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

62. Memorandum From the Director of the Bureau of the Budget (Schultze) to President Johnson¹

Washington, June 8, 1965.

SUBJECT

• “Gold Budget”

Attached is a summary of our latest “gold budget” report on the international transactions of Federal agencies.

Secretaries Fowler and Connor have informed me that many businessmen and bankers, involved in the voluntary balance of payments cooperation program, have wanted to know what the Federal Government is doing about its own dollar outflow.

The Secretaries and I believe that we have a good story to tell. The Federal Government’s own outflow of funds abroad has been sharply reduced—as shown in the attached gold budget report.

The gold budget summary itself is not suitable for release.

However, I have drafted the attached statement which you may wish to use with the press on the first appropriate occasion.² It has been checked with Secretaries Fowler and Connor.

Charles L. Schultze³

Attachment⁴

Washington, June 8, 1965.

MEMORANDUM FOR THE PRESIDENT

SUBJECT

• The “Gold Budget”—International Transactions of Federal Agencies

Highlights

The latest gold budget data which we have just reviewed and compiled shows:

The net dollar outflow abroad from the Federal Government’s regular activities will have fallen by 23%—$635 million between fiscal year 1963 and 1965.

The net outflow is programmed to fall by another 13%—$290 million between 1965 and 1967.

Between 1963 and 1965 the major improvements occurred through reductions in payments. In the next two years the forecasted improvements result from an increase in receipts—payments actually rise slightly during this period.

We have found that in the past agencies tend to be overoptimistic in their receipts estimates. Since most of the projected improvement in the next two years comes from an increase in receipts, agencies will have to redouble their efforts to meet their goals.

The improvements have been obtained (1) without sacrificing essential U.S. commitments abroad, and (2) in the face of rising price and wage levels in most overseas areas where we spend our dollars. A more detailed summary is attached.⁵

Charles L. Schultze

1. Source: Department of State, Central Files, FN 12 US. No classification marking. The memorandum was sent from Secretary of the Treasury Fowler to the members of the Cabinet Committee on Balance of Payments on June 16. A copy was also sent to the Chairman of the Board of Governors, Federal Reserve System.
2. Not printed.
3. Printed from a copy that indicates Schultze signed the original.
4. No classification marking.
5. Not printed.