Foreign confidence in the Carter administration yesterday appeared to be badly shaken by the unprecedented "offer" of resignation by the entire Cabinet and senior staff.
Uncertain over what would actually transpire, or what changes might be forthcoming in U.S. economic and political strategy, money-market traders pushed the price of gold over $300 an ounce for the first time in history.
The dollar, meanwhile, slumped. Against the key West German mark, the dollar in the past two weeks has lost about 70 per cent of the gains carefully nurtured since Nov. 1, 1978, when the dollar-rescue program was initiated.
Last week, the German Bundesbank and Japanese central bank raised interest rates in a move to curb their domestic inflation rates. But higher Japanese and German interest rates also contribute to a weakening of the dollar.
There were reports yesterday, as well, that the Saudi Arabian monetary authority was buying British pounds, which roared yesterday to a four-year high of $2.28. "If you were a seasoned [WORD ILLEGIBLE] money manager," said an expert yesterday, "you might not have wanted to be short of dollars over last weekend. But there's no reason not to be short of dollars now."
After reacting favorably to the new energy program spelled out last Sunday night by Carter, West German officials were shocked by what seemed to them to be a Cabinet crisis deliberately provoked by Carter.
Washington Post correspondent Michael Getler reported from Bonn that senior advisers to the German Government complained that in recent weeks they had been subjected to "a daily dose of unpredictability from Washington."
As seen in the German capital, there is little now that will prevent a continued slide of the dollar. Many American money market specialists are turning equally bearish on the dollar, and one said yesterday that in the next two and a half months, "it might take $60 billion in resources for market intervention to support the dollar." The funds mobilized by the U.S. on Nov. 1 total $30 billion, but more could easily be put together, U.S. government sources said.
One element of concern in both Bonn and Paris was that Treasury Secretary W. Michael Blumenthal had appeared prominently on the "hit list" mentioned in U.S. press reports.
Washington Post Correspondent Ronald Koven reported from Paris that Blumenthal "is highly regarded here." Blumenthal has articulated many of the free-market, private market views close to the heart of the French government.
In Bonn, government officials - once critical of Blumenthal for "talking the dollar down" - said privately they hoped he would be spared. A new face at the Treasury would further extend a period of uncertainty about American economic and trade policy, now closely interlinked with those of Germany and other major governments.
A major element in the European jitters was that mass Cabinet resignations are usually events that precede the toppling of a whole government. Thus, while American reaction was that the resignation move was surprising and somewhat bizarre, in Europe it evoked cries of "historic" and "sensational" from analysts and the press.
A more sophisticated reaction came from Bonn, where a ranking government aide said that "one not very favorable thing that seems likely to happen is the strengthening of the "Georgia Mafia."" In Bonn, Carter staff assistants like Hamilton Jordon - slated to become chief of staff - and press secretary Jody Powell are regarded as "narrow political managers rather than thinkers with an international view," Getler reported.
Some observers apparently did not understand that Carter had requested the high-level resignations. In London, as the price of gold passed $300 per ounce, one foreign exchange dealer said "it looks like they're deserting a sinking ship." CAPTION: Picture, Traders are shown executing record contracts in gold futures on the Chicago Mercantile Exchange yesterday morning. AP