Representative REUSS. I have one more question before I call on Senator Javits and Senator Percy.

Secretary Volcker, you referred to the need for picking up the balance-of-payments cost of our troop commitment in Europe. You referred to this in your statement as the basic principle that no country should suffer balance-of-payments disadvantage through its contribution to the NATO defense structure. Of course, we have been suffering about a billion and a half dollars a year balance-of-payments disadvantage because of our commitment to the NATO structure. Is that not so?

Mr. VOLCKER. As I recall it, something like $1.6 billion is the gross fiscal year 1968 balance-of-payments cost in the Western European area. But this has in part been neutralized or offset.

Representative REUSS. These offsets bother me a bit. To have our friends in the Federal Republic of Germany buy a billion and a half dollars worth of American military hardware that happen to be the least expensive in the world does not seem to be much of an answer. When it ceases to be the least expensive, they do not buy it anymore, as has been true in the last couple of years. On the other hand, if our friends lend us money at the going interest rate for 3 or 4 years we still do not really solve our problems. They merely compound and will come home to roost in 3 or 4 years. It has been the view of this committee that the only meaningful way in which our NATO friends can pick up our balance-of-payments cost is to write us a check. Yet we were not, I regret to say, successful in convincing the previous administration that they ought boldly and forthrightly to ask our NATO friends to do that. Do you think this committee is going to have any better luck with the current administration?

Mr. VOLCKER. As I suggested in my statement, while I recognize that the offsets and neutralization efforts that have been made are not valueless in the short term, I am not satisfied with the form that they have taken. I think this is an area where we need to do some fresh thinking and I am very glad to have the reiteration of your judgment on this matter in that connection.

Representative REUSS. Senator Javits?

Senator JAVITS. Just to take up where the chairman left off, though I have no questions and I would like to relieve the Secretary of Commerce promptly, is it not a fact that the most effective thing the Europeans can do would be to see a great deal more to their own defense? There is plenty of manpower in Europe. The tripwire effect of American troops in Europe can be attained with one-half or less of the troop deployment that we have there.

You would agree with that, would you not, Mr. Secretary, or Secretary Volcker? The only way is not to write us a check?

Mr. VOLCKER. It is clearly not the only way, but I am not going to pronounce, myself, any judgment on the strategic elements here. I would say if the decision is made to maintain troops there, a more effective way should be found of distributing the balance-of-payments cost. Senator JAVITS. Secretary Stans, you indicated, or at least there was indicated in the press just this week, that you are going to Western Europe to discuss monetary trade issues with European leaders and that you are also planning a new export drive. This is what I would like to ask you about. There is a piece in the Journal of Commerce

that says you are making a bid to take over the functions of the office of Special Representative for Trade Negotiations. Would you care to make any comment at this time on that?

Mr. STANS. On that latter point, I think the press is way ahead of me. I have thought of it. The matter has not been studied. It may well be that the Department of Commerce is the best place for it, but I have no prejudgment on it and I have not made a bid for it up to this time. Senator JAVITS. This piece would have us believe that it has some relation to an announcement made by the President in London, that you are going to Western Europe. But you say it has no relation to it whatsoever?

Mr. STANS. No relation to taking over that agency.

Senator JAVITS. Would you wish to give us any opinion now? I do not ask you to, because I think it is too important to press you about. But would you wish to give us any impression on former Ambassador Roth's feeling that this ought to be retained as a special negotiating agency in the Office of the President?

Mr. STANS. Senator, I am not prepared to express that opinion yet. I do not know enough about it. In another 3 or 4 months, as events evolve and relationships develop, I will be happy to make that expression.

Senator JAVITS. In your statement, you indicated that you are studying a report by the National Export Expansion Council which will encourage U.S. private investment in developing countries. We have just been discussing that in connection with the balance of payments. Are you aware of the report of the International Private Investment Advisory Council which, pursuant to an amendment of my own to the Foreign Assistance Act of 1968, has proposed the establishment of federally chartered corporations to take over the governmental functions of the United States respecting overseas private investment?

Mr. STANS. I am not, personally.

Senator JAVITS. I would strongly commend it to you, Mr. Secretary, that you acquaint yourself with this matter personally. I propose to introduce legislation on it, though I am hopeful that the administration will do it itself. It is a critically important matter, reflecting upon the very thing which we have just been talking about with Mr. Volcker. Mr. STANS. I assure you we are interested in all possible solutions to improve this overall situation, because it is in the nature of being quite critical at the present time.

Senator JAVITS. The idea would be to establish a Government corporation which could carry on with much greater flexibility and with much greater hope of success the question of stimulating private investment, and we do not believe that it has anything but advantage to the United States and does not have any material balance-of-payments difficulty.

May I ask you, Mr. Volcker, if the Treasury is aware of this activity? Mr. VOLCKER. I am not personally familiar with this, but I have already made a note, Senator, to become so.

Senator JAVITS. I would greatly welcome it, gentlemen, because it is, I might say, without being unduly partisan about it, very much of a character which the new administration has set of desires to look into that as the corporate form for carrying on highly desirable govern

mental activities, with the promise of great improvement in respect of its usefulness because it is a corporate form.

Mr. Secretary, one or two other questions. I notice there is nothing in your statement about travel. Now, it is a new administration and I am not attacking it at all, but I do think this is a time when we can enlighten each other. That is a big item in our balance of payments. It is adverse by about $2 billion a year. Senator Magnuson and I sponsored the U.S. Travel Service, which is now an established part of the Government.

In 1968, I introduced the International and Domestic Travel Act, which was cosponsored by a number of other Members, including Senator Percy who is here today. It is my intention to reintroduce this bill in this Congress.

I ask unanimous consent that a brief digest of that bill may be made part of my remarks, Mr. Chairman.

Representative REUSS. Without objection, it is so ordered.

(Excerpts from a statement made by Senator Javits upon introduction of S. 2907 follow. These appeared in the Congressional Record of February 1, 1968:)

INTERNATIONAL AND DOMESTIC TRAVEL ACT OF 1968

The proposal made in this bill is a positive approach to a solution of the U.S. travel deficit problem. Positive measures suggested to the administration for the last several years should, in your judgment, be given an opportunity to operate before Congress enacts any measures to restrict travel abroad by U.S. citizens. Travel restrictions as proposed by the administration would be self-defeating, difficult to administer, and would invoke retaliation by countries which depend on income received from Americans tourists.

Let us emphasize the positive before we go for the negative and restrict the freedom of our people to travel.

This bill, bipartisan in sponsorship, is designed to strengthen the capabilities of the U.S. Travel Service to reduce our balance-of-payments deficit. It would increase foreign travel to the United States and assist private industry and official travel organizations to encourage increased domestic travel by Americans. Specifically, the bill provides :

First. New responsibilities for the U.S. Travel Service. These include development of a coherent national travel policy, coordination of present travel activities of various Federal agencies, encouragement and improvement of domestic travel facilities, and coordination of and acting as the Federal Government's liaison with State and private tourist organizations.

Mr. President, at the present time the United States Travel Service operates exclusively abroad and it has no domestic functions.

The proposed legislation further provides:

Second. A budget of $15 million to finance the Service's new activities and to strengthen its present activities abroad. Of this, $5 million would be used to start the proposed domestic travel program and $10 million would be used to promote foreign travel to the United States.

Third. A national inventory of our travel resources to lay the groundwork for a long-term national travel program. The bill calls for the establishment of a 15member National Tourism Resources Review Commission, to be appointed by the Secretary of Commerce from among private citizens knowledgeable and experienced in the travel field.

Senator JAVITS. Would you be kind enough to give us your views and comments on what, if anything, the Department thinks can and should be done about a new escalation of the American effort to stimulate travel in the United States from other countries as one of the means of very materially redressing our balance-of-payments deficit?

Representative REUSS. Would the gentleman yield at that point? Senator JAVITS. I will be glad to.

Representative REUSS. I would hope, Mr. Secretary, your response could include a reference to the use of a travel stamp plan or some packaging of discounts by airlines, hotels and motels, carriers, and so on, as a method of greatly accelerating tourism in the country. I know that is in the Javits-Percy bill.

Senator JAVITS. Yes.

Mr. STANS. May I say I will be very happy to do that. I have had some discussions about the travel agency. As you know, there has been only an acting Director of the U.S. Travel Service for some time. A new Director has been nominated by the President. We hope he will be able to take office within a few days. It is quite apparent that we do need a great deal more action in that area than has existed in the past. I think budgetary problems have intervened to some degree, but perhaps we have to do a better selling job in order to surmount the budgetary problem. In any event, we are very anxious in this area also to find new approaches, and certainly we will give full consideration to those you two gentlemen have suggested.

Senator JAVITS. Mr. Stans-I am saying this only by way of buttressing the Department's argument-when you compare the leverage of what we are seeking, which is $15 million more a year, with what's at stake, it almost becomes ridiculous. It is hard to see how it can be resisted provided the Department will really use the money effectively. That is the important thing.

Mr. STANS. I agree.

(The Department later supplied the following:)

INCREASING THE FLOW OF FOREIGN VISITORS TO THE UNITED STATES

The United States Travel Service serves as the focal point around which the United States travel industry and other government agencies involved in international travel cooperate in shaping policies and programs to increase the flow of foreign visitors to the United States.

The United States Travel Service has recently undergone some significant changes. Internally, it has been reorganized to strengthen the control of the Director's office over the operation of the staff divisions and, most particularly, the overseas offices. In addition, the qualifications of all USTS personnel were reviewed and appropriate changes were made. The primary objectives of the reorganization are to allow the Department of Commerce, through the Travel Service to accomplish three main objectives, which are as follows:

(1) To increase the demand of foreign citizens to travel to the United States.

(2) Expand the capability of the United States travel industry to sell travel to and in the United States to the foreign visitor.

(3) To aid industry and government to improve their services to foreign visitors in order to stimulate return visits.

The new emphasis placed on working with the travel industry can be seen in the following examples:

(1) The seven USTS offices abroad are emphasizing service to the foreign travel industry. These prime promoters of travel are being encouraged to sell actively the U.S. as a travel destination. Through an orientation process. these sellers of travel abroad are learning more about the marketing of travel to and within the United States. USTS is sponsoring familiarization tours to the U.S. for over 1200 of these foreign travel agents, tour operators, and travel writers.

(2) USTS is conducting a $1.2 million trade and consumer advertising campaign in 18 major overseas markets. This campaign's development and scheduling has been coordinated with the travel industry. All major carriers

both U.S. and foreign have designed advertising campaigns complementing the VISIT USA program. Two major foreign airlines, SAS and Alitalia, are participating by direct financial support with USTS in the campaigns in Scandinavia and Italy.

(3) USTS is working with International Airports to facilitate reception and flow of foreign visitors and with hotels and motels to improve their visitor services.

(4) USTS is working closely with state and local governments in each of the 50 states and the territories in promoting their specific attractions.

(5) USTS is constantly working with the travel industry in developing pricing patterns and discount programs that have appeal to the foreign visitor while at the same time offer profit to the industry.

(6) USTS, in conjunction with industry, is establishing a capability to collect, collate and disseminate data in a form and content immediately applicable to trade and government use.

(7) USTS has revised the 1968 hospitality discount program which originated with the Presidential Task Force and was promoted abroad by USTS. While this program can be said to have been generally effective, problems did exist in its implementation. USTS still believes in the overall purpose of providing incentives to travelers.

In 1969 the special VISIT USA travel bargains to be promoted overseas will be confined to those host services which can offer a substantially attractive discount, can be available from all members of an affinitive group, and which can be implemented on a nation-wide basis. These criteria were developed as a result of USTS's experience with the Hospitality Card program conducted last Spring and Summer. In addition, further possible incentive measures might be taken such as visa waiver legislation for foreign travelers, and/or a waiver of overseas visitors on the automobile excise tax.

Without question, international travel is a growth market. One of the most understated of current economic facts is that international tourism is the most important element of world trade today. More than 138 million foreign tourist arrivals were recorded in 1967 in the countries of the world, representing a growth of more than 7% over the tourist arrivals recorded in 1966. This tourist traffic generated $14 billion worth of international tourist receipts a sum of 8% higher than in 1966. This sum is greater than that spent for any other single internationally traded commodity.

We cannot afford to stand still. The competition for the tourist and his money is world-wide and is growing in intensity. Every major and minor nation in the world has seen the potential and will be competing for this sector of world trade with all the resources at their disposal, both public and private. We must be continually adaptive and innovative to stay abreast of this rapidly changing and growing international market.

Senator JAVITS. In addition, I would strongly urge that you give attention to our ideas for matching projects with the travel industrynot only the national travel industry, but State by State travel industries which are very large, in many cases. New York State, my own State, is one of the greatest recipients of travel there is in the whole country. There is a great mutuality of interest in New York and the Federal Government to stimulate more travel in the United States. It has many connotations, including jet ports. I hope very, very much you will give it early attention.

Now, the last thing, Mr. Secretary, the International Chamber of Commerce thinks that you can lift all controls over private investment abroad this year. Would you care to give us now, or could you give us in the approximate future, some target date on which the American business community could look when, hopefully, the controls on overseas private investment will be lifted?

Mr. STANS. I have seen that report which, incidentally, is a good one, but I think the idea of eliminating all the controls by the end of this year is overly optimistic. It depends entirely on the extent to which we can increase net foreign trade, and to which we can relieve other elements of the balance of payments. I think we have to talk about this