Andrew Young On The End Of The Gold Standard And America's Financial Vision

To the best of our knowledge, the only Black politician who has publicly made a direct connection between world poverty and the end of the gold standard is Andrew Young. Among Blacks, only Nation of Islam leader, The Honorable Elijah Muhammad, preceded him in linking the end of the gold standard with world wide monetary inflation and the instability in world trade that would stem from not having the paper currencies of America and England backed by the precious metal. Today we take a deeper look at Andrew Young's first-hand witness of how the world's monetary regime unraveled and what he thought about it, at the time.

In his book A Way Out Of No Way Young writes (the italics are ours):

"The assassination of so many political and social leaders in the 1960s who were critical of America's vision of itself probably set back the cause of freedom at least twenty years. The Nixon administration institutionalized these setbacks through the appointment of conservative judges, the shift of expenditures to the defense industry, and perhaps worst of all, by abandoning America's leadership role in the world economy by repudiating the post-war Bretton Woods Agreements. Let me digress a moment and look at the Bretton Woods Agreements more closely- an agreement which had provided economic stability for the post-war world for twenty-five years.

Bretton Woods had provided a stable currency for the world which was pegged to the dollar, reasonable interest rates that encouraged development through public and private investment, and free access to technology and markets. From 1945 to 1973, the world grew and prospered under cooperative American leadership, which led with a strong dollar backed by gold.

One of my first congressional hearings was as a member of the Banking Sub-committee on International Finance, where in 1973 the Nixon Administration appeared en masse to advocate the end of U.S.-backed stability for the world monetary system. No one knew quite why. The arguments seemed based more on economic theories than practical evidence.

But George Schultz, Secretary of the Treasury, Paul Volker, then Assistant Secretary for International Monetary Affairs, and Arthur Burns, Chairman of the Federal Reserve Bank all said that they agreed on this course of action or, really, inaction. Twenty years later, Paul Volker, in his book Changing Fortunes, admitted that all of these distinguished men had grave reservations about their recommendation at the time, but they were going along with the new administration's position. I questioned them, and as the lowest-ranking member of the Committee, admittedly did not understand the meaning and implications of their actions. But without some strong agreement and leadership, it seemed that politics would increasingly influence currencies and prices.

Less than six months after this decision was taken, the Organization of Petroleum Exporting Countries (OPEC) was formed, the price of oil went from $3.50 per barrel to eventual highs of $50.00, and a major shift in our nation's economic fortunes began.

One of the greatest shifts in wealth in the history of the planet was about to occur, and the global economy went from a situation of gradual stable growth for twenty-five years under U.S. leadership, vision, and sacrifice, to the current economic roller coaster which had led to worldwide anxiety, economic stagnation, and joblessness.

This matter has never received sufficient attention and discussion. The press and the Congress got caught up in the Watergate scandal, and thanks again to the spirit moving across the South, southern Democrats were freed to vote their conscience, confident of their new protection from black voters in the coming elections.

Nixon was maligned and forced to resign because of the Watergate break-in scandal. But the greatest damage he did to the nation and to the world and his greatest crime may have been the abdication of American global leadership and financial vision. Whenever I think about this I mourn again the assassinations of Martin Luther King, Jr. and Robert Kennedy, and I lament Hubert Humphrey's loss in 1968 by less than 1 percent of the vote. Things might have been so different.

Forgive the digression, but even thoughts must be allowed to flow freely and uncensored when the 'spirit is a'movin over the land'."

Thursday, February 8, 2001