This month we observe the 40th anniversary of the resignation under threat of imminent impeachment of President Richard M. Nixon. Nixon aide and loyalist Pat Buchanan sums up in a column in USA Today Liberal Elites Toppled Nixon his view: Richard Nixon was not brought down by any popular uprising. The breaking of his presidency was a product of the malice and collusion of liberal elites who had been repudiated in Nixons 49-state landslide in 1972."
Nixon as it happens was not 1974s only casualty. As William Safire recalls Nixons secretary of the treasury John Connally was indicted for taking graft on the same day the President was charged by the House Judiciary Committee for abuse of power."
Both men were instrumental in the repudiation of the Bretton Woods gold-dollar monetary system that had undergirded post-war American (and world prosperity). Bretton Woods indeed was coming apart (as a goldpaper pastiche standard inevitably is prone to do). A gold-based international monetary order called out however to be mended not ended. Nixon ended it.
The House Judiciary Committees charges and the Connally indictment uncannily fulfill a prophecy by Tom Paine. Paines Common Sense triggered the American Revolution. Paine later wrote a tract Dissertations On Government; The Affairs of the Bank; and Paper Money in 1786. It was issued the year before the Constitutional Convention that would send the confederated former colonies into the epic called the United States of America. It was in part a perfect diatribe against paper-based (rather than gold or silver defined) money.
Paine observed:
But the evils of paper money have no end. Its uncertain and fluctuating value is continually awakening or creating new schemes of deceit. Every principle of justice is put to the rack and the bond of society dissolved: the suppression therefore; of paper money might very properly have been put into the act for preventing vice and immorality. … As to the assumed authority of any assembly in making paper money or paper of any kind a legal tender or in other language a compulsive payment it is a most presumptuous attempt at arbitrary power. There can be no such power in a republican government: the people have no freedom and property no security where this practice can be acted: and the committee who shall bring in a report for this purpose or the member who moves for it and he who seconds it merits impeachment and sooner or later may expect it. Of all the various sorts of base coin paper money is the basest. It has the least intrinsic value of anything that can be put in the place of gold and silver. A hobnail or a piece of wampum far exceeds it. And there would be more propriety in making those articles a legal tender than to make paper so. … The laws of a country ought to be the standard of equity and calculated to impress on the minds of the people the moral as well as the legal obligations of reciprocal justice. But tender laws of any kind operate to destroy morality and to dissolve by the pretense of law what ought to be the principle of law to support reciprocal justice between man and man: and the punishment of a member who should move for such a law ought to be death.The death penalty for proposing paper money? Paine called for the criminal indictment as a capital crime and for impeachment of any who even would call for tender laws. Connally was acquitted on the charges of graft and perjury. Later he underwent bankruptcy before dying in semi-disgrace. Nixon resigned rather than undergoing impeachment also living out his life in disgraced political exile. The spirit of Paines declaration was fulfilled in both cases. Connally and Nixon engineered this violation abandoning the good precious-metal money contemplated by the Constitution. Nemesis followed hubris. The closing of the gold window" was based by Connolly on deeply wrong premises. It was sold to the public by Nixon on deeply false promises. On August 15 1971 President Nixon came before the American people to announce:
We must protect the position of the American dollar as a pillar of monetary stability around the world. In the past 7 years there has been an average of one international monetary crisis every year. Now who gains from these crises? Not the workingman; not the investor; not the real producers of wealth. The gainers are the international money speculators. Because they thrive on crises they help to create them. In recent weeks the speculators have been waging an all-out war on the American dollar. The strength of a nations currency is based on the strength of that nations economyand the American economy is by far the strongest in the world. Accordingly I have directed the Secretary of the Treasury to take the action necessary to defend the dollar against the speculators. I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold or other reserve assets except in amounts and conditions determined to be in the interest of monetary stability and in the best interests of the United States. Now what is this actionwhich is very technicalwhat does it mean for you? Let me lay to rest the bugaboo of what is called devaluation. If you want to buy a foreign car or take a trip abroad market conditions may cause your dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America your dollar will be worth just as much tomorrow as it is today. The effect of this action in other words will be to stabilize the dollar. Now this action will not win us any friends among the international money traders. But our primary concern is with the American workers and with fair competition around the world. To our friends abroad including the many responsible members of the international banking community who are dedicated to stability and the flow of trade I give this assurance: The United States has always been and will continue to be a forward-looking and trustworthy trading partner. In full cooperation with the International Monetary Fund and those who trade with us we will press for the necessary reforms to set up an urgently needed new international monetary system. Stability and equal treatment is in everybodys best interest. I am determined that the American dollar must never again be a hostage in the hands of international speculators.Nixons promise that your dollar will be worth just as much tomorrow as it is today" has of course completely falsified. The 2014 dollar is worth only 15 cents in 1971 terms buying 85 less than it did in 1971. Some bugaboo. All of Nixons other rationalizations for going off gold also have been falsified. The closing of the gold window turned out to be the slamming of the golden door to social mobility and equitable prosperity. In the wake of the closing of the gold window median family income stagnated never again experiencing secular recovery. Meanwhile the income of the wealthy has continued apace. This has produced the very income inequality so loudly denounced by progressives who ironically are the last defenders of the very policy which is the probable cause of our inequitable prosperity. Brother Pat Buchanan states that Nixon
…ended the Vietnam War with honor brought all our troops and POWs home opened up China negotiated historic arms agreements with Moscow ended the draft desegregated southern schools enacted the 18-year-old vote created the EPA OSHA and National Cancer Institute and was rewarded by a grateful nation with a 61 landslide. Even as Watergate broke he ordered the airlift that saved Israel in the Yom Kippur War for which Golda Meir called him the best friend Israel ever had. His enemies were beside themselves with rage and resentment.Buchanan while admirably loyal ignores the correlation between Nixons embrace of paper money and Paines prophetic call for impeachment for that high crime. Let us now in this month of the 40th anniversary of Nixons resignation and the 43rd of his abandonment of the gold standard pause to wonder. It is bewildering circumstance that the very liberal elites Buchanan indicts as malicious in their treatment of Nixon today represent the most reactionary of defenders of the most pernicious and only enduring residue of the Nixon Shock: paper money a most presumptuous attempt at arbitrary power."