Evening star., 1961-12-06

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First of all, we recognize,
as already stressed, that this
country cannot solve this prob
lem alone. Our allies have a
vital interest in its solution.
Thus we have sought to in
crease the share of the con-
tribution which the other in
dustrialized states are making
to the less-developed world;
and are seeking their assump-
ton of a larger share Of the
cost of our Joint defense re-
quirements.
We are also working with
foreign governments and CEN
tral banks on new techniques
for dealing in foreign curren-
cies; on co-ordinating our de-
velopment aid, fiscal. debt
management. monetary and
other policies through the
DECD; on preparing a new
standby lending authority for
the international monetary
fund: on the prepayment of our
allies long-term debts during
this period of adverse trends;
and on increasing the proper
ton of their own military pro-
curement in the United States,
very important move that is
expected to cut our payments
deficit by at least another half
a billion dollars next year.
Secondly, to hold our own
outlays abroad to the absolute
essentials, we have emphasized
procurement in this country for
our military aid and overseas
defense programs, and insisted
upon it for three-quarters OF
our economic aid. We have also
substituted local currency ex-
penditures for dollar expendi-
lures to cover local costs where
ever possible; and sought to
discourage Cby a change in the
customs law heavy expendi-
lures abroad by tourists to sup
plemen restrictions already
placed on military families.
Third, to encourage a great
er movement of funds in this
direction, and discourage trans
fers in the other direction, we
have set up a new tax program
to attract foreign visitors; Sc
cured passage of a tax exemp-
ton encouraging foreign cen
trail banks to invest their capt.
tai in United States securities;
kept our own short-term in
terest rates high enough to
avoid unnecessary outflows; and
urged our allies to free theil
own private capital for invest
ment here. At the same time
we have directed the Treasury
for the first time in a genera
ton, to buy and sell foreign
currencies in the international
exchange markets so as to
strengthen its ability to offset
unfavorable developments af-
fecting the value Of the dollar
Fourth, we have asked the
Congress to remove the arti-
ficial tax preference for Amer
lean investment in highly de-
veloped nations with no capital
shortage and the unjuStifiable
tax avoidance loopholes avail
able to those Americans invest
ing in so-called "tax haven" ma
tionS. We do not seek to pena-
lize-only to equalize. Artificial
stimulants to the export of our
capital are no more reasonable
than artificial restrictions. Ex-
change controls in this country
would not be either workable
or helpful. But the recent flow
of our capital to nations already
fully developed has been a seri-
GUS drain-at least in the short
run on our current balance OF
payments position. The even
tual return from that capital
is no help to us today. And at
a time when we are hard
pressed to pay for the main
tenance of our forces in Europe
without unreasonable increas-
ing our payments deficit anc
our gold outflow, it makes nc
sense to be encouraging an ex-
odus of capital through tax laws
that were more appropriate at
a time when Europe was de-
ficient in capital.
Fifth, and most important
of all, we are seeking to in
crease our exports-and thus
our surplus of exports over i'm
ports. I shall discuss our op-
portunities here in more detail
in a moment; but it is worth
while recounting now that we
have embarked on a stepped-ur
campaign Of export promotion