international monetary policy

Since the first accounts of Kennedy's presidency were published it has become common knowledge that the president took a keen interest in monetary matters and that he considered the dollar-gold problem one of his most serious challenges, to the point of comparing it with the nuclear threat. Contrary to the initial expectations of the Kennedy team, balance-of- payments matters became an ongoing preoccupation that turned up on the agenda with irritating regularity. Most academic research has interpreted these monetary problems as an expression of the decline of American hegemony and viewed Kennedy's policies as a fight against this decline. Unfortunately, these interpretations lack serious empirical underpinnings. A thorough historical account of how Kennedy managed his international monetary policy, how it evolved over time, where exactly the points of debate lay, and what strategy he pursued regarding the surplus countries still needs to be written. In this chapter I summarize and supplement previous research, outline briefly the rationales behind U.S. monetary policy toward Europe, particularly toward Germany, and show how the link between American security policy toward Europe and the monetary problem became increasingly tighter.

Kennedy's first balance-of-payments message to Congress, shortly after his inauguration, made it clear that he contemplated no radical departures from existing policies for solving the dollar problem. After the appointment of Douglas C. Dillon as secretary of the treasury, this came as no surprise. The central point of Kennedy’s message was: “The United States’ official dollar price of gold can and will be maintained at $35 anounce. Exchange controls over trade and investments will not be invoked. Our national security and economic assistance programs will be carried forward.”