CHART 17 Since only increases in liabilities to foreign official holders (plus changes in U.S. reserve assets) are used to measure the official settlements balance, its changes from year to year reflect to a considerable extent shifts of dollar holdings between foreign private and foreign official holders in response to relative interest rates, here and abroad, and currency speculation. The downward trend in the official settlements balance from 1960 through 1966 when there was a small surplus-was interrupted in 1967 due in part to the outbreak of private gold speculation in the fall of that year. In 1968 the official settlements balance moved into a strong surplus position. particularly in the second quarter of the year, reflecting a loss of reserves from official holders, particularly France. The tighter cre lit conditions in the United States toward the end of the year also helped to accentuate the 1968 official settlements surplus. U.S. BALANCE OF PAYMENTS ON "OFFICIAL SETTLEMENTS" Note The official settlements balance counts changes in dollar claims of foreign official monetary Secretary BARR. Chart 17 would be $1.6 to $1.8 billion. That surplus. Now, what is the position of the United States if the new Secretar Designate gets into difficulties in an international crisis? He has a of chips in front of him. CHART 18 The U.S. international reserve position improved following establishment of the two-tier gold system in March 1968 and enactment of the fiscal restraint package at midyear. There was a rise in U.S. reserve assets from a low of $13.8 billion in the spring of this year to $15.8 billion by year-end. Gold losses were checked after the first quarter. By the end of the year, all U.S. drawings on the International Monetary Fund had been repaid. Federal Reserve swap lines were enlarged during the year to a total of $10.5 billion. U.S. RESERVE ASSETS AND FEDERAL RESERVE "SWAP" LINES, LATE 1968 ** Convertible Legislation in early 1968 removed the 25% gold cover requirement and freed the US gold stock for US gold tranche position, which is available virtually automatically if needed. Under appropriate conditions the US. US drawings were less than $0.5 billion at the end of 1968. Office of the Secretary of the treasury Secretary BARR. Chart 18 shows what the President has available to defend the dollar. He has $10.9 billion in gold freely available to meet international needs. Last year the Congress took off the gold cover on domestic note issues so consequently all this gold is available. He has a reserve position in the International Monetary Fund that is immediately available to him of $1.3 billlion. We hold convertible foreign. currencies of $3.6 billion and our short-term credit lines amount to $10.5 billion. We owe less than $500 million on them; as a matter of fact, we are in a net creditor position on these short-term credit lines. So Secretary-Designate Kennedy has $10.6 billion in gold, $1.3 billion. in the IMF position, $3.6 billion in foreign currencies for a total of $15.8 billion in assets to defend the dollar and he has $10.5 billion in short-term credit. TABLE 2.-UNIFIED BUDGET RECEIPTS AND EXPENDITURES, VIETNAM AND NON-VIETNAM 1 Deferral of scheduled reduction in excise taxes on telephone service and automobiles. * Tax Adjustment Act of 1966. * Deferral of excise tax reduction. • Effect of the Revenue and Expenditure Control Act of 1968 actual and proposed. TABLE 3.-NEW BUDGET CONCEPT OF FEDERAL DEBT AND FEDERAL DEBT AS PERCENT OF GNP This concept excludes Federal land banks, Federal home loan banks, and District of Columbia debt and Federal security holdings, CCC certificate of interest, and noninterest bearing debt issued to international lending institutions; it includes defense fa nily housing mortgages. * Estimated. |