Waiting for De Gaulle

Governor Perry’s remarks on Chairman Bernanke’s debasement of the dollar were greeted with widespread complaints owing to the governor’s raucous tone. So how could he have better made his case? For an example, we commend none other than Charles De Gaulle. We comprehend that the general-turned-president of Free France is renowned for his haughtiness and, for that matter, his mixed view, to put it mildly, of America. Let’s lay that aside for the moment and feature the prophetic remarks he made in February 1965, warning of the incipient monetary crisis that would, absent a return to gold-backed money, engulf the world. When these columns speak of our hope that some leader of our time will address this issue, this is the kind of talk for which we are hankering.

De Gaulle didn’t fool around when he wanted to make a statement. He gathered 1,000 journalists in the salle de fetes of the Elysee Palace, where, according to the dispatch by Richard Mooney of the New York Times, he seated them in gilded chairs. The president of the Fifth Republic sat himself at a cloth-covered table in front of them and spoke for 20 minutes in language that was slow, didactic, profound. He warned that the dollar had lost its transcendent value and called for a return to, in the gold standard, a system that was not particular to any one country but imposed the same measure of value and thus of discipline on all of them. “In truth,” he declared, “one does not see how one could really have any standard criterion other than gold.”

His remarks caused an immediate stir. “Perhaps never before,” rumbled Time magazine, “had a chief of state launched such an open assault on the monetary power of a friendly nation.” It called De Gaulle’s remarks “a particularly nettling irritant” coming, as they did, “just as the U.S. was deeply involved in making some hard decisions about its monetary policy.” President Johnson, pursuing his course of guns in Vietnam and butter at home, was facing a balance of payments crisis. But this did not prevent the more serious commentators from recognizing both the importance and the wisdom of De Gaulle’s demarche. These included, most notably, the Wall Street Journal, which issued an editorial upbraiding the American Treasury for denouncing the French president.

The Journal’s editorial, a classic, was called “A Gold Star for De Gaulle.” It noted that De Gaulle was not recommending an immediate return to a true gold standard from the so-called gold exchange standard that had been set up at Bretton Woods in the closing months of World War II. It acknowledged all the difficult questions of what it called “mechanics.” But it insisted that such issues did not mean that the French president was talking nonsense. It praised his adviser, the economist Jacques Rueff. And it said that it was “a splendid commentary on the quality of financial thinking when a man is bitterly resented for stripping off the mask of illusion and talking sense about money.”

In addition, the Journal rolled out two columns by its famed editor at the time, Vermont Connecticut Royster, praising De Gaulle’s demarche. The first one quoted Scartlett O’Hara’s remark as Rhett Butler rode into the sunset, “I’ll think about that tomorrow.” In the second, Royster responded to President Johnson’s petulant attack on De Gaulle, criticizing LBJ for buying into the notion that the gold standard had caused the Great Depression. The column ran under the headline “Muddling History.” Royster didn’t gainsay the monetary system’s role in precipitating the Depression, but said the system was very like the one we had then under Bretton Woods. “General De Gaulle is better on history,” he concluded.

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Who is going to be the De Gaulle of our time? Who can gather 1,000 journalists in a room, sit them in gilded chairs, park himself or herself before a baize-covered table and talk to them seriously about the monetary crisis? We are there now, with the value of the dollar having collapsed to less than an 1,800th of an ounce of gold. It is hard to imagine President Obama rising to this task. Or, for that matter, Prime Minister Cameron or President Sarkozy. The Chinese party boss has an over-hang on his economy (we speak of slave labor) worse than the monetary overhang that bedevils us. Chairman Bernanke doesn’t believe in it; worse, he confides — if that is the word — to Congress he is mystified by the gold price. Angela Merkel? Stephen Harper? Our guess is that the leadership here is going to have to come from the individual who emerges as the Republican nominee. For our part, we don’t have the slightest doubt that the American public is fully capable of digesting the warning that De Gaulle sounded and that our leaders brushed aside half a century ago. Since then there’s been a lot of history from which to learn.