baséd upon DCeonomiet article
eeessFOr reasons of domestic political diplomacy, men of more conser yative attitudes had been kept or installed in the actual offices of economic executions the sharp young radicals had vwhirred out their ideas in the “hite House in some is®lation, with President Kennedy acting as the connecting wheel to keep things moving. He could act as 'governor™ in this fashion because he was able and willing to come to grips with the argument and grasp the technical issues; becaune he recomrsed the need for a shrewi balance between the best of established banking and financial opinion and the straining ideas of the modernists which he was disposed to share; and because he fully saw the limits set to the pace of movement by the obligation to protect the dollar and not to upset the stability of world currencies, by the requirements of Amorica's own aid and defence policies, and by economic prejudices of Congrassssses
The policy consisted of a moderately successful roflation of demands a romarkabley successful direct acsault against cost inflation (controversial though last year's steel showlown proved to be) 3 and, however, uncertainly, the beginning of perhaps the first intellectual approach yet to a balance of payments problem — without sither umecessarily deflating an economy, or devaluing an oxchango rato, or defoulting on eid and military commitments overseas. Now the connecting wheel which kept things moving, and in balance, has gone, The risk now is that the central engino for a propressive policy could become too stationary again.
This hazard impinges on three fields, Firat, the recovery in American industrial production is already nearly three years old, Theat recovery might, in the normal course of tho trade cycle, soon be expected to lose sone of its momentum. President Konnedy belonged to tho generation and school who would have wished to move swiftly, tut in his case safely too, to rostimuilate demand. I+ has to be scen whethor President Johnson would be similarly spurred, and anyway the threat of a slowiown, which is not in sight yet, may well not arise during his period of office, If it coes, outsiders can only hope that a post-Kennedy administration will be seized of the fact of how quickly even a temporary limp in the American econony must become a4 major source of political as well as economic woakness to the whols free world,
Secondly, President Kennedy was in advance of his own Treasury ninistera in recognising the need for improvement in the whole system of international payments, through a radical reform of the International Monetary Fund. He had himself declared that "one of the reasons that new sources of international liquidity may well be needed is that, as we close our payments gap, wo will cut down our provision of dollars to the reat of the world," The contingent risk is that tho new administration might be even keener than the old on cutting America's balance of paymemis gap, porhnps by blunter methods — and without at the same time seeing the that largs measures to incransa world liquidity will then become quite vitals
i third major danger, already existing before President Kennedy was killed, is that the drive towards freer world trade may slow down, and that next year's round of tariff nogotiations in Gatt (a round which still bear President Kennedy's name ) may decolerate into virtual ineffectiveness, Here again the implication for Iritain is that it ought itself to take bold initiatives in an effort to meintain the impetus towards more’ literal international trading for which President Kennedy would have stood«sesss The aching gap which has been blasted in the economio governmont of the free world could be a gap in innovating unorthodoxy,....«.