Passing the Buck

The Fate of the Dollar

by Martin Mayer
Truman Talley/Times Books, 376 pp., $15.00

Martin Mayer’s tale begins back in the happy days of Good King Ike, when Americans coursed about the globe, displaying the contents of their wallets with the same pride and to the same effect as the sons of that earlier imperial republic used to tell foreigners in their own capitals, “civis romanus sum.” Our guns were respected but our money was venerated. It was the Almighty Dollar in a manner no one much younger than forty can believe, but which Mayer tries to depict by giving some of the underlying numbers which made our currency so strong:

…with only 5 percent of the world’s population, the United States had 40 percent of its total industrial output. More than half the world’s entire production of petroleum was American, and half its production of motor vehicles. Exports were only 5 percent and imports only 4 percent of national income…. But 20 percent of all world exports and 15 percent of all world imports were American.

In short, behold the country John Connally and George Bush and Teddy Kennedy think they still live in, a nation which needed nothing from abroad, made most of what was worth making and, being next to absolutely independent, had no particular need to sell what it made to someone else. The dollar was worth so much because it was issued by the government of the one society in the world that had a lot to sell. It was a claim on goods chunking out of the factories right then, actually on the shelves of the stores, even as the dollar’s owner could feel the thick durability of its paper, so in contrast to the trashy material upon which inferior nations printed their treasury notes. Boy, were we smug.

This book takes us from those proud times to our own era, wherein Walter Cronkite tells us nightly how the greenback is being despised in Tokyo, spurned in London, and laughed at in Bonn. In the aggregate, it tells us that if the dollar fetches so few deutsche marks now, it is because of twenty years of increasingly blunderous mistakes by presidents, Treasury and Federal Reserve officials. There are qualifying statements and sentences and paragraphs to be picked out here and there which argue in other ways, but the force of the book, its main direction, is to make one think that, had our international financial affairs been handled more capably, American tourists would not find Parisian hotels prohibitively expensive.

American stay-at-homes are finding New York hotels prohibitively expensive and for that you can’t blame the mistakes of our financial diplomats at under-reported international meetings in Basel. But Martin Mayer does—sort of. He is too knowing and too sensible a man to put all the onus of US inflation—the fate of the domestic dollar—on the deals European central bankers cut with the Treasury; but this unavoidably is one implication of a book which devotes most of its pages to chronicling those deals.

In the book’s last…

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