31. Letter From John Kenneth Galbraith to President Kennedy0
Dear Mr. President: I am submitting herewith the report on the balance of payments which you requested.1
While I realize you are not without reading material, I venture to urge your attention for the document as a whole.
The report takes an unsanguine view of the prospect. There is no solid reason for expecting the situation to improve. The consequences of unabated drain, which unhappily must be assumed, will be manifold and grave.
In the report, I examine at some length the nature and shortcomings of past action. By its nature this involves a good deal of second-guessing and hindsight. I would hope this would not be thought critical of individuals. It is important to see why, through errors of optimism and the desire to contract out of difficult action, we have erred in handling this problem in the past.
The heart of the strategy I propose is to suspend capital exports for a minimum period of six to nine months, with possible extension. This is imperative and requires supplementing recent Treasury action by stronger executive measures. The existing steps are not sufficient for the task.
The present course of trade negotiation is sadly inconsistent with our balance of payments position. I recommend as the next step the effective postponement of the existing negotiations with the Common Market Countries. I would personally like to go much farther for I do not believe that we have sufficiently reconciled our trade policy with our balance of payments position. However, I am restrained by the lack of public or even governmental preparation for such a reversal.
Further, I urge certain steps on tourist travel, military deployment, and the deeper tying of aid. None of these, the military proposals excepted, will have a very prompt yield. All will be important in the slightly longer run.
The person who comments responsibly on the payments problem is like the herald who brings bad news: He is a figure for popular execution, and in this case each department will have its own gibbet. There are, indeed, grave difficulties with everything here urged. I hope these will not be considered decisive for they must now be measured against the alternative [Page 78] courses of action, which are few and worse, and the consequences of inaction, which would be worse yet.
Yours faithfully,
- Source: Kennedy Library, National Security Files, Subjects Series, Balance of Payments and Gold. Personal; Secret.↩
- Document 32. The President’s request has not been further identified.↩
- Printed from a copy that bears this typed signature.2↩