U.S History A Level Theme 2

The Bretton Woods System (1940’s)

Post-WWII attempt at stabilizing the economy originally based on the gold standard and the US dollar the primary currency—included the IMF and the World Bank—goal: promote international trade and lending for poorer countries to keep them out of poverty

US dollar as the world’s reserve currency

On the gold standard, the amount of $ printed was tied to the amount of gold reserve on hand

Cost of military conflicts

The Korean War, Cold War, and involvement in Vietnam cost the US billions of $ starting in the 1950’s–1970’s

Military spending in the 1950s

Initially raising taxes was how revenue was raised to increase military spending

Profits of war

Spending on wars mostly benefitted the military-industrial complex who made huge profits (ignoring earlier warnings from Ike among others)

Wartime economy conditions

Included high corporate profits and low unemployment, however high inflation rates

Symbolism of war profiteering

The profits of manufacturers of helicopters, fighter planes, weapons, and ammunition as well as chemical weapons (Dow) would become a symbol for opponents of the war

Escalating costs and inflation

As US involvement in Vietnam escalated so did the cost, resulting in the printing of more money, one of the factors in rising inflation that would last into the 1980’s

LBJ and inflation

LBJ did not raise taxes to increase revenue, another factor in high inflation

The Great Society

Johnson’s social reform program for the US was based on the “war on poverty”

Cost of Great Society programs

Great Society programs such as Medicare and Medicaid were like another New Deal and cost billions $ to fund

Unstable economy by 1970s

The escalation of soldiers and equipment as well as funding for Great Society programs, without raising taxes, and with printing more money, left the US with an unstable economy into the 1970’s

Keynesian economic policy

As a country spending at a deficit for a period of time in crisis situations

End of Bretton Woods system

The Bretton Woods system ended for the US in 1971 when Nixon took the US off the gold standard and ended the system in the US in attempt to solve the issues of inflation and unemployment—the US dollar was being devalued aka the “Nixon shock”

Vietnamization policy

Nixon’s policies withdrew American troops and ended the draft but sent billions of aid and weapons to South Vietnam that was lost or captured by North—also led to “forever” wars that led into the Reagan era and beyond—also continued massive bombing raids into North Vietnam and Cambodia

Veteran care costs

Thousands of wounded returning soldiers needed medical care (some still do) that required funding to VA hospitals in the millions of $

War Powers Act 1973

Limited the power of Nixon (or future presidents) to initiate military action without giving Congress 48 hours notice and limiting the amount of time spent—vetoed by Nixon but Congress overrode veto

Foreign competition in the 1970s

The economic rise of Japan, West Germany, led to a rise in competition for US made products

American productivity and modernization

American productivity slowed economic progress, US businesses had little incentive to modernize means of production during its dominant years

Outsourced industries

The industries of steel, automobiles, and electronics previously dominated by the US now being outsold or outsourced to other countries

Technology and unemployment

New technology (ex. Robotics) reduced the need for human workers in low level manufacturing jobs—increase unemployment

Foreign products vs American products

Products made in other countries were generally cheaper and more efficient than the American alternative (smaller, more gas efficient Japanese cars vs. large engine Fords, Chevys, and GM cars made in Detroit)

Outsourcing and the Rust Belt

US companies move factories to 3rd world countries due to cheaper labor and production costs—leading to rise of the rust belt—the deindustrialization of northern cities whose effects still exist

Nixon’s tariffs

Meant to support US manufacturing led to higher prices and inflation

Energy Crisis 1973 (OPEC)

OPEC began to privatize their oil resources allowing them to control supply and prices

1973 oil embargo

Oil embargo placed on US and its allies due to its support of Israel in 1973 Arab-Israeli conflict

Oil production cuts

Embargo as well as cut in production caused global decrease in oil production as well as shortages

Impact on US consumers

Shortages in US led to high prices (40% increase) and long gas lines

Department of Energy (1977)

Created by Carter to mobilize federal government agencies to deal with energy crises

1979 oil crisis

Barrels of oil from Middle East declined by the millions due to the Iranian revolution

Iranian revolution and US oil supply
The shah of Iran, a friend of the US and exporter of oil to US, was overthrown and replaced by a theocracy unfriendly to the US (1979)

Global energy panic

Overcaution and panic led to increased energy costs, globally and in the US

Inflation and Carter’s presidency
Inflation and interest rates rose leading to low consumer confidence and the end of Carter’s presidency

Auto industry changes

The doubling of oil prices, as well as foreign competition caused great changes in the auto industry causing them to produce smaller, more energy efficient cars

Cold War costs

Cost associated with the escalation of the Vietnam conflict (Cold War proxy war) was the biggest factor in the inflation of the 1960s and 70s

Space race and arms race

Space race that included the Apollo program, as well as the continuing arms race cost the US billions $

Containment policy costs

$ for containment, as well as the arms and space race, and proxy wars led to $ being diverted from social programs and eventual stagflation

Stagflation basics

Stagflation combines slow economic growth with high inflation and high unemployment

Stagflation causes
Oil embargo, high budget deficits, low interest rates, end of Bretton Woods, outsourcing, Keynesian economic policy

Nixon and stagflation

Took US off gold standard, instituted wage and price freezes, raised taxes on imports

Ford and stagflation

Inflation 12%, unemployment 9%, Whip Inflation Now campaign

Carter and stagflation

Unemployment over 7%, deregulated transportation industry, money supply expansion

Bipartisan Support for Cold War

From the initial US involvement in Vietnam from Truman(D) through Ike(R) and JFK(D) there were no real party divisions about anything Containment or Cold War related.

1964 Escalation & Goldwater

Escalation of war 1964 LBJ(D), started to show distinct divisions. Republican leader Goldwater used dangerous war hawk rhetoric threatening nuclear war against China and Soviets, lost 1964 general election to LBJ in a landslide.

College Students' Opposition

College age students admired JFK and the Civil Rights movement and were starting to question US involvement in the war.

Gulf of Tonkin & Democratic Split

LBJ escalated war with Gulf of Tonkin Resolution, increasing his war powers, creating division within his own party, including his VP Humphry (wanted to exit Vietnam in 1965 but took one for the team)

Black Americans opinion on War

Blacks now aligned with Democrats (including MLK) questioned the racial hypocrisy of fighting for the US.

Nixon's Secret Plan

Nixon (R) promised to end the war if elected (1968) within a year (had a secret plan). Nixon’s Vietnam negotiator was Secretary of State Henry Kissinger.

RFK Assassination

Leading Democrat RFK was assassinated 1968, 2 months after MLK assassination.

1968 Democratic Collapse

Humphry (D) lost election in part association with LBJ war policy and out of control riot at the Democratic convention 1968.

Vietnamization & Bombing

Nixon attempted to negotiate peace (called it “peace with honor”), ended the draft (Vietnamization) but continued bombing raids (including Cambodia).

Hard Hat Riots 1970

The hard hat riots of 1970 were supported by Nixon and pro-war conservatives and personified political division.

1972 McGovern Defeat

Peace loving liberal activist, George McGovern (D) loses 1972 election vs. Nixon badly as Nixon supported by the “silent majority.”

Party Division Over War

In general, the escalation of the war along with TV images and campus protests (late 60’s) brought out party divisions—Republicans mostly favor US strategy in Vietnam and Democrats mostly younger and college educated mostly strongly opposed.

Constitutional Presidential Limits

US presidents are bound by the Constitution with limited powers to maintain a system of checks and balances.

Imperial Presidency

Presidents that are given or take more power than the Constitution allows are seen to have an imperial presidency.

Unilateral Executive Actions

Unilateral executive decisions are made without the consent of the courts or Congress.

Executive Orders

carried out without Congress but can cause political discontent and can be reversed by future presidents.

Famous Executive Orders

FDR order approving Japanese concentration camps during WWII

Truman’s executive order to integrate the military during the Korean war.

FDR Expands Presidency

FDR with a favorable Congress permanently changed the role of the federal government / also served 4 terms.

Bay of Pigs & JFK Assassination

JFK’s failed Bay of Pigs invasion (carried out by CIA and anti-Castro Cubans) was a national embarrassment / JFK assassination illustrated the vulnerability of a president (JFK unofficially exalted as royalty by much of the American public).

Southern Democrats Leave

JFK and LBJ Civil Rights agendas led Southern Democrats to gradually leave the party for good by 1968.

Gulf of Tonkin Resolution

The Gulf of Tonkin resolution 1964 was passed through Congress almost unanimously, giving LBJ as commander in chief almost unlimited power to escalate the war in Asia to terrible effect. (Constitutional war powers are Congressional)

Credibility Gap Begins

LBJ’s credibility gap began a gradual widespread distrust of the US government and presidency for the first time in history.

Cambodia Bombing & War Powers Act

Nixon's secret bombing attacks on Cambodia once discovered caused violent protests in the US. War Powers Act 1973 limited presidents' war powers.

Pentagon Papers Expose Lies

The Pentagon Papers, published by the NY Times 1971 exposed that the JFK, LBJ, and Nixon administrations had been misleading the public about the war for years.

Watergate Scandal

Nixon attempted to cover up, obstruct justice, dig up dirt on political enemies, and use the CIA against the FBI investigation was the iconic fall of the imperial president.

Supreme Court vs Nixon

The Supreme Court forced Nixon to hand over secretly recorded tapes to investigators, exposing his obstruction of justice (even with 18 minutes of recordings mysteriously erased).

Failure in Vietnam

All 3 presidencies ended badly and Vietnam, Cambodia (to horrible effect), and Laos all became communist despite billions spent and millions dead.

1960 JFK/Nixon Debate

Televised Kennedy/Nixon debate influenced 1960 election in favor of JFK.

Kennedy Assassination Coverage

Coverage of Kennedy assassination and funeral influenced sympathy for his incomplete Civil Rights agenda.

Civil Rights Violence on TV

Violent treatment of Civil Rights marchers in Alabama was shown on TV and influenced both the Civil Rights Act and Voting Rights Act.

Goldwater Negative Ads

LBJ successful negative ad campaign in 1964 election portrayed Goldwater as dangerous.

Credibility Gap on Vietnam

Vietnam war scenes on TV news contradicted government positive spin, creating the credibility gap. Starting 1967 Vietnam became a question of containment vs. morality.

Black and Women Representation

The civil rights and feminist movements allowed blacks and women to have leading roles on network TV shows in the 1960’s and 70’s.

1968 Convention Chaos

Chaos and violence shown at 1968 Democratic convention helped Nixon to victory.

Pentagon Papers

published in 1971 show government hypocrisy about Vietnam war.

Watergate Hearings

were televised, turning millions against Nixon and leading to his resignation 1974.

Distrust of Government

Mass media influenced millions to lose trust in their government for the first time in history.