Nixon Shock: Getting Off Gold IV - Speechwriter Safire Took Notes

On August 13, 1971 Nixon speechwriter William Safire was ordered to go to Camp David, He was told not to inform anyone, not even his wife, of where he was going. Safire’s assigned car-mate on the way to a nearby helipad was White House economic advisor Herb Stein.

Safire had no idea was what the meeting and the secrecy were about.  Stein was better clued in. “This could be the most important weekend in the history of economics since March 4, 1933,” Stein told Safire, who remained clueless about the significance of the day that FDR had ended America’s gold standard.

Stein then gave Safire another clue: “I would not be surprised if the President were to close the gold window.” In his memoir of his White House service, Before the Fall: An Inside View of the Pre-Watergate White House, Safire admitted he was still clueless at that point: “I did not have the foggiest notion about what the ‘gold window’ was.”

Safire, however, did not want to reveal his ignorance. After they were airborne in the helicopter, a Treasury official asked the speechwriter what was going on. Safire sagely suggested that the gold window might be closed. “My God!” responded the official – helping Safire recognize “that this could be a bigger deal that I thought.”

Safire asked Stein how to explain the significance of closing the gold window to the average American “in one-syllable words.” Stein answered in mostly one-syllable words: “I wouldn’t try. That’s why you’re along.”

Indeed, that’s why non-economist Safire was joining the administration’s foremost economic officials so that economic policy could be put into simple non-economist language. Safire admitted that President Nixon occasionally ordered administration economists to “put that in simple terms so Safire can understand.” It may also have been so that Nixon could understand.

As Safire remembered the meeting, Nixon went first and emphasized secrecy. Connally went second and presented policy proposals. Then Nixon spoke again: “About closing the gold window – we cannot know fully what effect it will have,” he admitted.

Nixon was committed to comprehensive new economic policy in response to the $3 billion British call on U.S. gold reserves. Safire wrote that “the President insisted that when he moved it would be on a comprehensive, across-the-board basis. Nixon was not about to stick his thumb in the dike and wait for another hole to appear elsewhere. He wanted a whole new dike.”

Safire reported that some participants on Friday afternoon expressed concern about closing the gold window although only Fed Chief Arthur Burns opposed the move. Treasury’s Paul Volcker worried that Allied governments would be upset. The White House’s Pete Peterson thought “folks” would “worry.” Council of Economic Advisors Chairman Paul McCracken said: “People’s reaction to closing the gold window would be negative.” Volcker contended: “Everybody who speculates in gold will seize on this to make a mint. We have to come up with a proposal to demonstrate gold is not that important. Maybe we should sell some.”

After the big meeting in the afternoon, there was a smaller meeting of principals called the “Quadriad” along with Paul Volcker to discuss closing the gold window. The decision was final. Burns admitted to speechwriter William Safire at dinner that night: “You know, I argued pretty strenuously against the gold move – that’s the only difference I have with the whole policy. But even on that I don’t feel so cocky – nobody can be sure. When it was decided, I told the President he would have my wholehearted support.”

Nixon himself concentrated on the politics and the packaging for the next two days. Like Safire, he stayed up much of the night writing a draft of his speech. As Nixon wrote out the notes for his speech about the impact of closing the gold window: “Let me lay to rest the bugaboo of devaluation. Will this action reduce the value of the dollar? The long term purpose and the effect of this action will be to strengthen the $ – not weaken it.”

The president, particularly concerned about the impact of his comments on TV, complained: “I have not had anybody working for me in the press area who understood the value of TV.” As much as a “New Economic Policy,” Nixon and his subordinates were scripted a political drama and an economic tragedy.

This is the fourth in a series of blogs on the history of the “Nixon Shock” of August 15, 1971 that closed the gold window. Next: National Security Advisor Henry Kissinger.

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