U.S. TROOPS IN THE MEKONG DELTA AREA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP67B00446R000400110005-1
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 8
• Document Creation Date: December 16, 2016
• Document Release Date: June 20, 2005
• Sequence Number: 5
• Publication Date: September 26, 1966
• Content Type: OPEN

September 26, 1966 proved CON(~R ggI691L6gpC RDPf6K 46R000400110005-1 22839
of this section is one in which the Secretary United States interests; and section 405 pro- AUTHORIZATION FOR TITLE II
of the Treasury determines that the foreign viding for assistance to countries helping The House bill authorized programs of as-
currency or credits owned by the United themselves to meet their food needs and sistance (donations) under title II or not to
States and available for use in such nation population growth problems. Those provi- exceed $800 million per year, plus carryover.
are in excess of the normal requirements sions of section 103(d) which relate only to The Senate reduced this figure to $600 mil-
of the Departments and agencies of the foreign currency sales do not, of course, ap- lion per year, plus carryover, and the com-
United States for expenditures in such na- ply to this section. mittee of conference has accepted the Sen-
tion for the 2 fiscal years following the In agreeing to the House language of sec- ate figure.
fiscal year in which such determination is tion 107, with the amendments noted, the ASSISTANCE OF OTHER COUNTRIES
made. The amendment provides that the conferees make the following observations The committee of conference accepted a
amount of any such excess currency shall be about this section: Senate provision stating that it is the sense
devoted, to the extent practicable and with- First, the agricultural commodities which of Congress that the President should en-
out regard to the requirements of section may be exported under the authority of this courage other advanced nations to make in-
1415 of the Supplemental Appropriation Act, section include livestock, if the particular creased contributions for the purpose of
to the acquisition of sites, buildings, and livestock to be exported meet the require- combatting world hunger and malnutrition,
grounds and to assist the purchasing nation ments set out in section 401 with respect to particularly through the expansion of inter-
in undertaking self-help measures to in- available agricultural commodities generally; national food and agricultural assistance
crease its production of agricultural com- second, the term "private economic enter- programs. The section also states that it is
modities and its facilities for storage and prise" in section 107(a) is intended to in- further the sense of Congress that as a means
distribution of such commodities. The clude private housing developments, of achieving this objective, the United States
President is required to advise the House and CCC COMMERCIAL EXPORT CREDIT should work for expansion of the United Na-
Senate Agricultural Committees of a de-
termination by the Secretary of the Treasury Section 107 of the House bill also con- tions world food program beyond its present
that a country has become an excess cur- tained a provision permitting CCC export established goals.
rency country and to keep such committees credit (now limited to CCC stocks) to be GUIDELINES AS TO "AVAILABILITY"
advised as to the extent of such excess, the used also in the export of private stocks, and The conference agreed to a Senate amend-
purposes for which it is used or proposed to authorizing appropriations to CCC to reim- ment to section 401 establishing guidelines
be used, and the effects of such use. burse it for credits extended under such pro- as to the availability of commodities for ex-
TERMS OF DOLLAR CREDIT SALES gram. The conferees have deleted this from port under Public Law 480 and providing
section 107 of the revised language of Public that no commodity shall be available for
The House bill (sec. 106) permitted sales Law 480 and have made it a separate section such distribution if it should reduce the
on long-term dollar credit on the same terms of the bill, appearing near the end as a new domestic supply of such commodity below
authorized for development loans under see- section 4. the quantity needed to meet domestic re-
tion 201 of the Foreign Assistance Act of OCEAN FREIGHT CHARGES quirements, adequate carryover, and antici-
1961, as amended. This is presently a 40-
year repayment period with a 10-year grace The conference adopted, with an amend- pated exports for dollars. The conferees did
period during which no payments on the ment, the Senate language of section 108, not agree to a Senate amendment to section
principal would have to be made, with in- dealing with payment of ocean freight 401 which would have placed in the Secre-
terest at 1 percent during the grace period charges. This provides that CCC may ft- tary of Agriculture (instead of the Presi-
and 2x/2 percent thereafter. The Senate nance ocean freight charges for sales of agri- dent) the authority to
amendment reduced the payment period to cultural commodities for foreign currencies tries with which sales agreements would be
20 years and the grace period to 2 years and only to the extent that such charges are made.
limited the delivery period of commodities higher than would otherwise be the case by AGRICULTURAL COMMODITY
under such an agreement to not more are than an reason of the requirement that commodities The conference agreed to a Senate amend-
10 years. This is substantially the provision be transported on United States flag vessels. ment making it clear that the term "agri-
of the present law, In view of the provision The balance of such charges for transporta- cultural commodity" as used in this act
in section 103(b) for foreign currency credit tion in United States vessels is to be paid means only agricultural commodities pro-
sales with the requirement that the currency in dollars by the recipient nation or organi- duced in the United States. This is merely
be fully convertible to dollars, and with a zation. This limitation does not apply to a clarification of the intent of the House.
maximum term similar to that in section 106 sales for dollar credit under sections 106 or ALCOHOLIC BEVERAGES AND TOBACCO
of the bill as passed by the House, the House 107 or sales on foreign currency credit terms The conference also agreed to a Senate
conferees accepted the Senate amendment to (requiring full convertibility to dollars) un- amendment prohibiting the sale or donation
section 106. der section 103(b). of alcoholic beverages under this act and the
This amendment also requires that local SELF-HELP FOR AGRICULTURE donation of tobacco or tobacco products.
currency proceeds of sales of commodities on The conferees adopted a Senate amend- This is a restatement of the existing policies
long-term dollar credit be used in the re- ment making it clear that the proviso in sec under which Public Law 480 is Operated. No
cipient country for economic development tion 109, relating to self-help for agriculture alcoholic beverages have ever been exported
purposes agreed upon between the two gov- in recipient countries, is to be a positive re- either by sale or through a donation program
ernments at the time the sale is made and quirement that 20 percent of certain cur- and tobacco has never been included in any
written into the sales agreement. rencies be set aside for the self-help purposes donation program. In accepting this amend-
LONG-TERM DOLLAR CREDIT SALES BY THE PRI- described in section 109, rather than a stand- ment the conferees intend that the Depart-
VATE TRADE ard suggested for the. President's considera- ment of Agriculture shall continue its efforts
Although the Senate amendment had sub- tion, to export tobacco as part of the sales pro-
stantially altered section 107, dealing with STIPULATION OF SELF-HELP PROGRAM IN grams authorized under title I of this act.
long-term dollar credit sales by the private AGREEMENTS BUDGET PRESENTATION
'trade, the conferees adopted substantially the The conferees also accepted a Senate The conference agreed to a Senate amend-
House language on this section. The lan- amendment to section 109 which provides ment to section 403 requiring that the Presi-
guage adopted by the conference requires that each agreement entered into shall de- dent, in presenting his budget, shall classify
that the provisions of section 106 should ap- scribe the programs which the recipient expenditures under this act as expenditures
ply to private trade dollar credit with respect country is undertaking to improve its pro- for international affairs and finance, rather
also to the 10-year maximum delivery period 'duction, storage, and distribution of agricul- than for agriculture and agricultural re-
and the 2-year deferral of the first payment. tural commodities and for termination of sources.
It also added to section 107(b) the require- such agreement whenever the President finds ADVISORY COMMITTEE
ment that the Secretary should take reason-, that such a program is not being adequately The conferees agreed to a Senate amend-
able precautions to safeguard the usual mar- developed. ment to section 407, establishing a joint leg-
ketings of the United States. - AUTHORIZATION FOR TITLE I islative-executive advisory committee on
Section 107 (d) 'stipulates the other sections The House bill provided an annual author- Public Law 480, which would add to the
of the act which are applicable to private ization of not to exceed $2.5 billion, plus membership of the committee the Secretary
trade agreements and to those listed in the carryover, for title I. The Senate reduced of State, the Secretary of the Treasury, and
House bill were added: Section 103(a) re- this authorization to $1.9 billion, plus carry- the two ranking majority and minority mem-'
quiring the President to take self-help efforts over, and the conferees have agreed to the bers of the House Committee on Foreign Af-
into account; section 110 bringing private Senate figure. faif8 and the Senate Committee on Foreign
trade agreements within the total authoriza- PERSONS Relations.
tion of $1.9 billion in any year, plus carry- ASSISTANCE To NEEDY ANNUAL REPORT
over; section 401 providing for determination The conferees accepted a Senate amend-
by conferees agreed to a Senate amend-
conferees
ties the Secretary of Agriculture of commodi- ment making it clear that assistance to The
r nfer the President's annual re nd-
ties available for export and prohibiting dis- needy persons authorized in section 201 is ment
be made not later than April 1, and rt
positions which would result in a shortage; limited to agricultural commodity assist-
section 404 providing that assistance be di- ante. This is consistent with the intention describe the progress of each country's self-
rected toward humanitarian objectives and of the House language. help program.
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 22840
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CONGRESSIONAL RECORD - HOUSE September 26, 1966
COTTON PRODUCTS
The House bill contained an amendment
to section 8 of the Public Law 89-931 (not
a part of Public Law 480) providing that
cotton products could be exported under
Public Law 480, if cotton constituted a "sub-
stantial portion" of the sales price. The
conference committee has agreed to the Sen-
ate wording of this provision, with an
amendment, providing that cotton products
may be financed under Public Law 480 "in
the same manner as any other agricultural
commodity or product is made available" if
the product to be financed is manufactured
"entirely" of cotton. This would permit cot-
ton product exports to be financed under the
same, circumstances as the products of other
agricultural commodities.
ADJUSTMENT PROGRAMS
The House bill contained a provision re-
quiring the Secretary of Agriculture, in
planning voluntary production adjustment
programs, to plan for a carryover at the end
of the marketing year of not less than 25
percent of the total estimated requirements
of such marketing year. The conferees agreed
to strike this provision of the House bill.
CCC RESALE PRICE
The House bill contained a provision (not
a part of Public Law 480) that whenever the
Secretary of Agriculture determines that the
carryover at the end of any marketing year,
of a price supported agricultural commodity
for which a voluntary adjustment program
is in effect, will be less than 25 percent of the
estimated export and domestic consumption
of such commodity, the CCC would be pro-
hibited from selling any of its stocks of such
commodity during such year for unrestricted
use at less than 115 percent of the current
support loan plus reasonable carrying charges
(instead of 105 percent of the support loan
plus carrying charges, as provided in existing
law). The Senate amendment changed the
115 percent resale price to 120 percent and put
in a special provision with respect to wheat
that the higher resale price should become
effective if the carryover dropped below 35
percent (instead of 25 percent as for other
commodities). The conferees agreed to the
House language with respect to commodities
other than wheat and for wheat agreed that
the 115 percent resale minimum should be-
come effective if the carryover dropped below
35 percent and that the CCC resale minimum
should be 120 percent if the supply dropped
below 25 percent.
HAROLD D. COOLEY,
W. R. POAGE,
E. C. GATHINGS,
HARLAN HAGEN,
GRAHAM PURCELL,
ALBERT H. gUIE,
CATHERINE MAY,
Managers on the Part of the House,
U.S. TROOPS IN THE MEKONG
DELTA AREA
(Mr. BINGHAM asked and was given
permission to address the House for 1
minute, to revise and extend his remarks,
and to include extraneous material.)
Mr. BINGHAM. Mr. Speaker, for
some weeks there have been reports that
the administration was giving serious
consideration to sending U.S. troops into
the Mekong Delta region in South Viet-
nam where no operational U.S. land
forces have been before. An article in
today's Washington Post indicates that
such a decision is imminent.
Such an extension of U.S. military
activities in Vietnam into an area where
there are no North Vietnamese troops
would be most unfortunate, especially
coining so soon after Ambassador Gold-
berg's splendid speech at the United Na-
tions. Surely Hanoi's prompt and pre-
dictable rejection of the Goldberg initia-
tive should not be accepted as the final
answer. A move now to extend. and ex-
pand the war would make the Goldberg
offer look like a phony, which is just
what the Communists say it is. Such a
move would largely destroy the good ef-
fects of the Goldberg initiative upon the
member states at the United Nations
General Assembly and upon the state of
mind of the Secretary General, U Thant.
The reason given in the Post story for
the projected move of American troops
into the delta area is that it is needed to
prevent a large part of the rice! harvest
from being diverted by the Vietcong, as
it has been in the past.
It seems almost incredible that we
could be thinking of sending American
troops into this large and difficult area
for such a reason. In the delta region
South Vietnamese troops are opposing
the Vietcong in what is essentially a civil
war, with both sides receiving aid from
outside. According to the Past story,
"The commander of the Vietnamese 4th
Corps area, which groups in the delta
Provinces, has long opposed the intro-
duction of U.S. troops," and, further:
"Many Vietnamese claim the Mekong
Delta, which is the greatest concentra-
tion of the country's 16 million people,
is the only area not dominated by Amer-
icans, and they want to keep it that
way."
It is clear that a large number of
American troops would be required to
protect the rice harvest and make sure
that the rice gets into South Vietnamese
hands. Surely it would be far less expen-
sive, as well as far more desirable politi-
cally, for the United States to supply
whatever rice may be diverted if Amer-
ican troops are not sent in.
Following is the text of the article in
this morning's Washington Post:
DECISION NEAR ON USING GI's To GUARD
VIET RICE
(By John Maffre)
A decision is imminent in South Vietnam
on sending the first U.S. troops into the
densely populated Mekong Delta in. time to
help guard the rice harvest and to assure
that most of it reaches Saigon.
The U.S. Mission there has been holding
increasingly urgent talks on this touchy po-
litical point, it was learned here. So far U.S.
troops have been deployed only in three of
the four military corps areas of South Viet-
nam.
But a decision is being forced on South
Vietnamese and American authorities, AID
officials here say, because the Vietcong skill
at siphoning off the crop has forced a mas-
sive importation of U.S. rice for the third
successive year into a country once known
as the rice basket of Asia.
AID officials say a major problem is the
Cambodian rice dealers, mostly Chinese, who
traffic with the Vietcong to get rice to sell
abroad. Officials say that Cambodia is ex-
porting rising amounts of rice to countries
in Africa-once a prime South Vietnamese
markets--despite a static level of production
In Cambodia.
Some Americans say that a higher level
of priority must be given to the river patrol
activity if there is to be any effective check
on the amount of rice flowing north to Cam-
bodia Instead of east to Saigon.
The Introduction of U.S. troops into the
Delta would invoke not only strictly mili-
tary problems but political and emotional
ones that the Mission has tried to avoid.
The commander of the Vietnamese Fourth
Corps area, which groups in the Delta prov-
inces, has long opposed the introduction of
U.S. troops. Despite the buildup elsewhere,
the three understrength South Vietnamese
divisions in the Delta are aided only by
American advisers and given air support by
U.S.A.F. and U.S. Army aviation units.
STATUS QUO SOUGHT
Many Vietnamese claim the Mekong :Delta,
which is the greatest concentration of the
country's 16 million people, is the only area
not dominated by Americans, and they want
to keep it that way.
U.S. military leaders, on the other hand,
are convinced that South Vietnam must re-
main in a state of seige until government or
American troops or both can break the physi-
cal and economic grip which the Vietcong
and their predecessors, the Vietminh, have
exerted on the area since the early 1940s.
In the past three years Saigon's control
area of the Delta has shrunk. There have
been relatively few major military actions in
the region compared to the fights north of
Saigon, in the central highlands and near the
17th parallel.
The biggest military problem is that har-
vest protection in the vast Delta would swal-
low the large number of troops.
SMALL FIELDS PROTECTED
In previous years U.S. Army and Marine
Corps units have protected the harvest of
small, selected rice fields north of Saigon.
This did not require a large troop deploy-
ment and it also paid off psychologically
among the peasants who were protected.
But the Delta is a larger problem. Ideally,
much of this protection should come from
the National Police, which now total 55,000
and from provincial and district militiamen.
But Public Safety experts here say this force
is nowhere near the level or the competence
needed for such a task.
Apart from shepherding the peasants as
they gather rice, a major job will be to guar-
antee that the ramshackle trucks and barges
loaded with rice can be protected on their
way to the mills of Saigon or other major
points In the delta.
Some AID experts here estimated that
South Vietnam, which in 1963 exported about
323,000 tons of rice from Its 3-million-ton
production, will probably have to import more
than 600,000 tong in 1966 to feed its people.
TRADE ACTIVITY AND POTENTIAL
IN PUERTO RICO
(Mr. POLANCO-ABREU asked and
was given permission to address the
House for 1 minute, to revise and ex-
tend his remarks, and to include ex-
traneous matter.)
Mr. POLANCO-ABREU. Mr. Speak-
er, in connection with the opening of
World Trade Week in Puerto Rico and
the Virgin Islands, Secretary of Com-
merce John T. Connor, made an address
at the Sheraton Hotel in Santurce, P.R.,
on September 18, 1966. On this occasion,
Secretary Connor delivered a message
from President Johnson and then added
his own observations on trade activity
and potential in Puerto Rico. I should
like to bring this address to the atten-
tion of our colleagues who, I am sure,
are interested in what we are doing
tradewise in Puerto Rico and how we are
seeking world markets for our industrial
products.
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 A roved For Rel I~ -p B7TB00 46R000400110005-1
22938 pp RECVD -ENATE September
$-Questior. Might the U.S. dollar also bene- Question. Could the U.S. dollar stand up
under a 30 per cent devaluation of the
Answer. Total currp cy swaps between the pound? Would the dollar be forced under?
"U.S. and 11 other npUgng, and the. Bank for Answer. A 30 per cent cut in the value of
International Sett" agw_,aggregate 4.5 the pound, in my view, would trigger a
billion dollars, compared with 2.8 billion dQl- chain reaction. All major countries-includ-
lars prior to,the increase announced in mid- ing the U.S.-probably would have to re-
$eptember. align their currencies.
'
i
l
ee4dg xesoujees in foreign currencies
C$itld?prove very useful if, in the future, the
dollar s3slliltl,tome under speculative attack.
As a matted 4f t,, ,the U.S. has already used
currency swaps from time to time
to ease
,
pressure oil the dollar. At latest count, the
'U.S..was using 235 million dollars under these
swap arrangements.'
Question, Is U.
,p.._help for the pound put-
ting a strain on the dollar?
Answer', it. seems clear that the support
of sterling does place an added strain on the
American international monetary position.
The #.$. _, provides support in the form of
dollars tp,tlle Bri,t1ph. These dollars are used
to purchase sterling.
The supply of dollars In foreign hands is
thereby increased and as a result, the incen-
tive to cgnyert dollars,into gold increases.
Question, 1)o European bankers feel that,
in supporting the British pound, the U.S. is
sending good money after bad?
Answer I am sure ti"t quite a few Euro-
l5eans are convinced,tliat the. present parity
afV sterling cannot be , supported and that,
Corlsegilently,`the ?d.S. is sending good money
after bad.
Question. Is thie_a }majority view among
Europeans?
Answer. i cannot say as to the majority
view, but?thee_clearly is an underlying lack
of confktence in sterling. Notwithstanding
this feeling, I sense that European bankers
recognize the need try to forestall a de-
valuatiou of sterling, and are willing to com-
mit resources to this end.
Question. What might Great Britain
ache if the pound were devalued?
Answer. Thi,,V;ajority view in Europe, in
my judgment, is that a devaluation of ster-
ling would be of little real benefit to the U.K?
even in, the short run, and, would probably be
of no,.lagung benefit.
While a devaluation would reduce the cost
of British exports to a foreign buyer, it would
also raise the.c~opt,of, Imports, and Britain's
Imports have been exceeding her exports.
Question. Would her European countries
permit Britian to devalue without following
suit?
Answer, There Is Agreement in Europe
that the United Kingdom is not free to
tffake a unijateral devaluation, of sterling of
large proportions.
Question, What would be considered .a big
devaluation?
Answer. If aterl(ng were to be devalued by,
may, roughly 30 per, cent-a $2 parity instead
of $2.80-other countries would also devalue
their currencies, After, other currencies
Were devalued, the net advantage to Britain
would certainly be reduced.
opinions differ as, to hoar much. much net
devaluation of sterling would be permitted
by the other European countries. The pre-
vailing view seems to be that 10, to 15 per
cent might ght be the maximum.
Devaluation of this magnitude-l0 to 15
per cent-hi the judgment of many Euro-
peans would be of no significant help to the
"t ~.' rbpeans doubt that 4 devaluation
,0_Uld' bg of
any real benefit to sterling, yet
,
fear that the Britisl gray be forced Into a
?devaluation,
Question. The 1949 de
_ valuation of the
pound amounted to 30 per cent, didn't it?
Answer. Yes, that Is right-from $4.03 to
Question. Devaluation of the dollar would
be accomplished by-
Answer. By raising the price of gold, now
fixed by the U.S. Treasury at $35 an ounce.
You would cheapen the dollar, make it worth
less in terms of gold.
Question. If a dollar crisis or devaluation
should be forced, might that upset the U.S.
economy-lead to a recession, or worse?.
Answer. I believe that a dollar crisis would
have serious effects upon the American econ-
omy. Given such a situation, the securities
markets would be under the pressure of for-
eign selling, the commercial banks would lose
deposits, a mounting gold outflow would
further weaken confidence in the dollar
abroad and possibly at home, and fear that
the dollar might be devalued would pose
great uncertainties for business and financial
transactions, especially those with other
countries.
Given a major dollar crisis, the Govern-,
ment would find it necessary to intervene
with a highly restrictive program, If the dol-
lar were to be defended. Such a program
would have adverse effects upon business
activity in the United States.
Question. This sounds like a pretty gloomy
prospect. Have other countries been forced
to take such strong medicine?
Answer. Yes, Indeed.
Both Canada and Italy were forced to pull
in their economic belts to defend their cur-
rencies. The United Kingdom provides an
excellent present-day illustration of the sort
of drastic action that, a country may be
forced to undertake: higher taxes, ration-
ing of credit, very high interest rates, con-
trols over foreign investment, controls over
incomes and prices, limitations on tourist
spending, and the like. This program will
mean lower levels of business activity and in-
creased unemployment in Great Britain.
Question. Is the feeling in Europe that the
dollar itself is on the way to forced deval-
uation?
Answer. I doubt that many European
bankers would take the categorical position
that the dollar is, on the way to devaluation.
I do believe, however, that the great majority
would point out the dangers inherent in the
American policy of delaying effective action
to get its balance of payments in order.
Europeans frankly will tell you that the
persistent decline in the gold stock of the
U.S. and the increased liabilities to foreigners
may-at some point that cannot be told in
advance-cause a serious run on the dollar.
Question. Might the U.S., at some point,
decide to out loose from gold-stop buying
and selling gold for dollars?
Answer. Monetary authorities have no
hesitation in adding gold to their monetary
reserves, whereas they are loath to add indef-
initely to their holdings of dollars or pounds.
I am confident, if the link between the dol-
lar and gold is broken, it will be the result
of adverse circumstances and not reflect a
conscious desire or choice on the part of U.S.
monetary authorities.
HOW UNITED STATES COULD LOSE GOLD
Question. Some American economists argue
that the dollar gives value to gold, instead
of the other way around. Are they correct?
Answer. I find no support abroad for that
thesis. I am sure that, if the U.S. were to
invite and urge the monetary authorities
around the world to convert their dollars into
gold, our gold stock would reach the vanish-
ing point in a matter of days or weeks.
Question. Would tklg, sitttatlQl}e siifFCrent
27, 1966
if the U.S. were to announce that it would
not stand ready In the future to continue to
Puy gold at $35 an ounce?
Answer. No, it would not. The gold still
Would flood out of the country. World bank-
ers would be delighted to give up paper
dollars.
After all, the U.S. has been a net seller of
gold in 12 our of the past 20 years-paying
out 4early 12 billion dollars in gold to the
rest ?f the world.
COURSE OF WAR IN VIETNAM
Mr. FULBRIGHT. Mr. President, one
of our most distinguished and experi-
enced statesmen, George F. Kennan, has
written a letter to the New York Times
which was published in that newsapaper
on September 25. I ask unanimous con-
sent that it be printed in the RECORD at
the conclusion of my remarks.
The PRESIDING OFFICER.
objection, it is so ordered.
(See exhibit 1.)
Mr. FULBRIGHT. Mr. President, Mr.'
Kennan urges a new round of public
discussion of our course in Vietnam be-
cause of the "strong possibility that we
may be approaching the point of no re-
turn in the drift toward major war, the
growing apprehension in world opinion,
and the current session of the U.N. Gen-
eral Assembly."
For those who do not see the impor-
tance of heeding world opinion, or the
views expressed at the United Nations,
Mr. Kennan has an answer-an answer
that requires the humility of introspec-
tion. In his usually articulate way, Mr.
Kennan wrote the Times:
_ I stress international opinion, and partic-
ularly the views expressed by Pope Paul and
Secretary General Thant. For while we ob-
viously must continue to bear the major
measure of responsibility for our own course,
a nation whose very claim to independence
was founded on "a decent respect to the
opinions of mankind" owes it to itself to
show respect for the feelings of the world
community and to make concessions to them
even when, it does not fully agree with them.
Its long-term interests are not likely to be
damaged by doing so.
Mr. Kennan then concludes that "a
decent respect to the opinions of man-
kind" means that we should taper off and
eventually end the bombing of North
Vietnam. The case he makes for doing
so should be considered by every reason-
able American:
The fact that the benefits of this tremen-
dous effort of strategic bombing are not, even
after many months of its prosecution, vis-
ible to the casual outside observer does not,
of course, prove that such benefits do not
exist. But to balance off the negative ef-
fects on world opinion and on the prospects
for a peaceful resolution of the conflict, not
to mention the suffering it must bring to
Innocent civilians, these benefits would have
to be of a very high order indeed; and this
they obviously have not been.
Mr. President, I ask unanimous con-
sent to have printed in the RECORD at
the conclusion of my remarks the text
of an eitorial, entitled "Will to Peace,"
which was published in the New York
Times of September 25.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
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 Comton ber 27. 196~provedCONGRE% ONAL0REC:6RI6-R_PN%1 446R000400110005-1
Answer. I Trends are adverse in some of the Answer. Yes, I would say so.
basic elei4ents of the American balance of Question. More specifically, would
Euro- pean bankers favor a reduction in U.S.
For exat' ple; due to the persistent rise of troops in Europe as a Way of saving dollars?
imports a faster rate than' the increase Answer. There is no unanimity of thought
In, exports~P the American surplus on foreign among bankers on the question of troop
trade will be lower this year than it was last, withdrawal. On this issue, European bank-
al~d the tade surplus may shrink further in era, like others, reflect their particular
1967 national interests.
The dr n of tourist expenditures will show Question. How about reducing U.S. foreign
another f its -regular increases this year, aid?
and may be expected to rise again In 1967. Answer. You generally find backing for the
What is especially adverse is the mounting idea of cuts in foreign aid. The feeling is
cost of our military operations in Asia. Un- that American aid spending has not achieved
less the unlikely occurs, these costs will keep a great deal, and that the continued out-
rising. pouring of dollars weakens the dollar with-
The nerd of this is that the chances of any out contributing a great deal to positive
improvem ent in the American payments progress in the aid-receiving countries.
position arc bleak indeed. The curiosity of some European bankers
Question1. Do European bankers say what has been whetted by the receipt of large
needs to 1 e done to assure a sound dollar? amounts of dollars from parts of the world
Answer Many Europeans are critical of the which are not wealthy in their own right
economic policies being followed in the U.S. but which are receiving substantial amounts
For on thing, they have been skeptical of American aid.
about whether guideposts for wages and Question. Is this money showing up in
prices w Id achieve anything. This point numbered accounts in Switzerland?
of view 'i4eftects European experience. "In- Answer. That is my distince impression. I
comes po icy" and guidelines have been at- doubt, however, that the influx of funds is
tempted n Europe, but they have failed. limited to Switzerland.
For an tier, they are critical of the U.S. Question. Could this mean that U.S. aid
for not raising taxes and cutting Government might in some part be siphoned off by offi-
spending to cope with the overheated boom. cials or others for private gain, and not go ries
much? Once aga~n they are reflecting their own ex- to help the c one hears this view expressed
perience: Iuropean countries, for political Answer. Yes, n reasons, ixave not seen fit to raise their taxes, in Europe. In addition, of course, there is
either. mention of the waste of resources on un-
In shot, there is a feeling in Europe that, economic projects, and the wastes that result
through Indecision and inaction, the United from bad management.
States h joined the "inflation club." Question. Would Europeans advise plac-
Quests n. Is Europe willing to go along ing a limit on travel by Americans abroad?
with a continued outflow of dollars from the Answer. No, there is no support for that
U.S. as a y-product of Vietnam? Idea.
Answe . The American Involvement in Asia Question. Would Europeans object to ex-
is not very popular In Europe, and I found change controls by the United States as a
little or o evidence of a willingness to con- way of cutting down on the outflow of dol-
done or to accept continued American pay- lars?
European bank-
decidedly
Yes
Answer
.
,
.
ments deficits because of Vietnam.
ers would definitely and positively object
resent offi-
e the
i
riti
p
z
c
Inds Europeans c
cial American attitude, which is to accept to the imposition of exchange controls.
the payments deficit because of Vietnam The dollar is the world's leading cur-
rather t fan to undertake strenuous correc- rency because the holder is generally free
tive actin. to use it for any purpose. Foreign bust-
Quests r;. Is it any of Europe's business nesses, banks and individuals are willing to
how the i U Z. handles the dollar? accept dollars because they believe they will
Answe . A major reason Europeans have be free to use them when, where and how
a right o be concerned about the dollar is they please.
that th. y hold so many of them. If the If this freedom to use dollars were to be
dollar ere to be devalued-cheapened in limited by the imposition of exchange con-
terms o ;;old and other currencies-Euro- trols, the usefulness and position of the
peans would take losses. Holdings of short- dollar in world trade and finance would be
term do lar assets by European central banks seriously impaired,
total m re than I billion dollars. Private Question. What role does the dollar now
holding of dollars by Europeans add up to play in the world?
almost another 5 billion. Answer. The dollar plays a number of
Europ ans hold long-term'bonds on which different but related roles.
they wo ld similarly suffer a loss in the event It is, first of all, the leading reserve cur-
of doll devaluation. rency in the world. That is, foreign cen-
What is more, Europeans have direct in- tral banks and monetary authorities hold
vestme9ts in the II S. on which earnings are dollars-in the form of bank deposits or
payable in dollars. short-term securities-as part of their inter-
22937
mentioned possible trouble for the dollar be=
cause of the British pound. Is the British
pound now in a strong position?
Answer. I would think that sterling should
escape serious trouble for the next few
months at least.
Yet, looking further ahead, I encountered
widespread skepticism on the Continent that
the present $2.80 parity of sterling could be
held.
Question. What causes the skepticism?
Answer. The underlying cause seems to be
a doubt as to whether the British-labor,
management and the politicians-will do
what is required to raise productivity, to
curb the increase in wage costs and prices,
and to achieve substantial improvement in
the foreign-trade position of the United
Kingdom.
Question. Is the U.S.. now holding up the
pound?
Answer. I think it is an exaggeration to
say that the U.S. is supporting the pound.
Until the latest sterling crisis, the funds
for the support of sterling came from the
International Monetary Fund in the amount
of 2.4 billion dollars, from the Swiss in the
amount of 120 million dollars, from the
proceeds of the liquidation of American
securities owned by U.K., and from a run-
down of British reserves.
No official information has been released as
to the amount of funds provided by the U.S.,
or others, in the latest sterling crisis in July.
However, it has been announced that 300
million dollars of the "swap line" between
the U.K. and the Federal Reserve was being
used at the end of August.
It is important to note that other coun-
tries besides the U.S. have provided funds
during the sterling crisis of the past two
years, and have entered into arrangements
to provide assistance in the future, if
required.
Question. Why is that?
Answer, These countries recognize that de-
valuation of sterling could precipitate a run
on the dollar, lead to increased buying of
gold on the London market, and thus to a
depletion of official gold reserves. All this,
if it happened, would create a state of great
unsettlement and turmoil in the interna-
tional monetary system.
Question. On the matter of U.S. support
for the pound, didn't the U.S. just increase
its line of credit to Britain?
Answer. Yes, it has. The currency-swap
arrangement has increased from 750 million
dollars to 1.35 billion dollars.
Question. How do these currency swaps
work?
Answer. A currency swap is an arrange-
ment under which the central bank of coun-
try A can obtain access to the currency of
country B.
For example, if the British pound came
under speculative attack, and the British
needed to support sterling, they could use
dollars obtained under the swap agreement
to buy sterling on the London market. In
addition, the New York Federal Reserve
Bank could support sterling in the New
York market.
Question. In effect, isn't this a short-term
loan from one country to another?
Answer. Yes, that is what it amounts to.
It is temporary credit between central banks
to tide a country over a short-term difficulty
with its currency.
Question. Is the increased credit line for
the pound of major importance to that cur-
rency?
Answer. I think the hope is that this dis-
play of additional resources available to the
British will discourage speculation against
sterling. Remember, too, that in addition to
increased U.S. credit, the British have ar-
ranged bigger credit lines with other coun-
tries in amounts as yet unspecified.
trouble
world n
for the dollar might upset the wnoie to 63.8 billion dollars. Of this total, 41 bil-
onev system? Sinn dollars is held in the form of gold. The
int
Meting eat chaos and confusion in the
er- Question. Is there another role for the
nation monetary area and could conceiv- dollar?
ably se off a chain reaction of devaluations Answer. The dollar also is the currency
of othe currencies. de- universally, or almost universally, used by
valEuuatins ro cans of the iremember130s and the increases and the recompetitive in n monetary authorities in operations in the