Maybe it's our stable of computers, but it seems to me that increasingly people tend to see bankers as Delphic priests. More and more, we are asked to describe the world of 1975 or '85. In fact, just the other day, the officer who runs our operating division and is lord of our computers participated in a radio forum on the subject of the year 2,000. Not to be outdone, I would like to make two observations on the Delphi syndrome: one negative and one positive.

There is no one on earth who can tell you what is going to happen in the world of finance in the next ten years. The best we can do is to look carefully at some of the alternatives that are likely to follow from today's experiences.

And I want to say just as positively that the world of tomorrow will be very different from what it is today. To be sure, it is possible to employ the probabilistic approach of a Herman Kahn to draw reasonable facsimiles of tomorrow. It is also possible to infer, as Peter Drucker did some time ago in a magazine article, that the future is composed of present happenings.

Here, I suggest, is where you will find the link between today and tomorrow. And if your interest is investment in the Seventies, as I understand it is, Mr. Drucker's observation is especially true of capital. How much will we need? How much will be available? Where will it come from? Let's examine these questions one at a time.

First, how much capital will be needed in the Seventies?

Not too long ago, we retained one of the nation's leading think tanks to work together with our own economists. Their joint assignment was to give us a view of the economic and technological future as it might be expected to affect a bank like ours. One of their accomplishments was a flow-of-funds analysis going out to 1975 and beyond. This is what they projected, based on the last decade's growth rate of nearly six percent.

During that decade, total fixed capital growth in the United States amounted to some $360 billion. But when you project out to 1975 based on that little figure of six percent, we find that fixed capital requirements in the coming decade will reach $800 billion, or some $450 billion more than was required in the previous decade.

At the same time, the needs of U.S. business for working capital amounted to $100 billion in the past decade. In the next ten years, business will need about $180 billion, or $80 billion more.

And when you add these major requirements and throw in the odds and ends, you find that in the coming decade corporations will need one trillion dollars to finance capital growth. Putting it another way, you will have to find over $600 billion more than you needed over the past ten years.

Partially from cash flow, of course, which should expand by $400 billion over the next decade, and partially from external financing which will increase by $150 billion over the same period. Of that $150 billion, we expect that bank loans will provide roughly half.

Unfortunately, the picture is not nearly as clear for Europe and the developing nations simply because the necessary figures are often unavailable. According to our best estimates, total capital requirements in Europe should reach about $115 billion for a gain of about 70 percent by 1975. The contribution of the private sector toward that total is a direct function of political structure and will vary from about 60 percent in the United Kingdom to almost 90 percent in Belgium.

For the developing countries, the data are even more tenuous. Assuming that present growth rates will continue, capital needs in this area will nearly double to about $50 billion. And knowing what we do about the political configuration of the developing countries, public sector requirements are likely to be larger than in the developed countries.

What these numbers suggest are, first, a worldwide squeeze on capital and its increasing cost, especially in view of the large public demand. In this country, for example, military spending, the needs of the cities, special projects like our venture into space and the SST have competed for a limited supply of capital.

Second, a good deal of the increased demand flows directly from the advances of technology as it obsoletes equipment at accelerating rates.

Nevertheless, the satisfaction of that incredible, worldwide need for capital in the mid-Seventies will be enormously assisted by technology and dangerously hindered by politics. These, I suggest, are the two inseparable points from which any planning for the mid-Seventies and beyond must proceed.

Technology, for example, will bring corporate investors and the banks closer together. Only the other day, one of our financial engineers demonstrated what he calls the peripatetic computer. This is a device about the size of a portable typewriter, and is in effect a remote terminal. With it, a banker can walk into a corporate office in Rio or Rangoon, dial an on-line computer in New York, and go to work. With the peripatetic computer, the banker can, for example, run off cash-flow and capital requirement projections for the next five or ten years, based on a whole spectrum of "ifs."

With time, computers will be located in Australia, or South America or Europe. They will not only speed up financial analysis and make certain kinds of information available that no pencil work could possibly produce, they will enable the establishment of a worldwide system of capital mobilization. Moreover, we in banking see computers talking to each other via satellite, and locked together in a more advanced international information and mobilization network that will make the use of capital more efficient.

In another important sense, technology will increasingly fill the important role of stretching the uses of available capital, if you will -- while an international capital market develops. Its present existence is still an illusion.

What are taken as international markets, the Eurodollar and Eurobond markets, are largely extensions of the American capital market. From a monetary sideshow in the earlier Sixties, the Eurodollar market is now a $15 billion pool of short-term credit. And while these are the dollars created by the U.S. balance-of-payments deficits, it is still a market managed largely by the branches of American banks. In fact, 16 branch banks are the predominant factor in London, the center of the market.

Similarly, the Eurobond market, which last year nearly reached the $2 billion mark, stems from the same basic cause and is also managed primarily by the branches of American investment bankers.

There is, in short, no truly European capital market of any real scope. What is now erroneously called the new international capital market is ironically the product of restrictions and regulations on private capital investment as much as the U.S. balance-of-payments deficit. Strict regulations within and among European nations prevent the creation of a European market. Our own restrictions, such as the interest equalization tax and the regulation of lending and investment, made the Eurodollar and the Eurobond markets possible.

In the event that our balance of payments should move into a surplus and U.S. controls were eliminated, the Euromarket would nevertheless persist. In all probability, rate differentials between here and abroad would moderate further. The Euromarket would stabilize and become even more an extension of the American capital market. For it is not likely that the elimination of European controls essential to the creation of savings and a true European capital market will come about in the very near future.

The validity of any future dreams of a great international capital market, the expansion of world trade and the uplifting of living standards must be tempered by one short-range problem and one long-range trend.

The short-range problem, which is on our doorstep today, is the crisis in the international monetary system. The plain, hard fact is that our friends in Europe have learned to live off the U.S. deficit and enjoy it. Nevertheless, the United States balance-of-payments deficit, which has continued for nearly 17 years, is the Achilles heel of the postwar monetary system. So far, the response of the United States to this problem is not unlike that which has been given by many developing countries. We have blamed our trouble on everything but the real cause, and there are so many zeros after our numbers that it is easy to get lost. We can talk about Vietnam and our political and military commitments around the world. We can make a list of alibis so long that even some of our better economists forget that we cannot have a deficit unless we finance it, and the way we are financing it is to print money.

The real danger to business is that we are now turning back into the jungle of exchange controls and international restrictions which have never worked in the past and will never work in the future. In the end, the only way to solve this problem is the prompt and effective adoption of less expansive fiscal and monetary policies. Timely action would restore confidence in the dollar exchange system, but right at the moment we are going in precisely the wrong direction.

While it is technically impossible at this time to devalue the dollar as against other currencies, it is distinctly possible to revalue gold as against the dollar. In the end the judgment will have to be made as to whether it is more politically agreeable to change the price of gold and thereby take the pressure off the United States balance-of-payments problem for a few minutes, or whether it is better politically to balance the federal budget and moderate the enormous increases in our money supply.

In addition to the crisis in the international monetary structure, the rosy glow that accompanied the truly successful outcome of the Kennedy Round negotiation last spring is fading slowly as we begin to awaken to the importance of non-tariff barriers. What one might call Gattmanship-lowering tariffs but hindering imports from the United States -- is being practiced by our friends in Europe with great skill and must be dealt with by us in a tough, realistic manner. In Europe border taxes and tax rebates to exporters have been increased in Germany, and further action is expected in other Common Market countries.

The argument is made that these devices are not protectionist in motivation nor do they spring from balance-of-payments problems. We are smoothly told that they are only part of the Common Market's harmonization tax program. While all of this may be so, the facts are that when all the arithmetic is done and all the fine print is examined, Europe has erected a barrier against many American exports which is much greater than that which existed under the old tariff laws. Because the tax structure is so complex and because the interaction of the border taxes and rebates is so difficult to trace, the significance of these protectionist moves has not been as widely understood as I hope it will be in the future.

No one of these developments would be critical in itself. But together, and in the present precarious state of international monetary relations, they threaten to set off an accelerating spiral of trade restrictions, as the major trading nations seek to safe-guard their trade balances from the consequences of each other's restrictions.

The greatest danger lies in the impetus given to protectionism. New protectionist measures build vested interests. Once created, they are difficult to eliminate when conditions later improve.

Another problem area in the world economy lies in the developing countries. The dismantling of the colonial systems was a great moral victory for those who believe in freedom and self-determination. But not enough attention has been paid to the economic problems and the political vacuum that have resulted from the collapse of colonial systems. The tragic convulsion in the Belgian Congo and the disintegration of the model African nation of Nigeria are just examples of what has happened. To a large extent, the economic problem has been dropped on our doorstep. It remains unsolved, and it is likely to be with us into the unforeseeable future.

In Latin America, the overall rate of economic progress of 1 1/2percent per capita last year has not met the target of the Alliance for Progress. Yet this overall figure masks the very real progress that some countries are achieving. Argentina, Brazil, Bolivia and Venezuela, for example, have all made important recent gains in economic stabilization, in improving productivity, and in coming to grips with basic social problems. Also, lagging growth in Latin America last year was partly the result of the general economic slowdown in the industrial countries and the slackening of world trade. This year should show better growth performance as world trade accelerates.

We should note that the large and growing inflow of direct foreign investment into Latin America is proof of the continuing confidence of foreign business in Latin America's long-run economic prospects. Some progress in regional integration has also been made, particularly among the countries of the Andean group. Latin America has the physical and human resources to accelerate its rate of progress and is making a determined effort to do so.

In Asia, the Vietnam dilemma and India's enormous, unsolved problems obscure the remarkable advances being made. Japan continues to have the world's most growth-oriented economy. This year its gross national product will reach $130 billion, making it the third industrial country of the world, after the United States and the Soviet Union. Korea, Taiwan and Thailand are booming with farm income, factory output and exports rising rapidly. Their free enterprise climate is proving attractive to foreign investors. Dynamic Hong Kong is moving ahead rapidly despite last year's disturbances. The outlook for Indonesia, one of the world's most populous countries, is clearer than at any time in the postwar period. The new mineral discoveries in Australia and the promise of many more to come have fundamentally altered long-run economic growth prospects. Problems there are aplenty in Asia, but the overall picture is by no means dark.

What is needed most is an understanding of the ingredients of social and economic progress and their interrelationship. Much depends, of course, on the leadership of the major powers in the maintenance of growth trends that are dependent upon monetary stability and continuation of trade liberalization and expansion. This alone will provide the expanding markets for the primary products of the developing countries and the world climate in which their tremendous economic and social needs can be met.

Altogether, this has not been an optimistic appraisal. I'm not certain that it could have been otherwise as long as we take our future a short run at a time. For in that way we tend to ignore the enduring long-run influences. And the fundamental problem that we will wrestle tomorrow in the conduct of our business is whether or not political man will be able to organize his life to take advantage of the new technologies or whether what de Tocqueville, more than one hundred years ago, described as a new kind of servitude will grip our nation and the world.

If it was ever true that the business of business is business, we can no longer accept this bromide and survive. Reduced to its simplest terms, the current battle in the world is a rerun of man's most ancient battle. That is, whether free men can organize their own community in a responsible way or whether we will climb step by step into the lap of some all-powerful government because we do not have the courage or the discipline to do it ourselves. This is a war that is never won, for the mentality of the bureaucrat is always present, and the free marketplace is a dangerous and hazardous terrain.

To go back to de Tocqueville, he described this process this way. He said: "It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate to rise above the crowd. The will of man is not shattered but softened, bent and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to be nothing better than a flock of timid and industrial animals, of which government is the shepherd."

If you cast a perceptive eye around the nation and the world, it will be difficult not to believe that he was writing today. Each of us in our own business is presently beset with rules, commissions, guidelines, voluntary programs and occasionally just plain harassment. The multiplicity of government officials intervening in the private sector form part of the eloquence of our own Declaration of Independence from England, which illustrates once again this is not a new problem but merely a continuing one.

No one doubts that we have the technological capability to go to the moon. But there are probably a few of us who question our ability to balance the Federal budget, to maintain the value of our currency and to have the courage to permit men, money and ideas to cross national frontiers without hindrance. All of your future planning for products, marketing and financing may falter if you and I and everyone else in the business community do not labor to arrest and indeed reverse the tides of nationalism, protectionism and unproductive regulation that are running in the world today.

The whole postwar boom was built upon the dismantling of wartime controls, and the economic progress of the world since VJ Day is a testament to the power of freer economic environment. Today the world is headed back to the jungle of exchange controls, each new control being justified by our balance-of-payments position or somebody else's problem. The first blush of optimism resulting in the very real success of the Kennedy Round negotiations on tariffs, as I indicated earlier, is being slowly replaced by a developing awareness of the formidable non-tariff barriers that are built into the way the technicians in Europe are revamping the European tax structure to deter our exports.

Despite the lesson of history and the reams that are written about one world and instant communications, somehow some politicians and businessmen manage to convince themselves that one nation can take unilateral action to protect its industry from foreign competition without the rest of the world retaliating. For a time, this problem was somebody else's worry, and the demands of the developing countries that they be accorded equal non-reciprocal tariff preferences by all industrial countries went unheard. Latin American producers found themselves excluded from the European preference arrangements, while at the same time competing on an equal basis with former colonies for the U.S. market. This is just another illustration that the economies of the world are inseparable, and you cannot take unilateral action without someone somewhere reacting against you.

It would be easy to become hopelessly discouraged at the drift of the world today by focusing only on its negative aspects. But despite all our problems, none of which would I attempt to sweep under the rug, it is still a fact that the world has never seen a country as strong economically, politically or militarily as the U.S. The real gap is a leadership gap because, unfortunately, at this particular moment of history there is no national leader of a major country who commands the confidence of his own people or of the world. But the political generations are turning over and, as has happened in the past, new leadership will provide fresh drives. It is up to all of us to do what we can to stimulate this leadership to move the world another inch toward economic freedom and away from the new servitude. In that way we can free a productive capacity to take care of the world's needs.