Kissinger Henry. White House Years

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IspentmostofMay12onthetelephone,heatedlyarguingalongthese

linestooursupportersinthesenate.ExperiencedleaderssuchasJohnStennis

wereconvincedthatMansfieldhadthevotesandthatonlyacompromisecould

headhimoff.IpreferredtheMansfieldamendment.Alltheproposed

compromiseshadthedisadvantageofmakingtheAdministrationapartytothe

decisiontoreducetroopsinEurope;oncewehadgiventhatmuchgroundwe

wouldsoonbedrivenfromonepositionofdisadvantagetoanother.Atthesame

time,astraightvotewouldprovideanopportunitytodemonst ratethatthe

essenceofourpostwarforeignpolicycouldsurviveourdivisionsoverVietnam.

ForthefirsttimeintheNixonAdministrationwemightsucceedinmobilizingthe

establishmentfigureswhohadbeenresponsibleforsomanyofAmerica’sgreat

postwarachievements.



OneofthefirstwasDeanAcheson.Thecapacitytoadmireothersisnotmy

mostfullydevelopedtrait.ThatfrailtydidnotapplytothefigureofAcheson,so

outofscaleinhisachievementsandinhispassion,inhismoralconvictionsandin

hisprejudices.Ihadmethimwhenhehadjuststeppeddownfromtheofficehe

lovedintothatemptinesswhichmarkstheaftermathofagreatmission,andinto

thatlonelinessknownonlytothosewhohavelivedwithexertionsforan

importantcause.Achesononcedescribedhisleavingofficeasakintotheendofa

loveaffair.Ihadinterviewedhimin1953athislawfirm;mustachebristling,he

wasimpeccablytailored,sufficientlyboredwiththepracticeoflawtobewilling

tohelpagraduatestudentwitharesearchpaperonsomearcaneaspectofthe

KoreanWar.Iaskedscholarlyquestionsthatlateracquaintance taughtmehe

musthaveconsideredrecherchéandirrelevant.Heansweredpatiently,

sometimesacerbically,alwaysprecisely.AllwenttolerablywelluntilIinquired

intohisreactiontooneofMacarthur’sparticularlymusculardispatches.“You

meanbeforeorafterIpeedinmypants?”Askedthisparagonofold‐world

diplomacy.Ourpathsdidnot crossagainuntilhetookmetolunchsomeyears

later,andgavemethisdescr iptionofaleadingfigureinathennew

administration:“Heremindsmeofanamateurboo merangthrowerpracticinghis

artinacrowdedroom.”



Achesonwasamanofdignity—in hispersonandinhisviewofthepublic

process.Hisexertionswerealwaysintheserviceofidealsthattranscendedthe

individual.Forthebetterpartofthethreedecadeshemadeaseminal

contributiontotheshapeanddesignofAmericanforeignpolicy.Heandthe

Presidenthesoloyallyservedusheredinthetransformationfromisolationismto

theunderstandingthatwithoutAmerica’sstrengththeworldwouldhaveno

peace,andwithoutourcommitmentitwouldknownohope.Thisunlikelypair

fashionedtheNorthAtlanticAlliance,thebuildingofcooperativerelationswith

formerenemies,theeconomicinstitutionsthathelpedEuroperebuildand

launchedawartornworldtowardpeace,security,andunprecedentedprosperity.



OnapersonallevelIcanneverforgetthegraceful—I mightalmostsay

gentle—wayinwhichDeanAchesonwelcomedmetoWashingtonwhenIarrived

asnationalsecurityadviser,andthewisdomandpatiencewithwhichhesought

thereaftertobridgethegapbetweentheperceptionsofaHarvardprofessorand

theminimumrequirementsofreality.“CanIputitthisway?”Ionceaskedhim

aboutaparticularlyponderouspro posal.“Certainlyyoucanputitthatway,”said

Dean,“butnotifyouwanttogetanywhere.”



DeanAchesonprizedmoralintegrity,but hedespisedthosewhousedthe

idealasadeviceforavoidingtheattainable.Hewouldoftenmockthefoiblesof

man,butheneverdenigratedthevaluesofhisnation.Hestrovemightilyfor

peaceandliberty,buthewastoowisetobelievethatanyoneman’seffortscould

markmorethanastageofanendlessjourney.JusticeHolmesoncesaidina

speechthatAchesonwasfondofquoting:“Alas,gentlemen,wecannotliveour

dreams.Weareluckyenoughifwecangiveasampleofourbestandifwecan

knowinourheartsthatitwasnoblydone.”DeanAchesonsurelylivedhisdreams;

anditwas,indeed,noblydone.



Inhistimehehadbeentheobjectofmuchabuse,someofitdirectedat

himbythePresidentwhowasnowinoffice.Thecreativity,excitement,and

achievementthatsomarkedhistimeasSecretaryofStatewereovershadowedby

apervasivedistrustandsuspic ionofwhichhebecameaconspicuoussymbol.But

hefacedadversityjauntily,withdeterminationandwithoutcompromiseof

principle.AndhistorygaveDeanAchesonitshighestaccolade—itprovedhim

right.



Nixon’sshabbytreatmentofhiminthe1952campaigndidnotkeep

AchesonfromassistinghisPresidentwhenhewasneededalmosttwodecades

later.Hisloyaltyrantotheoffice,nottheman.Hehadrespondedtoseveralof

Nixon’srequestsforhiscounsel,alwayswithoutpublicity.Nowheofferedto

assistpublicly.HetoldmethathewouldcallanySenatorswherehecouldhelp,or

anynewspaper—thoughhefeltthathemighthaveoutwornhiswelcomewiththe

NewYorkTimesandtheWashingtonPost.Hegavemealistof“worthies”—John

McCloy,GeorgeBall,McGeorgeBundy,CyrusVance,andothers—whosesupport

Ishouldtrytoenlist.ItoldhimIwouldreporttohimafterhavingtaken 

soundings.



Theresponsewasdivided.ContemporariesofAcheson—like McCloy—

cametoourassistanceunconditionally. Myowncontemporariesstillhadfutures

toprotect;theywerewillingtolendtheirnamesthoughnottheirmuscle;

basically,theypreferredcompromise.GeorgeBallwasinbetweeninage—andin

response.Hegaveushisjudgmentthatacompromisewasnecessary.Buthe

lovedafightinagoodcause,andhewenttoworkwitheffectivenessand

characteristicpassion fortheoutrightdefeatoftheMansfieldamendment.



WhenIreportedtoAchesonthevariousreactions,hehadanotheridea:“It

seemstomewhatwewantisalittlevolleyfiringandnotjustasplatteringof

musketry.”HeurgedthatPresidentNixonimmediatelygathertogetheranarray

offormersecretariesofstate,secretariesofDefense,HighCommissionersfor

Germany,NATOCommanders,andChairmenoftheJointChiefsofStaff.This

embodimentofabipartisanpostwarforeignpolicyshouldissueastatement

supportingthePresident’sdeterminationtomaintainourpresentmilitary

strengthinEurope.NixonsharedmyenthusiasmforAcheson’sproposal.He

reveledintheprospectthatforthefirst,andintheeventtheonly,timeinhis

publiclifehewouldhavetheestablishmentonhisside—themenhereveredand

despised,whoseapprobationhebothcherishedandscorned.Whattragedies

mighthavebeenavoidedifapermanentbridgecouldhavebeenbuilttothis

grouptogiveinwardsecuritytothislonely,complexPresident?Whatifthemen

whohadsustainedournation’spolicyintheirowntimehadhelpedNixonto

leavethedarklandofhisfearsandpremonitionsandtranscendthatstrange

senseofhisinadequacy?Itisapityitneverhappened;bothsidesmustsharethe

blame.



ThemeetinginthelateafternoonofMay13wasasplendidoccasion.

PresentintheCabinetRoomweresuchluminariesasAcheson,McCloy,Ball,

HenryCabotlodge,Vance,LuciusClay,AlfredGruenther,LaurisNorstad,and

LymanLemnitzer.ItwasthefinalmeetingoftheOldGuard,agroupunitedinthe

nationalinterest,stilldedicatedtotheself‐confidentperceptionofworldorderby

whichAmericanidealismhadrestoredwar‐ravagedsocietiesandturnedenemies

intoallies.Nixonwasathisbest.Hemadeaneloquentspeech:Hehadnever

askedthosepresentfortheirsupportonVietnam.Buttheyhadneverdisagreed

onNATO.ThePresidentrecalledthatsincetheEightiethCongress,when

PresidentTrumanproposedtheNorthAtlanticTreatyandrelatedprogramsanda

RepublicanCongresssupportedthem,wehadalwaysbeenatoneonthissubject.

InopposingtheMansfieldamendment,herepresentedthecontinuityof

Americanpolicy.AlludingtothetitleofAcheson’sautobiography,hesaidthathe

toohadbeen“presentatthecreation.”Perhapswewereonthevergeofa

breakthroughwiththeCommunistworld(hewasthinkingofSALTandthe

preparationsformytriptoPeking).Butwecouldachievethesegoalsonlyifthe

AtlanticAlliancestayedstrong.



Allpresentrespondedinthesamespirit.Therewassomediscussionabout

thedesirabilityofcompromise.ButAcheson,whosharednoneofNixon’s

reluctancetoengageinface‐to‐faceconfrontations,effectivelysquelchedit.Ata

strategicmomentAchesonsurfacedabriefstatementofsupportfortheothersto

sign.Rogers—unawarethatNixonhimselfhadoriginatedthenotionofan

Achesondraft,perhapsputoffbytheelegantself‐assuranceofhispredecessor,

perhapsworriedaboutMansfield,withwhomhewouldhavetocontinueto

work—urgedthatitbekeptinabeyance.Acheson,whoknewthattheexisting

consensusmightevaporateonceeveryonereturnedtohisnormalpressures,

urgedagreementinprincipleonthespotandreleaseofthestatementassoonas

possible,butnolaterthanSaturday,May15,orforty‐eighthourslater.Nixon

managedtoconveytohisSecretaryofStatethathewasinaccord,andRogers

joinedtheconsensus.



Achesonwasselectedtoreporttothepress.Reticencewasnothisstyle.He

gaveashisimpressionthatthePresidentwasadamantagainsttheMansfield

proposalandanyvariationofit.Itwouldbe“asinine,”hesaid,and“sheer

nonsense,”tocutforceswithoutacutinSovietforces.Hesaidhethoughtthat

wecouldwinthevote.HereportedthatthePresidenthadcalledonthepeople

whocreatedNATOandsawitthroughfortwentyyears.“Allofushadourfighting

gloveson.”Askedwhythemeetingtooksolong,hereplied,“wearealloldand

wearealleloquent.”GeorgeBalladdedthatitwasarelieftobetoldbythe

Presidentthathedidnotwanttocompromise.



Havingthuslaidthebasisforpublic support,NixondepartedforKey

Biscayneandleftthemanagementofthebattletome.InBonn,McCloyhadbeen

busywithBrandt,whoissuedaneffectivestatementwarningthataunilateral

Americanwithdrawalwouldleave“theirradicableimpressionthattheUnited

StatesisonitswayoutofEurope,”transformingdétenteintoappeasement.

Brosio,attheNATOsecretariat,releasedalettertothePresidentwarningthata

majorreductionofUSforceswould“withdrawallcredibilityfromNATO’sability

tokeepitscommitments.”



OntheSaturday,asagreed,abriefPresidentialstatementopposingthe

MansfieldamendmentwasreleasedfromKeyBiscayne,andwasimmediately

endorsedbytheluminouslistofsupporterswhohadbeenmarshaled.Inaddition,

formerPresidentLyndonJohnsonissuedastatementinsupport;endorsements

camefromformerSecretaryofStateDeanRusk;formerSecretariesofDefense

RobertLovett,NeilMcElroy,andTomGates;formerseniorDefenseDepartment 

figureslikeRoswellGilpatric;diplomatsRobertMurphy,LivingstonMerchant,and

DouglasDillon;formerNATOcommanderssuchasGeneralMatthewRidgwayand

allformerHighCommissionersforGermany.OnlyRobertMcNamaraandClark

Cliffordoptedoutofthejointstatement,theformerbecausehewasheadofthe

WorldBankandthusaninternationalcivilservant;thelatterforreasonshechose

nottoreveal.



Themediareactionshowedthattheoldforeignpolicyestablishmentstill

carriedquiteawallop.TheNewYorkTimespublishedaneditorialonMay16

entitled“SenatorMansfield’sfolly,”criticizingtheamendmentascomingatan

“inopportunetime”andpredicting certainrejectionunlesstheSenate“haslostall

senseofresponsibility.”Its“mereintroductioncouldharmnearlyeveryongoing

negotiatingeffortbytheUnitedStatesanditsallies.”Anditfurtherarguedthat

“evenanarrowdefeatfortheamendmentwillshaketheconfidenceofthe

Europeanallies.”



OntheverydayoftheNixonstatement,May15,supportcamefromamost

unexpectedquarter.Ina majorspeechinSovietGeorgia,LeonidBrezhnevwent

outofhiswayexplicitlytodeclareSovietreadinesstobeginnegotiationsover

mutualtroopreductionsinEurope.BrezhnevsaidthatWesternspokesmenwere

asking“whosearmedforces—foreignornational—whatarmaments,nuclearor

conventional,aretobereduce d?” Hecomparedsuchspeculationtoamanwho

triedtojudgetheflavorofwinebyitsappearanceandnotitstaste;“translated

intodiplomaticlanguagethismeans—tostartnegotiations.”



TheAdministration,Congress,andthemediaalikeseizeduponBrezhnev’s

statementlikemannafromheaven.Herewasawayoutforuneasysupportersof

MansfieldaswellasforhisAdministrationopponents.Bothcouldunitebehind

thepropositionthattheimminenceofnegotiationsmadeunilateralreductionsof

Americanforcesuntimely.OnMay16theWashingtonPostprintedaneditorial

entitled“Brezhnev’sBid;Nixon’sOpportunity,”urgingearlynegotiationson

mutualforcereductions.TheNewYorkTimesandotherleadingjournalsfollowed

asimilartheme.OnMay16secretaryRogersannouncedthatAmbassadorJacob

BeamhadbeeninstructedtoaskSovietofficialsto elaborateonBrezhnev’soffer.

WewerewellonthewaytodefeatingtheMansfieldamendmentbycommitting

ourselvestonegotiationswhosecontentwewereasyetunabletodefine.



WhatpossessedBrezhnevtomakehismutualforcereductionsofferon

thatparticulardayisnotclear.Itwaslong‐standingSovietpolicy;hehadsaid

exactlythesamethinginaspeechinMarch.TheMansfieldamendmentmust

havecaughttheKremlinevenmorethantheAdministrationbysurprise.Nor

couldMoscowhaveexpectedittopickupsuchaheadofsteam.TheBrezhnev

proposalwasundoubtedlyplannedtogiveimpetustotheBerlinnegotiationsby

suggestingthattheywouldunlockthedoorstoahopefulfuture.Nothing

illustratesbettertheinflexibilityoftheSoviets’cumbersomepolicymaking

machinerythantheirdecisiontosticktotheirgameplanevenwhenconfronted

withtheMansfieldwindfall.ItshouldbeponderedbythosewhoseeeverySoviet

maneuveraspartofawell‐considereddesign;Sovietmomentumresultsgenerally

frompersistenceandbrutepower,notfromstrate gic visionoreventactical

flexibility.



Asoftenbefore,ourbiggestproblemremainedtheinstitutionaldesirefora

compromiseinthesenate,andamongseveralmembersoftheAdministration—a

desirethateventhecombinedimpactofthe“worthies”andBrezhnevcouldnot

quenchtotally.IexplainedtoSenatorRobertGriffin,theRepublicanwhip,that

noneofthecompromiseproposalswasas“innocuous”ashethought.All

committedtheAdministrationtotheprincipleofunilateralwithdrawalandto

periodicreportstoCongressabout“progress.”IalsoremindedGeorgeBall,who

wasloyallyliningupvotesontheHilldespitehisbeliefinthenecessityofa

compromise,thattheWhiteHousewouldholdfirm.Anyhintsotherwisefrom

elsewhereintheAdministrationdidnotreflectthePresident’sthinking.



Thefinalvotecamenonetoosoonforoursanity,onMay19.The

compromiseamendmentadamantlyopposedbytheAdministrationwasbeaten

73‐24.AsimilaramendmentputforwardbySenatorPeterDominickwasrejected

68‐29.SenatorFrankChurchthenproposedamodificationoftheMansfield

position,acutofonly50,000insteadofMansfield’sproposalof150,000.Thatwas

defeated81‐15.ThemoodintheSenatewasrevealedbyoneofoursupporters

whobalkedwhenItriedtobracehimonthevoteagainstanotherofthecascade

ofamendments:“Howmanytimesadaycanamanvoteno?”Finally,Mansfield’ s

amendmentcametoavoteafteranimpassionedspeechbytheMajorityLeader.

Itwentdown61‐36.



Thenextmorning,May20,NixonannouncedthebreakthroughontheSALT 

negotiations.Ithadbeenaclosecall.Wehadbarelyavoidedthedismantlingof

twenty‐fiveyearsofforeignpolicyontheeveofenteringtheconclusivephaseof

thestrategicArmslimitationTalks.



Thedebatehadoneby‐product:Itgaveimpetustothemutualforce

reductionnegotiations.Ourstrategypreviouslyhadbeentostall,partlytolink

thesenegotiationstootherissues,butaboveallbecausewereallyhadnot

thoughtthroughwhatwouldbedesirable.Everyschemewehadexamined

increasedtheimbalanceofforcesinCentralEurope.TheWarsawPacthadfar

moretroopsthanwehadalongthecentralfront;itsinitialadvantagewouldgrow

rapidlyoncemobilizationbegan,particularlybecauseoftheproximityofSoviet

divisionsinEuropeanRussia.Insuchcircumstances,agreedmutualreductions,if

bothsidesreducedbyanequalpercentage,wouldcompoundNATO’sproblem;

theywouldweakenthealreadythinlyheldNATOfrontwithoutdegradingthe

Sovietcapacitytoreinforce.Oneofourstudiesshowedthatwhilea10percent

mutualreductionwouldnothaveanysubstantialeffect,a30percentreduction

wouldsignificantl yimprovetheWarsawPact’sposition.Inevitably,thisledtothe

viewthattheonlysafeagreementwas“asymmetrical”reductions,inother

words,thattheWarsawPactwouldcutitsforcesbyalargeramountthanNATO.

Thisconceptfirstfacedtoughsleddinginabureaucracydedicatedtothe

propositionthatweneededtoputforward“negotiable”proposals;nobody

believedthatsuchan“unequal”approachwouldbeacceptedbytheSoviets.The

debateovertheMansfieldamendmentguaranteedthatwewouldhavetosort

outourthinkingduringnegotiationsonmutualreductions,andnotbeforethem

aswewouldhavepreferred.



ThemovetowardnegotiationswasgivenamajorpushintheLisbon

meetingofNATOForeignMinistersthatadoptedaplanbyRogersofearly

explorationstobeconductedbySecretaryGeneralBrosio.AndNixonasusualwas

hisownworstenemyafterhehadwonthebattle.EuphoricovertheSALT

breakthroughandtheSenatevote,heusedapressconferenceonJune1toscore

apointoffhisliberaltormentors.Heannouncedthatafterconsultationswhich

werealreadyinprogresstheUnitedStateswouldbepreparedto“moveforward”

towardearlynegotiations.Hethuswouldhavemadenegotiationsforwhichwe

werequiteunpreparednea rlyinevitablehadtheSovietsseizedtheiropportunity.

Luckily,theywerelookingforloosechange;thisgaveustimetogetourhousein

order.



ForafterhavingraisedtheissueoftroopreductionsinEuropeata

fortuitousmomentintheMansfielddebate,theSovietsasquicklydroppedit.

Perhapstheyregrettedthefavortheyhaddoneusinhelpingtodefeatthe

Mansfieldamendment.Perhapstheyhadthesamedifficultyindevelopingunified

positionsthatwedid.PerhapstheyfearedtheimpactontheircontrolofEastern

EuropeifanySovietwithdrawaltookplace.Perhapstheywantedtowaituntil

aftertheBerlinnegotiations.PerhapsBrezhnevhadjustmadeamistake.



Whateverthereason,nosoonerhadNATOshownaninterestinmutual

forcereductionsthantheSovietsstalled,linkingittotheirpetprojectofthe

EuropeanSecurityConference.AndtheyrefusedtoreceiveBrosioforexploratory

talksonthegroundthattheydidnotwishtoparticipateinbloc‐to‐bloc

negotiations.ThissuitedFranceverywell,sinceParissawintheBrosiomissiona

diminutionofitscherishedindependence.AndFrancepreferredtheEuropean

SecurityConferencetomutualforcereductionsasacounterweighttoBrandt’s

unilateraldiplomacy.TheSovietsinsistedtheEuropeanSecurityConfere ncebe

convenedfirst.We,backedbyallalliessaveFrance,tookthepositionthatboth

negotiationsshouldproceedsimultaneously.Wesucceededinkeepingtheissue

ofmutualforcereductionsalivetoblockunilateralAmericanwithdrawalsbythe

Congress;atthesametimewesucceededinprolongingthenegotiationwithout

disadvantageousresult.



Asitturnedout,thedebateovertheMansfieldamendmentwasa

benchmarkintheAmericandomesticdebateoverforeignpolicy,thoughnoneof

theparticipantsunderstoodthisatthetime.UntilthentheAdministrationhad

beenonthedefensiveonthewholerangeofitspolicies.Ithadfoughtdesperate,

seeminglyhopelessrearguardactionstopreventemasculationofourdefense

budgetandunilateralreductionofourforces.WiththeSALTannouncementon

May20weseizedtheinitiative.ItwasfollowedbymysecrettriptoPeking,the

announcementoftheMoscowsummit,andanearlyuninterruptedseriesof

unexpectedmovesthatcapturedthe“peaceissues”andkeptouropponentsoff

balance.Inlateryears—whenitwassafetodoso—somewhohadharassedus

mostshiftedtheirviewswiththeprevailingpublicmoodandcametocriticizeus

forinsufficientattentiontoourallies;détentewasattackedforbeing“oversold.”

AsIhaveexplainedearlier,weconsideredadétentebasedonstrictreciprocityin

thenationalinterest.Butwhateverone’sviewsaboutdétenteintheabstract,in

thecontextof1971and1972thecarefullycalibratedmeasuresofthe

AdministrationtowardtheSovietUnionwereimperativetopreventaheadlong

rushtowardabdicationofresponsibilityinAmericaandamongtheallies.Our

willingnesstodiscussdétentehadluredBrezhnevintoaninitiativeaboutmutual

forcereductionsthatsavedourwholeEuropeandefensestructurefrom

Congressionalsavaging.Itwasaclassic exampleofwhysuchapolicywasneeded

tomaintaintheessentialelementsofnationalsecurityifweweretoavoidthe

destructionofournationaldefenseandAlliancesolidarityintheeraofVietnam.



<<Contents>>



****



TheEconomicCrisis:TheSecond“Nixonshock”



T

heMansfieldamendmentandtheflurryovernegotiatingwiththeSoviets

temporarilyovershadowedtheeconomicconflictthathadbeensteadily

buildingforoverayear.Itcametoaheadin1971asaresultofthree

developments:theimminententryofBritainintotheCommonMarket,the

appointmentofJohnConnallyasSecretaryoftheTreasury,andthegrowingstrain

onthedollar.



ByMay1971thelastobstaclestoBritain’sentryhadbeenovercome.AsI

havealreadyexplained,WillyBrandtsupportedBritain’smembershipinthe

CommonMarketatleastinparttogivebalancetohisOstpolitik.Pompidou

abandoneddeGaulle’sreservationslestFrancebeleftalonewithapotentially

nationalistGermany. HeathandPompidoumetonMay20‐21toresolvethe

remainingissues,allhighlytechnical. AfterwardPompidou,takingcaretoavoid

inflaminghard‐lineGaullists,announcedtheessentiallypositiveresultsina

doublenegativewhichwouldhavedoneGromykoproud:“Itwouldbe

unreasonabletothinkthatwewillnotreachanagreement.”Hewasasgoodas

hisword.ByJulyHeathwasinapositiontoannouncethathewouldsubmitan

agreementtoParliamentbeforetheendoftheyear.



ThisculminationoftwodecadesofeffortandAmericanencouragement

shouldhavecomeasagratificationtotheUnitedStates.Unhappily,itcoincided

withaperiodwhenthefrustrationsoftheVietnamWarwereencouraging

xenophobia.ThosewhowantedtoshaketheedificeofAmericanforeignpolicy

nowmadecommoncausewiththosewhosawintheenlargedCommonMarketa

challengetooureconomicpreeminence.Bothsoughttoreduceourinternational

commitments.ThecriticismoftheEuropeansystemofpreferencesandJapan’s

surplusinitstradewithusbegantomount.Urgencywasaddedbythe

increasinglyapparentplightofthedollar,theworld’sreservecurrency.Anumber

offactors—inflation,highwagesettlements,andaworseningbalance‐of‐

paymentsdeficit—combinedtocauseawaveofdollarsellingasthespringbegan.

Itbegantoappearthatamajorchangeinexchangeratescouldbestemmedonly

bythemassiveandescalatinginterventionoftheEuropeancentralbanks.On

May10theGermanFederalRepublicfinallystoppedbuyingdollars;themark

begantofloatupwardandthedollar’svaluefell.Theappreciationofthedeutsche

markinrelationtothedollarwould—the oreticallyandovertime—aidourexports

bymakingthemcheaperandreduceourimportsbyincreasingtheircost.Itwasa

“victory”ofsorts,sinceourmonetaryauthoritieshadbeenpressingfora

realignmentofratesforsometime.Butsinceitwasachievedbywhatthe

Europeansconsideredour“benignneglect” ofthedollar,itwastreatedasa

pressuretacticthatfurtherincreasedtensions.

