[L]

ROSTER OF FRIARS

(By name and date elected to membership)

Bert Rockfield - 4/81

Martin L. Roemer - 1/63

Richard Roer - 5/83

Richard Jay Rogers - 10/86

Freddie Roman - 10/71

Ric R. Roman - 4/82

Bernard D. Rose - 3/85

Howard Rose - 5/78

Ron Rose - 10/78

Irwin Rosee - 9/78

Rory Rosegarten - 6/87

Norman Rosemont - 1/67

Harvey Rosen - 1/82

Jesse Rosen - 5/73

Martin Rosen - 1/82

Simon Rosen - 11/66

Steven N. Rosen - 9/88

Victor I. Rosenberg, M.D. - 2/75

Hal G. Rosenbluth - 1/86

Richard I. Rosenkranz - 5/86

Charles Rosenthal - 11/50

Everett Rosenthal - 5/72

Herbert Rosenthal - 1/58

Imre J. Rosenthal - 6/74

William F. Rosenthal - 5/80

Andrew Rosenwach - 8/86

Wallace Rosenwach - 3/77

Erwin Rosner - 2/75

Harold Ross - 5/84

Jeffrey A. Ross - 9/85

Jerry Ross - 1/85

Stephen Ross - 10/81

George D. Roston, D.D.S. - 3/76

Michael L. Rothenberg - 9/79

Shelly Rothman - 10/86

Bruce Rowe - 9/88

Jeffrey P. Rowland - 3/83

Daniel Rubin - 2/75

George Rubin - 4/83

Morry F. Rubin - 9/84

Sam Rubin - 5/86

Stan Rubin - 2/59

Richard Rubinstein - 11/75

Michael I. Rudell - 9/81

Lewis Rudin - 1/64

Richard N. Runes - 1/64

Herman Rush - 5/80

Philippe Ruskin - 1/85

James Russek - 10/88

Nipsey Russell - 2/62

Al Rylander - 3/72

Samuel Sack - 6/69

Jules B. Sadock - 6/84

David F. Safran - 10/84

Robert A. Saks - 5/73

Soupy Sales - 10/65

Lee Salomon - 11/78

Sheldon Saltman - 10/82

Hal A. Salzman - 4/87

Norman Samuels - 5/83

Robert P. Samuels - 4/73

Stephen Samuels - 1/84

Daniel Sandberg - 5/80

Robert M. Sandleman - 9/88

Ernest Sands - 12/70

Jeffrey J. Sands - 6/86

Jonathan Sanger - 11/65

Lal C. Sani - 6/74

Edward Sarnoff - 4/83

Robert Sarnoff - 11/81

Robert Savin - 3/88

Arnold Sawyer - 1/76

Stan Sawyer - 9/83

Peter J. Scalia, D.D.S. - 5/86

Chuck Scarborough - 5/84

Rowland Schaefer - 6/65

Bruce Scheckowitz - 5/85

Jack Scheckowitz - 9/77

Daniel R. Schein - 11/70

Samuel Scheiner - 5/78

Harold Schiff - 9/69

Hal Schiller - 6/84

Harvey S. Schlags - 6/87

S. Sanford Schlitt - 10/75

Theodore Schmidt - 9/81

Herbert Schrank - 9/71

Morris M. Schrier - 1/58

Glenn Michael Schwartz - 9/86

Howard M. Schwartz - 1/83

Marvin Schwartz - 6/87

Sanford Schwarz - 4/74

Arthur Schweitzer - 4/84

Raphael Scobey - 4/59

Marvin Scott - 1/79

Stan Scottland - 10/87

Beverly Seeger - 11/87

Hal Seeger - 6/66

Benjamin H. Segal - 6/70

Jack Segal - 1/69

Robert Seidelman - 1/85

Sidney A. Seidenberg - 12/70

Edward P. Seigenfeld - 6/84

David Serby - 1/72

Raymond Serra - 3/88

Eugene Settler - 10/68

S

Arnold Sabin - 5/83

Sheldon Sachs - 10/81

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[c]

ROSTER OF FRIARS

Donald A. Shammas - 11/86
Michael B. Shane - 9/78
Scott Shane - 6/80
Sheldon Shane - 3/58
Ted Shapiro - 5/77
Avraham Avi Sharir - 3/88
J. Clinton Shaver - 9/78
Robert Shaye - 9/74
George Shearing - 1/79
Alan Sheinman - 5/84
Albert B. Shepard - 4/75
Billy Shepard - 5/87
Craig M. Shepard - 11/85
Dick Shepard - 10/69
Allie Sherman - 10/87
Lewis E. Sherman - 1/65
Nat Sherman - 3/76
Paul J. Sherman - 6/67
Paul M. Sherman - 8/64
Brooke Shields - 10/88
Hiram Shields - 9/74
Hinks Shinberg - 9/87
Dinah Shore - 6/88
Paul Shore - 1/72
Maurice Shorenstein - 1/68
Scott Shukat - 3/66
Richard B. Shull - 3/83
Stuart Shulman - 3/65
Irving Siders - 4/76
Alan H. Siegel - 4/72
Dani Siegel - 1/76
David Siegel - 5/82
Harold Siegel - 2/68
Henry H. Siegel - 4/84
Herbert J. Siegel - 2/59
Howard Siegel - 3/77
Paul M. Siegel - 9/85
Robert A. Siegel - 6/69
Robert H. Siegel - 2/83
Clifford L. J. Siegmeister - 1/69
Harvey L. Silbert - 6/79
Theodore H. Silbert - 10/71
Martin Silver - 3/77
Allen Silverman - 3/78
Jeffrey S. Silverman - 3/76
Alfred E. Simmons - 9/88
Michael Simmons - 2/88
Melvin Simon - 6/72
Mark Simone - 1/78
Barbara Sinatra - 6/88
Frank Sinatra - 1/59
Barry L. Sinkow - 9/83
Michael S. Sirkin - 7/85
Steven Sloane - 9/87

Mike Slosberg - 1/79
Herbert N. Slotnick - 10/79
Irving R. Small - 1/69
Robert F. Smerling - 1/75
Andrew Smith - 9/84
Gene Smith - 10/86
Howard K. Smith - 5/80
Paul R. Smith - 4/70
Ralph Smith - 4/79
Rolland G. Smith - 5/84
Michael Sneider - 1/82
James Snyder - 1/83
Harold Sobel - 1/74
Sam Sofsky - 5/77
Arthur Solomon - 9/78
Kenneth A. Solomon - 11/87
Michael Jay Solomon - 3/82
Robert Solomon - 6/85
Edward N. Sommerfeld - 9/79
Andrew J. Sordoni, III - 1/85
Harold N. Sparks - 1/88
Larry Spellman - 4/76
Peter J. Spengler - 11/69
Michael Spinks - 1/88
I. Joel Stanislaw - 5/86
Rusty Staub - 11/76
Dennis Stein - 6/83
Richard C. Stein - 1/82
Daniel Steinberg - 6/74
Meyer Steinberg - 5/84
Robert Steinberg - 5/88
George Steinbrenner - 2/80
Lee N. Steiner - 1/74
Martin Steinhandler - 9/75
Hy Steirman - 9/73
Arthur Steloff - 5/60
Robert M. Steloff - 5/81
Paul Stern - 11/84
Shadoe Stevens - 11/88
Walter W. Stevens - 1/72
Sy Stewart - 11/82
Jerry Stiller - 11/70
Mike Stoller - 3/82
Allan Stone - 2/83
Arnold Stone - 4/60
Jason Stone - 11/88
Joseph Stone - 4/59
Stewie Stone - 3/88
Allan Strahl - 3/74
David B. Strauss - 5/86
Harold L. Strauss - 4/87
Herbert H. Strauss - 9/61
Barbara Streisand - 6/88
Sheldon Streisand - 5/86

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ROSTER OF FRIARS

Louis A. Stroller - 9/83

William Stromberg - 3/79

David Stuart - 2/87

Jule Styne - 4/58

Leo Suberi - 4/80

Marc Suberi - 3/83

Milton B. Suchin - 10/73

Burt Sugarman - 3/85

Harlan Sugarman - 11/84

Alvin Sussman - 6/85

Chuck Sussman - 6/85

Morton Swinsky - 5/86

Alejandro Szterenfeld - 3/79

W

Edward Wagner - 3/87

Gary Wagner - 10/87

Hon. Robert F. Wagner - 5/88

Myron Wald - 4/76

Norby Walters - 11/82

Jack Warden - 9/88

Jackie Warner - 7/53

Milton Warren - 5/76

Donald M. Wasserman - 5/78

Eric C. Wasserman - 6/82

Kenneth M. Wasserman - 3/83

Dan K. Wassong - 9/69

Morton D. Wax - 1/75

Herschel Waxman - 10/79

Maurie Webster - 2/77

Harold Wegbreit - 2/88

John A. Weiller - 6/76

Harvey Weinberg - 3/88

Irwin Weiner - 1/77

P. Fred Weingarten - 6/69

George Weintraub - 4/83

Gerald W. Weintraub - 4/76

Jerry Weintraub - 3/61

Julius Weintraub - 2/83

Leonard Weintraub - 9/69

Jack Weis - 1/76

Joel Weiser - 1/78

Norman S. Weiser - 5/70

Stephen Weisklass - 4/88

Andrew H. Weiss - 4/83

Andrew M. Weiss - 2/73

Emanuel Weiss - 1/60

Michael Weiss - 11/86

Norman Weiss - 3/88

Sam Weiss - 1/67

Daniel H. Welkes - 4/62

Christopher Welling - 5/78

Francis A. Welling - 11/69

Robert Wells - 1/88

Irv Welzer - 1/76

David A. Werblin - 5/57

Stanley A. Weston - 10/67

Donald R. Whalen - 2/88

William Whaley - 11/81

Samuel White - 3/65

Roy Whitfield - 3/87

Ian G. Wilder - 10/86

Leonard A. Wilf - 1/86

Jeffrey B. Williams - 9/79

Paul Williams - 9/77

Robert S. Williams - 3/86

Gary Willner - 1/88

Michael S. Willner - 1/82

Marty Wilson - 2/84

Jules Winarick - 9/76

T

Donald Taffner - 4/79

Christopher Tanfield - 5/88

Stanley I. Tannenbaum - 4/74

Fred Tarter - 12/70

Joseph Taub - 1/81

Marc Taub - 2/88

Billy Taylor - 10/82

Elizabeth Taylor - 6/88

David William Tebet - 4/59

Bernard Tedlis - 9/69

Bertram Teich - 1/65

Jack Teich - 6/77

Robert L. Tenny - 10/72

Howard R. Terry - 10/76

Randall Terry - 10/81

Seymour Terry - 3/76

J. Leonard Tessler - 9/86

Jay R. Thalheim - 4/80

Jack G. Thayer - 1/82

Leonard Thun - 1/64

Warren H. Thun - 8/79

Jonathan Mark Tisch - 4/83

Fay Tishman - 11/88

Robert Michael Tomlinson - 6/88

Gino Tonetti - 10/82

Edward Torres - 9/80

Robert Towers - 9/78

Eugene Trief - 1/88

John B. Tucker - 10/88

Bill Tush - 1/86

Jonathan Tush - 4/88

Paul Tush - 5/64

U

Jack Uchitel - 5/84

Robert Unger - 2/88

Jack Urbont - 2/88

Larry Uttal - 9/71

V

John A. Vassallo - 9/79

Abe Vigoda - 4/83

Joseph Vogel - 5/86

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[LC]

# Constitution

## ARTICLE I

### Name

The name of this association shall be "The Friars National Association, Inc.", but for the general use it shall be known as the "Friars Club".

The seal of the association shall be circular, with the Friars head in the center, the Club's motto "Prae Omnia Fraternitas" above the Friars head, and the words "Friars Club" beneath the Friars head.

## ARTICLE II

### Objectives

The objectives of the organization shall be to foster and promote the best professional and fraternal relations among all its Members; to foster and promote better understanding between persons engaged in the theatrical profession or any other branch of the amusement field or related fields; and to foster and promote the highest ethical standards and help maintain the best traditions of the theatrical and kindred profession.

## ARTICLE III

### Officers And Board Of Governors

**Section 1.** The Officers of this Club shall be "The Abbot" who shall be the Chair of the Board; a President, to be styled "The Dean"; a Vice President, to be styled "The Prior"; a Secretary, to be styled "The Scribe"; and a Treasurer. The Board of Governors shall consist of the foregoing Officers together with eighteen Members to be elected as herein after specified. Excepting the office of Abbot, only resident Members shall be eligible for elective office or for membership on any committee.

**Section 2.** The ABBOT, DEAN, PRIOR, SCRIBE and TREASURER shall be elected at the annual election and shall hold office, unless removed for cause, for the term of two (2) years commencing from the time of their election or until their successor or successors shall be elected or appointed. The Scribe and Treasurer shall not serve more than two (2) consecutive two (2) year terms. No Member shall be eligible to hold the office of Abbot unless such Member is or has been a performing star of magnitude. The Dean and the Prior must be Professional Members who are or have been active in the entertainment field.

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**Section 3.** The ABBOT shall preside at all meetings of the general Membership and the Board of Governors. The Abbot and Dean shall be Members Ex-Officio of all committees except the Nominating committee. He or she shall present a report of his or her administration at the annual meeting of the Club. The Abbot shall perform such other duties and exercise such other powers as are incident to the Office.

**Section 4.** The DEAN, in the absence of the Abbot, shall perform and exercise all the Abbot's duties, responsibilities and privileges.

**Section 5.** In the absence of the Abbot and the Dean, the Prior shall perform and exercise all the duties, responsibilities and privileges of such Officers.

**Section 6.** The SCRIBE, or any other designee by the Board of Governors, shall attend to the general correspondence of the Club and with any other Officer at the direction of the Board of Governors make and execute all written contracts. Prior to making and executing all oral and written contracts, the Legal committee must receive a copy of the written contract or an outline of the oral contract for the purpose of examining and considering said contract or contracts and render a recommendation in writing to the Board of Governors of its conclusions. The Scribe shall promptly notify and turn over to the Board of Governors all resignations and all other correspondence of importance. The Scribe shall keep a roll of the Members of the Club, and bulletin all regular notices. The Scribe shall send all Members a notification of the annual meeting with a list of the nominees for Officers and Governors and shall furnish to the inspectors of election, a list of the Members entitled to vote. The Scribe shall keep minutes of all meetings of the general Membership and the Board of Governors. The Scribe shall provide a book in which shall be registered the names of all guests, with the names of the Members introducing them. The Scribe shall be the keeper of the seal of the Club.

**Section 7.** The TREASURER shall collect and have charge of all the funds of the Club which shall be deposited and invested in such depository as the Board of Governors prescribes. Payments shall be made by check only. The Treasurer shall keep the accounts in the Club books which shall be open to inspection to all Members within reasonable hours. The Treasurer shall notify Members of their indebtedness and delinquency and subsequently demand payment thereof. The Treasurer shall submit to the Board of Governors a quarterly financial statement listing the assets and liabilities of the Club and the membership delinquencies. At each annual meeting the Treasurer shall present a statement of the preceding fiscal year,

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[LC]

indicating the financial condition certified to by the auditor employed
by the Club.

**Section 8.** The eighteen (18) other Governors shall be elected by the Members of the Club, at each annual election, nine (9) of such Governors shall be elected to hold office for a two (2) year term commencing from the time of their election to replace nine (9) Governors whose terms of office expire or until their successor or successors shall be elected or appointed. In no event shall any Board Member be elected to serve for more than two (2) consecutive two (2) year terms. A Board Member who has served two (2) consecutive two (2) year terms shall not be nominated by the Nominating committee or nominated by petition for at least two (2) years after completing his or her previous terms of office.

**Section 9.** The Board of Governors by a two thirds (2/3) majority vote of the total Membership of the Board may establish Honorary Offices and designate those persons for such Offices for a period of time as it shall deem advisable. Such a vote shall be taken at one meeting and voted upon again at the following regular meeting for adoption. Honorary Officers shall not be Members of the Board of Governors.

**Section 10.** A Member of the Board of Governors absent without permission of the presiding Officer for three (3) consecutive regular meetings of the Board shall, at the option of the Board, be deemed to have resigned.

**Section 11.** The Board of Governors shall have the power to fill any vacancy, whether Officer or Governor. The person so appointed shall hold office until the following annual election. If the term of office of the Governor or Officer in whose place such person has been appointed shall not have expired at the next annual election, a Governor or Officer shall be elected in such person's place for the remainder of such term, at such annual election. Such vote shall be taken at one meeting and voted upon again at the following regular meeting of the Board for adoption.

**Section 12.** The government of the Club shall be vested in the Board of Governors, who shall have control and management of its property, its affairs and its membership. Eleven (11) Members of the Board of Governors shall constitute a quorum for the transaction of business.

**Section 13.** The Board of Governors by a three quarters (3/4) majority vote of those present at a meeting of the Board of Governors, shall have the power to adopt By-Laws, as it may

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consider proper and necessary, and shall further have the power by a three quarters (3/4) majority vote of those present at a meeting of the Board of Governors, to repeal or amend By-Laws. Said By-Laws shall not be inconsistent or in conflict with any of the provisions of this Constitution. By-Laws shall be voted upon for adoption, repeal or amendment at one meeting and voted upon again at the following regular meeting for adoption, repeal or amendment.

**Section 14.** The Board of Governors shall have the power to review and take any action it may deem proper with reference to the decisions or acts of any committee except that of the Nominating committee.

**Section 15.** The Board of Governors by a two thirds (2/3) majority vote of the total Membership of the Board, shall have the power to remove any Officer or Governor for cause; but no Officer or Governor shall be removed without a hearing before the Board. Such hearing shall be held after not less than twenty (20) days written notice has been sent to such Officer or Governor by registered mail with a return receipt requested, which notice shall set forth the charges against such Officer or such Governor.

**Section 16.** The Board of Governors by a majority vote of the total Membership of the Board, shall have the power to censure, suspend or expel any Member who shall be guilty of any offense affecting the good government, reputation or welfare of the Club. No Member shall be expelled without a hearing before the Board. A hearing shall be held after not less than twenty (20) days written notice has been sent to such Member by registered mail with a return receipt requested, which notice shall set forth the charges against such Member.

**Section 17.** The Board of Governors shall meet at least once a month, except during the months of July, August and December.

**Section 18.** The Abbot is empowered to call special meetings of the Board of Governors for any purpose. Special meetings may also be called upon the written request of five (5) Governors, stating the purpose of said meeting and shall be called within one (1) week. The purposes of all special meetings shall be clearly stated in the notices and only the stated purposes shall be considered.

**Section 19.** Each year the Board of Governors may select one Member who shall be presented with a suitable plaque for such Member's unselfish devotion and unusual services to the Club. This shall be placed on the agenda of the March meeting of the Board and the presentation shall be made at the annual Testimonial Dinner.

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**Section 20.** A copy of the minutes of each meeting of the Board of Governors shall be mailed to all Members of the Board as soon as may be practical.

**Section 21.** No Officer of the Club or any Member of the Board of Governors shall participate in the signing of petitions or letters of any kind pertaining to the candidacy or election of Officers or Members of the Board of Governors.

**Section 22.** The Friars Club shall indemnify any Officer, or Member of the Board of Governors made, or threatened to be made, a party to an action or proceeding other than one by or in the right of the Friars Club to procure a judgment in its favor, whether civil or criminal, including an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan, or other enterprise, which any Officer or Member of the Board of Governors served in any capacity at the request of the Friars Club, by reason of the fact that such Officer or Member, such Officer's or Member's testator or administrator was an Officer or Member of the Board of Governors of the Friars Club, or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement and reasonable expenses, including attorney's fees actually and necessarily incurred as a result of such action or proceeding, or any appeal therein, if such Officer or Member of the Board of Governors acted in good faith for a purpose which such Officer or Member of the Board of Governors reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the Friars Club, and in criminal actions or proceedings, in addition, had no reasonable cause to believe that his or her conduct was unlawful.

The termination of any such civil or criminal action or proceeding by judgment, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not in itself create a presumption that any such Officer or Member of the Board of Governors did not act in good faith, for a purpose which such Officer or Member of the Board of Governors reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the Friars Club or that he or she had no reasonable cause to believe that his or her conduct was unlawful.

For the purpose of this section, the Friars Club shall be deemed to have requested a person to serve as a Trustee or an administrator an employee benefit plan where the performance by such person or such person's duties to the Friars Club also imposes duties on, or

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otherwise involves services by, such person to the plan or, participants or beneficiaries of the plan; excise taxes assessed on a person with respect to an employee benefit plan pursuant to applicable law shall be considered fines; and action taken or omitted by a person with respect to an employee benefit plan in the performance of such person's duties for a purpose reasonably believed by such person to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the Friars Club.

This article shall be retroactive and shall apply to any Officer or Member of the Board of Governors made, or threatened to be made a party to any action or proceeding contemplated herein under, prior to the enactment of this article.

## ARTICLE IV

### Committees

**Section 1.** At the first meeting of the Board of Governors, after the Annual Meeting, the Abbot shall appoint the Chair of all standing and special committees, subject to the approval of the Board of Governors.

**Section 2.** No committee shall consist of more than twenty (20) Members and no more than two (2) Members of the Board of Governors shall serve on any committee.

**Section 3.** HOUSE COMMITTEE shall consist of not less than seven (7) Members and the Chair thereof shall be a Member of the Board of Governors. The House committee, subject to the approval of the Board of Governors, shall have charge of all matters pertaining to the internal regulation of the Club and shall have further charge of such matters as are delegated to it by the Board of Governors.

This committee shall entertain or initiate any complaints or charges against Members dealing with violations or infractions of any provisions of the Constitution, By-Laws, rules and regulations of any of the committees of the Club and which conduct shall be deemed prejudicial or offensive to the best interests of the Club. Any Member of the Board of Governors or Member of the House Committee may suspend said Member until the next special or regular meeting of the House committee. Such meeting shall be held within fourteen (14) days after suspension. The Member so suspended shall have a hearing of said charges before this committee. Said hearing shall not be held unless ten (10) days written notice has been sent to said Member by registered mail with a return receipt requested which notice shall set forth the charges against such Member. This committee after a due hearing shall recommend within three (3) days to the Board of Governors, its

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decision of either censure, suspension, expulsion from the Club or
dismissal of the charges. The Board of Governors shall then proceed
as authorized by this Constitution. Said Member shall remain
suspended until the charges are disposed of by the Board of
Governors.

**Section 4. ACTIVITIES AND ENTERTAINMENT COMMITTEE** shall consist of not less than seven (7) Members and the Chair thereof shall be a Member of the Board of Governors.

**Section 5. ADMISSIONS COMMITTEE** shall consist of not less than seven (7) Members and the Chair thereof shall be a Professional Member of the Board of Governors. The Admissions committee shall investigate and consider all applications for all classes of Membership. Applications shall be in writing and in such form as is required by the committee. This committee shall report its recommendations for membership to the Board of Governors.

**Section 6. FINANCE COMMITTEE** shall consist of not less than seven (7) Members and the Chair thereof shall be the Treasurer of the Club or anyone appointed by the Dean. The duties of the Finance committee shall be to examine and supervise the income and expenditures of the Club. It shall also evaluate the overall financial policy of the Club and shall examine all reports prepared by the auditors and report thereon to the Board. It shall also prepare the annual budget which shall be presented at the May meeting of the Board of Governors.

**Section 7. LEGAL COMMITTEE** shall consist of not less than seven (7) Members. This committee shall pass on all legal matters. All Members of this committee shall serve without remuneration.

**Section 8. WELFARE COMMITTEE** shall consist of three (3) Members, the Abbot, Treasurer and a Member of the Board of Governors. The Abbot shall be the Chair. In no event shall the committee have the authority to disburse to any Member a sum in excess of one thousand ($1,000) unless so authorized by the Board of Governors.

**Section 9. NOMINATING COMMITTEE** and its Chair shall be appointed by the Abbot subject to the approval of the Board of Governors at its April meeting.

a) Said committee shall be comprised of nine (9) Members, six (6) Professional and three (3) Non Professional, and three (3) alternates, two (2) of whom shall be Professional and one (1) Non Professional. The Chair shall be a Professional. Of the eight (8) other Members, at least two (2) shall be former Members of the Board of Governors. A

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Member of this committee shall be a Member of the Club for at least five (5) years.

b) Said committee shall meet as soon as possible after appointment. At its first meeting it shall nominate the various Officers of the Club and in its discretion need not nominate more than one (1) person for each Office. However it must nominate at least two (2) persons for each of the Offices of Scribe and Treasurer.

c) Said committee shall also nominate as candidates for the Board of Governors twelve (12) Members of the Professional Membership and six (6) Members of the Non Professional Membership. In the event any nominees refuse said nomination, the Chair shall call as many meetings as may be necessary to nominate the required number of candidates. Each nominee must receive a majority vote of those present at the meeting. This committee must present its final report of nominees not later than August 1st.

d) Not less than sixty (60) Members may nominate a candidate as an Officer or as a Member of the Board of Governors by a written petition properly filed as provided in this Constitution. (See Article VI, Section 4)

e) No Member of the Nominating committee shall be nominated as an Officer or as a member of the Board of Governors by said committee.

**Section 10.** The Abbot shall have the power to appoint any other committees subject to the approval of the Board of Governors. He or she shall also have the power to remove the Chair of any committee subject to the approval of the Board of Governors. The Chair of any committee shall have the right to appoint and remove any Member of his or her committee.

**Section 11.** The Abbot shall have the power to appoint a Vice Chair of any committee subject to the approval of the Board of Governors.

**Section 12.** No Member is eligible to be nominated or be elected as an Officer or Member of the Board of Governors unless he or she has been a Member in good standing for five (5) consecutive years.

**Section 13.** A Member cannot serve on any of these committees for more than two (2) consecutive years, except the Welfare committee. However, the Chair of any said committees may serve as long as he or she remains a Member of the Board of Governors.

**Section 14.** All Officers, Members of the Board of Governors, nominees, committee Members and signers of any and all petitions as provided in this Constitution must be Members in good standing.

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**Section 15.** A Member of any committee absent without permission of the Chair for three (3) consecutive meetings, shall be deemed to have resigned.

**Section 16.** No committee shall adopt any motions, rules or resolutions that may be inconsistent or in conflict with any provisions of the Constitution or By-Laws.

## ARTICLE V
### Membership

**Section 1.** Any person twenty one (21) years or over shall be eligible for election as a Member.

**Section 2.** Membership shall be divided into dues paying and non-dues paying categories. Dues paying Members are: Professional Members, Non Professional Members and Friarlings. The non dues paying Members are: Honorary Members and Senior Members. Membership shall in no event exceed thirteen hundred and fifty (1350) dues paying Members excluding Overseas Members and Friarlings.

**Section 3.** Professional Members shall be those persons who obtain substantially all of their earned income from occupations listed in By-Law Number One (1) or devote all of their time to same. The Board of Governors by a three quarters (3/4) majority vote of the total Membership of the Board shall have the right to establish additional categories or remove same as it may at any time deem advisable, subject to such conditions as it may prescribe. Such vote shall be taken at one meeting and voted upon again at the following regular meeting of the Board for adoption.

**Section 4.** Members who are presently classified in a Membership category may remain in said category.

**Section 5.** All other dues paying Members other than Professional Members shall be deemed Non Professional Members except Friarlings.

**Section 6.** Non Professional Members shall not exceed thirty three and one third (33 1/3) percent of the total Membership unless changed by a majority vote of the total Membership of the Board of Governors. However, in no event shall the percentage of Non Professional Members exceed forty (40) percent of the total Membership. Such vote shall be taken at one meeting and voted upon again at the following regular meeting of the Board for adoption. Friarlings are not included in this percentage.

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**Section 7. HONORARY MEMBERS.** The Board of Governors may elect any person an Honorary Member by a two thirds (2/3) majority vote of the total Membership of the Board, when in its discretion such person has attained sufficient distinction to warrant such honor. A vote shall be taken at one meeting and voted upon again at the following regular meeting of the Board for adoption. Honorary Members shall not be eligible to vote or hold office and shall be exempt from the payment of dues and assessments. They shall have all rights and privileges of the Club and may on proper application be elected to regular Membership.

**Section 8. Honorees of Testimonial Dinners or Celebrity Luncheons** shall automatically become Honorary Members. They shall not be eligible to vote or hold office and shall be exempt from the payment of dues and assessments. They shall have all rights and privileges of the Club and may on proper application be elected to regular Membership.

**Section 9. SENIOR MEMBERS.** The Board of Governors may elect a Member to Senior Membership, provided such Member has been a Member for at least fifteen (15) consecutive years and who by reason of such Member's financial situation is deserving of this classification. A vote shall be taken at one meeting and voted upon again at the following regular meeting for adoption. They shall have all rights and privileges of the Club and shall be exempt from payment of dues and assessments.

**Section 10. FRIARLINGS.**

a) A Professional reaching the age of twenty one (21) and not more than twenty nine (29) years of age may apply for Membership as a Friarling. Such person's tenure of Membership as a Friarling shall cease four (4) years from the date of such person's admission or at age thirty (30) whichever comes first. Upon the expiration of the tenure of a person as a Friarling, such person shall then become eligible to be a Friar upon proper application.

b) A child or stepchild of any Member in good standing shall be eligible for Friarling Membership. Said applicant shall be at least twenty one (21) years of age and not more than twenty nine (29) years of age. Such person's tenure of Membership as a Friarling shall cease four (4) years from the date of such person's admission or at age thirty (30) whichever comes first. If at the termination of such category, such person desires to become a full fledged Friar, such person must file an application for same. The status of such person, whether Professional or Non Professional, shall be determined by the Board of Governors pursuant to this Constitution, upon such application.

**Section 11.** Members who have entered the United States Armed

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Forces shall be exempt from dues and assessments. Termination of
such service shall place such person into the dues paying category.

**Section 12.** Upon approval of an application for Membership by the Admissions committee, the Board of Governors shall have an open vote on the admission to Membership of the applicant. A minimum of three quarters (3/4) of those present must be in the affirmative.

**Section 13.** No rejected applicant for Membership shall again be proposed until the expiration of one (1) year from the date of rejection.

**Section 14.** Any Member who has resigned from the Club in good standing shall, upon application for readmission, take precedence over all other applicants. However, the category of such Member shall be determined as of the date of such application for reinstatement. With such application, the Member shall pay the increase of the initiation fee since such Member's resignation together with one year's dues.

**Section 15.** Any Member who has been dropped as a Member for non payment of dues or other indebtedness, may apply for reinstatement as a Member. Such Member shall file an application for readmission and shall be obliged to pay with such application the full initiation fee, his or her previous indebtedness and one year dues. The category of said applicant shall be determined as of the date of the application for reinstatement.

**Section 16.** The Board of Governors, in its discretion, may grant any Member the privilege of a "Leave of Absence", subject to such conditions as it may prescribe.

**Section 17.** A resident Member is one whose residence is within one hundred (100) miles from New York City.

**Section 18.** The name of every person proposed for Membership, shall be mailed each month to the Members together with the person's occupation, proposer and seconder. Same shall also be posted on the bulletin board by the Scribe not less than six (6) weeks prior to being voted upon by the Board of Governors. All applications must be accompanied with the initiation fee and first year dues. The proposer and seconder must each certify to a personal knowledge of the candidate. If the application for Membership is not perfected within three (3) months from the date thereof, then such application shall be deemed withdrawn, unless such additional time is extended by the Admissions committee or the Board of Governors.

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**Section 19.** Dues, assessments and initiation fees are stipulated in the By-Laws. A person elected to Membership shall pay prorated annual dues from the date of such person's election to Membership.

**Section 20.** No Member of the Club shall be an employee thereof unless approved by the Board of Governors.

## ARTICLE VI
### Annual Meeting and Election

**Section 1.** The Annual Meeting of the Club shall be held during the last week of October of each year, on such date as may be determined by the Board of Governors. It shall be called to order at 8:00 PM for the purpose of receiving the reports of Officers and Committees of the past year and to conduct such business or other matters as may come before said meeting.

**Section 2.** Election of Officers and Governors shall be held on the day of the annual meeting and in such manner as prescribed by the Board of Governors.

**Section 3.** The names of the nominees filed by the Nominating committee and the names of the candidates nominated and filed by petition, shall be posted immediately by the Scribe, alphabetically listed upon the bulletin board for at least forty five (45) days prior to election. The names filed and posted shall be enclosed with the notice of the date of the annual meeting and election, and mailed to all Members.

**Section 4.** Any petition filed for candidates, as provided in Article IV, Section 9 (d), must be filed with the Scribe at the Club premises, containing the name of the candidate and the names of the petitioners, not later than fourteen (14) days after the filing and posting of the nominations recommended by the Nominating committee. Said petition with the names of the petitioners shall also be posted on the bulletin board, as soon as received by the Scribe.

**Section 5.** Petitions for candidates shall contain only one (1) nominee.

**Section 6.** Any Member in good standing, shall have the right to cast an absentee ballot by mail in the annual election. Each Member shall receive an absentee ballot together with the notice of the date of the Annual Meeting. Each Member then may return such ballot by mail, securely sealed in an envelope marked "Absentee Ballot". Said envelope shall then be placed in a mailing envelope on which the Member shall affix such Member's signature and shall be mailed to a

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designated United States Post Office Box. Only the inspectors of election shall have complete control of said ballots, which shall be handled and tallied by them in complete secrecy. Absentee ballots to be valid, must be received by mail only, no later than twelve (12) O'Clock noon on the day of the election and shall not be tallied prior to six (6) PM.

**Section 7.** At least fourteen (14) days prior to the election, the Abbot shall appoint a Chair and not less than eleven (11) other inspectors of election. They shall open the polls at twelve (12) O'Clock noon on the day of election and keep the polls open until eight (8) O'Clock PM.

**Section 8.** The election of Officers and Governors shall be by secret ballot and under the supervision and direction of said inspectors.

**Section 9.** A candidate for Officer or Board of Governors, may upon written request to the Scribe, have only one (1) letter sent by such candidate to the Membership in such candidate's own behalf through the facilities of the Club. However, said letter must first be approved by a committee of at least three (3) Members appointed by the Abbot for said purpose. All costs and expenses for such mailing shall be paid by the candidates to the Club prior to the mailing.

**Section 10.** If biographies of the candidates are to be published prior to an election, they shall be edited factually by a committee appointed by the Abbot. Each biography shall not contain more than sixty (60) words and must be presented to the Scribe no later than September 1st. Said biographies shall be mailed to the membership no later than thirty (30) days prior to the election.

**Section 11.** The ballots or other means of election shall designate in two (2) separate groups, Professional and Non Professional nominees. Such ballots shall clearly state that only six (6) Professional candidates shall be elected and only three (3) Non Professional candidates shall be elected. The ballots shall also state that they will not be considered valid unless the Member shall vote for at least four (4) Professional and two (2) Non Professional nominees. It shall also state that such ballots will not be considered valid if the Member votes for more than six (6) Professional or more than three (3) Non Professional nominees. All incumbents and candidates by petition shall be so designated in all notices and ballots pertaining to the election.

**Section 12.** The order of listing the candidates on all ballots and voting machine shall be chosen by lot by the Nominating Committee.

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**Section 13.** A voting machine may be provided at the discretion of the Board of Governors.

**Section 14.** A Member whose dues or other indebtedness to the Club are unpaid shall not be eligible to vote for candidates or at any meeting of the membership. The Board of Governors shall determine the delinquency status of Members which prescribes the right to vote. Thirty (30) days prior to the annual election, a notice shall be mailed to all Members who are in arrears, advising them of their ineligibility to vote.

**Section 15.** The candidates for Office and the nine (9) candidates for the Board of Governors receiving the largest number of votes cast in their category, shall be deemed elected. The inspectors of election shall declare the result of the election. In the event of a tie vote, the successful candidate shall be chosen by lot by the Board of Governors.

**Section 16.** In the event it shall be necessary, because of a vacancy, to elect more than nine (9) Members of the Board of Governors, then the candidate receiving the next highest number of votes in such candidate's category shall be deemed elected for the existing vacancy.

**Section 17.** If there is but one (1) candidate for any office, the Chair of the inspectors shall instruct the inspectors to cast one (1) ballot for the election of said candidate.

**Section 18.** At the annual meeting or any other meeting of the Membership, a quorum shall consist of not less than one hundred (100) Members in good standing.

**Section 19.** The Abbot is empowered to call a special meeting of the Membership at any time for any purpose, upon at least fourteen (14) days written notice to the Members. The purpose of the meeting must be clearly stated in said notice. Said notice shall also be posted on the bulletin board for the same length of time. At such special meeting, only the stated purposes shall be considered.

**Section 20.** Upon the written request of at least seventy five (75) Members in good standing, addressed to the Abbot, also stating the purpose of said meeting, a special meeting of the Membership must be called by the Abbot. At least fourteen (14) days written notice of said meeting must be given to the Members. A similar notice shall be posted on the bulletin board for the same length of time. The purposes of such special meeting must be stated in the notice. At such special meetings, only the stated purposes shall be considered.

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**Section 21.** If no quorum is present at the time designated for the annual meeting or any special meeting, the presiding Officer shall adjourn the meeting to some future date, not exceeding thirty (30) days. A fourteen (14) days written notice of such adjournment date shall be mailed to all Members.

## ARTICLE VII

### Funds

Monies of the Club shall not be disbursed except by check duly signed by any two of the elected Officers or any such Officer and a Member of the Board of Governors as designated by the Abbot.

## ARTICLE VIII

**Section 1.** Whenever the Scribe is not available for the receipt of the service of petitions or other matters referred to in this Constitution or By-Laws, then same may be delivered to the Executive Director or the Assistant Executive Director.

**Section 2.** This Constitution and By-Laws supersede the previous Constitution, previous By-Laws and all resolutions previously adopted by the Board of Governors and are effective immediately upon their adoption.

**Section 3.** The Board of Governors, or any committee, shall not adopt any By-Laws, resolutions or motions that are in conflict with the provisions of this Constitution or By-Laws of the Club.

**Section 4.** Unless otherwise provided by the provisions of this Constitution, all general or special meetings of the Membership, meetings of the Board of Governors and all committees shall be governed by the Rules adopted by the Board of Governors. Any questions of procedures not governed by said Rules shall be governed by the "Roberts Rules of Order Revised".

## ARTICLE IX

### Amendments

This Constitution may be amended by a two thirds (2/3) majority vote of the Members eligible to vote and voting (in person or by mail ballot) at any annual or special meeting. Proxies will not be permitted. Such proposed amendment shall have been recommended either by the Board of Governors or by at least seventy five (75) Members in good standing, and presented in writing to the Board of Governors at least thirty (30) days prior to such meeting.

An amendment recommended by the Board of Governors may be

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adopted by a two thirds (2/3) majority vote of the total membership
of the Board and it shall be voted upon again by the Board of
Governors at the following regular meeting for adoption.

At least twenty (20) days written notice of such proposed
amendment with notice of the date of said meeting shall be mailed by
the Scribe to all Members, together with a text of the proposed
amendment. A similar notice shall be posted on the bulletin board for
the same length of time.

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shall pay sales taxes as required by the State and the City of New
York.

## 5. Arrears In Dues

If any Member remains in arrears in the payment of his or her dues
for a period of six (6) weeks, the Treasurer shall call his or her
attention to such arrears and demand payment thereof. If payment is
not made within thirty (30) days of said notice, the Board of
Governors shall have the power to suspend or expel such Member
from the Club.

## 6. Suspension Of Credit

If any member shall be indebted to the Club for more than thirty
(30) days, other than for dues, such Member's credit to the Club shall
be suspended upon ten (10) days written notice from the Treasurer.

## 7. Guest Card

A Member in good standing shall be permitted to obtain a two
week guest card for an out of town visitor and such visitor during
such period shall be permitted the privilege of all Club facilities. No
person shall be considered an out of town visitor unless such person
resides at least one hundred and fifty (150) miles from New York City
and no person shall receive such privilege more than once a year.
Such visitor shall also have the privilege of using the card room,
however, the sponsoring Member must participate with the guest in
the same card game. The sponsoring Member is responsible for any
and all indebtedness and conduct of such visitor.

## 8. Guest Privileges

Other guests shall not be permitted above the 2nd floor more than
once every thirty (30) days excepting the Frank Sinatra and Ed
Sullivan rooms which rooms are located on the 3rd floor.

## 9. Working Performer

A Working Performer who has submitted an application for
Membership is permitted to use the facilities of the Club
immediately.

## 10. Resignation From Club

A Member desiring to withdraw from the Club must signify
such intention in writing to the Scribe prior to the 1st day of

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July, otherwise such Member shall be liable for another additional year's dues.

## 11. No Solicitation Of Funds

No Member or guest shall solicit funds for any cause on the Club premises.

## 12. No Cash Payments

Services are prohibited to be paid for in cash and must be charged to the Member's account. However a Member may pay cash in the card room or barber shop or charge same to his or her account.

## 13. Club Responsibility

The Friars Club is not responsible for personal property, money or belongings checked, left, or deposited in any department of the Club.

## 14. Tipping Prohibited

TIPPING IS ABSOLUTELY PROHIBITED AT ANY TIME EXCEPT IN THE GYMNASIUM, CARD ROOM AND BARBER SHOP.

## 15. Guests Under 18 Years Of Age

Guests under the age of eighteen (18) are not permitted above the 2nd floor excepting the Frank Sinatra and Ed Sullivan rooms which are located on the 3rd floor.

## 16. Unauthorized Use Of Friars Club Name

The name "Friars Club" shall not be used directly or indirectly by any person for any purpose without the prior approval of the Board of Governors.

## 17. Executive Director

The Executive Director may hire and discharge employees. Salaries for all employees shall be subject to the approval of the Board of Governors.

## 18. Non Resident Non Professional

A Non Resident Non Professional applicant is one whose place of residence is at least five hundred (500) miles or more from New York

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City. Such an applicant shall pay the same initiation fee and annual dues as a regular Resident Non Professional Member. Such applicant name will not be waitlisted on the Non Professional list of applicants and if accepted will be processed immediately. This Membership category shall not be considered part of the Membership ratio.

## 19. Monthly Minimum Charge

All Resident Members must have a monthly minimum charge of $50.00 for food and or bar, exclusive of taxes and gratuities. However, Members may accumulate said charge on a quarterly basis.

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# House Rules

1. The Club is open from 12 O' Clock Noon to 11:30 PM, Monday through Friday and 9:00 AM to 5:00 PM on Saturdays.

2. Lunch is served from 12 Noon to 2:30 PM and Dinner from 6:00 PM to 9:30 PM.

3. Functions held in Private Dining Rooms must be sponsored by a Member of the Club and also approved by the Executive Director or the Assistant Executive Director. Said Member must be present at said function.

4. Personal checks may be cashed between the hours of 12 Noon and 7:00 PM in the Card Room and shall not exceed Fifty (50) dollars.

5. A group of more than twelve (12) persons will not be served in the Dining Room unless expressly approved by the Executive Director.

6. An automatic gratuity of seventeen (17) percent will be added to all restaurant and bar charges.

7. After 4:00 PM gentlemen must wear jackets and ladies must wear appropriate attire on the first and second floors.

8. Animals or pets are not permitted inside the Club.

9. Names, addresses and telephone numbers of the Members of the Club shall not be available to anyone.

10. Members must enter the names and residence of their guests in the Guest Book provided for that purpose at the Reception desk immediately upon the guest arrival at the Club.

11. Guests using the Health Club or the Card Room must obtain a Guest card at the reception desk. Said card must be presented to the Health Club or Card room attendant.

12. Children under the age of fourteen (14) are not permitted to use the facilities of the Buddy Howe Health Club.

13. Advertisements or notices of any kind are prohibited from being posted on any bulletin boards in the Club.

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14. Displaying papers, plans, documents or samples of any kind is prohibited except in private rooms.

15. The Barber shop will be open week-days from 9:00 AM to 6:00 PM. A Member desiring Barber service must make an appointment by calling 751 7423.

16. Card playing is prohibited in any location of the Club except in the Card Room on the third floor.

17. A reciprocal agreement is in force between the New York and California Friars Club. Please inquire at the Club office for detailed information.

18. Alcoholic Beverages shall not be served to anyone who is or who appears to be intoxicated. Host Members will be responsible for their guests.

19. Children under the age of Five (5) are not permitted on the Club premises from Monday through Friday. However, they will be permitted for Saturday Brunches and for Special Holiday Events.

20. An interest charge of one percent a month will be applied to all accounts, except dues, that are past due over sixty (60) days.

21. Smoking will be permitted only in the designated sections of the Dining Rooms. However, smoking will be permitted at both bars.

22. Dues payments may be deductible in part as ordinary and necessary business expenses for Federal Income Tax Purposes. Dues and similar payments are not, however, deductible as charitable contributions.

23. The Club shall not be responsible for any personal property, money or jewelry left in any part of the building.

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CLUB DEPARTMENTS

<table><tr><td>Roof</td><td>Solarium and Golf net</td></tr><tr><td>5th Floor</td><td>Buddy Howe Health Club<br/>The Leo Gutman, Sr. Cardiovascular<br/>Corner<br/>The Health Club operates from:<br/>Monday through Friday: 12 Noon to<br/>7:30 PM<br/>Saturdays: 9:00 AM to 5:00 PM<br/>State of the Art Exercise Equipment<br/>Locker Room<br/>Masseur (1:00 PM to 7:30 PM)<br/>Sauna and Steam Room<br/>Fitness Instructor (4:00 PM to<br/>7:30 PM)</td></tr><tr><td>4th Floor</td><td>Harry Delf Billiard Room<br/>Barber Shop and Manicurist<br/>Accounting and Executive Offices<br/>9:00 AM to 5:00 PM</td></tr><tr><td>3rd Floor</td><td>Frank Sinatra Room<br/>Ed Sullivan Room<br/>George Burns Card Room<br/>Noon to 11:30 PM</td></tr><tr><td>2nd Floor</td><td>Milton Berle Room<br/>Joe E. Lewis Room<br/>Noon to 11:30 PM</td></tr><tr><td>Main Floor</td><td>Main Dining Room<br/>William B. Williams Room<br/>Reception and Check Room<br/>Noon to 11:30 PM</td></tr><tr><td>Basement</td><td>Main Kitchen<br/>Rest Rooms and Public Phones<br/>Noon to 11:30 PM</td></tr></table>

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“FRIAR OF THE YEAR”
AWARD RECIPIENTS

<table><tr><td>1981</td><td>DAVID W. TEBET</td></tr><tr><td>1982</td><td>SEYMOUR B. GOLDFELD</td></tr><tr><td>1982</td><td>JACK L. GREEN</td></tr><tr><td>1982</td><td>DAVID MILLSTEIN</td></tr><tr><td>1983</td><td>GEORGE BARRIE</td></tr><tr><td>1984</td><td>RICHARD KANE</td></tr><tr><td>1985</td><td>JUDGE A. LIEBERMAN</td></tr><tr><td>1985</td><td>AL RYLANDER</td></tr><tr><td>1985</td><td>JACK H. KLEIN</td></tr><tr><td>1986</td><td>BERNARD M. KAMBER</td></tr><tr><td>1987</td><td>SAMMY CAHN</td></tr><tr><td>1988</td><td>HON. ABRAHAM D. BEAME</td></tr><tr><td>1988</td><td>DAVID JONAS</td></tr></table>

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FRIARS ANNUAL
TESTIMONIAL DINNERS

1973 CAROL BURNETT
1974 DON RICKLES
1975 WALTER MATTHAU
AND GEORGE BURNS
(The Sunshine Boys)
1976 FRANK SINATRA
1977 KIRK DOUGLAS
1978 DAVID BRINKLEY,
WALTER CRONKITE
AND HOWARD K. SMITH
1979 JOHNNY CARSON
1980 DEAN BUDDY HOWE
DINNER-DANCE
1980 DR. HENRY A. KISSINGER
1981 BURT REYNOLDS
1981 BUDDY HACKETT
1982 CARY GRANT
1983 ELIZABETH TAYLOR
1984 WILLIAM B. WILLIAMS
1984 DEAN MARTIN
1985 MILTON BERLE
1986 ROGER MOORE
1987 RED BUTTONS
1988 BARBARA SINATRA

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# Friars Club Services

Private Ambulance and Paramedic Service:

## ASSOCIATED AMBULANCE AND HEALTH SERVICES, INC.

- medical emergencies on a priority basis in Manhattan

- non-emergencies from the five boroughs

Procedures to follow in the event of a medical emergency:

1. Dial (212) 809-5433.

2. Speak slowly and distinctly.

3. Mention the Friars Club as being a member of the Corporate Registry.

4. Give your name, the patient's name, address, age, sex and whether the person is conscious or unconscious.

All patients will be taken to the hospital of their choice, unless a life threatening situation is present, then the patient will be taken to the nearest hospital.

The ambulance charge is $250.00 the charge for paramedic Service is $375.00. Expenses will be billed to your account.

## FRIARS CLUB BARBER SHOP

Michael Denicoli - Hair Stylist

Claudia Weber - Manicurist

By Appointment Only

Winter Hours: Tuesday to Friday 7:30 A.M. to 5:00 P.M.

Summer Hours: Monday to Thursday 7:30 A.M. to 5:00 P.M.

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FINAL CURTAIN

<table><tr><td>BILL SMITH</td><td>January 13, 1988</td></tr><tr><td>LEON DENSEN</td><td>February 15, 1988</td></tr><tr><td>SEYMOUR B. GOLDFELD</td><td>February 14, 1988</td></tr><tr><td>RUDOLPH MAZZONELLI</td><td>March 6, 1988</td></tr><tr><td>LEE GUBER</td><td>March 27, 1988</td></tr><tr><td>NICK MANOR</td><td>May 4, 1988</td></tr><tr><td>PETER DEAN</td><td>May 17, 1988</td></tr><tr><td>DAVID SCHOENBRUN</td><td>May 23, 1988</td></tr><tr><td>ELIAS E. SUGARMAN</td><td>May 31, 1988</td></tr><tr><td>MEL STARR</td><td>June 1, 1988</td></tr><tr><td>HAROLD RIEFF</td><td>June 22, 1988</td></tr><tr><td>LOU BACON</td><td>August 22, 1988</td></tr><tr><td>IRVING MANSFIELD</td><td>August 25, 1988</td></tr><tr><td>BENJAMIN S. FISHMAN, M.D.</td><td>August 27, 1988</td></tr><tr><td>OTTO SCHMIDT</td><td>September 1, 1988</td></tr><tr><td>ALLEN HERMAN</td><td>September 15, 1988</td></tr><tr><td>HARRY DAVID GLASS</td><td>September 17, 1988</td></tr><tr><td>BILLY DANIELS</td><td>October 7, 1988</td></tr><tr><td>SAMUEL H. CLARK</td><td>October 9, 1988</td></tr><tr><td>DON PHILLIPS</td><td>October 11, 1988</td></tr><tr><td>GERRY GILBERT</td><td>October 15, 1988</td></tr><tr><td>STEVE KAHN</td><td>November 17, 1988</td></tr><tr><td>IRVING ORENSTEIN</td><td>November 19, 1988</td></tr><tr><td>EDDIE SCHAFFER</td><td>November 23, 1988</td></tr><tr><td>NORMAN W. ELSON</td><td>December 26, 1988</td></tr></table>

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CONTINENTAL GRAIN COMPANY

277 PARK AVENUE
NEW YORK, N. Y. 10172

PAUL FRIBOURG
GROUP PRESIDENT
WORLD GRAIN GROUP

SEP 25 1989

September 21, 1989

Dr. Henry Kissinger
350 Park Avenue
New York, NY 10022

Dear Henry:

I want to thank you for your help at the Board meeting last
week. We've gone through a difficult period this summer and I
appreciate the support you always give.

I also wanted to let you know how outraged I am by the article
in the Wall Street Journal on your China business. I have
been convinced for a long time that one of the most serious
shortcomings of the United States is that government and
business do not work closer together.

In any foreign country you'll find governments working hand in
hand with the business community to ensure that both the
national interests are preserved as well as those of any
private enterprise.

Japan is perhaps the extreme example, where you can see whole
industries working in consort with the government.

But even in countries like France, Spain, and Israel you see
top government officials working with private business to make
sure that everyone's efforts are towards common goals.

In our European business we are constantly meeting with top
government officials to see what direction they want us to go.
Does Brussels want a five year agreement with the U.S. to
import U.S. corn to Spain? Do the French want a long term
grain agreement with the Russians? Does ethanol make sense
for European agri-industries?

These are all questions we are constantly discussing with
European governments and they give us very clear signals as to
what they'd like to see.

Mr. Henry Kissinger
September 21, 1989

Page 2

In the U.S. with the "iron curtain" between government and business we have a constant guessing game as to what the government really wants. In the end, we use our own best judgement which often isn't what the government wants. This isn't good for us nor for the national interest.

I've always seen you as a man who could help the U.S. build that bridge between Washington and the real world. Take ideas from the key politicians and help transform them into real brick and mortar.

Twelve years ago you began a political rapprochement with China. Ten years ago, we followed your lead by investing in feedmills and poultry plants in China.

Had we looked at the pure short term economics, we never would have done a thing. We had a vision of the longer term which was shared by you and the Administration.

Today, we have a very exciting business in China. The U.S. has excellent relations with one of the most important countries in a rapidly changing Asian scene. And, the Chinese are slowly getting help in building a better food supply for their 1.3 billion population. It all fits together.

I strongly believe it is in everyone's interest to further the types of political/governmental relations which you've helped build both while you were in government and now that you're in the private sector. However, I don't see the American people nor the government very supportive of this.

It's frustrating to me, as I'm sure it has been for you. If you have any specific ideas of what can be done I'd be very happy to help in any way.

/cs

Adlai E. Stevenson
Alton Frye

TRADING WITH THE COMMUNISTS

In Moscow bold minds are asking where Marxism-Leninism went wrong. Were its premises flawed? Was the execution inept? Communist governments are experimenting with the answers. Americans would do well to pose similar questions about U.S. economic policy toward these nations. Are the premises correct? Do changes in their policies require new assumptions and changes in our policy?

The candor of Soviet self-criticism demands a comparable dose of introspection on our part. We have never expected mea culpas from the Soviets, and we have always prided ourselves on a capacity for self-correction. Yet the United States has been slow to acknowledge evident shortcomings in its economic policy toward the Soviet Union and other communist countries.

Policies framed to deal with an expansionist imperial state driven by authoritarian ideology and marked by the sacrifice of its citizens' well-being to the appetites of its military establishment are not appropriate for a state being reshaped in the image projected by the architects of perestroika and glasnost. As evidence mounts that the reforms of Mikhail Gorbachev are real, the West is challenged to rethink its approach to the Soviet Union. If the international aggrandizement of Stalin and Brezhnev gives way to genuine restraint abroad and gradual democratization at home, it would ill serve the interests of the United States to play the implacable antagonist, blinded by preconceptions and paralyzed by inertia and timidity. The United States would begrudge the revolutionary changes in Soviet behavior which it had long demanded.

Even without such dramatic departures by Moscow, there is ample reason to reexamine Washington's policy. The United States could scarcely have blundered more often if it had

Adlai E. Stevenson, former United States Senator (D-Ill.), is of counsel at the Chicago law firm of Maver, Brown and Platt; Alton Frye, Vice President of the Council on Foreign Relations, was staff director for Senator Edward W. Brooke (R-Mass.).

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followed a slapstick script. Over the past 15 years American policy has continually undercut its political objectives, harmed its economic interests and eroded its leadership in the Western alliance.

This pattern is partly attributable to the difficulties of dealing rationally with a state perceived as a powerful, atheistic enemy seeking world domination. Suspicious of Moscow's motives, Washington has not been inclined to give the Soviets the benefit of any doubt on important questions. U.S. laws still reflect an assumption that the Soviet Union reigns over a monolithic bloc of communist countries in a world divided by ideology and geography into two hostile camps. A fear of the worst—not always unrealistic—has blinded the United States to changes already made and failures self-inflicted. Consider the record.

II

The Jackson-Vanik Amendment to the 1974 Trade Act is the prototype of self-defeating policies. America's reverence for human rights led Congress to impose a link between free emigration from communist countries and the normalization of trade with them. Passed after protracted but unsuccessful bargaining between the late Senator Henry Jackson and Secretary of State Henry Kissinger, this measure effectively denied Moscow nondiscriminatory access to U.S. markets through the most-favored-nation status and access to credit facilities that a 1972 trade agreement pledged President Richard Nixon to seek. The law conditioned MFN, as well as government loans and guarantees for communist countries, on free emigration, subject to one-year waivers approved by Congress after the president reported a country's "assurances" of such emigration.

Jackson-Vanik was conceptually flawed, and it proved counterproductive in operation. By attempting to force Moscow to provide explicit public assurances regarding so sensitive a subject, the law failed on several counts.

It gutration, subject to one-year waivers approved by Congress after the president reported a country's "assurances" of such emigration.

It gutted the quiet diplomacy that had begun to yield significant increases in Jewish emigration. Under the Nixon Administration the number of emigrés leaped from barely 200 in 1968 to almost 35,000 in 1973. After passage of the Jackson-Vanik Amendment, the exodus fell sharply to 13,000 in 1975; emigration rebounded only as relations warmed during the

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Reagan term, the number of Jewish emigrants plummeted to less than 900 in 1984. The conjunction of Gorbachev's accession to power as General Secretary and the overtures of Secretary of State George Shultz revived a more favorable trend. Obviously, the flow of Soviet exit visas depended on larger factors than one heavy-handed section of American trade legislation.

The Jackson-Vanik Amendment proved costly in economic terms when Moscow repudiated the 1972 trade agreement in response to what the Soviet Union perceived as an intrusion in its domestic affairs. While the trade potential of that accord is arguable, its demise meant an end to the Lend-Lease settlement laboriously negotiated as part of the package. The settlement called for the Soviet Union to pay back over $720 million in World War II loans from the United States, a substantially larger fraction of the assistance it received than Britain had repaid for similar aid. Moscow paid initial installments on that debt, but it suspended payments in retaliation for Jackson-Vanik. (The balance due remains $674 million.) At the same time an agreement between the Soviet government and the Export-Import Bank on credits, interest rates and repayment schedules also died aborning.

In addition, Jackson-Vanik caught all communist states in its web. It retarded the development of U.S. economic relations with East European nations, ironically ensuring their continued dependence on the Soviet Union. Even when MFN status was granted to Hungary and Romania, trade was impeded by the uncertainties associated with annual waivers under Jackson-Vanik and the congressional debates required by the law. Romania, the one nation where the law may have favorably influenced emigration policy, finally renounced its trade agreement with the United States, forsaking commerce to be rid of Jackson-Vanik's waiver procedures. Thus the law did not promote either the economic or security interests of the United States—or increase free emigration from the Soviet Union.

The Jackson-Vanik formula was shortsighted, but it is not the only such example. The outrage that Americans felt at the Soviet intervention in Afghanistan, and the urge to punish the aggressor, prompted President Jimmy Carter to impose the famous embargo on grain sales to Moscow. The exercise told more about the vulnerability of U.S. foreign policy to domestic expediency than it did about U.S. capacity to pressure Moscow by withholding grain. The grain embargo became a central

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issue in the 1980 presidential campaign, and within weeks after
his election, Ronald Reagan lifted the ban. By 1983 the United
States had entered a long-term grain agreement with the Soviet
Union in which the Soviets agreed to certain minimum pur-
chases every year. President Reagan pledged not to impose
such an embargo in the future. By 1988 he was offering to
subsidize grain sales to the Soviet Union.

The grain embargo highlighted Moscow's leverage as a mar-
ket for American grain exports. U.S. farmers' dominance in
that market diminished because Moscow turned to other sup-
pliers, notably Canada and Argentina. Now that the Soviets
have diversified their sources, there should be no illusion about
future U.S. potential to exploit Soviet dependence on grain
imports.¹

The confused U.S. attempt to impede construction of the major gas pipeline between the Soviet Union and Western Europe in the early 1980s was no more successful. Weighty considerations were raised. Would the deal lead to excessive European dependence on the Soviet Union for indispensable energy supplies? Would the hard currency earned by Moscow feed its military machine? Were components supplied by the Europeans likely to convey advanced technologies to the Soviets that the West would be safer withholding? Posing these questions, however, should not have triggered Washington's rush to judgment and extraterritorial actions that provoked the 1982 crisis between America and its allies. Perhaps the best to be said is the affair enabled Shultz to begin his tenure at the State Department with a notable achievement by repairing damage the United States had done to relations with its allies.

The Western alliance has long struggled to prevent com-
merce from fortifying an adversary. Repeated attempts to
segregate strategic from nonstrategic goods, to control reex-
ports, to differentiate between communists and free world ex-
ports, to ascertain foreign availability of comparable items, to
resolve jurisdictional disputes and a host of other such problems
have shown how difficult it is to regulate exports with military
potential, especially when many products have dual purposes.

¹ John P. Hardt and Kate S. Tomlinson. An Assessment of the Afghanistan Sanctions: Implications for Trade and Diplomacy in the 1980s. Report for the House Subcommittee on Europe and the Middle East, 97th Congress, 1st Session, April 1981. This Congressional Research Service report was requested by Chairman Lee Hamilton (Del.) See also Abraham S. Becket. Economic Leverage on the Soviet Union in the 1980s. The RAND Corporation. July 1984. R-8127-A SDP. pp. 30-41.

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Much attention has been drawn to periodic violations of the export control procedures agreed upon by members of the Consultative Group and Coordinating Committee for Multilateral Export Controls (COCOM), which includes Japan and all the NATO countries except Iceland. One prominent episode involved the transfer to the Soviet Union of critical technologies manufactured by subsidiaries of Japan's Toshiba and Norway's Kongsberg Corporations.

The responsible governments addressed those violations as criminal offenses. Nevertheless, both firms became the targets of legislated sanctions in the United States. Such sensational transgressions have grave security implications, but they also obscure the general debilitation that an overloaded export control regime imposes on U.S. firms' trade in nonstrategic goods. According to the Department of Commerce in 1987 national security controls affected one-third of all U.S. exports of manufactures (other than military equipment). The slow-motion review of export license applications conveys the impression at times that Washington is more interested in emulating Moscow's notorious bureaucracy than in rectifying its chronic merchandise trade deficit.

For much of the Reagan Administration, export control policy was snarled in a struggle between the Departments of Defense, Commerce and State, and between the House of Representatives and the Senate. The experience was not edifying, either for native observers or for the allies we purport to lead. Many felt that the result was again to wash U.S. firms out of competition for international sales that other suppliers were ready and willing to make. The Reagan Administration finally took advantage of a deadlocked Congress to formulate a policy that still subjects U.S. export licenses to long delays occasioned by Department of Defense review.

### III

These episodes illustrate the incoherence of U.S. policy. Sour experience makes a powerful case for change. That change should begin with repeal of the Jackson-Vanik Amendment. It has not only poisoned the atmosphere for economic relations with the Soviet Union and other communist countries but it has blocked a reasoned debate about those relations. Despite the fledgling progress in Soviet-American relations during the late 1980s, Jackson-Vanik still hovers like a predator, devouring economic possibilities before they can emerge from the nest.

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The reasons for abandoning so flawed an endeavor are manifold. Apart from the failure to achieve the nominal purpose of unfettered Jewish emigration, the United States and its allies have now crafted more appropriate approaches to advance human rights. Frank and direct discussions with Moscow have resulted in some family reunifications and release of dissidents. Bilateral diplomacy of candor and detail has shown that it can address such matters fruitfully in the Gorbachev era. More important, the process created by the Conference on Security and Cooperation in Europe (CSCE) has reached a new plateau in agreements concluded at Vienna. These accords extend the commitment of all East European countries (except Romania) to freedom of movement and freedom of religion, including the right to provide religious instruction to children. And on these issues the Gorbachev regime has set benchmarks for itself which other states will be able to monitor.

Secretary of State James Baker has stated clearly that Soviet compliance with CSCE standards will determine whether the United States follows through on the Reagan Administration's pledge to attend the human rights conference planned for Moscow in 1991. It is through multilateral undertakings of this type, not misguided unilateralism, that we can best display our dedication to human rights. Nothing is more hopeful in the present era than the willingness of the Soviet leadership to expose its practices to wider international observation, whether in the verification of arms treaties or in the field of human rights. Perhaps here, too, Gorbachev sees that greater exposure to world opinion can make the Soviet fear of obloquy an ally in his striving for domestic reform.

Hopes for effective international action did not appear so promising in 1974, when the Jackson-Vanik provision was adopted. It has taken many years and disappointments to reach the current, more productive stage. Now that we have reached this point the various rationales for Jackson-Vanik have dissolved. What remains is the evident hypocrisy of applying the law in ways that are blatantly discriminatory and self-destructive of U.S. interests. It has never been applied as a sanction to force the free emigration of non-Jewish populations anywhere; waivers of the law for China have been routine since Washington and Beijing normalized relations in 1979. Nor was there ever an interest in China's emigration practices, especially after Deng Xiaoping reportedly asked President Carter "How many millions do you want?"

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In fact, it is not unknown for our government to urge others—Vietnam, for example—to stem the flow of emigrants. Even advocates of the Jackson-Vanik provision might feel a twinge of embarrassment that the U.S. embassy in Moscow has had to slow the processing of visas for refugees because of inadequate funds to resettle them. U.S. immigration law is highly restrictive, assigning quotas by nations and giving preference to skilled professionals over less fortunate candidates seeking entry.

The issue of Jewish emigration from the Soviet Union has taken on new aspects lately. There is progress toward renewed diplomatic relations between Israel and the Soviets, although the timing is unpredictable. Israel's embassy in Moscow is being refurbished. El-Al and Aeroflot are preparing new flight schedules, and joint ventures are under discussion between the two sides. Meanwhile, friction has arisen between Washington and Tel Aviv, as Israel presses the United States to help ensure that Jews emigrating from the Soviet Union go directly to Israel. But America cannot consistently uphold the right of free emigration while insisting that Israel be the sole destination for Jews.

Obviously, Jackson-Vanik is not to blame for all the complications in U.S. trade relations with communist nations. Furthermore, there are occasions when an expression of moral indignation is worth the economic price. But our policy toward trade with communist countries is a strange concoction of political opportunism and paralysis. It embodies a prejudice against doing business with communist states that is shared by few other nations. It produces no perceptible gains, and the economic and human costs are high.

In the end it is the politics of the Jackson-Vanik Amendment that constitute its central defect. Tying MFN and access to U.S. export credit facilities to another nation's emigration rules never made sense. Such selective linkage implies that if Moscow releases enough Jews, its actions in the Middle East, Afghanistan, Central America or elsewhere are relatively unimportant—at least so far as trade is concerned. Whatever the utility of such a posture in American politics, it is an untenable stance in international politics.

Many factors impinge on U.S. relations with each of the communist countries. Congress and the president need to weigh them all in order to reach a rounded judgment of the national interest. The singular preoccupation of the Jackson-

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Vanik standard prevents them from doing so. Repealing it would help to clear away the incoherencies obstructing trade and finance. It would enable the United States to shape a fresh assessment of East-West relations and to pursue its security interests with useful political flexibility. It would signal American recognition of meaningful change in the Soviet Union's behavior, both within and outside its boundaries. It would also comport with the nascent pluralism among communist nations now treated as a Soviet bloc.

Others will press for the use of the president's authority to grant waivers under Jackson-Vanik instead of its repeal. Exercising the waiver authority would place the Soviets on the same footing as the Chinese, and would let the leash out a bit without abandoning the legislation per se. Members of Congress might find it politically easier to support a waiver, rather than outright repeal.

In making the case against the waiver option we consider several points compelling:

- Waivers focus exclusively on Jewish emigration, neglecting other aspects of Soviet behavior important to the United States.

- The Jackson-Vanik Amendment only applies to communist countries, suggesting that the emigration policies of non-communist countries do not matter.

- Annual waivers deny businesses the multivyear-planning frames needed for trade and investment decisions, threatening orderly economic relations.

- The Soviet Union might again refuse to capitulate and offer the "assurances" demanded to gain a waiver; holding to the waiver option might be tantamount to rejecting MFN and to barring normal commerce. After all, Andrei Gromyko emphasized to Kissinger before the amendment passed that the Soviet Union would not accept a trade relationship based on Jackson-Vanik.

In short, a waiver would do little for trade—and its invidious character may do more to inflame the Soviets than to encourage them.

The Union of Councils for Soviet Jews has called for the repeal of the so-called Stevenson Amendment, repeatedly enacted since 1974, which places a $300-million ceiling on new Export-Import Bank loans and guarantees for the Soviet Union (beyond the $469 million outstanding in 1974). As it happened, the blanket prohibitions of the Jackson-Vanik Amendment

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render that provision moot. Repealing the Stevenson Amendment would be meaningful only in conjunction with lifting the Jackson-Vanik constraints. Neither provision is appropriate to today's circumstances.

Repealing Jackson-Vanik would not resolve the specific issues that a coherent policy must address. Negotiations would be necessary to determine on a country-by-country basis whether, when and under what conditions to grant MFN status. The abandoned 1972 trade agreement and the concomitant Lend-Lease settlement would have to be renegotiated. There would surely be no presumption of automatic access to Export-Import Bank guarantees or credits. Statutory restraints on loans by private U.S. lenders, i.e., the 1934 Johnson Debt Default Act, would remain applicable until the Soviet Union and the United States reached satisfactory settlements on long-standing disputes over "sovereign debt." Though evaded by U.S. banks with foreign branches, this act is another candidate for review—one more example of how U.S. policy restricts American companies to the benefit of foreign competitors but with little effect on the targeted country.

Once the legislative barriers are eased, most of these issues may be properly handled in executive branch channels and in multilateral venues. If commercial bank lending to the Soviet Union poses undue economic or political risks, then one sensible recourse would be cooperative reserve requirements or other measures worked out through the Bank for International Settlements (BIS).

### IV

It would be shortsighted to swing abruptly from the rigidity of the Jackson-Vanik Amendment to an arrangement that excluded Congress from the process of continuing review of Soviet-American economic relations. Congress will continue to oversee trade agreements with communist countries, including the decision to grant MFN status. It will want to be assured that remedies against dumping and other unfair trade practices, unavailable under the General Agreement on Tariffs and Trade (GATT), are readily available from the International Trade Commission and other U.S. agencies.

However encouraged they may be by Soviet behavior under Gorbachev, legislators also share their constituents' wariness. They will insist upon a step-by-step approach. They share with the president the responsibility to gauge those steps, and they

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will not displace the Jackson-Vanik Amendment with a carte blanche for Soviet use of Export-Import Bank facilities. What is needed is a flexible procedure that enables Congress to join with the executive in a periodic evaluation of the relationship, taking account of the entire range of relevant factors.

With respect to Export-Import Bank assistance, Congress could establish a separate authorization procedure for loans and guarantees to communist countries. These authorizations would be reviewed in the normal course of Export-Import Bank legislation. The proceedings would provide an occasion for wide-ranging legislative appraisals of overall relations with communist countries. In this manner the United States could establish implicit linkage to the full range of relevant behavior, rather than the explicit linkage to a single factor that the Jackson-Vanik Amendment requires.

The financial setting for Soviet participation in Export-Import Bank programs is today quite different from that of the early 1970s. In 1973-74 Export-Import Bank credits to the Soviet Union surged from zero to over $450 million before screeching to a halt. The Organization for Economic Cooperation and Development (OECD) now classifies the Soviet Union as a "Category I" borrower, for which no subsidies are permissible. Except for Israel, the Export-Import Bank tends not to lend directly to Category I countries, and officials doubt that the Soviets would find the bank's loans competitive with those available elsewhere.

While the bank is strapped for funds to offer credits, its authority for loan guarantees is more ample and relevant to the Soviet case. For U.S. banks, the Export-Import Bank guarantee programs could be useful in spreading the risk and in easing the limits on loans to a single sovereign debtor. Although reluctant to pay the bank's fees, Moscow might wish to exercise a right to guarantees as a demonstration that the taboo on doing business with the Soviet Union no longer prevails. Thus, as a practical matter, the issue today concerns guarantees of loans by other lenders, not the direct loans that increased so noticeably in 1972-74.

The Reagan Administration began a gradual movement toward more normal economic relations with the Soviet Union. Led by the late secretary of commerce, Malcolm Baldrige, the U.S.-Soviet Joint Commercial Commission in 1985 resumed sessions that had been suspended indefinitely in 1978. Various trade promotion activities have ensued, with hundreds of

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American businessmen visiting Moscow. Reagan lifted a ban on sales of some oil and gas equipment to the Soviets, a sanction tightened at the time of the Afghanistan invasion. He also allowed imports of Soviet nickel and furs to resume. Before leaving office Secretary Shultz recommended that COCOM end the "no exception" ban on high-technology exports after the Soviets withdrew from Afghanistan. The European allies support this return to a case-by-case review of such sales. U.S. reticence on this point could revive European fears of more "light switch" diplomacy—and Soviet suspicions that concessions only invite demands for more concessions. The ban should be lifted.

Increased commerce with the Soviet Union has been slow, but some developments are potentially significant. Several major firms have formed an American Trade Consortium and negotiated arrangements to permit repatriation of profits from operations in the Soviet Union, perhaps a model arrangement that will permit more income and capital flows to and from joint ventures there. In December 1988 the Soviets further adjusted their rules for joint ventures to permit foreign participants to hold equity majorities and to delay taxation until several years after initial profits are realized. They also increased the number of Soviet organizations authorized to deal directly with foreign partners and suppliers. These attempts to accelerate the pace of the Soviet economy's engagement with foreign investors and markets reveal an alertness to the weaknesses of Moscow's first steps in this direction. American firms were involved in only about 15 of some 200 joint ventures.

These Soviet reforms follow similar measures in China and Hungary. Perhaps the largest economic opportunities for the near future are in Eastern Europe, where capitalist, free market traditions are rooted. Natural trading partners are divided by artificial political demarcations, and the human and economic infrastructures run deeper than in the Soviet Union and China. These different economic potentials, reflecting the various political and economic contexts of the several countries, invite an East-West trade policy that itself is capable of differentiating. The present U.S. policy takes too little account of the liberalizing tendencies within communist countries and of the decentralizing tendencies within the communist "bloc."

This policy flaw bears on export controls. The United States pays a high price for the quaint notion that trade is a privilege. By some estimates export controls have cost U.S. firms between

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$7 billion and $9 billion in exports and 180,000 jobs annually. A National Academy of Sciences survey of almost 200 firms found that over half claimed to have lost sales because of these controls. Such controls also hurt U.S. sales with non-communist countries; 26 percent of the companies surveyed said they had lost deals with free world customers because of export controls, and over a third of the companies reported such customers preferred to shift to other suppliers outside the United States. In 1985 the control process handled proposals approaching $80 billion in value. This gives an idea of how far it ranges beyond direct trade with the Soviets."

In a wide-ranging review of COCOM's record, the National Academy of Sciences studies have urged a new balance between national security export controls and commercial considerations. They called into question the feasibility of enforcing the extensive COCOM list of controlled items and pressed for stronger enforcement of more limited restraints—"higher fences around fewer items." These studies and consultations within COCOM have helped build a consensus to shrink the export control list. In addition, the verdict emerged that, however compressed the list, the executive branch had to pick up its own tempo to reach timely decisions on export applications. With that goal in mind, the 100th Congress trimmed the Department of Defense's authority to delay the process, limiting DOD export license evaluations to "national security" as distinct from "foreign policy" considerations. It remains questionable whether such exhortations will be more effective than those in the past.

In the end, there must be some recognition that technology is inherently difficult to control. It travels on paper and in the human mind, as well as in tangible products. It is usually available from many sources. Security requires control of exports with clear military applications to adversaries. But the West's technological supremacy depends upon its economic and intellectual environment, resources for the development of inventions and their rapid application to commercial and military uses. The United States must stay ahead through a nurtured process of basic research and technological innovation.

² Carol Rae Hansen, U.S. Soviet Trade Policy, Washington, D.C.: The Johns Hopkins Foreign Policy Institute, 1988, pp. 10-11.

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V

It is essential to state the issues confronting U.S. policy with some precision. Posing the question "Should we help Gorbachev?" tends to divert discussion into narrow byways. If all the change that is transpiring in the Soviet Union rests on a single individual, if it has no roots beyond Gorbachev's alluring rhetoric, then there is little ground for optimism about its durability—or his. If the innovations are tentative and perishable, one would not be wise to argue for shifting American policy onto sandy terrain.

The dawning consensus, however, is that the changes within the Soviet Union are erupting from sources too deep to permit their suppression even if Gorbachev's tenure turns out to be relatively brief. He is a creature of economic and strategic necessities already recognized in China and other communist countries. What is remarkable is that this historical inevitability has been so slow in coming—and that it has not yet appeared in many communist countries. Fidel Castro and Nicolae Ceauşescu are defiant.

Some reform initiatives may prove abortive, but the United States can shape policy on the probability that the broad tides of change will continue to flow. That expectation rests not on naïveté, but on the calculation that attempts to revert to Stalinism would guarantee economic failure and political decline—and that even the old guards in Moscow and Prague can perceive these hazards. It rests on some conviction that what we have been saying about the superiority of our self-governing, capitalist systems in the West is inescapably true.

For policy purposes, it is not necessary to predict an outcome with certainty in order to prefer it. Surely, from the Western standpoint, a Soviet system that must become more benign in order to become more powerful is preferable to one that joins excessive military capability with the malign impulses of totalitarianism in decline.

But to welcome perestroika is not to advocate paying for it. In truth, there is little likelihood of excessive American investment in the still risky Soviet economy. The U.S. business community has long since discounted forecasts of easy or early profits in the Soviet market. There is impatience with the sluggish bargaining required to close deals with Soviet bureaucrats and enterprises. Permitting U.S. investment in the Soviet economy is not payment for perestroika. It merely means

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repealing provisions that hamper commerce and penalize American companies.

As far as Soviet exports to the United States are concerned, the range of candidates remains limited. Over 90 percent of Soviet hard currency exports consist of oil, gas, gold and arms, not manufactures that would displace major domestic sales by U.S. firms. It is conceivable that buried deep in Soviet archives and laboratories are ingenious developments waiting to be commercialized, but so far the examples are few, e.g., sales of electromagnetic casting technology and an ion-gun hardening system for industrial cutting tools.

Understandably Moscow hopes that the joint ventures it now encourages will concentrate on exports to generate hard currency revenues, but the projected scale of such enterprises remains relatively modest. The volume of trade with communist countries may be small, but these are nations with which the United States can run a needed trade surplus.

The apprehension that the United States might be lured into paying for perestroika seems to focus on official credit arrangements, perhaps reflecting concern about methods once employed to pursue détente. If Moscow were to become eligible for Export-Import Bank financing, as agreed in 1972, today it would face stiff competition for the bank's limited resources. There is no disposition in either Congress or the executive branch to allow Export-Import Bank guarantees to become a surrogate for foreign aid, for example, underwriting development in Soviet Siberia. In the midst of U.S. budget stringencies and chronic trade imbalances the bank is obliged more than ever to husband its authority and to devote its efforts to improving American export performance.

We do not suggest lending money to finance perestroika or denying credits to achieve some political purpose. It is unlikely that Soviet policies will be influenced materially by proffering or withholding cash. The clearest justification for official export assistance is the competitive imperative. If assistance is necessary to put U.S. exporters on an equal footing, then the Export-Import Bank should be in position to help. If there is foreign competition that requires official financial participation in U.S. ventures, the solution is not to punish American exporters but to negotiate international terms that prohibit subsidies. Such negotiations are best pursued with leverage, not with a unilaterally disarmed Export-Import Bank.

To preclude Export-Import Bank participation in business

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with communist countries discourages exporters, investors and private lenders from exploring opportunities. In any case, the bank's primary function is not to do the whole job but to lubricate the larger process. To the extent that there develops a need for selective use of Export-Import Bank assistance in trade, the option should be open. Otherwise American traders and financiers carry a handicap that their counterparts in other Western countries do not.

VI

There appears to be a good understanding at the highest levels in Moscow that one way to energize Soviet domestic enterprises is to subject them, albeit gradually, to the stresses of international competition.

The emphasis on opening the Soviet Union to foreign investment and on working toward convertibility of the ruble reflects this insight. More than nostalgia lies in the recollection that Lenin had a convertible currency. This opening is a farsighted appeal for a return to pragmatism, coupled with a straightforward acknowledgment that the transition from the current 6,000 variations ("currency coefficients") to a unitary ruble exchange rate will take a decade or more.

For the West the prospect of convertible currencies and an end to the Council for Mutual Economic Assistance poses interesting policy questions. Few measures would contribute more to the predictability of transactions with communist countries than the shift to currencies readily traded on world markets. Such a development could testify to the growing strength and independence of communist economies. It could help to stabilize East-West economic relations.

Yet Soviet reformers who foresee a "fully" convertible ruble by the end of the century are optimistic. The painful changes entailed in moving to convertibility are meeting both bureaucratic and grass-roots resistance. Retail price reforms are already behind schedule and worries about inflation are mounting. Western imports needed for restructuring will be costly, while Soviet export potential (barring an oil price increase) appears rather low. Without a surge in hard currency earnings, Moscow's borrowing capacity will be limited, perhaps to another $20 billion or so. This calculus puts full convertibility of the ruble far into the future, although there may be intermediate stages centered on special economic zones, hard currency auctions and partial convertibility.

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But do we want communist economies to be integrated into the world capital and trading system? Certainly not the Soviet economy we have learned to distrust. The economy Gorbachev envisages, however, would be a different matter. A Soviet economy that had undergone the transformations now contemplated could become a constructive participant in the international economic system arduously constructed by the free market countries.

With commitments to change being advertised by Moscow and other communist regimes, the United States and its allies cannot avoid a considered judgment about how to respond to these innovations as they unfold. The speed of reform will vary from one country to another, but the direction seems clear. Hungary is leaning West, and Czechoslovakia and East Germany could restructure sooner than the Soviet Union, if they were so disposed. The prudent case-by-case engagement of these nations with the Western economy is a looming opportunity. It poses a particular challenge for the European Economic Community. It might as well involve a reformed Hungary as a remote Turkey.

The rejection of a Soviet request for observer status at the 1986 GATT meetings in Punta del Este conveyed reasonable doubts about whether a state-run economy could mesh with the market-oriented universe to which that organization is dedicated. But a number of American analysts incline more positively toward some form of Soviet association with GATT, on the theory that it could provide a window on Soviet economic activity and enable outsiders to encourage genuine price reform and the decentralization of markets.

Looking ahead, there has been speculation regarding future Soviet involvement in the International Monetary Fund. Leaders in Moscow have pointed out that an IMF relationship could expedite the country's graduation to currency convertibility. They note that a place in IMF would not give a veto to the Soviet Union and that, given the IMF structure, Moscow would hardly have enough leverage to disrupt its functions. Hungary and Poland are already members and the prospect of an eventual Soviet connection to IMF warrants examination.

As we evaluate these issues, it is reasonable to argue that a Soviet Union more engaged in the global economy would be less prone to backsliding in its economic and political evolution. In the phrase of one close observer, Brezhnev wanted foreign

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investment to avoid reform, Gorbachev wants it to foster
reform.

Another development demands consideration by U.S. poli-
cymakers. While the Soviet or communist "bloc" is fragment-
ing, other nations, bound by a commitment to capitalism and
by geographical proximity, are forming economic blocs in
Western Europe, the Persian Gulf and North America. Where
will the colossi of the communist world fit in this emerging,
regional shape of things? It is too glib to say that they do not
fit. In a new age of regional cooperation the free countries of
the Pacific will be dealing with two communist mammoths,
Russia and China, both hungry for trade and capital.

Does the communist countries' pursuit of foreign investment threaten U.S. interests? One can imagine scenarios in which it might do so. Gullible Western investors, shown the green light by changes in public policy, might divert so many resources to Soviet projects and joint ventures that they deprive other needy nations of capital. That redirection of capital flows could drive up the cost of funds to everyone, including the United States. Reverse leverage could come into play, with the American government and its allies under pressure to do nothing that might prompt the Soviets to default. These concerns are valid, but not conclusive. Western banks' painful over-exposure in Latin America and Eastern Europe, especially Poland, has bred a healthy caution about concentrating too many eggs in the Soviet basket. Most lenders have relearned the old banker's adage that "if a man owes you a hundred dollars, he's got a problem; if he owes you a million dollars, you've got a problem."

Present evidence makes worst-case anticipations implausible.
The Soviets and Chinese historically have been prudent, cau-
tious, even reluctant borrowers. Sovereign borrowers, no less
than others, cannot afford to antagonize the big players in
Western capital markets. Besides, the West always has its assets
to sequester, as Iran discovered. The risks are not exorbitant.

An interagency study done late in the Reagan Administration
found that rumors of massive Soviet borrowing in the mid-
1980s were exaggerated. Dependable data are difficult to come
by, but it appears that, adjusting for exchange rate shifts, total
hard currency debt in the Soviet bloc grew by only about 14
percent from 1981-86, and in fact declined if measured in
constant dollars. Net Soviet debt to lenders reporting to the
Bank for International Settlements, i.e., gross debt minus de-

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70 FOREIGN AFFAIRS

posits in BIS banks, was actually less in 1986 than at the start of
the decade. The study concluded that the Soviet capacity to
service its debt is quite adequate.

To be sure Moscow has begun to dabble with bond issues
underwritten in the West, and during 1988 Western lenders
extended lines of credit amounting to several billion dollars,
most of which are thought to be tied to purchases of consumer
goods and equipment. The U.S. government believes that the
majority of these credits are officially guaranteed, export-
related borrowings permissible under OECD guidelines. This
contrasts with the pattern of Soviet loans earlier in the 1980s,
which appeared to be generally untied. Two-way trade with
nonsocialist countries slackened somewhat, but Wharton As-
sociates projects volume reaching $95 billion in the early 1990s.
In the estimate of Soviet economist Abel Aganbegyan, removal
of trade barriers could bring bilateral U.S.-Soviet trade levels
up to a range of $10 billion to $20 billion within five to seven
years.

Some analysts foresee Soviet hard currency debt rising from
less than $30 billion in 1985 to over $50 billion in the near
future.³ The Soviets themselves are quite chary about this
trend, and Gorbachev's advisers seem determined to hold debt
service below 25 percent of export earnings. They look instead
to joint ventures to attract perhaps $20 billion in the near
future, noting that China already has foreign investment com-
mitments of that magnitude.

All things considered, an alarm over Soviet penetration of West-
ern capital markets is premature. From a policy standpoint the
important objective in the near term is to improve the means
of monitoring Moscow's activities in those markets. That task
is part of the more general need to develop adequate infor-
mation about capital flows—now so rapid and dominant an
element in the global economy—as a building block for intel-
ligent policy and for government interventions, when necessary
to maintain stability. The United States will have more clout
in extracting that information from the Soviets if it is a player,
rather than a bystander, in Gorbachev's enterprise.

The shift in policy emphasis recommended here does not
prejudice whether American firms will discover enticing and
large-scale opportunities in the Soviet Union. Our contention

³ See "Report of the Special Interagency Task Force on Western Lending to the Soviet Bloc, Vietnam, Labya, Cuba and Nicaragua," 1988, also Hansen, op. cit., p. 32.

[L.C.]

TRADING WITH THE COMMUNISTS 71

is simply that the government should not strangle their search
for such opportunities by policies that preempt consideration
of mutually acceptable economic possibilities. The message is:
let businessmen strike bargains they deem profitable—and
keep enough steerage over U.S. policy to hold a safe and steady
course in our overall relationship with communist states.

It is often the essence of political decision-making that gov-
ernments must choose before there is a confident basis for
judgment. So it is in shaping the next phase of U.S. economic
relations with communist countries. The mistakes of the past
15 years are clearer than the path into the next century. But,
while remaining alert to the dangers, American policy should
lift the impediments barring its citizens from exploring that
path actively. In today's world economy, inertia is a recipe for
neither prosperity nor security. There is no standing still.

THE WALL STREET JOURNAL FRIDAY, MAY 26, 1989

A10

# Toward Cleareyed Soviet Trade...

By ALTON FRYE

Prejudice outlives premise. That truth holds in economics no less than in other realms. As the erstwhile Soviet "bloc" struggles and revels in newfound diversity, some old shibboleths make it hard for U.S. policy to adapt to a changed reality. American antipathy toward the Soviet Union and taboos against dealing with communists continue to impede East-West trade.

The peaceful revolution in the Soviet Union and Eastern Europe is so fluid that no one can prescribe policy with total confidence. It would be naive to suggest that, after so many years of confronting a Moscow hostile to U.S. interests, we should now drop our guard and embrace Mikhail Gorbachev wholeheartedly, no questions asked. Yet we can get beyond the "selling the rope" hangups and exploit opportunities in communist countries.

What should a balanced policy comprise? Certainly something more than the collective frown that has marked official U.S. attitudes for so many years. With its denial of Most-Favored Nation (MFN) treatment for Soviet exports and its exclusion of Moscow from customary commercial arrangements, the U.S. virtually precludes the healthy bargaining and market explorations that define free trade. That stance is understandable, but it amounts to political pre-emption of economic judgments by capitalists best placed to determine where profits may lie.

## Discouraging Businessmen

So long as policy discourages U.S. businessmen from testing the potential for Soviet markets and trade, it is hard to know whether expanded economic relations hold promise. What is not hard to see is that, if there are important opportunities, the U.S. is leaving the field clear for competitors while shackling its own traders.

Informed opinion outside government is adjusting more rapidly than official thinking, and several key ideas are beginning to jell. A notable Trilateral Commission report, written by three tough-minded statesmen (Valery Giscard d'Estaing, Henry Kissinger and Yasuhiro Nakasone), strikes the sensible theme: Western economic policy should abet those specific economic and social innovations that move the Soviet Union toward a market economy and democratic institutions.

Not only does their report favor joint ventures to meet Soviet consumer demand, but it proposes official guarantees for Western investment in such ventures. The

authors even contemplate creating a specialized institution within the European Economic Community or the OECD to provide such guarantees. They voice support for steps to move the ruble toward international convertibility as a prelude to Soviet membership in international economic institutions. Meanwhile, they favor inviting Moscow to take up some form of observer status in GATT and the IMF.

A consensus is now developing to modify the central restriction imposed on non-strategic U.S. trade with communist states by the Jackson-Vanik Amendment of 1974, which barred MFN and all official credits and guarantees until those countries per-

working through multilateral channels, instead of persisting in a unilateral power play Moscow is bound to resist. That verdict is spreading, as human-rights groups extend their concern to co-religionists who choose not to emigrate.

President Reagan acknowledged that changing Soviet behavior warranted a response in American policy, notably by resuming sessions of the U.S.-Soviet Joint Commercial Commission and easing sanctions-on sales to Moscow. On the broader East-West front, President Bush's first overtures recognize the wholesome changes in Eastern Europe. The administration's proposal to give Poland access to preferential U.S. tariffs and other steps to ease Warsaw's economic crisis are well-calculated to encourage greater democracy. Mr. Bush's decision to visit Poland and Hungary this summer adds incentive for them to conduct scrupulous elections and sustain other innovations they advertise. On that trip the president will hear testimony that a positive American attitude toward Moscow's political and economic reforms is crucial to preserving the atmosphere in which Eastern Europe begins to breathe free.

> What is not hard to see is that, if there are important opportunities, the U.S. is leaving the field clear for competitors while shackling its own traders.

mitted free emigration. The measure was highly successful—in blighting trade, not in eliciting more emigration.

In a wise and graceful address, President Bush has raised the prospect of waiving the law temporarily and extending MFN to the Soviet Union, as urged by its co-author, former Rep. Charles Vanik. Emigres are also calling for repeal of the so-called Stevenson ceiling on new Export-Import Bank loans and guarantees for the Soviet Union.

These are constructive sentiments, but they are less consequential than they may appear. So long as Jackson-Vanik bans all official credits and guarantees, the Stevenson ceiling is a dead letter. And even if a Soviet revision of emigration laws justifies a waiver, businesses will not make serious commitments under an arrangement that could be reversed at any time. If the U.S. wants to confirm that it is ready for expanded commerce, repeal of both Jackson-Vanik and Stevenson is in order. Perhaps debate over a waiver will illuminate its deficiencies and trigger repeal.

So far as the poignant issue of free emigration is concerned, surely the best hope lies in nurturing the process that is now generating exit visas for tens of thousands of Soviet Jews, Pentecostals and others. The U.S. can best encourage this trend by

## A Sound Premise

Doing business with the Soviets remains a formidable challenge, despite progress in rules for joint ventures, equity holdings for foreigners, and repatriation of profits. Watchful guidance over technology transfers is still necessary, a theme vigorously restated last week by Commerce Secretary Robert Mosbacher in remarks to the U.S.-U.S.S.R. Trade and Economic Council. Playing tough cop to the president's good cop, Mr. Mosbacher made clear that Soviet technological espionage is not compatible with a more forthcoming U.S. approach to East-West economic relations.

In coping with these problems, one need not assume that success is imminent, merely that it is plausible. By emphasizing that trade should proceed on "a normal commercial basis," Mr. Bush sets a sound premise for American policy. Economic relations with a transforming Soviet Union demand neither a cold shoulder nor a warm embrace. A cordial handshake—and a clear contract—should do nicely.

Together with Adlai E. Stevenson, Mr. Frye, of the Council on Foreign Relations, is author of "Trading With Communists" in the current Foreign Affairs.

Republican Party of Orange County

300 Alicante Plaza
Suite 340
Garden Grove, CA 92640
(714) 750-3335

September 25, 1989

Dr. Henry Kissinger
1800 "K" Street N.W. Ste. 520
Washington, D.C. 20006

Dear Dr. Kissinger,

SEP 29 1989

The Republican Party of Orange County is hosting a Grand Old Picnic and Auction on Sunday, Oct. 15, 1989. Orange County's finest Republican activists are expected to attend this family style event.

May we ask you to donate a personal item or two that could be included in the auction? Just about anything that would create interest would be appropriate, and most appreciated.

All proceeds from the auction will go to the Republican Party of Orange County's voter registration, precinct and general operating fund.

We have already received a wide variety of items donated by many celebrities, office holders, community activists, business people and Republican grass roots volunteers.

An item from you would be very popular and would be a tremendous help to the Party.

Should you have any questions or need further information, please feel free to contact the Executive Director of the Republican Party of Orange County, Greg Haskin at (714) 750-3335.

With the hope of a positive reply, we send you every good wish.