The Dissolution of the Bretton Woods System Evidence from the Nixon Tapes August – December 1971

Ohlmacher, Scott W.
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University of Delaware
In July 1944, representatives of the Allied nations gathered in Bretton Woods, New Hampshire and signed an agreement to rebuild the international monetary system. From 1946 until August 15, 1971, major currencies were fixed to the US dollar, and the dollar was, at the same time, convertible to gold at the rate of $35 per ounce. On August 15, 1971, without consulting the leaders of the rest of the world, Richard Nixon made the decision to end convertibility of the dollar into gold and allow the dollar to float against gold and world currencies. The Nixon tapes, the series of personal recordings made during the presidency of Richard Nixon and since made public, provide a unique opportunity to determine why the administration made the decision in this way. The tapes also provide unique insights into the reactions of the rest of the world following this decision and how the negotiations that rebuilt the system of international finance took place. It has become clear from these tapes that economic outcomes were subordinated in favor of political issues, as the Nixon administration viewed the renegotiation of the system of international finance as an issue of national security. The primary concern of the administration was always the 1972 election, and that overshadows the economic theory that surrounded the decisions being made.