Richard Nixon (1913-1994) served as the 37th president of the United States from 1969-1974 when he resigned. An economic climate of high interest rates, large government spending and high inflation shaped President Nixon’s economic policies (Friedman, 16). President Nixon’s economic policies were geared towards making amends for the wrong economic policies that president Johnson had made.
President Nixon imposed wage and price freezes by taking advantage of the new authorities. He enacted price and wage controls to reduce inflation and strengthen the economy. He ordered for a 90-day freeze on all process and wages throughout the US (Yuill, 138). The president ordered a Pay Board and Price Commission to approve all increases until after the 1972 elections.
President Nixon focused on the reduction of inflation rates. The best way of doing this was to alter the foreign policies and cease the Vietnam War. He believed that voters and people in general focused more on their own financial conditions than on the foreign policy. He focused on economic policies that made the US economy stronger and supportive of individual’s economic activities (Matusow, 23). The President’s economic policies were also tied to his support on “New Federalism”. According to Matusow, these policies proposed for the decentralization of power (political power) and the transfer of certain powers of the central government to the federal governments (25). He supported economic policies such as administration of social programs by the federal governments. His pursuance of the New Federalist policies caused him to support the budget grants to states as well as the sharing of federal revenue with the states. Although Nixon’s policies were unpopular with the Congress, many Americans supported the policies because the policies would empower the ordinary US citizen.
The US congress granted President Nixon the powers to impose wage cuts and prize freezes in 1970. Although the president had been opposed to such policies earlier, he accepted the policies because if the 1971 election in which he wanted to run and as a means of resolving the inflation issues (Yuill, 138). In addition to the price cuts and the wage controls, the president also suspended the gold standard. He allowed the dollar to float against other world currencies. President Nixon ended the conversion of the dollar into gold. Through these changes, the president ended the Bretton Woods system of international financial exchange, which had been in place since 1945 (Friedman, 18). The president raised the price of gold to $38 per ounce. Although the price was only $3 higher than the previous amount, many investors who had signed the Bretton Woods agreement went massive losses because the US government failed to honor its agreement over gold standards.
President Nixon’s economic policies managed to restore some economic stability to the US economy for a while. The policies were successful until 1972 when the same policies brought about high levels of inflation. According to many economic analysts, Nixon’s economic policies were only successful as political gimmicks geared to please the public (Yuill, 138). The policies were not sustainable in the end and they have serious counter effects. After the 1972 elections, inflation began to rise. Many people became frustrated with the Nixon government. The price controls came to be associated with the powerful labor unions. The price controls reduced food production. For instance, farmers opted to drown chicken rather than sell them at losses! The president was compelled to withdraw the price controls on April 30 1974.
Friedman, Leon. Richard M. Nixon politician, president, administrator. New York: Greenwood Press, 1991. Print.
Matusow, Allen J.. Nixon's economy: booms, busts, dollars, and votes. Lawrence, Kan.: University Press of Kansas, 1998. Print.
Yuill, Kevin. "Another Take On The Nixon Presidency: The First Therapeutic President?." Journal of Policy History21.02 (2009): 138. Print.