Foreign Relations of the United States, 1964–1968, Volume VIII, International Monetary and Trade Policy

157. Memorandum From Secretary of Commerce Trowbridge to Secretary of the Treasury Fowler¹

Washington, December 15, 1967.

SUBJECT

• Progress Report on Administration of the Voluntary Program

In the month since our joint press conference² and the announcement of the 1968 voluntary program, the following administrative steps have been taken or are currently being taken by the Department of Commerce:

1. Personal letters outlining the program and restating its objectives have been sent to the Chief Executive Officers of nearly 750 companies. Each letter emphasized the seriousness of the balance of payments situation and the extreme importance we attach to their sustained cooperation with the voluntary program. Companies were again urged to look into the possibility of greater reliance on foreign borrowings. Further, mention was made of our intention to invite executives from selected companies to meet with us during the weeks immediately ahead to discuss their participation in the program and how this might be improved. Although these letters did not expressly call for any acknowledgment, I have had a large and extremely encouraging response, which is still continuing. Virtually all of these assure me of their personal concern about the balance of payments and of their full support. Many have in addition specifically indicated that they were instructing their staffs to review corporate plans with a new urgency and have offered to discuss them with us.

2. As a second step, letters were sent during the latter part of November to the Chief Executive Officers of nineteen companies selected on the basis of several criteria—over-target, little if any foreign borrowing by parent or financing subsidiary, declining overall contributions, etc.—inviting them to meet with me on a specified date to discuss their position under the voluntary program.³ Thus far in December, I have met with Sterling Drug Company, The Singer Company, W. R. Grace and Company, Control Data Corporation, and Amphenol Corporation. Yet to see this month are: American Smelting and Refining Company, Owens-Corning Fiberglas Corporation, Libbey-Owens-Ford Glass Company, Kellogg Company, Clevite Corporation, Xerox Corporation, Hewlett-Packard Company, and Sunray DX Oil Company. Occidental Petroleum Corporation, which has had extremely large outflows, was slated to come in today, but we have just received a wire indicating they could not appear. This will be rescheduled. In January, we are planning to meet with 18 or 20 companies in addition to five carried over from December (J. Ray McDermott, Polaroid, Ampex, Fairchild Camera and Instrument, and Barton Distilling). During December we also met with executives from General Mills at their own request, and will be doing the same with IBM in late January.

For our part, we have stressed the usual considerations, underscored the latest information we have on the current outlook for the balance of payments, pointed up any short-falls in their own performance, and at the same time thanked them for what they had done. While the company representatives in turn have cited various special circumstances to justify their actions, they have also shown themselves receptive to our suggestions on foreign borrowing, accelerated return of earnings, etc. The most encouraging aspect is that the majority have indicated before any urging from us that they were looking into ways whereby the impact of their investment transactions might be curbed, and were in the midst of negotiations.

For example, Control Data has negotiations underway to borrow in Europe between $15 million and $20 million. Singer is shifting the entire trading and financial arrangements of its British company and borrowing in the London market between $8 million and $12 million which will improve its 1967 performance more than had been estimated at mid-year; Amphenol reported that it would have no major new investments in 1968 and had borrowing negotiations underway in England, Belgium, and Germany, involving a few million dollars. We have also been told by General Mills that they are willing to pay additional interest costs in order to support the government’s objectives and will endeavor to finance long-term outside the United States.

Sterling devaluation apparently has caused some confusion and uncertainty, but no one has indicated they would not continue with their borrowing plans. Following each meeting I have written to the company summarizing the points made and again urging the utmost effort. We feel that these meetings have been most worthwhile and will pay off in subsequent decisions by the companies.

3. The Quarterly Worksheets covering the third quarter of 1967 have been coming in, and we now plan to issue a summary statement showing the results for release on Tuesday morning.⁴ I am enclosing an advance draft copy⁵ in which you will see that the data confirm our earlier expectations that overall contributions would exceed the original projections and that capital outflows would be less than last year. I have taken advantage of the release to include a reference to our meetings and to press for more intensive effort.

4. As a means of indicating the extreme importance of these matters and to answer certain criticisms, I have arranged to send with a brief transmittal note a copy of the President’s latest address before the Business Council⁶ to the Chief Executive Officers of all reporting firms.

5. Finally, while retaining February 15 as the filing date for the 1968 projections, Assistant Secretary Shaw in his memorandum which accompanies the new worksheets will be asking that all firms endeavor to return these forms to us by not later than February 15 and by February 1, if at all possible. By this method, we hope to identify earlier in the year firms whose projected performance falls short of what it should be and to invite them to discuss it with us.

By these means and others that may evolve we hope that the administration of the corporate voluntary program will contribute to additional improvement.

A.B. Trowbridge ⁷

1. Source: Washington National Records Center, RG 40, Executive Secretariat Files: FRC 74 A 30, Treasury. Official Use Only.
2. Reference presumably is to the press conference held by Fowler and Trowbridge on November 16 at which the balance-of-payments figures for the third quarter were also released; see footnote 2, Document 149.
3. A schedule of meetings with company executives in December 1968, dated November 30, 1967, is attached to a note from Trowbridge to Fowler, December 1, 1967. (Johnson Library, Fowler Papers, International Balance of Payments: White Paper [5 of 7], Box 1)
4. December 19. The summary statement has not been found.
5. Not found.
6. For text of this December 6 speech, see Public Papers of the Presidents of the United States: Lyndon B. Johnson, 1967, Book II, pp. 1102–1104.
7. Printed from a copy that bears this stamped signature.