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That reminds me of the statement deficit in the current fiscal year. And, as More and more we hear from every made yesterday on the floor of the Sen- our national debt goes to astronomical side concerned about the level of our forate by the distinguished Senator from proportions, the foreign holders of nearly eign aid in the light of the confusion Alaska [Mr. GRUENING), when he said $26 billion of our dollars which they and maladministration of that program that more than a billion dollars had are entitled to have converted into gold in country after country. The Presibeen loaned for three-quarters of 1 per are becoming more and more uneasy dent's own foreign aid adviser, General cent interest, and that we would lose, on about the ultimate value of those dollars. Clay, after a careful review of the prothe basis of the difference between what As I have indicated, I made an effort 14 gram, declared in his report to the we paid and what we would get back, years ago, first to reduce and then to President: nearly $1 billion before the loan would end completely, our foreign aid giveaway We are trying to do too much for too many become due. program because over 90 percent of the
too soon, that we are overextended in reThe Senator also quoted the Foreign aid had been in grants and the other sources and undercompensated in results, Minister of Costa Rica as saying that in low-interest loans, many of which and that no end of foreign aid is either in his country had received a 40-year loan, will never be repaid. When I proposed sight or in mind. but with the understanding that it would a billion dollar cut in the program in Moreover, the foreign aid program in never be repaid.
1950, Administrator Hoffman said that many ways has failed to foster our I continued, in my letter:
I was proposing to cut the heart out of traditional values of free enterprise in We should make every effort to establish the program. There has not been an the countries to which it is directed. satisfactory trade with India, from which administrator of the program since Hoff While free world private trade and incountry we can receive acceptable imports in man who has not yelled long and loud vestment totals have expanded to unexchange for surpluses we need to dispose that any substantial cut of an ever-inof.
precedented levels in the postwar period In the interests of a more stable world we creasing budgeted amount would cut the
and promise under wise policies to grow should urge all nations who hold British heart out of the program. Yielding to
even more vigorously, our own foreign war debts to refund those debts on a long- such importunities, Congress has given aid efforts have, except in Western Gertime basis and at an appropriate rate of in away and loaned such tremendous sums, many, failed to enlist the support of this terest. The labor government of Great Brit under the pleasing name of foreign aid, vaunted system that has brought our ain will never realistically face the problem that what was termed in the Paul Hoff - country to unparalleled prosperity and of competition in world markets so long as
man days "a dollar shortage" has in this material strength. she can keep members of the labor unions employed in the production of high-priced good year of our Lord become for us a
But a critical examination of the forgoods for sale to sterling areas.
dollar drain on our rapidly diminishing eign aid program is long overdue not Spain desperately needs our wheat, cotton, gold supply. So we have pending on the only for the above reasons but also, and and machinery, and never in her history has Senate side two bills, which are closely most importantly, because there are clear Spain defaulted on a debt. I would like to related: first, a bill proposing an $11 bil- signs in our balance-of-payments probsee Spain given an Export-Import Bank lion cut in taxes, which will entail a tem- lems that the Federal Government is loan with a gentleman's agreement that the funds would be expended for the items menporary cut in a similar amount in reve
overextending its resources in foreign tioned.
nue; and second, a bill calculated to aid spending. Those resources might When you have had an opportunity to re further increase the acute balance-of- better be devoted to putting the Governflect upon these suggestions, I shall wel- payments problem by authorizing the ad- ment's budgetary programs in order, come your reactions. As I said in the out- ministration to lend and give away an and thereby-through both reducing the set, they are merely surface impressions additional $4 billion of taxpayers' money balance-of-payments deficit and reducbased upon an inadequate study, but I don't and that spending plan is presented to ing the Government's budget deficit-rebelieve all of them can be wrong. Cordially yours,
us with the insistent claim that it would store business confidence and provide A. WILLIS ROBERTSON,
cut the heart out of the measure even to business incentive for the further ex
U.S. Senator. agree to the cut carried in the House au- pansion of economic activity at home I, of course, do not know what efforts
thorization bill of $500 million, which and expansion through private channels Mr. Hoffman made to carry out my sugwould still leave nearly a billion more
of our foreign trade. There is a danger gestions about freer trade and currency than we appropriated for foreign aid 14 that in our preoccupation with Governconvertibility among the nations of
years ago when the need for our aid was ment programs labeled 'foreign economic Western Europe. All I know is that at its peak.
aid,” we overlook the historic and connothing worthwhile in that behalf was
Since the beginning of the foreign aid tinuous revolution taking place in the accomplished. I also know that as a
program, the American taxpayer has world through private trade and investmember of the Appropriations Commit
shown remarkable restraint and un- ment. The time has come when we tee in 1950, I participated in the fight precedented generosity in providing should concentrate on our policy to the to cut the foreign aid program by a bil
funds not only for the reconstruction world the American revolution of techlion dollars as I had recommended dur- of war-torn Europe through the Marshall nological progress, increased technical ing the previous December. And, it was
plan, but also through various grant competence of labor and management, then clearly understood that the proprograms to many nations for such hu
and the resulting rising material living gram would end on June 30, 1951.
manitarian purposes as food for the standards which we in this country have Mr. President, that was 12 years ago. starving, malaria control, assistance for come to expect as a matter of course. Since that time, the program has had education, and other humanitarian pro As I have said, the administration profirst, and then another, name, and the
grams to assist in defending many na poses another $4 billion plus in foreign annual expenditures under it have been
tions from the harsh burdens of poverty aid spending and at the same time proincreased instead of decreased and the and in providing a sine qua non for poses a tax cut of $11 billion with a retotal of expenditures now amounts to economic growth. I have recognized the sulting budget deficit variously estisomething over $100 billion.
contribution of foreign aid to the basic mated between $8 and $10 billion, and Senators will observe that in my letnational interests of the United States
acknowledged by Secretary Dillon to be ter of December 4, 1949, to Paul Hoffman
in a world of independent, peace-loving likely to continue for several so-called I said that our national debt was ap- nations, each pursuing its own national "transition years” during which the proaching $260 billion. In the morning goals and all together engaging in trade
economy is expected by the administrapapers of October 30, I read that the and investment among each other in the
tion to experience an increase in its Ways and Means Committee of the great tradition of private enterprise and growth rate.
growth rate. Thus, under the adminisHouse, which in many respects is the unrestricted exchange of goods and sery tration program, we are to expect to be most vital committee of the entire con- ices. Yet the current debate on the faced with a balance-of-payments defigress, voted to increase the ceiling on pending $4.2 billion foreign aid bill be- cit that so far has been little, if any, the national debt to $315 billion because fore the Senate requires me to speak out reduced, and also with a Government the debt now stands at $308 billion and in the name of fiscal soundness and plain budget deficit that is expected to conthere are those who believe that it will commonsense to urge upon Senators that tinue for several years. go to $320 billion, should an $11 billion now is the time for a searching reap There is no question that the balancetax cut be added to a possible $8 billion praisal of the entire foreign aid program. of-payments problem facing the United
States today is of serious proportions. percent, 10 years'-grace, no-payments
percent, 10 years'-grace, no-payments- gram. Mr. President, that would be The Secretary of the Treasury himself at-all loans without doing severe dam nonsense. The time has come to correct testified before the Joint Economic Com age to the gold structure of the United the program before we authorize or apmittee earlier this year that even at a States and without intensifying the bal- propriate one more dollar for it. rate lower than the present one, we can ance-of-payments problem.
Mr. ROBERTSON. Mr. President, I not afford this international payments No matter how unpopular it may be thank the Senator from Oregon. At the imbalance for more than a year or two. at the moment, we must say to the Amer conclusion of my remarks, I intend to
The foreign aid program cannot ican people, “You are being taken for a state that I will support his motion to soundly be considered apart from this ride."
recommit the bill, for further study and balance-of-payments problem. I need If we continue foreign aid at the level for necessary revision. not review for Senators today the his at which we have been providing it and I have not gone into all the details of tory of the balance-of-payments deficit. on which we have been asked to continue the waste involved; but before the SenaSuffice it to say that claims of foreigners it in connection with this bill, we shall tor from Oregon entered the Chamber, I and international agencies on our gold continue to weaken the gold structure referred to a study I made of 14 Eurostock now total $25.5 billion. Over the of the United States, endanger its econ pean countries in the fall of 1949, in conpast 13 years the balance-of-payments omy, and commit a great wrong against nection with the Marshall plan. When I deficits have amounted to $26 billion. To the people of the United States.
returned, I was greatly discouraged by finance them, we have sold about $8 I will not vote for the bill until the the waste and inefficiency I saw at that billion of gold, and foreigners have taken adoption of some amendments which time—so much so, that I called them to the rest in an $18 billion increase in their deal with the basic issue the Senator the attention of Paul Hoffman, the Adshort-term liquid claims on us. The from Virginia is raising. I know of no ministrator, in a long letter I wrote to current gold stock of about $15.6 billion more basic issue.
him. I said to him, “We are appropriatleaves less than $3.5 billion of free gold The Senator from Virginia and I and ing too much; we should cut it to $2,500 above the $12.2 billion required to back others who take this position are dealing million”-a $1-million cut. He replied, our money supply. This in the face of for the most part with economic abstrac- "Any cut at all would take the heart out foreign short-term claims totaling more tions and economic abstract principles; of all of these countries." than $25 billion.
but those abstract principles determine We cut the program to $2,500 million A pamphlet entitled “Gold,” recently the economic level of living of the Amer in 1950, at the peak of the need to rereleased by the Federal Reserve Bank of ican people. So we must try to make habilitate the war-torn countries. Philadelphia, says:
them understand the relationship be But now, 14 years after I made that A continuing loss of gold by the United tween these economic laws and their own report, we are asked to appropriate States could disrupt international trade and economic security. It is difficult to do $4,200 million in addition to a pipeline of the monetary systems of friendly nations, im that, and it calls for a very large amount $8 billion of unexpended funds. pair the Federal Reserve's ability to fight do of objective thinking. That is why we I have not gone into the question of mestic recessions and "shake confidence in
find it difficult to make ourselves un waste, although I know it exists. As I our political leadership of the free world.” Several possible ways to lessen foreign derstood.
have said, 14 years ago, I convinced purchases of the Nation's gold are listed by
So we must continue to talk and talk myself that there was very great waste; the Fed. These are to:
and explain and explain, as the Senator and ever since then I have been advocatIncrease foreigners' dollar payments to us from Virginia is doing so ably today, so ing economy in the program and ending by selling them more goods and services. the American people will realize that we the program. Decrease U.S. dollar payments to foreigners
are really fighting for the preservation But now, as chairman of the commitby cutting back investments, purchases, and
of their security, because we are fighting tee which administers the laws under aid payments abroad. Induce foreigners to keep more of their ex
to keep the U.S. economy strong. It is which we coin money and fix its value, cess dollars invested here, instead of buying
clear that our Nation's economy is its I have the solemn duty to put the Senate gold with them. This can be done through greatest defense weapon.
on notice that, on the basis of the inforhigher interest rates and by dispelling fears We must stop weakening the national mation I have received concerning the that the United States will increase the economy, and we must stop supporting potential drain on the $3,500 million of dollar price of gold-in other words, devalue inefficiencies and shocking wastes in the free gold over the 25 percent needed to the dollar.
foreign aid program-inefficiencies and back our currency, if we do not put the Mr. MORSE. Mr. President, will the wastes which we have been trying to soundness of our currency and the proSenator from Virginia yield?
point out in the course of the speeches tection of our gold supply above playing Mr. ROBERTSON. I yield to the we have been making on the foreign aid Santa Claus to 100 nations, we shall go Senator from Oregon. program,
broke. Mr. MORSE. I commend the Senator We must say to the administration, Mr. MORSE. Mr. President, I am glad for his able presentation of the gold “You should be supporting the amend- the Senator from Virginia has pointed problem and the balance-of-payments ment which proposes to bring the entire that out, because he speaks as chairman problem connected with the bill. I existing program to an end by the end of the Senate Banking and Currency agree with him; it is one of the un of 1965, and then begin it over again, but committee, and I know of no one who answerable propositions that we who are do so on the basis of the guidelines for is more familiar with all the problems opposed to the bill are presenting. It is which we have been pleading, whereby which face the economic structure of an issue that the administration and the countries to be aided will have to the country than is he. the proponents of the bill are not will express their willingness to meet the
I am also very glad that he has reing to face, and never have faced, in the terms and conditions which should be ferred to the amount of money in the consideration of the bill.
laid down, before they will receive $1 pipeline, because some powerful lobbies Mr. ROBERTSON. The Senator from from us."
are at work. As I speak, I notice in the Oregon is eminently correct. I have That is what the administration should galleries representatives of
many been worrying with this problem since accept; and I am at a loss to understand groups representatives of the League the speech I made on it on the floor of why the administration does not do so. of Women Voters, the Association of the Senate last March.
The Foreign Relations Committee has American University Women, and variMr. MORSE. The administration and brought in a report which accepts the ous other groups. They are "putting on the proponents of the bill want to sweep principles we stress; and in its report the heat”; but, as I have said repectunder the rug the balance-of-payments the Foreign Relations Committee warns fully and politely to them, they could not argument in its relationship to foreign the administration that it should do
the administration that it should do pass an elementary examination on the
something about this matter before the facts involvert in our foreign aid proMr. ROBERTSON. The Senator is end of 1965. However, as I have said, gram. The sud fact is that these lobbies correct.
although the Foreign Relations Commit- have accepted dogma, and those who repMr. MORSE. We cannot spend and tee admits the justification for our major resent the lobbies do not have the facts continue to spend for foreign aid with criticisms of the program, the commit- about U.S. foreign aid. For the most such a large percentage of grant money tee asks the Senate to support the ad- part, they are talking in terms of emoand such a large percent of three-fourths ministration's desire to continue the pro- tionalism, not facts.
Mr. ROBERTSON. Yes. They sayoutput and employment from suffering. by maritime union strikes which occur “the United States is rich, and the other There is already some evidence that the because of the flimsiest and most puzcountries are poor; so why do we not increase in short-term interest rates may zling reasons. share what we have with them?"
be spilling over into longer term rate Mr. President, I ask unanimous conBut I point out, as a case in point, that levels. If this tendency persists, the ad- sent to submit for the RECORD at the end in Africa, under the guise of democracy, ministration may have employed a rem of my remarks my correspondence with we are supporting some of the most out- edy for the balance-of-payments prob- the Department of State and the Fedrageous advocates of dictatorship since lem that creates a new malady of in eral Maritime Commission and other the days of Hitler.
creased unemployment and reduced out- documents that relate to our shipping Mr. MORSE. Yes.
put. The administration further pro- problems. I have talked with some of the lobby- vided more tying of military aid and The PRESIDING OFFICER. Without ists, and have asked them, “How much is foreign economic aid spending to pur objection, it is so ordered. in the pipeline?” Then I found that chases in the United States. And it seeks
(See exhibit 1.) they did not even know what the pipeline to reduce the balance-of-payments im
Mr. ROBERTSON. To return to the was; they did not know, as the Senator pact of its foreign spending programs by crucial subject of the balance-of-payfrom Virginia has pointed out that there the sale of military assets abroad, such ments problem as a whole and the adis now $8 billion in the pipeline.
as the sale of land that we have bought ministration's policy concerning that Mr. ROBERTSON. Yes.
in Germany, which we shall sell and buy problem, what is needed is not so much Mr. MORSE. In short, we could post- back again. We shall sell them military more ingenuity on the part of Governpone for 6 months or 12 months our ac hardware from some of our large supply ment technicians as it is more confidence tion on this bill and do no harm. depots in Western Europe. It seeks fur
in the soundness of administration policy However, a "rush act" is on; and those ther to reduce the impact by various pre
both by businessmen at home and by who are conducting it think they will be payment arrangements for foreign loans,
oversea dollar holders. I am convinced able to silence our demands to cut the and by offset agreements with NATO
that a reduction in foreign economic aid bill by some billion dollars. However, we nations having U.S. troops within their and foreign military aid would make a need to take up the bill section by section borders. The administration proposes a greater contribution to solving the baland paragraph by paragraph.
new tax on foreign securities sales to lance-of-payments problem than would I say to the representatives of the check private capital outflows.
more complicated and ingenious techniLeague of Women Voters and to the
In my opinion, these measures ease cal devices such as we have seen in recent Association of American University without curing. I am convinced that our years developed by the Treasury. Women and to the foreign policy asso- balance-of-payments policies require
Despite the administration's ingenious ciations, who apparently have been
apparently have been careful reappraisal. They should be ac actions to borrow time in which to solve called here to "put on the heat," that companied by an equally searching re
the balance-of-payments problem and to what they need is a seminar on foreign appraisal of Government spending poli- fend off the danger of a crisis of confiaid, so as to become enlightened in re cies which will, in the current fiscal year, dence on the part of foreign dollar holdgard to what is involved in the foreign reach an all-time high and include new ers, the defenses of the dollar that have aid program. Before they ask U.S. Sen programs with "escalator" clauses. The
been developed during the past few years ators to vote for their dogmas, they two are intimately related. To avoid a
are not impregnable and do not solve the should stop long enough to realize that needed rethinking of Government spend- pressing problems of policy that we face. we have a trust which they do not have; ing policies at home, we are letting the Neither can we solve the balance-ofwe have the trust of casting our votes balance-of-payments problem push us
payments problem by juggling figures. here in the Senate on the basis of the away from freedom of trade and invest- The Wall Street Journal, in its issue of facts and the issues as we find them. ment, away from private enterprise in Thursday, October 31, contains an arti
I say to the lobbyists, “I am very glad world trade toward more government in cle that describes how the administrato have any factual information you can foreign economic affairs, and toward tion is confused about how to calculate give me, but I am not interested in, nor more tying of private exports to Govern
the balance-of-payments deficit as a rewill I ever be deterred by, any sugges ment spending abroad, with all the dan- sult of the measures which it has taken tion that it might be to my political ad gers this may bring. Already, instead
to reduce that imbalance. vantage to follow the dogmas you ad- of reducing Government spending
Mr. President, I ask unanimous convocate.” abroad to the minimum, we plan to tax
sent to have printed in the RECORD at I say good naturedly to the ladies who private investment abroad. And the ad
the conclusion of my remarks the arrepresent some of these groups that I am ministrator of foreign aid is arguing that
ticle, "While United States Wrestles moved by the spirit of chivalry when I we cannot cut foreign aid because that Payments Deficit, Economists Fuss Over say that one of the most chivalrous sug will also reduce our exports.
How To Figure It," from the Wall Street gestions I could make to them is that
Take exports, for example, where our Journal for October 9. they register for a seminar refresher promotion campaign has had few con The PRESIDING OFFICER. Withcourse on what is involved in foreign aid. crete results. There is a long list of pos out objection, it is so ordered.
Mr. ROBERTSON. Mr. President, I sible measures. These include cuts in (See exhibit 2.) appreciate the contribution to clearer ocean freight rates and export taxes, re
Mr. ROBERTSON. In brief, the thinking on the subject that has been study of our antitrust laws regarding ex
problem arises because the Treasury made by the distinguished Senator from porters, and increased technical assist- has negotiated medium-term borrowing Oregon. ance. There is a vast area of nontariff
arrangements with foreign central To return to my discussion of the seri- restrictions on trade to negotiate away.
banks. Such Treasury bonds of 15- to ousness of the problem of balance of pay. There are the restrictions on tourist
24-month maturity which are sold to the ments, in a speech to the annual con- spending by our trading partners which
spending by our trading partners which foreign central banks, however, must vention of the American Bankers Asso- prevent travel here. It is time to urge contain a clause that permits the forciation on October 9, I spoke of my con and help Europe to develop its own capi- eign central banks to convert the bonds cern that the administration so far has tal markets.
into dollars on 4 days' notice. The reaemphasized short-term stopgaps without To further the prospect of achieving son for this provision in most cases lies going to the roots of the balance-of- results in these areas, I have written to in the monetary laws of the foreign payments problem. The President's July the Department of State on the subject countries, which prevent their central 18 statement of administration policy of travel restrictions and to the Federal banks from investing in long-term seconcerning the balance of payments Maritime Commission on the subject of curities in order to assure the liquidity placed major reliance on increased short- the impact of ocean freight rates. In the of those vital governmental central term interest rates and a further export face of our freight rates, which are un banks' assets. Now we find that the expansion drive. Rising interest rates justly discriminatory between American administration does not know whether normally reduce output and employ- exporters and their foreign competitors to count the foreign bond sale, as shortment if pursued to sufficient lengths, but and are in some cases so high as to be term liquid liabilities of the United the administration counts upon the pro- detrimental to the commerce of the States because they legally come due on posed tax cut of $11 billion to prevent United States, we find our ships tied up 4 days' notice, or whether to count them
as a long-term foreign capital invest- I discuss the possibilities of securing re this country. A large measure of success has ment in the United States. duced shipping rates which would tend to been achieved in this area. For example, 5
years ago French tourist expenditures were Mr. President, these medium-term stimulate our exports.
The Federal Maritime Commission is aware wholly subject to license, British tourists bonds of the U.S. Treasury, in fact, come of the vital impact which the level of freight were limited to an annual expenditure of due in 4 days at the option of the holder. rates in our foreign commerce has upon our $334 per person, Italian tourists to $520 per Whether we now think that foreign na- export expansion program and balance-of- person, and Netherlands tourists to $554 per tions are going to hold these bonds until payment problem. The Commission is now person, with any additional expenditures maturity or not, the matter is for them actively undertaking a program, within its abroad by residents of these countries subto decide and not for us to decide. They authority and jurisdiction as contained inject to individual licensing. These countries are our creditors.
the Shipping Act, 1916, to eliminate wherever as well as most of the other industrialized Mr. President, the confusion of the ad- possible freight rates which have an ad- countries have now liberalized these restric
verse effect upon American exporters. Pro- tions. In addition to Germany and Belgium, ministration over our balance-of-pay- visions of the shipping Act make unlawful which had no restrictions 5 years ago, the ments statistics is only another example, rates which are unjustly discriminatory be- Netherlands, France, Italy, and the United although it is a vivid one, that what we tween American exporters and their foreign Kingdom currently all permit tourist exneed to solve our balance-of-payments competitors, or which may be so high as to penditures freely. In some cases there are problem is not more ingenuity but more
be detrimental to the commerce of the Unit- checks to verify the bona fides of the case sound fiscal responsibility on the part ed States. Under the authority of these stat- with a view to preventing illegal transactions
utes the Commission has already instituted of other sorts, with actual expenditures for of the administration. A part of this
a formal investigation into the level of rates tourism in fact unlimited. fiscal responsibility is to tailor our for- on iron and steel products and is actively Japan still represents an important excepeign economic aid program to fit our eco- undertaking studies of freight rates on addi
undertaking studies of freight rates on addi- tion. Japan grants no automatic allowances nomic resources and to fashion that pro- tional commodities. Whenever it appears for tourist travel abroad at this time. Howgram to serve the national interests of necessary, the Commission will undertake ever, it has recently eased restrictions on the the United States and to administer that further formal proceedings and take appro use of foreign exchange for business and stuprogram with a minimum of confusion, priate steps to assure that export freight dent travel and there are signs that further
rates are not an unreasonable burden upon liberalization is to come. Japan's announced delay, and cross-purposes. our export expansion program.
intention to make the yen convertible for We will imperil the soundness of our
current account transactions beginning own currency and hazard our economic
sometime in the spring of 1964 should result future if we do not reduce our foreign Rear Admiral, U.S. Navy, retired,
in further relaxation of existing restrictions. aid spending. I hope the present bill
Chairman. While the achievements in liberalization will be cut by at least $1,800 million, as
of controls over tourism to date have been I recommended last March,
DEPARTMENT OF STATE,
impressive, the Department of State is, of
Washington, D.C., October 16, 1963. Mr. President, the bill should be re
course, continuing to work for the further Hon. A. WILLIS ROBERTSON,
reduction of remaining restrictions as the committed for further study and reviU.S. Senate.
improved financial condition of countries sion.
DEAR SENATOR ROBERTSON: I am glad to be abroad permits.
of help on the questions you raised in your We are enclosing two tabulations which FEDERAL MARITIME COMMISSON,
letter of October 10 concerning currency re will indicate the 1963 and 1958 status of Washington, D.C., October 16, 1963. strictions imposed by the more industrial- regulations over tourist expenditures pracHon. A. WILLIS ROBERTSON, ized countries on their residents who wish
ticed by the principal industrial countries. U.S. Senate, to tour abroad.
A comparison of these two tables will demonWashington, D.C.
Over the past several years the United strate the substantial progress made in reDEAR SENATOR ROBERTSON: This will ac States has pressed both bilaterally and in moving restrictive regulations. Please do not knowledge receipt of your letter dated Oc the forums of the International Monetary hesitate to get in touch with us should you tober 10, 1963, in which you discuss the Fund and the Organization for Economic Co- require additional information. impact of ocean freight rates on the balance operation and Development for the removal
Sincerely yours, of-payments problem, the need to increase of restrictions which have served to limit the
FREDERICK G. DUTTON, our exports, and in which you request that numbers of Europeans and others visiting
Tourist allocations for residents of the more industrialized countries
Automatic foreign exchange allocation 1
Additional allocation per journey in domestic
banknotes (unless otherwise specified this allocation may be exchanged and spent abroad)
$275 per person per year; 12 this amount for children....
$577 per journey.-
$500. $4,400 per traveler per year. Additional amounts are granted subject to the veri- Individual application evaluated for determinafication of the bona fides of the case.
Unlimited, - do...
tional amounts are granted on request subject to verification of the bona fides
Tourist allocations for residents of the more industrialized countries-Continued
Automatic foreign exchange allocation 1
Additional allocation per journey in domestic
banknotes (unless otherwise specified this allocation may be exchanged and spent abroad)
Italy ----Japan... LuxembourgNetherlands.
Unlimited. $266 per journey.
$33. Unlimited. The equivalent of $706 per journey is granted automatically; addi- $140, which may not be exchanged abroad.
tional amounts are granted on request subject to verification of the bona fides of
foreign and/or national currency. An additional allocation equal to $42 is also
$25, which may not be exchanged abroad. Unlimited
ist expenses abroad are paid on their behalf by approved travel agencies.
(See preceding column.)
tional amounts are granted on request, subject to verification of the bona fides
1 Where the amount is limited, the cost of a return or round-trip tricket can usually be paid in national currency to a foreign or domestic air or surface carrier without deduction from the allocation.
nate abroad exceeds the total dollars com Walther Lederer, requires that they should (From the Wall Street Journal, Oct. 31, 1963] ing back into the country from all foreign be counted as a short-term liquid liability FIGURE FEUD: WHILE UNITED STATES WRESTLES
of the United States—and thus as a minus dealings. PAYMENTS DEFICIT, ECONOMISTS FUSS OVER
The problem is worrisome for many rea in this country's accounts, deepening the
sons. How To FIGURE IT
One is that in order to preserve con deficit the same as would an outflow of
fidence in the stability of the U.S. dollar, the dollars. (By Richard F. Janssen)
United States pledges to sell gold to foreign Treasury men chafe at the bind they find WASHINGTON.-As if the Government's central banks at the fixed price of $35 an themselves in by having a step they devised presistent international balance-of-pay ounce. This means that the dollar can be to save U.S. gold counted by “masochistic ments problem weren't complex enough, freely used in world trade with the assurance statisticians" as a negative factor. Foreign Federal officials now are entangled in an in that it is as good as gold. But foreign gov governments buy the bonds to hold them to tramural squabble that at least one top ernments and central banks frequently do ex maturity and then perhaps renew them, they Treasury expert considers “damn silly” ercise this right to buy U.S. gold with the argue, and it's only a technicality that rethough, nevertheless, quite pertinent,just surplus dollars they accumulate. This has quires the provision for quick convertibility how do you figure the payments deficit? brought the U.S. stock down to less than $16 into dollars and gold. "It's not what the
The balance-of-payments problem is one billion, and around $12 billion of that is other countries say they intend to do, it's that's never been dismissed as financial legally required to back domestic U.S. cur what they can do” that counts, replies Mr. child's play, but while the situation itself rency. While no one in Government thinks Lederer. He finds support for his view in has become much more difficult this year so it likely to happen soon, foreigners could the way the foreign governments tote up the has following the statistics by which it is show up with dollars entitling them to buy bonds on their payments balance accounts; measured. Depending on which set of official about $24 billion of U.S. gold-more than they usually count them as assets they can Government figures one cares to use, it can exists.
quickly turn into dollars, he says. be proven that the deficit in the first half The Government is taking many steps to
When the payments balance is computed this year ran at an annual rate of a pon bring the dollar inflow and outfiow into
the way Mr. Lederer prefers (and he's the derous $4.5 billion, or $4.2 billion, or a less something close to balance. Among them:
one who writes the official Government reworrisome $3.2 billion.
Requiring that nearly all new foreign aid lease on it), the deficit reached a seasonally At a time when the degree of the deficit's money be spent for products in the United adjusted annual rate of $4.2 billion in the gravity is a vital consideration in shaping States, cutting military spending abroad,
first half of this year and a $5 billion yearly major domestic and foreign policies, the campaigning for higher exports, and trying pace in the second quarter alone.
The deffreedom of statistical choice is particularly to get Congress to pass a tax discouraging icit for all 1962. stood at $2.2 billion by the inappropriate. Unless someone quoting fig- U.S. citizens from putting so many dollars Lederer calculation. ures hobbles his speech with such awkward into foreign stocks and bonds. But in addi
THE TREASURY'S PREFERENCE qualifications as whether sales of nonmar tion to these longer-term measures, the adketable convertible medium-term bonds are
The Treasury, however, prefers to show ministration has made temporary moves to treated as a liquid liability or a long-term
the deficit being trimmed by the “Roosa" ease the bind. And it's the question of capital inflow it can be hard to tell if things whether these steps count as pluses or
bonds, running at only $3.2 billion in the
first half and $4.4 billion in the second quarare getting better or worse. And even then, minuses in the statistics that has multiplied
ter. Because such bonds weren't issued last few find it very easy. the ways of toting up the deficit.
year and, thus, don't directly affect 1962 DILLON'S FORECAST The knottiest problem is how to count
figures, this measure also compares with the Thus recently Treasury Secretary Dillon some of the Roosa bonds, dubbed for Treas
$2.2 billion deficit for all last year, and makes estimated the payments deficit for all this ury Under Secretary Robert V. Roosa who
things look not quite so dark. year would total roughly $3 billion. That initiated them. The Treasury started offer
Sometimes, though, both the Treasury and looks fine when matched up against the ing one type of these bonds just this year to
the Commerce Department prefer to look at first-half pace, no matter which set of fig- foreign central banks in hopes they'll use
the figures without counting the bonds at ures you choose. But because the Secretheir surplus U.S. dollars to buy them rather
all and without counting any of the other tary didn't specify the basis he used it wasn't than U.S. gold. So far, the Treasury has
"special Government transactions" made to clear at the time whether the 1963 outlook sold $678 million of them.
improve the balance or temporarily stave off was cause for optimism or pessimism. De
These bonds mature in from 15 to 24
sales of gold. These other "special" dealings pending on the statistics, the 1962 payments months, and as such, would qualify as a include such things as foreign governments deficit amounted to either $3.6 billion or long-term foreign capital investment in the obligingly paying debts to the United States $2.2 billion. United States a clear plus for the U.S. bal
before they're due, and paying for purchases Paradoxically, it is the administration's ance of payments. But to comply with for of military equipment in advance. effort to deal with the deficit that has eign laws on the type of securities in which
With the calculations limited only to what brought the Treasury versus Commerce disforeign central banks can invest, the Roosa
takes place without special Government efpute over how to compute it. Basically, the
bonds are convertible into dollars on 4 days' forts, then, the "regular" deficit ran at an United States incurs a payments deficit notice, and thus quickly into gold. This annual rate of $4.5 billion in the first half, when the total dollars that the Government feature, according to the Commerce Depart- and at $5.1 billion in the second quarter. and the private citizens spend, lend or do- ment's top balance-of-payments economist, While the figures are bigger this way, they