Expert Scores Eisenhower's Deficit Action

A University expert attacked President Eisenhower's recent action to reduce the balance of payments deficit yesterday and termed the situation "far from desperate."

Balance of payments is the difference between the amount of foreign money spent in the United States and the amount of American money spent abroad, including expenditures for imports, foreign troops, and aid to other countries. In a letter to the New York Times, Arthur Smithies, Nathaniel Ropes Professor of Political Economy, maintained that there are "good prospects" for restoring balance "by normal processes of economic adjustment." He stipulated, however, that other countries reduce their restrictions on American exports and increase their lending and foreign aid.

"Our exports have been increasing steadily over the past year," Smithies said. "Our international reserves are efficient to finance a deficit for some wars."

Smithies indicated that Eisenhower's recent statement ordering action on the payments deficit gives the impression that "important economic and military reports of our foreign policy are dictated by the condition of the balance of payments." He pointed out two "disturbing aspects of the statement: its emphasis a reducing government expenditures broad and on the "Buy America" government procurement.

Asserting that the Eisenhower statement will strengthen political opposition a increased foreign spending, Smithies declared, "If we mean what we say about our concern for under-developed countries, increased expenditures will be needed from the United States and other developed countries.

Eisenhower's statement also urged American officials in other countries to buy in the United States, even though higher costs are involved, Smithies reported. "This means that the commissary of the Paris embassy must stock California wine instead of French," he added.