The Nixon Shock: The Rapid Industrialization During The Late Nineteenth Century

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The Nixon shock, the end of Bretton Woods The rapid industrialization during the late nineteenth century imposed a greater need for countries to expand their economy via global commerce. Moreover, in the United States, the harsh economic realities of the Panic of 1893 encouraged Americans to look for new conduits to stabilize the economy beyond its borders. Consequently, leaders and thinkers in a country rich with isolationist traditions of avoiding permanent or entangling alliance embraced sympathetic views toward engagement in global commerce. For example, McKnight Nichols presented a diverse group of isolationist figures, Senators, Henry Cabot Lodge and William Borah, a noted philosopher and psychologist, William James, a progressive writer,…show more content…
Kennedy’s administration followed Eisenhower’s administration by continuing to view military spending abroad as the culprit for the balance of payments deficit. Indeed, a telegram dated September 12, 1961 from the U.S. Department of States to the U.S. embassy in the Federal Republic of Germany showed an effort to reduce U.S. military expenditure in West Germany. The telegram showed that the Defense and Treasury department’s desire to negotiate with the West German government to repay the U.S. for the cost of maintaining U.S. troops in West Germany. Still, the date of the telegram further revealed the urgency to correct the balance of payments deficit. Just a few months earlier on June 4, 1961, in a private meeting, the Soviet Premier Nikita Khrushchev warned the newly elected U.S. President Kennedy that the Soviet Union was prepared to defend the sovereignty of East Germany and wanted the Western Allies out of Berlin. As the Soviet premier departed, Kennedy closed the conversation by saying “It would be a cold winter” This meeting of course was the beginning of the Berlin Crisis that lasted until early November. Thus, it seemed astounding to request an allied to reimburse for the cost of providing defense against the Soviet Union, especially at the Cold War Frontline. Unfortunately the military spending cuts abroad cuts was not enough, subsequently, on July 18, 1963, President Kennedy delivered a special message to the Congress of the United States on the balance of payments. In the message, Kennedy discussed five goals to achieve a favorable balance of payments. First, to expand of exports, convened a White House conference to expand export. Second, to limit dollars leaving the country, create awareness that encouraged Americans to travel within America rather than abroad. Third, to restrain government expenditure abroad, assess foreign defense and aid budgets. Fourth, to reduce the outflow of short-term capital, the Treasury Department and the Federal

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