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JUN 1 51972
TREASURY

Of PART ME NT

~~ni ted States Savi.neo B~s ISGucd !l..'"1o. iiCo.eerr,eQ ,Uu-u~ .. '. Marcn l.~oq
. ,
(Doli~r o.mo~~ts in m1111o~~ - rour.Gcd und will ~ot ncceGGa~~ly ada to tctn1c)v

:312
~CG

A-1935 - D-1941 ••••••••••
& G-1941 - 1951

.........

~eG F

•••••••••••••••••••••
•••••••••••••••••••••
.a •••••••••••••••••••
•••••••••••••••••••••

•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••

•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••

••••••••••••••••••••
•.•••••••••.••••.••••

-.cJ.ass j.1"1eC1 ••••••••••••••••••
)to.l. Series E ••••••••••••••••
.e~

1951) Y
•••••

H (1952 - Jan.
1957 - 1964) •••••

n (Feb.

)tal Series H ••••••••••••••••
>tal Series E and H ••••••••••
~eG
~eo

)~al

$ 5,,003

29,308

;: nnd G (1952) ••••••••••
J and K (1952 - 1957) ••••
Series F, G, J and K ••••

Total mat,ured •••••••
S.::r:'..es Total UI1IiIatured •••••
GrD.r.d Total •••••••••

1,833

8,09~

\;moun t.

12
142

9~715

140 .. 469

Ou·~+c.udin(;
IIv ..
•

A.•• t.Ic.:;ucd

L24

.5~

278
1,211
1,934
2,423
2,100
1,164
1,277
1,421
1,486
1,377
1,203
1,317
1,658
1,872
1,977
1,886
1,847
1,949

1,.554
6,885
12,757
9,783
4,180
3,761
3,711
3,,623
3,080
2,656
2,724
2,940
2,791
2,836
2,733
2,493
2,250
2,064
1,902
1,709
1,482
973
39
745
90.793
1,459
770

j
,.
I ,.,

1I OutDto.ndinr; 2./ of

$ 4,991
29,165

13,034
15,180
1l,,883
5,344
5,038
5,192
5,109
4,457
3,859
4,041
4,598
4,663
4,814 I
4,619·
4,340
4,198
3,925
3,906
3,918
3,768
4,1l7
120
702
130.754·
3,670
6,045

il,lOO

15.17
14.96
14.84
15.96
17.67
21.78
25.35
27.37
29.09
30.90
31.17
32.59
36.06
40.15
41.07
40.83
42.56
46.43
47.41
51.31
56.38
60.64
76.37
100.00

1,86~

2,004
2,209
2,285
3,Jli4
120
-43

39~961

2,212
5,274

30.56
60.27
87.25

2.229

7.486

77.06

93.022

47.447

213

188

3.110
3J923
34,311
144,392
178,703

accrued discount.
;urrent redemption value.
I\t option or owner bonds rnny be held and
Nill earn interest for additional pel~odG
lfter originul maturity datos.
Incl'J.dop. matured bonds whioh ~ve not been
[nc:~~cs

A.,"ou.~t
Redee~ed

~~: J/
1941
191.2
1943
1944
1945
1946
1947
lS48
1949
1950
1951
1952
1953
1954
1955
1956
1957
:958
:'959
1960
1961
1962
1963
1964

I
Issued 1I

A.1I0U.~t.

I::J

33.78
.

.,.~.:::::rtP--=r=a

11.74

2.081

1.629

h3.31

2.269
34,156
95,291
l29,447

1.6~h

42.1L.45
34.01
27.56
..

l54
49,101
49,255

BUREAU OF THE

P~~LIC

DEBT

TREASURY DEPARTMENT

FOR H1MEDIATE RELEASE

March

, 1964

SERIES J AND K SAVINGS BONOO BEGIN TO
VlATURE HAY 1, 1964, AND DO NOT EARN
INTEREST AFl'ER MATURITY
LJhe Treasury remind~Olders of Series J and Kft Savings Bonds/1 today" that
the bonds begin to mature on MaYI1, 1964, and do not earn interest if held
after their maturity dates. tr The Ibonds should be presented promptly for payment at maturity in order that the redemption proceeds may be reinvested, if
desired, in other available Treasury obligation~ . Reinvestment may be made in
Series E and H Savings Bonds without regard to the limitations on the amounts of
such bonds that may be purchased and held in any calendar year but this privilege
does no~ apply to bonds registered in the names of commercial banks in their own
right .'\01'0 take advantage of the privilege, the matured J and K bonds must be
presented to a Federal Reserve Bank or Branch or the Office of the Treasurer of
the United States, Washington, D. C.
Under the law, Series E and H Savings Bonds are the only bonds which may
be held at the option of their owners beyond their original maturity dates and
continue to earn interest. E bonds with issue dates of May 1, 1941, through
May 1, 1949, may be held for two lO-year optional extension periods. All other
E bonds may at this time be held for only one 10-year extension period.
At this time only those H bonds with issue dates of June 1, 1952, through
January 1, 1957, may be held beyond their original maturity dates for one 10year optional extension period.
Series A, B, C, D, F and G Savings Bonds, in addition to those of Series
Bonds of Series
A, B, C and D matured some time ago -- the last issues of Series F and G bonds
mature on April 1, 1964. The Treasury suggests that savings bond owners carefully review their holdings to determine whether any bonds of these series are
being held. If so, they should be presented promptly for redemption.
J and K, were not accorded the optional extension privilege.

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE
SERIES J AND K SAVINGS BONDS BEGIN TO MATURE MAY 1,1964,
AND DO NOT EARN INTEREST AFTER MATURITY
Holders of Series J and K United States Savings Bonds were
today reminded by the Treasury that the bonds begin to mature on
May 1, 1964, and do not earn interest if held after their maturity
dates.
The J and K series bonds should be presented promptly for
payment at maturity in order that the redemption proceeds may be
reinvested, if desired, in other available Treasury obligations,
Treasury officials said. Reinvestment may be made in Series E and
H Savings Bonds without regard to the limitations on the amounts
of such bonds that may be purchased and held in any calendar year
but this privilege does not apply to bonds registered in the names
of commercial banks in their own right.
To take advantage of the privilege, the matured J and K bonds
must be presented to a Federal Reserve Bank or Branch or the
Office of the Treasurer of the United States, Washington, D. C.
Under the law, Series E and H Savings Bonds are the only bonds
which may be held at the option of their owners beyond their
original maturity dates and continue to earn interest. E bonds with
issue dates of May 1, 1941, through May 1, 1949, may be held for
two lO-year optional extension periods. All other E bonds may at
this time be held for only one lO-year extension period.
At this time only those H bonds with issue dates of June 1,
1952, through January 1, 1957, may be held beyond their original
maturity dates for one 10-year optional extension period.
Series A, B, C, D, F and G Savings Bonds, in addition to those
of Series J and K, were not accorded the optional extension
privilege.
Bonds of Series A, B, C and D matured some time ago -the last issues of Series F and G bonds mature on April 1, 1964.
The Treasury suggests that savings bond owners carefully review
their holdings to determine whether any bonds of these series are
being held.
If so, they should be presented promptly for redemption.
000

n-llR2

- 3 -

and exchange tenders will receive equ.a.l 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 trom the sale
or other disposition ot the bills, does not have any exemption, a.s such, and loss

trom the sale or other disposition of Treasury bills does not have any special
treatment, a.s such, under the Internal Revenue Code ot 1954.

The bills are subject

to estate, inheritance, gift or other excise taxes, whether Federal or state, but
are exempt from a.ll 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 ta.xa.tion 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 actu.ally
received either upon sale or redemption at maturity during the taxable year tor
which the return is made, as ordinary gain or loss •
. Treasury Department Circular No. 418 (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.

- 2 -

decimals, e. g., 99.925.

Fractions

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 pennitted 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 gu.a.ra.nty of payment by an incorporated bank or trust company.
Dmnediately 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

less for the additional bills dated __J_a_nu_a_ry..::o:r~9~'r-1_9_64_ _ _ , (

200,000 or

}(idiG()
91

days remain-

~
}(}a)8Q
ing until maturity date on _ _J_u...:ly-..,9...:.,~1_9_6_4_ _ _ ) and noncompetitive tenders for

)bSiJ

~oo or less for the

182

-day bills without stated price from anyone

~
~
bidder will be accepted in f'u.ll. at the average price (in three dec1ma.1s) of accepted competitive bids for the respective issues.

Settlement for accepted ten-

ders in accordance with the bids must be made or completed at the Federal
Banks on Apri 1 9, 1964

Rese~

, in cash or other immediately available fUnds or

in a like face amount of Treasury bills maturing _ _A_p_n_·_1"'="C9=,:..1r-9_6_4_ _ _ •

;ce5O

Cash

TREASURY DEPARTMENT

Washington
FOR IMMEDIATE RELEASE,

April 1, 1964

XXXXXXX~

TREASURY'S WEEKLY BILL OFFERING

The Treasury Department, by this public notice, invites tenders for two seriel
of Treasury bills to the aggregate amount of $

2,200,000,000, or thereabouts, tor

cash and in exchange for Treasury bills maturing
of

$2,201~,000

April 9, 1964

, as follows:

91 -day bills (to maturity date) to be issued

5(&){

, in the amounl

April 9, 1964

in the amount of $ 1,300,000,000 , or thereabouts, represent-

ing an additional amount of bills dated
and to mature
amount of $

JUly.1964.

800~OOO

January 9, 1964

,originally issued in the

,the .additional and original bills

to be freely interchangeable.
182 -day bills, for $

900,000,000

April 9, 1964

, or thereabouts, to be dated

xt&iX

--~-~~~----

, and to mature

October 8, 1964

•

The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding

hereinafter provided, and at maturity their face

amount will be payable without interest.

They will be issued in bearer form only,

Monday, April 6, 1964 _

xt&i)C
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

FOR IMMEDIATE RELEASE

April 1, 1964

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
$2,200,000,000,or thereabouts, for cash and in exchange for
Treasury bills maturing April 9,1964,
in the amount of
$2,201,233,000, as follows:
91-day bills (to maturity date) to be issued April 9, 1964,
in the amount of $1,300,000,000, or thereabouts, representing an
additional amount of bills dated January 9, 1964, and to
mature July 9,1964,
originally issued in the amount of
$ 800,403,000, the additional and original bills to be freely
interchangeable.
182 -day bills, for $ 900,000,000,
or thereabouts, to be dated
April 9, 1964,
and to mature October 8, 1964.
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 Standard
time, Monday, April 6, 1964.
Tenders will not be
received at the Treasury De~artment, 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
accompanied by an express guaranty of payment by an incorporated bank
or trust company.
0-1183

- 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 Depart~nt 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,OOOor less for the additional bills dated
January 9, 1964, (91-days remaining until maturit¥ date on
Ju1 9 1964)
and noncompetitive tenders for $100,000
or {ess'for the 182-day bills without stated price from anyone
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 mq~t be
made or completed at the Federal Reserve Banks on April 9, 1964,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing April 9, 1964.
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
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 prescribe the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained f~
any Federal Reserve Bank or Branch.
000

- 3 -

Since these transactions offset one another, the total
of medium-term, foreign currency borrowings on April 1
remains unchanged from the amount of $730 million equivalent
which appeared on the Treasury Daily Statement at the end of
February.

- 2 -

Over recent months, Italy has incurred a balance of
payments deficit, a reversal in its position which was
reflected in the program of financial assistance by the
United States and others announced on March 14.

The purchase

of lire by the U. S. over the past seven months, preparatory
to redemption of the lira bonds, also recognized the change
in Italy's position since the bonds were issued o

These

actions serve to demonstrate the adaptability of the mutual
credit arrangements which have been developed over the past
three years between the United States and the monetary
authorities of the major financial centers abroad o
The Treasury also announced a borrowing on April 1
equivalent to approximately $200 million in German marks
through the issuance of four Deutschemark-denominated, mediumterm, non-marketable securities for 200 million Deutschemarks
each.

This borrowing increases the amount of medium-term

Deutschemark securities outstanding to the equivalent of
approximately $475 million.

The investment by Germany in

these securities reflects that country's continuing creditor
po si tion. {~h- -.of -the-G.erman p.a.yment,s.sllrplll 5 over recent
-months has been due to movements of funds from Italy to

Germany~

FOR RELEASE 5:30 P.M. EST APRIL 1 FOR PUBLICATION MORNING
PAPERS APRIL 2

DRAFT PRESS RELEASE
Redemption C?t. I.tal-iarrLira-Deno~j~'''Eonds
by- Treasury and Iss\.1a.o..ca--crr~erman Mark:~1rOnas.
The Treasury announced today the first redemptions of
medium-term, non-marketable, foreign currency-denominated
securities.

The securities redeemed were first issued in

Italian lire late in 1962.

The issuance of additional

medium-term, non-marketable bonds in German marks was also
announced.

(lIn eEf~t,·

the-bonds...Qrj,&tnally issued to Italy
,

0", ,,~_

...

and denominated in lire have now been transferred to Germany,
and denominated in marks.- t

Lira bonds equivalent in value to approximately
$200 million have been paid off.

One for $50 million

equivalent was redeemed at maturity early in March and the
remaining $150 million, not scheduled for redemption until
various dates in 1965, were redeemed on April 1.

Borrowings

in Italian lire were first undertaken in January 1962 at
short term to provide the Treasury with resources for exchange
market operations at a time of substantial surpluses in Italy's
balance of payments.

In late 1962, as Italian accounts

continued in surplus, these borrowings were refunded and
enlarged on a medium-term basis.

Info. Serv. Letterhead

:C~

;;ELF'ASF A. ~~. NEWSPAPERS
Tl-:.ursclay, April 2, 196L.
I TALIAN LIRA BotJDS REDEEMED f;
NEff GERMAN MARK BermS ISSUED

TREASURY DEPARTMENT
FOR RELEASE A.M. NEWSPAPERS
THURSDAY, APRIL 2,1964
ITALIAN LIRA BONDS REDEEMED;
NEW GERMAN MARK BONDS ISSUED
The Treasury announced today the first redemptions of mediumterm, non-marketable, foreign currency-denominated securities.
The securities redeemed were first issued in Italian lire late in
1962.
The issuance of additional medium-term, non-marketable
bonds in German marks was also announced.
Lira bonJs equivalent in value to approximately $200 million
have been paid off.
One for $50 million equivalent was redeemed
at maturity early in March and the remaining $150 million, not
scheduled for redemption until various dates in 1965, were redeemed
on April 1.
Borrowings in Italian lire were first undertaken in
January 1962 at short term to provide the Treasury with resources
for exchange market operations at a time of substantial surpluses in
Italy's balance of payments.
In late 1962, as Italian accounts
continued in surplus, these borrowings were refunded and enlarged
on a medium-term basis.
Over recent months, Italy has incurred a balance of payments
deficit, a reversal in its position which was reflected in the
program of financial assistance by the United States and others
announced on March 14.
The purchase of lire by the U. S. over
the past seven months, preparatory to redemption of the lira bonds,
also recognized the change in Italy's position since the bonds
were issued.
These actions serve to demonstrate the adaptability
of the mutual credit arrangements which have been developed over
the past three years between the United States and the monetary
authorities of the major financial centers abroad.
The Treasury also announced a borrowing on April 1 equivalent
to approximately $200 million in German marks through the issuance
of four Deutschemark-denominated, medium-term, non-marketable
securities for 200 million Deutschemarks each.
This borrowing
increases the amount of medium-term Deutschemark securities outstanding to the equivalent of approximately $475 million.
The
investment by Germany in these securities reflects that country's
continuing creditor position.
Since these transactions offset one another, the total of
nedium-term, foreign currency borrowings on April 1 remains unchanged
from the amount e)f $730 million equivalent which appeared on the
Treasury Daily Statement ~t the end of February.

)-1]84

FOR RELEASE ON DELIVERY

STATEMENT OF THE HONORABLE ROBERT V. ROOSA
ACTING SECRETARY OF THE TREASURY
BEFORE THE SENATE COMMITTEE ON BANKING AND CURRENCY
ON S. 2671
THURSDAY, APRIL 2, 1964, 9:30 A.M.
Mr. Chainnan and Gentlemen:

I am happy to appear before your Committee this morning to
testify on S. 2671, a bill introduced by Senator Metcalf and others
to reduce the silver content of all of our silver coins by reducing
the fineness of silver in them from 900 to 800 one-thousandths.
We believe that passage of the legislation before your Committee
would in fact raise the monetary value of silver to $1.45.

This would

in turn soon cause the disappearance from circulation of all presently
outstanding silver dollars, would in all probability in the near
future lead to the meltinc-down of our present subsidiary silver
coinage, and would lead to an impossible situation for the mints in
supplying the coinage needs of our country.

Instead, we believe that

the best way to meet the present needs of the \.Jestern states will be
for the Senate to appropriate the funds requested by the Treasury for
the minting of additional silver dollars of the present fineness.

recognize, of course, that action on this request is for the
Appropriations Committee, not this Committee.

I shall set forth our

reFl.::>ons for our views on the effects of S. 2671 at some length further
on in my statement.

1185

- 2 First~

I should like to say that the Treasury recognizes the

disappointment of certain of the Western states caused by the
exhaustion of the present stock of silver dollars held in the
Treasury.

As you know, this stock has been reduced to some three

million silver dollars which have a considerable numismatic value.
Last week Secretary Dillon stopped further distribution of these
silver dollars from the Treasury when he found that they could no
longer be distributed equitably for their principal use as a circulating medium of exchange.

The Treasury realizes that unless addi-

tional silver dollars are minted, and made available in the Western
states, there will be a strong tendency for the large number of those
now in circulation in the West to disappear gradually into the hands
of collectors.
Having in mind the rapidly dwindling supply of silver dollars
available, the Treasury requested $675,000 in a supplemental appropriation request for 1964 in order to mint 50 million silver dollars
during the rest of this fiscal year.

In addition, our budget for

1965 included a request for $1,250,000 for the minting of 100 million
silver dollars.

As you know, the House of Representatives did not

include any funds for this purpose in the Treasury, Post Office and
Executive Office Appropriation Bill for 1965 which was passed on
March 24 of this yeer.
sUfplement~l

Instead the House allowed $100,000 out of our

appropriation request for 1964 to be used exclusively

- 3 for making smaller coins and $650,000 of our re~uest for $1,250,000
for the same purpose.

Secretary Dillon wrote to you, Mr. Chairman,

on March 25 of this year, in your capacity as Chairman of the TreasuryPOst Office SUbcommittee of the Senate Committee on Appropriatione,
appealing to that Committee for restoration of certain of the House
reductions in the Treasury appropriation

re~uest.

In that letter

he asked the Appropriations Subcommittee to restore $200,000 out of
the supplemental request to enable the Mint to produce about 15 million silver dollars in fiscal 1964 and also $600,000 of the request
for fiscal 1965 to permit the minting of at least 45 million additional silver dollars in that year.
The House Appropriations Committee and the House of Representatives itself considered the problem of the vanishing supply of silver
dollars at length before acting on the 1965 appropriations bill.

was suggested in the hearings of the House Appropriations Subcommittee
that legislation reducing the silver content of the silver dollar and
the other coins might be effective both to reduce the drain on the
Treasury's supply of silver and to produce a silver dollar which
would not be worth a dollar in silver bullion value and therefore
would stay in circulation more readily than the present silver dollar.
Careful considerRtion was given to this suggestion.

The Report of

the House Committee on Appropriations contained the following statement:

- 4 The Committee has disallowed the request to resume the
minting of silver dollars at this time. The Committee held
extensive hearings on this subject and carefully considered
statements by congressional delegations representing the
silver states. This is not a simple problem of authorizing
funds for the mintinG of additional silver dollars. Many
other factors are involved, and the Committee carefully
considered every alternative. The Committee is fully aware
of the importance attached to this issue by the silver
states; however, in vie,;, of the facts developed during the
investigations and hearings, the Committee could support
only one conclusion -- that the best interests of all the
people require that the total minting capacity of the two
existing mints be devoted entirely to meeting the critical
shortage in minor coins.
Among the major considerations which support the Committee's position are the following:
(a) The shortage in minor coins at the present time is
the most critical in the history of the mint, and the demand
is increasing at a rate that has outstripped the capacity of
both existing mints, even at three-shift, seven-day operation.
Every denomination of coin is now being rationed. There is
no currency substitute for minor coins such as there is for
silver dollars.
(b) The new mint to be constructed in Philadelphia, for
vThich funds are allowed in this bill, will not be in actual
production for several years.
(c) Additional silver dollars can be minted only at
the expense of minting minor coins.
(d) At the present rate of usage, the supply of free
sil ver in the Treasury \·:ill be exhausted in seven or eight
years. At the present time, the United states is using silver
annually at a rate approximately equal to the entire world
production. ConSiderable quantities of silver are being consUIned in dE: f.:nse activities ar.u cannot be recovered.
(e) The amount of silver in a silver dollar, at current
prices, is worth slightly more than a dollar, while the
amount of silver in two half-dollars is worth about 92 cents.

- 5 The Committee feels that additional silver dollars should
not be minted until the Congress enacts legislation concerning the silver content of the silver dollar. Should the
price of silver continue to rise, even just a few cents per
ounce, it would be profitable to melt down silver dollars
for the silver content. The minting of additional silver
dollars, at this time, would only serve to aggravate the
problem.
The debate in the House of Representatives revealed clearly that
in making the statement in point (e) above, that additional silver
dollars should not be minted until the Congress enacts legislation
concerning the silver content of the silver dollar, the Committee
had in mind that in any case mint capacity should not be used for
minting silver dollars until the new mint to be built in Philadelphia
was completed and the existing shortage of other coins remedied.

Chairman Gary of the Appropriations Subcommittee said before the
House, "h'e have said then that if you will get this content changed
by legislation -- we have no authority over that -- we will go ahead
with this mint, and as soon as we possibly can we will recommend the
minting of these silver dollars. 11
In recent months the Treasury has initiated a study of the longrange problem of the silver content of our coinage and the various
~uestions

tion.

raised by the excess of silver demand over current produc-

There are many problems involved and the decisions to be made

are exceedingly difficult.

We have given consideration to some of

the possible alternatives to continuing our coinage with the present

- 6silver content.

Ultimately, of course, unless a radical change in

the supply and demand situation should develop -- a change which is
not out of the question but which it would not seem prudent to count
on -- the Treasury stocks of silver will be exhausted.
must clearly be planned well in advance.

Alternatives

OUr stUdies have not

reached a point where any decision has been made as to a recommendation for long-range Government policy in this area.

Once the Treasury

has arrived at certain recommendations it will, of course, be necessary to circulate the proposals for approval throughout the Executive
Branch.

Since many agencies have an interest in the field and the

matter is a difficult and controversial one, it can be anticipated
that decision and clearance will require considerable time.

Unquestion-

ably the Congress will wish to consider the matter with great care and
deliberation before making any substantial changes in our coinage laws.
In the meanwhile the Treasury believes that it would be in the
best interests of the nation if no such legislation as that before your
Committee were passed.

Our silver stocks, which now amount to approxi-

mately one and a half billion ounces, are ample for continuation of
the present coinage and for the supplying of silver to meet the
industrial gap between supply and demand for a period of years ahead.
At the rate of redemption of outstanding silver certificates in 1963,
the present supply of silver should last until about 1972.

This

calculation is based on the assumption of our continuing to mint

- 7silver dollars with the present silver content.

Thus, while the

basic problem cannot be ignored and must be faced promptly, the
solution should not be a piecemeal attempt to cope with certain
aspects of the larger cOinage problem.

In our judgment, passage

of this proposed legislation, whether as submitted by Senator Metcalf
or as proposed by others to reduce the silver content to 50 percent,
would be premature and harmful.
The effect of this legislation can be analyzed, first, by ascertaining its effect on the definition of the standard silver dollar
and then its effect on the monetary value of silver.

Finally, it

will be necessary to estimate its effect upon the market price of
silver.
The standard silver dollar is defined by statute as containing
412.5 grains of silver nine tenths fine.

This standard was originally

established in the Act of January 18, 1837 (5 stat. 137), and was
subsequently included again in the Act of February 28, 1878 (20 Stat. 25).
These Acts retained the pure silver content of 371.25 grains originally established by the Act of April 2, 1792, but changed the alloy
content.

Although not codified in the United States Code, these 19th

century provisions nevertheless remain in full force and effect.

might be observed, in passing, that if the content of the silver dollar
is to be changed effectively by legislation, these old provisions would
have to be amended along with the section of the Code which is amended

- 8 by Senator Metcalf's bill, which is found in the Silver Purchase
Act of 1934 (48 Stat. 340), 31

u.s.c.

321.

If the weight of the

silver dollar is to remain the same as at present, namely, 412.5
grains, but with silver only eight tenths fine, there would be just
over 11 percent less silver in the standard silver dollar.

This

would also be true of the subsidiary silver coins as well.
The monetary value of silver, which is at present $1.2929292,
is nowhere defined in law in such mathematical terms.

Rather, it is

arrived at by dividing the number of grains in an ounce (480) by the
number of grains of pure silver in the silver dollar (371.25).

Under

the formula of this new legislation which reduces the number of silver
grains in the silver dollar, the monetary value of silver by the same
process of division would became $1.45-plus per ounce.
The market value of silver would not necessarily immediately
rise to its new monetary value.
mined by supply and demand.

Market value is, of course, deter-

However, the overwhelming factor in

keeping the market price of silver for the last many months at the
present monetary value of $l.29-plus has been the right of holders
of silver certificates to get silver fram the Government stocks at
the monetary value.

As soon as the monetary value rose to $1.45-plus,

the Government would only be able to dispose of silver at that price.
With the supply from present Government stocks thus cut off, i t is
difficult to see how the market price could stay at its present level.

- 9 It seems reasonable to estimate that it would promptly rise fram
the present level and might soon reach or surpass the price of
$1.38-plus, which is the value of silver in our present subsidiary
coins.

Whether or not the market price rose all the way to $1.45-plu8

per ounce, it would immediately have become profitable to melt down
the present silver dollars for their silver content, and very probably soon thereafter would become profitable to melt down all other
present silver coins.

This would make it impossible to maintain the

present silver coins in circulation, even though same brake could
perhaps be applied through imposing drastic penalties on melting and
exporting.
Even if melting and exporting were prohibited by law with severe
criminal sanctions, which would be difficult to enforce, a market
price of silver of $1.38 or more would seriously jeopardize all of
our present silver coinage, since it would be virtually impossible
to control hoarding of coins by individuals, and we would then face
an even more acute shortage of change than now exists.

The burden

on the Mints, which is already so severe, would became even worse.
This preliminary interpretation of the legislation might conceivably be open to challenge on the ground that the holder of an
existing silver certificate is entitled to 77/l00ths of an ounce of
silver, not the lesser amount in the new silver dollar.

\~nile

we do

not now think this is a valid interpretation of the law, it demonstrates

- 10 -

the type of difficulty that can be created by hasty adoption of
legislation in this exceedingly complicated area.
One of the apparent reasons for the submission of this legislation is the feeling of same people that the drainage of silver dollars
from circulation and fram the Treasury has been prompted by speculation over a possible rise in the price of silver.

It is our view,

however, that the main reason for the drainage of these coins has
been the constantly increasing interest of coin collectors and dealers
who have been hopeful of acquiring same of the rarer silver dollars
with numismatic value.

Perhaps the factor of speculation has played

same part in the picture as well.

To the extent that this accounts

for the disappearance of silver dollars at the present time,we do not
believe the legislation before your Committee will solve the problem.
To be sure, if the market value of silver were to remain at its
present level, the value of the silver in a new silver dollar of 800
fineness would be about 90 cents, thus reducing the motivation for
hoarding.

Since, however, as I have indicated earlier, the net effect

of the new legislation, in our judgment, would be to raise the market
price of silver, the market value of the silver in the new dollar
would probably soon rise to very close to $10

It seems doubtful that

the new silver dollar would stay in circulation for long any better
than the present ones.

In fact, the only real assurance against

speculation is the knowledge throughout the market that the Treasury's
present iIrr'lense stocks are "on offer" at the present monetary value
of $1.29.

- 11 -

Reducing the silver content of coins from 90 percent to 50 percent, as has also been proposed, would, of course, simply aggravate
further the problems outlined above.

Under such legislation the

monetary value of silver would became about $2.32 per ounce for the
silver dollar and $2048 for the subsidiary coins, and the market
price would presumably tend to rise toward this monetary value even
faster than if it were $1.45 per ounce.

It seems clear that it would

almost immediately exceed $1.38 per ounce, the point at which it
would be profitable to melt down our present subsidiary coins.
These problems which I have outlined are of a magnitude which
require the most careful consideration by the Congress as well as by
the Executive Branch.

They seem to the Treasury to outweigh greatly

in significance the providing of silver dollars to the Western states
through the means of reducing the silver content of our COinage, even
thoueh we

recogni~e

the importance which the people in these states

attach to silver dollars

i~e

believe that silver dollars should be

supplied by restoration of funds for the minting of silver dollars of
the present fineness through the regular appropriation procedure.
Meam:hile, 'tie will continue the intensive studies already underway,
attempting to appraise all of the metallurgical, electronic and other
requirements for a satisfactory coinage in future years.

We can do

this successfully only if the essentials of the present coinage system
are not disturbed -- giving us the necessary time to complete recommendations to the Congress, review them with you, await your consideration nnel legislntion, amI. then proceed to the minting of future
requirements with the added facilities which we now expect to have
in Denver within one year and in Philadelphia within three years.

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE

April 2, 1964

RESULTS OF TREASURY'S CURRENT CASH OFFERING
The Treasury today announced a 9 percent allotment on subscriptions
in excess of $50,000

for the current cash offering of an additional

$1 billion, or thereabouts, of 3-7/8 percent Treasury Notes of Series
D-1965 due AUGust 13, 1965.
allotted in full.

Subscriptions for $ 50,000 or less viII be

Subscriptions for more than $50,000 will be allotted

not less than $50,000.
Reports received thus far from the Federal Reserve Banks show that
subscriptions for the notes total about $10.2
~

9.4

billion, of ,,,hich about

billion ,,[ere received from commercial banks for their own account

and :) 1.8

billion from all others.

To enable holders of 3-7 /87~ notes of Series D-1965 to readily determine which of them are subject to the provisions of section 1232 of the
Internal Revenue Code all notes of this additional issue will be specially
marked to show they were issued April 8, 1964, at a price of 99.70%.
Details by Federal Reserve Districts as to subscriptions and allotments will be announced next week.

D-llSS

J'f.Al

~L.t.A,--\.~·

A. . • ':.' ,.•.J'

~ .~.;

h..J

Sa!:!l'd!jta lyrU 4, .964.

."eain&

ft. lnAr.u'7 r•.~ ~ iNt.
that. U. " . . . . . tor'l.OGOtl
>l! )~"-4q 1:re!)&U2"1 billa t,¢ be dated Ay'lJ'U 6, lt6lA, anci \e . . .
)\&retl )1, 1',6" amtcb weN ottend I).n t~a:'er, 26 ware opmwct at. \.be , .••ral. .....

_ .....Illtoaw..
3.

OIl A~l

1'he

_taU.

01'

tSS\l8

are .. tGl.leva.

To\.al. ~l1~d r,.- .. ~·2.)67 ,6)h, 000
TJ\al aceeptM
- 1.JO),f)~,t)(>J

{inoludN m7.I9Ja.OOO --..... • •
1l~t.1t.1ft l:au1. &ad . .. ,__ i
f\Ul ., W. ~ pr1ee

High
La.
A......ge

lI.a '"

- 96.)34
- 96.)!J6
- 96.)12

~r....rn

--ioe'- -......-.-.Dl.t.r1ot.
hv loft

;-'bll.· pbia
'
CleYOlaDd
Id.eIa>nd
A\lu\a
C'.l~o

3\. Loo1a
r~1Dft.r>apolJ..

lan:iu.8 C1t.7

;}&1.lu
•
.-.an
.' HflC •uco

ll!'"

fit.
1""".AU.
\b.a"

iasue of \-he
l&a&'&h and tor \be . . . _QIIlIId, lIlrIHt.ed, .....
t.hsR 'bUla WOllld provi_ it yield .r ).5a". I.Menat rMH .. ~ ..
in Wtl'fla of bank dtllOOWlt v1t.b t.M "tura n.l.at.d to t.M
~..
pq.Ihle ., Ntvrl \7 rattler ~ U. ...... 18ft. . ad \be'S.r
ia III
_her ''It ~. reat.eil \0 6
ylel.da _
no\es, a.nd boDda aN e.}Alt.H 1.B \el'U of ~n. OR the _a.1t 1M.....
maw \he INlOeI' of dqa rea.iniac 1Ja . . lateren ~ perS.od ' - till II
~ of .,.. 1D U. 'JeI'ioo .. with e,si.
.1 ~~ 11' . . .
~r1:)Q is inYolftd.

) l . Ct.lI.QQD
j:-:'

)6o-day,..... ID......,.

r.. _

TREASURY DEPARTMENT

RELEASE A. M. NEWSPAPERS,
!relay, April 4, 1964.

April 3, 1964

RESULTS OF TREASURY'S ONE-YEAR BILL OFFERING

The Treasury Department announoed last evening that the tenders for $1,000,000,000,
lihereabouts, of.357-day Treasury bills to be dated April 8, 1964, and to mature
~h 31, 1965, whioh were offered on Maroh 26 were opened at the Federal Reserve Banks
lpril 3.
The details of this issue are as follows:

Total applied for - $2,567,634,000
Total aooepted
- 1,000,864,000

(inoludes $117,894,000 entered on a
nonoompetitive basis and acoepted in
full at the average prioe shown below)

Range of acoepted oompetitive bids:
High

Low

Average

Equivalent rate of disoount approx. 3.697% per
- 96.334
- 96.306
"
""
II
"
3. 125%"
- 96.312
"
II"
"
"
3.719% II
(51% of the amoUllt bid for at the low prioe was aooepted)

Federal Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTAL

Total
Applied For
$ 119,962,000
1,112,909,000
55,121,000
205,547,000
56,148,000
65,631,000
372,851,000
54,542,000
101,566,000
44,231,000
226,481,000
152,645,000
$2,567,634,000

annum

"
"

Total
Aooepted
$ 53,216,000
295,209,000
33,681,000
81,557,000
28,258,000
27,131,000
141,413,000
24,344,000
47,416,000
24,283,000
161,101,000
11,195,000
$1,000,864,000

n a ooupon issue of the same length and for the same amount invested, the return
on these bills would provide a yield of 3.88%. Interest rates on bills are quoted
in tems 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 aotual
number of days related to a 360-day year. In contrast, yields on oertifioates,
notes, and bonds are oomputed 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 i f more than ooupon
period is involved.
1187

TREASURY DEPARTMENT

RELEASE A. M. NEWSPAPERS,
!relay, April 4, 1964.

April 3, 1964

RESULTS OF TREASURY'S ONE-YEAR BILL OFFERING

Total applied for - $2,567,634,000
Total aooepted
- 1,000,864,000

(inoludes $117,894,000 entered on a
nonoompetitive basis and acoepted in
full at the average prioe shown below)

Range of acoepted oompetitive bids:
High

Low

Average

Equivalent rate of disoount approx. 3.697% per
- 96.334
- 96.306
"
""
II
"
3. 125%"
- 96.312
"
II"
"
"
3.719% II
(51% of the amoUllt bid for at the low prioe was aooepted)

Federal Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTAL

Total
Applied For
$ 119,962,000
1,112,909,000
55,121,000
205,547,000
56,148,000
65,631,000
372,851,000
54,542,000
101,566,000
44,231,000
226,481,000
152,645,000
$2,567,634,000

annum

"
"

Total
Aooepted
$ 53,216,000
295,209,000
33,681,000
81,557,000
28,258,000
27,131,000
141,413,000
24,344,000
47,416,000
24,283,000
161,101,000
11,195,000
$1,000,864,000

TREASURY DEPARTMENT

April 6, 1964

FOR JH.!EDIATE RELEASE

TREASURY DECISION ON CEXENT
UNDER THE ANTIIlJMPING ACT

The Treasury Department has determined that portland cement,
other than white, nonstaining portland cement from Israel is not
being, nor likely to be, sold in the United States at less than
fair value within the meaning of the Antidumping Act.

Notice of

the determination will be published in the Federal Register.
The dollar value of imports of the involved merchandise received during 1963 was approximately $440,000.

r};,
:.t, .~', i,. " . ' . " '
lWatMj, ... ,~1.l 1, 1 yl~.
• I.

..Ale .• ,

.. ;'

;"C~',;'\'-'O

C_F,Trr!~r'

;... ~

,;1

91-dltJ' rr!!tan17 billa
_" MWri.l!l.. J!!l 9. 1~

hpprox. !".quiY.

i:.~ual i<&!!

t'!'1ce

~ .11.8

71~ f)f

\be .,QWlt

));' :)f the UlOWIt,

D1lt1.rl\lt
--....-....-

»w

.......

YQJ'k

z'Wdlph1&
Cl.eftlaDd

99.11)
99.114
oC;l-clQ l.llll.

). SO,,- !I
bid r . . .r at. \t~ low p.r1oe ........t ..
:>£ 1 2-dli)' \tin. bid 1'01' a\ t.he lIN prs.. .......,...

rQl'

Aj)f~cl.

31.49$,000
1,61.5,629,000
21,062, Q())

24tf2'9.0t~)

'.1~

12.J46,;)tJJ

;.\1. ."

)6,3.)1 , i)()J

Chl4&~o

:1..

~..au.1.

)"~I.;)u..

1auu :1t.T
Dall.a.o
-..an 'Tanctseo

'.81'
).SO&i

,~ ,

21.,,0,000 :
79l.4~,·');.X)

12,062,000

2),n8.lOO

12,171,000

29, faa, ,J<X)

201,))1.:0:>
L1, 'Y~O, t.lOO
19,915,OiJO

113,161,000

)),t6?,:JOO
21,6)J,CJ<Y)

).),G91,OOO

21h C7J, '.AX}
....
~

~2. 3ld, e17 ,oct)

lh,501,rm

U.US,~

11.!~'.OOO
~. i'J8,OO-)

;;'1,)JO,1Y9,O"JO

rREASURY DEPARTMENT

ELEASE A. M. NEWSPAPERS,
y, April 7, 1964.

April 6, 1964

RESULTS OF TREASURY'S WEEKLY BILL OFFERING

The Treasury Department announoed last evening that the tenders for two series of
ury bills, one serie s to be an additional issue of the bUls dated January 9 1964
he other series to be dated April 9, 1964, which were otfered on April 1,
d at the Federal Reserve Banks on April 6. Tenders were invited for $1,300,000,000,
ereabouts, of 91-day bills and for $900,000,000, or thereabouts of 182-day bills.
etails of the two series are as tollows:
'
OF ACCEPl'ED
91-~ Treasury bills
:
182-day Treasury bills
,TIT IVE BIDS:
maturing July 9, 1964
:
maturing Ootober 8, 1964
Approx. Equiv.
Approx. Equiv.
:
Price
Annual Rate
Price
Annual Rate
High
98.132
99.118
3.695%
Low
98.124
99.113
3.711%
Average
98.128
99.114
3.703%
71;g of the amount of 91-day bills bid for at the low price was accepted
33~ of the amount of 182-day bills bid for at the low price was accepted

we:.e

TENDERS APPLL-';D FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:

trict
ton
. York
ladelphia
Iveland
:hmond
lanta
\cago
Louis
:neapolis
sas City
J.as

Franoisco

Applied For
$ 31,495,000
1,645,829,000
27,062,000
24,829,000
12,346,000
36,331,000
207,391,000
41,050,000
19,915,000
33,860,000
21,830,000
235 02 813 02 000
$2,343,811,000

AcoeEted
$ 21,390,000
793,404,000
12,062,000
23,518,000
12,211,000
29,882,000
113,161,000
34,502,000
11,125,000
30,891,000
11,685,000
200 02 908 02 000
$1,300,199,000

·
··
·
··

·:

···
·
!I

AEplied For
$ 10,010,000
1,211,492,000
8,324,000
21,123,000
2,742,000
11,252,000
152,583,000
10,980,000
6,249,000
9,510,000
10,903,000
1120252102000
$1,514,355,000

AcceEted
$ 10,070,000
654,661,000
3,274,000
11,288,000
2,142,000
15,139,000
14,333,000
9,480,000
2,149,000
9,443,000
5,903,000
1012020l 000
$900,108,000

eludes $250,066,000 noncompetitive tenders accepted at the average price of 99.114
eludes $63,492,000 noncompetitive tenders accepted at the average price of 98.128
a coupon issue of the same length and for the same amount invested, the return on
ese bills would provide yields of 3.58%, for the 91-~ bills, and 3.83%, for the
2-day bills. Interest rates on bills are quoted in tenns of bank discount with the
'-urn related to the face amount of the bills payable at maturity rather than the
:)Unt invested and their length in actual mDllber of days related to a 360-~ year.
contrast, yields on certificates, notes, and bonds are computed in terms of in:-est on the amount invested, and relate the number of days remaining in an interest
/JIlent period to the actual number of days in the period, with semiannual canpounding
more than one coupon pe~lod is involved.
nR(l

,"", l"

'-.

- 5 ~~~~in~,

~:no-,."

s~all

continue to treasure your friendship.

that you have an important ?lace in our hearts.

oJo

As you

- 4 That accomplishment, by itself, stands as a
o~

Joe Fowler's service in the Treasury.

~he

shinin~

reminder

But it is only a part

whole fabric of his dedicated public service.

Over the

years, Joe Fowler has responded to the call to serve his country
under four presidents, in war and in peace.

He has done so at

grcut personal sacrifice -- and this has been particularly true
during his three years at Treasury, for he has twice postponed
his long-anticipated return to private life at considerable
personal cost.
Now, I want to end on a personal note:

Joe, all of your

friends at Treasury and throughout the Administration are going
to miss yeu.
ye~rs,

But nCI one will miss you more than I.

For three

I've relied upon your wise counsel, your warm and witty

companionship, and above all, your dedication and loyalty.
I

~~'-1st

Alth~

reluctantly how to your compelling personal reasons for

- 3 of your energy and skill our country today is stronger

and better prepared for the future."
That citation, while admittedly inadequate, is particularly
ap~rop~iate.

In fact, the Latin phrase attributed to Alexander

H<lrr.ilton \Vas cited nOl:: long ago by Joe Fowler himself in discussing
the irJportance of the separation of powers in our Government and

-'::,c

skills required for the successful conduct of business between

~l.e

legis lative and e;<ecutivc branch2s.

t~~nslation

of that Litin.

~nlat

Let me give you a free

it means is that Joe Fowler,

li~

/ile::':Lnder Hamilton) c'Jmbined great courtesy of manner with an
eq;j~11y

no~

great firmnes,; of purpose.

Both of these qualities proved

unly valuable, but essential, in accelerating the successful

O-~,:-::C"::le

the tax changes of the last three years.

I firmly

belie\'2 if Joe Fowler had less of either quality, the Revenue Act

L'_

1<;64 would not be the law that it is today.

- 2 Th.:: "\lc;~2.nder Hamilton A';lard I a;n :joing to present to him

nOH, and the citation vlhich

2.Ccor:1~}an l.CS

it, are inadequate to

c;·:::>ress the full measure of ::::.2

.:lpp~cciation

the respect of his colleagues.

I will read that citation now,

of his country and

and then I would like to make one closinJ remark:
"Your foresi3ht and tireless work during more than
three years as Under Secretary have made possible the
most important fiscal L:-.:,islation of our time and a
unique departmental record of achievement.

follO\ving the pre:cept of Alexander Hamilton of combining
suaviter in modo with fort iter in re you have attained
results Ivhere others had produced empty words.
a~ard

This

recognizes your accomplishments, but as with

Hamilton, the true measure of your service is that because

of your energ)

REHARKS OF TF':: HONORABLE DOUGLAS DILLON
SECRF.T.\~Y OF THE TREASURY
IN PRESENTING T:-;;~ ALEXANDER HANILTON AWARD TO
UNDER S:'::C-:l,ETARY HENRY H. Fmrr.ER
TUESDAY, APRIL 7, 1964, l~:gO A.M., EST

Those of you who worked with Mr. Fowler on the tax bill know
th~t

it would be difficult to determine the proper measure of

rcco;nition of his Herculean efforts in helping shift the legis~~tive

balance in favor of that vitally important measure.

As the tax bill moved slowly through the Congress, Joe
?o\vler's unrelenting efforts against what appeared sometimes to
be ovenllhelr.:ling odds played a crucial role.

The fact that the

Dill cnerged in its present form is credit not only to his
&s a statesman, but also to the courage that is so

<.:..~~li::ies

s~~ong

pu~t

of Joe Fowler.

If that were a m:i.litary instead of a legislative campaign,
joe Feider would have earned many decorations for valor and for

"ll~ntrv
U
J

2-.-,~J..

•

He certainly would have earned the Purple Heart.

llle Alexanaer lt41111t

TREASURY DEPARTMENT
Washington

~OR

RELEASE:

UPON DELIVERY

REMARKS OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
IN PRESENTING THE ALEXANDER HAMILTON AWARD
TO
UNDER SECRETARY HENRY H. FOWLER
TUESDAY, APRIL 7, 1964,2:30 P.M., EST

Those of you who worked with Mr. Fowler on the tax bill know
:hat it would be difficult to determine the proper measure of
~ecognition of his Herculean efforts in helping shift the
Legislative balance in favor of that vitally important measure.
As the tax bill moved slowly through the Congress, Joe Fowler's
Inrelenting efforts against what appeared sometimes to be overwhelming
)dds played a crucial role. The fact that the bill emerged in its
)resent form is credit not only to his abilities as a statesman, but
Ilso to the courage that is so strong a part of Joe Fowler.
If that were a military instead of a legislative campaign,
Toe Fowler would have earned many decorations for valor and for
;allantry. He certainly would have earned the Purple Heart.
The Alexander Hamilton Award I am going to present to him now,
nd the citation which accompanies it, are inadequate to express
he full measure of the appreciation of his country and the respect
f his colleagues.
I will read that citation now, and then I would
ike to make one closing remark:
"Your foresight and tireless work during more
than three years as Under Secretary have made
possible the most important fiscal legislation of
our time and a unique departmental record of
achievement.
By following the precept of
Alexander Hamilton of combining suaviter in modo
with fortiter in re you have attained results where
others had produced empty words.
This award
recognizes your accomplishments, but as with Hamiltn~,
the true measure of your service is that because
of your energy and skill our country today is stronger
and be t ter prepared for the fu ture . "

- 2 That citation, while admittedly inadequate, is particularly
ppropriate. In fact, the Latin phrase attributed to Alexander
ami1ton was cited not long ago by Joe Fowler himself in discussing
he importance of the separation of powers in our Government and the
kills required for the successful conduct of business between the
egis1ative and executive branches. Let me give you a free
rans1ation of that Latin. What it means is that Joe Fowler, like
lexander Hamilton, combined great courtesy of manner with an
qua11y great firmness of purpose. Both of these qualities proved
~t only valuable, but essential, in accelerating the successful
ltcome of the tax changes of the last three years. I firmly
e1ieve if Joe Fowler had less of either quality, the Revenue Act
f 1964 would not be the law that it is today.
That accomplishment, by itself, stands as a shining reminder
f Joe Fowler's service in the Treasury.
But it is only a part
f the whole fabric of his dedicated public service.
Over the

Joe Fowler has responded to the call to serve his country
1der four presidents, in war and in peace. He has done so at great
~rsona1 sacrifice -- and this has been particularly true during
ls three years at Treasury, for he has twice postponed his 10ng1ticipated return to private life at considerable personal cost.
~ars,

Now, I want to end on a personal note: Joe, all of your
~iends at Treasury and throughout the Administration are going to
Lss you. But no one will miss you more than I. For three years,
ve relied upon your wise counsel, your warm and witty companionship,
ld above all, your dedication and loyalty. Although I must
~luctant1y bow to your compelling personal reasons for leaving,
shall continue to treasure your friendship. As you go, know that
)u have an important place in our hearts.

000

TREASURY DEPARTMENT

April 7, 1964

FOR IMMEDIATE RELEASE

SUBSCRIPI'ION AND ALI.<YrMEN'r FIGURES FOR TRFASURY' S CURRENI' CASH OFFERING

The Treasury Department today announced the subscription and allotment
figures with respect to the current offering of an additional $1 billion, or
thereabouts, of 3-7/8% Treasury Notes of Series D-1965, due August 13, 1965.
All notes of this additional issue have been specially marked to show
that they were issued April 8, 1964, at a price of 99.70% to enable their
holders to readily determine that they are subject to the provision of
Section 1232 of the Internal Revenue Code.
SubSCriptions and allotments were divided among the several Federal Reserve
Districts and the Treasury as follows:
Federal Reserve
District

Total Subscriptions
Received

Total
Allotments

Boston
Ne~., York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury

3'.

Totals

D-1189

492,778,000
3,501,776,000
409,556,000
695,641,000
413,294,000
482,280,000
1,271,315,000
357,578,000
238,392,000
350,888,000
517 , 537 , 000
1,494,942,000
210,000
$10,226,187,000

48,584,000
325,086,000
42,685,000
70,127,000
45,196,000
61,479,000
141,208,000
45,712,000
36,623,000
52,335,000
57,349,000
139,745,000
60,000

$1,066,189,000

- 3 -

and exchange tenders will receive equal treatment.

Cash adjustments will be made

for differences between the par value of maturing bills accepted in exchan~ and
the issue price of the new bills.
The income derived from Treasury bills, whether interest or gain from the Ale

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, b~
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

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 such
bills, whether on original issue or on subsequent purchase, and the amount actua1l1
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, 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. .

- 2 -

decimals, e. g., 99.925.

Fractions may not be used.

It is urged that tenders

be made on the printed forms and forwarded 1n 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 customen
provided the names of the customers are set forth in such tenders.

Others tNm

banking institutions will not be per.mitted 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 01'

the face amount of Treasury bills applied for, unless the tenders are accompanied
by an express gua.ra.nty 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.

Secretary of the Treasury expressly reserves the right to accept or reject 83J.Y
or all tenders, in whole or in part, and his action in any such respect shall
final.

Subject to these reserv.ations, noncompetitive tenders for

2~OO

January 16, 1964
, ( 91
days rem&in~
X(ddi1
) and noncompetitive tenders for
July 1~64

less for the additional bills dated
ing until maturity date on
$1~O

or less for the

182

-day bills without stated price from anyone

bidder will be accepted in full at the average price (in three decimals) of aecepted competitive bids for the respective issues.

Settlement for accepted ten-

ders in accordance with the bids must be made or completed at the Federal Re"rn
Banks on

Apri 1 16~64

, in ca.sh or other immediately available funds or

in a like face amount of Treasury bills maturing

Apr! 1 ~964

•

Cash

TREASURY DEPARTMENT
Washington

FOR IMMEDIATE RELEASE,

April 8, 1964

XJOOOOOOOOOOO~ooooooobc
TREASURY I S WEEKLY BILL OFFERING

The Treasury Department, by this public notice, invites tenders for two seriee
of Treasury bills to the aggregate amount of $

2,100,000,000, or thereabouts, ~r

April 16, 1964

cash and in exchange for Treasury bills maturing

,in the amoUDt

of $ 2,10i,410,000, as follows:

ffi

91 -day bills (to maturity date) to be issued

6aX

in the amount of

tit

$ 1,200,000,000 , or thereabouts, represent-

ing an additional amount of bills dated
and to mature
amount ot $

April 16, 1964

_.-,;;.J_u...:~:.--,.1~6..;.,_1_9_64
_ _,

January 16, 1964 ,

tif

originally issued in the

m , the. additional and original bills

800~000

to be freely interchangeable.
182 -day bills, for $ 900,000,000

JUMC

,or thereabouts, to be dated

)MMC
Apri~

1964

,and to mature

Octobe~

1964

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 and
$1,000,000 (maturity value).
'lenders will be received at Federal Reserve Banks and Branches up to the
clOSing hour, one-thirty p.m., Eastern standard time, r.londay, April_ 1964
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 tender'~
price offered must be expressed on the basis ot 100, with not more ths.n three

TREASURY DEPARTMENT

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
,~,100,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing April 16, 1964,
in the amount of
$ 2,101,410,000, as follows:
91-day bills (to maturity date) to be issued
April 16, 1964,
in the amount of $1,200,000,000, or thereabouts, representing an
additional amount of bills dated January 16,1964,
and to
::nature July 16,1964,
originally issued in the amount of
$800,444,000,
the additional and original bills to be freely
interchangeable.
182-day bills, for $ 900,000,000,
or thereabouts, to be dated
April 16, 1964,
and to mature October 15, 1964.
The bills of both series will be issued on a discount basis under
and noncompetitive bidding as hereinafter provided, and at
naturity their face amount will be payable without interest. They
~ill be issued in bearer form only, and in denominations of $1,000,
p5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000
(maturity value).
~ompetitive

Tenders will be received at Federal Reserve Banks and Branches
to the closing ~our~ one-thirty p.m.,
Eastern Standard
:ime, Monday, Apr~1 15, 1964.
Tenders will not be
:'eceived at the Treasury De~artment, Washington. Each tender must
)e for an even multiple of $1,000, and in the case of competitive
~enders the price offered must be expressed on the basis of 100,
1ith not more than three decimals, e. g., 99.925. Fractions may not
)e used. It is urged that tenders be made on the printed forms and
~orwarded in the special envelopes which will be supplied by Federal
~eserve Banks or Branches on application therefor.
,1P

Banking institutions generally may submit tenders for account of
:ustomers provided the names of the customers are set forth in such
;enders. Others than banking institutions will not be permitted to
iubmit tenders except for their own account. Tenders will be received
'rithout deposit from incorporated banks and trust companies and from
'esponsible and recognized dealers in investment securities. Tenders
'rom others must be accompanied by payment of 2 percent of the face
lmount of Treasury bills applied for, unless the tenders are
',ccompanied by an express guaranty of payment by an incorporated bank
r trust company.
)-1190

- 2 Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, following which public
announcemer.t 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
Januarv 16,1964, ~l-days remaining until maturitr date on
Ju 1v 16, 1964)
and noncompetitive tenders for ~ 100, 000
or less for the 182-day bills without stated price from anyone
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 April 16, 1964,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing Apri 1 16, 1964. 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
sale or redemption at maturity during the taxable year for which the
return is made, as ordinary gain or loss.
No. 418 (current revision) and this
Treasury bills and govern the
condi tions of their issue. Copies of the circular may be obtained fro.
any Federal Reserve Bank or Branch.
~reasury Department Circular
n~tice prescribe the terms of the

000

TREASURY DEPARTMENT

April 9, 1964

FOR IMMEDIATE RElEASE
WITHHOIDING OF APPRAISEMENT ON

BICYCIES

The Treasury Department is instructing customs field officers
to withhold appraisement of bicycles from Hungary, manufactured by
Pannonia, Budapest, Hungary, pending a determination 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 Fed-

eral Register.
Under the Antidumping Act, determination of sales in the United
States at less than fair value would require reference of

the~ase

to the Tariff Commission, which would consider whether American industry was being injured.

Both dumping price and injury must be

shown to justif,y a finding of dumping under the law.
The complaint in this case was received on March 6, 1964, and
was made by Philip Sherman, Esquire, New York, New York.

The dol-

lar value of imports received during 1963 was approxi-tely $215,000.

TREASURY DEPARTMENT

April 9, 1964

FOR IMMEDIATE REIEASE
WITHHOIDING OF APPRAISEMENT ON

BICYClES

The Treasury Department is instructing customs field officers
to withhold appraisement of bicycles fram Hungary, manufactured by
Pannonia, Budapest, Hungary, pending a determination 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 Fed-

eral Register.
Under the Antidumping Act, determination of sales in the United
States at less than fair value would require reference of

the~ase

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 March 6, 1964, and
was made by Philip Sherman, Esquire, New York, New York.

The dol-

lar value of imports received during 1963 was approximately $215,000.

-6In dollar tel'DB, the $38 billion rise in GNP that is expected this year W1ll

represent as great a year-to-year increase in total national output as IDJ
in our peacetime history.

When this decade began, our GNP Just topped the $'00 billion ark. In
the fourth quarter of last ;year, as we all lmcnrI we reached the $600 b1ll1OD

mark. Since GNP practica.ll.y stood stU! in 1960, that represents a ~
of $100 bi1l1on in some three years. With the tax cut, we can expect to
cut that time by' about one-third - and pass the next $100 billion Dark at
least by' the beginning ot 1966.

That, therefore I is the prospect that the tax cut holds out before u.
That prospect -- and the importance of tbe tax cut -- become even 111)1'8
impressive when we recall that onJ.y a few Dlmtbs ago nearly all the forecuta
by leading business economists had us verging upon recession levels by the
end of this year -- it 118 did not have a tax cut.
Thus, we stand at a historic turn1ng point. And the tax cut w1ll spell
the difterence between maldng economic history and .rely repeating it.

00000

- 5 -

Yet since 1957 - while the forces that sustained the expansion ot the prior
decade began to recede - Federal tax revenues continued to rise as a percentage of GNP" trom 18.5 percent in 1957 to 19 •.3 percent in the firat halt
of 196.3. Bad tbe e~ aintained 1957 levels of actirlty' -- or l'O\1IhlI
4 percent UD8IIIployment - tax revenues would have risen to an even higher
percentage of' GNP" an estimated 20 percent. During this same period, hoIthl1',
government purchases rose only trom 11.2 percent to 11.5 percent of' GNP,
compared with a 7.4 percent to 11.2 percent rise tram 1948 through 1~7. Ytt
again" had the econoll\Y been operating in 196.3 at 1957 levels, actual Federal
purchases in 196.3 would have dropped instead of' risen as a percentage of' QNp,
There is little question, theref'ore" that since 19'7 high tax rates bm
been a significant source of our economic difficulties and have thus helped
def'eat their own purpose of' raising adequate revenues. There is also little
question that o~ an econoDU operating at reasonably' tul.l capacity can
produce the government revenues required to bear the costs of the oold war
as well as to meet urgent national needs • With the tax cut, we expect tbat
after a brief 2-.3 year period, greater Federal revenues w:Ul. be generated
than had there been IX) tax cut. This means that, with tbe tax cut and with
the kind of expenditure control which the new budget represents, we can
reasonably expect to reach the point of' balance in our budget within two or
at least three years • Without the tax cut, the prospect would have been
bleak indeed for a balanced budget within the near future -- except at the
cost or essential national needs and, very likely of our continued eccmomic
progress. Without it" even our relatively near-term ecollOlDic future -- in

the opinion of most experts -- appeared extremely uncertain.
Thus the tax cut bas very great implioations" not only over the l.cmg-l'IID,
for the relatively near future as well.

That coupled with rigorous expend!ture oontrol argues well for the
eooIlOllG" • Few ot us can taU to be impressed with the expenditure control
exemplified in President Johnson's new budget, or can d~ that it indeed
merits the term" Itrigorous". The new Johnson budget represents what can
o~ be oalled the positive approach to expenditure control. It will produce I
real saV'inp this year and in years to come. Yet it responds in new and
.
forward-looking ways to real and urgent national needs. It is genu1na11
frugal and prudent, while at the same time refusing to ~ homage to the
defeatist theory that between expenditure control and national needs -- at
between balanced budgets and national needs - there is some kind ot war,
that we cannot provide tor one wi:trout saoriticing the other.
With the new budget" and the new tax law" this nation can look tornrd
in all sober oonfidence to an eoonomio growth throughout this year and
beyond ot greater strength and magnitude than that of ~ comparable per.f.ocI
in our history.
We can expeot that by the end of fisoal 1965 the current recovery will
become the longest and strongest in our peacetime history.

- It It sbauld also - and this is one
us on the road to balanced budgets.

ot ita moat

important goals -

PUt

This is a goal which surely, in the light ot our recent eccmom1c hiItol'J,
all ot us can endorse wholehearted,ly- wi tmut, bo1rever, endorsing the n.
that clericita stand al1nl;18 tor absolute evil and balanced budgets stau4 Il.IfII
tor absolute good. For whether deficits are good or bad, or whether balaOld
budgets are good or bad, is a question that depeJlda entirely on the aC'tual
econamic conditions in which a given dericit or balanced budget occurs.
&lre~, mwever, we can al.1 endorse -- emphatioally and without the
slightest reservation -- the view that wastetul spending is intolerable, ad
that in a healthy and vibrant eCODOUV the Federal budget ought to be in loDeterm balance. The trouble with the dericits ot recent years is that tlleJ
are the unwanted, unwelcome children ot a delinquent ecoDOl1\V - au eCOlJOllV
that has not lived up to its potential.

When we look, tor example, at the tirst postwar decade - trom 1947
through 1957 - we see an econoJqy' nurtured and sustained in prosperity bJ
the eD01'JIK)US untultilled demand that bunt up during the war. Empl.oyment
was high and growing, incomes and output were rapidly expandiDg, and 1Dve• •
was running at cont1nual.1y bigh levels to keep up with the new high tiele of
demand. And during that same period -- over the 11 fiscal years trom 1947
through 1957 -- the Federal budget was in cash surplus 7 times and in cuh
deticit 4 times, tor a net cash surplus ot $20 billion.
Then the tide began to tall -- and we are all tamiliar with the results.
We had not yet tully recovered t'rom the 1957 recession, when recession struoi
again in 1960. And while, against that backgroUDd, the recovery from the
1960 recession is an impressive aecomplishment indeed -- it has DOt been
enough to m.ke up for the ground already lost. In the six fiscal. years trot
1958 through 1963, the Federal budget has been in cash deficit 5 times-cd
in cash surplus once -- tor net cash deficit of :nearly $26 billion. IfIde
than halt ot that net deficit occurred in the t:1rst three years -- troa 1958
through 1960 - despite the tact that the deficit from 1961 through 1963 :en.
large increases in expenditures tor national detense and space.
Any objective ~s makes it quite clear, theretore, that our deficit.
since 1957 have their origin -- not in wastetul. or excessive Federal speDd1Jtbut in an unsatisfactory economic performance that has tailed to produce
adequate revenues. SUch an a.nalJrsis also makes it clear that high tax rateI
have played a priDary role in the economic ditticulties we have acounte1'84
since 1957. These rates, af'ter all, were installed during the '181' to ~
private demand. ~ the tirst decade after the war, their restrictive
pressures were not economically damaging because demand built up during ~
war was so large, because ot the pressures ot the Korean ccmtlict, aDd tor
other reasons. Although Federal tax revenues -- including pQ1"Oll taD. rose from 16.7 to 18.5 percent of GNP between 1948 and 1957, their etfect.
primariq to restrain ~ int1ation.

- 3 As we all know, this lagging investment at home has been atchec! bJ ,
dramatic upsurge in the £low ot t\mds abroad, where econom1 c expanaioDa oatpacing our own have given p:romise ot greater returns. For example, in the
seven years 1956 - 1962, net long-term porttolio investment abroad aftrqe4
one billion dollars per year, or Jll)re than tive tilllls as mch as the $200
lIillion per year average tor the 1947 - 1955 period. And average net 41reot
investment abroad during the same recent period was more than double the
average IJII)UDt in the earlier period - $1.7 bUlion as agaiDst $700 milllcm.

These, am others, are the tacts that lead to the inescapable conclusion
that on the basis ot its long-term pertoranoe, our ecoDQIV needs 8018 ldII4
ot large fiscal stimulus.
The ~ possible question is, what ld.Dd ot fiscal st1Dll1us? Mmt'ta17
policy might otter one means ot providing some such stimulus, although,.. ue
restricted in that direction by' our balance ot p~ts situation. A. DUIi"
increase in Federal expeMitures might also provide at least a tempor&r1
fiscal boost ot the mapitude that we Deed. But even leaving aside the effect
such an approach would have upon our budget, there is grave doubt tbat it 1Oal4
genuinely answer our long-term economic Deeds -- when high tax rates would
continue to dampen private incentives and in!tiative and sipbon ott a 418proportionate share ot private incomes and capital. Sach an approach, UDluI
we were 1I'illing to adopt it as a permanent program, would hardq give us tile
ml'e rapid aId sustained llOrnn' rates ot economic growth that alone would
help ease our problems.

We have chosen, theretore, to to1lo1r an entirely ditterent course one that precludes excessive increases in govel"llJDeDt spend:Jng. It is to
enhance and improve the role ot the private eco~ by treeing private
incentives and initiative, income and capital trom the grip ot restrictive
tax rates.
I believe that most kna'l'ledgable people agree with the choice we have
made. For tax reduction is the ~ course open to us it 118 are to meet
our long-term economic needs in the 1r81' II08t suited to our market eCOlJOJlf.
It is anticipated that tax reduction will generate eccmomic grotrth
in such kind and 8ID1Dt that there will be created an estimated two to
three million new Jobs. It will not ot itself abolish ummployment, but
it should bring unemployment tar closer to its so-called "hard core" le'v81.
By markedly improving private incentives and treeing substantial
private capital, tax reduction will result also in sharp~ expanded ac.sUe
investment in DDdern plant and equipment and new techniques ot product1oD.
And this is the kim ot result that will generate, not only eooDOJDic progrlll
at home, but the lower costs and greater productivity that w1ll. sharpeD till
coq>etitive edge ot American industry in both toreign and domestic tieldl.
In this respect, as well as by making .America a tar III)re attractive ~
tor foreign and domestic investment, tax reduction presents the basic lDICrange answer to our balance ot p~ts problem.
.

43
- 2 -

This is the conviction that lies behind the new tax In - that, aDd
the simple tact, that while our eocmoD\Y has dcme ccmparatively well tor
three years, it bas DOt done nearly well enough tor some six years.
Not once tor 71 consecutive mnths has tmemployment tallen below
Over the six-year period trom 1957 through 1963, ~t
bas averaged 6 percent - alDDst 50 percent more than during the 1947-19S7
period. Even during the past year -- a year ot ste~ economic upturn unemployment averaged 5.7 percent, and nmr stands at 5.4 percent. Scm
tour million Americans able to work, needing work, and seeldng work, are
unable to t1Dd 1t. That bas been the plight ot that ID8.l\Y Americans tor tar
too long. Already those millions ot young people born in the earq post
war years have begun to enter the labor torce, and will enter it in evel'increasing numbers over the next tew years - at a time when technological
change will proceed at even "1'8 rapid a pace than tod~, and render even
mre Jobs obsolete than it does tod~.
5 percent.

All it takes is a close look at the tacts to realize how stubborn
this unemployment problem is. In the tourth quarter ot 1962, the ADar1can
eco~ was turD1Dg out on an annual basis $565 billion ot GNP, and unemplOJJElt ran at an average ot a 11ttle lU§. than 5.6 percent. n.r1ng the tourth
quarter last year, GNP hit the $600 billion mark -- $35 billion above the
year betore - and yet unemployment ran at an average ot a littl. sm tbIIl
5.6 percent. It took in other words a $35 billion rise in GNP merelJr to
keep an already unacceptably bigh unemployment rate at about the same level.

Unemployment, there tore , is the most disturbing tactor that has marred
ot 1.mbroken economic progress and still contronta our
continued progress with its mst urgent and insistent challenge.

the past three years

Unemploymant, however, is not the only area in which our eco:DOJqy bu
tallen sbort - and w1ll continue to tall short unless it enters a new aDd
sustained period ot more rapid growth. The long-run investment picture is
also disturbing. For it reveals, on the one band, persistent inadequate
levels ot domestic investment and, on the other, too large and sustained
an outpouring ot investment tums to toreign tields where prottts seem JI)!I
attractive. At home, business fixed investment has tallen trom 10-11 percat
ot GNP in the earlier postwar period to 9 percent in recent years.
Mr. stuart Salmders, Chairman ot the Board ot the Pennsylvania Ba:Uroa4,
pointed out last year betore the Senate FiDance CoDIDittee that, in constat
dollars, GNP rose by 16 percent during the years 1957-1962, while plant 8D4
equipment expend!tures tell by one percent. One corollary ot this ctriD" fIW
investment in plant and equipment -- in contrast to the sizable growth in
total output -- is the increasing obsolescence ot existing plant and ~
The proportion ot that plant and equipaent 10 years or older has climbed lrf'
43 percent in 1949, to 56 percent in 195), to 60 percent in 1958, to 64
in 1963. And when you contrast that 64 percent with the ratios ot otber
leading countries - with 50 percent in the Soviet Union, '5 percent in , Ge~, 58 percent in France, 59 percent in Great Britain -- the oont1"llt
appears all the mre serious.

ii-A

\,;~U

1·\,1-': . ':.

:\!\.>.!'

\!'FR~

SATlJKDAY , APRiL 11 , 1 ~64
.
~r

TRIASURI DlPARDIIN'l'

Washington

RDIARXS BY THE HONORABLE JAIIES A. REID

ASSIsrANT SECRITARY OF THE TREASOR!'
AT 'I'KI THIRD ANNUAL BANQtJJ:r OF TBI
SAVIl«JS BANK W<ImN OF MASSACBOSfttS
Sl'ATLER-HILTON HOTEL, BOSrON, IlASSACHtJSm"tS
FRIDAY EVENItIJ, APRIL 10, 1964

TIll IMPACT OF THE TAX CUT ON OUR EOOrD«

For over a month now, the new tax law has been on our books. As a
result, the prospect ot greater after-tax profits tor bus1Dessmn, an4
the real1 ty ot greater take-home pq tor wage-earners, have begun to
generate a more buoyant and rapid economic growth wb1ch the tax cut 1rI8
designed to toster.
It is too earq to Judge with precision wbat the tull. impact ot tm
tax cut will be. Events aloDe can tell WI that. We can, however, c0nsider what in general we expect to happen and wb\r - in a word, review
very brietq tbe basic eCOlJOmic case tor the tu cut.
It has been more than a year DOW' since the tax progr&ll1l'U p:roposed it bas been even longer than that since tax reduction 1I'U proposed. AD4
during that tiDe our econoaw has been steadily advanciDg, 11'1th scarceq •
perceptible pause or lag, passillg m:UestoDe atter milestone - not _n1l
maintaining on near~ all t'l'onts, but on some tronts even qu1ckeDiDg, tlII
unbroken torward stride which began three years ago last DIOnth, as the
econoaw emerged trom the trough ot our tourth recession since the SeC0D4
World War.
Apinst that background ot tour postwar recessions (tbree str1ld.ng
since the end ot the Korean War, and str1ldng with 1ncreasiDg f'reque1lC1),
no one can tail to be impressed with the achievement the present
represents -- or tan to recognize the s1gn1t1cant gains it has broacht
us. But the best measure ot what 118 have yet to do lies in what .. haft
not yet succeeded in do1Dg -- not in what we have alre~ accompl.1shecl.
For it we do nothing but continue past progress - and ignore the taU...
that wU1 continue to attelld it -- then the goal. 1I'h1ch we seek wUl pNtI
to be illusory.

1'800'.,.

RELEASE A.M. NEWSPAPERS

mRDAY, APRIL 11,

196~

RDIARIS BY TH! HONORABLE JAU:&S A. REID
ASSIS'lANT SECRl'rARI or THE TREAStJRr
AT 'l'HI THIRD ANNUAL BlNQtmr OF THE
SlVItIlS BANK W(I,CIN or MlSSA.CHUSl'rrS
STATLER-HILTON HarEL, BOSl'ON, MASSACHUSE'r'l'S
FRIDAY IVENItIl, APRIL 10, 1964

THE IMPACT OF TH! TAX CUT ON OUR 1CONca.«

For over a month now, tbe new tax law bas been on our books. As a
result, the prospect ot greater a.f'ter-tax proti ts tor businessman, and
the reail ty ot greater take-home PlY' tor wage-earners, have begun to
generate a more buoyant and rapid eccmom:lc growth which the tax cut was
designed to toster.
It is too early to Judge with precision wbat the tull impact ot the
tu cut will be. Events alone can tell WI that. We can, however, consider what in general we e%pect to happen and w~ - in a word, review
very briefly the basic eaonomic case tor the tax cut.
It has been more than a year now since the tax program was proposed -it has been even longer than that since tax reduction was proposed. And
dur1Dg that tiDe our eoonouu bas been steadily advancing, with scarcely a
perceptible pause or lag, passing milestone attar milestone -- not merely
maintaining on nearly all fronts, but on SOlIe tronts even quickening, the
unbroken torward stride which began three years ago last month, as the
ecollOUU emerged trom the trough ot our tourth recession since the Second
World War.
Against that background ot four postwar recessions (three strildng
since the end ot the Korean War, and str1ld.ng with increasing frequency),
DO one can tail to be impressed with the achievement the present recovery
represents -- or tall to recognize the s1gn1t1cant gains it has brought
us. But the best measure of what we have yet to do Ues in what we have
not yet succeeded in do1Dg -- not in what we have already accomplished.
For it we do nothing but continue past progress -- and ignore the failures
that w1ll. continue to attend it -- then the goal which we seek will prove
to be illusory.

- 2 -

This 1s the conviction that lies behind the new tax law - that, and
the simple fact, that wbile our eOOIlO~ has done canparat1vely well for
three years, it has rot done nearly well enough for some six years.
Not once for 77 consecutive mnths has unemployment fallen belo1r
5 percent. Over the six-year period trom 1957 through 1963, unemployment
has averaged 6 percent -- al.DDst 50 percent mre than during the 1947-1957
period. Even during the past year -- a year of steady economic upturn -unemployment averaged 5.7 percent, and now stands at 5.4 percent. Some
four million Amerioans able to work, needing work, and seeking work, are
unable to find it. That has been the plight of that ~ Americans for far
too long. Already those millions of young people born in the early post
war years have begun to enter the labor force, and will enter it in everincreasing numbers over the next few years - at a time when technological
change will proceed at even mre rapid a pace than today, aDd render even
IIDre jobs obsolete than it does today •
.All it takes is a close look at the facts to realize l'mr stubborn
this unemployment problem is. In the fourth quarter of 1962, the American
economy was turning out on an annual basis $565 billion of GNP, and unemployment ran at an average of a little l&u than 5.6 percent. Daring the fourth
quarter last year, GNP hit the $600 billion mark -- $35 billion above the
year before - and yet unemployment ran at an average of a 11ttle Bm:! than
').6 percent. It took in other words a $35 billion rise in GNP merely to
keep an already unacceptably high unemployment rate at about the same level.

Unemployment, therefore, is the 1IDSt disturbing factor that bas marred
the past three years of tmbroken economic progress aDd still confronts our
continued progress with its mst urgent and insistent challenge.
Unemployment, ho1rever, is rot the only area in which our econo~ bas
fallen short -- and will continue to fall short unless it enters a new aDd
sustained period of IOOre rapid growth. The long-run investment picture is
also disturbing. For it reveals, on the one hand, persistent inadequate
levels of domestic investment and, on the other, too large and sustained
an outpouring of investment funds to foreign fields where profits seem mre
attractive. At ho1"lle, business fixed investment has fallen from 10-11 percent
of GNP in the earlier postwar period to 9 percent in recent years.
Mr. Stuart SaUDders, Chairman of the Board of the Pennsylvania Railroad,
pointed out last year before the Senate Finance CoIIIIdttee that, in constant
dollars, GNP rose by 16 percent during the years 1957-1962, while plant and
equipment expenditures fell by one percent. One corollary of this dwindling
investment in plant and equipment -- in contrast to the sizable growth in
total output -- is the increasing obsolescence of existing plant and equipment.
The proportion of that plant and equipment 10 years or older has climbed from
43 percent in 1949, to 56 percent in 1953, to 60 percent in 1958, to 64 percent
in 1963. And when you contrast that 64 percent with the ratios of other
leading countries -- with 50 percent in the Soviet Union, 55 percent in West
Germany, 58 percent in France, 59 percent in Great Britain -- the contrast
appears all the mre serious.

- 3As we all know, this lagging investnent at rome bas been matched by a

dramatic upsurge in the now of funds abroad, where economic expansions outpacing our own have given promise of greater returns. For example, in the
seven years 1956 - 1962, net long-term portfolio investment abroad averaged
one billion dollars per year, or IJX)re than five times as DIlch as the $200
million per year average for the 1947 - 1955 period. And average net direct
investment abroad during the same recent period was DDre than double the
average aJOOunt in the earlier period -- $1.7 billion as against $700 million.
These, am others, are the facts that lead to the inescapable conclusion
that on the basis of its long-term performance, our ecoIlCJDU needs some kind
of large fiscal stimulus.
The only possible question is J what kind of fiscal stiDlllus? t.bnetary
policy might offer one means of providing some such stimulus, although we are
restricted in that direction by our balance ot payments situation. A massive
increase in Federal expend! tures might also provide at least a temporary
fiscal boost of the magnitude that we need. But even leaving aside the effect
such an approach would have upon our budget, there is grave doubt that it would
gemrl.nely answer our long-term economic needs -- when high tax rates would
continue to dampen private incentives and initiative and siphon off a disproportionate share of private incomes and capital. Such an approach, unless
we were willing to adopt it as a permanent program, would hardly give us the
mre rapid ani sustained nomA] rates of economic growth that alone would
help ease our problems.

We have chosen, therefore, to follow an entirely different course -one that precludes excessive increases in government spending. It is to
enhance and improve the role of the private econouw by freeing private
incentives and initiative, income and capital from the grip of restrictive
tax rates.
I believe that IJX)st knowledgable people agree with the choice we have
made . For tax reduction is the only course open to us if we are to meet
our long-term economic needs in the way mst suited to our market ecoIlOUW.
It is anticipated that tax reduction will generate economic growth
in such kind and 8lJX)UIlt that there will be created an estimated two to
three million new jobs. It will not of itself abolish unemployment, but
it should bring unemployment far closer to its so-called "hard core" level.
By markedly improving private incentives and freeing substantial

private capital, tax reduction will result also in sharply expanded domestic
investment in mdern plant and equipment and new techniques of production.
And this is the kind of result that will generate, not only economic progress
at bome, but the lower costs and greater productivity that will sharpen the
competitive edge of AIErican industry in both foreign and domestic fields.
In this respect, as well as by making America a far mre attractive magnet
for foreign am domestic investment, tax reduction presents the basic longrange answer to our balance of payments problem.

- 4 It should also -- and this is one ot its mst important goals -- put
us on the road to balanced budgets.
This is a goal which sure~, in the light or our recent economic bistozy,
all ot us can endorse wholeheattedly- without, however, endorsing the view
that derici ts stand al~ for absolute evil am balanced budgets stand alw~
tor absolute good. For whether deficits are good or bad, or whether balanced
budgets are good or bad, is a question that depends entirely on the actual
economic oonditions in which a given deficit or balanced budget occurs.
SUrely, however, we can all endorse -- emphatically and without the
slightest reservation -- the view that wastetu1 spending is intolerable I and
that in a hea1~ and vibrant eOOIlOII\'f the l'ederal budget ought to be in longterm balance. The trouble with the deficits ot recent years is that they
are the unwanted, unweloome children or a delinquent eCOIlOII\Y' -- an ecollOII\'f
that has not lived up to its potential.
When we look, for example, at the :first postwar decade -- from 1947
through 1957 -- we see an eCOIlOII\V' nurtured and sustained in prosperity by
the enoI'IIDUS untulfilled demani that bull t up during the war. Employment
was high and growing, incomes and output were rapidly expanding, ani investment
was running at continually high levels to keep up with the new high tide of
demand. And during thet same period -- over the 11 fiscal years from 1947
through 1957 -- the Federal budget was in cash surplus 7 times and in cash
deficit 4 tim!s, for a net cash surplus or $20 billion.
Then the tide began to fall -- and we are all familiar with the results.
We had not yet fully recovered from the 1957 recession, when recession struck
again in 1960. And while, against that background, the recovery from the
1960 recession is an impressive accomplishment indeed -- it has not been
enough to make up for the ground already lost. In the six fiscal years from
1958 through 1963, the Federal budget has been in cash deficit 5 times ~d
in cash surplus once -- for net cash dericit of nearly $26 billion. !.bra
than half of that net deficit occurred in the first three years -- from 1958
through 1960 -- despite the fact that the deficit from 1961 through 1963 renected
large increases in expenditures for national defense and space.

AJ:r:.i objective analysi~ makes it quite clear, therefore, that our deficits
since 1957 have their origin -- not in nstetul or excessive Federal spending-but in an unsatisfactory E'conomic performance that has railed to produce
adequate revenues. SUch an analysis also makes it clear that high tax rates
have played a primary role in the economic difficulties we have encountered
since 1957. These rates, atter ail, were installed during the war to restrain
private demand. .l)Jring the first decade at'ter the war, their restrictive
pressures were not economically damaging because demand bullt up during the
war was so large, because of the pressures of the Korean conflict, and for
other reasons. A1though Federal tax revenues -- including payroll taxes -rose from 16.7 to 18.5 percent of GNP between 1948 and 1957, their effect was
primarily to restrain runaway intlation.

- 5 -

yet since 1957 -- while the forces that sustained the expansion of the prior
decade began to recede - Federal tax revenues continued to rise as a percentage of GNP, from 18.5 percent in 1957 to 19.3 percent in the first half
of 1963. Had the ecoDOIl\Y maintained 1957 levels of act!vi ty -- or roughly
4 percent unemployment -- tax revenues would have risen to an even higher
percentage of GNP, an estimated 20 percent. During this same period, however,
government purchases rose only from 11.2 percent to 11.5 percent of GNP,
compared with a 7.4 percent to 11.2 percent rise trom 1948 through 1957. Yet
again, had the econo~ been operating in 1963 at 1957 levels, actual Federal
purchases in 1963 lIOuld have dropped instead of risen as a percentage of GNP.
There is little question, therefore, that since 1957 high tax rates have
been a significant source of our economic difficulties and have thus helped
defeat their own purpose of raising adequate revenues. There is also little
question that only an econo~ operating at reasonably full capacity can
produce the goverI'lIOOnt revenues required to bear the costs of the cold war
as well as to meet urgent national needs. With the tax cut, we expect that
after a brief 2-3 year period, greater Federal revenues w1l1 be generated
than bad there been 00 tax cut. This means that , with the tax cut and with
the kind of expenditure control which the new budget represents, we can
reasonably e~ect to reach the point of balance in our budget within two or
at least three years. Without the tax cut, the prospect would have 'been
bleak indeed for a balanced budget within the near future -- except at the
cost of essential national needs and, very likely of our continued economic
progress. Without it, even our relatively near-term economic future -- in
the opinion of mst experts -- appeared extremely uncertain.
Thus the tax cut has very great implications, not only over the long-run,
for the relatively near future as well.

That coupled with rigorous expenditure control argues well for the
econo~ .
Few of us can fail to be impressed with the expenditure control
exemplified in President Johnson's new budget, or can deny that it indeed
meri ts the term, "rigorous". The new Johnson budget represents what can
only be called the positive approach to expenditure control. It will produce
real savings this year and in years to come. Yet it responds in new and
forward-looking ways to real and urgent national needs. It is genuinely
frugal and prudent, while at the same tine refusing to pay homage to the
defeatist theory that between expenditure control and national needs -- or
between balanced budgets and national needs -- there is sone kind of war,
that we cannot provide for one without sacrificing the other.
Wi th the new budget, and the new tax law, this nation can look forward
in all sober confidence to an economic growth throughout this year and

beyond of greater strength and magnitude than that of any comparable period
in our history.
We can expect that by the end of fiscal 1965 the current recovery will
become the longest and strongest in our peacetime history.

- 6 In dollar term, the $38 billion rise in GNP that is expected this year will
represent as great a year-to-year increase in total national output as any
in our peacetime history.
When this decade began, our GNP Just topped the $500 billion mark. In
the fourth quarter of last year 1 as we all know, we reached the $600 billion
mark. Since GNP practica.ll.y stood still in 1960, that represents a growth
of $100 billion in some three years. With the tax cut, we can expect to
cut that time by about one-third -- and pass the next $100 billion mark at
least by the beginning of 1966.
That, therefore, is the prospect that the tax cut holds out before us.
That prospect -- and the importance of the tax cut -- become even DDre
impressive when we recall that only a few JlDntbs ago nearly all the forecasts
by leading business economists had us verging upon recession levels by the
end of this year -- if 11'8 did not have a tax cut.
Thus, we stand at a historic turning point. And the tax cut will spell
the difference between making economic history and merely repeating it.

00000

TREASURY DEPAR'DCIfI'
WuhiDgton, D. C.
IMMEDIATE RELEASE

THURSDAY, APRIL 9, 1964

D-l191

The Bureau ot CUsto. . aDDDUDCed tadq prel.1minar7 tigures shewing the
quantities ot wheat and milled wheat products autboriled to be entered, 01'
withdrawn from warehouse, tor consumption under the import quotas estabU. .
in the President's proclamation ot )lq 28, 1941, as JDDd1t1ed b7 the PretiA.,.
proclamation ot April 13, 1942, am provided. tor in the Tarift Schedule, of
the United States, tor the 12 months CODlD8Dc1ng Mq 29, 1963, as tollows:

Country

ot
Origin

••

••
••
••

••

••
••

Wheat

M1lled wheat products

.•

Imports
: Established:
:
Quota
:Mq 29, 1963, to

; March 28, 1964.
(Bushels)

Canada
China
Hungary
Hong Kong
Japan
United Kingdom
Australia

795,000

Germany

S1ria
Rev ZealaDi
Chile
NetherlaD:ls
Argentina
Italy
Cuba
France
Greece
Mexico

Panama
Uruguq
Polam1 am Danzig
Sweden
Yugoslavia
Horvq
Canary Isl.aD1s
Rwunia
Guateula

BruU
Union ot Soviet
Socialist Republica
Belg1\11l
Other toreign countries
or areas

100
100
100
100
2,000
100
1,000
100

1,000
100
100

(Bushels)

795,000

(Pouma)

3,815,000
24,000
13,000
13,000
8,000
75,000
1,000
5,000
5,000
1,000
1,000
1,000
14,000
2,000
12,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000

PouDla)
3,815,003

1,22A
6,lSJ

975

100
100
~-

TRBASURY DEPAImmfr
Wuhington, D. C.

IMMmIATE RELEASE

THURSDAY, APRIL 9, 1964

D-1191

The Bureau ot CUsto_ anDQunced todq prel.1m1nar7 tigures st»wing the
quantities ot wheat and milled wheat products authoriled to be entered, or
withdrawn from warehouse, tor coDSWIIptioD under the import quotas established
in the President's proclamation ot Hq 28, 1941, as mod1t1ed by the President's
proclamaUon ot AprU 13, 1942, am prov1dec1 tor in the Taritt Schedules ot
the United States, tor the 12 months coDlDencing Mq 29, 1963, as tollows:
•

Country'
or
Origin

••
••
Milled. wheat products
Wheat
••
•I
Imports
Imports
Established ••
: Established •
:Mq
29, 1963,to
Quota
:Mq 29, 1963, to.
Quota
••
; M~Ch 28. 1964
; M~ch 28. 1964:
••
Pounds)
(PoUDis)
Bushels)
(Bushels)

Canada
China

795,000

Hungary

Hong Kong
Japan
United Kingdom
Australia
Ge1"llW17
S7I"ia
New ZealaDi
Chile
NetherlaMs
Argentina
Italy
CUba
France
Greece
Mexico
Panama

100
100
100
100
2,000
100
1,000
100

Uruguq

Po1axxt am Danzig
Sweden
Yugoslavia
Norwq
Canary Islands
Rumania
Guatemala
BruU
Union ot Soviet
Socialist Republics

3,815,000
24,000
13,000
13,000
8,000
75,000
1,000
5,000
5,000
1,000
1,000
1,000
14,000
2,000
12,000
1,000
1,000
1,000
1,000
1,000
l.,000
1,000
1,000
1,000
1,000

3,815,000

4.000,000

'Lg::>1_ 17q

1,224
6,180

975

1,000
100
100
100
100

Belgium
Other toreign countries
or areas

SCX>.OOO

795.000

""./

-2-

Commodity
Ab~ulute

Uatt
:
of
: Qusnttty:

Period and Quantity

Quotas:

Butter substitutes containing
over 45~ of butterfst, SDd
butter oil •••••••••••••••••••••••••• Calendar Year

1,200,000

Pound

Fibers or cotton processed
12 mos. !'rom
but Dot spun •••••••••••••••••••••••• Sept. 11, 1963

1,000

Pound

Peanuts, shelled or Bot shelled,
blaDched, or otherwise prepared
or preserved (except pesnut
12 mos. from
butter) ••••••••••••••••••••••••••••• August 1, 1963

1,709,000

Pound

Imports through April 6, 1964.

D-1192

Quota PillA

Quota'1111

TREASURY DEPARTMENT
Washington
IMMEDIATE RELEASE

D-1192

THURSDAY, APRIL 9, 1964

The Bureau of Customs announced today preliminary figures on imports for CODsumption of the following commodities from the beginning of the respective quota
periods through March 28, 1964:

: UnIt
Commodity

Period and Quantity

: imports"
:
of
a8 or
:Quantity: March 28, l~

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

1,500,000 Gallon

343,793

Whole Milk, fresh or sour •••••••• Calendar Year

3,000,000 Gallon

Cattle, 100 lbs. or more each
Jan. 1, 1964(other than dairy cOws) ••••••• e March 31, 1964

120,000 Head

5,987

12 mos. from
Cattle less than 200 Ibs. each ••• April 1, 1963

200,000 Head

60 ,700-

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

24,861,670 Pound

Quota Fillet

Tuna Fish •••••••••••••••••••••••• Calendar Year

To be
announced Pound

1,222,255

114,000,000 Pound
45,000,000 Pound

21,141,684

White or Irish potatoes:
Certified seed ••••••••••••••••• 12 mos. from
Other •••••••••••••••••••••••••• Sept. 15, 1963
Knives, forks, and spoons with
Nov. 1, 1953stainless steel handles •••••••• Oct. 31, 1964

69 ,000 ,000 Pieces

40,274,700

64,659,341

Imports for consumption at the quota rate are limited to 6,215,417 pounds dur1q~
first three months of the calendar year.

gj Imports through April 3, 1964.

TREASURY DEPARTMENT
Washington
:DIATE RELEASE
~SDAY,

D-1192

APRIL 9, 1964

Tbe Bureau of Customs announced today preliminary figures on imports for COQ,tion of the following commodities from the beginning of the respective quota
ods through March 28, 1964:

Commodity

••
••

Period and Quantity

Unit :
Imports
of
as of
:Quantity: March 28, 1964

ff-Rate Quotas:
fresh or sour ••••••••••••• Calendar Year

1,500,000 Gallon

343,793

Milk, fresh or sour •••••••• Calendar Year

3,000,000 Gallon

le, 700 Ibs. or more each
Jan. 1, 1964'her than dairy cows) •••••••• March 31, 1964

120 ,000 Head

5,987

200,000 Head

60,700

12 mos. from
.e less than 200 1bs. each ••• April

1, 1963

fresh or frozen, filleted,
., cod, haddock, hake, polk, cusk, and rosefish ••••••• Calendar Year

24,861,670 Pound

Quota Filled

Fish •••••••••••••••••••••••• Calendar Year

To be
announced Pound

7,222,255

114,000,000 Pound
45,000,000 Pound

40,274,700
21,141,684

or Irish potatoes:
tified seed •••• o • • • • • • • • • • • • 12 mOB. from
!r •••••••••••••••••••••••••• Sept. 15, 1963
Nov. 1, 1963forks, and spoons with
lnless steel handles •••••••• Oct. 31, 196.\

69 ,000 ,000 Pieces

64,659,341-

,orts for consumption at the quota rate are limited to 6,215,417 pounds during the
three months of the calendar year.
lorts through April 3, 1964.

-2-

:
COIIIlod1ty

Period aDd Quantity

Oait

: Quant1t;y:
Absolute Quotas:
Butter sub.tltute8 containing
over 45i of butterfat, and
butter oil •••••••••••••••••••••••••• Calendar Year
Fibers at cotton proce8sed
12 IlOS. !roa
but Dot spun •••••••••••••••••••••••• Sept. 11, 1963
Peanuts, shelled or .ot shelled,
blanched, or otherwise prepared
or preserved (except peanut
12 1108. trom
butter) •••••••••• o • • • • • • • • • • o • • • • • • • August 1, 1963

]j Iaports through April 6, 1961t.

D-1192

1,200,000

PoUDd

1,000

Pound

1,709,000 POUDd

Quota

PUll
5J

Quota 11M

1'P,T.ASURY m::PA.R'1:i{.'S~:l'

Waahington. D. C.

'-·,:'.{EDIA n: RELEASE

T/{URSDAY, APRIL 9, 1964

D-l1l) )

PRELThfINARY DATA ON IMPORTS FOR CONSUMPTION IF UNMANUFAC'lURED LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISHED
BY PRESIDENTIAL PRCCLAMATICN NO. 3257 OF SEPTEMBER 22.1 1958R, AS MODIFIED BY THE TARlIT SGREDULES OF' 'ffiE
UNITED STATES, WHIGH BECAME l!:ITECTIVE AUGUST 31, 1963.
QUARTERLY QUOTA PERIOD -

IMPORTS _

ITEM 925.01.Country

Lead-beari~

Production

April 1. - April 3, 1964 (or as noted)

ITEM 925.03-

ITEM 925.02"
Zinc-Qe~ring

UnNTGught lead and
la9.d waste and scrap

ores

and rna. terlus

April 1 - June 30, 1964

1l,220,OOO

1l,220,000

22_540,000

and

materia.ls

; OilB;rterIy QUota.

. : OilarterIy

arts: Dutiabl
Australia.

or~s

arts:

Z~nc

Content

v~~r

ITEM 925.04·

;Unwrought zino (except alloys
: of zino and zinc dust) and
zino waste and scrap
QUota
By Weight

~ QiiafterI~r

Iroports

(Potar~s)

7,004,408

Belgium and
Luxemburg (tot.al)

Bolivia

5,040,000

4,294,491"

Canada

13,440,000

339,290··

15,920.000

Imports

1,459,041

66,480.000 66,480,000

naly

7,520,000

37,840,000

1,535,043

3,600,000
36,880,000

Meieo
16,160.000

PtIrU

3,274,420--

5,195,221

12,880,000

70.480,000

5,649,465

6.320,000

35,120,000

5,091,700

3,760~OOO

1,537

R~ub1ie

of the Congo
fonner1y Belgian Congo}

··ua.

14,eao,OOO

So. Africa

5,440,000
14,880,000
15~760,OOO

Y'Wgoslavia
l2ll o~her
countries (tot~)

6,560,000

1,118,960·"

.See Part 2. .t.ppeDd1.x to Tari.H Sobedul.e ••

••~ort.

~ub1~o

Apr~1

or South

6. 1964.

~~r~oa.

6~O80~OOO

2,774"
6.080,000

17,840,000 15,008,930--

6.080,000

6,080,000

'rR?ASURY DlPARTh!!.:..'i:t'

Washington, D. C.

DomDIATE REI.USE

THURSDAY. APRIL 9, 1964

0-1193

?R..-;;LIMINARY DATA ON IMPORTS FOR CONSUMPTION OF UNMANUFAC'lURED LEAD AND ZINC CHARGEABLE TO mE croous ESTABLISHED
BY PRESIDENTIAL PRCCLAMATICN NO. 3257 or SEPTEMBER 221. 19581. AS MODIFIED BY THE T.A.RllT SCHEDULES OF mE
UNITED STA.TES, WHICH B]!;CAME l!;FFECTIVE AUGUST 31, 1963.

QUARTERLY QUOTA. PERIOD IMPORTS _
I:1:M 925.01.

Country

Lead-bearl~

pres
and ma. terIals

April 1 - June 30. 1964
April 1 - April 3, 1964 (or as noted)

Zinc-bearing

UnwTcu~t

lead and
lead waste and scrap

Production

Australia

11,220,000

;:s ","IRA &

22,540,000

or~s

.;Uuwrought zino (except alloys

and

; of zinc and zinc dust) and

materials

f\:tiarterTYOiiota.- -~~ --. :nuarter~y-C;:Uota---- ----~rterly O:\iota
: Dutiable tead
,Imports: Dutiablp lead .
Imports ;Z:Lnc Content_
. U,."• .,QlA a i

ITEM 925.04·

ITEM 925.02·

ITEM 925.03.

bu~d3)

zinc

~te

Qu-o-ta.
By Weight
\ poUlldi )

--~~erIY

Imports

7,004,408

BelgilllD aDd

Luxemburg (total)
3 olivia

5,040.000

4,294,491"

Canad ..

13,440,000

339,290"

15,920,000

1,459,041

66,400,000 66,480,000

Italy
36,eao,000

Peru

16,160,000

3,274,420'"

Republic ot the Congo
(formerly Belgian Congo)
···:n. So. Africa

14,eao,ooo

14,8BO,OOO

':"UgOSlaTia

All o.f;her
oountries (total)

12,880,000

15,760,000

6,560,000

1,118,960"

.See Part 2, AppeDdb to Tariff Sobectal.e8 •
•• Imports as of April 6, 1964 •
••• Republic of South Africa.

5,195,221

6,080,000

Imports

7,520,000

37,840,000

1,535,043

3,600 ,()()()

Y.exico

and scrap

70,480,000

5,649,465

6,320,000

35,120,000

5,091,700

3,760,000

1,537

5,440,000

6,080,000

2,774-6,080,000

17,840,000 15,008,930.·

·' ASURY

m:fL":'~: ',c.

,'laJhingtcn. D. C,

D-1194

]_,: ;,~:DIA 'rE RELEASE

'1) I IJRSDAY, APRIL 9,1964
F~-;;:'I1!IHARY

DATA ON IMPORTS FOR CONSCMFTION '7 IJNMANUFAC:;''VRED LEAl) alQ ZlllC GRA..RGLillLL 1'0 TEE C.C;0'2A3
i.Tl PRESIDENTIAL PROCLAMA.TICN NO. 3257 OF SEPTEMBER 22;. 1958~ AS MODITED BY TE TARIIT SC:HLGULES
UNITED STA.T1:S, V1IDCE BSCA},S .:.FFECTIV1: AUGUoT Jl~ 1963,

~3'LA3LIS~J
(117'
v.

,-r-.or~

_..:l.i:.

QUARTEHLY o..uOTA PERIOD - January 1 - March 31, 1904
r~o.RTS _

r;';.}.{ 925.01"

_________:

Country
of
Production

Lead-bearing area
and rnaterl.a.1s

January 1 - March 31, 1964

-I.TI:M

925.03_·_~~TP.:.~_~.02"

11, 220,OCC

1l,2?O,OOO

22,540,000

ZL;:U.

Australia

'Zinc-Qo!'3:cing ')~,"3
materials

Umrr::ught lead and
le<,.d waste and scrap

:~arterly l}uota.;O:Uarterly Cuota.
: Dutiable lead
Imports; Dutiablf lead
\ .'"'oUlids)
?'oUhd!i)

_ _~~,

;w¥'tertj Quoh·
Imports:
1nc ontent

~crt3

\FounaS-r-

Luxemburg (tot.a.l)

Canada

5,040,000

13,440,000

11,530,577

15,920,000

66,480,000

Me~ico

Peru

]mocrts

\yoUIrcfs)

7,520,000

37,840,000

37 ,(~O,OOO

16,160,000

36,880,000

70.,480,0.00

63,916,153

6,320,000

12,880,000

35,120,000

3,760,000

5,440,000

5,438,847

6,0.80,000

6,oeo,OOO

Relublic of tbe Congo
(fonnerly Belgian Congo)
So. Africa

14,880,000

14,880.,000

~oslaTi&

AlJ. o~ber
countries (total)

6,560,000

3,976,119

-See Part 2. .AppeDdu to T~1'1' Sohedu1..a •
••~.pub1~o

;QUarterI~r QUota
By Weight

3,600,000

I"e:Uy

••u~

;;Urrl,Tought zinc (cxee.!? ~ a.lloy:;
: of zinc and zinc Ilu.::lt) and
zinc waste and scrap

22,540,000

Belgium and
Bolivia

1T'"aJ 925.04 ~

S~,th

Afr~oa.

15,760,000

6,080,000

17,840,000

rR?-:ASURY' DEPAR'lt1LI.J:

Wa3hington, D. C.

D-1194

ThNEDIA TE RELr.A.SE

THURSDAY, APRIL 9,1964

PR.:-:LIMllURY DATA. ON IMPORTS FOR CONSUMPTION OF UNMANlTFAC1URED LEAD AND ZINC CHA.RGEABLE TO mE QUOTAS ESTABLISHED
BY PRESIDENTIAL PROCLAMATICN NO. 3257 OF SEPTEMBER 22" 19581. AS MODIFIED BY THE TARIn' SCHEDUI.ES ot 'mE
UNITED S'llTES, WHICH Bl!;CAME l!;FFECTIVE AUGUST 31, 1963.

QUARTERLY QUOTA. PERIOD _ January 1 - March 31, 1964
IMPORTS _ January 1 - Maroh

ITEM 925.01*
Country
of

ores
and ma. terIals

Lead-beari~

31,

1964

ITEM 925.03-

,
-:Oliarterly GioU---

: Dutiable)ead
Imports: Dutiabl? lead
TE'oUDdi)
,Poundl}

Australia

11,220,000

22,540,000

I.,luota
inc ~ontent

:~ner.l.v

Imports:

ITEM 925.04-

Zino-bearing ores and
materiaJ.s

Umrrcultht lead and
lead waste and scrap

Production

;-Ilila.rterryonota

ITEM 925.02-

_ (POUJidI)

;Umrrought zino (except al.1oys

: of zinc and zinc dust) &Ad

dnc waa te a.nd scrap
~QU&i'terl~'

Imports

QUota.

By Weight

22,540,000

Belgium and.
Luxemburg (total)

Bo1b1a.

5,040,000

Cau.da.

13,440,000

ll,530,577

15,920,000

66,AC80 ,000

66~,000

Italy

Peru

So. Africa.

16,160,000

14,880,000

37.,840,000

37,840,000

6,560,000

36,880,000

7O,~,000

63,916,153

6.33),000

6.3210.000

12,880,000

35,120,000 35,120,000

3,7eo,OOO

3,760.000

5,440.000

5~38,847

14,880,000

YUgOSIaTia.

All o~her
countries (total)

7,520,000

36,880,000

Republic ot the CoDgo
(to~rly Belgian CODgo)

••un.

7,520,000

3.->.000

Mexico

Imports

tPo~wmJ~r)r--""";;""~;';;"';'

3,976,119

-See Part 2, Appendix to Tariff Sobedule ••
• -Republio of South Africa.

15,760,000

6,080,000

17,840,000 17,840,000

6,oao,000

6,080.000

TREASURY DEPARTMEltT

Washington
IMMEDIATE RELEASE

THURSDAY, APRIL 9, 1964

D-1195

The Bureau of Customs has announced the following preliminary figures shoYiag
the imports for consumption from January 1, 1964, to March 28, 1964, incluaive, of
commodities under quotas established pursuant to the Philippine Trade Agreement
Revision Act of 1955:

Commodity

Established Annual
Quota Quantity

··
·

Unit
of
Quantity

·•
·

Import.
at
March 28, 1961t

Buttons ••••••••••••••••

680,000

Cigars •••••••••••••• •'••

160 ,000,000

Number

Coconut oil ••••••••••••

358,400,000

Pound

153,189,289

Cordage ••••••••••••••••

6,000,000

Powad

1,451,512

Tobacco ••••••••••••••••

5,200,000

Pound

714,076

Gross

61,476
3,395,255

TREASURY DEPARTMEM'

WashIngton
DIATE RELEASE

RSDAY, APRIL 9, 1964

D-1195

The Bureau of Customs bas annouDced the following preliminary figures shovlag
imports for consumption fro. January 1, 1964, to March 28, 1964, inclueive, or
.odities under quotas established pursuant to the Phi1ippiDe Trade Agreement
sion Act of 1955:

ICOlIIIDodi ty

Established Annual
Quota Quantity

Unit
of
Quantity
Gross

Import.
of
March 28, 1964

cos ••••••••••••••••

680,000

ta •••••••••••••••••

160 , 000 ,000

Number

.Ilut oil ••••••••••••

358,400,000

Pound

153,189,289

.!ge ••••••••••••••••

6,000,000

Powad

1,451,512

••• oo.o •• o.oo • • •

5,200,000

Pound

714,076

~co

61,476
3,395,255

-2-

COTTON WASTES
(In pounds)
COTTON CARD STRIPS made from cotton having a staple of less than 1-3/16 inches in length, COMBER
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 1-3116 inches or more
in staple length in the case of the following countries: United Kingdom, France, Netherlands,
Switzerland, Belgium, Germany, and Italy:
Established
TOTAL QOOTA

Country of Origin
United Kingdom ••••••••••••
Canada •••• .; •••••••••••••••

France ...••...••.•..•.•...

India and Pakistan ••••••••
Netherlands •••••••••••••••
Switzerland •••••••••••••••
Belgium •.•...........•..••

Japan •••••••••••••••••••••
China •••••••••••••••••••••
Egyp t ••.•••••.••••••••••••

Cuba. • • • . •••...••.••••••
Germany..... • ••••.••••••
Italy .•.......•...•....•.•
Other, including the U. S.

Total Imports
Sept. 20, 1963, to
ADril 6. 196k.

Established :
Imports
11
33-1/3% of: Sept. 20, 1963,
Total Quota_:~to_~rJ~ 6~ 196~

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

919,269
239,690
210,516
19,284
11,249
34,147
33,022
59,000

1,441,152

170,476

75,807

55,151

35,738

25,443
7,088

5,482,509

1,561,915

1,599,886

22,747
14,796
12,853

225,6;a

Incl.uded in tota1 imports, column 2.
:
The co'Un:t.ry- des:i.gnat.i.ons l...ist.ed. in t.his press rel.ease are those specif"ied in Presidential. Proc1amat.:1on
5.

a.s mod:1.£':1.ed b;y t.he Tariff Sched~es of the United States.
S.1.nce that
h ......... b .....n
chang~_ The outallod.~ ~ ........... a r e be~ reta1.necl becau_

~"!!.t."!'_ ~- ~- C>~ c_~t.~ co....,...t.:r~ ....

No.

2353.. of' Sept.ember
-

3..939 ..

TREASURY DEPARTMENT
Washington, D. C.
IMMEDIATE RELEASE

THURSDAY, APRIL 9, 1964

D-119E,

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, as modified by
the Tariff Schedules of the United States which became effective August 31, 1963.
COTTON (other than linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4"
Imports September 20. 1961 - April 6. 1964
Country of Origin
Egypt and Sudan •••••••••••••
Peru ••••••••••••••••••••••••

India and Pakistan ••••••••••
China •••••••••••••••••••••••
Mexico ••••••••••••••••••••••
Brazil ••••••••••••••••••••••
Union of Soviet
Socialist Republics •••••••
Argentina •••••••••••••••••••
Ha~1 •••••••••••••••••••••••
Ecuador •••••••••••••••••••••

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

Imports

Established Quota

Country of Origin

628,215
1l,294
159,692

Honduras ••••••••••••••••••••
Paraguay •••••••.••••••••••••

8,88),259

British East Africa •••••••••
Indonesia and Netherlands
New Guinea ••••••••••••••••
y_Britlsh W. Indies •••••••••••
Nigeria •••••••••••••••••••••
2/British W. Africa •••••••••.•
- Other, including the U.S ••••

752
871
124
195
2,240

Colombia ••••••••••••••••••••
Iraq ••.•.•••••.•.••••••••.••

f:I:>O,ooo

475,124
5,203
237
9,333

71,388
21,321
5,377
16,004

11 Except Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
21 Except Nigeria and Ghana.
Cotton 1-1/8" or more
Established Yearly Quota - 45,656,420 1bs.
Imports August 1. 19·63 - April 6, 1964
Staple Length
1-3/8" or more
1-5/32" or more and under
1-3'8 11 (Tangu:l.a>

1-1'S'·

a>T

'llllDre

.....

uzacler

Allocation

Imports

39,590,778

39~590~ 778

1.S00.000

8~ ..

759

Import

TREASURY DEPARTMENT
Washington, D. C.
IMMEDIATE RELEASE

THURSDAY, APRIL 9, 1964

D-1196

Preliminary data on imports for cons~~tion of cotton and cotton waste chargeable to the quotas
established by the President's Proclamation of September 5, 1939, as amended, as modified by
the Tariff Schedules of the United States which became effective August 31, 1963.
COTTON (other than linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4"
!tm>ort~L S~tembeL 20~ 19B3 - April 6. 1964
Country of Origin
Egypt and Sudan •••••••••••••
Peru ••••••••

••••••••••••••

India and Pakistan ••••••••••
China •••••••••••••••••••••••
Mexico ••••••••••••••••••••

Brazil ••••••••••••••••••••
Union of Soviet
Socialist Republics •••••••
t'l.

.fgent ina •••••.•.•.•.....•.•

Haiti •••••••••••••••••••••••
Ecuador ••••••••••••••••.••••

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

Imports
628,215
1l,294
159,692
8,883,259

ffJO,ooo

Established Quota

Country of Origin
Honduras ••••••••••••••••••••
Paraguay •.•.•••..•••••••.••.
Colombia •••••••••••••••.•••.
Iraq ••...••.••.....•.••.•...

British East Africa •••••••••
Indonesia and Netherlands
New Guinea •••••.••••••••••

475,124
5,203
237
9,333

l/British W. Indies •••••••••••
Nigeria •••••••••••••••••••••
2/British W. Africa •••••••••.•
- Other, including the U.S ••••

1, Except Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
2/ Except Nigeria and Ghana.

Cotton 1-1/8 11 or more
Established Yearly Quota - 45,656,420 1bs.
Imports August 1. 1963 -,April 6, 1964
Staple Length
1-3/8" or more
1-5/32 1J or more and under
1-3/8" (Tanguis)

Allocation
39,590,778

Imports
39,590,778

1,500,000

8l.759

752
871
124
195
2,240
71,388
21,321
5,377
16,004

Import

-2-

COTTON WASTES
(In pounds)
COTTON CARD STRIPS made from cotton having a staple of less than 1-3/16 inches in length, COMBER
WASTE, LAP WASTE, SLIVER WASTE, AND ROVING WASTE, WHETHER OR NOT MANUFACTURED OR OTIfERWISE
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:
Es tablished
TOTAL QOOTA

Country of Origin
United Kingdom ••••••••••••
Canada ••••••••••••••••••

Fr ance ...••.•••..•..•.••..

India and Pakistan ••••••••
Netherlands •••••••••••••••
Switzerland •••••••••••••••
Belgium. •
• ••••••••
Japan. . • . .
. . ............................... .
China. . .
. ................................... . .
Egyp t ...................................................... . .

Cuba... . . . . . .

. . ............................ . .

Germany .......................................... .

Ita ly ................................ .

Total Imports
Established
Sept. 20, 1963, to
33-1/3% of
Aoril 6. 196k. __: Jotal Quota

Imports
II
Sept. 20, 1963, to April 6. 1964

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

919,269
239,690
210,516
19,284
1l,249
34,147
33,022
59,000

1,441,152

170,476

75,807

55,151

35,738

25,443
7,088

5,482,509

1,561,915

1,599,886

22,747
14,796
12,853

Other, including the U. S.

225,6;t7

Included in total imports, column 2.

The country designations listed in this press release are those specified in Presidential Proclamation
No. 235l o~ September 5. 1939. as modi~ied by the Tari~f Schedules of the United States. Since that
date the names of certain countries have been changed.
oC

thoir

eeographical

coverage

and

have

The outmoded names are being retained because

political connotation.

FOR RELEASE:

UPON DELIVERY

STATEMENT OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY
BEFORE THE SENATE COMMITTEE ON FOREIGN RELATIONS
ON EAST-WEST TRADE
APRIL 9, 1964, 9:00 A.M. EST
Mr. Chairman and

Me~bers

of the Committee:

I am here to describe the role of the Treasury Department in East-Hest Trade.

Secretary Rusk has already in-

formed you of the foreign policy aspects of East-West Trade
and Secretaries Hodges and Freeman and the President of
the Export-Import Bank have discussed with you this subject
as it relates to the responsibilities of their respective
agencies.
In order to inform the Committee of the details of the
Treasury Department's role in East-West Trade matters a
technical analysis has been prepared and is attached hereto.
Hhile I shall summarize the more significant aspects of the
Treasury Department's activities in this important area, I
would like to submit the technical analysis for the record.
The Treasury Department presently administers three
sets of Regulations which have a bearing on

D-1197

East-~Jest

Trade.

-2These are the Foreign Assets Control Regulations, the Cuban
Assets Control Regulations, and the Transaction Control
rtegulations, all of \vhich were issued under tae authority
of Section 5(b) of the Trading .Jith the Enemy Act.
The first two sets of Regulations affect East-Uest
Trade by prohibiting, except pursuant to license, all commercial and financial transactions with Cormnunist China,
North Korea, and

Cub~.

or nationals thereof and with respect

to tneir products no matter where located.

The Transaction

Control Regulations Jeal with the purchase and sale by
.~mcricans

and t.merican-controlled firms of strategic com-

Dodities located outside the United States if the intention
is ultimate delivery to the European Soviet Bloc or North
Vietnam.
Ti.le Foreign Assets Control Regulations v.lere issued on
ilecember 17, 1950, to implement the United States policy of
a total embargo on all financial and

con~ercial

dealings

",iti1 COTI1I:lunist China anu North Korea, including both exports
and imports, except pursuant to license.
ex~orts

The control of

from the United States to these areas is actually

-3exercised by the Department of Commerce under its export
control regulations, since the Treasury Department's Foreign
Assets Control Regulations contain a general license permitting any export directly to those areas 1vhich are licensed
by the Department of Commerce.

As a practical matter, under

both Treasury and Commerce Department regulations only publications move between this country and Communist China and
North Korea.
All imports from Communist China and North Korea are
prohibited by the FAC regulations the provisions of ,vi.lich
also extend to goods regarded as presumptively Chinese or
North Korean.

Because of trans-shipment possibilities these

restrictions affect imports of certain commodities from the
Soviet Bloc such as certain ores and metals, textiles and
animal hair.
The FAC regulations also extend to American-controlled
firms abroad.

It is not the Treasury Department's policy to

license exports by such firms to COIThllunist China or Nortil
iCorea except [or overriding foreign policy considerations.
unly two exceptions have been made, one for Hood pulp and

-4one for second-hand diesel locomotives, and in neither case
was the transaction consummated.

American-controlled firms

abroad equally may not import prohibited merchandise.
The Cuban Assets Control Regulations, issued on July 8,
1963, are essentially parallel to the Foreign Assets Control
Regulations.

Thus, trade between the United States and Cuba

is limited to exports of publications and certain foods and
medicines authorized by the Conunerce Department and to
licensed imports of publications.

Ho,qever, in the case of

Cuba most American-controlled subsidiaries abroad have been
authorized for foreign policy reasons to engage in trade
'vith Cuba in non-United States origin goods.

As a matter

of fact such firms, except for exports of foods and medicines,
are not known to be trading with Cuba.
The Transaction Control Regulations were issued on
June 29, 1953, at the request of the interdepartmental
Economic Defense Advisory Committee (commonly referred to
as EDAC) as a part of the United States efforts in the internationally agreed control of strategic commodities.

These

controls are in addition to the controls exercised by the

-5Commerce Department over direct exports from the United
States to the Soviet Bloc and North Vietnam.

They prohibit,

unless licensed, any person within the United States, and
foreign firms controlled by such persons, from purchasing
or selling or arranging the purchase or sale of strategic
commodities located outside the United States for ultimate
delivery to the European Soviet Bloco

The coverage of these

Regulations is restricted to those commodities which are
listed as strategic by international agreement through the
Consultative Group Coordinating Committee (generally known
as COCOM).

Treasury decisions on requests for licenses are

referred to EDAC for advice, which is invariably followed by
the Treasury.
In 1954, at EDAC's request, Treasury interpreted its
Foreign Assets Control Regulations and Transaction Control
Regulations to apply to patent and technical data licensing
agreements whereby the foreign licensees agreed not to ship
anything produced abroad 'tvith the American knO\'l-how to
Communist China or North Korea in the absence of a Treasury
license.

Similarly, the foreign licensees agreed not to

-6ship anything on the internationally agreed strategic lists
to the European Soviet Bloc or North Vietnam in the absence
of a Treasury license.

This control was transferred to the

Commerce Department on April 1, 1964.
To sum up Mr. Chairman, the Treasury has been given the
authority and delegated the function of administering controls over foreign assets and financial transactions where
necessary to protect United States national security interests,
since such controls can have an important effect on the international financial position and policies of the United States.
However, in the administration of these regulations the
Treasury acts essentially in an operating role rather than
in a policy-making role.

Determinations with respect to

types and amounts of goods which are strategic and the
United States position in international consultations on
the administration of international controls of such commodities are made by those members of EDAC who have qualified
experts on these subjects.

Hhere questions of foreign

policy arise in connection with the administering of these
regulations '17e are largely governed by the views of the
Department of State.

Of course, if any contemplated measures

-7or actions would be calculated to have a serious adverse
effect upon the international financial position of the
United States, the Treasury Department would playa major
role in the consideration of such a question.
Aside from the Treasury's responsibility in administering foreign assets regulations, as Secretary of the Treasury
and from my previous Government service, I am interested
in the broader economic implications of trade with the
Soviet Bloc.

In this area I will only say that non-strategic

trade with the Soviet Bloc on normal commercial terms can
be fully as beneficial to the United States as to the Bloc.
I favored such trade during my four years in the State
Department, and I continue to favor it today.

It is my

opinion that the balance of payments benefits to the United
States of the recent wheat sales to the Soviet Union were
fully as important to us as any benefit that the acquisition
of American wheat may have brought to the Soviet Union.
Contrariwise, I do not now and never have favored the grant
of long-term credit to the Soviet Union.

Any credit of over

5 years, the standard agreed upon by the Berne Union as
covering normal commercial practice, would in my view be
detrimental to our interests.

I 'will be glad to expand upon

these personal vievJs in answer to your questions.

The Role of the Treasury Deprtment in East-Vest Trade
'1lle Treasury Department present~ administers three sets of
Regulations which have a bearing on East-Vest trade. These are
(1) The Foreign Assets Control Regulations, 31 CFR, Part 500,
(2) The Cuban Assets Control Regulations, 31 CPR, Part 515, (3)
The Transaction Control Regulations, 31 CFR, Part 505, all of
which were issued under the authority of Section 5(b) of the
Trading nth the En~ Act, as amended, (50 U.S.C. App. 5(b»,
and Executive Order 9193. Section 5(b} of the Trading with the
Ene~ Act in effect authorizes the President or his de1eg$te,
during time of war or national emergency, to investigate, regulate,
or prohibit all commercial and financial transactions b.Y persons
subject to the Jurisdiction of the United States with foreign
countries or the nationals of such countries or with respect to
any property subject to the jurisdiction of the United states in
which such countries or their nationals have &D\Y interest. EIcecutive Order 9193 is the delegation of this authority to the
Secretary of the Treasury.
It should be noted that Yugoslavia is not treated under any of
the above Regulations as part of the SinO-Soviet Bloc. North VietNe.m is included within this term but is not subject to the total
embargo on Communi st China, North Korea, and Cuba.
(1)

Foreign Assets Control Regulations

General

The Foreign Assets Control Regulations, issued on December 17,
1950, implement the United States policy of total E!Ilbargo on all financial and commercial dealings by persons subject to the jurisdiction of the United States with Communist China or North KOrea.
B.

Exports from the United States

There is d1JB.l jurisdiction in the Treasury and. Commerce Departments over exports from the United States to Communist China or
North Korea. To avoid overlapping, the Treasury Department has issued a General Ucense (Section 500.533 of the Regulations) which
authorizes all transactions incident to any export d1rect~ from the
United States to Communist China or North Korea provided that the
export has been licensed by the Commerce Department. It is our
understanding that the Commerce Department licenses o~ publications,
the personal effects of departing travelers, and dead bodies to be
exported to those destinations.

- 2 C.

Imports into the United states

Section 500.204 of the Regulations proh1bi ts all UDl1cenaed
imports into the United states of all COlllmuni st ChiDeae &n4 Borth
Korean merchandise. Processed forms of such merchandise, . . tistinct from manufactured forma, are also subject to this prah1bi tl. on,
no lXBtter in whs.t country the processing takes place. ~e 1mport
prohibi tion of the Regul.a.tions extends to goods regarded as presumptively Chinese, i.e., goods of traditional Chinese-type and
goods which had principally been imported into the United States
from mainland China before the effective date of the Regulations,
no T1Btter in wat country they my be located. It also extends
to certain other commod1 ties 1IL1ch have been located in Soviet
Bloc countries (and Hong Kong and. Macao) since such countries are
regarded as likely channels through which the Communist Chinese
would. try to sell such items to the United states. Goods affected
by the above prohibitions are licensed for importation only on presentation of satisfactory evidence that there has been no Communist
Chinese or North KOrean interest in the goods since December 17, 1950.
Insofar az trade With the European Soviet Bloc is concerned,
this prohibition of the Regulations has principa~ affected textiles, certain metals and minerals and animal hair. Some of these
commodities have been susceptible to licensing, ~., cashmere and
camel hair on the basis of physical identificationj others, such as
antimony, tin, and tungsten, have not.
It should. be noted that not only are unlicensed imports into
the United States of the above-mentioned types of commodities prohibited, but also all other dealings in any such commodities which
are located abroad.
D.

Exports and Imports

American-Controlled Firms Abroad

Under the Foreign Assets Control Regulatl. ons, foreign firms which
are controlled by Americans, ~., branches, subsidiaries, agents,
certain licensees (See fI1+ below), etc., are prohibited, as are the
parent firms, from exporting to Communist China and North Korea, regardless of the origin of the goods involved and whether or not the
goods are strategic. It is not the Treasury Department's general
policy to license such exports. In two instances licenses have been
issued for foreign policy reasons, but in neither instance was
the license utilized. '!hese cases involved wood pulp and secondhand diesel locomotives, neither of wich is regarded b,y COCOM as
strategic.

- 3The prohibitions on importations of (and other dealings in)
Communist Chinese and. North Korean merchandise and the other types
of merchandise described in C above are applicable to foreign firms
which are controll.ed by Americans.
(2)

Cuban Assets Control Regulations

The Cuban Assets Control Regulations, issued on Ju~ 8, 1963,
replace the previously existing CUban Import Regulations. (In
addition to the authority of Section 5(b) of the Trading with the
Ene~ Act, these Regulations are also issued under Proclamation
3447, which was issued under Section 620 (a), P. L. 87-195.) The
Import Regulations, issued February 7, 1962, prohibited imports
into the United States of all goods of Cuban origin and, as amended
on March 23, 1962, also prohibited imports of goods (~., cigars)
made in third countries with Cuban components.
Essentially, the Cuban Assets Control Regulations are parallel
to the Fbreign Assets Control Regulations in that they prohibit all
unlicensed financial and commercial transactions by Americans with
Cuba or nationals thereof. Exports to Cuba thus are limited to
those authorized by the Commerce Department. It is our understanding that, in addition to publications, the Commerce Department licenses medicines and certain non-subsidized foods to be exported to
that destination. With respect to imports, the Cuban Assets Control
Regulations differ from the Foreign Assets Control Reeulations in
that there is no list of "presumptively Cuban" goods as there is
in the case of China. This is because the nature of our past trade
wi th Cuba was such that imports of goods of Cuban origin could be
controlled without a list of this type. Further, there is no
manufacturing/processing distinction in the Cuban Assets Control
Regulations. The import prohibitions here extend to all commodities
containing Cuban components.
The Cuban Regulations contain a general license (Section 515.541)
under which American subsidiaries abroad (other than banks) are authorized to sell non-United states origin goods to Cuba and to buy
(or otherwise deal in) goods from Cuba. This general license 'Was
issued at the state Department1s request for foreign policy reasons
and on the understanding that American subsidiaries abroad were on
a voluntary basis abstaining from trade with Cuba. (To the best of
our knowledge only non-objectionable shipments of foods and medicines
have taken placP.) The export of strategic goods to Cuba is not
excepted from the privileges of the general license because the: State
Department felt to do so might jeopardize the informal cooperation

- 4 we were recei ving from our allies in controlling shipments of
strategic goods to Cuba. (For the same reason, sa1.es to Cuba
are not affected by the below-described Transaction Control Regulations.)

(3)

Transaction Control Regulations

General

The Transaction Control Regulations were issued on June 29,
1953, at the request of the Economic Defense Advisor,y Commdttee
(EDA.C) as a part of the United States efforts in the internationa~
agreed control of strategic commodities. These Regulations are in
addition to the controls exercised qy the Commerce Department over
direct exports from the United States to the Soviet Bloc. They prohibit, unless licensed, any person within the United states from
purchasing or selling or arranging the purchase or sale of strategic
commodities located outside the United States for ultimate delivery
to the &tropean Soviet Bloc or North Viet-Name The prohibitions
apply not only to domestic American corporations but also to their
foreign subsidiaries and to other foreirn firms owned or controlled
by p"ersons normally resident in the Unt ted States. The Regulations
were intended to fill a gap in United States controls under which
traders in the United States, without violating any United States
reVllation, could arrange transactaons whereqy strategic goods would
reach the ~L~opean Soviet Bloc and North Viet-Nam either in contravention of other countries' security controls, through loopholes in
the existinG control system, or via countries without adequate controls.
B.

Coverage

The coverage of the Transaction Control Regulations is restricted
to those co~odities which are internationally agreed to be strategic
(the COCOM list) and as far as Ur~ted Sta~es strategic lists are concerned, these commodities may be identified as:
(a) those which appear on Commerce Department's Positive List of
Controlled Commodities and which are identified on that List by the
symbol "A" in the colUI!lIl headed "Commodity Lists" (15 crn 399);
(b) those commodities which appear on the Munitions List issued
by the State Department's Munitions List Board (22 CFR, Part l2l123); and (c) those commodities Which appear on the Atomic Energy
COmrUssion's List (10 CFR, Part 30, 40, 50 and 70).

- 5On the recommendation of the House Select Committee on Export
Control (the Xi tchin Comm:l. ttee) in 1962, we conducted a survey to
ascertain whether ship_nts by American subsidiaries abroad to the
Soviet Bloc of strategic commodities under United States unilateral
control, but not under COCOM embargo and thus not subject to the
Transaction Control Regulations, were significant enough to make
extension of the Treasury Department Regulations appear desirable.
Of the over 1,000 replies we received it was determined that onlf
nine of these firms engaged in such trade. The total of th1s trade
in 1961 and 1962 was about $13 million, of which $12 million was
in the form of grain-oriented silicon steel sheets used in electric transformers. In view of this substantial evidence that trade
Qy American subsidiaries abroad With the Soviet Bloc in non-controlled
strategic commodities was insignificant, the Transaction Control
Regulations were not extended to include such commodities.

Statistics

For the period from January 1, 1963 through March 31, 1964,
45 applications for licenses under the ~saction Control Regulations were filed, of which 41 were approved in whole or in part.
The principal types of commodities involved were communication and
navigation equipment, electronic equipment, and computers.
D.

Licensing Procedure

The substance of the application is forwarded to EDAC World.ng
Group I for advice. That committee arranges for a technical evaluation, and then gives the case policy review. The Treasury Department does not attend the technical group's meeting. At the
policy review meeting, this Department's role is confined to:
(a)

Clarifying al\Y questl. ons the Committee my have as
to the precise impact of Treasury Department controls on the proposed transaction;

(b)

Providing available information as to the applicant,
other parties to the transaction, etc.;

(c)

Obtaining from the applicant al\Y further data the
Committee my desire;

(d)

Otherwise attempting to expedite for the applicant's
benefit the Committee's consideration of the case; and

(e)

Asking questions to obtain clarification of statements
Qy Committee members concerning the case.

- 6,'!he Treasury Department cODa1Btent~ doe, not 'YOte OD caleS
before the OOlllJl1 ttee, and, in fact, is not a member of Vorld.ng
Group I. Wben the CODIIlitteets advice is rece1ftd, thi. Depa.r'tllent then either approves or denies the application in accordance
111 th the COZIII1 ttee' s recOJ!lll!tndat1on.

(4)

Patent am Technical Data Controls

In 1955, the Commerce Department relinquished much of its control in the area of technical data and the products thereof, for
various reasons. EDA.C then asked the Treasury Department to interpret its Transaction Control Regulations as applying to shipments
lIBde to the Soviet Bloc of strategic goods produced by foreign
firms under license from American firms. We also felt it necessary
to interpret similarly the Foreign Assets Control Regulations as
applying to shipments of all goods to Communi st China am North
Korea produced by foreign licensees of American firms. It vas
understood that the assumption of control in this area by the
Treasury Department was to be undertaken on an interim baSis, until
the Commerce Department was able to reassert its primary jurisdiction in this field.

The Commerce Department has now amended its Export Control
Regulations governing the export of patent information and technical data from the United States. Accordingly, licensing agreements executed after April 1, 1964 will be subject to Commerce Department Regulations but not to Treasury Department Regulations.
Also, where there is a continuing flow of technical data after
April I, 1964 under pre-existing licensing agreements, the Commerce
Department Will, in most instances, acquire jurisdiction. As a
result, With some minor transitional problems, the Treasury Department's role in this area after April 1, 1964, will be minimal.
One of the major differences that result from this transfer
1s that under Treasury Department administration of these controls,
no products Whatsoever produced with the licensed technology could.
be sent to Communist China or North KOrea while under Commerce Department controls onJy those items on the Posi ti ve List and the
Polish GRO Exception IJ.st are covered. While this is technically
a relaxation (and has been so described in some news reports), it
should. be noted that in fact the onJy products that will be allowed
to be sent to these destinations under Commerce Department Regulations are those which are not considered to contribute to their
military or economic potential. Another difference is that
the Commerce Department Regulations are applicable to Cuba (to
the same extent as to Communist China and North Korea) whereas
the Treasury Department's never 'Were (in order to be consistent
With the general license issued to Americ~control1ed subsidiaries as described in #2 above). In other re~ects, the Co~
merce Department restrictions are basically the same as those
the Treasury Department had. been applying.

TREASURY DEPARTMENT

April 10, 1964

FOR IMNEDIATE RELEASE
'fR1ASURY MARKET 'tRANSACTIONS IN MARCH

During March 1964, market transactions in
direct and

~~aranteed

securities of the govern-

ment for Treasury investment and other accounts
resulted in net purchasea b.Y the Treasury Department of $111,279,500.00.

000

D-1198

TREASURY DEPARTMENT

April 10, 1964

FOR IMt-lEDIATE RELEASE
'rREASURY MARKET TRANSACTIONS IN MARCH

During March 1964, market transactions in
direct and guaranteed securities of the government for Treasury investment and other accounts
resulted in net purchases b.Y the Treasury Department of $111,279,500.00 0

000

D-1198

TREASURY DEPARTMENT

April 10, 1964

FOR I1illEDIATE REIEASE
TREASURY DECISION ON WHITE PORTIAND CEMENT
UlmER 'THE ANTIDU1'{PING ACT

The 1reasury Department has determined that white portland cement from Japan, manufactured by Nihon Cement Co., Ltd.,
Tokyo, Japan, is being, or is likely to be, sold at less than
fair value within the meaning of the Antidumping Act.
Accordingly, this case is being referred to the United
States Tariff Commission for an injury determination.
!~otice

of the determination and of the reference of the

case to the Tariff Corrumission will be published in the Federal
Register.
The dollar value of imports of white portland cement from
Japan received durinC the year 1963 was approximately $198,000.

TREASURY DEPARTMENT

April 10, 1964

FOR UlfIiEDIATE REIEASE
TREASURY DECISION ON WHITE PORTLAND CEMENT
UNDER THE ANTIDUlvJPING ACT

The Treasury Department has determined that white portland cement from Japan, manufactured by Nihon Cement Co., Ltd.,
Tokyo, Japan, is being, or is likely to be, sold at less than
fair value within the meaning of the Antidumping Act.
Accordingly, this case is being referred to the United
States Tariff Commission for an injury determination.
Notice of the determination and of the reference of the
case to the Tariff COTlud.ssion will be published in the Federal
Register.
The dollar value of imports of white portland cement from
Japan received durinG the year 1963 was approximately $198,000.

- 2 -

Ifldee d ,one could sC.:1rcely '1sk for
eX~lmple

llVmce for Progress.

be surprised or disappointed
.~lli"1nce

P.S

more convincing

than the B,qn':(, of the too often unheralded but sure and

steady progress that together we
the

h~.lve

made under the aegia of

We cannot -- and should not -th~t

the great goals of the

have not already been reached or surpassed.

For

the B;mk bears witness, many small steps can move us jU8t

,.;s f,;r tonwrd -- and perhcips more securely -- as a few large
strides.

I .J.m sure the other Governors of the Bank share my
expect;-ltiol1 that this meeting will serve as another Bound and
significant milestone -- not only in the Bar!k's career -but in our j oint progress townrd securing a better 11fe for
the countries and people of L . ' tin 'merica.

UPON DELIVERY

FOR RELE' SE:
--

STATEMENT OF THE

H~ORtBLE

DOUGLAS DILLON

SECRET,"RY OF nIE TRE'SURY OF THE UNITED STATES
UPON ARRIV.<\L AT PANAMA CITY, PANAMA,
FOR TilE FIrTIl A~1NUAL MEETING OF TIlE BO.~RD OF GOVEIlNORS
OF TIlE ntTER-"'MERICftN DEVELOPMENT BANK

SUNDAY, APRIL 12, 1964, 7:00 '.M., 1ST
I

indeed happy to be here in this historic city, for

the Fifth "nnus1 Mee ttng of the BOdrd of GovernoJ:'8, of the
Inter-American Development Bank -- which in ita relatively abort
lifetime has proved a potent force in furtbertAg the econoaic
and social progress of Lstin 'meriCA.
During

the

weel<. ,:-:head, the Governors will carefully revi.

the work. of the P"lst ye.lr and fashion the policiea that will
guide the BDnlt tiU'oughout the coming year.

I look forward

with great edgemess to [1n intensely productive week of
study

..:'nd discussion whose result, I ara confident, will be

to adv&nce even

f~rther

and faster the fine work of the

~OR

RELEASE:

UPON DELIVERY

STATEMENT OF THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY OF THE UNITED STATES
UPON ARRIVAL AT PANAMA CITY, PANAMA,
FOR THE FIFTH ANNUAL MEETING OF THE BOARD OF GOVERNORS
OF THE INTER-AMERICAN DEVELOPMENT BANK
SUNDAY, APRIL 12, 1964, 7:00 P.M., EST

I am indeed happy to be here in this historic city, for
he Fifth Annual Meeting of the Board of Governors, of the
nter-American Development Bank -- which in its relatively short
ifetime has proved a potent force in furthering the economic and
ocial progress of Latin America.
During the week ahead, the Governors will carefully review
he work of the past year and fashion the policies that will
lide the Bank throughout the coming year.
I look forward with
~eat eagerness to an intensely productive week of study and
iscussion whose result, I am confident, will be to advance even
3rther and faster the fine work of the Bank.
Indeed, one could scarcely ask for a more convincing
cample than the Bank of the too often unheralded but sure and
~eady progress that together we have made under the aegis of
l€ Alliance for Progress.
We cannot -- and should not -) surprised or disappointed that the great goals of the
~liance have not already been reached or surpassed.
For as
l€ Bank bears witness, many small steps can move us just as far
Irward -- and perhaps more securely -- as a few large strides.

I am sure the other Governors of the Bank share my
pectation that this meeting will serve as another sound and
gnificant milestone -- not only in the Bank's career -- but
our joint progress toward securing a better life for the
untries and people of Latin America.

000

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TREASURY DEPARTMENT

R RELEASE A. M. NEWSPAPERS,

esdg, April 14, 1964.
RESULTS OF TREASURY I S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
one series to be an additional. issue of the bills dated January 16, 1964,
d the other series to be dated April 16, 1964, which were offered on April 8, were
pad at the Federal Reserve Banks on April 13. Tenders were invited for $1,200,000,000,
: thereabouts, of 91-day bills and for $900,000,000, or thereabouts, of 182-day bills.
e details of the two series are as follows:

eUUl'Y bills,

NGE OF ACCEPTED
KPETITIVE BIDS:

High
Low

Average

91-day Treasury bills
maturing July 16 , 1964
Approx. EqUiv •
Price
Annual Rate
99.125
3.462%
99.116
3.497%
99.119
3.L84%

·•

182-day Treasury bills
maturing October 15, 1964
Approx. EqUiv.
Price
Annual Rate
98.146
3.667%
98.132
3.695%
98.136
3.687%

38% of the amount of 91~ bills bid for at the low price was accepted
99% of the amount of 182-day bills bid for at the low price was accepted
l'AL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:

cago
Louis
tiJmeapolis
Cansas City
>a.Uas
Ian Francisco
TOTALS

St.

Applied For
$ 31,434,000
1,570,252,000
31,067,000
32,924,000
18,460,000
49,051,000
192,720,000
55,263,000
22,979,000
35,762,000
30,114,000
117 1167 1 000
$2,187,793,000

Applied For
$ 21,434,000
$
7,563,000
1,301,697,000
736,532,000
16,067,000
8,794,000
18,108,000
32,924,000
18,460,000
4,600,000
13,750,000
49,051,000
168,717,000
131,598,000
15,922,000
50,643,000
9,871,000
17,949,000
17,780,000
35,762,000 :
11,837,000
24,094,000
65 2 887 2000
168,. 8431000
$1,200,401,000-!/ $1,747,482,000
AcceEted

Acce~ted

$ 7,563,000
596,730,000
3,794,000
18,108,000
4,600,000
12,650,000
92,632,000
14,422,000
7,711,000
17,780,000
10,827,000

113 11722 000
$9 OO ,05 0 ,OOO....!?l

Includes $312,995,000 noncompetitive tenders accepted at the average price of 99.119
Includes $93,901,000 noncompetitive tenders accepted at the average price of 98.136
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yieldS of 3.56%, for the 9l-day bills, and 3.81%, for the
l82-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 )60-day
year. In contrast, yields on certificates, notes, and bonds are computed in tenns
of interest on the amount invested, and relate the nUll'lber of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
compounding i f more than one coupon period is involved.
199

STATUTORY DEBT LIMtJ;ATION

Karch

As of

31, 1964

Apr.13.

uti

Secti,)n 21 of Second Li berty Bond :\ct, as amended, provides that the face amount of obi isations issued under aUlhori
th.1t :\ct, and the bee amount of ohligations guaranteed as to principal and interest by the United State~ (except such gUII..lJ~
,)hli;:ati<>n' .\S may he held by the Secretary o~ the Treasury), :'Shall not exceed in the. asgre~ate S2H5.000,OOOJ OOO (AcIO';
,1\ 11)';<); (·:S.C, title 31, sec: 757b), out~tandl~g a.t anyone time,. For purpos.es of thIS se~tlon the current re emption 'II~~
.Iny "bll;:atlOn I"ued on a dl,",count baSIS whIch IS redeemable puor to maturity at the option of the Ih)l.!er shall be con.i....
•l ' it, f.lce amount,"
The Act of !'Iiovcmber 26, 1963 (P.L. 88-187 88th Congress) provides that durin;: the period bcginn'
Ikeemlwr I, Iq(d, ande~ding on June 30, [<)64, the abov,: limitati.on. shal! be temporarily increas~d to $>,(19,000,000,000, O:!:
of "",i.Hi,)n, in the tlmln;: of revenue receipts, the publtc debt hmlt as IIlcreased by the precedIng sentence IS further inc/tIIIi
thruu;:h June 29, 1C)6'l, by $6,000,000,000.
The fnllowing table shows the face amount of obligations outstanding and the face amount which Coln still be issued ....
thi, limit.ltion:
Tot.ll i.I,"(' ."nount that may be ,)ut'tanding at anyone time
(lu, .. ti,".llll~ nhl,,,;atln111'l itaJllit:'J Uth-h:'f St!t:tit1J Llbt;!ffY l.ltHh:l Acf, a.D pt11t:!'IlJ~.J

$315,000,000,.

Inl:L'r, -.,,·heaflnA:

Tr,·.I""\ hills _ _ _ _ _ _ _

$52 1 548 1 313 1 000

(.erlIIlClles of inJehtedness - - - - Trc.l:-.ury notes

Bonds Tre.lsury
*S.1\·in;:, ,Current redemption ,·aluL·i __

~tates

Cnited

I{etirement Plan bonds _

!)CpO,d .• ry

,erie~
IIl\·\.·~lml'n{ ~cries

41 198 1 246,000
641 478 1 3021 000

86,998,067,350
49,101,442,878
5, 1h.3,S03
97,862,000
24,090 1 000
3,6].),48>,000

R. L. .\.

Cn(ilicatL'~

of Indebtednes.~
Foreign series _ _ _ _ _ _ _ _ _ __

IH)(C~

139,840,090,731

215,000,000
30 1 120,482

Foreign Currency series _ _ _ _ __
Treasury

$121,2241 8611 000

158,333,423

Forci~n ~eric~

Trcolsury bond s Trca:-,uq ccrtific.l(·;-' _ _ _ _ _ _ _ __

15 197 7S.li

1,083,648,909
15,197,754

Tre .. ,,,ry honds _ _ _ _ _ _ _ _ _ _ __

20,000,000

For"i.~n

Currcnn' serIes _ _ _ _ _ __

Speci.,: Funds Cl'rti(ll.1tCS

TrL''',ur~

7,0361 711,959

.rhk-btedness _ _ _ __

2,303,59~,OOO

notes ______________

Tre.ls,.r, bonds _ _ _ _ _ _ _ _

33,880,451,000

Total intLCL·st-be .• Clng _ _ _ _ _ _ _ _ _ _ _ _ ___
~L.l(Ur\:d,

lntl.'fCSt-cca:-'L·J _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __

Dearing n\,) interL'~(:
~{'des ~d\ ln~~

l;ni(('li

55,013,104

Stamps _ _ _ __

688 1 284
3,171,0001 000

Excess 1'.llfits td.' tdun.! bonJs
Intern .• r , \lonet,ICY l:unJ nores _ _ __

~64,261,OOO

Intern.,,': DCVel,)I'. Ass'n. notes _ _ __

125,000,000
42,589,267

Inter- :\0.., :can j)L·\Tlop. Bank notes
l·ni(L·,. ".11ions bonds-Various programs_
TOI.lI
Gu.lC.mtL·.·.1 ,)bligations (not held by Treasury):
InterL·st-he.lring:
Debentures: f.II .. \. &:
\latuced,

1)(

817,095,3.50
848,525

:-;tad. Bds.

intC'reS("L-L'a~L'd

817,943,87$

Gr.lnd totoll outstolndin;:
BolI.lnce f.lce amount oi ohligations issuable under ,.:,,)\ , ... "lhority

-----------

RECONCILEMENT WITH TABLE III OF THE DAILY STATEMENT OF THE UNITED STATES TREASURY

As of
Gross publl'

March 31, 196h.","~__

.L·bt this J;;te

Guarolnteed , "jigati,)n, n,n o\\ned by Treasury _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Total ;:ross
DeJuc[ JL'ht

,,(,Iic tich( ..on.! ...:uarolnteed obligations _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
:I\)t

SUbjL'1. (

Total Jeb[ . . l..)'l:ct

~I..)

....

~J.[lJtory

limir..ltiOn

D-1200

limitation

---------------------------

~--------------------~--------

STATUTORY OE13T LIMITATION

Karch 31, 1964

As of

Washington,

Apr.13, 1964

Seclion 21 of Second Liberty Bond ACI, as amended, provides that the face amount of obligations issued under authority of
,I ACI, and the face amount of obligations guaranteed as to principal and interest by the United States (except such guaranteed

,igations as may be held by the Secretary of the Trea~lIry), "Shall not exceed in the aggrel;ate 5285,000,000 000 (Ace of June
195<); U.S.c.., tide 31, sec. 7C;7b), outstanding at anyone time. ror purposes of this sectIOn the current reJemprion value of
~ obligation issu~? on a discount basis which is redeemable prior to maturity at the ?ption of the. holder sha.ll he c<?ns!dered
its face amount.
The Act of November 26 1(6) (P.L. R8-187 88th Congress) prOVides that dUring the period beginning on
(ember 1,1963, and ending on June 30, 19('4, the above limitation shall be temporarily increased [0 S309,OOO,OOO,000. Because
variati<)ns in the timing of revenue receipts, the public debt limit as increased by the preceding sentence is further increased
ou/(h June 29. 1964, by S6,OOO,OOO,000.
The following table shows the face amount oi ohligations ourstanding and the iac!.' amount which can still be issued under
s limitation;
,tal fa .. e .• mount that may be \)U{st,\nding at anyone time
hll_hlndi"J.t '1ltliaRtinl1~ i .... ut<J UHih:tf S~¢tt"J Ltburry lhtHU !\l.'t, it'" alt1cnd(,..IJ
Inter, _,,-bearing;
1'r,' .• "ur), bills _ _ _ _ _ _ _

$315,000,000,000

Certi,ic.Hes of ,ndebtedness _ _ _ __
Tre •• "ury 'l\)(es _ _ _ _ _ _ _ _ _ __

$52,548,313,000
4,198,246,000

Bonds Tre.lsury _ _ _ _ _ _ _ _ _ _ _ __
*S.l\'ing" ,Currt'n, redempt,,)n \'alu~) __

64,1478,~2,OOO

$121,224,861,000

86,998,061,350

49,101,Wi2,818

5,143,.503
91,862,000
24,090,000
3,613 3 482,000

CnitL'u ~tate" I{etirement Plan bond" _
Dt·po"r.,ry _ _ _ _ _ _ _ _ _ __

R. L. ,\. series
In\"\.:~lIn('n( series _ _ _ _ __

139,840,090,131

Cl'rrillc.lle~

of InJebtedness
Foreign series _ _ _ _ _ _ _ _ __

215,000,000
30,120,482

Foreign Currency "ertes
Treasury note" Forci~n

1,8,333,423

.... eric~

Treasury hond" -

1,083,648,909
15,197,154

Forei,en (-urr"nn' "erte" _ _ _ _ __
(ertiti\.'.l(('.'-) _ _ _ _ _ _ __

Trc<.l:-,.\If\

2O~OOO,000

20,000,000

Tre.l:-- . .lry hond ... _ _ _ _ __

Speci,,; Funds Cenirll..lCeS
Trl."u~ury

.rhichrcJness _ _ _ __

note~

_ _ _ _ _ _ _ _ __

T(l'.""r~ bond"
Total interc "t-be .. rlng

1,0)6,111,959
2,303,591,000
333 880,451z000

\1atuf<.:d. In(L·rcsr ... ccJ. ... \.:J _ _ _ _ _ _ _ _ _ _ _

I3earin~

nl,)

in(CfL' .... [·

Cnite,1 '.r.des S." In,.:' Stamps _ _ _ __
Exl't·~,

prtJfit, 1,1.,

IUI1.1 hunJ1>

Imcrn .• ,'i \lonu'HY Fund nOtes _ _ _ __
Imun.d'; DeVelOp. Ass'n. note" _ _ __
Inru-:\~.(

iean Dc·\'elor. Bank no,e" __ _

Cnitl". '\"lion" oon,j,,·Various program,
TOl.li

55,013,104
688,284
3,171,000,000
164,261,000
125,000,000
42,,89,267

3,558,551,655
309,226,995,907

---------------- --------

:;uar"ntc'('.j

()bligation~

(nol held oy Tre"",,\' I:

Imc(c,t-bc:aring:

811,095,350
848,525

Debenture,,; 1'.11 ..\, '" Il( -;t.ld. Bcb.
,\Iatured, intere"t-cl'a"n!

811,943,815

Grand total out"ran.lill;":
dance face amount 01 ohlig.ltion" i""uable un,ler

"!,,

,,(ll()rir\'

- --

-----------

310,044,939,182

4,955,060,218

RECONCILEMENT WITH TABLE III OF THE DAILY STATEMENT OF THE UNITED STATES TREASURY
As of __ March

..3J..,

_1964

oS publj< "eb! thi" ,b(t'

,rantceJ ":.iigation,,

[101

o"ned by Trea"ury _____ _

~l gro"" j,,,blic 1khr .11,,1 ,~"ar,.nteed obligation"
/J<':(

de\)\

JnJ\

.... ub)

:~I Jcht . . 1.,lll... C(

, \ (

lI... J

.'.i..~i..uldI\" Inni~J~l()_'!)

:!n,!r,\IIOJl

310,044,939,782

..... i.'

,c .

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R RELEASE: AFTER 1:00 P.M. EST
ESDAY, APRIL 14, 1964

ADDRESS BY THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY OF THE UNITED STATES
~D

UNITED STATES GOVERNOR OF THE INTER-AMERICAN DEVELOPMENT B~K
BEFORE
THE FIFTH ANNUAL MEETING OF THE GOVERNORS OF THE BANK
AT THE LEGISLATIVE PALACE, PANAMA CITY, PANAMA
TUESDAY, APRIL 14, 1964

It is particularly fitting that we are holding our Fifth Annual
eting of the Bank's Governors today, which is being observed in my
llntrv as Pan American Day.
There could be no more fitting place
-~ --~ ~~o~nri~ city. which

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R RELEASE: AFTER 1:00 P.M. EST
ESDAY, APRIL 14, 1964

ADDRESS BY THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY OF THE UNITED STATES
AND
UNITED STATES GOVERNOR OF THE INTER-AMERICAN DEVELOPMENT BANK
BEFORE
THE FIFTH ANNUAL MEETING OF THE GOVERNORS OF THE BANK
AT THE LEGISLATIVE PALACE, PANAMA CITY, PANAMA
TUESDAY, APRIL 14, 1964

It is particularly fitting that we are holding our Fifth Annual
eeting of the Bank's Governors today, which is being observed in my
ountry as Pan American Day. There could be no more fitting place
Jr today's meeting than this honored and historic city, which
olivar chose for the first Inter-American Conference, The Congress
f Panama.
This is the l40th year since Bolivar prophesied proudly and
old1y that "a hundred centuries hence, posterity, searching for
he origin of our public law and recalling the compacts that
olidified its destiny, will touch with respect the protocols of
he Isthmus. In them will be found the plan of our first alliances
hat will have marked the beginning of our relation with the
niverse."
The Bank, then, could not be more "at home" than here in
'anama, where Inter-American meetings first were launched, for the
lank in the best Inter-American tradition is a strong and progressive
=orce in the social and economic development of the Hemisphere.
In 1963, the Inter-American Development Bank completed its
:hird full year of operations and once again compiled an impressive
~ecord of achievement.
To support the economic and social development of its Latin
\merican members, the Bank last year authorized 56 new loans, for
~ total of $259 million.
Its lifetime loan approvals at the end of
~he year had reached the impressive figure of $875 million, and
~ctivity under these loans is proceeding at a sharply accelerated
pace. Total disbursements at the end of 1963 were $206 million -nore than three times larger than disbursements at the end of 1962.
D-1201

- 2 -

Impressive as they are, these statistics can give us only a
limited appreciation of the truly remarkable work which the Bank's
ledicated management and staff have accomplished in the past three
{ears. Each loan, for example, reflects weeks and months of careful
scrutiny and planning. Behind each loan, moreover, lie several
3dditiona1 applications for projects found wanting or not yet ready
for execution, but which nonetheless required -- and merited -time and effort to review.
The Bank has also continued its efforts to mobilize private
for Latin American deve1cpment in the highly industrialized
cree countries. Last year the Bank was able to sell a total of
?7.4 million in additional participation -- without any guarantee -Ln the United States, Canada, and Western Europe. As you know, the
3ank has just floated its third successful bond issue -- the second
Ln the United States -- in the amount of $50 million. In addition,
:he Bank is actively negotiating for further flotations in various
vestern European countries. I am confident that these efforts
lill soon bear fruit. Additional external capital has also been
lobilized by the Bank through arrangements for the joint financing
)f projects. As stated in the Annual Report, five of the Bank's
)rdinary capital loans last year were made in association with other
~xternal sources of capital.
~apita1

Equally important -- although perhaps less immediately evident
.n our usual review of the Bank's activities -- is the fact that
:he Bank's lending policies have stimulated the mobilization of very
.arge amounts of domestic capital in its member countries. The
:otal cost of projects financed by the $875 million of the Bank's
oans amounts to nearly $2.5 billion most of the additional cost -ome $1.5 billion of it -- represents the direct participation of
ocal interests -- governments, firms, and individuals -- and their
rovision of the domestic capital required.
In directing the Bank's lending policies, President Herrera has
ncreasingly emphasized the encouragement of regional integration.
t seems to me all to the good that the Bank should give priority
o loans having a "regional integration component" -- for regional
ntegration is essential if an adequate rate of economic growth is
o be achieved in Latin America. I note that in the pursuit of
hese policies the Bank has extended a $6 million line of credit to
he Central American Bank For Economic Integration and has made a
3 million loan to the national universities of the five Central
nerican countries in order to insure technical progress within the
ramework of that area's vigorous movement towards regional
1tegration.

- 3 During the past year, the Bank moved to implement the export
credits program which the Governors approved in Caracas. The Bank
has given specific form to the general directive laid down by the
Governors and has completed the detailed regulations to govern this
new activity. The $30 million of ordinary capital resources allocated
to this program has now been put to work by the grant of lines of
credit to several member countries.
I am sure we will all watch
with great interest and expectation the important role this export
financing program can play in the development of capital goods
production, export diversification, reduced trade barriers, and
regional integration.
The pace of the Bank's activities required some time ago that
the Governors consider an increase in the Bank's lendable resources.
The process begun two years ago in Buenos Aires has now been
completed and the authorized ordinary capital of the Bank now
stands at the equivalent of an imposing $2.15 billion, of which
$475 million is the authorized paid-in capital stock and $1,675
million is callable capital. Our Congress in January authorized
United States participation in this increase to the extent of
$411.8 million in callable capital, which will be subscribed in two
installments -- this year and next -- along with the subscription
of the Bank's other members. With the Bank's demonstrated success
in raising funds in private capital markets, the increased authorized
capital provides ample assurance of adequate resources for projects
on standard "bankable" terms for several years to come.
We have at the moment no such assurance on the availability of
Bank funds for so-called "soft" loans -- loans designed to supplement
those made on ordinary banking terms. Agreement was reached
earlier this year on an increase of $73.2 million in the Fund For
Special Operations, of which $50 million will be paid in by my
Government on April 28.
This will bring the total capital of the
Fund For Special Operations to the equivalent of $219.5 million,
of which $150 million will have been paid in by the United States.
In addition, our Congress last year appropriated an additional
$131 million to increase the Social Progress Trust Fund
administered by the Bank.
These additional funds for loans on easy
repayment terms will suffice for less than one year of lending
operations at an adequate rate.
It is urgent, therefore, that the
Governors address themselves once again to the future of the Bank's
lending activities on soft terms and begin action to obtain the
requisite funds.

- 4 At our last meeting in Caracas, and again in the Report on this
matter which is now before you, my Government has expressed its view
that the Bank would be strengthened if at this point in its life -and at this juncture of the Alliance For Progress -- the lending
windows to which the United States and other member countries provide
funds were reduced from the existing three to two. We have, therefore,
proposed that there be no further replenishment of the Social Progress
Trust Fund and that, instead, there be a substantial enlargement of
the Fund for Special Operations.
The Social Progress Trust Fund, as you know, grew directly from
the Act of Bogota and the emphasis which at that time we all agreed
to place on social development in Latin America. It was unfortunately
all too true that social progress in the Hemisphere had been sadly
neglected, and therefore it was both essential and proper that the
Act of Bogota call attention to the priority needs of the social
sector.
The Act of Bogota, as we all know, was soon succeeded by the
great milestone of hemispheric dedication and cooperation, the
Charter of Punta Del Este. That Chdrter gave formal recognition
to the fact that social and economic progress are mutuallyreinforcing objectives. It also called for comprehensive planning
of the path to progress -- planning that would make it necessary to
reduce or remove any sharp distinction between economic and social
projects. The mark of well-prepared plans -- which, happily, are
now well-advanced in a number of countries -- is the rational
allocation of available resources between the economic and social
sectors, taking full account of their interdependence. We can
expect, therefore, that the Bank, in deciding upon particular
projects for financing, will increasingly take into account both
economic and social considerations and not just one or the other.
With this approach, only two sources of financing, one hard, one
soft, seem necessary -- the choice between them to be determined,
not necessarily just by the nature of the project, but also by the
situation of the borrower, or other special circumstances.
In the context of these considerations, I hope that we can
agree at this meeting to seek the commitment of our governments to
a three-year program to enlarge the Funds For Special Operations
by an amount equal to $300 million per annum, of which the United
States would contribute $250 million, and the other members of the
Bank, $50 million, all in our own national currencies.
This enlargement, which would enable the Fund to make loans
on special terms for the purposes currently being financed by both
the Fund and the Social Progress Trust Fund, can be accomplished
without any change in the agreement establishing the Inter-American
Developm('nL Bcwk. Tfiis-would simplify the legislative problems of

- 5 ,,

the member governments. This is particularly desirable as far as the
United States is concerned. In view of our forthcoming national
election, the United States Congress can be expected to adjourn
somewhat earlier in the year than has recently been the case. Delay
in reaching agreement on this matter or the introduction of
complexities involving basic changes in the Bank's Charter would
greatly increase our difficulty in obtaining Congressional approval
this year -- as can be attested by the members of the United States
Congress who have come here from Washington to attend this meeting
as members of our Delegation.
We look for the Bank to continue and expand its role as the
"Bank Of The Alliance." During the past year, the Bank has assumed
new duties as financial agent in the mobilization of external
resources for national development programs, in filling a special
advisory role with various entities concerned with the provision of
external development financing and, finally, as technical advisor
to the newly established Inter-American Alliance For Progress
Committee (known as ClAP). In connection especially with the
latter body, it seems appropriate for the Bank to assume a more
active role in the programing of development assistance and in
directing its activities toward the support of well-designed
national and regional programs.
Turning to the Alliance For Progress, in which the Bank plays
such an important role, I think we must, in honsty, acknowledge
that the present moment is one characterized by skepticism and
doubt, both in Latin America and in the United States. Unquestionably,
we still have a long way to go before we achieve the objectives
envisioned in the Charter of Punta Del Este. But while we face that
fact, let it not obscure the equally important fact that, by every
realistic measure, we have come a long way.
First, in the recent creation of the Inter-American Alliance
For Progress Committee, ClAP, we have established a sound mechanism
for hemispheric coordination and guidance within the framework of
the Alliance. Our appointment of Ambassador Teodoro Moscoso as United
States representative has made clear that the United States wishes
to play an active role in this Committee, to which President Johnson
has pledged "our full support."
Second, we should not lose sight of the fact that eleven of
the nineteen Latin American member countries have been achieving
the minimum 2-1/2 percent per capita growth target set at Punta Del
Este. Equally important, perhaps, is the fact that throughout the
Hemisphere we have witnessed in the past two years the creation of

- 6 -

new institutions vital to the pace of future growth. The Bank itself
has participated in the establishment or reform of a variety of
intermediate credit institutions -- development banks, agricultural
credit banks, savings and loan and housing finance institutions -all critical in the process of domestic resource mobilization.
Intense efforts are being devoted to the reform of tax structures,
improved tax collection, a more equitable and productive distribution
of land, and improved facilities in the fields of health and
education.
These are the very sinews of growth, and the attention and
activity focused in these areas in the past two years has far
surpassed anything ever before witnessed in the Hemisphere. The
fruits of endeavors such as these will not miraculously ripen
overnight -- on the contrary, progress will be difficult and even
hazardous. But without these efforts, progress simply will not
occur. We therefore have a clear choice before us:
- Shall we hold timorously back, afraid to move
because we might stir up waters that could become troubled?
- Or shall we venture forth on new paths -- but
always within a framework of free and democratic
institutions
that will offer all of our peoples a fair
share in the gradually ripening fruit of our mutual
endeavors?
On behalf of my country, I urge that we move without timidity

and with confidence.
So far as external funds are concerned, taking into full account
the self-help measures of the various countries of Latin America
in connection with their commitments under the Charter of Punta Del
Este, the United States continues to be prepared to provide public
assistance in the order of magnitude suggested by the Charter.
As our AID Administrator, Mr. David Bell, emphasized in his address
to the Governors last year, the pace at which aid can be provided
must depend upon a series of preparatory and correlated actions.
Careful advance planning and sound project implementation takes
time, and there will be inevitable lags between commitment and
disbursement of funds. I have pointed out the close attention the
Bank has given to the problem of project execution and loan
disbursements during the past year, and wish to assure you that our
own financing institutions have also made every effort -- consistent
with the overriding requirements of sound project implementation -to expedite disbursement.

- 7 -

·'0

Among the disappointments of the past two years, I might note
that the commitment of external funds from Europe has thus far
been less than had been hoped. Recently there has been new evidence
of European interest in Latin America symbolized by the recent visits
of President De Gaulle and President Luebke. The United States
wholeheartedly welcomes these renewed signs of European interest
and hopes that the interest will be clearly manifested in an increase
in the kinds of low-interest, long-term development loans so badly
needed by Latin America. In addition to liberal terms, we would
hope that European assistance to Latin America would be carefully
related to the overall planning effort and to the system of
priorities established within the context of the Alliance For
Progress. The proposal of the Governor for Argentina raises
interesting possibilities in this respect, and I can state that my
delegation is in full accord with the objectives underlying his
proposal.
I should like once again to emphasize in the strongest terms
the need for the Latin American countries themselves to be on
guard against terms of assistance from any source which would create
an unacceptable burden for the future. The indiscriminate and
unrestrained acceptance of short -- and medium-term suppliers
credits -- in cases where longer-term development loans are the
real need -- all too often simply creates an unwieldly and unmanageable
problem which can very quickly assume crisis proportions, leading to
a slowdown in the pace of development.
The field of private investment is another area where flows
of external capital have proved disappointing. In this connection,
we must constantly bear in mind the fact that the foreign investor
always has alternative possibilities for investment of his capital.
Given the high levels of current economic activity in the United
States and Europe, the opportunities for profitable investment at
home in both areas are relatively great. In order to attract
private funds from the United States or Europe, or to induce the
investment of local private capital, a country -- whether already
industrialized or developing -- must maintain an investment
climate which offers a reasonable prospect that a sound project
will yield a return commensurate with the risk involved. The
choice is for each country to make. The results will depend, to a
very great extent, upon that choice.
In the United States over the past three years we have
adopted a series of tax measures to increase the relative
attractiveness of investment at home as compared with investment
in other free industrialized countries. Countries that deliberately
hamper the investment of private capital or fail to provide a

- 8 hospitable climate, should be aware of the fact that they are
foregoing sources of financing and technical knowledge of great
importance to their future growth -- and to the strength of their
international position -- sources which cannot possibly be replaced
by public funds.

An important corollary of a favorable "investment climate"
is a country's ability to raise capital abroad. In this connection
the recent experience of Mexico comes to mind: Mexico has been
able to float two highly successful bond issues in the capital
markets of the United States -- one last year, and a second just
two weeks ago -- for a total of $65 million. It goes without
saying that these Mexican issues were very welcome, and we hope
that other Latin American countries will be able to follow this
example in mobilizing private external funds for their development.
I should mention here that the Interest Equalization Tax on
foreign securities which has been proposed to the United States
Congress by my Government is not designed to apply to the securities
of the Latin American countries.
Finally, I cannot let this occasion pass without mention
of the World Trade and Development Conference now under way in
Geneva. I am aware of the intense interest which your Governments
have in this Conference, and in its purpose of helping to ease the
problem facing the developing world. That endeavor is, of course,
one in which the United States has long taken the lead, and I would
simply like to emphasize my country's determination to continue its
efforts, in every feasible way, to serve that purpose.
Mr. Chairman, the tangible evidence of the Bank's progress
placed before us at this meeting symbolizes the activity, movement,
and forward progress being accomplished throughout Latin America
under the guidance of the Charter of Punta Del Este. I am confident
that at our meeting next year, and in the years ahead, we will find
ourselves increasingly able to meet the needs of Latin America and
of Western Hemisphere solidarity.

000

- 3 -

a.nd

exchnn~c

tenders will receive equn.1 treatment.

Cash adjustments will be made

for differences between the par value of maturing bills accepted in exchange and
thc issue price of the new bills.
The income derived from Trcv..sury 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
treotm~nt,

as such, under the Internal Revenue Code of 1954.

The bills are subject

to estRte, inheritance, gift or other excise taxes, whether Federal or state, but
are exempt from all taxation now or hereaster imposed on the principal or interest
thereof by any state, or any of the possessions of the United states, or by any
local taxing a.uthority.

For purpoGes of

t8:~ation

the em.ount 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

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 a.ctu.ally
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 not ice, 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.

- 2 -

decimals, e. g., 99.925.

Fractions

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 ot the customers are set forth in such tenders.

Others than

banking institutions will not be pennitted 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 gua.ra.nty of payment by an incorporated bank or trust company.
IlDmediately a:rter 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 a.dvised of the acceptance or rejection thereof.

The

secretary of the Treasury expressly reserves the right to accept or reject any
or a.1l tenders, in whole or in part, and his action in tmy such respect shall be
Subject to these reserv.ations, noncompetitive tenders for $ 200,000 or
~
less for the additional bills dated
January 23, 1964
, (91
days remainfinal.

1ng until maturity date on

$100 000 or less for the

July W64

) tmd noncompetitive tenders for

182 -day bills without stated price from

tmy

'one

bidder will be accepted in full at the average price (in three dec1mal.s) ot accepted competitive bids tor the respective issues.

Settlement for accepted ten-

ders in accordance with the bids must be made or completed at the Federal Reserve
Banks on

April

W 964

, in cash or other immediately available funds or

in a like face amount of Treasury bills maturing

April 2W64

•

Cash

TREASURY DEPARTMENT

Washington
April 15, 1964

FOR 1}1MEDIATE RELEASF
~r
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 $

2,100~,000

cash and in exchange for Treasury bills maturing

April

, or thereabouts, for

~964

,in the amount

of $ 2,103,123, 000 , as follows:

;a;&
91 -day bills (to maturity date) to be issued

xmx

April 2W964

in the amount of $ 1,200,000,000 , or thereabouts, represent~
ing an additional amount of bills dated January~ 1964
,
and to mature

July

23~64

amount of $ 800 ,~oo

, originally issued in the

, the additional and original bills

to be freely interchangeable.
, or thereabouts, to be dated
182 -day bills, for $ 900'088r200
WlX
~
April Hh1964
, and to mature __
Oc_t_o_b_e_r~2~2±,_1_9_6_4_ _

lUJ

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 fom only,

Monday, April 20, 1964

fBiEach tender

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

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

April 15, 1964
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
$2,100,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing April 23, 1964,
in the amount of
$ 2,103,123,000, as follows:
91-day bills (to maturity date) to be issued April 23, 1964,
1n the amount of $ 1,200,000,000, or thereabouts, representing an
additional amount of bills dated January 23,1964, and to
mature July 23,1964,
originally issued in the amount of
$800,615,000,
the additional and original bills to be freely
interchangeable.
182-day bills, for $900,000,000,
or thereabouts, to be dated
April 23, 1964,
and to mature October 22, 1964.
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.ho~c, Qna-thirty p.m., Eastern Standard
time, Monday, Aprll LU, 1~b4.
Tenders will not be
received at the Treasury De~artment, 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 3anks 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 rnust 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.

D-1202

- 2 Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, followin~ 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 01' 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
January 23, 1964, (91~ays remaining until maturit¥ date on
Julv 23 1964)
and noncompetitive tenders for ~ 100,000
or less'for the 182-day bills without stated price from anyone
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 ir. accordance with the bids must be
made or completed at the Federal Reserve Banks on April 23, 1964,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing April 23,1964.
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 Treasu17 bills, whether interest or
gain from the sale or other disposition of the bills, does not have
any exemption, as such, and lOBS 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
~~venue Code of 1954 the amount of discount at which bills issued
h~:"~u:Jder are sold is not considered to accrue until such bills are
sO:d, redeemed or otherwise disposed of, and such bills are excluded
~rom 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. 418 (current revision) and this
n::ltice prescribe the terms of t-.he Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained from
any Peieral Reserve Bank or Branch.
000

TREASURY DEPARTMENT

April 16, 1964
FOR IMMEDIATE RELEASE
DIRECTOR OF PRACTICE ANNOUNCES
SPECIAL ENROLLMENT EXAMINATION
Thomas J. Reilly, Director of Practice, U. S. Treasury
Department, has announced that the Special Enrollment Examination,
for those seeking to qualify for enrollment to practice as agents
before the Internal Revenue Service, will be held at IRS District
Offices September 24 and 25, 1964.

The examination will be similar

in content to that held in 1963.
The Special Enrollment Examination Program presents an
opportunity each year for those who are not attorneys, certified
public accountants, nor qualified former Internal Revenue Service
employees, to establish the proof of competence which is required
of tax practitioners who seek to acquire enrollment status in order
to represent their clients at all levels of procedure before the
Service.

The program is of special interest to the public

accountants of the Nation.
Applications, which are to be filed with the Director of
Practice, Washington, D. C., and detailed information concerning the
examination, may be obtained from Internal Revenue Service District
Offices.

The examination fee of $25.00, established in 1963,

continues to be effective for 1964.
000

TREASURY DEPARTMENT

The examination will be similar

The program is of special interest to the public

The examination fee of $25.00, established in 1963,

continues to be effective for 1964.
000

D-1203

-LlAn

April 20, 1 _

alZWSPAP&1&S,

'h.''''' !p!'1l 21. 1?64.

RESULTS 01 TREASURY'S WEElLY BILL OPRum

, . '..-nJ"1 Departaeat anno_oed la.t .'YeD1Dc

that ~ ' ••

'.N fer

.en..

two

'nanI'J bU1., ODe ••ri.. \0 be aD actdltloul 1••• of t . . bUla cia'*' J anuarl 2), l~,
ad \be ot...r ..ne. too be datect !prU 2), 1961&, wbion wn ott. . . - "rU 15, .....

. . . . . • 1. toM Pe*ral auarn Banta on Api'll 20. , . . . . . WN ia'd.\M t.r n,200,OOO.IXX),
or t.. . . . . . . . . ot 91-da7 bill• •ad tor .900,000,000, or the........ , .f Hl2-day bUll.
lbe cletal1. ot tbe tva .eri. . .re •• rOll~1
idlE or lCCJ.I:P'l'~
C<JlPITITIVE BIDS.

IlP
Low
AftftI.
1~

17~

fOhl,

9l-dq

rrea.UI"1

bll.la

..turiDg Jul.]' 23,

Appl'OS.

Price
99.128
99.12)

99.12,

ADRal Rate

).1& SO.
3.469'[.

3.46 3C

-''!1!1

111..-,. b •••ury 0111.

I
I
I

P£1ft
".lA

•
I
I

O!!t~er 22, 1~
Apn-ox.
Y.
Annual

3.651~
).66S~

lIa?

••

J.662S !I

~!~,

nate

of tJw aao'lDt ot 9l-cSa7 bUlB bid tor at tbe low pn. _ ....,ted
ot toM _01II1t ot 182-da1 biUa bid tor at tbe low pl'1_ . . . . . .pted

tuDEdS 'PP.LI!D Foa Mii) ,A';ClPTED II FEDEa.\L

!1f\r1o\
Ioo\OD
fork

Ptdla4elph1a
Cl~

~iVE

'PRllacl 'or
•
1.$,)81,000

AcC!J)'t!4
$ 1$,S81,ooo

1,5ll,859,OOO
29,896,000

121,7S9,000

2),OSS,000

14,891,000

1l,b6a,ooo

10,861,000
21,066,000

AtlaDta

)1,166,000
175,069,000
:)8,622,000
19,18S,ooo

U2,269,OOO
32,)62,000
12,OSS,000

3),4)1,000
)1,2"',000

)),4)7,000
U,w.,OOO

Applied , .

:.
I
I

2),OSS,000.

ilalllolld

Ob1eqo
St. LtHd..
H1aDaapoll.
lanee. City
00]..
San Fran.iaco

I
I
I
I
I
I
I

.DI1'I'1lCf8.

1,9'70,000

1,3S1.7I),ooo
9.1"~

11,711,010

Accept.ed

2,970,000
627,197 ,000
3,791,000
10,962,000

2,"',000

2,4bB,OOO

181,610.000

82,960,000

I,S~OOO

5,2)4,000

U.""-.ooo

10,064,000

lS~,ooo

14,775,000

S.... WOOO

lO.OOS,GOO

3,30),000

,,17,,000
218.926,000
ITl,81!,OOO I
210'''''000 1)1,9)9,0Q2
TOTAl$ '2,159,510,000
'1,200,069.0q0!l $1.162,111,000 S900,8GO,OOO ~
"
~ lDGludea I2)S,347,000 DOD~lt.lft t.endon aceepi.ed at. U. .,..... rrice at 99.lJJ
if IDCl.. . 169,061,000 DOUOIIpet1tlve Mad... aceepted. . , 'lIB ......... price of. 98.a9

OD a OOUPOD i ••• of the __ lq\h u4 for
t.bne bUla ww.d PI'OYl.4a yielcb of 3.SI".

t_ .... aMat. 1Jn'n\e4,. the retotD.

ter the 9l-da7 ld.118, ad 3.18~, tor ,.
Interen rat.. OIl bUll are quoted 18 t.e... of baM d i. scout. w1U
t.. Ntllftl rela\ecl to u. r ...
of t.ba bill. paJlllWt a' _,. .1t., r3thel' tbll
the a..-t. m..t.ecs aDd t.1 .. 1eac'h in act.ul . . . . • 1 . , . Nla\ed'to a )6041
rur. Ia eoatraat, y1e1da OD cent.1'icat.•• , DOt... a" .ada aN ~nuted in t.eI'II
CJt Urtenat. on t._ . . . . . Uvut.e4, and relate tU • . , . . .t da78 1'\el'1r.j ining iG •
at_raR ~ pel"1od t.o tbe aet.ual D-oer of ..,. 18
per1ecl, \ii th sell1a~pOucliDC it ItO" tbAD
eoupoa pert.od 18 1nftlYeCl.
182-4&7 bUla.

.-.0"

TREASURY DEPARTMENT

RBIBAS! J.. K. NEWSPAPERS,
Tue.day, April 21, 1964.

April 20,

1964

RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
Treasury bUls, one seriss to be an additional issue of the bills dated January 23, 1964,
and the other series to be dated April 23, 1964, which were offered on April 15, were
opened at the Federal Reaerve Banks on April 20. Tenders were invited for $1,200,000,000,
or thereabouts, of 91-day bills and for $900,000,000, or thereabouts, of 182-day bills.
The details of the two series are as follows:

91-day Treasury bills
maturing July 23, 1964
Approx. Equiv.
Annual Rate
Price

RANGE OF ACCEPrED

CCMPETITIVE BIDS:
High
Low
Average

99.128
99.123
99.125

3.450%
3.469%
3.463%

·:

182-day Treasury bills
maturing October 22, 1964
Approx. EqUIv •
Price
Annual Rate
98.154
98.147
98.149

3.651%
3.665%
3.662%

70% of the amount of 9l-day bills bid for at the low price was accepted
17% of the amount of 182-day bills bid for at the low price was accepted
TOTAL TENDEaS APPLIED FOR AND ACCEPl'ED BY FEDERAL RESERVE DISTRICTS:

District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. lDuis
Minneapolis
Kansas City
Dallas
San Francisco
TOO'ALS

AEE1ied For
15,581,000
1,531,859,000
29,898,000
23,055,000
11,468,000
31,166,000
175,069,000
38,622,000
19,185,000
33,437,000
31,244,000

•

218.z926.!000
$2,159,510,000

AEE1ied For
AcceEted
2,970,000
$
$ 15,581,000
1,351,723,000
721,759,000
9,188,000
14,897,000
11,782,000
23,055,000
2,948,000
10,868,000
8,534,000
27,066,000
181,620,000
112,269,000
12,064,000
32,362,000 :
5,888,000
12,055,000 •
15,44l,000
33,437,000
10,005,000
22,844,000 •
250
173 z876 z000
z059 z000
$1,200,069,000 ~/ $1,862,222,000

·
·

AcceEted
$ 2,970,000
627,197,000
3,791,000
10,982,000
2,448,000
5,234,000
82,960,000
10,064,000
3,305,000
14,775,000
5,175,000
131 z939 z000

$900,840,000

£I

Includes $235,347,000 noncompetitive tenders accepted at the average price of 99.125
~I Includes $69,061,000 noncompetitive tenders accepted at the average price of 98.149
LJ On a coupon issue of the sarre length and for the same amount invested, the return on
these bills would provide yields of 3.54%, for the 91-day bills, and 3.78%, 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 tenns
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 it more than o~ coupon period is involved.

D-1204

108
J -

:)rocccdin:~J) and .:.ire

l1C:':

cl.c3:',;ncd cith2r to mal~e it more or less

1 i:~l' ly that pdrti<;L'L:.,I" an t idumpins rn'occed ings \vi 11 resu 1 t in

The cban~cs l-esult ~ron: an intensive study of the existing

~e~~ulatic)n~;

c:ond'.1cted

';)V

the Treasury, the Bureau of Customs, by

academic c0nsuJ.tants cffi?luyed Ear this purpose, and from the views

c,.~pressed 2t 2

~,;ell-attcnded

public hearinz; held last January 23 which

"Jas prcsided over by .\ssistant .Jccretary

0;:

th2 Treasury, James A. Reec

80rrnents on the proposed amendments ';'7ill be received during the

::or,
n c"'t
.....
v .... '

d~vc
<..iJ.;J)

in ehc

li~ht

()~

\.;hich the proposals will again be

ccnsidered by the Treasury Derartment.

- 2 -

Treasury is satisfied that the nature of the material requires
confidential treatment.

At present any evidence submitted in

confidence in an antidumping proceeding is treated as confidential.
Other major changes which are proposed are:

First, the

establishment of standards for determining when differences in the
volumes of sales abroad and in the United States provide a basis
for making quantity allowances in price comparisons; second, the
elimination, in large part, of the retroactive application of

dump~

duties; and, third, allowing exporters to guarantee importers
against the imposition of dumping duties in connection with sales
which occur before Customs has issued a public finding that there
is reason to believe or suspect that sales are being made at a
dumping price.
The changes in the regulations proposed by the Treasury are
designed to increase the fairness and openess of the antidumping

D R AFT

I
'v

i
L'~'

April 21, 1964

or Release A.M. Newspapers
f Ap"ril
1964
F,
;J.. '2-

TREASURY PROPOSES CHANGES
IN ANTIDUMPING REGULATIONS
Publication of proposed amendments of its antidumping regulat1..
was announced today by the Treasury Department.
The principal effect of the proposals, if adopted, would be to
provide importers, exporters and domestic industry alike with
additional information as to evidence produced by interested per...
to show either the existence or non-existence of sales at dumptDa
prices.
The new proposals would also allow interested persons to
argue their respective positions to the Treasury in each other'.
presence, rather than separately as has been the ordinary practice

up to now.

Under the proposals evidentiary material would be

accepted by the Treasury on a confidential basis only if the

TREASURY DEPARTMENT

FOR RELEASE: A.M. NEWSPAPERS
APRIL 22, 1964

April 21, 1964

-jyE7PAY,

TREASURY PROPOSES CHANGES IN
ANTIDUMPING REGULATIONS
Publication of proposed amendments of its antidumping regulations
was announced today by the Treasury Department.
The principal effect of
provide importers, exporters
additional information as to
to show either the existence
prices.

the proposals, if adopted, would be to
and domestic industry alike with
evidence produced by interested persons
or non-existence of sales at dumping

The new proposals would also allow interested persons to argue
their respective positions to the Treasury in each other's
presence, rather than separately as has been the ordinary practice
up to now. Under the proposals evidentiary material would be
accepted by the Treasury on a confidential basis only if the
Treasury is satisfied that the nature of the material requires
confidential treatment. At present any evidence submitted in
confidence in an antidumping proceeding is treated as confidential.
Other major changes which are proposed are: First, the
establishment of standards for determining when differences in the
volumes of sales abroad and in the United States provide a basis
for making quantity allowances in price comparisons; second, the
elimination, in large part, of the retroactive application of dumping
duties; and, third, allowing exporters to guarantee importers against
the imposition of dumping duties in connection with sales which
occur before Customs has issued a public finding that there is reason
to believe or suspect that sales are being made at a dumping price.
The changes in the regulations proposed by the Treasury are
designed to increase the fairness and openess of the antidumping
proceedings, and are not designed either to make it more or less
likely that particular antidumping proceedings will result in
determinatio~ of dumping.

D-120S

- 2 -

The changes result from an intensive study of the existing
regulations conducted by the Treasury, the Bureau of Customs, by
academic consultants employed for this purpose, and from the views
expressed at a well-attended public hearing held last January 23
which was presided over by Assistant Secretary of the Treasury,
James A. Reed.
Comments on the proposed amendments will be received during
the next 60 days, in the light of which the proposals will again
be considered by the Treasury Department.

000

UNITED STAms TREASURY DEPARTMENT
WASHmGTOO, D.C.
April 22, 1964

PROPOSED APRIL, 1964, AMENDMENTS OF THE ANTIDUMPING REGULATIONS
BACKGROUND MEMORANDUM

The changes in the antidumping regulations which are presently proposed
are based in large part. on the conments received both orally and in writing
in connection with the hearing which was held on Ja.nuary 23, 1964.

In addition,

the proposed amendments reflect the views of the experts brought in by the
TreaSUl'"y' Department as consultants with regard to this matter.

Final..ly, they

are based in part on suggestions emanating from within the Department.
To some extent, the interests of those concerned with domestic production
and those concerned with imports are necessarily inconsistent, and it is
impossible to satisfy one without dissatisf.ying the other.

Ana~sis

of the

basic problems, however, has disclosed a surprisingly large area in which there
is room for improvement which it is believed would be welcomed by domestic
producers, importers and exporters alike.
This is the area to which the major part of the proposed revisions is
directed.

Their adoption would, it is believed, contribute significantly

to sound administration of Tx-easury' s antidumping procedures.

The proposed

amendments are not designed to make the administration of the Antidumping Act
either more or less restrictive.
v~

Information Available

At present virtually all information in an antidumping proceeding is
treated as confidential.

Under the proposed regulations all information

submitted in connection with an antidumping proceeding would be made available

- 2 -

for ir.gpection

copying by any interested person, except that the Treasul"1

;1'

OO1i.d, on the re14-c:~st of the person who submitted the information, conclude,
on the bash of standards Bet forth in the Regulations, that the information
should be t~eated ~5 confidential.
In any case in which information was submitted with the request that it

be treatsd as cor..fidential, and the Treasury Department denied the request,
the person submitting the information would have his choice of withdrawing the
information or ~cquiescing in its being treated as non-confidential.

Provision

would also be made for deleting identifying details, the inclusion ot which
would be harmful to the person submitting the information.
The proposed amendment also provides that certain information may be
disclosed by the Treasury in generalized or summary fashion rather than in
detail when this course is deemed appropriate in the interest ot maximum
disclosure coupled

~~th

protection of confidentiality.

The standards which

would bUide :he ':reasury in detennining which classes of information should be
or should not

regarded as entitled to confidential treatment are spelled

out in co~gidera~le detail in the proposed amendment in new section 14.6a(0).
It is belie":ed that the net effect of this proposal would be to open up

a large body :.;.f infonnation to interested persons without detriment to the
persons

~nc ~JPp~

Confrontation

such information.
UIgument

..'..nother or0posed amendment would specify that the Treasury, at the request
of

a.rv

interested person, will be prepared to hear the arguments of either

side L~ the p~e=e~ce of the other.
involved b

This procedure would not raise the probl~

t~e procurement of foreign witnesses and foreign records, but

- 3 it would aftord persons holding all points ot view an opportunity to argue
with respect to conclusions ot tact and law and to base those arguments on
tactual intormation which tor the tirst time would be largely available.
It had been suggested by some members ot the public that antidumping
proceedings be determined on the basis ot public hearings on the record with
tull disclosure ot all relevant books and records ot whatever nature.

It is

believed that public hearings ot this type are not suitable in antidumping
proceedings.

Hearings ot this type would presumably require the exporter to

reveal information with regard to his costs, customers, colllDissions paid,
administrative expenses and the like which he would properly be unwUllng
to reveal to his competitors.

Sometimes, perhaps orten, it would be

necessary tor the top executives ot a foreign manufacturing corporation, the
sales manager, the production manager and perhaps many other technical experts
to travel to this country as witnesses.

Voluminous corporate records might

also have to be brought and translated.

Since the exporter is likely to be

thousands of miles away, the direct costs ot maid ng such an appearance would
be large, and it might well be that the indirect cost ot having key personnel
away from the site

ot production tor a protracted period ot time would be

even more burdensome.

Since these costs would be so high, it might, in rna.ny

cases, not be worth while to contest an antidumping complaint since the
exporter's protit margin might be such that he could not recapture the cost of
contesting the complaint even if he were successtul.

And the alternative

to bearing the burden of detending against the complaint would be to have a
dumping tinding made regardless

ot whether it was justified on the merits.

any event, such a hearing would impose a costly burden upon exports to the United

states and would in most cases delay the outcome substantially.

- 4 Quantity Discounts
The proposed amendments would establish a clear standard for determining
when and how allowances should be made with respect to sales in different
quantities.

It would be specified that allowance would be made for a quantity

discount only if it was in fact enjoyed with respect to at least 20 percent of
the merchandise sold in the home market, or in third-country markets where
applicable, or, in the alternative, unless it was cost-justified.
Complaints
Importers and exporters have protested that the Treasury acts on complaints
by persons alleging in insufficient detail their belief that there are sales
below fair value.

persons moreover have urged that such complaints

should be filed directly with the Commissioner of Customs (rather than with
Customs appraisers, which is the current practice) and that they should
specify the individual shippers against whom they are directed.

All of these

desires would be met by the proposed amendments.
Retroactivity
The proposed regulations would eliminate the retroactive application of
dumping duties by eliminating withholding of appraisement of goods imported
before the date of a withholding order, in all cases except those in which the
relationship between the exporter and importer is so close that the importer
is defined as having a relationship with the exporter under Section 207 of the
Antidumping Act.

(The class of cases in which retroactivity would still obtain

are those where, for example, the exporter and importer are principal and agent
or where there is mutuality of ownership or control between exporter and
importer. )

- 5Reimbursement of Dumping Duties by Exporter
The proposed amendments would make it feasible tor an exporter to warrant
freedom from dumping duties with respect to any merchandise purchased prior
to an order withholding appraisement and to compensate the importer for a
breach of this warranty.
on

~rchandise

He could not do so with respect to dumping duties

bought thereafter.

Termination of Proceedings
A change is proposed which will allow termination of the antidumping

proceedings in some but not all instances when it is clear that prices have
been revised to eliminate any dumping margin, that sales to the United states
have been terminated, or that the complaining person has concluded that
no further purpose would be served by the continuation of the antidumping
proceedings.
Under the proposed amendment, safeguards would be provided by requiring
publication of a Federal Register notice of the impending action with an
opportunity to object to termination of the proceedings.

It is believed that

if this proposal is adopted a certain number of cases could be terminated

quickly.

the other hand, if it became clear in any case that, notwithstanding

the changed circumstances, there was reason to continue the antidumping
proceeding, the Treasury would be able to do so.
Offers of Sales

A further proposed amendment would specifically authorize the Treasury to
disregard offers of sales whenever it is clear from the circumstances that
acceptance of the offer could not reasonably be expected.

For example, an offer

of sales of heavy winter overcoats for local consumption by a manufacturer in
a tropical country would not be regarded as an offer to which any weight should
be given.

- 6 Adjustment for Differences in Cost of Production
The proposed changes would establish realistic standards for determining
..mat weight should be placed on differences in cost of production in making
determinations of the value of merchandise when the merchandise being compared
is not identical.

One of the proposed amendments would provide that, in

general, the differences in cost of production would be taken into account only
to the extent that they affect the market value of the merchandise concerned.
Change in Invoice Fonn
In addition to the changes proposed to be made by regulation, the Special
Customs Invoice form will be amended to elicit more information on home market
price.
Summa;r of PrOposed Changes
The proposed changes are set forth below, not in the order discussed above,
but in the sequence of related provisions in the present regulations.
in parentheses are to sections in the Notice of Rule Making.

References

In order, the

proposed amendments would provide as follows:
(1)

Require that complaints relating to alleged dumping be fUed with the

Commissioner of Customs instead of with appraisers.
for additional information in such complaints.

(Section 14.6(b).)

(Section 14.6(b)(1),(2).)

Invite suggestions as to specific avenues of investigation.
and 14.6(c).)

Provide

(Section 14.6(b)(4)

Require publication in the Federal Register of the nature and

date of such complaints.

(Section 14.6(d)(1).)

Require the Commissioner's

notice of withholding to state the date of the commencement of the antidumping
investigation and to state whether the basis of comparison for fair value is
purchase price or exporter's sales price.
(2)

(Section 14.6(e).)

State that, in general, all infonnation obtained by the Treasury

Depart~ent in

connection with an antidumping proceeding will be available

-,',

i-~'

- 7 for inspection or copying.

(Section 14.6&(a).)

Provide a method for requesting

confidential treatment of information but provide that information will be
treated as confidential only i f it is determined by the Treasury that such
treatment is appropriate.

(Section 14.6a(b).)

Provide for the sunrnarization and

deletion of identtr,ring detail of information to avoid for the necessity of
treating information as confidential.

(Section 14.6&(c).

See also 14.6a(b).)

Establish standards to guide the Treasury in determining whether information
will be regarded as confidential.
(3)

(Section 14.OO(c).)

Provide standards for determining when and in what manner it is

appropriate to make allowances for price differences based on differences in
quantities of merchandise sold.

Quantity allowances would be granted only if

they were in fact allowed in substantial volume or were cost-justified.
(Section 14.7(b)(l).)
(4)

Provide that in making fair value comparisons between merchandise

sold in the United states and in the home market or third-country markets,
differences in the merchandise would ordinarily be considered only to the
extent that such differences affect market value.
(5)

(Section 14.7(b)(3).)

Provide that offers of sales made in circumstances in which

acceptance is not reasonably to be expected will not be considered to be bona
fide offers.
(6)

(Section 14.7(b)(4).)

Provide a simple procedure for terminating antidumping procedures

in which changed circumstances indicate that there is no likelihood of sales

below fair value.
(7)

(Section 14.7(b)(9)(i) and (ii).)

Provide for publication of a notice in the Federal Register of each

tentative determination of whether merchandise is being or is likely to be
Bold at less than its fair value, and provide for the receipt of oral views and

- 8 -

argument thereon.
(8)

(Section 14.8(a).)

Provide for the elimination or the retroactive application ot dumping

duties to merchandise imported bY' persons who are not acting tor or cloaeq
related to the exporter.
(9)

(Section 14.9(a).)

Provide that warranties against dumping duties with respect to

merchandise purchased or agreed to be purchased before the date of the fUing
of a dumping complaint will not be regarded as afrecting the question
whether such merchandise is sold below fair Talue.

(Section 14.9(f).)

DEPAR'D4ENT OF mE TREASURY
BUREAU OF CUST()1S

!J.9

CFR, Part

PROCEDURE UNDER ANTIDUMPING ACT, 1921, AS AMENDED
NOTICE OF PROPOSED RULE MAKING

There was published in the Federal Register of December 24,
1963 (28 F.R. 14245), a notice that the Treasury Department was

reviewing its regulations relating to procedures under the Antidumping Act, 1921 (19 CFR 14.6-14.13), and announcing that all
interested parties would be afforded an opportunity to file written
statements and be heard on January 23, 1964, with regard to these
regulations.
After consideration of all the written submissions and oral
statements it bas been concluded that certain amendments of the
regulations should be proposed.

Accordingly, notice is hereby given

pursuant to section 4 of the Administrative Procedure Act (5

u.s.c.

1003) that it is proposed to amend certain sections of Part 14 of
the Customs Regulations (19 CFR Part 14) as indicated in tentative
form below:
1.

Section 14.6 presently provides that any person outside the

Customs Service who has reason to believe or suspect that merchandise
is being, or is likely to be, imported under circumstances which
bring it within the purview of the Antidumping Act may communicate

such beliefs or suspicions to an appraiser of merchandise.

It is pro-

posed to amend this section to provide that (1) information furnished
pursuant to this section should be based on belief and not merely
grounded on SUspiclon, (2) communications setting forth such information
should be addressed to the Commissioner of Customs, (3) certain additional information will be requested, (4) notice of the receipt of
information pursuant to this section and other data relating thereto will
be published in the Federal Register, and (5) the Commissicner's notice
that there are reasonable grounds to believe or suspect sales at less
than foreign market value (or constructed value) will specify whether
the proper basis of comparison for fair value purposes is purchase price
or exporter's sales price.
Accordingly, it is proposed to amend section 14.6 as follows:
Amend the first sentence of paragraph (b) to read as follows:
(b) Any person outside the Customs Service who has
information that merchandise is being, or is likely to be,
imported into the United states under such circumstances
as to bring it within the purview of the Antidumping Act,
1921, as amended,14 may communicate such information in
writing to the Commissioner of Customs. * * *
Amend paragraph (b)(l) to read as follows:
(1) A detailed description or sample of the merchandise;
the name of the country from which it is being, or is
likely to be, imported; the name of the exporter or
exporters if known; and the ports or probable ports of
importation into the United states. If no sample is
furnished, the Bureau of Customs may call upon the person
who furnished the information to furnish samples of the
imported and competitive domestic articles, or either.
Amend paragraph (b)(2) to read as follows:
(2) Such detailed data as are available with respect to
• values and prices indicating that such merchandise is
being or is likely to be, sold in the United States at
less than its fair value, within the meaning of the

3
Antidumping Act, 1921, as amended, including information
as to any differences between the foreign market value or
constructed value and the purchase price or exporter's
sales price which may be accounted for by any difference
in taxes, discounts, incidental costs such as those for
packing or freight, or other items.
Amend paragraph (b) by adding a subparagraph (4) to read as follows:
(4) Such suggestions as the person furnishing the information may have as to specific avenues of investigation to
be pursued or questions to be asked in seeking pertinent
information.
Amend paragraph (c) to read as follows:
(c) If any information filed pursuant to paragraph (b), does
not conform with the requirements of that paragraph, the
Commissioner shall return the communication to the person
who submitted it with detailed written advice as to the
respects in which it does not conform.
Amend paragraph (d)(l) to read as follows:
(d)(l) Upon receipt pursuant to paragraph (a), (b), or (c)
of this section of information in proper form
(i) the Commissioner shall publish notice of that
fact in the Federal Register, which notice may be
referred to as the "Antidumping Proceeding Notice."
The date of such receipt shall be the date on which
the question of dumping was raised or presented for
purposes of sections 201(b) and 202(a) of the Antidumping Act, 1921, as amended (19 U.S.C. 160(b) and
161(a» and that date shall be included in the notice.
The notice shall also contain a summary of the information received. If a person outside the Customs
Service raised or presented the question of dumping,
his name shall be included in the notice unless a
determination under section 14.6a of these regulations
requires that his name not be disclosed.
(ii) the Commissioner shall thereupon proceed promptly
to decide whether or not reasonable grounds exist to
believe or suspect that the merchandise is being, or is
likely to be, sold at less than its foreign market
value (or, in the 'absence of such value, than its constructed value). Tb assist him in making such decision
the Commissioner, in his discretion, may conduct a brief
preliminary investigation into such matters, in addition
to the invoice or other papers or information presented
to him, as he may deem necessary.

4
Amend paragraph (e) to read as follows:
(e) If the Commissioner determines pursuant to paragraph (d)(l)(ii) of this section, or in the course of an investigation under paragraph (d)(3)(i) of this section, that
there are reasonable grounds to believe or suspect that any
merchandise is being, or is likely to be, sold at less than
its foreign market value (or, in the absence of such value,
than its constructed value) under the Antidumping Act, he shall
publish notice of that fact in the Federal Register, furnishing
an adequate description of the merchandise, the name of each
country of exportation, and the date of the receipt of the
information in proper form, and shall advise all appraisers
of his action. This notice may be referred to as the "Withholding of Appraisement Notice." If the belief or suspicion
relates only to certain shippers, the notice shall also include
the names of such shippers. The notice shall also specif'y
whether the appropriate basis of comparison for fair value
purposes is purchase price or exporter1s sales price if sufficient information is available to so state; otherwise a
supplementary notice will be published in the Federal Register
as soon as possible which will specify which of such prices is
the appropriate basis of comparison for fair value purposes.
upon receipt of such advice, the appraisers shall proceed to
withhold appraisement in accordance with the pertinent provisions of section 14.9.
It is proposed to amend Part 14 to change the deSignation of
footnote "148." to footnote "14."
2.

To make available to the fullest extent possible all information

received in connection with antidumping proceedings it is proposed to
add a new section l4.6a reading as follows:
section l4.6a Disclosure of information in antidumping proceedings.
(a) Information generally available. In general, all
information, but not necessarily all documents, obtained by
the Treasury Department, including the Bureau of Customs, in
connection with any antidumping proceeding will be available
for inspection or copying by any interested person, including any importer, exporter or domestic producer of merchandise similar to that which is the subject of the proceeding.
With respect to documents prepared by an officer or
employee of the United States factual material, as
distinguished from recommendations and evaluations,
contained in any such document will be made

5
available by summary or otherwise on the same basis as
information contained in other documents. Attention is
directed to section 24.12 relating to fees charged for
providing copies of documents.
(b) Requests for confidential treatment of information.
Any person who submits information in connection with an
antidumping proceeding may request that such information,
or any specified part thereof, be held confidential. Information covered by such a request shall be set forth on
separate pages fram other informationj and all such pages
shall be clearly marked "Confidential Treatment Requested."
The Commissioner of Customs or the Secretary of the Treasury
or the delegate of either will determine, pursuant to paragraph (c) of this section, whether such information, or any
part thereof, shall be treated as confidential. If it is
so determined, the information covered by the determination
will not be made available for inspection or copying by
any person not an officer or employee of the United States
Government other than a person who has been specifically
authorized to receive it by the person requesting confidential treatment. If it is determined that information submitted with such a request, or any part thereof, should
not be treated as confidential, or that summarized or approximated presentations thereof should be made available for
disclosure, the person who has requested confidential treatment thereof shall be promptly so advised and, unless he
thereafter agrees that the information, or any specified
part or summary or approximated presentations thereof,
may be disclosed to all interested parties, the information
will be disregarded for the purpose of the antidumping
proceeding, and no reliance shall be placed thereon in connection with the proceeding.
(c) standards for determinin whether information will
be regarded as confidential.
1
Information will ordinarily
be considered to be confidential only if its disclosure would
have a significantly adverse effect upon a person supplying
the information or upon a person fram whom he acquired the
information. Further, if disclosure of information in specific
terms or with identifying details would have a significantly
adverse effect upon the person supplying the information or
upon any person from wham he acquired the information, the
information will ordinarily be considered appropriate for
disclosure in generalized, summary or approximated form,
without identifying details, if it is determined that this
course can be followed without its having the Significantly
adverse effect which direct disclosure of the information
would entail.

6
(2) Information will ordinarily be regarded as appropriate for disclosure if it
(i)

relates to price information;

(ii)

relates to claimed freely available price
allowances for quantity purchases; or

(iii)

relates to claimed differences in circurn~
stances of sale.

(3) Information will ordinarily be regarded as confidential if its disclosure would
(i)
(ii)
(iii)

(iv)

disclose business or trade secrets;
disclose production costs;
disclose distribution costs, except to the
extent that such costs are relied on to justify
allowances for quantity or differences of circwnstances of sale;
disclose the names of particular customers
or the price or prices at Which particular
sales were made;

(v)

disclose information which would be of significant competitive advantage to a competitor; or

(vi)

affect in a Significantly adverse way any person who supplied information, including any
informer, or any person from whom the supplier
of the information acquired it.

3. TO provide more definitive standards for determining
when and in what manner it is appropriate to make allowances for
price differences based on differences in quantities of merchandise
sold it is proposed to amend section. l4.7(b)(1) to read as follows:
Section 14.7(b)(l) Quantities.--In comparing the purchase
price or exporter's sales price, as the case may be, with such
applicable criteria as sales or offers, on which a determination
of fair value is to be based, reasonable allowances will be made

7
for differences in quantities if it is established to the
satisfaction of the Secretary that the amount of any price
differential is wholly or partly due to such differences.
In determining the question of allowances for differences
in quantity, consideration will be given, among other
things, to the practice of the industry in the country
of exportation with respect to affording in the home market (or third country markets, where sales to third countries are the basis for comparison) discounts for quantity
sales which are freely available to those who purchase in
the ordinary course of trade. Allowances for price discounts
based on sales in large quantities ordinarily will not be
made unless (i) the exporter during the year prior to the
date when the question of dumping was raised or presented
had been granting quantity discounts of at least the same
magnitude with respect to 20 percent or more of such or
similar merchandise which he sold in the home market (or
in third country markets when sales to third countries are
the basis for comparison) and that such discounts had been
freely available to all purchasers, or (ii) the exporter
can demonstrate that the discounts are warranted on the
basis of savings specifically attributable to the quantities
involved.
4.

It is proposed to amend section 14.7{b){3) to provide that

in making fair value comparisons between

merch~,dise

sold in the

United states and similar merchandise sold in either the home market
or third country markets differences in the merchandise will ordinarily
be considered only to the extent that such differences affect market
value.

This will make section 14.7(b){3) more closely parallel to

section 14.7(b)(2).

As amended, section 14.7{b){3) would read as

follows:

(3) Similar merchandise.--In comparing the purchase
price or exporter's sales price, as the case may be, with
the selling price in the home market, or for exportation to
countries other than the United States, in the case of similar
merchandise described in subdivisions (C), (D), (E), or (F)
of section 212(3), Antidumping Act, 1921, as amended (19 U.S.C.
170a(3», due allowance shall be made for differences in the
merchandise. In this regard the Secretary will be guided
primarily by the effect of such differences upon the market
value of the merchandise but, when appropriate, he may also

8
consider differences in cost of manufacture if it is established to his satisfaction that the amount of any price
differential is wholly or partly due to such differences.

5. To define offering price to exclude non bona fide offers,
it is proposed to amend section l4.7(b)(4) to read as follows:
Section l4.7(b)(4) Offering price. In the determination
of fair value, offers will be considered in the absence of
sales but an offer made in Circumstances in which acceptance
is not reasonably to be expected will not be deemed to be an
offer.

To provide a simple procedure for terminating antidumping

procedures when changed circumstances indicate that there is no
likelihood of sales below fair value it is proposed to amend section
14. 7(b) by adding a new subparagraph (9) to read as follows:
Section l4.7(b)(9) Likelihood of sales at less than
fair value.
(i ) Revis ion of prices. Whenever the Secretary of
the Treasury is satisfied that an exporter, promptly
after learning of an antidumping investigation with
respect to his shipments, has revised his prices so
as to eliminate the likelihood of his sales in the
United States being at prices below his comparable
sales in the home market (or in third country markets,
when sales to third countries are the basis for comparison) or bas, without intention to resume them,
terminated his sales to the United States, the Secretary shall publish a notice to this effect in the·
Federal Register. The notice shall also state tbat
the exporter's action is considered to be evidence
that he is not selling and is not likely to sell below
fair value and that the Secretary will so determine
unless evidence or argument to the contrary is presented
within thirty days.
(ii) Other changed circumstances. Whenever a person
who has filed information pursuant to section l4.6(b),
prior to the determination referred to in section l4.8(a),
advises the Secretary of the Treasury that he no longer
believes it is appropriate to determine that there are,
or that there are likely to be, sales below fair value
with respect to the merchandise to which his information
related, the Secretary may publish a notice of this fact

9
in the Federal Register, together with an invitation
to all interested parties to express their views
thereon. If, wi thin thirty days after the publication of such notice, comment shall be received indicating that any segment of an industry interested
in the antidumping proceeding believes that it is
desirable that the determination provided for in
section l4.8{a) be made, the COmmissioner of Customs
and the Secretary of the Treasury shall proceed in
accordance with the provisions of that section.
Otherwise, the antidumping proceeding may be closed
with a determination that this action has been taken
pursuant to the procedures herein described.

7. To provide for publication of notice of a tentative determination of whether merchandise is being or is likely to be sold
at less than its fair value, and to provide for the receipt of
oral views and argument thereon, it is proposed to amend section
l4.8{a) to read as follows:
(a) upon receipt from the Commissioner of Customs of
the information referred to in section l4.6(d), the Secretary
of the Treasury will proceed as promptly as possible to
determine tentatively whether the merchandise in question
is in fact being, or is likely to be, sold in the United
States or elsewhere at less than its fair value. Notice of
the tentative determination, which may be referred to as
"Notice of Tentative Determination," will be published in
the Federal Register. Interested persons will be given
an opportunity to make such written submissions as they
desire, within a period which will be specified in the
notice , with respect to the contemplated action. Appropriate consideration will be given to any such new or
additional information submitted. If any person believes
that any information obtained b,y the Bureau of CUstoms in
the course of an antidumping proceeding is inaccurate he
may request in writing that the Secretary of the Treasury
afford him an opportunity to present his views in this regard. Upon receipt of such a request the Secretary will
notifY the person who supplied the infor.mation, the accuracy
of which is questioned. If the Secretary is satisfied that
the circumstances so warrant an opportunity will be afforded
by the Secretar,y or his delegate for both persons to appear,
through their counselor in person, accompanied by counsel
if they so deSire, to make known their respective pOints
of view and to supply such further information as may be
of assistance in leading to a conclUSion as to the accuracy
of the information in question. 'The Secretary or his delegate

may at any time, upon appropriate notice, request that
information or argument be supplied orally to him by any
such person or persons as he in his discretion may deem
to be appropriate. As soon as possible thereafter, the
Secretary will make a final determination. If the determination is affirmative, the Secretary will advise the
United States Tariff COmmission accordingly.
8.

To avoid the retroactive application of dumping duties

to merchandise imported by persons whose relationship to the exporter is not such as to justify the use of exporter's sales
price as the basis for making the fair value comparison, it is
proposed to amend section 14.9(a) to read as follows:
Section 14.9 Action by the appraiser.
(a) Upon receipt of advice from the Commissioner of
Customs pursuant to section 14.6(e), if the Commissioner's
"Withholding of A,ppraisement Notice" shall specify that the
proper basis of comparison for fair value ~oses is ~xporter's
sales price or if that notice does not specify the appropriate
baSis of comparison for fair value purposes, each appraiser
shall withhold appraisement as to such merchandise entered,
or withdrawn from w;rebouse, for consumption, on any date
after the 120th day before the question of dumping was
raised b.Y or presented to the Secretary of the Treasury or
his delegate. If the Commissioner's "Withholding of Appraisement Notice, II including any supplementary notice, shall specify
that the proper basis of comparison for fair value purposes
is purchase price, the appraiser shall withhold appraisement
as to such merchandise entered or withdrawn from warehouse
for consumption after the date of publication of the '~ith
holding of A,ppraisement Notice. II Each appraiser shall notify
the collector and importer immediately of each lot of merchandise with respect to which appraisement is so withheld. Upon
advice of a finding made in accordance with section 14.8(b),
the appraiser shall give immediate notice thereof to the collector and the importer when any shipment subject thereto is
imported after the date of the finding and information is not
on hand for completion of appraisement of such shipment. Customs Form 6459 shall be used to notify the collector and importer 'Whenever appraisement is withheld under this paragraph.
9.

To provide that certain warranties will not be regarded as

affecting purChase price, it is proposed to amend section 14.9(f)
to read as follows:

11
Section l4.9(f) In calculating purchase price or
exporter's sales price, as the case may be, there shall
be deducted the amount of any special dumping duties which
are, or will be, paid by the manufacturer, producer, seller,
or exporter, or which are, or will be, refunded to the
importer by the manufacturer, producer, seller, or exporter, either directly or indirectly, but a warranty of
nonapplicability of dumping duties granted to an importer
with respect to merchandise which is purchased, or agreed
to be purchased, before publication of a "Withholding of
/q>praisement Notice" with respect to s1,1ch merchandise will
not be regarded as affecting purchase price or exporter's
sales price.
It is contemplated that if the proposed amendments are adopted
they will became effective, but not retroactively, on the date of
their adoption.

Section 14.6& and the amendments of sections

l4.7(b)(1), 14.7(b)(3), and l4.9(a) will not be effective with
respect to antidumping proceedings in connection with which the
question of dumping was raised or presented for the purposes of
section 20l{b) and 202(a) of the Antidumping Act, 1921, as
amended (19 U.S.C. l60{b) and l6l{a» before the date of the
adoption of the amendments.
Prior to the final adoption of any amencments based on the
foregoing, consideration will be given to any relevant data, views,
or arguments pertaining thereto which are submitted in writing in
duplicate to the Commissioner of Customs, Washington, D. C. 20226,
within sixty days from the date of the publication of this notice
in the Federal Register.

The proposed amendments are to be issued

under the authority of R.S. 161, as amended, 251, sec. 407, 42 Stat.
18; 5 U.S.C. 22, 19 U.S.C. 66, 17

~ · ~ck-e

Commissioner of customs

128
TREASURY DEPARTMENT
(

April 21, 1964

FOR IMMEDIATE REIEASE
WIT1lliOIDING OF APPRAISEMENT ON
COLD-ROLIED STEEL SHEETS

The Treasury Department is instructing customs field officers
to withhold appraisement of cold-rolled steel sheets, oiled or unoiled, in various sizes and thicknesses, from England, manufactured
by John Summers & Sons Ltd., Shotton, Chester, England, pending a
determination 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 COnunission, which would consider whether American industry vas being injured.

Both dumping price and injury must be

shown to justify a finding of dumping under the law.
The allegation in this case was received on Januar.y 24,

1964.

The dollar value of imports received from September 1963 to February 1964 was approximately $847,000.

TREASURY DEPARTMENT

April 21, 1964

FOR IMMEDIATE REIEASB
WITHHOlDING OF APFRAISEMENT ON
COID-ROUED STEEL SHEETS

The Treasury Department is instructing customs field officers

to withhold appraisement of cold-rolled steel sheets, oiled or unoiled, in various sizes and thicknesses, from England, manufactured
by John Summers & Sons ad., Sbotton, Chester, Engl.aDd, pending a
determination 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 vas being injured.

Both dumping price and injury must be

shown to justify a findiDg of dumping under the law.
The
The

allegation in this case was received on January 24,

1964.

dollar value of imports received from September 1963 to Feb-

ruary

1964 was approximatelY $847,000.

FOR RELEASE: A.M. NEWSPAPERS
THURSDAY, APRIL 23, 1964
TREASURY DEPARTMENT
Washington

R!MARKS BY THE HONORABLE JAMES A. REED
ASSISTANT SECRETARY OF THE TREASURY
AT THE l75TH ANNIVERSARY BANQUET
OF THE U. S. CUSTWS EXAMINERS ASOOCIATION
AMERICANA !mEL, ND YORK CITY

WEDNESDAY EVPNIOO, APRIL 22, 1964

It is a genuine privilege and pleasure for me to be your principal speaker
at this ugnit'icent banquet marking the l75th Anniversary of the U. S. Customs
Service. Your presence and your spirit are a fitting tribute to the men and
women who have made Customs one of the DDst widely respected agencies of our
Government and it is a matter of great personal pride that I am closely
associated with your distinguished CoDlDissioner, Philip Nichols, Jr., in this
lfOrtl\v enterprise. I bring greetings to you from the Secretary of the Treasury,
the Honorable l):)uglas Dillon, who asked me to deliver his felicitations on this
anniversary and to wish you well in whatever you undertake. Comnissioner Nichols
regretted his inability to attend and also sent a congratulatory message from
Laredo, Texas, where he is attending a regional conference of principal field
officers in the CUstoms Service.
On December .30 last, the Congress adopted a unanimous resolution calling
upon the American people to celebrate the l75th Anniversary of the CUstoms
Service with appropriate ceremonies and activities. President Lyndon Johnson
issued a proclamation deSignating 1964 as U. S. Customs Year and reiterating
the intent of Congress that the American people take part in activities which
mark the CUstoms birthday. It is therefore in keeping with the will of the
legislators as well as with the desire of the President that we are assembled
here today to pay homage to the CUstoms Service in the City which was its
birthplace, the original capital of our country, the City of New York.

What an exciting period were those early days of our infant republic when
the people severed their bonds wi th the mother country, and for the first time
exercised their sovereignty by imposing the first American customs duties on
imports. By this action, the colonies showed the rest of the world that they
wanted to stand on their own two feet, build their own cODJDercial system and
thereby establishing their economic independence.
But, interesting as it is to ruminate on the past, I am sure that all of
you are familiar with the widely-known and often-told story of our beginnings.
What is not so well-known and not so often-told is the unique achievement that
has been made to the development of the Custom Service by the appraisers and
examiners. I"e 1 come this opportunity to provide a forum for this narrative.
What is the role of the Appraiser?

What is the nature of his task?

has this operation changed down through the years?

How

Let me begin by reading an exoerpt from testiDDl\Y given to a Senate
Committee an Finanoe in 1887, in whioh there was given a definition of the
Appraiser .
. . . . There is no office in this government, from the President of
the United states down, that requires such varied aoquirements
as that ot an appraiser. He must know the language of every
oountry suffioiently to oonstrue the invoioes; he must know the
currency of every oountry -- franos, florins, piastres, rupees
•••• He must know the weights and measures of every country. He
must know the value of every artiole of merchandise known to
coDlDltrce, its quality and value in every oountry of the world,
on every day ot the week; and he must know human nature perfeotly -the mtives and springs of aotion whioh govern men in their transaotions with the oustoms, that he may proteot the boIIest importer
against the fraudulent one, and keep in legitimate channels ot the
trade of the CO'lUltry •••• He must resent no man for malice, hatred,
or revenge; nor must he spare him tor love, friendship, or regard.
There is no offioe where skill, taot, good Judgment, untiring
industry and firmness, and decision of character are more demanded;
while integrity, fidelity, and disoretion are only a few of the
requisites to make him an accomplished publio officer.
The U. S. Court of CUstoms and Patent Appeals has gone on record with
this statement: II Appraisement lies at the very basis of customs administration. II What was true 77 years ago is no less true today. Whether he is a
Line Examiner olassifying unripened oottage cheese, or appraising industrial
di8DDnds, or identitying Cuban tobacco, the examiner must be a psychologist,
a specialist, an II answer-man", an authority who can handle almost any si tuation arising out of one of the JOOst complex jobs in the Customs Servioe.

The U. S. Customs Examiner is at the forefront of our economio system,
as a devoted, skilled, resourceful agent of Government. In the faoe of the
challenge of the new era in which we live, tba Examiner has been assigned new,
difficult and highly selective duties which enable him to play a significant
role in the realization of the tariff policy of our country.
By far the most important new function is the assignment to the Customs
Examiner the task of correctly establishing the nature of imports into the

United States.
Some of the significant changes whioh have been made in his duties are:

Interpretation and administration of quotas and embargoes,
particularly on cotton textile.

Appraisement of merchandise under a dual standard in accordance
with the Customs Simplification Act of 1956, effective February 27, 1958.

3. Advising foreign and domestic inquirers of correct rates of duty
on actual or contemplated importations under the new tariff schedules.

- 3 There are 1ID1"e than 300 land, sea and air ports of entry in our country.
ThroUgh these points, merchandise is cleared for entry into the OOIIIIMrce of

the United states. This merehandise is broken down into tens of thousands of
different items wMoll have to be classified separately as to their dutiable
and statistical status. The statutory value of each article has to be
determined, and the proper duties and taxes have to be assessed am collected.
The Tariff Act of 1930 vests in Customs Appraisers the responsibility
for detemining and reporting to Collectors of CustaDs the appraised unit

value of imported merehandise, subject to different rates of duties, specific,
ad valorem, and compound. The Appraiser is authorized by law to make Nna1
value determinations, subject only to Judicial review by the U. s. Customs Courts.
However, without taking anything away from the appraisers or their trusted
assistants, it has often been said that the real "meat and potatoes" or appraisement is in the work of the Customs Line Examiners throughout the Un! ted states.
IW-ing Fiscal Year 1963, the CUstoms Line Examiners proeessed 2-1 million
invoices wMob broke down into slightly over 1,600,000 entries. Since January 1,
1962, Examiners have been deeply involved in eompiling import data for the
Census Bureau of the United states. In the Fiscal Year 1963, they verified
alDDst 3,000,000 iteJE and made substantial changes in the classification,
value, quantity, and country of origin in alDDst one-fourth of all (221 percent of)
these items. In addition, they contributed significantly to the accuracy and
speed of publication by the Census Bureau of editorial-type revisions in m1"e
than 60 percent of all items which come before them on import entries.
The Treasury Department relies heavily on the examiner's reports in antidumping cases, since it is the examiner's knowledge of home market prices as
well as export transactions which provide the major incentive for honest and
forthright replies by foreign exporters.

I could go in this vein at considerable length, but I must remember that
I am addressing a group which has 175 years of experience in operations in
the world's greatest merchandise mart. Hence, time will not permit me to dwell
on subjects which I know would be of great interest to all of you. Thus, I
will pass over the immensely important work of the Customs Information Elccbange
which processes lIDuntains ot inquiries and requests as to value and classification, and maintains and distributes all custOJE fOrDS, books and publications.
In addition, I will not be able to dwell upon the work of the Fibers
Administrator who coordinates and supervises the work of eustoms examiners
on importations of wool and other fibers at all ports, seeking to obtain
uniformity 8DX)ng individuals in different judgment areas. Nor can I dwell
upon the Canadian Query Program which for the last seven or eight years has
simplified or eliminated many of the problems of Canadian-United states trade
and which has been hailed by the Canadian Government as an important contribution to market development in that country. Neither will I have the opportunity
to elaborate upon the matter of the embargo on the importation or all goods fran
C'A)lIII1Ull.ist Cuba which has enlisted the skill of our Customs Examiners, particru.larly
tmse at New York and Tampa who in cooperation with the Chief Chemists in
BaltiDDre and New York, have devised a reliable metmd of identification of
the origin of tobacco by gas chromatography.

- 4 We are currently working on the revision ot the anti-dumping reiUlations -a probl_ in which I am personally _ch involved -- and we hope that existing
procedures in the processing ot dumping cases can be iDproved during the next
year.
ODe phase

ot your work which I would like to especially single out is

the program ot Examiner-Verification ot iDIport data which, since its beginning
in JaDl1&1"Y 1962, has earned high praise from users ot these statistics both
in aM out ot Government. The U. S. Taritt CoDIDission has found the CUstoms
Ela.1Ntra to be an unt'ailing source ot accurate intormation, and they have
received a tremendous 811DUDt ot "enracurricular" help tram the Exam1ners on
~ problems.
Invaluable coDllllnts and suggestions from Line Ezam1 ners
throughout the CUstom Service also helped to make the "Taritt Schedules ot
the Un! ted states" a DOlch DDre workable document.

It is obvious that the continued etfectiveness of our CUstoJD9 Service
depends to a remarkable degree upon the selection, trainiDg and proDDtion
ot competent, industrious and ambitious Customs Examiners. In coumon with
all other agencies ot our Government, Customs has been faced with the problem
of securing and retaining competent young personnel with the capacity to grow
on the job. This condition requires that our Customs Examiners retain their
high morale and pride in their own un!t as well as in the Service in which
they are employed and transm:L t this enthusiasm to those who tollow. I am
happy to be able to pay tribute to the work ot the Appraisers and Examiners
at this magniticent Anniversary celebration and to say with Secretary Dillon
that we are very gratetul tor your skill and knowledge and dedication to the
public service.

00000

- 3 -

and exchange tenders vill receive equal treatment.

Cash adjustments will be made

tor difterences betveen 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 trom the aale

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

1081

trom the sale or other disposition of Treasury bills does not have any special
treatment, as such, under the Internal Revenue Code ot 1954.

The bills are subject

to estate, inheritance, gi:ft or other excise taxes, whether Federal or state, but
are exempt from all taxation now or hereafter imposed on the principal or interelt
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

'.L'reasury bills are originally sold by the United States is considered to be interest.

Under Sections 454 (b) and 1221 (5) of the Interna.l Revenue Code of 1954

Accordingly, the owner

ot 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 tor
which the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and this notice, prescribe the terms ot 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 -

decimals, e. g., 99.925.

Fra.ctions

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 pennitted 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 reserv.ations, noncompetitive tenders for

less for the additional bills dated
ing until maturity date on
$10&cij0 or less for the

Janua~o, 1964

JUlY .1964

182

fffi

, (

$
91

~oo

days remain-

) and noncompetitive tenders for

-day bills without stated price from anyone

bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids for the respective issues.

Settlement for accepted ten-

ders in accordance with the bids must be made or completed at the Federal
Banks on

April 30~964

Reserv~

, in cash or other immediately available funds or

1n a like face amount of Treasury bills maturing

April 30, 1964

m:I

•

Cash

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,

April 22, 1964

Xftnfr?03{Y)f~0000000GOooeoooc'x
~ ~A_ _
A
.J

./\.

.1.

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

$ 2,100,000,000 , or thereabouts, for
~

cash and in exchange for Treasury bills maturing _..;.A.....plO.;n;.;;·;.;1~~r:3:-i0~.;;;;1;.;;.9;.;;.6;.;;.4__ , in the amount
of $ 2,lO~~8,OOO , as follows:
91

:t&X

-day bills (to maturity date) to be issued
in the amount of

$ 1,200,000,000 , or thereabouts, represent~

ing an additional amount of bills dated
July ~ 1964 .

and to mature
amount of

April 3~964

800~000

Januwo, 1964 ,

' originally issued in the

, the additional and original bills

to be freely interchangeable.
182 -day bills, for $ 900,000,000

twX

Apri~~ 1964
~

, or thereabouts, to be dated

, and to mature _ _....;0;;.;c;;.;t;.;;o~b~e.;.r'r2;;:.;9;."r.....;;1:.;:9;.;6;.;4_.

¢fui)C

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., Eastern/~ time, Monday, ApriCWt 1964
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 tile
price offered must be expressed on the basis of 100, with not more than three

TREASURY DEPARTMENT

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
$2,100,000,000,or thereabouts, for cash and in exchange for
Treasury bills maturing April 30, 1964,
in the amount of
$2,100,788,000, as follows:
91-day bills (to maturity date) to be issued April 30, 1964
in the amount of $1,200,000,000, or thereaboute J representing an
additional amount of bills dated January 30,1964, and to
mature July 30, 1964,
originally issued in the amount of
$800,267,000,
the additional and original bills to be freely
interchangeable.
182-day bills, for $ 900,000,000,
or thereabouts, to be dated
April 30, 1964,
and to mature October 29, 1964.
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 pour 0r.~-thirty p.m., Eastern Daylight Saving
time, Monday, Aprl1 2 j , ~64.
Tenders will not be
received at the Treasury De?artment, 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
Iforwarded 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
'llithout deposit from incorporated banks and trust companies and from
reSponsible and recognized dealers in investment securities. Tenders
~rom others must be accompanied by payment of 2 percent of the face
,imount of Treasury bills applied for, unless the tenders are
'lccompanied by an express guaranty of payment by an incorporated bank
)r trust company.
D-1206

- 2 Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, followin~ 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
January 30, 1964, (9~days remaining until maturitf date on
July 30, 1964)
and noncompetitive tenders for, 100,000
or less for the 182-day bills without stated price from anyone
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 ir. accordance with the bids must be
made or completed at the Federal Reserve Banks onApri1 30, 1964,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing April 30, 1964. 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
hereu~der 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.
~reasury Department Circular No. 418 (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.

000

')Q
v_

TREASURY DEPARTMENT

April 23, 1964

FOR IMMEDIATE RELEASE
WITHHOLDING OF APPRAISEMENT ON
SYNTHETIC DIAMOND POWDER OR DUST

The Treasury Department is instructing customs field officers
to withhold appraisement of synthetic diamond powder or dust from
Ireland, sold by Industrial Grit Distributors (Shannon) Ltd., County
Clare, Ireland, pending a determination 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 allegation in this case was received on January 22, 1964.
The dollar value of imports of synthetic diamond powder or dust
from Ireland, sold by Industrial Grit Distributors (Shannon) Ltd.,
County Clare, Ireland, received from June 1963 to March 1964 was
approximately $588,000.

TREASURY DEPARTMENT

April 23, 1964
FOR IMMEDIATE RELEASE

WITHHOLDING OF APPRAISEMENT ON
SYNT"rlETIC DIAMOND POWDER OR DUST
The Treasury Department is instructing customs field officers
to withhold appraisement of synthetic diamond powder or dust from
Ireland, sold by Industrial Grit Distributors (Shannon) Ltd., County
Clare, Ireland, pending a determination 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

~---

"n4

r:::~

:e:.~4:5-:-: ._:imM:~~
TEEJ..S:iRY ?E}!QVTS R"SSTr:;ICTIONS ON UNITED STATFS
:'r(IJ' ~r~1'~ :"ICA 'rES ISSUED BEFORE 193L

~1.«!1 VIr: l~~ •
J~ry ~~

191;.

~ UQt.ted ~
~ ~

~ l"efltrini(Ql=1

l:a,pr . . . .~
~

v-Aet!

etr-aot

a...... pri.• to

of +.J\U . . . . vQ1 . .

fQ'f! ~ el~

~bl.II.

f~ tbe law

l'N-1.934 ~oM ~1.t"'1. . . .

lt1l1. of

~oe~ OOD-tJ.mio ~

be . .~blJt

at tM tm!~ 5~.

1'be DIIW ~~ ~.daa ~
.apUa at,. t.¢ tatWd ~
h.faA'q

.,u.

30. 19;4. ,.,. bolM.QI f#

iaeled1UC

are . _ i l .... _

.net.. fa

-aft ~ . . . . I.

.)1.,

iI14e ta p1.4. .....

at•

.rae.

wa.

~1""

_II I.t

tI ea14

, . ....

lMIIlI4 JII1.- to

~ ~ ~

or .w. ~,

la.1N&!l lJr l"oete~ . 1 " - I'Al4 lWl4 _ . . . . . .

~.e~Jl.\ttIn Wi ... ~1~.

ae1._ gold eertH'i,,"t.

~ ~

Alae, ~ . . . !III till: ..,••6&1
the U.S .. fl • ....,. __ . . . . .

~l ~" ~~~ f'f)t' ~~ p.1'1'J.<$I&S 18 ut ~

11:m.h

l/!JOJA

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE
TREASURY REMOVES RESTRICTIONS ON UNITED STATES
GOLD CERTIFICATES ISSUED BEFORE 1934
The Secretary of the Treasury today issued Regulations removing
all restrictions on the acquisition or holding of gold certificates
which were issued by the United States Government prior to
January 30, 1934.

The main effect of this action will be to

permit collectors to hold this type of currency.
The restrictions which are being eliminated are considered
no longer necessary or desirable.

Under the laws enacted in

1934, these pre-1934 gold certificates are not redeemable in
gold.

They will, of course, continue to be exchangeable at face

value for other currency of the United States.
The new Regulation authorizing the holding of gold
certificates applies only to United States gold certificates
issued prior to January 30, 1934.

The holding of any other

type of gold certificates, including any issued by foreigners
against gold held on deposit abroad, continues to be prohibited.
Also, the status of the special series gold certificates issued
by the U. S. Treasury only to the Federal Reserve system for

reserve purposes is not affected.
000

D-1207

- 3 -

c)(t;lnpt from all trumtlon now or hereafter imposed on thc principal or interest
th~rcof

by o.n,y state, or any of the possessions of the United states, or by any

local to..'Cing authority.

For purposes of taxation the amount of discount at which

'rrensury 'bills nre originally sold by the United states is considered to be interest.
Under Sectiona 4G~; (b) and 1221 (5) of the Internal Revenue Code of 1954 the runount
of discOlmt at ,i111c11 bills issued hcreunder are sold is not considered to accrue
until such billa are sold, redeemed or othenrise disposed of, and such bills s,re
excluded frnlil consideration as capi tal assets.

AccordinGly, the owner of Treasury

billa (othcr thEm life insUToncc componles) issued hereunder need include in his incomc tNC l'cttu'n only the difference bctlTeen the price paid for such bills, ",hether
on original. is:;llc or on subsequent purchase, and the amount actually received either
upon sale

01'

rcdcmption at maturity during the taxable year for which the return is

mndc, an orc1i.nnry
']'l'CllGUl'Y

acrihc the

[~8Jn

or loss.

J)c1X1.l'Lmcnt Circular No. 418 (current revision) and this notice, pre-

tel111G

of the Trenstll"Y bills and Govern the conditions of their issue.

Coplea of the drculo.r mo.y be obtained from any Federal Reserve Bank or Branch.

- 2 -

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 closine hour, tenders will be opened at the Federal Reserve Banks and Branches, follm.Ting vlhich public announcement will be made by the
Treasury Department of the amount and price range of accepted bids.
ting tenders will be advised of the acceptance or rejection thereof.
of the Treasury

eA~rcssly

Those submitThe Secretary

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.
these reservations, noncompetitive tenders for $ 200)000

JUg

Subject to

or less without stated

price from any one bidder vdll be accepted in full at the average price (in three
·decimals) of acceptcd competitive bids.

Payment of accepted tenders at the prices

: offered must be made or completed at the Federal Reserve Bank in cash or other immediately available funds on

~~~~~y[J~~JI~9~6~4~.____lQDa~~~~~~~X4~~~~jf~

The income derived frrnn 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

~;lt..1.....A

TH.J"Y.sm r:l Dii:PAnTl mrrr
Uo.ahlnc t o l1

FOr: r:.~r;:;DJNl':~ r.EJ..zJ\Sl~~~

$1 BILLION ONE-YEAR BILLS

'rhe Tl'ec.Gl1.l'Y Dcpn.rtment,
or therc(lbouts, of
COI.I}~ctit.ive

~cr:'.eG

"lt~:l

th:lc puhUc notice, invites tend.ers for $1,000,000,000
~

-dny TreD,oury bill:::, to be isnued on a discount basis under

359

and noncompetitive biddiIl[; o.G hCl'einn1'ter provided.

,"-:11
., ..... - b e do.·"ed
II

May 6, 1964

_ _ _...II______...,..~_ _- _ - - -

·i.;he 'i'c.ee c;nount 1rl11 be

::a, 000 ,000

~M~-

iHX

J:l['~r[l.ble

~'oriJ only 1 t'llcl in denomln::1't::.o113 of
cn(~

April 24, 1964

,r.i:i,hoHt

The billG of this

, vnd lrill m2.tUl'e

int(~J:'cGL

:;a, 000, :/..i, 000,

They

~rlll

April 30, 1965
---=-----ri-r----

be iSGued in bCD-reI'

:;>10, 000, :;;50,000, :),100,000, $500,000

(r,lUtul'1. t~r value).

Tendel's vill be rccej, 'll!U o.t Fcc1el'<.1.l I:c;3elve
IlOU i:, one- thil't.~r p. PI.,

n[l.n1~G [~l1d

B:l'tl.llChcG up to the

Daylight Saving
Eo.::rce:;:n /~ tine, Thursday, A&3cl 30, 1964

lrill not be received l;'.t the 'l'rea::ml'Y Department, llo.shinrrton.

clo~;111il

Tcndcl'G

Each tender must be for

o.n even l,m.]..tiple of !~1,000, and in the cace of cO;llpetg.l:.:i.ve tender:} the price offered
·:n~~"~

be e~::pre::;ued

Fl'['.C L:i.on::; J:lC'~

011

the bo.c:i.::; oi'100, ,rlth not E1OJ.:'e than three decinw,lG, e. G., 99.925

not be used.

It 5.G l..u'ccd thcd:;

tcncleI'~

be made on the printed formo and

::"o:"\."2.rc1ed :tn the cpecir.l envelopes \!]ri.ch u:L1J. bc sU1l1,1:.i.ec1 by Ii'edel'al l1ene:L"Ve Bc.nks or
D:"':'.llches on e.:ppl:tco.tion therefor.
:&llk:l.l1[; inctitution::..: e:;enej:nl~r rao.y 3UU);[Lt tenderc

:\:'01'

account of customers pro-

vided the naJ:lCS of the customers arc Get l:o:-::th in D1).ch te"ldcrs.
institutions

,r.f.~.l

not be pCl'mittecl to Gubni t J..;cnclc:rc except

1'01'

Others

~han

banki!1£:

their ovm acCOtUlt.

Tenders lrlll be received lrithout dcpoc.lt :Ll'om incorporated bonl;.s ruld tnu;t companiesond

frOi.l

recponslbJ.e and recoGnized (leo.le:cc in investment securities.

others must be c.ccDrilpeniecl

l)~r Pt'.~rjJenJ~

of 2 pel'cent of the face aJnount

Tenders fl'OJIl

TREASURY DEPARTMENT

FOR TIMMEDIATE RELEASE
TREASURY OFFERS $1 BILLION ONE-YEAR BILLS
The Treasury Department, by this public notice, invites tenders
for $1,000,000,000, or thereabouts, of 359-day Treasury bills, to be
issued on a discount basis under competitive and noncompetitive
bidding as hereinafter provided. The bills of this series will be
dated May 6, 1964, and will mature April 30, 1965, 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,
Thursday, April 30, 1964. 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 mdde 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. Othe~ than banking institutions will not be permitted to
submit tenders except for their own account. Tenders will be
received without deposit from imcorporated 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 trus t company.
Immediately after the closing hour, tenders will be opened at the
public announceamount and price
:ange of accepted bids. Those submitting tenders will be advised of
:he acceptance or rejection thereof. The Secretary of the Treasury
~xpressly reserves the right to accept or reject any or all tenders,
~n whole or in part, and his action in any such respect shall be
:inal. Subject to these reservations, noncompetitive tenders for

,~edera1 Reserve Banks and Branches, following which
~nt will be made by the Treasury Department of the

1-1208

- 2 -

$200,000, or less without stated price from any one.bidder will be
accepted in full at the average price (in three dec~mals) of
accepted competitive bids. Payment of accepted tenders at the prices
offered must be made or completed at the Federal Reserve Bank in
cash or other immediately available funds on May 6, 1964.
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
pr 1 c",4ld for such bills, whether on original issue or on subsequent
plOt, :,;-,,, , and the amount actually received either upon sale or
redemption at maturity during the taxable year for which the return
is mdde, as ordinary gain or loss.
Treasury Department Circular No. 418 (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.

000

- 3 meeting, we are confident that the axchan.a of vi.". whieh we

shall have will itself be a uaeful guide to the coaduct of our
economic relations in the months ahead.

000

- 2 -

oountrl•• have reached the $11 bi1110a .ark.
With

UDited Nation. trade cODference already UDderway

and with the GATT negotiations starting next week in Geneva,

this represents a particularly opportune time to come to Ottawa
to exchange views with you an the trade pro.pect. that lie ahead

for both countries.

we are looking forward to another series of full and frank
discussions within this unique committee that haa done

.0 much

to further understanding between our two countries.
Ive await with

great interest the interim report from

Ambassador Heeney and Ambassador Merchant on thelr effort to

seek some general principles to govern the economic relationa
between our two countries.

Although we probably ahould not

expect to reach final agreement on such principle. at thia

FOR R£LlME:

Upon Delivery

STATEMENT OF mE HONORABlnl DOOOLAS DILLON
SECUlARY OF mE TREASUIlYOr THI UNITED STATU
I1f UlPONlI m WILCOMI H '!RI. II8NOIABLI
PAm. MARnN, CANADIAN SECRETARY or STATI lOR IXTDNAL Al'rAlU.
AT THE NINTH MUTING OF THE JOINT UNITED STATlI·

CAMDlAM CCItMITTD ON TIADI MID IGOMOMIC· AffAIU
WEDNESDAY, APRIL 29, 1964, 10: 00 A.M., 1ST

'nlank you very much, Secretary Martin, for your

-aI'ID

worM

of welcome.
On behalf of the American members of the Jo1D.t UD.lted. Stat.,-

Canadian Committee on Trade and Economic Affaire. I

V8ftt

how plea.ed we are to resume our continuing dlecuaaf.oraa of
problems, and C()(nmon objectives.

CU_,B

They stand .a a tribute to the

close working relationships that have long been •• tab1iabed between the United States and Canada.

we all recognize we ahare much more in
borders.

COI1IDOIl

thaD our

Each of our countries has made 8coaOlDic progre.. siMI

our last meetings, and there is every indication dlta a0UD4

poa REUME:

Upon Delivery

STATEMENT or THE HONORABLE OOUGLAS DILLON
SECRETARY or nil TUASUkY OF THE UNITED STATES
IN RESPONSE TO WELCOME BY THE HONORABLE
PAUL HARTIN, CANADIAN SECRETARY or STATE FOR EXTERNAL AFFAIRS,
AT THE NINni MUTING OF THE JOINT UNITED STATESCANADIAN C<HllTrEE ON TRADE AND ECONOMIC AFFAIRS
WEDNESDAY, APRIL 29, 1964, 10:00 A.M., EST

Thank you very much, Secretary Martin, for your warm words
of welcome.

On behalf of the American members of the Joint United StatesCanadian Committee on Trade and Economic Affairs, I want to say
how pleased we are to resume our continuing discussions of c01l'IDon
problems, and common objectives.

TIley stand as a tribute to the

close working relationships that have long been established between the Uniced States and Canada •
.-Ie

borders.

all recognize we share much more in common than our
Each of our countries has made C!conomic progress since

our last rneeting8, and there is every indication this sound

- 2 -

progress will continue.

Current transactions between our two

countries have reached the $11 billion mark.
with the United Nations trade conference already underway
and with the GATT negotiations starting next week in Geneva,
this represents a particularly opportune time to come to Ottawa
to exchange views with you on the trade prospects that lie ahead
for both countries.
~e

are looking forward to another series of full and frank

disCtlssions within this "..mique committee that has done so much

to further understanding between our two countries •
.~e await with great interest the interim report from

Ambassador 'aeeney and Ambassador Merchant on their effort to

seek some general pr1nciples to 6()vern the economic relations
between our two countries.

Althou;>;:h we probably should not

expect to reach final agreement on

Buell

principles at this

- 3 meeting, we are confident that the exchange of views which we
shall have will itaelf be a u8eful guide in the conduct of our
economic relations in the months ahead.

000

FOR RELEASE:

UPON DELIVERY

TOAST BY THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY OF THE UNITED STATES
AT DINNER WEDNESDAY, APRIL 29, 8:30 P.M.
AT THE NINTH MEETING OF YdE JOINT UNITED STATESCANADIAN COMMITTEE ON TRADE AND
ECONOMIC AFFAIRS
Honorable Ministers and Distinguished Guests:
These meetings represent the ninth gathering of the Joint
United States-Canadian Committee on Trade and Economic Affairs.
Thanks to this unique working group we've each learned a great
deal about our common problems) and common aspirations in world
trade.
Our mutual interest is in the expansion of international
commerce through a reduction of trading barriers.

We are con-

vening here now on the eve of a new round of GATT tariff negotiations -- negotiations that can materially·advance our common
objectives.

- 2 It is our hope that the spirit which prevails here will
also prevail in Geneva so that free nations everywhere may share
in the benefits of increased economic activity through increased
trade.
And now, I should like to propose a toast:
Gentlemen, the Queen!

26" of t.he uount; of 91-dq billa bid for at tbe lev prtoe va .;.,cc~pt.d
L8 Jj, or tbe aIIIOt1r1t. of 182-day billa bid for at, t.be low p1"'ice vu [l,cce!~ted

Di8V1ct

1l• • DIIICl

At,lata
Cbleap
S\. L3u1a

TREASURY DEPARTMENT

REIJo~SE

A.M. NEWSPAPERS,

~, April 28, 1964.

RESULTS OF TREASURY'S WEEKLY BILL OFFERING

• The Treasury Depa.rtment announced last evening that the "lenders for two series of
~ury bills, one series to be an additional issue of the bUla dated January 30, 1964,
[the other series to be dated AprU 30, 1964, which were offered on April 22, 'Were
~d at the Federal Reserve Banks on April 27. Tenders were invited for $1,200,000,000,
jhereabouts, or 91-<!q bills and for $900,000,000, or thereabouts, of 182-day bills.
detaUs of the two series are as follows:

··
·
·

91-day Treasury bills
182-d~ Treasury bills
July 301 1964
I18.turing October 29" 1964
Approx. Equiv. •
Approx. Equi'Y.
Price
Annual. Rate
Price
Annual Rate
High
99.1,32
98.176
,3.608%
3.434%
Low
z
99.126
98.170
3. 62(y;b
3.458%
AYerage
98.172
99.129
,3.616%
3.Wt6%
28% of the amount of 91-~ bills bid f.or at the low price was accepted
48% of the amount or 182-day bills bid for at the low price was accepted

fE OF ACCEPTED

$TITlVE BIDS:

maturin~

11 TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
irict

~tOD
~ York

/.lade1phia
~veland

bhmond

Lanta

Lcago
l Louis
meapolis
18&8 City

las
l

Francisco
TOTALS

Applied For
$
22,221,000
1,377,253,000
28,595,000
20,000,000
10,562,000
25,212,000
156,520,000
28,239,000
18,579,000
26,068,000
21,640,000
119,389,OOO
$1,854,278,000

Accepted
Applied For
$ 12,221,000 r $
,3,831,000
82,3,013,000
1,337,185,000
13,595,000
9,097,000
20,000,000 :
8,231,000
10,562,000
3,314,000
22,828,000
13,966,000
128,520,000
113,622,000
21,951,000
8,996,000
7,815,000
15,499,000
26,068,000 :
7,394,000
13,920,000
10,576,000
163,659,,000
92,069,000
$1,200,246,000 !I $1,687,688,000

Aocepted
$ 3,.331,000
695,060,000
4,097,000
6,58,3,000
3,206,000
6,071,000
68,747,000
6,161,000
3,215,000
6,684,000
5,5,38,000
91,464,000

$900,157,000

nCludes $2l0,311,OOO noncompetitive tenders accepted at the average price of 99.129
noludes $62,979,000 noncompetitive tenders accepted at the average price of 98.172
b a coupon issue of the same length and for the same amount invested, the return on
these bUla would provide yields of 3.52%, for the 91-dq billa, and 3.73%, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
tbe return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual DUIlber of days related to a 36o-~
year. In contrast, yields on certificates, notes and bonds are computed in terms
ot 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
caDpounding i f more than 0118 coupon period is involved.
0-120<)

-i (p.

Conclusion
Our recent efforts have been directed to the early correction of our own
balance of payments deficit and to exploratory discussions with other countries as to the appropriate lines along which the fUture evolution of international financial arrangements might proceed.

Along with the develoIJllent of

better balance in the long-term capital markets of the world, the achievement
of these objectives should help to establish an environment within which
international nows of long-term capital, including a continuing large flow
of investment to and from the United States, can raise productivity and assist
development on an ever-enlarging scale.
Beyond the transition period in which we now find ourselves, there will
be a continuing opportunity for this country to demonstrate internationally the
capacities and benefits of individual enterprise working through free markets.
Private foreign investment, joined in close association with a realistic
foreign aid program, can insure that this country's unrivalled productive
effiCiency will make its maximum contribution to "II
economic development.

international

wbatever the

eventu~

complete record may show, we do know that some of the

recent gains were temporary.

Tnere can be no relaxation of effort on any

pa~ents

front until the balance of

deficit is entirely removed, gold losses

are stopped, and our external accounts are securely in equilibrium.

.......-tC

~_~

The proposal for an interest equalization tax

a:, a temporary but

crucial role in our over-all baEance of payments program.

Private foreign

investment -- the long-term capital account -- was the last major sector of
our balance of payments to be subjected to special governmental influence in
the effort to achieve balance of payments savings.
step was taken with reluctance.
problem that would

no~

Even then, the necessary

But once we had found a way to treat the

constitute exchange control, we had to act.

For in-

action would only have led to far more serious consequences for capital
,

markets here and abroad.

That fact has been recognized, and our proposal of

the tax accepted with understanding and support, by every leading government
in Europe.

The need for this action,.though sometimes with reservations as

to its applicability to themselves, has been affirmed by every leading country
in the Free \oJorld.
Since the proposal for the tax was announced last July, there has been
an encouraging expansion of foreign lending activity in European capital
markets; an expansion Which, if securely based upon the grOwing savings of
Europe, could help to lessen the potential pressure on our own markets when
the tax does expire.

In the interim period, American underwriters are broaden-

ing their activities by participating in the sale of foreign dollar bond
issues in European narkets.

a/.u)

held in this country, and American owners ca~sell any foreign securities
they hold to foreigners free of tax.

It is only when Americans buy from

foreigners that the tax becomes applicable.
Tne effects of the proposal of the tax have been decisive in producing
a dramatic turnaround in our balance of payments position since last June.
During the second half of last year, purchases by Americans of new foreign
security issues dropped by an annual rate of $1.. 3 billion.

Having been a~

a rate of $2 billion in the first half year, they were at a rate of about
$700 million in the second·half.

In addition there was a further gain to the

United States of some $1/2 billion, at an annual rate, due to trading in out-

'It

standing foreign stocks and bonds.

Tne latter savinfu' I I
re:!ie . . as
C1M.cf..c.<. ~ eL
A! ~
~...otRe'·cl:&~.IR.e"8:im 'e.I··\Ghat--'ilMftt~_d
gain_ ",-'"

cr Total balance

applying the tax to outstanding securities.

libel

of payments savings

O'1ov~) ,t~~ CI.-.... ; ~.c.t~ ~
between the first and second half of the year)1'92 r ~i~i.~ . . .be
(' -'

lWo,e

~ "'ere

at an annua.l rate of $1.. 8 billion., Along with the
1\'
strer.gthening of our trade balance, further economies in Government spending
7

jet -hi

abroad, and the effects of last year's increases by the Federal Reserve in
discount rates and time deposit rates, the combined result was a drop in our
balar..ce of payments deficit to

4o.:J~

HP1Iit.MT $2 billion (at an annual rate) for
~
r'"
the second half of 1963-- m:u,c[.. (f.,:-" . :f.1.!'/~ i~"JI'6 --t(,~ ./t~Ha~. -e.....t ~ .~tv-A..O
W'1..wc-r~! ~,\

>('l

"t ~>'tf

f,("

t M'~.

L~at improvement has continued further during the first quarter of this
,..,-...... :_.

year.

But

01.!r

o~ data are.,preliminary and incomplete and are being revised
~I

as each new report comes in, so that any detailed analysis would be premature.

-: C Q

security issue -- in fact, ultimately, to choosing among particular borrowers
and among the various developed cou.'1tries.

A Capital Issues Committee becomes,

necessarily, a government control ~TIenever the volume of issues to be turned
dow~

;--

becomes very large in relation to the total vOlume~of,issues to be screened

or reviewed.
Any such course in this country would intrude government into individual
decision-making in a vay we have never found tolerable except in situations
of wartime emergency.
in

It is an overwhelming advantage of this proposed tax,

opinion, that it does leave the market mechanism intact.

and the readiness of competing borrowers to pay the price, will

Prices alone,
~ <~ ""tk.c. ~rJr
~eely

ps@le,er

borrower himself, not by the decision of any remote Treasury official.
The legislative proposal contains a carefully stated set of exemptions
designed to insure that the tax 1rill only reduce the outflow of long-term
portfolio capital to other

develop~d co~tries;

,~ "'-;( "II.,,~ t- v

_'"_

(~ ~
••

\1 \0("

,:.....

it is expected that Canada,

..."

because of her uniquetinte~ns~7 our markets, will receive a partial
exemption.

Under the House Bill the proposed tax would become effective as of

last July 19th -- August 17th in the case of transactions on the stock exchanges··
and it will expire December 31, 1965.

Because the proposed tax has been provi.

sionally effective in this sense for almost a fUll year, it has been possible
to observe the nature of its operation and to assess the effects of the propos&.
Security markets

~ave

continued to function smoothly.

Americans trade vith

each other on a tax-free basis for the more than $12 billion of foreign securities

-- , J

During a transitional period, while the proposed tax remains in effect, all
other efforts must be pushed even more vigorously to bring our external
accounts closer and closer toward balance.
The proposed tax is intended as a substitute for an increase in our
entire structure of long-term interest rates -- a substitute which brings
into play, insofar as borrowing here by the developed countries is concerned,
exactly the same forces as would prevail through the marketplace if we could
in fact raise all of our long-term rates of interest.
large flow of savings, such an actual

incr~a~ein
(... ....

(

.,. c... .. _

Ior-

.. : :

In the face of our

interest rates could only
~

be brought about by drastic monetary i:n.tlirlr 9Gtion.

The steps required to

force rates upward suddenly and decisively here would also disrupt the expansion in business investment that increases our competitiveness, at home and
abroad.

Because the proposed tax does substitute for the external effects of

an increase in our long-term interest rates, it logically applies to foreign
stocks and to foreign bonds, to new issues and to outstanding securities.
Any attempt artificially to limit this coverage -- for example, to apply the

tax only to new security issues -- would lead to market distortions and a
significant reduction in the effectiveness of the tax.
Alternative proposals have been made to achieve the necessary temporary
reduction in capital outflow by resort to outright controls, or the halfway
house of a Capital Issues Committee.

The latter technique, on the basis of

previous experience everywhere, would inevitably, and quickly, end up in
Goverr~ent-made

deCisions as to permissible amounts, types, and conditions of

160
•

1\
\

achieving in other sectors of our international accounts, and at mid-1963
the prospect was for an even greater scale of new foreign security sales.
In such a situation, there was no prudent alternative to same action to
,

(. /0. ...

" ....... \'

moderate the growing s~ of capital outflow.

As one part of the intensified

action program described in his Special Message on the Balance of Payments of
July 18, 1963, President Kennedy proposed the interest equalization tax on
purchases of foreign securities.
The Interest Equalization Tax
That proposed tax has been approved by the House of Representatives and
now awaits consideration by the Senate Finance Committee.

I want to discusp._/ •

~:o

~c:., 1..{J'rM

with you briefly some aspects OfJt;be. iill:&sl"e51t ~;j_ _II___"III.IC( proposal, ~
.....
(..

,-./
••

in a partisan L~~of radvoca,e.,. and without dwelling on technical details,

~d J.H. ,r.

but as one convinced, as I~ you are, of the efficiency of market processes
A

and the undesirability of controls.
~.

The proposal is for a temporary excise tax on American purchases from

foreigners of the securities of other developed countries.

Securities with

a remaining period to maturity of less than three years are exempted altogether
Ct.eCl.l\t! ~ "

,.{"{,t ~t /l'1a1VttLtt;

b-;r (~,.,,"""'t-H"" r L...,."

i. .)) WI ~·,.Lt.'Li·t6

from tax\ ~te-t....... ordinary
),\

Q...V~'&, a,..,...~ 0' 'tl't.&t,,~. -." ..(..,. ~

1iIi£,ept

OI.o..k

financing; above three years the

rate of tax on debt obligations is graduated according to maturity so as to
be equivalent to approximately one percent per year in .aRPi] interest cos't.
~ ~xo...c....u-.<I.~C;r ~·tQr~{I..'(~Clll.;~''i. .lt..:-.;~~ :,;,.,.u..i.((', ('(';,::"
; ~~en passed on to foreigners, ~ will bring the cost of borrowing in our
1\

~ "i:C~"i;:';',
C't

n..:r..'f7 ~

markets more nearly into correspondence with similar costs abroad.

As a

consequence, :.'t is expected that many borrowers will be diverted to other markets.:

I " .. ,
,~.

great momentum that had been developed toward freedom in the international
trade and payments system.
The danger had become real by 1962, when the volume of new foreign
security issues sold to U. S. residents suddenly doubled over the 1961 level
and exceeded $a billion for the year.

Our interest rates were comparatively

low by worldwide standards -- reflecting our high volume of liquid savings,
our friction-free markets, and the very small part that foreign borrowing
could play in the over-all balance between the total demand and total supply
of :funds in this country.

Even with foreign borrowing amounting to less than

one-fiftieth of our domestic markets, however, further increases in these out.
flows could, as some
long-term

~api tal 1Ie ~ou1d

remained in deficit.
,"

l' { <'L,-

repe~tedly

_.:--c;_/

warned, overrun

th~

liDQ. ~s on the

amou~l't;s

safely send. abroad -while our ovn balance ot

payments

But warnings were futile; the rate of foreign borrowing

"'~.inun-si"ed even further in early 1963.

~t:

In theA:ia: Ilr sJ"'t:.~ six months~ Iq~~
!.~_~,(.

~_~~~i2.~J

aRa ••• t $I "7268..0£ foreign securities ... sold to American resident~ and
during the second quarter of 1963 our seasonally adjusted annual rate of deficit
on "regular transactions" in the balance of payments exceeded $5 billion -- a
rate which, if continued, would unquestionably have undermined the stability
of the dollar and the entire international financial

system~

There were no signs that foreign borrowing would fall back to more normal
levels.

On the contrary there were clear indications that it

(,.~

">,,,1.,:(

increase

even further, with foreign municipalities and corporations -- particularly
from Japan and llirope -- becoming heavier and heavier borrowers.

Already,

the sharply increasing outflow ot portfoliO capital had eroded all ot the
steady improvement that our over-all balance ot

~nt8

program had been

-- t; ..-

)

The Growing Demands on the New York Capital Market
The vigorous revival in U. S. long-term lending abroad that commenced
in the mid-1950's was accompanied by a groWing interest of American investors
in foreign portfolio securities and by the rapid developnent of the New York
market both as financial entrepot and net capital exporter.

With the return

of currency convertibility in Western Europe by the end of the decade, the
opportunity presented itself for a parallel expansion of European capital
markets and their active contribution in international lending.

However,

expansion on the needed scale did not develop, and by the early 1960's there
I

was in effect only one market where foreign borrowers could be sure of ready
accommodation -- that in New York.

A more inappropriate time for the appearance

of such a pronounced imbalance between the capacities of our own and foreign
capital markets is difficult to imagine.
In the three-year period, 1958-1960, our balance of payments deficits
'\~ J.t. c,L;....."....t.. lM c-\I,.A (l ~
had increased steadily and averaged $3.7 billion per year. 8 l]?
IS
J
~·H't~_....

aVeraged~ $1.6 billion per year, and reached almost $I. billion in ~~~,.;~st~.:.=
quarter of 1960 alone, when the price of gold temporarUylbleke legs~ ..4
o.rea"c!iJ$40 an ounce in London.

While it was possible in early 1961, in view

of the real and fundamental strength of the dollar, to restore confidence and
to proceed to set in motion longer run correctives to remove the

1mbalanc~,

the danger was all too apparent even at that time that overuse of New York
capital market facUities by foreign borrowers could imperU the transition
to equilibrium -- a transition that had necessaril.7 to be slav if we were not
to cause irreparable damage to others on the

vay,

and perhaps

*a the

8
the suggestion that as publicly supplied capital meets the most urgent needs
of developing countries, their capacity to absorb and to service private
c:lpital inflows is enhanced.
:,.. ";., ,I...._~.

(4 _...

hope that the ~nce

•

frOm

In a roughly comparable way we can cefiainl.y
t.i,t ....~_{-.

<" (-

public aid to private investment may ~ in ...

many less developed cotmtries and eventually, perhaps, even in areas which
~+

are nOlo/' as yet quite literally undeveloped.
There is no precise analogy, of com-se, between the postwar reconstruction
of Em-ope where goals were immediate and realizable, and the long, slow task
of assisting the world's capital-scarce regions to self-sustaining growth.
Certainly private foreign investment cannot be expected to replace the
systematic effort of the multilateral international agencies whose cantribution is 'critical and which as they prosper may, in time, provide the
organizational nucleus for a truly comprehensive international attack upon
poverty.

The increasing reliance of such agencies upon the private capital

markets, not only here but abroad, is also a J:IlOst encouraging sign.
r.,..:.~

;t."... .. _.-(; ...

it also does seem to me that' S1IH'esei~ly

-:r

l,~

over time

-- even though the time

horizons may be distant ones -- private foreign investment Should and will
playa steadily

e~ging

role in meeting the capital requirements of most

of the developing countries.

7
promoting increased foreign investment in American securities, and for
increasing the foreign financing of American corporations operating abroad.
That task force met yesterday with President Johnson to present its
report.

impressi~

I COIIDllend it for close study to all of you, and can assure you that

its various recommendations are going to be given active and

~athetic

study by the Administrationo
THE BALANCE BETWEEN AID AND nNESTMENT

A question closely related to the amount of foreign investment we can
afford is that of foreign aid -- for we also have to find a balance between
what we can afford for aid and the urgent needs of countries whose more rapid
development is essential for future peace and prosperity, both their own and
ours.

This is another~affling calculus; but it is certainly clear that when

this COtmtry is in balance of payments deficit, and the deficit has continued
large for several years, we cannot afford very much that does not come from

That is why more than four-fifths of all our aid is now "tied", in

a present-day form of "lend-leaseo"
t:;~t\", U6.:f- ·""..n.r.~
"elL La-"p8iP:i'iw .~Ib I see no reason to believe that ou, present baJ.anCf
of effort between foreign aid and foreign investment is seriously misplaced.
However, as one looks to the future, the possibility of a gradual shift away
from aid programs toward private foreign investment does not seem unrealistic.
He all have been impressed with the wa:y in which the massive flow of reconstruction aid to Europe was gradualJJr phased out, to be succeeded by cont1~
amounts of U. S. private investment in Europe.

'!here is in that experience

6
can afford currently.
T'ne balance of payments impact of an increase in foreign lending is
i1mnediate.

The benefits are only realized gradually.

When the balance of

payments is already weak, there are limits to the extent to which a current
outlay can be justified by the promise of future returns.

In this respect,

the nation is subject to the same constraints that every business concern
itself experiences from time to time.

To take advantage of more and more

opportunities for profit tomorrow, the temptation is to borrow more and
more today.

But too much debt today can mean bankruptcy before the future

profit is realized.
There is no possible value we might assign to future income that could
compensate for undermining the stability of the dollar today.

This side of

our situation does not always seem to have received enough emphasis, even
from those who have, at least in principle, recognized the need to remove
the balance of payments deficit and halt gold losses •. rrn..~.II.'_flll__S".V.I~li'i.ei
t:iJ ~'" ~ ~ /ft·; hV 11'tl.-</~(kJ (.U; u.e ~(!h cd;:;-,. {.!. J..c~
't seems particularly surpris~ngAamong bankers~o are themselves so often
impelled to hold the financial commitments of their own clients wi thin limits
of e)..-pansion that can be sustained.
One 0::: the important determin~nts of our capacity to lend abroad over
the years cl1ead will be our ability as a nation to attract funds from some
to offset a part of what we lend to others.
"men he

"\{3.S

That is one of the reasons Wrr1,

intensifying our national balance of payments effort last year,

President Kennedy appointed a special task force of thirteen distinguished
goverr~ental,

business and financial leaders to develop new methods for

- '-

5
services does not automatica.ll.y flow from the act of investment itself.
If it did, we might

no~ have

had our sustained deficits.

To be sure,

in the case of same foreign investment transactions, the connection between
the financial now and the corresponding flow of goods is close -- the
investment is, in effect, tied to the export, which would not otherwise
B.u.:t)
have taken Place.1 ~ other cases, particularly where portfolio investment
is involved, the connection between the investor's decision to purchase
~~c...~~

foreign securities and our own export sales is11

te -- otten it is at

best roundabout and delayed, and more o:f'ten, totally unrelateQ..

Even this

would not necessarily be of great concern to a nation such as tre Un! ted
States with a large trade surplus.

We should expect, in a flourishing world,

to see dollars flow out to finance purchases and sales among other countries.
Trouble arises, however, when our purchases of foreign securities increase
very rapidly and the balance of payments is already lmder pressure.

As we

know from recent experience, the effects of excessive lending abroad can
then be extremely disruptive.
But, it will be argued, even if there are no exports to match the outflow

of funds, every foreign investment is an asset; it will yield a return that
will help our balance of payments in the future..
';;:[;;

:~ ~~~~~~h~ ~;( 0; l;;~J:=~c

That fact is

incontrovertib~

strength as a nation that

American holdings of earning assets abroad have risen by more, much more, thaD
our total balance of payments deficit during these recent years of grave con"
cern over our interm tiona! financial position.

Yet I the fact that foreign

investment leads ultimately to a return flow of earnings does not alter tbe
necessity of hOlding the current export Of capital to amounts that the nat1Cl1

1\:7

J..U.

4
the further acceleration of outflows in the early Sixties came at a time
,men, as a nation, we were also realizing that we had to grapple With a
difficult balance of payments adjustment, an adjustment which, in the short
run, was greatly complicated by the outpouring of capital.

The need has

consequently been forced upon us to re-examine in a searching and dispasSionate
way the complex of relationships between foreign investment, the balance of
payments, and our international economic objectives.
mule the urgency of that re-examination has certainly been increased
by our balance of payments situation, the relevant questions will endure
beyond the time, hopefully not
removed.

fjow

too far distant, when our deficit is

It is appropriate then, before discussing some of the interim

measures that we have taken since 1960 in the foreign investment area, to
look ahead to questions, as yet unanswered, that seem sure to require our
collective attention in the future.
Hm., I-illCH FOREIGN INVESTr-1ENT CAN WE AFFORD?

The first of these questions
can we afford?

simply:

How much foreign investment

Such a question has inevitably been faced in some form by

every capital-exporting nation, although only recently'have events forced
us to think it through again as it applies to our own situation.
From a national point of view, net capital exports over any substantial
period of time have to be matched by an export surplus of goods and services.
':'he real counterpart to the financial flow of capital is ordinari]s' a transfer
0: 600ds and services, otherwise available for use at home, to the use of
recipient countries.

But problems arise because this transfer of goods and

3
direct investment by U. S. concerns actua.l..ly operating abroad, the revival
of U. S. private long-term capital outflows was gradual.

Direct investment

reached substantial proportions by 1947 but U. S. purchases of new portfolio
security issues -- stocks, bonds, mortages and the like -- did not even
begin consistently to exceed the return flow fr?m~edemptions' until ~r .

(5'r\((1

u.",tI.vo.~) t.iu f/.J.~ .!6(JWL t'~l~l-~~ ~~t"~' ~
~o ~c4(-ta()~~,,,,,,, ,.tJN.,~~
'l('fl~,W/lMltr1Mlt'~~ ~a.~...

1950. ~,;t.t., 1q,sq'.I~r I,.{J!:l.<) 09:R0J1(! a-J U'}S-(,o;'.tAA-o~1 ~
.. _ _
~(!4\'~t\".{rr ~(V'An·~(.-('8 €.t.1_M..·.\'(t-{.·i1Iv.('\.~- Ma..cJ
s
n
n

was followed by a rising trend of long-term>ou'b .
armual average over these later five

Direct

VP~UI!IR

'.Mwestment ...'Wa3--tbe...iI.ngl&~.1fta""'~1I'I'\I"O
a steady

folio capital to Canada and, by the end of' theperied-r
securities began again to be sold in our markets , although

\. ' B y

the beginning of the 1960' s, and indeed well before , it was apparent

that the recovery of U. S. long-term private foreign investment was . . farvv.
reaching~Significance.

No longer constrained by the speculative excesses of

the 19m's nor the financial paralysis of the 1930' s, the outflow of U.

capital was becoming an integral part of a growing and spontaneous internat1C111i
zation of U. S. bUSiness, reflecting at the same time the developing ascendaDC1
of New York as an international financial center.
I

These were developnents growing out of the basic strength of the .AmericaD
economy and reflecting the urgent demand for capital in the rest of the world.
Unquestionably the implications were beneficial in the long

r\Dl,

both for tJle

United states and for the countries toward which our investment nowed. JIDIIIII

remind us that careful investors examine closely the uses to wh.ic h their
f\mds are to be put, and are not attracted by the extravagant claim or
the high pressure marketing technique.

Finall.y, they should remind us that

no amotmt of individual discretion can protect against the consequences of
a collapse in international payments-arrangements, and that private foreign
investment will flourish only so long as our international financial system
is secure.
The autarkic decade of the 1930's also stands as an object lesson we
are determined not to repeat.

The progressive strangulation of trade was

accompanied by short-term international capital movements that were t'requentl¥
perverse in direction and upsetting in effect, while the flow of long-term
foreign investment fram capital-abundant to capital-scarce regions practic&U¥
disappeared.

Indeed, after 1930, there was a steady net inflow of U. S.

long-term private capital and this repatriation was supplemented late in the
decade by massive inflows of foreign short-term capital and gold, as coming
events cast their ominous shadow over the continent of Europe.
THE POSTWAR REVIVAL OF U. S. PRIVATE FOREIGN INVESTMENT

Wi th the over-exuberant foreign lending of the 1920' s and the financial
dislocations of the 1930 9 s as a backgrmmd" there was" understandably, widespread doubt in the period inmediately following World War II as to whether
there would be any substantial revival' of private long-term capital flows
from this CO'W'ltry.
~6.

The ilI:mediate problems of postwar reconstruction ~ in fact lub

11 require large outfiows of public :funds which substituted for a time for
many of the traditional functions of private capital. movements.

Aside t.rcD

RE:,lARKS BY THE tt.birORABLE -ROBERT V. ROOSA, UNDER SECRETARY OF THE
TREASURY FOR HONEl'ARY AFFAIRS, AT THE INTERNATIONAL BUSINESS DINNER
SESSION Arr THE ANNUAL MEETING OF THE U. S. CHAMBER OF COMMERCE,
AT i400 Fr.i ON TUESDAY, ~L 28, 1964. ~ ~~~~

!J~Y

. 'if.,

;)

~~~~~

roREI~ INVES~ ~ ~~E PA~'rS ~ ~~
THE

When Mr. Neil,n asked me to talk tonight I responded
that may have surprised him.

with~~

For I found irresistible the

opportunity~

compare views with you on at least some aspects of What seems to me to
be one of the most stirring challenges of our time:

the challenge to businel

and government to find ways of assuring that our own free enterprise capital.
ism will provide a badly needed flow of capital funds throughout a developina
world, while maintaining, at the same time, our own stability and solvency.
In order to meet that challenge we must be able to learn from the past, and

yet to recognize that our own past history in international lending is short,
and that its lessons may not always be applicable without modification ina
rapidly changing world.
INVESTMENT EXPERIENCE IN THE INTER-WAR PERIOD

Emerging as an international creditor only at the close of World l-lar I,
our national experience in net foreign lending has been relatively
it has been intense.

Huch has been compressed within those years.

brief~
Theyb~

with a burst of U. S. foreign lending in the post-Versailles decade mrlch
culr:rl.nated in default and disillusionment by the early 1930's.

The excesses

of that period are still within memory, and perhaps it is well that they are,
They should remind us that private foreign investment, no less t~
domestic, must rest ultimately upon the ability of the borrower to emploY
funds productively and to discharge obligations responsibly.

They should

TREASURY DEPARTMENT
Washington

,
I

.
....

FOR RELEASE AFTER 7:30 P.M., EDT
TUESDAY, APRIL 28, 1964
REMARKS BY THE HONORABLE ROBERT V. ROOSA,
UNDER SECRETARY OF THE TREASURY FOR MONETARY AFFAIRS,
AT THE INTERNATIONAL BUSINESS DINNER SESSION OF THE
ANNUAL MEETING OF THE U. S. CHAMBER OF COMMERCE,
THE SHERATON-CARLTON HOTEL, WASHINGTON, D. C.,
AT 7:30 P.M. ON TUESDAY, APRIL 28, 1964.

FOREIGN INVESTMENT AND THE BALANCE OF PAYMENTS
When Mr. Neilan asked me to talk tonight I responded with an
alacrity that may have surprised him.

For I found irresistible the

opportunity to compare views with you on at least some aspects of
what seems to me to be one of the most stirring challenges of our
time:

the challenge to business and government to find ways of

assuring that our own free enterprise capitalism will provide a
badly needed flow of capital funds throughout a developing world,
while maintaining, at the same time, our own stability and
solvency.

In order to meet that challenge we must be able to

learn from the past, and yet to recognize that our own past history
in international lending is short, and that its lessons may not
always be applicable without modification in a rapidly changing
world.

)-1210

£.

INVESTMENT EXPERtENCE IN THE INTER-WAR PERIOD
Emerging as an international creditor only at the close of
World War I, our national experience in net foreign lending has been
relatively brief but it has been intense.
within those years.

Much has been compressed

They began with a burst of U. S. foreign

lending in the post-Versailles decade which culminated in default
and disillusionment by the early 1930's.

The excesses of that

)eriod are still within memory, and perhaps it is well that they
ire.
They should remind us that private foreign investment, no less
:han domestic, must rest ultimately upon the ability of the borrower
:0 employ funds productively and to discharge obligations

:esponsibly. They should remind us that careful investors examine
:losely the uses to which their funds are to be put, and are not
lttracted by the extravagant claim or the high pressure marketing
:echnique.

Finally, they should remind us that no amount of

ndividual discretion can protect against the consequences of a
ollapse in international payments arrangements, and that private
oreign investment will flourish only so long as our international
in~ncial

system is secure.

The autarkic decade of the 1930's also stands as an object
esson we are determined not to repeat.

The progressive

trangulation of trade was accompanied by short-term international
ipital movements that were frequently perverse in direction and

- 3

upsetting in effect, while the flow of long-term foreign investment
from capital-abundant to capital-scarce regions practically
disappeared.

Indeed, after 1930, there was a steady net inflow of

U. S. long-term private capital and this repatriation was
supplemented late in the decade by massive inflows of foreign
short-term capital and gold, as coming events cast their ominous
shadow over the continent of Europe.
THE POSTWAR REVIVAL OF U. S. PRIVATE FOREIGN INVESTMENT
With the over-exuberant foreign lending of the 1920's and the
financial dislocations of the 1930's as a background, there was,
Inderstandably, wide-spread doubt in the period immediately
:ollowing World War II as to whether there would be any substantial
~eviva1

of private long-term capital flows from this country.

The immediate problems of postwar reconstruction did in fact
'equire large outflows of public funds which substituted for a time
'or many of the traditional functions of private capital movements .
.side from direct investment by U. S. concerns actually operating
broad, the revival of U. S. private long-term capital outflows
as gradual.

Direct investment reached substantial proportions by

947 but U. S. purchases of new portfolio security issues -tocks, bonds, mortgages and the like -- did not even begin
)nsistently to exceed the return flow from redemptions until
fter 1950.

- 4 But, once underway, the recovery of our foreign investment
was vigorous.

In the last half of the 1950's there was a large and

continuing outflow of U. S. long-term private capital, responsive
in composition and destination to changing economic conditions here
and abroad, but remarkably stable in its overall amounts.

By the

beginning of the 1960's, and indeed well before, it was apparent
that the recovery of U. S. long-term private foreign investment was
far-reaching in significance.

No longer constrained by the

speculative excesses of the 1920's nor the financial paralysis of
the 1930's, the outflow of U. S. capital was becoming an integral
part of a growing and spontaneous internationalization of U. S.
business, reflecting at the same time the developing ascendancy
of New York as an international financial center.
These were developments growing out of the basic strength of
the American economy and reflecting the urgent demand for capital in
the rest of the world.

Unquestionably the implications were

beneficial in the long run, both for the United States and for the
countries toward which our investment flowed.

However, the

further acceleration of outflows in the early Sixties came at a
time when, as a nation, we were also realizing that we had to
grapple with a difficult balance of payments adjustment, an
adjustment which, in the short run, was greatly complicated by the
outpouring of capital.

The need has consequently been forced upon

~s to re-examine in a searching and dispassionate way the complex of

relationships between foreign investment, the balance of payments,
-

lnd our international economic obipctlves.

- 5 -

While the urgency of that re-examination has certainly been
increased by our balance of payments situation, the relevant
questions will endure beyond the time, hopefully not now too far
distant, when our deficit is removed.

It is appropriate then,

before discussing some of the interim measures that we have taken
since 1960 in the foreign investment area, to look ahead to
questions, as yet unanswered, that seem sure to require our
collective attention in the future.

HOW MUCH FOREIGN INVESTMENT CAN WE AFFORD?
The first of these questions is simply:
investment can we afford?

How much foreign

Such a question has inevitably been

faced in some form by every capital-exporting nation, although only
recently have events forced us to think it through again as it
applies to our own situation.
From a national point of view, net capital exports over any
substantial period of time have to be matched by an export surplus
of goods and services.

The real counterpart to the financial

flow of capital is ordinarily a transfer of goods and services,
otherwise available for use at home, to the use of recipient
countries.

But problems arise because this transfer of goods and

services does not automatically flow from the act of investment
itself.

- 6 -

;' 1;. ....:
.10..

If it did, we might not have had our sustained deficits.

be sure, in the case of some foreign investment transactions, the
connection between the financial flow and the corresponding flow
of goods is close -- the investment is, in effect, tied to the
export, which would not otherwise have taken place.
But, in other cases, particularly where portfolio investment
is involved, the connection between the investor's decision to
purchase foreign securities and our own export sales is anything
but close -- often it is at best roundabout and delayed, and more
often, totally unrelated.

Even this would not necessarily be of

great concern to a nation such as the United States with a large
trade surplus.

We should expect, in a flourishing world, to see

dollars flow out to finance purchases and sales among other
countries.

Trouble arises, however, when our purchases of foreign

securities increase very rapidly and the balance of payments is
already under pressure.

As we know from recent experience, the

effects of excessive lending abroad can then be extremely
disruptive.
But, it will be argued, even if there are no exports to match
the outflow of funds, every foreign investment is an asset; it
will yield a return that will help our balance of payments in the
future.

That fact is incontrovertible, so long as the investments

are soundly conceived.

And it is another part of our growing

- 7 economic strength as a nation that American holdings of earning
assets abroad have risen by more, much more, than our total
balance of payments deficit during these recent years of grave
concern over our international financial position.

Yet, the fact

that foreign investment leads ultimately to a return flow of
earnings does not alter the necessity of holding the current export
of capital to amounts that the nation can afford currently.
The balance of payments impact of an increase in foreign
lending is immediate.

The benefits are only realized gradually.

When the balance of payments is already weak, there are limits to
the extent to which a current outlay can be justified by the promise
of future returns.

In this respect, the nation is subject to the

same constraints that every business concern itself experiences
from time to time.

To take advantage of more and more opportunities

for profit tomorrow, the temptation is to borrow more and more
today.

But too much debt today can mean bankruptcy before the

future profit is realized.
There is no possible value we might assign to future income
that could compensate for undermining the stability of the dollar
today.

This side of our situation does not always seem to have

received enough emphasis, even from those who have, at least in
principle, recognized the need to remove the balance of payments
deficit and halt gold losses.

It seems particularly surprising

to find this form of myopia, as we sometimes do, among bankers

- 8 -

who are themselves so often impelled to hold the financial commitments
of their own clients within limits of expansion that can be
sustained.
One of the important determinants of our .capacity to lend
abroad over the years ahead will be our ability as a nation to
attract funds from some to offset a part of what we lend to others.
That is one of the reasons why, when he was intensifying our
national balance of payments effort last year, President Kennedy
appointed a special task force of thirteen distinguished
governmental, business and financial leaders to develop new methods
for promoting increased foreign investment in American securities,
and for increasing the foreign financing of American corporations
operating abroad.

That task force met yesterday with President

Johnson to present its impressive report.

I commend it for close

study to all of you, and can assure you that its various
recommendations are going to be given active and sympathetic
study by the Administration.

THE BALANCE BETWEEN AID AND INVESTMENT
A question closely related to the amount of foreign investment
re

can afford is that of foreign aid -- for we also have to find
balance between what we can afford for aid and the urgent needs

f countries whose more rapid development is essential for future
eace and prosperity, both their own and ours.

This is another

,/ l-J

- 9 -

baffling calculus; but it is certainly clear that when this country
is in balance of payments deficit, and the deficit has continued
large for several ye.ars, we cannot afford very much that does not
come from our production.

That is why more than four-fifths of all

our aid is now "tied", in a present-day form of "lend-lease."
Granting that necessity, I see no reason to believe that our
present balance of effort between foreign aid and foreign
investment is seriously misplaced.

However, as one looks to the

future, the possibility of a gradual shift away from aid programs
toward private foreign investment does not seem unrealistic.

all have been impressed with the way in which the massive flow of
reconstruction aid to Europe was gradually phased out, to be
succeeded by continuing amounts of U. S. private investment in
Europe.

There is in that experience the suggestion that as

publicly supplied

capital meets the most urgent

needs of

developing countries, their capacity to absorb and to service
private capital inflows is enhanced.

In a roughly comparable

way we can certainly hope that the transaction from public aid to
private investment may also occur in many less developed countries
and eventually, perhaps, even in areas which are now as yet quite
literally

undeveloped.

.-',;
'.> ' " , k

- 10 There is no precise analogy, of course, between the postwar
reconstruction of Europe where goals were immediate and realizable,
and the long, slow task of assisting the world's capital-scarce
regions to self-sustaining growth.

Certainly

private foreign

investment cannot be expected to replace the systematic effort of
the multilateral international agencies whose contribution is
critical and which as they prosper may, in time, provide the
organizational nucleus for a truly comprehensive international
attack upon poverty.

The increasing reliance of such agencies

upon the private capital markets, not only here but abroad, is
also a most encouraging sign.

It also does seem to me that

progressively over time -- even though the time horizons may be
distant ones -- private foreign investment should and will play
a steadily enlarging role in meeting the capital requirements of
most of the developing countries.
THE GROWING DEMANDS ON THE NEW YORK CAPITAL MARKET
The vigorous revival in U. S. long-term lending abroad that
commenced in the mid-1950's was accompanied by a growing interest
of American investors in foreign portfolio securities and by the
rapid development of the New York market both as financial entrepot
and net capital exporter.

With the return of currency convertibility

in Western Europe by the end of the decade, the opportunity
presented itself for a parallel expansion of European capital

- 11 -

markets and their active contribution in international lending.
However, expansion on the needed scale did not develop, and by the
early 1960's there was in effect only one market where foreign
borrowers could be sure of ready accommodation -- that in
New York.

A more inappropriate time for the appearance of such

a pronounced imbalance between the capacities of our own and
foreign capital markets is difficult to imagine.
In'the three-year period, 1958-1960, our balance of payments
deficits had increased steadily and averaged $3.7 billion per
year.

The decline in our gold stocks averaged more than $1.6

billion per year, and reached almost $1 billion in the last
quarter of 1960 alone, when the price of gold temporarily rose to
$40 an ounce in London.

While it was possible in early 1961, in

view of the real and fundamental strength of the dollar, to
restore confidence and to proceed to set in motion longer run
correctives to remove the imbalance, the danger was all too apparent
even at that time that overuse of New York capital market
facilities by foreign borrowers could imperil the transition to
equilibrium -- a transition that had necessarily to be slow if we
were not to cause irreparable damage to others on the way, and
perhaps reverse the great momentum that had been developed toward
freedom in the international trade and payments system.

- 12 -

r'i-{J-

The danger had become real by 1962, when the volume of new
foreign security issues sold to U. S. residents suddenly doubled
over the 1961 level and exceeded $1 billion for the year.

Our

interest rates were comparatively low by worldwide standards -reflecting our high volume of liquid savings, our friction-free
markets, and the very small part that foreign borrowing could play
in the over-all balance between the total demand and total
supply of funds in this country.

Even with foreign borrowing

amounting to less than one-fiftieth of our domestic markets,
however, further increases in these outflows could, as some
repeatedly warned, overrun the limits on the amounts of long-term
capital we could safely send abroad while our own balance of payments
remained in deficit.

But warnings were futile; the rate of foreign

borrowing accelerated even further in early 1963.

In the first

six months of 1963, foreign securities were sold to American
residents at an annual rate of $2 billion, and during the second
quarter of 1963 our seasonally adjusted annual rate of deficit
on "regular transactions" in the balance of payments exceeded
$5 billion -- a rate which, if continued, would unquestionably
have undermined the stability of the dollar and the entire
international financial system.
There were no signs that foreign borrowing would fall back
to more normal levels.

On the contrary there were clear indications

that it would increase even further, with foreign municipalities

- 13 -

l) ')
-

and corporations

particularly from Japan and Europe --

becoming heavier and heavier borrowers.

Already, the sharply

increasing outflow of portfolio capital had eroded all of the
steady improvement that our over-all balance of payments program
had been achieving in other sectors of our international accounts,
and at mid-1963 the prospect was for an even greater scale of new
foreign security sales.

In such a situation, there was no

prudent alternative to some action to moderate the growing volume
of capital outflow.

As one part of the intensified action program

described in his Special Message on the Balance of Payments of
July 18, 1963, President Kennedy proposed the interest
equalization tax on purchases of foreign securities.
THE INTEREST EQUALIZATION TAX
That proposed tax has been approved by the House of
Representatives and now awaits consideration by the Senate Finance
Committee.

I want to discuss with you briefly some aspects of

this proposal, without being a partisan advocate and without
dwelling on technical details, but as one convinced, as I feel
sure you are, of the efficiency of market processes and the
undesirability of controls.

- 14 The proposal is for a temporary excise tax on American
purchases from foreigners of the securities of other developed
countries.

Securities with a remaining period to maturity of less

than three years are exempted altogether from.tax, as are loans of
all maturity by commercial banks, in order to avoid any interference
with ordinary trade financing; above three years the rate of tax
on debt obligations is graduated according to maturity so as to
be equivalent to approximately one percent per year in interest
cost.

The tax also applies to purchases of stocks as well as

bonds.

When passed on to foreigners, the appreciable rates will

bring the cost of borrowing in our markets more nearly into
correspondence with similar costs abroad.

As a consequence, it

is expected that many borrowers will be diverted to other
markets.

During a transitional period, while the proposed tax

remains in effect, all other efforts must be pushed even more
vigorously to bring our external accounts closer and closer toward
balance.
The proposed tax is intended as a substitute for an increase
in our entire structure of long-term interest rates -- a substitute
which brings into play, insofar as borrowing here by the developed
countries is concerned, exactly the same forces as would prevail
through the marketplace if we could in fact raise all of our
long-term rates of interest.

In the face of our large flow of

savings, such an actual increase in interest rates could only

- 15 be brought about by drastic monetary restriction.

The steps

required to force rates upward suddenly and decisively here would
also disrupt the expansion in business investment that increases
our competitiveness, at home and abroad.

Because the proposed

tax does substitute for the external effects of an increase in our
long-term interest rates, it logically applies to foreign stocks
and to foreign bonds, to new issues and to outstanding securities.
Any attempt artificially to limit this coverage -- for example,
to apply the tax only to new security issues -- would lead to
market distortions and a significant reduction in the effectiveness
of the tax.
Alternative proposals have been made to achieve the necessary
temporary reduction in capital outflow by resort to outright
controls, or the halfway house of a Capital Issues Committee.

The

latter technique, on the basis of all previous experience
everywhere, would inevitably, and quickly, end up in Governmentmade decisions as to permissible amounts, types, and conditions of
security issue

in fact, ultimately, to choosing among particular

borrowers and among the various developed countries.

A Capital

Issues Committee becomes, necessarily, a government control
whenever the volume of issues to be turned down becomes very
large in relation to the total volume if issues to be screened
or reviewed.

- 16 Any such course in this country would intrude government into
individual decision-making in a way we have never found tolerable
except in situations of wartime emergency.

It is an overwhelming

advantage of this proposed tax, in my opinion, that it does leave
the market mechanism intact.

Prices alone, and the readiness of

competing borrowers to pay the price, will remain the important
consideration and exercise the decisive influence.

Rejection

will be by the decision of the borrower himself, not by the
decision of any remote Treasury official.
The legislative proposal contains a carefully stated set of
exemptions designed to insure that the tax will only reduce the
outflow of long-term portfolio capital to other developed countries;
it is expected that Canada, because of her unique and historically
close ties to our markets, will receive a partial exemption.

Under

the House Bill the proposed tax would become effective as of
last July 19th -- August 17th in the case of transactions on the
stock exchanges -- and it will expire December 31, 1965.

Because

the proposed tax has been provisionally effective in this sense
for almost a full year, it has been possible to observe the
nature of its operation and to assess the effects of the proposal.
Security markets have continued to function smoothly.

Americans

trade with each other on a tax-free basis for the more than
$12 billion of foreign securities held in this country, and
American

owners can also sell any foreign securities they hold to

- 17 foreigners free of tax.

It is only when Americansbuy from

foreigners that the tax becomes applicable.
The effects of the proposal of the tax have been decisive in
producing a dramatic turnaround in our balance of payments position
since last June.

During the second half of last year, purchases by

Americans of new foreign security issues dropped by an annual rate
of $1.3 billion.

Having been at a rate of $2 billion in the first

half year, they were at a rate of about $700 million in the second
half.

In addition there was a further gain to the United States

of some $1/2 billion, at an annual rate, due to trading in outstanding foreign stocks and bonds.

The latter saving indicates the

gains from applying the tax to outstanding securities.
Total balance of payments savings between the first and
second half of the year on new issues and outstanding securities
were at an annual rate of $1.8 billion.

The various exemptions

have not been used to offset these balance of payments gains in
other directions -- with the possible exception of a few commercial
banks which may have abused their unique responsibility and
opportunity by looking to legalisms rather than the intent of the
national interest.

Broadly speaking, however, the self-

enforcing nature of the effort to reduce capital outflows to a
scale we could afford, while assuring adequate finance for all
our trade, seems to h3ve worked well.

Along with the strengthening

of our trade balance, further economies in Government spending
abroad, and the effects of last year's increases by the

- 18 Federal Reserve in discount rates and time deposit rates, the
combined result was a drop in our balance of payments deficit to
less than $2 billion (at an annual rate) for the second half of
1963 -- much less than half the runaway rate that was mounting
upward during the first half.
That improvement has continued further during the first
quarter of this year.

But our data are still preliminary and

incomplete and are being revised as each new report comes in,
so that any detailed analysis would be premature.

Whatever the

eventual complete record may show, we do know that some of the
recent gains were temporary.

There can be no relaxation of

effort on any front until the balance of payments deficit is
entirely removed, gold losses are stopped, and our external
accounts are securely in equilibrium.
The proposal for an interest equalization tax continues to
playa temporary but crucial role in our over-all balance of
payments program.

Private foreign investment -- the long-term

capital account -- was the last major sector of our balance of
payments to be subjected to special governmental influence in the
effort to achieve balance of payments savings.
necessary step was taken with reluctance.

Even then, the

But once we had found

a way to treat the problem thdt would not constitute exchange
control, we had to act.

For inaction would only have led to far

more serious consequences for capital markets here and abroad.

- 19 That fact has been recognized, and our proposal of the tax accepted
with understanding and support, by every leading government in
Europe.

The need for this action, though sometimes with

reservations as to its applicability to themselves, has been
affirmed by every leading country in the Free World.
Since the proposal for the tax was announced last July,
there has been an encouraging expansion of foreign lending
activity in European capital markets; an expansion which, if
securely based upon the growing savings of Europe, could help to
lessen the potential pressure on our own markets when the tax
does expire.

In the interim period, American underwriters are

broadening their activities by participating in the sale of
foreign dollar bond issues in European markets.
CONCLUSION
Our recent efforts have been directed to the early correction
of our own balance of payments deficit and to exploratory
discussions with other countries as to the appropriate lines along
which the future evolution of international financial arrangements
might proceed.

Along with the development of better balance in the

long-term capital markets of the world, the achievement of these
objectives should help to establish an environment within which
international flows of long-term capital, including a continuing

- 20 -

large flow of investment to and from the United States, can raise
productivity and assist development on an ever-enlarging scale.
Beyond the transition period in which we now find ourselves,
there will be a continuing opportunity for this country to
demonstrate internationally the capacities and benefits of
individual enterprise working through free markets.

Private

foreign investment, joined in close association with a

realistic

foreign aid program, can insure that this country's unrivalled
productive efficiency will make its maximum contribution to
international economic development.

000

- 3 -

and exch3nBc tenders will receive equal. treatment.

Cash adjustments will be made

for differences between the par value of maturing bills accepted in exchange

the issue price of the new bills.
The income derived from Trca.sury bills, whether interest or gain from the I&le
or other disposition of the bills, does not have any exemption, as such, and

~••

from the Gale or other disposition of Treasury bills does not ha.ve any special
treotmr.;nt,

such, under the Internal Revenue Code of 1954.

The bills are subject

to estRte, inheritance, gift or other excise taxes, whether Federal or state,
are exempt from all taxation now or hereafter imposed on the principal or

inte~R

thereof by any sta.te, or any of the possessions of the United states, or by any
local to.xinB a.uthori ty.

For purposes of ta:cation 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 ~M

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 such
bills, whether on original issue or on subsequent purchase, and the amount a.ctualll
received either upon sale or redemption at maturity during the taxa.ble year for
which the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and this notice,
scribe the terms of the Treasury bills and govern the conditions of

their.is~,

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

.. 2 -

,ec1mals, e. g., 99.925.

Fractions ~ not be used.

It is urged that tenders

e made on the printed forms and forwarded in the special. envelopes which will
e supplied by Federal Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of customers

lrovided the names ot the customers are set forth in such tenders.

Others than

i&Dking institutions will Dot be pennitted to submit tenders except for their
iVD

account.

.nd

trust companies and from responsible and recognized deal.ers in investment

:ecurities.

Tenders will be received without deposit from incorporated banks

Tenders trom others must be accompanied by payment of 2 percent ot

he face amount of Treasury bills applied for, unless the tenders are accompanied
'Y' an express guaranty of payment by an incorporated bank or trust company.
Dmnediately after the closing hour, tenders will be opened at the Federal
eserve Banks and Branches, foliowing which public announcement will be made by
he Treasury Department of the amount and price range of accepted bids.

Those

ubmitting tenders will be advised of the acceptance or rejection thereof.

The

ecretary ot the Treasury expressly reserves the right to accept or reject any
r all tenders, in whole or in part, and his action in any such respect shaJ.l be
'1n&l.

'Subject to these reservations, noncompetitive tenders for $ 200,000 or

ess for the additional bills dated
III until maturity date on

,
'100 000 or less for the

February 6, 1964

X(Mt

August 6, 1964

(dij

Pil

daY's remain-

) and noncompetitive tenders for

(tilt
182

tcZXJ

-day bills without stated price from any 'one

ldder will be accepted in full at the average price (in three decimals) of
'!pted competitive bids tor the respective issues.

Settlement for accepted ten-

!ra in accordance with the bids must be made or completed at the Federal
,

IDks on
1

May 7, 1964

&Coo

Reserv~

, in eash or other immediately available funds or

6ft)

a like face amount of Treasury bills maturing _....;Ma;;.;;.:y:.....;.7J.,~19~6~4.;....._ _ _ •

bif

Cash

: 0:)

__ V

EIDXJE): II'UI) nIX)

TREASURY DEPARTMENT
Washington

April 29, 1964

FOR IMMEDIATE RELEASE,

TREASURY t S WEEKLY BILL OFFERING

The Treasury Department, by this public notice, invites tenders for two ser1ee
of Treasury bills to the aggregate amount of $ 2,100,000,000 , or thereabouts, tor

cash and in exchange for Treasury bills maturing __Ma...;;...::Y::.-7..Jm~1....9_64
_ _ _ , in the amount
of $2,100,427,000
91

, as follows:

ffi
-day bills

in the amount of $

May ~1964

(to maturity date) to be issued

1,200,000,000, or thereabouts, represent.

ing an additional amount of bills dated

February 6, 1964 ,

X&I

and to mature _.....;;.A...;ugu~~s-=t'T6..;...1'--1_9...;6...;4~, originally issued in the

amount of $

!ill

9OO~,000

, the additional and original bills

to be freely interchangeable.
182

-day bills, for $ 9oo,0&stl00
May W964

, or thereabouts, to be dated

, and to mature

NovembeIJ;j 1964

The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding as hereinafier provided, and at maturity their face
amount will be payable without interest.

They will be issued in bearer form onlJ,

and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 ~
$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/lt.G,acj time,
Monday· MaydtI1964;
Tenders will not be received at the Treasury Department, Washington.

Each tendll'

must be for an even multiple of $1,000, and in the case of competitive tende1'8"
price offered must be expressed on the basis of 100, with not more than three

TREASURY DEPARTMENT

May 7, 1964,
representing an
and to
amount of
to be freely

182-day bills, for $900,000,000,
or thereabouts, to be dated
May 7, 1964,
and to mature November 5, 1964.
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
to the closing hour, one-thirty p.m., Eastern Daylight Saving
;ime, Monday, May 4, 1964.
Tenders will not be
~eceived at the Treasury De~artment, Washington.
Each tender must
)e for an even multiple of $1,000, and in the case of competitive
;enders the price offered must be expressed on the basis of 100,
rith not more than three decimals, e. g., 99.925. Fractions may not
Ie used. It is urged that tenders be made on the printed forms and
'orwarded in the special envelopes which will be supplied by Federal
teserve Banks or Branches on application therefor.
lP

Banking institutions generally may submit tenders for account of
ustomers provided the names of the customers are set forth in such
enders. Others than banking institutions will not be permitted to
ubmit tenders except for their own account. Tenders will be received
'ithout deposit from incorporated banks and trust companies and from
'esponsible and recognized dealers in investment securities. Tenders
rom others must be accompanied by payment of 2 percent of the face
mount of Treasury bills applied for, unless the tenders are
ccompanied by an express guaranty of payment by an incorporated bank
r trust company.
D-1211

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 lOBS 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 U;. . . ited States is considered to be
interest. Under Sections ll54 (b) a~d 1221 (5) of the Internal
Revenue Code of 1954 the amount of discount at which bills issued
hereunder are sold is not con~ide~ed 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 C1rc:ular i:o. 418 (current revision) and thiS
notice prescribe the terms of the Treasury bills and govern the
.
conditions of their issue. Conies of the circular may be obtained f~
any Federal Re se rve Bank or Br8.Dc h.
000

TREASURY DEPARTMENT

OR IMMEDIATE RELEASE
TR»\SURY ANNOUNCm $10.6 BILLION Ml\Y 15 REFUNDING
The Treasury today announced the terms of its re:f\mding offer to holders of
10,614 million of Treasury securities maturing May 15. Public holdings of these
8turities a.nr:>unt to $4,196 million; the remaining $6,418 million is held by the
ederal Reserve and Government Investment Accounts. Holders of the maturing
ertificates and notes are being offered the right to exchange them for either
f the following securities:
A 4<;' Treasury Note of Series E-1965, to be dated May 15, 1964,
and to mature November 15, 1965, at 99.875 (to yield about
4.09'.'); or
A 4-1/4<;' Treasury Bond of 1974, dated May 15, 1964, and maturing
May 15, 1974, at par.
Cash subscriptions for the new securities will not be received.
ssues eligible for exchange are as follows:

The maturing

$4,198 million of 3-1/4<;' Treasury Certificates of Indebtedness
of Series B-1964, dated May 15, 1963,

$4,400 million of 4-3/410 Treasury Notes of Series A-1964, dated
July 20, 195 9, and

$2,016 million of
June 23, 1960.

3-3/410 Treasury Notes of Series

D-1964, dated

Exchanges of the maturing 3-1/4% certificates and the 4-3/4% and 3-3/4% notes
III be made in a like face amount of the new securities as of May 15. Coupons
~ted May 15 on the maturing certificates and notes should be detached and cashed
len due.
The books will be open for three days only, on May 4 through May 6, for the
~eipt of subscriptions. Subscriptions addressed to a Federal Reserve Bank or
:'8llCh, or to the Office of the Treasurer of the United States, and placed in the
1.11 before midnight May 6, will be considered as timely. The payment and deli very
Lte for the new securities will be May 15, 1964. The new notes and bonds will be
Lde available in registered as well as bearer fonn. All subscribers requesting
!gistered notes and bonds will be required to furnish appropriate identifying
mbers as required on tax returns and other documents submitted to the Internal
'!venue Service.
The 4-1/410 bonds will be redeemable prior to maturity at par in payment of
deral estate taxes if owned by the decedent at time of death.
Interest on the 4<;' notes will be pa~ble on November 15, 1964, and May 15 and
vember 15, 1965. Interest on the 4-1/410 bonds will be payable on May 15 and
Ivember 15.

'-1212

TREASURY DEPARTMENT
Washington

.. Q i;
• v_

FOR RELEASE: P.M. NEWSPAPERS
THURSDAY, APRIL 30, 1964

ADDRESS BY THE HONORABLE JAMES A. REED,
ASSISTANT SECRETARY OF THE TREASURY AT
THE FORTY-SECOND ANNUAL LUNCHEON MEETING
OF THE NATIONAL COUNCIL OF AMERICAN
IMPORTERS, AMERICANA HOTEL, NEW YORK CITY,
THURSDAY, APRIL 30,1964,1:00 P.M., EDT
MR. CHAIRMAN, MR. MAYOR, HONORED GUESTS:
I am happy to be here this afternoon as representative of the
Secretary of the Treasury, the Honorable Douglas Dillon, who has
asked me to express his sincere regrets at his inability to be
present.

He asked me to convey his regards and congratulations to

the American Council of Importers on the occasion of its salute
to the U. S. Customs Service on its l75th Anniversary which we are
celebrating in 1964.

I also bring you the personal greetings of

the United States Commissioner of Customs, Philip Nichols, Jr.,
who has sent a separate message to your Chairman.
I am indeed privileged to be your guest speaker at an affair
which has few precedents.

In our research in the dusty archives

of Customs history, we searched in vain for previous examples of
tax-payers getting together to salute tax-collectors.

What we

did find was a long catalog of incidents showing a striking absence
of affection on the part of taxpayers for their tax-collectors.

2 In fact, there was a time not too long ago when the agents of his
Britannic Majesty's Collector of Customs in the Port of New York
1ere nearly stoned to death by a group of hostile citizens who felt
that the King of England had no right to take their money.

Then

there was a Tea Party in Boston which showed how unpopular import
duties can really be when collected from a rebellious people strain-

ing at the leash to free themselves from tyranny.

Against this

listoric background, your tribute to our Customs Service becomes all
:he more dramatic and meaningful.

CUSTOMS ROOTED IN TRADITION
The relationship between Government and the business community
f America has deep roots in the American tradition.

Three out

f the first five acts of the first Congress were concerned with

he establishment of the Customs Service as prime medium for
)llecting sufficient funds with which to pay the salaries of the
~esident,

the Vice-President, Members of the Cabinet, Members

: Congress, and the tiny triumphant army of the infant republic.
t by establishing the machinery for collecting import duties,

e Government was in reality exercising its sovereignty in a
ghly significant way.

It provided a shield behind which the

lng and promising industries of ~merica could flourish.

:ablished a uniform system of Customs duties for all of the
ltes which, up until that time, were engaged in a bitter tariff

- 3 war, which resulted in such strange and bizarre situations as the
importers of New York paying duty on New Jersey chickens and eggs,
Connecticut firewood, etc.

Just imagine what it would be like if

the Customhouse in New York had to make entry on the cabbages
brought in from Pennsylvania farms today, and if New Yorkers had to
pay duties on citrus shipments from Florida, motorcars from
Michigan, or shrimp from Louisiana.
Thus, the Customs Service had a threefold impact in the
formative period of U. S. history:

(1) It provided the Treasury

with revenue which the Government desperately needed in order to
govern;

(2) It provided the Administration with the strength it

1eeded -'to secure all rights of independent sovereignty", and
(3) It brought some order out of chaos.

Despite many sharp and often bitter party differences, the
Eirst Congress was acutely aware that sectional interests were
;econdary to the vital necessity for action in collecting revenue.
~he outcome was
l

the first Tariff Act, entitled "An Act for laying

duty on goods, wares and merchandise imported into the

'nited States".
It was on July 4, 1789 -- the 13th Anniversary of the signing
f the Declaration of Independence -- when President George
ashington signed into law the Act which set up the Service
s t"Je know it today.

- 4 -

-:. vGD

Washington himself set an example by complying with the
Customs laws of his time.

You will find in the Customhouse of

New York manifests and entries for merchandise imported and duties
paid by George Washington when he was President.

One of these

manifests reveals that the cargo of the S.S. "New York",
George Dominick, master, from London in April, 1790; one item is
for two cases, marked "G.W." from W. Welch
to George Washington.

& Son, and consigned

The President made entry and paid duties just

like any other citizen -- and, of course, this has been the case with
all Presidents down through our history.
In spite of a great deal of conflict, many trials and errors,
the Customs Service collected two million dollars during its first
year of operation.

Today, 175 years later, Customs collects about

two billion dollars each year, most of it from duty on imports,
but it takes a lot more than this to run the Government of the
United States -- to pay for the salaries of the President, the
Vice-President, Members of the Cabinet, Members of Congress, the
Army, Navy and the Air Force.

But for 123 years, until the

Internal Revenue Act was passed by Congress in 1913, Customs
duties provided the United States with its major source and
virtually its only source of revenue income.
What do these historical facts mean to us here in this

~oom?

How has Customs changed since l789?

ceep pace with the times in which we live?

What have we done to

- 5 -

The world of 1964 bears little resemblance to the world that
saw the enactment of the first U.S. Tariff Act 175 years ago, and
trading methods, like everything else, has undergone a complete
revolution.

Not even the most astute of our statesmen in the days

of George Washington could have foreseen that

U.s. imports would

reach 17.15 billion dollars in 1963, or that our exports, excluding
military assistance and grant-aid, would total twenty-two billion
dollars in that same year.

Customs duties have changed as

drastically as the import figures themselves.
This vast expansion has been in keeping with the development
of our country to its pre-eminent position of world leadership.
The modest handful of Customs people who guarded the frontiers
of the 13 Colonies, has grown into a force of nine thousand men
and women in 1964, and they are spread out along the Canadian and
Mexican borders, along the East and West coasts of our country,
among the ports along the Gulf of Mexico and the Great Lakes in
the north, and among the International Airports throughout the
United States.
Although there have been many sweeping and swift changes
in Customs -- some of them so great, one might say that Customs
in 1964 bears little resemblance to Customs in 1962 or 1962 to
1959.

The one thing which has not changed is the devotion of

the Customs people to their jobs.

An amusing example of this

devotion is an incident that took place not long ago in the

U~~d S-tatea Sav:1ngs Bonc18 Issued anQ-Kea~meCluU"Ousn AiU-.L.L .,,'-"'t ,1~
(Dollar amounts 10 millions - rounded and will ~ot necessarilY add ~ total.)
AmOWlt
Amount
Amount
f, Outatanciiii~
IS8ued l} Redeemed ']j Outstanding
ot J.mt.leallt(~

}~~7u~:J)

-Saries A-1935 - D-1941 ••••••••••
Series F & G-1941 - 1952 ••••••••
u},1'.A 7URED

Seriea E:

19LI •••••••••••••••••••••
1942 •••••••••••••••••••••

19L3 •••••••••••• ~ ••••••••
1944 •••••••••••••••••••••

19L5 •••••••••••••••••••••

19L6 •••••••••••••••••••••
1947 •••••••••••••••••••••
19L8 •••••••••••••••••••••
19L9 •••••••••••••••••••••

1950 •••••••••••••••••••••
-1951 •••••••••••••••••••••

1952
1953
-1»54
1955
1956
1957
1958

•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••
•••••••••••••••••••••

1959 •••••••••••••••••••••

1960 •••••••••••••••••••••
1961 •••••••••••••••••••••
1962 •••••••••••••••••••••

1963 •••••••••••••••••••••

1964 •••••••••••••••••••••
Unclassified ••••••••••••••••••

Total Series E ••••••••••••••••

5,003
29,521

29,375

146

1,833
8,099
13,042
15,184
11,888
5,347
5,041
5,196
5,113
4,4to
3,863
4,045
4,to2
4,674
4,820
4,625
4,346
4,204
3,931
3,912
3,925
3,774
4,180
437
667

1,556
6, 894
11,117
12,781
9,791
4,188
3,769
3,780
3,633
3,089
2,665
2,734
2,957
2,808
2,846
2,742
2,503
2,266
2,074
1,918
1,726
1,505
1,088
181
759

277
1,205

91,196

H (Feb. 1957 - 1964) •••••

131,207
3,670
6,101

Total Series H •••••• ; •••••••••
Total Series E and H ••••••••••

Series

H (1952 - Jan. 1957)

Series J and K

All Series

21 ••

(1952 - 1957) ..... -

...---

Total matured •••••••
Total unmatured •••••
Grand Total •••••••••

.24

~.ll
.88
14.76
lS.83
17.59

1,~25

2,403
2,091
1,159
1,212
1,416
1,480
1,371
1,198
1,310

21.68

25.23 27.2528.95

30. 71~
31_.01
32.39
3,.75
39.92
40.95
40.71
42.41
46.12
47.24
50.98 '
56.03
&>.15
73.98
99.77

1,6l.:5

1,866
1,914
1,883
1,843
1,939
1,857
1,994
2,199
2,270
3,092
436
-92

1,479
784

~7.lS

9,771

2,263

7,509

.76.8S

140,978

93,459

47,520

33.71

3J711
34,524
144,689
179,213

2,090
34,366
95,549
129,915

1,621
158
49,141
49,299

43.68

30.49
59.73

JJt
- 39.9f

Current redomption value.

"jf A. t option of owner bonds may be held and
will earn interest for additional periods
after original Jr.a tur1 ty d.a tea.

.b9

40,
2,192
5,317

17 Includes accrued discount.

4,991

BUREAU 01 T'JX PUBLIC DEBT

27.Sl

203
TREASURY DEPARTMENT

April 30, 1964

FOR IHHEDIATE RElEASE

TREASURY DECISION ON \lliLDED STANDARD STEEL PIPE
UNDER THE ANTIDUMPING ACT

With regard to welded standard steel pipe from the United
~ngdom,

the Treasury Department has determined that the case be

closed on the basis of no sales at less than fair value within
the meaning of the Antidumping Act.

Notice of the determination

will be published in the Federal Register.
The dollar value of imports of the involved merchandise received during 1963 was approximately $7,500,000.

)

, .,

L-.. V

FO,{

~i.... Lt~Ac·V.

·\pril JO,

,~ ..:.:p~p~~,

A. M.

1964

7r1dal, Ma, 1, 1904.

n,ooo,ooo,.

T~ lr.~~ur.f .lepartment announeeJ laft eYftling that the tender., tor
or thereabout8, of 359-daj Tre.<t8ury oi11. to be dated Kay 6, 1~4, and to _tun AfrQ
)0, 1965, vnle:t Wftr. orrered Of.. :\prU 2h, ..,ere ooenecl at the;.deral a8serY. BaM• •
April )0.

lila

d~tail.

of tl1ir. issae are as followsl

Total applied tor - $l,bj),634,OOO
lot..il acceptej
- 1,000,239,000 (includes 11.6,8)4,000 ent.red on a
nooco.pet1tive ba.,i8 and acoepted 1&
full at the a ..erage price ahDVn belGw)
Range of accepted competit1ve bid••
- 96.)16~:qu1val.ent rate ot discount approx. ).694. pel'
- 96.~96
"
,,""
It
3.714'1·

HiiCh

Low

- 96.)OS

Average

n""

. ) . 70S~·

•

(69'£ of' toe amount oid tor at tne low price va. acee"ted)
total
fotal
Federall.sene
Applied
tor
ACcepted
<linnot

J 15,540,606

BOston
York
Philajelr>hia
.;leveland
aiemond
A.tlanta

New

5LO,ooo

760,8)7,000

4(13,000

42),000
6,280,000

1,5S6,OOO
9,900,000

214,2)6,000

Chica~o

st. Louis

1,505,0)7,000
10,640,000

9,)00,000

640,000

l,SS6,oao

1S7,4)6,000
4,800,000

~inneapolh

1,576,000

!ann~

6,056,000

4,0$6,000

1l,lSO,OOO
92,220,000

S4,910,000

11,88),6)4,000

$1.,000,7)9,000

~ty

JaUa"
.An '~'ranciS'co

!I \Al a

4,921,000

),auo,ooo

coupon i.sue of the s&I!'.e len'th and for the game &lnOWlt invested, tbl ,.-..
tbe•• bUls would provide a ,y1eld of ).86'. lnteren rates on billa are q...w ,
terms ot bank discount wittl the return related to the face amount of tbl bUll ~
at maturity rather than the 8JI\Ount iDTtlsted and t.heir length in actual _ _ tI
relateJ to a )6o-Jaj year. In eontra.t, y161d~ on certificates, not•• , aM ~
caaputed in term" of int.ereet on the al'llOunt inVested, and relate the D1:IIIbeIr eI ..
relU1D~ in aD intereet paym~nt period to the actual number ot daya ill tlle .....
vi tIl selliannual compounding if :J:Ore than one C<:' UDon neriod ill inyal vec:l.

REMARKS BY SECRETARY OF THE TREASURY DOUGLAS DILLON
UPON SALE OF FIRST $75 DENOMINATION UNITED STATES
SAVINGS BOND TO PRESIDENT LYNDON B. JOHNSON, AT THE
WHITE HOUSE, FRIDAY, MAY 1, 1964, 12:00 NOON, EDT.
It WaS the beginning of what has now become an establishll
American institution

Twenty-three years ago today -- on May 1, 1941 -- the late
President Franklin D. Roosevelt purchased the first Series E
United States Savings Bond ever issued. ~ so doing, he set in
--m.'2-t~ the greatest voluntary thrift program the world has ever
know~~- a program which is inspired and led by countless volunteers
in all walks of life, a program in which tens of millions of
Americans regularly participate through their purchases of E and H
Savings Bonds.~ ITPday, Americans own more than $47 billion worth of
thes-esecurities -.;; a bulwark of economic stability for the
Nation, and of financial security for millions of families •
. --- The widespread ownership of these securities is

Today, on the 23rd anniversary of the Savings Bonds program
we open a new drive to encourage more Americans to take part in
this patriotic thrift activity. We call it "Operation Security"
which symbolizes the close relationship between the security of
individual families and of our country as a whole, and the part
Savings Bonds can play in strengthening both.
We also introduce today a new $75 denomination Series E Bond -one which bears the portrait of the late President Kennedy and a
famous quotation from his inaugural address. It is my privilege to
issue the first bond of this new denomination to the President of the
United States.
In making this purchase, Mr. President, you will both
launch our campaign and encourage other Americans to save for
their country's security and their own by purchasing United States
Savings Bonds.

000

RESULts

_I .....

ftil:,ASUIJ t

a lfI'IIU

lULL OP - iU'j.l

!be rt.U1II7 ~
laA ST. ' . . . . . tl:.a tendar8 t . t..o a.1eI"
fftMu7 b1lla, - .riM t.o . . . . ..aU.ID 1 ~ fit tn. bUls dated fe'l""" 6, 1M
... to.. -.a.r
\0 be datecl Mar 7, U6, 1IIdAIIa . . . <:>rrsreci au AprU 29. ....
........ -' ... J'edIn1 ____ BaM. _ _ Ia. ... '11ft wre invite4 tor ·4!200. . . . . .
.. t'lft ___, of 91-da7 billlf .... tor tfOO,OGO.aoo, _ t.h8l'9abGut.e, of ltl2-dlr ~
a. ......u. .t tM . . ..nea ..... tell. . .

..n.a

.•
,

lC2-d.;.;yrr.u\1I7
"1U.t.ur1!g Hot'...,..

St..
~

;'r1oe
Jb.176
.ib.1S9

I
I

~~e .165

,amwe] U• •

).6OU
).~

).-629'-' !I

"~tbfte w= ..... ~t.. *1,66S,ooo
96S of \a. ___ td flo '., Mile td4 lew at. ... lmtMrlce wu a.oeepMd
W iii \he ___ fd l~ tdll..... ~ u Ute 10l!l ?J1,C6 v......pW

Far
4M.'1l.5Ji6,oao
"
*RPl'tf
•
l,.J12,Jn.OOO
796.591,000.
I

tJ.fI6.000

l1,sak,OOO

art 1.11
At.) nr\a

CId....

2Ot1J9I, 000
U,001,OOO

lB. TWl,ooo

U,s..-

b'lJ?.l1ed

1,on,BSl,tXXl
8,::;29,:)00
6,~),aoi'J

2O,la98,000.

u.OOY,oao.

)~66,ooo

?<a..ooo.

lJ4,I9I,aoo

rar

1,SS9,OOO

9. $hJ,m

..........]1.

19,1&98,000

IS,OS....

UB,6)1,O()J
9,100, (X);;

l'JaSI,O'JO.

G,:)Ol,~JOJ

' - - 01_

28,102,000

18.101.000 c

·::;,702,000

a. r...u

Da11_

Sea

"'17:1..

190,698,000
)1,2)S,OOO

•

32,601,000
60.21.000

••'-,000.
1O.l!LOOO"

9,6'n4,JOO
7b ;yll,OO)

-u,.325,

$1,816,6)1,000 u.aoo.ut.ooo ~
76J.~,00J
$900"""~ Iaal..... $Z1.J.0Q8,OOO ..... 1IIpItilt1w '.dln •••• p... at. t.he avenge j>n..
~ taeJ,d•• ·$SS.')1,ooo .... , :*'1\1.,. ._lIn ........ att.!t~ a~ }tn. "
t' i')a a ~ s.a.. or t.b.e . . . 1.eacUl 8M tor U. __ gaant iAve.tett. \be
'r01'A.L.~

fIIlJ
Nt.'
).1Sl, .. ,

\hue b1l18 walcl pnri,de )1.elds of ).SU, t_ ... 91-d."i bUl$, and
Iahftat, Pa\ea GIl Id.lla aN . . . . . in tenw of haak di .. a ....
. . . N\1II'II Nlated t.o tbe £. . . . . . . of ~ lQla payaha at ut..url.\.J ..........
\he . . .'" lavut.d aDd 'UIe1r 1eacUa 1a _ , _ a.ber :jf d.M,ys relat.e4 \0
~ar. Ia eaat.ran, J1elcla OIl ~, . . . . and bonda a.re COIIIIPIad ia ...
of i.lReft-at. QD tJJe _ t . 18-......-. .....I.e ... ftUIft'>81' of daJ·S 1. jet.. Sa II
lnt.n.t. paJItlMlt. per1.od to b~
in the ....riocl,
sC
'PCPIpCUN'S ng 11' aore \baa QQI . . . . pert.I .. Saftl ved.

182..., b:Ule.

, .. ., ..,,,

vi.- ...

218
- 3 -

2cnn.

C}:cl12n~'-:!

tenders 'Till receive cquDl treatmcnt.

Cash adjustments will "be made

for dlffcrences bchTccn the p'l.r V'8.1ue of maturing bills accepted in exchange and
the issue price of the new bills.
r]'he income deri vcd from Treo :mry bills, whether interest or gain from the sale

or othcr disposition of the bills, does not have any exemption, as such, and loss
from t.he sole or other di8position of Tren::mry bills does not have any special
trC[ltmr:nt,

81)

such, under the Internol Revenue Code of 1954.

The bills are subject

to Cr.tfl.t.C, inheritance, gift or other excise taxes, whether Federal or state, but
n.re

ex(;rnpt

from all taxation now or hereaf'ter imposed on the principal or interest

thereof by HJly state, or any of the possessions of the United States, or by any
local toxJnl3 8uthority.

For JJUrpoGes of to:-ation the amount of discount at which

Trc'lsury 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 8mOtmt of discount at which bills issued hereunder are sold is not considered
to accrue until such bills are Gold, redeemed or otherwise disposed of, and such
bills are excluded from consideration as ca.pital assets.

Accordingly, the ower

of Trca.sury 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 act~
received either upon sale or redemption at maturity during the taxable year for
which the return is

m~de,

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.

)l Q

TREASURY DEPARTMENT

Washington

FOR IHMEDIATE RELEASE,

6, 1964

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 $ 2,100,000,000 , or thereabouts, for

Xi»

cash and in exchange for Treasury bills ma.turing
of $

2.103~8,OOO

May 14, 1964

, as follows:

91 -day bills ( to maturity date) to be issued

bJh

in the amount of $

1120~0,000,

, in the amount

May 14, 1964

------~~~=------

or thereabouts, represent-

ing an additional amount of bills dated

February 13, 1964 ,

and to mature ___A_ugu~~s~t~1~3~,_1_9_64
___ , originally issued in the
amount of $

ffi

900~000

,the additional and original bills

to be freely interchangeable.
182 -day bills, for $ 900, 0l&J00

$X}J

May XiiJ'964

, or the rea.bout s , to be dated

, and to mature

November 12, 1964 •

xtfdX

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
Darl1ght Saving

closing hour, one-thirty p.m.,

Eastern;~

time,

Monday, MaYllii 1964

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

- 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 Department of the amount
and price range of accepted bids. Those submitt1ng tenders w1ll be
advised of the acceptance or reject10n 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 act10n in any such respect
shall be final. Subject to these reservations, noncompetit1ve
tenders for $200,000 or less for the addit10nal bills dated
February 13 1964,(91-days remaining until matur1tr date on
Au ust 13, 1964) and noncompetitive tenders for $100,000
or~es8 for the 182-day bills without stated price from anyone
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 ir. accordance with the bids must be
made or completed at the Federal Reserve Banks on May 14, 1964,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing May 14, 1964.
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 lOBS 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.
~reasury Department Circular No. 418 (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 Pederal Reserve Bank or Branch.

000

BUPY,Alf OF THE uP'fT DISCONTI'JUES ACCEPTA~CE OF
MAIL Oi1DERS FOR 1964 lNrI FCULATED COIN SETS
The Bureau of the Mint annotmced today that an unprecedented
demand for the 1964 uncircula ted coin sets - also refe rred to as
"Hint Sets" -- has required the Philadelphia Mint to discontinue
aeceptance of mail orders.

.:&w? 2

iii

•

In accordance with its

usual custom the Philadelphia Mint began taking orders on May 1st.
The volume of requests already exceeds the number of sets which can
be processed during 1964

therefore, many unfilled orders must be

retumed{t&- ~8 ..a.el1de~

Uncirculated coin sets contain ten coins of regular issue, five
each from the two Mints, Philadelphia and Denver.

They have a face

value of $1.82, and sell for $2.40 which covers the cost of handling,
postage and

insu~nce.

Uncirculated coin sets are also sold -

when a supply is available -

over the counter beginning May 1 of each year at the Mints in Philadelphia
a~d Denver, the Assay Office in San Francisco, and the Cash Room at ~e

vain Treasury in

aShington.

000

TREASURY DEPARTMENT

Mav

FOR IM1·1EDIATE RElEASE
TREASURY DECISION ON w"'ELDED STANDARD STEEL PIPE
UNDER THE ANTIDUMPING ACT

The Treasury Department has determined that welded standard
steel pipe from Belgium is not being, nor likely to be, sold in
the United States at less than fair value within the meaning of
the Antidumping Act.

Notice of the determination will be pub-

lished in the Federal Register.
The dollar value of imports of the involved merchandise received during 1962 was approximately $600,000.

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN APRIL
During April 1964, market

tran~actions

direct and guaranteed securities of the government for Treasury investment and other accotmts
resulted in net purchases by the Treasury Department of $44,636,500.00.

D-1218

x?'.:r LTS
'

'J' r;r'/',,;Uf:.t'S AEKILY

IfIJ. 0FFf1Im

n. '!'naau1'7 x.par1iNnt armOtmeed 1n\ ....1nc that, \be , . . . . tor ... ...s. If
tn.sUJ7 billa, QII8 serie. t.o be all ad41tJ.oaal 1uue of U. D1lla _'-4 ,...., U.
1964, and the other Mr1e. t.o be dat..d t1al 14, 19&, ....1eh ..... ottuM _ . ,
~ at. \.he Fedaral "-MntI aamua OQ Mq U. feaden waN 1aY1ti4Ml t .
or ~t.a, ~ 9l-dq billa aDd for $900,000,000, . , ~ __u fit 11.....
!be da\.a.Ua of the tlfl . . .1H aN as tollova.

':2

al,_,

~;~\)

l8I__

'H~

ACCEFTi'.D
catPETnT~~: lHMs

!!!!riM I!!
I

".11k

:
S~ of t.M _1IIIIIIl\ of

ot t.be _ _at.

TOTAL ttN1BR.:> APlr_IED

.J'(}f\

AND ACC&P'rf:D BY

Applied for

. .\an
lev len

Cl...lud
~

40J&.$1,OOO
1,Sb9,24S,CXlO

)0,037,000

25,9S7,000
16,617,000
28,94),000
1'18,800,000

AUanta

Ch1eaco

st.

Loa.1.
JUJmeapal1a
, . . . . Cit7
Dallu
sea Praac1aco
ftJ!'ALS

,.~

, ...

, ...,

1. . pr1ee . . . . .. . .

1;he

of 182-c1q b1l.l.a bid tor at t.M low prI.ee . . . .. . . . .

D1evs,-,

Pb'l.dllphla

91-<1q biUs bid tor at.

'i GIll.
'rm.] aate

9I.l.66
98.168

6,.

~..w.

)2,6~7,OOO
2~.)S,' ,000

26,88),000

)2,666,000

nm~~,'u.

usun

!o!!pt!cl

OI,3raICfSa

lpplt . . , .

t-,

* 760,)06,000:
20,457,000

2,m,GOO
1.,._,.,000

9.8)k,oao

15,037,000 IS

2$.~)7,000 I
16,617,000:
2),SOfi,OOO f

114,687,000'
2$,;.t7,OOO

lS,"',),481~oao

11,2)1,000

u.s
,811,CJOO
U,)66,OOO

1),983,000 s
24,9)$,-000'
18.461.,000 t

7,20),000
11,412,000

10,601,000

lb268,()JO,
W..1Sl.000
.:;'2,l72,Sl.3,OOOn,toO,433,OOO!l $1,8J7,JII.oao
189,868,00;)

of'"

IneludN $2)7,16$,000 ooaoc.peUU.... t.endws acoept.e4 at t.be ........ pJPiIe
IDll1ldee"'16,28S,ooo ~t.1t1ft tetMIItr•••••pWCl at. u. ....... prt. tI ~
Oa a ~ iuue or lJle a. . lAf&ctJl aDd tor tJMt . . . _nat. 1Jwu~ ... , . . . .

.... bUl. W8l.d provif4 11elda ot ).S1'.4, tor tbe 91....,. b1Ua, .... , ...,., • ~
182~ bw... Illtiereat rate. OIl bUla an quo\e4l 1a ...... at MIlk .....1 " •
U. retarD related to toile fa. ___ of ~ bUla p.,ula at
udb".
\be IMUt. 1Pe.tecl aDd their Itm&'h 1a aeaal
of ..,. nla~ " • ,..
~. III eontnat, yields on .n.U1.a.., DOtH .... lMDia an • _ _ .t Sa _
of iaMnat OIl the ~ iav.ated, ... relate u. ....... of ..,. J rid.
iaten8t PiOESnt. penod to the uWa1. ...... Itt ..,. la \t. pw1ed, . _ .....
~ it .... twh_ ... 008.1*1 peft.od 18 1mol~

DB""

_-..1.

II.

STATUTORY DEBT LIMITATION
As of

April

30, 1964

,-, ') Q

\\'aSlllnt:~O~~

May

12, l~

:"'<"Ii,," ~1 oi ~econd Liberty !'on~ Act, a~ amended, pro\'ide~ (hac (he face amount of.ohliFa:ions issued under o1Ulhol ll )'01
t •• e,· amount of ,)hl'fatlons guar.,nteed as to pr,I,n_clp':.! and ,n(eres.( by (he lnare,I ~(atl'S (.oxcept such i:uarantccd
,)hll).;.'(',>lI' .• s m.I), he hel,1 by !h~ ~ecretary o! (he Treasurv), . ~hall,no( exceed In the. aFFre1;,He S2H'i,Ol)(),OOOJ OOO (An 01 Junr
1'1<,". I >.i " ("Ie )1, 't.,: 'i,b), out~tandln!, a.t anyone (,me .. t'or purpos.es of thiS se~tlnn the current re empnon \'alurol
.IIIY "',:.
I,ll, """,,1 ,)n .• discount baSIS which IS redeem"ble prior to m.ltllrary at the option of the holder ,.,hall be consiJrtd
.IS " .
",,"" ' . "
Til, ,\.-£ of :\o\'ember 2(). 19()) (P.L. HH-IH7 8Rth (',)ngress) r;ro\'ides th,l( durinF the period heginnin Ion
1"",",:,.
. . ' ,.",i.ea:,hn.~ ,)n June 30, 1~64, the abo\'e I,mltat,.on. shal~ he temporarIly Incre.lsed to $5 09 ,000,000,000. llec!usr
lIt L,fJ.,
, : . . ' I timing ,)f re\'cnue receipts, the publIC debt lImit as Increased by the preeedln,': sentence IS further increased
., .. ,
. ",I, by $(,,000,000,000.
rhr'HI"'::'
I;" "."","'.~ table .shows the face amount of obli,':ations outstanding and the face amount which can still be issucdundrl

(h .• ( .\,·.t •• IIHI th"

,I).

((~

I'" • "H:' .;; .. :l :

$315,000,000,00<

'1',)(.<1 I.., , ..• ",ount that may bc outstanding at any onc time
Olitst.II",ing ,)bligations issued under Second Liberty Bond Act, ,,~ amended
In:~·"\.. ~(-b<.'aring:

$51,048,1 21,000
4,198,246,000
65,130,120,000

$120,311,087,000

86,978,996,050
49,J.4J.,553,488
5,263,611
99,264,000
24,343,000
3,$28,191,000

139,808,2ll,155

i r".lsury hiJ:, _ _ _ _ _ _ _ _

( ,rriii, ..... "t indebtedness

Trea:-,ur:

*Savings ,lIrrent redemption value) __
('ni" '-

Retirement Plan bonds_

's . . . "

...

·[l<.'S

\"· ..... 1:"

-..CflCS .

240,000,000
30,120,481

Forc.·it-:1. ., riL's _ _ _ _ _ _ _ _ _ __
l~rrL'ncy

FOfl.·i,":I,

l'-of4...,,";" .•

"l',IC~

Trc.· . . ~l..

~l'rll'S

_ _ _ _ __

158,333,423

_ _ _ _ _ _ _ _ _ __

l'or,'

1~:249~810

c'ncy serIes _ _ _ _

¥o_191.!15!i

rrc.lsllr\ ,C«llIeaces

Tre.ls.n) b,'O.i s _ _ _ _ _ _ _ _ _ _ _

~_ _.;:.;O~,.;:OOO;..;:..::..1,:.;OOO~.:.

~:'ln, '- -

SpCLi.ll

Ccrci:i.

,d,'"

Trc.l""

"f indebtedness _ _ _ _

II,HcS _ _ _ _ _ _ _ _ _

Treasury Il,'nds _ _ _ _ _ _ _ _ __

5,963,350,385
2,2ll,134,OOO
33,829,641,000

Tot.ll intercs.-bearing
~Iarured,

1,160,103,114
15,191,154
20,000,000

ifllL·,esr-ceased _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __

42,004,131,385
303,385, 331,OOB'
275,906,150

Bearing no ioterest:
Cnite,l :'r"r,
Exces"

Savin~s

profir~

53,394,698
688,013
3,166,000,000
164,261,000
150,000,000

Stamps _ _ _ _

tax refund bonds _ _ _ _

Intcrn .• c'l \\onctary Fund notes _ _ _ _

i,",'rr.", :

:)('"clop. Ass'n. notes _ _ _ _

.' .-.-\mcr.e.ln Dcvdop. Bank notes _ _
l

nitcd '\ations bonds- Various programs _ _ _....;;;42~,iE.:::5...;8:.;9~1..;:2:.6;:...:..1

Total

3,576,933,038
307,238,170,79"6

Guaranteed obligations (not held by Treasury):
Interest-bearing:
Debcnturc~:

800,865,100
752,,925.

l' .H ..... &: DC Stad. Bds.

\\atllreJ, iracr,,"t-eeascd _ _ _ _ _ __
Gr.lnJ

[0( ...

B.lI.lnc, ',,,','

801,618,622

1 ,',Jtstanding
~.'h'unt

of obligations issuable unJer above authority _ _ _ _ _ _ _ _ _ _ __

i\';CONCILEMENT WITH TABLE III OF THE DAILY STATEMENT OF THE UNITED STATES TREASURY
As

April 30,-,1=9:....::64:=-_ _

Gr,',s !,ub!ie .;d" chis dare
\ ... ,' .• ot<:c-.1

,)l)L.~ar.uos

nor owned by Treasury _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __

301,600,680,81
801,618~

.~ros~ pub;;, .Jebt and guaranteed obligations

• 'I

; .iebc IiOt ~,,,,iec[ to statutory limitation
_,) limit.ltion _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _~_ _ _ _ _ _ __
:--'L..

J<.:or

D-1221

308,039.7

- 2-

Country of Origin

Es tab l i shed
TOTAL QOOTA

Total Imports
Sept. 20, 196), to

Mav ll. 1964
United Kingdom ••••••••••••
Canada .................... .

France ••••••••••••••••••••
India and Pakistan ••••••••
Netherlands •••••••••••••
Switzerland..
••
Belgium...
• •••••
Japan. • • • • • •••••••••••••
China •••••••••••••••••••••
Egyp t •••••••••••••••••••••

Cuba ••••••••••••••••••••••

Germany..

• ••••••••••••••

Italy •••••••••••••••••••••

Established
Imports
11
33-113% of
Sept. 20, 19 6),
Total Qllota_ : __to_ ~av l l . 196J...

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

1,027,020
239,690
221,909
19,284
1l,249
34,147
33,511
59,000

1,441,152

265,586

75,807

55,151

35,738

25,443
7,088

5,482,509

1,681,548

1,599,886

22,747
14,796
12,853

Other, including the U. S.

)20,737

Inc1uded in total. imports, Column 2.
The count.ry desIgnat.Ions listed In this press reJOease are those specIfied In PresIdential Proclamat.l.on
No. 2351. o~ September 5, 1.939, as modified by t.he Tarif'f' Schedul.es of' the United St.ates.L .. ~inc~ that
date the names o£ certain countries have been c~ed.
The outmoded names are being re~ea bec&u8e
- ......... -~ - ~~.,. .....Dhica.J.. coverage and have no politic.i.l. connotation.

TREASURY DEPARTMENT
Washington, D. C.
IMMEDIATE RELEASE
WEDNESDAY, MAY 13,1964

D-1222

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, as modified by
the Tariff Schedules of the United States which became effective August 31, 1963.
COTTON (other than linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4/1
Imports September 20. 1963 ~vJl. 196k
Country of Origin
Egypt and Sudan •••••••••••••
Peru ••.••••.

oo • • • • • • • • • • • • • •

India and Pakistan ••••••••••
China ••••..•.••••••••••.••••

Mexico ••••••••••••••••••••••
Brazil ••••••••••••••••••••••
Union of Soviet
Socialist Republics •••••••
Arsentina •••••.•••••••••••••

Haiti •••••••••••••••••••••••
Ecuador •••••••••••••••••••••

Established Quota

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

Imports

628,215
24,045
208,692
8,883,259

600,000

475,124
5,203
237
9,333

Established Quota

Country of Origin
Honduras •••••••••••••.••••••
Paraguay •••••••.•••.••••••••

Colombia •••••••••••••••••••.
Iraq ••...•..••.....•.••••..•
British East Africa •••••••••
Indonesia and Netherlands
New Guinea •••••.••••••••••
!/British W. Indies •••••••••••
Nigeria •••••••••••••••••••••
£/British W. Africa •••••••••.•
Other, including the U.S ••••

11 Except Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
11 Except Nigeria and Ghana.
Cotton 1-1/8" or more
Established Yearly Quota - 45,656,420 Ibs.
Imports August I, 19 63 -:. May il, 196k
Staple Length
1-3/8" or more
1-5/32" or more and under
1-3/8" (Tangui.s)
l - l / S " or more and under

Allocation

Imports

39,590,778

1.500.000

86,776

752
871
124
195
2,240
71 ,388

21,321
5,377
16,004

- 2-

COTTON WASTES

(In pounds)
COTTON CARD STRIPS made from cotton having a staple of less than 1-3/16 inches in length, COMBER
'NASTE, 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 1-3116 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

Es tablished
TOTAL QOOTA

Total Imports
Sept. 20, 196). to

Ma:'Lll. 1964
United Kingdom ••••••••••••
Canada...............
France...............
India and Pakistan...
Netherlands...............
Switzerland...
Belgium.......
Japan............
China...................
Egypt.....
••••••••••••
eu ba. • . • • • • • • •
•••••••
Germany •••••••••••••••••
Italy..................
Other, including the U. S.

D-1222

Established :
Imports
33-l/3% of: Sept. 20, 19 63.
Tot<!l_Quota_ :_J~~n"," 196L.

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

1,027,020
239,690
221,909
19,284
ll,249
34,U7
33,511
59,000

1,441,152

265,586

75,807

55,151

35,738

25,443
7,088

5,482,509

1,681,548

1,599,886

22,747
l4,796
12,853

320,737

1/ Included in total imports, Column 2.
The country designations listed in this press release are those -specifioo 1.11 Yresident1.al. ProclSinAt.ior
!Jo. 2351 of September 5, 1939, as modified by the Tariff Schedules of the United ~tates
Since that
date the names of certain countries have been <:h~ed. The 0\ltmoded names are belng reta.ulecr because
of their geographical coverage and have no politlCal connotatlon.
Prepared in the Bureau of Customs

TREASURY DEPARTMENT

Washington. D. C.

0-1223

I14M.l'; ::nA n; r, F..L LA;:; E

WEDNESDAY, MAY 13 1964

-=----=--=...:.-=--..l'----=-=.n:l-'RE.;".,.L....:;OOj~.;,.A1~{Y.,..:::....:,.Df,TA ON IMPORTS feR CONSL~v1PTI(N OF UNMANUFACTURED LF.AD AND ZINC CHARGEABLE: TO TP.E cUOTAS ESTABLISHED
BY PRESIDl!:NTIAL PROCLAMATION NO. 3257 OF SEPTEMBF:R 22, 1958. AS MODIFIED BY ['HE TAF.FF SCHEDULES Cf 'I'HE
IJNIT1i.:D STATES, WHICH BF.GAME EFFF,cTIVE AUGUST 31, 1963.
OUAR1'id{LY

QUOTA

PERIOD -

IMPORTS -

ITEM 925.01-

Country
of
Production

Lead-bearing ores
and ma teria1s

April 1 - June 30, 1964
April 1 - May 8, 1964 (or as noted)

ITEM 925.03-

ITEM 925.04·

IT::<.:M 925.02·

Umrrought lead arul

lead ......ste and. ser&p

I
I

Zino-bearing ores and
materials

I
Z

Umrrought zino (exoept alloys
01 zino and 'Zinc duat) and

zinc waste and serap

Import.

A.Wltra11a

11,220,000

22,540,000

10,689,412

Belgium and
Luxemburg (total)
BoliTia.

5,040,000

Canada

13,440,000

.... 2,243,545

15,920,000

10,209,451

66,480,000

7,520,000

37,840,000

15,550,268

3,600,000

11Ia1y
Yedoo
l6,16Q,000

Paru

16,160,000

36,880,000

20,100,292

70,480,000

27,568,197

6,320,000

1,597,70)

12,880,000

3,773,726

35,120,000

12,668,523

3,760,000

2,569,94

5,440,000

".3, 251,a..

~Ub1io

of the Congo
( ormerly Belgian Congo)

••~ So. Africa

JA.,i300,000

.All other
oountries (total)

6,560,000

....1,414,145

Part 2. Appendix to Tariff Sohedules •

••R.p\1b~1.o of South Ap':1.~M
•••~ort. &S .~ May ~ •
•

•

14,880,000

Y~oslaTi&

-s ••

7,520,000

15,760,000

···3,531,061

6,080,000

5,080,000

11,840,000

17,840,000

6,000,000

6,080,000

T~EAS

UR. Y DEPA;<, T:·1ENT
\·':ashington

IMHEDIATE RELEASE

WEDNESDAY, MAY 13, 1964

D-1224

The Bureau of CClS toms has announced the following prelimina:cy figures showing
the imports for consul1ption from January 1, 1964, to Hay 2, 1964, inclusive, of
comllodities under quotas established pClrsuant to the Philippine Trade Agreement
Revision Act of 1955:

Commodity

Established Annual
Quota Quantity

Unit
of
Quantity

Imports
as of
Hay 2, 1964

Buttons •••••••••••••

680,000

Cigars •.......•.•.•.

160,000,000

Number

Coconut oil ....•....

358,400,000

Pound

183,546,919

Cordage •••••.•••••••

6,000,000

Pound

2,349,390

Tobacco •........•...

5,200,000

Pound

1,500,244

Gross

75,306
5,324,855

-2-

Commodity

Period and Quantity

Unit
Import;of
as of
:Quantity: May 2. U

Absolute Quotas:
Butter substitutes containing
over 45% of butterfat, and
butter 011 •••••••••••••••••••••••••• Calendar Year

1,200,000

Pound

but not spun ••••.••••••••••••••••••• Sept. 11, 1963

1,000

Pound

Peanuts, shelled or not shelled,
blanched, or otherwise prepared
or preserved (except peanut
12 mos. from
butter) ••••••••••••••••••••••••••••• August 1, 1963

1,709,000

Pound

Fibers of cotton processed

!I lm?orts through Hay 11, 1964.

D-1225

Quota '11

12 mos. from

Quota F11

V,EASURY DEPARD1ENT
\~ashington

Il'l}iEuL>'rE

.~ELE.,,3E

WEDNESDAY, MAY 13, 1964

D-1225

The Bureau of Customs announced today preliminary figures on imports for consumption of the following cOlumodities from the beginning of the respective quota
periods through Hay 2, 1964:

Commodity

Period and Quantity

: Unit
of
jQuantity:

Imports

as of
Hay 2, 1964

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

1,500,000 Gallon

409,914

Whole Milk, fresh or sour •••••••• Calendar Year

3,000,000 Gallon

Cattle, 700 Ibs. or more each
Jan. 1, 1964(other than dairy cows) •••••••• ilarch 31, 1964
April 1, 1964June 30, 1964

120,000 Head

6,014

120,000 Head

534

Cattle less than 200 Ibs. each ••• 12 mos. from
April 1, 1963
12 :nos. from
.,pril 1, 1964

200,000 Head

62,117

200,000 Head

18,774

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

24,861,670 Pound

11,446,791

Tuna Fish •••••••••••••••••••••••• Calendar Year

60,911,870 Pound

11,744,881

'8bi te or Irish potatoes:
Certified seed ••••••••••••••••• 12 mos. fro~
Other ••••.•.•••.••••••••••.•••• Sept. 15, 1963

114,000,000 Pound
45,000,000 Pound

Quota Filled

Knives, forks, and spoons with
Nov. 1, 1963stainless steel handles •••••••• Get. 31, 1964

69,000,000 Pieces

53,449,760

Quota Filled

11 Imports for consumption at the quota rate are limited to 12,430,834 pounds duri~
the first six months of the calendar year.

-2-

Commodity

Period and Quantity

Unit
Importsof
as of
:Quantity: May 2. ljj

Absolute Quotas:
Butter substitutes containing
over 45% of butterfat, and
butter oil •••••••••••••••••••••••••• Calendar Year
Fibers of cotton processed
12 mos. from
but not spun •••••••••••••••••••••••• Sept. 11, 1963
Peanuts, shelled or not shelled,
blanched, or otherwise prepared
or preserved (except peanut

D-1225

Pound

1,000

Pound

1,709,000

Pound

Quota Fit:

12 mos. from

bu t t e r ) •••..•.•••••••••••••••••••••• August 1, 1963

1/ lm?orts through May 11, 1964.

1,200,000

Quota FH:

TREASURY DEPAR'DmfI
Wubington, D. C.

IMMED lATE RELEASE
D-1226

\-JEDNESDAY, i-lA Y 13, 1964

The Bureau ot CUstoms announced todq prel.1m1nary tigures shoving the
quantities ot wheat and milled wheat products authorised to be entered, or
withdrawn from warehouse, tor consumption under the import quotas established
in the President's proclamation ot Mq 28, 1941, as mod1.t1ed by the President'.
proclamation ot April 13, 1942, am provided tor in the Tariff Schedules ot
the Unitad States, tor the 12 months commencing Mq 29, 1963, as tollows:

Country
of
Origin

Canada
China
Hungary
Hong Kong

••

••
••
••
••
••

Wheat

Milled wheat products
••
•••• Established •• Imports
•• Established •
Imports
••
:Mq 29, 1963,to:
Quota
Quota
:May 29, 19611
•• ~
•
•
64
«
;
•
(Powns)
(Bushels)
Bushels
Pounds

·.

795,000

Japan

Unitad Kingdom
Australia

100

Germany

100
100

Syria
New Zea1&Di
Chile
Netherlan:1s
Argentina
Italy
CUba
France
Greece
Mexico
Panama
Uruguay

••
:
••

100
2,000
100
1,000
100

Polam am Danzig
Sweden
Yugoslavia
Norvq
Canary Isl.8Dis
.Rwaan1a
1,000
Guatemala
100
Brazil
100
Union ot Soviet
Socialist Republics
100
Belgium
100
Other toreign countries
or areas

2, 1,.

tv 2. lr
795,000

3,815,000
24,000
13,000
13,000
8,000
75,000
1,000
5,000
5,000
1,000
1,000
1,000
14,000
2,000
12,000
1,000
1,000
1,000
1,000
1,000

3,S15,OOO

1,224
6,252

115

1,000
1,000
1,000
1,000
1,000

- 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.
~e

The income derived from Treasury bills, whether interest or gain from the

or other disposition of the bills, does not have any exemption, as such, and 10s8
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 herea.f'ter 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

19~

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 ac:tual.lY
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,

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 -

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 incorpora.ted banks

and trust companies and !'rom 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 a.t the Federal
Reserve Banks and BraJ1ches, 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

Secreta.ry 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 sha.l.l be
Subject to these reservations, noncompetitive tenders for $ 200,000 or
~
less for the additional bills dated F;:;b:uary 20, 196~
, ( 91
days remainfinal.

ing until maturity date on

j(jtilJi{

;.ugust ~ 196 /1

)

and noncompetitive tenders for

X~·
182 -day bills without stated price from anyone
. }
:(:&4\
bidder will be accepted in full at the average price (in three decimals) of ac-

$ l(lo0'J'J or less for the

cepted competitive bids for the respective issues.

Settlement for accepted teo-

ders in accordance with the bids must be made or completed at the Federal Reserre
Banks on

.1 J ~9~':

, in cash or other immediately availa.ble funds or
(t2)
in a like face amount of Treasury bills maturing
;':3.;/ ?1, 196c;
Ca.sh

{$Z

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,

:< /<~~i~x::: :XXXXXJ~ DODDO()OOOOOGmYJ();~{
TREASURY'S WEEKLY BILL OFFERING

The Treasury Department, by this public notice, invites tenders for tvo series
of Treasury bills to the aggregate amount of $ 2 z10(~3:)? ,000 , or thereabouts, tor
cash and in exchange for Treasury bills maturing
of $

Hay 2 m964

, in the amount

DOl '-' 8 000 , as follows:

?
H'

+Mf'
" a,

91 -day bills (to maturity date) to be issued

1M'(

in the amount of $

1)~00,000,000

Hay [;1, 1964

---~XfiijC~:----

, or thereabouts, represent-

)tE&}{
ing an additional amount of bills dated

February 20, 1964

%&}t
and to mature __A_u.:.::gu_:::;t..."..".~....
)O....:;,_1_9_6L'_",_ , originally issued in the

~ru

amount of $ 900,955,000

,the additional and original bills

fMi1X

to be freely interchangeable.
18'2 -day bills, for $ 900,000,000

ij~

;;iaL~'i 1964

,or thereabouts, to be dated

~£

, and to mature _ _N_o_v_e~mb~e~r~1_9_,_1_9_64_

x3t&')

tlAlWC

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
D3.ylight 3aving
clOSing hour, one-thirty p.m., Eastern/~~ time, Monday, H:ly 18, 1964
'!'euu.'I:;.I.0

,,~~~

....,.,;.

-", ............... ~ ... .:.

... ~

t1i~

the Treasury Department, Washington.

EE!h 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

- 2 Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, followin~ 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. Subjec t to these reservations, noncompetitive
tenders for $200,000 or iess for the additional bills dated
Fehru.3rv 20 1964, ( 91-days remaining until maturit;y date on
~ugust 20, i964)
and noncompetitive tenders for $100,000
orcless for the 182-day bills without stated price from anyone
bidder will be accepted in ful~ at the average price (in three
decimals) of accepted competitive bids for the respective issues.
Settlement for accepted tenders i~ accordance with the bids must be
made or completed at the Federal Reserve Banks on May 21, 1964,
in cash or other inunediately available funds or in a like face
amount of TreaSUFj bills maturing }lav 2l. 1964.
Cash and
exchange tenders \.;ill receive equal 'creatment. Cash adjustments
will be made for differences between the par value of maturing
bills accepted in ex:ha~g~ and the issue price of the new bills.
The incoT':le 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 sa1.e 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 taxaT;ion now or hereafter imposed on
the ~rincipal or interest thereof by any State, or any of the
posseSSions of the Unlt0d States, or by any local taxing authority.
?or purp:lses of taxation the amount of discount at which Treasury
bil~3 are originally sold by the United States is considered to be
i:-lterest. Under Sections 4sL~ (b) and 1221 (5) of the Internal
~~venue Code of 1954 the amount of discount at which bills issued
h::c'eunder are sold is not c:::msldered to accrue until such bills are
seld, redeemed or othe~Nise disposed of, and such bills are excluded
~rom consideration as capital assets.
Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunder
need :ncluie in his income tax return only the difference between
the ~rice p~i~ ~nr such billS, whether on original issue or on
subseque;.~ ~ur=hase, and the amem;'·':; actually received either upon
sa:e sr r~de~r~lo~ at naturity during the taxable year for Which the
return is ::13:::0, as ordinaFJ gain or 103s.
-:-~3~1~Y ~~D~rt~0nt Cl~cular No. 418 (current revision) and thiS
n-:-tice rresc:"ihe 4h0 ter:ns of the ":'reasury bills and govern the
:')nj~ 1::10ns "f' ~::-;e~ ~ -lssue.
('ontes nf the circular may be obtained from
3.;]y :-e'ieral ~)nC-C>;"0 l2nk 0:- 0;';>nch.

2 -

Exchanges for 4-1/4~ Bonds of 1974
Federal Reserve
District
Boston
Ne.... York
Pnilade1phia
Cleveland
Richmond

Atlanta
Chicago
St. Louis
Minneapolis
lCansas C1 ty
DaLl8.E

San Fra.n~~isco
Treasury
TOTAL

4-3/4~ Notes
Series A-1964

3-3/4~ Notes
Series D-1964

$ 56,650,000
307,396,000
19,122,000
27,067,000
10,369,000
l3,850,000
81,815,000
18,441,000
17 ,305,000
24,387,000
13,136,000
25,234,000

172, 778,OOC
23,971,000
8,653,000
1,620,000
4,035,000
44,204,000
16,345,000
7,447,000
11,181,000
1,580,000
10,760,000
SOCtOO'::

$307,957,OCO

3-1/ 4~ Ctfs.

Series }3.-1964

:$ 4,003 1 °00

Total

$ 104,700,00

~330,OOO

43,257,000
293,561,000
15,053,000
33,674,000
5,152,000
17,474,000
88,321,000
18,324,000
27,169,000
23,702,000
11,853,000
23,982,000
867,000

$620,102,000

$602,389,000

$1,530,448,00

773,735,00
58,146,00
69,394,00
17,141,00
35,359,00
214,340,00
53,110,00
51,921,00
59,270,00
26,569,00
59,976,00
6,697,00

"!t.... J\~

~~~.J. • •-\,.~

~\.

...

"I.

d~_\;} ....- . i - ' :

Mq 18. 19~

19, 19%.

Tue&d!)y&, 'raj

R:;:'LTS

.)!.';~'.:i.

t;d):':::' Ji.::r;t{Ll [. LL iJFFb:f\Iiro

Ti":e ~··r-eaz')f'.} C'e!- art.r:le!1t r.r.!1:1CJ.mcm! last eTeninl{ -::'.i at t.he tenders tor t;wo ..n... tI
Treasur., b:lls, '.i.18 ~eriQs t:) b€ an additional 1saile of t.h. bUla dated f'ebruI7 to.
19~, ann W~e ()t,.J.(':t' sp.ries to be dc.ted May 21, 1964, wLic.b we1"8 offered Oft " " - l~
opened at U:e Fedpral l~eserve Oa'rk. on May 18. renders wgre 1Irrlted tor $1,200,
or t ereaboJt.s, Jf;l-day bills 3..:ld far :t>yOO,OOO,/)(~), or t..htU'.about.s, ot 182-cIIJ
The detaU~ of ;:,i.e- t".-..) series ~re as f':.>11o""....

RA:'IUK i)F

Yl-day Treru;ury billa

A~_~.:fj'lD

maturing AUeus~, 20, ~

CWPr:T ;-TIVE '.;' .6:

A.lJ,.rox.

Friee
lii~b

A::nual Rate

)9.122 a/

';"
,:;-118 -

Low
,'v~rl<

:.• 9 _12~)

:"xce,jtl ~*.': t.W) ten',:e s t ytal i ng ~.) I, t.>OO
'.Jf l,; e 8]i1.kJlt ·,f 11-day ni115 . ,id f;)r .;;:.t ~h~ low r'rie. V6.S acoept.ed
6l)+' of t:·e ~:':.J!·.nt :>1' H'2-da~ blllv bid for &t tb.e low pri.ee W1l.S acoeptM
22;~

: ~

i1istrict

Boston

~; f"

N.... ~·ork
p: Hadel) 1a

21, Jm~, ')()Q

f,icr..m.md

12 J 795 , ),YJ
30 ,1,i3,'j,y)
P7 , :'1"t., JV'
~"""J~
l ·v.

Ct.1cah;o
~;t.

L,):Ji~

'~inne&polis

Kan$Q8

Cll,Y

Dallas
~:&n

j;"ra~c ~sco

Ji~,

JL. 7 ,X;;,

"'f::

-.. .::

1,95),000

18.140,00\)

146,194,000

1:),&)8,000

7,0S6,000

32, 3f 3, j;i)

10,679,000

2~J;)S9"n0
~2,2)'

5,461,000

14,938.000

JoJ-.J

112,ll9,,)

A?Pl1ed For

1,294.579,000
7,961,000

l ~ \1 ~

...... ,1.)" J

91;, 1 ~;/. ,j\N
27,79:1, ,)')Q

Cl('veland
l.\.tlantlA

EI
21

2 /,h, 'L.lt)

Acceot.ed
*'

11,l$O,OO.J

if)

lCif,72Z'OOO

,1;'J,Y){)

$1,633,450,000

ili.cluaE,,:, ,';; ??,;~'2~,).}) :'l;.r,c):"",:,·t.itlve t.ar."':ers a.ccc~rr.e(i ':Lt l,•. a avera~ price of"eII
ncludes:/'?,:r:l, '100 ")~ICY':';ctl tive tenders ttccer)t.Pd at ti';e Gverage yrice ~
.n !!. C!)<,)f: iss!p )..:' -:.:- e S~~-'-' len.;,~'i and for 'tir•.r· BaIfl8 al'IOlJot iHvelltAd, t.be N . . . .
t.;.~~~,(? hiLs ~·)".L; )Lld·~,e ,/i.ela:; of 3.56". !:or the ,1-0&., bi.1ls, &.nd ).72), '"
..~., €' '1"'~'
., 1
... -c.:;, '~'.!...L_~.
n .:k?!" Jt T?t.eS :X', .... 11s 81"8 quot.ed in t.el"ftlfl of bank <l1J3 ....
&
. ~ t.r.: tr:e ~t.lrn rel;o.t.€d L· :':'rf' f~ce llif',J ;nt of t.fie bill s va/a:)l. at . .tourit., . . .
tr;an tr,e a:"": ),nt inVeSU-l,j t;.;:" "'l~'ir lon;:th in act.ual n:..ber Jf days ..:laW'"
3S0-da. jear. ~n C)f;'_'R8't, } ields on certificates, notes, and bonda are .. quW
. n te:'T':.';);' i·, t"'-'l,··'t I' •. r € (£"')~··lt. ir.vest.ez~ J an<l relatA iJ.e nU1hber of daJI
rer.;,ni'i..:lf; :n <1.1'1 -:":·;i.,-!r-:::~\' '~_.:r-; -,t ,.,ierlod t,i) th. actual nurober of ~8 in to. ",..

,..aa

\\: t"

58 i2..~J.:<:1 c;:~,') ::d->:,{
.

i ('

:'\.):~e

ti;anme C:JULvm.
;:er1:ld 1a inx~d.
/

TREASURY DEPARTMENT

May 19, 1964

FOR IMMEDIATE RELEASE
TREASURY DECISION ON WELDED STANDARD STEEL PIPE
UNDER THE ANTIOOMPING AC1r

With regard to welded standard steel pipe from France, the
Treasury Department has determined that the case be closed on the
basis of no sales at less than fair value within the meaning of
the Antidumping Act.

Notice of the determination will be published

in the Federal Register.
The dollar value of imports of the involved merchandise received during 1963 was approximately $4,500,000.

- 2 -

his LL.B. degree, magna cum laude, from Harvard Law School
in 1956, where he was a member of the Board of Editors of
the Harvard Law Review.

Mr. Stone is a member of the State

~ 1v(._ ... ___ -l v

Bar of California(

and the American Bar Association

~f ~

the Federal Bar Association
~~

Section).

Mr. Stone is married to the former Anna Jean Clark and
makes h:is home at 3001 Ho11yridge Drive, Los Angeles,
California.

LAWRENCE M. STONE NAMED TREASURY'S TAX LEGISLATIVE COUNSEL
Secretary of the Treasury [Douglas Dillo~ today announced
the appointment of Lawrence M. Stone, of

w-~-

~Qve~s,

California, as the Treasury's Tax Legislative Counsel.
Mr. Stone, an attorney who specializes in tax matters,
will serve as a legal adviser to Assistant Secretary Stanley S.
Surrey on tax legislation and assist in coordinating the
Department's tax legislative program.

He will assume his

new duties
At the time of his Treasury appointment, Mr. Stone was a
tax specialist and partner in the B€verly Hills law firm of
Irell & Manella.

In 1956 and 1957, Mr. Stone was a Staff

Member, Federal Income, Gift and Estate Tax Project of file
American Law Institute,

From 1957 to 1961 he was associated

with the firm of Irell and Manella in Beverly Hills.

From

1961 to 1962, he served in the Office of Tax Legislative
Counsel in the Treasury Department working on the Revenue
Act of 1962.

Since 1962, he has been a partner in Irell and

Manella.
Mr. Stone, 33, was born in Malden, Massachusetts.

received a B.A. degree in 1953 from Harvard University, and

'f; .c'\,... :'1 ,~'"
l

t'l

pot';totlali t.tIP.S of our Internationa,l

Pt:ytJi.~·n'r,~

:;'Y~tPI11,

-15.,. :.po.-(<:" to you :i..n
;-'l't 1)[ t;l'~

r"ole

r.oroc~

two years

~~rformed

r"~netary

cUf'rencl~so

by the key

d~vl:.lop?d

It st'ents to roo that the

J.:., . : :1':'; '·.:,.•

)-!.:..l

,,;-)(, :-:"lll

':,;c'rvc curr-I:lcy cot;.nt.ries can sharr:' in a mul t1latf'ral ..-Jay th·:,. rl!spon..

,.!.;.),

liquidity i1!',eds

!.tl :.~Jdi tion,

-,.~JH

,,':

:r.ore and more as a mechunip.m whel"ft

J ),ti.:"l, fOl~ th~ financing of paymnts swings and thereby make a contribution

..'.:::.~·~'-run

.:,

Fund has

;"f the problem of multllaterLll1Zing

o...gf)

outside the v"und for other

rOOlil has reen found

UatE'ral facilities as w"!l1 --

suppl<:.~nting

and r~1nrorcing, but in

;;.:. '.:::".' .·upplanting, th"! cent.ral rolE' of the Fund 1 tcplf ~
:in

"Co'

past ten yaurs, and building on our past

tb~l~>~:

','.(

~~,;.

ol'

'1ir'\'I,

future with confidence.
on~

of the major

:k:::erve ::w/ap ncti'iork,

Over

achieve~nts

has

be~n

'rJe have

exp._~rience

Tney have proved

a long

we can look

thf': dp.velopment of t.hfi Federal

arrans.~:ments

th~,ir u~f>fuln'3sg

com~

as Sfl'en from th", U.S. poInt

while originally designed mainly as a

<.lollar, ti:lf'l rf>clpt'ocal natur0 of the
c:.;:-'r-'~rl'·nt,

th~" p-~riod,

bllat~ral

has

defe!lS~

for the

b9comt'~ progr~ssivoly

in economizlng on primary reserves

b,y cOQbai:.ting siX,culatlon and avoiding disruptive sNings in reserve positions
~'id h3V~

sr'(~at

b,'"-l},
8..."1:.,'

-'>~

8.j,1

alrAudy served Itore importantly for othAr

stref:i3 than for the dollar i tsp.lf.

curr?n(.~ic:s

a.t periods

Toget.her with oth'?l'" mutual central

r rmgt'1ID0nt.s. tb>9se svJap facilltip.s will clearly play an intP,gral role in

l iquidi ty eystem in the future.

Treasury foreign currency bonds have

i7,(lar-ly delOOnstrat.ed their usefulness. not only in absorbint the 't€'mporar111

;.:o~,;:;.

dollar accruals of some individual

,'~:::)p.Lt.f:'2'ntary

reserve

as~ets

countri~'s~

but also in providing

for the original creditor. wh1ch

:' ~;':' in ca.!:;'.?' of need -- as Italy has all'eady

may latP.r

done~

Dut thes~ are only examples of the cred1 t forms that make up an essential
pert of our present-day liquidity system.

I am sure that new forms will emerP

J ;

\' .:l\.:;·

" • ., -: ,<:.

o.t'

fully

r~cognl~sd.

1'01 the future th3.t will not 1nclud n a laBdlng r<:.le for tl",'!J Fur.,l

Fur

-:',;.3.1 oo~rf.~·..ions, an ac(~ptf;id way of using nation81 currenci~3 to kY-'~,';';·Ar

-13i 3C 111 tl'--s" in case of need -- something to be considered, 80 to speak,

a sort of aoset "below the line."

'de did not also think of our quotas

HE;

~I'ec.tlng

an equal opportunity for acquiring an asset "abov~ the l1ne" --

D.::

OlJr C',<n currency was drawn from the Fund by oth~rs -- an asset that would.

r"!~iC. ily

available, in turn, fo1.' us to draw upon at will if wa needed to

It did
," C':'

no~

occur to many of us in the Un1trod States that, as dollars

p2ild ·out by

th~:-

IntE-rnational Monetary l"und over the t;arly postwar yea.rs,

',,".' w::re 6c'tin:1.ng a valuable- asset in the parallel incr~asa 1n our lTaulX~r~golcl

',;,ctinche tl position, or. more properly, our "het croditor position" 1n the
Pund"

Tnen

mor~

recently, as dollar shortage gave way to dollar plenty,

in some countries, debtor countr1es to the Fund were able to pay back the

dollars they had drawn

earli~ro

The Fund itself was

th~reby

absorbing a

SlV11ficant fraction of the dollars that our payments deficit was pumping
into the: world .. - amount1ng, in fact .. to about $1. 3 billion in the period

from 19:;.8 to 19630

Or, to put it another waYI without receiving vP.ry much

attt'ntiun, the United States was making

us~

of its creditor claims on the

Fund. acquirf'od in years of balance of payruents strt:!ogth. to meet a signifi-

cant part of 1ts rf'osarve drain as our defic it accumulated -- consisting large]

cf some $304 million in 1959. $442 million 1n 1960 and $626 million in 1902.
At the present time, as you know, the Unitoo States is a small net usel'
,);:' th"3 li\md I s resources.

In eff"3ct, dollars drawn by others in earlier years

:-.& V"C:: bE'en wholly repaid out of the dollars crea.ted by our more recent
d~flcits,

And now, in order to facilitate adrlltional dollar payments to

Wl~ Intc~atlonal

Monetary Fund out of the ancumulated reserves of Fund

~:;:,,:.jliUe!'l that ...,'111 ~ r.Pf'dro 10 ~e',

I,.

\", 'ised ot maj'lJi' f;,l~n·~nt.'~-

' .. : y.,-1"..) Iv!.!) vii tr;~ g,~I>,,!

th~ p.l:ltabl.l~rlJ;;t'n1.

lor\:~T,t:·ruJ 1.)ii'U}

',:.'-

t.h;}t

":-IJS 1~, tn,t. 1.[.4::Y W~~!

(.r

Our c'.vCl Arr...-rieai. "x~)f~!'irn('<'

.. tably t.he. : ·::~lAT'i.ll Hese:>c ve:: [,w .• p

. I!c'J

U.":"'::<-:

0f n~,"" ~·~C ill·;.ie3 . ~

Ti':' '...... urk .~Ild :) .... B,'::lry

W~ ~..,;;.:"n(:1';r~

tllr, PilI!',

~.; 1':'.):-',)\1'"

Lncltl(lin{O;

!\-:"~~;

',.~urtl,-:', l~J"

'I:,·:,do<.i 0('

. ','.~ T',:'.!m~<>tr·uct 10n ''';0t1:Lci t", CQPv""l'~··. i:,j.,. ':Jl~·.:· ~l·.l'·\:d:i ty 1n'·.,:.r :..I'n"f: i .. "

_:~·o

h.)v;:,; rr:("n

·il·<t't

: iJ':

thl'l)\ll.h ad"anc~

L".'

r,ut.

f\~'(i yt('<er~.

i'.rc(li~

look at.

thlj fruit·s of tnt:'?r

a:.d I run sure· til.:.::"

th~

pant and the

llo.altby r".dl.3covl":!"ie::.t of It/hat

Part of
G',

th~

thi~,

,'10 '

".'1(.

t,JLIl. f1:-."n,_ tr..i

wi 11

~r'''''Jt;;e'n·.,

w"!\' aJr'~a.dy L;l'i~~

proct"!:I-s of rF"d.1 sc./)"I'!ry

IntF'-rnati(lI-lal MLnf'tary l<'i.md

.!",f'o1'

tc:rl,;'

C()C)r~r'a.ti.nn

Ct,"

~·n,:"

belill\'1~

~'h<tt. \'0',",

atl(l ~""i1l-l,~ \~1"

P.b.il

!WOcfr:.a

b2'.;n to n)..liz~ ttl':': .pot"l'tiol

thv. L:m.nr

int.~:ri:!.>:ll.J •• al

.'.2,,,nI:Y

\~bel't,i

,.i'll'

vlt;.-w of th~ Inthrnationo.l frLnc-t3.l';f r'und h~d. jn ';.1-,-= ;'.'t3't", t)' ... r,
by m:.my ot,h«)rs, t.hat ;~hl'"

l"il0.ction of thP Fund would 00 to ~.!l"J()

<).};

'-1 d)_~·t .. ibut(>I··~O

ll'ilk1r.g·

'.J') '..,l'th ()U'l'

ljf;

:':

t.ak':' a

Il;'.i~

fAr.

by th.;'· af:;sumption, eha~ .Ilt.h

C(l:Ol"".::U

l.n

n.\~:,,·.

cl.t'dj t fin~r.cing and financ.ial dls.:;ipUnio 'Int1.li't111y COl~I" t)I..;.. tJl:~·::·,
J\r:~c1can

f.n' ctJr

debt Pl~~p!l.yr":::';It.:~ ;'j ;- ii't.:nb,' (~ o'f "l-T r~u:'o~C:l i'tlrt.nera?

we look to future liquidity dr!'ant::":·'·i!:;-i1t.~ll and In ~Jlf'

(IS

:;,

~n'ong

~'\'l'~11Cy

t,:'l~ dol131'~ paid

~ l!: \'1-13 e-XPf'ct~ to

oth>r

in by the Unlt",j ~)trH~t.·; ·m1F.r it!.;; qw)ta,
be a revolvIng f·..l!ld :·()~.)tjng

;,:; ~ 1~ ';:S~ pI"~~~~nt n~ed,

cl.i'.llltrli:S

To h·.~ '~UI~i

aaJ':Ing:':ollni',"(,!.."';

but th« potf:nt:b.l i!!'lr~fuln'''i'3r ·Jf

·\'}l ....

P"Ii':iC

:£;''''';1'..1 ;:()

wi\1I the
t.'I'!

-11

., .
.'

-10-

~,.'

;n thosp. circumstances, thE} world m1p,ht well b"

.. ct ~

sllb.) ... ct~d·

Rgain

.: .,::;c. . ,,~ iTl urdol' to a:!qu1r£- and h.:-ld a mf'rc.mtllist hoard of p-rimary

L.'.':'::"l'-'.';

i:.!,V'·

that

c'?n

~ 11~:;.

und~r

on crcdl t wClJ.lu

lj.~

broug,h'~

into play..

fl'his

w~uld ~

a full gold standard syst.e:n ,'.-' for an indivIdual

CO\.U1t,ry

a."1d [Qr the E:yst.t>m aB a wholp. -- if t.he add 1 t1ans to holding.:=. w<tlre

rflati nl to int?rnal

Uj"<>!1

la.r~

mOl1~tary n~&d.s.

a cre'dlt element in internt'.tional lifplidity as n w,ealmp.!>s in our :::;YElt.em.

also of pr.:ev'Ontlng mal:ldjustDY.1nts from gQ.t.ng too far and elf "oc:.oun ::tnl) tho

en-ely ndopt1on of necessary

'!h:i cnalle;1ge to Nhich

1T. thus sl:'oll,:lr 1n nt;my

'~u!'di tJ.'

pol1c;~:;

Wi! ');llSt

r·,)j(1t·)"('··.~ ~Q,.dllbrlum"

respoiid.l.n the inte'rnntional. liquidity

rac.p"J; t-, to

'1'" chal ;t.l"nge

fU.C'<;'d

by c .. ntral bank.

for the ~al economic gI":.wth thr,.t 13 U1~: obje·c-"t of all our &.ctlona

"IIU,-;: !M1.ntalnlng the contrul nr~c~.,.n8.ry to k{·l'jp expar.slon from resulting in
.~,flat1.on"

To 1)-~ sure, th,-~ mor'~ Sv.cc~"'8ful lndl vidual countr1es are in

T.!(lntaln1ng relilt1w~ price stabUity alOItt.; wl-t..h achl.,ving their destred

But undF·rr.~ath all of the st.ructurt!

a.ll of the

.. 1 rIm

1 ,:,0,

privat~ transa~tions

proc~s~8

that aff'?c t . I}F·m·

Ir'-'l;lnwhlle any ad verse flow must b"> !inane ~d

run

Pl'lv~t""

cr'}ct:t

:i:f 1nnOW3 do net·

AdJusi.ment Md Hnane Lng

that the monetary author1t.J~s -- and particuhrly "t,.hos~ of the

SUM

FlrNl of coopnrsti ve action In pa.et ye·:trs

ar't.!' B.. t.::rt 'Co th~ n~~'d to respond

to th~ di:ldpl1nary· warnings that a~~ sounded' Wh"'ln an tr.dl vidual ('.(Juntry'a
p~yn10nt.f.<

position leads to inroad.s on offie)..9.l liquidity,

'I~E'are.

:.i..L~

hdWe-Ver, stUl in the procf's3

and it \,.rUl cf'l'tainJ.y b--J a

of prl,Ym('nts shifts heavily tor or ae,ainnt en 1noi vidu.al country I the

Il;..;..;~~aal'y

Imans of payment can b;t madf' available in

W~EJ

that will

f,~t

mvtiun ror,~es that will ass'lst in th~ return to balance "'/hll~ avoiding
"bl'upt Intarruption of domoestlc stabHity and growth'J
importan,·~
pr~.Ct$:; ~

of arrangemrita which
T'Ciere would be

encoura~

s<~riou$ r1~ks

and

~Je

fac1l1t9.t~

must str(ISa the

the

ad.;u5t~nt

fo!" an individual country, or for

arl lnt.,rmltional liquidIt.y system, that conc~nt1'atad solely on Wa:/S and

-8l;1~)[,?y sup~ly

lriCr'2<~C(>,
~

j. tself.

eff~ct,

nc r~ase:: in the

To an important degree l credit arrangements that

the v,..locity ·'Jf

mon~y

rr.one~r

sl.lpply.

t.oo, to distinguish carefully

It if" essent.ial in such an ap;!rIi11scl::
\ztw('cn the needs of th'3 pri va.te
~ch,

s,~etor

nnj the underlying

most of the
fact~

for official

But it is propt'lr to remind

that th0 ul i:.imat(-l a:!.m of all that. we do 1s to ?nsure. that the l1qu1.

d.it.y n(~d;.," of th(~ private s(,ctor can be t1{:·t,

must

ne~s

if not m:)st., of thp. discU3sion of int'?rnatlonal liquidity

on in te."ms of the public sect.ot'o

:d, CaITU'd.

{Jurs,:;;l vt."·z

do reduce the scale of nef'ded

ThiR. of courS"l" involves

G,u€stion:5 ..rhieh the monetary authori tiql3 in

sam~

in d.-:tc rmlnlng
4

~Jach CQtUltry

financial policy -- questions as to the

do:n~stlc

relatlor:ships tA'''tween dOlOOstic liquidity, growth, emploYID<='l1t. price stabll1t)r.
and the bo::Llal"lcP of

pay~ntEi,

P~ll't

th(: problem 16

on~

of a-f)uI"lng adequate

faciliti0s for the working balances needed to carryon trade and lXLYloonts

abroad.

In part, too, the problem

one of access to international credit

Dna, particularly for countries Nhe-re money
1t

includ.es a

ne~d

for holding st'lcondary

mark~ts arf:~

r~::terve

not \'lell developed,

assets abroad.

But above

all, there is tiw need for assuring ready convertibility at a st,able prioe
tlillOng

the various currencies used to

paYi'hfmts for trade and
s~;:,vice.

s~rvlces,

fL~ance

the flow of current

to cover new investments abroad, and to

old ones.

·rn;? actual op9ratlng rl4;'eds of the private sector are servic!:d, by an
.. :::lcL'nt complex of privatt! banking and credit institutions .. many of them
:,itlonal in origin but int~rnatlonal in the scope of th~lr operations.

of such inst.1tutions, you are confident. I am sure, as

yOU

~. ·':)i't:;5~,ntatives

2:iJuld. be, that existing facilities for private credit, at least at short

-7-

V 't!,~:,c\:Lionl:c
.' ;!'r:

t..:)

'Jpi:Jn

N01'

t.r.e

ue~

dof'.3 it imply t.hat. tho:>rf' are nClcesr,url'Jy l'..n., 1I:1t11l'\l1

ttle~~e

'1'he1'f-' wouli

familiar arrangelMnts.,

l'~,

..1O::plt>

r,·ctn .i : offte lal 1't"ser....e8 for -- hopefully -- an Incr~as.f'd VO}'..Wh; or' .Ttt wly
Ii.

:·:.j.lable gold at thEl contlmUng fixed price of $J) an

~ ~0n:.l.l
oj"~

ho1di . . ,~s of acceptable currr?nc ies,

dt.:'p'~ndill~';

O\.lnc~ ar~d

on t.ho.':':

l'c·r add!.

frE"'c~ ctlC>i~('

ttaoJi

the indjvic!ual cOlmtrles concer'nf:'d,.
~f

thin r-hould

!I~(m~tar'Y

th~1r

systf!'\m

prirnarJ

p03~1bl!:

the

phi9.3S;;

he.~ r€'·,.ch~i.

rlj,~~n'f> as,9,~ts

0;' d~v,;,:lopm'H1t, thAt our lnt·f:r·,l.at\.'~'nal

c'Jwrtri;,!-;
as a

b~~;;e

W01..i.1.d

tni.n.. ea;.... rl!.;ly corrl'i! to n?g,·.iJ

upon \'/hlch cr"d.U. ,,-. In ma:l,Y dUfErent

fO!'NE; -- mlf')lt btl gro.nt.(;.d or T'1I!'{.!,.,l'lmd

·!:,f·rH.t~.

t.x~lIl)pll!', It

fer

N)l,;ntT''>·'s re'SEtrveos might d'!'c11,n~ som~what l&!;~ at til'~'';.' Gf 3ti~~~n Hun in
~h~

P'v:t

c;'edit:~

c:"us'e mor€' of the cUl';tl.)m1lry dr.aj n:~ upon

r~!.ser·vot:.':';; \o,I~

-- credits maci.., credH,,"wortby. in per't, by the

b<.d.r.g held by the affected country.

And

con"'~rst~ly.

1·\~:~'I1'·~~ .

SUrplUiJ

·..;.:.,.t b-:1 mf.-t by
.":: .. '''_~ ~tUl

C(,liJ';' . ~ ':'';),

1n;..\7.'.:<::~1 of. pH ing up rnvre and more re~!3rv".!J. might 8.(!cept in ~';)lIi'<" f\ ."m the
C'ro;·dH.'" r.e€'d~d by t..'le deficit countr1.+s,

,l.n

inD.l\}'

l'esp-:t:ct.9,

under cond! tions of thil"! kind,

~'f.'

w()uld

a :::t9.f;·:' in th~' international a~a tlu~. was n~aoh~~d in srveral

tran~aton

b!;·gan front ·:xcll.lshe rell!.1l1ce on hand .. to-hand

h"lVE< ra,acr.~
;)i' i

curr--~nc

hI' national

'.:;,:;, to a

. :',:,::~,"m ...nich Involved the use of a l~rp,dlt ~)q)ansion pr(Jc~s3 and t.h,; r.:N'ati.jt
:.' '," r..\jn'~J sub~ti tutes by finlii.l1c ial intl"'l"Tf)P<1ial'ies,
rc:'~sn:~ on. fclCi1Hi~s for
',.J', t.lll.n

As now d~v"·loP"'c .. gl'fif.WI

creating Iflonp.y nl.lbstltut~~ ond -su}:,plf?)r.N!t.c;

1 m!i v ~d.ual ns.tlons has mMe 90::;:;1 hle II much more intensi v-':'! U'::~ tf

-6of :1 :-:r;ortae': of int~rnB.tlonal res~rves.

l','~;:'.rd

liquid1 ty ns superabundcmt.

\'.:Lr)~··

:.,

pha~e

stantial
thf~

for

con~ider

thnt q

And there nre~ ,,-'f course, many other

For mysolf, I have begun to wender \'Thether the Internatiohal.

rna::! not presently be compl~·tlng a phase of concentration on th~

l)u:i.ld-up of primary res<;,r'Je ass"}+ s and

would

pcints inst~acl to a short-fall in long-term capital flows, and. wcnalcI

cvhi~:nc';:

CC-J,101llY

()-'-~'1er(;

in which

thit~

Incr~::o.ses,

w{l~th(-:r

perha.ps it is n()w ent9r'ing

Eupply of primary resl':!rves can, wi thout. furth~r sub~erv"?

at least for a time,

gradual erf,ction of a

Perhaps, if soma of tho

son~"what lal~g~r
develo~d

as a reasonably Z\.dequat.o baSll
cradit structw:"'eo

count,I'1AS are comlng to consider

that

pr6'sent n,::stGrves of gold and dollars as reasonG'.bly sufflcll'mt, r,hey might
w1~h

inst.ead., with proper Gafeguards 3 to use some part of any addit.ional

st:rpll.;:es for extending cr-ed1 t, to othersn

countries"
ar~>

\'1hil~

On t.he part of tile lfis3 developed

some- m..V have additional scope for holding

re:::;~'rves,

not many which can afford furtr,ftr sizeab:t..t accumulations t.o be held Idll
reserv~s

~Iill

for very much of thf- tilDe"

Th~y

need only the minimum that

::erve for \'1ork1ng capital purposes and as a bas'? to support borrowing.

In other wcrC.a, the problem lying directly ahead of us may not
j

there

n~\cQssarl1y

nvol vo a n(>Eld for more dollars, nor for the immediate creation of another

L'~f·("n').tional
j •.

~'O

money to supplement them, but it may instead call for gi'eater

of c redi t faeil i ties and the· international money substitutes that

aF such crodit

facillt1~s

lU'ft 0

are utilized.

This interpretation does not imply any fundamental change in t·he role
cold and th'!, :.'--sservoe currencies in our IntArnational mon~tary systttm, eltb1
,-;i

W.1&.."1S

of international settlement or as international at.ores of valUl.

-'J."jujlol1

(lr

f(.rl1'"0;i

th~

~s~r'\'e

i.o·

'j:

1;,\.;(,

ether

counr.ri~,.s,

,'\nd pn:.uuctL'Io£! cd.pac1ty

ciol

t,· te·"

t.t-,~ ll:-)und ~.'tet·Un~ -- ~1'lch

most important part of the 1ncroas9 tllldng place in th.! bl!!Sle

r/.!)t"'rvt-S 'Jf nlOst.
l·'<.lQ.Jrc~·~

currency -- particularly

~~iI'.

l.bter,
f)f

th~

a~~

C(lncomi tant of th"" vast

UniteC-. St.aVt,~. ~mph~sl~ 15hHt'~'i
re!.~~('ve a~·s:et_s

Grow'lj) 1:1 t.re dollar compcmmt of

'.i~.!'.:d.j,!:S

ha!'! ;;"')vJ(1cd th':' rna jor f;ource of t:'\dd t tlom. t.u in h~rnH.ttJnl\l

Itql.l~u.1T.;I!l.~ a whol~~ w:nt1~ an impr~-!E;Sivf! l"'adl!Stri:,~!t1o~~ of
m()n~:+,a-ry

geld .rpserve6 from tl1P. "niv:;d

·St..at<'\~

')tiw;C'

tnt? •.;orldts

::ountrio.:; tlns

I dQ not have to 1'e-mind this amlience. hO .... ~V.M:·. th:it t.n';)
in~r'na~~1onal

mon~y

through th€ d,d'iaits of a

nisc' involve pI'oblems.
appal~rlt

ar.d our

Tbe c1It':l·rJ.dlng

to r'eotore equilibrium in
r~cent

dellar would

t-.~

as it hr:s ever

')Vl'r tIl"

t.h~

th~

'l-O

add t'O

T'lf,,;'1"V£I! curr'~n\.!y

n~ctl'sslty

that

hs.}~ fOr"

tlQO of

.c(J?mtry

C81l

f..cmr.< tIm" been

Unit,!ll :States balance of PuYlllf)ota,

progres3 toward that end.,
able

·:{'C:;...

.,l~t)

mak~

int~rnatiolla.l

two PNced1ng d,pcades.

it quite
liqllid1 \';.y

Thl~

m'lY to

unlik~l.Y
0\111'1'

th~

that.

the

nil x,1: d1itcsdf.t

'C;:Olti~ jJll:Jly I'''~

courne.

a iX'!.islb·Lfl! need t.o f1n(1 a:id,1tiona.l substitutBs f(JT gold, p1."rha:),':' 1.hr.jl.lP.'.h

nndlng

I-la,yS

for other

curr~ncies

to serve as

conv~rtible mon~t"lry "~G/~rV(!8.

Rut the ne~d might also point in a dlffer~mt dirp,ctlon -- toward economizing

th~= fOI'J.fign

e-.xchange component of international

in the past, the reserv~~ curr~tlC ias thamsel v~s
on tnt!

U1:le

r'ec~"'nt

w"!x¥.!' th~

ass&t.'!l -- Jl.. at

118

mea.ns c f economidng

of the limIted supplies of gold.

Thero are, to be Sure, a numb<ar of
l(Jt)st

re~~rv~

diff~rtmt We;!6

of looking at

phase of daveJ oprll"'nts in 1nterna.t1on~1 11quidi ty.

th~

$omfl ooservel'l

p.3.rtlcularly In the academIc fraternity. \r/ol.lld str~s& t,ht': evid';;n(;~ they _

~hl

f )"ort to

""~ ')n()iIlj J~'~

i!.\ not r."\".

rJ~(t

It. ~~f.> t,;;';rl€r';;;,U,:. r,f}col?:.n.::.d

tlllcnnsc ic.ualy, by lncr,=,as~B that had iY,~fl

C'eCi.t!'r In.g

for ~'''''.JI1V'!' Yf"[.1rs ill 1:r:e

... 3~l J~-Jay~i' twlrl,o(s.

: Ut,'I:'P.

the

Group of Ten 18 bUlld1no with

newsp1't·t t, ('1'

:~,t::--:~&t,;():lal fln'<m.~lal coo~l"at1on

that has been developed in , .."tnt. yc·err..

~!:',i ,co t,r:>Lp;tl'I',:n~rl dur Lng th~

di8cue.s1on~o

,., l '

,i:tJ:-.. i..icn

current

i\ L'.L;..,cc~

.1 ;"_,,.ll..:iJt/

fipir'i t ::M HI

repr",';entG a. stt'ide forward that 18 at le46t as Impo:r't.aI'1

::\:;'/ 11101'-:: con(.!r;:~te 1'{>'~QIJ,Jt~11dattons

,'iU~I':',":;;tu 11

'ro~. this

that may in the end emerge from our studltll.

uo.ck\Jard, in t.he history of uur intnrnatlon"l liquidity

nurnh?'r of lnt.riguing parallp.J.s, as well as cont.Y'a3'ts. \'11 t.h
I;Y'!ot%iS t..~<lt

ha'l9 ~en d~v~loped withIn indiVidual

th~

effective use of the l1qu;t,dj,ty-creating

r1llt.tcno.l econofl:ic purposes and goals"

Th12

dev!31opm~nt

pl;;J.ce through the market place. of private credlt --

has

where~

tll~

natll1ll.H.

f in.,w,e ta,') h13tc1"Y of national economies, '1n -t.h€; main, re fleets a

dev,::lopua':nt In

~r.'ltHl,

~H'ogr'~!,i

prOCfl~l\

1ve

to mN!t

g~neral,ly

in a

'I'he

tnken

ne'!~r·-~nd.1.ng

,st.t4'lmpt'to economize on money" en. almost infinite variety of,neST'-'Ulvtwy
:mb~:ti tut~a h4'\S

been d.gveloped"

But. it has

be~n

accompanisd by t.ll(' ;:>;we:'ganco

or centre.l banking .. and paralleled by a ,growing reliancoe upon debt
~ni

fiseal pollcyo

bJ,

of t.heliquldl ty-crept :'ng

establishn.v~mt

p...,l1tic.:l institutions for thp. area.s served..

int.egrat1!:d

d!l

~rfect1ng

w!thtn nations has :n!sted on the

:..';oc;:S.~
;:!','':-:l.LNt

Tn1s continuous

syst~ll';

m'\n~"'~~l!P.nt

and

p'~rpetu~t kr.

And it hac, b£o'!:n 1.lu<;;tres.

of financIal markets and instItutions .. - in

V;jrlCIA~

stl:P.gll!li of developtmnt. in different countries -- as well as by the '3xi;',t;'mce
of' Qfl.ly minimal barriers

wlt~in

nat.ional boundaries to the free flo''';

f)f

IT.en and good3. and money and capital.
In tile lnternational area, th~ money--creating eletJl4!nt of t,be llquidlt:f
?rC(!ASS cannot rest. !J.pon th~ political sove~1gl.'lty that ha$ been ite {-s"",nUal
t'~'l1nd.'ltlon in tb"~ in~if.vJdual
-~(\llomlc

trade.

national

Nor can it rest -on a unity of r.·5.,:,;~nt1a1

and flnanc ial poll.cl.es among nations.

emplo~nt, and growth

aljd practice.

Nat.ional monetarJ. filCcal,

,policies can 8J¥1 do differ .in both philosO~I?'

!lor can the creation ot .in-n.e~auQn;a' =arm' ssM on "- unlf.

-2-·

(.n~n

~/'~

th=tt.

not,. t.l1at.

th~

nr'-" d~ady Hving in t.he be::.t, of all posslblo worh1~. or if

unly an:;l'ili7r lies 1n turning back to

[,1cn<:·tJ.ry ~vulut. ion·.

.In

earlier st.aR'.· .j:'

St.ill a third kind of apprcacb hl'ts come to

(;On3t ·'ntly l...vol·J t ng in. rp..::.ponl'i::: t.o c\.lrrP,Jr.:t

upp~al fO M.

"$xp!?r!.encf~,

:511Ch ~.n approach asksl;.he historical ql.l~!ltion "Wh~rc havft we bo:>~n m1
hO\1 dLd \'I~ L':~t wh~re we arE'?", but. it asks thl~ qu~st1on for th,\' pllrpcc,{·

~'i!-:'

thrr"c'!"

re~ognlzes

that

mJr:Kl.':l 1.s gravely l1.ml t.ea:

C00ljc:rr:ti -1-':: and
i~·hlch·

flexibl~

that our; abHity to
~rhB.ps

oup

.forf:'s~e

the

SUt~$t COUI'Ctit

1s to

approach, both toward flnd.ing the

.... e mu,y wish to movs, from

c>n(~

fut\:.(~

and i.ts

d~v ... lo~)

di~cti!)n

period to anothfJr, .and in

s~l!.:cthg

+\"'1":'
"' ...... ,.,

(;(Al·J~.:,1.\'~

~j':

th~

toward

past.,

SUd:l
\tIe

an approachn

cam-lot.

e3cap~r

For as

\i~

look tC) the futuI"tc'!'

wjt.")

arl

the evidence that t.he evolut.ion of ';UJ'

raj'rr:'.':.t::; sY"'t£>m has too clften oot;ln scarred by disruptive convul.sion13

:,;C:,

FOR RELEASF.: P.)l. NE','SPAPEPS
ThursdaY2 May 21, 196L
TiE PO'I'Dr·?BJ...!"l'JES OF OUR DITERN/,TIONAL PAYMENl'S SYSTEr1
----!{c;l'a·clc.:;' bi i'1ob'?rt V> Roosa.. Und,,~r S€>cretary of

the, 'l'I·eD.~:;u"'y .for !'lon-)t.:rry Affairs, E~for~ the
11 th /,r,!11.la 1 In t.'?:rn~:Ltio:;-,al Nonetary Confe:-snce
of thp AlJEypicen E&.nltC'rs Association at the
P21ai~ S::;h~·fi:rt.~;m11:'1u;CeJ Vlezma., At.\strla~
'l'l"lUr:;da.v J I,lay 21, 19t)~, 3: cC p" Mo

(
----

~.......

~-~

In to.: ."i.sing

c.t:dl.blc,

But. I

cres~~'I1cIo

sc:a!'c~ly

•• sed ren;ind 'this

<ind inde.::r} ar(; 11k?<ly foY' a long·
:111 of us in the worla. of

m(),,·:;t,~ry

of C:111.s for refon) of the internatior.al

t.5.f:R~

to)

financ~ \·:111

~udi~nce

i.r.ljN~·tant,

that they are still

com;: to p;:'ovide the

str~c'~urc

on wJlich

continue to dep?nd.

_ ._---.. ..... It has been on-:: of the rlSll!arkable and. reassuring asp1?cts of the cJ v.'-'
and int(>l'lsi'i:e stud.ies which
th~ f.o-cal1~.d

th~ ess~'nC0

Group,of

of ..,hat

or for any of

US~

'.'19

T~:n,

hav~

b0cn undEr l"iay, fer '2orn" months now wlth11').

that

'~h";

already

as yet, t.o

)'.'~',,·eo

ven,ur~

partlcipants have nl',:ver lost 13ight cf
;'~h11e

it. '...rould be

in public a.'1Y

bili ti~s for the future evolutIon cf the

inappropT'iat~

f\n'

on speciflc

pO:3si~

Vi~MS

ii.',tel"n;;:t1onalmon~tary

I b3lieve I may b8 p0F.t1ii.".:.tc:'G to refJ.f.c:t for a

fEM

ulnutes, in

\W,

system,

pllrf~l.y p~::r:;onnl

:tn t.l"!e process of test.ing out and appralsiq; the full range of 1;hou,3hts;,

a.spirations or proposals that h9.ve been svgge.st'\"d 10::'

!-c ·.·.·,,~·ld'.~ .....\~I::I.L" '_~OT' .L'l·qu...~r~'...·t~vr_
--

l!._

....

·~fl.e

futurc.:o

("-~s +h~'"
D
'!;!."",
v,.G." oj.
con.;,"'"true t·l.hg

' J
V!.?!'.',c·~''::

rn..
I.,-.:r:c.."

2:"3,suring the p.:::r i'ormancc of our p:.rE;s0nt arra."lgo:zr.ents against thls :::t.<;n::i.J.ro.

- 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.
Tbe income derived from Treasury bills, whether interest or gain from the

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

19~

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. 418 (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.

- 2 -

decimals, e. g., 99.925.
be

Fractions may not be used.

It is urged that tenders

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
ing until maturity date on August

Febnla1m

~1964

964

days remain-

(]d)
) and noncompetitive tenders for

1~00 or less for the ~-daY bills without stated price from anyone

bidder will be accepted in full at the average price (in three dec1maJ.s) of accepted competitive bids for the respective issues.

Settlement for accepted ten-

ders in accordance with the bids must be made or completed at the Federal Reserre
Banks on

May 2B~64

, in cash or other immediately available funds or

in a like face amount of Treasury bills maturing

May 2W964

•

Cash

TREASURY DEPARTMENT

"Washington
May 20, 1964

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 $

2.100~0,000

, or thereabouts, for

May 2~1964

cash and in exchange for Treasury bills maturing

,in the amount

of $ 2., 003t!ic9 ,000 , as follows:
91 -day bills (to maturity date) to be issued

@
in the amount of $

1,2QQ~Q,QQQ

May

28, 1964

6&)

, or thereabouts, represent-

ing an additional amount of bills dated February 27, 1964
and to mature
amount of $

August

CJ6

901.~000

1964

600

,originally issued "in the

,the additional and original bills

to be freely interchangeable.
183

-day bills, for $ 900. 00&2£>0
May 2~964

, or thereabouts, to be dated

\J'.IJ'GV
,

and to mature ~N~OY.x.em!OiiWbOLleiMIr..,(~~~-=.19~61L:4L-_

The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding as hereinafter provided, and at maturity their f&ee
amount will be payable without interest.

They will be issued in bea.rer 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
Day light Saving

clOSing hour, one-thirty p.m., Ea.stern~ time,

Monday. May ~ 1964

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

- 2 -

Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, followin~ 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, om or less for the additional bills dated
February 27 1964,(91-days remaining until maturit¥ date on
August 27, i964) and noncompetitive tenders for $100,000
or les8 for the 183-day bills without stated price from anyone
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 ir. accordance with the bids must be
made or completed at the Federal Reserve Banks on May 28, 1964,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing May 28, 1964.
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 o~
subsequent purchase, and the amount actually received either upon
sale or redemption at maturity during the taxable year for which the
return 1s made, as ordinary gain or loss,
~reaSJry Department Circular No. 418 (current revision) and this
notice prescribe the terms of the Treasury bills and govern the
conjitions of their issue. Copies of the circular may be obtained from
any Federal Reserve Bank or Branch.

000

d-5Y
UNCLASSIFIED

-2- 2534, MAY 20, FROM VIENNA (SECTION FOUR OF FOUR)

THEN THAT O?PORUTNITIES SHOULD EMERGE 'FOR LONG-TERM ,CAPITAL
MOVEr·1ENTS TO CONTRIBUTE MORE ACTIVELY TO THE PROCESS OF BALANCE
OF PAyr·1ENTS ADJUSTMENT Ar~ONG NATIONS.

w'E DO NOT BY ANY '1EANS HAVE ALL THE ANS'~ERS IN THE LONG-TERM
CAPITAL ARE~. BUT AS INTERNATIONAL CAPITAL MARKETS ACHIEVE A
BETTER BALAt-lCE, BOTH IN TER!tlS OF INTEREST RATES AND OF LENDING
CFN

1964 0..1965

PAGE 3

RUF~C

1962 1963

7687/4 U N C LAS

CAPACITY, IT SHOULD PROVE POSSIBLE TO APPLY IN THE LONG-TERM
CAPITAL AREA
OF" THE LESSONS WE HAVE LEARNED IN THE SHORT-TEll
AREA.

sor.n:

~ NARROWING OF" EXISTING DIFFERENCES IN LONG-TERM lNTEREST RATES
A:'10~G INDUSTRIALIZED COUNTRIES, TOGETHER \HTH WIDER ACCESS

OF' BORR01"JERS AND LENDERS TO A V AR rETY OF NAT! ON At MARKETS,
IMPLIES A GROl,cJING SENSITIVITY OF LONG-TERM PORTF'-DLIO CAPITAL
FL01,vS TO RELATIVELY MINOR INTEREST RATEVARYATIONS. THIS SENSITIV
CAN BE TURNED TO OUR ,MUTUAL ADVANTAGE, FOR IT WILL PROVIDE
OPPORTU!\lITIES FOR GOVERNrlENTS TO r·1A1(E GREATER USE OF ACCEPTABCE
VARIATIONS IN MONET~RY POLICY TO INFLUENCE THESE FLOWS IN THE
INTEREST OF BALANCE OF PAYMENTS ADJUSTMENT, WITHOUT VIOLATING
THEIR OWN DONESTIC NEEDS. IT SUGGESTS ANOTHER WAY IN '~HICH WE CAl
ALL ~]ORK TOGETHER TO STRENGTHEN THE ADJUST!'lENT PROCESS, WHILE
CONT INUING OUR PROGRESS TO\'IARD A '~ORLD OF FREE CAPlT At MOVEMENTS
tND EVER FREER TRADE AND PAYMENTS. (END TEXT). RIDDLEBERGER

H~CO~\~H~G TELEGRMII\

Department of State
UNCLASSIFIED

Action
NNN~VVV

FKA065GCA474

P? RUt:~:C
D~ RUF'vVC 7687/4 20/ 14LH~Z

Info

ZNR
P 201'2252

Z~H

N'; A"~ErllBASSYcQlt'L\)£;

TO SECSTATE WASHOe
BT
__ --...
UNCLAS PR!ORITY~TWENTIETH.
-

01
t:)327
0»",
I
~U

1]:

,il

SEF'OR OrFOR .

-----

BUT IT ~UST BE RECOGNIZED TH~T THESE FIRST QUARTER R~SULTS
OVEHSTATE THE ACTUAL !M?ROVE:'1ENT. THERE IS EVIDENCE OF' A SUBSTANl
,-E·iPORARY INF'LOH OF SHORT-TERi.~ FUNDS FRO;;1 CANADA DURDlG MARCH -~J INFLOW THAT W4S COMPLETELY REVERSED EARLY IN APRIL. EVEN
AFTER TAKING 1;'{1S YNT 0 ACCOU;~T, T!iE FIRST PUARTER ST iLt WEIGHED J
AS OU~ BEST QUARTER SINCE 1957. ON AN OVERALL BASIS AND WITHO~
ALtOl-lANCE FOR r.AV ORABLE SEASON AL-INFLUENCES, OUR INTERN AT tONAL
PAY;'lENTS SO FAR THIS YEAR EAVE BEEN IN APPROXH1ATE BALANCE.
THIS C.L;NNOT BE EXPECTED TO CONTINUE AS SEASONAL.. EFFECTS WILL SOO~
C?N 2534 1957

so,

PAGE 2 RUPKVC 7687/4 U N C LAS
S 1\:'T AG4INST1US. ~VEN IF 1964 9 AS A t;1HOLE, SHOULD RECORD ANOTHEf
SIZEABLE DE\:'I~IT ON REGULAR TRANSACTIONS, THERE ARE EXCELLENT
F':::::.SONS TO HOPE THAT IT I;J!LL BE SHARPLY REDUCED FRml THE LEVELS (
mt?AST SIX YEARS. HE HAVE, THEREFORE, EVERY RIGHT TO BE ENCOURAGI

f IlS t1UST RE~·lE'·iBER TH4T A GOOD PARi Or OUR RECENT PROGRESS IS
DUE TO THE PROPOSAL FO~HE INTEREST EQUALIZATION TAX. ]Y THE
END 07 1965 9 1:i1iEN THIS TAX IS SCHEDULED TO E/~PIRE, A SECuRE P.AYMI
EQUILIBRIU~ WILL REQUIRE A MUCH BETTER BALANCED INTERNATIONAL
?LC~:.T OF' LCNG-TERi\j PORTFOLIO C'APITAL THAN CHARACTERIZED LATE 1962
~0D THE EARLY MONTHS OF 1963 e SPECIFICALLY, THIS MEANS THAT uNIT
s-~· ~TES PORTF'OL I 0 CAPIT AL IN L4RGE A:o~ aUNTS SHOULD NOT BE ASKED TO
SL?PORT THE EXPANSiON OF DEVELOPED AREAS WITH STRONG BALANCE OF
?o'; Y:·:t:NTS POS IT IONS • INCREAS INGL Y FLEX I BLE AND EFFiCIENT CAPITAL
··;t,RK2TS IN EUROPE ---CAPABLE OF SUPPLYING FUNDS AT REASONABLE RA
G? INTEREST -- toVILL REMOVE ONE NAJOR SOURCE OF DIFFICULTY. IT IS

REPRODUCTION fROM THIS copy ~
UNLES: "UNCLASSlflEl)

_ _U..::..JN=-:.."v..::..rrr:A===~:..:S:..:IF=-.::IE:.;:::""'..::..D_ _ _ _ _-lPROHIB1TED

UNCLASSIFIED

-3- 2 53 4, MAY 20, (SECTION III OF IV), FROM VIENNA
ThiS IS, FOR US, A NEW AND UNPLEASANT FACT OF LIFE, CUT IT
IS ONE WITH WHICH OUR EUROPEAN FRIENDS HAVE LONG LEARNED TO
LIVE. AND I T IS ONLY ONE OF MANY WAYS I NwH I CH \"JE ,\iUS T ACCO\~·<O:J.~
OUR POLICIES TO THE EXIGE~CIES OF OUR INTERNATIONAL PAYMENTS
SITUATION. WE MUST CONTINUE TO REDUCE OUR MILITARY EXPENDITURlS
OVERSEAS, AS WELL AS THE DOLLAR COST OF OUR FORE I GN AID PROGR;','·:.
WE MUST CONTINUE VIGOROUSLY TO PRESS THE SALE OF ADVANCED MILIT.
EQUIPMENT TO HELP OFFSET THE COST OF MAINTAINING OUR FORCES
ABROAD. WE MUST CONT I NUE TO I NCREASE THE ATTRACT I VENESS OF DIRE'
INVESTMENT IN THE UNITED STATES. AND, ABOVE ALL, WE MUST
CONTINUE TO SEEK OUT WAYS OF ENLARGING OUR EXPORTS WHILE
MAINTAINING PRICE STABILITY AT HOME.
UNTIL OUR PAYMENTS DEFICIT IS ENTIRELY REMOVED, AND
OUR GOLD LOSSES HALTED, OUR WORK WILL BE UNFINISHED. THE
PAST TEN MONTHS HAVE SEEN A DRAMATIC IMPROVEMENT IN OUR
PAYMENTS SITUATION, STEMMING IN GOOD PART FROM THE INTENSIFIED
AC T ION PROGRAM I NTRODUCED LAS T JULY, BUT ALSO FROM A NOT ICEABLE
LONGER TERM IMPROVEMENT I N OUR UNDERL YI NG COMPET I T I VE POS IT IO~I.
THE SEASONALLY ADJUSTED ANNUAL RATE OF DEFICIT ON REGULAR
TRANSACTIONS DURING THE SECOND QUARTER OF 1963 WAS SWOLLEN
BY MASSIVE FOREIGN BORROWING IN OUR MARKETS AND EXCEEDED
DOtS" 5 BILLION. THIS RATE OF DEFICIT WAS CUT SHARPLY TO A LITTLi
UNDER DOhS 2 BILLION IN THE THIRD QUARTER OF 1963, AND TO
A LITTLE OVER DOLS 2 BILLION IN THE FOURTH QUARTER.
PRELIMINARY DATE FOR THE FIRST QUARTER OF THIS YEAR INDICATE
ThAT AFTER SEASONAL ADJUSTMENT OUR DEFICIT ON REGULAR TRANSACT
HAS DECLINED EVEN FURTHER TO AN ANNUAL RATE OF ABOUT DOLS'S5
0I,ILLION •
RIDDLEBERGER
HCA

UNCLASSIFIED

-2-2534, MAY 20, (SECTION I I I OF IV), FROM VIENNA
POLICY COULD CAUSE OUR LONG-TERM INTEREST RATES TO APPROACH Th~
EUROPEAN LEVEL . -- AND ANY SUCH EXTREME MONETARY POLICY WOULD
--CLEARLY RUN COUNTER TO OUR CURRENT DOMESTIC NEED FOR FULLER
EMPLOYMENT AND HIGHER UTILIZATION OF OUR INDUSTRIAL CAPACITY.
IN cUROPE, ON THE OTHER HAND, EFFORTS TO REDUCE LONG-TERM
INTEREST RATES CANNOT HOPE TO ACHIEVE REALLY SIGNIFICANT
SUCCESS UNTIL BROADER AND MORE ACTIVE CAPITAL MARKET FACILITIES
COME INTO BEING.
IT IS ENCOURAGING THAT THIS NEED IS NOW RECOGNIZED ON
ALL SIDES. DURING RECENT YEARS, ~UROPE HAS TAKEN SIGNIFICANT
STEPS TOWARD IMPROVING HER CAPITAL MARKETS. IHE INCREASING
ECONOMIC INTEGRATION OF EUROPE OFFERS AN OPPORTUNITY FOR MUCH
GREATER PROGRESS IN THE FUTURE, AND IT IS
, IMPERATIVE THAT THE
OP?ORTUNITY BE SEIZED. BECENT EXPERIMENTATIO~ IN ACHIEVING A
BROAD EUROPEAN MARKET FOR SECURITY FLOTATIONS DESERVES TO BE
CARRIED FURTHER DESPITE THE DIFFICULTIES THAT HAVE BEEN
ENCOUNTERED. THE INCREASE IN DOLLAR-DENOMINATED LOANS UNDER
THE ST IMULUS OF THE PROPOSAL FOR THE I NTEREST EQUAL I ZAT ION TAX,
THE USE OF UNIT OF ACCOUNT LOANS, AND THE PROPOSAL BY 2R.
~ERMANN ABS FOR SEPARATE NATIONAL SHARES IN LARGE fUROPEAN
SECURITY FLOTATIONS, ARE ALL DEVELOPMENTS OF CONSIDERABLE
SIGNIFICANCE.
I RECOGNIZE THAT INSTITUTIONAL CHANGES OF THE REQUIRED
SCOPE CANNOT BE ACHIEVED EASILY OR QUICKLY.~OWEVER, THERE
ARE PROMISING SIGNS OF PROGRESS. IHE TASK NOW IS TO PUSH
AHEAD VIGOROUSLY IN A CONCERTED EFFORT TO ENLARGE AND IMPROVE
EUROPEAN CAPITAL MARKETS AS A NECESSARY PREREQUISITE TO OUR
CO~~ON EFFORT, WITHIN A FRAMEWORK OF FREE MARKETS, TO HAR~ESS
LCI\)G-TERM PORTFOL I 0 CAP I TAL FLOWS TO THE STARK REAL I TIES Or
BALANCE OF PAYMENTS IMPERAT I VES • ..\1NT I L TH IS HAS BEE~j SUCC~SSr J~L
ACCOMPLISHED, IT MUST BE RECOGNIZED THAT PORTFOLIO CAPITAL
CALLS ON THE NEW YORK MARKET FROM ABROAD WILL, IN SOME FASHIG\
OR ANOTHER, HAVE TO BE CONTAINED WITHIN THE LIMITS SET BY OUR
OvJ0i OVERALL BALANCE OF PAYMENTS S I TUA T I ON.
UNCLASSIFIED

1:~co:~rd~~G TELEGRAM

Departnlellt

Of State

UNCLASSIFIED
Action

FROM:

VIENNA

ACTION:

SECSTATE 2534, PR I OR I TY

DATE:

MAY 20, (SECTION III OF IV),

Control:

1 6247

Rec'd:

MAY 20, 1964
1 : 06 PM

Info

A BROAD AND RESPONSIVE CAPITAL MARKET HELPS TO INSURE THAT
TEMPORARY INFLUENCES CAN BE READILY AND RAPIDLY ABSORBED
WITHIN AN ACCEPTABLY NARROW RANGE OF CHANGES IN SECURITY PRICES
AND YIELDS. HOWEVER, WHERE GOVERNMENTS FOLLOW THE PRACTICE
OF PRE-EMPTING AND CHANNELLING LARGE PROPORTIONS OF THE FUNDS
POTENTIALLY AVAILABLE, IT BECOMES DIFFICULT TO PROVIDE SUFFICIENi
BREADTH IN THE PRIVATE SECTOR OF THE MARKET. UNLESS SECURITY
PRICES AND YIELDS ARE FREE TO REACT TO CHANGING PATTERNS OF
SUPPLY AND DEMAND, AND TO RESPOND TO BROAD AND VIGOROUS
COMPETITION AMONG PRIVATE FINANCIAL INSTITUTIONS, THE PROSPECTS
FOR THE DEVELOPMENT OF TRULY EFFICIENT CAPITAL MARKETS
CANNOT BE BRIGHT.
THE FAILURE OF EUROPEAN CAPITAL MARKETS TO KEEP PACE WITH
THE EXPANDING CAPITAL REQUIREMENTS OF THE INDUSTRIALIZED WORLD
hAS BEEN A MAJOR FACTOR IN STIMULATING PRESSURES UPON THE
~EW YORK CAPITAL MARKET. THE IMBALANCE HAS BEEN SO LARGE THAT
THE GREATER AVAILABILITY OF FUNDS TO POTENTIAL BORROWERS IN
NEW YORK HAS OFTEN SEEMED MORE IMPORTANT THAN INTEREST RATE
CONSIDERATIONS.
WITH SUCh WIDE DISPARITIES IN MARKET CAPACITY AND
ACCESSIBILITY, THERE IS NO USE LOOKING TO RELATIVELY MINOR
INTERNATIONAL VARIATIONS IN LONG-TERM INTEREST RATES TO GUIDE
ThE FLC,\.j OF CAP I TAL AND TO ENCOURAGE BALANCE OF PA'(:liEi'HS
':,JJUS T,\1[I~T. AND THE MAJOR VAR I AT IONS I N I NTERES T RA TE.:S THAT \·/Cj~:
o[ RE QU I RED TO BR I NG LONG-TERM PORTFOL I 0 CAP I TAL FLOvlS I; .,-:0 S~--:
DA~ANCE DO NOT SEEM POSS I BLE FOR EITHER iUROPE OR ThE.: y,..!\ I TED
STATES. THE HEAVY ACCUMULATIONS OF SAVINGS IN THE UNITED ~TATE5
~A~E IT DOUBTFUL THAT EVEN AN EXTREMELY RESTRICTIVE MONETARY
UNCLASSIFIED

REPRODUCTION FROM THIS copy IS
PROHIBLTfD UNLESS "UNCLASSIFIED"

-] - 2534,

tv1A'( 20

UNCLASSIFIED
(SECT I ON 1'vJO OF FOUR)

FROM V I ENNA

OF SUSTAINED GROWTH IN EUROPE ITSELF vJILL, IN TIME, REQUIRE
APPREC I ABLY LOWER LONG-TERM RATES OF I >HEREST •
C:VEN WI TI1 THE DUE ALLOWANCE FOR THE SPEC I AL F ACTORS THAT I HAVE
MENTIONED, THE QUESTION ARISES AS TO THE EXTENT TO WHICH
I NST I TUT 10NAL FR I CT IONS AND GOVEJ\r~HEi\n r~:~:) I'I~ I '~T 101\5 AR[ 1-0 BE HELD
ACCOUNTABLE BOTH FOR THE CURRENT HIGH LEVEL OF LO~G-TERM INTEREST
RATES IN EUROPE AND FOR OTHER IMPEDIMENTS TO THE AVAILABILity
OF FUI\jLJS 0 I,--jR~llJGHOlIT HI S-iORY, EFF I C I ENT CAP I TAL MARKETS HAVE TENDED
TO PI~JDUCE LO'ltJ[R RATl STRUCTURES At'm , CONVERSELY, I NA~EQUATE
CAPITAL MARKETS HAVE GENERALLY BRED HIGH INTEREST RATES. ~UROPEAN
CAPITAL MARKETS ONCE LED THE WORLD, BUT IN THE POSl\vAR PERIOD THEY
HAVE FALLEN FAR BEHIND THE NEEDS OF THE TIMES, PARTICULARLY IN TH=
ACCESS THEY OFFER TO FORE I GN BORROWERS. TH I SIS PARTL '( BECAUS[
GOVE~~MENT INTERVENTION AND CONTROLS HAVE IMPEDED THE DEVELOPMENT
OF BROAD A~JD I NTEGRATED CAP I TAL MARKETS I N EUROPE, AND PARTLY
BECAUSE PR I VATE F I NA[~C i ,\L I NST I TUT IONS HAVE DOMET I MES BEEN SLOW TO
ADAPT IMAGINATIVELY TO CHANGING SITUATIONS.

RIDDLEBERGER

GEJ/21

UNCLASSIFIED

UNCL ASS I F I=D
-2- 2534, MAY 20

(SECTION TWO OF FOUR) FROM VIENNA

t N SE~r\ I NG

THE REASONS WHY PORTFOL 10 CAP I TAL FLOWS f lAVE BECOME
DISTURBING TO PAYMENTS EQUILIBRIUM, ONE IS IMMEDIATELY STRUCK 8Y
THE CURRENT WIDE DI SPAR I TY BETWEEN EUROPEAN LON(;-'ERM I NTERES i"
RATES AND OUR OWN. LONG-TERM INTEREST RATES IN lUROPE HAVe BEEN
VE~Y HIGH THROUGHOUT THE POSTWAR PER I OD • ..,6L THOUGH COND I T IONS VARY
FROM COUNTRY TO COUNTRY, IUROPE CAN GENERALLY BE CHARACTERIZED
AS HAV I NG BE[N ON SOMETH II\)G CLOS[ TO A "6 PERCENT BAS IS"
SINCE WORLD WAR I L ~ERTA I NL Y, I N THE LIGHT OF PAST EXPER I ENCt~,
6 PERCENT IS AN UNUSUALLY HIGH LEVEL OF LONG-TERM INTEREsr RArLS
:--J'-~ {~Ji~\ ),-'l~. [i-1ROUGHOUT THE 19TH CENT URY, THE ANNUAL AVERAGE OF
PRIME LONG-TERM BOND YI[LDS IN CONTINENTAL EUROPE WAS ONLY
SLIGHTLY ABOVE 4-1/4 PERCCNT. IN ENGLAND, IT WAS JUST UNDER
3-1/2 PERCENT. 6ND, DURING THE EARLY DECADES OF THIS CENTURY,
THE OVERALL AVERAGES, WITH THE SOLE EXCEPTION OF GERM~NY, WERl
LITTLE, IF ANY, HIGHER o
BECAUSE OF THE VAST NEEDS OF POSTWAR RECONSTRucrlON AND, MORE
~ i-=Cl:N r,- Y, OF RAP ID ECc)NOM I C GROWTH, REASONS CAN BE FOUND TO
JUSTIFY THE CURRENT HIGH LEVEL OF EUROP~AN LO~G-TERM INTEREST
RATES. iN ADDITION, RELATIVELY RECENT [XPERILI\)CE WIT-l INFLATlJN
HAS DISCOURAGED POSTWAR EUROPEAN I NVESTORS FROM THE PURCHASE OF
BONDS o ~UT THESE TRANSITORY CONDITIONS DO NOT SUGGEST THAT
6 PERCENT IS DES I RABLE AS /\ PERtvlAi\)ENT LEVEL, OR THAT I TIS
LIKELY TO BE MAINTAINED OVU~ M')Y \fL~'~Y LO[\JG PERIIJD OF TIMEo HISTORY
WOULD SEEM CLEARLY TO INDICATE OTHERWISE.
WHILE THE PREVENTIO~ OF INFLATION REMAINS VITALLY NECESSARY,
IN ~UROPE AS WELL AS ELSEWHERE, CURRENf INFLATIONARY THREATS APPEM
TO BE DIFFERENT FROM THOSE OF THE IMMEDIATE POSTWAR P~RIOD.
THERE NOW SEEMS TO BE MUCH GREATER GROUND FOR THE USE OF II\jCOlvi[S
PC~ICIES TO RESTRAIN UPWARD PUSHES ON THE COST-PRICE STRUCTURE,
~0;D ;'iUCH LESS RE ASON TO PLACE PR I MARY REL I ANCE ON HIGH AND I[\;FLEX 12
L:::VELS OF Lm~'J- TER~'l I NTER[ST RATU:1.1 DO NOT SUGGEST THAT niE
NECESSITY FOR INTEREST RATE VARlATI6N IS AT ALL DI~INISHED. 1
G0JL Y QUEST I ON WHETHER I TIS DES I RABLE, AS A LO[\JG RUN ?r-~oPOS I TI:! "
THAT :::UROPEAN I NTEREST RATES SHOULD cmn I~UE TO FLUCTUATe AROLf.J
LEVELS SO MUCH HIGHER THAN THEIR HISTORIC AVERAGES o WHILE THE
10;,\~=DIATE AND VISIBLF THREAT OF SUCH !1IGH RATES IS TO l~nERNATIO('A:
PAYMENTS BALANCE, ONE CAN REASONABLY EXPECT THAT THE MAINTENANCE
OF SUSTAINED

INCOf.1ING TELEGRAM

Depart1Jzent of State
UNCLASSIFIED

Action

FROM:

VIENNA

ACTION:

SECSTATE

DATE:

MAY 20

Control:

16246

Recd:

MAY 20, 1964
12:49 PM

Info

2534 PRIORITY
(SECTIUN TWO OF FOUR)

IN OUR CASE, IT WAS NECESSARY TO REDUCE AN EXCESSIVE NET OUTFLOW
OF PORfFOLIO CAPITAL, WHILE THE GERMAN PROBLEM HAS BEEN THE
REVERSE ONE OF DISCOURAG J I'-JG AN ;:::xcrs~ I V[ NET I NFLOVJ • .9UR
APPROACH WAS THE PROPOSED INTEREST EQUALIZATION TAX TO INCREASE
THE EFFECTIVE COST OF FOREIGN BORROWING IN OUR MARKETS. IHE
GERMAN APPROACH -- I N SOME WAYS COMPLEMENT ARY -- WAS TO PROPOSE A
WITHHOLDING TAX ON NON-RESIDENT PURCHASERS OF GERMAN INTEREST
BEAR I NG SECUR I TIES, THEREBY LOWER I NG THE N-Tt::R-TAX YIELD TO SOl/I[
FORE I GN I NVESTORS AND THUS TEND J NG TO DISCOURACE CAP ITAL I [~r~ovls.
PERHAPS EVEN MORE SIGNIFICANT IN TERMS OF PROGRESS TOWARD ~ORE
EFFICIENT CAPITAL MARKETS, THE 9ERMAN AUTHORITIES COUPLED THIS
\-J I TH AN I tvll:lORT At'lT STRUCTURAL R[FOR~~, I N THE PROPOSAL TO REMOVE THE
2-1/2 PERCENT TAX ON THE PURC~ASE OF NEWLY ISSU~D SECU~ITIES -- A
STEP DESIGNED TO OFFER ENCOURAGEMENT TO NEW CAPITAL ISSUES,
BOTH FOREIGN AND DOMESTIC o
THE FACT THAT A COUNTRY AS BASICALLY COMMITTED TO THE FREE
FLJ\-J OF FUNDS AS IS THE UNITED _STATES, FOUND IT NECESSARY TO
PROPOSi~ THE I ;\jTEREST EQUAL I ZAT I ON TAX, UNDERSCORES THE I tv'IPGRTANCE
OF ACHI~V1NG A BETTER BALANCE IN THE STRUCTURE AND EFFICIENCY
OF WORLD CAPIT.\L MARKETS o ~NTIL THAT BETTER BALANCE IS ACHIEVED,
IT WILL BE DIFFICULT, OR EVEN IMPOSSIBLE, TO INFLUENCE THE
8IR:=~(ION AND AMOUNT OF LONG-TERM PORTFOLIO CAPI1-lI.L F-LOI.-JS
.~ ;,R':' ..iGH THE. NOR:<AL_lI.C T I ON OF MONETARY POL ICY, 'vJ I THOUT THE HELP
C~ SPECIAL MEASURES AIMED lI.T ENCOURAGING OR DISCOURAGING SUCH
MOVEMENT~. fONSEQUENTLY, PROGRESS IN IMPROVINGfHE FREE WORLDfS
CAPITAL MARKETS HAS BECOME ESSENTIAL IF THE UNINHIBI7:D FLO~
OF LONG-TERM INTeRNATIONAL PORTFOLIO CAPITAL IS NOT TO BE A
DISTU~BING ELEMENT IN THE QUEST FOR PAYMENTS EQUiliBRIUM.
I N SEEK li!G
UNCLASSIFIED

REPRODUCTION FROM THIS
pDOHlamD

copy

1JN!.~5S "UNCLASSIFIED"

UNCLASSIFIED

-3-2534, MAY 20TH, FROM VIENNA
DIFFERENTIALS IN PROFIT OPPORTUNITIES, AND TO THE BASIC CAPACITY
OF VARIOUS NATIONS TO SAVE 4 eUT IF THEY ARE NOT TO UNDERMINE
THE ADJUSTMENT MECHANISM, LONG-TERM PORTFOLIO CAPITAL MOVEMENTS
MUST ALSO BE RESPONSIVE TO THE BALANCE OF PAYMENTS POSITION OF
BORROWERS AND LENDERS ALIKE.
THE DIFFICULTIES INHERENT IN ACCOMPLISHING BOTH OF THESE GOALS
SIMULTANEOUSLY BECOME CLEAR WHEN WE CONSIDER THE KINDS OF PROBLE
THAT HAVE RECENTLY PLAGUED US IN THE AREA OF INTERNATIONAL FLOWS
OF PORTFOLIO CAPITAL. COUNTLESS BORROWERS AND LENDERS ARE
CONSTANTLY MAKING DECISIONS TO BUY OR SELL FOREIGN SECURITIES ON
THE BASIS OF PRICE AND YIELD DIFFERENTIALS AND AVAILABILITIES OF
FUNDS, AS THESE FACTORS ARE REFLECTED IN THE MARKET PLACE.
BUT WE HAVE NO ASSURANCE THAT THESE DECISIONS WILLI AT ANY GIVEN
TIME, REFLECT BASIC DIFFERENCES IN THE UNDERLYING CAPACtTY OF
VARIOUS COUNTRIES TO PROVIDE CAPITAL FOR DOMESTIC USES -- MUCH
LESS THEIR CAPACITIES TO TRANSFER THAT CAPITAL ABROAD tNSTEAD
IN THE CASE OF MORE THAN ONE COUNTRY -- FLOWS OF PORTrOLIO
CAPITAL HAVE RECENTLY SHOWN A DISTURBING TENDENCY TO SERIOUSLY
AGGRAVATE IMBALANCES IN PAYMENTS I RATHER THAN TO ASSIST IN THEIR
ADJUSTMENT. THE GREATEST DIFFICULTIES ON THIS SCORE HAVE ARISEN
FOR COUNTRIES WHICH DO NOT HAVE CONTROLS ON THEIR CAPITAL
MARKETS -- GERMANY AND THE UNITED STATES o
RIDDLEBERGER
EBC

UNCLASSIFIED

INCOMING TELEGRAM Department of State

UNCLASSIFIED
Control: 16032
Rec'd:
MAY 20, 1964

Action

TRSY
FROM:

10:54 AM

V I ENNA

Info

SS
EUR

ACTION: SECSTATE 2534 PR lOR I TY

(SECTION ONE OF FOUR)

E
P

DATE: MAY 20TH

USIA
NSC
INR

FOR STEVEN MANN I NG TREASURY

RMR

DILLON TEXT FOLLOWS:
Atv1 VERY PLEASED TO BE Vi I TH YOU AT ANOTHER OF YOUR ANNUAL
INTERNATIONAL MONETARY~ONFERENCESJl \,1HICH OFFER SUCH A UNIQUE
AND VALUABLE OPPORTUNITY TO CONFER \\'ITH ONE ANOTHER AND WITH OUR
EUROPEAN FRIENDS.
ALL OF US RECOGN I ZE THE NEED TO I MPRCNE THE PROCESS OF BALANCE
OF PAn~ENTS ADJUSTMENT AMONG THE FREE I NDUSTR lAL NATfONS
ItJE HAVE FOUND THAT THE OLD "RULES OF THE GAMEIt -- WHATEVER THEIR
VALUES IN THE PAST -- ARE NO LONGER ADEQUATE~"FOR INSTANCE, THE
CLASSICAL PHESUMPTION THAT BALANCE OF PAYMENTS DEFICITS CALL fOR
THE RESTRICTION OF DOMESTIC ECONOHIC ACTIVITY, HAS HAD LITTLE
RELEVANCE TO THE S I TUAT I ON F AC II~G THE J,.JN I TED STATES I N RECENT YEAI
~OR HAS THE OTHER S IDE OF THE CLASS 1CAL. CO IN -- EASY MONETARY
POLICIES DESIGNED TO STIMULATE DEMAND __ BEEN ANY MORE APPROPRIMI
AS AN ANT I DOTE FbR RECENT IUROPEAN PAYMENTS SURPLUSES
THE SELECTION OF SUITABLE INTERNATIONAL PAYMENTS POLCIES HAS
ALSO BECOME MORE DIFFICULT BECAUSE DOiV1ESTIC ECONOMIC POLlCIES
NOW ENCOMPASS SO MANY MORE OBJECTIVES THAN THEY ONCE DID [OR
EXAtvl?LE~ THE PROi'-10T ION OF FULL EMPLOYMENT HAS COME TO BE ACCEPT£D
AS A HIGH PR I O?-I TY RESPONS I B I L I TY OF GOVERNMENTS THROUGHOUT· THE
FREE ".'ORLD.. ,PRICE STABILITY, THE PROtv10T10N OF INTERNATtONAL TRADE
AND THE ST JMULAT 1or~ OF OVERALL ECONOIV11 C GRO'tITH, ALL NOW OCCUpy
PROMINENT PLACES IN NATIONAL POLICY OBJECTIVES.
ALL OF THIS MEANS THAT \v'[ HAVE HAD TO SEEK NEW TECHNIQUES

li:l!e

UNCLASS I F I ED

REPRODUCTION FROM THI
PY IS
PROHIBITED UNLESS "UNCLASSIRED

INCO::tING TElE5RAM

Department of State

UNCLASSIFIED

37-M
Action
N~NNVVV

TRSY
Info

RMR

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DE RUF'~VC 7740 21/14102

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At.1EMBASSYlVI'S~N.A_)

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21

P,,\i \0 :56

TO SECST ATE ".I~-sHDC

~ CL AS

PR! OR!TY

~5~-j IJE NTYF ! RST •

FOR STEUE MANNING TREASURY.
F'OLLO','I'" G CH ANGE "l !~DE IN DILLO~ TEXT: IN FOURTH GR AF FROM END,
PARA BEGINNING "BUT IT MUST BE RECOGNIZED ETC." NEXT TO LAST
·SENTENCE SHOULD READ "BUT ALTHOUGH 1964, AS A WHOLE, IS EXPEcr
TO RECORD ANOT4ER SIZEABLE DEFICIT, ETC." (INSTEAD OF 'EVEN I
1964, AS A WHOLE SHOULD RECORD ETC.") RIDDLEBERGER
BT
CFN 2555 1964 1964
NOTE: TRSY notified 5-21-64 CWO-M.

UNCLASSIFIED
REPRODUCTION FROM THIS COpy ~
---~-..;.;;..;.;;.....;...----~PROHIBITED UNLESS "UNCLASSIFIED'

- 12 ",E HWt: I V\D FHiF.F STRIK[S /.J,JI) }-v\VE aJJOVED RETTER LA30R-t-W.JAGEHENT
~~Eu,\TFi~,:SJ

()F

I, ,:or~

GBJU'.AlL Y, nV\N IN ,;:\NY COMPARAALE PERIOD sn..cE THE 00

U: ',.'/oP I I.

STon: !"'/i.P.KET PRICES 'r'AYE RISf::t ' TO THL HIGHEST LEVELS IN HISTORY.

\:IT!- ThE Ut/\CTIIENT OF THE TAX CUT, THE STATE OF 3USINESS CONFlDEt-CE
J;

HIGHn~

THE ECOt,j()/llC oJVTlOOK IS

THA'I AT

,~NY

TIME IN THE PAST THREE

I LOULD :IOT LIKe YOU TO THIf·1K Tl-v-\T 8Y nIlS RECITAL h'E ARE
I','E HAVE [UMIN·,\TED THE DL.;SIr-.lESS CYCLE.

v-IE CU\IM

~,;o

CLAI~1Ir-.x;

SUCH THU-G.

niAT

IrJE DO

CLAII-1 THI\T OUR. [COiO"1IC POLICIES -- tft/l.HJLY LUGGET POLICIES -- HAVE BEEN
[XTF-EHFLY EFFECTIVE j'lJ,tC

S!JCCE:~.sFUL.

\.'E 00 CLAH·' TW"T THE UNITED STATES IS

CJL::TIEL OFF EC(l-.JCi·;ICALLY TlJDf,Y Td·']") IT l-lAS !3fEH FOR }·'\A.NY YEARS.

\t'E

Clr\H1, f'\NC

nn S

IS PERI-lAPS THf: !"OST It-~PORT.AtlT OF ALL, THAT THE

C'..AI:'lS r·!ADf: so FAR ,\I'D THE Gfl.li-:S TO GE i'ltl\DE IN THE FUTURE ARE FAR
STI\TISTICS or: rRETIY Ll!'CS ot: ;'J<
It,C~Ej\5t:

ECO~«)l-HST'S

C1JAfH.

Ii,; TliC ECO!,,!()j'HC i-'(1\;Ef.; OF THE UNITED STATES.

T~IIS 1~)t'\lrnSTPATlr)~')

OPEPJ\.TIN~

It,)

~-1ORE

THEY REPRESEI'JT A VAST
IT IS THE AVOWED INTENT

II.!'! !-\THOSPHERE OF FIRt'1 EXPENDITURE CONTROL,

TO USE Tl-()SE Gt.,Jt;S TCi IHPP(JVE Tt£ LIFE OF [VERY AtlEf'.ICAN.
,L,S f>RtSWU;T JOt-INSCI! PUT IT lPST I"'~RCH, THE ISSUE IS SIt.A.pLE:
!lTO DO \',H\T h'E C;\H TO ifi.lU~E SURE Tf-l,/\T TIl: AVEPAGE i"IAN N'-D ~n'1I'N
U,:·~

THAN

LEi"D i\ F Tr~ER N..:£) A !JAPP I EP. LI Fr::

Nit)

TOGETHER

~JITH

(f1!U',R8', THF.Y eM, llLL. LOOf~. FC~\!ARD TO A SETTER DEAl."

THEIr.

- 11 I
,\<r

BY j.()TH.G TH/\T THf G\JflGETARY OBJECTIVES OF THE FEDERAL GOVERNoENT

()T THE SA'-\E ,L\S n10SE OF A PROFIT

Ff:.f}<'AL
~,

~)f:GAJJ

~LAtJC(

SII[ET I S

1"Li.~/5URfL

SH,'CE EARLY P:l61 THE
GI:,'CfTH IN t.v~TIONAL

8USINESS CORPORATION.

THE

!<y oT!-\n~ ;\CCOt"~PLI SHMEI'rrs.

F.~'1Er. ICN~

Ecmf. 1W H/\S REALIZED THE LARGEST SUSTAIt£D

rS'\CETIt-~E ECO'Jot~IC

OUTPUT IN CUR
ut':EROKEr'~

CllE-t-l.'\LF YEARS OF

~'CI.VH.G

HISTORY.

IN Tt-REE AKI

EXPN:SION ,\'JHICH I S ITSELF 1\ RECORD, LET US SEE

" W, T f1i\S HAPPENF'.

-- TOTAL ~}"..TlO'J~\L PR(!f')UCTIOi; Hj\S INCR.EJ\SED OVER $100 BILLION.
--

i~OU-FAru-,

EJ"IPLOYt·1UH IS UP OVER 4 t·lILLION JOBS.

-- UNEMPLOYMENT

~AS DROPPEC' Fi~or"~ 7

DESPITE 1\ 2-1/2 i'HLLIOt:

PERSONAL INCOHF J S UP
PRICES Ii"NE REt-'AH,[D

PERCENT TO LESS TH/\N 5-1/1 PERCENT,

H·:cr-~Ei\SE

~.'t)RE
~·~ORE

H{ THE SIZE OF THE LABOR

F~CE.

TH/\N $75 GlLLION.
STAI:LE TW.....·1

tNY OTHER HDUSTRI/I.l COlNTRY

OF THE FREE \·,cRLD.

-- TIE f~l.ANCE OF P,4.Yf n,frs uEFIC IT \4·.5 REDUCCD FROM $3.9 BILLION IN
lC)[)0

TO A PROSPECTIVE LEVEL OF

Uj.JDEf~

$2 BILLION H,; 1964-

THE '.()RLD I·ns REGAWfI' FULL cnrlFlDD,I(E n: THE STRENGTH AM) STABILITY
(IF THE U.

~>.

LOLLAR.

-- CORPm:I\TE PROFiTS OEFORE TAXES HAVE
':\U.~OST 50

PERCENT.

H.CF~EASED

BY $18 RILLICN, OR

,'.,FTEi=<-TAX PROFITS H;'WE HiCREASED FRO'" $22 8ILLIOIl

?fPORTEr:: H. 100 TO $14-1/2 3ILLIm! H~ 1')62, AND $27 ULLIOt< IN 1963--

- 1n -

TillS DECISION IS ,'\T TI-1:': rENZT OF PRESIDENT JOHNSON'S DRIVE Fffi REDUCTI()4
11,1

ITS Cr t1PLE}'ENT IS .A STRONG BELIEF IN OUR PRIVATE,

rEr'f::RAL SPfN[>n'iG.

CCMPETITIVE ECOI':O'1Y, \':HICH H'\S PP'()Vl[;f:T) OUR COUr,,'TRY WITH THE HIGfIEST
~~.T/\jDARDS

LIVI~

EVER B )JOYED r:.y /\NY COUIITRY I\T ANY TIt-E.

THE FIRST i1Ef,.sURES

REFLECTH~

THIS

~·rJ

FISCAL POLICY WERE EFFECTED IN

1l)G2 -- FIRST, 1ft: P,l\SSAGE OF TIlE 7 PERCENT HNES11''lENT TAX CREDIT WHICH WAS
DES I GI'JED TO El'iCOUf"'6.GE [US l!':r.:: SS It Nt:: ST;'~E;:T H< PPODUCTIVE EQU I PMENT AS A KEY

Fl\CTOR TO REYITALIZ ING

TO~"ARD

OUR [COt.(ltW

',.oULD REALIZE OUR ECOtKl-lIC POTEtITV\L.
{1Epr~EC

GUIDELH~[S,

{ATION

RESTORH.t; A GROWTH RATE THAT

SECOND, A THOROUGH j<EVISION OF

ALSO DESIGNU) TO SPUR.

~~USJNESS

INVEsn1ENT BY tomE

REALI 5TlCALLY REFLECTI1·IG ACTUAL nUSlf\:FSS DEPREe IATION NEEDS.
~-ll)H

\.','E ARE It--;

Ca-:FIDEI'X:E
TI£

TH~:

;·\1D5T OF THe GREt\TFST

EXPERII'1E~~T

OF ALL, \-lITH EVERY

ITS SUCCESS.

F:[VH~JE

ACT (IF 1 C)C't \lILL,

tHO. IT 15 FULLY C:FFECTtV~, PROVI['\[ f.N

!\V[i?;'·,GE, ACROSS-THE-SOARD REDUCTION OF U'E-FIFTH IN THE TAX LIABILITIES OF
If'DIVIDUALS /\.~f), ALO-...JG !-/ITH THE EARLIER INVESW-ENT TA)( I;KENTIVES, OF
:~L!SIf~ESS CORPOP-ATlO~S

T~ !ERL

TJHE r~EING.
L\r'(~FC.T

Tt"X

/\5

~·IELL.

\·tILL, OF COURSE" ~.;E f. less Ui FEDERAL PEVLtlt.!ES, ;")IJT O:·JLY FOP. ~I-£
/\LREAr,Y \11:: r~RE Sr::.EH-:G,

cur

THPJK, THE STH\JlATIVE EFFECTS OF THIS

1>4 THE: EI :TIRE HISTORY OF n1~ ~}\TImi.

THE ECOt,n·ne EXPANSION

IL L f'ECO"1E Eve~ STRONGEr~ iiITH PASS H<G MOt·.fTHS, ~'.'E EELIEVE.

3Y RAISING

L.CC:! ,[S SO AS TO Il,;(RU.SE TiiE TAX '_cAS~ ON HUCH FEDERAL REVH!UES uEPH(), WE
C;'.i

i,iJ\i

LC'Or-: F0f·YA.::::C ';:IT'.J C()\FICEHCE TO A f5,\U\l·j(EI: ~UL>G[T, PEi"'JV-<PS IN FISCAL

1"'7, I:"Tf::;.;\ C)F i\ c.Lr'{r,Y STr-'Ir:G CF i+TICITS H,'TO THE It~DF::FINITt: FUTUR.E.

- 9 ~1WI~':lJ'1

-- A HIGHER

\'!AGE \.JITI! EXPftNDED COVERAGE

-- 1\551 STANCE TO /\REAS OF CrRONIC \J'JEMPLOYr-£NT, ,AND

-- INCREASED FEDERAL AIDS FOR HOUSING.
AS A RESULT Of Tt£SE MEASURES,

STIt-t.JLATI~,G

At-{) SUPPORTlI\G THE NAnJRAL

RECOVERY FCRCES WITHIN THE ECONCMY, THE RECESSION ylAS REVERSED At-{) A

STRO~

RECOVERY Iv1OV81Et.!f GOT lJ'JDER\>!AY.
AT THE S.AI-1E
OF A

RECESSI()~,

TI~1E

THE J\DY,WI STRATIOf'1 \'iA.S t'()VII\G TO GET THE

HE ALSO

~'\OU'nED

~TlON

OUT

A GOVERNMENT -~'i1DE ATTACK TO REDUCE THE

MLANCE OF PAYMENTS DEFICIT AND 5T8'1 THE GOLD OUTFLOW.

TO RESTORE

CO~FIDENCE

IN THE DOLLAR PRESIDENT KENNEDY RESTATED 8-4PHATICALLY THE U. S. CCH-tITMENT

TO MAn~TAIN THE PRICE OF GOLD AT $35 At'" OUNCE.
ALLIES TO PUT UP A GREATER SH'\RE OF THE COST
THE FREE

~.oRLD

'·1AINTAltiING THE DEFENSES OF

IND REQUIRED HORE OF OUR FOREIGN AID DOLLARS TO BE SPENT

W THE. UNITED STATES.

RY UP\..;ARD

THEN HE ASKED OUR NA.TO

ADJUS~1ENT

BRING THEJv1 INTO LINE

SHORT TEPJ-1 CAPITAL FLm.;S ABROAD

~£RE

SLOWED OO\olll

IN SHJRT TEPJ'1 HHEREST RATES IH THE UNITED STATES TO
~'JlTH

SHORT TERM RATES ELSB-JHERE /i-lD, LATER, A PROGRJIM

TO REDUCE LO'-lG TERM CAP ITAL OUTFLOWS THRou;li AN INTEREST EQUALI ZATION TAX
O~;

FOREIGN SECUR ITlES HAS PROPOs[D.

/,5 Tl-l:: NA.T 10\) MOVED OUT OF THE
LONGER RANGE PRO BlE/"i OF SLOW GROWTH.
ltJH'1PLOYMH~T AI'{)

~¢.s

LAID FOR

RFCESSla~,

OUR ATTENT ION TURNED TO THE

FOR, DESPITE THE RECOVERY I EXCESSIVE

IjNDER-UTILIZATI()\J OF PU\NTS

PEF~SISTED.

Tt-IJS THE

GRruv~K

h~\I\T I FIK!-~LY 8f.LIEVE IS THE MOST SIGNIFICANT CtW~E IN

ll-iE

HRUST OF FISCAL POLICY TI-¢.T i'1A''iY OF US ARE LIKELY EVER TO EXPERIENCE -BY If II 5 I 1'~EJlIl THE DECI SIal TO BASE AN EXPAN5IOt~Y FI SCAL POlICY ON TAX

- 8 THE FACTS ARE, ~()vIEVER, THt\T AS 1961 BEGA/'J THE ECON<J-1IC PICTURE WA.S
FAR FRa-1 CHEERFUL.

OUR DrnESTIC lCQ-I(1.1Y 'tJAS IN THE DEPTHS OF RECESSION WITH

l.NEt-'PLOYMENT IN THE NEIGHBORt-()(){) OF 7%.

TrE RECESSION, WHICH YE \-ERE

EXPERIEt-IClf'.l7, WJ\S THE FOURTI-l RECESSION SINCE THE END OF I;,ORLD WAA I I
HE THIRD IN

~LY

EIGHr YEARS.

OUR GROtlTH RATE

DURI~

AI'.[)

TI-£ PERIOD It+1EDJATElY

PRECEDING 1961 rJAS FAR FRO-1 SATISFACTORY -- FAR BELOH THE RATE OF GROWTH
IN EARLIER POST v,oRLD \·iAR I I YEARS AS WELL AS BELOW OUR
RATE OF GROwTH.

AVERAGE

n-E COt--JTINUING LARGE DFFICITS IN OUR BALANCE OF PAYtwENTS

At.() THE SIZABLE OUTFLOW OF GOLD
f\K)

LO~-TERM

~ro

BECa-1E CR IT I CAL fW THE DOLLAR WAS

L(X'-JGER THE rAAD CURRENCY IN THE EYES OF THE \;cRLD THAT IT HAD BEEN.
IN 1961, THEREFORE, IT \.JI.\S OBVIOUS THAT TIiE FIRST ItvPEPATIVE WAS TO

REVERSE THE PROCESS OF RECESSI(t.l AND, AFTER EIGHT MOt-.'THS OF ECONCA'-1JC DECLHf,
GET tHE EC()\IOf.1Y MOVING UPWARD AGAIN.
\'l'HICH

HI\[)

PROGRESSIVELY

~RSENED

THE B.A.LANCE OF PAYMENTS SITUATION,

DURING 1960, ALSO HAS A SERIOUS CONSIDERATION

AND AS A SECO'JD IMPERATIVE, CONFIDENCE IN THE DOLLAR HAD TO BE RESTORED.
Tt-f::

A[1v1 IN I STRJ\,TI<N

tv'OVED SWI FTLY AND BOLDLY TO ADOPT A SER I ES OF

MEASURES DES 1GNED TO EM) THE RECE 5S I Qt.!

AI'~'D

BR 1NG ABOUT A STRot-.G RECOVERY.

THESE MEASURES INCLUDED:
-- EXTEr-.DED T8'1PORAAY ll.JG1PLOYMEf'fr BHEFITS
-- EARLY

PAyt1E~,T

OF VA LIFE INSURA1'-ICE DIVIDHVS AND A SPECIAL

VA INSURN-iCE DIV IDE~'{)
-

ACCELERATED rlILITARY PROCUREt-1E"rr AN) CONSTRUCTION .. NECESSITATED
BY THE BERLIN CRISIS f1UT ADDHlG TO If'COt-ES AN) OUTPUT

-- ACCELERATED HIGH.4AY AID PAYt-'iENTS

- 7 AFTER FURTIiER DISCUSS ION AT THI S L[vEL, AT \-JHICt-I AGAIN MOST

REMAINI~

DIFFERENCES OF OPHHON ARE RESOLVED, THERE IS A FURTHER REVIEW BY SECRETARY
DILL(),l, BUDGET DIRECTOR KERMIT GORDON, AND CHAIPJv'AN WALTER HELLER OF TI-£
COU~CIL

OF ECONOMIC ADVISERS.

THIS TOP-POLICY GROUP THEN MEETS WITH

THE PRESIDEf\IT TO PRESHH A CONSIDERED Jurx;MENT WHICH

BEEN ARRIVED AT

TI-f!CUGH THIS LENGTHY PROCESS.
IT [5 PERHAPS It-M)DEST AS A PMTICIPANT IN THIS REVIE'r! PROCESS TO CALL

ATTENTICN TO THE GENERAL

EXCELLEt~E

OF THE RESULTS.

IT IS.. HOWEVER, I

THINK, ONLY FAIR TO OaSERVE TKl\T THE FEDERAL ECONGlIC FORECASTS HAVE CCJw1PAREO
VERY FJ\\'ORABlY WITH PRIVATE FORECASTS, ~..IHETHER THOSE tvlADE BY BUSH-ESS OR
li;

ACADEMI C ECONOt·H STS.
PERHO.PS LNFORTUNATELY, THE PROOF OF BUDGETARY AND FISCAL
THE ACADEMIC NICETY OF THE ANALYSI S, BUT THE RESULTS.

'r/IS~

~'()T

WITHJUT WAf'...'TIf\G TO

CLAIM LNDUE CREDIT FOR THE INFLUUlCE OF THE ECOt,OMIC ANALYSIS FOR WHICH
HE HREE AGENC IES -- TREASURY, BUDGET BUREAU, AND CEA -- HAVE BEEN
RESPONSI8LE, LET US LOOK AT t..tiAT THESE POLICIES HAVE BEEN AND WHAT HAS

BEEN ACCCWLISHED IN TIlE PAST 3-1/2 YEARS.
IN

RFT~0SPECT,

IT I S ALREADY 0 I FFr CVl T, EVEN HI TI1 RJLl ACCESS TO THE

~ECORDS OF THE TIME, TO RECONSTRUCT MENTALLY THE SrTUATIa~ IN 1961.

UN5UprotTE

RECOLLECTIONS ARE EVEN LESS TRUSThORTHY, "''HILE A COLD RECITAl OF THE FACTS
DOES t'JOT DO JUSTICE TO THE t-IEAT OF Tit SITUATION.

- 5 WITH Hi ESE WORDS OF GENERAL INTROOUCTlON, I \to.JLD LIKE TO TURN

TO A REVIEW OF THE PROCEDURES THAT WE FOLLOW IN SETTlf\G FEDERAL BUDGETARY
POLICIES.

INSTITUTIONi-\LLY, THIS IS A RATt-ER SIMPLE MATIER.

THE BUREAU OF

THE GUDGET, IN CONSULTATION WITH THE AGENCIES JlND THE PRESIDENT, DEVELOPS
EST IMATES OF Tt-£ REQUIREMENTS FOR EACH AGENCY
NEEDS FOR OPERATING THE FEDERAL GOVERI'I-1ENT.

.M()

THE TOTAL EXPEf-I.)ITLRE

THESE EXPEt-l>ITURE ESTIMATES

ARE SUBMITTED TO THE COf\K3RESS BY THE PRESIDENT IN JANUARY OF EACH YEAR
FOR THE FISCAL YEAR BEGINNII\G () t-fJNTHS LATER.
ALSO PROVIDES THE

YEAR.

C~GRESS

AT THE SN-1E THE THE PRESIDENT

\vITH ESTItAATES OF REVENUES FOR THE

C().11~

FISCAl..

CCNGRESS REVIEWS THESE REQUESTS, AMEf'l)S THEM AS IT SEES FIT, N-ID

EN.A.CTS TrE APPROPRIATION BILLS \-,HICH GIVE THE AGENCIES THEIR AU1K>RITY TO
SPEf'D AND TrESE ENACTED APPROPRIATIONS ARE THEN APPORTIONED
YEAR TO Tt-E AGENCIES BY THE BUREAU OF mE BUDGET.

THROUGH Tit

SUBSEQUENTLY THE

EXPEI'lJITURES OF THE AGENCIES ARE SUBJECT TO A POST-AUDIT BY THE GENERAL
ACCOUf'..'TII'JG OFFICE, WHICH IS IN ARM OF THE C()\/GRESS, t'()T OF THE EXECUTIVE.
THIS IS THE INSTITUTIONAL PROCESS IN A NUT SHELL, BUT SUCH A
DESCR I PTI ON I S

(J\/ LY

BARE-~S

A r-UNOR PART OF THE STORY.

THE BEGINNING POINT HITH ALL OF OJR BUDGET PLANNlf'G IS THE ECOM>1IC
OUTLOOK, v!HICH H'()ICATES Wt-ETHER BUDGETARY POLICY SHOULD BE DIRECTED TCPIiARD
EXP4"JSICN OR T\)'W.ARD RESTRAI~'T -- WHETHER OUR PROBLEMS IN THE CO'1ING FISCAL
YEAR ~'!lLL SE PROBLEMS OF Ut\OER-UTILIZATlON OF MEN AND RESOORCES, OR INFLATI~

AND EXCESSIVE Dg..1A~.

IT IS f\()T Et-¥JUG.H, t-()WEVER, SlfwPLY TO w\VE QUAlITATIVE

ESTL"-1ATES ON WHICH TO RASE THESE JUrx;t-1Et-.'TS.

~IE KG.VE TO PREDICT ~1)T ONLY

V,'HETr£R BUSIi~ESS \nLL 8E C..noD OR BAD BUT ALSO JUST HOW
LIKELY TO SEe

GC(){)

OR RAD IT IS

THIS [SSE:}';TJAL ROLE, THi\T OF PROVIDING THE PRESIDEf,,! wITH

- 5 WITH H1ESE WORDS OF GENERAL IN TROOUCTl ON, J ~LD LIKE TO TURN t'OI
TO A REVIEW OF THE PROCEDURES THAT WE FOLL~ IN SETTIt--li FEDERAL 8UOGETARY
POLICIES.

INSTITUTIONALLY, THIS IS A RATt-ER SIMPLE MATTER.

THE BUREAU OF

THE BUDGET, IN CONSULTATION WITH THE AGa-.JCIES JlND TI-lE PRESIDENT, DEVELOPS
ESTIt1ATES OF HE REQUIREMENTS FOR EACH AGENCY
NEEDS FOR OPERATIM; THE FEDERAL GOVERrH:NT.

An)

THE TOTAL EXPEf.()ITlRf

Tt-ESE EXPEI'[)ITURE ESTIMATES

ARE. SUBMITTED TO THE C(N;RESS BY THE PRESIDENT IN JANUARY OF EACH YEAR
F~

THE FISCAL YEAR BEGINNII't; £> f-'ONTHS LATER.

ALSO PROVIDES THE CO.JGRESS WITH

YEAR.

ESTI~TES

OF REVENUES FOR THE CCMING FISCAL

CCNGRESS REVIEWS THESE REOUESTS, AMEr-.DS THEM AS IT SEES FIT, AND

ENACTS Tt-E APPROPRIATION BILLS 'riHICH GIVE
SPEt-l>

AT THE SAME THE THE PRESIDENT

JUI)

AGEt.JCIES THEIR AUTt()RITY TO

Tt-£SE Ef\V\CTED APPROPRIATIONS ARE THEN APPORTIONED

YEAR TO Tt-E AGENC I ES BY THE BUREAU OF THE f3lCIGET.

THROUGH TI-£

SUBSEQUENTL Y THE

EXPEI\CJITURES OF THE AGEt'JCIES ARE SUBJECT TO A POST-AUDIT BY THE GENERAL
ACCOUNTING OFFICE, WHICH IS IN ARM OF THE CCNGRESS,
THIS IS THE INSTITUTIONAL PROCESS IN A
DESCR I PTI ON IS CN LY A

I'm lOR

~UT

u:n OF THE EXECUTIVE.

SHELL, BUT SUCH A BARE-BONES

PART OF THE STORY.

n-E BEGINNING POINT \JITH ALL OF OJR BUDGET PLANNI~ IS THE

EcotOnc

OUTLOOK, WHICH IWICATES Wt-ETHER ElJDGETARY POLICY SHOULD BE DIRECTED

EXPN4SICN OR TWWARD RESTRAlt\'T -- \In-iETHER OUR PROBLEMS IN THE CO'1ING FISCAL
YEAR \.oJILL 8E PROBLEMS OF Ut--DER-UTILIZATION OF MEN AND RESOJRCES, OR INFLATI()l
tIJ.[)

EXCESSIVE DEMAf'i).

IT IS f\()T Er-o..JGH, t-()WEYER, SIp.pLY TO HAVE QUALITATIVE

ESTIMA.TES ON WHICH TO RASE THESE JUr:x:;M[t'-;TS.
\-,'HET~£R

~IE rv>'VE TO PREDICT I'1)T ONLY

8USIt"ESS \'11 LL t1E (.00D OR PAD nUT ALSO JUST HOW

LIKELY TO SE.

G(X)()

OR RAD IT IS

THIS [SSE~~TII\L ROLf, n-{J.,T (jF P~OVWING THE PRESIDENT WITH

- 4 CN THE OTHER ~t't), WHEN THE ECONOMY IS SUFFERlt-.G FRa-t INFLATICNARY PRESS~ES

ItH:> A TEf'()EI'I:Y TOWARDS EXCESS lYE

DEtv'A~VS

FOR RESOURCES, THE TEXTBOOk. SOLUTION

IS TO RAISE TAXES OR TO REDUCE EXPENDIlURES.
NEEDLESS TO SAY, THESE TEXTBOOK SOLUTIONS ARE GRAVE OVER-Slt-f'LIFICATlONS.
RATHER

TALKING ABOUT Tt-EORETICAL ECOt-OMICS WE SHOULD OE THIN<IJIG ABOUT

POlITICAL ECO/'Oo1Y, A MIXlURE OF TrE ART OF THE POSSIBLE
NEEDS OF THE TIME.

AN)

THE ECOfOo1IC

ADDUli FURTI--ER DIp.£NSI0-4S TO BUDGET CONSIDERATIONS ARE

TH: POSSIBILITIES AND LIMITATIONS OF OTHER ECOf'OMIC POLICY TOOLS OF Tt£
GOVERfIfo\ENT, INCLUDING MOST IWORTANTLY TI-£ MCJ.lETARY POLICIES OF TI-£ FEDERAL
RESERVE SYSTEM.
I WOULD LIKE TO STAY AWAY FROM MONETARY POLICY QUESTIONS, ALTHOUGH
THEY ARE VERY CLOSELY RELATED TO TrE TRfASURY'S awN DEBT MANAGEfvENT POLICIES.
THE FEDERAL RESERVE SYSTEM IS /IN. II'OEPENOENT AGENCY, ALTl-OJGH -- I St-OJlD
RAPIDLY ADD -- AS RESPONSIVE TO OUR NATIONAL NEEDS AS t-NY OTHER AGENCY OF
GOVERr-MENT.

NONET~£LESS,

THE GENERAL TEmENCY OF tvONETARY POlICY TOWARD

THE RESTRAINT OR EASE WITH w-iICH CREDIT

(..AN

BE OBTAINED IS A PAAT OF It£

Et#IROr-MENT FOR OOR CONSIDERATIONS OF BUDGETARY POLICY.

nus,

THERE ARE

CCMBINATIONS OF ~NETARY fIND FISCAL POLICY \o.tHCH M6.Y RESULT IN THE SA'1E
TOTAL NATlCNAL PRODUCTION BUT WHICH WILL CAUSE DIFFERENT ALLOCATIONS OF
PRODUCT.

AGAIN, TO OVERSIMPLIFY, AlDGETARY EASE AND MONETARY RESTRAINT

ARE LIKELY TO MVOR A LOtoI-SAVIr-GS, CONSLMPTlON~IENTED EC()to.X)MY, WHEREAS
~JETARY EASE ~D BUDGETARY RESTRAINT ARE r-uST LIKELY TO BE ASSOCIATED WITH

A HIGH SAVII'-(;S, INVESTMENT -oRIENTED ECOf'.O-1Y.

- 3 -

I ALSO EMPfib,SI ZE THESE }f\.'TERRELATIONSHIPS ~D THE VAA I ETY OF OUR
ECONa-1IC OBJECTIVES l3ECAUSE THEY REPRESENT THE ENVIRC»1ENT WITHIN \o.tiICH
FEDERAL BUDGETARY POLICY } S MADE.
ANOTHER FACT OF LIFE IS THAT
POWERFUL, THEY CAN BE USED WITH

~HlE

G~LY

TAX At-V EXPENDITURE POLICIES ARE

LIMITED FLEX} BILITY.

MA.JCR

EXPE~ITURE

PROGRAMS RELATE TO SPECIFIC NATIONl\L OBJECTIVES J\ND MUST MEETTHE
R~IREMENTS

OF EFFICIH.K:Y.

IT IS HARD TO BRlt-G AAOUT SLDDENLY MAJOR

CHANGES IN ONGOING BUDGETARY PROGP..N-1S,N>J() PROGR.AM NEEDS OR Dew-DS S<M:Ttt-t:S
CAN BECOME DI FF I CUL T TO RECONC I LE

~/JTH

Tr-ca-1E

At()

EMPLOYMENT GOALS.

IT StoJLD

BE REMEMBERED TH/\ T A FEfJERAL nurx;ET IS PREPARED ThO YEARS BEFORE THE Et-.[) OF
ITS FISCAL YEAR.
MOREOVER, THE LEGISLATION NEEDED TO IMPLE}1ENT FISCAL POLICIES IS THE
PREROGATIVE OF C()N;RESS tNO FOR /1. VARIETY OF REASONS

CO~RESS

MAY BE

LNWILLH.IG OR UNABLE. TO MOVE \:ITH THE SPEFO AND FLEXIBILITY WHICH OUTSIDE
OBSERVERS OR THE

l~INISTRATIGN

FI SCAl POLICY PLANr-1H.G I s
PAR LIAt-1ENTARY

SYSTEi'\.

nus

MAY FEEL IS REQUIRED AT /ltjY PARTICULAR TIME.
~J()T

AS EASY IN THIS COUt-,TRY AS IT I S IN A

W VIF.5TERN EUROPEAN COLNTRIES, FOR EXAM'LE, THE

GOVERr--MENT'S PROGRAM IS n~CTED OR THE \>.HOLE GOVERt-MENT FAC.'_S, AND THIS IS
A PO\->JERFUL SPUR TO P.l\RTY DISCIPLII'€.
~\~

\·A-V\T 15 TI-iE RELATICtJSHIP BET\.JEEN FISCAL POLICY

O&JECTIVES.?

AN)

OUR ECOI'-O'tJC

IN THE S V'lPLE TEXTBOOK TERMS, PtN It-CREASE IN F.XPEt-{)ITURES OR

A REDUCTIOf~ H~ TAX RATES \'!ILl TE"I) TO RAISE 1I'.K:ct>1ES I.-,HILE A REDUCTION IN

EXPEr--DITURES OR AN INCREASE H! TAX RATES WILL THO TO REDUCE H!Ca-1ES.

THUS,

l/HfY THE ECOt lo. . ,y I S SUFFER U\G Lft" IfJ·1PLOYt·1D JT OF ~'ft I t. JD PE SCURC ES, THE TEXTBOOf'.

FISCAL SOLUTIC','. IS SP''F'LY TC L(~.JEJ:: T;\XES OR PJCREASE EXPENDITURES OR 30TH.

- 2 GIVHI Tt-£ Ml'\Q>.IIruDE OF ITS EXPENDITURE C<M-1ITMENTS, ITS REVEfIlJE COLLECTl0t6,
ITS PUBLIC DEBT MANA.GEMENT OBLIGATIONS,
RESPONSIH lITIES, THE
O!~

THE ECOKMY.

GOVER~NT

GOVER~.MENT

At£)

ITS t-()NETARY PND CREDIT

INEVITABLY EXERTS A POWERFUL INFLUENCE

GIVEN THE DI RECTI VE OF THE EMPLO'n-ENT ACT, Tt£ FEDERAL

MJST ADJUST IS ECONa1IC POLICIES TO

C()v1P~NT

PRIVATE DEMAND.

IT IS, Tt-EREFORE, H£ PASIC PRINCIPLE OF FEDERAL ECOtO-1IC POLICY, OF
WHICH BUDGETARY POLICY IS A VITAL PART, TO ADJUST THIS IMPACT IN SO FAR
AS POSSIBLE IN WAYS WHICH WILL PRQV()TE TI-£ NATION'S

EC~lC

INCLUDE -- ON THE [)(J4ESTIC SIDE -- HIGH LEVELS OF EMPlOYH:NT
RAPID ECOf'01lC GROWTH

GQ4.LS.
PM)

OVERALL PRICE STABILITY Af'.l) -- ON THE

THESE

PRODUCTION,
INTERNATI~L

SIDE -- BALANCE:: OF OUR. INTERNATIONAL PAYM:NTS AND RECEIPTS.
FEDERAL FISCAL POLICY IS REFLECTED IN
~D

~INISTRATION

REC(to1fo£I'-DATIONS

C<J'.JGRESSIONAL ENACTMENTS AFFECTIt--G ROTH EXPEr-I)ITURES PND TAXATION.

COURSE NE ITt-£R EXPEND ITURE NOR. TAX POll CY CAN BE FORMULATED SOLEL Y ~ ntE
~SIS OF ITS I,..MEDIATE CONTRIBUTI~ TO ONE OR ANOTt-ER OF OUR BROAD ECO'01IC

OBJECTIVES.

NEVERTHELESS, WI-E~l USED FLEXI GLY IN COORDINATION WITH OTI-£R

FEDERAL ECGJCMIC POLICIES, FEDERAL FISCAL POLICIES ~ CONTRIBUTE TO ESTABLISHING A FI~CIAl ENVIRml1ENT WHICH CAN HELP TO ACHIEVE THESE OBJECTIVES.
IN HI S At'NUAL REPORTS ON THE ST,l\TE OF THE FH~KES 1 N THE PAST T'I«)
YEARS, SECRET.ARY DILLa-J HAS CAlLED SPECIAL ATTENTION TO THE INTERRELATIONSHIPS
BETW'EEN [,UDGETARY AND OTHEF~ FEDERAL ECONJ'v1IC POLICIES IN RELATION TO THE
VARIETY OF ruR ECO'~CMIC OBJECTIVES.

THESE $lIME POINTS HAVE BEEN EMPHASIZED

/\GAIN At,() AGAIN IN SPEECHES A~.v STATEMENTS BY TREASURY POll CY OFFICIALS fJH) BY
OTt-ER

ACMH~I STRATIOt~

SPOKESME'I.

FORr'1ULAT ION OF FeDERAL f-)lJDGETARY POLIe JES
ADDRlSS OF ROBERT A. \-lALLACE, ASSl STANT SECRETARY OF HI: TREASURY,
BEfORE THE 14TH AI'nJAL NATIONA.L C<J'JFERENCE OF THE
ElJDGET EXECUTIVES INSTITUTE, BELLEVUE-STRATFORD t-OTEL
PHILADELPHIA, ~YLVANIA, MAY 21, 1 %4

9:30
ALL E3lJDGETS ARE ALIKE

A.~".

REPRESENTING A PLAN FOR RELATING SOURCES

AND USES OF FUNDS f'(JRIt'-G AN ACCOUNTII.K; OR
ARE ALI KE ItJ

T~iI\T

PLANtHr~

PERIOD.

ALL GUDGETS

Tf-iEY r"UST TAKE ACCOUtH NOT ONLY OF CURRENT REQUIREMENTS

[JUT ALSO OF LOf\.G-TERM CAPITAL i'lEEDS.

IN ADDITION ALL nUDGETS ARE ALIKE

I1~

THAT [\OTH RECE I PTS AND EXPEUD ITURES HNOL VE ES Tl r·1A TES HI·il CH CAN SCM:T1 /YES
3E QUITE ACCURATE RUT 'rlliICH AT OTHER THIES I'-t.A.Y IrNOLVE lNCERTAIN JU[)GIo£NTS
AS TO MARKETS OR TO BROAD ECONOMIC TRt:NDS OR TO n-fE STATE OF THE ENTIRE
NATIONAL ECONOMY.
IN THESE RESPECTS THE FEDERAL BUDGET DOES NOT BASICALLY DIFFER FROM
THE BUDGETS OF, SAY, A FAMILY, THE UNIVERSITY OF PHJ'JSYLVNHA, UNITED STATES
STEEL

CORPORATI(Y.~,

OR T!-iE STATE OF PfJ\lfJSYLVN..JIA.

NONETHELESS, THERE IS IN

niE FEDERAL BUDGET AND Hi THE FEDERAL BUDGETARY PROCESS A UNIQUE ELEMENT,
SOHETHING THAT GOES BEYOND SIMPLY A MATCHHX; OF RECEIPTS N-JO EXPENDITURES
TO DETERt-UNE THE FEDERAL SURPLUS OR DEFICIT, AND nlAT IS THE RELATIONSHIP
Ben/EElJ TIlE FEDERAL :3t...n)GET AND TrlE NATION'S Ecora-Hc

:~[ALTH.

Ttt ECOfJOt·lIC OBJECTIVES OF FEDERAL BUDGETARY POll CY, AN~ OTHER
FEDERAL POll C I ES AS WELL, ARE SPELLED OUT l!1 THE EMPLOY:-''\ENT ACT OF 1 946
"J'rlIC!-I DIRECTS THE FEDERAL GOVERtlf''lEIIT TO USE EVERY POS5I'3LE tv'£At!S TO

- 2 -

GlvrN Tt£ ~ ITt.OE Of ITS EXPENDITURE CCJ+1IWENTS, ITS REVEI'-AJE COLLECTIONS,
ITS PUBLIC DEBT ~GEP£NT OBLIGATIONS,
RESPONSIB

At-f)

ITS MJNETARY PoND CREDIT

ITIES, THE GOVERr+1ENT INEVITABLY EXERTS A POtIERFUl INFLUENCE

ON THE ECCNCMY.

GIVEN THE DIRECTIVE OF THE EMPLOyt.-£NT ACT, THE FEDERAL

GOVERI'-MENT MJST ADJUST IS ECONC1-1IC POLIC I ES TO COMPLe£NT PRIVATE DEMAND.
IT IS, Tt-£REFORE, H£ MSIC PRINCIPLE OF FEDERAL ECOt-rnIC POLICY, OF
~/HICH

RUDGETARY POLICY IS A VITAL PART, TO ADJUST THIS IM'ACT IN SO FAR

AS POSSIBLE It. WAYS WHICH \-JILL PRO'1OTE TI-£ tJATION'S ECOt-01IC GOALS.

I1'.t(LUOE --

QI\j

THE [)(J4ESTIC SIDE -- HIGH LEVELS OF EMPLOyt-£NT t>.NO PRODUCTION,

RAPID ECOI'01IC GROwn; tND CNERALL PRICE STABILITY AW -- ON THE
SIDE -- MlANCE OF ()JR INTERNATI()'>.IAL

PAY~NTS

CCNGRESSIOI'JAL EtlACTI-1ENTS AFFECTING ROTH EXPEt\f)InJRES

COURSE NEITt-£R EXPENDITURE

M)R

r~'TERNA.TI()NI\l

At'-JD RECEIPTS.

FEDERAL FISCAL POLICY IS REFLECTED IN Al»1INJSTRATION
,A'\JD

THESE

REC~"DATIONS

A'~D

TAXATION.

TAX POLICY CAN AE FORt-1ULATED SOLELY Cl'J THE

&\SIS OF ITS IH-1EDIATE CONTRIBUTICt-J TO ONF OR ANOTH:R OF OJR BROAf) ECOtfflIC
OAJECTIVES.

~EVERTH[LESS,

\I;'t£~!

USED FLEXIGLY III COORDINATION WITH On£R

FEDEJ(AL ECCtKJo1IC POUC IES, FEDERAL FI SCAL POLIC IES

nx;

CONTRI BUTE TO ESTABLISH

A FIt'WJCIAL ENVIROt-J.1ENT 'f.IHICH CAN HELP TO ACHIEVE THESE OBJECTIVES.
IN HIS AtNUAL REPORTS ON THE STATE OF H£ FHJ\NCES IN THE PAST Tt,.,()

YEARS, SECRETARY DILLOt-J HAS CALLED SPECIAL ATTENTION TO THE INTERRELATIONSHIPS
BETWEEN

[~lOGETARY

AND

On1EF~

FEDERAL ECON:l-1IC POLICIES ItJ RELATION TO THE

VAP. IETY OF aJR ECCNCt1IC ()&JfCTIVES.

THESE S/lME POINTS HAVE !3EEN Et1PH1\SIZED

AGAIN At£) AGAH. It-; SPEECHES Ml) STATEMENTS BY TREASURY POLlCY OFFICIALS
OTt-£R

ACI'1H~ISTRATIOtJ

S?(lKESME'l.

N-f)

I3Y

- 4 ~fIl),

CJ-J THE OTHER
Iff:)

WHEN THE EC()f\()MY I S SUFFER I ~ FR<Jo1 I NFLA THNARY PRE SS~ES

A TEfIl)Ef'£Y TOWARDS EXCESS lYE DEMAH)S FOR RESOURCES, THE TEXTAOOK SOLUTION

IS TO RAISE TAXES OR TO REDUCE EXPa-l)lnJRES.
NEEDLESS TO SAY, THESE TEXTBOOK SOLUTIONS ARE GRAVE OVER-Slt-'PLIFICATIONS.
T~

RATHER

TALKIt-G ABOJT H£ORETICAL EC()M)MICS WE SHOULD [)E THINKIr-.x; ABOUT

POLITICAL ECOI'rnY, A MIXTIJRE Of
NEEDS OF THE TIME.

ART OF THE POSSIBLE At-.[) THE ECON:J.1IC

ADDnt; FURTt£R DIP-'ENSI<NS TO BUDGET CONSIDERATIONS ARE

H£ POSSIBILITIES AND LIMITATIONS OF OTHER ECOf'OHIC POLICY TOOLS OF THE
GOVERI'MENT, INCLUDING MOST [M>ORTANTLY TI-£ H()\JETARY POLICIES OF TH: FEDERAL
RESERVE SYSTEM.

I WOULD LIKE TO STAY AWAY fROM

r~ETARY

POLICY QUESTIONS, ALTHOUGH

THEY ARE VERY CLOSELY RELATED TO HI: TREASURY'S OWt J DEBT I-1MJAGEMENT POLICIES.
THE FEDERAL RESERVE SYSTEI"1 I S AN It·DEPENGEtJT AGENCY, Al THOJGH -- I SK1IJlD
PAPIDLY ADO -- AS RESPONSIVE TO OUR NATlOt.JAl NEEDS AS ANY OTHER AGENCY OF
GOVERr-MENT.
THE

NONETtf:LESS, THE

PESTRAH~T

GEr~ERAL

TENDENCY OF t-UNETARY POLICY TOWARD

OR EASE WITH ~ICH CREDIT CAN ')f OEHP.INED IS A PART OF THE

ErWIROt·MENT FOR CUR CONSIDERATIONS OF rnJOGETARY POLICY.
CCJ-1RlNATIONS OF MONETARY
TOTAL

'~ATI(),-lAL

PRODUCT.

M~D

nus,

THERE APE

FISCAL POLICY hHICH MAY RESULT It; THE SN-1E

PRODUCTION BUT HI-HCH WILL CAUSE DIFFERENT ALLOCATIONS OF

AGAIN, TO OVERSIMPLIFY, RUDGETARY EASE AND MONETARY

RESTRAI~rr

ARE LI KELY TO PAVOR A LCW-SAVlf'.GS, CONSLMPTION-QRIENTED ECONOMY, WHEREAS
1'-OJETARY EASE
A HIGH

SlWI~S,

fruDGETARY RESTRAINT ARE MOST LIKELY TO

HNESTMENT -QP IENTrD Ecm.()MY.

I~E

I\SSOCIATED \.fITH

- 6 -

HE BEST POSSIBLE II'FORJo4ATlON, IS FILLED THROUGH JOINT CONSULTATIONS BET\-.t:EN
OFFICIALS OF HE TREASURY .. Tt-£
ECO\lO'1IC ADVISERS, DRAWING

~EAU

OF Tt-£ P>\.()GET, AM) Tt-£ COUNCIL OF

TURN ON THE JNFORf"ATION.. EXPERIENCE, AND

WI$[)()'-1 OF CAPABLE PEOPLE IN ALL OF THE OTHER AGENCIES.
THIS REVI Elv PROCESS IS I."oT COI'l)uCTED JUST ONCE A YEAR, AT H£

BJDGET FOR THE

~lEXT

TI~

TrE

FISCAL YEAR IS l..tIDER CONSIDERATION, BUT IS A CONTIt'UOUS

PROCESS WITH REGULAR MONTHLY ,..IEETINGS OF STAFF MEMBERS OF THE THREE AGEf'.(IES.
THIS IS A REFLECTION OF THE FACT TH.4T THE FEDErAL
COHINJAlL Y ALERT TO DEVELOPM:NTS

WITHH~

GOVER~NT

H-E ECOf'.O-1Y

Mi)

NEEDS TO REMAIN

ON THE

INTERANTION~L

SCENE TO ASSURE THAT POLICIES PREVIOUSLY ADOPTED CONTI"UE TO BE SUITEr TO
EVOLVING CIRCl..MSTAI'J(:ES

AN)

THAT NEW POLICIES \"tILL BE DECIDED UPON IN THE

LIGHT OF n-£ f:EST POSSlOLE AtI) nOST UP-TO-DATE INFORMATION AVAILABLE.

WiNSTON CI-URCHILL ONCE Re-W:KED TI-tAT h'HEN HE ASKED

C~IT/\IN'S

TOP

Tt-REE ECOf\DMISTS FOR A[WICE H( ('.,()T FOUR OPUlJCtt;S, TVJO FROM LORD KEYNES.

ALHruGH GIFFERHCfS C{) DEVELOP BET';JEEN THE STAFFS OF THE TH<EE AGENCIES,

\-JE CONSIDER IT IMPORTANT n1i\T THE TH<EE AGfJ\lCIES HDEPENDENTLY REVIEW THE
SITUATION EACH !'-nt\TH MID COtvlE TO JUOC,t-1ENTS REGARDING THE OUTLOOK
C!,,~ T~1[t~

~.E

DISCUSSED AND USUALLY RECONICLED.

MOST Cf,SES, ARE MIfJOf( St-W)[S OF H1PH/\SIS.

f\J'jY MSIC

GlSAGRfE!"',ENTS~

\~ICH

RH1AININ'; DIFFEREUCES IN

THESE

f~E

THEt. EROUGI-IT, ALCllG

TO THE f\lEXT POLICY LEVEL" WHICH HA.S HEEt-! AITH-flED BY

Uv\RLES L. SCHlLTZE, ASSIST/f'JT DIRECTOR (.IF THE P.lJOCET, JOHr-J P. LEWIS,

OF THE CCXJJCJL OF ECOMJt.HC ADVISERS, ftND MYSELF, R[PRE5fNTH'(; THE
[j[PN<TI'IEtJT •

~~ITH

MEMUE~

TR£.~SURY

- 8 TI-£ FACTS ARE, H)WEVER, TH4T AS 1961 BEGAN THE

FAR FRClo1 Ct-£ERFUL.

EC~IC

PICruRE WAS

DCH:STIC ECCNCl-1Y WAS IN TI-£ DEPTHS OF RECESSION WITH

LNEMPlOYMENT IN THE NEIGHBOR~ OF 7\.

Tt-£ RECESSION, WHICH

\O£RE

EXPERIEt.cIt-G, WAS Tt-£ FOURTH RECESSION SINCE THE Et-V OF \o«)RLD WAR t I

n£

THIRD IN O'JLY EIGHT Yf.ARS.

OOR GRCMTH RATE

ruRI~

Af\I)

TI-£ PERIOO It+1EDIATELY

PRECEDING 1961 WAS FAR FRCJ1 SATISFACTORY -- FAR BELOW THE RATE OF GROWTH
IN EARLIER POST v.oRLD \'JAR II YEARS AS hELL AS BELOW OUR LOI't;-TERM AVERAGE
RATE OF GROWTH.

TH: CONTII'UING LARGE DFFICITS IN OUR BAlANCE OF PAYt-£NTS

At-D THE SIZABLE ()JTFLOW OF GOLD

tn L().JGER Tr£

BECCJ1E CRITICAL

AU)

THE DOLLAR WAS

CURRENCY IN THE EYES OF THE W'JRLD THAT IT HAD BEEN.

IN 1961., THEREFORE., IT WAS OBVIOUS THAT mE FIRST It<PE?ATIVE Wl\S TO
REVERSE THE PROCESS OF RECESSION AND, AFTER EIGHT MONTHS OF
GET 'tHE EC<l'l()t.1Y MOVtf\l; UPWARD AGAIN.
~ICH

ECO~.Q.1IC

DECLlf'£,

THE BALAN:E OF PAYMENTS SITUATION,

HAD PROGRESSIVELY r,oRSEI'£D DURING 1%0, ALSO WAS A SERIOUS CONSIDERATION

AND AS A SEC(l·m IMPERATIVE., CONFIDENCE IN Tt-E DOLLAR HAD TO BE RESTORED.
THE ADMINISTRATICN MOVED SWIFTLY AND BOLDLY TO ADOPT A SERIES OF
MEASURES DESIGNED TO
MEA~ES

THESE

EM)

HIE RECESS ION AND BRIf'G ABOJT A STROt-li RECOVERY.

If'.K:LUDED:

-- EXTEN:lEO TB-1PORARY LNG'PLOYMENT BEt-EFITS

-- EARLY PAYr-ENT OF VA LIFE INSURANCE DIVIDnVS

AM)

A SPECIAL

VA INSURANCE DIVIDEI'..[)
-

ACCELERATED MILITARY PROCUREMENT At-{) CONSTRUCTION, NECESSITATED

BY ne OERLIN CRl SIS fJUT ADDHJG TO It<Ot-ES Af\O OUTPUT
-- ACCELERATED HIGtWAY AID PAYME"rrS

- 10 THIS DECISION IS AT THE f-£ART OF PRESIDENT JOHNSON'S DRIVE Fffi REDUCTIONS
11~

FEDERAl SPff\()lt-.li.

ITS Co-iPLE}£NT IS A

STR~ ~ELIEF

IN OUR PRIVATE,

CCM'ETITIVE ECONG1Y, '*IICH Ht\.S PROVIDED OUR C()JNTRY WITH THE HIGHEST LIVIt-..G
STAt>DAADS EVER EtJJOYED RY I-"NY COUNTRY AT ANY TIt-E.
THE FIRST t-1EASURES REFLECT H'(; THIS t--'£I.J FJ SCAL POll CY WFRE EFFECTED IN
1<)62 -- FIRST,

PASSAGE OF TilE 7 PERCENT INVES1}1ENT TAX CREDIT WHICH WAS

DESIGNED TO El'COUKAGE OUSINESS ItNESTMEI\!T It-.: PRODUCTIVE EQUIPfv'ENT AS A KEY
FACTOR TO REVITALIZ ING

OUR ECorfflY TOWARD RESTORIt.G A GROWn, RATE THlAT

\.oULD REALIZE OUR ECO,K1'llC POTEtrTIAL.

SECOND, A THOR0UGH REVISION OF

DEPREC IATI(l\I GUIDELINES, AlSO DESIGNED TO SPUR eUSHESS INVESTH01T BY t-'()RE

REALI STICALL Y REFLECTWG ACTUAL BtJSINfSS lIEPRECIATtON NEEDS.
~.()W

\.:E AR[ If\;

Ca-~FlDENCE

It~

T,"*~

r-\lOST OF THE GREATFST

EXPERIMfJ~T

OF ALL, \o/ITH EVERY

ITS SUCCESS.

TI£ REVHUE ACT elF 1')(;4 rilLL, Irlt-£t: IT IS PJLLY EFFECTIVE, PROVlP[ AN

IWE'i<,N;E,

r~CROSS-THE-BOARD

II'DIVlDUALS AW, ALOiG

REDUCTION OF C"tE-FIFTIi

~'!Inf

II'~

THE TAX LIA81LITIES OF

THE EARLIER HNESTMENT TA..'\( I:"CENTIVES, OF

~'!ELL.

13US IfiESS CORPOPATIOT\!S AS

THERl WILL, OF COURSE, GE {\ LOSS Hi FEDERAl PEVENUES, qur ONLY FOP THE

TIt-IE f'EHJG.

,.'\LREADY~:

r. .RE SEEH.G, I THINK, THE STIt-UlATIVF. EFFECTS OF TH15

l.;\RGEST Ttv< CUT It'J THE EI :TIF..E HISTORY OF THE
~lJLL

PEC(t-1E

EVH~ 5TPCt-lGEr~

~~TION.

;JITH PASSnX; MOtHHS, \';'E

n£ ECOt,()t-1IC EXPAN510H

~~ELIEVE.

'JY HAISII'IG

1i.,(OhE5 50 AS TO I1..cRU\5E TilE TAX ~~ASE ON HHCH FEDEf,'/',L REVEttlES [;EPG.J(), \-IE

eN'; r:(J.\' LOOK FORHAR[; "':ITI! COl'~FIL[T!c[ TO A Hl\LAIlCH' m.rx;[T, PE2HI'.J'S IN FISCAL

lr:[)7, WSTEAC· OF A GLOO'iY Sn~HG CF [lEFICITS INTO THE INDEFINITE FUTUP.E.

- 12 -

-- w::

H-\VE

H~D

FE\'t1:R STRIKES

Ii'\VE ENJOYED RETTER

AN)

LAOOR-f>W4AGE1£~.rr

RELATIONS, G~ERALLY, lH&\N IN ANY C(Jo1PARABLE PERIOD SHCE lliE 00

OF \<)RLD WAR 11.
-

STOCK MARKET PRICES HAVE RISEN TO THE HIGHEST LEVELS IN HISTORY.

WITH THE E~lMENT OF THE TAX CUT, THE STATE OF BUSINESS Cor.FtDE~E

IN THE ECOt-O-llC OOTLOOK IS HIGHER TI-W'J AT .ANY TIME IN 11-£ PAST Tl-REE
DECADES.

I \truLD NOT LIKE YOU TO THINK TI-+'T BY THIS RECITAL WE ARE
\0.£ KA.VE ELIMlN\TED THE [3lJSINESS CYCLE.

WE CLAIM

CLAJ~1II\G

SUCH THUG.

THAT

\lIE 00

CLAIM THA.T CXJR ECOf'O"lIC POLICIES -- MAINLY BUDGET POLICIES -- HAVE BEEN
EXTREMELY EFFECTIVE ANt) SUCCESSFUL.
OETTER OFF ECCNChlCALLY TOOAY Tl-WJ IT

\.JE 00 CLAIM THAT THE UNITED STATES IS
I~S

BFEN FOR ;-'WlY YEARS.

\£ DO CLAn1, AtCJ THIS IS PERHAPS Tt-E MJST IMPORTNlT OF ALL, THAT THE

GAINS

t-~E

SO FAR

j."'J\![)

STATISTICS OR PRETTY
I~REI\SE

Of THIS

TI-iE

GAtr~S

LI~I[5 or~

TO OE MADE IN nff FUTURE ARE FAA MORE THAN

M-.! ECOI'CMIST'S CHART.

IN THE ECONOMIC r(MER OF THE UNITED STATES.
~ItHSTRATlOt-!,

THEY REPRESENT A VAST
IT IS THE AVO'v(ff) INTENT

OPEP...A.TIf'.(; IN M! All-1OSPHERE OF FIRM EXPEI'OJWRE COf'.;ROl

TO USE Tt-DSE GAINS TO IMPPOVE nt:: LIFE OF EVERY AtlEP.lCAN.
AS PRESlOENT JOHNSOti PUT IT LAST MARCH, THE ISSUE IS SIMPLE:

"TO 00 WH1.T WE CAN TO
CAN LEAD A F1NER

f>N)

1"'A.~E

SURE THAT n-tE AVERAGE MAN

M()

\H1IW

A HAPPIER LIFE Al'J!) TOGETHER \-lITH THfIP

Ct'ILDREN n£y CAt; ALL LOOK Fffi\'JARD TO A BETTER DEAL."

ex(

111(1l

['rom nll

tn.;~Q:Lloll

novr or hereafter imposed on the principal or interest

thereof by any State, or an,.v of the possessions of the United states, or by any
10cn'. t[L'Cinc; [1uthori ty.

For purposes of taxation the amount of discount at ,.,hieh

'l'reo.sury "uUls nre oriGinally sold by the United States is considered to be interest

Under Sections 1!.J t1 (b) and 1221 (5) of the Internal Revenue Code of 1954 the 8JnounL
of discount o.t llhich bills issued hereunder are sold is not considered to accrue
until such bills are Gold, redeemed or othenrise disposed of, and such bills nre
c;:cluc1ed fY("'I) consIderation as cnpi tal assets.

AccordinGly, the owner of Treasury

bilb (other tlwD life insurance compOllies) issued hereunder need include in his income

tr>,X

l'chu'n only the difference bet-l,een the price paid for such billa, vrheLhcr

on oric; in .. '_

iO:;II('

npon sale or

01'

on subsequenL purchase, and the amount actually received cHhel

re<1(~mption

lilCldc, n;; orcHnit]~r

at maturity durinG the taxable year for "hich the return is

cain or 101>,s.

'J're:tGUl,Y DCl';11'LJnc:nt Circular No. 418 (current revision) and this notice, preGcrilJe the tCl1110 of the Trc['.sury bi 1.1s and C;OVel"n the conditions of their issue.
Copies of Lhe

'~ircular

mo.y be obtained from any Federal Rescrve Bank or Branch.

THIi'JI.sm (i D',':PAH'J'j I8IlT
\TwJhin~ton

May 21, 1964
FFERS $1 BILLION ONE-YEAR Bil.LS
'rIlc Tl'Cc,Gl 1 ry Departmcnt, u;l th1c pul)l:i.c noticc, invitcs tend.erG for ~; 1,000,000,

l(Qf:
or tllcl'c[ll)outs, of

363

l)&}lC
COI.l1)c:~Hive

~el'ic~,

-d['.y Trco.sury bills, to l)c isr;-uco. on a diGcount br'.Gis undcr

['.<l1<1 noncompctltlv2 bidc]j.110 0.:; hCl'elnn.itcr providcd.

"iJJ. be clo.-ccd

June 2, 1964

------~~~~~--------

\Tlk~:1

·i..bc 'J.'c.cc caount 1rill be

:j'Ol',")

on1:',

cnt. .

('11(\

::iJ., 000,000
~.'cndCl'S

p['.~'·['.b}.e

The bills of this

May 31, 1965

, end. 1rill mo.tul'C

v:i.i,llo1l·L iI1L(~n;:~L.

The:,.' vTlll be iSGued in beo,l'cr

in dcnOliLtno.t ::.0113 of ::;1,000, :/;,000, :;;JO, 000, :;;50, GOO, :;ilOO, 000, ;~500, O(
(r.lO,tu:l'lL:' vnluc).

\Till bc l'cec.i. '/l:d

Clt

FcclcF'.l I;c :3Cl YO

n['nl~;~ [~nc1. B:L'~lllches

up to the closinG

Daylight Saving
llOlXL', ol1c-:,hil't:, p.r'I., Eo.::;-cco:nftc::tx'xlljlx,xjl t:i.l.1e,

wedneSdaYJ~ 27, 1964

1Till not bc received et the 'l'reC'.GU1'Y Departmcnt, Ho.r:;hincton.
rll1

even rruJtiple of :;:1,000, o.nd. in the

'm::,J" be c;;:prcGGed on thc bo.c5.::;

CQCC m.~

J.OO) "ldth not

Tcndr.:l';

Euch tender must be for

CO;:Jl)cU.t.:i.ve tender::; the pricc offereu
,10:;:'C

than three dccir.1o.ls) e. C.) GCl.Cl2

F:_'''.c l;:ionr~ u~r not bc 'lwcd.. \ It :i.e 1U'U~d "[;11.:::,t tcnrlcr,:; be uncle on the prjntcd :i'OJ.'Y":lS o.nu
:;"0 ~'·'.'-":'.rcl.cd in thc cpecic.l cnvcJ.opc G
r;:;"~'Jlc:hcs

cI>pl:l.co.t:~Ol1

~rh"i.ch

lri. :U. be C'l':!.Jl)l.i.e(l

b~{

Ii'cdel'ul nc se.:-ve DC.l11:s or

thcre:i."'ol'.

DcnkLn,:; jnGti"l:.ut.ionc c;cnc:;.-;::,lJ..:/ r.1C'.y ::;UU1;t:i."l:. tender::;
vic1cd. the nCIJC:::; of thc Ctwto,ncl'S

D.I'C

:;'OJ.'

[l.ccount of customers pro-

Gct ';.-0:: [:'h in ::'\'J.ch t.Ci1c1cl's.

Others than bDnldnc;

inst:a.utions ,;:i.:.l not. be PC1'l'ittcc.l~0 GU1)lTI.t -ccnc:.C:l'C c;~cept f01' their ovm account.
Tenders 1r.I..ll be reeci vec1 ':TIt-hout dcpoc.Lt. J.~rom incorporo:t.ed bOl'll~G nnd truclt companieGo
['nd :L'1'0;.1 J'e::;ponsibJ.e and recoc;ni zed deoJ.cl'C in invcstillcnt Gecul'i ties.

Tcnders from

- 2 -

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 without stated price from anyone bidder will be
accepted in full at the average price (in three decimals) of accepted
competitive bids. Payment of accepted tenders at the prices offered
must be made or completed at the Federal Reserve Bank in cash or othe
~mmediately available funds on June 2, 1964.
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
r~2 ~r~nc:pa~ or i~t2~est ~hereof 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
inte£est. Under Sections 454 (b) and 1221 (5) of the Internal
Revenue Code of 1954 the amount of discount at which bills issued
:i-=reJnder are sold is not considered to accrue until such bills are
,'~old, redeemed or otherwise disposed of, and such bills are excluded
~rrw, consideration 2S 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 i:
made, as ordinary gain or loss.
Treasury Department Circular No. 418 (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
trom any Federal Reserve Bank or Branch.

000

POi l1I.1.USI A. "". NEitSPAff.5,

r.!dtt.

'!!z 26, 1?§4.
Fl£!r.'l.TS )'/ T!Th.A.to,'RY'S iiiFKL!

U. 0 " ' _ .

1'nuUJ')' Depart.Mn~ anftO\',DOId lu~ ftU1.Ac t.ba\ the teaden t"" \110 MI"l.. .,
bUla, aDa . .ri .. \0 be _ add1t.1,na]. 1.... or the b1l1a
Mrwu'J
II
... t.be other aer1H t.o be .ted ~8¥ 28, l~, wh10b _re otte... - Mal 10, . , . ....
at, the F.-nl 'Merq Banka 011 Jl~ 2S. 'fendere wn l~.lU1d , . .,100,000,000, •
t.t....ao.u, eI ll-day billa and tor t900,OOO,OOO, t1r t.heJ'HboQu, of 1.~ bUla.
The ...u. or t.he _
aerl •• are ... toU. . .

cia'"

the

'1'Nu\61")'

91--.,. 'tre&8lJ..r1 bill.

SANlt j f ... ;;c~nw
e'~pu _rrVE 2 dJSI

_wine

H1gh
Low

A,,"rap
. ; E.x8eptina OM

'up_ipj)l"O&.
!1. 1~
Lid..

Price
19.12h

AMUl :lat.e

)'.120
99.121

).hBU

).k6S:l
).4:l'5~

tender ot $1>J,OOO

18,...., tn...'r '1• •
.me t/ ,.S*
'!"

_'ur1!i 1M g

•

l')' billa

:PPI"OS.
TAl!••

PI.176
98.170

rr,

•

).6Cn.C

~.17.

•

).SfS_1I

TI~ of the UO'l.lftt. of 91-4ar ~illa bid ttJr
the low pr10e ... • ••• pWcS
20:' of ~ UlQura\ of 18)-day bUla bid for at, t.be 1_ priM ... -..pW-

01aWlGt,
......
... Twtr

PbUadiIlpt:.1a
Cleftlud

Uebaorfd
AUanta
Ctdeqo
.". 1.cN1.

MI.,.poll.
I ..... CiV
Dall..
3an Cftnehco
f~

!!I

y
II

!£pl1M For
..a 20,880,000

1,5lS,61S.000

aos,

26,
000
16,601,000

9,m,OOO

Ili,6SS,OVO

A.o!!p!e4
:3. 10,",000

8I&S,OSS.OOO

.;$
I

ll,aos.OOO I
16,,10,000:

"lU,OOO:

2O,lSO,oocr

lhI, m,ooo

11.J&)l,ooo
2p....",(Qj
1&, lee,. 000

U,,,.OOO

2lI.8bl,iJOO

72,JJ2,ooo

llJ, 5.)2, OUO
·~2,O7::"002.000

2,465,aoo

1,274.hlk,aoo
8,61&6,000
11,88#,000
3,11',000
lO,tO?,OOO

llS,ll4,ooo
~.861.000

,,£pU" JI'or

182,901,000

2),W,OOO

9,lJl,oOO

...."..
$ 1,46$,•

660,211&.-

),216,.

U,6b&&,.
2,910,.
{\,481,-

1,,4f.n,_
7,ll),-

6.091,{,).)Q
22,4M.OOO

22,406,.

161,995,f)()O

94,8SS,-

11,101,000

9,2<~,OOO

$1,200,~9,OOO ~ :£1,709,150,000

),Ofl,-

4,209,.

;~<j,.):),CU,OIIII

DOl:.>dN ~~97 ..121,\,)JO n·cmc~JetH1v. t..e!lIan accepted .ltt.t.he aV0f~. j:rioe of "~
Includu ·,?1,ft.3,fXJO n;:m~,...,.t.lt.1ve ~ acce?~~d at, Ula aY81'afr.8 prie. 01 ,.
')n a C-..'l\.: on is... or :.be . . . leagt.h and for the ..... ~, inYUtMd, the " \ e
tC4M billa waltS provide j1.elda o! ).:;SS, tor t.h. 91~ hUla,
J.
lS)-day billa. !ftt.ar~st !"Glt.ea ~ billa an Ci~\ed. in MrM of bank d1.eeot.ln\"
<

* m, _

t.ha :-.t.um related t..~} the tace eo ,n' of t.bt billa ~aW.e
U·. 8(Hnt. :1.zroteated and t.."le1l' lMlf.'1Jl 1u ac'Wal tluMer GI

j......

ret..

at. _t.t41t.y ra\bW.

-.v. J"W.lated 1.0 a _ _

In Cllntrut., j1elda on cert.lt1_tu, DOYa, aad bOIlda are ~\4t,ed la . .
;;It int,erqa' ,:}~~ ti .• 8P." >'.mt, lnv!!sted, and
'-he n..... fit _ . nJl;ain1l'11
lnwl'Mt. pa)'aeat. ~ri ~ t.<j tone ac\.ual n..-.r of ...". 111 \be poriocS. li t.ll .....
aftll'U&l. C~~},)unding it 1t:r"8 t.ha."l .;me oou;~ pel'iod 1. i-..lsr ••

sa.

- 3 -

and exchange tenders will receive equal treatment.

cash adjustments will be made

for differences betveen the par value of maturing bills accepted in exchange and
the issue price of the new bills.
Tbe 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

10S8

trom 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

Accordingly, the owner

of Treasury bills (other than life insurance companies) issued hereunder need 1nclude 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. 418 (current revision) and this notice, prescribe the

te~s

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 -

decimals, e. g., 99.925.
be

Fractions may not be used.

It is urged that tenders

made on the printed forms and forwarded in the special envelopes which ViII

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

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 $

less for the additional bills dated

March~1964

, (

2WO

days remain-

XitA

ing until maturity date on

September 3, 1964

$ 1~OO or less for the

182 -day bills without stated price from anyone

) and noncompetitive tenders for

HiM

bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids for the respective issues.

Settlement for accepted ten-

ders in accordance with the bids must be made or completed at the Federal
Banks on

June

'l.ii1

Reserv~

, in cash or other immediately available funds or

in a like face amount of Treasury bills maturing

June

~964

•

Cash

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,

May 27, 1964

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 $ 2 100" 000 , or thereabouts, for
!

cash and in exchange for Treasury bills maturing

June

964

, in the amount

of $ 2l101'iiJ;t000 , as follows:
-xB--daY bills (to maturity date) to be issued

June 4k:iJX64

in the amount of $ 1, 200~, 000 , or thereabouts, representing an additional amount of bills dated

March 5, 1964

)(iij{
and to mature September 3, 1964

ffiX

amount of $ 902 , ~OOO

, originally issued in the

,the additional and original bills

to be freely interchangeable •
•

-daY bills, for $ 900 I 0im00

June 001964

, or thereabouts, to be dated

, and to mature

.....;;De;;.:;.;c;.;:e;;;;m;;;;;b;.;:e;.;;;iia~3-fr..;;1;.;.9..;,6..;;4_ _

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., Eastern/SUxlJih,rJji time, Monday. June~1964
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

- 2 Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, followin~ which public
announcement will be made by the Treasury Depar~ent 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
tende~s for $200,000 or less for the additional bills dated
t-larch 5, 1964,
(91-days remaining until maturit:y date on
Septe:nber 3,1964) and noncompetitive tenders for $ 100,000
or less for the 182-day bills without stated price from anyone
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 ir. accordance with the bids must be
made or completed at the Federal Reserve Banks on June 4, 1964,
in cash or other immediately available funds or in a like face
amount of Treasury bills maturing June 4, 1964.
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
i~terest.
Under Sections 454 (b) and 1221 (5) of the Internal
~~venue Code of 1954 the amount of discount at which bills issued
h~r·='.l~der are sold is not considered to accrue until such bills are
sold, redeemed or otherwise disposed of, and such bills are excluded
~rom cJTIsideration as capital assets.
Accordingly, the owner of
T~easury bills (other than life insurance companies) issued hereunder
~eed ~nclude in his income tax return only the difference between
the ~rice paid for such bills, whether on original issue or on
subseque~t purchase, and the amount actually received either upon
sale 0r redemption at maturity during the taxable year for which the
return is made, as ordinary gain or loss.
~"pas.1"Y

D'?partment Circular No. 418 (current revision) and this
prescribe the terms of the Treasury bills and govern the
coniitions of their issue. Copies of the circular may be obtained from
any ~eieral Reserve Bank or Branch.
TI~tice

000

IItPaI A. ...
Mal 16"

J!6' •.___

*711, IBM

RiSUI4'S 01 'll\EAStIRT'S OD-DAR ID.L • •DDIJ

*' •

!be 4fI ••a.ary DepartMIS ~ len .....
tMt the , ....... tor $1,OOO,(X)(),OGQl
or ~" of 363-d&y '.rreaPr;y la1l..la to De date4 .,... I, 19M, . . to .nare
1965, *lob wre oftWred on May 21, _re qpIIDIId . , .... ,.....,. . . . " . . . . OD *Y 11.
IIIe d8talla or thia 1uue are .. tol.kNa;

hal aa»1ec1 tor '-'al &c:AJJH4

$2,201,511,000
1,000 ,Ul,OOO

at. __ . . . . .

ftID&e ot

aa4.....,....

(1_1"d.. fl8 ,121,000 .n.e4 _ • .alCGIIPttltlft bae1a
ia tull
pri08

lIelGw)

MOepted ~ltlve bide:

B1p

Loll
Aft~

96.259 E9&1wlf:!l't rate of d1ecow1t approx. 3. ~ ,.r amau.
96.246
It
....
"
"3.~ It
96.250
II
"R
U
" 3• . , . · "
II

<_ of tbe &JIICN.IIt b14 tor at the law price • • eo",,")

,....,.1,......
Dlftr1~

btoD
..., 'fork
IbU_.lpS.
Clftelu4
81ca.-t
A~

CId_eo
st. Lout.

. . . . . .If.
...... C1~

'l'otal

AJ211!!1

'+9Mt

•

For
48 ,300,000

117l1,373,OOO
1O,6~l'OOO

C9,M.7,OOO
585,000

5,165,000
209 ,612,000
5,370,000

a, 785,000
.,930,000
16,255,000

U6,Gg.OOO

!oU.1

11,111,000
798 ,:&18,000

",000

16,567,000
111,000
1,'711,000
l3f.,a1I,OOO

2,110,000

1,".,000
5,610,000

'~,OQ)

as,!10 ,000

TO.rAL
;-.2,207,571,000
$l,CXJO,w.,OOO
()l a ceN.pOIl 1. . . of the . . . . leqt.h an.4 tor tbe _
uow:rt 1n"f'fNte4, till ret_I
the.. b1.l.l.e WUld prov14e a yield at 3.S~. ~!'An _ b1ll.tl an ~.
ten. of bUt ~ vttb the murn relate4 to the ,... • : . . of tile Wlle :.;
d _tv.rtty rather 'tl1aD the ~ in....-te4 . . tbe1r ~ 11& ...,.1 .7 • • r of
1-.J.ate4 to a 38O-da7 ,.r. In COJIt.ru't" y1elAa _ eet'tlt1caUe, ..... , .... bcIDM
CQIIPlte4 1D tel'll8 of 1r1terest 011 to. 8OUI1't iIU..-, aD4 I'8late tM D\IDeJ' ot ....
ra.1n1.n« in an 1ntenIat paYl*lt period. to tile .nual . . .r of 4IQs in the pert.lle
vlth ....'.nuual ~ng it' more ttan a. ~ )WJ'1ol 18 1III'o1w'i.

TREASURY DEPARTMENT
Washington, D. C.
May 28, 1964
FOR RELEASE: A.M. NEWSPAPERS
FRIDAY, MAY 29, 1964
Treasury Announees Second U. S.
Drawing from the International Monetary Fund
,

Secretary of the Tteasury Douglas Dillon announced today
~ second drawing of foreign currencies by the U. S. from
the International Monetary Fund. This drawing, like the
first drawing on February 13, 1964, is being made under the
standby agreement for $500 million which was announced
July 18, 1963 and also involves currencies equivalent to$125 millIon.
The U. S. drawing is being made in Deutschemarks and
French francs in amounts equivalent to $70 million and $55
million
The drawing will replenish currencies previously
used out of Treasury stocks to facilitate repayments by
members to the Fund and will cover contemplated requirements
for this purpose over the next few months. By this drawing
the U. S. obtains currencies from the Fund which it can sell
for dollars to other members for their use in making repayments to the Fund. Other members can therefore continue, in
effect, to use their dOllar holdings to settle their
obligations to the Fund.

000

-2Under the stand-by arrangement, the United States will be able to
make available to countries wishing to make repurchases from the Fund,
using dollars, a simple and effective facility for obtaining other convertible currencies which the Fund can accept in repurchase. In outline. the mechanism will be as follows:
1.

Upon learning that a given Fund member wishes to make a
repurchase, would otherwise use U.S. dollars for the
purpose, and would like to avail itself of this facility,
the Fund staff will contact the U.S. authorities.

For value on the date of the repurchase transaction. the
U.S. will draw other convertible currencies (pursuant to
appropriate consultations through the Fund) equivalent to
the value of the repurchase.

The U.S. will sell for U.S. dollars, the currencies drawn
from the Fund to the repurchasing member, which will execute
the repurchase by transferring them to the Fund and taking
back the appropriate amount of its own currency. The sale
of other convertible currencies by the U.S. to the repurchasing member is envisaged as being at par.

The net result of the transaction will be that the Fund's
holdings of the other convertible currencies drawn by the
U.S. will be the same as before, since they will leave the
Fund and immediately be returned by the repurchasing member.
The Fund's holdings of the repurchasing member's currency
will be reduced and those holdings of U.S. dollars will be
increased by the amount of the transaction.

The stand-by amount of $500 million is calculated to be sufficient
to cover presently foreseeable repurchases, using U.S. dollars as the
starting point, over the coming year. At the same time, the mechanism
described above is to be only a facility to be available to interested
Fund members at their option. Countries will, of course, continue to
have the option, if they choose, to purchase gold from the United States
for making repurchases from the Fund or for any other monetary purpose.
Countries will also continue to have the option of obtaining other convertible currencies for making repurchases from the Fund by purchasing
those currencies in the market against dollars or through arrangements
with the central banks concerned, with or without the assistance of the
Federal Reserve Bank of New York.

- 3 Thirty days has been set as the period within which comments and views
should be submitted b the

Co~ssioner

000

of Customs,

Washin~ton,

D. C.

TREASURY DEPARTMENT

May 28, 1964
FOR IMMEDIATE RELEASE

Treasury Secretary Douglas Dillon, in special kQy official
ceremon4~at National Aeronautics and Spacf Administration
headquarters, at 4:00 p.m., today (~hurs~~~~, exchanged
59 new $75 Series E Savings Bonds for the personal checks of
Administrator James E. Webb and his top ~~a~. The occasion
!HmetuatEd NASA's current campaign as part of the interdepartmental program to increase total federal employee participation
in the payroll savings plan.
"The example that you key officials are setting here, with
this ceremony," said Secretary Dillon, "is one of the most
significant that we have noted to date in our interdepartmental
effort to increase the purchase of U. S. Savings Bonds. It is
matched only by the pace you set in developing the world's
biggest and best space vehicles. It should encourage others in
like capacities to take similar steps.
"There are approximately $47~ billion outstanding in Series
E and H Savings Bonds. This represents more than twenty per
cent of the publicly held portion of the national debt. Because
it represents real savings -- savings that come out of earned
income -- it is a hard core of non-inflationary borrowing upon
which our debt management can rely. It is the cornerstone
upon which the entire debt structure rests.
"You and others like you -- throughout our Government and
among the public at large -- have supported the Savings Bonds
program in war and in peace, investing your time, your talent
and your money."
000

TREASURY STATEMENT ON PRESS REPORT OF CREDIT TO OAR

\<las

negotiated over a period of months between

the management of the Fund and the United Arab Republic and is subject
to the fulfillment of a series of financial undertakings agreed betwee
the Fund and the United Arab Republic.

It was in no sense instigated

or T':Eorced through" by the United States.
\Then the agreement was presented to the board of executive

- 6 little town of Derby Line, Vermont.

As you know, Derby Line is

right on the Canadian border; in fact one-half of the town is
in Quebec, and the other half in Vermont.

A white line

intersecting Main Street marks the border between Quebec and
Vermont.

The shopkeepers on the Quebec side are proud of their

heritage and they speak French, and many of the signs in the
shop windows are in French.

Somewhere along Main Street, a

Vermont farmer and his wife lived in a house which stood directly
on the white line where it left off Main Street and continued
through a succession of hay fields.

The farmer, being a good and

true New Englander, decided that he wanted to move his
wholly and completely into Vermont.

house

After much difficulty, the

house was moved on rollers a few feet across the border line
onto American soil.

The move was reported to the Derby Line

authorities who reported it in due course to Customs, and then
came the classic action by a conscientious Inspector.

The farmer

was politely and firmly advised that he would have to pay duty
on the old furniture in his living room which had been moved
across the line~

Such is the stuff of which our zealous
I

Customs Inspectors are rna d e ..
Another change which has taken place recently is the
refreshingly new attitude on the part of our inspection personnel

- 7 toward returning travelers.

A great many letters and telephone

calls are received by the Bureau of Customs as well as the
Secretary's office from travelers who are impressed with the
courtesy of the Customs Inspectors who check their baggage at
the piers and at the airports.

Every complaint received from

a traveler is fully investigated, and if a situation needs
correction, this is done.

The complaining traveler receives

a full explanation and there is rarely a recurrence.

The code

of conduct which is observed in the Customs Service has become
an important part of the training of Customs inspectors,
expecially since Mr. Philip Nichols became Commissioner in

1961.
The old attitude of cynical indifference to the rights of
travelers is a thing of the past.

Today the mission of the

Customs Inspector is closely identified with the "big picture."
It is identified with the Cold War.
our balance of payments problem.

It is identified with

It is identified with the

bond of understanding between Government and citizen, between
tax-collector and taxpayer.

In our generation, when we are

engaged in a "struggle for the minds of men." the attitude of
Our Customs Inspectors toward visitors to our shores from foreign
2ountries, can be an important factor in the impact which their
visit has to this country.

It also can help make a success of

the Government r s efforts to bring more foreign visitors into the

- 8 -

United States, thus helping to redress the deficit in our
balance of payments.
There has been another change which some of you may have
noticed in the Customs procedures during the last few
years.

Thanks to the concerted efforts of the Treasury

Department, working closely with the Commissioner of Customs,
we have simplified and streamlined many complex and difficult

:ustoms procedures and formalities.
)aperwork has been reduced.
1

In many instances,

Along the New York waterfront,

good many reforms have been introduced resulting in

;peedier Customs processing of hundreds of thousands of
}assengers arriving a t the Port of New York.

In-transit

laggage has been speeded up and the examination of holdlaggage requires much less time and than it use to at the
'ort of New York.

We have introduced an "oral declaration"

n place of the antiquated and complex written passenger
dec" which plagued passengers for years.
These are only a few of the reforms that have been introduced,
ld they will be followed by many others, a number of which will be

nportant to you importers.

- 9 -

As a

matter of fact your luncheon is most propitious.

gives me an opportunity to discuss directly with you a matter of
common and continuing interest -- that is, the administration of
United States dumping regulations.
As you know, just last week the Treasury Department announced a
series of proposed changes in these regulations.

We feel strongly these

:hanges will vastly improve the administration of our anti-dumping laws

)y providing fairer, more equitable procedures for considering all such
~ases

in the future.

The intent of the proposed changes may be clearly

briefly stated:
They're designed to clear the air in dumping cases -- giving all

)arties involved a lot more information about one another's position
:han has heretofore been available.

Importers, exporters and domestic

.ndustry will all be given equal opportunity to study the evidence pre;ented by interested persons in a dumping proceeding.

This means expor-

ers and importers alike will be able to study the supporting documents
ffered as evidence in a complaint filed with the Treasury Department.
What's more, they will be assured of an opportunity to argue their
ase in the presence of the complainant -- responding directly to any
oints raised or additional evidence that is submitted in a formal proeeding.

- 10 -

As you know, this has not been the procedure in the past.

)pportunity has been provided for, say, an importer to examine evidence
>resented to us designed to show he was offering a product in U.S. marcets at a dumping price.

Neither could he expect to confront, in a sub-

;equent proceeding before Treasury, the party or parties who had intro~ced

such evidence.
Under the proposed changes the importer, as well as the original

~xporter

of the product, will not be denied access to either the initial

~vidence

or additional points and evidence that might be presented during

he proceeding.
These first really substantive changes in our antidumping regulations
n ten years are the result of an exhaustive study by expert consultants
rought in by the Treasury Department and the Bureau of Customs.

They

lso reflect the extremely valuable comments, written and oral, that
ere received by the department at the January 23rd public hearing on
he subject.

We have not, in other words, drawn up these changes wholly on our
Nn, operating in a vacuum.

We have listened carefully to businessmen

lch as yourselves and taken into account the various points and prob-

2ms you raised.
The opening up of dumping proceedings is not the only change con:mplated in our regulations.

The changes also include a clear set of

:andards to determine when differences in the volume of sales abroad
Id in the United States provide a genuine basis for making quantity

- 11 -

allowances in price comparisons.
In the future, allowance would be made for a quantity discount only

if it was in fact enjoyed with respect to at least 20 percent of the
nerchandise sold in the home market or in third-country markets or,
finally, unless it was cost-justified.
Additionally the changes would remove another source of complaint
In the past.

Retroactive application of dumping duties would be dropped

ly eliminating withholding of appraisement of goods imported before the
late of a withholding order.
The revised regulations would also permit an exporter to reimburse
n importer who has been penalized -- a matter of particular interest
o yourselves.
Our objective throughout this revision in our dumping regulations
as been to make them more effective and above all fairer to all the
arties concerned.

We are not, it should be stressed, proposing a

elaxation in the laws governing dumping.

We want to expedite future

roceedings as much as possible and make certain everyone gets treated
iually and fairly.
We sincerely invite your views on these proposed changes.

Written

)mment on them will be received this month and next and then we shall
lce more review them in detail, looking for still more ways in which
l

~prove

our regulations and the conduct of future dumping disputes.

Ie year 1964 has been designated by Presidential proclamation and by
l

Act of Congress as U.S. Customs year.

In meeting here this evening

- 12 -

e are not only carrying out the mandate of Congress but also giving
oice to the will of the American people who have for 175 years been the
eneficiaries of the services rendered by Customs.

Allover the United

tates in cities and towrB Americans are celebrating the Customs anniverary.

This has helped to spread an understanding of a

sympathy for

ur overworked and understaffed Customs Service.
The Bureau of Customs is caught between the prodigious increase in
mports and our very limited available funds.

Inadequate operating funds

ave long been a major problem to the Customs Service.

Some years ago,

our organization appeared before the Appropriations Committee in support
f a request for financing for Customs which has fewer people on its

ayroll today than it did 30 years ago, despite a tremendous increase in
orkload.

The picture has not changed.

This past March, the House

pproved the 1965 Appropriations Bill which included only 40% of our
ncreased manpower requests for Customs included in the President's budet.

We have requested restoration by the Senate of this drastic cut

1d we are sure we will receive a full and fair opportunity to present
lr case.
Custo~s

is a progressive hard-working organization which returns

) the Treasury 25 dollars for every dollar it spends.

The Customs

:rvice deserves your support and the support of all parts of the foreign
~ade

community.

- 13 This splendid tribute will help to make the Customs employees concious of the recognition of a difficult job well done.

It is good that

e pause for a moment in history to doff our hats to this faithful and
oyal servant of the people, and say:

"Happy Birthday to all the men

nd women in the U. S. Customs Service."

"Congratulations on a job well done."

United S'tatea SaVings Bonds Issued and Redeemed ThrouGh April 1964
(Dollar amount.s in IIlilliona - rounded and will not necessarily add to totals)
AmoWlt
Issued 1}
os A-1935 - D-1941 ••••••••••
as F & G-1941 - 1952 ••••••••
'URE:)

,&8

19L1 • ••••••••••••••••••••
19U2 •••••••••••••••••••••
19LJ •••••••••••••••••••••
1941 •••••••••••••••••••••
1?~5 • ••••••••••••••••••••
19L6 •••••••••••••••••••••
1947 • ••••••••••••••••••••
19L8 •••••••••••••••••••••
"
19L9
1950 •••••••••••••••••••••
1951 •••••••••••••••••••••
1952 • ••••••••••••••••••••
1953 .............
19SL ................... ,.

........ .......... .
~

...... .

1955 •••••••••••••••••••••

1956
1557
1958
1959
1960
1961
1;62
1963

196L

•••••••••••••••••••••

~lassified

~
3S

A1Tlc)\m~
Amount
"'. OutstMd1nt;
Redeemed
Outstandingy of Amt.Issued

5,003
29,521

4,991
29,375

1,833
8,099
13,042

1,556
6, 894
11,117
12,781
9,797
4,188
3,769
3,780
3,633
3,OB9
2,665
2,734
2,957
2,808
2,846
2,742
2,503

15,184
1l,B88
5,347
5,041
5,196

5, ill
4,460
3,863

4,045

4,602
4,674
4,820
4,625
4,346

4,20h

277

1,205
1,925
2,L03
2,091

1,159
1,272

1,w.6
1,480
1,371
1,198
1,310

1,645
1,866
1,974
1,883
1,843

2,266

3,931

1,939
1,857

2,074
1,918
1,726

3,912

3,925
3,774
4,180
437

1,505

1,088

.24

.49

15.11
:11.88
11.76
15.83

17.59

21.68
25.23
27.2528.95

30.7h
31.01
32.39
35.75
39.92

40.95
hO.71
42.h1
h6.12
h7.2h
50.98

1,994
2,199
2,270

56.03

3,092

73.98
99.77

181

436

&:J.15

••••••••••••••••••

667

759

-92

Series E ••••••••••••••••

131,207

y ..

3,670
6,101

91,196
l,h79
784

40,011
2,192
5,317

59.73

2,263

7,509

76.85

47~520

33.71

1,621

43.68

H (1952 - Jan. 1957)

H (Feb. 1957 - 1964) •••••
~a1

Series H ••••••••••••••••

Series E and H ••••••••••

140,978

93,459

J a..'1d K (1952 - 1957) ••••

3,711
34,524
144,689
179,213

2,090

:ili6

Total matured ~ ••••••
Total UIll"",.atured •••••
G~~nd Total •••••••••
:ludes accrued discount.
,Tent redompt.ion value.
option of owner bonds may be held nnd
1 e.. rn :L"ltere:3t for additional periods
(lr originD.l ~ t.u...-1 ty da tea.
eries

34,366
95~5h9

I 129,915
B\J.~"U

158

49,141
49,299

07 ::~ P~lIC DEBT

30.L9
~7.15

TREASURY DEPARTMENT

April 30, 1964

FUR IMMEDIATE RElEASE

TREASURY DECISION ON WELDED STANDARD STEEL PIPE
UNDER THE ANTIDUMPING ACT

With regard to welded standard steel pipe fram the United
Kingdom, the Treasury Department has determined that the case be
closed on the basis of no sales at less than fair value within
the meaning of the Antidumping Act.

Notice of the determination

will be published in the Federal Register.
The dollar value of imports of the involved merchandise received during 1963 was approximately $7,500 ,000.

TREASURY DEPARTMENT

il. RELEASE A. M. NEWSPAPERS,

April 30,

lday, May 1, 196h.

RESULTS OF TREASURY'S ONE-YEAR BILL OFFERING

The Treasury Department announced last evening that the tenders for ~l 000 ,000 , 000 ,
thereabouts, of 359-day Treasury bills to be dated May 6, 1964, and to mature April
1965, which were offered on April 2h, were opened at the Federal Reserve Banks on
i1 30.
~,

The details of this issue are as follows:
Total applied for - $1,883,634,000
Total accepted
- 1,000,239,000 (includes $16,834,000 entered on a
noncompetitive basis and accepted in
full at the average price shown below)
~e

of accepted competitive bids:

High
Low

- 96.316 Equivalent rate of discount approx. 3.694~ per annum
- 96 • '296
"
"""
" 3 . 714 % II
II
Average
- 96.305
"
II
II
n
•
3.705,t 1\
II
(69% of the amount bid for at the low price was accepted)
Federal rteserve
Total
Total
District
Applied for
Accepted
Boston
J 15,540,000
i
5bO,OOO
New York
1,505,031,000
760,837,000
Philadelphia
10,640,000
640,000
Cleveland
1,556,000
1,556,000
Richmond
423,000
423,000
Atlanta
9,900,000
6,280,000
Chicago
214,2)6,000
157,436,000
st. Louis
9,300 ,000
1..,.,800,000
Minneapolis
1,576,000
h,92l,OOO
Kansas City
6,056 ,000
4,056 ,000
DallaR
11,150,000
3,840,000
San Francisco
92,220,000
54,910,000

TOTAL

$1,883,634,000

$1,000,239,000

a coupon issue of the same len"th and for the same alTlount invested, the rEturn on
hese bills would provide a yield of ).86%. Interest rates on bills are quoted in
erms of bank discount with the return related to the face amount cf the bills payaolE
t maturity rather than the amount invested and their length in actual nUJT1ber of rlay~
elated to a 360-cay year. In contrast, yield0 on certificates, notef, and boncis arfomputed in terms of interest on the amount invested, and relate the number of days
ernaining in an interest payment period to the actual number of days in the period,
ith semiannual compounding if more tr..an one coupon period is involved.
n

213

TREASURY DEPARTMENT

May 1, 1964

Twenty-three years ago today -- on May 1, 1941 -- the late
President Franklin D. Roosevelt purchased the first Series E
United States Savings Bond ever issued.
It was the beginning
of what has now become an established American institution -a program which is inspired and led by countless volunteers in
all walks of life, a program in which tens of millions of
Americans regularly participate through their purchases of E and
H Savings Bonds. The widespread ownership of these securities is
a bulwark of economic stability for the Nation, and of financial
security for millions of families.
Today, on the 23rd anniversary of the Savings Bonds program
we open a new drive to encourage more Americans to take part in
this patriotic thrift activity. We call it "Operation Security"
which symbolizes the close relationship between the security of
individual families and of our country as a whole, and the part
Savings Bonds can play in strengthening both.
We also introduce today a new $75 denomination Series E Bond
one which bears the portrait of the late President Kennedy and a
famous qU0tation from his inaugural address.
It is my privilege
to issue
the first bond of this new denomination to the
President of the United States.
In making this purchase, Mr. President, you will both
launch our campaign dnd encourage other Americans to save for
their country's security and their own by purchasing
United States Savings Bonds.

000

- 2 -

FOR lMMEOIATE RELEASE

MAY

1, 1964

OFFICE OF THE WHITE HOUSE PRESS SECRErARY

THE WHITE HOUSE
REMARKS OF THE PRESIDENT
ON PRESENTATION OF KENNEDY BOND AND THE
LAUNCHING OF OPERATION SECURITY
THE CA13:rnR1: Roa.1

When President Roosevelt purchased the first savings bond
ever issued he set into motion the greatest thrift program the world
has ever known. I am very proud today to buy the first of the new $75
denomination r~[,j,ted states savings bandl;, a bond which bears the portrait of our late, beloved, and brave President John F. Kennedy. I
rope that many of my fellow citizens will follow this example. In
doing so, they will be paying a tribute to a most remarkable American
and answe~ing in at least a small measure his unforgettable challenge,
"Ask not what your country can do for you, but what you can do for
your country. II
The purchase of savings bonds is an expression of faith in
America's future. Millions of Americans own a record total of $47 billion of these shares in their country. I urge them, and I urge all
Americans, to take part in the 1964 savings bond campaign, Operation
Security, which opens today. Our responsibility to our country, as
President John Kennedy said, and I quote, "is not discharged by an
~unGement of virtuous ends.
It must include concrete acts of
confidence. "
Buying bonds for our Nation's security is a 6U:e way to express
such confidence and I take pride and pleasure in presenting my check
f Or the first $75 bond to the Secretary of the Treasury, Mr. Dillon.
END

TREASURY DEPARTMENT
Jl'JR REIUSE A. M. NEWSPAPF1(, ,
Tuescig, Hq 5, 19&i.
RESULTS OF TREAStJRr'S WEEKLY BILL OFFERING

The Treasury Depa.rtIDen+ announced last evening that the tenders for two series of
t.!) be ~ a.dditional issue of the bills dated February 6, 1964,
and the other series to be dated I-iay 7, 1964, which were offered on A.pril 29, were
opened at the Federal Rese:rve Banks on May 4. Tenders were invited for $1,200,000,000,
or thereabouts, of 91-day r"ill~ A.nd fl')r $900,000,000, or thereabouts, of 182-day bills.
The details of the two se;;;'iA';s a::'", as follows:

Trluury bUls, one series

RANGE OF ACCEPTED

COO'ETITIVE BIDS:

9~,.. d<"y ~re2,,'Sur'lJ

Low
Average

3.462%
3.501%
3.482%

99.lJ$ 99~120

!I Excepting

··

matu=:Llg August. 6, 1964
Approx. EqUiv • :
Price
Annual Rate

----'--99,125 ttl

High

bills

182-day Treasury bills
maturing November 5, 1964
Approx. EqUiv.
Price
Annual Rate
98.176
98.159
98.165

3.608%
3.642%
3.629% !I

three tanders totaling $1,665,000

96% of the amount of 91-day bills bid for at the low price was accepted

45%

of the amount of 182-day bill~ bid for at the low price was accepted

TOTAL TENDERS APPLIED FOR AHD

J~CCEPTED

BY FEDERAL RESERVE DISTRICTS:

District

Aprl" "'~p~

Aeeepted

Boston
Hew York

$ 23,945,000
1,312,391,000

Philadelphia
Cleveland
Richmond
Atlanta
Chicago

27,584,000
2o!h9A;-CY"vO

11,007.000
38~ 744,000

190~698.000

st. Louis

)1.,235,000

Minneapolis
Kansas City

19,u98,OOO
28,102,000

;

Applied For

$
1,559,000
1,071,851,000
12,584,000:
8,529,000
20,498,000
6,293,000
1l,007, 000
),468,000
36,704,000:
9,543,000
141,298,000:
118,637,000
25,235,000:
9,100,000
19,458,000;
6,501,000
28,102,000
6,702,000
24,602,000:
9,614,000
70,127,000
73,911,000
$1,200,151,000
$1,325,768,000

1),945,000

796,591,000:

Accepted

$ 1,559,000
728,101,000
),529,000
6,293,000
3,468,000
8,543,000
61,6)7,000
7,600,000
4,726,000
6,102,000

~as
32,602,000
7} 674, 000
San Francisco
80,327,OQq
60,361,000
TOTALS
$1,816,631,000
$900,193,000 ~
Includes $213,008,000 noncampetitive tenders accepted at the average price of 99.120
Includes $58,931,000 noncompetitive tenders accepted at the average prioe of 98.165

On a coupon issue of the SPJnE'l length and for the same BJIlaunt invested, the return on
these bills would provid0 yield~ of 3.56%, for the 91-day bills, and 3.75%, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with

the return related t,O th". fs.ce amount of the bills payable at maturity rather than
the amount invested and their lengtb in actual number of days related to a 36cl.-day
year. In contrast, yieldR on certificates, notes and bonds are canputed in tems
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-1214

TREASURY

DEPARTMENT
May 5, 1964

FOR RELEASE: P.M. NEWSPAPERS
TUESDAY. MAY 5, 1964

NORTH VIET NAM ADDED TO LIST OF
BLOCKED COUNTRIES
The Treasury Department announced that it had added
North Viet Nam to the list of blocked countriea in the
Foreign Asaets Control Regulation., effective May 5, 1964.
This action was taken at the recommendation of the Department of State, in the light of the continued Viet Cong
Communist aggression in Viet Nam.

The effect of the action

is to freeze any North Vietnamese assets which might exist
in the United States, and to prohibit all financial and
commercial transactions by Americans with North Viet Nam.
Since the so-called "National Liberation Front of
South Viet Ham" wss created by the Communist regime of
North Viet Nam, and is based in and controlled by North
Viet Nam, this blocking action applies equally to all
transactiona with that puppet organization.

000

- 2 -

dectmals, e. g., 99.925.

~tions may

not be used.

It is urged that tenders

be made on the printed forms and forwarded in the specie.! 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 Buch 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.

Dmnediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public announcement will be made by
the '1'reasury 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 my such respect shall be

final.

subject to these reaerv.ations, noncompetitive tenders for

$ 200,000 or
)W£6

less for the additiona.l bills dated
Lng until maturity date on
~ 160

February 13, 1964
, ( 91 days rema1.n~
(i6O
August 13, 1964
) and noncompetitive tenders for

X5()1iOX
000 or less for the

182 -day bills without stated price from any 'one

)1dder will be accepted in tull a.t the a.verage price (in three dec1ma.ls) of ac-

:epted competitive bids tor the respective issues.

Settlement for accepted ten-

lers in accordance with the bids must be mnde or completed a.t the Federal Rese~
lanka on

May 1~964

, in eash or other immediately available 1\mds or

n a. like face amount of Treasury billa maturing

May lXOO64

•

Cash

TREASURY DEPARTMENT

FOR TIMMEDIATE RELEASE

May 6, 1964

182 -day bills, for $900,000,000,
or thereabouts, to be dated
May 14, 1964,
and to mature November 12, 1964.
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
(maturi ty value).
Tenders will be received at Federal Reserve Banks and Branches
to the clOSing hour, one-thirty p.m., Eastern Daylight Saving
time, Monday, May 11, 1964.
Tenders will not be
received at the Treasury De?artment, 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.
up

Banking institutions generally may submit tenders for account of
ustomers provided the names of the customers are set forth in such
enders. Others than banking institutions will not be permitted to
ubmit tenders except for their own account. Tenders will be received
ithout deposit from incorporated banks and trust companies and from
esponsible and recognized dealers in investment securities. Tenders
rom others must be accompanied by payment of 2 percent of the face
Imount of Treasury bills applied for, unless the tenders are
ICcompanied by an express guaranty of payment by an incorporated bank
r trust company.

D-1216

TREASURY DEPARTMENT

May 7, 1964
FOR IMMEDIATE RELEASE
BUREAU OF THE MINT DISCONTINUES ACCEPTANCE OF
MAIL ORDERS FOR 1964 UNCIRCULATED COIN SETS
The Bureau of the Mint announced today that an unprecedented
for the 1964 uncirculated coin sets-- also referred to as
!~lnt Sets" -- has required the Philadelphia Mint to discontinue
acceptance of mail orders.
In accordance with its usual custom
the Philadelphia Mint began taking orders on May 1st. The volume
of requests already exceeds the number of sets which can be
processed during 1964. Therefore, many unfilled orders must be
returned.
dem~nd

Uncirculated coin sets contain ten coins of regular issue,
five each from the two Mints, Philadelphia and Denver. They have
a face value of $1.82, and sell for $2.40, which covers the cost
of handling, postage and insurance.
Uncirculated coin sets are also sold -- when a supply is
available -- over the counter beginning May 1 of each year at
the Mints in Philadelphia and Denver, the Assay Office in San
Francisco, and the Cash Room 3t the Main Treasury in Washington.

000

D-12l7

TREASURY DEPARTMENT

May 8, 1964

FOR IMMEDIATE RElEASE

TREASURY DECISION ON WELDBD STANDARD STEEL PIPE
UNIER THE ANTIOOMPING ACT

The Treasury Department has determined that welded standard
steel pipe from Belgium is not being, nor likelY to be, sold in
the United States at less than fair value within the meaning of
the Antidumping Act.

Notice of the determination will be pub-

lished in the Federal Register.
The dollar value of imports of the involved merchandise received during 1962 was approximatelY $600,000.

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN APRIL
During April 1964, market tranaactions in
direct and guaranteed securities of the government for Treasury investment and other accotUlts
resulted in net purchases by the Treasury Department of $44,636,500 00
0

000

D-1218

TREASURY DEPARTMENT

May 8, 1964

OR DOIEDIATE RELEASE

PRELIMINARY RESULTS OF TREASURY I S CURRENT EXCHANGE OFFERIR:7

The Treasury today announced preliminary results on its refunding offer to
alders of $10.6 billion Treasury certificates and notes maturing May 15, of which
4.2 billion were held by the public. Public holders exchanged for $1,464 million
f the new 4-l/4~ bonds of May 15, 1974 and $2,114 million of new 4~ notes due
ovember 15, 1965. The Federal Reserve and Government Investment Accounts took
6,383 million of the 4~ notes and $29 million of the 4-1/4~ bonds.
About $624 million, or 5.~ of the total maturities and 14.~ of publicly-held
aturlties, will be redeemed in cash. This is closely in line with expectations
11 view of the exceptionally scattered ownership of the maturing secur1 ties.
Details of the exchange are as follows:
ELIGIBLE FOR EXCHANGE

(in millions)

EXCHAIDED FOR
Bonds
due 5Ll5L74

UNEXCHANGED

4-1/411

Securit;l

Amount

4~ Notes
due llL15L65

3-1/4;' etfs.

$ 4,198

$3,817

$ 307

$4,124

$ 74

Notes

4,400

3,438

590

4,028

372

3-3/4~ Notes

2,Ol6

1,242

596

1,838

178

$10,614

$8,497

$1,493

$9,990

$624

4-3/4~

Total

Amount

3UBSCRIBERS

rederal Reserve Banks
and Govt. accounts
\11 others

Total

$6,412

2,114

1,464

3,578

$8,497

$1,493

$9,990

$6,383

Final figures regarding the exchange will be announced af't;er final reports
Ire received from the Federal Reserve Banks.

D-1219

TREASURY DEPARTMENT

RELEASE A. M. NEWSPAPERS,
~, Mq

12, 1964.

~ 11, 19~

RESULTS OF TREASURY'S WEEKLY BILL 0FFERIl«i
The Treasury Department announced last evening that the tenders for two series of
UUl'7 bills, one seriee to be an additiona! issue of the bills dated February 13,
" and the other series to be dated May 14, 1964, which were offered on Mq 6, were
lid a.t the Federal Reserve Banks on Mq ll. Tenders were invited for $1,200,000,000,

thereabouts, of 91-dq bUla and for $900,000,000, or thereabouts of 182-day bUls.
details of the two series are as follows:
I}E

OF ACCEPTED

'ETITIVE BIDS:

High
Low

Average

91-~ Treasury bills
maturing August 13,2 1964
Approx. Equ1v.
Price
Annual. Rate
99.121
3.477%
99.115
3.501%
99.118
3.491% !I

··
·
··

l82 ...day Treasury bills
maturing November 12,1 1964
Approx. EqUiv •
Price
Annual Rate
98.174
3.612%
98.166
3.628%
98.168
3.625%

of the amount of 9l-~ bills bid for at the low price was accepted
63% of the amount of l82-day bills bid for at the low price was accepted
.L TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:

Applied For
AcceEted
AcceEted
AEElied For
$ 40,457,000 $
20,457,000
$
2,997,000 $ 2,791,000
744,973,000
164,306,000
1,488,284,000
1,549,248,000
4,784,000
9,8)4,000
15,037,000
30,037,000
13,995,000
.eveland
25,957,000
15,~,ooo
25,957,000
.emond
3,352,000
16,617,000
3,481,000
16,617,000
7,803,000
lanta
19,2)1,000
23,508,000
28,943,000
63,622,000
:icago
114,687,000
1.45,817,000
178,800,000
8,896,000
• Louis
25,517,000
11,366,000
32,657,000
4,303,000
nneapolis
7,203,000
13,983,000
20,358,000
9,06.3,000
asas CitY'
11,472,000
24,935,000
26,885,000
5,212,000
11as
18,461,000
10,608,000
32,686,000
:
n Francisco
3l.l65 8,!000
136z 968.z000
189 02 868 02 000
lllz751 ,!000
$1,837,388,000 $900,458,000 EI
TOTALS
$2,112,513,000 $1,200,433,000
~cludes $2)7,165,000 noncompetitive tenders accepted at the average price of 99.118
ncludes $76,285,000 noncompetitive tenders accepted at the average price of 98.168
n a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 3.57%, for the 91-day bills, and 3.74%, for the
182-~ bills. Interest rates on bills are quot9d in tems 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 ~8 related to a 36o...day
year. In contrast, yields on certificates, notes and bonds are ccmputed in terms
of interest on the amount invested, and relate the nwnber of days remaining in an
interest payment period to the actual number of days in the period, wi t.h semiannual
CCIIlpounding if more than one coupon period is invo1veda
-1220

strict
.ton
w York
d.lade1phia

STATUTORY DEBT LIMITATION

April 30, 1964

A:; of

Was h i ng ton. __May=,,--=1=-2...l'c...:1=:9::..:64~

Seclion 21 of Second Liberty Hond ACI, as amended, provides that Ihe face amounl of obligations issued under authority of
thllt Act, and the face amOllnt of oblij:3ti(1ns ~ll"r,\nlt'('d a~ In prineip,.! and interest by Ihe Uniled States (e'cept such guarante(,d
obli,:ati"ll~, ~s mal: be held by tht' Secretary of Ihe Treasurv), ~·Sh ..dl nOI l'Act'cd in the. a~grcf;.ale S285,OOO,OOO 000 fAct of June
\0 11)';1); I .S.c.., IItie 31. sec. 7'\7[,), outstandlrl~ at any nne 11mt'o I'or purpo,es of IhlS "ecllon Ihe current reJl'mplion v.ll"e of
ohli~'lIion i~"u<;~ on a Jiscoull~ basis which is re,jec·m.,hle rrior (() m.lIlirilY al Ihc ?ption of the. holder shall he considered
:IS iI' •. '"
am.)lll:t.
Th~ :\CI of :'\o\'ember 2(', 19(d (I'.L. Hfl·187 88th (on);ress) ~rovllJcS th.lt dUTlng the perIOd beginning on
Ikcc:mb.· :, i'l(d, and ending on Junt' ~O, 1C)(,Ij, the .1I,OVC· limitatIon shall he tcml'orartly Inere",,"ed to S3()I),OOO,OOO,OOO. Bee.HI,e
of ",IIi .. ", .. " ill the timing of ren:nue rl'ceil'ts, the public deht Ilmil a~ inuc.l~eJ by the precedin" seorence is further increased
throu;:h j .10' 2Cl , 1')64, by S6,OOO,OOO,OOO.

any

TIll" 1,'I1'''\ln,~ table shows the face amount of obi i,":a!ions outstandint: and the face amount which can still be issued under
rhi' limi:_.r: .. " :
Tot.11 f.KL' .,mount that may he oUlstanding at anyone time
(lutst.ln.lin!' obligations issued under Second Linnt}' nnnd Act. '" amen."'.!
Intc'rl'!>I-bearing:
TrL·asury hil;, _ _ _ _ _ _ _ _

$315,000,000,000

("'tiiiea,,"
Tr~a~ury

$51,048,121,000
4,198,246,000
65, 130, 120,z 000

.>1 indebtedness
_ _ _ _ _ _ _ _ _ __

n"'~'-'''''

Ih>n,js Treasur, ._ _ _ _ _ _ _ _ _ _ _ __

86,978,996,050

*~a\·in~' . (.urrent redemption value) __

49,lla.,553,488

5,263,617
99,264,000
24,343,000
.3,558,791,000

rnl" ,: -; •.. " , Retirement Plan bonds _

.\ ...... t.·CH·S
•• \\1.." .....

,1:" .• l ,,;<"'cies ..

240,000,000
30,120,481

.... ri\.:'s
4 u.rr~ncy :-'CrIC'S _ _ _ _ __

Forl."i ...:.r,

139,808,211,155

,)i Indebtedness -

C,·niti"".,
Forei~c

$120,377,081,000

158,333,423
1,160,703,714
15,197,754
20,000,000
C,·rti:i.

~,..:s

Tr~..l!-.u.,

5,963,.350,.385
2, 211, 1.34,000
3.3,829,647,000

of indebtedness _ _ _ __

n,Hcs _ _ _ _ _ _ _ _ __

Trea,ury i"'nds _ _ _ _ _ _ _ _ __
Total

42,004,131,38~

303,385,331,00
275,906,720

intert',,-bcarin~

~Ia!ured,

lnr,·re",·ceased _ _ _ _ _ _ _ _ _ _ _ __

Bearing no interest:
Cnited Stall' Savin~~ Slamps _ _ _ __
Excess I'rofit" tax r"fund bonds _ _ __
Internat'I \\onetary Fund notes _ _ __
llIl,·ro::.t·: l)c\,elop. Ass'n. notes _ _ _ _
.I,:",-Americ.ln Devc·lop. Gank notes _ _

53,.394,698
688,073
3,166,000,000
164,261,000
150,000,000

3,576,933,,038
.307,238,170,79"(;

L.oiled "ations bonds- Various programs _ _ _ _42.:...........=5_8.. . ;;..9.., :...2_6
.........
7
Tocal _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ .. _ _ _ _ _ _ _ __
Guaranteed obli~ations (not held by Treasury):
Interest-beari ng :
Debentur<:,: F. H.A. /l.: DC Scad. Gds. _ _
\Iatured, int<:r""t-eea:;ed _ _ _ _ __

800,865,700
752,922,

801,618,62$

Grand tot .. 1 .. "lstanding
Balanc\. .... ~."-.... m\.)unt of obligations issuable

unlicf

,dk)\(,

,luthllflt\"

----

---

--------

308,039,789,421
6,960,210,579

it2CONCILEMENT WITH TABLE III OF THE DAILY STATEMENT OF THE UNITED STATES TREASURY
As of_

AprtJ..30,_~~

ro." public ':('bt this datc _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
u.• r.m((:cd
.. I ...

ohli~ar:ons

not owned by Treasury __________ _

,;ro" pub!i, Jcbt and guaranteed obligations

~\hl4.:t Jcbt not .... h~);ect to ~tatutory limitation

.'. Jebt

221

M .. : . ,

Iimit"ti.)n _ _ _ _ _ _ _ _ _ _ _ __

307,600,680,872

801,618,62~

308,402,299,49
.3 62 ,510.. 07$
308,039,789,421

STATEMENT OF PAUL A. VOLCKER
DEPUTY UNDER SECRETARY OF THE TREASURY
FOR MONETARY AFFAIRS
BEFORE THE RULES COMMITTEE OF THE
HOUSE OF REPRESENTATIVES ON H. R. 5130
10:30 A.M., May 13,1964
Mr. Chairman and Members of the Committee:
A possible increase in the coverage of Federal deposit
and share insurance, as provided by H.R. 5130, was among the
matters considered with great care within the Administration
during the deliberations of the inter-agency Committee on
Finaticial Institutions, which reported to President Kennedy
on April 9, 1963.

That Committee, comprising all the interested

Federal Government departments and agencies, concluded that
increases in insurance coverage could be justified from time
to time to take account of such factors as increases in
average wealth and income -- factors which are related to the
average size of bank deposits or share accounts.

However, the

Committee also concluded that such an increase should be considered only within a context of complementary action to
strengthen the supervisory structure within which the insured
institutions operate, and to enable the responsible Federal
authorities to oversee more effectively certain practices with
important implications for the solvency and liquidity of those
institutions.

- 2 -

These conclusions were reflected in a bill drafted and
supported by an interagency group and transmitted to the
House and Senate by Secretary Dillon on June 26, 1963.

That

bill provided for an increase in insurance coverage from
$10,000 to $15,000 in combination with several other measures
to strengthen the regulatory powers of the agencies responsible
for supervising banks and savings and loan associations.

This

bill was subsequently introduced, by request, in the House by
Mr. Patman as H.R. 7404.
The Treasury and the Administration remain of the opinion
that an increase in insurance coverage should be contingent
upon action of the kind incorporated in H.R. 7404 to further
assure the solvency, liquidity, and effective performance of
insured institutionso

In contrast, H.R. 5130, as approved by

the House Banking and Currency Committee, provides only for an
increase in insurance coverage, and that increase would be
larger than provided for in the Administration's alternative
approach.

Consequently, the Administration is opposed to the

enactment of H.R. 5130.
The danger in a substantial increase in insurance coverage,
taken alone, is that it could encourage competitive and other

- 3 -

practices among promotionally minded institutions that would
tend to undermine their safety and solvency, since more
depositors or account holders would be inclined simply to look
to the Federal Government for protection in the event difficulties arose, instead of prudently assessing the management
and performance of the institution concerned.

This danger

would be mitigated if increased insurance coverage were
accompanied by other measures to assure that the powers of
supervisory agencies were more fully adequate to curb tendencies
that might weaken the financial structure.

These measures, as

incorporated in H.R. 7404, fall into three general categories:
1)

Uniform standby powers for the appropriate
regulatory authorities to limit the interest
or

dividends paid on deposits and share accounts;

A strengthening of the powers of the Federal Home
Loan Bank Board to assure adequate provision for
liquidity by its member institutions; and

Further statutory and supervisory safeguards
against conflict of interest situations in the
management of insured financial institutions.

- 4 This position, developed within the Administration, is
more fully detailed in a letter to Mr. Patman from Secretary
Dillon dated April 25, 1963, which was printed in the hearings
of the House Banking and Currency Committee on H.R. 5130, and
in the Secretary's letter to the Speaker of the House of
June 26, 1963, transmitting the proposed Deposit and Share
Account Insurance Act of 1963.

Copies of both those letters

are attached to this statement for your convenience.

I would,

of course, be happy to respond to any further questions you
may have on this position o

-----

-COP
- _...Y

•

:: .... .':.

to .;.

i:. -..;

H :,,- -I A

t~ '( \..~ i'

1 ~ T REA SUR Y

Dear Mro ChaIrman:
This letter is in response to your request for the
views of the Administration on proposals to increase the
coverage of FDIC insurance of bank deposits and FSLIC
insurance for saving and loan accounts, as provided in
H.R. 5130.
As you know, this question was among the important
issues reviewed by the Committee on Financial Institutions
established within the Administration by the President on
March 28, 1962.
The Report of that Committee was recently
completed, and copies have been made available to your
Committee, as well as to other interested groups, so that
the conclusions can be further reviewed and carefully
scrutinized.
In essence, the conclusion of the Committee on Financial
Institutions pertinent to your current deliberations -- a
conclusion with which the President has expressed his agreement -- is that increases in insurance coverage should be
considered only within a context of satisfactory resolution
of a number of related issues with a bearing on the strength
of our financial structure.
It was the judgment of the
Committee that a substantial increase in insurance coverage,
taken alone, would not be in the public interest at this time.
In arriving at chi::, conclusion, the Committee on Financial
Institutions fully recognized that d8posit and share insurance
has performed, and should continue to perform, a vital function
in our financial system -- preserving public confidence in
those financial institutions responsible for maintenance of
the bulk of our money supply and for handling the liquid savings
of millions of individuals and fRmilies.
Deposit insurance
remains an essential bulwark against disruptive "runs," in
which failure or suspicion of failure of one or a few institutions can set off a panicky series of withdrawals from
fundamentally sound institutions -- at the cost of heavy

2
individual losses and serious dislocations in the economic
life of a community, or even the nation.
Moreover, families
of moderate means, unable to diversify or accurately
appraise risks, should continue to be provided with a means
for fully and conveniently protecting their savings in
private institutions that, at the same time, make those
savings available for investment elsewhere in the economy.
In a nation characterized by tens of thousands of individual
financial institutions, the need for adequate deposit and
share insurance exists even though a strong central bank,
willing and able to provide liquidity at times of need,
combined with effective supervision and examination of
individual institutions, itself sharply limits the possibility
of incipient panic or failures of individual institutions.
If these were the only considerations involved, a case
could be made for a substantial upward adjustment in the
limits of coverage for demand deposit and time and savings
accounts without any need for accompanying action in other
directions.
In that way, whatever limited danger remains of
failures of banks or other savings institutions seriously
disrupting the economic life of a community or creating
individual hardship could be further reduced by increasing
both the number of accounts and the proportion of total funds
that are fully protected.
The Committee on Financial Institutions also received
evidence from both the FDIC and FHLBB suggesting that an
increase in the insurance limit would be consistent with
the adequacy and capacity of the FDIC and FSLIC insurance
funds for meeting foreseeable contingencies, with the
assessments as at present based on total deposit and share
accounts.
This evidence is, I believe, being made available
for further evaluation by your Committee.
However, the~e are other important considerations
involved in a substantial increase in insurance coverage,
and it was analysis of these considerations that led to
the principal reservations of the Committee on Financial
Institutions.
These reservations grow out of the fact that

3
deposit and share insurance provides financial institutions
with a distinct competitive advantage, enabling these
institutions as a group to attract funds from other savings
media, and enabling the weaker institutions among them to
compete on more equal terms with those that are more carefully and effectively managed.
Federal insurance sheltering
account holders from risk can be, and in some cases is, used
as a promotional device.
Some institutions, operating under
this protective umbrella and feeling pressure to maximize the
immediate returns that can be offered to their customers,
may lose sight of their fundamental responsibility for
prudent and careful management of the funds entrusted to them.
A very substantial increase in insurance coverage,
providing full protection for all but a few accounts and the
bulk of all funds entrusted to these institutions, would
pose this potential danger more sharply in view of the
possibility that more sizable depositors or shareholders
themselves will have less incentive to evaluate the safety,
stability, and investment practices of the particular
institutions in which they place their funds.
The result,
under some conditions, would be to increase the burden of
responsibility on the supervisory authorities for guarding
against overly aggressive competitive practices in seeking
funds that could in turn erode lending standards, for assuring adequate provisions for liquidity, and for protecting
against conflicts of interest in the management of savers'
funds.
In reconciling these various considerations, the
Committee on Financial Institutions concluded that increases
in existing deposit and share insurance coverage are justified from time to time to take account of rising wealth
and incomes (and the related increase in the average size
of deposit and share accounts) so that this insurance can
continue to serve effectively its basic purposes.
However,
the Committee also felt that these increases should not be
considered apart from complementary measures that will
strengthen further the supervisory framework and enable the
responsible authorities to oversee more effectively certain
practices with a bearing on the safety and liquidity of individual institutions, thereby assuring that their powers
match their responsibilities.

4
The Committee's Report suggests three areas in which
such complementary action is particularly appropriate, without in any way inhibiting institutions from exercising their
independent judgment concerning appropriate credit risks:
1.

Federal agencies with responsibility for supervising the various types of financial institutions
should each have sufficient authority to assure that
institutions under its jurisdiction maintain adequate
provisions for liquidity.
In areas where this authority
appears unsatisfactory or insufficient today, authority
to set a modest cash reserve requirement, with power
to make changes in that requirement within specified
limits, would be a helpful step in the direction of
strengthening the relationship between the appropriate
supervisory agency and the supervised institution in
the public interest.

Appropriate supervisory agencies should have standby
authority over the maximum interest and dividend rates
paid on savings and time accounts so that they might
effectively guard against competitive practices that
appear inconsistent with the safety and liquidity of
a significant number of institutions through their
adverse effect on lending standards.
Continuous
regulation of such rates, as is now the practice with
respect to insured commercial banks' time and savings
accounts, would not, in the judgment of the Committee,
be necessary to achieve this purpose, and the Committee
concluded on other grounds that such continuous regulation should be eliminated.

Safeguards against conflicts of interest on the part
of those responsible for the management of the various
institutions should be broadened to include those
institutions where this basic protection for the account
holders' interests now appear inadequate.

The Committee recognized that these objectives have already
been substantially met in the case of some kinds of institutions.
As a practical matter, however, it would not appear desirable to

raise the insurance limit at this time for some institutions
and not for others, since this would disturb long established
competitive relationships.
Like the other conclusions of the Committee on Financial
Institutions, the discussion of deposit and share insurance
coverage in the Report was couched in terms of general principle
rather than specific legislative proposals.
However, in view
of the timeliness of the Committee conclusions bearing on this
question with respect to the current deliberations of your
Committee, the President has directed that work proceed promptly
within the Administration to the end that the related issues
raised by the Committee on Financial Institutions can be
resolved in a practical legislative proposal as soon as possible.
This work is being given priority by interested agencies so that
your Committee, as it considers these questions, may have the
full benefit of the Administration's views on means of handling
the technical and operational questions involved.
The view of this Administration is that effective means for
dealing with the potential problems outlined above along the
lines suggested should be a prerequisite for an increase in
deposit and share insurance coverage, and these additional
safeguards should be enacted into law.
Sincerely yours,
/s/ Douglas Dillon
Douglas Dillon

The Honorable Wright Patman
Chairman, Committee on Banking
and Currency
House of Representatives
Washington 25, Do c.

COP Y
---

•

........
:~

. ,', <:

THE SECRETARY OF TH E TREASURY
WASHINGTON

June 26, 1963

Dear Mr. Speaker:
I am transmitting herewith a bill entitled the "Federal
Deposit and Share Account Insurance Act of 1963."
This bill is designed to accomplish two inter-related
objectives. First, the maximum insurance coverage for deposit
accounts in a commercial or savings bank insured by the Federal
Deposit Insurance Corporation, and for share accounts with a
savings and loan association insured by the Federal Savings
and Loan Insurance Corporation, would be raised from $10,000
to $15,000. At the same time, a number of steps would be taken
to protect further the safety and liquidity of those financial
institutions whose ability to attract funds from the public
would be enhanced by the increase in deposit and share insurance coverage, thus bulwarking the stability of the financial
system as a whole. These objectives are fully supported by
the conclusions of the Committee on Financial Institutions,
which reported to the President on April 9, 1963.
The proposed bill recognizes that deposit and share insurance performs an important role in our financial system,
and that increases in the maximum limit for insurance coverage of individual accounts are justified from time to time
to assure that the basic purposes of this insurance will
continue to be served effectively. These purposes include
the preservation of public confidence in those financial
institutions responsible for maintaining the bulk of our
money supply and for handling most of the liquid savings of
our citizens, and particularly in their ability to discharge
their responsibility for providing cash to account holders
fully and promptly.
Without adequate deposit and share insurance, the failure
of even a single institution potentially can seriously disrupt the economy of a community and bring individual hardship.
Moreover , there would also be a danger that failure, or even
the suspicion of failure, of one institution might set off

-2contagious and disruptive "runs" which even fundamentally sound
institutions could not readily withstand. Another purpose of
deposit and share insurance is to provide families and individuals of moderate means, frequently unable themselves to appraise
accurately the soundness of available outlets for their funds
with an opportunity for fully and conveniently protecting thei;
savings.
Clearly, these purposes can be met with full effectiveness
only if the maximum limits of deposit and share insurance are
high enough to provide full protection for the bulk of all accounts and for a large share of the total liabilities or share
capital of the institutions concerned. While judgments may
reasonably differ on the precise proportion of accounts and
total funds that must be covered to assure an effective insurance program, it seems clear that prudent limits in this respect
are not in danger of being breeched today. But, it is also
clear that maintenance of appropriate relationships may require
increases in coverage from time to time in response to such
factors as significantly higher price levels or increases in
average income or wealth, changes in average deposit or share
account balances, and similar factors; and these increases
should be made before any critical problem becomes evident. A
limit of $15,000 will be ample to take account of any changes
in these factors since the insurance limit was last raised
from $5,000 to $10,000 in 1950, and will assure maintenance
of a level of protection over the foreseeable future clearly
adequate by standards of past experience and practice.
However, at a time when such increases in insurance
coverage are being considered, we are also particularly conscious of the need to introduce measures to strengthen the
supervisory framework in other respects. These measures -desirable in themselves whether or not insurance coverage is
increased -- would provide needed protection against certain
possible dangers associated with such an increase in coverage.
In particular, pressures to maximize the immediate retur~s.
that can be offered to customers, at the expense of liqu~d~ty
and safety, might increase, since potential depositors and
account holders will themselves have less incentive for carefully appraising the safety, stability, and investment practices
of the institution holding their funds.

-3-

For these reasons, the Committee on Financial Instituttons
urged, and we strongly believe, that increases in insurance
coverage be considered only within a context of complementary
action to strengthen the supervisory framework within which
these institutions operate, and to enable the responsible
Federal authorities to oversee more effectively certain practices with important implications for the safety and liquidity
of financial institutions. To this end, the bill would provide
additional safeguards in three broad areas:
a) Standby authority would be provided to the Federal
Home Loan Bank Board for establishing ceilings over the
rates of interest or dividends that may be paid by members
of the Federal Home Loan Bank system (other than those insured by the Federal Deposit Insurance Corporation). This
would provide protection against the possibility that, at
some point, unsound competitive practices in that industry
could arise and so erode lending standards as to undermine
the safety and stability of the affected institutions. In
view of the need for awareness of the possible implications
of such ceilings for general credit flows and for competitive
relationships among financial institutions, these limits
would be imposed only after consultation with the Board of
Governors of the Federal Reserve System and the Board of
Directors of the Federal Deposit Insurance Corporation,
and when consistent with the policy declaration of the
Employment Act of 1946 to promote "maximum employment,
production, and purchasing power" in a manner calculated
to foster free competitive enterprise and the general
welfare.
The current authority of the Federal Reserve with respect to establishing ceilings on payment of interest on
time and savings accounts of Federal Reserve member banks,
and of the Federal Deposit Insurance Corporation with respect to insured nonmember commercial and savings banks,
would also be placed on a standby basis, with a similar
requirement for prior consultation with other relevant
supervisory agencies. This is consistent with the conclusion of the Committee on Financial Institutions that
continuous regulation of rates paid by commercial banks,
as practiced since the mid-1930's, is no longer necessary
or desirable.

-4In each case, it is contemplated that the standby
authority provided will be exercised only when the
authorities find affirmative evidence that such ceilings
are required to prevent unsound competitive practices
in bidding for funds that would endanger the safety of
institutions under their supervision, or that flows of
funds domestically or internationally, in response to
prevailing competitive practices are in serious conflict
with the aims of national monetary and economic policy.
The authority would, of course, be available for use in
time of emergency conditions.
b) Added authority would be provided the Federal Home
Loan Bank Board to assure maintenance of liquidity by
member and insured institutions in amounts and forms appropriate to assure their soundness and to meet the specific
circumstances of that industry. Changes from existing authority are designed to remedy a number of inadequacies in
present law that limit its effectiveness. The Board would,
under the terms of the bill, be able to define more precisely and fully the kinds of liquidity instruments eligible
for fulfilling the specified general liquidity requirement;
the accounting and enforcement provisions would be substantially improved; the upper limit of the general liquidity
requirement would be set at 10% instead of the 8% limit for
the analogous provision in current law; and this general
liquidity requirement, ranging at the discretion of the
Board from 4% to 10%, would be applied to the total of
withdrawable accounts and borrowings rather than to withdrawable accounts alone.
In addition, the Board would be permitted to impose an
additional special liquidity requirement on any member or
members if required, on the basis of specified criteria, to
protect further the safety of such member or members. Thus,
the Board would be provided with explicit supplementary
powers of a kind that have, in practice, long been exercised
in the banking industry on the basis of established traditions
andsupervisory authority. In no case, however, could such
special liquidity requirement, in combination with theogeneral
requirement applicable to members generally, exceed l5~ of
withdrawable accounts and borrowings.

-5c) New safeguards would be provided against possible conflicts of interest of directors and officers of insured nonmember
banks similar to those now in force for member banks' the discretionary regulatory powers of the supervisory auth~rities with
respect to conflict of interest situations for both member and
nonmember banks would be further strengthened; and roughly analogous safeguards would be instituted for member and insured savings and loan associations, tailored to the special conditions
of that industry. The proposed safeguards for member and insured
savings and loan associations are, insofar as criminal penalties
are not involved, modeled in large part on regulations now applicable only to Federally-charted savings and loan associations.
Existing provisions in the criminal code applicable to member
and insured nonmember banks, as well as to a number of other
credit agencies operating under U. S. laws, would be extended to
include member or insured savings and loans.
In addition, existing limits on loans to officers of member
banks or to bank examiners would be liberalized in certain instances where current provisions are unduly restrictive and where
dangers of abuse appear limited or nonexistent. The definition
of bank affiliates would be tightened for purposes of limitations
on loans to such affiliates, and restrictions on transactions
with affiliates now applicable only to member banks would be
extended to all insured banks.
Each of these provisions parallels conclusions of the Committee on Financial Institutions, but not all the relevant conclusions of that Committee have been encompassed in this bill.
In particular, the Committee had concluded that a modest cash
reserve requirement for mutual savings banks and savings and
loan associations would be a further helpful step in strengthening the supervisory framework and in assuring more effectively
the solvency and safety of individual institutions. However,
extension of cash reserve requirements to these institutions
inevitably raises important questions of equitable treatment
of competing institutions (including nonmember commercial
banks) and other considerations of regulatory policy and monetary controls extending well beyond the limited objectives of
this bill. These include the inter-related problem of broadening Federal requirements for cash reserves against demand deposits to nonmember commercial banks, which the Committee on
Financial Institutions concluded would be desirable for the
purpose of strengthening monetary policy.

-6These are complex issues, and methods of implementing the
Committee proposals for extending cash reserve requirements to
savings institutions and to demand deposits of nonmember commercial banks need further study. Accordingly, legislative
consideration of this matter might preferably be deferred until
these important proposals can be evaluated separately and in the
full context of their implications for monetary policy and for
competitive relationships between institutions. Meanwhile, the
provisions of this proposed bill will provide the supervisory
authorities with more effective powers in other areas where the
need is apparent -- interest rate ceilings, liquidity provisions
and conflict of interest safeguards. The supervisors would thus
have authority to enable them to meet effectively their potentially increased responsibilities as the insurance coverage is
increased in the amount suggested.
The
fully in
visions.
a number
affected
respects

provisions of the proposed bill are summarized more
the attached section-by-section analysis of its proIn addition to the substantive areas covered above,
of technical changes are included that would bring
existing legislation up-to-date, and in certain other
ambiguities or deficiencies in existing law are remedied.

It would be appreciated if you would lay the proposed bill
before the House. I am today transmitting an identical bill to
the President of the Senate.
The Bureau of the Budget has advised that enactment of
this bill would be consistent with the objectives of the Administration.
Sincerely yours,

/s/ Douglas Dillon
Douglas Dillon
The Honorable John W. McCormack
Speaker of the House of Representatives
Washington 25, D. C.
Attachments

TREASURY DEPARTMENT
Washington, D. C.

D-1222

WEDNESDAY, MAY 13,1964

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, as modified by
the Tariff Schedules of the United States which became effective August 31, 1963.
COTTON <other than linters) (in pounds)
Cotton under 1-1/8 inches other than rough or harsh under 3/4"
I!tlPorts September 20. 19 63- ~v~. ~264
Country of Origin
Egypt and Sudan •••••••••••••
Peru •••••••••••.••••.•••.••.

India and Pakistan ••••••••••
China ....................... .

MexicO ••••••••••••••••.•••••
Brazil ••••••••••••••••••••••
Union of Soviet
Socialist Republics •••••••
A~gentina •••••••••••••••••••
Haiti •••••••••••••••••••••••
Ecuador •••••••••••••••••••••

Imports

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

628,215
24,045
208,692
8,883,259

600,000

475,124
5,203
237
9,333

Country of Origin

Established Quota

Honduras ••••••••.••••.•.••••
Paraguay •••••••..••••••••.•.

Colombia ••••••.••••••••••••.
Iraq ••.....•••.•......•.•...
British East Africa •••••••••
Indonesia and Netherlands
New Guinea •••••.•••••••.••
l/British W. Indies •••••••••••
Nigeria ••••••••••.••..•••.••
2/Brltish W. Africa •••••••••••
- Other, including the U.S ••••

Except Barbados, Bermuda, Jamaica, Trinidad, and Tobago.

11 Except Nigeria and Ghana.
Cotton 1-1/8" or more
Established Yearly Quota - 45,656,420 Ibs.
Imports August 1, 19· 63 -, May ll. 1964
Staple Length
1-3/8" or more
1-5/32 11 or more and under
l-3/8"

(Tanguis)

Allocation

Imports

39,590,778

l,500,000

??~

752
871
124
195
2,240
71,388
21,321
5,377
16,004

TRjo~SURY

DEPAFTMENT

Washington, D. C.
IMMJo~~nA TE

D-1223

j,F..LLlloSr

WEDNESDAY, MAY 13 1964

------"-----,.P....RE;:".,...L.....
:lJirj,..,;..,~A1rTl,..,Y,.......,..".Dl,TA ON IMPOl{T~ feR C0NSG~;jpTI\N or tJNW.NUFACTURED LF.AD AND ZINC CHAHGl:ABLE: TO TIl.!: CUOTAS ESTABLISHED
BY PKt':S IDtNTlAl PEOCLAMA TIC'N NO. 3~57 OF SEPTEI.rnF:R 22, 1958, AS MODIFIED BY I1l.E TAPP'F SCHEDULES OF 'l'HE
lJNIT'.:n STATES, WHICH BF.cA11E ETFF.GTIVE AUGUST 31, 1963.
OUAR'l'iliLY QUOTA punOD -

ThlPOR'J'S -

ITEM 925.01Country

April 1 - June 30, 1964
April 1 - May 8, 1964 (or

ITEM 925.03-

Umrrought lead ani

and materials

lead waste and serap

Production

noted)
!TI),{

L.a.4l-bearing ores

8.8

I
I

IT!:M 925.04 e

925.02:
I

ZiDe-bearing ores and.

materials

s UDwrought z1.1lO (elCOept a.llCl)"s

of zlno aDd d.llC cluat) aDd
zinc wast. UlCl sera,

:
Import.

A.WI trall&

1l,220,OOO

11,220,000

22,540,000

10,689,412

Belgium and
Luxemburg (total)
BolinA.
Canada

5,040,000

13,440,000

.... 2,243,545

15,920,000

10,209,451

66,480,000

llerloo
16, HiO,OOO

16,160,000

l,.4,8ao,<XX>

70,480,000

27,568,197

6,320,000

1,597,'03

12,880,000

3,n3,726

35,120,000

12,668,523

3,niO,000

2,569,946

5,440,000

.. e3,251,844

14,830,000

'Ybgosl&Tla

All other
oountries {total}

15,550,26R

20,100,292

of the Congo
(formerly Belgian Congo)
So. Africa

37,840,000

36,880,000

~publ1o

··UD.

7,520,000

3,600,000

lta1y

Hem

7,520,000

6,560 ,<XX>

.. "1,414,145

-See Part 2, Appendix to Tariff Sohedules.
-.Renub11c of South Afrl~a~
e •• ~ort8 as o! May 11, 9 •
PREPARED IN THJ.: BUREAU

CUST~

15,760,000

."3,531,061

6,080,000

11,840,000

17,840,000

6,090,000

6,Oao,<XX>

TREASURY DEPARTMENT

Washington
of.DIATE RELEASE

SDNESDAY, MAY 13, 1964

D-1224

The Bureau of Customs has announced the following preliminary figures showing
imports for consu~ption from January 1, 1964, to May 2, 1964, inclusive, of
1110dities under quotas es tabUsbed pursuant to the Philippine Trade Agreement
rlsloo Act of 1955:

Commodity

Established Annual
Quota Quantity

Unit
of
Quantity
Gross

Imports
as of
May 2, 1964

tons ••••••.••••••

680,000

ars •...••..•.•••.

160,000,000

Number

onut oil •••••••••

358,400,000

Pound

183,546,919

dage •••••••••••••

6,000,000

Pound

2,349,390

Ie eo , ••••••••••••

5,200,000

Pound

1,500,244

75,306
5,324,855

TREASURY DEPARTMENT

Washington
Hl-lEDlATE RELEA.SE

flEDNESDAY, MAY 13, 1964

D-1225

The Bureau of Customs announced today preliminary figures on imports for conumption of the fa 1 lowing commodities from the beginning of the respective quota
eriods through Hay 2, 1964:

Commodity

Period and Quantity

: Unit
of
:Quantity:

Imports
as of
May 2. 1964

ariff-.Zate Quotas:
ream, fresh or sour ••••••••••••• Calendar Year

1,500,000 Ga lIon

~ole

3,000,000 Ga 110n

>li lk, fresh or sour •••••••• Ca lendar Year

lttle, 700 1bs. or more each
Jan. 1, 1964(other than dairy cows) •••••••• :;arch 31, 1964
April 1, 1964June 30, 1964
ittle less than 200 Ibs. each ••• 12 mos. f ror]
:,pril 1. 1963
12 :nos. frol:
.pril 1, 1964

409,914

120,000 Head

6,014

120,000 Head

534

200,000 Head

62,117

200,000 Head

18,774

sh, fresh or frozen, filleted,
etc., cod, haddock, hake, pollock, cusk, and cosefish ••••••• Calendar Year

24,861,670 Pound

11 ,446,791

Ina Fish •••••••••••••••••••••••• Calendar Yeal-

60,911,870 Pound

11,744,881

114,000,000 Pound
45,000,000 Pound

53,449,760
Quota Fill cd

lite or Irish ,)otatoes:

Certified seed . . . . . . . . . . . . . . . . . 12 mos. fro'l
15, 1963

uther ..............••..••....•. 3c 1)t.

ivss, forks, and S;JOons with
Nov. 1, 1963stain1e3s steel handles ........ ,--,ct. 31, 1964

69,000,000 Pieces

Quota Filled

Ir:Jports for consuf'lption at the quota L~atc are lilllited to 12,430,b3~ pounds during
~ first six :nonth::; of the calendar y.'ar.

7tl.EASURY DFPARDmiT
Wuhington, D. C.

IMMEDIATE RELEASE

D-1226

WEDNESDAY, MAY 13, 1964

The Bureau ot CUstoms a.nnounced todq prel.1minary' figure8 shoving the
quantities or wheat am milled wheat products authorized to be entered, or
withdrawn from warehouse, tor consumption UD:1er the import quotas establi8hed
in the President's proclamation ot Mq 28, 1941, &8 mod1!1ed by the President's
proclamation ot April 1), 1942, am provided tor in the Tariff Schedules ot
the United States, tor the 12 months coDlDencing M87 29, 1963, as tollows:
••

:
••
••
••
••

••

Milled wheat products
••
••
••
•
Imports
•• Established ••
Imports
•• Established •
••
:Ma,y 29, 19 6~ to
:M~ 29, 1963,to:
Quota
Quota
•• ~ 2, 19f4
•,
•
64
2.
i

Country

Wheat

·.

Origin

(Bushels)

795,000

Canada
Chine.

1r
15
Bushels
795,000

Hungary

Hong Kong
Japan
Uni ted Kingdom
Australia
Germany
STria
New Zealani

100
100
100

Chile
100
2,000
100

NetherlaOOs
Argentina.
Italy

1,000
1,000
1,000
1,000
1,000

1,000
100

Panama

Uruguay
Polam ani Danz1g
Sweden
Yugoslavia
Norwq
Canary Islands
Rumania
Guatemala

3,815,000

I,m

6,252

975

1,000
1,000
1,000
1,000
1,000
1,000
100
100

BrazU
Union ot Soviet
Socialist Republics

100
100

Belgium
Other toreign
or areas

),815,000
24,000
13,000
13,000
8,000
75,000
1,000
5,000
5,000
1,000
1,000
1,000
14,000
2,000

Pounds

U,OOO

Cuba
France
Greece
Mexico

(PouMS)

~~UDtrles

800.000

79').000

4.000.000

3.823.451

TREASURY DEPARTMENT

=
'OR

IMHEDIATE RELEASE

May 13,1964

TREASURY'S WEEKLY BILL OFFERING
The T~easury Department, by this public notice, invites tenders
or two series of Treasury bills to the aggregate amount of
2,100,OOO,OOO,or thereabouts, for cash and in exchange for
reasury bills maturing May 21, 1964,
in the amount of
2,001,448,000, as follows:
91-day bills (to maturity date) to be issued May 21, 1964,
the amount of $1,200,000 ,000, or thereabouts, representing an
jditional amount of bills dated February 20,1964, and to
ature Augus t 20,1964, originally issued in the amount of
900,955,OOOi the additional and original bills to be freely
1terchangeab e.

182 -day bills, for $ 900 ,000 ,000
or thereabouts, to be dated
\' 21,1964,
and to mature
November 19, 1964.

The bills of both series will be issued on a discount basis under
)mpet1tive and noncompetitive bidding as hereinafter provided, and at
ltur1ty their face amount will be payable without interest. They
III be 1ssued in bearer form only, and in denominations of $1,000,
),000, $10,000, $50,000,
$100,000, $500,000 and $1,000,000
1aturi ty value).
Tenders will be received at Federal Reserve Banks and Branches
to the closing hour, one-thirty p.m., Eastern Daylight Saving
me, ~londay, May 18, 1964.
Tenders will not be
ce1ved at the Treasury De~artment, Washington. Each tender must
for an even multiple of $1,000, and in the case of competitive
nders the price offered must be expressed on the basis of 100,
th not more than three decimals, e. g., 99.925. Fractions may not
used. It is urged that tenders be made on the printed forms and
~arded in the special envelopes which will he supplied by Federal
serve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of
stomers provided the names of the customers are set forth in such
'nders. Others than banking institutions will not be permitted to
bm1t tenders except for their own account. Tenders will be received
:hout deposit from incorporated banks and trust companies and from
Sponslble 3~d recognized dealers in investment securities. Tenders
)m others must be accompanied by payment of 2 percent of the face
Junt of Treasury bills applied for, unless the tenders are
~ompanied by an express guaranty of payment by an incorporated bank
trust company.
D-1227

TREASURY DEPARTMENT
Washington

RELEASE: A.M. NEWSPAPERS
?,AY, MAY 15,1964
ADDRESS BY THE HONORABLE JAMES A. REED
ASSISTANT SECRETARY OF THE TREASURY
AT THE 175TH ANNIVERSARY BANQUET OF THE
UNITED STATES CUSTOMS SERVI CE
SHERMAN HOUSE, CHICAGO, ILLINOIS
THURSDAY, MAY 14, 1964, 7:00 p.m. csr
I am happy to be here this evening as representative of the Secretary of
the Treasury, the Honorable Ihuglas Dillon, who has asked me to express his
sincere regrets at his inability to be present. He asked me to convey his regards
and congratulations to the ten Customs districts represented here on the occasion
of its salute to the U. S. CUstcm:: Service on its 175th Anniversary which we are
celebrating in 1964. I also bring you the personal greetings of the Uni ted States
Conmissioner of CUstom, Philip Nichols, Jr., who has sent a separate message to
your Chainnan.
The relationship between Government and the business community of America
Three out of the first five acts of
the first Congress were concerned with the establishment of the Customs Service
as a prime medium for collecting sufficient funds with which to pay the salaries
of the President, the Vice-President, Members of the Cabinet, ~mbers of Congress,
end the tiny triumphant a.rII\Y of the infant republic. But by establishing the
machinery for collecting import duties, the Government was in reality exercising
its sovereignty in a highly significant way. It provided a shield behind which
the young and promising industries of America could flourish. It established a
uniform system of Customs duties for all of the States which the young and
promising industries of ~rica could flourish. It established a uniform system
of Customs duties for all of the States which, up until that time, were engaged
in a bitter tariff war, which resulted in such strange and bizarre situations as
~ importers of New York paying duty on New Jersey chickens and eggs, Connecticut
firewood, etc. Just imagine what it would be like if the CUstomhouse in New York
had to make entry on the cabbages brought in from Pennsylvania farms today, and
if New Yorkers had to pay duties on citrus shipments fran Florida, m:::>torcars from
Michigan, or shrimp from Louisiana.
has deep roots in the American tradition.

Thus, the Customs Service had a threefold impact in the formative period
of U. S. history: (1) It provided the Treasury with revenue which the Government
desperately needed in order to govern; (2) It provided the Administration with
the strength it needed "to secure all rights of independent sovereignty", and
(3) It brought some order out of chaos.
Despite many sharp and often bitter party differences, the first Congress

W~ acutely aware that sectional interest~ ~ere secondary to the vital necessity

for action in collecting revenue. The outcome was the first Tariff Act, entitled
:'An Act for laying a duty on goods, wares and merchandise imported into t.he
Uni ted States".
It was on July 4, 1789 -- the 13th anniversary of th: signing of the
Declaration of Independence -- when President George Washington signed into
law the Act which set up tre .Service as we knoW it today.

- 2 -

In spite of a great deal of conflict, many trials and errors, the Custans
Service collected $2 million during its first year of operation. Today I 175
years later, CUstoue collects about $2 billion each year, JOOst of it from duty
on imports, but it takes a lot zoore than this to run the Government of the United
states -- to pay for the salaries of the President, the Vice President, Members
of the Cabinet, Members of Congress, the Arm:!, Navy and the Air Force. But for
123 years, until the Internal Revenue Act was passed by Congress in 191.3, Customs
duties provided the United States with its major source and virtually its only
source of revenue income.
What do these historical facts mean to us here in this room? How has Customs
ohanged since 17891 What have we done to keep pace with the times in which we live?
The world of 1964 bears little resemblance to the world that saw the enactment
ot the first U. S. Tariff Act 175 years ago I end trading methods, like everything
else, have undergone a complete revolution. Not even the BOst astute of our statesmen in the days of George Washington could have foreseen that u. S. imports would
reach $17.15 billion in 1963, or that our exports, excluding military assistance
and grant-aid, would total $22 billion in that same year. CustOIll3 duties have
changed as drastically as the import figures themselves.
This vast expansion has been in keeping with the development of our country
to its pre~eminent position of world leadership. The modest handful of Customs
people who guarded the frontiers of the 13 Colonies, has grown into a force of
9, (X)() men and waIlel1 in 1964, and they are spread out along the Canadian and
Mexican borders, along the East and West coasts of our country, BlOOng the ports
along the Gulf of Mexico and the Great Lakes in the North, and a.m:>Dg the International Airports throughout the United States.
Chicago is a prime example of this growth, a.lJoost explosive in its impact,
that has taken place in the Un! ted States over the last few years. This City,
traditionally considered the beginning of' the Western Frontier, has now become
a great world port, baving been opened up to international commerce by the magic
of IOOdern engineering. The St. Lawrence Seaway opened the Port of Chicago and
other Great Lakes cities to world commerce on a grand scale in 1959 and is resulting
in new records every year. In 1963, tonnage handled at the Port of' Chicago topped
a four year mark, s~lOWing a ten percen"t increase of that of the previous year.
The great dredging projects in the Calumet River as well as in Lake Calumet,
assuring that the port facilities in Chicago meet seaway depth requirements, are
a preview of additional expansion in this great City.
This growth and the enormous potential for further growth is made all the
more dramatic by looking back at the relatively brief period of hiStory of this
great City.
Thirteen years after the Indians moved from Illinois across the Mississippi
River the Port of Chicago was established by an Executive Order of President
James' Polk in 1848. Chicago, a hamlet of but 350 souls, with an area of less
than one squa.re mile, plainly bore the earmarks of frontier experience when
incorporated as a town in 1833.
In 1868 imports from Canada BlOOunted to $410,259, while exports to the
neighboring country were over $3 - 3/4 million. The high water mark of the
entrance ~ clear-onoes ~D t~ Port of Chicago came during 1862-63, when 626
vessels ~ltered and 696 cleared -- a record not surpassed today.

- 3 European representatives established contacts with Chicago business houses
in order to proJJX)te mutually profitable relations and arranged to carry purchases
directly to tre city from Great Britam by means of sailing vessels. In 1856,
the schooner DEAN RICJM)ND brought a cargo of wheat to Liverpool -- taking an
interminable time for the journey.
The Treasury ~partment and Congress agreed that duty-free goods could
be carried in bcmded cars with goods on which duty would be collected in Chicago.

In 1871, a day of celebration was declared by Customhouse officials, members of
firms, and others, when the seal of protection for the first two shipments was
broken to the tune of clinking glasses of champagne.
Just as the railroads elevated Chicago from the position of a country
town to that of the nation's second largest city, so the st. Lawrence Seaway is
destined to make its western terminus the world's largest inland port. Experts
have estimated that the waterway will make it accessible to 75 percent of the

world's ocean-going merchant ships, saving up to 38 percent on shipments to and
from Europe.
D.lring the past season -- 547 ships of waterborne cargo arrived -- 207 of
them from Northern Europe. A new $24 million harbor development project also is
now underway. Furthermre, its status as a world port is being enhanced by the
Cal-Sag Channel, which is already in operation and will provide when completed an
improved waterway between the Great Lakes and the Gulf of Mexico along the old
settlers' route -- the Illinois and Mississippi. In 1967, the new channel will
accommodate multi-two barges up to 14 units.
The variety of the Chicago area's industrial output is today one of its
major assets in world trade. It is next to impossible to mention a. piece of
machinery that isn't made in the area or for which there isn't a market in many
parts of the world. Exports of crude materia.ls, both agricultural and nonagricul tural, were much larger last year and wide gains appeared in foodstuffs.
The Custom collections of this district Lk'ne skyrocketed, and there has also
been a vast increase in airplane arrivals.
Carl Sandburg has aptly referred to Chicago as the "city of broad shoulders. II
But strength, hard work, determination -- exemplified by broad shoulders -- alone
did not create Chicago. Imagination, intelligence, and technology have played an
important part. It has grown in strength and stature on the markets of the world
because it continously offers many things to all lands.
What do all of these historical facts mean to us in the service of the United
states GoveI"I1lOOnt? Al though there have been many sweeping and swift changes in
Customs -- some of them so great, one might say that Custcms in 1964 bears little
resemblance to Customs 175 years ago. The one thing which has not changed however
is the devotion of the Custcms people to their jobs.
An rumL~ing example of this devotion is an incident that took place not long

igo in the Ii ttle town of ~rby Line, Verm:>nt. As you lmow, Derby Line is right
)n the Canadian border- in fact one-half of the town is in Quebec, and the other
lalf in VerrJl:)nt. A whl te 1 ine intersecting Main Street marks the border. betwe:n
~uebec and Vennont. The shopkeepers on the Quebec side are proud of ~hel.r her]. tage
md they speak French. and many of the signs in the shop windows are ill French.

- 4Somewhere along Main street, a Venoont farmer and his wife lived in a house which
stood directly on the white line where it left off Main Street and continued
through a succession of hay fields. The farmer, being a good and true New Englander,
decided that he wanted to mve his house wholly and completely into Vennont. After
much difficulty, the house was rooved on rollers a few feet across the border line
onto American soil. The DDve was reported to the Derby Line authorities who
reported it in due course to Customs, and then came the classic action by a
conscientious inspector. The farmer was politely and firmly advised that he would
have to pay duty on the old furniture in his living room which had been moved across
the line! Such is the stuff of which our zealous customs inspectors are made!
Another change which has taken place recently is the refreshingly new attitude
on ilie part of our inspection persormel toward returning travelers. A great many
letters and telephone calls are received by the Bureau of Customs as well as the
Secretary's Office from travelers who are impressed with the courtesy of the
customs inspectors who check their baggage at the piers and at the airports. Every
complaint received from a traveler is fully investigated, and if a situation needs
correction, this is done. The complaining traveler receives a full explanation
and there is rarely a recurrence. The code of conduct which is observed in the
Customs Service has become an important part of the training of customs inspectors,
especially since Mr. Philip Nichols became Commissioner in 1961.
The mission of the customs inspector today is closely identified with the
mu1 ti tude of national and internatbnal problems. It is indentified with the Cold
War. It is identified with our balance of payments problem. It is identified with
the bond of understanding between Government and citizen, between tax collector
and taxpayer.
In our generation, when we are engaged in a struggle for the minds
of men", the attitude of our customs inspectors toward visitors to our shores from
foreign countries, can be an important factor in the impact which their visit has
to this country. It also can help make a success of the GoveI'llIOOnt' s efforts to
bring more foreign visitors into the United states, thus helping to redress the
defici t in our balance of payments.
II

There has been another change which some of you may have noticed in the
Customs procedures during the last few years. Thanks to the concerted efforts
of tre Treasury Deparlrrent, working closely with the Commissioner of CUstom, we
have simplified and streamlined many complex and difficult Customs procedures
and fo:rmali ties. In many instances, paperwork has been reduced. Along the New
York waterfront a good many reforms have been introduced resulting in speedier
Customs processing of lrundreds of thousands of passengers arr:i.ving at the Port of
New York. In-transit baggage has been speeded up and the examination of holdbaggage requires much less time than it used to at the Port of New York. ~e have
introduced an "oral declaration" in place of the antiquated and complex wr~tten
passenger II dec" which plagued passengers for years.
These are only a few of the reforms that have been introduced, and they will
be followed by many others.
In meeting here this evening we are carrying ~ut the mandate of ?<>ngress to
observe this 175th Anniversary of the Customs Servlce -- and in so dO~ we are
.joining hands with numerous other American cities and town~ who are dOmg.
likewise. This is all to the good as it he Ips proroote a Wlder underst~dlllg of
the problem of the Customs Service and of the contributions that Servlce makes
toward national welfare.

- 5 At the same time we are conscious of the fact that the Bureau of CUstoms is
caught between the prodigious increase in imports and a limited am:runt of funds
available for it to provide tre essential services required. This is no new
dilemma. Your organization has consistently called attention to the need for
adequately financing the Customs Bureau which has fewer people on its payroll today
than it did )0 :,e ars ago I despite a tremendous increase in wor!do ad •
As you know I this past March, the House approved the 196; Appropriations
Bill which included only 40 percent of our increased manpower requests for Customs
included in the President's budget. We have requested restoration by the Senate
of this drastic cut and we are sure we will receive a full and fair opportunity
to present our case.
I feel strongly that CUstoms is a progressive, hard-working organization
which returns to the Treasu.ry $25 for every dollar it spends. It deserves the
support of all AIDeri cans .

Your celebration this evening will help to make CUstoms employees conscious
of the recognition of a difficult job well done. While we contemplate the past,
it is also appropriate to pause for a IOOment in history to doff our hats to
these faithful and loyal servants of the people, and say: "Happy Birthday to
all the men and women in the U. S. CUstoms Service. Congratulations on a job
well done ~"

00000

TREASURY DEPARTMENT

FOR Dtm>IATE RELEASE

SUBSCRIPl'ION

l"IG~

14, 1964

FOR CURRENT EXCIIAlIlE OP'.FERI1Il

The results of the Treasury's current exchange offering of

notes dated ~ 15, 1964, maturing November 15, 1965, and

~1/4'" bonds dated ~ 15, 1964, maturing Mlq 15, 1974,

are summari zed in the following tables.

Amount
Eligible
for Exch
e

Issues El1g! b1e
for Exch
e

.1/4l~

$ 4,198

etfs., B-1964

·'5/4~ Notes, A-1964
4~ Notes, D-1964

$5,824
5,460
1,211

$ 508

$ 4,J...52

$ 66

4,400
2,016

620
602

4,080
1,873

520
145

1.6
7.3
7.1

7.2
20.6
8.2

$10,614

$8,555

$1,530

$10,085

$529

5.0

12.6

-'5/

Total

For Cash Redemption
~ of
J of
Exchanged For
Public
Total
Hold4~
4-i/4~
OutNotes
Bonds
Total
Amount
i s
Amounts in millions

EXchanges for
!deral Reserve

3-1/4;'

Notes of Series E-1965

4-5/4;' Notes
Series A-1964

.strict

Ctfs.
Series B-1964

Iston

$3,823,957,000

$3,459,648,000

Y York

1lade1phi a
eveland
cbmond
lanta
1cago
• wU1.s

tmeapol1s
Uas City
llas
1 Francisco
~ury

TarAL
~'2a

26,683,000
3,465,252,000
14,333,000
44,525,000
17,731,000
54,765,000
79,048,000
32,611,000
14,182,000
36,096,000
32,698,000
24,820,000
1,215,000

43,419,000
5,045,370,000
48,565,000
26,922,000
19,461,000
27,865,000
102,113,000
34,575,000
34,486,000
43,245,000
16,011,000
13,822,000
3,796,2000

3-3/4;' Notes
Series 1)..1964
$

24,185,000
595,675,000
48,714,000
75,837,000
35,578,000
62,165,000
204,341,000
64,464,000
27,790,000
63,652,000
47,024,000
20,806,000
1,2013,2000

$1,271,020,000

Total

94,285,000
7,106,295,000
111,610,000
147,284,000
72,570,000
124,795,000
585,502,000
131, 650,000
76,458,000
142,975,000
95,753,000
59,448,000
6,1024.000

$8,554,625,000

(OVER)

TREASURY DEPARTMENT

=
i'QR RELEASE A. M• NEWSPAPERS,
~esday.L May 19, 1964.

May 18, 1964

RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of

reatlury bills, one ser~es to be an additional issue of the bills dated February 20,

964, and the other ser:l.es to be dated May 21, 1964, which were offered on May 13 were
paned at the Federal Rese~e Banks on May 18. Tenders were invited for $1,200,000,000,
r ttereabouts, of 91-day bills and for $900,000,000, or thereabouts, of 182-~ bills.
he details of the two series are as follows:
LNGE OF ACCEPTED

91-day Treasury bills
maturing Au~st 20z 1964
Approx. Equiv.
Price
Annual Rate
99.122 al
3.473%
99.118 3.489%
99.120
3.482% Y

l1PETITIVE BIDS:
High
Low

Average

:
:

l82-day Treasury bills
November 19,z 1964
Approx. Equiv •
Price
Arumal Rate
98.188
3.584%
98.177
3.606%
98.181
3.598% !I

maturin~

a/ Excepting two tenders totaling $400,000
- 22% of the amount of 91-day bills bid for at the low price was accepted
60% of the amount of 182-day bills bid for at the low price was accepted
)TAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRI eTS :
District
Boston
New York
Philadelphia
Cleveland

Richmond
Atlanta
Chicago
St. Louis

Minneapolis
Kansas City
Dallas
San Francisco

TCYl'ALS

AEE1ied For
56,264,000
$
1,694,156,000
29,790,000
21,088,000
12,795,000
30,903,000
187,578,000
36,347,000
18,108,000
32,383,000
26, 6S9, 000
112,119,000
$2, 258,lSiO,OOO

Applied For
Acce;eted
26,264,000
$
$
5,h6J.,OOO
853,756,000
1,294,579,000
14,790,000
7,967,000
2l,088,000
14,938,000
12,79S,OOO
1,953,000
24,967,000
18,140,000
110,058,000
146,194,000
28,991,000
10,608,000
9,438,000
7,056,000
26,923,000
10,679,000
16,879,000
11,150,000
56,046,000
104,725,000
$1,201,99S,OOO ~ $1,633,450,000

AcceEted
$ 5,261,000
693,059,000
2,967,000
9,938,000
1,953,000
9,140,000
64,394,000
8,608,000
5,056,000
10,579,000
6,250,000
83,385,000
$900,590,000 ~

InclUdes $227 226 000 noncompetitive tenders accepted at the average price of 99.120
Includes $65 881
noncompetitive tenders accepted at tt~ average price of 98.181
On a coupon issu~ of the same length and for the same amount invested, the return on
these bills would provide yields of 3.56%, for the 91-~y bills, and 3.72~, for
the 182-day bills. Interest rates on bills are quo~ed 1D terms of bank ~scount
with the return rele:ted to the face amount of the bills payable at matun ty 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 ~be~ o~ days in the period,
with semiannual compounding It more tt~ one coupon per10d 15 lnvolved.

000

TREASURY DEPARTMENT

May 19, 1964

JgR Dl4EDIATE RELEASE

TREASURY DECISION ON WELDED STANDARD m'EEL PIPE
UNDER THE ANl'IOOMPlNG ACT

With regard to welded standard steel pipe from France, the
~reasury

Department has deterDdned thnt the case be closed on the

ba$is of no sales at les6 than fair value within the meaning of
the Antidumping Act.

Notice of the determination will be published

in the Federal Register.
The dollar value of imports of the involved merchandise received during 1963 was approximately $4,500,000.

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE
LAWRENCE M. STONE NAMED
TREASURY'S TAX LEGISLATIVE COUNSEL
Acting Secretary of the Treasury G. d'Andelot Belin today
announced the appointment of Lawrence M. Stone, of Los Angeles,
California, as the Treasury's Tax Legislative Counsel.
Mr. Stone, an attorney who specializes in tax matters, will
serve as a legal adviser to Assistant Secretary Stanley S. Surrey
on tax legislation and assist in coordinating the Department's tax
legislative program. He will assume his new duties in a few weeks.
At the time of his Treasury appointment, Mr. Stone was a tax
specialist and partner in the Beverly Hills law firm of Irell &
Manella.
In 1956 and 1957, Mr. Stone was a Staff Member, Federal
Income, Gift and Estate Tax Project of The American Law Institute,
From 1957 to 1961 he was associated with the firm of Irell and
Manella in Beverly Hills.
From 1961 to 1962, he served in the
Office of Tax Legislative Counsel in the Treasury Department working
on the Revenue Act of 1962. Since 1962, he has been a partner in
Irell and Manella.
Mr. Stone, 33, was born in Malden, Massachusetts. He received
a B.A. degree in 1953 from Harvard University, and his LL.B. degree,
magna cum laude, from Harvard Law School in 1956, where he was a
member of the Board of Editnys of the Harvard Law Review. Mr. Stone
is a member of the State Bars ~ California and Massachusetts,
the Federal Bar Association and the American Bar Association
(Section of Taxation).
Mr. Stone is married to the former Anna Jean Clark and makes
his home at 3001 Hollyridge Drive, Los Angeles, California.

000

FOR RELEASE:

P, N. NEWSPAPERS
THURSDAY , i'1A Y 21 2 1964
REi'ffiRKS BY ROBERT V. ROOSA, UNDER SECRETARY
OF THE TREASURY FOR MONETARY AFFAIR , BEFORE
THE 11TH ANNUAL INTERNATIONAL MONETARY
CONFERENCE OF THE AMERICAN BANKERS ASSOCIATION
AT THE PALAIS SCHWARTZENBURG, VIENNA, AUSTRIA,
THURSDAY, HAY 21, 1964, 3:00 P. H.
THE POTENTIALITIES OF OUR INTERNATIONAL PAYMENTS SYSTEM
In the rising crescendo of calls for reform of the international
monetary syste~, the continuing themes of present experience seem
sometimes to be barely audible.
But I scarcely need remind this
audience that they are still important, and indeed are likely for a
long time to come to provide the structure on which all of us in the
world of finance will continue to depend.
It has been one of the remarkable and reassuring aspects of the
close and intensive studies which have been under way for some
months now within the so-called Group of Ten, that the participants
have never lost sight of the essence of what we already h~ve. While
it would he inappropriate for me, or for any of us, as yet, to
venture in public any views on specific possibilities for the future
~volution of the international monetary system, I believe I may be
permitted to reflect [or a few minutes, in purely personal terms, on
some of the features of the arrangements that are already in being.
~ven here, there is room for wide differences of view, but each of
1S must attempt Some sorting out of this kind as a prerequisite to
:aking anv part in the process of testing out and appraising the
~ll range of thoughts, aspirations or proposals that have been
;ugges ted f or the fu ture .
There are a number of avenues of approach that one might take
:oward a broad view of our international payments system and its
Ibility to meet the world's need for liquidity. One is that of
ontructing various theoretical models of an ideal system and then,
omewhat disappuintedly as a rule, measuring the performance of our
resent arrangements against this standard. A second line of
pproach traces historically the steps along which the world has
volved toward the present liquidity system, concluding all too
ften that we 3re alrc·ady living in the best of all possible worlds,

-1231

- 2 -

or if not, that the only answer lies in turning back to an earlier
stage of monetary evolution. Still a third kind of approach has
come to appeal to me. Somewhat more eclectic in its point of view,
it draws from our past experience while recognizing that the chief
lesson of history is that payments systems and liquidity arrangements
like most things in a dynamic world -- are constantly evolving in
response to current experience.
Such an approach asks the historical question "Where have we
been and how did we get where we are?", but it asks this question
for the purpose ultimately of answering another: "Where do we
want to go and how do we get there?" It recognizes that our ability
to foresee the future and its needs is gravely limited; that
perhaps our surest course is to develop a cooperative and flexible
approach, both toward finding the direction in which we may wish to
move, from one period to another, and in selecting the processes
that will take us forward in an orderly manner.

The work of the Group or Ten will have been fully successful,
I believe, if it helps to assure and confirm the commitment of all
the participating countries toward such an approach. For as we
look to the future with an eye to the past, we cannot escape the
evidence that the evolution of our payments system has too often
been scarred by disruptive convulsions set off at an unexpected
moment by the force of change itself. The system, too often, was
not readily flexible in meeting and adapting to underlying changes
that were already in motion.
In looking toward the changes that
an uncertain future always brings, the Group of Ten is building
with a new spirit of international financial cooperation that has
been developed in recent years and strengthened during the current
discussions. To me, this spirit and its perpetuation represents
astride forward tha t is a t leas t as important as any more
concrete recommendations that may in the end emerge from our
studies.
A glance backward, in the history of our international
liquidity system, suggests a number of intriguing parallels, as
well as contrasts, with the liquidity systems that have been
developed within individual nations. The financial history of
national economies, in the main, reflects a progressive development
in the effectiv~ use of the liquidity-creating process to meet
national economic purposes and goals. This development has
generally taken place through the market place of private credit
Where, in a never-ending attempt to economize on money, an almost

- J -

infinite variety of near-money substitutes has been developed.
But
it has been accompanied by the emergence of central banking, and
paralleled by a growing reliance upon debt management and fiscal
policy. This continuous perfecting of the liquidity-creating
process \\lithin nations has rested on the establishment and
perpetuation of secure plllilical institutions [or the areas served.
And it has been buttressed by ~n integrated system of financial
markets and institutions -- in various stages of development in
different countries -- as well as by the existence of only minimal
barriers within national bpundaries to the free flow of men and
goods, and money and capital.
In the international urea, the money-creating element of the
liquidity process cannot rest upon the political sovereignty that
has been its essential foundation in the individual nation.
Nor can it rest on a unity ut essential economic and financial
policies among n:ltions,
National monetary, fiscal, trade,
emploYment, and growth policies can and do differ in both philosophy
and practice. [\lclr can the' creation of international money rest on
a unified system of finaIH.:i_al or commercial institutions or on a
single money and capital market. To be sure, great strides have
been made in recent years in bringing the countries of the Western
world closer together in all these areas, but we would only be
deluding ourselves if we were to think that we have reproduced
internationally -- or arc likely to do so in the near future -- the
things that we can safely take [or granted within national
boundaries. We must be mindful, therefore, when we draw on analogies
ivith naticmal systems, as ~.Je try to visualize the potentialities for
tlw creation of monetary asset::;, as well as all other forms of
international liquidity, lhQt a cautious and selective approach
<lill be required.
In the international area we are still in the comparatively
:arly stages of learning how to economize on the primary element of
~nternational li~uidity, the monetary reserves themselves.
This
'[[ort to economize is not new, hut its adaptation from the
.nternal usage of nation-stat.es to the external needs of the
nternational community has necessarily been slow. As recently as
he Tventies, the domi~ant theme among those concerned over the
deq-l3cy of the international liquidity system was that of
conomizing on gold, al though an historian today might describe the
irn morc broadl'! as that of enlarging the capabilities for trade
nd finance oC ~ sy,stE:'m that rested ultimately upon a slm.Jly grmving
asc of monetary g()le!.
It wac; generally recognized then, too,
hat frequent changvs in thE:' price of gold offered no useful
o

- 4 alternative.
For monetary stability was hinged upon the certainty
of a generally acceptable fixed-value base, and in turn was itself
seen, then as now, to be essential [or sustained economic progress.
At that stage, of course, the economizing on gold was accomplished,
almost unconsciously, by increases that had been occurring for some
vears in the supply of a reserve currency -- particularly the pound
sterling -- which formed the most important part of the increase
taking place in the basic reserves of most other countries. Later,
as a concomitant of the vast resources and productive capacity of
the United States, e:nphasLs shifted to the dollar. Growth in the
dollar component of reserve assets over the past two decades has
provided the major source of additions to international liquidity
as a whole, while an impressive redistribution of the world's
monetary gold reserves from the United States to other countries has
also been tak ing p 1dce .
I do not have to remind this audience, however, that the
:reation of international money through the deficits of a reserve
:urrency countrv can also involve problems. The overriding necessity
that has for SJme time been apparent to restore equilibrium in the
Tnited States balance of payments, and our recent progress toward
~hat end, make it quite unlikely that the dollar would be able to
Idd to international liquidity over the next decade as it has over
:he two preceding decades.
This may to some imply, of course,
1 possible need to find additional substitutes for gold, perhaps
hrough finding ways for other currencies to serve as convertible
lonetary reserves.
But the need might also point in a different
lirection -- tmvard economizing on the foreign exchange component
!f international reserve assets -- just as in the past the reserve
urrencies themselves were the means of economizing on the use of
he limited supplies of guld.
There arc, to be sure, a numher of different ways of looking
t the most recent phase of developments in international liquidity.
orne observers, particularly in the academic fraternity, would
tress the evidence they sec of a shortage of international reserves.
thers would consider that any evidence points instead to a short311 in long-term capital flows, and would regard liquidity as
lperabundant. And there are, of course, many other variants.
)r Ilyself, I have begun to I.vonder whether the international economy
ly not presently he completing a phase of concentration on the
lild-up of primary reserve assets and whether perhaps it is now
ltc·ring a phase· in hlhich this supply or primary rC'serves can,
thout further substantial increases, at least [or a time, serve as
reasonably adc'Cjuatc basis for the gradual erection of a somel.,.;hat
'rgl'r cred i t s true ture .

- 5 Perhaps, if some of the developed countries are coming to consider
their present reserves of gold and dollars as reasonably sufficient,
they might wish instead, with proper safeguards, to use some part of
any additional surpluses for extending credit to others.
On the
part of the less developed countries, while some may have additional
scope for holding reserves, there are not many which can afford
further sizeable accumulations to be held idle in reserves for very
much of the time.
They need only the minimum that will serve for
working capital purposes and as a base to support borrowing.
In
other words, the problem lying directly ahead of us may not
necessarily involve a need for more dollars, nor for the immediate
creation of another international money to supplement them, but it
may instead call for greater use of credit facilities and the
international money substitutes that are created as such credit
facilities are utilized.
This interpretation does not imply any fundamental change in
the role of gold and the reserve currencies in our international
monetary system, either as a means of international settlement or
as international stores of value.
It does not imply changes in the
customary uses of currencies in private transactions. Nor does it
imply that there are necessarily any natural limits upon the use
of these familiar arrangements.
There would be ample room in
official reserves for -- hopefully -- an increased volume of newly
available gold at the continuing fixed price of $35 an ounce and
for additional holdings of acceptable currencies, depending on the
free choice of each of the individual countries concerned.
If this should be the phase of development that our
international monetary system has reached, countries would
increasingly come to regard their primary reserve assets as a base
upon which credit -- in many different possible forms -- might be
granted or received.
In effect, for example, a country's reserves
might decline somewhat less at times of strain than in the past
because more of the customary drains upon reserves would be met by
credits -- credits made credit-worthy, in part, by the reserve
assets still being held by the affected country.
And conversely,
surplus countries, instead of piling up more and more reserves,
might accept in some form the credits needed by the deficit
countries.

- 6 -

In many respects, under conditions of this kind, we would have
reached a stage in the international area that was reached in
several of the national financial systems seventy-five to one hundred
or more years ago, when the transition began from exclusive reliance
on hand-to-hand currencies to a system which involved the use of a
credit expansion process and the creation of money substitutes by
financial intermediaries. As now developed, greater reliance on
facilities for creating money substitutes and supplements within
individual nations has made possible a much more intensive use of
the money supply itself. To an important degree, credit arrangements
that increase, in effect, the velocity of money do reduce the scale
of needed increases in the money supply.
It is essential in such an appraisal, too, to distinguish
carefully between the needs of the private sector and the underlying
needs for official reserves. Much, if not most, of the discussion
of international liquidity is carried on in terms of the public
sector.
But it is proper to remind ourselves that the ultimate aim
of all that we do is to ensure that the liquidity needs of the
private sector can be met. This, of course, involves most of the
same questions which the monetary authorities in each country must
face in determining domestic financial policy -- questions as to the
relationships between domestic liquidity, growth, employment, price
stability, and the balance of payments.
In part the problem is one
of assuring adequate facilities for the working balances needed to
carryon trade and payments abroad.
In part, too, the problem is
one of access to international credit and, particularly for
countries where money markets are not well developed, it includes
a need for holding secondary reserve assets abroad.
But above all,
there is the need for assuring ready convertibility at a stable
price among the various currencies used to finance the flow of
current payments for trade and services, to cover new investments
abroad, and to service old ones.
The actual operating needs of the private sector are serviced
by an efficient complex of private banking and credit institutions,
many of them national in origin but international in the scope of
their operations. As representatives of such institutions, you are
confident, I am sure, as you should be, that existing facilities for
private credit, at least at short term, are adequate to meet the
challenge of a growing world economy. And wherever they may tend to
lag behind, competition will, within the open environment of free
convertibility, set in motion forces to widen appropriately the
SCope of such facilities.

- 7 But underneath all of the structure and processes of private
credit lies the capacity of the monetary authorities of the
individual countries to meet, at their posted exchange rates, the
composite of drains arising from all of the private transactions
that affect them.
If inflows do not balance outflows, national
policy changes may be needed to bring adjustment, but meanwhile any
adverse flow must be financed. Adjustment and financing are sometimes contrasted in ways which make them seem antithetical. But
I am sure that the monetary authorities -- and particularly those
of the leading financial countries that have made such pioneering
efforts in the area of cooperative action in past years -- are
alert to the need to respond to the disciplinary warnings that are
sounded when an individual country's payments position leads to
inroads on official liquidity.
We are, however, still in the process -- and it will certainly
be a continuing one -- of developing arrangements to ensure that
when the clustering of payments shifts heavily for or against an
individual country, the necessary means of payment can be made
available in ways that will set in motion forces that will assist
in the return to balance while avoiding abrupt interruption of
domestic stability and growth. We must stress the importance of
arrangements which encourage and facilitate the adjustment process.
There would be serious risks for an individual country, or for an
international liquidity system, that concentrated solely on ways and
means of piling up primary reserves, in order to meet all possible
contingencies. In those circumstances, the world might well be
subjected again to the dangers of a competitive race for reserves
as neighbor beggared neighbor in order to acquire and hold a
mercantilist hoard of primary reserves. And as more and more reserves
were created, there would be less and less assurance that the
self-restraint and discipline inherent in any system that relies on
credit would be brought into play. This would be true irrespective
of the form of primary reserve involved. It would be true even
lnder a full gold standard system -- for an individual country and
for the system as a whole -- if the additions to holdings were
large relative to internal monetary needs.
We need not, therefore, view the possible emergence of greater
upon a credit element in international liquidity as a
~akness in our system.
Instead, it may be a positive advantage
t flexible means of creating liquidity at the times and at the
loints where it is needed, but a means also oC preventing
laladjustments from going too far and of encouraging the timely
doption of necessary policies to restore equilibrium.

~eliance

- 8 The challenge to which we must respond in the international
liquidity area is thus similar in many respects to the challenge
faced by central banks and monetary authorities throughout the
world in their respective monetary and credit spheres.
It is the
challenge of assuring an ample expansion of liquidity for the real
economic growth that is the object of all our actions while
maintaining the control necessary to keep expansion from resulting
in inflation.
To be sure, the more successful individual countries
are in maintaining relative price stability along with achieving
their desired growth and employment levels, the fewer the problems
there are likely to be for international liquidity.
For liquidity
needs cannot be separated from the amplitude and magnitude of
payment imbalances and these in turn depend on the internal
circumstances of individual countries.
This only means, however,
that any consideration of liquidity must proceed hand-in-hand with
consideration of ways and means of improving the balance of
payments adjustment process and making it more efficient.
If it should be true that the present phase of international
financial development involves a shift of emphasis away from
primary reserves and toward more use of credit facilities, as well
as toward greater reliance by creditor countries upon the
supplementary reserve assets which the use of these credit
facilities implies, we are left with another crucial question:
What form shall these arrangements take in order to achieve our twin
goals of (1) the ample financing of temporary balance of payments
swings and (2) the exertion of pressure for an orderly correction of
any underlying imbalances that may ocrur?
It cannot be emphasized
often enough that the function of international liquidity is not to
permit countries to avoid the need to make what may sometimes be
painful adjustments in domestic policies and practices.
It is
rather to permit those adjustments to be made in an orderly fashion
and in ways that minimize the possibility of cumulative pressure on
other countries and on the international system as a whole. We
need liquidity so that economic ills can be cured without the use
of shock treatment. We do not need, and cannot successfully use,
liquidity to avoid the necessity of a cure.
I suspect that the only thing that can safely be said now about
the credit facilities that will be needed to meet these ends is that
they will be composed of many elements. Our own American experience
of the past few years has witnessed the establishment of new
facilities -- including most notably the federal Reserve swap
ne~vork and Treasury foreign currency bonds -- along with the

- 9 -

adaptation of older arrangements to meet new needs in unexpected
ways. Who, for example, could have foreseen even five years ago
that the long-term loans that we extended to Europe during the
period of its reconstruction would be convertible into liquidity
instruments for our own use through advance debt prepayments by
a number of our European partners? These have been among the
fruits of international financial cooperation in the past few years,
and I am sure that we will see many more.
As we look to future liquidity arrangements, and in the process
take a searching look at the past and the present, I believe that
we are also making healthy rediscoveries of what we already have
and what we can do with our present arrangements.
Part of this process of rediscovery has been to realize the
potential of the International Monetary Fund as the major
international agency where credit financing and financial discipline
naturally come together.
Our American view of the International
Monetary Fund had, in the past, been colored by the assumption,
shared with us by many others, that the prime function of the Fund
would be to serve as a distributor to other countries of the
dollars paid in by the United States under its quota.
To be sure
this was expected to be a revolving fund rotating among countries
with the greatest present need, but the potential usefulness of
the Fund to the United States was not always fully appreciated.
Many of us, at least, thought of the various quotas as drawing
rights, to be used as "borrowing facilities" in case of need -something to be considered, so to speak, as a sort of asset
"below the line." We did not also think of our quotas as creating
an equal opportunity for acquiring an asset "above the line" -as our own currency was drawn from the Fund by others -- an asset
that would be readily available, in turn, for us to draw upon at
will if we needed to use reserves.
It did not occur to many of us in the United States that, as
dollars were paid out by the International Monetary Fund over the
early postwar years, we were gaining a valuable asset in the
parallel increase in our "super-gold tranche" posi tion, or, more
properly, our "net creditor position" in the Fund. Then more
recently, as dollar shortage gave way to dollar plenty, in some
~ountries , debtor countries to the Fund were able to pay back the
ioll ars they had drawn earlier.
The Fund itself was thereby
lbsorbing a significant fraction of the dollars that our payments

- 10 deficit was pumping into the world -- amounting, in fact, to about
$1.3 billion in the period from 1958 to 1963. Or, to put it another
way, without receiving very much attention, the United States was
making use of its creditor claims on the Fund, acquired in years
of balance of payments strength, to meet a significant part of its
reserve drain as our deficit accumulated -- consisting largely of
some $304 million in 1959, $442 million in 1960 and $626 million in

1962.
At the present time, as you know, the United States is a small
net user of the Fund's resources.
In effect, dollars drawn by
others in earlier years have been wholly repaid out of the dollars
created by our more recent deficits. And nnw, in order to facilitate
additional dollar payments to the International Monetary Fund out
of the accumulated reserves of Fund debtors, the United States has
itself drawn modest amounts of foreign currencies under the standby
arrangement made in July, 1963.
Beginning in 1960, but increasingly in 1961 and thereafter, the
Fund has filled the drawing requests of member countries by using
the national currencies of those countries on the Continent that
have run sizeable balance of payments surpluses. And as these
currencies have been paid out, a form of reserve assets has been
created for the countries supplying then -- 8ssets that can be
used as needed in other times and other circumstances. The value of
these assets is becoming more and more fully recognized. Some of
the Group of Ten countries already include their "super-gold tranche"
claims, as well as their normal gold tranches in the Fund, among
thir primary reserve assets, while others consider them as a useful
second line supplement. Most recently, Italy, following the pattern
of the United States, has been able to use during a period of
deficit the added reserves acquired a few years earlier when other
countries were actively drawing lire from the Fund.
I expect that the months and years ahead will see more of a
reappraisal and rediscovery of the dimensions and potentials of the
International Monetary Fund for our payments system and as a center
of international liquidity.
The Fund's own study of liquidity will
itself, I am sure, be a stimulant to our thinking and to our
planning.
I personally cannot visualize arrangements for the future
that will not include a leading role for the Fund.
For in the Fund
we have an established institution that provides, through its normal
operations, an accepted way of using national currencies to bolster
international liquidity in a limited and systematic way.

- 11 I spoke to you in Rome two years ago of the problem of
multilateralizing a part of the role performed by the key currencies.
It seems to me that the International Monetary Fund has developed
more and more as a mechanism where the non-reserve currency
countries can share in a multilateral way the responsibilities for
the financing of payments swings and thereby make a contribution to
longer-run liquidity needs.
In addition, room has been found outside the Fund for other
bilateral and multilateral facilities as well -- supplementing and
reinforcing, but in no way supplanting, the central role of the
Fund itself.
We have come a long way in these past ten years, and
building on our past experience we can look to the future with
confidence.
Over the period, as seen from the U. S. point of view,
one of the major achievements has been the development of the
Federal Reserve swap network. While originally designed mainly as
a defense for the dollar, the reciprocal nature of the arrangements
has become progressively apparent.
They have proved their usefulness
in economizing on primary reserves by combatting speculation and
avoiding disruptive swings in reserve positions -- and have already
served more importantly for other currencies at periods of great
stress than for the dollar itself.
Together with other mutual
central bank arrangements, these swap facilities will clearly play
an integral role in any liquidity system in the future.
Treasury
fureign currency bonds have similarly demonstrated their usefulness,
not only in absorbing the temporarily large dollar accruals of some
individual countries, but also in providing supplementary reserve
assets for the original creditor, which he may later use in case
of need -- as Italy has already done.
But these are only examples of the credit [arms that make up
an essential part o[ our present-day liquidity system.
I am sure that
new forms will emerge as needs appear.
The emphasis I would like to
place is not upon the specific instruments themselves, but on the
process that has created them -- the process of evolutionary change
shaped by common appraisal and cooperative action.
All countries,
and particularly the leading industrial countries, have not only a
mutual interest hut also a shared responsibility in the maintenance
of an adequate and stable international monetary system.
The
fortunate fact is that they recognize and understand this imperative.
They arc, I believe, rleter~ined to find those approaches which will,
~hile adapting to the shifting needs of the world economy, most
~early fulfill th0 potenLialities of our international payments
sys tem.

000

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE

Hay 28, 1964,
representing an
and to
'amount of
to be freely

183-day bills, for $900,000,000,
or thereabouts, to be dated
and to mature November 27, 1964.

May 28, 1964,

The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidd1ng 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
(mat uri ty 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, Hay 25, 1964.
Tenders will not be
received at the Treasury De~artment, 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
~serve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of
ustomers provided the names of the customers are set forth in such
enders. Others than banking institutions will not be permitted to
5ubmit tenders except for their own account. Tenders will be received
~ithout deposit from incorporated banks and trust companies and from
~esponsible and recognized dealers in investment securities. Tenders
rom others must be accompanied by payment of 2 percent of the face
lmount of TreasUry bills applied for, unless the tenders are
ICcornpanied by an express guaranty of payment by an incorporated bank
Ir trust company.
D-1232

UNCLASS J F I ED
-2-253 4, MAY 20TH, FROM VIENNA
AND NEW COMBINATIONS OF OLD TECHNIQUES -- TO DEAL WITH PAYMENTS
DEFICITS AND SURPLUSES~ WE HAVE ALSO LEARNED THAT OUR SEARCH FOR
EFFECTIVE POLICIES CANNOT PROCEED IN ISOLATION-~ !N MOVtNG TO
SOLVE THEIR OWN BALANCE OF PAYMENTS PROBLEMS, MAJOR COUNTRIES MU
FIND WAYS TO ACHIEVE THEIR OBJECTIVES WITHOUT CREATING SERIOUS
DIFFICULTIES FOR OTHERS~ IHE SUCCESS OF BALANCE OF PAYMENTS
ADJUSTMENTS INCREASINGLY DEPENDS UPON THE COORDINATION OF
NATIONAL EFFORTS~ WE HAVE LEARNED THE LESSON -- PARTICULARLY
IN THE SHORT_TERM CAPITAL AREA -- THAT CLOSE INTERNATIONAL
COOPERATION CAN CONTRIBUTE IN VERY SPECIFIC WAYS TO THE JMPROVEM
OF THE ADJUSTMENT MECHANISM.
ALTHOUGH WE HAVE MADE SUBSTANTIAL PROGRESS, MANY UNRESOLVED
QUEST IONS REMA I N-oIjOWHERE J S TH IS MORE EV I DENT THAN JN THE AREA
OF LONG-TERM PORTFOLIO CAPITAL FLOWS~ JHE IMPORTANCE or SOME OF
THESE UNRESOLVED QUESTIONS WAS BECOMING APPARENT AT THE TIME
OF YOUR ~ONFERENCE IN BOME TWO YEARS AGO. I SPOKE THEN OF THE
DANGERS INHERENT IN THE GROWING PRESSURE OF FOREIGN BORROWERS
UPON THE UNITED $TATES CAPITAL MARKET~ WITHIN SIX MONTHS, THOSE
PRESSURES BEGAN TO MOUNT RAPIDLY AND, BY MID-1963. THE VOLUME
OF NEW ISSUES IN THE ~EW YORK MARKET WAS RUNNING AT MORE THAN
THREE TIMES ITS PREVIOUS LEVEL~ THAT, UNFORTUNATELY, LEfT US NO
RECOURSE BUT DIRECT GOVERNMENTAL ACTION. ,ACCORDINGLY, LAST JULY,
LAUNCHED AN INTENSIFIED PROGRAM TO IMPROVE OUR BALANCE
OF PAYMENTS, OF WHICH THE PROPOSED INTEREST EQUAL1ZATION TAX
IS A KEY ELEMENT.
WE LOOK UPON THAT PROPOSED TAX SOLELY AS A TRANSITIONAL MEASURE.
IT MUST NOT BE ALLOWED TO OBSCURE THE DESIRABILITY OF WORKING
OUT MEASURES THAT CAN PERMENENTLY STRENGTHEN THE INTERNATIONAL
ADJUSTMENT MECHANISM, NOR OUR OWN NEED VIGOROUSLY TO PURSUE
OTHER ELEMENTS OF OUR BALANCE OF PAYMENTS PROGRAM, SUCH AS 1HE
REDUCTION OF GOVERNMENT EXPENDITURES OVERSEAS AND THE P~SUtT Or
APPROPRIATE FISCAL AND MONETARY POLICIES. BUT THE NECESSJTY FOR
INTEREST EQUALIZATION TAX HIGHLIGHTS THE SERIOUS PROBLEMS
THAT HAVE ARISEN IN ATTEMPTING to RECONCILE FREEDOM Or CAPITAL
MOVEMENTS WITH THE HARSH NECESS ITIES OF BALANCE OF PAYMENTS ADJU~·'
MENT.
IF LONG-TERM PORTFOLIO CAPITAL FLOWS ARE TO MAKE THEtR MAXIMUM
CONTRIBUTION TO OUR MUTUAL GROWTH AND WELFARE. THEY SHOULD BE
PERMITTED TO RESPOND FREELY TO SHIFTING PATTERNS OF TRADE~ TO
UNCLASSIFIED

FOR RELEASE: A.M. NEWSPAPERS
THURSDAY, MAY 21, 1964

REMARKS BY THE HONORABLE DOUGLAS DILLON
SECRETARY OF THE TREASURY OF THE UNITED STATES
BEFORE THE 11TH ANNUAL INTERNATIONAL MONETARY CONFERENCE
OF THE AMERICAN BANKERS ASSOCIATION
AT THE PALAIS SCHWARTZENBERG, VIENNA, AUSTRIA
THURSDAY, MAY 21, 1964, 12:30 P.M.
I am very pleased to be with you at another of your Annual
International Monetary Conferences, which offer such a unique and
valuable opportunity to confer with one another and with our
European friends.
All of us recognize the need to improve the process of balance
of payments adjustment among the free industrial nations. We have
found that the old "rules of the game" -- whatever their values in
the past -- are no longer adequate.
For instance, the classical
presumption that balance of payments deficits call for the
restriction of domestic economic activity has had little relevance
to the situation facing the United States in recent years. Nor has
the other side of the classical coin -- easy monetary policies
designed to stimulate demand -- been any more appropriate as an
antidote for recent European payments surpluses.
The selection of suitable international payments policies
has also become more difficult because domestic economic policies
now encompass so many more objectives than they once did. For
example, the promotion of full employment has come to be accepted
as a high priority responsibility of governments throughout the
free world.
Price stability, the promotion of international trade,
and the stimulation of overall economic growth, all now occupy
prominent places in national policy objectives.
All of this means that we have had to seek new techniques
and new combinations of old techniques -- to deal with payments
deficits and surpluses. We have also learned that our search for
effective policies cannot proceed in isolation.
In moving to solve
their own balance of payments problems, major countries must find
ways to achieve their objectives without creating serious difficulties
for others.
The success of balance of payments adjustments
increaSingly depends upon the coordination of national efforts.

D-1233

- 2 We have learned the lesson -- particularly in the short-term capital
area -- that close international cooperation can contribute in very
specific ways to the improvement of the adjusLment mechanism.
Although we have made substantial progress, many unresolved
questions remain. Nowhere is this more evident than in the area
of long-term portfolio capital flows.
The importance of some of
these unresolved questions was becoming apparent at the time of your
Conference in RL1me two years ago.
I spoke then of the dangers
inherent in the growing pressure of foreign borrowers upon the
United States capital market. Within six months, those pressures
began to mount rapidly and, by mid-1963, the volume of new issues
in the New l c1rk I1ld rke t wa s runn ing a t more than three time sits
previous level. That, unfortunately, left us no recourse but direct
governmental action. Accordingly, last July, we launched an
intensified program to improve our balance of payments, in which the
proposed interest equalization tax is a key element.
We look upon that proposed tax solely as a transitional measure.
It must not be alloh'ed to obscure the desirability of working out

measures that can per~anently strengthen the international adjustment
mechanism, nor our own need vigorously to pursue other elements of
our balance of payments program, such as the reduction of government
expenditures overseas and the pursuit of appropriate fiscal and
monetary policies.
But the necessity for the interest equalization
tax highlights the serious problems that have arisen in attempting
to reconcile freedo~ o~ capital movements with the harsh necessities
or balance o[ payments adjustment.
If long-term portfolio capital ~l()\,vs arC:' to make their maximum
contribution to our mutual growth and welfare, they should be
permitted to respond Creely to shi~ting patterns of trade, to
differentials in profit opportunities, and to the basic capacity
o various n~tions to savC:'. Bu( i: they are not to undermine the
adjustment mechanism, long-term portfolio capital movemt:'nts must
also be' responsivC' to the oalancC:' 0;- payments position of borrowers
and lenders alike.
The difficulties inherent in accomplishing both of these goals
Simultaneously OPCllllW clear- when we consider the kinds of problems
that have recently plagued us in the area of international flows
of portfolio capiuti. Countless norrowers and lenders are
constcmclv I~)aking dccision:-; to nuy or sell fureign securities on
the bas i s ~ () [ p r i (' (, and y i (' 1 d cl i i: fer e n l j zll san d a va i 1 a b iIi t fL' S 0 f
funds, as till'--ie i-actors are rerlected in tht, lll.1rkel place.
Bu(_

- 3 we have no assurance that these decisions will, at any given time,
reflect basic differences in the underlying capacity of various
countries to provide capital [or domestic uses -- much less their
capacities to transfer that capital abroad.
Instead -- in the case
of more than one country -- flows of portfolio capital have recently
shown a disturbing tendency to seriously aggravate imbalances in
payments, rather than to assist in their adjustment.
The greatest
difficulties on this score have arisen for countries which do not
have controls on their capital markets -- Germany and the
United States.
In our case, it was necessary to reduce an excessive net outflow
of portfolio capital, while the German problem has been the
reverse one of discouraging an excessive net inflow.
Our approach
was the proposed interest equalization tax to increase the effective
cost of foreign borrowing in our markets.
The German approach
in some ways complementary -- was to propose a withholding tax on
non-resident purchasers of German interest bearing securities,
thereby lowering the after-tax yield to some foreign investors and
thus tending to discourage capital inflows.
Perhaps even more
significant in terms of progress toward more efficient capital
markets, the German authorities coupled this with an important
structural reform, in the proposal to remove the 2-1/2 percent tax
on the purchase of newly issued securities -- a step designed to
offer encouragement to new capital issues, both foreign and domestic.
The fact that a country as basically committed to the free
flow of funds as is the United States
found it necessary to
propose the interest equalization tax underscores the importance
of achieving a better balance in the btructure and efficiency of
world capital mar~ets.
Until that better balance is achieved,
it will be difficult, or even impossible, to influence the
direction and amount of long-term portfolio capital flows through
the normal action of monetary policy, without the help of special
~easures aimed at encouraging or discouraging such movements.
Consequently, progress in improving the free world's capital
markets has become essential if the uninhibited flow of long-term
international portfolio capital is not to be a disturbing element
in the quest for payments equilibrium.
In seelzing the reasons why portfolio capital flows have become
disturhing to payments equilibrium, one is immediately struck by
the current wide disparity between European long-term interest
rates and our own.
Long-term interest rates in Europe have been
very high throughout the postwar period.
Although conditions vary
from country to country, Europe can generally be characterized
"6 percent b aSis
. II Since
•
3S having heen on something close to a

- 4 World War II.
Certainly, in the light of past experience, 6 percent
is an unusually high level of long-term interest rates for Europe.
Throughout the 19th century, the annual average of prime long-term
bond yields in continental Europe was only slightly above 4-1/4
percent.
In England, it was just under 3-1/2 percent. And, during
the early decades of this century, the overall averages, with the
sale exception of Germany, were little, if any, higher.
Because of the vast needs of postwar reconstruction and, more
recently, of rapid economic growth, reasons can be found to justify
the current high level of European long-term interest rates.
In
addition, relatively recent experience with inflation has discouraged
postwar European investors from the purchase of bonds.
But these
transitory conditions do not suggest that 6 percent is desirable as
a permanent level, or that it is likely to be maintained over any
very long period of time. History would seem clearly to indicate
otherwise.
While the prevention of inflation remains vitally necessary,
in Europe as well as elsewhere, current inflationary threats appear
to be different from those of the immediate postwar periorl. There
now seems to be much greater ground for the use of income
policies to restrain upward pushes on the cost-price structure,
and much less reason to place primary reliance on high and
inflexible levels of long-term interest rates.
I do not suggest
that the necessity ror interest rate variation is at all diminished.
I only question whether it is desirable, as a long run proposition,
that European interest rates should continue to fluctuate around
levels so much higher than their historic averages. While the
i~mediate and visible threat of such high rates is to international
payments balance, one can reasonably expect that the maintenance
of sustained growth in Europe itself will, in time, require
appreciably lower long-term rates of interest.
Even with due allowance for the special factors that I have
mentioned, the question arises as to the extent to which
institutional frictions and government restrictions are to be held
accountable both for the current high level of long-term interest
rates in Europe and for other impediments to the availability
of funds.
Throughout history, efficient capital markets have tended
to produce lower rate structures and, conversely, inadequate
capital markets have generally bred high interest rates. European
capital markets once led the world, but in the postwar period they
have fallen far behind the needs of the times, particularly in the
access they offer to foreign borrowers. This is partly because
government intervention and controls have impeded the development
of broad and integrated capital markets in Europe, and partly because
private financial institutions have sometimes been slow to adapt
imaginatively La changing situations.

- 5 A broad and responsive capital market helps to insure that
temporary influences can be readily and rapidly absorbed within an
acceptably narrow range of changes in security prices and yields.
However, where governments follow the practice of pre-empting
and channelling large proportions of the funds potentially available,
it becomes difficult to provide sufficient breadth in the private
sector of the market. Unless security prices and yields are free
to react to changing patterns of supply and demand, and to respond
to broad and vigorous competition among private financial
institutions, the prospects for the development of truly efficient
capital markets cannot be bright.
The failure of European capital markets to keep pace with
the expanding capital requirements of the industrialized world
has been a major factor in stimulating pressures upon the
New York capital market. The imbalance has been so large that the
greater availability of funds to potential borrowers in New York
has often seemed more important than interest rate considerations.
With such wide disparities in market capacity and accessibility,
there is no use looking to relatively minor international variations
in long-term interest rates to guide the flow of capital and to
encourage balance of payments adjustment. And the major variations
in interest rates that would be required to bring long-term
portfolio capital flows into better balance do not seem possible
for either Europe or the United States. The heavy accumulations
of savings in the United States make it doubtful that even an
extremely restrictive monetary policy could cause our long-term
interest rates to approach the European level -- and any such
extreme monetary policy would clearly run counter to our current
domestic need for fuller employment and higher utilization of our
industrial capacity. In Europe, on the other hand, efforts to
reduce long-term interest rates cannot hope to achieve really
significant success until broader and more active capital market
facilities come into being.
It is encouraging that this need is now recognized on all
sides. During recent years, Europe has taken significant steps
toward improving her capital markets. The increasing economic
integration of Europe offers an opportunity for much greater
progress in the future, and it is imperative that the opportunity
be seized. Recent experirn2ntation in achieving a broad European
market [or security flotations deserves to be carried further
despite the difficulties that have been encountered. The increase
in dollar-denominated loans under the stimulus of the proposal for
the interest equalization tax, the use of unit of account loans, and
the proposal by Dr. Hermann Abs for separate national shares in large
European security flotations, are all developments of considerable
signifiC8n£p

- 6 I recognize that institutional changes of the required scope
cannot be achieved easily or quickly. However, there are
promising signs of progress. The task now is to push ahead
vigorously in a concerted effort to enlarge and improve European
capital markets as a necessary prerequisite to our common effort,
within a framework of free markets, to harness long-term portfolio
capital flows to the stark realities of balance of payments
imperatives. Until this has been successfully accomplished, it
must be recognized that portfolio capital calls on the New York
market from abroad will, in some fashion or another, have to be
contained within the limits set by our own overall balance of payments
situa t ion.
This is, for us, a new and unpleasant fact of life, but it
is one with which our European friends have long learned to live.
And it is only one of many ways in which we must accommodate
our policies to the exigencies of our international payments
situation. We must continue to reduce our military expenditures
overseas, as well as the dollar cost of our foreign aid programs.
We must continue vigorously to press the sale of advanced military
equipment to help offset the cost of maintaining our forces
abroad. We must continue to increase the attractiveness of direct
investment in the United States. And, above all, we must continue
to seek out ways of enlarging our exports while maintaining price
stability at home.
entil our payments deficit is entirely removed, and our
gold losses halted, our work will be unfinished. The past ten
months have seen a dramatic improvement in our payments sicuation,
stemming in good part from the intensified action program introduced
last July, but also from a noticeable longer term improvement in our
underlying competitive position. The seasonally adjusted annual
rate of deficit on regular transactions during the second quarter
of 1963 was swollen by massive foreign borrowing in our markets
and exceeded $5 billion. This rate of deficit was cut sharply to
a little under $2 billion in the third quarter of 1963, and to
a little over $2 billion in the fourth quarter. Preliminary data
for the first quarter of this year indicate that after seasonal
adjustment our deficit on regular trans~ctions has declined even
further to an annual rate o~- about $550 million.
But it must be recognized that these first quarter results
OVerstate the actual improvement. There is evidence of a
substantial temporary inflow of short-term funds [rom Canada
during March -- an inflow that was completely reversed early in
April. Even so, after taking this into account, the first quarter
still weighed in as our hest quarter since 1957. On an overall

- 7 basis and without allowance for favorable seasonal influences , our
international payments so far this year have been in approximate
balance. This cannot be expected to continue as seasonal effects will
soon shitt against us.
But although 1964, as a whole, is expected to
record another sizeable deficit on regular transact~ons, there are
excellent reasons to hope that it will be sharply reduced from the
levels of the past six years. We have, therefore, every right to
be encouraged.
But we must remember that a good part of our recent progress
is due to the proposal for the interest equalization tax.
By the
end of 1965, when this tax is scheduled to expire, a secure
payments equilibrium will require a much better balanced international
flow of long-term portfolio capital than characterized late
1962 and the early months of 1963. Specifically, this means that
United States portfolio capital in large amounts should not be asked
to support the expansion of developed areas with strong balance of
payments positions.
Increasingly flexible and efficient capital
markets in Europe -- capable of supplying funds at reasonable rates
of interest -- will remove one major source of difficulty.
It is
then that opportunities should emerge for long-term capital
movements to contribute more actively to the process of balance
of payments adjustment among nations.
We do not by any means have all the answers in the long-term
capital area.
But as international capital markets achieve a
better balance, both in terms of interest rates and of lending
capacity, it should prove possible to apply in the long-term
capital area some of the lessons we have learned in the short-term
area.
A narrowing of existing differences in long-term interest rates
among industrialized countries, together with wider access of
borrowers and lenders to a variety or national markets, implies
a growing sensitivity of long-term portfolio capital flows to
relatively minor interest rate variations. This sensitivity
can be turned to our mutual advantage, for it will provide
opportunities for governments to make greater use of acceptable
variations in monetary policy to influence these flows in the
interest of balance of payments adjustment, without violating
their own domestic needs.
It suggests another way in which we can
all work together to strengthen the adjustment process, while
continuing our progress toward a world of free capital movements
and ever freer trade and payments.

000

FORMJLAT ION OF FEDERAL BUDGETARY pOLle rES
ADDRESS OF ROBERT A. WALLACE, ASSI STANT SECRETARY OF H-E TREASURY
,
BEFORE THE 14TH At-«JAL NATI~L C~FERENCE OF THE
BUDGET EXECUTIVES INSTITUTE, BELLEVUE-STRATFORD HOTEL
PHI LADELPHIA, PEt+lSYLVANIA, foAA Y 21, 1 %4
q: 30 A.M.

ALL BU[x;ETS ARE ALIKE IN REPRESENTING A PL,AN FOR RELATING SCXJRCES
AND USES OF FUNDS {'(JRIf'..G AN

ACCOJNTII~

OR PIJl.NtHNG PERIOD.

ARE ALIKE IN TliA-T TI-iEY MUST TAKE ACCOUNT NOT ONLY OF
BUT ALSO OF LOt\G-TERM CAPITAL NEEDS.
THAT

:~TH

ALL BUhETS

CURRe~T

REQUIREMENTS

IN ADDITION ALL nlJ!)GETS ARE ALIKE III

RECEIPTS AND EXPENDITURES ItNOLVE ESTH-1ATES '..JI-llCH CAN SOMETlrvES

SE QUITE ACCURATE RUT W'lHCH AT OTI-iER TH'ES I"AY trM)LVE t.NCERTAIN JUDGtv£NTS
AS TO Mt\RKETS OR TO BROAD ECONOMIC TRENDS OR TO mE STATE OF THE EIHIPE
NA TI OJ'JAL EC ()\I()MY •

114 THESE RESPECTS THE FEDERAL BUDGET DOES NOT BASICALLY DIFFER FR0f'1
HiE BVDCIETS OF, SAY, A FAMILY, THE UNIVERS ITY OF PEt'l6YLVNHA, UNITED STATES
STEEL CORPORATI(Y.~, OR THE STATE OF P8'~rJSYLVN"IA.

Nor-ETrELESS, n-tERE IS HJ

Tr-iE FEDERAL !3UOGET AND Hi THE FEDERAL BUDGETARY PROCESS A UNIQUE ELn1EtJT,
sa-1ETHING T~1AT GOES REYOI'·!D SIMPLY A MA.TCHH~ OF RECEIPTS Ar,JO EXPENDITURES
TO DETERt"'It-.£: THE FEDERAL SURPLU? OR DEFICIT, AND TItAT IS THE RELATIONSHIP

:~[noJEEIJ TI'iE FEDE RAL f3t..OGET AND T'rlE NATION'S Ecmrnr CHEAL TH •

H-E ECOtO~IC OBJECTIVES OF FEDERAL BUDGETARY POLICY, AND OTHER
FEDERAL POll C I ES AS WELL, ARE SPELLED ruT

Jt.j

THE H1PLOYHENT ACT OF lI~l+fi

.4'rlIC'~ DIRECTS THE FEDERAL GOVERtt-1EIIT TO USE EVERY POSSH3LE tv'EAI'!S TO
"PROMJTE

t-1A)( IMlA"1

81P LOYMEt JT, PRODUCTI Ot\i, ND PURCHAS lt~G pO'...IER".

- 3 1 ALSO EMPt-¢.SI ZE THESE INTERRELATIONSHIPS .oN£) THE VAR I F::TY OF OUR
ECONCl..,'C 08JECTIVES UECAUSE THEY REPRESENT THE F.:NVIRmt1ENT WITHIN v.~ICH
FEDERAL RLOGETAAY POLICY IS MADE.
N\li)THER FACT OF LIFE IS THAT 'l*HLE TAX N.D EXPENDITURE POLICIES ARE
POHERFUl, THEY CAN BE USED HITt-1 O'IL Y LIMITED FLEXFsI LITY.

~IAJa<

EXPHF,ITURE

PRc(;RAMS RELATE TO SPEC IFIC I';,I\TIm-VXl ORdECTlVES AND MUST t-1ft:J HIE
REQUIR-EMENTS OF EFFICIEtl:V.

IT IS HARD TO FiRHG AP'()UT SUDDfNLY

OW-lGES Ii\! l)t.JGOHlG GUDGETARY F'PQGPAMS,/\'lf' PROGRftM

eM!

EECor-1E

~lEEDS

r-\AJOf~

OR DOW-lOS S(),-1f:TH-1ES

I FF I CUL T TO R[CONC 1 LE HJTH Tf'ICCME I\t () E/-1PLOYMENT GOALS.

IT SHJlJLD

R[:1'm-1BERfl) THAT A FHlEPAL PUCGET 1S PREPARED Th'O YEAPS GEf('R[ THE ENP OF

ITS FISCAL YEAR.
MOREOVER, TIlE LEGISLATlm;
PREROGf\TIVE OF CONGRESS NJD FOP..
l.N'.";IlLIf.-G OP

lH~BLE.

TO t-10VE

~~EEDE[,'

IMPLl·}~ENT F1~CAL
R[I\SO~lS

VARIETY or

/'l.,

\~ITH

PCLlClES IS THE

COt.,GRES$ fv'AY 2E

THE SPEf D At'D FLEXHILITY 1,...11ICH UUTSIDE

OSSEw.V[P.S OR THE ,\CM INI STr:ATI Ct; ~/.j\,Y F[El J C; REQU If..:B) AT Al'IY PART I CULA,R TIME.
FISCAL PI")LICY Pl.AtJt:UC IS TIllS tnT r"-.5 [I,SY H~ THIS COut<TRY !,S IT IS It /\

PAP L rN1EtiT;'PY
GCN[PIMe,T'S pl'(x;r-1/V'I IS UJ/\CT[C' Of.; T!i[ '.HJLE GOV[f:':~t'IENT FAL·_S, ,"M·,:' THIS 15
fl, P('JI.WRFUL spur--: TO P,\F,'TY r'I~,ClrLWE.
r.n~·J \','H/,T

:JB,J[CTIVf-S.?

IS THE PELATIU1SHJr f.:'ET'A']:f': FISCAL POlICY /'-.1'1" OUR [COtWIC

I,':

TI~L ~;I:"'PLE T[XT)'()OI( TErrvlS, /It..J

f\ rrDUCTlOf~ HI TAX R/... TES ',dLL TL!'f' TO pMS,",

O,P!:JJDIllJR[<:;

'Jlif'

or-

,~t; IrD:,[/,SE T'

HICPf/\SE It, FXP'~t,.r'TTUP[S OR

[~,'C0t'~E5 "HI If

.:, r:rf1UCTJ(1~: lr"

TAX f?,>\TFC, I--IILL T[:If) Tn HT)'XL HC0!"1ES.

THE :CUfJCKW IS SUFFfTP,j( u~IP'rUiYl'·n~T OF nPi /\rv iTSO)f'Cfe:"

FISCAL S(jLUTI(~'

IS SWPLY Te:

U'tJ!'1

T)\)([S

(JR

THUS,

Ttl1' rr::XTI""I('{lK

P;CPU\<,t' rXPF:II;JTur.rs ('.:.' :::JTH.

- 5 WITH THESE \r()ROS OF GENERAL INTROOUCTlON, I 'fOJLD LIKE TO TURN NOW
TO A REVIEW OF THE PROCEDURES THAtT WE FOLLo\., IN SETTING FEDERAL 8UDGETARY
POLICIES.

INSTITUTIONALLY, THIS IS A RATt-ER SIMPLE MATTER.

THE BUREAU OF

THE [lU)GET, IN CONSUlTATION WITH THE AGENCIES ft.ID THE PRESIDENT, DEVELOPS
ESTI~TES

n£

REQUIREMENTS FOR EACH AGENCY Mel THE TOTAL EXPENDITURE

NEEDS FOR OPERATlI\K3 THE FEDERAL GOVER f\Io1E NT •

THESE EXPEWITURE ESTlMl\TES

ARE SUBMITTED TO THE COf\XiRESS BY THE PRESIDENT IN JANUARY OF EACH YfAR
Fa< THE FISCAL YEAR BEGINNlf\X; b I"ONTtIS LATER.

AT THE SAl'-1E Tlr-'E THE PRESJDENT

ALSO PROVIDES THE CQ\JGRESS \-ltTH ESTIMATES Of REVENUES FOR THE
YEAR.

C~If'~

FISCAL

CONGRESS REVIEWS THESE REOUESTS, AMENDS THEM AS IT SEES FIT, AND

ENACT S n-E APPROPR I ATI ON BILL S W; I CH GIVE Tt-E AG8-JC IE 5 THE I R AU1H)R ITY TO
SPEH) AND TrESE [MCTED APPROPRIATIONS ME THEN APPORTIONED
YEAR TO TI-£ AGENC I ES BY THE BURF...AU Of mE !3t.JC'GET.

THROUGH TI-£

SUI3SEQUENTL Y THE

EXPEf'DITURES OF THE AGENCIES ARE SUBJECT TO A POST-AUDIT BY THE GENERAL
ACCOut-.'TING OFFICE, WHICH IS ffl ARM OF THE CCNGRESS, NOT OF THE EXECUTIVE.
THIS IS THE INSTITUTlQ\JAL PROCESS IN A NUT SHELL, BUT SUCH A 3ARE-OONES
DESCRIPTICN IS CNLY A

~WWR

PART OF THE STORY.

THE BEGI~mING POINT \'11TH ALL OF ClJR rnJDGET PI.ANNI~ IS THE ECot-a..nc
OUTLOOK, WHICH It.oICATES W~THER BUDGETARY POLlCY SHOULD CE DIRECTED TOWARD
EXP~SI(N OR ~D RESTRAINT -- WHETHER OUR PROBLEMS IN THE COMING FISCAL

YEAR ~·J[LL BE PROBLEMS OF U~DER-UTILIZATI()N OF MEN JlrW RESOURCES, OR Ii'.jFLATI~
At.l) EXCESSIVE DEMAN).

IT I 5 ~'()T ENOUGH, !-{)WEVER, SIWLY TO HAVE QUALITATIVE

ESTIMATES ON WHICH TO RASE THESE JUrx3MfNTS.

y.1[ t VNE

TU PREDICT t.(JT ONLY

hHCft-£R BUSINESS WILL 8E G000 OR RAD mIT ALSO JUST HOW GOOD OR BAD IT IS
LIKELY TO BE.

THIS ESSENTIAL ROLE, THAT OF PROVIDIt..:G

HI[

PRESIOEf\:T HITH

- 7 AFTER FURTIiER DISCUSSION AT THIS LEVEL, AT r.ttICH AGAIN MOST REMAINI~
DIFFEREr£ES Of OPINION ARE RESOLVED, THERE IS A FURTHER REVIEW BY SECRETARY
DllLO'l, BUDGET

DIRECT~

KERMIT GORDON,

COlNCIL OF ECCIf\O-1IC ADVISERS.

Ar..f)

CHAIRMAN WALTER HELl!R Of n£

THIS TOP-POLICY GROUP THEN MEETS WITH

THE PRESIDENT TO PRESENT A CONSIDERED JUDGMENT WHICH

BEEN ARRIVED AT

Tt-RruGH THI S LENGTHY PROCESS.
IT IS PERHAPS IMMODEST AS A PARTICIPANT IN THIS REVIEW PROCESS TO CALL
ATTEt-.'TICN TO THE GENERAL EXCELLEt-CE OF THE RESULTS.
THINK, ONLY FAIR TO

O~SERVE T~T

IT 15, J-OtIEVER, I

THE FEf'ERAL ECONO-lIC FORECASTS HA.VE C(to1PARED

VERY FAVORABLY WITH PRIVATE FORECASTS, WHETHER THOSE tv\I\DE BY BUSlr£SS OR

ACADEMIC

EC~I STS.

PERHAPS ll'JFORTIJNATELY, Tt-E PROOF OF BUDGETARY

n£

Ar-()

ACADEMIC NICETY OF THE ftNALYSIS, BUT THE RESULTS.

FISCAL

\.-IIS~

~.()T

WlTtWT WAf\,'TIf\G TO

CLAIM lJ'.JDUE CREDIT FOR THE INFLUHlCE OF THE ECmmlC ANALYSIS FOR WHICH
n£ nREE AGEt<IES -- TREASURY, BUDGET BUREAU, AND CEA -- HAVE BEEN
RESPONSIBLE, LET US LOOK AT WHAT T~£SE POLICIES HAVE BEEN AND WHAT HAS
BEEN ACCCWLlSHED IN THE PAST 3-1/'1 YEARS.
IN RfTRCSPECT, IT IS ALREADY DIFFICULT, EVEN \-11TH AJLL ACCESS TO THE
RECORDS OF THE TIM:, TO RECONSTRUCT ME'>JTALLY THE SrTUATlO" IN 1961.

UNSUPPORTED

RECOLLECTIONS ARE EVEN LESS TRUSThORTHY, WHILE A COLD RECITAL OF THE FACTS
DOES NOT DO JUSTICE TO THE t-EAT OF TI-£ SITUATION.

- 9 -- A HIGt-£R MINlM..M 'rJAGE HInt EXP~.JDED COVERAGE
-- ASSISTANCE TO AREAS OF C!-RONIC It-IEJoPlOYM:NT, JlND
-- INCREASED FEDERAL AIDS FOR tWs t~.
AS A RESULT Of n-ESE ~SURES, STlMJLATIt\G Att) SUPPORTIt\G THE NATIJRAL
RECOVERY FCRCES WITHIN THE [cor-mY, TtiE RECESSION \-V\S REVERSED Ar-t> A STRO~
RECOVERY MOVEMENT GOT l.ND ER WAY •
AT TI-£ SAME TIr-£ THE I'\L»1HJlSTRATION \~S MWII'G TO GET THE NA.TION OUT
OF A

RECESSI()~,

HE ALSO

~'OLNTED

A GO'IERt.Jt-1ENT-\</IDE ATIACK TO REDUCE THE

BAlANCE OF PA'Wf:NTS DEFICIT AND 5T8'1 THE GOLD OUTFLOW.

TO RESTORE

Ca~FIDENCE

IN THE OOLlAA PRESIDENT K[NNEDY RESTATED b'iPHATlCALl v THE U. S. CCf.t1ITMENT
TO MAn"TAIN TI-i: PRICE OF GOLD AT $35 AN OUNCE.
ALLIES TO PUT UP A GREATER

5~¥\RE

THEN HE ASKED OUR t-v\TO

OF THE COST IN MAIIJTAItHt--X; Tt-£. DEFENSES OF

Tt-iE !=REE ~LD ~D REQUIRED MORE OF OUR FOREIGN AID DOLLARS TO BE SPENT

IN THE UNITED 5TATES.

SHORT TERM CAPITAL FLOWS ABROAD

~RE

RY UP\-JARD ADJUSl}1ENT IN SKJRT TU1"'1 HnlREST RATES W THE

SLOWED OOhN

U~HrED

STATES TO

BRIr-.t; Tt-£M INTO LINE \-JITH SHORT TERM RATES ELSHMERE ,liND, LATER, A PROGRPM
TO REDUCE UNG TERM CAPITAL OUTFLOWS THR()lX;H AN iNTEREST EQUALIZATION TAX
OtJ FOREIGN SECURITtES l'4AS PROPOseD.

{.. 5 n-t::. NATICl\! PJtWED WT OF THE
LONGER RANGE PROBLEM OF SLOW GROWTH.

RFCESSH1~,

OUR ATIENTION WRNED TO THE

FOR, DESPITE THE RECOVERY, EXCESSIVE

LtJ&'PLOYMEt-.'T AtD 'JNDER-UnUZATlO'-J OF PLANTS PEP.SISTED.

Tt-US THE GROUf'JDWORK

WA.S LAID FOP yJ1{A,T I FIP.!-1LY EfllEVE IS THE MOST SIGtHFICANT CH-'\t.lGE HJ TIiE
nl<UST OF FI seAL POLICY THA.T MA"JY OF US ARE LlKEl Y EVER TO FXPERIENCE -BY THIS I t~~ THE D[CISHJl TO BASE AN EXPANSIONA.RY FISc/\L POlICY ON TAX

REDUCTlCl'-I RATHER Tt-Wl G-J EXPHvrruRE H4CREASES.

- 11 -

J BEGAN BY
ARE

~()T

FEDERAL

r-nTI~

THAT TtE BlDGETARY OBJECTIVES OF THE FEDERAL GOVERr-.t-£NT

THE Sf+1E AS THOSE OF A PROFIT M'\Kll\C BUSINESS CORPORATION.
~E

THE

SHEET I S MEASURED BY On£R ACCOMPLI SHt-£NTS.

SINCE EARLY 1961 H£ AMERICAN ECOtrny HAS REALIZED THE LARGEST SUSTAH.JEC

GROrffii IN NATICNAL OUTPUT IN OUR PEACETIME ECOJa"IC HISTORY.
CNE-K':\LF YEARS OF

UNBROKEf~

EXPANSION ,M-fICH I S ITSELF A

R.ECORD~

T~F.Ef

LET US Sf.:E

hHAT Ht\S HAPPENED.
-- TOTAL ~~TIcrU\L PRODUCTION HAS INCREASED OVER $100 BILLION.

-- t.'OI·.J-FAR"t Er'IPLOYt·1Et..'T IS UP OVER 4 t-1ILLION JOBS.
-- l)t·'SV'PLOYt-'€NT .. AS ORUPPEC' FRO~1 7 PERCENT TO LESS TH/\N 5-1/2 PERCH·iT,

DESPITtA. 2-112 MILLJOf: rr-lCp.EJ\SE W THE SIZE OF TIl[ LABOR FOPCF.
-- P[PSONAL INCa~E J S UP t1JRE TH/\N $75 GILL1a~.
-- PR ICES H'\VE RE1.c,l\H ,ED rc~OR[ STAPLE TW~l H4 N~Y OTHER PDUSTRI/l,L COLNTRY
OF THE FReE \..(JRLD.

-- TIE F.v\LNiCE OF PAYf'1El'lTS DEFICIT W\S REDUC[(I FRC'.M ~3. 9 BILLION Iti
19GO TO A PROSPF.CTrVE LEVEL OF Ui·JnEi~ 52 BILLIot! H~ 19f,q.
THE \"QRU) H·'\S REGAWfI· FULL CONFtDEtJCE It! THE STREt-lGTH At·!) STABILITY

('.F THE U.

S. DOLLAR.

fHO, liM t-VSI: lESS liAS FARE[l?
__ CORPOrATE PROFITS BEFORE TAXES /lAVE ItCREASED ElY $18 rILLI(l~ .. OR

/\U~0ST 50 PfFCf.NT.

i\FTF?-TAX PROFITS t-vWE 11j(~~';FAS[[) FRry-1 $22 PILLlor;

PfPORTED It. l<)f)l TO $74-112 ~:ILLlOI'I H; 1062, At1D $27 HLLIOt< IN 1%3 -\-lITH f . . YE/\f\-HC' RATE CF tjEN~LY ~?<) r.ILLtn~i.

- 2 -

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 closine hour, tenders will be opened at the Federal Reserve B8Jlk.s and Branches, follmvinc; vrhich public announcement will be made by the
Treasury Department of the amount and price ranee of accepted bids.
ting tenders will be advised of the acceptance or rejection thereof.
of the Treasury

e~~rcssLy

Those submitThe Secretary

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.
these reservations, noncompetitive tenders for
price from any one bidder

~dll

$ 20~

Subject to

or less without stated

be accepted in full at the average price (in three

decimals) of accepted competitive bids.

Payment of accepted tenders at the prices

offered must be made or completed at the Federal Reserve Bank in cash or other immediately available funds on -....!J~un~e:..~12~.!1~96§:4L.!.-_Y.~IeDOOOOl;oDXKlIOOQa!Q~IOOICDQ)~OO'
~IIUIUU"

• c ~ •••).•• ., ,I .; ... ~.I ~ .. ,~·t .',.;)t';) • 'I >;I••"

:).',• • • . • • '. f>,:-.', '.:0 ... '•• p

The income derived frrnn 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

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE
TREASURY OFFERS $1 BILLION ONE-YEAR BILLS
The Treasury Department, by this public notice, invites tenders
~or $l,OOO,OO?,OOO, or thereabouts, of 363-day Treasury bills, to be
lssued on a dlscount basis under competitive and noncompetitive
bidding as hereinafter provided. The bills of this series will be
dated June 2, 1964, and will mature May 31, 1965, 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,
Wednesday, May 27, 1964. 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 363 days, 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 advised of the
acceptance or rejection thereof. The Secretary of the Treasury
D-1234

TREASURY DEPARTMENT

'OR RELEASE A. M. NEWSPAPERS,

~esdq, May

26, 1964.

25, 1964

RESULTS OF TREASURY'S WEEKLY BTU. OFFERING

The Treaaury Depa.rtment announced Is-at evening th.at the wruiers tor two series of

flalury bills, one series to be an addi tional is~ue of the billa dated February 21, 1964,
\4 the other series to be dated May 2B, 1964, which were oltered on M~ 20, were opened
t the Federal Reserve Banke on May 25. Tend~r~ were invited text:' $1,200,000,000, or

hereabouts, ot 91-day bill. and tor $900,000,000, or thereaboutB,
he details of the two series are al!! follcnm ~

ANGE OF ACCEPTED
.»ETITIVE BIDS:

High

91-day Treasury bUls
matu.r1.ng.J.,ugt1!t .21...! 1964
Approx. F;q~
Price
Annual Rate

:
:

99.124

3 .. 465%

x
~

18)-day' billa.

183-day Treasury bills
maturing November 27, 1964
Approx. EqUiv.
Price
Annual Rate

~~::zzcu

98.176

3.588%

Low
99.120
3.481%
~
98 4 170
).600%
Average
996121
3.415%
98 e 112
3.595%
a/ Excepting one tender of $150,000
'18% of the amount of 91-day bills bid for at the low price was accepted
20% of the amount of 183-da;y bills bid for at the low price was accepted

:mL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:

District

AEElied For

Acce2ted

!P.E!!edFor

AcceEted

Boston
New York
Philadelphia
Cleveland
Richmond

$ 20,880,000
1,535,675,000
26,80S,0Cl0
16,602,000

2,465,000
$
1,274,414,000
8,646,000
11,884,000
3,119,000
10,807,000
182,901,000
6,091,000
22,486,000
9,209,000
167,9995,000

$ 2,465,000
660,214,000
),226,000
11,644,000
2,910,000
8,487,000
79,401,000
7,133,000
3,091,000
22,406,000
4,209,000
94,855,000

$1,709,150,000

$9oo,04l,000

Atlanta
Chicago

st. Louis
~eapoli8

Kansas C1 ty

Dallas
San Francisco

Totals

9, 295, ()(X)
24,6$$,000
2J$, 314 J 000

30,862,000
11,431,000
26,84.3,000
18,108,000

10,844,000

845,0)5,000
11,805,000
16,580,000

9,14l,ooo

20,1,0,000

142,792,000

.
0

·
·
@

23,418,000

9,13.3,000

11,991,000
2J.J, 8J~3, 000 ..
11,1.08,000
e

130~532.!22:2

721 'll~,J.. 000

$2,073,002,000

$1,200,059,000

~
@

Includes $197,121,000 noncompetitive tenders accepted at the average price of 99.121
Includes $51,843,000 noncompet1ttve tendeI"$ accapted at the a.verage price of 98.172
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 3.55%, for the 91-da;y bills, <nd 3.71%, for the
18)-dsy bills. Interest rates on bills are quoted in te:rms of bank disco1.Ult with
the return related to the face anwunt of the bills payable at maturity rather than
the amount imeGted and their length in actual number of days related to a 36o-day
year. In contrast, yields on cartificates, notes, and bonds are ccmputed in terms
ot interest on the amount inVested, and relate the numbe~ of days remaining in an
interest payment period to the actual number of days in t.he period, with semiarumal corftpoundJ.ng if' more tlml one coupon period is involved.

TREASURY DEPARTMENT

June 4, 1964,
representing an
and to
amount of
to be freely

182-day bills, for $900,000,000,
or thereabouts, to be dated
June 4, 1964,
and to mature
December 3, 1964.
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
(maturi ty value).
Tenders will be received at Federal Reserve Banks and Branches
up to the cloSing hour, one-thirty p.m., Eastern Daylight Saving
ti:ne, Monday, June 1, 1964.
Tenders will not be
received at the Treasury De~artment, 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 3 u d 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.
D-1236

TREASURY DEPARTMENT

RELEASE A. M. NEWsPAPmS,
:rsday, May 28, 1964.

May 21, 1964

RESULTS OF TREASURY'S ONE-YEAR BILL OFFERING
The Treasury Department announced last evening that the tenders for $1,000,000,000,
thereabouts, of 363-day Treasury bills to be dated June 2, 1964, and to mature May 31,
,5, which were offered on May 21, were opened at the Federal Reserve Banks on May 21.
The details of this issue are as follows:
Total applied for Total accepted

$2,207,571,000
1,000,141,000

(includes $18,121,000 entered on a noncompetitive basis and accepted in full
at the average price shown below)

Range of accepted competitive bids:

High
Low
Average

96.259 Equivalent rate of discount approx. 3.71~ per annum
96.246
II
""
"
"3.723;' II
"
96 .250
"
11"
"
" 3 . 7l~"
"

(95~ of the amount bid for at the low price was accepted)

Federal Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. wuis
Minneapolis
Kansas City
Dallas
San Francisco
TOTAL

Total
Applied For
$ 48,300,000
1,711,373,000
10,639,000
69,541,000
585,000
5,765,000
209,612,000
5,370,000
8,785,000
4,930,000
16,255,000
116 ,410,000

Total
Accepted

$2,207,571,000

$1,000,141,000

11,195,000
798,198,000
639,000
16,547,000
585,000
1,765,000
134,512,000
2,370,000
2,785,000
3,430,000
4,205,000
23,910,000

a coupon issue of the same length and for the same amount invested, the return on
hese bills would provide a yield of 3.88;'. Interest rates on bills are quoted in
erms of bank discount with the return related to the face amount of the bills payable
t maturity rather than the amount invested and their length in actual number of days
elated to a 360-day year. In contrast, yields on certificates, notes, and bonds are
ClDputed in terms of interest on the amount invested, and relate the number of days
!lDBining in an interest payment period to the actual number of days in the period,
ith semiannual compounding if more than one coupon period is involved.
1

Fund. ~~is drawing, like the first drawing on February 13,
1964, is being made under the standby arrangement for $500
million which was announced July 18, 1963: After this
drawing, $250 million will still remain available under
the one year standby arrangement.
The U. S. drawing is being made in Deutschemarks and
French francs in amounts equivalent to $70 million and
$55 million, respectively. The drawing will replenish
currencies previously used out of Treasury stocks to
facilitate repayments by members to the Fund and will
cover contemplated requirements for this purpose over
the next few months. By this drawing the u. S. obtains
currencies from the Fund which it can sell for dollars
to other members for their use in making repayments to
the Fund. Other members can therefore continue, in effect,
to use their dollar holdings to settle their obligations
to the Fund.

TREASURY DEPARTMENT

May 28, 1964
FOR RELEASE: A.M. NEWSPAPERS
FRIDAY, MAY 29, 1964

TREASURY ANNOUNCES SECOND U. S. DRAWING
FROM THE INTERNATIONAL MONETARY FUND
Secretary of the Treasury Douglas Dillon announced
today a second drawing of foreign currencies equivalent
to $125 million by the U. S. from the International
Monetary Fund. This drawing, like the first drawing on
February 13, 1964, is being made under the standby arrangement for $500 million which was announced July 18, 1963.
After this drawing, $250 million will still remain available
under the one year standby arrangement.
The U. S. drawing is being made in Deutschemarks and
French francs in amounts equivalent to $70 million and
$55 million, respectively. The drawing will replenish
currencies previously used out of Treasury stocks to
facilitate repayments by members to the Fund and will
cover contemplated requirements for this purpose over the
next few months.
By this drawing the U. S. obtains
currencies from the Fund which it can sell for dollars to
other members for their use in making repayments to the
Fund.
Other members can therefore continue, in effect,
to use their dollar holdings to settle their obligations
to the Fund.
(Previous releases and background are attached)

000

D-1238

TREASURY DEPARTMENT

February 13, 1964
FOR RELEASE:
A.M. NEWSPAPERS
FRIDAY, FEBRUARY 14,1964

TREASURY ANNOUNCES FIRST U. S. DRAWING FROM IMF
Secretary of the Treasury Douglas Dillon announced today that
the United States has made its first drawing of foreign currencies
from the International Monetary Fund.
The drawing is being made
under the standby agreement for $500 million which was announced
by President Kennedy in his Balance of Payments Message last
July 18.
The value of the currencies drawn is equivalent to
$125 million.
The Secretary said that the drawing was designed to meet a
special situation in the Fund's operations anticipated last July,
and is intended to facilitate repayments by other nations to the
Fund.
The Secretary explained that foreign countries over the
past several years have been repaying more dollars to the
International Monetary Fund than the Fund has been paying out in
new drawings.
As a result, the Fund's holdings of dollars now
equal the amount which the United States has paid into the Fund
in dollars as part of its quota. At this point, the Fund under
its rules can no longer accept dollars in repayment. Repayment
must instead be either in gold or in other convertible currencies
of which the Fund holds less than the normal quota.
The United
States will draw such currencies from the Fund and sell them for
dollars to other members for their use in making repayments to the
Fund.
In this way, other members will be able to continue, in
effect, to use their dollar holdings to settle their obligations
to the Fund.
The United States drawing will be made primarily in
Deutschemarks and French francs -- in equal amounts. A small
portion, equivalent to $5.5 million, will, however, be in
Italian lire to replace lire sold from existing Treasury stocks
in January to enable Fund members to make several small repayments
to the Fund in lire at that time.
The present drawing does not
relate to any single repayment by another country but is designed
to cover a number of transactions which are expected to take
place in the coming weeks.
000
D-l13

TREASURY DEPARTMENT

WASHINGTON. D.C.

Background

July 11, 1963

u.s.

Stand-b,y Arrlnaement with the
International Monetacr Fund

The United States has just obtained agreement of the International
Monetary Fund (IMF) to a stand-by arrangement in the amount of $500 million for a period of one year, beginning July 22, 1963. Since the amount
requested is well within the U.S gold tranche (of $1,0)1.25 million) at
the IMF, the proposed arrangement does not raise any problems in relation
to IMF policies on drawings.
The principal use of the stand-by arrangement foreseen by the United
States is for operations to facilitate solution of a technical problem
jointly faced by the Fund, many of its members with drawings outstanding,
and the United States. This is the problem of repurchases at the Fund by
countries which hold their official foreign exchange balances largely or
exclusively in U.S. dollars.
The Articles of Agreement of the Fund prevent the Fund from accepting
holdings of any currency above 75 per cent of that country's quota except
through the ini Uati ve of that country to make a drawing of other currencies.
From the time the IMF first beg;m operations until quite recently, the U.S.
dollar holdings of the Fund were well helow 75 per cent of the U.S. quola,
because most drawings (as well as repurchases) at the Fund were in U.S.
dollars and cumulative repurchases did not reach the level of cumulative
drawings. In the past four years, the previous situation for Fund hold ..
ings of U.S. dollars has been substantially changed, especially since the
lMF drawing of the equ1valent of $1.5 billion by the United Kingdom in
August-September 1961. First, the volume of repurchases ~t the Fund, while
never reaching the cumulalive amount of drawings, has been much higher since
1958 than at any time before; a relatively large proportion of these higher
repurchases has continued to be made with U.S. dollars. Second, with the
achievement of convertibility by the main European currencies, a significant portion of new drawings from the Fund have utilized these currencies.
As a result, the Fund's holdings of U.S. dollars have been fairly close to
75 per cent of the U.S. quota since July 1962 and since the end of April
1963 those holdings have been practically at 75 per cent.
For countries hol~ing official reserves in U.S. dollars, this situalion presents a difficulty when they wish to make repurchases at the Fund.
The Fund'S ability to accept U.S. dollars in repurchase is practically nil
owing to the 75 per cent of quota constraint. Countries wishing to repay
t.m Fund Crtn offer other convertible currencies or gold to discharge their
repurchase obligations. It is very doubtful that a net transfer of gold
to u~, Fund 113 desirable at present from the viewpoint of the inlernational
po'lymcnts rrechanism as a whole. Also, 1n order to offer other converti hIe
c\lorrencies in repurchase, the countries concerned often need to undertake
9~mln1Qtr~tlvB arrangements that are unusual and unfamiliar to them, and
BIle h currencies must usuaLly be purchased (against dollars) at prices

EXCERPT FROM INTERNATIONAL MONETARY FUND,
PRESS RELEASE, WASHINGTON, D.C., JULY 18, 1963

"The International Monetary Fund has entered into a stand-by
arrangement that authorizes the United States to draw the
currencies of other members of the Fund up to an amount equal to
$500 million during the next 12 months.
The quota of the
United States in the Fund is $4,125 million, of which $1,031
million has been paid in gold.
The amount of the stand-by
arrangement represents a little less than half the amount the
United States could draw on a virtually automatic basis under
Fund prac t ice.
"The United States has not previously made use of the Fund's
resources.
Drawings of U. S. dollars from the Fund by other
members have amounted to approximately $4.2 billion since the
Fund's operations began in 1947.
In recent years, Fund policy
has encouraged drawings in non-dollar currencies and repayments
to the Fund in U. S. dollars.
This policy has provided
assistance in financing the U. S. balance of payments deficit.
As a result of repayments, the Fund's dollar holdings are now
almost at the subscription level, which is 75 per cent of quota or
about 53 billion, and the Articles of Agreement prevent repayment
to the Fund with U. S. dollars beyond that level.
In these
circumstances the stand-by arrangement, which is available for
general balance of payments needs, is intended to facilitate
repayments by other members.
This would be accomplished through
U. S. drawings of other convertible currencies, which would be
sold to Fund members for dollars and used by them to make
repayments to the Fund."

000

TREASURY DEPARTMENT

FOR RELEASE: A.M. NEWSPAPERS
MONDAY, JUNE 1, 1964
TREASURY INVITES COMMENTS ON
CANADIAN AUTO AND PARTS EXPORT MEASURE
The Treasury Department today sent to the Federal Register a
notice inviting comments and views of all interested persons
relating to complaints arising from the recent Canadian Order-inCouncil on the export of motor vehicles and motor vehicle parts from
Canada. A copy of the notice is attached.
The Canadian Government, in a press release dated October 25,
1963, described the Canadian system as follows:
"The new measures provide for the remission
of duties paid on importations of vehicles and
parts for vehicles for use in the manufacture of
motor vehicles in Canada.
"The remission of duties on imports may be
earned through exports of vehicles or parts in
excess of exports made during the twelve months
ending October 31, 1962. Exports to any country
are eligible to earn a credit for remission of
duties.
Credits may be earned by vehicle
manufacturers through exports by themselves or
by the parts makers.
One dollar of exported
Canadian content will earn the remission of
duties on one dollar of dutiable imports."
Complaints have been received by the Treasury Department to
the effect that the Canadian move involves the bestowal of grants
or bounties so as to make Canadian exports to the United States
of motor vehicles ann motor vehicle parts subject to the
imposition of countervailing duties under the provisions of
United States law.
The notice states that the U.S. Bureau of Customs is giving
consideration to this question. The comments and views invited
may also relate to the net amount of the grant or bounty which any

D-1239

- 2 -

interested person believes to be bestowed. The notice points out
that if it should be determined that a grant or bounty is
bestowed it is proposed that a countervailing duty order would be
issued.
Under present law, countervailing duties may be imposed
"whenever any country ... shall payor bestow, directly or
indirectly, any bounty or grant upon the manufacture or production
or export of any article ... and such article or merchandise is
dutiable."
Thirty days has been set as the period within which comments
and views should be submitted to the Commissioner of Customs,
Washington, D. C.

000

IlEPAR'lMIlr.r CF THE 'mIASURY
BtmlAU CF CUSTtMJ
INVESTIMTlOH

SUSPEC'lED BOutrl'I OR GRAI'l'

NOTICE CF OPPOR'lUNITY TO PRESENT VIEWS OR 'mE QUES'l'ION
WHETHER CERTAIN ACTION BY CANADA. CCETlTU'l!:S PAJMEm' OH
BES'lWAL (Jl A BOUNTY OR GRANT WITHIN 'mE MEANIBG OF
SECTIOB 303, TARIn' ACT OF 1930, UPON EXPOR'lB or MOTOR
VEHICLES AND M()'.l'OO VEHICLE PARTS FRa.t CANADA

Notice is hereby given that the Bureau of Custan! has received
information that Canada has adopted measures, which became effective
on November 1, 1963, under which amounts measured by the duties paid
on imports into Canada of "motor vehicles" and IImotor vehicle parts"
(as described in Canadian Order-in-CouncU P. C. 1963 - 1/l544 01'
october 22, 1963) are to be paid directly or ind1rectly upon exports
to any country of "motor veh1cles" and "motor vehicle parts. 11

Such

amounts are to be paid 1n connection with total exports which exceed
total exports made during the twelve months ending October 31, 1962.
The Canadian Order-in-Council is appended hereto as Appendix A.
This information raises the question whether this action by
Canada. constitutes payment or bestowl of a bounty or grant, directly
or indirectly, within the meaning of section 303 of the Tariff Act of
1930 (19 U.S.C. 1303) upon the manufacture, production or export of
the vehicles and parts to which the Canadian Order-in-Council relates.
This question is now under consideration.
If it should be determined that a bounty or grant is pajd or
bestowed in connection With any such manufacture, production or export,
it is proposed that an appropriate countervailing duty order would be

- 2 -

issued and published in accordance with section 16.24 of the Customs
Regulations (19 CFR 16.24).
It is contemplated that if such an order should be issued it would:

(1) relate to all categories of merchandise encompassed within the Canadian Order-in-Council; the status
of particular articles under the Tariff Schedules of the
United States will be irrelevant, except that articles
which are duty free under the Schedules Would not be subject to the order.
(2) provide that liquidation shall be suspended as
to all articles affected by the Canadian Order-in-Council
imported fran Canada (except articles vhich are free of
duty under the 78r1ff Schedules of the United States) which
are entered or 'Wi thdre.'Wll from warehouse for consumption
after the 30th day after the date of publication of that
order in the Federal Register.

(3) prOVide that, in accordance 'With said section 303,
the ne t alIlCJUnt of such bounty or grant shall be such amount
as the Commissioner of Customs shall from time to time
ascertain and determine, or estimate, and publish in the
Federal Register, and that the suspension of liquidations
shall terminate when the Camnissioner of Custans shall, for

the first time, ascertain, determine or estimate and publish
the net amount of such bounty or grant.

- 3 -

Before a determination 1s made COIlsideratioD will be Biven to
any relevant data, views or arguments with respect to the existence

or non-existence, and the net amount of a bounty or grant, which

are submitted in writing to the Commissioner of Customs, Bureau of
Customs, Washington, D. C., 20226, and received not later than 30
days from the date of publication of this notice in the Federal
Register.

No hearing will

(R. S. 251,

held.

sec. 303, 624, 46 Stat. 687, 759; 19

1303, 1624.)

M~1
Assistant Secretar-y of the Treasury

u.S.c. 66,

••0.·196) - 1/lS44

":if;:'

-IU ..

~PENDnr A

•

caNADA
"'UW COUNCI"

AT THE GOVERnMENT. HOUSE AT CYrTAWA
PHEBEN'l'a

HIS EXCELLENCY
THE GOVERNOR GENERAL IN CQUNCIL
His Exoellenoy tne Governor General in Oounoil,
pursuant to Seotion 22 or the Pinancial Administratlon Aot,
18 pl~a8ed hereby to order

follows, 1n aooordanoe with

the follow1ng minute or the Treasury Board,
T.B. 617086
FINANCE
lFIDUSTRY
Tne Board reoommends that Your Exoellenoy in Council
be pleased to order as follows:
ORDER
1.

(1)

In this Order,

(a) "designated period" means any followlng period, namely

(1j

(11

(iil

November
1963 to Ootober 31, 1964,
November 1, 1964 to October 31, 1965, or
November 1, 1965 to Ootober 31, 1966;

(b) "motor vehicle" means vehlo1es that, 1f imported into

Canada, would be classlfied under any of Tariff items
410a(111), 424 and 438a;
(0) "motor veh101e parts" means parts that, 1f im-

ported into Oanada, would be olassitied under any or
Tarlff items 410a(111), 424 and 438a to 438u Inclusive, and 1noludes the following motor vehiole
parte and aooessor1es, namely, ball and roller bear1ngs,
radios, heaters, d1e oastings of clno; eleotr10
ator.... .,." ••1 •• , and pute ot wh10h the o~onent

mater1al ot oh1ef value 18 wood or rubber, but
does not inolude

t1r~8

or tubes.

A reterenoe in th1~ Order to the value tor CUstoms

(2)

duty purposes or any goods shall be oonstrued as a retere~oe
to the value tor Customs duty purposes of Huch ot thoae
goods

were subJeot to CUstoms dutie. speoified in

Sohedule A to the Oustoms Tariff.

All Customs duties speoified in Schedule A to

the CUstoms Tarifr payable in respeot of the following go04a,
namel:n
Ca> motor vehioles imported or taken out ot
warehouse by a motor vehiole manufaoturer
1n Canada during any designated period, and
(b) motor veh10le parts for use as original

equipment for motor vehioles. imported or
taken out of warehouse by or on behalf ot
auoh manuraoturer during that de8ignated period,

are remitted to the extent or the

~ut1e8

so payable on suoh

part or the value ror Oustoms duty purposes ot tho.e goods aa
does not exoeed the amount (hereinafter reterred to as the
"exoess value") by whlllh
(0) the

Canad1~1

oontent value, as established to

the satisraotion pr the Minister ot National Revenue,
or motor veniol •• and motor vehiole parta exported
by suoh manutaoturer during that de.ignated period,
exoeeds

Cd) tho Canadian

oo~tent

value, as 8stab11ahe4 to

tho satisfaotion or t.he M1n1ater ot

National Revenue, ot motor Yahlclaa and
motor vehicle parts exported by such manufacturer during the period Noynmber 1, 1961
to October )1, 1962,
and where the eXCess value exceods the value for Cuatom.
duty purposes of the goode ~o imported or taken out ot
warehouse during that deSignated period, the amount ot

such excess may be added to the Canadian content value

established to the eatisfaction of the Minieter or National
Revenue, cf motor vehicles and motor vehicle parte exporta4
by such manufacturer during the immediAtely p~eced1n,
period of twelve months in determining the "amount of Cueto.e
duties specified 1n Schedule A to the CU8toms Tariff that
may be remitted under this Order or under Order in COUDoil

P.C. 1962-1/15)6 in respect of goods imported or taken
out ot

~rehou8e

during that preceding period.

For the purposes of this Order,

{a) a manufacturer 1s a motor vehicle manufacturer
in Canada during any relevant period only it
such manufacturer produces in Canada during
that period motor vehicles the total number ot
which so produced i8 not lese than forty per
cent ot the total number of motor vehicle. sold
by such manufacturer during that period;
(b)

motor vehicle parts that are produced 1n Canada
by

a parts manufacturer and exported and that

can be identified a8 being tor us. 1n the
manufacture, repair or maintenanO. ot motor
veh1cleB produced by an affiliate outs1d. Canada

of a aotor yehiole

Nanuracture~

be oOA.ldered to have

1ft Oanada

Dar

been exported b, .uoh

motor vehiole _nutacturer; and
(0)

motor vehicle part. exported tor incorporation
into

~otor

yehicle. to be shipped to Canada

shall be deemed I\ot to have beeft exported 1t
the val ue ot such parte _y be taken into

• nmiulon PQrpo,.,
acoount tor CUltcaa duty
und.r any Order other tbaD thi. order upoD
t.he nbeequent ll1P01"'Atiaa 01 .uGh

~tl •••

TREASURY DEPARTMENT

For Release After 4:00 P.M.
Thursday. May 28, 1964
Secretary Dillon Sells New
Savings Bonds to Top NASA Officials
Treasury Secretary Douglas Dillon, in a ceremony at National
Aeronautics and Space Administration headquarters, at 4:00 p.m.
today, exchanged 59 new $75 Series E Savings Bonds for the personal
checks of Administrator James E. Webb and his top officials.
The occasion highlighted NASA's current campaign as part of
the interdepartmental program to increase total federal employee
participation in the payroll savings plan. The bonds are of the
denomination which bears the portrait of former President John F.
Kennedy.
"The example that you and your key officials are setting here,
with this ceremony, is one of the most significant that we have noted
to date in our interdepartmental effort to increase the purchase
of U. S. Savings Bonds. It is matched only by the pace you have
set in developing the world's biggest and best space vehicles.
It should encourage other top Government officials to take similar
steps.
"There are approximately $47~ billion outstanding in Series
E and H Savings Bonds. This represents more than twenty percent
of the publicly held portion of the national debt. Because it
represents real savings -- savings that come out of earned income
it is a hard core of non-inflationary borrowing upon which our
debt management can rely.
It is the cornerstone upon which the
entire debt structure rests.
"I assure you that the investment of your
and your money in this project will serve as a
the American public -- just as your success in
has spurred the determination of all Americans
great journey into the future."

000

time, your talent,
special example to
our space efforts
to lead in this

TREASURY
DEPARTMENT
:

May 28, 1964
FOR IMMEDIATE RELEASE
TREASURY STATEMENT ON PRESS REPORT OF
CREDIT TO UAR

The Treasury Department today issued the following statement
in response to inquiries concerning an article in a morning
newspaper regarding an International Monetary Fund standby credit
to the United Arab Republic:
The article alleges that the agreement in question violated
the basic principles of the International Monetary Fund and was
purportedly "forced through!' the Fund by the U. S. Department of
State over
the opposition of the U. S. Treasury Department and
of other countries.
The facts are that this standby was made in the normal
couse of IMF operations.
It was negotiated over a period of
months between the management of the Fund and the United Arab
Republic and is subject to the fulfillment of a series of
financial undertakings agreed behJeen the Fund and the United
Arab Republic.
It was in no sense instigated or "forced through"
by the United States.
When the agreement was presented to the board of executive
directors by the managing director, Mr. Pierre-Paul Schweitzer,
the United States executive director took the position that since
the managing director of the Fund had carefully considered the
matter and recommended the agreement, the executive directors
should support the position of the managing director. The
U. S. executive director received his instructions from the
National Advisory Council in the usual way and there were no
differences of view between the Departments of State and
Treasury. After full consideration, th€ recommendation of the
managing director was accepted by all concerned and the standby
was adopted by the IMF board of executive directors.

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Full text of Press Releases of the United States Department of the Treasury : Volume 142

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