John Connally - Secretary of The Treasury

Secretary of The Treasury

In 1971, Republican President Nixon appointed the then Democrat Connally as Treasury Secretary. Before agreeing to take the appointment, however, Connally told Nixon that the president must find a position in the administration for George H.W. Bush, the Republican who had been defeated in November 1970 in a hard-fought U.S. Senate race against Democrat Lloyd M. Bentsen. Connally told Nixon that his taking the treasury post would embarrass Bush, who had "labored in the vineyards" for Nixon's election as president, while Connally had supported Humphrey. Ben Barnes, then the lieutenant governor and originally a Connally ally, claims in his autobiography that Connally's insistence saved Bush's political career because the then former U.S. representative and twice-defeated Senate candidate relied on appointed offices to build a resume by which to seek the presidency in 1980 and again in 1988. Nixon hence named Bush as ambassador to the United Nations in order to secure Connally's services at treasury. Barnes also said that he doubted George W. Bush could have become president in 2001 had Bush's father not first been given the string of federal appointments during the 1970s to strengthen the family's political viability.

Shortly after taking the treasury post, Connally famously told a group of European finance ministers worried about the export of American inflation that the dollar "is our currency, but your problem."

Secretary Connally defended a $50 billion increase in the debt ceiling and a $35 to $40 billion budget deficit as an essential "fiscal stimulus" at a time when five million Americans were unemployed. He unveiled Nixon's program of raising the price of gold and formally devaluing the dollar—finally leaving the old gold standard entirely, a process begun in 1934 by Franklin D. Roosevelt. Prices continued to increase during 1971, and Nixon allowed wage and price guidelines, which Congress had authorized on a stand-by basis, to be implemented. Connally later shied away from his role in recommending the failed wage and price controls. Connally announced guaranteed loans for the ailing Lockheed aircraft company. He fought a lonely battle too against growing balance-of-payment problems with the nation's trading partners. He also undertook important foreign diplomatic trips for Nixon through his role as Treasury Secretary.

Historian Bruce Schulman wrote that Nixon was "awed" by the handsome, urbane Texan who was also a tough political fighter. Schulman added that Henry Kissinger, Nixon's National Security Advisor, noted that Connally was the only cabinet member that Nixon did not disparage behind his back, and that this was high praise indeed.