ABSTRACT
Following the introduction of the 1968 program, the policy-making environment began to change. Firstly, the higher level of domestic politicization of the issue, which had previously been reflected only in a horizontal executive level power shift from Treasury to White House, also produced a greater degree of vertical politicization, as even large foreign investors found their interests substantially affected. This private opposition to the controls is quite consistent with the major studies of the controls which indicate that, in the longer term, they are ineffective instruments of balance of payments policy. The second major change came in 1969 when the decision was made to gradually remove the controls as the first step in the compellence strategy of “benign neglect,” designed to force the Western European and Japanese governments to revalue their currencies.
