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The great majority of economists and financiers also reject the idea of an increase in the price of gold—in effect, devaluation of all the world's currencies. Says Yale's Robert Triffin, a ranking gold expert: "It would help unfriendly nations and hurt our friends, and lead to the collapse of international monetary cooperation." The biggest gold producers, South Africa and Russia, would be helped; their gold would immediately become worth two or three times what it is now. The countries that have helped the U.S. by holding large amounts of dollars in reserve would be hurt, especially Germany, Japan and Canada.
Moreover, since Congress normally would have to debate and vote on changes in the price of gold, many holders of dollars would rush to cash them in for gold. In theory, revaluation of gold could be prepared in secret by all nations concerned and announced simultaneously. In practice, economists believe, this might be nearly impossible to carry out. For all these reasons, President Johnson, in his Economic
Message two weeks ago, repeated six times that the U.S. is determined to hold gold at its current price.
New European Axis. De Gaulle probably does not really believe that the world will return to the gold standard. He has been much influenced by Jacques Rueff, his economic mentor and probably the world's foremost proponent of a return to gold; Rueff greeted De Gaulle's blast last week as "an invitation to a common enterprise that will deliver the West from an absurd monetary system." But De Gaulle, however much he may admire the theory, is an artist of the possible, and he is probably using the threat of a gold standard in hopes of pressuring the U.S. and Britain into accepting lesser changes in the monetary system favorable to France. For the past six months he has been urging the creation of a new international reserve currency called the "cru" (for collective reserve unit), which would give greater weight to gold and more financial power to nations with heavy gold supplies. The U.S. has opposed it, but De Gaulle's attack on the dollar may force Washington to reconsider.
High officials of the Federal Reserve Board believe that De Gaulle, aided by Spain's Franco, is trying to form a new European axis designed to embarrass and weaken the U.S. by attacking the dollar. To buttress the dollar, Federal Reserve Chairman William McChesney Martin Jr. has been strongly urging President Johnson to move swiftly and dramatically to wipe out the deficit in the balance of payments. "Some way or other, something has to be done," Martin said recently. "It is important that we face up to the fact that we have become a chronic deficiteer—and that leaves us in a weak position."