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A much stronger objection is that an official price increase would tend to give gold a continued undeserved prominence in world finance. Most economists—and the Nixon Administration—believe that the role of gold should be reduced, or even eliminated, in any long-range overhaul of the international monetary system. Still, there are ways of managing a gold price boost so that it would be what Economist Arthur Okun calls "severance pay" for cutting the monetary tie to gold. The U.S. could couple an increase with a formal announcement that the Treasury would no longer buy or sell any gold; that would make the increase only a bookkeeping entry for the U.S., although the Europeans could still claim victory. Negotiations could then proceed to construction of a new system in which gold would be phased out. There are indications that the Europeans would accept such an approach. For example, Italian Treasury Minister Mario Ferrari-Aggradi recently suggested that dollar devaluation be part of a package deal that would include unspecified moves to diminish the international roles of both gold and dollars, and to increase the importance of Special Drawing Rights, which are a deliberately created form of international reserves.
Treasury Secretary John Connally is believed to be less stubbornly opposed to a gold price increase than his official statements indicate, and the Federal Reserve recognizes that the price eventually may have to be changed. Opposition is waning even in Congress, which would have to give final approval. Wisconsin Democratic Representative Henry S. Reuss, whose mastery of the complexities of world finance has won increasing respect from congressional leaders, once threatened impeachment of any President who proposed a large unilateral increase in the gold price. Last week he suggested that the Administration agree to a "modest" increase, combined with foreign revaluations. The chances of such a deal would improve further if the U.S. could also win trade concessions from the Europeans and Japanese. President Nixon could then argue, correctly, that the gold raise was a minor part of a grand design for a better, fairer world monetary system and elimination of the U.S. balance of payments deficit. Presented with that bargain, many other Congressmen who have insisted that the U.S. must never, never devalue probably would agree with Reuss that "now is no time for false pride."