Devaluation Efforts Failing
$$$ Spiralling May Bring Trade
By BILL SOKOL
Alternative Features Service
It’s time to hang on to what
ever you have and prepare for
harder times to come. The inter
national monetary crisis is only
the opening act of the interna
tional economic crisis now brew
ing—the next act may be a dan
gerous, full-blown trade war be
tween the U.S., Japan, and West
ern Europe. The first devaluation
of the dollar, in 1971, was sup
posed to stabilize a world cur
rency market thrown into havoc
by the spiralling inflation of the
U.S. dollar. That inflation, caused
especially by the cost of the
Southeast Asian war, undermined
the dollar as a stable base for
the world currency market.
The new 10% devaluation ac
knowledged the failure of that
first move—the first devaluation
did not stabilize the dollar, nor
did it renew anyone’s confidence
in it. The dollar was still over
valued, U.S. goods still cost too
much to be competitive and the
country’s balance of payments
was worse than ever. There was
no way out of another devalua
tion.
Nixon’s growing defense budg
et, along with record corporate
profits, insufficient investment in
the expansion of domestic produc
tive capacity, costly and mush
rooming government bureaucra
cies, and federal welfare spending
to tame domestic discord, all in
flated the dollar far beyond the
relative stability it knew before
the war.
If the Smithsonian Agreement
of 1971 and accompanying deval
uation had worked, the dollar
would once again have brought
security to the international cap
italist economy. But the overval
ued dollar made the U.S.’s prod
ucts less competitive in the world
market while Japan and Western
Europe continued to prosper and
grow more competitive.
But Nixon’s newest devaluation
was not simply another attempt
to stabilize the world economy.
He has learned the U.S. can no
longer singlehandedly stabilize
and rule unchallenged the inter
national economic arena the way
it did from the end of World War
II until 1968. This new devalua
tion was planned as the first
salvo in what may soon develop
into a trade war to rival those
of the interwar period of 1918
to 1941.
More than a defensive maneu
ver, the new devaluation is de
signed to bring greater profits
and prosperity to American multi
national corporations in their
growing trade war with Japanese
and Western European corpora
tions. A cheaper dollar means less
currency outlays (lower prices)
for any nation interested in U.S.
products.
If all goes as planned, they
will sell more of these products
abroad now that they can com
pete more effectively for new
markets in China and the Third
World. It was no coincidence that
within a week of the devaluation,
Henry Kissinger announced the
U.S. was opening a liason office
in Peking—one of the principal
reasons for the first U.S. office
in China in more than twenty
years was to facilitate trade be
tween the two countries, he said.
But the devaluation signalled
only round one in what will be
fierce competition not only for
the China market, but also for
markets in Southeast Asia, start
ing with Saigon, where General
Thieu just announced plans for
opening a stock exchange to en
courage outsiders’ private invest
ment. U.S. corporations can bet
ter compete now for use of the
cheap labor available in Third
World countries run by Western-
oriented governments.
The very day the Vietnam
cease-fire was signed, David
Rockefeller, chairman of the
Chase Manhattan Bank, arrived in
Budapest on the first leg of his
first business trip to Eastern Eu
rope to meet the financiers of
Yugoslavia, Rumania, Austria,
and Poland, as well as Hungary.
The bell for round two was
sounded by Nixon’s announcing
he intends to ask Congress for
the power to impose higher tariff
walls. Now there is even specu
lation that Japanese steel impor
tation will be prohibited. (The
Japanese have already voluntarily
reduced steel exports to the U.S.)
These are the sparing moves of
an America no longer omnipo
tent, but of a nation fighting to
stay on top in a trade war with
the newer, more technologically
advanced, streamlined economy of
Japan and the evermore united,
integrated economy of the Euro
pean Common Market.
Benefitting most from the new
est devaluation and in the con
frontations to come are the gi
gantic U.S.-based multinational
corporations. Even the vice-pres
ident of Morgan Guaranty Trust
Company in London admits that
the speculators who profited most
in the .devaluation were “the For
tune Magazine list of the 500 big
gest (U.S.) companies and the
100 biggest financial institutions.”
Multinational corporations and
banks unloaded their dollars early,
made about $500 million, and left
foreign banks and corporations
holding the wrong end of the
dollar last week. And they stand
to make even greater profits
from the devaluation.
For example, food prices in the
U.S. will soar even more because
agribusiness conglomerates will
be selling more U.S.-grown food
abroad now that the devaluation
has lowered the price of that food.
These lower prices make it more
competitively attractive to other
nations. More food sold abroad
may mean greater profits for the
corporations selling it, but it
means less food available for
American consumers’ demands
and thus higher prices.
But higher prices alone do not
create the most fearsome prospect
in the growing trade war, nor do
possibly higher unemployment
rates created by attempts to limit
inflation. Most fearsome is the
fact that trade wars historically
have only been preludes to hot
ter wars—trade wars played their
part in the events leading to both
World Wars One and Two.
valuation to design and implement
just such a system. But this lat
est devaluation, a stab in the back
to Japan, whose yen has gone up
in value about 16 percent as a
result, is a bad sign for the suc
cess of such talks.
pmaSHUGART COUPON
SKAGGS - ALBERTSON
301 S. College
Thur., Fri., Sat. — March 15, 16,17
Growing trade war, with Japan
in particular, can be avoided only
if financiers and businessmen
from the competing nations can
work out a mutually agreeable
monetary system to bring order
and stability to their competition.
A Committee of 20, made up of
each interested country’s leading
bankers, has been meeting in
Switzerland since the first de-
The devaluation is the U.S.’s
pugnacious assertion of self-in
terest to let Japan and Western
Europe know that this country
will not idly wait for a possible
compromise but is instead ag
gressively trying to remain Num
ber One. As Japan, especially, re
sponds to the U.S.’s move, the
spiralling succession of economic
maneuvers and countermaneuvers
may spin out of control.
9
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j Batt News Summary
By THE ASSOCIATED PRESS
WASHINGTON—The railroads
and 15 unions announced tenta
tive settlement Tuesday on a new
nationwide contract increasing
wages and benefits by more than
10 per cent for 500,000 railroad
workers.
The settlement was unprece
dented in that it was the first
time in railroad labor history
that the parties reached agree
ment before current contracts ex
pired, and without strikes or any
disruptions in service.
tensive questioning by his Com
munist captors and told them
“about every bit of information I
had.”
Downey, 42, returned here
Monday night after more than
20 years’ imprisonment to be
with his critically ill mother. He
discussed some aspects of his cap
tivity at a news conference but
refused to reveal details of the
mission that led to his capture.
Trinity Project
WASHINGTON—Two brothers
and an 18-year-old companion
wez-e ordered held in lieu of bond
Tuesday in connection with the
robbery-shooting of Sen. John C.
Stennis, D-Miss.
The three men will have a pre
liminary hearing on March 23.
After carefully explaining to
each defendant his rights, U.S.
Magistrate Jean F. Dwyer set
bond at $25,000 for John S. Mar
shall, 21; $50,000 for Tyrone
Marshall, 18, and $10,000 for
Derick Holloway, 18, all of
Northeast Washington.
CLARK AIR BASE, Philip
pines — Another 108 American
war prisoners, including a plane
hijacker and an admiral’s son,
are heading home from Hanoi via
this Pacific check-in point.
They are flying out of the
North Vietnamese capital Wed
nesday in three C141 hospital
planes at 45-minute intervals,
with the first batch expected to
touch down at Clark around 4:15
p.m., or 3:15 a.m. EST.
NEW BRITAIN, Conn.—Freed
CIA agent John T. Downey said
Tuesday he was subjected to in-
(Continued from page 1)
The question facing voters was
two-fold, with the second propo
sition contingent on passage of
the first.
The first proposition sought
approval of a maximum 15-cent
per $100 valuation property tax.
The second asked authority to
issue $150 million in bonds.
For passage, the proposal need
ed a majority of the total vote
and had to carry in nine of the
17 counties participating in the
historic decision.
All or part of the counties lie
in the Trinity River Authority’s
(TRA) voting and taxing terri
tory.
They include all of Dallas, Tar
rant, Ellis, Navarro and Cham
bers counties, and portions of
Freestone, Leon, Madison, Walk
er, San Jacinto, Liberty, Polk,
Trinity, Houston, Anderson, Hen
derson and Kaufman.
The Dallas-Fort Worth area
held the balance of power with
more than 80 per cent of the eli
gible voters, but even strong sup
port there could not have assured
passage.
Debate over the controversial
project reached a near-feverish
pitch in recent weeks, particu
larly upstream in the heavily
populated area of the basin.
The TRA forecast a turnout of
nearly half a million voters and
campaigned vigorously in behalf
of the navigational, flood con
trol, and the river development
plan it designed.
Opposition largely came from
environmental groups up and
down the river but opponents at
tacked the proposal on a broad
front.
Two North Texas congressmen
split over the issue and emerged
as quasi-spokesmen for and
against the project. Jim Wright
of Fort Worth favored it and
Alan Steelman of Dallas opposed
it.
The project won an election
eve endorsement from John Con
nally, former Cabinet member
and Texas governor.
“I have a special interest in
this project because it was dur
ing my administration as former
governor of Texas that this com
prehensive plan was authorized
by Congress,” Connally said in
Dallas.
“. . . This program is a wise
investment in a sound economy
for present and future genera
tions,” Connally said.
Opponents labelled the project
a “giant boondoggle” and argued
that it was unsound economi
cally, ecologically and environ
mentally. They said the tax
structure was inequitable and
that taxpayers were being duped.
FRYERS
USDA GRADE A
WHOLE LB.
PRICES
GOOD
MARCH
16 - 16 - 17,
dr (Vao
1973.
GhccKsfifoelhGs:
PEANUTS
By Charles M. ^
Cbe Battalion
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News Editor Rod Speer
Women’s Editor Janet Landers
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Assistant Sports Editor Kevin Coffey
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