JC History Tuition - Why did Nixon abandon the gold standard - Global Economy Notes

Why did Nixon abandon the gold standard in 1971?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 1: Problems of economic liberalisation

Let’s take a look at the implications of the collapse of the ‘gold standard’ on the US economy and the rest of the world [Video by Ampleforth]

An unsustainable model
Ever since the Bretton Woods system was established in 1958, the convertibility of United States (US) dollars to gold was fixed at $35 an ounce. Initially, the US government held nearly 75 percent of the world’s official gold reserves, instilling confidence in the global monetary system.

However, demand for gold increased in the 1960s when exports from Western Europe and Japan became more competitive with the US. Additionally, the large Cold War expenditures contributed to excess supply of US dollars in circulation.

The economy falters
In the late 1960s, the US economy was hit by the increase in inflation (5.4%) and unemployment (6%) rates. An unexpected phenomenon has occurred – stagflation, which meant a combination of slow growth and high inflation.

In order to fight stagflation, US President Richard Nixon addressed the nation on 15 August 1971, declaring the end of the fixed exchange rate system that underpinned the Bretton Woods ‘gold standard’.

The Bretton Woods system of fixed exchange rates based on the free convertibility of the U.S. dollar into gold, which had been showing signs of strain for many years, came apart entirely on August 15, 1971. President Nixon’s announcement that the U.S. would no longer sell gold at $35 per ounce effectively set the dollar afloat. By December 1971, the dollar had fallen about 6% relative to a multilateral trade weighted average of currencies, as the world groped for a new international monetary system.

An excerpt from “Economic Policy and the Great Stagflation” by Alan S. Blinder.

Bold actions
During Nixon’s historic speech on 15 August, he raised three points to protect the US economy – lower unemployment rates, curb inflation and minimise international speculation.

For the third point, Nixon claimed that the ‘gold standard’ was not sustainable as currency speculators have been ‘waging an all-out war’ on the US dollar even though it functioned as a ‘pillar of monetary stability’ on the global scale.

I have directed Secretary Connally to suspend temporarily the convertibility of the American dollar except in amounts and conditions determined to be in the interest of monetary stability and in the best interests of the United States.

… If you want to buy a foreign car or take a trip abroad, market conditions may cause your dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today.

The effect of this action, in other words, will be to stabilize the dollar.

An excerpt from a speech by Richard Nixon, 15 August 1971.

Nixon defended his position by asserting that the devaluation of the dollar was to ensure fair competition between the American workers and the rest of the world. Furthermore, he imposed a 10 percent tax on imported goods into the US as a temporary measure to protect domestic jobs.

Fragmentation of markets
In response, the European governments were taken aback by the policy shifts of the US government. On 10 September 1971, The New York Times reported that the imposition of tariff barriers may affect nearly 90 percent of the European exports to the US, amounting to $7 billion.

What can we learn from this article?
Consider the following question:
– How far do you agree that the collapse of the Bretton Woods fixed exchange rate system was a turning point?

Join our JC History Tuition to comprehend the complexities of the global economy. Our online learning classes are suitable for students taking either H1 or H2 History. In preparation for the GCE A Level History examination, we provide thematic revision and writing practices.

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JC H1 H2 History Tuition Online - Criticisms of the veto - United Nations Essay Notes

Criticisms of the veto

Topic of Study [For H1/H2 History Students]:
Paper 1: Safeguarding International Peace and Security 
Section B: Essay Writing
Theme III Chapter 2: Political Effectiveness of the UN in maintaining international peace and security

Explore the issue with the veto to understand its significance on the United Nations. [Video by NowThisWorld]

Yea or nay?
As discussed in the previous article on the role of the Security Council, the Permanent Five (P5) Members possess special voting rights to either support or block resolutions.

Article 27(3) of the UN Charter states that consensus within the Security Council is only made possible with the “affirmative vote of nine members including the concurring votes of the permanent members“.

This means that if at least one of the P5 members exercised the “right to veto” (negative vote), the resolution would not be approved.

The use of veto by P5 members
Although the Charter states that the United Nations was formed with the primary aim to “save succeeding generations from the scourge of war“, the repeated use of the veto has sparked criticism among member nations over the relevance of the international organisation.

The following illustrations highlight the veto problem ever since the UN’s inception.

Security Council Vetoes - Bloomberg Opinion
Illustration by Bloomberg Opinion on the use of vetoes
Security Council Vetoes - Vocativ
Statistics by Vocativ on the use of vetoes

A flawed creation or a necessary evil?
One of the main criticisms was that the veto had allowed the P5 members to wield disproportionate powers, thereby creating an unrepresentative structure in the United Nations. On the other hand, defenders of the veto argued that the veto was essential in retaining membership of Great Powers and averting another world war.

For most UN Member states, Article 27 UN Charter is a codification of the painful reality that some States are more equal than others. This idea is obviously at odds with the principals laid down in the UN Charter, such as Article 1(2), pursuant to which the UN aims at developing friendly relations among nations based on respect for the principle of equal rights of peoples, and Article 2(1) which affirms the principle of sovereign equality as one of the basic pillars of the world body.

The concerns underpinning the insertion of Article 27 were well-founded in light of the demise of the League of Nations. This organisation never managed to live up to its aspirations due to the requirement of unanimity among all members of its Council on the one hand, and the lack of support from various power States on the other hand… None of the P-5 has abandoned ship. Moreover, no direct military confrontation has occurred between them.

An excerpt from “Security council reform: a new veto for a new century?” by Jan Wouters and Tom Ruys.

Reforms to the veto mechanism
In 2015, France proposed the practice of ‘veto restraint‘ in the United Nations Security Council, particularly for conflicts of mass atrocities and genocide. Its basis was that the veto should not be abused.

Interestingly, France early on broke ranks with the other permanent members of the Security Council and led the third initiative calling for veto restraint.

… Veto restraint in atrocity situations was initially suggested in 2001 by French Foreign Minister Hubert Védrine at a roundtable sponsored by the ICISS in Paris. He called for the permanent members to create a “code of conduct” for themselves and not to apply their veto to block humanitarian action where their own national interests were involved.

An excerpt from “Existing Legal Limits to Security Council Veto Power in the Face of Atrocity Crimes” by Jennifer Trahan.

Another proposed reform was the expansion of the Permanent Membership to create a more representative structure in the Security Council. The G4 nations, comprising of Germany, Japan, India and Brazil, asserted that their admission would maintain the relevance of the principal organ.

The concept of new permanency is prefaced on the notion that the current council does not reflect the geopolitical realities of the twenty-first century. In short, the council’s permanent membership is outdated. To address the disequilibrium, the G4 proposes the inclusion of six new permanent seats and five new elected seats.

An excerpt from “UN Security Council Reform” by Peter Nadin.

However, any reform made to the Security Council membership composition requires full consensus from the existing Permanent Members.

What can we learn from this article?
Consider the following question:
– Assess the reasons for the limited effectiveness of the proposed reforms to the Security Council.

Join our JC History Tuition to derive a better understanding of the veto mechanism and other critical areas of study for the United Nations. We provide H1 and H2 History Tuition classes to empower students to organise their reading, thinking and writing techniques. Through a comprehensive learning programme, students will become more acquainted with the content and confident in their methods of expression for the GCE A Level History examination.

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JC H1 History Tuition - Singapore's Foreign Policy - JC History Essay Notes - Cold War in Asia

What is Singapore’s Foreign Policy?

Topic of Study [For H1 History Students]: 
Section B: Essay Writing
Theme II: Cold War in Asia [1945-1991] – Singapore’s Foreign Policy during the Cold War

Examine Singapore’s Foreign Policy towards Malaysia in view of the Merger-Separation issue. [Video by Channel NewsAsia]

“We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.”

— Lord Palmerston, House of Commons, 1 March 1848

What is a ‘foreign policy’?
It refers to a set of strategies employed by the state to protect its domestic and international interests. A ‘foreign policy’ affects the state’s interactions with other states. Ultimately, the policy is implemented to safeguard national interests.

Foreign policies can involve the use of aggressive (military force) or non-coercive means (diplomacy). Also, these policies can also be carried out through engagement with other states in addressing a common challenge, such as regional security threats.

Singapore’s foreign policy: A summary
There are two key foreign policy theories that are covered the A Level H1 History syllabus: Survival and Realism.

1. Survival
One key ideology that shaped Singapore’s foreign policy is the concept of survival. Following the sudden Separation that led to Singapore’s independence in 1965, the government had to deal with political threats and economic challenges.

Amidst the Cold War context, the rise of Communist insurgencies was a common concern that affected the political stability of Southeast Asian nations. In Singapore, the government was challenged by the Barisan Sosialis.

As for the economic viewpoint, the People’s Action Party (PAP) took the first step towards modernisation by embarking on state-led industrialisation. In particular, the government aimed to establish strong trade ties with other countries, including Great Powers like the USA.

The historical roots of Singapore’s political ideology of survival lie in the events following the country’s ejection from Malaysia in 1965. Survival in both political and economic terms for newly independent Singapore was a very real issue for the PAP Government. The government in the period 1965-67 was involved in an intense, often violent struggle, for power against the Barisan Sosialis and the communists.

…In terms of economic policy, the survival ideology is linked with the concept of the “global city” first proposed in 1972 by Singapore Foreign Minister S. Rajaratnam. This concept suggests that if Singapore is to survive, it must establish a relationship of interdependence in the rapidly expanding global economic system.

An excerpt from “SINGAPORE: Reconciling the Survival Ideology with the Achievement Concept” by Lee Boon-Hiok [from the Southeast Asian Affairs 1978]

2. Realism
Realism describes the notion that states should act according to their best interest. From a realist’s perspective, the world is in a constant state of anarchy. Individuals are inherently egoistic and will do anything to pursue power. As such, states should protect their interests through means like the development of an independent defence force as well as the conduct of diplomacy.

Singapore’s interpretation of such a concept and practice was spelled out by Lee Hsien Loong in the same speech as follows:

This policy depends on the competing interests of several big powers in a region, rather than on linking the nation’s fortunes to one overbearing partner. The big powers can keep one another in check and will prevent any one of them from dominating the entire region, and so allow small states to survive in the interstices between them. It is not a foolproof method, as the equilibrium is a dynamic and possibly unstable one, and may be upset if one power changes course and withdraws. Nor can a small state manipulate the big powers with impunity. The most it can hope to do is to influence their policies in its favour.

An excerpt from “Singapore’s Foreign Policy: Coping with Vulnerability” by Michael Leifer

More importantly, Singapore did not rely solely on the goodwill of external powers to manage security challenges. Its emphasis on regionalism and multilateralism was also another vital channel, seen in terms of Singapore’s diplomatic role in ASEAN and the United Nations.

Through Singapore’s consistent lobbying efforts at the United Nations General Assembly, the government was successful in publicise the Cambodian conflict at the international level.

Singapore’s Ministry of Foreign Affairs distinguished itself as a diplomatic dynamo during the course of the Cambodian conflict. The advocacy, lobbying and drafting skills of its officials were employed to great effect within the United Nations against Vietnam and its client government in Phnom Penh. For example, the declaration of the International Conference on Kampuchea held at the UN in 1981 was drafted by Singapore’s delegation. Singapore’s diplomatic success was accomplished through playing on the political sensibilities of states that had been alarmed by the example of a government despatching its army across an internationally recognised boundary to remove an incumbent administration recognised at the United Nations and replacing it with another of its own manufacture.

An excerpt from “Singapore’s Foreign Policy: Coping with Vulnerability” by Michael Leifer

What can we learn from this article?
Consider the following question:
– Assess the view that Singapore’s foreign policy was largely shaped by Realism.

Join our JC History Tuition and learn more about Singapore’s foreign policy in response to the Second and Third Indochina Wars. We cover other topics for H1 and H2 History through online discussions and written practices. Also, students will receive summary notes to consolidate their content knowledge.

We have other JC tuition classes, such as GP TuitionEconomics Tuition, JC Chemistry Tuition, JC Math Tuition and China Studies in English Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition and Secondary Economics Tuition. Call 9689 0510 to find out more.