In August 1971, US President Richard Nixon must decide how to respond to a growing “run” on the US dollar. Declining confidence in the dollar has led some national trading partners to redeem dollars for gold at the US Treasury’s gold window. Nixon has convened an urgent conference with his economic advisers at Camp David to consider a response. The two dominant policy alternatives are (a) gradual intervention proposed by central banker, Arthur Burns; and (b) “shock treatment” (devaluation of the dollar by abandoning the commitment under the Bretton Woods Agreement to convert dollars into gold at the rate of $35/ounce) proposed by Treasury Secretary John Connally. The task for the student is to assess the situation and recommend a course of action.

The A case describes the Bretton Woods system, the run on the dollar, and Nixon’s policy dilemma. The B case gives the text of Nixon’s 1971 address outlining his New Economic Policy. This A and B abridged case, which has been taught successfully in Darden in-person and online classes, shortens the total presentation by eliminating some of the quoted material; the student task in this case is to analyze Nixon’s decision and decide on next steps. The C case presents a brief epilogue.