Behind Closed Doors
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- Behind Closed Doors
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Bibliographic details
- Authors: Atish Ghosh
- Published: September 2, 2021
Overview / central thesis
- The review summarizes Jeffrey E. Garten’s account that President Richard Nixon’s decision to close the “gold window” on August 15, 1971, was the triggering event that transformed the Bretton Woods system and the global monetary order.
- Garten’s book focuses on the specific event at Camp David (the weekend of August 13–15, 1971) as the immediate trigger amid broader structural forces that made the collapse of Bretton Woods likely.
Historical context and balance-of-payments facts
- Under Bretton Woods, the United States promised to provide gold, on demand, in exchange for dollars held by foreign central banks.
- During the 1960s the United States ran balance of payments deficits and began to deplete its gold stock.
- The review reports US monetary gold falling to $10 billion (against $40 billion in liabilities), creating a dire situation that prompted Nixon to convene officials at Camp David.
- Key date: August 15, 1971 (closing the gold window).
Key participants and positions at Camp David
- Principal figures described: President Richard Nixon; Arthur Burns; John Connolly; Paul Volcker; George Shultz.
- Positions and concerns:
- Burns and Volcker worried about how foreign officials would react to closing the gold window.
- Connolly argued that closing the gold window would help bludgeon surplus countries into revaluing their currencies.
- Shultz favored floating exchange rates (influenced by Milton Friedman), which would render the gold-window issue moot.
- Nixon prioritized domestic public reaction over concerns of foreign central bankers.
Camp David discussions and narrative framing
- Garten chronicles the discussions and how Nixon, a politician, reframed the narrative around shuttering the gold window:
- From an admission of US policy failures and international responsibility abrogation
- To a triumphant framing of a fresh start for the United States that resonated with domestic audiences.
Aftermath, the Smithsonian Agreement, and notable anecdote
- Garten describes the short-lived Smithsonian Agreement as part of the aftermath.
- Anecdote relayed in the review:
- Connolly pressed the Japanese finance minister to revalue the yen by 17 percent; the minister refused, citing that a 17 percent revaluation during the interwar period had led to the then–finance minister’s assassination.
- Connolly, who had been in the car during President John F. Kennedy’s assassination and had himself been shot, accepted a 16.9 percent revaluation.
- The review notes that the Japanese prime minister had pre-authorized up to a 20 percent revaluation.
Reviewer’s assessment and recommendation
- The review characterizes Garten’s book as a superb account that fills a gap in understanding the immediate trigger of Bretton Woods’ collapse.
- The book is recommended as "light, but thoroughly enjoyable, reading" and a reminder that personalities and politics shape historical economic events.
- The review closes that the book belongs on international economists’ bedside tables rather than merely their bookshelves.
Source: F&D book review "Behind Closed Doors" by Atish Rex Ghosh, September 2021.
Content in this bundle
- Book Review: Three Days at Camp David - IMF F&D
- A puertas cerradas ● Finanzas y Desarrollo ● Septiembre de 2021
- à huis clos
- Книжное обозрение – Финансы и развитие – Нельзя терять время– сентябрь 2021 года