1970-02-01
month
2
year
1970
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
mediaId
919d05d27bb07385
ocrText
The original documents are located in Box K21, folder "Klasen, Karl (2), 1969 - 1978" of
the Arthur F. Burns Papers, 1956 - 1990 at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Arthur Burns donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box K21 of the Arthur F. Burns Papers, 1956 - 1990 at the Gerald R. Ford Presidential Library
NATIONAL ARCHIVES AND RECORDS SERVICE
WITHDRAWAL SHEET (PRESIDENTIAL LIBRARIES)
FORM OF
CORRESPONDENTS OR TITLE
DATE
RESTRICTION
DOCUMENT
1. letter case, Burns to Klasen, 11/20/73
la. letter
Karl Klasen, Deutsche Bundesbank, to Burns,
11/14/73
A
re Article IV, Section 2 of the Articles of
Agreement of the IMF (1 p.)
FILE LOCATION
Arthur Burns Papers
SRM
Name File, Box B21
1/10/85
Klasen, Karl (2)
RESTRICTION CODES
(A) Closed by Executive Order 12065 governing access to national security information.
(B) Closed by statute or by the agency which originated the document.
(C) Closed in accordance with restrictions contained in the donor's deed of gift.
GENERAL SERVICES ADMINISTRATION
GSA FORM 7122 (REV. 1-81)
DR. KARL KLASEN
6 FRANKFURT AM MAIN
WILHELM-EPSTEIN-STRASSE 14
PRASIDENT DER DEUTSCHEN BUNDESBANK
TELEFON 1581
Airmail
September 2, 1974
Mr. Arthur F. Burns
Chairman of the
Board of Governors
of the Federal Reserve System
Washington, D.C. 20551
U.S.A.
Dear Arthur:
Many thanks for your letter of August 8. Unfortunately I have
not been able to reply to it before as I have been away on
vacation.
Already at the last meeting in Basle Governor Wallich drew my
attention to the interest of U.S. banks in not being treated
as creditors who had been giving the Herstatt Bank credit. We
have given careful consideration to this matter in the Bundesbank
and have come to the conclusion that, to our regret, we are
unable to help.
First you raise the objection that the timing of the closing of
the Herstatt Bank was arbitrary and incorrectly chosen. I am
unable to share this view. Under German law the Federal Banking
Supervisory Office was obliged to close the bank immediately
it became evident that the assistance envisaged by the major
shareholder was not realistic. Thus, once the major shareholder
and the banks which were prepared to render assistance agreed
at a given moment that supporting action was impossible, the
President of the Federal Supervisory Office had no choice but
to order the closure immediately.
Of course, this order applied only to Germany. This makes me
wonder why the U.S. banks did not credit the dollar amounts to
the accounts of the Herstatt customers who had already paid in
the Deutsche Mark amounts here. Why this did not happen is im-
possible to tell from this end. The fact remains, however, that
- 2 -
GERALD FORD VIBRARY
- 2 -
the Herstatt Bank had a considerable foreign exchange balance
with The Chase Manhattan, via which a large part of the spot
foreign exchange transactions could have been settled. U.S.
dollar amounts which were to be transferred by other banks
to Herstatt's account with The Chase Manhattan by way of re-
inforcement were also, according to our information, held up.
I should like to assure you that I fully appreciate your
interest in an early settlement of the interrupted spot foreign
exchange transactions. But this is impossible and admittedly
unjustifiable. I am sure that the U.S. banks did not intend to
give a credit neither of long term nor of short term, but in
the short space of time of the transactions they did in fact do
so. Incidentally, the same applies to those depositors who had
paid money in to the Herstatt Bank with express instructions to
use it for the immediate payment of debt. These depositors, too,
find that their money is held.
I confidently hope for understanding of the fact that all those
concerned must act in accordance with the law as it stands. I
cannot imagine that in your country an order to close a bank
that has become insolvent is manipulatable in respect, say,
of the office hours during which the business is transacted.
You know what great efforts we make to assist our American
friends. At the moment, however, I can unfortunately see no
possibility of helping. Should any opportunity arise, you may
rest assured that we shall take it.
With kindest regards,
sincerely yours,
Karl Kearen
BERALD FORD LIBRARY
BOARD OF GOVERNORS
OF
FEDERAL RESERVE SYSTEM
1974AUG 20 PM 3:08
DEUTSCHE BUNDESBANK
OFFICE OF RECEIVED THE CHAIRMAN
Personal Assistant
FRANKFURT AM MAIN, August 16th, 1974
to the President
Dr. Arthur F. Burns
Chairman of the Board of Governors
Federal Reserve System
Washington,D.C.20551/USA
Dear Mr. Governor,
I have the honour to confirm receipt of your letter
of August 8th, to President Klasen. I shall submit
your letter to the President, who is staying abroad
until the beginning of September, immediately after
his return.
Yours sincerely
(Dr. Schlüter)
LIBRARY GERALD ? FORD
August 8, 1974
Dear Karl:
I am aware of the fact that the Herstatt Bank matter
is now in the hands of the liquidator and the courts. Never-
theless, I write to urge you to take whatever steps you can
to facilitate an early settlement of those spot foreign exchange
transactions that were interrupted by the closure of the Herstatt
Bank.
Our banks seem to me to have a strong case. They were
caught by the Herstatt closure in the middle of a cash transaction.
They did not consider themselves to be giving credit, even though
some caution in dealing with a firm of Herstatt's reputation might
have been appropriate. The precise timing of the closing of the
Herstaft Bank was arbitrary, given the documented complexity
of the negotiations that had been underway in an effort to save
Herstatt, and was highly prejudicial to the American banks.
More broadly, the effect of leaving Herstatt's spot foreign
exchange transactions unsettled has been to create widespread un-
certainties in foreign exchange markets, to the particular detri-
ment of smaller banks, some of which are at the same time having
difficulties in the Euro-currency markets. I believe the prompt
settlement of the interrupted Herstatt transactions would have a
useful reassuring effect not only in the foreign exchange market
but also on a wider scale.
Finally, I should point out to you the possibility that this
matter, if left unsettled, may be drawn into the political arena
at a high level, a development that I am sure would be of as deep
concern to you as it would be to me.
GERALD LIBRAS
-2-
We must all give thought to how best to instill confidence
in the financial markets so that transactions will proceed smoothly.
As you know, your Chancellor and our Secretary of the Treasury
have discussed the importance of reassuring and stabilising the
Euro-currency market. The actions taken by the Bundesbank on
July 18 to meet seasonal strains and temporary liquidity difficulties
within the erman banking system will notdoubt be helpful, as
will your efforts to monitor more closely the foreign exchange
positions of German banks. For our part, we have, as you know,
made every effort to insure that difficulties of a few U.S. banks
not be allowed to cause more widespread damage. Significant
further reassurance to financial markets would be provided by
the prompt settlement of the spot foreign exchange transactions
that were interrupted by the closure of the Herstaff Bank.
With kindest regards,
Sincerely yours,
(simed) Arthur F. Burns
Arthur F. Burns
Dr. Karl Klasen
President
Deutsche Bundesbank
Frankfurt AM, Main, Germany
EORD i 076839 LIBRARY
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Office Correspondence
Date
July 29, 1974
To
Chairman Burns
Subject: Draft letter to
From
John E. Reynolds Jar
President Klasen
The attached draft letter supplies the customary
acknowledgment of a cable received from Dr. Klasen, and takes
advantage of the opportunity to include a word about the
Herstatt affair.
In view of the decisions already announced by the
German authorities that their laws do not permit full and
prompt settlement for the interrupted spot foreign exchange
transactions, it seems that there is little hope for American
banks to get full settlement, let alone prompt, except via
the courts.
Attachment
Mr provid
FORD i LIBRARY 938670
DRAFT: J. E. Reynolds
July 29, 1974
Draft Letter from Chairman Burns to President Klasen:
Dear Karl:
Thank you for your telegram of July 18, describing the
measures taken by the Bundesbank to meet seasonal strains and temporary
liquidity difficulties within the German banking system, and to support
the Federal Government's efforts to make additional credits available
to smaller and medium-sized enterprises.
We have also read with interest of your efforts to monitor
more closely the foreign exchange positions of German banks and prevent
excessive exposure. As you may know, the U.S. Treasury and the Federal
Reserve will soon be collecting detailed monthly information on the
foreign exchange positions of large U.S. banks. All these actions
should tend to make future banking difficulties less likely.
Unfortunately, it still seems to be the case that the legacy
of the Herstatt failure is causing some uncertainty in foreign exchange
markets and also, more broadly, in the Euro-currency markets. We were
naturally disappointed to learn that you and the other German authorities
have not found it possible to settle quickly the half-completed spot
foreign exchange transactions that were interrupted by the Herstatt
failure.
We must all give thought to how best to instill confidence in
the financial markets so that transactions will proceed smoothly.
With kindest regards,
Sincerely yours,
FORD i 07W839 LIBRARY
Copy of Telefax to Chairman Burns
from President Klasen
At its meeting on July 18, 1974 the Central Bank Council
of the Deutsche Bundesbank in the presence of Herr Peehl oe State
Secretary at the Federal Ministry of Finance, took following
decisions: (1) The period during which Lonbard credit is granted
At the present Lombard rate of 9 0/0, with no limit as to the amount,
will be extended beyond July 31, 1974 up to and including August 31,
1974. (2) The Deutsche Bundesbank will raise the upper limit set for
the total of prime acceptances which it is prepared to purchase in
market regulating operations by DM 200 million, with the proviso that
this additional facility shall be solely to the benefit of private
banks and smaller regional banks. (3) The Deutsche Bundesbank was
acceded to the application by the Federal Association of German Banks
or assuring refinance assistance for the liquidity syndicate which has
been formed, the members of this syndicate will, as a rule, receive
such assistance, where necessary through a corresponding increase in
their rediscount quotas. (4) By an increase in the special rediscount
facilities at the Bundesbank the Reconstruction Loan corporation
éditanstalt Fuer Wiederaufbau) will be enabled to obtain funds to
finance credits up to DM 500 million which it makes available to smaller
and medium-sized enterprises. With these measures the Deutsche Bundesbank
is making allowance firstly for the sustained seasonal chortage of bank
liquidity, and secondly for the temporary difficulties in balancing
liquidity within the banking system, By increasing the rediscount line of
the reconstruction loan corporation, The Deutsche Bundesbank is supporting
BERALD FORD CIBRARY
-2-
parallel endeavours by the Federal Government to improve the possi-
bilities for smaller and medium-sized enterprises to obtain finance dr.
Dr. Klasen
LIBRARY GERALD ? FORD
of
Feburary 4, 1974
Dear Dr. Klasen:
Dr. Burns has asked me to thank you for your letter
of January 22nd regarding the visit of Mr. Otto Graf Lambsdorff
to Washington during the period March 1-5. Since Dr. Burns
will be out of the country during that period, he regrets that
he will be unable to visit with Mr. Lambsdorff. I have suggested
to the German Embassy that Mr. Lambsdorff might want to
visit with one of the members of the Board and I am waiting
to 500 if that is agreeable with him.
Sincerely yours,
Catherine C. Mallardi
Administrative Assistant
to the Chairman
Dr. Karl Klasen
President
Deutsche Bundesbank
6 Frankfurt AM Main
Germany
FORD i LIBRARY AERALD
# 116-A
DR. KARL KLASEN
6 FRANKFURT AM MAIN
WILHELM-EPSTEIN-STRASSE 14
PRASIDENT DER DEUTSCHEN BUNDESBANK
TELEFON 1581
22-1-1974
Prof. Dr. Arthur F.Burns
Chairman
Board of Governors of the
Federal Reserve Systeme
Washington,D.C.20551/USA
OFFICE OF THE CHAIRMAN
RECEIVED
1974 JAN 28 PM 1: 06
FEDERAL RESERVE SYSTEM
OF THE
BOARD OF GOVERNORS
Dear Arthur,
I would like to let you know that Mr. Otto Graf Lambsdorff,
member of the German Parliament, would very much appreciate
to see you on the occasion of his visit to the United States
which he shall carry out at the beginning of March next.
Mr. Lambsdorff, who acts as one of the spokesmen of the ruling
Liberal Party, disposes of exhaustive information on economic
and monetary affairs. In German political life Mr. Lambsdorff
is recognized as a highly reputed politician.
I should be pleased to learn whether you could arrange for
an appointment with Mr. Lambsdorff between 1st and 5th of
March. In order to fix the details, Mr. Lambsdorff would
address himself to you either immediately or by means of
the services of the German Embassy.
Sincerely yours,
Karl Krane
FORD is LIBRARY GERALD
December 21, 1973
Dear Karl:
It was very kind of you to send me the beautiful
pewter mug. It shall have a place of honer in our
home.
Helen joins me in sending you and Ilse our best
wishes for the New Year.
Sincerely yours,
(signed) Arthur I
Arthur F. Burns
Mr. Karl Klassa
President
Deutsche Bundesbank
Frankfurt AM, Main, Germany
CCM/AFB:slc
FORD is 07V839 LIBRARY
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
DEUTSCHE BUNDESBANK
1973 DEC 18 PM 12: 13
RECEIVED
OFFICE OF THE CHAIRMAN
DER PRASIDENT
FRANKFURT AM MAIN, December 1973
Dear Arthur,
As a small Christmas gift from the Bundesbank I take pleasure in
sending you a pewter mug made for the Bank by the Menna tin-foundry in
Nuremberg.
The mug is decorated with a copy of the obverse of a Hamburg half-
"portugaleser" issued in 1723, i.e. two hundred and fifty years ago. The
relief shows the city of Hamburg viewed from the south with the River Elbe
in the foreground. Near the left-hand margin can be seen the steeple of the
Michaeliskirche, which is still the symbol of Hamburg today. The inscription
reads "Ich blühe durch Mühe" ("No gain without pain").
Portugalesers were ten-ducat pieces minted in northern Germany, and
especially in Hamburg, originally on the pattern of Portuguese coins.
With the best wishes for Christmas and the New Year
Yours sincerely,
Karl Kina
FORD i LIBRARY 076839
ZCZC YWB415 RMZ3053 GTX633 DP4031TG200
BOARD OF
FEDERAL
URPN CO DPFF 064
RESERVE SYSTEM
FRANKFURT AM MAIN/TLX 64 29 1757 VIA RCA
1973 NOV 30 PM 1:26
OFFICE
RECEIVED CHAIRMAN
WASHINGTON/DC/USA
B
NOV 291973
FEDRESERVE
CHAIRMAN DR. BURNS AT ITS MEETING ON NOVEMBER 29 THE CENTRAL
BANK
COUNCIL OF THE DEUTSCHE BUNDESBANK DECIDED TO RAISE THE
LINES
GRANTED TO BANKS FOR THE UTILISATION OF REDISCOUNT QUOTAS
BY
15 0/0 OF THEIR PRESENT LEVEL THIS INCREASE IS INTENDED
TO HELP
OFFSET THE LOSS OF LIQUIDITY INCURRED BY THE BANKS AS A
RESULT
OF EXCHANGE OUTFLOWS
DR KLASEN
FORD is GERALD LIBRARY
COL 29 15 0/0
November 20, 1973
Personal
Dear Karl:
Many thanks for your letter, which I deeply appreciate.
I am sharing it with George Shultz and with no one else.
As you know, I made the announcement on gold soon
after arriving in Washington and getting Shultz's consent. I
have already sent you a copy of the transcript of the press
conference at which I made this announcement, but I am
enclosing another on the chance that you may not have
received it.
I am also enclosing a copy of a letter that I sent
Senator Proxmire on November 6. It deals with some basic
issues of monetary policy and I think you may be interested
in perusing it.
It was a joy to see you in Basle and to talk over so
intimately several questions of deep concern to us personally
and also to our countries.
I shall look forward to our meeting in January. Helen
joins me in best regards to you, Ilse, and your children.
Sincerely yours,
Arthur F. Burns
Dr. Karl Klasen
President
Deutsche Bundesbank
GERALD BEFORD
Frankfurt AM, Main, GermanyFB:ccm
DR. KARL KLASEN
6 FRANKFURT AM MAIN
PRASIDENT DER DEUTSCHEN BUNDESBANK
WILHELM-EPSTEIN-STRASSE 14
TELEFON 1581
November 14, 1973
Dear Arthur,
Enclosed please find the letter we agreed upon in Basle
and to which I got the full consent of Mr. Schmidt, as
I already told you. Looking back to the Basle days I once
more wish to say, how glad I am that the spirit of mutual
understanding, of cooperation and friendship between us
again has proved to be real and true, to the benefit of
both our nations.
Thanking you for that atmosphere of mutual confidence,
and with my very best regards,' also to Helen and also
from Ilse, I am
Yours sincerely
Kare Kim
Encl.
FORD i LIBRARY 076839
GERALD R. FORD LIBRARY
This form marks the file location of item number
la
as listed on the pink form (GSA Form 7122, Withdrawal Sheet)
at the front of the folder.
KLASEN
#1563
July 19, 1973
Dear Karl:
Thank you for your letter of July 12. I, too, am pleased that it
has been possible to resume intervention on the exchange markets
to restore more orderly conditions.
For your information, I am enclosing copies of three of our recent
press releases.
I share your sympathy for gold sales in the free market, and I hope
that something can be arranged fairly soon. I doubt, however, that
it will be possible for us to proceed before the Committee of Twenty
meeting in Washington on July 30 and 31.
It will be difficult for the United States to take action on gold sales
until the Par Value Modification Act is passed in our Congress.
There is considerable pressure in the Congress to legalize owner-
ship of gold by U.S. citizens as of some early date (for example,
January 1, 1974), and amendments to the Par Value Modification Act
have been proposed which would require this change in our regulations.
The Administration has expressed sympathy with the objective of
allowing U.S. citizens to buy and hold gold at some appropriate time
in the future, but has argued against Congress setting any fixed date.
If the United States sold gold in the market before the Par Value
Modification Act is passed, the chances of an unfavorable resolution
of this issue would be significantly increased. The Par Value
Modification Act is now stalled in Senate-House conference (though
not on the issue of legalising gold ownership); I am told it may be
several weeks before compromises are reached and the bill is
passed.
GERALD LIBRARY FORD
The Honorable Karl Klasen
Page two
July 19, 1973
The Committee of Twenty meeting here in Washington will afford
a further opportunity to discuss the question of gold sales. I look
forward to seeing you then.
Please give my warm regards to Ilse. I hope you are having a
pleasant holiday.
Sincerely yours,
(signed) Arthur
Arthur F. Burns
The Honorable Karl Klasen
President
Deutsche Bundesbank
Wilhelm-Epstein-Strasse 14
Frankfurt (Main), Germany
Enclosures
RCB/AFB:srs
FORD & LIBRARY
NORKD OF OF OF GOVERNORS SYSTEM
FEDERAL RESERVE
THE
press
release
RESERVE
For immediate release
July 18, 1973
The Chairman of the Federal Reserve Board and the Secretary of
the Treasury have jointly issued the following statement:
"At the March 16, 1973 meeting of finance ministers and central
bank governors in Paris, it was agreed that official intervention in
foreign exchange markets may be useful at appropriate times to facilitate
the maintenance of orderly market conditions. In view of the inherent
strength of the dollar, and following consultations by the Federal Reserve,
the Treasury, and representatives of other countries, intervention by the
Federal Reserve in the New York exchange market began on July 10. Active
intervention will take place in the future at whatever times and in
whatever amounts are appropriate for maintaining orderly market conditions."
- 0 -
GERALD FORD LIBRAPT
THE OF SYSTEM OF NO.BOARD
FEDERAL RESERVE
press release
RESERVE
For immediate release
July 11, 1973
The Federal Reserve System said today 13 foreign central banks and
the Bank for International Settlements were involved in the $6.25 billion
City
swap network increase announced yesterday.
The largest increases, of $1 billion each, involved the Bank of
Canada, Bank of France, German Federal Bank and the Bank of Japan.
A swap arrangement is a short-term facility under which the
Federal Reserve and another central bank mutually agree to exchange
dollars for the currency of the other country up to a maximum amount over
a limited period of time.
The increases and the new totals of the swap lines are as follows
(in millions of dollars):
Foreign Bank
Increase
Total
FORD & LIBRARY
Austrian National Bank
50
250
National Bank of Belgium
400
1,000
Bank of Canada
1,000
2,000
National Bank of Denmark
50
250
Bank of England
--
2,000
Bank of France
1,000
2,000
German Federal Bank
1,000
2,000
Bank of Italy
750
2,000
Bank of Japan
1,000
2,000
Bank of Mexico
.50
180
Netherlands Bank
200
500
Bank of Norway
50
250
Bank of Sweden
50
300
Swiss National Bank
400
1,400
Bank for International Settlements
Swiss francs/dollars
--
600
Other European currencies/dollars
250
1,250
TOTALS
6,250
17,980
(Note: The foregoing announcement is also being released by
the Federal Reserve Bank of New York)
0 -
BOARD THE OF OF GOVERNORS: SYSTEM
FEDERAL RESERVE
press
release
RESERVE
For immediate release
July 10, 1973
The Federal Reserve announced today an increase of
$6.25 billion in the reciprocal currency ("swap") arrangements
that it maintains with 14 foreign central banks and the Bank for
International Settlements. The increase raises the total of the
System's swap network to $17.98 billion.
As in the past, the present expansion of the swap network
was worked out in full consultation with the Treasury.
A swap arrangement is a short-term facility under which
the Federal Reserve and another central bank mutually agree to
exchange dollars for the currency of the other country up to a
maximum amount over a limited period of time.
This announcement reflects arrangements that are being
carried out in conformity with the policy that was agreed to at
the March 16th Paris meeting of Finance Ministers and central
bank governors.
- 0 -
FORD i GERALD LIBRARY
BUARD OF GOVERNORS
OF
DR. KARL KLASEN
FEDERAL. RESERVE SYSTEM 61 ANKFURT AM MAIN
FRASIDENT DER DEUTSCHEN BUNDESBANK
1973 JUL 16 AM10: 16
WILHELM-EPSTEIN-STRASSE 14
TELEFON 1581
OFFICE OF RECEIVED THE CHAIRMAN
#1563
July 12, 1973
AFB
Dear Arthur,
Let me just say how glad I am that we both decided to
intervene on the money markets to restore orderly
conditions. On this point I take pleasure in sending
you a commentary which I made in a press conference
here today.
In the light of the Basle conversations last weekend
we are now free to sell gold. Personally, I think that
it would be an excellent thing if we were to begin
with some selling very soon, preferably before the
Ministers' meeting of the Group of Twenty in Washington
on July 30. and 31. We here would be prepared to do
so.
I am leaving Frankfurt today for a holiday. If there
should be any need for special coordination on the
subject, would you be so kind as to arrange for a
contact with Dr. Emminger, who fully shares our
views.
With my very best regards, also to Helen, in which
Ilse joins me, I am,
Yours very sincerely
Karl Kana
Enclosure
FORD i 076830 LIBRARY
- 2 -
the swap arrangements should now be redrafted or at least
given tangible form, so that everybody can tell what
conditions apply. This has been done; the amounts have
been raised. We have doubled our amount to DM 2 billion;
moreover, the general conditions governing the arrangement
were agreed upon. In the meantime interventions have
already taken place. However, as I pointed out, we were
not concerned with setting up something special; we merely
wanted orderly market conditions. We believe that the
market stands in need of some guidance so that it can see
that we consider this price to be so wrong that we are
prepared at that price to buy dollars. If it is a case
of selling great quantities of dollars quite cheaply in
the future we shall not take any counteraction but just
let the price tumble down. People who are anxious to get
rid of their dollars at cheap prices are welcome to do
so - we can always raise the price again later on. In a
nutshell, we shall be quite flexible.
Question: The Americans have not yet intervened. It was
only the European central banks that have bought dollars.
Klasen: No, no, the Americans have also done so. Please
trust my words. People are always trying to make out that
the Americans are hesitant and that we are the only ones
to put on the brakes. The Americans give full backing to
the agreement of 16th March. They are in perfect agreement
with all European partners; there is no illfeeling on the
European side and none on the American side. It is not
a case of one pulling the other; it is a case of entire
harmony in agreement. In Basle there was a unanimous
feeling amoung all of us that something needs to be done
GERALD FORD LIBRARY
now. Nobody wishes to back out of this. The fact that
one or another may give expression to this in a rather
- 3 -
- 3 -
stronger or rather weaker form is of no consequence; we
are all of us filled with an equal sense of responsibility
to keep the international money market functioning in
an orderly manner.
FORD & GERALD LIBRARY
Excerpt
Bundesbank press conference on occasion of central
bank council session on July 12, 1973
Question: I have a question bearing on the recent statement
regarding an intensification of swap arrangements. Have
they really been intensified or are they basically the
same that we have had since March? Is there really any
greater obligation on the part of the United States,
or is this not the case?
Klasen: Let me point out for your information that on
16 March we received a communiqué drown up by the Ministers
at the Paris conference. It says there that we have
European block floating by arrangement with the Americans,
who have noted this with approval. It was also arranged
at the time that this block floating was not to go
uncontrolled, but that the parties mutually undertook
to intervene to the extent felt to be necessary in order
to maintain orderly market conditions. All parties have
abided by this agreement. We were quite clear in our
minds that once the appropriate time had arrived the
swap arrangements which were no longer so meaningful would
have to be redrafted. Whenever there were meetings among
ministers or central bank governors of the countries
concerned we discussed with our friends from the United
States whether we felt that this moment had arrived; up
to the present we had agreed in believing that this was
not yet the case. Now, following the events last week,
especially on Friday, when heavy dollar fluctuations
FORD i LIBRARY
occurred in a downward sense, all parties concerned in
Basle took the view that the time had now come. The
Americans, too, entirely shared the view that the moment
had arrived when we should implement this part of the
agreement of 16th March. We came to an understanding that
- 2 -
Mrs. Mallardi
OF
CHAIRMAN OF THE BOARD OF GOVERNORS
OF
SYSTEM
FEDERAL RESERVE SYSTEM
THE
WASHINGTON, D.C. 20551
RESERVE
May 1, 1973
The Honorable Dr. Karl Klasen
President
Deutsche Bundesbank
4-6 Taunusanlage
6 Frankfurt am Main 1
Germany
Dear Karl:
Norman S. Fieleke, Vice President and Economist in charge of
international research at the Federal Reserve Bank of Boston, is
scheduled to attend the Konstanz Seminar at the end of June. While
in Europe, he would like to visit several central banks to meet with
experts in his areas of interest. Mr. Fieleke has a special interest
in international capital movements and in the recent performance of
foreign-exchange controls and foreign-exchange markets.
Mr. Fieleke expects to be in Frankfurt on June 21 and 22.
I would be grateful for any assistance that could be provided to him
that will make his visit to the Deutsche Bundesbank productive.
I have suggested to Mr. Fieleke that he send a letter to your office
giving further details of his planned visit.
Sincerely yours,
(signed) Arthur Burns
Arthur F. Burns
BERALD FORD LIBRARY
February 7, 1973
Dr. Karl Klasen
Deutsche Bundesbank
D-6 Frankfurt, Germany
My colleagues and I on the Board of Governors send
you our very best wishes for a speedy and complete re-
covery.
With warmest personal regards,
Arthur F. Burns
NB:cmn
REFORD & LIBRARY
January 17, 1973
Dear Karis
The powter beaker is just beautiful and I want you
to know how much I appreciate your thoughtfulness.
I do hope that you are feeling well. I had hoped to
call you before this, but because of the Federal Open
Market Committee meeting my schedule has been
extremely hectic.
With many thanks and best wishes,
Sincerely yours,
Arthur F. Burns
Dr. Karl Klasen
President
Deutsche Bundesbank
Frankfurt AM Main
CM:cmn
GERALD FORD LIBRARY
DEUTSCHE BUNDESBANK
DER PRASIDENT
FRANKFURT AM MAIN, December 1972
Dear Mr. Burns,
I have great pleasure in sending you a small Christmas gift of the
Deutsche Bundesbank in the shape of a pewter beaker specially cast for the
Bank by Menna's, pewterers in Nuremberg.
The vessel is ornamented with a cast reproduction of the obverse of
a Frankfurt Taler issued in 1772, exactly two hundred years ago. This
shows in relief a contemporary prospect of the town and the river Main,
giving expression to the burghers' pride in their city. The right to strike
its own coins was held by the Free City of Frankfurt from 1346 to 1866.
With best wishes for Christmas and the New Year,
I am,
Yours sincerely,
Karl Kearn
FORD & LIBRARY 938800
January 12, 1973
AIR MAIL
The Honorable Karl Klasen
President
Deutsche Bundesbank
4-6 Taunusanlage
6 Frankfurt am Main 1
Germany
Dear Karl:
One of the first things I want to do on my return to
Washington is to send you a note of warm appreciation for arranging
the there. plane trip to Hamburg and for your hospitality when we were
It was a great pleasure visiting with you and with your
wife and family. You have a beautiful home. I have told my wife
all about the visit, and she joins me in sending you very best
wishes -- in particular, for a speedy recovery.
As always, I found our discussion most instructive and
helpful. I hope we shall have a chance to get together again
before too long -- in Washington in March, if not sooner.
Sincerely yours,
Arthur F. Durns
P.S. I an enclosing with this letter a copy of a recent speech I
gave talked. in Toronto, which I think I mentioned to you when we
cc: Mrs. Mallardi (2)
RCBryant:dch
QERALD FORD LIBRARY
# 1431
DR. KARL KLASEN
6 FRANKFURT AM MAIN
TAUNUSANLAGE 4-6
PRASIDENT DER DEUTSCHEN BUNDESBANK
TELEFON 2681
November 9, 1972
Prof. Dr. Arthur F. Burns
Chairman of the Board of Governors
of the Federal Reserve System
Washington, D.C. 20551
Dear Arthur,
Let me congratulate you most warmly on President Nixon's impres-
sive victory in his reelection campaign. It is my sincere belief
that you have contributed most effectively to his success by
tendering good advice to the President in all-important questions
of economic and monetary policy, and by his following your counsel.
It seems to me the right moment to express to you our gratitude
for the fact that you have been such a determined champion of
stability in America and at all times so strong an advocate of
close cooperation within the entire free world.
Looking back on the three years of my tenure of office I face
the fact that they have confronted me with quite a few unexpect-
edly difficult situations, and indeed also some disappointments.
Yet one of the most significant and gratifying experiences for
me has been that so pleasant and friendly cooperation with you.
I feel true satisfaction by having been able to contribute to
the joint efforts of our two banks, and thereby of our two coun-
tries. Be it only for that reason, I feel that it has been worth
taking charge of this post. I In future, too, I shall make sure
to avoid every -thing which might disturb our collaboration based
on mutual confidence. I am a devoted partisan of European unity,
but at the same time I am equally convinced that such unity must
GERALD FORD LIBRARY
OFFICE FICE OF THE CHAIRMAN
RECEIVED
72NOV 14 AM10: AM 01
FEDERAL 2 RESERVE SYSTEM
OF THE
BOARD OF GOVERNORS
- 2 -
never lead to a front against the United States. Our economic
future and our safety depend upon close friendship with America.
Thus I shall always continue to be an indefatigable opponent
against a European floating of exchange rates, as long as this
would be planned without the explicit consent of the United
States. Such floating - and here I concur emphatically in your
views - would split the liberal world, at least economically,
in two parts; that is something we simply cannot afford if it
is our desire to maintain our liberal society.
With all my best wishes for you personally, for good health and
well-being, and for further successful cooperation, I am,
Very sincerely yours,
Kare Kearn
P.S. Ilse has asked me to convey to you, and also to Helen,
her very best regards. She quite particularly enjoyed
the home-made cake I brought from Washington. Many
thanks again for the gift!
K.K.
FORD & LIBRARY 936839
Norephy
No
N.B. N. B.
NOV 3 - y 1972
AIR MAIL
The Honorable Earl Klasen
President
Doutsche Bundesbank
Taunusanlage 4-5
Frankfurt (Main)
Cernany
Dear Karl:
Peter Clark, an economist in our Division of
International Finance, will be in Europe next week, to
attend a meeting at Basle. Early in the following week
(the week beginning November 13), ve would like his to
visit the Bundesbank before he returns to the United
States, if that would be convenient for your people.
May I suggest that when Mr. Clark 10 in Basle
he might arrange with the Bundesbank economists who will
be attending the same meeting a time at which he might
visit the Bundesbank?
Sincerely yours,
Arthur F. Burns
be: Mr. Bryant
Mr. Clark
FORD LIBRARY
Dirs, Mallardi (2)
ABH:deh
11-3-72
NOV 3 1972
AIR MAIL
The Honorable Farl Klasen
President
Doutsche Bundesbank
Taumusanlage 4-6
Frankfurt (Main)
Germany
Dear Karl:
Peter Clark, an economist in our Division of
International Finance, will be in Europe next week, to
attend a meeting at Basle. Early in the following week
(the week beginning November 13), we would like his to
visit the Bundesbank before he returns to the United
States, if that would be convenient for your people.
May I suggest that when Mr. Clark to in Basle
he night arrange with the Bundeebank economists who will
be attending the case meeting a time at which he might
visit the Bundesbank?
Sincerely yours,
Arthur F. Durns
be: Mr. Bryant
Mr. Clark
Mrs. Mallardi (2)
ABH:deh
QERALO FORD LIBRARY
11-3-72
Telefas
WESTERN UNION OF ONS THE
Tax
ICS IPMIIRA IISS
BOARD RESERVE SYSTEM 4:53
ZCZC IISS VIA ITT 02 1222
PMS WASHINGTON DC
FEDERAL 1972NOV -2 PM
AWE673 IA ITT XYI2206 DP4031T6284
OFFICE RECEIVED OF THE CHAIRMAN 51363
UIWA CD DPFF 12 1
FRANKFURT AM MAIN/TLX 1212 1723 PAGE 1/50
FEDRESERVE
FORD is 076839 LIBRARY
VASHINGTON/D.C.
BT
MR. DR. BURNS , CHAIRMAN IN ITS MEETING TODAY THE CENTRAL BANK
COUNCIL OF THE DEUTSCHE BUNDESBANK DECIDED TO RAISE 9 WITH
RUN
1270 (1-51)
Telefax
WESTERN UNION
Talax
4
EFFECT FROM 3 NOVEMBER 1 THE DISCOUNT RATE FROM 3 1/2 TO
AND THE LOMBARD RATE FROM 5 TO 6 0/0 $ THE BUNDESBANK
COL 3 1/2 4 D/O 3 5 6 D/C
SELLING RATES FOR MONEY MARKET PAPER WERE LIKEWISE INCREASED
.
BY THIS MEASURE THE DEUTSCHE BUNDESBANK IS ACAIN EXPLOITING
THE EXTRA ROOM FRO MANOEUVRE IN MONETARY POLICY
FORD
AFFORDED BY EXTERNAL DEVELOPMENTS IN RECENT WEEKS . AT
#3.63
GERALD
AMOUNT
==
1270 (1-51)
Telefax
WESTERN UNION
Thax
THE SAME TIME THE INCREASE IN INTEREST RATES IS DESIGNED
TO CURB THE EXPANSION
COL NIL
DP4031TG264 FEDRESERVE PACE3/21
OF THE DOMESTIC DEMAND FOR CREDIT $ THUS IMPEDING THE
CONTINUATION OF PRICE RISES IN THE FEDERAL REPUBLIC OF GERMANY
KLASEN
GERALE FORD
1270 (1-51)
TELEGRAM
LEASED WIRE SERVICE
RECEIVED AT WASHINGTON
1972 NOV 2 PM 4 44
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
CDE. 10B. 10- 3/72
FEDERAL RESERVE BANK
INFORMATION COPY FOR
OF NEW YORK
CABLE DIVISION
1B
INCOMING MESSAGE-SERIAL NO. 14610
DATE AND TIME RECEIVED JULY 13, 1972 12:52PM
FEDERAL RESERVE BANK OF NEW YORK
FRANKFURT/MAIN 7/13/72 1619
NEW YORK
MR DR BURNS CHAIRMAN
WASHINGTON D.C.
IN ORDER TO COMPENSATE FOR THE FRESH LIQUIDITY INFLOWS FROM ABROAD
DURING THE PAST TWO WEEKS THE CENTRAL BANK COUNCIL OF THE
DEUTSCHE BUNDESBANK AT ITS MEETING ON JULY 13 1972 DECIDED AS FROM
AUGUST 1 1972 TO RAISE THE MINIMUM RESERVE RATES ON DOMESTIC
LIABILITIES BY 10% OF THEIR PRESENT LEVEL. THE FREE LIQUIDITY RESERVES
OF CREDIT INSTITUTIONS STOPPED UP BY THE RECENT LIQUIDITY INFLOWS WILL
THEREBY BE REDUCED BY QUITE 3 BILLION DM
KLASEN
DEUTSCHE BUNDESBANK
ITT TELEX 75
V
ENGLISH BI
NOTE: THIS MESSAGE NOT NUMBERED OR TESTED.
DR. BURNS OFFICE AT THE BOARD NOTIFIED.
BY TELEPHONE AND A COPY OF THIS MESSAGE
QERALO FORD LIBRARY
FORWARDED M. Arcorolp TO HIM.
Unless otherwise indicated above, TEST for this message is CORRECT. Any underlined portion of this message was
received mutilated and has been "Serviced" unless received via Telex in which case it cannot be "Serviced".
JUN 14 1972
The Honorable Dr. Karl Klasen
President
Deutsche Bundesbank
4-6 Taunusanlage
6 Frankfurt am Main 1
Germany
Dear Karl:
We have received your telegram of June 1 informing
us of the action taken by the Bundesbank Council to raise
minimum reserve requirements and to reduce the rediscount
quotas of the banks in order to offset the liquidity effects
of the release of the anticyclical surtax funds. I note
particularly that the measure does not mark any change in the
underlying tendency of the credit policy followed by your
institution.
We appreciate being promptly informed of this measure.
Sincerely yours,
Arthur F. Burns
cc: Mrs. Mallardi (2)
\
GERALD FORD LIBRARY
RLS:rck
6/5/72
#681
P.S. It gave Helen and me great pleasure to see and
spend some time with you dear Corinna. We
fell in love with her!
/8/
Arthur
DR. KARL KLASEN
6 FRANKFURT AM MAIN
TAUNUSANLAGE 4-6
PRASIDENT DER DEUTSCHEN BUNDESBANK
TELEFON 2681
May 24th, 1972
Mr. Arthur F. Burns
Chairman of the
Board of Governors
Federal Reserve System
Washington, DC 20551
Dear Arthur,
Thank you very much for your kind letter of May 16th
indicating the purpose of the visit by the Governors
Mitchell and Daane on May 25th and 26th. They are
welcome, of course, to discuss problems involving
the activities of multinational banks, problems in
which we are also highly interested.
Thanking you for announcing the visit, I am,
dear Arthur,
Yours sincerely,
Karl Kran
GERALD LISRARY ? FORD
6 FRANKFURT f AM MAIN
DR. KARL KLASEN
TAUNUSANLAGE 4-6
PRASIDENT DER DEUTSCHEN BUNDESBANK
TELEFON 2681
24th February 1972
Mr. Arthur F. Burns,
Chairman of the
Board of Governors,
Federal Reserve System,
Washington, D. C.20551/USA
Dear Arthur,
Ilse and myself are just returning from some nice
days on the Gran Canaria Island, a week earlier than
we originally thought to do, due to recent monetary
developments. I am very glad, therefore, to understand
from your letter that you could make it possible to be
in Basle for the March-meeting at the BIS, and the only
thing Ilse and I are regretting is that Helen will not
be with you this time. So we are looking for another
opportunity to seeing her.
cable
Could you please drop me a short notice on the date and
time you will arrive in Basle so that I shall be able
dent. 3/1/2 cm
to adjust my plans accordingly?
With all good wishes and kind regards, also to Helen,
and also from Ilse, I am
sincerely yours,
Karl Kunca
BERALD FORD LIBRAPT
Mrs. Mallardi
FEB 3 1972
The Honorable Dr. Karl Klasen
President
Deutsche Bundesbank
4-6 Taunusanlage
6 Frankfurt am Main 1
Germany
Dear Dr. Klasen:
As you know, the Board of Governors has the responsibility
for supervising the international activities of member banks. In
this connection, it has requested the staff to prepare a study on
the basis of which guidelines could be developed to orient Board
policy in this field over, say, the next decade.
One part of this study deals with the general environment
which is likely to surround such activities, particularly in the
major industrialized countries. This would include such factors
as prospective changes in (a) the financial infrastructure (especially
the role of commercial banks) : (b) official controls over banking,
with special reference to foreign banks; and (c) international ac-
tivities of domestic banks, and of domestic offices of foreign banks
(e.g., Euro-currency markets).
Mrs. Helen B. Juns, a Senior Economist in our Division of
International Finance, will be in Europe in the near future, and
would greatly appreciate the opportunity to discuss these matters
with knowledgeable members of your staff, particularly those charged
with bank supervisory and regulatory matters and those involved in
forward planning, and possibly if time permits and you think it would
be helpful, with someone in the national commercial banking fraternity.
Please let us know whether this meets with your approval.
Convenient dates for Mrs. Junz would be February 24-25; if this would
be impracticable, and you would like to suggest another day between
February 23 and March 4, perhaps you would be kind enough to let us
know as soon as possible, preferably by cable. Mrs. Junz can be
GERALD FORD LIBRARY
Dr. Klasen
-2-
reached from February 20-22 c/o Mr. T. E. Summers, U.S. Mission
to the OECD, 2 Rue Andr6-Paseal, Paris XVI. She may find it con-
venient to telephone your office at that time in order to confirm
her itinerary.
Thank you for cooperating in this matter, the outcome
of which, I am sure, will be mutually beneficial.
Sincerely yours,
Arthur F. Burns
cc: Mrs. Mallardi (2)
HBJ:gae
2/1/72
GERALD R. FORD LIBRABIA
MR. KARL KLASEN
PRESIDENT, DEUTSCHEN BUNDESBANK
6 FRANKFURT AM MAIN, GERMANY
ARRIVING IN BASLE SATURDAY, MARCH 11
ON SWISSAIR #821 at 11:50 AM. STAYING AT
SCHWEIZERHOF X REGARDS,
ARTHUR F. BURNS
BERALD FORD LISBABI
Dear Karl:
Thanks for your letter of January 24. As
it turns out I have had to change my plans about attend-
ing the February Basle meeting. I now plan to go in
March and shall look forward to seeing you at that time.
There is much to talk about.
Since I shall probably be coming to Europe only
for the weekend at the BIS, it appears unlikely that Helen
will accompany me. I hope that the four of us will have
another opportunity soon to get together.
With all good wishes,
Sincerely yours,
Arthur F. Burns
The Honorable Karl Klasen
President
Deutsche Bundesbank
Townusanlage 4-6
Frankfurt (Main), Germany
RS:nss
1/28/72
cc: Mrs. Mallardi (2)
GERALD FORD LIBRARY
BS-Y
DEUTSCHE BUNDESBANK
DER PRASIDENT
FRANKFURT AM MAIN, January 24, 1972
Dear Arthur,
I still have to thank you for your kind letter of December 21,
and reiterating all your good wishes for 1972 I sincerely
trust that the coming year will bring both of us a good deal
less of disturbances than the last one.
I understand that you are intending to come to Basle for the
February sessions of the BIS, which will take place on the
weekend of February 13. In order to avoid any disillusion I
should like to let you know well in advance that I shall not
be in Basel for the February meeting, because Ilse and myself
will spend our winter vacation during that time. The first
Basle meeting I am planing to attend again are the March
sessions on the weekend of March 12.
In case it would be possible for you to switch your Basle
visit to the March meeting I would be extremely glad to see
you than. If Helen could accompany you Ilse would also come
to Basle, and we could spend a nice time together.
With kind greetings and best regards,
Yours very sincerely
BERALO FORD LIBRARY
December 21, 1971
Dear Karl:
Helen and I enjoyed being with you last week, and
we want to thank you for the lovely "angel" and the
porcelain jar. I am using the latter on my desk
for pens and pencils.
With every good wish for 1972,
Sincerely yours,
Arthur F. Burns
Mr. Karl Klasen
President
Deutsche Bundesbank
Frankfurt Am Main
Germany
CM:cmn
BERALD & FORD VIBRARY
n-v
DEUTSCHE BUNDESBANK
DER PRASIDENT
FRANKFURT AM MAIN, December 1971
Dear Mr. Burns,
I take pleasure in sending you, as a small Christmas gift
from the Bundesbank, this piece of porcelain, which is intended
as a receptacle for pens and pencils.
It has been specially produced by the Fürstenberg Porcelain
Manufactory to the order of the Bundesbank; the decoration
shows a gold-etched Deutsche Reich twenty mark piece of the
year 1871 on a cobalt-blue ground. This twenty mark piece, issued
just 100 years ago, was the first Reich coin in mark currency.
With best wishes for Christmas and the New Year,
Yours sincerely,
Karl Krasen
Dr. Arthur F. Burns
Chairman of the Board of Governors
of the Federal Reserve System
Federal Reserve Board
FORD is LIBRARY 038870
Washington, D.C. 20551
DEUTSCHE BUNDESBANK
DER PRASIDENT
FRANKFURT AM MAIN, December 20, 1971
Dr. Arthur F. Burns
Chairman
Board of Governors of the
Federal Reserve System
Washington, D.C. 20551
Dear Arthur,
After having returned to Frankfurt this morning I should
like to thank you for all you have done for me and for
the members of the Bundesbank during our stay in Washing-
ton. Your help and your cooperation was extremely valuable
for me - as it was ever. I hope to see you in Frankfurt
pretty soon again in order to be able to retaliate your
grand hospitality.
Yours very sincerely
Tall Kunn
FORD & GERALD LIBRARY
AAZCZC YW128 GTY732 DP4034TG098
RCA
URWA CO DPFF 048
FRANKFURTMAIN/TLX 48 15 1228 VIA RCA
DEC 15 727AM'71 f '71
FEDRESERVE
Reply via RCA: call 558-4321
WASHINGTONDC
и Global GlobalTelegram
FOR PRESIDENT BURNS DEAR MR BURNS, THANK YOU EVER SO MUCH
FOR YOU KIND TELEX INVITING ME TO HAVE
LUNCHEON WITH YOU ON DECEMBER 16 AT
LIBRARY GERALD ? FORD
1. P.M. STOP I GLADLY AGREE STOP I WILL CONTACT YOU
BY PHONE WHEN IN WASHINGTON
KIND REGARDS KLASEN
Reply via F
Mrs. Mallardi
OCT 20 1971
The Honorable Dr. Karl Klasen
President
Deutsche Bundesbank
4-6 Teumusanlage
6 Frankfurt am Main 1
Germany
Dear Dr. Klasen:
Thank you for your cable of October 13, 1971, informing
us of the measures taken by the Central Bank Council of the
Deutsche Bundesbank on that day.
We much appreciate your advising us so promptly as well
as your explaining the reasons for the decisions taken.
Sincerely yours,
Arthur F. Burns
HBJ:gae
10/18/71
CC: Mrs. Mallardi (2)
LIBRARY GERALD R FORD
Telefax
WESTERN UNION
Telefax
ZCZC COADO4 HYE462/BP4034TC241
WUI FRANKFURT AN HAIN/TLX 43 6 1709
1971 SEP 8 PM 3 13
FEDRESERVE FOR CHAIRMAN BURNS NASKINCTON/DC/USA
DEAR MR BURNS THANK YOU EVER so MUCH FOR YOUR KIND CABLE
INVITING ME TO A LUNCHEON ON OCTOBER 1 AT THE FEDERAL
RESERVE BUILDING STOP I CLADLY AGREE TO JOIN YOU AT THAT TIN
KIND REGARDS
KLASEN.
FORD
GERALD
LIBRERY
1270 (1-51)
Kleen
Karl
we
f
September 3, 1971
Dear Dr. Klasen:
Thank you for your thoughtful letter of
August 31st and the enclosed photographs which
have been received in Dr. Burns' absence from
the office. I shall bring them to his attention upon
his return. I know he will be delighted to have the
photographs.
Sincerely yours,
Concetta M. Nobilio
Secretary
Dr. Karl Klasen
President
Deutsche Bundesbank
Frankfurt AM, Main,
Germany
FORD i LIBRARY
DR. KARL KLASEN
6 FRANKFURT AM MAIN
TAUNUSANLAGE 4-6
PRASIDENT DER DEUTSCHEN BUNDESBANK
TELEFON 2681
31 August 1971
Dr. Arthur F. Burns
Chairman
Board of Governors of the
Federal Reserve System
Washington, D.C. 20551
Dear Mr. Burns,
I still remember with great pleasure the nice day we spent
on our tour to the Bavarian landscape during the Munich
International Banking Conference at the end of May. Just
now I am receiving some pictures we shot during our walk
on the boards of the Tegernsee, and I am glad to send
you two photos which seem to me to be especially nice.
Meanwhile I learnt that you have been so kind to extend
to Mrs. Klasen and myself an invitation for lunch on
September 26 in your home. Thanking you warmly in advance
for your kindness I take pleasure in repeating, that we
gladly agree. We are really happy to have the opportunity
to see Mrs. Burns and you on that day.
Looking forward to these days in Washinton, I beg to remain,
with warm regards,
yours very sincerely,
Karl Keann
Encl.
GERALD LIBRARY FORD
RC
suo
Communications
MAAZCZC YW178 GTX767 DP4034TG267
for
URWA CO DPFF 142
Clasen
FRANKFURT AM MAIN/TLX 142 2 1546 VIA RCA PAGE 1/50
RCA Global
ПСЛ Global Communications
FEDRESERVE
WASHINGTON/DC
MR. DR. BURNS, CHAIRMAN , AT ITS MEETING TODAY THE
RCA Global Communications
CENTRAL BANK COUNCIL OF THE DEUTSCHE BUNDESBANK DECIDED .
WITH EFFECT FROM JUNE 1971 , TO (A) RAISE THE
MINIMUM RESERVE RATES FOR DOMESTIC LIABILITIES THROUGHOUT
BY 15 0/0, AND TO (B) RAISE THE
RCA Global Communications
P2
RESERVE RATES FOR FOREIGN LIABILITIES TO DOUBLE THE
AMOUNT OF THE NEW DOMESTIC RATES . THE RESERVE RATES FOR
RCA Global Communications
ACCRUALS TO FOREIGN LIABILITIES REMAIN IN EFFECT UNCHANGED .
IN ADDITION , THE SUPPLEMENTARY QUOTAS FOR : THIRD - COUN-
TRY BILLS : ARE CANCELLED WITH EFFECT FROM 1 OCTOBER
1971 . THE
RCA Global Communications
QERALD FORD
P3
INCREASE IN MINIMUM RESERVE REQUIREMENTS IMMOBILIZES
APPROXIMATELY DM 5 BILLION , THEREBY NEUTRALIZING PART
СЛ Global Communications
OF THE EXCESS LIQUIDITY OF THE BANKING SYSTEM, WHICH
HAD DEVELOPED BY THE INFLOW OF FOREIGN EXCHANGE PRIOR TO
THE FLOATING OF THE DM EXCHANGE RATE
KLASEN
RCA Global Communicati
Mrs. Mallardi
APR 2 9 1971
AIR MAIL
The Honorable Dr. Kerl Klasen
President
Deutsche Bundesbank
4-6 Taunusanlage
6 Frankfurt am Main 1
Germany
Dear Dr. Klasen:
We are saddened at the news of the sudden death of former
President Blessing.
He was well known throughout the Federal Reserve System
because of his many years of outstanding service as a central banker
and his cooperation with other central banks in international
monetary affairs.
Let me express, on behalf of the Board of Governors, my
deep regret at this loss.
Sincerely yours,
131
Arthur F. Burns
ISH:gae
cc: Mrs. Mallardi (2)
GEBALD FORD
Mrs. Mallardi
APR 7 1971
AIR MAIL
The Honorable Dr. Karl Klasen
President
Deutsche Bundesbank
4-6 Taunusanlage
6 Frankfurt am Main 1
Germany
Dear Dr. Klasen:
Thank you very much for your cable of March 31, which
advises the Board of Governors of the Bundesbank's latest changes
in the discount rate and other monetary measures.
We appreciate very much being informed so promptly of
your policy decisions.
I look forward to seeing you at the BIS meeting in
April.
Sincerely yours,
Arthur F. Burns
cc: Mrs. Mallardi (2)
ISH:gae
4/2/71
BERALD R FORD LIBRARY
BOARD OF GOVERNORS OF THE FEDERAL
F
RVE SYSTEM
DATE
2/23
TO
Chairman Burns
FROM ROBERT SOLOMON
Klasen's reactions to his visit
to the Board.
Attachment.
FORD is GERALD LIBRARY
RS
OF STATE
Department of State
UNITED STATES OF
TELEGRAM
UNCLASSIFIED 330
Klasey
PAGE 01 BONN 02033. 201117Z
PLEASE RETURN TO
INTERNATIONAL INFORMATION CENTER,
18/45
ACTION EUR-25
INFO OCT-01 AID-28 CIAE-00 COM1-08 E-15: FRB-02 INR#08
NSAE-00 RSC-01 TRSY-11 XMB-06 NSC-10 SS-20 STR-08 L-04
H-02 P=03: PRS-01 USIA-12 0-03 08-01 OMB-01 EEA-02
I0-13 RSR-01 /186 W
007947
R 191817Z FEB 71.
FMI AMEMBASSY BONN
TO SECSTATE WASHDC 1918
UNCLAS BONN 2033
CORRECT EDICO PI Y FORI MRNI 2033 VICE 1918,1X,
SUBJECT: COMMENTS OF BUNDESBANK PRESIDENT KLASEN ON HIS U.S. TRIPI
1. AFTER THE FEBRUARY 19 MEETING OF THE CENTRAL BANK COUNCIL,
BUNDESBANK PRESIDENT KLASEN, ACCORDING TO THE PRESS SECTION OF THE
BUNDESBANK, WAS QUESTIONED ABOUT THE OUTCOME OF HIS RECENT
U.S. VISIT. HE WAS PARTICULARLY ASKED WHETHER U.S. BANKERS HAD
EXPRESSED CONCERN WHETHER THE BUNDSBANK COULD MAINTAIN ITS CURRENT
RESTRICTIVE POLICY IN THE LONG RUN. KLASEN REPLIED THAT PRIMARILY
HE HAD MET WITH REPRESENTATIVES OF THE FEDERALI RESERVE BOARD
BUT NOT WITH PRIVATE BANKERS. IN THESE DISCUSSIONS THE FEDERAL
RESERVE REPRESENTATIVES HAD SHOWN UNDERTANDING FOR THE CURRENT
BUNDESBANK POLICY, BUT NOT EXPRESSED CONCERNi® KLASEN ADDED THAT
THEI PRIMARY OBJECTIVE OF ECONOMIC AND MONETARY POLICY IN THE
U.S. IS TO OVERCOME THE CURRENT RECESSION AND THE HIGH RATE
OF UNEMPLOYMENT AND THAT THE EASS U.S. MONETARY POLICY AAS
UNDERSTANDABLE IN HIS CONTEXT. KLASEN AGREED THAT THE CURRENT
MONEARS IOLICIES IN THE U.S. AND GERMANY ARE GOING IN CONTRARY
DIRECTIONS AND E SOME COMPROMISE WOULD BE NECESSARY. HE STATED
THAT HE HAD WELCOMED THE U.S. MEASURE TO ABSORB EURO-DOLLARS
BY SELLING EXIM BANK PAPER TO FOREIGN SUBSIDIARIES OFTIUS
BANKS's HE CONTINUED THAT THE FRB REPRESENTATIVES HADI TOLD HIM
THAT THEY WOULDI CONSIDER FURTHERI ACTION OF THIS KIND.
FORD
UNCLASSIFIED
GERALD
LIBRARY
OF STATE
D
Department of State
UNITED STATES OF MEDICAL
TELEGRAM
UNCLASSIFIED
PAGE 02 BONNI 02033 2011172
A. KLASENI INDICATED THAT PRIORITY NOA WAS: BEING GIVEN IN
THEI U.S. TO INCOME POLICY AND THAT HE FELT THAT PRESIDENT NIXON
WAS ABANDONING HIS PAST OPPOSITION: TO SUCHI POLICIES.
3' IN REPLY TO A QUESTION WHETHER HE BELIEVES THAT THE INTEREST
RATE REDUCTION IN THE U.S. WOULD CONTINUE, KLASEN ANSWERED
IN THE AFFIRMATIVE, BUT ADDED THAT HE FELT THE MAIN EMPHASIS
WOULDNOW BE TO REDUCE LONG-TERM INTERESTRATES.
4. THE PRESS SECTION OF THE BUNDESBANK PROMISED TO LET THE EMBASSY
HAVE THE FULL TEXT OF KLASEN'S RRESS CONFERENCE REMARKS NEXT
WEEK.
RUSH
GERALD FORD LIBRARY
UNCLASSIFIED
cm
DEC 21 1970
Dear Dr. Kässen:
I should like to thank you wermly for the
beautiful book on bank notes in various countries,
which the Bundesbank has published, This volume is
a fine addition to the series that the Bundesbank
has already presented.
I would like to take this opportunity to
express to you all my good wishes for the holiday
season and for the year ahead.
Sincerely yours,
Arthur F. Burns
The Honorable Karl Klasen
President
Deutsche Bundesbank
Taunusanlage 4-6
Frankfurt (Main), Germany
GERALD R LISBARY FORD
Marl Klassen
DEUTSCHE BUNDESBANK
DER PRASIDENT
FRANKFURT AM MAIN, December 18, 1970
Mr. Dr. Arthur F. Burns
Chairman
Board of Governors of the
Federal Reserve System
Washington, D.C. 20551
U.S.A.
Dear Mr. Burns:
During a journey to the United States early next year
I shall also be visiting Washington. I should greatly
appreciate it if you could find the time for us to have
an exchange of views on that occasion. I plan to be in
Washington on January 26, and if necessary also on Janu-
ary 27, 1971.
I should be very pleased if it were possible to hold
a discussion on one of these days.
With the very best wishes for Christmas and the New Year,
Sincerely yours,
changed have Kim
to
Jan. 25-26
FORD i LIBRARY 074839
DEC of 1970
AIR MAIL
The Honorable Dr. Karl Klasen
President
Deutsche Bundesbank
4-6 Teunusanlage
6 Frankfurt am Main 1
Germany
Dear Dr. Klasen:
Thank you for informing us by cable of the Bundesbank's
latest discount rate measure. We appreciate very much being notified
so promptly of your policy decisions.
Sincerely yours,
ts/
Arthur F. Burns
CC: Mrs. Mallardi (2)
IH:gae
12/3/70
GERALD FORD
Mrs. Mallardi
NOV 23 1970
The Honorable Dr. Karl Klasen
President
Deutsche Bundesbank
4-6 Taunusanlage
6 Frankfurt am Main 1
Germany
Dear Dr. Klasen:
Thank you very much for your cable of November 17, in
which you advised the Board of Governors of the recent change in
the discount rate and other related monetary measures.
We greatly appreciate your informing us so promptly of
this decision.
Sincerely yours,
(Signed) Arthur F. Burns
Arthur F. Burns
cc: Mrs. Mallardi (2)
ISH:gae
11/20/70
FORD :- GERALD LIBRARY
AUG 13 1970
Dear President Klasen:
Mr. Philip E. Coldwell, President of the Federal
Reserve Bank of Dallas, will be visiting Frankfurt on Sep-
tember 3-4. He would like to take the opportunity to call
at your Bank and to meet with you and your associates, As
President of a Reserve Bank and a member of the Federal Open
Market Committee, Mr. Coldwell is concerned with economic
and financial developments both in the United States and in
the rest of the world.
Mr. Coldwell would be grateful if it were possi-
ble to arrange to meet with some of the leading commer-
cial bankers in Frankfurt.
Since this will be Mr. Coldwell's first visit to
Frankfurt, I have urged him not to spend all of his time on
business but to be sure also to see the sights of your city.
Sincerely yours,
Arthur F. Burns
The Honorable Karl Klasen,
President,
Deutsche Bundesbank,
Taunusanlage 4-6,
Frankfurt (Main), Germany,
RS:nss
cc: Mr. Coldwell
LIBRARY GERALD ? FORD
Mrs. Mallardi
JUN 23 1970
AIR MAIL
The Honorable Earl Klasen
President
Deutsche Bundesbank
Taunualage 4-6
Frankfurt, Cernany
Dear Karl:
Thank you very such for your letter of July 14. I
would like to say again how such of a pleasure it was for Mrs. Burns
and myself to meet both you and Mrs. Klasen during your recent
visit to the United States. We also enjoyed seeing your daughter
and her husband not too long ago,
We have been following recent economic events in the
Federal Republic with great interest. The new fiscal measures
of restraint are very interesting in their selectivity and flex-
ibility, and X look forward to hearing your assessment of how
effective these measures are as short-run counter-cyclical policy
instruments. I am also heartened to hear that the Bundesbank
Council felt these fiscal measures substantial enough to warrant
lowering the Bundesbank's discount and Lonbard rates.
Your invitation to visit Frankfurt is very such appre-
cisted. I will be traveling to Europe in September for the Bank and
Fund meetings in Copenhagen, but I do not think it will be
possible for me to stop in Frankfurt. Perhaps I will be able to
do so on 8 future trip. I hope, nonetheless, to see and talk with
you in Copenhagen,
Looking forward to seeing you soon, I remain,
Sincerely yours,
FORD
(Signed) A. F. Burns
GERALD
LIBRARY
Arthur F. Burns
CC: Mrs. Mallardi (2), Mr. Rudman, J. Hull
BJR/jmh/7/21/70
14
DEUTSCHE BUNDESBANK
DER PRASIDENT
FRANKFURT AM MAIN, July 14, 1970
Dr. Arthur F. Burns
Chairman
Board of Governors of the
Federal Reserve System
is
GRANTO
FORD
Washington, D.C. 20551
U.S.A.
LIBRARY
Dear Mr. Burns,
Quite some time has passed since my wife and I were privileged
to meet Mrs. Burns and yourself in Washington. I trust, dear
Mr. Burns, that you will have understanding for the fact that
the burden of business waiting for me over here has prevented
me from thanking you earlier for all the courtesies you and
your wife lavished upon us in Washington.
We keep recalling the days in Washington and the time we spent
with you. We would indeed be very happy if you were to look
us up here in Frankfurt in the near future. In the meantime
my daughter has written to say that you were good enough to
see her and her husband in Washington. The young couple were
greatly impressed by their visit and very proud at having
been allowed to come. I am most grateful to you for your
kindness.
You may be interested to hear that our Federal Government
complied with the request expressed by the Bundesbank to
resolve a 10 percent increase in income tax as from August 1st,
1970. The funds accuring must not be used by the fiscal
-2-
- 2 -
authorities but will be immobilised with the Central Bank in
an estimated total of 2 billion Dollars. Later on, when the
boom tapers off, they are to be repaid, the deadline for final
payment being March 31st, 1973.
Here in the Central Bank we are very happy over this step. My
personal feeling is that this action may provide a new element
of control in influencing economic activity, an element which
really cannot do any harm but still not only assists the
Central Bank but allows the Government later on in releasing
the accumulated funds to apply a regulative policy without
recourse to the ominous deficit spending. I very much hope
that at the latest in September we shall have an opportunity
of discussing this point.
With the renewed expression of our thanks and best regards to
yourself and Mrs. Burns, in which my wife wishes to join, I am,
yours very sincerely,
Karl Kinne
GERALO R. FORD LIBRARY
Mrs. Mallardi
JUL 22 1970
AIR MAIL
The Honorable Karl Klasen
President
Deutsche Bundesbank
Taunuslage 4-6
Frankfurt, Germany
Dear Karl:
Thank you for your cable notifying us of the Central
Bank Council's decision to lower the discount and Lombard rates,
effective July 16. We are following developments in Germany
with great interest and we appreciate your keeping us so closely
informed.
Sincerely yours,
(Signed) Arthur F. Burns
Arthur F. Burns
cc: Mrs. Mallardi (2)
Mr. B. J. Rudman
J. Hull (Return to International Finance, European Section
showing date of mailing.)
BJR/jmh/ 7/21/70
BERRED FORD LIBRARY
DEUTSCHE BUNDESBANK
11 May 1970
DER PRASIDENT
FRANKFURT AM MAIN,
Dr. Arthur F. Burns
Chairman
Board of Governors of the
Federal Reserve System
Washington, D. C. 20551
U. S. A.
Dear Mr. Burns,
Let me thank you very much for your letter of May 7.
I accept with great pleasure the invitation to the
luncheon at 1 p.m. on Friday, May 22.
On behalf of my wife I wish to thank Mrs. Burns for
the invitation for tea at 4 p.m. on the same day at
the Madison Hotel. My wife will be glad to attend.
With best personal regards,
sincerely yours,
have Kan
GERALD R. FORD LIBRAMAT
May 7, 1970
Dear Dr. Klasen:
Thank you for your kind letter of April 22nd, which arrived
while I was in Latin America. I would indeed like the
opportunity to visit with you. May I suggest luncheon here
on Friday, May 22nd at 1:00 p.m. I am hopeful that some of
my fellow Governors will be able to join us.
Mrs. Burns has asked me to extend an invitation to Mrs. Klasen
to join her for tea at the Madison Hotel on May 22nd at 4:00 p.m.
Mrs. Burns would have liked to have Mrs. Klasen for lunch on the
22nd, but she had already accepted a luncheon invitation from
Mrs. Nixon.
With warm regards,
Sincerely yours,
Arthur F. Burns
The Monorable Karl Klasen
President
QERALO
Deutsche Bundesbank
Taunusanlage 4-6
Frankfurt (Main) Germany
AFB:ck
DEUTSCHE BUNDESBANK
DER PRASIDENT
FRANKFURT AM MAIN, April 22, 1970
Dr. Arthur F. Burns
Chairman
Board of Governors of the
Turi Buns yes
Federal Reserve System
Washington, D.C. 20551
U.S.A.
Dear Mr. Burns,
As I already told you at our last meeting I am proposing
to take part in the Conference of the American Bankers
Association in Hot Springs. I am planning to arrive in
Washington in the company of my wife on Thursday, May 21,
1970, and I should be most grateful for an opportunity
to call on you on May 22.
At the same time I should like to thank you warmly for
sending me the Memorandum on the treatment of the European
American Banking Corporation. I feel that the parties
concerned can now await legislative developments in your
country with assurance. I should also like to express my
best thanks for the understanding attitude displayed by
the Federal Reserve System in the face of the special
features of the European American Banking Corporation, as
reflected in the Memorandum. I have passed copies of the
Memorandum on to our colleagues in the Netherlands, Britain
and Belgium who take a parallel interest in this matter.
With kind regards,
Yours sincerely,
Kane Kene
lunch
May from 22
LIBRARY GERALD ? FORD
Chairman Burns
MAR-1 3 1970
Dear Dr. Klasen:
Thank you for your cable notifying us of the recent
policy measures decided upon by the Central Bank Council and
the factors that entered into its decision.
We are, of course, following economic developments
in Germany with great interest and appreciate your keeping us
closely informed.
Sincerely yours,
(Signed) Arthur F. Burns
Arthur F. Burns.
The Honorable Karl Klasen,
President,
Deutsche Bundesbank,
Taunusanlage 4-6,
Frankfurt, Germany.
BJR/jah
3/10/70
FORD i 07V830 LIBRARY
Chai n Burns
FEB 20 1970
The Honorable Karl Klasen,
President,
Deutsche Bundesbank,
Taunusanlage 4-6,
Frankfurt (Main) Germany.
Dear Dr. Klasen:
I am writing to let you know that Arthur Hersey,
Adviser in our Division of International Finance, who will
be in Europe during the first half of March, would like to
visit your Bank on March 12 and the following day.
As on other visits in the past, Mr. Hersey will
be interested in learning about recent monetary policy
developments and economic trends in your country and in
discussing the economic outlook with members of your staff.
With kind regards,
Sincerely yours,
(Signed) Arthur F. Burns
Arthur F. Burns
ABH: kh
2/19/70
LISBARY GERALD R.FORD