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Lyndon Johnson has time and again
demonstrated his special regard for the
symbolic appurtenances of Presidential
actions. He once journeyed to the one-room
schoolhouse he had attended as a
pupil to sign a bill launching the Federal
Government into the field of general
education; and he approved a new
law overhauling this nation's immigration
policies while at the foot of the
Statue of Liberty.
Thus it may not have been wholly
coincidental that he chose New Year's
Day to promulgate new regulations intended
to stem the outflow of U.S.
dollars through direct overseas investments
by Americans. For while many
of his fellow countrymen, at that very
moment, might have been experiencing
the aftereffects of their giddy farewells
to 1967, the national economy was suffering
a kind of hangover of its own
in the wake of devaluation of the
British pound sterling and subsequent
speculative assaults on the gold-backed
U.S. dollar.
If some were later to find reason to
quarrel with the President's prescription
for a cure, there were few who
were ready to dispute the urgent need
of his finding a potent remedy.
But the immediate worry that confronted
many a businessman the morning
after The Morning After, as he
arrived for work at the start of the new
calendar year, was not the President's
concern for the general health of the
economy. Important though that be to
any businessman, the first focus of his
attention must be on the individual
well-being of his own patient—in this
case, any company he served that had
interests in foreign ventures.
So before the businessman could attempt
to assess the effectiveness of the
President's program or even undertake
a search for ways of learning to live
with this new code of restrictions, he
needed first to know its requirements.
The fact that the U.S. Department
of Commerce was only slightly more
prepared to confront this new situation
was of little solace.
To begin with, the problem had three
aspects. It immediately placed a limitation,
based upon a U.S. resident investor's
1965 and 1966 experience in
foreign investing, on all further capital
contributions, loans and other capital
transfers to any branch, subsidiary or
affiliate located abroad. It also established
a set of strict guidelines governing
the extent to which current profits
generated by American investments
overseas must now be returned to the
U.S. Finally it placed restrictions on
bank and other liquid balances maintained
in foreign countries by American
investors.
The initial difficulty arose from attempts
to interpret and understand
regulations that were, admittedly and
intentionally, loosely drawn. Drafted
to embody the spirit of the program,
the new regulations were seen by some
to impose unintended hardships, which
might later call for modification or exemption.
Such revision, it was said,
could be dealt with after enough experience
had been gained to prove
these changes necessary. For the moment,
however, the new rules were at
least something concrete that could be
measured and tested against a company's
actual situation. More importantly,
the new regulations demanded
clear definition in order to determine
precisely to whom they did apply.
Underlying all was the certain knowledge
that the intent of the program
was to aid this nation's balance of payments.
As such, there was the belief
that the new rules were not to be applied
in so narrow or restrictive a sense
as to contradict the desired result of
reducing dollar outflow or of actually
interfering with the possibility of creating
foreign exchange credits which
could be used by the United States.
The first reality, however, was that
