The Weekend That Changed The World: TIE Founder and Editor David Smick interviews Jeffrey Garten, author of the new book Three Days at Camp David: How a Secret Meeting in 1971 Transformed the Global Economy, which argues that there are many parallels between August 1971 and August 2021. The currency move was only part of the story.

The fiftieth anniversary of the August 15,1971, Camp David decision to delink the dollar from gold.

Smick: The book is a terrific, suspenseful read. It is part a sophisticated yet understandable explanation of what went on at a crucial moment in U.S. economic history. But it also reads like a Hollywood script. The characters come alive, from a Trump-like John Connally as Treasury secretary breaking all the china, to a serious, astute, quiet, and universally trusted hero figure-Paul Volcker, then-Treasury under secretary for international monetary affairs--tearing his hair out (what hair he had left) trying to keep the train from derailing. Financial scholars aren't supposed to be able to write this way. What got into you? How do you do it?

Garten: Thanks for the compliment! Maybe the starting point is that neither I nor anyone else would classify me as a financial scholar. Barry Eichengreen, Harold James, and a host of their peers have forgotten more about financial theory than I ever knew. I see myself as someone fortunate enough to have had a wealth of practical experience in the international financial and trading arena--in the Nixon, Ford, Carter, and Clinton Administrations; as an investment banker at Lehman in the 1980s and the Blackstone Group in the early 1990s with extensive involvement in everything from sovereign and corporate debt restructuring to running broader investment banking operations in Asia from a base in Tokyo; and as someone teaching Yale students about the global economy for many years.

In Three Days at Camp David, I deliberately set out not to write a theoretical book, or even a policy book, but to tell the story of an important historical event that anyone could understand. I wanted to entertain as well as to inform, although I fell far short of what a better writer could have done, I'm sure. I thought the best way to try was to focus on the people and on the blow-by-blow account of the actual decision, and make it like a television program as best I could.

You ask me how I did it. My first step was to interview everyone who was at Camp David who is still alive, as well as people who knew them. So I spoke at length to Paul Volcker, George Shultz, and a host of staff members who had accompanied them to Camp David, and who had done a lot of the preparatory work. Fred Bergsten, Robert Hormats, and John Petty were in and around the events I write about, and were also exceptionally helpful. I didn't rely on memories of fifty years ago for facts, but rather for atmosphere. I was influenced in my thinking by George Shultz, when he said that people tend to remember the good things they did, not the things they are not so proud of. The other thing I did was to study diaries and notes from speechwriter William Safire, White House Chief of Staff H.R. Haldeman, and Fed Chair Arthur Burns, all of whom were at Camp David, and I studied the Nixon tapes and read other authors' analyses of them, too.

Smick: You said that on August 15, 1971, President Richard Nixon didn't just announce a change in monetary policy. It was a change in how Americans saw the world. Please explain. You also quote Hugh Sidey of Time who wrote, "The men around Nixon [in August 1971] were to be the tacticians in a campaign already conceived in its broader outlines." Describe those broader outlines.

Garten: Sidey had two concepts in mind, I believe. First, as I try to show in the book, the story of why and how Nixon severed the link between the dollar and gold was just one part of a larger story.

That story was the end of the era that began with the Marshall Plan and terminated with Vietnam. Nixon and then-National Security Adviser Henry Kissinger were trying to lessen the global burdens on the United States, and give Washington room to focus more of its energies and resources on the massive economic and social problems at home, still boiling over from the late 1960s. In 1969, the president announced the Nixon Doctrine, which essentially said that aside from defense treaties, the United States would not automatically come to the defense of its friends. It might supply money and weapons, but not American troops.

This doesn't sound very dramatic today, but it was a very big change of policy at the time. At Camp David during the August 13-15 weekend, Nixon essentially announced the economic component of the Nixon Doctrine. It said that maintaining the dollar-gold standard--the commitment of the United States to exchange $35 for each ounce of gold--had created too much of an economic burden for the United States. The yen and the West German mark would have to be revalued; the Japanese and Europeans would have to open their markets wider and deeper to U.S. products, matching the level of concessions that Washington had accorded them in the past two decades; and the allies would have to increase their defense spending.

A second thing that Sidey had in mind was this: The United States was running out of gold. In 1955, it had about 160 percent more gold than dollars outstanding in governments and central banks. In 1971, the figure was just 25 percent. In effect, the emperor had no clothes and the United States had no choice but to abandon gold. Nixon, Connally, and Volcker knew that. The issue was getting the entire administration and Congress aboard, and the issue was also how to get the allies to cooperate and not precipitate a global financial crisis as a result of the changes in the global monetary system.

Smick: You suggest that the sword suddenly hanging over the head of the policy group was a decision by the British to ask for "cover" for $3 billion of its dollar reserves. Panic set in because no one on the American side knew what was meant by the word "cover." (Kind of like the mysterious and unexplainable "letters of transit" in the movie Casablanca?) A sense of urgency set in and, as you put it, the group felt it had no choice but to "dive off the diving board." Did the British ever get around to explaining what they meant by "cover"?

Garten: This is an entire story unto itself. It shows how nervous the administration was that several...