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JUN 151972
TREASURY DEPARTMENT

.United States Savings Bonds Issued and Redeemed Through September 30, 1962

(Dollar amounts in millions - rounded and will not necessarily add to totals)Amount
Amount
Issued i/ Redeemed l/
MATURED
Series A-1935 - D-1941 .«
Series F & G-1941 - 1949

5,003
26,082

UNMATURED
/
Series E: ^
1941 .
1942 ,
1943 .
1944 .
1945 .
1946 .
1947 .
1948 .
1949 ,
1950 v
.1951 ,
1952 ,
1953 .
1954 .
1955 ,
1956 ,
1957 .
1958 ,
1959 ,
1960 ,
1961 ,
1962 .
Unclassified >
Total Series E

' 1,816
8,025
12,917
15,038
11,768
5,282
4,970
5,117
5,030
4,380
3,79$
3,969
4,485
4,531
4,697
4,515
4,233
4,085
3,814
3,788
3,793
1,989
430

Series H-1952 - 1962 ^/
Total Series E and H .
Series F and G:
. 1950
1951
'1952
Unclassified •••••••••
Total Series F and G ..."
Series J and K-1952 - 1957
Total Series F, G, J and K ....

T
c
Total
matured .,
All Series C Total unmatured
] Grand Total ...,

4,988
25,903

1,513
6,682
10,775
12,449
9,528
AJ. ,U44
3,615
3,608
3,452
2,910
2,489
2,480
2,652
2,620
2,671
2,568
2,297
2,058
1,838
1,635
1,309
345
555

% Cutstandi
Amount
Outstanding 2 / of Amt.IssiK

15
179

.30
.69

303
1,343
2,142
2,589
2,240
1,238
1,354
1,510
1,578
1,470
1,304
1,489
1,833
1,911
2,026
1,947
1,936
2,027
1,976
2,153
2,485
1,644
-12?

16.69
16.74
16.58
17.22
19.03"
23.44
27.24
29.51
31.37
33.56
34.38
37.52
40.87
42.18
43.13
43.12
45.74
49.62
51.81
56.84
65.52
82.65

?*,?V
6,811

3] ,33
79.70

122,467
8,546

84.094
1,736

131,014

85.830

MML

_______

2,429
793
212

2,081
422
105
65

-*/ 348
371
106
-65

14.33
46.78
50.00

M??
3,685

2,672
1,913

_-_L
1,773

_-__!__
48.11

7,119

4,585

2,534

3>.?9

31,085
l_-l_l_2
169,218

30,891

194
47.717
47,912

.62
34.54
28.31

90,41?
121,306

1/ Includes accrued, discount.
OFFICE OF FISCAL ASSISTANT SECRETARY
2/ Current redemption value.
2/ ' At option of owner bonds may be held and will earn interest for additional periods
after original maturity dates.
^/ Includes matured bonds which have not been presented for redemption.

.United States Savings Bonds Issued and Redeemed Through September 30, 1962
(Dollar amounts in millions - rounded and will not necessarily add to totals)

jUIATUKED,
Series A-1935 - D-1941 ..
Series F & G-1941 - 1949

Amount
Outstanding 2/

5,003
26,082

•$ 4,988
25,903

' 1,816
8,025
12,917
15,038
11,768
5,282
4,970
5,117
5,030
4,380
3,79$
3,969
4,485
4,531
4,697
4,515
4,233
4,085
3,814
3,788
3,793
1,989
430

1,513
6,682
10,775
12,449
9,528
4,044
3,615
3,608
3,452
2,910
2,489
2,480
2,652
2,620
2,671
2,568
2,297
2,058
1,838
1,635
1,309
345
555

303
1,343
2,142
2,589
2,240
1,238
1,354
1,510
1,578
1,470
1,304
1,489
1,833
1,911
2,026
1,947
1,936
2,027
1,976
2,153
2,485
1,644
-125

8,546

84,094
1,736

38,373
6,811

31.33
79.70

131,014

85.830

AUM.

3JU&.

2,429
793
212

2,081
422
105
65

U 348

•3,4??
3,6-5*-

2ML
1,913

_-_L.
1,773

48.11

7,119

4,585

2,534

_i____l

31,085
138,132
169,218

30,891
90.415
121,306

194
47.717
47,912

TftMATURED ? /
Series E: •**
1941 .
•1942 ,
1943 ,
1944 .
1945 .
1946 .
1947 .
1948 .
1949 .
1950 •«
.1951 .
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
Unclassified ....*•••.
Total Series E

122,467

Series H-1952 - 1962 ^/
Total Series E and H .
Series F and G:
1950
1951
1952
'Unclassified
Total Series F and G ......
Series J and K-1952 - 1957' .,
Total Series F, G, J and K
{Total matured
* « «o
Total unmatured
Grand Total

Amount
Amount
Issued 1/ Redeemed 1/

15 •
179

371
106
-65

% Outstanding
of Amt.Issued
.30%
.69

16.69
16.74
16.58
17,22
19.03J
23.44
27.24
29.51
31.37
33.56
34.38
37.52
40.87
42.18
43.13
43.12
45.74
49.62
51.81
56.84
65.52
82.65

14.33
46.78
50.00
?? 17

1/ Includes•accrued, discount.
OFFICE OF FISCAL ASSISTANT SECRETARY
_/ Current redemption value.
2/ 'At option of owner bonds may be held and will earn interest for add5„tional periods
after original maturity dates.
U
Includes matured bonds which have not been presented for redemption.

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TREASURY DEPARTMENT
W A S H I N G T O N , D.C.
FOR RELEASE A. M. NEWSPAPERS,
Tuesday, October 2, 1962.
October 1, 1962
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
Treasury bills, one series to be an additional issue of the bills dated July 5, 1962,
and the other series to be dated October 1*, 1962, which were offered on September 26,
were opened at the Federal Reserve Banks on October 1. Tenders were invited for
$1,300,000,000, or thereabouts, of 91-day bills and for $700,000,000, or thereabouts, of
182-day bills. The details of the two series are as follows:
RANGE OF ACCEPTED
COMPETITIVE BIDS:

High
Low
Average

91-day Treasury bills
maturing January 3j^ 1963
Approx. Equiv,
Price
Annual Rate
99.310
2.730$
99.300
2.169%
2.1$2% 1/
99.301*

182-day Treasury bills
maturing April 1*, 1963
Approx. Equiv,
Price
Annual Rate
2.891$
98.537
2.908$
98.530
2.902$ 1/
98.533

75 percent of the amount of 91-day bills bid for at the low price was accepted
36 percent of the amount of 182-day bills bid for at the low price was accepted
TOTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTALS

Applied For
$
23,91*6,000
1,516,857,000
26,1*25,000
29,71*1,000
12,878,000
20,31*3,000
191,527,000
27,111,000
22,81*8,000
29,176,000
23,91*7,000
85,821*, 000
$2,010,596,000

Accepted
Applied For
3,936,000
1
13,821,000 : 0
1,211,261*,000
935,357,000 a
12,822,000
11,1*25,000
2l*,279,000
29,711*,000
2,265,000
12,878,000
6,612,000
19,093,000
129,255,000
121,777,000
9,1*96,000
23,111,000
7,179,000
19,31*8,000
17,118,000
28,876,000
11,779,000
17,672,000
69,061,000
67,321*,000
$1,300,396,000 a/ $1,505,066,000

Accepted
$ 2,672,000
577,360,000
5,672,000
10,636,000
2,087,000
5,012,000
1*1*,325,000
7,910,000
1*,2??,000
8,311*, 000
7,8ll*,000
2l*,583,QOO
$700,862,000 b/

a/ Includes $210,730,000 noncompetitive tenders accepted at the average price of 99.
0/ Includes $57,501,000 noncompetitive tenders accepted at the average price of 98.533
1/ On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.81$, for the 91-day bills, and 2.99$, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
compounding if more than one coupon period is involved.
D-625

a
- 11 -

and rates abroad which would have encouraged substantial outflows of shortterm capital. At the same time, the availability of funds and long-term
interest rates have remained at levels consistent with the promotion of a
large domestic flow of investment capital.
While the rate of increase in corporate investment has not been up to
our hopes and expectations this year, it does not appear that the flow of
corporate investment is being constrained by the level of money rates or the
availability of long-term funds. So far as Government is concerned, it is
probably in the area of tax policy that we must look for further means to
stimulate corporate investment.
In pursuing the various economic policy objectives, the Treasury has not
sacrificed its longer-term interest in a balanced maturity structure. The
maturity structure of the debt is, in fact, despite a rise of $10 billion in
the outstanding debt, in better "balance than it was twenty months ago — a
result largely attributable to carrying forward the creative innovations in
debt management introduced by the preceding Treasury administration.
Looking to the future, the only generalization that can be made with
absolute certainty is that debt management policy, like monetary policy, must
adapt to changing circumstances. It must continually evolve in response to
changes in the liquidity needs and the investment requirements of our domestic
economy, changes in our balance of payments position, and modifications in
the over-all policy mix through which the Governmental part of the solutions
to our economic problems may be sought.
From time to time, new debt management procedures may be needed to meet
both our economic policy objectives and our "housekeeping" objectives. In
recent months, we have tentatively introduced borrowing arrangements with
governmental bodies abroad. We have already announced our intention to test
another new procedure in the capital market here — the sale of long-term
bonds on the basis of competitive bidding. And as our experience grows, as
conditions alter, and experts such as those gathered here supply us with
further suggestions, there w i H be further changes in the techniques and the
policies that guide debt management and its relationship to the money and
capital markets in the United States.

- 10 -

reflected in an increase of six months in the average maturity of the debt,
from four years and six months in January, 1961, to five years at the present
time, the highest level in four years.
The developments in ownership of the Government debt have been equally
interesting. While the total debt has gone up by $10 billion, and the marketable part by $9 billion, commercial bank holdings have risen by only $1-1/2
billion. The Federal Reserve has, to be sure, added about $3-1/2 billion to
its holdings of Government securities. This means that $5 billion, or one-half
of the total increase in the debt, has been financed outside the banking system.
The subject of financing deficits through the banking system has been
much discussed in recent weeks. That is as it should be. But some of the
public discussion has seemed to me to proceed in oversimplified terms. The
issue is not simply Aether the Treasury sells securities to the banking
system or not, but whether the amount of securities that remains in the banking
system becomes so excessively large that the credit base is expanded well
beyond the needs of the economy and an inflationary potential is, thereby,
created. This, I can assure you, is a situation which both the Treasury and
the Federal Reserve are able and determined to prevent. The relatively sparing
use which we have made of the commercial banking system in financing the
deficit of the past twenty months testifies, I would suggest, both to our intent
and our ability to finance any future deficits in a manner which does not
generate an inflationary potential.
It is important to remember, too, that the distinction between financing
a deficit through the banking system and financing it through savings is not
a sufficiently clear-cut basis for evaluation. For, in addition to their demand
deposit function, the commercial banks are one of the most important financial
intermediaries engaged in attracting and investing the savings of the public.
Since January, I96I, time and savings deposits at commercial banks have grown by
about $21 billion. The $1.5 billion increase in commercial bank holdings of
Government securities represents only about 1% of this increase in time and
savings deposits.
And so far as Federal Reserve acquisitions of Government securities
are concerned, these have all been an incidental vby-product of providing
an adequate, bui^ non-inflationary, reserve base tor the commercial banking
system. I would''Indeed suggest that there is no evidence — in terms of
the expanding imoney supply, the over-all growth of bank credit, or in the
broader context of price behavior in the, economy — that P*edlral Reserve
credit has grown too much.
V.
To sum up the record of the past twenty months, though there is
obviously much more we would like to have done, we believe that we have had
some success in working toward both our economic policy and "housekeeping"
objectives. Throughout the period, we have managed to avoid the sort of
persistent, sizable gaps between short-term interest rates in the United States

-9 -

For a period that has consisted mainly of sustained economic expansion,
the interest rate behavior of the past twenty months has been most unusual.
Since January, 1961, short-term interest rates have been moving within an
upward-rising range, while long-term rates have remained stable or moved
lower. The yield on 3-month Treasury bills, for example, has gone up from
2-1$ to the recent range of 2-3A# to 3f». Yet corporate bond yields are
now at about the same level as in January, I96I, when we were close to the
bottom of the recession, and rates on municipal bonds and mortgages are
actually lower than they were then. Just how much of this unusual behavior
of interest rates should be attributed to the influence of monetary and debt
management policies and how much would have occurred in any event, I would.
not venture to say. However, one thing is clear: this is precisely the
sort of interest rate behavior that should have been expected to occur if the
economic policy aspects of the monetary and debt management programs of the
past twenty months were to be fulfilled.
The favorable climate in the capital markets during the past twenty
months has been reflected, as you know, in a record combined flow of longterm capital into corporate securities, State and local government bonds, and
mortgages. The corporate sector alone has not set new records, so far as
market borrowing is concerned, but both of the others have expanded remarkably.
New record highs have been reached in the first half of 1962, with $5 billion
flowing into State and local government bonds and more than $10 billion flowing
into mortgages.
Meanwhile, the total outstanding public debt has grown by $10 billion
over the full course of the twenty months from the end of January, I96I,
through September, 1962. Of this, $9 billion has been in marketable issues
and $1 billion in non-marketables, such as Savings Bonds. What has happened
in the maturity composition of these marketable issues? The total outstanding
in the under-one-year category has risen by almost $9 billion, the debt in
the one-to-five year maturity area has declined by almost $13 billion, and
the debt maturing beyond five years has risen by almost $13 billion. But note
that, while the rise in very short debt has been about equal to the rise in
total debt, the increase in the over-five-year debt has been 1+0$ greater than
the $9 billion total increase in the marketable debt during this period.
The decline of roughly $13 billion in the one-to-five year debt is very
significant from the standpoint of the maturity structure of the debt. The
under-one-year debt can increase in two ways: it can be increased by deliberate
action, as we have done in order to maintain upward pressures on the bill rate,
or it can increase automatically as, with the passage of time, more debt falls
within the one-year area. The substantial reduction in the quantity of debt
maturing in one-to-five years means that the short-term debt is under better
control, since the potential for automatic increases in the very short debt
has been substantially reduced.
We are convinced that the shifting of $13 billion of debt from the oneto-five year area out beyond five years has produced a significant improvement
in the over-all maturity structure of the debt. Statistically, this has been

20 7G

-8 -

sacrificing our balance of payments objectives. Moreover, from the standpoint of the liquidity position of the domestic economy, there was a positive
need for an expansion in the quantity of liquid assets to support a further
increase in economic activity. In statistical terms, the economy had apparently
grown up to the excess liquidity created during World War II, and the relationship between the money supply and the gross national product had returned to
the level which had generally prevailed during the first thirty years of
this century. In practical terms, a number of financial and business firms
were actively seeking more short-term investments.
And at the same
short-term area,
term savings for
commercial plant

time, by concentrating its own cash borrowings in the
the Treasury in effect was reserving the flow of new longthe use of private investment in housing, industrial and
and equipment, and for State and local public facilities.

Of course, no matter what we think we are trying to do, for "housekeeping"
purposes or in the interest of broad economic policy, we also have the bedrock problem of designing issues that will sell, will hold their place in the
market, and will make participation in the distribution of Government securities a reasonably rewarding as well as a patriotic undertaking. The fine art
of tailoring our issues to the prevailing market has no formulas. Each actual
offering is always a combined product of the advice we receive in many ways
from the market itself (notably our splendid advisory committees), the technical expertise of our career staffs, the lessons of recent experience, and
a pinch or two of hunch and intuition.

IV.
In appraising the results of our efforts during the past twenty months,
I should start with a word on Savings Bonds. They account now for almost
one-sixth of the entire outstanding debt. They provide, without exposure
to market risk, a convenient opportunity for every individual to have some
part in the debt financing of Government. And they pay rates of interest
that are, year in and year out, better than any alternative savings instrument that has other investment attributes of even rough comparability. Since
the continued success of this program is a vital part of the whole debt management effort, and since it depends so heavily on the support of a volunteer
program, it is gratifying that Savings Bonds have kept their place in our
debt structure during these recent months when the competitive pressure from
higher rates on bank deposits and savings and loan shares, in particular, has
been of unusual intensity.
In turning to the marketable debt, perhaps I can best sketch the outlines
of most of the significant developments if I focus on three visible indicators:
the behavior of interest rates, the change in the maturity structure of the
Federal debt, and the change in the ownership of the debt.

207 G

-7 -

In developing a policy framework which would embrace all of these
problems, we placed the central focus of our policies on encouraging and
raising the level of private investment. Increased private investment would
help pull us out of the recession. At the same time, more investment could
be the key to quickening our growth rate and reducing the continuing high
rate of unemployment. And, in a longer-range sense, through increasing the
productivity of American industry, more investment would also make the most
fundamental and long-lasting contribution toward strengthening our national
competitive position in the world and thereby righting our balance of payments.
All of our policies, then — fiscal policy, tax policy, and debt management, as well as monetary policy in its coordinate role — were oriented
toward this common goal. The joint evolution of monetary policy and debt
management, which had been under way since the Summer of i960, had two major
aspects: to help create conditions in the capital markets which would promote
a large flow of long-term capital into productive investment while, at the
same time, averting any changes in the short-term interest rate structure
which would set off significant outflows of short-term capital seeking interest
rate advantages abroad. To achieve both of these objectives simultaneously
required new operating techniques and new kinds of emphasis in the decisionmaking processes of both the Federal Reserve and the Treasury.
In monetary policy, this new policy orientation was reflected in the
decision by the Federal Open Market Committee to conduct open market operations
wherever necessary over the full maturity range of Government securities.
In debt management, the new emphasis was initially reflected in the development of the following key elements of policy:
that the Treasury would conduct the great bulk of its cash
borrowing operations in short-term securities, thereby exerting
a maximum of pressure to sustain an appropriate international
relationship for interest rates on Treasury bills and the constellation of surrounding money market instruments;
that, in ordinary refunding operations, the Treasury would largely
concentrate on short-term and intermediate-term securities in a
maturity range out to around ten years;
and that, to offset the deterioration in the maturity structure
of the debt which would otherwise have occurred, the Treasury
would seek, through the technique of advance refunding, to extend
further out into the long-term area substantial quantities of longterm debt already in the hands of the public, but which the passage
of time was moving steadily closer to the intermediate and short
maturity range.
In concentrating its cash financing largely in the short-term area, the
Treasury had, of course, several objectives. By placing upward pressure
on short-term yields from the supply side of the market, debt management
helped enable the Federal Reserve to expand the monetary base without

2u [&

-6-

Q
<w

A third important area of economic policy concerns the impact of debt
management and monetary policy on our balance of payments position. Over
the past two years and more, this has meant that both debt operations and
monetary actions have had to be directed, in part, toward keeping our shortterm rate structure in reasonable competitive equilibrium with rates abroad.
The purpose has not been to put a floor under rates at any particular level.
Our concern is not with absolute rate levels, but with relative levels. The
aim is to keep our short-term rates, if possible, in line with foreign shortterm rates, after adjusting for the cost of covering the forward exchange
risk. The result thus far, as many of you know, is that very little money
has flowed out of this country for interest arbitrage over most of the past
two years.
In addition, we have begun to use debt management itself as an active
instrument of balance of payments control. In recent months, we have borrowed
from official agencies at short term in two foreign currencies — the Swiss
franc and Italian lira. We have converted the proceeds into dollars at an
over-all cost that compared favorably with the costs of borrowing here. The
incidental result has also been a net absorption of excess dollars abroad
that might otherwise have ultimately been used to purchase gold here. Though
what we have done is still tentative and exploratory, we are increasingly
impressed with this new dimension of debt management — an approach originally
foreseen by Russell Leffingwell, then Assistant Secretary of the Treasury,
when he asked Congress for the necessary legislative authority before the close
of World War I. To be sure, however, this is not an approach that would be
relevant to a very sizable part of our total debt management program.
Every time a judgment is taken in debt management, however, some aspects
of all three of these areas of economic policy, as well as our various
"housekeeping" goals, must be weighed in the light of all known conditions,
at that particular moment in time. Quite obviously, no single answer can
produce the optimum result every time for each of these diverse objectives.
The objectives themselves may even occasionally be in conflict. The best
we can hope for, probably, is reasonably well-balanced progress toward meeting
all of these objectives, over a period of time.
III.
Having
is now safe
ment during
examine the
formulated.

thus briefly paraded the problems of debt management, I trust it
for me to review what we have been trying to do in debt managethe past twenty months. Perhaps the best starting point is to
economic environment within which policies were initially

In January, 1961, we faced a conjuncture of a number of serious problems:
a recession which had been under way for the past half year; an inadequate
rate of growth which had been slackening for a number of years; and, as if
these two problems were not enough, we were faced with a critical balance of
payments problem, with world confidence in the dollar deteriorating.

2076

- 5We now have a debt of more than $300 billion, almost $90 billion of which
will mature and have to be refunded during the year ahead. Apart from that,
in recent years, the ordinary seasonal swings in the Treasury's cash borrowing requirements have been running around $10 billion.
Thus, with about $100 billion of indicated borrowing requirements, whether
or not there are further budget deficits, the very magnitude and frequency of
Treasury borrowing operations is necessarily such that Treasury operations
can scarcely avoid having some impact on all of the other markets for fixed
income securities — the corporate bond market and the market for State and
local Government securities, as well as the mortgage market. The challenge
to debt management planning is, therefore, so to channel the influence of
Treasury debt operations upon these various other markets and activities that
it will, wherever possible, help to further the objectives of Government economic
policy — domestically and with respect to the balance of payments.
Much has been said in other countries about a presumed necessity for
combining monetary control and debt management into a single policy instrument. And, in some countries, both are administered by a single agency. But
in accordance with the principle of checks and balances, and the diffusion of
power, which characterizes our political institutions generally, these
functions have most appropriately been divided in the United States between
the Federal Reserve and the Treasury. Two separate centers of responsibility
appraise the needs of two interrelated spheres of action. And the results
for each, given a full flow of intercommunications and a genuine desire for
harmonious cooperation, are greater than any conceivable result of an enforced
consolidation. Certainly there is no country in the world today in which the
independence of these two functions is more clearly respected; yet I doubt if
there is any in which the integration between monetary policy and debt management is more effective.
There are three areas of economic policy in which monetary policy and
debt management come together. First, there is that of maintaining an appropriate level of liquidity — not only for the routine needs of the domestic
economy, but also to sustain a strong rate of economic growth — without
creating a potential inflationary hazard. The Treasury's decisions on the
volume of short-term Government securities to be issued play a part in
determining the volume of "near-money" liquidity in the economy. The influence
exerted is necessarily similar to, although, of course, much less potent
than that of the Federal Reserve in regulating the volume of bank reserves
and thereby the quantity of money itself.
A second general policy area that is common to debt management and
monetary management is that of helping to create conditions in the credit
and capital markets which will be conducive to the most appropriate flow of
funds into long-term private investment. I need not tell this group that
not only the amount, but also the manner and the timing, of Treasury borrowing efforts in the longer-term market can have important effects on the flow
of private investment funds. And as to the influence of Federal Reserve action even the significance of expectations as to what that action might be — surely
no elaboration is necessary.

2076

•4 •*

11
-k in any part of the maturity range that is appropriate for its policy objectives,
the quantity of outstanding securities in the various maturity areas must be
adequate to provide an active and broadly-based market in which such transactions can actually be conducted.
It is particularly important, so far as the implementation of monetary
policy is concerned, that the maturity composition of the Federal debt include
a significant volume of long-term debt. For at times when monetary controls
should be reaching through to the longer maturity areas — influencing the
supply of funds that may or may not be released to flow into mortgages, for
example — significant changes may be brought about in market expectations
by relatively small changes in the daily flows of funds into or out of Government securities, and the related small changes in interest rates. If there
were not an adequate supply of tradable Government securities, the effects of
any needed monetary policy would have to be expected to work their way out
toward the longer area by means of tentative and possibly erratic efforts at
private arbitrage. The alternative for monetary policy, if there were no
tradable volume of longer-term Government securities, would be a great lengthening of the time needed for monetary controls to take hold and a great intensification of the severity of the other actions that would actually have to be
taken by the Federal Reserve to accomplish a given result. It can indeed be
argued that a tradable quantity of outstanding Government debt in all maturity
sectors is a precondition for any broadly effective monetary policy in the
United States today. And that case is strong whether or not the Federal
Reserve itself chooses to operate directly in all maturity sectors.
For very short periods, the objective of maintaining a balanced maturity
structure for the debt may be subordinated to shorter-run economic policy
considerations. But this is very much like deferred maintenance on a railroad
or an industrial plant. If the practice is continued long enough, the basic
structure may deteriorate to such an extent that it may be very difficult to
restore a sound basic structure again. It is often said that there is never
a time when the Treasury can freely place securities in the longer-term area
of the capital market — when business is slack, no diversion from private
investment can be risked, and when business is booming, interest costs are
too high. The debt manager must, nonetheless, place long-term debt into the
market without being hung from either of the horns of this dilemma, and, if
possible, while furthering all of the other housekeeping objectives we have
just reviewed, and while also fulfilling the economic policy aims which I
will now briefly describe.

II.
Debt management cannot escape involvement in economic policy. The
present size of the debt alone virtually compels a continuous interrelationship between what is done to refund the steady stream of maturities and what
the Federal Reserve is doing to influence the supply of money and credit.

207s

- 3-

12
of liquid instruments will also grow. But this does not mean that all of
the debt can be in short form. For the stock of liquid instruments can
exceed the needs of the economy at going prices and practicable rates of
output. And, to the extent that such an excess occurs, a threatening inflationary potential will have been created in the economy — even an economy
that is not, throughout its many sectors, fully employed.
Furthermore, it does not follow that, if the Treasury were to concentrate its financing solely in the short-term area, the interest cost on the
Federal debt would be reduced. The level of interest rates for any given
maturity area reflects not only the state of expectations, but also the
quantity of securities supplied to the market in that maturity area. If
the Treasury were to add to the supply of short-term securities well beyond
the needs of the economy for this kind of instrument, short-term rates on
Treasury securities would inevitably rise relative to long-term rates.
This sort of situation is illustrated by the actual experience of 1959
and early i960, when the Treasury was forced to concentrate an excessive
amount of its financing in the one-to-five year maturity area. As a result,
a "humped" yield curve was produced, with yields in the one-to-five year
area being substantially higher than yields on the longest-term Government
securities. And partly as a result, total budgetary interest costs for the
fiscal year ending June, i960, were larger than those for either of the two
following fiscal years, even though the total outstanding debt was actually
increasing over those later years and, at the same time, a considerable
lengthening of the average maturity of the debt was being accomplished.
Another major hazard of an excessive concentration of short-term Government securities is that it may severely inhibit the execution of monetary
policy. It can do so in several ways. To the extent that more of the Federal
debt is concentrated in short maturities, other than Treasury bills, there will
inevitably be a need for more frequent, large refunding operations by the
Treasury.
The reason that the turnover of our short debt is now accomplished with
relatively little disturbance to the money market, and without serious impact
on the flexibility of the Federal Reserve, is that the volume of short-term
securities is still well within the absorptive capacity of the economy.
However, if the Treasury, because of an excessive concentration of short debt,
was forced to engage in very frequent and very large refunding operations of
the sort which might be disruptive to the money markets, the Federal Reserve
would find itself with only very short intervals of time within which it
could freely and independently work out gradations of change, or shifts, in
monetary policy without risking an undue disruption not only of the markets
but also of the Treasury financing operations themselves.
Since February, 1961, the Federal Reserve has extended open market
operations throughout the entire maturity range of Government securities,
instead of concentrating its efforts solely in the short-term sector. This
is a change in procedure which the Treasury has welcomed. However, if the
Federal Reserve is to be able to release or absorb reserves through transactions

2076

Id
2 -

opportunities inherent in any exercise of public policy. This means that
anyone engaged in Federal debt management must, among other things, keep
in mind the impact of any given Treasury debt operation on the liquidity
needs of the domestic economy, on the long-term capital markets, on our
balance of payments position, and on the interest cost of carrying t*|e debt
as a whole. Moreover, against the inM^orable pressurjrof the passage of
time, the debt _iandger must continually strive to tur&*tjver to his successar
a suitably balanced debt structure.
Very broadly, these objectives of debt management may be divided between
those that are more largely of a "housekeeping" character and those that are
more closely related to the Government's economic policy.
One of the first on either list is the aim of minimizing interest costs
and the burden of the debt on the taxpayer, to the fullest extent consistent
with other compelling objectives. Another housekeeping aim is that of
promoting and maintaining an active and "broadly-based market for Government
securities, not only in the interest of the Treasury and of investors in
Government securities, but also in the interest of the Federal Reserve, which
must operate through this market in adjusting, on a day-to-day basis, the
reserve position of the banking system.
Our further housekeeping objectives must be to establish and maintain a
maturity structure for the debt which w i H assure a reasonable range of flexibility for the Treasury debt managers in the future, a structure which will
also facilitate rather than inhibit the execution of appropriate monetary
policies, and one which will provide appropriate quantities of securities in
the various maturity areas to meet the needs of the investing public.
Very ofte%we are asked why^he Treasury, does not finance solely through
short-term securities* Such borrowing seems always to be more easily carried
out. And, since short-term rates are usually lower than long-term rates,
would not such a policy also save the taxpayers money? Not many of those who
ask this sort of question would carry it to its ultimate extreme and argue .¥.
that the Treasury ought to finance its operations solely through "greenbacks" —
demand obligations which carry a zero interest cost. The hazards of "greenback"
financing are well known. Unfortunately, the hazards of an excessive concentration of short-term financing are less well known.
Perhaps our housekeeping objectives can best be understood by pointing
up some of these hazards. First and most important, if we were to concentrate our financing entirely in short-term securities, we would be courting
the danger of excess liquidity and the inflationary potential which excess
liquidity creates. Short-term Government securities are a close substitute
for money; they can be turned into money very quickly and with little risk
of loss. To be sure, an advanced economy, such as ours, has need for a large
stock of liquid instruments that are free of credit risk; such a stock is
needed for the ready reserves ©f our financial institutions and other
organizations. And, as our economy grows, the size of the appropriate stock

TREASURY DEPARTMENT
Washington

FOR RELEASE ON DELIVERY
REMARKS OF THE HONORABLE ROBERT V. ROOSA,
UNDER SECRETARY OF THE TREASURY FOR MONETARY AFFAIRS,
AT THE ANNUAL CONVENTION OF THE MORTGAGE BAUKERS ASSOCIATION
OF AMERICA, AT CHICAGO, ILLINOIS,
TUESDAY, OCTOBER 2, I962, 10:00 A.M.
DEBT MANAGEMENT AND THE CAPITAL MARKETS
A meeting of the Mortgage Bankers Association is a particularly
appropriate forum for a discussion of debt management — the problems,
the policies, and the results. For mortgage bankers and the managers of
the Federal debt have a vital interest in common: a continuing concern
with the state of the capital markets, with the forces of supply and demand
at work in them, and with the behavior of interest rates that results from
these forces.
The mortgage market is by far the largest single component of our longterm capital markets in this ^country. The net increase of mortgages outstanding in a sing^JTyear consistently exceeds the entire outstanding total of all
Federal debt in the 20-year-and-over maturity range. For example, after allowing for all repayments and refundings, your industry placed last year a volume
of long-term debt that was larger than the total of long-term Federal debt now
in existence as the combined and cumulative result of everything that all of
the managers .of the Federal debt have been able to accomplish in that area of
the market since Worid War II. So I approach you very humbly, seeking both
the sympathy and the suggestions of the successful.
I would like to review with you the range of varied objectives that we
have to try to fulfill, and to reconcile, in managing a Federal debt that is
distributed through all maturity sectors of the money and capital markets.
And, in the light of that review, I will then trace through some of the results
we have had in working toward those objectives during the past twenty months.

I.
The process of decision-making in debt management is complicated by the
sheer number and diversity of objectives which we must pursue simultaneously.
Some are the cost and efficiency considerations appropriate to any borrowing
operation; some are peculiar to the inescapable fact that our operations must
almost always be large; and some relate to the special responsibilities and
D-626

TREASURY DEPARTMENT
Washington

FOR RELEASE ON DELIVERY

REMARKS OF THE HONORABLE ROBERT V. ROOSA,
UNDER SECRETARY OF THE TREASURY FOR MONETARY AFFAIRS,
AT THE ANNUAL CONVENTION OF THE MORTGAGE BANKERS ASSOCIATION
OF AMERICA, AT CHICAGO, ILLINOIS,
TUESDAY, OCTOBER 2, I962, 10:00 A.M.
DEBT MANAGEMENT AND THE CAPITAL MARKETS
A meeting of the Mortgage Bankers Association is a particularly
appropriate forum for a discussion of debt management — the problems,
the policies, and the results. For mortgage bankers and the managers of
the Federal debt have a vital interest in common: a continuing concern
with the state of the capital markets, with the forces of supply and demand
at work in them, and with the behavior of interest rates that results from
these forces.
The mortgage market is by far the largest single component of our longterm capital markets in this country. The net increase of mortgages outstanding in a single year consistently exceeds the entire outstanding total of all
Federal debt in the 20-year-and-over maturity range. For example, after allowing for all repayments and refundings, your industry placed last year a volume
of long-term debt that was larger than the total of long-term Federal debt now
in existence as the combined and cumulative result of everything that all of
the managers of the Federal debt have been able to accomplish in that area of
the market since World War II. So I approach you very humbly, seeking both
the sympathy and the suggestions of the successful.
I would like to review with you the range of varied objectives that we
have to try to fulfill, and to reconcile, in managing a Federal debt that is
distributed through all maturity sectors of the money and capital markets.
And, in the light of that review, I will then trace through some of the results
we have had in working toward those objectives during the past twenty months.

I.
The process of dec is ion-making in debt management is complicated by the
sheer number and diversity of objectives which we must pursue simultaneously.
Some are the cost and efficiency considerations appropriate to any borrowing
operation; some are peculiar to the inescapable fact that our operations must
almost always be large; and some relate to the special responsibilities and
D-626

1C
- 2 -

opportunities inherent in any exercise of public policy- This means that
anyone engaged in Federal debt management must, among other things, keep
in mind the impact of any given Treasury debt operation on the liquidity
needs of the domestic economy, on the long-term capital markets, on our
balance of payments position, and on the interest cost of carrying the debt
as a whole. Moreover, against the inexorable pressure of the passage of
time, the debt manager must continually strive to turn over to his successor
a suitably balanced debt structure.
Very broadly, these objectives of debt management may be divided between
those that are more largely of a "housekeeping" character and those that are
more closely related to the Government's economic policy.
One of the first on either list is the aim of minimizing interest costs
and the burden of the debt on the taxpayer, to the fullest extent consistent
with other compelling objectives. Another housekeeping aim is that of
promoting and maintaining an active and broadly-based market for Government
securities, not only in the interest of the Treasury and of investors in
Government securities, but also in the interest of the Federal Reserve, which
must operate through this market in adjusting, on a day-to-day basis, the
reserve position of the banking system.
Our further housekeeping objectives must be to establish and maintain a
maturity structure for the debt which will assure a reasonable range of flexibility for the Treasury debt managers in the future, a structure which will
also facilitate rather than inhibit the execution of appropriate monetary
policies, and one which will provide appropriate quantities of securities in
the various maturity areas to meet the needs of the investing public.
Very often we are asked why the Treasury does not finance solely through
short-term securities. Such borrowing seems always to be more easily carried
out. And, since short-term rates are usually lower than long-term rates,
would not such a policy also save the taxpayers money? Not many of those who
ask this sort of question would carry it to its ultimate extreme and argue
that the Treasury ought to finance its operations solely through "greenbacks" —
demand obligations which carry a zero interest cost. The hazards of "greenback"
financing are well known. Unfortunately, the hazards of an excessive concentration of short-term financing are less well known.
Perhaps our housekeeping objectives can best be understood by pointing
up some of these hazards. First and most important, if we were to concentrate our financing entirely in short-term securities, we would be courting
the danger of excess liquidity and the inflationary potential which excess
liquidity creates. Short-term Government securities are a close substitute
for money; they can be turned into money very quickly and with little risk
of loss. To be sure, an advanced economy, such as ours, has need for a large
stock of liquid instruments that are free of credit risk; such a stock is
needed for the ready reserves of our financial institutions and other
organizations. And, as our economy grows, the size of the appropriate stock

- 3-

17
of liquid instruments will also grow. But this does not mean that all of
the debt can be in short form. For the stock of liquid instruments can
exceed the needs of the economy at going prices and practicable rates of
output. And, to the extent that such an excess occurs, a threatening inflationary potential will have been created in the economy — even an economy
that is not, throughout its many sectors, fully employed.
Furthermore, it does not follow that, if the Treasury were to concentrate its financing solely in the short-term area, the interest cost on the
Federal debt would be reduced. The level of interest rates for any given
maturity area reflects not only the state of expectations, but also the
quantity of securities supplied to the market in that maturity area. If
the Treasury were to add to the supply of short-term securities well beyond
the needs of the economy for this kind of instrument, short-term rates on
Treasury securities would inevitably rise relative to long-term rates.
This sort of situation is illustrated by the actual experience of 1959
and early i960, when the Treasury was forced to concentrate an excessive
amount of its financing in the one-to-five year maturity area. As a result,
a "humped" yield curve was produced, with yields in the one-to-five year
area being substantially higher than yields on the longest-term Government
securities. And partly as a result, total budgetary interest costs for the
fiscal year ending June, i960, were larger than those for either of the two
following fiscal years, even though the total outstanding debt was actually
increasing over those later years and, at the same time, a considerable
lengthening of the average maturity of the debt was being accomplished.
Another major hazard of an excessive concentration of short-term Government securities is that it may severely inhibit the execution of monetary
policy. It can do so in several ways. To the extent that more of the Federal
debt is concentrated in short maturities, other than Treasury bills, there will
inevitably be a need for more frequent, large refunding operations by the
Treasury.
The reason that the turnover of our short debt is now accomplished with
relatively little disturbance to the money market, and without serious impact
on the flexibility of the Federal Reserve, is that the volume of short-term
securities is still well within the absorptive capacity of the economy.
However, if the Treasury, because of an excessive concentration of short debt,
was forced to engage in very frequent and very large refunding operations of
the sort which might be disruptive to the money markets, the Federal Reserve
would find itself with only very short intervals of time within which it
could freely and independently work out gradations of change, or shifts, in
monetary policy without risking an undue disruption not only of the markets
but also of the Treasury financing operations themselves.
Since February, 1961, the Federal Reserve has extended open market
operations throughout the entire maturity range of Government securities
instead of concentrating its efforts solely in the short-term sector. This
is a change in procedure which the Treasury has welcomed. However, if the
Federal Reserve is to be able to release or absorb reserves through transaction

- k-

in any part of the maturity range that is appropriate for its policy objectives,
the quantity of outstanding securities in the various maturity areas must be
adequate to provide an active and broadly-based market in which such transactions can actually be conducted.
It is particularly important, so far as the implementation of monetary
policy is concerned, that the maturity composition of the Federal debt include
a significant volume of long-term debt. For at times when monetary controls
should be reaching through to the longer maturity areas — influencing the
supply of funds that may or may not be released to flow into mortgages, for
example — significant changes may be brought about in market expectations
by relatively small changes in the daily flows of funds into or out of Government securities, and the related small changes in interest rates. If there
were not an adequate supply of tradable Government securities, the effects of
any needed monetary policy would have to be expected to work their way out
toward the longer area by means of tentative and possibly erratic efforts at
private arbitrage. The alternative for monetary policy, if there were no
tradable volume of longer-term Government securities, would be a great lengthening of the time needed for monetary controls to take hold and a great intensification of the severity of the other actions that would actually have to be
taken by the Federal Reserve to accomplish a given result. It can indeed be
argued that a tradable quantity of outstanding Government debt in all maturity
sectors is a precondition for any broadly effective monetary policy in the
United States today. And that case is strong whether or not the Federal
Reserve itself chooses to operate directly in all maturity sectors.
For very short periods, the objective of maintaining a balanced maturity
structure for the debt may be subordinated to shorter-run economic policy
considerations. But this is very much like deferred maintenance on a railroad
or an industrial plant. If the practice is continued long enough, the basic
structure may deteriorate to such an extent that it may be very difficult to
restore a sound basic structure again. It is often said that there is never
a time when the Treasury can freely place securities in the longer-term area
of the capital market — when business is slack, no diversion from private
investment can be risked, and when business is booming, interest costs are
too high. The debt manager must, nonetheless, place long-term debt into the
market without being hung from either of the horns of this dilemma, and, if
possible, while furthering all of the other housekeeping objectives we have
just reviewed, and while also fulfilling the economic policy aims which I
will now briefly describe.

- 5-

1<*

We now have a debt of more than $300 billion, almost $90 billion of which
will mature and have to be refunded during the year ahead. Apart from that,
in recent years, the ordinary seasonal swings in the Treasury's cash borrowing requirements have been running around $10 billion.
Thus, with about $100 billion of indicated borrowing requirements, whether
or not there are further budget deficits, the very magnitude and frequency of
Treasury borrowing operations is necessarily such that Treasury operations
can scarcely avoid having some impact on all of the other markets for fixed
income securities — the corporate bond market and the market for State and
local Government securities, as well as the mortgage market. The challenge
to debt management planning is, therefore, so to channel the influence of
Treasury debt operations upon these various other markets and activities that
it will, wherever possible, help to further the objectives of Government economic
policy — domestically and with respect to the balance of payments.
Much has been said in other countries about a presumed necessity for
combining monetary control and debt management into a single policy instrument. And, in some countries, both are administered by a single agency. But
in accordance with the principle of checks and balances, and the diffusion of
power, which characterizes our political institutions generally, these
functions have most appropriately been divided in the United States between
the Federal Reserve and the Treasury. Two separate centers of responsibility
appraise the needs of two interrelated spheres of action. And the results
for each, given a full flow of intercommunications and a genuine desire for
harmonious cooperation, are greater than any conceivable result of an enforced
consolidation. Certainly there is no country in the world today in which the
independence of these two functions is more clearly respected; yet I doubt if
there is any in which the integration between monetary policy and debt management is more effective.
There are three areas of economic policy in which monetary policy and
debt management come together. First, there is that of maintaining an appropriate level of liquidity — not only for the routine needs of the domestic
economy, but also to sustain a strong rate of economic growth — without
creating a potential Inflationary hazard. The Treasury's decisions on the
volume of short-term Government securities to be issued play a part in
determining the volume of "near-money" liquidity in the economy. The influence
exerted is necessarily similar to, although, of course, much less potent
than that of the Federal Reserve in regulating the volume of bank reserves
and thereby the quantity of money itself.
A second general policy area that is common to debt management and
monetary management is that of helping to create conditions in the credit
and capital markets which will be conducive to the most appropriate flow of
funds into long-term private investment. I need not tell this group that
not only the amount, but also the manner and the timing, of Treasury borrowing efforts in the longer-term market can have important effects on the flow
of private investment funds. And as to the influence of Federal Reserve action —
even the significance of expectations as to what that action might be — surely
no elaboration is necessary.

-6 -

_:u

A third important area of economic policy concerns the impact of debt
management and monetary policy on our balance of payments position. Over
the past two years and more, this has meant that both debt operations and
monetary actions have had to be directed, in part, toward keeping our shortterm rate structure in reasonable competitive equilibrium with rates abroad.
The purpose has not been to put a floor under rates at any particular level.
Our concern is not with absolute rate levels, but with relative levels. The
aim is to keep our short-term rates, if possible, in line with foreign shortterm rates, after adjusting for the cost of covering the forward exchange
risk. The result thus far, as many of you know, is that very little money
has flowed out of this country for interest arbitrage over most of the past
two years.
In addition, we have begun to use debt management itself as an active
instrument of balance of payments control. In recent months, we have borrowed
from official agencies at short term in two foreign currencies — the Swiss
franc and Italian lira. We have converted the proceeds into dollars at an
over-all. cost that compared favorably with the costs of borrowing here. The
incidental result has also been a net absorption of excess dollars abroad
that might otherwise have ultimately been used to purchase gold here. Though
what we have done is still tentative and exploratory, we are increasingly
impressed with this new dimension of debt management — an approach originally
foreseen by Russell Leffingwell, then Assistant Secretary of the Treasury,
when he asked Congress for the necessary legislative authority before the close
of World War I. To be sure, however, this is not an approach that would be
relevant to a very sizable part of our total debt management program.
Every time a judgment is taken in debt management, however, some aspects
of all three of these areas of economic policy, as well as our various
"housekeeping" goals, must be weighed in the light of all known conditions,
at that particular moment in time. Quite obviously, no single answer can
produce the optimum result every time for each of these diverse objectives.
The objectives themselves may even occasionally be in conflict. The best
we can hope for, probably, is reasonably well-balanced progress toward meeting
all of these objectives, over a period of time.
III.
Having
is now safe
ment during
examine the
formulated.

In January, 196l, we faced a conjuncture of a number of serious problems:
a recession which had been under way for the past half year; an inadequate
rate of growth which had been slackening for a number of years; and, as if
these two problems were not enough, we were faced with a critical balance of
payments problem, with world confidence in the dollar deteriorating.

-7 In developing a policy framework which would embrace all of these
problems, we placed the central focus of our policies on encouraging and
raising the level of private investment. Increased private investment would
help pull us out of the recession. At the same time, more investment could
be the key to quickening our growth rate and reducing the continuing high
rate of unemployment. And, in a longer-range sense, through increasing the
productivity of American industry, more investment would also make the most
fundamental and long-lasting contribution toward strengthening our national
competitive position in the world and thereby righting our balance of payments.
All of our policies, then — fiscal policy, tax policy, and debt management, as well as monetary policy in its coordinate role — were oriented
toward this common goal. The joint evolution of monetary policy and debt
management, which had been under way since the Summer of i960, had two major
aspects: to help create conditions in the capital markets which would promote
a large flow of long-term capital into productive investment while, at the
same time, averting any changes in the short-term interest rate structure
which would set off significant outflows of short-term capital seeking interest
rate advantages abroad. To achieve both of these objectives simultaneously
required new operating techniques and new kinds of emphasis in the decisionmaking processes of both the Federal Reserve and the Treasury.
In monetary policy, this new policy orientation was reflected in the
decision by the Federal Open Market Committee to conduct open market operations
wherever necessary over the full maturity range of Government securities.
In debt management, the new emphasis was initially reflected in the development of the following key elements of policy:
that the Treasury would conduct the great bulk of its cash
borrowing operations in short-term securities, thereby exerting
a maximum of pressure to sustain an appropriate international
relationship for interest rates on Treasury bills and the constellation of surrounding money market instruments;
that, in ordinary refunding operations, the Treasury would largely
concentrate on short-term and intermediate-term securities in a
maturity range out to around ten years;
and that, to offset the deterioration in the maturity structure
of the debt which would otherwise have occurred, the Treasury
would seek, through the technique of advance refunding, to extend
further out into the long-term area substantial quantities of longterm debt already in the hands of the public, but which the passage
of time was moving steadily closer to the intermediate and short
maturity range.
In concentrating its cash financing largely in the short-term area, the
Treasury had, of course, several objectives. By placing upward pressure
on short-term yields from the supply side of the market, debt management
helped enable the Federal Reserve to expand the monetary base without

- 8-

IV.
In appraising the results of our efforts during the past twenty months,
I should start with a word on Savings Bonds. They account now for almost
one-sixth of the entire outstanding debt. They provide, without exposure
to market risk, a convenient opportunity for every individual to have some
part in the debt financing of Government. And they pay rates of interest
that are, year in and year out, better than any alternative savings instrument that has other investment attributes of even rough comparability. Since
the continued success of this program is a vital part of the whole debt management effort, and since it depends so heavily on the support of a volunteer
program, it is gratifying that Savings Bonds have kept their place in our
debt structure during these recent months when the competitive pressure from
higher rates on bank deposits and savings and loan shares, in particular, has
been of unusual intensity.
In turning to the marketable debt, perhaps I can best sketch the outlines
of most of the significant developments if I focus on three visible indicators:
the behavior of Interest rates, the change in the maturity structure of the
Federal debt, and the change in the ownership of the debt.

-9 For a period that has consisted mainly of sustained economic expansion,
the interest rate behavior of the past twenty months has been most unusual.
Since January, I96I, short-term interest rates have been moving within an
upward-rising range, while long-term rates have remained stable or moved
lower. The yield on 3-month Treasury bills, for example, has gone up from
2--^ to the recent range of 2-3/4$ to 3$. Yet corporate bond yields are
now at about the same level as in January, I96I, when we were close to the
bottom cf the recession, and rates on municipal bonds and mortgages are
actually lower than they were then. Just how much of this unusual behavior
of interest rates should be attributed to the influence of monetary and debt.
management policies and how much would have occurred in any event, I would
not venture to say. However, one thing is clear: this is precisely the
sort of interest rate behavior that should have been expected to occur if the
economic policy aspects of the monetary and debt management programs of the
past twenty months were to be fulfilled.
The favorable climate in the capital markets during the past twenty
months has been reflected, as you know, in a record combined flow of longterm capital into corporate securities, State and local government bonds, and
mortgages. The corporate sector alone has not set new records, so far as
market borrowing is concerned, but both of the others have expanded remarkably.
New record highs have been reached in the first half of 1962, with $5 billion
flowing into State and local government bonds and more than $10 billion flowing
into mortgages.
Meanwhile, the total outstanding public debt has grown by $10 billion
over the full course of the twenty months from the end of January, 1961,
through September, I962. Of this, $9 billion has been in marketable issues
and $1 billion in non-marketables, such as Savings Bonds. What has happened
in the maturity composition of these marketable issues? The total outstanding
in the under-one-year category has risen by almost $9 billion, the debt in
the one-to-five year maturity area has declined by almost $13 billion, and
the debt maturing beyond five years has risen by almost $13 billion. But note
that, while the rise in very short debt has been about equal to the rise in
total debt, the increase in the over-five-year debt has been kO^ greater than
the $9 billion total increase in the marketable debt during this period.
The decline of roughly $13 billion in the one-to-five year debt is very
significant from the standpoint of the maturity structure of the debt. The
under-one-year debt can increase in two ways: it can be increased by deliberate
action, as we have done in order to maintain upward pressures on the bill rate,
or it can increase automatically as, with the passage of time, more debt falls
within the one-year area. The substantial reduction in the quantity of debt
maturing in one-to-five years means that the short-term debt is under better
control, since the potential for automatic increases in the very short debt
has been substantially reduced.
We are convinced that the shifting of $13 billion of debt from the oneto-five year area out beyond five years has produced a significant improvement
in the over-all maturity structure of the debt. Statistically, this has been

- 10 -

reflected in an increase of six months in the average maturity of the debt,
from four years and six months in January, 196l, to five years at the present
time, the highest level in four years.
The developments in ownership of the Government debt have been equally
interesting. While the total debt has gone up by $10 bill ion, and the marketable part by $9 billion, commercial bank holdings have risen by only $l-l/2
billion. The Federal Reserve has, to be sure, added about $3-l/2 billion to
its holdings of Government securities. This means that $5 billion, or one-half
of the total increase in the debt, has been financed outside the banking system.
The subject of financing deficits through the banking system has been
much discussed in recent weeks. That is as it should be. But some of the
public discussion has seemed to me to proceed in oversimplified terms. The
issue is not simply whether the Treasury sells securities to the banking
system or not, but whether the amount of securities that remains in the banking
system becomes so excessively large that the credit base is expanded well
beyond the needs of the economy and an inflationary potential is, thereby,
created. This, I can assure you, is a situation which both the Treasury and
the Federal Reserve are able and determined to prevent. The relatively sparing
use which we have made of the commercial banking system in financing the
deficit of the past twenty months testifies, I would suggest, both to our intent
and our ability to finance any future deficits in a manner which does not
generate an inflationary potential.
It is important to remember, too, that the distinction between financing
a deficit through the banking system and financing It through savings is not
a sufficiently clear-cut basis for evaluation. For, in addition to their demand
deposit function, the commercial banks are one of the most important financial
intermediaries engaged in attracting and investing the savings of the public.
Since January, I96I, time and savings deposits at commercial banks have grown by
about $21 billion. The $1.5 billion increase in commercial bank holdings of
Government securities represents only about 7$ of this increase in time and
savings deposits.
And so far as Federal Reserve acquisitions of Government securities
are concerned, these have all been an incidental by-product of providing
an adequate, but non-inflationary, reserve base for the commercial banking
system. I would indeed suggest that there is no evidence — in terms of
the expanding money supply, the over-all growth of bank credit, or in the
broader context of price behavior in the economy — that Federal Reserve
credit has grown too much.
V.
To sum up the record of the past twenty months, though there is
obviously much more we would like to have done, we believe that we have had
some success in working toward both our economic policy and "housekeeping"
objectives. Throughout the period, we have managed to avoid the sort of
persistent, sizable gaps between short-term interest rates in the United States

- 11 -

and rates abroad which would have encouraged substantial outflows of shortterm capital. At the same time, the availability of funds and long-term
interest rates have remained at levels consistent with the promotion of a
large domestic flow of investment capital.
While the rate of increase in corporate investment has not been up to
our hopes and expectations this year, it does not appear that the flow of
corporate investment is being constrained by the level of money rates or the
availability of long-term funds. So far as Government is concerned, it is
probably in the area of tax policy that we must look for further means to
stimulate corporate investment.
In pursuing the various economic policy objectives, the Treasury has not
sacrificed its longer-term interest in a balanced maturity structure. The
maturity structure of the debt is, in fact, despite a rise of $10 billion in
the outstanding debt, in better balance than it was twenty months ago — a
result largely attributable to carrying forward the creative innovations in
debt management introduced by the preceding Treasury administration.
Looking to the future, the only generalization that can be made with
absolute certainty is that debt management policy, like monetary policy, must
adapt to changing circumstances. It must continually evolve in response to
changes in the liquidity needs and the investment requirements of our domestic
economy, changes in our balance of payments position, and modifications in
the over-all policy mix through which the Governmental part of the solutions
to our economic problems may be sought.
From time to time, new debt management procedures may be needed to meet
both our economic policy objectives and our "housekeeping" objectives. In
recent months, we have tentatively introduced borrowing arrangements with
governmental bodies abroad. We have already announced our intention to test
another new procedure in the capital market here — the sale of long-term
bonds on the basis of competitive bidding. And as our experience grows, as
conditions alter, and experts such as those gathered here supply us with
further suggestions, there will be further changes in the techniques and the
policies that guide debt management and its relationship to the money and
capital markets in the United States.

- 3

KKMK

arc exempt from all taxation now or hereafter imposed on the principal or inter

thereof by any State, or any of the possessions of the United States, or by any

local taxing authority. For purposes of taxation the amount of discount at whic

Treasury bills are originally sold by the United States is considered to be in-

terest. Under Sections 454 (b) and 3.221 (5) of the Internal Revenue Code of 19

the amount of discount at which bills issued hereunder are sold is not consider

to accrue until such bills are sold, redeemed or otherwise disposed of, and suc

bills arc excluded from consideration as capital assets. Accordingly, the owner

of Treasury bills (other than life insurance companies) issued hereunder need i

clude in his income tax return only the difference between the price paid for s

bills, whether on original issue or on subsequent purchs.se, and the amount act

received either upon sale or redemption at maturity during the taxable year for
which the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and this notice, pre-

scribe the terms of the Treasury bills and govern the conditions of their issue

Copies of the circular may be obtained from any Federal Reserve Bank or Branch.

- 2-

banking institutions will not bo permitted to submit tenders except for their own
account. Tenders will be received without deposit from incorporated banks and

trust companies and from responsible and recognized dealers in investment securi

Tenders from others must be accompanied by payment of 2 percent of the face amoun

of Treasury bills applied for,, unless the tenders..are accompanied* by an.,expre
guaranty of payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal Re-

serve Banks and Branches, following which public announcement will be made by the

Treasury Department of the amount and price range of accepted bids. Those submit-

ting tenders will be advised of the acceptance or rejection thereof. The Secretar

of the Treasury expressly reserves the right to accept or reject any or all tende
in whole or in part, and his action in any such respect shall be final. Subject
to these reservations, noncompetitive tenders for $ 400,000 or less without
2@_®0
stated price from any one bidder will be accepted in full at the average price (in
three decimals) of accepted competitive bids. Settlement for accepted tenders in

accordance with the bids must be made or completed at the Federal Reserve Bank on
October 15, 1962

in cash or other immediately available funds or in a like

face amount of Treasury bills maturing October 15, 1962 Cash and exchange
_____

tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue
price of the new bills.
The income derived from Treasury bills, whether interest or gain from the sale

or other disposition of the bills, does not have any exemption, as such, and loss
from the sale or other disposition of Treasury bills does not have any special

treatment, as such, under the Internal Revenue Code of 1954. The bills are subjec

to estate, inheritance, gift or other excise taxes, whether Federal or State, but

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE, October 2, 1962
XXXXXXXXXV""' ^^^vvvyTrmfvv^TREASTJQRY INCREASES ONE-YEAR BILLS
Tlie Treasury Department, by this public notice, invites tenders for
$2,500,000,000 , or thereabouts, of 565 -day Treasury bills, for cash and
in exchange for Treasury bills maturing October 15, 1962 , in the amount

m
of $2,005,465,000

, to be issued on a discount basis under competitive and

m
noncompetitive bidding as hereinafter provided. The bills of this series will be
dated October 15, 1962 , and will mature October 15, 1965 , when
___s

___.

the face amount will be payable without interest. They will be issued in bear
form only, and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000
$500,000 and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve. Banks and Branches up to the
Daylight Saving
closing hour, one-thirty p.m., Eastern/X$3£M_3__ time, Tuesday, October 9, 1962.

Tenders will not be received at the Treasury Department, Washington. Each ten

must be for an even multiple of $1,000, and in the case of competitive tender

price offered must be expressed on the basis of 100, with not more than three

imals, e. g., 99.925. Fractions may not be used. (Notwithstanding the fact th

these bills will run for 565 days, the discount rate will be computed on a ba

discount basis of 360 days, as is currently the practice on all issues of Tre

bills.) It is urged that tenders be made on the printed forms and forwarded i

the special envelopes which will be supplied by Federal Reserve Banks or Bran
on application therefor.
Banking institutions generally may submit tenders for account of customers

provided the names of the customers are set forth in such tenders. Others tha

TREASURY DEPARTMENT
WASHINGTON, D
October 2, 1962
FOR IMMEDIATE RELEASE
TREASURY INCREASES ONE-YEAR BILLS
The Treasury Department, by this public notice, invites tenders
for $2,500,000,000, or thereabouts, oft* 365-day Treasury bills, for
cash and in exchange for Treasury bills maturing October 15, 1962,
in the amount of $2,003,^63,000, to be Issued on a discount basis
under competitive and noncompetitive bidding as hereinafter provided.
The bills of this series will be dated October 15, 1962, and will
mature October 15, 1963, when the face amount will be payable without
interest. They will be issued In bearer form only, and in
denominations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000
and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Tuesday, October 9, 1962. Tenders will not be received at the
Treasury Department, Washington. Each tender must be for an even
multiple of $1,000, and in the case of competitive tenders the price
offered must be expressed on the basis of 100, with not more than
three decimals, e. g., 99.925. Fractions may not be used.
(Notwithstanding the fact that these bills will run for 365-day, the
discount rate will be computed on a bank discount basis of 360-days,
as is currently the practice on all issues of Treasury bills.) It
is urged that tenders be made on the printed forms and forwarded in
the special envelopes which will be supplied by Federal Reserve Banks
or Branches on application therefor.
Banking institutions generally may submit tenders for account of
customers provided the names of the customers are set forth in such
tenders. Others than banking institutions will not be permitted to
submit tenders except for their own account. Tenders will be
received without deposit from incorporated banks and trust companies
and from responsible and recognized dealers in investment securities.
Tenders from others must be accompanied by payment of 2 percent of
the face amount of Treasury bills applied for, unless the tenders
are accompanied by an express guaranty of payment by an incorporated
bank or trust company.
Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, following which public
announcement will be made by the Treasury Department of the amount
and
price range of accepted bids. Those submitting tenders will be
D-627
advised of the acceptance or rejection thereof. The Secretary of
the Treasury expressly reserves the right to accept or reject any or
all tenders,
in whole
or in
his actionnoncompetitive
in any such respect
shall
be final.
Subject
to part,
these and
reservations,
tenders

- 2 for $400,000 or less without stated price from any one bidder will be
accepted in full at the average price (in three decimals) of accepted
competitive bids. Settlement for accepted tenders in accordance
with the bids must be made or completed at the Federal Reserve Bank
on October 15, 1962, in cash or other immediately available funds or
in a like face amount of Treasury bills maturing October 15, 1962.
Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing
bills accepted in exchange and the issue price of the new bills.
The income derived frojn Treasury bills, whether interest or gain
from the sale or other disposition of the bills, does not have any
exemption, as such, and loss from the sale or other disposition of
Treasury bills does not have any special treatment, as such, under
the Internal Revenue Code" of 1954. The bills are subject to
estate, Inheritance, gift or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed on
the principal or interest thereof by any State, or any of the
possessions of the United States, or by any local taxing authority.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States Is considered to be
Interest. Under Sections 454 (b) and 1221 (5) of the Internal Revenue
Code of 1954 the amount of discount at which bills issued hereunder
are sold is not considered to accrue until such bills are sold,
redeemed or otherwise disposed of, and such bills are excluded from
consideration as capital assets. Accordingly, the owner of Treasury
bills (other than life Insurance companies) issued hereunder need
include in his income tax return only the difference between the
price paid for such bills, whether on original issue or on subsequent
purchase, and the amount actually received either upon sale or
redemption at maturity during the taxable year for which the return
is made, as ordinary gain or loss.
Treasury Department Circular No. 4l8 (current revision) and this
notice, prescribe the terms of the
0O0Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained
from any Federal Reserve Bank or Branch.

- 3 -

and exchange tenders will receive equal treatment. Cash adjustments will be mad

for differences between the par value of maturing bills accepted in exchange an
the issue price of the new bills.
The income derived from Treasury bills, whether interest or gain from the sale

or other disposition of the bills, does not have any exemption, as such, and lo
from the sale or other disposition of Treasury bills does not have any special

treatment, as such, under the Internal Revenue Code of 1954. The bills are subj

to estate, inheritance, gift or other excise taxes, whether Federal or State, bu

are exempt from all taxation now or hereafter imposed on the principal or inter
thereof by any State, or any of the possessions of the United States, or by any

local taxing authority. For purposes of taxation the amount of discount at whic

Treasury bills are originally sold by the United states is considered to be in-

terest. Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 195

the amount of discount at which bills issued hereunder are sold is not consider

to accrue until such bills are sold, redeemed or otherwise disposed of, and suc

bills are excluded from consideration as capital assets. Accordingly, the owner

of Treasury bills (other than life insurance companies) issued hereunder need i

clude in his income tax return only the difference between the price paid for s

bills, whether on original issue or on subsequent purchase, and the amount actu

scribe the terms of the Treasury bills and govern the conditions of their.issue

Copies of the circular may be obtained from any Federal Reserve Bank or Branch.

- 2 B_gteXXMBB£GEgB
decimals, e. g., 99.925. Fractions may not be used.

It is urged that tenders

be made on the printed forms and forwarded in the special envelopes which will
be supplied by Federal Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of customers
provided the names of the customers are set forth in such tenders. Others than
banking institutions will not be permitted to submit tenders except for their
own account. Tenders will be received without deposit from incorporated banks
and trust companies and from responsible and recognized dealers in investment
securities. Tenders from others must be accompanied by payment of 2 percent of
the face amount of Treasury bills applied for, unless the tenders are accompanied
by an express guaranty of payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public announcement will be made by
the Treasury Department of the amount and price range of accepted bids. Those
submitting tenders will be advised of the acceptance or rejection thereof. The
Secretary of the Treasury expressly reserves the right to accept or reject any
or all tenders, in whole or in part, and his action in any such respect shall be
final. Subject to these reservations, noncompetitive tenders for $ 200,000 or
less for the additional bills dated

July 12, 1962

P&35
ing until maturity date on

January 10, 1963

( 91

aays remain-

~$mr

) and noncompetitive tenders for

jpnj$ 1D0,000 or less for the 182 *day bills without stated price from any one
"~"pH?
PSD?
bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids for the reispective issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve
Banks on

October 11, 1962

cask o r

other immediately available funds or

ps?
in a like face amount of Treasury bills maturing

October 11, 1962

. cash

30
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE, October 3, 1962

TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders for two series

of Treasury bills to the aggregate amount of $ 2,000,000,000 , or thereabouts, f

cash and in exchange for Treasury bills maturing October 11, 1962 , in the amoun

W
of $ 1,901,565,000 , as follows:
91 -day bills (to maturity date) to be issued October 11, 1962 ,
in the amount of $ 1,500,000,000 , or thereabouts, representing an additional amount of bills dated July 12, 1962 ,
and to mature January 10, 1965 , originally issued in the
amount of $ 700,094,000 , the additional and original bills
to be freely interchangeable.
182 -day bills, for $ 700,000,000 , or thereabouts, to be dated
October 11, 1962 , and to mature April 11, 1965
The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding as hereinafter provided, and at maturity their face

amount will be payable without interest. They will be issued in bearer form onl

and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 an
$1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up to the
Daylight Saving
closing hour, one-thirty p.m., EHstern/SSCSXDQSXJflXtime, Monday, October 8. 1962
Tenders will not be received at the Treasury Department, Washington. Each tender
must be for an even multiple of $1,000, and in the case of competitive tenders
price offered must be expressed on the basis of 100, with not more than three

TREASURY DEPARTMENT
WASHINGTON. D.C.
October 3, 1962
FOR IMMEDIATE RELEASE
TREASURY!S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders
for two series of Treasury bills to the aggregate amount of
$2,000,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing October 11, 1962, in the amount of
$1,901,565,000, as follows:
91-day bills (to maturity date) to be issued October 11, 1962,
in the amount of $1,300,000,000, or thereabouts, representing an
additional amount of bills dated July 12,1962,
and to
mature January 10,1963, originally issued in the amount of
$700,094,000,
the additional and original hills to be freely
interchangeable.
182-day bills, for $700,000,000, or thereabouts, to be dated
October 11*, 1962, and to mature April 11, 1963.
The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be Issued in bearer form only, and ill denominations of $1,000,
$5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000
(maturity value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Monday, October 8, 1962.
Tenders will not be
received at the Treasury Department; Washington. Each tender must
be for an even multiple of $1,000, and in the case of competitive
tenders the price offered must be expressed on the basis of 100,
with not more than three decimals, e, g., 99.925. Fractions may not
be used. It is urged that tenders be made on the printed forms and
forwarded in the special envelopes which will be supplied by Federal
Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of
customers provided the names of the customers are set forth in such
tenders. Others than banking institutions will not be permitted to
submit tenders except for their own account. Tenders will be received
without deposit from incorporated banks and trust companies and from
responsible and recognized dealers in investment securities. Tenders
from others must be accompanied by payment of 2 percent of the face
amountD-628
of Treasury bills applied for, unless the tenders are
accompanied by an express guaranty of payment by an incorporated bank
or trust company.

Oetobasr 8, If6t

fa mukSE A. M* mmmmm9

OF lff»3'JEI*S MgS&T' BILL. i.m«IiK_
f ^ Tlmsufy D»p«rt«Mit aimcmtiood last owiing that. tfeoteadorsitar.two. _*_*•• of
Ttwifurjr bill*, one s t H i s t d b# m %Mi%l®m&
issmo of tiw'bills darted; July 12, 15*62,
and th® otfeor M A M to bo dutod Oti«fe«r U , ' IJtift* rabioh nihiftfttofedon October 3, w n
opaaiod at itm factorial I M « * « » Hvite aatbtWbur ®# luaiara * M * invited for &,300,ooo,QOfli
or thoitw&o&to, of fSUdtyr M i l s m l for $700,000,000, or ttentibtiau, of 182-doy; M U » .

9%* details of Urn im mr$M® ®m m t&Xomi
91«dagr Troasoiy bill*
m^E of mmm®
CQtfPETmVfc 8X96t'

It'2-day Txvasuxy bills

SM.tl_3?ifl«f *fa_*MS&_*V 1 0 *

.V.

?ri@o
W.308
99.300

Mi#
Low

Crf tfe«
of th#

Frio®

jjwyl. i&tQ

t*w$
%.?m
2.760* J/

i
i
i

9i»S6o
9i.55o

$$*m

knuml

fiato

2.e66ji

2.mty

of 91*dagr bill* bid for at tfe« low prim ism aoooptod
of lJ2*diy M i l s bid far at tbt Ion prist' was mw®pw&

TOTAL *5^IB-iS t?PtIff ftHt AMD 1CCSPTPD SI MUMI

1E5EKF1 OXSritECTSt

PJsttiffc
Jg^l,l@a ..JFQy;..,—
,S^K2««2_
tttilSl
*• »*°56»oco
.17,111,000
Boston
*,756,000
*. 3k,95tfQO*
l v S6b i $36.O0Q
§73,672,000
Uow Tasfc
537,957,000
'1,276,670,000
3&,92it,OQO
li,9ifl,000
Hillad«l|3liia '
2,21*0,000
7,2^3^000
33,^28,000
$8,528,000
Cloir«l«6d
MS3»ooo
..:9,835,OO0
23^073,000
20,073,000'
fliotaiojsi 3,41,000
6*003,000
30,65:0,000
28Jb5U,000Atlanta
5,755,000
137,311,000
199,622,000
139,637,000
Chicago
72,172,000
11,111*000
3b,176,000
28,816,000
St. Louis
7*088,000
7,3*7,000
23,7H8,OO0
16,360,000
Mimiiipollo
3,797,00*
. 15,166,000
1*0,611,000
51,831,000
Kansas Oiiy
^la^ooo'
11,405,000
26,955,000
& 9 235»000
Z5allas
5,6gq,ooo
TOM*
2,135,685,000 $1,301,310,000 a/ $1,630,659,000
Ssn franelseo
$700,681,000
y Inelttdts $279,255,000 Mieospstlttwi t%nd#r® accepted at tho a v s n e o prioo of 99.302
1/ Xsolmdoii ^6^9li,00O ttmowpotltlvo tandars aeooptad at tha 9emr^^,peim
of 96.552
Cte
a
smipon
33»_®
«t
-vim
mmm
XOJX'.UH
aixa
ror
«
o
_
a
s
u
o
' *- - •
ispao of tli® # # « loa^M*' m& for tbo -.affao ® i o m t JjM«tid£ t ^ rotur® oo'
thoso M i l s w i X 4 lawrldo jiolJa of 2,82>, far ti« 9l*day b i U % .«ii'.i;5»S.i, for tho
l-^2«d«y biUs# XiQtorost rat«s O B bills ®r© guot®<! in tonus of bank diseouat with
tho xwfettrn raiUtsod io tbo f«oo swomut of tho bill® pvablo «t ni«turlt,y » t h o r than
th« «eKMmt infostod and tooir Imgtfe in aotual nuiab#r of digw yolatod to & 3 6 0 * ^
yoi~i\ In cotttrut, yloldo on eortiflofttto, notes, md bond® oro easput^d In t&m*
of int«root on tm mimmt iarootod, aad r#l»ta tho nunbor of da^yi i^ai&iag in m
•Intorest pa^nont porlod to tbo mftml a n b o r of ds^s in i^je porlod, with sosnaramal
e^pomdlng
if aaoro thte ono ©ompon p o f i M ia iffiroiwa.

TREASURY DEPARTMENT
a,_-) •.,., ;• .•..'. a _ w . _ . i » w a r n

»s,,i,>^.:rar^..^.M»«^

W A S H I N G T O N , D.C.
POR RELEASE A. M. NEWSPAPERS,
Mesday, October 9, 1962.

October 8, 1962

RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
Yeasury bills, one series to be an additional issue of the bills dated July 12, 1962,
[pd the other series to be dated October 11, 1962, which were offered on October 3, were
Ipened at the Federal Reserve Banks on October 8, Tenders were invited for $1,300,000,000,
>r thereabouts, of 91-day bills and for $700,000,000, or thereabouts, of 182-day bills.
)he details of the two series are as follows:
IANGE OF ACCEPTED
JQMPETITIVE BIDS:

High
Low
Average

91-day Treasury bills
maturing January 10, 1963
Approx. Equiv<
Price
Annual Rate
99.308
2.738$
99.300
2.169%
99.302
2.160% 1/

182-day Treasury bills
maturing April 11, 1963
Approx. Equiv,
Price
Annual Rate
98.560 2 • 81*8$
98.550
2.868$
98.552
2.861$ 1/

6k percent of the amount of 91-day bills bid for at the low price was accepted
3 percent of the amount of 182-day bills bid for at the low price was accepted
'OTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTALS

Applied For
$
33,958,000
1,56U,538,000
31,921;, 000
33,528,000
23,073,000
30,650,000
199,622,000
3U,176,000
23,728,000
10,631,000
28,955,000
90,902,000
$2,135,685,000

Applied For
Accepted
$
17,133,000
$
3U,956,000
873,672,000
1,276,870,000
l6,92li,000
7,293,000
28,528,000
26,953,000
20,073,000
9,835,000
28,U5U,000
6,003,000
139,837,000
137,312,000
28,816,000
11,188,000
16,368,000
7,5U7,000
38,831,000
15,166,000
2U,235,000
ll,La5,000
68,1+39,000
86,121,000
$1,301,310,000 a/ $1,630,659,000

Accepted

2U,756,000
537,957,000
2,210,000
9,853,000
3,61+1,000
5,755,000
72,172,000
7,088,000
3,797,000
9,19U,000
5,650,000
18,578,000
$700,681,000
/ Includes $279,255,000 noncompetitive tenders accepted at the average price of 99.3
/ Includes $69,U9U,000 noncompetitive tenders accepted at the average price of 98.552
/ On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.82$, for the 91-day bills, and 2.95$, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
compounding if more than one coupon period is involved.
D-629
$

up-to-date methods of investigation are important because they make
crime less likely to succeed, and increase the measure of public
protection which is the real reason for the existence of any
police force."
Chief Rowley is a member of the Executive Committee of the
International Association of Chiefs of Police. The organization

TV
had its start in St. Louis in 1871 as^ a national convention of
law enforcement officers,becoming the present international
association in 1893. Its headquarters are in Washington, D. C.
Its membership now totals about 5,000 law enforcement officials
from 63 nations of the Free World. The current President is
Frank A. Sweeney, Chief of Police of Jenkintown, Pennsylvania,
The text of Chief Rowley's remarks is attached.
oOo

- 2 Chief Rowley said the benefits of continued cooperation

between the police and the public are mutual. "Departures from that
cooperation should be viewed with alarm, as a weakening of respect
not merely for the law, but for the whole fabric of society," he

said. "The forces of organized crime are quick to exploit lawlessne
when encouraged by a listless or indifferent public."
Chief Rowley pointed to the need for '^ound and progressive"
legislation as a tool for more effective law enforcement. He said
that Attorney General Robert Kennedy had spearheaded a drive for
such legislation, "with outstanding success." He also applauded J.
Edgar Hoover, Director of the F.B.I, for his advocacy of a high
standard of professionalism in law enforcement, stressing more
effective scientific training and higher pay scales.
The Secret Service Chief said that over the years, the law
enforcement officers in the U. S. have steadily become more
courteous, better educated, and more capable. "An increasing air
of professionalism, better trained and better paid officers, and

36
FOR RELEASE P.M. NEWSPAPERS,
WEDNESDAY, OCTOBER 10, 1962
ROWLEY SAYS CITIZENS ARE REAL

The Chief of the United States Secret Service today called

for greater cooperation between the public and police as the mos
effective antidote to hoodlumism.
He said that he was concerned over the frequency of assaults

on police officials carrying out their duty, "because the ultima
target of lawlessness is not the police — it is the citizen."
Speaking before the International Association of Chiefs of
Police at their annual conference being held this week in

St. Louis, Missouri, James J. Rowley, Chief of the United States
Secret Service said, "no longer ... is the mere sight of a law
officer in uniform an adequate deterrent to crime."
JThe_Se«re* Service i&-a «e«^
Associart^^ir o* Police^*^

63o

TREASURY DEPARTMENT

WASHINGTON, D.C.
October 9, 1962
FOR RELEASE P.M. NEWSPAPERS,
WEDNESDAY, OCTOBER 10, 1962
ROWLEY SAYS CITIZENS ARE REAL TARGETS OF LAWLESSNESS
The Chief of the United States Secret Service today called
for greater cooperation between the public and police as the most
effective antidote to hoodlumism.
He said that he was concerned over the frequency of assaults
on police officials carrying out their duty, "because the ultimate
target of lawlessness is not the police — it is the citizen."
Speaking before the International Association of Chiefs of
Police at their annual conference being held this week in St. Louis,
Missouri, James J. Rowley, Chief of the United States Secret Service,
said, "no longer ... is the mere sight of a law officer in uniform
an adequate deterrent to crime."
Chief Rowley said the benefits of continued cooperation between
the police and the public are mutual. "Departures from that cooperation should be viewed with alarm, as a weakening of respect not
merely for the law, but for the whole fabric of society," he said.
"The forces of organized crime are quick to exploit lawlessness
when encouraged by a listless or indifferent public."
Chief Rowley pointed to the need for "sound and progressive"
legislation as a tool for more effective law enforcement. He said
that Attorney General Robert Kennedy had spearheaded a drive for
such legislation, "with outstanding success." He also applauded
J. Edgar Hoover, Director of the F.B.I., for his advocacy of a high
standard of professionalism in law enforcement, stressing more
effective scientific training and higher pay scales.
The Secret Service Chief said that over the years, the law
enforcement officers in the U. S. have steadily become more courteous,
better educated, and more capable. "An increasing air of professionalism, better trained and better paid officers, and up-to-date
methods of investigation are important because they make crime less
likely to succeed, and increase the measure of public protection
which is the real reason for the existence of any police force."
D-630

- 2 Chief Rowley is a member of the Executive Committee of the
International Association of Chiefs of Police. The organization
had its start in St. Louis in 1871 at a national convention of
law enforcement officers, becoming the present international
association in 1893. Its headquarters are in Washington, D. C.
Its membership now totals about 5,000 law enforcement officials
from 63 nations of the Free World. The current President is
Frank A. Sweeney, Chief of Police of Jenkintown, Pennsylvania.
The text of Chief Rowley's remarks is attached.

oOo

Remarks by James J. Rowley
Chief of the U. S. Secret Service
Before The International Association of Chiefs of Police
at The Chase-Park Plaza Hotel, St. Louis, Missouri
Wednesday, October 10, 9:30 A.M., CDT
It is an honor to appear here today. Few organizations command greater
respect than the International Chiefs of Police. The work you are doing —
toward greater exchange of ideas and continuous advancement in law enforcement — is not only desirable but essential to the effective and efficient maintenance of law and order.
We in the Secret Service are proud to be associated with this organization. We enjoy an excellent working relationship with the police and
other law enforcement agencies of this country — a relationship of mutual
cooperation which has existed for almost a century. Also, in recent years
we have had the opportunity of working closely with the police of other
nations of the Free World in connection with Presidential travel abroad".
Since many officers from other nations are not as familiar with the
responsibilities of the Secret Service as those of you from this country,
I feel it advisable to outline, briefly, the history and duties of the
Service I head.
The Secret Service was established in I865 as an arm of the Treasury
Department to stop widespread counterfeiting of this nation's currency.
At that time one-third of that currency was counterfeit. Since that time,
Secret Service agents have handled varied investigative assignments — not
only for the Treasury but for many other agencies of the Federal Government
as well.
In 1901 the Secret Service was designated by Congress to furnish protection for the Chief Executive — the President of the United States.
This occurred shortly after the assassination of President William McKinley,
and after a period of 37 years during which three Presidents were assassinated. Further protective duties were assigned by Congress, so that
today the-Secret Service also protects the President-elect, members of
the President's immediate family and the Vice President at his request.
We are proud of our tradition but as you all are well aware, no law
enforcement agency can ever become complacent.
Our citizens expect, and rightfully so, that we be measured in terms
of current service, rather than past performance. I believe we have a
creditable record in that respect. In the year ended June 30 the Secret
Service seized more than three and one-half million dollars in counterfeit
money before it could be circulated with a loss to the public. Seven out
of every eight counterfeit notes manufactured In the country were seized —
without loss to any of our citizens.

- 2 As you are probably aware, counterfeiting is increasing In the United
States, continuing a trend we have noted over the past two years.
We believe the rapid development of the graphic arts and the wide
distribution outlets available to organized criminals have been responsible for the increase in counterfeiting. There are definite indications
that organized crime — having been driven from other lucrative fields —
has in many cases turned to counterfeiting. Improved communications and
jet transportation have also aided criminals in their illegal activities,
by making it possible to operate efficiently over a larger area than in the
past.
To cope with this increased activity, we have stepped up our investigative techniques and have developed new methods to combat counterfeiting.
Prompt and intensive investigations are being made. A high priority has
been assigned to our investigative programming.
We are well aware, of course, that our success in suppressing counterfeiting as well as in our other investigative and protective responsibilities
has been made possible because of the united support and cooperation furnished promptly and willingly by police chiefs and officers all over the
United States, and indeed, all over the world.
The need for sound and progressive legislation as a tool for more
effective law enforcement has been a vital need for some time. Attorney
General Robert Kennedy has spearheaded a drive for such legislation with
outstanding success. In the last session of the Congress he proposed five
separate measures which were passed into law with bipartisan support, and
three other measures are now pending before the Congress.
This is a sophisticated society we are living in today, and law enforcement must continue to develop and improve. Techniques, standards and
personnel must be geared to meet the challenge of this fast-moving space
age. One of the foremost pioneers in improving law enforcement has been
the Honorable J. Edgar Hoover, Director of the FBI. He has long been an
advocate of the need for professionalism in law enforcement and has repeatedly stressed more effective scientific training and higher pay scales.
Today, applicants for law enforcement positions at all levels, local, state
and federal, are meeting higher standards and receiving more intensive
training that has enabled them to better perform their assigned duties.
Salaries have increased, but much more improvement is still needed in that
area, in order to attract the best qualified applicants.
Public recognition of the need for higher standards and increasing
professionalism in the field of law enforcement requires that the law
enforcement agencies themselves present this need on the basis of existing
facts.
It is our job to show the public how and why a more intelligent, bettertrained law enforcement officer, on any level of government, can be more

39
- 3effective in meeting his responsibilities. It is our job to maintain
our own efficiency at peak level in order to maintain maximum public
respect. An increasing air of professionalism, better-trained and
better-paid officers, and up-to-date methods of investigation are important because they make crime less likely to succeed, and increase
the measure of public protection which is the real reason for the
existence of any police force.
I don't have to tell you men, for instance, how important courtesy
Is in gaining public respect for a law enforcement organization. Almost
without exception, the better-trained, most efficient enforcement officer
is also the most courteous. For the officer who knows his job and goes
about it efficiently, there is no need for the arrogance that is, to any
experienced eye, the badge of insecurity. The officer — of whatever
rank, or at whatever level — who must misuse his authority in order to
carry out his obligation is the officer who has never properly learned
his job. There is — as you know well from experience — nothing more
efficient than careful, tireless investigation, backed up by years of
training and years of background with a particular field, or a particular
area, or a particular group of people.
The best way to gain public recognition of the values of a highly
professional law enforcement organization is to operate at all times and
at all levels in the most professional way possible. As you know yourself, the way an enforcement officer conducts himself is almost always
an indication of how he conducts his job.
Over the years in the United States law enforcement officers have
become steadily more courteous, better-trained, better-educated, more
capable and more professional. It is no surprise that the efficiency of
law enforcement operation has kept pace with this improvement. Our job
is to see that it continues in the future, at an ever-more-rapid pace to
meet the new demands of a new and changing world.
There is one cause of concern to me that I am sure you share, and
that is the frequency of assaults on police officials carrying out
their duty. Assaults on police officers should be viewed with particular
alarm, because the ultimate target of lawlessness is not the police —
it is the citizen. It is fundamental in a free society that a law enforcement officer properly and legally performing his assigned duty to
protect life and property should be given full support by the public.
No longer, either in the United States or anywhere in the world, for that
matter, is the mere sight of a law officer in uniform an adequate deterrent
to crime. There has been widespread social upheaval in the world since
World War II. Even in the United States, particularly in the ranks of
street hoodlums, respect for the uniform has declined. The most effective
antidote to hoodlumism from the enforcement point of view is greater public

- kcooperation. The public must be active in cooperating with police if
full mutual benefit is to be obtained. The benefits of cooperation will
be mutual, too, for the exchange of views will help to increase the
understanding of law enforcement officials of the problems, increasingly
complex ones, which they are called upon to meet in a modern society.
Departures from that cooperation should be viewed with alarm, as a weakening of respect not merely for the law, but for the whole fabric of society.
The forces of organized crime are quick to exploit lawlessness when
encouraged by a listless or indifferent public. The laws must be vigorously
investigated, violators quickly apprehended and justice properly meted out
by our courts if freedom in our society is to continue to thrive.
We have seen great progress in the field of law enforcement. We are
attaining a professional status, we are receiving more and better tools
with which to work, informed communities are becoming more interested and
better law enforcement and cooperation between law enforcement agencies
at all levels has developed and prospered to a degree unparalleled in our
history. In this latter regard It is imperative cooperation continue, as
this eliminates any possible misconception by the public that any one
federal agency is performing all law enforcement functions.
I feel sincerely that law enforcement officials today — not only in
the United States but throughout the Free World — recognize their responsibilities and are demonstrating on an international basis that crime
cannot prevail.
It is our responsibility, yours and mine, to assure that we make each
day in our work the maximum contribution to the service we have chosen.
In so doing we can take pride in the gains which law and order are making
over crime everywhere, and feel that we are playing a part in that progress —
an important part, in the last analysis, of the progress of any free society.

•^u
Ootdbtfr 9, 1962

PMi
a

Prater 10, 196g» '

-ht Trwuraiy te^artNMKb MnooiiMMl la*t a^aaiag that ti* tw&ira .for^fSOOtWfOOO,
®r tharMbotttan of J65»dt¥ ta«rary M 3 2 » to to dais#«t fetobar V>$-.W$*n*%m.
m%®m
0©to*ar 15, 1963, irtdtib wtm affara4 m QtfUk&t t9 w&m w o p d at tjft-Jfctortl
mmrm
Bar_«§s on Oetoter 9.
lb* fetall? ar this iaana an aa ftiUmet
fatal eg*f&Sa^. for * A*S3ii*661*# 006
fatal as$*pt«el •.. -> t, 500» 776f C«S

(laaaaAM ilfiS^WvOOO #rat»*acl m m
aonei3mp@tiii.lv© fcaaia audi accepted In
full at tha «vw*ga prio# afcsim balosr)
ftaaga of. aaeaptad. ©MpetittTra bids? (StoatpfclAg or*
«T *500 f 000)

Hltfi
Af#r&gt

97*019 Eqaivalaiit rata of dlaeowit ^pr->jc. 2«9b$$. p«r a ™ «
M
96*ffiO
w
a
»
*
»
'fetttt...'*

tt
m
* 96 # 989
» n
*
z*$m *
(96 p®r©»**i\@f U * a w M m t M i . for at tha low prte# was aaaaptad)

Esdaral fl*aar»a<.

f®tal

ftftal
A®^etpt«a

mm%m
mm x<m

* T5«M»fooo

mi.i HI.inaBiiimimiiii.ili

in w

* y

Jim

31*965,000
3,2t6t2?ti,0Q©
l»1b7,066;OQ0.
t*3f69ifOOO
Fhlla«alp&l*
" 3,608,006"
27#520t000
Cl*valarid
lS6,29k*O0O
60,505,000
itiQsnEsdfiQl
23,280,000
1*10*079,000
Atlanta
23#0S5 f OO©
!i0i>*72»000
Chica.to
208,879,000
67,399,000
St# Loala
12,720,000
31,672,000
Ka&saa City
1*0,090*000
39,349,000
$m ?_*&-."»«iaoo
>i*,53l*f66U,000
-TAI*
37,0^0,000
19,010,000
1 / On a eottp_#r lamia -'>!' tha aama langth and for tha saw» amount Invaatad, tha ratar® oa
«_-J__J^§iSSZ
"* thaaa bill® would provide & yiald of 3»0f^» Intaraat rata* on
billa ara ^ttetatf ia
$2,SQ0of
terma of \m>k dlaco-nt with Urn r a t u m ral&tad to the fa## amount
t&a bills pay*
S ??6,000
ahl* *t tt&turiiy rather thaa-i. the anount invaatad and ihalr langth in actual mmbtr
&t <*3^at ralat*** to * 360~day y«as% 'In eonti-aat, ylalda on ®®rtifi©au@a, iiotes, aa4
bonda are .losaputed in tare* of intaraat cm tn^i a^oi,mt imraatad.,, and ral&tafch®a^8*
b#r of Slav's iiwainins: la -MI intaraat paymant '{sei'loc? to tfaa actual mimb©r af cU_y» i»
Use ;jeriod, wit> se-^lanmiai C K M » xindiru if mora tiiaa ona ootapon .parlod is involve-*

TREASURY DEPARTMENT
W A S H I N G T O N , D.C.
. October 9, 1962

m RELEASE A. M. NEWSPAPERS,
fgdnesday, October 10, 1962.

RESULTS OF TREASURY'S ONE-YEAR BILL OFFERING

The Treasury Department announced last evening that the tenders for $2,500,000,00
ir thereabouts, of 365-day Treasury bills to be dated October 15, 1962, and to mature
Ictober 15, 1963, which were offered on October 2, were opened at the Federal Reserve
lanks on October 9.
The details of this issue are as follows:
Total applied for - $U,53U,66^,000
Total accepted
- 2,f>00,776,000

(includes $185,725,000 entered on a
noncompetitive basis and accepted in
full at the average price shown below)

Range of accepted competitive bids?
High
Low
Average

(Excepting one tender of $500,000)

97.019 Equivalent rate of discount approx. 2.9lt0$ per annum
M
96.980
'<
«
«
«
2.979$ "
"
M
M
M
96.989
••
"
"
2.969$ "
y

(96 percent of the amount bid for at the low price was accepted)
Federal Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTAL

Total
Applied For
$
75,U65,000
3,228,27U,000
U3,698,000
301,89^,000
27,520,000
60,505,000
UUl,079,000
llO, 872,000
67,399,000
U2,720,000
UO,090,000
165,1U8,000
$U,53U,66U,000

Total
Accepted
$
31,965,000
1,71*7,066,000
3,698,000
156,29U,000
23,280,000
23,055,000
288,879,000
31,672,000
39,3U9,000
37,01+0,000
19,010,000
99,U68,000
$2,500,776,000

On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide a yield of 3.08$. Interest rates on bills are quoted in
terms of bank discount with the return related to the face amount of the bills payable at maturity rather than the amount invested and their length in actual number
of days related to a 360-day year. In contrast, yields on certificates, notes, and
bonds are computed in terms of interest on the amount invested, and relate the number of days remaining in an interest payment period to the actual number of days in
the period, with semiannual compounding if more than one coupon period is involved*
D-631

- 3-

and exchange tenders will receive equal treatment. Cash adjustments will be made

for differences between the par value of maturing bills accepted in exchange and
the issue price of the new bills.
The income derived from Treasury bills, whether Interest or gain from the sale
*

or other disposition of the bills, does not have any exemption, as such, and los
from the sale or other disposition of Treasury bills does not have any special

treatment, as such, under the Internal Revenue Code of 1954. The bills are subje

to estate, inheritance, gift or other excise taxes, whether Federal or State, bu

are exempt from all taxation now or hereafter imposed on the principal or intere
thereof by any State, or any of the possessions of the United States, or by any

local taxing authority. For purposes of taxation the amount of discount at which
Treasury bills are originally sold by the United States is considered to be in-

terest. Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 1954

the amount of discount at which bills issued hereunder are sold is not considere

to accrue until such bills are sold, redeemed or otherwise disposed of, and such
bills are excluded from consideration as capital assets. Accordingly, the owner

of Treasury bills (other than life insurance companies) issued hereunder need in

clude in his Income tax return only the difference between the price paid for su

bills, whether on original issue or on subsequent purchase, and the amount actua
received either upon sale or redemption at maturity during the taxable year for
which the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and this notice, pre-

scribe the terms of the Treasury bills and govern the conditions of their.issue.
Copies of the circular may be obtained from any Federal Reserve Bank or Branch.

- 2 ^woio:*^:'/**^*
decimals, e. g., 99.925. Fractions may not be used.

It is urged that tenders

Tenders from others must be accompanied by payment of 2 percent of

the face amount of Treasury bills applied for, unless the tenders are accompanied
by an express guaranty of payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public announcement will be made by
the Treasury Department of the amount and price range of accepted bids. Those
submitting tenders will be advised of the acceptance or rejection thereof. The
Secretary of the Treasury expressly reserves the right to accept or reject any
or all tenders, in whole or in part, and his action in any such respect shall be
final. Subject to these reservations, noncompetitive tenders for $ 200,000 or
less for the additional bills dated
ing until maturity date on

July 19, 1962

January 17, 1963

, ( 91

days remain-

) and noncompetitive tenders for

pigr
• 100,000 or less for the

{<m

182

*day bills without stated price from any one

421:)

bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids for the respective issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve
Banks on

October 18, 1962

. in cash or other immediately available funds or

in a like face amount of Treasury bills maturing

October 18, 1962

. Cash

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE October 9, 1962

TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders for two series

of Treasury bills to the aggregate amount of $ 2,000,000,000 , or thereabouts, f
cash and In exchange for Treasury bills maturing October 18, 1962
of $ 1,902,774,000 , as follows:
X2pE$3C
91 -day bills (to maturity date) to be issued

, in the amount

October 18, 1962

in the amount of $ 1,500,000,000 , or thereabouts, representing an additional amount of bills dated July 19, 1962 ,
and to mature January 17, 1965

, originally issued in the

amount of $ 700,058,000 , the additional and original bills
to be freely interchangeable.
182 -day bills, for $ 700,000,000 , or thereabouts, to be dated
October 18, 1962 , and to mature April 18, 1965 •

pi_$c

3&§

The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding as hereinafter provided, and at maturity their face

amount will be payable without interest. They will be issued in bearer form only

and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and
$1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up to the
Daylight Saving
closing hour, one-thirty p.m., Easternfi&3&S&B8&time, Monday, October 15, 1962

Tenders will not be received at the Treasury Department, Washington. Each tender

must be for an even multiple of $1,000, and in the case of competitive tenders t
price offered must be expressed on the basis of 100, with not more than three

October 9, 1962
FOR IMMEDIATE RELEASE
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders
for two series of Treasury bills to the aggregate amount of
$2,000,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing October 18, 1962, in the amount of
$ 1,902,77^,000, as follows:
91-day bills (to maturity date) to he Issued October 18, 1962,
In the amount of $1,300,000,000, or thereabouts, representing an
additional amount of bills dated July 19, 1962,
and to
mature January 17, 1963, originally issued In the amount of
$ 700,058,000, the additional and original bills to be freely
interchangeable.
182-day bills, for $700,000,000, or thereabouts, to be dated
October 18, 1962, and to mature April 18, 1963.
The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be Issued in bearer, form only, and in denominations of $1,000,
$5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000
(maturity value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Monday, October 15, 1962.
Tenders will not be
received at the Treasury Department, Washington. Each tender must
be for an even multiple of $1,000, and in the case of competitive
tenders the price offered must be expressed on the basis of 100,
with not more than three decimals, e. g., 99-925- Fractions may not
be used. It is urged that tenders be made on the printed forms and
forwarded in the special envelopes which will be supplied by Federal
Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of
customers provided the names of the customers are set forth in such
tenders. Others than banking Institutions will not be permitted to
submit tenders except for their own account. Tenders will be received
without deposit from incorporated banks and trust companies and from
responsible and recognized dealers in investment securities. Tenders
from others must be accompanied by payment of 2 percent of the face
amount
of Treasury bills applied for, unless the tenders are
D-632
accompanied by an express guaranty of payment by an incorporated bank
or trust company.

- 2 Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, following which public
announcement will be made by the Treasury Departmment of the amount
and price range of accepted bids. Those submitting tenders will be
advised of the acceptance or rejection thereof. The Secretary of
the Treasury expressly reserves the right to accept or reject any or
all tenders, in whole or in part, and his action in any such respect
shall be final. Subject to these reservations, noncompetitive
tenders for $200,000 or less for the additional bills dated
July 19, 1962)
(91-days remaining until maturity date on
January 17, 3.963) and noncompetitive tenders for $100,000
or less for the 182-day bills without stated price from any one
bidder will be accepted in full at the average price (in three
decimals) of accepted competitive bids for the respective issues.
Settlement for accepted tenders in accordance with the bids must be
made or completed at the Federal Reserve Banle on October 18, 1962,
In cash or other immediately available funds or in a like face
amount of Treasury bills maturing October 18, 1962. Cash and
exchange tenders will receive equal treatment. Cash adjustments
will be made for differences between the par value of maturing
bills accepted In exchange and the issue price of the new bills.
The income derived from Treasury bills, whether interest or
gain from the sale or other disposition of the bills, does not have
any exemption, as such, and loss from the sale or other disposition
of Treasury bills does not have any special treatment, as such,
under the Internal Revenue Code of 195^. The bills are subject to
estate, inheritance, gift or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed on
the principal or interest thereof by any State, or any of the
possessions of the United States, or by any local taxing authority.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States is considered to be
interest. Under Sections k$k (b) and 1221 (5) of the Internal
Revenue Code of 195^ the amount of discount at which bills issued
hereunder are sold is not considered to accrue until such bills are
sold, redeemed or otherwise disposed of, and such bills are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between
the price paid for such bills, whether on original issue or on
subsequent purchase, and the amount actually received either upon
0O0 the taxable year for which the
sale or redemption at maturity during
return is made, as ordinary gain or loss.
Treasury Department Circular No. 4l8 (current revision) and this
notice prescribe the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained from
any Federal Reserve Bank or Branch.

TREASURY DEPARTMENT
Washington

FOR RELEASE UPON DELIVERY

REMARKS BY THE HONORABLE HENRY H. FOWLER,
UNDER SECRETARY OF THE TREASURY, AT THE
BUSINESS EXPANSION CONFERENCE OF THE STATE
DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT
AND THE PUGET SOUND INDUSTRIAL DEVELOPMENT
COUNCIL, OLYMPIC HOTEL, SEATTLE, WASHINGTON,
THURSDAY, OCTOBER 11, 1962, 7 P.M., PST
NATIONAL POLICIES FOR BUSINESS EXPANSION

You have heard today, and you will hear more tomorrow, of the
very impressive growth record of this region, as well as its
potential for business expansion. But you are here for a much more
important purpose — to consider how expansion can be stimulated in
the years ahead.
The acceleration of business expansion — throughout the entire
nation, Including the Pacific Northwest — is a major concern of the
Kennedy Administration. It Is a special concern of the Treasury.
Your goal and that of the nation are closely related. As your
region develops, it will contribute significantly to national
development. And the pace of your expansion will depend to a
considerable extent on the pace in the rest of the country. So we
all face the same problem: what is the potential for expansion,
what factors influence it, and what policies are needed to take
maximum advantage of those factors?
Business expansion is without question a key frontier. It is
incumbent upon us — Government officials, businessmen, and citizens
alike — to ensure that we explore it and that we do so boldly and
with imagination.
That is why I am particularly pleased to participate in this
Business Expansion Conference. It represents the kind of forwardlooking, imaginative, risk-taking activity — so typical of the
Pacific Northwest — that is pioneering at Its boldest, and business
statesmanship at its best„
The joining of state and local government efforts with private
enterprise is the winning combination for business expansion. The
Federal administration looks to that combined effort to lead the
D-633

- 2 -

drive for the more rapid rate of economic growth that is one of our
most important national goals. The Administration Is dedicated in
its economic policy to the proposition that our free market economy
is the appropriate vehicle for economic growth — that the free
market economy can operate only if private business is healthy,
active and expanding, producing the goods and services, the jobs,
the wealth and the profits that fuel the nation's growth.
This was nowhere better expressed than in a recent address
by President Kennedy, in which he said?
"I regard the preservation and strengthening
of the free market as a cardinal objective of this
or any Administration's policies. It is well to
remind ourselves from time to time of the benefits
we derive from the maintenance of a free market
system. The system rests on freedom of consumer
choice, the profit motive, and vigorous competition
for the buyer's dollar."
It would be presumptuous of me to attempt to appraise your
regional resources and enterprise. It israypurpose only to state
a few facts concerning our current national economic environment
and policy that make the timing of this conference propitious.
The U. S. economy is at the crossroads. Our choice of
direction will determine the future. The facts indicate that the
time is ripe for a wave of business expansion closer to the recent
rapid pace in Western Europe and Japan than to our own performance
in recent years. The long-term factors which determine the
climate for growth are turning more favorable now than they have
been in almost a decade. It is well worth while to take a close
look at these long-term factors in our economic future, rather than
remain frozen with an intent gaze on the current cycle.
The first, and one of the most important, Is the potential
represented by our labor force. We are well aware of our pressing
responsibility to continue to reduce unemployment and to provide
enough jobs for the millions of new workers who will be entering
the labor force in the years immediately ahead. We are also well
aware of the need to provide productive employment for those workers
who are being displaced by technological change.
We should not overlook, however, the fact that our growing
labor force is an invaluable asset that can give a powerful impetus
to business expansion — if we make energetic efforts to give our
workers opportunities to use their skills to the fullest. We have
only to look to Western Europe, which is plagued with labor
shortages, to recognize that our growing labor force is an asset
that we simply are not utilizing to Its maximum capacity. Just as
we need expansion to provide more jobs, we need workers to make
further expansion possible. Recent projections indicate that our
compared
labor force
to will
1.3 percent
grow byin
1.8
the
percent
19^7-1960
a year
period.
during this decade,

47
- 3The increasing education and training of our labor force also
will increase our workers' productivity, as will automation. And
this raising of productivity is a must if we are to regain a pace
of business expansion in line with our real potential.
The opportunity for increasing productivity significantly in
the years ahead is closely related to the second major long-range
factor which affects the climate for business expansion — the
increased activity in research and development.
We are now In a period of unprecedented activity in research
and development, in both defense and non-defense industries.
Between 1953 and i960, for instance, expenditures for research
and development Increased from $5 billion to $14 billion a year. In
i960, they were nearly a third as large as spending for plant and
equipment. Defense expenditures for research and development —
which have a significant "spillover" effect on the economy as a
whole — have more than doubled in the past five years.
There Is always a substantial lag between research effort and
application. From conception to marketing took 27 years for the
common zipper, 22 years for television, 13 years for radar, 11 years
for nylon, 9 years for the safety razor and 6 years for the ballpoint pen. Thus it can be assumed that much of the recent research
and development effort has not yet had its full effect.
Accelerating technological advance will produce new products,
new processes, new methods of distribution, new uses for existing
products and new selling techniques.
The new technology will allow us to take advantage of the
third major long-range factor favoring business expansion — the
growth of new markets both at home and abroad. Continental Europe
has been expanding rapidly, and is now rapidly evolving new markets
for goods associated with a high standard of living. Our
manufacturing and selling experience and skills particularly well
equip our producers to meet this new challenge in international
trade. There are still commonplace items in American supermarkets,
drugstores and department stores that are scarcely known in Europe.
But economic development is not confined to the industrialized
nations. The less developed countries are also advancing, and
over the long run, we can look forward to expanding markets in these
countries, although these markets will of necessity be limited at
first, both in scope of products and in demand.
In our preoccupation with new and expanding markets abroad, we
should not forget the tremendous opportunity offered by our own
internal markets at home. As our own population and its skills and
standard of living rise, the economic development of the United
States presents unparalleled opportunity for business expansion.

48
- 4Per capita disposable income in the United States — adjusted
for inflation — has increased almost 70 percent in the last two
decades, and savings are high. This means that purchasing potential
is increasing. Individuals, for instance, added to their "financial
savings" — which includes bank accounts, security holdings and the
cash value of insurance policies and pension fund holdings — by
$11.5 billion in the first half of this year alone. This compares
with an increase in financial savings of $7.9 billion for the same
period last year.
Advancing technology will expand this internal potential to
a tremendous extent. We can look forward to the development of new
products — and corresponding markets — as yet undreamed of.
The fourth major long-range factor which will foster accelerated
business expansion is the recent lag in business investment in the
United States, which has created a need for more modern productive
equipment. In the latter part of the last decade our share of
world markets declined. At the same time, our rate of economic
growth was outstripped by most of those competitors. The reason,
to a significant extent, was the greater proportion of total output
those competitors ploughed back into productive equipment, with
consequent improvement in productivity.
Thus the increasing age of American productive equipment has
presented a handicap to productivity increases in the past. But
it also provides an opportunity in the sense that there is now room
for increased Investment and widespread modernization.
You have heard much about "over capacity." This is difficult
to measure. But, it is safe to say that a sizable part of what
excess does exist is really obsolescent, and that one of the
reasons it is idle is that it simply is not efficient enough to
operate profitably. Equipment modernization could make that obsolescent
capacity once more a paying proposition, and it will, under the
combined stimulus of increased demand and a more favorable
environment for increased capital investment.
A recent survey in Fortune Magazine pointed up some of the
factors that create a great potential for capital investment over
the coming years,
The September Fortune article noted that during the sluggish
period since 1955-57* the growth in the stock of capital goods, at
2 to 2-1/2 percent a year, has fallen far below the roughly 3.4
percent growth trend needed to keep pace with a 4 percent growth
rate for the whole economy. The article noted that current "excess
capacity" is not very large, and would quickly disappear with a
lift In demand that absorbed our excessive unemployment -- that demands
for capital to replace outmoded and worn out equipment are rising
steadily — and that capital goods are becoming cheaper relative to
labor and materials, reversing the process of the 1950s.

d?
- 5Therefore, the article concluded, basic forces in the economy
are now turning more favorable for investment. The implication
for the short run is that current Investment planning rests on a
solid base, and assuming even modest increases in output over the
next three to six months,, investment outlays should continue to
rise, perhaps "taking off" later next year. The overall thrust of
the article was that a real potential exists for a full-scale
capital boom in the mid-Sixties, which is the argument I myself
have been putting before you.
In the meantime other factors In overall demand remain steady
or expansionary — consumer demand, state and local government
expenditures, and defense, space and public service requirements
of the national government.
So the overall combination of these four long-range factors
for business expansion — trained manpower availability, new
technology, new markets, and an increased capital goods demand —
presents a promising picture indeed.
The question then arises of what Government policies are being
devised to maximize the possibilities presented by these factors.
Let us review a few of them.
One of the most important areas of Government policy which wil
help translate these favorable factors into actual business
expansion is the role of Government in research and development.
Government's role is a major one. It finances more than 70
percent of university research, and almost 60 percent of research
in industry. Overall, Government pays for about two-thirds of the
total national research effort.
Although increasing rapidly In many Industries, more than
55 percent of industrial research is performed by two industry
groups and there is a heavy concentration of industrial research
reflecting primarily the concentration of defense contracts. There
is obviously much room for expansion of technological research,
especially into areas where little research is done.
In addition to direct financial contributions, the Federal
Government stimulates private research and development by making
such costs fully deductible for tax purposes in the year they are
incurred. The Small Business Act also encourages spending on
research and development, including cooperative research by small
companies.
The limiting factors on increasing our national research and
development effort appear to be four: the short supply of
scientists and engineers in certain fields; the small relative
quantity of effort devoted to non-military research; the small
relative effort devoted to basic research, and the limited
percentages of resources applied to research and development in
many industries and companies.

- 6-

Many features of the Administration's education program are
directly responsive to the first problem — the long-term need for
an increasing supply of scientists and engineers, and the President
has directed the National Science Foundation to develop further
programs responsive to this need.
The remaining limitations are under study by the Panel on
Civilian Technology, composed of scientists, engineers, businessmen
and economists. The Panel is examining opportunities for stimulating
civilian research and development as well as for more effective use
of existing technology. It is particularly concerned with those
sectors of our economy where significant social and economic benefits
could be expected to accrue from technology advances.
One of the most important new policy developments In this area
is the creation of the post of Assistant Secretary of Commerce for
Science and Technology, now ably filled by Dr. J. Herbert Holloman.
He has already taken hold of a number of problems in this area, In
a manner which gives promise of concrete results. He Is particularly
concerned over educational efforts, and the need for more effective
diffusion of technology from the space and defense sectors to other
public and civilian sectors. He maintains, and correctly, that the
technological gap between leading and lagging firms should be
narrowed.
In this respect, he places great importance on the need to
encourage effective cooperation among universities, industry and
the Government, to identify regional or area problems and to work
out jointly the technological means of solving them. He suggests
that a significant part of this effort could be an industryuniversity technical service not unlike the agricultural extension
service.
A second major policy area in which the national government is
seeking to take advantage of the long-range factors favoring business
expansion is in international trade. The Trade Expansion Act of
1962 is a milestone on the road to the future of the United States
in Free World trade.
While this legislation gives the President the authority to
bargain down tariff walls, we must do more than merely gain entrance
for our goods into the fast-developing markets of the world. Once
there, they must be competitive, and our policies must be such as to
allow our producers to meet the competition of foreign producers —
both at home and abroad — at least on an equal footing.
Increasing our trade surplus by expanding our export markets
while maintaining competitive resistance in import markets is an
essential requirement for continued progress toward eliminating our
balance of payments deficit. The Trade Expansion Act will foster

- 7_'_w

this aim, but it is up to American business to see that it is
competitive and enterprising enough to seize the opportunities offered
for business expansion. How competitive it will be, of course,
is a direct function of the level of investment in productive
equipment. That is one reason I have put so much emphasis on
productive investment today.
The Trade Expansion Act offers a direct opportunity for business
expansion by keeping our producers in on the ground floor of the
new markets and supplier relationships building up in the Common
Market. The potential for domestic business expansion as a result
of export trade, not only to the developed but eventually to the
less developed countries as well, adds a significant dimension to
the future of American business.
We cannot, of course, hope to take advantage of all these
factors for business expansion if our own economy is hobbled by
slack demand or the recessions such as those we have encountered in
the postwar period. Obviously, a major part of Government policy
must be directed to maintaining and increasing demand, and offsetting the possibility of recession.
Maintaining that recovery requires coordination of government
fiscal and monetary policies, and this has been done to good effect.
During the past eighteen months there has been a rise of over
$50 billion in output, representing a 6.6 percent growth in Gross
National Product over its previous peak in the second quarter of
i960. Even more important, there has been a 1.7 million rise in
employment and a drop in unemployment from nearly 7 percent to an
average of 5-1/2 percent in recent months.
Yet, this economic advance has not been marked by any of the
excesses which have accompanied previous recoveries.
Funds for productive long-term investment have remained in
ample supply and long-term rates for corporate bonds, mortgages,
and state and local securities — which have an important relationship
to domestic investment — have held at or below the levels to which
they had declined in the recession months of early 1961.
Inventories have increased gradually and moderately and in no
sector are excessive, and there is no evidence of the inflation that
has marked previous recoveries. Wholesale prices are one-half
percent below their level at the start of the recovery. Consumer
prices have risen only slightly, largely because of the long-term
increase in the cost of services. The recent rise In our consumer
price index, incidentally, has been only about one-third of that

- 8experienced during the same period in Western Europe. On the cost
side of inflation, there is also marked contrast with the situation
in Western Europe, where wages in the past year rose proportionately
twice as much as in the United States. The use of the governmental
tools of fiscal and monetary policy has obviously made a significant
contribution to the recent outstanding record of price stability.
But, by far the most significant area of government policy for
increasing our rate of business expansion is in the field of tax
policy. To a marked degree President Kennedy's recognition that
the health, welfare and profit-making character of U. S. business
and industry is basic to the achievement of our national goals -including full employment — is reflected in his tax policy,
specifically as it relates to investment, incentives and profits.
The President was well aware of the need for sweeping changes
in our tax system. Upon taking office, his first tax message to
Congress reflected the need for change. He directed the Secretary
of the Treasury to prepare "a comprehensive tax reform program"
through which we could work "toward the goal of a higher rate of
economic growth, a more equitable tax structure, and a simpler tax
law." He gave first priority to investment in productive equipment,
stating that "the immediate need is for encouraging economic growth
through modernization and capital expansion."
The problem was met in two ways, by administrative liberalization
of the tax treatment of depreciation, and by legislative enactment
of the Investment tax credit -- a tax incentive measure to spur
productive investment. The change in the administrative rules
concerning depreciation of machinery and equipment was issued on
July 12 of this year. The Investment tax credit, providing for a
credit reducing taxes In the amount of 7 percent of annual
expenditures for new productive machinery and equipment, becomes
law this week.
The important relationship of this two-pronged program to
reduce business costs and provide American industry a greater
opportunity to modernize and expand deserves closer examination by
all businessmen.
We at the Treasury have estimated that the total tax savings
to business In the first year as a result of the depreciation
reform alone will reach $1.5 billion. But the anticipated immediate
dollar savings tell only a small portion of the story.
What is really much more important is the concept which lay
behind the depreciation reform — the objective we sought, and
have reached. That objective can be stated quite simply: We
wished to create a situation in which It would be possible for
American industry to break loose from its old patterns of equipment
replacement and move toward replacement practices consistent with
the needs of our present era of swiftly changing technology.

- 9For the troubling fact is that for too many years — for more
than a decade, at a conservative estimate — our tax treatment of
depreciation has performed the undesirable and even harmful function
of "locking in" business firms to an endless repetition of their
past replacement patterns. Breakthroughs to the faster replacement schedules dictated by the modern age were almost impossible .
for most companies; the inadequate depreciation allowances of the
past left them too short of cash to shift to a more progressive
equipment purchase schedule. Even in cases where the cash was
available, any company attempting to shift to a more rapid
replacement practice continually ran the risk that Internal Revenue
auditors would disallow depreciation deductions based on the
newly-adopted replacement schedule.
It was a breakout from this vicious circle of slow past
replacement patterns dictating slow future replacement patterns
which was sought — and achieved -- with the depreciation reform.
The new depreciation guidelines will automatically permit
faster-than-existing tax writeoffs on some 70 to 80 percent of the
machinery and equipment In use by American business today.
In addition, Part Two of the new procedure contains the rules
that specifically provide that firms wishing to move to depreciation
schedules even faster than those set forth in the new guidelines
will be allowed to do so — now or in the future — provided only
that they can demonstrate that their actual replacement practices
are moving or will move Into conformity with their depreciation
claims.
We are confident that over a period of time there will be
increased understanding and recognition of these two opportunities movement to the stipulated lives in Part One of the regulations or
to lives less than those stipulated, as provided for In Part Two.
Both opportunities will be used by the majority of American
businesses owning depreciable property — to the benefit of the
whole economy and the individual company. Those who do not choose
to exercise either of the options presented can continue to operate
under the status quo undisturbed,,
It will undoubtedly take some months for the Impact of the
new regulations to be fully felt -- as the experience of the
textile industry demonstrates. That Industry, which received Its
depreciation revision in advance of Industry generally a year ago,
is now planning an increase in Its capital outlays of 26" percent
over the levels of last year. But the turnaround in textile
industry Investment plans took time. For example, four months
after the announcement of the new guidelines, a Commerce-SEC
survey showed no increase whatever in that Industry's Investment
plans.

^d
- 10 -

_><-:

Depreciation reform, however, is only one facet of the improved
tax climate for investment. The investment credit, just approved
by the Congress, will also make new investment more attractive by
making it more profitable and substantially decreasing the period
of risk. The tax savings to business arising from the credit are
estimated to run $1 billion in the first year.
In addition to reducing the period of recovery of investment
and improving the rate of return on investment, the new 7 percent
credit will produce another significant and beneficial effect:
Because it will lower the cost to any business of acquiring
machinery and equipment, it will add to the actual level of cash-inhand for any firm which takes the credit without diminishing the
amount of reported profits. This is, of course, not true of
additional depreciation, which appears on a firm's books as a
cost and thereby reduces the amount of reported profit. The fact
that use of the credit does not reduce reported profits — but
actually increases the reported after-tax profit — should lead
many companies which might otherwise hesitate to move toward more
rapid depreciation schedules to go right ahead with faster
depreciation. Thus the credit and depreciation reform are
complementary as well as supplementary.
The combined effect of depreciation reform and the investment
credit will be to reduce the current tax load on business by about
$2.5 billion a year -- an amount equal to about one-tenth of the
total corporate tax revenue.
This is a significant spur to business expansion, but it is
not by itself enough. President Kennedy took note of that in his
first tax message to the Congress, in April, 196l, when he
recommended the legislation which has just been approved as a first
urgent step toward tax reform.
In the past year it has become increasingly evident that
our tax system exerts too heavy a drag on our overall economy,
particularly during periods of recovery.
Observers have noticed a tendency since mid-1962 for the
economic expansion, enjoyed since early 1961, to level off or move
onto a plateau, despite the fact that the unemployment rate
significantly exceeds a tolerable level and manufacturing operating
rates are several points below the peak efficiency rates preferred
by businessmen. Moreover, although corporate profits, before
taxes, had Increased from $39-8 billion in early 1961 to $50.9
billion in the second quarter of 1962, the same leveling tendencies
were noted. The recent tendency of the economy to level off
in this manner brought renewed attention to the fact that during
the last five years excessive unemployment and underutilization of
plant and equipment has persisted throughout the cycle even in peak
periods of economic activity. This tendency to level off has
policy
focusedto
a wave
maximize
of national
businessattention
expansionon
and
further
employment.
developments in tax

- 11 -

In his address to the nation on August 13, President Kennedy
stressed this, and promised to recommend to the Congress in
January an "across the board, top-to-bottom cut" in personal and
corporate income tax rates, effective from January 1, 1963* partly
compensated for by some broadening of the tax base and involving some
net tax reduction. He summed up the current economic case for this
type of tax program by saying:
"Our tax rates . . . are so high as to weaken
the very essence of the progress of a free society,
the incentive for additional return to additional
effort. For these reasons, this Administration
intends to cut taxes in order to build the
fundamental strength of our economy, to remove a
serious barrier to long-term economic growth, to
increase incentives by routing out inequities and
complexities, and to prevent the even greater budget
deficit that a lagging economy would otherwise surely
produce..."
Obviously, if the pace of business expansion and economic growth
is to be further accelerated, tax law modification is essential.
Next year's tax reduction and reform will help this acceleration
effectively in several ways. It will broaden and strengthen
markets, it will spur additional investment, and it will increase
business profits.
By reducing the corporate tax rate, the tax reform package
will increase the flow of cash available to corporations to finance
modernization and provide incentives to expand, combining with
depreciation reform and the investment credit to make a maximum
opportunity for increased investment for business expansion.
In addition, by reducing the amount of taxes taken from the
paychecks of individual citizens, this reform will add greatly to
the basic level of demand In the economy — an Important factor in
any growth pattern.
Increasing the disposable income of consumers, of course, will
have an immediate effect on the economy. Consumers regularly spend
more than 90 percent of their disposable income, which has immediate
economic effects. A reduction in taxes to consumers adds new
vitality to markets, increases production, employment, income and
profits, creating pressure for an upward spiral of economic
activity.
A tax reduction and reform of the kind the President will
recommend to the Congress will, by increasing sales and bringing
production closer to capacity, increase profits on existing investment,
spur spending on Inventory, on new plant and on new equipment. This

ZQ
capital goods expansion increases total output, stimulates further
consumption, and increases profits. Meanwhile, reduction of income
taxes on corporations and unincorporated businesses coming on top
of the investment tax credit will increase business profit margins
and return on investment.
. This outlook for increased profits offers a highly favorable
environment for national business expansion, particularly In the
light of the other favorable environmental factors previously
described.
In closing, I should like to emphasize the need for profit,
for one cannot merely urge investment or business expansion for
its own sake. No one is going to risk his savings in a business
venture without prospect of return. Profit, and the expectation
of profit, is the touchstone of business expansion, which in turn
creates more jobs, Increases demand, and gives rise to even
greater expansion.
The successful enactment of a tax program along the lines
projected by the President early in the next session of Congress —
coming on the heels of the steps already taken — pushes the door
further open to a new era of business expansion and an increased
rate of economic growth.
Queried some weeks ago on what it would take to boost capital
commitments, some 60 percent of the National Association of
Purchasing Members polled gave higher profits the nod, while
45 percent also voted for lower taxes.
We have come a long way toward wrapping both measures up in
the same package. The early achievement of the President's tax
program next year should make a substantial contribution toward
consolidating all the favorable factors that exist in the present
situation and paving the way for a new era of business expansion,
which will provide the jobs, the profits and the wealth which our
economy is capable of producing in abundance.
0O0

TREASURY DEPARTMENT
Washington
FOR RELEASE ON DELIVERY

REMARKS OF JOSEPH W. BARR
ASSISTANT TO THE SECRETARY OF THE TREASURY
AT PRESENTATION OF MINUTE MAN FLAG
TO MARTIN-ORLANDO, FRIDAY, OCTOBER 12, 1962
ORLANDO, FLORIDA
LADIES AND GENTLEMEN: It is a distinct pleasure
to be with you here in Orlando this morning, an honor
for me to represent the Secretary in imparting to all
of you some measure of the Treasury*s thanks for your
outstanding support of the Savings Bonds Program
through the Payroll Savings Plan.
I'd like to tell you briefly today just what you
share in by being a payroll saver. And I think I might
best do this by giving you some of the reasons we stress
the value of Savings Bonds -— by giving you the "Whys"
of the Bond Program, so to speak.
. Specifically, we sell U. S. Savings Bonds to achieve
the widest possible distribution of the national debt
among individual citizens* This we do in the interest of
national economic health and stability. Only two primary
means are available to the Treasury to raise funds ——
taxation and borrowing. To the extent that we borrow
from the people instead of from the commercial banks we
inhibit inflation. Additionally, the hundreds of millions
of dollars in interest payments go to millions of our
citizens instead of to a relatively few financial
institutions.

- 2 -

Apart from purchasing power, these savings represent a
reservoir of funds for capital expansion and it is axiomatic that real capital must be saved.
We sell U. S. Savings Bonds because we seek to write
a multi-billion dollar insurance policy against boom and
bust. Savings tend to divert excess funds from the spending stream in time of inflation and they provide a backlog
of purchasing power available to every community in the
Nation in time of recession. We believe that this economy
of ours requires a steady flow of savings and that there
never has been and never will be a place in it for a
moratorium on thrift.
We sell U. S. Savings Bonds as a means of furthering
the basic American habit of thrift in every family in the
land. Apart from the beneficent influence of the thrift
habit upon our economic life as a Nation, we seek to
translate its advantages in terms of the individual
family unit —- the universal need for security, the
fruition of plans for higher education of its children,
a wory—free retirement, a home —- in short the realization of dreams perhaps once thought unattainable. In
pursuing this objective, we firmly aver that it is not
our intention to divert funds from other established and
valid savings media. To the contrary, it is our conviction
that the canopy of thrift consciousness and education which
we have erected over the length and breadth of the Nation

has benefited substantially all of our thrift institutions.
We seek for our thrift program only our fair and reasonable
share and believe that we complement rather than compete
with other established thrift media.
Sociologically and even ideologically, we sell U. S.
Savings Bonds because we seek to contribute to the development of a Nation of "haves" rather than "have-nots." We
feel that here again we join in the underwriting of another
insurance policy — protection against the risks of that
type of encroachment upon our free way of life, the "isms,"
which seem always to grow and breed within the ranks of
the "have-nots." It is our conviction that a U. S. bond
holder is a shareholder in America and like any other
shareholder in a going concern he becomes more resistant
to those influences which would tend to undermine the
corporate structure in which he has a financial stake.
In the area of citizenship, we seek through the sale
of these Shares in America, to stimulate a more active
interest in public affairs and issues, a stronger feeling
of personal identification with the actions and policies
of our Government, and a greater sense of self-reliance
which in turn carries with it a diminution of dependence
upon Government hand-out.
Through the U. S. Savings Bonds Program, we offer
thousands of volunteers an opportunity for worth-while

- 4 -

or,

public service in true American democratic tradition —
a corps of dedicated men and women ready and willing to
assume a mammoth burden in the event of dire national
emergency which we hope, God willing, will not occur.
Bonds in a very direct sense help us to achieve our
national goals. There are some who say that a critical
weakness of our society is that we have no great purpose
as a people or a nation; that we talk of ourselves as if
we are a completed society, with no further great business
to transact. This reminds me of statements made some years
ago, to the effect that our pioneering days were over;
that there were no new frontiers to conquer*
We cannot permit ourselves to assume such a pessimistic attitude as we face the great challenges both at
home and abroad. As for there being no more frontiers to
conquer, you people right here at Martin can see the
falsity of such a statement — you live in an area where,
in the course of your daily lives, you can hear and see
another frontier just beginning to crack — the frontier
of space. You, perhaps more than the rest of us Americans,
could feel the lump in the throat as our newest space
hero, Wally Schirra, zoomed into orbit last week. It was
right from your own backyard.
But space isn't our only frontier today. We still
have the very real frontier that exists right here on the
ground. It is the social and spiritual and ideological

61
- 5 frontier which requires perhaps even more attention than
does that in the skies. We are the leader of the Free
World and have assumed a major responsibility for the
promotion of freedom with justice among all peoples.
While these objectives encompass much more than the economic, they can not be attained without an economic
effort which must surpass everything we have heretofore
attempted.
Lastly, but certainly one of the most important
reasons for the Bond Program is to help support the
National Defense effort — by helping to ensure domestic
economic stability without which no military posture,
however formidable, is meaningful and quite directly
by helping to finance our huge defense expenditures in
the least inflationary manner.
You people here at Martin can certainly appreciate
the needs of that last item, national defense. In more
than a "sense, you are sharing a dual role in our nation's
defense efforts — by devoting your talents and energies
directly in the defense effort, and by your fine record
of payroll savings. It is perhaps fitting — certainly
gratifying to us — that you people, working as you do
in the research, development, production and testing of
some of our most complex and sophisticated defense
projects, realize and whole-heartedly complement this
endeavor by supporting the Bond program. Many people

62
- 6 simply do not appreciate the vast effort that is national
defense today. You people do — and realizing the importance of the program, go a step farther with your bond
purchases.
We at Treasury hope you will look on your own participation in the Bond program as an additional defense
system which Martin is producing —• a sort of financial
MISSILE MASTER or BIRDiE.
And it is with a great deal of pleasure that I
present, on behalf of the Treasury Department and
Secretary Dillon, this Treasury Minute Man Flag in
recognition of Martin-Orlando's fine record in the Payroll
Savings Plan. Your 82$ enrollment is a record which to
us at Treasury, and I am sure to you, is most gratifying.
It is proof enough of the real interest Martin employees
have in the preserving and fostering of our American way
of life. We hope that Martin,Florida's largest industrial firm, will serve as an example to other industry
in the state and in the nation. I am especially pleased
to present this flag as it is the first such award to be
presented in Florida since the end of World War II. Your
fine support of our Savings Bonds Program is a model of
Government-business cooperation for the common good.
congratulations and thanks.

TREASURY DEPARTMENT
Washington
FOR RELEASE ON DELIVERY

REMARKS OF JOSEPH W. BARR
ASSISTANT TO THE SECRETARY OF THE TREASURY
AT PRESENTATION OF MINUTE MAN FLAG
TO MARTIN-CANAVERAL, FRIDAY, OCTOBER 12, 1962
CAPE CANAVERAL, FLORIDA
LADIES AND GENTLEMEN: It is a distinct pleasure
to be with you here in Canaveral this afternoon, and
an honor for me to represent the Secretary in imparting to all of you some measure of the Treasury's thanks
for your outstanding support of the Savings Bonds
Program through the Payroll Savings Plan.
Ifd like to tell you briefly today just what you
share in by being a payroll saver. And I think I might
best do this by giving you some of the reasons we stress
the value of Savings Bonds — by giving you the "Whys"
of the Bond Program, so to speak.
Specifically, we sell U. S. Savings Bonds to achieve
the widest possible distribution of the national debt
among individual citizens. This we do in thie interest of
national economic health and stability. 0__6y two primary
means are available to the Treaisury to raise funds —
taxation and borrowing. To the extent that we borrow
from the people instead of from the commercial banks we
inhibit inflation. Additionalily, the hundreds of millions
of dollars in interest payme-nts go to millions of our
citizens instead of to a relatively few financial
institutions•

64
- 2 Apart from purchasing power, these savings represent a
reservoir of funds for capital expansion and it is axiomatic that real capital must be saved.
We sell U. S. Savings Bonds because we seek to write
a multi-billion dollar insurance policy against boom and
bust. Savings tend to divert excess funds from the spending stream in time of inflation and they provide a backlog
of purchasing power available to every community in the
Nation in time of recession. We believe that this economy
of ours requires a steady flow of savings and that there
never has been and never will be a place in it for a
moratorium on thrift.
We sell U. S. Savings Bonds as a means of furthering
the basic American habit of thrift in every family in the
land. Apart from the beneficent influence of the thrift
habit upon our economic life as a Nation, we seek to
translate its advantages in terms of the individual
family unit — the universal need for security, the
fruition of plans for higher education of its children,
a wory-free retirement, a home — in short the realization of dreams perhaps once thought unattainable. In
pursuing this objective, we firmly aver that it is not
our intention to divert funds from other established and
valid savings media. To the contrary, it is our conviction
that the canopy of thrift consciousness and education which
we have erected over the length and breadth of the Nation

6.
- 3 has benefited substantially all of our thrift institutions.
We seek for our thrift program only our fair and reasonable
share and believe that we complement rather than compete
with other established thrift media.
Sociologically and even ideologically, we sell U. S.
Savings Bonds because we seek to contribute to the development of a Nation of "haves" rather than "have-nots." We
feel that here again we join in the underwriting of another
insurance policy — protection against the risks of that
type of encroachment upon our free way of life, the "isms,"
which seem always to grow and breed within the ranks of
the "have-nots." It is our conviction that a U. S. bond
holder is a shareholder in America and like any other
shareholder in a going concern he becomes more resistant
to those influences which would tend to undermine the
corporate structure in which he has a financial stake.
In the area of citizenship, we seek through the sale
of these Shares in America, to stimulate a more active
interest in public affairs and issues, a stronger feeling
of personal identification with the actions and policies
of our Government, and a greater sense of self-reliance
which in turn carries with it a diminution of dependence
upon Government hand-out.
Through the U. S. Savings Bonds Program, we offer
thousands of volunteers an opportunity for worth-while

" 4"

public service in true American democratic tradition —
a corps of dedicated men and women ready and willing to
assume a mammoth burden in the event of dire national
emergency which we hope, God willing, will not occur.
Bonds in a very direct sense help us to achieve our
national goals. There are some who say that a critical
weakness of our society is that we have no great purpose
as a people or a nation; that we talk of ourselves as if
we are a completed society, with no further great business
to transact. This reminds me of statements made some years
ago, to the effect that our pioneering days were over;
that there were no new frontiers to conquer.
We cannot permit ourselves to assume such a pessimistic attitude as we face the great challenges both at
home and abroad. As for there being no more frontiers to
conquer, you people right here at Martin can see the
falsity of such a statement «— you live in an area where,
in the course of your daily lives, you can hear and see
another frontier just beginning to crack — the frontier
of space. You, perhaps more than the rest of us Americans,
could feel the lump in the throat as our newest space
hero, Wally Schirra, zoomed into orbit last week. It was
right from your own backyard.
But space isn't our only frontier today. We still
have the very real frontier that exists right here on the
ground. It is the social and spiritual and ideological

6?
- 5 frontier which requires perhaps even more attention than
does that in the skies. We are the leader of the Free
World and have assumed a major responsibility for the
promotion of freedom with justice among all peoples.
While these objectives encompass much more than the economic, they can not be attained without an economic
effort which must surpass everything we have heretofore
attempted.
Lastly, but certainly one pf the most important
reasons for the Bond Program is to help support the
National Defense effort — by helping to ensure domestic
economic stability without which no military posture,
however formidable, is meaningful and quite directly
by helping to finance our huge defense expenditures in
the least inflationary manner.
You people here at Martin can certainly appreciate
the needs of that last item, national defense. In more
than a sense, you are sharing a dual role,in our nation's
defense efforts — by devoting your talents and energies
directly in the defense effort, and by your fine record
of payroll savings. It is perhaps fitting — certainly
gratifying to us — that you people, working as you do
in the research, development, production and testing of
some of our most complex and sophisticated defense
projects, realize and whole-heartedly complement this
endeavor by supporting the Bond program. Many people

- 6 simply do not appreciate the vast effort that is national
defense today. You people do — and realizing the impor- .
tance of the program, go a step farther with your bond
purchases.
We at Treasury hope you will look on your own participation in the Bond program as an additional defense
system which Martin is producing -— a sort of financial
MISSILE MASTER or BIRDIE.

And it is with a great deal of pleasure that I
present, on behalf of the Treasury Department and Secretary Dillon, this Treasury Minute Man Certificate authorizing the Canaveral Division to fly the Treasury flag in
recognition of your fine record in the Payroll Savings
Plan. Your 16% enrollment is a record which to us at
Treasury, and I am sure to you, is most gratifying. It
is proof enough of the real interest Martin-Canaveral
employees have in the preserving and fostering of pur
American way of life. Your fine support of our Savings
Bonds Program is a model of Government-business cooperation for the common good. My congratulations and thanks*

ID
1
i. "4

- 2 Unit :
Imports
of
:
as of
Quantity:Sept. 29. 1962

Commodity

Absolute Quotas:
Butter substitutes, including
butter oil, containing k5%
or more butter fat

Calendar Year 1962 1,200,000

Pound

Cotton products, except cotton
wastes, produced in any stage
preceding the spinning into
yarn

12 mos. from
Sept. 11, 1962

1,000

Pound

644^

Peanuts, shelled, unshelled,
blanched, salted, prepared or
preserved (incl. roasted peanuts but not peanut butter)

12 mos. from
August 1, 1962

1,709,000

Pound

,
524,817 -/

1/ Imports through October 8, 1962.
2/ Imports through October 5, 1962.

D-634

Quota Filled

TREASURY DEPARTMENT
Washington

IMMEDIATE RELEASE

D-634

FRIDAY, OCTOBER 12,1962

The Bureau of Customs has announced preliminary figures on imports for consumption of the following quota commodities from the beginning of the respective
quota periods through September 29, 1962:

Unit : Imports
of
:
as of
Quantity:Sept. 29, 196;

Commodity

Tariff-Rate Quotas:
Cream, fresh or sour Calendar Year

1,500,000

Gallon

108

Whole Milk, fresh or sour Calendar Year

3,000,000

Gallon

313

Cattle, 700 lbs. or more each July 1, 1962(other than dairy cows)
Sept. 30,. 1962

120,000

Head

13,727

12 mos. from
Cattle less than 200 lbs. each.... April 1, 1962

200,000

Head

43,147

Fish, fresh or frozen, filleted,
etc., cod, haddock, hake, pollock, cusk, and rosefish
Calendar Year

28,571,433

Pound

Tuna Fish Calendar Year

59,059,014

Pound

42,335,267
52,233,560:-/
Quota Filled

White or Irish potatoes:
Certified seed
Other

12 mos. from
Sept., 15, 1961

114,000,000
.36,000,000

Pound
Pound

Certified seed 12 mos. from
Other

Sept. 15, 1962

114,000,000
36,000,000

Pound
Pound

5,000,000

Pound

Walnuts Calendar Year
Stainless steel table flatware
(table knives, table forks,
table spoons)

Nov. 1, 1961Oct. 31, 1962

69,000,000

Pieces

Quota Filled^

none
305,360
2,446,782

68,571,324

1/ Imports for consumption at the quota rate are limited to 21,428,574 pounds during
the first nine months of the calendar year.
2/ Imports through September 14, 1962.

TREASURY DEPARTMENT
Washington

IMMEDIATE RELEASE

D-634

FRIDAY, OCTOBER 12,1962

The Bureau of Customs has announced preliminary figures on imports for consumption of the following quota commodities from the beginning of the respective
quota periods through September 29, 1962:
Unit : Imports
of
:
as of
Quantity:Sept. 29. 1962

Commodity

Tariff-Rate Quotas:
Cream, fresh or sour. Calendar Year

1,500,000

Gallon

108

Whole Milk, fresh or sour Calendar Year

3,000,000

Gallon

313

Cattle, 700 lbs. or more each July 1, 1962(other than dairy cows)
Sept. 30,. 1962

120,000

Head

13,727

12 mos. from
Cattle less than 200 lbs. each.... April 1, 1962

200,000

Head

43,147

Fish, fresh or frozen, filleted,
, etc., cod, haddock, hake, pol' lock, cusk, and rosefish
Calendar Year

28,571,433

Tuna Fish. Calendar Year

59,059,014 Pound 42,335,267

.flute or Irish potatoes:
' Certified seed
'Other

12 mos • from
Sept. 15, 1961

114,000,000
36,000,000

Pound

Pound
Pound

Quota Filled

52,233,560-/
Quota Filled

'Certified seed... 12 mos. from
^Other
Sept. 15, 1962

114,000,000 Pound
36,000,000 Pound

none
305,360

Walnuts Calendar Year

5,000,000 Pound

2,446,782

stainless steel table flatware
(table knives, table forks,
Nov. 1, I96I" table spoons)
Oct. 31, 1962

69,000,000

Pieces

68,571,324

-J Imports for consumption at the quota rate are limited to 21,428,574 pounds during
-he first nine months of the calendar year.
]/ Imports through September 14, 1962.

- 2 -

Commodity

: Unit :
Imports
:
of
:
as of
;Quantity;Sept. 29. 1962

Period and Quantity

Absolute Quotas:
Butter substitutes, including
butter oil, containing 45$
or more butter fat

Calendar Year 1962 1,200,000

Cotton products, except cotton
wastes, produced in any stage
preceding the spinning into
yarn.

12 mos. from
Sept. 11, 1962

Peanuts, shelled, unshelled,
blanched, salted, prepared or
preserved (incl. roasted peanuts but not peanut butter)...

12 mos. from
August 1, 1962

1/ Imports through October 8, 1962.
2/ Imports through October 5, 1962.

D-634

Pound

1,000 Pound

1,709,000

Pound

Quota Filled

644-/

524,817 -/

70
TREASURY DEPARTMENT
Washington
IMMEDIATE RELEASE

D-635

FRIDAY, OCTOBER 12,1962

The Bureau of Customs has announced the following preliminary
figures showing the imports for consumption from January 1, 1962, to
September 29, 1962, inclusive, of commodities under quotas established
pursuant to the Philippine Trade Agreement Revision Act of 1955:

Commodity
Buttons....

Established Annual
Quota Quantity
680,000

Unit
:
Imports
of
:
as of
Quantity : September 29, 1962
Gross

203,339
8,910,853

Cigars

160,Q00,000

Number

Coconut oil

358,400,000

Pound

133,906,291

Cordage....

6,000,000

Pound

3,495,522

Tobacco....

5,200,000

Pound

4,500,376

7Q
TREASURY DEPARTMENT
Washington
IMMEDIATE RELEASE

FRIDAY, OCTOBER 12,1962

D-635

Commodity

Buttons....

Established Annual
Quota Quantity
680,000

Imports
: Unit
:
as of
:
of
: Quantity *: September 29, 1962
Gross

203,339

Cigars

160,Q00,000

Number

Coconut oil

358,400,000

Pound

133,906,291

Cordage....

6,000,000

Pound

3,495,522

Tobacco....

5,200,000

Pound

4,500,376

8,910,853

74
fREASTfftr jppMBXKBHi
_•-»•«.»•_«—>. ft- A ,
11 II •••••(Jj>iaMifp » —

ZU-SDXAfS BSLSAS.

D-636

FRIDAY, OCTOBER 12,1962

I-OZMZMARr DATA OH UffOBTS K R COHSOUFTION 07 tM_AN0?ACTUHSJ> -SAD AND ZINC CEAaGZABU TO THE QUOTAS ESTABLISHED
BY PHSSIDSafflAl, faOCU-ATZOM WO. 3257 JT SSPTSUBZa 22, _95»
CB-UCBLY ODDTA FEBXOD • July I - September 50, 1962
OffOBIS •

July I - September 30, 1962

ITEM 392
t Lead bullion or bass bullish
t load la pigs and bars, lsajl'
L*ad-»ba&ring ores, flua dast, i droaa, rool&laad lead* ecra?
and sattea
x lead, anti-oolal lead, antlt aoolal speap lead, type _atal,
t all alloys or combinations of
*
lead n.a.p.f.
:C__rtariy Quota
tC_-rtarly ttasrta
t Dutiable. Lead
Imports i Dutiable Laad
leoorta
(Pounds)
(Pounds)
IT-H 391

Country
of
Production

10,080,000

Australia

10,080,000

23,600,000

ITEM 394
ITEM 393
t
t
t
»
* Zlno-ba&ring oras of all kinds, s Zlno la blocks, pigs, or slabs;
t except pyrites oontainlag not t old and worn-out zlno, fit
t
orsr 3 # of d n o
t only to ba rs-a_uf_etur»d, zlno
t
*
dross, and zlno sk_a_lngs
x
t
t&artsrly
Oiota
;Q_urtarI~
Quota
Daports : By
ffeijfct
Igporta
* Dutiable Zinc
(Pounds/
(Pounds)"

18,681,227
5,440,000

Belgian Conge
Bslglun and
Luxsaburg (total)
5,040,000

Bolivia

13,440,000

Canada

5,*68,8»i7

7,520,000

37f»40,000

3?,8»»0,000

1,121,615
13,^0,000

15,920,000

66,480,000

66,1*60,000

Italy

•

Itezloo

36,880,000

35,77»4,252

70,480,000

70,U80,000

6,320*000

5,712,5^3

12,880,000

12,875,932

359120,ooo

35,120,000

3,7-0»ooo

5,756,5l»i

15,7-©»OOO

I5,5H0,9H

6,080,000

M48,072

17,840,000

17,8^0,000

Para

16,160,000

15,877,892

SB. S0e Africa

14,880,000

H»,880,000

Yugoslav!*
All other foraiga
woustrias (total)

6,560,000

3,600,000

The above country designations are those specified in Presidential Proclamation No. ~<5_57
countries have been changed. -

PrBTglSB——

_•

September 22, 1958.

6,080,000

Since that date the naaes of certain

TBSASDHY I 8 M H X - U B

X-US-IAIX &SLSASS

D-636

FRIDAY, OCTOBER 12,1962
FBEUDSmSI

DATA OH IMPORTS W R CONSuMPnOH 07 UiHttNOFACYOESP XXAO ASD ZDJC CHASS-lB-* TO THE OUOTAS SSTABLI_Hn>
BY fSZSXDSSTIAL SBOCLA-ATIOH KO« 3257 0? S-PTBEEa 22, 1950

CDABRSLY flBOTA JS8I0D • July I - September 30, 1962
Blp0aW

* July I - September 30, 1962

Country
of
Production

Australia

ITgM 394
ITS- 393
ITEM 392
IT-g 391
im w , Ts"
>
tt _eaa
Lead ou_-ion
bullion or oaaa
base w
bullion*
a
t load la pigs and bars, lsaa?
:
»
t Lead-bearing oraa, flua dast,: dross, raolaiasd lead, scrap
s Zino-baarlng oras of all kinds,: Zlno la blocks, pigs, or slabs;
i
snd eattes
s lead, antlaonlal lead, airtl- * except pyrites containing net :
zd 00 * f^* zlno
X old
onlyand
to worn-out
ba re—aoufactured,
fl- p
:
: aonlal sorap lead, typ« -atal, *
*
3 ^ of zlno
<
dross, and zlno ski—alngs
t
.
:
: all alloys or canbinatlon* of «
_
t__irt«rly Giota
iC-artsriy
G_ota
;Q_u*tarlor Qiota
j: Quarts rly ttiota
t
lead "n.a.p.f.
:
ffeiafct
Iffiports
Imports t 0-tl-bls Lsad
reports i Dutiable Zins
I-porta : By
t Dutlabla Load
(Pounds)
(Pounds)
:" '
(Pounds)
(Pounds)
18,681,227
23,680,000
10,080,000
10,080,000
5*440,000

Balglaa Congo
Belglua and
Luxsaburg (total)
Bolt-la

5,040,000

Cannda

13*440,000

7,520,000

37,840,000

37,8*«0,000

I,121,615
I3,1»IJQ,000

15,920,000

66,480,000

66,»+80,000

3,600,000

Italy
Mexico
Para

16,160,000

15,877,892

On. So. Afrloa

14,880,000

111,880,000

TugoslOTla
All stnar foralffa
oountrlas (total)

5,W38,8M7

6,560,000

6,5-0*300

The above country designations ar
countries have been changed. -

36,880,000

55,77>»f252

70,480,000

70,»480,000

6,320,000

5,712,5*13

12,880,000

12,875,932

35,120,000

3,760,000

3,756,5IH

15,7-0*000

. 15,5^0,9it-

6,080,000

1*8,072

17,840,000

I7,8UO,000

6,080,000

e those specified in Presidential Proclamation Ho.^257 of Septe.ber 22, 1958. Since that date the na.es of certain

psz__asa __ T B Z Boa-in o_> cosrous

cry

7£

YSBiSasr OpMBf-EwS
•fcsMngton, Bw 0«
B - G D I A K BSLtASS

D-637

FRIDAY, OCTOBER 12,1962

S-XtfMZNAHf DATA ON IMPORTS ?GR CONSUMPTION Of CN-ANUFACTTOSD -SAD AND - M O CHfflfiglBMg TO IBS QUOTAS _STABLI___B
BY fSSSXSSITIAL IS0CL4-ATI0M NO. 3257 07 SKrTOfflER 22, 195»
_="
CBASMHLY flOOTA FERZQD «• October I - December 31, 1962
OSOSfS • October I - October 5, 1962 (or as noted)

Country
of
Production

Australia

ITS. 394
ITEM 39ft
m a t 392
IT-g 391
i
i Lea:
«
:
Load Bullion
bullion or
or oasa
base Da-iion*
bulllojKp s
a
: lsad In pigs and bars, lead
:
t
: Lead-bearing ores, flue dust,: dross, reolalnsd lead, scsap
t Zino-bearlng oras of all kinds,: Zlno in blocks, pigs, or slabs;
:
and sattas
: lead, anti-toolal lsad, antl- i except pyrites containing- not % old and worn-out zlno, fit
:
s aonlal scrap lead, ^rpe -ataj, t
oyer 3 £ of zlno
s only to bo re-anufaetursd, zlno
x
: all alloys or combinations of :
t
dross, and zlno sklaalngs
:C__rtarly
dlead
a t a n.s.p.f.
;Q__*tarly
Quota.
2:Quarterly __ot*
t
t
t:__u-terly C&iot*
Icports ; By S*l,ght
reports
Imports i D-tl-bl» Lsad
I_-3orta : Dutiable Zinc
s Butlabia Lead
(Pounds)
(Pounds)'
(Pounds)
T' - (Pounds)
10,080,000

10,080,000

23,680,000 l,i»32,666

5,440,000

Belgian Conge
Belglun and
Luxsaburg (total)
Bolivia

5,040,000

88*1*

Canada

13,440,000

8,510,155*

15,920,000

770,OHO

66,480,000

66,k80,000

7,520,000

37,-40,000

!,730,895

3,600,000

Italy

Mexie©

36,880,000

300,126

70,480,000

5,701,030

6,320,000

12,880,000

35,120,000

^6,270

5,760,000

17,840,000

l?,8U0,000

f-ra

16,160,000

On. So. Afrloa

14,880,000

m , 880,000

15,7-0,000

Yugoslavia
All other foreign
countries (total)

6,560,000

5,805,75^

6,080,000

k,092,620*

6,080,000

•Imports as of October 8, 1962
The above country designations are those specified in Presidential Proclamation No.^257 of September 22, 1953. Since that date the na.ee of certain
countries have been changed.-

T"ftrfl5T?RY 33EFAB3—ZBB
SuhLagw9^# 8* Ow
X_y28XATI BSLB&SS

FRIDAY, OCTOBER 12,1962

D-637

RECLZ-XHASr DATA OS IMPORTS fCR COHSSHPTIOH 07 _S_AND?ACTUfSP LEAD AND ZINC CHIffffTiHI.^ TO ___•fflJOYAS*XSYABLX-H-9
BY -9ZSI&S8TIA- SBDCUiUXlQH SO. 3257 C? SSPTS-BSE 22, 2950
BJABTEaLT GESTA RBOQO • October I - December 31, 1962
OttwatS • October I - October 5, 1962 (or as noted)
irai 392
:
t Lead
Lead -union
bullion or
or base
base bullion*
bullion*
t lsad in pigs and bars, leajf
Lead-bearing ores, flue dust,: dross, reolalaad lsad, scrap
and E-ttea
x lead, anti_onial lead, antlt aonlal sorap lead, type satal,
8 all alloys or ecabinations of
sQuarterly
:C__rtarly
Quota
- Quota
t
lead n.s.p.f.
ITZH

Country
of
Production

391

s
*

: Dutiable Lead
(Pounds)
Australia

Imports

j Dutiabls Lsad
(Pounds)

B-oort*

IffiDorts

: By S-iiiht
(Pcusds)

•

5-440,000

7,520,000

10,080,000

23,680,000

Belgian Congo

Belglua and
Luxsaburg (total)

Canada

1 Dutiable Zins
(Pounds)

10,080,000

Boltrta

Drport*
";''"*

rrg- 394
ITEM 393
t
t
:
s
t -ino-bearing ores of all kinds,: Zlno la blocks, pigs, or slabs;
s except pyrites containing not 1 old and -era-cut zlno, fit
*
over yfr of zlno
s only to be re_anufactursd, zlno
1
t
dross, and zlno skla-lngs
jQ_u*tarly
Qieta.
j___-t-r_y
—iota
1
:

1 ,»t32,666.

5,040,000

884*

«>

13,440,000

8 ,510,155*

15,920,000

770,040

66,480,000

37,840,000

1,730,895

e»

3,600,000

Italy

•t

Mexico

«»

36,880,000

300,126

70,480,000

5,701,030

6,320,000

3,7-0,000

Peru

16,160,000

12,880,000

35,-20,000

46,270

On- So* Afrioa

14,880,000

•

15,7-0,000

—

•

17,840,000

6,080,000

Yugoslavia

All other forol0t
ooustrloa (total)

6,5-0,000

5,805,754*

^,080,000

4,092,620*

•laports as of October 8, 1962
The above country designations are those specified in Presidential Proclamation Mo.'^257 of Septe»ber 22, 1953- Since that date the naaes of certain
countries have been changed.-'

FS-S-BSa m

T H Z SOSUCAO »

CUSTOUS

70.

-£•
COTTON WASTES
(In pounds)

COTTON CARD STRIPS made rfrom cotton having -a staple of less than 1-3/16 inches in length, COHBER
WASTE, LAP WASTE, SLIVER WASTE, AMD ROVING WASTE, 'WHETHER OR NOT MANUFACTURED OR OTHERWISE
ADVANCED IN VALUE: Provided, however, that not more than 33-1/3 percent of the quotas shall
be filled by cotton wastes other than comber wastes made from cottons of 1-3/16 inches or more
"in staple length in the case of the following countries: United Kingdom, France, Netherlands,
Switzerland* Belgium, Germany, and Italy:

Country of Origin

Established
TOTAL QUOTA

United Kingdom
4,323,457
Canada . . . . . . . . .
239,690
France . .
227,420
British India
69,627
Netherlands
•
68,240
Switzerland . . . . . . .
44,388
Belgium . . . •
38,559
Japan . . . . . . . . . .
341,535
China •
17,322
Egypt
•• •.
8,135
Cuba
6,544
Germany
76,329
Italy
21.263
5,482,509
Included .in total imports, column 2..
Prepared in the Bureau of Customs.

_>-638

:
Total Imports
: Established :
Imports
: Sept. 20, 1961, to : 33-1/32 of : Sept, 20, 1961,
; Sept. 19, 1962
: Total Quota : to Sept. 19, 1962
1,441,152
V75.807
22,747
12,505
-

1,892,083
239,690
179,155
69,627
67,447
42,019
22,062
341,500

1,441,152

76,329

25,443
7.088

25,443

2,929,912

1,599,886

1,577,654

-»

75,807
-

22,747
14,796
12,853
—

TREASURY DEPARTMENT
Washington, D. C.

IMMEDIATE RELEASE
PREPAY, OCTOBER 12,1962

D-638

Preliminary data on imports for consumption of cotton and cotton waste chargeable to the quotas
established by the President's Proclamation of September 5, 1939, as amended
COTTON (other than linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3 A "
Imports September 20, 1961, to September 19. 1962
Country of Origin
Egypt and the AngloEgyptian Sudan ....
Peru
British India
China
,
Mexico
Brazil
Union of Soviet
Socialist Republics
Argentina ..Haiti
Ecuador

Established Quota
783,816
247,952
2,003,483
1,370,791
8,883,259
618,723
V75,124
5,203
237
9,333

Imports

Established Quota

Country of Origin

Honduras
Paraguay
783,816
Colombia
..
245,483
Iraq
;.,.....
2,003,483
British East Africa ...
Netherlands E. Indies .
8,883,259
Barbados
618,723
l/0ther British W. Indies
114,908
Nigeria
2/0ther British W. Africa
3/0ther French Africa ...
Algeria and Tunisia .•.

752
871
124
195
2,24b
71,388
21,321
5,377
16,004
689

1/ Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
2/ Other than Gold Coast and Nigeria.
3/ Other than Algeria, Tunisia, and Madagascar. '
Cotton 1-1/8" or more
Imports August 1, 1962r to September 15. 1962
Established Quota (Global) - 45,656,420 Lbs.
Staple Length Allocation Imports
1-3/8" or more
39,590,778
1-5/32" or more and under
1-3/8" (Tanguis)
1,500,000
1-1/8" or more and under
1-3/8"
h,565y6h2.

39,590,778
122,857
4,565,642

Imnorts

TREASURY DEPARTMENT
Washington, D. C.
IMMEDIATE RELEASE

D-638

FRIDAY, OCTOBER 12,1962

Preliminary data on imports for consumption of cotton and cotton waste chargeable to the quotas
established by the President's Proclamation of September 5, 1939, as amended
COTTON (other than linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4"
Imports September 20, 1961, to September 19. 1962
Country of Origin
Egypt and the AngloEgyptian Sudan ...
J
eru
British India
China
Mexico
Brazil
Union of Soviet
Socialist Republics •••
Argentina . .•
Haiti
Ecuador
*

Established Quota
783,816
247,952
2,003,483
1,370,791
8,883,259
618,723
475,124
5,203
237
9,333

Imports

Established Quota

Country of Origin

Honduras ..............
Paraguay
783,816
Colombia
245,483
Iraq
;.......
2,003,483
British East Africa ...
Netherlands E. Indies .8,883,259
Barbados
618,723
l/Other British W. Indies
114,908
Nigeria ...............
2/0ther British W. Africa
3/0ther French Africa ...
Algeria and Tunisia ...

752
871
124
195
2,24b
71,388
21,321
5,377
16,004
689

l/ Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago,
2/ Other than Gold Coast and Nigeria.
3/ Other than Algeria, Tunisia, and Madagascar.
Cotton 1-1/8" or more
Imports August 1, 1962T to September 15. 1962 -——
Established Quota (Global) - 45,656,420 Lbs.
Staple Length Allocation Imports
1-3/8" or more
39,590,778
1-5/32" or more and under
1-3/8" (Tanguis)
1,500,000
1-1/8" or more and under
I-3/8"
4,565,642

39,590,778
122,857
.4,565,642

Imnorts

-£COT-OH WASTES
(In pounds)
COTTON CARD STRIPS made rfrom cotton having* staple of less than 1-3/16 inches in length, COiffiER
WASTE, LAP WASTE, SLIVER WASTE, AND ROVING WASTE, WHETHER OR NOT MANUFACTURED OR OTHERWISE
ADVANCED IN VALUE: Provided, however, that not more than 33-1/3 percent of the quotas shall
be filled by cotton wastes other than comber wastes made from cottons of 1-3/16 inches or more
in staple length in the- case- of the- following countries? United Kingdom, France, Netherlands,
Switzerland, Belgium, Germany, and Italy.

Country of Origin

s
- x

Established.
TOTAL QUOTA

:
Total Imports
s Sept. 20, 1961, to
: Sept. 19, 1962

Established t
Imports
TJ
33-1/32 of % Sept. 20, 1961,
Total Quota t to Sept. 19, 1962

United Kingdom • • • .
4,323,457
239,690
Canada • • • • • • « •
227,420
France • • » • • • • •
69,627
British India . . . . .
68,240
Netherlands . . . . . .
44,388
Switzerland • • • • • •
38,559
Belgium * . • • • . . .
341,535
Japan « * . . . • • • •
China . • • . . • » . . .
17,322
Egypt
•
8,135
Cuba . . . •
6,544
Germany
76,329
Italy . . . . . . . . . . .
21.263

1,892,083
239,690
179,155
69,627
67,447
42,019
22,062
341,500

1,441,152

L,441,152

75,807

v75,807

22,747
14,796
12,853

22,747
12,505

76,329

25,443
7.088

25,443

5,482,509

2,929,912

1,599,886

1,577,654

Included .in total imports, -column 2..

Prepared in the Bureau of Customs.

r>-638

-£-

PI
\J _-

COTTON WASTES
(In pounds)
COTTON CARD STRIPS maderfrom cotton having* staple of less than 1-3/16 inches in length, COMBER
WASTE, LAP WASTE, SLIVER WASTE, AND ROVING 7JASTE, •WHETHER OR NOT MANUFACTURED OR OTHERWISE
ADVANCED IN VALUE. Provided, however, that not more than 33-1/3 percent of the quotas shall
be filled by cotton wastes other than comber wastes made from cottons of 1-3/16 inches or more
in staple length in the case of the following countries: United Kingdom, France, Netherlands,
Switzerland, Belgium, Germany, and Italy*

Country of Origin

United Kingdom
Canada
...
France . . . . . . .
. .
British India
Netherlands
•
Switzerland . . . . . . .
Belgium
Japan . . . . . . . . . .
China . . . . . . . . . .
Egypt
• •
Cuba • • • •
......
Germany
Italy . . . . . . . . . .

Established
TOTAL QUOTA
__.
4,323,457
239,690
227,420
69,627
68,240
44,388
38,559
341,535
17,322
8,135
6,544
76,329
21.263
5,482,509

Included in total imports, column 2..

Prepared in the Bureau of Customs.

D-639

:
Total Imports
: Established s
Imports
: Sept. 20, 1962, to : 33-1/3% of : Sept. 20, 1962
: Qp.t-. 8. 196?
t Total Quota : to Oct. 8. 1962
872,375
239,690
13,295
9,036
11,292

1,441,152

842,003

75,807

13,295

22,747
14,796
12,853

25,443
7.088
1,145,688

1,599,886

855,298

TREASURY DEPARTMENT
Washington, D. C.

IMMEDIATE RELEASE
FRIDAY, OCTOBER 12,1962

D-639

Preliminary data on imports for consumption of cotton and cotton waste chargeable to the quotas
established by the President's Proclamation of September 5, 1939, as amended
COTTON (other than linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4"
Imports September 20, 1962 - October 8. 1962
Country of Origin
Egypt and the AngloEgyptian Sudan ....
Peru
3ritish India
China
Mexico
Brazil
Union of Soviet
Socialist Republics
Argentina
,
Haiti
,
Ecuador

Established Quota
783,816
247,952
2,003,483
1,370,791
8,883,259
618,723
475,124
5,203

237
9,333

Imports

696,269
16,331
39,639
-

8,883,259
618,723
_
-

Country of Origin

Established Quota

Honduras
Paraguay
Colombia
Iraq
British East Africa ...
Netherlands E. Indies .
Barbados
l/Other British W. Indies
Nigeria
2/0ther British W. Africa
3/0ther French Africa ...
Algeria and Tunisia ...

752
- 871
124
195
2,24b
71,388
21,321
5,377
16,004
689

1/ Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
2/ Other than Gold Coast and Nigeria.
3/ Other than Algeria, Tunisia, and Madagascar.
Cotton 1-1/8" or more
Imports August 1, 1962 - October 8. 1962
Established Quota (Global) - 45,656,420 Lbs.
Staple Length
1-3/8" or more
1-5/32" or more and under
1-3/8" (Tanguis)
1-1/8" or more and under
1-3/8"

Allocation
39,590,778
1,500,000
U,565,642

Imports
39,590,778
122,857
4,565,642

Inroorts

TREASURY DEPARTMENT
Washington, D. C.

IMMEDIATE RELEASE
FRIDAY, OCTOBER 12,1962

D-639

Preliminary data on imports for consumption of cotton and cotton waste chargeable to the quotas
established by the Presidents Proclamation of September 5, 1939, as amended
COTTON (other than linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4"
Imports September 20, 1962 - October 8. 1962
_,
.
Country of Origin
Egypt and the AngloEgyptian Sudan
Peru
,
British India
China
,
Mexico
,
Brazil
Union of Soviet
Socialist Republics
Argentina
Haiti
Ecuador

Established Quota

Inroorts

783,816
247,952
2,003,483
1,370,791
8,883,259
618,723

696,269
16,331
39,639

475,124
5,203

237
9,333

8,883,259
618,723
_
-

Country of Origin

Established Quota

Honduras
Paraguay
Colombia
Iraq
British East Africa . -..
Netherlands E. Indies .
Barbados
l/Other British W. Indies
Nigeria
2/0ther British W. Africa
3/0ther French Africa ...
Algeria and Tunisia ."..

752
871
124
.. 195
'2,24b
71,388
21,321
5,377
16,004
689

l/ Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
2/ Other than Gold Coast and Nigeria.
3/ Other than Algeria, Tunisia, and Miadagascar. '
Cotton 1-1/8" or more
Imports August 1, 1962 - October 8. 1962
Established Quota (Global) - 45,656,420 Lbs.
Allocation
Staple Length
1-3/8" or more
1-5/32" or more and under
1-3/8" (Tanguis)
1-1/8" or more and under
1-3/8"

39,590,778
1,500,000
4,565,642

Imports
39,590,778
122,857
4,565,642

Inroorts

COTTON WASTES
(In pounds)
COTTOH CARD STRIPS maderfrom cotton having--, staple of less than 1-3/16 inches in length, COISER
WASTE, LAP WASTE, SLIVER WASTE, AND EOVING 7JASTE, WHETHER OR NOT MANUFACTURED OR OTHERWISE
ADVANCED IN VALUE. Provided, however, that not more than 33-1/3 percent of the quotas shall
be filled by cotton wastes other than comber wastes made from cottons of 1-3/16 inches or more
in staple length in the- case- of the- following countries: United Kingdom, France, Netherlands,
Switzerland, Belgium, Germany, and Italy;
Established.
TOTAL QUOTA

Country of Origin
-

Imports
Total Imports 2 Established :
33-1/3% of t Sept. 20, 1962
Sept. 20, 1962, to s
Qrr. », l%?
__. Total Quota ; tO ft-t;, R. 1962

United Kingdom
4,323,457
Canada
239,690
France
227,420
British India.
69,627
Netherlands
'. •
68,240
Switzerland . . . . . . .
44,388
Belgium • • • . . • • • •
38,559
Japan . • • • • • • - • •
341,535
China . • • • . . - • • •
17,322
Egypt • •
•••
8,135
Cuba . . .
6,544
Germany . • • • • * • • •
76,329
Italy . . . . . . . . . . .
21.263

872,375
239,690
13,295
9,036

5,482,509

1,145,688

Included in total inports, column 2..

Prepared in the Bureau of Customs.

D-639

11,292

,1,441,152

842,003

75,807

13,295

22,747
14,796
12,853

25,443
7.088
1,599,886

855,298

STATUTORY DEBT LIMITATION
A s of

Sftpt.flTnhftr 3 0 , 1 Q £ ?
Washington, O c t .

1? ,-962_

Section 21 of Second Liberty Bond Act, as amended, provides that the face amount of obligations issued under authority

irnic
$308,000,000,000, (2) during the period beginning on April 1, 1963, and ending on June 24. 1963. to $305,000,000,000, and
(3) during the period beginning on June 25, 1963. and ending on June 30, 1963, to $300,000,000,000.
T h e following table shows the face amount of obligations outstanding and the face amount which can still be issued
under this limitation:
Total face amount that may be outstanding at any one time
$308,000,000,(
Outstanding Obligations issued under Second Liberty Bond Act, as amended
s
Interest-bearing:
Treasury bills
$42,236,050,000
Certificates of indebtedness
Treasury notes
Bonds
Treasury
•Savings (current redemption value)
Depositary
\
R. E. A. series
Investment series

17,849,169,000
58.103.908.000 $118,189,127,000
79,761,858,650
47,717,382,389
95,748,500
24,407,000
4.574.186.000

132,173,582,539

Certificates of Indebtedness

500,000,000
149.869.500

Foreign series
Foreign Currency series
Special Funds Certificates of indebtedness
Treasury notes
Treasury bonds

6,830,367,000
6,232r978,000
31,495,174,000

Total interest-bearing
Matured, interest-ceased
Bearing no interest:
United States Savings Stamps

Internat'l Monetary Fund series

Interest-bearing:
Debentures : F. H. A. & D C Stad. Bds
Matured, interest-ceased

44,558.519.000
295,571,098,039
329,671,889

50,997,787
721,533

Excess profits tax refund bonds
Special notes of the United States :
Internat'l Develop. Ass'n. series
Inter-American Develop. Bank series.
Total
Guaranteed obligations (not held by Treasury):

649,869,500

3,002,000,000
115,304,400
55.000.000

3,224.023.720
299,124,793,648

485,943,950
l.?Q0.?2g

487.334.675
299.612.128_]
8.387.87-?

Grand total outstanding
Balance face amount of obligations issuable under above authority.
Reconcilement with Statement of the Public Debt
(Daily Statement of the United States Treasury,

.Sppt.pnihpr ^0
1Q£?
(D-t.)
September 28, 1962
(D-t.)

)

Outstanding Total gross public debt
Guaranteed obligations not owned by the Treasury .
Total gross public debt and guaranteed obligations
Deduct other outstanding public debt obligations not subject to debt limitation

299,985,627,3
299,612,128,)

D-640

8*
S T A T U T O R Y D E B T LIMITATION
As of
Sflpt.fm.hftr 30, 196?.

„..„,

0ct.

1Pfl962

Section 21 of Second Liberty Bond Act, as amended, provides that the face amount of obligations issued under authority
of that Act, and the face amount of obligations guaranteed as to principal and interest by the United States (except such guaranteed obligations as may be held by the Secretary of the Treasury), '•shall not exceed in the aggregate $285,000,000,000
(Act of June 30, 1959; U.S.C., title 31, sec. 757b), outstanding at any one time. For purposes of this section the current redemption value of any obligation issued on a discount basis which is redeemable prior to maturity at the option of the holder
shall be considered as its lace amount." T°e Act of July 1, 1962 (P.L. 87-512 87th Congress) provides that the above limitation shall be temporarily increased (1) during the period beginning on July 1, 1962, and ending on March 31, 1963, to
$308,000,000,000, (2) during the period beginning on April 1, 1963, and ending on June 24, 1963, to $305,000,000,000, and
(3) during the period beginning on June 25, 1963, and ending on June 30, 1963, to $300,000,000,000The following table shows the face amount of obligations outstanding and the face amount which can still be issued
under this limitation:
Total face amount that may be outstanding at any one time
$308,000,000,000
Outstanding Obligations issued under Second Liberty Bond Act, as amended
v
Interest-bearing:
Treasury bills
$42,236,050,000
Certificates of indebtedness
17,849,169,000
Treasury notes
58.103.908.000
$118,189,127,000
Bonds Treasury
79, ?6l, 858,650
•Savings (current redemption value)
47,717,382,389
Depo sitary
^_
95 , 748 , 500
R. E. A. series
24,407,000
Investment series
4,574.186.000
132,173,582,539
Certificates of Indebtedness Foreign series
500,000,000
Foreign Currency series
149.869. 500
649,869,500
Special Funds Certificates of indebtedness
6,830,367,000
Treasury notes
6,232,978,000
Treasury bonds
31.495.174.000
44.558.519.000
Total interest-bearing
295,571,098,039
Matured, interest-ceased
3291671, 889
Bearing no interest:
United States Savings Stamps
50,997,787
Excess profits tax refund bonds
721,533
Special notes of the United States :
Internat'l Monetary Fund series
3 , 002 , 000,000
Internat'l Develop. Ass'n. series
115,304,400
Inter-American Develop. Bank series
55.000.000
3,224.023.720
Total
299,124,793,648
Guaranteed obligations (not held by Treasury):
Interest-bearing:
Debentures: F- H. A. & D C Stad. Bds
485,943,950
Matured, interest-ceased
1.390.725
487.334,675
Grand total outstanding
299.612 128 ^23
Balance face amount of obligations issuable under above authority
8 ^87 871 677
Reconcilement with Statement of the Public Debt Sftpt.ftlTlhfir 30, 196?
(D-t«)
^
(Daily Statement of the United States Treasury,
September 28, 1^02
,.
(D-te)
Outstanding Total gross public debt
Guaranteed obligations not owned by the Treasury
Total gross public debt and guaranteed obligations
.
Deduct - other outstanding public debt obligations not subject to debt limitation

D-640

)

299,498 , 292,432
487.334,675
299 , 965, 627 ,107
3?3.^93,784
299,612,128,323

- 2 respect and &ur recognition of fk« truly fia© j*fe y#«
44d»

Hit nearly !i#0OO *m#ley<i«s earelled ©a tfes F*y~

roll Saviaga FXaa at ITT are evideaea aftaugfc af ta#
time, thought and aaargjr ya» P*** into this ^reject.

And

although the resulting benefits to these people, to the
company, and to tat eematry art fiaar testaments to your
efforts than any token X could present, please accept
these citations and medallions with my thanks and that
of the Department,

o©o

«^|lii"riA I am happy to welcome^yeu hare, and I
waat to add my personal taaaka to,the »epartmaa*«e for
the outstaadlag job Iff has done la the PayroUSavings
effort•

i:^M$

-, t- the*-* ft#fl«f t* t&a

In reeogaition of that performance it gives me ##|||
pleasure to preseat four awards, beginniag ,with this
framed Freedom Bond Award, iaseribed t© *The laternational Telephone and telegraph gorporatiea aad Its
Employees.*

I f m sure yea are proud of tae fact that

lTT*s pereeatage of laerease ia payroll savers duriag
your reeeat eampaiga is the greatest of any of the major
corporatieas ia the United States*

Aad your record of

83 per eeat participation in the plan is one which to
us here at Treasury, aad I*» sure to yam, is most
gratifying»
The second is an award to IfT's Presideat Harold «•
Geneen, far his outstaadlag leadership and personal
atteatiaa to the ITf eampaiga.

It»e our Minute Haa

Statuette, aad I hope that you will eeavey with it to
Mr* aeneea my warmest persoaal regards and best wishes.
Aad now te oaeh af yau two gentlemea, for the
mpsth

leadership aad diraatiaa you gave to the eampaiga

as Chairman aad Co-*Chairman, this Freedom Bond citation
aad silver medallion, reflectiag our appreeiatioa, our

Remarks by Secretary of the Treasury Douglas Dillon
at presentation of Awards to the International
Telephone and Telegraph Corporation, Thursday,
October 11, 1962, 3s30 pm

.,,-^,;I.,*n^^—mmjg^'-t .***«*** ^m*^fi£W^""*'"T" ¥•»#'

, . ^ X a recognition ofataat performance it^gives me

f^t

pleasure to present four awards, beginniag with this
framed Free-dom Bond Award, Inscribed .to, *The later-

m±

national Telephone aad Telegraph Corporation aad Its
Employees.n

I f m sure you are proud of the fact that

ITTfs percentage of increase ia payroll savers duriag
fi

your reaeat campalga is the greatest of any of the major
corporatieas la the United States.

And your record of

83 per cent participation in the plan is one which to
us here at Treasury, aad I'm aura to you, is most
gratifying.
The second is an award to ITT*a President Harold S.
Geneen, for his outstanding leadership aad personal
attention to the ITT campaign.

It's our Minute Man

Statuette, and t hope that you will convey with it to
Mr, Geneen my warmest personal regards aad best wishes.
Aad now to each of you two gentlemen, for the
superb leadership aad direction you gave to the campaign
as Chairman aad Co-Chairman, this Freedom Bond citation
aad silver medallion, reflecting our appreciation, our

TREASURY DEPARTMENT
WASHINGTON, D.C.
October 11, 1962
FOR IMMEDIATE RELEASE
SECRETARY DILLON PRESENTS SAVINGS BOND AWARDS TO
INTERNATIONAL TELEPHONE AND TELEGRAPH CORPORATION
Treasury Secretary Dillon today presented awards to the
International Telephone and Telegraph Corporation and its employees for the companyTs successful 1962 Payroll Savings
Campaign for United States Savings Bonds, Representing ITT
were William T, Marx, Senior Vice President, and Edward J.
Gerrity, Vice President-Public Relations, who served as Chairman and Co-Chairman of the ITT drive.
The Treasury*s Freedom Bond Award — a handsomely framed
certificate — was presented in recognition of the company's
83 per cent employee participation in the Payroll Savings Plan
as a result of the campaign, ITT's percentage of increase in
participation in the Plan is the highest for any major corporation
in the U.S., and at present nearly 19,000 of ITT's 23,000 employees
are payroll savers,
Mr, Marx also accepted for ITT President Harold S, Geneen the
Treasury's Minute Man Statuette, awarded to Mr, Geneen for his outstanding leadership and personal contribution to the Bond program.
Freedom Bond Drive citations and silver medallions were received
by Mr, Marx and Mr, Gerrity for their efforts in conducting the
successful drive.
The presentations served as a follow-up to a recent letter to
Mr, Geneen in which the Secretary recognized the success of the ITT
campaign and noted that it was "especially outstanding when you
consider that thousands of your employees are assigned to the Arctic
and other remote locations. Particularly impressive was the 93
per cent return from DEW line where you have nearly 1,000 U, S,
citizens employed at installations across Alaska and Northern
Canada,
"Your fine support of our Savings Bonds Division's nationwide
Freedom Bond Campaign," the Secretary's letter continued, "is a
model of government-business cooperation for the common good."
The text of Sepretary. Dillon's remarks during
the ^presentation ceremony Is attached.

D-641

v_»

TREASURY DEPARTMENT
WASHINGTON, D.C.
October 11, 1962
FOR IMMEDIATE RELEASE
SECRETARY DILLON PRESENTS SAVINGS BOND AWARDS TO
INTERNATIONAL TELEPHONE AND TELEGRAPH CORPORATION
Treasury Secretary Dillon today presented awards to the
International Telephone and Telegraph Corporation and its employees for the company's successful 1962 Payroll Savings
Campaign for United States Savings Bonds, Representing ITT
were William T. Marx, Senior Vice President, and Edward J,
Gerrity, Vice President-Public Relations, who served as Chairman and Co-Chairman of the ITT drive.
The Treasury's Freedom Bond Award — a handsomely framed
certificate — was presented in recognition of the company's
83 per cent employee participation in the Payroll Savings Plan
as a result of the campaign. ITT's percentage of increase in
participation in the Plan is the highest for any major corporation
in the U.S., and at present nearly 19,000 of ITT's 23,000 employees
are payroll savers,
Mr, Marx also accepted for ITT President Harold S, Geneen the
Treasury's Minute Man Statuette, awarded to Mr, Geneen for his outstanding leadership and personal contribution to the Bond program.
Freedom Bond Drive citations and silver medallions were received
by Mr, Marx and Mr. Gerrity for their efforts in conducting the
successful drive.
The presentations served as a follow-up to a recent letter to
Mr. Geneen in which the Secretary recognized the success of the ITT
campaign and noted that it was "especially outstanding when you
consider that thousands of your employees are assigned to the Arctic
and other remote locations. Particularly impressive was the 93
per cent return from DEW line where you have nearly 1,000 U, S,
citizens employed at installations across Alaska and Northern
Canada.
"Your fine support of our Savings Bonds Division's nationwide
Freedom Bond Campaign," the Secretary's letter continued, "is a
model of government-business cooperation for the common good;"
The text of Secretary Dillon's remarks during
the presentation ceremony is attached.

D-641

-4 b !

REMARKS BY SECRETARY OP THE TREASURY DOUGLAS DILLON
AT PRESENTATION OP AWARDS TO THE INTERNATIONAL
TELEPHONE AND TELEGRAPH CORPORATION, THURSDAY,
OCTOBER 11, 1962, 3:30 P.M.

I am happy to welcome you here, and I want to add my personal
thanks to the Department's for the outstanding job ITT has done in the
Payroll Savings effort.
In recognition of that performance it gives me pleasure to present
four awards, beginning with this framed Freedom Bond Award, inscribed
to "The International Telephone and Telegraph Corporation and Its
Employees." I'm sure you are proud of the fact that ITTfs percentage
of increase in payroll savers during your recent campaign is the
greatest of any of the major corporations in the United States. And
your record of 83 per cent participation in the plan is one which to
us here at Treasury, and I'm sure to you, is most gratifying.
The second is an award to ITT's President Harold S. Geneen,
for his outstanding leadership and personal attention to the ITT
campaign. It's our Minute Man Statuette, and I hope that you will
convey with it to Mr. Geneen my warmest personal regards and best
wishes.
And now to each of you two gentlemen, for the superb leadership
and direction you gave to the campaign as Chairman and Co-Chairman,
this Freedom Bond citation and silver medallion, reflecting our
appreciation, our respect and our recognition of the truly fine job
you did. The nearly 19,000 employees enrolled on the Payroll
Savings Plan at ITT are evidence enough of the time, thought and
energy you put into this project. And although the resulting
benefits to these people, to the company, and to the country are
finer testaments to your efforts than any token I could present,
please accept these citations and medallions with my thanks and that
of the Department.

0O0

91
Oatabar 15, X9&2
The Tvaaaary Da|*rtB*f_t aaaaunaad laai avaniag tbtt tte iattikurv for Urn series el
frsaaury bill®, oaa sarlss to b@ aa addltlaotl laaoa of tba bill* datad ,l_ly If, 1162,
aad tfc* atbar tarls* ta a * dated Oatabar liff 196$, which aara oltturad an Octobar 9, m n
apansd at the federal dmarm m m ® aa October IS* f a a t e a aara invitad for 11,300,00^
or itiaraabaata* of m - d a y M i l l and for $700,000 f 0», or tbanttbaafta, of l82*day bUls.
Tba
of tba t*o aarlas
at fallowss
l§2~day Traasmry M U i
91~dayare_*aaaary
bills
aulastataila
or kcz&ws
coNivxiiXfa axass

Approx. I^v;
ffiaf.,
Aaaaal jfttf ,_.„_,,
99.330 2,7301
$••570
2,&9ff
tow
99.303
2.7571
*,5ff
2.ftU*
Aaaraga
2&.S63
2,Sli3l|/
9%m
^.rkm y
6 0 psrsaat of tba aaoaai @f 91«aajr bill* bid for at tba law prim was aaasptsd
95 >g®rm&% af tba SMaaat a £ lit«4a,y bills bid far at tba law prim was aaeaptsd

TOTAL

TBiottt AFHJISB foa A I B mmmm

mnasi
Baatott

Approau H^idLv#

Am^llad For
i

30fS?U,oao

$t Fsmai, ws&iri &zir&iot*i

Ae#$i#&d
2O*ti9ll*000

I 10,050,000
i»i55»ftia»090
7,6bk,ojo
20,302,000

4ffwew#- _-

I 3,750^00
l,ftl«llifQ0Q
n*if7ii#oo§
law Xorit
559,755,000
i? f a*§ t §»
PhUadslphta
30»393#O0O
1,309,000
3#f003,aoo
Cllaval&Esd
1M67»OOQ
10,002,000
IkfMttOQO
k*t39»ocw
^iahaond
2Q5»ttifooo
tt,139,000
23*$&f0oo
6,1*67,000
Atlanta
!*t35M»0
5,6bb*0»
128 # 9H t 00O
13.Sta$Ot0QO
Claiaaga
21,b29,000
7b,3U9,000
fclfbfUOOO
0*966,000
St. i m d s
bB^TljfOOO
5,966,o«
26,0*9,000
u,8A,ooo
.4i«»ap0-XSa
3b,13l#O0D
39»9tL,000
7,^,000
10,70*1,000
iMwmm TOftUft
Sitj
«2,22b,$O0,0QO 01,300,331,000
00O
10,9*9,000 5/ *L,U36Ji26
t
9,06a,oo0
10,033,000
SaHas
ladadas $292,655,000 jasassapatitlaaJ»ff3BftflB
taadara aaaaptad at47-212.000
tba aaaaaga arias
af y?.3#
bf633|000
San Fmneisoc
loelaOsa 676,605,000 aaacaapaUU** tsadata aaoapiad at iba smnrtca priea
af .96,5*3 y
3700,011,000
0!» a soapan issue ©f ibs saaa laogib and far tbs asws anonat imv#®t©df tba retail «»
tbaaa biHa m€L® jaxnito jUMm of 2M%, far tte tl-day ICllsf &M 2.n%$ ^ar tH
I02*day biBs. Isiarast tatsa a^ bills % m <$wtad la t a n a af bauli dlaaouat aith
tba minrn ralatad to th& fac* w t a l af %m bills pa^a-bla at maturity rather tbftB
tba asiaaat itwastad aad thtir Ui|%b ia aatatl a«bar af dajns raiiatad ta a 36cM§7
l«ar« lis »niraat, ylalda oft aartifiaaiaa, a®taa, aad baisds ara coapmtad ia tana
of iotarttst an th*> at^mt invaatad, aad nOata tba ambar of daja rmm-iMm ia a»
iatnrraat parent ;p®r$M to tba aataal nanbar af days ia tba parlad, with
" ^
corapouudiiv: ii ^ore tfcan am m n m n parlad ia itivolvad#

TREASURY DEPARTMENT
H — -•^w-M^a—<_~a—— •

WASHINGTON, D.C.
OR RELEASE A. M. NEWSPAPERS,
October 1$ 1962
uesday, October 16, 1962.
'
RESULTS OF TREASURY'S 16®EKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
reasury bills, one series to be an additional issue of the bills dated July 19, 1962,
nd the other series to be dated October 18, 1962, which were offered on October 9, were
pened at the Federal Reserve Banks on October 15. Tenders were invited for $1,300,000,000,
r thereabouts, of 91-day bills and for $700,000,000, or thereabouts, of 182-day bills.
he details of the two series are as follows %
fANGE OF ACCEPTED
50MPETITIVE BIDSs
High
Low
Average

91-day Treasury bills
maturing January 17, 1963
Approx. Equiv.
Price
Annual Rate
99.310
2.730$
99.303
2.757$
99.305
2.1k9% 1/

182-day Treasury bills
maturing April 18, 1963
Approx. Equiv.
Price
Annual Rate
98.570
2.829$
98.562
2.810$
98.563
2.81*3$ 1/

60 percent of the amount of 91-day bills bid for at the low price was accepted
95 percent of the amount of 182-day bills bid for at the low price was accepted
'OTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS s
District
Applied For
Accepted
Applied For
$
10,050,000
Boston
0. 30,87U,000
20,U9U,000
1,155,81+1,000
New York
1,611,118,000
81*1,718,000
7,61*l*,000
Philadelphia
32,81*6,000
17,61+6,000
28,302,000
Cleveland
38,393,000
38,003,000
1*,139,000
Richmond
Hi,667,000
ll+,667,OQO
6,1*67,000
Atlanta
26,71*9,000
23,52i*,000
135,850,000
Chicago
205,781,000
128,981,000
8,966,000
St. Louis
1*8,351,000
1*1,1*91,000
11,218,000
Minneapolis
21,1*29,000
16,029,000
10,70l*,000
Kansas City
148,671,000
39,981,000
10,033,000
Dallas
3l*,131,000
18,969,000
1*7,212,000
San Francisco
111,1+98,000
98,828,000
TOTALS
$2,22l+,5Q8,000
$1,300,331,000 a/ $1,1*36,1+26,000

Accepted
$ 3,750,000
559,755,000
2,389,000
10,802,000
U,139,000
5,61+1*,000
7l*,3l*9,000
5,966,000
7,1*68,000
9,881+,000
1*,633,000
11,252,000
$700,031,000 b/

/ Includes $292,855,000 noncompetitive tenders accepted at the average price of 99.
I Includes $76,685,000 noncompetitive tenders accepted at the average price of 98.563
I On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.81$, for the 91-day bills, and 2.92$, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
ol interest on the amount invested, and relate the number of days remaining in an
i n ^ ^ m ^ E ^ ^ L S r + h ^ ™ o h L ? c t m l n ^ e r 0? days in the period, with semiannual
compounding ii more than one coupon period is involved.
- H-

OCT

M M

*•«»»•*•###*#•#»»•»•*•

4 1962

^ J§fip_fc--M_i§

9. A

TREASURY DEPARTMENT
WASHINGTON. D.C.
•September 1*1, 19&S

FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN AUQUOT

During A4g**&t 1962, market transactions in
direct and guaranteed securities of the government
for Treasury
easury investment and other accounts resulted
in net '&a£a© by the Treasury Department o f / ^ ^ ^ ^ A^vT^,

0O0

TREASURY DEPARTMENT
11JMjrmkvnii!uuiiitmiui*um<mmmAii^n.aw^xr^.jumMiq

WASHINGTON, D.
October 15, 1962

FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN SEPTEMBER
During September 1962, market transactions 5in
direct and guaranteed securities of the government
for Treasury investment andvother:accounts resulted
in net purchases by the Treasury Department of
$325,513,500.

0O0

D-643

-•

ion mmmm mmm®
wmrnamm w kpmasMm m

The T&se&vry Departjsant ia instructing custoeec fi*ld officars
to ^tJt__old apprsiseiaest af technical vanillin £r&n Canada jprmding
a detaradnatian as to A e t h e r this laarcfeaadisc ia beia& aold ia tfce
t&itad gtataa at leas than fair valua*

Ratios to thia affact ia

being published ia the ^federal Agister.
Uadar the Antidus^ing Act, 4©terain&tiOii of galea in tba United
States at leas than fair vs-Uae would repair- referenea of* ti» case
to the Sariff Cosaaission^ i#kieh would «<msdder whathar Aaerieaa
ifuluatry vm

&aiag iujurad.

Bpth duissadj&g price aad injury -tost ba

shown to Justify a finding of dumping under tba law.
fba coa^laint in this eaaa waa raceivad on <&aa 2a, 196a.
_fee aallar valua of iioports rseeivad during the first 6 «*nth_ of
19&2 vas a^rovsiiaataly $850,000.

2cc:

Mr- Bandrick

TREASURY DEPARTMENT
WASHINGTON, D.C.
October 16, 1962

FOR B4MEDIATE RELEASE
WITHHOLDING OF APPRAISEMENT ON
TECHNICAL VANILLIN

The Treasury Department is instructing customs field officers
to withhold appraisement of technical vanillin from Canada pending
a deteiiiiination as to whether this merchandise is being sold in the
United States at less than fair value. Notice to this effect is
being published in the Federal Register.
Under the Antidumping Act, determination of sales in the United
States at less than fair value would require reference of the case
to the Tariff Commission, which would consider whether American
industry was being injured. Both dumping price and injury must be
shown to justify a finding of dumping under the law.
The complaint in this case was received on June 22, 1962.
The dollar value of imports received during the first 6 months of
1962 was approximately $250,000.

fuller and more productive life.
That fundamental right should not be denied to anyone —

certainly not because of prejudice or discrimination, which are the
very antithesis of all that we as a nation stand for.
Passive tolerance and good intentions are not enough. Positive,
aggressive, vigorous action is called for, by men and women of
courage and tenacity. Only in that way, can we enhance the dignity
of the individual citizen, promote the maximum development of his
capabilities, stimulate their responsible exercise, and widen the
range and effectiveness of opportunities for individual choice.

Only in that way can we bring the American Dream closer to reality.

- 14 foreign policy reasons/. We must push back the frontier of injustice,
because the major resource of any free nation is a free people,
progressing within a framework of free institutions of their own
choosing.
This was never more important than it is today. We have been
told by the Soviet rulers that we are the old order, fit only for
the trash heap of history. I believe history teaches a different
lesson. It teaches that societies which concentrate power at the
top become increasingly rigid. As the rights of people are taken
over by the state, the society atrophies, and become^incapable of
adapting to change. We live in a rapidly changing world. I believe
it is the free society that will prove to be capable of changing
with it. It will do so because of the vitality, moral fibre, and
fcreativitylof free people.
Unleashing the creative potential of its people, and utilizing
their abilities to the fullest through equal opportunity, is a
major task of any free society. The fundamental^uman right of
all free people is to use their freedom constructively, to enjoy a

1 U v'

- 13a society committed to freedom; founded on the Declaration of

Independence and the Bill of Rights, and dedicated to the rule of

law in which the state is the servant of the individual and not t
individual the servant of the state. What really is at stake
is whether the United States in the next decade will be able to
maintain its leadership in the free world. J$0 if we treat a

large number of American citizens as inferiors and fail to strive
vigorously for our ideals as expressed in the Bill of Rights and

the Declaration of Independence, then we cannot expect to maintai
our leadership.
It is obvious, I think, that the recent triumph of the rule
^law over disorder and discrimination in Mississippi will/greatly
strengthen our position throughout the world."""?
The enlargement of human rights in this country beyond their
present frontier is imperative for social, economic, moral, and

101
- 13 But the price of prejudice runs far higher than even those
figures would suggest. The damage done to our image abroad when a
foreign diplomat is refused proper housing or service in a restaurant
is beyond calculation — especially when the diplomat represents one
of the new nations whose craving for freedom and human dignity was
largely fired by our own example. We present a strange contradiction
when we spend billions for foreign aid to expand opportunities for
human rights abroad at the same time that we tolerate discrimination
j

against human rights at home. /There is no question but that such
incidents do us serious damage.I Even more important — as I can

testify as a former Ambassador to France and Under Secretary of State-'

A
racial disturbances in the United States both shock and mystify many
foreigners, and some of them draw frQm_~such incidents a profound
skepticism about freedom in America.
______uma«ujj».—_u>""*

*" Mmnwniin• wiwi«

mwW

llfnl

People around the world are often unfamiliar with actual
conditions in the United States. But their hopes for their own
country are best fulfilled in the ideal of America — that is a

the Council said that if non-whites had the same educational level
as whit es, that amount would be w»t»to more than three percent,

r\
or roughly $17 billion at current levels of output.
While these estimates are necessarily approximate, they tell

us something with unmistakable clarity. They tell us that even if we
were able to ignore the human misery and degradation that discrimination creates, even if we were willing to endure the burden of
despair which is imposed upon our citizens as a result, even if we
were to accept indefinitely an unemployment rate among Negroes
twice that among whites, that prejudice and discrimination would —
solely on economic grounds — be in direct conflict with the
national interest of the United States. Since more rapid economic
growth is the major economic goal of our nation, no one with any

serious concern for public policy can afford to overlook the potenti
in human and economic resources that we waste through prejudice
and discrimination, regardless of whether the discrimination is
deliberate or inadvertent.

- Ha -

^0?

voluntarily. Two have not been and the Justice Department has
brought legal action. But, as in all cases, the Justice Department
has not gone to court until local authorities haveVbeenJunwilling
or unable to do the job themselves.
i ) All these actions have social significancet {which is obvious.J
What is less obvious is that they also have economic significance.
As Secretary of the Treasury, I am keenly interested in accelerating our rate of economic growth in order to meet the needs of our
citizens at home and to underwrite our heavy commitments abroad for
the defense and development of the free world. Anything that detracts
from our potential economic strength is a matter of great concern to
me. I was struck, therefore, by the report last month of the President's Council of Economic Advisers, which spelled out the high
economic cost to our country of racial discrimination in employment.
The Council estimated that full utilization of the present
capabilities of the non-white population would increase our total
output by about two and a half percent — an increase of some
$13 billion in the goods and services we now produce. In addition,

- 11 agencies to maintain a watchful eye on the vast operations of the
Federal Government to ensure equality of opportunity wherever
possible.
Furthermore, the Federal Government
closely and continuously with local authorities to
assure all citizens the full rights guaranteed them under the
Constitution, The Department of Justice has not filed a single
civil rights case without first going to the local authorities and
informing them of what appears to be a violation of the law. Local
authorities — judges, prosecutors and lawyers — have as much

J
responsibility to protect and defend the Constitution as dorthe;
Federal officials. In the majority of cases, the local officials
have taken action and nothing further has been required of the
Federal Government. There are no front page news stories but there
are changes; there are results and they are brought about by local
officials. In the long run, this is what is of real importance#
< /

in•jchb^/cojintpwi

For example, 13 airports have been desegregated

- 10 For instance, the Justice Department, seeking to eliminate
unlawful discrimination in voter registration, is now prosecuting
more than 30 cases and is gathering evidence in connection with

another 70 cases. In Louisiana, for the first time, a Federal Judge
has invoked the 1960 Civil Rights Act and has started to register
voters himself. Segregation in bus, railroad and air terminals, so

prevalent just a year ago] has virtually been eliminated throughout
the country, as a result of action taken by the Justice Department
and the gCCf) The Department of Health, Education and Welfare has
announced that segregated schools will no longer be considered

suitable for on-base children of military personnel. aa_4-^a^T^^_^-

a The Secretary of Labor will
certify only those apprenticeship programs which contain a specific

equal opportunity clause, and has also succeeded in desegregating a
number of State employment offices throughout the South. Finally,
the President has established a Subcabinet group on civil rights,

7\
comprising high level representatives of Executive departments and

.irtMMWWsBM*"«™™s»~.

u® $

":'^>

has not hesitated to seek amdhU?our Negro

population for skilled leadership.
for example, he

Only last month,

named a Philadelphia attorney, A# Leon
Higginbotlham , to the Federal Trade Commission.

The Senate has since confirmed this appointment, and Commissioner Higginbotham
/

•

is now the first Negro to sit on a Federal^ftegulator^/^Agency.
equal
But the struggle to expand 1W5£%$X

opportunity in the United States

* has been carried on in a much larger oaofe context thatfthat of individual (

/ /O P(O(P^0
recognition of ability.

1£T
- 9 -

It is scarcely necessary to say that this?hiring has been (done

on the basis of merit and that every Civil Service rule and regulation

has been strictly observed. Simply by affording equal opportunity an

by making our policies known, we have, since January 1961, more than
doubled the number of Negroes in the higher regular classified
positions of the Treasury Department — where more than 80 are now
serving.

In general, however, wmamm&^wmmmMmmMmil our broadened

recruitment %effortir^»ei»'»i MogO'^WThea-iddle grades, since this w
ultimately give more Negro employees the necessary experience to
qualify for the higher grades,, Since January 1961, the number of
Negroes in these middle professional level positions at Treasury
has increased from 1,437 to 1,901 —£up|more than 32 percent. I
believe this demonstrates l*^

can be done to increase

employment opportunities among minority groups without weakening
the merit system.
I am proud of /th3 record fthat\we have made! at the Treasury.
But it is only representative of what has been happening throughout
the government under the strong leadership of President Kennedy. -\

10c

- 8-

problem^ discrimination\ the employment of Negroes with
special talents or skills in jobs where they have no opportunity
to use them, has received the particular attention of Vice President
K*m»o*HW«a"»»s_——«

Johnson.

It was his plan toj5crutinizelrthis waste of training and"*""*-

talentgaN»e»g»aatNlwb» GQ¥airnma<y^ampaioyceB% *- - *-*—
•5 oira—--»
a f o%i_k
£*£•
Sgjggsr?"^" 1 '**.

bureau* discovered that^a uniformed guardj^ who was a Negro, held a
_3U

law degree^ Since there was no openingMn that bureau, he was
£jkJ$MJ

encouraged to apply through regular channels to another(bureau^

our progress has not been confined to the North.

Internal

Revenue Service appointments at the professional level have, for
the first time, gone to Negroes in Atlanta, Louisville, and New
Orleans. A Negro office auditor has been hired in Austin, Texas,
and the first Negro clerk has been named in Oklahoma City. In
Atlanta, where no Negro had previously served the Internal Revenue
Service in any white collar position, eight Negro punch card
operators have already been hired.

1 no
X w u

- 7 positions in the Office of the Secretary have also been filled by
Negroes•
I want to make it clear that I found no policy of discrimination when I arrived at the Treasury — it was just that there

ware jm Negroes serving in responsible positions in a number of it
many areas. For example, when I assumed office there was not a

single Customs Collector who was a Negro. President Kennedy quickl

4changed

this situation by appointing a Negro as Collector for the

Virgin Islands. The Savings Bonds Division appointed the first

Negro ever to serve as an Area Bond Representative. The Coast Guar
Academy appointed its first Negro faculty member. The Treasury
guard force appointed its first Negro Lieutenant. The White House
Police Force appointed its first Negroes. The Bureau of Engraving
and Printing appointed its first Negro machinists and its first

Negro electrician. Two local unions joft that Bureau, incidentally

have now for the first time accepted Negroes as members. And today

[_againj for the first time, the Internal Revenue Service has Negr
serving in the highest regular Civil Service grade.

- 6 -

to it that through such affirmative type of action, members of minority
groups are made aware that opportunity to qualify for this

institution will be denied to no one who is able to meet the entranc
requirements.
Other areas of the Treasury also received close attention. Soon
after taking office, I designated one of my top assistants, Robert
A. Wallace, who is here with us tonight, to ensure that^TreasuryxS^
adhered as closely as possible to the President's desires for
greater employment opportunity. This was the first time responsibility in this area had been given to such a high policy official.
Results were quick in coming.
For instance, I learned to my surprise that a Negro had never
held a professional position in the Office of the Secretary of the
Treasury. Nor was there a single Negro secretary in /this?large

«- /r
office numbering some 350 people. I immediately appointed a highly
qualified economist, Dr. Samuel Westerfield, Dean of the Graduate
School of Business of Atlanta University, to a top-level position
in my office. Three other professional and five secretarial

- 5see what could be done.
A quick check showed that the Coast Guard had no policy of
discrimination. Candidates had always been selected from applicants
who scored the highest marks on a competitive written examination.
/on the other hand! there^never M been any^ef^ort mado to positively
£gf encourage Negro applicants.
As Secretary of the Treasury, I could have waived the rules and
directly appointed a Negro to the Academy. I rejected this course^^
W because I thought it would/havejhinder^d^ rather than
further^&iL the President's program. Instead, I had Coast Guard
officials broaden the Academy's recruitment activities among all
schools, including those with Negro students. As a result, a number

of Negroes participated in the Coast Guard examination last February.
Four scored high enough for appointment. Unfortunately, two of them
failed the physical examination. One chose instead to accept a
scholarship to Columbia University. The fourth candidate, Merle
J. Smith, of Aberdeen, Maryland, entered the Academy, where he is an
outstanding member of the Cadet Corps. We intend to continue to see

- 4 Unfortunately, there was also the opportunity for the exercise
of conscious discrimination. A supervisor who did not wish to hire
a Negro could, when pree^a^ed^-^h a qualified candidate, exercise
the Civil Service option of choosing from the three top candidates,
at least one of whom was almost certain to be white.
The answer to the first problem, of course, was J to/actively;
broaden recruitment, and to make a strong effort to include Negroes
wherever possible in the search for qualified job applicants. The
best answer to the second problem was a firm, explicit stand by -e^efL*
department head against discrimination in any form.
The President set I a finejexample.

At early meetings of his

Cabinet, he made [it/plain|that he felt strongly!about the need for
equal employment opportunity, and urged that his Executive Order
on the subject be implemented as quicklyVas possible.

Indeed, even

before he issued the order, he pointed out to me in our very first
conversation after he took office that the Coast Guard — which is
under the Treasury Department — was the only Service Academy
without a single Negro cadet. He asked me to find out why, and to

113

'AdraAnisrtration has bje«i£ particularly vigorous in^expandin
areja 6f equal opportunity.
Soon after his inauguration President Kennedy issued an executive

order designed to promote and ensure equal opportunities for all
persons employed or seeking jobs with the Federal Government or
with private employers holding Government contracts. That set the
goalYN^bsitive action was needed to translate policy into
practice.
We /often] found that the greatest barrier to truly equal

opportunity/ £p_l^_l/ in Government service was not ^conscious?1 >^N%»^__
prejudice, but unconscious discrimination. This was/particularly!
evident in both hiring and promotidS. For example, since most
supervisors are white — and since it is only human to seek employees
or close associates with a similar background — it is not surprising that little effort had been made to ensure that Negroes were
included among middle and upper level job candidates. The result,
of course, was that few Negroes held high posts.

- 2-

114

The denial of opportunity invariably creates misery and
hardship. It inevitably adds to the tensions within our society.
Finally, and not the least important, it brings about a tragic
waste of human talent and skill.
At a time when our survival and that of the Free World
requires moral, social and economic strength, we simply cannot
'4-0

afford to let intolerance erode our vitality as a nation.
We must grow stronger, not weaker, if we lire counter-balance
At

the forces of violence and subversion around the world. An important
way to grow stronger is to break down persisting prejudice and extend

people.

This requires more than passive tolerance or acceptance.

It requires —

as voluntary organizations such as yours well know

01*
positive action by you, by me, by all our people, and by our Governmenl

Administration has been pursuing a strong policy in support of human
rights.

The results show the value of vigorous, positive action.

*| J ^^* l l^i^ 1 : ^f;|^Mf;:^^^^;rv^i;i^'• : * s i ; ; < '- i *•

It is difficult ta increase human dignity, ar ta create
appartunity, in an atmesphere ©f ddspair. That is why aur f©reign aid
pragram is, in a very real sense, designed ta expand human rights
areund the world. Far any effart which cembats the ancient human
enemies af disease, paverty, and ignarance, liiftl'iiiiai^|||jj|||iijiiiii

A
©f human rights.
In the United States, we have achieved the world's highest
living standard. While there are still many wha da nat share fully in
aur material blessings, mere physical survival is nat a matter af
primae concern, as it is in the developing lands. For that reasan,
human rights in the United States are, ta a large extent, a matter
©f equal appartunity. As yau are well 4P aware, the stuggle far huaan
rights in tliis ceuntry today is largely a struggle against intolerance,
both wilful and unconscious.

REMARKS BY THE HONORABLE DOUGLAS DILLON
1
SECRETARY OF THE TREASURY
UPON DECEIVING T H E NINTH ANNUAL HUMAN R I G H T S AWAED
OF T H E JOINT DEFENSE APPEAL OF T H E AMERICAN J E W I S H COMMITTEE
AND T H E ANTI-DEFAMATION LEAGUE O F B'NAI B ' R I T H
AT T H E H O T E L AMERICANA, NEW YORK, N.Y.
WEDNESDAY, OCTOBER 1 7 , 1 9 6 2 , 6:30 P.M., E D T

I am happy to be here tonight and to share the honors of this
occasion with Mr. Lane. The Human Rights Award is one I shall
always cherish. For, if there is a single goal that motivates
us as a nation and as a people, surely it is the extension and
enlargement of human rights. Political, social, and economic
progress are all directed to that goal. Our advancement as a
society cannot be measured solely in material terms. It must
be judged in terms of the progress we make — through positive
effort — to increase human dignity and individual opportunity.
Although we have made remarkable progress, we srtill have a
long way to go. We have not yet been successful in banishing

religious prejudice, handicaps to women, or racial discriminatio
These vestiges of intolerance are ne_«i»a4_sy wrong.
explosive. They are economically wasteful.

They are socially

TREASURY DEPARTMENT
Washington

117

FOR RELEASE A.M. NEWSPAPERS
THURSDAY, OCTOBER 18, 1962
REMARKS BY THE HONORABLE DOUGLAS DILLON
SECRETARY OP THE TREASURY
UPON RECEIVING THE NINTH ANNUAL HUMAN RIGHTS AWARD
OF THE JOINT DEFENSE APPEAL OF THE AMERICAN JEWISH COMMITTEE
AND THE ANTI-DEFAMATION LEAGUE OF B'NAI B'RITH
AT THE HOTEL AMERICANA, NEW YORK, NEW YORK
WEDNESDAY, OCTOBER 17, 1962, 6:30 P.M., EDT
I am happy to be here tonight and to share the honors of this
occasion with Mr. Lane. The Human Rights Award is one I shall
always cherish. For, if there is a single goal that motivates us
as a nation and as a people, surely it is the extension and
enlargement of human rights. Political, social, and economic
progress are all directed to that goal. Our advancement as a
society cannot be measured solely in material terms. It must be
judged in terms of the progress we make — through positive effort —
to increase human dignity and individual opportunity.
It is difficult to increase human dignity, or to create
opportunity, in an atmosphere of despair. That is why our foreign
aid program is, in a very real sense, designed to expand human rights
around the world. For any effort which combats the ancient human
enemies of disease, poverty, and ignorance, furthers the cause of
human rights.
In the United States, we have achieved the world's highest
living standard. While there are still many who do not share fully
In our material blessings, mere physical survival is not a matter
of prime concern, as It is in the developing lands. For that reason,
human rights in the United States are, to a large extent, a matter
of equal opportunity. As you are well aware, the struggle for
human rights in this country today is largely a struggle against
intolerance, both wilful and unconscious.
Although we have made remarkable progress, we still have a
long way to go. We have not yet been successful in banishing
religious prejudice, handicaps to women, or racial discrimination.
These vestiges of intolerance are morally wrong. They are socially
explosive and they are economically wasteful.
The denial of opportunity invariably creates misery and hardship.
It inevitably adds to the tensions within our society. Finally,
and not the least important, it brings about a tragic waste of
D-644and skill.
human talent

At a time when our survival and that of the Free World requires
moral, social, and economic strength, we simply cannot afford to
let intolerance erode our vitality as a nation.
We must grow stronger, not weaker, if we are to counter-balance
the forces of violence and subversion around the world. An important
way to grow stronger is to break down persisting prejudice and
extend the fullest possible opportunity to all of our people. This
requires more than passive tolerance or acceptance. It requires —
as voluntary organizations such as yours well know — positive
action by you, by me, by all of our people, and by our Government.
It is in recognition of this need that the present
Administration in Washington has been pursuing a strong policy in
support of human rights. The results show the value of vigorous,
positive action.
Soon after his inauguration, President Kennedy issued an
executive order designed to promote and ensure equal opportunities
for all persons employed or seeking jobs with the Federal Government
or with private employers holding Government contracts. That set
the goal. But positive action was needed to translate policy into
practice.
We found that the greatest barrier to truly equal opportunity
in Government service was frequently not wilful prejudice, but
unconscious discrimination. This was evident in both hiring and
promoting. For example, since most supervisors are white — and
since it is only human to seek employees or close associates with a
similar background — it is not surprising that little effort had
been made to ensure that Negroes were included among middle and
upper level job candidates. The result, of course, was that few
Negroes held high posts.
Unfortunately, there was also the opportunity for the exercise
of conscious discrimination. A supervisor who did not wish to hire
a Negro could, when seeking a qualified candidate, exercise the
Civil Service option of choosing from the three top candidates, at
least one of whom was almost certain to be white.
The answer to the first problem, of course, was actively to
broaden recruitment, and to make a strong effort to include Negroes
wherever possible in the search for qualified job applicants. The
best answer to the second problem was a firm, explicit stand by each
department head against discrimination in any form.
The President set the example. At early meetings of his
Cabinet, he made plain strong feelings about the need for equal
employment opportunity, and urged that his Executive Order on the
subject be implemented as quickly and as thoroughly as possible.

- ^ ""

11Q

Indeed, even before he issued the order, he pointed out to me in our
very first conversation after he took office that the Coast Guard —
which is under the Treasury Department — was the only Service
Academy without a single Negro cadet. He asked me to find out why,
and to see what could be done.
A quick check showed that the Coast Guard had no policy of
discrimination. Candidates had always been selected from applicants
who scored the highest marks on a competitive written examination.
But there had never been any strenuous effort to encourage Negro
applicants.
As Secretary of the Treasury, I could have waived the rules and
directly appointed a Negro to the Academy. I rejected this course
because I thought it would hinder, rather than further the President's
program. Instead, I had Coast Guard officials broaden the Academy's
recruitment activities among all schools, including those with Negro
students. As a result, a number of Negroes participated in the
Coast Guard examination last February. Four scored high enough for
appointment. Unfortunately, two of them failed the physical
examination. One chose instead to accept a scholarship to Columbia
University. The fourth candidate, Merle J. Smith, of Aberdeen,
Maryland, entered the Academy, where he is an outstanding member of
the Cadet Corps. We intend to continue to see to it that through
such affirmative action, members of minority groups are made
aware that opportunity to qualify for this institution will be
denied to no one who is able to meet the entrance requirements.
Other areas of the Treasury also received close attention.
Soon after taking office, I designated one of my top assistants,
Robert A. Wallace, who is here with us tonight, to ensure that the
Treasury Department adhered as closely as possible to the President's
desires for greater employment opportunity. This was the first time
responsibility in this area had been given to such a high policy
official. Results were quick in coming.
For instance, I learned to my surprise that a Negro had never
held a professional position in the Office of the Secretary of the
Treasury. Nor was there a single Negro secretary in that large
office, numbering some 350 people. I immediately appointed a highly
qualified economist, Dr. Samuel Westerfield, Dean of the Graduate
School of Business of Atlanta University, to a top-level position
in my office. Three other professional and five secretarial
positions in the Office of the Secretary have also been filled by
Negroes.
I want to make it clear that I found no policy of discrimination
when I arrived at the Treasury — it was just that there were no
Negroes serving in responsible positions in a number of its
many areas. For example, when I assumed office there was not a
single Customs Collector who was a Negro. President Kennedy quickly

J*- c_ v/

- 4changed this situation by appointing a Negro as Collector for the
Virgin Islands. The Savings Bonds Division appointed the first
Negro ever to serve as an Area Bond Representative. The Coast Guard
Academy appointed its first Negro faculty member. The Treasury
guard force appointed its first Negro Lieutenant. The White House
Police Force appointed its first Negroes. The Bureau of Engraving
and Printing appointed its first Negro machinists and its first
Negro electrician. Two local unions representing workers in that
Bureau, incidentally, have now for the first time accepted Negroes
as members. And today, also for the first time, the Internal Revenue
Service has Negroes serving in the highest regular Civil Service
grade.
One problem, the employment of Negroes with special talents
or skills in jobs where they have no opportunity to use them, has
received the particular attention of Vice President Johnson. It
was his plan to scrutinize the qualifications of all government
employees so as to avoid this waste of training and talent. The
results have been good. For example, a Treasury bureau discovered
that one of its uniformed guards, who was a Negro, held a law degree.
Since there was no opening for a lawyer in that bureau, he was
encouraged to apply through regular channels to another, where he
now holds a professional position in which he can put his knowledge
and training to full use.
Our progress has not been confined to the North. Internal
Revenue Service appointments at the professional level have, for
the first time, gone to Negroes in Atlanta, Louisville, and
New Orleans. A Negro office auditor has been hired in Austin, Texas,
and the first Negro clerk has been named in Oklahoma City. In
Atlanta, where no Negro had previously served the Internal Revenue
Service in any white collar position, eight Negro punch card
operators have already been hired.
I want to emphasize that such hiring has been on the basis of
merit and that every Civil Service rule and regulation has been
strictly observed. Simply by affording equal opportunity and by
making our policies known, we have, since January 196l, more than
doubled the number of Negroes in the higher regular classified
positions of the Treasury Department — where more than 80 are now
serving. In general, however, our broadened recruitment efforts
have put even greater emphasis on the middle grades, since this will
ultimately give more Negro employees the necessary experience to
qualify for the higher grades. Since January 1961, the number of
Negroes in these middle professional level positions at Treasury has
increased from 1,437 to 1,901 — more than 32 percent. I believe
this demonstrates how much can be done to increase employment
opportunities among minority groups without weakening the merit
system..

1.C.J-

- 5I am proud of our record at the Treasury. But it is only
representative of what has been happening throughout the government
under the strong leadership of President Kennedy. He has not
hesitated to seek among our Negro population for skilled leadership.
Only last month, for example, he named a Philadelphia attorney,
A. Leon Higginbotham, to the Federal Trade Commission. The Senate
has since confirmed this appointment, and Commissioner Higginbotham
is now the first Negro to sit on a Federal regulatory agency.
But the struggle to expand equal opportunity in the United
States — and Government's role in that struggle — has been
carried on in a much larger context than recognition of individual
ability.
For instance, the Justice Department, seeking to eliminate
unlawful discrimination in voter registration, is now prosecuting
more than 30 cases and is gathering evidence in connection with
another 70 cases. In Louisiana, for the first time, a Federal
Judge has invoked the i960 Civil Rights Act and has started to
register voters himself. Segregation in bus, railroad and air
terminals has virtually been eliminated throughout the country, as
a result of action taken by the Justice Department and the .
Interstate Commerce Commission. The Department of Health, Education
and Welfare has announced that segregated schools will no longer be
considered suitable for on-base children of military personnel.
The Secretary of Labor will certify only those apprenticeship programs
which contain a specific equal opportunity clause, and he has also
succeeded in desegregating a number of State employment offices
throughout the South. Finally, the President has established a
Sub-cabinet group on civil rights, comprising high level
representatives of Executive departments and agencies to maintain
a watchful eye on the vast operations of the Federal Government to
ensure equality of opportunity wherever possible.
Furthermore, the Federal Government is working closely and
continuously with local authorities to assure all citizens the
full rights guaranteed them under the Constitution. The Department
of Justice has not filed a single civil rights case without first
going to the local authorities and informing them of what appears
to be a violation of the law. Local authorities — judges,
prosecutors, and lawyers — have as much responsibility to protect
and defend the Constitution as do Federal officials. In the
majority of cases, the local officials have taken action and nothing
further has been required of the Federal Government. There are no
front page news stories but there are changes; there are results
and they are brought about by local officials. In the long run,
this is what is of real importance. For example, 13 airports
have been desegregated voluntarily. Two have not been and the
Justice
have
the Justice
proved
Department
Department
unwilling
hasor
brought
has
unable
not gone
legal
to do
to
action.
the
court
jobuntil
But,
themselves.
local
as in all
authorities
cases,

122
- 6All of these actions have obvious social significance. What
Is less obvious is that they also have economic significance.
As Secretary of the Treasury, I am keenly interested in
accelerating our rate of economic growth in order to meet the needs
of our citizens at home and to underwrite our heavy commitments
abroad for the defense and development of the free world. Anything
that detracts from our potential economic strength is a matter of
great concern to me. I was struck, therefore, by the report last
month of the President's Council of Economic Advisers, which
spelled out the high economic cost to our country of racial
discrimination in employment.
The Council estimated that full utilization of the present
capabilities of the non-white population would increase our total
output by about two and a half percent — an increase of some
$13 billion in the goods and services we now produce. In addition,
the Council said that if non-whites had the same educational level
as whites, that amount would be raised to more than three percent,
or roughly $17 billion at current levels of output.
»While these estimates are necessarily approximate, they tell
us something with unmistakable clarity. They tell us that even
if we were able to ignore the human misery and degradation that
discrimination creates, even if we were willing to endure the burden
of despair which is imposed upon our citizens as a result, even if
were were to accept indefinitely an unemployment rate among Negroes
twice that among whites, that prejudice and discrimination would —
solely on economic grounds — be in direct conflict with the
national interest of the United States. Since more rapid economic
growth is the major economic goal of our nation, no one with any
serious concern for public policy can afford to overlook the potential
in human and economic resources that we waste through prejudice
and discrimination, regardless of whether the discrimination is
deliberate or inadvertent.
But the price of prejudice runs far higher than even those
figures would suggest. The damage done to our image abroad when a
foreign diplomat is refused proper housing or service in a
restaurant is beyond calculation — especially when the diplomat
represents one of the new nations whose craving for freedom and
human dignity was largely fired by our own example. We present a
strange contradiction when we spend billions for foreign aid to
expand human rights abroad at the same time that we tolerate
discrimination here at home. Even more Important — as I can
testify as a former Ambassador to France and former Under Secretary
of State — racial disturbances in the United States both shock
and mystify many foreigners, and some of them draw from such
incidents a profound skepticism about freedom in America. It is
disorder
obvious,
this
skepticism.
I
and
think,
discrimination
that the recent
in Mississippi
triumph of
will
thedo
rule
much
ofto
law
counteract
over

123
- 7People around the world are often unfamiliar with actual
conditions in the United States. But their hopes for their own
country are best fulfilled in the ideal of America — that is, a
society committed to freedom; founded on the Declaration of
Independence and the Bill of Rights, and dedicated to the rule of
law in which the state is the servant of the individual and not the
individual the servant of the state. What really is at stake is
whether the United States in the next decade will be able to maintain
its leadership in the free world. If we treat a large number of
American citizens as inferiors and fail to strive vigorously for our
ideals as expressed in the Bill of Rights and the Declaration of
Independence, then we cannot expect to maintain our leadership:.
The enlargement of human rights in this country beyond their
present frontier is imperative for social, economic, moral, and
foreign policy reasons because the major resource of any free
nation is a free people, progressing within a framework of free
institutions of their own choosing.
This was never more important than it is today. We have been
told by the Soviet rulers that we are the old order, fit only for
the trash heap of history. I believe history teaches a different
lesson. It teaches that societies which concentrate power at the
top become increasingly rigid. As the rights of people are taken
over by the state, the society atrophies, and becomes Incapable of
adapting to change. We live in a rapidly changing world. I
believe it is the free society that will prove to be capable of
changing with it. It will do so because of the vitality, moral fibre,
and creativeness of free people.
Unleashing the creative potential of its people, and utilizing
their abilities to the fullest through equal opportunity, is a
major task of any free society. The fundamental human right of
all free people is to use their freedom constructively, to enjoy a
fuller and a more productive life.
That fundamental right should not be denied to anyone —
certainly not because of prejudice or discrimination, which are the
very antithesis of all that we as a nation stand for.
Passive tolerance and good Intentions are not enough. Positive,
aggressive, vigorous action is called for, by men and women of
courage and tenacity. Only in that way, can we enhance the dignity
of the individual citizen, promote the maximum development of his
capabilities, stimulate their responsible exercise, and widen the
range and effectiveness of opportunities for individual choice.
Only in that way can we bring the American Dream closer to reality.
0O0

- 20 can ultimately increase tax receipts.

1?&
In 1954, for instance,

a tax reduction totaling almost $7-1/2 billion went into
effect. /ftat{after an interval of only one year, total
Government receipts had risen above the pre-tax-cut level. A
major reason was the stimulation of business activityproughtj
about]by the tax cut.
Stimulation of business activity — especially business
investment — is precisely what we need and seek. This has
been a central focus of the Administration's tax program from

the outsets \ Next year's tax reduction and tax reform package
will be specifically designed with the end in view of making

capital investment more attractive. I hope you will make your
#\

plans accordingly.
^^.rtMWSWSJSM***"-****'-''

o 0 o

£ p/poa/HM

uj^/crt A'cae+o y I4AS

"^Im'fit a hocTtosKf //o g L*>/<? t? & fu

~T~

1 9^
- 19 equivalent amount. Such talk is simply not realistic. If
taken literally it would mean virtually permanent postponement of any tax reduction. While it is, of course, true that
the government must conduct its affairs with utmost frugality —
especially when a reduction in revenues is contemplated — there
is no realistic expenditures below current levels. Indeed, the
demands of the cold war, of the space age, and of our rapidly
growing population^are so urgent and compelling that Federal
expenditures are bound to continue to rise. What we must do is
f""* """""V

make certain that we limit any increase to those thingsfwhichj
we cannot do without.
If we wait to reduce taxes until we can reduce pur overall
expenditures, we will never achieve the strong economy we must
have to assure our position in the world, the well-being of
our people — or a balanced budget. For income tax reductions

126
- 18 fa simple matter. Andjfwe will not, of course, propose tax
reduction alone. What we have in mind is a restructuring of
our tax tsystemt aimed at the creation of a system which will
make a positive contribution to our basic economic health and
growth, while at the same time improving tax equity. £NO such
undertaking could possibly be easy or noncontroversial, even

ffcl#$££ fey j$4 r fit 4*($tutors *fi&4
though we plan that! any tax increases will be more than offset
*"~

jiSMSi,

by tax rate inductions.
Such a net reduction in overall taxes, incidentially, is
not only desirable but clearly necessary if we are to complete
the job of getting our national economy firmly on the road to
full employment.
There has been considerable discussion in recent months
concerning our planned net tax reduction. In some quarters the
opinion has been voiced that taxes must not and should not be
cut unless and until government expenditures are reduced by an

1#7
.£# t_- i

- 17 - /
w
Skeptics, however, are still with us. They/how say that
f
President Kennedy will not really propose e^ax cut* 0r that
if he does, it will not be of significant size. Or that if
it is large, it will contain only toKen reductions in upperbracket tax rates. Or, perhaps,^Snly token reductions in
/

lower-bracket tax rates — defending on who is doing the
talking, for businessmen are not the only skeptics. Or that

f
even if meaningful tax Reduction for corporations and in all
individual brackets j£s actually proposed, it will never be
passed by Congresp.
The skeptics will be proved wrong next year — as they
/

have been this year.

Of course, Congress will make changes

in what w£ propose; that is Congress' function, and we would
/

not havis it otherwise. Of course the legislation will be
/

controversial; the allocation of tax reduction among different
in/ome groups and between individuals and corporations is never

128

- 16 There appear, however, to be some who simply cannot
believe that a tax cut will actually be proposed and enacted.
/

Their skepticism is reminiscent of that which, till recently,
surrounded discussions of the depreciation reform and of
proppects for enactment of the Investment credit.
J?

Literally 48 hours before we announced our depreciation
/

reform — when the pamph^rft containing the new guidelines and
/

rules had already been printed and bound —

it was possible

to hear some businessmen and some trade association
representatives still proclaiming that the Administration
would never actually go through with the reform. And right up
until the final vote on the 1962 tax bill, there were many who
/

argued that it could not possibly be enacted into law. They
/
#

were w£ong.
/

129
- 15 that business will enjoy larger net profits, that it will be
more worthwhile for businesses and businessmen to work to
make more money and that they will have increased funds with
which to do so. The reduction in taxes for lower-income
individuals — apart from the clear benefits to these taxpayers
themselves — will mean more consumer purchasing power and
richer, larger markets for all business. For consumers, though
they may sometimes appear fickle to the individual businessman,
are quite consistent in their overall behavior. They spent 92
to 94 percent of their after-tax incomes and h&me done so
throughout the postwar period. Any increase in consumer disposable incomes is quickly translated into increased spending.
The prospect — I am tempted to say the certainty — of tax

reduction should be an important affirmative element in businessmen's thinking as they formulate next year's capital investment
plans.
•*"*'

*J"f

* • *

fy?fi

S H i

P/ A
7

I 7 /*V f(4£

\\j\&fe

- 14 -

i 3u
mama

credit should be a powerful stimulus to new investment,/improving, as it does] both the speed with which the cost of
new investment is recovered and the rate of return on investment. Taken together, depreciation reform and the investment
credit Cfor the first timejmake our tax treatment of new
investment in machinery and equipment comparable 1to that
currently available in other industrialized nations.
These are solid accomplishments which are now behind us.
But a third element aimed — among other things — at
improving the tax climate for investment, still lies in the
future. This is the top-to-bottom reduction in income tax
rates — both corporate and personal — which President Kennedy
[has pledged!to/propose early next year.
The reduction in corporate and upper-bracket individual
tax rates will mean — to state the matter quite simply —

1 ^1
- 13 Jr*"*"""—*

ammwrit

/ As reported in the Commerce Department-SEC survey of capital]
I programs, they remained the same as those for 196!Uj By May,
however, the story was quite ^herwise^

survey (f^aken at that timgj showed an 18 percent rise in textile

industry capital spending ^Intentions) compared with the
Wan_ * ' vMMMk

previous year's. /By the time of the July survey/ textile
industry capital programs were up 26 percent (over the previous^
year.( This is Indicative of the/powerlof depreciation reform,
once an industry has had the time to analyze it (fully and (
understand its gfectsTL &£fiJ&('>t7S A^X) Tfr tT&
Depreciation reform, though immensely important, is (x&yj
Of* It' &£irAf Cfts-i ;/u
fpart of?the improved tax climate for Investment.

A second

major element is the 7 percent investment credit, now finally
enacted into law. (The tax saving to business from the credit
during the present calendar year will be $1 billion.! The

132
- 12 written off in any other way which has proved acceptable in
the pastfbrjwhich will yield a fair result. The consequence
of this amendment will be a further liberalization for those
industries which are heavy users of this type of equipment.
Overall, we have estimated the tax savings to business/
from our depreciation reform at $1.5 billion in the first yearT[
We see no reason to change that estimate, despite the skeptical/
/comments which have emanated from a few quarters. To anyone f
I who doubts the efficacy of/depreciation reform In inducing a
higher level of capital investment* I recommend a good close

A
look at the Investment plans of the textile industry. That
industry, you will recall, got Its revised depreciation
guidelines ahead of others — in October a year ago. Four
months later, in February of this year, there was{stil-7no
sign of any increase in the industry's capital spending plans..

/VA/ N O C/ OJ c&b

iv ^&?&//u 6 To /u

0
days, when the Internal Revenue
Service will issue an amendment to the depreciation procedure
on the complex matter of writing off the cost of jigs, dies,
molds, patterns and Kfaata^^ltgma^of' <^eolal'-Q-q%a4|mu-i-t^ A
misunderstanding between the Treasury and some major companies
as to the scope of the information we sought^from themL

J^S

concerning &urrent| depreciation practices resulted in an underweighting of the Importance of these special items among their
productive assets. The information submitted to us also failed
adequately to reflect the extent to which some industries do
not actually depreciate these assets, but amortize, "expense",
or treat them in some other fashion. The amendment will
eliminate the difficulties which grew out of this misunderstanding £y?providj£|g that these special items may be
n
depreciated at any rate previously accepted or their cost

- 10 many business executives who! quite mistakenly,ibelieve fchat

/P/tf/P
the new guidelines are jminimumgf and that no company can go

^ A *
below them.

Equally mistaken and widespread is the belief

that use of the new guidelines is an all-or-nothing matter.
The reverse is true. The new guidelines may, if desired, be
used for some classes of assets, such as production equipment,
mum

and not for others, such as buildings. [A final!misconception
is the belief that some companies may actually be worse off
under the new rules. This is literally impossible. Any firm
which has already justified its use of a shorter-than-guideline
depreciation schedule may continue its use without challenge.
We recognized from the outset thatyfurther r^isions in]

tT/*w fcwtrs fiz*\tft A-frD

UP T& Dt{7tr u/ou«>|> "

Ijbhe new depreciation rules might be necessary and affirmed our/

tetQt*t*& tttA-r rwtxf far
readiness to make changes whenever they provid justified, wit
[

„' R&0-4$£J>

FttOM T'ttHt To ftfit*it.

/"the objective of keeping depreciation practices permanently upI to-date. A specific demonstration of this attitude will be/

13- 9 their retirement practices into conformity with their
depreciation claims.
Even those who delay in taking advantage of the reform
jjLn administration of depreciationjwill find shifts to faster
depreciation writeoffs easier than in the past. As a
practical matter, any company whichiha^over the years
followed the replacement pattern it claimed for tax purposes,
will permanently retain the right to speed up its depreciation
/at least! to the guideline rate. And (movement €o\ a belowguideline schedule — even after the expiration of our threeyear transitional rule — will be allowed upon a showing that
this is justified for the taxpayer concerned.
Thorough and careful study of the new depreciation rules
may reveal to many businessmen opportunities which they have
not, thus far, recognized. For example, there appear to be

1 1Q
X \J v./

- 8 the cost of investment through the tax deduction route £-7
/but this is hardly the half of it. What is realMmuch more
important is the fapt that the new rules covering depreciation
wipe the old slate clean, and permit |T fresh start forjany
business (wishing to shift ta a consistent policy of replacing
its equipment more rapidly (than it used toJ
The rules will make it easy (for any businessj— now or in
{

the future —\to accelerate the pace at which it depreciates
and actually retires and replaces equipment.

But there are

special advantages for companies which move quickly to a
speedier replacement pattern. Those which make the shift
within the next three years — either by adopting the schedule
suggested in the new guidelines or by justifying an even
shorter one — will find that they are allowed a grace period
equal to the duration of an entire replacement cycle to bring

"7 "

137

level to forestall large movements of funds to financial
centers outside our borders while at the same time preventing
undue increases in the cost of long-term borrowing.
Corporate borrowing costs have remained essentially unchanged

S/AJcfr

C th Jt¥fijm4.¥\/ff/tC

/"since January, 1961^4 the bottom of the 1960-61 recession/
What is more, this stability in interest costs has been
achieved without the slightest hint of any renewal of inflation.
fWhere/borrowing is necessary to finance new capital

***

-Nx A HM*Q t^cfr*

investment, the cost of money (figures importantlylin computati
.ToH the prospective return on the investment. The cost of
money is a favorable factor now.

i* f- _ ,-_„ -«. _-_ _ «. _«. ft.
investment/ however/ has come about in the tax area.
The depreciation reform which the Treasury put into effect
last summer envisages a substantially more rapid recovery of

1 1Q
JL. \J \->

- 6 Creation of this environment has |been| in large measure,/ the
>

accomplishment of government.
/Despite the recent trend toward (more and/more financing
of capital investment out of internally generated funds, a
large portion of new capital spending is still financed from
external sources, that is, from funds which are, through one
device or another obtained from the investing public. As
investment rises, reliance on external sources of funds will
increase. Such funds are available in ample supply now —
and at relatively low cost.
This ill the aim Ahe Administration fhas
(has had
h a dI—
j — and the
end we have achieved —Jthrougf? 20 months of continuous
effort on the part of the Treasury.working in close cooperation
with the Federal Reserve. We have accomplished the difficult
task of holding short-term interest rates at a high enough

- 5 / investigation,[reported
inve
its conclusion that
ftammm, - "Tllli —WW~VJJI»»»«»~—- 1

/ regardless of the measure of capacity used] output has been J
expanding faster than capacity/

If the steel industry is

excluded, Fortune noted, "the rate of utilization is higher
than it has been for the last six years...."
Those who are waiting for some dazzling upsurge in
economic activity before committing investment funds may^come
tol regret that decision. For sooner or later — and I think
sooner, rather than later — the gradual absorption of our
a~——a—s_* ""^"j

/ presently! unused capacity will catch short those who have not
prepared [themselves far enough in advance]for the expanding,
growing future.
mum***)

[jEf^the need for investment, and investment jiow. is
apparent| jso also is the fact that the general environment
for investment — specifically the financial and tax
environment — has never, in recent years, been better.

- 4 and present need for increased capital outlays by U. S.
business. Competition among our ownMmericanNfirms |is J
/intense! The company which hesitates will be left behind {^-j'
_- A-/U D
f~not only/with a cost-price structure it cannot maintain,£but^
behind in the race for new markets, new processes, and new
products.
The racefiTo have, enough! capacity to serve the markets
of the future — both here and abroad — is also one in which
no firm which wishes to prosper can refuse to run.

U,6r /4A^^ &£A@& &L6T _
£TJuch has been said and written recentl3 about (unused^
excess capacity kn this country H But clearly much of the
plant mow described as! excess is already obsolete or
^
A
^
obsolescent —at least according to any reasonable definition
of efficient, modern capacity. (1 noted with interest that J
Fortune magazine last month,[after an obviously tlxoroughL

,,.. ,lj±*ti<&l*i<i&l&(&&

- 3 be found/in other industrialized countries, ,our vast market
**i*>m&^-!%!s<imit'^fii

here at home J and the ^owinll markets of the ^ergin^nations
The prospectJrc)enlargement of the Common Market,^through
admission of the United Kingdom and other nationsJ coupled
with the^recent enactment of thejtrade expansion program —
which has given the President broad and unprecedented powers
to reduce tariffs — makes compelling the already evident
need for more efficient production in this country.
The time lis ripe! for a real effort ion the nart oft American
business to make itself more competitive _r JIJSKa before new

trading patterns within and foutside the Common Market become

so firmly fixed that new sellers wlll|find themselves! facesr
witl]'the hard task of courting customers whose supplier
relationships are already well established.
The fact and prospect of growing competition from foreign
producers is not, however, the sole factor indicating a clear

2
- 2 and your stockholders but/tof your employees andffioou? nationt
LJ

)

/ as well. /
As Henry Ford II put it in a recent speech, "The company
that really contributes most to the society is normally the
-. ^

most profitable company because, as a rule, it is"also the
^

-V.

most aggressive, most research-minded,^ most inventive, most
%

efficient.

******

It therefore contributes good jobs at good wages;
^

' *****

it contributes to the^management skill and technology of the
y

whole economy. "It may —

'""V.
" .
_

in addition —

be the most civic-

minded/but its economic performance, rather than its social
performance, is the basic measure of its social value."

—— — "m^m¥M ' •
(Achievement of the best possible economic performance
/requires use Sb the most efficient technology and equipment

h -*

available. Investment in such equipment is essential for any
American business that hopes to compete successfully in
the world markets of today — the markets to ?

*^V~J*A[

<Cu/t if,t\
10/15/62

DRAFT

REMARKS OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE NATIONAL INDUSTRIAL CONFERENCE BOARD
WALDORF-ASTORIA HOTEL, NEW YORK CITY
THURSDAY, OCTOBER 18, 1962, 8 P.M. EDT
A new environment for capital investmentjfias bee
K
j|^stablishe<jh.n our country. £lt is a more favorable environment than that which has prevailed in the recent past. What5
is mors} there is every reason to believe that the potential
attractiveness of new capital outlays will increaseJ]|#a^teef^?
in the months just ahead.

The case for

affirmative investment decisions, already strong, should
become even clearer and more compelling. #To

As businessmen, your primary responsibility Is to/make1
%a_

*»#

sure that your companies are operating with maximum efficiency

It is at responsibility (which extends! not only (to yourselves

TREASURY DEPARTMENT
Washington

I 44

FOR RELEASE A.M. NEWSPAPERS
FRIDAY, OCTOBER 19, 1962
REMARKS OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE NATIONAL INDUSTRIAL CONFERENCE BOARD
WALDORF-ASTORIA HOTEL, NEW YORK CITY
THURSDAY, OCTOBER 18, 1962, 8 P.M., EDT
A new environment for capital investment has been established
in our country. It is a more favorable environment than that
which has prevailed in the recent past. What is more, there is
every reason to believe that the potential attractiveness of new
capital outlays will increase further. The case for affirmative
investment decisions, already strong, should become even clearer
and more compelling in the months just ahead.
As businessmen, your primary responsibility is to ensure that
your companies are operating with maximum efficiency. Fulfillment
of this responsibility benefits not only yourselves and your
stockholders, but your employees, and the nation.
Maximum performance calls for the most efficient technology
and equipment available. Investment in such equipment is essential
for any American business that hopes to compete successfully in our
vast market here at home, the booming markets in other industrialized
countries, and the emerging markets of the new nations.
The prospective enlargement of the Common Market, coupled with
the new trade expansion program -- which has given the President
broad and unprecedented powers to reduce tarifffs — makes
compelling the already evident need for more efficient production
in this country.
The time for a real effort by American business to make itself
more competitive Is now — before new trading patterns within and
without the Common Market become so firmly fixed that new sellers
will face the hard task of courting customers whose supplier
relationships are already well established.
The fact and prospect of growing competition from foreign
producers is not, however, the sole factor indicating a clear and
present need for increased capital outlays by U. S. business,
Intense competition among our own firms will Increase. The company
which hesitates will be left behind with a cost-price structure it
cannot maintain, and behind in the race for new markets, new processes,
and new products.

D-645

145
- 2 The race for capacity to serve the markets of the future —
both here and abroad — Is also one In which no firm which wishes
to prosper can refuse to run.
We have heard a lot about excess capacity. But clearly, much
of the plant labelled excess is already obsolete or obsolescent —
at least according to any reasonable definition of efficient,
modern capacity. In addition, as Fortune magazine reported last
month, output has been expanding faster than capacity since 1959.
If the steel industry is excluded, Fortune noted, "the rate of
utilization is higher than it has been for the last six years....1'
Those who are waiting for some dazzling upsurge in economic
activity before committing investment funds may come to regret
that decision. For sooner or later — and I think sooner, rather
than later — the gradual absorption of our unused capacity will
catch short those who have not prepared for the expanding, growing
future.
The need for investment — and investment now — is apparent.
So also is the fact that the financial and tax environment
for investment has never, in recent years, been better. Creation of
this environment has, in large measure, been the accomplishment of
government.
Despite the recent trend toward more financing of capital
Investment out of internally generated funds, a large portion of
new capital spending is still financed from external sources,
that is, from funds which are, through one device or another,
obtained from the investing public. As investment rises, reliance
on external sources of funds will increase. Such funds are available
in ample supply now -- and at relatively low cost.
That has been the aim of the Administration — and the end we
have achieved — during 20 months of continuous effort on the part
of the Treasury, working in close cooperation with the Federal
Reserve. We have accomplished the difficult task of holding
short-term interest rates at a high enough level to forestall
large movements of funds to financial centers outside our borders,
while at the same time preventing undue increases in the cost of
long-term borrowing. Corporate borrowing costs have remained
essentially unchanged since the bottom of the 1960-61 recession,
In January 1961. What is more, this stability in interest costs has
been achieved without the slightest hint of any renewal of Inflation.
When borrowing is necessary to finance new capital investment,
the cost of money is a major factor in computing the prospective
return on the investment. The cost of money is a favorable factor
now.

- 3-

246

But the most pervasive recent improvement in the climate for
investment has come about in the tax area.
The depreciation reform which the Treasury put into effect
last summer envisages a substantially more rapid recovery of the
cost of investment through the tax deduction route. Much more
important, however, is the fact that the new rules covering
depreciation wipe the old slate clean, and permit any business to
adopt a consistent policy of replacing its equipment more rapidly.
The rules will make it easy — now or in the future — for any
business to accelerate the pace at which it depreciates and
actually retires and replaces equipment. But there are special
advantages for companies which move quickly to a speedier replacement
pattern. Those which make the shift within the next three years —
either by adopting the schedule suggested in the new guidelines,
or by justifying an even shorter one — will find that they are
allowed a grace period equal to the duration of an entire replacement cycle to bring their retirement practices into conformity with
their depreciation claims.
Even those who delay in taking advantage of the reform will
find shifts to faster depreciation writeoffs easier than in the
past. As a practical matter, any company which over the years has
actually followed the replacement pattern it claimed for tax
purposes, will permanently retain the right to speed up its
depreciation to the guideline rate. And adoption of a belowguideline schedule — even after the expiration of our three-year
transitional rule — will be allowed upon a showing that this is
justified for the taxpayer concerned.
Thorough and careful study of the new depreciation rules may
reveal to many businessmen opportunities which they have not, thus
far, recognized. For example, there appear to be many business
executives who believe quite mistakenly, that the new guidelines
are rigid and that no company can go below them. Equally mistaken
and widespread is the belief that use of the new guidelines is an
all-or-nothing matter. The reverse is true. The new guidelines
may, If desired, be used for some classes of assets, such as
production equipment, and not for others, such as buildings. The
most unfortunate misconception is the belief that some companies
may actually be worse off under the new rules. This Is literally
impossible. Any firm which has already justified its use of a
shorter-than-guideline depreciation schedule may continue its use
without challenge.
We recognized from the outset that our objective of keeping the
depreciation rules fair and up to date would require that they be
revised from time to time. The first such revision will be announced
in Washington tomorrow, when the Internal Revenue Service will issue
an amendment to the depreciation procedure on the complex matter of
writing
off items
the cost
of jigs,
dies, molds,
patterns and other
similar
subsidiary
of special
equipment.
A misunderstanding
between
the

1 A -7
__ T i

Treasury and some major companies as to the scope of the information
we had sought concerning their depreciation practices resulted in
an under-weighting of the importance of these special items among
their productive assets. The information submitted to us also
failed adequately to reflect the extent to which some industries
do not actually depreciate these assets, but amortize, "expense",
or treat them in some other fashion. The amendment will eliminate
the difficulties which grew out of this misunderstanding. It will
provide that these special items may be depreciated at any rate
previously accepted, or their cost written off in any other way
which has proved acceptable in the past and which will yield a fair
result. The consequence of this amendment will be a further
liberalization for those industries which are heavy users of this
type of equipment.
Depreciation reform will induce a higher level of capital
investment. To anyone who doubts this, I recommend a good close look
at the Investment plans of the textile industry. That industry,
you will recall, got its revised depreciation guidelines ahead of
others — in October a year ago. Four months later, in February
of this year, there was no sign of any increase in the industry's
capital spending plans over 1961. By May, however, the story was
quite different. The Commerce Department-SEC survey of capital
programs by then showed an 18 percent rise in textile industry
capital spending plans, compared with the previous year's. And
three months later, textile industry capital programs were up even
further — 26 percent. This is indicative of the potential worth
of depreciation reform, once an industry has had the time to
analyze it, understand its benefits, and take advantage of them.
Depreciation reform, though immensely important, is but one
element in the improved tax climate for investment. A second
major element is the 7 percent investment credit, now finally
enacted into law. The credit should be a powerful stimulus to
new investment, since it improves both the speed with which the
cost of new investment is recovered and the rate of return on
investment. Taken together, depreciation reform and the Investment
credit, make our tax treatment of new investment In machinery and
equipment comparable for the first time to that currently available
In other industrialized nations.
These are solid accomplishments which are now behind us.
But a third element, aimed — among other things — at improving
the tax climate for investment, still lies in the future. This
Is the top-to-bottom reduction in income tax rates — both
corporate and personal — which President Kennedy will propose
early next year.
The reduction In corporate and upper-bracket Individual tax
rates will mean -- to state the matter quite simply — that
business will enjoy larger net profits, that it will be more

- 5-

149

worthwhile for businesses and businessmen to work to make more money
and that they will have increased funds with which to do so. The
reduction in taxes for lower-income individuals — apart from the
clear benefits to these taxpayers themselves — will mean more
consumer purchasing power and richer, larger markets for all
business. For consumers, though they may sometimes appear fickle
to the individual businessman, are quite consistent in their
overall behavior. They spend 92 to 94 percent of their after-tax
incomes and have done so throughout the postwar period. Any
increase in consumer disposable incomes is quickly translated into
increased spending.
The prospect — I am tempted to say the certainty -- of tax
reduction should be an important affirmative element in businessmen's
thinking as they formulate next year's capital investment plans.
A tax cut will be proposed by the President — you may be sure
of that, llhd it is my firm belief that the Congress will enact
It in the rational interest.
We will not, of course, propose tax reduction alone. What w©
have in mind is a restructuring of our tax law, aimed at the
creation of a system which will make a positive contribution to our
basic economic health and growth, while at the same time Improving
tax equity. Any tax increases imposed by the requirements of equity
will be more than offset by tax rate reductions.
Such a net reduction in overall taxes, incidentially, Is not
only desirable, but clearly necessary, if we are to complete the
job of getting our national economy firmly on the road to full
employment.
There has been considerable discussion in recent months
concerning our planned net tax reduction. In some quarters the
opinion has been voiced that taxes must not and should not be cut
unless and until government expenditures are reduced by an
equivalent amount. Such talk is simply not realistic. If taken
literally, it would mean virtually permanent postponement* of any
tax reduction. While it is, of course, true that the government
must conduct its affairs with utmost frugality — especially when
a reduction in revenues is contemplated — there is no realistic
prospect for the foreseeable future of reducing Federal expenditures
below current levels. Indeed, the demands of the cold war, of the
space age, and of our rapidly growing population, are so urgent and
compelling that Federal expenditures are bound to continue to rise.
What we must do Is make certain that we limit any increase to those
things we cannot do without.
If we wait to reduce taxes until we can reduce our overall
expenditures, we will never achieve the strong economy we must
have to assure our position in the world, the well-being of our
people -- or a balanced budget. For income tax reductions can
ultimately
increasealmost
tax receipts.
In 1954,
for
Instance,
reduction totaling
$7-1/2 billion
went
into
effect.a tax

- 6-

148

After an interval of only one year, total Government receipts had
risen above the pre-tax-cut level. A major reason was the
stimulation of business activity by the tax cut.
Stimulation of business activity — especially business
investment — is precisely what we need and seek. This has been
a central focus of the Administration's tax program from the outset —
a program which already has offered, through depreciation reform and
the Investment credit, an annual reduction in current business tax
liabilities of $2.5 billion. Next year's tax reduction and tax
reform package will be specifically designed with the end in view
of making capital investment even more attractive. I hope you will
make your plans accordingly.

0O0

- 3 -

lc>j

and exchange tenders will receive equal treatment. Cash adjustments will be ma

for differences between the par value of maturing bills accepted in exchange a
the issue price of the new bills.
The income derived from Treasury bills, whether interest or gain from the sale

or other disposition of the bills, does not have any exemption, as such, and lo

from the sale or other disposition of Treasury bills does not have any special

treatment, as such, under the Internal Revenue Code of 1954. The bills are subj

to estate, inheritance, gift or other excise taxes, whether Federal or State, b

are exempt from all taxation now or hereafter imposed on the principal or inte

thereof by any State, or any of the possessions of the United States, or by any

local taxing authority. For purposes of taxation the amount of discount at whi

Treasury bills are originally sold by the United States is considered to be in

terest. Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 195

the amount of discount at which bills issued hereunder are sold is not conside

to accrue until such bills are sold, redeemed or otherwise disposed of, and su

bills are excluded from consideration as capital assets. Accordingly, the owner
of Treasury bills (other than life insurance companies) issued hereunder need
clude in his income tax return only the difference between the price paid for

bills, whether on original issue or on subsequent purchase, and the amount actu

received either upon sale or redemption at maturity during the taxable year fo
which the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and this notice, pre-

scribe the terms of the Treasury bills and govern the conditions of their .issu

Copies of the circular may be obtained from any Federal Reserve Bank or Branch

- 2 j_aa_QQM(-ii_Kij_decimals, e. g., 99.925. Fractions may not be used. It is urged that tenders
be made on the printed forms and forwarded in the special envelopes which will
be supplied by Federal Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of customers
provided the names of the customers are set forth in such tenders. Others than
banking institutions will not be permitted to submit tenders except for their
own account. Tenders will be received without deposit from incorporated banks
and trust companies and from responsible and recognized dealers in investment
securities. Tenders from others must be accompanied by payment of 2 percent of

the face amount of Treasury bills applied for, unless the tenders are accompani
by an express guaranty of payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal

Reserve Banks and Branches, following which public announcement will be made by
the Treasury Department of the amount and price range of accepted bids. Those
submitting tenders will be advised of the acceptance or rejection thereof. The

Secretary of the Treasury expressly reserves the rigjht to accept or reject any

or all tenders, in whole or in part, and his action in any such respect shall b
final. Subject to these reservations, noncompetitive tenders for $ 200,000 or

-PET"
less for the additional bills dated July 26, 1962
, ( 91 days remaining until maturity date on January 24, 1965 ) and noncompetitive tenders for
$100,000 or less for the 182 -day bills without stated price from any one

bidder will be accepted in full at the average price (in three decimals) of ac-

cepted competitive bids for the respective issues. Settlement for accepted ten-

ders in accordance with the bids must be made or completed at the Federal Reser
Banks on October 25, 1962 , in cash or other immediately available funds or
In a like face amount of Treasury bills maturing October 25. 1962 Cash

i PI

:^»v.t:t:«'>i»)»;»;i>;»i«;i

-L v_/

TREASURY DEPARTMENT
Washington
October 17, 1962

FOR IMMEDIATE RELEASE

TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders for two series
of Treasury bills to the aggregate amount of $ 2,000.000,000 , or thereabouts,

cash and in exchange for Treasury bills maturing October 25, 1962 > in the amou

m
of $ 1.898,506.000 > as follows:

isir
91 -day bills (to maturity date) to be issued
October 25, 1962
in the amount of $ 1,500,000,000 , or thereabouts, representing an additional amount of bills dated July 26, 1962 ,

m
amount of $ 702,855,000
, the additional and original bills
and to mature January 24, 1965
, originally issued in the
to be freely interchangeable.
182 -day bills, for $ 700,000,000 , or thereabouts, to be dated
October 25, 1962 , and to mature April 25, 1965 .

xpct£

pip

The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding as hereinafter provided, and at maturity their face

amount will be payable without interest. They will be issued in bearer form onl

and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 an
$1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up to the
Daylight Saving
closing hour, one-thirty p.m., Eastern y&_wtS__R_k time, Monday, October 22, 1962
Tenders will not be received at the Treasury Department, Washington. Each tender
must be for an even multiple of $1,000, and in the case of competitive tenders
price offered must be expressed on the basis of 100, with not more than three

TREASURY DEPARTMENT 152
WASHINGTON, D.C.
October 17, 1962
FOR BflflEDIATE RELEASE
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders
for two series of Treasury bills to the aggregate amount of
$2,000,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing October 25> 1962, in the amount of
$1,898,506,000, as follows:
91-day bills (to maturity date) to be issued October 25, 1962,
In the amount of $1,300,000,000, or thereabouts, representing an
additional amount of bills dated July 26, 1962,
and to
mature January 24, 1963, originally issued in the amount of
$702,835,000,
the additional and original bills to be freely
interchangeable.
182-day bills, for $700,000,000, or thereabouts, to be dated
October 25, 1962, and to mature April 25, 1963.
The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be Issued in bearer form only, and in denominations of $1,000,
$5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000
(maturity value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Monday, October 22, 1962.
Tenders will not be
received at the Treasury Department, Washington. Each tender must
be for an even multiple of $1,000, and in the case of competitive
tenders the price offered must be expressed on the basis of 100,
with not more than three decimals, e. g., 99.925. Fractions may not
be used. It is urged that tenders be made on the printed forms and
forwarded in the special envelopes which will be supplied by Federal
Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of
customers provided the names of the customers are set forth in such
tenders. Others than banking institutions will not be permitted to
submit tenders except for their own account. Tenders will be received
without deposit from incorporated banks and trust companies and from
responsible and recognized dealers in investment securities. Tenders
from others must be accompanied by payment of 2 percent of the face
amount of Treasury bills applied for, unless the tenders are
D-646
accompanied
by an express guaranty of payment by an incorporated bank
or trust company.

- 2 Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, following which public
announcement will be made by the Treasury Departmment of the amount
and price range of accepted bids. Those submitting tenders will be
advised of the acceptance or rejection thereof. The Secretary of.
the Treasury expressly reserves the right to accept or reject any or
all tenders, In whole or in part, and his action in any such respect
shall be final. Subject to these reservations, noncompetitive
tenders for $ 200,000 or less for the additional bills dated
July 26, 1962,
(91-days remaining until maturity date on
January 24, 1963) and noncompetitive tenders for $100,000
or less for the 182-day bills without stated price from any one
bidder will be accepted in full at the average price (in three
decimals) of accepted competitive bids for the respective issues.
Settlement for accepted tenders In accordance with the bids must be
made or completed at the Federal Reserve Banls on October 25, 1962,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing October 25, 1962. Cash and
exchange tenders will receive equal treatment. Cash adjustments
will be made for differences between the par value of maturing
bills accepted in exchange and the issue price of the new bills.
The income derived from Treasury bills, whether' interest or
gain from the sale or other disposition of the bills, does not have
any exemption, as such, and loss from the sale or other disposition
of Treasury bills does not have any special treatment, as such,
under the Internal Revenue Code of 1954. The bills are subject to
estate, inheritance, gift or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed on
the principal or interest thereof by any State, or any of the
possessions of the United States, or by any local taxing authority.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States is considered to be
interest. Under Sections 454 (b) and 1221 (5) of the Internal
Revenue Code of 1954 the amount of discount at which bills issued
hereunder are sold is not considered to accrue until such bills are
sold, redeemed or otherwise disposed of, and such bills are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunder
need Include in his income tax return only the difference between
the price paid for such bills, whether on original issue or on
subsequent purchase, and the amount actually received either upon
0O0 the taxable year for which the
sale or redemption at maturity during
return is made, as ordinary gain or loss.
Treasury Department Circular No. 4l8 (current revision) and this
notice prescribe the terms of -the Treasury bills and govern the
conditions
any Federalof
Reserve
their Bank
issue.
or Branch.
Copies of the circular may be obtained from

-5-

is?
-•* «_*

Joseph Gonsales*
Professional Staff Member,
United States Senate Appropriations Committee*

Roby

G« Carsx^ellfl
ecutive Secretariat,
Department of the Treasury*

^WMl^M^k^^^^.)^
Joseph D»
Office
De]

International Conferences,
ant of State*

Irene E. Sches?,
Office of International Conferences,
Department of\tate.
£§$££&§£&££*
Lucille Batchelder • State
\
Dorothy de Borchgrave - _Jreasury\
Eugenie Dwyer - State
Marian Frayman - AID
Eva HaXlam - Treasury
Muriel Lewis - State
Graciele Marques - AID
Yvonne Muers - State
Margaret Truitt - Treasury
Margaret
NbCLfifift?
( B ) B. Walthal - State

Office of International Conferences,
Department of State*
October 18, 1962.

+1 54
£iS£l^i£X»_^_Sl_3^£^Ai3^
John ho Hkgan,
Office of International Conferences*
Department of State.
ApBi.pfcgqilE SWic infpryiation omosttt
Lucia Donnelley,
Public Affairs Adviser,
Alliance for Progress,
Agency for International Development

''--

.155

MS§££2, * (c o nt i i me a}
Mr. Arturo Morales-Carrion,
Deputy Assistant Secretary of State
for Inter-American Affairs.
Eugene E..Oakes,
Chief, Eastern Latin America Division^
Export-Import Bank.
Edwin C, Kendall
Office of mternationai Finance,
Department of the Treasury.
William E» Rogers,
Special Counsel to the United States Coos>dinator,
Alliance for Progress,
Agency for international Development.
Gerald E. Tichenor,
Deputy Administrator for AID Programs,
Department of Agriculture.
William V. Turnage,
Director, Office of Inter-American
Beglonal Economic Affairs,
Department of State,
William M» Turpin,
Special Assistant to the Secretary,
Department of the Treasury,
Samuel Z. Westerfleld,
Office of International Finance,
Department of the Treasury*
Simon N. Wilson (Technical Secretary),
Office of Inter-toerlcan Kegional Political Affairs,
Department of State.
Public Information Officers?
Frederick J. Barcroft,
Coordinator for Alliance for Progress Information,
tlhlted States Information Agency.
Dixon Donnelley,
Assistant to the Secretary,
Department of the Treasury.

1 «
JL

Senior Advisersi

\^i^

(continued)

The Honorable
Thomas 0* Mann,
toerican itobassador,
HexLco City, Mexico.
The Honorable
de Lesseps S. Morrison,
iimtessador, Representative on the Council
of the Organisation of Merican States.
Congressional Advisers
_*he Honorable
Chester £• Merrow,
House of Representatives.
Advisers % "
\U Michael Blumenthal,
Deputy Assistant Secretary of State
for Economic Affairs.
Henry J. Costanzo (Technical Secretary),
Office of International Finance,
Department of the treasury.
William B, Dale,
Deputy Assistant Secretary of Commerce
for Economic Affairs.
Henry A. Du Flon*
Agency for International Development,
Guatemala City/ Guatemala.
John Elac,
Planning Economist,
Agency for International Development.
Philip Gla@$sner,
Deputy Assistant A&diiistv&fcor for Capita development,
Agency for International Development.
C- McKenzie Lewis,
Tax Policy Specialist,
Agency for International Development.
Sydney L* W. Mellen,
Office of International Resources,
Department of State.

Alternate United States Representative and Vice C-xaiman
oTTHe~l^legatlonl
'
The Honorable
Teodoro Moscoso,
United States Coordinator,
Alliance for Progress,
Alternate United States Representativesi
fhe Honorable
John M* Leddy (Coordinator),
Assistant Secretary of the treasury.
The Honorable
Edwin M. Martin,
Assistant Secretary of State
for Inter-&_erican Affairs.
Herbert May,
Deputy Assistant Secretary of State
for Inter-American Affairs.
Senior Advisers:
The Honorable
Tom Killefer,
United States Executive Director,
Inter-American Development Bank*
The Honorable
Harold F. Under 3
President and Chaimanj
Export-Import Bank.

ISO

Other members
<-i?
In Mexico, include:

©f the dele«ati«n, some «f wh@m are already

159
Per Immediate Releasd1

Dillon Heads U.S. Delegation to First Annual Meeting
©f Inter-American Economic and Social Council

Secretary of the Treasury Douglas Dillon will leave for
Mexico City tomorrow at 3:30 P.M. from Andrews Air Force Base kferif
as head of the United States delegation te the First Annual Meeting
at the Ministerial Level of the Inter-American Economic and Social
Council of the Organization of American States.
The meeting will evaluate *W_ results achieved so far 4&
the Alliance for Progress in Latin America and consider ways to
strengthen the Alliance and fck achieve Its objectives ©f economic

growth and social progress within -TiXlring-ittLifl'jJ-ilULUMili 1i a fra
of free institutions.

£& $+ f:: £~ *fc<v< w"
The n s H ^ ^ i will open on Monday, October 22 and is
scheduled to close on Biftl Saturday, October 27. A preliminary meeting
of technical expoerts has been underway

in Mexico City sinee

October

TREASURY DEPARTMENT

W A S H I N G T O N , D.C.
October 19, 1962
FOR IMMEDIATE RELEASE
DILLON HEADS U.S. DELEGATION TO FIRST ANNUAL MEETING
OF INTER-AMERICAN ECONOMIC AND SOCIAL COUNCIL
Secretary of the Treasury Douglas Dillon will leave for
Mexico City tomorrow at 3s30 P.M. from Andrews Air Force Base as
head of the United States delegation to the First Annual Meeting
at the Ministerial Level of the Inter-American Economic and Social
Council of the Organization of American States.
The meeting will evaluate results achieved so far by the
Alliance for Progress in Latin America and consider ways to strengthen
the Alliance and to achieve its objectives of economic growth and
social progress within a framework of free institutions.
The conference will open on Monday, October 22, and is scheduled
to close on Saturday, October 27. A preliminary meeting of technical
experts has been underway in Mexico City since October 1.
Other members of the delegation, some of whom are already in
Mexico, include:
Alternate United States Representative and Vice Chairman
of the Delegation:
The Honorable
Teodoro Moseoso,
United States Coordinator,
Alliance for Progress.
Alternate United States Representatives:
The Honorable
John M. Leddy (Coordinator),
Assistant Secretary of the Treasury.
The Honorable
Edwin M. Martin
Assistant Secretary of State
for Inter-American Affairs.
Herbert May
Deputy Assistant Secretary of State
for Inter-American Affairs.
D-647

161
- 2 Senior Advisers;
The Honorable
Tom Killefer,
United States Executive Director,
Inter-American Development Bank.
The Honorable
Harold F. Linder,
President and Chairman,
Export-Import Bank.
The Honorable
Thomas C. Mann,
American Ambassador,
Mexico City, Mexico.
The Honorable
de Lesseps S. Morrison,
Ambassador, Representative on the Council
of the Organization of American States.
Congressional Adviser:
The Honorable
Chester E. Merrow,
House of Representatives.
Congressional Staff Observers
Joseph Gonzales,
Professional Staff Member,
United States Senate Appropriations Committee.
Advisers:
W. Michael Blumenthal
Deputy Assistant Secretary of State
for Economic Affairs.
Henry J. Costanzo (Technical Secretary),
Office of International Finance,
Department of the Treasury.
William B. Dale,
Deputy Assistant Secretary of Commerce
for Economic Affairs.
Henry A. Du Plon,
Agency for International Development,
Guatemala City, Guatemala.

- 3Advisers: (continued)

1 Qo

John Elac,
Planning Economist,
Agency for International Development.
Philip Glaessner, _ , -. Deputy Assistant Administrator for Capital Development,
Agency for International Development.
C. McKenzie Lewis,
Tax Policy Specialist,
Agency for International Development.
Sydney L. W. Mellen,
Office of International Resources,
Department of State.
Mr. Arturo Morales-Carrion,
Deputy Assistant Secretary of State
for Inter-American Affairs.
Eugene E. Oakes,
Chief, Eastern Latin America Division,
Export-Import Bank.
Edwin C. Rendall,
Office of International Finance,
Department of the Treasury.
William E. Rogers,
Special Counsel to the United States Coordinator,
Alliance for Progress,
Agency for International Development.
Gerald E. Tichenor,
Deputy Administrator for AID Programs,
Department of Agriculture.
William V. Turnage,
Director, Office of Inter-American
Regional Economic Affairs,
Department of State.
William M. Turpin,
Special Assistant to the Secrtary,
Department of the Treasury.
Samuel Z. Westerfield,
Office of International Finance^
Department of the Treasury.
Simon N. Wilson (Technical Secretary)
Office of Inter-American Regional Political Affairs,
Department of State.

- 4-

16.?
Public Information Officers:
Dixon Donnelley,
Assistant to the Secretary,
Department of the Treasury
Frederick J. Barcroft,
Coordinator for Alliance for Progress Information,
United States Information Agency.
Secretary of Delegations
John L. Hagan,
Office of International Conferences,
Department of State.
Assistant Public Information Officer:
Lucia Donnelley,
Public Affairs Adviser,
Alliance for Progress,
Agency for International Development.

0O0

FOR HSLIASE A. M. HN5MPB-ft,
lueaday^ October 2|, I9&2*

SESULTS

or TSBAsaars iiBaa#i BILL

Dtftotar 22, 19©2

omaxm

1 be treasury Department announced last evening that tho tenters for %m& aeries of
treasury bills, ©an series to be an aciciitional issae of the bills dated Jol/ 16, 1962,
aad tee other series to be dated October 2$, 1962, whleit were off-red ©a October 17, *•
opened at the Federal Reserve Baaka on October 22* Tenders were iavited for 11,300,000
or thereabouts, of 91-day bills and for 1700,000,000, or thereabout*, of 182-day bill*.
the details of the two series ere as followt
182-day freaeary bills
9I~day Treasmry bills
Maturing April 2$, 1*3
material Jbmmrj 2k§ Xp$
Approx,
Approx* Equiv,
rex* tquiv.
Price
Annual gate
Price
gate
2.72211
J*.** V
2.0172
"353-T
Leu
2.7491
96.566 ^
2.633*
99.30$
Average
2.74212/
99.307
96.570
2*m% y
a/ Excepting one leader of 1100,000
ll perceat of the aaount of 91-day bUls bid for at the low price was
92 percent of tbe amount of 182-day bills bid for at the low price was accepted
TOTAL TEkiBiiS A? PLUS ?Oa 4MB JGJKFfEB 81 fSSSRAL g^lHfS DISfMCfSj

COHr-RinU 8IB3;

Accepted
I
3S,*f£,000
25,196,000
#
10*565,000 $ M » < * »
1,561,524,000
905,964,000
1,103,211^00
560,253,096
31,4liS,08O
16,448,000
io,ia6,ooo
Philadelphia
7,908,000
X$,nk,OQQ
3k,**#0Q0
34,237,000
Cleveland
2,622,000
2,647,000
26,101,000
Richmond
26,101,000
6,208,000
21,569,000
8,936,000
Atlanta
19,524,000
17f,6f4,ooo
32,627,060
116,167,000
Ciiicego
100,154,000
33»*ti_»OQO
6,401,000
9,4CJl,CX*r
it. Loaia
2o^yi t ooo
18,725,000
7,41*9,000
9,489,000
rtiraieapolis
12,725,000
43,169,000
9,068,000
City
14,169,000
35,569,000
32,298,000
San Fraaeiaeo
4,490,606
9,490,000
123,854,000
20,296,000
TOTALS
$70o,yi3,0&o at
12,132,626,000 *l,3OO,12ti,000
j
/
62,394,235,000
37,244,000
y Includes 1255,3*7,000 noacospetitive tenders accepted at tbe average price of 99.W
' Includes ^67,154,000 noncompetitive tenders accepted at the average price of 98.570
On a coupon issue of the saae length aad for the saae aae-st Invested, the return aa
tnese bills would profit yields of 2.80A, for the 91-day biHe, aad 2.93.1, fer ti»
182-day bills* interest rates on bills are quoted in tome of msk discount vita
tbe return related to the face ainoost of tbe bills payable at waturity ratber %to&
the asount invested aad their length ia actual amber of days related to a 360-**/
year. Ia contrast, yields on certificates, notes, aad beads are computed ia tsrns
of interest on tba aiaoiint invested, and relate the number of darg reifiaining la an ,
interest p-ystent period to ifae actual mmmr of diya ia tbe period, nitfe
"
if
more
tbaa
oae
coupon
period
Is
involved.
•r

Blstnet
Boston
Sew fork

1 Q<

TREASURY DEPARTMENT
W A S H I N G T O N , D.C.
DR RELEASE A. M. NEWSPAPERS,

October 22, 1962

lesday, October 23, 1962.
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
|as_ry bills, one series to be an additional issue of the bills dated July 26, 1962,
id the other series to be dated October 25, 1962, which were offered on October 17, were
>ened at the Federal Reserve Banks on October 22. Tenders were invited for $1,300,000, OOC^
• thereabouts, of 91-day bills and for $700,000,000, or thereabouts, of 182-day bills.
:e details of the two series are as follows s
fNGE OF ACCEPTED
MFETITIVE BIDS:
High
Low
Average

91-day Treasury bills
maturing January 24, 1963
Approx. Equiv.
Price
Annual Rate
2.722$
99.312
99.305
2.749$
99.307
2.742$ 1/

182-day Treasury bills
maturing April 25, 1963
Approx. Equiv,
Price
Annual Rate
98.576 a/
2.817$
98.568 ~
2.833$
98.570
2.828$ 1/

a/ Excepting one tender of $100,000
71 percent of the amount of 91-day bills bid for at the low price was accepted
92 percent of the amount of 182-day bills bid for at the low price was accepted
TAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
toston
lew York
Philadelphia
Cleveland
lichmond
Ltlanta
Jhicago
>t. Louis
linneapolis
[ansas City
tallas
>an Francisco
TOTALS

Applied For
$
35,496,000
1,561,524,000
31,448,000
34,904,000
16,101,000
21,569,000
179,894,000
33,644,000
18,725,000
43,169,000
32,298,000
123,854,000
$2,132,626,000

Accepted
Applied For
25,196,000
$
10,585,000
905,964,000
1,103,211,000
16,448,000
io,ia6,ooo
34,237,000
15,924,000
16,101,000
2,647,000
19,524,000
8,938,000
100,154,000
116,167,000
26,644,000
9,401,000
12,725,000
9,489,000
35,589,000
14,189,000
20,298,000
9,490,000
87,244,000
83,778,000
$1,300,124,000 b/ $1,394,235,000

Accepted
$ 4,300,000
580,153,000

4,la3,ooo

7,908,000
2,622,000
8,106,000
32,827,000
6,401,000
7,449,000
9,088,000
4,490,000
32,686,000
$700,443,000 c/
Includes $255,397,000 noncompetitive tenders accepted at the average price of 99.307
Includes ^67,154,000 noncompetitive tenders accepted at the average price of 98.570
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 2.80$, for the 91-day bills, and 2.91$, for the
io_-clay bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
xne amount invested and their length in actual number of days related to a 360-day
IT^+alnJ
11 > yie1*3.™ certificates, notes, and bonds are confuted in terms
intS_t?
+
^T*
^ v e s t e ^ and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with serriannual
compounding if more than one coupon period is involved.

5,S

TREASURY DEPARTMENT
Washington
FOR RELEASE ON DELIVERY

REMARKS BY THE HONORABLE HENRY H. FOWLER,
UNDER SECRETARY OF THE TREASURY,
BEFORE THE THIRD TRAINING CONFERENCE OF
THE NATIONAL DEFENSE EXECUTIVE RESERVE,
STATLER-HILTON HOTEL, WASHINGTON, D. C ,
MONDAY, OCTOBER 22, 1962, 8:00 P.M., EDT
OUR INDUSTRIAL ECONOMY AND NATIONAL SECURITY
During the Korean War, on October 30, 1952, as Director
of the Office of Defense Mobilization, in a public discussion
of some positive steps for the utilization in active mobilization
operations of the specialized personnel from industrial management
and labor, I stated: " . . . the creation of a reserve corps
composed of those who have served and will serve In the future in
the defense program . . . will be an invaluable backlog in meeting
any future emergency likely to arise."
It is reassuring to be here with you ten years later and see
that concept assume reality.
As Under Secretary of the Treasury, my daily concern is the
relationship of public finance to such national economic goals as
economic growth and the balance of payments. Against this background and that of operating experience in industrial mobilization
in World War II and the Korean War, my topic is foreordained — It
is the role of our industrial economy in maintaining national security
in the cold war.
My remarks should be read only in the context of world affairs
as they have generally existed since the end of the Korean War -they are not intended to apply to the entirely different situation"""
we face tonight in Cuba.
The role of our industrial economy in national security has
been drastically changed by the advent of nuclear weapons, missile
technology, and the Communist tools and tactics of the cold war.
Before World War I, World War II, and even the Korean War, it was
enough for the United States, as the pre-eminent economic and
industrial power in the world, to have a mobilization potential and
techniques for converting the industrial economy from peaceful
pursuits to an all out war footing over an extended build-up
period — after which the foe was overwhelmed by the fruits of our
Industrial might.
But old style mobilization planning and security policy is no
longer adequate -- confronted as we are by the continuous challenge
D-649
of the Sino-Soviet Bloc.

- 2 The national policy imperative In the Sixties is that
our private industrial economy must serve each day — in
freedom — to maintain our national security in the face of the
ever-present cold war, and to assure a speedy victory In event
a hot war is forced on us.
The private Industrial economy produces the implements
of war for military forces here and around the globe. That force
and its equipment must be sufficient to deter attack on the
United States and its Allies or defeat and destroy the enemy
quickly if war comes.
-- It creates the wealth and jobs that provide the income from
which taxes are extracted to support a national defense budget of
nearly $53 billion annually, in addition to space research and
technology, international affairs and finance, veterans1 benefits
and services and myriad social and nonmilitary government services.
— It conducts most and finances much of the Nationfs
research and development, which creates new products, new
processes, new jobs, and new instruments for keeping the peace.
— It utilizes the savings generated by the free economy
to provide the new facilities for increased capacity and
productivity. These make possible the economic growth and
competitive efficiency necessary to increasing economic strength.
— It produces the goods and services to maintain our vital
export lifeline and create the trade surpluses which earn the
foreign exchange that enables the United States to play a decisive
role In developing and defending the Free World.
— It participates directly in private industrial development
of the lesser developed countries as well as the industrialized
areas of many of our stronger Allies.
The present Administration is dedicated to the proposition
that this complex of daily relationships of the private
industrial economy to our national security should be maintained
in the context of a free market.
This was nowhere better expressed than in a recent address
by President Kennedy, in which he said:
"I regard the preservation and strengthening
of the free market as a cardinal objective of this
or any Administration's policies. It is well to
remind ourselves from time to time of the benefits
we derive from the maintenance of a free market
system. The system rests on freedom of consumer
choice, the profit motive, and vigorous competition
for the buyer's dollar."

Stated in broad terms, national security policy for the cold war
requires the systematic utilization of the economic strength of the
United States on a day by day, month by month, year by year basis.
It calls for the effective employment of the power and genius of
our industrial economy not only at home but in military deployment,
economic defense, trade, and economic development throughout the
Free World, in coordination, wherever feasible, with the economies
of Allies or friendly nations. It requires pursuit of these
objectives without converting our free industrial economy to
totalitarian methods that would betray our national objective of a
free society.
Perhaps, it will be useful to review the challenge to
which this policy is a response; the nature, scale and
character of the Industrial economy required to meet the
challenge; some of the inadequacies of past performance; and
some of the new or Improved policies, achieved or in near
prospect,
to meet
these inadequacies.
I. designed
THE ECONOMIC
CHALLENGE
OF THE SINO-SOVIET BLOC.
This challenge to which our national security policy is
a response is epitomized in Chairman Khrushchev's speech to
the 21st Congress of the Communist Party in February 1959 in
these words?
"The economic might of the Soviet Union
is based on the priority growth of heavy
industry; this should insure Soviet victory
in peaceful economic competition with the
capitalistic countries; development of the
Soviet economic might will give communism a
decisive edge in the international balance
of power."
Our Central Intelligence Agency has estimated that during
the 1950s the real gross national product in the U.S.S.R.
increased at an average rate of 7 percent; that in the same
period industrial production was estimated to have expanded at
10 percent per annum. Although these increases comprise
additions to an Industrial base substantially lower than ours,
they also substantially exceed the rates of growth In the
United States during the same period.
In addition, the Soviet Union devotes to foreign policy
and military purposes an appreciably larger proportion of its
resources than does the United States. A study by the Operations
Research Office of Johns Hopkins University in I960 estimated
that, though the U.S.S.R. then generated a national product
somewhat less than one-half that of the United States, its
military output is calculated, in American prices, to be
approximately that of the United States. It should be noted,
however, that because the U.S.S.R. devotes its most efficient

-4resources to its military effort, the burden of that effort, while
somewhat greater than ours, is not twice as great.
Referring to the pattern before 1959, the study stated
that: "If the U. S. and the U.S.S.R. continue to budget for
defense in accordance with recent allocation patterns, by
1970 the respective budgets would be $46 billion for the U. S.
and $72 billion for the U.S.S.R. (in 1959 dollar equivalents).'
Of course, in view.of the smaller volume of developed
industrial resources available to the U.S.S.R., increases in the
allocation of those resources to military ends require diversion
of effort not only from the production of consumer goods but also
from the further development of basic industry, upon which longterm Soviet growth depends.
If the U.S.S.R. chooses to maintain these same ratios of
allocation of resources and is successful in maintaining the
same rate of growth, the potential long-term threat to our
national security is clear. This threat may manifest itself
in several directions.
First, the continued commitment of a large proportion of
the fruits of a growing economy to military production could
confront the U. S. with the alternative of becoming a poor
second in military strength or of increasing substantially its
own rate of defense spending.
Second, the U.S.S.R. could utilize its own industrial
plant, plus that of Eastern Europe and a developing China, to
launch a formidable economic and trade offensive In the underdeveloped areas of Asia, Africa and Latin America, rich in raw
materials and hungry for end products but low on industrial
plant.
But this raw economic data pertaining to the U.S.S.R.,
however threatening, is only part of the picture. Conjoined
to this economic base in the U.S.S.R. by a political creed
hostile to the United States and free societies everywhere
are the rulers of one-third of mankind. They hold the economies
of Eastern Europe, Communist China, North Korea, North Vietnam,
and now Cuba, in thralldom by military force, a web of bilateral
trading arrangements and political subversion. Beyond these
areas, the U.S.S.R. has manifested a considerable capability for
economic penetration as well as political organization and
propaganda, and Internal subversion. The Soviet Union Is
II. THEadept
NATURE,
SCALE AND
CHARACTER
ANdeveloped
INDUSTRIAL
particularly
at using
the desire
of OF
less
nations
ADEQUATE
MEETto
THE
CHALLENGE.
to escape ECONOMY
from poverty
as aTO
means
spread
the Communist doctrine.
Having measured the challenge to our national security and
the industrial economy that undergirds it, let us consider the
nature, scale and character of the necessary response.

IB 8
Of course, we must never fall behind in the awful race
of weaponry, either technologically or in terms of a force in
being. The rocketry advances in Soviet missiles and the
successors to Sputnik are a constant reminder.
The contemporary challenge of the Soviet economy also
points up the need for an increased rate of U. S. economic
growth based on an expansion of industrial output, capacity and
productivity.
The resulting basic strength will keep our Nation ahead of
potential enemies who seek to "bury" us — either by outright
aggression or the utilization of superior economic power.
Military power is derived from economic strength and foreign
policy is based on both. The greater our economic strength and
rate of growth and that of our Allies, the more effective Is our
defense against aggression, no matter what form it may take.
In addition to military measures, economic strength
permits the carrying out of a positive foreign economic policy
which will preserve our alliances and increase the development
of freedom in the uncommitted world.
Greater growth In our private industrial economy is
conducive to a continuing political acceptance of, and economic
adjustment to, the larger military outlays that our national
security could require. The faster the national income
expands, the more resources from tax revenues are available
for the national security sector even with tax rates unchanged.
In the context of a higher rate of economic growth, the
provision of larger military outlays can be made wholly consistent
with an allocation of resources to this use on a scale which has
characterized recent years.
Our defense lines do not stop at our shores; they run
far beyond the seas. We need only recall names like Berlin,
Korea, and South Vietnam to understand why overseas expenditures
must be made if the established pattern of Free World security
from Communist aggression is not to be breached or weakened.
In addition, the United States supplies substantial amounts of
foreign aid to help create an economic and political future In
an atmosphere of freedom for the uncounted billions of human
beings who will populate Asia, Africa and Latin America in the
decades ahead. To the extent that this foreign aid Is not
furnished in the form of goods and services supplied from the
United States it requires foreign currencies and exchange.
To meet these requirements of national security and foreign
policy and allow continued freedom of persons, capital and goods
In the international market, we must have an industrial economy
capable of meeting export and import competition in the markets
of the Free World. It must provide a substantial commercial

- 6trade surplus sufficient to match these necessary external
outlays without creating imbalances of international payments
that would weaken the dollar as the reserve currency which
provides the basis for the Free World trade and financial
system. Hence, our industrial economy must feature exports and
a resulting commercial trade surplus adequate to support our
decisive role In developing and defending the Free World.
Our national security calls for an industrial economy
that is marked by competitive ability and efficiency for a
related reason, namely, the need to move forward in closer
economic alliance with other industrialized free nations. The
combined output of the purchasing power of the United States
and Western Europe is more than twice as great as that of the
entire Sino-Soviet Bloc. Though we have only half as much
population, far less than half as much territory, our
coordinated economic strength will represent a powerful force
for the maintenance and growth of freedom. Access to an
expanded Common Market would give an opportunity for internal
economic growth and expanding our export surplus. But there is
an additional political and security rationale. As President
Kennedy has put It:
"If the nations of the West can weld
together on these problems a common program
of action as extraordinary in economic
history as NATO was unprecedented in military
history, the long range Communistic aim of
Theredividing
is one additional
feature
in our
and encircling
us to
allbe
isdesired
doomed to
industrialfail."
economy If it Is to play its full role In long-term
national security and enable the United States to retain its
position in world affairs. Our private industrial economy
should function In such a manner as to provide a clear-cut,
continuous demonstration of its inherent advantages, sometimes
called a "system reputation." Only this and a pattern of
trade fairness and opportunity will attract the less developed
countries into association with the Free World rather than the
Sino-Soviet Bloc.
III. SOME INADEQUACIES OF PAST PERFORMANCE
Despite the best intentions and equal patriotic fervor of
those in government, industrial management and labor, past
inadequacies of performance have signaled the need for new or
Improved policies.

1 CQ

- 7 The year i960 witnessed a growing concern in the United
States and in the Free World for the national security
implications of the convergence of two factors. The first was
the retarded rate of economic growth in the United States,
particularly in the private industrial economy, which serves
as the dynamo of the Free World. The second was the confirmation
of a severe balance of payments problem affecting the United
States' role in world affairs and its dollar as a reserve
currency for the Free World.
During the Fifties, while the United States — in gross
national product — was growing at less than three and one-half
percent per annum and less than three percent in the latter half
of the decade, Free Continental Europe was growing at nearly
five percent, the Soviet Union at nearly seven percent, and
West Germany and Japan at between seven and nine percent.
During this same period, the U. S. economy became subject
to persistent deficits in our international balance of payments
which averaged $3.7 billion annually in the three years 1958-60.
The decline of the United States' trade surplus which fell
to a postwar low of $1 billion in 1959* focused attention on
the long run improvement in the competitive position of Western
European countries and Japan relative to the U% S. — improvement
caused mainly by remarkable advances in output and productivity
in those countries. In addition, a sharp rise in certain key
prices in the U. S. relative to those of major competitors had
weakened the competitiveness of some U. S. products in world
markets.
Add to these developments the following facts concerning
our national stocks of plant and equipment upon which our
productivity, efficiency, and competitiveness largely depend:
(a) a diminishing percentage of our gross national
product has been devoted to business fixed
investment and, particularly Important to
producers' durable equipment,
(b) increases in our stock of plant and equipment
have proceeded at a substantially receding
rate in recent years in relation to other areas
of the economy,
(c) the rate of increase in the production of
business equipment has fallen far behind the
rate of increase In industrial production,

- 8(d) there has been a startling rise in the proportion
of our machinery and equipment which is over ten
years old, and
(e) between 1954 and i960 there was a sharp decline
in the rate of increase of productivity per
worker and per hour from that of the earlier
postwar period.
A sharply contrasting pattern and trend has prevailed during
the last decade for our industrial allies with whom we are engage
in a common competitive market, as pronounced in the last few
years as in the early years of replacement of war damage. A
steady increase in the percentage of gross national product
devoted to machinery and equipment has characterized their
performance.
Equally troubling in the past fifteen years is the fact
that four recessions have arrested growth in the U. S. economy —
in a period when the economies of other major industrial
countries in the West have moved steadily ahead with only an
occasional pause. Approximately fourteen quarterly periods, or
23 percent of the total, have been periods of recession. The
economy has spent a total of seven years (out of the fifteen)
regaining previous peaks of industrial production. In two
months out of three during this fifteen-year period, 4 percent
or more of those able, willing and seeking to work have been
unable to find jobs. The peak of each of the last three
recoveries has been marked by a higher rate of unemployment than
the previous one.
Even in the field of research and development, in which
the United States prides itself on excelling, there were
limitations and imbalances derived from: (l) a too limited
supply of scientists and engineers in certain fields; (2) the
small relative quantity of effort devoted to nonmilitary
research; (3) the small relative effort devoted to basic
research, and (4) the limited percentages of resources applied
to research and development in many industries and companies.
In this rigorous se^lf-assessment it is necessary to assess
the performance of otherswith whom the United States is joined
in a network of alliances designed to maintain Free World securit;
and assure Free World development. For frankness among friends
and partners is a necessary Ingredient for the continuing
success of the partnership.
It must be emphasized that our security problems are not
wholly national in character; they are the security problems of
the Free World. As the President recently stated:
"They are problems which cannot be met by
one
country
Isolation
or by
nations
disarray
no
there
undue
Is burden
less
. .in.risk
When
on for
any
burdens
all."
nation.
aremany
When
shared,
risk
there
isin
shared,
is

I "

- 9Reference has been made to the marvelous performance of
the economies of Western Europe and Japan during the past decade.
The available evidence does not support the proposition that
they are carrying the increasing share of the burden of Free
World security and development that Is commensurate with their
increasing economic strength and growth.
For the past fifteen years the United States has carried
the main load of defense expenditures. There have been some
encouraging increases in the efforts of our NATO partners in
this area. But, as recently as the calendar year 196l, an
authoritative estimate (based on the NATO definition of defense
expenditures) showed defense expenditures of our NATO Allies to
be approximately 5.2 percent of their combined gross national
product while those of the United States were 9-8 percent.
Some of our Allies, especially the smaller ones, may feel that
the additional contribution they might be able to make is not
significant. This Is not the case. Additional contributions,
consistent with the size of their economies, would be of substantial
significance, particularly in the conventional arms area.
Since 1946 the United States has spent some $88 billion
overseas for the defense and aid of others, with the European
nations receiving some $26 billion In economic aid. Yet,
despite their relatively strong position in terms of the
balance of payments and the building up of financial reserves
in recent years, the principal industrialized countries of the
Free World, although providing long-term financial resources to
developing countries in increasing quantities, have in the last
four years contributed a diminishing rather than increasing
proportion of total Free World aid outlays.
In addition, while welcoming the advent and Increasing
strength of the Common Market, those outside in the Free World,
Including the United States, hope that the European Economic
Community will continue to pursue liberal external tariff
policies, so as to lessen the discrimination against non-member
countries which could result from disappearing Internal tariffs
coupled with a common external tariff. Increasing barriers
against agricultural exports from the U. S. and Latin American
countries threaten to increase the economic problems of the
Western Hemisphere and impair their payments potential at a
crucial time.
Many of these nations are already experiencing severe
economic difficulties as a result of a world-wide decline in
the prices of many of the raw commodities that provide their
principal sources of foreign exchange.

- 10 IV. NEW OR IMPROVED POLICIES, ACHIEVED
OR IN PROSPECT
The search for the combination of policies that will improve
the performance in the cold war of our private industrial economy,
and those of other Allied Industrialized nations associated with
it, is a never ending one. There is much recent progress to
report in many sectors, but much remains to be done.
1
- Increased scale of military strength in being —
There has been an increased allocation of our economic
resources to the development and maintenance of a much more
effective, secure and balanced military force In being. The
level of budgetary expenditures to support the direct military
functions of the Defense Department, apart from military aid,
has increased from a level of $4l.2 billion in the fiscal year
i960 to a projected $48.2 billion for the fiscal year 1963. The
1963 budget for these military functions for the Department of
Defense was the first to be developed under procedures introduced
last year to integrate the making of plans, programs and budgets.
This approach features long range projections of programs and
comparisons of effectiveness per dollar spent with alternative
weapons systems. It also encompasses continuing review and
adjustment of long range objectives to conform to changes in the
international situation and in military requirements and technology.
The effective participation of our industrial economy in this
increased effort, as well as a substantially expanded space program,
represents a tangible national security advance which, however
costly, is well within our resource availabilities.
2» Recovery and an increasing rate of growth —
A combination of the natural resiliency of the economy and
the effective coordination of government fiscal and monetary
policies designed to restore and sustain a higher level of
aggregate demand and encourage increased productivity and growth,
has once again put the United States on the road to a faster
rate of economic expansion. During the past eighteen months
there has been a rise of over $50 billion in output, representing
a 6.6 percent growth in gross national product over its previous
peak in the second quarter of i960. This has been accompanied
by a 1.7 million rise in employment and a drop in unemployment
of nearly 7 percent to an average of 5-1/2 percent In recent
months. Business expenditures for plant and equipment are
finally regaining the 1957 peak, after remaining well below that
level for five years. Corporate profits, before taxes, have
increased from $39.8 billion in early 1961 to $50.9 billion in
the second quarter of 1962.

i 71
A. t .__

- 11 3. An improved balance of payments situation —
Our balance of payments deficit has been sharply reduced —
from $3.9 billion in i960 to $2-1/2 billion in 1961 and to a
substantially lesser annual rate somewhat over $1-1/2 billion
so far in 1962. This Improvement is due to a diverse combination
of measures, some governmental, some of private initiative, and
some resulting from the cooperative actions of some of our Allies,
particularly in the field of debt prepayment and arrangements for
the purchase of additional military equipment and services from
U. S. sources.
4. New opportunities for trade expansion —
The passage of the Trade Expansion Act of 1962 is a
milestone on the road to the future of the U. S. in Free World
trade and a giant step towards a stronger and more closely knit
Atlantic Community. It also opens the door towards the
preservation of competitive opportunity for expanding U. S.
trade in the world's fastest growing market. If our industrial
economy is sufficiently competitive and enterprising to seize this
opportunity,, it will make possible the achievement of equilibrium
in our balance of payments and the earning of a commercial
trade surplus that will permit this Nation to continue to discharge
its full role in Free World security and development. The
initiation of a new export credit insurance program by the
Export-Import Bank in cooperation with private banks and
insurance companies and an Export Promotion drive by the Department
of Commerce can prove to be significant administrative auxiliaries.
5- A new attack on limitations on research and development —
A new organizational and educational effort has been mounted
to lessen the limitations on expanding research and development
and its application, particularly in the civilian sector.
6« Tax policies to encourage increased investment in
machinery and equipment —
In moving toward a comprehensive tax reform program looking
to a higher rate of economic growth and a more equitable tax
structure, the President gave first priority to forging tax
policies that would encourage investment in productive equipment
stating that:
"The Immediate need Is for encouraging
economic growth through modernization and
capital expansion."

- 12 This initiative resulted in a two-pronged program — both
now accomplished facts — administrative liberalization of the
tax treatment of depreciation and legislative enactment of the
investment tax credit. The change in the administrative rules
concerning depreciation of machinery and equipment became
effective on July 12 of this year. The Investment tax credit
provides a credit reducing taxes for a business by 7 percent of
annual expenditures for new machinery and equipment. It became
law with the President's signature last week, applicable to
qualifying expenditures in 1962. Together, and for the first
time in many years, these reforms will place investment in new
equipment In the United States — so far as taxes are a factor —
on a basis roughly comparable to that in the other industrialized
countries. Moreover, the combined effect of the two measures will
be to reduce the current tax load on business by about $2.5 billion
a year — an amount equal to about one-tenth of the total corporate
tax liabilities. The resulting benefits in cash flow, increased
rate of return on new investment, and shortening the period of
risk of investment in capital equipment should serve as long run
measures to stimulate investment for modernization and growth.
These advances in policy and performance, however gratifying,
leave much to be accomplished in relating our industrial economy
to its changing role in national security. In many areas
programs are being devised and substantial efforts are under way.
But their realization will require the support and understanding
of the public at large in this country and the cooperation, in
some cases, of friendly governments. Perhaps a few examples will
suffice to give some flavor of the breadth of the unfinished
business on the agenda.
A major task just ahead will be to carry through
President Kennedy's proposal that the next Congress promptly
enact an "across the board, top to bottom cut" in personal and
corporate income tax rates, compensated for by some broadening
of the tax base, but involving, overall, net tax reduction.
Broad agreement has developed among our citizens that one
of the keys to progress is the taking of this third step in
tax reform — in addition to the two previously mentioned —
a reform designed to stimulate Investment, sustain and Increase
demand, and release the brakes on growth inherent in our present
tax: rate structure. A meaningful reduction in rates should
serve to build the fundamental strength of our economy by
removing a serious barrier to long-term economic growth. It
should add to the basic level of demand in the economy by
increasing the disposable income of consumers — an essential
catalyst to growth in that it adds vitality to markets and
reduction
Increases production,
Involving a net
employment,
tax reduction
incomewill,
and profits.
by increasing
A rate
sales

1 79
- 13 and bringing production closer to capacity, increase profits on
existing equipment, spur spending on inventory, and stimulate demand
for new plant and equipment. The reduction of the corporate tax
rate, combined with depreciation reform and the investment credit,
will provide new incentives for investment in new ventures or
expansion of existing ones. Increased business profit margins
and return on investment will be the touchstone for an increased
utilization of capital in productive investment opportunities.
The successful enactment of a tax program along the lines
suggested by the President early in the next session of
Congress — coming on the heels of the steps already taken —
will strengthen immeasurably the long run effectiveness of our
industrial economy in its changing security role.
Another area which offers large potential rewards is
the forging of a closer economic community in which the
strength of our industrial economy can be more effectively
conjoined to the rapidly expanding Industrial economies of
Western Europe and Japan to protect the security of the Free World
and assure its steady economic development.
It has been a basic objective of our foreign policy for
two decades to encourage a strong and united Europe. The vast
progress now being made opens new vistas towards assuring our own
long-term national security — bound as it is to that of the
entire Free World. In the words of President Kennedy:
". . .We believe that a united Europe will
be capable of playing a greater role in the
common defense, of responding more generously to
the needs of poorer nations, of joining with the
United States and others in lowering trade
barriers, resolving problems of currency and
commodities, and developing coordinated policies
in all other economic, diplomatic and political
areas. We see In such a Europe a partner with
whom we could deal on a basis of full equality
in all
the greattask
and burdensome
building
The great
diplomatic
implicit intasks
this of
analysis
Is
and
community activity.
of free nations."
the subject
ofdefending
daily and aintensive
The opportunity
to Increase the effectiveness of the Organization for Economic
Coordination and Development, the International Monetary Fund,
and the World Bank — particularly the role of Its affiliated
International Development Association — is real and tangible.
But these, with NATO in the military field, provide an
institutional framework for multilateral action that must be
Increasingly adapted to meet the requirements of the future.

- 14 The negotiation and consummation of new trade arrangements
pursuant to the Trade Expansion Act, if accompanied by a more
intensive effort in Western Europe to free its capital markets
from outworn restraints, could be a giant step towards an
Atlantic Community. These arrangements should provide
Increasing strength and opportunity not only for that area
but for other friendly countries to which we are bound in
special ties of friendship such as Canada, Japan and Latin America —
indeed, the entire Free World.
The potential for economic strength and growth of the
combination of forces represented in this Atlantic Community,
given wise public policies and effective coordination, is an
impressive one. One measure will illustrate. On November 17,
1961 the United States joined with the other 19-member nations
of the Organization for Economic Cooperation and Development
in fixing as a target the attainment of a 50 percent (4.1 percent
a year) increase in their combined national product during the
decade from i960 to 1970. That increase would provide an
additional dimension to the industrial economy of the member
countries roughly equivalent to the size of the U. S. economy
at the outset of the Sixties.
Moreover, coordination of Allied economic activities that are
directly related to the cold war that could constitute a powerful
economic defense program Is now being undertaken on an increasing
scale.
Against this backdrop, the prospect for an economic
defense program — as distinct from a purely military one —
which could be decisive in the cold war, given coordinated
action, is a new challenge to the statesmanship of the Western
world. A coordinated program of economic defense, in contrast
to the present largely unilateral action of each individual
industrial power irt the Western world, could add greatly to Free World
security. It might include the consideration of coordination for:
(a) The utilization of economic sanctions in dealing
with the Sino-Soviet Bloc, or components thereof, In situations
involving overt aggression or subversion accompanied by violence,
(b) The control of trade and other commercial relationships with Bloc countries, or components thereofx including credit
arrangements, which contribute to military or economic potential, or
Industrial development, particularly that involving the ready
availability of advanced Western industrial know-how, packaged
plants, or specialized equipment.
(c) The prevention of excessive dependence on Bloc
materials and supplies,
(d) The prevention, countering, checking, or minimizing
countries,
of Bloc economic
and
penetration or subversion of less developed

173
- 15 (e) A program covering ordinary normal trade with the
Bloc in a manner that will protect private trade from the
abuses of Bloc state trading techniques violative of the normal
standards of commercial behavior and require the utilization of
reasonable commercial terms.
The tasks which lie ahead of us are not easy nor simple.
Our objective is a large one and mere half-way success could
be a failure. We must fix our sights on our essential goal,
which is the creation of a Free World industrial economy
strong enough to withstand simultaneously each and every one
of the present and potential challenges which lie before us.
We must create a Free World industrial economy strong enough
to support the direct military expenditures we must make to
meet a variety of possible aggressive threats ranging from
total to localized war. We must create a Free World industrial
economy strong enough to carry, in addition, the essential burden
of supplying economic aid to all those around the world now
engaged in the struggle upwards out of ignorance and poverty
into well-being — without which there can be no meaningful freedom.
We must create a Free World economy strong enough to counter
every para-military and non-military — that is, economic --• threat
imposed by the forces of world Communism.
Finally, we must structure our policies for the attainment
of this essential economic strength so that the burdens our
private Industrial economy must carry and the methods we devise
for bearing them will not destroy or erode our freedom.

oOo

BECKETAKX" DILLON SAYS SAVINGS BONDS PROGRAM
\ IMPORTANT TO NATIONAL THRIFT WEEK OBSERVANCE
\ October 22, 1962
FOR IMMEDIATE RELEASE)
The Treasury made public today the following statement by
Secretary Douglas Dillon in observance of National Thrift Week,
October 21-31, 1962:

0*~ i

October 21-31, 1962:
"National Thrift Week provides us with a welcome
opportunity to recognize the vital contributions made
by savings to this Nation's economic strength.
"The fact that we are joining with other free
world countries for the first time In celebrating
International Thrift Day on October 31st underscores
the importance of savings of all kinds in helping to
generate the economic growth that is our mutual goal.
"In this connection, I want to emphasize the part
played by the United States Savings Bonds Program in
enabling all of our citizens to become partners in thrift
for their own future prosperity and the security of their
country."

oOo

D-650

27 c

TREASURY DEPARTMENT
WASHINGTON, D.C.
October 22, 1962
FOR IMMEDIATE RELEASE
SECRETARY DILLON SAYS SAVINGS BONDS PROGRAM
IMPORTANT TO NATIONAL THRIFT WEEK OBSERVANCE
The Treasury made public today the following statement by
Secretary Douglas Dillon in observance of National Thrift Week,
October 21-31, 1962:
"National Thrift Week provides us with a welcome
opportunity to recognize the vital contributions made
by savings to this Nation's economic strength.
"The fact that we are joining with other free
world countries for the first time In celebrating
International Thrift Day on October 31st underscores
the Importance of savings of all kinds in helping to
generate the economic growth that is our mutual goal.
"In this connection, I want to emphasize the part
played by the United States Savings Bonds Program in
enabling all of our citizens to become partners in thrift
for their own future prosperity and the security of their
country."

0O0

D-650

- 2dealing with Switzerland1s problems of fiscal and monetary
management, particularly by providing a desired investment
outlet for capital funds which might otherwise be sterilized.
Borrowings of this kind can also provide a convenient
means of strengthening the Treasury's Swiss franc resources
available for exchange operations, although the present
borrowing is not needed for this purpose. Large scale
flows of funds to Switzerland at times have had destabilizing effects in the exchange markets. Such effects have
been and will continue to be counteracted through official
transactions, undertaken in full consultation and cooperation between the Swiss and United States authorities.
Actually, the flow of funds to Switzerland has ceased
since July and official United States commitments have
been reduced in an orderly manner since that time. The
new arrangements will provide useful flexibility, however,
not only for Treasury operations in Swiss francs but also
for bringing about a flow of capital into the United States.

FOR IMMEDIATE RELEASE
/ f •'
TREASURY TO ISSUE SECURITIES IN SWISS FRANCS
PRESS RELEASE ON TREASURY BORROWING OF SWISS FRANCS
(For Release on October 23, 1962, 3:00 p. m.)
The Treasury announced today that it is issuing during
October $23 million equivalent of bonds denominated in Swiss
francs as well as about $50 million equivalent of certificates
of indebtedness denominated in Swiss francs. These transactions represent the first Treasury foreign currency borrowings at terms longer than three months -- the bonds carry a
15-month maturity and the certificates of indebtedness
maturities of 5 and 8 months. This new type of public debt
operation is authorized by the Second Liberty Bond Act, as
amended — the same authority under which three-month foreign
currency*»denominated certificates of indebtedness were
issued beginning in October 1961. Previous borrowings of
$46 million of Swiss francs undertaken at that time were
repaid in the spring of 1962.
The longer-term borrowings of Swiss francs now undertaken
are to the mutual advantage of Switzerland and the United
States„ They afford the Treasury an opportunity to tap at
a very reasonable cost a large pool of capital funds arising
from Swiss Government surpluses and other fiscal measures
designed to mop up excess liquidity in the Swiss money and
capital markets0 At the same time, the Treasury1s borrowing transactions will assist the Swiss authorities in

TREASURY DEPARTMENT
WASHINGTON, D.C.
October 23, 1962
FOR IMMEDIATE RELEASE
TREASURY ISSUES SECURITIES IN SWISS FRANCS
The Treasury announced today that it is issuing during
October $23 million equivalent of bonds denominated in Swiss francs
as well as about $50 million equivalent of certificates of indebtedness denominated in Swiss francs. These transactions represent the
first Treasury foreign currency borrowings at terms longer than three
months — the bonds.carry a 15-month maturity and the certificates
of indebtedness maturities of 5 and 8 months. This new type of
public debt operation is authorized by the Second Liberty Bond Act,
as amended -- the same authority under which three-month foreign
currency-denominated certificates of indebtedness were issued
beginning in October 196l. Previous borrowings of $46 million of
Swiss francs undertaken at that time were repaid in the spring of
1962.
The longer-term borrowings of Swiss francs now undertaken are
to be the mutual advantage of Switzerland and the United States.
They afford the Treasury an opportunity to tap at a very reasonable
cost a large pool of capital funds arising from Swiss Government
surpluses and other fiscal measures designed to mop up excess
liquidity in the Swiss money and capital markets. At the same time,
the Treasury's borrowing transactions will assist the Swiss
authorities in dealing with Switerland's problems of fiscal and
.monetary management, particularly by providing a desired investment
outlet for capital funds which might otherwise be sterilized.
Borrowings of this kind can also provide a convenient means of
strengthening the Treasury's Swiss franc resources available for
exchange operations, although the present borrowing is not needed
for this purpose. Large scale flows of funds to Switzerland at
times have had destabilizing effects in the exchange markets. Such
effects have been and will continue to be counteracted through
official transactions, undertaken in full consultation and cooperation
between the Swiss and United States authorities. Actually, the flow
of funds to Switzerland has ceased since. July and official United
States commitments have been reduced in an orderly manner since that
time. The new arrangements will provide useful flexibility, however,
D-651
not only for Treasury operations in Swiss francs but also for
bringing about a flow of capital Into the United States.
0O0

Hie Honorable Ortiz-Mena

October 23, 1962

Chairman, Conference of IA-ECOSOC

I deeply regret that I have had to recall Secretary of the
treasury Douglas Dillon to Washington before the close of ftmr
meeting. However, as a member of the national Security Council of
the United States, as well as a principal executive officer of my
government, his presence in Washington is essential in the conduct
of the urgent end hazardous affairs which will occupy the days and
weeks ahead* 1 am designating Teodoro Moscoso, the Coordinator of
Alliance for Progress activities in the U. S. Government, and a man
who carries the highest responsibilities of the Alliance with my
complete confidence, as Chairman of the United States delgation.
There is little doubt that we are in the midst of a grave
moment In the history of the hemisphere. The security and freedom
of all our nations is at stake. Yet your meeting is a vital reminder
that the central task of this generation of Americans Is not merely
the avoidance of conflict. It is the construction of a new community
of American nations in which all our citizens can live not only free
from fear but full of hope.
The protection of our liberties -- resistance to aggression —
firmness in the face of danger -- these are essential to the preservation of our free society. But it is only through economic
progress and social justice that we can move forward to a hemisphere
where freedom accompanies ever-expanding horizons of opportunity and
hope* This is the work In which you are engaged. Just as the unyielding determination of today is essential If we are to realize
the future promise of the Alliance for Progress — the future success
of the Alliance for Progress will be the final vindication of the
resolute course we are undertaking today*
With every best wish,

John F. Kennedy.

l^cr

-22when the people of Cuba will be free once again to lead their
own lives within a framework of free institutions of their
own choosing. We continue to extend the hand of friendship
to the Cuban people. And we pray that a delegation of Cubans
representing a free people will soon sit among us. On that
day the people of Cuba will\share in the social, economic
and spiritual promise of the great Alliance which we have
undertaken so that human dignity can accompany human freedom
in every corner of this Hemisphere.

18 J
"*•• V„> ^_

-21I deeply regret that recent developments in Cuba
will not permit me to remain in Mexico City throughout this
conference. For the most basic hopes and ideals of my country
as well as my own deep convictionj are intimately involved
in the work we are doing here.
I have now been privileged to attend six Inter-American
Ministerial meetings dealing with economic matters. This will.
be the first time I have had to leave before the close of a
conference --an unfortunate occurrence which I hope will not
be repeated. For on thesuccess of the work which we are
carrying forward this week, largely rests the cause of freedom
and progress in this hemisphere.
In conclusion, I want to say that I am confident that
every Government and people of the Americas represented here
today looks forward, as do the government and people of the
United States, to the day -- and may it not be long in coming •

-3pAnd, third, private enterprise must, through one means
or another, be brought actively into the Alliance.
For we must recognize that the task ahead of us is so
vast that all the resources available to us -- both public
and private -- must be enlisted if the enterprise on which
we are embarked is to succeed. We of the United States pledge
our continuing and generous support. We are confident that
our partners in the Alliance will continue and intensify their
own efforts in behalf of their own people. For ours is a
genuine alliance, truly dedicated to progress in which all
the peoples of the Americas will share increasingly in the
years ahead.

the Alliance. And yet the private sector must become stronger
and more vigorous every year if the Alliance is to flourish.
Public funds simply do not exist anywhere on a scale adequate
to finance the enormous needs of the Alliance. The vast
resources -- both financial and managerial --of the private
sector must be enlisted if the Alliance is to have lasting
meaning.
There are three things which must be done if the private
sector is to assume its rightful role in the Alliance:
First, the governments of Latin America should take every
reasonable step to encourage the growth of thejprivate sector
and to reassure private enterprise, both foreign and domestic.
Second, whatever measures governments may take for public
purposes, such measures should be fair and equitable to the
private interests involved.

ft
social problems and that in many countries, necessary as these
reform measures may be to the well-being of the people, they
are strongly and even bitterly opposed by minority groups.
But, as President Kennedy stated last March, "Those who make
peaceful wssm&flmmi impossible will make violent revolution
inevitable.,!
There is one area in which during the pastyyear we have
not only made no progress but where we have suffered a serious
setback. Private investment, both domestic and foreign has
suffered damaging blows and has lost confidence. Not only has
foreign private investment in Latin America declined, but
private domestic capital has been seeking safe havens outside
Latin America. This capital flight has in some cases reached
serious proportions.
The plain fact of the matter is that private enterprise
has not always been made to feel that it is truly a part of

JL KJ .„•-

-17to economic growth and social progress. Without these vital
domestic measures external assistance cannot achieve the
purpose for which it is intended no matter how generous the
scale.
That is the true relationship between self-help and reform
on the one hand and external economic assistance on the other.
Together they comprise a true partnership between the United

States and Latin America. This partnership means steady progres

in carrying out essential self-help and reform measures and "TJL

«s£9s&s»d assistance for constructive, well thought out project

and not for those which would result in ineffective or wasteful
expenditures. We hope and believe that the pace with which

self-help and reform measures are being adopted in Latin Americ
will be stepped up substantially. This is particularly true of

measures to combat inflation, which have assumed such overridin

importance in recent months in several Latin American countries
We recognize that many of these measures deal with complex and
difficult economic and

emphasize the importance attached by other industrialized
free countries to the self-help measures provided for in the
Charter, for they know as we do that these measures are
am

necessary if external economic assistance is to be effective
in achieving growth and social progress.
These, then, are the major accomplishments of the first
year.
Now, where have we fallen short?
The reports of the CAS Secretariat, of the Panel of Nine,
and of the meeting of Experts, analyze the defects in detail.
I shall limit my remarks to two major aspects: First, the pace

of self-help and its relationship to external assistance. Second,
the role of private enterprise, foreign and domestic, in the
Alliance.
Self-help and reform, are provided for explicitly in the

Charter of ?unta del Estejbecause they are absolutely indispensab

^_*__3&r {*%£z£%S*>
supply and sanitation, and to private enterprise.

The Bank

has demonstrateo\outstanding competence in the\short period
of its existence,/ The United States^as±fcs-5T*prepared to
participate in replenishing the Bank' s^re sources^ jitisifo jLn
additfonylntends to continue to make available a substantial
and appropriate part of its economic assistance through the
Bank/Fo^. the Social Progressi Trust Fund.
Free industrialized countries other than the United States
have begun to interest themselves in helping to achieve the
objectives of the Alliance. Extensive credits, although often
on short term have been provided by European nations to Brazil
)

and Argentina. The industrial countries in the Development
Assistance Committee of the OECD have initiated useful discussions
on aid to Columbia. The Inter-American Bank has obtained
resources through the sale of bonds in Italy. Modest as these

ftfcfe!£J/t>6
efforts have been, they are a beginning. And I should like to

188

Assistance has been provided by the Agency for International
^ Development and the Export-Import Bank by agricultural
commodities under Public Law 480, and from resources given
by the United States to the Social Progress Trust Fund
administered by the Inter-American Development Bank. The
United States Is prepared to continue its assistance during
the year ahead on the same general order of magnitude, within
the context of continuing progress in implementing the selfhelp measures provided for in the Charter of Punta del Este
and the Act of Bogota.
The Inter-American Development Bank has achieved a high
rate of lending for development, both from its own resources
and from those provided by the U.S. under the Social Progress
Trust Fund. Total commitments by the Bank during the past
year have amounted to nearly $400 million. An important part
of these funds has been directed to low-cost housing, water

189

-POur new Trade Expansion Act authorizes the President of the
United States to conclude agreements with the European
Economic Community providing for sweeping reductions and
eliminations of tariffs and other trade barriers on a nondiscriminatory basis. We intend to use this new authority
to substantially reduce trade barriers affecting Latin American
exports to the industrialized countries of the Free World,
including the maximum possible freedom of trade for tropical
products.
Finally, the flow of external public assistance to
Latin America during the past year has sharply increased. At
Punta del Este the United States undertook to provide public
assistance under the Alliance totaling more than $1 billion
in the year ending March 1962. That pledge has been fulfilled.
An important part of our assistance has been in very long-

term loans with no interest or charge except a small service fee

-9in the FAO. The U.S. fully intends to play its part in these
discussions.
^ The United Statestully appreciates the desire of the
countries of Latin America to establish a mechanism to protect
and advance their trade interests. The United States is
convinced that the long-term interests of Latin America will
be best served by expanding opportunities for trade on a nondiscriminatory basis. We have in the past and will continue
in the future to lend our fullasupport to this objective. But
we do not believe that it is appropriate or effective for this
A • /'

purpose to create a regional bloc of American states daoignod

*f- Is?
^8 present^a united front vis-a-vis other regional groups.
We are keenly alive to the rapid evolution of trade
policies in the European community, and the expanding trade
needs of the developing countries in Latin America and elsewhere.

•*"

1^1
•*. w J.

quotas in excess of world demand and to make the agreement
truly effective.
At Punta del Este the need was foreseen for sources of
seasonal financing accompanied by adjustments in the coffee
marketing and exporting mechanisms of the countries of Central
America.

Since that time, the U.S. has indicated readiness

to assist in the creation of a fund for seasonal financing
of coffee.

The Central American countries for their part

have made good progress toward agreeing on the prerequisite
steps to put this scheme into operation. We hope that this
can be accomplished at an early date and believe that/it would
be an important step to relieve unnecessary pressure on prices
during the critical export season.
We have also moved forward toward ways and means to
stabilize and improve the world market for cocoa. The idea
of a world cocoa agreement is now under active consideration

IQO
^-

Progress has been especially noteworthy in Central America,
where theeobjective of deep integration is being pursued with
vigor,

,_./" £JU>--~*-_J

^The signature last month of the International Coffee

Agreement Tgfff a truly great achievement in the effort to provi
support for basic products in world trade. The U.S., as the
largest consuming country, has contributed its best efforts
to this agreement, which is of such great importance to the
economies of fourteen Latin American countries. Its great
promise lies in the fact that a mechanism now exists through
which declines in coffee prices can be arrested and more
remunerative levels of earnings achieved. Success will be
achieved only if the agreement is operated in an effective
manner. The U.S. stands ready to give serious consideration
to any sound project for reducing excess coffee production in
the exporting countries, so as to relieve the pressure for

id?

reform is being implemented or considered in nearly all of
Latin America. Large scale programs to provide low-cost
housing for low-income groups have been undertaken in a number
of countries, including Panama, Chile, Peru, Colombia and
Venezuela. Several countries have launched programs to
modernize their educational systems and in a number of
countries expenditures for education have risen sharply.
The work of planning for economic development is beginning
to bear fruit. The Panel of Experts has received Mptg?6i&(£\
economic development programs for evaluation from Bolivia,

Chile, Colombia and Mexico, with plans from Panama and Venezuela
expected soon. The development program of Colombia is now

receiving attention from the World Bank, the IDS, and industrial
coun;:rv:s interested in providing financial support.
Latin American economic integration is also making headway.

19 4

t
-#-

continent creative techniques which contributed so much to
the success of the Marshall Plan. Several of the resolutions
submitted for our approval by the officials are designed to
intensify and broaden this process of confrontation.
The work of the experts has been truly productive. We
owe a debt of gratitude to the Secretariat of the GAS for
its detailed preparation and documentation, and to the Panel
of Nine for its penetrating analysis and evaluation of the

Alliance as well as its valuable recommendations for improvement.
What have we accomplished in the first year of the Alliance?
In the field of self-help and reform, a solid beginning has
beeninade. An extensive land redistribution program in Venezuela
is being vigorously implemented. Colombia has now adopted an
agrarian reform law to improve substantially the; use of farm
land. In our host country, of course, land reform has been
carried out for several decades with beneficial results. Tax

1 Q^

7
-4On the contrary. The criticisms &re that we are moving
too slowly; that we must do much more and do it more quickly
to advance the vdtal principles which form the heart and
core of the Alliance for Progress.
It is to those constructive criticisms that we address
ourselves this week. In so doing we must not neglect our
accomplishments.
Our deliberations follow upon three weeks of intensive
work by representatives at the expert level. These three
weeks have been characterized by frank self-criticism on the
part of the Latin American representatives. The representatives

of the United States have also recognized the need for improving
our .participation in the Alliance.
Thus, here in Mexico City, we have successfully instituted
in inter-Arnerican economic relations a productive process of
confrontation, adapting to the development problems of this

The Charter of Punt a del Este called for an extraordinary
effort by the peoples and governments of Latin America. It
called for full and steady support by the people and government
of the United States. It called for a strong helping hand
on the part of other industrialized countries of the Free World.
When this Council framed the Charter of Punta del Este
it also agreed to review the Alliance for Progress each year
in a spirit of candor and objectivity. This week we conduct
the first review.
We are all aware ofthe many criticisms that have been
voiced about the Alliance. These criticisms should spur us
onward. For the burden of complaint is not that the Alliance
v/ is the wrong solution for the problems of pwp___y and despair
that beset so many of our fellow citizens in Latin America,
nor that the Alliance is moving in the wrong direction, nor that
we are not in agreement on our grand design.

Fourteen months ago, meeting at Punta del Este, the
governments here represented agreed upon the Charter of an
Alliance for Progress --an Alliance inspired by the vision
of dramatically bettering the lives of 200 million Latin
Americans in 10 short years.
It is particularly fitting that the first annual meeting
of the Inter-American Economic and Social Council should take
place in Mexico City, the capital of a country whose fundamental
goal for the past 50 years has been the same as that of the
Alliance for Progress: social;justice and economic progress

within the framework of individual freedom and political liberty
The principles of the Alliance for Progress are Latin
American in inspiration. Operation Pan America -- the Act of
Bogota -- Punta del Este -- those great landmarks in the history
of the Western Hemisphere were born of a ferment generated
within Latin America itself. This is a fact of tremendous
importance.

-4are removed or effectively neutralized,hopefully by the
immediate acceptance by Cuba of the resolution we have offered
to the Security Council of the U.N. requiring the prompt

dismantling of all offensive weapons in Cuba under united Nation
supervision and inspection.
I now turn to the statement that I had prepared for this

A
C

. ' t/

•""

J 9.9

At the very moment this statement was made, the missiles we
en route to Cuba in Soviet vessels.

And just last Thursday

the Foreign Minister of the Soviet Union, Mr. Gromyko,
deliberately lied to our President when he assured him that
the Soviet Union would never install offensive weapons in Cuba.
As President Kennedy announced last night, we have now
been forced to initiate action. A quarantine of Cuba which will
prevent the delivery of additional offensive weapons to Cuba
,

__~?^ "P

—M__ar-y^^.,a^.-._^.-J — Q _ ^ L

23r_r- ^_s^.^-_jfc^r

^a—-— -

r IT—"• ' ^ '•"

by the Soviet Union Is being initiated.
has "beeTl cairired^
&$€?

haveVreferred the matter to an emergency meeting of the Security
Council of the United Nations. It is absolutely essential that
the offensive preparations in Cuba come to an immediate halt.
If not further action wilrt^ju^tified. I can assure you that
the United States is resolutely determined to continue on the
course that it has set until the offensive weapons now in Cuba,

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201

evidence, in the form of aerial photographs which I myself
have seem that two types of missiles were being deployed in
Cuba: missiles with a range of just over 1000 miles, and
missiles with a range of just over 2000 miles. This means
that most of the United States, all of Mexico and Central
America, and all of South America as far south as Lima, Peru,
would be within range of surprise nuclear attack by these
missiles. We also learned that a shipment of jet bombers has
arrived and that they are in process of assembly.
I am sure that you will readily understand that this
situation is intolerable and that it cannot and will not be
accepted by the United States. It represents a direct challenge
to our entire hemisphere one that must be met and turned back.
It is a case of utter perfidy on the part of the Soviet Union.
For the Soviet Government told the1;-world just last month that

it would not station offensive missiles outside of Soviet borders

Since this is a meeting of the Finance Ministers of the

Americas to review the economic progress of the, past year, I

had intended to speak only of economic matters .V JHBBMBfc Jf

mmmms^mm^m^mmf^/\.rv Cuba/ awd*Washington pose issues of such

gravity for our^hemisphere that I feel it^lncumbent upon me t
comment briefly about them.

This is appropriate, because the

future course of economic and social progress in'all our coun

will inevitably be deeply affected by the outcome of the curr
crisis.
As a result of the surveillance of the heavy military

buildup in Cuba which we have been carrying out in accordance
with the communique of the Foreign Ministers of the Americas

following their meeting in Washington on October 6, we learne

early last week that offensive ballistic missiles with nuclea
capabilities were being deployed in Cuba. We immediately

intensified our surveillance. By the weeks end we had irrefut

LUU

Note: Because impertant sections ®f &e*-£fc Secretary Dillon1s
remarks were accidentally -wbitted in transmission from Mexico City,
the following complete version is supplied for the record. Please
substitute this for Treasury release 1)~~ _rJ 7^ .

NOTE:

Because important sections of Secretary Dillon's remarks
were accidentally omitted in cabled transmission from
Mexico City, the following complete version is supplied
for the record. Please substitute this for Treasury
release D-652.
STATEMENT BY THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY OF THE UNITED STATES
AT THE MINISTERIAL MEETING OF THE
INTER-AMERICAN ECONOMIC AND SOCIAL COUNCIL
MEXICO CITY, MEXICO
TUESDAY, OCTOBER 23, 1962

Since this is a meeting of the Finance Ministers of the
Americas to review the economic progress of the past year, I
had intended to speak only of economic matters. But this is
a fateful day, the activities of the Soviet Union in Cuba
followed by yesterday's developments in Washington pose issues
of such gravity for our entire hemisphere that I feel it incumbent
upon me to comment briefly about them. This is appropriate,
because the future course of economic and social progress in all
our countries will inevitably be deeply affected by the outcome
of the current crisis.
As a result of the surveillance of the heavy military
buildup in Cuba which we have been carrying out in accordance
with the communique of the Foreign Ministers of the Americas
following their meeting in Washington on October 6, we learned
early last week that offensive ballistic missiles with nuclear
capabilities were being deployed in Cuba. We immediately
intensified our surveillance. By the week's end we had
irrefutable evidence, in the form of aerial photographs which I
myself have seen, that two types of missiles were being deployed
in Cuba: missiles with a range of just over 1000 miles, and
missiles with a range of just over 2000 miles. This means that
most of the United States, all of Mexico and Central America,
and all of South America as far south as Lima, Peru, would be
within range of surprise nuclear attack by these missiles. We
also learned that a shipment of jet bombers has arrived and
that they are in process of assembly.
I am sure that you will readily understand that this
situation is intolerable and that it cannot and will not be
accepted by the United States. It represents a direct challenge
to our entire hemisphere one that must be met and turned back.
It is a case of utter perfidy on the part of the Soviet Union.
For the Soviet Government told the world just last month that
it would not station offensive missiles outside of Soviet borders.

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205

At the very moment this statement was made, the missiles were
en route to Cuba in Soviet vessels. And just last Thursday,
the Foreign Minister of the Soviet Union, Mr. Gromyko,
deliberately lied to our President when he assured him that
the Soviet Union would never install offensive weapons in Cuba.
As President Kennedy announced last night, we have now
been forced to initiate action. A quarantine of Cuba which will
prevent the delivery of additional offensive weapons to Cuba by
the Soviet Union is being Initiated.
This morning on the request of the United States and without
objection the Council of the OAS constituted itself as the
organ of consultation provided for by the Rio Treaty. It is now
considering the request by the United States to invoke Article 8
of the Rio Treaty in response to the threat to Hemispheric
security posed by offensive Soviet weapons now in Cuba. We
have also referred the matter to an emergency meeting of the
Security Council of the United Nations. It is absolutely
essential that the offensive preparations in Cuba come to an
immediate halt. If not, further action will be fully justified.
I can assure you that the United States is resolutely determined
to continue on the course that it has set until the offensive
weapons now in Cuba are removed or effectively neutralized,
hopefully by the immediate acceptance by Cuba of the resolution
we have offered to the Security Council of the U.N. requiring
the prompt dismantling of all offensive weapons in Cuba under
United Nations supervision and inspection.
I now turn to the statement that I had prepared for this
conference. But before I do so I would like to read to you a
telegram from President Kennedy addressed to the distinguished
Chairman of this conference which I have just delivered.(Attached)
Fourteen months ago, meeting at Punta del Este, the
governments here represented agreed upon the Charter of an
Alliance for Progress — an Alliance inspired by the vision of
dramatically bettering the lives of 200 million Latin Americans
in 10 short years.
It is particularly fitting that the first annual meeting
of the Inter-American Economic and Social Council should take
place in Mexico City, the capital of a country whose fundamental
goal for the past 50 years has been the same as that of the
Alliance for Progress: social justice and economic progress
within the framework of individual freedom and political
liberty.
The principles of the Alliance for Progress are Latin
American in Inspiration. Operation Pan America -- the Act of
Bogota — Punta del Este — those great landmarks in the history
of the Western Hemisphere were born of a ferment generated within
Latin America itself. This is a fact of tremendous importance.

90c
J- u -v

- 3The Charter of Punta del Este called for an extraordinary
effort by the peoples and governments of Latin America. It
called for full and steady support by the people and government
of the United States. It called for a strong helping hand on
the part of other industrialized countries of the Free World.
When this Council framed the Charter of Punta del Este
it also agreed to review the Alliance for Progress each year
in a spirit of candor and objectivity. This week we conduct
the first review.
We are all aware of the many criticisms that have been
voiced about the Alliance. These criticisms should spur us
onward. For the burden of complaint is not that the Alliance
is the wrong solution for the problems of poverty and despair
that beset so many of our fellow citizens in Latin America,
nor that the Alliance is moving in the wrong direction, nor that
we are not in agreement on our grand design.
On the contrary. The criticisms are that we are moving
too slowly; that we must do much more and do it more quickly
to advance the vital principles which form the heart and core
of the Alliance for Progress.
It is to those constructive criticisms that we address
ourselves this week. In so doing we must not neglect our
accomplishments.
Our deliberations follow upon three weeks of intensive
work by representatives at the expert level. These three
weeks have been characterized by frank self-criticism on the
part of the Latin American representatives. The representatives
of the United States have also recognized the need for improving
our own participation in the Alliance.
Thus, here in Mexico City, we have successfully instituted
in inter-American economic relations a productive process of
confrontation, adapting to the development problems of this
continent creative techniques which contributed so much to
the success of the Marshall Plan. Several of the resolutions
submitted for our approval by the officials are designed to
intensify and broaden this process of confrontation.
The work of the experts has been truly productive. We
owe a debt of gratitude to the Secretariat of the OAS for Its
detailed preparation and documentation, and to the Panel of Nine
for Its penetrating analysis and evaluation of the Alliance as
well as its valuable recommendations for Improvement.
What have we accomplished In the first year of the Alliance?
In the field of self-help and reform, a solid beginning has been

207
- k made. An extensive land redistribution program in Venezuela
is being vigorously implemented. Colombia has now adopted an
agrarian reform law to improve substantially the use of farm
land. In our host country, of course, land reform has been
carried out for several decades with beneficial results. Tax
reform is being implemented or considered in nearly all of
Latin America. Large scale programs to provide low-cost
housing for low-income groups have been undertaken in a number
of countries, including Panama, Chile, Peru, Colombia and
Venezuela. Several countries have launched programs to
modernize their educational systems and in a number of countries
expenditures for education have risen sharply.
The work of planning for economic development is beginning
to bear fruit. The Panel of Experts has received economic
development programs for evaluation from Bolivia, Chile,
Colombia and Mexico, with plans from Panama and Venezuela
expected soon. The development program of Colombia is now
receiving attention from the World Bank, the IDB, and industrialized
countries interested in providing financial support.
Latin American economic integration is also making headway.
Progress has been especially noteworthy in Central America, where
the objective of deep integration is being pursued with vigor.
Especially significant was the signature last month of the
International Coffee Agreement — a truly great achievement in
the effort to provide support for basic products in world trade.
The United States, as the largest consuming country, has
contributed its best efforts to.this agreement, which is of such
great importance to the economies of fourteen Latin American
countries. Its great promise lies in the fact that a mechanism
now exists through which declines In coffee prices can be
arrested and more remunerative levels of earnings achieved.
Success will be achieved only if the agreement is operated in
an effective manner. The United States stands ready to give
serious consideration to any sound project for reducing excess
coffee production in the exporting countries, so as to relieve
the pressure for quotas In excess of world demand and to make
the agreement truly effective.
At Punta del Este the need was foreseen for sources of
seasonal financing accompanied by adjustments in the coffee
marketing and exporting mechanisms of the countries of
Central America. Since that time, the United States has
indicated readiness to assist in the creation of a fund for
seasonal financing of coffee. The Central American countries
for their part have made good progress toward agreeing on the
prerequisite steps to put this scheme into operation. We hope
that this can be accomplished at an early date and believe that

90fi
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- 5it would be an important step to relieve unnecessary pressure on
prices during the critical export season.
We have also moved forward toward ways and means to
stabilize and improve the world market for cocoa. The idea of
a world cocoa agreement is now under active consideration in
the FAO. The United States fully intends to play its part in
these discussions.
The United States fully appreciates the desire of the
countries of Latin America to establish a mechanism to protect
and advance their trade interests. The United States is
convinced that the long-term interests of Latin America will
be best served by expanding opportunities for trade on a nondiscriminatory basis. We have in the past and will continue
in the future to lend our full and energetic support to this
objective. But we do not believe that it is appropriate or
effective for this purpose to create a regional bloc of American
states for the purpose of presenting a united front vis-a-vis
other regional groups.
We are keenly alive to the rapid evolution of trade
policies in the European community, and the expanding trade
needs of the developing countries in Latin America and elsewhere.
Our new Trade Expansion Act authorizes the President of the
United States to conclude agreements with the European
Economic Community providing for sweeping reductions and
eliminations of tariffs and other trade barriers on a nondiscriminatory basis. We intend to use this new authority to
substantially reduce trade barriers affecting Latin American
exports to the industrialized countries of the Free World,
Including the maximum possible freedom of trade for tropical
products.
Finally, the flow of external public assistance to
Latin America during the past year has sharply increased. At
Punta del Este the United States undertook to provide public
assistance under the Alliance totaling more than $1 billion in
the year ending March 1962. That pledge has been fulfilled.
An important part of our assistance has been In very long-term
loans with no interest or charge except a small service fee.
Assistance has been provided by the Agency for International
Development and the Export-Import Bank, by agricultural
commodities under Public Law 480, and from resources given by
the United States to the Social Progress Trust Fund administered
by the Inter-American Development Bank. The United States is
prepared to continue its assistance during the year ahead on
the same general order of magnitude, within the context of
continuing progress In implementing the self-help measures
provided
Bogota. for in the Charter of Punta del Este and the Act of

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90Q

The Inter-American Development Bank has achieved a high
rate of lending for development, both from its own resources
and from those provided by the United States under the Social
Progress Trust Fund. Total commitments by the Bank during the
past year have amounted to nearly $^-00 million. An important
part of these funds has been directed to low-cost housing, water
supply and sanitation, and to private enterprise. The Bank
has demonstrated outstanding competence in the short period of
its existence and I congratulate its management. The United
States Is prepared to participate in replenishing the Bank's
regular callable resources in an amount of $1 billion as
recommended by the Bank. In addition, the United States intends
to continue to make available a substantial and appropriate
part of its economic assistance through the Bank to. carry on
the important work of the Social Progress Trust Fund.
Free industrialized countries other than the United States
have begun to interest themselves in helping to achieve the
objectives of the Alliance. Extensive credits, although often
on short term, have been provided by European nations to Brazil
and Argentina. The industrial countries in the Development
Assistance Committee of the OECD have initiated useful discussions
on aid to Columbia. The Inter-American Bank has obtained
resources through the sale of bonds in Italy. Modest as these
efforts have been, they are a promising beginning. And I should
like to emphasize the importance attached by other Industrialized
free countries to the self-help measures provided for in the
Charter, for they know, as we do, that these measures are
necessary if external economic assistance is to be effective in
achieving growth and social progress.
These, then, are the major accomplishments of the first
year.
Now, where have we fallen short?
The reports of the OAS Secretariat, of the Panel of Nine,
and of the meeting of Experts, analyze the defects In detail.
I shall limit my remarks to two major aspects: First, the pace
of self-help and its relationship to external assistance. Second,
the role of private enterprise, foreign and domestic, in the
Alliance.
Self-help and reform are provided for explicitly in the
Charter of Punta del Este because they are absolutely indispensable
to economic growth and social progress. Without these vital
domestic measures external assistance cannot achieve the purpose
for which it is intended no matter how generous the scale.
That is the true relationship between self-help and reform
on the one hand and external economic assistance on the other.
Together they comprise a true partnership between the United
States and Latin America. This partnership means steady progress

C X v^

- 7in carrying out essential self-help and reform measures and the
extension of assistance for constructive, well thought out
projects and not for those which would result in ineffective or
wasteful expenditures. We hope and believe that the pace with
which self-help and reform measures are being adopted in Latin
America will be stepped up substantially. This is particularlytrue of measures to combat inflation, which have assumed such
overriding importance in recent months in several Latin
American countries. We recognize that many of these measures
deal with complex and difficult economic and social problems
and that in many countries, necessary as these reform measures
may be to the well-being of the people, they are strongly and
even bitterly opposed by minority groups. But, as President
Kennedy stated last March, "Those who make peaceful revolution
Impossible will make violent revolution inevitable."
There is one area in which during the past year we have
not only made no progress but where we have suffered a serious
setback. Private investment, both domestic and foreign has
suffered damaging blows and has lost confidence. Not only has
foreign private investment in Latin America declined, but
private domestic capital has been seeking safe havens outside
Latin America. This capital flight has in some cases reached
serious proportions.
The plain fact of the matter is that private enterprise
has not always been made to feel that it is truly a part of
the Alliance. And yet the private sector must become stronger
and more vigorous every year if the Alliance is to flourish.
Public funds simply do not exist anywhere on a scale adequate
to finance the enormous needs of the Alliance. The vast
resources — both financial and managerial — of the private
sector must be enlisted If the Alliance is to have lasting
meaning.
There are three things which must be done if the private
sector is to assume its rightful role in the Alliance.
First, the governments of Latin America should take every
reasonable step to encourage the growth of the private sector
and to reassure private enterprise, both foreign and domestic.
Second, whatever measures governments may take for public
purpose, such measures should be fair and equitable to the
private interests involved.
And, third, private enterprise must, through one means
or another, be brought actively into the Alliance.

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?1 i

For we must recognize that the task ahead of us is so
vast that all the resources available to us — both public
and private — must be enlisted if the enterprise on which we
are embarked is to succeed. We of the United States pledge
our continuing and generous support. We are confident that
our partners in the Alliance will continue and intensify their
own efforts in behalf of their own people. For ours is a genuine
alliance, truly dedicated to progress in which all the peoples
of the Americas will share increasingly in the years ahead.
I deeply regret that recent developments in Cuba will
not permit me to remain in Mexico City throughout this
conference. For the most basic hopes and ideals of my country
as well as my own deep convictions are intimately involved In
the work we are doing here.
I have now been privileged to attend six Inter-American
Ministerial meetings dealing with economic matters. This will
be the first time I have had to leave before the close of a
conference -- an unfortunate occurrence which I hope will not
be repeated. For on the success of the work which we are
carrying forward this week, largely rests the cause of freedom
and progress in this hemisphere.
In conclusion, I want to say that I am confident that
every Government and people of the Americas represented here
today looks forward, as do the government and people of the
United States, to the day -- and may it not be long in coming -when the people of Cuba will be free once again to lead their
own lives within a framework of free institutions of their
own choosing. We continue to extend the hand of friendship
to the Cuban people. And we pray that a delegation of Cubans
representing a free people will soon sit among us. On that
day the people of Cuba will begin to share In the social, economic
and spiritual promise of the great Alliance which we have
undertaken so that human dignity can accompany human freedom in
every corner of this Hemisphere.
0O0

The Honorable Ortiz-Mena

October 23, 1962

Chairman, Conference of IA-ECOSOC

I deeply regret that I have had to recall Secretary of the
Treasury Douglas Dillon to Washington before the close of your
meeting. However, as a member of the National Security Council of
the United States, as x^ell as a principal executive officer of ray
government, his presence in Washington is essential in the conduct
of the urgent and hazardous affairs which will occupy the days and
weeks ahead* I am designating Teodoro Moscoso, the Coordinator of
Alliance for Progress activities In the U. S- Government, and a man
who carries the highest responsibilities of the Alliance with my
complete confidence, as Chairman of the United States delgation.
There is little doubt that we are in the midst of a grave
moment in the history of the hemisphere. The security and freedom
of all our nations is at stake. Yet your meeting is a vital reminder
that the central task of this generation of Americans is not merely
the avoidance of conflict. It is the construction of a new community
of American nations in which all our citizens can live not only free
from fear but full of hope.
The protection of our liberties — resistance to aggression —
firmness in the face of danger — these are essential to the preservation of our free society. But it is only through economic
progress and social justice that we can move forward to a hemisphere
where freedom accompanies ever-expanding horizons of opportunity and
hope. This is the work In which you are engaged. Just as the unyielding determination of today is essential if we are to realize
the future promise of the Alliance for Progress — the future success
of the Alliance for Progress will be the final vindication of the
resolute course we are undertaking today*
With every best wish,

John F. Kennedy.

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213

and exchange tenders will receive equal treatment. Cash adjustments will be made

for differences between the par value of maturing bills accepted in exchange an
the issue price of the new bills •
The income derived from Treasury bills, whether interest or gain from the sale

or other disposition of the bills, does not have any exemption, as such, and lo
from the sale or other disposition of Treasury bills does not have any special

treatment, as such, under the Internal Revenue Code of 1954. The bills are subj

to estate, inheritance, gift or other excise taxes, whether Federal or State, b

are exempt from all taxation now or hereafter imposed on the principal or inter