Evening star., 1961-02-07
Strategy of Attack


President Kennedy has left no
doubt in his latest message to Congress
that he is determined to protect the
integrity Of the dollar In international
exchange and, collaterally, to arrest the
persistent deficit in our balance of pay
mentS position. Together, these related
commitments should stem the recently
worrisome outflow OF gold and, indeed,
the reduced foreign demand upon our
reserves in the past 10 days indicates
that confidence In the dollar already has
been shored up by the Presidents
earlier remarks on the matter.
In his message yesterday, the Presi-
dent repeated these earlier assurances
that the dollar will not be devalued
(that the price Of gold will not be raised
above its longtime level Of $35 per
ounce) and that exchange controls over
trade and investment will not be in
voked. Those who fear weakness in
the dollar will find their fears un-
founded" he said. ''Those who hope
for speculative reasons for an increase
in the price Of gold will find their hopes
in vain" From these words, free world
governments for whom we have become
the principal banker should take COM
fort and SPECTATORS who have con-
tributed to the gold outflow should take
warning.
On correcting the payments deficit
(higher expenditures, public and pri-
vate, than returns from abroad) Mr..
Kannedv hos V1rorocad a 1oriaA ~nk -
actions-Some executive, others legis-
lative and still others through persua-
sion or negotiation. Some are highly
technical in the field Of monetary man
agement. Others, such as the recon-
mendation for legislation reducing the
duty-free allowance on American tourist
purchases from $500 to 500, are rela-
lively simple. Greater participation by
other Industrial free nations in eco
nomic aid to under-developed areas
presumably will require negotiation,
but the Presidents emphasis on this
need Is an opening bid Of considerable
force.
Mr.. Kennedy placed his greatest
reliance, however, on the capacity Of
American industry, with the cooperation
Of Government and of labor, to increase
its export trade as the major dollar
Garner. Significantly, in his several
references to this primary source Of
help, he attached must" label to the
requirement Of marketing American
goods at competitive prices-meaning,
in the first instance, that productivity
and costs in this country must be at
levels which will permit Stabilizing or
possibly lowering our prices abroad. To
accomplish this end, he mentioned
again his intent to create an Advisory
Committee on Labor and Management
Policy Ito encourage productivity gains,
advance automation, and encourage
sound wage policies and price stability"
It has been demonstrated, Of course,
that American industry can be rugged
competitor worldwide and it has In fact
produced healthy export surplus in
the past two years. Even so, it is equally
clear that American costs have put our
goods at disadvantage in foreign mar
kets, and in some cases in our own. The
task Of the proposed Advisory Com
mittee will be difficult and intricate
one. The results through this channel
or any other tending to hold our cost
price relationship steady will have great
bearing upon the related problems of
the sound dollar, the balance of pay
ments and the maintenance of our
gold reserves.