America Besieged

MR. JACKMAN:

As most of you may know, it is the custom of the President of the United States to have, from time to time, intimate dinner parties at the White House, where leading inernational figures attend and discuss world problems. You are aware that the proverbial "man who came to dinner" at the White House three evenings ago, was none other than our own Prime Minister. Mr. Trudeau came back to Canada two days ago and was happy to announce to the House of Commons that the United States had no political or economic designs on our Country, and that our future independence was assured.

I am sure that this is most reassuring to The Empire Club's distinguished Past President, General Bruce Legge, who will not now have to call out the Militia. Now whether our Prime Minister's statement was necessary or not; or whether it represented the greatest diplomatic breakthrough in history; or whether it was akin to Neville Chamberlain's return from Munich, perhaps depends entirely on your political point of view, and the answer to that question must be safely left to history. The interesting thing about the intimate dinner party, as far as this meeting is concerned, is that there was another native-born Canadian with a christian name of Pierre, in attendance, and that was our guest of honour today, Dr. Pierre Rinfret, President and Chief Executive Officer of Rinfret-Boston Associates. Dr. Rinfret is a man of many credentials, and although he is perhaps best known in the economic and financial forecasting field, after last Monday's dinner perhaps he may well turn out to be a great peacemaker and diplomat as well.

Our guest today was born a Canadian in the City of Montreal. I am sure everyone in this room is aware of the exodus of economists, stock brokers and financial executives from the City of Montreal to Toronto, and other financial centres. Dr. Pierre Rinfret, who has exhibited an uncanny ability to forecast trends well in advance of their actual occurrence, certainly called this one right as he left Montreal at the tender age of four. Educated at the University of Maine, the New York University Schools of Commerce and Business Administration, he received his Masters Degree with honours and won the coveted Fulbright Fellowship, receiving his Doctorate in political economy from the University of Dijon in France in 1950.

On his return from France, he joined the highly respected firm of financial consultants, Lionel D. Edie & Co., where he shortly became Director of Economics. He very quickly made a name for himself among the hardheaded money managers in Wall Street, and other international capitals, and dazzled them all by taking over the Board Chairmanship of his firm when still in his 30's. Four years ago he left Lionel D. Edie and founded his own firm, Rinfret-Boston Associates, which in a few short years has become if not the largest, certainly the best known economic and financial consulting firm in the world.

Allan Ableson, the Editor of Barron's financial magazine, once said that there are three broad categories of economists: monetarists, who believe that money talks; fiscalists, who believe that money talks, but only when the government translates; and publicists, who believe that talk is money. Our guest today, whose style would certainly have to be called "freewheeling", refuses to be categorized with any school, but there can be no question that his forceful style and willingness to take a position, has made him perhaps America's best known and most important economic consultant. He has been an unofficial adviser to both Presidents Johnson and Nixon. For when, in 1964, President Lyndon Johnson, in a nationally televised address, announced that he was cutting taxes to stimulate the economy, he justified his move by citing the views of none other than Pierre Rinfret.

Again, when Richard Nixon was campaigning first for the Republican Nomination in 1968 and then for the Presidency, he chose as his economic adviser our distinguished guest, a relationship which has continued on an unofficial basis ever since.

An adviser to Presidents, corporation executives, money managers of all descriptions, Pierre Rinfret prides above all else his independence of thought and the flexibility of approach which is necessary to interpret events without being tied to any rigid position.

Whatever the consequences of the current economic problems that face our two countries, there can be no economist of such international repute who can speak with such authority and forcefulness; and for this reason I have the great honour to present to you Dr. Pierre Rinfret, President and Chief Executive Officer of Rinfret-Boston Associates.

DR. PIERRE RINFRET:

Thank you very much, Mr. President, Members of the Empire Club and distinguished guests:

I want to say something about that dinner Monday night. I want to tell you about that dinner because I think that dinner, better than anything I can tell you, tells the true nature of Canadian-American relations. Forgive me for saying this but I think you have got your hang-ups as much as we have got ours.

We Americans suffer from a persecution complex. The American people, the citizens of the United States, are absolutely convinced nobody in the world appreciates them. You know we say, "Look what we have done for the rest of the world and what have they done for us?" We get upset. And I hear the same thing when I come here, "Look what we have done for the rest of the world and what have they done for us?"

Let us talk frankly. Let us be honest with each other. First of all, in regard to the dinner let me say something to you.. . Read the article in the Globe and Mail on December the 8th. The headline is interesting. It is incidentally totally accurate: Nixon apologizes to the Prime Minister for saying that Japan is the No. 1 trading partner of the United States. He did apologize. Read the article it is incredibly accurate.

Now why did I tell you that story. To give you an indication of the straightforward talk that took place between your representatives and the representatives of the United States.

Let me give it to you very simply. No animosity at all zero. In fact--and I watched personalities because I believe in reading signs of personalities on people's faces--your Prime Minister came down and my President went up.

Now what I mean by that is each one tried to arrive at a level of personality that the other could live with. The President of the United States actually told a couple of jokes and the Prime Minister of Canada was in fact a little subdued for him.

Now what did I come away with? You won't believe it, you may disagree with it. Mr. Trudeau said that he was not concerned about the United States taking over Canada. Let me tell you something: we really don't want it. We have enough problems. You have got your own. The idea that the United States is embarked upon a protectionist policy is the most rank utter nonsense in the history of our generation. How can you be a major world power and be protectionist?

How can you ignore an economic entity which is on your northern border, the biggest unprotected border in the world, that you have lived with for over 200 years with a common ancestor, common ancestors, and have animosity towards it? How can you do things to your trading partners (and you are the biggest trading partner of the United States in the world) how can you do things to hurt or vice versa?

There is nothing but friendship for Canada and we hope vice versa. Sure we are stupid; sure we make mistakes; sure we do idiotic things. So do you. I haven't noticed that all your policies have been particularly brilliant. I can name a few .... You erected a border tax in 1962. I didn't notice American industry going around wearing sack cloth and ashes. They said, "You erected a border tax . . . okay we know how to get around it. How do we get around it? We will invest our capital in the country and to hell with the border tax." And they did.

Of course you then screamed "They are taking over our country."

Let me tell you something .... You want to put money in the United States? Come ahead. We will take everything we can get right now and I am very serious about that. We need capital inflow desperately.

There is no animosity. In fact I think very candidly that if I ever saw it in person I saw nothing but mutual respect, mutual agreement to talk and the development for the first time of mutual understanding.

Let me finish with one point. You have to admit that when the President of the United States apologizes in front of guests to another head of State he has eaten quite a bit of humble pie. I never thought of all people I would ever see Richard Nixon apologize for anything but he apologized to the Prime Minister of Canada. Of course he used a weasel out and I must tell you about it.

He said, "Well, I really didn't mean that. What I meant was that Japan is the largest overseas trading partner."

Now let me remind you of one fact. Your country and ours economically are tied together. Your industrial production index moves up with ours and ours with yours. Yours move down with ours and ours with yours. The trends are similar, the cycles are similar. Your problems are virtually identical with ours. You have an unemployment problem, you have an inflation problem. We have an unemployment problem, we have an inflation problem. We export some of our problems to you. You export a few to us. The destinies of the two countries economically are tied together for better or for worse.

If American economic policies of stimulation are successful it will accrue to the rest of the world. If they are unsuccessful the rest of the world will suffer. If we cannot get the American economy up the rest of the world will suffer because the United States by its size, not its intelligence or brilliance, but by its size is a major market and when that major market is not doing well the people who sell to it do not do well; and when it is doing well the rest of the world does well.

We are tied together for better or for worse and there are a substantial number of responsible people in the Government in the United States who fully realize that.

Let me make one final point. I am an economist. I am not a citizen of the United States and was born in Canada. I am an economist and I call it like I see it. I don't care whose feelings are hurt. I am proud of one fact: I am the only economist in the United States who warned one year ago that the United States was going to hemorrhage in its balance of payments and the people would say to me, "What will be your deficit in 1971?" And I said, "Fifteen billion dollars." They said, "Oh, you know him, he loves to be flamboyant." Boy was I an amateur?

We have problems in the United States. Only a fool would fail to understand that. We have some very serious problems but we are beginning to resolve them.

And so I talk to you and forgive me for saying it but I think in some ways my background is unique. Born in Canada, grew up in the United States, educated in France. You got to admit that was not a gingoistic environment. You know my children are educated in Europe for a simple reason. I don't want them to have only an American point of view because there is a lot of knowledge in the rest of the world as we all know.

Now many of the things I am about to say to you I have said before. I am not about to say much that is new but I want to put it in perspective.

Let us look at the American economy prior to August 15th. First of all, let me tell you a fact you don't know. In the newspapers--and I am not faulting the newspapers because this is what the Government reports to them--the American Government says that it had a trade deficit in 1971 for the first time. That is a totally erroneous statement of fact. The United States has had a balance of trade deficit since 1966. There is available in the United States a set of trade statistics which are compiled by the Department of Commerce at the request of Senator Long. If you don't remember who he is and I always have trouble . . . He is head of the Senate Finance Committee. He asked the Department of Commerce about six months ago: what are the trade statistics of the United States if we withdraw the military and economic aid for which we receive nothing. I don't know if you know this but when we give money for economic aid--and I am talking about gifts now--we turn over a billion dollars--it used to be India and that says something about economic aid--if you give a billion dollars to India and you have no purchase of commodities in the United States that was a net gift dollar outflow.

Well, we calculate our statistics very well. You know what we call that? We call that a commercial export. I once asked the question five years ago "How do you figure it? We gave it away and you guys call it an export. Now if you export it you get something back--right?"

They said, "That is an export of capital." And I said, "Damn right it is."

Now if you take out our economic and military gifts, you find we have had a trade deficit since 1966 and the deficit in trade this year will not be the four billion dollars that the Government reports, but somewhere between eight and ten billion dollars.

Point one: the trade problem is old. Now I am not surprised by it. Everybody knows what has been happening to American labour costs, American productivity, unit cost of production.

If we were so bad as we are how could we conceivably have a commercial export surplus until last year? The answer is we didn't.

These are now the official statistics of the Department of Commerce and when Commerce was asked why don't you publish them they gave a lovely equivocal answer: they didn't want us to publish them. They are available in the Congressional Record.

Now why? There is a substantial element of the American economic fraternity who are ignorant of international affairs, who really have no interest in the American position on balance of payments, who do not understand it and therefore ignore it.

I write economic studies and let me tell you what some of my American clients said to me six months ago when I kept writing on the coming hemorrhage. You can believe it or not. Some of the biggest money managers in the world and I am talking about people who manage five, ten and fifteen billion dollars--literally called me up and said, "Pierre, for God's sake don't write on the balance of payments. Who cares?" I said, "Baby, you will. You will." They said, "But I don't understand it." How do you understand something in which you have no interest?

We have had a problem and we paid no attention to it because frankly we train very few of our people in it. We just don't care. That is when you assume you are dominant. That is point one.

Point two: we forgot something. I made this point five years ago. We forgot that the rest of the world was making material and substantial economic progress and many of them were making more than we were. We had--and I hope you will forgive this expression--what I call "Marshall Plan liberalism".

The great United States in 1946, suffering from the fact that it had won the War because it had guilt complex very quickly thereafter, went out to reconstruct the economies of the world: Germany, Japan, France and England. They forgot something. Fifteen years later those countries were more productive than the United States. Our productivity in 1970 was 0.7%, 7/10ths of one percent increase in output per man hour and in 1970 in Japan it was 8% and in Germany 4 1/2 to 5% . And we are going to help their economy. We didn't realize the world had changed economically. We continued on a road which failed to realize the world had restructured itself and we had not.

The third point, which you all know, and which I made in 1966: the absolute folly of Viet Nam. Let me remind you in Viet Nam it costs us in balance of payments terms, five billion dollars a year, net capital outflow from the United States. I will tell you a story about how we discovered where all the money was going. It was a total accident. I am very proud to say that I discovered it and it was a total accident.

I went to the University of Dijon, as your President said, and spent two lovely years there. Liquidity-wise it is an incredible university. You may recognize Dijon is the capital of the Burgundy wine region. I lived in a state of total euphoria for two years. I went to school with a young man whose father happened to be head of the Secret Service of France and he was a fabulous guy and I knew him and he helped put me through College in the early six months. When I went I spoke French but it was pretty bad and he let me have all his notes and so we have stayed very good friends.

Well, in 1967 I visited him in London and I asked him a question. I said, "Tell me something, where is France getting all the gold? Where is she getting all the dollars from?"

He looked at me and said, "Are you kidding?" I said, "No, I am not kidding. Henri, tell me where are they getting all the dollars? Why is their balance of payments in such extraordinary good shape? It shouldn't be. It doesn't look right." He said, "Let me ask you a question: what is the name of the Bank I work for?" I said, "Oh my gosh. La Banque d'Indo Chine." The Indo China Bank. It was the only bank in Indo China. All the money the Americans were spending in dollars in the war was going in the Bank of Indo China in Viet Nam and they were sending it back to France. The French turned around and demanded gold and they got it.

I came back to the United States and told the Secretary of the Treasury and he said, "What would you do?" I said, "Let's put some American branches in there." You may remember in fact we got ten American branches to go including the Chase Manhattan Bank. That is how they got some of the money.

The folly of Viet Nam cost us five billion dollars a year and even now it is two billion dollars a year.

And finally the fourth point: to be honest the political leaders of the United States did not care about the economic strength of the dollar. They did not care about the international value of the dollar. They had one interest: how do you use the dollar to achieve political objectives.

Remember the phrase--they don't use it any more but it will come back I assure you, it is going to come back "dollar diplomacy". Remember that old phrase? You used your dollar to achieve political objectives. Now that is fine as long as the dollar is strong and very frankly, and from our point of view, and you may violently disagree, we gave and gave because we were getting political achievement in spite of commercial deterioration.

If you said, "Which one do you want?" to the political leaders the first requirement was his political objective and the second was his commercial. I won't go into chapter and verse. I could tell you about Toyota cars; I could tell you about selling televisions in the United States less than in Tokyo; radios less in the United States than in Tokyo; export cars to them and they charge us $500 customs duty and we charge them $100; and I can go on and on.

Barriers against us in the United States while we had no equivalent barriers against the rest of the world. The violation of the steel agreement, the violation of the textile agreement, chapter and verse down the line.

Why? Our Government did not care about the commercial importance of the dollar. Now what does that mean? Well, the United States is a big country, we do things in a big way. So in the first quarter, after all not to be pikers, you know, we really let go. We only ran a 23 billion dollar deficit in trade. Just minus 23 billion. In the second quarter, feeling a little gayer, minus 25; but the third quarter was unbelievable--minus 48 billion dollars. You know, forgive me, that is half your gross national product. We were running that amount as a deficit in world trade and then people say "Why did you take those moves?" How large a trade deficit and capital deficit could we run? 100 billion? We had 10 billion bucks in the kitty. You have got to admit that is known as leverage.

We had 10 billion dollars in gold, 40 billion in short term liabilities. Of course, we are loaded in long term assets. Did you ever try and sell a long term asset when you got a current liability problem?

Incidentally, do you know this? This is one of the suggestions of the French Government to the United States Government. Are you ready? You can verify it because I have: that the French government should take over all the American subsidiaries in France and they would give us francs for them. They said, "That would solve some of your problems." We said, "Thanks a lot. Very nice of you." 48 billion dollar deficit in the third quarter. Now we were hemorrhaging, hemorrhaging.

Now we are standing there watching this beautiful deficit and Dr. Burns is getting scared stiff. One of the Government's of the world chose the 12th of August to be nice to us. They asked us for four billion dollars in gold. We had ten. They said we have got four billion dollars in dollars and we have a problem with the IMF. We would like physical gold four billion dollars. This happened at 2.30 on Thursday 12th of August. You can imagine Dr. Burns got a little concerned about that and he picked up the phone and he called the President of the United States and at 3.30 they began the meeting at Camp David on Friday the 13th of August.

Can you imagine if we had let them have the four billion? How fast do you think the other six billion would have left? You know what you would have had? I will give it to you bluntly. If we had not closed the gold window you would not worry about 850 on the Dow Jones you would have a 1929 crash in the world today right now. Can you imagine if the United States lost its entire gold stock and then they were still out 40 billion dollars. What would have happened to the world monetary system with the dollar left with no gold?

I think you would be in a depression. I think the United States would be in very serious economic difficulties.

The second point, we were in domestic economic trouble. Our economy during the third quarter, a really dismal economic performance. The industrial production index is below where it was two years ago. Unemployment back to 6%.

Now the President moved. What did he do? He closed the gold window. He had to. He couldn't turn over four billion, 40% of his stock. Then he put on the border tax. 10%. Why? It is a signal. It is not a border tax and that it what people don't understand. It is a signal we realize the seriousness of our historic stupidities. Now there you are.

The world looks at us. Let me remind you what the world said that would happen as a result. First, the United States by imposing the border tax would immediately start a trade war. I have a question: where is it? Four months later where is it? Oh, Denmark put on a border tax and I am sure that worries all of us. Where is the trade war? Did France retaliate? Did Germany retaliate? Did Japan retaliate? Did Canada retaliate? No. Why not? One reason is this time we all go together. You start that and there is no central banker in the world who thinks you can stop total deterioration in the system. Let me remind you in 1928 when the French decided that the pound sterling was too high and they would knock it down by short selling sterling. Read the diary of the Governor of the Bank of France.

In 1928 he said, "I had a discussion this afternoon with M. Care and we decided that the pound sterling was too high in value. The English were not being fair to us in the railroad developments in Austria and we were not getting our fair share. Therefore we would sell the pound sterling short and put it down to where it should be relative to the franc. If sterling gets in trouble we will survive." Does anybody in the world believe that today? No. That is point one.

Point two: the United States would start a world recession. Let us look at some facts. There is a recession in Germany; there is a recession in France; there is a recession in the United Kingdom. I don't know what you call yours, I would call it a recession. When did that start? Why don't we look at the record? Germany imposed a 10% surtax to stop her economy from expanding. Beginning in April her rate of growth declined. Italy a year and a half ago began to put on the screws to turn her economic system down. Of course they are Italian, they got emotional, and industrial production is now down 17% from its preceding high. I always tell my lovely, wonderful, fabulous Italian wife that is just like you!

The English . . . did we start a recession in England? You know they have been working at it for two and a half years and I am very serious . . . They are delighted now they have got substantial unemployment.

And Canada . . . did we start it here or did your own Government decide you had too much inflation and they were going to teach you all a lesson by tight monetary screws, tight fiscal screws. Every Government in the world, including the Americans, fought over this for three years.

And finally the fourth point: the United States is inflexible, doctrinaire, theological and unbending. I will ask you one question. Is the United States willing to change the price of gold? Absolutely. We frankly don't care about the price of gold. We are not going to buy it or sell it at any price. You know we will let them determine any price they want at which we will not buy or sell.

Now I will tell you what happened in Rome. The Secretary of the Treasury went to Rome and everybody, of course, bombed him on this ridiculous fact that he would not change the price of gold and he sat back . . . and he is a beautiful Yankee trader, really he is a magnificent man . . . He sat back and they bombed him and bombed him and bombed him and he looked D'Estaing in the eye and said, "How much devaluation would you like? 10%?" D'Estaing almost fell off his chair. You know that the English say, "Don't devalue more than S% because 10% is too much."

We have said we will remove the border tax. Now let me tell you about the inflexibility on the other side. When the United States closed the gold window and put on the border tax the Japanese Government said, "We will never revalue the Yen" and the Americans, being very clever, said, "Fine. Take my dollars." The Japanese Government in one week bought two and a half billion dollars and we were delighted, we sold them more. The French said, "We will never revalue the franc." Of Course the Germans then said, "We will never change the mark."

Now let us look at the record. The Japanese revalued 11 % , the Germans revalued 11 % , the French 5 % , the English 4%, and I notice your currency changed modestly since the last couple of times I was here. The Japanese said, "We will never sign a textile agreement." I wrote the first textile agreement incidentally . . . Not that I liked it, but when the President of the United States says, "Do it", you say, "Yes, sir".

I wrote the first. The Japanese said, "We will never sign a textile agreement." Interesting . . . After we put on the border tax we got a textile agreement. Of course, the United States then is using muscles. Every currency is revalued, the textile agreement, the United States went back to Rome and said, "We will revalue".

Now what is going to happen? Let me give it to you very simply. There is one new element in the United States, I will not deny this to you. There is a totally new element in the situation and I will tell it my way. The day that the United States is rich internationally is over. We are broke. If we were a private corporation we would have gone into what the United States calls Chapter Ten Bankruptcy. I am serious. We cannot meet our short term obligations. We would have declared bankruptcy but because you are a sovereign state you can get away with it.

The day of the United States being liberal internationally is over. Every deal from now on is to be a commercial transaction. There is no more big brother, big father, big uncle. It is: you want? What are you going to give? You want something? Give it back. Let us trade. I am not going to be your benefactor and you are not going to be my slave. Let us trade on a commercial basis.

Conclusion. First point. For the first time in 25 years the international economic posture of the United States will take place on a commercial and not a political basis. That is what the world is finding hard to understand. You notice what we are doing on foreign aid. We are cutting it. They cannot get a Bill through. Very simple reason we haven't got the money and Congress understands this. You notice what we are doing all over the world, we are cutting back.

Point two. The United States will change the price of gold. The price of gold will go to $37-$38 an ounce, no more. Not because the United States is not willing to go to $38.70. They are. Europe doesn't want us to go to $38.70, particularly the British. They want $37-$38. I talked to the Bank of England and the Bank of England said "I will tell you the number. It is 5.04545." I said, "What is that?" He said, "$37 an ounce." I figure when he could say it to six decimal points he knew the number pretty good.

Third point. There will be an agreement, that is an accommodation, by the 17th of December. The world will agree in principle on a temporary working solution by December and if they don't they will extend the meetings in Washington. It is going to be done before the end of the year.

Fourth point. There will be a new Breton Woods. That will take a year. They can't sign a formal agreement of that complexity in two weeks.

Finally, all currencies will change but one thing unfortunately, and I am very unhappy about this, that will not change. The dollar will still remain the basic currency. I would like to see it end its days as the basic currency but it will remain.

Now rather ironically the rest of the world insists on this. That means that we will have more revaluations and devaluations against the dollar and that upsets me but right now we cannot change that and the rest of the world is not willing to change it, despite all of the talk.

One thing comes out. The world is in a state of masochistic pessimism and I believe this strongly.

The United States is beginning to resolve its economic problems. Beginning. I didn't say they have resolved them. Beginning. For the first time in my life we found out that the international posture of the United States is important in a money sense. We grew up a little bit in this crisis. We realized what we did affects the rest of the world. About time we learned that but we have learned it and I don't think the lesson is going to be easily lost.

The American domestic economy is beginning to move forward. I don't know if you watch Retail Trade. It is lousy. It is only up 13 % over a year ago for the last 12 weeks in a row and this guy from Ford can get up and say what a lousy economic posture the United States has got when he is cranking in the best automobile year in his entire history. It just shows you the stupidity of pessimism. The rule of masochistic pessimism which you have got in Canada and the United States is if you can interpret anything interpret it negatively.

The President of Ford says that the new economic plan is a disaster. Last week they had the best production year in the history of the automobile industry and he got a special 7% tax cut but he doesn't like it. Masochistic pessimism. The American economy is recovering.

Now finally you will see progress in the United States in 1972 and I will give it to you simply: (1) less inflation. (2) lower increases in wage rates. (3) increase in the real GNP of at least four and a half per cent in real terms. I don't think it will be as high as 6%. Some people do. I don't (4) corporate profits this year up 10 to 12%; next year 15 to 20%.

I think we are beginning to move forward and most important the impact of the war on the American economy is beginning to disappear.

Now forgive me for a moment for being American. If our economy in the United States recovers, and it is, is that so bad for the rest of the world? Which would they rather have: our demise and take them down with us or our recovery and take them up with us?

I remind you of what I said at the beginning: better or worse, like it or not, we are tied together. We know it. We understand it. We realize it. The United States posture has been necessitated to stop a hemorrhage. The moment the new world agreement comes in we will resort to the kind of posture we have had historically. I thank you very much.

Dr. Rinfret was thanked on behalf of the joint meeting by Mr. James Clarke, President of the Toronto Society of Financial Analysists.

EDITOR'S NOTE: Four days prior to this address, Prime Minister Pierre Elliott Trudeau led a cabinet level delegation to Washington in an attempt to resolve the difficulties that had clouded Canadian-American economic relations. President Richard M. Nixon invited the Canadian delegation to an informal dinner at the White House. One of the prominent guests was Dr. Pierre Rinfret, a native-born Canadian, but now a resident of New York, who had been President Nixon's economic adviser during his campaign for the 1968 Republican presidential nomination and in the subsequent election campaign.

In this address, Dr. Rinfret, who can be considered to be close to the thinking of the United States Administration, recounted the circumstances which led to the imposition of import surcharges and the other economic measures announced by the American Government on August 15. (See Editor's Note on page 57.) This address, along with Mr. David Rockefeller's the week following, explains the American point of view on this difficult subject. (For the views of leading spokesmen of Canada's three political parties on this subject, see the speeches by Messrs. Stanfield, Lewis, and Turner on pages 46, 60 and 71 respectively.)

Dr. Rinfret's predictions for a realignment of world currencies, including a floating Canadian dollar, were substantiated following the general accord reached by the Finance Ministers of the ten leading free-world nations at Washington only nine days after this speech was given. (See Editor's Note on page 136.)