-Mariner IV started on its way toward Mars on a photographic mission. -An orbiting geophysical observatory was placed into orbit to become the U.S.'s largest scientific satellite. Weighing more than 1,000 pounds, Ogo I carried 20 different experiments-a record number. -Syncom III was launched into a "stationary" or synchronous orbit and provided live television coverage of the Olympic Games in Tokyo.6 -The Department of Defense began to implement a decision to develop a military communications satellite system. They plan to use existing Syncom and Relay satellites during the interim period. -The Nimbus weather satellite photographed and reported cloud conditions during both day and night, and accurately measured temperatures of the earth's surface. -Tiros VII successfully tested the automatic picture transmission (APT) system which gave direct read-out of regional weather patterns to 60 stations-government and private-throughout the world. -Three Saturn I rocket boosters were launched as part of the Apollo test program. Record weights of about 39,000 pounds were orbited. -The Titan IIIA space booster was successfully launched for the first time. -Two anti-satellite systems became operational. -The existence of an over-the-horizon radar system was announced. -The Vela spaceborne nuclear detection project successfully orbited two additional satellites. -Greater coordination of effort was attained in the space and aeronautics programs. Among major areas of such cooperation were: the use of the XB-70 aircraft to confirm theoretical and laboratory data of the supersonic transport program; the establishment of a national pool of instrumentation ships to meet the requirements of both NASA and DOD; and the common use of tracking, data acquisition, communication, and control facilities of the Gemini B/MOL project. -An international agreement was arrived at with 19 countries to provide the basis for a global communications satellite system. The military navigational satellite system was declared operational, and is in use with submarines and surface ships to provide precision fixes on a world-wide, all weather basis. -The United States and the Soviet Union reached some degree of agreement on cooperation in bioastronautics, geomagnetics, and meteorological research. —The F-1 and J-2 engines, destined to rocket the Apollo spacecraft towards the moon, were qualified for flight. -Liquid hydrogen became a powerful fuel ready for use in operational flight after successful tests of Centaur and the Saturn I's upper stage. -An electrostatic (ion) engine operated in space for the first time. -Gains in nuclear rocket propulsion were achieved when two Kiwi reactors and one Nuclear Engine for Rocket Vehicle Application (Nerva) were tested at full power conditions. -Two models of the Apollo spacecraft were placed into orbit for test purposes. -A 156 inch diameter segmented solid rocket motor was successfully static test fired, demonstrating the feasibility of constructing segmented motors of this size and weight. -The XB-70 and the F111A passed their initial flight tests. -The existence of an advanced interceptor system, the YF-12A, was announced. -During its second year of activity, the Communications Satellite Corporation conducted technical studies, scheduled the launch of its first satellite (Early Bird), issued stock to the public and the carriers, elected a board of directors, and signed an international agreement to act as manager of the initial global communications satellite system. The laser beam was successfully harnessed and used to track a satellite in orbit. -The United States launched Ariel II for the United Kingdom, and assisted Italy in its successful effort to become the third spacelaunching country with the orbiting of San Marco. -The Explorer family of diversified small scientific satellites increased more than 25 per cent in 1964. -Data from several NASA Interplanetary Monitoring Probes revealed a new picture of our magnetosphere with supersonic winds of positively charged particles from the sun creating shock waves upstream from the earth's magnetic field and a long tail of the field downstream. -Several successful flights of the Asset winged reentry test vehicle were conducted at near orbital velocities to test radiative materials and structural concepts. -The experimental NASA-DOD hypersonic rocket plane, X-15, entered its fifth year of powered flight and made its 121st successful flight to the edge of space. Also launched were the Relay II and Echo II for communications purposes, as well as Project Fire for test heating of a spacecraft returning to the Earth's atmosphere from outer space. -The U.S. placed about 73 payloads in earth and solar orbits. Part XI FOREIGN ECONOMIC POLICY-TRADE AND TARIFFS Document XI-1 Review of the Economic Position of the United States: ECONOMIC REPORT OF THE PRESIDENT (JOHNSON) TO THE CONGRESS, TRANSMITTED JANUARY 20, 1964 1 1 A. Measures Taken To Redress the United States Document XI-2 "The Proposed Interest Equalization Tax-Has Been Largely Responsible for This Improvement [in the Balance of Payments]": LETTER FROM THE PRESIDENT (JOHNSON) TO THE CHAIRMAN OF THE HOUSE COMMITTEE ON WAYS AND MEANS (MILLS), FEBRUARY 25, 1964 1a DEAR MR. CHAIRMAN: In answer to your request conveyed to me by Secretary Dillon, I am glad to stress the importance of H.R. 8000, the bill to impose an interest equalization tax on foreign securities." This tax was originally proposed by President Kennedy on July 18, 1963.3 He was concerned because the outflow of portfolio capital from this country had reached unprecedented and unacceptable levels.* 1H. Doc. 278, 88th Cong. 1a Department of State Bulletin, Mar. 23, 1964, p. 464. 'See American Foreign Policy: Current Documents, 1965, pp. 1100-1113. 666 Foreigners... increased their borrowings and their financing here in the United States from an average of around $600 million a year during the late fifties through 1961; they roughly doubled that in 1962 to about $1.1 bil(Footnote 4 continued on next page) To protect the stability of the dollar and of the entire international payments system, these flows had to be reduced. President Kennedy did not want to impose direct governmental controls. He proposed that a tax be levied on purchases of foreign securities from foreigners, effective generally as of July 19. This would increase by approximately one percent per annum the cost to foreigners of American portfolio capital. Capital outflows have been markedly reduced since then and our balance of payments situation has improved. The out flow from transactions in new and outstanding foreign securities shrank to an annual rate of less than $100 million in the fourth quarter. Our balance of payments deficit on regular transactions was reduced to an annual rate of $1.5 billion in the last quarter. I believe the program announced last July-and in particular the proposed interest equalization tax-has been largely responsible for this improvement. But we must not relax our efforts to eliminate the balance of payments deficit and to insure the stability of the dollar. This remains a top priority of this administration. I fully support H.R. 8000 as reported by the Committee on Ways and Means. I hope it receives prompt and favorable consideration in the House of Representatives. Document XI-3 Report to the President From the Task Force on Promoting Increased Foreign Investment in United States Corporate Securities and Increased Foreign Financing for United States Corporations Operating Abroad, TRANSMITTED APRIL 27, 1964 (EXCERPTS) The magnitude and persistence of past U.S. balance-of-payments deficits, accompanied by large gold losses, have been of increasing (Footnote 4 continued from p. 1181) lion, and then they had a figure of over a billion dollars in the first 6 months of last year. "So that looked like it was on its way to doubling again which would be nearly quadrupling anything we had known before something over $2 billion in this area." (Reply made by the Secretary of the Treasury (Dillon) to a question asked before the Senate Committee on Foreign Relations, Apr. 9, 1964; EastWest Trade: Hearings Before the Committee on Foreign Relations, U.S. Senate, 88th Congress, 2d Session, pt. I, pp. 230-231.) H. Rept. 1046, 88th Cong., Dec. 16, 1963. 0 Report to the President of the United States From the Task Force on Promoting Increased Foreign Investment in United States Corporate Securities and Increased Foreign Financing for United States Corporations Operating Abroad (Washington, U.S. Government Printing Office, 1964). For the establishment of this task force and its terms of reference, see American Foreign Policy: Current Documents, 1963, p. 1109 and footnote 27 ibid. It was composed as follows: Henry H. Fowler, Chairman; Robert M. McKinney, Executive Officer; Charles A. Coombs; Fredrick M. Eaton; G. Keith Funston; George F. James; George J. Leness; Andre Meyer; Dorsey Richardson; Arthur K. Watson; Walter B. Wriston; John M. Young; Ralph A. Young. For an announcement of Apr. 27, 1964, by the White House on this report, see the Department of State Bulletin, May 18, 1964, pp. 804–805. concern both to the public and private sectors of our country. This situation, if allowed to continue indefinitely, would endanger our international financial position. During the past 9 months there has been an improvement in our balance of payments." Since some of this improvement may be only temporary, the importance of dealing with the basic factors involved in the problem is in no way diminished. Significantly, our balance-of-payments deficit does not arise because of any general inability to compete in international markets. Indeed, we have had a large export surplus of commercial goods and services. However, this surplus, which includes the current return from U.S. foreign investments, has not been large enough to offset our Government expenditures abroad for defense and for economic aid, together with our outflow of new private capital. That our exports of capital-especially in the form of long-term investment-have been on a large scale is natural. The U.S. economy generates a large volume of savings. No other country has a comparable capacity to supply capital both at home and abroad. As a result, the United States has supplied much of the free world demand for capital throughout the postwar period. Returns from these investments, already a major favorable element in our balance of payments, will be even more important in the future. Nevertheless, concentrated outflows of private capital can create severe difficulties, even for a country with the financial strength of the United States. Difficulties arise particularly when such capital movements occur at a time when the dollar is already under pressure for other reasons. The United States experienced such a combination of conditions in 1962 and early 1963. This created a situation which-had it been permitted to continue uncheckedcould have imperiled the stability of the dollar and, hence, of the international monetary system. These conditions led to a series of actions by the U.S. Government in July 1963. This program included measures to: (1) raise short-term interest rates, (2) reduce further Government expenditures overseas, (3) expand commercial exports, (4) increase foreign tourism in the United States, and (5) finance the balance-of-payments deficit in ways that result in a minimum drain on our gold stock. In addition, the President requested congressional approval of the proposed interest equalization tax on purchases of foreign securities by U.S. residents, designed as a temporary expedient to stem the accelerating outflow of private capital into foreign portfolio investments." In his message presenting this program, President Kennedy announced his decision to create this Task Force and set forth its terms of reference.10 In carrying out its assignment, the Task Force called for advice and assistance from major segments of the U.S. industrial and finan See post, doc. XI-8. See American Foreign Policy: Current Documents, 1963, pp. 1100-1113. 9 See post, doc. XI-5. 10 See footnote 6 above. |