Newspaper Page Text
Editorial Monetary Issues In New Regime By HERBERT BRATTER Contributing Writer Against the background of the IMO remnuign—the platform and the promises—the new men tak ing over at the Treasury Depart ment under a Republican Secre tary, C. Douglas Dillon, must deal with three major problems: • How to stop the gold outflow, which stems from our persistent, adverse balance of international payments, weakens confidence in the dollar at home and abroad and—if unemployment increases —hampers the Federal Reserve in its efforts to ease money and stimulate the economy. • How to manage the Federal Government’s huge and cumber some public debt, which is likely to be increased as a result of spending policies to be adopted in coming months. • How to change tax policy so that it will contribute to the fas ter rate of economic growth on which the President-elect and his Treasury Secretary are agreed. “ During the campaign Senator Kennedy hammered away at the thesis that interest rates have been too high for adequate na tional growth. He expressed the view that the Federal Reserve Board, which has great power to affect the volume of money and credit and thus, indirectly, in terest rates, under a Democratic President would be compelled to co-ordinate its policies more close ly with the aims of the White House. It is not a fourth branch of the Government, he warned. Reserve Relationship Another thing the financial world and business community will be watching, therefore, is the Treasury-Federal Reserve rela tionship in the new administra tion. The very heavy acquisition of American gold by foreigners dur ing the last few years has been a matter of deep concern in offi cial and private quarters. Not a' few were alarmed last summer by the tenor of the Democratic can didate’s remarks on his interest rate intentions. Even before the campaign ended, therefore, Mr. Kennedy, alerted to this public concern, made a reassuring speech on the subject. That the President-elect has se lected as his Treasury Secretary a member of the Eisenhower ad ministration with a Wall Street background has had a major ef fect in quieting concern during the transition period. That the Treasury Undersecretary in charge of debt management and mone tary affairs, Robert V. Roosa, is drawn from the Federal Reserve System augurs well for an under standing relationship between Treasury and Federal Reserve Board. President Elsenhower’s first Secretary of the Treasury, George W. Humphrey, was an able man; but he had to learn all about Treasury problems after he took the portfolio. This time is differ ent. Mr. Dillon’s financial back ground gives him a head start on Treasury debt problems. And, as Undersecretary of State, he has had ample first-hand opportunity to learn about the balance of pay ments and gold problem. He ac companied Secretary of the Treas ury Anderson to Bonn some weeks ago in the quest for German aid in solving that problem. Balance of Payments Naturally, from his Treasury office, Mr. Dillon will see the bal ance of payments question in a somewhat different light. The Secretary of the Treasury ex of ficio is chairman of the National Advisory Council on International Monetary and Financial Prob lems. In his desk at all times is the latest Treasury Daily State ment, giving the receipts, expendi tures and public debt. An Under secretary of State has less concern with such matters. In the State Department Mr. Dillon made "every effort to ex pand the flow of private Ameri can investment to the less de veloped countries.” He strongly advocated financial aid by the United States and other advanced free nations, a persistent effort, Over the next "20, 30 or perhaps even 50 years.” Senator Kennedy, too, has favored foreign aid. If aid contributes to the gold out flow, it will now be for the Treas ury to suggest adjustments. New York is our chief interna tional trade and finance center. From there Mr. Roosa brings to the Treasury much familiarity with gold and balance of payments matters. At the Federal Reserve Bank he was the No. 2 man in the big research department. He has had many contacts with interna tional finance. But chiefly it is his intimate knowledge of the Government securities markets which qualifies him for his Treas ury post. The New York "Fed” conducts the large operations in Govern ment securities for the Federal Reserve System. By buying such securities on the open market with freshly created credit the System helps make money easier and interest rates lower. At other times, when it sells securities to the open market, the System tends to tighten money and interest rates, Mr. Roosa for three years was the "Fed’s” chief securities trader. With this experience he should have a good feeling for the task at hand when, as he fre quently must in his new job, he tackles the delicate task of decid ing upon a new Treasury financ ing operation: its nature, matu rity and coupon. This is a job calling for great skill. Life of the Debt With each passing day, the life of the outstanding Treasury debt grows shorter. As debt matures, the Treasury must pay out cash. But its cash is limited. Whenever the Treasury has to borrow new money it seeks to sell the longest term securities the market will , take.. In this way. lengthening the debt,' it gains a breathing spell. THE SUNDAY STAR WaMnfton, D. C., JtHMff 15, 1961 Q DOUGLAS DILLON Familiar With Probit mi Under a Democratic or Republi can regime it is the very same problem. ’That wifi be Mr. Roosa's concern. Doubtless he will not discard the "advance refunding” device instituted by his predeces sor, under which, before maturity date, bondholders are offered new bonds in exchange. Mr. Dillon's Assistant Secretary for tax matters has not yet been named. Since President - elect Kennedy has revealed that the Council of Economic Advisers is to assume “larger responsibilities.” which certainly will bear on Fed eral Reserve and Treasury poli cies, the tax views of the coun cil's next chairman. Prof. Walter W. Heller of the University of Minnesota, are of interest. At Palm Beach in December Heller, asked about flexible tax rates for economic stabilization, called such flexibility "good basic economics” which should be explored, since, as he explained, the gold outflow limits us in the use of monetary tools. The big questions facing the new Treasury team are the heri tage of past Government policies extending across decades of war and peace. New policies to be in stituted by the next admlifistra tion in turn will shape the prob lems to be passed along to its successor. By its very size, the Govern ment’s business affects the econ omy. In tackling Its fiscal tasks the Treasury, therefore, must con sider not only what is best for its own needs, but how its decisions and actions affect the private economy and how they conform to the Government’s overall pro grams and purposes. Always, too, the Treasury Democratic or Republican—must reckon with the Congress, to which it must go for relief from statu tory debt limitations and tax leg islation and whose bills it must pay. New African Blocs For Long-Term Aims By JOSEPH G. HARRISON Csntributlns Writer UNITED NATIONS, N. Y.— Under the hard hammer of cir cumstances, several important new blocs are being forged on the con tinent of Africa. These blocs have, in the main, a similar long-term aim, and it is therefore expected that, on many major issues affecting Africa, they will join forces. This could result in the formation of one of the most influential international groupings on the world scene. The principal impulse behind this movement is the desire on the part of the native peoples in volved to find new strength in unity. Having quickly seen that they are unable to exercise much influ ence individually, these emergent nations have agreed—sometimes formally, sometimes Informally— to work together in behalf of a stronger, freer, and more pros perous Africa. All is not yet clear sailing. Many differences and much rivalry still remain. At certain points, coun tries which have little in common have banded together only be cause of the momentary interest or because each feels threatened by some third force. For Close Co-operation Yet the general movement on the continent, from the shores of the Mediterranean on the north to the borders of the Union of South Africa on the south, is towards close co-operation and, in some instances, even federation. An example of this is the con ference held during the first week of January at Casablanca, Mo rocco. Attended by Ghana, Guinea, Libya, Mali, Morocco, and the United Arab Republic, the confer ence resulted in the formation of a joint military command. It also provided for the even tual establishment of an African consultative assembly and the creation of African political, economic and cultural commit tees. These efforts are to be co ordinated through a liaison office. It is admitted that there were sharp disagreements at the meet ing at several points, and that the plans for future co-operation were purposely drawn rather loosely. Nevertheless, a pattern of working together has been formalized and a sense of mutual interest strengthened. In mld-December, a similar meeting was held in Brazzaville, bringing together 13 of the new states formed from the former French colonial territories in Africa. The aim of this conference, which was also attended by Con golese President Joseph Kasavubu and Chief of Staff Col. Joseph Mobutu, was two-fold. These states wished to evolve a policy of conciliation for the Congo and to determine whether they could OUR ORIENTAL FRONTIER East-West Center Nearing Completion in Hawaii - By F. K. HOLMES ContrtbuUnc Writer The capital away from home of President-elect Kennedy’s New Frontier may be Honolulu, seat of the University of Hawaii and site of the $26 million East-West Cultural Center which will owe its existence to the new Vice President. The Kennedy “Peace Corps” plan to weld 500 or more young Americans each year into a cadre of volunteer youth workers in foreign lands to concentrate their efforts in the emerging nations of Asia and Africa. A majority of these lucky young people probably will land in Hawaii as a staging area. There they will take lan guage training, study Oriental cultures, gain the experience of living among people of Eastern descent in a Pacific environ ment. The International East-West Center in Hawaii, due primarily to the dogged persistence of the Vice President-elect, is already near reality. The center is to provide an international college and an in ternational training facility—of fering academic resources rang ing from an institute of advanced studies down through primary language-training —for both Americans and Asians. Much Work 1$ Done Much spadework for the center is already completed. Citizens committees, Hawaii State com mittees, University of Hawaii committees, and joint commit tees from the State Department, the Department of Health, Educa tion and Welfare, and the United States Information Agency pro duced a plan more than a year ago which, as now expanded, can easily meet the needs of the Ken nedy program. Enabling legisla tion is in being and funds are available. Senator Johnson's East-West Center scheme was unveiled in April, 1959, in a speech before the American Society of Newspa per Editors. It called for an in ternational university —a “meet ing place for East and West,” built around the University of Hawaii. Legislation for the establish ment of a center was introduced by the majority leader a few weeks later, and parallel legisation was introduced in the House. There after a provision was inserted in the 1959 Mutual Security Act call ing on the State Department to come up with a plan. State submitted its blueprint on December 31,1959—a proposal spe cifically stated as "based oh past experience and current programs.” The proposal would have put a little over $8 into new facilities at the University of Hawaii; it looked toward handling something like 200 students yearly. Proponents of the center idea on the Hill were disappointed with this plan. They saw it falling far short of the “bold new concept” successfully mediate between France and the Moslem under ground in Algeria. Common Policy Needed More Important than even these aims, however, was the goal of working out a common policy on all future major issues facing them. Although they were not successful in regard to the Congo and Algeria, the conference is seen as having taken a long step toward the formation of a loosely knit bloc of more than a dozen states with similar purposes. In East Africa the native leaders of the vast territories of Kenya, Northern Rhodesia, Nyasaland, Tankanyika and Uganda have met and discussed the possibility of a federation embracing each of these countries. Leading this move is one of the most remarkable of native African leaders, Julius Nyerere, chief minister of the government of Tanganyika. Such a federa tion would contain more than 1 million square miles and have a population of more than 26 mil lion. A fourth bloc, and one which many observers expect will come into being not long after Algeria wins its expected freedom from France, would group the three Arabic-speaking states of Algeria, Morocco and Tunisia. If the Moslems succeed in in corporating into such a federa tion all the territory to which they lay claim, the state would be nearly 1.1 million square miles in extent and contain a popula tion of some 24 million. A further example of the al most irresistible urge of the Afri cans to achieve a broad political and economic unity is the recent decision of Ghana, Guinea and Mali to create a common legisla tive assembly, to integrate their trade, and where possible, to speak with one voice in interna tional affairs. This step is particularly sig nificant in that Ghana is a for mer British • colony, whereas Guinea and Mali are former French territories. Thus the lat ter two have a different politi cal and cultural background from the former. Yet the urge towards co-operation is suffi ciently strong to override even this important factor. In most cases these groupings are still tentative and fumbling. There will be many readjust ments in the years ahead, as wit ness the recent dissolution of the Mali-Senegal Federation and the fragmentation of the Congo. Yet there is not a single major African leader or party whose program does not call for regional unification. Like the issues of freedom, self-determination and equality, the goal of unification has a deep appeal for the peoples of Africa. , In this, they may turn out to have been world leaders. - fA .//■ - ■ A model of the center planned at the University of Hawaii. Johnson and Hawaii had in mind and they said so. “The issue is just how significant we are going to make this pro posed Center,” Senator Oren E. Long of Hawaii told an appropria tions subcommittee. “The State Department... seems to be think ing in terms of . . . 200 students. Others of us have been thinking in much greater terms, with great er confidence in it. We have talked in terms of 2,000 students and a cost, during the next three years, of $3l million.” He called the State plan "clearly inadequate.” Senator Long and others ham mered away at their theme and in result the 1960 Mutual Security Act established a "Center for Cul tural and Technical Interchange between East and West” in Hawaii, based on a planned expenditure of $26 million for University of Hawaii expansion. It will accom modate 2,000 new new students— upping the State plan ten-fold. The subsequent appropriation act for the State Department ear marked $lO million initial funds to start the wheels turning, and the Hawaiian Legislature put up another million. Today the University of Hawaii campus is a ferment of organiza tion and construction. A center capable of carrying out the origi nal “bold new concept” is emerg ing. It will be a center ideally adapted to meet the needs of Ken nedy "peace corps” training. The program is a major challenge for the university, but Hawaii is con fident the challenge can be met. From a small land-grant agri cultural college with a faculty of 13 in 1907, the university has al ready grown to a complex of seven Continued From Page C-l of the Soviet Embassy were de clared persona non grata, pre sumably as a result of the "Cuba si! Yanqui no!” riots staged by some 2,000 students. Other Latin American capitals were studying their relations with Castro’s Cuba. The United States, Peru, the Dominican Republic, Guatemala have severed relations with Havana. Haiti. Nicaragua, Paraguay and Colombia have re called their Ambassadors for con sultations. Other capitals are pon dering their policies. At the U. N.: More Congo The United Nations Security Council yesterday brushed aside a Soviet-Afro-Asian resolution charging that Belgium was using the trust territory of Ruanda-Urundi as a base for Interference in the Congo. After World War I. the old League of Nations mandated the former German colony of Ruanda- Urundi to Belgium. Under the United Nations, the territory con tinues to be administered by Bel gium as a trust territory. On January 1 a force of Congo lese army troops crossed Ruanda- Urundi to strike at pro-Lumumba rebels in Kivu Province. The Lumumba partisans protested, and the Soviet Union, with those African and Asian nations at the U. N. which hold that the deposed Premier, now in an army prison, is the legitimate head of the Congo government, complained to the Security Council. Secretary-General Dag Hammar skjold sent a strong protest to Belgium, warning that any use of the trust territory by the con tending Congolese factions would be in violation of the trust agree ment. The Belgian government replied that the Congolese had simply entered the territory with out permission, and had been or dered out. Soviet Ambassador to the U. N. Valerian A. Zorin demanded a special session of the Security Council to condemn Belgium for “aggression” against the Congo. He also assailed Mr. Hammar skjold for allegedly conspiring with the Belgians and the West to assist the forces of Col. Joseph Mobutu, military strongman, and President Joseph Kasavubu, in the Congo strife. A Mild Move On Friday, however, Ceylon, Liberia and the United Arab Re public submitted a watered down resolution as a substitute for the harsh Soviet demand. The three African nations asked only that colleges. The faculty numbers more than 500, with 100 research assistants. The student body without the 2,000 expected under the center plan—runs above 8,000. In the last several years the uni versity has developed programs of international conferences, opened an Asian Institute, and managed various orientation courses for the United States Government. Foreign students in 1959 num bered above 200. The University's Role The university’s conviction that it must play an important world role pre-dates the center plan by many years. It has been based on the thinking of such men as President Embree of the Rosen wald Foundation, who some time back saw a “new civilization” in the making—with a culture "com pounded of the best of East and West.” Embree saw Hawaii as the birthplace of this new cul ture. and a crossroads for the interchange of thinking. Both the President-elect and the Vice President-elect have made it clear they accept the philosophy expressed by James Michener in the preface to Spell of the Pacific. Michener pre dicted that along the Pacific’s shores "will be determined the precise quality of our future. What happens in our relations with Asia will determine our ulti mate destiny." A dozen Pacific and Asian areas formerly controlled by the major maritime colonial powers emerged to freedom between 1943 and 1959 —Korea, Viet Nam, the Philip pines, Pakistan. Burma, India, Ceylon, Laos, Indonesia, Cam bodia, Malaya and Singapore. The The Foreign Scene the General Assembly "consider” whether Belgium had vitiated the trust agreement. In the Council debate. United States Delegate James W. Barco charged that the deteriorating situation in the Congo was being caused by “rebel elements . . . ac tively aided and encouraged from outside.” As for the Soviet resolution. Mr. Barco said that “in typical Soviet fashion, an elephant gun has been tr ained against a mosquito.” Yesterday the Council refused to approve even the Afro-Asian resolution. Its only backers were the sponsors and the Soviet Union. Mr. Hammarskjold was in his seat at the Council Friday after a flight back from the Congo and South Africa. He had visited Pres ident Kasavubu and conferred with U. N. officials in a personal effort to strengthen the peace making mission of the U. N. forces in the Congo. Lumumba Scare Troops of the Congolese army stationed at Thysville, where ex- Premier Patrice Lumumba is im prisoned, staged a brief mutiny on Friday and for a few hours at least the rumor that he had been freed by the mutineers swept Leo poldville. There was a mad rush to the ferries crossing the Congo River to Brazzaville. Europeans and Congolese alike who have been anti-Lumumba were in a state of near panic. The U. N. command reported yesterday that the ex-Premier had indeed been free briefly. But a swift trip to Thysville by Col. Mobutu and President Kasavubu had brought an end to the pay day riot of the soldiers and Mr. Lumumba was locked up again. Leopoldville people breathed easier. But observers in the Congo re port that the round-table con ference of Congelese factions scheduled for January 25 stands little chance for success unless Mr. Lumumba takes part in its sessions. For Algeria: Secret Talks? Reports persisted all week that secret overtures for a re newal of direct negotiations had been made by France to the Algerian nationalist leaders in Tunis. The vote-heavy approval given President Charles de Gaulle’s pro gram for "an Algerian Algeria” a week ago in a three-day referen dum has sparked a new wave of optimism that a solution to the Algerian rebellion might be achieved at last. Both in France and in Tunisia, march continues, and a new march begins in Africa. Militarily insecure, economically shaky, politically immature, these countries—jealous of their free dom—instinctively turn away from former colonial powers when they look about for friends and as sistance. Often the choice wavers between the United States and the Communist powers. As President Snyder of the University of Hawaii told a Coast Guard class last sum mer “the scales appear to be fairly evenly balanced. They might be tipped one way or another by the merest evidence of sincerity of Interest, integrity of purpose, non-aggressive intent, philosophi- • cal affinity or economic advan tage.” Both the center plan and the peace corps plan seek to tip that scale. At this point it is worth taking a look at the factors—other than the sheer accident of geography— which make America's 50th State an ideal meeting ground for East and West—and an ideal "staging base” for volunteers selected to serve in the "Peace Corps.” The Romantic Viewpoint First and foremost the writer— who calls Hawaii home—insists at the risk of being considered a hopeless romantic that a major intangible asset is the “Aloha Spirit" of the Hawaiian Islands. Impossible to define with any ac curacy, the “Aloha Spirit” is as real a tool for training youth in the business of creating under standing as are the 300,000 books in the University of Hawaii Li brary. It's as real a thing as the buildings now in construction. Abraham Akaka, Hawaiian clergy man, tries to define this spirit by writing that it: where the Algerian provisional government haa its capital-in exile, there were predictions that direct negotiations between the Algerian National Liberation Front (FLN) would be reopened. Efforts to get negotiations going last year failed when Gen. de Gaulle insisted that only a cease fire could be discussed with the nationalists, with political ques tions barred. With approval of self-determi nation in last week end’s vote both in metropolitan France and in Algeria, Gen. de Gaulle now ap pears to have a "mandate” for political as well as cease-fire talks. Leaders of the provisional government have been wary of Gen. de Gaulle’s plan for new, Moslem-dominated political insti- The National Scene Continued From Page C-l sponse: Lack of funds; "let’s wait and see" if Polaris works aboard the nuclear submarines and the all-out opposition by the Air Force whose leaders have been reluctant to share the strategic striking mission. Early this month, under per sistent Navy pressure, the Defense Department gave Admiral Arleigh A. Burke, Chief of Naval Opera tions, permission, as a matter of policy, to put the solid-fuel mis sile on surface ships. No specific program has been worked out, but the nuclear powered cruiser Long Beach, which is still building, probably will be the first surface ship to carry the weapon. Admiral Burke has told Congress that Polaris could be put aboard 18 heavy and six light cruisers and, if needed, aboard Victory merchant ships. Defense Secretary Gates' decision, based on a recommendation by the Joint Chiefs of Staff, is a sig nificant one. It means that a military service is not to be re stricted arbitrarily in the deploy ment of a tested weapon. The growth of sea power is not to be stunted. It means, too, that the inevi table shift, started with the Pola ris submarines, of a major part of our deterrent, retaliatory forces from Fortress America to sea will be speeded up. We will get more mobile weapons systems at an earlier date. Pentagon opponents of surface ship Polarises are bent on over turning the Gates-JCS decision when the Kennedy administra tion takes over. But perhaps the Air Force, which lately has evolved a save-the-cities strategy for nuclear war, will concede that one way to draw enemy fire away from our population centers is to locate our big weapons in remote areas. The 140 million square "... consists of an attitude of heart above negativism and legal ism. It is the unconditional desire to promote the true good of other people in a friendly spirit, out of a sense of kinship. It seeks to do good to a person, with no strings attached ... does not exploit....” If the Aloha Spirit can be ab sorbed by the youthful Peace Corps recruits during their stay in Hawaii, they will have been armed with a very real working tool, as important as a knowledge of lan guages, for their efforts overseas. The spirit of Aloha stems from the ethnic origins of Hawaii and its history. The warmth of the • native Hawaiians, the gentle wis dom of the large Chinese popula tion, the grace and fineness of the Japanese, the positive factors of a dozen Eastern philosophies all have contributed. The present population of Ha waii itself offers an ideal environ ment for young people seeking to absorb Eastern ways. It is less than one-third Caucasian. Some 32 per cent stem from Japanese stock, 17 per cent are native Ha waiian, 11 per cent trace their families back to the Philippines. Almost every country touched by the Pacific is represented. The marks of Eastern culture are everywhere: temples and shrines of Oriental religions and philoso phies intermix with those of the West. And Hawaii is young. Not only as a State or a culture; its people are young and youthful in fact and in spirit. The median age in Hawaii is 24, as compared with 30 for the United States as a whole. The resulting dominance of youth is a real thing and will make President Kennedy’s Youth Corps feel very much at home. tutions tn Algeria, fearing that they will bring not Independence but partition. But they are re ported ready to accept some sort of “transition” as a necessary step to Independence. The major worry of the na tionalists since the referendum is that Gen. de Gaulle might go ahead with his program unilater ally, ignoring the FLN. Most diplomats familiar with the North African problem predict, however, that the French President is too practical a politician to attempt-to bypass the FLN after its strength was so clearly demonstrated in the referendum abstentions. In Algiers, Oran, and Constan tine, Europeans were liquidating # their assets in a mood of gloom ‘and insecurity. miles of the world’s oceans pro vides the easiest solution to this problem. Integration: Georgia Bows , Integration, riding down a path cleared by the Federal judiciary, came to Georgia for the first time last week despite bitter opposition. For 175 years, the State of Georgia had never had white and Negro students in attendance at the same public school. Then, on Tuesday, two carefully selected Negroes, good-looking and well-dressed, entered the Univer sity of Georgia after a Federal Court enjoined Gov. S. Ernest Vandiver, jr.. from cutting off funds and forcing the school to close. There was some jeering and un pleasant chanting, but no violence. On Wednesday night, however, after Georgia lost a disputed basketball game to Georgia Tech, the explosion came. A mob of students and outsiders, including several members of the Ku Klux Klan, rioted outside the dormitory where one of the Negro students was rooming. > The two Negroes were suspended for their own safety. On Friday, as expected, the Federal Judge, William A. Bootle, ordered them reinstated by tomorrow morning. Gov. Vandiver, while warning that a "tinder-box" situation exists, promised to provide any forces necessary to prevent new violence. Most white Georgians doubtless do not approve school integration. Nor do most whites in the Deep South. But to ignore the hand writing on the wall—(it is done in big letters in Little Rock, in Virginia and Tennessee)—can only result in a proliferation of self inflicted wounds.