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LJBRARY
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f\()'~n
JUN 1 ~ 1972
TREASURY DEPARTMENT
United Sta.tes Sau."1eS Dones I~::>D.od .:!...'1d ~ec8e;:,:ad Ti1:'o\:.!;h March 31 1965
(bollar a."llounts in mi1lion3 - rOl.:,,-;ced a.."1Q -"ill not r:ecessarily add t6 totals)
Ar..Olli'1t
Issued 1/
MATUT{ED
:Series' A-1935 - D-1941 •••••••••••
Series F & 0-1941 - 19$2 •••••••••
Series J and K - 1952 ••••••••••••
~1ATURED
Series E:
21
$ $,003
29,521
400
I
J.:',Ollil:"
P..ec.ee:::sd
lL.
$ 4,992
29,427
383
A.";1ount
Outstand:l...n.g
%Out:;t:...",:one2/ or kr.t.Issucd
$ 11
94
.22
.32
4.2$
264
14.32
14.01
13.82
17
_
1941 •••••••••••••••.••••••
1.9l.a •••••••••••• '•• ~ •••••••
1943 ••••••••••••••••••••••
1944 ••••••••••••••••••••••
1945 ••••••••••••••••••••••
1946 ••••••••••••••••••••••
1941 ••••••••••••••••••••••
1948 ••••••••••••••••••••••
·1949 •••••••••••••' •••••••••
1950 ••• ~ ••••••••••••••••••
1951 ••••••••••••••••••••••
1952 ••••••••••••••••••••••
1953 ••••••••••••••••••••••
~1954 ••••••••••••••••••••••
1955 ••••••••••••••••••••••
1956 ••••••••••••••••••••••
1957 ••••••••••••••••••••••
1958 •• ~ •••••••••••••••••••
19'9 ••••••.•••••..••••••••
1960 •••••••••••••••••••• ,.
1961 ••••••••••••••••••••••
1962 ••••••••••••••••••••••
1963 ••••••••••••••••••••••
1964 •••••••••••••••••••• ~.
1965 ••••••••••••••••••••••
Unc~ssi£ied., ••••••••••••••••••
-Total Series E •••••••••••••••••
1,843
8,139
13,10.3
- 15,269
1l,962
5,386
5,082
5,241.
5,162
4,506
3,901
4,087
4,654
4,732
4,919
4,695
4,412
4,272
3,998
3,985
4,000
3,850
4,265
4,168
390
350
1,579
6,997
ll,291
13,031
-9,966
4,276
3,864
3,884
3,743
3,195
2,762
2,847
3,115
3,035
2,984
2,851
2,615
2,396
2,202
2,067
1,902
1,724
1,616
1,1l9
-
374
Series H (1952 - Jan. 1951) '}j .•.
H (Feb. 1951 - 1965) ••••••
, Total Series H•••••••••••••••••
136,370
3;670
6,682
10,353
95,43B
1,687
974
2,661
Total Series E and H•••••••••••
146,723
98,099
Series J and K (1953 - 1957) •••••
3,325
) Total matured ••••••••
IUl Sel'ieS) Total unm~tured ••••••
Grand Total ••••••••••
34,924
150,048
184,972
,
I
1,141
1,812
2,238
1,997
1,nO
1,218
1,357
1,419
1,310
1,l4O
1,239
1,538
1,697
1,935
1,8L4
1,797
1,876
1,795
1,917
2,098
2,125
2,649
3,049
390
-25
14.66
16.69
20.61
23.97
25.89
27.49
29.07
29.22
30.32
33.04
35.86
39.34
39.28
40.73
43.91
44.90
48.ll
52.45
55.19
62.11
73.15
100.00
-
40,932
1,984
5,708
7,692
85.42
74.30
48,624
33.14
2,015
lY'1,311
39.43
34, 802
100,U3
122
.35
33.28
27.06
I
30.02
54.06
~
...
InCludes accrued discount.
~rent redemution value.
At option of ~wner bonds m~y.be ha1d ~d
Will earn interest for addit:l.onal perl.ods
after original maturity da tas.
Includes matured bonds which have not been
presented tor redemption.
D4,915
49,935
50,057
BUREAU OF THE PUBLIC DEBT
Ur.itcc. S7-a".:;:; $a....,.~iC:; ;cncs :.::::...c:.:.d
2..:iC.
(Doll.:.:- J..--:1ounts i..'1 r..i1licn.:; - rcl.:..":c.:,c
2..."1'::
J.~-.ou.:-.~
Issucc 1./
?:cc:.CC':~2C 7::::-jl:~n
·,,-:..a ::ot
A.."7'.OC:;1~
; __.Ol1."lt
I
I
r:cccc~~.:;d
1965
tot.::.,ls)
l..l Ou'"~...,,,'-".
,."- ~-~Cir
2/ of kr.t.Issuc
Harch jl,
r.8cess~ly add. to
Cutst~din~
1/
,0
}l\i \]: ).:',D
$eri83 1~-1935 - D-19hl •••••••••••
Series F & G-1941 - 1952 •••••••••
Series J and K - 1952 ••••••••••••
$ 5,003
$ 4,992
29,427
383
1,843
8,139
13,103
. 15,269
1l,962
5,386
5,082
5,241
5,162
4,506
3,901
4,087
4,651,.
4,732
4,919
4,695
4,412
4,212
3,998
3,985
4,000
3,850
4,265
4,168
390
350
1,579
6,997
11,291
13,031
9,966
4,276
3,864
3,884
3,743
3,195
2,762
2,841
3,115
3,035
2,984
2,851
2,615
2,396
2,202
2,067
1,902
1,724
1,616
1,119
136,370
3,670
6,682
10,353
95,438
1,687
974
2,661
29,521
400
$
.22
.32
4.25
11
94
17
UNHATURED
Series
:i: }}
1941 ••••••••••••••••••••••
1942 ••••••••••••••••••••••
1943 ••••••••••••••••••••••
19U1 ••.•••••••••••••••••••
1945 ••••••••.•••.•••••••••
1946 •.••.•••••••••••••••••
1947 ••••••••••••••••••••••
1948 ••••••••••••••••••••••
1949 ••••••••••••••.•••••••
1950 •••••••••••••.••••••••
1951 ••••••••••••••••••••••
1952 ••••••••••••••••••••••
1953 ••••••••••••••••••••••
l195h ••••••••••••••••••••••
1955 ••••••••••••••••••••••
1956 ••••••••••••••••••••••
1957 ••••••••••••••••.•.•••
1958 ••••••••••••••••••••••
1959 ••••••••••••••••••••••
1960 •••••••••••••••••••• ,.
1961 •••••••••••••••••.••••
1962 ••••••••••••••••••••••
1963 ••••••••••••••••••••••
1964 •••••••••••••••••••• ~.
1965 ••.•••••••••••••••••••
Unclassified •.••••••••••••••••••
Total Series E•••••••••••••••••
Series H (1952 - Jan. 1957) 2/ ...
H (Feb w 1957 - 1965) ••••••
Total Series H•••••••••••••••••
Total Series E and H••••
!
~ ••
146,723
(1953 - 1957) •••••
3,325
matur e d .~ ••••••
34,924
150,048
184,,972
o •••
J
Series J and
•
All
11
~
11
W
K
"'2-1
) 1",
~Ol..l
ser~esj ~otal unm~tureQ ••••••
~,238
!
-
374
!
!
Grand Total ••••••••••
Includes ~ccrued discount.
Current redemption value.
At option of owner bonds may be held a'1d
Hill earn interest for additional periods
after original rna t1.U'i ty aD.tes •
Includes matured bonds which have not been
presented for redemption.
98,099
2,015
34,802
100,113
134,915
11.32
14.01
13.82
11.66
16.69
20.61
23.97
25.89
27.49
29.07
29.22
30.32
33.04
35.86
39.34
39.28
40.73
43.91
264
1,141
1,812
!
1,997
1,nO
1,218
1,357
1,419
1,310
1,140
1,239
1,538
1,697
1,935
1,844
1,797
1,876
1,195
1,917
2,098
2,125
2,649
3,049
390
-25
44.90
48.11
52.45
55.19
62.11
73.15
100.00
-
40,932
1,984
5,708
7,692
30.02
54.06
85.42
74.30
I 48,624
! W 1,311
33.14
I
122
49,935
50,057
I
39.43
.35
33.28
27.06
BUREAU OF THE PUBLIC DEBT
~
UnitGd States SaVinGS Bends Is ::;ucd
(D o:.lar a."':lOll."'lts in mi1lion:3 - rOl.!.."1cied
d.....'
-l
4\~c.C!c;::e~
""c.
II
t
a:. h~
!lO
Ti.rot:gn April 30 1965
a:"1,
'
r.ecessarily add to
totals)
~ Out ..<.+~,,-;'.7.;n;v~
~ft]T~~D~~~~-----------------t~~~~~-1~~~o~e~e~~,~~d~l~~~~Out~s~t~an~din~·~tgL12~/20f~A~~jlt~.iIs~s~u~C~dL
Series L-1935 - D-19LIl. •••••••••••
5,003
4,992
11
.22
S~ries F & G-1941 - 1952 •••••••••
29,521
29,430
Ar..Ount./
Issued
1
Series J and K - 1952 ••••••••••••
~mATURED
:S6ries E:
J...r:WUl1t
P,"
I
400
385
1,843
8,142
13,llO
, 15,272
11,967
5,389
5,085
5,245
5,166
4,509
3,905
4,090
4,658
4,737
4,927
4,701
1,581
7,006
11,306
13,050
9,982
4,283
3,872
3,893
3,752
3,204
2,770
2,856
3,128
3,052
4,278
4,004
3,991
4,007
3,856
2,407
2,215
2,079
1,920
1,741
1,643
1,220
38
391
Amount
I
\ I ,-
............
91
15
.31
3.75
263
1,136
1,805
2,222
1,985
1,106
1,213
1,352
lh.27
13.95
13.77
21
1941 •••••••••••••••..•••••
1942 ••••••••••••••••••••••
1943 ••••••••••••••••••••••
19~11. ...................... .
19L5 ••••••••••••••••••••••
1946 ••••••••••••••••••••••
194~, ..................... .
1948 ••••••••••••••••••••••
19k9 ••••••••••••••••••••••
c .-, • • • • • • • • • • • • • • • • • • • • • •
19 :,Ju
1951 ••••••••••••••••••••••
1952 ••••••••••••••••••••••
1953 ••••••••••••••••••••••
195L ••••••••••••••••••••••
1955
••••••••••••••••••••••
"-'
19~b ••••••••••••••••••••••
1957 ••••••••••••••••••••••
1958 •• ~ •••••••••••••••••••
1959 ••••••••••••••••••••••
1960 •••••••••••••••••••• ,.
1961 ••••••••••••••••••••••
1962 ••••••••••••••••••••••
1963 ••••••••••••••••••••••
1964 ••••••••••••••••••••••
1965 •••••••••••••••• ~.v
.. .
Jncl<lssif:"ed., ..... ~ ...................... ..
Total Series E .....................
4,L~18
4,274
4,179
747
341
1,413
1,305
1,135
1,234
1,530
1,685
1,924'
1,840
1,792
1,872
1,788
1,912
2,087
2,1l5
2,630
2,960
709
-50
3,003
2,861
2,626
I
14.55
16.59
20.52
23.85
25.78
27.35
28.94
29.07
_30.17
32.85
35.57
39.05
39.14
40.56
43.76
Uh.66
47.91
52.08
54.85
61.53
70.83
94.91
'-----I-------+-------4-----95,879
40~962
1,·(Ob
1,904
Total Series H•••••••••••••••••
6,734
10,404
991
2,697
5,743
7,707
74.08
Total Series E and H •••••••••••
147,245
98,576
48,669
33.05
(1953 - 1957) •••••
),3 27
2,037
1,289
38.14
. . ) Total matured ••••••••
34,924
150,572
185,496
34,807
100,613
135,420
117
49,958
SO,075
33.18
eries H (1952 - Jan.. 1957)
'J/...
H (Feb. 1957 - 1965) ••••••
ieries J and K
t
U Serl.9S
-
Total unmstured ••••••
Grand Total ••••••••••
1
136~841
3,670
Includes accrued discount.
~rent redemution value ..
At option of ~wner bonds may be held and
\lill earn interest for additional periods
after original maturity dates.
Includes matured bonds which have not been
~hented for redempt1on~
y
29.93
53.51
85.28
.34
27.00
BUREAU OF THE PUBLIC DEBT
i.]:1i tee. S-::.a,,,es SavinGs
:acnes
I~ :;;\1cd
2.:,e.
:\ecc:c:::ec T;:rot:.:;n
April
30, 1965
(Do::..J.~ a::1.ol.4..'1ts in million:J _ rot:.r.cied a;1C -,.;ill :-:ot r:ecessarily add to totJ.ls)
A~.o\illt
Issued.
-~--
~-: .. r~. ;;~
I,
2/ of
~~t.Issuod
11
91
15
.22
.31
3.75
1,843
8,142
13,1l0
. 15,272
11,967
5,389
5,OB5
5,245
5,166
4,509
3,905
4,090
4,658
4,731
4,927
4,701
4,h18
4,278
4,004
3,991
4,007
3,856
4,274
4,179
747
341
1,581
7,006
11,306
13,050
9,982
4,283
3,87 2
3,893
3,752
3,204
2,770
2,856
3,128
3,052
3,003
2,861
2,626
2,407
2,215
2,079
1,920
1,741
1,643
1,220
38
391
263
1,136
1,805
2,222
1,985
1,106
1,213
1,352
1,413
1,305
1,135
1,234
1,530
1,685
1,924
1,840
1,792
1,872
1,788
1,912
2,087
2,1l5
2,630
2,960
709
-50
14.27
13.95
13.77
14.55
16.59
20.52
23.85
25.78
27.35
28.94
29.07
_30.17
32.85
35.57
39.05
39.14
40.56
43.76
136~841
Total Series H •••••••••••••••••
95,879
1,700
991
2,697
40~962
3,670
6,734
10,404
1,%4
5,743
7,707
29.93
53.51
85.28
74.08
Total Series E and H •••••••••••
147,245
98,576
48,669
33.05
(1953 - 1957) •••••
3,)27
2,037
W 1,289
38.74
) Total matured ••••••••
Total unm.:;,tured ......
Gra~d Total ••••••••••
34,924
150,572
185,496
34,807
100,613
135,420
117
49,958
50,075
.34
33.18
27.00
2/
1941 .•••••••••••••••••••••
19 L..2 ••••••••••••••••••••••
1943 ••••••••••••••••••••••
19l1~ ••••••••••••••••••••••
1945 •••••.....•.••••••••••
1946 ••••.•••••••••••••••••
1947 ••••••••••••• " ••••••••
1948 ••••••••••••••••••••••
19L9 •••••••.•.••••••••••••
1950 ••••••••••••••••••••••
19,1 ..............•..•••••
1552 ••••••••••••••••••••••
1953 ••••••••••••••••••••••
195~ ••••••••••••••••••••••
1955 ••••••••••••••••••••••
1956 ••••••••.•••••••••••••
1957 ••••••••••••••••••••••
1958 ••••••••••••••••••••••
1959 ••••••••••••••••••••••
1960 •••••••••••••••••••• ,.
1961 ••••••••••••••••••••••
19u2 ••••••••••••••••••••••
1963 ••••••••••••••••••••••
1964 •••••••••••••••••••• ~.
1965 •..••••.•••••••• _._ •••
"Jncl<:J.ssif:"ed~ .•
Total Series
er~es H (1952
H (Feb.
Series J andK
A.ll SerieS
11
Cutstandin~
4,992
29,430
385
UU}1ATURED
Series £:
21
1/
5,003
29,521
400
L-1935 - D-19LO- •••••••••••
Series F & G-1941 - 1952 •••••••••
Series J and K - 1952 ••••••••••••
~
P..ecee::-.ed
" .... ~ •••• v
E~
~
••• e ••
••••••••••••••••
- Jan. 1957) "}) •••
1957 - 1965) ••••••
I
,
I:1cluc.cs
I
Uh.66
47.91
52.08
54.85
61.53
10.83
94.91
-
"CO
<-ccr,",~a
Cisco\illt.
Current redemption value.
At option of owner bonds may be held and
\-rill earn interest for additional periods
after original maturity dates.
Includes rr~tured bonds which have not been
~
presented for redemption.
-
%Out~t~Cine
J~
S8F..1.CS
,~/
1/
Arr.ount
;:'~OW1t
BUREAU OF THE PUBLIC DEBT
TREASURY DEPARTMENT
?OR REU:A:-,S A .:~. N'0"'WSPAPEES,
April 5, 1965
i'uesday, AprU 6, 1965.
RESULTS OF TREASURY'3 vrEE:<:LY BILL OFFERING
TIle Treasury Department announced last evenine that the tenders for two series of
Treasury bills, one sei~ies to be an additional issue of the bills dated January 7, 1965, a
the other series to be dated April 8, 1965, which were offered on March 31, were opened
at the Federal Reserve Banks on April 5. Tenders were invited for $1,200,000,000, or
thereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 182-day bills.
The details of the two series are as follows:
RA~JGS OF ACCEPT~D
COHPETtTIVS BI DS :
High
Low
Average
182-day Treasury bills
maturing October 7, 1965
Approx. Equiv.
Annual Rate
Price
3.988%
97.984
97.980
3.996%
97.981
3.993%
91-day Treasury bills
maturing July 8, 1965
Approx. Equiv.
Price
Annual Rate
99.007
3.928;b
99.002
3.948~
3.942:;
99.004
y
!I
43 percent of the amount of 91-day bills bid for at the low price was accepted
50 percent of the amount of l82-day bills bid for at the low price was accepted
TOTAL
-
APPLIF.:D FOR AND ACC":?TED BY
F~~DEAA1
RESL-N"C: DISnUCrS:
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Applied For
$" 32,635,000
1, tt80, 997 ,000
23,971,000
32,719,000
15,642,000
41,191,000
275,167,000
38,932,000
17,164,000
35,321,000
29,175,000
257 z 766 z000
Accepted
:;:
;p
22,310,800
706,877,000
10,971,000
27,719,000
15,380,000
31,067,000
120, )ili2, 000
TOTALS
$2,280,680,000
$1,201,801,000
al
hi
II
T~NDr.::iS
31,~63,000
11,024,000
31,239,000
22,035,000
171,274,000
Applied For
26,866,000
1,475,087,000
14,502,000
54,575,000
5,806,000
29,666,000
337,484,000
17,838,000
8,937,000
13,i.J.57,000
11,216,000
192,498,000
~I 82,187,932,000
$
Accepted
$ 11,366,000
695,577,000
7,352,000
15,175,000
5,006,000
16,536,000
94,599,000
13,488,000
3,937,000
9,762,000
6,216,000
122,153,000
$1,001,167,000
Includes $242,920,000 noncompetitive tenders accepted at the average price of 99.004
Includes $96,765,000 noncompetitive tenders accepted at the average price of 97.981
On a cou?on issue of the same length and for the same amount invested, the return on
these bills would provide yields of 4.01.lb, for the 91-day bills, and 4.13%, 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.
Tn contrast, yields on certificates, notes, and bonds are computed in terms of
interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semi-annual.
compounding if more than one coupon period is involved.
?-l
- 4 international accounts into balance.
This is the course already clearly laid out in the
President's economic program for this year.
AN
-reduction planned for mid-year is but
~k,'--
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ano t lreJ illustration
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The excise tax
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Coming in £equenee after the liberalization of depreciation
and the enactment of the investment credit of 1962 and the
income tax cut of 1964, it underscores a wi11inguess to use
fiscal policy -- and tax reduction in particular -- as a more
effective and flexible instrument for sustaining our economic
&L
gro'itJch-by
burdensome~discriminatory
j\
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J
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privz.te sector \Yhile/~lacL.lg
Government expenditures.
/'r~ ~
Shdi.=P
taxes from the
c. t= Ft:'" Till i!
limits &n increases ::':..1
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-
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halpil'1g-achieve-narional economic goals, ~phtees t-he..::main..
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Achieving the proper mix of
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at=') 5. t=' \J ... I-.'{
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~APoliciesAis
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vital to
u· T H--e...
responsibili ties of the Treasury. ~r
financ-ial-and----t:tscal-vr(J~ai11s-;
fOI
~ppJ- opriaEe
our--i.nternational monetary
'tel a.-ions., ar.dEar --the--defense of- our-gold- and the stability
.of - the dollar.
The contributions of my predecessor and the able
staff-which he gathered -about him-- and which I have happily
in- good---measure-inherited------ toward--~eveloping---an effective ne~¥
mix -i.:ure--of i:i scal,--rrronet-ar'y-,-- and--de.bt-management- policies __ attun-;;d
EKI
as :t see
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w)
<:::
1 J;" ' -
lies in carrying forward the main lines of t~
?olicies, ~~rther sharpening the tools we have developed) aud
R.:~~ ~Nr
lessons
we have learned inJ~~ year~
a pt he
p
ly
ing'
;...\ t(\- r= S 1\'
D~f'-'II:;-<)f{'::" ~ C d N.o ~II t.
and~ringing our
cc .:he tasks of sustaining ourj\IDomentum ai
?~:~ently
- 2 -
[Bt"...!.:,,~""'1:,=o:a"E:'-have flO e Chi1II<:..edJ f[Second,
a
~~~~r
I do feel and hear
~ND \IV e LLll 1""1 E
nnd more insistentAemphasis on the fact that the$e
~ &\AA.. ~\X~,£L-l
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challenges and opportunities/,arise in large part out of the
inherent dynamics of our free market system, as it ceaselessly
changes and grows, and they can and must be met in that same
Third, there is a considerable consenSUb on the fact that
Government has an a':=firmative role, namely, a respol1.sibility
for helping to shape a fiscal and financial environm~nt in which
business cs~ flourish, and in which the collective energies of
business, labor, and Government can be applied to the achievement
o~.c
~
"/'1>,"",
t . t·........-+
.:
-t 0 my
these goal..s.if.t<ourtl,In-·
lo\..en.Lng-
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,..,.-l·1~ g ues
,-U.c_",a
a feet'
Ead
your Conference been but a week earlier, I might
have found myself on the other side of this platform, among
the quos tioners.
~ :}he passage of a week t s tim<'! and the
chanGe in seating arrangements are hardly enough to alter my
basic role in your session.
So I
~ count~
it a privilege
f~
to lis i':en and learn"'Lfrom GarcinerAel"ley J Ja04--eon'ler ~nc1th-=-----,-11=O;::r.']\·J~p.....
rWlems
and policies
.
,.
. . he
arl.-sen---<'tUl'l.il2,
my--11
--mont h -- " vaca t··".t:
Lon- ·-----J..rom·--~
~
"
~_tv8n
a rec'-.:.-.....:ly returned sojourner from .JrivaL:,~ li~-.-
may be pc . . .. .::.\.: ....:2G .;,. few gen·c:ral observations.
First, th.:.. :La:.:: - ..• a..l
economic go.:::.l;:; r2~erreG to haVe the same far.liliar r:..~~~ ~L.? (U~
did Hhen I left the Treasury;
.t\
1--
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sustained grmvth
f£'ee
:.Z:i"Oiii ::"i-b.':>
TREASURY DEPARTMENT
Washington
FOR RELEASE:
UPON DELIVERY
REMARKS BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE
THE WASHINGTON CONFERENCE OF
THE ADVERTISING COUNCIL
TUESDAY, APRIL 6, 1965, 12:15 P.M., EDT.
Had your Conference been but a week earlier, I might have
found myself on the other side of this platform, among the
questioners. The passage of a week's time and the change in seating
arrangements are hardly enough to alter my basic role in your
session.
So I count it a privilege to listen and learn.
But even a recently returned sojourner from private life may
be permitted a few general observations.
First, the national
economic goals referred to have the same familiar ring as they did
when I left the Treasury twelve months ago.
Second, I do feel and hear a more insistent and welcome
emphasis on the fact that the challenges and opportunities in our
national economy arise in large part out of the inherent dynamics
of our free market system, as it ceaselessly changes and grows,
and they can and must be met in that same framework.
Third, there is a considerable consensus on the fact that
Government has an affirmative role, namely, a responsibility for
helping to shape a fiscal and financial environment in which
business can flourish, and in which the collective energies of
business, labor, and Government can be applied to the achievement
of these goals.
Achieving the proper mix of economic policies -- both fiscal and
monetary -- is vital to successfuly meeting the responsibilities
of the Treasury. The proper course ahead, as I see it, lies in
carrying forward the main lines of existing policies, further
sharpening the tools we have developed, and patiently applying the
lessons we have learned in recent years to the tasks of sustaining
our domestic economic momentum and at the same time bringing our
international accounts into balance.
F-2
- 2 This is the course already clearly laid out in the President's
economic program for this year. The excise tax reduction planned
for mid-year is an excellent illustration of the creative
application of economic experience to maintain a healthy and
balanced expansion.
Coming so soon after the liberalization of depreciation and
the enactment of the investment credit of 1962 and the income tax
cut of 1964, it underscores a willingness to use fiscal policy -and tax reduction in particular -- as a more effective and
flexible instrument for sustaining our economic growth-by lifting
burdensome or discriminatory taxes from the private sector while
keeping sensible and effective limits on increases in Government
expenditures.
Recent events abroad have made it plain for all to see that the
international stability and standing of the dollar is not only a
matter of concern to world business and trade, but also directly
affects our national security and our capacity for effective
diplomatic action throughout the world. A strong currency is
an essential underpinning for worldwide responsibilities, and
we cannot -- and we will not fail in the job of keeping the dollar
strong.
This determination to balance our international accounts is
an essential prerequisite to the successful negotiation of a
sound modification of the international monetary system to adapt
it to the changing requirements of an expanding Free World
economy.
The intensified balance of payments program announced by the
President in February is already yielding good results.
But
much more remains to be done before we can claim success -- for
we need results not onlv this month, or through the spring and
summer, but for the months and years ahead.
Sometimes we hear the complaint that the new elements in our
total balance of payments program -- the voluntary efforts of
business and financial institutions to achieve savings through
their own operations -- represent no fundamental solution.
Instead, some have suggested that we should, in effect don
a protective shell of tight direct controls -- or accept instead
the risks and hazards for our domestic economy that would come
from applying a hard brake to credit expansion.
I share none of
that skepticism. American business, I am confident, will not
relax its early response to the President's call for cooperation
with the first sign of success.
- 3 But, I am equally certain that this kind of voluntary program
cannot, and should not, be looked upon as a permanent solution.
The
clear need remains to make our own economy even more competitive
in world markets and to encourage capital flows into the
United States. Nor can we relax our efforts to economize in
dollar outlays for defense and aid abroad. And perhaps even more
important, we cannot escape the complex and difficult task -- a
task that must be shared by our European friends -- of attacking
at its roots the basic source of the disequilibrium in world
capital markets.
That is the fundamental approach that has motivated the
entire balance of payments effort since 1961. Moreover our
unequalled record of price stability and sustained advances in
productivity are beginning to payoff in a rising trade balance.
Substantial economies in Government spending abroad have been
achieved.
The investment climate in the United States has vastly
improved, with the result that greater outlets are developing at
home to absorb our vast savings. And there are encouraging signs
that Europeans more clearly recognize, and are beginning to deal
with, deficiencies in their own capital markets.
The fact that an extraordinary flow of capital abroad could
undermine our progress last year -- and that ~he President was
compelled to ask for special efforts to curb that outflow -is evidence enough that our progress is still incomplete.
But, as
I take up my new responsibilities, I do so in confidence that the
main elements in our program are sound, and that business and
Government and all the people of our nation working together have
both the capacity and will to achieve our national objectives at
home and abroad.
000
- 2 -
covered by the new Executive Order has progressed to the point where
its borrowers should not be in a privileged position in the acquisition
of capital in the United States. Each is experiencing satisfactory
domestic economic growth, and each has relatively large international
resources to draw upon if it requires additional resources. Kuwait
has become a net exporter of capital. The other four, in addition
to their own domestic capital resources, have access to the capital
markets of Europe.
000
TREASURY DEPARTMENT
(
FOR IMMEDIATE RELEASE:
THE BAHAMAS, BERMUDA, IRELAND, KUWAIT AND PORTUGAL
TO BE MADE SUBJECT TO INTEREST EQUALIZATION TAX
The President today notified the Congress that on or shortly
after May 6, 1965, he intends to issue an Executive Order terminating
the "less developed" designation of the Bahamas, Bermuda, Ireland,
Kuwait and Portugal for purposes of the Interest Equalization Tax.
The President's action will have the effect of applying the
Interest Equalization Tax to purchases by U. S. citizens from
foreigners of stock and debt obligations originating from the three
countries and the Bahamas and Bermuda which are currently exempt from
the tax. All such purchases made after the date of the Executive
Order will be subject to the Tax, except those for which firm written
commitments existed prior to today.
The Interest Equalization Tax has been applied to the
acquisitions of various foreign securities by U. S. citizens since
July 18, 1963. The Tax is designed to help curb the outflow of
capital from the United States, which has been a major factor contributing to this country's adverse balance of payments position. The Tax
does not apply to stock and debt obligations issued by countries
which, for the purpose of this Tax, are determined to be "less
developed countries," and by certain corporations and residents of
such countries.
The Interest Equalization Tax law authorizes the President to
expand the list of countries considered not to be "less deve1oped,"
so that the application of the Tax can be adjusted to reflect economic
development in different parts of the world. When such changes are
to be made, however, Congress must be given 30 days advance notice.
In connection with the intensified balance of payments program
announced by President Johnson on February 10, 1965, the Administration
has reviewed the list of Illess developed countries" currently exempt
from the Tax. The review showed that each of the five areas to be
F-3
(OVER)
TREASURY DEPARTMENT
April 6, 1965
FOR IMMEDIATE RELEASE:
THE BAHAMAS, BERMUDA, IRELAND, KUWAIT AND PORTUGAL
TO BE MADE SUBJECT TO INTEREST EQUALIZATION TAX
The President today notified the Congress that on or shortly
after May 6, 1965, he intends to issue an Executive Order te~inatin~
the "less developed" designation of the Bahamas, Bermuda, Ireland,
Kuwait and Portugal for purposes of the Interest Equalization Tax.
The President's action will have the effect of applying the
Interest Equalization Tax to purchases by U. S. citizens from
foreigners of stock and debt obligations originating from the three
countries and the Bahamas and Bermuda which are currently exempt fro~
the tax. All such purchases made after the date of the Executive
Order will be subject to the Tax, except those for which firm written
commitments existed prior to today.
The Interest Equalization Tax has been applied to the
acquisitions of various foreign securities by U. S. citizens since
July 18, 1963. The Tax is designed to help curb the outflow of
capital from the United States, which has been a major factor contrib
ing to this country's adverse balance of payments position. The Tax
does not apply to stock and debt obligations issued by countries
which, for the purpose of this Tax, are determined to be "less
developed countries," and by certain corporations and residents of
such countries.
The Interest Equalization Tax law authorizes the President to
expand the list of countries considered not to be "less developed,"
so that the application of the Tax can be adjusted to reflect economi<
development in different parts of the world. When such changes are
to be made, however, Congress must be given 30 days advance notice.
In connection with the intensified balance of payments program
announced by President Johnson on February 10, 1965, the Administratic
has reviewed the list of "less developed countries" currently exempt
from the Tax. The review showed that each of the five areas to be
F-3
(OVER)
- 2 -
covered by the new Executive Order has progressed to the paint where
its borrowers should not be in a privileged position in the acquisition
of capital in the United States. Each is experiencing satisfactory
domestic economic growth, and each has relatively large international
resources to draw upon if it requires additional resources. Kuwait
has become a net exporter of capital. The other four, in addition
to their own domestic capital resources, have access to the capital
urkets of Eurone.
000
TREASURY DEPARTMENT
April 7, 1965
FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN MARCH
During Merch 1965, market transactions in
direct and guaranteed securities of the government
for Treasury inv8stment and other accounts resulted
in net purchases by the Treasury Department of
$83,189,050.00.
000
F-4
TREASURY DEPARTMENT
April 7, 1965
FOR IMMEDIATE REIEASE
TREASURY MARKET TRANSACTIONS IN MARCH
During March 1965, market transactions in
direct and guaranteed securities of the government
for Treasury investment and other accounts resulted
in net purchases by the Treasury Department of
$83,189,050.00.
000
F-4
- :3 -
and exchange tenders will receive equal treatment.
Cash adjustments will be made
for differences between the par value of maturing bills accepted in exchange and
the issue price of the new bills.
The income derived from Treasury bills, whether interest or gain from the sale
or other disposition of the bills, does not have any exemption, as such, and loss
tram 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 retum 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.
Fractions may not be used.
It is urged that tenders
be made on the printed forms and forwarded in the special envelopes which will
be supplied by Federal Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of customers
provided the names of the customers are set forth in such tenders.
others than
banking institutions will not be permitted to submit tenders except for their
own account.
Tenders will be received without deposit from incorporated banks
and trust companies and from responsible and recognized dealers in investment
securities.
Tenders from others must be accompanied by payment of 2 percent of
the face amount of Treasury bills applied for, unless the tenders are accompanied
by an express guaranty of payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public announcement will be made
by the Treasury Department of the amount and price range of accepted bids.
Those
submitting tenders will be advised of the acceptance or rejection thereof.
The
Secretary of the Treasury expressly reserves the right to accept or reject any
or all tenders, in whole or in part, and his action in any such respect shall
be final.
Subject to these reservations, noncompetitive tenders for each issue
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
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 15,
(16)
1965
, in cash or other immediately available funds or in a like face
amount of Treasury bllls maturing _____..:.:A=::p=-rl=-l~lS~,~l.:..:.9.:..:.65-=-------
fH}
Cash
TREASURY DEPARTMENT
Washington
_eeeesaeooeeese(
FOR IMMEDIATE RELEASE,
Apri 1 7, 1965
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
ffl
cash and in exchange for Treasury bills matvring
of $ 2,104
¥Jf'
000
df!
April
1965
, in the amount
, as follows:
91-day bills (to maturity date) to be issued
=t5f
,or thereabouts, for
in the amount of $1,200~,OOO
W-
, or therea.bouts, represent-
ing an additional amount of bills dated
and to mature
July 15, 1965
,
April 15, 1965
J~nU~4,
1965
,
,originally issued in the .
Ofijf
amount of $1,001,067,000 , the additional and original bills
"fl#
to be freely interchangeable.
182 -day bills, for $1,000,000,000
tnl
April 15, 1965
,or thereabouts, to be dated
t42+-
, and to mature
fl%)
October 14, 1965
•
tfit
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 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).
~nders
clOSing hour,
will be received a.t Federal Reserve Banks and Branches up to the
on~-thirty
p.m., Eastern Standard time,
Monday, April 12, 1965
f45f
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
TREASURY DEPARTMENT
FOR
I~ITDIATE
RELEASE
April 7, 1965
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 15,1965,
in the amount of
$2,104,117,000, as follows:
91-day bills (to maturity date) to be issued
in the amount of $1,200,000,000, or thereabouts,
additional amount of bills dated January 14,1965,
mature July 15, 1965,
originally issued in the
$1,001,067,000, the additional and original bills
interchangeable.
April 15, 1965,
representing an
and to
amount of
to be freely
182-day bills, for $1,000,000,000, or thereabouts, to be dated
April 15,1965,
and to mature October 14, 1965.
The bills of both series will be issued on a discount basiS under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be issued in bearer form 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 lL, 1965.
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.
F-5
- 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
a~ount and ~rice range of accepted bids. Those submitting tenders
wLll be advLsed of the acceptance or rejection thereof. The
Se:retary 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 each issue for $200 000 or less without
stated price from anyone bidder will be accep~ed 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
Res:rve Banks on April 15,1965.
in cash or other immediately
avaLI~ble fun~s or in a like face amount of Treasury bills
matur1ng AprL1 15,1965.
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, aB 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
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY DECISION ON APPLE JUICE
UNDER THE ANTIDUMPING PeT
The Treasury Department has determined that apple juice from
Canada, manufactured by SWl-Rype Products Ltd., Ke1owna, B. C.,
Canada, is not being, nor likely to be, sold in the United States
at less than fair value within the meaning of the Antidumping Act.
This action is being taken pursuant to a "Notice of Intent to Discontinue Investigation and to Make Determination That No 3ales Exist
Below Fair Value," published in the Federal Register on February 16,
1965, because of termination of sales with respect to apple juice
imported from Canada, manufactured by Sun-Rype Products Ltd., Kelmm.a,
B. C., Canada, and that such fact is considered to be evidence that
there are not, and are not likely to be, sales below fair value.
No persuasive evidence or argument to the contrary was presented
within 30 days of the publication of the above-mentioned notice in the
Federal Register.
Appraising officers are being instructed to proceed with the ap. praisement of this merchandise from canada without regard to any question of dumping.
The dollar value of imports of the involved merchandise received
during the period December 1, 1963, through August 1964 was approximately $252,000.
No importations were reported for the period sub-
sequent to August 1964.
TREASURY DEPARTMENT
WASHINGTON.
April 8, 1965
FOR IMMEDI.ATE RELEASE
TREASURY DECISION ON APPLE JUICE
UNDER THE ANTIDUMPDiG ACT
The Treasury Department has determined that apple juice from
Canada, manu:factured by SWl-Rype Products Ltd., Kelowna, B. C.,
Canada, is not being, nor likely to be, sold in the United States
at less than fair value within the meaning of the Antidumping Act.
This action is being taken pursuant to a "Notice of Intent to Discontinue Investigation and to Make Determination That No Sales Exist
Below Fair Value," published in the Federal Register on February 16,
1965, becnuse of termination of sales with respect to apple juice
imported from Canada, manufactured by Sun-Rype Products Ltd., Kelowna,
B. C., Canada, and that such fact is considered to be evidence that
there are not, and are not likely to be, sales below fair value.
No persuasive evidence or argument to the contrary was presented
within 30 days of the publication of the above-mentioned notice in the
Federal Register.
Appraising officers are being instructed to proceed with the appraisement of this merchandise from Canada without regard. to any question of dumping.
The dollar value of imports of the involved merchandise received
during the period December 1, 1963, through August 1964 was approximately $252,000.
No importations were reported for the period sub-
sequent to August 1964.
TREASURY DEPARTMENT
FOR IMMEDIATE REIEASE
WITHHOLDING OF APPRAISEMENT ON
BRAKE DRUMS
The Treasury Department is instructing customs field officers to
withhold appraisement of brake drums from Canada, manufactured by AtomOtive Products Co., Rexdale, Ontario, Canada, pending a determination
as to whether this merchandise is being sold at less than fair value
within the meaning of the Antidumping Act, 1921, as amended.
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 info~tion alleging that the merchandise under consideration
was being sold at less than fair value within the meaning of the Antidumping Act was received in proper form on August 24, 1964.
The in-
formation was submitted by Biggs, Hensley, Hughes, Curtis and Biggs,
St. louiS, Missouri, on behalf of Century Foundry.
The dollar value of imports received during the period August
1964 to date was approximately $100,000.
TREASURY DEPARTMENT
April 8, 1965
FOR IMMEDIA'm REIEASE
WITIlliOIDING OF APPRAISEMENT ON
BRAKE DRUMS
The Treasury Department is instructing customs field officers to
withhold appraisement of brake drums from Canada, manufactured by Atomoti ve Products Co., Rexdale, Ontario, Canada, pending a determination
as to whether this merchandise is being sold at less than fair value
within the meaning of the Antidumping Act, 1921, as amended.
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 ahown to
justify a finding of dumping under the law.
The information alleging that the merchandise under consideration
was being sold at less than fair value within the meaning of the Antidumping Act was received in proper form on August 24,
1964. The in-
formation was submitted by Biggs, Hensley, Hughes, Curtis and Biggs,
St. louis, Missouri, on behalf of Century Foundry.
The dollar value of imports received during the period August
1964 to date was apprOximately $100,000.
- 4 ...
of the rest of the Free
~Jorld
in the next few years.
this task with an open mind and
Ii
1 approach
willingness to study all practicable
propoaala.
000
Ou¥ det~taatlOD to keep the dollar Itrong ia an e ••ential
......q1I1a1te to the .\leee•• ful negotiatioo of • aouncl ,.~d'fi"'i_"
. . CIl4l iatematlonal monetary system to adapt it to the changing
requirements of an expanding free world economy.
ltaDding still amidst changing conditions.
lIle have not been
Discussions have been
takiDg place among international experts seeking. for example, to
evaluate various pos8ibilities of supplementing the mean. of
international payments when supplies of dollars abroad prove thin.
ADd th•• e studies are in any case an essential forerunner of any
qreement on the path that ought to be taken.
Like Secretary Dillon before me, I think the greatest challenge
1D this area is to work out a steadily improving international
~t.ry system.so .s to facilitate a continuing expansion of trade
ID4 economic development in the EYee .'lorld.
That, I believe, is
the major ta.k facing our Treasury and the financial authorities
- 2 lapr••• ion abroad.
But we must remember that our position depends
upoa our ability to eel1 enough of our products in competitive
vorl. markets to eCVer both our imports and our other public
private outpayment8.
and
We 1DU8t continue to .creen carefully dollar
.,..ltures abroad on government account.
If we can attract
fontcn capital and foreign tour lata , this will help.
1ft addition J
with our European friends, we will need to develop the lasting
....-r.
to the maYked difference8 between our own large supplies
of captt:al for investment and the deficiencies that appear in
..rope aad exert their attraction on American funds.
The aucee.8 of our program, alOllS with the promis. of the
~e offered the British position by measures announced in
tlle bud&ee last Tuesday will, in gt'owltt8 degree, provide grounds
for taeres.elngly frui.tful diaeussions of the 1nteTnatlonal payments
For Immediate Releaae
REMARKS OF THE HONORABLE HENRY H. FO~R
SECRETARY OF THE TREASURY
AT A MElTING OF TIlE CABINET
THE WHITE HOUSE
THURSDAY, APRIL 8, 1965, 1:30 P.M.
Day by day, it t. beeo.1na increa.ingly clear that our
aatlODal ••curity and our capacity for effective diplomatic action
tl\r-'pout the world are 4irectly relateet to the 8trength of our
c:ureocy.
A
scrona
eurrency i . an . .nnt1al Uftclerpirmina for our
wocldw1de reaponaibilitie••
We are, therefore, cleterm1Ded to k ••p the clollar .trong by
_1_1111 our lntematioaal accounts.
Our Balarace of Payments
progr_ 1. proving very succ••• ful -- and I am fully confident
tltat dua meaaur. . adopted will continue to do the job a. 10R1 aa
we need tbeIa.
We have been gratified "lth the response of the America
f1...eial and. bueine8s community t and we have adteved a favorable
FOR IMMEDIATE RELEASE
REMARKS OF THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
AT A MEETING OF THE CABINET
THE WHITE HOUSE
THURSDAY, APRIL 8, 1965, 1:30 P.M.
Day by day, it is becoming increasingly clear
security and our capacity for effective diplomatic
out the world are directly related to the strength
A strong currency is an essential underpinning for
responsibilities.
that our national
action throughof our currency.
our worldwide
We are, therefore, determined to keep the dollar strong by
halancing our international accounts.
Our Balance of Payments
program is proving very successful
and I am fully confident that
the measures adopted will continue to do the job as long as we
need them.
We have been gratified with the response of the American
financial and business community, and we have achieved a favorable
impression abroad.
But we must remember that our position depends
upon our ability to sell enough of our products in competitive
world markets to cover both our imports and our other public and
private outpayments. We must continue to screen carefully dollar
expenditures abroad on government account.
If we can attract
foreign capital and foreign tourists, this will help.
In addition,
with our European friends, we will need to develop the lasting
answers to the marked differences between our own large supplies
of capital for investment and the deficiencies that appear in
Europe and exert their attraction on American funds.
The success of our program, along with the promise of the
improvement offered the British position by measures announced in
the budget last Tuesday will, in growing degree, provide grounds
for increasingly fruitful discussions of the international payments
system.
F-6
- 2 Our determination to keep the dollar strong is an essential
prerequisite to the successful negotiation of sound improvements
in the international monetary system to adapt it to the changing
requirements of an expanding free world economy. We have not been
standing still amidst changing conditions.
Discussions have been
taking place among international experts seeking, for example, to
evaluate various possibilities of supplementing the means of
international payments when supplies of dollars abroad prove thin
And these studies are in any case an essential forerunner of any
agreement on the path that ought to be taken.
Like Secretary Dillon before me, I think the greatest challenge
in this area is to work out a steadily improving international
monetary system, so as to facilitate a continuing expansion of
trade and economic development in the Free World.
That, I believe,
is the major task facing our Treasury and the financial authorities
of the rest of the Free World in the next few years.
I approach
this task with an open mind and a willingness to study all
practicable proposals.
000
il.K ; I. '-.
_
..
c-
?url:' c"
Revision of the income tax conve~tion between the United States
and the United Kingdom is expected to be initiated in the near future in
the light of the fundamental changes in the British tax system which have
been announced in the U.K. Budget :Message, the Treasury stated today.
Under the existing income tax convention) the tax treatment of
dividends flowing betvreen the two countries is predicated on a British
tax system under which the corporate
of the shareholder.
tax covers the income tax liability
Under the new British system) a substantially lower
rate of tax will be collected from corporations than is now the case but it
will not cover the liability of the shareholder.
The new British system
is along the lines of the present U.S. corporation tax system.
As the British Chancellor of the Exchequer, Mr. James Callaghan,
indicated in the Budget Message to Parliament) preliminary discussions
were held betvreen representatives of the United Kingdom Inland Revenue
and the United States Treasury prior to the recent budget announcement and
it was agreed that discussions would be continued at an early date.
Persons in the United States "Tho wish to make aey suggestions on
possi b le mo d lOfolcat·lons l'n the tax treatment of dividends as well as on
other items covered by the income tax convention should submit their
comments to Stanley S. Surrey, Assistant Secretary of the Treasury,
Washington, D. C .
The comments should be submitted before May 15·
TREASURY DEPARTMENT
April 9, 1965
FOR
I~~EDIATE
RELEASE
U.K. - U.S. TAX CONVENTION REVISIONS TO
BE TOPIC OF ruRTHER DISCUSSIONS
Revision of the income tax convention between the
\1ni ted States and the United Kingdom is expected to he initiated
in the near future in the light of the fundamental changes in
the British tax system which have been announced in the lr.K.
Budget Message, the Treasury stated today.
Under the existing income tax convention, the tax
treatment of dividends flowing between the two countries is
predicated on a British tax system under which the corporate
tax covers the income tax liability of the shareholder.
Under the nevJ British system, a substantially lower rate of
tax \vill be collected frolll corporations than is now the case
but it will not cover the liability of the shareholder. The
ne\v British system is along the lines of the present U.S.
corporation tax systertl.
As the British Chancellor of the Exchequer, Mr. James
Callaghan, indicated in the Budget Message to Parliament,
preliminary discussions were held between representatives of
the United Kingdom Inland Revenue and the United States
Treasury prior to the recent budget announcement and it was
agreed that discussions would be continued at an early date.
Persons in the United States \vho wish to make any
suggestions on possible modifications in the tax treatment
of dividends as well as on other items covered by the income
tax convention should submit their comments to Stanley S.
Surrev, Assistant Secretary of the Treasury, Washington, D.C.
The cO:11'.nents should be submitted before May 15.
000
F-7
TREASURY DEPARTMENT
FOR RELEASE ~.M.
~esday,
NEWSPAPERS,
April 13, 1965.
April 12, 1965
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced 1a t
.
Treasury bills, one series to be an addit~ ea1ve~ng that the tenders for two series of
~on
~ssue of the bills dated Jan
11. 1965
and t he other series to be dated April 15 1965 'Wh' h
uary u,
,
opened at the Federal Reserve Banks on A ~
,
~c were offered on April 7, were
or thereabouts, of 91-day bills and for ~1~~2oooT~~gers were invited for $1,200,000,000,
The details of the t~.TO
.
'
,
,
, or thereabouts, of 182-day bills.
" serles are as follows:
RANGE OF ACCEPTED
CrnPETI TIVE BIDS:
High
Low
Average
61
91-day Treasury bills
maturing July 15, 1965
Approx. Equiv.
Price
Aruma! Rate
99.007
3.928%
3.944%
99.003
99.005
3.937%
··
Y
perce~t
182-day Treasury bills
maturing October 14, 1965
Approx. Equiv.
Annual Rate
Price
3.978%
91,989
91.979
3.998% , I
3.991% ~
97.983
of the amount of 91-day bills bid for at the low price was accepted
29 percent of the amount of 182-day bills bid for at the low price was accepted
TarAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
tPP1ied For
25,5'08,000
1,600,006,000
35,7(j1,000
33,567,000
15,012,000
63,819,000
284,215,000
45,371,000
21,162,000
42,786,000
29,768,000
139,002,000
TorALS
$2,335,997,000
if. Includes
Applied For
Accepted
$ 15',508,000
$ 33,765,000
705,713,000
1,189,899,000
22,781,000
23,059,000
33,567,000
60,934,000
15,012,000 :
5,734,000
55,974,000
25,295,000
161,000,000
329,911,000
15,886,000
38,093,000
13,277,000
17,992,000
18,602,000
42,786,000
21,809,000
21,378,000
70,914,000
94,072 z000
$1,200,718,000 ~ $1,832,243,000
·
AcceEted
$ 15,215,000
619,049,000
15,059,000
30,284,000
5,734,000
22,523,000
175,491,000
13,886,000
11,922,000
1.5,602,000
9,099,000
66,596 zoo0
$1,000,460,000 ~/
$298,370,000 noncompetitive tenders accepted at the average pric~ of 99.005
~ InclUdes $124,204,000 noncompetitive tenders accepted at the average price of 97.983
~ On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 4.03%, for the 9l-day bills, and 4.13%, 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 1n aotual numcer ot 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 nwnber of days in the period, with semiannual
compounding if more than one coupon period is involved.
M
,/
CA.A'.~
TREASURY DEPARTMENT
April 12, 1965
_1-_,,_2_5d_a.. . .l....
;,' ,'-_--_'-_r_i_l_l.-:;3J;,_1_~_~",-·::. _
The Treasury "Jepartment a1l..l1O'lL"'1ccd last evening that the tenders for "tilO series of
Treasury bills, one series to be an additi:mal issue of the bil] s dated January 14, 196
al1d the ot~er series to be dated A?ril 15, 1965, which were offered on April 7, were
opened at the ?ederal :eserve Banks on April 12. Tenders were invited for 31,200,OUO,0
or tJ- ereabouts, of 9l-da:r bills and for :-,1, u,)O, 800,0,)0, or tLereabouts, of 182-day bill
?te rietails O~~ :>!o t',;o series a2'e as fo110"s:
hiGh
Lo'..I
Averaee
1B2-day l'reasury bills
maturing October 14, 1965
Ap?rox. :Squiv.
Annual ;;ate
?rice
97.989
3.978%
97.979
3.998;6 I
3.991;;; !.
97.983
51-day Treasury bills
maturing Jnl~- 15, 1::65
AClprox. =:quiv.
Price
Annual ?a te
99.0)7
3.928%
3.9Ll-;
99.0J3
:;9.005
3.937% ~j
61 percent of the CiI"llOunt of 91-day bi11-s oid for at the 10'11 price Has accepted
29 percent of the ~"llount of 182-day bills bid for at the low price was accepted
District
Bost':m
~;ew York
?hilade1>Jhia
G1eveland
Richmond
Atlanta
':hicago
::t. Louis
?'innea~ :,lis
':ansas Ci ty
-:al1as
3an ?rancise'J
TOTALS
al
hi
II
Applied For
-~·--25
,5'J8, JOO
1,600,006,JOO
35, (..:1,')00
3.3,567,JOO
15,012,00:)
63,81~,:)00
264,215,000
he;, 371, 000
21,162,JOO
~2,7~6,OCJO
29,76E,Ooo
139,002,JOO
.'32,335,997 ,000
Accepted
::J
15,508,000
705, 713, 000
22,761,000
33,567,000
15,012,000
55,974,00J
161,1)00,0);
38,093,000
17 ,~;92,000
L2,7fJ6,000
21,37u,000
70,914,000
81,2:)0,718,000
),
y
Applied For
S
33,765,000
1,189,899,000
23,059,000
60,934,000
5,734,000
25,295,000
329,911,000
15,886,000
13,277,000
18,602,000
21,809,000
94,072 z000
$1,832,243,000
~pted
$
15,215,00C
619,049,00C
15,059,00C
30,284,00(
5,734,00(
22,523,OOC
175,491,0()(
13,886,00
11,922,00
15,602,00
9,099,001
66,596 z001
$1, 000,460, O()
Includes 2298,370,000 noncompetitive tenders accepted at the average price of 99.oc
Includes $124,204,000 noncompetitive tenders accepted at the average price of 97.98
On a coupon issue of the same length and for the same amount invested, the return 0
these bills would provide yields of L..03%, for the 91-da~r bills, and L..13%, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
the rct'.lI'n related to the face a'11ount of the bills payable at maturity rather than
the aJ1'!ount invested and their lengtt in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds ar(, ccr-:puted in terms
of interest on the amount invested, and relate the number of days remaining in an
inter-?st payment period to the actClal number of days :in the period, with s erniannuaJ
cam?o-~ding if more th~~ one cou~on period is involved.
STATD.tEm' OF THE H(}J GRABLE HENRY H. FOWLER
SECREI'ARY OF THE TREASURY
BEFORE THE
SUBCCl&UTTEE rn EXECUTIVE AND LIDISLATIVE REORGANIZATlOO
OF THE HOOSE CCM.UTTEE 00 GOVERNMENT OPERATlOOS
00 RlOFGANIZATIOO PlAN NO. 1 OF 1965
PROVIDING FeE REORGANIZATIOO IN THE BURFAU OF CUSTCMS
OF THE DEPARl'MENT OF THE TREASURY
10: 00 A. M., APRIL 12, 1965
Mr. Chairman and Members of the Connni ttee:
Introduction
I welcome this opportunity to appear before your Committee in
support of Reorganization Plan No. 1 of 1965 providing for reorganization in the Bureau of Custans.
This Plan is an essential element in
the general program now under way for the modernization and improvement
of the 175-year old Bureau of Customs and of the administration of its
functions.
As the President said in his message transmitting the Plan to
the Congress: "All that we do to serve the people of this land must be
done,as has been my insistent pledge, with the least cost and the most
effectiveness."
We cannot afford organizational arrangements such as those in
the Bureau of Customs which have became obsolete and do not meet
effectively the requirements of our times.
We need a Government
structure which is modern, streamlined, and capable of meeting current
requirements with maximum efficiency and minimum costs.
We believe that the proposed Reorganization Plan and the
administrative reorganization that it makes possible are responsive to
the purposes of Congress as set forth in the Reorganization Act.
F-9
We
- 2 -
particularly cite for your attention the following purposes as set forth
in the Reorganization Act;
"(1) to promote the better execution of the laws, the more
effective management of the executive branch of the Government and of its
agencies and functions, and the expeditious administration of the public
business;
" (2) to reduce expenditures and promote econcmy, to the fullest
extent consistent with the efficient operation of the Government;
"0) to increase the efficiency of the operations of the Government
to the fullest extent practicable".
If Reorganization Plan No.1 is permitted to become effective, all
Bureau of Customs officials and employees will henceforth be appointed
under the Ci vil
s~rvice
laws.
It will allow the Bureau to administer the
Customs laws more effectively and swiftly and pave the way for an
administrati ve reshaping of the Customs organizational structure and sane
legislative modification that will permit annual savings to the taxpayer
of some $9 million, more than 10 percent of the Bureau's annual budget.
Background of Proposal
When my distinguished predecessor, Secretary Dillon, appeared before
the House Appropriations Committee two months ago, he stated: "It is my
judgment that, except for the special case of the Secret Service, the
Bureau of Customs is far and away the most seriously understaffed of any
bureau in Treasury."
Formal merchandise entries filed increased more than 5 percent last
fiscal year and are continuing their steady climb in fiscal year 1965.
- 3 More than 174 million people entered our country in fiscal year 1964,
most of them as passengers on nearly 51 million automobiles, vessels, aircraft or other carriers.
It now appears that by 1966 these numbers will
approximate 188 million people and 55
mil~ion
carriers.
The growth of
Customs' work seems never-ending, and, of course, it is generated from
sources entirely outside of our control.
In the past ten years there has
been a 70 percent increase in imported merchandise and a 50 percent increase in international travel.
IncreaSEB in Custans personnel during the
corresponding period to handle this tremendously increased flow of business
have been less than 9 percent.
It is against this background that Secretary Dillon called two years
ago for a thorough-going evaluation of the mission, organization and
management of the Bureau of Customs.
The Survey Group which car:ded out
this study issued a 642-page report, a copy of which has been sent to
each of the members of this Committee.
The report contains 230 recommen-
dations for an overall Customs modernization program.
It is only fair to say, Mr. Chairman, that I personally have not
had an opportunity to examine in depth the detailed justification for
every aspect of the Customs modernization program which will be outlined
to you this morning.
On the other hand I can assure you that this program
is the product of two years of the most painstaking study by TreasuryCustoms experts, who were themselves cross-checked by the collective
judgment of the best brains on this subject we were able to find in the
Bureau of Customs, Treasury Department, Bureau of the Budget and Civil
Service Commission.
The final results were then reviewed at the v8ry
highest levels of the Treasury Department, including Secretary Dillon
personally.
- 4 -
Some of the most important recommendations made in the Survey
Group report -- perhaps the most important -- are those dealing with the
proposition that the Customs Service be placed on a career basis.
is the issue which is before your Committee.
That
The President's Reorganiza-
tion Plan proposes the elimination of all Bureau of Customs positions
now filled by Presidential appointment.
There are 53 such positions, two
of which are now vacant.
Since many of the reccmmendations in the Survey Group report are
still under consideration within the Treasury Department and are, of
course, not included in Reorganization Plan No.1, we are not asking your
Cormnittee to approve them.
Copies of the report were furnished to the
distinguished members of this Committee simply for the purpose of showing
how Reorganization Plan No.1 fits into the broad outline of Treasury's
overall program for modernization of the Bureau of Customs.
Description of Present Customs Organization
The basic structure of the Bureau of Customs has changed little
since its creation in 1789.
Its present organizational fabric reflects
in large part historical circumstances rather than sound concepts of
modern management of Federal establishments which call for some degree of
decentralization of decision-making from washington to a regional set-up
and supervision of far-flung field operations from a regional base.
As
new territories opened and trade patterns evolved, Congress established
many collection districts with a view to meeting immediate needs.
Thus,
the growth of the Customs Service took place without particular relation
to overall organization and management requirements.
- 5 As I said earlier, we have 53 positions to which appointments are
required to be made by the President by and with the advice and consent
of the Senate.
Same incumbents of the offices have been known to take
the view that they are responsible to one person, and one only, namely
the President of the United States.
It is obviously impossible to
I'Wl
an
organization properly if the situation is such that a senior official
could feel that he does not have a responsibility to the head of the
organi~
zation, in this case the Cormnissioner of CUstaas.
Nor is this the only difficulty.
The man to whan 45 of the
Presidential appointees who are Collectors of Customs are organizationally
required to report, is himself an appointee of the Secretary of the Treasury.
Though the Camnissionel' has the superior responsibility, the Collectors
have the superior status.
It is as though generals were required to report
to a colonel.
The present organizational arrangement creates problems even when
the Presidential appointees choose, as most do, to cooperate with
Ccmnissioner.
the
A2 I stated, we have 45 Presidentially appointed Collectors
of Custans reporting to the Comnissianer.
In addition, eight other Custans
officials, two in the field and six in washington, report to the Camn:1ssioner.
Certainly no national business and few national Gove:mment organizations
that I know of have any remotely similar set-up.
The general rule, in
business and in Government alike, is to limit strictly the number of persOllS
who report to any one top official.
All of us have fran time to time seen
this rule broken: we mow harried executives with lines of vice president.
and special assistants trying to get the final word fran the boss.
But 53
to 1 -- that is beyond the realm of effective supervision and management.
- 6 With the present field structure i t is impossible to exclude
situations where a Collector in one port rules one way in a given circumstance, whereas a Collector in another port rules differently on an
identical set of facts.
The overvrorked Commissioner of Customs and his
staff find it impossible to provide to the Collectors the type of guidance
required to eliminate such inconsistencies.
Persons dealing with Customs
have a right to expect substantially equal treatment.
Back in the last century, when communications were far different
from what they are today, it undoubtedly made sense to appoint to Customs
field posts persons who had considerable independent political authority.
It VIas not possible at that time to maintain constant touch with Washington
by telephone, teletype, overnight mail service and frequent face to face
meetings.
Hovrever, the role of the persons in charge of the Customs field
offices is quite different today from vmat it was then.
Now what is needed
are individuals who can combine several qualifications in one.
First and foremost, our field office chiefs must be knowledgeable
with respect to the intricacies and technicalities of Customs administration.
They must also be skilled in government administration and management.
Finally, they must have good public relations sense in dealing with local
problems.
The more successful of the political appointees in the Customs
Service possess some of these skills, but not many have all three qualifications.
The first two, particularly, are gained primarily through experience.
It is understandable that persons who are appointed to statutory four-year
tenns cannot become Customs experts in that time.
Olr
Customs career
- 7 officials are, generally speaking, people who entered the Service at the
bottom of the ladder, and who have by dint of hard work and attention to
their jobs, gone up the ladder.
The Collectors, Appraisers and other Customs field office heads are
constantly called upon to hand down decisions and rulings based on general
guidance provided by the Bureau of Customs from i\ashington.
Because of
the many technicalities in the Customs field, we have found it necessary
to back up the political appointees with an assistant who possesses the
general technical background in Customs administration which the normal
political appointee carmot be expected to have.
These assistants, gen-
erally speaking, are senior people in the Customs Service who are in a
position to act for and on behalf of the political appointees whenever this
becomes necessary.
This is obviously wasteful duplication.
Reorganization Plan No, 1
Reorganization Plan No.1, upon becoming effective, would eliminate
this duplication by putting the Customs Service on a career basis, and all
Bureau officials and employees would henceforth be appointed under the
Civil Service laws.
About $I million will be saved annually by abolition
of the political appointee positions.
I trust you will agree with President Johnson, who gave the subject
painstaking consideration before giving his approval, that the proposal is
essential to good Government administration and economy.
Regionalization of Customs Service
Quite obviously, in addition to the simple proposition contained in
Reorganization Plan No.1, there is more that should be done in connection
vnth modernization and improvement of the Customs Service.
Same improve-
ments will require legislation, which will be submitted to Congress for
- 8 -
its approval at a later date.
other improvements can be accomplished by
administrati ve action, without reference to the Legislative Branch.
In
this category, one of the most significant is a proposal to regionalize
the Customs Service.
I believe it may be of interest to have this described
in same detail.
Reorganization Plan No. 1 will, upon becoming effective, pave the
vmy for realignment and consolidation of 113 independent field activities
presently reporting directly to V{ashington vrith six regional Customs
offices supervising approximately 25 district offices.
At the headquarters
level, four new offices are being established to replace seven divisions.
Further, a new position of Special Assistant to the Commissioner will be
created and charged vrith responsibility for insuring that all Customs
employees conduct themselves in strict compliance with all applicable laws
and regulations.
By virtue of existing authority, the Secretary of the Treasury is
empowered to establisn the Customs regional and district offices and the
new headquarters offices without further Congressional action.
To understand the decree to which this new Customs field organization
will simplify the management and administration of the Customs Service, it
is necessary to compare this proposed new regional arrangement vrith the
present Customs organization.
The 113 independent field activities
currently in operation break dovm as follows: 25 major collection
districts,
22 smaller collection districts, 42 appraisement districts, 7 enforcement
regions, 7 comptroller districts, 9 lahoratory districts , and the Customs
Information Exchange in New York City.
- 9 -
C'. '
A reGional organization of the Customs Service will make possible
a net reduction of more than fifty principal field offices, by
concentrating administrative and supervisory responsibilities in fewer
officials in charge of regional and district activities.
These moves will
enable the Bureau of Customs to cut costs, eliminat8 much duplication of
effort and strengthen the supervision of its many activities, while at the
same time ma.:intaining all essential services.
Ass1.UDing that Reorganization Plan No. 1 becOOles effective by next
June, the present schedule provides for initiating the regionalization
program on September 1, 1965, with the establishment of Region 5 with headquarters in San Francisco.
The announced timetable for establishment of
the remainine; five regions is as follows:
Region:3 with headquarters at
Miami, January 1966; Region 4 with headquarters at New Orleans, February 1966;
Region 1 witil headquarters at Boston, March 1966; Region 6 with headquarters
at Chicago, April 1966; and Region 2 with headquarters at New York City,
May 1966.
This schedule will allow time for evaluation of the experience
gained in the San Francisco region before the remaining five regions are
created.
In select:ing the headquarters for the proposed six regions, the
Treasury-Customs officials concerned weighed a variety of factors: for
example, the geographic location of the proposed headquarters within the
re~ion;
convenience of transportation facilities from the headquarters to
the vario'us Customs offices vathin the region; communications facilities
in the port contemplated as the headquarters location; concentrations of
existing Customs personnel and installations wi thin the re£ion·
0 ' the volume ,
types and complexity of importations handled by tile port under consideration as a headquarters site; the extent to which selection of a particular
- 10 -
port would necessitate relocations of personnel and facilities; the
availability of office space in the proposed regional headquarters
location; whether the problems handled at the proposed location are fairly
representative of those encountered at other ports in the region; and so on.
Since some disagreement has been expressed
~egarding
the proposed
regional headquarters locations already announced, I think it is important
that I maJ..e my position clear on this question.
The proposed decision
with respect to the selection of each of the regional headquarters sites
was revievred with the greatest of care by a panel of senior Treasury and
customs officials.
Vfuere this panel could not agree, and to be candid
this happened in certain instances, the question was further reviewed at
the highest levels of the Department and by Secretary Dillon personally.
The conclusions, as announced in the press releases of March 21 and 22
previous~
sent you, were reached on the basis of administrative considera-
tions alone.
Treasury and Customs were concerned only with one question --
to decide on a regional headquarters location which would best facilitate
Customs administration.
In light of this background, I have every reason to believe that the
headquarters locations mentioned in the press releases are the most suitable
from the standpoint of Customs administration.
At the same time,
Mr. ChaiI'lTlan, since I personally have not had an opportunity to review
the decisions, I am seElewhat in the position of a judge considering a
motion to show cause.
Although I believe the decisions are correct, I do
not have a closed mind on the subject.
- 11 -
Turning again to the broad picture, a regionalized Customs Service
will be able to take full advantage of modern management concepts vdthout,
however, losing the benefits cained from the existing orientation of Customs
field offices to local problems.
For example, some administrative matters,
such as those involving budget, audit, space and personnel, and operations
such as laboratory analysis, accounting, drawback and liquidation of change
entries would be handled on a consolidated basis at the Regional Corranissioner
level.
On
the other hand, the bulk of decisions noVi made locally by Customs
officials would continue, generally speaking, to be made locally in the
nevI organization.
important.
I vdsh to emphasize this point because I consider it most
Local Customs officials will continue to make the broad range
of decisions essential for providing efficient and effective service to
the pUblic.
The major difference under a regionalized organization vdll take
place vdth respect to those decisions vmich at present are not, and cannot,
be made locally because of the intricate technical or policy questions that
are involved.
Under existing procedure questions such as these are referred
to the Bureau in Vfctshington for decision.
Because of the tremendous flow
of requests fram the 113 separate field activities to the Bureau for deCisions, rulings and interpretations, such requests cannot be handled as
efficiently or expeditiously as we would like and as the public has a right
to expect.
Under a regionalized Customs Service questions such as these would,
where necessary, be referred by the District Directors to the Regional
Corrunissioner for decision.
Since the latter will, by the nature of his
- 12 -
responsibilities, be oriented to the particular problems of his region and
at the same time will be familiar with the policies of the Bureau and the
Treasury Department, it is anticipated that all but the most intricate and
difficult questions will be resolved at the regional level.
As
for those
problems that will require the personal attention of Bureau officials in
Washington, these they will be able to handle more expeditiously than under
the current procedures, since the Washington officials will no longer be
inundated with requests from numerous independent field activities allover
the United states.
By the delegation of important authority fran the Bureau in Washington
to the regional offices, we expect to reduce significantly the time
presently required in the decision-making process.
All should benefit from
this - local Custans officials, the importing public and the harassed Bureau
officials in Washington.
Appointments to Key Positions
In his announcement of Reorganization Plan No. 1 the President stressed
that the 52 persons then holding Presidential appaintments in the CustCJDS
field organization would be given consideration for suitable employment in
the Customs Service under the Civil Service laws in any position for which
they may be qualified.
The abolition of the offices held by political appointees will occur
on a time-phased basis and will take place as the new regions are established.
Under present plans all offices would be abolished by May 1966.
There will be a number of senior positions in the regionalized Customs
Service.
It is contemplated that in each of the regional offices there will
be a Regional Commissioner of Customs assisted by a Regional Counsel and not
- 13 more than four Assistant Regional Commissioners, each of wham will be
in charge of one of the major segments of Custcms activity.
These officials
will be responsible for overall supervisory responsibility in the districts
comprising their regions.
At each of the approximately 25 new district headquarters there will
be a District Director responsible not only for the functions of the
present Collectors, but for those of the Appraisers of Merchandise as well.
At other important ports not administratively designated as district
headquarters, there will be Port Directors, who, like the District Directors,
will be responsible for both collection and appraisement functions at their
ports.
Savings to be Achieved
The application of modern management concepts to the Custcms Service
will bring about substantial savings for the taxpayer which in a few years
will total approximately $9 million armually, more than 10 percent of the
present annual budget of the Bureau of Customs.
These savings are broken
dovm in a stateJ'lQ.71t which, Vii th the Chairman t s permission, I would like to
submit for the record without reading it in detail.
IvIr.
I am assured,
Chairman, that these savings figures have been checked and rechecked,
and that they represent conservative estimates.
General Observations Regarding Modernization Program
There are certain additional observations that I should like to make,
Mr. Chairman, which are applicable to all six regions.
Although the modernization plan I have described will, of necessity,
invol ve some internal realignment and may in some cases necessitate retraining of personnel, I do not anticipate any losses in grade, or abolishing
of positions other than those of the Presidential appointees.
In view of
- 14 Custans' constantly increasinf, workload, there will not be an overall
reduction in employment.
There is nothing in the Reorcanization Plan which would affect the
basic compensation or right to payment for overtime services of any Customs
employee.
No action will be taken by the Department in this regard with-
out full consultation vdth the recognized employee organizations.
Involuntary transfers will be rare.
all.
Indeed we do not expect any at
If necessary, involuntary transfers will be carried out vdth minimum
inconvenience to the employees concerned.
The six Regional Commissioners' offices which are to be established
will be sta:fed from present Customs personnel to the extent possible.
As the President has
al~ady
stated in his transmittal message, the
modernization measures which are to be put into effect will in no way
prejudice any right of any person affected by the laws administered by the
Bureau of Customs.
To emphasize that t:nis will be so, the following section
has been incorporated into Reorganisation Plan No.1:
llPreservation of Relledies.--The abolition of offices
herein shall not prejudice any right to protest or to appeal
to the United states Custcms Co'.lrt any action taken in the
administration of the Customs laws. 11
Further, all esse.."1tial services to the importing, exporting, and
travelinG public vdll continue to be perfonned.
Indeed, after the initial
shake-down period, I look to a significant improvement in Customs service to
the public.
- 15 Conclusion
Mr. Chainnan, like Il\Y predecessor, Secretary Dillon, I hope to
maximize the efficiency of all operating bureaus and agencies falling under
Treasury Department jurisdiction.
Reorganization Plan No. 1 and the program
of modernization of the Customs Service, which I have outlined to you today,
are part and parcel of this effort.
They are the result of more than two
years of ex.haustive study of the Customs Service.
It is my judgment, Mr. Chairman, that Reorganization Plan No.1 and
the program for modernizing the Bureau of Customs which I have described to
you
would substantially improve the efficiency of the Customs Service,
and better equip it to handle its ever-increasing workload resulting from
expanding international trade and tourist travel.
1~.
It is Il\Y further judgment,
Chairman, that through this improved efficiency annual savings totaling
in excess of 10 percent of the current annual Customs budget could be
achieved while improving present Customs services to the public at large.
The changes involved in the program of Customs modernization would reduce
the unit costs of Customs services to the taxpayer and make possible the
sorely needed reduction of work backlog and the speed-up of entry, appraisement, and other operations.
I strongly recommend that the Congress allow Reorganization Plan No.1
of 1965 to become effective.
Thank you, Mr. Chairman.
STATEffAT OF TIlE 110:\ORABLE I {b'~RY If. FOl\1.ER
SECRETARY OF TIlE TIZl:.ASURY
I3EFORL TilE
SS\ATE TREASURY SUI3CMIITfEE 01\ APPROPRIATIOiJS
O~ DIE TREt\.SURY VEPART~1L\T APPROPRIATIO;-..J BILL
FOR THE FISCAL YEAR 1966
TUESDAY, APRIL 13, 1965, 10:00 A.M. EST
:·:r. Cnai nnan and >lcmbers of the Treasury Subcorrunittee on Appropriations.
It
is an lionor and a privilege to appear before you, as it is to lead
the Treasury Department in its many responsible functions.
'fhe devotion to duty of the officials and employees of the Treasury
lS
well known.
Their capacity for intelligent, effective, hard work is
an established fact to which I can testify from personal experience.
We
have been fortW1ate to have had Secretary Dillon's strong leadership in
the Treasury these last four years, and the foundations he has established
will contribute much to the success of our operations in the years to come.
The house Conunittee on Appropriations reported (H. Rept.
1"<0.
223)
the bill, H.R. 7060, making appropriations for the Treasury Departll1cnt
for fiscal year 1966.
The bill, as passed by the House on l\pril 5, provides
regular annual operating appropriations of $1,272,252,000 and a reduction
of $34,453,000 below the budget estimates submitted by the President.
The
principal reductions were $11,000,000 in the Coast Guard estimates and
$26,420,000 in the Internal Revenue Service estimates.
These reductions
were partially offset by an increase of $3,877,000 over the budget estimates
granted for augmentation of the protective capabilities of the Secret Service.
In
n~
letter of April 9, 1965, to the Chairman of this Subcommittee
were stated the items which I urge you to consider.
r would like to offer
a copy of the letter for the record and also, as supplementary information,
a copy of the statement Secretary Dillon made to the House Committee, since
it proviJes a comprehensive review of the budget programs of each of the
Treasury bureaus.
F-10
- 2 -
Request for Restoration
We are requesting restoration of $33,900,000 of the House reductions.
A table which compares the 1965 appropriations (including supplementals)
with the amounts recommended in the House bill for 1966 is attached.
You will have noted from my letter that we are appealing only four appropriations and two language changes -- on the others we will do our best to
work out program adjustments to stay within the liouse bill allowances.
'!'R&A5l'RY DEPAImIIl/T
Ca.parative .:t-'it.e..nt of 1966 HoP'"£> '11-"'''~'1r95
and lY6t 9udget rst1aate~
(Dollars in thouf:anc!s)
~e<"~,,,,nrled
1966
196'> APpropr1e.i,Y'ne
Bureau aM Appropr1.tl00
~~et
i!dJ'ln.ed) -
1.., :--POi.- -AP\OUIlt
~lar V\noo.l
ornoe
()f
~or
•....•......
~_ued
Amount
907
;1?
t5,970
"09
~,515
3,,764
lJ~?Q
'),765
1,~?9
3),("00
e,(l()
7A ,~5L
R,
fI~ ,flr:o
8, ;)(::3
fi2,2t:;(1
t~ J
~~5
-3
with
19t'~
ArrroprIRUoo
AY. Poe.
t.be ItIp-eY 1.ng and Print! Of q\l11tll ne l')
-7;>
~S
Exp _ _ o
o.t .K.1.Dt r.cillUee •••••.••••••••••.••....•....
••••...•....••.••.....................
l,2L7
9urew or K&J"C:'otlce .......................................... .
luI
B\lre&u of til. Pu blle Debt •••••..•...•.••••.•••••••..••..•.•••
2,619
C• • t Suard.
bp<I""".
(lUUtory)
(Ch:U1An)
lCQu1elt100. COIlBtNCUon Cld
I..,r~Dt.
(lI1l1tory) ......
(Civilian) ••••.•
)1,0))
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08
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-600
200
3,)96
Roo_ Tra1A1nc (1I1.ll t&J7) ........................ • .... ..
(Clv1l.Un) ............................... .
9)L
l'
~
3~,Oj5
Total, C _ Ouard (1I1.ll t.ary)
(Cl rl.11an)
) ,641
latAroal Re"fWIUII Ser"Yic ••
Sal..III"t.a and El:peneee ...................................... .
R..-nue Account1n,g and P'r-{)('tHIS 1.ng •••••••••••••••• • ••••••••
1,)87
19,)85
........................................ ". - ...••..
~&e"llJ'tIr
l..Lj6~, .,
1,}68
Req1..ut.ed
.uo..nt
t-5 7
L~L
~ ,970
45L
5,970
2)
)13
2,&1)
50,))0
2,6lj
50,))0
-6
93
c65,2U)
31,.s91
),626
7&,000
-1, ?CO
1'),248
109,250
117
lOl,()(X)
-', ,50
,58
108
19
LO,COO
-)00
72,t:(y\
-1,2~O
LL7. coo
-11 ,'fiJ(l
(7),7);:
85,QCX)
X',939
L.lb,6S7
31, ~)ll
3,626
117
178
I,OL~
32,753
0
0.
•••
3,980
18,170
I,Lu7
17,600
It>6,(O)
19,(\'35
l~L,60'\
'.7,090
65,R93
L J ,1";00
617 ,6?1'\
£)3,!112
6,175
785
h,35()
7K~
'1(-
00
8,75l)
n.'
'CO
I,
Q
LJ6
68
e. . .
8:-- ,lC;Q
1 1 :'!,-
,F~
11:--,17L.
-1"
oJ?)
-n,ll )<
ill
21
718
139
-~ ,LBt
-?6,L20
l,Z''?
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1~/t<?7
1,~06
luI.
~C.l0.7nr:
1l(',Q,"I7
1,250
",S),
759
611, ?OJ
',8
1,,61
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~~r.
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8, ~'S'J
5J
-11, c''X.
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1< ,'XJO
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901.
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1, :;)7
1-,835
Z ,&)6
l,900
r;::c
2[.'.X
L'~J
11~
j. "~
>
3,677
290
L,317
7
-z
){, 7' J
718
RL,L'I.
1,
10
- >Jl
-1,5;2
1..31..
i::l;;
1: "I~)
lL,l;JL,
3:,1Q
FN
~\"
i;859
TOf.lL, ~"",-,"\Jlar A.fUrual Ppe:ratin,f "i'l,r'c'l,n; tions ~~:ilithry) •...
l~·lV1.lian) ••
,·"tal) ....
1,01.5
176
l()
l,LR~
16,81.1
0)0
:13
68
•••• ••••••••••••••••••••••••
458,500
1,980
-755
•• •
7), 7~()
176
••••..••••.•......•.•••••••.••• , .•..••
0
178
LO,lOO
[c;oi,1~
Police ••••
-1,)09
-1.5,500
J
t~ J~12
IJu&rd For\'1i •••••••••••••••••••••••..••••••••••••••••...•••.
I,o.
~
l,()'C1
••••.•••..•..•....... . ..
~t Crt't SeJ"'YiC'81
S&l.artee and ~en56f1 ••.•••••••••••••••.••••.••••••..•.•...
lh:
13,350
~OJ2)7
'Xl
!1 1 ,"'"
t:.S.
1,)B-A
~
Ll,llhO
~rt'1.ce
13.350
J
1 ~ 1, <J~7
L.2'!,'-Q
Tot.a.l. lnt.rnal RtrY8I\ue
.-r-ut~ ~:O\JSt:'
FOe.
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) t-
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n.UI'<Id POQ .............................................. ..
Office at tht>
a.. tcraUoo
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-432
-,9
~, 7~n
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...~ ••.••..••..................................
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ape"tiDti: ApJl"OP"lotiono,
'-be S.,..tlO.,.,.
~orcu~
- . . . . of
Ayo
in
house 91.11
for 1;.a66
Avo foe.
Amount
Lst1..mstee
1,%;
-'2,297
1,27'2,252
-2,;9'7
-}L,45J
;: ,6e3
,-)'i!
:- ,t.3 t
(,~y-
;"J
Includee Buw.1a.entJ,,1 flflPNpr:ilatl(l!')t'I d,~ l'PJ"\-'''''"u y th!" lc'\....:>~ :',,);' l''.:i ... '·
~iLt<;r-.
b. ,'O-~S &''1' l-nCn'"soc gta.!fi."l.i?, in the recrBt ~er'~'~ I~',:'
~')91',
_l..r,.-1"'!'''l~t .. 1 a.r:: .L"t~ +C"':.·.. l t'), 'l t"
C--T~
of .tUcb 5,75 thl1"\H,-:tU'JI,.l ttl t<, , ,~riv-e~· 'J' trRfUlfer «.nd 5::',;0.'( n',a"',~~ l~ ",-:I~tl.,)n~~ >-11gatl,)r..,;:: _~th,")r1t.y. Pay COS"'.8 of =>Ul"P8." 0f ';.;~ ... ')t,~,:e (~1:".'X.::; -'''': W--,it~
n,..
~.li" ,t.:.;-r",)()', ,,'.1: l:X'J
met by trruwfer lr.::Jll 'lU.N"81J or I-.,'c0unl{;. Of $810,000 St:-x-n"t 0::.,,"1'" su/,plt-'Tilt>:ltA1, SS)~,JJ...' lIrill '" ~~rived ":. t~3.['''!':7' frO![ ?etirE:d ~:;, -(")':'ct
A.prll 1. \96'"
(>t,o,,<,.\
,e
- 4 Coast Guard Acquisition, Construction and Improvements
We will plan to modify the Coast Guard's operating expenses programs
to keep within the reduced amount allowed by action of the [louse.
However,
tne large cost of facility maintenance found in Operating Expenses can only
be
in~roved
by modernization of the Coast Guard plant through the Acqui-
sition, Construction and Improvements appropriation.
Appeal is made for
restoration of the $8,250,000 reduction in this capital account.
I have previously referred to Secretary Dillon's statement to the
[louse Appropriations Subcomnittee.
Secretary Dillon followed the Coast
Guard facilities problem very closely.
I would like to quote just briefly
from his remarks before that Committee:
II. * *
The total amount requested (for Acquisition,
Construction and Improvements) is $109.3 million.
This is
substantially below tlw approximately $170 million which
would be required for orderly replacement of worn-out facilities
within the time span envisioned in the approved long-range
plans and for augmentation of facilities to meet the expanding
workload.
Full ilnplementation of the long-range vessel replace-
ment program alone would require more than $110 million a
year through 1974.
The request for vessels in this budget
is only $73.4 million.
This is only two-thirds of what is
needed to carry out the program in the most orderly and
economical way.
This postponement of necessary acquisitions
in accordance with approved plans will mean larger maintenance
costs in the coming years and larger over-all costs for the
- 5 -
American taxpayer.
The reduced figure is only acceptable
because of the imperative need to hold the over-all 1966
budget request to a minimum.
It is therefore essential that
the full amount requested for AC&I be appropriated.
Even
this will leave us $71 million and 10 vessels short of the
approved schedule.
We are falling behind further each year.
The 1966 program is a hard-core minimal program which will
only take care of some of our most pressing problems."
The House Committee has affirmed its continuing interest in pursuing
a reasonable and level program to modernize the Coast Guard.
A reasonable
and level program is just what we have sought in preparing the long-range
improvement plans which we are implementing.
The House Committee had
questions in the matter of carryover of unobligated balances in the
Acquisition, Construction and Improvements appropriation.
has steadily improved its performance in this regard.
Coast Guard
At the end of
fiscal year 1961, 30 per cent of available funds remained unobligated.
In 1964 with twice the amount of available fWlds, less than 12 per cent
was not obligated by year's end.
Coast Guard, having further improved its
obligating procedures, firmly plans to have only 4 per cent of available
funds ($3.8 million) unobligated at the end of 1965.
When Admiral Roland
appears before you, he will be prepared to discuss this matter fully.
Coast Guard Reserve Training
The mission of Reserve Training in the Coast Guard was investigated
in depth in the course of the study of Coast Guard Roles and Missions in
1962, and was strongly supported.
The study reconmended improvements
in achieving personnel levels nearer to the mobilization manning requirements,
- 6 -
more complete unit equipment_ and more thorough and realistic training of
I~ithin
reservists.
the President's request of $23,750,000 we are seeking:
to add reservists in a program of two years of active duty alongside the
Coast Guard regulars; to outfit additional units; and to provide more and
better training.
these plans.
The House reduction of $1,250,000 will essentially stop
Only 100 of the planned 500 reservists could be started in
the new two-year program, and equipment for only four of fifteen Wlits
could be provided within the House allowance.
We have endeavored to pursue
a program which will give the maximum number of reservists suitable training
for their emergency tasks.
The douse Report seems to object to the balancing
of numbers and improved training and refers to it as "sweetening."
We
believe, however, that we must persist in trying to provide equipment for
reserve units appropriate to their missions and in training reservists to
useful levels of competence.
lYe will continue to do our best ultimately
to raise the number of keady l{eservis ts from the present 30,000 level to
the 45,000 mobilization requirement and to increase the numbers in organized
training units from 17,000 to the 29,000 goal.
However, under the House
allowance, it will not be possible to increase the levels above existing
ones in
~ly
substantial amount.
Internal Revenue Service
house action on the three Internal K.evenue Service appropriations has
reduced fWlding for the Service by a total of $26,420,000 below the President's
estimate.
This is the largest reduction in recent years and comes at a time
when the need for effective equitable revenue collection has never been greater.
- 7 -
The Salaries and Expenses portion ($520,000) of this total reduction
will not be appealed.
Adjustments will be made which, while not desirable,
will enable us to operate at the reduced level.
We are appealing $9,900,000 of the reduction of $11,400,000 in the
Revenue Accounting and Data Processing appropriation.
Changes in planning
for ADP equipment purchases since preparation of the estimate last fall
make it possible to accept $1,500,000 of the reduction.
however, the House action will have critical effects.
Beyond thiS,
The cut by the
House, if sustained, will:
(1)
Delay the completion of the nationwide Master File ADP System
now scheduled for fiscal year 1967. This system, which has shown such
promising results during the conversion from manual to ADP operations, is
truly our hope for increasingly effective tax administration for the future.
The proposed cut will result in failure to realize the benefits of the full
system as soon as possible.
(2)
Prevent the opening of the Detroit Data Center, in fiscal year 1966,
to which Non-Master File work such as preparation of payrolls and statistics
of income must be moved from regional service centers as they are converted
to Master File processing.
The opening of the Detroit Center is a necessary
segment of the ADP conversion program.
(3)
Eliminate all personnel requested to process the growth in numbers
of tax returns estimated at 1.9 million in fiscal year 1966.
The request is based on Service experience that one employee can process
approximately 6,000 returns per year.
Frankly, we cannot rationalize the large reduction in this appropriation.
While some personnel reduction in manual operations results from ADP
- 8 -
conversion, the Master File System primarily provides for better tax
enforcement through better analysis of the returns and development of
leads to poor compliance.
We can understand the basis of the reduction in the Compliance appropriation, although we cannot agree with it.
Here the House cut of $14,500,000
is directed primarily at the President's request for additional personnel for
audit, collection and prosecution of actions to improve the level of
compliance with the tax laws.
The reduction, however, goes deeper than
elimination of compliance improvement and reduces by 23 per cent the personnel
requested to meet the workload created by growth in the number of taxpayers.
We do not agree that Data Processing, without the subsequent follow-up of
leads by enforcement personnel, can improve compliance to the extent that
the estimated revenue gap of $4 billion will be narrowed.
Unless some of
this reduction is restored, the level of compliance will be below the level
for 1965.
Accordingly, we request restoration of this cut in its entirety.
Mr. Cohen, when he appears before you, will explain more fully the
undesirable effects of the reduction proposed by the House.
Transfer Authority Language
The House Appropriations Committee, in reporting the Bill to the House,
included a general provision permitting the Department to transfer funds
between appropriations in an amount not to exceed 2-1/2 per cent of any
appropriation.
This authority was deleted by action on the floor of the
House.
This authority, if granted, would greatly facilitate the management of
the Department without loss of Congressional control over the expenditure of
funds.
The provision is of such irrportance to the better execution of
- 9 -
Treasury's responsibilities that I urge your careful and favorable consideration.
The language proposed by the House Committee limits to 2-1/2 per cent
the amount to be transferred in or out of an appropriation.
It further
provides that it can be done only after the Secretary of the Treasury and
the Director of the tiureau of the Budget approve.
It also requires that an
iImnediate report be made to the Senate and House COlllllittees on Appropriations.
This type of transfer authority is not new in Government.
Similar
language is also contained in appropriations for the Atomic Energy Commission,
General Services Administration, and the National Aeronautics and Space
Administration.
Other transfer authority exists, with varying limitations
and modifications, in the appropriations for the Departments of Agriculture;
Defense; Health, Education and Welfare; and Interior.
The Foreign Aid
Authorization Act also permits trrulsfer, when the President so determines,
and requires a report to the Congress.
In 1965, a limited transfer authority
was given to Internal Revenue Service to interchange between its three
appropriations, but the Conference Report restricted its use to fiscal year
1965.
It
1S
difficult for me to understand why such language which has proved
its usefulness in other government agencies should be denied to the Treasury
Department.
Opposition to it can only be based on a lack of understanding of
our very real need for it and a misconception that it would somehow reduce
the effectiveness of
r~ngressional
control.
I pledge to the Congress that
the authority would not be used in the Treasury indiscriminately, or for
purposes for which the Congress has indicated it should not be used.
I would
- 10 -
expect the authority to be used sparingly and only with the full prior
knowledge of the Committees.
You recall that we now notify the respective
Subcommittees when we desire a significant reprogramming of funds within
the same appropriation that results in use of funds for a different purpose
from that which was justified to the Subconmittee.
This procedure has
worked well and has led to greater efficiency and more prudent use of
resources.
The limited transfer authority would have the same useful effect
with transfers between different appropriations.
There are a nlDllber of Treasury bureaus that are small in size of
staff and appropriations.
The present appropriation structure, without
transfer authority. does not penmit flexibility in meeting sudden or unexpected
workload changes.
The Bureau of Accounts, Public Debt, Customs, Secret
Service, Mint,Narcotics, Office of the Treasurer -- all have largely uncontrollable workloads.
Demands for services by these bureaus are generated
by the public or other Government agencies.
The ability to shift funds
between bureaus, subject to prior consultation with the competent Subcommittees
on Appropriations, would give the Treasury administrative flexibility to meet
unexpected demands.
appropriations.
Its omission will tend to increase resort to supplemental
Such authority would save both time and unnecessary effort
for Treasury and the Congress alike.
If we had had this authority over the past four or five years, we could
have saved the Government the expense of preparing and securing several
supplemental appropriations by using unobligated balances which finally
lapsed to the General Fund.
We could have also saved the taxpayer, through
reprogramming, some of the funds that because of the lack of the transfer
- 11 -
authority we were compelled to request in supplementals.
If the authority
had been available in June 1962, at the time of the delay in the passage
of the Second Supplemental Appropriations Act, 1962, our Secret Service
Agents would not have had to face a rayless pay day.
Such an event was
only forestalled by the use of the President's Emergency Fund.
The transfer
authority, had it existed, would have permitted the Secret Service to have
provided an orderly financing and avoided a number of administrative
problems.
In summary, let me say I believe the transfer authroity will contribute
to more efficient operations of the Treasury Department, will produce over-all
savings to the Government p and will actually increase the effectiveness of
Congressional control 0ver the appropriation process by making maximum
use of the knowledge of the Treasury Subcommittees.
U.S. Secret Service Language Change
In Secretary Dillonls statement before the House COTl1l1ittee, earlier
presented, he explained in detail the need for expanded resources and personnel necessary to provide effective protection to the President of the
United States.
I concur completely with Secretary Dillon in his expression
of the urgent need to implement this program.
The House allowed the full amount of $12,627,000 which was requested,
but, through a tecPnical oversight, did not provide the proper numerical
limitation for the purchase of additional automobiles.
essential to the over-all expansion program.
These vehicles are
The staff of the House
Committee has advised us informally that the omission was an oversight.
· 12 U. S. Secret Service Expansion
secretary Dillon told the House COil111ittec that:
"The events of .'Jovember 22, 1963, made it clear that
the protection we have heretofore provided to our President
has been inadequate.
~othing
can redress the traRedy ot
that Jay, but we all bear an awesome responsibility both to
our country and to the entire free world to insure that the
protection no .... and hereafter provided our President, whoever
he may be, is the most effective possible in our democratic
society."
His statement reviewed in detail the manner in which the requested amount
was arrived at.
lie further made it clear that $3,877,000 of the $12,627,000
requested was not in the President's Budget.
11ft
ft
It
[Ie then stated:
it is perhaps lUlprecedenteJ for a Cabinet officer,
anJ particularly for the Secretary of the Treasury, to ask for
an appropriation in excess of that requested in the President's
Budget.
This is, however, a very special and indeed unique
situation.
President Jolulson feels that these substantial additional
expenditures required for the increased protection of the President
aud 1 reemphasize the President, whoever he may be •. are so
intimately connected with fiim that he should not rersonally pass
upon then.
i ie
was aware, however, that I intend to request what
I and the PresiJent's Cor.vnittee feel to he necessary.
fully content to leave the decision to the wisdom of the
1\5
11e is
Con~ress.tI
the newly-appointed Secretary of the Treasury, I now have the grave
statutory responsibility for insuring the protection of the President.
The
- 13 -
aJciitional funds requested which were not in the President's Budget
($3,877,000) were recommended by the President's
r~rnrndttee
to advise him
on the Warren Report and by the Director of the Bureau of the
sat as an ex officio member of the Comittee.
Secretary Dillon;
~1r.
on ;.Jational Security Affairs.
~rr.
who
That ('.onruttee included
Katzenbach, the Attorney General; Mr.
Director of Central Intelligence; and
Bud~et,
~lcCone,
the
Bundy, the President's Adviser
Because of the intiMate familiarity of these
able and highly qualified men with the necessities of the situation, as
viewed by them in the perspective of the Warren Report, I associate myself
completely with the request.
It was the conclusion of Secretary Dillon that
without these additional resources it will simply not be possible to provide
the protection to the President and his family that the trap,ic event of
NoveDtler 1963 has proved to be necessary.
However, I must, in all candor, advise the COnJ!'littee of a situation
which has developed since Secretary Dillon' 5 request and the House action
on the appropriation that affects the inclusion of $522,000 for two armored
vehicles in the additional request for $3,877,000
~
in the President's
iludget.
(11 Monday afternoon, AprilS, news stories were carried in the press
concerning this request and its background.
For the first time the
PresiJent of the lInited States himself became aware of this particular
retlucst.
He did not know about it lIDtil he saw it in the paper.
In the interv6ning period, his intentions have become known to me.
lie will not use ar condone the use in his protection of the two annored
vehicles for which the $522,000 is to be allocated should they be built
and Jelivered.
He will use the special protective armored vehicle reconstruct
from an existing automobile by the Ford ~btor
Company
and tun1f~cI
nw• .,. t-n
- 14 Secret Service without cost, as well as another existing specially constructed
protective vehicle assigned from another Federal Government source for his
use.
Under these circumstances, I withdraw the request for $522,000 for the
two armored vehicles.
Conclusion
This completes my statement on the Treasury's appropriation requests.
Representatives of the bureaus concerned are, of
~ourse,
prepared to appear
before you to explain their programs in greater detail; and I am at your
disposal to answer questions or to discuss other subjects of interest to
t he Treasury.
-
'J
c.. -
A modification of the incume tax treaty between the United States
and the Netherlands last year led to elimination of the Netherlands
Antilles as a place through which third country residents could similarly
avoid taxes on investment income.
As a result Canadian corporations
may now be in the process of being established for the same purpose.
It is anticipated that discussions will be held soon with the
Canadian authorities to consider appropriate measures to eliminate the
tax avoidance descrited.
UNITED STATES TO ACT AGAINST TAX AVOIDANCE UNDER CANADIAN TAX TREATY
Action will soon be initiated by the United States to tighten the
tax rules that apply to income flowing betvreen the United States and
Canada so as to eliminate a tax avoidance device which nmr permits
people living outside both countries to receive investment income from
the United States at substantially reduced tax rates) the Treasury
Department announced today.
This unintended tax preference results from the interaction of existing Canadian law and the provisions of the existing tax treaty between
the United States and Canada.
The treaty provides that a company organized
in Canada and receiving investment income from the United States is subject
to a 15 percent u.S. withholding tax on such income rather than the usual
30 percent.
However, Canadian law provides that a company organized
under Canadian law but deriving its income from outside Canada shall be
exempt from Canadian taxes if the company is managed and controlled outside Canada.
The combination of these provisions makes it possible for
such a Canadian company to be used by third country residents as a device
to avoid U.S. taxes.
A holding company, a mutual investment fund, or a similar investment company created under Canadian law but managed and controlled in a
"tax haven1! country may be used to make investments in the United States
by people living in countries that have no tax treaty with the United
States.
Such people can derive investment income subject only to a
15 percent withholding tax in the United States and to no tax whatsoever in either Canada or their home ccmntry.
TREASURY DEPARTMENT
(
April 13, 1965
FOR Il'1MED [ATE RELEASE
l~ITED STATES TO ACT AGAINST
TAX AVOIDANCE UNDER CANADIAN TAX TREATY
Actilln vJi 11 ~Clon nl' initiated by the United States to tighten
thl' ta,,: rllll'~ that applY to income flowing between the United
StatL'~ and Canada so as to eliminate a tax avoidance device which
nmv perllit~ peopll' living outside both countries to receive
inv('stml'nt income from the United States at substantially reduced
tax ra t('~, the Trea~urv Depar tt11en t announced today.
This unintended tax preJerence results from the interaction
oj
C':-:isLing Canadian law and the provisions of the existing tax
treaL\' hl'th'l'l'll thl' United States and Canada.
The treaty provides
thaL a cll:lpany 'lrganL~l,d in Canada and receiving investment
incllil1C' fn):l1 the United State~ is ~ubjE'ct to a 15 percent U. S.
\vithhlllding ta:-: m) such income rather than the usual 30 percent.
Hu\vever, Canadian law pruvides that a company organized under
Canadian lav..; but deriving its income from outside Canada shall
he exempt fruil1 Canad ian taxes if the company is managed and
contrllileci outside Canada.
The combination of these provisions
l11akl':-l it p(l~sihle ror such a Canadian company to be used by
third countrv resident:..; as a device to avoid U. S. taxes.
A hlllding L'Ol1lpany, a mutual investment fund, or a similar
investment company created under Canadian law but managed and
contrl)llL'd in a "Lax havt>n' country may be used to make investments
in thl' United States by peuple living in countries that have no
tax treaty \vith the llnited States.
Such people can derive
Ll1vt>stillt>nt il1cl)me subject unly to a 15 percent withholding tax
in the lInited States and to no tax whatsoever in either Canada
or their hO:11(' C(luntrv.
A modi~ication of the income tax treaty between the United
States and the Netherlands last year led to elimination of the
Netherlands Antilles as a place through which third country
residents cDuld si:nilarly avoid taxes on investment income.
As
a result Canadian corporations may now be in the process of being
l'stablL·;\wd for the same purpose.
It LS anticipated that discussions will be held soon with the
Canad ian au t h"r i t ie s tu cons Lder a ppropr ia te measure s to eliminate
the tax avoidance described.
F-ll
000
- 3 -
and exchange tenders viII 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
trom the sale or other disposition of Treasury bills does not have
treatment, as such, under the Internal Revenue Code of 1954.
any
special
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 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 actus.lly
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 revis ion) 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 may not be used.
It is urged that tenders
be made on the printed forms and forwarded in the special envelopes which will
be supplied by Federal Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of customers
provided the names of the customers are set forth in such tenders.
others than
banking institutions will not be permitted to submit tenders except for their
own account.
Tenders will be received without deposit from incorporated banks
and trust companies and from responsible and recognized dealers in investment
securities.
Tenders from others must be accompanied by payment of 2 percent of
the face amount of Treasury bills applied for, unless the tenders are accompanied
by an express guaranty of payment by an incorporated bank. or trust company.
Immediately after the clOSing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public announcement will be made
by the Treasury Department of the amount and price range of accepted bids.
Those
submitting tenders will be advised of the acceptance or rejection thereof.
The
Secretary of the Treasury expressly reserves the right to accept or reject any
or all tenders, in whole or in part, and his action in any such respect shall
be final.
Subject to these reservations, noncompetitive tenders for each issue
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
for the respective issues.
Settlement for accepted tenders in accordance with
April 22,
~
in cash or other immediately available funds or in a like face
the bids must be made or completed at the Federal Reserve Banks on
1965
-------,
amount of Treasury bills maturing
_~A~p.-:.r~il~2~2=-"L.::17.9i:.6;;:;5:;x;_ _ _ _ _ _ __
~
Cash
TREASURY DEPARTMENT
Wt.\shington
FOR IMMEDIATE RELEASE,
XXXXXXXXX
April 14, 1965
~
TREASURY t 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 f!iJ.0 .000 , or thereabouts, for
cash and in exchange for Treasury bills mat~ring
April 22
m
of $ 21201QilzOOO , as folloW's:
91
J#
1965
,in the amount
-day bills (to maturity date) to be issued
April 22, 1965
,
~
in the amount of $ 1,200,000,000 , or thereabouts, represent~
ing an additional amount of bills dated January 21, 1965
and to mature
July 22, 1965
M
fBi
, originally issued in the '
amount of $ 1,001,051,000 , the additional and original bills
aa
to be freely interchangeable.
$ 1,000,000,000 , or thereabouts, to be dated
182 -day bills, for
nlJ
April 22, 1965
(CHJ
,and to mature
~
October 21, 1965
------fbij~~----
The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding
8S
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, on~-thirty p.m., EaStern standard time, Monday, April 19, 1965
~
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
•
TREASURY DEPARTMENT
April 14, 1965
FOR IMMEDIATE RELEASE:
TREASURY'S \,JEEKLY 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
,
, bi i Is maturingApril
'
Treasury
22, 1965,
in th e amoun t 0 f
$ 2 , 201 , 051 , 000 , as follows:
91-day bills (to maturity date) to be issued April 22, 1965,
in the amount of $ 1 200 000 000 or thereabouts, representing an
additional amount of bills dated'January 21, 1965, and to
mature July 22, 1965,
originally issued in the amount of
$1 001,051,000, the additional and original bills to be freely
interchangeable.
182 -day bills, for $ 1,000,000,000, or thereabouts, to be dated
April 22, 1965,
and to mature October 21, 1965.
The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be issued in bearer form 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 19, 1965.
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.
F-12
- 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 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 each issue 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
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 22, 1965, in cash or other immediately
available funds or in a like face amount of Treasury bills
maturing April 22, 1965
Cash and exchange tenders will receive
equal treatment. Cash adjustments will be made for differences
be~een the par value of maturing bills accepted in exchange and
t~ issue price of the new bills.
The income derived from Treasury bills, whether interest or
from the sale or other disposition of the bills, does not have
my exemption, as such, and loss from the sale or other disposition
)f Treasury bills does not have any special treatment, as such,
mder the Internal Revenue Code of 1954. The bills are subject to
lstate J inheritance, gift or other excise taxes, whether Federal or
ltate, but are exempt from all taxation now or hereafter imposed on
;he principal or interest thereof by any State, or any of the
}Ossessions of the United States, or by any local taxing authority.
'or purposes of taxation the amount of discount at which Treasury
lills are originally sold by the United States is considered to be
nterest. Under Sections 454 (b) and 1221 (5) of the Internal
',evenue Code of 1954 the amount of discount at which bills issued
ereunder are sold is not considered to accrue until such bills are
Old, redeemed or otherwise disposed of, and such bills are eXCluded
rom consideration as capital assets. Accordingly, the owner of
~asury bills (other than life insurance companies) issued hereunder
~ed include in his income tax return only the d1fference between
le price paid for such billS, whether on orig1nal issue or on
lbsequent purchase, and the amount actually received either upon
lIe or redemption at maturity during the taxable year for which the
~turn is made, as ordinary gain or loss.
~in
Treasury Department Circular No. 418 (current revision) and this
t1ce prescribe the terms of the Treasury bills and govern the
nditlons of their issue. Copies of the circular may be obtained from
~ Federal Reserve Bank or Branch.
000
-2-
Commodity
··•
··
Period and Quantity
:Uni t of: Imports as of
; Quantity: April 3, 1965
.
:
A.bsolute Quotas:
Butter substitutes containing Over 45% of butterfat,
and butter oil •••••••••••
Calendar year
Fibers of cotton processed
but not spun •••••••••••••
Peanuts, shelled or not
shelled, blanched, or
otherwise prepared or
preserved (except peanut
butter) ••••••••••••••••••
F-13
1,200,000
Pound
12 mos. from
Sept. 11, 1964
1,000
Pound
12 mos. from
August 1, 1964
1,709,000
Pound
Quo ta filled
Quota filled
TREASURY DEPARTMENT
Washington
IMMED lATE RELEASE
THURSDAY, APRIL 15, 1965
F-13
The
Bureau
announced
figur s on impo r t s f or conf 11Customs
wi
. . today preliminll'rV
~"e
.
f th of
0
e 0 0 ng commod1t1es from the begi.nning of th
t'
t
e respec 1ve quo a
periods through April 3, 1965:
sump t 10n
Commodity
·
··••
·
Period and Quantity
·: Unit of .: Imports as of
·•: Quantity .: April 3, 1965
•
Tariff-Rate Quotas:
Cream, fresh or sour •••••••
Calendar year
1,500,000
Gallon
377,897
Whole Milk, fresh or sour •••
Calendar year
3,000,000
Gallon
15
Jan. 1, 1965 -
Cattle, 1:)0 1bs. or more each
(other than dairy cows) ••
Cattle, less than 200 Ibs.
each •••••••••••••••••••••
Fish, fresh or frozen, filleted, etc., cod, haddock,
hake, pollock, cusk, and
rosefish •••••••••••••••••
Mar. 31, 1965
120,000
Head
7,469
Apr. 1, 1965 June 30, 1965
120,000
Head
475
200,000
Head
64,994
200,000
Head
526
12 mos. from
April 1, 1964
12 mos. from
April 1, 1965
Pound
6, 940,6UY
announced
Pound
5,6)1,316
12 mos. from 114,000,000
Pound
Pound
Quota filled
Quo ta filled
Pieces
Quota filled
Calendar year 24,38),589
To be
Tuna Fish ••••••••••••••••••
White or Irish potatoes:
Certified seed •••••••••••
Other ••••••••••••••••••••
IDrlves, forks, and spoons
with stainless steel
handles ••••••••••••••••••
11
Calendar year
Sept. 15, 1964
45,000,000
Nov. 1, 1964Oct. 31, 1965 69,000,000
Imports for consumption at the quota rate are limited to 12,191,794 pounds
during the first 6 months of the calendar year.
TREASURY DEPAR'll4»lT
Washington
IMMED lATE RELEASE
F-13
THURSDAY, APRIL 15, 1965
The Bureau of Customs announced today preliminary figures on imports tor consumption of the following commodities trom the beginning of the respective quota
periods through April 3, 1965:
·•
···•
Comnr:>dity
Period and Quantity
••
Unit of
•• Quantity
••
··
Imports as ot
··•••• April
3, 1965
••
Tariff-Rate Quotas:
Cream, fresh or sour
•••••••
CaleIXlar year
1,500,000
Gallon
377,897
Whole Milk, fresh or sour •••
Calendar year
3,000,000
Gallon
15
Cattle, (UO Ibs. or more each
(other than dairy cows) ••
Jan.
Mar.
Apr.
June
Cattle, less than 200 1bs.
each •••••••••••••••••••••
1, 1965 31, 1965
1, 1965 30, 1965
12 mos. from
April I, 1964
12 mos. from
April 1, 1965
1.20,000
Head
7,469
120,000
Head
475
200,000
Head
64,994
200,000
Head
526
Fish, fresh or frozen, filleted, etc., cod, haddock,
hake, pollock, cusk, arrl
rosefish •••••••••••••••••
Calen:iar year 24,383,589
Pound
6,9L1J,6U:lJ
Tuna Fish ••••••••••••••••••
Calendar year
To be
announced
Pound
5,631,316
White or Irish potatoes:
Certified seed •••••••••••
Other ••••••••••••••••••••
12 mos. from 114,000,000
Sept. 15, 1964 45,000,000
Pourrl
Pound
Quota filled
Quota filled
Nov. 1, 1964 Oct. 31, 1965 69,000,000
Pieces
Quota filled
Knives, forks, and spoons
with stainless steel
handles ••••••••••••••••••
JJ
Imports for consumption at the quota rate are llmited to 12,191,794 poun:is
during the first 6 months of the caleIXlar year.
-2-
COJIllIK)dity
···•·
·
Period and Quantity
:Unit of: Imports as of
iQuantity: April 3, 1965
.
;
bsolute Quotas:
utter substitutes contain-
45% of butterfat,
butter oil •••••••••••
~ over
~
11bers of cotton processed
but not spun •••••••••••••
)eanuts, shelled or not
shelled, blanched, or
otherwise prepared or
preserved (except peanut
butter) ••••••••••••••••••
F-13
Calendar year
1, 200,000
Pourrl
12 mos. from
Sept. 11, 1964
1,000
Pourrl
12 mos. from
August 1, 1964
1,709,CXXJ
Pound
Quota filled
Quota filled
-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:
Switzerland, Belgium, Germany, and Italy:
Country of Origin
United Kingdom ••••••••••••
Canada....................
France....................
India and Pakistan........
Netherlands...............
Switzerland...............
Belgium...................
Japan.....................
Es tablished
TOTAL QOOTA
4,323,457
239,690
227,420
69,627
68,240
44,388
38,559
Total Imports
: Sept. 20, 1964, to
: April 12, 1965
11,713
239,393
Established
33-1/3% of
Total Quota
1,441,152
75,807
43,264
22,747
14,796
12,853
341,535
China.....................
17,322
Eg-ypt.... .....••.•..•.••.•
Cu ba. • • • • • • • • • • • • • • • • • • • • •
8,135
Germany...................
Italy.....................
Other, including the U. S.
76,329
6,544
25,425
25,443
7,088
319,795
1,599,886
21,263
5,482,509
11 Included in total imports, column 20
F-14
United Kingdom, France. Netherlands,
Prepared in the Bureau of Customs.
Imports
11
Sep t • 20, 1964, to April 12, 1965
IMMFDIATE RELEASE
F-14
THURSDAY, APRIL 15,1965
Prel.1..minary data on imports for consumption of cotton and cotton waste chargeable to the quotas established by
Presidential Proclamation No. 2351 of September 5. 1939, as amen:ied, ard as mdified by the Tariff Schedules of the
United States which became effective August 31. 1963.
(The country designations in this press release are those specified in the apperrlix to the Tariff Schedules of the
United states. There is no political. connotation in the use of outmoded names.)
COTTON (other than linters) (in powxis)
Cotton wner 1-1/8 inches other than rough or harsh umer 3/4"
Imports Sep~er 20~ 1964 - ARrill~~96~
Country of Origin
Egypt and Sudan ••••••••••••
Peru •••••••••••••••••••••••
India and Pakistan •••••••••
China ••••••••••••••••••••••
Mez1co •••••••••••••••••••••
'&as.ll •••••••••••••••••••••
Union of Sonet
Social1at Republics ••••••
Argent~ •••••••••••••••••
Haiti ••••••••••••••••••••••
Ecuador ••••••••••••••••••••
11
?/
Established Quota
Imports
783,816
247,952
2,003,483
1,370.791
8,883,259
618,723
Count17 of Origin
Established Quota
Honduras ••••••••••••••••••••
68,899
871
Colombia ••••••••••••••••••••
124
Iraq ••••••••••••••••••••••••
2,657,001
!I
475,l24
5,203
237
9,333
~I
9
Except Barbados, Bel'Dll¥ia. Jamaica. Trinidad,
Except Nigeria am Ghana.
am
752
Par~ ••••••••••••••••••••
British East Africa •••••••••
Indonesia and Netherlands
New Guinea••••••••••••••••
British W. Indies •••••••••••
.igeria•••••••••••••••••••••
British W. Africa. ••••••••••
Other. i mIndi ng the U.s ....
195
2.240
71,J88
21,321
5,m
16.004.
Tobago.
Cotton l-1/St. or more
Established YearlY Quota - 45.656.429 Ibs.
Imports August 1. 196h - Apr;l 12 J 1965
Staple Length
1-3/8ft or more
1-5/32" or DJre
ife/St.
am umer
(Tanguis)
8ft or more ani UDier
11-3/8"
AllDcation
39.590,718
I;mports
39,3)0,206 (adjusted)
1.500,000
9,665
4,565,642
2,608,137
!?!!rw?rts
~IATE
wasn.J..ngtOn, D. C.
RELEASE
THURSDAY, APRIL 15,1965
F-14
Preliminary data on imports for consumption of cotton anj cotton waste chargeable to the quotas established by
Presidential Proclamation No. 2351 of September 5, 1939, as amemed, am as JOOdified by the Tariff Schedules of the
United States which became effective August 31, 1963.
(The country designations in this press release are those specified in the apperxiix to the Tariff Schedules of the
United states. There is no political. connotation in the use of ouUooded names.)
COTTON (other than linters) (in poums)
Cot ton umer l-1/S inches other than rough or harsh wner
~rts~ept~~l'-er20.
Country of Origin
Egypt and. Sudan ••••••••••••
PeMl •••••••••••••••••••••••
India and Pakistan •••••••••
Ch.iJ1a. ••••••••••••••••••••••
Mex:ico •••••••••••••••••••••
'Brasil •••••••••••••••••••••
Union of Sonet
Socialist Republics ••••••
Established Quota
1961L -
APl:i_L 1~L_196S
Imports
783,816
247,952
2,003,483
1,370,791
8,883,259
618,723
Country of Origin
Honduras ••••••••••••••••••••
? ,6::7 ,ocn
11
475,l24
5,203
~I
Haiti ••••••••••••••••••••••
Ecuador ••••••••••••••••••••
237
9,333
S,/
Except Barbados, Bermda, Jamaica, Trinidad,
Except Nigeria and. Ghana.
Established Quota
am.
••••••••••••••••••••
Colombia ••••••••••••••••••••
Iraq ••••••••••••••••••••••••
British East Africa •••••••••
Indonesia and Netherlands
Par~
613,899
Arge!lt1na. •••••••••••••••••
11
y
314"
New Guinea ••••••••••••••••
British W. Indies •••••••••••
liger.1a •••••••••••••••••••••
Bri tiah V. Afri ca. ••••••••••
other. inc100ing the U.s ....
752
871
124
195
2,24D
71,)88
21,321
5,m
16,004
Tobago.
Cotton 1-1/8" or more
Established Yearly Quota - 45.656.429 Ibs.
Imports Auguat 1.
1964 - AprjJ 12, 1965
Staple Length
1-3/8" or more
1-5/32" or a>re ani unler
i(e/8'1 (Tanguis)
1- an or a>re an:l umer
1-3/Bn
All.oeation
Imports
39. 590;n8
J9,j~~O,206
1.500,000
9,665
4,565,642-
2,608,137
(adjusted)
.r.ports
-2CO'ITON 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:
Country of Origin
Established
TOTAL QUOTA
Total Imports
: Sept. 20, 1964, to
: April 12, 1965
United Kingdom ••••••••••••
Canada •.•••••.•••••••..•••
France •.•••.•.•........•..
India and Pakistan ••••••••
~etherlands ••••
Switzerland.
• ••••••••
Belgium...
• ••••
J ap~n. •
• • • • • • • • ••••
China..
• •••••••••••••
Eg)'pt •••••••••••••••••••••
Cuba •••••••••••.••••••••••
Ge rrnany. • • •
• •••••••••
Italy .............•....•..
Other, including the U. S.
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
11,713
239,393
25,425
25,443
7,088
5,482,509
319,795
1,599,886
11 Included in total imports, column 2.
F-14
Established
33-1/3% of
Total Quota
Prepared in the Bureau of Customs.
1,441,152
75,807
43,264
22,747
14,796
12,853
Imports
11
Sept. 20, 1964, to April 12, 1965
~~~uri1-il~¥ARTMENT
W&.b~gton.
D. C.
F-1S
IYdEDIATE RELEASE
:.:::'H.::..;U~R=S.:=Dc:..A:;:..;y:;:..,>.;,A=P..;;:.R:..:I=..:L=--.:=1..:;;5.,o!~inJn.iri9r-~;;n;.5r.;Y
DATA ON IMPORTS FOR CONS1..,'MPTI0N OF UN)4ANUFACTURI:D LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISHED
BY PFlESIDE.'NTIAL PROCLAMATION NO. 3257 OF SEPTEMBF.R 22, 1958, AS MODD'IED BY 'ruE TARIIT SCHEDULES (IF '!'HE
DNITJi;D STATES, WHICH BECAME EnJl',cTIVE AUGUST 31, 1963.
OU.AR'l'ERLY QUOl'A PERIOD -
IMPORTS I'l']}d
925.01-
Ja.I1J.arj' 1, 1;6) - t•.arch J1,
JdflLldry 1,
1;;65 - .J.r"h 31. 1)65
ITEM 925.03-
,
UDITought lead ....
lead was te del scrap
Leaa-beariDg ores
del 111&terial.
.t
Protuotion
,
ITEM 925.02-
t
ZiDe-beariog oreB ant
materials
n'lt'l
.i.WI tral1..
11,220,000
:Qiiirterly QUota
Im ort. : Dntiable le....
•
'"1ft
11,2 Le" eVO
22,540,000
:o:uartei'ly Qiiota
Importa: ZiDO Corltent
•
t
\.
ITEM 925.04-
I
., Ulllrrought zil'lo (exoept alloy,
: ,d dno aDd. zinc eluat) aDd
-:
JOiiirterly Quota
, Dlttiable leael
l')
196,
I
Country
--.,J
:
:
zinc w&ste aDd s«ra,
Imports
l:q)orta
[Fou"ds J
(".nY"\.· \;:., )
~ ....... ' ....... I
22.540,CLL
Be1.g1U11l and
~ (total)
7,520,000
Bolbi..
5,040,000
1,1.1.)--,)
Canada
13,440,000
15,4-\\.1, ~'-V
15,920,000
15,~>' u,v:";v
66,480,000
6t,·~ ;U, L.U(J
Italy
Yexieo
Peru
16,1~,000
16, )[lJ,,-,
(;
lA,880,OOO
lC1:, 'icC
oountries (tot&l)
6,560,0<X>
;,))),156
-See Part 2, Appendix to Tariff Sohedules •
••Republic ot South Afrioa.
PREPARED IN TIfJI: FJREAU OF CUSTOM)
eee
3,600,000
1,7'',;, ,4 ... :.
3~J~SvJ["'J
70,480,000
7u,-tJ0,v~;C
6,320,000
Vt:; l7, »~?6
12,880,000
L"S7~,:nO
35,120,000
3,),0;20,\"00
3,7150,000
;,/)),7Sa
5~,000
;,4 jS,
6,080,0<x>
0,00l,
J~A7
t .... I.n.
yugoslaTi.
All. other
.:;, c·-tU,
36,880,000
Republio of the Congo
(to~rly Belgian Congo)
--Un. So. Urioa
37,840,000
9"'7,0;1
15,760,000
1 L , ;(, J, ~ 1 "
6,080,0<X>
L4 -'.,048
11,840.000
17,3'~C,vOO
l'c:~
TREASURY DEPARTMENT
Waahingtou_ D. C.
D6(EDU TE KELEASE
~URSDAY,APRIL 15
F-15
1965
~RELOO'N.ARY
DATA ON IMPORTS FOR CONSl'MPTI0N or UNldANUFACTURED LEAD AND ZINC CHARGEABLE TO THE CUOTAS ESTABLISHED
BY PRESIDUfl'lAL PRCCLAMATIC!!" NO. 3257 OF SEPTEMBF.R 22, 1958. AS MODD'IED BY 'f'HE TARlliT SCHEDULES
'!'HE
lJ~n STATtS, WHICH Bf::CAME EITJr,CTIVt AUGUST 31, 1963.
0'"
OU.lRl''t:RLY QUCYrA. PERIOD -
IMPORTS -
J ... 11.1 IO.\"J' 1, lJS~ - ;'.d.r,,:, '1, ,;65
J"'..J,r:; i,
1.S, -
,r r. ;~ . • /65
y
~
925.01-
Le"-beari~
Co1mtl"y
.t
I
I
I
Umrrought lead aM
lead waste anel scrap
oree
and. ua teriala
Prod.uoti Oil.
ITEM 925.04-
I'l'n.i 925.02.
ITEM 925.03-
Za.-beariDg ore., ani
material.
I
I
I
c
UlIIrrougbt zino (exoept alloy.
d zinc aDd zinc cltat) aDd
zino wallt~ aa4 sera,
orb
\t'Gunj;j
11,220,000
.luatral1a
Be141~
and
~
1 L, 2, C, ,,,{)
22,5040,000
,; ~ .. )-l~,
l.-
e
(total)
Bol1rt.a
canada
5,040,000
1 f 1 L 1. )"- j
13.4<40,000
1),4·.", A.v
15,920,000
.i";, :"
'J,
'..-Lv
66,480,000
6t.,. ;U,,,UU
Italy
Wexioo
16,160,000
Peru
16, iCiJ,,,
I.:
36,880,000
? ~,
~
12,880,000
l/,~
14,900.000
15,760,000
oountries (total)
6,560,000
,',,)),;56
.S88 Part 2, Appendix to Tariff Sohedules •
•• Republio of South Afrioa.
PRI:P~
IN
1'}-U;
B"u'REAU OF GUS TCW
i,tHU,Uv0
3,600,000
1,71" ,4 ••
7u,
~Ju.u,i\j
6,320,000
b,J 17, .i;>6
",dO
35,120,000
35,
.~u,LLlO
3,760,000
3, /')),7:"8
5,.440,000
:J,';
6,000,000
b,lJbl.,l0U
jo, 'N7
1... -, ~L • _
Y'a4[oslarla
.iU other
37,840,000
70~,000
of the Conco
(formerly Belgian Congo)
So. t.fl-ioa
3 4 7,U;1.
t;.,. 3
'j\,.
~publ1o
-4Un.
7,!'520,000
6,000,000
,I,
. / ' ~.:.
~..,.
,1,...1'.8
17,6040,000
17,'j'tC,iJlAI
TREASURY DEPAR'IMENT
Washington, D. C.
IMMEDIA TE RELEASE
THURSDAY, APRIL 15, 1965
F-16
The Bureau of Customs announced today preliminary figures showing the
quantities of wheat and milled wheat products authorized to be entered, or
withdrawn from warehouse, for consumption under the import quotas established
in the President's proclamation of May 28, 1941, as modified by the President's
proclamation of April 13, 1942, and provided for in the Tariff Schedules of
the United States, for the 12 months commencing May 29, 1964, as follows:
Country
of
Origin
Canada
China
··
Wheat
·· Hilled wheat products
··
•.
.. Imports
•
:
Imports
·
Established
··• Established
: May 29, 1964, ·
:May 29, 1964~
Quota
Quota
:
AEril 12. 1962:
:AEril 12.. 12 .2
·
(Bushels)
(Bushels)
795,000
795,000
Hungary
Hong Kong
Japan
United Kingdom
Australia
Germany
Syria
New Zealand
ChUe
Netherlands
Argentina
Italy
Cuba
France
Greece
Mexico
100
100
100
(Pounds)
3,815,000
24,000
13,000
13,000
8,000
75,000
1,000
5,000
3,815,000
5,000
397
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
100
2,000
100
1,000
100
Panama
Uruguay
Poland and Danzig
Sweden
Yugoslavia
Norway
Canary Islands
1,000
Rumania
100
Guatemala
100
Brazil
Union of Soviet
100
Socialist Republics
100
Belgium
Other foreign countries
or areas
800.000
(Pounds)
795,000
4,000,000
720
no
3,816,227
TREASURY DEPAR'IMmT
Washington, D. C.
IMMED lATE R.ELEASE
F-16
THURSDAY, APRIL 15, 1965
The Bureau of Customs announced today preliminary figures showing the
quanti ties of wheat and milled wheat products authorized to be entered, or
withdrawn from warehouse, for consumption under the import quotas established
in the President's proclamation of May 28, 1941, as modified by the President's
proclamation of April 13, 1942, and provided for in the Tariff Schedules of
the United States, for the 12 months commencing May 29, 1964, as follows:
Country
of
Origin
···
·
Wheat
· Established
·
Quota
(Bushels)
Canada
China
Hungary
Hong Kong
Japan
Uni ted Kingdom
Australia
795,000
:
Imports
: May 29, 1964,
: AEril 12. 1262
(Bushels)
795,000
100
Germany
100
Syria
100
New Zealand
Chile
Netherlands
100
Argentina
2,000
Italy
100
Cuba
France
1,000
Greece
Mexico
100
Panama
Uruguay
Poland and Danzig
Sweden
Yugoslavia
Norway
Canary Islands
Rumania
1,000
Guatemala
100
Brazil
100
Union of Soviet
Socialist Republics
100
100
Belgium
Other foreign countries
or areas
800,000
795,000
Milled wheat products
.
Imports
Established •
:May
29 1964,
Quota
:AQril 12 • 1202
(Pounds)
(Pounds)
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
3,815,000
4,000,000
3,816,227
720
3r:rt
no
~
DEPA.R'l'MENT
W•• hbg1;on. D. C.
F - 17
DAaDIATE RELEASE
rHURSDAY, APRIL
~y
DATA ON IMPORTS FOR CONSl..'MPTION OF um.!ANUFACTURJ:D LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISHED
BY PRESIDENTIAL PRCCLAMATION NO. 3257 OF SEPTEMBF,R 22, 1958, AS MODn-lED BY 'rHE TARIIT SCB£DULES Of '!'HE
uNITJi;D STATES, WHICH BECAME En'JI',cTIV! AUGUST 31, 1963.
OUAR'l'ERLY QUOTA. PERIOD IMPORTS :ITIld 925.01-
and ma terlal.
Pr04uotion
1\'
~~
-
ju,
JUfie
1'11 1, .j-,") - april
3,
1~i;5
l;b~:' \ or ::..s noted)
ITD4 925.03-
Le.t-bearlDg ores
Counby
ef
.~pril 1,
•
I
t
tn.rought lead aM
lead
a.ni scrap
,....t.
s
-
:
ITEM 925.04-
ITEM 925.02I
ZiDe-bearlDg oree aD4
material.
•
_s u.rroug'ht z1D.o (exoept all.".
:
of zino aDd dnc 4uat) aza4
zinc ".,.100 Ul4 . . .,
:
I
IQti8rlUJ.j QUota -
:~erl.y
, DIltlab1e 1.84
(PoUiiL)
~utral1a
11,220,000
Importa
~ ~,22l;,ClC
QUota
Dutiable leu
(pOUDai)
22, '540,000
:QUi.riii'1y QUota
Import., Zinc Content
:Cliii:rterly Cliiit.
Imports:
Br ••1((10
(PDunds )
-
2,506.076
Belgl\8 and
~ (total)
BoUTia
C&D&4a
5,040,000
.... 3,75 4
13,~,000
··'9,140,440
15,920,000
1,ll7, ;64
66,480,000
66,480,000
36,880,000
l.fexioo
16,160,000
Peru
'··1),6,<-,(;17
2,440,624
···);(,,7°8
37,840,000
:L,63>,j7~
12,880,000
70,..480,000
2,367,5 d
6,320,000
; ::'.8) .
35,1.20,000
2,6,9,3c6
3,760,000
Z,c87,4;;
Republ10 of the CoDgo
(formerly Belgian CongG)
So. Urioa
14,980,000
5,440,000
14,880,COO
yugosla.rla.
All other
countries (total)
6,560,000
···1,1"1,l)8
-See Part 2, Appendix to Tariff Sohedules •
• -Republic of South Afrloa..
"'Imports as
7,520,000
3,600,000
Italy
---un.
Imporia
found:;)
or
April 12, 1~65o
P1U:P.ARED IN TID.! B'JREAU OF CUSTCMS
15,760,000
"'L,2u7, ;:15
6,080,000
···869,81C
17,840,000
···r;,5 3 .3,1S,36
6,080,000
(;, \..";\" , \,'1... (,.,
IlA(EDll n; hELEASI:
[URSDA Y, APRIL
15l>~
F-1.7
DATA ON IlofPORTS FOR CONSl'MPTION
or
t1NWA..Nill'ACTUR1:D LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISHED
1958" AS MODIFIED BY '/'HE TARIIT SCHEDULES C'T THE
tJN:IT1i;D STATES" WHICH BEC.U1I: DTIX::TIVJ: AUGUST 31, 1963 •
FlY PRESIDENTIAL PRCCLAMATIC!f NO. 3257 OJ' SEPTEMBf.R 22,
OUlRl'uu.y QUar.l PERIOD -
IMPORTS :rrnd 925.01.
.;< ) - Jur.e )'-', 1)':5
:'prll
j,
"r!
1, <;, ~
1
,prf 1 3, 1;~., \ or ~s tlotddj
ITD4 925 .03·
•,
IT»of 925.02.
ITEM 925.04-
f
Le ....-beari~ ores
and material.
COWltry
•t
Umrrought lead &at
lead wute ant .crap
(::.t::.I,
. "--\
f
ZiDe-be&riDC ores ani
material•
•, Uarrought ziDo (exoept alloy.
aDd d~ dut) and
ziDc wast. aai sera,
: .t zino
Pr~uotion
I
lau&rtirLyWota
Dlltlable lead
I
Autralia
88141,.
IQiirlerly QQit&
Import.
(PoUiili)
ll,220,OOO
~
.. ,2?"",i..l\.,
Datlable le....
(pcniDli)
22,540,000
:
sQiii"tirly QiiOta
Import.: ZiDc ConteDt
r
tQi1&rterly QU't".Imports
By w.~
(PounuB )
••• 3J 75 4
13,-4-40,000
·"9,1410,440
15,920,000
1,177, ;64
66,480,000
66,480,000
36.880,000
lMrloo
16,160.000
···15,65l,C42
2,440,624
other
oountries (total)
37,640.000
1<,69/,379
12,880,000
2,3 6 7,5..1
6,320,000
2Ji,H;"
35,120,000
2,6',9,3l6
3,760,000
2, A17,479
5~,OOO
1,.4.980 ,<XX>
14,~3C,LGll
Y~oslarla
~ll
···J;L,7u8
70,.480 ,000
Repuhlio of the COIICo
(formerly Belgian Congo)
- "'Un. So. ilri...
7.520,000
3,600,000
Italy
Peru
~~--
.I.porla
2,5 c6,076
and
5,040,000
-
roundS)
lAtta-IIl'C (total)
Bollrl.a
-~-~
6,560,000
···1,1·',1,l)8
-Seo Part 2, Appendix to Tariff Sohedules •
•• Republio of South Afrioa.
···Imports as or April 12, 19650
PREf>!JU:D IN TID.: B'JREAU
or
CUSTCl£
15,760,,000
···2,2'-'7,i'15
6,080,000
···c69,81C
17,840,000
···o,5:lJ,I)J6
6,080,<XX>
6,L-ll,llG
TR2ASURY DEP;l.:iTE~nT
'/ '{SHINGTOn
IMMEDIATE RELEASE
THURSDAY, APRIL 15, 1965
F-18
The Bureau of Customs has arr~ounced the followinf preliminarj
figures showing the imports for co~s~~ption from JanuruJ' 1, 1965,
to April 3, 1965, inclusive, of co~odities under quotas established
pursuant to the Philippine Trade Ae;reenent f?evi::;j.on Act of 19~5:
Corrrnodity
Established .A..nnual
Quota Qu3.nti ty
Unit 0:
Quantity
Imports as of
April 3, 1965
Buttons ••••••••
510,000
Cigars •••••••••
120,000,000
Number
Coconut oil ••••
268,800,000
Pound
169,712,LS9
Corda.ge ••••••••
6,000,000
Pound
2,23 8,31l2
Tobacco •••••••.
3,900,000
Pound
1, S23,60L
Gross
128,249
1,810,LI87
TREASURY DEPARTMENT
I{ASHINGTON
IMMEDIATE RELEASE
THURSDAY) APRIL 15, 1965
F-18
The Bureau of Customs has announced the following preliminary
figures showing the imports for consumption from January 1, 1965,
to April 3, 1965, inclusive, of commodities under quotas established
pursuant to the Philippine Traoe Agreement Revision Act of 1955:
Established Annual
Quota Quanti ty
Unit of
Quantity
Buttons .••••...
510,000
Gross
Cigars •••••••••
120,000,000
Number
Coconut oil ••••
268,800,000
Pound
169, 712 ,LI~9
c:ordageo •••••••
6,000,000
Pound
2,238,342
Tobacco ••••••••
3,900,000
Pound
1, r;23 ,60L
Cotmlodity
Imports as of
April J, 1965
128,249
1,810,L87
- 2 technological improvement in the Bureau of Engraving and
Printing.
NEW SECRETARY WITNESSES FIRST
$1 NOTES BEARING HIS SIGNATURE
Secretary of the Treasury Henry H. Fowler today inspected
the first sheet of 32 one dollar Federal Reserve Notes bearing
his signature to come off the press.
Henry Jo Holtzclaw, Director of the Treasury's Bureau of
Engraving and Printing, supervised the first run during which the
new signature was overprinted on the currency.
The event has
become traditional over the years.
On the same printing run each new note receives the overprinting
of Secretary Fowler's signature, the Treasury Department's seal,
a seal denoting the particular Federal Reserve Bank issuing the
note and a serial number.
~"IfJ~~ji"'d,e.~a-'"'ft~ will be the initial production from new
ultra-modern sheet-fed rotary intaglio presses which have just
been installed as a part of a continuing program of
·
T~R~E~A~S~U~R~Y~D~E~P~A~R~T~M~E~N~T~~~~( ..~.. ,
WASHINGTON. D.C.
April i6, 1965
~
FOR IMMEDIATE RELEASE
NEW SECRETARY WITNESSES FIRST $1 NOTES
BEARING HIS SIGNATURE
Secretary of the Treasury Henry H. Fowler today inspected
the first sheet of 32 one dollar Federal Reserve Notes bearing his
signature to come off the press.
Henry J. Holtzclaw, Director of the Treasury's Bureau of
Engraving and Printing, supervised the first run during which
the new signature was overprinted on the currency.
The event
has become traditional over the years.
On the same printing run each new note receives the
overprinting of Secretary Fowler's signature, the Treasury
Department's seal, a seal denoting the particular Federal Reserve
Bank issuing the note and a serial number.
The sheets of currency will be the initial production from
new ultra-modern sheet-fed rotary intaglio presses which have
just been installed as a part of a continuing program of
technological improvement in the Bureau of Engraving and Printing.
000
F-19
- 26 -
these instruments in ways that respond to the needs of a
complex
~nd
rapidly changing economic seene.
To succeed in that task requires that our approach be
pragmatic rather than dogmatic, balanced rather than extreme,
req-~ires
resilient rather than rigid.
It
and the private sector of our
econo~y
the pursuit of our national
econo~ic
that the public
work as partners in
goals.
We have seen
what surpassing accomplishme:l.ts can come from follo'Ning this
path.
If we but continue to follow it, I see no end to
those accomplishments.
- 25 -
.-
/
I,
,
i
We have learned in recent yea~ that we cannot fashion
~
-
successful economic policies by remaining in thrall to
some
!:..~gid
an::) abstract theory,
doct;~n:i~e diC~~
of the
pa~t.
?{'.,bY ad~;!ri~g, ,~o ~ome
ee
~ve learn:~"th:
folly
--,
of E.:Yin~ upon one policy instrumentE"lone -- to th.-;g
1\
~~lusion
of all the
res~.
-:£ for
a single solution to all
our problems.
The success of the past four years has demonstrated how
in proper
proportions~
to move us simultaneously toward
mUltiple economic goals.
tl
stren~1~s
and its
Each p9licy instrument has its
limitations~
The task is to coordinate
- 24 -
~n~~s
those deficits dWindle)it will become
~ore
and more
urgent that we progress toward some agreement with our foreign
friends on ways to strengthen the internatiodal monetary
': ! I'. ;
system and assure fi_nternationalf liquidity la'dequat~ for
I..-.
I
j"
V"
"'-!
.-
(,
:
/1,
__ A
c:
:'\
"-iw.;
expanding [nternationag trade.
1\
~us,
on both the international and
do~estic
economic
fronts, we do not suffBr from any lack of challenge, or any
lack of opportunity.
But~ere is no challenge and no
\
opportunity before us which we are not far more able to meet
than we were four years ago.
If we continue to build upon
the progress and the policies of those years,
forward in all sober confidence to sustained
o-Ll
all fronts far into the foreseeable future
we can look
economi~
0
progress
- 23 our unflagging efforts to make our economy continually
more competitive in world markets and continually more
attractive and more accessible to foreign capital o
It
must come, as well, from European efforts to improve their
own capital markets -- markets whose
deficie~cies
become
" I}
: :,J ,.
more apparent as our ~1.orte7-ru,~ measures to ,halt excessive
/t.
capital outflows take firmer and firmer hold .
. ,: I:
rE1.~very
success
§
this
natio~' in
moving toward lasting
~
balance in our payments has begun to throw into
sharperL~~
jsharperirelief a potential problem in our international
~
-J
paym2nts system -- a problem that will require concerted
attention in the months ahead.
For the United States can no
longer afford to furnish steady increases in international
liquidity through deficits in our international paym2nt,\--~
\.
,
- 22 -
I have no doubt that this voluntary program will succeed.
And surely there can now be no doubt in anyone's mind -here or abroad --that American government and American
/ /, i
Ai
t .,.;",..,
business are ~sWer~ing in their mutual determinati~to
bring our balance of payments deficits to a swift and sure
end. §~~e will be no let up on our efforts to
t fL.
Hf fA
'I:'" /'7/1 Ilf
e
,c
a1 :'( feach it iwe must, and I~-;ach it/ we shall •
.-J '-. t\ ~.
1:.:: 1\ ~J
We do not, however, conceive of the voluntary program
as a final or fundamental solution to
payml=nts problem.
O'lr
balance of
Nor do we join with those who
would
have us hide within a tight protective shell of direct
,-11 '
1\
controls or rashly risk G"e, damage to O'.lr domestic economy
t:,
that
J
would corne
fr~ applying
a hard brake to !;ssenti!2l credit
1\
expansion.
On the contrary, the more lasting solution to
our balance of payments problem llnst continue to come from
- 21 The President's new program calls for redoublinev all
Iii'
our prior balance of payments effort's.
/T
i!
..
But
Ii '
i'
[t~ crucia~
J'j
~OViSi~ is the call _~our bQsinesses and banks to cut
down on the flow of our capital abroad --until new
arrangements in the internatio:lal monetary system and
improved. capital ma.rkets abroad offer assurance that uninhibited
capital flows will not endanger § e soundness
E
o~ the
d:>llalj,
~
its position as the world's leading reserve currenc;] Over
the next fewwe2ks we will have some first liard figures to
show exactly how successful that voluntary effort has been
thus far.
But we have only to look abroad and see how much
dearer and scarcer dollars have become to recognize what
good results that effort
h~~~;i~~ded.
- 20 -
--A
in markets abroad"
E
Ii
a result, our commercial
export~
t~st year exceeded the 1960 level of $900 million, or
~rcent -- giving us a commercial trade surplus of $3~
~llion. j
~,..i
We have also reduced by almost $500 million the annual
balance of payments cost of a foreign aid program of far
larger dollar dimensions.
Today, 85 percent of O;.lr foreign
aid commitments are spent for American goods and services.
In spite of rising costs abroad, we have cut $700 million
from our aet military expenditures abroad.
Despite these improvements we had, as you know, a
balance of p,3ym .~nts deficit last year of $3 billion -- largely
the result of swelling private capital outflows that last
year amounted to $6Q4 billion, $2.5 billion more than in 1960
and $2.1 billion more than in 1963.
- 19 ..-~
~nitiative of the American investor
:j exceed
the total
of foreign investment in the United States, plus all other
liabilities to foreigners, by some $18 billion, a figure
that grows larger every year.
Moreover, the hard-won improvement in our competitive
position, the balance of payments measures that we have
employed over the pa.st four years, and our rising returns
from private foreign investm2nt, have brought us s.ome $3.5
billion worth of balance of payments improvement -- eno'Jgh,
all else aside, to have
gi~~n
us virtual
ba~ance
in our ~~
. . ~~_~.~---)~~~~."t'l}'>
1
! "?"'''''.~''''-. ,~" '.. ;:~ ." ~ _ . I
-~''''-'T-;
I...
.....
...
.
,/
., ~
,t--t
~--'---- ~
__ payments last year;{;/:v,,:"
A=C',"I~i :>-~:-VC-I_,'-
itlj;'J:.<.ttt:::;-k'7::";/Op~:~. (;-J~ .~ -.:~b~L_~_
tL ~Ti¢-wn'
..
i'
'::-c-
-.~
J -'-
\~ '<- .,.~d~~,,_rl
.-v.. "{
-
.
-H -,. 1'-' .".1
,_,_:J-, !M-t.,.~·Jv•••:::),-,. ·/"T'---.··u-.·
In a climate of wage-price stability, our tax measures
to heighten incentives and encourage greater productivity at
at home , alonQ'C> wit h n~1ffierous direct aids to exports, have
helped make American business a formidable competitor indeed
- 18 As President Johnson pointed o~t in his Balance of Payments
Message earlier this year, we have the world's most productive
and efficient economy, the world's largest sup;>ly of gold,
the world's strongest creditor position, and -- by virtue of
o:J.r fine record of price stability -- the world's most
favorable trade position.
l~~erefore,
let there be no
-Z. '
II /"
--'I
-~
confusion: our balance of payments problem~uld scarcel.?:J
K. in",' I,' r
: '
~ mor~ unlik~the
1\
classic pattern in which, because
[9f
'- 1/ 11/ I
"~'
itj
~I
enU!..!,
~ability t.::J compete successfully, one country (f~ils tc:J sell
1\
, /T
f
as m:J.ch goods and services as it buys.
Our
com~ercial
trade
surplus last year stood at $3.7 billion -- over $1 billion
larger than it was four years ago, and more than twice the
size of West Germany's, the next largest in the world.
o~
And
.
.
t men t s abroad,i-- reflpcting
the vigor and
prLvate
1nves
L.
- 17 commercial banks) where it might contribute to inflatio'a.
But continued ';.vage and price stability must depend in
the future, as it has in the past, upon the determination
of American business and American labor to avoid wage
rises that outdistance our gains in productivity and price
rises not justified by actual cost increases.
Wage and
price stability is vital to both our balance of payments
andour domestic economic progress -- and it is to American
business and American labor that we must look to maintain it.
On the international financial front, as in our home
"
/
J
;/
-,
r:
1,---.
' J/. ,.,'
/,I /'
..' ,_'-' '.
/
.
'-
I
,_
",..__''
econo.:ny, ithe ch.allenges !that
t1
-.
w:'
face bear
resemblan0
1L---
1\
e.those we faced four years ago.
:~tt~
Fm:" whil,( the challeng,3'
\.,"
~ face today is urgent, we can meet it ~jlth the full
'-"
confidence that we deal from a position of growing strength.
- 16 -
economic machine
~n h~stor
.1..
Y
.L.
an d app 1y t h em, more and more,
to the task of helping the many poor or disadvantaged in
our society who do not fully share in t~e creation or i~
't"-.,-,
~he enjoyment of {its abundant life •
. ::0-.. .. _.
.---_.-1,..
~
At the same time, nothing could be
I. "
vvA
--- -
.~. ! i' f 'J
S0
foolish or so
L.
~rmfu~ as to ex~A.nd our talents and our resources in trying
"
to sustain our economic upsurge and extend its benefits
to
~ore
and more of our citizens, if we fail to protect
'"
.......,
our hai-won gains against inflation.
The policies of
this Adninistration will continue to support strong and
sound, but not excessive, growth in our economy and in the
availability of credit essential to that kind of growth.
For its part, the Treasury will continue to manage the public
debt prudently aRd3n:tm.d~ -- seeking to place any increase in
that debt in the hands of private savers rather than in
- 15 -
challenges we face in the domestic economic field.
And any
effective answer to these challenges cannot corne from
government programs alone -- it must come, on the contrary,
fro~
the joint effort of
govern~ent
and the private sector.
to train or retrain the unskilled and to place them in
productive jobs.
But surely there is enormous room, and
need, for more programs of this kind.
And most critical of
all is the need for private industry to seek ways of
synchronizing its recruitment policies with these retraining
programs, whether public or privat.,
I
I t will do no good
t~
\equip !!len with skills unless they i can find jobs in which t~
~
!
J
,
j
r
initiative and ingenuity that have fashioned the most powerful
-14 -
~ \while our economy is still not operating at full
the point where growing demand alone cannot make the inroads
upon unemployment we want without undermining the gains in
efficiency we need or exerting a strain upon our prices.
I
i'he<:;;:-i~"no qu~stion
but that we must maintain a strong and
!balanced growth in demand to keep pushing down upon unemployment.
t
!
!
: At the same time, it is imperative for us to preserve stable
y:ri~~_:~
This means growth in demand must be accompanied
by a broad and growing attack on so-called hard core, or
structural, unemployment.
Through such programs as Manpower
Retraining and the Job Corps we are just beginning to mount
such an attack.
The need to reduce structural unemployment and the need
to preserve price stability are two of the paramount
- 13 were largely the product of o'~r failure, while our problems
today issue, in large part, from the very success of our
labors over the last four years.
Daspite the sure progress we have made in creating
I-~
f,','c
more jobs we have f..till n1 yet rr,:ac~ed ev:~ our interim
goal of 4 percent unemployment.
To reach that goal, we
must sustain a steady growth in demand -- a growth to
w~ich
governm2nt fiscal policies have made, and will continue to
m~k~a
vital contribution.
T!.le prudent amO'..lnt of excise tax reduction we have
.---~
scheduled for the last half of
this~:a~~~~j,
while improving
our tax structure ,,,J,cilso help sustain our economic momentum
by expanding private purchasing power.
At the sarna time, it
will offer new incentives for price reductions.
- 12 -
wage-income for the working-man, greater profits for the
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seen what manifold
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that kind of cooperation can brin,g to all Americans,
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lit would be foolish indeed to set limits on what accomPlishmentJ
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fthe future can bring from ,gro'wing cooperation between
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[}efore in our history}' the full resources of this nation in
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a
concerted~d coordinat~~attack
upon the problems that
confront 'it.
We are fortunate that the problems before us today are
vastly different from those that loomed ahead four years
ago.
For those early problems -- domestically, at least
- 11 -
overemphasize~l:
an achievement that, in my
;~)
jUdgemen~~
till prove itself more and more vital to our future growth/
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I speak of the remarkable degree of cooperatior~/)that
-',\.
t~.,-t:;::-'~l'-
has gradually emerged over the past four years between
business and labor and government.
As we have pursued policies
to fashion a better balance between the public and private
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sectors, business and labor and government have:moved as well!
- 11
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can achieve much more than by pulling apart.
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They have ,been
more concerned about working together toward greater
abundance for all and less concerned about who receives the
greater ma,rginal advantage -- and the result has been greater
/
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10
:
Our resurgent economic performance since early 1961
has added more than $100 billion ~n real terms to our national
o~tput
-- a total that far exceeds the entire added output
during the same period by all of Western Europe.
the
inc~~
!
In fact,
alone in our national output over the past
four years surpasses the total national outP'.lt of any other
nation of the Free World -- and continues to widen the
already e:1.ormous distan'2e that separates our ability to
produce from that of the Soviet Union.
These are the gains, and the policies, upon which We
must build -- for they offer us solid ground
can move confidently into the future.
fro~ w~ich
we
These, however, are
not the only gains the past four years have brought us.
For underlying all these is an achievement whose importance
is impossible to measure and equally impossible to
,
- 9 over 60 percent in profits after taxes o
Business investment
in new plant and equipment has recovered sharply from its
tendency during the 1950's to lag or decline.
This year's
planned expenditures for plant and equipment stand,
according to the latest official survey, at $50.2 billion,
or more than double the level of a decade ago.
~
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,!
And the
I
$14.5 growth in those expenditures for the five years 1961 ....
1
1965 exceeds by $4.1 billion the increase for the entire
decade of the 50 1 sa
And, after taxes and in constant
dollars, average per capita income has grown by an average of
3 1/3 percent a yearo
And these have been real gains
preserved by a record of price stability unmatched by that
of any other major industrial country.
- 8 U
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_ _ 'e~
two-thir~;}.helo~.> the average annual increase of $3 billion
over the previous 10 years.
The response of the private economy to these policies
has been magnificent.
From the first quarter of 1961 to the
quarter just ended, our Gross National Product,has grown by
an average of more than 5 percent a year, in constant prices o
. !
" I
The unemployment rate has fallen from f&.19J percent in
...~
,
February of 1961 to 4.7 percent last month -- a seven-year
10No
At the same time, we have gained some 5 million jobs,
including 1.7 million in the last twelve months..
Partic:llarly
significant is the 600, 000 }~i1lio~ job gain in manufacturing
over the last twelve months, bringing total manufacturing
¥'
e~ployment back around the peak level of l7~ million for 1953)
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Profits have reached new highs each year, for a total gain of
- 7 / ,(
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We complemented our initial move to ~courage the/
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income levels -- from the tax load borne by individual
taxpayers, thus providing a massive increase in private
demand.
To these tax measures for expanding the role of our
private sector, we joined a rigorous program of control
over government expenditures -- a program that has reached
new heights of intensity and effectiveness under the leadership
of President Johnson.
In his Administrative judgets thus far -i
'
those covering fiscal years 1965 and 1966 -- President
.
,
Johnson has I;ucceeded in holding down! total expenditure
~~
t\
J),',ill
increases~to
an average of $1 billion a year, $2 billion or
- 6 -
Our first
step[therefore~! was
to redouble the
~
incentives for greater private domestic investment in new
plant and equipment -- investment that had
bee~
lagging
for far too long and whose strength was essential if we
were to have a firm foundation for sustaining uninterrupted
economic growth for any long period of time o
The Revenue
Act of 1962 granted a tax credit of 7 percent on new
investment in ma.chinery and equipment, and in that same year
the Treasury reformed and liberalized the tax treatment of
depreciation.
Together with the cut in the corporate tax
rate contained in
the Revenue Act of 1964 -- amounting to
some $207 billion at current income levels -- these measures
have raised the profitability of a typical investment in new
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equipment by m:)re than 1i!!:1'~L ce~.~.
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- 5 -
We were firmly convinced that the only final answer to
our problems on both the d3mestic and international fronts
/
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lay in
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)restorin~ the private sector ~~ its full and vigorou?1
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[rol~las the prime mover in the achievement of our economic
-.l
goals.
The private' economy sim?ly could not do it s job
0v'-.tLv-:,:k.';-'L-.1
L\J--V,-,~ ll.. ,-~ o-~'-¢''-
as long as/.. it continued to labor under excessively high
wartime tax rates -- rates originally a?plied to restrain
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strong inflationary pressures. thatl\ RO-'--J:.o~~
We needed to sharpen private investment incentives, to heighten
the private initiative and effort that alone could accelerate
the strong and stable economic growth we had to achieve -and that we knew we would 9chieve once the native ingenuity
and drive of American business, freed of excessive tax rates,
could turn its full attention to the tasks at hand o
- 4 today could scarcely be more different from those we faced
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four years ago
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recession
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acutely aware that each of the three prior
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recessions had been followed by ~ccessivelj shorter and
weaker recoveries, and that the previo'J.s recession had
r
.:
produced the largest peacetime budget deficit in our historyo
Unemployment was intolerably high.
Business investment was
"}>
far less than we needed to generate more vigorous and viable .
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At the same time, a series of balance of
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payments deficits -- averaging, on the basis of regular
transactions, almost $4 billion a year from 1958 through
1960 -- had made us vulnerable on the international front.
And to judge what those policies and that effort must be
if we are to sustain the current upsurge, we must understand
t
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what they have been in the past .:A \.1,.. /'-\~!
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i:Ltr \.C~;t~i~l~l;' ~h~' ~~pa~~-i'o'n' '&e' ~6~' ~~j~y' ~a~
foregone conclusion four years agoo
far from a
)ert P. 4
According to the Gallup Poll published yesterday, the
&~erican
people consider
econo~ic
problems the least important
I
facing the nation -- in~ontrast to the people in many
I
countries abroad who cite economic problems as their most
important.
And the latest quarterly report on conSQmer
attitudes by the University of Michigan finds consumer
confidence in the nation's economic outlook at its highest
level since 1956
0
The business com:nunity continues to demonstrate
through its investment plans and behavior that it shares this
same solid confidence in our economic prospects o
But while
our grounds for confidence are indeed firm, we must never make
the cardinal mistake of taking continued progress as a
foregone conclusion o
For continued progress rests on the
continued success of proper government policies and private efforto
- 3 -
that included World War 110
There could be no better
testimony to the success of our economic policies over
the past four years.
---.
lThey h:lve proven their prowess
......
~ very large part, achieving precisely what they we::)
~~tended to achieve.1
As Under Secretary of the Treasury,
I was privileged
to participate in the first formation of those policies -and to assist at every major stage of theiL" development.l C~l¢-S·l-L.'V'
and execution.
I
am convinced 'We must continue to build
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upon those policies -- End ~o revise them, adapt them, emp 1
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~hem in new combinations . ~~ new problem~-\ new needs (~~d ne:::j
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~allenges may requireoi
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p:Jlicies cannot be static in a world as rapidly
~/
changing as ourso ~n~ the problems and prospects we face
- 2 -
augment~riva~incentives,
overhaul of our tax system to
}AI
1
initiative and effort rand thus to enhance the role of th~!
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private sector lin') our econo:n i
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- \grow.thid
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-- and, second, an
J.
Ii
overall monetary approach ,that would} assure the ample
availability of long-term eredit so essential to domestic
growth while maintaining short-term rates at levels high
enough to prevent any excessive outflow of dollars abroad
p
These policies, he declared, would lead us -- and I quote -"to a period of growth and prosperity during the Sixties
such as this Nation has never known."
Next month, the economic expansion that began in
I
February of 1961 will become the longest/expansion in
the entire history of
O~lr
nation -- except for the expansion
FOR 7lELEP.Sr: AFTr.H\I,~C':;s';~~f'A}'~;:~·~)
SATU!LAY, ;.?~IL 17, J-~}_f)..:..~~,~ _ __
REMARKS BY TaE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE THE ANNUAL CONVENTION OF THE AMERICAN
SOCIETY OF NEWSPAPER EDITORS
AT THE WASHINGTON HILTON HOTEL
SATURDAY, APRIL 17 \ 12 :45 P .Me., ....:......_'.'~r __
ICJ(p:5.
\
I am particularly happy to make this, my first fu1lfledged speech as Secretary of the Treasury, before a group
that plays so vital a role in informing the American
public about the complex and critical issues that confront
our nation o
As I d,:) so I am conscious that I observe a precedent
set four years ago[ almost to the day JWhen mY' distinguished
predecessor and good friend, Douglas Dillon, made his
maiden economic address as Secretary of the Treasury before
this very same groupo
In that address, he set forth a two-fold program to
bring us closer to our econo~ic goals: first, a complete
F-20
TREASURY DEPARTMENT
'.Jashington, D. C.
FOR RELEASE AFTERNOON NEWSPAPERS
SATURDAY, APRIL 17, 1965
REMARKS BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE THE ANNUAL CONVENTION OF THE AM3RICAN
SOCIETY OF NEWSPAPER EDITORS
AT THE WASHINGTON HILTON HOTEL
SATURDAY, APRIL 17, 1965, 12:45 P.M., EST
I am particularly happy to make this, my first full-fledged
speech as Secretary of the Treasury, before a group that plays
so vital a role in informing the American public about the complex
and critical issues that confront our nation.
As I do so I am conscious that I observe a precedent set four
years ago when my distinguished predecessor and good friend,
Douglas Dillon, made his maiden economic address as Secretary of
the Treasury before this very same group.
In that address, he set forth a two-fold program to bring us
closer to our economic goals: first, a complete overhaul of our
tax system to augment incentives, initiative and effort in the
private sector of our economy -- and, second, an overall monetary
approach to assure the ample availability of long-term credit so
essential to domestic growth while maintaining short-term rates at
levels high enough to prevent any excessive outflow of dollars
abroad. These policies, he declared, would lead us -- and I quote
"to a period of growth and prosperity during the Sixties such as
this Nation has never known."
Next month, the economic expansion that began in February of
1961 will become the longest in the entire history of our nation
except for the expansion that included World War II. There could
be no better testimony to the success of our economic policies over
the past four years.
As Under Secretary of the Treasury I was privileged to participat
in the first formation of those policies -- and to assist at every
major stage of their development, adoption and execution. I am
c on v inced we must continue to build upon those policies -improving them as we can, and adapting them to meet new problems and
new needs. But policies cannot be static in a world as rapidly
changing as ours. The problems and prospects we face today could
F-20
- 2 -
scarcely be more different from those we faced four years ago.
According to the Gallup Poll published yesterday, the American
people consider economic problems the least important facing the
nation -- in contrast to the people in many countries abroad who
cite economic problems as their most important. And the latest
quarterly report on consumer attitudes by the University of
Michigan finds consumer confidence in the nation's economic outlook
at its highest level since 1956. The business community continues
to demonstrate through its investment plans and behavior that it
shares this same solid confidence in our economic prospects. But
while our grounds for confidence are indeed firm, we must never
make the cardinal mistake of taking continued progress as a
foregone conclusion. For 'continued progress rests on the continued
success of proper government policies and private effort. And to
judge what those policies and that effort must be if we are to
sustain the current upsurge, we must understand what they have
been in the past, how the best features can be conserved and built
upon for the future. It will be our purpose to appraise the past
as a basis for the future.
Certainly, the expansion we now enjoy was far from a foregone
conclusion four years ago.
Then we were just emerging from our fourth postwar recession
acutely aware that each of the three prior recessions had been
followed by shorter and weaker recoveries, and that the previous
recession had produced the largest peacetime budget deficit in
our history. Unemployment was intolerably high. Business
investment was far less than we needed to generate more vigorous
and viable economic growth and maintain a strongly competition
position in world markets -- including our own home market which
was becoming increasingly open to import competition. At the same
time, a series of balance of payments deficits -- averaging, on
the basis of regular transactions, almost $4 billion a year from
1958 through 1960 -- had made us vulnerable on the international
front.
We were firmly convinced that the only final answer to our
problems on both the domestic and international fronts lay in
reinvigorating the private sector as the prime mover in the achievement of our economic goals. The private economy simply could not
do its job as long as incentives were dulled and it continued to
labor under excessively high wartime tax rates -- rates originally
applied to restrain strong inflationary pressures that accompanied
wars and emergencies.
- 3 -
Our first step was to redouble the incentives for greater
private domestic investment in new plant and equipment -- investment
that had been lagging for far too long and whose strength was
essential if we were to have a firm foundation for sustaining
uninterrupted economic growth for any long period of time. The
Revenue Act of 1962 granted a tax credit of 7 percent on new
investment in machinery and equipment, and in that same year the
Treasury reformed and liberalized the tax treatment of depreciation.
Together with the cut in the corporate tax rate contained in the
Revenue Act of 1964 -- amounting to some $2.7 billion at current
income levels -- these measures have raised the profitability of
a typical investment in new equipment by more than one-third.
We complemented our initial move to accelerate private investment by reducing substantially personal income tax rates across
the board, thereby cutting more than $11 billion -- at current
income levels -- from the tax load borne by individual taxpayers,
thus providing a massive increase in private demand.
To these tax measures for expanding the role of our private
sector, we joined a rigorous program of control over government
expenditures -- a program that has reached new heights of intensity
and effectiveness under the leadership of President Johnso~. In
his administrative budgets thus far -- those covering fiscal years
1965 and 1966 -- President Johnson has held total expenditure
increases down to an average of $1 billion a year, $2 billion or
two-thirds, less than the average annual increase of $3 billion
over the previous 10 years.
The response of the private economy to these policies has been
magnificent. From the first quarter of 1961 to the quarter just
ended, our Gross National Product has grown by an average of more
than 5 percent a year, in constant prices. The unemployment rate
has fallen from 6.9 percent in February of 1961 to 4.7 percent
last month -- a seven-year low. At the same time, we have gained
some 5 million jobs, including 1.7 million in the last twelve
months. Particularly significant is the 600,000 job
gain in manufacturing over the last twelve months, bringing
total manufacturing employment back around the peak level of
l7~ million for 1953, despite the tremendous technological advances
in labor-saving devices in this period. Profits have reached
new highs each year, for a total gain of over 60 percent in
profits after taxes. Business investment in new plant and equipment has recovered sharply from its tendency during the 1950's
to lag or decline. This year's planned expenditures for plant and
equipment stand, according to the latest official survey, at
- 4 $50.2 billion, or mare than double the level of a decade ago.
And
the $14.5 billion growth in those expenditures for the five years
1961 - 1965 exceeds by $4.1 billion the increase for the entire
decade of the 50's. And, after taxes and in constant dollars,
average per capita income has grown by an average of 3-1/3 percent
a year. And these have been real gains -- preserved by a record
of price stability unmatched by that of any other major industrial
country.
Our resurgent economic performance since early 1961 has added
more than $100 billion in real terms to our national output -- a
total that far exceeds the entire added output during the same
period by all of Western Europe. As a yardstick, one might
remember that this added slice on our national cake in the last
four years exceeds the entire Gross National Product of France
and Belgium. In fact, the increase alone in our national output
over the past four years surpasses the total national output of
any other nation of the Free World -- and continues to widen the
already enormous distance that separates our ability to produce from
that of the Soviet Union.
These are the gains, and the policies, upon which we must build
for they offer us solid ground from which we can move confidently
into the future. These, however, are not the only gains the past
four years have brought us. For underlying all these is an
achievement whose importance is impossible to measure and equally
impossible to overemphasize.
I speak of the remarkable degree of cooperation, understanding,
and mutual confidence that has gradually emerged over the past
four years between business and labor and government. As we have
pursued policies to fashion a better balance between the public
and private sectors, business and labor and government have moved
together in a growing partnership for progress. They have
discovered that by pulling together they can achieve much more than
by pulling apart. They have become more concerned about working
together toward greater abundance for all and less concerned
about who receives the greater marginal advantage -- and the
result has been greater wage-income for the working-man, greater
profits for the businessman and the investor, and greater revenues
for meeting the demands on Government at lower tax rates for the
taxpayer. And these results merely suggest what accomplishments
the future may hold as, more and more, we bring to bear the full
resources of this nation in a concerted attack upon the problems
that confront it. An essential ingredient in this better understanding between business, labor and government is national
leadership. No man in our long national history has done more or
labored with greater intensity to bring about this understanding ~han
the man in the White House. He works at it night and day. And h~s
- 5 -
example is one for all of us to follow if we are to sustain our
recent advances and cope with the emergent problems of our time.
We are fortunate that the problems before us today are
vastly different from those that loomed ahead four years ago.
For those early problems -- domestically, at least -- were largely
the product of our failure, while our problems today issue, in
large part, from the very success of our labors over the last
four years.
Despite the sure progress we have made in creating more jobs
we have yet to reach our interim goal of 4 percent unemployment.
To reach that goal, we must sustain a steady growth in demand -a growth to which government fiscal policies have made, and will
continue to make, a vital contribution.
The prudent amount of excise tax reduction we have scheduled
for the last half of this year, while improving our tax structure,
will also help sustain our economic momentum by expanding private
purchasing power. At the same time, it will offer new incentives
for price reductions. But the excise tax reduction must be a
prudent amount -- not an excessive one that will interrupt the
movement of the last two years from large budget deficits towards
balance as the economy moves forward to the objective of full
employment with balanced budgets or surpluses.
While our economy is still not operating at full potential,
we may approach the point where growing demand alone cannot make tl
inroads upon tmemployment we want without undermining the gains
in efficiency we need or exerting a strain upon our prices. This
means growth in demand must be accompanied by a broad and growing
attack on so-called hard core, or structural, unemployment.
Through such programs as Manpower Retraining and the Job Corps
we are just beginning to mount such an attack.
In addition to the compassion we share with all for those who
lack opportunity, there are hard-bitten financial and economic
reasons why the Treasury was and will continue to be in the forefront of those supporting the efforts of the Department of Labor
and the Office of Economic Opportunity in this area.
The need to reduce structural unemployment and the need to
preserve price stability are two of the paramount challenges we
face in the domestic economic field. And any effective answer
to these challenges cannot come from government programs alone -it must come, on the contrary, from the joint effort of government
and the private sector. In this country we have long been
familiar with private programs to train or retrain the unskilled
- 6 and to place them in productive jobs. But surely there is enormous
room, and need, for more programs of this kind. And most critical
of all is the need for private industry to seek ways of
synchronizing its recruitment policies with these retraining
programs, whether public or private. The time has come for
America to take the same private initiative and ingenuity that
have fashioned the most powerful econo~ic machine in history and
apply them, more and more, to the task of helping the many poor
or disadvantaged in our society who do not fully share in its
abundant life.
At the same time, nothing could be so foolish or so wasteful
as to expend our talents and our resources in trying to sustain
our ecouomic upsurge and extend its benefits to more and more of
our citizens, if we fail to protect our hard-won gains against
inflation. The policies of this Administration will continue to
support strong and sound, but not excessive, growth in our economy
and in the availability of credit essential to that kind of growth.
For its part, the Treasury will continue to manage the public debt
prudently -- seeking to place any increase in that debt in the
hands of private savers rather than in commercial banks, where it
might contribute to inflation.
But continued wage and price stability must depend in the
future, as it has in the past, upon the determination of American
business and American labor to avoid wage rises that outdistance
our gains in productivity and price rises not justified by actual
cost increases. Wage and price stability is vital to both our
balance of payments and our domestic economic progress -- and it is
to American business and American labor that we must look to
maintain it.
On the international financial front, as in our home economy,
we can meet the challenges before us with the full confidence that
we deal from a position of growing strength. As President Johnson
pointed out in his Balance of Payments Message earlier this year, we
have the world's most productive and efficient economy, the world's
largest supply of gold, the world's strongest creditor position, and
-- by virtue of our fine record of price stability -- the world's
most favorable trade position.
Therefore, let there be no confusion: our balance of payments
problem bears no kinship to the classic pattern in which, because
it cannot compete successfully, one country cannot sell as much
goods and services as it buys. Our commercial trade surplus last
year stood at $3.7 billion -- over $1 billion larger than it was
four years ago, and more than twice the size of West Germany's,
- 7 the next largest in the world. And our private investments abroad
exceed the total of foreign investment in the United States, plus
all other liabilities to foreigners, by some $18 billion, a figure
that grows larger every year.
Moreover, the hard-won improvement in our competitive position,
the balance of payments measures that we have employed over the
past four years, and our rising returns from private foreign
investment, have brought us some $3.5 billion worth of balance of
payments improvement -- enough, all else aside, to have given us
virtual balance in our payments last year.
In a climate of wage-price stability, our tax measures to
heighten incentives and encourage greater productivity at home,
along with numerous direct aids to exports, have helped make Arne ric
business a formidable competitor indeed in markets abroad -- as OUI
huge trade surplus demonstrates.
We have also reduced by almost $500 million the annual balance
of payments cost of a foreign aid program of far larger dollar
dimensions. Today, 85 percent of our foreign aid commitments are
spent for American goods and services. In spite of rising costs
abroad, we have cut $700 million from our net military expenditures
abroad.
Despite these improvements we had, as you know, a balance of
payments deficit last year of $3 billion -- largely the result of
swelling private capital outflows that~st year amounted to
$6.4 billion, $2.5 billion more than in 1960 and $2.1 billion more
than in 1963.
The President's new program calls for redoubling all our prior
balance of payments efforts. But most important, it asks our
businesses and banks to cut down on the flow of our capital abroad
until new arrangements in the international monetary system and
improved capital markets abroad offer assurance that uninhibited
capital flows will not endanger the dollar. Over the next few
weeks we will have some first hard figures to show exactly how
successful that voluntary effort has been thus far. But we have
only to look abroad and see how much dearer and scarcer dollars
have become to recognize what good results that effort has already
yielded.
I have no doubt that this voluntary program will succeed. And
surely there can now be no doubt in anyone's mind -- here or abroa
that American government and American business are determined to
bring our balance of payments deficits to a swift and sure end.
End them we must, and end them we shall.
- 8 -
We do not, however, conceive of the voluntary program as a
final or fundamental solution to our balance of payments problem.
Nor do we join with those who would have us hide within a tight
protective shell of direct controls or rashly risk harm to our
domestic economy by applying a hard brake to credit expansion.
On the contrary, the more lasting solution to our balance of payments
problem must continue to come from our unflagging efforts to make
our economy continually more competitive in world markets and
continually more attractive and more accessible to foreign capital.
It must come, as well, from European efforts to improve their own
capital markets -- markets whose deficiencies become more apparent
as our interim measures to halt excessive capital outflows take
firmer and firmer hold.
Our very success in moving toward lasting balance in our payments
has begun to throw into sharper relief a potential problem in our
international payments system -- a problem that will require concerted
attention in the months ahead. For the United States can no longer
afford to furnish steady increases in international liquidity
through deficits in our international payments. As those deficits
dwindle, it will become more and more urgent that we progress
toward some agreement with our foreign friends on ways to strengthen
the international monetary system and assure ample liquidity for
expanding world trade.
Thus, on both the international and domestic economic fronts,
we do not suffer from any lack of challenge, or any lack of
opportunity. But there is no challenge and no opportunity before
us which we are not far more able to meet than we were four years
ago. If we continue to build upon the progress and the policies
of those years, we can look forward in all sober confidence to
sustained economic progress on all fronts far into the foreseeable
future.
Our failures during the Fifties taught us that we cannot fashion
successful economic policies by remaining in thrall to some abstract
~heory, or by adhering to some doc trinaire dictum of the past.
Chey taught us the folly of exclusive or excessive reliance upon
me policy instrument for a single solution to all our problems.
The success of the past four years has demonstrated how our
'arious instruments of economic policy -- tax policy, expenditure
olicy, monetary policy and many privately woven policies, as for
xample, the avoidance of unstabilizing action in the field
fwages, prices and inventories -- can work together, in proper
roportions and with sound balance, to move us simultaneously
)ward multiple economic goals. Each policy instrument has its
- 9 strengths and its limitations under given conditions. The task is
to coordinate these instruments in ways that respond to the needs
of a complex and rapidly changing economic scene.
To succeed in that task requires that our approach be pragmatic
rather than dogmatic, balanced rather than extreme, resilient ratheI.
than rigid. It requires that the public and the private sector of
our economy work as partners in the pursuit of our national economil
goals. We have seen what surpassing accomplishments can come
from following this path. If we but continue to follow it, I see
no end to those accomplishments.
000
TREASURY DEPARTrv1ENT
UfO
if
5
t
FOR RELE.ASE A.H. NE'",[SPAPERS,
Tuesday, April 20, 1965.
RESULTS OF TREASURY'S "LiTEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
bills, one series to be an additional issue of the bills dated January 21, 1965,
and the other series to be dated April 22, 1965, l-lhich vere offered on April 14, Here
opened at the Federal Reserve Banks on April 19. Tenders vere inVited for ~1,200,000,000,
or thereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of l82-day bills.
The details of the two series are as follm·rs:
Treas~'
RANGE OF ACCEPI'ED
Cm1PETI TI VE BIDS:
High
Low
Average
91-day Treasury bills
maturing July 22, 1965
A~prox. E~uiv.
Price
Annual Rate
99.006
3.932%
99.001
3.952%
99.003
3.946% !I
a/ Excepting 3 tenders totaling 81,$34,000
:
:
·
··
·
182-day Treasury bills
maturing October 21, 1965
Approx. Equiv.
Annual Rate
Price
4.000%
970978 a/
97.971 4.013%
4.008% 11
97.974
b2 percent of the amount of 91-day bills bid for at the low price was accepted
5 percent of the amount of 182-day bills bid for at tte
101'1
price was accepted
TOTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
··
Accepted
Applied For
Applied For
Accepted
$
25,935,000 $ 25,935,000
$
15,923,000 ~ 15,923,000
681,792,000
739,697,000
1,490,917,000
1,337,392,000
16,436,000
6,916,000
15,232,000
28,232,000
23,149,000
26,137,000 :
37,899 ,000
26,137,000
4,056 ,000
4,056,000
14,$67,000 :
14,,867,000
24,166,000
32,614,000
29,116,000
41,704,000
112,513,000
267,813,000
136,431,000
291,551,000
ll, 9116 ~ ceo
13,446,000
44,679,000
53,705,000
G
. / , o"L
IL . , (ICD
. \.
1l,474,000
19,527,000
25,667,000
c"'71
nr,n
'
l D}::> L~, _0
19,374,000
25,567,000
27,707,000
7 , 9(8 ,oee23,394,000
20,968,000
28,348,000
77,272,OO(J
13$,009,000
110,071,000
203,307,000
I:i 0'01 .,...,-L.
~., 2 ,\,.n(l)
_c/
$1,201,413,000 £/ -$1:- 921 ,3~1 ,ooe
TarALS
C2,248,065,000
Includes ~~260,097 ,000 noncompatitive tenders accepted at the average price of 99.003
Includes $108,127,000 noncompetitive tenders accepted at the average price of 97.974
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 4.04%, for the 91-day bills) and 4.15%, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount lnth the
return related to the face amount of the bills payable at maturity rather th3.n the
amount invested and their leneth in actual number of days related to a 360-day year.
In contrast, yields on certificates, notes, and bonds are computed in terms of interest on the amount invested, and relate the number of days remaining in an interest
payment period to the actual number of days in the period, with s8.!;uannual cor:lpounding
if more than one coupon period is involved.
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Hinneapolis
Kansas City
Dallas
San Francis co
\..."\.J
,I _
)
j
TREASURY DEPARTMENT
FOR RELEASE A.M. NEWSPAPERS,
Tuesday, April 20, 1965.
April 19,
RESULTS OF TREASURY'S 'WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
Treasury bUls, one series to be an additional issue of the bills dated January 2l, 1~
and the other series to be dated April 22, 1965, which vere offered on A.pril 14, were
opened at the Federal Reserve Banks on April 19. Tender8 were invited for $1,200,000,(
or thereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 182-day bill
The details of the two series are as follows:
RANGE OF ACCEPI'ED
COMPETI TI VE BIDS:
High
Low
Average
91-day Treasury bills
maturing July 22, 1965
Approx. Equiv.
Pri ce
Annual Rate
99.006
3.932%
99.001
3.952%
99.003
3.946%
11
.:
:
:
:
:
182-day Treasury bills
maturing October 21, 1965
.lpprox. Equiv
Price
Annual Rate
4.000%
97.978 !oj
4.013%
97.971
4.008%
97.974
!I
a/ Excepting 3 tenders totaling $1,534,000
02 percent of the amount of 9l-day bills bid for at the low price was accepted
5 percent of the amount of 182-day bills bid for at the low price was accepted
TOTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TetrAlS
:£/
E,/
II
Applied For
$ 15,923,000
1,490,917,000
28,232,000
26,137,000
14,867,000
41,704,000
291,551,000
53,705,000
25,667,000
27,707,000
28,348,000
203,307,000
$2,248,065,000
Accepted
:
15,923,000 :
739,697,000:
15,232,000:
26,137,000:
14,567,000
32,614,000
136,431,000:
44,679,000:
19,527,000
25,567,000:
20,968,000:
110,071,000:
$1,201,413 ,000 ~/
t
Applied For
$ 25,935,000
1,337,392,000
16,436,000
37,899,000
4,056,000
29,116,000
267,813,000
13,446,000
11,474,000
19,374,000
23,394,000
135,009,000
$1,921 ,3lili ,0(10
Accepted
$ 25,935,00
681,792,00
6,916,00
23,149,00
4,056,00
24,166,00
112,513,00
11,946,(00
9,024,00
16,574,00
7,969,00
77,272,0£
(~l ,001,312 ,00
Includes $260,097,000 noncompetitive tenders accepted at the average price of 99.00
Includes $108,127,000 noncompetitive tenders accepted at the average price of 91.97'
On at coupon issue of the same length and for the same amount invested, the return 0
these bills would provide yields of 4.04%, for the 9l-da,. bills, ani 4.15%, for the
l82-day bills. Interest rates on bills are quoted in terms of bank discount with t
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 )6o-day y~
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 intere:
payment period to the actual number of days in the period, with semiannual compound
i f more than one coupon period is involved.
-:--21
-
UI'(~
~j -
exempL from aLL tD.."{nt:i.on now or hercafLer :imposed on the prIncipal or Jnt.ercGt
of the pO~1GCs8:tons of the UnJ.tcd States, or by any
Lhcrcof hy flny StaLe, or
IJl1y
locn I. tax:i.nr: auLhor1ty.
For pm'})OGCf3 or L: 1 xaLJen t.he o.tnounL
or
chocount at H"hich
~'reQL:Ul'Y
lJills nrc orj.[;i.nnlly sold oy Lhe United States i8 considered to be in-
Lerest.
Und.er [,CCtiOllG -:1,04 (ll) ond 1221 (~)) of the Internal Revenue Code of 1%4
the amount of discount at \Thiel! bil.b issued hereunder are sold is not considered
to aecrue until such bill:::; o,rc Gold, redecmed or otherwise disposed of, and such
bills arC' c;:cludcll from conr;jnern L"ion
O.L'
'l'rcnmu-y b:i.l.h~ (other llnn J
ii'c
af~
c:'p i.taJ
n"';t~ct::;.
I\ccordingly J the elmer
.iWjlu'v.nCf? companieG) iG3ued hereunder need in-
elude in hiG income t8.X return on l,Y the dif:lcrence bctl-Teen the price paid for such
bills, 1{hethel' on ortc;Lnal Ljr;uc or on !;nbnequent puychaf3e, and the amount actually
received either upon sn.le or rcdem}rtJon nt mn.turi ty durj.nr; the taxable year for
~rhich
the return is wade, as onlinar;y
C~:in
or lose.
'l'rcnsury Department Circulo..r Ho. ~18 (current x'cvision) Md this not.ice, pre-
scrj.be Lhe terms of the TreCtsury biD.s ond Govern the candi tions of their issue.
Copies of the circular may be obtained from any Federal Reserve Bank or Branch.
- 2 !\ f,J 'ftfl:
bQnhinc; institutions Hill not be penni tted to subm.l t tenders except for their own
nCcOlwt.
Tenders "'ill be rec('ivcu
'Ii
thouL ucposit froln incorporated banks ond
Lrust companies and. from responsible o.nd reCOGnized uenlers in investment securities.
Tenders from oLhers must be aecompani.ed. by payment of 2 percent of
of' Treasury hills applied for,
unlcs~;
th~
face omount
the tcnucrs are accompanied by an express
GUaranty of payment by an incorporated bonk or trust company.
Ir.unediaLcly after the closinr; hour, tenders will be· opened at the Feeleri'll Reserve
Bon1~s
and Bronches}
follo"'il1[~
"hj ch l)ubJ ic a.nnouncement will be mMP l)y the.
'l'hose Gubmi t-
'l'rcasury Department of the DJ1l0unt and Tn'icc ranGe oj' accepted bids.
Line; tenders vrill be advised of the accr:ptanee or rejcclion thereof.
of the 'l'reaGury
c;~rcssly
The Secretary
reserves the riC;ht to o.ccc:pt or rO,ject any or all tenders,
in 1'Thole or in part, and his action in any such reGpect shall be final.
to these reservations, noncompetitive tenders for
*
200,000
(:~O )
Su.bject
i
or less without
stated price from anyone bidder ".rill be accepted in full at the average price (in
three decimalc) of accepted competi ti ve bids.
Settlement. for accepted tenders in
accordance lrith the bids mus t be made or completed at the
Fedcr8~
Reserve Banlc,on
__A-=-p_r_i_l"T'!:'3-:-0-1!,--1_9_6_5~__ , in cach or other imlnedintely available funds or in a like
{lit
face runount of Treasury bills Innturinc;
tenders "rill receive equal treatment.
April 30, 1965.
Cash and exc1u1.l16e
(18 )
Cash adjustments will be made for differ-
ences betvleen the par value of maturil1[; bills accepted in exchange
~d
the issue
pr lce of the ne", bi'_ls.
The income derived from Treasury bills, ,·mether interest, or gain ,from the sale
or 'Jther disposition of the bills, does not have any exemption, as such, and loss
frOJ1 the 62.1e or other disposition of Treasury bills does not have any special
treatment, as such, under the Internal Revenue Code of 1954.
The bills ;3.re supject
to estate, inheritance, gift or other excise taxes, '\olhether 1,'edera.L or Sta-ce,
DUll
TREASURY DEPARTMENT
Washington
April 19, 1965
FOR n1fvIEDIATE RELEASE,
REFUNDS ONE-YEAR BTI..LS
The Treasury Depart.ment, by this public notice, invites tenders for
$l,OOO?OOO,OOO
(z)
,or thereabQuts, of
365
-day Treasury bills, for cash and
~(~3)~
in exchange for Treasury bills maturing __...;,A.::.Ip::.:r;..:i:;:1=-r3?:;0roL,_1=9:;:.:6~5~___ , in the amount
(4)
of $ 1,001,439,000
, to be issued on a discount basis under competitive and
=t5+
noncompetitive bidding as hereinafter provided.
The bills of this series will be
dated __A_p_r_l_·1_3_0,,...,,,.......l_9_65_ _ _ _ _ , and will mature
::w=
the face amoWlt will be payable without interest.
April 30, 1966
,when
(7)
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,
Friday, April 23, 1965
48F
Tenders lri11 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 dectmals, e. g., 99.925.
Fractions may not be used.
these bills will run for 365
.f§f
(Notwithstanding the fact that
days, the discount rate will be computed on a bank
diaaount 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 general~ m~ submit tenders for account of customers
prOVided the names of the customers are set forth in such tenders.
Others than
TREASURY DEPARTMENT
April 19, 1965
FOR H1}1EDIATE RELEASE
TREASPRY REruNDS ONE-YEAR BILLS
The Treasury Department, by this public notice, invites tenders
for $1,000,000,000, or thereabouts, of 365-day Treasury bills, for
cash and in exchange for Treasury bills maturing April 30, 1965, in t~
amount
Sl ,001 ,.s. \CJ ,000, tl) he issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided. The
bills of this series will be dated April 30, 1965, and will mature
April 30, 1966, 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, SlO,OOO, $50,000, $100,000, $500,000 and $1,000,000
(maturity value).
()f
Tenders will be received Ht Federal Reserve Banks and Branches up
to the closing huur, one-thirty p.m. ,Eastern Standard time, Friday,
April 23, 1965. Tenders \\Iill not be received at the Treasury Departme
WashingtllTI.
Eae h UT,d(~-,Ll:-;l lw (llr an even multiple of $1,000, and
in the case of competitive tenders the price offered must be expressed
on the bas is of 100, \·,i th not more than three dec ima Is, e. g.,
99.925. Fractiuns may not bL' useo.
(Notwithstanding the fact that
these bills \vill run fl)r 365-oaY5, the discount rate will be computed
on a bank discount basi s of 360 clays, as is currently the practice on
all issues of Treasury bills.) It is urged that tenders be made on
the pri n ted forms and f oDvardcci in th(> spec ia 1 enve lopes which will
be supplied bv Federal Reserve Banks or Branches on application
there for.
Banking institutions generally may submit tenders for account of
customers provided the names of the customers are set forth in such
tenders. Others tha~ banking institutions will not be permitted to
submit tenders except for their DIm 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 ~,'ust he' rlC'co"'paniod by payment of 2 percent of
the [ace J:nount 01 Treasu~-y hi 1 L applied ior, unless the tenders are
accompanied by an e:·:press guaranty llf payment by an incorporated bank
or trus t c llmpany.
Immediately afli?r the closing hour, tenders will be opened at the
Federal Reserve Banks and Branches, following which public announcemen
will be :l1ade by the Treasury Depar tmen t of the amoun t and pr ice range
of accepted bids. Those submitting tenders will be advised of the
acceptance or rejection thereo[. The Secretary of the Treasury
expressly reserves the right to accept or reject any or all tenders,
F-22
- 2 -
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.
Settlement for accepted tenders in accordance with the bids must be
made or completed at the Federal Reserve Bank on April 30, 1965, in
cash or other immediately available funds or in a like face amount of
Treasury bills maturing April 30, 1965. 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 reuurn is made, as ordinary
gain or los s .
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 Federa 1 Re serve Bank or Branch.
000
..
,,'"
, t,*'
- 21 -
business can do much to sustain our present economic
expansion at its present rate.
vV'
f!f-OruLth-i-Hg=we C8-R=;:h:a..£-e-rJ:a:lft- -
problems in the future.
~e will face econo:nic
But with tr.c snr,--.t::::a£ enlightened
and energetic leadership -.He have today, and with the knowledge
and experience we have gained over the past few years, I am
confident that these problems will be solved~ ~6ur economy
,!
,.~•• /
-'(WJ)h~?~
will continue to provide the means to enrich the lives of
~\
o~rsclves
Sc
-
. )
and our children as we move closer to the Great
in the years ahead.
;
1 ') C
InsertC . -' 'page -21
.::
Government has modernized the tools of tax policy -- to
help the builders and users of machine tools to modernize our
industrial processes.
The Government has retired Bulletin F
and invested in a new depreciation policy and an investment
credit -- so that business can retire its outworn
and invest in modern productive toolsa
machinE~ry
Government has
retired high tax rates and invested in sweeping tax reduetions -so that business can modernize and expand with confidence in
a strong consumer demand.
With the modernization of GovE;!rnment
tax policies thus matched by a modernization of business
practices, the forces for economic growth will be powerful and
sustained.
- 20 0-
~~~u"'l~/lu.",,- ~ -aU- ~t ~ ~
aNlA(ltt".Ai5
.oG&~~~.. a~.Y~lZ'eshtettC:~s:'.;:propi:J-s:a.~ilg.
excise taxes.
business investment.
since business is a
This is a proper function of government,
v~tal
part of O'.lr economy
v
A
At the same
time, business must cooperate if all the economic policies of
the government are to prove effective.
We are now seeing a
splendid example of business cooperation in the voluntary
bt:3SS
efforts to help improve our balance of payments
fIY·:.position.
J. .
1
i
avJ A.4A..'~~
At the same time, by making the most of
i:'rJ.l,l:~
opportunities, by the exercise of responsible restraint in
m~:,
'\>li_ning price stability, and by aggressive exploration
of new markets and new opportunities both at home and abroad,
- 19 -
fJO
f
Whether your firm is large or small, the more you ,-...
•
6.V4•
,A~.v
r··
),., ~
.
,
I'·' I
..... ""..~.'- •(;"'i
,.--
invest,' the more you are helping your own business and the
~.
more you are helping the nation itself.
This is a big year in Detroit -- a record-breaking year
~~
I am convinced -- and I think most economists would
agree -- that the principal reason~;~ this is a recordbreaking year is the tax cut which President Johnson signed
into law just a little more than a year ago.
ilis tax cut created a real revolution in orthodox
thinking about tax policy as an economic tool.
You may be
sun' tha t, as a result, tax policy will be used again
it
"
C<..nl
help the economy -- as it will be this year
WliuilJI.lo8J;-.Qr
~r
The rewards of the modernization incentive provisions are not
confined to big business or to small business or to any sector of the
economy.
Let me be still more specific.
to raise is not merely:
A basic question you will want
Should I add new capacity to meet expanded
customer requirements and keep my share of the market?
For the
experienced businessman this is relatively easy to answer.
Rather, it is the more challenging query -- one ~ likelY~ ~
more vital to the
long-ran~success
of your enterprise:
~
Can I
profitably replace old, inefficient tools with new, more productive
equipment that not only enables me to produce more but also makes
it possible to deliver today's output at less cost?
This is the essence of modernization:
obsolete
&Rd=dee?e~it
the will to weed out the
~~
machine and substitute e new ene which embodies
the latest technology.
.~
~(/:~*".J
The new tax provisions provide the drive and(calcJfable monetary
f\
benefits to overcome hesitation or natural reluctance to make the
financial commitments involved which sometimes hold back decisions to
,/
modernize.
They check the contagion of neglected obsolescence.
For
if the tempo
of progress slows for some bUSinesses, this makes it easier
,
for others to slow down and still maintain their relative position in the
competitive parade, until a whole industry or the whole economy stagnates.
No business wants this to happen to itse~z.: i~d~fstr~~ or;, to the ('
ec onomy in which it operate 6.
The new tax taeerrt*~
I
,L~uh:t~;~as-the
inherent drive of American enterprise to seek ever more efficient costcutting techniques.
- 18 -
in February reports that planned expenditures for plant and
equipment for 1965 will be 12 percent above last yearrs
level and 41 percent above the 1960 level.
When you go back.to your offices, it might be very
useful -- useful in a dollars and cents way -- to call in
your
~
m~..;j.-e~
experts and your accountants and'your tax
counselors and ask:
depreciation reform?
Am I getting the benefits of the
Have my investment plans been analyzed
in the light of the investment credit and the tax rate
reform?
Wnen my competitors here and abroad are newly
modernized, can I compete?
The answer may well determine the
future course of your business and your share in the benefits
of (l'.!r expanding economy.
- 17.~.
1
.
r"
raises costs.' It. is.,.."aF company standing still, imnobilized
,/
,/
)
./
in a world of .apid change.
T~erefore,
it is not surprising that more and more
businessmen are looking around for new ideas, new ways to
~Ij.{,/ ~
modernize, new ways to take advantage of the
•....
imprOVCffiont i:n the"
~l
;,~.
itIV@.;t."'ffPei!.~ cl·~~~·t:·e·.2 ~-e4:s~8{ng
.,.,.--
--"...-
~..dynami~:.'_:1ook . · a~,~t.heil: ... modex;.m.z.a·tion ,;.potent.i.a.l"...in".t;he ..,light
v
-1'/
,."",
,
./
In fact, they are doing more than looking -- they are
makiilg concrete planso
A Commerce Department-SEC survey taken
- 16 to after-tax return.
It is increasingly recognized that
companies who ignore modernization needs are begging for
trouble.
An expectation that the company will share in
general prosperity may be disappointed.
Obsolete plant
and equipment will hold it back.
Businessmen can't just sit back and expect to ride the
wave of economic expansion.
If they don't keep up the wave
can go right over their heads.
The m9.n who is first to
modernize has a competitive edge that's hard to beat -- he
can deliver better goods faster, with fewer rej ects.
't,That's
::"
l¢
-'
the ~ind of competition that brings in ~reorders, and new
company that tries to hang on and save money by
I
i
OPL'
.:~c:ing with outdated- equipment doesn't save money -- it
- 15 -
-$J.l·&--....l"'-mill1.CnJ.~"'" In 1963, the year following the
introduction of the new tax measures, however, orders shot
up over 42 percent above the 1960 level.
Last year -- 1964 --
orders totaled $1,365.2 million, more than double the 1960
figure.
Moreover, the index of sales of used machine tools
has gone up -- purchases of used equipment incidentally, are
subject to the investment credit -- indicating
~
up··grading
I
as well as modernization.
Perhaps one of the most important contributions of the
tax
~~
changes has been the stimulus they
have given to business management to re-examine its thinking
and policies on modernization -- giving particular attention
- 14 together you find that in terms of after-tax rate of return
on typical equipment outlays, the profitability of new
investment -- in the important 10-15 year range for the
useful life of an asset -- has been increased by some 35 to
45 percent depending on the extent borrowed capital is used.
The overall effect on the rate of return is comparable to
that which would
~av~
resulted from dropping the maximum
corporate income tax rate from 52 percent to somewhere
between 29 and 3(+ percent -- depending upon how much of the
new investment is financed from borrowing.
~~
t
;m:rr
The success of these measures in speeding modernization
"
has been truly remarkable.
In 1960, for instance, orders for metal cutting and
metal forming machines were at a level of $653.1 mi1lion o
Insert B - page 14
It must be emphasized that these tax measures are general
measures -- the investment credit extends to all machinery
and equipment, the depreciation reform covered all industry
~
and business, tax reduction was across the board.
This
"
approach is deliberate.
Tax policy is most useful as a tool
of over-all governmental policy when it is called upon to
achieve such general goals.
In contrast, the achievement
of narrower goals, such as the development of depressed
areas or other particular geographical regions, the alleviation of specific industrial ills, or the encouragement of
specific industrial activities is nearly always better c:Lccomplished-through other governmental devices.
-13 In the last four years tax policy has
~us! markedly
improved the climate for investment -- by providing the means
for
~~~~e
gp cash flow, by providing measures to
A"'~,'U! 9.";;0,""" ,,,"-
rate of return~ and by providing consumer
0-~~1J
funds to support actJ4veee demand. Since all these tax. measures
insure an
~
interact, each is more effective because of the others, and
the total impact both on investment and on the economy
iS~hUS
all the more significant.
~ThU~;he
investment credit and the guidelines were effec-
tive by themselves
v
the general tax cut.
But their effectiveness is multiplied by
For, ultimately, machine tool makers and
users will look to the consumer market for their products to
justify increases in their investment.
Tax policy has there-
fore recognized the important role of the consumer market in
modernization incentives.
The best economic stimulus to growth
is &::u;,.!a balanced one, which rests on both producer and investor
incentives and on the buying power of people.
Our tax policy
reflects this broad-based approach to speeding up the tempo of
modernization and growth both in the capital goorids and consumer
/
goods sectors of the economy_
When you add the 1964 corporate rate reductions, the
investment credit and the depreciation reform
- 12 The 1962 guideline procedure provided for
when the reserve ratio test was not met.
The lengthening
of lives under the original procedure could be as much as
25 percent of the life used.
Because this seemed to be too
abrupt and bore no relation to the degree of failure, we
adopted a schedule of minimal 5 and 10 percent adjustments.
i
should
ffi€iTH.~~ vJe
have been asked why "we did
not drop the reserve ratio test altogether.
The answec,-is
that we did not because such action would do nothing to
encourage modernization --it would simply have distributed the
benefits of the depreciation changes indiscriminately 81mong
those firms which were modernizing -- by replacing old
equipment with new -- and those which were not.
The reserve
ratio will help to insure that the benefits go to those ~ho
:no(~
". -)ze
and not
- 11 -
;y~~t~"l.-
L1.~
First, the applica~4~ of the reserve ratio test ~
unsatisfactory for a business with an irregular growth pattern
-- which most businesses have.
we
dev~loped
To overcome this problem,
the optional guideline form --a technique which
enables a taxpayer to calculate a reserve ratio test
tailored to his own growth experience.
,
f'~
The moratorium period, three years, was found to J.l~ too
short a time for adjustment for many industries.
To alleviate
~J.li~~t,
this condition, we.J.l.&etl'" a guideline life - - one full life
cycle starting in 1965 -- as the basis for the transition
,
periOd;{l'ombi~';;~~ .:graduauraper. down J>"-""',
-
~~~{" .~.~) ~~ ~1l,~~~~~~:,,:!~'":'M'-:.i'!.J:.~~;!;;;.
b:::rw;:;;,';;;:t'!;¥i..,.
the
~
t}
lead time /~
i'
/"
could be made
~
~
so that
~.~
12-33 (iutlfte'€
~
the necessary
- 10 O~r
next step was to make sure that the depreciation
reform was working well.
Business was using the guidelines
to the extent that we had anticipated, but a serious problem
had developed.
Our studies indicated that about 60 percent
of the firms we survyyed which had adopted the guideline
procedure would be unable to meet the basic reserve ratio
test at the end of the three-year moratorium.
The Treasury started a series of studies to learn the
reasons for the failures and to find out how the guideline
procedure was working.
The studies showed difficulties ~
CJ.AlL
in the reserve ratio mechanics" in the transition
arrangement~
In order to meet these problems we developed three major
rules , which were announced early this year.
- 9 -
productive capacity.
Further, investment looks to the long
run and so demand must be not just for today's goods, but
it must give ev~dence of continuing to absorb the goods of
tomorrow's increased productivity.
o.t,~~"·
.,,;ut
.~
the desire for goods must, in turn, be supported
by strong consum'2r purchasing power.
That is why we provided the greatest investment stimulus
of all -- the individual and corporate rate reduction contained
in the Revenue Act of 1964.
The new law cut individual income taxes by an average
of 20 percent.
If you add the continuing benefits of the
investment credit, the depreciation reform and the rate
cut~
business also received a 20 percent overall cut in tax
liabilities -- and small corporations
receiv~d
a cut of 27 percent.
- 8 -
of separate ~ lives covering every piece of equipment
imaginable.
The guidelines offered instead
~l
lives
for 75 broad classes of assets -- lives which on the averaQe
o
were 30 to 40 percent shorter than those in Bulletin F.
The central objective of the depreciation reform Nas
to facilitate adoption of depreciable lives as short or
even shorter than the guideline lives, provided only that
~~
the subsequent replacement practice~reasonably consistent
with the life selected.
Taxpayers may pick what they want --
just so long as their future retirement practices justify
the shorter lives.
Thus, we provided lives allowing a
maximum recovery of capital and greatly increased cash flow
The climate to
inv~st
q
must be supported by strong
consumer demand -- demand strong enough to spur expansion of
- 7 The investment credit is a real innovation in
tax policy.
u.s.
It provides a direct credit against the tax
liability of up to 7 percent of the cost of new equipment.
The credit operates directly to increase the rate of return
on
in~estment.
Because it is provided in addition to
depreciation it is a potent factor in increasing profitability
of new investment, and thus provides an effective incentive
\
to modernization.
But in 1961 and 1962, at Congressional hearings. on the
tax bill which contained the investment credit proposal
businessmen still strongly emphasized that they were held
back from modernizing by unrealistic depreciation policies.
We were aware of that problem, however, and even then we
were already well along in the studies that led in mid-1962
to the complete reform of the tax treatment of depreciation
the optional use of new and more liberal depreciation guidelines.
The guidelines we announced offered businessmen an
alternative to the old Bulletin F, which contains thousands
- 6 -
'"
\ \his in turn would foster modernization, encourage
l.r\
//"
\
expansiol\, step up spending for plant and
,,,J"
"
equipOl~nt,
, "".,
raise
,,- .'
...,.;r
the ratio of investment in productive eqtfipment to Gross
/./
,/
National Product and thus set
,
,"
;/
tn~'stage
for accelerating our
national economic growth.
//~
,- "
/
-"
More modern equipment would lead to greater productivity,
\
>f'/".
\
\
lower costs, aQ,d improve,\ the competitive position of American
.ro'
,/
producer~/1.n
comparison wit,p. that of foreign producers, who
./,.
har:~n modernizing
I.
raPidlY':'\)
Our new tax policies were designed with those requirements
in mind.
The first measure we chose was the
inv~stm8nt
the central provision of the Revenue Act of 1962.
credit -The second
measure was the 1962 reform of the tax treatment of depreciation.
- 5 -
Taree requirements are essential to encouraging a
business to modernize by replacing old equipment with new
equipment:
First, there must be an adequate rate of return
/-'l
V(:-'r<:J~
on such investment -- and~~'~~i1:q what counts is the
\S"",Yi/'
after-tax rate of return.
Second, there must be adequate funds for investment
-- corporate cash flow must be capable of financing
modernization.
Tnird, there must be adequate demand for the increased
production resulting from modernization.
The task for tax policy was to operate on the factors
affecting investment in such a fashion as to improve the
climate for
inv~stment.
- 4 In 1953 for example,/54 percent of machine tools,were"more
,,. .-
//
..
,"
I'~.
than 10 years 6ld.
56
in
perce~~and
/
;'.
In 1956, the proportl.on,."had climbed to
-'
-,/
P".j'?
,
,r'
<f
be 1962, 67 percen,t/of the machine tools
-,,'
/1'
//
/'
t~e
D2troit region' were ove,r ten years old. In both the
/'
)'
/'
/
1'.
t~n and twenty-year categor~es, Detroit was above the
i
,/
,r
lnatiO,itii
(/
averag~
,/
,.'
Obv.iously, this nation cannot maintain its technological
leadership if it responds too slowly to technological advances.
Nor can we increase our productivity if we do not invest in
cuJ#A~
new
tools~ ~ ~/~V·"'J..r-
- 3 -
Tne Inventory of Metalworking Equipment reported in the
June, 1963, American Machinist, produced some hard statistics
on this trend.
The survey
showed almost two of every
three
I
\
ma.chine tools in metalworking -- 64 percent to be exact -were at least 10 years old.
was 60 percent.
Five years earlier this figure
In the report, twenty-one percent of these
machines -- more than one in five -- was more than twenty
years old.
Many of these old machines were built from designs
of the 1930's.
Some of them could be described as second-
generation machines -- they were older than the men who
operated them.
,../
.
... -
,."".-
\ ...Uero in-t:he mici'iliest , t:hi~:scrm~i:a~~~~~.Q...J:.4lI.Vard -,
\
'-
~
- 2 -
i:1USt
keep pace with our advancing technology.
We cannot
rnaint ,lin our leadership with old tools, with obsolete methods
and with antiquated ideas.
Since the end of World War II, there had been a dismaying
trend toward obsolescence in our machine tools and other
capital equipment.
This trend was not confined to a single
industry or to a single geographic region.
It was across-the -
board and across the nation.
At the beginning of the 1960's the economic situation
was characterized by a low rat~ of investment in productive
equipment to gross national product -- a ratio which had lnuch
to do with our lagging economic growth.
~li,-eS$lllen
/)
.
~/
were patching up otd m:;gdlhre:ty and eqyipmeRt;...1;o make
~a-8't
I
" /7
.. --.
j
!
11.£>1{/,~
.
REMARKS BY THE HONORABLE STANLEY S. SURREY
ASSISTANT SECRETARY OF TaE TREASURY
AT THE COMMERCE DEPARTMENT MODERNIZATION CO~FERENCE
COBO HALL, DETROIT, MICHIGAN
1 P.M. EST, TUESDAY, APRIL 20, 1965
TAXATION AND INDUSTRIAL MODERNIZATION
Tax policy ranks today as one of our most potent weapons
for furthering our national economic goals.
One of the most effective methods we used to make tax
policy a positive force for economic growth was to provide
"
.
~:W"t.I':h... &f"'~""·U-H.u(
CL- tax ·ince:lti.va5 to spur industrial modernization -- which has
bec" 8nd remains an urgent national need1The maintenance of
the nation's economic vigor depends in large measure on the
continuing infusion of new a1;ld more efficient tools of production.
If we are to remain the foremost industrial nation
in the world, our pool of capital equipment must grow -- and
grow more
productiv~
-- even faster than it has been growing.
If we are to be efficient at home and competitive abroad, it
-.--1 -
,-;
.?--.
TREASURY DEPARTMENT
Washington, D. C.
FOR RELEASE ON DELIVERY
REMARKS BY THE HONORABLE STANLEY S. SURREY
ASSISTANT SECRETARY OF THE TREASURY
AT THE COMMERCE DEPARTMENT MODERNIZATION CONFERENCE
COBO HALL, DETROIT, MICHIGAN
1:00 P.M., EST, TUESDAY, APRIL 20, 1965
TAXATION AND INDUSTRIAL MODERNIZATION
Tax policy ranks today as one of our most potent weapons for
furthering our national economic goals.
One of the most effective methods we used to make tax policy
a positive force for economic growth was to provide a tax climate
designed to spur industrial modernization -- which has been and
remains an urgent national need.
The maintenance of the nation's economic vigor depends in
large measure on the continuing infusion of new and more efficient
tools of production. If we are to remain the foremost industrial
nation in the world, our pool of capital equipment must grow -- and
grow more productive -- even faster than it has been growing. If
we are to be efficient at home and competitive abroad, it must keep
pace with our advancing technology. We cannot maintain our leadersl
with old tools, with obsolete methods and with antiquated ideas.
Since the end of World War II, there had been a dismaying
trend toward obsolescence in our machine ~ools and other capital
equipment. This trend was not confined to a single industry or to
a single geographic region. It was across-the-board and across the
nation.
At the beginning of the 1960's the economic situation was
characterized by a low ratio of investment in productive equipment
to Gross National Product
a ratio which had much to do with our
lagging economic growth.
The Inventory of Metalworking Equipment reported in the
June, 1963, American Machinist, produced some hard statistics on
this trend. The survey showed almost two of every three machine
tools in metalworking -- 64 percent to be exact -- were at last
10 years old. Five years earlier this figure was 60 percent.
In the report, twenty-one percent of these machines -- more than
one in five -- was more than twenty years old. Many of these old
F-23
- 2 machines were built from designs of the 1930' s. Some of them could
be described as second generation machines -- they were older than
the men who operated them.
Obviously, this nation cannot maintain its technological leader
ship if it responds too slowly to technological advances. Nor can
we increase our productivity if we do not invest in new tools and
retire outmoded and overaged equipment.
Three requirements are essential to encouraging a business to
modernize by replacing old equipment with new equipment:
First, there must be an adequate rate of return on such
investment -- and what counts is the after-tax rate of return.
Second, there must be adequate funds for investment -- corporat
cash flow must be capable of financing modernization.
Third, there must be adequate demand for the increased
production resulting from modernization.
Th? task for tax policy was to operate on the factors affectini
investment in such a fashion as to improve the climate for
investment.
Our new tax policies were designed with those requirements
in mind.
The first measure we chose was the investment credit -- the
central provision of the Revenue Act of 1962. The second measure
was the 1962 reform of the tax treatment of depreciation.
The investment credit is a real innovation in U. S. tax policy
It provides a direct credit against the tax liability of up to
7 percent of the cost of new equipment. The credit operates
directly to increase the rate of return on investment. Because it
is provided in addition to depreciation it is a potent factor in
increasing profitability of new investment, and thus provides an
effective incentive to modernization.
But in 1961 and 1962, at Congressional hearings on the tax bil
,vhich contained the investment credit proposal businessmen still
strongly emphasized that they were held back from modernizing by
unrealistic depreciation policies.
We 'ivere aware of that problem, however, and even then we were
already well along in the studies that led in mid-1962 to the
- 3 -
complete reform of the tax treatment of depreciation -- the
optional use of new and more liberal depreciation guidelines.
The guidelines we announced offered businessmen an~ternative
to the old Bulletin F, which contains thousands of separate lives
covering every piece of equipment imaginable. The guidelines offered
instead lives for 75 broad classes of assets -- lives which on the
average were 30 to 40 percent shorter than those in Bulletin F.
The central objective of the depreciation reform was to
facilitate adoption of depreciable lives as short or even shorter
than the guideline lives, provided only that the subsequent replacement practice be reasonably consistent with the life selected.
Taxpayers may pick what they want -- just so long as their future
retirement practices justify the shorter lives. Thus, we provided
lives allowing a maximum recovery of capital and greatly increased
cash flow.
The climate to invest must be supported by strong consumer
demand -- demand strong enough to spur expansion of productive
capacity. Further, investment looks to the long run and so demand
must be not just for today's goods, but it must give evidence of continuing to absorb the goods of tomorrow's increased productivity.
And the desire for goods must, in turn, be supported by strong
co~sumer purchasing power.
That is why we provided the greatest investment stimulus of
all -- the individual and corporate rate reduction contained in the
Revenue Act of 1964.
The ne\\) law cut individual incorne taxes by an average of 20 perc
If you add the contiuuing benefits of the investment credit, the
depreciation reform and th2 rate cut, business also received a
20 percent overall cut in tax liabilities -- and small corporations
received a cut of 27 percent.
Our next step was to make sure that the depreciation reform was
working well. Business was using the guidelines to the extent that
we had anticipated, but a serious problem had developed. Our studies
indicated that about 60 percent of the firms we surveyed which had
adopted the guideline procedure would be unable to meet the basic
reserve ratio test at the end of the three-year moratorium.
The Treasury started a series of studies to learn the reasons
for the failures and to find out how the guideline procedure was
working. Th2 studies showed difficulties in the reserve ratio
mechanics and in the transition arrangement.
- 4 In order to meet these problems we developed three
which were announced early this year.
~ajor
rules,
First, the mechanics of the reserve ratio test were unsatisfactory for a business with an irregular growth pattern -- which
most b~sinesses have. To overcome this problem, we developed the
optional guideline form -- a technique which enables a taxpayer to
calculate a reserve ratio test tailored to his own growth experience.
The moratorium period, three years, was found to provide too
short a time for adjustment for ITEny industries. To alleviate this
condition, we substituted a guideline life -- one full life cycle
starting in 1965 -- as the basis for the transition period. We
then combined this with an initial bonus or transitional allowance
of 15 points which would gradually taper down so that the transition
could be made with the necessary lead time for investment and
retire~ent of assets.
The 1962 guideline procedure provided for an adjustment in the
depreciable life when the reserve ratio test was not met. The
lengthening of lives under the original procedure could be as much
as 25 perce~t of the life used. Because this seemed to be too abr~t
and bore no relation to the degree of failure, we adopted a
schedule of minimal 5 and 10 perce~t adjustments.
We have been asked why we did not drop the reserve ratio test
altogether. The ans~er is that we did not because such action
would dJ nothing to encourage ~odernization -- it would simply have
dtstributed the benefits of the d'=preciation changes indiscriminately
among those firms \vl:1ich \Vere modernizing -- by replacing old
equipment with new -- and those which were not. The reserve ratio
will help to insure that the benefits go to those who modernize and
not to the laggards. The test is thus in keeping with the basic
objective of the depreciation reform.
In the last four years tax policy has markedly improved the
climate for investment -- by providing the means for greater cash
flow, by providing measures to insure an increased rate of return,
and by providing co~sumer funds to support a high level of demand.
Since all these tax measures interact, each is more effective
because of th2 others, and the total impact both on investment and
on the economy is all the more significant.
The investment credit and the guidelines were effective by
themselves. But their effectiveness is multiplied by the general
tax cut. For, ultimately, machine tool makers and users will look
to the consumer market for their products to justify increases in
their investment::. Tax policy has therefore recognized the important
- 5 -
role 0f th2 consumer market in modernization incentives. The best
economic stimulus to growth is a balanced one, which rests on both
producer ~nd investor incentives and on the buying power of people.
Our tax policy reflects this broad-based approach to speeding up
the te~po of modernization and growth, both in the capital goods and
consumer goods sectors of the econo~y.
~hen you add the 1964 corporate rate reductions, the investment
credit a'1d the depreciation reform together yO'J find that in terns
of after-tax rate of return o~ typical equipment outlays, the
profitabilitv of new investment -- in the important 10-15 year
range for the useful life of an asset -- has been increased by some
35 to 45 percent depending on the extent borrowed capital is used.
The overall effect on the rate of return is comparable to that which
\vould have resulted from dropping the maximum corporate inco'11e tax
~te 52 percent to so~ewhere between 29 and 34 percent -- depending
upo~ how much of th2 new investment is financed from borrowing.
It must be emphasized that these tax measures are general
measures -- the investmeryt credit extends to all machinery and
equipment, the depreciation reform covered all industry and business
the tax reduction was across the board. This approach is d,:=liberate
Tax policy is most useful as a tool of overall governmental policy
when it is called upon to achieve such general goals. In contrast,
the achieve~ent of narrower goals, such as the development of
depressed areas or other particular geographical regions, the
~lleviation of specific industrial ills, or the encouragement of
s?ecific industrial activities is nearly always better accomplished
through other governmental devices.
The success of these tax measures in speeding modernization
has been truly remarkable.
In 1960, for instance, orders for metal cutting and metal
forming machines were at a level of $653.1 million.
In 1963, the
year following the introduction of the new tax measures, however,
ord:=rs shot up over 42 percent above the 1960 level. Last year -1964 -- orders totalled 51,365.2 million, more than double the
1960 figure. MJreover, the index of sales of used machine tools
has gon~ up -- purchases of used equipment incidentally, are subject
to the lnV'2stment credit -- indicating up-grading as 'Nell as
mo::lernization.
- 6 -
Perhaps one of the m03t important contributions of the tax changes
has been the stimulus they have given to business management to
re-examine its thinking and policies on modernization -- giving
particular attention to after-tax return.
It is increasingly
recognized that companies who ignore modernization needs are begging
for trouble. An expectation that the company will share in general
prosperity may be disappointed.
Obsolete plant and equipment will
hJld it back.
Businessmen can't just sit back and expect to ride the wave of
economic expansion.
If they don't keep up the wave can go right over
their heads. The man who is first to ~odernize has a competitive
edge that's hard to beat -- he can deliver better goods faster,
with fewer rejects.
It is the kind of co~petition that brings in
reorders, and neN business as well.
The company that tries to hang on and save money by operating
with outdated equipment doesn't save money -- it raises costs.
Therefore, it is not surprising that more and more businessmen
are looking around for ne',v ideas, new ways to modernize, new ways
to take advantage of the new tax climate for investment.
In fact, they are doing more than looking -- they are making
concrete plans. A Commerce Department-SEC survey taken in
February reports that planned expenditures for plant and equipment
for 1965 will be 12 p2rcent above last year's level and 41 percent
above th2 196J level.
- 7 -
When vou go hack to your offices, it might be very useful
useful in ~ dollars and cents '.'<1Y -- to call in your machine
experts and your accountants and your tax counselors and ask:
A~ I getting the benefits of the depreciation reform?
Have my
investment plans been ana:yzed in the light of the investment
credit and the tax rate reform? When my competitors here and
abroad are ne~ly modernized, can I compete?
The answer may well
deter:nine the future course 01 your business and your share in
the benefits of our expanding economy.
Let me be ~till more specific. A basic question you will ~ant
to raise is not merely:
Should I add new capacity to meet expanded
customer requirements and keep my share of the market?
For the
experienced businessman this is relatively easy to answer.
Rather, it is the more challenging query -- one likely to he
more vital to the lung-range success of your enterprise:
Can I
proiitably replace old, inefficient tools with new, more
productive equipment that not only enables me to produce more but
also makes it possible to deliver today's output at less cost?
Tb is is the e s sene e of modern iza t ion:
the wi 11 to vfeed ou t
the ohsolete machine 3nd substitute a new machine ~hich embodies
the latest technology.
rhe ne~ tax provisions provide the drive and readily
calculable monetary benefits to overcome hesitation or natural
relucta~ce to make the financial commitments involved, which
sometimes hold hack decisions to modernize.
They check the
contagion oE neglected obsolescence.
For if the tempo of progress
slmJs for some businesses, this makes it easier for others to
sll)w dmvn and still maintain their relative position in the
competitive parade, until a whole industry or the whole economy
stagnates.
No business wants this to happen to itself, to its
industry, or to the economy in which it operates.
The new tax
climate reinforces the inherent drive of American enterprise to
seck ever more efficient cost-cutting techniques.
The rewards of the modernization incentive provisions are not
confined to big business or to small business or to any sector of
the economy.
Whether your firm is large or small, the more you
invest, and modernize, the more you are helping your own business
and the more you are helping the nation itself.
- 8 This is a big year in Detroit -- a record-breaking year
in the auto industry.
I am convinced -- and I think most
economists would agree -- that the principal reason this is a recordbreaking year is the tax cut which President Johnson signed into
law just a little more than a year ago.
This tax cut created a real revolution in orthodox
You may be
thinking about tax policy as an economic tool.
sure that, as a result, tax policy will be used again where it
can help the economy -- as it will be this year with a reduc tion
in the scope and amount of excise taxes.
The Government then, is doing its part to maintain a healthy
climate for business investment.
This is a proper function of
government, since business is a vital part of our economy. At
the same time, business must cooperate if all the economic
policies of the government are to prove effective. We are now
seeing a splendid example of business cooperation in the voluntary
business efforts to help improve our balance of payments position.
At the same time, by making the most of investment and
modernization opportunities, by the exercise of responsible
restraint in maintaining price stability, and by aggressive
exploration of new markets and new opportunities both at home
and abroad, business can do much to sustain our present economic
expansion at its present rate.
Government has modernized the tools of tax policy -- to
help the builders and users of machine tools to modernize our
industrial processes. The Government has retired Bulletin F
and invested in a new depreciation policy and an investment
credit -- so that business can retire its outworn machinery and
invest in modern productive tools.
Government has retired high
tax rates and invested in sweeping tax reductions -- so that
business can modernize and expand with confidence in a strong
consumer demand. With the modernization of Government tax
policies thus matched by a modernization of business practices, the
forces for economic growth \vill be powerful and sus ta ined.
We will face economic problems in the future.
But with the
enlightened and energetic leadership we have today, and with the
knowlpdge and experienc(' we have ga ined over the pas t few years,
I 2m confident that these problems will be solved.
Our economy
will thereby continue to provide the means to enrich the lives
of ourselves and our children as we move closer to the Great Society
in the years ahead.
000
- 2 -
The agreement will be submitted to the respective governments for
approval and signature as soon as possible.
The delegation from the
United States was headed by Stanley S. Surrey, Assistant Secretary of
the Treasury, and the Netherlands delegation was headed by W. H. van den Berge,
State Secretary of Finance.
For release Tuesday, April 20, 1965
12:00 Noon Washington Time
6:00 P.M. Netherlands Time
Draft Press Release
UNITED STATES-NETBERIANDS INCOME TAX TREATY TO BE REVISED
Agreement in principle on a supplementary convention modifying the
existing income tax convention between the Netherlands and the United States
was announced today by delegations from both countries.
Revision of the tax treatment of dividends, enabling the Netherlands
to impose withholding taxes on dividends at the same rates as the United
States, was one of the principal changes agreed upon.
At present the
Netherlands does not impose any withholding tax on dividends, while the
United States withholds at 15 percent on dividends from portfolio investment and at 5 percent on dividends from direct investment.
In the case
of direct investment, the supplementary convention reduces the required
percentage of corporate ownership from 95 percent to 25 percent.
Continued
tax-exemption for a transitional period of 2 years from the date the
supplementary convention becomes effective would be granted non-profit
charitable organizations and pension trusts in the United States on
Netherlands shares held by them as of April 30, 1965, in vievi of special
considerations between the United States and the Netherlands regarding
such investment.
The agreement also contains provisions, among others, dealing with
the tax treatment of capital gains, permanent establishment, professors
and students, and the recognition to be given by one country to the taxes
paid to the other.
TREASURY DEPARTMENT
April 20, 1965
FOR RELEASE TI1ESDA Y
APRIL 20, 1965
12:00 NOO~ WASHINGTON TIME
6:00 P.t-1. NETHERLANDS TIME
UNITED STATES-NETHERLANDS INCOME TAX TREATY
TO BE REVISED
Agreement in principle on a supplementary convention modifying
the existing income tax convention between the Netherlands and the
United States was announced today by delegations from both countries.
Revision of the tax treatment of dividends, enabling the
Netherlands to impose withholding taxes on dividends at the same
rates as the United States, was one of the principal changes agreed
upon.
At present the Netherlands does not impose any withholding
tax on dividends, while the United States withholds at 15 percent
on dividends from portfolio investment and at 5 percent on dividends
from direct investment.
In the case of direct investment, the
supplementary convention reduces the required percentage of corporate
ownership from 95 percent to 25 percent.
Continued tax-exemption
for a transitional period of 2 years from the date the supplementary
convention becomes effective would be granted non-profit charitable
organizations and pension trusts in the United States on
Netherlands shares held by them as of April 30, 1965, in view of
special considerations between the United States and the Netherlands
regarding such investment.
The agreement also contains provisions, among others, dealing
with the tax treatment of capital gains, permanent establishment,
professors and students, and the recognition to be given by one
country to the taxes paid to the other.
The agreement will be submitted to the respective governments
for approval and signature as soon as possible.
The delegation
from the United States was headed by Stanley S. Surrey, Assistant
Secretary of the Treasury, and the Netherlands delegation was
headed by W. H. van den Berge, State Secretary of Finance.
000
F-24
TREASURY DEPARDfENT
Washington
TOAST OFFERED BY SECRETARY OF THE TREASURY
HENRY H. FOWLER
AT THE LUNCHEON IN HONOR OF
PRIME MINISTER MORO OF ITALY, DECATUR HOUSE,
WASHINGTON, D. C., APRIL 20, 1965, 1:15 P.M.
In the first weeks of my incumbency as Secretary of Treasury
I am particularly pleased to have this opportunity to exchange
ideas with Prime Minister Aldo Moro of Italy and his Foreign Minister
Amintore Fanfani.
HClving served as a Treasury official for .some years, I have
been very impressed by the remarkable record of Prime Minister
Moro's coalition over the past fifteen months in overcoming many
of the urgent economic and fiscal problems that confronted Italy.
The fact that Italy's balance of payments has moved in this period
from over a billion dollar deficit to almost a billion dollar
surplus is enough to make any Treasury Minister envious.
I look forward at some point, not too distant I hope, to
meeting and comparing notes with the Prime Minister's able
colleague, Treasury Minister Colombo.
I referred to Mr. Moro's achievements in overcoming the
fiscal emergency that confronted his government.
Since I was not
personally involved it is not improper to point out that a little
over a year ago this Department and other United States agencies
cooperated with the Government of Italy in making available shortterm credits in support of the lira. This is not a one-way street.
Italy has shown great comprehension of our problems, and I trust
that both countries will continue to cooperate in adjusting our
financial arrangements to meet our broadening responsibilities.
I raise my glass to our distinguished visitors and to the
President of the Republic of Italy, his Excellency Guiseppe
Saragat.
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.
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
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 Bold 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 Treae,ury bills and govern the conditions of their.issue.
Copies of the circular may be obta.ined 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 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 each issue
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
for the respective issues.
Settlement for accepted tenders in accordance with
the bids must be made or completed at the Federal Reserve Banks on
. 1965
,
-------
April 29 z
--="-'=tf6f~-L--
in cash or other immediately available fUnds or in a like face
amount of Treasury bills maturing _ _ _ _A..=p:....,n_·_l_2 9=-,=1,9_6_5_ _ _ _ _ __
7
={17)'
Cash
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
April 21, 1965
~OOOO~
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
t~200~,OOO
, or thereabouts, for
cash and in exchange for Treasury bills mat"\lring April 29, 1965
of $ 2, 205 ~,OOO
-w=
, as follows:
91 -day bills (to maturity date) to be issued
.f5F
in the amount of $1,200,000,000
, in the amount
,
April 2W965
, or thereabouts, represent-
+1+
ing an additional amount of bills dated January 28, 1965
.f8OF
,
and to mature __J_u_ly:.....-2..,9~,~1_9_65
___ , originally issued in the '
=t4F
amount of $1,003,233,000
,the additional and original bills
""flOO)
to be
~reely
182 -day bills,
4Uf
April
~or
interchangeable.
$ 1,000,000,000, or thereabouts, to be dated
(i2)
29~
1965
<~)
, e.nd to mature
October 28, 1965
---~~(~lt4)~~--
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 bee.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
Daylight Satving
closing hour, on~-thirty p.m., Eastenl~ time, -&.:MAIooQwnlWd.gR.~~.,.,_AQoI;PWolrl..li"Mf~~,.....l",,9.w:65~_ _
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
TREASURY DEPARTMENT
April 21, 1Y65
FOR IMtvlEDIATE 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
$2,200,000,000,or thereabouts, for cash and in exchange for
Treasury bills maturing April 29, 1Y65,
in the amount of
$2,205,619,000, as follows:
9l-day bills (to maturity date) to be issued April 29, 1965,
in the amount of $1,200,000,000, or thereabouts, representing an
additional amount of bills dated January 28, 1965, and to
mature July 29, 1965,
originally iss~ed in the amount of
$ 1 ,003,2'33,000, the additional and orip;inal bills to be free ly
interchangeable.
182 -day bills, for $ 1 ,000,000,000, or the rea bouts, to be dated
April 29, 1965,
and to mature October 28, 1965.
The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be issued in bearer form 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,
tvlonday, April 26, 1965.
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.
F-25
- 2
Immediately after the closing hour te d
"II b
d
'
n ers W~
e opene at
d
1
the Fe era Reserve
Banks and Branches , foIL'
.
oWing Wh'lC h pu bl'lC
announcement Will
be
made
by
the
Treasury
D
.
epartment 0 f t he
Th
b"'
d
amount and price range of accepted bids
"
d .
.
ose su mlttlng t~n ers
will be a vised of the acceptance or re," ec t "
h
f
ion t ereo. The
Secretary of the Treasury expressly reserves th
. h
.
1 "
e rig t to accept or
reject any or a 1 tenders , in whole or in pa r t ,an d h"1S actlon
' .ln
any such respect
shall
be
final
SubJ"ect
to
th
"
. .
.
ese reservatlons
noncompetitive tenders for each issue for $200 000
1
. h
.
,
or ess Wlt out
stated price
from
anyone
bidder
wi
11 be acc
t
d
'
f
11
"
"
ep e 1n U
at t h e
average prlce (in
decimals) of accepted compe t""
" three
"
ltlve bOd
1 s
for the respectlve
iSsues
Settlement
for
ae
d
d
.
"
.
cepte ten ers ln
accordance with the ~ids must be made or completed at the Federal
Reserve Banks on April 29, 1965
in cash or oth
"
d"
1
"I b 1
'
er 1mme 1a te y
aval a e funds ur in a 1 ike .Lace amount of Trea
b'11
.
A
"1 29
sury 1 s
natur1ng prl
, 1965.
Cash
and
exchange
t
d
.
~
en ers Wi'11 recelve
equal treatment. Cash adjustments will be made for differences
be~~en the ~ar value of maturing bills accepted in exchange and
t~ Issue pr1ce at 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 1s 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
~onditions of their issue.
Copies of the circular may be obtained from
any Federal Reserve Bank or Branch.
000
TREASURY
DEPARTMENT
tn,
I tt1 2
4;g \
5
¥
HW"
! t
April
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, ~ill Le held at IRS District
J.-J
'Y~) /9 ~S""
Offices September ~ and~, 19&4'. The examination will be similar
in content to that held in
'196~
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
2mployees, to establish the proof of competence which is required
)f tax practitioners who seek to acquire enrollment status in order
to represent their clients at all levels of procedure before the
3ervice.
The. program is of special interest to the public
:lCCountants of the Nation.
Applications, which are to be filed with the Director of
)r
tice, Washington, D. C., and detailed information concerning the
~xamination,
)ffices.
may be obtained from Internal Revenue Service District
The examination fee of $25.00~4J.~~
:ontinues to be effective for 19£
000
TREASURY DEPARTMENT
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 23 and 24, 1965.
The examination will be similar
in content to that held in 1964.
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 continues to be effective
for 1965.
000
F-26
- 3 -
Prior to attending the Yale Law School, Mr. Hunt received
his B.A. degree in 1946 from the University of North Carolina,
i
and was elected to Phi Beta Kappa.
/ ? <.
He served in the U.S. Array
luntil 1948.
',-
Mr. Hunt is a member of the District of Columbia Bar, Bar
of the U.S. Court of Appeals for the District of Columbia, and
the Bar of the United States Supreme Court.
He is also a member
of the District of Columbia and American Bar Associations.
Married to the former Mary Jane Fairbairn Abdill, Mr. Hunt
resides at 3617 Gunston Road, Alexandria.
children.
They have four
t
f~
- 2 -
Mr. Hunt received the Treasury's Meritorious Service Award
from former Secretary Dillon on September 2, 1964.
For the decade prior to joining the Treasury, Mr. Hunt
had
been~engaged
in private law practice with Gardner,
Morrison and Rogers, of Washington, D.C.
He came to that firm
from the Yale Law School, where he received his LL.B. degree
in 1951.
Mr. Hunt has also had an active career in civic and
political affairs in Alexandria and Washington.
From 1951 to
1961, he was a member of the Alexandria City Democratic Committee -- serving as its Vice-Chairman in 1957-59 and as its
Chairman in 1959-60.
He was Chairman of the Alexandria Delegation
to the Virginia State Democratic Convention in 1960, and from
1956 to 1960 was Vice Chairman of the Committee for Job
Opportunities of Washington, D.C.
PIf ~ c
~
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A/I':
."
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- (1(/
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('j
TREASURY DEPARTMENT
April 21, 1965
FOR IMMEDIATE RELEASE
DOUGLASS HUNT NAMED SPECIAL ASSISTANT
TO SECRETARY FOWLER
Treasury Secretary Henry H. Fowler ~nn~:::~~::~Jt:~~y (the
appointment, effective May
1,~96~
of Mr. Douglass Hunt as
Special Assistant to the Secretary.
In this capacity, Mr. Hunt will aid Secretary Fowler in
carrying out all phases of the Secretary1s responsibilities.
Mr. Hunt has been serving as Acting Special Assistant to
the Secretary of the Treasury since April, 1964.
For the
previous three years he had been~rving a~ Special Assistant
to Mr. Fowler in his capacity as Under Secretary of the Treasury.
fir
In recognition go~ his valuable assistance to the Under
Secretary and his significant contributions to the
Revenue Acts of 1962 and 1964, as well as to other legislation and to various fields of tax administration,
1ft'· REPL.I\( :t. S'
Lt/(~ 0
IS
I'
l~·
t/ u ifl /c
ir"~,,
_- .
7c'
1. .,.
/'¥.'
.' ,
iPl
•.. ~.
~ •.
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\.... \0...
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"-,
TREASURY DEPARTMENT
(
FOR IMMEDIATE RELEASE
DOUGLASS HUNT NAMED SPECIAL ASSISTANT
TO SECRETARY FOWLER
Treasury Secretary Henry H. Fowler today announced the
appointment, effective May 1, of Mr. Douglass Hunt as Special
Assistant to the Secretary.
In this capacity, Mr. Hunt will aid Secretary Fowler in carryin
out all phases of the Secretary's responsibilities. He replaces
Robert Carswell, who is returning to private law practice with the
New York firm of Shearman and Sterling.
Mr. Hunt has been serving as Acting Special Assistant to the
Secretary of the Treasury since April, 1964. For the previous
three years he had been Special Assistant to Mr. Fowler in his
capacity as Under Secretary of the Treasury.
In recognition of his valuable assistance to the Under
Secretary and his significant contributions to the Revenue Acts of
1962 and 1964, as well as to other legislation and to various fields
of tax administration, Mr. Hunt received the Treasury's Meritorious
Service Award from former Secretary Dillon on September 2, 1964.
For the decade prior to joining the Treasury, Mr. Hunt had
been in private law practice with Gardner, Morrison and Rogers,
of Washington, D. C. He came to that firm from the Yale Law
School, where he received his LL.B. degree in 1951.
Mr. Hunt has also had an active career in civic and political
affairs in Alexandria and Washington. From 1951 to 1961, he was
a member of the Alexandria City Democratic Committee __ serving as
its Vice-Chairman in 1957-59 and as its Chairman in 1959-60. He
was Chairman of the Alexandria Delegation to the Virginia State
Democratic Convention in 1960, and from 1956 to 1960 was Vice
Chairman of the Committee for Job Opportunities of Washington, D. C.
Prior to attending the Yale Law School, Mr. Hunt received his
B.A. degree i~ 1946 from the University of North Carolina, and was
elected to Ph~ Beta Kappa. He served in the u. S. Army from 1946
to 1948.
F-27
- 2 Mr. Hunt is a member of the District of Columbia Bar, Bar of
the U. S. Court of Appeals for the District of Columbia, and the Bar
of the United States Supreme Court. He is also a member of the
District of Columbia and American Bar Associations.
Married to the former Mary Jane Fairbairn Abdill, Mr. Hunt
resides at 3617 Gunston Road, Alexandria. They have four children.
000
TREASURY DEPARTMENT
FOR RELEASE A. M. NEWSPAPERS,
Saturday, April 24, 1965.
April 23, 1965
RESULTS OF REFUNDING OF $1 BILLION OF ONE-YEAR BIILS
The Treasury Department announced last evening that the tenders for $1,000,000,00
or thereabouts, of 365-day Treasury bills to be dated April 30, 1965, and to mature
April 30, 1966, which were offered on April 19, were opened at the Federal Reserve &n
on April 23.
The details of this issue are as follows:
Total applied for - $2,572,794,000
Total accepted
1,000,762,000
(includes $36,662,000 entered on a
noncompetitive basis and accepted in
full at the average price shown below)
Range of accepted competitive bids:
3.994~ per annum
3 • 999';"
"
Average
- 95.949
"
"""
3.996%"
(45 percent of the amount bid for at the low price was accepted)
High
- 95.951 Equivalent rate of discount approx.
Low
- 95.945
11
" " "
"
11
Federal Reserve
District
Boston
New York
Philadelphia
Cleveland
RicrUllond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTAL
!I
Total
Applied for
$ 32,735,000
1,967,888,000
13,575,000
39,448,000
20,232,000
19,522,000
293,454,000
12,855,000
9,580,000
2,940,000
30,995,000
129,570,000
$2,572,794,000
11
Total
Accepted
$
5,235,000
923,368,000
2,310,000
4,448,000
2,132,000
2,522,000
28,607,000
3,655,000
1,580,000
2,940,000
995,000
22,970,000
$1,000,762,000
On a coupon issue of the same length and for the same amount invested, the return
these bills would provide a yield of 4.18%. Interest rates on bills are quoted in
terms of bank discount with the return related to the face amount of the bills ~Y
at maturity rather than the amount invested and their length in actual number of d
related to a 360-day year. In contrast, yields on certificates, notes, and bonds
computed in terms of interest on the amount invested, and relate the number of MY
remal.Ul.ng 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.
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY DECISION ON FIELD STRENGrH MErERS
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that Benco Model
FSP-3B Field Strength Meters and accessories (MT-FS, PM-50, PM-75,
and LCC) imported from Canada, manufactured by Benco Television
Associates Limited, Rexdale, Ontario, Canada, are not being, nor
likely to be, sold at less than fair value within the meaning of
the Antidumping Act.
A "Notice of Intent To Discontinue Investigation
Regarding Fair Value," was published in the Federal Register on March 9,
1965, stating that price reVisions with respect to Benco Model FSP3B Field Strength Meters and accessories (MT-FS, PM-50, PM-75, and
Lee) imported from Canada, manufactured by Benco Television Associates
Limited, Rexdale, Ontario, Canada, were considered to be evidence
that there are not, and are not likely to be, sales below fair value.
No persuasive evidence or argument to the contrary was presented
within 30 days of the publication of the above-mentioned notice in
the Federal Register.
The dollar value of imports of the involved merchandise received during the period April 1, 1964, through January 31, 1965,
was approximately $26,000.
TREASURY DEPARTMENT
WASHINGTON,
April 26, 1965
FOR IMME!DIATE RELEASE
TREASURY DECISION ON FIELD STRENGTH MEl'ERS
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that Benco Model
FSP-3B Field Strength Meters and accessories (MT-FS, PM-50, PM-75,
and LCC) imported from Canada, manufactured by Benco Television
Associates Limited, Rexdale, Ontario, Canada, are not being, nor
likely to be, sold at less than fair value within the meaning of
the Antidumping Act.
A "Notice of Intent To Discontinue Investigation
Regarding Fair Value," was published in the Federal Register on March 9,
1965, stating that price revisions with respect to Benco Model FSP3B Field Strength Meters and accessories (MT-FS, PM-50, PM-75, and
LCC) imported from Canada, manufactured by Benco Television Associates
Limited, Rexdale, Ontario, Canada, were considered to be evidence
that there are not, and are not likely to be, sales below fair value.
No persuasive evidence or argument to the contrary was presented
within 30 days of the publication of the above-mentioned notice in
the Federal Register.
The dollar value of imports of the i nvol ved merchandise received during the period April 1, 1964, through January 31, 1965,
was approximately $26,000.
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY DECISION ON FERTILIZERS
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that fertilizers:
ammonium phosphate type, ammonium nitrate type from Canada are not
being, nor likely to be, sold at less than fair value within the
meaning of the Antidumping Act.
A "Notice of Tentative Determination,"
was published in the Federal Register on March 10, 1965.
No written submissions or requests for an opportunity to present views in opposition to the tentative determination were presented within 30 days of the publication of the above-mentioned
notice in the Federal Register.
Appraising officers are being instructed to proceed with the
appraisement of this merchandise from Canada without regard to any
question of dumping.
The dollar value of imports of the involved merchandise received during the year 1964 was approximately $15,000,000.
TREASURY DEPARTMENT
Apr i 1 26, 1965
FOR IMMEDIATE RELEASE
TREASURY DECISION ON FERTILIZERS
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that fertilizers:
ammonium phosphate type, ammonium nitrate type from Canada are not
being, nor likely to be, sold at less than fair value within the
meaning of the Antidumping Act.
A "Notice of Tentative Determination, 11
was published in the Federal Register on March 10, 1965.
No written submissions or requests for an OPportunity to present views in opposition to the tentative determination were presented within 30 days of the publication of the above-mentioned
notice in the Federal Register.
Appraising officers are being instructed to proceed with the
appraisement of this merchandise from Canada without regard to any
question of dumping.
The dollar value of imports of the involved merchandise received during the year 1964 was approximately $15,000,000.
TREASURY DEPARTMENT
FOR RELF..ASE A.1'1. NEHSPAPERS,
WASHINGTON. D.C.
Nesday, April 27, 196~.
April 26, 1965
RESULTS OF TREASURY'S IN'EEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
rreasfu'J bills) one series to be an additional issue of the bills dated Januarv::8 1965
md the other series to be dated April 29, 1965, which were offered on April 2i, ~ere '
)pened at the Federal Reser:r8 Banks on April 26. Tenders were invited for $1,200, 000, 000,
)r ttereabouts, of 91-day bl11s and for $1,000,000,000, or thereabouts, of 182-day bills.
1he details of the two series are as follows:
;lANGE OF
ACCEPTED
!OMPETITIVE BIDS:
High
Low
Average
91-day Treasury bills
maturing July 29, 196~
Approxo Equiv.
Price
Annual Peate
99.01.4
3.901%
99.009
3.920%
99.010
3.916%
Y
-
·.
·
l82-day Treasur,y bills
maturing October 28, 1965
Approx. Equiv.
Price
Annual Rate
97.993
3.970%
97.988
3.980%
97.989
3.977% Y
98 percent of the amount of 9l-day bills bid for at the low price was accepted
69 percent of the amount of l82-day bills bid for at the low price was accepted
aI'AL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Boston
New York
Philadelphia
Cleveland
Pichmond
Atlanta
Chicago
St. Louis
}1imeapoli s
Kansas City
Dallas
San Francisco
TOTALS
Applied For
24,330,000
$
1,482,h20,OOO
27,869,000
23,996,000
11,420,000
55,841,000
299,701,000
34,144,000
23,379,000
36,158,000
24,626,000
223,460,000
$2,267,344,000
Applied For
Accepted
26,034,000
$
$ 13,314,000
1, 356,u23, 000
757,980,000
ll~, 869,000
27,950,000
34,254,000
23,694,000
9,216,000
11,384,000
39,115,000
40,154,000
422,625,000
157,840,000
12,256,000
27,128,000
30,385,000
18,319,000
16,713,000
35,935,000
19,414,000
13,963,000
216 z359 2 000
86,467,000
$1,201,047,000 ~ $2,210,744,000
Accepted
12,880,000
574,963,000
4,919,000
34, 10l[, 000
3,813,000
30,473,000
251,225,000
8,)J,46,000
17,715,000
ll,508,OOO
4,414,000
48, 913~OOO
$
$1,003,373,000
£I
InCludes $234,576,000 noncompetitive tenders accepted at the average price of 99.010
InCludes $92,706,000 noncompetitive tenders accepted at the average price ,of 970989
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 4.01%, for the 9l-day bills, and ~.12%, fa: the
182-day bills. Interest rates on bills are quoted in terms of bank dlsCOunt Wlth the
return related to the face amount of the bills p~able at maturity rather than tr~
amount invested and their length in actual number of days rel2.ted to a 360-day year.
In contrast, yields on certificates, notes, and bonds are compu~e? in. terrr4s. of interest on the amount invested, and relate the number of days rema~lng )Jl an _lnterest .
payment~period to the--actual number of days in the period, with semiannual compoundmg
if more than one coupon period is involved.
- -
TREASURY DEPARTMENT
A.r. 0C."S D il.:':-:-RS,
I'uesday, AprH 27, 1965 •
>:'CR
~T>:'A:-:E
April 26,
.cSs:Tlr, JF TREASTJRY IS '{S?KLY BILL OFF:<:RP!G
The ireasury Department announced lE-st evening tt.at the tencJers for two series o~
':'rE'Clsu:-y bUJs, one serips tobe an additional issue of the bills dated Ja~uaryll, 1905,
2nd tr:e other serj.es to l:)~ dated April 29, 1965, which we:-e offered on Aprll 21, were
Jpened at the Federal i1e3erve Banks on April 26. Tenders were invited for· ;;1,200,OO?,01
or tr ereabouts, ;) f 9l-day bi.lls and for $1,000,000,000, or thereabouts, of 182-day blll:
The details of the two series are as follows:
RA.fI''J:;:
)F
ACCEPTED
182-day Treasury bills
maturing October 28, 1965
Approx. Squiv.
Arumal :,.ate
Price
3.970-%
97.993
3.98o;b
97.988
97.989
3.977%
9l-dc::.y Trp.asury biD s
maturing July 29, 1965
Ap~)roxo Equiv.
Price
Annual ~ate
99.014
3.901%
99.009
3.920%
99.010
3.916% Y
COF ?=TTTIV~ BIDS:
Hic;h
Low
A'Jerar;e
y
98 percent of the amount of 91-day bills bid for at the low price was accepted
69 0ercent of the amount of 182-day bills bid for at the low price was accepted
T:TAL
T:;lm~:RS APt)LL~D
Cistrict
Boston
New York
Philadelrhia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
~'i nneapolj s
1\ansas City
G8llRs
:=:an :randsco
TOTALS
:;'OR
M~D
.C\.~CS?T=<D
Applied ~or
$
2Ll, .330, 000
1,L 82, W20,000
27,869,000
23,996,000
11,420,000
55,841,000
299,701,000
34,144,000
23,379,000
36 ,lS8,000
24,626,000
223,L60,ooo
$2,267,:L4,000
EY FSDERAL
REST?RV~:
Accepted
$
13,314,000
757,980,000
111,869,000
23,694,000
11,384,000
40,154,000
157,840,000
27,128,000
18,319,000
35,935,000
13,963,000
86,467,000
$1,201,OU7,OOO
!I
DISTRICTS:
Applied For
j;
26,034,000
1, 356,L 23, 000
27,950,000
34,254,000
9,216,000
39,115,000
422,625,000
12,256,000
30,385,000
16,713,000
19,L14,000
216 l 359,2 000
$2, 210,7ti4, 000
Accepted
$ 12,880,000
574,963,000
4,919,000 .
34,104,000 .
3,813,000 ~
30,L73,OOO .
251, ?25 ,000
8,h46,000
17,715,000
11,508,000
4,~14,000
LR z913 z000
$1,003,373,000
a/ Includes $234,576,000 noncompetitive tenders accepted at the average price of 99.010
b/ Includes $92,706,000 noncompetitive tenders accepted at the average price of 97.989
II On a coupon issue of the
same length and for the same amount invested, the return 00
these bills would provide yields of 4.01%, for the 91-day bills, and 4.12%, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with tb
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 yeU.
In contrast, yields, on certificates, notes, and bonds are computed in terms of inter'
est on the amount lllvested, and relate the number of days remaining in an interest
payment period to the actual number of days in the Deriod with semiannual c<JYIpoundi
if more ttan one coupon period is involved.
.
,
:-~9
- 2 -
While Mr. Saul's primary responsibility was in the
municipal bond field, he participated in the formulation of
policies affecting the quality and maturity composition of the
Bank's bond portfolio which comprises U.S. Treasury, state and
municipa1,corporate and foreign obligations.
Mr. Saul served with the U.S. Army from 1951 to 1953.
Mr. Saul was born in Belleville, New Jersey, on
November 26, 1929.
He received his B.S. in Economics from
the Wharton School, University of Pennsylvania, Philadelphia,
Pennsylvania, in 1951.
In 1962, he attended the Stonier
Graduate School of Banking at Rutgers, the State University,
in New Brunswick, New Jersey.
He is a member of the Municipal
Bond Club of New York, and the Cashiering and Procedures
Sub-Committee, Municipal Section, of the Investment Bankers
Association of America.
I
·- _
FOR IMMEDIATE RELEASE
FRANKLIN R. SAUL NAMED ASSISTANT
TO THE SECRETARY OF THE TREASURY
r .
y--.
Secretary of the Treasury / Henry H. Fowler l today announced
the appointment, effective May 1, 1965, of Franklin R. Saul,
~.
Vice President of the First National City Bank of New York,
as Assistant to the Secretary (Debt Management).
Mr.Saul succeeds Daniel S. Ahearn) who resigned recently
to join Wellington Management Company of Philadelphia,
investment adviser to the Wellington Fund.
Mr. Saul will aid in developing and coordinating plans
and policies for debt management.
Since 1953, Mr. Saul has been with the First National
City Bank of New York -- serving since 1963 as a Vice President
and a senior officer of the Bond Administration Division.
TREASURY DEPARTMENT
April 27, 1965
FOR IMMEDIATE RELEASE
f'RAN}:L :.N R. SAL; L NAMED ASS ISTANT
T0 THE SECRETARY cr,.' THE TREASURY
Secretar\' of the Treasur:T Henry H. Fowler today announced
trLe appoidtme~t, effective Ma:v 1, 19b':;, of Franklin R. Saul,
a Vice President of the First National City Bank of New York,
as ~ssistant to the ~ecretary (Debt Management) .
Mr. Saul succeeds Daniel S. Ahearn, who resigned recently
join Wellington han--:geml'nt :'::ompany of Philadelphia, investment adviser to t;-:.e Wellington Fund.
'.:0
Mr. ~aul will aia in developing and coordinating plans
and policies for deh~ management.
Since 1953, Mr.~aul L.as ~een with the First National
City Bank of New York -- serving since 1963 as a Vice President
and a senior officer of tne Bond Administration Division.
Wi1ile Mr. Saul I s primary' responsibility was in the municipal
bond field, he participatei in the formulation of policies
affecting toe qualit r and mat:Jrity composition of the Bank's
bond portfolio w~ich comprises U. S. Treasury, state and
municipal, corporate and foreign obligations.
Mr. Saul served wir.-, :ne ;J. S. Army from 1951 to 1953.
Mr. Saul was born iG Belleville, New Jersey, on November 26,
1929. He received ~is B.S. in Economics from the Wharton School,
lfuiversity of De~~svlvania, Philadelphia, Pennsylvania, in 1951.
=n 1962, he attended t~e Stonier Graduate School of Banking at
Rutgers, the State Universit v , in New Brunswick, t'-:ew Jersey.
He is a member of ::::--.2 ~lL:n ic i pa 1 Bond Club of New York, and the
Cashi~ring ~nd Proce~~res Sut-Committee, Municipal Section, of
the I~vestment Ba0kers )ssociation of America.
000
F-30
- 3 -
and
exchange tenders will receive equal treatment.
Cash adjustments will be made
for differences between the par value of maturing bills accepted in exchange and
the issue price of the new bills.
The income derived from Treasury bills, whether interest or gain from the sale
or other disposition of the bills, does not have any exemption, as such, and loss
from the sale or other disposition of Treasury bills does not have any special
trea.tment, as such, under the Internal Revenue Code of 1954.
The bills are subject
to esta.te, 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 te.xa.tion the amount of discount at which
Trea.sury 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 taxa.ble year for
which the return is made, as ordinary gain or loss.
'l'reasury Department Circular No. 418 (current revision) and this notice, prescribe the terms of the Treas:ury 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 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 each issue
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
for the respective issues.
Settlement for accepted tenders in accordance with
the bids must be made or completed at the Federal Reserve Banks on May
1965
~
, in cash or other immediately available funds or in a like face
amount of Treasury bills maturing __~M~a~y~6~,~1~9~6?5~~~~_______________
~
Cash
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
~~
April 28, 1965
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 $
cash and in exchange for Treasury bills
2,20~0,000
mat~ring
May 6, 1965
, in the amount
~
of $ 2,20.7,000, as follows:
91 -day bills (to maturity date) to be issued
XJ<CI!tX
, or thereabouts, for
,
May 6, 1965
f4J
in the amount of $ 1,200,000,000 , or thereabouts, represent~
ing an additional amount of bills dated February 4, 1965
and to mature August
W965
Xf41
, originally issued in the .
amount of $1,00.,000 , the additional and original bills
to be freely interchangeable.
182 -day bills, for $l,OO~OOO
XJI{X1m)t
.
May
6~
,or thereabouts, to be dated
, and to mature
November 4, 1965
XfUJC
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, on~-thlrty p.m., Easte~ time,
Monday, Ma~1965
!enders 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
TREASURY DEPARTMENT
April 28, 1965
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
$2,200,000,000,or thereabouts, for cash and in exchange for
Treasury bills maturing May 6, 1965,
in the amount of
$2,202,477,000, as follows:
9~day bills (to maturity date) to be issued May 6, 1965,
in the amount of $1,200,000,000, or thereabouts, representing an
additional amount of bills dated February 4,1965, and to
mature August 5,1965,
originally issued in the amount of
$ 1,003,580,000,the additional and original bills to be freely
interchangeable.
182-day bills, for $1,000,000,000, or thereabouts, to be dated
May 6, 1965,
and to mature November 4, 1965.
The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be issued in bearer form 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 c lOSing hour, one-thirty p.m., Eas tern Day1 ight Saving
time, Monday, May 3, 1965.
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.
F-31
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 t~nders
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 each issue for $200,000 or less without
sta ted pr i ce from anyone bidder will be accepted in fu 11 a t the
average price (in three decimals) of accepted competitive bids
for the respective issues. Settlement for accepted tenders in
accordance with the hids must he made or completed at the Federal
~serve Banks on
May 6, 1955,
in cash or other immediately
awilable funds or in a like i8ce amount of Treasury bills
maturing
May 6, 1965.
Cash and exchange tenders will receive
equal treatment. Cash adjustments will be made for differences
be~een the par value of maturing hills accepted in exchange and
t~ 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
lotice prescribe the terms of the Treasury bills and govern the
)ond1tions of their issue. Copies of the circular may be obtained from
my Federal Reserve Bank or Branch.
000
- 2 -
The 4-1/4~ bonds are redeemable prior to maturity at par in payment of Federal
estate taxes if owned by the decedent at time of death.
Interest on the
and August 15, 1966.
November 15.
4~
notes will be payable on August 15, 1965, and February 15
Interest on the 4-1/4% bonds will be payable on May 15 and
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
April 28, 1965
TREASURY ANNOUNCES MAY 15 REFUNDING TERMS
The Treasury today offered a choice between a
4~
l5-month note and a 9-year
Public
holdings of the maturing securities amount to $4.1 billion; the remaining $4.3
billion is held by the Federal Reserve and Government investment accounts. The
two securities offered in exchange are as follows:
4-l/4~ bond to holders of $8,436 million of Treasury notes maturing May 15.
An additional amount of 4~ Treasury Notes of Series A-1966,
dated February 15, 1962, and maturing August 15, 1966, at
99.85 (to yield about 4.12~) and accrued interest from
February 15 to May 15, 1965 ($9.83425 per $1,000); or
An additional amount of 4-1/4~ Treasury Bonds of 1974, dated
May 15, 1964, and maturing May 15, 1974, at 100.25 (to
yield about
4.22~).
There are noy outstanding $5,156 million of the 4~ notes and $1,532 million
of the 4-1/4'/0 bonds.
Cash subscriptions for the new securities will not be received.
notes eligible for exchange are as follows:
The maturing
$1,816 million of 4-5/8'/0 Treasury Notes of Series A-1965, dated
May 15, 1960; and
$6,620 million of 3-7/8'/0 Treasury Notes of Series C-1965, dated
November 15, 1963.
The books Will be open for three days only, on May 3 through May 5, for the
receipt of subscriptions. Subscriptions addressed to a Federal Reserve Bank or
Branch, or to the Office of the Treasurer of the United States, and placed in the
mail before midnight, May 5, will be considered as timely. The payment and delivery
date for the new securities will be May 17, 1965. The new notes and bonds will be
made available in registered as well as bearer form. All subscribers requesting
registered notes and bonds will be required to furnish appropriate identifying
numbers as required on tax returns and other documents submitted to the Internal
Revenue Service ~
Exchanges of the maturing notes will be made in a like face amount of the new
securities as of May 15. Coupons dated May 15 on the maturing notes should be
,!!.etached and cashed when due. The final interest due on registered maturing notes
will be paid by issue of interest checks in regular course to holders of record
on April 15, 1965, the date the transfer books closed.
F-32
TREASURY DEPARTMENT
April 28, 1965
FOR IMMEDIATE RELEASE
TREASURY ANNOUNCES MAY 15 REFUNDING TERMS
The Treasury today offered a choice between a 4~ l5-month note and a 9-year
bond to holders of $8,436 million of Treasury notes maturing May 15. Public
holdings of the maturing securities amount to $4.1 billion; the remaining $4.3
billion is held by the Federal Reserve and Government investment accounts. The
two securities offered in exchange are as follows:
4-1/4~
An additional amount of 4~ Treasury Notes of Series A-1966,
dated February 15, 1962, and maturing August 15, 1966, at
99.85 (to yield about 4.12%) and accrued interest from
February 15 to May 15, 1965 ($9.83425 per $1,000); or
4-l/4~ Treasury Bonds of 1974, dated
May 15, 1964, and maturing May 15, 1974, at 100.25 (to
yield about 4.22~).
An additional amount of
There are now outstanding $5,156 million of the
of the 4-1/4% bonds.
4~
notes and $1,532 million
Cash subscriptions for the new securities will not be received.
notes eligible for exchange are as follows:
The maturing
$1,816 million of 4-5/8~ Treasury Notes of Series A-1965, dated
May 15, 1960; and
$6,620 million of 3-7/8~ Treasury Notes of Series C-1965, dated
November 15, 1963.
The books will be open for three days only, on May 3 through May 5, for the
receipt of subscriptions. Subscriptions addressed to a Federal Reserve Bank or
Branch, or to the Office of the Treasurer of the United States, and placed in the
mail before midnight, May 5, will be considered as timely. The payment and deliver
date for the new securities will be May 17, 1965. The new notes and bonds will be
made available in registered as well as bearer form. All subscribers requesting
registered notes and bonds will be required to furnish appropriate identifying
numbers as required on tax returns and other documents submitted to the Internal
Revenue Service.
Exchanges of the maturing notes will be made in a like face amount of the new
securities as of May 15. Coupons dated May 15 on the maturing notes should be
detached and cashed when due. The final interest due on registered maturing notes
will be paid by issue of interest checks in regular course to holders of record
on April 15, 1965, the date the transfer books closed.
F-32
- 2 -
The 4-1/410 bonds are redeemable prior to maturity at par in payment of Federal
!state taxes if ovned by the decedent at time of death.
Interest on the
md August 15, 1966.
fovember 15.
4~
notes will be payable on August 15, 1965, and February 15
Interest on the 4-l/4~ bonds Will be payable on May 15 and
Estimated Ownership of May 15, 1965 Maturities
As of March 31, 1965
(In millions of dollars)
4-5/810
3-7/810
Total
Commercial banks ••••••••••••••••••
$ 585
$1,350
$1,935
Mutual savings banks ••••••••••••••
103
18
121
Fire, casualty and marine •••••••
Total, insurance companies ••••••
3
80
83
1
~
4
125
Corporate pension funds •••••••••••
35
30
65
Corporations ••••••••••••••••••••••
50
350
400
Savings & loan associations •••••••
45
60
105
State & local governments •••••••••
125
160
285
All other private investors •••••••
507
549
1,056
Total, privately held •••••••••••••
1,533
2,563
4,096
Federal Reserve Banks and
Government Investment Accounts •••
283
4,057
4,340
Total outstanding •••••••••••••••••
$1,816
$6,620
$8,436
Note
Note
Insurance companies:
Life .••..••.••.••..••.•••••••...
Office of the Secretary of the Treasury
129
April 28, 1965
TREASURY DEPARTMENT
April 28, 1965
FOR DlMEDIATE REIEASE
ANTIDUMPING PROCEEDING ON
STEEL JACKS
On April 13, 1965, the Commissioner of Customs received information in proper form pursuant to the provisions of section l4.6(b)
of the Customs Regulations indicating a possibility that steel jacks
imported from Canada, manufactured by J. C. Hallman Manufacturing Co.)
Ltd., Waterloo, Ontario, Canada, are being, or likely to be, sold at
less than fair value within the meaning of the Antidumping Act, 1921,
as amended.
In order to establish the validity of the information, the Bureau
of CustOmB is instituting an inquiry pursuant to the provisions of
section l4.6(d)(1)(ii), (2) and (3) of the Customs Regulations.
The information was submitted by the Harrah Manufacturing Company,
Bloomfield, Indiana.
An "Antidumping Proceeding Notice t1 to tbis effect is being pub-
lished in the Federal Register pursuant to section l4.6(d)(1)(i) of
the Customs Regulations.
The dollar value of imports received during the period January 1,
through March 31, 1965, was approximately $50,000.
TREASURY DEPARTMENT
April 28, 1965
FOR IMMEDIATE REIEASE
ANTIOOMPING PROCEEDlNG ON
STEEL JACKS
On April
13, 1965, the Commissioner of CUstoms received infor-
mation in proper form pursuant to the provisions of section 14.6(b)
of the Customs Regulations indicating a possibility that steel jacks
imported from Canada, manufactured by J. C. Hallman Manufacturing Co. J
Ltd., Waterloo, Ontario, Canada, are being, or
like~
to be, sold at
less than fair value within the meaning of the Antidumping Act, 1921,
as amended.
In order to establish the validity of the information, the Bureau
of Customs is instituting an inquiry pursuant to the provisions of
section 14.6(d)(1)(ii), (2) and (3) of the Customs Regulations.
The information was submitted by the Harrah Manufacturing Company,
Bloomfield, Indiana.
An "Antidumping Proceeding Notice 11 to this effect is being pub-
lished in the Federal Register pursuant to section 14.6(d)(1)(i) of
the Customs Regulations.
The dollar value of imports received during the period January 1,
through M9.rch 31, 1965, was approximately $50,000.
- 20 -
?irst, bow can we make certain that any new scheme will be entirely
compatible with the evolution of the existing system?
that nations should not be penalized
T.~is
will reQuire
nor benefitted -- as a result of
the composition of their reserves, when and if some new liQuidity asset
is developed.
Secondly, how can we assure that any new system will increase and not
reduce world liQuidity?
World liQuidity would be reduced to the extent
that existing reserve currency holdings are converted into gold.
What,
then, should be our attitude toward proposals which might stimulate such
conversion or cast doubt upon the stability or the convertibility of
existing reserve currency holdings?
Thirdly, how can we make sure that any new system will maintain
machinery for giving appropriate weight to the views of both creditor and
debtor countries?
Should it be subject to the arbitrary control of either,
or to the veto of a single country?
These are three broad questions, among many, that will need to be kept
in mind as we proceed to examine most carefully the various ideas that have
been or may be suggested.
We are conscious that the creation of any new
type of reserve asset by international agreement would be a step of profound
significance.
We must be sure that it is a step in the right direction.
The mechanism of the international monetary system is an intricate and
complicated mechanism, the successful functioning of which is of world-wide
concern.
We must make certain that any adjustments made in that mechanism
will be the best that experience and intelligence and concern for the
welfare of all nations can devise.
--000--
- 19 Tnere would be no real economic impact at this stGGe.
But as soon as the
newly-created asset or unit began to be used, those surplus countries which
accumulated the unit would be extending credit to the deficit countries.
llid the extension of credit from one country to ar.othcr reflects the transfer of real assets.
The surplus country foregoes present consumption in
exchange for higher reserves -- or for future potential consumption.
A
creditor country has, of course, considerable freedom of action in controlling the credit it vi1l extend.
There are many acceptable ways in which a
balance of payments surplus can be reduced.
Study of the adjustment process
to determine appropriate policies to be followed -- both by deficit
countries to correct their deficits and by surplus countries to reduce
their surpluses -- is another area to which the Group of Ten is giving
attention.
With respect to the deficit countries, no country can expect to receive
unlimited automatic credit from its trading partners.
The search for
assurance that adequate international liquidity will be maintained in the
future will not in any sense be a search for automatic credit for persistent
debtors.
I have mentioned a few of the issues connected with the liquidity
discussions without giving any clear indication of what the answers should
be.
The answers must await continued hard study and, at an appropriate
stage, perhaps hard negotiations.
your consideration at this time.
I will advance only three questions for
- 18 were to be subject to a unanimous agreement, which is to say if any
country could veto an expansion or a contraction, it 'WOuld hardly be
accurate to say that decisions regarding the adequacy of international
li~uidity
had been placed under international control in any meaningful
way.
The importance of the conditions which might govern creation of new
assets would be no less if new reserve assets should be created in the
International Monetary Fund.
Proposals of this type call for creation
of claims on the Fund that can be drawn upon at will to meet balance of
payments deficits.
For example, automatic drawing rights could be accorded
against some part of the existing credit tranches in the Fund.
Another pro-
posal is that the Fund might be authorized to invest some of its holdings
of currencies in member countries, thereby providing those countries with
assets useable internationally.
Again, a number of questions would have to be considered.
Would
operation of the normal weighted voting procedures in the Fund serve the
interests of creditor and debtor countries equitably?
Should reserve
assets be created for all countries or for only those countries that might
be expected to be in both surplus and deficit over a period of years?
However additional reserves are created, their use implies a credit
operation.
The original creation could take the form for each participating
country of an equal increase in its liabilities and in its assets -- the
latter becoming, by terms of the agreement, an international reserve asset.
- 17 value of reserve units.
These would represent y(proportionate claim upon
the aggregate pool of resources and these claims or units would be transferable among the members in settlement of surpluses or deficits.
reserve unit itself would be held or used much as
reserves or used in international settlements.
~old
The
is now held in
By agreement among the
members, it would assume the nature of gold -- it would be held as reserves
its value would be fixed in terms of gold -- its acceptance by any member
would be automatic according to stipulated conditions.
For example, some proposals would call for creation of a limited
amount of reserve units and for the use of these units in fixed proportion
With gold in making all settlements among members.
The economic effect
would be little different from the gold standard itself.
like the gold standard With some reserve units added.
It would operate
Like a return to
the gold standard, itself, it could call into question the continuing
usefulness of reserve currency holdings and would
conversion of some holdings into gold.
~robably
encourage the
To the extent such conversions
should occur, the world would face a decline in total world liquidity,
rather than an increase.
A second important condition would be that dealing with the manner
in which decisions would be made for increasing or, if necessary, decreasing the amount of units in existence.
To over-simplify, it would be in
the apparent interest of creditor countries to resist -- and of debtor
countries to favor -- the creation of additional units.
If new issues
.. 16 when this operation has been completed.
That Will provide an appreciable
sdM tion for international liquidity in the form of credit facilities.
The most intriguing aspect of the liquidity question, however, doubtless lies in efforts to devise a new type of reserve asset.
that the Deputies of the Group of Ten, in their Report to
I mentioned
~linisters,
announced that they had established a "Study Group on the Creat:ton of
Reserve Assets" to study the problem which its name iln:plies.
is meeting periodically.
This Group
It is expected to present to the Deputies some
time this summer a study which will "assemble the elements necessary for
evaluation of the various proposals" which have been put forward.
I cannot speak in detail about the work of this Group.
of reference are public
te~
info~mation.
The Deputies
But its
to the
Group of Ten spoke of two types of proposals:
"O::;.e, the introduction, through an agreement among the memr)er
countries of the Group, of a ne"l-T reserve asset which would be
created according to appraised over-all needs for reserves;
"and the other based on the acceptance of gold tranche or
similar claims on the (International l-bnetary) Fund as a form
of international asset, the volu:ne of which would, if nece(;sary,
be enlarged to meet an agreed need. II
Proposals of the first type vary ~~bstantiallY in detail.
Essentially,
however, these schemes provide that a limited group of countriefl, by
depositing their own currencies or gold, establish a central. poc;,l of
lllOnetary :resources much would provide the backing for a nevr reserve unit.
lIembers 'WOuld receive in e."{change for their respective subscript.ioit an equal
- 15 express the opinion, which is shared by an ovenlaelming majority of
commercial and financial interests, that such a system, in practice,
would prove extremely disruptive to world trade ana financial transactions.
The Ministers and Governors of the Group of Ten have ruled out consideration of any such system and the International Monetary Fund has operated
for nearly
t~y
years in defense of a regime of generally fixed exchange
rates, with individual exchange rate adjustments regarded as appropriate
from time to time when individual countries have fallen into a position of
fundamental disequilibrium.
As we consider possible methods for assuring adequate liquidity in
the future, the next question is whether some new type of asset should
be created or whether liquidity needs can be met by fUrther development
and refinement of existing credit mechanisms.
On the credit side, agreement has already been reached, in principle,
on a 25 percent increase in International Monetary Fund quotas.
principle" because, 'While more than 80 percent of the
I say "in
memb~lU~ v~t8a iii- -..
?
": 'I,
/'/
t:e:vQPl.j5P
-.~"'.~
."'"
the increase, each member must now determine for itself, in
accordance with its own legislative procedures, whether it will accept its
appropriate share of such increase.
The United States Administration is
seeking Congressional approval for an increase of $1,035 million in the
U. S. quota.
The House of Representatives voted favorably on this bill on
Tuesday of this week.
We are confident that the total of aggregate quotas
in the Fund will be increased from about $16 billion to about *21 billion
- 14 has been corrected, I should acknmrledge that there is a school of thought __
and one which appears to be quite strong in academic circles -- that believes
in solving the liquidity problem not by increasing liquidity but by reducing
the need for liquidity.
ing exchange rates.
Members of that school are the advot::ates of float-
They hold that fixed exchange rates alone create the
need for large reserves.
More importantly, perhaps, they feel that fixed
exchange rates constitute a restraining influence preventing individual
countries from following domestic policies which might be deemed appropriate
for domestic aims.
If exchange rates were free to move up and down in the
market, a balance of payments deficit would be reflected in a cheapening of
the CQuntry1s currency rather than in a loss of reserves.
The cheapening
of the currency, in turn, the argument runs, would bring about adjustments
in the trade pattern -- lower imports and higher exports, am.ong other
changes -- which would restore balance of payments equilibrium.
No country
would need to hold large reserves and each country could choose its internal
monetary and fiscal policies according to its own system of priorities and
without regard for balance of payments effects.
I am not going to try to argue the case for or against floating rates.
I would admit, as any student of economics will admit, that the theoretical
arguments for floating exchange rates can be presented with great precision
and appeal.
Operation of the system in a world of imperfect knowledge,
imperfect governmental and monetary institutions, and conflicting national
ambitions and policies would be something else again.
I will merely
-
~j
-
eliminated by measures Which would have a minimum impact both on the
te of economic growth in our own country and on the continued economic
asperity of the rest of the Free World.
We have ruled out measures
ieh would have denied our responsibilities in defense of the Free World
in the economic development of less developed countries -- and we have
ne so in the interest of free men everywhere.
Our deep reluctance to
Dpt more restrictive monetary or fiscal policies at home has derived
om the unshakable conviction that a strong and growing economy in the
ited States is a prerequisite both to lasting correction of our balance
payments difficulties and to continued prosperity in the Western world.
I shall not digress at any length to review the extent to Which our
lance of payments position has, in fact, been strengthened in recent
ars.
The splendid record of price stability which we have maintained
rough fifty months of steady economic growth has established for us a
rong competitive position in world trade and/our
trade balance is highly
I
/
~orable.
We have reduced the balance of payments impact of our military
foreign aid operations without retreating from our commitments in these
i
~as.
More recently, measures have been taken to dampen the outflow of
pital from the United States by means of the voluntary cooperation of
~
banking system and the business community.
~ever,
The United States will,
continue to be an important source of productive capital.'
Before I resume commenting briefly on
~nat
I think vi11 be the
lncipal issues to be decided as we cooperate in working out arrangements
assure that adequate world liquidity will be maintained When our deficit
- 12 -
some $14.5 billion of dollar reserves of foreign official holders at a
rate of $70 for an ounce of gold rather than the existing $35 per ounce.
The United States
~uld
be left at the end of the operation with gold
reserves near the present level, according to the new valuation, and would
have wiped out its official liabilities to foreign monetary authorities.
Such a proposal is thoroughly unacceptable to the United States.
It combines the proposal that the world once again accept automatic
regulation of its money supply according to the vagaries of world gold
production with the proposal that the implied and stated commitments of
the gold exchange be repudiated to the advantage of a few and the disadvantage of many.
It is easy to see how it might be appealing to the major
gold-producing countries, including the Union of South Africa and the
U.S.S.R., and to countries holding a high proportion of their reserves in
gold.
It would, of course, be h~y discriminatory against countries
which have kept a substantial fraction of their reserves in the form of
reserve currencies.
Our commitment to maintain the fixed parity of $35
an ounce between gold and dollars is basic to the stability of the world
monetary system.
President Johnson has reiterated our unchanging determina-
tion to maintain this parity.
We share fully, however, the European view that our balance of payments
deficit should be promptly corrected.
We do not believe that the existence
of the present monetary system has weakened our resolve to eliminate our
balance of payments deficit.
We have, however, insisted that the deficit
- 11 -
size and persistence of U. S. deficits, and the resulting supply of dollars.
It is no secret that some European countries feel that the long-continued
deficit of the United states has been at best made possible and at worst
encouraged and stimulated by the ability of
i:~e
United States to finance a
very substantial portion or its dericit during the past seven years by
paying out dollars that have been added to roreign reserves.
rr the U. S.
deficit had been settled entirely in gold, they assert, the United States
would have taken earlier and more rigorous steps to bring its payments into
equilibrium.
Accordingly, some of these countries are prepared to argue that the
international monetary system at the present time is experiencing a surplus
of liquidity, not a shortage.
This is perhaps the basiS for the suggestion
. of General de Gaulle that the world should return to a gold standard system.
A return to a gold standard would imply a sharp curtailment or world reserves
and vorld liquidity and would carry the threat of world-wide deflation.
I need not -- for this audience -- spell out the detailed mechanism by which
this would come about.
I mentioned Jacques Rueff, Who recently expressed
his support ror a return to the gold standard in public statements in the
United States.
Recognizing that this alone would create dangerous deflationary
pressures, he couples his proposal with the suggestion that the price of
gold be doubled and that the United States then payoff its
to foreign central banks in gold at the new price.
liqu~d
liabilities
That would mean redeeming
- 10 -
monetary gold would alone be insufficient to provide an adequate secular
growth in reserves.
You will recall that new gold supplied only about
one-third of the ten year growth in reserve assets.
The United States also looks forward to a changing situation; it is
not in our interest to continue substantial balance of payments deficits,
to payout increasing amounts of dollars to the rest of the world, and
then to be faced with financing a substantial part of that deficit in
gold because other countries no longer wish to accumulate important
amounts of dollars in their reserves.
T'nere is certainly no fixed or
absolute level or ratio of our short-term dollar liabilities to our gold
reserves.
But officially-held dollar claims of a liquid character are
now just about equal to our gold reserves.
They have been rising for
about fifteen years, and rising quite sharply since 1958.
It is quite
essential that we bring this long series of balance of payments deficits to
a halt.
In doing so, we will also stop the process of providing gold and
dollar reserves to the rest of the world.
~men
this happens, there may then be a question as to how to provide
supplementary reserves in some form, to add to gold and the existing holdings of dollars and sterling exchange.
It is, in
my
view, unrealistic to
assume that the world can or should attempt to do away
foreign exchange holdings.
and meritorious instrument.
~th
these existing
The gold exchange standard in itself is a useful
But, at the same time, we must exercise
moderation in its use, and realize that it has been over-strained by the
- 9 -
a thorough study of the measures and instruments best suited for avoiding
and correcting large and persistent international imbalances, compatibly
with the pursuit of essential internal objectives.
They recommended a
procedure for "multilateral surveillance" of the ways and means of financing balance of payments disequilibria.
Looking further into the future,
since there was a possibility that the supply of gold and foreign exchange
reserves may prove to be inadequate for the over-all reserve needs of the
world economy, they authorized a study group to examine various proposals
regarding the creation of reserve assets either through the IMF or otherwise.
Finally, they agreed that they vould support a moderate general
increase in quotas in the IMF.
It might be asked vhy there was
SO
much concern regarding the future
of international liquidity When reserves had increased so rapidly in the
previous ten years.
The eight continental members of the Group of Ten
and Switzerland nearly tripled their reserves during the ten year period,
'1954 to 1963. In fact, some of these countries consider that the growth
in their reserves has been excessive and has been a contributing factor to
inflationary pressures on the European Continent.
Thus, they are particularly
concerned that the growth in reserves not be excessive in the future, as a
result of continuing deficits in the United States balance of payments.
At the same time, they join with the United States in recognizing
that there may be conditions in the future, given the remarkably vigorous
expansion of vorld trade and investment, when annual supplies of nev
- 8 Apart from the global picture, it is useful to pause a moment to
look at the
year period
reg~onal
aspects of this growth in reserves.
During the ten
,1e1'~t majo?-~~~~wsl ~~I ~ t~'~r~and ~!L ~;'afiIl:I...-.?:~j
I
~ acquired $18-1/2 billion of reserve assets, or $1-1/2 billion more
than the world as a vrnole.
---~~~o~~:hes:-~~'Pl~~he major
part of a
persistent surplus area in Continental Europe, which has had an unexampled
prosperity and an unprecedentedly strong balance of payments position.
Moreover, this group of countries acquired nearly $ll billion in gold,
nearly twice the total of new gold supplies available for monetary use
in the world as a 'Whole.
They were able to do so through a substantial
redistribution of the gold reserves of the United States.
This was the pattern of the ten years prior to the study undertaken
by the Group of Ten in 1964.
Against this pattern, the Ministers and
Governors concluded tha'l:;, IIFor the international monetary system as a
whole, supplies of gold and reserve currencies are tully adequate for
the present and are likely to be for the immediate fUture.
are supplemented by a broad range of credit facilities.
These reserves
The continuing
growth of world trade and payments is likely to entail a need for larger
international liquidity.
This need may be met by an expansion of credit
facilities and, in the longer run, may possibly call for some new form
of reserve asset.
j
1I
The Ministers and Governors of the Group of Ten then took several
decisions looking toward the future of the monetary system.
They undertook
7
- 7 as "credit facilities,1I and these might be available to potential deficit
countries in the future, subject to individual credit arrangements.
Reserve assets represented the claims of creditor countries that had
been established by the extensions of credit to others in the past on
their :part, through the International Monetary :FUnd or directly, and that
could readily be mobilized for their own use in case they, in their turn,
needed foreign exchange resources.
This latter category included also
the gold tranche claims on the Fund acquired by past subscriptions of gold
to the INF.
During the ten year period, the reserves of all the countries in the
Free Vorld rose about $17 billion or nearly a third.
nearly $6 billion.
Gold accounted for
Foreign exchange, principally in the form of dollars
and sterling, rose nearly $8 billion, and $3 billion was contributed by
increased claims on the Fund and by the use of bilateral credit facilities.
You will note that only about a third of the total addition to reserves,
defined broadly to include the ~~C±i~ti~s noted, was provided by
gold.
At the end of 1963, countries held in their reserves about $40
billion in gold or about 57 percent of the total reserves of $70 billion.
$25 billion was held in the form of foreign exchange, one-half in sterling,
and one-half in dollars.
These foreign exchange holdings were official
reserves and take no account of some $15 billion in liquid assets held by
non-Official private entities, almost entirely as claims in dollars or
sterling.
- 6 of pAyments deficit.
These may be denominBted in the currency of the holder
and are convertible at short notice by the holders into cash.
currency bonds now outstAnding emount to $1.1 billion.
Foreign
Foreign moneter,y
euthorities holding these bonds regard them either as part of their reserve
assets or as an asset similar to reserves.
In considering international liquidity, it is also appropriate to take
into account the availability of credit from the International MOnetary
Fund beyond the gold tranche positions.
As
r have said, one-quarter of a
country's quota represents its gold tranche; three-quarters represent its
drawing rights beyond the gold tranche.
These borrowing rights are not
so automatic as gold tranche drawing rights and, hence, not so highly liquid.
Consequently, they are not generally regarded as reserves.
However, they
are available in accordance with well understood standards and have been
widely used for nmny years.
They represent en important element in total
international liquidity.
The report of the Deputies of the Group of Ten, released in August
of last year, following their study, brought out several interesting
points relative to the growth of international liquidity, as the report
d.efined it, during the ten years from 1954 to 1963.
As noted, they dealt
with international liquidity as being a spectrum div:!.ded into two broad
categories:
,
" The div:!.ding line between
"reserves" and "credit facilities.
these two closely related classifications was fixed in this manner.
Credit
availabilities that had not been utilized were, broadly speaking, treated
- 5 I might mention parenthetically that such gold tranche positions will
be increased to $5 billion when the twenty-five percent increase in
Fund quotas now under way has been completed.
There are other forms of international credit about as liquid as
gold tranche positions in the Fund.
In the last four or five years, a
network of short-term credit facilities has been created among monetary
authorities and central banks of the highly industrialized countries.
These are generally referred to as "swap" lines.
They consist of
agreements that the authorities of one country will make its currency
available to its swap partners up to agreed amounts, usually for an
initial
~eriod
of 90 days.
If, for example, Italy should find itself
in need of dollar currency, it could deposit lire to the account of the
Federal Reserve System and the Federal Reserve System would deposit an
equivalent sum in dollars to the credit of the Italian authorities.
These agreements represent a highly liquid asset for the countries concerned.
Swap lines can be activated on only a few hours' notice, and
many of them have been so activated throughout the network in many
directions in recent years.
The total of swap agreements at the present
time throughout the network amounts to more than $2-1/2 billion.
Another substantial element in international liquidity is represented
by special Government bonds which the United States has issued to certain
of its creditors in recent years to help finance the United States balance
- 4a reserve asset.
The reserve currency status of the dollar is greatly
buttressed by the fact that the United States is the only country Which
stands ready to deliver gold at the fixed price of ;35 an ounce to foreign
monetary authorities upon request.
But international liquidity has broader dimensions than gold and
reserve currencies.
When representatives of the Group of Ten leading
industrial countries began a couple of years ago to study what has come to
be called the "liquidity problem," they placed emphasis upon a broad
liquidity spectrum which shaded from owned reserves through certain credit
availabilities.
It was agreed that the first additional asset to be included in the
broader liquidity concept should be the "gold tranche" position of member
countries in the International Monetary Fund.
The International Monetary
FUnd has 102 member countries, and each of these has a borrOwing quota
for which it has paid one-quarter in gold and three-quarters in its own
nationaJ. currency.
As a result, one-quarter of its drawing or borrowing
rights in the Fund are referred to as its "gold tranche"rights.
member country is entitled to borrow from the Fund, virtually
Any
~~thout
question, any currency it may need up to the amount of its gold tranche
position.
There is general agreement, accordingly, that the aggregate of
gold tranche positions in the Fund, amounting to approximately $4 billion,
should appropriately be considered an element in international liquidity.
- 3 payments equilibrium.
In this, the purpose of international reserves is
very similar to the purpose of indiViduals and businesses in setting
aside and holding liquid assets for an emergency_
A complication with
vhich I shall not deal today is that international reserves in many
countries play an additional role as partial determinants of the domestic
money supply.
International reserves, of course, are not held in the same form as
the reserves of a private bUsiness.
are gold and reserve currencies.
The traditional reserves of nations
A reserve currency, if you will excuse
the tautology, is a currency 'Which, by general agreement, nations are
prepared to hold in their reserves.
currency.
The dollar is today the major reserve
The pound sterling is held rather widely, particularly by
sterling area countries, and the French franc is regarded as a reserve
currency in some parts of Africa.
Each nation makes its own decision as
to vhat it will regard as a reserve currency.
It bases its decision on
the extent to which that currency can be widely used in international
transactions, the confidence it has in the stability of that currency in
terms of gold and in terms of goods, and the ease with which it may
invest and disinvest both its working balances and additional holdings of
the currency in question.
The status of the dollar as a reserve currency developed over the
years, particularly since the Second World War, :from the voluntary decision
of many 'countries that this
~s
the currency which best met their needs as
- 2 system so as to facilitate a continuing expansion of trade and
4'~conomic
development in the Free World. 1I
The United States position with respect to the liquidity issue has
been made very clear by President Johnson, 'Who said in his
Mess~l.ge
to
Congress on the Balance of Payments:
"The measures I have proposed in this message Will hasten
our progress toward international balance Without damage to
our security abroad or our prosperity at home. But our international monetary responsibilities will not end With our deficit.
Healthy growth of the free world economy requires orderly but
continuing expansion of the world's monetary reserves.
llfuring the past decade, our deficits have helped mee·~
that need. The flow of deficit dollars into foreign central
banks has made up about half of the increase in free world
reserves. As we eliminate that flow, a shortage of reserves
could emerge. We need to continue our work on the developnent
of supplementary sources of reserves to head off that threa.t.
"We must press forward With our stUdies and beyond, to
action--evolving arrangements which will continue to meet the
needs of a fast growing world econ~ny. Unless we make timely
progress, international monetary difficulties will exercisle a
stubborn and increasingly frustrating drag on our policies
for prosperity and progress at home and throughout the world."
Today I would like to discuss with you just 'What it is that all of
these distinguished people are talking about and why there is this general
and Widespread interest in international liquidity.
We might start With a very simple statement as to the purpose of
international reserves.
Their primary purpose is to permit a country to
ride through any balance of payments deficit while making an orderly adjustment of its international and domestic policies to restore balance of
REMARKS BY THE HONORABLE FREDERICK L. DEMING,
UNDER SECRETARY OF THE TRFASURY FOR MONETARY AFFAIRS,
AT THE OHIO STATE UNIVERSITY IN COrf.illCTION WITH
"DISTINGUISHED LECTURES IN M:)NETARY POLICY"
JOINTLY SPONSORED BY THE UNIVERSITY AND THE OHIO BAJi:CERS ASSOCIATION
ON THURSDAY, APRIL 29, 1965, Nr 3: 30 PM
Fifteen days ago, the Prime Minister of Great Britain, Mr. Harold
Wilson, devoted a section of his major public speech in New York to
consideration of international liquidity.
He took the view that the
verld should push forward promptly in comprehensive planning to avoid
a liquidity squeeze which might result from the disappearance of the
United States balance of payments deficit.
Some weeks ago, President de Gaulle suggested that the world should
return to a gold standard system, and Mr. Jacques Rueff, a well-known
French economist, has recently proposed the same course of action, with
the additional suggestion that the price of gold be doubled in order that
reversion to a gold standard system might take place without drastic
deflationary consequences for the world economy.
The President of the German Bundesbank, Karl Blessing, recently
endorsed the present international monetary system but suggested the
possible desirability of standardizing the composition of national reserves
by agreeing on an appropriate ratio between holdings of gold and reserve
currencies.
Former Secretary of the Treasury Douglas Dillon in his last press
conference suggested that one of the major questions with which his successor
would have to wrestle would be that of the future adequacy of world
liquidity.
Secretary Fowler has agreed "that the greatest challenge in
this area is to work out ,a steadily improving international monetary
TREASURY DEPART:1E0:T
Wash i nf!,t ,)11
FOR RELEASE
O~
DELIVERY
REMARKS BY THE HONOKABLE FREDERICK L. DEMING,
UNDER SECRETARY OF THE TREASURY FOR ~lONETARY AFFAIRS,
AT THE OH 10 STATE UNIVERS ITY n: CONNECTION WITH
"DISTINGUISHED LECTURES IN MONETARY POLICY"
JOINTLY SPONSORED BY THE UNIVERSITY AND THE OHIO BANKERS ASSOCIATION,
COLUMBUS, OHIO, THURSDAY, APRIL 29,1965,3:30 P.M., EST.
Fi f teen days ago, the Pr ime Min is ter of Grea t Br ita in, Mr. Harol,
Wilson, devoted a section of his major puhlic speech in New York to
consideration of international liquidity. He took the view that the
world should push forward promptly in comprehensive planning to avoid
a liquidity squeeze which might result from the disappearance of the
United States balance of payments deficit.
Some weeks ago, President de Gaulle suggested that the worlrl sho
return to a gold standard system, and Mr. Jacques Rueff, a well-known
French economist, has recently proposed the same course of action, wi
the additional suggestion that the price l)f gold be doubled in order
that reversion to a gold standard system night take place without
drastic deflationary consequences for the world economy.
The
endorsed
possible
reserves
gold and
President of the German Kundesb3nk, Karl Blessing, recently
the present international monetary system but suggested the
desirability of standardizing the composition of national
by agreeing on an appropriate ratio between holdings of
reserve currencies.
Former Secretary of the Treasury Douglas Dillon in his last
press conference' suggested that one of the :11ajor questions with
which his successor would have to wrestle would be that of the future
adequacy of world ] iqu id i ty. Secre tary Fow ler has agreed "that the
greatest challenge in this area is to wor~ out a steadily improving
international monetan' system so as to facilitate a continuing
expansion of trade and economic development in the Free World."
The United States position with respect to the liquidity
issue has been made very clear by President Johnson, who said in
his Message to Congress on the Balance uf Payments:
"The measures I have proposed in this message will
hasten our progress toward international balance without
damage to our security abroad or our prosperity at home.
But our international monetary responsibilities will not
F-33
- 2 end with our deficit. Healthy growth of the free world
economy requires orderly but continuing expansion of the
world's monetary reserves.
"During the past decade, our deficits have helped
meet that need. The flow of deficit dollars into
foreign central banks has made up about half of the
increase in free world reserves. As we eliminate that
flow, a shortage of reserves could emerge. We need to
continue our work on the development of supplementary
sources of reserves to head off that threat.
IIWe must press forward with our studies and beyond,
to action -- evolving arrangements which will continue
to meet the needs of a fast growing world economy.
Unless we make timely progress, international monetary
difficulties will exercise a stubborn and increasingly
frustrating drag on our policies for prosperity and
progress at home and throughout the world."
Today I would like to discuss with you just what it is that all
of these distinguished people are talking about and why there is this
general and widespread interest in international liquidity.
We might start with a very simple statement as to the purpose of
international reserves. Their primary purpose is to permit a
country to ride through any balance of payments deficit while making
an orderly adjustment of its international and domestic policies to
restore balance of payments equilibrium.
In this, the purpose of
international reserves is very similar to the purpose of individuals
~d businesses in setting aside and holding liquid assets for an
emergency. A complication with which I shall not deal today is that
international reserves in many countries play an additional role as
partial de terminan ts of the domes tic money supply.
International reserves, of course, are not held in the same
form as the reserves of a private business. The traditional
reserves of nations are gold and reserve currencies. A reserve
~rrency, if you will excuse the tautology, is a currency which, by
general agreement, nations are prepared to hold in their reserves.
The dollar is today the maj or reserve currency. The pound s terl ing
is held rather widely, particularly by sterling area countries, and
the French franc is regarded as a reserve currency in some parts of
Africa. Each nation makes its own decision as to what it will
- 3 -
regard as a reserve currency. It bases its decision on the extent
to which that currency can be widely used in international
transactions, the confidence it has in the stability of that currency
in ter:ns of gold and in terms of goods, and the ease with which it me
invest and disinvest both its working balances and additional
holdings of the currency in question.
The status of the dollar as a reserve currency developed over
the years, particularly since the Second World War, from the
voluntary decision of many countries that this was the currency
which best met their needs as a reserve asset. The reserve currency
status o( the dollar is greatly buttressed hy the fact that the
Uni lL,d States is the only country which stands ready to deliver
goldlt the fixed price of $35 an ounce tl) foreign monetary
authurities upon request.
Rut international liquidity has broader dimensions than gold an(
reserve currencies. When representatives of the Group of Ten
leading industrial countries began a couple of years ago to study
wha t has come to be ca lled the "1 iqu id i ty pr ob lem ," they placed
emphasis upon a broad liquidity spectrum which shaded from owned
reserves through certain credit availabilities.
It was agreed that the first additional asset to be included
in the hroader liquidity concept should be the "gold tranche"
position of member countries in the International Monetary Fund.
The International Monetary Fund has 102 member countries, and each
of tlwsc> has a horrowing quota for which it has paid one-quarter in
gold and three-quarters in its own national currency. As a result,
onl'-quartcr of its drawing or borrowing rights in the Fund are
referred tn as its "gold tranche" rights. Any member country is
entitled tn borrm~ from the Fund, virtually without question, any
currency it rnay need up to the amount of its gold tranche position.
Ther~ is general agreement, accordingly, that the aggregate of
gold tranche positions in the Fund, amounting to approximately
$4 billion, should appropriately be consiclered an element in
international liquidity. I might mention parenthetically that such
gold tr3nche positions will be increased l l ) $5 billion when the
twenty-five percent increase in Fund quotas now under way has been
c '. )mpleted.
There are other forms of international credit about as liquid
as guld tranche positions in the Fund. Tn the last four or five
yt'cl)'S, :1 net\vork 01 short-term credit facilities has been created
amlmg :nl)\1etary authorities and central banks of the highly
- 4 industrialized countries.
These are generally referred to as "swap"
lines. They consist of agreements that the authorities of one
country will make its currency available to its swap partners up
to agreed amounts, usually for an initial period of 90 days.
If,
for example, Italy should find itself in need of dollar currency,
it could deposit lire to the account of the Federal Reserve System
and the Federal Reserve System would deposit an equivalent sum in
dollars to the credit of the Italian authorities. These agreements
represent a highly liquid asset for the countries concerned.
Swap
lines can be activated on only a few hours' notice, and many of them
have been so activated throughout the network in many directions in
recent years.
The total of swap agreements at the present time
throughout the network amounts to more than $2-1/2 billion.
Another substantial element in international liquidity is
represented by special Government bonds which the United States has
issued to certain of its creditors in recent years to help finance
the United States balance of payments deficit. These may be
denominated in the currency of the holder and are convertible at
short notice by the holders into cash.
Foreign currency bonds now
outstanding amount to $1.1 billion.
Foreign monetary authorities
holding these bonds regard them either as part of their reserve
assets or as an asset similar to reserves.
In considering international liquidity, it is also appropriate
to take into account the availability of credit from the
International Monetary Fund beyond the gold tranche positions. As
I have said, one-quarter of a country's quota represents its gold
tranche; three-quarters represent its drawing rights beyond the gold
tranche. These borrowing rights are not so automatic as gold
tranche drawing rights and, hence, not so highly liquid.
Consequently, they are not generally regarded as reserves. However,
they are available in accordance with well understood standards and
~ve been widely used for many years.
They represent an important
element in total international liquidity.
The report of the Deputies of the Group of Ten, released in
August of last year, following their study, brought out several
interesting points relative to the growth of international
liquidity, as the report defined it, during the ten years from
1954 to 1963. As noted, they dealt with international liquidity
as being a spectrum divided into two broad categories:
"reserves"
and "credit facilities." The dividing line between these two
closely related classifications was fixed in this manner. Credit
availabilities that had not been utilized were, broadly speaking,
treated as "credit facilities," and these might be available to
- 5 P l1 ten t i aid e f i cit c ou n t r i e sin the f u t u r e, sub j e c t to in d i vi d u a 1
credit arrangements.
Reserve assets represented the claims of
creditor countries that had been established by the extensions of
credit tl) others in the past on their part, through the
International Monetary Fund or directly, and that could readily be
mobilized for their own use in case they, in their turn, needed
[()reign exchange resources.
This latter category included also
the gold tranche claims on the Fund acquired by past subscriptions
ll[ g(lld to the IMF.
During the ten year period, the reserves of all the countries
in the Free World rose about $17 billion or nearly a third.
Gold
aCC(lunted for nearly $6 billion.
Fore>ign exchange, principally
in the form of dollars and sterling, rose nearly $8 billion, and
$3 hill ion was contributed by increased claims on the Fund and by
the usc of bilateral credit facilities.
You will note that only ahout a third of the total addition to
reserves, defined broadly to include the reserve assets noted, was
provided by gold. At the end of 1963, countries held in their
reserves about $40 billion in gold ur about 57 percent of the total
reserves of $70 billion.
$25 billion was held in the form of
foreign exchange, one-half in sterling, and one-half in dollars.
These foreign exchange holdings were official reserves and take no
account of some $15 billion in liquid assets held by non-official
private entities, almost entirely as claims in dollars or sterling.
A part from the global picture, it is useful to pause a moment
to look at the regional aspects of this growth in reserves. During th
ten year period, the eight major non-reserve currency countries of
the Group of Ten and Switzerland acquired $18-1/2 billion of reserve
assets, or $1-1/2 billion more than the world as a whole,
This
group of countries includes the major part of a persistent surplus
area in Continental Europe, which has had an unexampled prosperity
and an unprecedentedly strong balance of payments position.
Moreover, this group of countries acquired nearly $11 billion in
gold, nearly twice the total of new gold sup~lies available for
monetary use in the world as a whole.
They WeL"e able to do so through
a substantial redistribution of the gold reserves of the United States
This was the pattern of the ten years prior to the study
undertaken by the Group of Ten in 1964. Against this pattern, the
Ministers and Governors concluded that, "For the international
~onetarv system as a whole, supplies of gold and reserve currencies
are fully ~dequate for the present and are likely to be for the
- 6 immediate future.
These reserves are supplemented by a broad range
of credit facilities.
The continuing growth of world trade and
payments is likely to entail a need for larger ~nternational
liquidity. This need may be met by an expansion of credit
facilities and, in the longer run, may pOSSibly call for some new
form of reserve asset."
The Ministers and Governors of the Group of Ten then took several
decisions looking toward the future of the monetary system. They
undertook a thorough study of the measures and instruments best
suited for avoiding and correcting large and persistent international
~balances, compatibly with the pursuit of essential internal
objectives. They recommended a procedure for "multilateral
surveillance" of the ways and means of financing balance of payments
disequilibria. Looking further into the fu ture, since there was a
possibility that the supply of gold and foreign exchange reserves
may prove to be inadequate for the over-all reserve needs of the
world economy, they authorized a study group to examine various
~oposals regarding the creation of reserve assets either through
the IMF or otherwise.
Finally, they agreed that they would support
a moderate general increase in quotas of the IMF.
It might be asked why there was so much concern regarding the
future of international liquidity when reserves had increased so
~pidly in the previous ten years.
The eight members
of the Group of Ten and Switzerland nearly tripled their reserves
during the ten year period, 1954 to 1963.
In fact, some of these
countries consider that the growth in their reserves has been
~cessive and has been a contributing factor to inflationary
pressures on the European Continent. Thus, they are particularly
20ncerned that the growth in reserves not be excessive in the future,
3.S a result of continuing deficits in the United States balance of
payments.
At the same time, they join with the United States in
~cognizing that there may be conditions in the future, given the
~emarkably vigorous expans ion of world trade and inves tment, when
l.nnual supplies of new monetary gold would alone be insufficient
:0 provide an adequate secular growth in reserves. You will recall
:hat new gold suppl ied only abou tone - third of the ten year growth
.n reserve assets.
The United States also looks forward to a changing situation;
.t is not in our interest to continue substantial balance of
layments deficits, to payout increasing amounts of dollars to the
est of the world, and then to be faced with financing a substantial
- 7 part of that deficit in gold because other countries no longer
wish to accumulate important amounts of dollars in their reserves.
There is certainly no fixed or absolute level or ratio of our
short-term dollar liabilities to our gold reserves.
But officiallyheld dollar claims of a liquid character are now just about equal
to our gold reserves. They have been rising for about fifteen years,
and rising quite sharply since 1958.
It is quite essential that we
bring this long series of balance of payments deficits to a halt.
In doing so, we will also stop the process of providing gold and
dollar reserves to the rest of the world.
When this happens, there may then be a question as to how to
provide supplementary reserves in some form, to add to gold and the
existing holdings of dollars and sterling exchange.
It is, in my
view, unrealistic to assume that the world can or should attempt to
do away with these existing foreign exchange holdings.
The gold
exchange standard in itself is a useful and meritorious instrument.
But, at the same time, we must exercise moderation in its use, and
realize that it has been over-strained by the size and persistence
of U. S. deficits, and the resulting supply of dollars.
It is no secret that some European countries feel that the
long-continued deficit of the United States has been at best made
possible and at worst encouraged and stimulated by the ability of
the United States to finance a very substantial portion of its
deficit during the past seven years by paying out dollars that
have been added to foreign reserves.
If the U. S. deficit had
been settled entirely in gold, they assert, the United States would
have taken earlier and more rigorous steps to bring its payments
into equilibrium.
Accordingly, some of these countries are prepared to argue that
the international monetary system at the present time is experiencing
a surplus of liquidity, not a shortage. This is perhaps the basis
for the suggestion of General de Gaulle that the world should return
to a gold standard system. A return to a gold standard would imply
a sharp curtailment of world reserves and world liquidity and would
carry the threat of world-wide deflation.
I need not -- for this
audience -- spell out the detailed mechanism by which this would
come about.
I mentioned Jacques Rueff, who recently expressed
his support for a return to the gold standard in public statements
in the United States. Recognizing that this alone would create
dangerous deflationary pressures, he couples his proposal with the
suggestion that the price of gold be doubled and that the United
States then payoff its liquid liabilities to foreign central banks
- 8 in gold at the new price. That would mean redeeming some $14.5
:billion of dollar reserves of foreign official holders at a
.rate of $70 for an ounce of gold rather than the evis ting $35 per
ounce. The United States would be left at the end of the operation
.with gold reserves near the present leve 1, according to the new
"~luation, and would have wiped out its official liabilities to
"foreign monetary authorities.
Such a proposal is thoroughly unacceptable to the United States.
It combines the proposal that the world once again accept automatic
regulation of its money supply according to the vagaries of world gold
~oduction with the proposal that the implied and stated commitments
of the gold exchange standard be repudiated to the advantage of a
few and the d isadvan tage of many.
I t is easy to see how it might
~ appealing to the major gold-producing countries, including the
Union of South Africa and the U.S.S.R., and to some countries holding
a high proportion of their reserves in gold.
It would, of course,
~ discriminatory against countries which have kept a substantial
fraction of their reserves in the form of reserve currencies. Our
commitment to maintain the fixed parity of $35 an ounce between
gold and dollars is basic to the stability of the world monetary
system. President Johnson has reiterated our unchanging determination
to maintain this parity.
We share fully, however, the European view that our balance of
~yments deficit should be promptly corrected.
We do not believe
that the existence of the present monetary system has weakened our
resolve to eliminate our balance of payments deficit. We have,
however, insisted that the deficit be eliminated by measures which
would have a minimum impact both on the rate of economic growth in
wr ~n country and on the continued economic prosperity of the rest
of the Free World. We have ruled out measures which would have
denied our responsibilities in defense of the Free World or in the
ecooomic development of less developed countries -- and we have
done so in the interes t of free men everywhere. Our deep re luc tance
to adopt more restrictive monetary or fiscal policies at home has
derived from the unshakable conviction that a strong and growing
economy in the United States is a prerequisite both to lasting
correction of our balance of payments difficulties and to continued
prosperity in the Western world.
I shall not digress at any length to review the extent to which
balance of payments position has, in fact, been strengthened
in recent years. The splendid record of price stability which we
have maintained through fifty months of steady economic growth has
established for us a strong competitive position in world trade and
o~
- 9 our trade balance is highly favorable.
We have reduced the balance
of payments impact of our military and foreign aid operations withou
retreating from our commitments in these areas.
More recently,
measures have been taken to dampen the outflow of capital from the
United States by means of the voluntary cooperation of the banking
system and the business community.
The United States will, however,
continue to be an important source of productive capital.
Before I resume commenting briefly on what I think will be
the principal issues to be decided as we cooperate in working out
arrangements to assure that adequate world liquidity will be
maintained when our deficit has been corrected, I should acknowledge
that there is a school of thought -- and one which appears to be
quite strong in academic circles -- that believes in solving the
liquidity problem not by increasing liquidity but by reducing the
need for liquidity. Members of that school are the advocates of
floating exchange rates.
They hold that fixed exchange rates alone
create the need for large reserves. More importantly, perhaps, they
feel that fixed exchange rates constitute a restraining influence
preventing individual countries from following domestic policies
which might be deemed appropriate for domestic aims.
If exchange
rates were free to move up and down in the market, a balance of
payments deficit would be reflected in a cheapening of the country's
currency rather than in a loss of reserves.
The cheapening of the
currency, in turn, the argument runs, would bring about adjustments
in the trade pattern -- lower imports and higher exports, among
other changes -- which would restore balance of payments equilibrium
No country would need to hold large reserves and each country could
choose its internal monetary and fiscal policies according to its OWl
system of priorities and without regard for balance of payments
effects.
I am not going to try to argue the case for or against floating
rates.
I would admit, as any student of economics will admit, that
the theoretical arguments for floating exchange rates can be
presented with great precision and appeal. Operation of the system
in d \vorld of imperfect knowledge, imperfect governmental and moneta
institutions, and conflicting national ambitions and policies would
be something else again.
I will merely express the opinion, which
is shared by an overwhelming majority of commercial and financial
interests, that such a system, in practice, would prove extremely
disruptive to \vorld trade and financial transactions. The
Ministers and Governors of the Group of Ten have ruled out
consideration of any such system and the International Monetary Fund
has operated for nearly twenty years in defense of a regime of
generally fixed exchange rates, with individual exchange rate
adjustments regarded as appropriate from time to time when individua
countries have fallen into a position of fundamental disequilibrium.
- 10 As we consider possible methods for assuring adequate liquidity
in the future, the next question is whether some new type of asset
~ould be created or whether liquidity needs can be met by further
~velopment and refinement of existing credit mechanisms.
On the credit side, agreement has already been reached, in
~inciple, on a 25 percent increase in International Monetary Fund
quotas. I say" in principle" because, while more than 80 percent
of the membership favored the increase, each member mus t now
determine for itself, in accordance with its own legislative
procedures, whether it will accept its appropriate share of such
increase. The United States Administration is seeking Congressional
approval for an increase of $1,035 million in the U. S. quota. The
House of Representatives voted favorably on this bill on Tuesday
of this week. We are confident that the total of aggregate quotas
in the Fund will be increased from about $16 billion to about
$21 billion when this operation has been completed. That will
provide an appreciable addition for international liquidity in the
form of credit facilities.
The most intriguing aspect of the liquidity question, however,
doobtless lies in efforts to devise a new type of reserve asset.
I mentioned that the Deputies of the Group of Ten, in their Report
to Ministers, announced that they had established a "Study Group
on the Creation of Reserve Assets" to study the problem which its
M~ implies.
The Group is meeting periodically.
It is expected to
present to the Deputies some time this summer a study which will
:'assemble the elements necessary for evaluation of the various
propsoals" which have been pu t forward.
But its
I cannot speak in detail about the work of this Group.
terms of reference are public information. The Deputies to the
Group of Ten spoke of two types of proposa Is:
"One, the introduc tion, through an agreement among
the member countries of the Group, of a new reserve
asset which would be created according to appraised
over-all needs for reserves;
"and the other based on the acceptance of gold tranche
or similar claims on the (International Monetary) Fund
as a form of international asset, the volume of which
would, if necessary, be enlarged to meet an agreed
need."
- 11 -
Proposals of the first type vary substantially in detail.
Essentially, however, these schemes provide that a limited group
of countries, by depositing their own currencies or gold, establish
a central pool of monetary resources which would provide the
backing for a new reserve unit. Members would receive in exchange
for their respective subscriptions an equal value of reserve units.
These would represent proportionate claims upon the aggregate pool
of resources and these claims or units would be transferable among
the members in settlement of surpluses or deficits. The reserve
unit itself would be held or used much as gold is now held in
reserves or used in international settlements. By agreement among
the members, it would assume the nature of gold -- it would be held
as reserves -- its value would be fixed in terms of gold -- its
acceptance by any member would be automatic according to stipulated
conditions.
For example, some proposals would call for creation of a limited
amount of reserve units and for the use of these units in fixed
proportion with gold in making all settlements among members. The
economic effect would be little different from the gold standard
itself. It would operate like the gold standard with some reserve
units added. Like a return to the gohl standard, itself, it could
call into question the continuing usefulness of reserve currency
holdings and would probably encourage the conversion of some holdings
into gold. To the extent such conversions should occur, the world
would face a decline in total world liquidity, rather than an
increase.
A second important condition would be that dealing with the manne
in which decisions would be made for increasing or, if necessary,
decreasing the amount of units in existence. To over-simplify, it
would be in the apparent interest of creditor countries to resist -and of debtor countries to favor -- the creation of additional
units. If new issues were to be subject to a unanimous agreement,
which is to say if any country could veto an expansion or a
contraction, it would hardly be accurate to say that decisions
regarding the adequacy of international liquidity had been placed
under international control in any meaningful way.
The importantance of the conditions which might govern creation
of new assets would be no less if new reserve assets should be
created in the International Monetary Fund. Proposals of this type
call for creation of claims on the Fund that can be drawn upon at
will to meet balance of payments deficits. For example, automatic
drawing rights could be accorded against some part of the existing
credit tranches in the Fund. Another propsoal is that the Fund
might be authorized to invest some of its holdings of currencies in
member countries, thereby providing those countries with assets
useable internationally.
- 12 Again, a number of questions would have to be considered. Would
operation of the normal weighted voting procedures in the Fund serve
the interests of creditor and debtor countries equitably? Should
reserve assets be created for all countries or for only those
countries that might be expected to be in both surplus and deficit
over a period of years?
However additional reserves are created, their use implies
a credit operation. The original creation could take the form
for each participating country of an equal increase in its liabilities
and in its assets -- the latter becoming, by terms of the agreement,
an international reserve asset. There would be no real economic
impact at this stage. But as soon as the newly-created asset or
unit began to be used, those surplus countries which accumulated
the unit would be extending credit to the deficit countries. And
the extension of credit from one country to another reflects the
transfer of real assets. The surplus country foregoes present
consumption in exchange for higher reserves -- or for future
potential consumption. A creditor country has, of course,
considerable freedom of action in controlling the credit it will
extend. There are many acceptable ways in which a balance of payments
surplus can be reduced. Study of the adjustment process to determine
appropriate policies to be followed -- both by deficit countries to
correct their deficits and by surplus countries to reduce their
surpluses -- is another area to which the Group of Ten is giving
attent ion.
With respect to the deficit countries, no country can expect to
receive unlimited automatic credit from its trading partners. The
search for assurance that adequate international liquidity will be
Mintained in the future will not in any sense be a search for
automatic credit for persistent debtors.
I have mentioned a few of the issues connected with the liquidity
discussions without giving any clear indication of what the answers
should be. The answers must await continued hard study and, at an
appropriate stage, perhaps hard negotiations. I will advance only
three questions for your consideration at this time.
First, haw can we make certain that any new scheme will be
entirely compatible with the evolution of the existing system?
This will require that nations should not be penalized -- nor
benefitted -- as a result of the composition of their reserves, when
and if some new liquidity asset is developed.
- 13 Secondly, how can we assure that any new system will increase
and not reduce world liquidity? World liquidity would be reduced
to the extent that existing reserve currency holdings are converted
into gold. What, then, should be our attitude toward proposals
which might stimulate such conversion or cast doubt upon the
stability or the convertibility of existing reserve currency
holdings?
Thirdly, how can we make sure that any new system will maintain
machinery for giving appropriate weight to the views of both creditor
and debtor countries? Should it be subject to the arbitrary control
of either, or to the veto of a single country?
These are three broad questions, among many, that will need to
be kept in mind as we proceed to examine most carefully the various
ideas that have been or may be suggested. We are conscious that
the cre&tion ',f any new type of reserve asset by international
agreement would be a step of profound significance. We must be
sure that it is a step in the right direction.
The mechanism of
the international monetary system is an intricate and complicated
mechanism, the successful functioning of which is of world-wide
concern. We must make certain that any adjustments made in that
mechanism will be the best that experience and intelligence and
concern for the welfare of all nations can devise.
000
2
Under the new ruling, entries may be made at any port of
entry in the following Customs districts:
Maine and New Hampshire (1)
(4)
Massachusetts
Rhode Island
(5)
(6)
Connecticut
(10)
Ne¥l York
Philadelphia
(11)
Maryland
(13)
(14)
Virginia
North Carolina
(15)
(16)
South Carolina
Georgia
(17)
(18)
Florida
Orleans
Galveston
San Diego
Los Angeles
San Francisco
Oregon
Washington
Ha¥laii
Michigan
Chicago
Ohio
Kentucky
NevF
(The numbers in parentheses are the pertinent Customs
district numbers.)
(20)
(22)
(25)
(27)
(28)
(29)
(30)
(32)
(3 8 )
(39)
(41)
(42)
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
April 29, 1965
ARTISTIC ANTIQUTIFS - FURNITURE
CUSTCMS REGULATIONS AMENDED
The Treasury Department has determined that the list of ports
at which furniture claimed to be antique within the meaning of the
Tariff Act of 1930, as amended, may be entered, should be expanded.
"Furniture," as so used, includes movable articles of convenience
or decoration for use in furnishing a house, apartment, place of
business, or of accommodation.
In order to qualify as antiques,
such articles, except for rugs, carpets, and certain ethnographic
objects, must have been produced prior to 1830.
To qualify as
antiques, rugs and carpets must have been made prior to the year
1701; ethnographic objects made in the traditional aboriginal styles
must have been made at least
50
years prior to the date of entry.
Previously, antique furniture could be entered free of duty
only at the ports of Baltimore, Maryland; Boston, Massachusetts;
Chicago, Illinois; Honolulu, Hawaii; Los Angeles, California; New
Orleans, Louisiana; New York, New York; Philadelphia, Pennsylvania;
San Francisco, California; and Seattle, Washington.
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
April 29, 1965
ARl'ISTIC ANTIQurIFS - FURNITURE
CUSTCMS REGULATlOOS AMENDED
The Treasury Department has determined that the list of ports
at which furniture claimed to be antique wi thin the meaning of the
Tariff Act of 1930, as amended, may be entered, should be expanded.
"Furniture," as so used, includes movable articles of convenience
or decoration for use in furnishing a house, apartment, place of
business, or of accommodation.
In order to qualify as antiques,
such articles, except for rugs, carpets, and certain ethnographic
objects, must have been produced prior to 1830.
To qualify as
antiques, rugs and carpets must have been made prior to the year
1701; ethnographic objects made in the traditional aboriginal styles
must have been made at least
50
years prior to the date of entry.
Previously, antique furniture could be entered free of duty
only at the ports of Baltimore, Maryland; Boston, Massachusetts;
Chicago, Illinois; Honolulu, Hawaii; Los Angeles, California; New
Orleans, Louisiana; New York, New York; Philadelphia, Pennsylvania;
San Francisco, California; and Seattle, WaShington.
2
Under the new ruling, entries may be made at any port of
entry in the following Customs districts:
Maine and New Hampshire (1)
(4)
Massachusetts
Rhode Island
(5)
(6)
Connecticut
(10)
New York
Philadelphia
(11)
Maryland
(13)
(14)
Virginia
North Carolina
(15)
(16)
South Carolina
(rr)
Georgia
(18)
Florida
New Orleans
Galveston
San Diego
Los Angeles
San Francisco
Oregon
WaShington
Hawaii
Michigan
Chicago
Ohio
Kentucky
(The numbers in parentheses are the pertinent Customs
district numbers.)
(20)
(22)
(25)
(27)
(28)
(29)
(30)
(32)
(38)
(39)
(41)
(42)
TREASURY DEPARTMENT
April 29, 1965
FOR IMMEDIATE RELEASE
WITHHOLDING OF APPRAISEMENT ON
TITANDJM DIOXIDE
The Treasury Department is instructing customs field officers
to withhold appraisement of titanium dioxide, pigment grade, from
West Germany, manufactured by Farbenf'abriken Bayer A. G., Leverkusen,
Germany, pending a determination as to whether this merchandise is
being sold at less than fair value within the meaning of the Antidumping Act, 1921, as amended.
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 information alleging that the merchandise under consideration
was being sold at less than fair value within the meaning of the Antidumping Act was received in proper form on November 17, 1964.
The in-
formation was submitted by the Cabot Corporation, Boston, Massachusetts.
The dollar value of imports received during the period July 1, 1964,
to March 1, 1965. was approximately $2,000,000.
TREASURY DEPARTMENT
April 29, 1965
FOR IMMEDIATE RELEASE
WITHHOLDING OF APPRAISEMENT ON
TITANIUM DIOXIDE
The Treasury Department is instructing customs field officers
to withhold appraisement of titanium dioxide, pigment grade, from
West Germany, manufactured by Farbenfabriken Bayer A. G., Leverkusen,
Germany, pending a determination as to whether this merchandise is
being sold at less than fair value within the meaning of the Antidumping Act, 1921, as amended.
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 information alleging that the merchandise under consideration
was being sold at less than fair value within the meaning of the Antidumping Act was received in proper form on November 17, 1964.
The in-
formation was submitted by the Cabot Corporation, Boston, Massachusetts.
The dollar value of imports received during the period July 1,
to March 1, 1965, was approximately $2,000,000.
1964,
- 2 -
Merlyn is a true diplomat in the highest sense of the word.
When he comes into a situation, differences of opinion seem to
melt away. Merlyn also possesses that other essential quality of
diplomacy -- it is absolutely impossible to rattle him.
For all these reasons and for many more that I find myself
inadequate to put into words, I take great pleasure and
satisfaction in the fact that Joe Barr and Merlyn Trued will be
here with me as we face the tasks that lie ahead. The tasks which
confront all of us in the Treasury are certainly difficult, but we
have faced difficult tasks before.
I feel quite confident that with the present staff of the
Treasury, with Joe Barr, with Merlyn Trued, and with all the
rest of you, we will be able to meet the responsibility which
President Johnson has called upon us to assume with energy, with
experience, and with dedication, and I am confident we will
succeed.
000
REMARKS OF THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
AT SWEARING-IN CEREMONIES FOR
UNDER SECRETARY JOSEPH W. BARR
AND
ASSISTANT SECRETARY MERLYN N. TRUED
ROOM 4121, MAIN TREASURY BUILDING,
THURSDAY, APRIL 29, 1965, 4:00 P.M., EDT.
It seems only yesterday that I was standing before you with
Joe Barr beside me. The occasion was the presentation to
Joe of the highest award the Treasury can bestow on one of its
own -- the Alexander Hamilton Award. Joe was shortly to become
Chairman of the Federal Deposit Insurance Corporation.
I know I speak for everyone in the Treasury when I say how
delighted we are to get Joe Barr back with us again. Throughout
the long hard days of the tax bill, Joe Barr was a source of great
support to former Secretary Dillon, to me, to Assistant Secretary
Surrey, and to all the rest of us who looked to him for advice
and counsel. Besides his thorough grasps of essentials and his
keen political judgment, Joe brought to the job a cheerful,
stubborn refusal to accept defeat in any form whatsoever.
As I look forward to the tasks facing me and facing the
Treasury in the months and years ahead, I take the greatest
satisfaction and encouragement from the fact that I will have
Joe Barr at my side. We may have difficult problems and things may
look dark at times, but Joe Barr is a born winner. There has
never been a problem, and I don't think there ever will be, that
Joe would be afraid to tackle. His unquestionable brilliance,
his indomitable courage, and his unfailing energy and good spirits
will sustain us all in the task ahead.
It's with great pleasure that we are gathered here to
also welcome into new responsibilities a man who played a
very significant role in those achievements -- Merlyn Trued.
Merlyn shares Joe Barr's ability of dealing with the most
difficult problems as if they were really quite simple an~ o~
dealing with impossible problems as if they were merely dlfflcult.
All of us have long since found that whenever you seek
Merlyn's advice, you will find him absolutely and thoroughly
informed on every aspect of any problem in his area. You will
also find that his soft-spoken way of discussing the most
difficult and delicate matters invariably sheds new light on the
question.
(OVER)
RE~~RKS
OF THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
AT SWEARING-IN CEREMONIES FOR
UNDER SECRETARY JOSEPH W. BARR
AND
ASSISTANT SECRETARY MERLYN N. TRUED
ROOM 4121, MAIN TREASURY BUILDING,
THURSDAY, APRIL 29, 1965, 4:00 P.M., EDT.
It seems only yesterday that I was standing before you with
Joe Barr beside me. The occasion was the presentation to
Joe of the highest award the Treasury can bestow on one of its
own -- the Alexander Hamilton Award.
Joe was shortly to become
Chairman of the Federal Deposit Insurance Corporation.
I know I speak for everyone in the Treasury when I say how
delighted we are to get Joe Barr back with us again.
Throughout
the long hard days of the tax bill, Joe Barr was a source of great
support to former Secretary Dillon, to me, to Assistant Secretary
Surrey, and to all the rest of us who looked to him for advice
and counsel.
Besides his thorough grasps of essentials and his
keen political judgment, Joe brought to the job a cheerful,
stubborn refusal to accept defeat in any form whatsoever.
As I look forward to the tasks facing me and facing the
Treasury in the months and years ahead, I take the greatest
satisfaction and encouragement from the fact that I will have
Joe Barr at my side. We may have difficult problems and things may
look dark at times, but Joe Barr is a born winner. There has
never been a problem, and I don't think there ever will be, that
Joe would be afraid to tackle. His unquestionable brilliance,
his indomitable courage, and his unfailing energy and good spirits
will sustain us all in the task ahead.
It's with great pleasure that we are gathered here to
also welcome into new responsibilities a man who played a
very significant role in those achievements -- Merlyn Trued.
Merlyn shares Joe Barr's ability of dealicg with the most
difficult problems as if they were really quite simple and of
dealing with impossible problems as if they were merely difficult
All of us have long since found that whenever you seek
Merlyn's advice, you will find him absolutely and thoroughly
informed on every aspect of any problem in his area.
You will
also find that his soft-spoken way of discussing the most
difficult and delicate matters invariably sheds new light on the
question.
(OVER)
- 2 -
Merlyn is a true diplomat in the highest sense of the word.
When he comes into a situation, differences of opinion seem to
melt away. Merlyn also possesses that other essential quality of
diplomacy -- it is absolutely impossible to rattle him.
For all these reasons and for many more that I find myself
inadequate to put into words, T take great pleasure and
satisfaction in the [act that Joe Barr and Merlyn Trued will be
here with me as we face the tasks that lie ahead. The tasks which
confront all of us in the Treasury are certainly difficult, but we
have faced difficult tasks before.
I feel quite confident that with the present staff of the
Treasurv, with Joe Barr, with Merlvn Trued, and with all the
rest of you, we will be able to meet the responsibility which
President Johnson has called upon us to assume with energy, with
experience, and with dedication. and I am confident we will
succeed.
000
- 11 -
trade and payments among the nations of the free world.
It is
an approach that you and the efforts of your organization are helping to implement as you work to preserve and strengthen our system
of enterprise through greater investment at home, and bring to the
attention of our younger citizens the value of investing in America.
- 10 organization.
But I have saved for the last another small set
of numbers that you may find the most useful of all, since they
relate directly to the profitability of investment itself.
This
is, the annual rate of profit upon stockholder's equity in the
United States.
In the final quarter of 1960, after-tax profit
on stockholder's equity was 8.4 per cent; four years later, it was
12.4 per cent, a rise of very nearly one-half in this short time.
Considerations such as these, I think, should be increasingly
convincing to American and foreign investors deciding where to put
their funds to work over the years ahead.
At the same time, we are
working to remove unnecessary impediments in our tax system to
foreign investors attracted to our expanding investment opportunities.
As this invigorating tonic for our free enterprise system is more
fully appreciated -- and provided we can maintain our healthy
economic advance with stable prices -- market forces will greatly
assist our effort to avoid excessive capital outflows in the years
~e~.
This must and will be a fundamental answer to one of the most
critical elements in our present balance of payments problem.
It is
an approach which necessarily takes time and effort -- but it is
also an approach that, in the end, will pay high dividends in time
of a stronger economy at home and progress toward our goal of free
- 9 -
Equally important, the general reduction in personal income
taxes in 1964, and the other measures to sustain our rapid economic
advance, assure markets for the added production made possible by
new investment, and are key elements in the maintenance of profit
margins and investment incentives.
I do not need to rely upon forecasts to make the case for these
measures.
Data on corporate income and profits already show that the
profitability of investment in America has risen, and substantially.
For example, in the fourth quarter of 1960 the after-tax profit per
dollar of the sales of United States manufacturing concerns was 4 per
cent; in the fourth quarter of 1964 it was 5.4 per cent, a rise of
a third.
At the same time, before-tax profits per dollar of sales
rose by a quarter.
In the same recent four years, the total before-
tax profits of United States corporations increased from $41.1
billion to $57.4 billion, and their profits after-taxes increased from
$20.4 billion to $31.7 billion.
After tending to decline for a good
many years relative to total national income, the share of profits
has risen again to levels more typical of prosperous periods in the
past.
I think that these figures are ammunition that you can use
to good effect in your campaign to make known and understood the
advantages of investing in America, and I hope that you can and will
be putting them to work through the activities of your most useful
- 8 Let me review with you briefly the steps that we have taken ,
and are taking, in support of greater investment opportunity
within the United States.
In doing so, let me emphasize,too, the
double-barreled benefits of an improved climate for investment
for our balance of payments position.
First of all, more dollar
funds will stay horne if the profitability of investments in the
United States improves relative to profit on investments elsewhere,
risks and other considerations being equal, and more foreign
investors will want to place their funds here.
of payments directly.
That helps our balance
Less direct, but no less important, is that
more investment in modern plant and equipment means greater efficiency
and productivity, and our whole export effort must rest on our
ability to produce more at stable or declining costs.
Recognizing these fundamentals, the effort to improve our
investment climate got underway in a serious way several years ago.
The seven per cent investment credit and the depreciation rules
changes were undertaken as a matter of first priority in 1962, for
they directly and significantly added to the profit potential of
domestic investment.
The 1964 tax law extended this process by
reducing the tax liability on corporate profits from 52 to 48 per cent
in two steps.
We estimate that these reductions should increase the
profitability of new corporate investment in representative types
of equipment after taxes -- and that is what counts -- by as much
as 35 per cent or more.
- 7 abroad -- have persuaded both American and foreign investors to
place more of their funds to work in this country on the basis of
normal profit and loss considerations rather than appeals to
patriotism.
Only then can we claim a fundamental solution firmly
rooted in the forces of the market place -- the forces that, in
our free enterprise society, we rely upon for guidance in making
all our economic decisions.
This does not argue against, nor in any way depreciate, the
importance of the present voluntary action program.
The situation is
such that the voluntary program is required, and the situation is
such that the voluntary program will continue to be required for some
time.
And the continued cooperation of the business community in
making the voluntary program a success is essential.
But, so long as we want to engage in mutually beneficial commerce and financial transactions with the rest of the world on the
basis of free markets, we must be alert to the need to maintain a
balance in our international accounts through the operation of basic
market forces and incentives.
That is why we must look beyond the
present voluntary program -- however necessary that program is now and
in the period ahead -- and continue our efforts to improve the climate
for investment in this country.
It is in this area, of course, where the
efforts of your Government coincide directly with your own efforts in
the Invest-in-America program.
- 6 -
for correcting our deficit.
A key element in this program is the
call to banks and other businesses to review their own foreign
operations and voluntarily cutback on the flow of dollars abroad.
To this end, the Government has provided American banks and
businesses with a set of guidelines, worked out in consultation with
the business community itself, for their international transactions,
including their foreign lending and investment.
I will not review these guidelines in detail, but I do think
it fair to say that the first reports reflecting this voluntary
program do indicate that the American business community is responding with awareness of the urgency of the problem.
It is essen-
tial that no one be lulled into a false sense of security, for the
success of the program will depend upon performance over a period of
time, not just the first few months.
But, I believe there is reason
for confidence that, with the continued cooperation of the business
community, this voluntary program will bring our deficit under control.
My main point today, however, is to emphasize that this kind of
program to staunch the investment outflow cannot be regarded as the
basic and permanent solution to our balance of payments problem,
however necessary and successful it may be.
The lasting solution must
be found in forces that will be felt in the market place.
In other
words, we cannot be content until improvements in the investment
climate of the United States -- along with other changes at home and
- 5 -
Taking all of these elements of improvement together, the gains
from 1960 to 1964 totalled some $3.6 billion.
That, as a matter of
simple arithmetic, should have brought us close to balance in 1964
if all other things held unchanged -- but, of course, they did not.
Instead of a balance in 1964, we had a disappointingly large deficit
of around $3 billion
a deficit that, coming after almost 15 years
of earlier deficits, was simply too large.
The reason for the lack of over-all improvement on the scale
anticipated was readily apparent.
The improvement in our trade position,
and the reductions in the burdens of military payments and aid, was
offset by an accelerating outflow of American investment to Europe
and elsewhere.
In 1964, this outflow of private capital, after
increasing every year but one in the past five years, reached nearly
$6.4
billion.
Clearly, foreign investment provides long-term benefits to the
nation in future earnings, as well as in its potential for strengthening
the free world economy as a whole.
Moreover, the world's largest and
richest nation should, over the long-run, be in a position to provide
capital to assist the development of poorer countries.
But, we simply
cannot afford to transfer capital abroad in such volume as to undermine
the stability of the dollar itself.
This was the setting for President Johnson's Balance of Payments
Message in February, in which he presented a vigorous la-point program
- 4 foreign countries were accumulating more dollars than they wished
to hold.
As a result, they were calling on our gold in exchange for
those dollars, and while our gold stock was and is large, it is not
inexhaustible.
Consequently, when the Kennedy Administration took office, a
wny sided program was launched to reduce our deficit and to protect
the stability of the dollar.
Four years later, in 1964, evidence
had accumulated that this program was beginning to payoff in a number
of directions.
Most significant, our international competitive position was
beginning to benefit from our ability to maintain price stability
during the current business advance, and our exports consequently
have risen more than our imports.
This brought our traditional trade
surplus to a new record of $3. 7billion in 1964 even after excluding
all shipments financed by foreign-aid funds -- the largest trade
surplus,by the way, for any country in the world.
At the same time,
more and more of our foreign aid has been provided in the form of
U. S. goods and services rather than dollars, sharply reducing the
drain on our balance of payments from that source.
Reductions in
military spending abroad also have helped reduce the pressures upon
our balance of payments, and important gains have been made in selling
more of our military goods to our allies.
foreign investments has risen sharply.
Meanwhile, our income from
- 3 -
expense of inflation.
A third might be to permit Government to raise
the needed funds through taxation -- and to make the investment
decisions for us.
Clearly, none of those alternatives would represent realistic
or desirable solutions -- all would exact an intolerable cost in terms
of both economic performance and damage to our system of competitive
private enterprise.
But, if our present system is to work, and work
effectively, it must be widely understood.
For that reason I hope you
will continue your increasing emphasis of recent years upon the
education of our high school youngsters -- and their teachers
in
the role of savings and investment in our free economy.
Now let me make
~
pitch.
I want to describe to you, as I see
them, the links between what you are doing in encouraging saving and
investment in the national economy and the success of the national
effort the President has undertaken to overcome our balance of payments
difficulties.
First, perhaps a word or two on past developments will help put
this rather complex problem into perspective.
of payments deficits in most years since 1950
a half now.
We have had balance
for a decade and
And, however you keep the books, it became obvious by the
late 1950's that these deficits had become far too large to be sustained
for long, averaging about $4 billion a year from 1958-1960 under our
standard accounting methods.
These deficits meant, in essence, that
- 2 -
of free enterprise.
Our ability to grow rests in good part on our
ability to provide our growing population with more tools of production
with more power to operate those tools -- and with ample
supplies of the basic raw materials necessary for production.
Equally
important, we must stimulate the research and innovation necessary to
achieve better equipment and methods, and to bring these innovations
into use rapidly.
All of this requires a vast amount of capital,
and a willingness on the part of our citizens to provide the savings
essential to finance that capital.
In our economic system, we cannot look to Government or even to
business to provide those needed savings.
In 1964, for instance, the
financial savings of individuals approached $28 billion.
These funds
were equivalent to almost 70% of our total investment outlays, apart
from that portion represented by depreciation and other capital consumption allowances which are, of course, designed only to assure
replacement of our existing capital stock.
That is why your efforts, aimed at the general public, are so
useful.
For, without private individuals willing and able to save
and invest in large volume, we would necessarily have to accept one
or a combination of totally unsatisfactory alternatives.
One of these
would be simply to accept a much lower rate of economic growth.
Another , in theory , would be to force investment through a huge
expansion in the money supply and in Government deficits, at the
REMARKS OF PAUL A. VOLCKER
DEPUTY UNDER SECRETARY FOR MONETARY AFFAIRS
DEPARTMENT OF THE TREASURY
BEFORE THE
NATIONAL INVEST-IN-AMERICA COMMITTEE
METROPOLITAN WASHINGTON CHAPTER
KICK-OFF OF INVEST-IN-AMERICA WEEK LUNCHEON
MONDAY, MAY 3, 1965, at 12:30
I am very glad to participate in your Invest-in-America Week
this year, and to bring you the best wishes of Secretary Fowler for the
success of your efforts.
I am glad to be here,first, because you are working in an area
of critical importance for our domestic growth and prosperity.
I must also admit
to another more immediate reason.
But
Measures to
encourage investment in the United States are a vital part of our
effort to eliminate our balance of payments deficit.
In a very real
sense, the Government of the United States has vigorously undertaken
its own Invest-in-America program in the firm conviction that an
improved climate for domestic investment is a basic prerequisite
for a better balance in international capital flows and an essential
element in any lasting solution to our balance of payments problem.
I hope, therefore, you will permit me to take advantage of this forum
today to talk as much about our program as about yours, for that is my
intention.
I need not, before this group, linger long over the importance
Df encouraging savings and investment among our citizens, for that
process lies at the very heart of an effectively functioning system
REMARKS OF PAUL A. VOLCKER
DEPUTY UNDER SECRETARY FOR MONETARY AFFAIRS
DEPARTMENT OF TIlE TREASURY
BEFORE THE
NATIONAL INVEST-IN-AMERICA COMMITTEE
METROPOLITAN WASHINGTON CHAPTER
KICK-OFF OF INVEST-IN-AMERICA WEEK LUNCHEON
MONDAY, MAY 3, 1965, at 12:30
I am very glad to participate in your Invest-in-America Week
this year, and to bring you the best wishes of Secretary Fowler for thE
success of your efforts.
I am glad to be here,first, because you are working in an area
of critical importance for our domestic growth and prosperity.
I must also admit
to another more immediate reason.
But
Measures to
encourage investment in the United States are a vital part of our
effort to eliminate our balance of payments deficit.
In a very real
sense, the Government of the United States has vigorously undertaken
its own Invest-in-America program in the firm conviction that an
improved climate for domestic investment is a basic prerequisite
for a better balance in international capital flows and an essential
element in any lasting solution to our balance of payments problem.
I hope, therefore, you will permit me to take advantage of this forum
today to talk as much about our program as about yours, for that is my
intention.
I need not, before this group, linger long over the importance
of encouraging savings and investment among our citizens, for that
process lies at the very heart of an effectively functioning system
- 2 -
of free enterprise.
Our ability to grow rests in good part on our
ability to provide our growing population with more tools of production
with more power to operate those tools -- and with ample
supplies of the basic raw materials necessary for production.
Equally
important, we must stimulate the research and innovation necessary to
achieve better equipment and methods, and to bring these innovations
into use rapidly.
All of this requires a vast amount of capital,
and a willingness on the part of our citizens to provide the savings
essential to finance that capital.
In our economic system, we cannot look to Government or even to
business to provide those needed savings.
In 1964, for instance, the
financial savings of individuals approached $28 billion.
These funds
were equivalent to almost 70% of our total investment outlays, apart
from that portion represented by depreciation and other capital consumption allowances which are, of course, designed only to assure
replacement of our existing capital stock.
That is why your efforts, aimed at the general public, are so
useful.
For, without private individuals willing and able to save
and invest in large volume, we would necessarily have to accept one
or a combination of totally unsatisfactory alternatives.
One of these
would be simply to accept a much lower rate of economic growth.
Another, in theory, would be to force investment through a huge
expansion in the money supply and in Government deficits , at the
- 3 -
expense of inflation.
A third might be to permit Government to raise
the needed funds through taxation -- and to make the investment
decisions for us.
Clearly, none of those alternatives would represent realistic
or desirable solutions -- all would exact an intolerable cost in terms
of both economic performance and damage to our system of competitive
private enterprise.
But, if our present system is to work, and work
effectively, it must be widely understood.
For that reason I hope you
will continue your increasing emphasis of recent years upon the
education of our high school youngsters -- and their teachers
in
the role of savings and investment in our free economy.
Now let me make
~
pitch.
I want to describe to you, as I see
them, the links between what you are doing in encouraging saving and
investment in the national economy and the success of the national
effort the President has undertaken to overcome our balance of payment
difficulties.
First, perhaps a word or two on past developments will help put
this rather complex problem into perspective.
of payments deficits in most years since 1950
a half now.
We have had balance
for a decade and
And, however you keep the books, it became obvious by the
late 1950's that these deficits had become far too large to ~e sustain
for long, averaging about $4 billion a year from 1958-1960 under our
standard accounting methods.
These deficits meant, in essence, that
- 4 foreign countries were accumulating more dollars than they wished
to hold.
As a result, they were calling on our gold in exchange for
those dollars, and while our gold stock was and is large, it is not
inexhaustible.
Consequently, when the Kennedy Administration took office, a
many sided program was launched to reduce our deficit and to protect
the stability of the dollar.
Four years later, in 1964, evidence
had accumulated that this program was beginning to payoff in a number
of directions.
Most significant, our international competitive position was
beginning to benefit from our ability to maintain price stability
during the current business advance, and our exports consequently
have risen more than our imports.
This brought our traditional trade
surplus to a new record of $3. 7billion in 1964 even after excluding
all shipments financed by foreign-aid funds -- the largest trade
surplus,by the way, for any country in the world.
At the same time,
more and more of our foreign aid has been provided in the form of
u.
S. goods and services rather than dollars, sharply reducing the
drain on our balance of payments from that source.
Reductions in
.
military spending abroad also have helped reduce the pressures upon
our balance of payments, and important gains have been made in selling
more of our military goods to our allies.
foreign investments has risen sharply.
Meanwhile, our income from
- 5 -
Taking all of these elements of improvement together, the gains
from 1960 to 1964 totalled some $3.6 billion.
That, as a matter of
simple arithmetic, should have brought us close to balance in 1964
if all other things held unchanged -- but, of course, they did not.
Instead of a balance in 1964, we had a disappointingly large deficit
of around $3 billion
a deficit that, coming after almost 15 years
of earlier deficits, was simply too large.
The reason for the lack of over-all improvement on the scale
anticipated was readily apparent.
The improvement in our trade positic
and the reductions in the burdens of military payments and aid, was
offset by an accelerating outflow of American investment to Europe
and elsewhere.
In 1964, this outflow of private capital, after
increasing every year but one in the past five years, reached nearly
$6.4
billion.
Clearly, foreign investment provides long-term benefits to the
nation in future earnings, as well as in its potential for strengthenio
the free world economy as a whole.
Moreover, the world's largest and
richest nation should, over the long-run, be in a position to provide
capital to assist the development of poorer countries.
But, we simply
cannot afford to transfer capital abroad in such volume as to undermine
the stability of the dollar itself.
This was the setting for President Johnson's Balance of Payments
Message in February, in which he presented a vigorous lO-point progr~
- 6 -
for correcting our deficit.
A key element in this program is the
call to banks and other businesses to review their own foreign
operations and voluntarily cutback on the flow of dollars abroad.
To this end, the Government has provided American banks and
businesses with a set of guidelines, worked out in consultation with
the business community itself, for their international transactions,
including their foreign lending and investment.
I will not review these guidelines in detail, but I do think
it fair to say that the first reports reflecting this voluntary
program do indicate that the American business community is responding with awareness of the urgency of the problem.
It is essen-
tial that no one be lulled into a false sense of security, for the
success of the program will depend upon performance over a period of
time, not just the first few months.
But, I believe there is reason
for confidence that, with the continued cooperation of the business
community, this voluntary program will bring our deficit under control.
My main point today, however, is to emphasize that this kind of
program to staunch the investment outflow cannot be regarded as the
basic and permanent solution to our balance of payments problem,
however necessary and successful it may be.
The lasting solution must
be found in forces that will be felt in the market place.
In other
words, we cannot be content until improvements in the investment
climate of the United States -- along with other changes at home and
- 7 abroad -- have persuaded both American and foreign investors to
place more of their funds to work in this country on the basis of
normal profit and loss considerations rather than appeals to
patriotism.
Only then can we claim a fundamental solution firmly
rooted in the forces of the market place -- the forces that, in
our free enterprise society, we rely upon for guidance in making
all our economic decisions.
This does not argue against, nor in any way depreciate, the
importance of the present voluntary action program.
The situation is
such that the voluntary program is required, and the situation is
such that the voluntary program will continue to be required for some
time.
And the continued cooperation of the business community in
making the voluntary program a success is essential.
But, so long as we want to engage in mutually beneficial commerce and financial transactions with the rest of the world on the
basis of free markets, we must be alert to the need to maintain a
balance in our international accounts through the operation of basic
market forces and incentives.
That is why we must look beyond the
present voluntary program -- however necessary that program is now anc
in the period ahead -- and continue our efforts to improve the climatE
for investment in this country.
It is in this area, of course, where
efforts of your Government coincide directly with your own efforts in
the Invest-in-America program.
- 8 -
Let me review with you briefly the steps that we have taken,
and are taking, in support of greater investment opportunity
within the United States.
In doing so, let me emphasize,too, the
double-barreled benefits of an improved climate for investment
for our balance of payments position.
First of all, more dollar
funds will stay home if the profitability of investments in the
United States
improv~relative
to profit on investments elsewhere,
risks and other considerations being equal, and more foreign
investors will want to place their funds here.
of payments directly.
That helps our balao
Less direct, but no less important, is that
more investment in modern plant and equipment means greater efficien
and productivity, and our whole export effort must rest on our
ability to produce more at stable or declining costs.
Recognizing these fundamentals, the effort to improve our
investment climate got underway in a serious way several years ago.
The seven per cent investment credit and the depreciation rules
changes were undertaken as a matter of first priority in 1962, for
they directly and significantly added to the
domestic investment.
profr~
potential of
The 1964 tax law extended this process by
reducing the tax liability on corporate profits from 52 to 48 per ce
in two steps.
We estimate that these reductions should increase the
profitability of new corporate investment in representative types
of equipment after taxes -- and that is what counts -- by as much
as 35 per cent or more.
- 9 Equally important, the general reduction in personal income
taxes in 1964, and the other measures to sustain our rapid economic
advance, assure markets for the added production made possible by
new investment, and are key elements in the maintenance of profit
margins and investment incentives.
I do not need to rely upon forecasts to make the case for these
measures.
Data on corporate income and profits already show that the
profitability of investment in America has risen, and substantially.
For example, in the fourth quarter of 1960 the
after-~
profit per
dollar of the sales of United States manufacturing concerns was 4 per
cent; in the fourth quarter of 1964 it was 5.4 per cent, a rise of
a third.
At the same time, before-tax profits per dollar of sales
rose by a quarter.
In the same recent four years, the total before-
tax profits of United States corporations increased from $41.1
billion to $57.4 billion, and their profits after-taxes increased from
$20.4 billion to $31.7 billion.
After tending to decline for a good
many years relative to total national income, the share of profits
has risen again to levels more typical of prosperous periods in the
past.
I think that these figures are ammunition that you can use
to good effect in your campaign to make known and understood the
advantages of investing in America, and I hope that you can and will
be putting them to work through the activities of your most useful
- 10 organization.
But I have saved for the last another small set
of numbers that you may find the most useful of all, since they
relate directly to the profitability of investment itself.
This
is, the annual rate of profit upon stockholder's equity in the
United States.
In the final quarter of 1960, after-tax profit
on stockholder's equity was 8.4 per cent; four years later, it was
12.4 per cent, a rise of very nearly one-half in this short time.
Considerations such as these, I think, should be increasingly
convincing to American and foreign investors deciding where to put
their funds to work over the years ahead.
At the same time, we are
working to remove unnecessary impediments in our tax system to
foreign investors attracted to our expanding investment opportunities
As this invigorating tonic for our free enterprise system is more
fully appreciated -- and provided we can maintain our healthy
economic advance with stable prices -- market forces will greatly
assist our effort to avoid excessive capital outflows in the years
ahead.
This must and will be a fundamental answer to one of the most
critical elements in our present balance of payments problem.
It is
an approach which necessarily takes time and effort -- but it is
also an approach that, in the end, will pay high dividends in time
of a stronger economy at home and progress toward our goal of free
- 11 -
trade and payments among the nations of the free world.
It is
an approach that you and the efforts of your organization are helping to implement as you work to preserve and strengthen our system
of enterprise through greater investment at home, and bring to the
attention of our younger citizens the value of investing in America.
TREASURY DEPARTMENT
ClIO!
1-:'::':::"::-"-"'--
g
)R RELEASE A.M. NElrJSPAPERS,
les'day, May
:
i
::
VVASH1NGTON. D.C.
4, 1965.
May
3~
1965
RESULTS OF TREASURY I S HEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
bills, one series to be an additional issue of the bills dated February 4
}6S, and the other series to be dated }~ay 6, 1965, 1-lhich were offered on April 28; were
lened at the Federal Reserve
. Banks on May 3. Tenders were invited for $1 , 200, 000, 000 ,
'thereabouts, of 91-day b~lls and for $1,000,000,000, or thereabouts, of 182-day bills.
le details of the two series are as fol1o\vs:
~easUl"Y
MGt OF ACCEPTED
MPETITIVE BIDS:
High
Low
Average
91-day Treasury bills
maturing August 5, 1965
Approx. Equiv.
Price
Annual Rate
99.016
3.893%
99.012
3.909)b
99.014
3.901% Y
·
•
182-day Treasury bills
maturing November 4, 1965
Approx. Equiv.
Price
Annual Rate
98.004
3.948%
98.001
3.954%
98.003
3.950% Y
percent of the amount of 91-day bills bid for at the lovT price was accepted
percent of the amount of 182-day bills bid for at the low price was accepted
I!'A~ TENDERS
APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DlSTRlCtS:
:DisJc.~ict
:Boston
Nei-l York
'Philadelphia
Cleveland
Richmond
A.tlanta
Chicago
St. Louis
"linneapolis
(ansas City
)allas
lan Francisco
70TALS
Applied For
~
20,640,000
1~396,014,000
29,056,000
21,532,000
10,856,000
36,592,000
279,380,000
57,334,000
21,316,000
26,662,000
26,485,000
147 02 616:°00
$2,073,483,000
Accepted
$
9,85'4,000
815,514,000
17,056,000
21,482,000
10,856,000
26,ili2,000
146,180,000
··
Applied For
$
20,359,000
1,307,540,000
16,111,000
20,316,000
Accepted
$
5~359~000
18,716,000
25,462,000
15,285,000
36,729,000
358,086,000
14,132,000
24,975,000
17,417,000
10,780,000
46 z106 z000
l28~28:Z1000
656,753,000
8,111,000
12,299,000
2,545,000
20,929,000
182,921,000
12,132,000
17,125,000
8,367,000
5,780,000
6112811 000
$1,200,607,000 ~/ $1,958,277,000
$1,000,308,000
L~7, 954,000
:
2,845~OOO
1"'l.cludes $227,090,000 noncompetitive tenders accepted at the average pr~ce of 99.014
fucludes $91,271,000 noncompetitive tenders accepted at the average pr~ce of 98.003
On a coupon issue of the same length and for the same amount invested, the return on
thesG bills 'tv-ould provide yields of it.. 00% for the 91-day bills, and 4.09% for the
182-cay bills.. L'11terest 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 compu~e~ in,terms
of interest on the amount invested, and relate the number of days rema~g ~ an
~terest payment period to the actual number of days in the period, with semiannual
~ompounding if more than one coupon period is involved.
F-34
£I
TREASURY DEPARTMENT
;
NEWSPAPERS,
Tuesday, May 4, 1965.
FOR RELEASE A.M.
May 3, 1965
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
Treasury bills, one series to be an additional issue of the bills dated February 4,
1965, and the other series to be dated May 6, 1965, which were offered on April 28, ""
opened at the Federal Reserve Banks on May 3. Tenders were invited for $1,200,000,000,
or thereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, ot 182-day bUlt:
The details ot the two series are as tollows:
RANGE OF ACCEPTED
COMPETITIVE BIDS:
High
Low
ATe rage
91-day Treasury bills
maturing August 5, 1965
Approx. EqUiv.
Price
Annual Rate
99.016
3.89lt
99.012
3.909%
99.014
3.901% !I
:
182-day Treasury bills
maturing November 4, 196$
Approx. ECiUiT.
Price
Annual. Rate
98.0~
3.948%
98.001
3.954% , I
98.003
3.95o,c !t
80 percent of the amount of 91-day bills bid for at the low price was accepted
50 percent of the amount of 182-day bills bid for at the low price was accepted
TOTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
AEElied For
Applied For
AcceEted
Boston
$
20,640,000 $
$ 20,359,000
9,854,000
New York
1,396,01.4,000
815,514,000
1,307,540,000
Philadelphia
29,056,000
17,056,000 :
16,lll,OOO
Cleveland
21,532,000
21,482,000
20,316,000
Richmond
10,856,000
10,856,000
2,845,000
Atlanta
36,592,000
26,142,000
36,729,000
Chicago
279,380,000
146,180,000
358,086,000
St. Louis
57,334,000
47,954,000
14,132,000
Minneapolis
21,316,000
18,716,000
24,975,000
Kansas City
26,662,000
25,462,000
17,417,000
Dallas
26,485,000
15,285,000
10,780,000
San Francisco
141.z 616.z 000
46.z106,2000
l2~.2~1.QQQ
TOTALS
$2,073,483,000 $1,200,607,000 a/ $1,958,277,000
AcceEted
$
5,3$9,000
656,75.3,000
8,111,000
12,299,000
2,$4$,000
20,929,000
182,921,000
12,132,000
17,125,000
8,367,000
5,180,000
~11281.QQQ
$1,000,308 ,000
!I.
Includes $227,090,000 noncompetitive tenders accepted at the average price ot 99.004
§( Includes $91,271,000 noncompetitive tenders accepted at the average price of 98.003
!I
On a coupon issue of the sarne length and for the same amount invested, the return OD'
these bills would provide yields of 4.00% for the 91-day bills, and 4.09% 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 te~
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.
J
F-3L
I.
STATEMENT OF THE HONORABLE HENRY H. FOWLER,
SECIIDrARY OF THE TREASURY,
BEFORE THE
HOUSE WAYS AND MEANS CCJ«['l'.rEE ON H.R. 7368,
liTO AMEND THE TARIFF SCHEDULES OF THE
UNITED STATES TO REJXJCE UNTIL JANUARY 1, 1968,
THE EXEXPTION FRCM WTY ENJOYED BY RETtJRNJ:OO
RmIDENTS TO $50 FAIR RETAIL VALUE, TO LIMIT
THE EX»tP.rION TO ARTICLES ACCOO'ANYING SUCH
~IDENTS, AND FOR OTHER PURPOSES"
MONDAY, MAY 3, 1965, 10:00 A.M. (EDT)
Mr. Chairman and Members of the Committee:
I appreciate the opportunity to appear before you and to recommend
the enactment of H.R. 7368, which, from July 1, 1965, until January 1,
1968, would reduce to $50 fair retail value the exemption from duty
available to returning residents, and which would limit that exemption
to articles
~companying
such residents.
The bilJ. also would amend the
$10 gift provision and the other so-calJ.ed administrative exemptions
of the tariff act, which authorize the Secretary, subject to carefully
specified conditions, to admit limited quantities of articles free of
duty and tax when he determines that doing so is of net advantage to
the Government in terms of cost and convenience.
The value standards
for these exemptions would be changed from wholesale value, as at
present, to fair retail value.
In tbe absence of Congressional action, the so-called tourist
exemption would rise from the present $100 to a maximum of $500 on
July 1
of this year.
In his balance-of-payments message to the Congress on February 10,
1965, the President stated:
Foreign travel should be encouraged when we can afford it,
but not while our payments position remains urgent. Today,
our encouragement must be directed to travel in the United
States, both by our own citizens and by our friends from
abroad.
F-35
- 2 I ask the tourist industry to strengthen and broaden the
appeal of American vacations to foreign and domestic
travelers, and I will support its efforts through the
"See the U.S.A. \I program.
This statement cannot be interpreted as a Government request to the
American people to travel only within the limits of the United States.
But it does emphasize that this is no time to encourage foreign travel.
It is within these guidelines that we are proposing this legislation.
This legislation is one of several steps proposed by the President
to deal with the problem caused by the continuing deficit in our balance
of payments.
Last year the deficit on regular transactions was $3.1
billion. While that represented sane improvement over the $3.3 billion
deficit in 1963 and the $3.6 billion deficit in 1962, our progress is
too slow.
The dollar outflow on account of expenditures by Americans traveling
abroad is a major item in our balance-of-payments deficit.
expenditures totaled $2.8 billion.
In
1964 these
The inflow of dollars from foreigners
traveling to the United States amounted to only $1.2 billion; thus, the
deficit on account of tourism was $1.6 billion in 1964.
Although our estimated balance-of-payments savings from the bill
before you may seem relatively small, we must realize that success in
eliminating our deficit is most likely to result from a many sided
program -- from the combined effect of many measures.
In the interests of both effectiveness and equity, the President's
program calls for restraint and cooperation from all sectors of the
Nation -- private and public.
All segments of the economy must share
Part of the burden and discipline which are necessary to meet this problem.
-
-~
..J
Since
1960,
the Government has cut in half the balance-of-pay.ments
cost of the foreign aid program, reducing it to about
year.
$500 million last
Also, despite rising costs, the Government bas cut $900 million
fran net mili ta.ry expenditures abroad (including progress payments on
orders for military equipment).
The Government is striving to make
f'urther savings.
Businesses and banks with foreign operations have been asked to take
steps to strengthen our balanoe-of-payments position and the Interest
Equalization Tax bas been imposed on certain types of foreign investment.
The Administration believes that it is appropriate to ask individual
citizens to make the modest, but significant, contribution which the bill
before you calls for, as part of this program which we are pursuing on
many fronts to achieve
balance-of-p~ents
savings.
Indications thus far are that the President 1 s program is off to a
good start.
Following substantial deficits in January and February, our
over-all balance of payments was in surplus in March and apparently also
in April on the basis of partial and preliminary data.
This improvement is no basis for relaxing our efforts or failing
to follow through on all aspects of the President 1 s program.
A few
favorable months, while encouraging, are far from being determinative.
Over optimism must be avoided at all costs.
The Congress can demonstrate
its determination by enactment of the proposal before you into law by a
deeisive margin.
We must be ever mindful that it takes a number of
quarters of equilibrium back-to-back to demonstrate our ability and
decisiveness in this crucial area.
- 4We must be prepared for the contingency that some parts of our
program may not measure up to expectations, and for the fact that
there v1ll be an increase in
p~ents
abroad associated with a rise
in domestic business and income, and for other contingencies that may
add unexpected drains on our progress toward balance.
Prudence, equity and the need to demonstrate determination in
solving our deficit problem all make it imperative to follow through
on all aspects of the President's program.
The outflow of gold is
our constant reminder of inadequate progress.
When the exemption was reduced to the present level of $100 by
the Congress in 1961, we expected that this action would be of material
assistance in our efforts to reduce the
balance-of-p~ents
deficit.
This expectation proved to be correct and it was for that reason that
we requested the Congress in 1963 to continue the exemption at the
reduced level for an additional two years.
In 1960, prior to reduction of the exemption to $100, the average
foreign acquisition per returning resident was $84.
Since 1962 (after
the reduction) the average foreign acquisition has ranged between $50
and $55.
Based on the average reduction in foreign acquisitions and
the number of Americans traveling abroad, it is estimated that the
reduced exemption has resulted in discouraging foreign purchases
- 5by more than $600 million since 1961.
However, the number of Americans
traveling abroad has continued to increase each year and it is imperative that ve achieve a still further reduction in the average foreign
acquisition.
The Bureau of Customs estimates that during calendar year 1964
articles acquired in foreign countries and brought or sent back to
this country by returning residents totaled approximate~ $400 million
in declared or retail value.
If the duty exemption had been limited
to $50 fair retail value (rather than to $100 wholesale value, as was
the case), approximately $90 million of such acquisitions which were
duty floee would have been dutiable.
But we believe that if the exemp-
tion had been at the lower figure a large part, perhaps as much as $60
million, of that $90 million 'WOrth of articles would not have been
purchased at all.
Our experience has shown that the fact that articles
for sale abroad will be subject to duty when imported tends to discourage tourists from acquiring them.
In add! tion, it is believed that changing the basis of
app~ing
the dollar value of exemptions to a fair retail value basis will
establish a more realistic measure for goods brought in by tourists
and will facilitate customs clearance of passengers, since such
values normally can be readily ascertained.
One important prOvision of the bill,
whi~h
is before you, would
end the so-called lIarticles to follow" privilege.
This privilege has
- 6 ..
allowed the returning resident to apply any unused part of his duty
exemption to articles acquired on a trip abroad but shipped to him
separa.tely and not carried in his baggage.
This is a privilege which
very few other countr " -.:.; have ever allowed for tourist purchases of
their residentE.
Customs estimates that last year about 1.2 million
baggage declarations included articles "to fOllow" and that elimination of the "to follow" privilege would have affected articles worth
a.bout $40 million.
The elilnination of purchases of goods "to follow"
constitutes an essential part of our program to reduce the outflow of
dollars spent 2.:;road. by Flllerican tour'
-~S.
The "to follow" pri1filege also has led in recent years to a mailorder businesb of substantial proportions which has become of growing
concern to us.
Tourists going abroaa have been increasingly solicited
to place mail orders which are filled in countries which they do not
even visit an& which result in their obtaining goods, tax and duty
free, delivered to their homes.
This practice bas been particularly
marked in the case of liquor and perfume.
Tourists artc.. tnose taking
short business trips have been able to avoid both domestic
taxes on these purchases
~~Q
ana.
foreign
thus have been able to acquire goods which
they could no 7, normally buy tax free in the countries which they do
visit.
They have,
mail-order device,
fo~
:3xr.i!nple, been able to go to Canada and, by this
a.rra.n~~
to have perfume and liquor sent to their
- 7 -
homes in the United States free and clear of all duties and taxes.
What is notable is that these United States' travelers could not have
walked into a store in Canada and bought the same liquor free of
Canadian taxes and duties.
In addition to our increasing concern about this mail-order
problem, I am informed that the tax administrators of a number of
states are also deeply troubled by the 105s of state liquor taxes
caused by this mail-order practice.
Their concern in this regard
'WOuld, of course, be eliminated by the tenninatlon of the lito folloy"
privilege.
Another important reason for this proposal is that elimination
of the "articles to follow" privilege will result in a significant
economy in the administration of the Customs Bureau.
Complex and
costly administrative procedures are nov required to identify
II
articles to follow" and to verify exemption claims with baggage
declarations in connection with the use of this privilege by an
increasing number of returning tourists, even though these procedures are by no means employed on a lO~ basis.
One important effect of eliminating this privilege would also
be to accelerate the clearance of travelers by Customs, primarily
through extended use of the oral declaration.
The advantages of
the oral declaration procedure cannot be fully achieved at present
because it is necessary to obtain a written listing of articles
- 8 fran each of the approximately 1.2 million residents who annua.l.l.3
claim exemptions for
II
articles to follow."
I should also call to your attention the fact that a
by
stu~
custans officials bas shown widespread abuse of the "to follow"
privilege.
During a two-month period in 1963, the Bureau of Customs
ran a careful check on importations for which returning residents
utilized the "to follow" privilege.
The test disclosed that in
approximately 22 percent of the cases such claims by returning
residents were not valid.
Unfortunately, to expose and control all
ll
false claims relating to the applicability of the "to follow pri vilege on a continuing basis would require elaborate and time-consuming
administrative procedures involving a considerable additional cost
to the taxpayer.
Moreover, the institution of such procedures could
be expected to cause serious public objection since the additional
documentation and inspection would necessarily slow down the clearance
of articles through Customs.
Section 2 of the bill relates to administrative exemptions
provided for by section 321(a) of the Tariff Act of 1930, as amended.
Under section 321(a)(2) the Secretary of the Treasury is authorized
to admit articles free of duty and tax, subject to certain carefully
specified restrictions, in order to avoid expense and inconvenience
to the Government disproportionate to the amount of revenue that would
otherwise be collected.
It is this section which allows the duty-free
entry of bona fide gifts worth $10 or less which are sent to this
country by persons abroad.
This section also provides authority for
- 9a $10 baggage exemption for persons who have not been out of the
country long enough to qualify for the regular statutory baggage
exemption.
It also authorizes waiver of duty on imported articles
worth less than a dollar.
Section 2 of the bill would change the
basis for applying the dollar value of these so-called adm1 nistrative
exemptions from wholesale to the fair retail value in the country
from which the articles are shipped.
This proposed change is intended
to insure that these importations, insofar as determinations of value
are concerned, are treated consistently with importations which would
be affected by the first section of the bill.
While complete data with respect to the volume of imports
entered under these administrative exemptions are not available, it
is estimated that approximately 6 million gift parcels for which free
entry is now claimed are mailed to the United States in a typical
Many of these are parcels being sent back by American tourists.
year.
We believe that it is reasonable to expect that the proposed change
would have considerable influence on discouraging acquisitions which
are now free of duty, but which would became dutiable by this change.
As I pointed out earlier, if this bill is not passed in time to
become
,jump
ef~ective
by July 1, the baggage exemption will automatically
to $500 for those returning residents who have been out of the
GOun (;ry
for more than 12 days.
Thus, even a very short lap se of time
oetween the expiration of the present temporary legislation and the
- 10 caning into effect of the bill now before you would have a most serious
effect.
The exemption would go from $100, as at present, to $500 (or
$200 in certain cases) and then down to $50.
An interlude at the $500
level would not only be very bad because of its impact on the President's
balance-of-payments program but it
obv1ous~
public relations effect even among those not
would have a very adverse
direct~
affected.
Addi-
tiOnally, it would create serious administrative difficulties for
Customs to have to make a double change in its aDministrative practices,
with the multiplicity of instructions, forms and so forth, which would
be required.
Further, we could anticipate serious discontent from
those travelers caught at the $50 level when just a few days earlier
a rise from $100 to $500 had been allowed.
In summary, while it is difficult to make precise estimates of
how much these proposed measures will save for our balance of payments,
the volume and pattern of expenditures by American travelers on foreign
merchandise make it reasonable to expect that the savings in the first
full year a.fter enactment would be in the range of $75 to $125 million
more than the mere extension of the present law and, of course, a much
larger sum if the law reverted to its pre-l96l form.
Accordingly, I urge strongly that H.R. 7368 be enacted promptly
because of the beneficial effect which it would have on our balanceOf-payments position and on customs
exemptions from duty.
administ~ation
of the laws governing
FOR RELEASE:
TREASURY DEPARTMENT
Washington
UPON DELIVERY
REMARKS BY THE HONORABLE JOSEPH W. BARR
UNDER SECRETARY OF THE TREASURY
BEFORE THE LOUISIANA BANKERS ASSOCIATION
JUNG HOTEL, NEW ORLEANS, LOUIS IANA
10:00 A.M. CST., TUESDAY, MAY 4,1965
On April 1, 1965 Henry H. Fowler became Secretary of the
Treasury. Two months earlier Frederick L. Deming became
Under Secretary of the Treasury for Monetary Affairs. On April 29
I assumed the office of the Under Secretary of the Treasury, and
on the same date Merlyn N. Trued became Assistant Secretary for
International Affairs. Some of you may wonder what these changes
will mean in terms of policy developments -- particularly in the
area of debt management. Perhaps a brief report would be in order.
Secretary Fowler has already made clear his intention to
build on the programs that have been taking shape in the last
few years. This intention is particularly strong in the debt
management area where so much progress has been made in recent years.
In the same way that Secretary Dillon and Under Secretary Roosa
built upon the debt management policies initiated and developed
by Secretary Anderson and Under Secretary Baird, I can promise that
we will follow through along the lines laid down by our
predecessors. The issues and problems that confront the Treasury
in taxation, debt management, gold, silver, or the balance of
payments -- all have a long life history. I know this from
personal experience, having lived with a number of issues in the
major areasof Treasury responsibility.
My first contact with the Treasury, other than that of being
a taxpayer, was in 1959, when as a new Congressman I came over
to the Treasury to meet some of the Treasury officials and staff
members. My discussions with Secretary Anderson, Under Secretary
Baird and the Treasury staff alerted me to a developing problem
that was to some extent threatening to get out of hand -- the
problem of managing the public debt.
F-36
- 2 -
/
__
"
...
'... .1
"
I
In 1959 this was not an important problem in the public
mind, but the Treasury was doing all it could to alert the country
to it. As a result of those efforts, and the progress that has
been made since then I am able to report now that public debt
management is in excellent shape.
I developed immediate interest in 1959 in the debt management
problem. The concern expressed about this problem by the
Treasury at that time lead Representative Moorhead and myself
to a series of meetings with Treasury officials and also to
meetings in New York with participants in the Government Securities
Market.
Treasury officials at that time were deeply concerned over
the problem of how to properly manage our public debt, and were
intensively exploring new techniques in this area. However, it
was not until 1962 and 1963 that there waw much public concern
over the problem. This public concern was perhaps best
exemplified by the fact that Congress passed three separate bills
dealing with the debt limit instead of only a single piece of
legislation to cover the year's requirements.
As I was in charge of Treasury's Congressional liason at
that time I can testify to the irritation this caused members
of Congress. By the time the year was over Congress was not only
heartily sick of the issue but so were we in the Treasury
Department. However, by that time the Treasury was already well
on the way to a satisfactory solution of the problem.
To understand how it was solved we should begin with the
nature of the problem itself. In terms of its size the public
debt has gone up $59 billion since 1946. This seems like quite
a startling increase until it is put into perspective with the rest
of the economy. This debt increase represents a 23% rise, but
since 1946 our population has grown some 35% so that on a per
capita basis the debt is nearly $200 less than it was at the
end of World War II. The debt in 1946 was larger than our
Gross National Product but today it is less than half of GNP.
Similarly, during the same period, while the Federal debt went up
23%, private debts, the debts of individuals, businesses, State
and local governments, have increased more than 400 percent.
Obviously the size of the debt alone was not the major difficulty.
The truth is that we have been growing up to a debt of this size,
and the debt itself -- in terms of its absolute magnitude -- is
actually much more manageable now than it was back in 1946.
- 3 -
The real difficulties in debt management were those of a
structural nature. We came out of the war with the debt well
under control and improved the situation even further during 1946
by paying off bank-held debt with surplus cash that was in the
Treasury till. The average length of our marketable debt issues
was close to 8 years and we had over $43% billion of the debt
maturing out beyond 20 years. In a sense the Treasury lived off
the fat of that good structure for a number of years. Attempts
were made to maintain a balanced structure of the public debt
but no consistent way was found to keep the structure from eroding
and, although long-term issues were put out from time to time, the
debt gradually shortened through the passage of time so that by
the end of 1959 the average length of marketable debt was down
to 4 years and 4 months and the amount of debt maturing out beyond
20 years had declined from $43-1/2 billion to only $8 billion.
In the meantime market forces had brought interest rates up
from the artificially depressed level of the war years to a
level that was higher than those at the present time. The Treasury
for a time found that it could not, because of the 4t percent
interest rate ceiling, sell any securities out beyond 5 years.
Prior to this there had been a burst of speculation in Treasury
bonds which had led to a massive oversubscription of the 2-5/8's
of February 1965. This boom ended spectacularly in mid-l958 and
in the face of the largest peacetime deficit of our history the
Treasury had a series of financings that could be called successful
only in a technical sense -- the amounts needed were raised. In
fact the market was not stabilized until late 1959 when the
so-called magic 5's were issued.
In the interval the Treasury had been able to control the
growth of the short-dated debt that matured in less than 1 year.
This had risen from about $55 billion to about $80 billion -- not
an excessive increase in terms of the money market needs for a
short-dated security. But this control over short-dated debt
and the inability to issue long-dated debt created a buildup
in the intermediate area so that the debt maturing in from one
to five years increased from $24 billion to $6l~ billion. All
of this short intermediate debt could quickly spill into the
shortest-dated debt in just a few years. The need for debt
lengthening was illustrated by a 1960 study of the potential
increase in short-term coupon securities. These issues,
excluding Treasury bills, totaled $35~ billion in 1961 and could
mount to $93~ billion by 1964 if all the maturing debt had to be
rolled over into short-term securities.
- 4 This steady attrition in structure was finally arrested in
1960 as the Treasury developed and tested new techniques in debt
management that have proven to be quite successful. In the first
place a larger part of the debt has been put on an automatic
basis through the development of new Treasury bills, tapping the
6-months market and the l-year market. Secondly, the long-term
debt problem was met through the advance refunding technique.
Under this technique securities are offered in exchange for
longer-dated securities well in advance of their maturity. Since
its first use in June 1960 there have been some 11 advance
refunding operations and the turn-around in the structure of the debt
has been marked. Although marketable issues have increased by some
$25 billion since 1959 the under-l-year debt has grown by only
$8 billion, probably at a lesser rate than the liquidity needs of
the economy. The over-20-year debt has more than doubled, growing
from $8 billion to very close to $20 billion and over two-thirds of
these long-term securities have come out of advance refundings. The
average length of the debt has also improved and at the present time
is up over a year in length, at 5 years and 3 months. The results
are shown in the volume of financing the Treasury has to undertake.
New cash borrowings in 1964 were $ll~ billion -- down substantially
from the $25 billion of 1959. Maturities of coupon issues are also
down to $32~ billion from the $42~ billion of 1959, and in terms of
public holdings of the same down from $23~ billion to $14 billion.
The better spacing of the debt has meant the Treasury can be in the
market less frequently and for smaller amounts.
The second major current problem of the Treasury, the balance of
payments, has compounded the problem of debt structure because we no
longer can afford to be isolationists in our domestic monetary and
debt management policies. In previous periods of business slack
interest rates in our economy could go to any level without any serie
consequences internationally. But since 1958 and 1959 when other maj
currencies of the world became fully convertible, as only the dollar
had been since the early 1930's, our short-term interest rates can nc
longer fluc tuate only in accordance with domes tic needs. If Treasury
bill rates had declined to as low as 5/8 of 1% per annum as they had
during earlier business recessions we could have had a hemorrhage in
our balance of payments as short-term funds sought higher rates
abroad in equally liquid short-term instruments. As a result, we
have consciously increased our short-term rates from the recent
recession low of 2~% to the current level -of close to 4%. From a
debt management standpoint this required a large increase in Treasur)
bills to put upward pressure on these rates. Since 1959 we have addE
$20 billion to the amount of our regular Treasury bills. To keep
the total of short-dated debt from growing by the same amounts,
coupon issues have been reduced in size largely through the advance
refunding techniques. As a result our short-dated debt total has
only grown by $8 billion.
- 5 At the same time as all of this was going on the Government and
the Treasury had to be concerned with the financing of the deficits
occasioned by failure of the domestic economy to perform at or near
its potential. The direction of Treasury response has been to place
as much of the debt increase as possible outside the commercial banks
to avoid the possibility of any inflationary potential. This policy
has also been highly successful. As a matter of fact, of the
$28 billion increase in the debt since January 1961, none of the
increase has gone into the hands of commercial banks. Commercial bank
holdings of Government securities are actually down by over
$2~ billion.
Banks have contributed to the record of sound debt management in
other ways, by temporarily underwriting new issues thus facilitating
their secondary distribution, by educating the public on the need for
sound financial habits and practices, and by advising the Treasury
on debt management through industry advisory committees. Another and
vital service freely given by bankers has been your aid in the Savings
Bond program without banker and other volunteer support we could not
point with pride to the fact that $22 of every $100 of debt in the
hands of the public is now in the form of Series E and H Bonds. The
growxh of these holdings is not dramatic on a month-to-month basis
but over the years adds up to a large amount -- more than $5 billion
since January 1961 and more than $18 billion since 1946. This record
has been a tremendous assist to the debt managers and we thank you for
a job well done.
The proper management of our public debt in the years ahead will
require careful attention, but I think we can continue to profit by
the experience of the past. The ingenuity of the various measures
which have been developed reflects credit on the men charged with
this responsibility, and you may be sure we will continue to profit
from their wisdom and their experience. We are well aware that debt
management was a serious problem not so many years ago, and we will
remain constantly on the alert in the years ahead to make every effort
to see that it does not become one againo
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.
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 sal.e or other disposition of Treasury hills 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 original.ly sold by the United states is considered to be interest.
Under Sections 454 (b) and 1221 (5) of the Interna.1. 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 consider.ation as capital assets.
Aceordingly, 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 purcha.se, 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.
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 1n 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 each issue
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
for the respective issues.
Settlement for accepted tenders in accordance with
the bids must be made or completed at the Federal Reserve Banks on
May'
AV.
--A:)UOlr,lLr::(lE~61.1-)-
_ _=19=.65=-_ _ , 1n cash or other immediately available funds or in a like face
amount of Treasury bills maturing
May 13, 1965
------------~(~1·~7)~----------
•
Cash
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
May 5, 1965
~URY' S
WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders for two series
of Treasury bills to the aggregate amount of
$
21200~01000
cash and in exchange for Treasury bills mat\lring
, or thereabouts, for
May 1%t1965
, in the amount
of $ 2 200:tfL4 000 , as follows:
I
I
91 -day bills (to maturity date) to be issued
i5F
in the amount of $
lI20~0,000
May
,
1~965
, or thereabouts, represent-
ing an additional amount of bills dated February 11, 1965
and to mature
amount of $
August 12, 1965
#f
1,0~61000
,
f8f
, originally issued in the '
, the additional and original bills
to be freely interchangeable.
183 -day bills, for $ 1,000tOOO,ooo , or thereabouts, to be dated
: (II)
12)
May 13
1965
{ 13)
, and to mature November
12)
(14
1965
•
The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding as hereinafter provided, and at maturity their face
amount. will be payable without interest.
They will be issued in bearer form only,
and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and
$1,000,000 (maturity value).
!enders will be received at Federal Reserve Banks and Branches up to the
Daylight Saving
clOSing hour, on~-thirty p.m., Easternf~ time, Monday, May 109 1965
(1 )
renders 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
;1:- J:>/
•
· , -....
TREASURY DEPARTMENT
-
,
-
t-la y 5, 1965
FOR It-lHEDIATE 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
$2,200,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing May 13, 1965,
in the amount of
$ 2,200,674,000, as follows:
91-day bills (to maturity date) to be issued May 13, 1965,
in the amount of $1,200,000,000, or thereabouts, representing an
additional amount of bills dated February 11,1965, and to
mature August 12,1965,
originally issued in the amount of
$ 1,OOl,236,000,the additional and original bills to be freely
interchangeable.
183-day bills, for $ 1,000,000,000, or thereabouts, to be dated
Hay 13, 1965,
and to mature
November 12, 1965.
The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be issued in bearer form 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, Honday, Hay 10, 1965.
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
fO~larded 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.
F-37
- 2 -
Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, following which public
announcemen t wi 11 be made by the Treasury Departmen t of the
amount and price range of accepted bids. Those submitting t.nders
will be advised of the acceptance or reject ion thereof. The
Secretary of the Treasury expressly reserves the right to accept or
reject any or all tenders, in whole
in part, and his act~on in
any such respect shall be final.
Subject to these reservatl~ns
noncompetitive tenders for each issue for $200,000 or less wlthout
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 hids must be made or completed at the Federal
~serve Banks on May 13, 1965,
in cash or other immediately
available funds l)r in a like race amount of Treasury bills
maturing May 13, 1965.
Cash and exchange tenders will receive
equal treatment. Cash adjustments will be made for differences
be~een the par value of maturing bills accepted in exchange and
t~ issue price of the new bills.
0::
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 princ ipal 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 from
any Federal Reserve Bank or Branch.
000
TREASURY DEPARTMENT
it
C C:'
;;..
,~
-
(
May 6, 1965
FOR IMMEDIATE RjiLEASE
TREASURY J..tARm' TRANSACT IONS IN APRIL
During April 1965, market transactions in
direct and guaranteed securities of the government
for Treasury investment and other accounts resulted
in net purchases by the Treasur,y Department of
17,025,000.00.
000
F-38
TREASURY DEPARTMENT
May 6, 1965
FOR
IMMEDIATE
TREASURY
RELEASE
~~
TRANSACTIONS IN APRIL
During April 1965, market transactions in
direct and guaranteed securities of the government
for Treasury investment and other accounts resulted
in net purchases by the Treasury Department of
t7,025,000.00.
000
F-38
,.;
I
I
L
I
"
I
STATEMENT OF THE HONORABLE HENRY H. F~IER
SECRETARY OF TIiE TREAS URY
Before the
SENATE COMMITTEE ON FOREIGN RELATIONS
10 a. m., May 6, 1965
Mr. Chairman and Members of the Committee:
In this, my first appearance as Secretary of the Treasury
before the Senate Committee on Foreign Relations, I am especia1ly pleased to testify in support of legislation to
strengthen the International Monetary Fund -- an institution
which has made a vital contribution to the economic prosperity
of the Free World.
1 have with me today Treasury Assistant
Secretary for International Affairs, Mr. Merlyn N. Trued, and
Mr. William B. Dale, U. S. Executive Director of the Fund, who
will be able to answer any question of detail you may have on
the Fund's operations.
The bill which the Committee has under consideration would
authorize acceptance of an increase of $1,035 million in the
United States quota in the International Monetary Fund and would
authorize the necessary appropriation.
This bill was passed by
the House on April 27 by a vote of 301 to 88, upon the recommendation of the House Banking and Currency Committee and after
debate in the House.
F-39
- 2 President Johnson, in submitting this legislation to the
congress, stated that "An expansion of the Fund's resources
is now needed if it is to contribute effectively to Free World
growth in the future."
He noted that the effect of the measure
would be to promote orderly and stable growth in world trade
and payments, that it would strengthen the international
monetary system and maintain the central position of the Fund
in the evolution of the international monetary system.
The National Advisory Council on International Monetary
and Financial Problems strongly recommended this action in a
report submitted to the President and to the Congress in March
of this year.
This report explains in full detail the need
for an increase in our quota in the Fund as part of a general
increase in Fund quotas.
The Legislation
The Bretton Woods Agreements Act provides that Congressional
authorization must be obtained for any increase in the United
States quota.
The legislation before you would authorize me,
as the United States Governor of the International Monetary
Fund, to consent to the increase in our quota as part of the
general increase in the quotas of all members.
,
f
L
- 3 -
At the Tokyo meeting of the Board of Governors of the
International Monetary Fund last September, the Governors
directed the Executive Directors of the Fund to consider the
question of increases in the quotas of members and to submit
an appropriate recommendation.
Accordingly, the Directors
have submitted for approval of the Governors, in accordance
with the Fund's Articles of Agreement, two resolutions.
The
first proposes that all members increase their quotas by 25 percent; the second proposes additional increases totalling $870
million in the quotas of 16 countries, whose economic positions
have changed considerably over recent years.
The United States share of the total increase would be
slightly more than 20 percent, corresponding roughly to our
proportionate share in the Fund.
No special increase in Fund
quota is proposed for the U.S.; we would participate only in
the 25 percent across-the-board increase.
If all of the countries
accept the increases proposed, the Fund's resources, or the total
quotas, would rise from the present $16 billion to about $21 billion.
Under the Fund's Articles of Agreement, there are two procedura1 steps necessary before the quotas of members may be increased.
Any general or particular increase in a country's
- 4 quota must receive the approval of the Fund's Governors with
80 percent of the total voting power.
My predecessor, Secretary
Dillon, on the advice of the National Advisory Council, cast his
vote in favor of the two resolutions before the Governors in
March.
He made it clear in agreeing to the resolution that he
was not then requesting or accepting an increase in the United
States quota in the Fund, since this requires further legislation by Congress.
The effect of his vote, along with the votes
of the other Governors, was to place the proposal before their
respective governments for action.
A favorable vote of more than
90 percent of the total votes was received on both resolutions.
Under the Fund's Articles, however, no member's quota may
be increased without its consent.
The increase in our quota will,
therefore, not become effective until the Congress authorizes
action and makes the necessary appropriation.
As a safeguard to
protect those countries which might take the action to increase
their own quotas, while other countries neglected to take action,
or delayed their action, the resolution requires that the whole
set of increases will not become effective unless countries with
two-thirds of the quotas as of the date of the resolution have
consented to the increase.
This would prevent a situation in
- 5which some of the countries might make their contribution to
the Fund's resources, while others neglected to take action.
The two-thirds of the quota cannot be reached unless the United
States and other large countries agree to the increase.
The
Fund resolutions provide that consents to the increase must be
given before September 25, 1965, unless the Directors extend
the time for action.
Once the consent is given, payment of
the quota is called for within thirty days.
The Fund will
hold these payments in a separate account until the requisite
two-thirds is obtained.
It is only then that the quota in-
crease becomes effective for those countries which have agreed.
If a two-thirds of quota majority is not reached, the Fund will
return the payments to the member countries which have made
them.
Authorization of Appropriation
The second section of the bill authorizes an appropriation of $1,035 million to remain available until expended.
An appropriation will, of course, be required before the United
States can accept the quota increase, and this bill authorizes
an appropriation consisting of two parts.
In accordance with
- 6 -
the Fund's Articles and the resolution, the United States
will be required to pay 25 percent of the increase in the
quota in gold.
Other countries will, of course, also pay
in 25 percent of their increases in gold.
For the United
States, the gold payment will be $258.75 million, which will
appear as an expenditure in our accounts.
In exchange for
this payment, the United States will receive a "gold tranche"
drawing right on the International Monetary Fund.
This is
an automatic drawing right and represents a reserve asset
which the United States can call upon at any time.
The remainder of the appropriation to be authorized,
$776.25 million, will not be expended in the foreseeable
future.
The Treasury will issue a letter of credit to the
International Monetary Fund for this amount against which
the Fund may draw dollars if they are needed by other countries
through the regular drawing procedure.
Under Fund policies,
however, substantial drawings of dollars are not likely as
long as our balance-of-payments deficit persists.
The Fund
now holds about $3,425 million in dollars, all but a small
r
- 7 -
.'.
-
,./
f
'
'
amount in the form of non-interest bearing, non-negotiable
notes.
The Fund would use up its present holdings of dollars
before it called upon the Treasury to make payments under
the letter of credit.
As I have said, it is unlikely that
the Fund will use large amounts of dollars in the foreseeable
future.
The letter of credit technique which we have proposed
is now in general use in domestic programs and in our dealings with international institutions.
It will replace the
former practice of making a payment of the entire subscription
to an international institution and then substituting noninterest bearing notes for amounts not immediately needed.
The proposed technique will obviate expenditure prior to the
time when funds are actually needed.
It constitutes an un-
conditional obligation on the part of the Treasury to provide
these funds as they are required.
- 8 -
Nature of the International Monetary Fund
Before outlining the reasons for an increase in Fund quotas
I should like to say a word about the nature of the Fund itself.
The International Monetary Fund and the International !ank
for Reconstruction and Development were established following
negotiations at the Bretton Woods Conference of 1944.
The IBRD,
or the World Bank, was designed to provide long-term financial
assistance -- first for the reconstruction of war torn areas
and later for the economic development of its member countries.
It now gives particular attention to the needs of the less
developed countries of the world.
The International Monetary Fund, on the other hand, was
designed
"To promote international monetary cooperation
through a permanent institution which provides
the machinery for consultation and collaboration
on international monetary problems.
"To facilitate the expansion and balanced growth
of international trade and to contribute thereby
to the promotion and maintenance of high levels of
employment and real income and to the development
- 9 -
of the productive resources of all members as
primary objectives of economic policy."
To accomplish these purposes, the Fund has worked continuously for the elimination of exchange restrictions, the
avoidance of competitive exchange depreciation, and the promotion of exchange stability.
When member countries draw
needed currencies from the Fund they do so to provide financing
for their position while corrective measures are being taken to
eliminate a temporary balance-of-payments situation.
Any draw-
ing must be repaid within a 3-to 5-year period.
The point I wish to make is that the International Monetary
Fund should not be confused with institutions whose primary
purpose is the making of long-term loans.
Even less should it
be confused with bilateral or multilateral aid programs under
which long-term assistance is provided, frequently on very
generous credit terms.
When a country draws a needed currency from the Fund,
moreover, it transfers to the Fund an equivalent amount of its
own currency.
Accordingly, the assets of the Fund are not re-
duced when it provides temporary assistance to a member country.
The composition of those assets is, however, changed, depending
upon the gold and currency composition of the drawings and re-
- 10 payments which have taken place.
I shall discuss the significance
of the asset composition at a later point.
In 18 years of Fund operations through the end of 1964,
member countries have drawn over $9 billion in dollars or other
currencies.
These drawings have been or are being repaid in
accordance with agreed schedules.
In the most recent ten-year
period, net drawings outstanding at the end of the year have
varied from a low of $234 million in 1955 to a high of $2,621
million at the end of 1964.
The latter figure is unusually high
because it includes nearly $1 billion of net drawings by the
United Kingdom, reflecting a large drawing by that country in
December 1964.
Prior to 1960, drawings from the Fund were predominantly
taken in the form of dollars and the United States established
a strong creditor position in relation to the Fund.
By the end
of 1957, gross drawings of dollars had amounted to nearly $2.7
billion.
The Fund had purchased additional dollars from the
United States by selling us nearly $600 million worth of gold.
At that time, IMF holdings of dollars represented no more than
28 percent of the United States quota.
Following the return to de facto convertibility of the
currencies of Western Europe at the end of 1958, the Fund began
- 11 -
increasingly to provide currencies other than the dollar to
countries seeking temporary financing.
This practice was
intensified as the balance-of-payments position of the United
States moved into substantial deficit.
Repayments in dollars,
however, continued to be large, with the result that in the
period from the end of 1957 to the end of 1962 the Fund's holdings of dollars increased by more than $1 billion.
In this way
the normal operations of the Fund absorbed more than $1 billion
from the reserves of other countries, thus easing our international financing problems and obviating possible drains upon
the United States gold stock.
By the end of 1963 Fund holdings
of dollars had been restored to 75 percent of the U.S. quota.
At that point the UoS o was neither a creditor nor a debtor visa-vis the institution.
This is an important fact which I would like to underline
for the accounts of the IMF are not always clear to the nonexpert.
When the Fund's holdings of a member's currency are
equal to 75 percent of the member's quota, the position of that
member vis-a-vis the Fund is the same as it was when the Fund
began operations. Although the Fund used dollars extensively in tht
past, when we were in a strong balance-of-payments position, all
- 12 those dollars have come back to it and, in effect, back to
the United States.
Looked at another way, we have lent money,
on medium term, to foreign countries -- through the Fund
and have been completely repaid.
Over its entire period of
operation the IMF, while it has been of great benefit to the
world and to us, has not cost us, net, any dollars at all in
our international accounts.
Over the past 15 months the United States has itself, for
the first time, made modest drawings from the Fund.
We have
drawn primarily in German marks and French francs and we have
sold the currencies we have drawn, against dollars, to countries
wishing to make repayments to the Fund.
These countries could
not use their dollar holdings directly for this purpose since
the Fund does not accept in repayment currencies which it holds
in excess of 75 percent of quota.
For the Fund to accept such
currencies -- in this instance dollars
would mean that the
United States would be placed in a debtor position vis-a-vis
the Fund without any initiative on our part; this would be
inconsistent with the Fund's method of operation.
Attached to this statement is a chart which shows graphically the developments of the U.S o position in the Fund which
I have just described.
- 13 ......
I
Our current net drawings of approximately $320 million
have, of course, also had the effect of reducing United States
dollar liabilities to foreign countries; these countries have
paid dollars to us in order to acquire the particular currencies
used to repay the Fund.
The other side of the same picture I have been presenting
is that drawings from the Fund in recent years have been made
primarily in currencies other than the dollar.
These have been,
for the most part, the currencies of Western European countries
now in balance-of-payments surplus.
As a result, the Fund's
holdings of the currencies of the "Group of Ten" countries,
other than the United States and the United Kingdom, have been
reduced by more than $1 billion and at the end of 1964 amounted
to the equivalent of about $1.8 billion.
If all member countries accept the quota increases suggested for them, Fund holdings of these same currencies will be
increased by more than $1 billion and the liquidity of the Fund
will be substantially improved.
In addition, Fund holdings of
gold will also be increased by approximately $1 billion.
As will be apparent from this brief summary, the operations
of the Fund are designed so that countries in balance-of-payments
surplus are called upon to provide a certain amount of interim
- 14 -
financing for countries in balance-of-payments deficit.
The
position of the surplus countries is, however, protected in two
ways.
First, the extent to which anyone country may be called
upon to provide its currency to the Fund is limited by the size
of that country's quota.
Secondly, the Fund examines the
requests of countries seeking to draw currencies from it with
increasing rigor, depending on the extent to which the drawing
country is making use of the Fund.
The gold tranche (normally
25 percent of quota) is granted virtually automatically upon the
drawing country's assertion that it needs foreign currencies
in connection with its balance-of-payments financing.
When a country seeks to draw its first credit tranche (a
second 25 percent of its quota), the Fund will appraise its needs
with a liberal attitude provided that the member itself is making
reasonable efforts to solve its problems.
Requests for addi-
tional drawings require substantial justification.
words of a recent annual report of the Fund:
In the
"They are likely
to be favorably received when the drawings or standby arrangements are intended to support a sound program aimed at establishing or maintaining the enduring stability of the member's
currency at a realistic rate of exchange."
- 15 -
Current Discussions Regarding
the International Monetary System
Members of the Committee on Foreign Relations will be
aware that international discussion is presently taking place
in various inter-governmental forums regarding the effectiveness of the present international monetary system to support
and sustain a rapidly growing volume of world trade and further
expansion in the economic growth of both less developed and
developed countries.
Secretary Dillon, in his statement to the House Committee,
stated that he believed this whole question had been placed in
proper perspective last September by Mr. Pierre Paul Schweitzer,
the Managing Director of the Fund.
He quoted Mr. Schweitzer as
follows:
liThe record of the two decades since the end. of the war,
although not perfect, cannot be considered unsatisfacto~.
Much has been achieved; a tremendous expansion of world
trade; the convertibility of all major currencies; greatly
reduced reliance on restrictions and on bilateralism; considerable, if still insufficient, progress in the developu
countries; high levels of employment; and avoidance of the
extremes of inflation and deflation in most areas of the
world."
- 16 -
In sharp contrast, the turbulent history of the period after
World War I included the monetary crisis of the 1930's, the
shattering worldwide depression which followed, the proliferation of "beggar thy ne ighbor" trade pol ic ies, and the growth of
forms of economic warfare in which exchange controls and other
financial tools played an important part.
In no small part this vast improvement in the international
monetary system and in the economic cooperation among the countries of the world has been the result of the Fund's policies
and activities.
In the agreement establishing the Fund, the
members undertook to eliminate from their practices the more
objectionable features of the monetary and exchange systems in
the earlier period.
By their participation in the Fund, countries
have become increasingly aware of the problems of others, and
have realized that they are part of a world community with common
economic interests.
The Fund has used its powers of persuasion, the provision
of sound technical advice, and the availability of medium-term
assistance to secure the adoption of appropriate economic policies
in many countries.
It has to a great extent succeeded in eliminat-
ing bilateralism in trade and exchange agreements.
It has brought
about a sharp reduction in multiple eJ(change rate practices
- 17 -
which were particularly disadvantageous to American exporters
Who found themselves discriminated against.
It has used its re-
sources effectively to give temporary relief to countries whose
exchanges were under pressure.
This has provided a breathing
spell during which the countries concerned could develop measures
to restcre equilibrium in ways which would have
repercussions on other countries.
min~um
adverse
The relative stability of
exchange rates which the Fund has fostered has encouraged the
expansion of international trade and the international movement
of productive capital.
The contrast between the orderly way in which exchange
adjustments have been made and national policies have been
formulated in a cooperative manner and the disorderly trade and
monetary policies of the period following World War I is, of cours,
not entirely a matter of the International Monetary Fund.
The
United States provided billions of dollars for the restoration
of the European economies under the Marshall Plan and it has
provided a large measure of assistance to the development of
the economies of the countries with lower economic levels.
countries have to a considerable extent cooperated in
policies.
Other
s~ilar
It is doubtful, however, that the degree of cooperatiOO
- 18 -
among countries in the monetary field which has developed in
recent periods could have been attained without the existence
of the International Monetary Fund and the undertaking by its
members to observe a code of fair practices in their exchange
and related financial policies.
The lesson learned during the first postwar decade -- that
the correction of international
~balance
requires the coopera-
tion of countries in surplus as well as those 'in deficit -- is
one that continues to be highly relevant.
This is the background against which the International
Monetary Fund, representing nearly all the Free World countries,
large and small, and the Group of Ten major trading countries
have been examining the adequacy of world reserves, the need for
international credit facilities, and possible future needs for
international cooperative measures to assure that world liquidity
will keep pace with a growing world economy.
The increase in Fund quotas now under consideration falls
in the second category -- expansion of international credit
facilities.
The purpose is not to add to reserves -- these are
considered to be adequate at the present time -- but rather to
provide the Fund with the resources needed to meet temporary
imbalances that are likely to grow larger as the total value
of world trade and world financial transactions expands.
- 19 -
'-
I
The Quinquennial Review of Fund Quotas
The aggregate of country quotas in the Fund when it started
operations amounted to $8 billion.
These quotas were arrived
at by a process of negotiation at the Bretton Woods Conference
in part on the basis of a formula Which took into account the
trade, exports and
~ports,
national incomes and monetary re-
serves of the member countries.
The data used were necessarily
data for the pre-World War II period.
It was recognized from the beginning that quotas based on
these magnitudes would not be satisfactory over a long period
of time and the Fund Articles therefore provided for a general
review of quotas every five years.
If the original formula
were applied to current data the indicated size of the Fund
would be about $40 billion.
have been increased.
From time to time, individual quotas
There was only one general increase, in
1958-1959, when the quotas of the member countries were
general~
increased by 50 percent with some larger increases by Germany,
Canada, Japan and same other countries Whose positions had
markedly changedo
The need for a revision of quotas at the present time arises
from several factors o World trade has increased by more than
50 percent since the last general revision.
In 1964, bDports
of the Free World aggregated $156 billion, compared with $101
- 20 -
billion in 1958.
billion.
In 1948, Free World imports were only $60
There is no way of measuring adequately the expansion
of other financial transactions arising from investment and other
nan-trade items.
It is well known, however, that foreign invest-
ments have increased greatly in recent years and that there
have been corresponding increases in payments of interest and
amortization of capital.
Since 1958, when the European currencies
became practically convertible, there have been large shortand long-term capital movements.
Same of these have had the
effect of smoothing out balance-of-payments disequilibria, hilt somE'
have exaggerated existing disequilibria, particularly when 'hey were
the result of currency speculati.on.
Accordingly. it may b{' ex-
pected that fluctuations in the balance of payments of the member
countries with which the Fund must deal may be of greater magnitude in the coming years.
Another factor of importance is that in recent pe!"iods tht'
larger countries have made more extensive use of the Fund.
Canada, Italy, Japan, the United Kingdom and the United States
have drawn on the Fund for current needs or have entered into
stand-by arrangements which would assure them of the availability
of resources if they were needed.
In the past five years, the
annual level of drawings has been above $1 billion, while during
the period 1955 to 1959 the average level was only $440 million.
- 21 -
The consensus of the Governors of the International Monetary
Fund last September in Tokyo was that an increase in quotas at
this time would be a prudent action.
The proposal for a 25
percent increase emerged from discussions both in the IMF and
in the Group of Ten major industrial countries.
I may note in
passing that some members of the House of Representatives, while
fully agreeing with the need for the 2S percent increase, suggested that a 50 percent increase and additional special increases for some of the major countries would have been still
more satisfactory.
TIle 25 percent quota increase, however, is
as much as could be negotiated at the present time, and the
special increases represent in my judgment a useful contribution
to the Fund's resources from some of the countries which are in
a position to provide more funds.
Even when the Fund is not actually providing resources to
member countries to meet their temporary balance-of-payments needs
it is performing an important role in the present-day monetary
system.
The very existence of the Fund, and the drawing rights
which members possess, provides a background against Which a
number of the larger members have established among themselves
a substantial network of reciprocal bilateral credits.
The
- 22 -
swap arrangements operated by the Federal Reserve System and the
Treasury form part of this network.
These arrangements provide
short-term facilities which permit the participants to avoid or
counter the damaging effects which might otherwise follow from
volatile capital flows of speculative or seasonal nature.
These
short-term bilateral facilities can be called on promptly and
quietly by members participating in them.
Should balance-of-
payments difficulties persist beyond the period for which the
bilateral facilities are provided the availability of mediumterm credit from the International Monetary Fund can facilitate
liquidation of the short-term obligations.
Evidence of the
affectiveness of the short-term bilateral network and of the
nanner in which the International Monetary Fund may assist in
~onverting
short-term obligations into medium-term obligations
.ias given in the British drawing of $1 billion from the Fund
ast December
0
Irrangements for Minimizing Impact on UoS, Gold Reserves
The Administration has given particular attention to the
ossible effect on the United States of gold payments to the
und in connection with the proposed quota increases.
It
as clear that, in the normal course of events, many countries
- 23 -
would wish to purchase gold from the United States in order
to pay the gold portion of their quota increase to the Fund.
Both the Group of Ten and the IMF recognized that, if nonreserve countries utilized their holdings of reserve currencies
to acquire gold from reserve currency countries in order to
make payments to the IMF, the result would be both to reduce
the gold holdings of the reserve centers and to dtminish
aggregate world reserves.
Accordingly, special measures were developed to minimize
this indirect drain on the gold stocks of the reserve countries
with its accompanying decrease in international reserves.
Three measures, explained in full detail in the National AdvisM
Council Report and in the Report of the Executive Directors of
the Fund, are contemplated.
First, a number of the major countries have indicated that
they intend to pay their gold subscriptions from their own
gold holdings and will not buy gold for this purpose.
Second, the Fund is prepared to make arrangements with
certain non-reserve countries in strong balance-of-payments
positions that gold sold by them to third countries for the
latter's gold payments to the Fund will be resold to the sell-
- 24 -
ing country by the Fund in exchange for the selling country's
mm currency.
Arrangements of this nature are expected to
caver some $150 million of gold subscriptions.
Third, to the extent that gold may still be purchased
from the United States and the United Kingdom by other countries,
the Fund is prepared to open gold deposits with those two
countries up to an aggregate amount of $350 million.
These
funds will be withdrawable by the International Monetary Fund
on demand.
It is understood, however, that "on the occasion
of any use of gold, the Fund would normally use, in appropriate
proportions, earmarked gold and gold on general deposit in
accordance with the good management of its assets."
These arrangements will provide fully adequate protection
for the United States gold stock while at the same time providing the Fund with needed liquidity.
-
Conclusion
The National Advisory Council has strongly recommended
that the Congress authorize the proposed increase of 25
percent in the United States quota.
Secretary Dillon was
Chairman of the Council When its endorsement was submitted.
I now associate myself with the recommendation and urge
favorable consideration of the bill
bE~fore
you.
The increase
- 25 -
'.'-- [,')
. \
in the United States quota as part of a general move to
strengthen the Fund is in the interest of the United States
and of the entire world community.
President Johnson, in sUbmitting this legislation to
Congress, pointed out that the International Monetary Fund
has played a key role in the flourishing economic growth
experienced by the Free World in the last two decades and
that an expansion of the Fund's resources is now needed if it
is to continue to contribute effectively to Free World growth
in the future.
The President urged that Congress give prompt
and favorable consideration to this legislation.
$8il.
$Bil.
+3.5r\------------------------------
------------------------------------------------~\+3.5
/75% olllS Ouoto, $3.1
+3.01-
.------!
-------7"
I'
~I
+2.5\
/'5% ofUS Ouolo, $2/
+
- - - - - - 1 +3.0
2.0 I
I
~-------------------------.I
I
"'''"WI (End of Period)
+2.0
- - - - --------
, / Poyment
Repurchoses wdh
dol/ors by Other
Countries
+.5f-1- - -
Ho/dinqs ofFund
I
~ - US. ()uolo ------~----~
+1.5f-1- - -
+1.0f-1- - -
1+2.5
1+1.5
Orowings
- - - - - - - by U.S
Go/dSo/e
taUS
\
~
Dol/ors AcqUIred
By Fund
(During Period)
+1.0
+.5
o
Do//ors Drown
From Fund
-.5 11----------
-.5
(During Period)
\
-1.0
I
1947
'47-'54
Note. Fund
nor a
Fund
Fund
OffIce of the Se<rotNy 01 the lroasury
)
I
-,-
I
!
I
'55
'56
'57
'58
'59
'60
I
'61
I
'62
I
'63
'64
-1.0
holdings of dollars equal to 75% of the Us. quota represents a balancfJd pos/hon - the US net/her a creditor
debtor vis-a-vis the Fund.
holdings below 75% = U.s. credJlor position.
holdings above 75% =U.s. debfor position.
FO-384
TREASURY DEPARTMENT
(
May 6, 1965
FOR IMMEDIATE RElEASE
WITHHOIDING OF APPRAISEMENT ON
STEEL JACKS
The Treasury Department is instructing customs field officers to
withhold appraisement of steel jacks from Canada, manufactured by
J. C. Hallman Manufacturing Co., !Ld., Waterloo, Ontario, Canada,
pending a determination as to whether this merchandise is being sold
at less than fair value within the meaning of the Antidumping Act,
1921, as amended.
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
show to justify a finding of dumping under the law.
The information alleging that the merchandise under consideration was being sold at less than fair value within the meaning of the
Antidumping Act was received in proper form on April 13, 1965.
This
information was the subject of an "Antidumping Proceeding Notice "
Which was published pursuant to section l4.6(d), Customs Regulations,
in the Federal Register of April 30, 1965, on page 6123 thereof.
TREASURY DEPARTMENT
May 6, 1965
FOR IMMEDIA'IE REIEASE
WITHHOIDnm OF APPRAISEMENT ON
STEEL JACKS
The Treasury Department is instructing customs field officers to
withhold appraisement of steel jacks from Canada, manuf'actured by
J. C. Hallman Manufacturing Co., Ud., Waterloo, Ontario, Canada,
pending a determination as to whether this merchandise is being sold
at less than fair value within the meaning of the Antidumping Act,
1921, as amended.
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 information alleging that the merchandise under consideration was being sold at less than fair value within the meaning of the
Antidumping Act was received in proper form on April 13, 1965.
This
information was the subject of an "Antidumping Proceeding Notice"
which was published pursuant to section l4.6(d), Customs Regulations,
in the Federal Register of April 30, 1965, on page
6123 thereof.
TREASURY DEPARTMENT
Washington
FOR RELEASE: AFTERNOON NEWSPAPERS
SATURDAY, MAY 8, 1965
REMARKS BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
TO THE BUSINESS COUNCIL
AT THE HOMESTEAD, HOT SPRINGS, VIRGINIA
SATURDAY, MAY 8, 1965, 9:15 A.M., E.S.T.
Ma"y times, and in several capacities, I have had the
pleasure of journeying to this pleasant place to discuss with
this distinguished group some of the critical economic events
and issues of the day.
If today, therefore, I join you in a new role, it is not as
a stranger. And you are well aware that the principles and
policies for which I stand are, in all essentials, those for which
the Treasury has stood over the past four years and more.
Like Douglas Dillon before me, I share President Johnson's
conviction that the primary purpose of economic policy is to
fashion a framework, to create a climate, in which private
economic effort can flourish for the benefit of all Americans.
I share the President's conviction that the achievement of our
national economic goals depends very largely upon our success
in bringing public policies and private effort together in joint
pursuit of those goals.
These are the convictions upon which our economic policies
for the past four years have been based -- and upon which they
will continue to be based.
There could be no better proof than the prosperity we
enjoy today of the abundant benefits that can flow from public
policies designed to encourage private effort. There could be
no better proof of the remarkable feats that American government
and American business can accomplish when they work as allies
rather than as antagonists -- when they seek, not cause for
senseless conflict, but common cause in the national interest.
No man in the history of our nation has worked harder or
longer or more effectively to bring government and business toget~r
in a growing partnership for progress than the man who now occupies
F-40
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He knows -- and he has demonstrated his
the White House.
belief -- that in that partnership lies the path to continued
economic advance and a better America for all our citizens.
intend to follow the President's example with every resource
at my command. For there is no major area of Treasury concern
that is not also of deep concern to you, or in which you are not
deeply involved.
I
I have been most happy to learn that it is the earnest desire
of the Business Council -- as it is my desire -- to reconstitute
its Liaison Committee, as a regular channel of communication
between the Treasury and the Council.
I look forward to meeting
with this Committee in the very near future to set up a schedule
and an agenda, and thus maintain a really practical and effective
medium for the exchange of views on matters of vital concern to
you, to the Treasury and to the nation.
Let me briefly review with you a few of those areas of joint
concern:
First, there is no task before us more important than
sustaining the economic advance which is now in its fifty-first
month -- a ripe age, indeed, as expansions go.
In fact, this
month of May marks an event which has received only rather
perfunctory notice, but which will always hold a high place in
the annals of American economic history -- for this month our
economic expansion has become the longest in the entire history
of our nation, with the single exception of the expansion that
included World War II. Would it not be fitting to mark this
record breaking achievement by a national celebration? All
the American people -- business, labor, consumer, and government
could share in this event -- because all have worked together
to make it possible.
Yet for all its longevity, this expansion shows no signs of
flagging.
On the contrary, it continues to forge ahead on all
fron ts .
Our Gross National Product for the first quarter of this
year rose by $l~ billion over the last quarter of 1964 -a gain exceeded on only three previous occasions. The largest
part of that gain was the $ll~ billion rise in consumer spending.
And recent surveys of consumer attitudes show consumer confidence
in the nation's economic outlook at extremely high levels.
- 3 But consumer demand must be conjoined to investment demand,
or capital expenditures, for a healthy growing competitive
economy, and investment demand requires strong incentives.
Those
incentives have rarely been stronger in recent years than they
are today. For example, in the fourth quarter of 1960 the
after-tax profit per dollar of sales of United States manufacturing
concerns was 4 percent.
By the fourth quarter of last year it
had grown to 5.4 percent -- a rise of one-third.
And, as President Johnson reported earlier this week, corporate
after-tax profits for the first quarter of this year totalled
$36 billion at a seasonally adjusted annual rate -- $4 billion
above the rate in the last quarter, and more than $4~ billion
above the rate in the first quarter, of last year.
And business confidence in our outlook continues to run high.
As you know, the recent McGraw-Hi] 1 survey of capital spending
plans show, for 1965, a 15 percent increase over last year's
levels -- higher than the sizable 14 percent last year.
In
manufacturing alone, the planned increase is 21 percent -- in
contrast to 18 percent last year. The $51.7 billion planned for
this year is almost double the level of a decade ago. And the
$16 billion growth in capital expenditures for the five years
1961-1965 exceeds the rise for the entire decade of the 50's.
And, most encouraging, the same recent survey reveals the
intention of businesses to maintain large capital spending programs
well beyond the current year.
This acceleration of capital expenditure is perhaps the
most encouraging factor in our national economic outlook.
For
it means more rapid improvement in our competitive quality -it means new jobs and new products -- and it signals the success
of a happy combination of creative public policies and private
business effort.
It is indeed impressive testimony to business
confidence in our national leadership and to the imagination,
initiative and drive of American business as encouraged by such
measures as the depreciation reform and investment credit of 1962
and the tax reduction of 1964.
Slowly but steadily, our expanding economy is moving us
closer to our interim goal of 4 percent unemployment. We
have cut the overall unemployment rate from an average 6.8 percent
in the first quarter of 1961 to an average 4.8 percent for the
first quarter of this year -- and over the same period the
important rate for married men has fallen from an average 4.8
percent to an average 2.6 percent.
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Thus, our economy is moving strongly and surely ahead. And
to insure that it continues to do so throughout the rest of
this year, we have scheduled to take effect at the beginning of
July a prudent amount of excise tax reduction -- prudent because
it provides an adequate but not excessive stimulus to the
private sector -- prudent because it furnishes added incentives
for price reductions at a time when it is imperative that we
redouble our efforts to maintain our excellent record of wageprice stability -- and prudent because it would achieve these ends
without seriously slowing down our drive towards a balanced budget.
This is a second and vital area of joint concern between
the Treasury and the business community -- the conduct of our
national fiscal affairs. When we urged the tax cut in 1963
and 1964, we said that, by helping create more jobs and
rising incomes and profits, it would mean rising Federal
revenues -- even at lower tax rates. We said that growing
revenues in a growing economy, together with a rigorous program
of expenditure control, were the only sure path to a balanced
budget. Last week President Johnson reported to the nation that,
as a result of rising Federal revenues and reductions in
Federal expenditures, we expect the actual budget deficit for
fiscal 1965 to be at least $1 billion below the $6.3 billion
estimated in January.
Thus, President Johnson's programs for economic growth
and expenditure control continue to uphold the pattern of
diminishing deficits established with the budget for fiscal 1964
when the deficit dropped from an estimated $11.9 billion in
January 1963, to an estimated $10 billion in January 1964, to an
actual $8.2 billion. There is no need for me to tell you how
difficult it is to sustain that pattern in the face of foreign
crises that cannot be foreseen but continually appear. Nor is
there any need for me to assure you -- for President Johnson's
record of expenditure control leaves no room for doubt
that
despite these crises this Administration will continue to save
everywhere we can in order to spend where we must.
It is
essential that we exercise restraint in the upcoming excise
reductions -- furnishing the economic stimulus we need without
seriously impeding our progress toward balance in our budget.
Our third area of joint concern is national credit policy.
There are, as you know, those whr have urged -- either to
forestall what they fear is impending inflation at home,
or to aid our balance of payments -- that we slam hard the brakes
on credit expansion. Surely, we must vigilantly guard against
- 5 inflatiun -- but just as surely we must do so without harming our
expansion.
I see no reason why we cannot continue to be
successful in both endeavors -- preventing inflation and
sustaining our expansion -- if we continue, at the government
level , to follow flexible monetary policies and, at the private
level, to avoid inflationary wage settlements or price rises.
Nor is it feasible for us to curtail credit drastically
in order to aid our balance of payments. Vigorous domestic
grmvth remains essential to any fundamental solution to
our balance of payments problems. Any gain that a sharp
boost in interest rates might bring to our balance of payments
would hardly be a price worth paying for the domestic economic
havoc it would wreak -- havoc that would ultimately place our
balance of payments position in jeopardy once more.
Certainly, as time passes and situations alter, we must
make adjustments in our credit policies to meet given needs
at given times. Always, those policies and those adjustments
must be based on a hard and careful analysis of realities and
evaluation of priorities -- not on the basis of some automatic
allegiance to "tight money" or "easy money." And both the
realities and priorities before us today call for continued
flexibility in credit policy capable of supporting our home economy
without harming our balance of payments.
The fourth, and final, major area of joint concern is
our balance of payments -- and more broadly, the continued
viability of our international monetary system.
I will not dwell at any length upon developments in our
intensified program to bring our international deficit to a
swift and sure end. We are moving ahead in all aspects of
that program. As President Johnson reported last week the
voluntary program among the business and banking communities
is off to a good start. Overall, preliminary indications are
that -- following substantial deficits in January and February
our overall balance of payments was in surplus in March and
probably also in April.
I am disturbed, however, by the undue note of elation over
these results that I detect in some quarters.
By all means, let
these results spur us on to greater effort -- but let them not
delude us into premature visions of victory.
Let there be no
mistake:
these figures are no more than preliminary indications
of a brief respite from the intense pressures created by a
prolonged period -- some seven successive years -- of serious
deficits in our balance of payments.
- 6 I want to emphasize with all the vigor I can muster the danger
of early or excessive optimism.
For example, the projected gain
of $1.2 hillion in the industrial side of the voluntary program
concerns only certain specified transactions on which business
firms were asked to report -- mainly exports, and capital movements
and investment earnings transactions with industrialized countries.
It docs not take into account what developments may occur in other
parts of our balance of payments, such as imports and tourist
expenditures or even military expenditures during 1965. The
$1.2 billion, therefore, cannot validly be deducted from last
year's regular transactions deficit of $3.1 billion as a means
of projecting this year's deficit.
We must avoid any over- optimism because of favorable
developments in any particular segment of our balance of payments.
Early optimism could lead to premature relaxation.
For overall
assessment of our situation we must rely on the regular quarterly
reports which reflect all factors and actual transactions rather
than expectations.
The significant fact is that, for the first time, the
entire nation is involved in a massive, concerted effort, to
reduce our dollar outlays abroad wherever we can, while trying to
increase the inflow from abroad -- uy boosting our exports and
attracting greater foreign investment. That effort is bringing
good results. And we can allow no let up -- indeed we must
continue to redouble all our efforts -- until we have restored our
international payments to balance once again, and until we have
maintained that balance, not for one or two quarte.rs, but a
sufficient time to demonstrate our strength and our determination
and to allow a more permanent solution to take hold.
As we do mov~ toward balance in our payments, a new
and crucial challenge is presenting itself with growing urgency
before the nations of the free world -- the challenge of
assuring ample liquidity to support expanding world trade in the
years ahead.
Through its balance of payments deficits during the
past six years the United States has, as you know, been augmenting
the supply of international liquidity by some $3 billion a year.
As our deficits dwindle, therefore, so does a prime source of
international liquidity -- and it becomes more and more imperative
that \ve progress toward some agreement with our foreign friends
on some other means of furnishing adequate international reserves.
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We have seen this problem coming for some time -- and
much Df the preliminary spadework has thus been underway for
some time.
During the past several years the United States has
joined with other major countries in comprehensive studies of
the international monetary system -- its recent evolution, its
present effectiveness and its future.
Under Secretary Deming and Treasury staff members are in
Paris this week working on various aspects of the liquidity
question.
Prime Minister Wilson focused public attention on this
question recently when he devoted a portion of his New York
speech to a plea for comprehensive planning to avoid a
liquidity squeeze when the U. S. payments deficit has disappeared.
We expect the Chancellor of the Exchequer, Mr. Callaghan, to
visit Washington late this month -- and he ~il1 doubtless wish to
exchange views on this matter.
Over the summer and fall there will be other bilateral
and multilateral talks at all levels as we move ahead toward
exploring this most complex problem and toward reaching some kind
of workable consensus. There is, therefore, no fixed timetable.
But we are moving ahead -- and we will spare no effort to speed
our progress toward a sensible and workable solution.
These, then, are four major areas of joint concern between
the Treasury and the business community -- four major areas of
national concern in which you are deeply interested or deeply
involved.
There are, of course, many other important topics of joint
concern which I have not been able to discuss -- such as the
proposed liberalized tax treatment of foreign investment in the
United States, our forthcoming program to deal with the silver
and coinage prob1e~.our reJiew of abuses in the use of private
foundations, and problems arising out of the regulation of the
banking industry.
But through your Liaison Committee, I intend
to keep in close touch with you on these and other matters in the
months ahead.
I know that, while I have limited myself today to what we
could call the bread and butter issues of our economic life, that
the interest of this group and others like it is far from limited
to these concerns.
I know that you are intensely interested in
the ~ital e~ent~ taking place today on the vast stage of world
affa~rs -- ~n V~etnam, in the Atlantic Alliance in the Dominican
Republic.
'
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- 'But we all know -- and we can never let ourselves forget -that America's ability to succeed in its difficult and demanding
role as leader of the Free World, that all the political, diplomatic
and military resources at our command, depend upon a strong and
stable American economy and a sound dollar.
We need have no fear for our economy or our dollar if, in the
weeks and months ahead, we in government and you in the private
sector can continue to confront the challenges and opportunities
before us in these areas in a spirit of growing partnership and
cooperation.
I assure you that I will always welcome your advice and
your counsel with the same enthusiasm with which I welcome your
help and your support.
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\...}
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TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
May
7, 1965
PRELIMINARY RESULTS OF TREASURY I S CURRENT EXCHANGE OFFERING
Preliminary figures show that about $7,956 million, or 94.3~, of Treasury
notes maturing May 15, 1965, aggregating $8,436 million, were exchanged for the
two issues included in the current exchange offering. The total exchanged for
the 4~ notes was $5,898 million (including $4,253 million for official accounts)
and for the 4-1/4~ bonds $2,058 million (including $65 million for official
accounts).
Of the maturing notes held outside the Federal Reserve Banks and Government
accounts, 11.6'!owere not exchanged.
Details of the exchange are as follows (in millions):
ELIGIBLE FOR EXCHANGE
Security
Amount
4-5/8% Notes
$1,816
3-7/8% Notes
6,620
Total
$8,436
411 Notes
d..~e 8/15/66
EXCHANGED FOR
4-174~ Bonds
due 5/15/74
UNEXCHANGED
Total
Amount
737
$1,530
$286
5,105
1,321
6,426
194
$5,898
$2,058
$7,956
$480
$
793
$
SUBSCRIBERS
Federal Reserve Banks
and Govt. accounts
All others
Total
$
$4,253
65
$4,318
1,645
1,993
3,638
$5,898
$2,058
$7,956
Final figures regarding the exchange will be announced after final reports
are received from the Federal Reserve Banks.
000
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7272
TREASURY DEPARTMENT
May 10, 1965
FOR IMMEDIATE REIEASE
TREASURY DECISION ON GALVANIZED WARE
UNDER THE ANTIDUMPING ACT
The Treasury Department has completed the investigation with
respect to the possible dumping of galvanized ware from Canada,
manufactured by General Steel Wares Limited, Canada.
A notice
of intent to close this case with a determination that this merchandise is not being, nor likely to be, sold at less than fair
value will be published in an early issue of the Federal Register.
Appraisement of the above-described merchandise from Canada
is being withheld at this time.
The dollar value of imports of the involved merchandise received during the period August through December 1964 was approximately
$24,000.
ber 1964.
No importations have been reported since Decem-
TREASURY DEPARTMENT
May 10, 1965
FOR IMMEDIATE REIEASE
TREASURY DECISION ON GALVANIZED WARE
UNDER THE ANTIDUMPING ACT
The Treasury Department has completed the investigation with
respect to the possible dumping of galvanized ware from Canada,
manufactured by General Steel Wares Limited, Canada.
A notice
of intent to close this case with a determination that this merchandise is not being, nor likely to be, sold at less than fair
value will be published in an early issue of the Federal Register.
Appraisement of the above-described merchandise from Canada
is being withheld at this time.
The dollar value of imports of the involved merchandise received during the period August througb December 1964 was approximately $24,000.
ber 1964.
No importations have been reported since Decem-
TREASURY DEPARTMENT
WASHINGTON. D.C.
FOR RELEASE A.M. NEWSPAPERS,
Tuesday May 11, 1965.
May 10, 1965
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for tll'lO series of
l'reasury bills, o~e series to be an additional. issue of the bills dated February 11, 1965,
md the other ser~es to be dated May 13 1965, which were offered on May 5, were opened
It the Federal Reserve ~s on May 10. Tenders were invited for $1,200,000,000, or
;;hereabouts, of 91-day bills and for $1,000,000,000, or thereabouts of 183-day bills
ehe details of the two series are as follows:
,...
j
lANGE OF ACCEPTED
91-day Treasury bills
183-day Treaswr,r bills
maturing August 12, 1965
maturing November 12, 1965
Approx. Equiv. :
Approx. Equiv ..
Price
Annual Rate
Price
Almual. Rate
o
High
99.020
3.877%
30938%
97.998
:
Low
99.015
3.897%
97.990
).954%
Average
99.016
3.893% Y
97.992
3.. 950% Y
Y Excepting one tender of $100,000
77 percent of the amount of 91-day bills bid for at the low price was accepted
25 percent of the amount of 183-day bills bid for at the low price was accepted
:~ETITIVE
BIDS:
·
!I
JTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
A;eElied For
$
20,130,000
1,546,571,000
26,308,000
28,683,000
23,652,000
43,458,000
318,825,000
36,801,000
24,095,000
25,825,000
26,155,000
125,571,000
·
··
·
Acce,eted
• A,Eplied For
$ 10,107,000 • $ 12,278,000
1,273,293,000
778,601,000
•
18,409,000
14,308,000
25,033,000
23,3 83,000 :
9,017,000
23,652,000
32,245,000
23,890,000
348,090 J OOO
174,851,000
15,735,000
28,549,000 •
20,414,000
16,842,000
16,831,000
24,526,000
11,561,000
16,086,000
88,884,000
66,081,000
0
·
AcceEted
2,278,000
671,918,000
4,409,000
18,458,000
9,017,000
14,285,000
192,090,000
13,110,000
17,164,000
10,956,000
6,336,000
40,900,000
$
$2:1 246,074,000 $1,200,876,000 "pi $1,871~790,OOO $1,000,921,000
Includes $237,927,000 noncompetitive tenders accepted at the average price of 99.016
InclUdes $98,564,000 noncompetitive tenders accepted at the a~erage price of 97.992
On a coupon issue of the same length and for the same amount lllvested, the return on
these bills would provide yields of 3.99%, for the 91-day bills, and 4.01%, for the
l83-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual. number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
compounding if more than one coupon period is involved"
TOTALS
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TREASURY DEPARTMENT
FOR .-lELEASE A.1". W,"!SPAPERS,
Tuesday May 11, 1965.
Nay 10, 1965
RFSULTS OF TRE.ASURY I S,~EKLY BILL OFFERING
The Treasury Department announced 18.st evening tha.t the tenders for two series of
Treasury bills, one series to be an additional issue of the bills dated February 11, 1965
and the other series to be dated May 13, 1965, whi ch were offered on Nay 5, were opened
at the Federal Reserve Banks on May 10. Tenders were invited for $1,200,000,000, or
thereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 183-day billR.
The details of the two series are as follows:
·
RANGE OF ACCEPTED
COMPETITIVE BIDS:
183-day Treasury bills
91-day Treasury bills
maturing
November 12, 1965
maturing August 12, 1965
Approx. Equiv.
Approx. Equiv.
Price
Price
Annual Rate
Annual Rate
High
99.020
3. 938~t
3.877~
97.998
Low
99.015
3.897:t
97.990
3.954%
Average
99.016
97.992
3.893% y
3.95~ Y
!I Excepting one tender of $100,000
77 percent of the amount of 91-day bills bid for at the low price was accepted
25 percent of the amount of 183-day bills bid for at the low price was accepted
TOTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
·
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
A,eplied For
:1:
20,130,000
1,546,571,000
26,300,000
28,683,000
23,652,000
43,h58,ooO
318,825,000
36,801,000
24,095,000
25,825,000
26,155,000
125, S71, 000
$2,2)46,074,000
AcceEted
$ 10,107,800
778,601,000
14,308,000
2),383,000
23,652,000
23,890,000
174,851,000
28,549,000
16,842,000
24,526,000
16,086,000
66,081,000
$1,200,876,000
!I
Applied For
$ 12,278,000
1,273,293,000
18,409,000
25,033,000
9,017,000
)2,21.6,000
348,090,000
15,735,000
20,414,000
16,8)1,000
11,561,000
88,884,000
AcceEted
$
2,278,OOC
671,918,000
4,409,000
18,458,000
9,017,000
14,285,000
192,090,000
13,110,000
17,164,000
10,956,000
6,336,000
40,900,000
TOTALS
£I $1,871,790,000 $1,000,921,000
bl Includes $237,927,000 noncompetitive tenders accepted at the average price of 99.016
oj Includes $98,564,000 noncompetitive tenders accepted at the average price of 97.992
On a coupon issue of the same length and for the S3JT\e runount invested the return on
these bills would provide yields of ).9%, for the 91-day bills, and 4.W%, for the
183-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days remaining in an
interest.pa~ent period to the actual number of days in the period, with semiannud
compounding 1f more than one coupon period is involved.
Y
F-L2
'I'
733
TREASURY DEPARTMElJT
Washington
IMMEOIA TE RELEASE
F-43
WEDNESDAY, MAY 12, 1965
The Bureau
figures showing
to May 1, 1965,
pursuant to the
Commodity
of Customs has announced the following preliminary
the imports for consumption from January 1, 1965,
inclusive, of commodities under quotas established
Philippine Trade Agreement Revision Act of 1955:
:• Established Annual •
: Unit •
of
: Imports as of
:
Quota Quantity
: Quantity : May 1, 1965
..
.
Buttons •••••••
510,000
Cigars ••••••••
120,000,000
Number
Coconut oil •••
268,800,000
Pound
215,329,072
•••••••
6,000,000
Pound
2,945,216
Tobacco •••••••
3,900,000
Pound
1,846,250
Cordage
Gross
158,318
2,637,512
TREASURY DEPARTMENT
Washington
n.1MSDIA TE RELEAS E
F-43
WEDNESDAY, MAY 12, 1965
The Bureau
figures showing
to Hay 1, 1965,
pursuant to the
Commodi ty
of Customs has announced the following preliminary
the imports for consumption from January 1, 1965,
inclusive, of commodities under quotas established
Philippine Trade Agreement Revision Act of 1955:
: Unit of
Annual .
.:• Established
•
Quantity
Quota Quantity
: Imports as of
.
: May 1, 1965
Buttons •••••••
510,000
Cigars ••••••••
120,000,000
Number
Coconut oil •••
268,800,000
Pound
215,329,072
Cordage •••••••
6,000,000
Pound
2,945,216
Tobacco •••••••
3,900,000
Pound
1,846,250
Gross
158,318
2,637,512
-2-
Commodity
··
·
,..., 1'-,
C:o"O!j
Period and Quantity
of : Imports as of
···· Unit
Quantity ·
·• May 1, 1965
Absolute Quotas:
Butter substitutes containing over 45% of butterfat,
and butter oil •••••••••••
Calendar year
Fibers of cotton processed
but not spun •••••••••••••
12 mos. from
Sept. 11, 1964
Peanuts, shelled or not
shelled, blanched, or
otherwise prepared or
preserved (except peanut
butter) ••••••••••••••••••
F-44
1,200,000
Pound
1,000
Pound
12 mos. from
August 1, 1964 1,709,000
Pound
Quota filled
Quota filled
733!
I
I
TREASURY DEPARTMENT
Washington
IMMIDIATE RELEASE
WEDNESDAY, MAY 12, 1965
F-44
The Bureau of Customs announced today preliminary figures on imports for consumption of the following commodities from the beginning of the respective quota
periods through May 1, 1965:
Commodity
···
Period and Quantity
:Unit of : Imports as of
:Quantity: May 1, 1965
Tariff-Rate Quotas:
Cream, fresh or sour ••••••••
Calendar year
1,500,000 Gallon
456,799
Whole Milk, fresh, or sour ••
Calendar year
3,000,000 Gallon
16
Cattle, 700 Ibs. or more each Apr. 1, 1965
(other than dairy cows) ••• June )0, 1965
120,000 Head
3,684
Cattle, less than 200 Ibs.
each ••••••••••••••••••••••
12 mos. from
April 1, 1965
200,000 Head
17,786
Fish, fresh or frozen, filleted, etc., cod, haddock,
hake, pollock, cusk, and
rosefish ••••••••••••••••••
Calendar year
24,383,589 Pound
12,025,07aY
funa Fish •••••••••••••••••••
Calendar year
66,059,400 Pound
9,599,442
White or Irish potatoes:
Certified seed ••••••••••••
Other •••••••••••••••••••••
12 mos. from 114,000,000 Pound
Sept. 15, 1964 45,000,000 Pound
Quota filled
Quota filled
Knives, forks, and spoons
with stainless steel
handles •••••••••••••••••••
Nov. 1, 1964 Oct. 31, 1965
Quota filled
V
69,000,000 Pieces
Imports for consumption at the quota rate are limited to 12,191,794 pounds
during the first 6 months of the calendar year.
TREASURY DEP AR'lMElJT
Washington
IMMEDIATS
RELEA~E
WEDNESDAY, MAY 12, 1965
F-44
The Bureau of Customs announced today preliminary figures on imports for consumption of the following commodities from the beginning of the respective quota
periods through May 1, 1965:
Commodity
Period and Quantity
:Unit of : Imports as of
:Quantity: May 1, 1965
Tariff-Rate Quotas:
Cream, fresh or sour ••••••••
Calendar year
1,500,000 Gallon
456,799
Whole Milk, fresh, or sour ••
Calendar year
3,000,000 Gallon
16
Cattle, 700 lbs. or more each Apr. 1, 1965 (other than dairy cows) ••• June 30, 1965
120,000 Head.
3,684
Cattle, less than 200 lbs.
each ••••••••••••••••••••••
12 mos. from
April 1, 1965
200,000 Head
17,786
Fish, frHsh or frozen, filleted, etc., cod, haddock,
hake, pollock, cusk, and
rosefish ••••••••••••••••••
Calendar year
24,383,589 Pound
12,025,07~'
Tuna Fish •••••••••••••••••••
Calendar year
66,059,400 Pound
9,599,442
12 mos. from 114,000,000 Pound
Sept. 15, 1964 45,000,000 Pound
QUo ta filled
Quota filled
Nov. 1, 1964 Oct. 31, 1965
Quota filled
'~mi te
or Irish potatoes:
Certified seed ••••••••••••
Other •••••••••••••••••••••
Knives, forks, and spoons
with stainless steel
handles •••••••••••••••••••
11
69,000,000 Pieces
Imports for consumption at the quota rate are limited to 12,191,794 pounds
during the first 6 months of the calendar year.
-2-
Commodity
·•••
·
Period and Quantity
•
•• Unit of : Imports as of
•• Quantity • May I, 1965
·
··
Absolute Quotas:
Butter substitutes containing over 45% of butterfat,
and butter oil •••••••••••
Calendar year
Fibers of cotton processed
but not spun •••••••••••••
12 mos. from
Sept. 11, 1964
Peanuts, shelled or not
shelled, blanched, or
otherwise prepared or
preserved (except peanut
butter) ••••••••••••••••••
F-44
1,200,000
Pound
1,000
Pound
12 mos. from
August 1, 1964 1,709,000
Pound
Quo ta filled
Quo ta filled
733
--::;n
,~
-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
Total Imports
Sept. 20, 1964, to
May 10 1965
j
United Kingdom ••••••••••••
Canada ••••••••••••••••••••
France •••••••••••••.••••••
India and Pakistan ••••••••
Netherlands •••••••••
Switzerland........... ••
Belgium...
•••••
Japan. . . . . . • . • . • • .
.•
China •••••••••••••••••••
Egyp t. •
Cuba....
••••. ••••. •••
••
• •••••••••••••
Germany....
• •••••.•••.••
Italy.....
• ••••••••••••
Other, including the U. S.
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
11,713
239,393
25,425
-.
25,443
7,088
5,482,509
319,795
1,599,886
11 Included in total imports, column 20
Prepared in the Bureau of Customs.
v_I,
~
Established
33-1/3% of
Total Quota
1,441,152
75,807
43,264
22,747
14,796
12,853
-
Imports
Sept. 20, 1964,
to May 10, 1965
11
I
I
733(:
I
I
I
I
I
I
I
I
I
I
I
I
DfHFDIATE RELEASE
WEDNESDAY, MAY 12, 1965
F-45
Prel.i.minary' data on imports £or consumption o£ cotton and cotton waste chargeable to the quotas established b)r
Presidential Proclamation No. 2351 of September 5, 1939, as amended, and as modified bY' the Tariff Schedules of the
United States which became effective August 31, 1963.
(The country designations in this press release are those specified in the appendix to the Tariff Schedules of the
United States. There is no political connotation in the use of outmJded names.)
(in poums)
or harsh urlier
Countrz
or
Origin
Egypt and Sudan••••••••••••
Peru •••••••••••••••••••••••
India and Pakistan •••••••••
China ••••••••••••••••••••••
Mexico •••••••••••••••••••••
Brasil •••••••••••••••••••••
Union ot SoT.let
Socialist Republics ••••••
Argent~ •••••••••••••••••
Haiti ••••••••••••••••••••••
Ecuador ••••••••••••••••••••
!I
Y
Established Quota
783,816
2A7,952
2,003,483
1,370,791
8,883,259
618,723
Imports
Count" of Origin
':tIl."
Established Quota
Honduras ••••••••••••••••••••
68,899
Par~ ••••••••••••••••••••
2,701,763
475,l24
5,203
237
9,333
11
~I
9
Colombia ••••••••••••••••••••
Iraq ••••••••••••••••••••••••
British East Africa•••••••••
lD:lonesia and NetherlaD:is
New ~11nea ••••••••••••••••
British W. Indies •••••••••••
Biger.La •••••••••••••••••••••
Britiah 11. Africa. ••••••••••
other, 1ncJ!ld1ng the U.s ....
Except Barbados, Bermuda. Jamaica. Tr1n1dad, au:l Tobago.
Except Nigeria am Ghana.
.
Cotton 1-Usn or more
Established Yearly Quota - 45.656.420 Ibs.
Imports Augwst 1. 1964 - Nay 10, 196?
Staple Length
1-3/sn or more
1-5/32!' or mre and urlier
ife/81t (Tanguis)
1- an or mre and umer
1-3/an
Allocation
lJnDorts
39_590,Tl8
39,590,778
1,500,000
42,564
4,565,642
2,608,137
752
871
124
195
2,240
71,388
21,321
5,m
16,004
T'P2rta
waah:1.ngt.on.
DMm.IATE RELEASE
D. C.
WEDNESDAY, MAY 12, 1965
F-45
(,l
r)
,n
Prel..1a1nary data on imports for consumption of cotton am cotton vaste chargeable to the quota establiShed b7
Presidential Proclamation No. 2351 of September 5, 1939, as amemed, alii as modified b,. the TarUr Schedules of the
United States which became effective August 31, 1963.
(The countl'7 designations in this press release are those specified in the apperxt ix to the Tariff Schedules of the
United States. There is no political connotation in the use of out.aN:led names.)
(in poUDis)
or harsh Ullier
Country of Origin
Egypt and Sudan ••••••••••••
Peru •••••••••••••••••••••••
India and Pakistan •••••••••
China ••••••••••••••••••••••
Mez1co •••••••••••••••••••••
Brasil •••••••••••••••••••••
UDion of Sorlet
Socialiat Republica ••••••
ArgeDt~ •••••••••••••••••
Haiti ••••••••••••••••••••••
Ecaadar ••••••••••••••••••••
Y.
Y
Established Quota
783,816
247,952
2,003,483
1,370,791
8,883,259
618,723
Country of Origin
Imports
~/J."
Established Quota
Honduras ••••••••••••••••••••
871
124
Par~ ••••••••••••••••••••
2,701,763
11
Colombia ••••••••••••••••••••
Iraq ••••••••••••••••••••••••
British East Africa•••••••••
Indonesia aDl NetherlaDls
Rev Q J1nea••••••••••••••••
British W. Indies •••••••••••
71,388
21,321
~I
g
B1ger.ia •••••••••••••••••••••
Britiab V. Af'rica. ••••••••••
16,OOIt.
475,124
5,203
237
9,333
Other,
1 nc:lpd1 ng
the U.s ....
PXcept Barbados, Bemuda. Jamaica. Tr1n1dad, aDi Tobago.
EJ[cept R!geria and Ghana.
Cotton 1-l/8tt or IIOre
Established IearlI Quota - 45.656.420 lbs.
Imports Auggt 1. 1964 - Hay 10, 196 5
Staple Length
1-3/8tt or IDDre
1-5/32" or IIIDre an::l umer
1-)/8" (Tanguis)
1-1/8" or mre aDi uDler
1-3/8tt
752
68,899
Allocation
39,590,778
Imports
39,590,778
1,500,000
42,564
4,565,642
2,608,137
195
2,240
5,m
TrMrta
-2-
COTI'ON 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 OTIlERWISE
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
United Kingdom ••••••••••••
Canada ••••••••••••••••••••
France ...•....•..•..•..•..
India and Pakistan ••••••••
~etherlands •••••••••••••••
Switzerland •••••••••••••••
Belgium.
• •••
Japan.........
.•
China...
•••••
• ••••
Eg)'p t. .
. ••••..••••••
Cuba............
• •••••
Germany_........
•.
Italy. . . . .
. .•...•.....••
Established
TOTAL QOOTA
Total Imports
Sept. 20, 1954, to
Established
33-1/3% of
Eay 10, 19_65 _ _ __:_ Total Quota
4,323,457
239,690
227,420
69,627
68,240
44,388
38,559
341,535
17,322
8,135
6,544
76,329
21,263
11,713
239,393
25,425
25,443
7,088
5,482,509
319,79.:'
1,599,886
L:3,264
-
1,441,152
75,807
22,747
14,796
12,853
Other, including the U. S.
~I
Included in total imports, column 2.
Erepared in the Bureau of Customs.
Imports
Sept. 20, 1964,
to I'lay 10, 1965
11
F-46
DAlfEDIA TE RELEASE
mDNESDAY, MAY 12,1965
PRELDltNARy DATA ON IMPORTS FOR CONSL'MPTI(\N OF tJN).fAN(JFACTURED LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISBE1>
BY PRESIDl.'NTIAL PROCLAMATION NO. 3257 OF SEPTEMBER 22. 1958, AS MODIJ'lED BY 'J'HE TARIIT SCHEDULES (\i' THE
uNITJilD STATES, WHICH BECAMI: EJTF,cTIVE AUGUST 31, 1963.
OUAR'l'ERLY QUOTA. PERIOD - April 1, 1965 - June
~o,
1965
IMPORTS - April 1, 1965 - MII,Y 7, 1965 (or os not.ed)
:I'rm 925.01Ccnmby
.t
Le"-bearl~
ProcluotiOJl
lQ:iii.nerly QUota
, Dltlable t;~~_!i_
.!.uatra11a
ores
anel ma teria1s
11,220,000
I
Umrrought lead aM
lead waste and. scrap
I
I
I
I
_l
ZiDe-beariug ores &Di
I
I
:I
materials
:
:
:
UDwrought z1D.o (exoept allCIYs
d zino and. zinc cllUt) uul
zinc waste aA4 sera,
I
:Qilii'terl,. QUota
Import.: Dnt1ablT b~~t i
11,220,0('0
ITEM 925.04-
ITEM 925.02-
ITD4 925.03-
Import.: Zinc Co~~~
Import.:
By We~: __ _,-1'
-
1i08~,51~
22,540,000
Belgll8 and.
~ {total}
Bolina
5,040,000
....
562,6,J2
CaDa4a
13,.04<40 ,000
....
12,4~lf312
15,920,000
",580,160
66,480,000
6/,48(;, >.'"C
Italy
36,880,000
l·,l~C,CC(
16,160,000
Peru
So. Africa
14,880,000
37,840,000
•••
12,880,000
6,560,000
77",68,}
0';
J
_
:
'.E: ',1;2
'''''''
,,,
70,480,000
:,; 1,6)15,2:,
6,320,000
....
;, :': 2,45;)
4,840,;35
35,1.20,000
1':, ;.';4, <'7
3.760,000
•••
3,l;J":,lOe
5,440,000
....
),141,612
14,8:JC,t'Ct·
yugoslana
All other
oountries (total)
•••
14/;;l2,~5u
Repub1io of the Congo
(formerly Belgian Congo)
.~.
7.520,000
3,600,000
lIenoo
_orb
:C&ii1"terI,. QDj'h.
:C1iirtiil,. G.UOti
....
"un. 775
-See Part 2, Appendix to Tariff Sohedules •
••Republic ot South Afrioa.
•• .. Imports as of ~~' lJ/ :965.
PREP.1R£D IN THE BUREAU OF CUSTCMS
15,760,000
•••
(',178,?55
6,080,000
•••
465
11,840,000
.. •• 12,782,256
6,080,000
6, (3(:, c·0l.
TREASURY DEPARTMENT
W... bugton, D. C.
F-46
:n&a:DIA TE I\ELEASJ:
WEDNESDAY, MAY 12,1965
PRELDIltNARY DATA ON IMPORTS FOR CONSL'MPTION 01' UNl4ANUFACTURED LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISHED
BY PRESIDENTIAL PROCLAMATION NO. 3257 OF SEPTEMBF.R 22, 1958, AS MODIFIED BY THE TARIIT SCHEDULES
'!'HE
l.JNITli.:D STATES, WHICH BI:CAMI: ETfJl',cTIVE AUGUST 31, 1963.
0"
OU.A.R'l'rnLY QUan PERIOD - April I, 196'1 - June ?O, 1'365
IMPORTS - ~l-ril 1, 19~~ - MI\Y 7, :96r< (Jr us rot,,")
ITW 925.01-
ITEM 925.04-
ITEM 925.02-
:rrEM 925.03I
I
Le&i-bear1~ oree
and DI& teriala
Ccnmtl'y
et
tJarrought lead aM.
lead W'U t. anei scrap
I
Pr04uetiOIl
.i.utralia
Zu.-beariDC oree ani
material.
I
1l,220,OOO
11,220,0('0
Canada
7,520,000
5,040,000
13,~,OOO
•••
••• 12,4 ~Jg)12
15,920,000
.. ,560,160
66,480,000
~:,4B(;, (·I.-l
37,840,000
3,600,000
36,880,000
Yerloo
16,l6Q,OOO
l' ,l!C,CC(
12,880,000
"1.6)15,2:~'
6,320,000
...
;,~.~2p4':"
4,841.-,5 3 5
35,120,000
L,C~4,(:'7
3,760,000
•••
),191,,,lO~
5....-.0,000
•••
),141,612
14,2 ;)(', eCG
Yugoalarla
.i.ll other
oountries (~otal)
6,560,000
...
3~1.J79,775
-S88 Part 2, Appendix to Tariff Sohedules •
•• Republic of South Afrioa.
···Imports &5 ot May lUg :96,.
PREP.A.RED IN 'lID.: B'JREAU
or
••• ::',]}o, )6~
70~,OOO
of the CoDCo
(formerly Be141an Congo)
lA,gao ,000
77,.,6 8 3
1?,1!5lJ
t~,;:,
~publ1o
• "'On. So. Ahioa
•••
562,6.12
Italy
Peru
tJarrougbt ziDo (exoept al101.
.f zino aDd zino eiust) aDd
ziu wute aM ....,
7,08~,51'
22,540,000
Be141.... aD4
La ...... , (~otal)
Bol1rla
I
I
.I
I
CUSTCMS
15,760,000
•••
(',l78,?,)5
6,080,000
• ••
46,
11,840,000 ••• 12,782,2,6
6,080,000
6, l'8C, l,Cl.
- 3 -
and exchange tenders will receive equal treatment.
Cash adjustments will be made
for differences between the par value of maturing bills accepted in exchange and
the issue price of the new bills.
The income derived from Treasury bills, whether interest or gain from the sale
or other disposition of the bills, does not have any exemption, as such, and 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 Cil:-cular No. 418 (current revision) and this notice, prescribe the tenms 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.
~;
v'
('. 0
'~
. .....,.
- 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 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 each issue
for $200,000 or less without stated price from anyone bidder will be accepted
1n 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
1965
---...;;...;...,;;~---
May 20,
---;'xtBJir==-i---
, in cash or other immediately available fUnds or in a like face
amount of Treasury bills maturing
May 20, 1965
------~~~===~----------
•
Cash
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
May 12, 1965
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 $
2'2~'000 ,
cash and in exchange for Treasury bills mat\lring
of $ 2 ,200. ,000
or thereabouts, for
May 20~5
, in the amount
, as follows:
91 -day bills (to ma.turity date) to be issued
~
May 20, 1965
--~~~~~----
in the amount of $ 1,20.0,000, or thereabouts, representing an additional amount of bills dated February 18, 1965
XS@t)5{
and to mature August
~1965 .
' originally issued in the
amount of $1,00.,000 , the additional and original bills
to be freely interchangeable.
182 -day bills, for $1,000_000 , or thereabouts, to be dated
~
.
May 20 1965
, and to mature November 18, 1965
~
~
The bills of both series will be issued on a discount basis under competitive
and noncompetitive bidding as hereinafter provided, and at maturity their face
amount, will be payable without interest.
They will be issued in bearer form 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, on~-thirty p.m., Eastern/~ time,
Monday, May 17, 1965
~
'!'enders 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
TREASURY DEPARTMENT
May 12, 1965
FOR Ir11'lED IA TE 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
~,200,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing May 20, 1965,
in the amount of
$ 2,200,894,000, as follows:
91day bills (to maturity date) to be issued May 20, 1965,
in the amount of $1,200,000,000, or thereabouts, representing an
additional amount of bills dated February 18,1965, and to
mature August 19,1965, originally issued in the amount of
$ 1,000,358,000,the additional and original bills to be freely
interchangeable.
182-day bills, for $ 1,000,000,000, or thereabouts, to be dated
May 20, 1965,
and to mature November 18, 1965.
The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be issued in bearer form only, and in denominations of $1,000,
$5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000
(maturity value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m.,
Eastern Daylight Saving
time, Monday, May 17, 1965.
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.
F-47
- 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 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 each issue 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
for the respective issues. Settlement for accepted tenders in
accordance with the hids must be made or completed at the Federal
Reserve Banks on May 20, 1965,
in cash or other immed iately
available funds or in a like iace amount of Treasury bills
maturing May 20, 1965.
Cash and exchange tenders will receive
equal treatment. Cash adjustments will be made for differences
be~een the par value of maturin~ bills accepted in exchange and
the iss u e p ric e 0 f the new b ill s .
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 from
any Federal Reserve Bank or Branch.
000
- 6 -
In the debt-management responsibilities of our Deparbnent,
in its constant vigil against the :Ln:roads of inflation, U. S.
Savings Bonds are a dynarnic detriment to the latter and a
mainstay of the former.
So, Mr. Neal, I congratulate you on
the good fortune of your Division in having such good men and
women in your corner.
Finally. I would say to all of you in behalf of Secretary
Fowler .- with a sizeable underscore of my own -- that our
Savings Ioftds program is bigger and better and conducts itself
with mo~e dignity and dete1:lUinatiQu be-cause of you.
000
- 5 -
because of TOur dedication to practical patriotism in your
daily lives.
You build the backdrop for the projections of
our program. you create the climate for its acceptance by
the opinion leaders of your respective states.
You pull the
8trinas of our marketing motivations.
Of course" our Payroll
~;av:tne:s
pro:;rar:l) ou:r advertising
and promotion, our marketing rescal:'ch, otu.;' unlimited banking
as.istance, our field organization -- all are available to you,
.. State Chairmen and J in truth, enable you to carry out a more
adrQit state activity.
But, you play the leading roles In om:
perfor.:nance and, to change the words of Shakespeare. Hithout
your enactment, ttthe play tJould not be the thinJlf •
(Mr. Barr may here wish to l'efer to deb';: m.:ma::;ernent
and other Treasury matters.)
• 4 ..
)loW.
w. are loold.ag to George Gallup and his Opinion
.....rch to sharpeD our knowledge
aDd
to guide our effort. in
the pr••iaion of .arketiag procedures.
aut,
we ,ert1cu!Arly want to cODIllend the ilSenior Partners ll
1a 0\11' marketing fi.m .- the State Chair.nen for U. S. Bavings
Bond' ... io whose
DoDGI"
we are hare convened.
voluat..r. have been with us for a
b~oad
Many of theae
brace of years.
Some
ue iab\led with tlwt apirit of the Minute Man, our traditional
'''''1; all o( you are still pioneers in your thinking and
,1...1.. with regard to added achievements for our program.
tUM ue not leadership missions which you have sottt;ht
for youa:eelve..
&atAer, the leadership missions have sought
you out, because of your standing in your' l:'cspectiv€ CODJIlH.;o.1itles;
your record.s of individual, business and
C.I.:V::"C acl'riev(i!'[;1ent
and
- 3 We &lao wat to .&lute Dr. Elmer W. Engstrom of i.CA. the
ClIaUaa of our IHuatrial Payroll Savings Conni ttee, who ia
II8ld.aa
08
current capa1an throughout indus try come alive with
reeord-breakiDI acoomp11abDents.
He is the personification of
"praotiea1 patriotia" whicb ia, of course. the theme that he
.... liveD to the 1965 drive for one .:1.111011 one huadred thousand
_
:I...... trl.al payroll aavers.
aurel,. we would fiad our efforts much less rewardina. 1f
we could
DOt
eouat oa reel Reppller aG hi.. Advertising Council
u 1t ap.... the ••• ag•• of Saviqa Bond values aeross the
,.... _d acs-OH the air laue of tll. priDt and broadc.at media
of the uti..
Dollar-wis•• we aust recognize the impr... ive
f1aun of better tlum$50 million ia space ad time QOlltributed
ttrroap that far-reaehing _deaver.
- 2 ..
to eoqr...i.onal hMriap vital to our international monetary
.1tuuon wbiola cI..-ad his presence throughout the day.
He
fully recognizes the
tt_rcbua iIaportece of your leadership as State Chairmen.
w.t-.iaute aft1fta tR Committee scbeduling dictated otherwise.
1 addr..... a bankers convention in New Orlean. last week
... I _
. .aur. )'Ou that bankers are pmverful people wherever
you f1ad
t...
IbAiy are great workers in behalf Qf our Savings
lind
,rogr_.
IGIM
of the real leadera of the American Bankers Association to
1
an happy to find myself in the good cODlpany of
. . I OOIlV., tlle respeots of the Treasury for outstanding jobs
~f eloae cooperation and understanding support throughout the
,.18'.
i.eJ» Odlill, &ria Kryzsko. Paul Collins, Joe Jones and
tMir. oapable crew u. bellwethers of our p:cograu.
l'·e would
rlli.ter far less than Significant success 't',ithout their hands
•
tIM ti....ot:t:le of our oromotive power.
l~
?IJ-'_''tf'..z~
I
I~':ll"
'-v.
f .'
("'1
S!1!I'QlPJ)
I ' ..
[)
RDWU<S FOR THE HONORABLE JOSEPH ~'J. BARR
UNDER SECRETARY OF THE TREASURY
IIJOI,lIA%IOJIAL CONlEIlENCE OF U. S. SAVINGS BOND
VOLUNTEER STATE CHAIRMEN
THE WASIUNGTON HILTON HOTEL, WASHINGTON, D. C.
WEDNESDAY, MAY 12. 1965
I-~ ~
[:t
C'
~/t,~·1
"f'
'/!,.,
Mr. Chairman, Distinguished Guests, Ladies and Gentlemen
_. Ruurously and most recently, I have enjoyed the happy
occa.ion of productive experiences ltlhich reflect the stature
aDd .trength of the field organization of the Savings Bonds
Divi8ion.
Wherever you work with them -- whatever the occasion
•• no matter the demands -- you can count on their judgement and
ability to come up with profitable results.
the firat factor in our success story of
$48~
That is, I'm sure,
billion outstanding
in I and H Savings Bonds.
So, I p.y tribute to the Savings Bond field force today,
II
Secretary Fowler would have me do and as I know he would
WID.t to
do, personally. were it possible for him to be here.
You iaow. of course, that he is deprived of the privilege, due
TREASURY DEPARTMENT
Washington
FOR RELEASE:
UPON DELIVERY
REMARKS BY THE HONORABLE JOSEPH W. BARR
UNDER SECRETARY OF THE TREASURY
BEFORE
NATIONAL CONFERENCE OF U. S. SAVINGS BOND
VOLUNTEER STATE CHAIRMEN
THE WASHINGTON HILTON HOTEL, WASHINGTON, D. C.
WEDNESDAY, MAY 12, 1965, 12:00 NOON, EDT.
Mr. Chairman, Distinguished Guests, Ladies and Gentlemen
Numerously and most recently, I have enjoyed the happy
occasion of productive experiences which reflect the stature
and strength of the field organization of the Savings Bonds
Division. Wherever you work with them -- whatever the occasion
-- no matter the demands -- you can count on their judgement and
ability to come up with profitable results. That is, I'm sure,
the first factor in our success story of $48~ billion outstanding
in E and H Savings Bonds.
So, I pay tribute to the Savings Bond field force today,
as Secretary Fowler would have me do and as I know he would want
to do, personally, were it possible for him to be here. You
know, of course, that he is deprived of the privilege, due to
Congressional hearings vital to our international monetary
situation which demand his presence throughout the day. He had
planned ahead to be with you, for he fully recognizes the
tremendous importance of your leadership as State Chairmen.
Last-minute shifts in Committee scheduling dictated otherwise.
I addressed a bankers convention in New Orleans last week
and I can assure you that bankers are powerful people wherever
you find them. They are great workers in behalf of our Savings
Bond program. I am happy to find myself in the good company of
some of the real leaders of the American Bankers Association to
whom I convey the respects of the Treasury for outstanding jobs
of close cooperation and understanding support throughout the
years. Reno Odlin, Kris Kryzsko, Paul Collins, Joe Jones and
their capable crew are bellwethers of our program. We would
register far less than significant success without their hands
at the throttle of our promotive power.
F-48
- 2 -
We also want to salute Dr. Elmer W. Engstrom of RCA, the
Chairman of our Industrial Payroll Savings Committee, who is
making our current campaign throughout industry come alive with
record-breaking accomplishments. He is the personification of
"practical patriotism" which is, of course, the theme that he
has given to the 1965 drive for one million one hundred thousand
new industrial payroll savers.
Surely we would find our efforts much less rewarding, if
we could not count on Ted Repplier and his Advertising Council
as it spreads the messages of Savings Bond values across the
pages and across the air lanes of the print and broadcast media
of the nation. Dollar-wise, we must recognize the impressive
figure of better than $50 million in space and time contributed
through that far-reaching endeavor.
Now, we are looking to George Gallup and his Opinion
Research to sharpen our knowledge and to guide our efforts in
the precision of marketing procedures.
But, we particularly want to commend the "Senior Partners"
in our marketing firm -- the State Chairmen for U. S. Savings
Bonds -- in whose honor we are here convened. Many of these
volunteers have been with us for a broad brace of years. Some
have but recently become members of our team. But, all of you
are imbued with the spirit of the Minute Man, our traditional
symbol; all of you are still pioneers in your thinking and
planning with regard to added achievements for our program.
These are not leadership missions which you have sought
for yourselves. Rather, the leadership missions have sought you
out, because of your standing in your respective communities;
your records of individual, business and civic achievement and
because of your dedication to practical patriotism in your
daily lives. You build the backdrop for the projections of our
program; you create the climate for its acceptance b~ the
opinion leaders of your respective states. You pull the strings
of our marketing motivations.
Of course, our Payroll Savings program, our advertising and
promotion, our marketing research, our unlimited banking
assistance, our field organization -- all are available to you,
as State Chairmen and, in truth, enable you to carry out a more
- 3 -
adroit state activity. But, you play the leading roles in our
performance and, to change the words of Shakespeare, without
your enac tment, "the play would not be the thing".
In the debt-management responsibilities of our Department,
in its constant vigil against the inroads of inflation,
U. S. Savings Bonds are a dynamic detriment to the latter and a
mainstay of the former. So, Mr. Neal, I congratulate you on the
good fortune of your Division in having such good men and women
in your corner.
Finally, I would say to all of you in behalf of Secretary
Fowler -- with a sizeable underscore of my own -- that our
Savings Bonds program is bigger and better and conducts itself
with more dignity and determination hecause of you.
000
3C.'")"'.1
STATEMENT OF THE HCNORABLE HmRY H. FOWLER
SECREl'ARY OF THE TREASURY
BEFORE THE
SUBCCMMrrTEE CN EXEC11l'IVE REORGANIZATION
rn GOVERNMEm' OPERATIONS
rn REORGANIZATIOO PLAN NO. 1 OF 1965
OF THE SENATE CCJAMl'l'TEE
PROVIDING FOR REORGANIZATION IN THE BUREAU OF CUSTCMS
OF THE DEPARTMENT OF THE TREASURY
10:00 A. M. MAY 12, 1965
Mr. Chairman and Members of the Committee:
Introduction
I welcome this opportunity to appear before your Committee in
support of Reorganization Plan No. 1 of 1965 providing for reorgani3ation in the Bureau of Customs.
This Plan is an essential element
in the general program now under way for the modernization and
improvement of the 175-year old Bureau of Customs and of the administration of its functions.
As the President said in his message transmitting the Plan to
the Congress:
"All that we do to serve the people of this land must
be done, as has been my insistent pledge, with the least cost and
the most effectiveness."
We cannot afford organizational arrangements such as those in
the Bureau of Customs vmich have become obsolete and do not meet
effectively the requirements of our times.
We need a Government
structure which is modern, streamlined, and capable of meeting
current requirements with maximum efficiency and minimum costs.
We believe that the proposed Reorganization Plan and the
administrative reorganization which it will facilitate are responsive
to the purposes of Congress as set forth in the Reorganization Act.
F-49
- 2 -
We particularly cite for your attention the follovdng purposes as
set forth in the Reorganization Act:
"(1) to promote the better execution of the laViS, the more
effective management of the executive branch of the Government and
of its agencies and functions, and the expeditious administration
of the public business;
"(2) to reduce expenditures and promote economy, to the fUllest
extent consistent with the efficient operation of the Government;
"(3) to increase the efficiency of the operations of the Govern-
ment to the fullest extent practicable. Jt
If Reorganization Plan No. 1 is permitted to become effective,
all Bureau of Customs officials and employees will henceforth be
appointed under the Civil Service laws.
It will allow the Bureau to
administer the Customs laws more effectively and swiftly and pave the
way for an administrative reshaping of the Customs organizational
structure and some legislative modification that will permit annual
savings to the taxpayer of some $9 million -- more than 10 percent
of the Bureau1s annual budget.
and
The importing, exporting, traveling
tax paying public is entitled to be served by the most efficient,
effective, and economical Customs organization we can devise.
Background of Proposal
When
my
distinguished predecessor, Secretary Dillon, appeared
before the House Appropriations Corranittee three months ago, he stated:·
- :3 "It is wy judgment that, except for the special case of the Secret
3ervice, the Bureau of Customs is far and
av~y
the most seriously
Ul1derstaffecl of any bureau in Treasury."
Formal merchandise entries filed increased more than 5 percent
last fiscal year and are
y'car 19()5.
cantinuin~
their steady
clL~b
in fiscal
More thaD 174 million people entere(l t>ur country in
fiscal year 1964, most of them as passengers on ncarly 51 million
:1~ito:Tlobiles,
vessels, aircraft or other carriers.
It now appears
that by 1'066 these numbers vr111 approximate 188 r::illion pcople and
~:'
:;,illiO!1 carriers.
course, it is generated from sources eYltirej,Y outside :)f.'
3.j::, o~
cor.trol.
:eJ
The :;ro\'rth of Customs' work seems never-end in:: ,
11: the past ten years therE' has been
i.rpcr!,('(~
ll':erchandise and
3. 5()
8,
Ol1r
70 percent inc"Y'case
percent. incre['.ne in internn.tio!lal
t :''lvel.
Increase.:;:in Customs personnel durinc tr,e corresponding
;~c:riod
to ha..'1dle this tremendously increaseri f'LOVl of bllsines::; have
heen less than 9 percent.
It is acainst this backr:-roUl1d that Secretary !)illon called two
~Tea r~~
a[;o for a thorough-coing evaluation of the T:lission, organization
3.Ill: E,al13.2eT:lent of the Bureau of Customs.
c~rrieci
The Survey Group which
out this study issued a 642-pac;e report, a copy of which has
becE sent to each of the members of this Committee.
- 4 status of Survey Group Report Recommendations
The Survey Group report contains 230 recommendations for an
overall Customs modernization program.
Only five of these 230
recommendations deal directly with changes that would be accomplished
by
Reorganization Plan No.1.
This
Pla~upon
becoming effective,
would place the Custans Service on a career basis.
I emphasize this, Mr. Chairman, because there is apparently
considerable confusion on this point.
Your Committee is not being
requested either to approve or disapprove, directly or indirectly,
any of the recommendations of the Survey Group Report.
The only
question before this Committee is the action to be taken on
S. Res. 102 expressing the disfavor of the Senate with respect to
the President's Reorganization Plan No. 1 of 1965.
Plan No. 1
proposes the elimination of 53 Bureau of Customs positions now
filled by Presidential appointment.
That is its only purpose.
I hope, Mr. Chaiman, that this Corrnnittee will recommend that the
Senate oppose S. Res. 102.
I have been struck by the fact that since March 25 when the
President transmitted Reorganization Plan No. 1 of 1965 to the
Congress, most of the comments which have been received, relate
not to Plan No. 1 now under consideration by Congress, but rather
to certain recommendations of the Survey Group report.
Desiring
on one ground or another to oppose one or more of the recommendations
in the Survey Group report, sane persons have taken the position that,
- 5 in the absence of a Treasury commitment not to implement a
particular recommendation to which they take
exce~tion,
they vall
oppose r:eorganization Plan No. 1 of 1965.
I hope this Committee \rill, in its report, do everythinG it
can to discourage this tendency, Mr. Chairman.
Here is vmere we stand on the 230 recommendations.
5 relate directly tc the Reorganization Plan now before you.
52, mainly dealine with headquarters operation in Washington,
have been adopted.
These have been r,on-controversial, and they
already show promise of improved operations.
31 are dependent on legislation.
They
canno~
therefore, be
adopted unless this be the will of Congress.
The remaininE:' 142 are recommendations that can be put into
effect by administrative action.
Some of these furnish a potential
area of controversy.
With respect to these 142 recommendations I assure this Conunittee
that none will be acted upon until interested parties have had a
full opportunity to express their opinions and until these opinions
have been given full, open-minded, consideration in the Department
of the Treasury.
I shall have more to say on this subject later.
DescriDtion of Present custcms Orr:anization
The basic structure of the Bureau of Customs has changed little
since its creation in 1789.
Its present organizational fabric reflects
1..:j lar~e part hictorical circumstances rather than sound concepts of
- 6 modern management of Federal establishments.
As new territories
0pened and trade patterns evolved, ConGress established many
collection districts vlith a view to meeting irmnec1iate needs.
Thus,
the erovrth of the Custans Service took place vii thout particular
relatia.'1 to overall organization and management requirenents.
As I said earlier, we have 53 positions to which appointments
are required to be made by the President
con.sent of the Senate.
kno~'ffi
b~r
and with the advice and
Sorr..e incumbents of these offices have been
to take the view that they are responsible to one person, and
one only"namely the President of the United States.
im~ossible
It is obviously
to TW1 an organization properly if the situation is such
that a senior official can feel that he does not have a responsibility
to the head of the organization, in this case the Commissioner of
Customs.
Nor is this the only difficulty.
The
l1t[L.'"1
to whom 45 of the
Presidential appointees who are Collectors of Customs areorganizationally required to report, is himself an appointee of the Secretary
of the Treasury.
Though the Commissioner has the superior responsibility,
the Collectors have the superior status.
It is as though generals were
required to report to a colonel.
The present organizational arrangement creates problems even
when the Presidential appointees choose, as moot do, to cooperate with
the Cormnissioner.
Forty-five Presidentially appointed Collectors of
- 7 Customs report to the Commissioner.
In addition, eight other
CtlStornS officials, two in the field and six in Waahinrton, report
to the Commissioner.
r~vernment
Get-up.
Certainly no national
bu~iness
and few national
organizations that I know of have any remotely
sllr.i~ar
The general rule I in business and in Government alike, is
to limit strictly the number of persons who report to anyone top
official.
All of us have fram t:iJne to time seen this rille broken;
'::e know harried executives with lines of vice presicients and special
1.~:·istants
tf~t
tryine; to eet the final Vloro fram the boso.
But 53 to 1
is beyond the realm of effective supervision and management.
With the present field structure it is impossible to exclude
sit,mtions where a Collector in one port rules one way in a civen
circ\.U!1Stance, v/hereas a Collector in another port rules differently
on an identical set of facts.
~~n(l
The overworked Conunissioner ('of r;ustorns
his :otaff find it impossible to provide to the Collectors the
type of guidance required to eliminate such inconsistencies.
Persons dealing vdth Customs have a right to expect substantially
equal treatment.
Back in the last century, when conun\ll1ications were far different
fron what they are today, it \ll1doubtedly made sense to appoint to
~ustams
field posts persons who had considerable independent
political authority.
It
v~s
not possible at that time to maintain
constant touch with Washington by telephone I teletype I overnight
r:!8.i1 service and frequent face to face meetings.
- 8 -
However, the role of the persons in charf,e of the Customs field
offices is quite different today from what it Vias then.
Novl what is
needed are individuals who can combine several qualifications in one.
First, and foremost, our field office chiefs must be knowlede;eable
i'Titn respect to the intricacies and technicalities of Customs
administrntion.
They must ulso be skilled Dl
tion and management.
sense in dealing
vnth
administra-
Finally, they );lust ha'TC i:ooJ p'Jblic relations
local problems.
The more successful of the political
ap~ointees
Service possess sane of these skills, but not
qualifications.
~overnment
Ti1:l11y
in the Customs
have all three
The first two, particularly, are gained primarily
through experience.
It is illlderstandable tnat persons vrho are
appointed to statutory four-year terms cannot become Customs experts
in that tiTtle.
OUr Customs career officials are, Generally speakine,
people who entered the Service at the bottoT'l of the ladder, and who
have by dint of hard vrork and attention to t}leir jobs, Gone up the
ladder.
The Collectors, Appraisers and other Customs field office heads
are constantly called upon to hand dovm decisions and rulings based
on eeneral quidance provided by the Bureau of Customs fran Washington.
Because of the many technicalities in the Customs field, we have
found it necessary to back up the political appointees with an
assistant
VIDO
possesses the general technical backsround in Customs
- 9 -
administration which the
expected to have.
~ornal
political
ap~ointee
cannot be
These assistants, generally speaking, are
senior people in the Customs Service who are in a position to act
for and on behalf of the political appointees whenever this becanes
necessary.
This is obviously
~~steful
duplication.
Reorganization Plan No, 1
Reorganization Plan Ho.
~,
upon becoming effective, would
eliminate this duplication by putting
t~e
Customs Service on a
career basis, and all Bureau officials and employees would henceforth
be appointed under the Civil Service laws.
About $1 million will
be saved annually by abolition of the political appointee positions.
I trust you VillI acree with President Johnson, who gave the
subject painstaking consideration before transmitting his message to
the Congress, that the proposal is essential to good Government
administration and economy.
Modernization of Custans Service
Quite obviously, in addition to the simple proposition conta:ined
in Reorganization Plan No.1, there is more that should be done in
cOIUlection with modernization and improvement of the Customs Service.
Same improvements will require legislation, which will be submitted
to Congress for its approval at a later date.
other improvements
can be accomplisbed by a':1..'"::i.."'1istration action.
In this category, one
of the most sisnificant is a proposal to regionalize the custans
Service.
- 10 -
A regionalized organization would permit the Bureau of Customs
to realign and consolidate 113 independent field activities
presently reporting directly to washington.
In its press release
of March 22 the Treasury announced its intention to establish six
regional Customs offices supervising approximately 25 district
offices.
At the headquarters level, four new offices have already
been established to replace seven divisions.
Further, a new
position of Special Assistant to the Camnissioner would be created
and charged with responsibility for insuring that all Customs
employees conduct themselves in strict compliance with all applicable
laws and regulations.
By virtue of existing authority, the Secretary of the Treasury
is empovrered to establish the Customs regional and district offices
and the new headquarters offices.
Complaints Received
The testimony before the House Subcommittee on Executive and
Legislative Reorganization indicated same strong dissents from
certain aspects of this proposed regionalized organization, particularly the location of same of the contemplated regional headquarters
sites.
There Vias also some criticism of other recammendations in the
Survey Group report.
As you lmow, Mr. Chairman, when I assumed my present post,
Secretar,y Dillon had already announced his intention to establish
- 11 -
a regional Customs organization, and he had further
alU1UWICt'.j
headquarters sites for six proposed Customs regions.
1,/1('
In view of
this and in light of the information presented to the Treasury sine'£'
that time, I think it would be helpful to describe the procedure I
plan to follow in proceeding Vii th the broad program of Custom[:
modernization.
Reyiew of Tentatiye Decisions on Regions and Regional
Headguarte~
With respect to the establishment of a regional Custom.::;
orEanization, I have asked that a further
r:t'~r1y
l"le
TTl~"P ~~
tf'l whp+."~~
the six regions and the headquarters offices originally armouncea
the Treasury Department are the number and locations best
11°'
l'
i '~11f
to meet the actual needs of shippers, importers and others in the
most efficient marmer.
I wish to emphasize that, pending canpleti()l1
of that study, no specific number of regions or ree;ional headquartE":
locations will be finally approved.
Meanwhile I have designated
Assistant Secretary Reed, who has supervisory responsibility for
the Bureau of Customs, to receive any additional information and
views which may be submitted concerning the regions and regional
headquarters sites.
Before a final decision is reached, I shall,
0f
course, review the matter \vith Mr. Reed.
Review of Recommendations for Administrative Action
With respect to the other recommendations for administrative
action contained in the Survey Group report,
and these, as I have
alreac.iy :pointed out, car,prise ti:.e ,::reat bulk of such reoommendations the
follovrin~
procedure vdll be adopted.
- 12 -
The Acting Commissioner of Customs has established a coordinating
committee to consider these recommendations thoroughly.
Persons
desiring to express their views should submit them to the Commissioner
of Custans for consideration by his coordinating committee and by
him.
Where there is controversy concerning recommendations requiring
implementation by administrative action, the Commissioner of Customs
has been instructed to submit his considered views to Assistant
Secretary Reed.
\'fuere substantial controversy still persists
following Mr. Reed's review, I shall myself make the final review.
Proposed Regionalization Program
To understand the degree to which regionalization would simplify
the management and administration of the Customs Service, it is
necessary to compare the proposed program vdth the present Customs
organization.
The 113 independent field activities currently in
operation break dovm as follows:
25 major collection districts,
22 smaller collection districts, 42 appraisement districts, 7 enforcement regions, 7 comptroller districts, 9 laboratory districts, and
the Customs Information Ex:change in NeVI York City.
A regional organization of the Customs Service VTould make
possible a net reduction of more than fifty principal field offices,
by concentrating administrative and supervisory responsibilities in
fe'~r
officials in charge of regional and district activities.
These
moves Vlould enable the Burea'J. of Customs to cut costs, elirflinate nuci1
- 13 duplication of effort and strengthen the supervision of its
~
acti vi ties 1 while at the same time mainta:in:ing all essential
services in a more integrated organization.
For example I separate
collector and appraiser offices at each location would be combined
in a single o:'fice 1 but both services would continue to be provided.
The proposed schedule provides for initiating the regionalizatic
pro Grarr. vrith establishment of the first region in September 1965.
The final region would be created in the late spring or summer of
1966.
This S!hedule Vlould allow time for evaluation of the experience·
gained
in the first region before the remainder of the regions are
created.
In selecting regional headquarters locations the TreasuryCustoms officials concerned weighed a variety of factors: for
example, the geographic location of the proposed headquarters withm
the region; convenience of transportation facilities from the headquarters to the various Customs offices within the region; comrrnmica-:
tions facilities in the port contemplated as the headquarters
locatic~
concentrations of existing Customs persoIU1el and installations withil\
the region; the volume, types and complexity of importations handled
by the port under consideration as a headquarters site; the extent
to ,thich selection of a particular port Vlould necessitate relocations
of persormel and facilities; the availability of office space in the
proposed regional headquarters location; and \7hether the problems
ha~dlea
at the proposed location are fairly representative of
encounterec at other ports in the region.
th~e
- 14 A regionalized Customs Service ,'[auld be able to take 1'<..:11
advantage of modern management concepts r.rithout, hovlcver, losinC
the benefits gained frar: the existing orientation
offices to local problems.
C;A
:~11stOJ.,['
fiel-a
For example, some ac©inistrative matters,
such as those involvine budGet, audit, space and personnel, and
others involving operations such as accounting, drawback and liquidation of change entries Vlould be handled on a consolidated basis at a
regional level.
At the same time it vlould be plarmed to mainta:L"'1 at
the district level, and at the larger ports VIi thin a c] ist!'ict, a
sufficient number of vrell trained, knowledgeable ernployees to
resolve problems relative to liquidation of all entries, L"'1cluding
drawback, submitted by importers, and to ansvler questions relating
thereto.
Thus the establishment of a refional oreanization would
not result in any reduction of services now provided to shippers,
importers and travelers at the district port offices.
The bulk of decisions
noVi
made locally by Customs officials
Vlould continue to be made locally in a regionalized organization.
I wish to emphasize this point because I consider it most important.
Local Customs officials vrould continue to make the broad range of
decisions essential for providilg efficient and effective service to
the pUblic.
The major difference '(meier a ref,ionalizeu orcaniz3.tion v.'ould
take place with respect to those decisio!1s \'111ich at present a!'e :lOt,
,
,
::'2~
-
~
- l5 and cannot, be made locally because of the intricate technical or
policy questions that are involved.
Under
existin~
procedure
questions such as these arc referred to the Bureau in Washington
for decision.
Because of the tremendous floVl of requests from the
113 separate field activities to the Bureau for decisions, rulines
and interpretations, such requests cannot be handled as efficiently
or expeditiously as VIe v/ould like and as the public has a right to
expect.
Under a regionalized CUstoms Service questions such as these
Vlould, where necessary, be referred by the District Directors to
the Regional Cormnissioner for decision.
Since the latter Vlould,
by the nature of his responsibilities, be oriented to the particular
problems of his region and at the same tir.le would be familiar with
the policies of the Bureau and the Treasury Department, all but the
most intricate and difficult questions would be resolved at the
regional level.
Problems requiring personal attention of Bureau
officials in Washington could then be handled more expeditiously
than under the current procedures, since the WashinGton officials
wuilii no longer be flooded with requests fran numerous independent
field activities allover the lJnited States.
We intend to dele,::ate ir:':portant authOrity fron \'w'ashington to
the regional level.
appeals
take:c'~
to
This ':lould reduce sicnificantly the numher of
':iashin,~on
and the time presently required 1..11 the
- 16 in the decisiCll-rnaking process.
All should benefit fran this -
local Customs officials, the importing public and the harassed
Bureau officials in washington.
Mr. Chairman, attached to my statement is a detailed analysis
of the ldnds of decisions that we contemplate would be made at the
regional, district, and port offices when the proposed program of
Custans modernization has been completed.
This is extremely
important, because a key objective of regianalization would be
to achieve faster action taken closer to the ports where problems
arise.
Attainment of this objective is possible only i f there is
clear-cut delegation from Washington to the regions.
The analysis
in the attached statement sets forth the types of delegation we have
in mind.
Appointments to Key Positions
In his announcement of Reorganization Plan No. 1 the President
stressed that the 52 persons then holding Presidential appointments
in the Custans field organization would be given consideration for
suitable employment in the Customs Service under the Civil Service
laws in any position for which they may be qualified.
The abolition of the offices held by political appointees would
occur on a time-phased basis and would take place as the new regions
are established.
The following steps are envisaged in the program
presently under review:
-17 The~e
'l"/ould be a. number of senior positions in the regionalized
Customs Service.
It is contemplated that in each of the regional
offices there would be a Regional Commissioner of Customs assisted
by a ReGional Counsel and not more than four Assistant Regional
Comnissioners, each of \',hom ·would be in charge of one of the major
segments of Customs activity.
These officials would have
overall supervisory responsibility in the districts eanprtsing
their regions.
At each of the new district headquarters there would be a
District Director responsible not only for the functions of the
present Collectors, but for those of the Appraisers of Merchandise
as well.
At other important ports not administratively designated as
district headquarters, there would be Port Directors, who, like the
District Directors, Vlould be responsible for both collecticn and
appraisement functions at their ports.
Savings to be Achieved
The application of modern management concepts to the Customs
Service vrould bring about SUbstantial savings for the taxpayer ylhich
in a few years Vlould total approximately $9 million annually -- more
than 10 percent of the present annual budget of the Bureau of customs.
These savings are broken dm'm in a memorand1.lr;1 v!hich
this stateII'.ent.
is attached to
'.','ith your gemission, therefore, Mr. Chairman, I shall no1
read it in detail.
I have been assured that these savings figures
re"r')resent conservative est:ir.ates.
- 18 I do not mean to imply that these savings will effect a $9
million reduction in Customs appropriations.
The constant rise
in the flow of Customs business makes this impossible.
What I have
in mind is rather that the increased costs of handling a steadily
growing volume of Customs activity would be reduced in future years
to the extent of $9 million annually.
Effect of Modernization Program Upon Employees and General Public
There are certain additioml observations that I should like
to make, Mr. Chairman.
Although the modernization program I have described would,
of necessity, involve sane internal realignment and might in sane
cases necessitate retraining of personnel, I do not anticipate any
losses in grade, or abolishing of positions other than those of the
Presidential appointees.
In view of Customs' constantly increasing
workload 1 there would not be an overall reduction in employment.
There is nothing in the modernization program which would affect
\
the basic compensation or right to payment for overtime services
any Custans employee.
or
No action will be taken by the Department in
this regard without full consul taticm with the recognized employee
organizations.
Involuntary transfers Vlould be rare.
any at all.
Indeed we do not expect
If necessary, involuntary transfers would be carried
out vdth minimum inconvenience to the employees concerned.
':'2 (j
- 19 -
The Regional Coomissioners' offices would be staffed from
present Customs personnel to the extent possible.
As the President has already stated in his transmittal
message, the modernization measures which are to be put into effect
will in no way prejudice any rieht of any person affect.ed by t.h0
laws administered by the Bureau of Customs.
To emphasize that this
will be so, the follovr.i.ng section has been inC'orporateri iJlt.n
Reorganization Plan No.1:
"Preservation of Remedies.--Tbe abolition of
()ffiC'('~
herein shall not prejudice any right to protest or to appeal
to the United States Custcrns Court any action taken in t.h0
administration of the Customs laws."
FUrther, all essential services to the importing, exportine,
and traveling public vrill continue to be performed.
Indeed, after
the initial shake-doval period, I look to a significant improvement
in Customs service to the pUblic.
Conclusion
Mr. Chairman, in order to effect a proper reorganization of
the Customs Service, the President requires the authority of
Reorganization Plan No. 1 to eliminate the office::> of the Presidential
appointees.
I strongly urge that he be given that authority and that
the Confress alloy: ::1eors-anizution Plan No. l of 1965 to became effective.
I have outlined to you this mOrning, which the Secretary of the
- 20 -
Treasury already has authority to put into effect, I promise that
before action is taken, interested persons vdll have a full opportunity
to make their views knovm, and we shall hear them with an open mind.
Thank you, Mr.
Chaiman.
......~j.V I
TREASURY DEPARrMENT
Delegation of Functions
Tl'.is is :in three parts.
Part I outlines the many functions which under the program for
re:..:ionalization Vlould be deleGated from WashinGton doy.rn to the recionn.l
headquarters.
Part II outlines the feV! housekeeping functions vThich Ull(ler this prosra
vlOuld be transferreci froo tile port or liistrict :Level ill2. to the regional
h0.a(iquarte:!.~s •
Part III outlines the functions (those not included in Part II)
\'iDich V/oulc! continue to be performed at the port or district level.
Part I (the liGt here civen of functions and activities v/hich are
CODG idered for tranGfer from ','iashinGton to reGional offices) contains n.
nW'-l'er vlhicl"l can directly concern individuals and corporations financially,
uG.f.1ple[J are items 2 (tariff classification), 3 (vessel measurer.lent), 4
(~)ellalties), 11 (questions a:-J to overtllle laws etc.), 12 (cartaGe contracts)
2.!t (disposition of :nerchandise), 21 (procurement contracts), 23 (space and
reI. to..i.), 2.!t (property manaGement). Others concern employees - eX8.f.1ples
3.rc ::; (liours of service), 13 (time and leave questi r )1S), 15 (~iisposition of
clalJ:,s), l. ') (3.uthori ty to appoint certifyinG officers), 27 (position c:J..n.ssii'icntion), ]0 (disciplinary actions).
The ,lescriptions Ci ven indicate the extent of the particular dele~ation"
are envisa::,ed. Item 2 is, it is clear, a narrOVl deleeation, due to
the nature of the particular subject matter where unity of interpretation is
c~:::;entia1.
IteJIE 14, 15, 24, 27, anc:i. 30 are I-~enerally described in terms
inCiicatin;; that "Jr.ost" decisions would be made at the regional level. This
ncans that the most intricate and difficult cases only would GO to V/ashineton
Other dele(~ations are described without limitation, nnd it is expected these
would without exception be finally decided at the regional level.
;'i1llCll
Part II ShO\'lS housekeeping and administrative activities nov:
pe:rforrned at the district level "'hich 'Would, instead, be transferred
to t>e re ~ional offices. '.Vi th respect to liquidation of chanee and
:h'G.~·:back entries explanation is eiven of the reasons for the chanGe,
as well as an outline of the plan to maintain employees at the district
2.e'.'cl to rccolve problen.s presented by importers.
The e~~tent of the list of functions under Part III cives assurance
. th<l t the establishment of regional offices would not result in reduction
of servicec now provided to shippers, importers, and travelers at the
district ar.d port offices and it gives exrunples, in this connection, of
the functio:1S which would thus remain at these offices.
TJ:fr.:AoUJ:d:
uL.I:"JUi.'.1.'Ml!;l'1'.1.
Bureau of Customs
Functions and Activities Considered for Transfer to Proposed Offices From the Central Office
There follows a list of same of the activities and functions now performed at the Bureau headquarters which it
These matters are under continuing study and no
firm commitment can be made at this time to implement all of these transfers, nor is this intended to exclude
other transfers of functions which study may prove to be desira~.
is contemplated would be transferred to the regional level.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _, -_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ c _ _ • _ __
Item
Remarks
1.
Complete control of the operations of bonded warehouses aDd foreign trade zones.
2.
General decision-making authority on questions
I 2.
relative to tariff classification of imported merchandise which will commit the Bureau to classify
imported articles in particular cl~ssification
categories whenever the Bureau has already issued
a precedent for such classification.
3.
Control of vessel measurement operations to avoid
duplication of effort when sister ships are being
built in different districts, and dissemination
of information as to tonnages of vessels admeasured.
4.
Delegate to Regional Commissioners certain of the
authority presently delegated to the Commissioner
of Customs relating to penalties not exceeding
$25,000.
4.
This would Bubstantially reduce the number of requests for decisions now being received at the
Bureau headquarters.
Generally, the Commissioner's authority to decide
penalty matters is limited to cases involving less
than $100,000 except for a number of clearly defined
types of cases for which he has complete authority.
Additional delegation to Regional Commissioners would
provide more expeditious treatment of penalties. A
study is presently being made as to the type of cases
that would be delegated to Regional Commissioners.
1')
5.
Hours
6.
o~
Service.
5.
Authority to establish ~r change hours of service at
ports of entry would be delegated by the Bureau to the
Regional levels relieving the Bureau of a function
that can better be handled at or near the locations
when changes in hours of service are proposed.
Liaison Inspections.
6.
Systematic evaluations of field operations would be
provided by liaison officers at the Regional levels.
Bureau liaison inspections for the most part would
be restricted to the more complex problems and inspections cutting across Regional lines.
7.
Responsibility for budgetary functions including
responsibility and authority to transfer funds
between financial plans in the region.
7.
A single allotment would be made to each regional
office. This would place total financial responsibility in the region and permit greater flexibility
and maximum utilization of available funds. It
would also reduce the workload burden at the Washington
level by decreasing from 47 to 6 the number of offices
supervised.
8.
Field-level management analysis studies of planning, staffing, organizational, and procedural
matters.
8.
This effort would support the Bureau-wide management
analysis program. The regional sta~f would identify
new or emerging problems peculiar to the region and
bring these matters to attention with recommendations
for solution.
9.
Maintenance of detailed general ledger accounts.
9.
Because of wide dispersal and inadequate staffing
general ledger accounts are not now maintaJned in the
field offices. The maintenance of these accounts at
regional level would substantially reduce the detailed
accounting at the Washington level.
10. Summary collection and appropriation accounts.
~~.
Questions from ~porters and the public pertaining
to the various overtiJlle laws and 1'1 seal. procedural.
. terse
10. The Bureau headquarters would receive a consolidated
collection and a consolidated appropriation account
from each region rather than from 47 separate offices.
l~.
It would no longer be necessary to forward to Washington
most questions or this nature.
or cartage contracts.
l2.
~pp~oval
13·
l'::.me and leave questions now submitted to the
B'..u-ea'.l headquarters.
14.
u1spos:tion o~ unclaimed, abandoned, and seized
merchandise.
15·
Disposition of Claims (overtime claims filed by I
employees, death claims filed by survivors, etc.)
16.
Issuance of Travel Authority in Regions.
17.
Authority to make cash advances for changemaking purposes.
16.
Authority to establish imprest funds for small
purchases.
19.
Authority to appoint certifying officers in the
regions.
20.
:Cispcsal of fiscal records.
21.
~~tters
22.
Utilization of surplus and exess
23.
Procurement of space and rentals - including
regional negotiations with the General Services
Administration.
pertaining to procurement contracts.
I 14.
15.
I 16.
Most cases would be closed at regional level.
Most claims would be settled at regional level
without referral to Washington.
Now performed in Bureau except for travel entirely
within a collection district.
20.
Subject to standard disposal instructions.
21.
Subject to established contract appeal procedures.
23.
Regional offices would establish long-range plans
for replacing furniture and equipment, which plans
would be consolidated into an overall plan by the
Bureau. At present each district has primary responsibility for space and facilities in his jurisdiction. The division of responsibilities in the
Bureau does not provide a centralized authority for
facilities management and planning.
property.
f;.-
24.
Not including final decisions on such matters
selection of sites for Customs houses.
Position Classit'i.cation.
2'"(.
Probably some upper-grade limit would Le fixed and,
likely, key positions would be excepted from thir
delegation.
28.
He13ional training progrrun.
28.
This would be largely a new respons~"bl i ty ruther
than a transfer of a function from the Bureau headquarters. It would improve the efficiency of the
field service.
2').
HeCr"cli tment. selection, in-service placement, and
promotion at all levels except executive and midde
management positions.
30.
Authority to take disciplinary actions.
30.
This would reduce the number of cases coming to
Washington but would not diminish right to appeal
to higher authority.
31.
Authority to grant recognition to employee organi- 131.
zations under Executive Order 10988, except exclusive recognition.
24.
Decisions pertaining to property mana,n;ement.
25.
Control and use of Government vehjcles, including
regional negotiations concerning General Services
AdministratIon motor pools, etc.
2u.
Procurement and use of Customs Seals.
2'( .
Appellant procedures to remain unchanged.
RS
w
w
r\..)
The~~ follows a list of some of the activities and fun~~ions presently performed at the district level which i t
is contemplated would be transferred to the proposed regional offices. For the most part, these are housekeeping
and administrative tasks which could be performed more uniformly and more economically at regional offices. Consolidation of these services would permit the establishment and full utilization of an adequate administrative
staff. Also, relieved o~ these service-type ~unctions, district personnel could devote ~ e~fort to the day-today operational problems at the various ports and stations. This concentration o~ attention on operational matters
would result in ~aster and better service to importers, exporters, and the traveling public.
Item
Remarks
1.
Liquidation of change and Drawback Entries (see
remarks for variance from recommendation).
2.
Personnel work now being performed at the district 12.
level.
Normal personnel management responsibilities would continue to be performed at the district and port levels.
3.
Fiscal - Most of the work now being performed at
13.
the district level, except collecting, classifying
by account number, and depositing payments received
(cashier functions).
This contemplates that when fully implemented the
Bureau headquarters of~ice would concentrate on developing plans, poliCies, and procedures for overall
financial management operations; most of the detailed
fiscal and accounting work would be performed at the
regional level; and the district office would be free
to give full attention to better serving shippers.
importers, and travellers.
11.
This function could be performed most efficiently in
centralized offices where adequate training could be
given, the flow of work would permit full manpower
utilization, optimum supervisor-employee ratios could
be maintained, and the quality of the work better controlled. However, it is planned to maintain at the
district level and at the larger ports within a district a sufficient number o~ well-trained knowledgeable
employees to resolve problems relative to liquidation
of all entries including drawback submitted by importers
and answer questions relating thereto. This liquidation assistance service to importers at the district
level was not a part of the recommendation of the Study
Group.
0'-
With the establishment of regional offices and the trru!~fer of the functions listed above certain basic oUucctives of good organization, not now possible to achieve, could be obtained. Among these are: (1) a realiBt~c
span of control at Bureau, Regional, and District level, (2) unity and uniformity of c~~d not possible w~th
the present fragmentation of authority, and (3) a larger portion of the direction and authority over functioGs
and activities of tce Burea1l of Customs lodged outside Washington and nearer the operating level.
'lbe establishment of regional offices would not result in any reduction of services now provided to shippers.
importer5. and travelers at the district and port offices. Relieved of most administrative duties, local
officers would be better able to cope with da,:r-to-day operating problems. All of the normal customs functLOT:S
would remain at the district and port offices. These functions would include, but not necessar il~i ~e limited
to, the f)llowing:
Direc t alllll inistrati ve supervision.
Accep t:ll'.'-' ': of all types of customs entries ~overing mercha.1d';'se for ccnR lJ'nptLCI:, wr..reh:>'.lse, tempora:-,: :mpo:'tu.tion, exh~::>ition. transportation under bond, etc.
of variOUS types of bon-is rel6.t.ive to prodt;,cticn of missirl€:
exportat:.on of merchandise, payment of amount.s due, etc.
Acceptanc~
d.)C·Olen~~"
redeliver:; of mercnan:iise,
F'urnishilg lnformntioIl in per::;on, by telephone and by mai:. concerning a:l t:rpes of importations such as t:lOse
covering quota merchandise, narcot.i..:!s, gold, arms and ammunition, etc.
Examination and anpra.isement of merchandise.
Inspection and rE.:lease of imported cargo.
Clearing passengers arriving by all types of carriers.
Discharee, examination and delivery of passenger~ baggage.
Registration of foreign articles taken out of the United States.
Acceptance of estimated duties and/or taxes paid at the time of entry.
{
Acceptance of additional amounts found to be due upon liquidation.
--'
(.,.)
Acceptance of protests to classification decisions.
Acceptance of appeals to reappraisements.
Acceptance of drawback c1aims.
-
W
-.J
BoaruLng of vessels and other carriers.
~'ntrance
and clearance of' vessels and aircraf't in international trade.
Assessment of' tonnage taxes.
Issuance of permits to lade and unlade.
Acceptance and approval of requests for overtime services.
Assignment of personnel as needed.
Admeasurement of vessels.
Marine documentaticn.
Renewal of licenses, change of masters, recording bills of sale, preferred mortgages, etc.
Authenticating, verifying, and filing shippers export declarations.
Examination and inspection of export shipments.
Direct supervision and control of merchandise in bonded warehouses.
Direct supervision of operations of Foreign Trade Zones.
Enforcement and investigative functions.
Port patrol functions.
Maintenance of records of liquidated entries.
Consultations with importers with a view to answering questions and resolving problems relative to liquidation
of import and drawback entries.
Organization and administration of customs sales of unclaimed, abandoned, and seized merchandise.
CD
TREASURY DEPARTMENT
Bureau of Customs
STATEMENT OF PROBABLE SAVINGS
Resulting from the Reorganization of the Bureau of Customs
The application of modem management concepts to the Customs Service
will brinq about substantial savings for the taxpayer which in a few years will
total approximately $9 million onnually, more than 10 percent of the present
an!1ual budget of the Bureau of Customs. These savings are broken down as follows:
$1,248,000
Economies dependent on abolition of offices of 53
Presidential appointee positions.
$2,135,000* -
Economies dependent on new legislation authorizing a
number of techni ca I innovations which would permit
savings here and there without sacrificing the basic
objectives of the tariff act
0
For example, it is estimated
that $200,000 would be saved if the value limitation for
formal entries were changed from the present ceiling of
$250 to $500. This change would permit importers to file
informal entries rather than formal customs entries in more
than 200,000 instances each year. The unit cost to process
an informal entry is at least 1 dollar less than the unit cost
of processi ng a forma I entry.
*
This is the estimate made by the Survey Group on the basis
of fiscal 1964 figures. Use of fiscal 1966 figures would
increase it to $2,385,000.
2
$1,600,000
Economies resulting from the transfer from the distri ct
level to the six regional offices, of responsibility for
activities such as administering change entry liquidations,
drawback claims and fiscal operations. This saving would be
realized from better manpower utilization. Centralization of
the liquidating and fiscal operations would make possible a
more favorable ratio of supervisory personnel to worki ng
employees than can be achieved in many small offices. For
example: We would establish a ratio of 1 supervisor for each
12 Customs liquidator positions, in lieu of our present
nationwide ratio of 1 to 3 9 positions. Also, in the larger
0
offices it would be possible for liquidation and fiscal employees
to specialize or concentrate on fewer phases of these complicated
tasks, much as merchandise examiners now do in our larger
appraisement offices. This eventually would increase production
by at least 20 percent.
$1,661,00011- -
Economies resulting from the substitution of appropriate spot
checks for the present policy of 100 percent examination of
passenger baggage. I should point out that this particular
saving would accrue to the benefit of the Department of
* This
is the estimate made by the Survey Group on the basis
of fiscal 1964 figures. Use of fiscal 1966 figures would
increase it to $2,000,000.
- ,-') ...
,
3
Agriculture rather than the Treasury budget since that
Deportment reimburses Treasury on the theory that Customs
controls provide an important safeguard against the importation of dangerous plant pests into the United States.
At the present time it is often a practical impossibility,
particularly during peak workload periods, to open every bag
arriving with the millions of passengers. Eliminating the
emphasis on examining all baggage would permit the concentration of attention on the belongings of would-be
smugglers. The objective wi" be a generally accepted
program of voluntary compliance by the traveling public,
combi ned wi th an effecti ve enforcement program.
I might also add that substitution of spot checks for the present
100 percent baggage examination poli cy would be instituted
only after full advance consultation with the Department of
Agriculture.
$1,000,000
Economies resulti ng from development on a port-to-port basis
of more efficient staffing patterns. This contemplates a
careful appraisal of the conditior.s at each port of entry after
which work measurement standards would be developed and
applied. The estimate of savings assumes a 5 percent incre05e
4
in the effectiveness of the Customs inspection activity,
which presently costs approximately $20,000,000 annually.
$3,400,000
Economies resulting from various other administrative actions
intended to streamline Customs procedures. Illustrative of
what we have in mind under this category, it is estimated
that $160,000 would be saved if the value requirement for
reporting initial shipments to the Customs Information Exchange
were raised from $250 to at least $500. Another $300,000
could be saved by integrating collection and appraisement
activities relating to the determination of rates of duty on,
and value of, importso This combination of activities would
eliminate the need for Customs liquidators to classify
merchandise previously advisorily classified by Customs
appraisers. It is estimated that 24 man-years of liqui dating
time plus additional administrative and clerical time would
be saved by this concentration of activities o
In addition, under the proposed organization it would be
possible to combine many of the present entry division functions
with the classification and value activities o These functions
would then operate jointly with the appraisement procedures.
This combination would make possible optimum supervisory and
5
staffing ratios, eliminate duplication of effort, and result
in an estimated saving of $250,000.
The above savi ngs wou Id tota I approx i mate Iy $ 11 ,000,000. From thi 5, however,
it would be necessary to subtract about $2 million for new staffing requirements of the
Customs modernization program. This will leave an ultimate net annual saving of
approximately $9 million o
TREASURY DEPARTMENT
May 13, 1965
FOR IMMEDIATE RELEASE
TREASURY DECISION ON BICYCLES
UNDER THE ANTIDUMPING ACT
The Treasury Department has completed the investigation
with respect to the possible dumping of bicycles from Poland.
A notice of intent to close this case with a determination that
this merchandise is not being, nor likely to be, sold at less
than fair value will be published in an early issue of the Federal Register.
Appraisement of the above-described merchandise from Poland
is not being withheld at this time.
The dollar value of imports of the involved merchandise received during the year 1964 was approximately $67,000.
TREASURY DEPARTMENT
May 13, 1965
FOR IMMEDIATE RELEASE
TREASURY DECISION ON BICYCLES
UNDER THE ANTIDUMPING ACT
The Treasury Department has completed the investigation
with respect to the possible dumping of bicycles from Poland.
A notice of intent to close this case with a determination that
this merchandise is not being, nor likely to be, sold at less
than fair value will be published in an early issue of the Federal Register.
Appraisement of the above-described merchandise from Poland
is not being withheld at this time.
The dollar value of imports of the involved merchandise received during the year 1964 was approximately $67,000.
4
Our balance of payments deficit did not develop overnight and we don't expect to be. able to solve it overnight.
We have made substantial progress during the last few
years.
We expect to make more progress in the immediate
future.
Despite the rough sledding that we are sure
to encounter, I have every confidence that the United
States has the will and ability to reduce and eventually
eliminate its payments' deficit and I intend to see that
every effort is made to achieve that goal just as soon as
possible.
###
3
We expect that the voluntary program will continue to
be effective, but let me caution you vigorously against
interpreting these results as indicating that the battle
has been won.
We must avoid undue optimism that can arise from
reports that do not take into account all the factors
affecting the balance of our international payments.
The voluntary program, which is of the utmost importance,
nevertheless concerns only certain specified transactions
on which business firms were asked to report.
It does
not take into account other highly important factors
affecting the balance of our payments, such as imports
and tourist expenditures, or even military expenditures
abroad during 1965.
Even when all factors are considered, we must avoid
undue optimism based upon no more than one or two favorable
quar~~rs.
purchases from the United States --- purchases which
represent more than half of our gold loss so far this
year.
But, as I have said before, we can certainly
expect significant gold losses so long as our balance of
payments stays in deficit.
Thanks in part to the PresidentVs program to reduce
capital outflows through the voluntary cooperation of the
banking and business community, the deficit in our international payments was cut substantially durin1the first
quarter of this year.
We will show a surplus in March and
hopefully also in April.
Details will be issued by the
Commerce Department shortly, but I can say that the first
,
quarter of this year will show a seasonally adjusted deficit
of somewhat over $750 million on regular types of transactions.
This is just about one-half the deficit in the fourth
quarter of last year.
REMARKS BY THE HONORABLE HENRY H. FOWLER,
SECRETARY OF THE TREASURY, AT A
NEWS CONFERENCE AT 2 P.M., EDT,
THURSDAY, MAY 13, 1965
The weekly gold figures which the New York Federal
Reserve Bank will announce later this afternoon show a
$60 million reduction in the Treasury gold stock, bringing
the gold loss this year to $1.035 billion.
The most important single reason our gold outflow
this year has been high is precisely because it was so
low last year -- $125 million -- despite the fact that
our balance of payments deficit ran over $ 3 billion.
Much of the gold loss so far in' 1965,
therefore~
represents conversions of dollars accumulated by foreigners
last year.
Another factor, only partly
related~
is the
decision by the French Government to make substantial gold
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE
REMARKS BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
AT A NEWS CONFERENCE
THURSDAY, MAY 13, 1965, 2:00 P.M. ,EDT.
The weekly gold figures which the New York Federal
Reserve Bank will announce later this afternoon show a $60
million reduction in the Treasury gold stock, bringing the
gold loss this year to $1.035 billion.
The most important single reason our gold outflow this
year has been high is precisely because it was so low last year
$125 million -- despite the fact that our balance of payments
deficit ran over $3 billion.
Much of the gold loss so far in 1965, therefore, represents
conversions of dollars accumulated by foreigners last year.
Another factor, only partly related, is the decision by the
French Government to make substantial gold purchases from the
United States -- purchases which represent more than half of
our gold loss so far this year. But, as I have said before, we
can certainly expect significant gold losses so long as our
balance of payments stays in deficit.
Thanks in part to the President's program to reduce capital
outflows through the voluntary cooperation of the banking and
business community, the deficit in our international payments
was cut substantially during the first quarter of this year.
We will show a surplus in March and hopefully also in April.
Details will be issued by the Commerce Department shortly, but
I can say that the first quarter of this year will shaw a
seasonally adjusted deficit of somewhat over $750 million on
regular types of transactions. This is just about one-half the
deficit in the fourth quarter of last year.
We expect that the voluntary program will continue to be
effective, but let me caution you vigorously against interpreting
these results as indicating that the battle has been won.
F-50
- 2 -
We must avoid undue optimism that can arise from reports
that do not take into account all the factors affecting the
balance of our international payments. The voluntary program,
which is of the utmost importance, nevertheless concerns only
certain specified transactions on which business firms were
asked to report. It does not take into account other highly important
factors affecting the balance of our payments, such as imports and
tourist expenditures, or even military expenditures abroad during
1965.
Even when all factors are considered, we must avoid undue
optimism based upon no more than one or two favorable quarters.
Our balance of payments deficit did not develop overnight and we don't expect to be able to solve it overnight.
We have made substantial progress during the last few years.
We expect to make more progress in the immediate future.
Despite the rough sledding that we are sure to encounter, I
have every confidence that the United States has the will and
ability to reduce and eventually eliminate its payments deficit
and I intend to see that every effort is made to achieve that
goal just as soon as possible.
000
TREASURY DEPARTMENT
May 13, 1965
FOR IMMEDIATE RELEASE
TREASURY DECISION ON TITANIUM DIOXIDE
UNDER THE ANTIDUMPING ACT
The Treasury Department has completed the investigation
with respect to the possible dumping of titanium dioxide, pigment grade, from France.
A notice of a tentative determination
that this merchandise is not being, nor likely to be, sold at less
than fair value will be published in an early issue of the Federal
Register.
Appraisement of the above-described merchandise from France
is not being withheld at this time.
The dollar value of imports of the involved merchandise received during the period July 1964 through January 1965 was apprOximately $1,500,000.
TREASURY DEPARTMENT
May 13, 1965
FOR IMMEDIATE RELEASE
TREASURY DECISION ON TITANIUM DIOXIDE
UNDER THE ANTIDUMPING ACT
The Treasury Department has completed the investigation
with respect to the possible dumping of titanium dioxide, pigment grade, from France.
A notice of a tentative determination
that this merchandise is not being, nor likely to be, sold at less
than fair value will be published in an early issue of the Federal
Register.
Appraisement of the above-described merchandise from France
is not being withheld at this time.
The dollar value of imports of the involved merchandise received during the period July 1964 through January 1965 was approximately $1,500,000.
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
May 13, 1965
SUBSCRIPrION FIGURm FOR CURRENT EXCHANGE OFFERING
The results of the Treasury's current exchange offering of
4~ notes dated February 15, 1962, maturing August 15, 1966, and
4-1/4~ bonds dated May 15, 1964, maturing
issues with interest from May 15, 1965,
M8y
15, 1974, both
are summarized in the following tables.
For Cash Red!!Rtf
Issues Eligible
for Exchange
Amount
Eligible
for Exchange
Exchanged For
4-1/41'
411
Total
Amount
Notes
Bonds
(Amounts in millions)
4-5/~ Notes, A-1965
3- 7/ f11, Notes, C-1965
$1,816
6,620
$
Total
$8,436
$5,904
796
5,108
Exchan~es
~
I
standing 11
$1,530
6,434
$286
186
15.7
2.8
11
$2,060
$7,964
$472
5.6
11
for 4~ Notes of Series A-1966
4-5/£Jt, Notes
Series A-1965
3-7/fJ1, Notes
Series C-.l963
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
$ 22,337,000
$
TOTAL
F-Sl
Total
Out-
733
1,327
$
Federal Reserve
District
456,804,000
14,783,000
36,939,000
13,078,000
23,899,000
100,172,000
21,882,000
19,720,000
46 ,195,000
4,441,041,000
23,771,000
68,473,000
37,669,000
56,557,000
180,859,000
65,918,000
39.067,000
,t;S'J
,', " .;.:; ~ , \ iOO
12,056,000
1-'-,"±.:...J,vvu
AI,....- ",...,""
35,552,000
34,562,000
Cr.,398,OOO
lei, 726,000
$796,382,000
$5,107,698,000
.. .'-, "
J of
'-~l
(OVER)
Total
68,532,
4,897,845,
38,SM,
105,412,
50,747,
80,456,
281,O:n,
87,800,
58,787,
59,193,
$
46,618,
101,950,'
Z7,~
$5,904,080
-2-
Exchanges for 4-1!4! Bonds of 1974
leral Reserve
Itrict
Iton
, York
:ladelphi a
~veland
moM
Lanta
lcago
lDu1s
aneapol1s
lIBI City
Uas
Francisco
~aBury
TOTAL
4-5!~ Notes
Series A-1965
3-7!~ Notes
Series C-1965
$ 52,798,000
$
376,753,000
7,766,000
26,970,000
8,637,000
19,907,000
88,257,000
14,706,000
13,485,000
22,359,000
11,722,000
88,389,000
1,747,000
31,378,000
825,417,000
15,493,000
62,137,000
7,077,000
21,833,000
154,153,000
24,770,000
20,352,000
12,338,000
14,978,000
113,112,000
23,687,000
$733,496,000
$1,326,725,000
Total
$
84,176,000
1,202,170,000
23,259,000
89,107,000
15,714,000
41,740,000
242,410,000
39,476,000
33,837,000
34,697,000
26,700,000
201,501,000
25,434,000
$2,060,221,000
TREASURY DEPARTMENT
:
FOR REL.;:ASE A.M. NE~SPAPERS,
Tuesday, May 18, 1965.
May 17, 1965
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
Tlie Treasury Department announced last evening tha.t the tenders for two seriea 01
Treasury bills, one series to be an additional issue of the bills dated February 18,
1965, and the other series to be dated May 20, 1965, which were offered on May 12, lit
opened a.t the Federal Reserve Banks on May 17. Tenders were invited for $1,200,000,(
or thereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 182-day bit
The details of the two series are as follows:
RANGE OF
ACCEPT~D
COMPETITIVE BIDS:
High
Low
Average
91-day Treasury bills
maturing August 19, 1965
l82-day Treasury bUls
ma.turing November 18, 196$
Approx. Equ.r
Price
Annual Rate I
98.003
3.950.& ~
97.998
3.96a,l
98 .000
3. 955% !i
19 percent of the amount of 91-day bills bid for at the low price was accepted
16 percent of the amount of 182-day bills bid for at the low price was accepted
TOTAL TENDERS APPLI~D FOR AND ACCEPTED BY FfDERAL RESERVE DISTRICTS:
District
Accepted
Applied For
~pp1_ied For
Boston
$ 14,495,000
$
24,495,000
6,704,000
New York
1,332,590,000
786,510,000
1,424,666,000
Philadelphia
28,280,000
16,280,000
11,877,000
Cleveland
22,602,000
22,602,000
34,731,000
.Richmond
1l,272,OOO
11,272,000
3,534,000
Atlanta
34,622,000
32 ,622,000
26,798,000
Chicago
305,668,000
159,668,000
354,359,000
St. Louis
32,960,000
25,988,000
11,740,000
Minneapolis
18,390,000
18,309,000
7,726,000
Kansas City
24,417,000
23,607,000
19,842,000
Dallas
20,895,000
13,085,000
12,551,000
San Francisco
26.,28.000
16 1 168.000
122,51&.3, 000
TOTALS
$1,952,419,000 $1,200,606,000 !/ $2,041,
000
on,
Accepted
$
6,620,00
155,484,00
3,877,00
24,731,00
3,534,00
10,794,00
91,713,00
9,022,00
3,974,00
1),02),00
5,951,00
13.1,3. 00
$1,001,846,00
a/ Include. $237,4L2,OOO noncompetitive tenders accepted at the average price of 99.0l!
0'/ Includes $102,986,000 noncompetitive tenders accepted at the average price of 98.00(
On a coupon issue of the same length and for the same amount invested" the return OJ
these bills would provide yields of 3.99%, for the 91-day bills, and 4.09%, 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 t~
the amount invested and their length in actual number of da.ys related to a 36o-day
year. In contrast, yields on certificates, notes, and bonds are computed in terat
of interest on the amount invested, and relate the number of days remai ning ill an
interest payment period to the actual number of days in the period, with semi~
compounding if more than one coupon period is involved.
Y
F-52
TECHNICAL BACKGROUND SHEET ON
THE SILVER DOLLAR
The silver dollar was established by the Mint Act of
April 2, 1792. The coin in use now is the one first authorized by
tpe Act of January 18, 1837, fixing the pure silver content at
90 per cent of its total weight, the remainder being copper. The
coin weighs 412.5 grains, which is .8594 of a troy ounce and
.9429 of the avoirdupois, ounce. The troy ounce is approximately
a tenth greater than the avoirdupois ounce.
Before 1837 a slightly heavier coin (416 grains) was used.
But from its first minting in 1794 the United States silver dollar
has contained, and continues to contain, the same amount of
silver -- slightly more than 77 and a third hundredths (.77343)
of a troy ounce. At the current price for silver of one dollar
and 29 and a quarter cents ($1.29292), the silver dollar is worth
exactly $1.
The new silver dollar issue will be a further coinage of
the "Peace" dollar. Some 190 million of these dollars were
minted in 1921-1928 and 1934-1935. Since then there has been no
new minting of them. Current coinage law require~ that all
United States coins now being minted be dated 1964, the date the
new silver dollar will bear.
The Peace dollar commemorates the declaration of peace among
the United States, Germany and Austria following the end of
World War I. One side shows a female head, with a tiara of light
rays. This side bears across the top the inscription Liberty and,
in the lower half, In God We Trust, and date. The other side sh~s
an eagle perched on a mountain top, holding an olive branch in its
talons, the light rays of a new dawn rising from below. Across
the top are the inscriptions, United States of America and
E Pluribus Unum. In the lower half are the words One Dollar, and,
at the bottom, the word Peace.
The new silver dollars are being made with $600,000 included
in the Mint's expenditure authority for Fiscal Year 1965. This
expires on June 30. Production of the new dollars will be on a
24 hour a day basis, so that as many as possible can be made before
the end of June. The $600,000 covers manufacturing costs only,
and does not include the cost of the silver or the copper content
of the coins.
- 2 -
Since coinage of silver dollars began in 1794, 855,611,127
standard silver dollars have been made. This excludes
35,965,924 "trade dollars" of 420 grains, minted during the
l870s for use abroad, chiefly in the Orient.
The Treasury has a stock of some 3 million silver dollars,
left when the Treasury ceased on March 25, 1964 to redeem silver
certificates in silver dollars. Most of these pieces have
special numismatic value, and no equitable way has been found
for distributing them. For this reason, their release would not
add to the silver dollars in circulation, because they would be
taken up by coin dealers and collectors.
The Treasury now redeems silver certificates in silver
bullion, at the San Francisco Assay Office and at the New York
Assay Office, at the price of $1.292929292 per ounce of silver.
May, 1965
000
TREASURY DEPARIMENT
WASHING'roN
FOR RELEASE ON DELIVERY
BY THE HONORABLE FREDERICK L. mxING,
UNDER SECRETARY OF THE TREASURY FOR MONErARY AFFAIRS,
AT THE FORrY-THIRD ANNUAL MEE:rING
OF THE BANKERS ASSOCIATION FOR FOREIGN TRADE
AT 'lHE FRENCH LICK-SHERATON HOTEL, FRENCH LICK, INDIANA
ON TUESDAY, MAY 18, 1965, AT 9: 30 AM (cm)
REWJU(S
THE UNITED STATES BALANCE OF PAYMENTS -- PROBLEM AND PROGRAM
The United States balance of international payments, except for
one year, has been in deficit since 1949.
In tenns of the "balance on
regular transactions" which we currently use in our official
~ents
statistics, and which I use throughout this talk, the cumulative d.etic1t
was almost $35 billion.
We bad seven consecutive years of deficit fram 1950 through 1956,
one year of surplus in 1957, and then seven more consecutive years ot
defici t.
What I hope to demonstrate in this talk is that the first
seven years of deficit constituted no great problem but that the deficits
of the last seven years have been a major problem and that the form ot
the problem and its seriousness has shi:rted appreciably during that period.
I also hope to show you that the corrective program has shi:rted in keeping
'Wi th the shifts in fonn and scope of the problem and that there i& good
prospect that ve are on the way to a solution of it.
To help accanplish my Pl rpose, I first want to sketch briefly the
history of the U. S. payments position during the entire post-World War II
period.
F-53
This, I hope, v1ll give the picture both perspective and d1mena1on.
- 2 In the first four post-war years, 1946 through 1949, our payments
balance registered fairly large surpluses, totalling about $7 billion
and averaging about $1-3/4 billion per year.
;l:n the light of the acute
reconstruction needs and the badly depleted gold and foreign exchange
reserves of the war-torn countries, both of which were only partially
ameliorated by the very substantial economic assistance we were extending
to these countries, U. S. surpluses of this size represented a relatively
severe strain on the payments and reserve positions of our trading partners.
More than half of our $7 billion cumulative payments surplus for those
years 'Was settled in gold, and, during the period, our gold stock rose
by $4.5 billion and amounted, at the close of 1949, to $24.6 billion.
Beginning in 1950 and for a seven-year period through 1956, we ran
deficits at a rate averaging $1..5 billion per year.
Compared with our
cumulative deficit of $10.7 billion for the period, the decline in our
gold stock was relatively small, only $2.5 billion.
These U.
s.
payments deficits and gold losses were considered both
moderate in size and not a cause for concern because of the general
circumstances of the world's international payments situation during
that period.
Most other countries' gold and foreign exchange reserves,
as I have said, had been badly depleted.
What was perhaps the most
important difference from our present day situation, virtually all of
those countries wanted to have earning assets in their reserves and,
thus I could be regarded as more than willing holders ot such dollars as
- 3 might accrue to them from our payments deficits.
During that seven-year
period, foreign dollar holdings virtually doubled to over $1.6 billion.
The year of the Suez crisiS, 1951, brought a small surplus again
in our foreign payments -- our first and only such surplus since
1949.
The amount was $500 million, and it was accOOlpanied by a gold gain ot
:;Boo million.
This brought our gold stock, at the close ot the year, to
$22.9 billion, which represented a net decline of only $1.8 billion ~
the earlier peak and was almost $3 billion more than we had as ot the
close of World War II.
In 1958, we resumed our international payments deficit position but
With profOund change in both 8cape and circumstance. The annual deficit.
in the three years, 1958 through 1960, were not only much larger than bad
been the case in the early 1950's but they presented a new and difficult
financing problem.
Over these three years, the cumulative deficit was
$ll.6 billion, or almost $3.9 billion average per year, and our gold 10S8
totalled more than $5 billion.
The major industrial countries of the world, particularly those in
Western Europe, by 1958 had made great gains in general economic and
financial strength, due in substantial measure to our economic aid.
Tbey
had largely reached the stage of currency convertibility and, by their
own standards, had reasonably adequate levels ot official dollar reaenes.
Thus, they wanted, and took, more gold to finance their surpluses.
- 4But not only bad Western Europe grown relatively stronger in
economic
te~s,
the inflationary pressures of the early 1950's had
v
weakened the U. S. competitive position somewba so that our commercial
trade and service balance had deteriorated at the same time that our
Governmental expenses overseas were rising and overseas investment
opportunities were increasing in attractiveness.
Thus the U. S. deficit
was not only larger but more menaCing just as our financing possiblli ties
seemed to became more limited.
With the appearance of these large deficits and gold losses in 1958
and 1959, it became widely recognized that this new and disturbing
61tuat1on gould not be allowed to continue lons. But it
val &110
recos-
nized that, despite same deterioration in our international competitive
position fram a cost standpoint, we did not face a classic type of
payments deficit characterized by domestic inflation and over-fUll
employment, with accelerating demands for imports and dwindling exports.
Rather we had rising unemployment, under-utilization of capacity and,
from 1958 on, stable to declining production costs and prices.
And
While our surpluses on goods and services exports were not large enough
to balance our heavy Governmental and growing private investment outlays
abroad, there continued to be surpluses.
Thus ~ t was decided that the solution to our problem must be sought
Within a framework of a vigorous and growing domestic econemy with stable
- 5 costs and prices.
A broad program was developed and launched in early
1961. It laid emphasis on tax incentives and ample credit to 'encourage
growth and improve
productivity through
incre~ed
domestic investment.
Monetary policy, 'While designed to be broadly stimulative, also aimed at
keeping our short-ter.m interest rates generally competitive with those
abroad and, in this effort, was aided by Treasury debt management policy.
In addition to this broad policy approach, a number of other actions
were undertaken.
A vigorous program of export encouragement got under
vay with a nev system of export credit guaranties and a major strengthen.
ing and broadening of Government information and promotion services tor
E!XIlorte1'O. 8troll8 aat10nl "ra taken to o.ehi@VO :reduction. in the
foreign exchange costs of Government outlays overseas, and same steps
vere taken in the Revenue Act of 1962 to reduce the attractiveness 01'
foreign tax havens for U. S. private capital.
The program was eminently successful. in the areas affected.
Thus,
in 1964 as compared with 1960, our commercial trade surplus showed a net
gain, despite a $3.9 billion increase in the imports required by our
growing domestic economy, ot $900 million, and reached a record figure
in 1964 of $3.7 billion.
Our trade gain during
1964 alone was most im-
pressive -- with gross commercial E!XlX>rts rising by $3.1 bUlion, or l6
percent,
~ile
the increase in our imports remained moderate in relation
to our growing GNP.
- 6We also achieved, between 1960 and 1964, a net improvement of more
than $I. billion in our m1litary expenditures and Government grant and
capital payments abroad.
By tying more and more, of our foreign aid --
with over 85 percent of new AID commitments now being 11m1ted to the
purchase of U. S. goods and services -- we halved the net drain tram this
factor, from
$1 billion in 1960 to less than $500 million last year. By
streamlining operations and cutting procurement fram foreign sources, our
gross defense expenditures abroad were reduced by $250 million over this
period, despite rising cost levels in the areas where most of our forces
vere stationed overseas.
In addition, we made offsetting sales of U. S.
military equipment to allied foreign governments, raising our receipts
from this source fram $300 million in 1960 to more than $l. billion in
each of the years 1962 through 1964.
The gains made in these two major areas directly affected by our
balance of pa.)'Illents program were supplemented, moreover, by the very
rapid further growth in total income receipts fram U. S. private invest-
.
ments abroad -- which, over the course of these four years, added a
nttther
$1.5 billion annually to our total payments receipts.
These three areas of major gains, taken together, added up to a
$3.6 billion gross improvement in this portion of our international
transactions -_ a remarkable and impressive achievement -- which, other
things being equal, would have been virtually enough to eliminate our
balance of payments deficit.
- 7 But other things were not equal.
billion.
In 1964, the deficit was $3.1
D..tring the four years, 1960 through 1964, the deficits
totalled $13.0 billion, or $3.2 billion average per year.
So the 1m-
preGsive improvements noted led to a relatively modest net gain.
And
while our gold losses during the four years were less than halt those
of the preceding three years, mainly because of new and imaginative
financing methods, they totalled
$2.3 billion. At the close ot 1964,
our gold stock was about $15.5 billion.
The failure to gain more ground vas due primarily to tvo factors -.
private capital. outflow and tourist expenditures.
Des~~~@ ~re~s~ve
percentage gains in our earnings last year tram
foreign tourists, our net tourist deficit showed an inc~ease
ot $300
million over the four-year period, amounting in 1964 to $1.6 billion.
Very much larger than this, and obviously the major factor in the
worsening of our payments position which developed between the very
encouraging first quarter and the final quarter of last year, was the
swelling outflow of nearly all types of private capital investment.
Our
total outflow of private capital during 1964 amounted to almost $6.5
billion -- up almost $2.2 billion from the preceding year and $2.6
billion higher than the 1960 level.
Private capital outflow began to grow in the late 1950' s and short·
term outflow
'WaS
particularly heavy in 1960.
Such outflows, of course,
- 8 generate earnings, and I also noted the rise in investment income during
the period 1960-64.
But the relatively rapid rise in capital outflows
in early 1963 gave cause for concern and led to, the mid-1963 program of
add1tional monetary policy action to keep sbort rates more competitive
and to the introduction of Interest Equalization Tax leg1sJ.ation designed
to hold down the rapid expansion of foreign securities marketing in this
country.
The $6.5 billion capital outflow in 1964 breaks down as follows.
Direct investment abroad totalled $2.4 billion, or $700 million more than
in 1960 and $500 million more than in 1963.
investment of retained earnings abroad.
This figure does not include
We do not have the data tor
1964,
but for 1963 such reinvestment totalled $1.6 billion.
Long and short-term bank credit outstanding increased during 1964
by $2.5 billion, a very sharp gain.
The rise in short-term credits
a.lone was $1.5 b111ion, or more than $500 million greater than in 1960,
while the gain in long-term credits was more than $900 million, six
times that for 1960.
While much of the short-term finance provided
support for American exports, very little of the long-term finance, only
15 percent, was for that purpose.
i'~eign
Most of it represented financing of
business enterprises in various countries, and much of it seems
to have been a substitute for capital market borrowing which was inhibited
by the Interest Equalization Tax.
Foreign securities purchases by
- 9iJ:lericans were less than $700 million in 1964, about equal to their 1960
level
and
only one-third as large as the annual ra.te prevailing in the
first half of 1963.
Finally, outflows of nonbank short-term capital, much but not all
of Which represented temporary placements of U. S. corpora.te liquid funds
abroad, 'Were almost $600 million in
1964,
or $200 million more than in
1960. Other long-term capital outflow totalled more than $300 million
in 1964, up very much fram 1960, but the bulk of this represented a
special transaction to finance the British Columbia hydro-electric
project.
So here you have the setting for the President's Balance of Payments Nessage of February 10, 1965.
Let me restate it in brief summary
form.
The success of the program begun in 1961 had led to gross improvement of $3.6
billio~
resulting mainly from bigger net exports, rising
investment income, and savings on Government expenditures abroad.
economy had grown significantly
~th
stable costs and prices.
The
Monetary
policy, aided by debt management policy, had kept our short rates
reasonably competitive and had moderated short-term outflows responsive
to interest rate differentials.
The Interest Equalization Tax legislation
had cut back sa.les of foreign securities to Americans from the extraordi1l&17
levels of early 1963.
But the over-all outflow of capital was very heavy
- 10 -
and, coupled 'With rising net expense on tourist account, had far more
than offset such gains as had occurred in other areas.
Thus the problem
had shifted again and the new program was designed to deal with that
I
shift.
This program included a variety of measures strengthening and
rounding out various aspects of the broad effort we had been making to
improve the various segments of the balance of payments since early 196J..
Strong additional measures to achieve further cuts in the balance of
pa.yments cost of Government expenditures abroad were requested, along
with continuing and intensified efforts to expand our exports.
?resident also requested a program
Ur~ted
~ed
The
at increasing travel in the
States, by both foreigners and Americans, and asked for legisla-
tion to reduce further the duty-free allowance for American tOurists
returning from abroad.
This measure, we believe, should help directly
to reduce somewhat the total amount which American tourists would spend
abroad during the next two years, while also serving to remind all
travelers and citizens that such expenditures are a significan't element
in the balance of payments situation we are dealing with.
He also asked
for legislation, as recommended by a special task force which had been
appointed by President Kennedy, to give added encouragement to private
tnvestments,by foreigners in the United States by removing unnecessary
..ax barriers or discouragements to such investment.
- 11 -
In addition to this reinforcement ot ear11er programs, 1 t vas
necessary to bring about a :pranpt and substant1al cutback 1n the very
large outflow ot private lending and 1nvestmeJlt abroad.
'l'he Prelident I I
Message therefore included a series of new and much more ccaprehenaive
measures.
First, under authority provided to him in the Interest Equalization
Tax law, he announced the immediate applicat10n of that tax to bank lendiDS
of one year or more matur1ty •
He also requested that the Congrela extend
the lite of the tax by a further two ;years, trom the end of 1965 to the
end of 1967, and broaden its coverage to include nonbank lending in the
one to three-year maturity area.
Secondly, and most important of a..ll, the President alao called tor
a broad program of voluntary restraint by banks and business firms,
applicable to all types of capital outflows.
This program ot voluntary restraint is, as you know, being-1mpl.emented
on the basis of rather specific guidelines circulated by the Federal
Reserve System and the Secretary of Camnerce, respectively, to the banks
and other financial institutions and business corporations vhich are in..
volved.
The gu1delines for banks call for a limitation of total. outstanding
loans to foreigners at the end of this year to a level not more than 5
percent .above the end-December,
1964,
level and provide that, within these
ceilings, priority should be g1Ten to export financing and to cred!ts to
less-developed countries and to avo1d restrict1ve policies that would place
an undue burden on canada, Japan, and the United Kingdaa.
- 12 -
In tbe development and implementation of tbese guidelines, special
pains bave been taken to avoid an adverse impact on the continued availability of adequate bank financing for U. S. exports.
exports is, atter all, one
ot
Such financing of
the most important wrqs in which banks can
contribute to our over-all balance of payments program.
Our ultimate
success in achieving the kind of long-run balance we are seeking in our
international payments will, in the end, depend very heavily on the
adequacy of the continuing growth we can attain in our exports.
Tbe guidelines for business corporations under this program call
for each firm, using 1964 as a reference point, establishing for i tselt
a quanti tative target tor substantial improvement in the balance of
payments impact of its foreign transactions during the current year.
We are aware that recent large outflows of such capital are, in
one sense, both a result and a demonstration of the great and growing
general strength of our economy -- its ability to generate a large flow
of savings, the capacity and flexibUi ty and efficiency of our financial
institutions and other mechanisms for directing investable funds to
available investment opportunities, and the general competitive drive
and effectiveness of our financial firms and business corporations.
The basic point which we have to face up to, however, is that recent
heavy outflows of private capital -- portfoliO outflows, long and shortterm bank lending, direct investments and liquid deposits abroad by
bUSiness firms -- have together put a very heavy strain on our international
liquidity position and must, for tbe time being, be substantially curtailed.
- 13 Deapi te the long-term benefits which we reap fran such capital outfiova
over the years ahead, we simply cannot afford, as a short-term matter,
to let these outflows get so far out of line, relative both to inflowa
of foreign investment funds into our own economy and to the over-all
level of international earnings fram exports and other foreign transactions.
It is essential tha.t we bring our total. foreign payments
accourts into balance, not sometilne in the indefinite future, but soon.
To achieve this, it is necessary that all sectors of our economy cooperate
in this over-all effort.
We believe that the program annoUnced by the President on Februar,y
10 is off to a good start.
It is, however, still too early to attempt
any quantitative assessment of its long-term effects, and it is still
too early to claim complete success for it.
It has, certainly, had a
favorable psychological effect 1n strengthening confidence in the U. S.
dollar.
We feel sure that it can and will, as the year proceeds, make
a major contribution in reducing our total payments deficit quite sub·
stantlally belov the levels of the past fev years.
But the fight is far
from OV'er, and there must be no relaxation of effort now.
The preliminary figures for our first quarter balance of payments
were released by the Commerce Department last week.
These estimates
show, for the full quarter, a seasonally adjusted deficit on regular
transactions of $767 million -- about balf the size of the fourth quarter
1964 deficit.
- 14 This total figure for the entire quarter includes, however, large
deficits in both January and February.
These deficits reflected both
adverse temporary effects from the dock strike on our trade balance and
sharp further increases in at least sane types of pr1vate capital outflow
during the period preceding the President's February 10 Message.
Our
trade surplus, seasonally adjusted, for the fUll first quarter was down
almost by half from the preced1ng quarter, with exports being much more
heavily affected by the dock strike than imports.
During January and February together, the net increase in outstand1ng
long-term claims of U. S. banks on foreigners was about $500 million -more than half as much as the entire increase over the previOUS full year.
During March, on the other hand, there was very little further increase
at all in the amount of such cred1 ts outstanding, and all of such increase
went to the less developed countries.
The shift in the pattern of this particular category of bank lending
during the course of the first quarter, and the direct relationship of
its timing to the February 10 announcement of our program, is even more
clearly ind1cated by the data we get on new long-term lending commitments
by banks.
These data, even though they do not reflect the precise timing
of actual. loan disbursement, are nevertheless our best ind1cator of gross
bank-lending outflows before any netting against repayments.
'!be total
amount of such commitments during 1965, reported to us to date, is over
- 15 $1 'billion, a'bout half as large as all co:nuri. tments made in 1964.
But
15 percent of this total represents commitments made during January and
the first ten days of February.
And 80 percent of the commitments made
since February 10 have gone to the less developed nations.
I might note
also that both data on net claims outstanding and our new-commitments f1gurea
show that long-term bank lending to less-developed countries this year has
continued at levels pretty much in line with the pattern last year.
Our gold losses since the beginning of this year have, as you know,
been large.
The Treasury gold stock has shoYn a decline of $1,035 million
through May 12.
This is, of course, a complete turnabout fram our extremely
favorable experience last year.
In part, as you know, this reflects the
decision by the French Government to make substantial gold purchases from
the United States -- and more -than half of our total loss so far this
year has been accounted for by their purchases.
For the remainder, the large gold outflow so far this year reflects,
with a lag, the 1964 deficit of more than $3 billion.
Dollar accumulated
by foreigners during the last half, and particularly the final quarter,
of last year as a result of our large payments deficit are, this year,
in effect, filtering through to their central banks and being converted
by them into gold.
We have always recognized, after all, that the root
cause of our gold losses is our large balance of payments deficits, and
that we must, generally speaking, expect to continue to have significant
gold losses until these deficits are fully and firmly eliminated.
- 16 To return again to the over-all payments results, our January and
February deficits were followed by a sizeable surplus in March.
such an improvement in March was partly to be
~pected
Although
in any case -- both
as a temporary result of the initial recovery in exports following the
dock strike and on the basis of what appears to be a normal. seasonal
pattern of some reflow of corporate liquid funds from abroad at the end
of each quarter -- it also reflected the sharp and substantial decline in
long-term bank lending which I have just referred to, and very probably
other similar developments.
Moreover, this limited evidence of significant favorable developments during March appears to be confirmed by such preliminary and vert
partial information we have so far on April.
Present indications are
that April also 'Will probably show some surplus in our over-a.ll payments.
In this case, such a surplus would run counter to what we would otherwise
be inclined to expect as a normal seasonal pattern.
So" I think it fair to claim progress in the balance of payments
program.
But in the words of "September Song, II "it· s a long, long time
from May to December."
Again, I must stress that it is too early to make
a quantitative appraisal of 1965 results.
Even more importantly, it is
far too early to talk of attaining complete success in our efforts to
resolve the balance of payments deficits.
One thing we cannot afford nov
is over-confidence, which could lead to relaxation of our efforts.
c: .:
"
\
- 17 '7.1e stakes are too high to be careless.
For the attainment of inter-
national payments equilibrium for the United States is vital to our
position of
~orld
leadership and to meaningfUl discussion of any improve.
ment in the international payments system.
--000--
I
I
I
I
I
I
I
I
- 11 -
It is always difficult to predict with any degree of
accuracy the future state of our balance of payments or the
year-to-year developments that might take place. There are,
however, some significant factors to be noted. There are
changes in the depth and quality of markets abroad taking
place -- slowly to be sure but nonetheless important. Most
importantly, there is in our balance of payments situation
deep underlying strength. There are favorable trends in our
Government expenditures overseas as they affect the balance
of payments; there is the fundamental encouragement growing
out of the price stability characterizing our domestic economy
and the increasing general competitiveness of the United States
in world markets -- key factors to the maintenance and
strengthening of our trade position; there is also the growing
amount of earnings arising from United States investments
abroad over past decades which should sharply improve our
balance of payments position in the years ahead. How strong
these forces will be and how quickly their strengthening will
appear will have much to do with the timing of the day when
we can begin to thaw out the restraints employed to bring,
over the shorter term, a sharply improved balance of payments
position.
Some may wonder whether this disappearance will be hastened
by the achievement of a reinforced international payments system.
We are certainly going to continue to search for ways in which
the international payments system can be further reinforced.
But this task should not be misinterpreted as one of finding a
system which will permit any and all nations at their discretion
to be perpetually in deficit. It seems highly doubtful indeed
that the countries of the free world will be willing to accept
a situation in which the United States, for example, would run,
in a future as in the past period of 15 years, deficits totaling
$35 billion settled only 25 percent in gold. Rather the search
is one of exploring all means by which the system can be adapted,
modified and built upon to reinsure a system in which countries
can avoid severe shocks either to their domestic economy or to
other countries in correcting balance of payments positions. In
whatever system emerges, I am confident that the dollar will play
a key role both as a trading and reserve currency.
o~
- 10 The Administration has asked for the extension of the
tax for an additional two years, that is, up to the end of
1967 and has asked for its application generally to loans of
one year or more maturity. With the passage of such legislation the Administration will have, broadly speaking, a doubleedged restraint on all forms of investment abroad -- except
direct investment and loans of under one year, to which only
the voluntary restraint program applies. These exceptions
were based to a considerable extent on administrative difficulties as well as the closer involvement of these forms of
investment with United States exports.
It seems apparent, therefore, that the lET remains a
major deterrent in the area it affects. With Congressional
approval, the tax will be broadened to apply also to the oneto three-year lending of non-bank financial institutions,
following the application of the Gore Amendment imposing the
tax on bank loans of one year or longer. However, the primary
influence on bank lending is the guidelines issued by the
Federal Reserve System which deal with curbing flows by limiting availability. In the longer term area in which foreign
issues are most likely to fall and for those investors which
historically have been most interested in purchasing such
securities, we continue to rely on the lET.
It seems quite clear that heavy capital demands will
characterize the free world for years and years to come. At
the same time, there may be a question as to how much of this
demand the United States can meet and cover with a surplus in
our current account. If actual developments over time do show
a need for some dampener on United States supplies of capital
to the free world, the question as to the technique to be used
will again be raised. This is a highly "iffy" qu.estion. However, in theoretical terms, I would submit that there is much
to be said for the tax method -- if indeed our objective remains
one of interfering as little as possible in the operations of
free markets. The tax method does remain a non-discriminatory
allocator by the cost method and it provides the incentives
for correctives permitting its eventual elimination. I would
think that these are not inconsiderable benefits to be lightly
discarded.
- 9 -
substitution and that the tax would at least reduce one form
of capital outflow which had been rising at an alarming rate.
There is no doubt that the rise in long-term bank loans
during 1964 and early 1965 reflected to some degree an effort
to escape from the tax on securities. There is no way of demonstrating with certainty what that degree was; but, whatever it
was, the rising volume of bank loans to foreigners in 1964 made
one thing clear. We could not prudently assume that the operation of European security markets in the near future would
reduce sufficiently the pressure of foreign demand for United
States capital. Long-term interest rates in Europe which
generally rose during 1964 -- substantially in some cases -have continued to rise this year despite the fact the European
interest rate levels are high by historical standards. Indeed
United States rates are on the high side by any historical
standard. Continuation of this movement could increase the
relative attractiveness of the United States capital market
to foreign borrowers despite the tax. Hence it appeared
desirable to supplement the lET by a direct appeal to the
American financial and business community to cooperate voluntarily in restraining capital outflows of all types to other
advanced countries.
The tax itself, of course, acted as a voluntary as well as
a market restraint on the sale of new foreign security issues
to American investors. I think this is one of the reasons why,
after uncertainties about the nature of the tax were resolved
by its passage, the American financial community did not resume
any substantial marketing of new issues of other advanced
countries (excluding Canada), but the growing pressure to
market foreign issues in this country as the long-term interest
differential widened would eventually, if continued, have
reduced the effectiveness of the tax. It therefore seemed
desirable, in establishing the voluntary control program, to
apply it not only to forms of capital outflow previously untaxed, but also, as an added dissuader, to those that were
taxed.
- 8 I do not mean in any way to suggest that the lET has been
the only factor leading to the apparent reduction in gross
purchases of foreign securities from foreigners by Americans.
The domestic business climate and the course of United States
security prices may have had as much or more effect. This
becomes apparent in considering why the tax has not opened up
a substantial price margin between the prices of American-held
foreign securities and foreign-held foreign securities. In the
case of bonds traded on the New York Stock Exchange, there has
been little or no premium. In the case of stocks, premiums have
been more variable but generally have been much lower than ten
percent.
Before Congressional approval of the tax last September,
temporary uncertainties may have accounted in part for this
situation. But certainly in the period since last September one
must conclude that, in general, there has been such a weak
American demand for many foreign securities that, as a group,
Americans have been willing to unload many of these securities
at close to current foreign prices even at times when foreign
demand for them has been heavy. The reason for this situation,
as noted above, undoubtedly lies in part in the vigorous expansion of our own securities market, as compared to declines in
major stock markets abroad, at least until quite recently.
There have, of course, been some individual foreign stocks
which have attracted strong United States, as well as foreign
demand, and the premiums on these have become substantial at
times. But American demand for many foreign stocks has remained
weak despite the steady attrition in the tax-free American-held
supply over the last year and a half.
Balance of Payments Effect
The lET has been criticized as not having helped the
balance of payments, however much it has reduced purchases by
Americans of securities of other industrialized countries. I
began by saying that the lET was a limited measure. It was
realized, of course, that foreign borrowers might be induced to
seek United States funds through other channels than the United
States capital market after the tax had been announced. But it
was believed that there was a limit to the extent of such
- 7 -
')
.
...:, :::.;
:.:
Bank for Reconstruction and Development, after an absence of
three years from our market, floated a large issue, of which
$160 million was placed with American investors.
But attention simply to new issues is misleading.
also applies to trade in outstanding issues.
The lET
Prior to the announcement of the lET there had been several
years of net purchases by Americans of such issues. Purchases
of outstanding foreign bonds which had been sizeable in the
first half of 1963 almost ceased in the second half of 1963 and
have not resumed to date. United States purchases of foreign
stocks which had already fallen off in the months preceding
announcement of the tax changed to large net sales in the
second half and these have continued to date.
The combination of these changes was that net United States
transactions in outstanding foreign securities by Americans
shifted from purchases of about $250 million for the seven
quarters prior to the lET to sales of $340 million for the
seven subsequent quarters. In balance of payments terms, this
represents a reversal of nearly $600 million.
While the change in net transactions in outstanding foreign
securities has been favorable for the United States balance of
payments since mid-1963, it is important to consider, from the
viewpoint of effectiveness of the lET, whether this has happened
at a relatively high or at a greatly reduced level of gross
transactions. If gross purchases of outstanding foreign securities from foreigners by Americans have not been restricted substantially by the tax, the net movement could again become
troublesome for the United States balance of payments whenever
foreign gross purchases of outstanding foreign securities from
Americans fell off.
Available data do not reveal the volume of gross purchases
directly. A major indicator, however, suggests that they have
fallen off substantially since the first half of 1963. This
indicator is the relatively small volume of purchases reported
to Internal Revenue Service for purposes of the tax. Based on
the amount of tax collected in the first quarter of this year,
it would appear that gross purchases of taxable foreign securities from foreigners have been quite small.
- 6 frequently serving as the base, underwriters from other
countries have also handled these issues, placing them with
a variety of buyers in markets abroad.
The European market naturally enough primarily took
issues of European borrowers. These amount to 60 percent of
the 1964 total. However, Japan accounted for 24 percent of
the total issues, $200 million, making it the largest single
borrower, and Japanese issues in European markets in previous
years had been very small. Denmark and Norway, two other
countries which had previously sold substantial amounts in
the United States, also raised large sums in Europe last
year.
To sum up, there has been noteworthy and favorable
reaction to the incentives which the lET offered. To
potential borrowers, there was encouragement to seek funds
in other markets; these borrowers have done just that. On
the supply side of the market, attention was riveted on the
lack of depth and broadness in markets which limited their
ability to satisfy either domestic or external demand. A
number of studies continue in this area by the Cornmon Market
countries, in the Organization for Economic Cooperation and
Development (OECD) and elsewhere. Finally, the marketers of
issues responded by seeking new sources of supply and a
greater internationalization of the capital markets.
Now for a brief note on new issues which are not subject to the tax. As regards Canada, and the special exemption applied to its new issues, borrowers held back to some
extent from the United States market until after enactment
of the tax and confirmation of its proposed exemption. A
very large amount, $383 million, of Canadian new issues hit
our market in the fourth quarter of 1964, then fell off to
about $150 million in the following quarter. Less developed
countries and international institutions, also exempt from
the lET, substantially increased their issues in 1964. In
part this was due to the reentry of Mexico into the bond
market on a sizeable scale and to borrowings of the InterAmerican Development Bank. This year also the International
- 5 I mention some of this background thinking in order to
provide a basis for appraising the effectiveness of the lET.
It was designed to help reduce our balance of payments
deficit by reducing a particular form of capital outflow to
particular areas with a minimum of interference with investors' choices and without undesirable side-effects on the
international usefulness of the dollar. That it has accomplished this major purpose to date is quite evident.
What have been the results since the lET was proposed
by the President to be effective July 19, 1963? Since then,
new foreign security issues taken by foreigners have
averaged a quarterly rate less than one-half the rate of
the three quarters prior to the announcement. While part
of this decline was due to uncertainties about the passage
by Congress of the tax, the interesting point is that since
passage of the bill in September there has been no upsurge
in issues floated in the United States by advanced countries
other than Canada. The amount of such issues purchased by
United States residents has remained insignificant.
On the other hand, the lET has been a powerful stimulus
to development of the European capital market as Japanese and
European borrowers have turned to it to meet their needs.
New foreign bond issues in Europe in 1964 reached $1 billion
almost double the 1963 figure. Significantly, issues
denominated in dollars which were about $100 million in 1963
rose to over half a billion dollars in 1964 attesting to the
broad acceptance of the dollar as a standard of value in the
long-term international capital market.
These dollar issues served as a vehicle for the development of new underwriting and marketing techniques which might
not otherwise have been forthcoming. I am particularly
pleased that United States underwriters have played an important role in this development. In addition, with London
- 4 -
(;
'-' '-or \
)
~
A Capital Issues Committee would inject the Government into
a decisive role with regard to acceptance or rejection of
individual foreign issues, a state of affairs which could
well create market speculation as to decisions on particular
issues and thus unhealthy influence over both the market and
the issuer.
We also wanted to avoid any measure that would create
doubts about the continued usefulness of the dollar as the
major international currency. The outflow of capital was
not a sign of basic weakness in our economy. It stemmed
from the combination of two factors: a large and rising
volume of domestic savings, efficiently channeled into
whatever investments at home or abroad seemed to offer the
highest yields; and a persistent demand for private longterm investment funds from borrowers in other developed
countries.
Many of these borrowers wanted local currency funds,
not foreign exchange in the form of dollars. To some
extent the United States played the role of a financial
intermediary -- particularly between continental West
European savers and borrowers. The former have a penchant
for keeping their savings in rather liquid forms; while
the latter wanted long-term funds. Local banking systems
to some degree performed the role of intermediaries between
savers and borrowers; but various legal and institutional
factors limited this role.
The United States, therefore, helped as an intermediary
by providing substantial amounts of long- as well as short-
term dollars to Western European borrowers who converted
them into the required local currencies at their banks. The
latter, as a result, accumulated dollars which they hold
with varying degrees of firmness depending on the usefulness
of more dollar holdings to them in their own particular
situations. We did not want to adopt any measure that would
reduce that usefulness.
- 3 -
cooperation and a stronger international payments system.
Sound developments in these areas can only be assured with
an American economy that performs without waste of human or
natural resources.
There were, in our view, serious doubts that the major
alternative for dealing with this problem -- the establishment of a Capital Issues Committee -- would in fact provide
a sound approach. Speculation at home and abroad as to the
scope of the Committee's activities, particularly during
its formative period, would in all likelihood have stimulated
more capital flight than the Committee's actions could
possibly have deterred. Moreover, a Capital Issues Committee could not have dealt with the problem of curtailing
outflows owing to investments by Americans in outstanding
foreign securities -- outflows which on occasion had involved quite substantial amounts in the United States
balance of payments. In addition to these very practical
considerations, there is finally the important consideration of seeking to establish a ground rule which is as nondiscriminatory as possible and is little subject to arbitrary
administration. It, therefore, seemed far better to let the
individual investor decide about transactions in foreign
securities in the light of a non-discriminatory and clearly
identified tax rather than having a Committee or person continually deciding which new foreign issues individually, was
to be allowed into the United States market.
To some it may seem that the administration of the tax
involves arbitrary decisions regarding exemptions and other
matters perhaps little different from those that would face
a Capital Issues Committee. But I submit there is a fundamental difference. Under the Interest Equalization Tax, the
Administration explained to the Congress at the beginning
the nature of its operating guidelines and these by and
large avoided discrimination among individual foreign issues.
- 2 -
offered, over time, in assisting us toward bringing about a
generation of forces working toward international adjustment
in the balance of payments positions of the various countries, surplus and deficit alike.
When we asked the Congress in July 1963 to adopt the
Interest Equalization Tax, the measure was conceived as a
limited response to a situation that was threatening to
nullify the improvement we had been making in other than the
capital sector of our balance of payments. New foreign
issues in our market, on an annual rate basis, doubled between
1961 and 1962, then redoubled between 1962 and the first six
months of 1963. There were without doubt, some unusually
heavy although temporary concentrations of certain issues
during this latter period. But it was quite clear that the
accelerated outflow of portfolio capital would continue -and that would have pushed our balance of payments deficits
to new heights unless, as seemed unlikely, other capital
flows simultaneously declined or movements of a compensating
nature occurred elsewhere in our balance of payments
position.
To deal with the situation by forcing long-term interest rate levels in the United States fully into line
with those abroad would have been totally unacceptable in
the light of our unemployment and unutilized plant
capacity -- even if it were a practical possibility.
Domestically, we simply did not -- and this has been confirmed by experience since then -- need either higher interest rates or tighter credit. And, I might add
parenthetically, there is no evidence now that these are
needed.
The solution of a major upward readjustment in longterm rates therefore was not feasible. Indeed, untimely
action toward domestic restraint, by threatening to stifle
economic expansion and growth, could have in fact impeded
the continued development of international financial
For Release:
Upon Delivery
TREASURY DEPARTMENT
Washington
Remarks of the Honorable Merlyn N. Trued
Assistant Secretary of the Treasury for International
Affairs, before The Financial Analysts Federation 18th
Annual Convention, at the Sheraton Hotel, Philadelphia,
Tuesday, May 18, 1965, 2:15 p.m. EDT
The invitation to be with you today and to discuss the
Interest Equalization Tax provides a welcome opportunity.
Two years ago, almost precisely at this time, we were developing this tax proposal. Faced with a flow of United States
investment into foreign securities that threatened to swamp
our balance of payments with an intolerable deficit and the
dollar along with it, we were carefully assessing the various
possibilities for curtailing this flow.
I should like to revert later in this talk to a brief
consideration as to why we chose the tax as the particular
method to deal with this problem in our balance of payments.
Let me note at the outset simply that two years' experience
provides a timely occasion to review the performance of the
Interest Equalization Tax in terms of markets and prices, as
well as in terms of our current, more pervasive efforts to
deal with our payments deficit. It is particularly timely
moreover because we have now asked the Congress to extend
this tax for a further two-year period to expire December 31,
1967.
It is perhaps useful, before discussing the Interest
Equalization Tax in the context of our present program, to
discuss the market impact of the Interest Equalization Tax
and evaluate it in terms of the incentives which we felt it
F-54
For Release:
Upon Delivery
TREASURY DEPARTMENT
Washington
Remarks of the Honorable Merlyn N. Trued
Assistant Secretary of the Treasury for International
Affairs, before The Financial Analysts Federation 18th
Annual Convention, at the Sheraton Hotel, Philadelphia,
Tuesday, May 18, 1965, 2:15 p.m. EDT
The invitation to be with you today and to discuss the
Interest Equalization Tax provides a welcome opportunity.
Two years ago, almost precisely at this time, we were developing this tax proposal. Faced with a flow of United States
investment into foreign securities that threatened to swamp
our balance of payments with an intolerable deficit and the
dollar along with it, we were carefully assessing the various
possibilities for curtailing this flow.
I should like to revert later in this talk to a brief
consideration as to why we chose the tax as the particular
method to deal with this problem in our balance of payments.
Let me note at the outset simply that two years' experience
provides a timely occasion to review the performance of the
Interest Equalization Tax in terms of markets and prices, as
well as in terms of our current, more pervasive efforts to
deal with our payments deficit. It is particularly timely
moreover because we have now asked the Congress to extend
this tax for a further two-year period to expire December 31,
1967.
It is perhaps useful, before discussing the Interest
Equalization Tax in the context of our present program, to
discuss the market impact of the Interest Equalization Tax
and evaluate it in terms of the incentives which we felt it
F-S4
- 2 offered, over time, in assisting us toward bringing about a
generation of forces working toward international adjustment
in the balance of payments positions of the various countries, surplus and deficit alike.
When we asked the Congress in July 1963 to adopt the
Interest Equalization Tax, the measure was conceived as a
limited response to a situation that was threatening to
nullify the improvement we had been making in other than the
capital sector of our balance of payments. New foreign
issues in our market, on an annual rate basis, doubled between
1961 and 1962, then redoubled between 1962 and the first six
months of 1963. There were without doubt, some unusually
heavy although temporary concentrations of certain issues
during this latter period. But it was quite clear that the
accelerated outflow of portfolio capital would continue -and that would have pushed our balance of payments deficits
to new heights unless, as seemed unlikely, other capital
flows simultaneously declined or movements of a compensating
nature occurred elsewhere in our balance of payments
position.
To deal with the situation by forcing long-term interest rate levels in the United States fully into line
with those abroad would have been totally unacceptable in
the light of our unemployment and unuti1ized plant
capacity -- even if it were a practical possibility.
Domestically, we simply did not -- and this has been confirmed by experience since then -- need either higher interest rates or tighter credit. And, I might add
parenthetically, there is no evidence now that these are
needed.
The solution of a major upward readjustment in longterm rates therefore was not feasible. Indeed, untimely
action toward domestic restraint, by threatening to stifle
economic expansion and growth, could have in fact impeded
the continued development of international financial
- 3 cooperation and a stronger international payments system.
Sound developments in these areas can only be assured with
an American economy that performs without waste of human or
natural resources.
There were, in our view, serious doubts that the major
alternative for dealing with this problem -- the establishment of a Capital Issues Committee -- would in fact provide
a sound approach. Speculation at home and abroad as to the
scope of the Committee's activities, particularly during
its formative period, would in all likelihood have stimulated
more capital flight than the Committee's actions could
possibly have deterred. Moreover, a Capital Issues Committee could not have dealt with the problem of curtailing
outflows owing to investments by Americans in outstanding
foreign securities -- outflows which on occasion had involved quite substantial amounts in the United States
balance of payments. In addition to these very practical
considerations, th~re is finally the important consideration of seeking to establish a ground rule which is as nondiscriminatory as possible and is little subject to arbitrary
administration. It, therefore, seemed far better to let the
individual investor decide about transactions in foreign
securities in the light of a non-discriminatory and clearly
identified tax rather than having a Committee or person continually deciding which new foreign issues individually, was
to be allowed into the United States market.
To some it may seem that the administration of the tax
involves arbitrary decisions regarding exemptions and other
matters perhaps little different from those that would face
a Capital Issues Committee. But I submit there is a fundamental difference. Under the Interest Equalization Tax, the
Administration explained to the Congress at the beginning
the nature of its operating guidelines and these by and
large avoided discrimination among individual foreign issues.
- 4 A Capital Issues Committee would inject the Government into
a decisive role with regard to acceptance or rejection of
individual foreign issues, a state of affairs which could
well create market speculation as to decisions on particular
issues and thus unhealthy influence over both the market and
the issuer.
We also wanted to avoid any measure that would create
doubts about the continued usefulness of the dollar as the
major international currency. The outflow of capital was
not a sign of basic weakness in our economy. It stemmed
from the combination of two factors: a large and rising
volume of domestic savings, efficiently channeled into
whatever investments at home or abroad seemed to offer the
h;ghest yields; and a persistent demand for private longterm investment funds from borrowers in other developed
countries.
Many of these borrowers wanted local currency funds,
not foreign exchange in the form of dollars. To some
extent the United States played the role of a financial
intermediary -- particularly between continental West
European savers and borrowers. The former have a penchant
for keeping their savings in rather liquid forms; while
the latter wanted long-term funds. Local banking systems
to some degree performed the role of intermediaries between
savers and borrowers; but various legal and institutional
factors limited this role.
The United States, therefore, helped as an intermediary
by providing substantial amounts of long- as well as short-
term dollars to Western European borrowers who converted
them into the required local currencies at their banks. The
latter, as a result, accumulated dollars which they hold
with varying degrees of firmness depending on the usefulness
of more dollar holdings to them in their own particular
Situations. We did not want to adopt any measure that would
reduce that usefulness.
- 5 -
I mention some of this background thinking in order to
provide a basis for appraising the effectiveness of the lET.
It was designed to help reduce our balance of payments
deficit by reducing a particular form of capital outflow to
particular areas with a minimum of interference with investors' choices and without undesirable side-effects on the
international usefulness of the dollar. That it has accomplished this major purpose to date is quite evident.
What have been the results since the lET was proposed
by the President to be effective July 19, 1963? Since then,
new foreign security issues taken by foreigners have
averaged a quarterly rate less than one-half the rate of
the three quarters prior to the announcement. While part
of this decline was due to uncertainties about the passage
by Congress of the tax, the interesting point is that since
passage of the bill in September there has been no upsurge
in issues floated in the United States by advanced countries
other than Canada. The amount of such issues purchased by
United States residents has remained insignificant.
On the other hand, the lET has been a powerful stimulus
to development of the European capital market as Japanese and
European borrowers have turned to it to meet their needs.
New foreign bond issues in Europe in 1964 reached $1 billion
almost double the 1963 figure. Significantly, issues
denominated in dollars which were about $100 million in 1963
rose to over half a billion dollars in 1964 attesting to the
broad acceptance of the dollar as a standard of value in the
long-term international capital market.
These dollar issues served as a vehicle for the development of new underwriting and marketing techniques which might
not otherwise have been forthcoming.
I am particularly
pleased that United States underwriters have played an important role in this development. In addition, with London
- 6 frequently serving as the base, underwriters from other
countries have also handled these issues, placing them with
a variety of buyers in markets abroad.
The European market naturally enough primarily took
issues of European borrowers. These amount to 60 percent of
the 1964 total. However, Japan accounted for 24 percent of
the total issues, $200 million, making it the largest single
borrower, and Japanese issues in European markets in previous
years had been very small. Denmark and Norway, two other
countries which had previously sold substantial amounts in
the United States, also raised large sums in Europe last
year.
To sum up, there has been noteworthy and favorable
reaction to the incentives which the lET offered. To
potential borrowers, there was encouragement to seek funds
in other markets; these borrowers have done just that. On
the supply side of the market, attention was riveted on the
lack of depth and broadness in markets which limited their
ability to satisfy either domestic or external demand. A
number of studies continue in this area by the Common Market
countries, in the Organization for Economic Cooperation and
Development (OECD) and elsewhere. Finally, the marketers of
issues responded by seeking new sources of supply and a
greater internationalization of the capital markets.
Now for a brief note on new issues which are not subject to the tax. As regards Canada, and the special exemption applied to its new issues, borrowers held back to some
extent from the United States market until after enactment
of the tax and confirmation of its proposed exemption. A
very large amount, $383 million, of Canadian new issues hit
our market in the fourth quarter of 1964, then fell off to
about $150 million in the following quarter. Less developed
countries and international institutions, also exempt from
the lET, substantially increased their issues in 1964. In
part this was due to the reentry of Mexico into the bond
market on a sizeable scale and to borrowings of the InterAmerican Development Bank. This year also the International
- 7 Bank for Reconstruction and Development, after an absence of
three years from our market, floated a large issue, of which
$160 million was placed with American investors.
But attention simply to new issues is misleading.
also applies to trade in outstanding issues.
The lET
Prior to the announcement of the lET there had been several
years of net purchases by Americans of such issues. Purchases
of outstanding foreign bonds which had been sizeable in the
first half of 1963 almost ceased in the second half of 1963 and
have not resumed to date. United States purchases of foreign
stocks which had already fallen off in the months preceding
announcement of the tax changed to large net sales in the
second half and these have continued to date.
The combination of these changes was that net United States
transactions in outstanding foreign securities by Americans
shifted from purchases of about $250 million for the seven
quarters prior to the lET to sales of $340 million for the
seven subsequent quarters. In balance of payments terms, this
represents a reversal of nearly $600 million.
While the change in ~ transactions in outstanding fore~n
securities has been favorable for the United States balance of
payments since mid-l963, it is important to consider, from the
viewpoint of effectiveness of the lET, whether this has happend
at a relatively high or at a greatly reduced level of gross
transactions. If gross purchases of outstanding foreign securities from foreigners by Americans have not been restricted substantially by the tax, the net movement could again became
troublesome for the United States balance of payments whenever
foreign gross purchases of outstanding foreign securities from
Americans fell off.
Available data do not reveal the volume of gross purchases
directly. A major indicator, however, suggests that they have
fallen off substantially since the first half of 1963. This
indicator is the relatively small volume of purchases reported
to Internal Revenue Service for purposes of the tax. Based on
the amount of tax collected in the first quarter of this year,
it would appear that gross purchases of taxable foreign securities from foreigners have been quite small.
- 8 I do not mean in any way to suggest that the lET has been
the only factor leading to the apparent reduction in gross
purchases of foreign securities from foreigners by Americans.
The domestic business climate and the course of United States
security prices may have had as much or more effect. This
becomes apparent in considering why the tax has not opened up
a substantial price margin between the prices of American-held
foreign securities and foreign-held foreign securities. In the
case of bonds traded on the New York Stock Exchange, there has
been little or no premium. In the case of stocks, premiums have
been more variable but generally have been much lower than ten
percent.
Before Congressional approval of the tax last September,
temporary uncertainties may have accounted in part for this
situation. But certainly in the period since last September one
must conclude that, in general, there has been 2uch a weak
American demand for many foreign securities that, as a group,
Americans have been willing to unload many of these securities
at close to current foreign prices even at times when foreign
demand for them has been heavy. The reason for this situation,
as noted above, undoubtedly lies in part in the vigorous expansion of our own securities market, as compared to declines in
major stock markets abroad, at least until quite recently.
There have, of course, been some individual foreign stocks
which have attracted strong United States, as well as foreign
demand, and the premiums on these have become substantial at
times
Eut American demand for many foreign stocks has remained
weak despite the steady attrition in the tax-free American-held
supply over the last year and a half.
<
Baiance of Payments Effect
The lET has been criticized as not having helped the
balance of payments, however much it has reduced purchases by
Americans of securities of other industrialized countries. I
began by saying that the lET was a limited measure. It was
realized, of course, that foreign borrowers might be induced to
seek United States funds through other c~c..l1l1~:l_S ~~an the Unit,::,r
States capital market after the tax had been announced. But it
was believed that there was a limit to the extent of such
- 9 -
substitution and that the tax would at least reduce one form
of capital outflow which had been rising at an alarming rate.
There is no doubt that the rise in long-term bank loans
during 1964 and early 1965 reflected to some degree an effort
to escape from the tax on securities. There is no way of demonstrating with certainty what that degree was; but, whatever it
was, the rising volume of bank loans to foreigners in 1964 made
one thing clear. We could not prudently assume that the operation of European security markets in the near future would
reduce sufficiently the pressure of foreign demand for United
States capital. Long-term interest rates in Europe which
generally rose during 1964 -- substantially in some cases -have continued to rise this year despite the fact the European
interest rate levels are high by historical standards. Indeed
United States rates are on the high side by any historical
standard. Continuation of this movement could increase the
relative attractiveness of the United States capital market
to foreign borrowers despite the tax. Hence it appeared
desirable to supplement the lET by a direct appeal to the
American financial and business community to cooperate voluntarily in restraining capital outflows of all types to other
advanced countries.
The tax itself, of course, acted as a voluntary as well as
a market restraint on the sale of new foreign security issues
to American investors. I think this is one of the reasons why,
after uncertainties about the nature of the tax were resolved
by its passage, the American financial community did not resume
any substantial marketing of new issues of other advanced
countries (excluding Canada), but the growing pressure to
market foreign issues in this country as the long-term interest
differential widened would eventually, if continued, have
reduced the effectiveness of the tax. It therefore seemed
desirable, in establishing the voluntary control program, to
apply it not only to forms of capital outflow previously untaxed, but also, as an added dissuader, to those that were
taxed.
- 10 -
The Administration has asked for the extension of the
tax for an additional two years, that is, up to the end of
1967 and has asked for its application generally to loans of
one year or more maturity. With the passage of such legislation the Administration will have, broadly speaking, a doubleedged restraint on all forms of investment abroad -- except
direct investment and loans of under one year, to which only
the voluntary restraint program applies. These exceptions
were based to a considerable extent on administrative difficulties as well as the closer involvement of these forms of
investment with United States exports.
It seems apparent, therefore, that the lET remains a
major deterrent in the area it affects. With Congressional
approval, the tax will be broadened to apply also to the oneto three-year lending of non-bank financial institutions,
following the application of the Gore Amendment imposing the
tax on bank loans of one year or longer. However, the primary
influence on bank lending is the guidelines issued by the
Federal Reserve System which deal with curbing flows by limiting availability. In the longer term area in which foreign
issues are most likely to fall and for those investors which
historically have been most interested in purchasing such
securities, we continue to rely on the lET.
It seems quite clear that heavy capital demands will
characterize the free world for years and years to come. At
the same time, there may be a question as to how much of this
demand the United States can meet and cover with a surplus in
our current account. If actual developments over time do show
a need for some dampener on United States supplies of capital
to the free world, the question as to the technique to be used
will again be raised. This is a highly "iffy" question. However, in theoretical terms, I would submit that there is much
to be said for the tax method -- if indeed our objective remains
one of interfering as little as possible in the operations of
free markets. The tax method does remain a non-discriminatory
allocator by the cost method and it provides the incentives
for correctives permitting its eventual elimination. I would
think that these are not inconsiderable benefits to be lightly
discarded.
- 11 -
It is always difficult to predict with any degree of
accuracy the future state of our balance of payments or the
year-to-year developments that might take place. There are,
however, some significant factors to be noted. There are
changes in the depth and quality of markets abroad taking
place -- slowly to be sure but nonetheless important. Most
importantly, there is in our balance of payments situation
deep underlying strength. There are favorable trends in our
Government expenditures overseas as they affect the balance
of payments; there is the fundamental encouragement growing
out of the price stability characterizing our domestic economy
and the increasing general competitiveness of the United States
in world markets -- key factors to the maintenance and
strengthening of our trade position; there is also the growing
amount of earnings arising from United States investments
abroad over past decades which should sharply improve our
balance of payments position in the years ahead. How strong
these forces will be and how quickly their strengthening will
appear will have much to do with the timing of the day when
we can begin to thaw out the restraints employed to bring,
over the shorter term, a sharply improved balance of payments
position.
Some may wonder whether this disappearance will be hastened
by the achievement of a reinforced international payments system.
We are certainly going to continue to search for ways in which
the international payments system can be further reinforced.
But this task should not be misinterpreted as one of finding a
system which will permit any and all nations at their discretion
to be perpetually in deficit. It seems highly doubtful indeed
that the countries of the free world will be willing to accept
a situation in which the United States, for example, would run,
in a future as in the past period of 15 years, deficits totaling
$35 billion settled only 25 percent in gold. Rather the search
is one of exploring all means by which the system can be adapted,
modified and built upon to reinsure a system in which countries
can avoid severe shocks either to their domestic economy or to
other countries in correcting balance of payments positions. In
whatever system emerges, I am confident that the dollar will play
a key role both as a trading and reserve currency.
000
- 3 -
and exchange tenders will receive equal. treatment.
~or
Cash adjustments will be made
differences between the par value of maturing bills accepted in exchange and
he issue price of the new bills.
The income derived from Treasury bills, whether interest or gain from the sale
)r other disposition ot 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 Sta.te, 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 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 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 each issue
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
for the respective issues.
Settlement for accepted tenders in accordance with
the bids must be made or completed at the Federal Reserve Banks on
1965
May ~
, in cash or other immediately available funds or in a like face
amount of Treasury bills maturing _ _--=-Ma~y.-.::..2..;,..7L'....:1~9::,;:6~5:::-r________ •
6dC1dC
Cash
TREASURY DEPARTMENT
Washington
May 19, 1965
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, 200 ~ ,000 , or thereabouts, for
cash and in exchange for Treasury bills mat'\lring
May
27~65
, in the amount
of $ 2,201# ,000 , as follows:
91 -day bills (to maturity date) to be issued
May 27, 1965
,
-----.;.--ril**~:__-~
in the amount of $ 1,200~zOOO , or thereabouts, representing an additional amount of bills dated
and to mature
August 26, 1965
Februa~5,
1965 ,
, originally issued in the '
;&l&
amount of $ 1,003,386,000 , the additional and original bills
;QSJ
to be freely interchangeable.
183 -day bills, for $ 1,000,000,000 , or thereabouts, to be dated
l(Jbi¥
5(B9K
May 27, 1965
, and to mature __N_o_v_e_m_b":':le!::r=z2:;o6.:;..'_1_9_6_5_.
XJ(J&ijC
~
Tbe 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, on~-thirty p.m., Eastern/:stulJiarii time, Monday, May 24, 1965
HQ
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
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
May 19, 1965
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tendt
for two series of Treasury bills to the aggregate amount of
$ 2 200 000 000 or thereabouts, for cash and in exchange for
TreasurY biils maturing May 27, 1965,
in the amount of
$ 2,201,019,000, as follows:
91-day bills (to maturity date) to be issued May 27, 1965,
in the amount of $ 1 200,000,000, or thereabouts, representing an
additional amount of' bills dated February 25,1965, and to
mature August 26,1965, originally issued in the amount of
$1,003,386,000, the additional and original bills to be freely
interchangeable.
183-day bills, for $ 1,000,000,000, or thereabouts, to be da1
May 27, 1965,
and to mature
November 26, 1965.
The bills of both series will be issued on a discount basis'
competitive and noncompetitive bidding as hereinafter provided, a:
maturity their face amount will be payable without interest. The;
will be issued in bearer form only, and in denominations of $1,001
$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 Branchl
up to the closing hour, one-thirty p.m., Eastern Daylight Savin!
time, Monday, May 24, 1965.
Tenders will not be
received at the Treasury De~artment, Washington. Each tender musi
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 1
be used. It is urged that tenders be made on the printed forms al
forwarded in the special envelopes which will be supplied by Fedel
Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for accoun1
customers provided the names of the customers are set forth in sue
tenders. Others than banking institutions will not be permitted t
submit tenders except for their own account. Tenders will be reCE
without deposit from incorporated banks and trust companies and f]
responsible and recognized dealers in investment securities. Tenc
from others must be accompanied by payment of 2 percent of the rae
amount of Treasury bills applied for, unless the tenders are
accompanied by an express guaranty of payment by an incorporated 1
or trust company.
F-55
- 2 -
Immediately after the closing hour, tenders will be opened at
:he Federal ReservE> Banks and Branches, following which public
lnnouncement will be made hy the Treasury Department of the
:amount and price range of accepted bids.
Those submi.tting t.nders
lIill be advised of the acceptance l,r re ;ect i em thereof.
The
~cretary of the Treasury expressly reserves the right to accept or
reject any llr all tenders, in whole nr in part, and his action in
any such respect shall be final.
Subject to these reservations
noncompetitive tenders for eaeh issue for 5200,000 or less without
stated price from anyone bidder will be accepted in full at th~
avera~e price (in three decimals) of accepted competitive bids
for the respective issues.
Settlement for accepted tenders in
accordance with the hids must he made or completed at the Federal
Reserve Banks on May 27, 1965,
in cash or other immediately
available funds ,'r in a like ,.lee amnunt of Treasury bills
maturing May 27,1965.
(ash and exchange tenders will receive
equal treatment. Cash adjustments wi.ll be made for differences
be~een the par value of maturing hills accepted in exchange and
the issue pr ic e n t t he new hi lIs.
The income derived from Treasury bills, whether interest or
from the sale or other disposition of the bills, does not have
my exemption, as such, and lOBS from the sale or other disposition
)f Treasury bills does not have any speCial treatment, as such,
mder the Internal Revenue Code of 1954. The bills are subject to
~state, inheritance, gift or other excise taxes, whether Federal or
3tate, but are exempt from all taxation now or hereafter imposed on
Ghe principal or interest thereof by any state, or any of the
)ossessions of the United States, or by any local taxing authority.
~or purposes of taxation the amount of discount at which Treasury
:li115 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
rreasury 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.
~ain
Treasury Department Circular No. 418 (current revision) and this
notice prescribe the terms of the Treasury bills and govern the
~onditions of their issue.
Copies of the circular may be obtained from
any Federal Reserve Bank -or Branch.
000
(.l.l'C
exempt from all taxa.tion now or hereafter lnrposcd on the principal or Jnt.erest
~hereof by ony
Stal,e,
Ol~
locDJ. tu,'{ing auLhority.
any of thc pOGGcssions of the United States, or by any
For pUrpOGC8 of tnxatJon t.he amount of cUscount at which
itreasllry tdlls nrc originally sold by -Lhe Unj_ted States is considered to be in\~:rest.
the
Una.cr Sections 4,54: (b) and 1221 (~)) of the Internal Revenue Code of 1954
~ount
of discount at "mich bills lssued hereunder are sold is not considered
t<) accrue until 'such bills arc sold, redeemed. or otherwise disposed of, and such
bills arC' excluded from conr.;jJlerntJon
fl.r;
c~'p
t t.al fl.;_n1Ct:::;.
fl.ccordingly, the owner
of 'ltrcasury bIlls (other tll:.ln li'1'(~ insurance companies) issued hereunder need 1nelude 10 h:i.s income tEl.":: return only the difference betvreen the price paid for such
bills, "1hether on ortc;inal lr;Guc' or on f..mbsequcnt ptU'chase, and the amount actually
received either upon sale or redemption at maturity durj.oc the taxable year for
which the return is mo.de, as ordi.no.ry enin or loss.
'ltreo.sury Department Circular No. 4:18 (current revision) and this notice, prescribe the terms of thc rrreasury bills and govern the conditions of their issue.
Copies of the
circu~lar
may be obtained from any Federal Reserve Bank or Branch.
- 2 -
bonJdnc; lnsti tutiona \-rill not be pcrmi tted to subnrl t tenders except for their
nccOtll1t.
own
Tenders ,viII be received lf~i. thout deposit from incorporat~d banks and
trust companies and from responsible and recognized dealers in investment secur1t1el
Tenders from ol:.hers must be accompanied by payment of 2 percent of' the
face. BlDOUIlt
of Treasury hills applied for, unless the tenders are accomponied by an express
euaranty of payment by an incorporated banlc or trust company.
Immediately after the closing hour, tenders will be opened at the Federal Reserve Danks and Brunches, follolf1nc \Thich public announcement will be made by ·the
Trcasury Department of the Dmount and price range of accepted bids.
'1.llose submit-
tiUG tendcrs vrill be advised of the acccptance or rejecLion thereof. \ The S~cretary
of the 'l'reasury e;~resGly reserves the riGht to D.cccpt or reject ru:ry or all tenders,
in ,·,hole or in part, and his action in any cuch respect _shall be final.
to these reservations, noncompetitive tenders for :)j 200 000
(16)
Subject
or leGS without
stated price from any one bidder "rill be accepted in full at the average price (iln
three decimals) of accepted competitive bids.
Settlement for accepted tenders in
accordance "lith the bids mu:::;t be made or completcd at the Federal Reserve -Bank.on
_M_ay~_3_l,,-,..,1-=-9-=-65'T-_ _ _ _ ,
'fHf
in caah or other inunediatcly available funds or in a likct-
face amount of Trcasury bill:::; maturinG _ _ _Ma....,..=.y--.-3_l~,_1_9_65~__ , / Cash .and excbange
.(12 )
tenders will receive equal treatment.
Cash adjustments will be made' for differ-
ences betvTeen the par value of maturine bills accepted in exchange and ·the issue
pr:tce of the ncv' bills.
The income derived from Treasury bills, whether interest or gain fr.om the sale
or other disposition of the billa, does not have any exemption, as such, and loss
from the sale or other disposition of Trcasury bills does not have any special
treatment, as such, under the Internal Revenue Code of 1954.
.The bills are subject
to estate, inheritance, gl~~_~r _0"t~:~ excise taxes, vl~~ther ,Federal. or ,ste.te, bU~
except that settlement may be made on June 1 if the Federal-Reserve Bank is cloled)
on May 31.
TREASURY DEPARTMF..NT
Washington
rOll INlvID:DIATE RELEASE
May 19, 1965
REFUNDS ONE-YEAR BILIS
The Treasury Department, by this public notice, invites tenders for
$l,OOW'OOO
, or thereabouts, of
365
(b)
in exchange for Treasury bills maturing
of $l,OOO,~ooo
-day Treasury bills, for cash and
May 4!}:1965
, in the amount
, to be issued on a discount basis under competitive and
noncompetitive bidding as hereinafter provided.
~be
bills of this series will be
They will be issued in bearer
form only, and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000,
:liSoo,ooo
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, TueSday,-trf 25, 1965
Tenders trill not be received at the Treasury Department, Washington.
Each tender
mwt 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 dec~ls,
e. g., 99.925.
Fractions may not be used.
these bills will run for
365
=w
(Notwithstanding the fact that
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 'nll be supplied by Federal Reserve Banks or Branches
on application therefor.
Banking institutions generally may submit tenders for account of customers
~ided the names of the customers are set forth in such tenders.
x-
s7
Others than
TREASURY DEPARTMENT
May 19, 1965
FOR IMMEDIATE RELEASE
TREASURY REFUNDS ONE-YEAR BILLS
The Treasury Department, by this public notice, invites tenders
for $1,000,000,000, or thereabouts, of 365-day Treasury bills, for
cash and in exchange for Treasury bills maturing May 31, 1965, in the
amount of $1,000,141,000, to be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided. The
bills of this series will be dated May 31, 1965, and will mature
May 31, 1966, when the face amount will be payable without interest.
They will be issued in bearer form only, and in denominations of
$1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000
(maturity value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Tuesday, May 25, 1965. Tenders will not be received at the
Treasury Department, Washington. Each tender must be for an even
mul t-iple of $] ,000, and in the case of competi tive tenders the
price offered muSL be expressed on Lhe lJAsis of ]00, with not more
than three decimals, e. g., 99.925. Fractions may not be used.
(Notwithstanding the fact that these bills will run [or 365 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 prin ted 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 f01, 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, [allowing which public
announcement will be made by the Treasury Department of the amount
and. price range o[ accepted bid s . Those subm itt ing tenders will be
advlsed of the acceptance or rejc'ct]r)Jl thereof. ThE' Secretary of the
f-56
- 2 easury expressly reserves the right to accept or reject any or all
nders, in whole or in part, and his ac tion in any such respec t
.a11 be final. Subject to these reservations, noncompetitive tenders
Ir $200,000 or less without stated price from anyone bidder will be
cepted in full at the average price (in three decimals) of accepted
Impetitive bids. Se ttlement for accepted tenders in accordance with
Ie bids must be made or completed at the Federal Reserve Bank on
y 31, 1965, in cash or other immediately available funds or in a
.ke face amount of Treasury bills maturing May 31, 1965, except that
ttlement may be made on June 1 if the Federal Reserve Bank is closed
May 31. Cash and exchange tenders will receive equal treatment.
sh adjustments will be made for differences between the par value of
turing bills accepted in exchange and the issue price of the new bills.
The income derived from Treasury bills, whether interest or gain
om the sale or other disposition of the bills, does not have any
'emption, as such, and loss from the sale or other disposition of
easury bills does not have any spec ial treatment, as such, under
\e Internal Revenue Code of 1954. The bills are subject to estate,
Iheritance, gift or other excise taxes, whether Federal or State,
~t are exempt from all taxation now or hereafter imposed on the
~incipa1 or interest thereof by any State, or any of the possessions
: the United States, or by any local taxing authority. For purposes
E taxation the amount of discount at which Treasury bill are
7igina1ly sold by the United States is considered to be interest.
Ider Sections 454 (b) and 1221 (5) of the Internal Revenue Code of
J54 the amount of discount at which bills issued hereunder are sold
~ not considered to accrue until such bills are sold, redeemed or
therwise disposed of, and such bills are excluded from consideration
~ capital assets.
Accordingly, the owner of Treasury bills (other
~n life insurance companies) issued hereunder need include in his
lcome tax return only the difference between the price paid for such
ills, whether on original issue or on subsequent purchase, and the
nount actually received either upon sale or redemption at maturity
lring the taxable year for which the return is made, as ordinary
:lin or loss.
Treasury Department Circular No. 418 (current revision) and this
)tice, prescribe the terms of the Treasury bills and govern the
)nditions of their issue. Copies of the circular may be obtained
rom any Federal Reserve Bank or Branch.
000
StateMnt or
lIInry H. JPovler
Secretar;y of the 'l'r....llr7
before the
of tbe
Senate
C~ ttee OD
tbe JUdic1ar7 em
s.
1592
*7 19, 1965
--~----
Mr. Chai~, I _
- - - - - - - - --- - - -
-
~
happy to appear before 7OUJ' ec-1tte. ill u8oc1atlO1l
with my colleague, the Attoruey Geaeral, and other repre8entative. of till
Administration 11l 8Upport at S. 1592 to
l teel that ell&ctaent of th1a piece
~d
the Ped.eral n~ Act, be_
ot legislation i.
of sr-t 1apartaDce to
the welfare of thi. cOUIatry and its citizena.
s.
1592 is designed to implement the recCIIDIIDdatiOJl8 which the PreI1deD1
set torth with respect to t1re&rma control in hi. .e••age to the Ccmsr.s. of
JU8t1~.
March 8, 1965, relating to law enforcement and the atJwi n1strat1on of
'!'be President, in that 88S8&6e, described
cru. ..
"a _
11
sr-ut ..., 11
America's midst" of such extent and seriousness tbat tl:ae problAa
Hot great zational coocern."
message, "'1be time bas
u
DOlI CIDI
'Dle Pres1dent alao stated, aDd I qUDte
CeDe ~,
rrc. IW
to check that growth, to cemtain it. aprea4,
and to reduce 1ts toll ot 11ves and property."
As an 11ltegral f&l"t of the war againat the spread of lawl••••ss, tM
President urged the exactment of more effective t1rearaa control 1q1.alat1C11l,
and cited as a significant factor 111 the rise ot violent cr1me in tbe 1JIl1W
States lithe eaa. with which any person can acquire fu-.n.a."
F-57
- 2 ~e
President recognized the necessity for state and local action, as
well as Federal action, in this area and he urged "the Governors of our states
and ..)'Ors and other local public officials to review their existing legisla-
tion in this critical field with a view to keeping lethal weapons out of the
wrong banda. "
liN'ever, the President also clearly recognized in his message
that effective state and local regulation of firearms is not feasible unless
we Itrengthen at the Federal level controls over the importation of firearms
and over the interstate shipDent of firearms.
The President advised that he
was proposing draf't legislation to accomplish these aims, and stated, and
I quote, "I recallllend this legislation to the Congress as a sensible use of
Federal authority to assist local authorities in coping with an undeniable
menace to law and order and to the lives of innocent people."
Anyone who reads the papers today or hears the news on radio and television cannot help but be appalled at the extent of crime and lawlessDess in
this country and at the extent of the loss of lives through the use of weapons
in the hands not only of crim1 nals but also juveniles, the mentally sick and
other irresponsible people.
Every day the lives of decent American citizens,
our greatest national asset, are being snuffed out through the misuse and
abuse of firearms by persons who should not bave access to them.
Mr. Chairman, before proceeding to discuss briefly the essential features
ot the bill before you, I want to take this occasion to congratulate you and
the members of your Caam1ttee for the part which you have played during the
past tour years in awakening the people of this country to the dangers to the
-. ('0,
~
I
'-"
-
- 3 publIc s&tety and. vel.tare created by the ease with which any person in the
United States can obtain fIre&rms.
I should like nov briefly to state 1111
understanding at wbat this bill would do and, in order to el1.JD1nate mi8concep
tions, wba t i t vould not do.
AIDOllg other things, the bill would:
(1)
Prohibit the shipaent of firearms in interstate cC8Jerce,
except between Federally-licensed manufacturers, dealers and
ilIlporters;
(2)
Prohibit sales of firearms by Federal licensees to persODa
u.nder 21 years of age, except tba t sales of sporting rifle. &nd sbotguns could continue to be _de to persons of 18 years of age j
(3)
Prohibit a Federal licensee frClll selling a firearm (other
than a rifle or shotgun) to ~ persOD who is not a resident of the
state where the licensee is OOins business j
(4)
CUrb the flow into the United States of surplus milItary
weapons and other t1rearaa not sui table for sporting purposes j
( 5)
Bring under effective Federal control the importation and
1J;lteratate shipaent of large caliber weapons such as bazookas and
8.Jlti tank guns, and other destructive devices j and
(6)
Revise the licensing prOvisions ot the Federal Firearms
Act, including increases in license fees: so as to assure that
licenses v1ll be issued only to responsible persons actually engaging
in business as importers, manufacturers and dealers.
- 4Wbat the bill does is to institute Federal controls in areas where the
Federal Government can and should operate, and where the state goverrments
C&DDOt, the areas of interstate and foreign cClllDerce.
Under our Federal
conatitutional system, the responsibility for maintaining public health and
safety is left to the state governments under their police powers.
Basically,
1t 18 the province of the state government. to determine the conditions under
which their citizens Day acquire and use firearms.
I certainly hope that in
those states where there is not now adequate regulation of the acquisition
of firearms, steps will soon be taken to 1nstitute controls ccmplementing the
steps taken in this bill in order to deal effectively with this serious menace.
Since a bureau of my Department is responsible tor the admini8tration of
the Firearms Act, I am particularly anxious that the changes proposed in the
bill with respect to the issuance of licenses to manufacture, import and deal
in firearms be adopted.
Under existing law, anyone other than a felon can,
upon the mere allegation that he is a dealer and payment of a tee of $1.00,
demand and obtain a license.
sane fifty or sixty thousand people have done
this, sane of them merely to put themselves in a position to obtain personal
~
at wholesale.
The situation is wide open for the obtaining of licenses
by irresponsible elements, thus facilitating the acquisition ot these weapons
by criminals and other undesirables.
The bill before you, by increasing
license fees and imposing standards for obtaining licenses, will go a long way
toward rectifying this situation.
ODe misconception about this bill which bas been widely publicized is
that it will Eke it possible for the Federal Government to institute such
- 5regulations and restrictions as will create great difficulties for
law-ab1~
ci tizens in acquiring, owning or using firearms for sporting purposes.
is absolutely not so.
ru.
Sportsmen will continue to be able to obtain rifle. aDd
shotguns frail licensed dealers and DBnu:tacturers subject only to the requirements of their respective state lawaI
Indeed, they can travel to another
State and purchase a rifle or shotgun frCIm a licensed dealer there and br1
it home with them without interference.
occur for the sportsmen of this country.
Only two minor inconveniences
ma,
'!bey will not be able to travel
another state and purchase a pistol or concealable weapon, and they will n
be able to obtain a direct shipnent frail another State of &IIY type of firel
On
this latter point, the inconvenience is more apparent than real becauae
large mail order houses have outlets in most ot the States and th8 bill vi:
perm! t mail order sh1pnents to individual citizens tran these outlets.
These minor inconveniences have been found to be necessary in order t
make it possible for the States to regulate effectively the acquisition an
possession of firearms.
Obviously, state authorities cannot control the a
sition and possession ot firearms if they have no way of knowing or atcert
what firearms are caning in to their states through the mails or, in the c
of concealable weapons, by personally being carried across state lines.
Mr. Chairman, there are many other points which could be made with rei
to this bill.
For example, I think it is selt-evident that minors should
I
have access to pistols, other concealable firearms and weapons at vast de.1
tive power, and that minors under the age of 18 should not have access to
or shotguns.
I
- 6 Today, the people of the Un! ted State. are living under the most ideal
conditions which have ever existed for any peoples anywhere on earth.
Yet
much of this is threatened by the spreading cancer of crime and juvenile
delinquency.
It i8 ab80lutely essential that steps such
&8
those proposed in
this bill be taken to bring under control one of the main elements in the
spread ot thil cancer, the indiscriminate acquisition of weapons of destruction.
In concluding my statement, lI&y I 8ay that the Department's experience
with the existing Federal Fire&rDl8 Act has resulted in a feeling of frustration since the controls provided by it are so obviously inadequate in the ways
tbat I have indicated.
In dr&tting S. 1592 we have bad in mind these inadequa-
cies and now have, we believe, a bill which, when enacted, will provide effective
controls without jeopardizing or interfering with the freedan of law-abiding
citizens to own firearms tor legitimate purposes.
enactment ot S. 1592.
Thank you very much.
I strongly 8Upport the
- 2 -
To ensure that maximum use of U. S.-owned foreign
currencies is made for the benefit of the U. S. balance of
payments, the President recently ordered a Government-wide
re-examination of foreign currency utilization.
In support of
, this effort, American tourists are encouraged to purchas..e.. ....their
~
IN
t \, I
..
' .. \ A
local currency needs from U. S. sources in
i
fl-tzP..J2-t'
!~ese
A .....
A'
~.Mp.
three
countries~
By buying their local currency needs at the respective embassies
or consulates in these countries American citizens are in
effect keeping their dollars "at home" and are assisting the
U. S. balance of payments.
/),$,
In most of the countries throughout the world,
the~GOvern-
ment holds foreign currencies only as working balances.
This
area includes all of Western Europe, Latin America, Africa,
with the exception of Guinea, and the Far East, except for
Burma, India and Pakistan.
owned
balan~es
In these nations, the Government-
of foreign currency are inadequate or barely
adequate to cover official requirements and supplemental purchases are made with dollars.
There is, therefore, no balance
of payments benefit to be gained by sale to private persons.
As additional sales for foreign currencies are made, as
repayments under previous agreements are received and as United
States official requirements change, arrangements will be
negotiated where possible and procedures established for sales to
private U. S. citizens.
FOR
II
,
...--"
f ft.
mOl :ufME
JtW,
A
~,'.I
~
May--l-9-;~.~l%S·
RELEASE
, ,_" ',~
~'L""'''J.
.......~
E1JT 17IU/f5.Pft"I' A,irt' 2. 0 ".- !,j-
(--
~~
U.
S. Citizens E,·May
Buy Indian Rupees
l>vVl>t>i>C>#... ''lO l.-,,_, f
,!,-
I
l:d<
£.'
i
Lt
@
f
.
_
I
OW/4t!A' h" Vi ~ Gn:>vt ~'~'>J1(;;: J4 'r ._
.:t;..-w.....,.. ...... ~~""S-·;T~~~~"1I<''t'1f'-''''''~~h.~ J
1Xhe Department of State and the Treasury Department
-l
I
,announced t~dax_ that i the American Embassy at New Delhi and
-',
~//
the American Consulates at Madras, Calcutta and Bombay, India,
have been authorized to sell to American citizens Indian
rupees received by the United States from the sale of surplus
agricultural commodities.
\
,),
(01 if ()G.l C@J t,;1A~
/17 c;tCCc nia H(.:·~ W / rh
The actio~ was taKen ~!:,8\:leme t:!J1a provision of tIiI&.,.:{ ;,,./
n
amendment signed on December 31, 1964 to the Food for Peace
Agreement of September 30, 1964 with India.
American tourists and businessmen, upon presentation of
their passports for identification, can obtain Indian rupees
~
at the official rate of exchange at the Embassy or Consulates
in exchange for
u.
"/
S. currency, personal\checks,drawn on
.
'
. "
a
I
in India brings to three the number of countries where such
~ sales of local currency, held in amounts excessive to the needs
of the U. S. Government, are now in effect.
The U. S. has
been selling Israeli and Egyptian pounds to U. S. citizens
in tho9Z two countries for some time.
TREASURY DEPARTMENT
FOR RELEASE 11:00 A.M., EDT
THURSDAY, MAY 20, 1965
U. S. CITIZENS MAY BUY INDIAN RUPEES
OWNED BY U. S. GOVE~~NT
The Department of State and the Treasury Department announced
today that the American Embassy at Ne\;7 D01.hj and the American
Consulates at Madras, Calcutta and Bombay, India, have been
authorized to sell to American citizens Indian rupees received by
the United States from the sale of surplus agricultural commodities
To ensure tha t max imum use 0 fIT. S • - owned fore ign currenc ies is
made for the benefit of the U.S. b:d:1i.C2 of payments, the President
recently ordered a Government-wide re-examination of foreign
currency utilization. In support of this effort, American tourists
are encouraged to purchase their local currency needs from u.s.
sources in countries where such sales are authorized. By buying t~
local currency needs at the respective embassies or consulates in
these countries American citizens are in effec t keeping their dollar
"at home" and are assisting the U. S. balance of payments.
The initiation of Indian rupees sales to American citizens in
India brings to three the number of coun:-ries where such sales of
local currency, held in amounts excessive to the needs of the
U.S. Government, are now in effect. The U.S. has been selling
Israeli and Egyptian pounds to U.S. citizens in those two countries
for some time.
The action announced today was taken in accordance with a
prov~s~on of an amendment signed on December 31, 1964 to the Food
for Peace Agreement of September 30, 1964 with India.
American tourists and businessmen, upon presentation of their
passports for identification, can obtain Indian rupees at the
official rate of exchange at the Embassy or Consulates in exchange
for U. S. currency, personal checks drawn on a bank in the U.S.,
or U.S. travelers checks.
In most of the countries throughout the world, the U.S.
Government holds foreign currencies only as working balances. This
area includes all of Western Europe, Latin America, Africa, with t~
exception of Guinea, and the Far East, except for Burma, India and
F-58
(OVER)
- 2 Pakistan. In these nations, the Government-owned balancesof foreign
currency are inadequate or barely adequate to cover official
requirements and supplemental purchases are made with dollars. There
is, therefore, no balance of payments benefit to be gained by sale to
private persons.
As additional sales for foreign currencies are made, as repayments
under previous agreements are received and as United States official
requirements change, arrangements will be negotiated where possible
and procedures established for sales to private U.S. citizens.
000
TREASURY DEPARTMENT
(
FOR D1MEDIATE RELEASE
TREASURY DEC rsION ON CRUDE SULFUR
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that crude sulfur
from Canada is not being, nor likely to be, sold at less than
fair value within the meaning of the Antidumping Act.
A "Notice
of Tentative Determination," was published in the Federal Register
on February 12, 1965.
All written submissions received in opposition to the tentative determination were given full consideration.
were not convincing.
The objections
No request was made of the Secretary of the
Treasury for an opportunity to present views.
The dollar value of imports of the involved merchandise received during the period January 1964 through February 1965 was
apprOXimately $9,000,000.
000
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY D~ISION ON CRUDE SULFUR
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that crude sulfur
from Canada is not being, nor likely to be, sold at less than
fair value within the meaning of the Antidumping Act.
A "Notice
of Tentative Determination," was published in the Federal Register
on February 12, 1965.
All written submissions received in opposition to the tentative determination were given full consideration.
were not convincing.
The objections
No request was made of the Secretary of the
Treasury for an opportunity to present views.
The dollar value of imports of the involved merchandise received during the period January 1964 through February 1965 was
approXimately $9,000,000.
000
TREASURY
~;:tctW'!"
lOR RELEll.SE A.H. NEHSPAPZRS,
uesday, I1ay 25 , 1955.
RESULTS 0"] TREf..sURYI S 'VlKCKLY BILL W'li3?.:Ilm
':l."Q~s;;:-~y ~~:?~:".'c;~a.~/-, ~71~01,·:,,""1C~~':}
'rho
1.:1 c~~ c'\7c;)i.:;;'$
tl~":; 1;~hQ ~0c:,,1.clol."~ £01" 1;;1:-0 80;:~~a:;:;; oZ
reasury bon 1 s J 0::;'0 ::;0~':"83 -:':'0 be 2:' 2.dcli"t.iOE~l iSSUG oi' °1:.110 bills 6.a:cod Fe'.J:l:"tlE::cy 25,
965, and -the other series to be dat.ed Hay 27, 1965, t-Jhich ~Jere offered on Hay 19, 1;;Gr'e
~ned at the Federal Reserve Banlcs on l{ClY 2!;.. Tenders ~;ere innted for 61,200,000,000:1
thereabouts, of 91-day bills and for ~;l,OOO,OOO,OOO, or the:~eabouts:l of 183-day b-'PJs.
details of the t~!O series are as follo":'Js:,
91-day
ANGE OF ACCEPl'ED
OMPETITlVE BIDS:
.",!>J-ui"';'
'1"\0'
...., .. _tJ _ ~-b
t uO'us+U
.., . y : " )
?.cic::::
High
99,,02'0-
26
bills
065
, _ "'i
,,/
Lppl"'ox. Equiv.
Ln"'1u.al Rate
-308775~---
99.015
99.0:"7
3.897%
3,,889% Y
Excepting one tender of ~?2 ,l25 ,OCO
Low
Average
al
T~0asury
44%
·.
~
..
183-day Treas-ary bills
r,:"s:.twing November 26, 1965
f...pprox. Equi v.
·•
·.
Annual R2.te
3.938%
3.946%
o
~
3.945% Y
e
of the am.ou';"1.t of 91~c:ay bills bid for at the lou p::dce 'tJas accepted
88% of the a.."r.OlliJ.t of 183-day bills bid for at tha lot-r p:;'''ice -eras accepted
OTAL TENDERS APPLIED FOR AND ::.CCEFTED BY FKDEEAL RESERVE DISTHICT3:
Distric-c,
i3oston
New York
Philadelphia
Cleveland
Richmond
Atlanta
,chicago
St.Louis
Minneapolis
Kansas City
Dallas
San Francisco
Applied Fo:::'
~
22,0$(5,;1000
1,,464,203,080
26,177,OCO
21,858,000
20,389,000
34,763;1000
296,4.08,000
3h,668,coO
17,230,000
30,325~COO
22~804;lOOO
100,301,OOq,
Lcce7:;ted
~12!1706!lOOO
·
··
"
0
822,897,000
13,943,000
21, 858,?OOO •.
16,877,000 "
23,826,000 "
150,031,000 "
0
·
Q
0
0
27~556.?ooo
13,158,000
30,292,000
13,244,000
.
a
·
Applied For
~
13;1555,000
1,399,166,000
. J.8,691,000
23,033;1000
5,398,1)000
22,590,?OOO
337,018,000
12,554,000
7~137~OOO
n
·•
54,L~70 )1000
·
()l,200;;858,OOO b/
0
"
0
17,,402.?OOO
9,219,000
?
I...,,, 0'10
.L",j;;L~..,)~;; v
~
-J
Accepted
(;~'l
OJ
3,555,000
734,,689,000 '
5,691,000
12,238,000
5,042,000
1l,316,OOO
146,298,000
10,190,00a
4,1~57 ,000
10,706,000
L~,189 ,000
52 :.L!l3 !)OOO
01,000,784,000
/ Includes $216,652,000 no~ccmpet.iJ:'ive t.enders accGPt.ed at -'.:.he average price of 99 .. 017
01 Includes $84,749,000 noncompetit.ive tenders accepted at t.l:e average price of 97 .. 995
02,091~982;JOOO
l
~2;;oOOl~200~OOO
On a coupon issue of the; sa.!::e lengt.h and for t.he sane cl'llO-u::.t i!lvested" the return on
these bills uould provide y.:.elds of 3098%, for th0 91-dz.y bills s mld 4.08%, for the
l83-day bills. Interest :i.~.2:l:;es on bills are quoted. in te:cr.23 of bank discoUl?-t, 't·iith
the return l'elated to -;:'he f&.co aLi-ount of the bills payable at rC..3.tUl'"ity rather t:-.:2.::1
the amount invested and their 10~gth il1 actual nuraber of days related to a 36C~~y
year. In contrast, yields on ce::·t.ificates, notes, G.nd bond8 ~:i."e corr.puted in t er~T;Z
of interest on the amount invo ... ·:.ad, and relate tl:e nULwer of days remaiZ'l...iI2g in ':"~1
interest payment period to the ac-'c.u.a1 DUl7lber of cb.ys in the period, "With seraia::mual
compounding if more than one coupon period is involved.
~I
TREASURY DEPARTMENT
FOR RELEASE A.M. NEWSPAPERS,
Tuesday, May 25 , 1965.
May 24, 1965
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two leries of
Treasury bills, one series to be an additional issue of the bills dated February 25,
1965, and the other series to be dated May 27, 1965, which vere offered on May 19, veri
opened at the Federal Reserve Banks on May 24. Tenders were invited for 11,200,000,001
or thereabouts, of 91-day bills and for 11,000,000,000, or thereabouts, of 183-dayb1t
The details of the two series are as follows:
91-day Treasury bill ~
RANGE OF ACCEF1'ED
COMPETITIVE BIDS:
maturin~ A~U5t
Price
High
~J9 .020
Low
99.015
99.017
Average
261. 1965
Approx. 2:quiv.
Annual ltate
3.87il
3.897~
3.889~
!/
••
••
••
••
••
183-day Treasury bills
maturins November 26 z 1965
Approx. Equiv,
Price
.lnnual Eta te
3. 936r97.998 a/
97.994 3.946%
97.995
3.945%
!I
a/ Excepting one tender of $2,125,000
41% of the amount of 91-day bills bid for at the low price vas accepted
88% of the amount of 183-day bills bid for at the low price vas accepted
TOTAL TEN DEns APPU~D FOR AND ACCEP1'ED BY FEDE:iAL RESERVE DISTRICTS:
District
Eoston
New York
Philadelphia
Cleveland
Richrr.ond
Atlanta
Chicago
st. Louis
Ninneapo1is
Kansas City
Dallas
San Francisco
API~lied
.~
For
22, 856 , 000
1,h6h,203,OOO
26,177,000
21,858,000
20,)89,000
34,163,000
296 ,408 ,000
34,668,000
17,2)0,000
30,)25,000
22,804,000
100z301~OOO
$2,O~,982,000
·
AcceEted
•
12,706,000 :
822,897,000
13,943,000
21,858,000 ••
16,877,000
23,820,000
150,031,000
21,556,000 ••
13,155,000
30,292,000 •
13,244,000
54,470,2000
$1,200,858,000 ~
$
·
·
·
·
·
AEE1ied For
•
13,555,000
1,399,166,000
18,691,000
23,038,000
5,398,000
22,590,000
337,018,000
12,554,000
7,137,000
17,402,000
9,219,000
1350143201000
$2,001,200,000
AcceEted
3,555,000
7)4,689,000
$,691,000
12,238,000
5,042,000
11,)16,000
146,298,000
10,190,000
4,457,000
10,706,000
4,189,000
52,2413 2 00
'1,00(',784,000
•
°
b/ Includes $216,652,000 noncompetitive tenders accepted at the average price of 99.017
Includes $84,749,000 noncompetitive tenders accepted at the average price of 97.~'
On a coupon issue of tee same length and for the same amount invested, the return on
- these bills would provide yields of 3.98%, for the 91-day bUls, and 4.08%, for the
183-day bills. Interest rates on bills are quoted in terms of bank discount with
the ret\Jl'n 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 ~1
year. In contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semia nrmal
compounding if more than one coupon period is involved.
c/
1/
F-59
- 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 sale
or other disposition of the bills, does not have any exemption, as such, and loss
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, gi:ft or other excise taxes, whether Federal or state, but
are exempt from all taxation now or herea:fter 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
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 for
which the return is made, as ordinary gain or loss.
Treasury Department Circula.r 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 BE'fA • MODIF-Imr
decimals, e. g., 99.925.
Fractions may not be used.
It is urged that tenders
be made on the printed forms and forwarded in the special envelopes which will
be supplied by Federal Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of customers
provided the names of the customers are set forth in such tenders.
others than
banking institutions will not be permitted to submit tenders except for their
own account.
Tenders will be received without deposit from incorporated banks
and trust companies and from responsible and recognized dealers in investment
securities.
Tenders from others must be accompanied by payment of 2 percent of
the face amount of Treasury bills applied for, unless the tenders are accompanied
by an express guaranty of payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal
Reserve Banks and Branches, following which public announcement will be made
by the Treasury Department of the amount and price range of accepted bids.
Those
submitting tenders will be advised of the acceptance or rejection thereof.
The
Secretary of the Treasury expressly reserves the right to accept or reject any
or all tenders, in whole or in part, and his action in any such respect shall
be final.
Subject to these reservations, noncompetitive tenders for each issue
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
for the respective issues.
Settlement for accepted tenders in accordance with
the bids must be made or completed at the Federal Reserve Banks on __J_un~e~3~,==
(16)
1965
, in cash or other immediately available funds or in a like face
------
=-_______ .
amount of Treasury bills maturing _____J_U_n_e_3-::,'{:.l,.:9'i-6+5
(1"1)
Cash
BKAi)i~
aA
Bifl'A - MOBIPIEB
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE
May 24" 1965
~=
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 $ 2,200,000,000 , or thereabouts, for
(2)
cash and in exchange for Treasury bills mat\lring
June 3 1965
,in the amount
-----=:::=P.(45~):::=-
of $2,200'rtf'OOO
, as follows:
91 -day bills (to maturity date) to be issued
=m=
June 3, 1965
--~(6;:+)=---
,
in the amount of $ 1,200,000,000 , or thereabouts, represent-
. (7)
ing an additional amount of bills dated
March 4} 1965
----:.~::r.(~8)~~-
,
and to mature
.
September 2, 1965 , originally issued in the
(9)
.
amount of $ 1,000f99 ,OOO , the additional and original bills
(-6)
to be freely interchangeable.
182 -day bills, for $1,000,000,000
(ll)
, or thereabouts, to be dated
(D)
June 3, 1965
, a.nd to mature
=(45)
December 2, 1965
=tYf-'
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 bea.rer fonn 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, on~-thlrty p.m., Eastern~time, _...;.Fr~i;.;;;da;;;Ly.l..,...;;Ma..;;;;;.;.:;:y7:i.2p8~,~1::-9...;6;..;5_ _ __
. (15)
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
:=l_
TREASURY DEPARTMENT
Hay 24, 1965
FOR INMEDIATE 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
$ 2,200,000,000,or thereabouts, for cash and in exchange for
Treasury bills maturing June 3, 1965,
in the amount of
$ 2,200,248,000, as follows:
91-day bills (to maturity date) to be issued June 3, 1965,
in the amount of $1,200 ,000 ,000, or thereabouts, representing an
and to
additional amount of bills dated March 4,1965,
mature September 2,1965, originally issued in the amount of
$1,000,299,000, tll~ additional and original bills to be freely
interchangeable.
182 -day bills, for $1,000,000,000, or thereabouts, to be dated
June 3,1965,
and to mature December 2, 1965.
The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be issued in bearer form 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, Friday, May 28, 1965.
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.
F-60
- 2 -
Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Rranches, following which public
announcement will be made hy the Treasury Department of the
amount and price range of accepted bids. Those submitting t~nders
will be advised of the acceptance or rejection thereof. The
Secretary of the Treasury expressly reserves the right to accept or
rejec t any or a 11 tenders, in who le or in par t, and his ac t ion in
any such respect shall be final. Subject to these reservations
noncompetitive tenders for each issue for $200,000 or less without
stated price from anyone hidder 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 hids must he made or completed at the Federal
Reserve Banks on
June 3, 1965,
in cash or other immediately
available funds l)r in a like ic1ce amount of Treasury bills
maturing June 3, 1965.
Cash and exchange tenders will receive
equal treatment. Cash adjustments will be made for differences
berneen the par value of maturing bills accepted in exchange and
the iss ue p ric e 0 f the new b ill s .
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.
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
- 2 -
not
tQ
proceed with the production of these dollars.
After con-
fUTing with the White House, the Treasury has therefore determined
~t
the Mint will not make any of these dollars at this time.
000
, . .'AII . . NlWUAlIU
.....1, laY 2', 1965
ftIAIU&y -CUES AGAINST PRODUCING IILVD DOLLARS
lb.
~....,
today 8IIDOUIlcecl that 1t baa dec:t.ded qainat the
1dntiDa of _y new Silver doll__ at this time.
Lat yMl'. in reaponae to • Treasury reque8t. Congres8 approplated '600,000. _
ECNnt:
sufficient to manufacture 45 million
lilver c1011ua.
out: the expre••ed intent of the Conaress. the Treasury
To CIa&1:'y
r_ u eded to the White Hou.e that dle United Stu.. Mint be
auChoru.t to begin production.
It was on this recommendation that
the Wblt.e Rouae aonounced May 15th, that production could begin.
It.raoe that time. however, manbera of the Congress who, by
reaaon of their tom.lttee asslgnments, have a direct and responsible
lacer••t in United State. coinage. have strongly urged the Treasury
/
.~l/
/
TREASURY DEPARTMENT
FOR RELEASE A.M. NEWSPAPERS
TUESDAY, MAY 25, 1965
TREASURY DECIDES AGAINST
PRODUCING SILVER DOLLARS
The Treasury today announced that it has decided against
the minting of any new silver dollars at this time.
Last year, in response to a Treasury request, Congress
appropriated $600,000, an amount sufficient to manufacture
45 million silver dollars.
To carry out the expressed intent of the Congress, the
Treasury recommended to the White House that the United States
Mint be authorized to begin production. It was on this
recommendation that the White House announced May 15th, that
production could begin.
Since that time, however, members of the Congress who, by
reason of their Committee assignments, have a direct and
responsible interest in United States coinage, have strongly
urged the Treasury not to proceed with the production of these
dollars. After conferring with the White House, the Treasury
has therefore determined that the Mint will not make any of
these dollars at this time.
000
F-6l
TREASURY DEPARTMENT
WASHINGTON. D.C.
RELEASE A.M. NEWSPAPERS,
lesdayJ May 26, 1965.
May 25, 1965
RESULTS OF REFUNDING OF $1 BILLION OF ONE-YEAR BILLS
The Treasury Department announced last evening that the tenders for $1,000,000,000,
lihereabauts, of 365-day Treasury bUls to be dated May 31, 1965, and to mature May 31,
6, which were offered on May 19, were opened at the Federal Reserve Banks on May 25.
The details of this issue are as follows I
Total applied for - $2,751,845,000
Total accepted
- $1,000,737,000
Range of accepted competitive bidss
High
Low
Average
(includes $31,221,000 entered on a
noncompetitive basis and accepted in
.full at the average price shown below)
(Excepting 2 tenders totaling $10,000,000)
- 95.994 Equivalent rate of discount approx. 3.951% per annum
- 95.991
"
n"
"
"3.954%""
- 95.991
n
a"
"
"3.954% n
n
!I
(86 percent of the amount bid for at the low price was accepted)
Federal Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
MirUleapolis
Kansas City
Dallas
San Francisco
Total
Applied for
TOTAL
$ 60,914,000
2,198,600,000
16,516,000
26,500,000
1,463,000
12,250,000
322,)05,000
9,644,000
8,900,000
2,942,000
813,000
90,998,000
$2,151,845,000
Total
Accepted
$
914,000
945,251,000
1,)16,000
3,400,000
1,)91,000
1,950,000
24,075,000
),619,000
1,900,000
1,742,000
81),000
14,)60,000
$1,000,737,000
On a coupon issue of the same length and for the same amount invested, the return
on these bills would provide a yield of 4.13%. Interest rates on bills are quoted
in tems of bank discount with the return related to the face amount of the bills
pay-able at maturity rather than the amount invested and their length in actual nwnber of days related to a )60-d.tq year. In contrast, yields on certificates, notes,
and bonda are computed in tems of interest on the amount invested, and relate the
number of days remaining in an interest payment period to the actual mnnber of days
ill the period, with semiannual CCIIlpounding 1£ more than one coupon period is involved.
F-62
TREASURY DEPARTMENT
FOR RELEASE A.f-i.
NKwSPAP~R.S,
May 25, 1965
'..J"ednesday, Hay 26, 1965.
RESULTS OF REFUNDING OF $1 BILLION OF
ONE-Yr~R
BILLS
The Treasury Department announced last evening that the tenders for $l,OOO,OOOt~
or thereabouts, of 365-day Treasury bills to be dated 'May 31, 1965, and to mature May 3~~
1966, which were offered on May 19, were opened at the Federal Reserve Banks on May 25,
The details of this issue are as follows:
Total applied for - $2,751,845,000
Total accepted
- $1,000,737,000
Range of accepted competitive bids:
High
Low
AveraiSe
(includes $31,227,000 entered on a
noncompetitive basis and accepted in
full at the average price shown below)
(Excepting 2 tenders totaling
$lO,OOO,~)
- 95.994 Equivalent rate of discount approx. 3.951% per annum
_ 95.991
"
""
II
11
3.954%"
n
95.991
"
""
II
II
3.954% II
"Y
(86 percent of the amount bid for at the low price was accepted)
Federal Reserve
District
Boston
New York
Philadelphia
Gleveland
?ichmond
Atlanta
Shicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTAL
!/
Total
Applied for
$ 60,914,000
2,198,600,000
16,516,000
26,500,000
1 ,l..!.63 ,000
12,250,000
.322,305,000
9,6uu,000
6,900,000
2,9u2,000
813,000
90,998,000
Total
Accepted
914,000
$
945,257,000
1,316,000
3,400,000
1,391,000
1,950,000
24,075,000
3,619,000
1,900,000
1,742,000
813,000
14,360 ,000
$2,751,845,000
$1,000,737,000
On a coupon issue of t~e same length and for the same amount invested, the return
on these bills would provide a yield of 4.13~. 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 contra3t, yields on certificates, notes)
and bonds are computed in terms of interest on the amount invested, and relate the
number of days remaining in an interest payment period to the actual number of days
in the period, with semiannual compounding if more than one coupon period is inVolved.
TREASURY DEPARTMENT
Washington
REMARKS BY THE HONORABLE STANLEY S. SURREY
ASSISTANT SECRETARY OF THE TREASURY
AT THE REGIONAL CONFERENCE OF TAX ADMINISTRATION ASSISTANTS
SPONSORED BY THE AGENCY FOR INTERNATIONAL DEVELOPMENT
AND THE INTERNAL REVENUE SERVICE
AT MIAMI, FLORIDA, TUESDAY, MAY 25, 1965,
10:00 A.M., EST.
A sound tax system is important to the social and economic
progress of a developing
count~y,
indeed of any country.
Therefore it is not surprising that both the Act of Bogota
and the Charter of Punta del Este made tax administration a
specific object of efforts for reform.
This breakthrough in development policy may, in time, rank
in importance with the two other great development principles
established in those historic documents -- the recognition of
social goals and the necessity of self-help.
Early in 1961, the
O~ganization
of American States, the
Inter-American Development Bank. and the United Nations Economic
Commission for Latin America formed a Joint Program in Taxation.
The first effort of this joint program was a conference on
Tax AdministratiJn held in Buenos Aires in October, 1961, which
generally
defin~d
the
p~oblc~3
i~ ~~is
drea in Latin America.
Tne necessity for tax administration reform was clear.
terms of the general financial
asp~cts
In
of the self-help prin-
ciple, it was estimated that to accomplish the goals established
by the Alliance, a total investment of
F-63
100 billion dollars
- 2 -
would be required over the initial 10-year period of the Alliance.
It was further agreed that 80 percent of this investment
would have to be generated by the Latin American countries
themselves.
External financing by Latfn American nations has long been
a problem.
Most of these countries are dependent on one or two export
products
0
These products -- generally agricultural and mineral --
have proven unreliable sources of funds due to unstable shortrun conditions in the world markets for these products.
Furthermore, the volume of international capital available,
from both bilateral and multilateral loan sources, was clearly
insufficient to finance the volume of investments required by
the Alliance goals.
Finally, the problem of servicing existing external debts
was then -- and remains today -- one of the most serious facing
many Latin American countries.
Since there was no immediate potential of expanding external
sources of financing, attention turned to potential internal
sources -- a turn consistent with the self-help principle.
But what were the conditions affecting internal financial
sources?
Internal capital markets are practically nonexistent
- 3 -
in Latin America, and have little potential for rapid develop.
ment o
In such a situation, the only avenue remaining for
financing increased public investment
~as
taxation.
Heretofore, neither tax policy nor tax administration in
Latin America had been notable for adequacy of structural
design or operating efficiency.
to play the crucial
rol~
Therefore, if taxation was
assigned to it. there had to be
reform -- both as to policy and as to Administration.
Taxation is vital in marshalling national resources for
development.
It is not only a source of
pu~lic
revenue for financing
government expenditures -- both current and capital.
It is
also- a major factor in determining the allocation of resources
and the distribution and growth of
private sector of the economy.
inco~e
and assets in the
Finally, the tax system can
help prevent inflationary or deflatioDc..t"y forces from distorti.ng
consumption,
inv~stment,
and production.
In short, just as economic progres3 is necessary for social
progress, a sound tax
systc~
which contributes to healthy gro~h
is essential for both.
However, if a well-designed tax policy is to be effective,
after it is enacted into law, the administration underlying it
- 4 must also be effective o
It was this
ve~y
practical considera-
tion that prompted the participants at the Punta del Este Conference to include improved tax administration as one of the
goals of the Alliance.
It was clear at that time that reform
in this area was going to be both difficult and delicate,
because it would directly affect the lives and affairs of many
people.
The Buenos Aires Tax Administration Conference made clear
that there both a need and a desire for broader and deeper
United States technical assistance than had been available previouslyo
In response to this, the Treasury Department, the
Internal Revenue Service, and the Agency for International
Development established a system whereby Internal Revenue's
experience and personnel could be utilized in the assistance
effort o As a result, the Foreign Tax Assistance Staff was
formed, and in the last year and a half long-term tax administrative assistance teams have been
Latin American countries.
fo~ed
in more than a dozen
Many short-term assistance and
survey missions have also been carried out in Latin Americao
This has occurred within the framework of a soundly developed
general program for assistance and supporting administration.
- 5 -
The Organization of American States (OAS), the InterAmerican Committee for the Alliance for Progress (CLAP), and
the Inter-American Development Bank (lOB) have all pointed,
in
off~cial
,statements, to the fact that improvement in tax
administration in Latin America has been one of the most
important factors contributing to the effectiveness of the
Alliance and of the self-help effort.
The results have indicated that the tax assistance program
is one of the most important of the AID programs in support of
the Alliance.
Certainly much remains to be done o
There is no such thing
as instant development, no matter how hard we try to compress
centuries into decades, and decades into years.
So far it has
been impossible -- because of lack of time, the lack of
resources, the very difficulty of the varied and new problems
encountered -- to achieve the progress desired in all aspects
of tax administration in all countries.
And there is more to the developing world than Latin America.
Tne many countries of Africa, the Near East, the Far East, and
Asia are equally anxious to increase their pace of development
and to receive technical tax assistance for that purpose.
In
- 6 many of these countries our Latin American experience will be
useful.
But anyone who has worked in these other areas will
realize that there will also be different problems involved.
It seems likely that the demands for tax administration
•
assistance have barely reached the take-off stage.
In addition to the new demands for assistance which we
know will be forthcoming, we must also be alert to new problems.
The Inter-American Committee for the Alliance for
Progress (ClAP) has reported that although reform in taxation
had shown noteworthy results, policy and administrative reforms
have not always been adopted in a consistent, harmonious manner
a difficulty that could limit the effectiveness of both aspects
of tax reform.
It seems logical that those agencies actively
responsible for administrative and policy reform must, in the
near future, join in making a determined effort to consider this
relationship before the problem assumes the proportion of a
major impediment.
Another problem which is taking shape with increasing
rapidity concerns the administrative difficulties of tax harmonization.
Tax harmonization is an effort to adjust tax systems
within a common market context so that these systems w.ill, at
- 7 -
least, be consistent with the objectives of the market and,
at most, make an affirmative contribution to the market.
In
Latin America, one common market agreement already exists,
embracing the five Central American countries.
Further, there
is a strong, newly-developing movement to convert the Latin
American Free Trade Area into a common market.
In the Central
American Common Market, which is already well advanced, the
problems of tax harmonization in a policy sense are past the
discussion stage and legislative proposals are being drafted.
To what extent the tax harmonization process will affect tax
administration is not yet known, but I believe that it is a
movement which we would be wise to analyze for its administrative implications.
A third problem is the cost to the private sector of tax
compliance.
Because the resources available in the private
sector in
under-developed countries are usually quite
limite~
and because of the absolute necessity for devoting the
maximum amount of such resources to the development effort,
private sector tax administration costs can be very important.
The major task, however, will continue to be the develop·
ment of foreign tax administration assistance through the selfhelp principle.
Tax administration reform is of crucial and
- 8 -
immediate importance to the Alliance.
In recognition of this fact, it has been Treasury's position from the start of the Alliance that the Department can
and must make a major contribution to this program.
This position is as true roday under Secretary Fowler as
it was for the past three and one-half years under Secretary
Dillon.
This is an effort which, once started, we must see through
to a successful conclusion o
You here today have been selected
as those best equipped to carry forward and complete this ,task
as thoroughly ani rapidly as possible o
I want you to know that
in doing this you have the full support of the Treasury Departmente
As you carry out this work you will broaden your own knowledge and skill, but you will also be doing much more than that.
You will
tion to what
b~
making a very real and very necessary contribu-
h;_~tory
may well =egard
dS
one of the major under-
takings of our time -- the Alliance fur Progress.
I wish you well in your work) and I believe that in the
years ahead you will look back on it with pride.
L[ 0 'l./
- 9 You are doing more than serving the nations of Latin
America, you are serving the people of Latin America.
You
are serving them in one of the most important ways possible -by offering the skill, and experience, and knowledge that you
,
have to help them to help themselves.
In doing so you have a unique opportunity to gain a depth
of understanding of the problems of tax administration that
could take many years to achieve in the United States.
The
opportunity to work on tax administration problems in Latin
America will, by giving you the chance to see developing systems
and procedures in a new context, greatly increase your own professional competence and the scope of your abilities.
Thus,
~s
you work to help others to help themselves, you
will also be helping yourselves as well -- and that is what the
Alliance is all about.
TREASURY DEPARTMENT
Washington
STATEMENT OF THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE THE
HOUSE WAYS AND'MEANS COMMITTEE
ON THE PUBLIC DEBT LIMIT
TUESDAY, MAY 25, 1965, 10:00 A.M., EDT
Action is essential before the end of the current fiscal
year to establish a new public debt limit adequate to
accommodate the needs of fiscal 1966.
ceiling stands at
~324
billion.
The present temporary
On July 1, the ceiling, in
the absence of Congressional action, will revert to its
permanent level of $285 billion, $32.4 billion below the
estimated debt subject to limit at that time.
Clearly, we
cannot permit the credit of the United States to come under
that shadow for a single day, nor doubts arise over the
authority of the Treasury to finance in an orderly way the
additional needs of the Federal Government that will arise
later in fiscal 1966.
The actual debt subject to the limit in recent months,
which reached a peak of $320.4 billion in mid-March, has
fluctuated about levels very close to those projected at the
time your Committee last considered the debt ceiling a year
ago.
This means that, fortunately, there has been no need to
draw upon the $3 billion margin for flexibility and contingencief
F-64
- 2 -
implicit in the temporary ceiling of $324 billion that has
been provided for the current fiscal year.
This record is,
I believe, indicative of the firm and constant intent of
the Treasury to relate its borrowing to that which is
necessary and not to an amount that might, theoretically,
be available within the statutory limit.
The primary factors bearing upon the determination of
an appropriate debt ceiling for any fiscal year are:
a.
The recurrent seasonal fluctuations in
receipts and expenditures, and
b.
the fiscal result for the period prior
to the beginning of the fiscal year for which
the debt ceiling is being considered.
Let me discuss these in order.
First, even in a year of a balanced budget, or of a
surplus, the Treasury has substantial borrowing needs in the
first part of a fiscal year.
For instance, less than 45 per cent
of our receipts are taken in during the first half of a fiscal
year, and heavy borrowing is essential over that period even
in years of a balanced budget.
Typically, much of this
borrowing can be done by tax anticipation instruments, which
- 3 -
will be retired in March and June as the larger corporate
tax payments are received.
Thi~
recurrent seasonal deficit
during the first six to eight months of a fiscal year is
affected relatively little by moderate changes in the size
of the deficit anticipated for the fiscal year as a whole,
but it is this regular seasonal pattern that ordinarily
determines the peak amount the debt will rise within a
fiscal year over the level prevailing at the beginning of
that fiscal year.
The level of debt at the beginning of the fiscal year
is in turn a consequence of the deficits incurred during
previous fiscal periods -- the second point mentioned above.
The difference between our debt ceiling needs for fiscal
1966 and the need when the Treasury appeared before this
Committee a year ago is essentially accounted for by the
estimated fiscal 1965 deficit, for that deficit will be
reflected in an approximately equivalent increase in the
debt between the start of fiscal 1965 and the start of
fiscal 1966.
You will recall that the President's Budget submitted
to the Congress in January of this year anticipated a deficit
- 4 -
of $6.3 billion for fiscal 1965.
I am glad to report,
however, that this outlook has improved significantly since
that time.
Late in April, the President was able to announce
an expected increase in revenues over our earlier estimate of
$500 million and a decrease in anticipated expenditures for
the fiscal year of a like amount.
Further evidence during
May of a larger than expected flow of taxes, particularly
of mdividual income taxes, now indicates that receipts will
total at least $1.4 billion more than anticipated in January.
The result is to reduce our estimated fiscal 1965 deficit
to about $4.4 billion.
As I indicated earlier, it is this fiscal 1965 deficit
that largely determines the increase in the debt ceiling
required for fiscal 1966.
However, I know the Committee is
also interested in our latest projections for fiscal 1966.
As this Committee is aware, the more favorable current
experience with receipts is expected to carryover into
fiscal 1966.
The President's January Budget, in estimating
fiscal year 1966 receipts at $94.4 billion, had already taken
into account the $1-3/4 billion cut in excise taxes proposed
- 5 -
for July 1.
With continued gains in economic activity,
the revenue estimate, assuming only the proposed July 1
reductions in excises, has been raised by $1.6 billion.
Further allowance must now also be made for the additional
cut in excise taxes of $1-3/4 billion on January 1, 1966,
requested by the President last week -- a request upon which
this Committee is currently acting.
Enactment of that
additional cut is estimated to reduce revenues in fiscal
1966 by $600 million.
As a result, we now estimate receipts
at $95.4 billion, $1 billion higher than projected in the
President's January Budget.
I am informed by the Director of the Bureau of the Budget
that, at this stage in the appropriations process, there is no
sound basis for changing the expenditure estimate for fiscal
1966 in the January Budget, and that the estimated spending
total of $99.7 billion still represents a fair appraisal of
the spending outlook.
Consequently, we now anticipate a
deficit in fiscal 1966 of $4.3 billion, as compared with
$5.3 billion in the President's Budget.
The outlook for the public debt at mid-month and month-~d
dates in fiscal 1966 is shown on the attached table.
The debt
- 6 levels that are shown in the last column of the table are
based on the same assumptions that have been used in previous
debt limit discussions.
The first assumption is that the
Treasury's cash operating balance will be maintained at a
constant level of $4 billion, which is a necessary and prudent
allowance if the cash balance is to be adequate to conduct
the operations of the Treasury in an efficient manner.
In
practice, there is, of necessity, a great deal of fluctuation in
our actual cash balances, but it has been customary before
both the House and Senate Committees to use this minimum
figure for advance planning.
The second assumption provides the usual $3 billion of
margin for flexibility and contingencies.
This is insurance
against the uncertainties that inevitably exist in projections
of budgetary receipts and expenditures a year or more ahead,
and also recognizes the need for financing flexibility to
assure maximum efficiency in debt management operations.
For
instance, Treasury obviously would prefer to refrain from
new financing in an unfavorable market environment; conversely,
it would like to anticipate future cash requirements by
borrowing when markets are particularly favorable.
And, clearly,
- 7 with receipts and expenditures subject to sharp fluctuations
from day to day and week to week, it would be impractical to
schedule Treasury financings so as to avoid considerable
swings
in the cash balance.
As the table indicates, our peak requirement -- including
the allowance for contingencies -- is estimated at $328.9
billion at the middle of March 1966.
Consequently, a debt
ceiling of $329 billion, $5 billion higher than the present
temporary limit for the current fiscal year, will be necessary
to carry the Treasury through the fiscal year 1966.
I should emphasize, in requesting this debt limit, that
our peak needs have not been significantly affected by the
second stage of the excise tax program recommended by the
President.
The estimated $600 million revenue impact of the
excise tax cuts scheduled for January 1, 1966 will appear in
our actual collections only with a lag of two to three months,
with virtually all of the effect coming after our peak debt
needs on March 15 have already passed.
In fact, substantial
reduction of the debt is anticipated during the Spring of
1966.
- 8 -
It is not the intent of the Treasury to ask for any
more borrowing power than is necessary and prudent.
To the
contrary, our firm objective is to maintain no more debt
outstanding than that which is absolutely required to
effectively and economically discharge the financial
responsibilities of the Government.
~t1
.
:-l.Jt: . ...:
~
..
:- ::-~~ ~ .~;:~ PlBLIC DEBT SUBJECT TO LMTATION
2cr.stunt mir.imum operating cash balance of $4.0 billion}
fISCAL YEAR 1966
(In billions)
O;erating
Cash Balance
( excludir'G
free bn1dJ
Public Debt
Subject to
Limitation
Allowance to Pro- . Total Public
vide Flexibility
Debt
in Financing and
Limitation
for Contingencies
Required
- -.: 5
~- __ .c
)~
l..o..--v'
_/
$4.C
$310.2
$3.0
$313.2
4.0
4.0
313.1
314.3
3.0
3.0
316.1
317.3
4.0
4.0
314.7
315.7
3.0
3.0
317.7
318.7
4.0
4.0
318.8
313.1
3.0
3.0
321.8
316:1
4.0
4.0
316.2
318.7
3.0
3.0
319.2
321.7
r l5
r .)0
4.0
4.0
319.7
319.6
3.0
3.0
322.7
322.6
15
Dec.c.-ti.oer 31
4.0
4.0
321.3
319.6
3.0
3.0
324.3
322.6
January 15
Jetr;uary 31
4.0
4.0
322.B
321.5
3.0
3.0
325.8
324.5
rc:brt.:.ary 15
rebruary 28
4.0
4.0
321.6
321.9
3.0
3.0
324.6
324.9
;.:5.2ch 15
:.:arch 31
4.0
4.0
325.9
319.5
3.0
3.0
328.9
322.5
;'-;:ril 15
30
4.0
4.0
323.0
319.0
3.0
3.0
326.0
322.0
:.:J.y
4.0
4.0
31B.3
320.1
3.0
3.0
321.3
323.1
15
4.0
June 30
4.. 0
322.8
315.2
3.0
3.0
325.8
318.2
LJ
;'.u;;ust ::'5
j..u.gust 31
15
30
S2?-:;<2;:"ber
S~p-v2r..ber
... )
v2tc::..,~r
Cc -:G'S~:':~ 31
:~ovc::~·..~'-;~ov<.::;..-uc.:
Jcc, ...:iI;~r
.t.~ril
::"5
l~:~~l J~
Ju..."1e
May 21, 1965
I-ft/{)
TREASURY DEPARTMENT
(
May 26, 1965
FOR IMMEDIATE RELEASE
TREASURY DECISION ON WELDED WIRE MESH
UNDER THE ANTIDUMPING ACT
The Treasury Department has completed the investigation with
respect to the possible dumping of welded wire mesh for concrete
reinforcement from Belgium.
A notice of a tentative determination
that this merchandise is not being, nor likelY to oe, sold at less
than fair value will be published in an early issue of the Federal
Register.
Appraisement of the above-described merchandise from Belgium
is not being withheld at this time.
The dollar value of imports of the involved merchandise received during 1964 was approximately $385,000.
TREASURY DEPARTMENT
May 26, 1965
FOR IMMEDIATE RELEASE
TREASURY DECISION ON WELDED WIRE MESH
UNDER THE ANTIDUMPING ACT
The Treasury Department has completed the investigation with
respect to the possible dumping of welded wire mesh for concrete
reinforcement from Belgium.
A notice of a tentative determination
that this merchandise is not being, nor likely to be, sold at less
than fair value will be published in an early issue of the Federal
Register.
Appraisement of the above-described merchandise from Belgium
is not being withheld at this time.
The dollar value of imports of the involved merchandise received during 1964 was approximately $385,000.
UNITED STATES NET MONETARY GOLD TRANSACTIONS
WITH FOREIGN COUNTRIES AND INTERNATIONAL INSTITUTIONS
January 1, 1965 - March 31, 1965
(in millions of dollars at $35 per fine ounce)
Negative figures represent net sales by the
United States; positive figures, net purchases
First Quarter
1965
Country
.... . .. .. ...... · . .. ....·. . .. -25.0
· .... · . . ·..... ·. ·.... -39.6
.. . . . . . . . . .
·.. ·... . -1.0
.. ·. ·... .... . ·...... ...... -1.0
Chile
-1.3
Costa Rica
· . . . . . .. ..
Egypt
·.. ... .·..... . ... ·.... .. ... .... -1.0
France ·. . . .· .·. .. ... ·. . . . . ... .. . . .. -482.5
-.4
Ireland
·... .. . .. ·. .... . . . ........ -35.0
·
.
.
Netherlands · .. . . .... . .. ·.. . . .. . .
-2.7
Panama · . . . . . • • • • . .. · . .· . . .·.. . . . . .. . .
-.1
Philippines .•..•.• ·. . . . .. .. · ..
·
.
-1.5
Salvador .••.••••••.••••. · .. · . . . . . . . . . .
.... -90.0
Spain
·
.
.
.
. · . . . . . . · . .. .
·
...
Switzerland • • • • • • • · . · . . .
· ..... .. -37.5
Syria
·..... .. ... .... .......·........ -.2
Turkey · . . . . .. . .. .. . . . .. .· .. . . . . . . . . . . -15.7
United Kingdom ·. · . · . · .. · . . . . . . .. ·. -75.7
Uruguay ••..••. · .· .. . ... . .. . . .. · .
·. -.1
Yugoslavia
·.. ... ·.. ...... • • -.6
·
.
.
·
.
-.2
All Other
· ....... . .... . . ... .. ..
Austria
Belgium
Brazil
~
•
Total
·... ..... . ... ..... ..... .
-811.0
TREASURY DEPARTMENT
May 27, 1965
FOR TIMMEDIATE RELEASE
UNITED STATES FOREIGN GOLD TRANSACTIONS
FOR FIRST QUARTER OF 1965
During the first quarter of 1965, the net sale
of monetary gold by the United States amounted to
$811.0 million.
The Treasury's quarterly report, made
public today, summarizes net monetary gold transactions
with foreign governments, central banks, and international institutions.
(Table on reverse side.)
The total decrease in U.S. gold stock in the first
quarter of 1965 was $833.0 million, including the net
sale of $22.0 million worth of gold for domestic
industrial, professional, and artistic uses.
F-65
(OVER)
TREASURY DEPARTMENT
May 27, 1965
FOR TIMMEDIATE RELEASE
UNITED STATES FOREIGN GOLD TRANSACTIONS
FOR FIRST QUARTER OF 1965
During the first quarter of 1965, the net sale
of monetary gold by the United States amounted to
$811.0 million.
The Treasury's quarterly report, made
public today, summarizes net monetary gold transactions
with foreign governments, central banks, and international institutions.
(Table on reverse side.)
The total decrease in U.S. gold stock in the first
quarter of 1965 was $833.0 million, including the net
sale of $22.0 million worth of gold for domestic
industrial, professional, and artistic uses.
F-65
(OVER)
UNITED STATES NET MONETARY GOLD TRANSACTIONS
WITH FOREIGN COUNTRIES AND INTERNATIONAL INSTITUTIONS
January 1, 1965 - March 31, 1965
(in millions of dollars at $35 per fine ounce)
Negative figures represent net sales by the
United States; positive figures, net purchases
First Quarter
1965
Country
· . . .. .. . ... .. ..... . . . .. ...... .. -25.0
· .... .. ... . .. .... . .. . . . . . ... ... -39.6
·. . .. .. .. . . .. . . . . . . . ... . . ... .. . -1.0
. . . ... . ... .. ... .. ...... . . ..... -1.0
Chile
Cos ta Rica ........................... .
-1.3
Egypt
·.. . .. ... . .. .... . . . . . . . . . .. . ... -1.0
France · . . . . . . .. . . . . . . . . . . . . . . . .. . . . .. -482.5
Ireland · . . . . .. . . . . .. . . . . . . .. . . . . . . . . . .
- .4
Austria
BelgilDll
Brazil
~
Netherlands .......................... .
-35.0
· . . . . . . . . . . . . . . . . . . . . .. . . . . . . . .
-2.7
Panama
Philippines .......................... .
Salvador ............................. .
Spain
· . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .
· . . . . .. . .. . . . . . . . . . . . . . . . . . . . . .
·... . .. . .. .. . . . . ... .. . . .. . . .. . .
Switzerland .......................... .
Syria
Turkey
-.1
-1.5
-90.0
-37.5
-.2
Uni ted Kingdom ....................... .
-15.7
-75.7
Uruguay .............................. .
-.1
Yugo s lavi a ........................... .
All Other ............................ .
-.6
-.2
Total ........................ -811.0
forei3n markets; the continued tailoring o[ our Government's spend-
"
~
~ \.tu.-,1C/vf ~"u~ C~~~~ ~~v~wt.~o.L,~
ing abroad to the minimum essential}\the fashioning oE effective
capital markets throughout the Free
~!orld;
and an ever more
vigorous domestic economy in which all our human resources are
fully at work.
All of this will not be easy to achieve, but
~vith
the help
and cooperation of the business and financial community, and
indeed of the entire nation, we can look forward with confidence
to success in this vital endeavor.
000
-25The dollar today is backed by public and private claims
against foreigners which exceed their claims a8ainst us by $37
billion.
If you choose to consider only private assets, the U.3.
is still in a stronc:;er creditor position -- with private claims
against foreigners exceeding their claims against us by r0113hly
$15 billion.
Finally, the U."';. enjoys the most Eavorable trade posl.tioD
of any maj or nation in the
~vorld
today, ,;·.'ith a total commercial
trade surplus last year of $3Yf, billion.
Clearly the United 3tates dollar today is the strongest
currency in the ';-Jorld.
strength, and that is
Our task is to r.:1aintain and increase that
e:~actly ~1b.at
. . Je i:1tend to do.
3uccess in this tas!:: will requi.re
~'h.e
ina.:;inative
I;1ar1~etins
of more of our products and ser"rices in stroTI3ly ccmr;etiti'1e
- 24 The continuing strength of these factors in the future, and how
quickly they contribute to improving our payments position, will have
much to do \olith determining when "ole can remove the voluntary
restraints required over the shorter term.
In conclusion I would like to remind you that the state of the
dollar in today's \vorld is far stronger than it \vas several years
ago, and it is getting stron3er every day.
Among the reasons for this are not only the measures I have
cited, both short and long term, but also the deep underlying
strength of the entire U.3. balance of payments position.
The dollar today is backed by the \vorld' s strongest economy,
which is in the midst of the lonoest peacetim2 expansion in its
history.
1/\..u...lt..,~
The dollar today is backed by the
gre;d
e:8"t \'lorld' s-\ gold
supply, fully pledged to honor our international obli3ations.
- 23 problem.
but
~ve
No one can realistically predict when they can be abandoned,
all agree on one thing -- the sooner, the better.
There are, however, some significant factors to be noted.
For one thing, slowly but surely chan:;es are takin::; i)lace
in both the depth and the quality of foreign capital markets.
Furthermore, there has been substantial reduction in the
impact government spending overseas has had on our balance of
payments.
At the same time, our continuing price stability and
rising productivity are contributing to increasing competitiveness
of U.S. goods in foreign trade.
In addition to these important factors to the maintenance
and strengthening of our trade position there is also the rising
tide of earnin3s from U• .:J. private investment over the iiliXK post-\'Jar
period.
These earnings can help to provide substnatial im}!rovement
to our payments position in the years ahead.
0/1 S···
- 22 world -- on possible steps to improve the world monetary system
once our deficit has been eliminated.
Any other course would invite a crisis rather than prevent
it because it would eventually -- and inevitably -- require the
imposition of more restrictive measures, \vith all the problems of
retaliation and damage to confidence that these measures 'i'JOuld
involve.
A second step \vill also be required to adjust to the new era
of equilibrium, in addition to new rilonetary arrangements.
Having
reached and sustained an equilibrium in our balance of payments for
a substantial period, we shall also rene'w our pursuit of our lon::r/;;)
term objective of free capital markets both here and abroad.
For
there is no attractiveness to anyone in considering the voluntary
restraint programs and the related series of interferences . .·,lith
these free capital markets as a permanent solution to the payments
- 21 It is not too soon to begin high-level talks on this matter,
building upon the exploratory technical discussions that have
already taken place.
That is
Hr. Callaghan, will come to
~vhy
the Chancellor of the Exchequer,
~Jashington
ne;:t month.
Through the
remainder of this year, there will be other discussions at all
levels with representatives of other interested countries as we
strive
~vith
them to reach a substantial measure of improvement
in the system of international monetary cooperation.
Our view, supported by most of :··Jestern Europe, is that the
best step the United Jtates can possibly take at this time -- to
protect not only its mm interests but also the world monetary
system -- is to move as strongly as possible
tO~lard
equilibrium.XX At
the same time we should continue discussions -- predicated on the
maintenance of the dollar as the maj or rese.rve currency of the free
- 20 Our course is clear.
It is a difficult one but I have every
confidence that "<;.,e \vill achieve our goal of sustained payments
equilibrium.
It is not too early to consider ,.,hat
st~ps
will be required
to adjust to that new eral or equilibrium.
First of all, there is general agreement that some modifi=
cation in the international monetary system will be required.
~.Je
will need some way of gradually and systematically producing
the additional liquidity which will l)e required to fit'pance expanding free world trade and development.
In the past, the major source for such additional liquidity
has been the continuing payments deficits of the United 3tates.
~Jhen
these deficits have been brougbt to an end, itvlill be
necessary that there be general agreement on an effective \-Jay of
fueling the 'ivorld payments system.
- 19 -
There is no question that this course, through the voluntary
program, requires us to restrict private new or additional business
and financial activities which in normal times we would consider
highly desirable.
There is no question that such new or additional business
and financial investment abroad pays excellent dividends to our
future balance of payments position.
In fact, more than a third
of the balance of payments gains made since 1960 under our first
two balance of payments programs reflect increasing returns from
such activities.
Such returns, hmvever, are realized only in the long run.
But ours is a short-run problem confronting us nmv -- this
year.
We cannot wait for the long run to eliminate our payments
deficit.
chances.
The time is too short and the risks are too great to take
- 18 -
Many of these wishful thinkers embrace one or another
o.c
these various solutions to our payments problem in the hope that
we will be free to return to unlimited private capital movements
abroad, to intensify government spending abroad, to abandon or
slip away from our national effort to remain competitive.
They
would confine our activities to making some token effort to
achieve equilibrium.
Unfortunately, we cannot '\vish a-;'Jay the deficit -- or the
potential consequences of allowing it to continue unchecked.
The only acceptable solution facing us is the one ,'Je are
pursuing -- to maintain our present system and to make it work
by eliminating the deficit, thereby paving the way for the
successful negotiation of an improved system.
- 17 The significance of improvinG international monetar:l ar'ran,30ments
~vill
increase as we move closer to solving our balance o"E
payments problem.
That progress v7ill increase interest in some of
the mtions of improved international monetary arran8ements that
-:"le
think are tn the interests of the free ';JOrld economy, methods of
providing additional liquidity, for example, ,;vithout depending
upon dollar deficits.
Arriving at sustalned equilibrium in our payments would allov]
time for other processes to occur that \vould make it possible to
thaw out the voluntary arran3ements -- ,:.vithout fear of any .':urtber
great outflow that would again create a serious de:':icit.
Unfortunately, there is no magical arrangement ,vhich ,-Jill
automatically do away with the present imbalance, or which "Jill
make possible continued large outflow without endangerin:; the
oosition of the dollar.
~L (
- IS in this area 'Cvould almos t cert",-inly
bl~in:::;
a recession.
in turn, would severely clar,1a:;e the cl:tn:ate
.COl:"
L.\.
:('cces;:;aon
..corei,sl1. invect:11ent
in the United 3tates and '~ ..oulcl also create a stron..; movement to
reduce interest rates immediate"9
,]till another :;rou1? of
~'Jish£ul
tb.inkers look to ne;; inter-
national monetary arrangements as an escape
:~roU1
our
pres€~nt
payroents
problem.
I must frankly admit that tbis attitude puzzles me.
people must be confused by the role which ne;,;
arrangements will play.
TIlese
int~rnational
For instance, they certainly 'vmn'
t
monetary
remove
the necessity for the United 3tates -- as a major reser"J'.? currency
coun t ry -- to
apyments.
"
ma~nta~n
"I e
reasonao
'J'"
equ~ .1.or~Un.1
And there is no c10uht that \katevE'i::"
,
1-11
n2';',1
ments may be negotiated are bound to incll1der:l-:2
major reserve currency for the
£ree~'Jorlcl.
.
1,)a 1a-nee
'lts
o·
Llc'netary arran:;e-
~loJla1.4
"'-3 ti'8
- 15 -
Another group hails a new method of measuring the deficit,
and on this basis claims that the deficit -- and the problem -are greatly exaggerated by statistics.
Unfortunately, we cannot make the problem go away by changing
our method of measuring the deficit.
Regardless of how we measure,
the fact reamins that dollars are piling up in other countries.
j
~ ~~other group believes that all we have to do to solve the
j~
~payments
problem is raise our interest rates.
'"
Unfortunately, such a course not only conflicts with our
need to maintain our domestic expansion but also important, would
not solve the problem.
In view of the tremendous dLcference in
size and efficiency between the money markets here and abroad, it
is hardly realistic to expect a higher ineterest rate to provide
the necessary reduction in long-term capital outflow.
Furthermore,
an interest rate increase large enough to have a significant effect
- 14 impact of our prolonged period of deficit.
Achieving and maintaining equilibrium
task.
~vill
be a difficult
It is not surprising that a number of wishful thinkers
would like to avoid the discipline of such a course.
These
\~ishful
thinkers fall into several groups.
One group points to the fact that under our first two programs
we achieved more than $3.5 billion in balance of payments gains
more than enough to wipe out our present deficit and leave us
a comfortable surplus.
~'lith
This group looks at our present problem
~~
as "temporary one, vlhich will soon clear up and allow our previous
gains to automatically restore us to balance.
Unfortunately, this happy optimism is without foundation,
and nothing could be more damaging to our efforts than unfounded
optimism.
- 13 The banker may wish to give even more generously to charities
than before, but he will remember his primary responsibility and
refrain from another big pledge.
He may wish to go on a European
trip until he realizes he is cash poor.
He may even 'il7ish to make
some long-term commitments in loans or investments that look
potentially highly profitable, but he will adjust his current
assets to liabilities as a first priority.
This means, whether we like it or not,
we are committed to
eliminating our balance of payments deficit.
Furthermore, it will not be enough to reach payments equilibrium for two or three quarters or even for a year and then slip
back into another deficit.
Once we achieve equilibrium, we must maintain it for a subatantial period.
For only sustained equilibrium can wipe out the
- 12 Already there are those who say that
~'le
will fail, that
the deficit will continue, threatening the role of the dollar as
a reserve currency and creating a world monetary crisis.
I say these people are wrong.
I say the program that President Johnson began on February
10 will succeed.
The simple truth is that too many dollars have been flowing
out of the United States for too long.
The United States is like
a banker who is lending far more than he is borrowing and whose
net as'set position is great and growing.
living beyond his means.
In one sense he is not
But if that banker is short of cash and
current assets, which are regularly excee.ded by his current
liabi1itie~,
it is not prudent for him to further deplete his
current assets.
- 11 -
trade, and the achievement of a more flexible world monetary system
that will permit continued Freedorld trade and development to
progress as it has s ince>Jorld :Jar II.
Recent events abroad have made it plain for all to see that
the international stability and standing of the dollar directly
affects our national security and our capacity for effective diplomatic, political or military action.
A strong currency is essential
to our success in meeting our worldwide responsibilities.
Already there are those in Europe and
else~vhere ~vho
look upon
the United States as a monetary paper tiger.
Already there are those who point to fi.fteen years of chronic
deficit and predict many more deficits to cone.
Already there are those ";'lho point to our t';vo previous efforts
to eliminate the deficit and predict our third e:E2ort '\vill he no
Dore successful than the others.
- 10 -
in the United States, and a further reduction in the duty-free
allowance for returning American tourists.
Some of these measures may appear to be unnecessary and
trivial.
They are neither.
They represent our determination to
make every possible effort to reduce and eliminate our deficit as
quickly as we can.
I am not here to argue vlhether this program is right or Hrong.
I happen to believe that it 1.s right.
this time the program must work.
I am here to tell you that
The possibility of failure is
too dismal to contemplate.
What is at stake in this program?
The protection of the dollar in ways fully consistent '>Jith
sustaining prosperity at home, maintaining our defenses abroad
when our allies are threatened, supplyinS private and public :':unds
to less developed countries, avoiding renevJed restriction on
- 9 -
1961 and 1963 programs.
the new problem.
But he also struck hard at the heart of
He called upon the business and bankin3 community
to do everything in their power to help by launching voluntary
programs to reduce the net overall private capital outflows.
The result is that for the first time our entire nation is
committed to a concerted attack on the deiicit.
~!ith
the exception
of travel and tourist spending abroad, virtually every source of
~'-private or public C8fital outflow is now the target of either
substantial public or private effort or both.
This program includes, in addition to the voluntary measures,
legislation to remove existing tax barriers to foreign investment
in the United States, an extension and broadening of the Interest
Equalization Tax, a stepped-up effort to promote foreign tourism
- 8 -
Because last year another new problem appeared -- the marked
rise in overall private capital outflow, including both short- and
long-term bank credits and direct investment abroad.
It was clear that action was n2cessary to meet this new
challenge.
It was equally clear that we could no longer attack
the deficit piecemeal.
'contI
~t as-the success
Of OUI 1961
ibuted to t:he lise in-portfolio outflmi, the
~Iogram
SUGC9SS
of our
1963 program.. contrib1]ted to the rise in other private capital
t;:
To stop the flow, we had"attack the entire deficit.
That is just what President Johnson did in his Balance of
Payments Hessage last February.
In that message he strongly reaffirmed his intention to
strengthen and build upon the measures already taken in both the
-7recourse to our money market the easy and cheap course for all
who needed capital.
This required the second program to control the deficit, which
was contained in the Balance of Payments Message of July 1963.
The Interest Equalization Tax proposed in that message was
~ediately
securities.
effective in stemming capital outflow into foreign
Last year, for instance, the total of such foreign
borrowing was cut more than 65 percent below the rate for the
first half of 1963.
The program also intensified other existing
programs and utilized monetary policy by combining an increased
rediscount rate with measures which raised short-term interest
rates substantially.
But the net result of all of these efforts achieved only a
reduction in our overall deficit of $800 million -- from $3.9
billion in 1960 to $3.1 billion in 1964.
-6-
__ increased commercial trade surpluses ($900 million);
__ reduced overseas dollar spending for foreign aid($400
million);
--economies in military spending abroad ($200 million);
increased military offset sales to foreign countries by
the Defense Department ($450 million);
-- and an increase in profits and interest on past foreign
investments{l.6 billion).
But the deficit failed to narrow a corresponding amount.
The reason it did not was that just as this vigorous attack
on several different areas of our deficit was gathering momentum
and beginning to show increasing progress, a new problem appeared.
Early in 1963, the outflow of United States private capital into
foreign securities rose alarmingly because, in part, inadequate
capital markets in the remainder of the industrialized world made
INS~~I "
S41;~[ed !!wazA'e
for Page 15
Another group contends that all we must do to solve the
payments problem is raise our interest rates.
I must frankly admit that this attitude puzzles me.
We have
not ignored the differentials in interest rates that exist in the Western 'world.
Twice, when need appeared, the Federal Reserve has raised its discount
rates: in the summer of 1963 to 3 k1Jd l/2
""
pe~ent,
and in the fall of 1964 /£1'((
VC·/J.L!"
to 4 per cent when the United Kingdom raised its bank rate from 5 to
~
But while we clearly recognize that the United States cannot be an isolationist on interest rates --any more than it can be in the political arena--it is
important to realize that the persistent raising of interest rates may conflict with our needs to maintain our domestic expansion and yet not be
an overall solution, in itself.
size and
ef~iciency
In view of the tremendous difference in
of money markets here and abroad, it is hardly
realistic to expect a higher interest rate alone to provide the necessary
reduction in long-term capital outflows.
Furthermore, an interest rate
increase large enough to have a significant effect in this area would almost
certainly at this juncture risk a recession.
A recession, in turn, would
severely damage the climate for foreign investment in the United States
and would also generate a strong effort to reduce interest rates immediately.
-5increase in short-term capital outflow.
The first comprehensive program to reduce the payments
deficit -- which had averaged almost $4 billion for the three
years 1958-60 -- was presented in a message to Congress in January
1961.
This program was designed to minimize the balance of payments
impact of necessary federal spending abroad;
to reduce short-
term capital outflow by restoring confidence in the dollar;
and
eei...)
to expand our trade surplus by 1aunching a vigorous campaign of
A
export
~~~~v-A-U~
promotion~omhjned
wjth special inV8S8meRt tax incentives
~v0~vJl Lvv~ ~~t-~
Ai\......
Ainvestment to help cut
cost~J\ eeasiRue
wage-price stability,
Over a period of
which totalled more than $3.5 billion, including:
we
t~;q,\.
~
-4purpose today is to tell you why that program is necessary, why it
must work, and what sort of a situation we will face when it has
worked.
In the early part of the fifteen-year period referred to our
deficits served to reduce the so-called "dollar shortage."
For
that reason these deficits were appropriate, since dollars were
needed to finance expanded world trade and nourish the redevelopment of Western Europe and Japan.
For the second part o£ our deficit period -- 1958 through
1960 -- our deficits reflected inadequate trade surpluses
combined with rising expenditures for defense and foreign aid.
Long-term private capital outflow also rose during this
period, as European recovery led to a substantial increase in
U. S. private investment abroad.
Finally, in 1960, the rising
tide of speculation against the dollar contributed to a sharp
-3-
The elimination of the deficit is at once the most serious
and the most difficult economic task facing the United States today.
The task will not be easy.
For the last four years, our
balance of payments has engaged the best efforts of bold and
imaginative men.
Many of the steps taken have been highly successful in reducing
part of the deficit.
But each time the deficit was held down
in one place, it bulged out in another.
In fact, we have been
plagued by a series of deficits arising from a different mix of
causes from year to year.
Putting an end to the deficit will require strong determination
and firm action.
A successful program to achieve equilibrium must
attack the deficit on all fronts.
President Johnson launched just such a program with his
February 10 message to Congress on the balance of payments.
My
-2Let me caution you vigorously against interpreting these
results as indicating that the battle has been won.
all costs, avoid undue optimism.
We must, at
We cannot afford any premature
relaxation of our determination or our efforts.
Solving our balance of payments problem will be a long,
hard and difficult task, but it is a task I believe to be vital
to continuing our political as well as economic leadership in
today • s wor ld.
The United States has had 14 balance of payments deficits
in the past 15 years.
During
billion.
those fifteen years, our deficits have totalled $35
One out of every four of those dollars of deficit has
been settled in gold.
The time has come to put a stop to this chronic deficit.
We
can eliminate it, we must eliminate it, and we will eliminate it.
u~ cV'--iv'\r--->(y~/)
o
'I
()-~--~
Ra,u\.RKS BY THE HONOPABV::: H'~N:;Y ~1. r:0 JL:7.7.
SECR2TLRY OF TrtZ TR'3il.STJRY
TO THE COHtITTTEE ON ECON01{I C T)EV~=l,OPM~NT
IN THE STA~LIGHT BL-U,LROOH OF THS::ALDOR? ASTORI.:\ HOTEL
1-1:;<:\,7 YORK, NZI,J YO?J{
2:00 P.M., EDT, THURSDAY, Hi'S 27, 19()5
1
For the :Zirst quarter of 1955, our balance 0:: payments de:::icit
dropped to an annual rate of sligbtly more than $3 billion.
That was half the rate 0:': the final quarter of 1964.
Hore important, after a bad start in January, our [osition
improved to show a surplus in Narch and -- on the basis of
preliminary figures -- hopefully in April.
;fuile it is still too early to assess the impact
of
President
Johnson's program to reduce private capital outflo-;v3 throu':7h the
--'
voluntary cooperation of the banlcin8 and business communit:r , it
appears that this program is already helr,ing to im;;;rov-e our
position.
/
FOR RELEASE:
TREASURY DEPARTMENT
Washington
UPON DELIVERY
REMARKS BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
TO THE COMMITTEE ON ECONOMIC DEVELOPMENT
IN THE STARLIGHT BALLROOM OF THE WALDORF ASTORIA HOTEL
NEW YORK, NEW YORK
2:00 P.M., EDT, THURSDAY, MAY 27, 1965
For the first quarter of 1965, our balance of payments
deficit dropped to an annual rate of slightly more than $3 billion.
That was half the rate of the final quarter of 1964.
More important, after a bad start in January, our position
improved to show a surplus in March and -- on the basis of
preliminary figures -- hopefully in April.
While it is still too early to assess the impact of
President Johnson's program to reduce private capital outflows
through the voluntary cooperation of the banking and business
community, it appears that this program is already helping to
improve our position.
Let me caution you vigorously against interpreting these
results as indicating that the battle has been won. We must, at
all costs, avoid undue optimism. We cannot afford any premature
relaxation of our determination or our efforts.
Solving our balance of payments problem will be a long
hard and difficult task, but it is a task I believe to be vital
to continuing our political as well as economic leadership in
today's world.
The United States has had 14 balance of payments deficits
in the past 15 years.
During those fifteen years, our deficits have totalled
$35 billion. One out of every four of those dollars of deficit
has been settled in gold.
The time has come to put a stop to this chronic deficit. We
can eliminate it, we must eliminate it, and we will eliminate it.
F-66
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- 2 The elimination of the deficit is at once the most serious
and the most difficult economic task facing the United States
today.
The task will not be easy. For the last four years, our
balance of payments has engaged the best efforts of bold and
imaginative men.
Many of the steps taken have been highly successful in
reducing part of the deficit. But each time the deficit was held
down in one place, it bulged out in another. In fact, we have been
plagued by a series of deficits arising from a different mix of
causes from year to year.
Putting an end to the deficit will require strong
determination and firm action. A successful program to achieve
equilibrium must attack the deficit on all fronts.
President Johnson launched just such a program with his
February 10 message to Congress on the balance of payments. My
purpose today is to tell you why that program is necessary, why
it must work, and what sort of a situation we will face when it
has worked.
In the early part of the fifteen-year period referred to our
deficits served to reduce the so-called "dollar shortage." For
that reason these deficits were appropriate, since dollars were
needed to finance expanded world trade and nourish the redevelop~nt
of Western Europe and Japan.
For the second part of our deficit period -- 1958 through
1960 -- our deficits reflected inadequate trade surpluses
combined with rising expenditures for defense and foreign aid.
Long-term private capital outflow also rose during this
period, as European recovery led to a substantial increase in
U. S. private investment abroad. Finally, in 1960, the r~s~ng
tide of speculation against the dollar contributed to a sharp
increase in short-term capital outflow.
The first comprehensive program to reduce the payments
deficit -- which had averaged almost $4 billion for the three
years 1958-60 -- was presented in a message to Congress in Februa~
1961.
- 3 This program was designed to min~m~ze the balance of payments
impact of necessary federal spending abroad; to reduce shortterm capital outflow by restoring confidence in the dollar; and
to expand our trade surplus by launching;
(a)
a vigorous campaign of export promotion and
(b)
a program of special tax incentives for
investment to help cut costs combined with
policies,wage-price stability,both designed
to increase our national competitive edge
in markets at home and abroad.
Over a period of four years -- 1961-64 _. the efforts initiat~
under this program yielded results which totalled more than
$3.5 billion, including:
increased commercial trade surpluses ($900 million);
reduced overseas dollar spending for foreign aid
($400 million);
economies in military spending abroad ($200 million);
increased military offset sales to foreign countries
by the Defense Department ($450 million);
and an increase in profits and interest on past
foreign investments ($1.6 billion).
But the deficit failed to narrow a corresponding amount.
The reason it did not was that just as this vigorous attack
on several different areas of our deficit was gathering momentum
and beginning to show increasing progress, a new problem appeared.
Early in 1963, the outflow of United States private capital into
foreign securities rose alarmingly because, in part, inadequate
capital markets in the remainder of the industrialized world made
recourse to our money market the easy and cheap course for all who
needed capital.
This required the second program to control the deficit, which
was contained in the Balance of Payments Message of July
1963.
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- 4 The Interest Equalization Tax proposed in that message was
immediately effective in stemming capital outflow into foreign
securities. Last year, for instance, the total of such foreign
borrowing was cut more than 65 percent below the rate for the
first half of 1963. The program also intensified other existing
programs and utilized monetary policy by combining an increased
rediscount rate with measures which raised short-term interest
rates substantially.
But the net result of all of these efforts achieved only
a reduction in our overall deficit of $800 million -- from $3.9
billion in 1960 to $3.1 billion in 1964.
Why?
Because last year another new problem appeared -- the marked
rise in overall private capital outflow, including both short- and
long-term bank credits and direct investment abroad.
It was clear that action was necessary to meet this new
challenge. It was equally clear that we could no longer attack
the deficit piecemeal.
To stop the flow, we had to attack the entire deficit.
That is just what President Johnson did in his Balance of
Payments Message last February.
In that message he strongly reaffirmed his intention to
strengthen and build upon the measures already taken in both the
1961 and 1963 programs. But he also struck hard at the heart of
the new problem. He called upon the business and banking community
to do everything in their power to help by launching voluntary
programs to reduce the net overall private capital outflows.
The result is that for the first time our entire nation is
committed to a concerted attack on the deficit. With the exception
of travel and tourist spending abroad, virtually every source of
private or public dollar outflow is now the target of either
substantial public or private effort or both.
This program includes, in addition to the voluntary measures,
legislation to remove existing tax barriers to foreign investment
in the United States, an extension and broadening of the Interest
Equalization Tax, a stepped-up effort to promote foreign tourism
in the United States, and a further reduction in the duty-free
allowance for returning American tourists.
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- 5 Some of these measures may appear to be unnecessary and
trivial. They are neither. They represent our determination to
make every possible effort to reduce and eliminate our deficit as
quickly as we can.
I am not here to argue whether this program is right or wrong.
I happen to believe that it is right. I am here to tell you that
t~ time the program must work.
The possibility of failure is
too dismal to contemplate.
What is at state in this program?
The protection of the dollar in ways fully consistent with
sustaining propserity at home, maintaining our defenses abroad
when our allies are threatened, supplying private and public funds
to less developed countries, avoiding renewed restriction on
trade, and the achievement of a more flexible world monetary system
that will permit continued Free World trade and development to
progress as it has since World War II.
Recent events abroad have made it plain for all to see that
the international stability and standing of the dollar directly
affects our national security and our capacity for effective
diplomatic, political or military action. A strong currency is
essential to our success in meeting our worldwide responsibilities.
Already there are those in Europe and elsewhere who look upon
the United States as a monetary paper tiger.
Already there are those who point to fifteen years of chronic
deficit and predict many more deficits to come.
Already there are those who point to our two previous efforts
to eliminate the deficit and predict our third effort will be no
more successful than the others.
Already there are those who say that we will fail, that
the deficit will continue, threatening the role of the dollar as
a reserve currency and creating a world monetary crisis.
I say these people are wrong.
I say the program that President Johnson began on February 10
will succeed.
- 6 -
The simple truth is that too many dollars have been flowing
out of the United States for too long. The United States is like
a banker who is lending far more than he is borrowing and whose
net asset position is great and growing. In one sense he is not
living beyond his means. But if that banker is short of cash and
current assets, which are regularly exceeded by his current
liabilities, it is not prudent for him to further deplete his
current assets.
The banker may wish to give even more generously to charities
than before, but he will remember his primary responsibility and
refrain from another big pledge. He may wish to go on a European
trip until he realizes he is cash poor. He may even wish to make
some long-term commitments in loans or investments that look
potentially highly profitable, but he will adjust his current
assets to liabilities as a first priority.
This means, whether we like it or not, we are committed to
eliminating our balance of payments deficit.
Furthermore, it will not be enough to reach payments equilibri~
for two or three quarters or even for a year and then slip back
into another deficit.
Once we achieve equilibrium, we must maintain it for a
substantial period. For only sustained equilibrium can wipe out
the impact of our prolonged period of deficit.
Achieving and maintaining equilibrium will be a difficult
task. It is not surprising that a number of wishful thinkers
would like to avoid the discipline of such a course.
These wishful thinkers fall into several groups.
One group points to the fact that under our first two programs
we achieved more than $3.5 billion in balance of payments gains -more than enough to wipe out our present deficit and leave us with
a comfortable surplus. This group looks at our present problem
as a very temporary one, which will soon clear up and allow our
previous gains to automatically restore us to balance.
Unfortunately, this happy optimism is without foundation,
and nothing could be more damaging to our efforts than unfounded
optimism.
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t~nother group believes that all we h~~e to do to solve the
paym~nts
problem is raise our interest rates.
Unfortunately, such a course not only conflicts with our
need to maintain our domestic expansion but also important, would
not solve the problem. In view of the tremendous difference in
size and efficiency between the money markets here and abroad, it
is hardly realistic to expect a higher interest rate to provide
the necessary reduction in long-term capital outflow. Furthermor&,
an interest rate increase large enough to have a significant effect
in this area would almost certainly bring a recession. A recession
in turn, wou19 severely damage the climate for foreign investment
in the Unit~d States and would also create a strong movement to
reduce inee'rest rates immediate10
Still another group of wishful thinkers look to new international monetary arrangements as an escape from our present
payments problem.
I must frankly admit that this attitude puzzles me. These
people must be confused by the role which new international
monetary arrangements will play. For instance, they certainly
won't remove the necessity for the United States -- as a major
reserve currency country -- to maintain reasonable equilibrium in
its balance of payments. And there is no doubt that whatever
new monetary arrangements may be negotiated are bound to include
the dollar as the major reserve currency for the free world.
The significance of improving international monetary
arrangements will increase as we move closer to solving our balance
of payments problem. That progress will increase interest in some
of the notions of improved international monetary arrangements
that we think are in the interests of the free world economy,
methods of providing additional liquidity, for example, without
depending upon dollar deficits.
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- 7 Another group contends that all we must do to solve the payments
problem is raise our interest rates.
I must frankly admit that this attitude puzzles me. We have not
ignored the differentials in interest rates that exist in the Westen
world. Twice, when need appeared, the Federal Reserve has raised its
discount rates: in the summer of 1963 to 3~ percent, and in the fall
of 1964 to 4 percent when the United Kingdom raised its bank rate
from 5 to 7 percent. But while we clearly recognize that the United
States cannot be an isolationist on interest rates -- any more than
it can be in the political arena -- it is important to realize that
the persistent raising of interest rates may conflict with our needs
to maintain our domestic expansion and yet not be an overall solution,
in itself. In view of the tremendous difference in size and efficient
of money markets here and abroad, it is hardly realistic to expect a
higher interest rate alone to provide the necessary reduction in long.
term capital outflows. Furthermore, an interest rate increase large
enough to have a significant effect in this area would almost certainl
at this juncture risk a recession. A recession, in turn, would
severely damage the climate for foreign investment in the United State
and would also generate a strong effort to reduce interest rates
irmnediately.
Still another group of wishful thinkers look to new international monetary arrangements as an escape from our present
payments problem.
I must frankly admit that this attitude puzzles me. These
people must be confused by the role which new international
monetary arrangements will play. For instance, they certainly
won't remove the necessity for the United States -- as a major
reserve currency country -- to maintain reasonable equilibrium in
its balance of payments. And there is no doubt that whatever
new monetary arrangements may be negotiated are bound to include
the dollar as the major reserve currency for the free world.
The significance of improving international monetary
arrangements will increase as we move closer to solving our balance
of payments problem. That progress will increase interest in some
of the notions of improved international monetary arrangements
that we think are in the interests of the free world economy,
methods of providing additional liquidity, for example, without
depending upon dollar deficits.
- 8 Arriving at sustained equilibrium in our payments would all~
time for other processes to occur that would make it possible to
thaw out the voluntary arrangements -- without fear of any further
great outflow that would again create a serious deficit.
Unfortunately, there is no magical arrangement which will
automatically do away with the present imbalance, or which will
make possible continued large outflow without endangering the
position of the dollar.
Many of these wishful thinkers embrace one or another of
these various solutions to our payments problem in the hope that
we will be free to return to unlimited private capital movements
abroad, to intensify government spending abroad, to abandon or
slip away from our national effort to remain competitive. They
would confine our activities to making some token effort to
achieve equilibrium.
Unfortunately, we cannot wish away the deficit -- or the
potential consequences of allowing it to continue unchecked.
The only acceptable solution facing us is the one we are
pursuing -- to maintain our present system and to make it work
by eliminating the deficit, thereby paving the way for the
successful negotiation of an improved system.
There is no question that this course, through the voluntary
program, requires us to restrict private new or additional business
and financial activities which in normal times we would consider
highly desirable.
There is no question that such new or additional business
and financial investment abroad pays excellent dividends to our
future balance of payments position. In fact, more than a third
of the balance of payments gains made since 1960 under our first
two balance of payments programs reflect increasing returns from
such activities.
Such returns, however, are realized only in the long run.
But ours is a short-run problem confronting us now -- this
year. We cannot wait for the long run to eliminate our payments
deficit. The time is too short and the risks are too great to
take chances.
- 9 -
Our course is clear . . It is a difficult one but I have every
confidence that we will achieve our goal of sustained payments
equilibrium.
It is not too early to consider what steps will be required
to adjust to that new era of equilibrium.
First of all, there is general agreement that some
modification in the international monetary system will be required.
We will need some way of gradually and systematically producing
the additional liquidity which will be required to finance
expanding free world trade and development.
In the past, the major source for such additional liquidity
has been the continuing payments deficits of the United States.
When these deficits have been brought to an end, it will be
necessary that there be general agreement on an effective way of
fueling the world payments system.
It is not too soon to begin high-level talks on this matter,
building upon the exploratory technical discussions that have
already taken place. That is why the Chancellor of the Exchequer,
Mr. Callaghan, will come to Washington next month. Through the
remainder of this year, there will be other discussions at all
levels with respresentatives of other interested countries as we
strive with them to reach a substantial measure of improvement
in the system of international monetary cooperation.
Our view, supported by most of Western Europe, is that the
best step the United States can possibly take at this time -- to
protect not only its own interests but also the world monetary
system -- is to move as strongly as possible toward equilibrium.
At the same time we should continue discussions -- predicated on
the maintenance of the dollar as the major reserve currency of the
free world -- on possible steps to improve the world monetary
system once our deficit has been eliminated.
Any other course would invite a crisis rather than prevent
it because it would eventually -- and inevitably -- require the
imposition of more restrictive measures, with all the problems
of retaliation and damage to confidence that these measures
would involve.
- 10 A second step will also be required to adjust to the new era
of equilibrium, in addition to new monetary arrangements. Having
reached and sustained an equilibrium in our balance of payments for
a substantial period, we shall also renew our pursuit of our longterm objective of free capital markets both here and abroad. For
there is no attractiveness to anyone in considering the voluntary
restraint programs and the related series of interferences with
these free capital markets as a permanent solution to the payments
problem. No one can realistically predict when they can be
abandoned, but we all agree on one thing -- the sooner, the
better.
There are, however, some significant factors to be noted.
For one thing, slowly but surely changes are taking place
in both the depth and the quality of foreign capital markets.
Furtheremore, there has been substantial reduction in the
impact government spending overseas has had on our balance of
payments. At the same time, our continuing price stability and
rising productivity are contributing to increasing
competitiveness of U. S. goods in foreign trade.
In addition to these important factors to the maintenance
and strengthening of our trade position there is also the rising
tide of earnings from U. S. private investment over the post-war
period. These earnings can help to provide substantial improvement
to our payments position in the years ahead.
The continuing strength of these factors in the future, and
how quickly they contribute to improving our payments position,
will have much to do with determining when we can remove the
voluntary restraints required over the shorter term.
In conclusion I would like to remind you that the state of
the dollar in today's world is far stronger than it was several
years ago, and it is getting stronger every day.
Among the reasons for this are not only the measures I have
cited, both short and long term, but also the deep underlying
strength of the entire U. S. balance of payments position.
The dollar today is backed by the world's strongest economy,
which is in the midst of the longest peacetime expansion in
its history.
- 11 The dollar today is backed by the world's greatest gold
supply, fully pledged to honor our international obligations.
The dollar today is backed by public and private claims
against foreigners which exceed their claims against us by
$37 billion. If you choose to consider only private assets, the
U. S. is still in a stronger creditor position -- with private
claims against foreigners exceeding their claims against us by
roughly $15 billion.
Finally, the U. S. enjoys the most favorable trade position
of any major nation in the world today, with a total commercial
trade surplus last year of $3.7 billion.
Clearly the United States dollar today is the strongest
currency in the world. Our task is to maintain and increase that
strength, and that is exactly what we intend to do.
Success in this task will require the imaginative marketing
of more of our products and services in strongly competitive
foreign markets; the continued tailoring of our Government's
spending abroad to the minimum essential; the use of tax incentives
and private financial market initiatives to promote foreign
investment in U. S. private securities, properties and
and business; the fashioning of effective capital markets throughout
the Free World; and an ever more vigorous domestic economy in
which all our human resources are fully at work.
All of this will not be easy to achieve, but with the help
and cooperation of the business and financial community, and
indeed of the entire nation, we can look forward with confidence
to success in this vital endeavor.
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TREASURY DEPARTMENT
Washington
Statement of
Joseph W. Barr
Under Secretary of the Treasury
before
Subcommi ttee No. 'lof the
House Committee on the Judiciary on H.R.
May 27, 1965
6097
------ - - - -- - -- -- - - - --t-1r. Chairman and
~1embers
of the Subcommittee:
I appear before your Committee in association with my colleague,
the Deputy Attorney General, in support of H.R. 6097.
We in the Treasury have a singlllar interest in this legislation
since we, through. the U. S. Secret Servi.ce J have the responsibility for
the protection of the President and his possible successors.
It was
for this reason that the Secretary of the Treasury joined the Attorney
General in recommending to the Congress draft legislation which has
been incorporated in H.R. 6097.
The tragic assassination of President Kennedy and the events that
follmved brought to the forefront a serious omission in Federal law.
There are laws on the books which make it a Federal crime to kill
such people as U. S. Attorneys, marshals, F.B.I. and Treasury agents,
officers and enlisted men of the Coast Guard, and employees of penal
institutio~s.
Yet when it comes to the President, who is the Chief
Executive and the Commander-in-Chief of our armed forces, no comparable
provision exists.
The killing of underlings in the Executive Branch is
a Federal crime, but the killing of the person at its helm is not.
F-67
- 2 -
I would like to illustrate this anomoly in the following way
Let's assume that Lee Oswald not only killed President Kennedy but
also killed one of the Secret Service agents that accompanied him.
Oswald could have been tried in the Federal courts for killing the
Secret Service agent.
Yet, he could not have been tried 1n the
Federal courts, had he lived, for the assassination of President
Kennedy.
Let me illustrate the anomaly in still another way:
It is now
a Federal crime to make a threat to take the life of the President.
But if the person making the threat later killed the President, the
killing would not be a Federal offense.
In other words, the lesser
offense of making a threat to take the President's life is a Federal
offense, but the heinous offense of actually killing him is not a
Federal crime.
Tile support the legislation also because we believe that the
investt;;a.tion of the crimes against the officials involved and the
apprehension and prosecution of the criminals should be brought under
Federal control.
The Federal Government provides protection for the
officials covered by the bill.
Since the Federal Government already
has the responsibility for their protection, we feel it should have
the authority to investigate and prosecute crimes against them.
- 3 Any attempt to assassinate the President may involve a conspiracy
by several persons.
The conspirators could have agreed that if an
attempt by one failed further attempts would be made at some other
place or at a different time by other conspirators.
Or the conspiracy
could involve not only a plan to kill the President but others in line
to the Pres idency as well.
In such a situation, Federal officials should have the right to
question the individual who made the assault or committed the lID.l.rder
to obtain any possible information as to co-conspirators.
This is
necessary to make sure that all aspects of the assault or attempt can
be thoroughly explored and any further possible threat to these officials
eliminated by the identification and apprehension of the offenders.
While state or local officials would not necessarily be uncooperative,
it seems to us that the Federal responsibility for protection of the
President and his successors cannot logically be separated from the
authority to investigate and to prosecute attempts against their lives.
Further, the Federal Government has certain advantages local police
officials would not have in the apprehension and prosecution of persons
who attempted to assassinate the President.
In view of their protective
responsibility, Secret Service agents go with the President in his
travels.
They would be on the scene in the event of a direct attempt
- 4 on his life.
Time would be of the essence and the agents could take
immediate steps to apprehend the criminal.
I should add that in the
case of a wide spread conspiracy the Federal resources that would be
available for a complete and thorough investigation would be greater
and more effective than the resources of a local police force.
Finally, it is our considered view that the enactment of this
legislation could well deter some future attempt on the life of the
President and thus improve the protection now afforded by the Secret
Service.
We urge the enactment of H.R. 6097.
- 13 It
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bopt that the )"ebl"Ual7 }lI'OgF8a Will remove
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J'I!Y1...o
me.nt of
fOr you toc18y, it 18 tar tiOo early to talk about the attain..
the full aehieYe'!llellt of our objectives in zolving the balance
of pqments problem.
OWr-con:f1dence coulo be our worst enem:,y at thia
point, bringing about premature l-elaxa.tion o£ our concentration and our
efforts.
scored one
It 1$ no time to talre our eyee oft tbe ball, because we ha've
01" tllO
good
shots.
Our obJectives are far too vital. to run that risk.
of e¢.l1br1um in our 'ba.1..an<!c of
ot our position
or world
~nt.s
leadernhip.
rnle attainment
1s essential to the retent.ion
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___ 1'nMe, wbere • IIherp
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. . 0ft'lMrIt by a daoliae in 'Ule aeoomS balt.
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COll'iiaeakl. Iurepe 8J'.Kl the united S1satea Widened sl1gbtJ.y on abort_ _ ,.... and by • W,rd . , a .baU'
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cd U. S. flada :!.I.rH the .tiU.ro-dollar ma.rket and the
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ean- d14 enluae O\U"
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1964.
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tile IUJrG-doll.lU' . . . . . to __ up 'for
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by
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lwel ot Bet
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bf!U.1k l...u.nc to foreign bol!'1"Oliera to abOut
f500
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!Ih1s ~ direetJ.y affects the ~
J.Jnerten,QIJ with the ava:Il abU:1ty of domeIrtic ered1t, or
ft1IItas 4caut1o 1l1'teftft l'&1MttI.
Pftl:bli D&t7 t"1prea 'lor the tlrat ~ balance U payments
show a seasonally-adjusted deficit on regular transactions of
~767
m1ll1on -- about half the D1ze of the corresponding deficit in the
... 10 -
Frca time to time, it has been sussested that the tendency to exces ..
""'flow of ftDanclel
dw
iateren ,..tee
OQ1tal sbcu1d be restra1ne<3 by higher long-term
in '\he United
States. This View is videly held
!here are reuone tor dot.t.bt1na that
l.ODI-1aeft1 lntereft ratets here 1s an
8
in Europe.
81JI.p1e pr$ecr1ptlon of higher
etteet1ve a.newer to the
~l_.
First,
thtt d1ff«Nrlt1a1 between long-term rates here and 1n moat of Europe is s.o
l a p bot ime JOU1b1l1ty
~ al1y
eubfl'talrt1a1 lnHn1ns fit the spread by
u. S,. ecUOlt 1e open to eOft81dent'ble qu.ut1Oft tran a pu;reJ.y technical
~,
in 91ft'
SeoOnd, . . . more
cal.
8'te.1:adard.,
o't the . .atve '¥Ol.ume ot ....1»18 in thi8 country.
~,
and a s1plftcant1y h1sher level misht vel.l do harm to our
daltntc eccaany.
Third, the b1gh interest raw" in
ret1ect, 1n part, both the
em
~
the level of U. S. rates i8 not low by histori ...
~
probably
hee:¥y, perhaps eilCee&s1ve, pre156Ure of borrowers
and a poneral. tendency fOr prices to rifle, thue cutting down
aubatant1&11y the anml8l rate of interest, in terms of purchasing power
re&1. goods.
OYer
Lut
~,
noticeably.
At the year eM, long-tel'Jl!. rates exceeded the 4.14 :percent
U. 8. Government bonde in the Un! ted states by one to two per-
level
Oil
ctm,
out81de
to
ute-rest rates on the Continent of :&!rope tightened
~
ot the
1964,
special ease of' Mteerland..
From year.end 1963
long-term bond rates increased on the order of one-
half penJent in the Netherlands 6 Belg1um, Italy I Germany, and SW1 ke-r..
lcd, as meuured by the highest quality domestic securities.
Short..
tem rates 1nereased one-half percent or more ir; all these countries
I
/
, i
... 9 ..
Mr '\tdId
~ ~
'lJII oa»ttal . .
Ell....
to tbe volatUe nature of the fine.Jlcial ...
:tleGJ1te ell
the ditfieuJ.Uea of 1Btezpret1ng
J"" nol.el1t ud J'IIlI1d 8h1tta 1a the ~ ~ s1tuat1anl
laR J8IjI:"'a tlll:,Perieace apia po1nte to a
. . ........ . oapiW Ot.I.tft.ov)
.eMIl
Q1J' ~ OQ
...... 1bU 18
~ ~
JBrti<NlArl¥ at tbe
tor l.Qna-
t1n8nc1al
t.ne, w
otbIal- aocomta. and to do so at t1aea by a l..-p
~
tWIt 11 it 1.8 __ •
tbe.t thlt wide
~.
Ul the ~ U».1~ed ~l»I it.a t4 ~ and <lIisa1oDa also
........... sa ~
••••
ed41UOS&l t1laaDcW-t7.Pa ce.p1tal f'l0W8 •
~..tJ»e
tj,eJU. ~1a1crla
flova
~ DIIiPV
capital
usuee Md
:redem;p-
betwen Amv10tula ead t'Ore1pers in OU,wtawl:J US
....-:Lu., '** 1. . . of ~ aI¥l ~0J.lI ~ty.. lind pl.seat o.f
r-. ~ .. ~bMJr;"*'S COl"J01"&'t.1oDa, tJ.nmlc1al or nou-t1IlClC1al.
to ooyv a
l_eotJ.J
~
ranae
~ the reatre.tDts of ~
'bf ed1eDd1_ it to 'bank loua
lUi...
~1W
1:IbJ:w ,..-n to
one
yea;e
or more aflii are
~ty
SyReII.
tb.rouah the
TaK
~ legis-
subject to the tax troJat
1905.
ey:en ~ rapidl.y and ~
~,
we baVe
1963 Interest Equal1U.tion
~J effective Yebruuy 10,
. . of loan Q.QI.Uaenta by
~
Of
to l'84.uee 1the IIdni.liNll
ODe
nee.....,. to move
le4e1'&l.
of ~ta1 outtlw of th1s type,
Ho\Ievel', it 1188
to halt the heavy build ..
vo.l.u.ntar,y ~
ot the
- 8 ...
act.1. _ _ by PNa1<1et Johnson in hi. l3a.1.arlee of Paymetlts Messase ot
~
10
I~ ~
that the doUar out.tlov wuld eoat1nue at the
ft1urtlJl ~ rate and Ph DeY ~ of «tr dettmdn&t1on to
d_ate ev 4etic1.t•
or ~
. . . Wid. . . OIl the etteett. . . . of our boll.lUte
IIOp. can, I bel1we, be tCMVl 1a
1. . . . . . .eb.
~ ~ d~
1'b.eJte an JIIIIQ' taotora 1lbl.eh, }l8J'tlC1l1.a.r1y :!J1 tile 8hO!rt
1'\&1 ~ • . , . . . ".... other tbaD ClUJ"
or ___ lid ftc. . . tbat
ow actiOll$, but it lI!17 "
the dall.ar 18 closer 'bo par vtth the German
..-fl . . . it __ been 1n fIeftftl 7e&Y81 tU 9w1_ trane
ana the P':iftCh flwtc
lowest 14!1ftl 111 OYV a 4oea4e,
oft 1_
. . . .~ e~
•
•
to
~ ~
__ !\l.1.t) cut,
~
~
iu
~
bas bee
..osee tor· the ,... two . . . . .
80 . . . 1a 'beIdJJt' Wl.
of . .
in
~ CIQr
1I\U
O'Cl1II1deJtlble
~
PJIIlt1Crl
u
ke:ep up
the
. . to
~
a
eeatt~.DS
~tures
fINn in the.- acecunta,
eft"eet or ....,
~
1I01'Ma COJlS1de:t6ly
tu1l.el" un o:E eepc1't¥.
in iJJIipOrta as our
abroad •
,.rt.l-
iloek ftl1.ke in the first
tbe trade
~UB
......, 'b7 . . et.t.ot Of alower &towth lW'tetl in Earope - our
. , . . II&'tlUal
and
the aloIer WWiq 1tas
.a ~c_ and Goven_ntal
1Jt ~ peri..
...... «
el.ea'rl.7 need to
We
QWD ~ ~
in
ec,ports
toward a
- 1 Ial . . l.Awr JIIiI'ta of
,.. nwuaa.
Sa tile fUR
1964, however,
the pressurea lIb1eh were felt
u4 the tact. tbat 1a'leqln by Russia were concentrated
ba1t~
fJI1f8 zUe to IlOWltUa el*Nlat1on in j'Old, so that
. . . . . ....-- oeued to be a channel thrOugh which new sold became
Die 'k'ead 00IIt1nued 1J'l'tQ thb
- - . , . . Lon4fa . . .t baa ba4 ..
.... ,..,.#
._t
lIb1eh seJ"V'8d
A1~
ot
the
~
~
whil.~
~ ~
lJ.
s.
O\U"
aald 1..,.... 1n a
b
~.
JUt tIN
en"" em om.tal
cel4 loue••
an \U.l4entud 1D1 of . . . . futon
~
....... 1bat
to
)IOU, _
loQa~
~s \t8
to
view the
JUQ80tlve, u4 doIrIOD-
piu or lOll... . , . be in p&1"t due to the vagaries of
1. Busta, 1,\ provJ.4ee
DO
grou,nd for
~y.
In tbe
a..1 -.1p1., our loaau ean oDly be stt.r1'buted to current or etAaV.le.tiW det1411ia 18
ow:
balAnce ot
p.a~_
.
• . . . . . , '. . the large deficit 1ncurred by . . United State. ln the
. .lib
_
~l"
~~
of lM' ,..r and the ra1Wer eevere preasure, at times,
\he 40Uar 1Uelt vas not 'UDder qecuJ.at1ve a.ttack.
tile ,... . . tv thi_ an, I believe, twofold .... first, tM netwrk
fit 4et. . . . . .lob baY. been steadily erected over the past five yearn
baYe convinced speculators of their folly, and, oecondly, the forthrlght
- 6•
Ot the totIal dft1t\
ot $125 mUllon on the U. S. sola stock, only $36
1dl1toa . . . . . to intemat,1oual monetary trannc'tions J the baJ..anee
bel,. a'bV1)uta'ble to net d_est1e needs for industrial and s:1mUar
~-.
~
over
eOll'tarUt 1:Mt'heen the IN] J gold 10S8 last year and the 1065 of
$1 b1ll10Jl 10 far this year".""'l. P .... 1.
11\ '¥'i. of the f80t
~
etr1ld.ng -
particularly
w haft IIlOWlted a vl80l"OWt effort to reduce
,.,.... U . .tllb:t'1la.
Of.tr
But a SIOIlIent l ., reflection points up the tact
..... 1ft the ~ run, it 18 quite possible to ban gold losses even
UB1",d 8tctee bal . . . ot pqIltmts 18 in surplus and to baYe
\bm •
U'ttle or DO 1.8 dvr1ns pert0d8 0'£ beaYy det'1ci t.
Q1fted,
thla is ..
~ \Nt
As I have already
vttMssed last year, end much of thU
ywar •• len 1s due . . the U. S. deficits in earlier perioda.
Al. ., the "'*'1 r.tet 1. . 18ft year
chae
to the t.et that sa1.ea
~
-*"
.~aed
196',
alptftCMtly offset by acquisitions
. . OOCIPJrative operations
'ae . . . .
of
Wl"e
oOl$i-.e<1 last.
".t to a considerable extent,
~"n
~
:in the London golCi market.
to bfmeftt by increased prcduct10n
8Cl.t! eac11ece sal. . of gold by Rue.1a, undel"taken,
\0 ftDllDCe the 'tIJNM1al Rwts1an Vb. ., purc:bues in 'the Weat.
U
in
'!'hese
......... er " " 7 no't enly p.roY1c1ed IlGre 601d to monetary reserves in a
Ureot . . ..,. eonV1.buted to • generaUy e&l.Ja atmosphere in the @Old and
~ ~ ~ the f1ret hsJ.f of
teJadem:i•••
15)64, curbing speculative
*'- 1a ...1..... to . . i..-t of ~ou
teCS.s.-.
811' ~
loues
los_
_
~
~
lS• ..,. ., .18ae
a_.. '*
CN.Il c;.~
'*' be iDtl....... l'q the 8hiAa Of clQ11 AI'
ia ....'.1...............n Of . . . ~
..,.
1D our
ot. fNl".Jl.vae ill
IDW . . i t . . are _ _
1rt tile ~ fJUJI ofI
bfalMMl' of
...,..i:re4 __
~.
~
It
ldtb
• Jar ...... Of' &OiW 11\ theU . . . . . boldS.. !.be"" of &Old
~
... ,.,. aev
,...-. 1f tMft . . 1....
~_
lIM VV1ed 1l'QI .,..
...u.- III Q01I40D11t.ar.v SQl.d ..sl·able to
*
.. ......, ~u. Of . . . 1RId4, w..
~ to
_ _ et .fI'tftip .....,. . . . . .
tbeU' ___, to
fJIQW
a. . . thd. .
~
aue
a.. ret.z.ec:W
~
1& »fri a ~
~ of . . dOll_ ~ of . . . ~ ~ns
J'reDDh JQUq of
~»6
1964.
Ia~f
as lIItll u
. . Me JIiIII'1Ra . . l.,.a . . . . Of
~
to
~
In~,
their ~ ~
. . Utdte<l
.............
SOld
$--..
1M lie. '7 8Q1A ~ in 196; to
" abo Sa . . . _
~
~
~ Un1t.eQ
'YOX"W, _
states,
tb&.i'.reneh
f
__ ....... ot . . ~~~.
Ja 1964.
u. s. .,u 1..,.._ ~ .ate 1IJIG.11,
~ly Wt.m
. . . ." ill ~ W ... ~. . . . l..arp "Mlaw. of ~ de.tieit.
L/67
{
... 4 WhUe d1l"ect investment added Dearly $900 million -~ to the emnuaJ.
me ot wttlcw,
other capital
autnov
tram the
u. S.
&CGounted tor an
eD1arplDent at our deficit betwen these same tw periods ot no leas
thM
4'2.1
billion at an annual rate.
aDd Pout ball ahon-tel'll.
t1ew in another WII;Y, about
About halt
ot this was lons-term
Looking at thi. $2.7 bUllon of lArser out-
$1 billion reaul.ted
troIIll.ons- Md sIlort-term
bankh. opt1"&tlons, ud the rema.tnaer . . divided about equaUy between
1&1.. to torelp.en of new and old securities and Bhort-.term pl.aeement.
abroaii by non-babk1ns enUties.
In eMltion to the $2.1 billion increase
in the recorded ouU1av of A1aeriean o~1tal, another $1. billion, e.nnuaJ.
!'de, ~ Ulll"ttcorded tra.mJa.etlons, and a small part,
" " . - . re<!Uced
!ben
~.
1Ilt1ow of
~ direct
$200 million,
and ather long. teN ct.ldtal.
'IIlOVeIIlEmtB genen.Uy continued until the new balance of
lIRe
prosnw ot Febru.ary- 10 began to vo:rk in March.
the t1rrrt ~
ot 1965
at"'$
The results o'f
only ~1ally in, 'but they shOW a considerable
l"e4uet1OD in 'the replar def1eit,to an anmllll rate of '3.1 billion,
CCII,PI.l"ed V1th
Pl"Hsure
OIl
$4.3 billion in July...'DeeeDberI 1964. But the continued
the Un!ted KingdOl'll during this period I and the et'f'eetB of
\he 40clt etr1ke, add to the d1t'ficult1es ot
traa the
1D:1~
~
one in the
the ba1an.ee
sole
any clear eonclusions
tmpact of the new program.
I JJbtNld note that there 1s an operational
..,.t to
8.8
of~.
The put
and exchange marke'ts.
&8
well as stat.1st1caJ..
year hU been a very active
In thia sphere I we have to recognize
... 3 ..
the Gl"WI of fen found tbelnselvea addinl 5 percent to their reserves of
IQld &Ild fWoe:l.p
_0".
and
8 percent in all types of reserve Msets,
'tIhicb 1Dolwie reserve olatu em the DO'.
the
JM)ftl, &II
I b8Ye iIQl.1ed, 1s obv1oua.
As I 8b&1 l. note later in
.... --.u. we baY. Il8de proc;re•• toward b&1&nce sinee the President's
to a.ke
;pl'O&reH.
We have
to
dQ 80S the
stabs are too h1&h tor us to
taU. :BuS ... coat1dence resu on tne COIIV'ict1on that
. . . . . the .troD& eftorta nov
'u.t. our problem 1ft aol.ved.
emp1.~.
~
'We
abAll continue
It does JlOt rea't on a conviction
ver:t wret th1na that eould happen now
1& Oft.l'COQt1daae, toll.oweQ by ntlaut101l of effort.
Mf _oDd JQ1at-1• • aimJtle recital
IIIf.')Dtha
I bave .ent1oned.
of 'What bappEmed in the
w..
Wha't".. responsible tor allIoat tri:p1.i. our
.reauJ,aJt 'traUacUou deficit betfteen the second halt of 196.3 and tbe
Heoad halt
ot 19641 the aooda
and serY1ces 'balance, excJ.\ld1l18 Qovernment-
ft._eel 1t. . . act\Ulll.ll iIIproved by al.Dtoet one-'\b1rd ($1.6 billion), to
an .mu.) ra_ of l'.HtIIrl¥ $6 bUllen, o~ns JUly-December,
J\&l7-J)ece'ber,
t1.ov
1964.
OIl Govertaent
1963..
'With
Also, our net m:U1tary ex:pend1tures end dollar out-
Il'Uta and
capital~.
What happened,
and what
. . . . cle.rly reQOna1ble tor the sbar» 'WOrsening of our payments posi-
t1on, ".. • atrilt1n&
e-yeq
tne
:s..nc.reu. 'betweA
theae two periods in virtua.Uy
ot priya. cap1tal outflow, amount1n& to $3.6 billion at an
....... rate -
:t':raI an a.nn\UIl rate of' $3.1 bUlion to $6.7 b:U1.1on.
- 2 -
III the t1aca.1. year 1963-64, the
....... . , . , .
. . bad _ _ . . . .4.
. . ."_ 4dhl',
_..-.JI¥ _Jua'bed, . . dCMI to •• 7 billion, as
IS ..... ft....,... ....... of $3.3li:Ul1on.
. . . X1Idi......... l.OU••
......
~
Or 1963
and
Internat1onel1.y, the 'WOlTi-
"11 1964
. . . . . . o:t CcD1Dtrdlal. Iuopeea
W" oadna to a close
:reael"ft ~.t1ons,
., .,1 Mea .. _MU1ve anct :l1lt1&t10D81'Y in &uvpe. ..-ad to be 8lawing
..... It ... ncoa;nlaed. __
~. . .
covu, 1sbat _ _ of the
. , the iJJ4.t1al
...alt.. . . . . . . in
u.u. a. ,
. . . ..".., bu, YfI'II'I
aa,,_
o~
tllJ""'l of ...
~e4
ntlatpIe
sa . . ~'be4
of 1be Intereat
IIImOUM__•
DOW 01.11*1118,
......s UDlikely.
did occur • marked deterioration,
bo'Ob in 1me U. S. balaDee and in the
Ill ... 1u~ a1x IIOntha or
W'I"14 patVI'B.
was
and "'- heavy scwtet. grain purchaBee ancl
~ ~, ~
out of wId.ch . . are
~nt
1.964. ,.. saw
StaH soar to _ aamaal n:t,e of'
the resuJ.ar det"iclt
$4.3 bUl10lt,
and to an
_ , . . of $6ltt.1l1oll1B" ~ qu,M"ter alone, wbUe the U. IC.
~ • 'ftW7 lIwp
111 ...
~
U.
a.nct"
1(......
of $2 bUl10D
at an annual.. rate,
measured
A .eatye Uort-t.em support program :for 'the
JIIIUDCI n.r1111& or $3 b1ll100 acc~ed a clrav1nc of $1. bUl10ft by the
V.
x. _ . . ~ *ne...,.
J\md.
daMlC1p14 ~eular1y be&¥)' surpluaee.
France, Italy and Canada
There also was a general rise in
"..... ....U 1D 1il1e oute1de world, rea\tl:t1n8 t:rom the bulginc U. s.
4IIfto1t ad the U. K. draV1np upon oredit .facU1t1ea, bUsteral and
-.1.:kUaWal..
For the year
1964
as a whole, the other eight countries in
Tl"{EA..c.mnY DEPAHTMB'rr
WASHI'NG'I\:>N
FOR RELEASE ON DELIVERY
RJMAmcs BY 'mE HONORABLE FREDERICK L. mlIOO I
UNDER SECIUfilAHY OF llIE rIT~HY ron HOImrARY AJ.~'AII\G I
AT THE MIDYEAR MEE'rIm OF THE DIVISION OF FINANCE AND ACCOUNTING
OF THE AMEHICAN PETROLl-M:1 IN~JllJ:TUTE
AT THE BELLEVUE-STRATFORD HOTEL, PHILA.DELPHIA, PENNSYLVANIA
ON FRIDAY, MAY 23, 1965, AT 10:00 AM (RIff.)
RIOC;ENT D!.VELOPMEtrI'S IN INTERNATIONAL BALA.NCE OF PAYMmfl'S
J
I ...
Ilad
to be with
yo\l
todq.
'II:
P
'l
You are aaaoc1ated with an industry
vh1ch has an especially broad aDd porva81ve =sphere and scale ot act1v1 ty
1n~onal.ly.
The oU caapan1ee particlpate ln almost every conceivahle
kind of current and capital tre.naactlon af'f'ect1ng our balance of
~,
~nts.
I WIlDt to share \dth 7W ecme thougbta on the s1snificance Of
recent deyel.opnent.a in internatiouaJ.
'1'he first observation I make
no aention..
perhaps
110
obvious that it should need
In p:tpul&r to:m, 1t is expressed by the old
count your cbiek.ena
~
18
~nta.
untU they are
is that 1t 1s
dif'f1cul~
. .~1nc 11'1 the CCIJWl._1t1es
o~
hatched .. "
s~ing,
"Don't
Another way to say 1t
to evaJ.U&te future trends which are
tbe pr8eent.
The point 1s 8iapleJ let
.. U1ustrate it by event.s of the put nine months •
m.anv shif'ta in the pattern of tntenw.t1onal
~, the lut twoq,uar1ers of 1964 and the first of 1965 stand out 88
Q'OWded and conf'uBed. As we entered July ~ 1964, Pros)'IeQts tor the U. s.
• en in a decade marked by
balance of
~nta
seemed reuonably br1sht.
In the previous tvelve
m.EASURY DEPAR rt-~ENT
Washington
FOR RELEASE:
ON DELIVERY
REMARKS BY THE HONORABLE FREDERICK L. DEMING,
UNDER SECRETARY OF THE TREASURY FOR MONETARY AFFAIRS,
AT THE MIDYEAR MEETING OF THE DIVISION OF FINANCE AND ACCOUNTIN(
OF THE AMERICAN PETROLEUM INSTITUTE
AT THE BELLEVUE-STRATFORD HOTEL, PHILADELPHIA, PENNSYLVANIA
ON FRIDAY, MAY 28, 1965, AT 10:00 A.M., EDT
RECENT DEVELOPMENTS IN INTERNATIONAL BALANCE OF PAYMENTS
I am glad to be with you today. You are associated with an
industry which has an especially broad and pervasive sphere and
scale of activity internationally. The oil companies participate
in almost every conceivable kind of current and capital
transaction affecting our balance of payments. Today, I want to
share with you some thoughts on the significance of recent
developments in international payments.
The first observation I make is perhaps so obvious that it
should need no men tion. In popular form, it is expressed by the (
saying, "Don't count your chickens until they are hatched." Anotl
way to say it generally is lhat it is difficult to evaluate futurE
trends which are gestating in the complexities of the present. Tt
point is simple; let me illustrate it by events of the past nine
months.
Even in a decade marked by many shifts in the pattern of
international payments, the last two quarters of 1964 and the
first of 1965 stand out as crowded and confused. As we entered
July, 1964, prospects for the U. S. balance of payments seemed
reasonably bright. In the previous twelve months, improvement had
been marked. In the fiscal year 1963-64, the regular deficit,
seasonally adjusted, was down to $1.7 billion, as against a
five-year average of $3.3 billion. Internationally, the worrisome
Italian reserve losses of 1963 and early 1964 were coming to a cla
and the long sequence of Continental European reserve accumulation
regarded as excessive and inflationary in Europe, seemed to be s10
down. It was recognized, of course, that some of the improvement
was temporary, due to the initial impact of the announcement of th
Interest Equalization Tax in the U. S., and the heavy Soviet grain
purchases and gold sales, but very pronounced relapse seemed
unlikely.
F-68
- 2 But, shortly thereafter, there did occur a marked deterioration,
out of which we are now climbing, both in the U. S. balance and in
the world pattern. In the last six months of 1964, we saw the
regular deficit in the United States soar to an annual rate of
$4.3 billion, and to an annual rate of $6 billion in the fourth
quarter alone, while the U. K. revealed a very large deficit of
$2 billion at an annual rate, measured in the standard U. K. way.
A massive short-term support program for the pound sterling of
$3 billion accompanied a drawing of $1 billion by the U. K. on the
International Monetary Fund. France, Italy and Canada developed
particularly heavy surpluses. There also was a general rise in
reserve assets in the outside world, resulting from the bulging
U. S. deficit and the U. K. drawings upon credit facilities, bilateral
and multilateral. For the year 1964 asa whole, the other eight
countries in the Group of Ten found themselves adding 5 percent
to their reserves of gold and foreign exchange, and 8 percent in
all types of reserve assets, which include reserve claims on the
IMF.
The moral, as I have implied, is obvious. As I shall note
later in more detail, we have made progress toward balance since
the President's Message of February 10 this year. I am confident
that we shall continue to make progress. We have to do so; the
stakes are too high for us to fail. But my confidence rests on
the conviction that we shall continue to make the strong efforts
~ow employed.
It does not rest on a conviction that our problem
is solved. The very worst thing that could happen now is
)verconfidence, followed by relaxation of effort.
My second point is a simple recital of what happened in the
line months I have mentioned. What was responsible for almost
tripling our regular transactions deficit between the second half
of 1963 and the second half of 1964? The goods and services
balance, excluding Government-financed items, actually improved
by almost one-third ($1.6 billion), to an annual rate of nearly
$6 billion, comparing July-December, 1963, with July-December,
1964. Also, our net military expenditures and dollar outflow
on Government grants and capital improved. What happened, and
what seems clearly responsible for the sharp worsening of our
payments position, was a striking increase between these two
periods in virtually every type of private capital outflow, amounting
to $3.6 billion at an annual rate -- from an annual rate of $3.1
billion to $6.7 billion. While direct investment added nearly
$900 million to the annual rate of outflow, other capital outflow
from the U. S. accounted for an enlargement of our deficit between
- 3 ~hese same two periods of no less than $2.7 billion at an annual
rate. About half of this was long-term and about half short-term
Looking at this $2.7 billion of larger outflow in another way,
about $1 billion resulted from long- and short-term banking
operat~ns, and the remainder was divide~ ~bout equally between
sales ~j foreigners of new and old secur1t1es and short-term
placellh::nts abroad by non-banking entities. In addition to the
$2.7 billion increase in the recorded outflow of American capital
another $1 billion, annual rate, represented unrecorded transactil
and a small part, $200 million, reflected reduced inflows of
foreign direct and other long-term capital.
These same movements generally continued until the new balan
of payments program of February 10 began to work in March. The
results of the first quarter of 1965 are only partially in, but
they show a considerable reduction in the regular deficit, to an
annual rate of $3.1 billion, as compared with $4.3 billion in
July-December, 1964. But the continued pressure on the United
Kingdom during this period, and the effects of the dock strike,
add to the difficulties of drawing any clear conclusions from the
initial impact of the new program.
I should note that there is an operational as well as
statistical aspect to the balance of payments. The past year has
been a very active one in the gold and exchange markets. In this
sphere, we have to recognize that, in addition to the impact of
fluctuations in our own statistical deficit, our gold losses can
be influenced by the shifts of dollar holdings among third countI
and by the changing demands of private purchases on the London go
market. In a sense, what is most important in determining the
amount of our gold losses is the aggregate sum of, and the
distribution of, surpluses in foreign balances of payments. If
dollars flow to countries maintaining high gold ratios, we are
more likely to lose gold than if they are being acquired by
countries with a low ratio of gold in their reserve holdings. Th
amount of gold flowing into monetary use from new production has
varied from year to year. If there are large supplies of nonmonetary gold available to the monetary authorities of the world,
this tends to raise the gold ratios of foreign central banks and
reduces their tendency to purchase gold from the United States.
The heavy gold loss in 1965 to date reflects in part a
delayed impact of the dollar accruals of some countries during
1964. In part, it also is due to the French policy of converting
their surplus dollars into gold at a time when the United Kingdoo
- 4 has been paying out large amounts of reserves to the world, and
France has been one of the leading surplus countries.
In 1964, U. S. gold losses were quite small, particularly when
viewed in relation to the continuing large balance of payments
deficit. Of the total drain of $125 million on the U. S. gold
stock, only $36 million was due to international monetary
transactions, the balance being attributable to net domestic needs
for industrial and similar purposes.
The contrast between the small gold loss last year and
the loss of over $1 billion so far this year is striking
particularly in view of the fact that we have mounted
a vigorous effort to reduce our payments disequilibrium. But
a moment's reflection points up the fact that, in the shorter run,
it is quite possible to have gold losses even when the United
States balance of payments is in surplus and to have little or no
loss during periods of heavy deficit. As I have already noted,
this is a phenomenon we witnessed last year, and much of this year's
loss is due to the U. S. deficits in earlier periods.
Also, the small net loss last year was, to a considerable
extent, due to the fact that sales were significantly offset by
acquisitions through the cooperative operations undertaken in the
London gold market. The London market continued last year to
benefit by increased production of newly-mined gold and large sales
of gold by Russia, undertaken, as in 1963, to finance the unusual
Russian wheat purchases in the West. These sources of supply not
only provided more gold to monetary reserves in a direct way but
contributed to a generally calm atmosphere in the gold and exchange
markets through the first half of 1964, curbing speculative
tendencies.
In the latter part of 1964, however, the pressures which were
felt upon sterling, and the fact that the sales by Russia were
concentrated in the first half, gave rise to mounting speculation
in gold, so that the London market ceased to be a channel through
which new gold became available for monetary reserves.
This trend continued into this year, and while, in the past
few months, the London market has had a generally neutral effect
on official reserve accumulations, there has not been an inflow
such as occurred last year, which served to reduce U. S. gold
losses.
Although an understanding of these factors requires us to
view the amount of current gold losses in a longer-range
perspective, and demonstrates that our gains or losses may be
,
/
b
- 7 Last year, interest rates on the Continent of Europe tighten~
noticeably. At the year end, long-term rates exceeded the 4.14
percent level on U. S. Government bonds in the United States by
one to two percent, outside of the special case of Switzerland.
From year-end 1963 to year-end 1964, long-term bond rates
increased on the order of one-half percent in the Netherlands,
Belgium, Italy, Germany, and Switzerland, as measured by the
highest quality domestic securities. Short-term rates increased
one-half percent or more in all these countries except France,
where a sharp increase in the first half of the year was offset
by a decline in the second half. The spread between Continental
Europe and the United States widened slightly on short-term rates
and by a third to a half percent on prime long-term bonds.
Despite these shifts in short-term interest rates, we belie~
that the movement of U. S. funds into the Euro-dollar market and
the return flow to U. S. banks was about in balance in 1964. But
the gross outflow did enlarge our regular deficit, statistically.
During the year, there were also periods when our banks provided
large temporary credits to the Euro-dollar market to make up for
withdrawals by European banks. At present, there is a
differential of Euro-dollar rates at three months of .55 per~ent
over the certificate of deposit rate in New York, according to one
series we use, as compared with .40 percent a year ago.
The program of the Federal Reserve aims at a reduction in t~
level of net new bank lending to foreign borrowers to about
$500 million a year -- both long- and short-term -- as against
about five times that amount in 1964. This program directly
affects the external flow, without interfering with the availabliq
of domestic credit, or raising domestic interest rates.
Preliminary figures for the first quarter balance of payments
show a seasonally-adjusted deficit on regular transactions of
$767 million -- about half the size of the corresponding deficit
in the fourth quarter. Seasonal adjustment, however, is
especially difficult in this quarter because of the dock strike
in February and in parts of January and March. The trade surplus
was down markedly for the quarter as a result. Moreover, there
were unusual outflows of some types of capital prior to the
announcement of the President's program on February 10, 1965, and
large reverse movements when the program began to take effect.
Data now available on long-term bank lending commitments show
that new commitments to developed countries have been quite
limited since February 10, while commitments to less developed
countries have continued pretty much in line with last year's
pattern. This corresponds to the objectives of the program
thus far.
- 8 To sum up what we know of the situation at present,
January-February deficits were followed by a sizeable over-all
surplus in March. The March improvement was partly to be expected
because of the recovery in exports after the dock strike and
certain seasonal reflows of corporate funds at the end of the
quarter. But there was also a sharp and substantial decline in
long-term bank lending. Moreover, the limited evidence of
favorable developments during March tends to be confirmed by very
preliminary and partial information on April. According to these
indications, we should have an appreciable surplus in over-all
payments in April, in contrast to deficits during April in recent
years.
It seems to me, therefore, fair to claim progress. However,
I wish to stress again that it is too early to attempt any
quantitative appraisal of the outlook for 1965 as a whole. We
have seen how rapidly the picture can change, particularly in a
sphere of capital movements, though we have reason to hope that
the February program will remove much of the valatility in these
capital accounts.
However, in the light of the experience that I have briefly
reviewed for you today, it is far too early to talk about the
attainment of the full achievement of our objectives in solving
the balance of payments problem. Over-confidence could be our
worst enemy at this point, bringing about premature relaxation
of our concentrati0n and our efforts. It is no time to take
our eyes off the ball, because we have scored one or two good
shots.
Our objectives are far too vital to run that risk. The
attainment of equilibrium in our balance of payments is essential
to the retention of our position of world leadership.
000
TREASURY DEPARTMENT
FOR IMMEDIATE REIEASE
WITHHOlDING OF APPRAISEMENT
ON SHOES
The Treasury Department is instructing customs field officers
to withhold appraisement of shoes, leather, men's and boys', welt
construction, from Rumania pending a determination as to whether
this merchandise is being sold at less than fair value within the
meaning of the AntidWIIping Act, 1921, as amended.
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 in-
jury must be shown to justif'y a finding of dumping under the law.
The information alleging that the merchandise under consideration was being sold at less than fair value within the meaning of
the Antidumping Act was received in proper form on October 15,
1964.
The complaint was received from Truitt Brothers, Inc., Bel-
fast, Maine, through Senator Edmund S. Muskie.
The dollar value of imports received during the period May 1,
1964, through March 31, 1965, was approximate~ $227,000.
TREASURY DEPARTMENT
FOR DfMEDIATE REIEASE
WITIlliOIDING OF APPRAISEMENT
ON SHOES
The Treasury Department is instructing customs field officers
to withhold appraisement of shoes, leather, ments and boys', welt
construction, from Rumania pending a determination as to whether
this merchandise is being sold at less than fair value within the
meaning of the Antidumping Act, 1921, as amended.
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 in-
jury must be shown to justify a finding of dumping under the law.
The information alleging that the merchandise under consideration was being sold at less than fair value within the meaning of
the Antidumping Act was received in proper form on October 15,
1964.
The complaint was received from Truitt Brothers, Inc., Bel-
fast, Maine, through Senator Edmund S. Muskie.
The dollar value of imports received during the period May 1,
1964, through March 31, 1965, was approximately $227,000.
TREASURY DEPARTMENT
roR IMMEDIATE REIEASE
WITHHOlDING OF APPRAISEMENT
ON SHOES
The Treasury Department is instructing customs field officers
to withhold appraisement of shoes, leather, men's and boys', from
Czechoslovakia pending a determination as to whether this merchandise is being sold at less than fair value within the meaning of
the Antidumping Act, 1921, as amended.
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 information alleging that the merchandise under consideration was being sold at less than fair value within the meaning of
the Antidumping Act was received in proper form on August 12, 1964.
The complaint was initiated within the Customs Service.
The dollar value of imports received during 1964 was approximately $1,331,000.
TREASURY DEPARTMENT
FUR IMMEDIATE REIEASE
WITHHOlDING OF APFRAlSEMENT
ON SHOES
The Treasury Department is instructing customs field officers
to withhold appraisement of shoes, leather, men's and boys', fram
Czechoslovakia pending a determination as to whether this merchandise is being sold at less than fair value within the meaning of
the Antidumping Act, 1921, as amended.
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 information alleging that the merchandise under consideration was being sold at less than fair value within the meaning of
the Antidumping Act was received in proper form on August 12, 1964.
The complaint was initiated within the Customs Service.
The dollar value of imports received during 1964 was approximately $1,331,000.
TREASURY
DEPARTMENT
.4 ;
n
d,*
FOR RELEASE A.M. NEVJSPAPERS,
Saturday, May 29, 1965.
May 28,
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
Treasury bills, one series to be an additional issue of the bills dated March 4, 1965,
and the other series to be dated June 3, 1965, which were offered on May 24, were
opened at t:'le Federal Reserve .Banks on May 28. Tenders were invited for $1,200,000,000,
or thereabouts, of 9l-day bills and for $1,000,000,000, or thereabouts, of 182-day bills.
The details of the two series are as follows:
RANGE OF ACCEPTED
91-day Treasury bills
182-day Treasury bills
:
COMPETITIVE BIDS:
maturing September 2, 1965
••
maturing December 2, 1965
Approx. Equiv •
Approx. Equiv. :
Price
Annual Rate
Annual Rate
Price
High
:
99.026
98.023
3.9ll%
3.853%
Lou
98.013
99.020
3.930%
3.877%
•
Average
98.016
99.022
3.924%
Y
3.870% !I
•
89% of the amount of 91-day bills bid for at the low price was accepted
25% of the amount of 182-day bills bid for at the low price was accepted
TOTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
•• AEElied For
AcceEted
AcceEted
AEElied For
Boston
30,806,000
$ 20,928,000
$ 12,056,000
$ 10,528,000 • $
•
New York
825,359,000
1,539,352,000
1,407,447,000
731,847,000
Philadelphia
25,522,000
13,404,000 ••
21,165,000
6,365,000
Cleveland
22,080,000
18,440,000
22,251,000
39,390,000
Richmond
18,802,000
2,983,000
2,983,000
8,775,000
Atlanta
16,888,000
11,063,000
19,803,000
28,499,000
Chicago
132,425,000
314,550,000
282,393,000
145,531,000
St. Louis
13,684,000
10,309,000
22,560,000
31,509,000
Minneapolis
9,633,000
4,258,000
8,647,000 ••
18,786,000
•
Kansas City
13,260,000
10,345,000
18,473,000
23,409,000
Dallas
10,053,000
12,587,000 ••
5,053,000
26,587,000
San Francisco
112 z438 02 000
56 z188 z000
94 2502 2°00 ••
168 2689 2°°0
$1,202,249,000 !I $1,992,297,000 $1,001,332,000 B
$2,206,727,000
·
·
·
·
·
·
·
·
·
·
·
a/ Includes $210,580,000 noncompetitive tenders accepted at the average price of 99.022
0/ Includes $83,772,000 noncompetitive tenders accepted at the average price of 98.016
II On a coupon issue of the same length and for the same amount invested, the return on
these bills would provid.e yields of 3096%, for the 91-day bills, and 4.06%, for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
compounding if' more than one coupon period is involved.
TREASURY DEPARTMENT
FOR RELEASE A.M. NEWSPAPERS,
Saturday, May 29, 1965.
May 28,
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
Treasury bills, one series to be an additional issue of the bills dated March 4, 1965,
and the other series to be dated June 3, 1965, which were offered on May 24, were
opened at the Federal Reserve Banks on May 28. Tenders were invited for $l,200,OOO,OOOJ
or thereabouts, of 9l-day bills and for $1,000,000,000, or thereabouts, of 182-day billl
The details of the two series are as follows:
RANGE OF ACCEPTED
91-day Treasury bills
182-day Treasury bills
COMPETITIVE BIDS:
maturing September 2, 1965
maturing December 2, 1965
Approx. Equi v • :
Approx. Equiv.
Price
Annual. Rate
Price
:
Annual Rate
High
99.026
98.023
3.911%
3.853%
Low
98.013
99.020
3.930%
3.877%
Average
98.016
99.022
3.870%
3.924% Y
89% of the amount of 91-day bills bid for at the low price was accepted
25% of the amount of 182-day bills bid for at the low price was accepted
·
Y
TOTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
AE,Elied For
AcceEted
•• AEElied For
Boston
$
30,806,000
$ 20,928,000
$ 10,528,000
New York
1,539,352,000
825,359,000 :
1,407,447,000
Philadelphia
25,522,000
21,165,000
13,404,000 :
Cleveland
22,080,000
22,251,000
39,390,000
Richmond
18,802,000
8,775,000
2,983,000
Atlanta
16,888,000
19,803,000 ·
28,499,000
Chicago
314,550,000
282,393,000
145,531,000
St. Louis
13,684,000
22,560,000 ·
31,509,000
9,633,000
Minneapolis
8,647,000
18,786,000
Kansas City
13,260,000
18,473,000
23,409,000
Dallas
10,053,000
12,587,000
26,587,000
San Francisco
94 z502 2OOO
112 z438 2Ooo
168.16892000
$1,202,249,000 !/ $1,992,297,000
$2,206,727,000
·
·
·
·
··
AcceEted
;$
12,056,000
731,847,000
6,365,000
18,440,000
2,983,000
11,063,000
132,425,000
10,309,000
4,258,000
10,345,000
5,053,000
56 2188 2°°0
$1,001,332,000
a/ Includes $210,580,000 noncompetitive tenders accepted at the average price of 99.022
0/ Includes $83,772,000 noncompetitive tenders accepted at the average price of 98.016
II
-
On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 3096%, for the 91-day bills, and 4.06%, 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 )6o-day
year. In contrast, yields on certificates, notes, and bonds are computed in terms
of interest on the amount invested, and relate the number of days remaining in an
interest payment period to the actual number of days in the period, with semiannual
compounding if more than one coupon period is involved.
F-69
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