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june-July, 1970
they may reach the one mi Ilion mar
k!
"Nearly all tbe imports come from
Japan," reports San Francisco newsman
Milton Moskowitz. "They seem to be
doing to the TV set manufacturers what
Volkswagen and other foreign cars have
done to the automotive industry."
On and on it goes.
And the big lesson of it all is - if
the United States had been living
within its means, checking ioflation,
curbing excessive wage increases, and
cootrolling governmeot spending, the
import problem would virtually cease
to exist.
How Long Can It Continue?
In the light of all this, there are sev–
era! important questions that oeed
answering.
How long can America's rapidly
deteriorating export-import situation
continue?
More important, how long can
America's annual balance-of-payments
hemorrhage - a record $7,000,000,000
in 1969 alone- contioue? How long
will Europeans be willing to hold onto
over 43,000,000,000 infiated "Eurodol–
lars" backed up by a mere $12,000,·
000,000 in U. S. gold? How long
will the strained foreign confideoce in
the undisciplioed American economy
cootinue?
For a little while longer, at least.
If
there were a heavy run on the U. S.
gold supply, the Treasury would simply
stop selling gold. The last link between
the dollar and gold would be cut. This
would leave foreign banks holding over
30,000,000,000 totally unbacked dollars.
The fact
is,
there simply is no other
international reserve currency on the
scene to replace the dollar - yet.
But the seed has been planted for
just such an alttrnatt unit, should
it
become necessary.
The six nations of the Common Mar–
ket have already agreed to move toward
the establishment of a Common Market
reserve fund, and eventually a common
currency. The current thinking is that it
would take from five to nine years
before such a currency unit could
become a reality.
But should there be another inter–
national currency crisis - such as the
devaluation of the British pound ster-
The
PLAIN TRUTH
7
POTENTIAL CLAIMS ACiAINST
U. S. Gold
Supply
UNITED STATES CiOLD
24.7
Bi ll ion
1949
Foreign
Claims
Against
Dollar
6
Billion
U. S. Gold
Supply
11.9
Billion
D
Foreign
Claims
Against
Dollar
44.9
Billion
1970
B~~rter
$ourc.:
Faderol
R•,.rv• lulletln
Chorts above show the ropidly deteriorating condition of the U. S. dollor and
monetory gold reserve. A little over twenty years ago Americe owned almost
three fourths of the world's gold stock. Gold outnumbered foreign-held dollars
- potentia l claims- by four to one. Today that ratio is reversed. Over
half of the world's monetary gold is in the hands of Western European
nations.
ling in 1967 - the timetable could be
stepped up.
None of America's trading partners,
however jealous they may be of our
abuodant affiuence, or howtver much
they may want to improve their own
trade accouot with the U. S., want to
see an economjc collapse in the United
States. lt is in virtually every nation's
self-interest
to
see the shaky U. S. econ–
omy
improved. No nation or bloc of
nations eagerly anticipates assuming the
burden of a world banker.
But the United States must show
some reassuring sigo it is willing to
tackle its mounting fiscal and economic
problems- and this indudes resolving
the financially disastrous war
in
Asia.
Says
]elle
Zijlstra, board chairman of
the Bank of International Settlements:
"The ultimate discipline for the
interoational payments system as a
whole is the degree of stability achieved
by the U. S. dollar as the anchor
currency.
"That the United States should strive
towards a major improvement in its
externa! current account," he argued, "is
not only in its interests but also in that
of the entire Western world."
Survival at Stake- Who Caces?
Americans still have time to act - to
act unitedly in their individual and