April 1, 1965
Page 6543
THE BALANCE OF PAYMENTS AND PRESIDENT JOHNSON'S PROGRAM
Mr. MUSKIE. Mr. President, the Subcommittee on International Finance of the Senate Committee on Banking and Currency is conducting hearings on the balance-of-payments problem. One of the principal questions raised in connection with these hearings is the effectiveness of President Johnson's voluntary program to curb the outflow of American dollars. European financial experts have been openly skeptical, as have been some of our own economists, bankers, and businessmen.
A report by Bernard D. Nossiter in the March 31 Washington Post indicates that the President's program is having an effect and that the Europeans are recognizing that fact.
I ask unanimous consent that the article by Mr. Nossiter, "Europe Admits Effect of U.S. Payments Plan" be printed in the RECORD at this point.
There being no objection, the article was ordered to be printed in the RECORD, as follows:
EUROPE ADMITS EFFECT OF U.S. PAYMENTS PLAN
(By Bernard D. Nossiter)
PARIS, March 30. -- European financial officials ate some crow here today.
They told Frederick Deming, U.S. Under Secretary of the Treasury, that they had misjudged the power of President Johnson's appeal to curb the outflow of dollars. One financial aid put it this way: "I was skeptical, but now much of my skepticism has been dissipated."
Deming listened to all this with evident delight. Just 6 weeks ago, these same officials had told him that the administration's appeal for voluntary restraint on foreign lending and investing wasn't likely to work.
The forum for both gatherings was a meeting of the Organization for Economic Cooperation and Development. This body brings together leading officials from central banks and finance ministries nearly every month to discuss balance-of-payments problems.
In fact, Washington's appeal to banks and corporations to hold back their oversea investment has worked so well that dollars have started to flow back from Europe.
This has led some authorities here to wonder whether they might not run into a dollar shortage by the end of the year. But that prospect was not mentioned at today's meeting.
Another significant feature of the gathering was the change in tone toward American interest rates. It has become an article of European faith that the United States won't solve its payments problem without tighter money.
Today, however, the Europeans did not push this line so hard. According to one source, they even acknowledged that Washington's monetary policy was not as loose as they had intimated in the past.
All this is setting the stage for an expected American initiative on the international monetary front. The United States has not yet put forward its own plan to revamp the world money system. But there were clear hints today that such a plan would be forthcoming when the American payments are clearly nearing balance. That could happen toward the end of the year.
The officials discussed the British position in only a cursory manner. Continental money men are waiting to see what the British budget, due next week, looks like before committing themselves to further aid for the pound.
The money men also agreed to make still another study. This one will examine how leading nations meet their balance-of-payments problems.