On one special problem, of great concern to our friends, and to us, I am
proud to give the Congress an encouraging report. Our efforts to safeguard
the dollar are progressing. In the 11 months preceding last February 1, we
suffered a net loss of nearly $2 billion in gold. In the 11 months that
followed, the loss was just over half a billion dollars. And our deficit in
our basic transactions with the rest of the world--trade, defense, foreign
aid, and capital, excluding volatile short-term flows--has been reduced
from $2 billion for 1960 to about one-third that amount for 1961.
Speculative fever against the dollar is ending--and confidence in the
dollar has been restored.
We did not--and could not--achieve these gains through import restrictions,
troop withdrawals, exchange controls, dollar devaluation or choking off
domestic recovery. We acted not in panic but in perspective. But the
problem is not yet solved. Persistently large deficits would endanger our
economic growth and our military and defense commitments abroad. Our goal
must be a reasonable equilibrium in our balance of payments. With the
cooperation of the Congress, business, labor, and our major allies, that
goal can be reached.
We shall continue to attract foreign tourists and investments to our
shores, to seek increased military purchases here by our allies, to
maximize foreign aid procurement from American firms, to urge increased aid
from other fortunate nations to the less fortunate, to seek tax laws which
do not favor investment in other industrialized nations or tax havens, and
to urge coordination of allied fiscal and monetary policies so as to
discourage large and disturbing capital movements.