25. Memorandum From President Kennedy to the Cabinet Committee on Balance of Payments0
- In the light of your meeting with me on April 18, I would like to
have put into effect the program for immediate action to reduce the
balance of payments deficit outlined in your memorandum to me of
April 6.1 Specifically:
- Defense. Secretary McNamara should proceed to develop recommendations for submission to me, after consultation with the Department of State, before July 1 on specific actions which can be completed by end CY 1964 with the target of a gross reduction in the annual rate of dollar expenditures abroad of between $300-$400 million below FY 1963 level.
- AID. Administrator Bell should take action to further reduce AID expenditures that result in payments of dollars abroad with the target of keeping these expenditures to $500 million or less in FY 1965.
- Gold Budget. Budget Director Gordon should carry forward the screening and readjustment of expenditures abroad by other Federal departments and agencies to achieve the indicated annual saving of $50-$75 million per year.
Agriculture. Secretary Freeman should take steps to achieve savings of $35 million per year, in addition to those included within the “gold budget” review, through administration of PL 480 programs.
I want to be able to announce the implementation of this action program around July 1 in a special statement on our balance of payments effort.
- In addition, the Treasury should continue to take action to finance as much as possible of the balance of payments deficit, and minimize the drain on our gold stock, along lines that have already been initiated.
- It is my understanding that monetary policy and debt management will continue on present lines and, barring unexpected developments, that it is not now contemplated that any positive action will be taken to increase short-term interest rates until the tax bill is passed. There thus will be a further opportunity for discussion of this issue later this summer. Meanwhile, the Federal Reserve and Treasury will press other countries (particularly Canada) to lower their short-term rates as appropriate.
- Action should also proceed, with a view to completion for
announcement around July 1 with the immediate action program if
possible, on the following:
- White House Conference on Export Promotion. Secretary Hodges, in consultation with Secretary Dillon and Mr. Feldman of my staff, should prepare a plan of organization and working program for a White House Conference of Business Leaders on Exports to take place in the autumn of 1963.
- Citizens Committee to Promote Investment in America. Secretary Dillon, in consultation with Under Secretary Ball, should prepare an organization plan and working program for a representative group of financial leaders to promote investment by foreigners in the United States.
- Tourism. The Secretaries of Agriculture, Commerce and Interior, in consultation with the Balance of Payments Committee, should prepare plans for a “See America Now” program to promote tourist travel in the United States by Americans as well as foreigners.
- Coastwise and Ocean Shipping. Secretary Hodges, in consultation with the Balance of Payments Committee, should study and report to me on the costs of coastwise and ocean shipping as these affect our ability to compete with foreign products in the United States and abroad, and should prepare a program of recommended action.
- Other. The Committee should see to it that other studies mentioned in part V of the report of April 6 are completed promptly and the results reported to me.
- In order to improve the usefulness of the International Monetary Fund to the United States, the Treasury should take appropriate action to prepare public opinion, both here and abroad for the possibility of a technical drawing. The possibility of such a drawing should be kept under close review.
- In addition, the Long Range International Payments Committee, while continuing its other studies of various proposals for increasing liquidity and reforming the monetary system, should consider possibilities for enlarging member quotas in the International Monetary Fund.
- Since in my view the balance of payments will remain one of the major constraints on a wide range of government actions in both foreign and domestic policy, I wish the Committee to continue to keep developments under review, and inform me as the need for further action arises.