ABSTRACT
Late in 1964, President Johnson sat by at a meeting in the White House and listened to an exchange between McGeorge Bundy, his National Security adviser, and William McChesney Martin, then chairman of the Federal Reserve Board. Bundy suggested that the United States ought to be able to afford guns and butter, but if it found it could not and if in order to carry on the war in Vietnam, devaluation of the dollar proved necessary, it would have to be given serious consideration. To Martin such a course was inconceivable; if he had to choose, he said, between the war and devaluation he would rather get out of the war. No American President, he declared, could politically survive such an admission of financial defeat. President Johnson listened intently but did not comment.
