54. Memorandum From the Director of the Office of Management and Budget (Shultz) to the Members of the Council on International Economic Policy 1
- The Capital Control Programs
Each of these programs imposes costs on U.S. business and financial institutions and, through them, on the economy as a whole.
The programs were enacted and have been maintained despite these costs on the grounds that they achieve a result: an improved balance-of-payments position for the United States.
Some have argued that the costs are such as to suggest relaxation of the programs despite the presumed result. This point of view highlights the importance of the costs.
There are additional arguments against retaining the controls. The ability of these programs to achieve substantial and desirable results is questioned. If this argument is correct, then the balance of payments argument is irrelevant and, in view of the undoubted costs, the programs should be abandoned. Material presented in the attached memorandum leads me to that point of view.
- Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 218, CIEP. No classification marking. Sent through Peterson. The memorandum is the attachment to Document 55.↩
- Richard N. Cooper: “The Interest Equalization Tax: An Experiment in the Separation of Capital Markets,” paper # 78, Economic Growth Center, Yale University, 1967. [Footnote in the source text.]↩
- Arthur B. Laffer: “Short-Term Capital Movements and the Voluntary Foreign Credit Restraint Program,” unpublished paper, University of Chicago, 1969. [Footnote in the source text.]↩
- Center for Political Research: Federal Control of Foreign Direct Investments, research report, May 11, 1970. [Footnote in the source text.]↩