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

83. Memorandum From the President’s Deputy Special Assistant for National Security Affairs (Bator) to President Johnson¹

Washington, November 29, 1965, 9:05 p.m.

SUBJECT

• Announcement of Balance of Payments Program

1. I understand that you have spoken to Joe Fowler about the Cabinet Committee report which he sent you last Friday,² and that you are agreeable to an early announcement of the revised program. If you agree, we will plan to go ahead with an announcement on Thursday.³ (Connor is scheduled to soften-up the Business Council on Thursday, and they are a leaky lot. Also, quite apart from leaks, the sooner we give the corporations the new ground rules the better. They generally make their capital-budgeting decisions for the year during the early part of December.)

2. To make it clear that the new program is your program, I would recommend that:

(i) There be a Fowler-Connor-Martin-McNamara-Bell press conference at the White House. Fowler and Connor are agreeable.

(ii) We release a letter from you to Fowler approving the recommendations of the Cabinet Committee and instructing him to put them into effect. A draft of such a letter is at Tab A. (I read it to Joe on the telephone. He likes the idea, and had no problems with the draft.)⁴

(iii) As an alternative to (i), we could skip the press conference and simply release a Presidential letter, and a sanitized, spruced-up version of the Cabinet Committee’s memorandum to the President.⁵ The appropriate Assistant Secretaries and I would background the press on the technical details. (Fowler’s man Donnelly will be in touch with Bill Moyers about your preference as between (i) and (iii).)

3. On the substance of the program, let me just say that, in my judgment, the Cabinet Committee proposal represents our best move for now. I think it a fair three-to-one bet that most of Connor’s clients will play ball—for awhile. (For the first time, each company will be given a formula by which both the company itself and we will be able to judge whether it is doing its share. We are doing for the corporations now what we did for the banks last February.) In the end, I suspect that we will have to go further and impose a tax on virtually all capital outflow. But there is a good case for moving one step at a time. If Connor’s people do not play ball, we will be in a stronger position to impose a tax, after having given the voluntary route a real try. If they do go along for awhile—as I think likely—you have more time to consider asking Congress for a standby tax, with a variable rate, which is what we will need for the long pull. (I’ll do a longer separate memo for you on this if you wish.)

FMB

A public letter from President to Fowler (as at Tab A)

Announce program on Thursday, Dec. 2, but no press conference

White House press conference (Fowler, et al) on Thursday, Dec. 2⁶

1. Source: Johnson Library, Bator Papers, Balance of Payments, 1965 [1 of 4], Box 14. Secret. The source text was accompanied by two typewritten notes. The first, from Francis Bator to Jake Jacobson, has the following handwritten notation: “Recd Ranch 11–30–65 4:00 p.” The note reads: “We need Presidential approval on this by Wednesday [December 1] noon at the latest, if we are to go ahead Thursday [December 2] 9 a.m. (the only time Fowler, Connor, etc. can make it). Will you call me as soon as you have an answer? Many thanks.” A handwritten circle appears around the words: “Wednesday noon.” The second, from President Johnson, November 30, 8:55 p.m., reads: “What I would do is to have Bill Moyers preside at the press conference—call it at the White House. I would probably try to do it early Thursday [December 2] morning, so it won’t conflict with what we are doing down here that afternoon.”
2. Document 82.
3. December 2. The press conference to announce the 1966 Balance of Payments program was held on December 3.
4. Tab A was not attached. For the version of the letter, December 2, from President Johnson to Secretary Fowler, released on December 5, see American Foreign Policy: Current Documents, 1965, pp. 1074–1075.
5. A summary of the recommendations submitted to President Johnson by the Cabinet Committee on the Balance of Payments, December 3, was released on December 5; see ibid., pp. 1075–1076.
6. This option is checked. A handwritten note, presumably by the President, reads “with Moyers.”