The cost of living continued to rise, until by June 1970 it was 30 percent above the 1960 level. Industrial production declined, as did the stock market. By mid-1971 unemployment reached a 10-year peak of 6 percent, and inflation continued. Wage and price controls were instituted, the dollar was devalued, and the limitation on the national debt was raised three times in 1972 alone. The U.S. trade deficit improved, but inflation remained unchecked.
The Watergate scandal
A scandal surfaced in June 1972, when five men were arrested for breaking into the Democratic national headquarters at the Watergate office-apartment building in Washington. When it was learned that the burglars had been hired by the Committee to Re-Elect the President (CRP), John Mitchell, a former U.S. attorney general, resigned as director of CRP. These events, however, had no effect on the election that fall. Even though the Democrats retained majorities in both the Senate and the House, Nixon won a landslide victory over Democratic nominee Sen. George McGovern of South Dakota, who won only Massachusetts and the District of Columbia.
In 1973, however, it was revealed that an attempt to suppress knowledge of the connection between the Watergate affair and CRP involved highly placed members of the White House staff. In response, a Senate select committee was formed and opened hearings in May, and Nixon appointed Archibald Cox as a special prosecutor to investigate the scandal. Amid conflicting testimony, almost daily disclosures of further scandals, and continuing resignations of administrative personnel, a battle developed between the legislative and executive branches of government. Nixon attempted to stop the investigation by firing Cox, leading Attorney General Elliot Richardson and Deputy Attorney General William D. Ruckelshaus to resign. This “Saturday night massacre” of Justice Department officials did not, however, stem the flow of damaging revelations, confessions, and indictments.
Watergate ScandalWhite House reporters watching the televised Watergate address by U.S. President Richard M. Nixon on April 30, 1973.© Archive Photos
The Watergate affair itself was further complicated by the revelation of other irregularities. It became known that a security unit in the White House had engaged in illegal activities under the cloak of national security. Nixon’s personal finances were questioned, and Vice Pres. Spiro T. Agnew resigned after pleading no contest to charges of income tax evasion. On December 6, 1973, Nixon’s nominee, Congressman Gerald R. Ford of Michigan, was approved by Congress as the new vice president.
On May 9, 1974, the Judiciary Committee of the House of Representatives began hearing evidence relating to a possible impeachment proceeding. On July 27–30 it voted to recommend that Nixon be impeached on three charges. On August 5 Nixon obeyed a Supreme Court order to release transcripts of three tape-recorded conversations, and he admitted that, as evidenced in the recordings, he had taken steps to direct the Federal Bureau of Investigation away from the White House when its inquiries into the Watergate burglary were leading it toward his staff.
Nixon’s support in Congress vanished, and it seemed probable that he would be impeached. On the evening of August 8, in a television address, Nixon announced his resignation, effective the next day. At noon on August 9, Vice Pres. Ford was sworn in as his successor, the first president not elected either to the office or to the vice presidency.
The Gerald R. Ford administration
Ford’s was essentially a caretaker government. He had no mandate and no broad political base, his party was tainted by Watergate, and he angered many when he granted Nixon an unconditional pardon on September 8, 1974. Henry Kissinger remained secretary of state and conducted foreign policy along the lines previously laid down by Nixon and himself. Ford’s principal concern was the economy, which had begun to show signs of weakness. A brief Arab oil embargo during the Yom Kippur War had led to a quadrupling of oil prices, and the oil shock produced both galloping inflation and a recession. Prices rose more than 10 percent in 1974 and unemployment reached 9.2 percent in May 1974. Ford was no more able than Nixon to deal with the combination of inflation and recession, called “stagflation,” and Congress had no remedies either. For the most part Congress and the president were at odds. Ford vetoed no fewer than 50 bills during his short term in office.
Ford, Gerald R.Gerald R. Ford being sworn in as U.S. president, August 9, 1974.Robert L. Knudsen —White House Photo/Courtesy Gerald R. Ford Library
In the election of 1976 Ford won the nomination of his party, fighting off a strong challenge by Ronald Reagan, the former governor of California. In a crowded field of contenders, the little-known ex-governor of Georgia, Jimmy Carter, won the Democratic nomination by starting early and making a virtue of his inexperience. Ford, despite Watergate and stagflation, nearly won the election, Carter receiving the smallest electoral margin since 1916.
Carter, Jimmy; Ford, GeraldJimmy Carter (left) and U.S. President Gerald Ford meeting in the first of three televised debates during the 1976 presidential campaign.AP Images
The Jimmy Carter administration
Foreign affairs
More than any other president, Carter used diplomacy to promote human rights, especially with regard to the governments of South Korea, Iran, Argentina, South Africa, and Rhodesia (Zimbabwe). Efforts to continue the détente with the U.S.S.R. foundered as the Soviets supported revolutions in Africa, deployed medium-range nuclear weapons in Europe, and occupied Afghanistan. Relations with the People’s Republic of China, on the other hand, improved, and full diplomatic recognition of the communist government took effect on January 1, 1979. In September 1977 the United States and Panama signed two treaties giving control of the Panama Canal to Panama in the year 2000 and providing for the neutrality of the waterway.
Carter’s most noted achievement was to sponsor a great step toward peace in the Middle East. In September 1978 he met with Egyptian Pres. Anwar Sadat and Israeli Prime Minister Menachem Begin at a two-week negotiating session at Camp David, Maryland, and on September 17 Carter announced that two accords had been signed establishing the terms for a peace treaty between Egypt and Israel. Further torturous negotiations followed before the peace treaty was signed in Washington, D.C., on March 26, 1979.
U.S. President Jimmy Carter (centre), Israeli Prime Minister Menachem Begin (left), and Egyptian President Anwar el-Sādāt (right) clasping hands on the White House lawn after the signing of the peace treaty between Israel and Egypt, March 26, 1979.© Bettmann/Corbis
Carter’s greatest defeat was administered by Iran. In that country, following the overthrow of Mohammad Reza Shah Pahlavi, who had been supported by the United States, the Islamic Republic of Iran was proclaimed on February 1, 1979, under the leadership of Ayatollah Ruhollah Khomeini. In November militants seized the U.S. embassy in Tehrān and held its occupants hostage. An attempt to rescue the hostages in April 1980 failed, and the hostages were not released until Carter left office in January 1981. Carter’s inability to either resolve the hostage crisis or to manage American perceptions of it disabled him as a leader.