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UNIVERSITY DAILY KANSAN
Friday, March 29, 1968
U.S. dollar will lose its power: KU professor
"The U.S. dollar will cease to be the preeminent currency in the world and become one of several," Leland Pritchard, KU professor of economics, predicted Thursday.
Five years ago Pritchard predicted the current gold crisis was bound to happen.
He said the reason for the current gold crisis is the chronic balance of payments deficit which began in 1950. From 1950-1968, U.S. gold stock holdings dropped from approximately $24 to $10 billion," he said, "while short term claims against our gold stock increased from $7 to $33 billion."
A short term claim is one where foreign countries hold U.S. reserve notes until they have more than they need to pay for their U.S. imports. They then turn in the excess for gold.
He said the U.S. gold problem is not that our total economy is bad, because "in the private sector of the economy, we have always had a surplus in our balance of payments. That is, our exports have exceeded our imports."
He said the U.S. has about $10 billion in gold stock at the present time and it is decreasing. At the same time, foreign countries "hold about $33 billion in short term claims, and could denude us of all our gold stocks any time they want," he said.
Pritchard feels the Swiss franc may possibly supplant the dollar as the world's preeminent currency.
The problem is with our military expenditures which began with the Korean war. "We still export more goods and services than we import." Prichard said, "but the outputs of the federal government for military expenditures has eaten up the surplus."
"In 1967, our total military outlay was $3.6 billion, of which $1.5 billion went to Vietnam," he said. The rest went to support numerous bases around the world, and to support more than 600,000 troops and their dependents in Europe.
Tonkin policy repeal asked
WASHINGTON — (UPI) — Twenty-one congressmen took up the administration's challenge Thursday and initiated a move to repeal the Gulf of Tonkin resolution, the policy statement under which President Johnson contends Congress authorized his war policy.
But their move promised to get nowhere because without the support of House leadership, representing the President, the repeal resolution was not likely to come to a vote.
Speaker John W. McCormack, D-Mass., said he did not think a vote was necessary. "Every member knew what he was voting for in 1964." he said.
Virtually all of the 21 House members sponsoring the repealer are "doves" on the Vietnam War.
"Sooner of later we will have to say our dollar is not convertible to gold, and we will have to eliminate deficit spending." Pritchard said. "Until we do, we will continue to lose gold at least as rapidly as the deficit increases, and probably faster."
To correct the U.S. monetary situation, Pritchard advocates adopting an enlightened economic policy.
"We are going to have to approach all countries as equals and stop trying to run them. You don't have to own a country to deal with it; you just have to show a willingness to trade with them as equals and not think of them as enemies," Pritchard said. "This is what Japan has done, and they have developed one of the best economies in the world."
"The U.S. is not willing to cur-
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tail foreign military outlays sufficiently, but it is going to have to." Pritchard said. "Our foreign aid programs also contribute to
our payments deficit and will have to be cut."
eign countries to an amount equal to our profit on exports, or we will be in serious trouble," Pritchard said.
"We will have to cut all our expenditures which subsidize for-