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LIBRARY
pnnM flO::lO
JUN 1 ~ 1972
TREASURY DEPARTMENT
(C - ~,-- - ~
......,~_
..:...t...,;~
t -....
i
...
S~~~eG
?
9-'}~~
.,;/
-
I
~ C~i9\"
.... ~
S~~eG J ~~d K -
.......... .
1952
........ .
D"
- - ,9'.L'.1-
-
4,993
29,433
388
5,003
29,521
400
1952 ••••••••••••
I
SGries ~:
1 col,
19~ •••....••••.••.•••.•••
1943 ••••••••••••••••••••••
~~w
262
1,129
1,788
2,210
1,977
1,100
1,206
1,344
1,406
1,297
1,128
1,221
1,518
1,666
1,906
1,835
1,787
1,865
1,779
1,904
2,073
2,100
2,599
2,838
1,213
-74
14.19
13.85
13.63
14.45
16.49
20.39
23.68
25.59
27.17
28.71
28.84
,29.83
32.53
35.10
38.55
38.93
40.33
43.47
44.31
47.55
51.57
54.26
00.61
67.72
88.03
!
....•...••............ I
19),1,
-
.20
.29
3.00
!
y1
-~~
I
10
87
12
.
•••••••••••••••••••••
1945 .•••..........••.•••••
I
1
19
,_~~D ••••••••••••••••••••••
1947 •...••.••••.....•••.••
19~8 ••••••••••••••••••••••
1949 ••••••.••.••••••••••••
1950 ••• ~ ••••••••••••••••••
1951 ••••••••••••••••••••••
1952 •••••.••••••••••••••••
1953 ••••••••••••••••••••••
1954 •••.•••••.••.••••••..•
1955 •••••••••••.•••.••••• e
1956 ••••••••••••••••.....•
1957 ••••••••••••••••••.•••
1958 •••..•••••••••••••••••
I•
•
I
1959 •••••••••••••••••••• ~. !
1960 •••••••••••••••••••• ,. !
1961 •••••••••••••••••.••••
"191'2
~ 0
••••••••••••••••••••••
1963 ••••••••••••••••••••••
1964 •••••••••••••••••••• ~.
1965 •..••••••.••••••••••••
Uncl<lssified. '................... .
I
I
I
I
1
1,846
8,150
13,119
15,290 I
11,989 1!
5,396 !
5,092 I
5,253
5,174
4,517
3,911
4,093
4,666
4,746 I
4,944
4,713
4,431
4,290 ,
4,015 I
4,004 !
4,020 )
3,870 I1
4,288 I
4,191 !
1,378
367 I
!
I
,
I
t
1,584
7,021
11,331
13,080
10,012
4,296
3,885
3,908
3,768
3,219
2,783'
2,872
3,149
3,079
3,038
2,878
2,643
2,425
2,236
2,100
1,947
1,770
l,689
1,353
165
441
!
I
t
I
I
t
!t
,
!
!
-
137,753 I
96,675
41,078
29.82
Series H (1952 - Jan. 1957) y .... !-~3-,6~7-0-!---1-,~74~5.,..--:--1-,~925..----+--..".52.-.......
45."...-H (Feb. 1957 - 1965)......
6,823
1,031
5,191
84.87
10,493
2,776
7,716
73.53
Tot~ Series H •••••••••••••••••
Total Series E ................... I
148,246
i
I~cludcs
accrued Cisco~~t.
()~:::-8:1t red8rr.l,tion value.
At optio:'! of m·T::e:::- bonds -;nay be held. z--:ci.
~1il1 ea.:'n interest fo:::- addi tion.u perioc:s
~ter origi:'!al ~~t~ity dates.
Includes matured bonds uhich have not be.::;!:
presented for redemption.
BUREAU OF THE PUBLIC DEBT
U~itcd. States Sav'..u"1Gs 3cnc.s I~~c:.c.d ~:e :\ec.e:c:7:cc T;:~ot:.::h June 30, 1965
(Doll.:.r 3."':".Ou....·l'ts i."'l r.U.llion~ - :-o\.::;CCC a::.c. i-:'ll ::ot r:ecessarily add. to tct.:2s)
j Ar..ocr..t.
---
Issucc. 1/
j
~~ T"'")"7":"'"
... \) ••. J;.J
-=-~'-:C'"
1..;; .......
..,
(;:-icc
,~:::-ies
....
_
I
•••••••••••
2L of
.,....~
~··v
;.:7"~t.Issucd
.20
.29
3.00
10
87
12
4,993
29,433
388
--
. / C',"""..,..."..,
....... ""- ..........
".,,,,,,':' '::
~
P
I
~·::\Tc?.E~
I
'''rie<"'-'' })
~
Cutst~C:L"1~
! P.ec.ee:::ed 1/
5,003 ,
29,521 !
400 I
!
1-'935 - D-1 9l.0.
F & C--1941 - 1952 •••••••••
J ~"1d. K - 1952 ••••••••••••
.-\."':".01.:..."1t
j..!7".OUl~t
I
iJ.......,.,J
'- 9\'1
~
....•...••..........•.
19L2 ••••••••••••••••••.•••
1943 ••.•••.•••••••••••••••
19~1
. ••••••
'~v • • • • • • • • • • • • • • •
1945 ••••••••••••••••••••••
'9'
/' ••••••••••••••••••••••
_~~D
1947 •...••••••••..••••••••
19~8 •••.•••••••••••••.••••
I
1949 •••••••••••• ~ •••••••••
1950 ••••••••••••••••••••••
1951 ••••••••••••••••••••••
1952 ••••••••••••••••••••••
1953 ••••••••••••••••••••••
1954 ••••••••••••.•••••••.•
1955 ••••••••••••••••••••••
1956 •••••••••••••••••••.••
1957 ••••••••••••••••••••••
I
1958 ••••••••••••••••••••••
1959 •••••••••••••••••••••• ,
1960 •••••••••••••••••••• ,.
1961 •••••••••••••••••.••••
'9(2
~
0 ••••••••••••••••••••••
1963 ••••••••••••••••••••••
~
1964 •••••••••••••••••••• ~.
1965 •.••••••••••••••••••••
Dnclu.ssified.,•••••••••••••••••• 1
1,846
8,150
13,ll9
15,290
1l,989
5,396
5,092
.5,2.53
.5,174
4,517
3,911
4,093
4,666
4,146
4,944
4,713
4,431
4,290
4,01.5
4,004
4,020
3,870
4,288
4,191
1, 378
367
!
,!
I
I
I
•
!
1
!I
I
,!
I
1,584
7,021
ll,331
13,080
10,012
4,296
3,885
3,908
3,768
3,219
2,783
2,872
3,149
3,079
3,038
2,878
2,643
2,425
2,236
2,100
1,947
1,770
1,689
1,353
16.5
!
I
I
I
,
I
!
(
I
262
1,129
1,788
2,210
1,977
1,100
1,206
1,344
1,406
1,297
1,128
1,221
1,518
1,666
1,906'
1,835
1,187
1,86.5
1,779
1,904
2,073
2,100
2,599
2,838
1, 213
-74
I
!
I
14.19
13.85
13.63
14.h5
16.49
20.39
23.68
2.5.59
27.17
28.11
28.84
,29.83
32 •.53
35.10
38.55
38.93
40.33
43.47
44.31
47 •.5.5
51 •.57
54.26
60.61
67.72
88.03
Total Series E ••••••••••••••••• !~~13~7~,~7~53~~~~976-,6~7~5~~~~~J~0~7~8~~~~~2~9~.-8-2~-
lI ... I
ieries H (1952 - Jan. 1957)
H (Feb. 1957 - 1965)......
Total Series H•••••••••••••••••
3,670
6,823
10,493
Total Series E and H •••••••••••
148,246 i
!
1,745
1,031
2,776
1,925
5,791
7,716
105,003
I 48,794
I, };j 109
,
leries J
~~d K
(1953 - 1957) •••••
3,329
.-.
.11 Series
.J,....,'
) 1 f"jI~ov~
m~vurec
l
Total..........
..,.J..,
. ••••••••
Tota~ ur.m.:>.tured ......
Gra~a
I'
34,6.54
1.51,515
186,229
,
:
;
f
Includes accrued ~scount.
Cur:-ent redemption value.
At option of o~mer bonds may be held. ~~d
~·1ill earn interest for additional periods
~ter original maturity dates.
Includes matured bonds vmich have not bc~r.
presented for redemption.
2,081
34,814
107,084
141,898
1,248
50,042
.50,1.51
52.45
84.87
73 •.53
i
32.91
I
37.49
1
.31
33.01
26.93
BUREAU OF THE PUBLIC DEBT
Sav'.illf:.s ~cnc'-::: T.<:.:·.~::-d .,,,':
(Dv::...l~ a.r:1otmts il1 million:J - rO~ic.(;C a.-.c.
United. S1jJ.~es
_
oJ
_
__ ___
__,,-
I~'sucd 'J
~A'I'mt:-:D
SeF~es ~-1935
- D-19l~ ••••••••••• $ .5,003
29,.521
Series F & G-1941 - 19.52 •••••••••
Series J and K - 1952 ••••••••••••
400
tn-mATURED
Series B:
•
2/
$
96,261
1,712
1,026
2,738
41,023
5,752
7,711
29.88
53.38
84.86
73.80
98,999
48,734
32.99
Total Series E and H•••••••••••
147,732
19!.~7 ••••••••••••••••••••••
1948 ••••••••••••••••••••••
1949 •••••••••••• ~ •••••••••
1950 ••• ~ ••••••••••••••••••
1951 ••••••••••••••••••••••
1952 ••••••••••••••••••••••
1953 ••••••••••••••••••••••
1954 ••••••••••••••••••••••
19.5.5 ••••••••••••••••••••••
1956 ••••••••••••••••••••••
1957 ••••••••••••••••••••••
1958 ••••••••••••••••••••••
1959 •• ~ •••••••••••••••••••
1960 •••••••••••••••••••• ~.
1961 ••••••••••••••••••••••
1962 ••••••••••••••••••••••
1963 ••••••••••••••••••••••
1964 •••••••••••••••••••• ~.
1965 •.••••••••••••••••••••
Uncl<lssi.fied. ,••••••••••••••••••
Total Series E•••••••••••••••••
Series
H (19.52
H (Feb~
Total Series
Series J and
K
- Jan. 1957) y ...
1957 - 196.5) ••••••
H.~.~
(1953 - 1957) •••••
I
3,328
I
34,924
) Total matured ••••••••
151,060
All SerieSj Total unm~tured ••••••
Grand Total •••••••••• 185,984
. •
Includes accruea discount
Current redemption value.
At option of owner bonds may be held and
'Hill earn interest for additional periods
after original maturity dates.
Includes matured bonds which have not been
presented tor redemption~
89
13
14.21
13.90
13.10
•• ~ ••••••••••
1946 •••••.••••••••••••••••
.22
.30
3.25
II
262
1,13 2
1,796
2,213
1,983
1,102
1,210
1,348
1,409
1,301
1,131
1,227
1,524
1,676
1,915
1,837
1,790
1,868
1,783
1,907
2,080
2,107
2,615
2,894
9.52
-41
131,284
3,670
6,778
10,L48
1945 ••••••••••••••• ~ ••••••
$
4,993
29,432
387
1,582
1,013
11,318
13,065
,-91.:1 ......................
.
;;
196~
',-::'ll
1,844
8,14.5
13,114
1.5,278
1l,978
5,392
5,088
5,248
5,169
4,.5]2
3,908
4,091
4,662
4,742
4,936
4,706
4,424
4,284
4,009
3,997
4,013 I
3,862 I
4,281
4,18.5 II
1,Ou.5
369
1941 .•••••••••••••••••••••
1942 ••••••••••••••••••••••
1943 ••••••••••••••••••••••
avr 31,
M
::ot. r:ecessu.ri1y add to totals)
--Ar..ou.'1t
%Out!'#t~Qnr
j..;:-,o\.:.:"!t
P
'
•£cee:::e
0.• Ii Cutstanding 2/ of knt.lssuod
~oun.l..
---
J. •• - ... ..,
----:-,"'-"'c' r'\:''''o,·(""'n
.,''';".,-1,;;.,.1;:
~~~§6
3,878
3,900
3,1CIJ
3,212
2,71 6
2,864
3,138
3,065
3,020
2,869
2,634
2,416
2,226
2,089
1,933
1,755
1,666
1,291
94
410
2,0.59
34,812
101,058
168,623
I
14.48
16·te
20.
23.18
2.5.69
27.26
28.83
28.94
29.99
32.69
35.34
38.80
39.04
40.46
43.60
44.h7
47.71
.51.83
54.56
61.08
69.15
91.10
1,9~9
W
1,268
113
50,002
50,115
I
38.10
.32
33.lD
26.95
BUREAU OF THE PUBUC DEBT
-
--
United Statas SaruiGs :acnes I;;. ~;\'~2d
(Dollar aJ:iounts in million3 - rCl..~:cicd
lu;-,ount
Issued.
--
a:-.c.
2ec(:c:::ec Ti1ro\.:Gh
a.'1c. i.:ill
May
31, 1965
::ot r.ecessarily add to totals)
Amount
% Outst.{r.Cing
Hecec;.-.ed 1/ Cutstanding 2/ of k"Tit.Issuod
J.:'iOunt
1/
KA.TUHED
Series 1~-1935 - D-1941 ••••••••••• $ 5,003
29,521
Series F & G-1941 - 1952 •••••••••
Series J and K - 1952~ •••••••••••
400
$
4,993
29,432
387
$
11
89
13
.22
.30
3.25
UNHATURED
serias E: 2J
1941 ••••••••••••••••••••••
1942 ••••••••••••••••••••••
1943 ••••••••••••••••••••••
11.21
13.90
13.70
lA.48
3,878
3,900
3,7tIJ
3,2]2
2,776
2,864
3,138
3,065
3,020
2,869
2,634
2,416
2,226
2,089
1,933
1,155
1,666
1,291
94
410
262
1,132
1,796
2,213
1,983
1,102
1,210
1,348
1,409
1,301
1,131
1,227
1,524
1,676
1,91$
1,S37
1,790
1,868
1,783
1,907
2,080
2,107
2,615
2,894
952
-41
Series H (1952 - Jan. 1957)
H (Febu 1957 - 1965) ••••••
Total Series H •••••••••••••••••
137,284
3,670
6,778
1O,L48
96,261
1,712
1,026
2,738
41,023
1,959
5,752
7,711
29.88
53.38
84.86
73.80
Total Series E and H •••••••••••
147,732
98,999
48,734
32.99
Series J and K (1953 - 1957) •••••
3,328
2,059
1,268
38.10
ill
.32
33.1D
26.95
1944 ••••••••••••••• ~ ••••••
1945 ••••••••••••••• ~ ••••••
1946 ••••••••••••••••••••••
1947 •••••••••••••.••••••••
1948 ••••••••••••••••••••••
1949 ••••••••••••••••••••••
1950 ••• ~ ••••••••••••••••••
1951 ••••••••••••••••••••••
1952 ••••••••••••••••••••••
1953 ••••••••••••••••••••••
1954 ••••••••••••••••••••••
1955 ••••••••••••••••••••••
1956 ••••••••••••••••••••••
1957 ••••••••••••••••••••••
1958 ••••••••••••••••••••••
1959 ••••••••••••••••••••••
1960 •••••••••••••••••••• ,.
1961 ••••••••••••••••••••••
1962 ••••••••••••••••••••••
1963 ••••••••••••••••••••••
1964 •••••••••••••••••••• ~.
1965 •••: ••••••••••••••••••
UnclClssii'ied.,••••••••••••••••••
Total Series E •••••••••••••••••
21 ...
1,844
8,145
13,114
15,278
11,978
5,392
5,088
5,248
5,169
4,512
3,908
4,091
4,662
4,142
4,936
4,706
4,424
4,284
4,009
3,997
4,013
3,862
4,281
4,185
1,045
369
1,582
7,013
11,318
13,065
4:~~
,
34,924
) Total matured ••••••••
All Ser~esl Total unm~tured •••••• 151,OtIJ
Grand Total.~ ••••••••
185,984
~ Includes accrued discount.
~ Current redemption value.
2/ At option of owner bonds may be held and
will earn interest for additional periods
attar original maturity dates.
l:I Includes matured bonds which have not been
presented for redemption.
.
34,812
101,058
168,623
W
50,002
50,115
16.~
20.
23.78
25.69
27.26
28.83
28.94
29.99
32.69
35.34
38.80
39.04
40.46
43.tIJ
Wi..h7
47.71
51.83
54.56
61.08
69.15
91.10
-
BUREAU OF THE PUBLIC DEBT
- 2 -
of
Mr. Stockfisch was an associate professor/Business
Administration at the University of California, Los Angeles,
before coming to Washington in 1961.
He is a native of
California and received his B.A. degree from Pomona College
and his Ph.D. in Economics from the University of California,
Berkeley.
Gerard M. Brannon, Associate Director, Office of Tax
Ana1 y sis)wi11 serve as Acting Director until a successor
to Mr. Stockfisch is appointed.
000
.1-
~
June 1, 1965
FOR P lHEDIA TE PELEASE
DEPUTY ASSISTANT SECRETARY STOCKFISCH RESIGNS,
ACCEPTS POSITION WITH STANFORD RESEARCH INSTITUTE
Secretary of the Treasury Henry H. Fowler announced today
the resignation of J. A. Stockfisch, Deputy Assistant
Secretary and Director, Office of Tax Analysis, to become
effective June 4,1965.
Mr. Stockfisch will join the Field Experimentation
Department of the Stanford Research Institute at Fort Ord,
California.
1963.
He was appointed to the Treasury on September 4,
In his capacity as Deputy to Assistant Secretary Stanley S.
Surrey, Mr. Stockfisch played an important part in the
development of the Revenue Act of 1964 and other important
legislation in the tax field.
Prior to joining the Treasury,
Mr. Stockfisch was Assistant Deputy Comptroller and Director
for Special Studies, Systems Analysis, in the Office of the
Secretary of Defense.
TREASURY DEPARTMENT
June 1, 1965
FOR IMMEDIATE RELEASE
DEPUTY ASSISTANT SECRETARY STOCKFISCH RESIGNS,
ACCEPTS POSITION WITH STANFORD RESEARCH INSTITUTE
Secretary of the Treasury Henry H. Fowler, announced
today the resignation of J. A. Stockfisch, Deputy Assistant
Secretary and Director, Office of Tax Analysis, to become
effective June 4, 1965.
Mr. Stockfisch will Jo~n the Field Experimentation
Department of the Stanford Research Institute at Fort Ord,
California. He was appointed to the Treasury on September 4,
1963. In his capacity as Deputy to Assistant Secretary
Stanley S. Surrey, Mr. Stockfisch played an important part
in development of the Revenue Act of 1964 and other important
legislation in the tax field. Prior to joining the Treasury,
Mr. Stockfisch was Assistant Deputy Comptroller and
Director for Special Studies, Systems Analysis, in the Office
of the Secretary of Defense.
Mr. Stockfisch was an associate professor of Business
Administration at the University of California, Los Angeles,
before coming to Washington in 1961. He is a native of
California and received his B.A. degree from Pomona College
and his Ph.D. in Economics from the University of California)
Berkeley.
Gerard M. Brannon, Associate Director, Office of Tax
Analysis, will serve as Acting Director until a successor
to Mr. Stockfisch is appointed.
0000
F-70
- 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 specia.1
treatment, as Buch, 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.
- 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
submi tting 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
June 10, _
(16)
, in cash or other immediately available funds or in a like face
amount of Treasury bills maturing - -_ _ _~J~un:;:!;;e:..r.;I;:.O~~\r_=1~9:..=65:::....------.
"{17-}
Cash
TREASURY DEPARTMENT
Washington
June 2, 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, 20?df:0' 000 , or thereabouts, for
Jline
cash and in exchange for Treasury bills mat\lring
of $ 2, 201
¥if
fA:
, in the amount
1965
,000 , as follows:
91 -day bills (to maturity date) to be issued ____-=J~un~e~10~1~1~9~6~5~-,
f5f
in the amount of
$1,200~,OOO
#f
, or thereabouts, represent-
ing an additional amount of bills dated
and to mature
September 9. 1965
=M
amount of $ 1 J 000.355 ,000
March _II, 1965
f&f
, originally issued in the
,the additional and original bills
(10)
to be freely interchangeable.
182 -day bills, for $ 1,000,000,000 , or thereabouts, to be dated
(12)
(11)
June 10
1965
+Uf
, and to mature
December 9, 1965
+14
•
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/z:~ time, Monday, June 7, 1965
f4&tEach
Tenders will not be received at the Treasury Department, Washington.
tender
must be for an even multiple of $1,000, and in the case of competitive tenders t~
price offered must be expressed on the basis of 100, with not more than three
TREASURY DEPARTMENT
June 2, 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 June 10, 1965,
in the amount of
$2,201,332,000, 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 March 11,1965,
mature September 9,1965, oribinally issued in the
$1,000,355,000, the additional and original bills
interchangeable.
June 10, 1965,
representing an
and to
amount of
to be freely
182-day bills, for $ 1,000,000,000, or thereabouts, to be dated
June 10, 1965,
and to mature December 9, 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, June 7, 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-71
- 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 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
~ny 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 he made or completed at the Federal
Reserve Banks on June 10, 1965, in cash or other immediately
available funds or in a like i3ce amount of Treasury bills
maturing J~ne 10, 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
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
Washington
Statement of the Honorable Frederick L. Deming
Under Secretary of the Treasury for Monetary Affairs
Before the
Senate Camn1 ttee on Appropriations
10:00 A.M. 1 June 31 1965
Mr. Cha1rman1 and Camnittee members 1 I am glad to appear before the
Committee today in support of an appropriation to enable the United States,
in cooperation with the other members of the International Monetary Fund,
to take part in a broad international program for expanding the resources ot
the Fund by
25 percent plus larger increases for 16 countries.
I haw vi tb
me today Mr. William B. Dale I U. S • Executive Director ot the Fund, who nll
be able to answer any questions
ot detail you
~
have on the Fund' s opera-
tions.
Legislation amending the Bretton Woods Agreements Act ot 1945 to
authorize a 25 percent increase 1 amounting to $1,035 million, in the quota
of the Un1 ted States in the Fund was passed by the Senate by Wl&Il1mous consent and in the House by a vote of 301 to 88. P.L .. 89-31 .. which also authorizes the appropriation ot the Un!ted States quota. increase, was signed
yesterday by the President.
As President Johnson pointed out in submitting this legislation to the
CongresS1 the International Monetary Fund has pla,yed a key role in the
flourishing economic growth experienced by the tree world in the last two
decades and an eJq>ansion of the Fund' s resources is now needed it it is to
continue to contribute etfecti vely to free world growth in the future.
The framers of the International Monetary Fund foresaw the probable
F-72
- 2 -
need for periodic increases in Fund quotas to keep pace with the
in world econcxn1c activity.
elq)&n8iQll
While the Articles of Agreement permit review
of the adequacy of quotas at a;ny time, they provide that quotas must be
reviewed each five years.
The present proposals for enlarging quotas result
fran the fourth quinquennial review.
While individual quotas have been
changed from time to time on the request of particular members and approval
by the Governors of the Fund, the only previous general increase occurred in
the period 1958-59.
At that time, there was a general increase in quotas
of 50 percent for all members and special quota increases were requested
and accepted by Germany, Canada, Japan and certain other countries.
Since 1958, world trade has increased by more than 50 percent.
Aggre-
gate world imports, for example, were about $101 billion in 1958 and about
$156 billion in 1964.
No comparable single figure is available to measure
world capital movements, but these have undoubtedly increased by a substantially greater percentage since the restoration of de facto
in Western Europe at the end of 1958.
movements have increased greatly.
convertibili~
Both short-term and long-term capital
Same of these are equilibrating in naturej
others tend to widen rather than narrow balance-of-payments disequilibria.
The same period has seen greater use of the Fund's resources by the
larger member countries.
Canada, Italy, Japan, the United Kingdom and the
United States have either drawn on Fund resources or entered into stand-by
arrangements with the Fund, or both.
In the most recent ten-year period, net
drawings outstanding at the end of the year have varied from a low of $234
.. 3 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 Un1 ted Kingdom, reflecting a large
December 1964.
drawing by that country in
The United Kingdom has also drawn $1.4 bill10n in May of this
year.
As a result of the increased use of the Fwld, its holdings of major cur-
rencies other than dollars and sterling have declined by about $1.6 billion
since 1959 and now amount to about $1.5 billion.
These facts clearly indicate the need for an increase in the Fund's
resources at this time.
This need was unanimously recognized by
the Governors
of the Fund at their meeting in Tokyo last September.
Acting on instructions from the Board of Governors, the Executive Directors
submi tted to the Governors two Resolutions:
countries accept a
25i
the first proposes that all member
increase in quota; the second proposes that sixteen of
the members accept, in addition to the
25i
in the aggregate amount to $870 million.
increase, special increases which
On
April 1, 1965, the Fund announced
that these Resolutions were adopted by the required
power of the Board of Governors.
80i
of the total voting
Former Secretary of the Treasury Dillon, in
accordance with the directive of the National Advisory Council, cast the vote
of the United States in favor of the two Resolutions.
The canbined total of general and special increases recanmended amounts
to nearly $5 bill1on, and acceptance of the recommendation by all members
would increase the total of Fund quotas trom a Iittle more than $16 billion
- 4to approximately $21 billion.
The Un! ted States share of this total increase
would be slightly over one fifth, and our quota would become $5,160 million
as compared to its present $4,125 million.
If all member countries accept the quota increases suggested for them,
Fund holdings of the currencies presently used extensively in drawings will be
increased by more than $1 billion and the liquidity of the Fund
stantially improved.
nil
be sub-
In addition, Fund holdings of gold will also be increased
by approximately $1 billion.
The proposed quota increases by country are shown in detail in the Special
Report of the National Advisory Council on International Monetary and: Financial
Problems.
Attached to that report as an appendix is the report of the Execu-
ti ve Directors of the Fund to the Board of Governors entitled "Increases in
Quotas of Fund Members:
4th Quinquennial Review".
Now that the Board of Governors has adopted the Resolutions submitted
by the Executive Directors two :f'urther requirements have to be met.
member IlD.1st consent to the increase in its own quota.
Each
Moreover, before any
of the quota increases may becane effective, countries whose quotas on
February 26, 1965, aggregated two-thirds of the total Fund quotas 1ID1St consent
to the increase in their quotas and make payment to the Fwld.
P~nts
recei ved by the Fund will be placed in a segregated account until the twothirds total is reached.
Consents to the increase must be g1 ven before
September 25, 1965, unless the Executive Directors extend the time for action.
-5P . L. 8931, the authorizing legislation, provides for the appropriation
of $1,035 million to remain available until expended.
Except for the gold
portion of the increased subscription, I have every reason to believe as I
shall presently explain, that, like our GAB participation, no calls for
actual expend.! tures will be made for the foreseeable future.
The Articles of Agreement of the Fund provide that 25~ of any quota
25~
increase must normally be paid to the Fund in gold.
of the proposed U.S.
increase of $1,035 million amounts to $258.75 million and this amount must
be paid at the time the United States accepts the quota increase.
for thi s payment, the Uni ted State swill receive a
right on the Fund.
II
In exchange
gold tranche" drawing
This is a virtually automatic drawing right and repre-
sents a reserve asset which the United States can call upon at any time.
Thus this payment will not result in any change in our internaticnal reserve
position and consequently will have no effect on our balance-of-payments.
The remaining portion of the appropriation -- $776.25 -- will pennit
the United States to issue to the International Monetary Fund a letter of
credi t in that amount on which the Fund may draw at such time as it may
require additional dollar funds to meet drawings of other members.
Drawings
against this $176 million portion are not likely to occur in the foreseeable
future.
It is interesting to note that this Committee considered and approved
the appropriation of $2 billion for United States partiCipation in the General·
Arrangements to Borrow (GAB).
At the hearings on the appropriation former
Secretary Dillon assured this Committee that "in practice we do not expect
to have to use this authority in the foreseeable future.
I.
Although the GAB
-6has proved to be extremely useful and appropriation of the whole $2 billion
was essential to United States participation, in fact, no expenditures have
been made pursuant to this appropriation.
This Committee should also note that although the Fund used dollars
extensively in the past, when we were in a strong balance-of-payments position, all these dollars have come back to it and, in effect, back to the
United States.
Thus, while the Fund has been of great benefit to the world
and to the United States, over the entire period of its operations, our participation in the Fund has not cost us, net, any dollars at all in our
international accounts.
Dollars lent by the Fund in earlier years have been
repaid to it and the Fund now holds U.S. dollars in the amount of about
$3,215 million.
bearing notes.
These are held almost entirely in the form of non-interestAs long as the United States continues to have a balance-of-
payments deficit, Fund policy will limit drawings in dollars.
And, in any
event, the Fund's existing holdings of dollars will be used to meet the needs
of any future drawings before calls will be made on the new letter of credit.
Because no dollar expenditure is foreseen this portion of the appropriation will also have no adverse effect on our
balance-of-p~ents.
As the Committee is aware, the United States Government has shifted
increasingly to the provision of funds through a letter of credit technique.
This amounts to an unconditional obligation to provide funds as they are
actually needed.
This technique is now in general use both in our domestic
programs and in our dealings with international institutions.
It was designed
to obviate expenditures prior to the time when funds are actually needed.
In
the past, the technique in dealing with international institutions was somewhat
-7different.
Payments were made to the institution and excess funds were
returned to the United States Government in exchange for non-interest-bearing
notes.
I should like to say a word at thi s point about the nature of the Fund
itself.
The International Monetary Fund was established following negotia-
tions at the Bretton Woods Conference of 1944.
The Fund has worked continuously for the elimination of exchange restrictions, the avoidance of competitive exchange depreciation, and the promotion
of exchange stab iIi ty .
When member countries draw needed currencies from
the Fund they do so to provide financing for their position while corrective
measures are being
ation.
~aken
to eliminate a temporary balance-of-payments situ-
Any drawing 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 longterm 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 reduced 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 repayments which have taken place.
-8In 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.
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
fram the United States by selling us nearly $600 million worth of gold.
At
that time, IMF holdings of dollars represented no more than 28 per cent 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 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, how-
ever, 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 U.S. was neither
a creditor nor a debtor vis-a-vis the institution.
-9As I have noted, 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. position in the Fund which I have just described.
Our current net drawings of approximately $120 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.
Particular attention has been given to the possible effect on the
United states of gold payments to the Fund in connection with the proposed
quota increases.
It was clear that, in the normal course of events, many
countries 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
-10of Ten and the IMF recognized that, if non-reserve 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 actually
diminish aggregate world reserves.
The arrangements
that have been
worked out and which are described on pp 11-13 of the NAC Special Report
will provide fully adequate protection for the United States gold stock
while at the same time providing the Fund with needed liquidity.
Before concluding, I should like to emphasize that the appropriation
must be in the full amount of $1,035 million since the proposed increase
in each country's quota is determined by the Resolutions adopted by the
Board of Governors.
The amount of each country's increase cannot be
changed without a reformulation of the entire general and special quota
increase proposals.
It is thus necessary to have the full amount re-
quested in order to make our increased subscription payment, even though
in practice we do not expect that the Fund will make use, in the foreseeable future, of the portion payable through a letter of credit.
The U.S. Government is convinced of the importance of ensuring that
adequate resources shall be available to the Fund so that it can continue
to playa vital role in the monetary system of the free world.
For this
reason, the United States took a leading part in the discussions of the
Group of Ten, at the Annual Meeting of the Board of Governors in Tokyo
-11-
and in the deliberations of the Executive Directors in bringing about
the present quota increase proposal.
It is important for the United
states to continue to exercise leadership in this area, at this time
when so much attention is being directed to the strengthening of the
international monetary system.
No better example of leadership can
be given than the prompt approval and payment of our own subscription.
President Johnson requested in his transmittal letter to the Congress
that the quota increase legislation be given prompt and favorable
ation.
consider~
The Congress has heeded the President's request in quickly enacting
the authorizing legislation.
Equally prompt and favorable consideration
of the necessary appropriation is requested.
_ . "',..
_
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~
~
u"
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$8il.
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~
J
- - -----
$8il.
- - - - - - - - - - - - - - - - - 1 +3.5
+3.5f-I- - - - . - - -
+ 3.0
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1----------
f - I- - - -
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-----F·-
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+2.5f-I- - -
-----------------------
+ 2.0 I
.......
+1.5 r-
~
+\.0 ~
+.51
oI
-
-----,
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!
/75% ofUS Ovolo, $2./
--------------------------.1
"»»'"
I
1---
~
(End of Period)
- - - - - - - - - - +2.0
1+ \.5
Drawings
by U.S
f----------1
Oo//ors AcqUIred
By Fvnd
\
-il-~-n
Gold Sole
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FO-384
TREASURY DEPARTMENT
Washington
STATEMENT OF THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE THE
HOUSE BANKING AND CURRENCY COMMITTEE
FRIDAY, JUNE 4, 1965, 10:00 A.M.
THE PRESIDENT'S COINAGE AND SILVER PROPOSALS
Mr. Chairman, I appear before you today in support of the
legislation the President has recommended for a new and
efficient United States coinage.
We are recommending a change in the coinage because
there is not enough available silver to assure the
continued minting of our traditional 90 percent
silver coins for years in the quantities necessary
to meet our rapidly increasing coinage requirements.
As much as all of us would prefer to keep our old
and handsome silver coinage, there is no choice but
to reduce drastically our heavy dependence upon
silver for this purpose for one simple reason
the
demand for silver has far outrun supply.
The only option open to us in this matter, without gravely
risking the national interest in adequate and plentiful coinage,
has been choice of what new material to use in the place of silver.
The new coinage the President has recommended that you
authorize has all the attributes of a strong and stable coin system,
73
and that, moreover, it is fully modern and, specifically engineered
- 2 -
to carry out efficiently all the tasks that American merchandising
of our day requires.
The new coins recommended to you will provide
uninterrupted service as a medium of exchange.
They
can be made without the necessity of further change
for a long period ahead.
These coins are made of
materials for which there is assured access.
They
can be minted without undue difficulty and at
moderate cost.
They can be used across the counter
and in all of the 12 million coin operated devices
in use in the United States -- side-by-side with
our existing silver coins.
There is, of course, no substitute for the appearance of
silver.
In one of the three new coins we are asking authority
to make -- the half dollar -- the beauty of the "noble metal"
is preserved intact, although the actual silver content is
much reduced.
The proposed new dime and quarter are a departure
from the tradition of silver, but they are coins that have a
distinctively modern appearance and that will serve us well because
they can protect us from future coin shortages.
The fact
that they are not silver, but are composite coins made of a
nickel alloy bonded to a copper core, is a change that requires
getting used to.
But I think the ruddy edge resulting from
- 3 their copper core gives these coins a character we will come not
only to accept, but to value.
The need for legislation -- shrinkage of silver supplies
I think the attached table presents the silver supply
situation as briefly as possible.
I have taken it from our Treasur)
Staff Study of Silver and Coinage.
The table shows a steadily worsening of our silver supplies,
from a small deficiency of production in the early post-war
years to a slightly bigger deficiency in the next five year
period, a much larger inadequacy in the five years from 1957
through 1961, and to a bounding growth of the deficiency in the
last two calendar years.
Actual market deficits are smaller
than the difference between total consumption and new production
because the United States meets its coinage needs for silver
out of its stocks.
These, however, are being depleted at a
rate which cannot be permitted to continue indefinitely.
It is notable that in 1964 each major type of usage (the
use of silver by industry and the arts, and use of silver for
coinage) taken separately, was greater than new supply.
This is the crux of the matter.
There is simply not enough silver appearing on the
market to continue to satisfy the demand for it in
the foreseeable future.
FREE WORLD SILVER CONSUMPTION
\ND PRODUCTION, 1949-1964
~mi11ions of fine troy ounces)
~STIMATED
NEW GROSS
PRO- DEFDUCTION
USE
:ALENDAR
[EAR
ICIT
DEFICIT
EXCLUDltG
U.S.
COINAGE
DEMAND
Coinage Demand
Indus- U.S.
try
and the
Arts
Foreign
Free
World
Total
Total
ConStnnption
.949-53
Nerages
153
36
48
85
238
174
64
28
,953-57
.verages
190
37
36
74
264
191
73
36
957-61
verages
216
47
51
98
314
200
114
67
962
248
77
50
128
375
207
169
72
963
252
112
56
167
419
214
205
93
964
286
203
62
265
550
216
335
132
)urce:
)te:
Staff Study of Silver and Coinage, Part III, Table 1,
fl.gures rounded.
A troy ounce equals 480 grains, an avoirdupois pound equals
7,000 grains, a 2,000-pound ton equals 14,000,000 grains,
hence, 1 billion troy ounces (480,000,000,000 grains) equal
34,285 tons.
Tre~sury
~
4 -
There is no dependable -- or, for that matter, likely -prospect, in the opinion of experts both inside and outside the
Treasury, of new economically workable sources of silver that
would appreciably narrow the gap between silver supply and
demand.
In fact, optimistic projections envision an increase
of no more than 20 percent over the next four years.
Projected
increases in consumption are at least equally as great.
This
stand-off between future increases of production and consumption
in a situation where deficits are already very heavy could not
change the basic conclusion that use of silver in our coinage
must be very sharply curtailed.
Also, because silver is produced
chiefly as a by-product of the mining of copper, lead and zinc,
even a very great increase in the price of silver would not
stimulate new production sufficiently to change the situation.
Most Free World contries have long since ended or nearly
ended the use of silver in their coinage.
Except for Canada and
Switzerland, those countries still using silver coins make only
limited use of it, in one or two "prestige" coins, as we now
propose to do with the new half dollar.
As seen in the above
table, in the early post-war years, the United States accounted
for less than half of total Free World employment of silver for
coins, but at present we use more than three quarters of all
silver put into coins in the Free World.
- 5 -
We have no choice but to make a large reduction
of silver in the coinage, and no choice but to do
so now.
We have on hand some 1 billion ounces of
silver in the Treasury stock.
At current rates of
Mint production we are using silver for coinage at
the rate of 300 million ounces a year:
and for the
redemption of silver certificates at 120 million
ounces a year.
Even should demands upon our stock increase no
more, it is clear that at present rates of use we
can expect to exhaust our resources in two or
three years.
This gives us enough time to shift
to a new coinage if we act promptly.
Basic reguirement for the new coinage system
In arriving at our recommendations for new coinage alloys
our overriding consideration, Mr. Chairman, was the necessity
of continuing at all times to provide an adequate means of
exchange and of avoiding any disruption of commerce.
Experience
shows all too clearly that, under modern conditions, the
essential medium of exchange function is imperiled if a subsidiary
coinage alloy threatens to become more valuable as a commodity
than as money.
-
b
-
The Treasury's own staff study, and that of the Battelle
Memorial Institute, establish certain other criteria which an
acceptable coinage alloy should have, beyond the basic criterion
of efficiency in its function as a medium of exchange.
These
include, the degree to which a coinage material lends itself to
being minted into coins which would be durable in use; its
acceptability to the public; ease and sureness of production;
cost and availability of raw materials, and counterfeiting
potential.
An additional criterion is a critical factor for a modern
American coinage.
Present day coins should perform not only
as a medium of exchange, but also as technical merchandising
instruments, in use in coin operated vending and service
machines.
The need for compatibility of old and new coinage
The new coins should be made compatible with the existing
coinage in use in coin operated devices, particularly, in coin
operated vending machines.
This is one of the most desirable
characteristics of a modern coinage, and a characteristic
fully met by the President's proposal.
If the new coinage
could not be used in these mechanisms, the public would be
subjected to great inconvenience, and trade and commerce in
many sectors of distribution harassed and handicapped.
If the
new coins were not compatible, two alternatives would be presented,
both of them undesirable from the point of view of the public
- 7 at large:
(1)
The vending machines would have to be shut
down until new sensing and rejecting
devices could be installed, or
(2)
Their devices for sensing and rejecting
wrong coins and slugs would have to be
deliberately circumvented, exposing
the machines to a high rate of fraud.
In the case of merchandise vending machines alone -- that
is, not including such service devices as pay telephones and
coin operatedmundries -- over
$3-~
billion worth of goods were
dispensed to consumers last year, in over 30 billion separate
transactions.
These vending machines are equipped with sensitive selectors,
which reject wrong coins, slugs, foreign coins and the like.
Highly selective rejectors are necessary if coin machines are
to be low cost supply points for foods and for many other kinds
of goods, available by night and by day, in out of the way as
well as accessible places.
Approximately half of the 12 million coin operated machines
in the United States are equipped with sensors that accept or
reject coins on the basis of the electrical properties of our
traditional high silver content coinage.
To be compatible in
operation with our existing coinage, our new coins must duplicate
- 8 -
the electrical characteristics of a coin with high silver content.
The coins we are recommending to you reproduce precisely the
electrical properties of coins with high silver content.
Moreover, they are made of the only materials that do so,
satisfactorily, among the practical alternatives.
Any other
course would subject the public to extensive inconvenience.
If non-compatible materials are used, there will have to be
an interregnum while new selectors are developed and brought
into mass production that are:
(1)
capable of handling coins of high silver content
together with coins that do not have the
electrical properties of nearly pure silver
and that are,
(2)
at the same time capable of rejecting slugs,
low value foreign coins and coins of wrong
denominations.
Selectors exist that can
handle coins with a wide range of electrical
properties.
But when they are set for a
wide range, their selectivity falls, and
they become subject to fraudulent use.
During the one to three years that development, manufacture
and installation of a new kind of sensor would take, the public
~ould
not be able to use the incompatible new coinage in the
- 9 6 million of our coin operated devices, chiefly those vending
merchandise, fitted with sensitive selectors.
The choice of
the coins recommended here avoids these difficulties and the
attendent interferences with trade and commerce.
OUTLINE OF THE RECOMMENDATIONS
Section 1 of the proposed legislation describes the metallic
content of the proposed new coinage:
A.
The Minor Coinage
The penny and the five cent piece:
No change is proposed.
B.
The Subsidiary Coinage
1. The dime and the quarter:
It is proposed that silver be eliminated
from the dime and quarter.
Instead,
they should be composite, or clad,
coins, faced with an alloy of
75 percent copper and 25 percent
nickel (the same cupronickel alloy
used throughout the five cent piece),
bonded to a core of pure copper.
2. The half dollar:
It is proposed that the 50 cent piece
should also be a composite coin,
with the silver content reduced
- 10 from the present 90 percent to
a new ratio of 40 percent.
It
would be faced with an alloy of
80 percent silver and 20 percent
copper, clad on core alloy of
approximately 21 percent silver
and 79 percent copper.
3. The Silver Dollar:
No change is proposed.
Authority
to make a Silver Dollar of the same
weight and fineness (412.5 grains,
90 percent silver) made at various
times since the Act of 1837, would
be continued.
However, we would
not plan to mint any new coins of
this denomination at the present time.
Section 2 provides that the new coins would be subject to
the current laws as to design and inscription.
With respect to these coins, I would like to emphasize the
following points, some of them already discussed:
1.
It is our intention that the existing
silver coinage should circulate side
by side with the new coinage, indefinitely.
- 11 -
2.
The proposed new dime and quarter would
have a copper-colored edge, due to the
use of a pure copper core.
3.
The new coinage would meet the exacting
technical requirements necessary to
permit it to be used in the coin operated
devices now in use in the United States,
including those fitted with rejectors
set to refuse coins or imitations of
coins that do not have the electrical
properties of our current silver coins.
4.
We expect to place the new coins in
circulation sometime in 1966.
5.
The new coins would be of the same size
and design as present coins of the same
denomination.
They would be slightly
lighter in weight.
Section 3 provides specific recognition of the new coins
as legal tender.
Section 4 provides for continued minting of the existing
coins as needed until production of the new coinage is adequate,
continuing without change the standard Silver Dollar.
- 12
~
Section 5 provides for standby authority for the Secretary
of the Treasury to prohibit the melting, exportation or
treating of United States silver coins.
Section 6 provides for sales by the Treasury of silver
in excess of what is needed to back silver certificates, at a
price not less than the moretary value of silver.
Section 7 would authorize the Treasury to purchase newly
mined domestic silver at $1.25 per fine troy ounce.
Section 8 provides for legal authority to procure the
materials and technical assistance, equipment and patents needed
to make the new coinage in the required quantity.
Section 9 provides authority to continue dating the new
coins as of the first year they are issued.
Section 10 would authorize the temporary use of the San
Francisco Assay Office for the minting of coins, and would
authorize the conversion of that facility for the refining of
precious metals, if necessary, after it is no longer needed for
coin production.
Sections 11 - 16:
An Act requiring recoinage of all worn
and uncurrent subsidiary silver received in the Treasury is
repealed; the Minor-coinage Metal Fund is renamed the CoinageMetal Fund, and the Minor-coinage Profit Fund is renamed the
Coinage-Profit Fund, and the amount available in the CoinageMetal Fund is raised from $3 million to $30 million; expenditure
- 13 of not more than $15 million is authorized for additional
mint facilities to accommodate manufacturing requirements of
the new materials; the counterfeiting laws are amended to cover
the new coinage; the issuance of necessary regulations by the
Secretary of the Treasury under the proposed Act is authorized;
and penalties are provided for violations of regulations issued
under Section 5.
A separate Title of the proposed legislation provides for
the establishment of a Joint Commission on the Coinage after
the new coinage is issued.
The Commission would be composed of the Secretary of the
Treasury, the Secretary of Commerce, the Director of the Bureau
of the Budget, the Director of the Mint, of four public members,
not representative of interest groups, appointed by the
President, of the chairmen and ranking minority members of
the House and the Senate Banking and Currency committees, and
of two other congressional members, one appointed by the Speaker
of the House and one by the President of the Senate.
The function of the Commission would be to study the progress
of the implementation of the new coinage program, new
technological developments, the supply of various metals and
the future of the silver dollar.
It would report as to the
time and circumstances in which the government should cease to
- 14 maintain the price of silver.
And it would advise the President,
the Congress and the Secretary of the Treasury on the results
of its studies.
Protection of Existing Coinage
The continued use of coins that are 90 percent silver also
requires protection of this high silver content coinage from
hoarding or destruction.
There is no reason for hoarding of coins in anticipation
of a coin shortage.
We expect no such shortage during the
period when we are installing the new coinage.
We can, if
necessary, step up production enough to replace completely, in
less than three years, the existing silver coinage while at the
same time keeping up with the normal growth of coin demand.
We can defend the existing silver coinage against the
second possible danger -- the threat of destruction by melting
them for their silver content.
To make certain that the silver
coinage is not destroyed in this manner, it will be necessary
for the Treasury to protect the monetary value of our silver
coinage by supplying silver to the market upon demand at the
present monetary price of silver of $1.29+ per troy ounce.
The Treasury has been doing this since 1963 by exchanges of
silver bullion against silver certificates.
- 15 -
The value of the silver in our existing coinage, as silver,
would exceed the face value of the coins if the price were
allowed to rise above a so-called "melting point" of these
coins of $1.38 per ounce.
We hold the price of $1.29+ per ounce
by standing ready freely to redeem silver certificates in
silver at this price.
The prudent course is to maintain the
price of silver at its present level.
It is as additional protection for existing silver coinage,
which includes the silver dollar, that we recommend asking for
stand-by authority to institute controls over the melting,
treating or export of United States coins, practices not now
forbidden by law.
We believe strongly that suggestions for more extensive
controls would operate against our best interests.
Sufficiency of coinage supply
As you know, we have recently experienced a shortage of
coins.
I am happy to say that as a result of intensive
production efforts on the part of the Mint the supply of coins
in circulation and in inventory in the Federal Reserve banks
is improved.
5-cent pieces.
There is no longer a shortage of the I-cent and
We still have a problem with dimes and quarter
- 16 supply but substantial improvement has been made.
The shortage
of half dollars is still severe.
In view of the continuing shortages of high denomination
coins and the uncertainties inevitable during the changeover
period, we are gearing up for maximum production of the new
coins as soon as the legislation is passed.
after enactment, we expect to make at least
In the first year
3~
billion of the
new subsidiary coins -- a billion and a half more than we will
make of the silver coins in fiscal 1965.
This is more than double
the production in fiscal 1964 and four or five times what we
would consider as a normal year's production of silver coins.
In the second year after enactment we would expect to make well
over 7 billion of the new coins, doubling production again.
The Silver Dollar
The silver dollar will remain as an authorized coin of the
United States, at 90 percent fineness.
This is a central
element in our program for holding the price of silver to its
present level for the protection of our existing subsidiary
silver coin.
The future of the silver dollar can better be
decided when the Joint Commission of the Coinage, which we have
recommended, can take a look at the world's silver supply and
demand situation and other relevant factors and make its
recommendations.
At that time, the facts can largely govern
the decision on the issue of the future of the silver dollar.
-
.1 1 4
Maintaining some silver Ln the subsidiary coinage
We have considered it desirable to maintain some silver in
our subsidiary coinage.
half dollar was designed.
It was to this end that the new silver
The new composite coin reduced the
silver content of the half dollar from 90 percent to 40 percent.
It nevertheless retains without readily apparent differences,
the aspect and ring of a coin with high silver content, although
it is slightly lighter than the present half dollar.
It is to
be of the same design as the present half dollar, that is,
bearing the image of the late President Kennedy.
One reason for retaining some silver in our coinage is a
desire to continue the l73-year-old tradition of American
silver coinage.
Inclusion of a 40 percent silver half dollar is
as far as we can safely go to satisfy this tradition.
We expect
that, barring unforeseen changes in industrial demand for silver,
we will have adequate silver to make this one coin in normal
amounts for an indefinite period.
After the new coins are in
full production it should require no more than 15 million ounces
a year -- less than 5 percent of expected 1965 silver consumption
for coins.
One reason for continuing this particular coin is the
fact that we could, if unforeseen difficulties developed, do without
the half dollar temporarily.
quarters.
It can be replaced in use by two
- 18 -
Summary
A change in our coinage is unavoidable.
We have
reviewed very carefully the results of all of the studies
which have been made on this subject.
We are satisfied that,
taking into account all of the various factors involved in
this problem, our recommendations for the new coinage are
sound proposals that will, if enacted, provide the United
States with a dependable, technically perfect, and
distinctive coinage that can be produced in whatever quantity
desired.
It is a coinage that, I emphasize, will perform not
only across-the-counter, but will also carry out fully and
without interruption its function as a technical merchandising
instrQnent.
interest.
This is absolutely necessary for the public
I therefore strongly urge approval of these
recommendations and that they be enacted into law at the
earliest possible date.
000
792()
TREASURY DEPARTMENT
June 4, 1965
FOR IMMEDIATE RELEASE
TREASURY D8CISION ON BREAD IN LOAVES
UNDER THE ANTIDUHPING ACT
The Treasury Department has determined that bread in
loaves from British Columbia, Canada, is not
bein~,
to be, sold at less than fair value within the
Antidumping Act.
nor likely
meanin~
of the
A If Notice of Tentative Determination," was
published in the Federal Register on April 15, 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 British Columbia, Canada,
without regard to any question of dumping.
Imports of the involved merchandise received during the
period July 1964 through February 1965 were worth approximately
:1il65 , 000.
TREASURY DEPARTMENT
June 4, 1%5
FOR IMMEDIATE RELEASE
TREASURY DECISION ON BREAD IN LOAVES
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that bread in
loaves from British Columbia, 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 April 15, 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 British Columbia, Canada,
without regard to any question of dumping.
Imports of the involved merchandise received during the
period July 1964 through February 1965 were worth approximately
$165,000.
STATEMENT BY MERLYN N. TRUED
ASSISTANT SECRETARY OF THE TREASURY
BEFORE THE SENATE COMMITTEE ON FOREIGN RELATIONS
MONDAY, JUNE 7, 1965, 10:00 A. M., EST
Mr. Chairman and Committee Members:
I welcome this opportunity to appear before the Committee
on Foreign Relations in support of S. 1760.
Also here with me
today are Mr. Arthur W. Hummel, Jr., Acting Assistant Secretary
of State for Educational and Cultural Affairs, and Mr. John D.
Jernegan, Deputy Assistant Secretary of State, Bureau of Near
Eastern and South Asian Affairs.
Mr. Hummel and Mr. Jernegan
have brief statements on certain aspects of this bill.
The bill would authorize the Secretary of the Treasury
to settle a debt arising from a loan made to Greece in 1929
for refugee resettlement.
Subject to the approval of Congress,
under the Settlement Agreement of May 28, 1964, entered into
between Greece and the United States, Greece will repay at
interest $13,155,921 which represents the outstanding amounts of
the original obligation in full, plus a portion of the accrued
interest.
The approval of Congress is also requested for the
use of principal and interest payments made by Greece for a
cultural and educational exchange program.
- 2 -
The Loan
In order to help finance the resettlement of Greek refugees
from Asia Minor in connection with the work of the Refugee
Settlement Commission, established under the auspices of the
League of Nations, the United States in 1929 agreed to a loan
to Greece of $12,167,000.
The Refugee Resettlement Loan as
approved by Congress at that time provided for a 20-year
maturity and carried interest at 4 percent per year.
Payments
on this 10anto May 1931 reduced the amount outstanding to
$11.3 million.
However, with the general breakdown of
economic conditions in the early 1930's, Congress adopted a
Joint Resolution under which the Secretary of the Treasury,
with the approval of the President, made on behalf of the
United States agreements with a number of countries, including
Greece, postponing the payment of any amount due during the
year beginning July 1, 1931.
An agreement was reached with
Greece in May 1932 postponing $400,000 of principal and
$500,000 of interest, which were funded into a separate
agreement.
From 1933 through 1940 Greece continued to make partial
payments of interest on the 1929 loan in accordance with
equivalent treatment given to its other foreign creditors.
- 3 -
However, no payments at all were made under the May 1932
Agreement.
Since the invasion of Greece in 1941, no payments
have been received under the 1929 and 1932 Agreements.
Various attempts have been made in the past to settle
Greece's indebtedness.
Greece convoked a conference in 1954
to renegotiate a settlement of its defaulted pre-war external
debt.
In connection with this conference, the Treasury Depart-
ment advised the Chairman of this Committee that the United
States intended to participate in this conference and that
Congressional approval would be sought for any settlement
agreed upon.
However, a settlement could not be reached.
In October 1962, the Government of Greece and the Foreign
Bondholders Protective Council agreed upon a settlement of
privately held dollar bonds issued prior to the original U.S.
Government loan for similar purposes.
The principal features
of the Bondholders settlement with Greece involved the
reduction of the interest rate to one-half the original rate,
a grace period of several years during which time interest
payments are to be less than one-half of the original rate and
forgiveness of approximately 93 percent of the interest arrearages.
- 4 The terms of this settlement between the private bondholders and Greece provided the pattern for the United States
settlement with Greece.
As I have mentioned, this settlement
is embodied in an Agreement between the United States and
Greece which will enter into effect only after the enactment
of the legislation before you.
The amount to be repaid under
the present Agreement was derived by taking all principal and
interest due and unpaid as of August 1933, a total of $12,208,538,
and adding to this $947,383 in lieu of arrears of interest
subsequent to August 1933.
is $13,155,921.
Thus, the total amount to be refunded
Greece will pay interest on the outstanding
balance at the rate of 2 percent per year.
It will also pay
annually one-half of one percent of the bta1 principal.
In
addition to these repayments of principal, Greece will make
additional principal repayments so that there will be level
annual payments of $328,898.02 for the life of the loan.
Payments of principal and interest will be in United
States dollars and will begin one year after enactment of
authorizing legislation.
The Government of Greece has taken
all the steps necessary to commence payments, and once
Congressional approval is given, Greece will issue the necessary
bond evidencing its indebtedness under the Settlement Agreement.
- 5 -
The proposed legislation would authorize settlement on
these terms and would also authorize the Secretary of the
Treasury to discharge Greece of its obligations under the
1929 and 1932 agreements upon the issuance by Greece of the
bond called for by the Agreement.
The Settlement Agreement contains another provision which
requires Congressional approval.
It provides that the payments
of interest and principal made by Greece will be made available,
as determined by the Secretary of State, for financing
educational and cultural activities authorized by the Mutual
Educational and Cultural Exchange Act of 1961.
Accordingly,
the bill authorizes the appropriation of amounts equal to the
Greek payments of principal and interest for this purpose,
and it is the intention of the State Department to seek
annual appropriations under this authorization.
Thus, these
payments will help finance a program which has heretofore
been financed by the United States.
Agreement to use the
payments made by Greece for educational exchange purposes
constituted an important consideration in reaching a settlement
and, at the same time, will provide funds for our valuable
educational and cultural exchange activities.
- 6 -
The enactment of this legislation is in the interest
of the United States.
It will result in the settlement of
a debt which has been in default for many years and provide
the United States with funds for financing our cultural
and educational exchange program with Greece.
At the same
time, it will help to restore Greece's credit standing in the
international financial community and thus contribute towards
its continued economic development.
I urge your favorable consideration of this legislation.
STATEMENT OF MERLYN N. TRUED
ASSISTANT SECRETARY OF THE TREASURY
Before the
SENATE FOREIGN RELATIONS COMMITTEE
June 7, 1965
Mr. Chairman and Members of the Committee:
I am happy to appear before you in support of S. 1742,
a bill containing three separate proposals relating to the
International Bank for Reconstruction and Development and
its affiliate, the International Finance Corporation.
I have
with me Mr. Ralph Hirschtritt, Deputy to the Assistant
Secretary of the Treasury_
Mr. Chairman, the proposals embodied in this legislation
have been fully endorsed by the National Advisory Council on
International Monetary and Financial Problems, and a copy
of its Special Report is before you.
I shall briefly cover
some of the main points.
IBRD Lending to IFC
The first would amend the Articles of Agreement of the
IBRD and the IFe to permit the Bank to
~end
to the IFC.
This
authority will contribute greatly to the continued success of
these institutions in encouraging, each in its own way, private
investment in the less developed countries of the free world.
I need hardly stress the importance of the role of private
- 2 enterprise in the economi.c development of the less developed
areas.
This role is encouraged by both the IBRD and its
affiliate, the IFC.
The IFC, of course, was especially
created to promote private investment in member countries,
particularly the less developed areas.
function.
This is its exclusive
The proposed legislation, by thus increasing the
resources available to the IFC, will enable it better to carry
out this important function.
I am sure that the Committee is quite familiar with the
two institutions.
The World Bank, established immediately
after World War II, is now engaged primarily in lending to
the less developed countries.
It makes hng-term loans directly
to member governments, public entities or private enterprises.
All loans must be guaranteed by the member in whose territories
the project is located.
Projects financed and assisted by the
Bank are generally basic to the economic structure of the
recipient country and typically have been in the fields of
transportation, power, and industrial and agricultural
development.
The Bank has been highly successful, and it enjoys the
reputation of being a sound financial institution.
As I have
indicated, except in the case of loans made directly to member
- 3 governments, the borrower is required to obtain a guarantee
from the government of the country in which the project is to
be located.
Often, however, private investors have been
reluctant to seek, and in some cases it is difficult for host
governmentstn give, such guarantees.
To complement the Bank's
operations in promoting assistance to the private sector in
the less developed countries, the Bank sponsored the IFC,
which was established in 1956 with the full support of the
United States.
The IFC invests only in private enterprise
projects and does not require host government guarantees of
repayment of its investments.
The result is that IFC can and
does make loans to private enterprise that the Bank cannot
make.
The proposed legislation would provide additional
resources through the IFC for the future stimulation of economic
growth through private enterprise.
In its decade of operations, the IFC has promoted the
growth of private enterprise activity in the less developed
countries and brought new venture capital where it is needed.
By providing financing in conjunction with other investment
both local and foreign, and often with only limited use of its
own fundS, the IFC has facilitated the investment of a much
greater aggregate volume of private capital.
- 4 The IFC offers a variety of forms of assistance.
operations fall into three major categories:
Its
(1) loan or
equity investments in operating companies; (2) investments in
industrial finance companies that relend to local industry;
and (3) participation in underwriting and stand-by transactions
for private firms raising capital.
Individual IFC investments
have been relatively small, generally under $5 million, and
they have been made to a variety of types of manufacturing
industries.
While it still has funds to invest, the pace of
IFC's operations is increasing and it is dmely and important
to make provision for the future.
To this end, the Executive Directors of each institution
in August 1964 recommended to the Governors that Bank resources
be made available to the private sector through the IFC.
This
would be accomplished by permitting the Bank to make loans to
the IFC.
The IFC would use funds borrowed from the Bank for
relending to private enterprise.
Such loans by the IFC would
not require a government guarantee.
The total amount of loans outstanding by the Bank
~
IFe
could not, under the arrangement, exceed four times the
unimpaired subscribed capital and surplus of IFC.
This limit
is about $400 million based on the IFC's present balance sheet.
- 5 Bank lending to the IFC would take place only over time and
in accordance with IFC's operational requirements.
At their Annual Meeting in Tokyo last September, the
Governors of the Bank and the IFC approved the report of the
Executive Directors recommending this proposal.
Draft
resolutions containing the necessary amendments to the Articles
of Agreement are presently before the respective Boards of
Governors to be voted on by each Governor after obtaining the
necessary authority prescribed by domestic law.
The Bretton
Woods Agreements Act, authorizing U. S. membership in the
Bank, requires Congressional authorization for the U. S.
Governor to vote for an amendment of the Articles.
The Inter-
national Finance Corporation Act contains a similar provision
with respect to amendment of the IFC Articles.
The proposal does not, of course, involve any appropriation
or expenditure of funds by the United States.
It is fully
consistent with fue objectives of the United States in promoting
private enterprise in less developed countries and should have
our full support.
A number of countries have already acted
and U. S. action will enable it to become effective.
- 6 -
IBRD Capital Increases not Involving the U. S.
The proposed legislation would also permit the U. S.
Governor to vote for an increase in the authorized capital
stock of the International Bank for Reconstruction and
Development.
This increase would not involve an increase in
the U. S. subscription, nor any expenditure of funds by the
United States.
$22 billion.
The present authorized capital of the Bank is
This amount is almost fully subscribed, but it
is now apparent that it is not adequate to accommodate the
immediate and foreseeable subscriptions of new members and the
special increases in the subscriptions of existing members.
As of March 31, 1965, $21,629 million had been subscribed.
An additional $165 million in new subscriptions and subscription
increases have been authorized by the Board of Governors and
these are now merely awaiting the completion of formalities.
Total subscriptions will then amount
to $21,794 million.
Thus,
the limit is now very nearly reached at a time when further
subscriptions of about $900 million may be expected.
This
further amount will come about as the 16 countries undertaking
special increases in their quotas in the International Monetary
Fund also increase their Bank subscriptions, in accordance with
normal practice.
Other subscriptions may also be expected.
- 7 Because the resulting increases could not be made under
the Bank's existing authorized capital, there is now pending
before the Board of Governors a resolution to increase the
authorized capital stock of the Bank by $2 billion.
Congressional
approval is required for the U. S. Governor to vote in favor
of this resolution which, I wish to re-emphasize, does not
involve any change in the U. S. subscription.
In 1963 the
Congress approved a similar increase of $1 billion in the
Bank's authorized capital.
The bill before the Committee will authorize the U. S.
Governor to vote for the present resolution by granting him
continuing authority to vote for any such increases in the
authorized capital of the Bank when an increase in the U. S.
subscription is not involved and hence no U. S. payments or
increased obligations result.
If an increase in the U. S.
subscription is involved, then, of course, Congressional
authorization would continue to be required.
Reports of the NAC
The third change which would be made by S. 1742 would be
to permit reports of the National Advisory Council on International Monetary and Financial Problems to be made on an
annual basis instead of semi-annually and biennially as presently
required.
This proposal stems from a request by the President
- 8 -
that Executive agencies review the reports which they are
required by statute to submit to Congress for the purpose
of determining whether such reports could be eliminated or
reduced in number.
It is anticipated that the proposed
annual reports will contain all the information now contained
in the presently required reports, while at the same time the
number of such reports would be reduced from five to two over
each 2-year period.
In connection with this last proposal, it should be noted
that Reorganization Plan No.4 of 1965, submitted by the
President on May 27, 1965, would abolish the National
Advisory Council as a statutory body and transfer its functions
to the President.
The President stated, however, that prompt
action would be taken to create a successor committee along
the general lines of the body now provided by law.
I urge the enactment of S. 1742.
That concludes my statement, Mr. Chairman.
However, I
have included as an appendix to my statement a technical
amendment which should be made in S. 1742 to make it fully
consistent with the amendment to the IFC Articles of Agreement
proposed by the Governors of that Corporation.
APPENDIX
On page 3, line 1 of S. 1742, there should be inserted
the words "the Corporation lending to or" immediately following the word "against."
While there is no intention of the
IFC lending to the Bank, the inclusion of the above language
is necessary to enable the U. S. Governor to vote for the
amendment actually proposed.
TREASURY DEPARTMENT
JUNE 4, 1965
to queries on
Seigniorage
Estimated
Seigniorage, at
Fiscal Year 1965
Produc tion Rates
(millions of dollars
= difference between face value of coins and
the cost of metal in the coins.
Present Coins 200 Silver 100 COJ2J2er
lQL
.?2.i.
$ 1,000.00
$102.0
2~tt·2~
6.6
Face Value
Cost of Metal
Seigniorage
$ 1,000.00
$173.0
~
11.2
Face Value
Cost of Metal
Seigniorage
$ 1,000.00
$ 96.0
·1j
6.2
Total Seigniorage $3,000.00 Face Value
~124.12
$ 24.0
Face Value
Cost of Metal
Seigniorage
$ 1,000.00
8 . 61
~2-1. j2
$ 96.0
Face Value
Cost of Metal
Seigniorage
$ 1,000.00
8 . 61
~2-l.j2
$162.9
Face Value
Cost of Metal
Seigniorage
$ 1,000.00
Al1o~
~
~
·1
2~tt·27
Coins
lOt
~
2.Q.i
a
ti
4~2.~7
Total Seigniorage on $3,000.00 Face Value
Wei~ts
10¢
25¢
50¢
·1
2~tt·2~
2.Q.i
New
Face Vafue
Cost of Metal
Seigniora ge
~2-7.-~
$ 54.5
$ 2 z4 20.41
$ 313.4
of Subsidia!:r Coins
Present
Grains
Grams
38.58
2·5
96.45
6.25
12.5
192·9
Pro~osed
Grams
2.268
5.67
11·5
Grains
35·0
87.5
177.47
TREASURY DEPARTMENT
JUNE 4, 1965
response
:0
queries on
!igniorage
Estimated
Seigniorage, at
Fiscal Year 1965
Production Rates
(millions of dollars)
= difference between fa ce value of coins and
the cost of metal in the coins.
resent Coins 900 Silver 100 Copper
Face Va!ue
Cos t of Metal
Seigniora ge
$ 1,000.00
$102.0
$9~a·2j
·7
6.6
Face Value
Cost of Metal
Seigniorage
$ 1,000.00
$173.0
$9~a·2j
·7
11.2
Face Value
Cost of Metal
Sei£uiorage
$ 1,000.00
$ 96.0
Total Seigniorage $3,000.00 Face Value
$194.19
9L
?J.
~w
>.i
i1.
I$.
$9~a·2j
·7
6.2
$ 24.0
Alloy Coins
Face Value
Cost of I-letal
Seigniorage
$ I OOO.OO
Face Value
Cost of Metal
Sei[,niorage
$ 1,000.00
8 6l
Face Value
Cost of Metal
Seigniorage
$ 1,000.00
Total Seigniorage on $3,000.00 Face Value
j
8 . 61
ti
~~tl. ~2
ti
.
~~rl.~2
4~2.~7
$ 96.0
$162.9
~~-I'-~
$ 54.5
$ 2 z4,20.41
$ 313.4
Weights of SubsidiaEI Coins
Prol2osed
Present
Grains
Grams
Grams
Grains
2.268
35·0
38.58
2·5
87.5
5.67
6.25
96.45
177.47
12.5
1l·5
192·9
TREASURY DEPARTMENT
FOR RELEASE A.M. NEWSPAPERS,
Tuesday, June 8, 1965.
June 7,
RESULTS OF TREASURY I S WEEKLY BILL OFFERING
Department announced last evening that the tenders for two series ot
Treasury bills, one series to be an add! tiona! issue of the bills dated March 11, 1965,
and the other series to be dated June 10, 1965, which were offered on June 2, were o~
at the Federal Reserve Banks on June 7. 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 bUla.
The detaUs of the two series are as follows:
The Treasury
RANGE OF ACCEPTED
COMPETITIVE BIDS:
High
Low
Average
9l-day Treasury bU1s
maturin~ SeEtember 9" 1965
Approx. EqUiv.
Price
Annual Rate
3.762%
99.049
,3.806%
99.038
3.781%
99.044
Y
:
s
I
I
:
·
·
•
•
182-day Treasury bUls
December 92 1965
Approx. EqUIv.
Price
Annual Rate
maturin~
98.654
).849%
98.047
3.869%
3.862%
98.~
Y
38 percent of the amount of 91-day bills bid for at the low price was accepted
12 percent of the amount of 182-d~ bUls bid for at the low price was accepted
TOTAL TENDERS APPLIED FOR AND ACCEPrED BY FEDERAL RESERVE DISTRICTS:
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTALS
Applied For
$
25,636,000
1,,308,096,000
27,715,000
30,685,000
11,830,000
47,707,000
255,654,000
34,676,000
19,943,000
26,947,000
31,148,000
112,130,000
$1,932,167,000
Accepted
: Applied For
$ 15,636,000 : $
3,436,000
1,34l,874,000
744,996,000 :
14,182,000
15,715,000 :
30,685,000 :
20,245,000
10,428,000
11,830,000 :
47,087,000 :
32,032,000
268,283,000
130,654,000 :
13,170,000
28,676,000
12,081,000
19,881,000 :
26,947,000 t
9,637,000
26,528,000 :
10,847,000
101,386,000 ¥
110,112,000
$1,200,021,OOO!l $1,846,327,000
Accepted
$
3,336,000
706,794,000.
5,877 ,000
14,845,000
6,353,000
1l,856,000
131,538,000
10,170,000
10,081,000
9,197,000
6,847,000
17 ,470,000
-
$1,000,364,000
a/ Includes $245,515,000 noncompetitive tenders accepted at the average price of 99.dJi
Includes $1Cit.,226,000 noncompetitive tenders accepted at the average price of 98.~1
On a coupon issue of the same length and for the same amount invested, the return (I
these bU1s would provide yields of 3.81%, for the 91-day bills, and 3.99%, for the
l82-day bills" Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the amount invested and their length in actual number of days related to a ,36O-dal
year. In contrast, yields on certificates, notes ll and bonds are computed in tenas
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 semiannnal
ccmpounding i f more than one coupon period is involved ..
'b/
'Y
TREASURY DEPARTMENT
IR HELEASE A.M. lfuWSPAPE:HS,
esday, June 8, 1';'65.
June 7, 1965
HESULTS OF T:-ffiALfRY I S
WE~KL '{
BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
'easury bills, one series to be an additiJnal issue of the bills dated March 11, 1965,
ld the other series to be dated June 10, 1965, which were offered on l.Tune 2, were opened
,the Federal Reserve Banks on June 7. Tenders were invited for $1,200,000,000, or
lereabouts, of 91-day bills and for .$1,000,000,000, or thereabouts, of 182-day bills.
Ie details of the two series are as follows:
ACCEPTED
IMPETITlVE BIDS:
.NGE OF
High
Low
Average
91-day Treasury bills
maturing September 9, 1965
Approx. Equiv.
Price
Annual Hate
99.049
3.762%
3.806%
99.038
99.044
3.781%
Y
182-day Treasury bills
maturing December 9, 1965
Approx. Equiv.
Price
Annual Rate
3.849%
98.054
3.869%
98.c1ili
3.862% Y
98.047
38 percent of the amount of 91-day bills bid for at the low price was accepted
12 percent of the amount of 182-day bills bid for at the low price was accepted
ITAL TENDERS AI)PLIED FOR A.ND ACCEPI'I:,D BI FEDERAL RSSERVE DISTRICTS!
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
!ftTLl'leapolis
Kansas City
~las
3an Francisco
TOTALS
Applied For
$
25,636,aJO
1,308,096,000
27,715,000
30,685,000
11,83 0 ,000
47,707,000
255,654,000
34,676,000
19,943, 000
26,947,000
31,148,000
112,130 ,000
$1,932,167,000
Accepted
Applied For
$
15,636,000
$
3,436,000
744,996,000
1,341,874,000
15,715,000
14,182,000
30,685,000
20,245,000
11,830,000
10,428,000
47,087,000
32,032,000
130,654,000
268,283,000
28,676,000
13,170,000
19,881,000
12,081,000
26,947,000
9,637,000
26,528,000
10,847,000
_ 101,386,000
110,112,000
$1,200,021,000 ~/ $1,846,327,000
Accepted
$
3,336,000
706,794,000
5,877,000
14,845,000
6,353,000
11,856,000
137,538,000
10,170,000
10,081,000
9,197,000
6,847,000
77,470,000
$1,000,364,000
Includes $245,515,000 noncompetitive tenders accepted at the average price of 99.044
InclUdes $104,226,000 nonc0T1petitive tenders accepted at the average price of 98.047
On a coupo~ issue of the same length aDd fo~ the same amount invested, the return on
these bills would provide yields of 3. 87:~, for the 91-day bills, and 3.99%, for the
,182-day bills. Interest rates on bills are quoted in tems of bank discount with
:the return related to the face amount of the bills payable at maturity rather than
i the amount invested and their length in actual number of days related to a 360-day
year. In contrast, yields on certificates, notes, and bonds are computed in tenns
:of interest on the amount invested, and relate the number of days remaining in an
!interest payment period to the actual number of days in the period, with semiannual
~compounding if more than one coupon period is involved.
-74
£/
TREASURY DEPARTMENT
Washington
FOR RELEASE ON DELIVERY
RmARKS BY 'l1m HONORABLE FREDERICK L. DEMING,
UNDER SECRErARY OF THE TREASURY FOR MONETARY AFFAIRS,
AT THE NATIONAL MORl'GAGE BANKING CONFERENCE
OF THE MOR'lUAGE BANKERS ASSOCIATION OF AMERICA
AT THE HOTEL LEAMINGTON IN MINNEAPOLIS, MINNESOTA,
ON 'lUESDAY, JUNE 8, 1965, AT 1l:15 AM (cm)
DEBT MANAGEMENT AND THE LONG-TERM CAPITAL MARKET
The basic continuing goal of debt management is to assure the
capacity of the Federal Government at all times to provide the necessary
cash to meet any deficit in the budget and to refinance maturing securities,
and to do so in ways that will neither require inflationary money creation
or disruptive influences on credit markets.
Given the large size of the
Federal debt in relation to the economy and to the total supply of credit
market instruments, as well as its importance as a me,.dium for portfolio
adjustments by investors and for Federal Reserve operations, another
related, but not identical, goal of debt management is to achieve a well
distributed debt, both in terms of ownership characteristics and maturity.
This entails, in particular, an amount of shorter-dated debt related to
the economy's need for liquid instrumentse
F1nally, changes in th&
composition of the debt over time, through its influence on the structure
of interest rates, the flow of funds to other borrowers, and the liquidity
of the economy, can and should contribute to the effort of economic policy
as a whole to achieve non-inflationary economic growth at home and balance
of payments equUibri1.DDe
F-75
- 2 -
One continuing objective of debt management, in pursuing the broad
goals, is to maintain a variety of instruments outstanding in all maturity
occtoro
of
the
mnrketj and to develop techniques that permit orderly
marketing of new issues throughout the maturity spectrum, so that active
trading markets and access to areas will be preserved.
In the process, a
key objective is to avoid a volume of shorter-dated issues
60
large as to
leave the Treasury vulnerable in its financing operations to serious
marketing difficulties and
~dden
large increases in interest cost in
periods of market strain.
This, in turn, requires continuing attention
to the need to offset the passage of time on the maturity structure and
the development of techniques that penni t the placement in the market of
longer-dated securitieso
Efficiency in financing, in the sense of minimizing interest costs
consistent with the aims described above, is a constant objective of debt
management~
This objective has been aided by the development of techniques
that facilitate the placement of new issues with a minimum market impact,
and by taking advantage of opportunities to place debt in those portions
of the maturity structure where demand is relatively stronge
Against this background of basic goals and objectives, I want to talk
today about the debt management operations of the Treasury Department as
they affect the long-term capital markets in the United Statese
Actually,
the net demands of the Federal Government on the markets have been, and
Will remain, quite moderate in relation to the demands of other borrowers,
even though the over-all amount of financing activity in recent years has
tended to overshadow this
fact~
- 3In making that point, I don't want to minimize the kinds of problems
the Treasury debt managers have had to cope with through the postwar
years -- I,roblcmo that
~~re
reflected during much of the
1950's
in a
persistent shortening of the debt structure -- nor the achievement of
more recent years in developing ways and means of placing more of our debt
in longer-term form.
But it is important to keep these problems and
achievements in the broader perspective of the growth of the economy and
the vast size of our capital markets.
In terms of its absolute size, the Federal debt has gone up $59
billion since 1946p or by almost a quarter.
But this compares With a
35 percent rise in our population, so that the debt is now nearly $200
less per capita than it was at the end of World War II.
More significantly,
the Federal debt has declined to less than one-quarter of total debt,
reflecting the much more rapid 400 percent rise in other debt -- debts
of individuals, businesses, and State and local governments.
The financing of the Second World War had, of course, greatly
inflated the relationship of the Federal debt to over-all business
activity, and we emerged from that war in 1946 with our debt equal to
116 percent of gross national product.
Currently, this ratio has dropped
below 50 percent, and I believe there is every prospect that, with continuing economic growth, it will continue to decline over the years ahead.
- 4 By the end of 1959, the average life of the debt had decreased from
the comfortable postwar level of seven years and eleven months that
existed in 1946 to a greatly reduced level of four years and four months.
The Treasury, during a good many of those years, had, in effect, withdrawn from the long-term market in the face of strong competing demands
from other borrowers, rising interest rates and tight market conditions.
And the sheer ari tbmatic of the passage of time works insidiously against
the debt manager -- year a:f'ter year.
Perhaps this effect can be demonstrated most graphically by recent
experience.
In last month's financing operation, involving, in part,
the 4-1/4's of 1974, the highly successful extension of $2 billion of
debt for nine years provided something less than a one-month addition
to the average life of the total marketable debt.
So we are continually
reminded that it is necessary to "run'! to keep up with the effect of the
passage of time on our debt structure, and woe betide the debt manager
who fails to recognize that fact.
Since the end of 1959, a trend
t~d
maturity of the debt has been evident.
a lengthening in the average
This reversal of the earlier trend
was due in large part to innovations in debt management techniques begun
by my distinguished fellow Twin Ci tian, J'ulian Baird, and bullt upon by
his successor, Robert Roosa.
From December, 1959, to March, 1965, the
total amount of Federal securities outstanding increased by $27.5 billion,
- 5but nearly all of that increase was in the form of bonds maturing in more
than five years.
Consequently, the average life of the debt increased to
five years and four months.
How did this vital change in direction prove
possible without bringing strain on the capital market?
Part of the
answer lies, I believe, in the fact that the demands that were made on
the capital market in order to accommodate this debt management requirement
were, in the perspective of the capacity of that market, rather modest.
In order to appreciate this pointi it is necessary to center attention in the public marketable issues that are held by private investors,
U. S. Government investment accounts, and by the Federal Reserve System.
This will eliminate from consideration the special issues held in U. S.
Government investment accounts, Savings Bonds, other nonmarketable issues
(which, in recent years, have been tailored entirely for foreign accounts),
and minor amounts of guaranteed Government securities and noninterestbearing debt.
Of the $24 billion increase in the marketable debt that
occurred from 1959 to the present, only a little more than $8 billion vas
placed in the "private" sector.
Govermnent investment accounts took about
$5 billion of the added marketable issues, and the Federal Reserve banks
took $ll billion.
Within the private sector, there are many classes of investors that
actually hold slightly fever Governments nov than in December, 1959,
including the important commercial banks I insurance companies, mutual
- 6 savings banks, and corporations.
Those whose holdings have increased
are state and local governments, which have added over $5 billion;
foreign and international
investors~
who have added $4 billion; and all
other investor groups, including savings and loan associations, corporate
pension funds, and dealers, whose totals have increased by $4.5 billion.
The holdings of individuals are also higher by $I billion.
This points to the fact that, in plaCing its added debt, the Treasury
has "displaced" potential placements by other borrowers only with State
and local governments, many of whom are still restricted to goverrunent
issues in any event, and probably with some corporate pension funds.
And the total increase in demand in this sector of the market was certainly
not much more than about $6 billion for the period observed.
Rather than competing for funds with other users, the primary accom-
.
plishment of debt management during this period was the successful
restructuring of the debt within the framework of existing holdings.
The principal vehicle that was used to accomplish this restructuring was
the advance refunding technique.
Currently, about 67 percent of out-
standing 2O-year and over debt was placed by this method, and the comparable
percentage for the five- to 20-year maturities is
58
percent.
The major categories of investors have been willing to accept the
debt extensions that have been offered to them by the Treasury, or have
been enabled to find new issues to meet their needs readily in the dealer
market.
Vl.rtually all of the major investor groups have extended the
average life of their portfoliOS since 1959.
- 7 In sheer dollar volume, the primary area of concentration of
offerings in advance refUndings has been in the five- to ten-year
range.
This has met the desires of the commercial banks, who have
wanted to extend to increase their current income; and it has proved
quite acceptable to the mutual savings banks, to the savings and loan
associations, and to other investors, who place considerable emphasis
on liquidity requirements in their Government security portfolios.
Meanwhile, life insurance companies, pension funds, and others interested
in the truly long-term bonds have had repeated opportunities to exchange
into such bonds, and have responded favorably to advance refunding
offers in that area.
At a time of rapid growth in highly liquid savings media, this
.
increase in the average life of the debt has had the broad advantage of
forestalling any excessive build-up in liquidity for the economy as a
whole.
More narrowly, it has had the collateral advantage of allowing
the Treagury to make less frequent trips to the market for smaller amounts
of funds.
Maturities of coupon issues, for example, were reduced from
$40-1/2 billion in 1959 to only $31 billion by the end of March, 1965.
Then, too, the advance refunding technique has allowed short-dated
issues to be extended at times when the market was most receptive and,
in effect, has let the market help make the decisions as to how much was
to be sold in which maturity range.
- 8 I do not, of course, mean to imply that the markets are capable of
absorbing indefinite amounts of longer-term debt in advance refunding
operations or that there would be no problems in overly-frequent use of
this technique.
The extent of restructuring has to be keyed to market
demand, and it has often required substantial bank and dealer underwriting in order to facilitate the ultimate placement of the securities
involved.
We will continue to attempt to mesh these plans with our
continuing assessment of the market potential, and with recognition,
too, of the continuing role and function of the dealer market in enabling
investors to do their own "refunding" through the market.
It is not
our intention to strain the capital markets or to place a ceiling on
prospects for price appreciation by a restructuring operation at every
favorable juncture.
IW-ing the
1960 IS,
a great deal of consideration has had to be
given to the implications of our operations for the balance of payments.
We have been concerned particularly about mainta1n1ng a reasonably competitive relationship between our short-term investment opportunities
and alternative short-term investments in other money markets, taking
account, of course, of the cost of cover.
This vas a primary reason for increasing the volume of regular
Treasury bills outstanding by more than
$19 billion since December, 1959.
But, at the same time, the total of maturities due wi thin one year has
increased by only tr-l/2 billion.
'!his vas made possible by a massive
- 9 movement of the coupon bonds out of the short-term area, another change
made possible by the use of the advance refunding operation.
Looking to the future, we can examine the Treasury's responsibilities in light of the perspective that has been developed.
Ideally, the
Treasury wants to place as much of its long-term borrowing in the hands
of bona fide savers as is possible.
In this connection, it is frequently
pointed out that recent increments in the public debt have been accommodated without additions to the Government bond holdings of the commercial
banks.
The banks held $60.3 billion in December, 1959, and, as of the
end of March, 1965, these holdings were estimated to amount to $60
billion.
It should also be pointed out that the U. S. Savings Bonds program
is making continuing and substantial contributions in this area.
During
the past five and one-quarter years, series E and H Savings Bonds have
increased by $6 billion, while the discontinued series F, G, J, and K
Bonds have declined by $4-1/4 billion.
In this way, Savings Bonds,
which are the only vehicle we have for directly tapping the "retail"
market for savings, have made an important continuing contribution to
our debt management objectives, a contribution we expect will continue,
aided so greatly by the volunteer efforts of banks and businessmen in
all sections of the country.
- 10 -
Here, I want to add a word about the financial requirements for
the new fiscal year beginning in less than a month.
Wi th every prospect
that the deficit for the year will be held within reasonable proportions,
these requirements should be fully consistent With attainment of our
basic debt management goals.
Certainly, balance of payments considerations will require at least
the same total of regular Treasury bills, and, if necessary, that total
could be increased without, in my judgment, conflicting with the broader
liquidity needs of the economy.
At the same time, opportunities are
apt to arise over the course of the year to fit additional longer-term
financing into our financing pattern, consistent with the relatively
modest size of our over-all needs.
The financing schedule for the current fiscal year, 1965, offers
a recent example of the manner in which Treasury debt operations , With
an estimated deficit on the order of $4-1/2 billion, can be fitted into
the market without impeding the orderly flow of funds to other borrowers,
while also making progress toward improving the debt structure.
So far
as cash finanCing 'Was concerned, $6-1/2 billion of marketable debt was
issued in the first half of this fiscal year , with $4 billion of this
accounted for by Tax Anticipation bills.
bills 'Were sold in January.
Another $1-3/4 billion of tax
Aside from this temporary debt, less than
$4 billion of new securities were sold for cash during the course of
- II -
the year, and almost half of that $4 billion merely offset normal
attrition on our refunding offers.
Consequently, the net additlon to
the marketable debt lI1ll only be about $2 billion -- less than the
amount absorbed by the Federal Reserve and Government investment accounts
in meeting their needs.
On balance, therefore, it was not necessary to
call upon the market for new funds, and our financing schedule and
market developments provided scope for two sizeable advance refundings
to improve the debt structure.
The outlook for fiscal year
1966, in terms of our own requirements,
is, if anything, for a somewhat smaller volume of cash offerings, reflecting prospects for a slight further decline in our deficit, as
well as our comfortable cash balance position.
And this is after having
taken the fiscal 1966 impact of the pending excise tax cut into consideration.
The immediate outlook concerning the first half of fiscal 1966 is
certainly not very different from the preceding year.
In fact, our
cash balance position would permit deferral of new borrowing well into
the fiscal yearQ
We could even, if it seems appropriate, extend to
six months our period of absence from the new cash market.
Later in
the summer or fall, sizeable borrowing needs are certain, perhaps in an
amount of $8 billion, to cover seasonal needs of this period.
But, again,
these needs could appropriately be met in substantial proportion by Tax
Anticipatiou bills, to be retired from the seasonal surplus in March
- 12 -
and June.
The residual, more permanent, need during the period can, I
believe, be handled with considerable flexiblli ty both in t1m1ng and
maturi ty, depend1ns both on market developnenta and the broader needs
of the economy, either in terms of our domestic or balance of payments
objectives.
One can, of course, cite Govermnent financing activities in the
hunqreds of billions of dollars by adding together the regular roll-over
of Treasury bills, normal refundings, and advance refunding takings on
the scale of recent years.
But these computations do not seem to me
an accurate measure of the impact of Federal finance.
They divert
attention tram the main point that the Treasury's net demands have been,
and are likely to remain, modest, when compared with any other sector
of the capital market.
Moreover, the financing flexibility that we have
achieved -- and of which I am a happy recipient of the hard-won gains
of
my
predecessors -- penni ts these requirements to be spread out in an
orderly manner in ways that min1m1ze any potentially disruptive impact.
In concentrating on Treasury debt management today, I do not want
to leave you with any impression that I am oblivious of the current
problems vi th which you are coping.
As the yield curve has flattened,
a competi ti ve squeeze has been placed upon you, between the yield requirements of your custaners and the drive to obtain the needed volume
of mortgage outlets for your funds.
This squeeze probably makes it more
difficult to resist pressures toward a deterioration in the quality of
credit in the industry.
- 13 Given the urgency ot our balance ot payments problem and the canpelling need to maintain. a competitive posture in the short-term area,
I cannot o"£fer any clear pro8pect ot rel.iet w1 th re8pect to competing
attractions tor your custaners' funds.
On the other side ot the coin,
I think that there is ample evidence of a continuing large flow ot funds
available for mortgage investment, and, quite frankly, that seems to me
healthy in terms of the economy as a whole.
continue.
So
the squeeze may well
And, by the same token, I believe a heavy burden ot responsi-
bility is thrust upon your own industry to cope with this situation
wi thout being tempted in the process to contribute toward a weakening
in the credit structure that would create new problems in the future.
In this area, there can simply be no substitute for your own Vigilance.
--000 ...
STATEMENT BY MERLYN N. TRUED
ASSISTANT SECRF,TARY OF THE TREASURY
BEFORE THE SENATE COMMITTEE ON FOREIGN RELATIONS
MONDAY, JUNE 7, 1965, 10:00 A. M., EST
Mr. Chairman and Committee Members:
I welcome this opportunity to appear before the Committee
on Foreign Relations in support of S. 1760.
Also here with me
today are Mr. Arthur W. Hummel, Jr., Acting Assistant Secretary
of State for Educational and Cultural Affairs, and Mr. John D.
Jernegan, Deputy Assistant Secretary of State, Bureau of Near
Eastern and South Asian Affairs.
have brief
s~atements
Mr. Hummel and Mr. Jernegan
on certain aspects of this bill.
The bill would authorize the Secretary of the Treasury
to settle a debt arising from a loan made to Greece in 1929
for refugee resettlement.
Subject to the approval of Congress,
under the Settlement Agreement of May 28, 1964, entered into
between Greece and the United States, Greece will repay at
interest $13,155,921 which represents the outstanding amounts of
the original obligation in full, plus a portion of the accrued
interest.
The approval of Congress is also requested for the
use of principal and interest payments made by Greece for a
cultural and educational exchange program.
F-76
- 2 -
The Loan
In order to help finance the resettlement of Greek refugees
from Asia Minor in connection with the work of the Refugee
Settlement Commission, established under the auspices of the
League of Nations, the United States in 1929 agreed to a loan
to Greece of $12,167,000.
The Refugee Resettlement Loan as
approved by Congress at that time provided for a 20-year
maturity and carried interest at 4 percent per year.
Payments
on this loanto May 1931 reduced the amount outstanding to
$11.3 million.
However, with the general breakdown of
economic conditions in the early 1930's, Congress adopted a
Joint Resolution under which the Secretary of the Treasury,
with the approval of the President, made on behalf of the
United States agreements with a number of countries, including
Greece, postponing the payment of any amount due during the
year beginning July 1, 1931.
An
agreement was reached with
Greece in May 1932 postponing $400,000 of principal and
$500,000 of interest, which were funded into a separate
agreement.
From 1933 through 1940 Greece continued to make partial
payments of interest on the 1929 loan in accordance with
equivalent treatment given to its other foreign creditors.
- 3 -
However, no payments at all were made under the May 1932
Agreement.
Since the invasion of Greece in 1941, no payments
have been received under the 1929 and 1932 Agreements.
Various attempts have been made in the past to settle
Greece's indebtedness.
Greece convoked a conference in 1954
to renegotiate a settlement of its defaulted pre-war external
debt.
In connection with this conference, the Treasury Depart-
ment advised the Chairman of this Committee that the United
States intended to participate in this conference and that
Congressional approval would be sought for any settlement
agreed upon.
However, a settlement could not be reached.
In October 1962, the Government of Greece and the Foreign
Bondholders Protective Council agreed upon a settlement of
privately held dollar bonds issued prior to the original U.S.
Government loan for similar purposes.
The principal features
of the Bondholders settlement with Greece involved the
reduction of the interest rate to one-half the original rate,
a grace period of several years during which time interest
payments are to be less than one-half of the original rate and
forgiveness of approximately 93 percent of the interest arrearages.
- 4 The terms of this settlement between the private bondholders and Greece provided the pattern for the United States
settlement with Greece.
As I have mentioned, this settlement
is embodied in an Agreement between the United States and
Greece which will enter into effect only after the enactment
of the legislation before you.
The amount to be repaid under
the present Agreement was derived by taking all principal and
interest due and unpaid as of August 1933, a total of $12,208,538,
and adding to this $947,383 in lieu of arrears of interest
subsequent to August 1933.
is $13,155,921.
Thus, the total amount to be refunded
Greece will pay interest on the outstanding
balance at the rate of 2 percent per year.
It will also pay
annually one-half of one percent of the btal principal.
In
addition to these repayments of principal, Greece will make
additional principal repayments so that there will be level
annual payments of $328,898.02 for the life of the loan.
Payments of principal and interest will be in United
States dollars and will begin one year after enactment of
authorizing legislation.
The Government of Greece has taken
all the steps necessary to commence payments, and once
Congressional approval is given, Greece will issue the necessary
bond evidencing its indebtedness under the Settlement Agreement.
- 5 The proposed legislation would authorize settlement on
these terms and would also authorize the Secretary of the
Treasury to discharge Greece of its obligations under the
1929 and 1932 agreements upon the issuance by Greece of the
bond called for by the Agreement.
The Settlement Agreement contains another provision which
requires Congressional approval.
It provides that the payments
of interest and principal made by Greece will be made available,
as determined by the Secretary of State, for financing
educational and cultural activities authorized by the Mutual
Educational and Cultural Exchange Act of 1961.
Accordingly,
the bill authorizes the appropriation of amounts equal to the
Greek payments of principal and interest for this purpose,
and it is the intention of the State Department to seek
annual appropriations under this authorization.
Thus, these
payments will help finance a program which has heretofore
been financed by the United States.
Agreement to use the
payments made by Greece for educational exchange purposes
constituted an important consideration in reaching a settlement
and, at the same time, will provide funds for our valuable
educational and cultural exchange activities.
- 6 -
The enactment of this legislation is in the interest
of the United States.
It will result in the settlement of
a debt which has been in default for many years and provide
the United States with funds for financing our cultural
and educational exchange program with Greece.
At the same
time, it will help to restore Greece's credit standing in the
international financial community and thus contribute towards
its continued economic development.
I urge your favorable consideration of this legislation.
TREASURY DEPARTMENT
Washington
STATEMENT OF MERLYN N. TRUED
ASSISTANT SECkr.~·ARY OF THE TREASURY
Before the
SENATE FOREIGN RELATIONS COMMITTEE
June 7, 1965
Mr. Chairman and Members of the Committee:
I am happy to appear before you in support of S. 1742,
a bill containing three separate proposals relating to the
International Bank for Reconstruction and Development and
its affiliate, the International Finance Corporation.
I have
with me Mr. Ralph Hirschtritt, Deputy to the Assistant
Secretary of the Treasury.
Mr. Chairman, the proposals embodied in this legislation
have been fully endorsed by the National Advisory Council on
International Monetary and Financial Problems, and a copy
of its Special Report is before you.
I shall briefly cover
Some of the main points.
IBRD Lending to IFC
The first would amend the Articles of Agreement of the
lBRD and the IFC to permit the Bank to lend to the IFC.
This
authority will contribute greatly to the continued success of
these institutions in encouraging, each in its own way, private
investment in the less developed countries of the free world.
I need hardly stress the importance of the role of private
F-77
- 2 -
enterprise in the economic development of the less developed
areas.
This role is encouraged by both the IBRD and its
affiliate, the IFC.
The IFC, of course, was especially
created to promote private investment in member countries,
particularly the less developed areas.
function.
This is its exclusive
The proposed legislation, by thus increasing the
resources available to the IFC, will enable it better to carry
out this important function.
I am sure that the Committee is quite familiar with the
two institutions.
The World Bank, established immediately
after World War II, is now engaged primarily in lending to
the less developed countries.
It makes hng-term loans directly
to member governments, public entities or private enterprises.
All loans must be guaranteed by the member in whose territories
the project is located.
Projects financed and assisted by the
Bank are generally basic to the economic structure of the
recipient country and typically have been in the fields of
transportation, power, and industrial and agricultural
development.
The Bank has been highly successful, and it enjoys the
reputation of being a sound financial institution.
As I have
indicated, except in the case of loans made directly to member
- .1 -
governments, the borrower is required to obtain a guarantee
from the government of the country in which the project is to
be located.
Often, however, private investors have been
reluctant to seek, and in some cases it is difficult for host
governmentsto give, such guarantees.
To complement the Bank's
operations in :" ~<)t:'.,. ~.-'ng c!ssistance to the privat e
the less developed countries, the HclrLk sponsort:J
;>
..
th~
_
;:lr
:{
n
iFC,
which was established in 1956 with the full support of the
United States.
The IFC invests only in private enterprise
projects and does not requlre host government guaranteoes of
repayment of its investments.
The result is that IFC can and
does make loans to private enterprise that the Bank cannot
make.
The proposed legis12tinn w0uld provide additional
resources through the IFC for the future stimulation of economic
growth through private enterprise.
In its decade of operations, the IFC has promoted the
growth of private enterprise activity in the less developed
countries and brought new venture capital where it is needed.
By providing financing in c\-;·c:junction with other investment
both local and foreign, and often with only limited use of its
Own funds, the IFC has facilitated the investment of a much
greater aggregate volume of private capital.
- 4 The IFC offers a variety of forms of assistance.
operations fall into three major categories:
Its
(1) loan or
equity investments in operating companies; (2) investments in
industrial finance companies that relend to local industry;
and (3) participation in underwriting and stand-by transactions
for private firms raiSing capital.
Individual IFC investments
have been relatively small, generally under $5 million, and
they have been made to a variety of types of manufacturing
industries.
While it still has funds to invest, the pace of
IFC's operations is increasing and it isdmely and important
to make provision for the future.
To this end, the Executive Directors of each institution
in August 1964 recommended to the Governors that Bank resources
be made available to the private sector through the IFC.
This
would be accomplished by permitting the Bank to make loans to
the IFC.
The IFC would use funds borrowed from the Bank for
relending to private enterprise.
Such loans by the IFC would
not require a government guarantee.
The total amount of loans outstanding by the Bank D IFC
could not, under the arrangement, exceed four times the
unimpaired subscribed capital and surplus of IFC.
This limit
is about $400 million based on the IFC's present balance sheet.
- 5 Bank lending to the IFC would take place only over time and
in accordance with IFC's operational requirements.
At their Annual Meeting in Tokyo last September, the
Governors of the Bank and the IFC approved the report of the
Executive Directors recommending this proposal.
Draft
resolutions containing the necessary amendments to the
Artic~es
of Agreement are presently before the respective Boards of
Governors to be voted on by each Governor after obtaining the
necessary authority prescribed by domestic law.
The Bretton
Woods Agreements Act, authorizing U. S. membership in the
Bank, requires Congressional authorization for the U. S.
Governor to vote for an amendment of the Articles.
The Inter-
national Finance Corporation Act contains a similar provision
with respect to amendment of the IFC Articles.
The proposal does not, of course, involve any appropriation
or expenditure of funds by the United States.
It is fully
consistent with fue objectives of the United States in promoting
private enterprise in less developed countries and should have
our full support.
A number of countries have already acted
and U. S. action will enable it to become effective.
- 6 -
IBRD Capital Increases not Involving the U. S.
The proposed legislation would also permit the U. S.
Governor to vote for an increase in the authorized capital
stock of the International Bank for Reconstruction and
Development.
This increase would not involve an increase in
the U. S. subscription, nor any expenditure of funds by the
United States.
$22 billion.
The present authorized capital of the Bank is
This amount is almost fully subscribed, but it
is now apparent that it is not adequate to accommodate the
immediate and foreseeable subscriptions of new members and the
special increases in the subscriptions of existing members.
As of March 31, 1965, $21,629 million had been subscribed.
An
additional $165 million in new subscriptions and subscription
increases have been authorized by the Board of Governors and
these are now merely awaiting the completion of formalities.
Total subscriptions will then amount
to $21,794 million.
Thus,
the limit is now very nearly reached at a time when further
subscriptions of about $900 million may be expected.
This
further amount will come about as the 16 countries undertaking
special increases in their quotas in the International Monetary
Fund also increase their Bank subscriptions, in accordance with
normal practice.
Other subscriptions may also be expected.
- 7 Because the resulting increases could not he
m~~= ul:d~-
the Bank's existing authorized capital, there is now pending
before the Board of Governors a resolution to increase the
authorized capital stock of the Bank by $2 billion.
Congressional
approval is required for the U. S. Governor to vote in favor
of this resolution which, I wish to re-emphasize, does not
involve any change in the U. S. subscription.
In 1963 the
Congress approved a similar increase of $1 billion in the
Bank's authorized capital.
The bill before the Committee will authorize the U. S.
Governor to vote for the present resolution by granting him
continuing authority to vote for any such increases in the
authorized capital of the Bank when an increase in the U. S.
subscription is not involved and hence no U. S. payments or
increased obligations result.
If an increase in the U. S.
subscription is involved, then, of course, Congressional
authorization would continue to be required.
Reports of the NAC
The third change which would be made by S. 1742 would be
to permit reports of the National Advisory Council on International Monetary and Financial Problems to be made on an
annual basis instead of semi-annually and biennially as presently
required.
This proposal stems from a request by the President
- 8 that Executive agencies review the reports which they are
required by statute to submit to Congress for the purpose
of determining whether such reports could be eliminated or
reduced in number.
It is anticipated that the proposed
annual reports will contain all the information now contained
in the presently required reports, while at the same time the
number of such reports would be reduced from five to two over
each 2-year period.
In connection with this last proposal, it should be noted
that Reorganization Plan No.4 of 1965, submitted by the
President on May 27, 1965, would abolish the National
Advisory Council as a statutory body and transfer its functions
to the President.
The President stated, however, that prompt
action would be taken to create a successor committee along
the general lines of the body now provided by law.
I urge the enactment of
s.
1742.
That concludes my statement, Mr. Chairman.
However, I
have included as an appendix to my statement a technical
amendment which should be made in S. 1742 to make it fully
consistent with the amendment to the IFC Articles of Agreement
proposed by the Governors of that Corporation.
APPENDIX
On page 3, line 1 of
s.
1742, there should be inserted
the words "the Corporation lending to or" immediately following the word "against."
While there is no intention of the
IFC lending to the Bank, the inclusion of the above language
is necessary to enable the U. S. Governor to vote for the
amendment actually proposed.
TREASURY DEPARTMENT
Washington
STATEMENT BY THE HONORABLE STANLEY S. SURREY
ASSISTANT SECRETARY OF THE TREASURY
BEFORE THE SENATE FINANCE COMMITTEE
ON H. R. 8371
THE EXCISE TAX REDUCTION ACT OF 1965
JUNE 8, 1965
H. R. 8371 can be described by saying that it
repea~all
of
the excises except:
those which are intended to impose part of the cost
of a particular Government service in the area thereof.
This category includes the Highway Trust Fund taxes,
the tax on fishing equipment and certain firearms,
shells and cartridges, and the tax on air passenger
travel.
those on alcohol and tobacco, which are traditional
sources of revenue.
As the House Committee Report
indicates, the fact that these taxes may inhibit
some choices is part of the reason that we have had
them.
those which are intended to be regulatory in nature,
such as the taxes on certain firearms, wagering,
coin-operated gaming devices, marihuana, and opium.
The bill makes these changes in a way that is fiscally responsible through staged reductions.
Where postponement of purchases in
antiCipation of a reduction could be a potential problem, the reduction is s':11edu1ed for the first stage -- July 1, 1965.
F-78
The remaining
- 2 -
part of the reduction is scheduled for January 1, 1966 (December 31,
1965 in the case of certain admission taxes and the cabaret tax).
In the case of the two taxes where very large amounts of revenue are
involved, telephone service and passenger automobiles, part of the
reduction is staged through 1967-69.
In two industries where the effect on sales because of the
anticipated reduction on July 1 might be a serious problem, passenger automobiles and air conditioners, the bill provides customer
refunds to the original announcement date -- May 15.
In the other
situations floor stock refunds are provided where considered
appropriate.
An alphabetical listing of the present excise taxes and the
indicated changes under the House bill and the President's program
is attached to this statement.
Let me turn now to the few instances in which the House bill
differs from the President's program.
The President recommended
that the passenger automobile tax be reduced by half, from 10 percent to 5 percent, in reductions staged 3 percent on July 1, 1965,
1 percent on January 1, 1967 and 1 percent on January 1, 1968.
The revenue obtained from a tax at a 5 percent rate is $950 million, at 1966 levels of income.
It is not regressive.
tutes.
This tax is efficient to collect.
It falls upon an item without close substi-
Most important the revenue is large.
- 3 The House bill provides that the entire tax be phased out by
January 1, 1969; 3 percent on July 1, 1965, 1 percent January 1, 1966,
and 2 percent on January 1 in each year 1967, 1968, and 1969.
We believe, however, that only 5 percentage points of the automobile
tax should be removed, and 5 percentage points left in effect, in
accordance with the President's recommendation.
This will allow future
Congresses to consider whether to reduce the automobile excise tax
below 5 percent.
Postponing the decision with respect to this remaining 5 points
of the automobile excise tax until the future is the course of fiscal
prudence.
In the judgment of the Administration it is unwise to enact
now large tax changes to come into effect three and four years in the
future.
ahead.
It is impossible to forecast the economic situation that far
The prudent course for the Nation is to stay with the President's
program.
One cannot foretell just what tax requirements for responSible fiscal
policy will be in the fiscal years 1967, 1968, and 1969, depending as they
do on expenditures, receipts, and the economic situation.
In fact, one
cannot tell just what expenditures will be forced upon us by the automobile
itself.
How much will we have to spend to deal with such problems as highway
safety, air pollution, and automobile graveyards?
The other differences in the House bill from the Presidents recommendation are relatively minor, and we concur in the House action.
The House bill would retain the tax on lubricating oil so far
as it applies to highway users.
This would be done by repealing
- 4 the present tax on cutting oil and by providing refunds for use of
lubricating oil in other than highway vehicles.
The proceeds of
this tax, $50 million, would be put in the Highway Trust Fund.
The remaining difference in the House bill deals with the
automobile parts and accessories tax so far as it applies to parts
which are primarily designed for trucks.
The President recommended
retention of this 8 percent tax as it applies to parts which are
not suitable for use in a passenger automobile.
The problem here
is that some large components of trucks are subject to a 10 percent
tax if they are installed by a truck manufacturer on a new truck.
This 10 percent tax on trucks, which is part of the Highway Trust
Fund,is not changed by this bill.
If no parts tax applied, there
would be a considerable incentive to install the part later as an
accessory.
Retaining the tax for truck parts and accessories will
avoid aggravating this problem.
The House bill places this truck
parts tax, which amounts to about $20 million, in the Highway Trust
Fund, along with the basic tax on trucks.
Finally, I want to say a brief word about the matter of
effective dates.
The Ways and Means Committee went extensively
into this problem,as its Report indicates.
It considered the
- 5 -
potential postponements of sales and came to the same conclusions
that we had reached, after the extensive discussions which trade
associations and individual firms had with the Treasury and with
the Staff of the Joint Committee.
Two industries thought this sales postponement problem was
serious.
In automobiles the tax involves a large dollar amount.
Postponement of a purchase until after July 1 would bring the
buyer close to the new model year when he might decide to wait
until fall.
This could result in a significant loss of sales
for the current model year and perhaps even some permanent loss
of sales.
In air conditioners the problem is somewhat similar.
Here,
nearly 40 percent of the year's sales come in May and June.
Postponement of a purchase until after July 1 would mean that
part of the hot weather is gone and many potential customers
would postpone the purchase until next year.
In these two cases,
the House considered that customer refunds were appropriate with
respect to purchases between May 15 and July 1.
As to other industries, the Committee noted that retroactive
refunds were not provided in the last significant excise tax
reduction, that of 1954, and that a retroactive date, with consumer refunds, would constitute a serious administrative burden
- 6 -
for the industries affected.
In order to provide the Internal
Revenue Service with some means of verifying the refund claims,
it would be necessary that they be channelled through, and consolidated by, the person who initially paid the tax.
taxes, this would be the manufacturer.
For most
Such a procedure would
involve the processing, verifying, and consolidating of thousands
of small claims by a manufacturer.
For manufacturers that sell
many different taxes articles the burdens would be multiplied many
times, and the benefit of retroactivity would be far outweighed by
the burden of additional paperwork involved.
Consequently, the
House thought that in view of the short time between the announcement date -- May 15 -- and the effective date of the first scheduled reduction, July 1, it would be wise to proceed in all other
cases in accordance with prior practice and avoid retroactive
reduction.
However, as stated earlier floor stock refunds are
provided in the House bill for most of the manufacturers taxes.
The Treasury staff has been working with the staff of the
Joint Committee on Internal Revenue Taxation on some technical
amendments.
We will be glad to discuss these matters with the
Committee, when it considers the bill in detail.
Attachment
000
Excise Tax Program to be Enacted in 1965
Indicating Differences Between President's Recommendation and H.R. 8371
July 1, 1965
January 1, 1966
Repeal
lissions .................... .
Repeal
'conditioners ........•......
,omobiles .............•...... President's recommendation:
Red uce 10% to 7%
Reduce 7% to 6%
House Bill:
Red uce 10% to 7%
Reduce 7% to 6%
,omobile parts and ac 2essories
excluding trucks parts) .....
1 point & founta in pens,
tc. . ....................... .
ling alleys & pool tables .. .
iness & store machines ..... .
arets ...................... .
eras & film, etc ........... .
arette lighters ............ .
dues ., ................... .
a-operated amusement devices.
:'ls oi' conveyance ........... .
et:M.C', gas, & oil appliances.
etric tight bulbs .......... .
January 1967
January 1969
Reduce 6% to 5% 1967
Reduce to 4% 1967
Reduce to 2% 1968
Repeal 1969
Repeal
Repeal
Repeal
Repeal
Repeal
Repeal
Repeal
Repeal
b
Repeal
Repeal
Repeal
Repeal
Repeal
:J . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
Repeal
Repeal
~lry ....................... .
rieating oil ............... . President's recommendation:
Repeal
House Bill:
Repeal as to nonhighway use. Put into
Highway Trust Fund as to
highway use.
Repeal
sage & handbags ............ .
:=zers
~hes
........................
Leal instruments ...........
ring cards .................
lograph records ............
Los & phonographs ..........
~igerators
.
.
.
.
................. .
; deposit boxes ............ .
~ting goods (except fishing).
:ks & bonds
issuance
:ks & bonds -- t rans f er .....
1I
Repeal
Repeal
Repeal
Repeal
Repeal
Repeal
Repeal
Repeal
Repeal
Repeal
(Continued)
- 2 Excise Tax Program to be Enacted in 1965
Indicatint, Differences Between President's Recommendation and H.R. 8371
July 1, 1965
Telegraph ........................ .
Telephone -- general & toll ...... .
Telephone -- interior communications
systems .......................•.
Televis ion sets .................. .
TOilet preparations .............. .
Wire & equipment service ........•.
!/
Janua ry 1, 1966
II
(Cont'd)
January 1967
January 1969
Repeal
Red uce 10% to 3% Red uce to 2% 1~
Red uce to 1% 196
Repeal 1969
Exempt
Repeal
Repeal
Repeal
The table does not deal with the user tax recommendations. In addition to the
items in the table, the automatic reductions in present law respecting cigarettes,
beer, distilled spirits, and wine are to be repealed, and the automatic reduction
in the case of the general telephone tax is postponed.
TREASURY DEPARTMENT
Washington
STATEMENT BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF TI{E TREASURY
BEFORE THE SENATE FINANCE COMMITTEE
ON H.R. 8371
THE EXCISE TAX RED~CTION ACT OF 1965
10 A .M. EN' TUESDPtY, JUNE 8, 1965
Mr. Chairman:
am pleased to be able to state the views of the Treasury Departmen-L
on H. R. 8371, the Excise Tax Reduction Act of 1965.
You have the President's Message on excise tax reduction and user
charge increases before you, so I will not repeat here the recommendations
he has already made in that Message.
You also have the Report of the Ways
and Means Committee on the bill.
In both the departmental and executive branch consideration
hearings before the House Ways and Means
co~ttee,
a~d
the
I have voluntarily
disassociated myself from any specific discussions or decisions as to how
the excise tax reduction should be distributed among the various excise
tax products and services and, specifically, how the passenger automobile
excise taxes should be handled.
For that reason, I would like to confine
my comments today to the general fiscal aspects of the President's
recommendations and the HOUse bill.
Assistant Secretary SUrrey is here
with me to present the Adrnini strati on ' s position on the differences between
the President's proposed program and the bill as adopted by the House,
which centers on the treatment of the passenger car excise tax.
He will
also present the Administration's position on the specific tax reductions
proposed.
I should note that the bill before you does not deal with the recommendations for increased user taxes.
T~e W~ys
and Means
Co~ittee
decided
to reserve the user charge recommendations for future consideration.
At
the same time it recognized the desirability of rapid action on the excise
reductions to avoid any lengthy disturbance of the marketing of taxed
F=79
- 2 -
products.
While this procedure 1s understandable, I would like to emphasize
that we regard user taxes as a most important part of the President's
Program.
The elimination or reduction of the selective excise taxes not now
dedicated to particular uses such as the Highway Trust Fund or falling
the category of sumptuary taxes such as
li~uor
int~
and tobacco is an important
step in our continuing program of tax reform, which has included the Revenue
Acts of 1962 and 1964 as well as the depreciation reform.
We are all
interested in the development of an overall tax system which is characterized
by
e~ui ty
and simplicity and which makes a maximum contribution to econOOlic
growth.
The excise tax reductions recommended by the President represent the
next logical step in this direction.
Reduction of our selective excise taxes increases the equity of the
tax system.
Many
selective taxes are discriminatory and burdensome on
producers, sellers, and consumers of the items subject to tax.
I believe that the Congress and the public have long felt that many
of our excise taxes have no place in a permanent tax system.
Thus, wherever
it is appropriate to remove a particular burden on one product or another,
we should strive consistent with other tax goals to proVide a freely
operating competi ti ve price system, and in the President's words " •..• end an
unfair burden on many businesses and workers who produce the commodities
singled out for excise taxation."
- 3 Excise taxes, unlike income taxes, impose burdens on those whose income
is below the level of their personal exemptions and deductions.
The present
excise tax reduction program will lighten the burden of regressive taxation
on low- and middle-income people.
A great deal of the revenue involved
comes from extremely regressive taxes, which are a heavy burden on low
incomes.
These include the taxes on telephones, automobile parts and
accessories, toilet preparations, and most of the household appliances.
The proposed reductions will simplify the tax system by greatly
reducing the number of separate taxes as well as the accompanying burden
on business of collecting and reporting those taxes.
It will cut the
Governmentfs cost of tax collection and enforcement.
Many of the selective excises involved in this legislation are expensive
to collect, and they impose heavy compliance burdens on the taxpayers.
This
is particularly true of the retail excises and some of the lower yield taxes,
such as the tax on cabarets and safe deposit boxes.
Many of the selective excises fallon items which have non-taxed
substitutes.
is not.
Room air conditioners are taxed, but central air conditioning
Most admissions are taxed, but many are not.
Some house furnishings
are taxable, others not.
But an
e~ually
compelling reason for the elimination or reduction of
many of these selective excises is that they are incompatible with a tax
system that leaves the private economy the maximum opportunity for growth.
These taxes were imposed largely in war and emergency in part to sustain
- 4 production and consumption in the taxed products and services and encourage
the transfer of the material and manpower resources dedicated to these
products to other areas deemed more essential to the war effort.
Imposed
in part for this reason, it is only logical that they should be removed
as a part of a normal peacetime economy_
This removal of a burden on the
private sector will bolster the economy in a particularly valuable way
since it will strengthen the competitive forces in the market place, and
it will entail significant price reductions, thereby contributing to
wage-price stability.
The House bill will have substantially the same impact in fiscal years
1966 and 1967 as the President's recommendations.
But in the fiscal years
1968, 1969, and 1970 the House bill will eliminate additional excise taxes
in successive stages totalling nearly one billion dollars beyond the
President's Program.
The revenue effects of an excise tax reduction are somewhat complicated,
and I would like to clarify the various figures.
When we speak of the full year gross revenue loss fram repealing an
excise tax, we are referring to the revenue that is collected in a full year
of operation under that tax.
The full year decreases in tax collections
in the administrative budget under the House bill and the President's
Program are given in Table 1.
- 5 Table 1
Reduction in Tax Collections
Full Year Effect
House Bill and President's Program
House Bill
Separate
Cumulative
President's Program
Separate
Ctmlulative
($ Billions)
....
$1.75
$1.75
$1.75
$1.75
January
1, 1966 reduction ..
1.68
3·43
1.73
3.48
January
1, 1967 reduction ••
0.47
3 ·90
0.28
3.76
January
1, 1968 reduction ..
0.47
4.37
0.09
3.85
January
1, 1969 reduction •.
0.47
4.84
0.09
3.94
July
1, 1965 reduction
Under the House bill, the important figures here are
the July
1 reduction, $1.68 billion for the January
$470 million for the reduction on each January 1,
add eventually to a reduction of
~,
$1.75 billion for
1966 reduction, and
1967 to 1969. These will
$4.8 billion in tax collections.
to the Presidentts Program, the principal differences occur after
Compared
1966. The
reduced tax collections under the excise reduction recommendation of the
President were
$3.9 billion.
The Committee will be particularly interested in the budget effect of
these cuts.
The figures in Table 1 change in several ways as respects the
gross budget effect, before feedbacks.
In the first place, the House bill provides that certain tax receipts,
amounting to about
$70 million, be put in the Highway Trust Fund. This
allocation to the Trust Fund does not reduce tax collections, but it does
lower administrative budget receipts.
- 6 Second, if an excise tax is repealed effective July 1, 1965 the Federal
Government will still get tax payments in July and August on taxable transactions entered into in May and June because the taxes on those transactions
will be turned into the Treasury after July 1.
The fiscal year loss is,
of course, even less when the reduction becomes effective on January 1 in
the middle of a fiscal year.
Finally, the budget effects must take into account customer refunds
and floor stock refunds.
The gross fiscal year budget losses under the House bill and the President's
Program from the tax reduction are shown in Table 2.
Table 2
Gross Fiscal Year Reductions
in Administrative Budget Receipts
Fiscal year
1966
1968
($ Billions)
House Bill
July 1, 1965 reduction •••••••••••••.•••
January 1, 1966 reduction ••••••••••••••
January 1, 1967 reduction .•••••••••••••
Total ............................. .
$1.63
$1.75
0.54
1.78
2.17
0.15
3."m
$1.75
1.77
0.49
4.01
President's Program
July 1, 1965 reduction ••••••.•••••••••.
January 1, 1966 reduction ••••••.•••••••
January 1, 1967 reduction ••.••••.••••.•
$1.75
$1.75
1.74
0.09
1.73
Total ............................. .
:r:5E
0·30
3.78
- 7 Under the House bill the gross budget losses are (in round figures) in
fiscal year 1966 $2.2 billion, in fiscal year 1967 $3.7 billion, and in
fiscal year 1968 $4.0 billion.
The losses under the President's Program
would have been the same in fiscal year 1966, and slightly smaller in
fiscal year 1967 and fiscal year 1968.
Excise tax reduction will mean that there is this much more disposable
income of consumers and businesses.
As this is spent, there will be increased
income taxes and more disposable income for further respending, again
increasing income tax receipts.
To properly assess the excise tax reduction, we should take into account
these "feedbacks" of increased collections under other taxes.
On this basis
the expected net budget impacts of the House bill and the President's Program
are:
House
Bill
($
Fiscal year 1966
Fiscal year 1967
............
President's
Program
Billions)
$1.8
$1.8
2.2
2.1
In the long run the net revenue loss after feedback will be about one -half
of the gross loss.
This excise tax reduction can have an important strategic effect in
maintaining the upward thrust of the economy_
It is well known that a decline
in the pace of our economy, leading possibly to a recession, can cause a
major decline of revenues.
Federal revenues declined in the recession of 1958
and in the recession of 1960.
They did not decline during the period of the
major income tax reduction in 1964-65.
- 8 Let me turn now to the specific matter of the net budget deficit.
In January of 1963 it was anticipated that the budget deficit for the
fiscal year 1964 would be $12 billion.
In the end a number of circumstances,
including the combination of improving economic conditions resulting from
both the anticipation and enactment of the Revenue Act of 1964 and firm
expenditure control, brought this figure down to $8.2 billion.
In January of this year the budget deficit for fiscal year 1965 was
estimated to be $6.3 billion.
Thanks to continued expenditure control and
substantial improvements in revenue collections, it was announced late in
April that the deficit was likely to be $5.3 billion.
Now as a result of
additional information, we anticipate that the deficit for fiscal year 1965
will be reduced to $4.4 billion.
Of this $1.9 billion reduction in the
deficit below the January estimate, $500 million represents reduced expenditures,
and $1.4 billion represents increased revenues.
It may be that by the end of the
fiscal year the expenditure figures will show further reductions but it is
too early to hazard any hard estimate.
In January the budget estimate of the deficit for the fiscal year 1966
was $5.3 billion.
At that time we were contemplating an excise tax reduction
program of only $1.75 billion.
Since then we have revised upward our esti-
mate of revenues under the income tax by $1.6 billion.
We have also recom-
mended the enlarged excise tax reduction program which will involve for
fiscal year 1966 a net budget loss after feedbaCk of $1.8 billion.
This is
larger by $0.6 billion than the net budgaloss that would have occurred
- 9 under the original $1.75 billion program contained in the Budget Message.
This additional revenue reduction of $0.6 billion combined with the expected
increase in receipts of $1.6 billion still leaves a net improvement in
receipts of $1.0 billion.
At this time, the Bureau of the Budget continues to expect expenditures
for fiscal 1966 to be approximately the same as they were estimated to be
in the January budget.
There have been some increases due to increased
defense operations in Viet Nam, but these have been matched by economies
elsewhere.
The prospective improvement in the deficit figure is, then,
this increase of $1.0 billion in receipts which would reduce the deficit
to
$4.3
billion -- slightly below the
$4.4
billion now anticipated for
fiscal year 1965.
The Cluestion could be raised, "Would the deficit in fiscal year 1966
be lower by $1.8 billion if there were no excise tax reduction?"
The
answer would be "Yes" only if we ignore the strategic effect of the reduction,
that is, if we ignore the particular contributions that the reduction will
make to maintaining the expectation of growth, which is our basic defense
against the development of recession.
As I said before, deficits rise with
recession but they can fall with responsible tax cuts.
For the fiscal year 1967, assuming continued economic growth at the
long-term trend rate, administrative budget revenues should increase by
about $5 billion.
This potential gain will be slightly offset by the fact
that the January 1966 excise tax cuts will be in operation for all of fiscal
- 10 year
1967 compared to only half of fiscal year 1966, and some further excise
tax cuts will come into effect January
in fiscal year
1967 be realizing more of the
two stages of the
fiscal year
progra~.
On the other hand, we will
econo~ic
feedback of the first
The added revenue loss of the House bill in
1967 over fiscal year 1966 on a net basis will be about
$0.4 billion.
fiscal year
1, 1967.
(Under the President's
Progra~,
this added revenue loss in
1967 would have been about $0.3 billion.)
thus put the potential revenue gain in fiscal year
Roughly, we could
1967 at $4.6 billion.
We do not know now what expenditures in fiscal year
but this potential revenue gain leaves considerable
rJo~
1967 will be,
for providing
such increased expenditures as might be needed by a growing population
and still achieving reduction of the budgetary deficit.
On
this matter of expenditures, I would like to repeat the President's
statement to the Ways and Means Committee, "I would like to make clear once
again my strong determination to hold expenditures to the lowest reasonable
levels."
As you realize, expenditure control requires hard decisions and
the determination to stand behind them.
I believe that the Administration
has given ample evidence of this determination.
Mr. Surrey is now prepared to present the Administration's position on
the specific tax reductions in the bill and the differences between the
President's program and the HOuse bill which center largely on the passenger
car excise tax.
000
Into YDur hands will be entrusted the high traditions
established by generations of brave men before you.
you
~Jill
I know
bring new hono:c to those traditions.
To all of you, I t!J(tend -- on my own behalf, and on
behalf of Secretary Fowler ... - our warmest congratulations and
our earnest hope that you have long and successful car.era in
...---...,
the service jJiifyour nationjand of humanity.
God speed - - ad
'--"
~~od sallin~.
-
J.J.
-
These, then, are but a few of the challenges and
~.D? k.:' /--I;!I !
I
-
.'£'
I~.
\
~
r experience;J that 'tVill confront you young men in the year.
ass ign~/ IT1any of its young men to outstanding
&~uat• •chooll
IitJ "'-'IL ~ L A 06 I V-,:"S TrI£4 t'P1E VS'ly,·.:1tli
around. the country § r further tra1D.iD& ill • variet1 q!)
IN· __ i I .f-.' 'f/ IfI;.:: i (, "·r"'·:, j '7"' r H I I '<.. C A ~.[ ( Il'sTD., ,I\EE;:J j4.81(£~
.1
.-
r
i8peclaltieal.
)j...
/·,Ir . .
t.,)
t'fJ.\1/1,..
,/.~ .IAl lilt II<
rl'-
f......J.)S.
A8 youllervice cOIlt1lwea to . , . . iIlto the __
complex worl;] of tomorrow', its !'leed for new ideas and fftilla
approaches will beco-.:ne more and more urgent - - and for the.. it IIUI
look to men such as yourselves.
In a few mowents you young men of the Class of 1965
will raise your tight hands to take the oath of a Coast Guard
officer.
You will bec0me part of
a"lf1ost
distinguished Service.
·ft
10 -
safety, and other operations, the Coast Guard playa a key
part in the maintenance of our merchant fleet .. - aaQ tau.
~
,I.
:;- r-t t-."
i1 help~ meet
,
»~rforms a vital service
"
f
A/~; < ,rAJ
one of ~~~J moat
~
serious national challenges, the deficits
-~
~ (I
<
~
have
8uffere~1
-I..;)
in hur balance of payments.
'-~
We have undert<1ay, as you know, a comprehens ive program
to wipe out those deficits -- and no part of that program i.
more v1t.l to the current, as well as long run, strength of
our balance of paynlents than our tracie position.
We are
fortunate that our trade pesition is far and away the
strongest in the world.
But we must continue to maintain
that st:cen;th, and to increase it in every way possible.
In
that task, the American merchant ruarine plays a prominent,
even a crucial, role -- and So does the Coast Guard in help!n&
our merchant
r~rine.
- 9 ..
to the operation of lighhous&s. buoys., alld other humane
navigational needs.
An outstanding example of the Coast Guard's capacity
to ••
.,e
the wizardry of modern electronics to the humane
-- the voluntary position-reportinf program,
-X2$'
Lties
which Furnishes search and rescue operations with'
;raIil.
in~tdnt
information on the position and characteris
l
which choozes to
....
~.
____ u
pa!'t
............
instance as in
80
_____
ie ipate.
_
co the Pacific Coast.
In this
many others, the Coast Guard's willingness
to help all in peril at sea transcends politics and national
boundaries.
Through its icebreaiing, through its merchant marine
q,
v.l.
Coast Guard ships to augment the Co.at Guard fl ••t 10 tba
decades ahead.
New aircraft, .till in the . .pertm8nt.l
.~.
will add new capability to search and rescue and other operatlau
Those marvelous electronic computer. which can be ooe of
mankind's greatest servants will play a
revolu~tlODary
new
role in Coast Guard planning, and your r •••arch 1n the maru.
sciences will contribute even more 8ignificantly thaD it
already doe. to our under8tanding of tbe age old •• cret. of
the sea.
Coast Guard enforcement of conservation law. d•• isPed
to protect our valuable marine re80urces will be crucial to
a world which seeks new sources of high quality proteiD.
In the vital area of aids to navigation, Coast Guard
engineers are working hard to adapt the power of the .to.
So 1 am not surprised at the intense pride that I ...
reflected in the faces of you yOUQ6 men of the CIa •• of 1965.
For it is pride in the hi&h and humane mission of your "nice ••
pride in the tradition of surpassing excellence and courage
in the perfonaance of that Mission that haa cnaracteri.ed
the men of the Coast Guard since its very inception -- and
p:L'ide in yourselves and. in the accomplislnnenta that l1e ahead
for you and your Service.
As you meet the challenges ahead of you, you will have
s upli:A..&
the advantage not only of a splendid tradition, of ~c:.11e~~
i\
training, of knOWing that you serve such high goals ... - 1Nt
.::.
I'
/'
J ~-
//.<1
ell' . i
~. / "
/
/J 0 AJ 1£ t) P
the advantage a180 of ffinowing that your Service i~
-/7.
I
//
~/' .->. ,. '/ <."
/«
"
,
.~'
.)
/.{I
ke.ptnj] -.
//1 ,,-
t.<JO/l...(,D.
p&ce with the rapid advances in modern technology and
Already our sbipy.... are at work building
DeW
.c~.
cl..... of
Q'~
\JV
-fa,economy.
;It~: Icebreaking
-
operations (:"'::. the third order of!
A
'J
~.
_. --/lA/~ itiU~~~!,c..~5~:~~£~{1¥d2,:JI~~~
pt'iority - ~ benefit the national
econom:'~ hy~eepiDg
opa
the viJtal flO't>? of commerce in our porte and waterways
out the winter months.
~~,
tbrouah.
At the fourth level of priority,
the Military Readiness and Reserve Training programa help
strengthen the security of our nation.
And at the fifth
level of priority the Coast Guard, through its Oceanolr.phy
and other programs, helps to advance the cause of scientific
kncrwledge and ultimately to strengthen our national economy
and our national security.
These, then, are the programs and the purposes of the
Coast Guard.
pUl~oses
There are no higher puttpoaes, for the •• are the
of humanity and peace.
And there are not ...,
that selve such high purposes So effectively .s thes••
prol~
wlth all other government department. and agenei•• -- review
and report on all of its program. 1n
I know
t.~
of prlorlt1e••
of no better way to characterize the value aad
portance of the Coast Guard'. mis.ion than
.~ly
~
to cit.
the list of priorities which it set up in r ••poaa. to lud&et
Director Gordon's request.
Let me simply list those priorities:
througb it.
Search and Rescue operations the Coaat Guard
perfo~
1t.
for Law Enforcement, and for Merchant Martie Safety ••n.
--
although not as directly or totslly -. the same blah goal
U/JI+/ I.E
of saving lives and protecting propere,)Fi the .... tt.e
r-'1/
J-.:iataey help promote the growth and security of our DAt1oa'.
"---
'
country and to humanity.
Let
n~
illustrate:
Every spring, as you may know, the national Admloutration begins an intensive review of every government proar...
in every government department and agency -- a review to ..t
the stage for shaping the budget to be presented the
January.
follov~
This Spring, President Jobnson emphasiaed that thiJ
review must not stmply be an exerci•• in number., but muat
reach into the
not
8~ply
x~alitie.
behind thoae number. --
~t
deal
in allocating different amounts of money for
different programa, but in a searching analysis of programa
in order to distinguish between those of greater and tho•• of
lesser priority.
In accordance with the President',
directi~.
Budget Director Gordon requested that the Treasury -- .1081
a Lieutenant Commander in the Coaat Guard took aix hour.
of his valuable time to teach me how to bring a craft in
al()n.i~61de 8. dOCK _ ..
and in general to give me the be_fit
vf his extraordinary seagoing skill and knowledge.
That
was the beginning of a wartllne asaociation with the Coat
Guard that extended through the landings at
Elba and Southern France.
aalamo, Aaw1o,
On th.e basis of that exp.rleace
I have long been convinced that Co.at Guard.men are the
6reatest sailors in the world.
'to that conviction, my years in the Treaaury 8epartMDt
have added a profound respect and admiration, not only for
the seagoing pr~Je8S of the men of the Coast Guard, but for
their extraordinary dedication and performance 1ft carryiDa
out their high mission -- th.e mission of service to thair
and every member of the Clua of 196.5 bia very .ar.at coaaratu.
lations and best
wis~e8.
I am pa rticularly de ligllted that the Secretary •• ked _
to come here today, for I have had a particularly wam and
close association with the Coast Guard -- an asaoclatiOD that
dates back to the Spring of 1943 when, as • young and rather
green naval lieutenant, I was sbipped to Biaerte Harbor ia
Africa to take command of a subchaaer.
My qualificatiool
consisted of the usual wartime tra:i.ning of three month. at
Miami Beach and a background as a boating eDthuali•• t.
Jut
while I could get by on moat maneuvers, 1 had had no
experience at all in the extremely tricky buaine81 of
land~
a craft alongside a dock.
'Ih~s it
was that, ",~en I took cOlllmAnd of my lubcbaler,
98
f>\ t l'l
---l
lUrKARU IY 'rill llOBOIAau JGIUII V. MI.
~R SBCU'W.Y or Till DIAfUU
AI CGl•• JIC&MIft IXIIC;:;UU
'nil COUT GUllI) ACA'WHI
lEW .LQIiDOH. COIIIiCECS'Ic:uT
• .-SQt.y t JUlIE 9. 1965, 1l, cD A.II.. IIJr
Admiral R.oland, Admiral llai.ch, . . . .r. of tM e1M. of 1M5,
distinguiabeci guesta, ladi•• &ad ,eat:te.eal
deep regret that he ca:mot join you today
oce.. ion in tbe liv.. of you youag
_Il
CD
tllia
~
who w111 aItonl, , . .....
your coaa1•• iona ... officers of the Ua1ted SUe:.. CoMt ...,...
The Secretary bad looked forw4lrd eagerly to beJ.q _zoe C...,.
but unfortuaately bad to forego that pleuure ia o r "
co
testify before the C~•• on reCONaeadatloM fer tM finC
ItAjor reviaion of our eoina&• •yate.m aiace 1192 -- . . . . . .
fir8t Coaat Guard fleet ... atill
haa a.ked
~
bein& built.
!be '.IIWIII1
to appear in his abaenca ADd to caa.e1
Ie ~
TREASURY DEPARTMENT
Washington
FOR RELEASE:
UPON DELIVERY
REMARKS BY THE HONORABLE JOSEPH W. BARR
UNDER SECRETARY OF THE TREASURY
AT COMMENCEMENT EXERCISES
THE COAST GUARD ACADEMY
NEW LONDON, CONNECTICUT
WEDNESDAY, JUNE 9, 1965, 11:00 A.M., EDT
Admiral Roland, Admiral Smith, members of the class of
1965, distinguished guests, ladies and gentlemen:
Secretary Fowler has asked me to express to you his very
deep regret that he cannot join you today on this important
occasion in the lives of you young men who will shortly receive
your commissions as officers of the United States Coast Guard.
The Secretary had looked forward eagerly to being here today,
but unfortunately had to forego that pleasure in order to
testify before the Congress on recommendations for the first
major revision of our coinage system since 1792 -- when the
first Coast Guard fleet was still being built. The Secretary
has asked me to appear in his absence and to convey to each
and every member of the Class of 1965 his very warmest
congratulations and best wishes.
I am particularly delighted that the Secretary asked me
to come here today, for I have had a particularly warm and
close association with the Coast Guard -- an association that
dates back to the Spring of 1943 when, as a young and rather
green naval lieutenant, I was shipped to Bizerte Harbor in
Africa to take command of a subchaser. My qualifications
consisted of the usual wartime training of three months at
Miami Beach and a background as a boating enthusiast. But while
I could get by on most maneuvers, I had had no experience at
all in the extremely tricky business of landing a craft
alongside a dock.
F-80
- 2 Thus it was that, when I took command of my subchaser,
a compassionate Lieutenant Commander in the Coast Guard took six
hours of his valuable time to teach me how to bring a craft in
alongside a dock -- and in general to give me the benefit of
his extraordinary seagoing skill and knowledge. That was
the beginning of a wartime association with the Coast Guard
that extended through the landings at Salerno, Anzio, Elba
and Southern France. On the basis of that experience I have
long been convinced that Coast Guardsmen are the greatest
sailors in the world.
To that conviction, my years in the Treasury Department
have added a profound respect and admiration, not only for
the seagoing prowess of the men of the Coast Guard, but for
their extraordinary dedication and performance in carrying out
their high mission -- the mission of service to their country
and to humanity.
Let me illustrate:
Every spring, as you may know, the national Administration
begins an intensive review of every government program in
every government department and agency -- a review to set
the stage for shaping the budget to be presented the following
January. This Spring, President Johnson emphasized that this
review must not simply be an exercise in numbers, but must
reach into the realities behind those numbers -- must deal
not simply in allocating different amounts of money for
different programs, but in a searching analysis of programs
in order to distinguish between those of greater and those of
lesser priority. In accordance with the President's directive,
Budget Director Gordon requested that the Treasury -- along
with all other government departments and agencies -- review
and report on all of its programs in terms of priorities.
I know of no better way to characterize the value and
importance of the Coast Guard's mission than simply to cite
the list of priorities which it set up in response to Budget
Director Gordon's request.
Let me simply list those priorities: through its
Search and Rescue operations the Coast Guard performs its
first and highest mission -- its mission of saving lives and
protecting property. At the second level of priority, its
- 3 programs for Aids to Navigation, for Law Enforcement, and for
Merchant Marine Safety serve -- although not as directly or
totally -- the same high goal of saving lives and protecting
property while at the same time they help promote the growth
and security of our nation's economy. The Icebreaking
operations of the Coast Guard benefit the national economy -and thus accomplish its mission on the third order of
priority -- by keeping open the vital flaw of commerce in our ports
and waterways throughout the winter months. At the fourth level
of priority, the Military Readiness and Reserve Training
programs help strengthen the security of our nation. And at the
fifth level of priority the Coast Guard, through its Oceanography
and other programs, helps to advance the cause of scientific
knowledge and ultimately to strengthen our national economy and
our national security.
These, then, are the programs and the purposes of the
Coast Guard. There are no higher purposes, for these are the
purposes of humanity and peace. And there are not many programs
that serve such high purposes so effectively as these.
So I am not surprised at the intense pride that I see
reflected in the faces of you young men of the Class of 1965.
For it is pride in the high and humane mission of your
Service
pride in the tradition of surpassing excellence and
courage in the performance of that Mission that has characterized
the men of the Coast Guard since its very inception -- and pride
in yourselves and in the accomplishments that lie ahead for you
and your Service.
As you meet the challenges ahead of you, you will have
the advantage not only of a splendid tradition, of superb
training, of knowing that you serve such high goals -- but the
advantage also of being an officer in one of the most modern
services in the world.
Already our shipyards are at work building new classes of
Coast Guard ships to augment the Coast Guard fleet in the
decades ahead. New aircraft, still in the experimental stages,
will add new capability to search and rescue and other operations.
Those marvelous electronic computers which can be one of
mankind's greatest servants will playa revolutionary new role
in Coast Guard planning, and your research in the marine
sciences will contribute even more significantly than it
already does to our understanding of the age old secrets of the
sea.
- 4 Coast Guard enforcement of conservation laws designed
to protect our valuable marine resources will be crucial to
a world which seeks new sources of high quality protein.
In the vital area of aids to navigation, Coast Guard engineers
are working hard to adapt the power of the atom to the
operation of lighthouses, buoys, and other humane navigational
needs.
An outstanding example of the Coast Guard's capacity
to adapt the wizardry of modern electronics to the humane
uses of search and rescue is its Automated Merchant Vessel
Reporting program, known as AMVER -- the voluntary positionreporting program, open to vessels of any nation which furnishes
search and rescue operations with accurate and instant
information on the position and characteristics of any vessel
which chooses to participate. Since its inception in 1958,
more than 8,000 vessels of all nationalities have participated
in this program. It has proven so successful that in the near
future it will be extended from the Atlantic to the Pacific
Coast. In this instance as in so many others, the Coast Guard's
willingness to help all in peril at sea transcends politics and
national boundaries.
Through its Icebreaking, through its Merchant Marine Safety,
and other operations, the Coast Guard plays a key part in the
maintenance of our merchant fleet -- and thus helps the nation
meet one of its most serious national challenges, the deficits
in its balance of payments.
We have underway, as you know, a comprehensive program
to wipe out those deficits -- and no part of that program is
more vital to the current, as well as long run, strength of
our balance of payments than our trade position. We are
fortunate that our trade position is far and away the strongest
in the world. But we must continue to maintain that strength,
and to increase it in every way possible. In that task, the
American merchant marine plays a prominent, even a crucial,
role -- and so does the Coast Guard in helping our merchant
marine.
These, then, are but a few of the challenges and
opportunities that will confront you young men in the years
ahead -- as you serve your country and your fellow man. Many
- 5 of you will continue to further your education in your fields
of specialization. For the Coast Guard needs -- its mission
demands -- officers of the highest competence, and thus it assigns
many of its young men to outstanding graduate schools around the
country as well as gives them every incentive throughout their
careers to keep abreast of new advances in their fields. As your
Service continues to move into the more complex world of
tomorrow, its need for new ideas and fresh approaches will
become more and more urgent -- and for these it must look to men
such as yourselves.
In a few moments you young men of the Class of 1965 will
raise your right hands to take the oath of a Coast Guard officer.
You will become part of a most distinguished Service. Into
your hands will be entrusted the high traditions established
by generations of brave men before you. I know you will bring
new honor to those traditions.
To all of you, I extend -- on my own behalf, and on
behalf of Secretary Fowler -- our warmest congratulations and
our earnest hope that you have long and successful careers in
the service of your nation and of humanity. Godspeed -- and
good sailing.
000
STATEMENT OF THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE THE
SENATE BANKING AND CURRENCY COMMITTEE
WEDNESDAY, JUNE 9, 1965, 10:00 A.M.
This statement is presented in support of the legislation
the President has recommended for a new and efficient coinage.
The new coinage will use a composite copper and nickel alloy
in the ten and twenty-five cent pieces in place of the present
90% silver, and a composite silver alloy of 40% in the fiftycent pieceo
In response to this Committee's desire for a detailed
description of the proposed program, my statement contains
sections on:
The New Coinage System, Outline of Legislative
Recommendations, The Shortage of Silver (including a table at
p. 20), The Choice of a New Coinage Alloy, Importance of the
- 2 -
Operation of the New and Existing Coins in Coin-Operated
Machines, and The Adequacy of Coin Supplies.
The New Coinage System
The new alloys reflect the latest developments
in modern technology.
Precisely engineered
characteristics will insure the consistent
operation of the new dimes and quarters alongside
our high content silver coinage in all of our
millions of coin-operated machines.
These new ten
and twenty-five cent pieces will be functional.
They
will be attractive in appearance, durable, and
available in needed amounts.
They will be full legal
tender, circulating alongside, and with the same
- 3 -
purchasing power, as our present silver dimes and
quarters.
Their copper colored edge and special
production process will reduce counterfeiting
potential.
The realities of the silver situation have made it
impossible for us to continue much longer the production of
silver coins in large volume.
During calendar year 1964, we used more than 200 million
ounces of silver in coinage and we are coining silver at about
a 300 million ounce rate this year.
While Treasury stocks of
silver of 1 billion ounces are still very large, they obviously
cannot withstand this rate of use for long.
Moreover, Treasury
stocks must also be available for the continuing redemption of
- 4 silver certificates which will keep the market price of silver
from rising above $1.29+.
We have no choice but to remove silver entirely from
the dime and the quarter.
have serious consequences.
Any other course could
By switching to the new
cupronickel clad alloy for dimes and quarters, a
major and avoidable drain upon our supplies of silver
is removed.
As a result, it should be possible to
maintain our tradition of silver coinage with a silver
fifty-cent piece in the new coinage system.
At
anticipated rates of production, this 50-cent piece of
reduced silver content would use relatively small
amounts of silver, possibly 15 million ounces a year
once we are Iron stream."
In addition, the present legal
- 5 -
definition of the silver dollar would remain unchanged,
although planning for renewed minting of that coin
would be premature o
The new coinage system looks to the future in providing
functional coins for a modern America.
The new system also
retains a valued tie with the past by extending a 173-year-old
tradition of silver in our coinage.
We do not expect this
combination of the new and the old to require any major
modifications in the future.
But, we recognize the complexity
of the silver and coinage problem and the fact that any change
in this area touches the daily lives of all our citizens.
Therefore, in the consideration of future silver policies, the
role of the silver dollar and other matters, it is fitting that
- 6 we should provide now for an orderly review of the issues in
the light of conditions as they develop.
Provision is made as
an integral part of this legislation for the formation of a
Joint Commission on the Coinage.
I will comment upon the duties
of the Commission in a moment.
Outline of Legislative Recommendations
The specific legislative proposals now before you are
best summarized by a brief section-by-section review.
Title I of the proposed legislation:
Section I describes the metallic content, weight, and
other technical specifications, of the proposed new coinage.
1.
The dime and the guarter:
It is proposed that silver be eliminated
entirely from the dime and the quarter.
- 7 -
Instead, they should be composite, or clad,
coins faced with an alloy of 75 percent
copper and 25 percent nickel (the same
cupronickel alloy used in the five-cent
piece) bonded to a core of pure copper.
By
use of this modern technique, it has become
possible to duplicate exactly the electrical
properties of our existing silver coins.
This
is essential to avoid disruption to commerce
and great inconvenience to the public, as I
shall explain later in some detail.
2.
The Half Dollar:
It is proposed that the 50-cent piece should
also be a composite, or clad, coin.
The
- 8 over-all silver content would be reduced
from the present 90 percent to 40 percent.
This would be accomplished by cladding
outer faces of a high content silver-copper
alloy on a low content silver-copper core.
The outside alloy would be 80 percent silver
and 20 percent copper, and the inner core
would be approximately 21 percent silver and
79 percent copper.
The result is a handsome
coin, not readily distinguished from our
present 50-cent piece.
Samples of the 10-cent, 25-cent and 50-cent coins are
available for your inspection.
A final clause of Section I defines certain technical
specifications for the new coins.
Among these is a requirement
- 9 -
that the outside cladding of the new coins should be at least
30 percent of their weight o
This will more than insure that the
outside facing of the coins will not be worn away in circulation.
Extensive wear tests have been conducted on the new coins with
entirely satisfactory results.
The new lO-cent and 25-cent
cupronickel clad coins can be expected to outwear our present
silver coins of the same denomination.
Section II provides that the new coins would be subject
to the current laws as to design and inscription.
This is
desirable in terms of maintaining continuity with the past
and increasing ready public acceptance of the new coins.
Section III provides specific recognition of the new
coins as legal tender.
Such express provision will eliminate
any possible doubt or misunderstanding on this score and make
- 10 -
it absolutely clear that the new coins will be accepted along
with the present coinage.
The present coinage would, of course,
retain its 'full legal tender status.
We expect the existing
silver coinage to remain in active circulation into the
indefinite future.
Section IV provides for the continued minting of the
existing coins as needed.
Silver dimes and quarters and the
present half dollar would be phased out of production as
rapidly as possible in favor of the new coins.
But efficient
utilization of Mint capacity during the early parts of next
year, may require the production of some amounts of the old coins.
Section IV also provides for the continuation without
change of thl present specifications of the penny, the nickel,
and the standard Silver Dollar.
Authority to make a Silver
- 11 Dollar of the same weight and fineness (412.5 grains, 90 percent
silver) made at various times since the Act of 1837, would thereby
be continued.
That standard silver dollar, whose pure silver
content has actually remained the same since 1792, defines the
monetary value of silver at which we are legally and morally
obligated to continue the redemption of silver certificates.
No change should be made in the legal definition of the
standard silver dollar.
However, we would not plan to mint
any new coins of this denomination under existing circumstances.
Section V provides for standby authority for the Secretary
of the Treasury to prohibit the melting, exportation, or
treating of United States coins.
While these prohibitions
probably will not have to be used, we seek the standby authority
- 12 to use them as a precautionary measure, and as an appropriate
permanent provision of law.
We plan to continue our existing silver coins in active
circulation alongside the new coins.
The existing high silver
content coins will be protected by the Treasury supplying silver
to the market through exchanges against silver certificates at
$1.29+ per ounce.
This will prevent the development of any
incentive to melt or export our silver coins.
And, once the
large present drains from the production of silver coins have
been removed, our silver stocks should be adequate to protect
our coinage for an indefinitely long period ahead.
Section VI provides for sales of silver by the Treasury
in excess of that needed to back silver certificates, at a price
- 13 not less than the monetary value of silver.
This is an
additional measure designed to insure that there will be
no increase in the price of silver above its monetary value,
even should silver certificates not be readily available for
redemption.
There is general agreement that preventing an
increase in the price of silver is essential to the protection
of the existing coinage.
Section VII would authorize the Secretary of the Treasury
to purchase newly mined domestic silver at $1.25 per fine troy
ounce.
It is not believed that enactment of our proposals to
reduce drastically the use of silver in the United States coinage
would cause any sizable or persistent decline in the market
price of silver.
However, since we are imposing a ceiling on
- 14 -
the price of silver, it seems reasonable to provide domestic
producers of silver with protection against any sizable decline
in price.
The purchase provision at $1.25 is included for that
purpose.
Section VIII provides for legal authority to procure the
materials and technical assistance, equipment and patents
needed to make the new coinage in the required quantity.
Section IX provides authority to continue dating the new
coins as of the first year of coinage or issuance.
This will
help to avoid hoarding of the initial issue of the new coins.
Section X would authorize the temporary use of the San
Francisco Assay Office for the minting of coins and would
- 15 authorize the conversion of that facility for the refining of
precious metals, if necessary, after it is no longer needed
for coin production.
During early stages of the production
of the new coins, the Mint's production load will be particularly heavy and temporary minting facilities at San Francisco
will be needed.
Subsequently, the provision of refining
facilities there will contribute to the efficiency of operations
at the Mints and Assay offices.
Sections XI through XVI deal with various minor legislative
changes required to assist the establishment of the new coinage
system.
An Act requiring recoinage of all worn and uncurrent
subsidiary silver received in the Treasury is repealed; the
- 16 Minor-coinage Metal Fund is renamed the Coinage-Metal Fund,
and the Minor-coinage Profit Fund is renamed the Coinage-Profit
Fund and the amount available in the Coinage-Metal Fund is
raised from $3 million to $30 million; expenditure of not more
than $15 million is authorized for additional Mint facilities
to accommodate manufacturing requirements of the new materials;
the counterfeiting laws are amended to cover the new coinage;
the issuance of necessary regulations by the Secretary of the
Treasury under the proposed Act is authorized; and penalties
are provided for violations of regulations issued under Section V.
The Joint Commission on the Coinage
Title II of the proposed legislation provides for the
establishment of a Joint Commission on the Coinage.
- 17 The Commission would be composed of the Secretary of the
Treasury, the Secretary of Commerce, the Director of the
Bureau of the Budget, the Director of the Mint, of four public
members, not representative of interest groups, appointed by
the President, of the Chairman and ranking minority members
of the House and Senate Banking and Currency Committees and
of two other Congressional members, one appointed by the
Speaker of the House and one by the President of the Senate.
The function of the Commission would be to study and
report on the progress of the implementation of the new coinage
program, new technological developments, the supply of various
metals, and the future of the silver dollar.
as to whether the government
It would report
- 18 should continue to control the price of silver or get out of the
silver market.
And it would advise the President, the Congress
and the Secretary of the Treasury on the results of its studies.
The provision for a continuing appraisal of these
issues is a very useful step.
The problems are complex,
and final answers in some areas can only await the
fuller information the future will provide.
The
elimination of silver from our dimes and quarters is
a final step, enforced by a developing shortage of
silver of inescapable dimensions.
But decisions in
other areas, such as the quantity of production of
the silver 50-cent piece and the future of the silver
dollar
c~
1
be reviewed.
Such decisions are better
judged against what actually happens, rather than
- 19 what we think, or hope, may happen.
It will be the
important function of the proposed Joint Commission
to appraise these issues and to suggest any courses
of action that may be desirable.
The Shortage of Silver
The need for the changes contained in the proposed legis 1ation arises from a chronic, and steadily worsening, shortage of
silver.
That shortage has now become so severe relative to the
demands for silver that we have no option but to reduce drastically
our use of silver for coinage.
The main dimensions of this
problem are shown in an accompanying table derived from the
Treasury Staff Study of Silver and Coinage.
- 20 ESTIMATED FREE WORLD SILVER CONSUMPTION
AND PRODUCTION, 1949-1964
(millions of fine troy ounces)
DEnc:
EXCWD:
GROSS
U.S
CALENDAR
YEAR
DEFI-
NEW
CONSUMPTION
POO~ON
COIIAI
~) DEJWID
Coinage
Industry
and the
Arts
1949-53
U.S.
Foreign
Free
World
Total
Total
Consumption
Total
Foreign New
Free
ProU.S. World
tion
153
37
48
85
238
39
135
174
-64
-21
Averages
190
38
36
74
264
38
153
191
-13
-35
1958
191
38
41
79
270
37
169
206
-64
-26
1959
213
41
45
86
299
23
165
188
-lll
-70
1960
225
46
58
104
329
37
170
207
-122
-76
1961
240
56
81
137
377
35
168
203
-114
-liB
1962
248
77
50
128
375
36
171
207
-169
-92
1963
252
D2
56
167
419
35
179
214
-205
-93
1964
286
203
62
265
550
36
180
216
-335
-132
Averages
1953-57
Source:
Treasury Staff Study of Silver and Coinage, Part III, Tables 1 and 3, figures
rounded.
- 21 The table shows a steady worsening of silver
supplies from a small deficiency of production
in the early postwar years to a slightly bigger
deficiency in the next five year period, a much
larger inadequacy, on the average, in the five
years from 1957 through 1961, and a bounding
growth of the deficiency in the last two calendar
years
0
Last year the gross production deficit
was more than 330 million ounces.
It will
probably be even larger this year.
Actual market deficits are smaller than this difference
between total consumption and new production because the United
States meets its coinage needs for silver out of its stocks.
- 22 -
These, however, are being depleted at a rate which cannot be
permitted to continue indefinitely.
Even with U.S. coinage
demand excluded, the production gap reached some 130 million
ounces in 1964 and has been growing steadily.
It is notable that in 1964 each major type of Free World
consumption (the use of silver by industry and the arts, and
use of silver for coinage) taken separately was greater than
new production.
Thus, there is simply not enough silver appearing
on the market to continue to satisfy the demand
for it in the foreseeable future.
During the past fifteen years, there has been a steady
expansion ir the world-wide use of silver in industry and the
- 23 arts.
Rising incomes have stimulated increases in such
consumer-oriented uses as photography, silverware, and jewelry.
In addition, the relatively unique physical and electrical
properties of silver have led to its rapidly expanding use in
a range of industrial and defense applications.
As a consequence,
growth in the noncoinage uses of silver has been very substantial
as may be seen from the attached table.
There has been some expansion of new production of silver
in the F_ee World but not at a pace sufficient to prevent the
appearance of the large and widening deficits to which I have
already directed your attention.
The expansion in silver
production that has occurred has been outside the United States,
and has largely been a consequence of rising levels of copper,
lead, and zinc production with which silver
as a by-product.
~s
sometimes found
- 24 -
Production of silver in this country has shown no upward
trend in the postwar period, but has averaged a more or less
steady 35 to 40 million ounces annually.
This level of produc-
tion is small relative to U.S. industrial demand for silver and
this country has typically had to import substantial amounts
of silver and rely on Treasury stocks.
During the past four years, Free World industrial
use of silver has grown by an estimated 60 million
ounces, but Free World production has grown by only about
10 million ounces, and U.S
at all.
Q
production has not grown
There are some signs that new production of
silver in this country and abroad may increase by
modest amounts in the future.
- 25 In the opinion of experts both inside and outside the
Treasury, there is no dependable -- or, for that matter, likely -prospect of new economically workable sources of silver that
would rapidly and appreciably narrow the gap between silver
supply and demand.
In fact, optimistic projections envision
a production increase of no more than 20 percent over the
next four years.
Projected increases in consumption in industry
and the arts are at least equally as great.
Thus, there is a
standoff between future increases of silver production and
noncoinage uses of silver in a situation where deficits are
already very heavy.
Expected increases in silver production
could not, therefore, change the basic conclusion that use of
silver in our coinage must be very sharply curtailed.
Also,
- 26 -
because silver is produced chiefly as a by-product of the
mining of copper, lead, and zinc, we could not count on even
a very great increase in the price of silver stimulating enough
new production to change the situation.
Most Free World countries have long since ended or
nearly ended the use of silver in their coinage.
Except for Canada and Switzerland, those countries
still using silver coins make only limited use of
it, in one or two "prestige" coins, as we now
propose to do with the new half dollar.
As seen
in the attached table, in the early postwar years,
the United States accounted for less than half of
total
~ree
World employment of silver for coins,
- 27 -
but at present we use more than three quarters of
all silver put into coins in the Free World.
We
have no choice but to make a large reduction of
silver in the coinage, and no choice but to do so
now.
We have on hand some 1 billion ounces of
silver in the Treasury stock.
At current rates of
Mint production, we are using silver for coinage at
the rate of about 300 million ounces a year; and
for the redemption of silver certificates at nearly
120 million ounces a year.
Even should demands upon our stock increase no more, it is
clear that at present rates of use we can expect to exhaust our
resources in two or three years.
This gives us enough time to
shift to a new coinage, but requires that we act promptly.
- 28 -
The Choice of a New Coinage Alloy
In arriving at our recommendations for new coinage alloys,
an overriding consideration was the necessity of continuing
at all times to provide an adequate means of exchange and
avoiding any disruption to commerce.
Experience shows all too
clearly that, under modern conditions, the essential medium of
exchange function is imperiled if a subsidiary coinage alloy
threatens to become more valuable as a commodity than as money.
In addition to insuring that the all important needs of commerce
would be met, our coinage choice has been influenced by technical
and metallurgical considerations.
In order to be sure that these important technical and
metallurgical considerations would be fully investigated, the
Mint supplemented its own intensive efforts through a contract
- 29 -
study carried on by the Battelle Memorial Institute.
This
nonprofit research organization has a world-wide reputation in
the metallurgical field; and by virtue of this special competence
it was uniquely equipped to assist the Mint and the Treasury in
a study of the alternative coinage alloys that might be appropriate for use In the new coinage system.
Battelle's investigations and those of the Treasury were
guided by specific criteria essential for a modern coinage
system.
These included criteria relating to:
(1) availability and price of the raw materials
required for the coinage program,
(2) public acceptability in terms of the technical
characteristics of the coins and the effects of
the over-all program,
- 30 -
(3) technical characteristics of the coinage material
in terms of color, density, mechanical, chemical,
and physical properties, including those required
at present by coin selector devices in vending machines,
(4) minting characteristics of alternative materials
and assurance of high levels of coin production, and
(5) counterfeiting and slug potential.
Every coinage alloy showing any sign of promise
investigated both by Battelle and by the Mint.
was
Advocates of
particular coinage materials were given an opportunity to
present their case.
Trial strikes of a wide range of different
alloys were made by the Mint in the course of its own investigations, anrl to assist Battelle in theirs.
The results of
- 31 -
these investigations and the extent to which the different
alloys met or fell short of minimum standards of acceptability
are set forth in detail in the Battelle Report entitled "A
Study of Alloys Suitable for Use as United States Coinage"
and in somewhat lesser detail in Section IV of the Treasury
Staff Study -- both of which have been made available to your
Committee.
Consequently, I shall not describe the specific
reasons which led to the rejection of some alloys upon technical
and metallurgical grounds and the provisional acceptance of
others.
However, I do want to comment upon the importance
we have placed upon the new coins working in vending and
service machines.
This was a major consideration which, along
with its other desirable properties, led us to a final
- 32 selection of the cupronickel clad coin for use in the
l~cent
and 25-cent denominations.
Importance of the Operation of the New and
Existing Coins in Coin-Operated Machines
Because of the greatly increased reliance we now place
upon the use of coin-operated devices, our coins must serve
us as a technical merchandising instrument as well as a medium
of exchange in the traditional sense.
The extent of that
reliance is suggested by the fact that there are today more
than 12 million coin-operated machines in this country.
In
the case of merchandise vending machines alone -- excluding
such devices as pay telephone and most coin-operated laundries -over $3-1/2 billion worth of goods were dispensed to consumers.
last year, in over 30 billion transactions.
- 33 -
Our own dependence upon coin-operated machines is much
greater than that in any other country.
This fact has added
an extra dimension to our coinage problem and imposed certain
requirements which any new coinage alloy should meet, if at
all possible.
We now take for granted the fact of ready access
to machine-vended goods and services, available by night and
by day, in out-of-the-way as well as accessible places.
It
is clear that a coinage alloy that did not work alongside
existing coins in coin-operated devices would impose extreme
inconvenience upon the public and some disruption to the orderly
flow of commerce would be sure to occur.
About half of our 12 million coin-operated devices are
equipped with sophisticated mechanisms which subject coins to
- 34 -
a variety of tests before accepting them and dispensing the
merchandise or service.
The most important of these tests
is based upon the electrical resistivity of the coinage
material, and has been built around the rather special
properties of our existing silver coinage alloy.
Yet, the
continued use of any silver in our dimes and quarters is out
of the question because of the over-all silver situation.
Therefore, the alternatives for the dime and the quarter are
a nonsilver alloy which would be compatible in the sense of
working in vending machines alongside the existing coinage,
or one which would not.
If a noncompatible alloy were chosen, two alternatives
would be presented, both of them undesirable from the point
of view of the public at large:
- 35 -
(1) The vending machines would have to be
shut down
until new sensing and rejecting devices could be
developed and installed, or
(2) Their devices for sensing and rejecting wrong coins
and slugs would have to be deliberately circumvented,
exposing the machines to a high rate of fraud.
In due course, entirely new rejector mechanisms could
probably be developed which would accept any new alloy along
with our existing coins.
All evidence suggests that it
would take at least 1 to 3 years, even after a successful
design had been developed, to produce and install new rejector
mechanisms.
During this period, the public would experience
serious inconvenience if machines were shut down entirely and
- 36 would probably have to pay higher prices if machines were kept
in operation but were subjected to a high rate of loss through
the use of slugs.
My technical staff advises me that there may well be
serious difficulty in designing a rejector which would accept
the existing coins together with coins of very different
electrical properties, without at the same time seriously compromising the ability of the mechanism to accept genuine coins
and to reject slugs, low-valued foreign coins, and coins of
wrong denominations.
It may be, as I have noted, that these
technical limitations can be overcome in time, but they represent
an additional factor arguing for the use of a compatible coinage
alloy.
- 37 I have not mentioned the financial costs to the vending
machine industry of adapting to an incompatible coinage alloy.
These would undoubtedly be sizable.
Very approximate figures
are suggested by the Battelle and Treasury studies.
The
existence of these financial costs did not appreciably
influence our final recommendation of the best coinage alloy
for the dime and the quarter.
Every industry must be reconciled
to the costs of adapting to change when it occurs.
But, wide-
spread inconvenience to the consuming public, disruption of
commerce, and loss of employment were factors which did
influence our choice.
The cupronickel alloy clad on a core of pure copper,
that we recommend for use in the dime and quarter, is
- 38 -
a remarkable example of technical ingenuity.
The
faces of cupronickel provide a tested, attractive,
and durable coinage material.
Solid cupronickel
coins would not work, however, in the lO¢, 25¢, and
50¢ channels of existing rejector mechanisms.
But
the same cupronickel material clad on a copper core
in the proportions proposed duplicates exactly the
electrical properties of our existing silver coins.
The new coins work alongside of the existing ones
dependably in all of our coin-operated devices.
The Adequacy of Coin Supplies
The compatibility of the new coins with existing silver
coins in vending machines will do much to insure side-by-side
- 39 -
circulation.
However, it will be essential to continue to
protect our high silver content coinage from hoarding or destruction.
There is no reason for our silver coins to be hoarded
because of the introduction of the new coins.
The existing
silver coins can be expected to remain in active circulation
indefinitely.
There are no plans for their accelerated withdrawal.
Hoarding of coin, of course, is greatly stimulated by
fear of shortages.
the new coins.
No such fear need be felt in the case of
The Mint has already shown with pennies and
nickels how successfully a massive production effort can overcome an even fairly severe shortage.
With silver removed from
the dime and the quarter, there will be no barrier to a very
large production effort on the new subsidiary coins, if such
should be required.
- 40 In view of the existing tight supplies of high
denomination coins and the uncertainties inevitable
during any changeover period, we are gearing up for
maximum production of the new coins, beginning very
soon after the actual enactment of legislation.
In
one year from the passage of the legislation, we
expect to make at least 3-1/2 billion of the new
subsidiary coins.
This would be a billion and a half
more subsidiary coins than we will be producing in
fiscal 1965 even under the greatly increased crash
coinage program.
It would be more than double the
production of similar coins in fiscal 1964 and four
or five times what we could consider as a normal year's
- 41 production of silver coins.
In the second year
after enactment we will have the capacity to make
well over 7 billion of the new coins, doubling
production again if that is necessary.
Production capabilities of this size should provide an
adequate safeguard against any hoarding of silver coins that
might possibly occur.
In addition, however, it will be necessary to continue
to protect our existing silver coins from the
threat of destruction by melting them for their
silver content.
To make certain that the silver
coinage is not destroyed in this manner, it will
- 42 -
be necessary for the Treasury to protect it by
supplying silver to the market upon demand at the
present monetary value of silver of $1.29+ per
troy ounce.
The Treasury has been doing this
since 1963 by exchanges of silver bullion against
silver certificates.
The value of the silver in our existing coinage, as silver,
would exceed the face value of the coins if the price were
allowed to rise above a so-called "melting point" of these coins
of $1.38 per ounce.
We hold the price of $1.29+ per ounce by
standing ready freely to redeem silver certificates in silver
at this price.
The prudent course is to maintain the price of
silver at its present level.
In order to remove any possible
- 43 -
question as to our intention and ability to maintain the current
price of silver, authority is requested to sell silver not needed
to back silver certificates.
Such sales could only take place
at or above the monetary value of silver.
As additional protection for existing silver coinage,
which includes the silver dollar, we ask for stand-by
authority to institute controls over the melting,
treating or export of United States coins, practices
not now forbidden by law.
We believe strongly that suggestions for more extensive
controls would operate against our best interests.
It has been
suggested that we should institute a comprehensive system of
controls, including prohibitions on the hoarding of silver coin
- 44 and bullion and the institution of end-use certificates to
regulate the industrial use of silver.
It is our opinion that a prohibition against hoarding
coins would be extremely difficult to administer and therefore
of doubtful success.
An essential initial step would be the
determination of what would constitute a normal supply of
coins for businesses and individuals.
This would appear to
be an insoluble problem for which little relevant information
is available, and involving massive interference in private
businesses.
Furthermore, it is difficult to escape the con-
elusion that any efforts along these lines would be quite
likely to stimulate the very hoarding that it is desired to
avoid, by giving rise to the impression that the government
fears large scale hoarding is about to occur.
- 45 Controls over hoarding or exporting of silver bullion
and the regulation of industrial consumption through end-use
certificates might seem, in principle, a more feasible
undertaking.
However, such action would result in a dual
price system for silver which could jeopardize our supply
of circulating silver coins o
One price, $1.29+, would be
available to legitimate industrial, professional and artistic
users of silver who could obtain it from the Government.
However, it is difficult to see how the development of a second
price paid by speculators, hoarders and foreign users of silver
could be avoided.
This second price which would be entirely
dependent upon the unregulated supply of and demand for silver
could rise high enough to constitute a threat to our silver
- 46 -
coinage.
The best way to achieve a smooth transition to the
new coinage is to make silver freely available at the $1.29+
price that will avoid the creation of incentives to melt or
export our present coinage.
The Silver Dollar
The silver dollar will remain as an authorized coin of
the United States, with 90 percent silver.
This is a central
element in our program for holding the price of silver to its
present level for the protection of our existing subsidiary
silver coin.
The future of the silver dollar can best be
decided when the Joint Commission of the Coinage, which we
have recommended, can take a look at the world's silver supply
and demand situation and other relevant factors and make its
- 47 -
recommendations.
At that time, the facts can largely govern
the decision on the issue of the future of the silver dollar.
Maintaining Some Silver in the Subsidiary Coinage
We have considered it desirable to maintain some silver
in our subsidiary coinage.
It was to this end that the new
silver half dollar was designed.
The new composite coin
reduces the silver content of the half dollar from 90 percent
to 40 percent.
It nevertheless retains without readily apparent
differences, the aspect and ring of a coin withhlgh silver
content, although it is slightly lighter than the present half
dollar.
It is to be of the same design as the present half
dollar, that is, bearing the image of the late President Kennedy.
The reason for retaining some silver in our coinage is a
desire to continue the l73-year-old tradition of American silver
- 48 -
coinage.
Inclusion of a 40 percent silver half dollar is as
far as we can safely go to satisfy this tradition.
We expect
that, barring unforeseen changes in industrial demand for silver,
we will have adequate silver to make this one coin in normal
amounts for an indefinite period.
After the new coins are in
full production they should require no more than 15 million
ounces a year -- less than 5 percent of expected 1965 silver
consumption for coins.
One reason for confining our use of
silver to this particular coin is the fact that we could, if
unforeseen difficulties developed, do without the half dollar
temporarily.
It can be readily replaced in use by two quarters.
Summary
A change in our coinage is unavoidable.
We have
reviewed very carefully the results of all of the
- 49 -
studies which have been made on this subject.
We are satisfied that, taking into account all
of the various factors involved in this problem,
our recommendations for the new coinage are
sound proposals that will, if enacted, provide
the United States with a dependable, technically
perfect, and distinctive coinage that can be
produced in whatever quantity desired.
It is a
coinage that, I emphasize, will perform not only
across-the-counter, but will also carry out fully
and without interruption its function as a technical
merchandising instrument.
This is absolutely
necessary in the public interest.
I therefore
- 50 -
strongly urge approval of the President's
recommendations on coinage and silver and that
they be enacted into law at the earliest
possible date.
000
TREASURY DEPARTMENT
Washington
SUMMARY
REMARKS BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE THE SENATE BANKING AND CURRENCY COMMITTEE
WEDNESDAY, JUNE 9, 1965, 10:00 A.M.
In response to the Committee's requests, I am submitting
for the Record of this Hearing a written statement in support
of the legislation recommended to the Congress by the President
for a new and efficient United States coinage and related
matters, and, in addition, this Summary of the President's
program.
To conserve time for answers to your questions, I will read
only the Summary.
However, I would emphasize that the President's
coinage and silver program rests upon interdependent developments and considerations, which have created a number of
related responsibilities that the legislation you have before
you seeks to discharge in balance.
I cannot hope in this Summary to convey more than
a suggestion of how and to what extent a world
shortage of silver has developed, the risks of
trying to maintain a silver coinage in the face
of the ever tightening scarcity of silver, the
consequent unavoidable need to act promptly
while our silver stock is still large -- to
- 2 reduce our dependence upon silver for our
coinage, the concurrent need to maintain our
existing silver coinage in circulation, and the
resulting requirements that we bring into being a
new coinage compatible in every way with the old,
while at the same time we conserve in the hands
of the government silver stocks adequate to fulfill
our obligations to redeem silver certificates and
to defend the silver coinage against hoarding or
destruction.
The Proposed
Coinage System
We propose no change in the penny, the nickel or the silver
dollar.
The silver dollar remains upon our books as the coin
that has been made from time to time since 1837, a coin of
412.5 grains weight, 90 percent silver.
We have no present
plans for a new minting of silver dollars.
The Dime and the Quarter
We ask authority to make a dime and a quarter without silver
content.
The proposed new dime and quarter are composite coins
with outside layers of the same copper-nickel alloy used in
our five cent piece, bonded to a core of pure copper.
The
copper center gives them a copper edge -- a distinctive appparance
- 4 coins for some substantial part of their normal life, which is
about 25 years.
The second "compatibility" requirement arises from the fact
that our coin operated merchandising devices -- which number
some 6 million out of a total 12 million coin operated devices
of all kinds now operating in the United States -- are guarded
against fraudulent use by coin selectors that reject anything
not having the electrical properties of our traditional coins
containing 90 percent silver.
If, therefore, the silver coinage is to remain in circulation,
as we intend, the new coins must duplicate the electrical properties
of a 90 percent silver coin, or they will be rejected by the
coin controlled vending machines through which some
$3-~
billion
of merchandise was sold, in 30 billion transactions, in 1964.
The sensors in these automatic vendors could, of course,
be changed to accomodate a non-compatible coinage.
But this would
impose service delays of up to three years upon the public,
and cause attendant business losses and disruption of trade and
commerce.
Consequently, we have elected to recommend a non-silver
coinage that will operate in coin controlled vending machines
without the need for adjustment of the present sensors or the
installation of new sensors.
- 5 -
The new dimes and quarters recommended to you use the
only combination of metals, among practical alternatives, that precisely duplicates the electrical
properties of a coin with 90 percent silver content.
They therefore can be put into use with confidence
that they can be produced in quantities sufficient
to guard against coin shortages in the future, and
that they will fit into our coinage system without
delay or interruption to the nation's commerce.
The Half Dollar
The proposed new half dollar is also a composite coin, made
up of outer layers of a high silver content alloy bonded to a
core of low silver content.
The overall silver content is
reduced from 90 to 40 percent.
The new half dollar is nearly
indistinguishable from the current 50 cent piece.
It will continue
to be minted with the image of President Kennedy.
It was to the end of maintaining the 173-year-01d tradition
of silver in the American subsidiary coinage that this coin was
designed.
We believe that the economies of silver resulting
from the proposed new 25 cent and 10 cent pieces would make
available enough silver to keep a half dollar of greatly reduced
silver content in circulation, once the transition to the new
coinage has been made.
We think we can go safely this far toward
- 6 -
continuation of the American tradition of silver coinage.
We think the retention of silver in the half dollar is a
very important and integral part of our coinage program.
Were
we to abandon silver completely in subsidiary coins we believe
there would be a much greater tendency towards the hoarding of
existing silver coins.
As long as we retain at least some
silver in our coins this tendency will be abated.
Moreover, there are many people in all parts of the nation
who want very much to keep some silver in coins.
The amount of
silver required for use in the half dollar would amount to no
more than 5 percent of current use of silver in coins.
It is a
small price to pay to meet the wishes of these American citizens.
Why We Must Reduce Our
Dependence Upon Silver
In Our Coinage
I draw your attention to the information in the sections on
Free World silver production and consumption in the President's
Message and in my
accompanying Statement.
I will only attempt
in this S~ary the briefest outline of the case that is made there.
Examination of the past, present and probable future
silver supply and demand situation leads without room
for doubt to the conclusion that there simply is not
enough silver appearing on the market to continue to
satisfy the demand for it in the foreseeable future.
- 7 An attempt to maintain a coinage dependent upon silver
in such a situation would expose the nation to the risks
of chronic and growing coin shortages.
The overhanging
threat of such a situation, to say nothing of its
appearance, would be unsettling alike in our commerce
and in our daily lives.
Let me point to one or two salient features of the silver
situation disclosed
~n
the table embodied in my Statement.
First,
since 1959, the use of silver by the industry and the arts has
alone been greater than total new production.
Second, last year, the
use of silver for industry and the arts, and for coinage, was
each, taken separately, greater than new production.
Third,
U. S. silver output has not been rising, and would have had to be
more than five times as great as it was, in 1964, to provide for
U. S. coinage alone.
Only Canada and Switzerland outside the United States still
maintain a high silver content coinage.
Other nations, as we now
propose, have cut back to very limited use of silver in their
coinage.
For many years the United States has met its silver coinage
needs, and part of its other needs for silver out of the official
silver stock.
- 8 -
We now have on hand some 1 billion ounces of silver.
Even should demands increase no more, this stock
cannot last beyond two to three years.
This gives
us enough time to shift to a new coinage and enough
silver supply to continue the protection of the
silver coinage, but it requires that we act promptly.
The Treasury protects the silver coinage by standing ready
at all times to redeem silver certificates, at 1 dollar and
29 and a fraction cents.
This keeps the price below the point
at which it is profitable to melt the coinage for its silver
content.
This maintenance of the coinage in being, in turn, is
the chief protection against hoarding, since it keeps the
silver coinage from being reduced in numbers to the point where
people fear it will vanish.
As an ultimate protection of the silver coinage -- and
remembering that we intend for it to remain in circulation -- we
are asking for stand-by authority to institute controls over
the melting or export of United States coins.
To protect U. S.
silver producers from a precipitous fall in the price of silver
following the reduction of silver in the coinage, we are asking
authority to buy newly mined U. S. silver at $1.25 an ounce.
- 9 Coin
Production
We are gearing up for massive production of the new coins
at the earliest possible time following approval by the Congress
of a new coinage.
We expect to place the new coins in
circulation in 1966.
In one year from the passage of legislation
we expect to make at least
l-~
3-~
billion pieces of the new coins
billion more pieces than we will produce, under a crash
production effort, of the silver coinage in fiscal 1965.
In the
second year after passage of coinage legislation, we expect to
be able to make well over 7 billion pieces of the new coins.
Meanwhile, we will be continuing the production of our
existing silver coins, until the new coins are ready in
sufficiently large amounts to put into circulation.
Production
of silver coins will be phased out as production of the new
coins comes up.
To ensure the very great and speedy production needed for
the shift to the new coinage, we are asking authority for the
temporary use of the San Francisco Assay office for minting.
It would be converted to precious metals refining at a later time.
A Safeguard
For the Future
A change in coinage is a matter that runs so deep, that
touches so intimately the lives of the people, and that is so
- 10 -
delicately related to the nation's commerce that it is best not
to assume in advance that any proposal, even one as thoroughly
parsed out as that the President has put before you, is final
in all respects.
Consequently, the President's recommendations call for a
Joint Commission on the Coinage, with members from the Congress,
the Executive Branch and the Public, to review issues which
cannot be resolved at this time -- whether to continue minting
silver dollars, whether the Treasury should continue to be in the
silver market, and effects of any new technological developments
which should be taken into account.
Its tasks would include the formulation of recommendations on
these and any other matters pertaining to coinage and to the
future of Treasury operations in the silver market.
000
TREASURY DEPARTMENT
Wa.hington, D. C.
F - 81
IM.(EDlA TE l\!:LUSI:
I-IURSDAY
JUNE 10 1965
2
2
F'F<1:LlMINARY DATA ON IMPORTS FOR CONSt:MPTI0N or UNldANUFACTURED LEAD AND ZINC CHARGEABLE TO THE r.UOTAS ESTABLISHED
BY PBESIDt'NTIAL PROCLAMATION NO. 3257 OF SEPTEMBF.R 22, 1958, AS MODITIED BY THE TAREr scm:mJLES cr '.l'HE
lJNIT1i.:D STATtS, WHICH BECAMI: EITJi',cTIVt AUGUST 31, 1963.
OUAR'l'ffiLY QUOTA. PERIOD IMPORTS -
ITnd 925.01-
.1
Produotiol1
AlUtraUa
Bel.gllB and
~
Dat1able lead
Jun.
4, 1965
Import. : Dnt1abl. leM
t pmma. J
11,220,000
22,540,000
(01" as noted)
•
I
S
1
s
:Qii&l"terly QUeta
I PoUIiL J
11,220,000
1, 1965"
30, 1965
Jun.
Umrrought lead. ....
lead waste and .crap
lQi.iirterly OUota
1
April
..
ITEM 925,03-
Le"-beariDg oree
and me.terial.
Countl'y
Apl"ll 1, 1~65
ITEM 925.04'
ITEM 925.02'
oree and.
materials
Z~eariDC
Ca.na4a
5,040,000
·"562,602
13,04<40,000
13,440,000
15,920,000
Peru
16,160,000
16,160,000
i ~nHnt4c
Imports
j
-"'Un.
So. Urioa
14,990,000
6,560,000
'··5,34),182
-See Part 2, Appendix to Tariff Sohedules •
• *Republio of South Afrioa.
"*x.porl. as of June 7, 1965·
PREP.A..RED IN THl!: BUREAU OF
CUST~
By
Qiiib
1fe~t
DA.'~A~
t=
lq>orta
10,?~8,318
66,480,000
66,480,000
7,520,000
'·'3,372,492
37,840,000
37,840,000
3,600,000
'.'1,432,990
36,800,000
26,278,002
70~,000
44,684,360
6,320,000
"'5,555,690
12,890,000
8,5°1,587
35,120,000
20,929,027
3,760,000
"'3,35',720
5,04<40,000
'·'5,4)8,147
6,080,000
6,080,000
14,880,000
Y-agoslarla
All other
oountries (total)
U1Mrought zino (exoept alloys
or zinc &Ad zinc etuat) and.
zinc wast. IIoD4 .era,
7,550,651
..
Republio of the Congo
(formerly Belgian Congo)
:
:QnaTteJ'~y
:01iiOrtii1y QUota
Import., Zinc Content
Italy
Verloo
1
:
:
(total)
Bolirla
I
I
15,760,000
***9,374,, 243
6,090,000
"'1,O~,265
17.840,000
17,840,000
TREASURY DEPARTMENT
Wuhington, D. C.
F - 81
D6tEDIA TE RELEASE
ITRSDAY, JUNE 10,1965
PF<ELDllN.ARY DATA ON IMPORTS FOR CONS\.,'MPTION or UNl4ANUFACTURED LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISHED
BY PRESIDENTIAL PROCLAMATION NO. 3257 or SEPTEMBF:R 22, 1958, AS MODIfIED BY 'rHE TARI~' SCHEDULES or '!'HE
uNITl\:D STATES, WHICH BlCAMt EIT]l;CTIVJ; AUGUST 31, 1963.
OU.A.R'l'BRLY QUOT.A. PERIOD IMPORTS ITDd 925.01.
Aproll 1,
Aproll
1965 ..
1, 1,65 -
Jun.
30, 1,65
Jun• • ,
1,65
(oro
&8
notld)
IT»i 925.02.
ITEM 925.03.
•
I
Cow:ltl'y
.f
Procluotl~n
Leal-beari~ ores
a.nd ilia terial.
UDrrought lea4 . . .
lead wa.ate and. .cra,
I
ll,220,OOO
,
•
-
(PoUDii)
-'.utralia
•
22,540,000
Zu..-beari~
ores &Di
material.
_I
UDlrroug'ht ziDo (exoept allC/11
:
. f zinc and zinc 4u.t) aDd
zinc wast. &Ill. .era,
ImfOl'"b
\POUiiii}
11,220,000
I
(Pounds
\Poundsr
-
7,550,651
Beiliu. aDd
Lux_IuD" (total)
Bo11rla
CaDa4a
5,040,000
···562,602
13,440,000
13,"'°,000
15,920,000
Italy
}lexioo
16,160,000
Pera.
16,160,000
Repub1io of the ColiCo
(formerly Belliu Ccmgo)
• "UIl. So. !.frioa
1.4,980,000
111 other
oountriel (total)
6,560,000
···5,343,182
-S.. Part 2, Appendix to Tariff Schedules •
••Republio of South Afrioa •
••• Japor\ . . . .
or
June 7, 1965-
PREPARED IN 'l'KE B"JREAU OF CUSTc.E
-
66,480,000
66,.80,000
···3,372,,,,2
37,840,000
37, MO,OOO
3,600,000
···1,.32,,,0
26,278,002
70,.4S0 ,000
"",684,360
6,320,000
···5,555,6,0
12,800,000
8,5°1,587
35,120,000
10,,2,,027
3,760,000
··*3,35',72°
5.,440,000
···5,"38,147
-
-
14,880,000
-
10,~8,318
7,520,000
36,800,000
•
YlaCos1 aTia.
ITEM 925.04·
15,760,000
···',374,243
6,080,000
···1,0,",,265
•
17,840,000
17, MO,OOO
-
•
6,090,000
6,010,000
-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:
Country of Origin
United Kingdom ••••••••••••
Canada ••••••••••••••••••••
France..........
• ••••••
India and Pakistan..
• ••
Netherlands...
••
Switzerland..
• ••••••••
Belgium.
••
••
Japan............
• •••••
China... ••••
• •••
Egypt .......•.••.•...•.•••
Cuba.. • . . . . • .
. ..
Gc rmany. • • • • • • • • ••
Italy •••••••••••••••••••••
Other, including the U. S.
~/
Es tablished
TOTAL QOOTA
Total Imports
Sept. 20, 1964, to
June 7 ~ 1965
Established
33-1/3% of
TotCll_ Quo_ta
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
Included in total imports, column 20
Prepared in the Bureau of Customs.
1,441,152
75,807
43,264
22,747
14,796
12,853
Imports
Sept. 20, 196~
to ~~e 7, 1965
1/
TREASURY DEP AR'IMENT
Washington, D. C.
IMMEDIATE RELEASE
F-82
THURSDAY, JUNE 10, 1965
Prelim.inary 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 amerxled, arxl 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 apperxlix to the Tariff Schedules of the
United States. There is no political connotation in the use of outm:xled names.)
n
Country of Origin
Egypt and Sudan ••••••••••••
Peru •••••••••••••••••••••••
India and Pakistan •••••••••
Ch.1l\a ••••••••••••••••••••••
Mexico •••••••••••••••••••••
&as11 •••••••••••••••••••••
Union of Sorlet
Socialist Republics ••••••
Argent~
•••••••••••••••••
Haiti ••••••••••••••••••••••
Ecuador ••••••••••••••••••••
!I
Y
Established Quota
783,816
247,952
2,003,483
1,370,791
8,883,259
618,723
Country of Origin
Imports
Established Quota
Horxluras ••••••••••••••••••••
68,899
Par~
••••••••••••••••••••
Colombia ••••••••••••••••••••
Iraq ••••••••••••••••••••••••
2,701,763
11
475,124
5,203
237
9,333
~I
Si/
British East Africa •••••••••
Indonesia and Netherlands
New Guinea ••••••••••••••••
British W. Indies •••••••••••
.igeria •••••••••••••••••••••
British W. Africa. ••••••••••
Other, 1 ncltxli ng the U.s ....
Except Barbados, Benuia- Jamaica- Trinidad, ani Tobago.
Except Nigeria am Ghana.
.
Cotton 1-1/8" or more
Established Yearly Quota - 45.656.420 lbs.
ImPorts
A~t
staple
1.
1.964 - JJ.me 7. 1965
Length
1-3/8ft or more
1-5/32." or more am UDier
1-)/8" (Tanguis)
1-1/8" or more and under
1.-3/an
Allocation
39,590.718
Imports
39,590,778
1.500.000
42,564
4.565.642
2,662,245
752
871
124
195
2,240
n,388
21,321
5.377
16,004
Imports
TREASURY DEPAR'lHElIT
Washington, D. C.
IMMEDIATE RELEASE
F-82
THURSDAY, JUNE 10, 1965
Prel.1m1nary data on imports for consumption of cotton an:i cotton waste chargeable to the quotas established by
Presidential Proclamation No. 2351 of September 5, 1939, as amemed, am 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 appemix to the Tariff Schedules of the
United States. There is no political connotation in the use of outmxied names.)
n
Country of Origin
EgJpt and Sudan ••••••••••••
Peru •••••••••••••••••••••••
India and Pakistan •••••••••
C~ ••••••••••••••••••••••
Mexico •••••••••••••••••••••
Brasil •••••••••••••••••••••
Union of SoYiet
Social1at Republics ••••••
Argent~ •••••••••••••••••
Haiti ••••••••••••••••••••••
Ecuador ••••••••••••••••••••
1/
y
Imports
Established Quota
7 83,816
247,952
2,003,483
1,370,791
8,883,259
618,723
68,899
2,701,763
!I
475,l24
5,203
237
9,333
E%cept Barbados, Benuia, Jamaica, Trinidad,
~cept Nigeria and Ghana.
Count17 of Origin
~I
s.t
am
Established Quota
Homuras ••••••••••••••••••••
Par~ ••••••••••••••••••••
Colombia ••••••••••••••••••••
Iraq ••••••••••••••••••••••••
British East Africa •••••••••
Indonesia and Netherlands
New Guinea ••••••••••••••••
British W. Indies •••••••••••
.lgeria •••••••••••••••••••••
Bri.tish W. A.tr1ca. ••••••••••
Other, including the U.s ....
Tobago.
Cotton 1-1/8" or more
Established Yearly Quota - 45.656.420 1bs.
Imports_AURU8~_l._1964
_- June 7. 1965
Staple Length
1-3/8" or more
1-5/32" or more an::l umer
1-J/St· (Tanguis)
1-1/Stt or JllDre ani under
1-3/Bn
Allocation
39,590,(78
39,590,778
Imports
1.500.000
42,564
4.565.642
2~662~245
752
871
124
195
2,240
71,388
21,321
5,m
16,004
IT9rt.s
- 2-
COTrON 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
United Kingdom..... • ••••
Canada.....
• ••••••••••
France..
•••••••
• ••
India and Pakistan... • ••
Netherlands.
Switzerland.
Belgium •••
.Japan ••••
China..
• •••••
Egypt..
. ••••.
Cuba •••
Germany .•
Italy...
• ••••
Uther, including the U. S.
Es tablished
TOTAL QOOTA
Established
33-1/3% of
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
319,795
1,599,886
II Included in total imports, column 2.
Prepared in the Bureau of Customs.
F-82
Total Imports
Sept. 20, 196h, to
June 7,,----1-165
1,441,152
75,807
43,264
22,747
14,796
12,853
Imports
Sept. 20, 1964,
to June 7, 1965
II
-2-
Commodity
···
·
Period and Quantity
.• Unit of
:
Quantity
••
Imports as of
:
• May 29, 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-83
1,200,000
Pound
1,000
Pound
12 mos. from
August 1, 1964 1,709,000
Pound
Quota fUled
Quota filled
TREASURY DEPARTMENT
1r.J ashington
IHMEDIATE RELEASE
F-83
THURSDAY, JUNE 10, 1965
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 M~ 29, 1965:
:
••
:
Commodity
Tariff~e
Period and Quantity
:Uni t of : Imports as of
:Quantity: May 29, 1965
.•
.•
Quotas:
Cream, fresh or sour ••••••••
Calendar year
1,500,000 Gallon
582,164
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
12,278
Cattle, less than 200 Ibs.
each •••••••••••••••••••••
200,000 Head
36,284
0
12 mos. from
April 1, 1965
Fish, fresh or frozen, filleted, etc., cod, haddock,
hake, pollock, cusk, and
rose fish ••••••••••••••••••
Calendar year
24,383,589 Pound
Quota filled
Tuna Fish ••••••••••••••••••
Calendar year
66,059,400 Pound
12,187,083
12 mos. from 114,000,000 Pound
Sept. 15, 1964 45,000,000 Pound
Quota filled
Quota filled
Nov. 1, 1964 Oct. 31, 1965
Quota filled
0
or Irish potatoes:
Certified seed ••••••••••••
~fuite
Other ••••••••••••••.••••••
Knives, forks, and spoons
~-rith stainless steel
handles ..••••.••••.•.•••••
69,000,000 Pieces
1/ Imports for consumption at the quota rate are limited to 12,191,794 pounds
during the first 6 months of the calendar year.
TR EA Sm::'i DEP AR TMENT
v; ashington
IMMEDIATE RELEASE
THURSDAY, JUNE 10, 1965
F-83
The Bureau of Customs announced today preliminary figures on imports for conffimption of the following commodities from the beginning of the respective quota
periods through May 29, 1965:
Commodity
·
·
Period and Quantity
:Unit of : lJIport.a as of
:Quantity: May 29, 1965
:
:
Tariff-Rate Quotas:
Cream, fresh or saur ••••••••
Calendar year
1,500,000 Gallon
S82,164
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 30, 1965
120,000 Head
12,278
12 mos. from
April 1, 1965
200,000 Head
36,284
Cattle, less than 200 Ibs.
each ••••••••••••••••••••••
Fish, fresh or frozen, fil-
leted, etc., cod, haddock,
hake, pollock, cusk, and
rose fish ••••••••••••••••••
Calendar year
24,383,589 Pound
Quota filled
Tuna Fish •••••••••••••••••••
Calendar year
66,059,400 Pound
12,187,083
12 mos. from
114,000,000 Pound
Sept. IS, 1964 45,000,000 Pound
Quota filled
Quota filled
Nov. 1, 1964 Oct. 31, 1965
Quota filled
or Irish potatoes:
Certified seed ••••••••••••
Other •••••••••••••••••••••
~fuite
Knives, forks, and spoons
Nith stainless steel
handles •••••••••••••••••••
69,000,000 Pieces
1/ Imports for consumption at the quota rate are limited to 12,191,794 pounds
during the first 6 months of the calendar year.
!I
-2-
I
J
Commodity
·
·
Period and Quantity
I
J
Unit of
Quantity
Imports as of
May 29, 196)
Absolute 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
otherwi~e prepared or
preserved (except peanut
butter)
..................
F-83
1,200,000
Pound
12 l'OOs. from
Sept. il, 1964
1,000
Pound
12 mos. from
August 1, 1964
1,709,000
Pound
Quota filled
Quota filled
TREASURY DEPARTMENT
'tiashington
HIHEDIA TE RELEASE
THUSDAY, JUNE 10, 1965
F-84
The Bureau of Customs has announced the following preliminary
figures showing the imports for consumption from January 1, 1965,
to Hay 29, 1965, inclusive, of commodities under quotas established
pursuant to the Philippine Trade Agreement Revision Act of 1955:
Commodity
Established Annual
Quota Quantity
·: Unit of .:
·· Quantity
Buttons •••••••
510,000
Cigars ••••••••
120,000,000
Number
3,774,762
Coconut oil •••
268,800,000
Pound
268,666, 00?*,
.......
6,000,000
Pound
3,535,840
Tobacco •••••••
3,900,000
Pound
3,006,912
Cordage
*Imports through June 1, 1965.
Gross
Imports as of
29, 1965
May
190,122
TREASURY DEPARTMENT
Washington
IMHEDIATE RELEASE
THUSDAY, JUNE 10, 1965
F-84
The Bureau of Customs has announced the following preliminary
figures showing the imports for consumption from January 1, 1965,
to M~ 29, 1965, inclusive, of commodities under quotas established
pursuant to the Philippine Trade Agreement Revision Act of 1955:
•
Annual · Unit of ·
. Established
•
Quantity •
Quota Quantity
·
·
Commodity
Gross
Imports as of
May 29, 1965
190,122
0 •••
510,000
Cigars ••••••••
120,000,000
Number
3,774,762
Coconut oil •••
268,800,000
Pound
268,666,007*
Cordage •••••••
6,000,000
Pound
3,535,840
Tobacco •••••••
3,900,000
Pound
3,006,912
Buttons •••
*Imports through June 1, 1965.
TREASURY DEPAR'DmiT
Washington, D. C.
IMMID lATE RELEASE
F-85
THURSDAY, JUNE 10, 1965
The Bureau of CUstoms announced todq prel.im1nary figures shawing the
quantities of wheat and m1lled wheat products authorised to be entered, or
witMrawn from warehouse, for consumption wner the import quotas established
in the President t s proclamation ot Mq 28, 1941, &8 mod1.t1ed by the President' 8
proclamation ot April 13, 1942, am provided for in the Tariff Schedules of
the Un! ted States, for the 12 months CODlDeJlcing May 29, 1964, as follows:
••
••
Country
of
Origin
:
••
Killed wheat products
••
•
•
Imports
Imports
Established •
•• Established ••
6
Quota
:Mq 29, 19 4, :
Quota
:Mq 29, 196~ .
ito H~ 28 z 1 65
ito N~ 28 z 1965 i
(Powns)
(Pounds)
(Bushels)
(Bushels)
Wheat
•
t
Canada
China
795,000
795,000
3,815,000
3,815,000
24,000
13,000
13,000
8,000
75,000
1,000
5,000
Hungary
Hong Kong
Japan
United Kingdom
Australia
Germany
Syria
New Zealam
ChUe
Netherlan:ls
100
100
100
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
100
2,000
100
Argentina
Italy
CUba
France
Greece
Mexico
Panama
1,000
100
Uruguay
Polani am Danzig
Sweden
Yugoslavia
Norwa;y
Canary Isl.alx1s
120
397
110
1,000
100
100
Rumania
Guatemala
Bruil
Union of Soviet
Socialist Republics
100
100
Belgium
Other foreign countries
or areas
8CXJ,000
795,000
4,909,000
3,,815,627
TRRAS UR Y Dfl> AR'lME2fr
Wuhington, D. C.
:D4ME)IATE RELEASE
THURSDAY, JUNE 10, 1965
F-85
The Bureau ot CUstoms announced tod83' prelim1nary figures shQN1ng the
quantities ot wheat and milled wheat products aut,b)rised to be entered, or
witMrawn from warehouse, tor con8UDlption urder the import quotas established
in the President's proclamation ot Mq 28, 1941, as moditied by the President's
proclamation ot AprU 1), 1942, am provided tor in the Tariff Schedules ot
the United States, tor the 12 months CODlDellcing MQ' 29, 1964, &8 tollows:
••
••
Country'
ot
Origin
••
:
••
I
Milled wheat products
Wheat
I
••
••
••
•
•
•: Established • Imports
Imports
: Establlahed :
•
••
:M.,
29,
1964
:
Quota
Quota
:Mq 29, 19~
;to M& 28 2 1 65
;to H~ 28 1 1965;
••
•
Canada
China
Hungary
Hong Kong
Japan
United Kingdom
Australia
(Bushels)
(Buahela)
795,000
795,000
100
100
100
Ge!"III8DY
S7rla
New ZealaDi
Chile
Netherlam1s
100
2,000
100
Argentina
Italy
Cuba
France
Greece
1,000
100
Mexico
Pan..•
Uruguq
PolaM
Sweden
am
(PoUDis)
),815,000
24,000
1),000
1),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
Dansig
Yugoslavia
Norwq
C&Dar7 IslaDds
RUNnia
Guatemala
BrazU
Union ot Soviet
Socialist Republics
(POUDis)
3,815,000
120
397
1,000
1,000
1,000
1,000
110
4,000,000
3,815,627
1,000
100
100
100
Belgium
100
Other foreign countries
or areas
scx>.OOO
795,000
TREASURY Dll>AR'lHEm
Wuhington, D. C.
IMMID IATE RELEASE
F-86
TNURSDAY,JUNE 10, 1965
The Bureau of Customa announced todq prel.1m1nary' figure8 8howing the
quantities of wheat and milled wheat products authorised to be entered, or
witlxirawn from warehouse, for consumption under the import quotas established
in the President's procl.ma tion of Mq 28, 1941, as moditied by the President. IS
proclamation of April 13, 1942, am provided for in the Tariff Schedules of
the United States, for the 12 months coumencing Mq 29, 1965, as follows:
••
••
•
Country'
of
Origin
Wheat
:
Milled wheat products
Imports
Established ••
Established ••
Imports
••
Quota
:Mq 29, 1965,
Quota
:May' 29, 1965,
••
ito Hal 28.z 1966.
; to M~ 28.z 196/
(Poums)
(Bushels)
(Bushels)
(Pounds)
Canada
China
Hungary
Hong Kong
Japan
Uni ted Kingdom
Australia
Germany
Syria
New Zealan:i
ChUe
NetherlaD:is
Argentina
Italy
Cuba
France
Greece
Mexico
Panama
Uruguq
Polam am Danzig
Sweden
Yugoslavia
Norwq
Canary Islarxls
Rmunia
Guatemala
795,000
100
100
100
100
2,000
100
1,000
100
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
3,815,000
2,000
12,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
100
100
Brazil
Union of Soviet
Socialist Republics
100
100
Belgium
Other foreign countries
or areas
800,000
~JOQQJOOO
3,815,000
TREAS URI v.I:..rAR'DIDiT
W&abington, D. C.
IMMJ!DIATE RELEAS E
F-86
TEHRSDAY,JUNE 10, 1965
The Bureau of Custoll18 announced todq prel..1zrrl.nary figures showing the
quantities of vbeat and milled vbeat producta authorised to be entered, or
witbirawn from warehouse, for consumption umer the import quotas established
in the President t s proclamation of Mq 28, 1941, as modified b,. the Presidentt s
proclamation of AprU 1), 1942, am provided for in the Tariff Schedules of
the United States, for the 12 months COlllllellcing M&7 29, 1965, as follows:
:
••
••
Count17
of
Origin
Wheat
:
••
••
••
Milled wheat products
Imports
Established :
Imports
: Established :
:Mq 29, 1965,
:
Quota
:Mq 29, 1965,,:
Quota
: to M& 28, 1966
;to Mal 28, 1~66;
••
(PoUBis)
(Buahe1a)
(Pounds)
(Buahels)
Canada
795,000
),815,000
3,815,000
24,000
China
1),000
1),000
8,000
Hungary
Hong Kong
Japan
100
Un! ted Kingdom
75,000
1,000
Australia
100
100
5,000
5,000
1,000
Italy
100
2,000
100
1,000
14,000
Cuba
France
1,000
Germany
Stria
New Zealand
1,000
Chile
Hetherlanis
Argentina
Greece
100
Mexico
Pan".
Uruguq
Polm:! am Danzig
2,000
12,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
SlftIden
Yugoslavia
lforvq
1,000
CUW7 Isl.aD1a
RnMn1 a
1,000
100
100
Guataala
BraaU
Union of Soviet
Socialist Republica
100
100
Belgium
Other foreign countries
or areas
800.000
4,000,000
3,815,000
- 3 -
and exchange tenders will receive equal treatment.
Cash adjustments viII 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 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 tor
which the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and this notice, prescribe the terms of the Treasury bills and govern the conditions of their.issue.
Copies of the circular may be obtained from any Federal Reserve Bank or Branch.
- 2 -
decimals, e. g., 99.925.
Fractions 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
1955
June~
, in cash or other immediately available funds or in a like face
amount of Treasury bills maturing
June 17
196
c
__~~~~'~~~0~~_______________ •
WtJ
Cash
TREASURY DEPARTMENT
Washington
June 9, 1965
FOR IMMEDIATE RELEASE,
]OOOOOOOOO[]OOOO~OOOOOOOOOOOOOOOO~
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders for two serie
of Treasury bills to the aggregate amount of $
2,200~O,OOO
cash and in exchange for Treasury bills mat\lring
of $2,20l'iij'OOO
, in the amoun
June l:i"ft1965
, as follows:
. - d aY bills (to ma.turity date) to be issued
in the amount of $
1,200~O,OOO
,
June l7
and to mature
amount of
965
,
M
or thereabouts, represent.
ing an additional amount of bills dated
nu
, or thereabouts, for
~Ch 1~1965
September 16, 1965 , originally issued in the '
M
$1,002~.OOO
,the additional and original bills
to be freely interchangeable.
-day bills,
fOr$l,OOO,~oo
June 17txij65
, or thereabouts, to be dated
, and to mature
December~
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/Staw«ard time, Monday, June tiit1965
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
!==:
:
June 9, 1965
FOR IMMEDIATE RELEASE
TREASURY'S WEEKLY BILL OFFERING
The Treasu~' 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 17, 1965,
in the amount of
~,201,597,000,
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 March 18,1965,
mature September 16, 1965,originally issued in the
$ 1,002,526,000,the additional and original bills
interchangeable.
18~-day
June 17,1965,
June 17, 1965,
representing an
and to
amount of
to be freely
bills, for $ 1,000,000,000, or thereabouts, to be dated
and to mature December 16, 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
(maturi ty value).
Tenders will be received at F'ederal Reserve Banks and Branches
to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Monday, June 14, 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.
up
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-87
- 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 he made or completed at the Federal
Reserve Banks on June 17, 1965,
in cash or other immediately
available funds or in a like idee amount of Treasury bills
maturing June 17, 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
the issue price ot the new bills.
The income derived from Treasury bills, whether interest or
gain from the sale or other disposition of the bills, does not have
any exemption, as such, and lOBS from the sale or other disposition
of Treasury bills does not have any special treatment, as such,
under the Internal Revenue Code of 1954. The bills are subject to
estate, inheritance, gift or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed on
the principal or interest thereof by any State, or any of the
possessions of the United States, or by any local taxing authority.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United states is considered to be
interest. Under Sections 454 (b) and 1221 (5) of the Internal
Revenue Code of 1954 the amount of discount at which bills issued
hereunder are sold is not considered to accrue until such bills are
sold, redeemed or otherwise disposed of, and such bills are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between
the price paid for such bills, whether on original issue or on
subsequent purchase, and the amount actually received either upon
sale or redemption at maturity during the taxable year for which the
return is made, as ordinary gain or loss.
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
Washington
SUMMARY
REMARKS BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE THE SENATE BANKING AND CURRENCY COMM[TTEE
WEDNESDAY, JUNE 9, 1965, 10:00 A.M.
In response to the Committee's requests, I am submitting
* support
for the Record of this Hearing a written statement/in
of the legislation recommended to the Congress by the President
for a new and efficient United States coinage and related
matters, and, in addition, this Summary of the President's
program.
To conserve time for answers to your questions, I will read
only the Summary.
However, I would emphasize that the President's
coinage and silver program rests upon interdependent developments and considerations, which have created a number of
related responsibilities that the legislation you have before
you seeks to discharge in balance.
I cannot hope in this Summary to convey more than
a suggestion of how and to what extent a world
shortage of silver has developed, the risks of
trying to maintain a silver coinage in the face
of the ever tightening scarcity of silver, the
consequent unavoidable need to act promptly
while our sil'.'er slock is :..;till large -- to
*
Available upon request from the Office of Information, Treasury
Department, Washinr,ton, D. Co 20220 (50 pages)
- 2 -
reduce our dependence upon silver for our
coinage, the concurrent need to maintain our
existing silver coinage in circulation, and the
resulting requirements that we bring into being a
new coinage compatible in every way with the old,
while at the same time we conserve in the hands
of the government silver stocks adequate to fulfill
our obligations to redeem silver certificates and
to defend the silver coinage against hoarding or
dest.ruction.
The Proposed
Coinage System
We propose no change in the penny, the nickel or the silver
dollar.
The silver dollar remains upon our books as the coin
that has been made from time to time since 1837, a coin of
412.5 grains weight, 90 percent silver.
We have no present
plans for a new minting of silver dollars.
The Dime and the Quarter
We ask authority to make a dime and a quarter without silver
content.
The proposed new dime and quarter are composite coins
with outside layers of the same copper-nickel alloy used in
our five cent piece, bonded to a core of pure copper.
The
copper center gives them a copper edge -- a distinctive appearance
- 3 -
entirely fitting to their modern and functional nature.
design and size are unchanged.
Their
These coins are carefully
engineered to perform, alongside the existing silver dime and
quarter, as long lasting, plentiful and dignified media of
exchange, and as technical merchandising instruments in the
many millions of coin operated devices in use in the United States.
I am compressing in the following lines an account of several
highly important and inter-related factors that are spelled
out in the President's Message and in my accompanying Statement.
Taken altogether, these factors add up to one of the key factors
for a new U. S. coinage
that it be "compatible" with our
existing silver coinage.
The first of these factors is the need to keep our present
silver coinage at work.
We cannot retire it from circulation,
because, first of all, it will continue for many months after
enactment of new coinage legislation to be the major part of our
coinage.
These months are needed to bring the new coins into
mass production and to build up sufficient stocks of them to
begin large scale circulation.
Also, the nation's need for
coins is growing at such a pace that, although we will be able
to make tt.e new non-silver coins in vast quantities, we foresee
the need for the ccntinued circulation of our billions of silve
- 4 coins for some substantial part of their normal life, which is
about 25 years.
The second "compatibility" requirement arises from the fact
that our coin operated merchandising devices -- which number
some 6 million out of a total 12 million coin operated devices
of all kinds now operating in the United States -- are guarded
against fraudulent use by coin selectors that reject anything
not having the electrical properties of our traditional coins
containing 90 percent silver.
If, therefore, the silver coinage is to remain in circulation,
as we intend, the new coins must duplicate the electrical properties
of a 90 percent silver coin, or they will be rejected by the
coin controlled vending machines through which some
$3-~
billion
of merchandise was sold, in 30 billion transactions, in 1964.
The sensors in these automatic vendors could, of course,
be changed to accomodate a non-compatible coinage.
But this would
impose service delays of up to three years upon the public,
and cause attendant business losses and disruption of trade and
cormnerce.
Consequently, we have elected to recormnend a non-silver
coinage that will operate in coin controlled vending machines
without the need for adjustment of the present sensors or the
installation of new sensors.
- 5 The new dimes and quarters recommended to you use the
only combination of metals, among practical alternatives, that precisely duplicates the electrical
properties of a coin with 90 percent silver content.
They therefore can be put into use with confidence
that they can be produced in quantities sufficient
to guard against coin shortages in the future, and
that they will fit into our coinage system without
delay or interruption to the nation's commerce.
The Half Dollar
The proposed new half dollar is also a composite coin, made
up of outer layers of a high silver content alloy bonded to a
core of low silver content.
The overall silver content is
reduced from 90 to 40 percent.
The new half dollar is nearly
indistinguishable from the current 50 cent piece.
It will continue
to be minted with the image of President Kennedy.
It was to the end of maintaining the l73-year-old tradition
of silver in the American subsidiary coinage that this coin was
designed.
We believe that the economies of silver resulting
from the proposed new 25 cent and 10 cent pieces would make
available enough silver to keep a half dollar of greatly reduced
silver content in circulation, once the transition to the new
coinage has been made.
We think we can go safely this far toward
- 6 -
continuation of the American tradition of silver coinage.
We think the retention of silver in the half dollar is a
very important and integral part of our coinage program.
Were
we to abandon silver completely in subsidiary coins we believe
there would be a much greater tendency towards the hoarding of
existing silver coins.
As long as we retain at least some
silver in our coins this tendency will be abated.
Moreover, there are many people in all parts of the nation
who want very much to keep some silver in coins.
The amount of
silver required for use in the half dollar would amount to no
more than 5 percent of current use of silver in coins.
It is a
small price to pay to meet the wishes of these American citizens.
Why We Must Reduce Our
Dependence Upon Silver
In Our Coinage
I draw your attention to the information in the sections on
Free World silver production and consumption in the President's
Message and in my
accompanying Statement.
I will only attempt
in this Summary the briefest outline of the case that is made there.
Examination of the past,present and probable future
silver supply and demand situation leads without room
for doubt to the conclusion that there simply is not
enough silver appearing on the market to continue to
satisfy the demand for it in the foreseeable future.
- 7 An attempt to maintain a coinage dependent upon silver
in such a situation would expose the nation to the risks
of chronic and growing coin shortages.
The overhanging
threat of such a situation, to say nothing of its
appearance, would be unsettling alike in our commerce
and in our daily lives.
Let me point to one or two salient features of the silver
*
situation disclosed in the table/embodied in my Statement.
First,
since 1959, the use of silver by the industry and the arts has
alone been greater than total new production.
US2
Second, last year, the
of silver for industry and the arts, and for coinage, was
each, taken separately, greater than new production.
Third,
U. S. silver output has not been rising, and would have had to be
more than five times as great as it was, in 1964, to provide for
U. S. coinage alone.
Only Canada and Switzerland outside the United States still
maintain a high silver content coinage.
Other nations, as we now
propose, have cut back to very limited use of silver in their
coinage.
For many years the United States has met its silver coinage
needs, and rart of its other needs for silver out of the official
silver stock.
*
Attached
- 8 We now have on hand some 1 billion ounces of silver.
Even should demands increase no more, this stock
cannot last beyond two to three years.
This gives
us enough time to shift to a new coinage and enough
silver supply to continue the protection of the
silver coinage, but it requires that we act promptly.
The Treasury protects the silver coinage by standing ready
at all times to redeem silver certificates, at 1 dollar and
29 and a fraction cents.
This keeps the price below the point
at which it is profitable to melt the coinage for its silver
content.
This maintenance of the coinage in being, in turn, is
the chief protection against hoarding, since it keeps the
silver coinage from being reduced in numbers to the point where
people fear it will vanish.
As an ultimate protection of the silver coinage -- and
remembering that we intend for it to remain in circulation -- we
are asking for stand-by authority to institute controls over
the melting or export of United States coins.
To protect U. S.
silver producers from a precipitous fall in the price of silver
following the reduction of silver in the coinage, we are asking
authority to buy newly mined U. S. silver at $1.25 an ounce.
- 9 -
Coin
Production
We are gearing up for massive production of the new coins
at the earliest possible time following approval by the Congress
of a new coinage.
We expect to place the new coins in
circulation in 1966.
In one year from the passage of legislation
we expect to make at least
l-~
3-~
billion pieces of the new coins
billion more pieces than we will produce, under a crash
production effort, of the silver coinage in fiscal 1965.
In the
second year after passage of coinage legislation, we expect to
be able to make well over 7 billion pieces of the new coins.
Meanwhile, we will be continuing the production of our
existing silver coins, until the new coins are ready in
sufficiently large amounts to put into circulation.
Production
of silver coins will be phased out as production of the new
coins comes up.
To ensure the very great and speedy production needed for
the shift to the new coinage, we are asking authority for the
temporary use of the San Francisco Assay office for minting.
It would be converted to precious metals refining at a later time.
A Safeguard
For the Future
A change in coinage is a matter that runs so deep, that
touches so intimately the lives of the people, and that is so
- 10 delicately related to the nation's commerce that it is best not
to assume in advance that any proposal, even one as thoroughly
parsed out as that the President has put before you, is final
in all respects.
Consequently, the President's recommendations call for a
Joint Commission on the Coinage, with members from the Congress,
the Executive Branch and the Public, to review issues which
cannot be resolved at this time --
whe~her
to continue minting
~
silver dollars, whether the Treas~ry shoulaeontiuu. to be in the
silver market, and effects of any new technological developments
which should be taken into account.
Its tasks would include the formulation of recommendations on
these and any other matters pertaining to coinage and to the
future of Treasury operations in the silver market.
000
sTIMATED FREE WORLD SILVER CONSUMPTION
lID PRODUCTION, 1949-1964
millions of fine troy ounce s )
DEFICIT
EXCWDIlI}
U.S.
DEFI- COIBAGE
CIT( -) DEXAKD ( - )
GROSS
:ALENDAR
CONSUMPTION
YEAR
NEW POOIU:I'lON
Coinage
Industry
and the
Arts
'.949-53
U.S.
Foreign
Free
World
Total.
Total
ConSUlllp-
tion
Total.
Foreign !'fey
Free
ProU.S. World
tion
153
31
48
85
238
39
135
174
-64
-27
,verages
190
38
36
14
264
38
153
191
-73
-35
958
191
38
41
19
270
37
169
206
-64
-26
959
213
41
45
86
299
23
165
188
-lll
-70
960
225
46
58
104
329
37
110
207
-122
-76
961
240
56
81
131
371
35
168
203
-174
-li8
962
248
71
50
128
315
36
171
201
-169
-92
,963
252
ll2
56
161
419
35
179
214
-205
-93
.964
286
203
62
265
550
36
180
216
-335
-132
.verages
953-57
o~e:
Treasury Staff Study of Silver and Coinage, Part III, Tables 1 and 3, figures
rounded.
TREASURY DEPARTMENT
June 10, 1965
FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN MAY
During May 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
$143,093,000.00.
000
F-89
TREASURY DEPARTMENT
(
June 10, 1965
FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN MAY
During May 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
$143,093,000.00.
000
F-89
REMARKS OF PAUL A. VOLCKER
DEPUTY UNDER SECRETARY FOR MONETARY AFFAIRS
DEPARTMENT OF THE TREASURY
BEFORE THE
FORECASTING CONFERENCE
OF THE
CHICAGO CHAPTER OF THE AMERICAN STATISTICAL ASSOCIATION
ON
CRITICAL FACTORS IN THE BALANCE OF PAYMENTS PROBLEM
TUESDAY, JUNE 8, 19E5_________________
I do not need tonight, before this expert audience, to review
in detail our balance of payments performance. The over-all results of recent years are familiar to all of us, and I will not
belabor the basic point that our deficits have been both too
large and too prolonged.
These deficits have' persisted des~ite the many elements of
underlying strength in our position -- our enormous potential
to produce, and in particular to produce efficiently the kinds
of new and complex equipment in growing derrland in world markets
the pr0ductivity of our agrlculture in a world of rapidly rising
population and heavy pressure on resources -- our steadily growing
world creditor position, an0 the rising returns our foreign investments will yield us in the years ahead -- and, not least, I would
also add the progress we have been making, in business and Govern~
ment alike, in learning to develop policies that support our objective of reasonably steady growth in employment, output, and
income at home without inflationary excesses.
These are som~ of the factors, in addition to our still large
gold stock; that have made -- and continue to make -- the dollar
the premier currency in the world. But these elements of longterm strengt~ can in no way substitute for eff~ctlve action to
close promptly the imbalance in our payments -- not just for a
few months or a year, but without relapse into the chronic
deficits of recent years.
One of the first lessons that is drilled into an economist
is that a dollar earned in the future cannot be equated with a
dollar earned today. That basic lesson applies with special force
to the balance of payments. Whatever our future prospects, failure to take whatever action is required to protect the dollar
today would strike at the vital underpinnings of the international
financial system. The result would be to impair the hard won
gains in trade and freer payments during the postwar period,
and to undermine both our own prosperity and that of our trading
- 2 partners. Moreover, the issues are not narrowly economic. It
is plain that a strong dollar is an essential part of our ability
to discharge effectively our far-flung military, diplomatic, and
foreign policy objectives.
This over-riding need to protect the dollar is the essential
setting for the balance of payments program set forth by President Johnson in February -- a program that commits us to early
elimination of our balance of payments deficit as a matter of
high national priority.
I do not mean tonight to debate the particulars of that program.
As you know, it includes a variety of measures to strengthen and
reinforce our earlier efforts in a number of directions. But we
all recognize that the key new element was the call to the business and financial communities for cooperation, even at the expense
of some short-run profit opportunities, in reducing the swelling
outflow of private capital that was threatening to undercut our
entire balance of payments position. These are not the kind of
measures that we want to, or even could, live with forever. But,
after years of sustained deficit, it is clear that extraordinary
measures are essential, and that they must be made to work.
Recognition of that simple fact is implicit, I think, in the
willing and gratifying response of businessmen and bankers to
the program. The fragmentary data at hand suggest that over the
three months since the program was announced our international
accounts have returned to balance, and possibly to a surplus -a sharp contrast to the very large deficits in the fourth quarter
of 1964 and the early weeks of this year. That turnabout was
clearly importantly influenced by the end of the dock strike in
February, and by other temporary factors, and it is far too soon
to try to isolate and evaluate the particular contribution of the
new program. But there are signs that, amid the other cross
currents at work, the special efforts of the banks and businesses
are beginning to have an effect.
It would, however, be a great mistake to conclude, on the
basis of these early results, that the problem is already solved,
or that we can look forward to any early relaxation ot our efforts.
In fact, the first few months were bound to be the easiest. It
is very useful, for instance, to achieve some reflow of liquid
funds originally placed abroad simply for the purpose of achieving a slightly higher interest return, and such reflows appear
to have been one source of balance of payments improvement in
recent months. But that source of improvement is, by its nature,
a limited "one-shot" affair, and cannot substitute for hard and
-
3 -
continuing efforts to achieve increased exports, to max~m~7.e
the financing of foreign investment projects with foreign funds,
and to reassess or defer marginal investment projects. Similarly,
it is one thing for the banks to cut back for a few months the
extraordinary bulge in foreign lending that developed in 1964
and during the earlier weeks of this year, as they appear to be
doing, and another thing to observe the Federal Reserve guidelines, and the priorities within those guidelines, over time as
customer demands build up. But, I see no basis for optimism that
the special disciplines of the cooperative program can be relaxed
in any way until our ability to maintain a balance over a sustained period has been fully demonstrated and proved.
In asserting this, however, I also recognize that full success
in our effort to restore equilibrium cannot be claimed until we
can finally phase out these voluntary restraints, and achieve
equilibrium under conditions more consistent with normal market
incentives and processes. So, it is a fair question to ask
whether there are forces and programs at work, alongside the
voluntary effort, that give promise of continued progress toward
lasting equilibrium in our international accounts.
Without pretending a full analysis of that question tonight,
I would like to touch upon developments in several of the critical
areas that seem to me to bear directly upon"the issue.
First of all, as you know, heartening evidence of an improvement in our trade position is already evident. The U. S. commercial trade surplus, excluding all Government financed shipments,
reached a new peak of $3.7 billion last year, an improvement of
$900 million since 1960) just before our balance of payments
effort got underway in earnest. This performance is all the more
noteworthy for the fact that it took place during a period of
continu.ing expansion in the American economy -- an expansion that
has generated an increase of over 25% in our import bill since
1960.
To be sure, some non-recurring factors helped our 1964 performance, and we cannot blithely count on so favorable results
this year. But, I believe evidence is accumulating that a number of
our industries have begun to benefit from the invigorating effects
of increased competitiveness in world markets, and that our efforts
to step-up export promotion and improve export credit facilities
are beginning to pay dividends.
- 4 The key to progress in this area has been, and must remain,
price stability. In contrast to the noticeable inflationary
pressures and rising costs in nearly all other industrialized
countries, our own expansion -- despite some lapses in particular
cases -- has so far been notable for stability in our unit labor
costs and the flatness of our industrial prices. Our wholesale
prices, for instance, average only about 1% higher than in 1960,
while the increases in France, Germany, the U.K., Italy, and
Austria -- to take a few leading European examples -- have ranged
from 8 to 15%. The contrast in consumer prices is at least as
great, with European increases generally ranging from 12 to 24%,
contrasting with about 5% in the United States.
I am aware that changes of this kind in internal price
structures are not translated uniformly into export prices, and
that the impact of rising average costs on international competitive positions and flows of trade is typically delayed. I am
also aware that our relative price position in export markets
deteriorated during the 1950's, so we have had ground to make
up, and that,in the broader interests of orderly growth in the
free world, we cannot expect or desire that our competitors in
world markets live with inflation. But, with all the qualifications, recent trends seem to me to provide encouraging evidence
that, in a context of vigorously expanding world markets, and
with responsible policies at horne alert to counter price pressures
as they appear, our large export surplus can be maintained and
even increased in the years ahead.
Side by side with the gradual recovery in our international
competitive position, our current account has also benefitted
from a swelling flow of interest and dividends from abroad.
This flow reached nearly $4 billion in 1964 alone, an increase
of $1.6 billion over 1960. And further increases in these
returns will eventually follow from the continuing heavy outflows of investment in recent years, as well as from further
gains in business activity abroad.
It has, of course, been precisely in this area of capital
outflows that our recent problems have been centered. The
United States has been, and clearly should remain, a sizable
capital exporter, both in our own interests and those of a
world in critical need of capital for development. But the
total of our capital outflow in 1964 -- reaching $6-1/2 billion,
or more than $2-1/2 billion more than the already large figure
of 1960 -- was clearly placing an intolerable burden on our
balance of payments.
- 5 -
In examining the disequilibrium in international payments
in recent years, and in speculating on their future shape,
this outflow of American capital -- and in particular the flow
of American capital from the United States to Western Europe
assumes special importance. In 1964, the flow to Europe, as
we record it in our statistics, totaled about $2.1 billion,
equivalent to 2/3rds of our entire deficit on regular transactions and about equal to the whole of the net increase in
European monetary reserves. Viewed in the broader context
of the basic capital needs of the world economy, as well as
an immediate source of disequilibrium in world payments, it
is incongruous, to say the least, that so much of our capital
outflow should be diverted to the second richest area of the
world -- an area that should be fully capable of generating its
own surplus of savings in helping to meet the urgent needs of
the developing countries.
Are there forces in motion that promise, in this area, too,
to restore an equilibrium -- forces that will permit in time
a relaxation of the special measures undertaken in February?
Will the voluntary program itself help pave the way by forcing
market adjustments that will themselves ease the task?
I would argue without pretending to foresee the future in
detail or to deal with all the uncertainties, that there are
some hopeful auguries, as well as continuing problems. For
instance, partly responding to the incentives implicit in the
Interest Equalization Tax, Europe has already demonstrated its
ability to absorb a much larger volume of new foreign bond
issues, with the total in 1964 reaching n"early a billion dollars,
almost double the previous record. And this burst of activity
was accompanied by some useful experimentation with new institutional arrangements to broaden the market, including notably
the widespread use of the dollar as, in effect, a common unit
of account.
Against this encouraging development must be set the fact
that, as the European markets absorbed this larger volume of
foreign financing in 1964, long-term interest rates rose, and
in some cases sharply. For instance, in the German market,
where the largest portion of the foreign issues was placed,
long-term rates have now reached 7% or more, in contrast to
6% eighteen months ago. Increases of 1/2% or more in other
countries were common. And, as the pressures on the European markets increased, foreign demands for capital tended to
seep back into the American market through bank loans or other
channels.
- 6 -
In the Euro-dollar market -- to take the other end of the
maturity spectrum -- rates have moved up appreciably since
February. So in that case, too, restraint by the United States
may have had the effect, at least in the short-run, of somewhat
increasing interest rate differentials.
In part, these developments seem to me a symptom of underdeveloped capital markets in Europe, the full consequences
of which the Europeans have escaped in the past by ready access
to our own markets as a source of marginal capital. But more
broadly, it is also a reflection of the fact that the European
econoruies, by and large, have been running full tilt, with inflationary pressures of a kind that their monetary authorities
would like to brake -- and have been braking -- through monetary
policy. And beneath the surface is the implication of a high
rate of return on capital investment in Europe -- and in the
end funds tend to flow where the profit outlook is best.
The extent to which the Europeans carry through in improving
their own capital markets remains to be seen. Certainly, until
European markets achieve the greater degree of cohesion, flexibility and efficiency necessary if they are to provide at rates
within a normal range the large blocks of capital essential for
their own growth, and for meeting a portion of the needs of other
countries, the threat of recurring disequilibrating capital flows
will remain. There are hopeful signs of progress -- but also
many obstacles to the kind of relaxation of restraints and restrictions in foreign markets, government or private, that circumstances would seem to warrant.
Meanwhile, the Interest Equalization Tax, by raising in a
nondiscriminatory way, the interest cost for borrowers in developed
countries entering our market, is designed to afford protection
against this kind of structural disequilibrium in world capital
markets. We have asked that that tax be extended through 1967.
A tax of this kind, operating through price and cost incentives
in ways consistent with normal market forces, seems to me a tool
well adapted to meeting this particular kind of problem.
Beyond the question of structural market differences, there
is little doubt that we have made progress toward closing the
gap which had so clearly developed during the 1950's in basic
rates of return and profitability on investment between the
United States and Europe. Let me review just a few figures bearing
on the issue.
- 7 Corporate profits in the United States from 1957-1960
averaged $21.9 billion after taxes, and the ratio to GNP had
declined to 4.7% -- a fact reflected in the widespread concern
expressed over a "profits squeeze". By the first quarter of
this year, however, after tax profits were running two-thirds
higher at $36.5 billion, and had returned to 5.6% of GNP -despite the effects of more liberal depreciation guidelines in
encouraging corporations to increase d~preaiatio.n allowances
at the expense of reported profits. Looking at manufacturing
industries alone, after tax profit margins on sales rose from
4.5% in the 1957-1960 period to 5.4% in the final quarter of
1964, a gain of 20%. And even more directly relevant to investment decisions, the rate of return on equity in manufacturing
industries has climbed over the same period from 9.8% to 12.4%.
Clearly, this improved climate for investment in the United
States has not, in itself, so far prevented a rising capital
outflow -- or encouraged an equivalent rise in foreign investment here -- amid all the other factors bearing upon these
investment decisions. But there are signs that the extraordinary
investment and profit opportunities in Europe that developed out
of its rapid growth and the development of the Common Market in
the late 1950's and early 1960's are gradually being exhausted.
And it does seem to me that, slowly but surely, this kind of
narrowing of the gap in investment prospects cannot fail to
exert a favorable effect in bringing a more balanced flow of
funds internationally, as long-range investment programs are
established and formulated not on the basis of conditions that
existed a few years ago, but on the basis of today's facts and
the brighter prospects for the home market.
This is an area in which our domestic needs coincide directly
with the requirements of international equilibrium. As you know,
our fiscal policies have been fundamentally reoriented in recent
years to help sustain our business expansion and improve our
profit potential. The results~ in terms of our domestic economy,
are plain, and I am confident the improved domestic investment
climate should help us internationally as well. Moreover, we
have proposed measures to encourage foreigners themselves to
share in these benefits by removing features of our tax structure
that discourage foreign investment here out of all proportion to
the revenues generated.
In summary, as we look ahead, in the investment area as in
the current account, there are some encouraging signs that basic
forces are at work toward equilibrium. Many problems remain and
- 8 -
no precise timetable can be specified. But the opportunities
are clear, if we have the will and wisdom to seize them.
The nature of the challenge is clear. For example, past
experience indicates that the task of maintaining price stability
can be even more difficult as levels of unemployment decline.
Good as our past performance has been in this respect, Government,
business and labor must continue to face up to their own responsibilities in protecting and extending that record against any
new threats on the horizon. We must be equally alert to the
dangers of recession or stagnation that could only impair investment prospects at home and increase incentives to the outflow of funds, while undermining our prospects for continuing
growth in productivity and maintaining our lead in technology.
At the same time, as our accounts begin to respond to the
voluntary program, we must not be under any illusion that we
can delay or weaken measures -- large or small -- to reduce
the outflow of Government dollars abroad, to spur our exports,
and to encourage tourism in the United States.
The other side of the coin seems to me equally clear. There
is no room for relaxation of the voluntary program in a presumption that the long-range factors and other measures upon
which I have concentrated tonight will predictably and promptly
restore equilibrium -- no matter how favorable they may appear
to be. The time has come when we must end our deficits, and
end them decisively. We cannot escape into the long-run, nor
can we procrastinate in the idle hope that some alchemy in the
form of a new international monetary system will ease the task.
I am confident that, with the continued willing cooperation
of the business and financial communities, we will succeed in
our effort. Anything less will fall short of our needs.
000
TREASURY DEPARTMENT
FOR IMMEDIATE REIEASE
ANTIDUMPING PROCEEDING ON
VINYL ASBESTOS FlOOR TIlE
On
May 17, 1965, the Commissioner of Customs received informa-
tion in proper form pursuant to the provisions of section 14.6(b)
of the Customs Regulations indicating a possibility that 1/16 inch
vinyl asbestos floor tile, 9 x 9 inch size, imported from Canada,
manufactured by Building Products Limited, Montreal, Canada, is
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 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 Asphalt and Vinyl Asbestos
Tile Institute, New York, New York.
An "Antidumping Proceeding Notice" 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 June 1964
through March 1965 was approximately $400,000.
TREASURY DEPARTMENT
June 10, 1965
FOR IMMEDIATE REIEASE
ANTDlJMPING PROCEEDING ON
VINYL ASBESTOS FlOOR TIIE
On MB\Y 17, 1965, the Commissioner of Customs received informa-
tion in proper form pursuant to the provisions of section 14.6(b)
of the Customs Regulations indicating a possibility that 1/16 inch
vinyl asbestos floor tile, 9 x 9 inch size, imported from Canada,
manufactured by Building Products Limited, Montreal, Canada, is
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 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 Asphalt and Vinyl Asbestos
Tile Institute, New York, New York.
An "Antidumping Proceed.1n8 Notice II to this effect i8 being published 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 June 1964
through March 1965 was approximately
$400 ,000.
TREASURY DEPARTMENT
June 11, 1965
FOR IMr-1EDIATE RELEASE
ANTIDUMPING PROCEEDING ON
FUR FELT HAT
BODIES
On May 24, 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 fur felt
hat bodies imported from Czechoslovakia are being, or likely to be,
sold at less than fair value wi thin tile 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 l4.6(d)(1)(ii), (2) and (3) of the Customs Regulations.
The information was submitted by United Hatters, Cap and Millinery Workers International Union, New York, New York.
An
"P.ntidumping Proceeding Notice" to this effect is being pub-
lished in the Federal Register pursuant to section l4.6(d)(1)(i) of
the Customs Regulations.
Imports of the involved merchandise received during the year 1964
were worth approximately $1{0,000.
000
TREASURY DEPARTMENT
(
June 11, 1965
FOR IMMEDIATE RELEASE
ANTIDUMPING PROCEEDING ON
FUR FELT HAT BODIES
On May 24, 1965, the Commissioner of Customs received information in proper form pursuant to the provisions of section 14.6(b)
of the Customs Regulations indicating a possibility that fur felt
hat bodies imported from Czechoslovakia are being, or likely to be,
sold at less than fair value witnin 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 United Hatters, Cap and Millinery Workers International Union, New York, New York.
An "Antidumping Proceeding Notice" to this effect is being pub-
lished in the Federal Register pursuant to section 14.6(d)(1)(i) of
the Customs Regulations.
Imports of the involved merchandise received during the year 1964
were worth approximately $1'(0,000.
000
TREASURY DEPARTMENT
JR RELEASE A.M. NEVlSPAPERS,
-
lesday, June 15 , 1965.
June 14, 1965
RE3lJLTS OF TREASURY'S WEEKLY BILL O£"FERING
The Treasury Department announced last evening that the tenders for tW('l series of
~easury
bills, one series to be an additional issue of the bills dated March 18, 1965,
ld the other series to be dated June 17, 1%5, which were offered on June 9, were opened
; the Federal neserve Banks on June 14. Tenders were invited for $1,200,000,000, or
1ereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 182-day bills.
1e details of the two series are as follows:
91-day Treasury bills
maturing September 16, 1965
Approx. Equi v. :
Price
Annual Rate
99.043
3.786%
99 • 038
3 • 806 %
:
99.040
3.799% 1/
iliGE OF ACCEPTED
)MPSTITI~ BIDS:
High
Low
Average
182-day Treasury bills
maturi~ Decffiuber 16, 1965
Approx. 'Squiv.
Annual Rate
Price
3.867%
98.045
98.041
3.875h
98.042
3.873%
1/
75 percent of the amount of 9l-day bills bid for at the low price was accepted
45 percent
of the
a~ount
trAL TENDERS APPLIED F'OB.
District
;3s'Eon
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st, Louis
Hinneapolis
Kansas City
Dallas
San ?rancisco
TOTALS
of 182-day bills bid for at the low price was accepted
A1~D ACC:~PI'ED
AEl21ied For
146,976,000
1,273,127,000
27,941,000
29,073,000
13,813,000
32,789,000
307,461,000
44,796,000
19,153,000
20,868,000
25,483,000
98,371,000
$2,039,851,000
$
BY F:2":DSRAL RESERVS DISTRICTS:
Accepted
$ 1}4,476,000
685,706,000
15,941,000
29,073,000
13,813,000
28,917,000
168,3)6,000
37,396,000
13,128,000
19,868,000
15,408,000
33,571,000
$1,200,633,000
···
·
$
·••
·
10,439,000
10,)66,000
10,857,000
185,479,000
$2,302,842,000
AEElied For
1,724,712,000
13,620,000
16,968,000
2,725,000
34,556,000
275,173,000
13,87i,000
!/
Acce,eted
4,068,000 $
3,049,000
782,178,000
5,448,000
14,803,000
2,725,000
12,106,000
59,013,000
9,279,000
4,939,000
9,366,000
5,857,000
92,706,000
$1,001,469,000
£/
Includes $245,728,000 noncompeti ti ve tenders accepted at the average price of 99.040
Includes $102,442,000 noncompetitive tenders accepted at the average price of 98.042
~a coupon issue of the same length and for the same amount invested, the return on
these bills wouli provide yields of 3.89% for the 91-day bills, and 4.01% 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
Yea:, In contrast, yields on certificates, notes, and bonds are computed in terms
of lnterest on the amount invested, and relate the number of days remaining in an
~terest payment period to the actual number of days in the period, with semiannual
COmpounding if more than one coupon period is involved.
,90
STATEMENT OF THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE THE
SENATE FINANCE COMMITTEE
ON THE PUBLIC DEBT LIMIT
TUESDAY, JUNE 15, 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
our needs in the period ahead.
at $324 billion.
The present temporary ceiling stands
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 corne 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.
You will recall that the President's Budget submitted to
the Congress in January of this year anticipated a deficit of
$6.3 billion for fiscal 1965.
As you are aware, this outlook
has improved significantly since that time.
Late in April, the
President was able to announce an expected decrease in anticipated
expenditures for the fiscal year of $500 million.
Meanwhile,
accumulating evidence of a larger than expected flow of taxes,
particularly of individual income taxes, now indicates that
F-91
- 2 -
receipts will total at least $1.4 billion more than anticipated
in January.
As a result, our estimated fiscal 1965 deficit has
been reduced to about $4.4 billion.
The difference between our debt ceiling needs for fiscal
1966 and the need when the Treasury appeared before this Committee
a year ago is primarily accounted for by this 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.
Every year, the Treasury faces a large seasonal shortfall
in revenues during the first six to eight months of a fiscal year.
For instance, we typically collect less than 45% of our annual
revenues from the end of June to the end of December.
Consequently,
even in years of balanced budgets, we have substantial seasonal
borrowing requirements over that period, and these requirements are
relatively little influenced by moderate changes in the budgetary
projections for a fiscal year as a whole.
The size of an anticipated
surplus or deficit does, of course, determine how much of this
borrowing can be purely temporary, to be paid off in the spring
when revenues are seasonally flush, but it is the earlier peak
seasonal needs which must be covered by the debt ceiling.
- 3 -
Given this recurrent seasonal pattern, it is plain that
the debt ceiling must be raised not so much to take account of
any prospective deficit in fiscal 1966 as a whole, but simply
to take account of the fact that, as a result of the $4.4
billion deficit anticipated for the current fiscal year, we
expect that we will be entering the current fiscal year with
the actual debt some $4.7 billion higher than a year earlier.
I know the Committee is also interested in a review of
the prospects for fiscal 1966 as a whole.
As you are aware,
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 for July 1.
On the
basis of recent experience, and with continued gains in economic
activity, that revenue estimate, still 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, which was
passed by the House of Representatives recently and upon which
your Committee has reported.
Enactment of that additional
cut will offset an estimated $600 million of the $1.6 billion
improvement in the revenue outlook.
As a result, we now estimate
- 4 receipts in fiscal 1966 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-end
dates in fiscal 1966 consistent with this budgetary outlook is
shown on Table I attached.
The debt levels that are shown in
the last column of Table I 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 -- a figure
below our actual average balances in recent years.
In practice,
there is, of course, a great deal of fluctuation in our actual
cash balances, and at various times
during the year it is
feasible and desirable to achieve cash balances smaller than $4 billion
- 5 However, that figure seems to me a necessary and prudent minimum
allowance for a cash balance adequate to conduct the operations
of the Treasury in an efficient manner, and 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, 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 Table I 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
- 6 for the current fiscal year was presented to the House Ways and
Means Committee as the amount that was necessary to carry the
Treasury through the fiscal year 1966.
That Committee suggested
that this figure instead be rounded down to $328 billion, and
the House has since completed action to provide a new temporary
ceiling at the $328 billion figure for fiscal 1966.
I stated
before the House Committee that our study had been carefully
done and that we believed it would be prudent to fix the ceiling
at the requested figure of $329 billion.
I
added that the
process of shaving the assumptions could entail some measured
risks.
Nevertheless, I told the House Committee that I would
not enter any strong objection to their then proposed action.
In consequence, I appear before you with the same data and
estimates as were presented to the House Committee, but with
a specific request for the $328 billion ceiling as voted by
the House rather than the $329 billion we had requested.
I should emphasize, in requesting your concurrence in this
action, 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
collect~0ns
only with a lag of two to three months,
- 7 -
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.
I would also like to call your attention to Table II,
comparing our projections of the debt subject to limitation
submitted to this Committee last June with actual results.
It
can be seen that the actual debt in most recent months, adjusted
to the assumed cash balance of $4.0 billion, (Column 5) fluctuated
close to our earlier estimates.
While the unexpected increases
in the revenue flow have permitted us to remain under our estimates
by a wider margin in April and May, at the peak requirement
period of mid-March the debt was only $800 million less than that
which was estimated a year ago.
It is, of course, this peak
seasonal requirement that must be anticipated almost a year ahead.
I believe the record is also clear that the $3 billion leeway
implicit in the temporary ceiling of $324 billion provided for
the current fiscal year has, as intended, been properly reserved
as a margin for flexibility and emergencies -- a margin that,
fortunately, we did not need to draw upon this year.
It can also be seen that as a practical matter the operating
cash balance has rarely been at or below $4 billion, and that
the substantial, and not entirely predictable, monthly variations
- 8 -
in our cash flow have occasionally resulted in considerably
higher balances for brief periods.
These variations, I believe,
are a normal consequence of an orderly financing program designed
to assure adequate balances over periods of peak cash
dra~ns,
adequate flexibility in scheduling our borrowing operations, and
our ability to meet the broader economic objectives of our debt
management program.
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.
Attachments:
Table I
Table II
Table I
ESTIMATED PUBLIC DEBT SUBJECT TO LIMITATION
(Based on constant minimum operating cash balance of $4.0 billion)
FISCAL YEAR 1966
(In billions)
Operating
Cash Balance
(excluding
free gold)
Public Debt
Subject to
Limitation
Allowance to Provide Flexibility
in Financing and
for Contingencies
Total Public
Debt
Limitation
Required
~
June 30
$4.0
$310.2
$3.0
$313.2
July 15
July 31
4.0
4.0
313.1
314.3
3.0
3.0
316.1
317.3
August 15
August 31
4.0
4.0
314.7
315.7
3.0
3.0
317.7
318.7
September 15
Septembe r 30
4.0
4.0
3Hs.8
313.1
3.0
3.0
321.8
316.1
October 15
October 31
4.0
4.0
316.2
318.7
3.0
3.0
319.2
321.7
November 15
November 30
4.0
4.0
319.7
319.6
3.0
3.0
322.7
322.6
December 15
December 31
4.0
4.0
321.3
319.6
3.0
3.0
324.3
322.6
1966
January 15
January 31
4.0
4.0
322.8
321.5
3.0
3.0
325.8
324.5
February 15
February 28
4.0
4.0
321.6
321.9
3.0
3.0
324.6
324.9
March 15
March 31
4.0
4.0
325.9
319.5
3.0
3.0
328.9
322.5
April 15
April 30
4.0
4.0
323.0
319.0
3.0
3.0
326.0
322.0
May 15
May 31
4.0
4.0
318.3
320.1
3.0
3.0
321.3
323.1
June 15
June 30
4.0
4.0
322.8
315.2
3.0
3.0
325.8
318.2
Table It
Comparison of debt projections of June 23,1964 with actual results
(In billions)
-
Projections of
June 23, 1964
Fiscal Year 1965
~
June 30
·..............
·..............
·..............
August 15 .............
August 31 .............
July 15
July 31
September 15
September 30
••• c ••••••
..........
October 15 ·...........
October 31 ·...........
November 15 ·..........
November 30 ·..........
December 15 ·..........
December 31 ·..........
Operating
cash balance (excluding
free Gold)
Actual
Debt
Operating
subject cash balto
ance (exlimita- eluding
tion
free Gold)
(1)
(2)
$4.0
Debt
subject
to
limitation
Debt subDifferject to
ence
limitation
col.
5
after adj.
compared
cash balance
with
to $4.0
col. 2
11
(3)
(4)
$307.9
$10.1
$312.2
$306.1
-1.8
4.0
4.0
311.0
311.8
5.9
5.3
311.2
311.6
309.3
310.3
-1.7
-1.5
4.0
4.0
313.5
314.2
6.1
6.0
313.2
314.6
311.1
312.6
-2.4
-1.6
4.0
4.0
316.9
311.2
3.8
9.3
315.7
316.1
315.9
310.8
-1.0
-.4
4.0
4.0
315.0
316.3
5.1
4.8
315.6
316.1
314.5
315.3
-.5
-1.0
4.0
4.0
318.1
317.7
4.8
7.2
317.0
319.0
316.2
315.8
-1.9
-1.9
4.0
4.0
320.5
316.0
3.3
6.2
318.7
318.5
319.4
316.3
-1.1
+.3
4.0
4.0
318.9
318.0
2.8
4.5
317.9
318.4
319.1
317.9
+.2
-.1
4.0
4.0
319.1
318.2
4.6
6.8
318.4
320.3
317.8
317.5
-1.3
-.7
4.0
4.0
321.0
315.4
4.2
8.1
320.4
318.1
320.2
314.0
-.8
-1.4
4.0
4.0
319.2
315.6
4.5
7.9
318.0
316.9
317.5
313.0
-1.7
-2.6
4.0
4.0
316.7
317.1
8.9
9.7
316.1
319.5
311.2
313.8
-5.5
-3.3
4.0
4.0
319.9
313.9
(5)
~
·...........
·...........
February 15 ·..........
February 28 ·..........
March 15 ·.............
March 31 ·.............
April 15 ·.............
April 30 ·.............
January 15
January 31
................
May 15
May 31 ...•............
June 15
,June 30
...
...............
...............
/ Mjustment to $4.0 billion cash balance places data on basis comparable to estimates
given OIl June 23,1964, as shown in column (2).
- 3 -
In addition to the above delegates, the following will
attend the Conference as U. S. observers:
Byron Engle, Director of the Office of Public
Safety, Agency for International Development,
Department of State;
Frank A. Bartimo, Assistant General Counsel
(Manpower), Department of Defense;
James F. Greene, Deputy Associate Commissioner,
Immigration and Naturalization Service,
Department of Justice;
Edward S. Sanders, Legal Attache, United States
Embassy, Rio de Janeiro.
Mr. Sagalyn was elected in 1962 to a three-year term,
expiring this week, as senior Vice President and a member of
Interpol's nine-man Executive Committee.
representative of the Western Hemisphere.
He holds office as a
The President of
Interpol is Mr. Firmin Franssen, Commissioner of the Belgium
Criminal Police.
There are 93 member nations in the organization
and three more are expected to be admitted at the meeting this
week.
- 2 -
Arnold Sagalyn, Director of Law Enforcement Coordination
for the Treasury Department and senior Vice President of
Interpol)is Chairman of the U. S. delegation.
The Treasury
Department.which has international law enforcement responsibilitiE
,)
in such fields as narcotics trafficking, counterfeiting, and
smuggling, serves as the Interpol representative in the United
States.
Other U. S. delegates at the Rio de Janeiro meeting are:
John Ro Enright, Assistant to the C
Bureau of Narcotics;
o~missioner,
Lawrence Fleishman, Deputy Commissioner,
Bureau of Customs;
H. Alan Long, Director of Intelligence Division,
Internal Revenue Service;
John H. Hanly, Special Agent-in-Charge, U. S.
Secret Serviceo
Alternate delegates are:
William J
o
Durkin, District
Supervisor, Bureau of Narcotics, Mexico City, Mexico; and
Charles L. Gittens, Special Agent, U. So Secret Service, San
Juan, Puerto Rico.
June
15, 1965
FeR IMMEDIATE RELEASE:
UNITED STATES OFFICIALS AT
INTERPOL CONFERENCE IN RIO DE JANEIRO, BRAZIL
Treasury law enforcement officials are representing the
United States at the 34th General Assembly of the International
Criminal Police Organization (Interpol) which meets June 16-23
in Rio de Janeiro, Brazil.
Interpol was organized in
1'12.. 3 , to insure and promote
mutual assistance between criminal police authorities, within
the limits of the laws of the member states, and to work toward
efficiency in repression of crime.
Its regulations exclude
matters of political or religious character, and racial matters.
Subjects to be discussed at the meeting include the
international drug traffic, international counterfeiting of
currency and securities, laws and regulations governing
international trade in gold and diamonds, a study of an
international fingerprint classification system, and international
frauds.
F-
fL
TREASURY DEPARTMENT
June 15, 1965
FOR IMMEDIATE RELEASE
UNITED STATES OFFICIALS AT
INTERPOL CONFERENCE IN RIO DE JANEIRO, BRAZIL
Treasury law enforcement officials are representing the
United States at the 34th General Assembly of the International
Criminal Police Organization (Interpol) which meets June 16-23
in Rio de Janeiro, Brazil.
Interpol was organized in 1923, to insure and promote mutual
assistance between criminal police authorities, within the limits
of the laws of the member states, and to work toward efficiency
in repression of crime. Its regulations exclude matters of
political or religious character, and racial matters.
Subjects to be discussed at the meeting include the
international drug traffic, international counterfeiting of
currency and securities, laws and regulations governing international
trade in gold and diamonds, a study of an international fingerprint
classification system, and international frauds.
Arnold Saga1yn, Director of Law Enforcement Coordination for
the Treasury Department and senior Vice President of Interpol,
is Chairman of the U. S. delegation. The Treasury Department,
which has international law enforcement responsibilities in such
fields as narcotics trafficking, counterfeiting, and smuggling,
serves as the Interpol representative in the United States.
Other U. S. delegates at the Rio de Janeiro meeting are:
John R. Enright, Assistant to the Commissioner,
Bureau of Narcotics;
Lawrence Fleishman, Deputy Commissioner,
Bureau of Customs;
H. Alan Long, Director of Intelligence Division,
Internal Revenue Service;
John H. Hanly, Special Agent-in-Charge,
United States Secret Service.
F-92
- 2 -
Alternate delegates are: William J. Durkin, District
Supervisor, Bureau of Narcotics, Mexico City, Mexico; and
Charles L. Gittens, Special Agent, U. S. Secret Service,
San Juan, Puerto, Rico.
In addition to the above delegates, the following will attend
the Conference as U. S. observers:
Byron Engle, Director of the Office of Public
Safety, Agency for International Development,
Department of State;
Frank A. Bartimo, Assistant General Counsel
(Manpower), Department of Defense;
James F. Greene, Deputy Associate Commissioner,
Immigration and Naturalization Service,
Department of Justice;
Edward S. Sanders, Legal Attache, United States
Embassy, Rio de Janeiro.
Mr. Sagalyn was elected in 1962 to a three-year term, exp~r~ng
this week, as senior Vice President and a member of Interpol's
nine-man Executive Committee. He holds office as a representative
of the Western Hemisphere.
The President of Interpol is
Mr. Firmin Franssen, Commissioner of the Belgium Criminal Police.
There are 93 member nations in the organization and three more
are expected to be admitted at the meeting this week.
000
- 3 -
and exchange tenders vill 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
~e
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.
- 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
June 24,
fl6+
, in cash or other immediately available funds or in a like face
amount of Treasury bills maturing _ _ _--:J::..;un=.:..;e::..-=2:....;4~W~~1~9~65:::::..-.-------.
Cash
TREASURY DEPARTMENT
Washington
June 16, 1965
FOR IMMEDIATE RELEASE,
XXX)GO{~
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
cash and in exchange for Treasury bills
of $ 2,207,661,000
mat~ring
tet
June 24, 1965
, in the amount
:w
,as follovs:
W-
91 -day bills (to maturity date) to be issued
:w=
,or thereabouts, for
June 24, 1965
-------f&F~~-----
in the amount of $ 1,200,000,000 , or thereabouts, represent-
+4=
ing an additional amount of bills dated
and to mature
M~rch
m
1965
September 23, 1965, originally issued in the '
w= ,the additional and original bills
amount of $1,000,457,000
{Mf
to be freely interchangeable.
182 -day bills, for $ 1,000,000,000 ,or thereabouts, to be dated
tIft
June Jflr 1965
f14
------~~~------
, and to mature
December 23, 1965
-------{44f~~------
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, June 21, 1965
fiSt
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
June 16, 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,OOO,000,or thereabouts, for cash and in exchange for
Treasury bills maturing June 24,1965,
in the amount of
$2,207,661,000, 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 March 25,1965,
mature September 23,1965,originally issued in the
$1,OOO,457,OOO,the additional and original bills
interchangeable.
June 24, 1965,
representing an
and to
amount of
to be freely
182 -day bills, for $ 1,000,000,000, or thereabouts, to be dated
June 24, 1965,
and to mature December 23, 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
(maturi ty value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Monday, June 21, 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 de ale rs in investment securi tie s . 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-93
- 2 -
Immediatelv after the closing hour, tenders will be opened at
the Federal Res~rve 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 tenders
will be advised of the acceptance or rejection thereof. The
Secretary of the Treasury expressly reserves the righ~ to a:cept or
reject any or all tenders, in whole or in part, and hiS act~on in
~ny 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 he made or completed at the Federal
Reserve Banks on June 24, 1965,
in cash or other immediately
available funds ,)r in a like i<1Ce amount of Treasury bills
maturing June 24, 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, 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
- 23 -
and welfare of his community and of his nation.
Always, he has
understood that neither the nation nor business is well served
by unnecessary and unwarranted antagonism -- by unnecessary and
-between government and business.
unwarranted misunderstandingi Always, he has recognized instead
the need for widening the avenues of communication and cooperation
between business and government -- between government officials,
on the one hand, who understand the role of the profit system in
accomplishing our economic goals and businessmen, on the other
hand, who accept their full responsibility in helping government
do its job of promoting the welfare of the nation as a whole.
Always, he has advanced the welfare of his business, his
nation and his fellow man.
- 22 bargaining, of trade, of fiscal and monetary policy.
And, as you know, Stuart served with Henry Ford II as cochairman of the Business Committee for Tax Reduction without
whose efforts the Revenue Act of 1964 might never have seen the
light of day -- or might have done so only after our economy
fallen into its fifth postwar recession.
q+Jv-<.~--ft ~~l/\;V7
Today,
serves as a member of the Business Advisory
~
Committee on the Balance of Payments -- a committee whose efforts
~~
-
~~1
lA.4
t11tz. .
e.-
~~ J-MIt
thus far fra.¥e been instrumental in / ,\raev4ng
us ahead toward bringing
..
our balance of payments to a swift and sure endo
.To_li.--st=t:hese endeavors is' otrly- to hiftt: at the
cQntr ibutions
to
~he
StuartSatmders--hao-~made
ltati""al
~ale. l~lWayS,
enp:r'MftHS _
--to--na t iona-l PQ 1 icie s---And
ST"~kl ..SAl'llIli£~.S
I,
has understood that the propel
concern of the businessman must include more than merely his
business or business in general -- it must also include the life
- 21 -
Under the leadership of President Johnson, we in government
have thus given continued evidence of our faith in the vigor and
viability of our free enterprise system -- and our recognition
of the vital role that the American business can, and must, play
"E~ct A~~ ~Lu.;
in the promotion of our national welfare. <r·kHow of He aeetal'
~:, J ( '.:..,,; -', ,. .... , I \ l dl 7' rhf,;4- '1" \/~t~ .
.
Gttu c r..) t...'j
~ c edctl(
l
1 r
\! u
~. - ~ Nt Wi
d,
iI
'l:
,~r ""1"'ff-J;;jCe
5 __
5~
tt.. ~'-'\..- ....,.,,-c,tl--v-
way to illustrate hO~11 CORitructive that role can be theft to talk,
,~ \.._'-A)/\/\i"vL-4--~"-(
Y--
~ L ~ r--1U,-,- ,-' '- \"'-+--;y-~ "V'-'.L-,-v--'-'/ll. ,C'L ~
agaia-,-of my good friend Stuart Saunders,
----- . 'V'
, '\ ~. tt.ll....~
.
(L l..._
l
'--'
v ..... V--\" ,-.>..T
0.-\. 'vt
L
~ C,-)
Gl "'-
1.-')
('-T
-,Cr \. L ---tv v I
~tl.
Lo.--
'c..L L L'O
I
He has been an active, participating member of a group which
has -- I am sorry to say -- been languished of late but which I
intend to do all I can to revive:
tee on Labor-Management Policy.
the President's Advisory Commit
It would be
~possible
to des-
cribe in the little time I have left the range and depth of key
national policy questions that this group of business\and labor
leaders have studied -- questions of automation, of collective
- 20 -
government purchases of goods and services in our economy have
risen by only $123 billion, while non-government purchases have
times as much. S~~~< I ~ , t, ~~1~'
, ' ",' '.. Co ~ ~, ) C , 'I 'i'-l'eL .' ' " ," ,,), L 0 C U ,,) i",,_c-' "'~ L~'~ ~~ oW
l\.A..-)," Y ~~ -\ ~ 'V -c L.--w, 1: .... ,-,(..."...:t f}../\- '- '-C £''--''-1--'-.1 ~L-,,- (,,~v ~J.-~-"" t., ... '"'I ~I.
J "1
international financial affairs, as well as in the aomes- . .
risen by $552 billion, or by
-.
412
/n
. /'
;fP
.
~
ct;' \ .
tic economy, President Johnson has demonstrated his faith in the
-..
t,
~~v ~L~American economy and in the American businessman.
When special
factors joined with an increasing outflow of private investment
capital late last year and widened our balance of payments deficit,
President Johnson rejected the counsel of those who called for
direct government controls upon private outflowso
sought and he received -- and he followed
-~
Instead, he
the advice of
bankers and businessmen themselves by calling upon the nation's
business and banks to join in a program of voluntary restraint
on
- 19 the five-year period 1961-1966, we expect Federal revenues to
;' ~
,\,-,~. v 'Iv" '--{,'~ L
$1707 billion -- despite some
grow by an even larger,amount
$17
bi11~?n
/C,.(',--,C"\'
in tax
reduction.U~r- ~tCvi rl.b--'-J\.' ,-.J _t,t.. ~tA ~
Lv- jJt,L'--'J ~Lv.-.(..~,- LJ'~M.. \...1~y~l' i')'L~'C'v
It \.\.
'Iv,L1f
Thus, I see no reason why -- since our policy of tax reduction has made such a signal contribution to our economic needs
~A,~l
and goals -- we should not, in the months BUO year.s ahead,
continue to look for opportunities for further tax cuts as the
circumstances may warranto
,,',1
,
.
.',
.vt'c-'-: \:)...r--\".\...
t '-I
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L-v "\....-~.i\.'~,
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nvll-
t;t\,.\
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fJAAV'\.Cl.\. c/l.
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'
/",~,LtX~'-'\ (;\A..-\..<L'-""
There, is---l-it-tte, - therefor e ,-i:n-ree€nt:· -bistory
'll [,.\., ~\.,\
th~
c.:.~';
!L..\....-\"-v,",-"t:\.,,
IV'VV{. '\,. ...........
1
Ju
J. 1
•• _ j
+-r.
./~ r;
l~"""""'\ \~V"
.t.o---~i,fy-
~f--.. 'C-{;v\
.fears that we see expressed, from time to time, that
government is taking over everything, is usurping the role and
entering the provinces of private enterprise and of the private
sector.
In fact, it may come as a surprise to some to learn
that in the years between 1929 and the first quarter of 1965,
- 18 of the private sector of our economy -- as well as its determination to seek solutions to our economic problems within the
framework of the free enterprise system.
TH i=,J
----....---investment
depreciation reform5of 1962
(
{j ( i '-j \#' '-}
",." .---
Through the
credi~~
and the Revenue Act of 1964, and now through the proposed reductions in excise taxes, we have moved vigorously and repeatedly
to diminish the burden of wartime tax rates upon the private
/\
economy and thus to furnish it with renewed opportunity and fresh
incentives to help meet our basic economic needs.
These measures have not only strengthened the private
economy, but they have brought us steadily closer to our goal
of a balanced budget in a healthy, balanced economy.
During the
six-year period 1955-1961 -- a period with no tax reductions --
r
. . . . ,)
I
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l~
v-v""""'-
- 17 ever, the national welfare requires a dialogue, not discord -cooperation, not conflict -- between the leaders of American
government and the leaders of American business.
There will -- there must -- be honest differences, but let
them not be divisiveo
There will -- there must -- be mutual
I-vi ([)I." I@
~{
.
'
,'~-.;
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/V\,_~~ry'-liJ __ ,~ v,Lc'\...t/;;l./-r _t/--i- J C;;~t t'L<>---' ~t.J l \"LoL-{'1'-<-J-.1
',/vv~i
7
. ble
,~
~
t
J
t" v-e- I
- 16 strategic role in the life of the nation as a whole.
It is
his judgment, initiative and administrative skill that primarily
determine the goods and services we produce in our system of free
competitive enterprise -- that foster the economic development
of our society -- that govern the distribution of income to workers
and owners -- that furnish the industrial and technological base
for our national defense.
He, in short, is the main fulcrum of
our economic system.
Today, more than ever, he has a crucial role to play in
promoting the national welfare -- a role that must reach far
beyond the immediate interests of his business.
For today, more than ever, continued economic expansion
depends upon a growing partnership for progress between the
private and public sectors of our economy.
And today, more than
- 15 c c U:.. \ .'
,I.I( ("
f+ ,\}
i)
THe
UMA/illl
must depend very largely upon the ~vic effor1J of local business
- - - ---------S~eaking
leadership.
-
\
------------ ---_.- .... -
"
-
-
------------------.--~
---
of the war on poverty, President Harold
\,
Geneen of Intern~tional Telephone and Telegraph has said -- and
\
I quote:
\
"We in
\
in~ustry
owe it to our society to use
\
our
resour~s
to cure a social ill that has
\
been with us too long o
We have the capital,
the manpower, the skills, the technology and
the desire to get: the job done."
\
These words apply equally a
a multitude of other social
-
--
-~--
- - ------- --- ---
--
well to poverty and ignorance, and
Is.
But it is not enough that our business leaders extend their
interests and their endeavors to the critical needs and problems
of their localities.
For the businessman also occupies a
- 14 fortune his child receive a good education, his chances are slim
of finding suitable work or a suitable home anywhere but in a
neighborhood like that in which he was raised.
It is also time --
high time -- for business leaders to play a far more positive
and progressive role in seeking solutions to the incendiary
problems of de facto segregation in schools and housing.
Too
often businessmen -- along with many others in our cities and
communities -- have simply sat back and watched and waited until
these problems reached uncontrollable proportions.
It is time for
our business leaders to seize the initiative and to set in motion
in our cities and communities positive and effective efforts
3 r
i
i Jf/~> /
rf,
lJ )-/ ,~- // I
toward solving these prob1emsA C;:-: /"l . ; )
/h':;;'
~ t".
-.
.... .'
,<./,.(~,-
'"
~,
I,'"
''/-
M.-
((/ ,7'" (:,J;::. ~~
fIT" ·,'::>E· /p ;:: /...:.v S/ Adt19 lioAJ
(,:,~,/';"" " I AI/c2)
;'::I.":<.-£(.!J.;I,!
.Y",t If(''
G/~ /
t.t)/Lc.. ,U" (..6A.16,I'-,-t;
4) •
These are but three of the most crucial problems that
afflict every area of our nation today -- problems whose solution
- 13 effective and durable results.
But perhaps there is no more crucial area in which our cities
and communities cry out for far greater, far more constructive
and courageous leadership from the business community \~ in the war
/.
on prejudice.
For prejudice strikes at one of the most basic
beliefs of our
societ~
-- the belief that, while between indivi-
dual human beings there may be enormous differences, we all share
alike a common humanity.
And prejudice in countless ways under-
mines and impoverishes our lives -- morally, socially, economically
The time has come -- it is indeed high time -- that in our
cities and communities we open wide our employment doors to
qualified people of all races and colors.
For only thus can we
help replace with hope the deep despair that afflicts the Negro
parent who knows or believes that, even should by some good
- 12 There can be no question but that businessmen throughout
the country have heard and heeded the call to arms against
HC
IAJ
L.pOJC~ {
~li I ~
-.,
poverty -- particularly ~ it involves equipping\ the untrained
-
I
or illtrained with appropriate skills for productive employment
in a given region or community.
But there remains enormous room,
and need, for greater and growing efforts in this area.
~iS
particularly vital that private industry coordinate its recruitment policies with local and regional retraining programs,
whether public or private.
Nothing could be more wasteful, or
foolish, than to equip people with special skills if there are
no jobs available in which to employ those skills.
fact, vital need for deep
<-\. -
'v
There is, in
L-'\.. V,--,,-<--..w
indus~A
involvement in all phases of
I '
local and regional retraining programs
in planning, in teach-
ing, in counselling -- for only thus can we assure really
- 11 -
in aiding education -- has estimated that corporate contributions to education last year totaled about $250 million -compared to an estimated $225 million for 1963 and $200 million
for 1962.
But the $250 million contribution for 1964 amounts
to an estimated 0.44 percent of corporate profits before taxes -the same percentage estimated for 1963.
<~ /'.I
i ;:'
And this is simply
'I
one example ofAone aspect of the enormous need for business
leadership in helping meet the mounting demand for more and
better educational opportunity in our cities and communities.
There is also a critical need for businessmen to expand
their efforts in attacking, at the local and regional level,
two of our most pervasive ~ appalli~~:social ills -- poverty
and prejudice.
For in the war to wipe out these two ills -- as
well as in the effort to aid education -- national programs /t6111AJ
serve simply to spur and support local programs.
- 10 -
outpacing our efforts to meet them.
More perhaps than any in
our history, President Johnson's Education program will hasten
that day in our land when ability to learn, rather than ability
to pay, will be the sole standard of educational opportunity -when every child will have the opportunity, in the President's
words, "to get as much education as he has the ability to take."
But that program is designed to support, not to supplant, the
efforts of our communities and states.
And while the business
community throughout the nation has taken a leading role in
-- IT ;oUt us / INi:,EAJSIi= "1- those efforts, it must
enlarge~that
role.
Recently, for example, McGraw-Hill, Inc., noted in a
.1VH! C. ~ .
message to industry that the total amount of dollars contributed
- l
.--
by United States corporations to education bQntinues to
liS ,<'A-T( D t ~ i ~C 1-1 A5 ~ t6i.1 AI 'Ie .sLc4)
/'
but at a slower rate.
-1
ris~,
.J
The Council for Financial Aid to
Education -- a private service organization for companies interest
- 9 -
industrial development drives under the personal
direction of the governor's office and has been so
enormously successful in the past two or three years;
-- That led him to play such a vital role in the
Virginia Foundation for Independent Colleges, an
organization to spur corporate contributions to
It M 0
TI·i {. 1 ~
r
M;i \~\, (
private colleges, ~ablin~..i them not only to survive
but to furnish better education for more people.
The list of Stuart's contributions is far too long to
recite here -- and so is the list of problems in our cities and
communities, urgent problems that will surrender only to
intensive, intelligent local effort under local
leadership~~
~ I/,--~../~~t, \..l.,-- ... '--, L ,) l \...~ Ltv\...L '-CLl '-<Lt~ '- t \A..<I..- ~ V\. ~J F(,,--,.:rLU p a,i~
Under the pressures of a rapidly expanding population, for
example, our educational needs at all levels are continually
- 8
=
Stuart Saunders gave to the city of Roanoke and that he is giving
now to the city of Philadelphia o
We need in cities and towns
throughout the land the kind of business leadership that made
Stuart Saunders the leading figure in Roanoke -- the kind of
business leadership
-- that made him the prime mover and chairman of the
Committee of One Hundred, a citizen's group to stimulate
the growth of the city through urban redevelopment,
industrial development and other innovations;
-- that made him active in almost every form of civic
endeavor;
-- that led him, on the state level, to become one of the
organizers of the State of Virginia Advisory Board
on Industrial Development and Planning, which stimulated
- 7 MftN
i
and widespread are these problems that );h~y\
have long since
.,......
/'
passed beyond the reach of purely local concern or local effort
to arouse national concern and to demand national effort.
But
at its very best national effort can only supplement and support
local effort -- it can never supplant it, it can never succeed
without it.
It is to effective local action that we must look for solid
and enduring solutions to these problems -- and effective local
action must depend very largely upon the willingness of local
business leadership to fulfill its civic responsibilities.
What
we need in far more cities from far more of our business leaders
is the application to local problems of the same kind of initiative
imagination and effort that they bring to their businesses.
What
we need is more -- much more -- of the kind of leadership that
- 6 -
than a year ago -- the address in which he first summoned the
nation anew to the building of a Great Society for all Americans -President Johnson pointed out that:
" .0. In the remainder of this century urban
population will double, city land will double,
and we will have to build homes, highways and
facilities equal to all those built since this
country was first settled.
So in the next 40
years we must rebuild the entire urban United States."
There is, I would imagine, scarcely a city or community of
any size in this country that is not beset by a whole host of
serious and stubborn problems -- problems of poverty and slums,
of delinquency and crime, of schools, of housing, of race relations
of traffic and transportation -- the list is endlesso
So acute
- 5 -
businessman merely by sitting at board meetings at the regularly
scheduled time.
I mention these simple truths -- with which we are all
familiar -- only because too often our very familiarity with them
leads us to forget them or take them for granted, because too often
our inevitable preoccupation with the incredible complexities
and subtle sophistications of today's world leads us to overlook
or ignore them.
And in that world, above all, it is imperative
that we not forget or ignore them -- for that world, above all,
requires that the leaders of the business community exercise
their responsibilities
for~rnishin~leadershiP in helping
solve the pressing problems that confront cities and communities
throughout the land as well as the nation as a whole.
In his address at the University of Michigan a little more
- 4 economy of the nation.
Nor, in today's intricate and fast-moving
world, does anyone underestimate how difficult and demanding is
that responsibility alone -- requiring not only considerable
personal ability and character but a competence in a broad and
ever-widening spectrum of fields.
But a businessman is also a human being responsible for his
fellow man, and a citizen responsible for the welfare of his
city, his state and his country -- and he is all these things
not at different times but at one and the same time and all the
time.
He does not cease being a citizen when he sits in a board
meeting, nor does he cease being a businessman when he stands in
a voting booth.
And he does not meet his full responsibilities
as a citizen merely by standing in a voting booth every other
year any more than he meets his full responsibilities as a
- 3 -
deeper than the narrow and parochial view which -- while it is
fiast fading -- is still, I suspect, too prevalent.
MerE-::pel"hl:fps--{;1ian=any-~~ -am faIl£111lf!'wiOGQ." Stuart
W~A TXtL~~LtL
Saunder's career is a kind of parable, an epitome,
(t
l. l.
\> '- \..
ofA~·~e~
l" , >' i. i,
the businessman ought to be in today's world.
For he has excelled
in the three primary roles which that world demands of a business
leader -- the role of leader in his company and his industry,
the role of leader in his home community, his city and his state,
and the role of leader in national affairs.
Surely, no one questions that the first and most basic
respon~
sibility of a business leader -- to his community and to his
nation as well as to himself and to his shareholders -- is to
succeed in his business, for thus he provides jobs and incomes
and goods and services that bolster his local economy and the
- 2 -
-4 ;:7" r
I(
private practice in the nation's capital, saw him become, ~~ aJ
~ . \:K:s:eck:"f
pesl:ee ··-{}f his brilliant service as}, counsell., the first non-engineerj
president of the Norfolk and Western Railway, and saw his extraordinary accomplishments in that difficult job lead to his selection as Chairman of the Board and chief executive officer of the
Pennsylvania Railroad.
But what is most revealing and most characteristic of
Stuart Saunder's career is that to summarize it simply as a
surpassing business success, in the ordinary sense of that phrase,
is to leave out so much that renders it truly distinctive and
truly great.
What distinguishes the achievements of Stuart
Saunders is not -.go-mueb---the-- fa.G.t -t.ha:t---they have ranged so . . far,
R:ather-;:it is the fact that his conception of the/p-roper/concerns
/--.
../
and responsibilities of the businessman is so much broader and
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y,-
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,or, -t i.. I.. I. . i', \
REMARKS BY THE HONORABLE HENRY H FOWLER
SECRETARY OF THE TREASURY
AT THE DINNER OF THE NATIONAL CONFERENCE
OF CHRISTIANS AND JEWS
IN HONOR OF STUART T. SAUNDERS
AT THE HOTEL AMERICANA, NEW YORK, N.Y.
WEDNESDAY, JUNE 16, 1965, 7:00 PoM., EDT
,4
\"
~ - L' ~ ~
.
I.J'"'L. ")vho"l a...~'-(
I
iJu )'bbbvA:4::;s.
LQV\
•
0
~,t' tc'\,)d;tc Lo~ the ?;~Cr tOqt~~acM,:+~k".xecV'
-0
I ~~~i:,~.he.~:'~.~.:~Qiil8~Q tha~ I am--t~R-ight t1\j oin wi1:h
~~_ . . . . . . ~
• •
,
••
\
•
"'-';, .. :..,~·~~,,~·:'~""t.il"_"'.01I3~•. ~~dist:inguish€fr-g~ in
~NJ/~' <::"(/('•...;;' I
d./ ,,(/!f,o\>
sueh.a
-
I
., i""
;Jl".i::
.
0
.i
'
honoring -- for all he has done to he
~::.., N •. ·· ... · 7I':tliA././ /J:~";;
iii~- dJ¥tu ~).·;'i/.5 a:DI s
/
I~
:'
0""
,i.
!';..
e·,,' 6
TD
.
/;/.41
_s-u:' Slit':/) AiA
".;,~~ 5
/""f
f
k: J(
his fellow man -- one of the most remarkable men I know, Stuart
Saunders.
And I have known Stuart Saunders for almost forty
_l.. \;--t-
years that go
.bac~
v\...
.L4'\.... . .
to the
d~ys~~
~ ..-l~(j\.. ~(,\ .iv\;vl t-"'-L<.~
d
~
t?e Great
LVcctl...1
Dep~ession
.'C~r'l~\.-t~'h;::J
oJ
.~ though neither of us carne from weal thy families, both Stuart and
I were fortunate enough
to be able to attend the small college of
-
,\, .
. . --1..".... ";,,:)
Roanoke inrVirginia.
Although we were in different classes --
I was a year ahead of Stuart -- cornmon interests constantly drew
us together and we became close friendso
In the years since, I have followed Stuart's career with
abiding interest and admiration -- saw him begin as a lawyer in
TREASURY DEPARTMENT
Washington
FOR RELEASE MORNING NEWSPAPERS
THURSDAY, JUNE 17,1965
REMARKS BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
AT THE DINNER OF THE NATIONAL CONFERENCE
OF CHRISTIANS AND JEWS
IN HONOR OF STUART T. SAUNDERS
AT THE HOTEL A~ffiRICANA, NEW YORK, NEW YORK
WEDNESDAY, JUNE l6, 1965,7:00 P.M., EDT.
It is a privilege to leave fue public counting house behind
for one evening and participate with this great organization in
its noble venture -- the promotion of brotherhood.
Nor could
I be more pleased than I am to join with so distinguished a gathering
of Americans in honoring -- for all he has done to help his fellow
man -- one of the most remarkable men I know, Stuart Saunders.
And I have known Stuart Saunders for almost forty years -years that go back to the days even before the Great Depression
which until recently we had all but forgotten. Although neither
of us came from wealthy families, both Stuart and I were
fortunate enough to be able to attend the small college of
Roanoke in Salem, Virginia. Although we were in different
classes -- I was a year ahead of Stuart -- common interests
constantly drew us together and we became close friends.
In the years since, I have followed Stuart's career with
abiding interest and admiration -- saw him begin as a lawyer in
private practice in the nation's capital, saw him become, after
brilliant service as one of its counsels,the first nonengineering president of the ~orfolk ana Western Railway, and saw
his extraordinary accomplishments in that difficult job lead to
his selection as Chairman of the Board and chief executive officer
of the Pennsylvania Railroad.
But what is most revealing and most characteristic of
Stuart Saunder's career is that to summarize it simply as a
surpassing business success, in the ordinary sense of that phrase,
is to leave out so much that renders it truly distinctive and
truly great. What distinguishes the achievements of Stuart
Saunders is the fact that his conception of the concerns and
responsibilities of the businessman is so much broader and
F-94
-
.,
L
-
deeper than the narrl)\V dnd paruchial vie\v \vhich -- while it is
fast fading -- is still, I suspect, too prevalent.
Stuart Saunder's career is a kind of parable, an epitome,
of what the full function of the businessman ought to be in
todav's world.
For he has excelled in the three primary roles
which that world demands of a business leader -- the role of
leader in his company and his industry, the role of leader in
his home community, his city and his state, and the role of
leader in national affairs.
Surely, no one questions that the first and most basic
responsibility of a business leader -- to his community and to
his nation as well as to himself and to his shareholders -- is
to succeed in his business, for thus he provides jobs and incomes
and goods and services that bolster his local economy and the
economy of the nation.
Nor, in today's intricate and fastmoving world, does anyone underestimate how difficult and demanding
is that responsibility alone -- requiring not only considerable
personal ability and character but a competence in a broad and
ever-widening spectrum of fields.
But a businessman is also a human being responsible for his
fellow man, and a citizen responsible for the welfare of his
city, his state and his country -- and he is all these things
not at different times but at one and the same time and all the
time.
He does not cease being a citizen when he sits in a board
meeting, nor does he cease being a businessman when he stands in
a voting booth. And he does not meet his full responsibilities
as a citizen merely by standing in a voting booth every other
year any more than he meets his full responsibilities as a
businessman merely by sitting at board meetings at the regularly
scheduled time.
I mention these simple truths -- with which we are all
familiar -- only because too often our very familiarity with
them leads us to forget them or take them for granted, because
too often our inevitable preoccupation with the incredible
complexities and subtle sophistications of today's world leads
us to overlook or ignore them.
And in that world, above all,
it is imperative that we not forget or ignore them -- for that
world, above all, requires that the leaders of the business
community exercise their responsibilities for leadership in
helping solve the pressing problems that confront cities and
communities throughout the land as well as the nation as a
\vho le .
- 3 -
In his address at the University of Michigan a little more than
a year ago -- the address in which he first summoned the nation anew
to the building of a Great Society for all Americans -- President
Johnson pointed out that:
" •.. In the remainder of this century urban
population will double, city land will
double, and we will have to build homes,
highways and facilities equal to all those
built since this country was first settled.
So in the next 40 years we must rebuild the
entire urban United States."
There is, I would imagine, scarcely a city or community of any
size in this country that is not beset by a whole host of serious
and stubborn problems -- problems of poverty and slums, of
delinquency and crime, of schools, of housing, of race relations,
of traffic and transportation -- the list is endless. So acute
and widespread are these problems that many have long since passed
beyond the reach of purely local concern or local effort to arouse
national concern and to demand national effort. But at its very
best national effort can only supplement and support local effort -it can never supplant it, it can never succeed without it.
It is to effective local action that we must look for solid and
enduring solutions to these problems -- and effective local action
must depend very largely upon the willingness of local business
leadership to fulfill its civic responsibilities. What we need
in far more cities from far more of our business leaders is the
application to local problems of the same kind of initiative,
immagination and effort that they bring to their businesses. What
we need is more -- much more -- of the kind of leadership that
Stuart Saunders gave to the city of Roanoke and that he is giving
now to the city of Philadelphia. We need in cities and towns
throughout the land the kind of business leadership that made
Stuart Saunders the leading figure in Roanoke -- the kind of
business leadership
that made him the prime mover and chairman of the
Committee of One Hundred, a citizen's group to
stimulate the growth of the city through urban
redevelopment, industrial development and other
innovations;
that made him active in almost every form of civic
endeavor;
that led him, on the state level, to become one of
the organizers of the State of Virginia Advisory
- 4 Board on Industrial Development and Planning, which
stimulated industrial development drives under the
personal direction of the governor's office and has
been so enormously successful in the past two or
three years;
that led him to play such a vital role in the
Virginia Foundation for Independent Colleges, an
organization to spur corporate contributions to
private colleges, and thus enable them not only to
survive but to furnish better education for more
people.
The list of Stuart's contributions is far too long to recite
here -- and so is the list of problems in our cities and communities,
urgent problems that will surrender only to intensive, intelligent
local effort under local leadership in which there is a considerable
business participation.
Under the pressures of a rapidly expanding population, for
example, our educational needs at all levels are continually outpacing
our efforts to meet them. More perhaps than any in our history,
President Johnson's Education program will hasten that day in our
land when ability to learn, rather than ability to pay, will be the
sole standard of education opportunity -- when every child will have
the opportunity, in the President's words, "to get as much
education as he has the ability to take." But that program is
designed to support, not to supplant, the efforts of our communities
and states. And while the business community throughout the nation
has taken a leading role in those efforts, it must enlarge -- it
must intensify -- that role.
Recently, for example, McGraw-Hill, Inc., noted in a message
to industry that, while the total amount of dollars contributed
by United States corporations to education is rising, its rate of
rise has begun to slow. The Council for Financial Aid to Education
a private service organization for companies interested in aiding
education -- has estimated that corporate contributions to education
last year totaled about $250 million -- compared to an estimated
$225 million for 1963 and $200 million for 1962. But the $250 million
contribution for 1964 amounts to an estimated 0.44 percent of
corporate profits before taxes -- the same percentage estimated for
1963. And this is simply one example of simply one aspect of the
enormous need for business leadership in helping meet the mounting
demand for more and better educational opportunity in our cities
and communities.
- 5 There is also a critical need for businessmen to expand their
efforts in attacking, at the local and regional level, two of our
most pervasive social ills -- poverty and prejudice. For in the
war to wipe out these two ills -- as well as in the effort to aid
education -- national programs, again, serve simply to spur and
support local programso
There can be no question but that businessmen throughout the
country have heard and heeded the call to arms against poverty
particularly in helping equip the untrained or illtrained with
appropriate skills for productive employment in a given region or
community. But there remains enormous room, and need, for greater
and growing efforts in this area.
It is particularly vital that private industry coordinate its
recruitment policies with local and regional retraining programs,
whether public or private. Nothing could be more wasteful, or
foolish, than to equip people with special skills if there are no
jobs available in which to employ those skills. There is, in fact,
vital need for deep business involvement in all phases of local
and regional retraining programs
in planning, in teaching, in
counselling -- for only thus can we assure really effective and
durable results.
But perhaps there is no more crucial area in which our cities
and communities cry out for far greater, far more constructive and
courageous leadership from the business community than in the war
on prejudice. For prejudice strikes at one of the most basic
beliefs of our society -- the belief that, while between individual
human beings there may be enormous differences, we all share alike
a common humanity. And prejudice in countless ways undermines and
impoverishes our lives
morally, socially, economically.
The time has come
it is indeed high time -- that in our
cities and communities we open wide our employment doors to qualified
people of all races and colorso For only thus can we help replace
with hope the deep despair that afflicts the Negro parent who knows
or believes that, even should by some good fortune his child
receive a good education, his chances are slim of finding suitable
work or a suitable home anywhere but in a neighborhood like that in
which he was raised. It is also time -- high time -- for business
leaders to play a far more positive and progressive role in seeking
solutions to the incendiary problems of de facto segregation in
Schools and housing. Too often businessmen -- along with many others
- 6 -
in our cities and communities -- have simply sat back and watched
and waited until these problems reached uncontrollable proportions.
It is time for our business leaders to seize the initiative and to
set in motion in our cities and communities positive and effective
efforts toward solving these problems before they get out of hand -before the deep frustrations of men long denied become the explosive
rage of men who will no longer be denied.
These are but three of the most crucial problems that afflict
every area of our nation today -- problems whose solution must
depend very largely upon the conscience and the commitment of local
business leadership.
But it is not enough that our business leaders extend their
interests and their endeavors to the critical needs and problems
of their localities.
For the businessman also occupies a strategic
role in the life of the nation as a whole.
It is his judgement,
initiative and administrative skill that primarily determine the
goods and services we produce in our system of free competitive
enterprise -- that foster the economic development of our society
that government distribution of income to workers and owners -that furnish the industrial and technological base for our national
defense.
He, in short, is the main fulcrum of our economic system.
Today, more than ever, he has a crucial role to play in promoting
the national welfare -- a role that must reach far beyond the
immediate interests of his business.
For today, more than ever, continued economic expansion depends
upon a growing partnership for progress between the private and
public sectors of our economy. And today, more than ever, the
national welfare requires a dialogue, not discord -- cooperation,
not conflict -- between the leaders of American government and the
leaders of American business.
There will -- there must -- be honest differences, but let them
not be divisive. There will -- there must -- be mutual criticism
when those differences occur, but let it be constructive, not
destructive, criticism.
What are the fruits of this attitude of constructive partnership
and joint pursuit of the national interest by leaders of business
and government?
Let me cite one concrete example in which our guest of honor
played a key role. As many of you know, Stuart Saunders served with
Henrv Ford 11 as co-chairman of the Business Committee for Tax
- 7 Reduction without whose efforts the Revenue Act of 1964 -- the big
tax cut -- might never have been enacted. Believe me for I know ,
this was not simply an endeavor motivated by self-interest. It
was an endeavor motivated by a deep conviction that the national
economy needed to escape from a five-year pattern of slow growth,
slack and stagnation that had resulted in rising unemployment,
increased budget deficits and a threat to our position as the
economic dynamo of the Free World.
Let us review some of the results of this private enterprise
in the public interest.
Our current economic expansion is in its fifty-second month.
It has outpaced and outperformed all other advances in the peacetime
economic annals of this nation. And this economic upsurge is the
direct result of one of the most happy combinations of public and
private economic policies in our history.
This Administration has demonstrated its determination to pursue
policies to encourage in every way possible the growth of the private
sector of our economy -- as well as its determination to seek
solutions to our economic problems within the framework of the
free enterprise system.
Through the investment credit of 1962, the depreciation reforms
of 1962 and 1965, and the Revenue Act of 1964, and now through the
proposed reductions in excise taxes, we have moved vigorously and
repeatedly to diminish the burden of wartime tax rates upon the
private economy and thus to furnish it with renewed opportunity and
fresh incentives to help meet our basic economic needs.
Associated with these bold and forthright programs, achieved
by a determined President and Congress -- programs designed not
to create but to reduce
budget deficits -- was the equally
significant policy of holding down increases in federal expenditures
in the administrative budget. Serving to remove the shackles of
restraint from the private economy without the attendant risk of
inflation, this mix of fiscal measures, together with a monetary
policy of ample money and credit on reasonable terms, and private
sector policies of balance and moderation in wage, price and
inventory adjustments, has provided one of the great economic success
stories of this or any other time in this or any other nation.
These measures have not only strengthened the private sector.
They have brought the nation steadily closer to our goals of a
healthy balanced economy, characterized by a steady trend toward
full employment, dynamic economic growth without inflation, a
balanced pud~et, increas~d competitiveness and productivity, and an
- 8 abounding plenty of goods and serVlces shared by an ever larger
proportion of the population.
Just consider a moment the increase or add on in real gross
national product -- more than $100 billion over the last four years.
It's as though we had added states with the entire output of France
and Canada onto the United States in the period since early
1961.
But, as one observer has remarked:
this won a battle, not a war."
"we have, however, with
While monetary and private price-wage policies are of vital
importance to sustaining prosperity, we cannot afford to forego the
use of tried and now proven fiscal instruments &mply because they
have become "old hat".
While we emerged from 1964 with an improved tax structure, it
was no time to call a halt in 1965 to tax reduction, to prosperity,
or to our systematic progress toward a tax structure that is more
consistent with sustained full employment and vigorous growth. That
is why the action of President Johnson and the
:ongress, now
nearing completion, in reshaping and reducing our discriminatory and
restrictive excise tax structure should serve to strengthen our
confidence in the future.
Horeover, that is why we must undertake additional initiatives
in the future to lower income tax rates and adjust the tax
structure. The system we have, however improved, is still capable
of stalling or holding back the economy at a "somewhat higher
altitude."
It will still tend to take a very large proportion
of the rise in personal and business income. We must seek
appropriate opportunities for tax reductions to keep the tax
structure's revenue capability from growing too fast as private
incomes and the capacity of the economy enlarge. We have, indeed,
a great deal yet to accomplish in ridding our tax structure -- and
particularly our income tax -- of its impediments to an efficient
flow of capital, its unlike treatment of like incomes, and its
excessive burdens on small incomes.
Of course, there are some who are fearful that this policy of
periodic income tax reduction will deplete the revenue-raising
resources of the system to the point where it cannot discharge its
basic function.
Some assessment of the record, however, should quiet, if not
dispel, these fears.
- 9 -
During the six-year period 1955-1961 -- a period with no Lax
reductions -- federal tax revenues increased by some $17.5 billion.
Yet during the five-year period 1961-1966, we expect Federal
revenues to grow by an even larger annual amount -- $17.7 billion
despite some $17 billion in tax reduction that taxpayers will not
have to pay each year from now on out.
Thus, I see no reason why
since our policy of tax reduction has
made such a signal contribution to our economic needs and goals -we should not, in the period ahead, continue to look for opportunities
for further tax cuts as the circumstances may warrant.
In international financial affairs, as well as in the
domestic economy, President Johnson has demonstrated his faith
in the American economy and in the American businessman. When
special factors joined with an increasing outflow of private
investment capital late last year and widened our balance of
payments deficit, President Johnson rejected the counsel of those
who called for direct government controls upon private outflows.
Instead, he sought and he received -- and he followed -- the
advice of bankers and businessmen themselves by calling upon the
nation's business and banks to join in a program of voluntary
restraint on capital outflows abroad.
Today, Stuart Saunders serves as a member of the Business
Advisory Committee on the Balance of Payments -- a committee
whose efforts thus faL ha~been instrumental in getting us off
to a good start toward bringing our balance of payments to a
swift and sure end.
Under the leadership of President Johnson, we in government
have thus given continued evidence of our faith in the vigor and
viability of our free enterprise system -- and our recognition
of the vital role that the American businessman can, and must, play
in the promotion of our national welfare.
But thLS policy can
only succeed to the extent that American businessmen accept
their responsibilities for the national interest, as does
Stuart Saunders.
- 10 -
Always, Stuart Saunders has understood that the proper
concern of the businessman must include more than merely his
business or business in general -- it must also include the life
and welfare of his community and of his nation. Always, he has
understood that neither the nation nor business is well served
by unnecessary and unwarranted antagonism -- by unnecessary and
unwarranted misunderstanding -- between government and business.
Always, he has recognized instead the need for widening the
avenues of communication and cooperation between business and
government -- between government officials, on the one hand,
who understand the role of the profit system in accomplishing
our economic goals and businessmen, on the other hand, who accept
their full responsibility in helping government do its job of
promoting the welfare of the nation as a whole.
Always, he has advanced the welfare of his business, his
nation and his fellow man.
000
DMFT TREASURY PRESS RELE;;SE
FRANCE TO PRqAY i179 IgLLIQI! Olf
DEBT IQ Y'tmn STAI§§
The GoileI'l'WQetlt of F·r~.nce toda.y aDDO\alced
lta f.nteatioa
to make in the near future a further prepaymetlt 10 tM
of $178.6 million of principal outstanding
OIl
~
debts owed to
the United States.
The
pre~aymcnt
Bank Lend Lease
nost~l':Jr
Te~inatlon
Loan contracted tD the early
ycnrs of French reconstruction and cOIIIpletes rep.,.·
mcnt of that loan.
d~bts
will be applied to the Export-Import
Previous prepayaaeots on this and other
to the U. S. in 1962 and 1963 amounted to approxiaately
$630 l.lltllion.
The prepayment aDIlOUIlced today J aloog with
rcgul<lrly scheduled mid-year pa}'1Dellta all other debts, wl11
reduce the ?rinc Ipal remaining on the French Govel'll8JDt' s polt
Worlrl
'~8r
II debt to the United States to alight1y under $400
mtllion.
The
u.~.
Trecoury
wel~omes tl~
by the Government of France.
prepa,-.nt announced today
TREASURY DEPARTMENT
=
June 16, 1965
FOR IMMEDIATE RELEASE
FRANCE TO PREPAY $179 MILLION ON
DEBT TO UNITED STATES
The Government of France today announced its intention
to make in the near future a further prepayment in the amount
of $178.6 million of principal outstanding on debts owed to
the United States.
The prepayment will be applied to the Export-Import
Bank Lend Lease Termination Loan contracted in the early
postwar years of French reconstruction and completes repayment of that loan. Previous prepayments on this and other
debts to the U.S. in 1962 and 1963 amounted to approximately
$630 million. The prepayment announced today, along with
regularly scheduled mid-year payments on other debts, will
reduce the principal remaining on the French Government's
post World War II debt to the United States to slightly
under $400 million.
The U.S. Treasury welcomes the prepayment announced today
by the Government of France.
000
F-95
TREASURY DEPARTMENT
Washington
Remarks of the Honorable Merlyn N. Trued,
Assistant Secretary for International Affairs,
U. S. Treasury, before the Institute of Higher
Studies, University of Navarro,
Barcelona, Spain
June 16, 1965
I am very happy to have the opportunity to be here with
you today and to discuss developments in the international
financial sphere. This is certainly a timely occasion to
take a close look at what has happened to the international
payments system over the years in the past and to consider
what further steps may be in order to assure continuation
of the very substantial progress thus far achieved. What
happens to the international payments system is, of course,
of key concern to you and I think you expect, and have every
right to expect, that every appropriate step be taken to
insure a smoothly functioning payments system which
facilitates the highest levels of international trade to
the mutual betterment of all.
I should like in this discussion to take something of a
look into the immediate and longer-range future. I would
like to approach this against the background of our experiences over the past two decades and in the light of an
early elimination of the United States balance of payments
deficit. In the light of these considerations I would then
like to draw some implications for the future evolution of
a payments system that can continue to function effectively
to the betterment of the entire Free World. The steps taken
by the United States to correct it~ payments position -- and
let no one mistake that firm purpose -- have already brought
a number of interesting by-products to light, and these may
well have an important bearing on future developments.
- 2 What in very broad terms has been achieved since the
end of World War II? A comparison of today with the conditions prevailing in a war-torn Europe in the immediate
post-World War II years reveals so deep a difference that
explanation is superfluous.
If we set aside the early
years of the miracle of reconstruction, however, and look
simply at the last decade, the continuation of impressive
progress is evident. During that decade world trade
doubled, reaching an estimated $150 billion last year.
Gross national product -- in terms of constant prices -rose by more than 50 percent among the Group of Ten and
Switzerland, while the output of goods and services in the
United States rose by more than 30 percent.
Total gross
national product in the Eleven in 1955, in terms of 1962
prices, is estimated at $750 billion; in 1964, it was over
$1,000 billion. While there have been some problems, these
impressive gains -- indeed unprecedented gains -- should
not be overlooked.
Europe has enjoyed a truly remarkable
and persistent prosperity with the economists' ideal of
full employment for at least 15 years -- a truly remarkable
phenomenon for those who remember the decade of the 30's.
Since the end of 1953, the amount of gold and foreign
exchange reserves held by the Group of Ten and Switzerland
rose by $10.6 billion, the gold component climbing $5.2
billion and the foreign exchange, largely dollars, $5.4
billion. However, excluding the United States and the
United Kingdom, the picture was very different.
The other
nine added $17 billion, of which about $12 billion was gold.
The key to this growth in reserves lies, of course, in
the United States balance of payments deficits, which, as
everyone is now painfully aware, have persisted since 1950,
with the single exception of one year.
To some extent, however, these deficits have been the fuel for the impressive
progress that has been made.
Indeed, it is only over the
most recent years that the flows of dollars abroad have
been less enthusiastically received in all quarters.
-
3 -
If we view the United States payments position in broad
terms, we find that it typically shows a very substantial
surplus on current account that has been more than offset by
United States Government expenditures abroad and outflows of
American capital.
The United States surplus on all non-military goods and
services transactions, plus private transfers, has been quite
large, and growing throughout the period. For the seven
years 1950-1956 this surplus (including our aid-financed
exports) averaged slightly less than $4 billion annually;
the corresponding 1958-1964 annual average -- the period of
our largest payments deficits -- was well over $6 billion.
During the 1950-1956 period this surplus was more than
offset by our governmental expenditures alone. The average
of our net military expenditures plus gross foreign aid and
governmental lending was almost $4.5 billion per year. Longterm private capital outflows, averaging about $900 million
annually, substantially accounted for the remainder of still
relatively moderate deficits.
Over the 1958-1964 period as a whole, the annual
average of our deficits on regular transactions was $2 billion higher than it had been before -- $3-1/2 billion per
year against the 1950-1956 average of $1-1/2 billion. The
largest single factor in this worsening of our position
was a nearly three-fold increase in our long-term private
capital outflows, to an average during the past seven
years of more than $2-1/2 billion annually.
A second major factor in this period was the appearance, beginning in 1960, of large net outflows on unrecorded
transactions and on recorded short-term capital movements.
Taken together, these two items changed from approximate
balance in the first seven-year period to an outflow each
year averaging nearly $1-1/2 billion during the most recent
period.
- 4 -
Finally, our governmental outlays abroad also showed a
further increase for the 1958-1964 period as a whole. The
balance of payments impact however dropped since a sharply
increased portion of our total foreign grants and credits
was used for procurement in the United States.
The balance of payments program undertaken by the United
States in 1961, reinforced in 1963, and further broadened in
February of this year, clearly promises to bring an end to
these deficits in the immediate future.
Those areas of our balance of payments -- particularly
export expansion and reduction of net dollar outflows
resulting from the Government's own programs abroad -- to
which our original balance of payments program in early
1961 was mainly directed had, by last year, already shown
very substantial and impressive results.
Our 1964 commercial trade surplus (excluding aidfinanced exports) reached a record figure of $3.7 billion
which represented a net improvement of $900 million over the
1960 balance despite a $3.9 billion increase in the import
requirements of our growing domestic economy. We also
achieved, over the same period, a reduction of more than
$1 billion in our net military expenditures abroad and our
untied dollar payments under foreign-aid and governmentlending programs, taken together.
The major new feature of the intensified and expanded
corrective program which the President launched in his
Message to the Congress last February is a concerted and
comprehensive attack on the whole area of long and shortterm private capital outflows -- which last year had risen
to an unprecedented high level of almost $6-1/2 billion,
up almost $2.2 billion from the preceding year and $2.6
billion higher than in 1960. This then clearly had become
the primary element in our continuing payments deficit.
This aspect of our present program includes two major
elements:
- 5 -
First, the Interest Equalization Tax has now been
applied by Executive Order to bank lending of one year or
more maturity, and legislative action to extend it for a
further two years and broaden it to cover non-bank lending
of one to three-year maturities is now before the United
States Congress. This tax -- which was instituted in mid1963, in response to a large and rapid upsurge in portfolio
sales of foreign securities in our market -- has, since
then, substantially eliminated United States purchases of
new securities from those issuers to which it was applicable,
and virtually halved our total new-issues outflow to all
areas.
Secondly, our banks and business firms are now
engaged -- on the basis of a general call sounded by the
President in his February Message, plus specific guidelines
and continuing surveillance by the Federal Reserve System
and the Commerce Department -- on a broad program of
voluntary restraint applying to all types of capital outflows.
The Federal Reserve guidelines to the banks, under this
voluntary program, are aimed at reducing our net outflow of
long- and short-term bank credit to foreigners this year to
about $500 million annually -- only about one-fifth as much
as last year's increase in such credits.
We believe that the program announced by the President
on February 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 in strengthening confidence in
the United States dollar. We feel sure that it can and
will, as the year proceeds, make a major contribution in
reducing our total payments deficit quite substantially
below the levels of the past few years. But the fight is
far from over; and there must be no relaxation of effort
now.
- 6 -
Figures for the first quarter balance of payments show
a seasonally-adjusted deficit on regular transactions of
about $750 million -- about half the size of the corresponding deficit in the fourth quarter of 1964. Seasonal adjustment, however, is especially difficult in this quarter
because of the dock strike in February and in parts of
January and March, which markedly reduced our trade surplus
for the quarter. Moreover, there were unusual outflows of
some types of capital prior to the announcement of the
President's program on February 10, 1965, followed by 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.
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 ref10ws 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.
The description I have given of the United States
balance of payments shows, I believe, two factors of key
importance. It reveals the deep underlying strength,
over the longer term, of the payments picture. It also
shows the very real economic underpinning for the dollar
wherever held and wherever traded.
- 7 -
Even a cursory look at the domestic economy of the
United States strongly reinforces these basic facts. During
the first quarter of this year, the gross national product
of the United States reached an annual rate of almost $650
billion. Real output during that quarter increased about
1.7 percent, bringing the total growth since the first
quarter of 1961 to $117 billion. The United States economy
is now in its 52nd consecutive month of a broad-based, noninflationary expansion -- the longest in its peacetime
history. The retail price index over the past four years
has risen less than 1-1/2 percent annually; the index of
wholesale prices has risen much less. In terms of employment, the last four years have seen the United States civilian
labor force increase by over thr~million persons; at the
same time the number of unemployed has declined by one and
one-fourth million -- an over-all improvement of more than
25 percent. Our seasonally adjusted unemployment rate in
May dropped to 4.6 percent. I do not mean in any way to
imply that the United States faces assured smooth sailing.
There are some wisps of clouds signaling possible dangers
on the price front and certainly we remain unsatisfied with
the unemployment rate we still have. However, the danger
signals are clearly recognized and there is every determination to meet any challenge they pose.
The nature of the United States balance of payments
deficit and the problems we have faced clearly explain why
the United States has not, as some have suggested, dealt
with the problem by recourse to more "classic" remedies.
Interest rates in the United States are, in any historical
terms, high. Over recent years, a combination of monetary,
fiscal and debt-management policies have combined to shore
up the short-term interest rate structure while keeping
longer-term rates relatively stable. I think without doubt
that the policies chosen have facilitated the vast expansion
in the American economy. Looked at conversely, it would
seem inappropriate to have had recourse to a sharp tightening
of credit availability and a higher interest rate structure
which could well have prejudiced attainment of these economic
- 8 benefits.
Indeed, the degree of tightening that would have
been required to serve balance of payments purposes could
well have acted perversely since, by precipitating recession, an even heavier outflow of investment funds could have
passed through the very broad and massive capital markets of
the United States.
Looking beyond an immediate future that will be
characterized by balance in our payments position is not
an easy task, and certainly cannot be done with any
precision.
Nevertheless, some general lines of probability
can be discerned.
The underlying strength of the United
States balance of payments position should become increasingly evident.
Based upon an economy functioning ever more
efficiently and productively in a non-inflationary climate,
the United States position on its trade account will in all
likelihood improve, despite further rises in our substantial
imports.
The flow of earnings should sharply increase over
the years ahead as a result of the heavy investments for
decades past in productive enterprises abroad.
With continued increases in the standards of living of people
throughout the Free World, some narrowing in the difference
between American travel expenditures abroad and those of
foreigners in the United States may occur.
There should be
further improvement in the breadth and efficiency of capital
markets throughout the Free World -- indeed, developments of
the past two years indicate heartening results on this front,
in part owing to the measures which the United States has
taken to dampen outflows from the United States.
No one
can predict with any certainty the timing or the magnitude
of these changes -- but one can predict their likelihood.
In any event, the timing and magnitude of these changes
will dictate to a considerable extent the timing and extent
to which the temporary measures taken by the United States on
the balance of payments front can be reduced.
It seems doubtful, in a world of massive demand for capital, that the United
States can again serve in quite the same fashion as a supplier.
- 9 -
If, over time, an appropriate measure is needed to adjust
capital flows from the United States roughly to the
magnitude permitted by its surplus on current account less
necessary Government expenditures abroad, there is much to
be said for use of the tax method. The Interest Equalization Tax, for example, is a non-arbitrary non-discriminatory
allocator of funds by the cost procedure. Properly conceived,
some similar arrangement could serve, with the least interference, to meet the need.
There are two aspects of possible future developments
in this area that may be of particular importance. No one
can foresee what the structure of rates in the United States
and abroad will be, but I have noted earlier that the
pattern now in the United States is high by historical
standards. The rates in Europe, especially at long term,
are well above those generally prevailing before World War II.
Over time, one could expect a narrowing between these differences in the two markets if capital markets abroad become
more efficient and broad, savings grow, and the European
demand for capital of all types is more largely met from
European savings.
The second aspect of importance relates to the pull of
funds from the United States for investment abroad. In this
regard, there are some indicators, heartening to us, that
profitability on investment in America has risen -- and
substantially. For example, the after-tax profit per dollar
of the sales of United States manufacturing concerns as an
average between 1957-1960 was 4.5 percent; in the fourth
quarter of 1964 it was 5.4 percent -- a rise of over 20
percent. If we compare the average of 1957-1960 with 1964,
we find that total profits after taxes have increased from
$21.9 billion to $31.6 billion.
Finally, we should note the data that relate directly
to the profitability of investment itself, that is to say,
the annual rate of profit upon stockholders' equity in the
United States. In the 1957-1960 period, after-tax profit
- 10 -
on stockholders' equity was 9.8 percent; four years later,
it was 12.4 percent -- a rise of over 25 percent.
The rate
of return is, of course, only one factor in these decisions.
Nevertheless, the continuation of these trends should help
significantly to dampen the pull of American investment
abroad, particularly as there is some indication of narrowing profit margins in some European countries.
At the same time, however, continuation of a high level
of prosperity in Europe exerts a powerful impact on our
exports and thus on our current account surplus. A declining rate of growth in Europe therefore may have different
and partially offsetting effects on the two main divisions
of our balance of payments. We therefore have a strong
interest in continued European prosperity, at the same time
as we hope for the development and more effective use of
European savings.
You, of course, are particularly interested in what may
lie ahead.
It is quite clear that a correction of the United
States balance of payments position is necessary if attention
is to be turned in meaningful fashion toward further reinforcement of the payments system.
But we will achieve this correction and we will share, along with other nations of the
Free World, the clear responsibility to assure that the payments system remains adequate and responsive to emerging
needs.
As I have noted earlier, the vast gains made over the
two decades since World War II have been facilitated by a
payments system that has been highly flexible and adaptive.
The payments system has had the benefit of using a monetary
unit, the dollar, which can slide smoothly through the exchange markets, through private hands and through official
channels -- a fact which, I suggest, is of great importance
to the private sector.
- 11 In any event, in looking forward certain broad-range
possibilities are clearly evident. It would seem useful in
considering future developments to give attention first to
the possible needs in the private sector in order to insure
that the financing needs of trade are fully met. As I
noted earlier, dollar holdings in the hands of private
foreigners have about doubled over the past decade, roughly
the same change that has taken place in world trade. This
contrasts sharply with the experience in the second decade
after World War I -- a testament to the worth of an
entirely different approach by the free nations to their
inter-relationships.
What has been accomplished over the past 20 years
reflects a high degree of cooperation among the Free World's
nations. It seems to me quite evident that cooperation must
continue if the future is to prove equally rewarding. All
have a responsibility for making the system perform well and
there is no automatic answer for the widely differing and
increasingly complex problems that face us both individually
and collectively. Certainly it may be expected that one
country or another will, in the future as in the past, be
able for a time to follow a path widely divergent from the
mainstream of thinking among financial officials generally.
But for many nations to ignore the basic need for cooperation and a sharing of responsibility is to invite tradeshattering results and serious deterioration in standards
of living generally -- a situation unattractive to
contemplate.
Given a m~n~murn of cooperative and responsible action
in the future as in the past, the outlook is highly
promising.
We are, of course, particularly conscious of the roLe
of the dollar as a currency facilitating the international
exchange ot goods and services. Similarly, we are conscious of the great need, over time, to inspire confidence
in its stable value and its unrestricted use for wideranging, useful purposes. In concentrating attention upon
- 12 official reserves, their needs and composition, we must
remain also keenly aware of the day-to-day needs of private
trade, and remember that official confidence can mirror as
well as affect private confidence.
In viewing these private needs, it is difficult to conceive of -- accounting, perhaps, for the fact that no one
has suggested it, so far as I know -- the introduction into
the system of a totally new or arbitrary unit which could
serve quite as well as a national currency, dealt in and
held by financial institutions and traders as a matter of
course and as part of their normal working requirements.
Indeed, I would firmly expect the dollar to continue to
serve as the world's primary trading currency, and I see no
insuperable difficulties in assuring its availability to
meet private balance requirements.
This role of the dollar in past years is highlighted
when one compares the results on the United States balance
of payments as presently calculated with alternative methods.
As you may know, we in the United States Government are now
studying one possible alternative, the official settlements
concept, that has been recommended by a committee of distinguished economists, bankers, and businessmen headed by
Dr. E. M. Bernstein. If this alternative method were used,
the deficits over the past five years would have totalled
about $12-1/2 billion rather than $17 billion, and the
trend would have been distinctly downward from $3.5 billion
in 1960 to $1.5 billion in 1964 instead of remaining in the
area of over $3 billion.
Although these private holdings of dollars have increased substantially over the years, the rate of increase
from year to year has fluctuated sharply, and we must be
conscious of the potential shiftability of the dollar
between private and official hands. For this and other
reasons as well, the use of the dollar as a trading currency does imply a special responsibility for the United
States in maintaining ample international resources and,
more broadly, there is sure to be a related need for
higher official reserve availability.
- 13 Gold, quite clearly, will not fully meet this need -although some further refinement and strengthening of
official operations in gold might well serve to secure an
increased proportion of new production for official holdings,
the place where gold serves its most useful purpose. But
one can predict that gold will not prove adequate, and one
may with equal confidence predict that the United States
might find it either inconvenient or perhaps embarrassing
to run a deficit -- at the expense of its own net reserve
position -- simply to supply official reserves needed by
"the rest of the world." Other possibilities, therefore,
have been explored and are being explored, most notably in
the International Monetary Fund and the Group of Ten.
To the extent that the problem is viewed as one of
assuring that financing is available to deal with shortlived fluctuations in private balances or recurrent swings
in balance of payments positions, the solution could, at
least largely, lie in the range of improved credit availability. Some further reinforcement in the International
Monetary Fund's resources could well serve this purpose.
A reinforcement of the Fund's resources could serve over
time to contribute to a secular growth in reserve availabilities, if, for example, ways could be found to substitute a relatively dormant gold certificate for the gold
payments now made to the Fund at the time of a quota
enlargement.
Another means of reducing the impact of United States
payments surpluses on liquidity needs would lie in the accumulation by the United States of holdings of other
foreign exchange. To some people this seems a simple
matter of reciprocity. If others build up their holdings
of dollars when the United States is in deficit, why
shouldn't the United States build up its holdings of
foreign currencies when it is in surplus? The extent to
which such holdings could increase depends upon a number
of factors, but this possibility should not be overlooked.
- 14 Given a willingness on the part of other countries to permit
their currencies to be effectively convertible, and with
greatly improved chances that the currency instability of
the past will not be characteristic of the future, there is
good reason to assume that some addition to liquidity could
be carried out in this manner. The reluctance of countries
to have their currencies so held, partly because of a lack
of market which provides ready investment facilities and
partly because of other institutional controls over market
activity, might well, hopefully, decline in the future.
And if some of the major currencies abroad were to become
more closely linked and perhaps even a uniform currency
devised, the potentiality of this course of action might
be improved.
Some further reinforcement of the system might be
possible as a result of concerted action to devise
supplementary assets to be held in official reserves.
Perhaps the key to a successful search in this regard lies
in constructing various types of assets with differing
characteristics as regards the earnings from holding the
asset, the maturity and liquidity of the asset and the
degree of formalized assurance against change in its exchange value. By being able to select from a range of
portfolio possibilities, the willingness of financial
authorities to hold higher amounts of aggregate reserves
might be increased. The possibilities are quite numerous
but certainly a vast proliferation of supplementary assets
should be avoided in the interest of an orderly and
efficient system.
As you know, the methods of creating reserve assets
have been under study by a committee of the Group of Ten.
In seeking to determine whether and when new types of
assets might be appropriately fashioned, a related study
is also of importance. This study is one that explores
the mechanism by which countries adjust to imbalance in
their positions. The need for aggregate reserves of a
particular size depends in good part upon the depth and
tenacity with which imbalances in a particular country's
position occurs, as well as the availability character,
- 15 and magnitude of credit facilities. To the extent that
market instruments, techniques and institutions, along with
fiscal and monetary policies, are fully available to deal
with maximum effectiveness in solving deficit or surplus
problems, the need for increased reserve assets in official
reserves is reduced.
The challenge of insuring a payments system that
performs equally as well in the next two decades as it has
in the past two decades is a real one. And I would not,
in concentrating upon these possibilities, wish to exelude
an appropriate role for bilateral instruments and techniques
that serve importantly to safeguard against abrupt and
serious threats to stability in the foreign exchange markets
or serve to meet the needs of the two parties concerned in
the particular circumstances that might prevail at a given
time. Certainly, these techniques, some of which have been
introduced into the system with immense benefit, will also
continue as an approp~iate facet of the system.
As we consider possible improvements in the payments
system of the future, it is important that we alertly avoid
falling into the trap of thinking that completely formalized
arrangements are always more dependable than the less formal,
or that rigid guidelines always assure greater stability than
would less rigid, more adaptable rules. The flexible and
adaptable payments system of the past and present, responsive to emerging needs, as I have pointed out, has
facilitated vast progress. In viewing future arrangements
to correct any weaknesses, the strengths and the stability
of that system should not be cast lightly aside. A degree
of responsiveness and flexibility must be retained -- to
help insure that needless rigidity does not bring abrupt
and shattering points of conflict.
000
:11'('
exempt. from aLL tn..'{ut:ton now or hcreafLcr
Lltcreof by {Uly GLal.c, or any of the
1OCtl, I taxJnr: ltuLhor.tty.
rl'rem;ury lJtlls
Lcrest.
nTC
:iDlPO~CU
pO~1GCS8ions
on the prInc:ipal or int.erc!lt
of the Un:i ted States, or by any
For pUrpOGCD of tl1;mLJon LlIe amount of c1iacount at which
origJn::d1y sold by the United States is considered to be in-
Undcr SectionG 4:S~l (b) and 1221 (5) of the Internal Revenue Code of 1954
the amount of discount at lThich bi118 issued hereunder are sold is not considered
to accruc w1tilsuch billG arc Gold, reuccmed or otherwise disposed of, and such
bills
O,},('
e;:clU!kd from
con~;jn('ral,i(Jn
ar; cqli.tal
nJ~;ctG.
Accordingly, the O1mer
o.i.' 'l'rcn::;ury bi ]J.G (other U nn J ii'C' .inGm'unce companieG) issued hereunder need include 1n h:i.s income tax return only the difference bctvrccn the price paid for such
bIlls, ",hetheX" on ortc:i.l1nlL;r;u(' or on r;nbcequent plU'chase, and the 8Jl1ount actual]
received either upon snle or rcdelO}Jtion at mnturity durj.nG the taxable year for
Hhlch thc retlU'n iD made, as orrl ino.ry U:in or 10SG.
'l'l'cn,sury Dcpartment Ci.rcular No. ~18 (currcnt revision) and this notice, prescrj.be Lhe terms 01' the Treasury bills and Govern thc conditions of their issue.
Copies of' the circular may be obtained from any Federal ReGel"'l'e Bank or Branch.
- 2 -
banking insti tutionn vrill not be pel1nl tLed Lo subml t tenders except for their own
nCC01mt.
Tenders "'ill he rec(' ivcd vri LllouL deposit from 1ncorporated banks and
trust companies and from responsible and r8cor;nized dealers in :lnvestment securities.
Tenders from oLhers must be nccompanLcd by payment of 2 percent of the face o.mOW1t
of Treasury bills applied for, W11e8G the tenders nre accompanied by an express
guaranty of payment by an incorporated ban.k or trust company.
Immediately after the cl08111['; hour, tenders will be opened at the Federal Reserve Bonks and Branches, follo1fing ,,115 ell pub 1 tc annoW1cement will be made by the
Treasury Department of the amount and price ronc;e of accepted bIds.
Ung tenders vrill be advised of the accr;ptnnce or rejec Lion thereof.
of the rl'reasury
e;~resnly
'l'hoEje Gubml 1:.The Secretary
reGerves the riGht to D.ccept or reject any or all tenders,
in "Thole or in part, and his nction In any Guch I'eGpect shall be final.
to these reservations , noncompetitive tenders for :J; 200 000
~
Subject
or less without
stated price from anyone bIdder 1-rill be accepted in full at the average price (in
three decimals) of accepted competitive bidG.
Settlement. for accepted tenders in
accordance ,·rith the bids mUGt be made or completed at the FederD.l Reserve Bank on
June 30, 1965
---'im~----
, in each or other immedintely available funds or in a like
face amount of Treasury bills mnturinc
tenders 1-rill reccive equal treatment.
June 30, 1965
Cash and exchange
lli;&
Cash adjustments will be made for diffeT-
ences betvleen thc par value of maturinc billG accepted in exchange and the issue
prtce of thc
nC1-T
bills.
The income deri vcd from 'rrcaGury bills, "mether intercnt or gain from the sale
or other disposition of the bills, does not have any exemption, as such, and loss
from thc sale or other disposition of Treasury bills does not have any special
treatment, as such, W1der the Internal Revenue Code of 1954.
'Il1e bilJ.s are subject
to estate, inheritance, gift or other excloe taxen, whether Federal or State, but
TREASURY DEPARTMENT
Washington
June 17, 1965
FOR INMEDIATE RELEASE
XXX:KXXX~:ro."XXXX
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
m June
in exchange for Treasury bills maturing
of $
00
1,001~zOOO
,to be issued on a discount basis under competitive and
noncompetitive biddine as hereinafter provided.
June 30~65
dated
, in the amount
3~965
The bills of this series will be
, and will mature
the face amount will be payable without interest.
June
~ 1966
, llhen
They will be issued in bearer
form only, and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000,
$500,000 and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve. Banks and Branches up to the
Daylight Saving
closing hour, one-thirty p.m., Eastern/~ time, Thursday, June 24, 1965 .
hij(
Tenders '\-rill 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 dec!mals, e. g., 99.925.
Fractions may not be used.
these bills will run for
365
(Notwithstanding the fact that
days, the discount rate will be computed on a b~
~
discount basis of 360 days, as is currently the practice on all issues of TreasW1
bills.)
It is urged that tenders be made on the printed forms and forwarded in
the special envelopes which will be supplied by Federal Reserve Banks or Branches
on application therefor.
Banking institutions generally may submit tenders for account of customers
provided the names of the customers are set forth in such tenders.
Others than
TREASURY DEPARTMENT
June 17, 1965
FOR IMMED IA TE 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 June 30, 1965, in the
amount of $1,001,222,000, to be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided. The
bills of thif series will be dated June 30, 1965, and will mature
June 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, $10,000, $50,000, $100,000, $500,000 and $1,000,000
(maturity value) •
. Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Thursday, June 24, 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 decimals, e. g., 99.925. Fractions may not be used. (Notwithstanding the fact that these bills will run for 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 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 ins titutions 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
t~ acceptance or rejection thereof.
The Secretary of the Treasury
1-96
- 2 expressly reserves the right to accept or reject any or all tenders,
in whole or in part, and his action in any such respect shall be
final. Subject to these reservations, noncompetitive tenders for
$200,000 or less without stated price from anyone bidder will be
accepted in full at the average price (in three decimals) of accepted
competitive bids. Settlement for accepted tenders in accordance with
the bids must be made or completed at the Federal Reserve Bank on
June 30, 1965, in cash or other immediately available funds or in a
like face amount of Treasury bills maturing June 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 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
FOR IMMEDIATE RELEASE
<fIANCELLOR OF THE EXCHEQUER TO VISIT WASHINGTON
v
~
Secretary of the Treasury /Henry H. Fowler / today
D-
nounced that The Right Honorable James Callaghan ,M. P.,
Chancellor of the Exchequer in the United Kingdon, will visit
Washington for informal discussion of topics of mutual
interest on June 29th and 30th.
TREASURY DEPARTMENT
June 17, 1965
FOR IMMEDIATE RELEASE
CHANCELLOR OF THE EXCHEQUER TO VISIT WASHINGTON
Secretary of the Treasury Henry H. Fowler today announced
that The Right Honorable James Callaghan, M.P., Chancellor
of the Exchequer in the United Kingdom, will visit Washington
for informal discussion of topics of mutual interest on June
29th and 30th.
F-97
000
TREASURY DEPARTMENT
June 18, 1965
FOR IMMEDIATE RELEASE
TREASURY DECISION ON HEADBOARDS
UNDER THE ANTIDUMPING ArJr
The Treasury Department has completed the investigation
with respect to the possible dumping of headboards, manufactured
of wood, from Yugoslavia.
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 Yugoslavia is not being withheld at this time.
The dollar value of imports of the involved merchandise received during the period June 1, 1964, through March 31, 1965,
was approximately $110,000.
TREASURY DEPARTMENT
(
June 18, 1965
FOR IMMEDIATE RELEASE
TREASURY DECISION ON HEADBOARDS
tnmER THE ANTIDUMPING ACJr
The Treasury Department has completed the investigation
with respect to the possible dumping of headboards, manufactured
of wood, from Yugoslavia.
A notice of a tentative determination
that this merchandise is not being, nor
like~
less than fair value will be published in an
to be, sold at
ear~
issue of the
Federal Register.
Appraisement of the above-described merchandise from Yugoslavia is not being withheld at this time.
The dollar value of imports of the involved merchandise received during the period June 1, 1964, through March 31, 1965,
was
approx1ma.te~
$110,000.
TREASURY DEPARTMENT
June 18, 1965
FOR IMMEDIATE RELEASE
TREASURY DEC ISION ON HARDBOARD
UNDER THE ANTIDUMPING ACT
The Treasury Department has completed its investigation
with respect to the possible dumping of hardboard from South
Africa.
A notice of a tentative determination that this mer-
chandise 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 South
Africa is not being withheld at this time.
The dollar value of imports of the involved merchandise received during the period January 1, 1964, to date was apprOximately
$151,000.
TREASURY DEPARTMENT
June 18, 1965
FOR IMMEDIATE RELEASE
TREASURY lK:ISION ON HARDBOARD
UNDER THE ANTIDUMPING ACT
The Treasury Department has completed its investigation
with respect to the
Africa.
possibl~
dumping of hardboard from South
A notice of a tentative determination that this mer-
chandise 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 South
Africa is not being withheld at this time.
The dollar value of imports of the involved merchandise received during the period January 1, 1964, to date vas approximately
$151,000.
DEPARTMENT
t
;
FOR r:EI2.A.S3 1•• J:1. lIE.JSPA?ERS,
Tuesday, Jur.8 22, 1965.
June
P.sSULTS OF TREAS1JRY'S 1BEny BILL OFFE...1.ING
The
T:'~8a.SCy
Depar-cment announced last evening tb.at the tenders for two series or
bills, one seri~s to be an additional issue of the bills dated I:-1arch 25, 1965,
.::..nd the other O:;3ries to be dated Ju.."'1e 2L~, 1965, which were offered on June 16, were ope:
at tne Feeler-a: Re.:;erve Ban.ks on Jll:.'1e 21. Tenders vIere invited for $1,200,000,000, or
t.hereabout.s, of 91-day bills and for ~?l-,OOO ,000 ,000, or thereabouts, of 182-day bills.
The details of the tvTO series are a3 folious:
T:.~easury
Rl0IGE OF ACC3?I'ED
CC:·:FZTITIVE BIDS:
bills
~~turi~g Septe~ber 23, 1965
_l;_pprox. Equiv.
Price
Lr2:.u2.1 Rate
3.770%
99.047
3.790%
99.042
99.01.;.2
3.789% 1/
91-~y Treas~~y
High
Lou
Average
·•
··
·
·
·:
o
182-day Treasury bills
maturing December 23, 1965
Approx. Equiv.
Price
Annual Rate
98.068
3.822%
98.062
3.833%
98.063
3.831% ~/
98% of the arnOlli'1t of 91-d<:y bills bid for at the lo't~ price was accepted
68% of the amount of 182-day bills bid for at the low price was accepted
TOTAL TENDZR3 APPLIED FOa AND ACCEPTED BY FEDE.iJl.1 RESERVE DISTRIcrS:
ACc0:).'c,ed
Applied For
Applied For
District
ijoston
6,460,000
2b,288,ooo ~~o,2'o4:; 000
.;;
~
1,689,029,000
Ne>T York
821,861,000
1,551,212,000
18,919,000
Phil2.delphia
26,457,000
14,045,COO
19,806,000
36,150,000
Cleveland
36,487,000
Richmond
12, 7L~7 ,oeo ;
4,721,000
13,277,000
34,591,000
17,407 j OCO :
At1an-l:ia
34,575,000
374,173,000
179,931,000
Chic.:..go
32.5,794,OCO
14,844,000
24,135,000
33,631,000
:
St. Louis
14,890,000
10,582,000
10,508,000
l'Iir:u."'1eapo:"is
17,509,000
24,029,000
Ka.'lsas City
29,704,000
14,119,000
13,698,000
26,708,000
lli.11as
132 z301,000
San FrZu"'1.:;isco
103,210,000
33,913,000
:j2,220,851,OOO 01,204, 782,000 ~/ :~2,341,362,oOO
TOl:'~~IS
I.~ \0
·
··
·
··
·
~
·
2./
0/
l./
AcceEted
3,050,000
::P
710,630,000
6,658,000
12,941,000
4,667,000
19,140,000
172 ,451,000
10,344,000
4,340,000
10,771,000
6,619,000
40~4662000
$1,002,077,000
Ir;,cludes ~i23L, 768,000 noncompetitive tencers accepted at the average price of 99.04
Includes ~)110 ,631,000 noncor.1petitive tenders accepted at the average price of 98.06
C:.1 a c01:.:;?on issue of the sa.."l'J.e length and for the sarlle amount invested, the return 0
these bills would provide yields of 3.88%, for the 91-day bills, and 3.96%, for the
182-eay bills. Interest rates on bills are quoted in terms of bank discount with
t::--~~ ret1l.l"'n :celc.ted to the face amount of the bills payable at maturity rather than
~he ~~ount invasted a.~d their length in actual number of days related to a 360-day
y8a~9
In contrast, yields on certificates, notes, and bonds are computed inte~
o~ i::te:"e.s-G on the a:1:ount invested, and relate tte number of days remaining in an
i.."'1-c..2;:.~,:;;:;t pay;::ent period to the act-.:al number of days in the period, with semiannualco;.:;;o-.:.:.:d.ing if r;;,ore t:::.an one coupon period is mvolved.
TREASURY DEPARTMENT
FOR RELEASE A.M. NEWSPAPERS,
~esdal, June 22, 1965.
June
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 25, 1965,
~ the other series to be dated June 24, 1965, which were offered on June 16, vere opened
at the Federal Reserve Banks on June 21. 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:
RAN3E OF ACCEPl'ED
eOO'ETITI VE Blm:
High
Low
Average
91-day Treasury bills
maturing September 23, 1965
Approx. Equi v.
Price
Annual nate
99.047
3.770%
99.042
3.790%
99.042
3.789.t 11
:
•
:
:
.
182-day Treasury bills
maturing December 23, 1965
Approx. Equiv.
Price
Annual Rate
98.068
3.822%
98.062
3.833%
98.063
3.831% 11
98% of the amount of 91-day bills bid for at the low price was accepted
68% of the amount of 182-day bills bid for at the low price was accepted
TOTAL TENDERS APPUED FOR AND ACCEPl'ED BY FEDERAL RESERVE DISTRICI'S:
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTAlS
A:e:e1ied For
i 26,298,000
1,551,212,000
26,457,000
36 ,487,000
13,277,000
34,575,000
315,794,000
33,631,000
18,508,000
29,704,000
26,708 ,000
108,210,000
$2,220:851,000
•• ~:elied For
Acce:eted
16,284,000
6,460,000
1,689,029,000
821,861,000
18,919,000
14,045,000 :
19,806,000
36,150,000
12,7h7,000
4,721,000
34,591,000
17,407,000
374,173,000
179,931,000
14,844,000
24,135,000
14,890,000
10,582,000
17,509,000
24,029,000
14,119,000
13,698,000
132 z301 z000
33,913,000
$1,204,782,000!1 $2,341,362,000
S
·
··
·
Acce:eted
$
3,050,000
710,630,000
6,658,000
12,941,000
4,667,000
19,140,000
172,451,000
10,344,000
4,340,000
10,771,000
6,619,000
40,2466 2°00
$1,002,077,000
bl
a/ Includes $234, 768,000 ~0ncomp~titive t"'nders accepted a.t the average price of 99.042
~110,631,000 ~cncompetitive tenders accepted at the average price of 98.063
1/ On a coupon issue of the same length and for the same amount invested, the return on
these bills would provide yields of 3.88%, for the 91-day bills, and 3.96%, for the
l82-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to thA facp. amount of the bills payable at maturity rather than
the amount invested and ~heir 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 inve~ted, 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.
£/ Includes
F-98
- 30 -
sf.mu.ltaneoua existence of 8Urp1uae8 -1KtI the IIAJ. c-.tdea.
1neludlng the United Statea. ill nee•• of . .
supplies, and without red1str1bu.tia of
--uz, ..
IAI
exutfaa ..,..
then be true supple.nta t. exiat1Dg reserve-.
A
ConeeDSUS . . ,
DOt
_rae
eaa11y
world baa to date rel!ad .....ttally _
ft
quickl,.
, . die
8014 . . . . .ne
om:reacws • .ad the public ewr)wlaere teDda u .. c. .t ....
and pre_tie in __ tary Mtters o
KGDey 18 peculial,
sensitive to publte aecepta:ace a\d publle c.tiAle_.
We shall DOt fiDd -.wra to the.. queatt.8 CWft'
lDdeed. the
ar&8W'r8
c_ probably evolve -1, _
shaped aacJ molded by the .tual
the maktag. ------ ----
....
C8UrM
-
of
a"".
they . .
--t8J
hlat.-, ..
- 29 2:cn<~:;:a)
publ ll' acccptanc'e -wlt:b a minimal duturbaoce of
avoid c\l4;om.. ateme11t to sold hoardiut and gold speculatl00.
Four t;.h., a
fear~'
would bave to be ael"! ieved between the
of SQ'.}e d.at creatlOtI of intenlAt i0l141 reserve.
bcCOOlE!~
all
balaJ;4c~
too
t:a..~)'.
with a t-eneral aver-expansionary effect
world suppl1et> of xuallcy and credit J and thoee who fear
thatintenlst iOllal decisions would be too ctabersOlll8 and
too restrictive.
'!here ax-e, of course, many other questiGua
tha t m4tl t d i v ide proata
Em ca of
th 18 or t:1t technique. or
appeal to particulax' countries I inc ludulg the alway.
important questions of Mio participates in the beoefits aDd
r€sponsibilitie~
of reserve creation, and how they are shared.
Reserve assets I once created, in • satis£aetory way ar
waYf, could be shifted from country to country and earned _
bep •••
- 18 -
tivc procedures, both as to participatioa and gcrvemiDg rule ••
I do not propose to
approaches.
CCltIDent
in any detail
OIl
any of th...
However. I would 11lce to underline
8" . f ttw
characteristics of any appToach M11ch seem to me especiall,
s :lgn if ic ant.
First, additional or new reserve assets should be
accepted as such by the major industrial countries.
SeeGbdI,..
they should be held as reserve assets without directl, or ia-
directly leading to a reduction in reserve currellCies or other
supplements to gold re.erves.
'l11at is t they should DOt
cf/'-t. tC.~.
accentuate ~e futur!] demands on [United DeW supplies of
monetary gold, or on eyuti.J.lf gold reserves of the re ..rw
countries':l Thirdly, the med10d of providing addit1anal
--J
•.....'
reserves should be in eeneral evolutionary, in the ..... ef
- 27 -
and can
~
virtually at
~Jil1.
as a result either of haviDg
paid gold 8ubttc'I"lpti. . to the FtmtI. er f r . tM un of their
Ctlrrencf.es by dle Pull. to _tencl eftdite to et:her eeunb't.8.
lb.
MaDagtat tireetor ef the Pund. Mr. lehwettzer. It..
reeetltly ilwltaaced
"011 tit U
.1"" t . he dane. either by tn-
c-bI@ doe tmI_t readny evan.I. cIr..tag
the boaN fft ruM • __ra tf!at _ t
qualt.ft.e.tl.....~ M' by
the
~
cre.t~
rt,!tt.~oa.
8" ,,". .~ratad-
epeeial
@IJ. . . . . . . .
elat._
t. be u . .d as Nserw as . .t ••
Obi ft
- 26 i.ndust!.4ial ,'ountries require in the form of gold, ald . a t
to fold?
lttere are a number of technical pose ibillt1ea for creat-
int' additional reserve usets to meet these or other situtlans in the future.
'!bey involve essentially an ~Qt
or understandlllfl among monetary authorities to treat a
particular type of credit claim, either
or on an ins t i tut ion,
~
&8
OIl
another eountry
a mcmetary reserve .... t.
method, frequently mentioned, 1s the further ex-
tension of dhe technique of reciprocal acquisition of
currencies, a5 Ul the short-term ."ap8 of the rederal ....rw.
but for a long-term.
Each country then regards its clalm
on the other partner as a reserve asset.
'lb. COUDtr1e. cou14
also issue spec ial securities to each other. "ith"':l;rif.~'
, •• s
,.f.'
- 25 It :1~ e~peC'ial1y worthy' of note that the de. . .d of th...
countries fat" rold to add to their reserves, at $12 bl111oD.
was about twice the availability of new lOOnetary gold
.~,;up~·dles
for
tt~e
world as a wole.
'Ibis was made possible
only by large-scale transfers of gold to them from United
State s reserves.
I do not attempt today more than to sketch out
the relationahlps between internatIonal capital
our balance of payments and liquidity problems.
SOllIe
fl~
of
8Dd
AIs and when
our balance of payments shows cont1nu!.ut strength, some of
the tJDCertaint ies t11at have to date surrounded ttle liquidity
problem should begin to clear.
'We can then see wat
we fac.,
once the all-embrachlt screen of the massiw United States
deficit has been lifted and moved aside.
que~tlons
t!~(.'
1.b.••• HDt1al
that will 1'-ave to be anewered are:
rcn?l."VE tit">eds of t!',e world:
What .01 . .
HO\-; much will the
major
- 24 -
Actually the growth 1D ltAtulAltty 1D the
.,-t _ ,...
has been coneenttateci i-rely fD the 8.,,1.- 1IIIIueft1al c • •
tries.
When . . look at: the poeltial of fat:ernati_l r •••rw.
and their recent: tr.rowdl,
'We
tries, excludiDf, the United
an .truck at -.:. .., die nelly
~tatE'S
and the United
From tlle eDel of 1953 to the end of 1964, the
~1c1
"Uaa4-.
- " , ......
eJtChange reeerwe of .~t 1eed1tt8 iDdu8trlal etMab'f.e. III
the Gl:oup of Ten and S"teart" reM tr. fl0.6 billS. ..
$27.6 bil1lan. or by $17 bl111oD.
.18
aaounte4 to _ _ 1,
ttlpliDg their total nserves.
rest of the verld loat about $3 btllt.. of Na.rwe ill thls
form.
- :l3 U·!OU€..i~
our o\r-er-all balance of paYJD"=llts position.
are several qual if ic at iOWi to bear in wind.
[;a~
coulltrles
ssvinr;s.
011
c..
But then
18 tha t th...
for some time been facing heavy pre88\14.-es 011
prices, and
ditians ie should be
011
labor suppl1es.
possib~
Under such ca·
for these countries to absorb
Witllout adverse results a considerable part of the iDp4Ct of
a swallel" voluwe of. £0'l4eign receipts.
Secondly, as noted,
the amount of these receipts is small in relat10al to total
investUJeut cui Saving5 of the European economies.
'J.hirdly,
the movement of reserves frequentl) seewe to be the
dependent variable in the equation.
Especially in recent
years. peril istent reserve iDcreasee seem in
SOllIe
cu•• not
to have been the result of policies directed specifically
toward the
C~ ternal
accounts. but rather a by-product of
action taken to dampen domest ic inflatiosaary pres.ures.
- 22 IlUlDber of countries . . t:be ceoclMtat of 8at!.... k . . . . . . .
reserve. year by ye. . , . . . _jumeata 0_1. . . . .,.. . . .
hen 8ld abr'" that •• pas.
eGaCeft _ _ t
tIhe .ffeet ..,.
the . . .eeo_1M . , • c . . W..,ab1e atd rapt. taperiag flff of
. . . .eic ere'lt Ili(IJ\t tilhtea t . . ah-.ly . . . 6at this
IIiPt plaM -
addlci_l . .au
_
e . . . . t... aln..,
could afleet tM 1awl .f ..'lvtc, fa dte MlU.......W~
It is certaialy t1!'Ue that
.o.
adjuabMiDU will _4
to be .... 1a theM cOIMtrlea. f . _., _ _ fa .......1
flows to t...'1e outside world will have its ee....... 111.1t.
I
l
~
~
f
i~
ft
c
!
? :
t:~
ift ·i
e
i~ t
I
I
iI
I
r~
f
i
r
ft
~
a
!...
1
1
=f
pi
i
t
f
~
l
rt
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j
r
f-
~
i
=
ft
i
I:
r
rI ,i
E
•f.
f
i
·I
~i::
i
i • I-
f
I
r
....
F :~ I
E
:
;
a.
, i
fir •
I
I
•
£
!
..!
~
~.
a :
(
I :
ft.
••
-I
~
•
i
I
~ ·
I ::·
i
f
!
I
~
f •~ 1 l
II: :~.
Ii
I
r
I
I~
i
·§~
r •
ii 1-•
- • f l~ ·~
~"
!
. . I~i i I
E
I
e f
~8
· J
i~
•
I I
I
·If ,~:II
;
•
~
- 20 -
tie ef GUr def1cit to we.. W .... s..•• _tl~ 18 "raiaal.
'taMe ...ot
to widen.
At the . . . C_, the . .1...
reas~ly
M expeotecl to ceDtiDae to .uppl, _. .ltal .. _
IDtenatlaDal baker if
tta ,.....1:W
"'ueed by • cODtia1i1l1 .flei..
.._itt.
ta ace_lly
!tab.., _11 ..._ t a
.allenp co Europe . . the Ualted IUtaa to liM _
approprt..ce Nt of pol1elaa to _c _
tile capital f t . . pnblea.
a e-.&1Du.Saa ......
a.n:.......trw.
U la
uw,
- 19 It .hauld be noted that, n n ~. f . e . pt.cl.ata _
...11 in rel.tien to our . .at 1"1'_ pri.,ete cI ••• tie iDw.t.-Dt of
'73 bill1oD, or wtth ftepect ..... to our per. . .1
savini- of $35 billion. year.
fram the 1Jftlted States
Moftowr. ttae capital
"pft.-a •
*-
_11 penellt... of the
total of 8aviDp ad tJwe_a.nt tD Europe.
All fIa .11, 18. ._ _ ide direct f.meltmellt, . _ f4
bi1110D of UI'llbtd lute. capital ••••• out laae"...
half weIlt to C..... Del
. . odler regt.oe..
J..-.
About
leas ttl. . . . . .ter .lnctl,
!he ftclueti. .
we _tiel... fl'. the
prezr_ a_ fA .ffeet. partteu1arl" . . . tile fapact
c1ireeted towa. tile other blduaertal eOUDtrte.,
u
_.ld ,..
• relatiwly _11 pert of the total tJneet80t ft-..e" fa
ttl . . eeuatrt...
I1l the
_j_
alone annual irlwsc.nt in all
eWl'ltrfa. of • •e.na It&t...
f01:m8
pJ!.... 17
....1.
~
- 18 intet'8st rate. in the United State. ia _
Europe 18
80
effect1w . . . .~.
tilde that the po.a1bllity of .., aubatat1a1
narrowiDg of the dUferential by bleed ltata. _tl8a U
open to c0D8iderable queat10D fr• • punl,. tecluU.cal
point, because of the .... 1_
States.
Secoacl,
U
yol~
.c.d-
of aav1Dgs ill the UDlted
DOted, pre.eat 18"18 ere
DOt
1..,
historically, _d a .1p1f1caatll hi.&ber lewl of ..ate.
noted, the Europe_ rate. DOt 0Il1,. are
iIlfu.ace. bJ tt.
pre •• un of c:Jeuacla frca borrOllera .... ..vllap. but &lao
probably reflect the ._ral teadel1CY for price. to ~iM,
thus reduciDg c0D8iderably the real rate of iDtenat, ill
terms of purcbu1D& ,o.r ewer gooU __
- 17 applyul!, such a prescl'iptiOll to the 81tuattc.'a in 1Itt1ch find ourse Ivea.
~
wry large economic entity. the iD-
duatrial naticma of Cont1nenu.l Burope, h . . a hietor1cal1y
hiah level of interut rates that hu prevailed durlDa •
period of , __ rally full o-r over full emplo,-at aDCI in-
f1atiaaary prea.urea on p-rices and vases.
!he entire
atructure of the capital values in these countrie. b . . for
a 100& t t . been pared to a plateau of rate. .ubatctlally
hiaher the that ill our -.n ecODODlY.
atructure
H ...
'11\1. Burope_ rate
likely to come down slowly, if at all, . .
Cb the odler haad. looa-terDl interest rates in the
United S tate. are also at hf.gb leve 1, in terms of our
bac~OUDd aDd history.
QIWIl
1.bere are ..veral r8UODS for
doubt inf that a simple prescriptioa of h igber l_-terID
..........
- 16 -
Effacu are
bema A.te
te aplon . . . . . . . . _
• t~uccural probl_ 18 tile .....,.. ftJtMlCtal
..
.,a_.
ill the
capital .-rketa tIlat c _ _ t ... tnea . , ....... ..at a_
fall ~ heavily
"poD the
• .,1ta1 to the nat ., tile . .W.
capital exporUn, t:beJ .....
.cnaa
Ia ••••• -
1J1lib141 States.
Juc iMteacl . , Me.t..
c_cs.-d
to
fn
._t .
.,1Ul
fl". Cbe Uaited Ita... , . d baw, 1D .ffect. b __4 the
proeM'" with the:fz eeDCZ'al Itaks 1Il the form of reserve ••
Particulaly fa Kura,e. it 1a fn.-.tlJ . . . . .
ebe 1NIY te
._exaia
eM
te.te.cy
f_ capital to
c..
n ..
that
oR af
the Ualte4 States . .14 be co briJIB _ _c a h1tlber lewl of
t.a-term
iDteftat rate. ill the UDlted .......
...
..... .
IDOCll8nt' 8 reflectioo will 1Ddlcate the dlff1cult1e . . .
'
- 1.5 or :.,t..her advanced countries that they should readjuat their
t tn.mcint patt('ms to as to obtain capital reSOUTce. out of
their awn savinf.'s.
As lloted, the tendency to
seek United States fUD4.
1M)'
he in part due to the tener.11y high coat of borrowing in
fo~eign
countries.
Bu t tl'ere are otber reasoos why • ame types of borr.... rs
are attracted to the United States market.
these iDe1ucSe
the narrowness and h 4d't coat of fecurity issue m8-rkets in
Europe. the favored position of govel."1'm18ntal borrowing
entitiJ:. and
~at'-<JI\al1zed
induetr1.E's in lome capital a;.arket.
abroad. the charme lint of savings of the public through
pavings banks and
IIWn't~'agE
hanks into government securities
or mortgages, and the tendency in many cotmtr1es of the
la't'g£'
~ank.E, to TTls.1.ntain a
lending policies.
rf: latively rl.!id
~"attnrn
of
- 14 -
our ,own natal accouats, 1ncreaiaa attentl_ hal h_ to
t..
be c1ewted .1nce Ju1,. 196' t. tile
fleN eI • .,ital
abroad -- pertle,,1..1, to 0Chft' taI_uia1 0CMah'U8.
'Ilu:ouab
the latere.t Iqualisacl_ Tax, ,.. have
prov14l a ..-.e-t".. naulatol'.
.ouaht to
We have h •••• fa til ...
tri.e. to Iltl11ae dle1l' ...1D&. . . . .f&etl_1,. te _ t t::Ile
. . . . . . that woulcI oth.rw1N
c..
to tIae UIl1.te4 .tata••
More recentl,.. ill tile . . . of the wry . . . dllten-acia
in our capital accouat. ... ill tile
,.ace.
_t.c• ., ..
,.._ra11y. clur1la& the peri.. aiDee J,,1, 1964. _
haw
adopted the vol_tarJ cn.lt re.tratat pwep-_ _
Februar, 10.
this
proar-.
t ...
u
1acnubal the . . . . . . .
41E
- 13 The major channe Is through vb ich these capital fUDda
have recently been flowing out, apart frCllll CaoadiaD security
issues in New York, are the direct lending operatlou of the
banking system. or the placement of funds with £oreigD baka,
01."
with foreign branch.es of American banks. by nan-bankinl
entities.
\<''hile some of the proceeds in the form of dollars
were added to the risins total of forelgn private dollar
holdings, foreign official dollar balances were built up
as well.
While our private investments abroad, both short and
long-term, are presumably sowd and profitable one. in the
sense of income-earning asaets. they have clearly tended to
exceed the net surplus on other &ecounts.
'lh1a adds to our
liquid liabilities to foreigners, and tie 8e liabilities, ill
turn, may be converted into gold.
"
Ij
- 12 At short-term. h _ _ r, the ,..ltioa . . . ratbft clU-
fereDt.
roreip short-ten ciat. GO the UDlted Statea,
both priftte ad official, wCMlDtecl to ,28.7 bill ... at dua
end of 1963.
'Ibis f!pre 1acludea about $3 billion til. are
not couldered liquid flDaacf.a1 llabf.litiaa.
the total -.ount vas off1e1al1J heW.
. .. .17 half of
Alabst thia. the
United Stat.a thea helel $15.6 bl11t.. 1a 101., ... other
rea.row-type ...e •• of $1.2 bi111oa.
III acWiti_. our
$8 billion.
over
tu..
account had
our net positiOll
~r098d
01\
private lOllI-tara c.,ital
fra. $27 blllt.a to .35 hilliea, froa
1960 to 1963, while our Det official aocl private poaltloD
OIl
ahort-term account (iDcludlDa ,old), vor_4 by t5
billloD.
.
- 11 -
Let WI recall brs.-fly ..........1 8t1:UcUln ." . . fat.rnat~l
taveaa:-t ,..ltta.
.. .....
Y.~
haw _tallad
f!tufts foe 1164 t but at the eloae of 1963, pri". . . laDI-tera
1Dvea~I!.
a1:4'." wn v.w.d at
bill1cm . . dinet: iIavu&:llleats •
ether
~pe.
of
~
__ b .
.5.
...s
J,,111f.a, .. ..tltdt. $40.6
$17.6 .,111* ftt)resented
I'ClNipu.,-can . . . . a.uts
ill the tJa1.ted States amounted to nearly $23 bill1oa. leaviag a
- 10 '1be U.
j,
lit 1510g
M
lattn',,.,l
'rut
We have all heard .uch about tM UDlt.c1 State. role ..
_
international b_latr ad about our teDdeucy to pile up
long-tent 1nv•• a.nta lIhile
liabilities.
acc:~lat1D&
ahort-tent
We ha... lar. . aDd c: .... tltiw . . .y ad
capital uaarkAtU. . . cGIIpU'e4 with the aarl'ower . . 1•••
ec.petiti......rlrets 18 the other lad_trial cOUIltyu ••
1here bas beell increuiDa • • ire for capital iIlve.a.at
abz'oed,ariaiDg fr_ the loaa-e_tirwed lurepe_ pro.perltJ.
~~
CCIiiIIOIl Marlatt prefenac•• , aDd the rapidly growi:Dr;
corporati0n8 haw traditioually beell intex:•• ted.
While
th. . . latter an f.tors that an pardcularly _!.pUle_t
in tM, area of direct iDvestlleDt. they also may account fer
some movement of banking funda to supply the .eels of . . .
.....
,"
- 9 -
in reductnp thf.8 drain on the balance of .,.,..nta.
n,e resnonee of businessmen and bankers has been
impre8sive.
ID08t
While the ltmited data yet available are
difficult to evaluate bec8US. of .peclal factor. they 8U1Jeat
that tl'I.is cOOlJeratlon.
U'[J«l
tIllc'h the progr_ depeDds. h ..
begun to "ave a 8~tficant effect.
tresaetions far the first quarter
'l'h. deficit OIl regular
~a.
redueed to abClUt half
the mqnltude of the wry laqe ft.,.ures in the final qua"ter
of 1964.
Sueh indieatiantl as we have since dle end
heft! continued to be ewn more favorable.
t!1Jl1'hasize
~at
sustained
.~uillbrtumt
March
But I eamot over-
we Deed to establbb a record of clear aKt
to
demon8tr.~
our full recovery
frOOl the lout continued matady of deficits.
~erefm"f',
(Jf
cOlltemrtlatp.
at,
tie c _ t ,
early relaxatlCXl of our effort ••
• • <'
- s -
Sta~.
capital in .11 feme had alna<l)'
.1. . . . eharply
from the moderate lewls of 1950-1955 .....
T . . . .d
$2-1/2 aDd $4 bl11iDD fa the Jears 1956-1960.
reached al.-est
.'-1/2 bUlt.... with a
latter p.trt of the year.
$4.1 bil1i.a.
I
f'1i'. "i
in 1956
betl__
ID 1964 it
_ry decided ..... ill the
BeCVM1l 1960 aad 1964
uaiud ltatea
In July 1163 . . . . Intel'Ht lqualt..aa&t. T_
,
it.(,·
... enncNDCed _ea the ••rly .-nlf•• t.atieDa . , t1aeM 1_••
volatile cepit.1 aoCMmta 1D 1964 led ...... lMat J . . . . . to
propoee
OD.
Febnuy 10. 1965. a ctJlllpftheulve prop_ call1aa
••
- 7 -
however. ch_gecl IllU'bdly after 1957.
deficits
GIl
Fr. 1958-1964
euz'
ngular tr. .ectiMas h ... aver. . . . .3-1/2
bl11iGD • year.
Private Capital MovI_llte .wi the United
States BalaD£8 of Paymenc8
1 do not intend to review the policies applied in 1961
and 1962 to correct our balance of payments and at the
time revitalize the domestic economy.
8_
We did achieve
substantial progress in 1961-1964 in enlarging our c ....rc:ial
e:xport surplus, despite a rising total of i.mports, ad in
reduc ing the balance of payments impact of our military and
aid programs.
W1th a steady increase in our 8erv1ces inca.,
/ t; Y1 ( /y
r;., t!our defic it would have been ell.'1l1nated if capital accounts
A
had remained constant.
BL...i .;.>\,)11;<' vtht..T couul'.:I'icH:
ha ,e been as sO(: iated with over-heated
ll"t ,jeneral, there haw beer, pressures em wages and pric•• ,
labQ't'
shurtat~tls,
and
II
general preoccupetioo with the need te
placE:' brakes on th£; dOOJestic econoruias, rather than
accelerate them.
A different situation haa prevailed in
the United States, Wiere the economy has required fram
tu.
to time an assist from fiscal policy rather that public
action to restraul an over-exuberant business activity.
Lven so. bO\4ever I the United States itself has had durlD(!;
thE poBt-war years no prolonged recessions and at the
pl.'esent. time has had 52 months of COlltinuing ecoruauk advaoc••
In most industrial countries, balances of payments haw
been in surplus Bud international reserves haw beea risiD&
at ar, e}'.trelDE'ly rapid rate.
wr own payments poaitiGll,
b
II'
- 5 We sCEetimee forget. in our baersl_ in the prob~ ef
today. how much of a poaitive character baa been achieved f.a
During the l>•• t decade. world trade ha.
the poat""War period.
grawn at
.'1
liurpr181ng pace.
World exports reached a total of
more than $150 billion in 1964. about double the correa,...iliiE, figure at the beginning of the decade.
In the iuduatrial
ten
countries. the las t t t f t _ years has been a period of rather
persistel1t prosperity.
the Organlzat1oD for ECOl1OCIie
Cooperation and Developul8nt (caD) countries haw had • total
output rise. in real terms, of about 50 percent.
countries this has been accc:ap.m:1ed by full
OT
employment I althougll this. of course. has DOt
the l1nited States.
been fe It
OIl
In BlOat
over full
heel'l
true ef
But even the fbumcf.al strains that haw
oceu ion by the United IU.IlgdCID, Japea. Italy.
- 4 :Al£ of the interestint. aspects of .... period of
opinion au all these questions.
'l'hus, at
ODe
f.~t
eDd of the
spectrum, there is concern that ay d1.mhwtioll ill the flow
of United States capital to ott.r developed cOUDtriea lI1ght
have a serious and
~diate
effect "'POll world proaperlty.
A acmemat milder view held 'Widely in the United Statea 18
that there will be a
~ed
to replace the outflow of dollars
ill recent years with
SOlIe
substitute fora of iDternatieDal
liquidity, 81Dce the United State. deficit haa prCJVlded •
source of reaerve. to other countries.
At the other aad of
the spec: tnan , a view held particularly on the Cootiaellt of
Europe I it is cOliteoded that the outflow of capital f r .
the United States h_ been exces.ive. has added UDCIul,. to
the lew I of Continental Europe_ reserve.. .ad has
tributed to inflationary pressures in Europe.
CeII-
- 1 -
international reserves, and to other aspects of the htremely
broad subject of international 1 iquid1.ty.
III a ,,-ery l"pal setWe, the wo't'ld is
search~,
to f1ad a
.,.,~
cOllstructive relationsl-.tp between capital flO1, balance of
r>Byloonts adjustmeut and the magnitude and cCJIllpOCition of
.::.rOlf,lur needs for international liquidity.
Today. I do not. wish to attempt 8Ily
sweep~
review of
this e}:treroely h't"nad and 4!2?:tremely intricate subject.
Rnthe't" 1 f\hould 1 il--s to draw your attention to some leading
facts, to some cOllfltcting interpretations that are
SOftWtfMl
drawn frOnt them, and to eontrlbute. if t can, to plaetng
thpse relatloost,i?s in
~s;wctive ..
- 2 Firat, I want to J.Uelltion briefly t..'le United States
balan..:e of payments pos it iOll , against the backgrouad of poet~ar
economic progresa>.
'!hen 1 would like to
fOCU8
attention
f:iOrf.: spec 1£ies11y on internatioul I80Wments of private
Jnited States capital, ...d particularly on those outside the
field of direct investments.
Speaking generally, we are in • period in 'Which deep
and serious attention is being given to iIlternatioDal
monetary and pa)·.nts problema.
finaDclal preas, aDd ill the
Within
ac~ic
gove~nts.
in the
ccaBunity. both hen
and abroad, there 18 iIltense interest in the deterainanta of
the various types oi international capital IIiOv_nta, the
relationshiD of these movementa to the balance of payaent8,
Rel:C"U by the ftonorable ,"_rick L. Demf.Dg,
I...iud€!:' E,U:T('t:atl- O( tbe Treasury for Moraetary Affaire.
at thE: .tUauual COllventiOll of the wa.h In&tOl1 State
Bankers' AI.octati_. Tat--. VuhiDst_.
Tuesda)" ,,!une 22,1%'5, at 9:30 a.m., PDT
Intf.;rllatiaualf.lallkl~
in Relation to
Q:e Balance of l'fY!i!pts 54 to hlt'mttiO!l!l WSyW1ty
I VEt) much we lca:oe the invitation to cross the cOUIltry
an.u talk with haukers from the State of Washington.
_1
Situated
the Pacific Coast, with .1.mportant mat:lt1me 8Ild . .rial
conne(~tiOWi ~it:h
other parts of the world, you are, I _
sure. senait ive to and interested in the internati-.l
aSpt."'cts of financial aud banking laatters.
dacuss
80llW:t
I haw dtoeell to
of the aspects of our internatlODal pC)'1Dents
position that are of a special iIlterest. I believe, to the
TREASURY DEPARTMENT
Washington
FOR RELEASE P.M. NEWSPAPERS
TUESDAY, JUNE 22, 1965
REMARKS BY THE HONORABLE FREDERICK L. DEMING,
UNDER SECRETARY OF THE TREASURY FOR MONETARY AFFAIRS,
AT THE ANNUAL CONVENTION OF,,--THE WASHINGTON STATE
BANKERS' ASSOCIATION, TA£OMA, WASHINGTON,
TUESDAY, JUNE 22, 1965, At 9:30 A.M., PDT
INTERNATIONAL BANKING IN RELATION TO THE
BALANCE OF PAYMENTS AND TO INTERNATIONAL LIQUIDITY
I very much welcome the invitation to cross the country
and talk with bankers from the State of Washington. Situated
on the Pacific Coast, with important maritime and aerial
connections with other parts of the world, you are, I am
sure, sensitive to and interested in the international aspects
of financial and banking matters. I have chosen to discuss some
of the aspects of our international payments position that are
of a special interest, I believe, to the banking community.
First, I want to mention briefly the United States
balance of payments position, against the background of postwar economic progress. Then I would like to focus attention
more specifically on international movements of private
United States capital, and particularly on those outside the
field of direct investments.
Speaking generally, we are in a period in which deep
and serious attention is being given to international monetary
and payments problems. Within governments, in the financial
press, and in the academic community, both here and abroad,
there is intense interest in the determinants of the various
types of international capital movements, the relationship
of these movements to the balance of payments, to domestic
monetary and fiscal policies, to the needs for international
reserves, and to other aspects of the extremely broad subject
of international liquidity.
F-99
...
)
In a very real senSl'. tIle' ',vorld is ~('arching t l ) find a
C0nstrllctivl' rlidlionship bel\.;een capital fluHs, balance of
payments adjustment and the magnitude and cl)mposition of
growing needs for international liquidity.
.
.
Today, I do not wish to attempt any sweeping review of
this extremely broad and extremely intricate subject. Rather
I should like to draw your attention to some leading facts,
to some conflicting interpretations that are sometimes
drawn from them, and to contribute, if I can, to placing these
relationships in perspective.
One of the interesting aspects of this period of ferment
through which we are passing is the very wide range of
opinion on all these questions. Thus, at one end of the spectrum,
there is concern that any diminution in the flow of United
States capital to other developed countries might have a serious
and immediate effect upon world prosperity. A somewhat milder
view held widely in the United States is that there will be a
need to replace the outflow of dollars in recent years with
some substitute form of international liquidity, since the
United States deficit has provided a source of reserves to
other countries. At the other end of the spectrum, a view
held particularly on the Continent of Europe, it is contended
that the outflow of capital from the United States has been
excessive, has added unduly to the level of Continental
European reserves, and has contributed to inflationary pressures
in Europe.
We sometimes forget, in our immersion in the problems of
today, how much of a positive character has been achieved in
the post-war period. During the past decade, world trade has
grown at a surprising pace. World exports reached a total of
more than $150 billion in 1964, about double the corresponding
figure at the beginning of the decade. In the industrial
countries, the last ten years has been a period of rather
persistent prosperity. The Organization for Economic
Cooperation and Development (OECD) countries have had a total
output rise, in real terms, of about 50 percent. In most
countries this has been accompanied by full or over full
employment, although this, of course, has not been true of
the United States. But even the financial strains that have
been felt on occasion by the United Kingdom, Japan, Italy,
and some other countries have been associated with over-heated
domestic economies rather than situations of economic recession.
- 3 In general, there have been pressures on wages 'and prices,
labor shortages, and a general preoccupation with the need to
place brakes on the domestic economies, rather than accelerate
them. A different situation has prevailed in the United States,
where the ec'onomy has required from time to time an assist
from fiscal policy rather than public action to restrain an
over-exuberant business activity. Even so, however, the
United States itself has had during the post-war years no prolonged
recessions and at the present time has had 52 months of continuing
economic advance.
In most industrial countries, balances of payments have
been in surplus and international reserves have been rising
at an extremely rapid rate. Our own payments position,
however, changed markedly after 1957. From 1958-1964 our
deficits on regular transactions have averaged $3-1/2 billion
a year.
Private Capital Movements and the United
States Balance of Payr'lents
I do not intend to review the policies applied in 1961
and 1962 to correct our balance of payments and at the same
time revitalize the domestic economy. We did achieve
substantial progress in 1961-1964 in enlarging our commercial
export surplus, despite a rising total of imports, and in
reducing the balance of payments impact of our military and
aid programs. With a steady increase in our services income,
our deficit would have been largely eliminated if the capital
accounts had remained constant.
But this was not the case. The outflow of private
United States capital in all forms had already jumped sharply
in 1956 from the moderate levels of 1950-1955, and ranged
between $2-1/2 and $4 billion in the years 1956-1960. In 1964
it reached almost $6-1/2 billion, with a very decided surge in
the latter part of the year. Between 1960 and 1964 United
States security and c'redit transactions grew from $2.2 billion
to $4.1 billion. In July 1963, the Interest Equalization Tax
had been announced when the early manifestations of these latest
capital demands on our markets appeared, particularly in the
form of potential placements by other industrial countries in
our capital market. The further dramatic evidence of the
volatile capital accounts in 1964 led President Johnson to
propose on February 10, 1961), a comprehensive program calling
- 4 L)r the cooperalion of the business and finane ial communities
in reducing this drain on the balance of payments.
The response of businessmen and bankers has been most
impressive. While the limited data yet available are
difficult to evaluate because of special factors, they suggest
that this cooperation, upon which the program depends, has
begun to have a significant effect. The deficit on regular
transactions for the first quarter was reduced to about half
the magnitude of the very large figures in the final quarter
of 1964. Such indications as we have since the end of March
have continued to be even more favorable. But I cannot overemphasize that we need to establish a record of clear and
sustained equilibrium, to demonstrate our full recovery from
the long continued malady of deficits. We cannot, therefore,
contemplate any early relaxation of our efforts.
The U. S. Position as International Banker
We have all heard much about the United States role as
an international banker and about our tendency to pile up
long-term investments while accumulating short-term
liabilities. We have large and competitive money and capital
markets, as compared with the narrower and less competitive
markets in the other industrial countries. There has been
increasing desire for capital investment abroad, arising from
the long-continued European prosperity, the Common Market
preferences, and the rapidly growing European demand for many
products in which American corporations have traditionally
been interested. While these latter are factors that are
particularly significant in the area of direct investment, they
also may account for some movement of banking funds to supply
the needs of some United States subsidiaries abroad. Finally,
there is the differential between interest rates here and
abroad, particularly at longer-term.
Let us recall briefly the general structure of our
international investment position. We do not yet have detailed
figures for 1964, but at the close of 1963, private long-term
investments abroad were valued at $58 billion, of which $40.6
billion was direct investments, and $17.6 billion represented
other types of long-term assets. Foreign long-term investments
in the United States amounted to nearly $23 billion, leaving a
net balance in our favor on private long-term investment
account of about $35 billion. Note that this does not count
any of our governmental claims on foreign countries.
- 5 -
At short-term, however, the position was rather
different. Foreign short-term claims on the United States,
both private and official, amounted to $28.7 billion at the
end of 1963. This figure includes about $3 billion that are
not considered liquid financial liabilities. Nearly half of
the total amount was officially held. Against this, the
United States then held $15.6 billion in gold, and other
reserve-type assets of $1.2 billion. In addition, our private}
held short-term claims on foreigners were about $8 billion.
Moving from the cross section to the changing pattern
over time, our net position on private long-term capital
account had improved from $27 billion to $35 billion, from
1960 to 1963, while our net official and private position
on short-term account (including gold), worsened by $5
billion.
The major channels through which these capital funds
have recently been flawing out, apart from Canadian security
issues in New York, are the direct lending operations of the
banking system, or the placement of funds with foreign banks,
or with foreign branches of American banks, by non-banking
entities. While some of the proceeds in the form of dollars
were added to the rising total of foreign private dollar
holdings, foreign official dollar balances were built up as
well.
While our private investments abroad, both short and
long-term, are presumably sound and profitable ones in the
sense of income-earning assets, they have clearly tended to
exceed the net surplus on other accounts. This adds to our
liquid liabilities to foreigners, and these liabilities,
in turn, may be converted into gold.
Thus, while our balance of payments program has
consistently aimed at improving both our current accounts
and our governmental accounts, increasing attention has had
to be devoted since July 1963 to the large flaw of capital
abroad -- particularly to other industrial countries.
- 6 -
Through the Interest EqualizatinI1 Tax, we have sought to
provide a market-type regulator.
We have hoped in this
way to strengthen the incentive to other industrial
countries to utilize their savings more effectively to meet
the demands that would otherwise come to the United States.
More recently, in the wake of the very sharp deterioration
in our capital accounts and in the balance of payments,
generally, during the period since July 1964, we have
adopted the voluntary credit restraint program on
February 10. This program, too, is increasing the awareness
of other advanced countries that they should readjust their
financing patterns So as to obtain capital resources out of
their own savings.
As noted, the tendency to seek United States funds
may be in part due to the generally high cost of borrowing
in foreign countries.
But there are other reasons why some types of borrowers
are attracted to the United States market. These include
the narrowness and high cost of security issue markets in
Europe, the favored position of governmental borrowing
entities and nationalized industries to some capital
markets abroad, the channeling of savings of the public through
savings banks and mortgage banks into government securities
or mortgages, and the tendency in many countries of the
large banks to maintain a relatively rigid pattern of
lending policies.
Efforts are being made to explore these and other structural
problems in the European financial system, in the hope of developing
more efficient and more competitive capital markets that can meet
the types of demands that now fall so heavily upon the United
States.
Indeed, as strong surplus and creditor countries, many
Continental European countries would normally be expected to be
- 7 -
net sources of capital to the rest of the world. But instead of
becoming capital exporters, they have continued to import capital
from the United States, and have, in effect, banked the proceeds
with their central banks in the form of reserves.
Particularly in Europe, it is frequentyy suggested that
the way to restrain the tendency for capital to flow out of the
United States would be to bring about a higher level of long-term
interest rates in the United States. But a moment's reflection
will indicate the difficulties of applying such a prescription to
the situation in which we find ourselves. One very large economic
entity, the industrial nations of Continental Europe, has a historically high level of interest rates that has prevailed during
a period of generally full or over full employment and inflationary
pressures on prices and wages. The entire structure of the capital
values in these countries has for a long time been geared to a
plateau of rates substantially higher than that in our own economy.
This European rate structure seems likely to come down slowly, if
at all, as inflationary pressures subside.
On the other hand, long-term interest rates in the United
States are also at high levels in terms of our own background
and history. There are several reasons for doubting that a
simple prescription of higher long-term interest rates in the
United States is an effective answer. The spread between longterm rates here and in most of Europe is so wide that the possibility
of any substantial narrowing of the differential by United States
action is open to considerable question from a purely technical
standpoint, because of the massive volume of savings in the United
States. Second, as noted, present levels are not low historically,
and a significantly higher level of rates might well do harm to
the domestic economy. Thirdly, as noted, the European rates not
only are influenced by the pressure of demands from borrowers on
savings, but also probably reflect the general tendency for prices
to rise, thus reducing considerably the real rate of interest, in
terms of purchasing power over goods.
It should be noted that, even today, foreign placements are
small in relation to our annual gross private domestic investment
- 8 -
of $73 billion, or with respect even to our personal savings of
$35 billion a year. Moreover, the capital drawn from the United
States represents a small percentage of the total savings and
investment in Europe.
All in all, leaving aside direct investment, some $4 billion
of United States capital moved out last year. About half went to
Canada and Japan, less than a quarter directly to Western Europe,
and the remainder to Latin America, Asia, and other regions. The
reductions we anticipate from the programs now in effect, particularly when the impact is directed toward the other industrial
countries, should form a relatively small part of the total investment financed in those countries. In the major countries of Western
Europe alone annual investment in all forms probably equals that
in the United States. Hence the relationship of this correction
of our deficit to world business activity is marginal, and should
not be over-stressed.
As the world moves farther away from the restrictions and
restraints of the earlier post-war period, the stream of financial
capital moving between these two great industrial complexes in
Europe and the United States might tend to widen. At the same
time, the United States cannot reasonably be expected to continue
to supply capital as an international banker if its reserve position
is steadily reduced by a continuing deficit. This may well present
a challenge to Europe and the United States to find an appropriate
set of policies to meet on a continuing basis the capital flows
problem. European countries, it is true, made some progress in
1964 in enlarging their capital markets, and in accommodating
the needs of some foreign borrowers, particularly Japan; some
countries have applied special disincentives to the attraction of
foreign capital into their monetary reserves. But there remains
the need to reduce European capital imports and to stimulate larger
foreign investments, without a corresponding increase in its current
account position.
Capital Flows and European Reserves
A reduction in the flow of financial capital from the United
States and an associated shrinkage of the United States deficit
could have a considerable effect on international liquidity.
Without a U.S. deficit, the increase in world reserves would be
limited essentially to the amount of new gold production flowing
- 9 -
into monetary channels -- that is, to about $500 to $700 million
per year. Since a number of countries on the continent of Europe
have become accustomed to much larger aggregate increases in their
reserves year by year, some adjustments could be expected. While
the authorities in some of these countries might look with favor
upon a position of United States equilibrium and somewhat slower
growth in their reserves, there are voices here and abroad that
express concern about the effect upon these economies of a considerable and rapid tapering off of these customary reserve increases.
They would fear that domestic credit might tighten too sharply,
and that this might place an additional brake on expansion, already
slowing down in several Continental countries, and that this could
affect the level of activity in the outside world.
It is certainly true that some adjustments will need to be
made in these countries, for any change in capital flows to the
outside world will have its economic effect, through our over-all
balance of payments position. But there are several qualifications
to bear in mind. One is that these countries have for some time
been facing heavy pressures on savings, on prices, and on labor
supplies. Under such conditions it should be possible for these
countries to absorb without adverse results a considerable part
of the impact of a smaller volume of foreign receipts. Secondly,
as noted, the amount of these receipts is small in relation to
total investment and savings of the European economies. Thirdly,
the movement of reserves frequently seems to be the dependent
variable in the equation. Especially in recent years, persistent
reserve increases seem in some cases not to have been the result
of policies directed specifically toward the external accounts, but
rather a by-product of action taken to dampen domestic inflationary
pressures.
Actually the growth in liquidity in the past ten years has
been concentrated largely in the surplus industrial countries.
When we look at the position of international reserves and their
recent growth, we are struck at once by the really phenomenal
enlargement of reserves in the industrial countries, excluding the
United States and the United Kingdom. From the end of 1953 to
the end of 1964, the gold and foreign exchange reserves of eight
leading industrial countries in the Group of Ten and Switzerland
rose from $10.6 billion to $27.6 billion, or by $17 billion. This
amounted to nearly tripling their total reserves.
Moreover, during this period, while these countries increased
their reserves in gold and foreign exchange, the rest of the world
- 10 lost about $3 billion of reserves in this form.
It is especially worthy of note that the demand of these
countries for gold to add to their reserves, at $12 billion, was
about twice the availability of new monetary gold supplies for
the world as a whole. This was made possible only by largescale transfers of gold to them from United States reserves.
I do not attempt today more than to sketch out some of the
relationships between international capital flows and our balance
of payments and liquidity problems. As and when our balance of
payments shows continuing strength, some of the uncertainties
that have to date surrounded the liquidity problem should begin
to clear. We can then see what we face, once the all-embracing
screen of the massive United States deficit has been lifted and
moved aside. The essential questions that will have to be answered
are: What will be the reserve needs of the world: How much will
the major industrial countries require in the form of gold, and
what will they be willing to take into their reserves in addition
to gold?
There are a number of technical possibilities for creating
additional reserve assets to meet these or other situations in
the' future. They involve essentially an agreement or understanding
among monetary authorities to treat a particular type of credit
claim, either on another country or on an institution, as a
monetary reserve asset.
One method, frequently mentioned, is the further extension of
the technique of reciprocal acquisition of currencies, as in the
short-term swaps of the Federal Reserve, but for a long-term.
Each country then regards its claim on the other partner as a
reserve asset. The countries could also issue special securities
to each other, with appropriate provisions as to maturity,
interest rates and exchange pro~ection.
Another approach would be a further evolution of the present
reserve claims on the International Monetary Fund. These claims
are drawing rights that countries have obtained, and can use virtual
at will, as a result either of having paid gold subscriptions to
the Fund, or from the use of their currencies by the Fund to extend
credits to other countries. The Managing Director of the Fund,
Mr. Schweitzer,has recently indicated how this might be done,
either by increasing the present readily available drawing rights
or by creating special claims on the Fund to be used as reserve
assets.
- 11 -
Other sllggestions lw\lc he':'L1 made involving more restrictive
procedures, both as to participation and governing rules. I do
not propose to comment in any detail on any of these approaches.
However, I would like to underline some of the characteristics
of any approach which seem to me especially significant.
First, additional or new reserve assets should be accepted
as such by the major industrial countries. Secondly, they
should be held as reserve assets without directly or indirectly
leading to a reduction in reserve currencies or other
supplements to gold reserves. That is, they should not
accentuate demands on gold. Thirdly, the method of providing
additional reserves should be in general evolutionary, in the
sense of general public acceptance with a minimal disturbance of
financial and exchange markets and with especial care to avoid
encouragement to gold hoarding and gold speculation. Fourth, a
balance would have to be achieved between the fears of some that
creation of international reserves becomes too easy, with a general
over-expansionary effect on world supplies of money and credit,
and those who fear that international decisions would be too cumbersome and too restrictive. There are, of course, many other
questions that might divide proponents of this or that technique,
or appeal to particular countries, including the always important
questions of who participates in the benefits and responsibilities
of reserve creation, and how they are shared.
Reserve assets, once created, in a satisfactory way or ways,
could be shifted from country to country and earned or borrowed
in ways similar to gold, reserve currencies, or existing claims
on the Fund. That is, they could make possible the simultaneous
existence of surpluses among the major countries, including the
United States, in excess of new monetary gold supplies, and without
redistribution of existing gold reserves or cancellation of other
reserve assets. They would then be true supplements to existing
reserves.
A concensus may not emerge easily or quickly. For the world
has to date relied essentially on gold and reserve currencies,
and the public everywhere tends to be cautious and pragmatic in
monetary matters. Money is peculiarly sensitive to public acceptance
and public confidence
0
- 12 We shall not find answers to these questions over night.
Indeed, the answers can probably evolve only as they are
shaped and molded by the actual course of monetary history in
the making. What we must insure is that the monetary
authorities of the world have a common awareness of the type of
problem which may arise as dollars become more scarce and have
a common objective of shaping the evolving international
monetary system in a cooperative way to the benefit of the
sound economic aspirations of developed and developing nations
alike.
000
J ... 21, 196'
//2.-e1f )-C~/L(
~ 4 ' ~'t.e today aMCNDee4 publlcatloa of •
pa.pblet eat1tled. "The
The
~.,hl.t
v..
£~cl . .
Tax ReductiOll _. Soae
prepared by the Tr. . .\II'J' 18
cooperation with tbe Pr•• ideat'. Co.m1tt•• oa
Tr......ry IafoJ:'Mt.ioa ufflce.
Ioaau.era
uther cop1. . ..,. b.
from the Govel"DlMDt rrtat1n, Olfice at 10
0 .........
Cell" .. . " . .
TREASl)RY DEPARTMENT
(
June 21, 1965
FOR IMMEDIATE RELEASE
EXCISE TAX PAMPHLET FOR CONSUMERS
The Treasury today announced publication of
a pamphlet entitled, "The Excise Tax Reduction
Some Questions and Answers for Consumers."
The pamphlet was prepared by the Treasury
in cooperation with the President's Committee on
Consumers Interest.
A limited number will be
available at the Treasury Information Office.
Other copies may be ordered from the Government
Printing Office at 10 cents a copy.
000
F-100
- 4 The next general meeting of the Treasury panel of
economic consultants will be held in July.
000
- 3 itT he Treasury is very fortunate in having
access to the tremendous pool of talent represented
by Dr. Harris and the other consultants.
These
men have made a great contribution in recent years
If~'
G
tr e[;:·f/At ,~,
informing t~ Treasury and other government
1\. L1 .k.t> /')c; A.'....".
~,;. ,.,
officials E'jf new ideas and
~
If'
j..,
0 ,'""-.
research in the areas
of fiscal and monetary policy.
They are an
invaluable source of information and academic
expertness available to Treasury officials engaged
in working out new policies and reviewing progress
on existing programs.
Their efforts will assure
that the Treasury has continued access to leading
-/tJ~
scholars, as well
as~leaders
of business, finance,
and labor with whom it regularly consults."
- 2 La Jolla, California, will continue as Senior Consultant.
Dr. Harris will also continue to coordinate the activities
of the panel.
The panel holds several general meetings each year.
Smaller working groups meet from time to time with
Treasury officials and staff members, with respect to
current problems.
The general meetings may be attended by
other government officials from the Council of Economic
Advisers, the Bureau of the Budget, the Commerce Department
or any agency which has an interest in the subjects to be
discussed.
In announcing that the Treasury would continue to
make use of the services of the consultants, Secretary
Fowler said:
BRAFT PRESS RKLg8Si
TREASURY TO CONTINUE ROLE OF ECONOMIC CONSULTANTS
Treasury Secretary Fowler announced today that he will
continue the practice of meeting with members of a panel of
outside economists who serve as Treasury consultants.
Panel
members are leading economists on the staffs of universities
and of research organizations.
They serve the Treasury
as consultants in their particular field of study.
~cretary
Fowler named 33 economists as members of his
consultative panel, and indicated that four others may
. . .V
I,·.~iv.
& C·'
/'
.f.,.r>
attend~eetings
from time to time.
had served previously
Nearly all named today
on a panel of Treasury economic
FO(V/fe/?
consultants established in 1961 by Secretary Dillon.
~
Dr. Seymour E. Harris, Chairman of the Department of
Economics, the University of California, San Diego, at
TREASURY DEPARTMENT
=
(
June 22, 1965
RELEASE A.M. NEWSPAPERS
WEDNESDAY, JUNE 23, 1965
TREASURY TO CONTINUE ROLE OF
ECONOMIC CONSULTANTS
Treasury Secretary Fowler announced today that he will
continue the practice of meeting with members of a panel of
outside economists who serve as Treasury consultants. Panel
members are leading economists on the staffs of universities
and of research organizations. They serve the Treasury as
consultants in their particular field of study.
Secretary Fowler named 33 economists as members of his
consultative panel, and indicated that four others may be
attending meetings from time to time. Nearly all named today
had served previously on a panel of Treasury economic consultants
established in 1961 by former Secretary Dillon.
Dr. Seymour E. Harris, Chairman of the Department of
Economics, the University of California, San Diego, at La Jolla,
California, will continue as Senior Consultant. Dr. Harris will
also continue to coordinate the activities of the panel.
The panel holds several general meetings each year. Smaller
working groups meet from time to time with Treasury officials and
staff members, with respect to current problems. The general
meetings may be attended by other government officials from the
Council of Economic Advisers, the Bureau of the Budget, the
Commerce Department or any agency which has an interest in the
subjects to be discussed.
In announcing that the Treasury would continue to make use
of the services of the consultants, Secretary Fowler said:
"The Treasury is very fortunate in having access
to the tremendous pool of talent represented by
Dr. Harris and the other consultants. These men have
made a great contribution in recent years by keeping
F-10l
- 2 Treasury and other government officials abreast of
new ideas and research in the areas of fiscal and
monetary policy. They are an invaluable source of
information and academic expertness available to
Treasury officials engaged in working out new policies
and reviewing progress on existing programs. Their
efforts will assure that the Treasury has continued
access to leading scholars, as well as to the leaders
of business, finance, and labor with whom it regularly
consults."
The next general meeting of the Treasury panel of economic
consultants will be held in July.
List of Treasury consultants attached.
PANEL OF TREASURY CONSULTANTS
George L. Bach
Carnegie Institute of Technology
Schenley Park
Pittsburgh, Pennsylvania
Seymour E. Harris
University of California, S.D.
La Jolla, California
Philip W. Bell
Haverford College
Haverford, Pennsylvania
Albert G. Hart
Columbia University
New York, New York
Roy Blough
Columbia University
New York, New York
Hendrik S. Houthakker
Harvard University
Cambridge, Massachusetts
Harvey E. Brazer
The University of Michigan
Ann Arbor, Michigan
Harry G. Johnson
The University of Chicago
Chicago, Illinois
Gerhard Colm
National Planning Association
Washington, D. C.
John H. Kareken
University of Minnesota
Minneapolis, Minnesota
Richard N. Cooper
Yale Universi ty
New Haven, Connecticut
Peter B. Kenen
Columbia University
New York, New York
James S. Duesenberry
Harvard University
Cambridge, Massachusetts
Co P. Kindleberger
Massachusetts Institute of Technology
Cambridge, Massachusetts
John G. Gurley
Stanford University
Stanford, California
Hal B. Lary
National Bureau of Economic
Research, Inc.
New York, New York
Gottfried Haberler
Harvard University
Cambridge, Massachusetts
Alvin H. Hansen
Harvard University
Cambridge, Massachusetts
John Lintner
Harvard Graduate School
of Business Administration
Soldiers Field
Boston, Massachusetts
- 2 -
Fritz Machlup
Princeton University
Princeton, New Jersey
Carl S. Shoup
Columbia University
New York, New York
Lloyd A. Metzler
The University of Chicago
Chicago, Illinois
Warren L. Smith
The University of Michigan
Ann Arbor, Michigan
Raymond Fo Mikesell
University of Oregon
Eugene, Oregon
Arthur Smithies
Harvard University
Cambridge, Massachusetts
Franco Modigliani
Massachusetts Institute
of Technology
Cambridge, Massachusetts
Robert Solow
Massachusetts Institute
of Technology
Cambridge, Massachusetts
Geoffrey H. Moore
National Bureau of Economic
Research, Inc.
New York, New York
Daniel B. Suits
The University of Michigan
Ann Arbor, Michigan
Richard A. Musgrave
Princeton University
Princeton, New Jersey
James Tobin
yale University
New Haven, Connecticut
Alice Rivlin
The Brookings Institution
Washington, D.C.
Robert Co Turner
Indiana University
Bloomington, Indiana
- 3 -
Others who are expected to participate upon an occasional
basis include:
Edward Mo Bernstein
E.M.B. Limited
Washington, Do C.
Walter S. Salant
The Brookings Institution
Washington, D. C.
Joseph A. Pechman
The Brookings Institution
Washington, D.C.
Paul A. Samuelson
Massachusetts Institute
of Technology
Cambridge, Massachusetts
- 3 -
and exchange tenders vi11 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
~e
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.
- 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
JUl~
, in cash or other immediately available funds or in a like face
amount of Treasury bills maturing
_J_u_l-"Y,--1~'--.;::;;1.,;:.,9.:.6.::..5-r.~r--_ _ _ _ _ _ _ •
ffii
Cash
_
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
June 23, 1965
XXXXXXXXYrX~..::.XXXXXXXXXXXXXX
TREASURY I 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
X¢X
cash and in exchange for Treasury bills mat\lring
July 1, 1965
XWX
of $ 2 , 20xafi ,000 , as follows:
, in the amount
,
91 -day bills (to maturity date) to be issued July 1, 1965
Xf&X
{{ij
in the amount of $1, 200~ooo
, or thereabouts, represent-
ing an additional amount of bills dated
~e~te~~~ol
1964 ,
and to mature September 30( 1965 , originally issued in the
~ an additional $1,002,063,000 was issued
amount of $1,00.,000 /, the additional and original bills April
1965
to be freely interchangeable.
182 -day bills, for $ 1,008t?22,000 , or thereabouts, to be dated
~
xtd&)(
~J.;,;;U,;;;;;lYI/"".;1;;.._~1~9.r.6.;;;.5_ _ _ ,
and to mature
December 30, 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, JUne~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 tM
price offered must be expressed on the basis of 100, with not more than three
TREASURY DEPARTMENT
June 23, 1965
'OR
IMMEDIATE RELEASE
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders
:or two series of Treasury bills to the aggregate amount of
2,200,000,000, or thereabouts, for cash and in exchange for
Ireasury bills maturing July 1, 1965,
in the amount of
2,202,143,000, as follows:
9l-day bills (to maturity date) to be issued July 1, 1965, in the
amount of $1,200,000,000, or thereabouts, representing an additional
amount of bills dated September 30, 1964, and to mature September 30,
1965, originally issued in the amount of $1,000,539,000 (an additional
$1,002,063,000 was issued April 1, 1965), the additional and original
bills to be free 1y in terchangeab Ie.
182 -day bills, :'or $1,000,000,000, or thereabouts, to be dated
a!1d to r:1ature December 30, 1965.
July 1, 1965,
The bills of ~oth series will be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be issued in bearer form only, and in denominations of $1,000,
$5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000
(maturi ty value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Monday, June 28, 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 ~ffered must be expressed on the basis of 100,
with not more than three dp.cimals, e. g., 99.925. Fractions may not
be used. It is u~€ed that t.enders be made on the printed forms and
forwarded in the spec ial ~:vr~ lopes whic h \Aiill 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-I02
- 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
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
averagp 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 July 1, 1965,
in cash or other immediately
avall~hle funds l)r In a like ;.1CP amount of Treasury bills
maturlng July 1, 1965.
Cash and exchange tenders will receive
equal treatment. Cash adjustments will be made for differences
bet\..J~en the ~ar value of matllrin~ hills accepted in exchange and
the 1 S s II e p r 1 C e l.) t the new h 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
TREASURY DEPARTMENT
~R m.r..lst A..M. NlWSPAPERS,
?rl<iay, June 25, 1965.
June 24, 1965
RESULTS OF RlFUNDIliQ OF II BILLION OF ONE-!EAR BIW
The Trea~ury Department announced last evening that the tendera for '1,000,000,000,
thereabouts, of 365-day Treasury bill!! to be dated June 30, 1965, and to . .ture
June )0, 1966, which ",ere cffered on June 17, were opened at the 'ederal ReaerYe Banks
)r
)11
June
24.
The details of this issue are as fo11ows:
Total applied for - $2,190,290,000
Total accepted
- 1,000,090,000
Range of accepted competitive
(includes $47,025,000 entered on a
noncompetitive basis and accepted in
full at the average price shown below)
bid~:
High
(Excepting one tender of 1840,000)
- 96.15; EquivRJ.ent rate of discount approx. 3.790% per annum
Low
A.verage
- 96.126
- 96.lho
"
"
M..
.
"".
•
3.821%.
3.801%·
n
•
(90% of the amount bid for at the low price was accepted)
Federal Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
.ltlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
!pp1ied for
Total
A.ccepted
I
•
10,504,000
1,687,197,000
12,21u,OOO
l.L..575,OOO
9,L.L3 ,000
15,584,000
307,265,000
7,L21,OOO
~.lLS,ooo
4,1(;4,COO
30,730,000
85,108,000
TOTAL
$2,190,290,000
504,000
685,197,000
2,214,000
14,575,000
9,443,000
15,384,000
162,265,000
5,421,000
6,145,ooc
4,104,OOC
30,130,000
64,108,000
$1,000,090,000
/ On a coupon issue of thf" same length rtnd for the 1a"":e amount invested, the return
on these bills would nrovide a yield of 3.97%. Interest rates on bills are quoted
in tera of bank discount with the return related to the face amount ot the billa
payable at maturity rather than thp s..-,:::.mt "'.nveste:i and their length in actual IlUIIlber of days related to a 360-d.ay year. In contrast, yield8 on certificates, notes,
and bonds are COllputed in terms of interest on the amount invested, and relate the
IIUIIber of days re1l&1n1ng in an interest payment period to the actual number of days
in the period, with selliannual compounding i f more than one coupon period is involved.
F-103
TREASURY DEPARTMENT
Washington
STATEMENT OF THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE THE
SENATE FINANCE C~ OJ( H. R.
8147
REIATIIG TO CERTAIN CUSTCMS EXEMPl'IOIS
JUlIE
24, 1965
Mr. Chairman and Members of the CcmDi ttee :
I welcane this opportunity to appear before your CClIIIIdttee to
comment on H. R. 8147.
Introduction
<il ley 12 I appeared before the Bouse Ways and Means CaaD1ttee
to testify in support of H. R. 7368, a bill introduced at the request
of the Administration.
That bill provided, among other things, that
fran July 1, 1965, until January 1, 1968, the current exemption fran
duty available to residents returning fram foreign travel would be
reduced fran $100, wholesale value, to $50, fair retail value
$
It
also provided that the exemption would be applicable only to article.
accompanying returning residents.
In substitution for H. R. 7368, the Bouse passed B. R. 8147, as
amended.
Instead of the $50 reccaaended by the Administration, the
F-I04
- 2 -
bill passed by the House provides, on a permanent basis, for a
tourist free exemption of $100 retail value.
Moreover, it would not,
as did the legislation proposed by the Administration, limit the
exemption to articles accompanying the returning residents.
The
Treasury Department is strongly opposed to the changes made in these
prOvisions and hopes that your Ccmrlttee will reject them and, at a
minimum, substitute for them the provisions in
the original bill
which was B. R. 7368.
B. R. 8147 also contains special exemptions for residents of the
United states returning trom the Virgin Islands, Guam, or American
Samoa, but increases them by 100 percent over the amounts provided
in the Administration-supported B. R. 7368.
The Treasury is also
opposed to these increases.
In addition to the modifications of H. R. 7368 described above,
H. R. 8147 would l1m1t to one quart the present one gallon, duty-free
liquor allowance available to returning residents, and would restrict
- 3 -
it to individuals who have attained the age of 21.
The Treasury
endorses this provision of the bill.
Urgent need for legislation
If Congress fails to act before July 1, the tourist exemption
will automatically revert to $500, a figure utterly out of keeping
with our present needs.
Impact of tourist free exemptions provisions of B. R. 8147 on
U. S. balance-of-payments program
Passage of B. R. 8147 without substantial amendment would have
same implications for our balance-of-payments position which I view
as quite serious.
I fear that the American public would regard such
legislation as a sign that it is now safe to relax; and that our
foreign friends would regard 1t as a weakening in the American Government's resolve to take a step considered politically disagreeable to
carry through the balance-of-payments program announced by the Pre8i-
dent on February 10.
The fact 1s that, trom a balance-ot-payments
sta1dpo1nt, we are far trca a position where it is sate to relax and,
- 4 as Secretary of the Treasury, I have no altern"lt1ve but to urge this
CClllldttee and the Congress to &vo1d any action that would 1nd1cate a
lack of will and determination to bring our balance of payments into
equilibrium and keep it there.
In his bLlance-of-payments message to the Congress on Februal'7 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
Un! ted States, both by our own citizens and by our friends
fran abroad.
"I ask the tourist industry to strengthen and
b~den
the appeal of American vacations to foreign and domestic
travelers, and I will support its efforts through the 'See
the U.S.A.' program."
Although we are not restricting American tourist travel abroad,
we feel strongly that this is certainly no time to encourase foreign
- 5travel and spending abroad.
I am concerned that Senate approval at
the House-approved version at H. R. 8141 would be interpreted by .c.e
as Congressional encouragement of foreign travel.
time for the Congress
~o
Instead, it i8 a
carry out fully the President's recClllDeJlda-
tion that the Congress:
"_- pass legislation to reduce the duty exemption on toreign
purclBses by United states citizens retUl'D1.ng frca abread
to $50, baaed on the price actually paid;
It __
limit the exemption to gooc:t. which accClllp&n7 the returning
travelers. II
Description ot U.
s.
~lance-of-pa,.nts
situation
It is our view that official encouragement of toreign travel i.
inappropriate at this time for the folloviUS
First, the overall picture:
reuOIl8.
IAat year the detici t on the regular
international transactions of the United states vas
that represented some tmprovement over the
and the
$3.1 billion. While
$3.3 billion deficit in 1963
$3.6 billion deficit in 1962, it does not represent enough
progress, or progress that is fast enough.
- 6Second, the effect of foreign travel:
The dollar outflow on
account of expenditures by Americans traveling abroad is a major
item in our balance-of-payments deficit.
totaled $2.8 billion.
In 1964 these expenditures
The inflow of dollars from foreigners trav-
e1ing to the United states amounted to only $1.2 billionj thus, the
deficit on account of tourism was $1.6 billion in 1964.
It is
expected to be larger in 1965, even with a reduced tourist exemption.
Although the estimated balance-of-payments savings from the
tourist free exemption prOvisions recommended by the Administration
may seem relatively small when compared with the provisions presently
in effect -- they would be in the range of $15 to $125 million
annually -- we must realize that success in eliminating our deficit i8
moat likely to result from a many-sided program -- from the combined
effect of many measures which reach a large segment of our economy.
In the interests of both effectiveness and equity, the P.resident's
program calls for restraint and cooperation frail all sectors of the
- 1 oation -- private and public.
All segments of the econany must share
part of the burden, and should feel the discipline, which are necess&ry to meet this problem.
This is so of small as well a8 of large
affairs.
Bllance-of-payment econanies by the Government:
'!'he Government
bas been making strenuous efforts which have borne fruit.
In a state-
ment issued on June 11, 1965, the President indicated that the net
balance-of-payments costs of federal programs through regular transactions abroad declined 23 percent -- $635 million -- fran fiscal year
1963 to 1965.
Be went on to state that, according to present plans,
these costs will decline another 13 percent -- $290 million -- by 1967.
While this achievement results fran efforts in many areas, the most
substantial contribution to date has resulted fran a reduction in
O-verse&8 payments of $720 million frail 1963 to 1965.
Just as an
example of what is being done, the statement points out that there
were 8,614 fever civilian federal employees overseas in December 1964
than a year earlier.
We are striving to -.lte further savings.
- 8 Effects of the voluntary restraint by banks and businesses:
D1sinesses and banks vi th foreign operations have been asked to take
stepa to strengthen our balance-of-payments position and the Interest Equalization Tax baa been imposed on certain types at foreign
investment.
The Administration believes tbat 1t is appropriate
to ask also that individual citizens make a s1gn1ticant,
even if modest, contribution
&8
part of this program which
we are pursuing on many fronts to achieve balance-of-payments
savings.
The provisions of H. R.
7368, the bill introduced
at the request of the Administration, provide for such a
contribution by individuals.
IndicatiOns thus far are that the President' 8 effort to ella1.nate our balance-of-payments deficit is now having succeS8.
FOllowing
substantial deficits in January and February, our overall balance at
payments was in surplus in March and apparently also in April, on the
basis of partial and prel:lmiMry data.
- 9This improvement i. no bas18 tor relaxing our etforts or tailiDi
to tollow through on all aspects ot the President' 8 program.
A 'lew
tavorable month8, while encouragiD8, are tar tran being determinative.
Over-optimism must be avoided at all costs.
!be Congress can demon-
strate its determination by enactment ot the proposals which I
described to you in my introductory statement and which are contained
in B. R. 7368.
We IllU8t be ever mindful that it takes more than a
'lew quarters of equilibrium to demonstrate our ability and decisive-
ness in this crucial area.
What is called tor is firm and consistent evidence
that the United States is determined to face up, on all
fronts, to the need for putting its balance of payments in
equilibrium and keeping it there.
I am concerned that
Senate approval of the BOuse-approved version of B. R. 8147
will tend to cast doubt on this determination.
- 10 -
implications ot tailing to reduce tourist tree exemptions
The thought that I tound recurrillg
&IIlODg
adequate~
members ot the BowIe
when the bill was being considered there was that the balance-otJ8yments sanog vas so small that the bill amounted to "nit picking"
by the Administration.
True, the estimated balance-ot-payments saviDg
frCII the bill we recCDDended is in the range ot $75 - $125 million.
Muly bave overlooked the tact that this is an annual saving.
Aving is saving, and this is how you do it:
Secondly,
you save a little here
and you aave a little there and, if you are perSistent about it, it
all adds up to a big amount.
This is what we are trying to do on
every front, with regard to large items and small items.
And,
&.
I have already emphasized, the problem is not simply one
ot figures and bookkeeping.
National will power and determination
necessarily became involved.
Let me cite an example ot the importance ot what I have in mind.
One of the __ jor teatures ot the balance-ot-payments program outlined
- 11 -
by the President last February is the appeal tor voluntary action
the part
or
OIl
tive or six hundred ot the major .American corporations
which carry on extensive operations abroad.
'lbese corporatiol18 are
beiDl asked to -.Ite an important contribution to the U. S. national
interest by tak1 ng into account the balance-ot-payments
their corporate decisions and actions.
im~ct
ot
Where, tor instance, they
require 1"unda to tinance operatiOns overseas, they are being asked to
'borrow abroad tor this purpose although this sy entail the payment
ot
aanewbat higher interest charges.
These corporations are also being asked to take a careful look at
and, it possible, deter sane of their overseas investment tor a period
ot time.
They are also reexamining whether they are doing all that
they can to prCJDote their exports.
In allot these situations an element ot determination is involved,
a willingness to pursue the goal in small and large affairs alike and
a willingness to temper business and personal interests in tavor of
- 12 -
long-term national interests.
I am glad to report that we are
receiving exemplary cooperation.
I am concerned that approval of the Bouse bill as it now standa
would have the effect, however unintended, of undermining that determ1n&tion which President Johnson has so successfully injected into the
national position on this vital problem.
If the Congress is unprepared
to take the mild action the Administration bas recommended to reduce
American tourist expenditures, why should American corporations be
willing to subordinate their financial interests.
Voluntary coopera-
tion can only be asked at all if it is asked of all.
Practice of other countries with respect to tourist free exemptions
There has been a great deal of comment to the effect that enactment of the Administration's tourist exemption proposal would have
serious consequences for our trade and trade relations with friendly
foreign countries.
It is interesting in the light of this contention
to examine the practices of some of these countries, particularly
- 13 tho.e not .utfer1D8 trom bAlance-ot-payments probl...
Juat to cite
C&Dada allow. Canadian tourists returning fran the United State.
to import no more than $25 ot merchandise duty tree.
Belgium, which is not suttering tran a balance-of-payment. probls,
allows returning Belgian nationals to import only $12 of merchandise
duty tree.
France, with no balance-of-payments problem, similarly allows
only $12.
And West
Ge~,
which certainly bas no balance-ot-payment.
problems, allowa only $12. 50.
The Un1ted Kingdan, which for years bas been suffering fran
balance-ot-payments difficulties, allows no exemptions whatsoever.
TheBe countries, and others which might be cited, have no legitimate canplaint against the measures we propose.
- 14 When this bill was being considered,
same
8lny
proposals were advanced.
telt that the tourist tree exemption should be eliminated alto-
gether, at least temporarily.
SOme
felt it should be $10, or $25.
Great empbasis was given to the desirability of enacting a provision
which, while making a significant contribution to our balance-otpayments problem, would provide a minimum of inconvenience to the
American traveler.
It was for this reason that we finally decided
upon what was considered a very liberal allowance of $50.
In other
words, the issue of the inconvenience to the American public was fully
taken into account.
Possibly we should have recommended $25.
Certainly
a persuasive argument can be advanced in favor of temporarily reducing
the tourist free exemption to $25 and establishing an exemption of $100
on a permanent basis to take effect after an equilibrium in our balance
of payments bas been achieved and sustained for a sufficient period to
justify a conclusion that it was not a passing phase.
- 15 Availability of tourist free exemption privilege for "articles to
follow"
I also hope that the Senate will provide for a discontinuance of
the so-called "articles to follow" privilege which the President recCIImended.
This pr1vilege bas allowed the returning resident to apply any
unuaed part of his duty exemption to articles acquired on a trip abroad
but shipped to him separately and not covered in his baggage.
This is a privilege which very few other countries have ever
allowed for tourist purchases of their residents.
Cuatoms 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 about $40 million.
The
elimination of purchases
of goods "to follow" constitutes an essential part of our program to
reduce the outflow of dollars spent abroad by American tourists.
The
"to follow" privilege also has led in recent years to a mail
order business of subatant1al proportions which has becane of
concern to us.
growing
TOurists going abroad have been increasingly solicited
- 16 to place mail orders which are filled in countries which they do not
even visit and which result in their obtaining goods, tax and duty
free, delivered to their homes.
TOurists and those taking short busi-
nesl trips have been able to avoid both domestic and foreign taxes on
these purchases and thus have been able to acquire goods which they
could not normally buy tax free in the countries which they do visit.
They have, for example, been able to go to Canada and, by this _il
order device, arrange to have French perfume sent to their hanes in
the united States free and clear ot all duties and taxes.
What is
notable i8 that these United States travelers could not have walked
into a store in Canada and bought the same perfwne tree ot Canadian
taxes and duties.
In other words, the "to tollow" privilege has been
taken advantage ot in a way that was never intended.
Elimination ot the "articles to tollow" privilege will result in
a significant economy in the administration ot the Customs Eureau.
Complex and costly administrative procedures are now required to identify
- 17 "articles to fOllow" and to verity exemption claims with
~e
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 lOO-percent basis.
ODe 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.
declaration procedure cannot
be
The advantages ot the oral
tully achieved at present because it
is necessary to obtain a written listing of articles fram each of the
approximately 1.2 million residents who annually claim exemptions for
"articles to follow."
I should also call to your attention the fact that a study by
Customs 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
- 18 22 percent of the cases such claims by returning residents were not
valid.
Unfortunately, to expose and control all false claims relating
to the applicability of the "to follow" privilege 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 required would necessarily slow down the clearance of
articles through custans.
Need for urgent CongreSSional action
If Congreso fails to enact legislation in time to becane effec-
tive by July :l.] the bLggage exemption will autanatically jump to $500
for those returning residents who have been out of the country for
more than twelve days.
Thus, even a very short lapse of time between
the expiration of the present temporary legislation and the Coming
into effect of the bill now before you would have a most serious effect.
- 19 The exemption would go fran $100, as at present, to $500 (or $200 in
certain cases) and then down to whatever figure may be established by
the Congress.
An
interlude at the $500 level would not only be very
bad because of its impact on the President's balance-ot-payments
program but it obviously would have a very adverse public relations
effect even among those not directly affected.
Additionally, 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 torth, which would be required.
Further,
we could anticipate serious discontent fran those travelers caught at
the $50, or whatever other level Congress may legislate, when just a
few days earlier a rise fran $100 to $500 had been allowed.
Conclusion
The legislation that will be enacted by the Congress in this
regard is one of the few things that we can practically do to bring
hane to the public at large the effect of foreign travel on our
balance of payments.
- 20 -
It)reover, officials ot foreign governments observe our actiona
closely to detect any slight weakening in the American resolve to
take the necessary corrective measures tor redressing our foreign
payments imbalance.
I earnestly request that this Committee recommend a bill lubltantially along the lines of H. R. 7368, notably including:
1.
El1mination of the "articles to follow" privilege; and
2.
Temporary reduction of the tourist exemption to not more
than the $50 figure requested.
In addition I would urge:
3. Retention of the liquor provision added by the House; and
4. Establishment of a permanent tourist exemption at the $100
fair retail level, to became effective when our balance-of-payments
difficulties have passed.
the Departn:ent
~f;s.tate
to the Soviet EIrbassy in Washington.
The STORIS relX>rt said that preliminary attempts by it to
~
l:W~:'m..
J aCC&pac;,o
were unsuccessful.
------'----'-------------
("
~rad1o
contact with the mNSTANTm SUlCBANOV
~. \.2.'L '
Late in the afternoon of Z
JroNSTAMDf SUiHANOV
Jun);jf;fie
picked up all her boats and proceeded into the Bering Sea through Un1mak
Pass.
Tbe STORIS using international signals advised the Soviet vessel that
fishing for king crab was only permitted in the eastern Bering Sea.
The
J(ONs.CANrIN SUKHAliOV using international. signal.s replied, "fishing for ld.ng
crabs proceeding in eastern Bering Sea ".
V11.F+/ce
Coast Guard Discovers Soviet Violation
of the
U.S.-&viet King Crab Fishing Agreement
The United &tates Coast disclosed today
tha~e
of its vessels
on patrol off the Alaskan shore recently discovered Russian fishing vessels
L<.V\
taking king crabs in violation of .a. l<i:iIg _II? "U.rg agreement signed
by the Ucl1ted 5tates and Soviet
Rus::J~:-,
The Coast G~ said that ite cutter STCRIS on ~ol off Alaska
June 21 saw the Russian factory vessel KONSTANTIN
S~OV,
with seven
fishing boats in the water, taking ldng crab approximately 25 miless
south of Unimak Islam, AJ.aska, in 40 fathorns.r'
This is outside the area agreed ulX'n for Soviet ldng crab fishing
in an accord of February 5, 1965.
The agreement provides for Soviet
king crab fishing on the continental shelf of the U:u ted States in the
"C'~
•
part of the ilRI!il'qf::i) lBC eastern Bering Sea west of
~ ~
160 degrees
West Longitude.
A. protest based ulX'n the relX'rt of the S.TORIS was made today by
TREASURY DEPARTMENT
(
June 24, 1965
FOR IMMEDIATE RELEASE
COAST GUARD DISCOVERS SOVIET VIOLATION
OF THE U.S.-SOVIET KING CRAB FISHING AGREEMENT
The United States Coast Guard disclosed today that one of
its vessels on patrol off the Alaskan shore recently discovered
Russian fishing vessels taking king crabs in violation of an
agreement signed by the United States and Soviet Russia this
year.
The Coast Guard said that its cutter STORIS on patrol off l
Alaska June 21 saw the Russian factory vessel KONSTANTIN SUKHAROV,
with seven fishing boats in the water, taking king crab approximately 25 miles south of Unimak Island, Alaska, in 40 fathoms.
This is outside the area agreed upon for Soviet king crab
fishing in an accord of February 5, 1965. The agreement provides
for Soviet king crab fishing on the continental shelf of the
United States in the part of the eastern Bering Sea west of 160
degrees West Longitude.
A protest based upon the report of the STORIS was made
today by the Department of State to the Soviet Embassy in
Washington.
The STORIS report said that preliminary attempts by it to
make radio contact with the KONSTANTIN SUKHANOV were unsuccessful.
Late in the afternoon of June 22 the KONSTANTIN SUKHANOV picked
up all her boats and proceeded into the Bering Sea through
Unimak Pass. The STORIS using international signals advised
the Soviet vessel that fishing for king crab was only permitted
in the eastern Bering Sea. The KONSTANTIN SUKHANOV using
international signals replied, "fishing for king crabs proceeding
in eastern Bering Sea".
F-I05
000
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY DECISION ON GAIN ANIZED WARE
UNDER THE ANTIDUMPING peT
The Treasury Department has determined that galvanized ware
imported from Canada, manufactured by General Steel Wares Limited,
Canada, is 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 and to Make Determination That
No Sales Exist Below Fair Value," was published in the Federal Register on May 12, 1965, stating that termination of sales with respect
to galvanized ware imported from Canada, manufactured by Genera.l Steel
Wares Limited, Canada, and assurances that if resumed they would not
be at less than fair value 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.
Appraising officers are being instructed to proceed with the appraisement of this merchandise from Canada without regard to any question of dumping.
Imports of the involved merchandise received during the period
August through December 1964 'Were worth apprOximately $24,000.
importations have been reported since December 1964.
No
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY DECISION ON GUV ANIZED WARE
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that galvanized ware
imported :from Canada, manuf'actured by General Steel Wares Limited,
Canada, is not being, nor likely to be, sold at less than fair
value wi thin the meaning of the Antidumping Act.
A "Notice of
Intent to Discontinue Investigation and to Make Determination That
No Sales Exist Below Fair V&lue," was published in the Federal Register on May 12, 1965, stating that termination of sales with respect
to galvanized ware imported from Canada, manuf'actured by General Steel
Wares Limited, Canada, and assurances that if resumed they would not
be at less than fair value 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.
Appraising officers are being instructed to proceed with the appraisement of this merchandise from Canada without regard to any question of dumping.
Imports of the involved merchandise received during the period
August through De cember 1964 were worth approximately $24,000.
importations have been reported since December 1964.
No
TREASURY DEPARTMENT
FOR RELEASE A. 1,1. NEHSPAPERS,
Tuesday, June 29, 1965.
June 28, 1965
RESULTS OF TREASURY 1 S WEEKLY BILL OFFERING
TI1e Treasury Department announced last evening that the tenders for two series of
Treasury bills, one series to be an additional issue ot the bills dated September 30,
1964, and the other series to be dated July 1, 1965, which were offered on June 23, WeJ
opened at the Federal Reserve Banks on June 28. Tenders were invited for $1,200,000,0
or thereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of l82-day b~
The details of the two series are as follows:
l82-day Treasury bills
9l-day Treasury bills
RANGE OF ACCEPTED
COMPETITIVE BIDS:
maturing December 30, 1965
maturing September 30, 1965
Approx. ~quiv
Approx. Equiv ..
Price
Annual
Rate
Price
Annual Rate
99.ot~7
98.070 Y
3.818%
3.770%
98.061
3.802%
99.039
3.835%
98.067
99.043
3.784% !I
30824%
a/ Excepting 4 tenders totaling $1,695,000
t7 percent of the amount of 91-day bills bid for at the low price was accepted
18 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
Applied For
Accepted
Applied For
Accepted
Boston
$
21,601,000 $
11,601,000
$
4,741,000 $
4,741,000
New York
1,476,082,000
805,762,000
1,465,377,000
772, 777,OOC
Philadelphia
26,251,000
14,251,000
12,470,000
4,470,000
Cleveland
26,602,000
26,602,000
26,943,000
26; 943,OOC
Richmond
16,459,000
3,610,000
16,459,000
3,610,OOC
Atlanta
33,764,000
30,764,000
21,460,000
21,460,OOC
Chicago
269,471,000
140,641,000
234,344,000
83,934,OOC
St. Louis
35,731,000
12,771,000
30,901,000
10,271,000
Minneapolis
20,663,000
18,833,000
14,289,000
12, 379,OOC
Kansas City
26,284,000
26,284,000
14,188,000
13, 688,OOC
Dallas
22,926,000
18,096,000
9,650,000
5, 830,OOC
San Francisco
67,371,000
60,051,000
63,920,QQO
40,/,20,ooC
TOTALS
$2,043,205,000 $1,200,245,000 £I $1,883,763,000 $l,OOO,$23,OOC
High
Low
Average
Y
bl Includes $228,493,000 noncompetitive tenders accepted at the average price of 99.~;
Includes $88,982,000 noncompetitive tenders accepted at the average price of 98.~7
On a coupon issue of the same length and for the same amount invested, the return 0:
these bills would provide yields of 3.87% for the 9l-day bills, and 3.95% for t
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 tha
the amount invested and their length in actual number of days related to a 360-da
year. In contrast, yields on certificates, notes, and bonds are computed in term
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~u
compounding i f more than one coupon period is involved.
£/
Y
F-106
TREASURY DEPARTMENT
(
r.
IR RSL~ASE ft..
1'TE1;J3PA?~:\S,
~sday, Jlme 29,1565.
June 28, 1965
RESuL'l'S OF 'l'REA3URY , S
vJE~Y.LY
81LL 0/: LRn~(}
The TreasUIJ' Department announced last eVenin, that the tenders for two series of
series to be an additional issue of the bills dated ,SetJtember 30,
f.eries to be dated July 1, 1965, which were offered on June 23, were
)ened at the Federal E?,e1'erve :8anks on June 28. Tenders were invitAd for $1,200,000,000,
~ thereabouts, of 9l-day bills and for $1,000,000,000, or thereabouts, of 182-day bills.
~ details of the two spries are as follows:
~easury bills, one
~64, and the other
lliGE OF ACCEPTED
)MPETITI\lS BIDS:
High
Low
Average
91-day Treasury bills
maturing September 30, 1965
Approx. Equjv.
Price
Annual Rate
99 .ol.~ 7
99.039
99.043
3.770%
3.802%
3.784~
!I
182-day Treasury bills
maturing December 30, 1965
Approx. EqUiv.
Price
Annual Rate
98.070
98.061
98.067
Y
3.818%
3.835%
30824%
!I
Excepting 4 tenders totaling $1,695,000
percent of the amount of 91-day bills bid for at the low price was accepted
percent of the amount of 182-day bills bid for at the low price was accepted
ITAL TENDERS APPLIED FOR AND ACCEPT ~D BY FEDERAL RESERVE DISTRICTS:
District
Applied For
Accepted
Applied For
Accepted
Boston
$
21,601,000 $
11,601,000
$
4,741,000 $
4,741,000
New York
1,476,082,000
805,762,000
1,465,377,000
772,777,000
Philadel phia
26,251,000
14,251,000
12,470,000
4,470,000
Cleveland
26,602,000
26,602,000
26,943,000
26,943,000
Richmond
16,h59,000
16,459,000
3,610,000
3,610,000
Atlanta
33,764,000
30,764,000
21,h60,000
21,Lr60,000
Chicago
269,471,000
Iho, 641, 000
234,344,000
83,934,000
St. Louis
35,731,000
12,771,000
30,901,000
10,271,000
Minneapoli s
20,663,000
lU,289,000
18,833,000
12,)79,000
Kansas Cjty
26,284,000
26, 28h,000
14,188,000
13,688,000
Dallas
22,926,000
18,096,000
9,650,000
5,830,000
San Francisco
67,371,000
60,051,000
63,920,000
40,420,000
TOTALS
$2,043,205,000
$1,200,245,000 £( $1,883,763,000
$1,000,523,000 ~
Includes $228,493,000 noncompetitive tenders accepted at the average price of 99.043
InclUdes $88,982,000 noncompetitive tenders accepted at the avera.ge price of 98.067
On a coupon issue of the same length and for thE! same amount invested, the return on
these bills would provide yields of 3.87% for the 91-day bills, and 3.95% for the
182-day bills. Interest rates on bills are quoted in terms of bank discount with
the return related to the face amount of the bills payable at maturity rather than
the qnJount invested and their length in actual number of days relF.ted 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 lnore than one coupon period is involved.
F.lnf..
- 3 -
and exchange tenders vill 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, gif't or other excise taxes, whether Federal or state, but
are exempt from all taxation now or hereaf'ter imposed on the principal or interest
thereof by any state, or any of the possessions of the United states, or by any
local taxing authority.
For purposes of taxation the amount of discount at which
Treasury bills are originally sold by the United states is considered to be interest.
Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code of 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 1n accordance with
the bids must be made or completed at the Federal Reserve Banks on
1965
July 8, _
=M
, in cash or other immediately available funds or 1n a like face
amount of Treasury bills maturing
July 8, 1965
----------------~fHg~~-------------
• Cash
TREASURY DEPARTMENT
Washington
June 28, 1965
FOR IMMEDIATE RELEASE,
X~~oooooooooooooooeoC
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders for two seriel
of Treasury bills to the aggregate amount of $ 2,200,000,000 , or thereabouts, for
cash and in exchange for Treasury bills
ot $
2,205~,000
W
mat~ring
July
~965
, in the amoun1
, as follows:
___ ,
91 -day bills (to maturity date) to be issued ___J_u_l.;;.y-r.::8~,_1_9_65
W-
in the amount of
$
1,200~,000
W
, or thereabouts, represent-
ing an additional amount of bills dated
tat
October 7, 1965 , originally issued in the
and to mature
amount of
$
April 8, 1965
f9f
1100~1,000
, the additional and original bills
to be treely interchangeable.
182 -day bills, for $
tUf
1,000~,000
July ~65
.)
, or thereabouts, to be dated
, and to mature
JanUary~1966
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 torm only,
and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and
$1,000,000 (maturity value).
1'enders will be received at Federal Reserve Banks and Branches up to the
Daylight Saving
clOSing hour, on"!-thirty p.m., Eastern/sD.lttll:'N. time, Friday, July ~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 tM
price offered must be expressed on the basis of 100, with not more than three
TREASURY DEPARTMENT
June 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 July 8, 1965
in the amount of
$2,205,181,000, as follows:
91 -day bills (to maturity date) to be issued
July 8, 1965,
in the amount of $ 1,200,000,000, or thereabouts, representing an
additional amount of bills dated April 8, 1965, and to
mature October 7, 1965, originally issued in the amount of
$1,001,261,000, the additional and original bills to be freely
interchangeable.
182 -day bills, for $ 1,000,000,000, or thereabouts, to be dated
July 8, 1965.Pnd to mature January 6, 1966.
The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be issued in bearer form only, and in denominations of $1,000,
$5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000
(maturi ty value).
Tenders will be received at Federal Reserve Banks and Branches
up to the c lOSing hour, one-thirty p. m., Eas tern Daylight Saving
time, Friday, July 2, 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
~ount of Treasury bills applied for, unless the tenders are
accompanied by an express guaranty of payment by an incorporated bank
or trust company.
F-I07
- 2 -
Immediatelv after the closing hour, tenders will be opened at
the Federal Res~rve 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
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
averagp price (in three decimals) of accepted competitive bids
for the respective issues. Settlement for accepted tenders in
accordance with the bids must he made or completed at the Federal
Reserve Banks on
July 8, 1965, in cash or other immediately
availahle funds t1r in a like ',lee amount of Treasury bills
maturing
July 8, 1965·
Cash and exchange tenders will receive
equal treatment. Cash adjustments will be made for differences
between the par value of maturin~ bills accepted in exchange and
the issue price of the new hills.
The income derived from Treasury bills, whether interest or
gain from the sale or other disposition of the bills, does not have
any exemption, as such, and loss from the sale or other disposition
of Treasury bills does not have any special treatment, as such,
under the Internal Revenue Code of 1954. The bills are subject to
estate, inheritance, gift or other excise taxes, whether Federal or
state, but are exempt from all taxation now or hereafter imposed on
the principal or interest thereof by any State, or any of the
posseSSions of the United States, or by any local taxing authority.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States is considered to be
interest. Under Sections 454 (b) and 1221 (5) of the Internal
Revenue Code of 1954 the amount of discount at which bills issued
hereunder are sold is not considered to accrue until such bills are
sold, redeemed or otherwise disposed of, and such bills are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between
the price paid for such bills, whether on original issue or on
subsequent purchase, and the amount actually received either upon
sale or redemption at maturity during the taxable year for which the
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and this
notice prescribe the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained f~
any Federal Reserve Bank or Branch.
000
- 2 -
He is the author of a book, Growth Opportunities in
Cornmon Stocks, published in May by Harper & Row.
Mr. Knowlton attended Lawrenceville School, Lawrenceville,
New Jersey and the University of Nanking, at Nanking, China
before going to Harvard.
For the past three years he has been manager of his
firm's research department.
Mr. Knowlton succeeds Mr. Merlyn N. Trued in office.
Mr. Trued became Assistant Secretary of the Treasury for
International Affairs on April 29, 1965.
000
D R AFT
FOR RELEASE AT NOON
MONDAY, JUNE 28, 1965
Winthrop Knowlton Named Deputy
Assistant Secretary of the Treasury
for International Affairs
Secretary of the Treasury Fowler today administered the
oath of office to Winthrop Knowlton, of New York City, as
Deputy Assistant Secretary of the Treasury, for International
Affairs.
Mr. Knowlton was a partner of White, Weld and Company,
international investment bankers of New York City, before
coming to the Treasury.
He has been with that firm since
he finished Harvard Business School, where he was graduated
with distinction in 1955.
He was graduated magna cum laude
from Harvard College in 1953.
Mr. Knowlton was born in New York City September 1, 1930.
He is married to the former Grace Daniels Farrar , and has
~~.
children.
TREASURY DEPARTMENT
June 28, 1965
FOR RELEASE AT NOON
MONDAY, JUNE 28, 1965
WINTHROP KNOWLTON NAMED DEPUTY
ASSISTANT SECRETARY OF THE TREASURY
FOR INTERNATIONAL AFFAIRS
Secretary of the Treasury Fowler today administered the oath
of office to Winthrop Knowlton, of New York City, as Deputy
Assistant Secretary of the Treasury, for International Affairs.
Mr. Knowlton was a partner of White, Weld and Company,
international investment bankers of New York City, before
coming to the Treasury. He has been with that firm since he
finished Harvard Business School, where he was graduated with
distinction in 1955. He was graduated magna cum laude from
Harvard College in 1953.
Mr. Knowlton was born in New York City September 1, 1930.
He is married to the former Grace Daniels Farrar, and has five
children.
He is the author of a book, Growth Opportunities in
Common Stocks, published in May by Harper & Row.
Mr. Knowlton attended Lawrenceville School, Lawrenceville,
New Jersey and the University of Nanking, at Nanking, China
before going to Harvard.
For the past three years he has been manager of his firm's
research department.
Mr. Knowlton succeeds Mr. Merlyn N. Trued in office. Mr.
Trued became Assistant Secretary of the Treasury for International
Affairs on April 29, 19650
000
F-108
- 3 -
Mr. Frederick L. Deming, Under Secretary of the Trea.ury for
Monetary Affairs j Mr. Merlyn N. Trued, Aas1stant hoc.tar,
of the Treasury for International Affaira, aDd Hr. Stanle,
s.
Surrey, Assistant Secretary of the Treaaury for Tax '011.,.
-
"i. -
Acidey, ChsLrmall of the President t s Council of Economic
Acvisers, Mr. George Woods, President of the International
Bank for Reconstruction and Development (World Bank), and
Mr. Frank A. Southard, Jr., Deputy Manag'ng Director of the
. ~ . ; (,I
Internationa1,/t~d.
r<A.
J
In addition to the Chancellor and the Secretary,
participants in the Treasury discussion included:
SiL Patrick Dean, British Ambassador to the United
States; Sir William
Ar~strong,
Joint Permanent Secretary
of the British Treasury; Sir Denis Rickett, Second Secretary
of the British Treasury; Mr. M. H. Parsons, Executive
Director, Bank of England and Mr. John Stevens, Economic
Minister in the British Government; Mr. Joae,b W. Barr,
Under Secretary of the United States Treasury;
Chancellor of the Exchequer MHta
With U. S. Trea.ury Secretary lowler
The British Chancellor of the Ixcbequer, J_a Call. . . . .
met with U. 8. Secretary of the Trea.ury ~U'1 B.....1.r: •
.-! ~ t,
i '\
I~ /) ?'lIJ 1:".1 (.
A'? 7
f( c.'"
71':1 E~ ~5:() ,()I
t
"
to review a variety of subject. of mutuel intereat, lacladtaa
the bU8ine'. situation in each country and the iaternatioaal
payments system.
The meeting began at 10:30 A.H. and concluded at _ _ _•
A joint cOIBunique concerning the coover •• tioH will '-
issued later.
This is Mr. Callaghan's first visit to W••hillltoa ..
Chancellor of the Exchequer, and be Mt the A.ric. .
Secretary of the Treasury for the firat time today.
Whi Ie he is in Washington today and tomorrow, 1Ir. Call. . . .
also plana to see Secretary of Defenae Mc. . . .ra, Under
Secretary of St ate George W. Ball J Mr. Willi_
1IcCbe_,
TREASURY DEPARTMENT
June 29, 1965
FOR IMMEDIATE RELEASE
CHANCELLOR OF THE EXCHEQUER MEETS
WITH U. S. TREASURY SECRETARY FOWLER
The British Chancellor of the Exchequer, James Callaghan,
met with U. S. Secretary of the Treasury Henry H. Fowler,
this morning at the Treasury, to review a variety of subjects
of mutual interest, including the business situation in each
country and the international payments system.
The meeting began at 10:30 A.M. and concluded at 1:15 P.M.
A joint communique concerning the conversations will be
issued later.
This is Mr. Callaghan's first visit to Washington as
Chancellor of the Exchequer, and he met the American
Secretary of the Treasury for the first time today.
While he is in Washington today and tomorrow, Mr. Callaghan
also plans to see Secretary of Defense McNamara, Under
Secretary of State George W. Ball, Mr. William McChesney
Martin, Chairman of the Federal Reserve Board, Mr. Gardner
Ackley, Chairman of the President's Council of Economic
Advisers, Mr. George Woods, President of the International
Bank for Reconstruction and Development (World Bank), and
Mr. Frank A. Southard, Jr., Deputy Managing Director of the
International Monetary Fund.
In addition to the Chancellor and the Secretary,
participants in the Treasury discussion include:
Sir Patrick Dean, British Ambassador to the United States;
Sir William Armstrong, Joint Permanent Secretary of the
British Treasury; Sir Denis Rickett, Second Secretary of the
British Treasury; Mr. M. H. Parsons, Executive Director,
Bank of England and Mr. John Stevens, Economic Minister in the
British Embassy in Washington; Mr. Joseph W. Barr, Under
Secretary of the United States Treasury; Mr. Frederick L. Deming,
Under Secretary of the Treasury for Monetary Affairs;
Mr. Merlyn N. Trued, Assistant Secretary of the Treasury for
International Affairs, and Mr. Stanley S. Surrey, Assistant
Secretary of the Treasury for Tax Policy.
TREASIIRYhDEPARTIIENT
Was lngLon
STATEMENT BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE THE HOUSE WAYS AND MEANS COMMITTEE
ON H. R. 5916
WEDNESDAY, JUNE 30, 1965
Mr. Chairman and Members of the Committee:
I am appearing before you to urge prompt and favorable
action on H. R. 5916, legislation which is intended to reduce tax barriers to foreign investment in the United States.
Passage of this bill will serve two important national
objectives.
First, it constitutes a comprehensive and
integrated revision of our present system of taxing foreign
individuals and foreign corporations on income derived from
the United States, bringing our system of taxing foreigners
into line with the rules existing generally in the other
developed countries of the world.
Second, the bill will
make a significant contribution to our balance of payments
by serving to eliminate the impedimeuts now existing in
our tax laws to foreign investment in the United States.
Background of Proposals
In his Balance of Payments Message of July 18, 1963,
F-II0
- 2 -
President Kennedy announced he was appointing a task force
to review U. S. Government and private activities which
adversely affect foreign purchasesof the securities of
U. S. companies.
The group was composed of representatives
of finance, business, and government.
This task force, of
which I had the privilege of serving as chairman, studied
various courses of action which could be adopted in both
the private and public sectors to encourage foreign ownership
of U. S. securities.
In April 1964, the task force issued its report containing
39 recommendations, which call for a broad range of actions
by U. S. international business organizations and financial
firms, as well as by the Federal Government, to bring about
broader foreign ownership of U. S. corporate securities.
Among the recommendations directed toward the Government,
those dealing with the taxation of foreign individuals and
foreign corporations have the most significant and immediate
impact.
Issuance of the task force report prompted a broad and
intensive review by the Treasury of the rules governing
- 3 -
taxation by the United States of foreign individuals and
foreign corporations.
This review considered these rules
not only from the standpoint of the balance of payments
but also from the viewpoint of conventional tax policy
considerations.
As a result of this review, the Treasury
Department on March 8, 1965 submitted to the Congress legislation containing not only proposals in all of the tax areas
dealt with in the task force report, but also in other areas
where it appeared that change was desirable to make the
present system more consistent with rational tax treatment
of foreign investment.
The Treasury Department agrees with the task force
conclusion that many of the existing rules applicable to
foreign investors in the United States are outmoded and not
only serve to deter foreign investment but are inconsistent
with sound tax policy.
These rules were enacted many years
ago and do not reflect the changes in economic conditions
which have occurred over the last fifteen years.
Examples of tax rules which impede foreign investment
- 4 in this country are many:
The present level of our estate
tax -- higher on foreigners than on U. S. citizens -- is
completely out of line with the rates generally prevailing
elsewhere in the world and acts as a significant deterrent
to potential foreign investors.
Also, the fact that we
require tax returns from foreigners merely because they
make passive investments here is inconsistent with international tax practice and hinders foreign investment.
These
and other provisions in the Internal Revenue Code contribute
to the widely-held view that investment in U. S. securities
poses such serious tax problems for the ordinary foreign
investor that it cannot be undertaken without the benefit
of expensive tax advice.
At the same time, some of these
provisions are extremely difficult, if not impossible, to
enforce, or are susceptible of relatively easy avoidance by
the sophisticated foreign investor.
Since they deter many
foreign investors and are avoided by the rest, they give rise
to almost no tax revenue.
Enactment of all of the changes
proposed in H. R. 5916 will result in a revenue loss of less
than $5 million annually.
- 5 However, in proposing these changes, we have kept in
mind the importance of not converting the United States into
a tax haven nor of diverting funds to the United States from
less developed countries.
The purpose of this bill is to
remove tax barriers which have served to discourage foreigners
from making investments in the United States.
At the same
time we recognize that no purpose will be served if the bill
violates international tax standards, thereby setting off
a struggle among the developed nations of the world to
attract foreign investors through tax devices.
To attract
foreign investors, the United States must offer not "tax
breaks" or "tax gimmicks"
dynamic economy.
~-
it must offer a growing and
We believe our record of economic growth
over the last five years and our prospects for the future
are sufficient to induce a substantial increase in foreign
investment if our tax system does not act as a bar.
Impact of H. R. 5916 on the Balance of Payments
There is no way of estimating with any degree of
precision the impact of the bill on foreign investment in
- 6 the U. S. or the resulting benefit to our balance of payments.
The factors governing securities investment are many and
complex.
Even in purely domestic transactions, intangibles
such as habit, convenience, and past experience may be as
important as yields, price-earnings ratios and other
economic indicators.
Although difficult to quantify, there is ample evidence
of a sizable potential for attracting foreign investment in
U. S. corporate securities, particularly stocks, by residents
of the prosperous countries of Continental Europe.
After
more than a decade of rapidly rising incomes, Europeans
have to a large extent fulfilled many of their most pressing
consumer needs and are accumulating savings at a high rate.
Individuals in Europe are turning increasingly towards
securities investment, as shown by the riSing activity on
European stock exchanges, the large number of new offices
opening in Europe by American securities firms, and rising
sales of mutual fund shares.
Yet, even now, in Europe only
1 person in 30 is a shareowner as compared to 1 in 11 in the
United States.
- 7 At the end of 1964, foreigners held an estimated
$12.8 billion of U. S. corporate stocks valued at market
prices.
In every year since 1950 except two, foreign
purchases of U. S. stocks have exceeded foreign sales.
In the six years between 1959 and 1964, net purchases by
foreigners averaged $161 million.
These net figures are
the residual of much larger gross purchases and sales
which in recent years have been on the order of $2-1/2
billion to $3-1/2 billion.
A small percentage shift in
the ratio of purchases to sales, therefore, could have had
a substantial effect on the net balance of transactions.
If the amount of additional investment expected to
result from H. R. 5916 were merely a function of the amount
of tax saved, there would be little improvement in the
balance of payments.
More important than the small tax
savings to foreigners, however, is the substantial effect
which will result from the simplification and rationalization of our tax treatment of foreign investors.
Our high
estate tax on foreigners, for example, is widely considered
- 8 by experts to be one of the biggest barriers to foreign
investment.
While the change in the estate tax proposed by
H. R. 5916 would eliminate $3 million out of about $5
million of tax levied each year, existing estate tax rates
almost certainly deter many foreigners from investing here
at all.
This is particularly so when the exemption is
limited to only $2,000 -- any investment whatsoever will
subject the estate to tax and require filing of an estate
tax return, with the resulting expenses.
It is not sur-
prising under these circumstances that the small foreign
investor avoids purchasing U. S. stocks because of the
inconvenience of the estate tax; the big investor also
avoids such purchasing but because of the size of the tax
itself.
Viewed in this light, it is clear that the changes
contained in H. R. 5916 should in time materially increase
the volume of foreign investment in the U. S.
Based on the
sizable potential for foreign purchases of U. S. corporate
stocks which is known to exist, we expect that the legislation
- 9 will eventually result in an additional capital inflow on
the order of $100 million to $200 million per year, other
factors remaining unchanged.
Considerable time -- perhaps
one to two years or maybe more -- will be required before
foreigners can complete the adjustment of their portfolios
to take advantage of H. R. 5916, but a substantial impact
may be felt in the period just ahead.
Specific Proposals Contained in H. R. 5916
I should like to review at this time the principal
substantive changes embodied in H. R. 5916.
Estate Tax.--It is generally felt that our current
system of taxing the U. S. estates (involving only the U. S.
assets) of foreign decedents is inequitable and constitutes
one of the most significant barriers in our tax laws to
increasing foreign investment in U. S. corporate securities.
Under present law, a foreign decedent is taxable at regular
U. S. estate tax rates, ranging up to 77 percent, on U. S.
property held at death.
Moreover, the U. S. estates of
foreign decedents are entitled only to a $2,000 exemption
- 10 compared with a $60,000 exemption available to U. S. citizen
decedents, and are not entitled to the marital deduction
available to U. S. citizen decedents.
Thus, U. S. estate
tax rates applied to nonresidents are in most cases considerably
higher than those of other countries and therefore foreigners
who invest in the United States suffer an estate tax burden.
In addition, a fareign decedent's estate must pay heavier
estate taxes on its U. S. assets than would the estate of
a U. S. citizen owning the same assets.
H. R. 5916 would increase the exemption for the U. S.
estates of foreign decedents from $2,000 to $30,000 and would
tax such estates on the basis of a 5-10-15 percent rate
schedule.
With this significant increase in the exemption
and sharp reduction in rates, the effective U. S. estate
tax rate on foreign decedents would no longer be considerably
higher than most other countries and would be more closely
comparable to the rates prevailing elsewhere.
This change should have an important psychological
effect on foreigners contemplating investment in U. S.
securities.
Where the gross U. S. estate would be less
- 11 -
than $30,000, there would be no estate tax, and no need
to file an estate tax return.
In those instances where
the estate is larger, the effective rate would be sharply
reduced and would be comparable to the effective rate of
tax of a U. S. citizen who utilizes the $60,000 exemption
and the marital deduction.
Capital Gains.--The present system of taxing capital
gains realized by foreigners has contributed to the view that
investment in the United States is something which should be
approached cautiously because of the possibility of inadvertently becoming subject to tax.
The Internal Revenue
Code now provides for a general exemption from capital gains
tax for nonresident foreigners not doing business in the
United States with two exceptions.
First, the foreigner's
gains are subject to U. S. capital gains tax if he is
physically present in the United States when the gain is
realized, and second, all gains during the year are taxable
if he spends 90 days or more in the United States during
that year.
- 12 The physical presence restriction can be easily avoided
by the experienced foreign investor if he arranges to be
outside the country when the gain is realized, but is a
potential trap to the foreigner who is not aware of its
existence.
The bill would eliminate this restriction from
the general capital gains exemption.
In addition, the bill would extend the 90-day period
which a foreigner may spend here without being subject to
capital gains tax to 183 days.
This will make the provision
more consistent with international standards governing the
taxation of foreigners residing in a country for a substantial period.
It will also minimize the possibility that a
foreigner will be taxed on capital gains realized at the
beginning of a taxable year if he later spends a substantial
amount of time in the United States during that year.
Graduated Income Tax Rates.--At the present time,
foreign individuals not doing business in the United States
who derive more than $21,200 of investment income from U. S.
sources are subject to regular U. S. income tax graduated
rates on that income and are required to file returns.
- 13 These requirements have produced little revenue, in part
because we have eliminated graduated rate taxation of investment income in almost all of our treaties with the other
industrialized countries and in part because of the ease
with which this provision is avoided.
Moreover, it has
been indicated that graduated rate taxation and the
accompanying return requirement may represent a substantial
deterrent to foreign investment in the United States.
H. R. 5916 eliminates all progressive taxation of nonresident foreigners not doing business here and removes the
requirement for filing returns in such cases.
The liability
of foreign investors deriving U. S. investment income would
thus be limited to the tax withheld at the statutory 30
percent rate or a lower applicable treaty rate.
The legisla-
tion would continue graduated rate taxation for foreigners
who are doing business in the United States.
These rules
are consistent with the practices of most other industrialized
countries.
Segregation of Investment and Business Income.--Under
- 14 present law, if a foreign individual is doing business in
the United States he is subject to tax on all of his U. S.
income, whether or not connected with his business operations, on the same basis in general as a U. S. citizen.
H. R. 5916 would separate the business income of a foreign
individual engaged in business here from his nonbusiness
income, and would tax the nonbusiness income at the 30
percent statutory withholding rate or at the lower appropriate
treaty rate.
All business income would remain subject to
tax at graduated rates.
With respect to foreign corporations doing business in
the United States (so-called resident foreign corporations),
which also have stock investments here, H. R. 5916 would
likewise separate dividend income from the other income of
the foreign corporation.
Under the legislation, a resident
foreign corporation deriving such dividend income from the
United States would thus be taxable on its dividend income
at the statutory 30 percent rate or at the lower applicable
treaty rate.
As a result, the foreign corporation would no
longer receive the deduction now afforded under the Internal
- 15 Revenue Code to dividends received by one corporation from
another corporation.
The elimination of the dividends received deduction
as respects resident foreign corporations is in part designed
to end an abuse which has developed.
Frequently, a foreign
corporation with stock investments in the United States
engages in trade or business here in some minor way and
then claims the dividends received deduction on its stock
investments.
Such a corporation ends up paying far less
than the 30 percent statutory or applicable treaty rate on
its U. S. dividends, even though its position is basically
the same as a corporation which is not doing business here
which derives investment income from the United States.
In
those cases where the applicable treaty rate is 5 percent
(the rate set by certain treaties where subsidiary dividends
are involved), the resident foreign corporation will benefit
from this proposed change.
Definition of "Engaged in Trade or Business."--H. R. 5916
makes clear that individuals or corporations are not engaged
- 16 in trade or business in the United States -- and thus
subject to tax at regular graduated rates rather than the
30 percent withholding rate or lower treaty rate -- because
of investment activities here or because they have granted
a discretionary investment power to a U. S. banker,
or adviser.
broker
This provision should have the effect of re-
moving much of the uncertainty which now surrounds the
question of what amounts to engaging in trade or business
in the United States.
Uncertainty of this type is unde-
sirable as a matter of tax policy and has the effect of
limiting foreign investment in the United States.
Many
foreigners are afraid of investing in U. S. stocks if they
cannot give a U. S. bank or broker authority to act for
them.
This change will have relatively limited impact,
however, since under the legislation, business income does
not include dividends or gains from the sale of stock.
The bill also changes present law by giving foreign
individuals and corporations an election to compute their
income from real property on a net income basis at regular
- 17 U. S. rates rather than at the 30 percent withholding rate
or lower treaty rate on gross income.
This type of treat-
ment is common in the treaties to which the United States
is a party and is designed to deal with the problem which
arises from the fact that the expenses of operating real
property may be high and cannot be taken into consideration
if the income from real property is subject to withholding
tax.
Personal Holding Companies and "Second Dividend Tax."-H. R. 5916 changes the personal holding company provisions
of the Internal Revenue Code as applied to the U. S. investment income of foreign corporations and also modifies the
application of the so-called "second dividend tax."
Under
the bill, foreign corporations owned entirely by foreigners
would be exempt from the personal holding company tax.
This
is possible because of the elimination of graduated rates
as applied to foreigners which is contained elsewhere in
the bill, and which makes the application of the personal
holding company provision to corporations wholly-owned by
- 18 -
foreigners no longer appropriate.
Under the bill, the "second dividend tax" (which is
levied on dividends distributed by a foreign corporation
if the corporation derives 50 percent or more of its
income from the United States) would be applied only to
the dividend distributions of foreign corporations doing
business in the United States which have over 80 percent
U. S. source income.
It is desirable to retain this part
of the tax to cover those cases where a resident foreign
corporation has the great bulk of its business operations
in the U. S. and to treat dividends of such a corporation
as being from U. S. sources.
These changes should have the effect of eliminating
application of the personal holding company tax and "second
dividend tax" in many cases where they now apply, and which
may now act as a deterrent to foreign investment.
Expatriate American Citizens.--The provisions of H. R.
5916 which eliminate graduated rates for foreign individuals
and substantially reduce the estate tax liability of foreign
- 19 decedents may create a substantial tax incentive to U. S.
citizens who might wish to surrender their citizenship in
order to take advantage of these changes in the law.
While
it is doubtful whether there are many who would be willing
to take such a step, still the incentive would be present
and might be utilized.
H. R. 5916 deals with this problem
by providing that an individual who had surrendered his
U. S. citizenship for tax reasons within the preceding 10
years shall be subject to U. S. taxation with respect to
his U. S. income and assets at the rates applicable to citizens.
Such individuals will therefore not receive the benefits of
this legislation but will be taxed as nonresident foreigners
are at present.
As I mentioned, these provisions would not
apply if the expatriate American citizen can establish
that the avoidance of U. S. taxes was not a principal reason
for his surrender of citizenship.
Retaining Treaty Bargaining Position.--The risk is
present that by making the changes provided in H. R. 5916,
the United States may be placed at a considerable disadvantage
- 20 -
in negotiating similar concessions for Americans.
In order
to protect the bargaining position of the United States in
international tax treaty negotiations, H. R. 5916 therefore
authorizes the President, where he determines such action
to be in the public interest, to reapply present law to
the residents of any foreign country which he finds has not
acted to provide our citizens substantially the same benefits
for investment in that country as those enjoyed by its
citizens on their investments in the United States as a
result of this legislation.
If this authority were invoked,
it could be limited to those investment situations as to
which U. S. citizens were not being given comparable treatment.
We believe that the presence of such a provision
will be a material aid in our securing appropriate provisions
respecting these matters in our international tax treaties.
Conclusion
Our current system of taxing foreign investors in the
United States contains elements which are inconsistent with
generally accepted international tax policy principles and
- 21 which, at the same time, act to discourage foreign investment in the United States.
H. R. 5916 is designed to re-
shape our present system in order to make it a more rational
vehicle for taxing foreign individuals and corporations.
The legislation is an essential element of the President's
comprehensive program for dealing with our balance of payments problem.
As such, it is one of the aspects of the
President's program which is expected to have a longer-term
impact on our balance of payments.
Foreigners will invest
in this country as long as our economy remains prosperous
and stable.
However, it cannot be expected that the level
of foreign investment will reach its full potential so long
as provisions exist in our tax laws which serve to discourage
foreign investment and which are not in accord with international tax standards.
H. R. 5916 will eliminate or
modify the provisions of present law which have complicated
our system of taxing foreigners but have resulted in little
revenue being realized.
Adoption of H. R. 5916 will lead to a simpler and more
- 22 rational method of taxing foreigners.
It will also be an
important step in moving toward the elimination of our
balance of payments deficit and the strengthening of the
international position of the dollar.
Because this legis-
lation will contribute to these two vital national objectives,
I urge you to support it.
TREASURY DEPARTMENT
June 30, 1965
FOR IMMEDIATE RELEASE
TREASURY DECISION ON BICYCLES
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that bicycles from
Poland are not being, nor likely to be, sold at less than fair
value wi thin the meaning of the Antidumping Act.
A "Notice of
Intent to Discontinue Investigation and to Make Determination That
No Sales Exist Below Fair Value," was published in the Federal Register on May 14, 1965, stating that in view of the Tariff Commission's
"no injury" determination in the case concerning Hungarian bicycles
involving analogous circumstances with respect to bicycles imported
from Poland, it was no longer appropriate to continue the instant
investigation.
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.
Imports of the involved merchandise received during the period
January through April 1965 were worth approximately $34,000.
TREASURY DEPARTMENT
June 30, 1965
FOR IMMEDIATE REIEASE
TREASURY DECISION ON BICYCLES
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that bicycles from
Poland are not being, nor likely to be, sold at less than fair
value 'Wi thin the meaning of the Antidumping Act.
A "Notice of
Intent to Discontinue Investigation and to Make Determination That
No Sales Exist Below Fair Value," was published in the Federal Register on May 14, 1965, stating that in view of the Tariff Commission's
"no injury" determination in the case concerning Hungarian bicycles
involving analogous circumstances with respect to bicycles imported
from Poland, it 'Was no longer appropriate to continue the instant
investigation.
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.
Imports of the involved merchandise received during the period
January through April 1965 were worth apprOximately $34,000.
- 4 the
ne~d9
of the developing oountries.
The Ministers agreed that the two reserve currencies WOuld
continue to play an essential part in the
fina~cing
ot
international trade and as a medium in which to, hold res.rY••
/L~ .H(.(r~r::L: t: ~"I t ~'l' I 0-:1--\
~t. ,,"c,.-~c.¥:t::;
,1-1- ~
They recognised that the/lt::::::=-=-ells -ef t~ two currencies "'.. .
~J osel1' oouad up
wr:i.iB eBe· aru~~he~§~...idaAti-qr . , iat'riit
Mel a) read,)' b.... peee!"i8e ..
~1rn?'jji'fifs~inancial
co-operation tRken by the two countries, which should be~
maintain~~~a iftteR9ifi~~
In addition to the
in the
Tr0~3ury
Sir Patrick
C~ancellor
and the Secretary, partioipa
discussion included:
DPp~,
British Ambassador to the United sr.te.,
Sir William Armstrong, Joint Permanent Secretary of the Brit11l1
Treasury; Sir Denis Rickett, Second Secretary ot the British
Treasury,
r~.
Rob~rt
Neild,
Econo~tc
Adviser to the British
Treasury, Mr. M.R. Parsons, Executive Director, Bank ot
England and Mr. John Stevens, Economic Minister in the Briti.h
Embassy, Washington.
Mr. Joseph W. Barr, Under Secretary of the United State.
Treasury; Mr. Frederick L. Deming, Under Secretary ot the
Treasury for Monetary Affairs; Mr. Merlyn N. Trued, Aas1sUmt
Secretary cf the Treasury for International Affairs, and
Mr. Stanley S. Surrey, Assistant Secretary ot the Treasul1 tor
Tax
Policy.
_
'1 _
.,
Chancf::}}or rf'iterated earlier assurances that the British
D.:..tthorities would continue to co-operate by managine the
portfolio in such a way as to minimize the impact of the
cperations on
th~
U.S. balanc8 of payments and avoid any
im0act on
si,,~nificA.nt
th~
IL3 so:curi ty narkets.
thpt tr-c31'> operations had now Of:f:n
the
at
p0~tfo~io coy~d
rrinforce the
".K.
re9~rves
rcs;wct tc the pr()o::..'r!! -:)1' intf.::rnational liqllidity,
feJ t
ifF.:3
~zfd ~G
carried to a point where
fl0tice.
~hort
'-1 t.L
it
b2
He add",d
n nl..l:ub( r cf countrL:E will
trl~t
:rE-quir~
time to
in int('rneticll81 oHYlllCnts, n.nd with t.he benefit of technical
8t~dlPS
now beinJ
he h8d
~cld
with
FinancE; and
tnlks with
~.
In this
Giscard d'Estaing, the French Minister of
J~cretary
th~
in the Group of Ten.
Chancellor referred to the discussions which
th~
cc-,:mection,
com~leted
Fowler indicated that he hoped to have
FinAnce Ministers of other major countries
in the latter p8,rt of the year on the subject of international
liquidity.
Thes A ta1ks would explorp the various possibilities with
a viJ:w toward any reinforcement that would help to assure a
p8_ymt;nts ~5Y8t()m fully responsive to the continued growth of
intpr~y.tional
Th~
duch
trade.
Britinh and American ministers were agreed that any
rpinforc~m~nt ~ust
await the development, out of the
Dr€3ent divereent ooiniOll3. of an international
con8~ntrug
on
-
2 -
of the current year.
The Chancellor of the Exchequer and 3ecretary Fowler Bgreel
that the prospects for an early and
sustain~d
rqllilibrium in
the U.S. balance of payments resulting from the efforts ot the
last four yea.rs were good, and that there should be no relaxaUc
in the execution of President Johnson's program of
'~bruary
10,
1965. ~,he Chancellor S8i.n thnt a substantial if"lproV f :J'I1ent had
taken place in the British balance of payments during the first
quarter of 1965.
~.
He expected
big reduction in thp. de fici t on
current and 10ng-tC'rm c8pi tal 2ccouUt for 1965 as
11.
whole.
The
measurethich the Rri tt~h G(;vernmt~nt had tak~n in thp fields of
fiscaJ policy, credit controJ., the stimulation of i.ndustrial
efficiency, incomps po] icy ?nd
econo~ic
to work throuf,h thl' ('conC"rny: and he rE" i
bal arlC info Britain's overse8.S
pay~ents
planninB were beginnins
t~r~t(>d
his e im of
in the sEcond hal f of
1966.
In discussing the interaction of the balance of payments
programs of the two countries, the C}1.ancel10r drew attention to
the
eff~ct
on the British position of the measures which the
Uni ted Statf's had undf'rtaken to correct its bAlance ot payments.
In this connection, Secretary Fowler emphasized that the
guidplines for the voluntary restraint program take a.ccount of
the U.K.
payml~nts
problem.
The United States pointed out that
the British GovE!rnment's proera.'ll described by Chancellor
Callaghan to the British Parliament on 12th April, for
FOR IMMEDIATE RELEASE
STATEMENT ON DISCUSSIONS HELD JUNE 29 BY
CHANCELLOR OF THE EXCHEQUER JMtES CALLAGHAN
OF GREATaRlT·A;rn·
AND
SECRETARY OF THE TH.C:AJURY HENRY H.FOWLER
AT TIm WlITED STATES T~~ASURY.
Bri ti~h Chancel"1 or of the Exchequer James Calla.p,han and
Secretnr;v of the TrpP..8ury
-
..
at the Unitp.d
talk~
H~nry }-T.
StatesTr~s;SUFy.
Fowler agreed m-·the-i"!"that in present
circumstances the 1\ orimary contribution of both the United
~
Kinf,dom and the United
to international financial
Stot~s
stability and the improvement in the international monetary
system is to achieve and sustain a broad equilibrium in
their international balance of payments.
Secretary Fowler noted that the voluntary effort by
American bankers and businessmen to reduce their net dollar
outlays abroad, undertaken earlier this year at the
President's request, is having an encouraging effect.
PrOVisional indications are that this, and the wide range ot
other efforts being made to end the United States payments
deficit, resulted in
probably in
surplus~s
rt~y. ~,
relaxation of its efforts.
--....
-
oS
_
~
..LL_
----
-1... _ _
+~'»-
during March, April and
the Dni ted States plans no
The country is now entering the
.. ,....;
0+
"'"'V .....
o..,~ i
+1l'rOQ
inaraAaA dol '&1'
FOR IMMEDIATE RELEASE
June 30, 1965
STATEMENT ON DISCUSSIONS HELD JUNE 29 BY
CHANCELLOR OF THE EXCHEQUER JAMES CALLAGHAN
OF GREAT BRITAIN
A~
SECRETARY OF THE TREASURY HENRY H. FOWLER
AT THE UNITED STATES TREASURY
British Chancellor of the Exchequer James Callaghan and
Secretary of the Treasury Henry H. Fowler agreed in their
talks at the United States Treasury that in present
circumstances the primary contribution of both the United
Kingdom and the United States to international financial
stability and the improvement in the international monetary
system is to achieve and sustain a broad equilibrium in
their international balance of payments.
Secretary Fowler noted that the voluntary effort by
American bankers and businessmen to reduce their net dollar
outlays abroad, undertaken earlier this year at the
President's request, is having an encouraging effect.
Provisional indications are that this, and the wide range of
other efforts being made to end the United States payments
deficit, resulted in surpluses during March, April and
probably in May. However, the United States plans no
relaxation of its efforts. The country is now entering the
period of the year when tourist expenditures increase dollar
payments to foreigners markedly. Imports are rising with
continued internal expansion and there are increased dollar
outlays in South Vietnam and in the Dominican Republic. The
accumulation of dollars in reserve holdings abroad in past
years is the cause of large continued gold outflows, such as
those of the current year.
The Chancellor of the Exchequer and Secretary Fowler
agreed that the prospects for an early and sustained equilibrium
in the U. S. balance of payments resulting from the efforts of
the last four years were good, and that there should be no
relaxation in the execution of President Johnson's program
of February 10, 1965.
- 2 The Chancellor said that a substantial improvement had
taken place in the British balance of payments during the first
quarter of 1965. He expected a big reduction in the deficit on
current and long-term capital account for 1965 as a whole.
The measures which the British Government had taken in the
fields of fiscal policy, credit control, the stimulation of
industrial efficiency, incomes policy and economic planning were
beginning to work through the economy; and he reiterated his aim
of balancing Britain's overseas payments in the second half of
1966.
In discussing the interaction of the balance of payments
programs of the two countries, the Chancellor drew attention to
the effect on the British position of the measures which the
United States had undertaken to correct its balance of payments.
In this connection, Secretary Fowler emphasized that the
guidelines for the voluntary restraint program take account of
the U. K. payments problem. The United States pointed out that
the British Government's program described by Chancellor
Callaghan to the British Parliament on 12th April, for
continuing to raise gradually the proportion of the U. K.
Government's holdings of non-sterling securities in a liquid
form, and their use to reinforce the reserves, would involve
an adverse impact on the U. S. balance of payments. Secretary
Fowler recognized the need for this British program; and the
Chancellor reiterated earlier assurances that the British
authorities would continue to cooperate by managing the
portfolio in such a way as to minimize the impact of the
operations on the U. S. balance of payments and avoid any
significant impact on the U. S. security markets. He added
that these operations had now been carried to a point where
the portfolio could be used to reinforce the U. K. reserves
at short notice.
With respect to the problem of international liquidity,
it was felt that a number of countries will require time to
consider their attitudes in the light of changing developments
in international payments, and with the benefit of technical
studies now being completed in the Group of Ten. In this
connection, the Chancellor referred to the discussions which
he had held with M. Giscard d'Estaing, the French Minister of
Finance; and Secretary Fowler indicated that he hoped to have
talks with the Finance Ministers of other major countries
in the latter part of the year on the subject of
international liquidity.
- 3 -
These talks would explore the various possibilities with
a view toward any reinforcement that would help to assure a
payments system fully responsive to the continued growth of
international trade.
The British and American ministers were agreed that any
such reinforcement must await the development, out of the
present divergent opinions, of an international consensus on
this subject; but that constant and persistent efforts should
be pressed at the Ministerial level, both during and after the
meetings of the World Bank and International Monetary Fund.
In this connection the Chancellor stressed the importance of
the needs of the developing countries.
The Ministers agreed that the two reserve currencies would
continue to play an essential part in the financing of
international trade and as a medium in which to hold reserves.
They recognized that the interests of the two currencies were
closely bound up with one another. This identity of interest
had already been recognized in the measures of financial
cooperation taken by the two countries, which should be
maintained and intensified.
In addition to the Chancellor and the Secretary,
participants in the Treasury discussion included:
Sir Patrick Dean, British Ambassador to the United States;
Sir William Armstrong, Joint Permanent Secretary of the
British Treasury; Sir Denis Rickett, Second Secretary of the
British Treasury, Mr. Robert Neild, Economic Adviser to the
British Treasury, Mr. M. H. Parsons, Executive Director,
Bank of England and Mr. John Stevens, Economic Minister in the
British Embassy, Washington.
Mr. Joseph W. Barr, Under Secretary of the United States
Treasury; Mr. Frederick L. Deming, Under Secretary of the
Treasury for Monetary Affairs; Mr. Merlyn N. Trued,
Assistant Secretary of the Treasury for International Affairs,
and Mr. Stanley S. Surrey, Assistant Secretary of the Treasury
for Tax Policy.
000
STATEMENT BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
ON BUDGET ESTIMATES
AT A PRESS CONFERENCE
ON WEDNESDAY, JUNE 30, 1965, 3:30 P.M., EDT
Since today is the last day of the fiscal year, it seems
appropriate to bring you up to date on our latest budget
estimates for the year just ending -- although the actual results
will not be available for another three weeks.
Improvement in the outlook has continued. The President's
efforts to hold down expenditures have made even further
progress and revenues are expected to be still higher than
previously estimated.
The January Budget Message estimated FY 1965 expenditures
at $97.5 billion and receipts at $91.2 billion, leaving an
expected deficit of $6.3 billion.
On April 27, the President made public the first rev~s~ons
of these January estimates. He reported that expenditures were
expected to be down to $97.0 billion and revenues up to
$91.7 billion, lowering the projected deficit to $5.3 billion.
On May 17, in his Excise Tax Message, the President revealed
still higher revenue estimates of $92.6 billion, reducing the
deficit still further to $4.4 billion.
On June 17, the President again made public revised budget
estimates, listing expenditures at $96.6 billion and receipts
at $92.8 billion moving the estimated deficit down to
$3.8 billion.
As of today I am pleased to report a continuation of these
budgetary improvements. According to Budget Director Schultze,
expenditures are expected to be reduced to $96.4 billion.
Meanwhile, Treasury estimates of receipts have moved up to
$92.9 billion, leaving our current estimated deficit at
$3.5 billion.
(OVER)
- 2 -
The $2.8 billion improvement in the deficit from $6.3 billion
to $3.5 billion reflects a $1.7 billion increase in revenuffiand a
$1.1 billion reduction in expenditures.
I would like to point out that, with the exception of one
year, the deficit is the lowest since 1958.
I would also like to point
can be credited in good part to
Administration's program of tax
in expenditures can be credited
efforts to hold down spending.
out that the increase in revenues
the stimulative effect of the
reduction -- and the reduction
to President Johnson's persistent
STATEMENT BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
AT NEWS CONFERENCE, WEDNESDAY, JUNE 30, 1965,
3~30 P.M., EDT.
Because
the last few
economy over
consistently
there has been some confusion in the press in
days about my position on the outlook for the
the near term future I would like to make my
held view entirely clear.
It is my view -- and, it is the President's
view and the view of others in the Administration
that the United States economy is in excellent
condition, that the near term outlook is for
continued healthy economic growth, and that so far
as the Eye~f economic foresight can see ahead, there
is no indication of economic difficulty.
This is a view that I have held throughout the past
weeks when movements in the stock market have given rise to
questions about the condition and continuation of the longest
unbroken period of economic growth in the nation's history.
My views have not changed for the simple -- and the very
good -- reason that the economic conditions upon which they
rest have not changed. Those were, and remain, conditions of
sound, stable and sustainable economic health and expansion.
But, looking ahead into the far future in the late sixties,
let me add that I am not to be counted among those who think we
are in a new era that would guarantee us against economic trouble
in the future.
I think we have learned a great deal about the use of
government and private economic policy to avoid recessions,
and that better public and private policy is one of the
crucial and reassuring differences between the present and
1929, or other past periods of economic distress.
(OVER)
- 2 -
But let me repeat again:
I do not. think the laws of economics
have recently been repealed.
It is -- as I have been saying
repeatedly -- still entirely possible to have a recession
sometime in the distant future.
At the same time, I would emphasize also
that I see no such prospect for the excellent
reason that our analysis of the economic
situation reveals none of those imbalances or
excesses that bring about economic downturns.
On the contrary, and this is one of the most important
factors in our thinking, the long expansion that we
have been having is an uncommonly well balanced one,
uncommonly free of excesses.
It is in these simple and
homely facts -- and not in any "new era" thinking, that
our confidence reposes.
It is because of the sustainable
rate, and the good relation of the various parts of the
economy one to the other, that we expect the period of
expansion to continue for the remainder of the calendar year
1965, and that we see nothing on the horizon in 1966 that
could justify any change in our views.
000
STATEMENT BY THE HO~ORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
AT NEWS CONFERENCE, WEDNESDAY, JUNE 30, 1965
Since so many of you have expressed interest in our
conversations with the British Chancellor of the Exchequer,
Mr. James Callaghan, I thought it might be helpful to call this
conference.
Before I accept your questions, I have a statement to make.
Since today is the last day of the fiscal year, it seems
appropriate to bring you up to date on our latest budget estimates
for the year just ending -- although the actual results will n~t
be available for another three weeks.
Im?rovement in the outlook has continued. The President's
efforts to hold down expenditures have made even further progress
and revenues are expected to be still higher than previously
estimated.
The January Budget Message estimated FY 1965 expenditures at
$97.5 billion and receipts at $91.2 billion, leaving an expected
deficit of $6.3 billion.
On April 27, the President made public the first reVlSlons
of these January estimates. He reported that expenditures were
expected to be down to $97.0 billion and revenues up to
$91.7 billion, lowering the projected deficit to $5.3 billion.
On May 17, in his Excise Tax Message, the President revealed
still higher revenue estimates of $92.6 billion, reducing the
deficit still further to $4.4 billion.
On June 17, the President again made public revised budget
estimates, listing expenditures at $96.6 billion and receipts at
$92.8 billion moving the estimated deficit down to $3.8 billion.
As of today, I am pleased to report a continuation of these
budgetary improvements. According to Budget Director Schultze,
expenditures are expected to be reduced to $96.4 billion. Meanwhile, Treasury estimates of receipts have moved up to $92.9 billion,
leaving our current estimated deficit at $3.5 billion.
- 2 The $2.8 billion improvement in th~ deficit from $6.3 billion
to $3.5 billion reflects a $1.7 billion increase in revenues and
a $1.1 billion reduction in expenditures.
I would like to point out that, with the exception of one
year, the deficit is the lowest since 1958.
I would also like to point
can be credited in good part to
Adninistration's program of tax
expenditures can be credited to
efforts to hold down spending.
out that the increase in revenues
the stimulative effect of the
reduction -- and the reduction in
President Johnson's persistent
Because there has been some confusion in the press in the
last few days about my position on the outlook for the economy
over the near term future, I would like to make my consistently
held view entirely clear. It is my view -- and, as you know, it
is the President's view and the view of others in the Administration
-- that the United States economy is in excellent condition, that
the near term outlook is for continued healthy economic growth,
and that so far as the eye of economic foresight can see ahead,
there is no indication of economic difficulty.
This is a view that I have held throughout the past weeks when
movements in the stock market have given rise to questions about
the condition and continuation of the longest unbroken period of
economic growth in the nation's history.
My views have not changed for the simple -- and the very good
reason that the economic conditions upon which they rest have not
changed. These were, and remain, conditions of sound, stable and
sustainable economic health and growth. If I may, I would like to
draw your attention to statements I have made in this respect on
four occasions in the recent past. They represent my present views
accurately:
On June 8, in answer to questions put to me by m2mbers of
th2 Senate Finance C01Illnittee in the course of a h,3aring on the
Excise Tax reduction that has since been enacted, I said:
- 3 -
"I s~e n:>. reason to ques t ion the earlier j udgeffio:mts
of econom~sts ~n Government, and I think in business
as well, that we see and expect a continued orderly
growth as far ahead as one can see with reasonable
clarity.
"The dissimilarities between (1929 and the present)
so far outweigh the similarities that I am not at
all fearful of the repetition of the 1929-33 experience.
"I believe it is the duty and responsibility
of those of us who are concerned to realize that
it is the balanced character of this particular
expansion which has given it its durability and its
sustained effect over a long period of time ...
It is perfectly natural when the economy is catching
its breath, following very large increases in sales
and production during the first quarter, that as
we return to a more normal growth pattern we recognize
this is something which has been fully anticipated."
But let ffio~ add that, looking ahead into the far future
in the late Sixties, I said -- and I have repeated it since
when asked about the longer term outlook -- that I am not to
h2 counted a::nong those who think we are in a new era that
guarantees us against economic trouble in the future.
I will repeat again that I do not think the laws of economics
have recently been repealed. It is -- as I have been saying with
an eye to the distant future -- still entirely possible to have
a recession. But I see no such prospect ahead of us. I see
no such prospect for the excellent reason that our analysis of
the economic situation reveals none of those imbalances or
excesses that bring about economic downturns.
On the contrary, and this is one of the most important
factors in our thinking, the lo~g expansion that we have been
having is an uncorrnnonly well balanced :me, uncorrnnonly free of
excesses. It is in these simple and homely facts -- and not in
any "new era" thinking -- that our confidence reposes, and it
is because of the sustainable rate and the good relation of the
various parts of the economy one to the other that we expect
the period of expansion to continue the rest of this year and
so far as we can see into 1966.
- 4 Now let me resume:
On June 10 I was a member of a ffii=eting convened by the
President to review the economic situation. Others present besides
the President included William McChesney Martin, Chairman of
the Federal Reserve Board, and Gardner Ackley, Chairman of the
President's Council of Economic Advisers.
Following this meeting, the President expressed the sense of
our conclusions, as follows, and I q~ote:
"The economy is good, employment is high, revenues
are exceeding our expectations, expenditures are far
below our expectations, stability of the currency is good
and our exports are working well."
The President said there was no cause for "gloom or doom" and
that he expected a "good steady second half" of the year.
On that occasion I referred to my earlier statements to the
Senate Finance Co~ittee, from which I have just now quoted, and
I added:
"I feel that the outlook as far as I can see
ahead is very promising. If anything has happened
since the first of the year it seems to me our sights
have been a little bit raised insofar as the outlook
for continued growth is concerned. Certainly the
official forecast of $660 billion of Gross National
Product for calendar 1965 seems solid and may be a
trifle low."
On June 15, I was before the Senate Finance Committee in
connection with the ceiling on the Federal debt. In answer to
questions about the condition of the economy, I referred to concluSi(
reached at the White House ffii=eting of June 10 as follows:
"I think Wi2 all recognized that it is too much to
expect that the economy will maintain the tremendous
pace it had in the first quarter, when the Gross National
Product increased about $14.2 billion due to some
non-recurring factors -- the carryover of automobile
demand from the fourth quarter when there had been some
- 5 -
interruptions due to strike and the steel inventory
buildup in anticipation, or in fear of, a steel strike
at the time of the May closing of the contract. I
think we all expected the second quarter to continue to
show a healthy rate of increase but not nearly at the
pace that the first quarter had shown. We expect the
third and fourth quarters of this calendar year to
continue to show a healthy and appreciable expansion.
"We were all of th3 opinion that there is nothing
on the horizon in the way of data or trends about
the economic situation that indicate any substantial
difficulties in 1966."
Now, for my final reference, I said in an interview on the
television program Issues and Answers on June 20:
"(The) facts and circumstances justify a conservative view that the outlook for the economy is for a
continued expansion as far as one can reasonably foresee.
"I think we can see fairly and soundly and solidly
a continuing expansion for the remainder of the calendar
year 1965, and we see nJthing on the horizon in 1966
that would justify a~y change in the view •..
"I believe that a calm and conservative appraisal
of all the factors that are at work today is one that
ought to give the American people, both consumers,
investors, managers of industry, leaders of labor, all
those that are involved, an attitude of confidence for
the future."
000
U!1i ted.
states
(Doll:..r 3..":".Ou.....l.'tz
Sa'T'...."1Ss 3cncs I~ ~-..:.cd ~le. Rec.oc~ec 'l':i:ro\.:.[!;n June 30,
i."'l r.iillion=> - :rOt:..:-;C8C a..-.C i,-:"ll ::ot necess::.rily add.
I A.r..o\.:.nt
I
Issucc. 1/
~C::D
iCs' L-1935 - D-19L0.. •••••••••••
iC:J
C--1941 - 1952 •••••••••
K - 1952 ••••••••••••
F&
ies J
5,003
29,521
400
<l.11e.
I
j.:'--.OUl1t
..
1':"
,
~cec:::ec.
to tct.:2s)
~-o~¥'\t
~. / C"",
... .J.. .. ,_~:;... .."..., """""""'·-...... .. ·v
.....
'.1
_
Cu:'''sJ.z.ndil''''''
v
"".......
P
2/
0"'''
_
'~J. Ic-C'D""d
t..,;
J"_I.V.
-.J .... '
4,993
29,433
388
10
87
12
.20
.29
3.00
1,846
8,150
13,119
15,290
1l,989 1!
5,396 I
5,092
5,253
5,174
4,517
3,911
4,093
4,666
4,746
4,944
4,713
4,,431
4,290 ,
4,0l..5 I
4,004 1
4,020
3,870
4,288 II
4,191 I
1,378
367
1,584
7,021
11,331
13,080
10,012
4,296
3,885
3,908
3,768
3,219
2,783'
2,872
3,149
3,079
3,038
2,878
2,643
2,425
2,236
2,100
1,947
1,770
l,689
1,353
165
262
1,129
1,788
2,210
1,977
1,100
1,206
1,344
1,406
1,297
1,128
1,221
1,518
1,666
14.19
13.85
13.63
14.45
16.49
20.39
23.68
25.59
27.17
28.71
28.84
,29.83
32.53
35.10
38.55
38.93
40.33
43.47
44.31
47.55
51.57
54.26
60.61
67.72
88.03
137,753 I
!
3,670
6,823
10,493 I!
,
96,675
148,246 i
105,,003
!
2,081
! W1,248
34,81h
107,,084
141,898
109
50,042
50,151
T~?":'::!)
I
I
Ii
I
~'})
ies .::..:
1941 ••••••••••••••••••••••
1942 ••••••••••••••••••••••
1943 ••••••••••••••••••••••
'9~1
_ l.l. . . . . . . . . . . . . . . . .'. . . . . . .
1945 •••••••••••••••••••••• l
19~6 •.••••••••••••••••••••
1947 •••.••••••••••••••••••
1948 ••••••••••••••••••••••
1949 •••••••••••• ~ •••••••••
1950 ••• ~ ••••••••••••••••••
1951 ••••••••••••••••••••••
1952 ••••••••••••••••••••••
1953 ••••••••••••••••••••••
1954 ••••••••••••••••••••••
1955 ••••••••••••••••••••••
1956 ••••••••••••••••••••••
1957 ••••••••••••••••••••••
1958 ••••••••••••••••••••••
1959 •••••••••••••••••••••• (
1960 •••••••••••••••••••• ,. ~
1961 ••••••••••••••••••••••
'9(2
~ 0 ••••••••••••••••••••••
1963 ••••••••••••••••••••••
1964 •••••••••••••••••••• ~.
1965 ••••••••••••••••••••••
I
nclClssified. ,••••••••••••••••••
otal Series E •••••••••••••••••
(1952 - Jan. 1957) 2/ ... 1
H (Feb. 1957 - 1965) •••••• I
ies H
otal Series H•••••••••••••••••
t
otal Series E and H•••••••••••
ies J 2.."ld K
i'l' Ov
""a.l
Gr~~d
mQV
Total ••••••••••
I
I
,
!,
(1953 - 1957) •••••
.,J. ureo' ...•.•.•
SerieSj Total ur~~tured ••••••
)
i
!
1965
3,329
I
i
34,654 ,
151,575 ,
186,229 !
Includes accruea discount.
Cur!'ent redcmntion value.
~t option of ~'tomer bonds may be he1e. z,.."10
;-r.i.ll earn interest for additional periods
;:i'ter original maturity dates.
[ncludes matured bonds which have not bC>3r,.
?resented for redemption.
I
;
441
1,906
I
I
/
,
1
I
1,835
1,787
1,865
1,779
1,904
2,073
2,100
2,599
2,838
1,,213
-74
41,078
1,925
5,791
7,716
1,745
1,,031
2,776
I
!t.8,794
I
I
I
I,
i1
!
I
-
29.82
~r:~~
73.53
32.91
37.49
.31
33.01
26.93
BUREAU OF THE PUBUC DEBT
- 2 -
reserve asset in the form of virtually automatic Itgold tranche"
drawing rights on the Fund.
No expenditures under the letter
of credit will be required for the foreseeable future.
Accordingly, the quota increase payment will have no effect
upon the United States international reserve position, or upon
its balance of payments position.
The increase in the United States quota is part of a
general expansion of all members' quotas by 25 percent, plus
larger increases for 16 countries.
tT ~
;(;9!P=-
Rc t
5U
6: s:i s
--v.:i-e\'6 t!hc action air deillollstratt:~ tSQ ".i:Hlt'6<£'tElft8b :J;::re pleeee 01
/t
ensuring that adequate resources shall be available to the Fund
so that it can continue to play a vital role in the international
monetary system.
Proposed
Press Release
U. So CONSENTS TO IMF QUOTA INCREASE
Secretary of the Treasury Henry Ho Fowler, as U. S. Governor
of the International Monetary Fund, has informed the Fund of
United States consent to an increase of $1,035 million in the
United States quota.
Secretary Fowler's action followed President Johnson's signing
yesterday of appropriations legislation which implemented earlier
Congressional authorization for the increase.
The increase in United States quota will be paid 25 percent or
$258.75 million in gold, and 75 percent or $776.25 million through
a letter of credit.
The action is in accordance with the Resolution
of the International Monetary Fund Board of Governors providing
for the increase in members' quotas.
In return for its gold
payment the Unitea States will receive an equally valuable
TREASURY DEPARTMENT
(
July 1, 1965
FOR IMMEDIATE RELEASE:
U. S. CONSENTS TO IMF QUOTA INCREASE
Secretary of the Treasury Henry H. Fowler, as U. S. Governor
of the International Monetary Fund, has informed the Fund of
United States consent to an increase of $1,035 million in the
United States quota.
Secretary Fowler's action followed President Johnson's
signing yesterday of appropriations legislation which implemented
earlier Congressional authorization for the increase.
The increase in United States quota will be paid 25 percent
or $258.75 million in gold, and 75 percent or $776.25 million
through a letter of credit. The action is in accordance with the
Resolution of the International Monetary Fund Board of Governors
providing for the increase in members' quotas. In return for its
gold payment the United States will receive an equally valuable
reserve asset in the form of virtually automatic "gold tranche"
drawing rights on the Fund. No expenditures under the letter of
credit will be required for the foreseeable future. Accordingly,
the quota increase payment will have no effect upon the
~ited States international reserve position, or upon its
balance of payments position.
The increase in the United States quota is part of a general
expansion of all members' quotas by 25 percent, plus larger
increases for 16 countries. Secretary Fowler said that the action
of the U. S. Government demonstrates the importance which it places
on ensuring that adequate resources shall be available to the
Fund so that it can continue to play a vital role in the
international monetary system.
000
F-lll
-,-~~ ~.:;.su RY
DEPARTMENT
?01 ?':;:LSJ.S;:: A.1';. KE}:[S PAPERS,
S.3."(,urday , July 3, 1965.
July 2,
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series ~
l:::-casury bills, one series to be an additional issue of the bills dated April 8, 1965,
2::d tl-;.e other series to be dated July 8, 1965, which were offered on June 28, were
o:[)ened at the Federal Reserve Banks on July 2 •. Tenders were invited for $1,200,000,001
or tr.ereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 182-day bill
'lh8 details of the two series are as folloi-ls:
R!'·,)IGE OF ACCEPTED
9l-day Treasury bills
CO:·:P2TI1'IVZ BIDS:
maturin~ October 7 z 1965
....... .,
lugn
Lm1
Average
Price
99.030
99.022
99.026
Approx. Equiv.
Annual Rate
).837%
3.869%
).853%
182-day Treasury bills
January 6 z 1966
Approx. Equ!Y
Price
Annual Rate
3.881%
98.0)8 ~
98.029
3.899%
98.033
3.890%
maturin~
:
Y
!I
8./ EZC8pting one tender of $150,000
]8 p8rcent of the amount of 9l-day bills bid for at the low price was accepted
25 pc~cent of the amount of 182-day bills bid for at the low price was accepted
'rOTJ.L:'~~\jDERS APPLIED FOR AND ACCEPI'ED BY FEDERAL RESERVE DISTRICTS:
Dis"(,rict.
Boston
~;81-l Yo:..';(
?hilac.elphia
Cleveland
Ricr.:·;;o"d
At2.::.:.:ta
C:1ica.:;o
St. Louis
l-:ir.neapolis
Ke-nsas City
Dallas
San Francisco
Applied For
$ 40,371,000
1,337,359,000
23,832,000
24,838,000
15,024,000
32,162,000
261,205,000
36,432,000
18,527,000
25,005,000
21,962,000
94,858,000
Accepted
$
30,371,000
780,959,000
11,656,000
24,8)8,000
15,024,000
)1,192,000
1)2,585,000
29,650,000
16,287,000
23,005,000
16, )42, 000
88,208,000
Applied For
5,297,000
1,471,)81,QOO
10,)6),'000
8,578,000
2,485,000
12,605,000
210,990,000
11,494,000
7,794,000
8,65),000
10,149,000
64,190,000
TOTALS
$1,931,575,000
$1,200,117,000 ~/ $1,823,979,000
$
Accepted
5,297,00
872,006,00
2,363,00
6,578,00
2,185,OC
9,605,00
60, 240,OC
8, 744,OC
5,419,OC
7,633,OC
5,S49,OC
15,190,OC
$
$+, 000, 800, OC
£/ Includes $223,928,000 noncompetitive tenders accepted at the average price of 99.
c/ Includes $72,881,000 noncompetitive tenders accepted at the average price of 98.C
f! o~ a coupon issue of the same length and for the same amount invested, the ret~
these bills would provide yields of 3.94%, for the 91-day bills, and 4.02%, fort
182-day bills. Interest rates on bills are quoted in terms of bank discount ~tt.
the return related to the face amount of the bills payable at maturity rather tM
t,he a.'T1ount invested and their length in actual number of days related to a 36o-da
yea:::. In contrast, yields on certificates, notes, and bonds are computed in tenr
of interest on the amount invested, and relate the number of days remaining in sr,
interest. pa~ent period to the actual number of days in the period, with semiannt
co;r.pouncling l.f more than one coupon period is involved.
TREASURY DEPARTMENT
4
)R RELEASE A.M. NEWSPAPERS,
lturday, July 3, 1965.
July 2, 1965
RESULTS OF TREASURY'S WEEh"LY BILL OFFERING
The Treasury Department announced last evening that the tenders for two series of
'easury bills, one series to be an additional issue of the bills dated April 8, 1965,
Id the other series to be dated July 8, 1965, which were offered on June 28, were
~ned at the Federal Reserve Banks on July 2.
Tenders were invited for $1,200,000,000,
-thereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 182-day bills.
le details of the two series are as follows:
~NGE
OF ACCEPTED
91-day Treasury bills
182-day Treasury bills
maturing October 7, 1965
maturing January 6, 1966
Approx. Equiv.
Approx. Equiv.
Price
Annual Rate
Price
Annual Rate
High
99.030
3.881%
3.837%
98.038
Low
99.022
3.869%
3.899%
98.029
Average
99.026
98.033
3.853%
3.890%
a/ Excepting one tender of $150,000
~8 percent of the amount of 91-day bills bid for at the low price was accepted
25 percent of the amount of 182-day bills bid for at the low price was accepted
)TAL TENDERS APPLIED FOR AND ACCEPl'ED BY FEDERAL RESERVE DISTRICTS:
~MPETITIVE
BIDS:
!I
Y
District
Y
Kansas City
Dauas
San Francisco
Applied For
$
40,371,000
1,337,359,000
23,832,000
24,838,000
15,024,000
32,162,000
261,205,000
36,432,000
18,527,000
25,005,000
21,962,000
94,858,000
Accepted
S
30,371,000
780,959,000
11,656,000
24,838,000
15,024,000
31,192,000
132,585,000
29,650,000
16,287,000
23,005,000
16,342,000
88,208,000
Applied For
$
5,297,000
1,471,381,000
10,363,000
8,578,000
2,455,000
12,605,000
210,990,000
11,494,000
7,794,000
8,653,000
10,149,000
64,190,000
Accepted
$
5,297,000
872,006,000
2,363,000
6,578,000
2,185,000
9,605,000
60,240,000
8,744,000
5,419,000
7,633,000
5,549,000
15,190,000
TOTALS
$1,931,575,000
$1,200,117,000 ~/ $1,823,979,000
~1,000,809,OOO
~ston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
~inneapolis
'9J InclUdes
51
$223,926,000 noncompetitive tenders accepted at the average price of 99.026
c/ InclUdes $72 881 000 noncompetitive tenders accepted at the average price of 98.033
On a coupon issu~ of the same length and for the same amount invested, the return on
these bills would provide yields of 3.94%, for the 9l-day bills, and 4.02%, for the
182-day bills. Interest rates on bills CI.re 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 •
!I
..1l2
- 2 c~=~~~~~~, tr~s fact, together with a s~ry of the oppOS~"-:3 vl.c;:::-J, c1:-.ould ba reported by the Committee Chairman to
tho SC.::::c:Ulry of the Trccsury.
to
.;l
Taia p=c?ozul in its b~~ad outlic~s conforms closely
~:;:;co:=~:1d.::.tion of tho Prcsid::nt's COrn:Dittce on Fil1~n
I:~titutiors.
It ei-:(iuld provido eu effective instru::.:::::t for the! c~~chCZ"..2;c of vlc:1s c=ong the b.:ll1Y..ing agencies •
.:..::c for st:ch eCCO!Z.:1:~c.:;:tion of difforences es is fcasibla
cC:-...Jid.::::::::::; tM c1ivo::g~nt scope of authority and responsibility o~ t~~ participating a~oncics.
c::'c:.l
J:u
~!d..r:.3
your assent to this new procedure" let me
.:.::su::o you trot I am coru:;cious of end will fully respect
t:--:.o
ccni:c..""1C~
Jl:.,)
;-.................
~ ~~""'
in
tl~3
Prcsidont' G letter which re"ds:
t:.::; extent th.:lt c.:.ch of thc.:sa agencies has
~· ...'h"-"'i+-y
di.,..."
... ~ly by Congro~s
ur.·-....,.,.,.'·~a~
...
... ..,....
...... '...,.;.....
..
J
~.i.."-
w.y,~
~
c~ch c~joys consi~rable
indcpcndonce of action
in this field. II
Sincerely yours.
Henry H. Fowler
';r-.+l··M>nM'8hle .
\oWilllamMeehe:!ney Martin, Jr.,
C~~i.r&:ilant :8oard-·,·o£ ~Z'S
::.:b=al Reserve Sygtemwashington. D'.' C.
'lte:lticzl tetter Settt to:
~e!!lp~iiOl~~aJWn
Cheit:nmn"'rumdal-l
-~ro;. W-tt' ~1tc\.--j~~<:t4~~xman
~'"''-'"
..... ,.' Vryr'"
~.;, t
1iQ:z:ne
:;;; lj."•. q
i&-' 6¥::"-'!;
June 24, 1965
The Honorable William HcChesney Martin, Jr.
ChGirrran
Board of Governors of the Federal Reserve System
The Honorable James J. "Saxon
Ccmptroller of the Currency
,
The Honorable Kenneth A. Randall!.
~ ~ 'l~8S
Chairnan of the Federal Deposit lnsurance ~ C
; on
~&_
.l11:
C-..:- -
The Honorable John E. Horne
Chairman of the Federal Home Loan Bank Board
D !·!:l:ch 3, 1964~ in respor~e to a direction of the
~-'''·P'''lo~''>~ nil'on
estllblish~d
._'-...J_\,M.......... of "~-·""h
.. __ J,.~ 2 J 1"1'..1,
J~,
"'''-W''\Vf~-J'''
o ~~o~~~urc for tIle exchange of information among the bank
::c27..11a.tory cgC!1cies. 'Ihis e~changa W~ to apply to any
17":.110" ~(;Z'Jllstio:l or policy of anyone agency ~hich might
CO::1£lict uith an existing rula~ regulation or policy of
t.:-:.y of t~.$ othar agencies. Ten working days was to be al1(;"::::0 for corr.;-~nt beforo sny chango was instituted, and
t;~-11.1c th8ro t-JUS no rcquirc~nt th:lt th2se co:mnents should
b~ sccc;,?tcd. tM arr.:m3cm~:1e t-10rkcd cut by Secretary DilioD
ir..dicsted that c~nts received should be "carefully con~·~~1 ...~-''''''t
sidered
~d
acccn:oodated as practicable."
I should like now to have your assent to a further
elaboration of the earlier arrangement, and the extension
of the n=.w plan to cover the Federal Home Loan Bank Board.
The one t~eakness in the earlier procedure was the lack
of direct discussions among the affected agencies _, My proposal is that tr~re shculd be established a Coordinating
CO!"7.1itteo on Bank Regulation to be composed of the Chairman
of tha Board of Governors of the Fed~ral Reserve System or
a d~sign~ted Governor thereof, the Comptroller of the Currcncy~ tp~ CP~irman of the Federal Deposit Insurance Corporation~ end the Chairman of the Federal Rome Loan Bank
Doord. Tl"'..e Chairmanship of the Committee should rotate
quarterly among the members. and the members should meet
at loast quarterly and additionally at tlla call of any
~bar.
For each meeting of the Coordinating Committee, there
should be a formal agenda comprising those matters requestecl
for discussion by the individual members. The Secretary of
th~ Treasury should have the authority to designate an observer or observers to attend these meetings. Where, with
respect to any matter. the Committee 18 unable to reach an
- 4 Secretary Fowler said that the new Committee corresponds
to recommendations made by the President's Committee on
Financial Institutions)
(J),.-
If/;.,
/
(,j/"
jl/
/(".?
~(.:!
The Secretary recalled in his letter to the heads of
the four bank regulatory bodies that in suggesting coordination
-------
of bank regulation actions the President had noted that
tb&
- --
-
-
---
_. -
-
~
-
eyt!.t the agencies had been granted authority directly
l,,!~lA ~l
-'
by Congres~they enjoy "considerable independence of action."
/\
Secretary Fowler stated that he would "fully respect" this
observation.
Secretary Fowler's letter proposing the Coordinating
Committee on Bank Regulation is attached.
- 3 -
In a letter to the heads of the four agencies on June 24,
Secretary Fowler said he wanted to add to this, provision
( .:', i ~'•.. ~) /, /q L ~ ~_~~~::.'
. - -----
for direct discus sio';\ among the agencies,oi.;.; ~gull!ot:ory --meves-.
-~,
t. )
He suggested, and they accepted, the establishment of a
Coordinating Committee on Bank Regulation to meet at least
quarterly.
Chairmanship of the coordinating group will
rotate among the members.
Each meeting will have an agenda
comprising matters for discussion requested in advance by
the members.
The Secretary of the Treasury will send an observer
to the meetings.
If the committee cannot reach agreement this is to be
reported by the Chairman of the Coordinating Committee to
the Secretary of the Treasury.
- 2 differences as is feasible considering the divergent scope
of authority and responsibility of the participating agencies."
The Coordinating Committee adds to arrangements made in
March, 1964, at the suggestion of President Johnson, for
exchange of information among bank regulatory agencies.
This exchange was to apply to any rule, regulation or
policy of anyone of the bank regulating agencies which might
conflict with an existing rule, regulation or policy of any
of the others.
The arrangements for exchange of information
provided for 10 working days for comment before any change
was instituted.
There was no requirement that these comments
should be accepted, but the arrangement worked out by
former Treasury Secretary Douglas Dillon indicated that comments
received should be "carefully considered and accommodated
as practicable."
FOR IMMEDIATE RELEASE
'K'
COODINATING COMMITTEE ON BANK REGULATION
"
Treasury Secretary Henry H. Fowler today announced the
establishment of a Coordinating Committee on Bank Regulation.
-
i
,-7 Ii il.-h ' 1'1 ~.!j (;; I:' / l/{,
Secretary Fowler namcd,te the committeere~resen~~4ves
f,
"
_
'
t.·
'<'>.J ";~"_( ~: \_.
"i./fi /r,;-c,the four Feeieil'Ql agencies with responsibility for regulation
1..(./11'
\at
/\
1\
of banks:
William McChesney Martin, Jr., Chairman of the
Federal Reserve Board, or, a designated Federal Reserve
Board Governor; James J. Saxon, Comptroller of the Currency;
Kenneth A. Randall, Chairman of the Federal Deposit Insurance
Corporation and John E. Horne, Chairman of the Federal Home
Loan Bank Boardo
The Secretary said he expected the Coordinating Committee
to provide "an effective instrument for the exchange of views
among the banking agencies, and for such accomodation of
TREASURY DEPARTMENT
July 6, 1965
FOR IMMEDIATE RELEASE
COORDINATING COMMITTEE ON BANK REGULATION
Treasury Secretary Henry H. Fowler today announced the
establishment of a Coordinating Committee on Bank Regulation.
Secretary Fowler announced that the Committee was composed
of representatives of the four Nationa agencies with responsibility
for regulation of banks: William McChesney Martin, Jr.,
Chairman of the Federal Reserve Board, or, a designated Federal
Reserve Board Governor; James J. Saxon, Comptroller of the
Currency; Kenneth A. Randall, Chairman of the Federal Deposit
Insurance Corporation and John E. Horne, Chairman of the Federal
Home Loan Bank Board.
The Secretary said he expected the Coordinating Committee
to provide "an effective instrument for the exchange of views
among the banking agencies, and for such accommodation of
differences as is feasible considering the divergent scope of
authority and responsibility of the participating agencies."
The Coordinating Committee adds to arrangements made in
March, 1964, at the suggestion of President Johnson, for
exchange of information among bank regulatory agencies.
This exchange was to apply to any rule, regulation or
policy of anyone of the bank regulating agencies which might
conflict with an existing rule, regulation or policy of any
of the others. The arrangements for exchange of information
provided for 10 working days for comment before any change was
instituted. There was no requirement that these comments should
be accepted, but the arrangement worked out by former Treasury
Secretary Douglas Dillon indicated that comments received should
be "carefully considered and accommodated as practicable."
In a letter to the heads of the four agencies on June 24,
Secretary Fowler said he wanted to add to this, prov~s~on for
direct discussion of regulatory moves among the agencies.
F-113
- 2 He suggested, and they accepted, the establishment of a
Coordinating Committee on Bank Regulation to meet at least
quarterly. Chairmanship of the coordinaeing group will rotate
among the members. Each meeting will have an agenda comprising
matters for discussion requested in advance by the members.
The Secretary of the Treasury will send an observer to the
meetings.
If the Committee cannot reach agreement this is to be
reported by the Chairman of the Coordinating Committee to the
Secretary of the Treasury.
Secretary Fowler said that the new Committee corresponds
to recommendations made by the President's Committee on
Financial Institutions, of April, 1963.
The Secretary recalled in his letter to the heads of the
four bank regulatory bodies that in suggesting coordination
of bank regulation actions the President had noted that the
agencies had been granted authority directly by Congress and
. that they enjoy "considerable independence of action."
Secretary Fowler stated that he would "fully respect" this
observa tion.
Secretary Fowler's letter proposing the Coordinating
Committee on Bank Regulation is attached.
- 3 -
June 24, 1965
The Honorable William McChesney Martin, Jr.
Chairman, Board of Governors of the
Federal Reserve System
The Honorable James J. Saxon
Comptroller of the Currency
The Honorable Kenneth A. Randall
Chairman, Federal Deposit Insurance Corporation
The Honorable John E. Horne
Chairman, Federal Home Loan Bank Board
On March 3, 1964, in response to a direction of the President
of March 2, 1964, Secretary Dillon established a procedure for
the exchange of information among the bank regulatory agencies.
This exchange was to apply to any rule, regulation or policy of
anyone agency which might conflict with an existing rule,
regulation or policy of any of the other agencies. Ten working
(jays was to be allowed for comment before any change was
instituted, and while there was no requirement that these
comments should be accepted, the arrangement worked out by
Secretary Dillon indicated that comments received should be
"carefully considered and accommodated as practicable."
I should like now to have your assent to a further
elaboration of the earlier arrangement, and the extension of
the new plan to cover the Federal Home Loan Bank Board.
The one weakness in the earlier procedure was the lack
of direct discussions among the affected agencies. My proposal
is that there should be established a Coordinating Committee on
Bank Regulation to be composed of the Chairman of the Board of
Governors of the Federal Reserve System or a designated Governor
thereof, the Comptroller of the Currency, the Chairman of the
Federal Deposit Insurance Corporation, and the Chairman of the
Federal Home Loan Bank Board. The Chairmanship of the Committee
should rotate quarterly among the members, and the members should
meet at least quarterly and additionally at the call of any member.
- 4 For each meeting of the Coordinating Committee, there
should be a formal agenda comprising thos"e matters requested
for discussion by the individual members. The Secretary of
the Treasury should have the authority to designate an observer
or observers to attend these meetings. Where, with respect to
any matter, the Committee is unable to reach an agreement, this
fuct, together with a summary of the opposing views, should be
reported by the Committee Chairman to the Secretary of the
Treasury.
This proposal in its broad outlines conforms closely to
a recommendation of the President's Committee on Financial
Institutions. It should provide an effective instrument for
the exchange of views among the banking agencies, and for such
accommodation of differences as is feasible considering the
divergent scope of authority and responsibility of the
participating agencies.
In asking your assent to this new procedure, let me
assure you that I am conscious of and will fully respect the
sentence in the President's letter which reads:
liTo the extent that each of these agencies has
been granted authority directly by Congress,
each enjoys considerable independence of action
in this fie ld."
Sincerely yours,
Henry H. Fowler
- 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 sa
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 subje,
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 interes
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 ths.n life insurance companies) issued hereunder need include in his income tax return only the difference between the price paid for suc
bills,· whether on original issue or on subsequent purchase, and the amount actual
received either upon sale or redemption at maturity during the taxable year for
which the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and this notice, pre
scribe the terms of the Treasury bills and govern the conditions of their.issue.
Copies of the circular may be obtained from any Federal Reserve Bank or Branch.
- 2 -
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
submi tting 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 vith
the bids must be made or completed at the Federal Reserve Banks on July __ _
1965
, in cash or other immediately available :f"unds or in a like face
amount of Treasury bills maturing ___-.. :;J.. ;;U;=:1...Y-=1.:;;:,5~~loo9t1oi6tr5~-------
Cash
TREASURY DEPARTMENT
Washington
July 7, 1965
FOR IMMEDIATE RELEASE
B1~QQQ~
TREASURY'S WEEKLY BIU. OFFERING
The Treasury Department, by this public notice, invites tenders for two seriel'
of Treasury bills to the aggregate amount of $ 2,200,000,000 , or thereabouts, for
til
cash and in exchange for Treasury bills mat\lring
of $2,201,735,000
July lfiJ 1965
,as follows:
f4
91 -day bills (to ma,turity date) to be issued
XW
, in the amoun1
in the amount of $
1,200~0,000
July 15iiJ965
, or thereabouts, represent-
ing an additional amount of bills dated
and to mature
amount of
October 14, 1965
ffl
$1,00~000
April
~1965
,originally issued in the
, the additional and original bills
to be freely interchangeable.
182
n:a
-day bills, for $ 1,000,000,000 , or thereabouts, to be dated
{Hi
B.k1965 ,and
----~~~~r-~--July
to mature
January 13 , 1966
-------~tEij~~--------
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., Eastem/3~ time, Monday, July 12, 1965
t5JEach tender
Tenders will not be received at the Treasury Department, Washington.
must be for an even multiple of $1,000, and in the case of competitive tenders t~
price offered must be expressed on the basis of 100, with not more than three
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders
for two series of Treasury bills to the aggregate amount of
$2,200,000,000,or thereabouts, for cash and in exchange for
Treasury bills maturing July 15, 1965,
in the amount of
$2,201,735,000, as follows:
91-day bills (to maturity date) to be issued July 15, 1965,
in the amount of $ 1,200,000,000, or thereabouts, representing an
additional amount of bills dated April 15,1965,
and to
mature October 14,1965, originally issued in the amount of
$ 1,OOO,699,000,the additional and original bills to be freely
interchangeable.
182-day bills, for $1,000,000,000, or thereabouts, to be dated
July 15,1965,
and to mature January 13, 1966.
The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be issued in bearer form only, and in denominations of $1,000,
$5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000
(maturi ty value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Monday, July 12, 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-114
- 2 -
Immediatelv after the closing hour, tenders will be opened at
the Federal Res~rvp 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 advlsed ,~f the acceptance llr reiectirm thereof. The
Secretarv of the Treasury expressly reserves the right to accept or
reject any llr all tenders, in whole or in part, and his action in
~ny such respect shall be final.
Subject to these reservations
noncompetitive tenders for each issue for 5200,000 or less without
stated price fro~ 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 July 15, 1965, in cash or other immediately
availahle funds c'r in a like i;]L'e am()unt of Treasury bills
maturing July 15, 1965.
(ash and exchange tenders will receive
equal treatment. Cash adjustments will be made for differences
bet1.leen the par value of matLJrinl2, hills accepted in exchange and
the issue price ('t the new hills.
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
TREASURY DEPARTMENT
Washington
STATEHENT OF MERLYN N. TRUED
ASSISTANT SECRETARY OF THE TREASURY
Before the
HOUSE BANKING
AN~CURRENCY
COMMITTEE
July 8, 1965
Mr. Chairman and Members of the Corrunittee:
I am happy to appear before you in support of H.R. 8816,
a bill containing three
se~arate
nroposa1s relating to the
International Bank for Reconstruction and Development and
its affiliate, the International Finance Corporation.
with me Mr. Ralph Hirschtritt, Deputy to the
I have
,.~:,ssistant
secretary of the Treasury.
Mr. Chairman, the proposals embodied in this legislation
have been fully endorsed by the National ".dvisory (:ounci1 on
International Monetary and Financial PJ:ob1ems, and a copy
of its Special Report is before you.
companion bill,
s.
The Senate passed a
1742, by a voice vote on June 30.
I
shall briefly cover some of the main points.
IBRD Lending to IFC
The first proposal would amend the Articles of Agreement
of the IBRD and the IFC to permit toe Bank to lend to the IFC.
This authority will contribute grea.tly to the continued
Success of these institutions in encouraging, each in its
own
~lay,
F-1l5
private investment in the less developed countries
- 2 of the free v.orld.
I need hardly stress the importance of
the role of private enternrise in the economic development
of the less develooed areas.
I am sure that the Committee is quite familiar with the
tHO institutions.
The Horld Bank, established immediately
after Horld 1,Jar II, is now engaged primarily in lending to
the less developed countries.
It makes long-term loans
directly to member governments, public entities or priv8te
enterprises.
~.'hose
All loans must be guaranteed by the member :.i.n
territories the project is located.
Projects financed
and assisted by the Bank are generally basic to the economic
structure of the recipient country and typically have been
in the fields of transportation, power, and industrial and
agricultural development.
The Bank has been highly successful, and it enjoys the
reputation of being a sound financial institution.
As I
have indicated, exceryt in the case of loans made directly
to member governments, the borrower is required to obtain
a guarantee from the government of the country in which the
T)roject is to be located.
Of ten, however, nrivate investors
have been reluctant to seek, and in some cases it is
difficult for host governments to give, such guarantees.
- 3 -
To complement the Bank's operations in .promoting assistance
to the private sector in the less developed countries, the
Bank sponsored the IFG, which 'tvas established in
the full support of the United States.
19~)6
with
The IFC invests only
in private enterryrise projects and does not require host
government guarantees of repayment of its investments.
Tile
result is that IFC can and does make loans to private
enterryrise that the Bank cannot make.
The proposed legislation
would provide additional resources through the IFC for the
future stimulation of economic growth through nrivate enternrise.
In its decade of operations, the IFC has promoted the
gro'tvth of private enter!,rise activity in the less developed
countries and brought new venture capital where it is needed.
By
providing financing in conjunction with other investment
both local and foreign, and often with only limited use of
its own funds, the IFC has facilitated the investment of a
much greater aggregate volume of private capital.
The IFC offers a variety of forms of assistance.
ooerations fall into three major categories:
Its
(1) loan or
equity investments in operating companies; (2) investments
in industrial finance companies that relend to local
industry; and (3) participation in underwriting and stand-by
- 4 transaction~
for private firms raising capital.
Individual
IFC investments have been relatively small, generally under
$~
million, and they have been made to a variety of types
of manufacturing industries.
While it still has funds to
invest, the pace of IFC's operations is increasing and it is
timely and important to make provision for the future.
To this end, the Executive Directors of each institution
in August 1964 recommended to the Governors that Bank resources
be made available to the private sector through the IFC.
Tl~is
uou1d be accomplished by permitting the Bank to make loans to
the IFC.
The total amount of loans outstanding by the Bank to IFC
could not, under the arrangement, exceed four times the
unimnaired subscribed capital and surplus of IFC.
This
limit is about $400 million based on the IFC's present
balance sheet.
Bank lending to the IFC would take place
only over time and in accordance with IFC's operational
requirements.
At their Annual Meeting in Tokyo last September, the
Governors of the Bank and the IFC approved the report of the
Executive Directors recommending this proposal.
Draft
resolutions containing the necessary amendments to the
Articles of Agreement are presently before the respective
- 5 -
Boards of Governors to be voted on by each Governor after
obtaining the necessary authority prescribed by domestic
law.
The Bretton Woods Agreements Act, authorizing U.S.
membership in the Bank, requires Congressional authorization
for the U.S. Governor to vote for an amendment of the
Articles.
The International Finance Corporation Act contains
a similar provision \\71 th resnect to amendment of the IFC
.I.'\r tic1e s.
The ?=oDosa1 does not, of course, involve any appropriation
or expenditure of funds by the United States.
It is fully
consistent 'tvith the objectives of the United States in
promoting private enterr>rise in less developed countries
and s11OU1d heve our full support.
A number of countries have
already acted and U.S. action will enable it to become effective.
lERD Capite.1 Increases not Involving the U.S.
The pro:)osed 1egis1a·tion would also permit the U. S.
Governori:o vote for an increase in the authorized capit8.1
stock of
t~le
International Bank for Reconstruction and
D2ve1o;)ment.
the U.::::.
United
T'lis increase vlou1d not involve an increase in
subs~ription,
~;tates.
is $22 billion.
it is
nO~7
nor any ex;")enditure of funds by
t~1e
Tl,.e present authorized car>ita1 of the Bank
Tl-;.is amount is almost fully subscribed, but
apparent that it is not adequate to accommodate the
- 6 -
immediate and foreseeable subscriptions of new members and
the special increases in the subscriptions of existing
members.
As of March 31, 1965, $21,629 million had been subscribed.
An additional
$16~
million in new subscrintfuns and subscription
c
_
increases have been autholized by the Board of Governors and
these are now merely awaiting the completion of formalities.
Total subscriptions will then amount to $21,794 million.
T;.lUs, the limit is now very nearly reached at a time when
further subscrintions of about $900 million may be exnected.
This further amount will come about as the 16 countries undertaking special increases in their quotas in the International
I10netary Fund also increase their Bank subscriptions, in
accordance with normal practice.
Ot~er
subscriptions may
also be expected.
Because the re sul ting increases could not be rna.de under
the Bank's existing authorized capital, there is now pending
before the Board of Governors a resolution to increase the
authorized capital stock of the Bank by $2 billion.
Congress-
ional approval is required for the U.S. Governor to vote in
favor of this resolution which, I wish to re-emphasize, does
not involve any change in the U.S. subscription.
In 1963 the
- 7 congress approved a similar increase of $1 billion in the
Bank's authorized capital.
The bill before the Committee will authorize the U.S.
Governor to vote for the present resolution by granting him
continuing authority to vote for any such increases in the
authorized capital of the Bank when an increase in the U.S.
subscription is not involved and hence no U.s. payments or
increased obligations result.
If an increase in the U.S.
subscription is involved, then, of course, Congressional
authorization would continue to be required.
Reports of the NAC
The third change which would be ma.de by H. R. 8816 would
be to permit reports of the National Advisory Council on
International Honetary and Financial Problems to be made on
an annual basis instead of semi-annually and biennially as
presently required.
This proposal stems from a request by
the President that Executive agencies review the reports which
they are required by sta.tute to submit to Congress for the
purpose of determining whether such reports could be eliminated
or reduced in number.
It is anticipated that the proposed
annual reports will contain all the information now contained
in the presently required reports, while at the same time the
number of such reoorts would be reduced from five to two over
.I.
each two-year period.
- 8 In connection with this last proposal, it
sho~ld
be
noted that Reorganization Plan No. 4 of 1965, submitted by
the President on May 27, 1965, would abolish the National
Advisory Council as a statutory body and transfer its functions
to the President.
The President stated, however, that prompt
action would be taken to create a successor committee along
the general lines of the body now provided by law.
I urge the enactment of H.R. 8816.
- 4 for U. S. industry and finance.
4.
Measures for reviewing and correcting abuses in the
use of private foundations.
- 3 -
t~
Sidney J. Weinberg, Senior Partner, Goldman, Sachs & Co.,
New York;
I
Roger M. Blough, Chairman, United States Steel Corporation,
New York.
Treasury officials attending, in addition to the
Secretary, included Under Secretary Joseph We Barr,
II
- -7
c
~,
( C 1 .-J~/··(.f, , ,,-~~
- --- ' \
'
(': ",
__ J'"
/~. ~.
/'r
.
C_I;(~'
,
/
!l",
/,1/
A~sistant
'I
''1(~:;-'r{-J''
.
v~
/'
f
!/V[;f.--(~
''-,/1\...
- -- -
Secretary Stanley Surrey, Assistant Secretary Robert A.
/1
Wallace, and Deputy Under Secretary Paul Volcker.
The agenda for the meeting included tpe following items:
1.
Policies for maintaining the economic advance.
2.
The balance of payments' position of the United
States international liquidity, and the viability
)
of the international monetary system.
3.
Liberalization of the tax treatment of foreign
investment in the United States, and its significance
~./~
- 2 -
The Chairman of the Liaison Committee is Mr. Harold
Boeschenstein, Chairman of the Owens-Corning Fiberglas
Corporation, Toledo, Ohio.
Other members attending today
were:
Henry C. Alexander, New York, formerly Chairman,
Morgan Guaranty Trust Co.;
G. Keith Funston, President, New York Stock Exchange,
New York;
David Packard, Chairman-,i Hewlett-Packard Company,
Palo Alto, California;
~....
~
.
•
Henry S. Wingate, Chairman, The International Nickel
Company, Inc., Few Yor~;
Frederic G. Donner, Chairman, General Motors Corporation,
New York;
Paul L. Davies, Chairman, FMC Corporation, San Jose,
California;
Eugene N. Beesley, President, Eli Lilly and Company,
Indianapolis, Indiana;
Frank R. Milliken, President, Kennecott Copper
Corporation, New York;
W.B. Murphy, Chairman of the Business Council and
President, Campbell Soup Company, Camden, New Jersey.
Members not attending today were:
FOR IMMEDIATE RELEASE
TREASURY OFFICIALS HOLD FIRST MEETING
WITH NEW BUSINESS COUNCIL
CONSULTATIVE COMMITTEE
Secretary Henry H. Fowler and other Treasury officials
met today with members of the newly organized Treasury
Consultative Committee of the Business Council.
The committee was proposed at a Business Council
meeting in Hot Springs, Virginia, last May 8, by Secretary
Fowler, who said that "the principal function of our
consultation should be to keep up a two-way exchange and
dialogue on areas of mutual concern to the Treasury and to
the business community."
Today's meeting, held in the Treasury, began at 11:00 A.M.,
extended through luncheon, and ended at
-------•
TREASURY DEPARTMENT
July 8, 1965
FOR IMMEDIATE RELEASE
TREASURY OFFICIALS HOLD FIRST MEETING WITH NEW
BUSINESS COUNCIL CONSULTATIVE COMMITTEE
Secretary Henry H. Fowler and other Treasury officials
met today with members of the newly organized Treasury
Consultative Committee of the Business Council.
The committee was proposed at a Business Council meeting
in Hot Springs, Virginia, last May 8, by Secretary Fowler, who
said that "the principal function of our consultation should
be to keep up a two-way exchange and dialogue on areas of
mutual concern to the Treasury and to the business community."
Today's meeting, held in the Treasury, began at
11:00 A.M., extended through luncheon, and ended at 5:00 P.M.
The Chairman of the Liaison Committee is Mr. Harold
Boeschenstein, Chairman of the Owens-Corning Fiberglas
Corporation, Toledo, Ohio. Other members attending today
were:
l.
Henry C. Alexander, New York, formerly
Chairman, Morgan Guaranty Trust Company;
Eugene N. Beesley, President, Eli Lilly and Company,
Indianapolis, Indiana;
Paul L. Davies, Chairman, FMC Corporation,
San Jose, California;
Frederic G. Donner, Chairman, General Motors Corporation,
New York;
G. Keith Funston, President, New York Stock Exchange,
New York;
F-116
- 2 Frank R. Milliken, President, Kennecott Copper
Corporation, New York;
David Packard, Chairman, Hewlett-Packard Company,
Palo Alto, California;
Henry S. Wingate, Chairman, The International
Nickel Company, Inc., New York;
Ex Officio:
W. B. Murphy, Chairman of the Business
Council and President, Campbell Soup
Company, Camden, New Jersey.
Members not attending today were:
Roger M. Blough, Chairman, United States Steel
Corporation, New York;
Sidney J. Weinberg, Senior Partner, Goldman,
Sachs & Company, New York.
Treasury officials attending, in addition to the Secretary,
included Under Secretary Joseph W. Barr, Assistant Secretary
Stanley Surrey, Assistant Secretary Merlyn N. Trued, Assistant
Secretary Robert A. Wallace, and Deputy Under Secretary
Paul Volcker.
The agenda for the meeting included the following items:
1.
Policies for maintaining the economic advance.
2.
The balance of payments position of the
United States, international liquidity, and
the viability of the international monetary
system.
3.
Liberalization of the tax treatment of foreign
investment in the United States, and its
significance for U. S. industry and finance.
000
- 12 will 8ee that democracy ia the aystea that give. the 70utb
of each generation the widest chanee to . e t the cballeD...
it senses.
And in saying tbis 1
818
not . .king an effort to be
either brief or modest, .a I alway. _
the operations of the Treasury.
000
wben apeakilll .f
- 11 generation.
1 am one of tho8e who believe that rII1 ' .... nt1.
dealt with its main problems -- world war, and cbroalc .. ~.
instability -- rather well.
And I am one of those who
beL_eve your generation will do at lea.t as well with it ••
problema.
In coming to work in your Federal
Cove~t
this summer you are gaining an invaluable insight into the
J~y-by-day
realities of the challenge of democracy to youth.
and i.ndeed to all of us.
I think that what you aee of
American government in operation will strengthen the belief
you Lnbibed in your homes and schools th.at our .yst.,
howeve r much it may need to be improved -- and you will
have your day for making imp;YWVements
in
tt-- 18 the belt,
the mos t hu;nan and humane, the most orderly and the . a t
bene.ricial syste;n that mankind haa yet invented for keapial
tilt: peace anc 'lULing progress.
If you look around, 1"
- .Lv -
b~fore
his iello\! raen .::md before his govemment, the equal
riP'hts
of all before the law and in our daily lives, the
c.'
'Worth of honest work, leve for our fellow men, r ••pect for
the ideas of others, and willingaess to accept
the
res!)onsibilities as well as the privileges of freedom.
Nov;, it seems to me that we could say that thea. value.
add up to a belief that i! democracy itself, a belief that
decent people, trying with respect for one another regardlell
of race or creed, to understand and do something about their
problems, generate a collective wisdom that is superior to
any centrally planned direction of human activities.
I may not be entirely sure on all occaaion. what you
young people
as "square. ,.
~llean
by some of your words. such, for ill8taace,
But I !!! sure that young people today an ill
no real way diifcrent than the young people of my
own
- 9 -
great before, because we find ourselves now in a t1_ of
such rapid and deep going change -- scientific, ,ocial,
teclmological, political, and cultural change -- that you
yOWlg
people are called upon to take in and dig.lt almo.t
universal breaks with the past, and yet to re.....r aDd
treasure the old value. of democracy.
In this welter of change that is all about UI, it 1.
easy to lose sight of old values.
But it is a good idea to try to keep thea 1n aind, for
they are the tbings that do
!!2.t change, and they
an the
yardsticks that we can use to judge, and to accept or rej.ct,
proposals for change in other things.
These old values are the foundation atona. of
socjety and
lllUSt
lmderpin the Great Society.
aD, fna
The,. an
such
simple but essential matters as the dignity of the tDdi~l
- 8 cen'~ral
meetings, attended by students working in all
government branches.
The program i8 itself a demonstration
of the President's conviction that if the Great Society
he :ts trying to help into being in the United Stat.. i. to
bec~ne
a reality, our young people must have a good under-
standing of the role of government in a free aociety --
what it cnn do and cannot or should not do, and bow in fact,
your Federal Government actually goes about ita work.
!bi.
Second, about the challenge of democracy to youth.
is probably greater today than it baa been in generationa,
perhaps since the very earliest days of the Republic.
It
is true we have been through many trials in the p•• t 189
years, in which our youth has been instrumental each tt.8
in saving and preserving American democracy.
But the
challenge of democracy to youth may never bave been eo
bureaus and .najor off ices.
I
ale
thin~
that you ~ill get from the speakers who are followu.
ao appraisal of the link between citizen and govem.nt --
and don' t forget that government is operated by citizen. -- that
will give you something to ponder on with re8pect to the chll-
lenge that democracy offers to youth these days.
ltk~
But I would
to add just a word or two of general observations.
First, about tbe nature of this meeting.
This 1••
me.ting of thelDOre than 375 YOlmg people employed for the
summer by the Treasury Dep.~wtment in the Washington area,
including over 160 employed under the Pre.ldent'. Youth
Opportunity Campaign.
The meeting ia part of President JobDton',
Whi (e House Seminar Program, aimed at providing you, tOI.tber
~l~h
your
wor~ experience
in the government, with. better
understanding of the function of government in our dealDcl'atlc
society, as pert of your educational C'll"eec
Later
tIIen vUl"
- 6 mainly -- sees to the safety of ports and shipping.
In
this last respect the Treasury even operates ligbtboua•• ,
and its computors, besides such humdrum taak. 8. prepariDI
checKs, also keep watch on the movements of merchant ships
in the Atlantic.
Besides all that, the Mint, which 1s part of the
Treasury, makes all the nation'. coins, and, ve hope, wl11
soon now be tuming out a new, modem coinage, and the
Bureau of Engraving and Printing makes all of the nat1eD'.
paper llIOl1ey.
Well, that leaves out a good deal, but .ince I ...
strictly enjoined not to trumpet the Treasury'. virtue. _.
on the theory, as I suppose, that the, are ..If evtdeDt _.
I must leave this subject, except to
s.y that .e do all tblJ
with only 88,000 people e~loyed by the Trea.ury'. 13
- 5 -
catching counterfeiters, halting amuggling and gun ruaniDI.
and protecting the lives of the President and the Vic.
President and their families.
If you .Ik bow the
~ ••ury
got inCO all of this, it is becauae, in its long hi.tory,
the Customs Service, the Secret Service, and the .arcotic.
Bureau became lodged in the Treasury, and are .tlll there.
Some of you in this room, I predict J will one day ... pa-t
of these Treasury law enforcement agencies.
But that' 8 not
8
full picture, by aDY
Mana,
variety of careers available in the Treasury.
runs a
to it.
.avy, and, of courae,
of the
The Treaaury
there i . an air aN attadle"
This is the Coaet Guard, something el •• that lit
attached to the Treasury in the long cour•• of itl hlat..,.
The Coast Guard, operating by 8ea and b1 air, patrol.
shores, takes on duty even
8S
our
far away •• Vietaa., ... --
- 4 As tor my other points -- and I . . aun that I will DOt
be regarded as blowing the Treaaury'l born bare, but _rely
as reciting a few facts -- what other agency could . .tob
this line up-;
The Treasury collects over 100 billion dollewa • , ••~
in taxes through ita Internal Revenue Service, alUl ,.,. it
out again in IDOre than 300 million cbec:1u
a year.
E.'.~_~
Some 13,000 accountants, 1_ p'.duatea and other
tax technicians work in the lllteroal levenue " n l. . , ad
tilere are other tbouaaucls operating computers
taat ,npan
cb.ec 7(S and savings bonda, and who . .0 tbe T1:euury t •
management, persOIUlel and general adtainlatrative "1'V1cd.
Over 5,000 Trea.ury enforce..-nt aaent.
a~e
bueJ t
around the world, figbting the illicit trade in uZ'COticl,
- 3 -
we collect, and disburse.
There are • number of other
respects in which the Treasury'. ,uperiority could be
demonstrated, but in the interests botb of Drevity aad
lDOdesty I will leave what I have said unadomed.
the Treasury .peakerl who
...ldel,
follow me will prove it. hotk
by the wisdom of wbat tbey s.y and the obvio_ . . .ileac.
of the backgroUDd of thelr bur••• , out of wbiola tile,.
I will only add that the lIre •• ury ca. have
any, peers in government servica for alatlOur.
variety -- and sheer bard work.
f...
.,.*.
if
uolt~,
Aa reprd. the lAIc . .lat,
I don t t want to be understoo4 •• aaylng that . . doll· t bIw
our
.lec~
periods.
We do.
There wa• • tt.e l •• t week, 1
be 1 ieve it want on for 20 JJllnut•• , when tbin..
at the Treasury.
wen dull
But we try to avoid such ..... t . . . . ., fIIr
the most p8rt, we succeed.
- 2 much better for getting out of thea.
I have careful instructlona on wbat I . . to
today.
.0
ben
I won I t tell you what I II! to do fOl' fear tbat I
might not do it to your satisfaction.
ast
tell you wbat I a. tn.tructed .!.!!S to do.
I a.
I _
sotaa
Dot
to
te
blow the Treasury born too laudly or too long, bee....
this 1& to .,. a general orientation ... ting in lceepln.
with the theme of ' Deaaocracy' a Challenge to Youth."
So, where the Treaaury i . concerned, I vi11 be both
modest and brief.
I will just say that altbougb the
TN'."
is only the second oldest Depart.-nt of the """a1 .a_rilMal
it ia undoubtedly the beat and the
1808t
iIIpow'tant.
the Goverruaent could not operate at all without tbI
In fact,
all..,-
REMARKS OF THE HONORABLE HENRY H. FtXtlLER
SECnETARY OF THE TREASURY
AT THE TREASURY SESSION OF THE WHITE HOUSE SEMINAR PIOGJAH
FOR SUMMER STUDENTS AND youm OPPOltTUNITf CAMPAIGH EMPLO!IIS I
ON CHALLENGES TO TODAY' S YOUTH
AT THE DEPARTMENT OF e<:HIERCE AUDlTOB.IUH
FRIDAY t JULy 9, 1965, 2 P.M., EDT
Hy role here today i8 the light and agree.ble ooe of
greeting you.
I am glad of that for it means that I w111
not be getting into your bad grace. by speaking v.ry loDg.
And it al.o mean. that I can leave to otbers the v.1ahtler
matter. that -- as I
atD
given to understand the 18DSua..
you speak -- might be considered "square."
Beaven forbid that a Secretary of the Trea.U%J, ...aa
his other burdens, should also be thought to be " ....1'•• "
It is easy to see how inappropriate that would be.
Ita """
Secretary of the Treasury would tell you, be apaoda molt of
his time in tight cornera, and, clearly, a round .bape 1.
TREASURY DEPARTMENT
Washington
FOR RELEASE ON DELIVERY
REMARKS OF THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
AT THE TREASURY SESSION OF THE WHITE HOUSE SEMINAR PROGRAM
FOR SUMMER STUDENTS AND YOUTH OPPORTUNITY CAMPAIGN EMPLOYEES ,
ON CHALLENGES TO TODAY'S YOUTH
AT THE DEPARTMENT OF COMMERCE AUDITORIUM
FRIDAY, JULY 9, 1965, 2 P.M. EDT
My role here today is the light and agreeable one of
greeting you. I am glad of that for it means that I will not
be getting into your bad graces by speaking very long. And it
also means that I can leave to others the weightier matters that
as I am given to understand the language you speak -- might be
considered "square."
Heaven forbid that a Secretary of the Treasury, among his
other burdens, should also be thought to be "square." It is
easy to see how inappropriate that would be. As any Secretary
of the Treasury would tell you, he spends most of his time in
tight corners, and, clearly, a round shape is much better for
getting out of them.
I have careful instructions on what I am to do here today.
I won't tell you what I am to do for fear that I might not do it
to your satisfaction. But I am going to tell you what I am
instructed not to do. I am not to blow the Treasury horn too
loudly or too long, because this is to be a general orientation
meeting in keeping with the theme of Democracy's Challenge to
Youth.
So, where the Treasury is concerned, I will be both modest
and brief. I will just ~ay that although the Treasury is only
the second oldest Department of the Federal Government, it is
undoubtedly the best and the most important. In fact, the
Government could not operate at all without the money we collect,
and disburse. There are a number of other respects in which the
- 2 Treasury's superiority could be demonstrated, but in the interests
both of brevity and modesty I will leave what I have said
unadorned. Besides, the Treasury speakers who follow me will
prove it, both by the wisdom of what they say and the obviou~
excellence of the background of their bureaus, out of which they
speak.
I will only add that the Treasury can have few, if any,
peers in government service for glamour, excitement, variety
and sheer hard work. As regards the last point, I don't want
to be understood as saying that we don't have our slack periods.
We do. There was a time last week, I believe it went on for
20 minutes, when things were dull at the Treasury. But we try
to avoid such moments, and, for the most part, we succeed.
As for my other points -- and I am sure that I will not
be regarded as blowing the Treasury's horn here, but merely as
reciting a few facts -- what other agency could match this line
up:
The Treasury collects over 100 billion dollars a year
in taxes through its Internal Revenue Service, and pays it
out again in more than 300 million checks. Some 13,000
accountants, law graduates and other tax technicians work
in the Internal Revenue Service, and there are other thousands
operating computers that prepare checks and savings bonds,
and who man the Treasury's management, personnel and general
administrative services.
Over 5,000 Treasury enforcement agents are busy, around the
world, fighting the illicit trade in narcotics, catching
counterfeiters, halting smuggling and gun running, and protecting
the lives of the President and the Vice President and their
families. If you ask how the Treasury got into all of this, it
is because, in its long history, the Customs Service, the Secret
Service and the Narcotics Bureau became lodged in the Treasury,
and are'still there. Some of you in this room, I predict, will
one day be part of these Treasury law enforcement agencies.
- 3 -
But that's not a full picture, by any means, of the
variety of careers available in the Treasury. The Treasury
runs a navy, and, of course, there is an air arm attached to
it. This is the Coast Guard, something else that got attached
to the Treasury in the long course of its history. The Coast
Guard, operating by sea and by air, patrols our shores, takes
on duty even as far away as Vietnam, and -- mainly -- sees to
the safety of ports and shipping. In this last respect the
Treasury even operates lighthouses, and its computers, besides
such humdrum tasks as preparing checks, also keep watch on the
movements of merchant ships in the Atlantic.
Besides all that, the Mint, which is part of the Treasury,
makes all the nation's coins, and, we hope, will soon now be
turning out a new, modern coinage, and the Bureau of Engraving
and Printing makes all of the nation's paper money.
Well, that leaves out a good deal, but since I was strictly
enjoined not to trumpet the Treasury's virtues -- on the theory,
as I suppose, that they are self evident -- I must leave this
subject, except to say that we do all this with only 88,000
people employed by the Treasury's 13 bureaus and major offices.
I think that you will get from the speakers who are following
me an appraisal of the link between citizen and government -and don't forget that government is operated by citizens -- that
will give you something to ponder on with respect to the challenge
that democracy offers to youth these days. But I would like to
add just a word or two of general observations.
First, about the nature of this meeting. This is a
meeting of the more than 375 young people employed for the summer
by the Treasury Department in the Washington area, including over
160 employed under the President's Youth Opportunity Campaign.
The meeting is part of President Johnson's White House Seminar
Program, aimed at providing you, together with your work
experience in the government, with a better understanding of
the function of government in our democratic society, as part of
your educational careero Later, there will be central meetings,
- 4 attended by students working in all government branches. The
program is itself a demonstration of the President's conviction
that if the Great Society he is trying to help into being in
the United States is to become a reality, our young people
must have a good understanding of the role of government in a
free society -- what it can do and cannot or should not do,
and how in fact, your Federal Government actually goes about its
work.
Second, about the challenge of democracy to youth. This
is probably greater today than it has been in generations,
perhaps since the very earliest days of the Republic. It is
true we have been through many trials in the past 189 years, in
which our youth has been instrumental each time in saving and
preserving American democracy. But the challenge of democracy
to youth may never have been so great before, because we find
ourselves now in a time of such rapid and deep going change -scientific, social, technological, political, and cultural
change -- that you young people are called upon to take in and
digest almost universal breaks with the past, and yet to remember
and treasure the old values of democracy.
In this welter of change that is all about us, it is easy
to lose sight of old values.
But it is a good idea to try to keep them in mind, for they
are the things that do not change, and they are the yardsticks
that we can use to judge:-and to accept or reject, proposals for
change in other things.
These old values are the foundation stones of any free
society and must underpin the Great Society. They are such simple
but essential matters as the dignity of the individual before
his fellow men and before his government, the equal rights of all
before the law and in our daily lives, the worth of honest work,
love for our fellow men, respect for the ideas of others, and
willingness to accept the responsibilities as well as the
privileges of freedom.
- 5 -
Now, it seems to me that we could say that these values
add up to a belief that is democracy itself, a belief that
decent people, trying with respect for one another regardless
of race or creed, to understand and do something about their
problems, generate a collective wisdom that is superior to any
centrally planned direction of human activities.
I
may not be entirely sure on all occasions what you
young people mean by some of your words, such, for instance, as
"square." But I ~ sure that young people today are in no
real way different than the young people of my own generation.
I am one of those who believe that my generation dealt with its
main problems -- world war, and chronic economic instability -rather well. And I am one of those who believe your generation
will do at least as well with its problems. In coming to work
in your Federal Government this summer you are gaining an
invaluable insight into the day-by-day realities of the challenge
of democracy to youth, and indeed to all of us. I think that
what you see of American government in operation will strengthen
the belief you Dnbibed in your homes and schools that our system,
however much it may need to be improved -- and you will have
your day for making Dnprovements in it -- is the best, the most
human and humane, the most orderly and the most beneficial
system that mankind has yet invented for keeping the peace and
making progress. If you look around, you will see that democracy
is the system that gives the youth of each generation the widest
chance to meet the challenges it senses.
And in saying this I am not making an effort to be either
brief or modest, as I always am when speaking of the operations
of the Treasury.
000
- 12 particular policy was going to work.
Today, we see the results of this down-to-earth,
practical, moderate approach in an economy which daily breaks
new records and gives every promise of strong, healthy,
and continued growth in the future.
.
~-", ~
" ...
__
J
~ ........
~
This intelligent examination of all possible aspects of
.. ', •....
a sing le que s t ion is what I ca 11 "the LBJ, .way·rf
0
no better way, in my
opinion~'
The re is
to run our government.
I
recommend it tgyou as an essential tool in,your own thinking
to heTp you become a more informed and more effective citizen.
- 11 -
I would like to urge each of you in discussing this
subject to do as we have done in recent years in the
government, to set aside doctrinaire views, rigid theories,
and harsh judgments, and to replace these "knee-jerk
reactions" with an intelligent, responsible, and moderate
attitude of inquiry.
You may have heard talk of what is
called "the new economics" of this Administration.
assure you there is no "new economics."
Let me
All we have done is
to replace the "old orthodoxy" with a "new pragmatism."
What
this means is that we have evaluated economic decisions and
every economic policy not on the basis of old beliefs or old
theories, but on the basis of the latest and most up-to-date
information we could get on how this particular program or
- 10 that any responsible person expected, and at the same time
funds have been found to create and expand such vital programs
as the war on poverty, aid to education, medical help for the
aged, the fight against chronic disease, increased and improved
federal housing, and all the other programs that are moving
us toward the Great Society.
I would like to give you one piece of advice to keep in
mind in considering and discussing economic policy.
You will
soon be discussing economic policy if you aren't already, because
more and more economic policy is becoming a subject of
discussion among ordinary citizens, as more and more the people
of our country are becoming aware of how important it is to both
their national and their personal welfare.
- 9 -
vast and our growing nation may well require increases in
expenditures.
If these increases are made for sound and necessary
reasons, and if they represent money that is well and
wisely spent for the benefit of all the people, there is
no reason to oppose these increases simply because the
Federal Government is spending more money.
I can assure you from firsthand experience that President
Johnson is not going to let a dollar of the federal budget
go out without knowing just where that dollar is going.
There is no more zealous guardjan of the federal revenues in
the Executive Branch, in the Congress, or in the public
than the President himself.
Thanks to his personal efforts,
federal expenditures have been held far below the levels
- 8 -
which banks loan to their customers.
Fiscal policy concerns the operations of the government
on the economy.
It concerns both expenditure policy -- how
much the government spends and on what programs it chooses
to spend -- and tax policy -- how much the government collects
in taxes and how it collects it.
In recent years, we have maintained a very flexible
monetary policy and we have chosen to provide economic
stimulus and the basis for future growth largely through the
use of tax policy.
That doesn't mean that from now on all economic policy
of the United States Government is going to be centralized
around tax policy.
I happen to believe that there will be future tax cuts,
but at the same time I'm well aware that the needs of our
- 7 Monetary policy concerns the amount of money and credit
which is available in the economy.
It is controlled,in part,
by the government as it markets government securities in order
to finance the public debt.
It is also controlled by the
Federal Reserve Board, an independent agency of the government -actually our national bank -- which controls the size of
bank reserves and has the power to control credit in a
number of ways.
For instance, the Federal Reserve Board can set the margin
level on stock exchanges and thus control the degree to which
stocks can be purchased on credit.
And the Federal Reserve
Board also sets the rediscount rate, which is the interest rate
charged to banks borrowing money from the federal reserve system.
This,in turn, affects the rate and the availability of money
- 6 -
In case any of you are worried that we may be so generous
with tax cuts that we may be left without any money to run
the government, let me point out that by the start of next
year, our tax reduction measures will have lightened the
federal tax burden by about $18 billion.
Yet our estimates
show that in the 5 years, fiscal 1961 through fiscal 1966 -the period which covers all of our various tax cuts -federal revenues increased by $17.8 billion.
That is about
70 percent more than the increase of federal revenues for
the previous 5 years during which there were no tax cuts.
I don't want to leave you with the impression that tax
cuts are the only way to strengthen our economy.
Economic
policy can be separated into two broad fields, monetary policy
and fiscal policy.
- 5 -
But an economy does not exist in a vacuum.
Economic
decisions affect people and we were concerned with this aspect.
That is why we cut taxes for poor people more than for rich
people.
over-all
The/tax cut averaged 20 percent for individuals --
but people at the bottom of the income scale got a tax cut
of approximately 40 percent.
Furthermore, as President Johnson recently indicated,
any future tax reduction will pay particular attention to
the needs of low-income people.
President Johnson has just signed into law a sweeping
reduction in federal excise taxes.
This tax reduction removes
so-called nuisance taxes on thousands of items and further
helps to increase consumer purchasing power by stretching the
dollar.
- 4 American business, it provided individuals with greatly
increased purchasing power and helped to fuel our continued
economic expansion.
It is no exaggeration to say that a million people are
working today who would not be working without that tax cut.
I don't want you to think, however, that we cut taxes
simply to feed more fuel into the economic engine.
another reason which is a little more sophisticated.
We had
The
other reason was the need to reduce the high wartime tax
rates which had been pulling too much money out of our economy
and holding us back.
These high tax rates had acted like an
emergency brake on our economic growth.
By removing them, we
modernized our tax policy so that it can make a maximum
contribution to our future growth.
- 3 -
One of the major reasons for this prosperity is tax
policy.
We cut business taxes twice in 1962, in order to give
business money to invest in new and expanded production.
We
did this because we knew that in order to maintain prosperity
once it was achieved, business would have to have money to
invest.
This investment is absolutely essential to create
more jobs.
As we create more jobs and better jobs, incomes
go up, purchasing power goes up, business can sell more goods
and this in turn encourages more investment.
But we did not stop there.
Last year, President Johnson
signed into law the biggest corporate and individual tax
cut in history.
This year alone that tax cut was worth
$14 billion.
This not only strengthened the investment potential of
- 2 -
A little over four years ago the United States was in the
midst of the fourth recession since World War II.
A recession,
as you know, is a business slump, but it affects not only
business but the entire nation and many people in it.
In May of 1961, the unemployment rate actually rose above
7 percent.
That means that 7 out of every 100 people willing
and able to work in this country couldn't find a job.
Today, I'm happy to say that situation is much improved.
Instead of the boom and bust cycles which characterized the
first 15 years of the postwar period, we have created and
sustained the longest peacetime economic expansion in our
history.
The unemployment rate has been brought below 5 percent
and our country is enjoying the strongest and healthiest
period of prosperity we have ever seen.
D R AFT
REMARK.S OF THE HONORABLE JOSEPH W BARR
UNDER SECRETARY OF THE TREASURY
AT THE TREASURY SESSION OF THE WHITE HOUSE SEMINAR PROGRAM
FOR SUMMER STUDENTS AND YOUTH OPPORTUNITY CAMPAIGN EMPLOYEES,
ON TREASURY ROLLS IN THE WASHINGTON, D.C., AREA
AT THE DEPARTMENT OF COMMERCE AUDITORIUM
FRIDAY, JULY 9, 1965, 2:15 P.M., EDT
0
FEDERAL TAX POLICY AND THE NATIONAL ECONOMY
Tax policy is one of the most, if not the most, important
considerations of the United States Treasury.
For tax policy means much more than just how much you and
the other people in the United States will pay in taxes this
year, next year, and the years to come.
Because tax policy affects directly or indirectly almost
every economic decision, private or public, made in our nation,
it is vitally important in determining how many people have
jobs, what kind of jobs they have, how much they get paid,
how they spend their income, and what types of goods and service
and how much goods and services we as a nation produce.
TREASURY DEPARTMENT
Washington
FOR RELEASE UPON DELIVERY
REMARKS OF THE HONORABLE JOSEPH W. BARR
UNDER SECRETARY OF THE TREASURY
AT THE TREASURY SESSION OF THE WHITE HOUSE SEMINAR PROGRAM
FOR SUMMER STUDENTS AND YOUTH OPPORTUNITY CAMPAIGN EMPLOYEES ,
ON TREASURY ROLLS IN THE WASHINGTON, D.C., AREA
AT THE DEPARTMENT OF COMMERCE AUDITORIUM
FRIDAY, JULY 9,1965,2:15 P.M., EDT
FEDERAL TAX POLICY AND THE NATIONAL ECONOMY
Tax policy is one of the most, if not the most, important
considerations of the United States Treasury.
For tax policy means much more than just how much you and
the other people in the United States will pay in taxes this
year, next year, and the years to come.
Because tax policy affects directly or indirectly almost
every economic decision, private or public, made in our nation,
it is vitally important in determining how many people have
jobs, what kind of jobs they have, how much they get paid,
how they spend their income, and what types of goods and services
and how much goods and services we as a nation produce.
A little over four years ago the United States was in the
midst of the fourth recession since World War II. A recession,
as you know, is a business slump, but it affects not only
business but the entire nation and many people in it.
In May of 1961, the unemployment rate .actually rose above
7 percent. That means that 7 out of every 100 people willing
and able to work in this country couldn't find a job.
Today, I'm happy to say that situation is much improved •.
Instead of the boom and bust cycles which characterized the f~rst
15 years of the postwar period, we have created and sustained
the longest peacetime economic expansion in our history. The
unemployment rate has been brought below 5 percent and our
country is enjoying the strongest and healthiest period of
prosperity we have ever seen.
- 2 -
One of the major reasons for this prosperity is tax policy.
cut business taxes twice in 1962, in order to give business
noney to inve s t in new and expanded produc t ion. We did this
)ecause we knew that in order to maintain prosperity once it
~as achieved, bus iness would have to have mon~y to inves t.
This
investment is absolutely essential to create more jobs. As we
:reate more jobs and be tter jobs, incomes go up, purchas ing power
~oes up, business can sell more goods and this in turn encourages
nore inves tment.
~e
But we did not stop there. Last year, President Johnson
3igned into law the biggest corporate and individual tax cut
in history. This year alone that tax cut was worth $14 billion.
This not only strengthened the investment potential of
business, it provided individuals with greatly increased
lUrchasing power and helped to fuel our continued economic expansion.
~erican
It is no exaggeration to say that a million people are working
:oday who would not be working without that tax cut.
I don't want you to think, however, that we cut taxes
limply to feed more fuel into the economic engine. We had
mother reason which is a little more sophisticated. The other
:eason was the need to reduce the high wartime tax rates which
~d been pulling too much money out of our economy and holding
15 back.
These high tax rates had acted like an emergency brake
m our economic growth. By removing them, we modernized our tax
lolicy so that it can make a maximum contribution to our future
~rowth.
But an economy does not exist in a vacuum. Economic
lecisions affect people and we were concerned with this aspect.
:hat is why we cut taxes for poor people more than for rich people.
be over-all tax cut averaged 20 percent for individuals -- but
~ople at the bottom of the income scale got a tax cut of
pproximately 40 percent.
Furthermore, as President Johnson recently indicated, any
uture tax reduction will pay particular attention to the needs
f low-income people.
President Johnson has just signed into law a sweeping reduction
n federal excise taxes. This tax reduction removes so-called
uisance taxes on thousands of items and further helps to increase
onsumer purchasing power by stretching the dollar.
- 3 -
In case any of you are worried that we may be so generous
with tax cuts that we may be left without any money to run the
government, let me point out that by the start of next year,
our tax reduction measures will have lightened the federal tax
burden by about $18 billion. Yet our estimates show that in
the 5 years, fiscal 1961 through fiscal 1966 -- the period
which covers all of our various tax cuts -- federal revenues
increased by $17.8 billion. That is about 70 percent more than
the increase of federal revenues for the previous 5 years during
which there were no tax cuts.
I don't want to leave you with the impression that tax cuts
are the only way to strengthen our economy. Economic policy can
be separated into two broad fields, monetary policy and fiscal
policy.
Monetary policy concerns the amount of money and credit
which is available in the economy. It is controlled, in part,
by the government as it markets government securities in order
to finance the public debt. It is also controlled by the Federal
Reserve Board, an independent agency of the government -actu~lly our national bank
which controls the size of bank
reserves and has the power to control credit in a number of ways.
For instance, the Federal Reserve Board can set the margin
level on stock exchanges and thus control the degree to which
stocks can be purchased on credit. And the Federal Reserve
Board also sets the rediscount rate, which is the interest rate
charged to banks borrowing money from the federal reserve system.
This, in turn, affects the rate and the availability of money
which banks loan to their customers.
Fiscal policy concerns the operations of the government
on the economy. It concerns both expenditure policy -- how
much the government spends and on what programs it chooses
to spend -- and tax policy -- how .much the government collects
in taxes and how it collec ts it.
In recent years, we have maintained a very flexible
monetary policy and we have chosen to pr0vide economic stimulus
and the basis for future growth largely through the use of tax
policy.
That doesn't mean that from now on all economic policy of
the United States Government is going to be centralized around
tax policy.
- 4 I happen to believe that there will be future tax cuts, but
at the same time I'm well aware that the needs of our vast and
our growing nation may well require increases in expenditures.
If these increases are made for sound and necessary reasons,
and if they represent money that is well and wisely spent for the
benefit of all the people, there is no reason to oppose these
increases simply because the Federal Government is spending more
money.
I can assure you from firsthand experience that President
Johnson is not going to let a dollar of the federal budget go
out without knowing just where that dollar is going. There is
no more zealous guardian of the federal revenues in the Executive
Branch, in the Congress, or in the public than the President
himself. Thanks to his personal efforts, federal expenditures
have been held far below the levels that any responsible person
expected, and at the same time funds have been found to create
and expand such vital programs as the war on poverty, aid to education, medical help for the aged, the fight against chronic
disease, increased and improved federal housing, and all the other
programs that are moving us toward the Great Society.
I would like to give you one piece of advice to keep in
mind in considering and discussion economic policy. You will
soon be discussing economic policy if you aren't already, because
more and more economic policy is becoming a subject of discussion
among ordinary citizens, as more and more the people of our
country are becoming aware of how important it is to both their
national and their personal welfare.
I would like to urge each of you in discussing this subject
to do as we have done in recent years in the government, to set
aside doctrinaire views, rigid theories, and harsh judgments, and
to replace these "knee-j erk reactions" with an intelligent,
responsible, and moderate attitude of inquiry. You may have heard
talk of what is called" the new economics" of this Administration.
~et me assure you there is no "new economics." All we have done
is. to replace the "old orthodoxy" with a "new pragmatism." What
thls means is that we have evaluated economic decisions and every
economic policy not on the basis of old beliefs or old theories,
but on the basis of the latest and most up-to-date information
we could get on how this particular program or particular policy
was going to work.
- 5 -
Today, we see the results of this down-to-earth, practical,
moderate approach in an economy which daily_ breaks new records
and gives every promise of strong, healthy, and continued growth
in the future.
000
TREASURY DEPARTMENT
WASHINGTON
Statement of
Joseph W. Barr
Under Secretary of the Treasury
before the
Committee on Ways and Means
of the
U. S. House of Representatives
on
Proposals Relating to Firearms Control
July 12, 1965
-------------------------------------------------------------Mr. Chairman, I welcome the opportunity to appear in
support of the enactment of the Administration's bills introduced by Mr. Murphy and Mr. Multer, which I deem to be of
great importance to the welfare of this country and its
citizens.
Mr. Sheldon S. Cohen, the Commissioner of Internal
Revenue is here with me.
F-117
He will discuss in more detail
- 2 -
aspects of the Administration's proposals which I will cover
in a general way.
The bill which would amend the Federal Firearms Act
regulating interstate and foreign commerce in firearms is
designed to implement the recommendations which the President
set forth with respect to firearms control in his message to
the Congress of March 8, 1965, relating to law enforcement
and the administration of justice.
The President, in that message, described crime as "a
malignant enemy in America!s midst" of such extent and
seriousness that the problem is now one "of great national
concern."
The President also stated, and I quote from his
message, "The time has come now, to check that growth, to
contain its spread, and to reduce its toll of lives and
property."
As an integral part of the war against the spread of
lawlessness, the President urged the enactment of more
- 3 -
effective firearms control legislation, and cited as a
significant factor in the rise of violent crime in the
United States "the ease with which any person can acquire
firearms."
The 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 mayors and
other local public officials to review their existing
legislation in this critical field with a view to keeping
lethal weapons out of the wrong hands."
However, the
President also clearly recognized in his message that effective State and local regulation of firearms is not
feasible unless we strengthen at the Federal level controls
over the importation of firearms and over the interstate
shipment of firearms.
The President advised that he was
proposing draft legislation to accomplish these aims, and
stated, and 1 quote, "1 recommend this legislation to the
Congress as a sensible use of Federal authority to assist
- 4 local authorities in coping with an undeniable menace to
law and order and to the lives of innocent people."
H.R.
6628, introduced by Mr. Murphy, and H.R. 6783, introduced by
Mr. Multer, reflect the legislation amending the Federal
Firearms Act, to which the President referred.
I should like now briefly to state my understanding of
what the Administration bill to amend the Federal Firearms
Act would do and, in order to eliminate misconceptions,
what it would not do.
Among other things, the bill would:
(1)
Prohibit the shipment of firearms in
interstate commerce, except between Federallylicensed manufacturers, dealers and importers;
the purpose of this is to control the distribution
of firearms interstate so that states may more
effectively control the traffic intrastate.
(2)
Prohibit sales of firearms by Federal
- 5 -
licensees to persons under 21 years of age, except
that sales of sporting rifles and shotguns could
continue to be made to persons of 18 years of
age;
(3)
Prohibit a Federal licensee from selling
a firearm (other than a rifle or shotgun) to any
person who is not a resident of the State where
the licensee is doing business;
(4)
Curb the flow into the United States of
surplus military weapons and other firearms not
suitable for sporting purposes;
(5)
Bring under effective Federal control
the importation and interstate shipment of large
caliber weapons such as bazookas and antitank guns,
and other destructive devices; and
(6)
Revise the licensing provisions of the
Federal Firearms Act, including increases in license
fees, so as to assure that licenses will be issued
only to responsible persons actually engaging in
business as importers, manufacturers and dealers.
- 6 -
What the bill does is to institute Federal controls in
areas where the Federal Government can and should operate, and
where the State governments cannot, the areas of interstate
and foreign commerce.
Under our Federal constitutional system,
the responsibility for maintaining public health and safety
is left to the State governments under their police powers.
Basically, it is the province of the State governments to
determine the conditions under
acquire and use firearms.
which their citizens may
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 institute
controls complementing the steps taken in this bill in order
to deal effectively with this serious menace.
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 fee of $1.00,
demand and obtain a license.
Some fifty or sixty thousand
people have done this, some of them merely to put themselves
- 7 in a position to obtain personal guns at wholesale.
The
situation is wide open for the obtaining of licenses by
irresponsible elements, thus facilitating the acquisition of
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.
Mr. Cohen, whose organization is responsible
for the administration of the Federal Firearms Act will discuss
this aspect in more detail.
One misconception about the AdministrationTs bill to
amend the Federal Firearms Act which has been widely publicized is that it will make it possible for the Treasury
Department to exercise, through the regulatory authority
expressed in the bill, such arbitrary power as to be virtually
dictatorial, and so potentially restrictive as to permit the
elimination of private ownership of guns at the whim of the
Secretary.
This misunderstanding has been fostered by
certain National gun, and wildlife conservation, organizations whose representatives, in testifying at Senate hearings
- 8 on a companion bill, have pointed with alarm to "seven
places" in the bill where regulatory authority is granted
to the Secretary of the Treasury.
You and I know that it is customary for the Congress
to vest discretionary powers in a Government officer to
implement legislation through the issuance of regulations.
Such regulations are necessary to provide flexibility and
to take care of problems Which may be unforeseen by the
law makers.
This flexibility, within the guidelines of
standards and policies laid down by the Congress, inures to
the benefit of the citizen affected as well as to Government.
Moreover, a grant of regulatory authority is not,
and cannot in any sense be, a dictatorial fiat.
Surely
no rational, intelligent individual can seriously maintain
that the Secretary of the Treasury would issue regulations
under this proposed legislation so arbitrary or capricious
or so complicated or impracticable or so burdensome that they
would make Lmpossible the private ownership of guns.
There
is nothing in the bill that would authorize this and if any
attempt were made to do so there is abundant opportunity
for appeal to the courts, the top administrative machinery,
or to the Congress.
- 9 -
Any allegation of this nature, which attempts to
obscure the merits of the bill by raising imaginary fears
of possible maladministration, ignores completely the
Treasury Department's past administrative record as well
as the statutory and Constitutional limitations on executive
authority.
The Secretary of the Treasury has for 27 years
exercised regulatory authority under the Federal Firearms
Act in many of the "seven" areas pointed to by critics of
the bill where details or procedures are to be prescribed
by regulations.
In fact, section 907 of the present law
provides "the Secretary of the Treasury may prescribe such
rules and regulations as he deems necessary to carry out
the provisions of this chapter".
The term, "this chapter",
incidentally, includes the entire Federal Firearms Act.
During these years there has been no regulatory abuse which
can be cited.
I do not believe that there is a single pro-
vision of existing regulations (26 CFR Part 177) which can
be said to be unreasonable or beyond the intent of Congress,
and in the 27-year history of this Act no regulation issued
under it has been held invalid by the courts.
- 10 Irresponsible allegations to the contrary, the bill
does not, and regulations under it can not, seriously interfere with the acquisition, ownership or use of firearms for
sporting purposes, or any other legitimate use. Sportsmen
will continue to be able to obtain rifles and shotguns from
licensed dealers and manufacturers subject only to the
requirements of their respective State laws.
Indeed, they
can travel to another State and purchase a rifle or shotgun
from a licensed dealer there and bring it home with them
without interference.
Only two minor inconveniences may
occur for the sportsmen of this country.
They will not be
able to travel to another State and purchase a pistol or
concealable weapon, and they will not be able to obtain a
mail-order shipment from another State of any type of firearm.
On
this latter point, the inconvenience is more apparent
than real because the large mail-order houses have retail
outlets and the bill will permit intrastate mail-order
shipments to individual citizens from these outlets.
Such minor inconveniences cannot be avoided if the
- 11 -
legislation is to make it possible for the States to regulate
effectively the acquisition and possession of firearms.
Obviously, State authorities cannot control the acquisition
and possession of firearms if they have no way of knowing or
ascertaining what firearms are coming in to their States through
the mails or, in the case of concealable weapons, by personally
being carried across State lines.
Mr. Chairman, there are many other points which could be
made with respect to the Administrationts bill to amend the
Federal Firearms Act.
For example, I think it is self-
evident that minors should not have access to pistols, other
concealable firearms and weapons of vast destructive power,
and that minors under the age of 18 should not have access to
rifles or shotguns.
Today, the people of the United States 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.
- 12 It is absolutely essential that steps such as those proposed
in this bill be taken to bring under control one of the main
elements in the spread of this cancer, the indiscriminate
acquisition of weapons of destruction.
The ease with which any person can acquire firearms
(including criminals, juveniles without the knowledge or
consent of their parents or guardians, narcotic addicts,
mental defectives, armed groups who would supplant duly
constituted public authorities, and others whose possession
of firearms is similarly contrary to the public interest)
is a matter of serious national concern.
The existing Federal controls over interstate and
foreign commerce are not sufficient to enable the States
to effectively cope with the firearms traffic within their
own borders through the exercise of their police power.
Only
through adequate Federal control over interstate and
foreign commerce in firearms, and over all persons engaging
in the business of importing, manufacturing, or dealing in
firearms, can this problem be dealt with, and effective State
and local regulation of the firearms traffic be made possible.
- 13 The Department's experience with the existing
Federal Firearms Act has resulted in a feeling of frustration since the controls provided by it are so obviously inadequate.
In drafting the Administration's
bill we have had in mind these inadequacies and now
have, we believe, a bill which, when enacted, will provide effective controls without jeopardizing or interfering with the freedom of law-abiding citizens to own
firearms for legitimate purposes.
As to the Administration's bill which would amend
the National Firearms Act, H.R. 6629 introduced by
Mr. Murphy and H.R. 6782 introduced by Mr. Multer, there
seems to be a general recognition of its need and no
serious opposition to its objectives.
- 14 The National Firearms Act now provides for Federal
controls, under the taxing power, with respect to gangstertype weapons such as machine guns and sawed-off shotguns.
It has long been felt that stmi1ar controls are needed for
highly destructive weapons such as grenades, rockets, missiles,
and large bore military-type ordnance in the nature of
antitank guns, mortars and grenade launchers.
Although it
is difficult to conceive of any valid reason for their
private ownership, such devices are frequently available
for purchase at stores specializing in military surplus and
there is presently no Federal law effectively regulating
their sale or ownership.
They have found their way into
the hands of lawless and irresponsible elements such as
armed groups who would supplant duly constituted public
authorities and those who recently fired on the United Nations
building.
The Administration's bill to amend the National
Firearms Act is designed to regulate, by taxing, the dealing
in and transfer of these highly destructive devices.
- 15 There appears to be no doubt that Federal controls are
needed in this area.
The Secretary of the Army stressed the
need for effective controls over these weapons in expressing,
to the Director of the Budget, the position of the Department
of Defense on proposed firearms legislation.
The National
Rifle Association in an April 3, 1965 release declared, "That
it would support properly drawn legislation to outlaw dangerous
devices such as bazookas, bombs, antitank guns and other
military-type weapons which have found their way into trade
channels across America.
TI
A trade association of firearms
manufacturers, Small Arms Manufacturers Institute, has also
indicated approval of such controls, in testimony by its
representative, Dr. Hadley, before the Senate Subcommittee
Hearings on S. 1591 (the companion bill to H.R. 6629 and
6782).
The only opposition to controls over these destructive
devices seems to stern from that irresponsible faction which
opposes, on principle, controls of any nature with respect
to firearms or self-appointed "defenders of America Tl who have
formed para-military organizations.
- 16 The bill would also increase to twice the present
rate all of the rates of tax in the National Firearms Act.
The principal rates have not been changed since the original
enacement of the Act in 1934.
Therefore, it is necessary
to increase the rates in order to carry out the regulatory purposes of the Act.
It is recognized that some perfecting changes within
the intent and purpose of the bill to amend the National
Act may be desirable.
Commissioner Cohen, whose testimony
follows mine, will discuss specific proposals to effect
changes in both this bill and the Administration's bill to
amend the Federal Firearms Act.
Enacc.ent of the Administration's bills to amend the
Federal Firearms Act and the National Firearms Act is
needed now to augment existing controls to keep firearms
out of the wrong hands.
These bills are an essential and
integral part of the President's program to combat crime.
Therefore, I strongly urge that this Committee report these
bills to the House of Representatives at an early date.
- 28 -
need to protect the existing international payments system
by maintaining a strong, sound and stable dollar.
,-'-
must come first.
,.·1
I
t
-Uvo,
'",--
'~-
',--
'-
'-- '\.
'-
-~
'.
First things
-...
We must-bring our 'own payments into equilibiun
/.\
c
I , I
6
and-keep tt=tneue.
By resolutely shouldering that responsibilit
we will preserve the foundation upon which must rest all
efforts to assure free world growth in the years ahead -the monetary system that has served the free world so well
in the past.
-~
international monetary system.
-
We can expect no overnight
solution -- but only patient exploration of the alternatives
with our trading partners in a spirit of mutual cooperation~
This is the course we are now pursuing.
As we move ahead, we \vill do well to remember that the
existing international financial system has successfully
I
financed an
unpara17'~d
expansion in world trade and payments.
We have also done much in recent years to strengthen that
system.
The ned now is not to start allover again, to move
in a completely new direction.
Rather, we must move once
more to strengthen and improve the existing .syl ben .-t,}tJ;5'E
And while we proceed solidly and surely toward internationa
agreement on the problems of world liquidity, we in this
country must keep ever before us the present and pressing
~
- ~to any rig id time tab le •
-Ind~e'llie;flct:p.:,--;r~i:rt:fttt~e~lin;et-rlmlPl)Sl!IAc~lt:!£FI!l6"'"~&~-t:1tl~le
_l'1~ !0=f~ \ l!'(.-~ ~ cva::fobq.( :;La; =ctx::c, ) fe€"
(D'S ~ u"i7tt
n . . . soneral lIeelts ~ cORs.,.1. w'i:4!h my colleagues in Europe
,
>
and elsewhere, as well as with the senior officials of the
International Monetary Fund, on how best to proceed.
The
point I wish to emphasize here is that the United States is
determined to move ahead -- carefully, deliberately -but without delay.
'~e
are conseious of the risks iRvelved
in any such undertaking, but belielle ..that. the time·· calb
-~
f~ng -indeed,
requires, a
hegitmjD~
CVvvv\.!V~'~
M
O-Zt
Not il-Gswg when the
t- CL-Ct-G-o- .~V\..-t... ~
time is ripe can be asr.islcy as action taken ia haste.
1\
.
We are, therefore, moving ahead -- and we are making
progress.
But we must be aware that the issues involved are
complex, and they raise basic questions of national interest.
It is not, therefore, easy to arrive at the degree of internati~
consensus we must have for any workable reform of the
-2,,creative resolution of the free world's monetary problems,
it must be preceded by careful preparation and international
consultation.
To meet and not succeed would be worse than not meeting
at all.
Before any conference takes place, there should be
a reasonable certainty of measurable progress through 'rl \- '-- \- '-I
agreement on basic points.
,
Our
o~
_en~ati¥e
suggestion
)
woul~.
that the work of
preparation be undertaken by a Preparatory Cormnittee ,.,-wll4ar·
the allspjces. of the-InteIrlational-MonetaIy Fond>.. - Sueh
pr-eparatory-:cotm'IH.~
"._ L\. '--~
I..
\.
i!l
could be given its tenns of reference
v'-- "-
~ing~he-e~
of the annual meeting of the International
September 27.
The United States is not wedded to this procedure nor
-zfof Congressman Henry Reuss to obtainthtouglr--£aat 9Aaftftei
various private and organizational points of view.
These
hearings and the reports of the Committee will be of great
value, together withpthose whieh--have been
-~eefttly eCMduct;;aQ
and the International Finance Subcommittee of the Senate
Banking and Currency Committee under the Chairmanship of
Senator Edmund MuskieJ
I am privileged to tell you this evening that the
President has authorized me to announce that the United
States now stands prepared to attend and participate in an
international monetary conference that would consider what
steps we might jOintly take to secure substantial
improvements in international monetary arrangements.
Needless
to say, if such a conference is to lead to a fruitful and
Institute of Technology.
With their help and that of many others who will be
consulted including, particularly, many well informed members
of the appropriate committees of Congress, we shall constantly
seek a comprehensive U. S. position and negotiating strategy
designed to achieve substantial improvement in international
monetary arrangements thoroughly compatible with our national
interests.
In the various proposals which have and will be
made we must determine those which will be acceptable to
the United States, those which are entirely unacceptable, and
those which may well be appropriate for negotiation.
There will be an initial meeting of the Advisory Committee
on International Arrangements on July 16.
Hearings are
planned before the International Finance Subcommittee of the
House Banking and Currency Committee under the Chairmanship
21,
-
~x;
-
lateral negotiations that should follow.
In addition, so
that the government may have the benefit of some of the
expertise and experience outside the government in this
highly technical area, President Johnson has accepted my
recommendation and announced creation of an Advisory Committee
on International Monetary Arrangements which includes as its
Chairman the former Secretary of the Treasury, Douglas
Dillon, and a distinguished group of experts including
Robert Roosa, former Under Secretary of the Treasury for
Monetary Affairs; Kermit Gordon, former Director of the
Bureau of the Budget; Edward Bernstein, economic consultant
specializing in international monetary policy; Andre Meyer,
of the investment banking firm of Lazard Freres; David
Rockefeller, President of the Chase Manhattan Bank, and
Charles Kindleberger, Professor of Economics at Massachusetts
2t
- ijxK iarJ'Jits~'81
countries,
beghu;li:ftS=d4rDearly-=Aug~
to ascertain
firsthand their views on the most practical and promising
ways of furthering progress toward improved international
f\,'--1;:·T C vvLj t,~ CLi{.C-C\..v-.-(. '-monetary arrangements.
We must Bot eftiy be
-t. . .· ':".(,~ "--~fv~ L-Lv( \:..~ v'-;~-J.\.
own proposals,
but~be
other proposals.
""'
1....
preparedA~
our
'~\..."'"e"~ ~~\-"LLJ-
tHa position te- weigh the merits of
&1
l>
k~\.",,:j.A'~/)..--
As Congressman Robert EllsworthAin discussing
this subject recently remarked:
"We must appreciate that if we wish a strong
Europe it must be a Europe strong enough to look
upon an American proposal as merely one among many
possible solutions -- all of which will be reviewed
together.
If we wish their partnership, we must
treat them as partners."
Already your government is engaged in an intensive
internal preparation for these bilateral meetings and multi-
20
- i3xK a'payments system fully responsive to the coqtinued growth
\
\\
,
o~ internationa
\
While w~ agreed any
trade.
\
rei\forcement mus
i
\
i
UCh
f the present
await the deve opment, out
dive~ent oPinions,\
f an internat anal consen
hat constant and persiste t efforts.
should b~ pressed at the\ministerial
'\
\
after the
world
"-
eetings of the I\ternational Monetary Fu d and
~nk ~heduled
---~+--~------
in late\pt
___ \ ;
.
..
.~-~-..=:~.-.-::-:::~:::.--...,...-
~~
Next week I h@pe to have the pleasure of informal
discussions with the Japanese Minister of Finance, Takeo
Fukuda, in connection with the Joint Cabinet sessions of the
u.
S. - Japan Committee on Trade and Economic Affairs.
Both before and after the scheduled meeting of the
I
'C":-"
,(,~
'-- ~'..{_.
International Monetary Fund and World Bank
' . ,'. '.' " " c ,
.:
expect to visit., ~~'8
in~September,
I
';I~ '-S ...
(vL\J\.- ....l) ib :U"'Y"Mjp1gt_ of other cleva] oped
.. '.
,'t. "'.
,.c'"
··lv.1
19
- :il.ixD monetary difficulties will exercise a stubborn and
increasingly frustrating drag on our policies for
prosperity and progress at home and throughout the
world."
In taking office, I described this as "the major task
facing our Treasury and the financial authorities of the rest
of the Free World in the next few years."
In recent weeks we have moved beyond the plaae of hopeand technical studies toward the prospect of more conclusive
negotiations from which alone solution can emerge.
I met
last week with the British Chancellor of the Exchequer James
-ti:tv-r :;uct;A be
eea:; o>i4Vd::tt..,&..;;~t' i....
Callaghan....attd we a gre8'1\- eEl)" talks witb finance
~l ~ .A-~\...t~l ~~V-V~(iv~
~
otaer majoI
CODnt~on
liquidity. . We agreed
~.~w
1\
tQ
li'vv'-l-l
)1:1.ail~e~t
--r;zv/v-ta;:t;u;,-\
VUlN'
the subject of international
exptate
the "8' ,. AlIi
pess 111111e188>-
[Ilwaril my: reinforeement" khat wOUld help C' 1 sure
18
- iixi and should be substantially improved, building on
the basis of the International Monetary Fund and
the network of more informal international monetary
cooperation that has marked recent years.
(3) The completion of technical studies necessary
to give a thorough understanding of the problem and
various alternative approaches to solution on the
part of those at the highest levels of government
who must ultimately take these decisions.
We have now reached the moment which President Johnson had
in mind when in speaking of new international monetary steps
he said:
"We must press forward with our studies and beyond,
to action -- involving arrangements which will
continue to meet the needs of a fast growing world
economy.
Unless we can make timely progress, international
17
- l3xa -
Group of Ten on June 1 of this year, which exhaustively
examines, with all their promises and pitfalls, the possible
paths to the creation of reserve assets.
Now for the first time in four years we are confronted
by the happy concurrence of three crucial facts:
(1) The U. S. balance of payments is approaching
an equilibrium and the Executive Branch, the
Congress and the private sector, including industry,
banking and labor, have mounted a program that makes
unmistakably manifest our will ·-e:ft8 determination to
keep it that way.
(2) Evidence is accumulating of a rising tide
of opinion in many knowledgeable and influential
quarters in the Free World, private and public,
that our international monetary arrangements can
16
- lWClA -
.
~~ J2tJ2§6tzit=~c~
Meanwhile, the Group of Tenj,and the "iMP itself hST+'e heeD
~(t t~ )""X",··vv--iv---CUv"-Ci.J \v--~-;t~ 1~\,k'W~- ~
• continuing their studies of the future course of world liquidky
/\
Deputies of the Group submitted a comprehensive report on the
problems involved last August.
In their Ministerial Statement
last August, the Group of Ten stated that while supplies of
gold and reserve currencies are fully adequate for the present
and are likely to be for the immediate future, the continuing
growth of world trade and payments is likely to require larger
international liquidity.
While they said that this need might
be met by an expansion of credit facilities, they added that
{
..- )
;
it may possibly call for some new form of reserve asset.lf A
Study Group was set up "to examine various proposals regarding
the creation of reserve assets either through the IMF or
otherwise."
The efforts of that Group have culminated in the
so-called Osaola report, submitted to the Deputies of the
- 15 As long ago as 1961 the ten major industrial nations,
negotiated with the International Monetary Fund a so-called
General Arrangements to borrow whereby the ten nations agreed
to lend to the IMF up to $6 billion should this be necessary
"to forestall or cope with an impairment of the international
monetary system."
That arrangement was activated last December
.~
-.
I
, in order to provide a part of a $-i.. billion drawings from the
IMF on the part of the United Kingdom.
On the credit side, also, the members of the International
Monetary Fund have now agreed to support a 25% general increase
in IMF quotas.
This 25% increase, pI us special increases for
some sixteen countries, will raise total aggregate quotas from
$15 billion to around $21 billion.
The Congress last month
approved a $1,035 million increase in the U. S. quota.
- 14 This, in a nutshell, is what the issue of world monetary
reform is all about.
It is to assure ample world liquidity for
the years ahead that the United States, in cooperation with
other leading financial powers, is seeking workable ways of
strengthening and improving international financial arragnements
For several years now the essential laying of the
technical groundwork has been underway as 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.
An early conclusion
was that there are two elements in international liquidity:
on the one hand the more conventional reserves of gold and
reserve currencies and on the other hand the ready availability
of credit facilities for countries in need of temporary
assistance.
- 13 Dollars would return to our shores as c~i~~s on our gold, thus
! \, ",to. ",_ ... ,_(}- \.. \.
I....~
L \.
~
\.
\
'- _',
,)
deplating instead of supplementing world liq'dDiey.
To
prevent such a contraction in world liquidity and the
widening circles of deflation and restriction that would surely
follow, we must reach and sustaia equilibrium in our payments
",
-t, \ ' "
f~
as a matter
of
.
'
.....
~ ~ ""~'- '-''''-~\
'. -:_.: __ "__.;._,t,_;_ ... ..z,
I"~.
" "
national priority,~
.'
J
I
,/
_ .._~--'"'_ _ _ _
,
'i
The paradox is, therefore,'that the very increase in
official foreign dollar holdings that has fueled so much of
the growth in world liquidity in the past -- and has thus
helped support the growth in world trade -- can no longer be
allowed to continue if current international liquidity is to
',.
be protected.
~ '~
,
[,
c
'.
{(.:...."..v ..... ~
Yet by depriving the world
,.'.<"0.
o~,\
..
L,."
j
("
the reserve
1\
,
\..
L~~. l -. v l-
l . \.
(
dollars that our deficits have so long supplied, .we leave tt
. '-
.:~ ,)
with-[~lO~-su-bstitube sGur~-e~new
support
~~~~~g
"'l
and gr-owing liquidity to
,L-
j "-
"- I..-
~
',,--
J
world trade and investment.
- 12 -
transactions, and other countries hold them alongside gold
in their official reserves.
Today, those dollarsAaccount for a major share of the
international liquidity that sustains the growing
~" II: .'
I{. i ~ LJ; i ( I ('1</,'.1- 7>;,'
l:d' (. (
economy. ~
~s.
,~ii
/'
ii/(
I,
i'
/'..,.,
1.A.Jff'I.:.,.·
~orld
It,' ,~. /1.( t!J1 U
iii'" /,'1:<.1'//1,#)/
it is essential to the V:iability of the
international monetary system as it exists today that the
usefulness and value of those dollars remain unquestioned
throughout the world.
And, whatever changes might be
introduced into that system, the dollar will have to continue
1,-
to carTY a heavy burden as a reserve currency.
If we allowed our deficits to continue, or if we lapsed
;;c;
r
back
&I!
~v ~
L
into~abst:;Ctai
deficit after a brief period of surplus,
we would undermine world confidence in the dollar and impair
its usefulness as a world reserve and leading currency.
- 11 But the big job -- the job that remains -- is for us to demonstrl
that we can sustain equilibrium through these measures as well
as the longer term measures inaugurated since 1961.
,I
" . '\_
J,' - ~
'
", ... '
,'-"
We must,
\
maintain those measures in full force until rising returns
/\
~<"'.
'{:V'-'t ,.r'--<~ l.~.,v'l.t~\
abroad,,~~eater returns-e• •
tM..-l : \.\,
from past private investment
'".
Ae
;_'~A,,_,I ",~:, "-,.(,,.\~1_1 '~,
..
'i,·t.-,
,\
lC'Y'~'11.v~~Clj,lV--L-''1-<l
t y.~R
Li-~l."'vt'-'-·
domestic employment of capital, and growth in ourAeKpo.,s -i\
which requires that we maintain our excellent record of price
..
stability -- place our accounts securely in
C~I v\'J~J,,-v.. ~~ ,\'cI.cl'iSP1i
eal8Ra8.
It is imperative not simply to reach balance in our payment
for a quarter or two, or even for a year, but to sustain
equilibrium over time.
The reasons are clear.
Our fourteen
years of deficits have resulted in a large outflow of dollars
to the rest of the world.
Because there is worldwide
confidence in the stability of those dollars and becuase they
are convertible into gold at the fixed price of $35 an ounce)
- 10 and banks -- the call to join voluntarily in a national effort
to curb the outflow of dollars abroad.
That call has been heard -- and heeded.
After a bad
start in January, our balance of payments improved in
February following the President's Message and showed a
surplus in March, in April and in May.
Thus we are off to a good beginning, but -- let there be
no mistake -- it is no more than a beginning.
think
~hat ~-months
Let no one
of apparent surplus -- a surplus
purchased only through extraordinary and temporary measures -can suffice.
The likelihood of a surplus in the second quarter of this
year does tell us that we are moving in the right direction -that our current measures can turn our deficit into a surplus.
- 9 -
friends to expand and improve their markets.
But their
progress in that endeavor had simply not been large and rapid
enough, and we had passed the point where we could sustain
the huge drain of capital which that disparity entailed.
We had to act.
We had not only to intensify the efforts
already underway in other sectors of our balance of payments,
but to extend those efforts to include comprehensive curbs
upon private capital outflows.
It had become abundantly
clear that to restore balance to our payments once more we
had to attack our deficit on all major fronts simultaneously.
President Johnson launched such an attack with his February
10 Message to Congress on the balance of payments.
The heart
of that Message was the call to arms of America's businesses
- 8'-
in the one major area of our balance of payments which our
prograw
had not yet effectively reached. -- the area of private foreign
investment outflows.
In 1964,the outflow of private capital abroad reached the
$6~
billion mark -- more than twice the size of the deficit and
up over $2 billion from 1963 and over
$2~
billion from 1960. That
outflow reflected a variety ·of causes -- including the drive by Ame
business to stake out acclaim in the rapidly growing and seemingly
highly profitable European markets.
But, to a very large degree,
the accelerating outflow had its source in the marked disparity
that had long existed between European capital markets and our
own -- a disparity in size and scope and facilities that led
borrowers in other countries to tap our market for a large share
of their capital requirements.
The United States had often
enough called attention to this disparity and urged its European
· 7-
-- a $400 million cut in tne dollar outflow as a result of
foreign aid;
-- a cut of nearly $700 million in net military dollar outlays
despite rising costs abroad;
-- a $1.6 billion rise in our earnings from past private
foreign investments.
Simply as a matter of arithmetic, those gains were enough -all else being equal
payments last year.
-- to have given us virtual balance in our
But all other things were not equal.
Instead
of approaching the vanishing point, with the $3.9 billion deficit
of 1960 being absorbed by th ese
in particular sectors of our
payments, our deficit in 1964, was in fact reduced by a net total
of only $800 million to $3.1 billion.
We incurred that deficit -- despite four years of real and
lasting progress -- primarily because of a drastic deterioration
-6w~~n d~c
~otal
volume of
doll~rs
held by all foreigners •
•'v-:-L~\""--'"'\I~·"""~'~ I !;:\.~ ! ·r. ,'-.
. . . )~L . .
•
~
Y~t
~veraged al~ost
Qoll~=
gold
~~X~ ~~~ea y~~~3 --
over the
..... ow::;.,ng
beg~n I:~,.
billion ::;.,n
t~~ee
r~'~1at vl':'S
when we
wo~a ~apidly t~an
a b roaa' in
~uch
greater
ou~\deficits
countries found their
they wished, and our
vo:~a
-- roughly $5
years.
t:1.e
la~nc~cd
C~~~r
$4 bi:lion a year.
holdings growing
1958-59-60 -
situatio~"l
a
that confronted us in early 1961,
st~on3 ~~cl sustai~ed
effort to mave our inter-
national payments into balance once more.
t=-~-;::-~·:;:-;Ove~
a pe:.:iod of four years --
1961-64 --
'-- 'v
--\......
,:"i (.-..-,-1.. u/
tha-t:=e:f:f~rought
us-morc-tha~3.-.5--b-i-l-l-ion..-of--balanc-e--of-?aymants-improvement,
.'- ,----
/.,-~
'.-
'--,''--",_ .........
_
. ..--.,
._-_.----'"
I
. 1· .
·~nc Ud.::;.,ug:
a $900 million gain in our
t~ose
co~ercial
trade surplus --
not financec Qy government -- making it a record
$3.7 billion in 1964;
-5:Zut this progress was accompanied by other developments that
.
vJ,",-~~ .... ",~,~
'-I
,
:.J--::.-~r'-Y~~(.,,·)
v)
1
led to U. S :i\ defic its far l.a rger than Europe required and than we
co~ld
live with indefinitely.
~'leakened
our
co~?etitive
Rising prices in this country had
position at a time when Europe and Japan
had once again become a formidable competitive force in world
markets.
At the same time, the strength of Europe's economic re-
._ L~: c. .,--,,,"';iiiII'i-Ia'- _.......;) 10 If m
\j
surgeilce and
amounts of
it~ ~~w-won
p~ar~ca~
financial
stability~& •••• ed
growing
capital abroad.
Thus, beginning in 1958, things changed -- and more swiftly
perhaps than most people realized.
The "dollar shortage" which
l:. v '-1c-/J
L;;~')...-'T'
Zu::ope h.::.d suffered in the early postwar years :was-f-ak-t-becom-in.g
..... '---.....;..---- 1-.':....... ....... ..-- \..-
v ... ~r;,
.,-'- -.,--!!r·o"L'
",-r- o-1U~.JJ.
........ :L."--.. -o....
......
i...4a.\.oo
fru::ing the seven years 1950=57, our deficits averaged only
$1.5 billion a year -- and at
~he
,
end of that period our gold
stock amounted to about $22 billion, or more than a third larger
-4I .'
--;-
v.....- ...... :.~ . . ."""'-
international reserves and liquidity required by
financial, as well as physical, resources
u...v-A ,..... .)~.I'-'~.
I
~\Europej\whose
war had drastically
depleted.
Under the Marshall Plan and other programs, we furnished some
thirty billions of dollars in grants and loans to help put the
economies of Europe back on their feet again.
With the recovery
of Europe, we turned more and more of our dollars toward aiding
the underdeveloped countries of the world.
We alsO sent dollars
abroad to support large military forces and furnish military aid
essential for the defense of the free world.
These measures were eminently successful.
By the mid-fifties
the economies of Europe and Japan were strong and growing, controls
and restrictions on trade and payments were being progressively
dismantled, and in 1958 external convertibility of the leading
European currencies was restored.
-3-
The solution of our balance of payments difficulties and the
strengthenin3 of the
in~arn~tional
conotary system are thus far
more than merely arid economic exercises.
They are crucial matters
which must deeply concern -- for, in a broad but very real sense,
they deeply affect -- not just bankers and/\.economists, but every
American in every walk of life.
What, then, is our balance of payments problem?
Why is it
so important that we solve it?
Since 1949, the United States has had balance of payments
deficits every year except for 1957 -- when our exports soared
as a result of the Suez crisis.
During that first postwar decade·
up until 1958 -- those deficits were little cause for concern,
for they were simply the counterpart of our effort to help rebuild
a Europe laid waste by war.
Our vast outpouring of dollars was
the essential source-spring for replenishing the reservoir of ~
-3-
The solution of our balance of payments difficulties and the
strengthening of the international monetary system are thus far
more than merely arid economic exercises.
They are crucial matters
which must deeply concern -- for, in a broad but very real sense,
they deeply affect -- not just bankers and,economists, but every
\
American in every walk of life.
What, then, is our balance of payments problem?
Why is it
so important that we solve it?
Since 1949, the United States has had balance of payments
deficits every year except for 1957 -- when our exports soared
as a result of the Suez crisis.
During that first postwar decade'
up until 1958 -- those deficits were little cause for concern,
for they were simply the counterpart of our effort to help rebuild
a Europe laid waste by war.
Our vast outpouring of dollars was
the essential source-spring for replenishing the reservoir of . . .
~
-l
•
I
7
.tt
By bRlance of payments, as you know, we mean simply the annual balance -
4/
net surplus o r . . .
·f
...:.
r
I
net deficit -- between the payaents and receipts,
eitber
4411
both public and rrivate, between the United States and the reaainder of the wor1d.
-2-
in its difficult and demanding role as leader of the Free World __
that all the political, diplomatic and military resources at our
command y depend upon a strong and stable American economy and a
sound dollar.
We must never forget that our lives can be vitally affected,
not only by the events in Saigon or Santo Domingo, but by such
apparently far removed occurences as the outflow of American gold
and dollars abroad.
For the role of the dollar as the most widely used international currency is part and parcel of America's leading role in
the free world -- politically, economically, militarily.
More
than any _ther single factor, it is the strength and the soundness
/
and the stability of the American dollar that serves as the
f
essential underpinning of the
I
,~ f
_
entire,~rld
/\
monetary system through
which the interdependent nations of the free world have fashioned
- 3 -
Carter
·h~,,-·.I
,).\..\.-,-in 0..the
'--)
Congress
Glass.~ both
f\.
and as Secretary of
,.~.,
the Treas ury , /~~du:e~nwo't'ira~br,l~e,r-c~o"nrtt"TI-ii-tbrrur1t~iho'J11T.lSC<10l'n1t1@e..p-.r~ra 1 dec ades
aaa
is particularly remembered throughout the world of
financial
u
It,.
f'
l
\,---C'·I.-~tl.'''' C... J ~h c.... vv~;t/1-'- hi ~1
the creatio~ and
affairs.~'lhis eontribuEio~to
development of the Federal Reserve System which served to
correct many of the outstanding defects of the preexisting
international financial world of today.
It is to these international financial problems that I
would direct your attention this evening.
'&
-
2 -
Virginians who bear heavy national responsibilities in the
fields of finance, taxation, money, credit and banking, holding
i--
'\, '" ',' '~"-'
.\
"~I,
the most important posts in the U. S. Congress in these areas .
\
I refer to Senator Harry Byrd and Senator Willis Robertson)
who serve the Commonwealth and the nation with distinction and
dedication as Chairmen of the~ited Stat~ Senate Finance
Committee and the Senate Banking and Currency Committee~~'{K-CT(,v'l..
.f1:: ,,- ,).,\' L
iJU',
l.\.
",'.j
.'
"~'f"'~
J'
No 's-eate-eemposed
~
,.I.,'.
,.:.
't., ,_A /l" 'I
~.A:,{;<---t~,
v,t· e
t,
-~'- '--'-'v~ )~
7~
two Senators "whose ifl£lllease and pte
exceeds their senority by so great a margin.
As Chairmen of
the two Committees with which the Treasury, acting for the
Executive Branch, has most of its dealings with the Senate,
I am indebted to them for their constant courtesy and their
impeccable fairness.
They carryon the tradition of an earlier national
statesman \in the field of public finance in this century, namely,
uS_Tlr nt.lib . E ]
For a Virginian, the honor of sharing in this 75th
annual meeting of the Association is exceeded only by the
pleasure of seeing so many old friends of my native Roanoke
and my adopted home of Alexandria.
For an erstwhile lawyer, the privilege of speaking to
this distinguished bar, including most notably the fourteen
life members, is surpassed only by the temerity of choosing
international monetary problems as a subject for discussion.
But Virginians have always been heavily concerned with and
leaders in providing for the United States an appropriate role
in international affairs.
And Virginians have in this century
made notable contributions to and set high standards for
the conduct of public financial affairs.
For a Secretary of the Treasury from Virginia, this is
a welcome opportunity to pay tribute to two great living
REMARKS BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE THE VIRGINIA STATE BAR ASSOCIATION
AT THE HOMESTEAD, HOT SPRINGS, VIRGINIA
SATURDAY, JULY 10, 1965, 6:00 P.M., EDT
i;
)!
~Ifi tr.x s.ei""'l:tb..lif'le.·h •• a~
)'
- " / We have all heard or read a great deal in recent months about
the problem this nation faces in its balance of payments and about
the need for the nations of the free world to move toward agreement
I i · ..
.
\!l .
'iJ.,o(i"
1
~
_
1'~'
prominent place in public discussion than they do today.
-,
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VMI1t1
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I suspect, these problems still seem rather remote
"U,,--,-,,-,-
from
~
daily lives and labors -- rather unrelated,
eYen~to
the
other national and international events that engage so much of
our interest and our concern.
Nor is it unnatural that they should
pale beside events such as those in Saigon or in Santo Domingo.
But we must never forget that America's ability to succeed
TREASURY DEPARTMENT
Washington
FOR RELEASE MORNING NEWSPAPERS
SUNDAY, JULY 11, 1965
REMARKS BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE THE VIRGINIA STATE BAR ASSOCIATION
AT THE HOMESTEAD, HOT SPRINGS, VIRGINIA
SATURDAY, JULY 10,1965,6:00 P.M., EDT
For a Virginian, the honor of sharing in this 75th annual
meeting of the Association is exceeded only by the pleasure of
seeing so many old friends of my native Roanoke and my adopted
home of Alexandria.
For an erstwhile lawyer, the privilege of speaking to this
distinguished bar, including most notably the fourteen life members,
is surpassed only by the temerity of choosing international monetary
problems as a subject for discussion. But Virginians have always
been heavily concerned with and leaders in providing for the
United States an appropriate role in international affairs. And
Virginians have in this century made notable contributions to
and set high standards for the conduct of public financial affairs.
For a Secretary of the Treasury from Virginia, this is a
welcome opportunity to pay tribute to two great living Virginians
who bear heavy national responsibilities in the fields of finance,
taxation, money, credit and banking, holding two of the most
important posts in the U. S. Congress in these areas. I refer
to Senator Harry Byrd and Senator Willis Robertson, who serve
the Commonwealth and the nation with distinction and dedication
as Chairmen of the Senate Finance Committee and the Senate
Banking and Currency Committee respectively. No other state is
represented by two Senators whose influence and prestige exceeds
their senority by so great a margin. As Chairmen of the two
Committees with which the Treasury, acting for the Executive
Branch, has most of its dealings with the Senate, I am indebted
to them for their constant courtesy and their impeccable fairness.
They carryon the tradition of an earlier national statesman
from Virginia in the field of public finance in this century,
namely, Carter Glass. His service, both in the Congress and as
Secretary of the Treasury, is particularly remembered throughout
the world of financial affairs. He contributed in a major way
F-118
- 2 to the creation and development of the Fedoeral Reserve System
which served to correct many of the outstanding defects of the
preexisting national financial arrangements which in many ways
find their counterpart in the international financial world of
today.
It is to these international financial problems that I would
direct your attention this evening.
We have all heard or read a great deal in recent months about
the problem this nation faces in its balance of payments and about
the need for the nations of the free world to move toward a~reement
on ways of assuring the financial resources needed to support
increasing international trade and development.
Indeed, world financial questions have never occupied a more
prominent place in public discussion than they do today. But to
most Americans, I suspect, these problems still seem rather
remote from their daily lives and labors -- rather unrelated,
even, to the other national and international events that engage
so much of our interest and our concern. Nor is it unnatural
that they should pale beside events such as those in Saigon or
in Santo Domingo.
But we must never 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 must never forget that our lives can be vitally affected,
not only by the events in Saigon or Santo Domingo, but by such
apparently far removed occurrences as the outflow of American
gold and dollars abroad.
For the role of the dollar as the most widely used international currency is part and parcel of America's leading role
in the free world
politically, economically, militarily. More
than any other single factor, it is the strength and the soundness
and the stability of the American dollar that serves as the
essential underpinning of the entire Free World monetary system
through which the interdependent nations of the free world have
have fashioned their awesome economic accomplishments of the past
several decades.
- 3 -
The solution of our balance of payments difficulties and
the strengthening of the international monetary system are thus
far more than merely arid economic exercises. They are crucial
matters which must deeply concern -- for, in a broad but very
real sense, they deeply affect -- not just bankers and businessmen
and economists, but every American in every walk of life.
What, then, is our balance of payments problem?
so important that we solve it?
Why is it
Since 1949, the United States has had balance of payments
deficits every year except for 1957 -- when our exports soared
as a result of the Suez crisis. During that first postwar decade
up until 1958 -- those deficits were little cause for concern,
for they were simply the counterpart of our effort to help rebuild
a Europe laid waste by war. Our vast outpouring of dollars was
the essential source-spring for replenishing the reservoir of
international reserves and liquidity required by a Western Europe
and a Japan whose financial, as well as physical, resources war
had drastically depleted.
Under the Marshall Plan and other programs, we furnished
some thirty billions of dollars in grants and loans to help put
the economies of Europe back on their feet again. With the
recovery of Europe, we turned more and more of our dollars toward
aiding the underdeveloped countries of the world. We also sent
dollars abroad to support large military forces and furnish
military aid essential for the defense of the free world.
These measures were eminently successful. By the mid-fifties
the economies of Europe and Japan were strong and growing, controls
and restrictions on trade and payments were being progressively
dismantled, and in 1958 external convertibility of the leading
European currencies was restored.
But this progress was accompanied by other developments that
led to U. S. balance of payments deficits far larger than Europe
required and than we could live with indefinitely. Rising prices
in this country had weakened our competitive position at a time
when Europe and Japan had once again become a formidable competitive force in world markets. At the same time, the strength of
Europe's economic resurgence and its new-won financial stability
began to attract growing amounts of American capital abroad.
- 4 Thus, beginning in 1958, things changed -- and more swiftly
perhaps than most people realized. The "dollar shortage" which
Europe had suffered in the early postwar years was fast disappearing.
During the seven years 1950-57, our deficits averaged only
$1.5 billion a year -- and at the end of that period our gold
stock amounted to about $22 billion, or more than a third larger
than the total volume of dollars held by all foreigners.
Yet over the next three years -- 1958-59-60 -- our balance
of payments deficits averaged almost $4 billion a year. Other
countries found their dollar holdings growing more rapidly than
they wished, and our gold began flowing abroad in much greater
volume -- roughly $5 billion in three years.
That was the situation that confronted us in early 1961,
when we launched a strong and sustained effort to move our international payments into balance once more.
Over a period of four years -- 1961-64 -- we achieved
substantial improvements in many separate accounts entering into
our balance of payments, including:
a $900 million gain in our commercial trade surplus -those not financed by government -- making it a record
$3.7 billion in 1964;
a $400 million cut in the dollar outflow as a result
of foreign aid;
a cut of nearly $700 million in net military dollar
outlays despite rising costs abroad;
a $1.6 billion rise in our earnings from past private
foreign investments.
Simply as a matter of arithmetic, those gains were enough -all else being equal -- to have given us virtual balance in our
payments last year. But all other things were not equal. Instead
of approaching the vanishing point, with the $3.9 billion deficit
of 1960 being absorbed by these gains in particular sectors of
our payments totalling $3.6 billion, our deficit in 1964 was in
fact reduced by a net total of only $800 million to $3.1 billion.
- 5 -
We incurred that deficit -- despite four years of real and
lasting progress -- primarily because of a drastic deterioration
in the one major area of our balance of payments which our programs
had not yet effectively reached in a comprehensive way -- the
area of private foreign investment outflows.
In 1964, the outflow of private capital abroad reached the
$6~ billion mark -- more than twice the size of the deficit and
up over $2 billion from 1963 and over $2~ billion from 1960. That
outflow reflected a variety of causes -- including the drive by
American business to stake out a claim in the rapidly growing and
seemingly highly profitable European markets. But, to a very
large degree, the accelerating outflow had its source in the
marked disparity that had long existed between European capital
markets and our own -- a disparity in size and scope and facilities
that led borrowers in other countries to tap our market for a
large share of their capital requirements. The United States
had often enough called attention to this disparity and urged
its European friends to expand and improve their markets. But
their progress in that endeavor had simply not been large and
rapid enough, and we had passed the point where we could sustain
the huge drain of capital which that disparity entailed.
We had to act. We had not only to intensify the efforts
already underway in other sectors of our balance of payments,
but to extend those efforts to include comprehensive curbs
upon private capital outflows. It had become abundantly
clear that to restore balance to our payments once more we had
to attack our deficit on all major fronts simultaneously.
President Johnson launched such an attack with his February 10
Message to Congress on the balance of payments. The heart of
that Message was the call to arms of America's businesses and
banks -- the call to join voluntarily in a national effort to
curb the outflow of dollars abroad, while preexisting programs
were intensified.
That call has been heard -- and heeded. After a bad start
in January, our balance of payments improved in February following
the President's Message and showed a surplus in March, in April
and in May.
Thus we are off to a good beginning, but -- let there be
no mistake -- it is no more than a beginning. Let no one
think that a few months of apparent surplus -- a surplus
purchased only through extraordinary and temporary measures
can suffice.
- 6 -
The likelihood of a surplus in th,e second quarter of this
year does tell us that we are moving in the right direction -that our current measures can turn our deficit into a surplus.
But the big job -- the job that remains -- is for us to demonstrate that we can sustain equilibrium through these measures
as well as the longer term measures inaugurated since 1961. We
must maintain those extraordinary measures in full force until
rising returns from past private investment abroad, our improved
climate for domestic employment of capital, enlarged availability
of capital in markets abroad and growth in our trade balance -which requires that we maintain our excellent record of price
stability -- place our accounts securely in equilibrium.
It is imperative not simply to reach balance in our payments
for a quarter or two, or even for a year, but to sustain equilibrium over time. The reasons are clear. Our fourteen years
of deficits have resulted in a large outflow of dollars to the
rest of the world. Because there is worldwide confidence in
the stability of those dollars and because they are convertible
into gold at the fixed price of $35 an ounce, those dollars are
widely used to finance international transactions, and other
countries hold them alongside gold in their official reserves.
Today, those dollars -- some $27 billion -- account for a
major share of the international liquidity that sustains the
growing free world economy. Some $12 billion of those dollars
are in official reserves, while the remainder serve to support
growing world trade and investment. Thus, it is essential to
the viability of the international monetary system as it exists
today that the usefulness and value of those dollars remain
unquestioned throughout the world. And, whatever changes might
be introduced into that system, the dollar will have to continue
to carry a heavy burden as a reserve currency.
If we allowed our deficits to continue, or if we lapsed
back into prolonged deficit after a brief period of surplus,
we would undermine world confidence in the dollar and impair its
usefulness as a world reserve and leading currency. Dollars
would return to our shores as claims on our gold, thus depleting
instead of supplementing world financial resources. To prevent
such a contraction in world liquidity and the widening circles
of deflation and restriction that would surely follow, we must
reach and maintain equilibrium in our payments as a matter of
the highest national priority, along with sustaining the economic
- 7 advance that has marked the last fifty-three months.
The paradox is, therefore, that the very increase in
official foreign dollar holdings that has fueled so much of
the growth in world liquidity in the past -- and has thus
helped support the growth in world trade -- can no longer be
allowed to continue if current international liquidity is to
be protected. Yet without additions to the reserve dollars
that our deficits have so long supplied, the world will need
a new and assured source of growing liquidity to support
increasing world trade and investment.
This, in a nutshell, is what the issue of world monetary
reform is all about. It is to assure ample world liquidity for
the years ahead that the United States, in cooperation with
other leading financial powers, is seeking workable ways of
strengthening and improving international financial arrangements.
For several years now the essential laying of the technical
groundwork has been underway as 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. An early conclusion was
that there are two elements in international liquidity; on
the one hand the more conventional reserves of gold and reserve
currencies and on the other hand the ready availability of
credit facilities for countries in need of temporary assistance.
As long ago as 1961 the ten major industrial nations,
now known as the Group of Ten, negotiated with the International
Monetary Fund a so-called General Arrangements to borrow whereby
the ten nations agreed to lend to the IMF up to $6 billion should
this be necessary" to forestall or cope with an impairment of
the international monetary system." That arrangement was
activated last December and again this May in order to provide
a part of a $2.4 billion drawings from the IMF on the part
of the United Kingdom.
On the credit side, also, the members of the International
Monetary Fund have now agreed to support a 25% general increase
in IMF quotas. This 25% increase, plus special increases for
some sixteen countries, will raise total aggregate quotas from
$15 billion to around $21 billion. The Congress last month
approved a $1,035 million increase in the U. S. quota.
- 8 -
Meanwhile, the Group of Ten and the lnternational Monetary
Fund have been continuing their studies of the future course
of world liquidity. Deputies of the Group submitted a comprehensive report on the problems involved last August. In their
Ministerial Statement last August, the Group of Ten stated that
while supplies of gold and reserve currencies are fully adequate
for the present and are likely to be for the immediate future,
the continuing growth of world trade and payments is likely to
require larger international liquidity. While they said that
this need might be met by an expansion of credit facilities,
they added that it may possibly call for some new form of
reserve asset.
A Study Group was set up "to examine various proposals
regarding the creation of reserve assets either through the
nw or otherwise." The efforts of that Group have culminated
in the so-called Ossola report, submitted to the Deputies of
the Group of Ten on June 1 of this year, which exhaustively
examines, with all their promises and pitfalls, the possible
paths to the creation of reserve assets.
by
Now for the first time in four years we are confronted
the happy concurrence of three crucial facts:
(1) The U. S. balance of payments is approaching
an equilibrium and the Executive Branch, the Congress
and the private sector, including industry, banking
and labor, have mounted a program that makes unmistakably
manifest our determination to keep it that way.
(2) Evidence is accumulating of a rising tide of
opinion in many knowledgeable and influential quarters
in the Free World, private and public, that our international monetary arrangements can and should be substantially improved, building on the basis of the International Monetary Fund and the network of more informal
international monetary cooperation that has marked recent
years.
(3) The completion of technical studies necessary
to give a thorough understanding of the problem and
various alternative approaches to solution on the part
of those at the highest levels of government who must
ultimately make these decisions.
We have now reached the moment which President
- 9 Johnson had in mind when in speaking of new international
monetary steps he said:
"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
economy. Unless we can make timely progress, international monetary difficulties will exercise a stubborn
and increasingly frustrating drag ori our policies for
prosperity and progress at home and throughout the
world. "
In taking office, I described this as "the major task
facing our Treasury and the financial authorities of the rest
of the Free World in the next few years."
In recent weeks we have moved beyond the plane of hope
and technical studies toward the prospect of more conclusive
negotiations from which alone solution can emerge. I met
last week with the British Chancellor of the Exchequer James
Callaghan and we exchanged preliminary and tentative views on
the subject of international liquidity.
Next week I hope to have the pleasure of informal
discussions with the Japanese Minister of Finance, Takeo
Fukuda, in connection with the Joint Cabinet sessions of the
U. S. - Japan Committee on Trade and Economic Affairs.
Both before and after the scheduled meeting of the
International Monetary Fund and World Bank in late September,
I expect to visit ranking financial officials of other
Group of Ten countries, to ascertain firsthand their views on
the most practical and promising ways of furthering progress
toward improved international monetary arrangements. We must
not only be prepared to advance our own proposals, but to
carefully consider and fairly weigh the merits of other
proposals. As Congressman Robert Ellsworth of Kansas in discussing this subject recently remarked:
"We must appreciate that if we wish a strong
Europe it must be a Europe strong enough to look
upon an American proposal as merely one among many
possible solutions -- all of which will be reviewed
together. If we wish their partnership, we must
treat them as partners."
- 10 Already your government is engaged in an intensive
internal preparation for these bilateral ~eetings and multilateral negotiations that should follow. In addition, so that
the government may have the benefit of some of the expertise and
experience outside the government in this highly technical area,
President Johnson has accepted my recommendation and announced
creation of an Advisory Committee on International Monetary
Arrangements which includes as its Chairman the former Secretary
of the Treasury, Douglas Dillon, and a distinguished group of
experts including Robert Roosa, former Under Secretary of the
Treasury for Monetary Affairs; Kermit Gordon, former Director
of the Bureau of the Budget; Edward Bernstein, economic consultant
specializing in international monetary policy; Andre Meyer, of
the investment banking firm of Lazard Freres; David Rockefeller,
President of the Chase Manhattan Bank, and Charles Kindleberger,
Professor of Economics at Massachusetts Institute of Technology.
With their help and that of many others who will be
consulted including, particularly, many well informed members
of the appropriate committees of Congress, we shall constantly
seek a comprehensive U. S. position and negotiating strategy
designed to achieve substantial improvement in international
monetary arrangements thoroughly compatible with our national
interests. In the various proposals which have and will be
made we must determine those which will be acceptable to the
United States, those which are entirely unacceptable, and
those which may well be appropriate for negotiation.
There will be an initial meeting of the Advisory Committee
on International Arrangements on July 16. Hearings are planned
before the International Finance Subcommittee of the House
Banking and Currency Committee under the Chairmanship of
Congressman Henry Reuss of Wisconsin to obtain various private
and organizational points of view. These hearings and the
reports of the Committee will be of great value, together with
those of the Joint Economic Committee of Congress and the
International Finance Subcommittee of the Senate Banking and
Currency Committee under the Chairmanship of Senator Edmund
Muskie of Maine.
I am privileged to tell you this evening that the President
has authorized me to announce that the United States now stands
prepared to attend and participate in an international monetary
conference that would consider what steps we might jointly take
to secure substantial improvements in international monetary
arrangements. Needless to say, if such a conference is to lead
- 11 -
to a fruitful and creative resolution of some of the free world's
monetary problems, it must be preceded by careful preparation
and international consultation.
To meet and not succeed would be worse than not meeting
at all. Before any conference takes place, there should be a
reasonable certainty of measurable progress through prior agreement on basic points.
Our suggestion is that the work of preparation be undertaken
a Preparatory Committee which could be given its terms of
reference at the time of the annual meeting of the International
Monetary Fund this September.
by
The United States is not wedded to this procedure nor
to any rigid timetable. I shall exchange views with my
colleagues in Europe and elsewhere, as well as with the senior
officials of the International Monetary Fund, on how best to
proceed. The point I wish to emphasize here is that the United
States is determined to move ahead -- carefully, deliberately -but without delay. Not to act when the time is ripe can be as
unwise as to act too soon or too hastily.
We are, therefore, moving ahead -- and we are making
progress. But we must be aware that the issues involved are
complex, and they raise basic questions of national interest.
It is not, therefore, easy to arrive at the degree of international
consensus we must have for any workable reform of the international
monetary system. We can expect no overnight solution -- but only
patient exploration of the alternatives with our trading partners
in a spirit of mutual cooperation. This is the course we are
now pursuing.
As we move ahead, we will do well to remember that the
existing international financial system has successfully
financed an unparalleled expansion in world trade and payments.
We have also done much in recent years to strengthen that system.
The need now is not to start allover again, to move in a
completely new direction. Rather, we must move once more to
strengthen and improve the existing arrangements.
And while we proceed solidly and surely toward international
agreement on the problems of world liquidity, we in this country
must keep ever before us the present and pressing need to protect
- 12 -
the existing international payments system by maintaining a
strong, sound and stable dollar. First things must come first.
We are bringing our awn payments into equilibrium and we must
keep them in equilibrium. By resolutely shouldering that
responsibility we will preserve the foundation upon which must
rest all efforts to assure free world growth in the years ahead-the monetary system that has served the free world so well in
the past.
TR:::ASURY DEPARTMENT
FOR RELEASE
A.l~.
NEWSPAPERS,
Tuesday, July 13, 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 ot the bills dated April 15, 1965,
and the other series to be dated July 15, 1965, which were offered on July 7, were
opened at the Federal Reserve Banks on July 12. Tenders were invited for $1,200,000,~
or thereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 182-day bUll
The details of the two series are as follows:
182-day Treasury bills
91-day Treasury bills
CO}1PETITIVE BIDS,
maturing October 14, 1965
:
maturing January 13, 1966
Approx. EqUiv.
Approx. Equiv.
Price
Annual Rate
Price
Annual Rate
3.918%
98.019
I
f~gh
99.026
3.853%
3.940%
98.008
Low
99.017
3.889%
S
98.012
3.933%
Average
99.018
3.883%
I
a/ Excepting 2 tenders totaling $755,000
b3 percent of the amount of 91-day bills bid for at the low price was accepted
45 percent of the amount of 182-day bills bid for at the low price was accepted
R1u~GE
OF ACCEPl'ED
!I
11
11
TOTAL TENDERS APPLIED FOR AND ACCEPl'ED BY FEDERAL RESERVE DISTRIaI'S:
District
Boston
New York
Philadelphia
Cleveland
Ricbmond
Atlanta
Chicago
St. Louis
Y.inneapolis
Kansas City
Dallas
San Francisco
TOTALS
AE,Elied For
$ 36,382,000
1,422,000,000
31,318,000
38,853,000
19,153,000
72 ,547,000
284,900,000
45,532,000
22,173,000
48,226,000
27,391,000
98 2541 2°00
$2,147,016,000
I
AcceEted
!EE1ied For
$ 16,887,000
$ 22,682,000
734,0$0,000 : 1,176,014,000
13,891,.000
18,981,000
38,189,000
•
38,853,000
8,642,000
17,611,000
60,691,000
23,100,000
143,863,000
234,912,000
37,621,000
12,931,000
16,618,000
11,811,000
12,367,000
40,507,000 ••
18,021,000
11 ,256 ,000
67,323,000
:
52 2°31 2°00
$1,201,529,000 ~/ $1,627,323,000
·
·
AcceEted
16,887 ,OOC
728,189,OOC
5,891,00(
~ ,189,00(
8,642,00(
22,790,00(
102,062,00(
10,794,001
10,811,001
12,367,00
6,706,00
36,873,00
$1,000,201,00
i
b/ Includes $313,726,000 noncompetitive tenders accepted at the average price of 99.01
~ Includes $llO,883,OOOnoncompetitive tenders accepted at the average price of 98.012
y
On a coupon issue of the same length and for the same amount invested, the return 0
these bills would provide yields of 3.98%, for the 91-day bills, and 4.07% for thE
lo2-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 tban
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 teI'lllB
of interest on the amount invested, and relate the nunbar of days remaining in an
interest payment period to the actual number of days in the period, with aemjannuaJ
compounding if more than one coupon period is involved.
F-119
TREASURY DEPARTMENT
July 12, 1965
FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN JUNE
During June 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
$69,714,500.00.
000
F-120
fREASURY DEPARTMENT
July 12, 1965
FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN JUNE
During June 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
$69,714,500.00.
000
F-120
- 2 Excise Tax Reduction Act.
Prior to his work on the Staff of
the Joint Committee, he served in the Office of Chief Counsel
of the Internal Revenue Service where he worked on the foreign
provisions of the Revenue Act of 1962 0
Before that, from 1955
to 1961, he held a number of positions with Chrysler
Corporation o
Born in 1928 in New York City, Mro Moody is a graduate of
Washington and Lee University and Indiana University Law School,
and holds a Master of Laws degree from Wayne State Universityo
FOR IMMEDIATE RELEASE
NEW TREASURY OFFICIAL NAMED
Treasury Secretary Henry Ho Fowler today announced the
appointment of Robert Jo Moody as a Special Assistant to the
Secretary~
Mr. Moody will serve
a~ ~irector of the Executive
~~~~:!iL~ of--
Secretariat .... the~~~~e
~~tt:~
§
O'ii
fFom the Secretary and Under Secretaryo
He will succeed Donald 10 Lamont, who has accepted a position
of tax attorney for the American Telephone and Telegraph
Company 0
At the time of his Treasury appointment, Mro Moody, an
attorney, was on the Staff of the Joint Committee on Internal
Revenue Taxation o
Among the tax measures he worked on are the
Revenue Act of 1964, the Interest Equalization Tax Act, and the
TREASURY DEPARTMENT
July 13, 1965
FOR IMMEDIATE RELEASE
NEW TREASURY OFFICIAL NAMED
Treasury Secretary Henry H. Fowler today announced the
appointment of Robert J. Moody as a Special Assistant to the
Secretary and Director of the Executive Secretariat -- the
central coordinating staff of the Department serving the
Secretary and Under Secretary. He will succeed Donald I.
Lamont, who has accepted a position of tax attorney for the
American Telephone and Telegraph Company.
At the time of his Treasury appointment, Mr. Moody, an
attorney, was on the Staff of the Joint Committee on Internal
Revenue Taxation. Among the tax measures he worked on are
the Revenue Act of 1964, the Interest Equalization Tax Act,
and the Excise Tax Reduction Act. Prior to his work on the
Staff of the Joint Committee, he served in the Office of
Chief Counsel of the Internal Revenue Service where he worked
on the foreign provisions of the Revenue Act of 1962. Before
that, from 1955 to 1961, he held a number of positions with
Chrysler Corporation.
Born in 1928 in New York City, Mr. Moody is a graduate
of Washington and Lee University and Indiana University Law
School, and holds a Master of Laws degree from Wayne State
University.
000
F-12l
TREASURY DEPARTMENT
Walhington, D. C.
ThHEDlA TE RELEASJ;
WEDNESnAY, JULY 14
F-122
1965
~~:":'==":=..=......2""""::~="':--=::"-~~REL""";:"';OONAR~~Y DATA ON IMPORTS FOR CONSl'MPTION OF tJNW.NUFACTURED LEAD AND ZINC CHARGEABLE TO THE C:UarAS ESTABLISHED
BY PRESIDt'NTIAL PRCCLAMATION NO. 3257 OF SEPTEMBF.R 22, 1958, AS MODIfIED BY 'J'HE TARI~F SCHEDULES OF 'l'HE
lINITli.:D STATES, WHICH BECAMt ETrF,cTIVl: AUGUST 31, 1963.
PERIOD -
ou.A.R'l'uu,y QUan
IMPORTS IT».i 925.01*
Coun'hy
.t
Produotion
LeN-bearing oree
and material.
July
1, 1965 ..
Sephlllbel"
30, 1965
July I, 1965 - July 9, 1965 (01" as nohd)
ITEM 925.03.
••
Umrrought lead aM
lead 'W'&ste and Icrap
ITEM 925.04*
ITEM 925.02.
s
oree
materials
Z~earing
anj
• lJDRrought ziDo (exoept al101'
I
: .t zino
&Del zinc d.uat) &Dd
zinc 'W'&et. an4
:
.era,
lBIportl
~uatralia
11,220,000
11, 220pooO
22,540,000
Be141lB and
~ (total)
Bolirla
5,040,000
Ca.na4a
13,440,000
·"10,995,469
15,920,000
664,946
66,480,000
66,480,000
Italy
36,880,000
Werloo
Peru
16, HiQ,OOO
···8,716,578
457,167
12,880,000
So. ilrioa
r..,880,000
other
oountries (total)
6,560,000
PREP.A.RED IN TRJ.: BUREAU OF CUSTct.f3
13,806,892
3,600,000
···1,102,300
2,0'34,650
6,320,000
35,120,000
972,192
3,760,000
14,880,000
···2,036,260
.Se. Part 2, Appendix to Tariff Sonedules •
••Republio of South Afrioa.
···Import. as or July 12, 1965.
37,840,000
5,440,000
Yllgoslarla
~ll
···551,150
70,480,000
R.publio of the Congo
(toJmerly Belgian Congo)
."Un.
7,520,000
15,760,000
···2,375
6,080,000
···1,676,019
17,840,000
17,840,000
6,080,000
6,080,000
TREASURY DEPARTMENT
W_hagton. D. C.
DAiEDIA TE RELEAS':
1~
WEDNESDAY, JULY
F-122
1965
MlMINARY DATA ON IMPORTS FOR CONSL'MPTI0N 01' UNlofANUFACTURED LEAD AND ZINC CHARGEABLE TO THE 0UOTAS ESTABLISHED
BY PRESIDL'NTlAL PROCLAMATION NO. 3257 OF SEPTEMBF:R 22, 1958, AS MODUIED BY THE TARl"'F SCHEDULES C'T '!'HE
lJNITli;J) STATES, WHICH BI:GAME ETrr.cTIVl: AUGUST 31, 1963.
OUJ..R'l'uu.y QUail.
lTI},f
PERIOD -
July
1, 1965 ..
S.ptelllb.r
IMPORTS -
July
1, 1965 ..
July
925.01.
JO, 1965
9, 1965
(or as noted)
ITEM 925.04·
ITEM 925.02·
ITll4 925.03.
I
I
Le"-beari~
ores
and material.
Country
et
Ztn.-beari~
Uurrought lead ...
lead was t. and. scrap
ores ani
material.
Prod.uotiOI1
• Umrrought 'liDo (exoept allCIJ.
I
et
z1no aDd "iDO clua t ) aDd
ziDe wast. ani sera,
IIIIporta
.1.utralla
11,220,000
BelCiwa ani
~1D'g
11, 220pOOO
22,5040,000
(total)
13,4040,000
C&Da4a
·"10,995,469
15,920,000
664,946
66,480,000
66,480,000
Italy
36,880,000
Yexioo
16,160,000
Peru
···8,716,578
457,167
37,840,000
1J,806,8~J2
3,600,000
·~·1,102,300
12,880,000
70,.480,000
2,034,650
6,320,000
35,120,000
972,192
3,760,000
Republ10 of the Conco
(formerly Belgian Congo)
1<4,980,000
~ioa
5,4040,000
1.4,880,000
Yqoslarla
All other
oountries (total)
6,560,000
···2,0361'260
.See Part 2, Appendix to Tariff Sohedules •
••Renublic of South Afrioa.
···Imports
···551,150
5,040,000
Bol1rla
-"'Un. So.
7,520,000
as
or
July
12, 1965.
PREPARED IN 'lID.: BUREAU OF CUSTCMS
15,760,000
···2,375
6,080,000
·"1,676,019
11,840,000
17,840,000
6,0130,000
6,080,000
TREASURY DEPARTMENT
Wa.hington, D. C.
F-123
WEDNE s~~lj3iffis?)'9 65
PRELIMINARY DATA ON IMPORTS FOR CONSL'MPTION aT UNW.NUFACTURED LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISHED
BY PRESID1'NTIAL PROCLAMATION NO. 3257 OF SEPTEMBF;R 22, 1958, AS MODIfIED BY THE TARI~F SCHEDULES or '!'HE
lJNITJi.:D STATr.S, WHICH BECAMI: EITJI',cTIVt AUGUST 31, 1963.
OU.1R'l'BRLY OU<Jll PERIOD -
April 1, 1965 - June 30, 1~65
IMPORTS -
April 1, 1~65 - June 30, 1~65
I'l'»d 925.01-
Country
ores
and material.
Le~-bearlDC
ef
Proeluotion
ITEM 925.04-
ITEM 925.02-
ITEM 925.03-
UDrrought lead aM
lead waste aIlel scrap
I
I
I
I
ores Ul4
materials
Z~eariDC
:
I
I
I
:
U1IItTought ziDo (exoept all."..
ef zinc aDd. zinc cluat) aDd.
zinc wast. U14
.era,
:
orb
.i.uatralia
Be14ilB and
~
11,220,000
1l,220,000
22,540,000
72,540pOOO
(total)
BoliTia
7,520,000
5,040,000
2,283,681
13,.04<40,000
13 p 440 p OOO
15,920,000
15,~20,000
66,480,000
66,48L,UI)0
Italy
Yexioo
Peru
16,160,000
16,160,000
So. ilrioa
1,.4,880,000
6,560,000
6,560,000
-Se. Part 2, Appendix to Tariff Sohedules.
--Republio of South Afrioa.
PREPARED IN THJ: BUREAU OF CUSTCMS
37,840,000
37,840,000
3,600,000
1,432,~~0
36, 82 5,323
70,.480 ,000
60,022,157
6,320,000
6,31~,~48
12,880,000
12,8n,4~~
35,120,000
35,120,000
3,760,000
3,75,,178
5,440,000
5,438,847
6,080,000
6,080,000
14,880,000
yugoslaTia
All other
oountries (total)
254,332
36,880,000
Republio of the Congo
(formerly Belgian Congo)
--un.
~,
15,760,000
15,760,000
6,080,000
1,526,103
11,840,000
17,840,000
TREASURY DEPARTMENT
Washington, D. C.
F-123
WEDNES~~~~S~965
P}{ELIMINARY DATA ON IMPORTS FOR CONSL'MPTION or UNldANUFACTURED LEAD AND ZINC CHARGEABLE TO THE QUOTAS ESTABLISHED
BY PBESIDt'NTIAL PRCCLAMATION NO. 3257 OF SEPTEMBER 22, 1958, AS MODD'IED BY 'J'HE TARI~r SCHEDULES or 'rm:
uNITli.:D STATES, WHICH BECAMJ: EITF.CTIVE AUGUST 31, 1963.
OU.1Rl'BRLY QUO'U PERIOD -
April 1, 1,65 - Jun. 30, 1,65
IMPORTS -
April 1, 1,65 .. Jun. 30, 1,65
lTI}.f
925.01.
I
I
CouDby
.f
Pr04uotion
Le&i-beariDt orea
and materials
ITEM 925.04-
ITEM 925.02-
rrD4 925.03I
&
I
.t
Uafrought lead aM.
lead waste an4 scrap
I
Ziu.-beariDt orea ani
materials
.I
,
u.rought zinc (exoept al1C1J"s
ef zino &Dd. zinc cluat) &Dd.
zinc wast. aD4 sera,
lJIporta
.A.utra1ia
11,220,000
11, 220, OOC
22,5040,000
~2,
5409000
BelCl18 and
~ (total)
BoliTia
5,040,000
2,283,681
CaDa4a
13,-4<40,000
13,440,000
15,920,000
15,~20,000
66,480,000
66,48L,uVO
Italy
Yerloo
Peru
16,160,000
16,160,000
14,880,000
6,560,000
6,560,000
-See Part 2, Appendix to Tariff Sohedules •
••Republic of South Afrioa.
PREPARED IN THJI.: BUREAU OF CUSTCMS
37,840,000
37,840,000
3,600,000
1,432",0
36,825.323
70,.480 ,000
60,022,157
6,320,000
6,31,,~48
12,880,000
12,8n,49~
35,120,000
35,120,000
3,760,000
3,75,,178
5,440,000
5,438,847
6,080,000
6,080,000
14,880,000
YugoslaTia
.A.U other
oountries (total)
4,254,332
36,880,000
Republio of the CODto
(formerly Belgian Congo)
-"Uu. So. Urioa
7,520,000
15,760,000
15,760,000
6,080,000
1,526,103
17,840,000
17,840,000
TlUASU HY DEP AR1lm~ T
Hashington
UiK3DIA T~
i~LZASH:
F-124
WEDNESDAY, JULY 14, 1965
T~e
Bureau of Customs has announced the following preliminary
figures showinG the imports for consumption from January 1, 1965,
to July 3, 1965, inclusive, of commodities under quotas established
pursuant to the Philippine Trade Agreement Revision Act of 1955:
3stablished Annual
Quota Quantity
Commodity
Unit of
Quantity
Imports as of
July 3, 1965
Buttons •••••••
510,000
Cigars •..••.••
120,000,000
Number
...
268,800,000
Pound
Quota filled*
Cordage
.......
6,000,000
Pound
4,172,762
Tobacco
.......
3,900,000
Pound
3,006,912
Coconut oil
Gross
223,574
4,434,097
*Approximately 275,327,530 pounds entered through July 2, 1965.
TREASURY DEPAR'Il-1FlJT
Washington
IMMEDIA TE RELEASE
F-124
WEDNESDAY, JULY 14, 1965
The Bureau of Customs has announced the following preliminary
figures showine the imports for consumption from January 1, 1965,
to July 3, 1965, inclusive, of commodities under quotas established
pursuant to the Philippine Trade Agreement Revision Act of 1955:
Commodity
Established Annual
Quota Quantity
Unit of
Quantity
Gross
Imports as of
July 3, 1965
Buttons •••••••
510,000
Cigars ••••••••
120,000,000
Number
Coconut oil •••
268,800,000
Pound
Quota fil1ed*
Cordage •••••••
6,000,000
Pound
4,172,762
Tobacco •••••••
3,900,000
Pound
3,006,912
223,574
4,434,097
*Approximately 276,327,530 pounds entered through July 2, 1965.
-2-
COTTON HASTES
(In pounds)
COTTON CARD STRIPS made from cotton having a staple of less than 1-3/16 inches in length, COMBER
vJASTE, LAP WASTE, SLIVER WASTE, AND ROVING WASTE, WHETHER OR NOT NANUFACTURED OR OTHERWISE
ADVANCED IN VALUE: Provided, however, that not more than 33-1/3 percent of the quotas shall
be filled by cotton wastes other than comber wastes made from cottons of 1-3/16 inches or more
in staple length in the case of the following countries: United Kingdom, France, Netherlands,
Switzerland, Belgium, Germany, and It~:
Country of Origin
.•
Established
TOTAL QUOTA
Total Imports
:
Sept. 20, 1964, to
: Jull 12. 1965
:
Established:
33-1/3% of t
Total Quota:
4,323,457
239,690
227,420
69,627
68,240
44,388
38,559
341,535
17,322
8,135
11,713
239,393
CUba ••• o • • • • • • • • • • • • • • • • • •
6,544
Germany...................
Italy.....................
other, including the U.S ••
76,329
21,263
25,425
25,443
7,088
5,482,509
319,795
1,599,886
United Kingdom ••••••••••••
Canada....................
France....................
India and Pakistan........
Netherlands...............
Switzerland...............
Belgium...................
Japan.....................
China.....................
Egypt.....................
1/
Included in total imports, column 2.
~A~~An
;n thA
~l~p.ml
of Customs.
43,264
1,441,152
75,807
22,747
14,796
12,853
Imports
Sept. 20 1964,
to July i 2, 19b5
i/
TREASURY DEI>AR'lMFlIT
Washington, D. C.
4MID lATE RELEASE
EDNESDAY, JULY
1~,
F-125
1965
Pre1.1minary data on imports for consumption of cotton an1 cotton waste chargeable to the quotas established by
residential Proclamation No. 2351 of September 5, 1939, as amerned, ani as modified by the Tariff Schedules of the
~ted States which became effective August 31, 1963.
The country designations in this press release are those specified in the appeoiix to the Tariff Schedules of the
~ted States. There is no political connotation in the use of ou1:.DKlded names.)
COTTON (other than linters) (in pouma)
Cotton umer 1-1/8 inches other than rough or harsh lD'Iier
Imports September 20___ 1961Lo- JulY ] 2. 19tiS
:nmtq of Origin
~t and Sudan ••••••••••••
!ru •••••••••••••••••••••••
~ia
and Pakistan •••••••••
iUBa ••••••••••••••••••••••
~co •••••••••••••••••••••
r. .il .................... .
non of Sorlet
Socialist Republics ••••••
rgent~ •••••••••••••••••
litl •.••.••..•......•.....
~or ••••••••••••••••••••
Established Quota
Country of Origin
Imports
Established Qqota
314"
Hornuras ••••••••••••••••••••
783,816
247,952
2,003,483
1,)70,791
8,883,259
618,723
6R,S99
Par~
752
871
124
••••••••••••••••••••
Colombia ••••••••••••••••••••
Iraq ••••••••••••••••••••••••
2,701,763
!I
475,124
5,203
237
9,333
~I
SJ
, Except Barbados, Bermuda, Jamaica, Trinidad,
I Except Nigeria and Ghana.
am
195
2.240
British East Africa •••••••••
Indonesia ani NetherlaDis
New Guinea••••••••••••••••
British W. Indies •••••••••••
.1ger.1a •••••••••••••••••••••
Britiah V. Africa. ••••••••••
Other. including the U.s ....
71.388
21,321
5,377
16. ow.
Tobago.
.
Cotton I-Usn or more
Established Yearly Quota - 45.656.420 lbs.
Imports August 1.
1964 -
Julv 12, 1965
Staple Length
1-3/8" or more
1-5/32" or IIIDre ard
1-)/8" (Tangtds)
All.Dcation
Imports
39_590.Tl8
39,590,778
1.500.000
51,468
lD'Iier
1-1/Bn
or IIIDre ani under
..
_ I.....
1.._6i6"i_6J...2
?
M?
?i,
r,
Im!nr!:2
TREASURY DEPAR'lMENT
Washington, D. C.
IMMED lATE RELEASE
WEDNESDAY, JULY 14, 1965
F-125
Prelimina.ry data on imports for consumption of cotton am cotton waste chargeable to the quotas established by
Presidential Proclamation No. 2351 of September 5, 1939, as amerrled, ani 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 apperrlix to the Tariff Schedules of the
United States. There is no political connotation in the use of outaldad names.)
COTTON (other than linters) (in pounis)
Cotton under 1-1/8 inches other than rough or harsh under
~rt.~ S~temb~~_2Q.
Country ot Origin
Egypt and Sudan ••••••••••••
Peru •••••••••••••••••••••• ~
India and Pakistan •••••••••
China ••••••••••••••••••••••
Mexico •••••••••••••••••••••
Brasil •••••••••••••••••••••
Union ot Sorlet
Socialist Republics ••••••
Argent~ •••••••••••••••••
Haiti ••••••••••••••••••••••
Ecuador ••••••••••••••••••••
!I
2/
Established Quota
Imports
783,816
247,952
2,003,483
1,370,791
8,883,259
618,723
Countr.r of Origin
Eatahli shed Quota
Honduras ••••••••••••••••••••
()i;, ~199
2,701,7 63
11
475,l24
5,203
237
9,333
Except Barbados, BenlLKla. Jamaica. Trinidad,
Except Nigeria and Ghana.
3/4"
19CL- July li---l96 r;
~I
g
871
Colombia ••••••••••••••••••••
124
195
2.240
Iraq ••••••••••••••••••••••••
British East Africa •••••••••
ID::lonesia ani Netherlauis
New Guinea••••••••••••••••
British W. Indies •••••••••••
R1geria •••••••••••••••••••••
Britiah 11. Africa. ••••••••••
other. including the U.s ....
am
Toba&o.
Cotton 1-lISn or JIO.re
Established YearlY Quota - 45.656.429 1bs.
Imports Augwst. 1. 1964 - Ju1 v 12, 1965
St.ap1e Length
1-3/8ft or more
1.-5/32" or IDDre am UDier
1.-;J/sn (TangtUs)
1-1/8" or ..,re and under
1-3/sn
752
Par~ ••••••••••••••••••••
!amnrts
Allocation
39. 590. Tl8
39,590,778
1..500.000
51,468
4.565.642
2,662,245
7l.J88
21.321
5,m
16.004.
T!T2rt.a
-2-
COTTON l:lASTSS
(In pounds)
COTTON CAlm STl1IP;j JTlade fron cotton havi:1g a st::tple of less tha::1 1-3/16 inches in leneth, COlmER
'/ASTE, LAP 'v'JASTE, SLIVill '/vA3TE, AND ROVING ~1ASTE, HHETHErt 011. N,)T HANUl'-'ACTURED OR OTHERWISE
AT)VANCEJ DJ VAlliE: Provirled, ho,-vever, that not :nore than 33-1/3 percent of the quotas shall
be fillerl by cotton \-Jastes other than comber wastes mRde from cottons of 1-3/16 inches or more
in staple length in the case of the follovnnp; countries: United Kingdom, France, Netherlands,
Sv:itzerland, Belgium, Germany, and Italy:
:
Country of Origin
United KingdoM ••••••••••••
Ca!lada ••••••••••••••••••••
France ....•.....••.•......
India and Pakistan ••••••••
Netherl:lnds •••••••••••••••
Switzerland •••••••••••••••
RelgilLrn. •••.•••••••••••••••
J rtpan • • • • • • • • •
• •••••
China............
• •••••
ER:'YP t .................... .
wba ..................... .
Germany.. . • . .• .. • . •..
Italy. . . . . . . . . . . . . ...
other, includinf, the U.S ••
Established
TOTAL QUOTA
4,323,4$7
239,69 0
11,713
239,393
69,627
68,24 0
44,388
38,5$9
341,535
17,322
8,13$
6,544
76,329
21,263
43,264
$,482,509
319,79$
,?27,b20
,!/ Included in total imports, column 2.
Prepared in the Bureau of CUstoms.
F-125
Total Imports
Sept. 20, 1964, to
July 12, 196$
Established :
33-1/3/0 of:
Total Quota
1,441,1$2
7$,807
22,747
:!l.!,796
12,8$3
25,)~25
2$,443
7,0138
1,599,8fl6
Imports,!/
Sept. 20i 19641
to July 2, 190$
TREASURY D~AR'Dmfr
Wuhington, D. C.
IMMEDIATE RELEASE
WEDNESDAY, JULY 14, 1965
F-126
The Bureau of CUstoms announced todq prel..im1nary figures showing the
quantities of wheat and milled wheat products authorized to be entered, or
vitlxirawn from warehouse, for consumption under the import quotas established
in the President t s proclamation of Mq 28, 1941, as moditied by the President' 8
proclamation of April 13, 1942, am provided for in the Tariff Schedules of
the United States, for the 12 months commencing Mq 29, 196 5, as follows:
••
••
:
••
Country
of
Origin
Wheat
:
••
Milled wheat products
Established
Quota
(Bushele
Canada
China
Hungary
Hong Kong
Japan
United Kingdom
Australia
Germany
S)Tia
New Zeal8D1
ChUe
NetherlaMs
Argentina
Italy
Cuba
France
Greece
Mexico
Panaaaa
Uruguay
Polam am Danzig
Sweden
Yugoslavia
lforwq
Canary Islands
Rumania
Guatemala
795,000
100
100
100
100
2,000
100
1,000
100
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
3,81:;,000
4,000,000
J,31S,O(lO
1,000
100
100
Bruil
Union of Soviet
Socialist Republica
100
100
Belgium
Other foreign
or areas
Poums)
~tries
800, fi)()()
TREASURY DEPAR'lHEM
Wuhington, D. C.
IMMEDIATE RELEASE
WEDNESDAY, JULY 14, 1965
F-126
The Bureau ot Customa announced todq prelim1nary figures showing the
quantities ot wheat am milled wheat product. authoriled to be entered, or
withdrawn from warehouse, tor consumption under the import quotas established
in the President' 21 proclamation ot Mil' 28, 1941, as moditied by the President's
proclamation ot April 13, 1942, am provided tor in the Taritf Schedules ot
the United States, tor the 12 months COlllDeJlcing Mq 29, 1965, &8 tollows:
••
:
:
Country
of
Origin
:
:
:
Wheat
Milled wheat products
••
;
Imports
: Established
Established :
:May 29, 1965, to:
Quota
Quota
rJu1112 , 1965
(Bushels)
Canada
China
Hungarr
Hong Kong
Japan
Un! ted Kingdom
Australia
Gel"lDBJl1'
5;yria
Nev Zealand
ChUe
Netherlands
Argentina
Italy
795,000
100
100
100
100
2,000
100
Cuba
France
Greece
1,000
Mexico
100
Panau.
Uruguq
Polmi am Danzig
SW8den
Yugoslavia
lforvq
Canary Isl&D1s
Rnunia
Guateula
Bushels)
;
(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
1,000
100
100
BruU
Union ot Soviet
Socialist RepublicI
100
100
Belgium
Other foreign countries
or &reU
8()),OOO
4,000,000
3,815,000
-2-
Commodity
Period and Quantity
.• Unit of · Imports as of
:
Quantity · July 3, 1965
Absolute 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) •••••••••••••••• o.
F-127
1,200,000
Pound
12 mos. from
Sept. 11, 1964
1,000
Pound
12 mos. from
August 1, 1964
1,709,000
Pound
Quota filled
Quota filled
T:EASlTdY
!)EPAE{TI1ENT
i.:8.shin~on
r:-~:mI
c. TE
rLSL:~\S2
F-127
WEDNESDAY, JULY 14, 1965
The Bureau 0 f CUstoms announced tooay preliminary figures on imports for consumption of the follovincr commooities from the beginning of the respective quota
perioos through July 3, 1965:
.
Com:nodity
Period ano Quantity
.
:Unit of :Imports as of
;Quantity;July 3, 1965
Tari+'f-Hate Quotas:
Cre~,
........
Calendar year
1,500,000
Gallon
639,114
or sour ••
Calendar year
3,000,000
'1allon
32
fresh or sour
vllo1e rTilk, fresh
Cattle, 700 Ibs. or more each f,pr. 1, 1965 (other than dairy COHS) ••• June 30, 1965
July 1, 1965 Sept. 30, 1965
Cattle, less than 200 Ibs.
120,000
Head
28,206
120,000
Head
1,264
Head
50,777
e,'1ch ••••••••••••••••••••••
12 mos. from
April 1, 1965
200,000
'<'ish, fresh or {'rozen, filleted, etc., cod, '1adclock,
hake, pollock, cusk, and
rosefish ••••••••••••••••••
Calendar year
2b,383,5e9
Pound
13,832,989 ~I
Tuna Fish •••••••••••••••••••
Calendar year
66,059,400
Pound
19,159,835
", "1i te or Irish potatoes:
Certi"ied seed ••••••••••••
Other
12 mos. from 114,000,000
Sept. 15, 1964 b5,000,000
Pound
Pound
Quota filled
Quota filled
nov. 1, 196b Oct. 31, 1965 69,000,000
Pieces
Quota filled
.....................
:illives, forks, and spoons
vith stainless steel
~"".~nles
•••••••••••••••••••
1/ I~ports for consumption at the quota rate are limited to 18,287,691 pounds
'luring t~e first 9 T'lonths 0: the calendar year.
TREASURY DEPARTMENT
lV'ashington
r:r:HEDIATE RELSASE
WEDNESDAY, JULY 14, 1965
F-127
The Bureau of Customs announced today preliminary figures on imports for consumption of the follmving commodities from the beginning of the respective quota
periods through July 3, 1965:
Commodity
Peri od and Quantity
.:Unit of .:Imports as of
.:Quantity:July
. 3, 1965
Tariff-Rate Quotas:
........
Calendar year
1,500,000 Gallon
or sour ••
Calendar year
3,000,000 I}allon
Cream, fresh or sour
rhole
~1ilk,
fresh
Cattle, 700 Ibs. or more each ~pr. 1, 1965(other than rlairy C01-rS) ••• June 30, 1965
July 1, 1965 Sept. 30, 1965
Cattle, less than 200 los.
each .••••••••.•.......••..
12 mos. from
,\pril 1, 1965
32
120,000 Head
28,206
120,000 Head
1,264
200,000 Head
50,777
<'ish, fresh or frozen, fil-
leted, etc., cod, ~addock,
hake, pollock, cusk, and
rose fish ••••••••••••••
•••
Calendar year
24,383,589 Pound
13,832,989
Tuna Fish .••••••.••.••••..••
Calendar year
66,059,400 Pound
19,159,835
:Thite or Irish potatoes:
Certified seed ••••••••••••
other ..••.•.•.•••..••....•
12 mos. from 114,000,000 Pound
Sept. 15, 1964 45,000,000 Pound
Quota filled
Quota filled
Nov. 1, 1964 Oct. 31, 1965 69,000,000
Quota filled
0
Knives, forks, and spoons
,nth stainless steel
~ J.!ldle s
!/
•••••••••••••••••••
Pieces
Imports for consumption at the quota rate are limited to 18,287,691 pounds
during the first 9 months of the calendar year.
2/
-2-
Unit of
Quanti ty
Imports as of
July 3, 1965
1,200,000
Pound
Quota filled
Period and Quantity
Commodi ty
Absolute Quotas:
Butter substitutes containing over L5% of butterfat,
and butter oil •••••••••••
Calendar year
Fibers of cotton processed
but not spun
12 mos. from
Sept. 11, 1961~
1,000
Pound
12 mos. from
August 1, 196b
1,7 09,000
Pound
.............
Peanuts, shelled or not
shelled, blanched, or
otherwise prepared or
preserved (except peanut
butter)
••••••••••••••••
F-127
0
•
Quota filled
- 3 -
sale or other disposition of Treasury bills does not have any special treatment,
such, under the Internal Revenue Code of 1954.
8S
The bills are subject to estate,
inheritance, gift or other excise taxes, whether Federal or State, but are exempt
f~
all taxation now or hereafter imposed on the principal or interest thereot by aQY Statl
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 Boll
by th~ 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 hen
under are sold is not considered to accrue until such bills are sold, redeemed or othe
wise 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 moou
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, prescrH
the tenDs of the Treasury bills and govern the conditions of their issue.
the circular may be obtained from any Federal Reserve Bank or Branch.
Copies of
- 2 -
printed forms and forwarded in the special envelopes which will be supplied by Feder
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 bankiD.@
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 b1
applied for, unless the tenders are accompanied by an express guaranty of payment
b~
an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal Reser
Banks and Branches, following which public anouncement will be made by the Treasury
Department of the amount and price range of accepted bids.
will be advised of the acceptance or rejection thereof.
Those submitting tenders
The Secretary of the
Trea~
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 reserva-
tiona, 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 Feden
Reserve Bank on _-.:J::.;u::::ly
....-=2~M*"==:=;l.::.965==-_ _ _ , in cash or other immediately available fw
or in a like face amount of Treasury bills maturing __---lJ~u=.::1:=_Y'_:(:Hf.y:.2:=2~...oIlo.ll9:.1165::w....--.
and exchange tenders will receive equal treatment.
Cash
Cash adjustments will be made tt
differences between the par value of maturing bills accepted in exchange and the is
price of the new bills.
The income derived from Treasury bills, whether interest or gain from the sale
other disposition of the bills, does not have any exemption, as such, and
1088 ~
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
July 14, 1965
The Treasury Department, by this public notice, invites tenders for two series
of Treasury bills to the aggregate amount of $ 2,200-m0'000 , or thereabouts, for
cash and in exchange for Treasury bills maturing
of $ 2,202,
+it 000
July
, in the amount
1965
, as follows:
91 -day bills (to maturity date) to be issued
·W
f3t
_.....:.J.;:.:.u;:.:ly=--,2,...2::..,~1;:.:9....;65~__ ,
W
in the amount of $1,200,000,000 , or thereabouts, represent-
. +1f
.
ing an additional amount of bills dated April 22, 1965
and to mature
October 21, 1965 ,
·W
w:originally issued in the
,
amount of $1,001,522,000 , the additional and original bills
=tW
to be freely interchangeable.
182 -day bills, for $1,000,000,000 , or thereabouts, to be dated
·tm
July 22, 1965
=tThf
tB+
, and to mature
January
fftt:
1966
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
will be payable without interest.
They will·be issued in bearer
fo~
amoUD
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 closw
Day light SaVing
hour, one-thirty p.m., Eastern/~ time, Monday, July 19~ 1965
• Tend!.
(1 )
will not be received at the Treasury Department, Washington. Each tender must be
for an even multiple of $1,000, and in the case of competitive tenders the price
offered must be expressed on the basis of 100, with not more than three decimals,
e. g., 99.925.
Fractions may not be used.
It 1s urged that tenders be made on the
TREASURY DEPARTMENT
FOR IMMED lATE 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 July 22,1965,
in the amount of
$2,202,615,000, 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 April 22,1965,
~ture October 21,1965, originally issued in the
$1,OOl,522,000,the additional and original bills
interchangeable.
July 22, 1965,
representing an
and to
amount of
to be freely
182-day bills, for $1,000,000,000, or thereabouts, to be dated
and to mature January 20, 1966.
July 22,1965,
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
(maturi ty value).
Tenders will be received at Federal Reserve Banks and Branches
to the closing hour, one-thirty p.m.,
Eastern Daylight Saving
time,
Monday, July 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
fONarded in the special envelopes which will be supplied by Federal
~se~e Banks or Branches on application therefor.
up
Banking institutions generally may submit tenders for account of
provided the names of the customers are set forth in such
enders. 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
~esPonsible and recognized dealers in investment securities. Tenders
rom others must be accompanied by payment of 2 percent of the face
~ount of Treasury bills applied for, unless the tenders are
~~COtmpanied by an express guaranty of payment by an incorporated bank
rust company.
~ustomers
F-128
- 2 -
Immediately after the closing hour, tenders will be opened at
the Federal Reservp Banks and Rranches, following which public
announcement will be made hy the Treasury Department of the
amount and price range of acceptpd bids. Those submitting t.nders
will be advised of the acceptance or rejection thereof. The
Secretary of the Tr~asury expressly reserves the right to accept or
reject any ,lr all tenders, in whole or in part, and his act~on in
~ny such respect shall he final.
Subject to these reservations
noncompetitive tenders for each issue for $200,000 or less without
stated price from anyone hidrlpr will be accepted in full at th~
averagp pric~ (in thr~e decimals) of accepted competitive bids
for the respective issues. Settl~ment for accepted tenders in
accordance with the hids must he made or completed at the Federal
Reserve Banks on July 22, 1965,
in cash or other immediately
availahle funds or in a lik~ f~c~ amount of Treasury bills
maturing July 22, 1965.
Cash and exchange tenders will r~ceive
equal treatment. Cash adjustments will be made for differences
between the par value of maturinl!, hills accepted in exchange and
the issue price ('t the new hills.
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
TREASURY DEPARTMENT
Washington
STATEMENT OF THE HONORABLE JOSEPH W. BARR
UNDER SECRETARY OF THE TREASURY
BEFORE THE SUBCOMMITTEE ON ANTITRUST AND MONOPOLY
LEGISLATION OF THE SENATE JUDICIARY COMMITTEE
ON S. 1240
THURSDAY, JULY 15, 1965, 9:30 a.m., EDT
I appear before you today in support of S. 1240, to
provide for exemptions from the antitrust laws to assist in
safeguarding the balance-of-payments position of the United
States.
The purpose of the bill before you today is to help to
maintain the effectiveness of one of the most important
measures in the President's program for correcting our balance
of payments--the voluntary program by banks and nonbank
financial institutions for limiting loans and other credits
to foreigners.
In connection with this part of the program,
in his special balance-of-payments message to the Congress
on February 10, 1965, the President stated:
"I request the Congress to grant
exemption from the antitrust laws
~
statutory
!£ make possible the
cooperation of American banks in support of
~
balance
Ei payments objectives. 1. request, also, that the
legislation require that this exemption be administered
~
ways which will E2! violate the principles of free
competition. "
F-129
- 2 -
The urgency of restoring balance in our international
payments is known to all of you.
Continued gold losses
remind us that even despite improvement in our balance of
payments since the President's new program was announced
on February 10, foreign official holders of dollars remain
unconvinced of our ability to maintain our international
accounts in order.
Last year, after a period of improvement in some of our
major international accounts -- our exports had been rising
and our Government expenditures abroad had been falling -we were confronted with huge foreign demands for U. S. private
capital.
These resulted in an outflow of $6.5 billion.
No outflow on this scale had occurred before in our
history -- even in the first half of 1963, when new foreign
security issues alone were running at an annual rate of
almost $2 billion.
There was every indication that the
excessive outflow would continue.
It was to be expected, therefore, that the President's
new program would put strong emphasis on restraining it. One of
the means chosen was the voluntary program involving the cooperation of U. S. commercial banks and nonbank financial institutions.
- 3 -
Bank claims on foreigners rose almost $2.5 billion
last year as compared with $1.5 billion in 1963 and about
$0.5 billion in 1962.
Much of this increase reflected
foreign demand for working capital which could not be
obtained as cheaply or in such large amounts abroad, often
because of restrictive credit policies in the countries of
the borrowers.
This country obviously could not continue to become an
increasing source of working capital funds for foreigners
who should appropriately look to their own domestic credit
markets for such funds.
Borrowers in Western Europe who did
not even want dollars as such were borrowing them from U. S.
banks then using the dollars to buy their own local currencies
to meet their working capital requirements.
In the process
the dollars passed into the hands of foreign central banks
where they became potential claims on our gold supply.
To curb this outflow of funds, the Federal Reserve has
established guidelines designed to restrict substantially the
outflow of bank funds to foreign borrowers.
that these guidelines have been working.
Indications are
Long-term bank
commitments to borrowers in other developed countries averaged
- 4 less than $40 million a month during March, April, and May,
as compared with almost $300 million a month in January and
February.
Net disbursements under long-term bank loans to
foreigners, which exceeded $450 million in the first quarter,
shifted to net repayments of over $130 million in April and
May.
For the entire year we anticipate a reduction in the total
outflow of bank funds to foreigners of roughly $1-1/2 billion
from the 1964 outflow.
Nonbank financial institutions have been asked to observe
the guideline of not more than a 5 per cent increase in their
short- and medium-term investments abroad during this year and
to exercise substantial restraint in increasing their long-term
investments abroad.
We do not yet have complete data on the
performance of these institutions under the guideline, but
partial information suggests that they are cooperating.
This bill should be regarded as a piece of insurance in
attaining our objectives.
At the present time, the Federal Reserve guidelines are
of quite a general type.
The situation could arise, however,
where more specific guidelines seem desirable and where some
explicit agreement among banks to observe them also appears
- 5 -
desirable.
Such an agreement in the absence of the requested
exemption would put the banks in jeopardy of violating the law.
The banks and other nonbank financial institutions have
had considerable experience with the operation of the antitrust
laws particularly in connection with mergers.
They are quite
sensitive to the risk of violating the law, even inadvertently.
Therefore, their full cooperation in the voluntary program
could be blunted in situations which they think might expose
them to charges of antitrust violation.
A foreign applicant for a loan facing a series of refusals
from a number of banks in the same community might charge them
with a violation of the antitrust laws.
Banks naturally do
not want to expend time and money in having to defend themselves
against such suits.
Hence, while their inclination might be to
refuse the loan within the spirit of the voluntary cooperation
program, they might hesitate to take such action if it might
possibly be construed as the result of an inter-bank understanding.
We believe that the likelihood of conflict with the
antitrust laws is extremely limited; but, as I mentioned
before, the important thing in a voluntary program is the
- 6 attitude of the participating banks.
As long as they see
the possibility of an antitrust prosecution or litigation
for actions taken within the spirit of the voluntary program,
it is important to have this exemption as a means of insuring
their full cooperation.
Comparable protection was afforded by a provision in
the Defense Production Act of 1950.
It extended, among
others, to lending institutions cooperating in restraining
credit expansion under the program inaugurated in March,
1951, at the time when the Korean War was generating
inflationary pressures in the U. S. economy.
Similar
antitrust protection was afforded in the Small Business
Mobilization Act of 1942 and the Small Business Act of 1958.
As far as we know, these exemptions did not result in any
Significant compromise of our principles of free enterprise
and competition.
was
re~uested
We are asking no more in this bill than
in earlier measures of the same type, and we
are asking it in connection with our effort to solve one
of our urgent national problems -- our balance-of-payments
disequilibrium and its associated gold losses.
- 7 -
I therefore recommend that this Committee take
favorable action on S. 1240.
H.R. 5280, as introduced.
It is identical with
The House made some minor
amendments which we find acceptable; and we would be
happy to support action by this Committee recommending
corresponding amendments to S. 1240.
000
- 4 •., \
\,.
jnew dimes, quarters and hilf dollar.. Mint pl.De call for
the manufacture of
3~
billion. of the new coins ta the firet
year affer approval. and 7 billion pieces in tbe ••coad ,.ar.
The Mint's plans call for continued productiOSl of the
;;resent stlver coins while tne new coinesa ia _de read,.l
APPI'l)ximBtely 1 billion new pieces of the current .1Iver
cotnage will be added to the
.xt~t.d
12 billion piec•• aow
tn (,: trculation before producti01l ia halted.
.. 3 -
that a1vay. aris8. d•• pite tbe be.t forward plaaai... - •
DeN
prt'Jduc:t 1s being _cie.
Be v11l eouult vida -
will counsel with A•• tetant Secretary of the
aM
~aur, ao~
A.
tallaca, Mint Director Iva Aa. a4 Gell• • •leb n...,...1'bll1t7
for the operation. of tb. H6Dt. II
Hr. Decker 18 64.
Ie
wae lraduated fro.
lie baa 11• • at C~rataa
"DD.J~B1a
sace 19'0.
Stat. Uaivara1t1 ta 1922
with. degree ta ladustrtal Ch.aiatry.
1. 1927 h. received
• gx'aJuate degree in Ius in••• AdmillIstration frOID Harvard
BusineS8 School.
ae began at Clmi.ns Gla •• i,a 1930, becaae
Prisident in 1946, Chairwn of the Board ill 1961 and Cbau.a.
~xecutlve
COIlIIlittee,
l.n 1964.
Pendina approval of the propos.d
DeW
coinage Hr. Decker
.., serving 8. apart t1.llle c:ouultant to the Secretary of eM
Treasury i.n c;onuection wlth advanee punntDI for the procluctl.
dSll~S
anl1 qtlsrter.:bt and a
~!O
percent silver half dollar,
P.i:C>duct :.00 ~.)f the new coiuage cannot begin until tile Senate
anu the
hlHl
h:"'.H9~
agree upon tdentical legi.latlan and the bill
heen si.gnf:d by the Pl:eaident.
"1 have asked Me. i)(JCY,.ex to advise with us UPOD the
procurement and !;roduction aspects of the proposed new coinage
to the end lila t
the
~o~rQss
".,.-;e
should be ready to 6et into quantity
and Ule b:esiJent.,1I Secl.etary Fowler .aid.
"t~r. Uecker's advice is
abunoant
~jroducti.ol'\
lasuranc.:e for the ,wift and
)f t:he r-t:or<)seci ne"!-t" coi..nage worked out
,
r
/ I!~
.' , ( , ~I
He
g~ye8 U4
added car StLt, durLng the
,'-
cri.lci.~l
"!..ni_ti.,al uhaaea to identify and ,.>vercome the , - 1. .
in
-----~--
TllEASUllY SBCRftAaY POW'LIa ABODCD !III
APPOllflMDT
or
A. SPECIAL COlISULDft
a.
PRODUCTIOB OF THE noPOilD lIEW COIMCE
Treasury Secretary Fowler today announced the appotat.eat
of
~:L 11 tam
(~ -
Gell._, Decker. of Cornlna. lev York. • • • Special
"
ConsultaDt to the Secretary of the Treasury ill co_etLOD "ltla
productiOQ of the proposed new dUDes,
Kr. Decker ia a
r )
~rt.r• •Dd
half dollara.
producti~
'f
ADd supply expert who 18
Ihlt~ .
~ ___~-'~~ I--IvJ S Ie-(LA, 1:A . . L . '/'
Ch.l~n, of
e h~cutlv. COIBlttee of Coming Gla.
A
,;F~~!.: ~ "~,
Secreta~..,.
". ;)
.< -
, ••
~~@~;Z::.~~f,~
Fowler' a alUlOUllCement followed paa. .,_
by the House, of the
Coinage Act of 1965.
Tbe btll . . a paaled
by the Sel1&te. with s;xae differenc •• , on June 24,
Prel~dent
urged
pr~pt
,..teJ:cIa"
Tbe
Congressional 8uthorLzatioa of
aoa-.ll~
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY SECRETARY FOWLER ANNOUNCES THE
APPOINTMENT OF A SPECIAL CONSULTANT ON
PRODUCTION OF THE PROPOSED NEW COINAGE
Treasury
of William C.
Consultant to
production of
Secretary Fowler today announced
Decker, of Corning, New York, as
the Secretary of the Treasury in
the proposed new dimes, quarters
the appointment
a Special
connection with
and half dollars .
. Mr. Decker is a production and supply expert who is a
former President and Chairman of the Executive Committee, of
Corning Glass Works.
Secretary Fowler's announcement followed passage yesterday,
by the House, of the Coinage Act of 1965. The bill was passed
by the Senate, with some differences, on June 24. The
President urged prompt Congressional authorization of nonsilver dimes and quarters, and a 40 percent silver half dollar,
together with related measures, in a message on June 3.
Production of the new coinage cannot begin until the Senate
and the House agree upon identical legislation and the bill
has been signed by the President.
"I have asked Mr. Decker to advise with us upon the
procurement and production aspects of the proposed new coinage
to the end that we should be ready to get into quantity
production at the earliest possible time after approval by
the Congress and the President," Secretary Fowler said.
"Mr. Decker's advice is insurance for the swift and
abundant production of the proposed new coinage worked out
in advance by the Mint. He gives us added ability during the
crucial initial phases to identify and overcome the problems
that always arise, despite the best forward planning, when a
new product is being made. He will consult with me and will
counsel with Assistant Secretary of the Treasury Robert A.
Wallace, Mint Director Eva Adams and others with responsibility
for the operations of the Mint."
F-130
- 2 -
Mr. Decker is 64. He has lived at Corning since 1930.
He was graduated from Pennsylvania State University in 1922
with a degree in Industrial Chemistry. In 1927 he received
a graduate degree in Business Administration from Harvard
Business School. He began at Corning Glass in 1930, became
President in 1946, Chairman of the Board in 1961 and Chairman,
Executive Committee, in 1964.
Pending approval of the proposed new coinage Mr. Decker
has been serving as a part time consultant to the Secretary
of the Treasury in connection with advance planning for the
production of new dimes, quarters and half dollars. Mint
plans call for the manufacture of 3-1/2 billions of the new
coins in the first year after approval, and 7 billion pieces
in the second year.
The Mint's plans call for continued production of the
pre?ent,silver coins while the new coinage is made ready.
Approximately 1 billion new pieces of the current silver
coinage will be added to the estimated 12 billion pieces now
in circulation before production is halted.
000
TREASURY DEPARTMENT
WASHINGTON,
July 15, 1965
FOR Dvll<lEDIATE REIEASE
TREASURY DECISION ON FERROCHROMIUN
UNDER THE ANTIDIDJPING ACT
'The Treasury Department has completed the investigation with
respect to the possible dumping of ferrochromium, not containing
over 3 percent by weight of carbon, from Sweden.
A notice of a
tentative determination that this merchandise is not being, nor
likely to be, sold at less than fair value within the meaning of
the Antidumping Act will be published in an early issue of the
Federal Register.
Appraisement of the above-described merchandise from Sweden
is not being withheld at this time.
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 June 29, 1964.
The complaint was submitted by Vanadium Corporation of America,
New York, New York.
Imports of the involved merchandise received during the
period June 1964 through March 1965 were worth approximately
$4-30,000.
TREASURY DEPARTMENT
FOR IMMEDIATE RElEASE
TREASURY DECISION ON FERROCHROMIm.1
UNDER THE ANTIDUMPING ACT
The Treasury Department has completed the investigation with
respect to the possible dumping of ferrochromium, not containing
over 3 percent by weight of carbon, from Sweden.
A notice of a
tentative determination that this merchandise is not being, nor
like~
to be, sold at less than fair value within the meaning of
the Antidumping Act will be published in an early issue of the
Federal Register.
Appraisement of the above-described merchandise from Sweden
is not beinG withheld at this time.
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 June 29, 1964.
The complaint was submitted by Vanadium Corporation of America,
New York, New York.
Imports of the involved merchandise received during the
period June 1964 through March 1965 were worth approximate~
$430,000.
TREASURY DEPARTMENT
July 16, 1965
FOR IMMEDIATE RELEASE
TREASURY DECISION ON WELDED WIRE MESH
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that welded wire mesh
for concrete reinforcement from Belgium is not being, nor likely to
be, sold at less than fair value within the meaning of the Antidumpiug Act, 1921, as amended.
A rrNotice of Tentative Determination,"
was published in the Federal Register on
~
28, 1965.
No written submissions or requests for an opportunity to present
views in opposition to the tentative determination were presented
within 30
~s
of the publication of the above-mentioned notice in
the Federal Register.
Imports of the involved merchandise received during the period
January through April 1965 were worth approximately $187,000.
TREASURY DEPARTMENT
(
July 16, 1965
FOR IMMEDIATE RELEASE
TREASURY DECISION ON WELDED WIRE MESH
UNDER THE ANTIDUMPING Am!
The Treasury Department has determined that welded wire mesh
for concrete reinforcement from Belgium is not being, nor likely to
be, sold at less than fair value within the meaning of the Antidumping Act, 1921, as amended.
A "Notice of Tentative Determination,"
was published in the Federal Register on MB¥ 28, 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.
Imports of the involved merchandise received during the period
January through April 1965 were worth approximately $187,000.
TREASURY DEPARTMENT
July 19, 1965
FOR RELEASE A.M. NEWSPAPERS
TUESDAY, JULY 20, 1965
U.S. AND U.K. AGREE ON TEMPORARY CHANGE
IN WITHHOLDING TAX RATES ON DIVIDENDS
The Treasury today announced that the new system of taxation
being introduced in the United Kingdom will require modification
of the double taxation convention between the two countries.
The convention is an agreement governing the taxation of
transactions between residents in both countries.
Negotiations are now under way on revision of the convention
and both governments are confident of a satisfactory outcome at
an early date.
It is clear that Article VI of the convention -- which deals
with the taxation of dividends -- will require modification. For
that reason the United States and the United Kingdom have agreed to
termination of Article VI, effective January 1, 1966, for the
United States and April 6, 1966, for the United Kingdom.
Consequently, and in accordance with terms of the Article,
the United States has given notice of termination. This does not
affect any other Articles of the treaty.
Article VI limits the rate of United States withholding tay
on dividends paid to United Kingdom recipients by United States
companies.
Article VI also prohibits the United Kingdom from imposing
any additional tax on dividends received by individuals resident
in the United States from United Kingdom companies -- apart
from the tax imposed at the company level.
The United States withholding tax is now limited by Article VI.
to 5 percent on dividends paid by United States companies to
United Kingdom parent companies and to 15 percent to other
United Kingdom shareholders.
F-13l
- 2 Unless a new agreement is concluded and ratified before
January 1, 1966, the statutory withholding rate of 30 percent
imposed under the Internal Revenue Code will apply from that
date to all dividends paid to United Kingdom shareholders. If
an agreement is ratified after January 1, it is contemplated
that the reduced rates in the agreement will be made retroactive
to that date.
Modification of the existing agreement is required by the fact
that the new British system will impose -- effective April 6, 1966 -a new corporation tax on company profits and in addition, a
withholding tax of 41-1/4 percent on all dividends paid by
United Kingdom companies, including those paid to residents
abroad as well as to residents in the United Kingdom.
If notice to terminate the dividend article were not given,
the United States withholding tax rate next year would continue
to be frozen at the rates of 5 and 15 percent, but the United
Kingdom would be free to impose the 41-1/4 percent withholding tax.
Termination of the existing dividend article allows both
countries the necessary flexibility to arrive at mutually acceptable
withholding tax rates.
It is anticipated that whatever agreement on withholding tax
rates is reached in the negotiations now underway, the rates
will apply retroactively from January 1, 1966, in the case of the
United States, and from April 6, 1966, in the case of the United
Kingdom. If withholding takes place at the statutory rates
prior to these dates, appropriate refunds will be made.
The notification for termination of the dividend article
which the United States has given to the United Kingdom is
therefore not with the intent of eliminating reduced rates of
withholding tax but rather to facilitate a transition from the
existing treaty provisions on dividends to whatever new rates
may be arrived at in the current negotiations.
The text of a memorandum of understanding between the two
countries on this subject is attached.
000
MEMORANDUM OF UNDERSTANDING
A delegation from the United Kingdom Government headed
by Sir Alexander Johnston, Chairman of the Board of Inland
Revenue, and a delegation from the United States Government
headed by Stanley S. Surrey, Assistant Secretary of the United
States Treasury, met in London on June 25, 1965, to consider,
in the light of the prospective changes in the United Kingdom
taxation system, revision of the Convention between the United
States and the United Kingdom for the avoidance of double taxation on income.
Both parties are confident that agreement can be reached
at an early date on the revision of the Convention. While
discussions on such revisions proceed, it is agreed that:
(1) In order to remove the restraints presently in
Article VI upon withholding tax on dividends, and without
prejudice to the reductions in the rates of tax which may
ultimately be agreed upon, the United States Government will
present to the United Kingdom Government on or before June
30, 1965, and the United Kingdom Government will accept, a
notice of termination of Article VI.
(2) If revision of the Convention is not completed before
December 31, 1965, for such interim period as may exist until
a new agreement becomes effective, the United States, beginning January 1, 1966, and the United Kingdom, beginning April
6, 1966, will impose withholding tax on dividends transferred
to residents of the other country at statutory rates. It is
anticipated that the withholding rates agreed upon will be
retroactive to the above respective dates and that such
refunds will be made as may be required to reduce the tax to
the level ultimately agreed upon in the revised Convention.
(3) Decisions on changes in the Article XIII dealing
with the credit for underlying tax on corporate profits will
take effect on a date to be agreed, such date to be the same
for both countries, and both parties will endeavor to arrange
that the date will be April 6, 1966.
June 30, 1965
TREASURY DEPARTMENT
roR RELEASE A.M. NEWSPAPERS,
~e~,
July 20, 1965.
RESULTS OF 'fREASURY'S WEEKLY 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 April 22 1965
~d the other series to be dated July 22, 1965, which were offered on July 14, w~re '
opened at the Federal Resez:re Banks on July 19. Tenders were invited for $1,200,000,000,
~thereabouts, of 91-day bills and for $1,000,000,000, or thereabout~ of 182-day bills.
The details of the two series are as follows:
~a~
RANGE OF ACCEPTED
COMPETITIVE BIDS:
ijigh
Low
Average
a/ Excepting
91-day Treasury bills
maturing October 21, 1965
Approx. Equiv.
Price
Annual Rate
99.034 a/
3.822% .
99.030 3.837% .
99.031
3.833% 11
one tender of $5,000;
bl
182-day Treasur.y bills
maturing January 20, 1966
Approx. Equiv.
Price
Annual Rate
98.024 bl
3.909%
98.02l 3.915"
98.022
3.913%
Y
Excepting 1 tender of $800,000
73. percent of the amount of 91-day bills bid for at the low price was accepted
97 percent of the amount of 182-day bills bid for at the low price was accepted
TOTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTALS
m~ude8
AEP1ied 'For
$ 47,007,000
1,'-~27 ,62.3,000
30,196,000
30,412,000
16,273,000
35,116,000
291,942,000
42,563,000
22,581,000
27,928,000
27,525,000
129,829,000
$2,128,995,000
Accepted
$ 33,218,000
774,143,000
18,196,000
29,552,000
14,322,000
2h,025,000
152,812,000
35,612,000
17,256,000
26,7h8,000
17,147,000
58,662,000
$1,201,693,000
sf
Applied For
$ 32,860,000
1,620,427,000
13,746,000
28,089,000
5,667,000
22,160,000
279,935,000
15,614,000
9,730,000
9,532,000
11,397,000
143,884,000
$2,193,041,000
Accepted
$ 11,560,000
809,328,000
4,921,000
15,531,000
3,617,000
8,760,000
97,050,000
10,214,000
6,200,000
8,317,000
6,397,000
22,699,000
$1,004,594,000
$269,612,000 noncompetitive tenders accepted at the average price of 99.031
m~udes $91 299 000 noncompetitive tenders accepted at the average price of 98.022
On a coupon :i.ssu~ of the same length and for the same amount inve sted" the return on
these bUls would provide yields of 3.92%, for the 91-day bills, and 4. 05%, for the
l82-day bills. Interest rates on bills are quoted in terms of bank disCOlUlt with
~ereturn 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
In contrast, yields on certificates, notes, and bonds are compute~ l.n, tenns
of lnterest on the amount invested, and relate the number of days remaimng l.ll an
interest payment period to the actual number of days in the period, with semiannual
~~ounding if more than one coupon period is involved.
yea:.
F..132
sf
TREASURY DEPARTMENT
July 20, 1965
FOR RELEASE P.M. NEWSPAPERS
TUESDAY, JULY 20, 1965
FOWLER APPOINTS NEW COMMISSIONER OF CUSTOMS
Secretary of the Treasury Henry H. Fowler today announced
the appointment of Lester D. Johnson as Commissioner of Customs.
Mr. Johnson has been Acting
October, 1964. He has served in
Customs since 1935. He succeeds
to accept appointment as a Judge
Commissioner of Customs since
the Department's Bureau of
Philip Nichols, Jr., who resigned
in the U. S. Customs Court.
Beginning as a Clerk and Examiner in the Bureau's San Francisco
office, Mr. Johnson later served as Appraiser of Merchandise,
Treasury Attache in Japan, Assistant Deputy Commissioner, Regional
Customs Representative in Italy, Deputy Commissioner and
Assistant Commissioner.
Mr. Johnson was a member of the Advisory Committee to the
Survey Group appointed by the Secretary of the Treasury to
evaluate the missions, organization and management of the Bureau
of Customs. The President's Reorganization Plan No.1, adopted
May 24 of this year, enabled the major recommendations of that
Committee to be put into effect. One of Mr. Johnson's major
achievements was the reorganization in 1963 of the Customs Agency
Service, the enforcement arm of the Bureau of Customs.
Born in San Jose, California, on May 15, 1907, Mr. Johnson
earned his A.B. degree in Economics from San Jose State College
in 1929 and his Masters degree in Public Finance from Stanford
University in 1933. After graduation from that University, he
instructed in Economics at the Polytechnic College in Oakland,
California, for two years before joining the Treasury Department.
Mr. Johnson is married to the former Faye Lucas, and resides
at 2306 Windsor Road, Alexandria, Virginia. He is a member of the
American Club of Rome, the Foreign Correspondents Club of Tokyo,
and the National Press Club.
F-133
- 2 -
As Commissioner of Customs he will direct the activities of
9,300 Customs employees throughout the United States and abroad.
The Customs Service processes 180 million persons arriving at the
U. S. Ports of Entry each year and collects more than $2 billion
annually in Customs duties and is engaged in the prevention of
smuggling of contLaband into the United States.
000
2
Actual
January
budget
Actual
Change
from
budget
General Services Administration •••••• ••••
Housing and Home Finance Aeency •• ••••••••
National Aeronautics and Space
$592
328
$616
176
$632
244
$+16
+68
Administration ....•.....................
4,171
5,478
861
57
4,900
5,376
1,013
76
103
5,094
5,488
1,073
61
+194
+112
+60
-15
-103
Deduct interfund transactions ••••••••••••
98,3 48
664
98,314
833
97 ,388
869
-926
36
Total expenditures ••••••••••••••••••
97,684
97,481
96,518
-963
-8,226
-6,281
-3,474
+2,807
1964
Descri •ntion
Expenditures by major agency - Continued
Veterans Administration ••••••••••••••••••
Other independent agencies •••••••••••••••
District of Columbia •••••••••••••••••••••
Allowances, undistributed ••••••••••••••••
Subtotal ........................... .
Administrative budget surplus (+) or
deficit (-) ............................ .
FEDERAL RECEIPI'S FROH AND PAYMENTS TO THE PUBLIC
(Fiscal years. In millions)
Federal receipts from the public:
Administrative budget receipts ( net) •••
Trust and other receipts ( net) .........
Deduct intragovernmental and other noncash transact ions .•.•.....•.•...........
$89,459
30,331
$91,200
30,515
$93,044
31,055
$+1,844
+540
4,259
4,331
4,415
+84
115,530
117 ,384
119,685
+2,301
97,684
28,885
97,481
29,0 45
96,518
29,627
-963
+582
6,237
5,13 4
3,776
-1,35 8
Total Federal payments to the public
120,332
121,393
122,369
+976
Excess of cash receipts from or pa~~ents
to (-) the public •••••••••••••••••••••••
-4,802
-4,009
Total Federal receipts from the
public .............................
Federal payment s to the public:
Administrative budget expenditures (net)
Trust fund and other expenditures (net)
Deduct intragovernmental and other noncash transactions •••••••••••••••••••••••
-2,684·
+1,325
NOTE.--Figures are rounded to nearest I!lillion and will not necessarily add to
totals.
fwr,;INISTRATIVE BUDGET RECEIPTS AHD EXPENDI'l'URES
(Fiscal years. In millions)
1965
Actual
January
budget
Actual
Change
from
budget
$4U,697
23,493
10,211
4,016
3,646
$41,000
25,600
10,133
4,485
4,215
$48,192
25,452
10,918
4,596
4,154
+$1,792
-148
+185
+111
-61
Deduct interfund transactions ••••••••••••
90,123
664
92,033
833
93,913
869
+1,880
36
Net receipts ....................... .
89,459
93,044
+1,844
1964
De script ion
Receipts by source
Individual income taxes ••••••••••••••••••
Corporation income taxes •••••••••••••••••
Excise taxes •••••••••••••••••••••••••••••
Mis ce llaneous receipt s •••••••••••••••••••
All other receipts •••••••••••••••••••••••
Subt otal ••••••••••••••••••••••••••••
Expenditures by major agency
211
23
255
26
239
24
-16
112
332
1,991
1,485
193
319
341
300
2,050
1,200
215
320
210
322
2,036
1,204
184
+1
-131
+22
-14
+4
-31
5,100
2,191
686
4,105
2,153
164
4,442
2,888
157
+337
+135
Labar ••••••••••••••••••••••••••••••••••••
49,160
1,153
5,498
1,124
328
370
Post Office ••••••••••••••••••••••••••••••
St at e ••••••••••••••••••••••••••••••••••••
341
41:3,100
1,269
5,710
1,225
367
495
118
388
46,118
1,23 4
5,739
1,205
357
480
800
380
-1,922
-35
-31
-20
-10
-15
+82
-8
10,666
1,2cH
2,165
-702
151
11,200
1,351
2,100
-6 4 5
781
11,35 4
1,303
2,624
-357
795
+154
+32
-76
+288
+14
Legislative Branch and the Judiciary •••••
Executive Office of the President ••••••••
Funds Appropriated to the President:
International financial institutions •••
Office of Economic Opportunity •••••••••
Public works acceleration ••••••••••••••
Foreign assistance - economic ••••••••••
Foreign assistance - military ••••••••••
other ••••••••••••••••••••••••••••••••••
Agriculture:
Commodity Credit Corporation •••••••••••
Other ••••••••••••••••••••••••••••••••••
Comm.erce •••••••••••••••••••••••••••••••••
Defense:
Ivlili tar-y •••••••••••••••••••••••••••••••
Civil ••••••••••••••••••••••••••••••••••
Health, Education, and Welfare •••••••••••
Interior •••••••••••••••••••••••••.•••••••
Just ice •••••••••••••••••••..•••••••••••••
Treasury:
Interest on the public debt ••••••••••••
Other ••••••••••••••••••••••••••••••••••
Atomic Energy Comrrission •••••••••••••••••
Export-Import Bank of Washington •••••••••
Feaeral Aviation Agency ••••••••••••••••••
,)1d
-2
-1
- 4 Consolidated cash statement -- The reduction in the cash deficit
from the January estimate is $1.5 billion less than the decline in
the administrative budget deficit. This difference is accounted
for by:
(1) an increase of about $0.1 billion in the excess of
trust fund expenditures over recipts, reflecting $0.6 billion
higher trust fund expenditures (mainly Government-sponsored
enterprises) and $0.5 billion higher trust fund receipts than
anticipated, and (2) a decrease of $1.4 billion from the January
estimate for the noncash items (e.g., interest accruals,
transactions in non-interest bearing notes with the International
Monetary Fund, and the clearing accounts) which are deducted to
arrive at total payments to the public.
About $0.9 billion of the increase in trust fund expenditures
over the January estimate is for the Federal home loan banks,
primarily because repayments on advances to member savings and
loan associations were less than estimated in January.
Greater
than anticipated loan activity by the Federal land banks and the
banks for cooperatives accounted for an additional increase of
nearly $370 million over the earlier estimate. These increases
in net expenditures of Government-sponsored enterprises were only
partly offset by reductions in the expenditures of the unemployment
trust fund (down $206 million), the military assistance trust
fund (down $62 million), the highway trust fund (down $74 million),
and in deposit funds (down $185 million).
In addition to higher administrative budget receipts, most
trust fund receipts were greater than anticipated last January. The
largest increases occurred in the social security (up $255 million)
and unemployment (up $119 million) trust funds, also reflecting
higher levels of employment and earnings. Other sizable increases
were in the military assistance trust funds, used mainly to account
for military assistance sales transactions, (up $133 million) and
the railroad retirement trust fund (up $53 million) .
000
- 3 -
By far the largest decrease in budget expenditures was for the
military functions of the Department of Defense. These expenditures
were more than $1.9 billion below the January estimate, reflecting
primarily a slower rate of equipment procurement than had been
anticipated earlier.
Among the other sizable reductions below the January estimate
were:
$137 million for the Office of Economic Opportunity,
primarily because the present level of program expenditures was
not reached as quickly as had been anticipated, and $76 million
for the Atomic Energy Commission, reflecting operating economies
and some delays in construction and procurement schedules.
These and other decreases are partly offset by several
increases over the January estimates, including:
$288 million,
net, for the Export-Import Bank, reflecting lower sales of loans
but also a decline in loan outlays; $472 million for the Department
of Agriculture (primarily the Commodity Credit Corporation), mainly
because of greater than anticipated redemptions of CCC loans held
by banks and because of non-enactment of proposed legislation to
permit the Rural Electrification Administration to use loan
repayments for credit to its loan account rather than depositing
these funds in miscellaneous receipts; $194 million for National
Aeronautics and Space Administration programs, reflecting the
fact that research and development expenditures increased more
rapidly than had been expected; $154 million for interest on the
public debt, primarily because of higher interest rates;
$112 million for the Veterans Administration and $68 million for
the Housing and Home Finance Agency, primarily reflecting lower
mortgage sales than anticipated earlier; $109 million for the
Federal Home Loan Bank Board because of unanticipated acquisitions
of assets of insured savings and loan institutions; and
$82 million for the Post Office, reflecting a liquidation of
obligations at a faster rate than anticipated last January.
All other changes, both upward and downward, combined, amount
to a decrease of $307 million.
Administrative budget receipts were $1.8 billion higher than
the January estimate of $91.2 billion.
Individual income tax
collections were $1.8 billion above the earlier estimates, reflectin:
mainly a higher level of taxable income in calendar 1964 than had
been assumed in making the January estimate. Corporation income
tax collections were about $150 million below the January estimate.
Miscellaneous receipts and excise tax collections exceeded the
January estimates but were partly offset by lower than anticipated
estate and gift taxes.
- 2 -
In terms of the national income accounts -- including only
transactions which directly affect current production and incomes,
and measuring receipts and expenditures on an accrual, rather than
a cash basis -- preliminary estimates indicate expenditures of
somewhat more than $120 billion, receipts of somewhat more than
$119 billion, and a fiscal year 1965 deficit of about $1 billion.
This compares with an estimated deficit of $5 billion last January.
(These rough, preliminary estimates are subject to revision when
the official Department of Commerce figures are available.)
The following table shows the actual results for 1964 and the
results for fiscal year 1965 as compared with the estimates in
the January 1964 and January 1965 budget documents.
FEDEML FHlANCES
(Fiscal Years. In Billions)
Description
Administrative Budget:
Expenditures .•.•.•.•
Receipts .•.....••••.
Deficit .......•.•.
Consolidated Cash
Statement:
Payments to the
public .•••..••..•
~\eceipts from the
public ••....•....
E;~cess of
payments .••...
1964
actual
Jan.1964
estimate
Jan.1965
estimate
Actual
:p 97.7
:;;97 ·9
$ 97.5
$ 96.5
b9.5
93·0
_3~
93.0
-3·5
::S.2
J+.9
----=b.3
Change from
Jan. 1965
estimate
-$ 1.0
+
1.8
- 2.8
120.3
122.7
121.4
122.4
+1.0
115·5
119.7
117·4
119.7
+2.3
-4.8
-2.9
-4.0
-2·7
-1.3
•
Comparison of Budget Results With January
1965 Estimate
Administrative budget -- The reduction of $1.0 billion in
budget expenditures below the January estimates reflects the net
result of various decreases and increases.
FOR RELEASE 2:00 P.M., EDT,
WEDNESDAY, JULY 21, 1965
July 21, 1965
JOINT STATEMENT OF HENRY H. FOWLER, SECRETARY OF THE TREASURY,
AND CHARLES L. SCHULTZE, DIRECTOR OF THE BUREAU OF THE BUDGET,
ON BUDGET RESULTS FOR FISCAL YEAR 1965
The Treasury preliminary monthly statement of receipts and
expenditures for the fiscal year 1965, released today, shows
Federal administrative budget expenditures for the fiscal year
were $96.5 billion. Administrative budget receipts were
$93.0 billion, resulting in a budget deficit of $3.5 billion.
Both budget receipts and expenditures show a substantial
improvement over the estimates of last January. Receipts were
$1.8 billion higher and expenditures $1.0 billion lower, reducing
the administrative budget deficit by $2.8 billion, or nearly half
the amount of the earlier estimate. The 1965 deficit of
$3.5 billion was reduced nearly three-fifths from 1964 and was
the smallest administrative budget deficit in five years.
Significantly, 1965 administrative budget expenditures were
over $1 billion less than in fiscal year 1964, the first such
year to year reduction of expenditures in five years. In large
part, this result reflects the continuing efforts of the heads
of the various government agencies, at the President's insistence,
to seek increased economies in operations wherever possible and
to promote more efficient use of manpower. In addition, tax
collections were higher than in 1964 in spite of last year's
income tax reduction -- the largest and most comprehensive ever
enacted. The increased collections resulted largely from the
substantial increase in economic activity. However, the economy
in the past year did not operate at its full potential, and this
has had a direct impact on the budget results. Had the economy
reached a full prosperity level in calendar 1964, the fiscal
year 1965 budget would have shown a surplus.
On a consolidated cash basis
including the transactions
of Federal trust funds -- the fiscal year 1965 deficit was
$2.7 billion, $1.3 billion below the amount estimated last
January and $2.1 billion less than the 1964 deficit. This was
the lowest cash deficit in four years. Total cash payments to
the public in 1965 were $122.4 billion, $1.0 billion above the
January estimate. Receipts from the public totaled $119.7 billion,
$2.3 billion higher than estimated in January.
F-134
~OR
RELEASE 2:00 P.M., EDT,
ffiDNESDAY, JULY 21, 1965
July 21, 1965
JOINT STATEMENT OF HENRY H. FOWLER , SECRETARY OF THE TREASURY ,
AND CHARLES L. SCHULTZE, DIRECTOR OF THE BUREAU OF THE BUDGET ,
ON BUDGET RESULTS FOR FISCAL YEAR 1965
The Treasury preliminary monthly statement of receipts and
expenditures for the fiscal year 1965, released today, shows
Federal administrative budget expenditures for the fiscal year
were $96.5 billion. Administrative budget receipts were
$93.0 billion, resulting in a budget deficit of $3.5 billion.
Both budget receipts and expenditures show a substantial
improvement over the estimates of last January. Receipts were
$1.8 billion higher and expenditures $1.0 billion lower, reducing
the administrative budget deficit by $2.8 billion, or nearly half
the amount of the earlier estimate. The 1965 deficit of
$3.5 billion was reduced nearly three-fifths from 1964 and was
the smallest administrative budget deficit in five years.
Significantly, 1965 administrative budget expenditures were
over $1 billion less than in fiscal year 1964, the first such
year to year reduction of expenditures in five years. In large
part, this result reflects the continuing efforts of the heads
of the various government agencies, at the President's insistence,
to seek increased economies in operations wherever possible and
to promote more efficient use of manpower. In addition, tax
collections were higher than in 1964 in spite of last year's
income tax reduction -- the largest and most comprehensive ever
enacted. The increased collections resulted largely from the
substantial increase in economic activity. However, the economy
in the past year did not operate at its full potential, and this
has had a direct impact on the budget results. Had the economy
reached a full prosperity level in calendar 1964, the fiscal
year 1965 budget would have shown a surplus.
On a consolidated cash basis
including the transactions
of Federal trust funds -- the fiscal year 1965 deficit was
$2.7 billion, $1.3 billion below the amount estimated last
January and $2.1 billion less than the 1964 deficit. This was
the lowest cash deficit in four years. Total cash payments to
the public in 1965 were $122.4 billion, $1.0 billion above the
January estimate. Receipts from the public totaled $119.7 billion,
$2.3 billion higher than estimated in January.
F-134
- 2 In terms of the national income accounts -- including only
transactions which directly affect current production and incomes,
and measuring receipts and expenditures on an accrual, rather than
a cash basis -- preliminary estimates indicate expenditures of
somewhat more than $120 billion, receipts of somewhat more than
$119 billion, and a fiscal year 1965 deficit of about $1 billion.
This compares with an estimated deficit of $5 billion last January.
(These rough, preliminary estimates are subject to rev~s~on when
the official Department of Commerce figures are available.)
The following table shows the actual results for 1964 and the
results for fiscal year 1965 as compared with the estimates in
the January 1964 and January 1965 budget documents.
FEDERAL FINANCES
(Fiscal Years. In Billions)
196 2
Description
Administrative Budget:
Expenditures ••••••.•
Receipts .•••.•••••••
Deficit ••..••.••••
Consolidated Cash
Statement:
Payments to the
public ...•.••••••
Receipts from the
public ••••••••••.
Excess of
payments ••••••
1964
actual
Jan. 1964
estimate
Change from
Jan. 1965
estimate
Jan.1965
estimate
Actual
$ 97.7 $97.9
$ 91.5
$ 96.5
41.2
~
·9
~
·3
2~·0
120·3
122.1
121.4
122.4
+1.0
ll5·5
ll9·1
lll· 4
112·7
+2-3
-4.8
-2.9
-4.0
-2·7
-3· 2
-$ 1.0
+ 1.8
- 2.8
-1.3
Comparison of Budget Results With January
1965 Estimate
Administrative budget -- The reduction of $1.0 billion in
budget expenditures below the January estimates reflects the net
result of various decreases and increases.
- 3 -
By far the largest decrease in budget expenditures was for the
military functions of the Department of Defense. These expenditures
were more than $1.9 billion below the January estimate, reflecting
primarily a slower rate of equipment procurement than had been
anticipated earlier.
Among the other sizable reductions below the January estimate
were:, $137 million for the Office of Economic Opportunity,
primarily because the present level of program expenditures was
not reached as quickly as had been anticipated, and $76 million
for the Atomic Energy Commission, reflecting operating economies
and some delays in construction and procurement schedules.
These and other decreases are partly offset by several
increases over the January estimates, including: $288 million,
net, for the Export-Import Bank, reflecting lower sales of loans
but also a decline in loan outlays; $472 million for the Department
of Agriculture (primarily the Commodity Credit Corporation), mainly
because of greater than anticipated redemptions of CCC loans held
by banks and because of non-enactment of proposed legislation to
permit the Rural Electrification Administration to use loan
repayments for credit to its loan account rather than depositing
these funds in miscellaneous receipts; $194 million for National
Aeronautics and Space Administration programs, reflecting the
fact that research and development expenditures increased more
rapidly than had been expected; $154 million for interest on the
public debt, primarily because of higher interest rates;
$112 million for the Veterans Administration and $68 million for
the Housing and Home Finance Agency, primarily reflecting lower
mortgage sales than anticipated earlier; $109 million for the
Federal Home Loan Bank Board because of unanticipated acquisitions
of assets of insured savings and loan institutions; and
$82 million for the Post Office, reflecting a liquidation of
obligations at a faster rate than anticipated last January.
All other changes, both upward and downward, combined, amount
to a decrease of $307 million.
Administrative budget receipts were $1.8 billion higher than
the January estimate of $91.2 billion. Individual income tax
collections were $1.8 billion above the earlier estimates, reflecting
mainly a higher level of taxable income in calendar 1964 than had
been assumed in making the January estimate. Corporation income
tax collections were about $150 million below the January estimate.
Miscellaneous receipts and excise tax collections exceeded the
January estimates but were partly offset by lower than anticipated
estate and gift taxes.
- 4 Consolidated cash statement -- The reduction in the cash deficit
from the January estimate is $1.5 billion less than the decline in
the administrative budget deficit. This difference is accounted
for by:
(1) an increase of about $0.1 billion in the excess of
trust fund expenditures over recipts, reflecting $0.6 billion
higher trust fund expenditures (mainly Government-sponsored
enterprises) and $0.5 billion higher trust fund receipts than
anticipated, and (2) a decrease of $1.4 billion from the January
estimate for the noncash items (e.g., interest accruals,
transactions in non-interest bearing notes with the International
Monetary Fund, and the clearing accounts) which are deducted to
arrive at total payments to the public.
About $0.9 billion of the increase in trust fund expenditures
over the January estimate is for the Federal home loan banks,
primarily because repayments on advances to member savings and
loan associations were less than estimated in January. Greater
than anticipated loan activity by the Federal land banks and the
banks for cooperatives accounted for an additional increase of
nearly $370 million over the earlier estimate. These increases
in net expenditures of Government-sponsored enterprises were only
partly offset by reductions in the expenditures of the unemployment
trust fund (down $206 million), the military assistance trust
fund (down $62 million), the highway trust fund (down $74 million),
and in deposit funds (down $185 million).
In addition to higher administrative budget receipts, most
trust fund receipts were greater than anticipated last January. The
largest increases occurred in the social security (up $255 million)
and unemployment (up $119 million) trust funds, also reflecting
higher levels of employment and earnings. Other sizable increases
were in the military assistance trust funds, used mainly to account
for military assistance sales transactions, (up $133 million) and
the railroad retirement trust fund (up $53 million).
000
ADMINISTRATIVE BUDGET RECEIPTS AND EXPENDI'l'URES
(Fiscal years. In millions)
1965
1964
Description
Actual
January
budget
Actual
Change
from
budget
Receipts by source
$41,000 $48,792
25,600 25,452
10,133 10,918
4,485
4,596
4,154
4, 21 5
Individual income taxes ••••••••••••••••••
Corporation income taxes •••••••••••••••••
Excise taxes •••••••••••••••••••••••••••••
Miscellaneous receipts •••••••••••••••••••
All other receipts •••••••••••••••••••••••
$48,691
23,493
10,211
4,016
3,646
Subt otal •...........................
Deduct interfUnd transactions ••••••••••••
90,123
664
92,033
833
93,913
869
+1,880
36
Net receipts ••••••••••••••••••••••••
89,459
91 ,200
93,044
+1,844
217
23
255
26
239
24
-16
112
332
1,991
1,485
193
319
341
300
2,050
1,200
215
320
210
322
2,036
1,204
184
+1
-131
+22
-14
+4
-31
5,100
2,191
686
4,105
2,153
764
4,442
2,888
151
+331
+135
49,160
1,153
5,498
1,124
328
310
)78
347
48,100
1,269
5,710
1,225
367
495
718
388
46,118
1,234
5,739
1,205
351
480
800
380
-1,922
-35
-31
-20
-10
-15
+82
-8
10,666
1,281
11,200
1,351
2,100
-645
181
11,354
1,303
2,624
-351
195
+154
+32
-76
+288
+14
+$1,192
-148
+185
+111
-61
Expenditures by major agency
Legislative Branch and the Judiciary •••••
Executive Office of the President ••••••••
Funds Appropriated to the President:
International financial institutions •••
Office of Economic Opportunity •••••••••
Public works acceleration ••••••••••••••
Foreign assistance - economic ••••••••••
Foreign assistance - military ••••••••••
other .......•..........................
Agriculture:
Commodity Credit Corporation •••••••••••
Other •••••••••••••••••••.•••.•••••.••••
Comm.erce •••••••••••••••••••••••••••••••••
Defense:
~lili t
ary •••.••.•.•••.....••...•••••••.•
Civil ••••••••••••••••••••••••••••••••••
Health, Education, and Welfare •••••••••••
Interior ....•.....•..................••..
Justice •.....................•...........
Labor ••••.•••••••.••.••••••.•••.•••••••.•
Post Office ••••••••••••••••••••••••••••••
St ate ................................... .
Treasury:
Interest on the public debt ••••••••••••
Other ••.••••••••••...•••.••••••••••.•••
Atomic Energy Comwission •••••••••••••••••
Export-Import Bank of Washington •••••••••
Federal Aviation Agency ••••••••••••••••••
2
;r65
-702
'r51
-2
-1
19G~,
Actual
Cbange
from
budget
$632
244
$+16
+68
4,900
5,316
1,013
16
103
5,09 4
5,488
1,073
61
+194
+112
+60
-15
-103
1964
Actual
January
budget
General Services Administration ••••••••••
Housing and Home Finance Aeency ••••••••••
National Aeronautics and Space
$592
32(\
$616
Admin i strat i on •••••.•••••••••••.•..•.•••
4,111
),418
861
51
Description
--~--
Expenditures by major agency - Continued
Veterans Administration ••••••••••••••••••
Other independent agencies •••••••••••••••
District of Columbia •••••••••••••••••••••
Allowances, undistributed ••••••••••••••••
1'(6
Su bt ot ale .......................... .
98,3 48
Deduct interfund transactions ••••••••••••
664
98,314
833
91,388
869
-926
36
Total expenditures ••••••••••••••••••
97 ,684
97,481
96,518
-963
-8,226
-6,281
-3,474
+2,807
$93,Ol,4
31,055
$+1 ,'.544
Administrative budget surplus (+) or
deficit (-) ..•..........................
FEDERAL RECEIPrS FROM AND PAYMENTS TO THE PUBLIC
(Fiscal years. In millions)
Federal receipts fron the public:
Administrati YC: LU(l.get receipts (net} •••
Trust and other receipts (net) ••.••••••
Deduct intragovernmental and other p.oncash transactions ...•............
Total Federal receipts from
t"
.......
.
~;t;'9, '.')9
30.~,3i
$9l,200
30,51)
" >40
_l..;.:,l.;;z2;;.::5;.;;;9_ _ _L,;.;',L;:3:.:::3:.:1~_4;"J,L..:4:.;;1.~~___
.. ~4
115,530'
,301
Pc:
public ..•...•.•.......•............
Federal payments to the public:
Administrative budget expenditures (net)
Trust fund and other expenditul'.~.: ~ 'Jet)
Deduct intragovernmenta1 and ottr' _, 'AI
cash transactions ••••••••••••••• ' •. ".' ..
117,384
119,685
91,684
28,885
97,481
29,0 4 5
96,518
29,621
-963
6 z237
5 z134
3 z77 6
-J~35d
120,332
121,393
122,369
+()76
-4,802
-4,009
+~'
+')32
r
Total Federal payments to
tl)e r'lt~
Excess of cash receipts from or paY"Lp.ilt
to (-) the public •••••••••••••••••••••••
-2,684·
+1,325
NOTE.--Figures are rounded to nearest million and will not necessarily add to
totals.
Preliminary 1 Statement of
Receipts and Expenditures of the United States Government
for the period from July 1, 1964 through June 30, 1965
(Cents omitted, therefore details may not add to totals)
TABLE I--SUMMARY
(In millions)
Administrative Budget Funds
Fiscal
Year
Net
receipts
Net
expenditures
Surplus (+)
or
deficit (-)
Estimated 1966 3 ••••••.••
$94,400
$99,687
-$5,287
Estimated 1965 3 ...•••.•.
91,200
97,481
Actual fiscal year 1965 ...
(Twelve months)
93,044
96,518
Actual fiscal year 1964 •.•
89,459
Actual fiscal year 1963 ...
86,376
Actual fiscal year 1962 •..
81,409
Trust Funds
Balance in
Public Debt
account of
Excess of
Net
(end
of
Treasurer
receipts or
expenditures expenditures(
period)
2
(end of period)
-)
Net
receipts
-~
$33,616
$32,898
+$718
$322,096
-6,281
30,515
29,045
+1,469
316,404
9,000
-3,474
31,055
29,627
+1,428
317,274
12,610
97,684
-8,226
30,331
28,885
+1,446
311,713
11,036
92,642
-6,266
27,689
26,545
+1,143
305,860
12,116
87,787
-6,378
24,290
25,141
-851
298,201
10,430
$9,000
TABLE II--SUMMARY OF ADMINISTRATIVE BUDGET AND TRUST FUND RECEIPTS AND EXPENDITURES
Funds
Classificatio.1
Fiscal Year 1965
to date
Fiscal Year 1965
estimates (net)3
Fiscal Year 1965
to date
Fiscal Year 1965
estimates (net) 3
RECEIPTS
Internal Revenue •..•.••••.•....•.........
Transfers to trust funds •.•..............
Reimbursement from trust funds for
refunds of taxes ....•.•..•...•...•...
Refunds of receipts ...•.............••..
$114,428,991,753
-20,887,027,360
$112,206,115,000
-20,649,115,000
$20 ,887 , 027 ,360
$20,649,115,000
322,796,918
-5,989,075,810
325,250,000
-5,749,250,000
-322,796,918
-325,250,000
86,133,000,000
20,564,230,442
20,323,865,000
11,119,638,965
10,769,855,000
Subtotal--Net Internal Revenue ...... .
87,875,685,500
Customs .......•.....•..•...•.......•...
Refunds of receipts .....•...............
All other..•...•.•...•.•.......•......•.•.
Refunds of receipts .•.........•.........
Inter fund transactions ...................•.
1,477 ,548,820
-35,286,526
4,598,698,578
-3,161,988
-869,041,070
Net receipts •..•...•...............
93,044,443,313
EXPENDITURES
Legislative Branch .•••.....•....•.•.•.•..
The Judiciary .....•.....................•
Executive Office of the President 4 ••••••••••
Funds appropriated to the President: 4
Mutual defense and development:
Military assistance •.•...•............
Economic assistance •....•........•...
Other 4 ••••••••••••••••••••••••••••••••
Agriculture Department .••.•....•••.......
Commerce Department ••••••.•...•.•...•••
Defense Department:
Military ....•.•.•....•..•...•...•.••..•
Civil ............••...•.•••.....•.•...
Health, Education, and Welfare Department.
Interior Department .•••.•.•.••..••.•...••
Justice Department ..•.........••....•..••
Labor Department .•........•...•.......•.
Post Office Department •••.••••..•.•.•..•.
State Department ...•..•••....•••••.•.••••
Treasury Department:
Interest on the public debt ••••..•••.•...•
Other ••...•..••..••.••..••••••..•...•••
Atomic Energy Commission •..••..•.•••••..
Federal Aviation Agency•..••.•••.••••.•.•.
General Services Administration •.•••..•.••
HOUSing and Home Finance Agency •••••••••
National Aeronautics and Space Adm •••••.••
Veterans Administration .••••••..•••.•••••
Other independent agencies •...•••••..••••.
District of Columbia .•...•••••••.•••..•...
DepOsit funds ••••.•.....•.•.••.••.•.••.••
Government-sponsored enterprises •.••••••.
Allowances, undistributed ...•.•.•.•...•.••
lnterfund transactions •••...•.•.••.•..••.•
Net expenditures ..•••.•..••••.••.••
Administrative budget surplus or deficit (-) ••
Excess of trust receipts or expenditures (-) •
See footnotes on pages 10 and 14
165,168,900
74,055,281
24,043,295
179,133,000
76,178,000
26,409,000
1,894,266
487,789
1,720,000
484,000
1,203,883,365
2,035,785,540
1,036,047,197
7,330,479,616
756,519,283
1,200,000,000
2,050,000,000
1,181,767,000
6,857,932,000
763,619,000
743,259,261
2,010,794
75,215
52,060,591
4,047,321,548
805,147,000
2,085,000
253,000
50,096,000
4,137,409,000
46,177,679,726
1,233,610,040
5,739,388,296
1,205,164,149
357,268,391
479,500,782
5 799,578,136
379,623,580
48,100,000,000
1,269,301,000
5,769,761,000
1,225,366,000
367,330,000
495,080,000
718,000,000
387,629,000
5,315,207
31,379,994
17,460,428,448
85,458,263
-168,730,922
3,129,817,504
5,077,000
38,122,000
17,484,759,000
82,784,000
-124,233,000
3,336,092,000
11,354,312,422
1,383,056,159
2,624,142,652
794,587,545
631,570,375
243,658,902
5,093,760,148
5,488,042,037
715,326,561
61,251,600
11,200,000,000
1,351,131,000
2,700,000,000
781,000,000
615,933,000
175,772,000
4,900,000,000
5,375,700,000
367,831,000
76,269,000
.....................
.....................
. ....................
......................
. ......................
9,512,810
. ......................
8,812,000
. .....................
. .....................
. ....................
. .....................
22,958,718
865,952
203,802
95,259,055
50,317
620,553,682
2,587,349,570
382,349,174
-233,214,656
1,379,011,900
19,928,000
1,242,000
426,000
48,000,000
90,000
633,838,000
2,562,527,000
432,369,000
-47,299,000
144,640,000
2
TABLE III••ADMINISTRATIVE BUDGET RECEIPTS AND EXPENDITURES.-JUNE 30,1965
ClassiflcaUon
This month
RECEIPTS
Internal Revenue:
lntIivtdual ~come taxes:
Withheld
• ••••••• , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Otbe
6
Corresponding
month
last year
Fiscal Year
1965
to date
.2,945.831,224
2,368.643,348
,2 654 _,6'10
2'218'699
,
, - -!0'l9.
Total individual income taxes •••••••••••••••••.
5,314,4'14,5'13
~orporation income taxes .••••.•••.••.•••.••••.•••.
6,595,MO,164
7
Corresponding
period
fiscal year 1964
P6 830 478 0'11
18:870:257:334
139,258,881,314
15,331,4ft,088
4,872,985, 'l5O
53,650,'735,405
54,590,354,384
1,362,698,8'13
6,196, 183, Z'l3
1,289,944,9'l8
26,130,4111 ,050
14,798,498,942
24,3110,_ ,236
13,950,231,'l'l9
1,34'1,623,185
56,690,908
2,526,200
1,404,121,109
53,269.254
2, '739,_
15,846,072,594
635,81'7,974
623,371,126
15,557,'1112,863
Total employment taxes ••••••••.•.••••.••••••.•
1,406,840,295
1,460,129.627
17,105,261,694
17,002,504,398
Estate and gift taxes ...............................
216,948,151
20'1,814,:m
2, '144.017,660
2,416,303,318
Total internal revenue .........................
14,896,902,057
14,02'1,057,836
114,428,991, '753
112 ,260,25'l ,114
Customs .•••••••••••.••••••••••••••••••••••••••••••
144,968,000
117,483,446
1,4'77,548,1120
1,284,1'16,379
Miscellaneous receipts:
Interest .•••.•••••••••••.•••.•..••...•••.•••.••..•
Dividends and other earnings •••••••••••••••••••••.•
Realization upon loans and investments ••••••••••••.•
Recoveries and re~s ••••••••••••••.•••••••••••••
RoyaltieS •••••••••.••••••••••••••••••••••••••••••
Sales of Government property and products ••••••••••
Seigniorage .......................................
Other ............................................ """ ............................ ""
119,423,885
152,454,2'71
-7,433,303
20,284,560
13,247,028
118,06'1,749
13,679,468
47,325,322
104,874,265
-12,481,202
3,511,561
65,528,.
61,36'1,000
6,181,411
1,067,583 ,145
1,396,954,067
38,119,656
135,149,104
'1'1,149,430
898,641,061
112,960,192
412,288,258
954,625,491
983,911,299
752 ,311, '127
129,'110,795
130,559,691
740,515,615
68,745,284
316,741,380
Total miscellaneous receipts •••••••••••••••••.•
453,5'71,932
386,525,481
4,598,698,578
4,077,121,_
Subtotal gross receipts •••••.••••••••••••••••••
15,495,441,989
14,531,066, '164
120,505,239,152
252,518,469
56,361,886
7,470,899
1,6M,3UI
241,827,316
47,816,535
9,165,730
1,486,971
4,859,190,619
678,569,558
98,988 ,O'l3
29.388,'194
5,893,412,3112
1lMI,341, 188
93,004,024
22,704,074
. ..............................
...••...••.•..•.•
...........................
152,4'10,010
13,330,000
126,638,_
r •••••••••••.•• " ............ " ••••••••••••••
7
xelse taxes .......................................
Employment taxes:
Federal Insurance ContribUtions Act and
Self-Employment Contributions Act6 •••••••••••••
Railroad Retirement Tax Act ••••••••••••.•.••••.•
Federal Unemployment Tax Act •••••••••••••••••••
Deduct:
Refunds of receipts: 8
Internal revenue:
A'?:tlicable to budget accounts:
dividual income taxes ••••••••••••••••••••••
Corporation income taxes ••••.••••.•••.••••••
Excise taxes ........................................................ , ....
Estate and gift taxes •••••.•••.••••••••••.••••
Applicable to trust accounts:
Federal old-ageand survivors ins. trust fund •••
Federal disability insurance trust fund ••••••••
Highway trust fund. ..........................
Railroad retirement account ••.••••••••••.••••
Unemployment trust fund •••••.•••••••••••••••
7
95,948,835
I
7
7
-
7
593,883,553
850,858,1'79
m,m,'117
I
-
-
11'1,621,554,780
••..........•...
.... · .... -*:785
.... ·...... i:842
629,462
570,0113
178,625,500
13,064,500
123,498,341
161,846
7,608,51'7
Subtotal Internal revenue refunds. •••••••••.•
318,'122,814
300,868,490
5,989,0'15,810
'1, 1l4,m,'1M
Customs .......................................
Other
3,049,991
34,132
2,656,634
35,286,_
.................. " " ..............
3'1,822
3,161,988
32,313,298
1,196,525
Total refwxls of receipts •••••••••••••••••••
321, 'l96, 93'l
303,562,94'1
6,an,524,325
'1,148,085,618
1~249,731,325
97,891,859
346,588,156
56,613,122
1896738
1,310,546,305
93,5'74,804
319,900,000
53,267,412
2 169 168
14,5'1Z,359,320
1,082,023.2'73
3,658,429,170
635,656 127
615,782'549
14,335,1211,1128
1.056,855,734
3,519,156,642
593,4'l6,8)1
846 56'7,343
I, 'l52, '121 ,204
I, '7'79,457,690
20,564,230,442
20,351,183,450
40,862,405
3,316,6'76
31,000
44,098,981
3,124,918
851,472,899
648,014,385
Reimbursements ......................................
Fees and other charges ..........................
...•.......•....
1'1,155,1'10
413,000
15,108,433
488,8)0
Total interfund transactiOns ••••••••••••••••••••
44,210,062
47,223,900
869.041,0'10
tI63,621,619
............................................
I
Transfers to trust accounts:
Federal old-age and survivors insuran~e trust fund ~
Federal dtsabiUty insurance trust fund ••••••••••••
Highway trust fund ••••••••••••••••••••••••••••••
Railroad retirement account. •••••••••••••••••••••
Unemployment trust fund •••• _.................. _.
Total transfers to trust acCOUDts••••••••••••••••
Interfund transactioDs:
Interest on loans to Government-owned enterprises.
I
........................
?
1
7
386,'l52
4,zeo,BS6
Total deductioas ..........................................................
2,118,728,223
2,130,244,538
27 ,460, 795,838
28,162,890,688
Net administrative budget receipts ••••••••••••••
13,3'l6, 713, 'l65
12 ,400,822,236
93,014,443,313
89,458,1184,071
2,544,311
31,193,816
63,698 • •
25,459,105
532,069
23,838.397
EXPENDITURES
L egislative Branch:
Senate •••••••••••••••••••••••••••••••••••••••••••
House of Representatives ••••••••••••••••••••••••••
Architect of the Capitol •••••••••••••.••••••••.•.•••
Botanic Garden ...................................
Library of Congress...............................
See footnotes on pages 10 and 14
3051 Z40
5:·110;161
2.118,079
44,629
2,568,566
4,288,91'1
1,774, 'l8O
42,984
2,305,0&1
29,.,822
55,84'1,(84
23,149,822
516,054
21,19'1,00
TABLE 1i1--ADMlNIGTRA TlV£ BUDGET RECEIPTS AND EXPENDITURES-- JUNE 30, 1965--Continued
Classification
EXPE NDlTURES- -Continued
Corresponding
period
fiscal year 1964
Fiscal Year
1965
to date
Corresponding
month
last year
This month
Legislative Branch- -Continued
Government Printing Office:
General fund appropriations........................
$2,970,309
$2,388,827
Revolving fund (net) ..••......•.......•.•....••..... 1--_ _ _ _-c::
19=-c1:L,80=2--+--_ _ _-657,395
3
$23,842,096
$22,125,334
__ ~~~~84~7~1--_ _ _-~1~,~~~,I=W~
Total--Legislative Branch ...••.•................
15,969,785
12,687,476
165,168,900
151,511,929
The Judiciary:
Supreme Court of the United States •••••....••.........
Court of Customs and Patent Appeals •••••••...........
Customs Court .......•.•...•..•.......•...••.......
Court of Claims •..••••....••••.•••...••..•..........
Courts of appeals, district courts, and other judicial
services ....•................•..•.....•...........
215,173
44,535
91,967
97,528
163,889
42,818
79,579
97,187
2,491.391
414,274
1,053,219
1,243,855
2,107,933
389,209
916,538
1,107,452
68,852~5~9
5, 341,23_0--t_ _ _ _
~_
60,606,342
Total--The Judiciary......................... ....
5,671,515
_ _6_,~20, 7!~
1====--------
74,05~~~ .
_ _ 5,724,7.06
65 127 476
-.-----~----
Executive Office of the President: 4
Compensation of the President ...•.••...••..•...•.....
12,500
150,000
150,000
12,500
The White House Office .•..•••....•••..••••.•........
320,373
2,704,698
2,~1. 715
231,417
Special projects •..•........••...•..•...••••.........
111,418
1,212,476
110,533
1,090,481
Executive mansion and grounds ••.•••.....•....•......
661,705
28,803 i
686,314
19,122
Bureau of the Budget ...•••.....•.•....•••..•..•......
594,220
6,636,366
734,511
7,089,463
Council of Economic Advisers .•.••.••••.•.•••.••.....
613,357
51,666
61,318
654,904
39,030
418,671
National Aeronautics and Space Council .••..••.•.••...• !
29,242
456,573
National Council on the Arts .•..•.•.••....•..•••......
4,753
29,367
.
514,630
National Security Council •.••••••••••••.••••.••••....•
:19,492
608,402
40,923
Office of Emergency Planning:
Civil defense and defense mobilization
functions of Federal agencies... . .. ... .•....... . •.
195,090
171,585
3,914,837
3,788,518
Other. . . . . . . . . . • . . . . • . . . . • •• . . . . .. . . • . . . . • . . .. . . .
402,201
408,254
5,151,530
5,136,539
Office of Science and Technology............. ... . . . . . .
104,407
112,665
930,255
822,650
Special representative for trade negotiations.... . . . . . . .
108,430
68,744
561,623
400,239
Miscellaneous ...........•............•...•..•....... r--_____
25--'-,_2_21_+______
22_3~,58_5-t__ ____-..:1-=5=2L:,1".:7.::.3_+_ _ _ _ _-~15::.:5'"__,__=_66=__1
... . .......... .
..........................
~
Total- -Executi ve Office of the President .•••••••... 1=====2~,0=3=7~,6=1=0=+=
Funds appropriated to the President: 4
Alaska programs ........•..•.....•.•.••.••••.•••..•.
Disaster relief ...........•....•..•...........••.....
Emergency fund for the President •••.....••...........
Expansion of defense production (net) ••••••.••••••.....
Expenses of management improvement .••...•.........
International Financial Institutions:
Investment in Inter-American Development Bank .••••
Subscription to the International Development Assn ...••
Increase in quota in the International Monetary Fund •.
Office of Economic Opportunity:
Economic Opportunity Program.....................
Public enterprise funds (net).. ••.••......••••••••.•.
Peace Corps ••...•.......•....••••.....•••••.•..•.. ,
Public works acceleration........... ............... . .
~~~i d~f~~~ ~d' d~~~i~~'e'nt; ..................... ,
37,458
5,749,348
483
14,302,075
29,240
=
__ .
_.2_~~c~2~24c",~400~==1'===.••.24~ 043""",2;;9~5===1F==~=2=2c!=,=904~,=194=
16,583,062
1,206,448
83,806
-16,106,637
11 ,950
522,118
43,460,637
939,790
59,979,057
334,957
61,655,825
258,750,004
103,107,312
4,403,051
8,663,956
11,334,339
........•......•.
.......................
8,459,803
39,807,069
27,021
F=====~402,=7",6c:c8==l==~==~~==
-
Military assistance:
Office of Secretary of Defense:
Repayment of credit sales g • • • • • • • • • • • • • • • • • • • • •
Other •••......•......•......•..•.•..•..•.•...
Department of the Army •••..........•.....••••...
Department of the Navy ••.•••.•••.••.•.••.•.•..•.
Department of the All' Force •••.•••..•••...•......
Agency for International Development••••••...••...
All other agencies .....•••...•••..•.•...•.••••...
I
---
.
193,277 ,286
17,059,208
77,805,722
321,623,604
638;986
-.---
19,430,487
21,190,006
509,190
90,883,495
181,178
50,000,000
61,655,825
..•.....•...•.....
········60;397;i95
331,819,565
673~3
-3,797,291
828,722
182,238,693
66,404,218
111,599,994
-6,767
163,339
-6,143,942
7,728,124
204,327,947
36,531,069
104,099,610
147,646
340 640
-41,069,390
52,781,931
556,652,069
195,992,476
434,835,186
1,544,487
3,146,604
-48,153,912
85,782,870
620,934,771
202,365,011
612,610,405
2,576,152
357,430,908
347,031,095
1,203,883,365
1 485 277 204
23,246,732
9,291,747
8,581,000
35,976,716
9,650,805
14,848,055
6,088,246
30,544,432
16,489,386
2,000,000
30,577,431
40,503,862
6,531,992
10,725,825
225,707,507
99,180,484
64,405,000
387,281,072
99,732,417
150,689,003
63,492,824
226, 305 , 083
94,430,493
65,000,000
370,968,653
178,890,199
121,803,988
63,600,383
16,329,943
94,230,231
-1,023,300
31,848,094
68,182,799
-763,532
199,308,227
753,767,498
-7,778,494
112,580,286
768,045,425
-4,831,094
Total--Economic assistance ..•.....• " ...... .
217,220,098
236,640,292
2,035,785,5~
1, 99~ 793,419
Total--Mutual defense and development .•..•..
574,6511 007
583,671,387
3,239 668,905
3 482070 623
981,069,046
633,743,913
4,275,716,103
4,118,811,751
Total--Military assistance •.................•
Economic assistance:
Technical cooperation and development grants:
General .••.•.••.•••••••••.•.••.••••••••..•...
Alliance for Progress .•..•..•.••••••••••••.....
Social progress fund, Inter-American Dev. Rlnk •••
Supporting assistance ...••..••.•.•..••....•......
International organizations and programs ••..•....•
Contingencies ...•...•.•••.•.••••••••••.•.......•
Other .....•••.....••.••.•..•..•••..••• · .•. ···· .
Public enterprise funds (net);
Alliance for progress, development loans ....... .
Development loan funds.. ••••••••••.••...•..•....
Foreign investment guarantee fund •...•...••...•
Total--Funds appropriated to the President .•.•••.••.
See footnotes on pages 10 and 14
_.c
-
~
.-~~
9~161,906
4
TABLE III--ADMINISTRATIVE BUDGET RECEIPTS AND EXPENDITURES··JUNE 30, 1965·..Contlnued
Classification
EXPENDITURES--Continued
Agriculture Department:
Agricultural Research Service:
Intragovernmental funds (net) •.••••••••••••••••••••
Other ••.•.
It It • • • • • • • It .. It • It t • • It
of
It •
It • • • • • • It It • • • • • • • • •
Cooperative State Research Service •••••••••••••••••••
Extension Service ••••••.•.•.•••.•••••••...••••.••.••
Farmer Cooperative Service •••••••••••••••••••••••••
Soil Conservation Service:
:
Conservation operations. •••••••••••••••••••••••••••
Flood prevention, watershed protection and other••••.
Great Plains conservation program ••••••••••••.••••
Economic Research Service •.•••••••••• , •••••.•••••••
Statistical Reporting Service .•••.•••.••••••••.••••.••
Consumer and Marketing Service:
Marketing services •••.•••.••..•••..•••••••••••••••
Payments to States and possessions. • ••••••••••••••
Special milk program ..............................
School lunch program •••....•...••..•••••••••...••.
FoOd stamf program ..............................
Removal 0 surplus agricultural commodities ••••••••
Intragovernmental funds (net) •••••••••••••••••••.•••
Other ............................................
-139,485
24,314,747
233,231
1,185,985
124,362
to date
46,865,209
-113,982
191,833,182
41,613,963
79,401,628
1,213,155
8,328,266
7,2'75,698
105,401,403
91,131,665
12,491,801
10,138,094
11,586,186
96,214,298
85,158,235
11,881,562
10,016,682
11, 183!814
40,008, 2411
43,540,0'15
-162,660
84,730,581
1,119,099
1,327,~
1,123,315
1,489,999
.-
3,m,747
23,248
3,553,050
33,261
12,~,093
I
Corresponding
periOd
fiScal year 1964
209,740,011
100,110
,
17,106,522
4,423,215
4,212,321
1965
21,548,054
191,808
1,111,801
125,123
11,608,218
10,031,382
1,436,398
1,055,267
1,823,846
-- .
Fiscal Year
Corresponding
month
last year
This mO:lth
12,437,970
1,500,000
86,752,927
178,693,365
355,591
..... ..............
...
112,490,127
34,395,189
1,500,000
97,433,697
180,684,170
..................
270,058,764
-91,608
89,934
89, I'!!.
272,921,400
102,837
847,212
Total- ·Consumer and Marketing Service: ••••••••••
41,854,400
128,932,252
615~221,182
- 593,989,557
Foreign Agricultural Service .........................
Commodity Exchange Authority ••••••.••••••••••••••••
Agricultural Stab1l1zation and Conservation Service:
E~nses, Agrieultural Stabilization and
onservation Service •••••••••••••••••.••••••••••
2,235,324
134,403
2,000,101
122,790
18,395,834
1,143,557
19,935,089
1,117,02:1
-1,644,602
16,032,741
95,503
25,247,824
··.f ...............
-1,943,728
270,841
179.586
108,009,512
92,108,332
199,993,361
215,000
9,255,924
8,761,290
193,743,104
116,844,709
87,071,258
213,563,068
SUp.!'
act program ..... , ..............................
Agricultural conservation program •••.•••••.••••••••
Appalachian region conservation program .••.•••••.••
Cropland conversion program •.••.. _.•.....•.•.••••
Emergency conservation measures•••••.•••.•••.••••
Soil bank program ••••••.••••••••••••.••••••••••••
Indemnity payments to dairy farmers ••••••••••••••••
Intragovern:mental funds (nat) ••••••.••••••••••••••••
Commodity Credit Corporation:
Public enterprise funds (net):
Price support and related programs 10 ••••••••••••
Special activities 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign assistance and speCial export programs •••••
Total--Commodity Credit Corporation•••••••••••••
Federal Crop Insurance Corporation:
Administrative expenses ...........................
Federal Crop Insurance Corporation fund (net) •••••••
Rural Electrification AdministratiOll:
Loans ................................................
Salaries and expenses ....................... • •.••
Farmers Home Administration:
Rural hOUSing grants and loans .....................
Rural renewal .................................................
Salaries and expenses •••••••.•••.•••••••••••.•••••
Public enterprise funds (net):
Direct loan account .............................
...... , ...... , ....
4,514,592
5,503,568
..................
76'7,527
-148.917
58,144
2,995
-1,390
118,569,114
.
-125,362
-404,734,797
486,788,916
-6,313,022
2,826,'798,436
-139,739,252
1,754 998 402
3,174,895,974
36,390,317
1 889,044 000
55,741,096
.....4,442,057.586
5 100,330,.
-100,959
1,846,915
8,108,421
310,846
7,133,922
-819,100
380,581:~1:
11.831
134,655,793
946,033
42,362,408
~~~~~
'72,802,497
30,995,359
8,215,639
1,008,170
56,128,965
-9,137,912
42,461,045
100,000
290,985,901
259,399,642
275,500
9,705,311
3,968,628
1,698,130
1,627,080
.....................
1294891
13,190, '128
35,562
... - .
12.78'1, 527
15,440
4,351,962
..
3,573,809
4.506.177
9,874,208
1,'f46,218
289,933,264
226,380
29, '145,92'1
1,334 26'l
'7,09'7,152
3,392,835
..................
966,122
45'7,882
59,914,800
.. . . . . . . . . . . . . . . • • 1 ..
260,937
....................
-12,587,459
-7,117.167
138,2'13,741
-92,059
834,907
-108,741
130,618,247
142,733
39,126,563
Emergency credit revolving fund •••.••••••••••••••
AgricUltural credit insurance fund ••••••.•••••••••
Rural housing for the elderly revolving fund ••••••••
2,467,708
Total--Farmers Home Administration ••••••••••••
25,835,035
Rural Community Development Service ••••••••••••••••
Office of the JnspectOl' GeneraL .......................
Office of General Counsel ............................
Office of Information. •••••.••.••••••.•.••••••••.•••••
National Agricultural Library •••••••••••••••••••••••
Office of Management Services •••••••••••••••••••••••
General administration:
Intragovernmental funds (net) •••••••••••••••••••••••
205,661
1,122,976
453,781
184,177
........... .......................
318.168
..........................
Other ....................................................................
183,220
433,117
154,051
293,901
Other ....................................................................
33 651 ~
26 856,.318
3i!:~:=
348,860,846
354:::~=
Total--Agrlculture Department ••••••••••••••.•.•.
353, 112,'l96
7,330,419,616
1,896,863-,-6'19
Commerce Department:
General Administration:
Public enterprise funds (net) •••••••••••••••••••••••
Other ...........................................................................
5,056
761,710
-1,100
811,973
6,974,963
Forest Service:
Intragovernmental funds (net) •••••••••••••••••••••••
See footnotes on page 14
20,000
186,68'1
-5,994
-296,960
-3,008,128
-
50,000
23,419,219
221,674
462,209
163,41)1
168,48'l
-900,009
----
186,503
4,031,923
1,644,309
1,458,731
2,400,634
.. .........................
58,175
-329,658
3,901,500
3,487,364
-2,316
-17,611
15.511 866
TABLE 1I1--ADMtNtS I HA TlVE eUDGET RECEIPTS AND EXPENDITURES--JUNE 30, 1965--Coi1tinued
.. -....:.=.:-:.:.:::..~:..--.-- ...... __. _ - -..
.. ',"
ClaSSification
EXPENDITURES--Continued
_ .. ___ . ... _... . __ . __ ._.__ .. ...
r
ThlH month
Commerce Department--Continued
Economic development:
Area Redevelopnlent Administration:
PU~lic ent~rpri::;t' funds (lIl'I) ••••••••••••••••.••••
Ot er ......•......•......•..•••••......••..••. 1
Office of Appalachian Assistanre ..•....... " ..... "1
Community Relations Service ••.•.••.•.•.•••.......
U. S. Travel Service ••..••••••••.•••••••.••••..•••
Office of Business Economics ...................... I
Bureau of the Census •..•••.•....•••••••••••...••. I
Business and Defense ServiceH Administration ....... I
Internatlonal Activltles ........................... .
Office of Field Services .••.•••••.••••••..••••..•••
montll
last- year
._--... _..--- --
-$672,280
4,898,460
158
89,602
519,094
193,776
2,9'16,534
512,283
1,212,047
333,436
Total- -Economic development ..•..••...••.•.....
C(lrre~pondinl~
-:'1:647,667
11,143,663
Fi~cal Year
1965
..
to date
-----_._--._-
5
.........- ....- ....._-
!
CorreHllonding
period
fiscal year 1964
----
-
.. - ...
---
231,636
153,630
2,718,863
435,688
1,123,120
300,310
-:H,591,291
78,918,442
158
492,884
2,430,996
2,312,334
37,743,851
4,829,631
14,237,991
4,110,086
10,063,114
15,459,246
140,485,085
124,664,812
.................
.................
-4'2,388,501
71,599,948
......................
..................
2,560,896
1,908,364
30,274,000
5,071,278
12,001,569
. ~ }63.~}?55
Science and technology:
Coast and Geodetic Survey •••••.•.••••••••••••.••••
Patent Office ..••.•••.••••.•••.•••••••••.•••...•.
National Bureau of Standards:
In~agovernmental funds (net) ••••••••.••••••.••••
Ot er •••••••••••••.•••••••••••••••.•••••••••.•
Weather Bureau ••••••.•••••••.•••••••.••••••..•..
2,749,696
2,504,200
2,755,411
2,020,604
33,6:;2,549
30,650,975
33,496,291
27,276,915
1,854,812
1,724,905
16,928,439
-1,215,950
5,838,714
7,531,629
7,955,327
56,729,174
100,584,994
-2,391,201
51,064,984
89,400,157
Total--Science and tecMology •.••••••••••••...•.
25,762,054
16,930,409
229,553,020
198,847,147
..... , ..........
................
-799,500
-1,382,270
12,127,052
10,463,850
2,673,128
32,652
-2,311,093
213,334,409
125,845,201
41,608,456
1,031,555
5,150,491
203,036,847
98,662,335
40,359,266
===. =38~~~~!~ ...:
23,914,412
379,508,529
347,331,751
_ ..
Defe::;:~~:::::::ce Department ••••••••••••.•••..••. = =. .2~'~~~?~'1
57,114,941
756,519,283
686,344,067
538,188,133
373,291,357
396,188,516
108,180 ,435
4,676,741,031
4,030,235,405
4,668,450,287
~.,384 ,375,846
4,602,456,655
3,833,389,480
4,549,838,100
__
1,.~09 ,446, 544
14,759,802!o5?!
," :".-'::.'":" =.-:-.:-=-:-:-- .--:--:-:-=
383,584,479
265,525,606
591,430,564
49,332!416
3,576,608,684
3,340,945,714
4,731,142,505
526, 307 ,~3.2
3,637,623,224
3,071,007,104
4,718,975,198
... 5~~434,583.
1,289,873,067
12,175,004,636
Transportation:
Inland
Watel'wa.
ys. Corp.oration (net)(liquidated)...... .
Maritime
Admmlstrahon:
•.••••••••..•• , ••
Public enterprise funds (net) ..................... '
-352,192
Operating-differential subsidies .•.•...•.••••..•• , i
24,426,596
Other ••••••..••••••..•.•.•.•••.••....• , •. , ... , "
10,955,073
Bureau of Public Roads .....•... " •.• , ..• , •• , .•••• i
3,355,885
Transportation research ••••.•.•.•••••••••••••••••• ~_._ ..__ . 102,781
Total--Transportation .•••••..•••••••.•••.......
Military:
i
Military personnel:
I
Department of the Army. • . • • • • • • • • • • . • • • • • • . . • . •
500 ,161,286!
Department of the Navy.........................
394,358,485
Department of the Air Force.... ........ ••••...•..
399,727,519
Defense agencies ..•.••••.•••.••.••..•..•••..... ____l_~ ~~67 , 891
I'I
Total--Military personnel. ................... , .
1,414, 715,
Operation and maintenance:
:
363,4'14,428
Department of the Army....... ..... ..............
Department of the Navy.........................
331,610,854
Department of the Air Force.....................
555,918,206
Defense agencies ............................... _ _ _ ~9,181,537
Total--Operation and maintenance..............
.
18~. t~_ ~!~15'1!4~,~4~·
I
I
1,300,185,026
I·I
=-===-=-." .
Procurement:
Department of the Army ........................ .
Department of the Navy •••••••••••••••••••••....
Department of the Air Force ............ , ....... ,
Defense agencies •••••••••••.••••••••••••••..••.
66,065,866
192,630,104
322,301,888
6,206,223
Total--Procurement ••••••••••••••••••••••••••
-
922,3~
._-
14,195,130,780
11,932,040,111
..
------
114,991,974
822,252,642
772,672,701
4,762,312
1,756,331,167
4,927,052,635
5,100,446,521
42,211,462
2,314,564,649
6,042,189,631
6,959,249,357
34,822,349_
. 587,204,082
.__ ..
..
1, 714,.6?~.'.630
.!.~~ 826 ~,041 , ~87
..1~!350 ,~~~8~
Research, development, test and evaluation:
113,721,693
Department of the Army... .. .. • .. • • • .. .. .. • .. • • .
Department of the Navy ......................... '
53,947,930
Department of the Air Force... .... .............. .
316,730,224
Defense agencies ............................... L---.. 4:!.._31l_~877
147,585,836
154,090,478
411 ,448,537
4} , 023, 710
1,338,931,315
1,293,216,300
3,145,444,441
452,006,521
1,338,004,511
1,577,846,242
3,721,619,557
.. ~8~~7!~~
756,148,562
6,229,~~,5:m_
Total--Research, development, test and
evaluation .................................
i
I
F
I
527,711,725
----====---.=.."'":"
Military construction:
I
Department of the Army ......................... :
36,643,518
Department of the Navy ......................... :
37,092,550
Department of the Air Force .••.••••••••••••..• ,. j
48,942,144
Defense agencies ••••••••••••••••••••••••••..••• ~_. ___....2,416,558
Total--Military construction .................. :
125,094,771
~'.--':'-.-:--.=---.
-::--
Family housing:
Department of the Army ........................ ;
17,770,710
Department of the Navy ....................... ,. ;
17,1104,383
Department ofthe Air Force..................... i
23,617,341
Defense agencies ••••.•••.•••••.•••.•• , , •••..••. :__ ._. .. 1,!!.f!I?! 561 .
Total--Family housing•••••••••••...•••••..•••
be ___ . 6~,.~~~96".,
33,636,756
14,306,662
63,391,409
8.!_827 ,!l43
216,453,627
251,226,240
505,742,530
__~~ 66!.i~1
232,523,014
190,274,592
554,360,809
_ 49,133,862
120, 1~,~672
I , D<!~!~91~~~_
26,691,874
14,006,539
27,248,663
232,735
205 353 262
154;029;219
254,290,698
4,299,264
204,015,110
132,386,067
240,902,903
2,214,574.
68,179,813
-----,-
617,972,445
579,518,655
. =---"
.l!.~6 ~~ ,278_
6
TABLE III--ADMINISTRATIVE BUDGET RECEIPTS AND EXPEN~ITURr::S--JUNE30.1965--Contlnued
-----::::- ...-.----- - - - - f--··
---. --co~~~;o~;;~~---c:r~Fi~~tJ:~~~;-~-- -c-o-r~-~-!-~l-~~-d-in-g--
~=---='':'-~=-=='':-'-=-=-:''~==:::'==-=---:===-=.-:.'--::-:----'
-----~~=--
Classification
EXPENDITURES--Continued
j
This month
:,
month
last
year
I
to date
fiscal year 1964
--- ----- ----- ---------------- -------r---------+------.:.----+-------t----Defense Department--Continued
Military - -Continued
Civil Defense..... •••••••..•••..•. .•.••.••••••••.•
-$4,009,901
1==---- -- - -
t92, '128,431
__ !t8,354,126 __ c--c-= --------- ---
=1=-==~'-
Revolving and management funds (net):
Public enterprise funds:
Defense production guarantees:
Department of the Army ••.•..••••.••••...•
Department of the Navy ..••••••••••••••••••.
Department of the Air Force ...•••••••••...••
Defense agencies ••.••••••• , ••.•.••••..•.•.
Other:
Department of the Navy •.... , ............ , ..
Civil defense procurement fund. ...••.••....•.
Intragovernmental funds:
Department of the Army _.....................
Department of the Navy ••••.••••.••••.••.•••.
Department of the Air Force...................
Defense agencies. ••• •••.• •.•..• •••••. ••••.•..
Undistributed stock fund transactions...........
-='=-C-_7~=--_'-
---
$106,825,223
-2,437
-857,247
-948,781
-525
-36,545
-1,236,384
-1,210,977
389
-37,061
1,095,471
2,671,910
·855
12,924
-5,085
-18,331
-7,520
41,995
345
-'1,228,488
-74,271,189
23,741,898
-53,280,722
-146,757,839
-150,554,854
-455,309,673
19,474,875
-184,518,007
244,856,495
c-------- -
-75,243,502
-195,80'1,59'1
1,933,164
-187,136,482
~-------'----~--'--
....................
-259,597,494
Total--Revolving and management funds •••..••.. 1===~~~~~===~~;;;;~~=I=====-~~~~~,=560~:.,;,,;.:53c:c.::.5+~~-~-452,482,591
-5,113,648,820
Total--Military ............... ...... ..........
46,17'1,6'79,726
!=====.c-'-._----"=======!====___ _
49,759,598,080
Civil:
Army:
Corps of Engineers:
1,177,364,899
119,981,686
1,091,868,918
Rivers and harbors and flood control ...•••..•..
-8,391,810
839,4'19
3,055,902
Intragovernmental funds (net) .••...••.••••••••. l==========4=====================\==========
The Panama Canal:
;
'30,806,089
32,985,839
Canal Zone Government ...................... .
3,724,'163
Panama Canal Company:
Public enterprise funds (net) ................ _
3,193,166
2,073,750
2,586,014
-310,626
759
233,466
Thatcher Ferry Bridge .••.•••••••••.•••.•••. /-_ _ _ _-'-''-=--__1_ _ _ __
-----Total--The Panama Canal ••••••••.•.•••••.
36,412,472
32,569,214
6,311,536
.. _ - ._--
I
F=~~==~===*======
Other .•••.•••.••••.•••••.••..•••••••••••.•.••.
Navy--Wildlife conservation, etc ........•.•..•..•••
Air Force--Wlldlife conservation, etc ...••...•....•
-
Total--Defense Department •• , ••...•.• , •••.•..••..
---
2,942,372
668
1,592 -
-
28,186,168
4,714
33,595
--
27,730,414
1,958
25,498
132,293,759
.... -
1,233,610,040
1,153,035,483
5,245,942,579
47,411,289,766
50,912,633,564
F============F=====
Health, Education, and WeUare Department:
Food and Drug Administration:
986
84,875
-:1DO,216
-111,0'17
Public enterprise fund (net) ....................... .
4,623,626
4,293,565
40,841,699
38,385,984
Other •••.•••..•••••..•.•••..••.•.•••..•....•....•
I
Office of Education:
26,633,916
23,654,107
283,687,595
Payments to school districts ..................... ..
311,412,885 :
6,637,961
2,131,884
Assistance for school construction•..•.•...•..•..••.
50,001,125
41,636,015 ~
45,809,'128
12,503,620
239,576,372
Defense educational activities .......•...•.....•.•••
270,283,593 I
42,366,185
2,445,117
86,022,925
218,348,556
Other ........................................... .
5,055,257
119,907,952
3,694,069
Vocational Rehabilitation Administration ...•....•....•
137,235,388
Public Health Service:
I===~--'----='==F===~--=--='="'=:t=====~~c:..:.~=f===========
Community health:
Hospital construction activities .•.••.•••.••••••..
19,906,839
18,182,621
203,510,407
194,482,254
Other .•••••.••...•.••.•••••.•..•••.•.•..••.••.
12,886,460
12,310,223
119,258,'181
159,159,246
Environmental health •.••.•••••..••••••••.••...••.
12,316,776
14,346,025
141,426,100
152,'125,428
Medical services ...•.•.•••••.•••.•••..•.•..•...•.
14,027,051
13,183,539
124,683,034
132,747,674
National Institutes of Health ....................... .
42,934,559
99,890,710
909,600,588
7'19,337,079
Operation of commissaries, narcotic hospitals (net) ••.
-1,802
-2,631
6,'111
6,9'16
i
Emergency health activities .................... ' .. .
787,504
1,324,223
20,080,028
12,668,368
I
9,522,586
21,42'1,222
36,091,148
12,418,764
Other •..••..•.•.....•••..•.••.•.....••....••...• ~------=~~~-r-----~~~~1-----~~~~~+-------~~~~
Total--Public Health Service ••••••••..•..•.••.••.
112,3'19,9'/4
180,671,27'1
1,545,619,305
=====-~--==+=====~---,;,==I=====-,;;;;;;;,;,;,;;;~~=====~~",;,,:,=
Saint Elizabeths Hospital .......................... ..
Social Security Administration:
Operating fund, Bureau of Federal Credit Unions (net).
w~~~~ Ad~~i~t;~ti~~; ............ , ................ i
Grants to States for public assistance .•.••.••••••••• I
Urants for maternal and child welfare .•.•...•.......
Other .••..•..•.•..••.•••••••.•••..••.••••••••....
Special institutions:
American Printing House for the Blind .•••.••.•.•••.
Freedmer.'s Hospital ••.••. '" •.•...••.• " .•.••.•••
Gallaudet College ...•...............•.•......••• '
Howard University................................ ,
General Administration and other:
Intragoyernmental funds (net) .••..•....•..••••••• " I
Other .........•..•....••. '" ...........•.•....... L
Total--Health. Education, and Welfare Department.
},~,573,946
!==",i
1,594,239
-297,322
9,959,185
9,348,316
151,236
1,251
177,921
9,385
-175,398
77,043
116,471
4,513
421,469,494
7,568,165
5,838,523
3,059,498,069
109,796,010
55,337,934
2,944,051,522
89,355,4-48
61,436,712
305,410
663,504
1,324,749
442,284
191,833
1,292,126
865,000
3,928,256
4,355,441
11,617,844
775,000
4,173,943
2,353,511
12,08'1,'193
-211,549
1,802,500
48,638
1,741,018
-320,334
12,317,372
-81,063
10,419,313
276,525,766 !
5,545,492 i
2,701,195
r=====~=P====~==F===~~~====~~
533,911,453 :
66'1,960,588 i
5,739,388,296
5,497,731,667
r~==~~~'~~~~~~~~~~~~~~
TABLE nl--AOMINI~ TRATIVE BUDGET RECEIPTS AND EXPENDITURES--JUNE 30, 1965--Continued
Classification
EXPENDlTURES--Continued
Corresflondinl~
This month
Interior Department:
Public Land Management:
Bureau of Land Management •••••.•••••••••••••.••.
:115,661,441
Bureau of Indian Affair!:!:
Public enterprise funds (net):
Revolving fund for loans •.••••.•.••.•••••••••.
98,083
Other •••••.•••••••••.•••••••••••••.•••••• " ••
-185
Other .••.•••••••••••••.•••.••.••••••.••••.••••.
19,846,613
National Park Service ........................... .
11,276,229
Bureau of Outdoor Recreation••••••••••••••••.•••..
1,127,178
Office of Territories:
Public enterprise funds (net} ................... ..
Other •..••••..•..••.•....•.•••....••.•.••...•.. I
1,918,806
The Alaska Railroad (net) ......................... .
323,294
Mineral Resources:
Geological Survey .••••••••••••••••••••..•••••••.•.
5,222,152
Bureau of Mines:
Public enterprise funds (net) .................... .
1,038,546
Other ........................................ ..
2,816,728
Office of Coal Research .......................... .
717,548
Office of Minerals Exploration .................... .
71,701
Office of on and Gas •••••••••••••••••••••••••••••.
61,413
Ftsh and Wildlife Service:
Office of Commissioner of Fish and Wildlife ••••••••.
43,865
Bureau of Commercial FiSheries:
Public enterprise funds (net) .................... .
-94,'>04 i
Other ........................................ .
3,113,581 I
Bureau of Sport Fisheries and Wildlife •••••••••••••• '='=' ::-.=-=:--;-----::-:.
8,040,711
-. -:.:,"- _.
Water and Power Development:
Bureau of Reclamation:
Public enterprise funds (net):
Continuing fund for emergency expenses,
Fort Peck project, Montana •••••••••••••••••
-2,599,332
Upper Colorado River Basin fund ••••.••••••••••
6,572,381
Other .................................................................. .
23,220,630
I
Bonneville Power Administration •••••••••••••••.••• I
Southeastern Power Administration ••••••••..•••••.
Southwestern Power Administration••••••.•••••••••.
Office of Saline Water ••••••••••••••••••••••••••••.
Secretarial Offices:
Office of the Solicitor ............................ .
Office of the Secretary ••••••••••••••••••••••••••••
Office of Water Resources Research •• , •••••••••••••
Vll'gln Islands Corporation (net) ..................... .
I
Total--Interior Department •••••••••••.••••••••••
to date
:~131,309,464
:';118,599, 174
359,804
179,3?1l
15,680,358
9,890,384
141,044
234,249,440
130,688,869 :
3,699,104
5,094,471
-1,647
199,123,020
127,830,060
1,900,04l)
16413
,
-110,441
280241
, '
24,925,782
15,056,267
,
-102658
40,245,4 63
1,808,638
364,779
69,062,533
61,047,191
656,7'17
3,188,388
342,751
53,950
55,375
20,424,617
40,965,305
3,821,990
629,259
685,946
9,793,964
38,853,924
2,626,813
567,898
613,212
26,327
432,291
380,112
165,225
3,102,801
7,133.!~3~_
- .
379,118
37,781,221
. _."O~!~!5~L4~~_
-536,604
32,7ai,527
70,228,972
--
...
-26,871
6,971,328
23,367,840
-2,332,881
59,370,274
269,925,305
55,887
547,709
1,362,260
~~!.~~!~9!l",
54,902,030
644,171
7,856,393
11,468,342
::::+~~~~:::.
33,230
425,182
1,201,604
Total--Justice Department ••••••••••••••••••••••
Labor Department:
Manpower Administration:
Public enterprise funds (net):
Advances to employment security administration
account, unemployment trust fund •••.••••••••.•
Farm labor supply revolving fund ••••••.••••••••••
Manpower, development and training activities ••••••.
Bureau of Apprenticeship and Training •••••••••••••.
Payment to the Federal extended compensation
account ....................................... .
Unemployment compensation for Federal employees
and ex-servicemen..••..••........•..... , ...... .
~r .••••••••••••••••••••••••••••••••.••••••••••
Total--Manpower Ad ministration ••••.••••••••••
Labor-Management Relations:
Labor-Management Services Administration •••••••••
Bureau of Veterans' Reemployment Rights •••••••••••
Wage and Labor Standards:
Bureau of Labor standards ...................... ..
Woments Bureau •••••••••••••••••••.•••.••••••••••
Wage and Hour Division .......................... .
Bureau of Employees' Compensation:
Employees compensation claims and expenses •••••
ether••.•••........•..•••...•.•................
-0.'-"-==_.
4,374,152
4,211,278
.............••...
2,296,378
-88,018
-1,657,189
._- _.. - .------ -- ._------- - - .
1,205,164,149
86,511,253
358,212
697,352
1,354,290
-113,885
302,088
465,945
---
96,959,870
4,837,500
12,611,028
5,881,102
-1,300
1,616,332
··.~_==._~=·_=~c==--=
Justice Department:
LeraI activities and general administration •.••••••••••
FeGeral Bureau of Investigation ..................... .
Immigration and Naturalization Service ••••••••••••••• I
Federal Prison System:
Federal Prison Industries, Inc. (net) ••••.•.•••••••.
Other........................................... .
.1
:1l5,151,807
-SO
.............................
....
I
I==~-'.'-='
5,274,116
12,160,199
5,380,760
103,610
6,271,377
.- -
315,003
6,598,~17
30,243,052
~,.!.90,O~5
. ........•.....•.
...........•..•...
-
~.-
...- .. -'-
..
_
_- ...
. -
_.~5,1~.~~~
339,382,531
3,901,617
3,830,502
....•..............
326,052
._--1,123,783,755
.-
-
-
-1,439,001
-4,609,903
61,585,910
.. _._.62,848,052
...••..•.........
-19,358,259
. ..•..............
'--
.
44,991,433
757,563
10,303,474
9,493,993
357,268,391
._-._=-;-,
f=
..
_
60,892,997
143,024,458
67,100,876
455,393
--
-895,609
95,122,605
64,148,973
159,507,465
72,202,901
-2,225,696
-349,922
230,025,806
5,550,010
15,742,604
12,936,604
'788,755 -- .. _--_. 425,490
35,112,883
._ ..
- 14,012,485
.
--=-.:.=....:...-=--==-=-=-=...:=..=
-
-3,425
16,615,928
590,147
895
20,931,234
Corresponding
period
fiscal year 1964
1965
I
I
I
Total--Bureau of Reclamation •••.••••••••••••••
I
Fiscal Year
month
last year
7
....- -- .327,994,340
..
.-
-7,434,616
-1,200,043
109,970,184
5,647,023
-19,357,595
122,397,686
152,514,219
7,933,034
9,250,291
._----1-----._-----ai9,389,463
~3,330,919
550,948
62,599
903,965
80,671
7,189,618
811,796
7,239,318
755,837
232,475
41,899
1,703,356
376,975
61,635
2,046,564
3,600,626
773,904
20,333,711
3,708,625
19,925,639
6,367,825
375,246
5,919,849
379,585
52,657,638
4,431,652
58,811,537
4,368,978
802,380
B
+
TABLE III--ADMINISTRATIVE BUDGET RECEIPTS AND EXPENDITURES--JUNE 30. 1965·-Contlnued
=·._==::_7-=":=:="~:.:-~=-,==---,-::=.:~·-
Classification
EXPENDITURES--Continued
....- ..-- . . -....--- - ... -.-. .-- -.-- -.. -.- .-....._.-.
.--
Labor Department--Continued
Bureau of Labor Stattstics •••••••••••.•••.••••••••••
Bureau of International Labor Affairs.................
Office of the Solicitor.. .. ................ ...........
Office of the Secretary............ •••..•..••••.•••••
.---;--_..--.----. _-1-----··--.-=-·.;..=-_:.::.=.·_- - -
-.-.=~
~!
'l'his month
--
..
Correspondt.lg
month
last year
I
Fiscal Year
1965
to date
Corresponding
period
flscal year 1964
._- ._-----_.-1---- .---------- -...- .. - - - - -
!
I
."1,286,184
110,53 7
226,845
3~!.50~
$1,676,183
97,156
490,903
__ , =..•..-3~S.'.~~1-....
tl
,
46,464,305
i
$18,083,225
706,561
4,850,830
2,725,297
.=-== ==-==-----,...
479,500,782
:. ..:-
$17,8'10,453
938,168
4,615,823
1,988,810
.::....~-
.. _. -.. ......:..:.....----=
3'10,415,037
123,996,828
s 799,578,136
577,698,965
16,947,872
1< 173,627,828
148,852,334
2,347,478
-45,041
373,091
26,182,260
113,915
3,581,627
15,690,033
355,598
3,272,327
19,623,401
203,505,631
168,170,293
99,220
-2,435,632
.0410,244
-58,711
574
5,282,749
10,719,407
31,896,388
338,860
31,853,215
133
......... 74;6aj; 958
'rotal--Interest on the public debt •••.••••••••••••
•
Total--Treasury Department •••••••.•••••••••••• I
I
Atomic Energy Commission .••••••••.•••••••••••••••••
Federal Aviation Agency:
GrantS-in-aid for airports •••••.•.•••••••.••••.•••••
Other ..
It
•••••
It • • • • • • • • • • • • • • It • • • • • • • • • • • • • • • • • • • I t .
Total--Federal Aviation Agency
I
,
,
1,133,918,747
I
I
229,526,256+_
•
, ,
I
1,081,275,851
=
t==
242,123 ,440
-
,
,312, 22:
, , ,
12,737,368,581
11,947,349,231
2,624,142,652
._.... _. 2,764,564,835
...
_.
I
3,967,959
70,074,521
4,986,010 !
61,278,870 I
70,598,086
723,989,458
65,247,695
685,301,962
,
74,042,480
66,264,881
794,587,545
750,549,658
135,977,129
81,493,483
15,856,997
272,681,572
160,818,414
73,364,528
-21,162,273
260,128,427
!
General Sen"ices Administration:
r
Real property activities:
Construction, public buildings projects ••.•• " •••••••
Repair and improvement of public buildings •••..•.•• I
IntragO\'ernm£-ntal funds (net) •••.••••..•••••••••••. !
Other .•.•....•..•...•.•..•••..•..•.•.•••••.•••.
I
See- footnotes on page H.
I
1
11,162,067
5,276,489
40,807,573
8,290,747
I
18,017,191 I
6,444,093 '
9,113, 204
4,023,635 i
1
TABLE III--ADMINISTRA TlVE BUDGET RECEIPTS AND EXPENDITURES-- JUNE 30, 1965--Continued
_. -.._-_._- "_ ... _-- ---,-= :===-------- ---_. ---
9
~-
Classification
EXPENDrrURES- -Continued
Tllis month
- -.-
General Services Administration--Continued
Personal property activities:
Intragovernmental funds (net) ••.•••..••••••••••• ..
Other •••••..•.••....•.•••••••••••••••••••••••
Utilization and disposal act! "ities •••••••••.•••••.•
Records activities .••••.••••.•••••••••.•••••••••.
Transportation and communications activities ••.•.•
Defense materials activities:
Public enterprise funds (net) .•••••.•••••••••....
Intragovernmental funds (net) •••••••••.••.•...•.
Strategic and critical materials .••.••.•.•••••••. .,
General activities:
Public enterprise funds (net) .................. .
Intragovernmental funds (net) ••••••••••••••••••• .,
Other ....................................... .
---
Corresponding
month
last year
"---
Fiscal Year
Corresponding
period
fiscal year 1964
1965
----r- -
to date
..
..
..
-$14,642,180
3,084,532
673,510
1,230,525
1,550,050
-$5,901,069
3,631,508
778,652
1,138,753
-375,226
$18,301,953
52,883,697
9,697,620
15,983,385
10,849,104
··..
..
..
...................
. .................
527,731
1,308,653
2,650
478,666
16,242.,565
-188
1,883,829
154,687
-214,572
-644,918
1,981,040
-582,256
-729,444
1,745,683
40 745,455
631,570,375
592.,710738
11,554,687
-63,792
24--.1555,033
219,334,339
-1,799,428
235,012,399
. ...................
..
76,558
1,194,783
-871
2,014,422
150,696
$28,312,889
46,609,897
9,585,279
14,546,003
4,230,481
.. . . . . 11 . . . . . . . . . 11 . . . . . . . . . . . . . . . . .
-114,368
15,957,475
..
60,868,905
Housing and Home Finance Agency:
Office of the Administrator:
Publlc enterprise_ funds (net):
College housing loans .••••••••••••••••••••••
Liquidating programs .•.•••••••••••••••..••••
Urban renewal fund •.••..••••••.••••.•••••••• ..
Rehabilitation loan fund ..................... .
Urban mass transportation •••••••••••••••••••
Other ••••••...•••••.•.•••••••••••••.••••.••
Open-space land grants ••.•••••••••••••..•••.••
Other ...................................... ..
14,073,082
-96,870
46,096,496
180,000
749,535
8,333,027
247,954
2 266 779
..................
4,449,769
710,493
3 942 219
220,743,636
-985,142
324,351,500
180,000
11,068,235
87,507,504
6,211,704
34 695 713
71,850,005
45,148,409
683,773,151
569,006,131
-14,360,000
11,355,300
-20,866,718
....................................
-4,460,000
-38,000,000
-113,100,179
-373,170,608
14 -31 156 780
4,460,000
-70,820,304
-138,358,625
-141,925,191
..........................
Total--General Services Administration •••••••••
....
......
....
Total--Office of the Administrator •••••••..••• ..
I
Federal National Mortgage Association (net):
Loans for secondary market operations •••.••.••• "
Purchase of preferred stock •••••••••••••••••.•• "
Management and liquidating functions fund •••••••• "
Special assistance functions fund ••••••••••••••••
Government mortgage liquidation fund .•••••••••• "
-2,350,000
....................................
-11,628,690
-21,161,148
-3 871 621
..
---
--
...................
.. ..................................
195,000
79,919,134
5,130,371
31 214 316
Total--Federal National Mortgage Association . "
~39,011)460
-23,871,418
-559,887,568
-346,644 122
Federal Housing Administration (net) •••••••••••••• "
Public HOUSing Administration (net) ••••••••••••••••
-56,597,391
22,994,177
-71,851,640
18,101,440
-110,342,987
230,116,306
-43,441,952
149,206,532
-764,668
-32,473,208
243,658,902
328,126,589
507,934,144
504,848,391
5,093,760,148
4,170,997,324
346,391,574
338,893,289
4,181,035,472
4,057,282,216
-14,000,484
-3,386,480
-6,902,153
152,430,791
-14,050,582
28,714,368
-5,148,216
147,752,376
-129,834,060
38,337,047
-29,067,180
1 427,5~O! 760
-32,302,501
76,497,875
-16,820,049
11 393 1443 1 600
474,533,247
496,161,235
33,195
39,265
Total--Housing and Home Finance Agency ••••••••
National Aeronautics and Space Administration •.••.•••
Veterans Administration:
Compensation, pensions, and benefit programs ••.••.
Public enterprise funds (net):
Direct loans to veterans and reserves •••.••••••••
Loan guaranty revolving fund •••••••••.•..•••....
Other ........................................ .
Otlter •••••••• , ... , ............................... .
·
·
I
,
I
·
Total--Veterans Administration ••••••••••.••.•.••
Other independent agencies:
Advisory Commission on Intergovernmental Relations
Alaska Temporary Claims Commission •••••••••••••
American Battle Monuments Commission •••••••••.•
Central Intelligence Agency-construction ••.•••••••.
CiVil Aeronautics Board:
Payments to air carriers •••••••••••••••••••••••
Other ....................................... .
Civil Service Commission:
Payment to Civil Service retirement and disabillty
fund ........................................ .
Government payment for annuitants, employees
health benefits fund ••••..••.••.•••••••••••••••.
Government contribution, retired employees health
benefits fund ................................ ..
Other ....................................... ..
·
··
·
Commission of Fine Arts ......................... .
Commission on Civil Rights ••••••••••••••..•...• - •
Commission on International Rules of Judicial
Procedure .................................... .
Equal Employment Opportunity Commission •••••••••
Export-Import Bank of Washington (net) •••••••••••••
Farm Credit Administration (net):
Revolving fund for administrative expenses .•.•••••
Short-term credit Investment fund ••••••••••••••.•
Banks for cooperatives investment fund •••••••.•••
·
·
Total--Farm Credit Administration ••••••.•••••
See footnotes on page 14
5,478,101,142
I
337,709
7,382
5,356,900
826 415
80,422,548
1~204 613
84,122,285
10:022:669
........ .............. .....................
65,000,000
62,000,000
. .................
12,210,000
2, 767J 082
.......................
2 766 372
9,500,000
14,800,000
25,111 362
14,800,000
25118237
2,767,082
2,766,372
._ ------.!!1J21,362
111 418 237
7,830
107,968
8,188
70,156
95,259
1,146,957
87,078
817,286
4
29,383
-35,174,_791
.. ...................
.......................
4
29,383
-357,231,298
7,469
..........-701............
783 845
-161,201
5,490,000
-13926 400
-8,597,601
250,785
11,634
6,036,705
872 145
. .................
-37,619,229
-2,614,361
1,100,000
-6,400,000
. .................
98,754
3,375,000
-20 287 000
-6,384,678
-1,514,361
-16,813,245
-884,678
·
5,488,042,037
422,349
5,354
1,952,476
353,972
...................
..•...............
.......•..........
·
Total--Civll Service Commission ••••••••••••••
-
i
900,000
..
365,899
...................
1,785,902
285,036
10
TABLE III--ADMINISTRATIVE BUDGET RECEIPTS AND EXPENDITURES--JUNE 30,1965--Contlnued
Classification
EXPENDITURES--Continued
This month
.
-
Other independent agencies--ConUnued
Federal Coal Mine Safety Board of Review •••••••••••
Federal Communications Commission ••.••.•.•.•••••
Federal Development Planning Committees
for Alaska ••••••••••••••••••••.••••••••••••••••••
Federal Home Loan Bank Board (net):
Federal Savings and Loan Insurance Corp. fund ••..
Other ••.•••••••••••••••••••••••••••••••••.•••••
Federal Maritime Commission ••.•••.••••••••••••••
Federal Mediation and Conciliation Service ••••••••••
Federal Power Commission ••.•.••••••.••.•••••••••
Federal Trade Commission ••••.••••••••.•••••••.••
Foreign Claims Settlement Commission ••••••••••••.
General Accounting Office .••••••••••••.••.•••••.•••
Historical and Memorial Commissions •••••••••.•••••
indian Claims Commlssion •••••••••••••••••••••.•••
Interstate Commerce Commission •••••.••••••••••••
National Capital HOUSing Authority ••••••••••••••••••
National Capital Planning Commission •••••.•••••••••
National Capital Tr~sportation Agency ••••••••.•••••
National Commission on Food Marketing •••••••••••••
National Commission on Technology, Automation,
and Economic Progress •••••.•••••••••••••••••••••
National Labor Relations Board ••••••••.••••••••••••
National Mediation Board ••••••..•••••••••••••••••••
National Science Foundation •.•• " ••••••••••••••••••
Outdoor Recreation Resources Review Commission •••
Participation in Interstate Federal Commissions:
Appalachian Regional Commission •••.••••••••••••
Delaware River Basin Commission ••......••••••••
Interstate Commission on the Potomac River Basin••
President's Adv. Com. on Labor-Mgmt. Policy ••••••
Railroad Retirement Board-Military service credits ••
Renegotiation Board ••••••••••••••••••.••••••••••••
Saint Lawrence Seaway Development Corporation (net).
Securities and Exchange Commission •••.•••••.•.•.•.
Selective Service System ••••••••••••.•••••••••.••••
Small Business Administration:
Public enterprise funds (net) ..........................................
Salaries and expenses •••..•..••••.•••••.••.••.••.
Other •••••••••••••••••••••••••••••••••••••••••.
Corresponding
month
last year
866,348
16,747,173
163,760
16,717,021
6,318
23,141
87,083
-29,985
-184,007,355
170,160
232,719
482,763
1,502,847
1,473,369
152,173
4,953,199
10,333
-145,069,7m
64,172
:J)9,687
646,766
1,350,468
942,153
2,036,372
5,035,043
18,620
-204,698,Z72
137,685
2,852,409
6,283,641
13,115,854
13,661,513
35,043,150
44,948,351
133,496
302,800
26,491,243
33,820
3,537,987
616,828
406,241
-248,096,226
-322,431
2,611,387
5,701,676
12,324,394
12,117,728
8,924,446
45,116,039
122,820
294,478
24,378,287
43,031
735,483
981,682
45,239
2,084,533
150,727
29,085,653
,
to date
Corresponding
perlod
fiscal year 1964
85,045
1,651,863
23,5Z7
I
1965
85,908
1,914,720
2,193,245
-878
2,402,923
34,085
87,500
I
Fiscal Year
32,8Z7
1,962,142
4,237
82,823
81,785
...............
.................. "" .... " "
1,786,368
185,285
46,315,099
................
134,209
25,220,791
1,891,645
306,871,514
........ "" .... "",, .... "
22,049,363
1,939,470
310,m2,016
6
............................ ..
.. ..........................
................................
29,090
3,235
..............................
.. ............................
199,637
156,520
1,598,873
5,798,556
19,793,113
1,323,096
105,558
40,342
131,387
5,000
106,155
13,834,000
2,649,988
904,557
15, Zl6,483
43,210,934
243,868,969
6,659,039
43,349
...............
..............................
285,297
358,563
1,781,291
4,134,788
15,065,643
4,500,173
222,820
2,493
................
10,127
...............
152,795
5,000
112.514
. ............................
2,508,699
154,12'7
14,336,737
40,935,735
124,316,477
8,591,226
24,989
,
19,788,637
21,221,769
250,571,358
132,932,693
I,
3,097,334
44,019
354,923
163,031
12,226,651
433,440
2,378,297
37,054
225,458
188,732
10,639,499
962,648
27,986,151
408,843
3,270,600
2,087,496
47,918,975
7,508,749
21,790,573
435,801
12,631,860
291,685
500,630
-1,930
18,705,481
657,433
714,738
1,119,169
149,589,698
6,638,775
7,389,272
940,000
140,619,721
12,156,829
7,391,960
Total--U. S. Information Agency •••.••••••.•••••
13,859,978
20,075,723
164,736,915
161,108,512
U.S. -Puerto Rico Commission on the status of
Puerto Rico ••••••••••••...•.•••••••.••••••••••••
United States Study Commissions ••••••••••••••••••••
24,819
...............
..
.............................
..........................
83,355
8
.. ..........................
Total--Other independent agencies •••.•••••••.••.
-111,853,(173
-48,861,6m
715,326,561
159,176,718
District of Columbia:
Federal payment to District of Columbia ••••••••••••
Advances for general expenses (repayable) •••••••••••
Loans to District of Columbia for capital outlay ••••••
Loans to District of Columbia (stadium fund) •••••••••
.. ..........................
.. ............................
17,000,000
1,025,000
..............................
40, 7:1D ,000
9,000,000
10,700,000
831,600
40,368,000
7,000,000
9,450,000
655,800
Interfund transactions (-) (See detail on page 2) •••••••••
-44,210,082
-47,223,900
-869,041,mO
-663,621,619
Net administrative budget expenditures ••••••••••••
9,081,120,197
9,526,956,409
96,518,462,919
97,684,3'14,794
Administrative budget surplus (+) or deficit (-) •••••••••
+4,295,593,568
+2,873,865,816
-3,474,019,605
-8,225,710,723
Total--Small Business Administration •••••••••••
Smithsonian Institution ••••.•••••••••••.••••.•••••••
Subversive Activities Control Board ••••••••••••.•••.
Tariff Commission ••••••••••••.••••••.••••.•••••••
Tax Court of the United States ••.••...•.•••••••.•••.
Tennessee Valley Authority (net) ••••••••••••••••••••
U. S. Arms Control and Disarmament Agency ••••.....
United States Information Agency:
Informational media guarantee fund (net) •••••.•.•••
Salaries and expenses ••••••••.••••••.••••.•••••••
Construction of radio facilities ••••••••••••••••••••
Other •••••••••••••••••••••••••.••••••••••••••••
!
!
2,500,000
200,000
415,800
348,400
2,931,835
l,m,62O
59,291,307
6,194,807
170,418
FOOTNOTES
Source:
Prepared by the United States Treasury Department. Bureau of Accounts. on the basis of reports received from disbursing. collecting. and administrative agencies of the Government .
.. This statement is preliminary and based on reports from disbursing. collecting and administrati ve agencies ofthe Government received
through Jul)" 14. 1965. Final reports of Government disbursing, col:ecting and administrative agencies. including certain overseas
transactions for the year ended June 30. 1965, which it has not been
possible to include in this statement, will be incorporated in the final
statement for fiscal year 1965 to be published at a later date.
2 Includes debt not subject to limitation. which on June 30, 1965
a mounted to Sl83.3b4.98b. The statutory debt limitation established
at $285 billion by act approved June 30. 1959, has been temporaril~
increased during the periods covered by this table. The dates wher
each increase became effective are as follows: $308 billion on Ju1~
I. 1962; $305 billion on April 1, 1963; $307 billion on May 29,1963;
$309 billion on July I, 19b3; $315 billion on December 1, 1963; $3Z4
bilfion on June 29, 1964; and $32.8 billion on July 1, 1965.
From 19b6 Budget Document released January 25. 1965.
Footnotes continued on page 14
TABLE IV--TRUST RECEIPTS AND EXPENDITURES-_ JUNE 30, 1965
11
=====,.,...,.,."-:::.,=======-"",,---,-====--"--1--' .. - - . - .-.-.-'--.,- - - "----"'---'- - '-=r--==----.. .: .-.,'-.'"-'--..;, :."__--.---___'---'.====--=
Classification
Corresponding
Fiscal Year
Cor responding
This month
month
1965
period
RECEIPTS
last
year
to
date
fiscal year 1964
-----_._--Legislative Branch:
Payments from general fund •••••• _•••••••••••••• _••
Other •••••••••••••••••••••••..•••••••••••••••••••
Tbe Judiciary:
Judicial survivors annuity fund:
Contributions ••••••••••••••••••••••••••••••••.••
Interest on investments ••••••••••••••••••••••••••
Funds appropriated to the President:'
Mutual defense and development:
Military assistance advances •••••••••••••••••••••
Economic aSsistance ••••••••••••••••••••••••••••
Otller ................................................................................... ..
Agriculture Department ••••••••••••••••••••••••••••••
Commerce Department:
Highway trust fund:
Transfers from general fund receipts ••••••••••••••
Less refunds of taxes ......................... .
Interest on investments ••••••••••••••••••••••••••
189,981
117,076
$89,555
162,326
1,462,762
1180,355
1179,799
1,831,310
64,757
-4,530
49,506
-4,088
790,371
89,797
645,013
76,016
49, '112, '130
366,804
1,591
4,317,856
31,343,708
105,136
64,269
5,004,999
823,223,542
1,386,498
167,070
56,997 739
719,700,507
769,192
164,217
55 71l,025
3,781,927,512
-123,498,341
~~,034,928
3,645,793,198
-126,636,555
20,361,229
,.
346,588,156
319,900,000
.. .... i;iI63;952
...... ·.i;63S;40i
._... 348,252,109
1,193,505
324,536,401
3,669,464,099
3,s.s.~,517,~72
1,252,661
10,455,042
33,052,009
225,483
11,834
5,744,543
5,1'18,359
.. ·.. ·i;789;S27
·........ 633;483
3,135,803
25,885,735
42,94~251
1,359,'131,325
-110,000,000
1,332,546,305
-22,000,000
. .. ---2;30i;555
-... -. :i;300;576
213,786,212
15,15'1
196,'100,791
16,862
14,'17'1,984,820
-2'1,000,000
-1'18,625,500
1,257,836,809
583,124,534
3,189,891
14,488,596,928
-1,000,000
-152,4'10,000
1,166,599,194
539,044,380
2,603,619
1,465,834,251
1,505,957,383
16,416,510,555
16,043,374 122
105,891,859
-8,000,000
96,574,1104
-3,000,000
1,095,087,773
...... "650;4oi
......................
..· .... i;68B;iI2i
23,820,112
994
27,635,934
.........•....•.
65,247,217
16,970
...••.•.•.••••.•...
Total--Federal disability insurance trust fund ••••
122,363,369
122,899,560
1,240,508,081
1,210,820,825
OtIIer ............................................................... .
65,448
29,992
33'1,085
866,739
3,144,519
..· .. ·i;oi7;776
20,439,077
8,851,108
1,145,498
58,587,'136
65,842,526
12,671,51'1
'10,253 ,227
23,467,585
10,834,556
2,783,000
456,799
-629,462
2,545,000
194,262
-570,093
Total--Highway trust fund ••••••••••••••••••••••
Other ...................................................................................... ..
DefeJlSe Department:
Military ••••••••••••••••••••••••••••••••••••••••••
Civil:
Payments from general fund ••••••••••••••••••••••
Other .................................................................................. ..
Health, Education, and Welfare Department:
Federal old-age and survivors insurance trust fund:
Transfers from general fund receipts:
Appr opr iated •••••••••••••••••••••••••••••••.•
Unappropriated •••••••••••••••••••••••••••••••
Less refunds of taxes ......................... .
Deposits by states .............................. .
Interest and profits on investments ••••••••••••••••
Other .................................................................. .
Total--Federal old-age and survivors insurance
trust fuJ1CI .......................................... .
Federal disability insurance trust fund:
Transfers from general fund receipts:
.AlJpropriated .................................................. .
Unappropriated •••••••••••••••••••••••••••••••
Less refunds of taxes ......................... .
Deposits by States .............................. .
Interest and profits on investments ••••••••••••••••
Other .................................................... .
Interior Department:
Indian. trillal funds ............................................ .
Payments from general fund ....................... .
Other .......................................... ..
Labor Department:
Unemployment trust fund:
Employment security administration account:
Transfers (Federal unemployment taxes):
Appropriated •••••••••••••••••••••••••••••••
Unappropriated ............................ .
Less refunds of taxes •••••••••••••••••••••.••
Advances from general (revolving) fund ••••••••••
Less return of advances to the general fund •••••
state accounts --deposits by states ••••••.••••••••••
Railroad unemployment insurance account:
Deposits by Railroad Retirement Board ••••••••••
Advances from railroad retirement account ••••••
Advances from general fund •..•••••• _......... .
Railroad unemployment insurance adm. fund:
Deposits by Railroad Retirement Board ••••••••••
Federal extended compensation account:
Advances from general fund ••••••••••••••••••••
Interest and prOfits on Investments •••.••••••••••••
Total--Unemployment trust fund ••••••••••••••••
other ........................................................ ..
-
--------~--~-------
3,057,247
l,aro,l85,734
.. .. :i3;064;SOO
-13,330,000
86,305,332
67,659,757
93,220,620
,I
i
i
.................
...............
39,918,252
29,804,172
................
...............
.................
................
32,618,681
30,34'1,360
........................
. . . . . . . . . . . . . . oO . . . . .
1,986,873
1,216,7'13
....................
87 194,951
...... 67'512;,585
160,800,988
622,037,760
1,333,366
-7,608,577
194,968,108
-194,968,108
3,050,191,612
854,305, '/36
-3,447,557
-4,290,836
239,705,000
-244,205,000
3,042,40'1, 829
142,780,563
58,230,000
144,086,600
35,18'1,000
................
...................
9,519,774
11,970,150
................
255 264 828
664
212,608,189
133,924,569
4,131,749,328
4,288,327,777
38,244
1,040
130,291
88,833
302,101
292,730
3'12,122
364,383
3,843,747
3,653,015
3,440,312
3,307,974
28,292
1,422,759
21,160
2,396,799
80,332
1,369,785
17,684
1,652,037
795,896
1,5'1'1,255
1,257,837
24,227,746
385,359
1,507,411
338,355
26,053,691
State Department:
Foreign Service retirement and disability fund:
DedueUous from salaries and other receipts •••••••
Employing agency contributions •••••••••••••••••••
Receipts from CivU Service retirement and
disability fund ................................ .
Interest on investments ••••••••••••••••••••••••••
Other ••••••••••• , ................................ .
Treasury Department ............................................ ..
See footnotes on page 14.
12
TABLE IV--TRUST RECEIPTS AND EXPENDITURES--JUNE 30, 1965--Continued
Classification
RE CE IPTS - -Continued
Corresponding
month
last year
This month
-_. __._"
- - - - - - - - - . - - - - - - - - . - . -- - -....- - - - f - -
;)180,000
Atomic Energy Commission .•••••.•••..••••.••.•••••••
Federal Aviation Agency •••.••.••.•.•.•.••..••.•••••••
General Services Administration ••.••••••••.•••.••.••••
National Aeronautics and Space Administration ••••••..••
Fiscal Year
1965
to date
..................
$1,229,591
500
540,521
· .. · ...... ·!ii;iOO ..................
2,243,970
5
Corresponding
period
fiscal year 1964
1629,312
.. ...................................
283,451
201,033
Veterans Administration:
Government life insurance fund:
15,221,034
949,773
15,805,169
Premiums and other receipts......................
1,285,393
6,996
-119,011
Payments from general fund •..•••••...••....•.•••
1,628
-142,522
33,761,925
32,924,726
34,463,875
Interest on investments.. . . . . . • •• . . . . • . • . • . •. • . • . .
32,407,194
National service life insurance fund:
476,011,040
38,872,073
478,299,648
Premiums and other receipts.......... ••.•••••••••
40,236,415
7,028,552
523,275
Payments from general fund .. • .. • .. .. • . • .. .. .. . .. •
527,713
5,969,469
182,144,&.19
176,471,453
Interest on investments ...........................
179,758,000
173,839,253
1
810
331
118,510
1
870 242
Other •..•••.••.•••..•...•....•.•••..•...•...••.••. 1--_ _ _~19~8!..!,04:.!:54_ _ _----'=~::.--r____=.1.:==+----===
Total--Veterans Administration ••..••••.•••.•••.•••
Other independent agencies:
Civil Service Commission:
Civil Service retirement and disability fund:
Deductions from employees' salaries, etc •••••.•••
Payments from other funds:
Employing agency contributions ••••.••.••••••••
Federal contribution •.•••••••••••••.••.••.••••
Voluntary contributions, donations, etc •••.••••...
Interest and profits on investments •••..••...•.•••
Total--ClvU
Servic~
254,414,392
247,234,610
715,858,773
712,737,337
89,758,406
83,143,034
1,050,416,467
979,885,732
83,150,043
979,941,019
62,000,000
14,592,256
419,838,372
.. ................................
. ..................................
1,225,904
436,616,505
1,383,485
378,982,857
1,050,356,476
65,000,000
16,429,592
482,170,944
617,362,642
546,659,420
2,664,373,481
2,456,257,381
65,813,983
-9,200,860
61,160,206
-7,892,'794
100
73,394,511
630,429,539
608,969,561
-15,492,759
100
130,127,866
89,761,826
Commission ••.•••••••••••
Railroad Retirement Board:
Railroad retirement account:
Transfers (Railroad Act taxes):
Appropriated •••••••.••••••••••••••••.•••••••
Unappropriated ••••••••••.•••••••••••.•.•.•..
Fines and penalties ••••..•••.•••••••••••.•••••••
Interest and prOfits on investments •.•.•••••••••••
Interest on advances to railroad unemployment
insurance account •...•.•.•..•...•••.•.......•.
Repayment of advances to railroad unemployment
insurance account •••••••••••••••.••.•••.•••••
Payment from Federal old-age and survivors and
Federal disability insurance trust funds ••..••.••.
Other ••••••••••••••••.••••••••••.••••••••••••.
. ................
103,411,834
·......i4::::;::\
11,036,945
9,060,235
12,167,342
9,507,533
13,700,000
11,095,000
77,935,000
37,454,000
459,253,000
................ ,
..................
421,7'15,000
459,253,000
13,834,000
. ......................................
Total--Railroad Retirement Board •••••••••.•••
644,014,902
568,592,260
1,341,979,132
1,192,341,301
Other •.•••.••.•.••.•••.•••••••.•••.••••.••.•••••••
District of Columbia:
Revenues from taxes, etc •...••••••..•.•••••.•••••.•
Payments from general fund:
Federal contribution •••.•.••••.•••••••••••.•••••••
Advances for general expenses••••••...•••••••••.••
Less return of advances to general fund ••.•••.••.
Loans for capital outlay •...••..•••.•....•..•.•.•.•
Other loans and grants •••••••.•.•••.•••.•.•••••••
5,471
29,326
9,751,423
48,098,115
14,910,426
15,212,354
285,552,615
272, 163, 169
...... · .. 2;500;000
..................
........ i'i;ooo;ooo
.. ................................
1,025,000
4,559,424
40,720,000
50,000,000
-41,000,000
10,700,000
41,243,916
40,368,000
33,000,000
-26,000,000
9,450,000
26,606,257
1,341,331
1,198,562
16,340,286
14,562,638
435,638,000
402,636,000
435,638,000
402,636,000
....................................
48,380,237
....•......•......
39,374,568
58,230,000
118,729,869
35,187,000
68'!I93,101
Total interfund transactions (-) ••••••.•••••••••••
-485,359,568
-443,209,131
-628,938,156
-521,379,439
Net trust receipts ..•.••••.•••••••••••••••••••.•.•••••
3,216,946,515
3,117,481,332
_.
31,054,931,251 _..
200,000
3,862,807
Interfund transactions (-):
Payments to employees' retirement fund receipts •.•.•
Payments between funds:
FOASI fund to railroad retirement account •.••.•.•••
Unemployment trust fund from ra.ilroad retirement
account •••.•••.•...••.•••.•••••••••..••••••••••
Other ••.••••••••••••••••.••••••.••••.•••.•••••••
421,775,000
_.~O,330,645,525
EXPENDITURES
Legislative Branch .••••••••••••••.••.•••.•.••••.•••.•
The Judiciary--Judlcial survivors annuity fund ••••.••.••
Funds appropriated to the Presii:lent:
Mutual defense and development:
Military assistance advances ••••••.••.••••••••••••
Economic aSSistance •••••.•••.•••..••.•.••••..••••
Ag~~~:ltu~e nepart~e~i:" . . . . . . . . . . . . . . . . . . .. . . . . . . . . ..
Trust enterprise funds (net) • • • • • • • • • • • • . • • • • • • • . • • ••
Other ..•.••..••••.•••.••..•••••••••..••.••••••••••
Commerce Department:
Highway trust fund - Federal-Aid Highways •••••••••••
Other .•••.••..•.•.••••••.••••••••.••••••••••••••••
Defense Department:
Military •••••••••.•••••••••.•.••••••••.•••••••••••
Civil:
Trust enterprise funds (net) ...................... .
Other •••••••••.••.••••••••.••••.••.••••.•••••••.
144,992
36,183
I
I
208,016
54,466
1,894,266
487,789
1,643,731
490,145
131,492,704
-231,460
6,762
84,592,271
86,187
933
743,259,261
2,010,794
75,215
480,750,1112
2,023,845
151,799
145,609
6,251,685
1,219,941
5,952,246
-901,997
52,962,588
716,847
50,854,097
359,227,268
1,245,868
333,477,746
2,605,963
4,026,985,379
20,336,168
3,645,013,031
25,303,325
329,794
671,426
5,315,207
5,149,265
4,673
2,758,428
3,085
5,538,987
-1,638
31,381,633
5,956
44,142,189
I
TABLE: !V··~ TAUS T RECEIPTS AND EXPENDITURES-- JUNE 30, 1965--Continued
Classification
EXPENDrruRES--ConUnued
Corre.sponding
month
lallt year
Thl!!! month
Health, Education. and Welfare Department:
Federal old-age and survh'ors insurance Iru.st fund:
Administrative expenses-Bureau of Old-Age and
SUrvlvors Insurance ••••••••••••••••••••••••..•••
Reimbursement of administrative expenses from
Federal disability lnsurance tru.st fund ••••.•..•...
Payments to general fund--administrative expenses •.
Payment to Railroad Retirement Board ••••••••.••••
Benefit payments •••••••••••••••••••••••••.•..••••
Construction ••••••••••••••••••••••••.•••••.••••••
:i:36,389,150
.~37, 749,916
4,511,466
435,638,000
1,302,972,406
55,367
4,196,524
t312,381,991
218,265
-75,110,959
52,378,198
435,638,000
15,226,064,177
304,745
-63,849,716
51,713,954
402,636,000
14,579,166,049
2,558,352
1,689,639,978
15,962,062,928
15,284~606,631
.1~~:~;~.
320,506
110,677,840
19,139,000
78,223,221
3,767,958
1,392,197,572
23,615,000
66,357,624
3,841,295
1,251,207,262
19,139,000
150,255,365
130,137,346
1,497,803,751
1,340,545,182
46,182
131,061
561,767
832,859
9,400,809
1,027,941
8,791,321
1,466,996
74,418,206
11,040,056
66,092,602
10,882,258
402,636,000
1,244,839,272
I ..:. :. :.;;;;5;~
disability insurance trust fund •••••
Other"" •••••••• " •••••••••••••••• ""."""""""""""".,, "
~
Interior Department:
I
Indian tribal funds ................................. .
Other .......................................... ..
Justice Department (net):
Alien property activities ........................... .
Federal Prison System commissary funds ••••••••••••
LabOr Department:
Unemployment trust fund:
Employment security administration account:
Salaries and expenses, Bur. of Empl. Security ••••
Grants to States for Wlemployment compensation
and employment service administration •.•••••••.
Payments to general fund:
Reimbursements and recoveries •••••••••••••••
Interest on refunds of taxes •••••••••••••••••••
Payment of interest on advances from general
(revolving) fund •••••••••••••••••••••••••••••
Railroad Wlcmployment insurance account:
Benefit payments ••••••••••••••••••••••••••••••
Temporary extended railroad unemployment benefits.
Repayment of advances to railroad retirement acct.
Payment of interest on advances from railroad
retirement account ••••••••••••••••••••••••••• ,
Repayment of advances from general fund •••••••••
Rllllroad unemployment Insurance adm. fund:
Administrative expenses ••••••••••••••••••••••••
State accounts:
Withdrawals by States ••••••.••.••••••••••••••••
Reimbursements from Fed. extended compo account
Federal extended compensation account:
Temporary extended Wlempl. compensation payments
Reimbursements to State accounts ••••••••••.•••••
Repayment of advances from general fWld •.•••••••
.
52,783,427
11,284
Other independent agencies:
Civil Service Commission:
Civil service retirement and disabUity fund •••••••••
Employees health benefits fund (net) ••••••••••••••• •
Employees life insurance fund (net) ••••••••••••••••
Retired employees health benefits fund (net) •••••••••
Total--Civil Service Commission ••••••••••••••••
13,370,830
12,829,141
56, 607, 8O!i
35,307,634
399,382,196
412,707,380
3,267,408
17,184
223,144
112,017,648
172,046
54,594,261
92,825
12,256
7,975,445
11,036,945
9,060,235
I........~~:~?~:~~
182,800,638
154,420,474
9,507,533
7,090,380
7,925,581
9,070,279
2,389,611,624
2,703,274,544
......................... ........
-664
~
..................................
................................ .
................... ...:.:.-
-655
-_.--'--
..___20,053,044
~
247,158,200
__ ~7,1_~,.~6
29,948
98,355
715,500
15,907
1,993,346
55,726
634,047
.. .......................... ., . .
-20,531
11,011
-22,473
58,759
2,350,000
8,938,640
.................
14,360,000
-26,445,760
9,466
4,916,218
4,828,872
."''f,;;~
126,315,003
1,133,833
-107,452
1.~1.~~,2~~.. ..
~--1-28 506 ..637' ....
I
8,308,468
1,204,342
22,958,718
865,952
..................
113,976,337
2,733,098
260,539
1,168,795
I
I
II
-18,523
42,460,000
52,799,055
50,317
66,360,:114
-103,751,979
97,005
71,016,818
72,204,389
382,617
L
I
7,485,890
300,417
18,492,178
638,350
36,084
-10,301
214,103
;;:1. --,
32:1li
-2,304,877
664
. 325,402,030
-- 3,~·;,;~:;r·3.....::::
85,222
1,902,178
109,580
30,183
b======.~'=-=-.~--':.::
-466,958
-1,344,473
30,650
---=-- -::..:--=..:..-:- ..
I
..............................
I.... ·..~~~:~::~~
37,454,000
77,935,000
133,912,182
621,537 i
475,139
2,934,616
2,225,696
I
11,095,000
Otller ....................................................................................... ..
Treasury Department ............................... ..
Atomic Energy COmmission •••..••..••••..•••••••••.••
Federal Aviation Agency •••••••••••••••••.••••••••••••
General Services Administration:
Trust enterprise funds (net) •••••.•••••••••••••••••••
Other ........................................... ..
Rousing and Home Finance Agency:
Federal National Mortgage Association (net):
Loans for secondary market operations and
purchase of preferred stock ..................... .
Other secondary market operations ••••••••••••••••
National Aeronautics and Space Administration ••••••••••
Veterans Administration:
Government IUe insurance fund-Benefits, refunds
aDd dividends •••••••••••.••••••••••••••••••.••••••
National service life insurance fund-Benefits,
refunds and dividends ............................. .
Oth.er ........................................................................................ ..
1,280,772
6,459,382
..................
13,700,000
Other ........................................... ..
State Department:
Foreign Service retirement and disabll1ty fund ••••••••
4----=-
833,579
I-l~::
Total--Unemployment trust fund •••••.•••••.•••••
, .. Correspo~ding -period
fiscal year 1964
Fiscal Year
1965
to date
t322, 788, 765
Total--Federal old-age and survivors insurance
trust fund .................................. .. ~ 1,779,566,391
Federal disability insurance trust fund:
Administrative expenses--reimbursement to Federal old-age and survivors insurance trust fund •••.•
Payments to general fund--administrath'e expenses ..
Benefit payments •••••••••••••••••••••••••••••••••
Payment to Railroad Retirement Board ••••••••.••••
Total-~Federal
13
~:¥l;~I~~ ':t.~a~
1,438,145,563
-9,277,515
-26,361,034
-782,501
'I
1,318,295,895
-14,562,188
-49,382,736
-115,355
1l8,~-58~~72 ._.!z.4~,5~il~~;;:~·
. .
.
- ._.- .-.
.
.......
-=-=--==-~"---,,,- _.
14
..
TABLE IV--TRUST RECEIPTS AND EXPENDITURES--JUNE 30, 1965··Continued
-- - _-_-_-"-_~-_.__E_:'~~~:~~;:~:":""d ..~-=
Other independent agencies--Continued
National
Housing
Authority (net)
. •••. ••...
Railroad CapUal
Retirement
Board:
Railroad retirement account:
Administrative expenses........................
BenefU payments, etc. .... ............ .... .....
Payment to Federal old-age and survivors and
disabUity insurance trust funds ..•.•••••••. . • • • •
Advances to railroad unemployment insurance
account......................................
Interest on refunds of taxes ••.•••..••.••••.••.•.
Total--Railroad Retirement Board •••••••.•••••
Other:
Trust enterprise funds (net) ..•••.•••.•••.•••.•••••
Other ••••••••.•••••••.••••••••.•••.•.•••.•.•••••
District of Columbia •••••••...••••••••••.•••.•••••••.•
Deposit fund accounts:
Food stamps issued (receipts):
Payments from general fund .•••••••..••.••••.•••••
Receipts from sales .•.•.••..•••••••.•••••••••••••
Food stamps redeemed (expenditures) •..•....•..•...•
Other deposit funds (net) ••.••.••••••••.•••••••.•••••
Subtotal trust and deposit fund expendltures ••••••••.
Government-sponsored enterprises (net):
Farm Credit Administration:
Banks for cooperatives ........................... .
Federal intermediate credit banks •••.•••.•••••••••
Federal land banks •.•••.••.•.••.•••.•.•..••••••••
Federal Home Loan Bank Board:
Home loan banks •••.••.••.......•....•..•.•.•....
Federal Deposit Insurance Corporation •••••.•••••••.•
Total Government-sponsored enterprises •••••.•••.•
Interfund transactions (-) (See detail on page 12) •••.•••..
Net trust expenditures ••••....••••••.•••••••••••.•••..
~I: ~:~~- C°:Jfr~-- ..~:i~te~, r.:~.fWE::
11
_}303,919
= ____
~:=-__ .~~~~81 -~~~--O=I'l-=t-~-~,~,~593~-:'006-7-g-925
~
~-
-:M36 , 370
800,489
94,148,910
1,378,137
92,111,681
11,021,137
1,092,450,771
• ........ , • .. • • • • •
• . .. • • • . .. . .. • ... •
.. ............ , ... ! ................... .
• ••.••.•••••..•..•
864
87
58,230,000
9,160
35,187,000
277
94,950,265
93,489,906
1,184,886,495
1,138,659,186
42,918
14,343
37,722,666
7,916
6,842
45,028,713
-116,407
261,969
382,349,174
43,497
651,789
355,246,868
-3,988,580
-6,863,259
11,045,886
575,158,937
-2,315,570
-3,758,443
6,193,597
-32,504,837
-52,632,432
83,774,157
-231,851,544
-28,646,374
-44,995,620
73,663,476
-566,998,999
3,577,927,646
2,637,860,490
28,876,666,392
27,549,261,823
9,100,000
96,458,500
116,973,000
-29,489,000
69,570,000
-615,000
189,231,000
149,032,500
561,024,400
37,092,000
182,203,000
248,400,700
289,504,000
-500,000
659,681,000
-179,957,000
1,571,914,000
-182,866,000
486,191,500
328,470,000
1,379,011,900
1,856,743,700
3,578,759,577
2,523,121,358
29,626,740,135
28,884,626,084
F=====~==~===========--~-==--=--=-=======+=========~
__ -179,~5,3~__
F=====~====~====t=~~"-==-======~====f=~-==-===c~=======4==============~==
265,160,000
-1,500,000
1-------'-------
-----------+--------+---------
'-====--=1======+=======
-485,359,568
-443,209,131
-628,938,156
-521,379,439
t==========-4==-=-==-':'. c-_-="--=---= =_.".-====--===1=======
F=====,,;..-,.~~:=,~==
F==========~============~~==--==.-~--=-~~===~~=====~==~~=
Excess of trust
receipts (+) or expenditures (-). •••••••.•
-361,813,061
+594,359,973
+1,428,191,115
+1,446,019,441
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . _ .. _ _ _ _ _ _ _ _ _ _ _ _ _---' _ _ _ _ _ _ _ _ _' - -_ _ _ _ _ _ _ _ _ _ L - -_ _ _ _ _ _ _ _ _ _ -'--_ _ _ _ _ __
Continued from page 10.
FOOTNOTES
4Transactions for Office of Economic Opportunity are now shown
under Funds Appropriated to the President.
5Transactions cover the period July I, 1964throughJune 30, 1965
and are partially estimated.
60istribution between income taxes and employment taxes made in
accordance with provisions of Sec. 201 of the Social Security Act as
amended, for transfer to the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund.
7"Individual
income taxes withheld"
have been decreased
$6.803,143 to correct estimates for the quarter ended September 3D,
1964 and prior and "hldividual income taxes other"
have been in-
creased $86,179.958 to correct estimates for calendar years 1963
and 1962. The total of the above adjustments $79,376,814 is shown as
a decrease of employment taxes under "Federal Insurance Contributions Act and Self-Employment Contributions Act," representing decreases in appropriations of $74.268.674 for the Federal Old-Age and
Survivors Insurance Trust Fund, and $5,108,140 for the Federal
Disability Insurance Trust Fund.
3 Beginning with the statement for January 1962, amounts representing refunds of principal for overpayment of taxes formerly reported net of reimbursements for trust fund accounts are now shown
on a gross basis. These reimbursements to Internal Revenue Service
for refunds are now included and netted with amounts shown for
trar.sfers to respective trust fund accounts. The distribution of
amounts by type of tax applicable to budget accounts for the month is
partially estimated.
9Represents net cash transactions under provisions of the Act of
Se~tember 4, 1961 (22 U.S.C. 2316).
o Represents residual of gross receipts expenditures after reductions for certain costs which are included in amounts shown for
special activities.
11 Inc ludes certain costs transfer red from price support operations
for which expenditures may have been made in prior years, in addition to adjustments for prior months' transactions.
12Gives effect to reimbursements collected for administrative
support furnished to other agencies amounting to approximately
$85.167.619.
13 Expenditures are stated on an accrual basis.
!I. The proceeds from sale of partiCipation certificates amounting
to $299,262,000 were credited to this fund and paid over to Veterans
Administration and to the Special Assistance Functions fund, FNMA.
15 Represents changes in cash on hand, in banks held outside the
Treasurer's account, deposits in transit and cash payments not yet
covered by vouchers processed through accounts.
16Amounts shown for individual classifications are net of refunds
of taxes. For gros s amounts of administrative budget receipts including Internal Revenue and also Trust fund receipts see Table Ill, page 2
and Table IV, page 11.
JUNE 30, 1965
TABLE V·-INVESTMENTS IN PUBLIC DEBT AND AGENCY SECURITIES (NET)
.- - - .._.. ..
Classlfic:'atiull
This month
I
Corresponding
month
last year
Publlc enterprise funds:
Commerce Department:
Federal ship mortgage lnsuranl.'e fuud •••••••••••••
.......................... ...................
War risk insuranc:'e revllh'ing fund ..•.••.••..•••••
. ............. , ...
Federal National Mortgage kl",ociation:
Public debt securitle",:
Government mortgage liquidation fund •••••.•••••• .................. . ...................
Guaranteed ~ecurities (FHA debentures):
Management and Uquidating functions •••••••.•••••
-!to, 9tlO,000
-*29,523,250
Special assistance fUllctions food ••••••••....••••.
4,055.850
2.596.950
Not guaranteed securities:
Government mortg-.1ge liquidation fund •••.•.••••••
3,860,000 ..................
Federal HOUsing Administration:
Public debt securities .,., ...••.•..•••..•..••.•••.
-52.594.000
36,574,000
Guaranteed securitieli (FilA debentures) •••..•••••••
2,362.700
24,612,850
Public HOUSing Administration .••••••..•••••.••••••••
-5,000.000
2,000.000
Federal Sa\1ngs and Loan Insurance Corporation ••••••
198,000,000 I,
196,000,000
Tennessee Vaney Authority .• , ••••.•••••.•••.•••••••• ................... . .................
Other •••••••.•••••••••••.••••••••••••.•.••.•.••••. ,I . ....4,~0,0I!l
~!~.ooo
Total public enterprise funds ••••••••••••••••••.•••
150,008,550
236,930,550
.
..
~
i
=-
Trust accounts, etc.:
Jud:lcial survivors annuity fund ••.•••••••••••••••••••
Highway trust fund •••••••••••••••••••••••••••••••••
Foreign service retirement and disability food •••••. _•
Federal disability insurance trust fund ••••••••••..•••
Federal old -age and survivors insurance trust fund •••.
Unemployment trust fund ••••.•.•••••••••••••..••••. !
Federal National Mortgage Association:
Secondary market operations:
Public debt securities •••.•••••••••••••••.••••••
Guaranteed securities (FHA debentures) •.•••••••• ,
Not guaranteed securities ••.•.••••••••••.•••..•. J
Veterans Ufe insurance foods:
I
Government life insurance fund:
Public:' deot securities .• , • , . , ....... , ..• , . , . , ... .
Not guarantl'ed securities ..... _..••.•••.•..... _.
National ser\'ice life insurance fund ••..•.•..••.• , •.
Civil Service Commission:
I
CIvil service retirement and disability fund •• , •.•••• I
Employees health benefits fund ..•.••• _• _•. _... _.•. i
Employees life lnsurancl' fund •••••••••••• , •••..••.
Retired employees health benefits fund •..•..• _••••.
Railroad retirement account ••. , .•.•.••••.•• , .•••••••
Government-sponsored enterprises (net):
Farm Credit Administration:
Banks fOr cooperatives ••••••.••••••••••••••••••
Federal Intermediate credit banks ••••••.•••••••• J
Federal land banks •••••••••••••••••••••••••••••
Federal Home Loan Bank Board:
Home loan banks •••••••••••• , ••••••••••••••••••
Federal Deposit Insurance Corporation •••••••••••••
~
~
Fiscal Year
1965
to date
___ .a.__
.-- ..
--::...:...~.
.~'';
.~
=... -.:::-. ....
78,000
-27,208,000
1,268,000
26,581,225
-20,144,273
-115,070,169
58.000
-39,371,000
1,350,000
34,369,580
172,126,049
-93,285.897
-56,000,000
-1,771,200
-65,500,000
................................
Corresponding
feriod
fisca year 1964
.................
lt96,OOO
-1!2, 785, 000
212,000
5,794,000
. ......................................
-~,712,000
-1,053,350
-55,674,750
-8,051.450
25,345,000
. ...................
-195,059,500
1.693.800
-17,000,000
2JY1 ,528,000
62,309,000
76,052,600
24,500,000
244.000,000
...................
~-'-
....
15
.................
., ..................
28...!~,OOQ.. __ .._. __ 2.;§85,OOO
--_.
35,197.950
363,147,400
-------==
1.530,000
-262,942,856
460,855,144
966,763,653
225,()()0
-68,715,000
1,023,000
-138,734,678
691,679,475
573,222,677
4,706,750
..................
-1,000,000
232,100
1,OOQ, ()()O
-91,500,000
-18,263,700
-59,570,000
28,137,000
-22,386,000
t7:f,016,OOD
125,765,000
-47,162,000
25,000,000
69,0'77, 000
483,363,000
502,500
796,000
-2,200,000
557,715,000
429,661,000
696,000
1,028,493
-1.500,000
482,885,000
1,212,396,000
8,920,500
26,614,000
1,225,000
149,281,000
I .................
....................
-11,000
25.000
-91,000
-1,'127,500
-2,106,0()()
7,540,000
1,500,000
184,486,000
500,000
I
i
2B,:i43,UUO
........... I
I
430,000
-343, 634,(J(j()
...................... .................
.................
189,814.000
-20,000
-833,000
1,124,529,000
15,103,000
49,503,493
.....................
68,963,000
1.408,000
-53,000
-79,000
-103,846,000
179,95'1,000
Other .............................................. . ........----538,061,256
-_._-- . __. ...!~!~~!~4_ f--- ..__ 70, 711~ -_.
Total trust accounts, etc ••••••••••••••••••••••••••
2,326,5].8,366
470,G!~~-:: = . 1, 533!~~2.5oo
620,700,876
1,770,143,050
Net investments, or sales (-) ..................... .
2,361,716,316
-140,744,000
182.866,000
174,298,640
2,412.076,909
2,'175,224,309
TABLE VI-·SALES AND REDEMPTIONS OF GOVERNMENT AGENCY
SECURITIES IN MARKET (NET)
~=~~.r~='--:I:::ti~····I-----=
Federal Housing Administration:
Issues (net) to government agencies. . ••••••. •. . • •
2,312,650
Issues (net) to the public ••• • • • • • • • • • • • • • • • • • • • . •
13,211, '700
Home Owners' Loan Corporation ••••. , •.••••••.••.. '
2,125
Not guaranteed by the United States:
Federal National Mortgage Association
(management and liquidating functions) ••••••••••.• • ........•••..•••
Home Owners' Loan Corporation...................
. ...•...••.......
Termessee Valley Authority........................
• .••..•.•••.•.••.
Trust enterprise funds:
Not guaranteed by the United States:
Federal National Mortgage AJ;sociaUon
100,847,000
(secondary market operations) •••••••••••••••••••.
Government-sponsored enterprises (net):
Not guaranteed by the United States:
I
Farm Credit Administration:
Banks for cooperaUves ••••••••.••••••••••••••.. '
-9,080,000
Federal intermediate credit banks •••••••••••••.• ,
-95,625,000
Federal land banks ••••••••••••••••••••••••••••.
-116, 9'73. OOOJ
Federal Home Loan Bank Board:
Home loan banks.................. ••• •••••••••.
-272,700.000
t
I
~ rede_mptions, ~~:ales (-)••••~:~=.~~. ::~. __. ~~78,~~~~
_==.'
-2,393,300
13,8'71,850
875
469,000
29,500,000
-69,595,000 I
615.000 '
!1l,500
"6,900
19,839,450
202.806,500
8,425
5,937,300
-212,350,200
14,450
3,550
-45,000,000
50
-35,000,000
-98, '74'1 ,000
261,'110,000
-189,140,000
-14'7,3)5,000
-558,918.400
-182,150.000
-555.835,000
-1,431,170,000
L
-501'52!'~;5-- ~1~~~:-~~"~~
-473,990,000
-38,!D),OOO
-248,321,700
L-:=-:=··=·=-:=1=,8=79=,=81=3=,200=
JUNE 30, 1965
TABLE VII--PUBLIC DEBT RECEIPTS AND EXPENDITURES
16
(Includes exchanges)
._--"'.
--.-
I
Classification
--_.
- -
-
Correspond ing
month
last year
This month
..-------_.
"---
Fiscal Year
1965
to date
Corresponding
period
fiscal year 1964
R eceipts (issues):
Public Issues:
Marketable •••••.•••••• , •••.••• , ••••••••.•••••••
Non-marketable •••••••••••••••••••••••••••••••••
SlO,838,231,OOO
1,161,584,041
~9,418,319,()()()
$176,276,726,000
754,903,427
9,~9,978,673
t170, 967,497, 500
8,517,136,436
Total public issues ••••.••.••••••••••••.•••••••
11,999,815,041
10,173,222,427
185,486,704,673
179,484,633,936
. .................
16,756,738,843
15,180,166,417
1,205,724,740
53,286,544,486
512,920,819
48,847,074,784
1,680,429,280
28,756,553,885
26,559,113,584
~9, 286, 169,978
230,012,138,000
Public issues:
Marketable ••••••••••••••••• , •••••••••••••••••••
Non-marketable ••••••••.••••••••••••••••••••••••
13,960,199,703
776,431,269
11,017,829,539
694,287,098
174,043,506,869
7,711,403,075
167,982,551,162
7 940,484 235
Total public issues ••••••••.••.•.••••••.•••••••
14,736,630,973
11,712,116,638
18_1,_~, 909, 945
175,923,035,397
15,939,910,100
23,693,074
13,586,849,392
1,079,221,610
51,264,015,461
706,244,845
47,020,554,268
1,215,282,073
30,700,234,147
26,378,187,640_.
233,725,170,252
224,158,871,740
-1,943,680,261
,180,925,943
+5,560,999,726
+5,853,266,260
Special issues .....................................................................
Other issues ........................................................................... i
Total pubUc debt receipts ........................
--
_. .-
E xpenditures (retirements):
Special issues ........................................................................
Other Issues .......................................
Total public debt expenditures •••••••••••••.••••••
.
_-
E xcess of receipts (+) or expenditures (-) ••••••••••••••
.-
.-
TABLE VIII--EFFECT OF OPERATIONS ON PUBLIC DEBT
..
---_._---------,------
_..
Ad ministrative budget surplus (-) or deficit (+)(Table III).
E xcess of trust receipts (-) or expenditures (+)
-.'l4, 295, 593 , 568
-.!2,873,865,816
+$3,474,019,605
+$8,225,710,723
(Table IV) •••••.••••••••••••••••••••••••••••••••••
Excess of investments (+~ or sales (-) in pubUc debt
and agency securities Table V) .....................
Excess of sales (-) or redemptions (+) of Government
agency securities in market (net) (Table VI) ••••••••••
Increase (-) or decrease (+) in checks outstanding and
deposits in transit (net) and other accounts •.•••••••••
Increase (-) or decrease (+) in public debt interest
accrued ••.••••.••••••••••••••••••••••••.•••••••••
Increase (+) or decrease (-) in cash heid outSide
Treasurer's account 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (+) or decrease (-) in balance of Treasurer's
account ••••••••••••••••••••••••••••••••.•••••••••
Increase (+) or decrease (-) in pubUc debt (Table vn
above) •••••••••.••••••••••••••••••••••••••••••••••
Gross debt at beginning of period .....................
+361,813,061
-594,359,973
-1,428,191,115
-1,446,019,441
,620, '100,876
+1,770,143,050
+2,361,716,316
+2,775,224,309
-378,004,325
-501,521,375
-1,372,275,975
-1,879,813,200
-480,363 ,423
-1,026,600,098
-+891,220,916
-909,927,975
+630,049,348
+517,928,043
-98,316,264
-37,909,384
-196,990,404
+153,784,956
+158,292,816
+206,446,184
+1,794, '!08, 174
+2,735,417 156
+1 574,533,426
-1 080 444 954
-1,943,680,261
319,217,579,245
+180,925,943
311,531,973,313
+5,560,999,726
311,712,899,257
+5,853,266,260
305,859,632,996
Gross public debt at end of period .....................
Guaranteed debt of U.S. Government agencies ..........
317,273,898,983
590,326,050
311,712,899,257
812,991,925
317,2'73,898,983
590,326,050
311,712,899,237
812 991 925
Total publlc debt and guaranteed securities ••••••••••.•
Deduct: Debt not subject to statutory limitation••••••.•.
317,864,225,033
283,364,986
312,525,891,182
361,717,548
317,864,225,033
283,364,986
312,525,891,182
361 717 548
Total debt subject to statutory limitation •.•••••••••••••
317,580,860,047
312,164,1 'TJ,634
317,580,860,047
312,164,173,634
--_. , - - - -
TABLE IX--SUPPLEMENTARY TABLE OF RECEIPTS AND EXPENDITURES OF
PUBLIC ENTERPRISE (REVOLVING) FUNDS
(Included in expenditures in Table
m on a net basis)
Fiscal year 1965 to date
Classification
Funds appropriated to the President: 4
Expansion of defense production •••••••.•...••••.•.•
Office of Economic Opportunity •••••••••••••••••••••
Mutual defense and dev. --economIc assistance:
Alliance for progress, development loans •••••• " ••
Development loan funds •••••..•.••.•.••••••••.•••
Foreign investment guarantee fund ••.••••.••••••••
Total--Funds appropriated to the President ••••.•
Receipts
r---
60,322,867
47,316,876
7,790,193
Net receipts (-)
or expenditures
Expenditures
:67,272,030
109,561
,
I
corresPOnd~
fiscal year 19 4
Net receipts (-)
or expenditures
SI27,251,087
17,168,770
S59,979,057
17,059,208
$90,883,495
.....................
259,631,095
801,084,375
11,698
199,308,227
753,767,498
-7,778,494
112,580,286
768,045,425
-4,831,094
1,022,335,497
966,678,112
2,826,798,436
-139,'TJ9,252
3,174,895,974
36,390,317
182,811,529
1,205,147,026
3,255,778,114
231,278,349 ,
6,082,576,550
91,539,097
--
A griculture Department:
Commodity Credit Corporation:
_,
P rice support and related programs '-" •••••.••••••.
Special activities ~ c _.••..•.••••.•••••••.•.•••••••
See footnotes on page 14.
JUNE 30. 1965
TABLE IX--SUPPLEMENTARY TABLE OF RECEIPTS AND EXPENDITURES OF' PUBLIC
17
ENTERPRISE (REVOLVING) F'UNDS--Continued
m on a net basiS)
(Included In expenditures in Table
Fiscal year 1965 to date
~.-.- ----r--.-
---.-----~
Classification
------------
---
---------1- _
Receipts
.
Agriculture Department--Continued
Federal Crop Insurance Corporation....... ••• •••••••
.;27.804,399
Farmer.:; Home Administration:
Direct loan account. • • • • • • •• • • • • • • . . • • .. .. • .. • .. . •
322. '153 ,303
Other ........................................... __ .. _~~.~12,3~
Total--Agrlculture Department..................
~310,846
~:819,106
395,555,801
72,802,497
56.128,965
6.922,218.208
2,800,391.697
3,300.019,283
.*"","--=~.-=.=~=*========l===~~==
-
Commerce Department:
Area Redevelopment Administration •.••.••••.•••••••
!28, 115,246
_3~!43~!3.!.2 . _._ ..40.21~!168._---r_ _ _ _33....;.:...4_23...;,,-1_33
4,121.826,511
0==.
4.73'1,736
8,752,773
Maritime Administration ........................... .
Other ............................................ .
---.--~~~
Total- -Commerce Department •••...•....•.•.••• _
==
Defense Department:
Military:
Defense production guarantees ................ _....
Other ............................ ,..............
Civil - Panama Canal Company ....... ,............ ..
Net receipts (-)
or expendl.tures
Expenditures
Corresponding
fiscal year 1964
receipts (-)
or expenditures
~et
-4,591,291
146,444
6,441,680.
.2,311.093
13,266 , - 2 , 3 1 6
+-_. - - - -
13,506,093
.=====._-'!'
-2,388,501
5,150,491
-817,111
-----+-----==-------===
-6,904, '101
6.601,391:
1,944,878
.-
15.017,164
600,480
131,515,338
12,533,645
574,628
134.708,505
147,132,983
147,816,779
I
-
-2,483,518
-25,852
3,193,166
3,729.465
42.340
2,a73.750
683,795
5,845,557
-=-~---------~~----~~~~------~~~
Total--DefenseDepartment .....................
=.-
Health. Educati.on. and Welfare Department •••••.••.•..• 1====c=7,f,=65=7=,9=88==l",===-==7,2~!.-=~;:,,50~*====~;;68d,63;;;;8==4======;;2~,7;,;;61
Interi.or Department:
Bureau of Indian Affairs •..•••.••. _. _...............
2,261,274
2,439,294
178,019
5,092,824
Bureau of
24,481.728
44.906,345
20.424,617
9. '193.964
Bureau of Reclamation..............................
13,646,059
70,683,453
57,037,393
94,226,995
Other .... " .......................... '" ..... . .. • •
25.713,471
39.771,908
14,058,437
1,495,428
Mines...................................
..------'_.!.._----- -.-----+---.-....:..........:--~----...:............:.-
Total--Jnterior Department.......... -...... . .. . .
66.102,533
t .____ ..
15'1.80~I,~001"-"-====91=,=698===,46=7=:j.i====11=0,;,m=9;..2=12
Labor Department:
Advances to employment security administratton
account, unemployment trust fund ................... I
191.193,805
194,968,108
Farm labor supply revolving fund .................... f--_ _ _1_~,6'19_~,5_1_4-t- _ _ _I.:..,3_2_9:..,59_1_t.
Total--Labor Department.......................
198,8'13,319
Post Office Department--Posta! Fund•••••••••••••••••••
.-
4,667,692.430
196,297, '100
-2.225,696
-349.002
5
I
I
323,317
327
6'13,231
37,034
44,210
675,346
Total--Treasury Department ••••••••••••••.••.••
996,876
756,591
Geaeral Services Administration .••••••.•••••••••••••••
229,337
17,414
799,578,13fi
College housing loans ............................ .
Liquidating programs ............................ .
Urban renewal fDDd • • • • • • • • . • • • • • • • • • • •••• • • • • •• •• !
Rehabilitation loan fund _
• ••
UrblUl mass transportation: .•• : : : ••.••• : : : :: : : : ••• !
Other ...........................................
Federal National Mortgage Association:
r
Loans for secondary market operations ••••••••••••• I
Purcbase ot preferred stock ••••••.•••.•••••••• , ..• I
~ment and liquidating functlons fund •••••.•••••
Spec1al assistance functions fund •••••••••••••••••••
Government mortgage liquidation fund ••••••••••••••
Federal HOUSing Administration••••••.••••••••••••..•
Public HOUSing Administratioo ••••.••••••.••.••••••••
99,029.659
1,264.595
191 685 807
i
I
I
319.7'13.295
279.453
516037307
310,096
11,3'18,332
30,036,689
117.544,193
566,820,000
562,380,Il00
38,000,000
292,716,881
571,909,712
...... i1il;iliii::roi
198,739.103
15,867,097
--286,_
43,1182
!
2.115
I
I
!
--240,285
1
-211,922
220,743.636
!
.
-4,460,000
I
-38,000 ,000
406 026,395
230 116306
2.961.011,240
3.163.762,'124
202,751,484
341,311,577
362,093,378
9'1,812.706
211.543,516
4011,430,425
68.745,52&
-129,834.Ofn
38.337,047
-29,067,18)
Administration•••••••.•••••••.••
801,210,663
Gal. T19,468
-120,584,194
Other independent agencies:
EIqIOrt-~ Bank of Wasldngton •••••••••••.•• '" ••
Farm Cr it Admtnlstratlon .........................
Federal Home Loan Bank Board••••••••••••••••••••••
Saint Lawrence Seaway Development CorporatlOll •••.••
Small Business Administration ••••••••••••••••••••••
Tenaessee Valley~borfty •••••••.••••••••••••.•.••.
United States lDformation Agency•••••••••••••••••••••
1,083,925,893
23 122 630
342'458' 649
5;'1D:76S
287,218,151
321,577,986
2,487,843
726.694,595
Total--Other Independent agencies. " ••• _•••••••.
2 0fI6 551 919
1 781 758 459
15,235,676,426
19.73'7.456,684
Total~-Publlc
enterprISe fuDds ••••••••••••••••••.
•
I
6,309,384
137.898,062
6.665,322
531.087 ,120
369.496, !162
3.607.012
r
,i
i
:
1
:
!
I
-2,1IM.588
338.860
20,147
-2.545,580
-582.256
_4
195.000
:
4,460,000
-70,820.304
-138,358,625
-141.925,191
.......................
-110:342;987
-357,231.298
-16,81.3,245
-204 .560. 586
IIIM.557
243,868,969
47,918,975
1,119,169
219,334.339
-1.799,428
235,012,399
79.919,134
-31 156 78l
175910,089
Total~-Veterans
i
-113,100,1'/9
-373,170,6011
I
r
835,960,844
Veterans Administration:
DIrect loans to veterans and reserves ••••••••••••••••
Loan guaranty re'l'olv1ng fund ....................... Other .............................................
I
-985,142
3~ , 351 ,500
11),1XX)
11,088,235
8'1,5O'l ,504
4'1,023,877
946,303,831
Total--Housing and Home Finance Agency•••••••••
577,698.965
:
I
I
I
I
I
I
!
BOIISIDg aad Home FiDance Agency:
Offlce of the Administrator:
.
-8634660
,
-2,575 ,619
I
5,467,270,567
Treasury Department:
Office of the Secretary ............................. .
Bureau of Accounts--Government losses in shipment fund
Office of the Treasurer --Check forgery lnsurancefUnd •••
-7,434,616
-1,200,043
-43,441,952
149206,532
I
:
291.181,901
I
-32,.302,501
76,497.875
-16,820,049
I
2'1,375,325
i
-701.783.845
-8.597.ml
-248.418,658
154,127
124,316.477
59,291,307
940.000
-21M '193 459
-'1'74 091! 191
4,501, m,2S8
4,496,09!i,309
JUNE 30, 1965
18
TABLE X ••SUPPLEMENTARY TABLE OF RECEIPTS AND EXPENDITURES OF TRUST
ENTERPRISE (REVOLVING) FUNDS
(Included 1n expeDditures 1n Table IV on a net basis)
Fiscal year 1965 to date
Classification
EzpeDdltures
Receipts
Acrlculture Department:
Farlllers Home AdminlstratlGll .........................................
Defen.. Department - Civil:
UDlted States Soldiers' Home. ................................................
Justice Department:
Allen property actlvities ........................................................
Federal Prison System commissary funds ••••••••••••
Gell8ral Sel'Yices Admlnlstratian:
Records activtties: NatiOD&l Archives trust fuDd •••••••
HOIISIDg and Rome FiDaD.ce Agency:
Federal National Mortgage Association:
LOIDB for secondary market operations and
purc.... of preferred stock ••••••••••••••••••••••
Other secondary market operatlaas ..................................
Other iDdepeDdent agenCies:
Civil Service Commission:
Employees healtb benefUs fund ••••••••••••••••••••
Employees life insurance fund •••••••••••••••••••••
Retired employees health benefits fund •••••••••••••
National Capital Housing AIItbority " ••••••••••••• " ••••
Federal CommunlcatlODs Commlsslcm •••••••••••• " •••
TotaI--Trust enterpriSe fuDds .........................................
CorrespcIIIdtDg
fiscal year 1964
::e~
Netr::(-)
tures
or ope
'8,443, '126
'7,541,728
"'801,997
135,721
134,083
-1._
5._
331,112,416
2,471,775
162,354,133
2,499,136
-168,'158,283
27,360
52,183,42'7
11,284
558,255
547,954
-10,301
-18,523
562,380,000
.,00,411
604,820,000
414,8M,486
41,480,000
484,221,585
181,888,720
2'1, 8'J2 ,118
10,403,881
401.183
1, 951, 914,'lf1l
4M,9U,0'I0
155,527,686
2'1,089,61'l
-26,361,Q3t
-'182,501
10,996,884
_,775
593,002
-116,4O'l
1,1M1,58t,536
-110,330,261
1'llI,IM7
.,380,.
52,799,055
-101, '151,11'19
-9,277,515
-14,582,188
-49,311,736
-116,355
-436,3'10
43,49r
-48,HIi,IM
TABLE XI--RtSUMt OF RECEIPTS BY SOURCES AND EXPENDITURES BY FUNCTIONS
(Figures are rounded 1n mill10ns of dollars and may not add to totals)
Administrative Budget Funds
ClassJficat10n
NET RECEIPTS
~Ivldal
Thts
month
Trust FuDds
Same
F. Yo 1965 F. Y.1964
month
to
to
last year
date
date
1.6
Income taxes ..............................................................
15,0112
6,549
148, 'l92
25,452
148,69'1
..· ..9si .i<i:iliil
·····206 ··2: "is
"io;:iii
14,633
6,146
23,493
Same F.Y.1985
This
to
month
month last
year date
'ii;4iMi "ii;460 iii;_
,16 832
Federal employees retirement ••• " " ••••••••••••••••••••
Interest on trust fund investments ••••••••••••••••••••••
Veteraos life. InSurance premiums •••••••••••••••••••••
........
...... ........
...... .......
........
........ ....... ....... 1,080
180
167 ··i;i;"
.......... .......... .......... ........
1 '159
95'1
........
'491
42
40
..
···386
.
·4:596
··,,:076
454
608
583
3.645
-47
-44
-889
:.s&4
-485
:.e29
)Oscel~
receipts •••••••••••••••••••••••••••••••
IDterfwld traDsactlOllS (-) .....................................
TCJtal !let rece:q,ts ......................................
215
142
115
1,442
date
. .......
........
1,009
Excise ta.s ...............................................................................
Unemployment tax: deposits by States " ••••••••••••••••••
Estate and gift taxes ....................................................................
CUstomns ••••••••••••••••••••••••••••••••••••••••••••
1984
to
.......
....... .......
ElIlployment taxes ................. c ..................................................
Corpontion iDcome taxes .........................................................
F.~
34'1
320
33
40
"2;394
3,658
3,050
1,252
3:519
3,M2
.. .......
2,029
1,803
4IN
3,333
---443
~l
13,377
12,401
93,044
89,459
3,217
3,117
31,055
30,331
4,934
623
508
144
5,69'1
233
504
316
240
311
-1'10
662
112
50,143
54,181
3 68'1
4:1'll
132
1
86
'150
-160
(*~
134
3,_
1138
23'1118
• 2
627
487
82
NET EXPENDlTURES
National defense
lnterD&l:loaa1 affairs lIDd finance ••••••••••••••••••••••••
Space research and tec:bnology •••••••••••••••••••••••••
Agriculture lIDd agricultural resources •••••••••••••••••
Natural resources ...................................
Commerce aDd u.a.osportatlOb. .....................................
HOII8iDg lIDd commUDity development •••••••••••••••••••
Health, laoor. aDd welfa.re .............................................
Educatklm •••••••••••••••••••••••••••••••••••••••••••
Veteraos benefits IUd services •............•..........
. . . . . . . . . . III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dderest •••••••••••••••••••••••••••••••••••••••••••••
CerDJllf!J1t .......................................
General
.Deposit
s (net) ..........................................
IDterfund transactiOllS (-) ........................................
III . . . . .
Total net expeDdltures ......................................
* Less than $500,000.
See footnotes on page 14.
26t
361
-195
800
182
476
1,003
2,660
3,499
-118
5,89'1
1,543
498
5,503
948
224
225
........
........
-44
-47
9,081
4,350
5.094
4,_
9,52'1
11,443
2.409
•
•••
96.518
5,560
2,4'18
3,002
-110
5,475
1,339
5,492
····228
16
359
314
2,401
C*)
38
2
(*)
44
18
335
322
2,299
(*)
38
.......2 .......2
(*)
498
13'1
3,482
1,_
23,m
2
l1li6
··· ..ii
·····is
.":e84
575
-485
-180
-443
-233
-629
-56'1
-521
9'1,684
3,579
2,523
29,828
28,_
10,785
2,2110
JUNE 30, 1965
19
(Figures are rounded in rnlllions o( dollars and may not add to totals)
TABLE XII--SUMMARY OF FEDERAL GOVERNMENT CASH TRANSACTIONS WITH THE PUBLIC
-
.. -
Claasifieatioa
Correspandlng
IIIOIltb
TId. montb
last year
Federal reeeipt8 from tile pubUc:
AdIIJ,lDl8tn.tIve r:=r-!recelpta (net) - see Table m•••••
Tr1ISt receipts (ne -see Table IV•••• '" ••••••••••••••
JDtra&Vftl'lllD8lltal and other Doo-cub trauactlons aee receipt lUijustments Table XDI •••••••••••••••••
Total Federal receipts from the public
...•.••.•..••
FecIIInl paymeDts to the public:
Fiscal Year
Corresponding
1985
to date
flsc&l yeu 19M
period
1I13.3'rl
3.21'1
112.401
3,11'1
193,014
31,055
189,459
-1.288
-
-1,142
-4,415
-4,259
15,3011
14,3'16
119,685
115,53()
116,518
39 , 62'l
9'1,684
28 , 885
-
30.331
,
AdIIlDIatntive b1ICIget openditun.(net) - see Table m.
Trost expeDditures (net) - see Table IV •••••••••••••••
lIitn&OVel'llll18Dtal and other BOD-cash trauaactlons see payment adjUSbneuts Table laD ••••••••••••••••
9,081
3, 5'nJ
9,52'7
-1,12i
-1,692
-3,Tl6
Total Federal paymeDts to the public •••••••••••••••
11,535
10,358
122,369
-6,23'1
120,332
bCels 01 cash receipts from or payments to (-) the public.
3,'1'11
- ...
4,019
-2,684
-4,802
-1,944
181
5,561
5,853
3'18
502
1,372
1,880
-621
-1. 'l'lO
-2,362
-2,T15
( )
-48
-26'1
-1,099
rep&J'1II8IIt (-) ...........................................
-Z,I8'1
-1.138
4,aoc
3,859
SeJ&ll1oral;e .......................................................
14
6
113
69
Total cash transaet10ns with the public ••••••••••••••
1.598
a,889
I,m
-a"l4
Cub. bon'O"W'iDI from the public or rer.yment (-):
hbUc: debt iDereue or decrease (- Bee Table VB •••••
Bet sales of Government agency seellrltles in
market (net) - see Table VI •• • ....................
Bet bmlstment (-) in public debt and ageney securitieS
see Table V ......................................
OIlIer IlClll-cash t:ransactiODS -seeoorrowlngadjllstments
Table mJ ............................................
2.523
---
-
-
.
Total net cash borrowing from the public or
Calla balances - net iDcrease or decrease (-):
Tnu1JroerIs acC01mt ......................
41 . . . . . . . . . . . . . . . . . .
1,'l95
2,'135
-19'1
154
1.5'15
CMh held 0IIi:a1cIe' Treasury ................................
158
-1,080
316
Tatal cbaaleB in the cash balaaces .....................
1,588
2,889
1,'133
-8"/4
TABLE XIII--INTRAGOVERNMENTAL AND OTHER NON-CASH TRANSACTIONS
(SbcnriDC details of amounts lDCIUlled u adJustments in Table
~~ to rec:e1pts:
tranaactiODS:
IDterest CIIl trust fuad investments ••••••••••••••••••
CM1 Semee retirement - pqroll deduct1aIIs for
m above)
SI,(8)
&95'l
tl,'l59
$1,603
89
89
83
83
1,042
1,042
458
9'73
9'1'3
642
1,2'l4
1,136
4,302
4,190
I2ceas profits tax refund bonds ...............................
~e ••••••••••••••••••••••••••••••••••••••••
(*)
(*)
(*)
(*)
14
6
113
69
Tc:ItIl receipt ad;I..stments. ..................................
1,288
1,142
4,415
4,.
.................•..
1,2'l4
1,136
4,302
4,UIO
~ baIld increm.en.t. .....................................
DJsc01Iat DB secu.rlt!es .........................................
65
4B
-2
5'11
611
-59
24
268
11'1
103
em.=ee:s .............................
CivIl
41 41. 41 . . . . . . . . . . . .
nice reUrement - emploJers' share•••••••••
....•.••.....•.................•...........
~ .•..................•....•.............
~
14
16
AdJutmeata applicable to payments:
WnaovenuaeJltal trllll88CtioPS (see deta1l under
~~~~~~
144
-4'12
IJd:ematloDal ll00etary I'uDd DOtes .........................
ClIber apeclaI securltJ' 111811811 ..........................
......•••...••...
-6
'2
..•....••..............•.............
(*)
4B
38'l
1,099
-518
1,02'1
98
-891
910
1.892
3,'1'16
-
6,23'1
~
Aec:rued Interest 011. ,paIJ11c debt ..............................
CIaadm outstanding aad other :u:CDIIIlta ••••••••••••••••
• . . . . . . . . <II . . . . . . . . . . .
-630
480
38
..............................
1,125
~Dt8 appUcable to Det borroWIDp:
issuance ~epreseatiDI:
~ - excess profits tax reflmd boIlcls•••••••••••
~ents - (see ditall UDder payment lIdJustmeDts) ••
(*)
(*)
(*)
(*)
(*)
4B
2m
1,099
(*)
4B
2f1l
1.099
Total. parIIIeIlt __1IStDIeJIta,
-
Total borrowtDg ad,iastmeats (neG ••••••••••••••••
..... tbaD $500, 000
-
20
TABLE XIV--COMPARATIVE STATEMENT OF ADMINISTRATIVE BUDGET RECEIPTS
AND EXPENDITURES BY MONTHS OF THE FISCAL YEAR 1965
.- .
-
(Figures are rounded In millions of dollars and may not add to totals. )
.-
Classification
July
September
August
October
November
December
January
February
March
-
April
May
June
Cumu- eom- Est!lative parable mates
thru period F.(net)
Y.
June F. Y.
1965
1964
.-
RECEIPTS
Internal Revenue:
Individual Income taxes withheld .:1,172 E4,809 .:2,669 $1,158 H,956 S2,969 $1,181 $5,302 53,207 $1,091 55,371
696
928 5,852
2,506
872
112
430
377
159
Individual income taxes--other ..
2,255
264
520
1,187
6,759
Corporatton income taxes •••••.
607
473
449 3,953
646
419 3,950
572
1,325
1,150
1,303
Excise taxes .••...•..•........ 1,234 1,284 1,203 1,176 1,244 1,257 1,045 1,214
399 2,810 1,459 1,311 2,861
Employment taxes ...•.........
624 2,338 1,148
479
1,491
779
283
370
308
183
Estate and gift taxes ...........
168
192
213
219
219
166
205
128
139
Customs ......•.•...•........•..
155
120
112
124
125
76
106
122
126
322
398
M Iscellaneous receipts •....••....
398
320
332
338
739
429
323
252
294
Gross receipts ••••.•.•••..
5,131
9,662
11,766
4,275
duct:
Refunds of receipts:
Applicable to budget accounts.
Applicable to trust accounts •.
Transfers to trust accounts .....
Interfund transactions ••...•.••.
215
4
948
477
206
2,718
84
215
1
1,472
6
90
85
691
10
Total deductions •••••••..•.
1,644
3,009
1,694
Net receipts F. Y. 1965 ••••••••
3,48'7
6,653
Comparable totals F. Y. 1964 ••••
3,547
11
Legislative Branch •••.••.•••.•..
5
The Judiciary ••••••.••••.•••..•.
2
Executive Office of the President 4 •
Funds appropriated to the President:"
Mutual defense and development:
26
Mllitary assistance ••.•••.••.
129
Economic assistance •.••.••..
40
Other'. ••••••••.•.•.••.•••.••.
Agriculture Department:
839
Commo:lity Credit Corp ••••..•.
Foreign asSistance and
special export programs •.•.. ......
229
Other ••....•••.......•..•....
91
Commerce Department••..•..•...
Defense Department:
Military:
721
Department of the Army ••.•..
90'1
Department of the Navy ••••••
Department of the Air Force•• 1,372
168
Defense agencies •.•..•••••..
62
Undistributed stock fund trans. .
8
Civil defense .•...•..••.••..
8,972 10,025
6,329
$36,830
16,820
26,130
14,798
17,105
2,744
1,478
4 599
139,259
15,331
24,301
13,950
17,003
2,416
1,284
4,077
!36,31O
15,300
26,400
14,592
16,889
2,825
1,447
4,489
15,495 120,505 117,622 118 142
1,06~
321
5
3,152
92
(*)
40
1,745
2
3,811
3,328
2,8'74
4,315
~19
5,642
7,518 11,188
8,549
7,261l
13377
93,044 89,459 91,310
8,803
5,853
8,047 10,148
6,609
6,136
12,401
89,459
. ......
12
5
2
9
7
2
14
5
14
6
::
16
9
2
20
6
3
16
6
2
165
69
24
152
65
23
179
76
2
11
5
2
67
171
88
70
181
42
79
199
30
69
118
48
105
152
42
82
191
39
197
153
145
357
217
406
1,204
2,036
1,036
1,485
1,99'1
63'1
1,200
2,050
1,182
90
(*)
(*)
1,827
9
1,059
19
fIT7
1,935
1,168
687
10,072
3,398
7,037
8,856
7,290
10,095
3,400
7,131
12
6
2
19
5
2
13
7
2
32
237
60
69
131
47
49
156
48
686
-
2,369
6,596
1,363
1,407
217
145
454
1,284
2
1,580
8
100
(*)
11,329 14,517 11,423 11,582
~2,946
-85
192
502
77
620
33
3,118
1,582
(*)
1,753
44
5,705 6,851 5,460
323
297
325
20,564 20,351 20,321
869
664
833
27461
28,163 26 942
EXPENDITURES
26
370
483
50
323
-127
36
105
11
-71
-20
2,687
3,211
1,551
73
220
54
145
173
42
162
225
87
165
331
49
138
283
51
187
394
73
149
138
73
193
226
45
226
240
69
179
138
230
75
1,755
2,888
757
1,889
2,797
2,554
2,753
764
932
891
1,392
171
117
9
1,034
1,068
1,557
181
59
8
961
1,207
1,597
181
_21
10
1,008
1,057
1,449
178
951
1,099
1,435
169
30
7
894
1,095
1,353
198
26
7
989
1,216
1,743
187
38
8
982
1,273
1,578
14
1,042
1,213
1,698
223
-13
12
954
1,130
1,531
187
39
3,238
3,512
3,907
3,936
3,726
4,174
3,691
3,574
4,183
4,063
92
Civil ...•..•..•••......•••••..
Health, Education, and Welfare Dept
45'1
115
Interior Department •••••••••••..
Justice Department .•..•..•.•••.•
36
Labor Department. ..............
70
32
Post Office Department ••....••.•
State Department ••••.•.•.••.•...
59
Treasury Department:
957
[nterest on the public debt •..•••
7
Interest on refunds, etc •••.••.• I
99
Other ••••.••••.•...•.•••.••••
261
Atomic Energy Commission •.....
67
Federal Aviation Agency ••••••...
49
General Services Administration •.
HoUSing and Home Finance Agency:
-14
Federal National Mortgage Assn.
114
Other •...•••..••...••.••.•..•
National Aeronautics and Space Adm.
334
441
Veterans Administration ••...•.•.
Other independent agencies:
Export-Import BankofWashingto~
-29
Small Bus mess Administration .•
15
4
Tennessee Valley Authority ••...
88
Other ........................
23
District of Columbi.a •..•.•••.••.•
Allowances, undistributed •••..... .......
Interfund transactions (-) ........ -477
104
112
28
74
73
33
120
493
137
27
73
95
45
122
482
114
111
509
108
38
67
31
33
77
495
78
29
80
82
35
79
482
85
26
-156
102
31
89
314
99
40
74
42
107
417
91
28
53
23
34
913
10
91
228
66
63
927
9
87
225
66
46
923
10
141
238
65
42
917
6
95
207
81
39
955
8
116
230
71
966
7
100
213
61
57
71
-39
79
385
478
102
59
386
487
-159
24
387
466
-188
51
406
75
99
435
494
-107
86
-29-
-19
24
8
154
-6
34
-39
30
4
69
1
-27
9
67
{*)
-422
27
4
54
-6
-10
Total Military ...............
468
61
7
57
8
...... ......
-84
29
~
20
364
40'7
448
17
2
68
16
200
49
686
'I
1,152
1,383
1,719
209
-133
-4
11,620 12,25t 11,936
13,540 14,652 14,103
18,424 20,'150 18,965
2,256 1,997 2,971
245
125
10'1
93
3,848
4,327
46,178 49,760 48,100
52
44
22
102
541
80
30
28
33
-3
95
547
88
27
53
137
534
97
30
46
1,234
5,739
1,205
357
480
86
124
30
~
933
9
97
191
56
42
961
5
98
219
59
63
948
6
111
199
61
50
955
5
129
184
-42
56
423
477
-37
75
461
458
-73
51
529
450
433
449
3
12
-14
59
-3
62
1
55
3
-1
141
167
10
3
61
(*)
29
11
204
19
7
19
48
997
6
131
230
74
61
-39
-39
63
73
38
508
475
-35
20
12
-109
3
1,153
5,498
1,124
328
370
578
347
1,269
5,770
1,225
367
495
718
388
11,354 10,666 11,:IKl
89
1,294
2,624
795
632
99
1,182
2,765
751
-560
-347
6'15
593
86
1,265
2,700
781
616
-632
5,094
5,488
4,1~~
8111
4,900
-357
251
48
774
61
-'702
-645
804
5,47
133
59
669
57
(*)
_11
24
...... ...... ...... .......
......
......
...... ....... ....... ' .. :aM
..
··~2
-9
-19
-71
-40
-8
-44
-869
-92
5,376
243
57
713
76
103
-833
Net expenditures F. Y. 1965 ••••
7,410
8,083
8,450
8,329
7,051
8,770
7,676
7,146
8,139
8,268
8,116
9,081
96,518 97,684 97,481
Comparable totals F. Y. 1964 •.•
7,863
8.305
7,815
8,776
7,784
8,289
8!492
7,521
7,8'71
7,930
7,511
9,527
97,684
Surplus (+)ordeficit(-)F. Y. 1965. -3,923 -1,430 +1,622 -4,930
Comparable results F. Y. 1964 ••• -4,316 -1,015 +2,279 -5,377
-15
-1372 +3 049
+280
-848
+526 +2278 -1322 -1 375
+4296
-3474 -8.22E
+2,874
.......
-652
+86 -2033
+514
_2 639
-8,226
.......
-6.281
See footnotes on pa!!e 14
·Less than $500,000.
For sale by the Superintendent of Documents, t:. S. Government Printing Offlce Washington D C 20402
Subscription price S6. 00 per year (domestic). 511.00 per year additional (foreign mailing). includes all iSsue~ of' daily Treasury statements
and the Monthly Statement of Receipts and Expenditures of the U. S. Government. No single copies are sold.
GP 0 892·:11)5
- 3 ~M'A
- llODIFIFm
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 fran
all taxation now or hereafter imposed on the principal or interest thereot by aQY StatE
or any ot the possessions of the United states, or by any local taxing authority.
Fbr
purposes of taxation the amount of discount at which Treasury bills are originally sole
by th~ United States is considered to be interest.
Under Sections 454 (b) and 1221 (5
ot the Internal Revenue Code of 1954 the amount of discount at which.bills issued here·
under are sold is not considered to accrue until such bills are sold, redeemed or othe:
vise disposed of, and such bills are excluded from consideration as capital assets •
. Accordingly', the owner ot Treasury b.iUs (other than life insurance companies) issued
hereunder need include in his income tax return only the difference between the price
paid tor such bills, whether on original issue or on subsequent purchase, and the
BDIOUI
actually received either upon sale or redemption at maturity during the taxable year
tor which the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and this notice, prescrib
the tems of the Treasury' bills and govern the conditions ot their issue.
the circular may be obtained from any Federal Reserve Bank or Branch.
Copies of
- 2 BE'rA • MOBIPIFlL
printed forme and forwarded in the epecial envelopes which will be supplied by Feder
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 bank1D8
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 fram
others must be accompanied by payment of 2 percent of the face amount of Treasury b1
applied for, unless the tenders are accompanied by an express guaranty of payment
b~
an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal Reser
Banks and Branches, following which public anouncement will be made by the Treasury
Department of the amount and price range of accepted bids.
will be advised of the acceptance or rejection thereof.
Those submitting tenders
The Secretary of the
Trea~
expressly reserves the right to accept or reject any or all tenders, in whole or in
part, and his act10n 1n any such respect shall be final.
Subject to these reserva-
tions, 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 1n accordance with the bids'must be made or completed at the Feden
Reserve Bank on __J_u_ly__2_9.....,-...1:-::9:-t6_5____ , in cash or other immediately available fw
- (16)
or in a like face amount of Treasury bills maturing
July 29, 1965
,Cash
(17)and exchange tenders will receive equal treatment. Cash adjustments will be made f(
differences between the par value of maturing bills accepted in exchange and the i81
price of the new bills.
The income derived from Treasury bills, whether interest or gain from the sale
other disposition of the bills, does not have any exempt1on, as such, and 1088 tram
HTA
= MODIFIED
TREASURY DEPAR'nvlENT
Washington
FOR IMMEDIATE RELEASE
July 21, 1965
_~IS
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 OOO,ooo , or thereabouts, for
(i )
,
cash and in exchange for Treasury bills maturing
July 29 ~ 1965
( )
, in the amount
of $ 2,204~?00 , as follows:
91 -day bills (to maturity date) to be issued --.;:J;.;Ul;:::.l".y.....;2:.;97"~~1;.;;.96;;..;5::.-_ _ ,
(6)
(5)
in the amount of $ 1.,200~.000 , or thereabouts, representing an additional amount of' bills dated
and to mature
Octobem- 1965
April ::f:4:l965
,
,originally issued in the
amount of' $ 1,003!275,OOO , the additiorl81 and original bills
,
(:I:O)
to be freely interchangeable.
182 -day bills, for $ 1,OOOtOOO,ooo , or thereabouts, to be dated
(-a)
(11)
July 29; 1965
, and to mature
Janua~ 27. 1966
(l-t .
-14)
•
The bills of both series will be issued on a discount basis under competitive
and noncompetit1ve bidding as hereinafter provided, and at maturity their face
will be payable without interest.
8JmUJl'
They will· be issued in bearer f'orm only, and in
~iDBtions 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 C101 in:
Daylight Saving
,
hour, one-thirty p.m., Eastern/Stl @lI1.ri time,
M:>nday, Jul 26, 1965
• i'eDde,
t
-15)
will not be received at the Treasury Department, Washington.
Each tender . I t be
tor an even multiple of $1,000, and in the case of' competitive tenders the price
off'ered must be expressed on the basis of' 100, with not more than three decimals,
e. g., 99.925.
Fractions may not be used.
It 1s urged that tenders be made on the
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders
for two series of Treasury bills to the aggregate amount of
$2,200,OOO,OOO,or thereabouts, for cash and in exchange for
T~asury bills maturing July 29, 1965,
in the amount of
$2,204,331,000, as follows:
9~day bills (to maturity date) to be issued
in the amount of $1,200,000,000, or thereabouts,
additional amount of bills dated April 29, 1965,
mature October 28 1965, originally issued in the
$1,003,275,000, the additional and original bills
interchangeable.
July 29, 1965,
representing an
and to
amount of
to be freely
182 -day bills, for $1,000,000,000, or thereabouts, to be dated
and to mature January 27, 1966.
July 29, 1965,
The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidd1ng as hereinafter pro'lided, and at
~tur1ty their face amount will be payable without interest.
They
will be issued in bearer form only, and in denominations of $1,000,
~5/000J $10,000, $50,000,
$100,000, $500,000 and $1,000,000
(maturi ty value).
Tenders will be received at Federal Reserve Banks and Branches
to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Monday, July 26, 1965.
Tenders will not be
~ceived at the Treasury De~artmentJ Washington.
Each tender must
be for an even multiple of $1,000, and 1n 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
~ 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.
'JP
Banking institutions generally may submit tenders for account of
cllstomers provided the names of the customers are set forth in such
tenders. Others than bank1ng 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
~SPons1ble and recognized dealers in investment securities. Tenders
~m others must be accompanied by payment of 2 percent of the face
~ount of Treasury bills applied for, unless the tenders are
aCCompanied by an express guaranty of payment by an incorporated bank
Or trust company.
F-135
.. ::; ..
m'~
exempl; :f.'ror" 0.11 tD.Xrltion now or hereafter :i.mpofJcd on the principal or IntereRt
l,hel"Cot' by
My
Ota.t.e, or o.ny of the pOGocssions of the United Sta.tes, or by allY
to.xlnr: lLuLhorl ty.
locl\ 1.
li'or
purp030D 0:('
tnxo.tion t.bc amount of discount at whlch
'l'loeo,G1l1"y 11111s l1.rc orlgillllil¥ sold by the United states Is considered to be In-
-t.erest.
Under Scotlono 454 (b) and 1221 (5) 01" the Intemal Revenue Code of 195'
the omount of discount at which billa issued hereunder are sold 1s not considered
to o.ccruc until ·such bills arc Dold, redeemed or otherwise disposed of,
bills
or
nJ.'(' c;~clucku
rrom
conoidr'rnti.on ns c:-.pttaJ. R.Jl1cta.
'l.'rco.Gury bIlls (othel' 1:lmn IH'e
In3lU'flDCC
and such
Accordingly, the owner
cOJJq)8.llies) issued hereunder need in-
clude :I.n hiG income tax return onl,Y the difference between the price paid for such
billa, whether on or1C;lno.l .l:mue or on rmbocC'}ucnt purchase, and the amount
l~celved
actual~
either upon sale or redemption at maturity during the taxable year for
which tho return is made,
OF,
ordlno.ry r.;nin or
1053.
'I.1reasury Department Circular I~o. 418 (current revision) and this nOUce, pre-
scribe the ·termo 01' tho TreasllrJ bills and govern the conditions of their issue.
Cqp1cs of tIle circular mB¥ be obtained from any Federal Reserve Bank or Branch.
- 2 -
bonki~ institutiono will not be pcrmlt"Led to submlt tendcrs except for their own
nccOtUlt.
Tenders ,nIl be received 'vr.i Lhout depoa:i.t from incorporat~d banks and
trust companies and from responGiblc
OJld
l'eco~n:l.zed dealers in investment securities.
Tenders fl'om o[:'bers must; be nccompanled by payment of 2 percent of the'facea,rrrount
of Trea.sury bills applied for, unlesG the tenders are accompanied'by
guaranty of payment by an
incorpor~.teu bank
or
t~Gt
a.o
express'
company.·
Immcdintel,v after the closing hour, tendero wil.l.be opened
~t
the Federal Re ..
serve Do.nlm and Branches, follollinc uhj eh 1mb] tc ::mnounccment will be. made by the
Treasury Department of the Dmotint and price range of accepted bIds.
ting tenders "rIll be advised of' the .acceptance or rcjccLion
of' the rllreasury
c~"Presoly
i'hose Gubml t-
thcl;'~of'. ,:T1;l~ '~c:;retary
rCGcrves the riGht to p.cccpt or reject any or all
•
•••
•
.....
<11",
t~ndeI's,
'"
in ,.,hole or in part, and hio action in any rmch rcspect shall be fina:l. ':Subj'ect
to these reservations, noncompetitive tenders for :1;2Q~
less .without '"
01'
stated price from anyone bidder "rIll be accepted in full at the average price (in
three decimals) of accepted cornpctj.ttve bido.
Settlement for accepted tenders in
accordance l-ri:th t.he bids munt be made. or completed at the Federal Reserve' Ba.nkon).
August 2, 1965
-----.
nr=ii~--.
, in cQ.Gh or other tnunedlatcly available funds-·or in ·a
f'ace amount of Treasury billa maturinG
tenders 'Will receive equal treatment.
JUl~ '1965
. iO
l:f.k~·.
Cash and exchElllge.
.CnGh adjustments wtll be made 'for diffe.r.. ;-:
ences be-tl-leen the par value of maturine bills ::,tc~epted in exc)1E\.n,ge 'and the iSSllC_
price of the netT bills.
The
income derived from Treanury billa, ,mether..if\te:reot PI' gain from,,~e sale
or other disposition' of thebilln, does not have any pxemptioq" as s~~h,., ~d. l~ss,
from thc' sale or other disposition of i'reasury ·bills. does not pave. any specfa1
tre£Ltment, as such, under the Internal Revenue Code of 1954;.
rhe pi;1.1s are. f;ubject
,
. • ,. . • •
t
.
to estate, inheritance, 'gift or othercxcioe· taxen, l-Thetner.federa:J. or State, but
...
-
TRFASURI DEPARTMENT
Washington
July 21, 1965
FOR D4MEDIATE RELEASE,
TREASURY REli'UNIS ONE-YEAR BILLS
The Treasur.y Department, by this public notice, invites tenders for
$ -l ,oowoa ,QQO
, or thereabouts, of
~titt
in excha,nee for Treasury bills maturing
of
$ lJOOQ~,QQO
-~ Treasury bills, for cash and
, to be issued on a discount basis under competitive and
noncompetitive bidding as hereinafter provided.
July 3~ 1965
dated
, in the amount
July 3W965
The bills of this series will be
, and will mature
the face amount will be payable without interest.
July 31, 1966
•
, when
They will be issued in bearer
form only, and in denominations of $1,000, $5,000, $10,000, $50,000, $100,000,
$500,000 end $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., Easte~' time, Tuesday,
27.z 1965
W
Tenders will not be received at the Treasury Department, Washington.
Each tender
must be for an even multiple of $1,000, and in the case of competitive tenders the
price offered must be expressed on the basis of 100, with not more than three dec1JIals, e. g., 99.925.
Fractions may not be used.
theBe bills will run for 365
(1$
c1ieeount basis of 360
bills.)
d~s,
(Notwithstanding the fact that
days, the discount rate will be computed on a bank
as is
current~
the practice on all issues of Treasury
It 1s 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 lnst! tutions general4r may submit tenders for account of customers
provided the names of the customers are set forth in such tenders.
Others than
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY REFUNDS ONE-YEAR BILLS
The Treasury Department, by this public notice, invites tenders
for $1,00?,000,000, or thereabouts, of 365-day Treasury bills, for
cast and ~n exchange for Treasury bills maturing July 31, 1965, in
the amount of $1,000,462,000, to be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided. The
bills of this series will be dated July 31, 1965, and will mature
July 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, July 27, 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 decimals, e.g., 99.925. Fractions may not be used. (Notwithstanding the fact that these bills will run for 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 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
F-l36
- 2 -
range of accepted bids. Those submitting tenders will be advised of
the acceptance or rejection thereof. The Secretary of the Treasury
expressly reserves the right to accept or reject any or all tenders,
in whole or in part, and his action in any such respect shall be
final. Subject to these reservations, noncompetitive tenders for
$200,000 or less 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
August 2, 1965, in cash or other immediately available funds or in
a like face amount of Treasury bills maturing July 31, 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 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
INTERNATIONAL COOPERATION YEAR
COMMITTEE ON FINANCE AND MONETARY AFFAIRS
OF THE INTERNATIONAL CITIZEN'S COMMISSION
Washington, D.C.
FOR
I~DIATE
RELEASE
July 21, 1965
A Citizen's Committee and a Cabinet Committee charged with
reporting to President Johnson on international cooperation in
finance and monetary affairs met Monday in Washington to take stock
of present developments and to consider the outlook for the future.
The meeting, held as a part of President Johnson's program
for United States' participation in the current International
Cooperation Year, was called by David M. Kennedy, Chairman of the
Board of the Continental Illinois National Bank and Trust Company
of Chicago and Merlyn N. Trued, Assistant Secretary of the
Treasury for International Affairs.
Mr. Kennedy is Chairman of the private sector of the
Committee on Finance and Monetary Affairs of the International
Citizen's Commission on International Affairs, established by the
President as one of 28 groups to examine various aspects of
international cooperation engaged in by the United States.
Assistant Secretary Trued is Chairman of the Cabinet committee on
this same subject.
The primary missions of the Committee on Finance and Monetary
Affairs, as well as the private and Federal committees in other
areas, are to 1) prepare a Report for the President, and 2) participate in a White House Conference to be held later this year.
At the meeting, the Private and Cabinet Committees considered
a draft of the introductory section of its Report, and further
methods of procedure looking toward a progress report to be transmitted to the White House.
The group agreed that over the past two decades international
cooperation in the fields of monetary affairs and development
finance has become a deeply ingrained operational habit among
governments, both broad in scope and intensiv: in detail. It has
facilitated the very substantial progress ach~eved so far in the
postwar world economy. To assure the continuation of the progress
that has been made, the Committees agreed that it is timely to
take stock of the present and consider our course for the future.
F-l37
- 2 The Chairmen of the two groups agreed also that recent
steps toward consideration of the international payments system
underlined the importance of their final Report, and that participation in the White House Conference of the Finance and Monetary
Committees as part of the International Cooperation Year would
greatly aid in achieving wide public understanding of the progress
made and the problems involved in the field of international
finance.
Members of the Citizen's Committee on Finance and Monetary
Affairs, in addition to Mr. Kennedy, are:
Eugene R. Black, Special Adviser to the President on
Southeast Asia Economic and Social Development
(former President of the International Bank for
Reconstruction and Development).
Arthur H. Dean of Sullivan and Cromwell, New York City
Frederick M. Eaton of Shearman and Sterling, New York City
Thomas S. Gates, President of Morgan Guaranty Trust Co.,
New York City
Kenneth Hansen, Syntex Laboratories, Palo Alto, California
Charles H. Percy, Chairman of the Board, Bell and Howell Co.,
Chicago, Illinois
Maxwell M. Raab, Attorney, New York City
Jesse W. Tapp, Retired Chairman of the Board, Bank of
America, San Francisco
J. Cameron Thomson, Retired Chairman, Northwest Bank Corp.,
Minneapolis, Minnesota
Frazar B. Wilde, Chairman of the Board, Connecticut General
Life Insurance Co., Hartford, Connecticut
Emile Despres, Research Center in Economic Growth,
Stanford University
John H. Perkins, Senior Vice President of Continental National
Bank and Trust Co.aEChicago
Robert P. Mayo, Vice President of Continental National Bank
and Trust Co. of Chicago
- 3 -
The Cabinet Cmnmittee on Finance and Monetary Affairs is
composed of:
Merlyn N. Trued, Assistant Secretary of the Treasury for
International Affairs
J. Dewey Daane, Board of Governors of the Federal Reserve
System
William B. Dale, u. S. Executive Director, International
Monetary Fund
Harold O. Folk, Associate Assistant Administrator for
Finance Development, Agency for International Development
Anthony M. Solomon, Assistant Secretary of State for Economic
Affairs
Arthur M. Okun, Council of Economic Advisers
Ralph Hirschtritt, Deputy to the Assistant Secretary,
for International Financial and Economic Affairs
000
July 21. 1965
FOR IMMEDIATE RELEASE
NAVY TRANSFERS ICEBREAKERS TO COAST GUARD
Navy Secretary Paul H. Nitze and Acting Treasury
Secretary Joseph W. Barr today announced that the U.
_
...
;".,
A',r,4":": .:.').:..:
s.
[VIS,,)· ()SS
G"t./lc/("Ii"/
Navy's five remaining icebreakers are being transferred to
A
()i.
f~UP7'.'J
the U. S. Coast Guard under an agreement between the Tr•• sury
~A
~
ut;.!
and Navy Department.
Previously the Navy operated five
icebreakers and the Coalt Guard four in support of national
interests from the Polar regions to the Hudson River.
The transfer of the ships will be accomplished during
the next 16 months.
A review of the dual Navy-Coast Guard
operation of icebreakers led to the conclusion that the
operation and manning of ieebreakers by the Boast Guard would
best satisfy::-he national interest.
Coast Guard operation of icebreakers will be respoDsive
to Navy requirements in high latitudes •• s well as to the
or.:;..
requirements of commerce and the needs "
programs.
F-138
national research
TREASURY DEPARTMENT
July 21, 1965
FOR IMMEDIATE RELEASE
NAVY TRANSFERS ICEBREAKERS TO COAST GUARD
Navy Secretary Paul H. Nitze and Acting Treasury
Secretary Joseph W. Barr today announced that the U. S.
Navy's five remaining icebreakers -- USS ATKA, USS EDISTO,
USS GLACIER, USS BURTON ISLAND and USS STATEN ISLAND -are being transferred to the U. S. Coast Guard under an
agreement between the Treasury and Navy Department.
Previously
the Navy operated five icebreakers and the Coast Guard four
in support of national interests from the Polar regions to
the Hudson River.
The transfer of the ships will be accomplished during
the next 16 months.
A review of the dual Navy-Coast Guard
operation of icebreakers led to the conclusion that the
operation and manning of icebreakers by the Coast Guard would
best satisfy the national interest.
Coast Guard operation of icebreakers will be responsive
to Navy requirements in high latitudes, as well as to the
requirements of commerce and the needs of national research
programs.
F"138
TREASURI DEPARMNT
Waahin gton
STATEMENT OF THE HONORABLE JOSEPH W. ~RR
UNDER SECRErARY OF THE TRFASURY
BEFORE THE JOINT ECONOMIC COWUTTEE
WEDNESDAY, JULY 21, 1965, 10:00 a.m., EDT
I appreciate this opportunity to present to the JOint Economic
Committee some Treasury views on aur approach to long-range fiscal
policy.
It is clearly important that from time to time we look beyond the
horizon of short-run decision problems that necessarily absorb so much of
our a.ttention.
The SUbcommittee is to be congratulated on its effort. to
place these problems in perspective.
The initial publication of the statements
of invited economists and organizations has already provided a useful
compendium of views on the issues that lie ahead and possible wB.¥s of dealing
with them.
The Setting for Fiscal. Policy
In approaching this topic of fiscal policy over the next decade, I
would first like to emphasize several basic aspects of the setting in which
fiscal policy is used.
Perhaps most fundamental, we should recognize that
we are dealing with one of several instruments of economic policy.
FIlrther,
the broad policy goe.l.s are already set forth in the Employment Act of 1946,
which commits our government to seek sustained growth in employment and
income in, by implication, an environment of stable prices, all within a
framework of a competi ti ve private enterprise system.
That Act was a historic step.
In the two decades which have followed
we have made tremendous strides toward
the realization of its objectives -
uot least by the intelligent and more active use of the tools of fiscal
policy.
Obviously we still have much to learn, but the improvement of
techniques and data for appraising economic developments and a better
F-139
understanding of our policy tools have both enabled us to realize more
fully the tremendous contribution that appropriate fiscal policies can malte
toward achieving the potential of our economy.
However, let me make one thing quite clear.
Under our economic system,
by tra.di tion and choice, we place pr1mary reliance on the vigor and skUls
Of our private economy to achieve the objectives of the Employment Act.
We reject detailed government planning of production, ccmsumption, and
investment, and direct controls to implement such plans.
This does not mean, of course" that government policies -- and particu.la.rly tax
and
expenditur~
policy -- do not affect the environment in which private decisions
are made, or that they do not have a. powerfUl. influence on economic activity.
Obviously they do.
But, it does mean that government cannot itself supplant
the market" and that in shaping decisions on fiscal. policy we must be alert
to the shift1ng forces in the private economy and to the need to provide
constantly a f1scal enVironment in which these forces can best operate.
There are no magic formulas for fiscal. policy applica.ble to all the
variety of problems and needs that may arise.
For instance, those few who
would still insist on reaching for a balanced budget year in and year out
fail to recognize the influence that these taxing and expenditure decisions
ma.y have for the performance of the entire economy.
Experience shows there
are s1tuations in which the forces of expansion in the priva.te economy are
no~
adequate to fully employ our workers and our resources, and in which the level
- 3and structure of taxes may themselves be impeding the required growth and
investment.
In circumstances like these, an effort to balance the budget
may be self-defeating if the result is only to further restrain economic
activity and to constrict the tax base.
Instead, tax reduction may be an
essential means of releasing the energies of the private sector, even if
projected revenues do not fully COver anticipated spending.
at times when
d~nd
Conversely,
threatens to outrun our capacity to produce, responsible
fiscal policy may require tax increases and a budgetary surplus.
This approach by no means implies loss of firm and effective controls
an expenditures -- a never-ending effort to assure a dollar of value for
every dollar spent.
budget.
Nor does it entail losing sight of the goal of a balanced
Rather, it emphasizes the importance of seeking that goal within
the framework of a healthy, expanding economy.
And it recognizes that that
goal is dependent not only upon decisions concerning the level of tax rates
and expenditures, but upon all the complex forces at work in the private
economy and in other areas of government policy that importantly affect
economic activity, including the structure of our tax system, developments
in the credit markets and in monetary policy, and the management of the public
debt.
Experience Since 1961
Our approach towards fiscal policy can, I believe, be illustrated by
our experience since 1961.
Our fiscal policy recommendations over this
period have been made only after painstaking and at times painful evaluation
.. 4 of all relevant economic data and exhaustive consultations with a broad
cross section of outstanding economic authorities representing the views
of virtually all sectors of the economy.
The approach seems to work, since
during this period the nation has experienced the longest peacetime
expansion in
~story,and
our price level has been the most stable of any
industrialized nation in the free world.
In January of 1961 we were confronted with an economic recession which
obviously required expansionary policies.
Unfortunately we also faced a
balance of payments deficit of nearly $4 billion.
Under these circumstances,
it 'Was not feasible, in an attempt to promote expansion, to push monetary
policy to extremes of ease for that couid only have aggravated the capitaJ.
outflows that were materia.lly contributing to the outflows of dollars.
Instead, our response to the recession and to the broader pattern of
slow growth that had developed 1n the late 1950's was to encourage expansion
through fiscal policy.
Our analyses of the economy indicated very clearly
that our problem centered in domestic investment.
Faced with necessary
increases in defense expenditures in 1961, a broad program of tax reduction
was not immediately feasible.
However, it was possible, without excessive
loss of revenue, to develop an investment tax credit and liberalized
depreciation guidelines for product1ve equipment tailored to providing
increased incentives for productive investment -- investment that not only
would pay dividends in terms of domestic growth but would also help to
buttress our international competitive position.
- 5 •
Recovery proceeded through
1961 and into 1962, but as the economy
absorbed the higher level of defense spending it was apparent that unemployment was still too high, and that prospects for sustained and vigorous growth
cootinued to be impeded by our tax stncture.
CalCUlations showing what
the budget would look like if we were operating at full emplo,y.ment indicated
a sizable surplus.
The difficulty was that the tax rates that produced
that large "Ml employment surplus" were so high as to thwart the growth
in the economy necessary to reach full employment.
stated another way, as
the economy·came out of the recession, the high marginal rates of taxation
drained off so much of the added purchasing power that markets were not
avaUable to match our f'ull productive potential..
There was good reason to
believe that these high tax rates, enacted to offset the inflationary pressures
caused by war and post-war defense needs many years earlier, were no longer
appropriate.
01lr primary- problem was obviOUsly not inflation, but slow
growth, high unemployment, and periodic recessions.
The solution lay in
greater incentives to invest combined with a measured release of purchasing
power.
This objective required a carefully balanced program of tax reduction
spaced out over time, and we proposed cuts in both corporate and individual
rates combined with substantial improvements in our entire structure of
income taxation.
The result ws the $14 billion two stage tax cut enacted
- 6in early
1964,
the larsest in h:Lstory.
At the same t1me, a tiSht lid was
:lIIIposed on expenditures, assur1D8 that the tax redllction could be absorbed
without intlation and. cons:Lstent with reduction in our budcet&1:"y' deficit.
Finally', this year we were able to recOllJlllend el1mination ot DILDl ot
our excise taxes, removing another
~ent
to growth while 1.mprov1D8
our tax structure.
~e
Basic Objectives of P1scal Policy
In extract1ns lessons for the future from this experience I I want to
emphas:Lze that none of us can be sure what the particular problems ot tomorrow
wUl be -- whether 1n:f'lat1on or recession, increased military spendiD8 requirementa, or what.
We can be sure, however, that we must be prepared to use our
fiscal policies flexibly, aa required by
by doctrinaire be11efs.
.
UDtoldiDg
events.. and not be bound
And we have learned much of the varied potential
of flscal policy in combination w:Lth,other economic policies -- to fight
inflation or deflation and to encourage consUll'ij)tion or investment.
Moreover,
we will bave before us in guiding these decisions the basic contiuuing objectives
of all our economic policies -- each implicit in the Employment Act of
!hese include:
1.
Mlintenance of an
~quate
eco1lO1ll1c growth rate with a broad
and. equitable distribution of income.
2.
Provision of adequate levels of those essential services that
we buy collectively through government expenditure.
3. Maintenance of reasonable price stability.
1946.
- 7 -
4.
Preservation of healthy levels of international trade and
investment along with equilibrium in our balance of payments.
Reconciling the Goals of Policy
We suggest that
long-range
a
fiscal~cy
basic concern of this Committee in examining
should be to study more intensively the inter-
relationships between these goals and the adequacy of our existing fiscal
policy instruments for achieving them.
Let me direct your attention to
some of these interrelationships.
In recent discussions of economic policy, there has been much concern
about finding a blend of poliCies to achieve multiple objectives -- objectives
that, at least in the Short-run, sometimes seem partially conflicting.
instance, experience
sugges~that,
Fbr
as our objective of full employment is
more closely approached and the economy operates with a smaller margin of
excess capacity, problems of maintaining price stability increase.
The active and intelligent use of fiscal policy, has, I believe, contributed to reconciling these goals.
Certainly, the record is clear that
our sustained advances in economic activity have been accompanied by substantial stability of the wholesale price index.
updrift in the consumer price index of about 1 to
True, there has been some
2 points a year, but
part of this updrift may be associated with our inability to make full
allowance for quality improvement within the index itself.
This is
- 8 clearly involved in one of the most rapidly increasing components, the
cost of medical services.
Altogether our price performance over the
past five years has been far better than that of our leading competitors
in world markets.
The Administration has been conscious of the inflation problem in
formulating its fiscal policies.
In a situation marked by excess capacity
and excessive unemployment, we were convinced that a tax cut, intended to
spur growth and reduce
unemploymen~would,
not lead to inflation.
We have not" on the other hand, sought to drive to Qnsustainable goals
simply by massive injections of purchasing power.
Instead, reductions
in consumer taxes have been accompanied by measures to provide investment
incentives, to encourage steady growth in capacity, and to promote efficiency.
At the same time, we have recognized that the Whole burden of reconciling
these goals could not be placed on fiscal policy alone, and that our fiscal
program needed to be implemented with full awareness of the need for complementary policies in other areas.
Thus, monetary and debt management
policies have been carefully coordinated to assure that Federal deficits
would not result in excessive liquidity that might give rise to future
inflation.
And, we have begun to deal directly with problems of structural
unemployment -- by manpower training and development, the economic opportunity
program, Federal Aid to Education and the like.
- 9Our ability to achieve an unemployment rate of
4.7 percent without
widespread price pressures represents. substantial progress over earlier
experience, but we must push ahead to extend our gains.
Fiscal policy will continue to have a key role to play in that effort,
but it must not be called upon to do the job alone.
Let me point out, for
instance, that unemployment among particular groups, such as Negroes and.
teenagers, tends to follow the ups and. downs of the national average, but
the rate among Negroes stays twice as high as the total rate, and the rate
among teenagers stays almost three times as high.
Progress toward. our
social goals of improving the position of the underprivileged and reducing
juvenile delinquency certainly requires that we improve job opportunities
generally, and fiscal policy can help assure the expanding markets essential
to provide those opportunities. EUt adequate job opportunities for minority
groups and for teenagers -- consistent with
ord~rly,
non· inflationary growth -.
will also require.action to reduce and eliminate structural imbalances in
our labor market.
Our use of fiscal policy in recent years has also been influencei by
the need. to reconcile the goals of balance of payments equilibrium with
domestic growth.
One way of encouraging a higher level of domestic invest-
ment would have been very low interest rates, but we have learned that in a
- 10 -
world of increasingly free trade and payments, no country can afford
to ignore the relationships between its own money markets and those
abroad.
The use of fiscal policy -- and particularly tax reduction--
offered an alternative.
Some measures could be centered directly on
investment incentives, such as the investment tax credit, the depreciation
reforms of 1962 and 1965, and the corporate tax cut of 1964. MOre
generally, the spur to overall
ec~nom1c.activity
through reduced
tax rates, as it works its way through the economy, provides a more
attractive environment for the employment of capital domestically,
tending to reduce incentives to the outflow of capital rather than
increasing them, as would have been the case with extremely easy money.
In this way, the increasing integration of the world economy has
required the United States to explore and use the potentialities of
fiscal policy more fully.
I believe that these external considerations
will remain important in the choice of policy tools, not only for the
U.S. but for other industrialized countries as well in the years
ahead.
- 11 -
The Choices for the Future
As we look 1nto the future, and consider the range of lssues that
will be confronting the :f'iscal policy'-maker -- such as the need tor tax
rate reduction as asainst expendtt ure increases, possible chqes in
state aDd local government tiscal relationships, and the alternative of
debt retirement -- it is uset'ul to emphasize that a srowina econam;y will
re8l"-by~&l"
generate higher revenues at mstins tax rates. '!'his
tendencr -- sometimes referred to as the fiscal !teas -- presents a clearcut need to. make choices, and mch recent discussion has centered on
what tbese choices should be.
For instance, a sUDlltla.'ry of the repUes of 48 eooncm1sts and ten
organizations to the questions put by the Chairman of this Subcomm:l.ttee,
stated that liThe consensus is tbst dur1ng the next deoade, Federal
revenues are apt to rise faster than Federal expenditures, thus exert1ng
a dras on the econCllJ7. The respondents were hesitant, however, on recommend1ng the proper remecJy
tor tiscal drag, with no clear-cut consensus
emerging tor either increased spend.1n& or tor further tax cuts."
!rb1s absenoe of a consensus seems to me readily understandable, tar
the kind ot choice implied is dependent upon a host of other juapents
on more particul&l" problems and objectives. First, the degree to which
rising revenues ma.T be divided between reduction of the budget det1c1t
or to debt reduction, lower taxes or higher spend1US, can be baaed onlJ
on a thorcNgh ana.'lys1s of the impact of these alternatives on the national
economy under preva1linS conditions. Clea:rl1, lower deficits or a surplus
- 12 -
applied to retirement of the debt wouLd be in order if the nation were
at full employment and if inflationary pressures were great.
On the
other hand, if economic projections indicated sluggish growth and no
price inflation, such a policy would not be in order.
Balancing Saving with lmvestment
In considering this issue, we should recognize at the beginning that
in our economy borrowing is a necessary concomitant to savings.
To take
a simple and obvious example, a savings bank can only operate if somebody
borrows the .money in order to spend it and put it back into the income
stream.
In addition to lending by individuals, the growth in the money
supply required by an expanding economy requires annual increases in net
borrowing from commercial banks.
To same extent, of course, savings get back into the income stream
through direct investment by the
sa~er
or through the purchase of equities.
In quantitative terms, however, this represents a relatively small portion
of the use of personal savings in our economy.
The bulk of our savings must
be absorbed by willing borrowers, and put back to work in the economy if
we are to achieve sustained increases in employment and output.
We believe that it is desirable that over time a maximum amount of the
vast supply of savings the economy is capable of generating should be
absorbed by borrowers within the private economy or by state and local
governments.
In fact, over the post-war period, about $700 billion of such
savings have been absorbed by the private economy -- nearly $300 billion
- 13 .
by corporations, $230 billion by home mortgages, $70 billion by consumer
credit, and about $100 billion by other borrowers.
absorbed by state and local governments.
About $70 bil110n was
About $40 blllion has been absorbed
by the Federal Government.
A properly designed tax structure can make aD important contribution
to the private absorption of saviDgs by mirdmiziag any discourqement to
avestment that might arise from the magnitude of taxes that we have to
collect.
We cou.ld. 1 for exemple I have obtained about the same dollar amount
of revenue from corporatiOJls by providing a combined top rate of' 46 percent,
iDstead if the present 48 percent, bu.t 'without
I!U1
investment credit.
We are
convinced, hOwever, that collecttDg this amount of money through a structure
'that does have an investment credit will result in a larger amount of private
investment, and thus more private absorptiOD. Of savings and less need for
Federal deficits.
With a carefully designed tax structure aDd policies in other areas
to encourage investment, there 1s every reason to believe that a healthy
ecoJl.Omy operating at full employment will be capable of generating adequate
investment outlets to absorb all our potential sav1Dgs.
aim for this kind of healthy investment climate.
Certainly, we shoUld
ADd, under these cODditions,
a budget balauce is appropriate, or a surplus which will release funds from
the Federal Government to help meet the needs ot private il1vestment.
In other circumstances, however, private investment demands may not
be great enough to absorb all the saviDSs we are capable of generating.
~el1 Federal absorption of some of our saviDgs means a highly useful
purpose, for those savings, instead of being diverted from, the spending atreaui.,.
&ad thus tending to restrain the level of economic activity, can be carefully
employe~.
- 14 Federal uses of savings are in quite important ways productive in
the same sense in which business investment expenditures are productive.
Certainly the Federal Govermnent requires buildings, equipment, and power
plants -- the same kind of things financed by private borrowing.
Much of
what is currently labelled as government expend 1ture is devoted to producing
assets which wUl be providing services tor III8.DY' years in the future.
One kind of productive Federal investment 1s increased investment in
people -- namely I the investment represented by improved education.
This
we have attempted to advance on many frorits from aid to elementary education
through aid to colleges and graduate training and to vocational retraining.
This kind of investment in people will be particularly advanced. by the
adoption of the program to provide scholarships, student employment, and
guaranteed subsidized. interest loans for college stUdents from low and
middle income families.
This kind of a program, unlike the proposed tax
credit schemes, is concerned with opening up college opportunities fOr
capable students who cannot afford college.
MOreover, in considering this issue of the Federal debt, its relation
to total output is important.
Between 1960 and 1965 while our GNP will
have increased by 30 percent I the public debt has increased by 11 percent.
It has fallen from about 52 percent of our GNP to about 49 percent.
period included three fiscal years in which the deficit was over
This
$6 billion.
.. 15 -
Currently, the Federal deficit has been reduced considerably below the
average level of those years.
The pOint is, however, that even in those
years of larger deficits, the debt was getting smaller relative to our
capacity to deal with it.
Expenditure Increases and Tax Reduction
The proper mix between tax reduction and expenditure increase .... when
the growth in revenues makes this possible .... cannot, in my judgment,
be decided apart from specific decisions as to particular needs
at particular times.
The very magnitudes involved mean that this situation
opens up dramatic opportunities to improve our society.
The compend1um d.eals
with many of these, including major tax rate reduction, assistance to state
and local governments, the use of general revenues to meet part of the costs
of social insurance now covered by payroll taxes, and a larger scale attack
on the problem of poverty.
There will be others as well and all merit debate
and analysis.
I
am sure that, in testifying before you tomorrow,the Director of
the Bureau of the Budget will d.eal with the kinds of specific and particularized choices entailed in expenditure decisions.
Fbr my part, I would
Uke to close by briefly touching upon a few of the more important issues
that arise, and must be deCided, in connection with further tax reduction.
Perhaps most important, we must continue to be concerned about the
impact of our tax structure on the entire distribution of income.
We have
- 16 red \lced the impact of the high 1nd i vid usl surtax rates, aDd the corporate
tax rates,
OIl
the growth creatias; investment process.
a start toward dealing with the problems at poverty.
We have also made
One important future
concern is the impact of the ind ivid ual income tax in the lower, and lower
middle, income brackets.
Over the years, if the income tax law does not change, the effecti va
rate of tax at the average incOll1e level tems to rise, essentIally because
the persODSl exemptioos become lower relative to the average income itself.
This increasing effective tax rate shows. up clearly at the low and middle
income levels.
It is instructive to follow the experience of a family with two
children that has every year an adjusted gross income equal to the average
lDcame of all American families.
income tax rate of 6.7 percent.
In 1950 this family paid an effective
In 1960 the effective income tax rate
OIl
this 1'am1ly was 9.8 percent because of the increased average income. In
1965, we estimate that the rate haa been reduced to 8.6 percent, b\lt it
remain.· above the 1950 level.
not been
~vident
On ~he other hand, the same progressiCl1 has
for the top income taxpayers, largely because the taxpayers
had larger personal ded\lctions.
These considerations were one factor bearing u.pon our recent action
to reduce excise taxes which were a regressive element ill our tax
structure.
In the longer run they require that ve be especially alert to
- 17 finding efficient ways to reduce income taxes at lower income levels.
The provision in the Revenue Act of 1964 for the
minim~
standard deduction
was a breakthrough in providing a new method of lessening the tax burden
of those who can least afford to carry it.
Possible expansion of this
and other methods deserves continuing study.
Another issue in the area of tax structure is presented by the
impediments to the flow of capital and the l.Ullike treatment of like income.
This is a perennial problem that needs continued attention to preserve
confidence in thp. justice of our tax system and ef;'icienc-y and mobility
of our capital markets.
DeciSions on changing the level of tax rates will bring to the forefront
many other questions of tax structure.
It is quite obvious that "taxation
for revenue only" is not a principle that is rigidly adhered to in the
United States.
We have assigned to our tax law the function of encourag:l.ng
diversified activities.
The difficulty here 1s that this multitude of
specific objectives tends to conflict with the baSic objective of raising
an amount of revenue necessary for our overall fiscal policy in a way that
is equitable between taxpayers.
This conflict is the root of our continuing
concern about the matter of income tax refOrM.
The pursuit of diverse ob,jectives thrcu€;h the tax law has in
pra~ti~e
meant that some of the particular objectives tend to receive rather cursory
examination, without full and continuing analysis of the effectiveness of
the proviSion in accomplishing the desired o'b,ject1ve.
Expenditure programs
are subject to an annual and rather critical review during the appropria.tiou·
process.
This means review both within the Gommittees and on the floor of
the House and of the Senate.
- 18 On the other heAd, the question of whether or DOt we get our
moneys'
worth from a particular incentive in the tax law is raised tor discussiOD
perhaps once a decade, and then 1s dropped if the matter 1s not carried
forward by one Comm1ttee .
What is needed to improve our tax laws is sane
quite hardheaded analysis of whether or not the various preferential tax
t
provisions -- in effect an indirect government expenditure -- are 8D efficieD
way of reaching the objectives that we
want.
The process that I am referring to is not different from the program
analysis that the Bureau of the Budget has been trying to develop in various
areas of direct government expenditure programs.
It requires detailed
hard work to specif'y what we are trying to do and to measure the degree
and cost of accomplishment.
Such analysis might well be applied to areas
of the tax collection and administration process as well as to the
law itself.
substanti~
This kind of analysis calls for cQDsiderable cooperation with
the business, professional, and academic communities, cooperation between
various government departments, and for a strengthened research &ad analytic
capacity within the Treasury.
Flexibility
In conclusion, I would like to refer to the matter of flexibility in
fiscal policy.
Whether we are at full employment or on a path to full
employment, we must be aware of the possibilities of unexpected developments
in the pr1 vate economy that would tend to stall the growth of income.
The Congress has demonstrated that it can act quickly
OIl
important
fiscal legislation, as it did in passing an excise tax cut in 32 days.
- 19 The important thing here was a broad initial consensus on policy, . aided
in large measure by the decision of the
W~s and
Means Committee to hold
hearings on the issue prior to a legislative proposal.
This Committee might make an important contribution to this aspect of
the fiscal policy problem by undertaking some studies of the kind of tempora.."""Y
changes that should be made in fiscal policy to deal with the unexpected.
What role should be assigned to tax cuts or expenditure speed-ups when more
expansion is needed? As to tax reduction, what form of tax reduction is
most appropriate1
The problem of flexibility in fiscal policy brings home in a striking
way the problem before this Committee and before all the fiscal policy-makerE:.
The problems are not only tough but also in the future decisions vill
sometimes have to be made rapidly.
The kind of constructive analysis that
this Committee is undertaking will help assure that these decisions vill be
soundly based.
000
TREASURY DEPARTMENT
July 26, 1965
FOR IMMEDIATE RELEASE
MEETING OF U.S. - CANADA
BALANCE OF PAYMENTS COMMITTEE
As an outgrowth of discussions at meetings of the
Joint U.S. - Canada Ministerial Committee on Trade
@FedFRASER