12. Editorial Note

On February 12, 1973, overwhelming speculative pressure against the dollar prompted the closure of Western European exchange markets; that same speculative pressure had led to the closure of the Japanese foreign exchange market on February 10. On the evening of February 12, Secretary of the Treasury George Shultz announced that the administration would seek Congressional approval of a 10 percent devaluation of the dollar. He also announced that the Japanese Government would allow the yen to float, and that Washington’s "firm expectation is that the yen will float into a relationship vis-à-vis other currencies consistent with achieving a balance of payments equilibrium not dependent upon significant government intervention." Moreover, "[c]onsultations with our leading trading partners in Europe assure me that the proposed change in the par value of the dollar is acceptable to them, and will therefore be effective immediately in exchange rates for the dollar in international markets." Finally, Shultz announced that the administration would soon send new trade legislation to Congress and would lift all controls on capital flows by the end of 1974. For the text of Shultz’s statement, see The New York Times, February 13, 1973, page 56. For President Richard Nixon’s public comments on Shultz’s statement, see Public Papers: Nixon, 1973, pages 89–90.

On February 13, President Nixon, Shultz, and President’s Assistant for Domestic Affairs John Ehrlichman met from 11:05 to 11:42 a.m. in the Oval Office. (National Archives, Nixon Presidential Materials, White House Central Files, President’s Daily Diary) The tape recording of their conversation reveals that they discussed international monetary and trade policy. (Ibid., White House Tapes, Oval Office, Conversation 851–4) Attached to a proposed schedule for this meeting is a draft of Shultz’s February 12 statement. At the bottom of the proposal, Nixon wrote to Ehrlichman: "The key point I made in my August 15 [1971] speech—i.e. that this devaluation does not reduce value of [illegible] American dollar at home—is not covered in all his public statements + should emphasize the protective rather than ‘outgoing’ features of our trade proposals." (Ibid., White House Special Files, Staff Member & Office Files, President’s Office Files, President’s Handwriting, Box 20, Feb 1–15, 1973)