United States Battles Won and Battles Lost
Economics / US Economy May 28, 2007 - 01:50 PM GMT
Martin Weiss writes: Today is the day I remember my uncle Al, who volunteered for the Battle of the Bulge in World War II, was blown off a transport truck, suffered a lifelong injury, and has since passed away.
But it's also my day to remember my father, Irving Weiss, who fought battles of a less violent kind.
Dad's struggle wasn't against a tangible enemy. Nor did it endanger his life. But its impact on our economy was longer lasting: He fought to safeguard the U.S. dollar. And although he won several battles, ultimately, he lost the war.
The Battle Against Big Corporate Debts
Dad first saw the dangers in the 1950s, when Corporate America began to shift away from bigger cash reserves and toward more debt.
The classic example came in the winter of 1954, when Louis Wolfson, a Florida junk dealer who had risen to the control of a large industrial concern, mounted an all-out attack to take over Montgomery Ward, the nation's second largest retailer.
Montgomery Ward was one of the last bastions of a cash-rich, debt-free Corporate America. And it was obvious that, if Wolfson could gain control of the company in a proxy fight, he would end that regime.
To defend Montgomery Ward, Dad founded the Businessman's Committee for Seasoned Management. He mounted a national public relations and publicity campaign to rally the support of shareholders for management. And he won.
The New York Times called it "one of the fiercest battles in the history of corporate finance."
But it wasn't the last.
The Battle for A Sound Dollar
Five years later, in the last year of the Eisenhower administration, Dad saw a similar threat, but this time on a national scale: The U.S. government was draining its cash reserves, running bigger federal deficits, taking on more debt.
And in the future, Dad feared, we could see budget deficits spread to trade deficits; and loans to foreign countries, turn into debts to foreign countries.
So he went back to his supporters from the first committee and founded another one: The Sound Dollar Committee.
Former President Herbert Hoover accepted an invitation to be the Republican co-Chairman. But Bernard Baruch turned down the invitation to be Democratic co-Chairman.
"I have come to the conclusion," Baruch told Weiss that winter, "that it's not timely. We can't stop their spending until they come to us for help. We really can't do anything until we see the whites of their eyes."
Even without Baruch, however, the Sound Dollar Committee's campaign was a resounding success.
To encourage the public to fight inflation, support a balanced budget and defend the dollar, the Committee placed a full-page ad in the Wall Street Journal , which was soon followed by a similar effort in the Chicago Tribune.
A few days later, the Tribune's editors called the Sound Dollar Committee, requesting permission to run a similar campaign at their own expense. The Los Angeles Times, the New York Daily News and Reader's Digest followed suit. Soon, scores of newspapers and magazines joined the Sound Dollar Committee in a nationwide mail-in campaign to protect the dollar.
Congressmen would walk into their offices on a Monday morning, be struck immediately with the clutter of mailbags, and ask their clerks: "What's all this? Where did all this mail come from?"
"They're protests, sir," came the response.
"Protests against what?"
They were protests against big deficits and anything that might jeopardize a stronger dollar.
It was an avalanche! Based on a Chicago Tribune survey on the Hill, the Sound Dollar Committee estimated the total response was 12 million postcards, coupons, letters and telegrams.
According to Business Week, "Leaders in Congress began the session talking like big spenders; now they are talking about cutting Eisenhower's budget."
Senator Proxmire, who had been steadfastly in favor of bigger spending programs, changed his mind and voted for the balanced budget. One Congressman after another shifted his vote. And the budget was balanced.
Unfortunately, however, it was the last real balanced budget of the century.
The Greatest Trade Deficits of All Time
From that point forward, America's fiscal balance began to deteriorate. They might diminish in good times. But not enough to cover the gaping holes in bad times.
Moreover, in subsequent decades, America's trade balance also began to turn sour. Trade surpluses diminished. Small trade deficits appeared. Then larger ones.
Years went by, and nothing was done to reverse the trend. The U.S. dug itself into a deeper and deeper deficit hole.
And now, here we are looking at close to $800 billion in red ink per year, the biggest trade deficit of any country at any time in history.
Worse, after so many years of nonstop red ink, we also have the biggest pile-up of debt; we owe more money to foreign central banks and foreign investors than any other country on Earth.
Our economic and technological leadership is faltering and shifting to faster growing economies overseas. Our jobs are also leaving. And behind it all, our dollar is now falling almost everywhere, even against currencies that, until recently, were among the weakest in the world.
What I've Done So Far
I have very mixed emotions about this decline.
As an American who loves his country, I have dreaded this outcome since the first day I began helping Dad to prevent it four decades ago. And on this Memorial Day, I wish I could remember more battles for the dollar that were won than the battles that were lost.
But at the same time, as an investor, I have dreamed of an opportunity like this since the first day I opened a savings account.
So I have done two things:
First, I have revived the Sound Dollar Committee, re-establishing it as nonprofit, nonpartisan corporation. And I have been preparing for the right time to do more.
Second, I have created a series of tools for American investors to prudently invest overseas.
Most investors fantasize about the day when they can see great megatrends like these … make the right moves with the right investments … and come away with a king's ransom in profits.
Enough money to guarantee a secure and comfortable retirement. Enough to give your kids and grandkids a helping hand. More than enough to never have to worry about money again.
So if you haven't done so already, join me on this journey. Help me in my fight for a stronger dollar. And let me help you build your wealth.
Good luck and God bless!
By Martin Weiss
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