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{nRARY
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.IUN
I REASlJR '(
1
I;O~O
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1972
LJEPARTM ENT
STATEMENT BY THE HONuRABLE JObEPH "W. l'ARR
UNDF'..R SF.CPETARY CF THE TREASURY
REFORE THE SENATE FINA~E COHMITTEE
ON FINANCING POLITICAL CAMPAIGNS
THURSDAY, JUNE 1, 1967
10:00
A~'~.,
E.D.T.
Mr. Chairman and Members of the Committee:
I appreciate this opportunity to testify at this hearing, because the subject before you is of deep significance to our country
and our democratic political system.
Your deliberations can make an
important contribution to the preservation and sound future development of our democracy.
At the outset, I think it important that the nature and character
of the issues before us be put in perspective.
Our American system of government has weathered nearly two
centuries of dynamic social, political, and economic change, and yet
remains a stable instrument responsive to the will of a free people.
I do not believe that any of us is here to disrupt this system.
Rather, I believe that our aim is to protect it against a threat.
That threat arises out of the great increases in campaign costs
resulting from the changes in the size of our electorate and in the
technology by which candidates for public office communicate with
the electorate in our political campaigns.
Political campaigns are a central feature of our democratic
system.
They are the occasion for serious debate and discussion of
the great public issues our nation faces -- as well as the opportunity
for our free people to choose their leaders.
- 2 -
Whether that discussion is meaningful, and whether that choice
is intelligent, depend in large measure upon the opportunity and
ability of the candidates to communicate with the electorate.
In
that basic context, we are fortunate indeed to have seen the development within the last generation of highly effective mass media -television, radio, and periodicals -- and highly efficient nationwide transportation.
These developments have greatly enhanced the opportunities for
the citizens of this country to express not only a free, but also an
informed and intelligent choice among candidates and policies.
Yet
the cost of utilizing these new methods of communication is staggering.
Historically, men seeking public office have had to rely on
private sources of wealth.
Small groups of affluent persons typically
have provided the greater part of campaign funds.
However, innova-
tions in te chnology, while opening new and unimagined means of communication, have increased the costs of campaigning beyond the safe
limits of traditional financing.
These innovations have intensified
the need for candidates to seek out increasingly large contributions
from a small minority of Americans, magnifying the possibility that
too great a measure of influence can reside in the hands of too few.
Thus, the framework for action is two-fold.
We must infuse
the system with new sources of support, and retain the existing
structure of our political process.
- 3 If we look to the past for guidance, there is little to chart
our way.
As a matter of fact, it is only since last November that a
Federal statute has existed with regard to this problem.
The enactment by the Congress of the Presidential Election
Campaign Fund Act of 1966 was a breakthrough in a wall of inaction.
Decades of talk and study had produced nothing tangible.
the Act was not perfect.
Of course,
All recognized that there was room for
improvement.
We all knew we were embarking upon a new experience and that
we would have to rely on enlightened dialogue and the force of
heightened public concern to lead us to the means of improvement.
The debate held in recent weeks in the Senate concerning this
subject was an outstanding contribution.
The Senate faced complex
and difficult issues with frankness and candor.
It brought to the
surface the areas of concern and divergent opinion.
The Administration
relied heavily on the many alternative solutions offered during this
debate in formulating the recommendations contained in the President's
Message of May 25 on the political process in America.
In the area of financing Presidential campaigns) the President
has offered recommendations which would build upon the breakthrough
accomplished by the Presidential Campaign Act.
His proposals are tempered by the realization that we lack experience in this area and of the many uncertainties which are present.
Nevertheless, as he stated:
- 4 II
I believe, howeve r, that we are ready to make a be-
ginning.
We should proceed with all prudent speed to
enact those parts of such a program which appear to be
feasible at this time. II
President Johnson has made 11 specific recommendations for
strengthening and improving the 1966 Act.
His proposals are offered
in the spirit of serving as guidelines for Congressional action.
I
think these recommendations go a long way in meeting all the meritorious
criticisms of the present law and will give new purpose and effectiveness to this measure.
First, it is recommended that the tax return check-off be
eliminated, and that the necessary funds to finance Presidential
campaigns be provided by direct Congressional appropriation.
approach has two essential advantages.
This
It gives the Congress the
opportunity to make a realistic assessment of the amount of funds
necessary to conduct these campaigns.
measure of certainty to the system.
Moreover, it adds a needed
Advance determination of the
am:::mnts available to the major parties has great importance in the
planning of effective and coordinated political campaigning.
Second, the Federal funds would be available only to reimburse
expenses which are needed to bring the issues before the public.
Only the cost of radio and television, newspaper and periodical
advertising, the preparation and distribution of campaign literature,
and travel, would be covered.
These expenses would Ciualify for
- 5 reiDibursenent only if they are incurred after the party bas selected
its candidates for President and Vice President.
For this purpose,
an expense would be incurred when the services are furnished or the
goods delivered.
No item of qualified
e~nse
would include
salaries paid to CBmpaign workers.
Third, private contributions could not be accepted to defray
the types of expenses which are reinibursable by the GoveI"l'llIent.
Howver, private donations could continue to be accepted to defray
other expenses, such as salaries, overhead, research, polls, and
admin1strative expenses.
This will permit local party fund-raising
activities and the utilization of strong local party structures.
However, since our purpose is to reduce the reliance of candidates
on small groups of wealthy contributors, we must be careful not to
superimpose a layer of Federal monies over a base of large private
donations.
We believe that we should move in the direction of pro-
hibiting the receipt of private contributions under this approach.
Ex:p=rience and testing will be required before we finally resolve this problem.
This proposal constitutes an important, but
prudent first step in that direction.
Fourth, a major party would be defined as one which received 25
percent or more of the popular votes cast in the last election.
This would replace the 15 million vote test of present law.
It pro-
vides a more flexible standard upon which to judge the significance
- 6 of a. party' B popular support and will not be tied to a. fixed figure
whose significance fluctuates with changes in the total votes cast
in each election.
lic support.
Major parties would receive equal 8.lOOunts of pub-
This is in keeping with the stability afforded by
our two-party system.
Fifth, a minor party would be defined as one which received
5
percent or more of the total votes cast in the current election.
This is a modification of existing law Which permits a. minor party
to qualify only if it received 5 million or more votes in the preceding election.
A percentage of votes cast test is a. more meaningful
standard by which to
~asure
a party's impact.
The 5 percent test represents a. liberalization in fa.vor of minor
parties.
Reasonable standards for the qualification of third parties
are necessary to insure tha.t full opportunity for political expression
and
develo~nt
will not be blunted.
However, the public interest
demands that appropriate limitations be provided to avoid the deflection of public monies to groups lacking even a modest base of popular
support, and also to avoid prOviding an incentive for artificial opposition.
Determination of the equitable allocation of funds to minor
parties presents questions of great difficulty.
I believe that the
proposal just discussed reaches a sound and fair adjustment between
these conflicting pressures.
- 7 Sixth, a qualifying minor party would receive Federal funds immediately following a current election, rather than waiting four
years until the next Presidential campaign.
In effect, this recom-
mendation deletes the requirement in present law that a minor party's
qualification be based on its showing in the prior election.
The
prompt availability of funds should minimize financial difficulties
of emergent parties and thereby aid in the presentation of their
policies and programs.
Seventh, the percentage of Federal funds which could be spent
in anyone State would be limited to 140 percent of the percentage
which the population of that State bears to the total population of
the country.
For example, if 10 percent of the population resides in
a given State, no more than 14 percent of the total Federal funds
made available to any political party under this program could be
expended in that State.
This will prevent a party from concentrating
large sums of the Federal monies in one State.
much needed degree of flexibility.
Yet it retains a
The party will be able to al-
locate its funds on a basis which takes account of the varying demands for the expenditure of monies among the different States.
In
the case of expenditures of a national or regional character, the
Comptroller General will be given specific authority to issue rules
and standards for their allocation on a State-by-State basis.
- 8 Eighth, the Comptroller General. would be re,!uired to make a
full report to the Congress following each Presidential election,
setting forth the payments made to each party from the fund, the expense s incurred by each party, and any misuse of the funds.
Full
disclosure is necessary to the maintenance of the integrity of this
program.
It is also essential to the continuing development and
review of the public financing system.
Ninth, the Comptroller General will be given specific and clear
authority to conduct thorough audits and examinations of the expenses
covered by the Federal payments.
Moreover, prOvision would be made
for the repayment of money erroneously paid, misused, or misappropriated, and for a penalty of up to 50 percent of the amount involved in the case of willful noncompliance.
Tenth, under the present law a special advisory board is provided to assist the Comptroller General in the performance of his
duties under the Act.
The board is composed of two members from
each major political party and three additional. members from the
public at lar@8.
It is recommended that the membership of this board
be expanded to include the majority and minority leaders of the
Senate, and the Speaker and minority leader of the House of
Representatives.
The Congressional leadership of our major parties
can bring great wisdom and practical experience to the board and will
- 9 insure effective participation of the Congress in the supervision
of this program.
This should also serve to augment public con-
fidence in the administration of the Act.
Eleventh, specific recommendations are made for criminal
penalties.
They wouJd apply in cases of willful misuse of funds,
or the making of a false or fradulent claim.
These recommendations set out a course for action which is consistent with our guiding purpose -- that is, not to transform the
system of Presidential campaigns, but to fortify and strengthen it
by removing the reliance of candidates and parties on wealthy
contributors.
Turning to Congressional, State, and local elections, we believe
that these elections equally are in need of changes in their methods
of financing looking to public support.
However, the uncertainties
and complexities that are involved in these elections are substantially greater than those we face when considering a Presidential
election.
This becomes readily apparent when we consider the sheer
number of electoral campaigns involved, and the diversity that exists
in the size and political make-up of each State and district throughout the nation.
Moreover, the many issues involved in financing those campaigns
have not been subjected to the public scrutiny and Congressional debate which has been accorded Presidential campaigns.
While we urge
- 10 -
full consideration and exploration of means to provide necessary assistance in Congressional and State and local elections, we believe
this is an area where one method does not immediately commend itself
from among the many alternatives available.
The President has recommended that all alternatives be actively
examined.
Among these are various means of making direct appropria-
tions, matching grants, and tax incentives, each of which involvffian
expenditure of public funds.
Each plan should be considered and the
Treasury Department stands ready to furnish whatever assistance the
Congress may desire.
Finally, I must emphasize that election reform and public
financial support of political campaigns go hand in hand.
Indeed, if public support for campaign financing is provided at
any level of the elective process, it is imperative that reforms in
the regulation of the conduct and disclosure of those campaigns be
enacted at the same time.
As public funds and increased levels of
financial resources become available, the need for these reforms
correspondingly becomes more critical.
Our obligation to act is clear.
We are at the threshhold of a
great opportunity to strengthen and invigorate the political process
in the United States.
I am confident that this opportunity will be seized, and I
urge the Congress to take prompt action in accordance with the
President's program.
STATD1ENT OF HONORABLE JOSEPH W. BARR
THE UNDER SECRETARY OF THE TREASURY
ON GOLD SUBSIDY LmISLATION
HOUSE INTERIOR AND INSULAR AFFAIRS CCJ.fMITl'EE
JUNE 2, 1967
9:45 A.M.
Mr. Chairman and Members of the Committee:
I appreciate this opportunity to appear before you today to give
the views of the Treasury Department on ten bills providing for subsidles to the dJrnestic gold mining industry.
With the exception of
H. R. 3951, H. R. 8803, and H. R. 10097, the bills would establish
a Gold Mines Assistance Commission to provide financial assistance
to domestic gold producers on the basis of a domestic costs-ofproduction formula.
H. R. 3951 would accomplish the same results
through the use of the offices of the Governor of the State where
application for assistance is made and the Department of the Interior.
H. R. b803 and H. R. 10097 would provide f)r a program of grants-inald to States for gold mining subsidy.
It will come as no surprise to the Co.amittee to hear that the
Treasury Department is opposed to the enactment of these ten bills.
The Treasury Department has consistently opposed this type of legisletion.
In our view, nothing has
occurr~d
in our domestic economy or
in our international monetary, trade, and payments situation in the
last year that would justify any change in the position we took last
year and in prior years on these
proposal~.
The reason for our opposition can he simply stated:
We feel that
gold subsidy payments would lead to uncertainty and speculation with
regard to the official price of gold.
F-936
We believe that such payments
- 2 -
would be interpreted by foreign countries in such a way as to stimulate
private non-monetary speculative demands for gold, and thus reduce
the monetary supply of gold.
OVer all, the result would be inimical
to confidence in the dollar and would tend to aggravate our gold outflow problem.
Spp.culation as to the price of gold could result in a
very short while in the loss fram monetary channels into private boards
of more gold than the extremely limited amount of increased domestic
production that could be achieved through a program of gold subsidy
payments to miners.
There is a
b~sic
difference of viewpoint between the Treasury and
the sponsors of tbe subsidy bills, reflecting different concepts about
the
pr~
function of gold.
The Treasury believes its primary function
in our economy today is as a monetary metal, not as a commodity.
monetary metal, gold must remain stable in price.
As a
Since the enactment
of the Gold Reserve Act in 1934, our basic policy has been and remains
one of centralizing the gold stock of this country in tbe hands of the
Government and maintaining a fixed price for gold.
As you know, the dollar has evolved as a key currency and during
and since World War II has been accepted along with gold as a monetary
reserve asset.
The use of the dollar as a major reserve asset has
provided the basis for much of the expansion of international trade and
payments from which the United States and tbe rest of tbe world have
greatly benefited.
This bas required confidence in the stability of
the dollar, and of the dollar price of gold for monetary purposes.
- 3 The Treasury Department opposes the enactment of these and similar
bills because the introduction of a gold subsidy might provide an
additional spur to destabilizing speculation as to the future price of
gold.
Recent events have increased the nervousness of the holders of
liquid assets in some parts of the world, and the U. S. gold stock is
reduced when this occurs.
We should not ourselves add to such uncertainties
and enlarge our own gold losses.
Foreign official holders of dollars exchange their dollars into gold
for a variety of reasons.
Some have legal reserve requirements.
Others
have traditionally held a certain percentage of their reserves in gold.
But unquestionably one factor that could induce central bankers to move
from an asset on which they can earn a reasonable return -- the U. S. dollar
is concern that the U. S. official price of $35 an ounce might come under
question, and be changed.
Or to put it another way, one major reason
that foreign central banks are willing and eager to hold dollar balances
on which they can earn, at present, rates ranging upward from 3 1/2~
is their confidence that the price of gold will not be changed.
It
would be foolhardy to take actions or make statements that would give
foreign officials any reason to question our real determination on this
score.
It is for these reasons that the United states over the last 30-odd
years has been at great pains not to take any action or make any statements which might call into question the continuance of the official price
for gold at $35 per ounce.
Subsidy payments to gold miners yould, we
believe, be interpreted by foreign countries as possibly the first step
toward the official revision of this price.
- 4 On January lOth of this year, in response to inquiries with
respect to press reports from Paris suggesting that study be given to
raising the price of gold as one of the means of meeting international
liquidity needs, the Treasury Department issued the following statement:
"The price of gold is determined by its relationship
to the United states dollar.
This relationship has been
fixed at $35 per ounce since 1934, and will remain there.
Any suggestion that the price of gold be raised -- either
to meet needs for additional international liquidity or
for any other reason -- is completely unacceptable to the
United states.
Future international monetary arrangements
must be based on this fact.
This has been made clear to
French financial authorities."
I want to make it absolutely clear that there is no contemplated
change in United states policy toward the buying, selling, or price
of gold.
In view of the importance which the United states attaches to the
maintenance of the official price for gold, we obviously cannot tolerate or accept any proposals which might indirectly affect or call in
question this price, whether they be in the form of gold subsidies or
otherwise.
other countries can and do have gold subsidy programs.
These do
not appear to have any significant impact on international monetary
stability.
However, most of these programs were initiated many years
ago and the markets became adjusted to them under different circumstances
- 5 in the past.
These countries, moreover, do not have currencies that
are widely used in international transactions, and as
reserves.
internat~onal
Thus, the decisions of these countries to pay subsidies
for their new gold production could not under present circumstances
have any significant impact upon the monetary system of the Free World,
nor would they be likely to result in any lessening of confidence in
the currencies of such countries.
The Treasury Department's opposition to legislation providing
subsidies for the domestic gold mining industry does not in any sense
indicate that we have a negative attitude toward the problems of gold
miners.
We strongly support the program initiated by the Department
of the Interior about a year ago whereby, through new techniques of
exploration and development assisted by the Federal Government,
significant expansion of United states gold production on a basis that
is economic at the $35 price is feasible.
While it is too early to
point to massive accomplishments in view of the brief period in which
the program has been in operation, we believe that the program offers
great promise.
The kind of research and development envisioned by
the program is a legitimate means by which the Government can provide
assistance in this area since it helps in the development of additional
deposits of gold for industrial use without requiring any change in
the price of gold.
I understand that representatives of the Depart-
ment of the Interior are testifying today and will be able to give
the Committee more information on this program.
TREASURY DEPARTMENT
JUN 2 1967
FOR IMMEDIATE RElEASE
TREASURY DECISION ON ICE SKATE BLADES
UlfDER THE ANTIWMPIl«} ACr
Tbe Treasury Departaent has determined that ice skate blades from Japan
are not being, nor like~ to be, sold at less than fair value within the
meaning of the Antidwaping Act, 1921, as ueDded (19 U.S.C. 160 et seq.).
A "Notice of Tentative Determination," that this merchandise vas being sold.
at less than fair value, was published in the Federal Register CD February 7,
1967.
The attorney for the exporter submitted a written request for an opportunity to present views in person in opposition to the tentative determination.
Tbe opportunity was afforded to the attorney, &lid all interested parties of
record were notified and vere represented.
All VTitten and oral argument presented in connection with the tentative
determination vere given full consideration.
The exporter of the iee skate blades haa advi8ed the Bureau of CUstoms
that of the three types of iee skate blades being Bold to the United states,
one type will no longer be Shipped, priees of a seeond type are being revised to eliminate margins, and the third type is nov being Bold exclusively
to the United States. Comparison for fair value purposes of thi8 third
type is therefore between purchase price to the United States and constructed
value. Such comparison reveals that purchase price is not less than constructed value.
The exporter has further provided the Bureau with written assurances
that regardless of the outcome of the investigation it will not make any
future sales to the United States at less than fair value. The voluae of
the imports of this product as to which dumping margins were found was
relative~ small.
Customs officers are being instructed to proceed with the appraisement
of this merchandise from Japan without regard to any question of dumping.
Imports of the involved merchandise received during the period
1966, through December 31, 1966, were valued. at approximately
$200,000.
January 1,
TREASURY DEPARTMENT
(
)R RELE.A3E b: 30 P. 1'_. ,
)nday, June 51 1967.
RESULTS OF TI<.EASURY'S vJEEKLY BILL OFFERING
The Treasury Department announced that the tenders for two series of Treasury
_115, one series to be an additional issue of the bills dated March 9, 1967, and the
;her series to be dated June 3, 1967, which were offered on May 31, 1967, were
)ened at the Federal Reserve Banks today. Tenders were invited for $1,300,000,000,
, thereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 182-day
"lIs. The details of the two series are as follows:
\.NGE OF A:~CEPThl)
)l>iPETIT:lVE BID.,):
High
Low
. Average
91-day Treasury bills
maturi!:!g Se2tember 12 1~62
Approx. Equiv.
Price
Annual Rate
99.150
3.3637;
99.139
3.406%
99.144
3.386% 11
182-day Treasury bills
maturing December LZ 1267
Approx. :Equiv.
Annual Rate
Price
98.106
3.746%
98.091
3.776%
98.100
3.753% ]/
·
:
·
·
~
Excepting 1 tender of $377 000.
95% of the amount of 91-day blils bid for at the low price was accepted
31% of the amount of 182-day bills bid for at the low price was accepted
)Thl. Ti!;lJDER3 APPLIED FOR AND ACCEPTED DY FEDERAL RE.S'ERVE DISTRICTS:
District
Boston
I;;ew York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
AEElied For
$ 23,675,000
1,436,182,000
28,633,000
36,130,000
11,171,000
41,714,000
231,669,000
41,797,000
25,664,uOO
23,397,000
22,223,000
131,007,000
Acce[2ted
$ 13,675,000
831,832,000 :
16,633,000
31,130;000
11,171,000 :
29,664,000
155,019,000
36,697,000
16,052,000
23,397,000 :
15,223,000
119,907 2°00
TOTALS
$2,053,262,000
$1,300,400,000
EI
~172611,000
AcceEted
$
4,274,OGO
732,095,000
7,492,000
14,689,000
3,183,000
13,282,000
49,766,000
14,781,000
7,415,000
12,668,000
8,415,000
132,221 z000
$2,106,955,000
$1,000,281,000
AEElied For
14,274,000
1,499,443,000
15,658,000
39,689,000
3,183,000
38,172,000
204,766,000
21,361,000
21,515,000
12,868,000
18,415,000
$
£I
{ Includes $224,257,000 noncompetitive tenders accepted at the average price of 99.144
!. Includes $102,506,000 noncompetitive tenders accepted at the average price of 98.100
{ These rates are on a bank discount basis. The equivalent coupon issue yields are
3.47% for the 91-day bills, and 3.89% for the lS2-day bills.
F-937
TREASURY DEPARTMENT
WASHINGTON.
FOR IlVlMEDIATE RELEASE
JUN 6 1967
TREASURY DECISION ON CAST IRON SOIL PIPE AND FITl'INGS
UNDER THE ANTIDUMPING ACT
The Treasury Department has de-cermined that cast iron soil pipe
from Poland is being) or is .Lil:ely- to lee) sold at less than fair value
\Vithin the lllean~rlG of L1e Antidumpi:1C Act., 1:921, as amended (19 u. s. c.
160 et seq.).
l"'ill~, actiun is beinC taken pursuant to a "Notice of
Tentati ve Det2rminat:Lon," pu.bLLshed in the Federal Re(jister on Februar'J 15, 1967.
r.2t1C attorney for the exporter submitted. a wri tten reques"'~ for a:1
opportunity to present views in perso~ in opposition to the tentative
determinatl0n.
The opportunity \Vas af70rded to the attorney; a;10 all
interested. parties of record were notified and were represented.
All "'7'i "L;Gen and oral arglUnent pTe:centec in connc(;~~ion v.Ti th the
tent8.ti ve deterLlina t ion 'Jere &;i ven f llll con~ ioera tion.
\..jitI1 rcspec-c to cast iron soil pipe !T~tings) uI)on beinG aU'IiEed
c,1' toe tcncat:;' ve dp-tern1inatiop" the expo:c'ter immediately revi[ccl his
prj :~es to the UniGed States and gave aSSLlrances that there would 1:;e
i,O fu::,ure sales at less than fair va~ue to the Un:Lted SJGates recardless cf trw o:.lt::omeof trle investigation.
'l'be volume of the import2
0::' Un::; p::c.::-d:J~~ 2.: ~:,o '...rhi'2:1 dumping marGinE vere fauna wa::: rclae,ivel/
sroall..
Therc~'o~'t:) 1 c, Ila::; been det,ermined that cas l~ irlJll soL 1 IJ.:i.pc
fi'";~ni3::' are neG r;~J_ng) l.cr Lll':.cly to 0C) sold ac less than fa:ll' v2.Ltl:
H.'-U Hi "be i Ctt:3t:L'f; of the Al1t __ dumplng P.et) 1921; as amendeG. (1) U.~. 2.
160 :? ~ 2 e c;. ~ ) ~
--
...... < , - -
r~[,lLi[: ::-:ase as it rela~e3 to cast iroi1 :30l..L pj_pe 1r: bE:ing rcfer:rcd
to the Unicc;ed Statez 'l'ariff C:::mrnis ;~:j on for an injury determinCltion.
NotLce of <:ohe determinatior (;TId of :.lle reference of the 23.Se t')
the Tariff C:JmmisEion with regard -co cast :i.ron sojl pIpe ',:ill te published in the Federal Register.
Imports of' the involved r.lercl1and-Lsc recei 'ledi'~ring the period
April 1) 196)) throll.gh October 31) 1,]66) Here valued at approx~maLcly
$702)!~00.
UNITED STUES SAVINGS BONDS ISSUED AND REDEEMED THROUGH May 31, 1967
(Dollar amounts in mi II ions - rounded and wi II not nece ssari Iy add to total s)
DESCRIPTION
AMOUNT ISSUEO.!!
AMOUNT
REDEEMED
TURED
Series A-1935 thru 0-1 941 __~______
Series F' and G-1941 thru Ifl52
-series J and K-I 952 thru 19$4
!J
AMOUNT
OUTSTANDING
Y
% OUTSTANDING
OF AMOUNT ISSUED
--
5,00)
4,995
29,465
2,209
8
56
27
.16
.19
1.21
1,86)
8,226
13,241
15,435
12,119
5,478
5,182
5,345
5,271
4,607
3,988
4,177
4,767
4,854
5,054
4,e70
h,577
4,439
4,156
4, ili9
4,179
4,020
4,472
4,365
4,269
4,573
889
1,624
7,192
11,606
1),430
10,348
4,482
4,064
4,098
3,966
3,408
2,9$0
) ,05'8
3,387
3,3ffi
12 .83
2,673
2,457
2,342
2,224
2,079
2,107
1,999
1,829
1,425
63
239
1,034
1,6)5
2,005
1,771
996
1,118
1,247
1,305
1,199
1,038
1,1) 9
1,380
1,494
l,6ho
1,647
1,666
1,766
1,699
1,806
1,954
1,942
2,364
2,365
2,h40
3,lU7
826
661
629
31
149,225
106,352
42,873
5,h85
6,166
2,803
995
2,f.82
5,170
11,650
3,798
7,P52
67.40
160,e75
110,150
50,725
31.53
1,512
1,089
u23
36,7(,(1
162,388
199,147
36,668
111,239
147,907
92
51,118
51,2uO
29,521
2,2)6
MATURED
Series E}):
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
Vne lass ified
Total Series E
Series H (1952 thru May, 1959).:U
H (June, 1959 thru 1967)
Total Series H
Total Series E and H
Series J and K (
1955
thr~ 1957)
{Total matu.ed
All Series
Total unmatured
Grand Total
3,hlS
3,22L.
2,911
12.~7
12.35
12.99
14.61
18.18
21.57
23.33
24.76
26.03
26.0)
26.79
28.95
30.78
32.4S
33.e2
3A.40
39.78
40.88
43.S)
46.76
48.31
52.e6
54.IE
57.lt
68.e2
92.91
-t
TRE:ASURY DEPARTMENT - Bureau of the Public Debt
28.73
4e.~
83.85
~
ludes arcrued discount.
rrent redemption value.
option of owner bonds may be held and will earn interest for additional periods after origirud maturity dates.
ludes matured bonds whirh have not been presented for redemption.
Pa,", "0 3812
4.69
27.98
.25
31.50
25.73- -
TREASURY C:PARTMENT
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
$2,300,000,000, or thereabouts, for cash and in exchange for
Treasury b1lls maturing June 15, 1967,
1n the amount of
$2,302,420,000, as follows:
91-day b1lls (to matur1ty date) to be 1ssued
1n the amount of $ 1,300,000,000, or thereabouts,
add1tional amount of b1lls dated March 16, 1967,
mature September 14,1967pr1g1nally issued in the
$1,001,557,000, the additional and original bills
1nterchangeable.
June 15, 1967,
representing an
and to
amount of
to be freely
182-day bills, for $1,000,000,000, or thereabouts, to be dated
June 15, 1967,
and to mature December 14, 1967.
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 denominatlons 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 12, 1967.
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-938
- 2 -
Immediately after the closing hour, tenders will be opened at~
Federal Reserve Banks and Branches, following which public announce.
ment 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 TreasU!
expressly reserves the right to accept or reject any or all tenden,
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 Bank on June 15, 1967, in
cash or other immediately available funds or in a like face amount
of Treasury bills maturing June 15, 1967.
Cash and exchange tende
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 dispositioo
of Treasury bills does not have any special treatment, as such,
under the Internal Revenue Code of 1954. The bills are subject m
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 bi lIs 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 t~
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and tbiJ
notice prescribe the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be" obtainedb
any Federal Reserve Bank or Branch.
000
rREASURY DEPARTMENT
June 9, 1967
FOR IMMEDIATE RELEASE
MA TTHEW J. MARKS
NAMED DEPUTY TO THE ASSISTANT SECRETARY
Appointment of Matthew J. Marks as Deputy to Assistant
Secretary True Davis was announced today by Treasury Secretary
Henry H. Fowler.
Mr. Marks will aid Mr. Davis in
superv~s~on
of the Bureau
of Customs and the Bureau of Engraving and Printing.
Except for a period of approximately two years between
April 1962 and July 1964, Mr. Marks has been with the
Treasury Department since 1941. Since July of 1964, he has
been Assistant to the Assistant Secretary.
From April, 1962, to July, 1964, Mr. Marks served as Chief
of the Regional Organizations Division, International Development
Organizations Staff, of the Agency for International Development,
Department of State. During this period he led U.S. delegations
to two conferences in Asia under the auspices of the Colombo
Plan.
Mr. Marks, 53, was born in New York City. He was graduated as
a Bachelor of Arts, summa cum laude, from Dartmouth College in
1936. He was named to Phi Beta Kappa in his junior year. He
received his law degree from Columbia Law School in 1941 and
attended the National War College in 1955-56. He is a member of
the bar of the State of New York.
Among the Treasury posts he has held in the past are those of
Chief of Enforcement, Foreign Assets Control, and Treasury
representative in Brussels, Belgium.
Mr. Marks is married to the former Simone Van de Meulebroeke
of Brussels. The Marks and their son, Ramon live in Falls Church,
Virginia.
000
F-939
TREASURY DEPARTMENT
June 9, 1967
FOR IMMEDIATE RELEASE
UNITED STATES FOREIGN GOLD TRANSACTIONS
IN FIRST QUARTER OF 1967
In the first quarter of 1967, net sales of monetary gold by
the United States Treasury amounted to approximately $20 million,
compared with sales of $34 million in the same quarter a year ago.
The largest sales were to Turkey (see Table I, attached)
which had gold payments to make to the International Monetary
Fund and the European Mone tary Agreement ($16. g million), and
Mexico ($10 million), reversing a sale by Mexico in the fourth
quarter of 1966 and a purchase of $10 million from Peru.
Sales of gold to licensed domestic users for industrial
purposes totaled about $30 million, slightly less than the
comparable figure for the first quarter of 1966. The aggregate
reduction in the gold stock of the United States in the first
quarter therefore was $49.7 million.
Data in Table II show for the first quarter of 1967,
United States sales of gold for which deposits of like amounts
of gold were made by the IMF with the United States. The
purpose of these deposits is to mitigate the effects upon the
United States gold stock of purchases which are attributable
to gold payments made to the IMF by purchasing countries in
connection with their quota increases.
F-940
TABLE
UNITED STATES NET MONETARY GOLD TRANSACTIONS WITH
FOREIGN COUNTRIES AND INT2RNATIONAL INSTITUTIONS
January 1 - March 31, 1967
(In millions of dollars at $35 per fine troy ounce)
Negative figures represent net sales by the
United States: positive figures, net purchases
Western Europe
England
Ireland
Turke;y
Yugoslavia
Total
Latin America
Argentina
Brazil
Chile
Colombia
Costa Rica
Dominican Republic
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Surinam
Uruguay
Total
Asia
Afghanistan
Ceylon
Indonesia
Iran
Iraq
Pakistan
Syria
Total
Africa
Burundi
Liberia
Rwanda
Somalia
Sudan
Tunisia
Total
Total
-0.1
-0.1
-0.4
-19.8
Domestic Transactions
Total Gold Outflow
-29.9
-49.7
*Under $50,000.
Figures may not add to totals because of rounding.
+3.3
-0.3
-16.9
-0.7
-14.5
-0.4
-0.4
-1.5
*
-0.1
-0.1
*
*
'*
-10.0
-0.1
+10.0
+2.6
'*
-0.1
-1.2
-0.1
-1.8
-1.3
-0.1
-0.2
-0.2
-4.8
'*
-0.1
'*
-0.1
TABLE 2
UNITED STATES MOOETARY GOLD TRANSACTICNS
WITH FOREIGN COUNTRIES
MITIGATED THROUGH SPECIAL DEPOSITS BY THE IMF
(Millions of U.S.$)
January 1 - March 31, 1967
Latin America
Dominican Republic
Asia
Iran
Lebanon
Vietnam
Total
-0.4
-13.7
-0.6
-1.3
-15.6
Africa
Ivory Coast
Total
IMF Deposit
-0.2
-16.2
+16.2
TREASURY DEPARTMENT
Washington
FOR AM RELEASE,
SATURDAY, JUNE 10, 1967
REMARKS BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
AT THE
ANNUAL MEETING OF THE
MANUFACTURERS CHEMIST ASSOCIATION
AT THE GREENBRIER, WHITE SULPHUR SPRINGS, WEST VIRGINIA
FRIDAY, JUNE 9, 1967, AT 7:30 P.M.,EDT
It is my deep and abiding conviction that the fostering
of a healthy and creative partnership between business, labor
and government, including an active dialogue, is fundamental
to our national interests in this fateful century_
I can assure you that such a partnership is a primary
objective of President Johnson and his Administration.
It
was former Secretary of Commerce John Connor who said in a
notable address last November:
"In recent years there has been a distinct change in the
attitudes of government toward business and business toward
government that has had a salutary effect on the economic
environment
- 2 "The nature of business affairs requires men to launch
enterprises, great and small, that are founded largely on
faith.
Despite the modern analytical tools that aid businessmen
in making decisions, a very large element of risk is still
involved in their every undertaking.
"One of the principal things that prompts businessmen to
take these risks is confidence in the policies of government
and in the men who run government.
For in the complex socio-
economic environment of modern society, we cannot escape the
deep involvement of government in the affairs of business.
Its all-encompassing economic policies, including both fiscal
and monetary measures, must be taken into consideration in
every business decision -- for they are part and parcel of
.
every b us~ness
transac t '~on. "
- 3 -
In the past five years your Government has given the
strongest vote of confidence in private enterprise that is
possible.
It has done this through personal and corporate
income tax cuts averaging 20 percent and the provision of new
and powerful incentives to investment including the enactment of
the investment tax credit in 1962, and the administrative
liberalization of depreciation.
It has
eliminat~rl
200 excise
th~
production
taxes that restrained or discriminated against
and provision of hundreds of goods and services,
These tax reductions will save taxpayers some $23 billion
a year at Fiscal 1968 income levels.
And, as a result of them, the United States today enjoys
the lowest tax burden of any major industrial nation in the world.
The benefits to everyone of the partnership for
national progress between government and the private sector
are spread clearly on the record.
- 4 In the past three and a half years, since President Johnson
took office, our economy has grown at the rate of about 4.9
percent a year, in real terms.
In this short span of years, the
value of our goods and services has increased by some $170
billion, more than the total gross national product of France
and Italy combined.
Almost 8.7 million non-farm jobs have been
added, and unemployment has been cut by nearly 1.1 million people.
Some 4 million people are estimated to have been lifted out
of poverty, thereby being switched from tax consumers to income
and revenue producers.
by 30 percent.
35 percent.
Personal income after taxes has grown
Corporate profits after taxes have increased
The 43 month period of dynamic growth did not come
on the heels of a recession, but followed upon an expansion
that had already been in progress for 33 months.
- 5 -
It is my conviction,which is shared by President Johnson,
that these great economic accomplishments could not have been
made except that they were based upon a growing sense of
partnership between American business and American Government.
But it is not only what has already been done that is
causing a partnership pattern between the government and
the private sector to emerge ever more distinctly.
It emerges
even more strongly when we look at what we are doing to
solve our current, wartime problems, and when we look ahead
to where we are going.
The economic climate is so different now
that the results during this wartime build-up have been
very different from similar previous periods.
-- During the first 18 months after Pearl Harbor,
consumer prices rose by D percent.
We had
- 6 economic controls, and the tax burden rose
very steeply.
During the first 18 months of the Korean War
consumer prices rose by 11.1 percent.
Furthermore,
the economy was subject to very comprehensive
price, wage and production controls, and it
was burdened with very large tax increases,
including the onerous excess profits tax.
-- During the first 18 months of the Vietnam conflict,
consumer prices rose 4.2 percent and the economy
geared up for war without the intrusion of
governmental economic controls.
Instead,
we have had government-business cooperation
through the guideposts, and the tax burden
remains moderate -- including, as I do, the
- 7 enactment this year of the temporary wartime
surtax on both corporate and individual income
taxes.
Thus, with a free, low-tax, high productivity, privateenterprise-oriented economy that has acquired the habit of
vigorous growth we face the future today in much better order
than was the case after previous war emergencies.
The very
difficult problems we have ahead of us are nevertheless welcome
problems, for they are the problems along the road to a new
cycle of improvement of the quality of life for all Americans.
As a basic step toward being able to carry out this
task without over-reaching our capacity to produce goods and
services, we are taking out an insurance policy for the
future that is of vital interest to every business that hopes
to do well in a future that must be ever more technologically
complex.
- 8 -
I am referring to President Johnson's insistence on improving
the quality and expanding the quantity of education that
Americans get -- to make sure that every American, regardless
of race, location or economic condition gets an education of
the highest quality that he or she can usefully absorb.
In this field of education our little children are picked
up in Head Start at the age of three and four years old.
At
the other end of the scale there is a veritable explosion in
the college population, with even the post college age group
having far more opportunities for adult education and jobtraining to upgrade their skills.
In between those ages a
great deal more is being done to help the communities of the
nation -- including the slums and rural backwaters -- to
educate all of their children at the high level that will
-
9 -
make them high productivity members of a high-consumption
society in a highly technological future America.
At the same time an effort is being made to lay a sound
basis for dealing with other fundamental problems that lie
ahead.
For instance, we are trying to improve the health of
Americans, and we are trying to cleanse our air and our rivers
and lakes and seashores.
These are necessary steps that we
must take if we are to continue to be a great society and a
great civilization.
No one knows so well as President Johnson that given the
demands of Southeast Asia, we cannot proceed as fast as would
otherwise be desirable in these efforts.
Priorities must prevail.
But, by the same token we believe the beginnings must be undertaken because efforts to cope with these problems cannot be
left to the drawing board and the indefinite future.
Moreover,
- 10 the President constantly preaches to his lieutenants that it
is not for the Federal Government to attempt these tasks alone.
Some are responsibilities to be placed with states and localities
in a creative federalism.
Others are for joint ventures with
the private sector.
He and his Administration have the strong conviction
that it is private industry, working from the profit motive,
that has made the American economy the wonder of the world.
We believe that private industry working from the profit
motive must not only continue to have a partnership role with
Government, but that that role must be enlarged and refined
as we grapple with the ever larger and more complex tasks
of the future that we have just been outlining in a few of
their aspects.
- 11 -
In the program he has set up for post-Vietnam planning,
President Johnson has mobilized some of the best minds in
the country, in and out of Government, to determine just
what the
role of the partnership with business should be.
This effort rests squarely on the relationship of the private
sector and Government that President Johnson made known early
in his Administration.
He said:
"I believe we are entering a new era of
cooperation between government and business and
labor and the many groups which form this nation.
"This is an economy where the health of
business benefits all the people.
"This is an economy where the prosperity
of the people benefits the health of business.
- 12 -
"This is an economy where, in large measure,
the fortunes of each are tied to the fortunes
of all."
This described a vital interdependence of social and
economic forces that is the innermost characteristic of the
American economy.
Rather than the static stand-off of
suspicious and uncooperative forces that has been common in
the past and exists in many countries, we have and must continue
to have a moving, flexible balance of forces.
Under these
circumstances, the U. S. Government should, and does, playa
much less direct role in economic affairs than is the case in
many other countries, even many of the most advanced nations.
But, this system of private-public relationships calls
for reasonable and responsible actions by all in the economic
market places, against the backdrop of policies that serve
- 13 the self interest of all by serving the national interest in
our security, our economic growth and our economic stability.
This is what is meant when it is said that some form of the
economic guideposts must be a part of our future.
It is the
role of responsible government in the free enterprise setting
to establish such benchmarks, by which all can be guided,
and to make it a matter of conscience for all to be so guided.
But beyond this, the relationships that we are discussing,
so dramatically illustrated by the last few years of unprecedented
and sustained economic expansion and of wartime stress that
we have been passing through -- establish a framework for
action, even as they help to define ground rules for public
and private economic policy.
In addition to the sustained
prosperity of the last six years, let us look at some other
- 14 major examples of joint programs and mutual problem solving
that are and will continue to be so important to our American
future:
-- The private sector has helped the administration hold
the balance of payments deficit in 1965, 1966 and so far in
1967 to the lowest level since 1957.
-- Business and government, working together, have
delivered the export punch that has increased American sales
in the world market by 47 percent since 1961.
Moreover,
through our great multinational companies, the managerial and
production techniques of American business have been carried
to the rest of the world.
-- Together, business and government are fighting poverty
in this nation by the most effective method of all -- vocational
training.
- 15 -- Business and government have cooperated and are
cooperating on advanced transportation techniques involving,
for example, high-speed railways, hydrofoils, and supersonic
aircraft.
-- A vast family of companies works with the government
on our program in space.
-- And let it never be forgotten that American business,
in support of the American government, has been a primary
factor in the defense of freedom through the decades of
hot war, lukewarm war and cold war that have characterized
this century.
This last item reminds us of one of the most important
aspects of the partnership we are discussing, but one that is
usually overlooked.
This is the fact that as the cares, the
- 16 responsibilities and the perplexities that come with power,
wealth and the world leadership that has been thrust upon
this nation in recent times, American business has matured
and extended its views of world affairs and of the American
role in world affairs, in step with government.
American business has realized, together with American
government, that the price of leadership and responsibility
is sometimes high -- that there are no final breakthroughs,
no cure-aIls in a fast and ever changing world -- that no
one body of opinion has all the answers -- that no specialized
outlook is the one valid perspective -- that getting through
one crisis may only bring a new one into view.
It is this growth of patience and wisdom in the business
community that, at bottom, has made possible the partnership
- 17 of joint action and problem solving that has contributed so
much to the unexampled growth in the past years of the
American economy_
And there can be none here who do not
realize that this nation will only be able to perform the role
that history has assigned it in world affairs if it rests
foursquare upon a domestic economy that contrives, through
combining the arts of government and business,to be dynamic
although stable, and stable although dynamic.
This is to say, we have work to do, and we have the means -and the spirit -- to do it together.
As I have emphasized repeatedly, the essential ingredient
here is responsible behavior.
It is our view, in the
Government, that free enterprise is meeting the challenge of
responsibility.
- 18 It is also our view that the government in recent years
has been doing its part by giving a high priority to policies
of tax reduction and incentives. We have had faith in free
enterprise, and it has been rewarded.
The result is a magnificently healthy economy, powerfully
oriented to economic growth, with the government playing the
minimum role and the private sector playing a growing role in
economic expansion.
I am certain this growth of mutual confidence and mutually
responsible economic conduct is the pattern of businessgovernment relationships in America that is emerging for the
future.
000
STATEMENT OF THE HONORABLE JOSEPH W. BARR
UNDER SECRETARY OF THE TREASURY
BEFORE THE SUBCOMMITTEE ON HOUSING AND URBAN AFFAIRS
OF THE SENATE COMMITTEE ON BANKING AND CURRENCY
ON MORTGAGE CREDIT
MONDAY, JUNE 12, 1967 - 2 P. M.
Financial market pressures and rising interest rates in
1966 brought about severe adjustments in the housing and mortgage market.
While homebuilding had declined during previous
periods of monetary restraint, these declines were exceeded
by last year's experience.
Because of the heavy dependence
of the homebuilding industry on financing we expect that
industry to be more sensitive to changes in interest rates and
credit availability than other sectors of the economy.
How-
ever, the extent of this selective sensitivity was so great
last year that it is important for us to examine what did
happen and, where possible, bring about changes in the organization and regulation of mortgage market activity in order to
lessen this potential sensitivity.
Hopefully, the papers submitted to this Subcommittee and
the various panel discussions will generate practical recommendations for improving the long-run operations of the mortgage
market as well as lessening its sensitivity to monetary fluctuation.
Rather than suggest specific proposals at this
- 2 -
juncture, I will suggest several areas that I feel are in
need of close scrutiny to determine whether legislative
change is desirable.
One reason why the decline in homebuilding was so severe
last year was the sharply reduced inflow of funds into thrift
institutions and the resulting curtailment of their mortgage
lending.
In previous periods of monetary restraint thrift
institutions were not substantially affected by outside
competition for funds, and, as a result, thrift institutions
lent an element of stability to the mortgage market.
This pattern was substantially reversed last year.
A
number of factors contributed to this reversal, including
increased competition for savings by commercial banks and very
high short-term interest rates.
In addition, last year's
experience pointed up certain weaknesses in the policies pursued by many savings and loan associations.
The combination
of excessive reliance on out-of-state solicited funds and
very low liquidity increased the vulnerability of some Sand
L's to 0utflows of funds when interest rates rose rapidly.
Such outflows necessitated a drastic curtailment in mortgage
lending.
I am pleased to note that the prepared statement of
- 3 -
the Federal Home Loan Bank Board has stressed the need for
increased Sand L liquidity.
It seems to me that this is
a fruitful area for close examination and potential reform.
Interest rate ceilings were another factor contributing
to the decline in the mortgage flow last year.
State usury
laws limiting interest rates on loans to individuals -- to
6 percent in some states -- persuaded lenders to shift funds
away from the mortgage market when competing market rates
moved above maximum permissible mortgage rates.
The 6 percent interest ceiling on FHA and VA loans resulted
in deep discounts on such loans last year, despite three increases in the rates permissible on these loans.
These discounts
necessitated increased costs to builders, cash payments from
sellers of existing homes, and, in some instances, higher
prices and downpayments to homebuyers.
When interest rates
on FHA and VA loans get substantially out of line with market
rates, discounts get very large, as they did last year, and
the market for FHA and VA loans ceases to function effectively.
It is important to realize that rigid legislated rate
ceilings actually penalize the homebuyer rather than protect
him.
Flexibly administered, ceilings can serve a useful
purpose, but in 1966 the force of market moves in interest
- 4 -
rates sometimes pressed beyond the available range of
administrative flexibility.
There may be particular reason
to consider action at the State level to provide greater
flexibility for rates to move in response to market forces.
Secondary market purchases by FNMA and Home Loan Bank
advances to Sand L's offset some of the decline in mortgage
flow last year.
I think there is need to study the extent to
which FNMA and the FHLB's can be used to insulate the mortgage
market to some desired degree from the effects of changing
financial market conditions.
Such insulation would have to be
coordinated with monetary policy and overall economic policy.
I do not have in mind the situation where these agencies
are constantly supporting the mortgage market.
In periods of
abundant availability of mortgage financing FNMA would be a
seller of mortgages and the FHLB's would reduce advances to
Sand L's.
Effective policy might require wide swings in
purchases and sales and advances and repayments, but not
necessarily substantial accumulations of assets and liabilities
over the long run.
In the case of the Federal Home Loan Banks
it may be useful to look into the possibility of varying interest
rates on advances so as to moderate fluctuations in mortgage
flows.
- 5 -
Thus far my remarks have covered existing institutions
and regulations and I have tried to suggest that, with slight
institutional and regulatory modifications, we might be able
to get substantially better mortgage market results.
Another
area of potential improvement concerns various devices that
have been suggested to improve the mortgage market by making
mortgages more attractive to a broader range of investors.
This might be done by developing an effective secondary market
for conventional and insured mortgages and tailoring mortgages
or mortgage participations to those investors that are not
currently mortgage-oriented.
Among the various suggestions that have been offered are:
expanding FNMA's secondary market operations in insured mortgages and allowing FNMA to deal in conventional mortgages;
providing Federal charters for companies that will insure all
or a portion of conventional mortgages; providing Federal
charters or support for corporations that will pool mortgages
and sell participations in such pools or sell bonds supported
by such pools.
Many additional proposals have been made and
these, undoubtedly, will be discussed in this committee's
hearings.
- 6 -
In recent months there has been considerable improvement
in the mortgage market and a conaiderable increase in the
availability of mortgage funds.
This market improvement
should enable us to evaluate recent experience and proposed
change in a more detached and objective manner so that we
can lessen the cyclical sensitivity of the mortgage market
and insure an adequate flow of funds to it over the long run.
It is extremely important that we carefully weigh the potential
benefits, costs and practicality of the various proposals that
will be suggested to this committee.
TREASURY DEPARTMENT
4
iliSASE 6:30 P.N.,
lX, June 12, 1967.
liESULTS OF TRMSURY' S I'.EEKi..Y DILL OFFcl1.H~G
The Treasury
~epc.rtment
announced that the tenders :t·or two series of Treasury
>, one series to be an additional issue of the bills dated Y~rch 16, 1967, and
)ther series to be dated June 15, 1967, which were offered on June 7, 1967,
opened at the Federal heserve b~nks today. Tenders were ~nvited for ~1,300,OOO,OCO,
1ereabouts, of 91-day Dills and for $1,000,000,000, or therectouts, of 182-day
>. The details of the two series are as follows:
~
OF
91-day Treasury bills
:...:ID3: _;;;mc;:;;-.;:.tur=..lll:;;:·~g~S:..:e::..l:p:.:t:..::e;,:m::;b.;:.e.:..r...;14=-'L.....:l:.;9:..::6~7__
il.pprox. Equiv.
Price
Annual Rate
hCG~'l'.c;D
~TITIVi
High
Low
hverage
990123
'19.105
99.114
->.4b9%
3.541';;';
3.5u5.i
Id2-day Treasury bills
maturing December 143 1967
Approx. cquiv.
Price
Annual Rate
98.089
98.07470.0Bl
11
3.78CJ%
3. 310,~
J.796jb
11
5% of the amount of 91-day bills bid for at the low price was accepted
39,bof the amount of IB2-day bills bid for at the low t-.:rice was accepted
;trict
;ton
r York
.1adel;;hia
:veland
hmond
anta
cago
Louis
neapolis
sas City
las
Francisco
TOTili.i
A,e,elied For
$ 12,202,000
1,422,010,000
25,438,000
33,686,000
10,588,(;00
54,131,000
357,6u6,OOO
43,215,000
18,114,000
27,180,000
23,010,000
73,867.000
.i1cceEted
,.,
~
8,202,GOO
880,860,000
13,433,000
33,166,000
10,5:5::::,000
48,131,000
132,211,000
39,215,000
18,114,uuC
27,100,000
15,010,000
73,867.000
$2,107,047,000
;pl,30lJ,U02,000
APElied For
: $
2,317,000
1,361,809,000
14,087,000
39,278,000
2,880,000
32,U71,OOO
371,345,000
24,025,000
9,469,000
20,087,000
18,530,000
74,72°3°00
.
~/
$1,978,618,000
hcce,eted
$
2,317,000
733,929,000
b,037,OOO
27,102,000
2,880,000
21,632,000
119,033,000
1:-3, 620,OUO
d,859,OOO
16,362,000
7,747,000
34,950,000
$1,OOO,U18,OOO ~
Includes ~6 130 000 noncompetitive tenders accepted at the avera6e price of 99.114
Includes $110;798;000 noncompetitive tenders accepted at the average price of 98.0~1
rhese rates are on a bank discount basis. The equivalent coupon issue yields are
3.60~ for the 91-day bills, anj 3.93%for the 182-day bills.
TREASURY DEPARTMENT
June 12, 1967
FOR IMMEDIATE RELEASE
HENSLEIGH BECOMES
DEPUTY ASSISTANT FOR NATIONAL SECURITY AFFAIRS
Howard E. Hensleigh has been appointed Deputy Assistant
to the Secretary for National Security Affairs, Secretary of
the Treasury Henry H. Fowler announced today.
Mr. Hens1eigh will assist Raymond J. Albright, principal
adviser to Secretary Fowler on national security matters.
He will also aid in supervising Foreign Assets Control
activities and liaison with the Department of Defense and
other government agencies on matters involving national security
in relation to international financial programs.
Mr. Hensleigh holds a Juris Doctor degree, received in
1947 from the State University of Iowa's College of Law.
He received a Bachelor of Arts degree from the State University
of Iowa in 1943.
He was Comments Editor of the Iowa Law Review from
1946 to 1947, and did graduate work in international law and
private international transactions at Columbia University in
1954 and 1955.
Born October 29, 1920, in Blanchard, Iowa, Mr. Hensleigh
graduated from Hamburg High School, Hamburg, Iowa, in 1939.
He entered government service in 1956, as Assistant Counsel for
International Affairs in the Office of the General Counsel,
Office of the Secretary of Defense. He later became Legal
Advisor to the United States Mission to the North Atlantic
Treaty Organization in Paris.
Immediately prior to his appointment at the Treasury,
Mr. Hensleigh was Deputy Assistant General Counsel for
International Affairs, in the Office of the Secretary of Defense.
F-942
- 2 Prior to entering government service, he was in general
law practice in Marshalltown and Traer, Iowa. In 1948 and
1949 he was Assistant City Attorney, Marshalltown, Iowa.
Mr. Hensleigh served as a paratrooper in the
European Theater during World War II. He has 20 years of
service in the National Guard and U. S. Army Reserve, and
presently holds the grade of colonel, USAR.
He is a member of the New York Bar Association, the
Iowa Bar Association, the American Society of International
Law and the Federal Bar Association.
Mr. Hensleigh is married to the former Janice Pedersen,
of Marshalltown, Iowac Mr. and Mrs. Hensleigh have four
children, Susan, 17; Nancy, 14; Richard, 12; and Jonathan, 8,
and make their home in Arlington, Virginia.
000
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
THOMAS W. WOLFE NAMED ACTING DIRECTOR,
OFFICE OF DOMESTIC GOLD AND SILVER OPERATIONS
Thomas W. Wolfe has been named Acting Director of the Office
of Domestic Gold and Silver Operations, Office of the Secretary
of the Treasury. The office has been headed by Dr. Leland
Howard, who recently retired.
The office, under direction of the Under Secretary for
Monetary Affairs, administers the Treasury Department's
regulations on gold and issues licenses and other authorizations
for its use. It also assists in determining and implementing
policies and procedures relating to silver.
Mr. Wolfe joined the Treasury Department 18 years ago as
a fiscal economist. He has served as Assistant Chief of the
Debt Analysis Staff, Director of the Executive Secretariat,
Deputy Assistant to the Secretary, and, just prior to being
named to his new post, as Special Assistant to Assistant
Secretary Robert A. Wallace.
He was born in Boston, Massachusetts, May 5, 1919. He
received a Bachelor of Arts degree from Columbia College in
1948 and a Master of Arts in economics from Columbia University
in 1949.
During World War II, he served in the U. S. Army Air
Corps. He is married to the former Patricia Ann Howley of
New York. Mr. and Mrs. Wolfe and their two children, Thomas, 8,
and Eileen, 5, reside in Kensington, Maryland.
000
F-943
TREASURY DEPARTMENT
FOR DNEDIATE RE lEASE
JUN 10 1967
TREASURY DECISION ON DISC BRAKE PADS
UNlER THE ANTlDUNPING ACT
The Treasury Department announced today that 1t is issuing
&
notice
of intent to close its investigation with respect to the poasible duJlpiD8
of disc brake pads from Canada, manufactured by Atom-Oti ve Products,
Rexdale, Ontario, Ce.na.d.a.
The notice, which will be published in an early issue
ot the Federal
Register, announces that the investigatioc is being closed with & 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, 1921,
as amended (19 u. S.C. 160 ~t seq.).
Appraisement of the above-described merchandise from Canada, manufactured by At01ll-Otive Products, Rexda.le, Ctltario, Canada, bas not been
withheld.
Imports of the involved merchandise received during the period
January 1, 1966) through February 28, 1967, were valued at approx.iJlB.tely
~192,000.
T REASURY DEPARTMENT
June 13, 1967
FOR IMMEDIATE RELEASE
TREASURY DECISION ON PLASTIC CONTAINERS
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that plastic
containers from Canada, manufactured by Reliance Products
Ltd., Winnipeg, Canada, are not being, and are not likely to
be sold at less than fair value within the meaning of the
Antidumping Act, as amended (19 U.S.C. 160 et seq.).
A "Notice of Intent to Discontinue Investigation and of
Tentative Determination That No Sales Exist Below Fair Value,"
had been published in the Federal Register on April 12, 1967.
The notice stated, with respect to consumer and industrial type
containers (other than 5-gallon industrial containers), that
purchase price was not found to be lower than adjusted home
market price. With respect to 5-gallon industrial containers,
the notice indicated that there had been price revisions, and
that the complainant had withdrawn its complaint in view of
these price revisions and of assurances given by the manufacturer
that there would be no future sales at less than fair value.
The notice concluded that for the reasons indicated above 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 abovementioned notice in the Federal Register.
Customs officers are now being instructed to proceed with
the appraisement of plastic containers manufactured by Reliance
Products Ltd. without regard to any question of dumping.
Directions to withhold appraisement of this product had
previously been issued in an early stage of the investigation.
Imports of the involved merchandise received during the
period January 1, 1966, through October 31, 1966, were valued
at approximately $58,000.
TREASURY DEP ARTI1ENT
\'lashington
JtiiEDIA TE RELEAS C
F-944
WEDNESDAY, JUNE 14,1967
The Bureau of Custo~s announced tod~ preliillQnary figures on imports for
:on:m:nption of the follm-ring commodities fron the beginning of the respective
[uota periods through June 3, 1967:
Period
:om:nodity
Quantity
.Imports as of
: June 3, 1967
'ade-rate Quotas:
....
Calendar year
1,500,000 gallons
fresh or sour
Calendar year
3,000,000 gallons
reali, fresh or sour
1101e
~'~lk,
attle, 700 lbs. or wore
each (other than dairy
860,894
April 1, 1967 June 30, 1967
120,000 hearl
1,107
lbs. each •••••••••••••
12 rna s. frolT.
April 1, 1967
200,000 head
48,354
ish, fresh or frozen,
filleted, etc., cod,
haddock, ha~e, pollock,
cusk, and rosefish ••••
Calendar year
24,883,313 pounds6i Quota filled
Fish •••••••••••••••
Calendar year
69,472,200 pounds
20,132,992
COhiS)
•••••••••••••••••
attle, less than 200
~a
hitc or I~ish potatoes:
Certified seed ••••••••
Other
.................
12 mos. from
Sept. 15, 1966
114,000,000 pounds
45,000,000 pounds
lo'Uota filled
(uota filled
nives, forks, and spoons
1,,Q tt stainless steel
handles •••••••••••••••
Hov. 1, 1966 Oct. 11, 1967
84,000,000 pieces
Quota filled
liskbrooms •••••••••••••
Calendar year
1,380,000 pieces
(,;'uota filled
brooms ••••••••••••
Calendar year
2,460,000 pieces
~her
2, 409, 36f:l/
l~orts for consumption at the quota rate are limited to 12,441,656 pounds
during the first 6 months of the calendar year.
Luports as of June 9, 1967.
-2-
COmr:lOdity
·.
·
Period
··•
Quantity
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, 1966
Peanuts, shelled or not
shelled, blanched, or
otherwise prepared or
preserved (except peanut
butter) ••••••••••••••••
F-944
1,200,000 pounds Quota tilled
1,000 pounds
12 mos. from
Aug. 1, 1966
1,709,000 pounds Quota till.
TREASURY DEP AR'IMENT
Washington
lliJMEDIA TE RELEASE
WEDNESDAY, JUNE 14,1967
F-945
The Bureau of Ct:.stoms has announced the following preliminary
figures showing the imports for consumption from January 1, 1967,
to June 3, 1967, inclusive, of commodities under quotas established
pursuant to the Philippine Trade Agreement Revision Act of 1955:
Commodity
Buttons
Established Annual
Quota Quantity
510,000 gross
Imports as of
June 3, 1967
107,412
Cigars
120,000,000 pieces
3,570,915
Coconut oil
268,800,000 pounds
Quota filled
Cordage
6,000,000 pounds
3,407,501
Tobacco
3,900,000 pounds
727,179
TREASURY DEl'AR'Dmfl'
Wuhington, Doe ..
DOODUTE RELEASE
WEDNESDAY, JUNE 14,1967
F-946
The Bureau at Customs 8lU¥)unced tod~ prelim1nary tigures ahowing the
quantities ot wheat am milled wheat products authorized. to be entered, Ot~
withdrawn from warehouse, tor consumption under the import quotas established
in the President t s proclamation ot Ma,y 28, 1941, &l'J modified by the President' 8
proclamation or AprU 13, 1942, and provided for in the Tariff Schedules of
the United States, tor the 12 months coumencing May 29, 1966, 8.8 tolloW3:
~URY
Dm'AR'IMEKT
"fashington, D. C.
IMMFDIATE RELEASE
WEDNESDAY, JUNE 14,1967
F-947
The Bureau ot CUstoms announced tod~ prel.1.m1nary' figures showing the
quantities ot wheat and milled. wheat product. authorized to be entered, or
witldrawn from warehouse, tor consumption under the import quotas established
in the President's proclamation ot Mq 28, 1941, &5 modified by the President. a
proclamation ot April 13, 1942, and provided tor in the Tarift Schedules ot
the United States, tor the 12 months commencing May 29, 1967, as tollows:
·••
••
Country
ot
Origin
••
••
Wheat
••
•I
•• Established ••
Imports
••
Quota
:May 29, 1967,
•,
;Jun~ 12. 1967
Bushels)
(Bushels)
Canada
China
Hungary
Hong Kong
Japan
United Kingdom
Australia
Germany
Syria
New ZealalXl
ChUe
NetherlaD::is
100,000
795,000
100
100
100
·.·
Quota
•• Established
•
(Poums)
3,81.5,000
24,000
13,000
1),000
8,000
75,000
1,000
5,000
5,000
••
Imports
:Mq 29, 1967,
;JUD 12, 1}67
Pounds
Z
3,815,000
1,000
100
2,0CX>
100
Italy
Cuba
France
Greece
Mexico
Panama
Milled wheat products
1,000
1,000
14,000
2,000
Arg8lltina
••
••
12,000
1,000
1,000
1,000
1,000
1,000
100
l~OOO
Urllg11q
Po1alXl am Danzig
Sweden
Yugoslavia
Norwq
Canary IslalXls
Rumania
Guatemala
BrazU
Union ot Soviet
Socialist Republics
~0C10
1,000
1,000
1,000
1,000
1,000
100
100
100
100
Belgium
Other foreign countries
or areas
BlX1,OOO
,
100,000
4,000,000
3,815,000
F-948
WEDNESDAY, JUNE 14,1967
Preliminary data on imports for consumption of cotton and cotton waste chargeable to the quotas establishec
Presidential Proclamation No. 2351 of September 5, 1939, as amended, and as modified by the Tariff Schedules of
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 1
United States. There is no political cormotation in the use of outm:xied names.)
COTTON (other than linters) (in poums)
Cotton under 1-1/8 inches other than rough or harsh umer
~rts September 20. 1966 - June 12.~967
Country of Origin
Egypt and Sudan ••••••••••••
Peru •••••••••••••••••••••••
India and Pakistan •••••••••
China ••••••.••••••••••.••••
Mexico •••••••••••••••••••••
Brazil ••••••••••••••••
t ••••
Established Quota
Imports
783,816
247,952
2,003,483
1,370,791
8,883,259
618,723
43,523
50,487
Union of Soviet
Socialist Republics ••••••
Argentina ••••••••••••••••••
475,124
Haiti •••••••••••••••••• ~ •••
Ecuador ••••••••••••••••••••
237
Y
Country of Origin
229,552
!I
~I
~
5,203
3/4"
Established Quota
Honduras ••••••••••••••••••••
752
PaI'agt1~ ••••••••••••••••••••
871
124
195
Colombia ••••••••••••••••••••
Iraq ••••••••••••••••••••••••
British East Africa •••••••••
Indonesia and Netherlands
New Guinea ••••••••••••••••
British W. Indies •••••••••••
Nigeria •••••••••••••• e • • • • • •
British W. Africa •••••••••••
Other, including the U.S ••••
9"J33
Except Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
and Ghana.
~ Except Nigeria
Cotton l-1/8ft or more
Established Yearly Quota - 45.656.420 lbs.
Imports August 1. 1966 - June 12, 1967
Staple Length
1-3/8« or more
1-5/32" or mre and under
1-3/8" (Tanguis)
1-1/8'1 or more and under
1-3/St'
Allocation
39,590,778
39,518,064
1,500,000
151,695
4,565,642
4,130,101
Imports
2,240
71,388
21,321
5,377
16,004
-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:
Established
Country of Origin
United Kingdom ••••••••••••
Canada •••••••••••••••.••••
Franee ••••••••••••••••••••
India and Pakistan ••••••••
Netherlands •••••••••••••••
Switzerland •••••••••••••••
Belgium •••.....••.•..••.
Japan. . • . . • • . .
. ....•..•
China ••.•••••••.•.....•••.
Egyp t ••••••••.••••••••••••
Cuba •••••••••••••• e • • • • • • •
Germany •••••••••••••••••••
Italy ......•..•.•.•.......
TOTAL QOOTA
Total Imports
Established :
Sept. 20, 1966, to
33-1/3% of:
June 12 .. 1967_ . _.. _=-~ J'otat.Chl.9ts_.:
Imports
11
Sept. 20, 1966
to June 12a 1Q.61
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
34,048
67,453
31,583
16,058
33,839
25,443
7,088
22,148
5,482,509
182,981
1,599,886
87~719
1,441,152
34,048
75,807
31,583
22,747
14,796
12,853
Other, including the U. S.
l' Included in total imports, column 2.
Prepared in the Bureau of Customs.
F-948
TREASURY DEPARTMENT
Washington
IMJItEDIATE RELEASE
WEDNESDAY, JUNE 14, 1967
F-949
The Bureau of Customs announced today the following preliminary
figures on imports entered for ~onsumption under the absolute import
quotas provided for in section 12.71, Customs Regulations, for coffee
grown in nonmember countries of the International Coffee Organization
for 12-month period beginning November 15, 1966.
COFFEE
(Green - In pounds)
Count~
Established
Quota
Total Imports as
of June 12, 1967
BoliviaY
1,850,800
1,095,585
Guinea
1,454,200
Quota filled
Liberia
2,511,800
Quota filled
Paraguay
2,644,000
Yemen
1,850,800
291,534
Basket.Y'
6,610,000
5,554,869
Y
Adjusted. Only shipments certified to the U. S. Department of
State by the Boliviall Government as bona fide shipnents may be
charged to this quota.
S!
Basket quota allocated to unlisted nonmember countries and to
listed nonmember countries after respective quota filled. o
rREASURY l,:PARTMENT
R IMMEDIATE RELEASE
June 14, 1967
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders
two series of Treasury bills to the aggregate amount of
,300,000,000,or thereabouts, for cash and in exchange for
~asury bills maturing
June 22,1967,
in the amount of $7,820,560,000
nc1udes $5,514 million of tax series bills redeemable either June 15 ,
paY[]lent of taxe.s. or June 22). as f011ows:
~
9l-day billS ttb maturity date) to be Issuea
the amount of $1,300,000,000, or thereabouts,
iitional amount of bills dated March 23, 1967,
~ureSeptember 2l,1967,orlglnally issued in the
,000,191,000, the additional and original bills
~erchangeable .
Je
June LL, 1967,
representing an
and to
amount of
to be freely
182 -day bIlls, for $ 1,000,000,000. or the reabouts, to be dated
22, 1967,
and to mature December 21, 1967.
The bills of both series will be issued on a dlscQunt basis under
1petitive and noncompetitive bidding as hereinafter- provided, and at
;urity their face amount will be payable without interest. They
~l be issued in bearer form only, and in denominations of $1,000,
,000, $10,000, $50,000,
$100,000, $500,000 and $1,000,000
tturity value).
Tenders will be received at Federal Reserve Banks and Branches
to the closing hour, one-thirty p.m., Eastern Daylight Saving
le, Monday, June 19, 1967.
Tenders will not be
:eived at the Treasury De~artment, Washington. Each tender must
for an even multiple of $1,000, and in the case of competitive
Iders the price offered must be expressed en the basiS of 100,
.h not more than three decimals, e. g., 99.925. Fractions may not
used. It is urged that tenders be made on the pr.inted forms and
'Warded in the special envelopes whicl":. will be supplied by Federal
,erve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of
tamers provided the names of the customers are set forth in such
ders. Others than banking institutions will not be permitted to
mit tenders except for their own account. Tenders will be received
hout deposit from incorporated banks and trust companies and from
ponsible and recognized dealers in investment securities. Tenders
m others must be accompanied by payment of 2 percent of the face
unt of Treasury bills applied for, unless the tenders are
ompanied by an express guaranty of payment by an incorporated bank
trust company.
F-950
- 2 -
Immediately after the closing hour, tenders will be opened at
Federal Reserve Sanks and Branches, following which public announce
ment will be made by the Treasury Department of the amount and ~~
range of accepted bids. Those submitting tenders will be advised
of the acceptance or rejection thereof. The Secretary of the Trea~
expressly reserves the right to accept or reject any or all ten~n
in whole or in part, and his action in any such respect shall be
final. Subject to tnese reservations, noncompetitive tenders f~
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 Bank on June 22, 1967, ~
cash or other immediately available funds or in a like face amount
of Treasury bills maturing June 22, 1967.
Cash and exchange tenc
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 ~
estate, inheritance, gift or other excise taxes, whether Federal M
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 authori~.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States is considered to ~
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 bi lIs are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereundel
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 upoo
sale or redemption at maturity during the taxable year for which t~
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revis ion) and tbiJ
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
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN MAY
During May 1967, market transactions
in direct and guaranteed securities of the
government for Government investment accounts
resulted in net purchases by the Treasury
Department of
~343,594,000.00.
000
F-951
TREASURY DEPARTMENT
Washington
FOR PM RELEASE
FRIDAY, JUNE 16, 1967
REMARKS BY THE HONORABLE TRUE DAVIS
ASSISTANT SECRETARY OF THE TREASURY AND
UNITED STATES EXECUTIVE DIRECTOR OF
THE INTER-AMERICAN DEVELOPMENT BANK
AT THE JOINT OPENING SESSION OF THE
ANNUAL CONVENTION OF THE
VETERANS OF FOREIGN WARS OF THE UNITED STATES
HOTEL PRESIDENT, KANSAS CITY, MISSOURI
FRIDAY, JUNE 16, 1967, 9:00 A.M., EDT
PROGRESS IN PURSUIT OF NATIONAL GOALS
This morning I want to discuss with you the progress we have
made during the past three years in achieving national domestic
objectives which were clearly enunciated in the platform of the
Democratic Party of 1964. This progress will be discussed within
the framework of our defense expenditures and our defense
obligations as a world power committed to the preservation of
world peace and the security of the free world. This is
essential, for one actually cannot divorce domestic policy
programs from foreign policy programs. They are interdependent. Each dprives strength from the other. The fulfillment
of our foreign policy objectives accelerates the progress of our
national domestic objectives and enriches the foundation from
which they derive their strength and continuity. Conversely,
the success of our domestic programs provides us with the
necessary resources -- including human resources -- to achieve
our international goals. A sensible nation and a sensible people
must pursue domestic and foreign goals simultaneously.
If, in
the process, we temporarily diminish progress in one direction
in order to achieve progress in a more critical area, we will
subsequently accentuate our future efforts in those areas that
exigencies of the moment once forced us to postpone.
- 2 -
Some critics, for example, believe that our efforts in
Vietnam to restore peace to that troubled corner of the world
and by restoring peace there help make more secure the freedom
of people everywhere -- is materially diminishing our strength
to wage war against numerous social problems here at home.
This is not true. Our physical and human resources are so
strong that we can simultaneously pursue both objectives. The
pace we set in future months and years will be determined by the
stamina, strength and determination of the American people. In
the pursuit of both domestic and foreign goals we are striving
~o achieve long-range objectives of enduring value, not short:ange objectives temporary in nature. This requires the
patience and strength of long-distance runners, not the quick,
transitory brilliance of sprinters.
When we examine the needs and requirements of the people in
the greater Kansas City and St. Louis areas, or throughout the
State of Missouri in medium and small towns, we find that these
personal needs and community requirements, are not too dissimilar
from those of people in other cities and towns throughout the
country. So when the Administration proposes and the Congress
legislates measures costing hundreds of millions of dollars to
resolve national problems, we are, in effect, resolving
problems peculiar not to one area but common to most, if not
all. We also recognize now that problems affecting the lives
of our citizens which we once thought could be solved quickly
can only be solved through painstaking efforts, year after year,
until the causes of the problems are eliminated or controlled.
This applies not only in our quest for peace, but also in our
search for full employment, sustained economic growth, urban
renewal, air and water purification, fast transportation
systems, and programs to beautify our landscape and preserve
our natural resources for succeeding generations.
In the past three years -- during the 89th Congress of
1965-66 and the first session of the 90th Congress of 1967-68
the Administration has initiated and the Congress passed an
outstanding far-reaching series of laws that will enrich the
lives of our citizens while strengthening our democratic
institutions for years to come, I would now like to discuss
a few of the more important of these measures, for they
illustrate the scope of the problem areas which concern us all
and the progress we are making to achieve national goals to
which we are committed as a people.
- 3 Of all our national goals, nothing takes precedence over the
health and welfare of our people. Mental health and physical
health are essential for success in all our undertakings, for
human resources are the cornerstone upon which all other
resources of our nation rest. One of this Administration's
objectives in this area, as President Johnson emphasized in
1965, was lito speed the miracle of medical research from the
laboratory to the bedside." To accomplish this it was
essential to unite our nation's health resources, accelerate
communication between researcher and the student and the
practicing physician, expand our medical facilities, and
increase the number of physicians and health services personnel.
Giant strides were Laken to realize these objectives and meet
the growing needs of the American people, particularly the
elderly, through a series of laws enacted during the past three
years.
To combat cancer, strokes, and heart disease that yearly kill
seven out of ten of our citizens, the Congress authorized grants
to establish some twenty-five regional medical programs. To
help meet the acute shortage of health professions personnel,
grants were authorized for construction of facilities, improvement and expansion of curricula, training for technicians and
therapists, and loans for students at schools of medicine,
dentistry, nursing and other allied professions. Social
security benefits were increased, stricter drug controls were
enacted, and grants were authorized to cover part of the cost of
establishing professional and technical staffs at community
mental health centers, to train teachers of mentally retarded and
handicapped children, and for university research and demonstration
projects in these important areas.
The most important piece of legislation in this area of
human health and medical care, however, was the enactment of a
medical care program for the aged, thus ending a deadlock of
two decades that had prevented our elder citizens from receiving
adequate health coverage. The importance of this great piece of
humanitarian legislation cannot be overstated, for almost half
of our elder citizens had no health insurance, yet four out of
five have a disability or chronic disease. Health costs for
the elderly are double those for young persons, while their
stay in hospitals is twice as long.
The work in this vast area of health care and medical
treatment has by no means been completed, but great progress
has been made to insure that all our citizens, young and old,
white and non-white, and especially citizens with low
- 4 income, can receive the benefits of medical and scientific
knowledge and the care that their disabilities or afflictions
merit. Health care and proper medical treatment is a
continuous process. We have now the foundation and framework
of a health care and medical treatment structure which
successive legislatures can build upon in proportion to the
needs of an increasing population that will reach 400 million
in another ha If century.
Two years ago in his message to Congress on education,
President Johnson proposed that we declare a national goal of
full educational opportunity. He emphasized that nothing
matters more to the future of our country than the achievement
of this goal: Il not our military preparedness -- for armed
might is worthless if we lack the brain power to build a
world of peace; not our productive economy -- for we cannot
sustain growth without trained manpower; not our democratic
system of government -- for freedom is fragile if citizens are
ignorant. "
We were confronted with some unpleasant facts:
one out of
every three students in the fifth grade would drop out
before finishing school if the present rate continued; almost
a million students would quit high school each year; over
100,000 of our brighter high school graduates each year would
never go to college, and many more would leave college if higher
educational opportunities could not be expanded. Throughout
the country there were educational pockets of ignorance that
nurtured unemployment and corresponding pockets of poverty
that nurtured ignorance. Numerous school districts possessed
inadequate educational facilities and insufficient or inadequately
trained teachers. Almost 70 percent of our public elementary
schools had no libraries, and over half of our four-year
colleges were below accepted professional standards in the
number of volumes in their libraries. There were insufficient
college scholarships and research grants available for the
ever-increasing numbers of qualified applicants. These and
other conditions and deficiencies in our educational systems
made r imperative that we accelerate our efforts to provide
full educational opportunity for all.
Congress responded to the President's proposal by passing
two of the most significant Acts in the history of our country.
The first of these was the Elementary and Secondary Education
Act, one of the greatest breakthroughs in education since the
Continental Congress declared that" schools and the means
of education shall forever be encouraged."
It was the
- 5 culmination of almost twenty years of repeated tries and repeated
failures by Congress to enact vitally necessary measures for our
e le.mentary and sec ondary school sys terns. In the firs t year of
operation over 7 million educationally-deprived children from
low income families were aided in their pursuit of learning.
Almost all of our Nation's countries are eligible for Federal
grants under the formula which allocates funds to school
districts where three percent of families have an annual income
of less than $2,000. This historic Act also provided grants
to States to strengthen their own departments of education, to
purchase libraries and textbooks for public and private schools,
~nd to establish model school programs and community-wide
educational centers.
The second historic education measure Congress passed was
the Higher Education Act of 1965, one of "the key stones of the
sreat, fabulous 89th Congress ," to quote the President. This
\ct, which provided the first general program of Federal
5cholarships for needy college students, broke new ground in the
1istoric relationship between the Federal Government and higher
?ducation that has existed since the founding of our country.
[he Higher Education Ac t authorized scholarship grants tha twill
lnnually enable 140,000 qualified high school graduates from
Low-income families to enter college. At the same time it
luthorized insured, reduced-interest college education loans
lnd part-time employment through work-study programs for needy
;tudents. Colleges and universities were granted increased aid
:or the construction and improvement of academic facilities, and
~rants were given to assist small colleges in raising their
lcademic quality.
Beneficial amendments to both educational measures were
lassed by the Congress last year. The programs of the Higher
:ducation Facilities Act were extended through fiscal year 1969,
:he student loan program revised, and steps taken to assist
eveloping colleges. Similarly, the life of the companion
:lementary and Secondary Education Ac t was extended for two
ears, its provisions expanded, and the formula for determining
.rants to states and the requirements for receiving aid as a
~derally impacted area were both liberalized.
We are hopeful that the Act will be strengthened in the
ourse of current Congressional action.
In the 174 years before the election of President Johnson,
ighty-eight Congresses passed only six education bills. The
NO important education acts that I have briefly discussed with
DU were only two of eighteen basic education measures passed
- 6 -
by the 89th Congress. The $9.6 billion appropriated for
education was almost twice as much as that appropriated by all
the preceding Congresses combined. This is a large expenditure,
as President Johnson pointed out, "but it is a small price to
pay for preserving this nation, for saving our free enterprise
system, and for developing our country's most priceless
resource, our young people", upon whom the ultimate destiny
of our country depends.
During the decades of this century, particularly in the
forties and fifties, we neglected to safeguard important
natural resources of our country and improve structural elements
of our society. We destroyed or abused the natural beauty of
our land even as we neglected to preserve the beauty and
strength of our cities. We suddenly awoke to the realization
that our air was filled with poisonous fumes from factories
and automobiles, our rivers with contaminated sewage and
chemicals, that our country's landscape, from which generations
of Americans have derived strength and inspiration, was
blighted with man's junk and debris, and that our cities, which
nurture culture and finance, commerce and government, were in
need of maj or surgery if they were to survive as friends -and not enemies -- of man. Congress's response to these
challenges was to enact into law the President's proposals
improving the quality of life in city and country, among the
prosperous and the poor.
In the area of air and water pollution control, Congress
passed a series of acts that will materially speed up our local
and national efforts to purify the air we breathe and clear
the filth from our streams and rivers. Congress also made a
good start toward meeting our nation's recreation needs by
establishing or expanding seven new recreation areas and
national monuments or historic sites. A uniform policy was
also adopted on inclusion of recreation and fish and wildlife enhancement features in Federal multipurpose water
projects. Paralleling beautification efforts in this area was
the passage of a bill to improve landscaping of interstate
and primary highways by eliminating or severely controlling
billboards and junkyards outside of specified commercial
and industrial areas.
The creation of a new Department of Housing and
Urban Development was a major step forward in meeting the
- 7 -
maze of problems affecting our cities. An Omnibus Housing
Act was passed which provides rent supplements to low-income
families to help meet the crucial shortages of housing for
this group. This important measure also extends numerous
housing programs for middle-income families and the elderly,
expands urban renewal, college housing, and urban
beautification programs.
To meet the problem of growing congestion of transportation
in heavily populated areas, the Congress approved a threeyear, $90 million research, development, and demonstration
project in high speed ground transportation. The Congress
also authorized a two-year $300 million program for grants
to mass transportation demonstration projects that will
expand the efficiency of our country's transportation
system. A Department of Transportation was created to
bring closer together the burgeoning transportation systems
and correlate and synthesize the thinking of transportation
people toward solving mutual problems in this vast and
complicated area.
During the 89th and the present 90th Congress, the
Veterans of Foreign Wars submitted legislative proposals
upon which members had been working for years. A great number
of these constructive proposals were incorporated in the
Veterans Assistance Act Amendments of 1966 and the
Veterans' Pension and Readjustment Assistance Act of 1967.
The Veterans Assistance Act of 1966, you will recall,
extended a wide range of benefits to members of the Armed
Services who served more than 180 days, any part of which
took place after January 31, 1955, when eligibility for
benefits under similar Korean War legislation terminated.
These benefits have been liberalized, both by the House and
the Senate in their respective versions of the Veterans'
Pension and Readjustment Assistance Act of 1967. The
omnibus bill passed by the Senate earlier this month
has gone to the House, which has already enacted some of
its provisions; adjustments between the two bills are
presently being made in a House-Senate conference.
- 8 -
Of particular importance -- both to the individual and
the Nation -- are the educational benefits to servicemen who
served more than 180 days, any part of which took place after
January 31, 19550 These veterans may now receive educational
assistance allowances to finish high school without diminishing
their eligibility to receive later financial assistance in
pursuit of higher education. Under this Cold War GI Bill, a
single veteran in college will receive $130 a month, a veteran
with one dependent $155, and a veteran with two or more
dependents $175 a month, plus $10 for each additional dependent.
Veterans may also receive educational allowances for full-time
training on farms, in factories, or in apprenticeship programs.
If enrolled in flight training, 75 percent of the charges will
be paid by the Veterans Administration. Such educational
training must be completed within eight years from 1966, or
the veteran's discharge date if later. The length of time
permitted a veteran for such educational allowances is based
on a formula of 1.5 months benefits for one month's service,
with the maximum period of entitlement being 36 months.
We can all recall the tremendous benefits that accrued to
our country as a result of the GI bill of rights program after
World War II and the Korean War. Over ten million of our young
men and women received a college education, or business,
professional, and technical training that they might not otherwise
have ever obtained. Their contribution to our economy and our
culture since then -- and as a direct result of their pursuit
of knowledge -- has been of inestimable value. By permitting young
service veterans today and tomorrow the same opportunity extended
an older generation, we are continuing a valuable tradition that
will mutually benefit our veterans and our nation. Both will be
immeasurably enrichedc
The new Assistance Act of 1967 also deals with a wide range
of existing veterans programs. It provides, for instance, a
cost-of-1iving rate increase for all veterans, their widows and
children now receiving pensions under Public Law 86-211, as
amended, and a substantially greater increase -- about 8~ percent
for widows and children in the lowest income categories. In
addition, the bill grants certain wartime benefits not previously
provided to veterans serving in the Armed Forces after August 4,
1964, the date of the sea fight in the Gulf of Tonkino It also
grants additional benefits, the educational aspects of which I've
just summarized, to those serving after January 31, 19550
-
9 -
In this brief idscussion, time has only permitted
uching the highlights of some of this Administration's more
portant domestic programs. The progress we have made in the
st three years in pursuit of national goals has been
complished during a period of healthy economic expansion and
precedented prosperity. Today there are over 75 million
ericans at work producing a gross national product of over
60 billion -- a feat unmatched by any other country. Almost
ne million new jobs have been added in the last six years, and
r unemployment rate of less than four percent of our labor
rce is the lowest in our country's history.
Corporate after-tax
ofits have essentially doubled since early 1961, and the net
nancial worth of American families has risen some $320 billion.
st year net income per farm went up 10 percent, and real
sposable income per person rose 3~ percent -- reflecting an
erage yearly gain three times as great as in the Fifties.
This strong economy that has annually reflected a sustained
)nomic growth rate has permitted us to pursue national
jectives in both domestic and foreign affairs areas. While
Jroving the quality of American life in the fields of health,
lcation, urban development, pollution control and the war on
Jerty, we have acted to increase the standard of living of
Llions of people in the developing countries. By such action we
Ie helped insure continued peace and stability in areas
3ceptible to revolutionary movements and war.
In Southeast Asian areas, where Communists are actively
;aged in revolutionary operations to destroy neutral or friendly
lce-loving governments, we are assisting these governments and
~ir peoples through bilateral loans designed to advance their
lnomic and technological development.
Simultaneously, we are aiding
~m to improve their military capability to respond quickly and
:ectively to internal and external threats to their security .
. s is in response to the President's and our country's firm
mitments to defend nations and peoples of the free world against
munist revolution and aggression.
Even in the midst of war in Vietnam we are deeply involved
advancing the works of peace there, particularly in the
elopment with other countries of the vital Mekong Valley. We
also helping the Vietnamese to increase their agricultural
duction c Great strides have already been made in this area
addition, we are building houses, schools, and hospitals in
etermined effort to give to the Vietnamese people a better
of life. The efforts of some 900 Americans, together with
- 10 500 medical personnel from other free nations, in helping develop
a national medical program for the Vietnamese -- in every hamlet,
district and province -- is one reflection of the constructive,
peaceful efforts in which we have been engaged during the past
two years of bitter war. More than ten thousand Americans have lost
their lives and six times this number wounded in pursuing both
military objectives and vital, peaceful work projects in agriculture;
education, public health and medicine.
Speedy technical development of natural and human resources in South Vietnam will not be
easyo "Peace will be necessary for final success," as President
Johnson has emphasized. "But we cannot wait for peace to begin the
job."
Money appropriated to successfully pursue the war against
North Vietnam to its logical conclusion -- which is a lasting
peace between North and South Vietnam -- totaled some $26 billion in
fiscal 1966 and 19670 The President recently asked for a slightly
lesser amount -- $24 billion -- for special support of Vietnam
operations for fiscal 1968.
In the past, "our economy," as the
President recently emphasized, "has successfully met these
requirements with minimum strain and disruption." There is no
reason to assume that in the future we cannot also meet our
requirements with minimum strain and disruption on our economy.
No one can predict with finality the extent of the Vietnam
war nor the cost of its operation. However, the productivity
and vitality of our people and our economy is such that we can
realize essential objectives in programs to improve the welfare of
our people, as well as of those in less developed areas, as we
help a free people resist aggression and violence. We are committed
as a people and as a Nation to bring this conflict to a
satisfactory resolution. This we shall do! And this we can do
within the historic framwork of our society that has always
successfully enabled us to pursue together national goals in both
domestic and foreign affairs.
000
~REASURY
DEPARTMEWr
W~shington,
D. C.
FOR RELEASE ON DELIVERY
REMARKS BY THE HONORABLE FRED B. SMITH
GENERAL COUNSEL, TREASURY DEPARTMENT
LAUNCHING 1967 PAYROLL SAVINGS CAMPAIGN
FOR NEW YORK STATE EMPLOYEES
ALBANY, THURSDAY, JUNE 15, 1967
12:00 NOON
I run grateful for the opportunity which you have afforded me to
speak at this, the New York State Employees Treasury Bond Campaign
Kickoff meeting.
I am here to promote a product, really two products,
and in turn to generate within you enthusiasm for promoting these products among the employees of this vast and great State, of which I am
a native son.
What are these products?
and the new Freedom Shares.
these products.
They are United States Savings Bonds
First, let me speak a little bit about
You all know about Savings Bonds.
Today, more than
ever before, we must increase the sale of Savings Bonds.
In an effort to attract new purchasers, to add more dollars to the
savings market, to increase our cO'tL"1try's financial stability, we are
now offering a new product -- Freedom Shares -- which the President has
called a "cheerful companion to the popular Series E Savings Bond."
Freedom Shares offer 4.74 per cent interest when held to maturity;
they mature in just 4-1/2 years.
(Series E Bonds yield 4.15 per cent
when held to maturity; they mature in 7 years.)
Freedom Shares are designed to attract additional money into the
savings market.
Thus we have
care~lly
worked out a few restrictions
to prevent siphoning dollars from existing savings plans.
- 2 To be eligible to buy Freedca Shares, you must be enrolled in a
plan for the regular purchase of Savings Bonds -- where you work or
where you do your banking.
Freedom Shares came in four denominations -- $25, $50, $75, and
$100.
These may be bought only in combination with Series E Bonds of
equal or larger denomination.
And there is a limitation on how many Freedca Shares you can buy.
The maximum biweekly deduction for them under a Payroll SaVings Plan 1s
$40.50; the maximum monthly deduction under a Bond-A-Month Plan is $81.
Each individual purchaser is limited to not more than $1,350 -face amount -- of Freedom Shares each year.
Here's how the plans work:
You can, for example, invest $39 of
your pay ($18..75 for a $25 Series E Bond and $20.25 for a $25 Freedcm
Share) •
You will get back $50 -- half in 4-1/2 years, the other half
in 7 years.
The combined yield of the two securities, if each is held to
~
maturity, is 4.39 per cent
I should point out that Freedcm Shares must be held at least one
year before they can be redeemed.
Savings Bonds may be redeemed two
months after date of issue.
It is expected that the dollars invested in Freedom Shares will
be dollars that would not have otherwise entered the savings market.
Certainly, they constitute an extra helping of personal security to thOle
whose family plans are tied to the Payroll Plan.
- 3 Well, these are the products that I am prcmating today.
Unlike
most other products, these offer a variety of benefits, tangible and
intangible.
The rewards of purchas ing Savings Bonds and Freedom Shares
under regular payroll deduction programs are threefold:
(1)
We are helping ourselves to build up a nest egg of
savings for the future in the safest investment in
the world;
(2)
By so dOing, we are helping our National Government
in the best and least painful way possible to manage
its finances and pa.y its bills; and
(3)
We are supporting our men who are manning the bastions
of freedcm in Viet Nam and in various other places
around the world.
I was thinking the other day about how history repeats itself.
Exactly 50 years ago, in 1917, they held the first baseball gmne in
New York's Polo Grounds and the managers of both teams, the New York
Giants and the Cincinnati Reds, were arrested for violating New York's
'blue law" prohibiting Sunday ba.1l-p1aying.
We Meet Again" and "God Bless America."
People were singing, "Til
American doughboys were going
into action to "save the world for democracy, It and my father, like many
others of his generation throughout the country, was standing up on a
soapbox in front of the City Hall in Syracuse, New York, selling Liberty
Bonds.
In that first Liberty Loan drive which ended on June 15th, 4
million people subscribed to more than $3 billion in bonds yielding 3-1/2
- 4 per cent interest.
lotY dad bought a lot of those bonds and salle years
later he used sane of them to make the down payment on the first house
that he and Mother were able to buy, the hane that I was brought up in
in Fayetteville, New York.
Twenty-five years later, in 1942, history was repeated itself.
About that time, Frank Sinatra had the girls swooning as he sang, "All
Or Nothing At All."
James Cagney won the Academy Award for his portrayal
of George M. Cohan in "Yankee Doodle Dandy. II
(The original "Yankee
Doodle;' as you may know, was witten in 1755 by Richard Shuckburgh of
Albany, New York.)
Ladies' dresses were worn above the knees.
In 1942,
many of my buddies, including Commissioner Murphy, were going into action
to try and obtain for the world Franklin D• Roosevelt's four freedau.
As a fledgling lawyer, I cODlllenced to buy Defense Bonds, later called
War Bonds.
I was newly married and my wife and I were living on $35 a
week but, nevertheless, we were regularly buying bonds under the Pa¥roll
Savings Plan.
It wasn't until 1950 that we were able to buy our first
house and the down payment, you guessed it, came frem those Savings Bonds
which we had purchased.
Well, here we are today, 1967, 25 years later again.
Frank Sinatra
is still going strong and his daughter Nancy has a big number called
"You Only Live Twice."
The mini-skirts are with us again, and they are
getting more and more t'mini."
And our young men are again fighting O'Ier-
seas to preserve freedom in the world in a vicious and expensive war.
Since World War II, many millions of Americans have gotten into the babit
- 5of buying Savings Bonds regularly under payroll savings plans.
It would
be interesting to know how many hcmes young married couples have been
able to buy by reason of their savings in the form of Savings Bonds.
I
venture to guess tha.t many of them would not have had the wherewithal
to buy their homes had it not been for their regular habit of allowing
a portion of their incomes to be deducted under the payroll savings plans.
I could cite many examples of the direct benefits which millions of our
citizens have derived from this program.
******
I'm sure many of you are concerned with the management of the
finances of the State of New York, so I do not need to dwell at length
upon the importance of the Savings Bond and Freedom Shares program to
the management of our national finances.
Year in and year out these
programs make a significant contribution in this respect but in times
such as the present they are of special importance.
Let me review briefly the overall financial impact of the defense
of freedom. in Southeast Asia.
In fiscal year
1967 -- the year ending
this month -- the administrative budget deficit is estimated at roughly
$11 billion, compared with a deficit of only $2.3 billion for fiscal
1966, which was the lowest since 1960.
But this fiscal year, the special
cost of Viet Nmn will run a little over $20 billion in contrast to $6.1
billion in fiscal 1966.
Even though $4.7 billion of revenues will have
been raised this fiscal year through the Tax Adjustment Act of 1966,
the administrative budget deficit has widened appreciably.
- 6 As the pace of econcmic activity has temporarily slaved, a degree
of fiscal support has been welcome.
But, in the period ahead, the
econauy will be picking up speed again.
Fiscal responsibility, under
present circumstances, requires that we should obtain as much revenue
trail taxation as the econanic outlook permits, and finance the deficit
that remains in a noninflationary manner.
On the revenue side, it is
our strong conviction that the proposed surcharge on corporate and
personal income taxes will definitely be required.
deficit for fiscal
1968
Even so, the budget
may equal or even exceed the figure projected
for this current fiscal year.
This emphasizes the need for sound financing of the excess of our
expenditures over revenues.
Civilian expenditures have been held down
to essential levels, consistent with raising the standard of living
at heme while we fight to preserve a free world.
will be sought through the proposed surcharge.
Extra tax revenue,
The remaining amounts
needed to finance expenditures -- while easily manageable in terms of
the nation I s income and total savings flows -- must be raised in a lIlINler
which will not contribute to inflationary pressures or drive interest
rates sharply higher.
The Savings Bond program and the new FreedClll Share
are especially valuable in this respect.
link with millions of American savers.
They are our major financial
By rounding out our overall debt
management effort, these programs help insure that the Government's
financial. demands will continue to be financed efficiently and responaibl1.
******
- 7 Finally, the SaYings Bond and Freedom Share program is one
way
that each of us can have a special feeling of contribution toward the
efforts of our fighting men.
We all feel a sense of frustration about
this war that our men are fighting in Viet Nam.
end in Sight.
to help.
There seems to be no
We all wish that there were something that we could do
But it is very hard to find ways.
One thing we know, however,
is that the money that we invest in Savings Bonds and Freedom Shares
directly supports the efforts of these gallant fighting men of ours.
Along with the taxes we pay, it helps to provide them with food, equipment, the best weapons in the world, recreational facilities, everything
that we can possibly do to improve their efficiency, comfort and morale
as they fight under aome of the worst conditions and circumstances
imaginable.
Some years ago, we had an elderly messenger at the Treasury Department by the name of Lopez.
he woul.d like my advice.
He came to me in 'lIlY office one day and said
Ie said he had been buying Treasury bonds ever
since 1941 and some of them were more than 20 years old.
he should do with them.
He asked me what
He didn't realize that legislation had been passed
extending the Series E Bonds.
I told Lopez that they were still earning
interest but he could cash some of them in if he wanted to.
he didn't want to do that.
bonds.
"Oh," he said,
He didn't want to take any money for these
He wanted to contribute them to his government and his country
which had done so much for him.
It turned out that he had several thousand
- 8 dollars in Treasury bonds.
Imagine a messenger, at the lowest salary lnel.
in the Federal OovernJlent, being able to accumulate that amount of bond.
and wanting to contribute them to his country!
Well, we don' t want auyone to think of the Bonds and Freedoa Share.
that he is buying as a girt to Uncle Sam.
We want the purchasers in due
course to redeem them, to spend the lDOney and realize the benefit. of
them as the sound investment which they are.
But we do have high hope.
that millions of Americana, including the many thousand employees of the
state of New York, will continue to buy, and in increased amounts, Bonds
and Freedom Shares under their payroll savings plans, and will continue
to get that added satisfaction that comes tram knowing that here at lea"
is one significant contribution that they are able to make to the welfare
of their country.
I hope that in these brief remarks I may haYe been able to coDVinee
you of the desirability and importance of this program and iJlbue you with
the necessary enthusiasm to go out and do a job of pro.oting it &mong
your fellow employees.
Your personal interest and the example you set
will be the key ingredient of e successf'ul payroll savings campaign.
In
our payroll savings campaigns over the years throughout the couatry, in
companies big and smal.l, we have found that the speed of the boss 1s the
speed of the gang.
Your challenge is clear; I know you will meet it.
I wish you ever" success as you commence the New York State Employees
Treasury Bond Campaign.
TREASURY DEPARTMENT
Washington
FOR RELEASE IN AM NEWSPAPERS
MONDAY, JUNE 19, 1967
REMARKS BY THE HONORABLE JOSEPH W. BARR
UNDER SECRETARY OF THE TREASURY
AT THE
SIXTH ANNUAL INTERNATIONAL CONFERENCE
FOR
CREDIT UNION EXECUTIVES
AMERICANA HOTEL, MIAMI BEACH, FLORIDA
SUNDAY, JUNE 18, 1967,3:00 P.M.,EDT
PROBLEMS AND PERSPECTIVES IN THE FINANCING
OF HIGHER EDUCATION
I appreciate the opportunity to meet with you today. I
expect that I shall surprise you -- but I hope that in the
end I shall not disappoint you -- if I do not address my
remarks to the usual subjects that Treasury officials discuss.
Such topics as Government and private finance, tax and
monetary policy, the balance of payments, and the economic
outlook, for example, certainly are as interesting to me as they
are to you. But I believe it is imperative for the
financial community -- both public and private -- occasionally
to turn its attention to less parochial matters, particularly
when we may have something useful to contribute to the
development of ideas in other fields.
The example I should like to pursue today is the
financing of higher education. Here is a topic that both
private financial officials and Treasury officials do not, at
first blush, consider part of their direct responsibility.
Yet I would suggest that for several reasons this is a subject
that should be of concern to us.
First, we are involved with finance, and higher education
poses an important and growing financing problem in this
country. To illustrate: In 1930, total expenditures on
higher education in the United States were about $630 million.
- 2 -
In 1950 the figure had multiplied more than four times over
to about $2.7 billion. In the current year, 1967, these
expenditures are expected to reach a level of approximately
$16.8 billion, or over 25 times the 1930 level. Financing
of this magnitude should not be ignored by those ~vhose job it
is to concern themselves with the nation's financial needs.
Second, precisely because the financing of education has
received relatively little attention from the financial
community, there is a distinct possibility that we may have
fresh ideas to contribute. The talent and ingenuity that
characterize the financial institutions of this country -- and
our credit unions, which are one of the fastest-growing
segments of the financial community -- surely should be
brought to bear upon this, one of the most basic problems
facing the United States.
Finally, and most personally, the problem of college costs
is one that will affect most of us individually. With costs
continually rising, the vast majority of American families are
finding it a burden to bear the college expenses of their
sons and daughters.
I therefore propose to subject you to a few observations
an this topic. I shall first review with you a recently
enacted program that serves as a good example of the potential
benefits of a cooperative public and private effort in meeting
this problem. Then I should like to set before you some of
the broader questions that all of us will have to consider.
Let me start from first principles. I believe that
perhaps the most significant and unique characteristic of
this country is our historical commitment to equality of
opportunity. This is a nation built on the talents and
energies of its people. It has derived its unprecedented
strength from a commitment to give every young man and woman
the opportunity fully to realize his or her potential.
In the United States of 1967, this commitment requires us
to provide an increas ing number of our young people with the.
higher education that is so vital in a sophisticated economy.
At the same time, with rising college costs, higher education
is an ever-increasing financial burden to American families.
- 3 -
In this important sense, then, financial aid for higher
education is a critical national problem. It is these
circumstances that necessitated a renewed commitment to the
goal that no young American who is admitted to college shall be
deprived of an education for lack of the necessary financial
resources.
We have accepted that goal.
achieve it?
I.
The issue is, How do we
The Guaranteed Student Loan Program
In the Higher Education Act of 1965, the Congress
established a new approach to the problem of assisting students
to meet college costs. Basically the program contains no
radical departures from sound practices in other areas of
finance. Rather it involves the application of experience
gained in other areas to this vital problem. The program
works as follows:
-- A college student applies to borrow up to
$1500 per year from his local credit union, bank,
savings and loan association, or other lending
institution. The terms of the loan provide for
6 percent interest, with no repayment of principal
while the student is in school, and up to 10 years
thereafter to repay. These are the sort of terms
that students really need, and the basic concept
here is that the acquisition of a college
education is at least as sound a reason to borrow
money as the acquisition of a house, an automobile,
or a television set.
-- Although the loan and its terms may be just
what the student needs, the credit union or other
lender normally would not be able to extend such
liberal credit to a student. To make the transaction
feasible for the lender, the program provides for the
loan to be guaranteed by a state or private nonprofit student loan guarantee agency. During the current
- 4 academic year -- the first year that this program has
been in operation -- the Federal Government advanced
$17.5 million in "seed money" to these guarantee
agencies across the country, to provide the initial
reserves that they would need to back up their
guarantees. If the student should default on the
loan, the guarantee agency promptly makes good to the
lender.
For many students, even the loan terms that
I have described would not be favorable enough.
Accordingly, under this program the Federal Government
provides an interest subsidy for students from
families with income below about $20,000 (the precise
level varying with the size of the family). In
these cases, the Government pays all of the interest
'while the student is in school and one -ha 1 f of the
interest after he leaves school.
As you can see, this is a cooperative effort in which the
Federal Government, the State governments, and the private
financial community all playa part.
-- The lending community, with its vast resources,
supplies the actual funds.
-- The state governments, with their familarity
with local conditions, administer the guarantee
arrangements.
-- The Federal Government, with the best credit
rating in the world, stands ready to supply the
ultimate backing and subsidizes part of tre
borrowing costs for lower and middle income
families.
This is an example of what President Johnson refers to
as "creative federalism."
Any new program requires a little time before it can be
functioning smoothly -- and particularly where a cooperative
effort such as this is involved. To make sure that this loan
program would progress satisfactorily, the President directed
liS a few months ~o to study its operations and recommend
any appropriate improvements. I was assigned the
responsibility for coordinating the inter-agency study.
- 5 If I say so myself, we did a fairly diligent piece of
work. We reviewed all of the data available. We consulted
not only with experts within the Government, but also with
representatives of the credit unions, the banks, the savings
and loan associations, the colleges, and the state and private
guarantee agencies, among others.
Our basic conclusion was that the program was we11conceived and had gotten off to a promising start, with an
expected total by June 30, 1967 of $400 million in loans to
480,000 students.
There were, however, some problems that required
resolution. These problems did not lie in the area of student
demand for loans. There seems little doubt that, as the
program becomes known to students, they are finding it
sufficiently attractive and useful.
The problems s=em to relate to the other two parties to
the arrangement -- the lender and the guarantor.
With a fixed 6 percent interest rate, it appeared that
the program was a loss operation for a great many lenders.
The combination of high interest rates and tight money last
year, plus the administrative costs involved in this program,
discouraged many lenders.
The long-term nature of these loans also presents a
potential problem. Smaller lenders, such as some of the credit
unions, and in the long run larger lenders as well, could face
liquidity problems if too much of their funds became tied up
in these loans.
Guarantee capacity generally has been adequate up to
now, but we could see clearly that it would not continue to be
adequate in a number of states for the coming year. The
reserves of some of the state and private agencies had
consisted solely of the Federal "seed money" advances that
I have mentioned. With these funds exhausted, the states
would have to supplement the guarantee reserves, or the
Federal Government would have to provide additional support
in some fashion.
- 6 -
We are convinced that these problems can be dealt with
successfully, and we are moving to deal with them. Here
are the steps that are in progress.
1. Since we cannot expect the private financial
community to support a major loan program on a loss
basis, we have proposed an amendment to the law that
would authorize the Federal Government to pay loan
placement and conversion fees in amounts up to $35.
The amount of the fees would be adjusted from time
to time, to take account of varying costs of money
and administrative costs. Basically, however, the
fee authority would assure lenders that they should
not have to take a loss on these loans.
2. The paperwork involved in the program also
can and should be reduced to cut costs" We are
substantially simplifying the application forms and
procedures, and we have proposed a statutory
amendment that would provide, at the lenders option,
a simplified method of collecting the interest
subsidies due from the Federal Government. Along
the same lines, we have proposed to reduce
administrative expenses by combining the two
separate loan programs for vocational and college
students.
3. The interest rate and credit situation
generally in the economy lave eased significantly.
Although of course, we have many other reasons
to encourage that trend, we are hopeful that it
will facilitate increased lender participation in
this student loan program.
4. These changes should encourage
substantially increased participation in the
program by all types of lending institutions.
This will, we expect, spread the student loan
business around quite a bit. However, to assist
smaller lenders and in anticipation of a
substantially increased volume of loans, we are
exploring the feasibility of establishing
arrangements for pooling lending resources, and
the possibility of creating a secondary market
in these education loans. We intend to find out,
for example, whether some of the insurance companies
might provide a secondary market for student loans
made bv credit unions.
- 7 5. On the guarantee side, we plan to move
administratively, with maximum cooperation with the
states, to assure the guarantee capacity that will
be needed. A number of states are taking care of
their own needs in this area most admirably. We
have been in touch with each of the Governors, and
have been pleased with the wide-spread support for
this program.
But where necessary, we can extend
direct Federal guarantees -- preferably to be
administered by the existing state loan guarantee
agencies -- to make certain that students are
not denied loans for lack of guarantees to back
them up.
As you can see, this involves some fairly technical
matters. There is, however, a fairly simple observation
that I hope you will bear in mind: A cooperative
effort of this type obviously cannot succeed without full
cooperation. The colleges and the students are ready and
willing. The state and private guarantee agencies are
generally performing quite admirably. And the Federal
Government is doing its very best to play its proper
role in the endeavor. The program cannot function,
however, without the support of the private lending
community.
I do not mean to imply that the support of our private
financial institutions has been lacking. Despite some
initial problems, the loan program got off to a promis ing
start.
I am also very much a~vare of the limitations that
arose from the extraordinary credit conditions that
prevailed last year.
But now that the problems are
being eliminated, I hope that f"ve can look forward to
substantially increased support from all quarters.
I particularly hope that this program will commend itself
to the nation's credit unions. We have appreciated eUNA's
support, advice, and encouragement in developing this program
and resolving some of the problems it has presented. We
know that you have historically been committed to serving
the needs of your members -- and that by doing so, you have
become one of the fastest-gror.,ving elements on the
financial scene.
I believe that this program provides an
opportunity for increased service to your members in an area
in which they are, and increasingly will be, in need of
assistance.
I am confident that you will rise to that task.
- 8 -
II.
Some Broader Perspectives
I have taken your time to review the status of the
guaranteed loan program because it is the program that
is currently on the books, and because it illustrates
several of the more basis issues in this area.
As I have mentioned, this program attempts to
proceed through the extension of assistance directly
to students. And it attempts to do this through a
public and private, state and Federal effort.
I believe
that there is wide-spread agreement that this program
is a sensible and practical approach to the problem.
The assumptions upon which the program proceeds,
however, have implications that warrant examination.
Much has been said about the fantastic increase
in recent years in the size of our college population;
but this has been only the beginning.
In 1965,
full-time enrollment in our colleges stood at 5.5
million students.
By 1975, we expect the total to
reach nearly 9 million students.
I think we must assume that the need for financing
higher education in this country is going to grow at least
as rapidly as college enrollmen~.
I.think we must also
accept the fact that this need lS gOlng to be met, one way
or another.
We are then discussing just what is the best way of
moving financial resources to this particular.area of need.
This is the subject that deserves some attentlon from all of us.
- 9 -
The loan program aims at assisting students -- not
colleges -- to carry the costs of higher education. In the long
run, is this the right road to travel? In our elementary and
secondary schools, we basically assume that the cost of
education should be borne by the tax-paying public at large,
and the education should be provided free of cost to the student.
Our system of higher education has been and still is something
of a hybrid in this respect, since we have public universities
at which some of the expenses are covered by tuition fees; and
private colleges which depend largely on tuition and alumni
support for their financing, but for which Government assistance
has become increasingly significant in recent years.
There are some who believe that we should move in the
direction of extending the public education concept to virtually
all of our colleges and universities. This view is grounded
in large part upon principle, and upon the contribution that
education makes to the national well-being. Although the
primary benefits of higher education accrue to the student, there
also are important benefits to the economy and the Nation as a
whole. The public education concept also finds support in the
concern that many feel about the ability of young people to
assume heavy debt responsibility, and the social and economic
effects of such debts, in terms of other uses of credit and the
formation of families, for example.
At the same time, it can be argued that the logical basis
for tax-supported public education must be the near-universal
availability and use of the educational system. The overwhelming majority of our young people do go to elementary and
secondary schools, but a great many do not go on to college.
It
may be unfair to tax them and their families to support the
expansion of public higher education_
- 10 -
It also has been pointed out that the tax-support arrangement is inefficient and inequitable in the sense that it
requires all of us to pay for the college education of students
who can well afford to pay their own way. This viewpoint
obviously has not been allowed to stand in the way of public
elementary and secondary education, but some feel that it has
greater force in the context of higher education.
As you can see, these financing questions bring us unavoidably to some of the most basic issues in the field of higher
education. Indeed, the choice between putting the burden upon
the student -- in effect, a user method of financing -- and
putting the burden upon the tax-payers generally, is an issue with
vast social, economic, and political implications, and one to
which there is no easy answer.
The guaranteed loan program proceeds on the assumption that
the major resources to be utilized in financing the expanded
needs of higher education will be at least in this instance,
supplied by the private financial community. In the context of
this particular program, this is, I believe, quite clearly a
sensible and constructive approach. It does lead us, however, to
more fundamental questions as to the method of moving resources
in this area. I, for one, believe that methods can be devised
for increasing the involvement of the private financial sector.
This, of course, depends upon the ingenuity of the decisionmakers as well as the willingness of the financial institutions of
this country to explore new financing possibilities. The
obvious alternative is for Government -- Federal, state, and
local -- to tax the resources out of the private sector and direct
them where they are needed, either in assistance to students or
assistance to colleges.
Finally, the student loan program pursues policies of
"creative federalism." It relies upon a division of responsibility
between the states and the Federal Government. This is a basic
approach which President Johnson has committed himself to follow,
whenever possible
And in this instance, it appears that it
can and will do the job in an effective manner,
The broader implications here again are obvious. As I
have indicated, the needs of higher education in this country ~
going to be met. I believe that much of the responsibility should
be assumed by state and local government, but whether this can
and will be done depends upon the interest and energy of state,
local, and community leaders -- such as yourselves -- in grasping
the problems and devising methods to cope with them. We must
- 11 recognize that, whether we like it or not, if the job is not
done at the state and local level, there will be irresistible
pressure to try to do it from Washington.
III.
Conclusion
You no doubt have noticed that I am much better at posing
tough questions than at providing easy answers.
That is the
nature of this problem.
I have tried to put two tasks before you.
In reverse order,
they are, first, to apply your own talent and experience to some
of these vital problems in the area of financing higher education;
and second, to give support, if you can, to one immediate effort
that is underway to meet these needs -- the guaranteed student
loan program.
Ths history of this Nation proves again and again how
much can be accomplished by the effort of our people.
I hope
that you share with me the conviction that no endeavor is more
worthy of our effort than the education of our children.
000
TREASURY DEPARTMENT
Washington
FOR P.M. RELEASE
TUESDAY, JUNE 20, 1967
REMARKS OF THE HONORABLE STANLEY S. SURREY
ASSISTANT SECRETARY OF THE TREASURY
BEFORE THE 1967 ANNUAL MEETING
OF THE
CALIFORNIA SOCIETY CERTIFIED PUBLIC ACCOUNTANTS
LAKE TAHOE, JUNE 20, 1967, 9:00 A.M., PDT
(Delivered by Melvin I. White,
Deputy Assistant Secretary for Tax Policy)
CURRENT TAX DEVELOPMENTS
The subject I have chosen for today -- Current Tax
Developments -- permits a choice of many topics, too many
for a short talk if they are to be examined in detail. I
will therefore sketch in somewhat summary fashion a number
of developments, so that at least a goodly portion of the
current tax panorama may be observed.
Those who have followed developments in our Federal
tax system, know that the years since 1961 have been crowded
years. New legislative measures followed hard on the heels
of completed acts, and the revenue Committees of the Congress
have been operating at rates well above what those in
industrial production would refer to as "preferred rates."
The range of measures and provisions considered and the policies
acted upon have served wide and varied purposes -- tax
provisions to spur economic growth, tax reductions for the same
purpose, tax reform, new tax devices to aid in meeting our
balance of payments problems, reduction and recasting of the
excise tax structure, increasing stress on the current tax
payment system and tax payment adjustments to impose fiscal
restraint. Legislative measures have been complemented by
important administrative steps similarly covering a wide area
such as depreciation reform, and the establishment of an
administrative framework for international tax matters.
F-9S2
- 2 -
This vast tax kaleidoscope is in large part explained by
the varying economic conditions of our times -- a sluggish rate
of growth just a little more than six years ago changed by
fiscal measures to a strong and ever-lengthening expansion that
now, because of the impact of Vietnam military expenditure,
requires careful handling if inflationary pressures are to be
kept from gaining an upper hand.
Fiscal responsibility means differing things in differing
circumstances.
To gain a proper perspective on the relationship between
tax policy and our economic situation, it is necessary, I
think, to note some little known facts:
In the past five years, we have had individual
and corporate income tax cuts averaging 20 percent.
In 1962 with the legislative enactment of the
investment tax credit and the liberalization of
depreciation, new and powerful incentives for
investment were provided. In 1965, over 200
separate items had excise taxes removed from them.
All told, the tax reductions effected in that period
will save taxpayers nearly $23 billion a year at
fiscal 1968 income levels.
Largely as a result of these tax reductions,
the U. S. today enjoys the lowest tax burden of any
major industrial nation in the world. Computations
made by the Organization for Economic Cooperation
and Development, representing the industrialized
nations, show that dS a proportion of total national
production the citizens of France are paying 38.5
percent in taxes. The Germans are paying 34.4 percent.
In Italy the figure is 29.6 percent. In Great Britain
it is 28.6 percent. And, finally, lowest on the list,
the U. S. pays 27.3 percent. And this is for taxes
at all levels of government -- Federal, state and local.
I feel, in brief, that our Federal tax policy can be used
to achieve what all of us want: continued prosperity, price
stability, and growth for the United States. I share the
views of the distinguished Chairman of the House Ways and Means
Committee, the Honorable Wilbur Mills, who recently defined the
problem very ably in a speech, from which I quote:
- 3 " • • • surely we can all agree that the
primary or overriding role of the Federal
tax system is to raise in a fair and
equitable manner the necessary revenues
without which government cannot operate.
At the same time there also is a
widening agreement that with moderation
our tax system can also be used to provide
economic stability and growth for the
private economy."
With this background, then, I want to now focus on current
tax developments. To do so, however, I think it is necessary
to look very briefly at where the economy was two years ago,
in the first half of 1965. Despite earlier gains in output and
employment, our resources both of men and machines were not
yet fully utilized. The unemployment rate was slowly declining,
capacity of manufacturing industries was being utilized at an
average rate of nearly 90 percent -- a substantial improvement
over the 79 percent average rate of 1961, but still below the
rates preferred by management. There was general balance
between inventories and production, and no significant bottlenecks
of capacity or labor supply were apparent. Wholesale industrial
prices were essentially stable -- at the level of 5 years
earlier -- although farm prices had begun to move up, and unit
labor costs in manufacturing were still no higher than in 1958.
Expansionary policies were still needed to move the
economy toward full employment, the President proposed a major
elimination of the selective excise taxes, the first stage of
which became effective in June. This was a much needed reform
of our tax structure. A retroactive liberalization of social
security benefits was also enacted at midyear, with the
corresponding payroll tax increase deferred until January 1966.
Then, the economic environment suddenly changed, after
midyear, largely as the result of the step-up of military
activity in Vietnam. Government spending began to rise more
rapidly than the budget had foreseen. And private investment in
new productive facilities and inventories received an unexpected
stimulus from the new economic and psychological climate. As
a result, over the next three quarters, production expanded at a
rate which exceeded prudent speed limits. GNP in constant
prices grew at a phenomenal annual rate in excess of 7 percent,
and industrial production at an annual rate of nearly 10 percent.
Unemployment quickly melted from about 4~ percent at midyear to
- 4 3.7 percent in February 1966.
The overly rapid pace of expansion, combined with measures
taken to restrict demand, drove interest rates last summer to
their highest levels in four decades. The resulting redirection
of the flow of funds created a near-starvation in the mortgage
market and a dramatic decline in homebuilding and commercial
construction. At the same time, business spending on plant and
equipment continued to move ahead at a clearly unsustainable
rate, promising problems for the future.
In 1966, this surge was brought under control by a
combination of monetary and fiscal measures. Tax changes proposed
by the President in January last year were quickly enacted.
Together with the payroll tax increase deferred from the
previous year and a tight control on non-defense expenditures,
the growth of GNP slowed noticeably after the first quarter; yet
inflationary pressures showed no immediate sign of moderating.
The rapid climb of plant and equipment investment continued
without let up. The President, on September 8, proposed
suspension of the investment credit and accelerated depreciation
on new buildings, and announced a $3 billion hold-back of
authorized or appropriated Federal non-defense spending.
When the Congress and the President acted to suspend the
investment credit, they made a public commitment that as soon as
it would be appropriate in the economic environment to lift the
suspension, they would do so. Toward the end of the first
quarter of 1967 9 the economic evidence available made it clear
that the special conditions giving rise to the suspension
legislation no longer exir;ted.
President Johnson, on March 9,
recommended lifting the suspension and the Congress acted upon
that recommendation. 1be President signed the restoration measure
last week.
While the investment tax credit suspension and restoration
were not strictly revenue measures, the proposal in the January
Budget for a six percent surcharge on individual and corporate
tax liabilities, on the other hand, is an overall, across-the-board
fiscal measure.
It is designed to cope with the budgetary and
economic situation anticipated for the latter part of 1967 and
throughout 1968, assuming the continuation of hostilities on
their current scale in Southeast Asia. We need to pay for the
increased cost of war projected for the next fiscal year. We
will certainly not want to risk a resumption of the monetary
- 5 strains of tight money and a return to higher interest rates at
that time, and this will require that the Government's own demands
on the credit markets be kept in bounds. The surcharge will
help achieve these objectives.
Let there be no misapprehension about the nature of our
needs, or about the impact of Vietnam on our economy and our
budget. Let me cite some figures from the record.
The special cost in Fiscal Year 1966 of
Vietnam was $6.1 billion. Without this
cost, and without the $1.2 billion of
extra revenue from the Tax Adjustment Act
of 1966, which was enacted because of
Vietnam, the administrative budget would
have been in surplus by $2.6 billion instead
of in deficit by $2.3 billion. And the
actual deficit, incidentally, was the
smallest since Fiscal Year 1960.
The special cost in Fiscal Year 1967 of
Vietnam will be a little over $20 billion.
Eliminating that cost along with the $4.6
billion of revenues from tht' Tax Adjustment
Act of 1966, there would be a budget
surplus this year of some $5 billion -instead of the deficit of roughly $11 billion
that now appears to be in the making.
For Fiscal Year 1968, it was estimated last
January that the special cost of Vietnam
would be $22.4 billion. Without that
Vietnam cost, and also with the added tax
measure proposed in January, the 1968 budget
would yield a surplus of $8.8 billion rather
than a deficit of $8.1 billion.
We would now place Vietnam costs somewhat higher, and total receipts somewhat lower.
But the point still stands that, without
Vietnam and the special tax measures proposed
in January we would be looking at a
substantial budget surplus rather than a
sizable deficit.
- 6 Let me quote from Secretary Fowler's statement before
the House Ways and Means Committee last month, when he
testified on the public debt limit:
"Clearly, but for Vietnam, we would be
facing potential Federal surpluses, and
trying to decide how to employ those
surpluses among tax reduction, debt
reduction, and expenditures for needed
domestic programs to raise the quality
of life in America. But reality would
have it otherwise and instead of the welcome
task of distributing fiscal dividends we
have the difficult, yet necessary, task
of financing a war that, however distant
geographically, is very close in its meaning
to our lives and ideals."
I would now like to shift gears somewhat, and talk about
the need for and the prospects of tax reform in the near future.
In his Economic Message to the Congress for this year, the
President hailed the American tax system as one in which we can
take pride and one which, in most of its elements, is unsurpassed
by any other tax system in the world today.
He also made it
clear that the system can be -- and should be -- improved. He
stated that this year he would send to the Congress a Message on
Tax Reform.
It seems clear that our tax laws, as they stand today,
impose burdens on some of our citizens which are clearly unfair.
In other cases, they grant special preferences to individuals
and groups which are just as clearly inequitable.
The 1962 and 1964 Acts eliminated a great many of these
inequities, but not all that the President and the Treasury
recommended.
The Act of 1964 also represented a commendable
switch from the old pattern of opening even more loopholes in
order to combat top-heavy rates on taxable incomes.
It set the
desirable design of the future -- the provision of necessary
revenues at the lowest possible tax rates applied to a fair tax
base.
The Act of 1964, however, was not our last major tax reform
- 7 In 1965, the repeal of the highly discriminatory and unfair
system of selective excise taxes which had developed as
emergency measures in World War II and the Korean War and even
earlier, gave a substantial added measure of equity and
simplicity to our tax system. And through the Tax Adjustment
Act of 1966 and the separate administrative measures taken last
year and this year to speed collections, the system of
collecting income taxes on a pay-as-you-go current basis was
considerably strengthened and the tax system was greatly improved
by the action.
For us to get to the point at which such beneficial actions
as these can be taken, much hard work must be done. Tax reform
requires a vast amount of preparatory work, both technical and
in terms of education of the American people. As Chairman Mills
has said, "tax reform cannot be achieved overnight." Much has
been done in recent years, but much also remains to be done.
The whole realm of estate and gift taxation has not had
any ma)or legislative review or overhaul since 1942. Rate
schedules and basic exemptions in the estate and gift tax laws
have thus remained unchanged for 25 years.
Complexities and
inequities in this important area have crept in through a long
series of piecemeal changes by statutory amendments and court
decisions. The present structure places a high premium on the
form and timing of the transfer of property. A comprehensive
reexamination of these provisions of the law to reduce the
complexities of estate planning and correct rules which work
inequities or induce taxpayers to dispose of their property in
ways which they would not otherwise choose, is long overdue.
Without in any way getting into a discussion of what the
President might recommend, but solely to point up some of the
thorny problems inherent in tax reform, let me cite some
examples of inequities and economic distortions which arise
from provisions of our tax laws which, however justified at the
time of their enactment, have become subject to certain abuses.
Very often, of course, there are good business reasons
for the creation of affiliated corporate groups. But the good
reason for an affiliated group does not make sense as a good
reason for giving that group multiple corporate tax ememptions.
A single enterprise is involved.
If it is divided into sub-groups
which are called "subsidiaries," rather than divided into
branches or divisions of the business, that does not rationally
entitle the enterprise to be the recipient of a host of surtax
exemptions.
- 8 Similarly, changing patterns have occurred with respect
to tax exempt industrial development bonds, which are rapidly
growing in numbers and amounts. These bonds are sold, in
effect, on the credit of a private corporation which has bought
or leased a facility from the issuing local agency.
It is interesting to note that, a few weeks ago, North
Carolina, a state which recently enacted legislation authorizing
industrial development bond financing, at the same time passed
a resolution asking the President and the Congress to amend
the tax laws to make the interest on such bonds subject to
Federal income tax.
The legislature of that state in its
resolution, said:
!l WHEREAS,
the General Assembly of the State
of North Carolina has enacted legislation whereby
the State of North Carolina joins 35 other states
in the authorization of the issuance of industrial
revenue bonds; and
"WHEREAS, many members of the General Assembly,
as well as public officials in North Carolina,
realizing that North Carolina cannot stand alone,
endorsed the enactment of such legislation, but did
so reluctantly as a defensive measure and with reservations; and
:'WHEREAS, the use of this type of inducement
has lost practically all positive effectiveness since
a large majority of the states now offer these
industrial revenue bonds resulting in it not being
a competitive tool:
Now, therefore, be it resolved by the House
of Representatives, the Senate concurring:
"That the General Assembly does hereby
memorialize President Lyndon B. Johnson and the
49 other states of the United States to request the
Congress of the United States by appropriate
legislation, to make the interest received by the
owners of so-called industrial revenue bonds
hereafter issued subject to all applicable federal
income tax law s. "
- 9 Cities and states are beginning to realize that there is
nothing to hold back the flood of these bonds. What was $200
million in new issues in 1965 and may be $1 billion thif
year, couhlbe $2 or $3 billion in a few years as corporations
exploit this device more and more, in effect converting their
regular bonds into tax exempt bonds. As a consequence of this
development, the yields that will have to be paid by state and
local governments on their regular tax exempt bonds may be
seriously affected.
In another area, the Treasury Department has recently
recommended legislative action upon problems in the exempt
organization field.
Defects in the present tax on the unrelated business income
of private foundations make it possible for many foundations to
arrange their business enterprises so as largely or entirely to
immunize the profits from tax.
Even if the present unrelated
business income tax contained no avenues of avoidance, the
commercial enterprises conducted or controlled by private
foundations would still possess significant competitive advantages
over those owned by taxable entities.
Experience with foundation-owned businesses has shown
that they are frequently free from demands for current distribution
of earnings -- often an important competitive advantage.
Because of these competitive problems, and other unfortunate
abuses attendant on foundation involvement in business, the
Treasury Department has recommended that Congress adopt
legislation requiring private foundations to dispose of
substantial business interests which are unrelated to exempt
activities.
In April 1965, the Supreme Court approved capital gains
treatment for persons who sold a business to a tax-exempt
organization under an arrangement designed both to immunize the
business profits from tax and to provide payment of the purchase
price only from those profits. The decision, known as Commissioner
V. Clay B. Brown, provides a powerful incentive for the owners
of businesses and other classes of productive property to sell
to exempt organizations, rather than taxable purchasers, because
the tax exemption of the proceeas oeing used to finance the
purchase price makes it possible for the exempt entity to pay a
price substantially higher than anyone else can afford. This
tax incentive places taxpaying business enterprises at a
substantial competitive disadvantage in acquiring other businesses.
- 10 To deal with this problem and related difficulties, legislative
proposals are being developed which would restore competitive
parity in this area.
Now, I repeat:
let no one take this recital of these
particular examples as an outline of the President's forthcoming tax reform proposals, upon which much preparatory work
has been done and on which there is still work in progress.
I
cite them only as evidence of the fact that tax reform, a
complicated matter, has many facets which can be explored.
One area of reform currently being explored by the Congress
concerns the President's recommendations for revision of the income
tax treatment of the elderly. The existing income tax benefits
extended to the elderly cost about $2.3 billion annually in
tax revenues.
The Administration's proposals for revision of
these tax rules would not alter this revenue cost. The proposals
aim only to redirect this relief, in a uniform manner, to
benefit those elderly people who are most in need of it, and at
the same time to simplify the structure of the tax rules applicable
to the elderly.
For some reason, these proposals are surrounded
by misunderstanding.
Some critics discuss in detail the suggested elimination
of the present $600 added exemption and the retirement income
credit. But they do not mention the substitution, under the
proposals, of a simple blanket special exemption of $2,300 for
a single person and $4,000 for a married couple where both are
over age 65. Other critics state that Social Security benefits
will be subject to tax, and add that this is unfair because the
beneficiaries will have made payment of Social Security taxes
before retirement.
But they do not mention that the cost of
those taxes will be taken into account through the blanket
exemption, which in no event would be reduced below one-third
of the benefits included in income. Nor do the critics point
out that about two-thirds of the elderly people who are now
subject to income tax will receive a tax reduction under the proposals -- almost all married couples with incomes below $11,600
and single persons with incomes below $5,800.
The tax liabilities for a relatively small group of older
citizens -- less than 6 percent of the total -- will be increased
and thereby brought more in line with the tax liabilities of
those taxpayers under age 65 with similar amounts of income.
- 11 -
To keep the matter in perspective, the proposed special
exemption $2,300 for a single person and $4,000 for a married
couple) taKes fully into account the present levels of Social
Security benefits. But this does not mean that all recipients
of future Social Security benefit increases will automatically
be taxed. The regular income tax exemptions and deductions,
which are allowable in addition to the special exemption, will,
together with the special exemption, shelter from income tax
payment future Social Security benefit increases for all who
have only this source of funds and, indeed, for most other
recipients.
To illustrate further, the maximum Social Security
benefit payable to a married couple under present law is about
$2,500 per year. This would rise to about $2,700 under the
President's Social Security proposals. But this is not even
half the amount of income necessary before any income tax would
be due under the proposed changes, since the couple would not owe
tax until their income exceeded $5,800 a year. In other words,
for a married couple living only on Social Security benefits,
the maximum benefit level would have to more than double before
the income tax would become a factor. If they are now
receiving average Social Security benefits (about $1,500 per
year), their benefits would have to more than triple before they
would owe any tax.
A good deal of the misunderstanding has been clarified
by Senator Dirksen in a recent statement. The Senator had
previously introduced a resolution expressing the sense of the
Senate that it was wrong for the Congress to take any step
that would itwolve a double tax on that part of an individual's
benefits which reprpsent a return of his own contributions
made out of wages that were fully taxed.
Only two weeks ago, the Senator, in a s ta tement on the floor
asked his colleagues to defer action on his earlier resolution
and give careful consideration to the President's proposalo He
said
that the plan as presented to the Congress by the
Treasury, (and I quote)"
there will be no double tax
bec.ause their plan provides an exclusion for even the most
wealthy that fully offsets the portion of his benefits which
represents a return of his own social security taxes. They
{the Treasury/ state that this was done so as specific~lly to
prevent any double taxation." (end quote). He told hloS Senate
0
••
- 12 colleagues that (and I quote) "counting social security and
railroad retirement benefits as taxable income is but one part
of a more comprehensive plan that applies the law more uniformly
and . • . more equitably."
(end quote).
The Senator said that
(and I quote again) " • • . the plan will really mean tax
reductions for practically all lower and middle income taxpaying
elderly. Thus, he went on, " . . . the overwhelming number of
social security recipients -- all but about 700,000 of 14 million
will either be unaffected by the proposal or will actually
realize a tax reduction."
(end quote).
We in the Treasury have also been analyzing the various
reactions and studying possible modification~ to meet some
of the problems that have been raised. One particular area of
concern involves persons receiving railroad retirement pensions.
Since the level of these pensions is considerably higher than
that of social security benefits, there are some railroad
retirement recipients who would realize a tax increase under
the Treasury proposal, even though their total income is in the
range in which reductions would be available to the elderly
generally. We are studying ways in which to modify our proposal
so as to leave these individuals in the same tax position with
respect to their rai1raod retirement benefits as they are today.
We are also looking at the question of whether it might be
appropriate to make other changes relating primarily to the
treatment of single taxpayers.
At the same time we are looking at employee pension
benefits and trying to eliminate flaws in the private pension
system. While no decision has been made on legislation,
proposals developed by the Inter-Agency Staff Committee on
Pension Funds are now under review with the Government. The
reforms deal with two major aspects: vesting -- that is,
fixing the right of an employee to his pension even if he
changes jobs, and financial security -- the assurance for the
employee that the money will be there when the time comes to
collect his pension.
On the question of vesting, the basic staff proposal
considers it proper that an employee be granted vested rights
after ten years of service with an employer.
In order to give recognition to the problems of employers
in adjusting to new vesting standards, liberal transitional
- 13 features would be provided, so that employers could accumulate
funds gradually to meet the maximum increase in plan
costs. As to providing sufficient funds to guarantee
payment of accrued benefits, the staff proposal would give
all plans 25 years to reach a position at which their assets
equaled their vested liabilities. A common fund would be
established to guarantee plan benefits in case of termination
of the plan during the interim period, while the fund is
building towards its full goal.
In addition to reform legislation for the elderly, there
are a number of other measures pending before the Congress.
One of the most important is H.R. 6056, the so-called
"Divorced Parents Bill." The bill provides new rules for
determining which of two divorced or legally separated parents
are entitled to the $600 exemption for each of their children.
This question is one of the most difficult administrative
problems of the Internal Revenue Service, because of the
frequency with which it arises and the difficulty of making
a correct determination under present law. The amount of
revenue involved in most cases is hardly commensurate with
the administrative burdens involved in bringing them to a
conclusion. However, the amounts are frequently large enough
for individual taxpayers to engage in prolonged controversies
with the IRS and with their former spouses. The bill
resolves these problems by providing clear, easily understood
rules which enable divorced or separated parents to
determine which of them is entitled to claim the dependency
exemption.
From this recital of the uses of tax policy, it is
apparent that the uses are many and varied. Perhaps to
some they may even appear too ambitious or wide-ranging
in what is sought to be accomplished. But let me hasten
to dssure you that they are indeed modest alongside the
claims that some have made for the uses of taxes and tax
policy.
There are those who urge tax policy as the solution for
almost all of our social problems. If you object to polluted
air or polluted water, then a tax incentive will clean it
right up.
If a college education appears too costly to a
family, then a tax credit will open the college doors. If
our business firms are not training enough workers, then a
tax incentive will set them to improving worker skills. If
- 14 private enterprise and city officials will not eradicate our
slums, then a tax incentive will remove this urban blight.
If businesses won't locate in depressed areas, than a tax
incentive will show them the way.
If electric companies
will not place their transmission lines underground, then
a tax incentive will turn the soil.
If urban transportation
is too slow and too antiquated, then a tax incentive will
make it fast and attractive.
Indeed, all you need to do to
see what is wrong with America is to read the tax bills in
Congress.
There are powerful arguments holding that the
structure of taxation should be basically determined by
considerations relating to an equitable sharing of the real
costs of achieving public purposes. There are situations
in which tax incentives can be used effectively and equitably
to affect the private allocation and economic resources in
desirable ways. However, there are many more situations
in which a different approach is preferable.
Rather than decide the question in the abstract, we must
in fact look at each problem on its merits.
But in doing so
we should really consider all the alternatives. We should
not make up our minds to use the tax route simply because we
pronounce the particular objective worthwhile. The
question has to be: which of the whole range of possible
methods -- incentives (or disincentives), direct regulation,
direct government provision of a service, explicit subsidy,
or whatever -- is most simple, efficient, and equitable, and
best permits frequent re-evaluation in the light of changing
circumstances, changing ~echnology, and changing social
values.
When we compare the full range of alternatives, I
submit that we will find the tax incentive route -- although
superficially attractive -- rarely standing up very well.
One of the major appeals of the tax incentive route is
that it hides the budgetary cost and, of course, this appeal is
strong from the standpoint of the private interests affected.
But this should not deter us from the rational calculations and
analyses which must be made to weigh the benefits of
alternative expenditure programs. The sheer weight of the
- 15 various demands being placed upon Government makes it urgent we
obtain the utmost efficiency in the use of public funds, and that
we fully recognize the amount of funds allocated to each
demand. That efficiency and recognition cannot be obtained
by hiding the costs in the intricacies of our tax system.
Nor could that tax system survive the cumulative weakening
of its strength and its fairness that would be involved in
this use of tax incentives.
So far my remarks have been concerned with domestic
issues which cover a wide area.
I do not, however,
mean to place international tax matters in the position
of a stepchild.
Indeed, they occupy an important
substantive place in the scheme of tax matters and I can
assure you that many members of the Tr~asury staffs are
engaged in considering tax proposals a Efecting the
international relationships of thE: United Stai:es.
In one very important area of international taxation, we
expect hearings on the ne",! tax treaty with Bri:l,zl.l to be held
this summer, and we are continuing tax convention discussions
vlith other less developed countries, such as Jamaica,
Korea, Tahvan and Singapore. Negotiations with other
Latin American countries, using the Brazil treaty with its
investment credit provision as a guide, are contemplated.
In the case of industrialized countries, we have concluded
protocols or new treaties which bring up to date our treaties
with most of the countries of Western Europe and, at the
present time, v.le are continuing our discussions with Portugal
and Spain.
We are well on the way to completing our review of the
taxpayer comments received with regard to the proposed
regulations under sections 482 and 861 of the I.R. Code.
In this regard the American Institute of Certified Public
Accountants furnished a thoughtful and useful set of
comments.
It is not surprising that the accounting profession
should be a leader in this area since the proposed regulations
are fundamentally an articulation of accounting principles.
Accounting practices and standards for the
allocation of income between various taxing jurisdictions
will continue to be a pressing problem so long as international
business exists. The accounting profession will have to be
a leader in setting standards for the allocation of expenses
and providing intercompany pricing rules which will satisfy
- 16 the diverse needs of management and the tax authorities.
However, the drafting of regulations is not the only
lctivity currently being carried on in this area. We recognize
~hat businesses must be flexible and have attempted to provide
vithin the framework of the regulations the necessary degree
)f flexibility. Moreover, we are equally aware of the practical
lspects involved in the application of these rules.
For this
:eason, the Internal Revenue Service has emphasized the
'spirit of reasonableness" to its personnel in order that a fair and
vorkable system \vill result. The IRS is currently engaged in an
illtensive educational program for its field people. Seminars
lave been held for people throughout the Service, including
~xamining officers, for the purpose of explaining to them the
)olicy and thinking behind the proposed regulations and the
)rogram of administration of international matters in general.
\ primary aim of this activity is to impart to all the
;ervice personnel the special importance of a spirit of
~easonableness in the administration ,)f section 482.
In the area of our balance of payments, the- President has
)roposed that the interest equalization tax, dup to expire at
:he end of July, be ex tended for an add itional t~,1Co years. He
las also proposed important modifications. A Bill to accomplish
:he extension and to effect modifications passed the House
1arch 15,1967, and is expected to be considered by the Senate
~inance Committee shortly.
As passed by the House, the Bill
)ermits the President to vary the rates of tax between the
~ates currently in the statute (from 1.05 percent to 15
)ercent on debt obligations and 15 percent on stock) and 1~
:imes such rates, making the maximum rate applicable to the
lcquisition of stock and long-term bonds 22~ percent.
In
)rder to prevent accelerated outflows of capital in anticipation
)f a possible increase in rates, the House Bill would make
:he maximum rates effective during the period beginning
ranuary 26, 1967, and until thirty days after the enactment
)f the Bill except where there was a pre-existing firm
:ommitment.
I have discussed with you today some of the different
lets of priorities and different approaches and different
!mphases of tax policy.
- 17 If there is one thing to be learned about the u. s.
tax system, it is that there is no such thing as a tax
policy for all seasons. Conditions and needs change. The
needs for improvement are endless -- and the response must
be continuous over many areas. If that wonderful productive
machine -- the American economy -- is to maintain its full
potential, the task of alert surveillance over our tax
system~ the responsibility of not only your Government but
of every responsible group, such as your own, and every
thoughtful citizen.
000
TREASURY DEPARTMENT
RELEA.:3E 6 :30 P .N.,
lay, June 19, 1967.
l\.tSULTS UF TRE;'.sURY I S \-.JEEKLY BILL OFFERING
The Treasury Department announced that the tenders for two series of Treasury
one series to be an additional issue of the bills dated x-larch 23, 1967, and the
!r series to be dated June 22, 1967, which were offered on June 14, 1967, were
.ed at the Federal Reserve Banks today. Tenders were invited for $1,300,000,000,
,hereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 182-day
.5.
The details of the two series are as follows:
_5,
E OF ACCEPTl!;D
ETITlVE BIDS:
High
Low
Average
91-day Treasury bills
maturigg SeEtember 213 1261
Approxo Equivo
Price
Annual Rate
:
99.105
3.541
99.094
3.584
11
99.097
3.572
182-day Treasury Bills
maturing December 212 1261
Approx. Equiv.
Annual Rate
Price
98.069
3.820%
98 .. 054
3.849'1;
30841;'; Y
98,058
.
36% of the amount of 91-day bills bid for at the low price was accepted
66% of the amount of 182-day bills bid for at the low price viaS accepted
L
TEKDERS AP?.LIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
strict
ston
rl York
Uadelphis
~ve1and
~hmond
Lanta
Lcago
, Louis
meapolis
lsas City
.las
1 Francisco
TOTALS
AE:e1ied For
7,192,000
1,349,288,000
20,861,000
40,405,000
5,658,000
44,852,000
314,279,000
28, 949,OvO
14,717,000
18,975,000
19,397,000
93,098,000
Acce:eted
$
3,910,000
766,269,000
9,631,000
22,980,000
5,556,000
18,089,000
66,622,000
22,697,000
9,605,000
15,645,000
9,197,000
49,898,000
$1,300,691,000 ~$1,957,671,000
~1,000,099,000
AcceEted
:
AEElied For
$ 22,987,000 $ 12,987,000
1,627,206,000
830,446,000
21,916,000
34,846,000
28,644,000
33,717,000
15,515,000
15,734,000
67,205,000
47,905,000
184,189,000
368,439,000
51,755,000
64,035,000
24,582,000
16,777,000
31,187,000
32,154,000
17,496,000
27,496,000
41,814,000
71,°14 2 °°0
$2,389,475,000
$
£I
ncludes $294 491 000 noncompetitive tenders accepted at the average price of 99.097
ncludes $150;427;000 noncompetitive tenders accepted at the average price of 98.058
'hese rates are on a bank discount basis. The equivalent coupon issue yields are
.66~ for tpe 91-day bills, and 3.98% for the 182-day bills.
953
JUDe 19. 1967
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.,...1_ .
Tbe debt u.1t b11J. wb.1cb tbIa ConIne. will be .1Ied to
18 raeG IDded '1api-,.17 by tt. flftMD oe.ocnt.1c
..__n of tile aou..
ad *m' eo-lttee. wader tbe
Cl\a1ruaeb1p of Coa&ru. . . Wilbur Milb.. Tbelr: neord for
fucal hePODl1b1l1ty w111 ataDd favorable c08pU1aoG with
my group of 1eg18laton anyvbe~. That 18 why they an
cboea by Chair collq,guM to ••rve O'D tb1s cl1atiD&\dabIMI
Co.m.ttee.
.p~
w.,.
The" _ tJQUld the Secretary of the Tnuury. P'Mtl),
prefer aurplua.. to deflelU. dUu.u pa1iD& JAr. oueu,.
for lnten.t OIl the Dat.1oDal debt, and would -J01 rMucUa
tbe debt.
- 2 But, .. reapoDllible le&1alatora, tMJ do DOt • • the
••08. 1n vitbboldJ.D& adequate autborlt1 to borrow .a.7 to
pay the billa that Coagru8 lta.1f pnaeribea.
They belleve, for reama. .pelled out in the naporc of
the DeBx:rat1c _jority. that the debt litdt ac:t1oD
incorporated in the b1ll they nco Ind 18 the cours. of
fiscal r88poMlbI11ty. They bel1Arft It 18 the ... e effective
way to extend borrovlng authority eo all to pemit ordu"ly
aad economical ftnaac1D& aDd, at 1:M . _ tt.. eacour. . .
prude1lce and rea tralnt 10 bud&et maid. by the Executi"..
Depara.nt and the autbor1&atioD aDd approprlat1Da pcoc.....
by the Congreas.
Nearly two veeU ago a ujoney of the Houaa. lacl.ucU..
every Republicaa _ber vot1ns, def.ated a prev60ua prop08al
to eatend the Tftaaury borrowing autbority. FroII the _bate,
it would seem that the UD4erlyina factor ... an errO'De<JWl
Ampre'liDn that Increu .. in nondefeae expenditures are the
roct cauae of deficits 1n Prea1deDt .JohMon '. budgeta.
resulting Jaan inereae in the aattoDaI debt 4aaproua to the
ecoft01l)'.
Glvea ray departmental and penoaal btu, c . . toaar1ly 1
welcome the ~1a en prioritl.. and fiecal ~.p0n81bl11ty
thAt any 1n the Congress and the public choose to give.
In the past, 1 have applauded. and solicIted the aUl'port of
leaders cf the minority for tbH. policle8.
But 1 ClIDDOt a taDd 811eDtly by .m. potentially coaatructive
criticie_ fa1b to reflect all tt. facta. crea~1Dg all ft"'rOfteOWl
impreas10n that:, if left un.anave'red aDd incOliplete. lId.&ht
provide tba buis for legialative action on the debt lildt
that would ,bake confldttnce in the eeono.y and iaaperl1 the
essential proceasea of govera.eDt.
1 invite 811 tho •• who voted . . .1nat the proviaiotl of
additional Treasury borrowing authority weftk before 1Mt,
all those who . y have believed aiDe.rely that it is oecett ••ry
tc deprive the government of the . . . . of orderly erad ecoaoad.cal
financial unageaent In order to get at Federal .peod1Da. ad
A
J -
all those who mey have dvne SU out of party loyalty but
agaiast their real c0nvicti(.t1S, to consider the f.-eta about
F~deral spending that fellow.
Let: ua
gi;J
over the factual record:
The first and fO~trAS t fact. that the rec(·rd will
support fully. 'is that, £nr from being out of control.
Federal 8pandlng under ,resident Jolmsc:.n has been subjected
tc tight, effective and ~ustained control -- even under the
a tTe•• or war and even 1n the face of huge incre.... in
-revanuu -- Sh~t ~re it nc t [or the see;lal CO;J ca o£
resi.tin CoauDiat
('rrc.S$i0n in Southeast Asia the
admin trative bud'ets
rev!
1M second gt!neral fact worth DOting is that our deficits
t;, insignificant fractions of gro.s
national prNluct. th~t e~n in tbb fi8cal year. when Vietnam
spencling more than tripled. the deficit will be lass than
one and a half percent ,;f GNP t and that the beat curreDtly
available eatimate f~r the coming ftscal year 19 that the
deficit wl11 remain far bel· 'v the 2.7 percent of CNP figure
in 1965 and 1966 declined
redched in fIscal 19S5 when there vas no armed conflict.
The third general [act I want tv bring out is that
during the years in the 1~50s when the Republicans were in
I.: ffice
Faderal spending wae substantially larger in relati<Jn
to the s1&. c..lf our econonrJ than It n.a been since 1 and that
in the Jobnsvn yean ?e~ra 1 5 ~ina ha c· ·nt1ruad to dec l1ne
as a percent of GNP. !up1te and loeludl!,& the addition of
Vietnam cc,. ta • The argument chat the Budget fa • danger tv
our free entet"pT'ise sys tem is, like the notion that our
dpflciu are iocreui.ng in r&s.l tet:'llJ8, altrgether untrue,
[c.r federal sending was a bi.Ne!r proportion of the 8C0!I!I!Y
in the l~56ii than it has bei'n since.
I
~
L
_ _ .
Finally, since the d~bt limit 1s the matter at stake hereh<'wever wrcngly -- let me nete that far frotr increasing, !h!
Fed.eral debt ia cuD'tinuins tv ~cl1ne 10 reAl per capita t8J:"D;.
- 4 a real per capita debt, it stood at $1,823 PIft" MD, _ _ _
and child 111 1951, held about at-.dy during the Kon. War
and hu dec lined • teadlly .ince,
into the ,.an of eM
conflict in Vieen...
As
""0
Raving _de these general obeervat1oM, I wat CCJ
over the r.eord with you.
.0
I challenge tho•• who • • ere that the Jom-on Adldab trati,;n
has let speDding get out uf hand, to . .wr t .... fol1ow1q
quastioDIJ. OD the bul. of the factual record, not of political
fant.y:
1. Do too.e who assert that 'ederal apeudiag 18 BOt
under effective control mean that too Dlch 18 being .peat
fer the defense against c0UIlIlD1at agre•• ic.n in. SouthaMt
Asia?
2.
do they C u.1m that dun... tba four flacal ,.an
ft:. . r which President JohnaoD hM beeIl fully reapo_ib1e DOIlVletaan apendiDg bu gc·tten out of cODtrol?
i)T,
I want them to face up to these two queatiaa. on the
basis of theae administrative budpt facta for fuca1 yean
already complete or nearly complete -- Fiacal 1965, 1966 and
1!J67.
Let me 8ay l_diately that by looking at the tud,et
relults wi thout the special Vieen. revenues and cP.te, I
emphatically am nor trying t~· wave those ec:,. t.a _ide.
They are facta of life. ~~t I am getting at is the following:
In the
rtion c~:( the bud et where there 1. sOlDe freedu. of
c~lce the President has exercised w
strict.
• active
contra 1 0 Federal 8 eendlng . Thia Cat'l cnly be seen whe.. the
special budget effecte of Vl.tnam are tak.n into accOWlt.
Thue, it 18 necessary tu consider the Budget without the
Vietnam coats and revenues t\) get an uncli. torted view of
what has really transplr~d in the budget in Pt"uidant Jotu.(:n '8
Administt:'ation.
- 5 During the thn!C: ccmplete ,:',r nearly complete fiscal
year. cevered by budgets {lrig1nally prepared and exeeue.d
by President Johnson (fiacal year. 1965, 1966 and 1967)
the .dminia trat1ve budget expendlturu have lnecaaaed free
$97.7 billion in fiscal 1964 to approxi. .tely $127.5 billion.
But of that inere.aae 1n F~ral OQtuya of $29.8 bil1ioa,
sumewhat \Nor $20 billion re8ulte from the special coatll ()f
rf:8isting aggra.ion 1n Southeaat Aa1a.
In utber Wl:rds. all noQ-V1etnam expenditures
have increased by svme $9.5 billion io thrae
yean. That 1s an incre._ of a little over
$3 billion -- ·-:;-r ':"Dly 3-1/4 percent -- a
year. Thia should be c01Ipand t( tha 7-1/2
percent a year grc-wch of the ~ti('nal ec:c·ooary,
and of state and lccel expenditures averagi'ftg
~
1';0\11
percent 8
let _
nct~
y~ar.
in thie peri0d.
these further points, tc put the
Federal Budget intI-' true perspective:
- - ')i too nearly $9-1/2 billion inerease 1n ncn-Vletnaa
i!xpencllturea in the three fiscal yean fc·r which P-realdent
Johnst·n has budgeted, and which are cosaplete or nearly
~omplete. $5 billion is accounted for by three i~ ~re
increases weN beYLod ?'residential coacr' 1: interest on
tho public debt, increased civilian pay, and veterana benefits.
All the (.ther ?t"v>;raa c.f the
FE!'~r.l
Goveromaot tak~n tGsetber have risen in
theee years by cnly $4-1/2 bl11i c n, or
about $1-1/2 billl,~ per yearo
When the SUdg4l!t fL'r fucal Year lS68, which bu not
7~r. ~tartedt
t~
is added, non-V1etnae expendlturee are projecte(!
rise $15.5 btillon ov.r
t~
fcur fiscal
y~arl.
Of this, th~ thrett i t . - n;.;..t within PTealdential
contrt.l acccunt for $6 bill1on. rhat_ana
that .11 0tlwr nL,n-Vleu.. pr,.gr_ ria. by
$9.5 billion.
That 18 l . . s than :) percent a
- 6 -
,.ar. Even if the effect on the budpt of
•• 1.. of fiD8Deial . . . .u ... diacounted,
the iDcnue la _11 UDder 4 percent a ,.ar.
Excludina the c~ta of V1etaa.. Federal expeDClitut:e8
10 me ad.tDiatr.t.i~ budget wen 16 PftC-t of eroel ..tional
Produet in 1964. Tl'lU viii drop to 1A parent 1a tM fbea1
,..r about to ead.
--
to an aver_ of 16.3 percent
duriDa the laat 81x yean of the laat bpublicaD
Adsd.rdatratlO1l _. after bftaa War outla,. wn
eadect.
TbJ.a
COIIp8retJ
You will receive fro. the Director of the audpt . .
acCOUDt of ao.e of the beDafita aeht.ev.cl by tbne .odMt and
careful incre.... in 11On-Vi.t~ outlay8 urader Pnaldeat
JOm-OD.
In order that you ad your colle..... may .....,. dw
budptary facta OIl iDeo. aDd outlo. the deflet ta, tM i.,ac t
of lpeeia1 eoet. of the .ned cODfllct in sottheaat Mia,
and the debt burden, for tbe yean In which Prnlc1ent Johallon
baa bad full budptary re8IKJ..-ib111ty, there la attaebecl a
.ire detailed . .1,.18 of thea. ye.n, with pertiDnt tabLl.
a
Slncenly faun,
... , .. ,;,t
,.
Henry H.
The Hoaorabla
Carl Albert
HOWIe of Repr...ntat1.vetI
Wuh1agton. D. C.
Ene l~u1."e8
20515
~.
~
r""tar
nlE JOONSON
---..
BUDGET- -RECOOD
. . - .........-
~--
In order to lDlderstand fully the picture of
budgets. income and outcio, deficit. and debt burden.
it i.:.l necessary to c:xam1ne the r8Ccn'd of tt1e years
of th~ Johnson Ac1m1nistr6l.tion under those headings.
For this purpose several tables are provided.
They contain the princiPdl budget facts ,,~s they
'lPpCdr in all three types of the Budgets in use-administrative, C<lS;l and national income o.ccounts.
ISut for s~ licity of di3Cussion reference will be
m>lde only to t;:tC -ldmln1strative budt~et. with 1967 and
19ij~) estimates revised accordin8 to our latest information. Generally s1miLlr results are to be seen in the
cash or the tl.:ltional income account budget.
T.."le record for fiscal years 19&5 thrOUg!l 1963
that is under ex.urdn,.ltion is not only thdt of the
Johnson I'Tes1dency. It is also the record of the
·,~ernment·s income 3Ud outgo in the four fiscal years
since the pusage of the Revenue Act of 19&4. 'ntis
record sbow. how the potentials of the 19y~ Revenue
.,ct for economic &rowth. ec011Ol81c stability and
control of Federa.l spendi..nQ bave been handled by the
Johnson Administration.
Steppe.J tiP outwys in Vietnam besan in Fiscal
19;,,)6. Thua only one of the fiscal years under Giscussion -- 1965 -- is not fnflueoced in <l major wa··
oy t.he specLil :::ost:.; of the vtetn<lm conflict. ·where
the uncertainties of-..;ar make coapar1SOQ; of current
estim..ltes for .risc~l 19::"~-· with other years itklppro{)rtate.
only 19' j. thro'4'~h 19t.7 <rtill be conside't'~':!o.
3ec tion 1 -- the opening words .- Df the T{evenue
0.1' 1904 laid ~ com:nit.Il1ent to fiacal rcspona1IJility
LQan both the Executive and the COI\f;ress. The JohnsOll
/-.ct
·,dmin1strat1on sponsored and heartily a; .reecl to tnat
in .:.u1v'mCQ. section 1 reads:
rea.pon~ib1Uty I
" It is the sense at Coagress that the tAX
reouction provided by this Act throu,?,h stimul~ti01l
- 2 ~
of the 8C0In0DIJ. viII,. aft._ a brief traaaltioGal period. rai.. (ratber ~ l.cNer)
1"""'" ~ that §UCh r~ 1ocr.....
should fir~~*_~.!'84!<!..1..o e:ii!~,!,,~tlua ~flcit•
.10 tM
.adm1!'L~tra~l'y'. ~. ~_theD~
,;;:educe tM publ1c ~t.
1'0 furtbu the
objective of obta1n1Dg balancM budge" in
the near future. CoDgr•••• by thl»&etiGa,
recognizes the iDIportaDc. of tak1.D& all
reaeoaab1e ..ana to reatrala OoYeraaeDt
apeadlag andm-S•• the Prui"t to. dRlar.
hi. accord with thU
obj8Ctl~", H
..
Purt:h.exwDre, this ~t gave a Q8.'U dlnct10a to the
of fiec.al pollcy that Iwe be4fID deecribed by
Chairman Mills of the ~ \I.." • • ad HI __ c...ittM:
UNa
t~"e .r~
1Ie...,·-
tw rOAds tlM Govumnet\t could
follow tcJwu'd ,il larger, . . . pr~roua
the tu rQ>doc t ion road or the GovumDMlt e.xpeaditure 1Dcreas. rtWd •• '" '!be 1uere~Jle in GoverDment "x:p.'!ldit~rr~ r~!ld get. Ia to a higher level
of ac~ activU;:y with u.rg~r ~j larger MIIar.a
-t _~AV
_IF':<'- ·1''''''
"'.' .~4Ic.4,.~f.'i'<?#""' &- ~ ..
o f ....
....
•• I&.~' ~,"~~"".J.5ol""~ &H ~.~,~ .. " • •
The ~ r~:ti_ road, _ tho ot~ haDd. set.
UtI to a h~ lw.l of ee~~ ~~ivity vith
lit larg~ Md U~~ ~re ~£ tJMtt ~~d.;r&ed
~tivity tcitl~~:in,.~ 1n eM !~I,,,.t-t'~t. $.lCtor
e
3.
nCl~"';',
~" ,.l,fiir'l"
r"
<1;'< ~,b.
\"":'" l
'/'),;,.
"'1I~} 11Jl~_~ ,-
.1; <&
,1;."1'
'#;.,"'
ftAaitl
.'il ll.,",lt'U.
r".
uaertiA'ib \,,~: ·~tl,~Yf'rtf.rfiDi:. of ~b~ ~ed S:&tu
for the ';.,;~ ~~¥ t ,,~ r@Jid ~~ ... 'b:'\::;$'q' ~ . . . .
progreUi'~MC ~~ <I U
In b1a a~ .t4:t~ ~ Prui~,t J~8OD.
e.braced the objec~!v. Gf atilltz1&tbg th. ere..." b,.
l1&htani.ll& lts ~ax lo&d aDd .tJialt:-..oual,. e_uoll1a&
1ncreaaed aptlDd:lc.g.,
Here u thAt 8p4Udt~ 8Dd ~ l:"~ord that IJbon
how ialthfWly and ~ (f~t1_y.ly . . baa put that pr1.lle1pl.
1D.to pract1.ce.
It '\iJ ,.~'fJ8ItttJ'ed b Yabht 1 . .
- 3 ....
~ IDC~_~d 9ut.a~~!'I'd:
-Before
-
Vietnaa:
-:.;;;.-~;;;;;;.;.
The ecouomy responded so quickly to the tax
reductioaa for individual. and bu.tn.....
that went iDto effect five . .tha before thi.
fiac&l year began that reYeDUeS roae by $3.6
billion over the yU.u' before. to $93.1 billioD.
--
But. Federal 8IH!adinS .decl1n!i, by $1.2 bl1Uc.:s.
to $96.5 billion.
The ..Vietnam
Year.:
--_
-..-.---------~
Fiscal 1966
_.
Due chiefly to the continued qu1ck.eoing of the
economy following the 1964 tax cut revenuea
climbed in Fiscal 1966 by DO leas than $11.6
bUlioo.
--
Even in the face of auch a bounty. the-Pr••Mat
~ti:.DuedJ9__l12..~d_ s.£elld!!!g be~~ the rUe in the
government T s income. and it was due only to the
1.nclu3ioo of $6.1 of special Vietnam outlays that in
Fise.ll 1966 spending Increaaed hy ..£8 much aa $10.5
billian.
In Fiscal 1960 revenues raised e.,€cially to pay
the costs 0). V:Lctn~Lm C~ to $1.2 LilliCJn. Ttw speci~l
costs of Vh::tncWl that ye~r ,:aae to ~G.1 hilliOil. "l'hus.
without Vietndm.
record would
duout ••
followa -- give or t~y~ a little for indirect ef~ect.
that .;.:Ul only be: ~ucssed .. - as seen in T.-..ble 2:
th~
hav~
been
l'km~V:ietn.~'£y"l;!!tle8 u~ by $lO •.'~ billion, but !!!!!y'ietn~"!p"end_ing . u,p by. uta,S thau ~1!!_.t as much. or
some $4.4 billion.
- 4 ..
Fiscal 1967
1D thU fiacal year the coMa of Vletaa roM . .
that teu1 Federal apendiDg ro. aiCh futu
aviftl~
tluaa
.t,
·flreDUe••
It la the GIlly year 111 which Chi. 1. so. While
the orq t aal Judget vu plamaed to Uep thue apeIld1tur.
razghly 1D lirMa wlth reveuu. the
accelerated , . . of the war, ..-fAl apeDd1turea . .de
DeC . ....,.
of tight -...y ad h1gb iDter•• t rat. . ,
aDd outlay. weed by th1a Coftgr... over and ~ the
1evala of tiw Prn:l....t'. Budget all CGatrlbuted to a
apaad1n& toU1 . .11 over $15 bilU. 1a exc... of that
pl.aDad. Bere 18 the 1967 record, .. it 1a •• t1aat:ed at
~~t~:
'
iller......
bee._
-
Total r ....... will be up by . . . $11.8 bl1l10D.
but total 8peDdiAg vill riM by $20.5 bl1liora.
_.
If ..-1&1 Yletaaw rflY8llUe3 ad outlay. are aet
uide, the CGIIpariaao with QCDaVletDaID 1ae<ae
ad outgo of the year bel£on !a:
--
HcIIa-V1etaaa reveaues up in Fiaeal 1961 by $8.4
b111ial.
-
'ftut;.
&&AiD. DOD-YietDam expenditures up by
aubataat:1a tty lus than reveauea
bUl1GD.
1}
at about S6
Here, of course, oaty .st1.Ditu are available J for:
of lMKe than the usual uncertaiDtie.., that begin.
lrt IIOGth f r . 1MN.
Both Buc4;et Director Schultze aDd
the See-retary of tba Treaaury 811phaa1zeIJ in testimcDy
to the House Ways and Means Coaaittee OIl May 15 tb.e
fact that Fiscal 1968 est1.lBii.tes. although they .re
hased OIl the best current infonaation. are vulner.thle
to the 1Dcalculable uneertaintiaa of war. These eatill&tes,
a
ye4r
- 5 never-theles8, are the best thdt can cun:ently be W3d~.
Total revenues in Fiscal 1968 are e>_pected to
increase same $9.0 billion.
--
Total spending. on the basis of the best current
tnJ~tlon, arc expected also to increase $9JO.
"lith Vietnam revenues and outlays set aside,
ho~ver, the changes from the comparable 1967
total a would be:
--
non-Vietnam revenues up $8.6 billion, but,
--
non--Vietnam spending up by appro:d.mately
$7 billion, once dgain well under the ris~
of revenues.
Now one further .!lIld very important fact that is
nover mentioned by critics ot the Admillistration's
Budgets:
During the final ab: fiscal years of the l~st
Kepublican Miministration -- vb.ich were ~
b1.lrde~<i
lJy
~y
spec !.~l !!.efens4.!. ~O:~ll -- the
,\.Gtainiatrative Budget averaged 16.3 percent of
Grosl National Product.
But, in the seven complete or nearly complc:-te
Democratic fiscal years t~")jJt lwve followed.
~J_~~~
the $20 billion rise in
Vietn~
costs
ot f1seal 196G ana 1967, the Budget has averaged
only 15.6 percent of GNP.
Ano, 1D the three Johnson £18ca.l years 19(:5. 1966
and 1967 in which--.the
costs
concentr..1tad.
_--..- .Vietnam
_.-..,.. . .......---..-.,
............jlre
---,,,,--.,, .... --~
.F_h.tL av~x:..a&.e J-~- . ~!theJ£~-l!!J.JJ__ J~~: 15.5 percent:
, --_.----
--.------
- 6 -
.The
.,...., Deficit Record
This control of Federal expenditures has had an effect
upon our deficits that 18 not reflected in many c~~nt8
abL"Ut the Administration·s fiscal record. once again, let
us look at the administrative budget recurd. Tables 1, 3
and 4 are of interes t here.
In~ludlng
the effect of Vietnam on both spending and
revenues, the control over spending exercised by the President
has reduced the deficit 1n twc out of the three fiscal years
fl.-'r which he has had full budgetary responsibility and that
Rre nearly ccmpleted.
Excludlpg Vietnam r~ven\teR .and c,ut1ay., there has been
but one deficit, and there would have bef'n two surpluses,
in the Fiscal Years 1965 through 1967 10 Vithout Vietnam,.
the Fiscal 1968 estimates would show a third surp1UB, (.ut
L~ four years, for the Johnson Administration, and the lize
•. r the surpluses would be growing.
Here are the figures, with Vietnam:
In Fiscal
Y~ar
1965, the deficit declined by
more than half, to $3.4 billion.
In Fiscal 1966, the deficit shrank further,
to $2.3 billion despite an addition to spending
due tv Vietnam -- net ,-,f Bpecia1 rev.. nues
raised to defray the C0Sta of
8DKJunclng tc $1•• 9 billion.
Vi~tnam
--
In Fiscal 1967 the deficit rCSE tc: $11 bil11,)n,
as now 8S timated. This results fr(·ru an increaa4!
i.n spending due tc \' ietnam ,'£ S'll~ $15-1/2 bl11i'Jn,
net of special VletnaIn revenue-s.
And 1n the Fiscal 1968 Budget, infvrmation currently
available indicates a substantially unchanged
deficit, despite a further net addi.tlc-n tc
eapend1tures, due tv Vietnam, c f more than
$17 billion.
.. 7 -
Another result vf the f1.scal eontr(-J 1 ex.retsed by
Pres ident Johnson Is ..t naticnal debt that -- despite the
cvsta of Vietnam -- is ce:ntinuing to 1POVe dcwnw.rcd in
Nlatlon to the eCl.lnomy ,r which it 1a a part. Here.
again, is the recot:ti, which can be .een in Table 4, and,
fer Fiscal Yean! 1964 tc 1967, 1n Table 1 .
.~}llring the three cvmplete or nearly comple te fiscal
y-:-arJ -- Fiscal 1965, 1966 and 1967 -- the public debt
has grffW11 fr(..1t) $312.5 billion at the end of Fucal 1964
tv ~he estimate of $327.2 billion for the end of Fiscal
1967.
That i. a growth of $14.7 billion, or apprcxlmately
4.7 percent, in the public debt.
l~
the. same three years
the groBs national pr(.tduct
will risa acc(;rding t ( \ current e.tlmates by appr .. xlmately
25 percent -- or. five times 8& I'DUCh ,.. the public debt.
J
Or) t. put it 8.Ul)ther w<J.y, when Fiscal 1964 ~ndedt
the llsticll41 cliebt was 51 percent ci tr.e gr<.:8! naticnal
~r'(;.juc t .
But by the ~nd '- ( ?"iscal 1~67, the nnti,jndl debt 1.
tl'!C tfJ be down t.e., 4 j ~rcent of the r;r cA'8 national
product. That is a vile), b!'::~ drc,p in cnly thrN> years.
e}~pe<:
'-'IT ACHMENT B:
Tables 1 - 4
FISCA~ YEARS 1~G4-1968
(Billions of Dollars)
Fiscal
Years
Budget
1964
89.5
+
3.1
97.7
1965
93.1
+
3.6
96.5
104.7
116.5
125.5
+
+
~'('k'k
1966
19 6 7
1968
+
11. 6
11. 8
9.0
107.0
127.5
136.5
~'o'(~'(
1966 - 68
+
32.4
Administrative
Budget
-10'("1<
Cash Budget
+
+
+
?ublic De~tJ! Pe:cce;:t
Revenues or Revenues Spending o~Spending Deficit CLDcficit End of Yr.
of GNP
51
3.4
4.8
317.9
49
2.3
11.0
11.0
+
1.2
8.8
320.4
327.2
45
43
+
1.2
+
10.5
20.S
9.0
t-
40.0
+
::i.C.
1964
115.5
+
5.8
120.3
T
6.6
4.8
1965
119.7
+
4.2
122.4
+
2.1
2.7
2.1
1966
1967
1968
134.5
154.7
168.1
+ 14.8
+ 20.2
+ 13.4
137.8
160.9
172.4
+ 15.4
+ 23.1
+ 11.5
3.3
6.2
4.2
.6
+
+ 2.9
+
1966-68
N.I.A.Budget
312.5
8.2
+
+
2.0
5.0
+
1964
115.5
1965
120.6
1966
1967
.1968
132.6
149.8
167.1
1966-68
+
48.4
+
+
5.3
116.9
+
5.S
1.4
5.1
118.3
+
1.4
2.31.
12.0
17.2
17.3
132.3
153.6
169.2
+ 14.0
+ 21.3
+ 15.6
+ 50.9
+
+
+
+
46.S
.8
1.9
+ SO .0
.3!!..!
3.8
2.1
.2
3.7
+
,
...L
"'1~
4 .1~\''''(
1.7
s]=surplus l/Includes Government enterprise debt guaranteed by U.S. Treasury
~ Reduction of surplus
Surplus of .3 to deficit of 3.8
Gives effect to revisions by Treasury Secretary Fowler and Budget Director Schultze to
House Ways & Means Committee. Nay 15. 1967.
***
**
1'1.SCaL Years L~o4 th~ough 1~6~
With and Without Special Vietnam
Costs and Revenues
(Billions of Dollars)
4~
~·t
p./
I]~.
.s>
0$'(- 0~
(-~.
()
v(? ~<-
e<S'
v(j
~(?(-
.........
.........
.........
If'l
If'l
If)
\.0
\.0
\.0
\.0
'D
\.0
\.0
r--
If'l
.........
'D
\.0
eo
eo
\.0
.........
'D
.........
<-~ ./ P:.
~k
'I':
'k
r--
r--
\.0
(j)
..,~;
\.0
\.0
\.0
r--
\.0
"k
co
\.0
\.0
Q"\
Q"\
Q"\
Q"\
(j\
...-I
...-I
...-I
...-I
...-I
~
III
!-<
bO
Cd C
...-I Cd
...-I":::
au
Cl
-I...J
(j)
C bO
ill
U
;::
('j
!-<..c:
CJu
p...
!-<
-I...J
bO
C bO
<li C
Cd C
...-I Cd
...-I..c:
au
Cl
U
Cd
!-<..c:
('Ju
Total Outlays
Total Revenues
Deficit (- )
$97.7 $96.5
89.5 93.1
- 8.2 - 3.4
$107.0
104.7
2.3
$12l.5
116.5
- 11
$136.5
125.5
- 11
Total Outlays
Vietnam Outlays
Non-Vietnam Outlays
$97.7 $96.5
96.5
$107.0
6.1
100.9
$127.5
20.+
107. +
$136.5
22.+
114.+
$29.8
20.+
9,.+
Revenues
$89.5 $93.1
Vietnam Revenues
Non-Vietnam Revenues 89.5 93.1
$104.7
1.2
103.5
$116.5
4.6
111.9
$125.5
5.0
120.5
Non-Vietnam Outlays $97.7 $96.5
Non-Vietnam Revenues 89.5 93.1
Surpluses (+)
or Deficits (- )
- 8.2 - 3.4
$100.9
103.5
$107.+
112
$114.+
120.5
+
+
97.7
2.6
5(e3t) +
Cd C
au
cuu
!-<
Q
40%
10%
$38.8
22.+
16.+
$27.0 30%
4.6.
22. ~. 25%
$36.0
5.0
31. 0
40%
17%
35%
U
nl
!-<..c:
~
,-.-
;J
str-atiol1 years, Admin is t rat io n
complete or
Budgets)
nearly complete)
30%
OJ)
..-I n'
.J
..-I.e
,J...;
~,"._-.::=::r- ~.,-
.v
.w (j)
C bG
(J
C
ill
(j)
r-\.0
\.0
Yea rs,
completE:
or nearl-- ,
complete)
$31. 0
20.+
10.+
32c/~
$23.4
4.6
18.8
25%
6 (est)
*Gives effect'to Budget revisions estimated May 15 by Secretary of the Treasury Fowler
and Budget Director Schultze in tes timony before the House Hays and I-ieans Committee.
11%
201u
Years In Which Veficit
Declined or There Was
a Surplus
Budget
Administrative,),Cash
N. 1. A.
1965, 1966
Years When There
WAS
No Change
1968
Years When Deficit
I
ncreascc.:
1967
1965, 1968
1966, 1967
1965~, 1966~ 1968
1967
!!.,/ =surp1us
Budget
Rise of Revenues
Rise of Outlays
Administrative:*
1965
1966-1968
1965-1968
+$ 3.6 billion
+$32.4 billion
+$36.0 billion
-$ 1.2 billion
+$40.0 billion
+$38.8 billion
Cash:
1965
1966-1968
1965-1968
+$ 4.2 billion
$48.4 billion
$52.6 billion
+$ 2.1 billion
$50.0 billion
+$52.1 billion
$ 5.1 billion
$ 1.4 billion
$46.5 billion
$51.6 billion
$50.9 billion
$52.3 billion
N. LA. :
1965
1966-1968
1965-1968
*
Gives effect to revisions in F.Y. 1967 & 1968 budgets in testimony
of Secretary of the Treasury Fowler and Budget Director Schultze
to House Ways and Means, May 15, 1967.
Public
Defic its and SErpLJ3CS
1;:1 Billicll'; of DolJ.ars and
nc~t
as Percent of
and Public Debt
GNP and Per Capita
as Percent of GNP
Real
Public Debt
End of Fiscal
Year
World War II
1940
1946
1950
Korea
1951
1952
1953
1954
(Billions of
Doll&rs)
Public Debt
as Percent
of GNP
Pc>r Capita
Public Debt
(Dollars)
$
Surplus (+)
or Deficit (-)
(Billions of
Do 11a rs)
sl
S urp 1usor De£ic i t
as Percent
of GNP
783
2.,544
- 3.9
-20.7
97.7
1.946
- 3.1
1. 2/.)
255.3
2')9.2
266.1
27l. 3
82.2
1,823
-,- 3. 5
1. 1%~./
76.8
74.1
74.9
1,824
1,826
1,821
- 4.0
- 9.5
1.270
2.6%
- 3.1
0.9%
274.4
272.8
270.6
276.4
284.8
286.5
289.2
298.6
306.5
312.5
317.9
72.5
66.6
62.7
62.8
60.7
57.8
57.1
55.1
53.4
51. 5
48.8
1,802
1,706
1 , 611
1,598
1,593
- 4.2
1 • 1 "110 1 "'\!
0.4%~
,320.4
328.6
45.0
43.2
$ 48.5
269.9
51. 1
133.9
257.4
Rea 1 Ec: ;.01.1 L:
Growth i{3tes
t\fter Korea
and Before
Vietn.Jrn
Peacetime
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
Vietnam
1966
1967
1,540
1,532
1,528
1,515
1,518
1,478
1,452
+ 1. 6
+ 1. 6
- 2.8
-12.4
+ 1. 2
- 3.9
-
6.4
6.3
8.2
3.4
- 2.2
-11. 0
I
0.47;1 \
0.7% )
2.2%
2.7% I')
O. 27~ I
0.8%
1. 2%
1.
l
4.7%
{
1: )
1.310
0.570
0.3%
1. 470
...
5.9/
0
EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON 25. D.C.
.:runG 19, 1967
HClnor~ble Cu~l
Albort
ty LcucJ.c::
H'I~so of ~eproo2;'l.tativc~
H<: G:1ington t D~ c..
20515
Hz:, j
0': i
~r,
his lc~tor to you 0..; ui.mo 19, sccrctury Fowlor
stu.tOG thut: tjlO DL:cc\:o~ of t!'.~ Bureau of the Budget
will provido you vJil:h u~(. ... tion.:ll infonml.tion about
trio rolntionGhip 0;;: Pc~cru.l cx!?cnditurca 'Co tho
n~,tionul economy an6 ubouJc soraG of the ",1ajor bono fits
wflich havu bocn. forthcoming f.:om Il'oClcrnl programo"
I am c:iclosing a otatoment which COVGrs both of theSQ
Illi.ttors.
Sincorely,
~na~las
L. SchultzQ
Direotor
Er., closure
COpy FOR SECRETARY FOWLER
In cAp.1.:d.11ing 'tho 1964 t.c.:.: cut. HOUGQ WClYO
C"n\lirm<ln \;ilbur Nills D~":utc:c13
1I';(~1C':O
ilrc
l,:cmla
Government could follov
mOkO ~):.:o:;'):;rous occnOrLl'" - - tho tux
1:\>.'0 rO;:lcJo t!lC
...
~ l~~gcr I
"co".-Ja:cd
:ma
r('C:uc~ion ro~cl
..
0:: the GovorniJCnt c;';l?.:l1".o iturc incrc~cG
l"OOU .... Tho inc1. (:.:lCC :in GovCrnt40;lt c:-..--:)cndi
turG rOOld
...
4
S"ct~ U1;
to a
hiS~lOJ:
level
o~ ocono~,)ic
ilctivity '-lith
1~~00:C ~~d lQrsc~ Dh~rcc
in
Govcrn:;-;c~'\;
......
T~jC
of th~~ ~ctivity initiating
't~~: reGuction ro~o, on tha o~er
hund. 0cts us to a hishcr level of cconowic ac~ivity
\d~:l 4t lZ1rgor 4ln~ l~rs'c~ oh'-1.ro of t..'1c::t cnl~r90d activity
in
initi<lt.1ng
~ho p;.:iv~\:e
£;oct.or ••• "
:~1)onc1itu.:o
dnta clc~rly (3:40\'/ th~t tho Govo.;-nr.:lQl'lt h~9 followed
.ho I'o\ld oU'clincd by Ch~ir;i,~n I-till::; - P('Qcr<:tl l"ict5.vi ~l io not.
~1d.n9 :i
~.~:::''1o::!r ~h,,'r.0.
CCO\!0~:i.C
of
~ndccd
:1ct:ivity -
quite to
ho cont:LZlY.'y.
1.
--
-
0;'
(':tr:.:""'~ I r:'c~o :C~l
~--......--............------'-r~-l""'~
··r""~:"lo
~01.~
............ _ _ . . WI\". . .
t.... b!~,.":·t"'~.
~'""'~J"""-~
v .......... c
1:111:
......
.
'/·U··CD {,... 4.....
r>':f.'lnC\ i
""
J..
nn
...... 4
(,,(y. -:.
~-~'c
n
V5
'·'···""··:v--
c;..:ryondl.....
lC"
,~
o-F
__
<]4'OC;rJ r.~·;;icnnl
l~%
in
yC(l~!)
~isc:~l
01
\:.l10
2:':-- ~i.l.::;t in 1~1S4 -- \:hcy \"Ul 00
is,:'/, .:.nd 10C8. ToJ-:ing illl four
Jol... :... ::~~, 1\~.:::i.l"li~J~r~-;'ion t00o~hcr.
~c:aQr<:ll non-Viot;~1':'~ cXIJ2udi·i;.uroG ':lVC.t'~00d l~.2"A
or
tho g~O:;;G nu-;:ic~"wl p~oCud;, cOJ]~arod to lG.3%
fo~ ·~... o lo:::t=~ cix y~~:cu oi p;.:c::;;ido...t. Ei,;c:Al"lo\Jcr ' &
.";.Ci.linic;,c~:u\;ion, tho poriod ;;'4ftcr the ond of tho
i<o~c(;n ~·;r;lr.
2.
'~~>.0. C():;1:~
V10tn(~m
\\7hich oro
·~v..n.l1.ing in cxc'c::;::; or.' ' $20 billion --: the ratio of
Z"cdoral c;~.Q~01diturvc to G~;J? f ill both £isctll 19G7
~nc.1 1968. \'Jill ~o lG.[i,.{., leo:; tll~n in 1955 and
l059 (yc~:.r{.) in ";;~'lich I~crc '-lora no Will: C)cpcl'ldituroo).
;;;'.\1 Zt:ll: bolo'.l tho 21,~ rO.:lchcQ dw:ing the l~o;'''can w~:r.·
Pinally, -::~~;:1ng ;211 four yc;:~.o of tho Johnson
:;'.'c:)'\
inclpr::i.nn
of
-
~c1;rii.l1iz-;;.ratioll to'.J~·t:1cr. ~caGrul o~~onditt.:.~os,
l~clt:(11 nOT -ti.18 cn::;~;:1 O:l: Vlctn0m. avorilQ'cd 15.~' of
<.t7:H? ..:. cO::lparoc1 to tho '16.3% ratio .for thQ l4lst ~1x
EicQnho~r yo"~~.
2
l~1 i)b=:oluto .u.ruount~, non-Victn~l':l o;IDcnCliturcD will
3.
h;JVO :.:i:;cn by como ,~~-1/2 billioll b;th·ccn fi8C~1l
..1t)C~, ~,.d ~.!JG7,. Thin it; nn incrcaco of only 3-1/4%
par year --
co~~~rcd ~o inc~coccD
in tho nutional
ocono:1Y nvorz:.gir.g about 7-1/Z/t) a yc~r and in Gtata
~4d loc~l c:-=pondi t.urcD, avc:aging C"). a year.
If
'\':0 ildd l~GG, the ~icc in no."'l-Vlotnilln e:'!'cnditures
4.
ovor the
p~~t
four
or ctill
lCtiD
thtill ~;~ per
yc~r~
equals tibout
yC?!ar.
~15-1/2
billion.
02 tho $9-1/2 billion incrm DO in non-Viotnilllt omond1'\:.uroo bctuccn 1964 und 1957. Q5 billion i.o acco~tQQ
for by ~1rca uncon~rollublo items, intcrc~t on tho
P~Y. and veterans'
bcncfi"~o.
1\11 othC'Y.' proql:;'~G_of the P('ccJ:";)l Cov~rn
n~n"" ....
u'·-,...n
~'or'
.., . . . ",-....
"l..-'''10
ri ~~.
,..,~ b y on 1"'/1
L."h..
i.
.!_1..1._
... ,
<Au, X y.t-- 1/2 bill! on
El)O\!t $1-1/2 hill:l.on n~Z' XC<:)J:'.
public debt, inc:cnocd civilian
•
.
5.
6.
'p
'-
Tl.\1d.rl:J. 1~68 into ('Jc;:-:;unt~
-
find non-Victnrun ol~nd1turon ~ising $15-1/2 billion, of which intcroGt. civilian
p~y r~i~cs4 end vctvr~nG ~ccount for ~6 billion.
All
othor pro~r~~8 rioo by ~9-1/2 ~illion -- lc~o thon 3%
J?2'C V;:'~~7.". r;vcn if \;0 Clicco\.tnt tho cffQct on the budget
of o~lcs of fL,~ncial aSGots. the inCrC8GO ig wall
W1QOr 4~ par ycur.
\JO
If 'va uzo tl1c r;;o:r.n corr.ry::C011r..ncivc nnttonnl income tlccount2
D:>:1-Vir"i:r\:"n C~ :,:--·:":'n<~:L5:.l2.r.C;"1. f.nll f i:'O:-:l 10 .l(~ of
(;':Jp in ]. c)G~, to ],7. G~;;,
'..rho rcd::io illCreDElCa to
. in J.9(·7.
,
~bout lG,~ in 1960.
The NIh budget (ao a percontLlge of
1)11.,:1C[ot {~
than tho ~cl~iniotrativo budgot product
prin~=ily bccau~o of the r~pidly riGing G,~onditurcs of tho
rielf -finlillccd trt.lf·'-t fundn. nut thecj(~ fundll ~rQ running
'u subot;)ntial Jiijurplu$ - rCVGnuas havQ .ri~cn fastGr than
G~?)
declineD
(l~ndii:
7.
In tilo
los~
urea.
pLiS':: fOUl:
h~V'o
YC<.lrG . oGOWla fiSC'll und economic poliaiQQ
proc1uccd an unparallolod ccono:aic grovr~
DccauGQ
of 'i:iliD lv-a h;JVO been ublo to launch ~n attack on .. omQ
II
N~tion· 0 mOGt urg~nt social problem=- 't,d thout.
~nlargin9 the ~l~rQ of the Fedoral Govornmcn~ in the
of "cl4a
~ation·s acono~.
In fi~Qal 1~6a our g.o~a national
3
bi:'lion hiS:l:-:':
'''',-,.--,.,..~'
&..~.'~_""'I.A __
hu.'V'c
in.::ro~~c.
t.h~:1
C~17"'-~·"~r.~,'-'
u,,'- ........ ~ ............ A .....
in lS04.
"'"
U
m~~or
..... .J
taJcc~ ~O;-:,·:J G;~ 0:2
:2t::: ~::c::1:~= ~d2..y,
t~1~
this
r:l:l.jor ~c.v<:mccc being
to r.-'::2.t. !?::.::::;:;i:.-:C1 n2.tion'll nC2(iz - in c(!ucation,
h
'".-••.••
--l,l..
\.","1
'-,,-.
--""'';0'·-.1 ~
"'co?"'\o·~.!c G.'-;..;"
,.. ....-.;~c.,o-,r",...nt
.l
~."I
'.'- .... r_ _~,
.L. i...I .. H.......
,
r'JJ.lutio~"l cc'r.trol, llou.:;ing ~nd cC::'~'1";\:r-.i ty dcvclopr:1ent,
Li~1d the \'l~r on povcr'~Y -- ~11 of .....:1;~ .... 0 ~.'7:i.ll. "h~o!'b
<...,,-'.,,/ ():-J~-~:i.~:-::""''''·l1'::~1 0';: 1-:11"" :t:1C~:;~':,:-:0 ;i.n OE~ n-::t:i.onnl
r:~;::C:c
.J.. ....
r~~
. . ' - ' ; , .....
1 ... '- ..
... .t
.... L...l.
i: i:.~.~ l:.
,\1 ~~;'.'_ M'::~. ~: . . ~('~ I
.
-- - ,
~~-~~~':.-'~'-- ~ .:.~.., ~~.""'-:
1"' ~-'.". ~.~
0'
rapidly)
'-'-:1 ~·.I~"" n'" ': icl"':" l (':::'::~-::.:.
[_:·.:~Y ~~ccct::-.:;: £0:: 0 cr::::l1cZ' not a
,:l::-0cr cll.::r~ of O~~ u~~·ti(/:-:.;~l i;:~.:.:~:c. ~;-2. :1~~.VC ]~CL!t to the path
~i.CCC:;'l ::l.-::' the til71..:; t.:.c :. <:.~,::. "..:~,,,,x rcauc'::.ic.::. ~.jU:J 4.dc;?tca.
Chargca
::~"'JO ba0n ~\:.::CQ t:;.:: ..~ ~"2::.~·:::~~tJ.. ;.I~. :.:..~~[i!1!J ir;; cut of co:--.. trol and in
~ ..... , :-_-~.r:. ~ .t_.~
:;:-i~
l,~
-
~
;:JdnJ <:11. even 1<.',::,=;;:;::.: ::.: .. ,:::.:.:. ::;,:: ~1~c I·J<:1t.io~1.·:J inco,"'i~c.
~""hQ facts
h:lvO recited clc~'.:.::":r ::;~.::'.j ~,-• ...;,:;;:; cll<:l:&:90:; \:.0 be inco::-r\2ct in
.:\ct ar..d r,ti::;lcadi:-,g i."1
~J:!li.c;J:;:ic~.
11 t11ia is not to d:;:;-.y the: c~-JiC'.ls fact
ut::;i~Q of Vio:.:.r..::L-;"(, ha~ ri::.:..1;- ~-~ '.:.
--
t!l~t rOQc~al
npending,
J ...
.t. ...
't.:.. 2 ::t,:,,~·d:::.ra of livil1.9 of the k:,Clric~ people is
m1 i;11.,:) 1:' i.;;. ~
·C.:1C cCr"v·;j.c.::;:; '::::;'.:.::nC:..::~ of t:'1C J..?cC;c~~ Government arra
on
th",..
,~ .......
t:11:.i
r i.:.;u.
,...,.~~.
l~O"~
~"~'''>~
•
~
'::~-ro···
.............
1'..
..........
:..,,'-
.J,....\.I.J.....J
;'>
4&
""""n';r" ...
" ..' c:::o:1ing po")
.. ul.::.tion
............... -'-~
<OJ
C~~iJ.to::; v ,i.::·;;i:.:::l::r ~'.l·;:,,;;-;;:'i;ic incrcZloco 1.:1 L1Al."lY ~c~~ral
.rc~por.oiliilit.ic;:;;
• II
4
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~EASURY
DEPARTMENT
JUN 201967
FOR INMEDIATE RELEASE
TREASURY DECISION ON ALUMINUN SHEATHED COAXIAL CABLE
UNDER THE ANTIDUMPING ACT
The Treasury Department has determined that aluminum sheathed
coaxial cable, also known as insulated electrical conductor cable,
from Canada, manufactured by Canada Wire & Cable Company, Ltd.,
Toronto, Canada, is not being, nor likely to be) sold at less than
fair value within the meaning of the Antidumping Act, 1921, as
amended (lSi U.S.C. 160 et seq.).
A "Notice of Tentative Determina-
tion" was publi(Ji1ed in the Federal Register on May 2, 1967.
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
Regist~r.
Imports of the involved merchandise received during the period
April 1, 1966, through January 31, 1967, were valued at approximately $300,000.
TREASURY DEPARTMENT
fOR 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
i2,300,000,000, or thereabouts, for cash and in exchange for
:reasury bills maturing June 29, 1967,
in the amount of
i2,301,646,000, as follows:
91-day bills (to maturity date) to be issued
Ln the amount of $1,300,000,000, or thereabouts,
ldditional amount of bills dated March 30, 1967,
latureSeptember 28,1967,originally issued in the
;1,000,402,000, the additional and original billa
Lnterchangeable.
June 29, 1967,
representing an
and to
amount of
to be freely
182-day bills, for $1,000,000,000, or thereabouts, to be dated
June 29, 1967,
and to mature December 28, 1967.
The bills of both series will be issued on a discount basis under
ompetitive and noncompetitive bidding as hereinafter provided, and at
aturity their face amount will be payable without interest. They
ill 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
p to the clOSing hour, one-thirty p.m., Eastern Daylight Saving
ime, Monday, June 26, 1967.
Tenders will not be
eceived at the Treasury De~artment, Washington. Each tender must
e for an even multiple of $1,000, and in the case of competitive
enders the price offered must be expressed on the basis of 100,
ith not more than three decimals, e. g., 99.925. Fractions may not
e used. It is urged that tenders be made on the printed forms and
orwarded in the special envelopes which will be supplied by Federal
eserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of
ustomers provided the names of the customers are set forth in such
enders. Others than banking institutions will not be permitted to
ubmit tenders except for their own account. Tenders will be received
ithout deposit from incorporated banks and trust companies and from
esponsible and recognized dealers in investment securities. Tenders
rom others must be accompanied by payment of 2 percent of the face
mount of Treasury bills applied for, unless the tenders are
ccompanied by an express guaranty of payment by an incorporated bank
r trust company.
-954
- 2 -
Immediately after the closing hour, tenders will be opened at till
Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and priCJ
range of accepted bids. Those submitting tenders will be advised
of the acceptance or rejection thereof. The Secretary of the Treaaur
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 tnese reservations, noncompetitive tenders f~
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 [}-.(; bids must be
made or completed at the Federal Reserve Bank on Jun,' :29, 1967, in
cash or other immediately available funds or in a like face amount.
of Treasury bills maturing June 29, 1967.
Cash a~d exchange t
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 ha~
any exemption, as such, and loss from the sale or other dispositi~
of Treasury bills does not have any special treatment, as such,
under the Internal Revenue Code of 1954. The bills are subject m
estate, inheritance, gift or other excise taxes, whether Federal
State, but are exempt from all taxation now or hereafter imposed ~
the principal or interest thereof by any State, or any of the
possessions of the United States, or by any local taxing authori~.
For purposes of taxation the amount of discount at which Treasury
bills are originally sold by the United States is considered to ~
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 an
sold, redeemed or otherwise disposed of, and such bi lIs are exc1udl
from consideration as capital assets. Accordingly, [he owner of
Treasury bills (other than life insurance companies) L:sued heretl
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 upoo
sale or redemption at maturity during the taxable year for which tile
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) a
notice prescribe the terms of the Treasury bills and govern t~
conditions of their issue. Copies of the circular may be obU
any Federal Reserve Bank or Branch.
000
TREASURY DEPARTMENT
IMMEDIATE RELEASE
June 21, 1967
TREASURY'S MONTHLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders
two series of Treasury bills to the aggregate amount of
,500,000,000,or thereabouts, for cash and in exchange for
easury bills maturing June 30,1967,
in the amount of
,501,501,000, as follows:
275 -day bills (to maturity date) to be issued June 30, 1967,
the amount of $500,000,000,
or thereabouts, representing an
jitional amount of bills dated March 31,1967,
and to
ture March 31,1968,
originally issued in the amount of
100,047,000, the additional and original bills to be freely
terchangeable.
366 -day bills, for $ 1,000,000,000, or thereabouts, to be dated
tne 30,1967,
and to mature June 30, 1968.
The bills of both series will be issued on a discount basis under
npetitive and noncompetitive bidding as hereinafter provided, and at
curity their face amount will be payable without interest. They
11 be issued in bearer form only, and in denominations of $1,000,
,000, $10,000, $50,000,
$100,000, $500,000 and $1,000,000
3.turity value).
Tenders will be received at Federal Reserve Banks and Branches
to the cloSing hour, one-thirty p.m., Eastern Daylight Saving
ne,
Tuesday, June 27, 1967.
Tenders will not be
!eived at the Treasury De~artment, Washington. Each tender must
for an even multiple of $1,000, and in the case of competitive
lders the price offered must be expressed on the basis of 100,
~h not more than three decimals, e. g., 99.925.
Fractions may not
used. (Notwithstanding the fact that the one-year bills will run
-: 366 days, the discount rate will be computed on a bank discount
,is of 360 days, as is currently the practice on all issues of
~asury bills.)
It is urged that tenders be made on the printed
-:rns and forwarded in the special envelopes which will be supplied
Federal Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of
tomers provided the names of the customers are set forth in such
ders. Others than banking institutions will not be permitted to
mit tenders except for their own account. Tenders will be received
hout deposit from incorporated banks and trust companies and from
ponsible and recognized dealers in investment securities. Tenders
F-955
- 2 from others must be accompanied by payment of 2 percent of the t ..
amount of Treasury bills applied for, unless the tenders are
.
accompanied by an express guaranty of payment by an incorporated . .
or trust company.
Immediately after the closing hour, tenders will be opened at
Federal Reserve Banks and Branches, following which public announce.
ment will be made by the Treasury Department of the amount and prlct
range of accepted bids. Those submitting tenders will be advi~d
of the acceptance or rejection thereof. The Secretary of the ~"_
expressly reserves the right to accept or reject any or all ten~n I
in whole or in part, and his action in any such respect shall be
final. Subject to t"nese reservat,ions, 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 Bank on June 30, 1967, b
cash or other immed ia te ly ava ilab Ie funds or in alike face amount
of Treasury bills maturing June 30, 1967.
Cash and exchange tend
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 exempt ion, 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 FederalM
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 bi lIs are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunde
need include in his income tax return only the difference between
the price paid for such bills, whether on original issue or 00
subsequent purchase, and the amount actually received either upoo
sale or redemption at maturity during the taxable year for which til
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and thl
notice prescribe the terms of the Treasury bills and govern t~ t
conditions of their issue. Copies of the circular may be obta~
any Federal Reserve Bank or Branch.
000
STATEMENT OF THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE THE
SENATE FINANCE COMMITTEE
ON THE PUBLIC DEBT LIMIT
JUNE 23, 1967, 9:00 A.M. EDT.
Mr. Chairman and Members of the Committee:
I am here today to talk about financing a war.
It is a costly
war and it must be financed consistently with the preservation
of soundly balanced, and fruitful, economic growth at home
while we are fighting to maintain freedom in a far-off corner
of the world.
Fiscal responsibility means differing things in differing
circumstances.
In a wartime context it must include the courage and
willingness to vote to raise the money that is as necessary
as the guns, planes and materiel needs of our Forces in
Southeast Asia.
Those who support our national effort to
defend freedom from communist aggression in Vietnam do not
hesitate to vote overwhelmingly for appropriations to support
our Forces there.
They will equally support legislation
needed to facilitate the financing of those appropriations.
Fiscal responsibility means, in contemporary circumstances,
that in financing the war we should obtain as much as possible
from current tax revenues as the economic outlook permits.
F-956
- 2 -
It means that expenditures in excess of revenues have
to be financed with debt, and that we must have the ability
to borrow the needed amounts of money in the market.
We
do not intend to be in the position of "squeezing a buck"
where it can cost the lives of our soldiers or the freedom
of a democratic people.
Finally, fiscal responsibility means that we must have
flexibility in our borrowing to manage the public debt as
a constructive force in the economy.
The present temporary ceiling of $336 billion extends
only through June 30 of this year.
On July 1, the limfr reverts
to the permanent leva of $285 billion.
We expect the actual
debt to be about $327 billion on June 30, and to rise considerably
above that level in coming months, so it is obvious that prompt
action is needed.
Let me underscore at this point that it was not a part of
our plans to present this important matter to this body at so
late a date.
I am very conscious of the fact that we were
urged to present our recommendations early, so as to permit
ample time for study and review.
We did in fact have our initial hearing before the House
Ways and Means Committee on Ma-·i 15 -- an earlier starting date
- 4 by $2.3 billion.
And the actual deficit, incidentally,
was the smallest since Fiscal Year 1960.
In Fiscal Year 1967 the special cost of Vietnam
will be a little over $20 billion.
Eliminating
that cost along with the $4.6 billion of revenues
from the Tax Adjustment Act of 1966, there would
be a budget surplus this year of some $5 billion
instead of the deficit of roughly $11 billion that
now appears to be in the making.
For Fiscal Year 1968, it was estimated last
January that the special cost of Vietnam would
be $22.4 billion.
Without that Vietnam cost,
and also without the added tax measures proposed
in January, the 1968 budget was estimated to yield
a surplus of $8.8 billion rather than a deficit of
$8.1 billion.
On a revised reading for Fiscal Year 1968, we would
place Vietnam costs and other expenditures a little
higher and total receipts somewhat lower.
In
testimony before the House Ways and Means Committee
on May 15, I indicated that the prospective deficit
in Fiscal Year 1968 was, in round numbers, $11 billion.
- 5 -
But the point still stands that, absent Vietnam
and absent the special tax measures proposed in
January we would be looking at a budget surplus
rather than a sizable deficit.
In short, except for Vietnam, we would now be facing
potential Federal surpluses, and trying to decide how best to
employ those surpluses among tax reduction, debt reduction, and
expenditures for needed domestic programs to raise the quality
of life in America.
But reality would have it otherwise and instead of the
welcome task of distributing fiscal dividends we have the
difficult, yet necessary, task of financing a war that, however
distant geographically, is very close in its meaning to our
lives and ideals.
A number of steps have been taken already to ensure that
the special demands of Vietnam are financed soundly, in
a balanced economy without the panoply of cumbersome direct
controls that have been employed in past periaE of heavy
military expenditure.
This approach has been accompanied by
a record of upward price movement far below those that
characterized World War II or the Korean War, and even below
that in the major peacetime expansion of the mid-1950's.
In early 1966 the Tax Adjustment Act, passed
- 6 promptly by the Congress, deferred declines in
certain excise taxes and put corporations and
individuals on a more current footing in their
payment of income taxes.
Administrative measures were taken in the spring
of 1966. to speed the payment of corporate income
taxes, and steps were taken within the past several
months to put certain excise taxes on a more
current basis.
The investment tax credit was suspended in
October 1966, not as a revenue measure but as
a selective measure to help slow down an area
of spending that was putting the economy and
the financial markets under excessive pressure;
as soon as it was clear that the special reasons
for suspending the credit no longer existed, the
President recommended lifting the suspension and
the Congress has now acted.
As part of our sound financing program, we have
launched the largest U. S. Savings Bonds campaign
since World War II.
Holdings of Savings Bonds,
which are the most stable and noninflationary form
of debt financing that can be devised, have increased
- 7 from $48.8 billion at the end of June 1965 to
$50.7 billion in May 1967.
Over $1.1 billion
has been added to public holdings of these
bonds just in the past year.
This year we are supplementing the sale of
regular Savings Bonds with a new Freedom Share
savings note.
It carries a higher interest
rate than Series E Savings Bonds and must be
held at least a year before redemption.
It is
designed to produce additional savings, while not
diverting savings from thrift institutions, so we
do not look to the Freedom Share to bring in
multiple billions of dollars -- but we do expect
it to make a significant contribution to sound
financing of the deficit.
Civilian expenditure programs have been held
down to a minimum consistent with meeting basic
national objectives in the many areas that we
cannot afford simply to neglect because we are
fighting a costly war.
We have also proposed a 6% tax surcharge to
defray additional military expenditures and keep
- 8 -
the over-all Federal deficit within bounds that
the economy and the financial markets can
handle.
We need to pay for the increased cost
of the war projected for the next fiscal year.
We certainly do not want to risk resumption of
the monetary strains and excessively high
interest rates that occurred last year, and
that means the Government's own demands on the
credit markets must be held down.
I am not here today to talk about the tax surcharge,
however.
That will be taken up in due course.
a brief comment about the need for the increase.
Let me make
It will be
needed and the economic evidence generated in the months since
it was proposed has strengthened my conviction on this scoreQ
The economy neither needs nor can tolerate the kind of stimulus
it would receive in the second half of this year from a Federal
deficit of the size that would emerge without the proposed tax
surcharge, given the other changes in the situation that have
been and are occurring.
With or without the tax surcharge, however, we must have
flexibility to finance the war and manage the nation's fiscal
affairs prudently.
That means having adequate room under
- 9 the debt limit to cover the wide range of contingencies
present at this time, and having greater flexibility to
borrow outside the short-term area, in the interest of
sound debt management.
A year ago, I asked the Congress to approve a
temporary rise in the debt limit to $332 billion, to extend
through Fiscal Year 1967.
I pointed out then that the
budget figures were uncertain, and I re-emphasized this
point when the Ways and Means Committee provided an increase only to $330 billion.
I noted then that it might
be necessary to return before the end of Fiscal 1967 to
provide additional leeway for the debt.
It was indeed necessary to return for an interim
increase.
The debt ran higher by the middle of Fiscal
1967 largely because of the bigger than expected rise in
expenditures for Vietnam, and the impact of tight money
markets in impeding financial asset sales, raising interest
costs, and adding to loan disbursements in areas particularly hurt by tight money markets.
The Congress responded promptly, early this year,
in raising the temporary debt ceiling to $336 billion.
- 10 This provided sufficient leeway to resume policies of
careful and prudent cash management -- after a period
of some weeks when we operated hand-to-mouth in our cash
management.
The higher limit, while it provided elbow room, was
not taken as a license to spend or incur debt freely.
Indeed, the highest point of debt actually reached after
the limit was raised was $333,227 million on March 14 -well within the $336 billion ceiling.
By June 30, 1967,
we project that the debt will be down to about $327 billion.
Our latest estimate of the administrative budget for
Fiscal Year 1967, as I have already noted, yields a deficit
of around $11 billion.
This is up $1.3 billion from the
estimates submitted last January.
Receipts are estimated
to be down $.5 billion, reflecting a number of minor
revisions, including the early restoration of the investment
tax credit.
Expenditures are working out to be approximately
$500 million to $750 million higher than estimated in
January.
The Budget submitted last January for Fiscal Year
1968 estimated expenditures of $135 billion, and revenues
- 11 of $126.9 billion, yielding an administrative budget deficit
of $8.1 billion.
We do not yet have a firm basis for making
a thoroughgoing revision of these estimates.
A rough interim
revision, which as I indicated earlier was provided to the
Ways and Means Committee last month, placed the deficit about
$3 billion higher -- or around $11 billion.
The $3 billion
difference reflected, about equally, higher spending and lower
revenue.
The $11 billion deficit figure for fiscal year 1968 remains our planning base in projecting debt figures ahead,
although I must say that there are a number of uncertainties
and contingencies bearing on this figure and tending if anything to raise rather than to lower it.
These uncertainties
and contingencies are of a scope that calls for a far different
approach to the debt limit than has been followed in recent
years.
On the revenue side, one element of uncertainty is the
tax surcharge which the President recommended early this
year.
The deficit figure of $11 billion assumes a July 1
effective date for the recommended surcharge.
that particular date is no longer feasible.
Enactment by
Let me underscore
again, however, that there is no wavering in the Administration's
intentions about the surcharge
0
It has been, and still is, a
- 12 definite part of the fiscal program.
But since it has yet
to be enacted, I must consider it as a contingent item.
Also on the revenue side, I must regard the expected
yield of existing tax rates as uncertain in some degree.
The Report of the Ways and Means Committee refers to revenue
estimates for Fiscal Year 1968 by the staff of the Joint
Committee on Internal Revenue Taxation.
Those estimates,
after allowing for the effect of proposed legislation, are
about $4 billion below the January budget estimates, and
also about $2-1/2 billion under the rough interim estimate
that we presented to the T·.Tays and Means Committee in mid-May.
Based on our latest information on individual income tax
revenues and corporate revenues, while much uncertainty
remains, I think it would be fair to say that the Joint
Committee staff estimates could very well approach the
revenue picture for Fiscal Year 1968 more closely than did
our prior estimates.
Consequently, the total receipts figures
they use for the forthcoming Fiscal Year may be regarded for
the purposes of these hearings as a reasonable quantification
of our revenue prospects.
On the spending side, I can only repeat that wars are
by their very nature uncertain, and so are the expenditures
needed to carry them out.
Our estimates of Vietnam spending
- 13 -
are not subject to the particular source of underestimate
that occurred this current fiscal year, when the initial
estimates rested on the assumption that the conflict would
end by June 30, 1967.
Still I must say that a margin ;f
underestimate, or overestimate -- but more likely the first
is always a possibility.
These are contingencies that must be
given due regard.
In the hearings before the other body, a further area
of contingency was also brought out -- namely, the possibility
that not all of the projected participation sales of financial
assets would be carried out, leading to a larger deficit in
the administrative budget and larger rise in Treasury debt
than would otherwise be the case.
The practice in recent years, in estimating debt
limit needs, has been to project a level of debt for the
year ahead on the basis of a constant $4 billion cash
balance, and then to request a $3 billion allowance for
contingencies.
I believe this practice is not suited
to present circumstances for two reasons:
First, the contingencies just outlined are
of a number and scope that render the $3
billion allowance inadequate.
It is worth
- 14 noting that quite apart from the special
uncertainties affecting Fiscal 1968, the
standard $3 billion allowance dates back
to 1958, when the Federal Budget and the
national economy were only a little over
half the size in prospect for the year
just ahead.
Second, I think it is timely to change
the permanent debt ceiling, which has
remained at $285 billion since 1959 -and if that is done the ceiling should
be revised to a level that stands a
reasonably good chance of lasting for
longer than the one year interval that
has typified changes in the temporary
ceiling.
As I need not remind Members of this Committee, in
light of your initial action on the debt limit bill last
February, the present $285 billion permanent ceiling hangs as
usword of Damocles" over the Congress -- and over the Secretary
of the Treasury
requiring legislative action on the debt
ceiling by June 30 each year lest the limit drop down to an obviously unrealistic level.
this ceiling.
Thus it makes good sense to revise
But in so doing there would seem to be little
- 15 gained in moving to a ceiling that did not offer some
reasonably good prospect for durability.
Accordingly, rather than ask for another rise in the
temporary ceiling that would last only through Fiscal Year 1968,
I recommend a significant increase in the permanent debt ceiling
to a level that, hopefully, will provide ample margin for Federal
debt operations and cash management at least through Fiscal
Year 1969.
There is ample precedent, from the World War II period,
for providing large debt limit increases that made sure the
limit would not be a constraint on necessary wartime finance.
From 1941 to 1945, annual increases in the debt limit ranged
from $40 billion to $85 billion.
At the end of the war there
was a substantial margin of extra leeway and the debt limit
was cut back by $25 billion.
Based on that experience, I believe it would have
been entirely appropriate to increase the permanent
ceiling to $375 billion.
At the same time, I can well
understand a desire on the part of Congress to set a
limit that, while not inhibiting the financing needed
for Vietnam, stayed closer to near-term foreseeable
contingencies than would a $375 billion permanent ceiling
at this time.
- 16 mo~or
It is as a result of considering these
less
foreseeable contingencies that the permanent debt limit
figure of $358 billion emerged from the deliberations of
the other body.
That is the level of the permanent debt
limit incorporated in H.R. 10867.
Let me review with you the background for that determination.
The starting point is the table of projected
debt levels appended to this statement, based on a prospective budget deficit of $11 billion in fiscal year 1968, and
a constant cash balance of $4 billion.
The highest point of
debt projected in that table is $345.2 billion, reached on
March 15, 1968.
contingencies.
1)
2)
But that is without any allowance at all for
Now add the following for contingencies:
$ 3.0 billion
Normal contingency allowance •
Possible delay in effective date
II
2.2
of tax surcharge • • • • •
Possible shortfall in revenues at current
tax rates, based on estimates of Joint
Committee staff (cumulative effect by
1.1
3/15/68)
"
Possible shortfall in sales of participation certificates -- or, alternatively,
provision for including participation
certificates issued in FY 1968 under the
I'
debt limit (cumulative effect by 3/15/68)
If
Hypothetical addition to defense costs • •
0
0
3)
4)
5)
•
•
•
•
•
Total contingencies
•
•
•
•
•
•
$12.8 billion
~
17 -
Adding the $12.8 billion allowance for contingencies to
the projected peak debt of $345.2 billion, one arrives at
$358 billion as an appropriate debt limit level for fiscal
year 1968.
certainties.
Let me stress that these are contingencies, not
To guess what the impact might be of a delay in
the proposed tax surcharge is the sheerest speculation.
So
is the figure plugged in for hypothetical additional defense
costs.
Looking beyond fiscal year 1968 -- as we should if we
are seeking to set a revised permanent debt ceiling that will
have some qualities of durability -- the uncertainties and
contingencies cover an even wider range than those that are
dimly foreseeable for the next year.
Based on past experience,
however, a major determinant of the debt limit need applicable
in fiscal year 1969 will be the seasonal rise in debt from
the start of the fiscal year to the high point reached in
the late winter or spring months.
That is the basis of the
rough rule-of-thumb which relates next year's debt limit need
to this year's peak debt level plus this year's deficit.
It is this seasonal need that has been incorporated into
H.R. 10867 and applied to the fiscal years 1969 and beyond.
We do not know the basic budget position that may apply in
- 18 fiscal year 1969, but we can estimate that whether that position is one of surplus, deficit or balance, there will be a
seasonal upswing in debt during the first 8 or 9 months of the
year which will be a major factor in determining the peak debt
for the period.
The experience of recent years suggests that the seasonal
upswing in debt would be about $7 billion, and that is the
figure provided in
H.R~
10867.
The seasonal variation arises
because of the uneven pattern of tax receipts over the year,
with a more than proportionate share concentrated in the last
3-1/2 months of the fiscal year.
8-1/2 months, with
receip~running
That means that in the first
seasonally light, there
must be some extra borrowing until the heavy tax months roll
around
0
The seasonal nature of the $7 billion addition to the debt
limit provided in H.R. 10867 is unmistakably clear.
The
addition applies to the period from July I through June 29
of each fiscal year, beginning July 1, 1968, but each June 30
the debt limit drops back to the permanent level of $358
billion.
We believe this arrangement provides reasonable
operating flexibility while maintaining the principle that
the permanent debt ceiling should be held in reasonably close
check.
- 19 Coverage of the debt limit
A further provision of H. R. 10867 is that participation
certificates in pools of Federally owned financial assets
issued by the Federal National Mortgage Association during
Fiscal Year 1968 shall be counted under the debt limit for as
long as those participation certificates remain outstanding.
We did not seek the inclusion of this provision.
It reduces
our leeway under any given ceiling, and it takes a step
even though it is a temporary step -- along a path, the end
of which we cannot clearly foresee.
the
provis~on
However, we can live with
embodied in H. R. 10867, and we recommend that in
the interest of speedy passage of this vital legislation the
entire bill be approved.
Our own preference, as I informed the Ways and Means
Committee, would have been to make no change in the coverage
of the debt limit at this time.
This was our conclusion after
devoting some considerable staff study to this question
following the debt limit hearings at the beginning of this
year.
This was not because we regarded the existing arrange-
ments as incapable of improvement, but because the proposals
- 20 -
that have been advanced did not appear to us to offer the
prospect of significant improvement.
A particular reason for delay is that further light
on this whole question of debt limit coverage may emerge from
the studies of the President's Commission on Budget Concepts.
While the Ways and Means Committee took note of the Commission's
possible contribution in this area, they nevertheless chose to
incorporate the provision described for including participation certificates under the debt ceiling.
But, as I have
noted, in light of the present time factor, the provisions
of H. R. 10867 on this matter are workable and acceptable to
us, even if not especially welcome.
The 4-1/4 percent ceiling
Let me turn now to the 4-1/4 percent interest rate
ceiling and the modification of that ceiling provided in
a R.
10867.
Because of the 4-1/4 percent interest rate
ceiling on Treasury bonds, the Treasury has been unable
to sell marketable debt issues maturing in over 5 years
since May 1965 -- just before events in Vietnam led to
an escalation not just in our military effort but also in
our economy, credit demands, and interest rates.
- 21 -
As I mentioned earlier, the intensified Savings Bonds
campaign has made a contribution to an improved debt
struct~re,
and it will continue to do so with the introduction of the
Freedom Share this year.
But Savings Bonds and Freedom Shares
cannot do the whole job.
Good maturity balance must be
achieved' and maintained in the marketable debt, too.
In the early 1960's, with long-term interest rates holding
relatively steady, the Treasury made big strides in improving
the maturity structure of the marketable debt
relieving
the under-5-year area of heavy maturities and issuing instead
a large volume of intermediate and longer-term debt.
Chiefly through the use of advance refundings -- inducing
holders of relatively short-term issues to exchange into
relatively long-term issues -- the average maturity of the
marketable debt was raised from 4 years
1960 to 5 years
2 months in September
5 months in January 1965.
The proportion
of the marketable debt maturing within 5 years was reduced
from 78% in September 1960 to 67% in January 1965.
The wisdom of these efforts to lengthen the debt was
demonstrated last year, when very high rates had to be paid on
refundings.
Fortunately, the magnitude of the refunding job had
been substantially reduced because of previous advance refundings.
- 22 -
Since early 1965, the trend has been toward a shorter
average maturity and a heavier concentration of debt within
the 5-year area.
From an average maturity of 5 years
5 months in January 1965, the marketable debt shortened to
4 years
6 months at the end of May 1967.
The proportion of
the marketable debt maturing within 5 years has grown from
67% to 77% over this period.
At the end of June 1967 the
average maturity of the marketable debt will still be about
4 years
6 months, or 5 months shorter than a year earlier.
What might happen to the debt structure over, say,
the next year and a half, if the Treasury issued no debt
maturing in over 5 years?
Assuming that new borrowings
and refundings are handled about in line with patterns during
the past two years, we would estimate the average maturity
of the marketable debt by the end of December 1968 at 3 years
8 months -- well under the 1960 low point.
Some 85% of the
marketable debt would mature within 5 years, including
nearly 50% maturing within one year.
- 23 This shortening tendency is unwelcome.
It presents a
f1roblem that should be dealt with in an orderly and systematic
way, so that we do not face an excessive pile-up of maturing
debt.
Such a pile-up, if it came at a time of tight money
and high rates, would mean that the Treasury had to compete
for investment funds on most unfavorable terms -- bidding
against itself and against other borrowers for the favor of
investors.
This kind of frantic competition could send
short-term rates up sharply and push long-term rates higher,
too, with disruptive effects throughout the capital markets.
Further, the heavy pile-up of relatively short debt
could make'it more difficult for economic stabilization
policies to operate smoothly in the economy.
Heavy amounts
of short-term debt represent potentially excessive liquidity
in the hands of the holders.
This could mean that the
monetary authorities would have to take more drastic restraining action than otherwise
in terms of interest rate
effects -- in order to restrain total demand.
These are not imminent dangers, but they are potential
problems that can be avoided or minimized if we would make a
careful, orderly effort to stretch out some short-term debt
into a longer area.
- 24 Certainly I would much prefer to be able to accomplish
the needed improvements in the debt structure at low rates
of interest -- low enough to corne within the present 4-1/4%
statutory ceiling.
But while rates have corne down since last
summer's high point they are not at a level that would permit
long-term financing under the 4-1/4% ceiling, and I would like
to be able to take some steps -- even if they are small-sized
steps -- on the debt structure problem while aiming toward
further progress in reducing the over-all level of interest
rates.
In appearing before the Ways and Means Committee several
weeks ago, I requested two modifications of the 4-1/4% ceiling:
first, that the maximum maturity on Treasury notes -- to which
no rate ceiling applies -- be extended from the present 5
years to 10 years, and, second, that the Treasury have authority
to sell up to
$2 billion of longer bonds without being subject
to the 4-1/4% ceiling.
I did not ask for repeal of the 4-1/4% ceiling, just as I
did not ask for repeal of the debt limit.
Both of these are
useful concepts and worth preserving, provided they are not so
rigidly bound as to interfere with sound debt and cash management.
- 25 The House Committee went only part way in meeting my
request on the 4-1/4% ceiling.
They rejected the request for
authority to sell $2 billion of bonds outside of the ceiling,
but they agreed to extend the maximum maturity of Treasury
notes to 7 years.
That provision is incorporated in H.R. 10867.
We believe that this modification will be he1pfu1,a1though it is less than we asked for.
It does at least demon-
strate a concern with the problem of debt structure, and that
is an important step forward.
Through a widened flexibility
in this area it should be possible to mitigate the shortening
tendency of the debt observable in recent years.
I have no hesitation whatever in recommending strongly
that you give approval to this feature of H.R. 10867.
Even
if we did not face an urgent timing problem, requiring the
completion of Congressional action on the debt ceiling within
the next few days, I do not believe there would be anything
to be gained by pressing at this time for still greater
flexibility in our debt managemento
Conclusion
I believe that H.Ro 10867 provides for a responsible
approach to the problems of providing adequate flexibility for
needed Government borrowing, and sound debt and cash management.
It revises the unrealistic $285 billion permanent debt
- 26 -
ceiling, and puts the debt ceiling legislation on a basis
that should remove the "Hairsbreadth Harry" scenario that
has been enacted in the closing days of June in each of the
past several years.
It also makes some worthwhile headway
on the matter of modifying the 4-1/4% interest rate ceiling,
to permit greater flexibility of debt management.
I urge most strongly, therefore, that you approve
H.R. 10867 without further modification, and clear the way
for speedy passage of this urgently needed legislation.
As I need not remind you again, it is imperative that the
Congress act by the end of June because the debt ceiling
drops on J~ly 1 to $285 billion -- a level that would be
some $42 billion under the actual level of debt now expected
on that date.
At that point the Treasury would
b~
able to
issue no new debt, including debt needed to refund maturing
issues and including the United States Savings Bonds now
being purchased by over 9 million persons on payroll savings
plans and by other buyers over the counter.
Without new
borrowing, we expect to have cash on hand at the end of June
sufficient to last only through about July 12.
After that,
our cash would be inadequate either to redeem maturing debt
issues or meet current bills.
- 27 -
Our national commitments must be met in the financial
area, as they are being met on the battlefield.
It is not
conceivable that the Congress would shirk its responsibilities
by leaving the Government financially unable to carry out the
programs authorized and approved by the Congress, particularly
in wartime, and when the financing of the war effort is the
ocoasion for a larger calIon the private market.
ESTIMATED PUBLIC DEBT SUBJECT TO LIMITATION IN
FISCAL YEAR 1968, ASSUMING BUDGET DEFICIT
OF $11 BILLION, AND NO ALLOWANCE FOR CONTINGENCIES
Based on constant minimum operating cash balance of $4.0 billion)
(In billions)
Operating Cash
Public Debt
Balance (exc1udSubject to
ing free gold~
Limitation
1967
$324.3
$4.0
June 30
July 15
July 31
4.0
4.0
326.4
327.2
August 15
August 31
4.0
4.0
329.7
331.8
September 15
September 30
4.0
4.0
335.0
330.9
October 15
October 31
4.0
4.0
334.7
334.8
November 15
November 30
4.0
4.0
337.3
338.3
December 15
December 31
4.0
4.0
341.9
337.2
1968
January 15
January 31
4.0
4.0
339.3
338.5
February 15
February 29
4.0
4.0
339.4
341.1
March 15
March 31
4.0
4.0
345.2
342.9
April 15
April 30
4.0
4.0
344.9
337.3
May 15
May 31
4.0
4.0
337.4
340.2
June 15
June 30
4.0
4.0
342.7
335.3
June 22, 1967
M'u~T1J:IG OF THE
STJ..'rES-CP.lii;.DIAl1 ca·:':.fi'l"rEE
ON TEE OPZ.u:m CF 'l'r:-S EI.BVf;:n'rt
JOINT
U:U'i"r~
Hr. Chairman:
Thank you for your words of Vlelcome.
vIe have
always enjoyed coming to Canada for these meetings
and we are particularly pleased to be
meeting in Montreal in your Centennial Year.
Our Conr.nittee, as usual, is faced with a lengthy
agenda.
We must perforce, deal largely Vlith problems
and occasionally with controversy.
But in a world
where men are not al\:vays prepared to settle their
difference by discussion, our relations, as exemplified
by the activities of this Joint Cabinet Corrrnittee, stand
as a useful model.
We might also remember that the vast
majority of our exchanges of goods, capital and ideas
and they are the largest such bilateral exchanges in
-2-
the world--take place without controversy and provide
the true base for our relationship.
We do
no~
always settle our problems at these
meetings, but we often set many of them on the path
to solution.
The agenda is lengthy and I propose, Mr. Chairman,
that we now begin our deliberations.
Thank you.
Ml'1AH.KS OF THJ:: HONORABLE HBNRY H. FOWLER
ON THE OCCF.SION OF '.i'HE LUNCHEON ~mETING OF THE
JOINT UNITED
ON
TRADE
STATES-Cru~ADIk~ CO~~~ITTEE
~.ND
ECONONIC AFFAIRS.
June 22, 1967
Montreal
:,x. l-linister, Ladies and Gentlemen
We are near the end of another -- the eleventh -- productive
~nd ins~ructive
meeting of the Joint United States-Canadian
Committee on Trade and Economic Affairs.
It has truly been an honor and a pleasure to be here.
I
will return to Washington with renewed tidings that the United
States and Canada are continuing to acknowledge their problems
w:i..t.h QonQ~X"uc1;ive
frankness, to approach their solut ion with
confidence, and to Cleal with them in a spirit of creative
~{~~i~ Canada can turn to its second hundred years of nationhood
with a feeling that the consultative and cooperative procedures
represented by the workings of this Committee puts our trade
-
2 -
and economic affairs on fruitful grounds.
That is a mighty
important arou for bo·th of us because oach of us is the other's
principal t4ade partner.
Let me say, on our part, that
\·le
look forward to another
century -- at least -- of growin9 trade and economic cooperation
with Canada.
We believe very strongly that it is not stretching
things at all to look forwarCl to another hundred years of
progressively growing and mutually beneficial economic dealings
between us.
We believe that it is precisely the fact that we
have learned to bring our problems to the conference table,
at the policy making level of the Cabinets of our two countries,
that justifies this optimism.
I believe in fact that there is no international relationship
in the world that better justifies looking a whole century ahead
-
3 -
\'Jith t"he cxpectQtion of a solid growth of mutual benefits than
ooos t"he United Statcs-CunCldian trade ~nCl economic relationship.
One important reason for this.
r..ll.:cOUgt:
this
in my mind, is the fact that
Joint Cotl"l..initt:ee we have ensured that our good
economic and trade relations are not taken for granted.
We
are aware that very serious problems can and do arise within
the context even of the most beneficial overall relationship.
\~e
are aware that it is the worst of all policies to let such
problems go untended simply because the parties to the problem
are fr iends .
Through our Joint Committee we ensure not only that our
problems will be spotted as they come over the horizon, and
not only do
problems.
'ile
ensure that something will be done about those
All that is progress and very important progress.
- 4 ~-lo~t impo:c-cant of all,
how.:!ver, is the fact that in our Joint
committee wo arc agreed th24t we have to find solutions that
~c satisfactory to both of us.
WG>
be making
Thut means that not only shall
progress, but that we shall be making progress
of a kind, in directions, and within bounds that we both find
acceptable.
This will be
States.
import~nt
not only to Canada and the United
It will be important to the wnole world.
only a long term matter:
Nor is it
there is a vast here-and-now need
for acceptance by the world of consultation and cooperation
us a way of international life.
We have just promised ourselves an expansion and
liberalization of world trade through the happy outcome of
:ha I<Gnnedy Round.
Now that advance needs to b~ secured by
any related steps toward wider, deeper and more constant
-
economic cooperation
~cross
5 -
national frontiers.
I will mention
just one -- and, here again, I am glad to be able to say that
the united States and Canada find their outlook very similar.
refer to t11e renc\'led emphasis the trade agreement gives
I
to the need for improvement of our international monetary
system, particularly to the need
~eserve
a means to provide a
supplement adequate to our needs for international
liquidity.
lo\~-ur
f01:
It would be less than reasonable, in my view, to
the barriers to trade, and thon fuil to widen the financial
channelG sufficiently to carry the enlarged flow of trade
that we want and need to enrich our lives and the lives of
all others.
And so I will just ask you to join mo in a salute to
optimism -- a safe and sane optimism -- as we look down the
-
6 -
c1cc<loes of Canada' s secono hundred YCZlrs I
.::md as we look
forward to a grO\,..;in'J acceptance by the rest of the world of
the careful anc1 mutually considerate fi\ethods of achieving
and maintaining good economic relations that we have devised
for our two countr ies.
vJe com..'11end 'chese methods as a useful
model to all others, anywhere in this wide world of so much
potential for economic growth and progress.
o
o
o
rREASURY DEPARTMENT,
~E
6:30 P.M.,
June 26, 1967.
11,
RE3Ui,TS OF TREASUHY'.3 vJEEKLY 1:;I1.1 OFl"ERING
The Treasury Department announced that the tenders for two series of Treasury
3, one series to be an additional issue of the bills dated March 30, 1967, and the
~ series to ~e dated JQle 29, 1967, which were offered on June 21, 1967, were
3d at the Federb.l Heserve Banks today. Tenders were invited for ~1,300,000,000,
1ereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 182-day
3.
The details of the two series are as follows:
~
OF
ii.~;C:r.;pT,c;D
~TITIV~
olD3:
:!igh
~Oh'
A.verage
91-day Treasury bills
maturing SeEtember 28~ 1967.
Approx. Equiv.
Price
Annual Rate
99.140
3.402%
99.1()0
:3 .560';;
99.125
3.46ZJ, 11
182-day Treasury bills
maturing December 23~ 1~6L
Approx. Equiv.
Annual .(ate
Price
98.038
3.881%
3.992);
97.982
11
98.003
3.950;;
72% of the amount of 91-day bills bid for at the low price was accepted
75l; of the amount of 182-day bills bid for at the low price was accepted
L TEJJJER.S ArPLI!.<:.D FOR k.D ACCaTED .by FWtRAL
rict
:m
York
3.delphia
eland
nond
nta
3.;;0
Louis
eapolis
3.S City
3.S
~rancisco
TOTALS
AEE1ied For
AcceEted
9,197,OlJO
$ 19,197,000 $
1,406,348,000
936,348,000
23,939,.000
23,939,000
30,345,000
30,345,000
10,635,000
10,635,uOO
42,887,000
42,887,000
229,392,000
104,392,000
33,928,COO
31,928,000
13,1l0,000
13,110,000
3],341t,uOO
33,344,000
21,749,000
21,469,000
47.727.()OQ
42,727,000
RE0ERV~
DISTRICTS:
Accepted
ipElied For
3,069,000
$
3,069,000 $
770, 834,0()0
1,205,834,000
12,012,000
4,012,000
15,746,000
20,746,000
3,857,000
3,857,000
20,097,000
28,097,000
70,290,000
217,790,000
12,964,000
15,464,000
9,109,000
9,109,000
19,268,000
19,268,000
12,632,000
17,632,000
58,221.000
69.471.000
$1,912,601,000 $1,300,321,000 ~ $1,622,349,000
$1,000,099,000
EI
InclUdes $231,397,000 noncompetitive tenders accepted at the average price of 99.125
Includes $109,491,000 noncompetitive tenders accepted at the average price of 98.003
rhese rates are on a bank discount basis. The equivalent coupon issue yields are
3.55% for the 91-day bills, and 4.10% for the 182-day bills.
57
REASURY DEPARTMENT
June 26, 1967
FOR A.M. RELEASE
TUESDAY, JUNE 27, 1967
U.S.-MEXICO EXCHANGE STABILIZATION AGREEMENT
INCREASED TO $100 MILLION
Secretary of the Treasury Henry H. Fowler and the
Ambassador of Mexico, Hugo B. Margain have completed an
exchange of let,ters increasing the amount of the existing
Exchange Stabilization Agreement between the two
countries from $75 million to $100 million.
The existing Agreement was signed on December 30,
1965, for the two-year period ending December 31, 1967,
by the United States Treasury, the Bank of Mexico, and
the Government of Mexico.
The Agreement provides
reciprocal swap facilities available for use both by
Mexico and by the United States.
These facilities enable
the financial authorities in both countries to cooperate
in the conduct of stabilization operations deemed mutually
desirable from time to time to provide stable and orderly
conditions in the exchange markets.
000
F-958
TREASURY DEPARTMENT
4
~OR
RELEASE 6: 30 P •. M. ,
fuesday, June 27, 1967.
RESULTS OF TREASURY'S MONTHLY BILL OFFERING
The Treasury Department announced that the tenders for two series of Treasury
Ji11s, one series to be an additional issue of the bills dated March 31, 1967, and
Ghe other series to be dated June 30, 1967, which were offered on June 21, 1967, were
)pened at the Federal Reserve Banks today. Tenders were invited for $500,000,000,
)r thereabouts, of 275-day bills and for $1,000,000,000, or thereabouts, of 366-day
:>i11s. The details of the two series are as follows:
RANGE OF ACCEPl'ED
COMPETITIVE BIDS:
High
Low
Average
275-day Treasury bills
maturing March 31, 1968
Approx. Equi v.
Price
Annual Rate
4.650%
96.448 !!:l
96.340
4.791~
96.392
4.723'"
Y
366-day Treasury bills
maturing June 30 , 1968
Approx. Equiv.
Price
Annual Rate
95.298
4.625~
95.080
4.839i
95.189
4.732~
!I
Excepting 1 tender of $800,000
of the amount of 275-day bills bid for at the low price was accepted
78'" of the amount of 366-day bills bid for at the low price was accepted
38i
TOTAL TENDERS APPLIED FOR AND ACCEPl'ED BY FEDERAL RESERVE DISTRICTS:
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTALS
£I
£I
y
AI?,Elied For
$
158,000
941,598,000
4,813,000
10,858,000
741,000
7,460,000
167,808,000
6,035,000
1,775,000
5,878,000
11,700,000
23,780,000
AcceEted
$
158,000
440,598,000
813,000
10,858,000
741,000
1,460,000
20,808,000
6,035,000
775,000
5,878,000
3,200,000
8,780,000
$1,182,604,000
$
500,104,000
£I
A'pp1ied For
$
20,747,000
1,344,011,000
11,157,000
9,980,000
2,191,000
18,344,000
267,311,000
14,746,000
4,696,000
5,941,000
12,125,000
59,239,000
AcceEted
$
10,747,000
77 2 , 411 ,000
3,157,000
9,980,000
2,191,000
14,344,000
112,311,000
14,746,000
4,196,000
5,941,000
5,875,000
44,239,000
$1,770,488,000
$1,000,138,000
sf
Includes $17,904,000 noncompetitive tenders accepted at the average price of 96.392
Includes $37,797,000 noncompetitive tenders accepted at the average price of 95.189
These rates are on a bank discount basis. The equiValent coupon issue yields are
4.94% for the 275-day bills, and 4.99% for the 366-day bills.
F-9S9
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
$2,300,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing July 6, 1967,
in the amount of
$2,302,197,000, as follows:
9l-day bills (to maturity date) to be issued July 6,1967,
in the amount of $ 1,300,000,000, or thereabouts, representing an
additional amount of bills dated April 6, 1967,
and to
mature October 5, 1967, originally issued in the amount of
$1,000,743,000, the additional and original bills to be freely
interchangeable.
l82-day bills, for $1,000,000,000, or thereabouts, to be dated
July 6, 1967,
and to mature
January 4, 1968.
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 3, 1967.
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-960
- 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 Treasu~
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 Bank on July 6, 1967, in
cash or other immediately available funds or in a like face amount
of Treasury bills maturing July 6, 1967.
Cash and exchange tender,
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 fro
any Federal Reserve Bank or Branch.
000
TREASURY DEPARTMENT
=
4
June 28, 1967
FOR :o.1MEDIATE RELEASE
TREASURY BORROWING PLANS
The Treasury announced today the first steps in the program
of borrowing to meet cash needs during the fiscal year beginning
July 1, 1967.
On July 5, the Treasury plans to sell, through competitive
auction, $4 billion of tax anticipation bills maturing in March
and April 1968. The $4 billion total includes $2 billion of
bills maturing March 22, 1968, and $2 billion of bills maturing
April 22, 1968, which may be used at face value in payment of
taxes due, respectively, on March 15 and April 15, 1968. The
bills are to be issued and paid for on July 11, 1967. Commercial
banks may make payment for the bills by crediting Treasury tax
and loan accounts.
The Treasury also announced that weekly offerings of 3-month
bills would be enlarged by $100 million, commencing with the bills
to be auctioned on July 10. This means that weekly bill offerings
will include $1.4 billion of 3-month bills and $1.0 billion of
6-month bills. This will raise $1.3 billion of new cash over the
course of three months.
Further, it is planned that subsequent offerings of bills
maturing on month-end dates will include $1 billion of l-year
bills and $500 million of 9-month bills. This will raise $900
million of new cash over the course of the next fiscal year.
Finally, it was indicated that additional cash borrowing
will be needed after the August 1967 refunding, and that plans
for this borrowing will be announced when the needs have been
evaluated more precisely and the financing program formulated.
000
F-961
TREASURY DEPARTMENT
June 28, 1967
R IMMEDIATE RELEASE
TREASURY OFFERS $4 BILLION OF
MARCH AND APRIL TAX BILLS
The Treasury Department, by this public notice, invites tenders
r two series of Treasury bills designated Tax Anticipation Series
the aggregate amount of $4,000,000,000, or thereabouts, as
Haws:
2SS-day bills, for $2,000,000,000, or thereabouts, to be dated
ly 11, 1967, and to mature March 22, 1968. The bills will be
cepted at face value in payment of income taxes due on March 15,1968.
286-day bills, for $2,000,000,000, or thereabouts, to be dated
ly 11, 1967, and to mature April 22, 1968. The bills will be
cepted at face value in payment of income taxes due on April 15, 1968.
The bills of both series will be issued on a discount basis under
mpetitive and noncompetitive bidding as hereinafter provided and at
turity, to the extent they are not presented in payment of income
xes, their face amount will be payable without interest. They will
issued in bearer form only, and in denominations of $1,000, $5,000,
0,000, $50,000, $100,000, $500,000, and $1,000,000 (maturity value).
Taxpayers desiring to apply these bills in payment of income taxes
y submit the bills to a Federal Reserve Bank or Branch or to the
fice of the Treasurer of the United States, Washington, not more than
fteen days before the appropriate income tax payment date. In the
se of bills submitted in payment of income taxes of a corporation they
all be accompanied by a duly completed Form 503 and the office
ceiving these items will effect the deposit on the date the taxes are
e. In the case of bills submitted in payment of income taxes of all
her taxpayers, the office receiving the bills will issue receipts
erefor, the original of which the taxpayer shall submit on or before
e date the taxes are due to _the District Director of Internal Revenue
r the District in which such taxes are payable.
962
- 2 Tenders will be received at Federal Reserve Banks and Branches up
:0 the closing hour, one-thirty p.m., Eastern Daylight Saving time,
~ednesday, July 5, 1967.
Tenders will not be received at the Treasury
)epartment, Washington. Each tender must be for an even mUltiple of
~l,OOO, and in the case of competitive tenders the price offered must
Je expre~sed on the basis of 100, with not more than three decimals,
~.g., 99.925.
Fractions may not be used. It is urged that tenders
Je made on the printed forms and forwarded in the special envelopes
~hich will be supplied by Federal Reserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of
:ustomers provided the names of the customers are set forth in such
tenders. Others than banking institutions will not be permitted to
submit tenders except for their own account. Tenders will be received
Nithout 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
~mount of Treasury bills applied for, unless the tenders are accompanied
)y an express guaranty of payment by an incorporated bank or trust
:ompany.
All bidders are required to agree not to purchase or to sell, or to
nake any agreements with respect to the purchase or sale or other
jisposition of any bills of the issue for which they are bidding at a
specific rate or price, until after one-thirty p.m., Eastern Daylight
Saving time, Wednesday, July 5, 1967.
Immediately after the closing hour, tenders will be opened at the
Reserve Banks and Branches, following which public announcement
Nill be made by the Treasury Department of the amount and price range
)f accepted bids.
Those submitting tenders will be advised of the
~cceptance or rejection thereof.
The Secretary of the Treasury expressly
reserves the right to accept or reject any or all tenders, in whole
Jr in part, and his action in any such respect shall be final. Subject
:0 these reservations, noncompetitive tenders for $400,000 or less for
~he 255-day bills and $400,000 or less for the 286-day bills, without
5tated price from anyone bidder will be accepted in full at the
iVerage price (in three decimals) of accepted comp~titive bids for the
:espective issues. Payment of accepted tenders at the prices offered
~st be made or completed at the Federal Reserve Bank in cash or other
lmmediate1y available funds on July 11, 1967, provided, however, any
lualified depositary will be permitted to make payment by credit in its
Creasury tax and loan accounc for Treasury bills alloted to it for itlelf and its customers up to any amount for which it shall be qualified
~ excess of existing deposits when so notified by the Federal Reserve
lank of its District.
~ederal
- 3 -
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
freasury 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
3re exempt from all taxation now or hereafter imposed on the principal
Jr 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
FOR P.M. RELEASE
FRIDAY, JUNE 30, 1967
REMARKS OF THE HONORABLE JOSEPH W. BARR
UNDER SECRETARY OF THE TREASURY
TO
TIIE JAPANESE ECONOMIC MISS ION TO THE U. S. MIDtlEST
AT
THE MAYFLOWER HOTEL, WASHINGTON, D.C.
FRIDAY,
JUNE 30, 1967, 1:30 P. M., EDT
International Cooperation for
Economic Growth and Mutual Security
I am indeed happy to be here before this distinguished
group and to have the opportunity to participate in a venture
designed to improve mutual understanding between Japan and
the United States and to expand the flow of trade between
our two countries.
It is a particular pleasure for me today to welcome this
mission and its Chairman, Mr. Kazutaka Kikawada to the
United States.
My pleasure in greeting you is reinforced by memories
of the most cordial reception given me by your countrymen in
the course of my travels to Japan, most recently last summer
when I had the privilege of participating in the U.S~ Delegation
at the U.S.-Japan Committee on Trade and Economic Affairs in
Kyoto. I hope that your visit to my home state of Indiana was
as useful and enjoyable as have been my visits to Japan.
I understand that you have had a busy schedule in the
Midwest and this week in Washington. I gather that there
have been many opportunities to discuss trade and investment
flows between our countries and that you have been briefed on
the economic outlook in the United States.
I would like, therefore, to turn briefly this afternoon
to a different subject. It is one with which I have been
concerned frequently during my tenure here at Treasury -that of finding solutions to the U. S. balance of payments
F-963
- 2 -
problem consistent with a continuation of world-wide economic
growth and prosperity.
The broad outline of our problem is familiar. In sixteen
of the past seventeen years -- with the sole exception of 1957,
when under the influence of the Suez crisis our balance of
payments showed a small surplus -- the U. S. has experienced
payments deficits. The deficit, on a liquidity basis, has
persisted despite swings in our current account position from
a deficit of $2.3 billion in 1959 to a surplus of $5.7 billion
in 1964. As a result of the series of deficits, our gold
stock has dropped, to $13.2 billion at the end of last year.
Let me assure you -- in case there is any doubt
that
we fully recognize our payments problem, and that it is a
difficult one.
I want to make it crystal clear that we regard it as a
problem that must be solved in a long-term, fundamental sense.
Considerable constraints on our freedom of action
throughout the world -- which no one in this country wants
would follow if we had to conclude that our present approach
to the problem could not yield equilibrium when we no longer
have the extraordinary foreign exchange costs of the Vietnam
conflict. It is important, not only to us but the rest of
the world, that the solution to our payments problem be found,
for the long term, in a combination of sound economic
conditions in this Nation and in collaboration with us by
other countries.
The rest of the world has a large stake in the United
States' ability to avoid constraints affecting our
contributions to mutual security and development aid, as well
as continuation of our liberal trade and payments policies.
I need only mention two of the principal, short-term
measures -- the Interest Equalization Tax and the Voluntary
Federal Reserve Program to restrain capital outflows from banks
and other financial institutions -- to illustrate that the
method by which we solve our problem is important to you.
You will recall the difficulties presented by the
imposition of the lET which culminated in our granting an
exemption from the tax for $100 million per year of Japanese
Government or Government-guaranteed debt in the IT.S.
At the same time, I am sure you realize these restraints
- 3 -
have played a vital role in a period in which Vietnam costs
have had a major adverse effect an our payments position.
The United States has sought to avoid solutions to our
balance of payments problem which would impede progress
toward an open, competitive, and fruitful world economy.
We recognize the u.s. should continue to meet its fair
~re of international commitments on behalf of mutual
security in the Free World and economic development in the
poorer nations of the Free World. In addition, the United
States should export private capital.
To deprive a world that needs capital of access to the
most efficient capital market in the world would, over the
long run, constitute an act of economic perversity.
Our long-range program to improve our position in a
manner consistent with these considerations is a varied one.
A major emphasis of our program is to improve our
trading position. We hope to achieve a trade surplus
$3 to $4 billion higher than the $3.7 billion of last year.
We have had a trade surplus of this magnitude before, in
1964. Such an increase is neither unreasonable nor would
it create havoc in an expanding international trading world
in which the exports of all countries currently exceed
$200 billion. Among the measures we have taken to encourage
our exports are to:
simplify procedures and exand facilities
for export financing by the Eximbank
expand efforts to work with private firms
to find new markets
enlarge commercial staffs in our embassies
abroad
Aside from the export field, we have taken other actions
to improve our position fundamentally. I will mention only
a few here.
- 4 -
We are requiring all Government agencies to conduct their
programs abroad to minimize their foreign exchange costs.
We are searching for ways to increase foreign tourist travel
in the U. S. We are seeking to make foreign investment in
this country more attractive.
We have gotten legislation, based on pioneer work in
this field by Secretary of the Treasury Fowler, designed to
make foreign investments in this country more attractive.
And, we are constantly pressing European countries to improve
their capital markets, in order for them to assume a more
equitable part of the responsibility for providing
international finance.
Thes'e measures, while he lpful, cannot do the entire job
alone. If our deficit is to decline, surpluses of other
countries must fall. Therefore, surplus countries must also
assume a measure of responsibility if a better payments
equilibrium is to be achieved within a cooperative framework.
Much of this cooperation necessarily must be on the part
of the persistent surplus countries of Western Europe. But
all nations are concerned, particularly those whose role in
international trade and finance is important in their economic
life. Japan is clearly such a nation.
Let me discuss briefly the balance of payments relationships
between the United States and Japan. Data show a consistently
large surplus in favor of Japan over a number of years. Japan
has benefited in particular from large net military expenditures
by the United States in Japan, which totaled $450 million in
1966 and are expected to be even greater in the current
year.
May I emphasize that this is a matter of vital concern
to us.
The trade balance between our two countries
which had traditionally been favorable to the United States,
turned heavily in favor of Japan during the past two years.
Large capital flows from the United States to Japan in the early
1960' s , however , were also reversed in 1965 and 1966 . When all
items are totaled, our balance of payments deficit with Japan
has averaged half a billion dollars annually in the 1960's.
What can Japan do to help insure a solution to the U. S.
balance of payments problem that is beneficial to Japan as
well as to the U. So and to the rest of the world?
Japan has cooperated in many ways. This has been demonstrated,
in the monetary field, by Japan's reserve policies and its
position in the international liquidity negotiations,
- 5 In the same spirit, Japan might consider other actions.
Your trip here, for example, might have given you some ideas
an how you could expand your imports from the United States.
I know you have made an effort to expand your trade with
Europe. Despite the obstacles that have been placed in your way,
I wonder if more could not be done.
In the financial area, you have traditionally looked to the
United States as a source of funds. In recent years, you have
turned to some extent to European capital markets for financing,
but has, perhaps, the time come to more fully utilize the
possibilities there?
Could Japan, perhaps, consider further investments in the
U.S.? W~ have noted with interest the many plans for expanded
Japanese investments in Canada. We would welcome more direct
investment by your companies in the United States. Is this not
also the time to strengthen the close links between the financial
markets of our two countries by increasing your portfolio investments in this country? You may be aware that the recent enactment
of the Foreign Investors Tax Act increases the attractiveness of
such investment, as I mentioned earlier.
Now let me turn your attention to the need for more equitable
burden-sharing among the developed countries in meeting the
capital requirements of the less developed world.
I will not dwell on the basic problem we face today.
President George Woods of the World Bank put it succinctly las t
September when he said:
" ..•. at this moment of increased potential, it is
a matter of high irony that development, instead of
proceeding at the faster pace of which it undoubtedly
is capable, is threatened by a serious loss of momentum.
The effort is faced by a crucial finance gap -- the
difference between the capital available and the capacity
of the developing countries to use increasing amounts of
capital effectively and productively."
To close this gap is the challenge to the developed
countries -- a challenge which Japan has increasingly demonstrated
it is willing to meet. We welcome such statements as that of
Prime Minister Sato in addressing a session of the Diet on
March 14, this year:
"As an Asian nation and as one of the leading
advanced industrial nations, our country is conscious
of its responsibilities and will extend further
cooperation to many developing countries."
- 6 We also note the record shows you are steadily increasing
your economic aid program from year to year and that the
recently announced figure for aid to developing countries in
1966 -- $538 million -- was nearly 11 percent more than in the
previous year. This figure included private disbursements as
well as official aid, it is true, and given the debt burdens of
many developing countries, the terms of some of the loans
were relatively hard. Nonetheless, your effort has been a
commendable one.
Speaking frankly, however, we believe your remarkable
achievements during recent years in economic growth will permit
you to do even more in the future to assist the developing
world.
I cannot fail to recognize the leading role Japan is
progressively playing in promoting regional economic development,
as demonstrated most recently at the Ministerial Conference
on Southeast Asian Development held in Manila last April. But
perhaps the best evidence of Asian initiative in the economic
field, including a crucial role by Japan, is the Asian
Development Banko I have a very personal interest in the
Bank, having been one of the signers of the Bank's charter at
the Manila meeting in December 1965. Japan has not only
provided $200 million of the Bank's capital (as has the
United States), but as you know, has also furnished the Bank
an able and conscientious president in the person of Mr. Takeshi
Watanabe"
These new initiatives in Asia have the warm support of
the American peopleo As President Johnson put it last year
on his trip to Asia and the Pacific:
"We shall also be the friends and partners
of those in Asia who want to, and who are willing
now to work together to fashion their own destinyc
From you must come initiative and leadershipo
From us will come cooperation rr
o
Our role as a non-Asian country is to assist, to help, to
encourage, to support
We intend to continue such support.
0
As Secretary Fowler pointed out in his speech at the
inaugural meeting of the Asian Development Bank in Tokyo last
November our support must be consistent with our responsibility
and obli~ation to achieve and maintain a reasonable equilibrium
- 7 -
in our own balance of payments. This is essential to help
preserve the continued sound working of the international
financial system, of which a dollar "as good as gold" is a
crucial elemento
In the final analysis, regional development has promise
and viability only in the context of an orderly, smoothlyfunctioning monetary system. It should be possible for us to
devise imaginative methods to achieve the dual objective of
increased aid and protection of balance of payments.
In conclusion, let me say that we all know that the
United States could, if necessary, solve its balance of payments
alone, but· it could do so only at great cost to the economies,
the aspirations, and the safety of all the nations of the
Free World o However, we believe that we should and that we
shall, with the cooperation of Japan and other nations who
recognize their stake in the continued viability of the world's
economy, find a solution to this problem in a combination of
measures consistent with the responsible role of the
United States in international economic and financial matters.
000
TREASURY DEPARTMENT
1
'OR RELEASE 6: 30 P.M.,
[onday, July 3, 1967.
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced that the tenders for two series of Treasury
ills, one series to be an additional issue of the bills dated April 6, 1967, and the
ther series to be dated July 6, 1967, which were offered on June 28, 1967, were
pened at the Federal Reserve Banks today. Tenders were invited for $1,300,000,000,
r thereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 182-day
ills. The details of the two series are as follows:
ANGE OF ACCEPI'ED
OMPETITIVE BIDS:
High
IDw
Average
91-day Treasury bills
maturing October 52 1967
Approx. Equiv.
Price
Annual Rate
98.958 ~/
4.122%
98.890
4.391%
98.918
4.280%
Y
182-day Treasury bills
maturing January 4~ 1968
Approx. Equi v •
Price
Annual Rate
97.700
4.549%
97.565
4.816%
97.616
4.71610 Y
~
Except 1 tender of $200,000
59% of the amount of 91-day bills bid for at the low price was accepted
47% of the amount of 182-day bills bid for at the low price was accepted
OTAL TENDERS APPLIED FOR AND ACCEPTED BY
FEDERAL RESERVE DISTRICTS:
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Applied For
$ 16,916,000
1,400,008,000
31,474,000
28,560,000
13,046,000
21,800,000
281,719,000
35,717,000
11,682,000
23,026,000
23,716,000
100,332,000
AcceEted
$
6,916,000
906,303,000
31,474,000
28,560,000
13,046,000
21,800,000 :
107,719,000
32,717,000
11,682,000
23,026,000
16,716,000 :
100,332,000
TOTALS
$1,987,996,000
$1,300,291,000
£I
AEElied For
$
AcceEted
$
122~0711000
3,350,000
729,573,000
8,000,000
25,445,000
2,874,000
14,485,000
57,172,000
15,909,000
5,193,000
11,552,000
9,467,000
117,071 1°00
$1,699,441,000
$1,000,091,000
3,350,000
1,199,373,000
16,000,000
25,445,000
2,874,000
14,485,000
260,172,000
16,409,000
10,243,000
11,552,000
17,467,000
£I
Includes $ 227 189000noncompetitive tenders accepted at the average price of 98.918
Includes $ 104: 943',OCXllOncompetitive tenders accepted at the aver~e pric: of 97.616
These rates are on a bank discount basis. The equivalent coupon ~ssue y~e1ds are
4.40% for the 91-day bills, and 4.91% for the 182-day bills.
F-
964
TREASURY DEPARTMENT
Washington
FOR P.M. RELEASE
TUESDAY, JULY 4, 1967
REMARKS OF THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
ON THE OCCASION OF THE 1967 NATURALIZATION CEREMONY
FOR APPLICANTS FOR CITIZENSHIP
BEFORE THE
U.S. DISTRICT COURT FOR THE WESTERN DISTRICT
OF VIRGINIA, UNDER AUSPICES OF THE THOMAS JEFFERSON
MEMORIAL FOUNDATION, MONTICELLO, VIRGINIA
JULY 4, 1967, 10:00 A.M., EDT
As an American, and a Virginian, I am honored to be here
with you today. Any thoughtful human being is stirred when
he enters this home of the great humanist; any American s~ould
feel true pride called forth by the anniversary of the
signing of the Declaration of Independence and this
significant occasion; any Virginian asked to participate in
a ceremony of this nature at Monticello must say, simply,
"I thank you for this honor."
Here at Monticello which housed the person and thought of
Thomas Jefferson, some of you today will become new citizens
of the United States. You have had no easy time of it in
achieving this status. We need you. We need people who want
and are willing to work for the things which United States
citizenship signifies.
What, essentially, are those things?
they are two in number:
Plainly stated,
One of them is the right to live in freedom with the
natural rights of the individual assured by a system of
government based on the Declaration of Independence and the
Constitution -- embodying the noblest political concepts
ever brought forth by the mind of man.
The other is the responsibility to work for the
preservation and development of this country, that system,
and the ideals which brought it into being.
F-965
- 2 -
Now, which of these comes first -- the right or the
responsibility? That question was never fully answered in the
formative days of our nation. It was never answered because
strong men, sincere men, men of skill, enterprise and ability,
fought each other to a philosophical draw over which of these
concepts should have priority. The battle was joined shortly
after these same men, who served together as brothers in the
cause of creating the new republic, achieved their immediate
goal of winning the war of revolution and achieving American
inde pendence .
The problem they tried to decide was inherent in the very
idea of government by the people, of the people and for the
people, When a people itself truly rules -- without a
king -- without a feudal aristocracy -- without an oligarchy
which must come first: rights as individuals or
responsibilities to society?
How should the principle that the nation should assure the
freedom of the individual be reconciled to the principle that
the individual has responsibilities to that nation as something
which is greater than himself?
Efforts to answer these questions sometimes crystallized
into issues on which passions were aroused to the point that
rights and responsibilities instead of being complementary
seemed to be placed in direct confrontation. Some of these
issues were: freedom of the individual versus organized
and centralized power; state and local preference versus
na tiona 1 will.
Many able men contributed much to the intellectual
ferment and political action that swirled around these
questions in the early days of our nationhood. But none
contributed more than Thomas Jefferson, in whose home we are
gathered today -- and his philosophical and political
opponent, Alexander Hamilton, whose portrait was hung in
an honored place on the walls of this home by the man whom
he sincerely opposed.
As a native Virginian, wholly committed by heritage and
conviction to the Jeffersonian tradition, now occupying
the post of Secretary of the Treasury in which Hamilton
put his theories into practice, I have thought much
about these two men, their acts and words.
- 3 My conclusion is that history, in weaving its seamless
web, is demonstrating that, instead of confronting each
other down through the ages in irreconcilable opposition,
Jefferson and Hamilton are complementary. Fused properly,
their contributions constitute the great American tradition
of individual rights and collective responsibilities,
indissolubly bound, with the function of government being
to aid in the realization of both.
Time does not permit a thoroughgoing analysis of
this conclusion -- only a few reminders may be noted.
Let us remember, the Jefferson who penned that shattering
Declaration that our rights as human beings are inalienable
rights, given to us, along with our existence, by God
himself. 'Let us think of the way in which this man, through
this document alone, opened the gates of history so that men
could walk through them erect and proud of their condition
as men, and away from a past, in Jefferson's phrase,
of II ignorance, ind igence and oppre s s ion. "
If Hamilton foresaw a future in which America would be
primarily an industrial power, he was right. And if
Jefferson saw a future in which the states and localities,
along with the individuals of that nation needed the full
protection from centralized power that the Constitution and
laws could give them, he was right, too.
If Hamilton saw that the new nation would be weak if it
were to consist merely of a loosely-knit grouping of
communities, his idea was sound. Some centralized authority
and direction was needed if the new nation was to achieve
sufficient power and resources to defend the rights and promote
a realization of the responsibilities of its individual
citizens and playa role on the world scene. Can we doubt
that Jefferson, after two terms as President and the
Napoleonic Wars failed to recognize the need for means to
assure the continuing independence and growth of the United
States?
And if Jefferson saw that the Constitution, which to
a great degree owed its passage to Hamilton's influence,
failed to provide assurances of individual liberty in its
original form he was right. And he was right when he fought
,
. h
for the immediate adoption of the first amendments whLc
constituted the Bill of Rights and brought the power of the
government back into a more equitable balance with the power
of the individual citizen.
- 4 I would not assign the principle of rights to Jefferson
and responsibility to Hamilton. Rather it seems more
accurate to conjoin the emphasis by Jefferson on broad
human and moral ends to Jefferson and technical and practical
concerns with the role of national economic and political
power to Hamilton.
An eminent scholar of the Founding Fathers has defined
their respective contributions in these terms:
"The Republican experiment was a success
and can still serve as a model to all the
world, as the founding fathers hoped, because
they, by their joint activity, saw the
necessity for the constant balance and tension
of pawer and morals .... Jefferson contributed
the most searching statement of the equal rights
of man in terms that he intended to be a
common human faith. Hamilton contributed
the most searching statement of the strategic
means for establishing the economic basis for
a society that could operate as a unity in
controlling the resources of nature to increase
national productivity. These two in their
strong but complementary opposition contributed
the strategic ideal of an extensive republic .•.•
Their dialectic opposition and argument, together
with their strong personal qualities and great
talents, resulted in securing the national
interest for the common pursuit of happiness."
(KOCH, Por'ier, Morals, and the Founding Fathers)
The views of these two men, I feel, are important to
us today. The very fact that they have never been
completely resolved has had an effect upon this country
which their exponents might never have dreamed of as being
possible at the time:
This might best be defined as motion with stability.
I mean this in the sense in which a great ship is enabled to
rush forward through the waves of the ocean at tremendous
speeds, and yet preserve the stability of its decks because of
the paradox that there are two huge tops in its hold, spinning
in opposite direction, on opposite si.des of the ship.
- 5 -
In this analogy, the ship becomes the United States of
America. The rough seas become the real dangers which have
threatened and are threatening its progress. The speed of
the vessel represents the result of the human energy
unleashed by the success of the American Revolution. And
the two, huge, counter-spinning" tops", or gyroscopic
stabilizers, represent the balances provided by the ideas of
individual freedom and local rights versus individual
responsibility for a strong central government -- balances,
because they oppose each other with equal strength -balances which have, it turns out, complemented each other,
and helped assure the strength and steady progress of our
country.
On the day one hundred and ninety-one years ago on which
the people of the Thirteen Colonies declared that they were
free and independent, every person who agreed with the declaration
became a new citizen.
Jefferson became a new citizen. Hamilton became a new
citizen. Jefferson was thirty-three at the time he wrote
the Declaration; Hamilton, nineteen and a captain of
artillery. On that day, George Washington, who had held the
command of the Continental Army for just one year, was only
forty-four years old.
These facts give us a clue to an understanding of the
men who fought to create this country. They were young men.
They were young giants. The fact is that they set loose a
tide in the affairs of the world that has never stopped
running.
They won the war of revolution which guaranteed freedom
for the new nation, yes. But further than that, they
started a revolutionary movement in world history which has
never really ended. It is in progress today, gathering
strength and direction as it moves. It has been subject to
slowdowns and explosive diversions. But ever since it started it
has moved restlessly in pursuit of its goal -- that pursuit
defined by Jefferson: in brief, it has assured. our country
the liberty in which we can try to achieve what each man
defines for himself as "happiness."
- 6 -
The big achievement of these men was that they took
ideas out of the printed pages -- off the dusty book shelves
and away from th~ quiet libraries, and put them into
startling, physical, actual operation.
They took the concept of individual liberty, guided by
rule of the individuals themselves, and fashioned it so that
it was no longer a concept but an actuality.
And it worked.
And it is still working.
And it is still revolutionary.
Now, since we are the greatest nation on earth -- since
the revolution which started in 1776 has pushed us forward,
with ever-increasing momentum to the point at which we can
no longer seek -- as a nation nor as individuals -- to
pursue our dreams alone and apart from the world around us
what are the great issues which face us today?
Many of them involve the now familiar domestic problems
of assuring the domestic tranquillity promised in the
Constitutional Preamble. They face us wherever we go -in city streets and urban slums and squalor, in suburban
settlement and rural backwater. We are engaged in seeking
solutions compatible with the great tradition of rights and
responsibilities of U.S. citizenship -- for example, the
right to equal opportunity must be conjoined to the
responsibility for avoiding civil disobediance and violence.
These issues involve the rights and responsibilities of U.S.
citizenship, we face of necessity because they physically
confront us each day. But there are others beyond our borders
where more of a choice seems to be presented. It is those on
which I would touch~
Let us all fully understand that the international
leadership which we will show in our times will do much to
determine the future for the world and for succeeding
generations of Americans.
- 7 -
We face many challenges.
are surely basic:
However there are three which
First, the effort of Communism to impose
its will and extend its influence both by outright
aggression and by acts of subversion backed by the
threat of aggression.
Second, the responsibilities presented to
us in our time by the collapse of colonialism
and the emergence of new nations of underprivileged
peoples who demand, through some system of
government,help in seeking relief from hunger,
disease, illiteracy and poverty and the right to
the pursuit of happiness in the terms of our
Declaration.
Third, excessive nationalism, highly visible
today in Some of the world's more developed nations
as well as -- and more understandably -- in less
developed countries, complicating the efforts of
nations to work together -- multilaterally -- to
attack common problems and achieve common
objectives.
The work set before us by these issues will demand our
energies and efforts for long, hard years to come. If any
of us entertain the illusion that these stark problems will
disappear, or fall to pieces as the result of sudden or
simple solutions, we should have shed it long ago.
Let us face another harsh fact: the responsibilities
of today's world are not ours alone -- either to determine
or to bear. They are determined by the realities and events
of the world in which we live -- often open to our influence
but beyond our control. They are shared by all the other
nations of the free world -- by all people who, with us,
cherish freedom and independence and who labor alongside
us to further the cause of peace and justice and freedom and
well-being throughout the world.
This is hard work that we face. But let us not face it in
fear and trembling. We have good reason to be self-confident
without being vainglorious; to be realistically capable of
assessing our own ability without being deluded by the thought
that we are all-powerful.
- 8 For we have done great work in our time. We have helped
counter agg:ession in all its guises, open or concealed, throughout
the world, ~n large countries and in small: in Greece, in Turkey,
in the beleagured Berlin of Germany; in Lebanon, in Iran, in
India, in Taiwan, in the Congo, in Laos, and now in South
Vietnam. Let those who may feel that this country's revolutionary
allegiance to the right of a people to live as they desire
stopped with the Revolutionary War look at this record and pause.
It represents nothing less than a recitation of the list of
battle honors for freedom we have earned in your time and mine.
We have not sought to act alone and apart from the rest of
the world. With other free nations we have forged effective
alliances against aggression -- through the North Atlantic
Treaty Or,ganization, through the Southeast Treaty Organization,
through the Organization of American States, and through the
United Nations.
We have not shrunk from the sacrifices which the times have
called forth. We have borne the cost of fighting for liberty
both in the measurable material sanse and in the immeasurable
losses we have taken on the battlefield.
Also in our time, I submit, we have not been found wanting
in efforts in support of the right to pursue happiness in the
developing nations of the world. Since World War II there has
been no great multilateral organization for social and economic
development which does not reflect our leadership and our support.
Let me run down this roll call of progress: the United Nations,
the International Monetary Fund; the World Bank, the Marshall
Plan, the Inter-American Development Bank, the Alliance for
Progress, and the Asian Development Bank. What opportunities in
economic abundance and social progress have these institutions
opened up throughout the world? We may never know the full
answer in our times. But this we know -- that in the postwar
decades we have devoted a fair share of our wealth and of our
resources through multilateral programs -- as well as through our
own major governmental foreign assitance programs -- to the task
of helping others increase their share of the world's abundance.
In money we have contributed a total of some $100 billion of our
national wealth to these objectives in addition to many more billions
of privately invested capital.
Far more we have contributed to these objectives with the
personal services as of thousands of our citizens who have served
this cause and are serving it, under strange, and sometimes harsh
and dangerous conditions, throughout today's world.
- 9 -
Never before in history has any nation done so much and
at so great a cost to help others gain what we gained through
our revolution -- the promise of the Declaration of Independence.
We may not always have been right. We may not always
have been successful. But we have not been found wanting.
And we will not be found wanting today or tomorrow.
We will continue to yield to no nation in patient pursuit
of peace and the works of peace. We will continue to
demonstrate, aswe do in Vietnam, that we have the determination
and the weapons to resist aggression.
We must bear the burden and accept the uncertainties and
the unpleasantness and the imperfections that come with such
a war as that in Vietnam. It is a war of wills as well as
a war of weapons. It is a test of our willingness to endure
to surmount -- the strain of constant, continuing conflict
whose end is never clearly in sight.
At the same time we must continue -- together with other
developed nations of the Free World -- to carry our share of
the burden of leadership in the common task of helping the
developed nations realize their destiny and enrich the lives of
their people in dignity and freedom. We must be willing to
take the initiative in new multi-national efforts to promote
free trade, to strengthen the international monetary system,
and to make available to needy peoples everywhere the opportunity
and the means and the incentives for conquering hunger and
disease, and for living under the liberating light of education
and knowledge.
We seek for others no more than we seek for ourselves -- the
opportunity for a full and free life. Abroad as at home, our
-efforts reflect our awarenes,s that with might must come maturity,
with ~l7ealth and riches must come wisdom and responsibility, and
with success must come sacrifice.
The challenges before us in the days ahead are too great
and the world is too small for any of us to retire into an
island of purely private concern -- into what one observer has
called the "cult of private sunshine and secluded complacency."
- 10 It is today, almost two centuries after our war of
revolution began, that we understand most deeply all that
America is and can be -- a land where every man can find not
only infinite promise but abundant opportunity for a full and
free life.
Nine days ago, on the 50th anniversary of the Bolshevik
Revolution, a Soviet Communist party document was issued in
Moscow which stated, and I quote:
"The revolutionary rejuvenation of the world,
begun by the October revolution and embodied in
the triumph of Socialism in the U. S. S. R., has been
continued by the triumphant Socialist revolutions
in other countries. The emergence of the world
Socialist system is the most important historic
event after the great October Socialist revolution.
"Imperialism, notably U.S. imperialism, was
and continues to be the main enemy of the national
liberation movement."
The challenges implicit in these false attacks cannot be
ignored.
You and I know that "national liberation" as used in the
context I have quoted, means nothing more than the coercion
of one state by another to change its freedom for a totalitarian system forced on it by a neighbor.
You and I know that we are in the mainstream of a true
revolution -- and that it began on July 4, 1776 -- and not
50 years ago last June 25.
I ask to submit a definition of what our revolution is
doing. This definition stands on its own terms against the
sterile accusations of "imperialism" contained in the Moscow
document which I have quoted. The definition which I am going
to quote was written on the occasion of the fiftieth anniversary
of our revolution. It was written by Thomas Jefferson, just
a few weeks before he died, on July 4, one hundred and forty-one
years ago, and it refers to the Declaration of Independence.
Here it is:
"May it be to the world
the signal of
arousing men. .
to assume the blessings and
security of self-government. That form which we
have substituted restores the free right to the
unbounded exercise of reason and freedom of opinion.
0
0
•
•
- 11 -
All eyes are opened, or opening, to the rights of
man. The general spread of the light of science
has already laid open to every view the palpable
truth, that the mass of mankind has not been born
with saddles on their backs, nor a favored few,
booted and spurred, ready to ride them legitimately,
by the Grace of God. These are grounds of hope
for others. For ourselves, let the annual return
of this day forever refresh our recollections of
these rights, and an undiminished devotion to them."
Guided by our undiminished devotion to the rights for
which the revolution was fought, and by our sense of
responsibility which causes us to work to preserve and extend
those rights, our nation moves on today.
To you, who today will become citizens of that nation, I
emphasize that the rights for which we are fighting, and the
responsibility to fight and work for them, are part and parcel
of the lives of every man and woman who can say today, "I am
a citizen of the United States of America." They are the two
sides of a medal you have earned. To have one side of it alone
is impossible.
Being a citizen of the United States means that one accepts
the entire medal: the inherent rights which go with citizenship,
along with the responsibilities and any future individual
hardships which those responsibilities may imply -- at the same
moment in time.
Whether that medal of citizenship is bright and newly-minted,
as will be the case with those offered and accepted today; or
whether the medal of citizenship has become dulled because it has
been held for a lifetime, it still has these two sides -- obverse
and reverse -- rights and responsibilities; and no one should ever
-become so accustomed to it -- so inured to it -- as to ever try
to buy his way through life with it on the strength of one side
only.
This has not been our history. And as long as our history
is guided by this principle, we should have no fear of what
the future may hold for us.
000
TREASURY DEPARTMENT
FOR RELEASE TO AM'S
OF WEDNESDAY, JULY 5,1967
UNITED STATES AND ARGENTINA TO DISCUSS
INCOME TAX CONVENTION
Representatives of the United States and Argentina are
scheduled to meet in Washington in mid-August to begin
discussions on a proposed income tax treaty between the two
countries ..
The proposed treaty is intended to avoid double taxation and
to promote trade and investment between the two countries. It
will be concerned with the tax treatment of trading and other
business enterprises; investment income, and income from services.
No tax treaty presently exists between the two countries.
The proposed treaty is expected to include an investment
credit following the lines of the credit available to United
States taxpayers on investment in machinery and equipment in
the United States.
Persons interested in the United States-Argentina discussions
may wish to consult, as background on United States treaties with
developing countries, the treaty with Brazil, which is pending
in the Senate Committee on Foreign Relations, as well as the
statement by Assistant Secretary of the Treasury, Stanley S. Surrey,
contained in the August, 1965, hearings on the treaty with
Thailand before the Subcommittee on Tax Treaties of the Senate
Committee on Foreign Relations.
Anyone wishing to offer comments or suggestions in
connection with the Argentine negotiations is invited to send
views before August 1, 1967 to Assistant Secretary of the
Treasury, Stanley S. Surrey, United States Treasury Department,
Washington, D. C., 20220.
000
F-966
TREASURY CEPARTMENT
July 5, 1967
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
$2,400,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing July 13, 1967,
in the amount of
$2,301,511,000, as follows:
92-day bills (to maturity date) to be issued July 13, 1967,
in the amount of $1,400,000,000, or thereabouts, representing an
additional amount of bills dated April 13, 1967,
and to
mature October 13, 1967, originally issued in the amount of
$1,000,657,000, the additional and original bills to be freely
interchangeable.
182-day bills, for $ 1,000,000,000, or thereabouts, to be dated
July 13, 1967,
and to mature January 11, 1968.
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 closin~ ~our, one-thirty p.m., Eastern Daylight Saving
time, Monday, July 10, 19670
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-967
- 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 Treasuh
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 Bank on July 13, 1967, in
cash or other immediately available funds or in a like face amount
of Treasury bills maturing July 13, 1967.
Cash and exchange tendet
will receive equal treatment. Cash adjustments will be made for
differences between che 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 a~y 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 t~
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and thi
notice prescribe the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained b
any Federal Reserve Bank or Branch.
000
TREASURY DEPARTMENT
(
!OR m.EASE 6 :30 P .M. ~
'ednesday, July 5, 1967.
RESULTS OF 'l'REASURY I S O~ OF $4 BILLION TAX AJTICIPATION BILLS
Toe Treasury Department announced that the tenders for two series of Treasury
bills, both series to be dated July 11, 1967, which were offered on
'une 28, 1967, were opened at the Federal Reserve Banks today. Tenders were invited
'or $2,000,000,000, or thereabouts, of 255-day bills and for $2,000,000,000, or
~nereabouts, of 286-day bills. The details of the two series are as follows:
ax Anticipation
WilE OF ACCEPTED
:OMPETITIVE BIDS:
High
IDw
Average
!I
25~
8~
255-day Treasury bills
matur1 ng March 22 z 1968
Approx. Equiv.
Price
Annual Rate
96.607
4.79(ij
96.522
4.91~
96.557
4.861~
Y
!I
.
286-day Treasury bills
maturing AEril 222 1968
Approx. Equi v •
Price
Annual Rate
96.171 'EJ
4.8261/
96.065
4.953c,£
96.108
4.89~
Y
Except 1 tender of $500,000; ~ Excepting 5 tenders totaling $3,500,000.
of the amount of 255-day bills bid for at the low price was accepted
of the amount of 286-day bills bid for at the low price was accepted
m'AL TEllERS APPLIED FUR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Acce~ted
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
l6llas
San Francisco
Applied For
~ 130,400,000
1,337,126,000
129,390,000
235,465,000
54,235,000
124,915,000
384,150,000
80,155,000
114,030,000
73,627,000
75,830,000
508,690,000
TOTALS
$3,249,273,000
BOstOn
Applied For
Acce~ted
$3,050,000
r179,700,OOO
548,251,000
89,390,000
167,215,000
26,535,000
112 , 450 , 000
284,500,000
66,255,000
100,530,000
53,277,000
64,330,000
424,565,000
1,321,941,000
94,960,000
193,830,000
44,935,000
57,141,000
339,145,000
92,047,000
99,125,000
54,813,000
10,405,000
478,450,000
600 , 441 , 000
14,960,000
157,830,000
27,235,000
49,741,000
309,645,000
60,597,000
87,625,000
43,513 ,000
58,905,000
424,450,000
$2,000,348,000 ~ $3,026,492,000
$2,000,042,000
$
1~ ,100, 000
~
Includes $268,773,000 noncompetitive tenders accepted at the average price of 96.557
Includes $224,492,000 noncompetitive tenders accepted at the average price of 96.108
'rhese rates are on a bank discount basis. The equivalent coupon issue yields are
5.08~ for the 255-day bills, and 5.13~ for toe 286-day bills.
Statement of
Joseph W. Barr
Under Secretary of the Treasury
Before the
Subcommittee to Investigate Juvenile Delinquency
of the
Senate Committee on the Judiciary
on
S. 1
S. 1 - Amendment Number 90
S. 1853 and S. 1854
July 10, 1967
-------------------------------------------------Mr. Chairman, I welcome the opportunity to appear before
this subcommittee in support of the enactment of legislation
placing additional Federal controls over the movement of
firearms in interstate and foreign commerce.
Mr. Sheldon S.
Cohen, the Commissioner of Internal Revenue, is here with me.
He will discuss in more detail the inadequacies of present
interstate controls and how S. 1, Amendment Number 90, will
overcome those inadequacies.
He will also discuss the other
bills being considered by this subcommittee.
I shall cover
the Administration's proposal, S. 1, Amendment Number 90, in
a general way.
- 2 Let me begin, if I may, Mr. Chairman, with a brief
summary.
First, the main objective of this bill is to give the
Federal Government control over firearms in the areas of
interstate and foreign commerce where state governments have
no powers.
The bill is to be cited as the TlState Firearms
Control Assistance Act of 1967".
Second, we view this legislation as part of a jOint
Federal-State effort to bring about a needed improvement in
the nation's system of firearms regulation.
Third, the legislation we are proposing is in the spirit
of creative Federalism that pervades President Johnson's
March 17 Message to Congress on
.
The Quality of American
Government, in which the President said:
"Today the Federal system rests on an interlocking
network of new relationships and new partnerships among
all levels of government.
"Administration of programs which are the jOint
responsibility of Federal, state, and local governments
should be strengthened;"
It is against that background, Mr. Chairman, that I offer
the following observations:
- 3 -
The bill before you would repeal the Federal Firearms
Act now codified as Chapter 18 of Title 15, United States
Code, and would substitute a new and improved system of
Federal regulation of interstate and foreign commerce in
firearms under Title 18, United States Code.
The Treasury
Department would retain the responsibility of administering
these regulatory controls.
S. 1, Amendment Number 90, implements legislative
recommendations which the President set forth in his Message
to the Congress of February 6, 1967.
It would put substantially
into effect the legislative program for Federal regulation of
traffic in firearms strongly urged by the President's Commission
on Law Enforcement and Administration of Justice in its
February 1967 report titled ITThe Challenge of Crime in a Free
Society. IT
This distinguished group of citizens, headed by Under
Secretary of State Nicholas Katzenbach, our former Attorney
General, included among its members nationally recognized
leaders in the judiciary and in the fields of law, law
enforcement, penology, and local government.
The Commission1s
study found agreement among police administrators of major
cities that easy accessibility of firearms is a serious law
- 4 enforcement problem.
The Commission found that state and
local laws intended to control traffic in firearms tend to
be nullified by the fact that firearms are too often
available in neighboring jurisdictions under less restrictive
legislation, or free from any regulation.
Accordingly, the Commission favored both the enactment
by the states of laws prohibiting acquisition and possession
of firearms by certain classes of persons who might be
inclined to use them for criminal purposes, and the enactment
of Federal legislation that would complement state and local
laws and assist state and local governments in achieving
their goals.
The A¢ministrationTs proposal before you for consideration
is designed to reflect the CommissionTs recommendations.
I should like now to state briefly my understanding of what
it would do and, in order to eliminate misconceptions, what
it would not do.
Among other things, S. 1, Amendment Number 90, would:
(1) Channel interstate and foreign commerce in
firearms through Federally licensed importers, manufacturers
and dealers -- thereby prohibiting the commercial mail-order
traffic in firearms (although licensees could ship interstate
- 5 -
to nonlicensed persons rifles and shotguns lawfully purchased
in person at the licensee's place of business and which the
consignee could lawfully receive and possess at his place of
residence);
(2)
Prohibit sales of firearms by Federal licensees to
persons under 21 years of age, except that sales of sporting
rifles and shotguns could continue to be made to persons of
at least 18 years of age;
(3)
Permit a Federal licensee to sell a firearm (other
than a rifle or shotgun) only to persons who are residents
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;
(6)
Provide for a licensing system with meaningful
standards and annual fees somewhat higher than those now
applicable under the Federal Firearms Act, so as to assure
that licenses will be issued only to responsible persons
actually engaging in business as importers, manufacturers,
- 6 and dealers.
The dealer's first year annual fee, set at a
figure higher than the standard fee, would be available to
help defray the cost of applicant investigations;
(7)
Prohibit a nonlicensee from transporting into or
receiving in his state of residence a firearm (other than a
shotgun or rifle), purchased outside that state, or a rifle
or shotgun which it would be unlawful for him to purchase or
possess in that state or political subdivision thereof;
(8)
Provide for adequate record-keeping by licensees
(to include data identifying purchasers) and for authority to
furnish record information to state and local law enforcement
authorities; and
(9)
~etain
the penalties now provided in the Federal
Firearms Act for interstate transportation of firearms to or
by felons and the interstate transportation of firearms which
have been stolen or had their identifying number removed; and
in addition would punish interstate transportation of a
firearm with intent to commit a felony therewith.
s.
1, Amendment Number 90, is not in any sense "anti-gun"
legislation.
(1)
The bill would not outlaw possession or use of
firearms by law-abiding citizens.
- 7 (2)
No requirement of this bill would be violative of the
Second Amendment to the Constitution.
Those opposed to firearms con-
trols have created a misconception of this constitutional provision
by asserting that the amendment provides that "the right of the
people to keep and bear arms shall not be infringed."
However, the
complete amendment must be considered to determine the right granted
to whom.
This amendment was not adopted with individual rights in
mind but rather was considered a protection to the militia of the
various states.
The Attorney General submitted a memorandum on
this point at hearings before Subcommittee Number 5 of the House
Judiciary Committee on the Anti-Crime Program.
H.R. 5384, a bill
identical to S. 1, Amendment Number 90, is a part of the program.
He also submitted a memorandum on the point to this subcommittee
on May 19, 1965, at your hearing on firearms legislation.
(3)
The bill would not prohibit the acquisition of
firearms for sporting purposes, or for any other legitimate
use.
Sportsmen will continue to be able to obtain firearms
although under the bill they would need to procure them from
local licensed dealers and manufacturers and thus be subject
to the requirements of their respective state and local laws.
Indeed, they can travel to another state and purchase a
rifle or shotgun from a licensed dealer there and bring it
- 8 horne with them without interference if the purchaser's state
and local law does not forbid the purchase and possession of
such a firearm.
Only two minor restraints are laid upon 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 a rifle or shotgun, unless they made the purchase in
person and the purchase and possession is legal in their horne
state and locality.
Such minor inconveniences cannot be avoided if the
legislation is to make it possible for the states to regulate
effectively the acquisition and possession of firearms.
Obviously, state authorities cannot control acquisition and
possession of firearms if they have no way of knowing or
ascertaining what firearms are coming into their states through
the mails or, in the case of concealable weapons, by personally
being carried across state lines.
(4)
The bill would not interfere with interstate
transportation of firearms by the ordinary citizen hunter,
marksman or householder.
Neither would it preclude the
interstate shipment of a gun to a licensee for adjustment
- 9 -
or repairs, nor the return or replacement of such a gun by
the licensee.
(5)
The bill would not prohibit possession or use of
firearms by those too young to purchase them.
It is
recognized that some parents may wish their minor children,
who are sufficiently mature to be entrusted with them, to
enjoy the use of firearms for recreational purposes.
(6)
The restriction on imports would not preclude the
importation of all surplus military rifles.
Some of these
weapons are suitable for or readily adaptable to use in
hunting and could be brought in for that purpose.
(7)
The bill would not interfere with activities of
collectors, of antique firearms.
"Antique firearms, fT
as
defined in the bill, are not subject to the bill's controls
since they are specifically excluded from the definition of
"firearm. "
As I have already indicated, the major purpose of the
bill 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
- 10 left to the state governments under their police powers.
Basically, it is the province of the state governments to
determine the conditions under which their citizens may
acquire and use firearms.
I would emphasize that it is one
of the important objectives of this legislation to strengthen
and make more effective the exercise of the powers of the
state -- and local -- governments to regulate the sale of
firearms in the public interest.
I expect this Federal
legislation to inspire more adequate state and local
legislation
and to make that more adequate non-Federal
regulation enforceable where it is now all too easy to evade
and will always be easy to evade in the absence of such Federal
regulatory, controls as S. 1, Amendment Number 90, sets up.
The bill would correct serious weaknesses of the existing
Federal Firearms Act concerned with licensing and record
keeping.
Under existing law, anyone other than a felon can,
upon the mere allegation that he is a dealer, and open payment
of a fee of $1.00, obtain a license.
Some 104,000 dealer
licenses were outstanding as of January 1, 1967.
Approximately
25 per cent of these were held by people not actually engaged
in business.
The purpose of licenses by these people puts
them in position to obtain personal guns at wholesale or to
- 11 -
avoid laws that prohibit mail shipment of concealable weapons
and prohibit shipment into states that require purchase
permits.
This is a wide open situation in which licenses can
be obtained by irresponsible elements, thus facilitating the
acquisition of 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.
Commissioner Cohen, whose
organization is responsible for the administration of the
Federal Firearms Act, will discuss this aspect in more detail.
He will also supply facts and figures illustrating the problems
encountered in enforcing existing law because of incomplete or
inaccurate licensee records and the need for more effective
record-keeping requirements.
This bill cannot, of itself, eliminate crime.
However,
let us not lose sight of the fact, stated by the President
in his February 6 Message to the Congress, that "Any effective
crime control program requires the enactment of firearms
legislation.
~'~
* *
This legislation is no panacea for the
danger of human irrationality and violence in our society.
But it will help to keep lethal weapons out of the wrong
hands. "
- 12 -
Today, the people of the United States are living under
the most nearly ideal conditions ever achieved by any society.
Yet, their peace of mind and security is threatened by the
spreading cancer of crime and juvenile delinquency.
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 the weapons most frequently utilized in
crimes of violence.
Right now, any person can acquire firearms with ease.
This includes 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.
This situation is clearly intolerable.
The Treasury DepartmentTs experience with the Federal
Firearms Act has resulted in a feeling of frustration since
the controls provided by it are so inade4uate.
The drafters
of S. 1, Amendment Number 90, had in mind these inadequacies
and have, I believe, designed a bill which, when enacted,
will provide effective regulation while presenting a minimum
- 13 of inconvenience to the law-abiding citizen in the acquisition,
ownership and use of firearms for legitimate purposes.
These
light restraints are surely a small price to be borne by
sportsmen gun owners when weighed against the potential
benefits to the citizenry generally.
There are indications that those opposed to additional
firearms regulation will assert that the present Federal
statutes controlling firearms are adequate, but that these
statutes are not adequately enforced.
Thus, it will be
inferred that any present deficiencies in firearms controls
result not from lack of statutory authority, but from lack
of proper enforcement.
Let me remind you that the Attorney
General has stated that existing Federal firearms laws are
largely ineffective and inadequate.
Within these recognized
limitations, I can assure you that the Treasury Department
has vigorously enforced the provisions of the present National
Firearms Act and Federal Firearms Act.
Commissioner Cohen
will offer statistics covering some aspects of the firearms
enforcement program.
This subcommittee also has under consideration another
bill, S. 1853, introduced by Senator Hruska, which would
amend the Federal Firearms Act.
In addition, S. 1854, a bill
- 14 to amend the National Firearms Act, is being considered.
The Treasury Department expressed its views on S. 1853 and
S. 1854 in letters to this Committee from the General Counsel.
Briefly, the Department expressed itself as favoring S. 1,
Amendment Number 90.
I again urge the enactment of that bill.
As the President so aptly stated:
"To pass strict
firearms control laws at every level of government is an act
of simple prudence and a measure of a civilized society.
Further delay is unconscionable."
00000
UNITED STA.,£S SAYING! HIM rSsUED AND REDEEMED THROUGH
June
30, 1967
(Dollar amounts in millions - rounded and will not necessarily add to totals)
DESCRIPTION
AMOUNT ISSUED.!!
JRED
ries A-1935 thru D-1941
ries F and G-1941 thru 1952
'ries J and K-1952 thru
19$L.
~TURED
'ries E!J:
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
eries H (1952 thru May. 1959)}j
H (June, 1959 thru 1967)
Total Series H
Total Series E and H
eries J and K (
19$,
thru 1957)
{Total matured
Total unmatured
Grand Total
AMOUNT
OUTSTANDING
Y
'70 OUTSTANDING
OF AMOUNT ISSUED
.16
.19
1.12
8
"
,,482
,,186
;,3;0
,,276
4,611
3,992
4,179
4,771
4,8,8
5,059
4,876
4,581
4,451
4,162
4,1,6
4,186
4,028
4,479
4,372
4,278
4,585
1,284
1,62,
7,196
11,617
13,443
10,359
4,488
4,071
4, lOS
3,974
.3,41;
2,9S6
3,06,
3,395
3,370
3,426
3,237
2,925
2,685
2,467
2,352
2,235
2,089
2,123
2,016
1,853
1,501
134
239
1,032
1,628
2,003
1,770
993
644
674
-30
1L.9 _7~8
112 .. 9'59
28.69
;,UB;
2,664
5,194
48.57
6,209
106 ..199
2,820
1,015
1l,693
3,83;
7,858
67.20
161,451
110,635
;0,817
31.48
1,513
1,n6
397
36,760
162,964
199.724
)6,671
111 .. 7,1
148,422
88
51,213
,1.302
l2,129
Total Series E
4,m
.!.J
29,466
2,211
1,865
8,230
13,24,
1,,446
Unclassified
II Series
,,00.3
29,,21
2,236
AMOUNT
REDEEMED
2,
12.82
12.,h
12.29
l2.97
14.$9
18.11
21.50
23.27
24.68
2,.94
25.95
26.66
28.84
30.63
32.28
33.61
36.13
39.68
40.70
43.41
46.61
48.14
52.62
53.89
,6.69
67.26
89.$6
1,115
1,245
1,302
1,196
1,036
l,ll4
1,376
1,488
1,633
1,639
1,655
1,766
1,694
1,804
1,951
1,939
2,357
2,356
2,425
3,084
1,1,0
83.6;
~
~des accrued discount.
~n.t redemption value.
lJlon of owner bonds may be held and will earn interes t for additional periods after original mawrity dates.
~ es matured bonds which have not been presented for redemption.
Form PO 3812 _ TREASURY DEPARTMENT _ Bureau af the Public Debt
26.24
.24
31.43
2,.69
TREASURY DEPARTMENT
,
=
RJill'.J\SE 6 :30 P. H. ,
lay, July 10, 1961.
nr.;sULTS OF TI\.EASURY'S vJEEKLY BILL OFFERIOO
The Treasury Department announced that the tenders for two series of Treasury
.s, one series to be an additional issue of the bills dated April 13, 1967, and the
serJes to be dated July 13, 1967, which were offered on July 5, 1967, were
led at the Federal Reserve Banks today. Tenders were invited for $1,400,000,000,
,hereabouts, of 92-day bills and for $1,000,000,000, or thereabouts, of 182-day
.5.
The details of the two series are as follows:
If
,1
OF . . CCEPTED
92-day Treasury bills
maturing October 121 1261 :
Approx. Equiv.
Pdce
Annual Rate
98.918
4.234%
98.899
4.308%
98.905
4.285% 11
'ETl TIVE BIDS:
·
High
Low
Avtrage
Zfo
42~
·
182-day Treasury bills
maturi!:!Ej Januar;:t: il, 1268
Approx. Equiv.
Price
Annucl Rate
97.652
4.644%
97.605
4.737);
11
97.630
4.68e%
of the amount of 92-day bills bid for at the low price was accepted
of the amount of 182-day bills bid for at the low price was accepted
J. TEi·,D1RS
APPLI:t!;D Felt
listrict
loston
lew York
'hiladelphia
:leveland .
:ichmond
.tlanta
hica.go
t. Louis
inneapolis
C.nsas City
allas
an Francisco
TetrALS
AhJ
ACCEPT£D BY FELJillAL RESlliVE DISTRlCTS:
·
Acce,Eted
AEElied For
$
14,072,000:
24,072,000
909,078,000:
1,586,638,000
26,360,000
14,360,000:
38,688,000
38,688,000:
16,417,000
16,417,000:
46,676,000:
58,576,000
138,795,000:
199,795,000
68,136,000
59,036,000:
20,346,000
18,356,000:
33,8$4,000:
33,884,000
28,419,000
24,419,000:
105,188,000
86,498,000:
$
~li~
For
$
2G,d96,000
1,217,750,000
20,887,000
24,216,000
8,153,000
2.7,177,000
161,327,000
25,'/97,000
12,480,000
17,723,000
20,648,000
88,770,000
$2,206,519,000 $1,400,279,000 ~ $1,645,824,000
AcceEted
20,896,000
655,950,\...00
10,887,000
24,216,000
8,153,000
24,177,000
100,827,000
20,297,000
11,480,000
17,723,000
16,648,000
88,770,000
$
$1,000,024,000
EI
fucludes $299 553 000 noncompetitive tenders accepted at the average price of 98.905
Includes $146'241'000 noncompetitive tenders accepted at the average price of 97.630
These rates a~e oh a bank discount basis. The equivalent coupon issue yields are
4.40% for the 92-day bills, and 4.88% for the 182-day bills.
969
STATEMENT OF FRED B. SMITH
GENERAL COUNSEL, DEPAR'IMENT OF THE TREASURY
BEFORE THE SENATE COMMITTEE ON BANnRG AND CURRENCY
ON S.
1084
TUESDAY, JULy 11, 1961, 10:00 A.M., EDT
Mr.
Chairman and Members of the CoDlli ttee :
I run pleased to have this opportunity to testifY on S. 1084,
a bill "to permit Federal employees to purchase shares of Federal or
State chartered credit unions through voluntary payroll allotment."
This bill would give Federal employees the right to make allotments
from their salaries for payment on shares in credit unions.
It would
also require the credit unions to reimburse the Government for the
reasonable costs of such allotment and the bill also provides for the
Comptroller General to issue necessary regulations.
The Treasury Department is opposed to this legislation and recommends against its enactment.
We are 8ympathetic with one of the primary objectives of thio bill
which is to encourage Federal employees to develop the habit of
larly saving
8
portion of their earnings.
r~gu-
Indeed, the encouragement
of habits of thrift has been one of the principal objectives behina
the savings bonds program, including the new "Freedom Share" savings
note, for which payroll deductions are presently authorized and
encouraged.
We feel, however, that, desirable as this objective may be, ennugh
deductions are
alrea~
at the present time.
being made from the salaries of Federal employees
These include deductions for Federal and State
income taxes, civil service and social security benefits, life insurance
- 2 -
and health insurance, charitable contributions, union dues, and savings
bonds and notes, as I have already mentioned.
Each additional deduction adds something to payroll costs and to
administrative burdens.
While the bill would require the credit unions
to' reimburse the Government for the reasonable costs of making such
allotment, the proceSSing would involve additional workloads, a matter
of considerable concern especially at this time when we are making
every effort to minimi ze Federal employment.
I would like to observe to the Committee that I have not been
able to obtain any satisfactory estimate of the kinds of reimbursable
costs which would be involved if this legislation were adopted.
The
difficulty is that these costs would be different for each payroll
installation, depending upon the operations of the particular unit.
I can say, however, that the costs and administrative burdens over the
entire Federal establishment would be fairly significant and consequently should be a matter of some real concern.
Our opposition to this legislation does not, of course, imply
opposition to credit unions and to their further growth.
We feel,
however, that the Government 1s already making significant efforts to
encourage the habit of thrift through the voluntary savings program
of Series E savings bonds and the new "Freedom Share. 1t
In addition,
credit unions are the beneficiaries within the Federal Government of
rent-free office space and uncompensated time of Federal personnel.
It does not seem to us justifiable to increase the Federal commdtment
to credit unions beyond the present boundaries.
- 3 We can foresee in this regard that enactment of the proposed
legislation would lead to demands for similar treatment by banks,
savings and loan associations, and other financial institutions.
The
end result could be the extension of payroll deductions beyond reasonable lillits with the Federal Government serving as a banker in all
respects for Federal employees.
The fact that the cost would be
reimbursed does not seem to us to justify even a beginning on this
sort of extension.
The question might be asked as to
why
the savings bond program
should have a special privilege of Federal Government payroll deduction when other forms at savings do not.
I think the answer is that
the savings bond program is "special" and it is in the national interest that it should have this type of special assistance.
in these times, it is
8
Particularly
way in which Government employees can feel
that they are making a contribution toward the efforts of our fighting
men in this bitter and frustrating war in Vietnam.
As the costs of
government go up in direct relation to the costs of this war, the
Treasury bas two ways of financing these costs:
taxes and through public debt financing.
through increases in
And we have to guard against
the problem of inflation.
Taxes are, of course, the most noninflationary method of financing
the costs of government.
Second to taxes, savings bonds are the most
noninflationary way to finance the Government's necessary expenditures.
- 4Certainly, borrowing in this form is the best way for the Government
to borrow while still keeping a lid on total public and private
spending in the economy.
In this sense, savings through the purchase
of' U. S. savings bonds is even more noninflationary than would be
individual savings in other forms, for those other types of savings
are eventually reflected in additional spending -- however worthwhile
that added spending may be -- while in the case of U. S. savings bonds
we can take Government spending as already given and then it is only
a question of how best to finance that given amount of spending.
I question whether this legislation would be entirely to the
advantage of present members of credit unions in the light of the
requirement of reimbursement of reasonable Federal expenses.
Thf
effect of this would be simply to place an extra cost on operations
of a credit union without, so far as I can see, any compensating benefit in costs saving.
The effect would be,I should think, to reduce
the return which credit unions could pay on their savings shares and
to make their operations somewhat less attractive.
TREASURY DEPARTMENT
WASHINGTON
FOR P.M. RELEASE
WEDNESDAY, JULY 12, 1967
REMARKS BY THE HONORABLE MELVIN I. WHITE
DEPUTY ASSISTANT SECRETARY FOR TAX POLICY
UNITED STATES TREASURY DEPARTMENT
BEFORE THE
ANNUAL MEETING OF THE AMERICAN ASSOCIATION
OF COST ENGINEERS
CLEVELAND, OHIO
WEDNESDAY, JULY 12, 1967, 9:00 A.M., EDT
TAX POLICY AND BUSINESS INVESTMENT
There is no question -- at least, 11m sure, in the mind
of anyone who is here today -- but that the tax system can and
does exert an influence on the volume and composition of investment.
There are questions, however, as to just how that
influence is exerted, and how much it amounts to.
Also, I doubt that there is any question about the appropriateness of using tax measures to influence the volume of
investment generally.
There are questions, however, as to
just what the proper measures are and when and to what extent
they should be used.
I would like to address myself to both
sets of questions -- that is to questions relating to how
taxes affect investment, and to the appropriateness of using
tax policy to influence investment.
I realize, of course, that I am addressing a group that
deals in the "grass roots" zone of practical investment planning.
There is much that you know and that I wish I knew about costeffectiveness analysis of decisions to invest in physical
- 2 -
plant, and about replacement, expansion and modernization
practices of industry.
Therefore, I am not unaware that.
I risk both presumptuousness and perhaps some naivete in
advancing these remarks today.
I.
Understanding How Taxes Influence Investment
An economist's understanding of how taxes influence the
aggregate amount and composition of investment logically starts
with a theory of the investment decision making process.
From
this starting point one travels, often precariously, over a
rough empirical terrain -- usually replete with wide gaps -- to
a
final conclusion as to the effects (but not necessarily the
desirability) of tax policies.
However, it appears that the economics profession today
offers not one, but several alternative starting points, from
each of which one comes ultimately to conclusions about the
relative effectiveness of alternative measures that differ
significantly, and even may be at variance with one another.
Let me illustrate.
Consider first the implication of the acceleration theory
of investment.
In its strict and most straightforward form --
- 3 which still, I believe, has some proponents although its more
relaxed formulations are, of course more popular -- investment
is a function of the rate of expansion of consumers, or government, demand.
Under this theory, changes in the corporate
profits tax would affect investment only indirectly and only
to the extent that consumption responded to whatever changes
were produced in dividends and capital gains. 1/ Similarly,
the investment credit, changes in depreciation guidelines,
and accelerated depreciation would be confined to the same
type of indirect effects.
The personal income tax on the other hand, in operating
directly on consumer demand, would be the strongest competitor
as a tax policy instrument, measured in terms of investment
effect, per dollar of revenue change.
The highly popular cash flow approach -- reflecting my
own bias, I resist referring to it as a theory
l/
1/ --
attributes
This sets aside forward shifting of the corporate profits
tax, or a shift to wages.
~/ One rationale for cash flow that pushes it a little in the
direction of a cost of capital approach, is that implicitly
businessmen regard internal funds as less expensive than
external funds and will, therefore, use them for investment
when they would not make the investment if they had to rely
on outside capital.
- 4 different significances to the\arious tax measures.
Basically,
the investment effect of all fiscal actions would be comm.ensurate with their effect on cash flow -- perhaps equal, dollar
for dollar, to the change in cash flow, or be some function
of the change in cash flow.
The 7 percent investment credit
at 1966 levels of investment might be equated with 2-1/2 points
of the corporate income tax.
Both could in turn be equated
with depreciation provisions that accounted for the same amount
of after-tax cash, and even with specific changes in the individual income tax given relevant assumptions about savings and
spendings propensities, so that impact on business cash flow
could be traced.
Then there are the theories in the classical tradition,
which consider the investment decision from the viewpoint of
its implications for profit maximization, or alternatively
expressed, from the viewpoint of maximizing the present net
worth of the firm.
Consistent with profit maximization the firm is assumed
to accumulate the optimum amount of capital as well as to hire
the optimum amount of labor, and the cost of capital expressed
- 5 -
in one form or another, becomes an important determinant.
According to one modern version
II
II of how this optimum capital
stock is determined, the firm is envisaged as being in effect
a purchaser of the services of capital, paralleling its position
as purchaser of the services of labor.
The payment made for
1/ An implication of the difference between the cost of capital
and the accelerator theories that might be of particular
interest to cost engineers concerns the nature of production
functions and the possibility of substituting capital for
labor in the short run. The former assumes a shift in
production processes to relatively more or less capital
intensive processes will take place at the margin in response
to changes in cost of capital. The accelerator theory
implies tha~ in the short ru~ prevailing technology dictates
the proportion of capital and labor in use, and that changes
in amount of capital employed vary
with market demand for
output rather than with cost of capital. In the long run,
however, shifts do, of course, take place in the capitallabor ratio.
The acceleration, cash flow and cost of capital approaches
are not, of course, necessarily mutually exclusive. Some
econometricians bundle them together in what might be termed
an eclectic theory, using time series representing the
different explanatory factors as independent variables in
an investment function.
?:..! See Jorgenson, Dale IITax Policy and Investment Behavior"
Working Paper 51, Institute of Business and Economic
Research, University of California, Berkeley.
- 6 the capital services is rent.
Since in most cases the firm
owns the capital it uses, the rent is implicit in the fiqn's
calculations but could be made explicit by appropriate bookkeeping.
That is, the firm could charge itself a "shadow price"
or rent for the services of capital and proceed to calculate
profits in the usual way.
The rent should be sufficient to
enable the firm to cover depreciation and provide the going
rate of return on its investment.
1/
How much services of capital it pays the firm to employ -and by implication how large a capital stock it pays the firm
to accumulate -- will depend on the rental cost in relation
to the cost of labor and to the quantity and prices of the
firm's output.
In the economist's jargon the firm will equate
the value of the marginal product of capital services with the
rental cost of those services.
On this theory, the investment credit becomes an unambiguously strong incentive to capital accumulation.
a reduction in the required
11
II
I/
It permits
rental for capital services,
If the firm anticipates that the price of the particular asset
is going to rise, the current rent could be lower than otherwise and still permit the going rate of return to be earned.
Required, that is, to cover true economic depreciation and
provide the going rate of return.
- 7 and therefore encourages more capital to be used.
Acceleration
of depreciation allowed for tax purposes in relation to true
economic depreciation, by providing a tax benefit for the use
of capital, would also reduce the required rent for capital
services and thereby encourage greater use of capital.
On the other hand, change in the corporate income tax is
viewed more ambiguously.
One reason for this is that because
of its generality, a change in the corporate tax affects the
going rate of after-tax return which the rent charged for
capital services is required to cover.
Thus, the rental a
particular firm would charge itself for use of capital after
a corporate tax reduction may not be very different than before
the tax reduction, because it now must earn a larger aftertax rate of return on investment in order to equal the rate
available elsewhere.
Another source of ambiguity about the effects of the
corporate tax is in the depreciation allowance.
If tax allowed
depreciation is higher (faster) than true economic depreciation,
then a valuable tax benefit results which the renter-owner ot
- 8 capital equipment naturally takes into account.
The value
of this benefit, however, varies with the tax rate and wQuld
diminish with tax rate reduction.
In fact, one line of reasoning from this theory leads to
the conclusion that when tax allowed depreciation does exceed
economic depreciation, a reduction in the corporate tax,on
balance, may actually deter investment.
But it must be immedi-
ately emphasized that this theory sets aside cash flow effect,
does not accept target rate of return concepts, and does not
allow for any influence on interest rates induced by the impact
of corporate tax on private savings.
1/
Another important factor concerning the relation between
changes in taxes and changes in investment concerns time lags.
For policy making it is often more important to know the time
pattern of the effects of action taken, than it is to know
their eventual magnitude.
A small impact produced sooner may
be more significant than a larger impact produced later.
Indeed the point is made that if the lag between policy changes
1/ Nor does it recognize the possibility of forward shifting
of a portion of the corporate tax.
- 9 and investment is too long, certain countercyclical measures
taken to stimulate investment may actually have an adverse
effect on stability.
The form of the lagged effect of policy action is important
as well as the length of time involved.
If the effects are
highly concentrated at certain points in time, then the standards
for precision in the timing of policy measures must be higher
than if the effects are distributed more evenly over time.
The timing of the successive stages of the investment
process -- running from changes in demand for capital assets
or for the services of those assets -- through appropriations
to orders to expenditures -- has been studied, and apparently
is much in need of further study.
In the meantime, time lags
remain an additional element of uncertainty in predicting the
investment effects of tax policy.
1/
1/ One tangential aspect of the timing question was critically
involved in understanding the effects of the suspension of
the investment credit. The credit suspension applied basically
to orders placed during the suspension period. At the time
the suspension measurewas being considered by Congress,
(Footnote continued on next page.)
- 10 -
Footnote 1/ continued from previous page:
question was raised in the press and elsewhere as to how the
suspension would affect the current economic situation in the
case of orders for goods that had a long lead time and would
not be delivered perhaps until long after the suspension
period was over. However, the economic impact of an order
placed -- or deferred -- is prompt even though delivery takes
place after a long lag. The impact shows up in the activities
of firms producing the ordered item and the activities of their
suppliers. In fact, at the point when the item is delivered
to the ordering firm the real economic impact is completed.
This is well exemplified by the railroad industry.
Partly in response to the suspension of the investment credit
on October 12, 1966, railroads began a cutback in orders for
boxcars and locomotives. This cutback would have its primary
impact on investment outlays by railroads not in 1967 but
in 1968. The producers of railroad equipment, however,
responded to the reduced order flow by cutting down production in 1967.
- 11 -
Finally, it must be recognized that monetary policy (as
well as other spheres of policy) is an important factor in the
environment in which tax measures to influence investment
operate.
Recent experience pretty conclusively demonstrates
that at least one area of investment -- residential construction
is highly responsive to extreme swings between monetary
ease and monetary tightness.
The case of business investment
is not nearly so clear cut -- especially for larger firms.
In other words, there is no great precision of knowledge about
the influence exerted by monetary policy either.
However,
the relevant point for this discussion of tax policy is the
probability that the influence of tax measures on investment is
conditioned by what is happening in the sphere of monetary
policy.
Therefore, the degree of ease or tightness of money
and its availability for the particular activity -- becomes
another factor which must somehow be taken into account in
appraising the impact of tax measures.
The upshot of my discussion so far, I suppose, is that
in gauging the potential effect of tax measures on investment,
policy makers cannot yet live by logic and fact alone.
must playa role
Judgment
in choicemaking -- still too large a role to
please the social scientist.
The essence of this situation is, perhaps, vividly refleeted in the range of results of some recent studies
attempting to measure the effects of suspending the investment
credit.
Assuming the suspension had been maintained for the
full period initially provided in the suspension law (Oct. 10,
1966 to Jan. 1, 1968), one eminent econometrician has estimated that the effect on investment expenditures for the years
1967 and 1968 combined, would have been around $4 billion.
Another equally eminent econometrician estimated the effect
for the same period would be around $10 billion!
II.
Discrimination between Appropriate and Inappropriate
Uses of a Tax Measure to Influence Investment
Let me turn now to questions relatfug to the appropriateness rather than potential effectiveness of using tax measures
to influence investment.
Suppose for the moment that all of
the questions I have raised so far concerning the responsiveness of investment to specific tax changes were answered,
and that certain types of tax action were known with certainty
to have an immediate and direct impact on investment.
The
knowledge that we possess a powerful tool does not always
- 13 -
mean, of course, that the tool should be used.
tools may do a better job.
Alternative
Matching the right tools to the
right jobs is the fundamental matter involved when we discuss
the relation of private investment to the objectives of public
policy.
Although there may still be some who argue that an economy
operating below its full potential, with both capital and
labor unemployed, is not a sufficient or necessary condition
for Government action to influence the private economy, it
is pretty generally accepted nowadays that the stabilizing
job does require fiscal policy tools.
This includes both
stimulating aggregate demand when it is deficient and dampening it when it becomes excessive, with the overall aim of
promoting full employment growth at stable prices.
Now it is important here to distjnguish between influencing the aggregate level of activity, and influencing the
composition of that activity.
It is one thing to take as
an objective the stimulation of investment demand generally
by, say, making an investment credit available to virtually
- 14 all firms, or by reducing the corporate income tax -- and
quite another thing to purposely favor one industry over.
another, or one type of investment activity or taxpayer situation over another.
In the latter case, perplexing issues of
equity and resource allocation are posed.
11 Equity calls
for equal treatment of equals, and preferential tax treatment
does not bear this principle out.
In the matter of resource
allocation, we consider the market as generally the appropriate
arbiter.
The guiding principle for tax policy then is neutral-
ity -- i.e., that tax-caused deviations from what would otherwise be market determined allocations should be held to a
minimum -- and this principle too may be quite at odds with
preferential tax treatment.
Rather than discussing this aspect of the subject further
in general terms, I think I might now do better to proceed
with some cases and examples.
11 This is not to say that the use of the overall tools I have
cited is entirely free of equity and resource allocation
problems. The difference is one of considerable degree.
- 15 Liberalization of Tax Depreciation
Revision of depreciation guidelines in 1962 was primarily
justified because there was evidence that a significant number
of taxpayers were being constrained from adopting rapid equipment replacement practices in keeping with current and prospective economic conditions.
Undoubtedly investment was
stimulated by the revision to the extent that taxpayers could
shift to more rapid, and more realistic, depreciation rates.
However, this one-time adjustment was by no means intended as
a precedent for using changes in depreciation rates as a means
of influencing the rate of investment.
The fact that the
reserve ratio test was included in the 1962 proposals made
clear that the policy intent was the attainment of realistic
depreciation for purposes of obtaining a valid measure of
taxable income.
Unrealistically rapid depreciation may constitute as
much of a reduction in tax liabilities as a reduction in the
nominal tax rate itself.
It is true that insofar as the
individual asset is concerned rapid depreciation is a deferral
of tax liability:
high depreciation deductions in early years
are balanced by lower deductions than otherwise in later
- 16 years.
The deferral can be regarded as an interest free
loan to the taxpayer, and this gain is the interest cost that
the loan permits him to avoid.
In the case of steady replace-
ment the loan in effect is never repaid and with a growing
firm the permanent tax savings becomes larger and larger.
And, of course, the permanent tax savings are larger
the larger the gap between the economic life of the asset and
the depreciation write-off period allowed for tax purposes.
This gap is likely to vary among taxpayers.
Generally, the
percentage gap for longer lived assets is apt to be larger
than for shorter lived assets -- conferring tax benefits on
some industries such as steel relative to other industries
such as machine tools. 11
Thus, unrealistically rapid depreciation poses issues
both of equity and neutrality.
Taxpayers similarly situated
would be treated differently while deviations are produced from
market rates of return for assets of different lengths of life.
liOn
21
the other hand it can be shown that the present value
of the excess of ~ccelerated depreciation over straight line
depreciation is less for long lived assets than for short
lived when the discount rate is high. Source: E. Cary Brown,
"The New Depreciation Policy under the Income Tax: An
Economic Analysis," National Tax Journal, March 1955, page 92.
II The effect of the reserve ratio test on reducing such
inequalities has been the subject of an intensive study by
a staff member of the Office of Tax Analysis of the Treasury
Department.
- 17 Real Estate
One area where the depreciation and related provisions
of the present tax code may be offering a special investment
incentive, for which questions of equity and efficiency are
relevant, is in real estate.
For several categories of bui1d-
ing investment we are aware of the fact that a common operating procedure is for an investor to acquire or construct a
building on a relatively small equity and hold it for a period
of 8 to 10 years, and then sell it.
During his period of
ownership depreciation deductions allowed for tax purposes
are sufficiently high to offset most of the cash throw-off,
and perhaps even create a loss which can be used to offset
taxable income from other sources.
1/
The gain from the sale
of the building at the end of the period is then taxed mostly
at the preferential capital gains rate. ~/
1/
The fact that dividends are frequently paid when tax losses
occur sugges~ that the losses are not real and that the
high tax-free cash flows are in fact return on capital rather
than return of capital, and that the sale of the property
will net enough to repay the mortgage.
?:../
There is a "partial recapture" provision in the law which,
in effect, subjects to ordinary taxation some portion of the
gain attributable to the fact that depreciation was taken
in excess of that allowable under the straight line method.
All of this "excess depreciation" portion of the gain is so
treated if the property is held less than 20 months. After
that a diminishing fraction of excess depreciation gain is
taxed at ordinary rates, with none of it so taxed after 10
years of ownership.
- 18 This opportunity to convert ordinary income into capital
gains which is more available, and more valuable, to some
investors than others is certainly difficult to square with
the principles of tax equity.
Clearly it introduces a factor
favorable to real estate investment.
On the other hand, it must be recognized that buildings
are not eligible for the investment credit nor have depreciation guidelines been established for them.
One cannot really
say then, a priori, whether on balance the tax system favors
or disfavors real estate investment.
To appraise how significant quantitatively the tax provisions are as an influence on real estate investment requires
a good deal of knowledge about the characteristics of investors
attractable into real estate, and their sensitivity to the
factors affected by tax provisions.
I am aware that strong
views have been expressed on the importance of accelerated
depreciation and capital gains in real estate, for good -as in urban renewal projects -- and for bad -- as in overbuilding of commercial properties for speculative purposes.
- 19 I am not prepared to render judgment on this matter now -except to say that sound judgment requires a good deal more
fact finding and analysis than I think have been done to date.
The urban renewal aspect of real estate investment which
I have just mentioned suggests another slant on the use of the
tool of tax policy to influence the composition of investment.
This is the suitability of using tax incentives when the
objective of public policy is precisely to be non-neutral,
that is to bring about an allocation of resources that is
different from what the market would determine.
The issues can be well illustrated by considering two
rather popular types of proposals for use of tax incentives:
one, to use them as a stimulus to industry to undertake manpower training programs; the other as an aid to pollution
control.
Manpower Training Incentives
There is general agreement, I think, that manpower training programs should be expanded beyond their present scope.
Such expansion would have the objectives of alleviating skill
- 20 shortages, increasing the employability of disadvantaged
workers, facilitating the re-employment of workers displaced
by technological change and generally improving the*ills
and productivity of the labor force.
Fundamentally, the justification for a subsidy to private
industry to train workers is that, due to labor turn-over,
the individual firm under-invests in worker training, because
the benefit from the training will not be returned to the
firm but will go to other employers when the worker shifts
his job.
To improve on the solution provided by the market and
induce additional investment in training, it has been proposed
that a tax credit for manpower training be allowed to industry.
This has been viewed as a particularly apt approach, since
it would appear to put investment in human capital on a par
with investment in physical assets, to which the 7 percent
investment credit applies.
However, there are serious defects with this approach.
In the first place it might be noted that insofar as tax
treatment is concerned investment in manpower training is not
- 21 now necessarily disadvantaged compared to physical investment,
even after allowing for the investment credit.
The reason for
this is that outlays for training are treated as current expense for tax purposes.
This is equivalent to permitting
instant, 100 percent depreciation, and it is sufficiently more
favorable than double declining balance or sum of the years
digits methods of depreciation to more than offset the investment credit.
Further, the investment credit was readily integrated
into the regular administration of the income tax since the
essential determinations involved in its application are part
and parcel of administering depreciation on capital equipment.
Manpower training credit, on the other hand, requires new
factual determinations, judgments and application of criteria
that are not a normal part of tax administration nor readily
adapted to it.
The tax credit approach does not appear an efficient device for alleviating specific occupational shortages, which
are concentrated in a few sectors of the economy and in public
- 22 service areas (medical, educational, and welfare occupations)
which would not be affected by the credit.
do have labor shortages the effect of the
uncertain:
For firms that
~redit
is quite
many firms are too small to conduct training
programs effectively, and many large firms in capital goods
and defense industries are limited in their engagement in
training by uncertainty as to output which the credit would
not overcome.
The help the credit might give to the disad-
vantaged is likely to be very limited:
most workers who would
be trained would be those already employed and relatively well
educated, and the disadvantaged probably need pre-job training before they can benefit from on-the-job training.
All this is not to say that industry should not be assisted
in expanding training.
Rather, it is to say that the tax
incentive device is not the proper tool.
Alternative approaches
would be more effective.
Pollution Control
A similar line of reasoning applies to pollution control.
Again a problem arises because the market does not produce
- 23 the desired solution.
In this case it is due to the fact
that a cost item, rather than a benefit, accrues to other than
the originating firm.
Thus, the firm tends to under-invest in
methods that will reduce this cost.
There is, of course, an economic viewpoint that the cost
of pollution -- or of averting pollution -- ought to be borne
entirely by the industry and its customers.
This viewpoint
leads to such proposals as imposing a charge on effluents set
sufficiently high to induce their curtailment to acceptable
levels, which would come about as a result of adopting methods
that diminish effluents or as a result of curtailing industry
output in response to higher costs and prices, or both.
But setting such an approach aside and accepting public
responsibility for meeting some portion of the costs of pollution control, the question is whether tax allowance is the
proper way to do it.
efficient.
A tax allowance is likely to be in-
It tends to be geared to meeting the cost of
pollution control only when it is done by treating effluents
at the end of the production process.
But there apparently
are numerous other possible technical means of cutting down
- 24 -
on pollution at other stages in the production process which
would be reflected in higher operating costs (low sulphur fuels
for power plants; better quality control i
r
,
production; alkalize
acid waste and dump it rather than build a plant to remove it).
It would be difficult to devise equivalent tax allowances when
these means are adopted.
Not all pollution is equally signi-
ficant and it would be preferable to have a method of cost
sharing that could be varied so that the sharing might be
greater, say, for high density communities with many sources
of pollution than for low density communities with few pollution sources.
firms:
And tax incentives vary in their impact on
pollution does frequently arise from firms that operate
at little or no profit, perhaps for purposes of recovering
sunk capital, and, therefore,
wouldnot be responsive to tax
incentives, while relatively small benefits would be derived
from tax deductions by small firms subject to lower marginal
rates.
Finally, the administering of tax allowances for pollution control requires specialized knowledge that is not part
of the normal background of tax agents.
- 25 I could go easily on to examine many further cases where
proposed uses of the tax system to induce investment into
specific areas have been made, and where I think the case for
such use is not supported by careful reasoning.
This prompts me to voice one additional deep concern about
all tax incentive proposals that one soon acquires at the
Treasury.
The flow of claimants for use of the tax system
to further specific, often quite meritorious purposes, is
enormous and endless.
Therefore, it is a simple fact of life
that no one such proposal can be evaluated in isolation.
It
inevitably becomes a potential precedent that will weaken
resistance to a great many others.
This heavy "cost add-on"
is one that the Treasury official must always include in weighing costs against the benefits of specific proposals.
III. Conclusion
The general import of my discussion of tax policy in
relation to investment can, I think, be expressed as follows:
First and foremost, we have considerable need for more
and better measurement of actual and potential effects of tax
policy on investment.
This implies work at the theoretical
- 26 -
level as well as on statistical investigation.
I am happy
to be able to report that the Treasury Department is currently
sponsoring a number of projects that are
e~pected
to contribute
very substantially to meeting these measurement needs.
For
this, if for nothing else I have said here today, I expect
some applause from the Association of Cost Engineers.
Second, the use of tax policy as a means of allocating
investment in specific directions for specific objectives
should be viewed with great skepticism.
When the merits of
the objectives warrant government action there is usually a
more appropriate alternative to the tax system.
On the other
hand, a general overall stimulus to expanding and modernizing
our capital stock, such as is provided by the investment credit,
which at the same time perhaps serves as a counterweight to
other features of the system that tend to deter investment,
is a justifiable use of tax policy.
I might add here as a third, personal viewpoint, some
reservation about our ability to influence the aggregate
level of investment in a sufficiently reliable and rapid way
to serve the purposes of normal countercyclical policy.
I
- 27 -
would prefer to give emphasis to influencing consumption,
through simple countercyclical adjustments of the indiviqual
income tax.
Nevertheless, I recognize that in view of the
equities involved, countercyclical adjustments in the corporate
tax rate must be a companion to changes in the individual
income tax.
The Administration's surcharge proposal, therefore,
is in my view, an admirable case in point.
However, except
in the very special circumstances that developed in 1966 when
there was a very intense capital goods boom accompanied by a
monetary crisis and rising military expenditures, I would oppose
countercyclical use of the investment credit.
Further, I do
not favor changes in depreciation rules as a stabilization
measure.
000
TREASURY DEPARTMENT
(
FOR IMMEDIATE REI.EASE
JUL 11 I~ol
'l'REASURI DECISIOlI OB CElWfiC GLAZED WALL TILE
tnmER mE AlTlDUMPDIG ACT
The Treasury Departaent annollnced today that it is iS8U1ag a
notice of intent to close its investigation vi th reapeet to the
possible ctu.ping of ceraaic glazed. wa.l.l tile trca Japu.
The notice, which vill be pllb1ished in an earl1' issue of the
Federal Register, announces a tentative deter.dnation that this
aerebaDdise is not beiog, nor like17 to be, sold at less than fair
value vi thin the meaning of the ADtidUJllliDg Act, 1921, as 811eDded
(19 U.S.C. 160 et seq.).
Purchase pri ce was fooDd. to be lover thaa a4Jus ted. hOIIe Jll!Lrket
price in a majority of the ~iSODB .-de.
Promptly after the caa.ence.8nt of the ant1~iDl investigation, price revisions were .ade whicb eliminated the likelihood of
sales below fair value. Assu.raIlces were 81 Yell tbat, regardless of
the deter.dnatioD of this case, DO tuture &ale. to the United States
will be -.de at prices ¥b1eb could be construed as beiq at less
than tair value vithin the Jl8an1D& ot section 201(a) of the Antie
dllllpiug Act, 1921, &S 8IM!nded (19 u. s. C. 16o(a». '!'here appears
to be no likelihood of a resWlption ot prices which prevailed before
such price revisioD.
Appraise.ent of the above-described. .ercbandise from Japan vill
continue to be wi thhe1d peDdiD8 :further deteraination.
lDports of the involved lIIerchandise received dLlrina the period
1966, were valued at approximately
July 1, 1965, throUih Decellber 31,
$14,000,000.
T REASURY DEPARTMENT
•
JUl111967
FOR ll'ThlEDIATE RELEASE
TREASURY DECISION ON THIOUREA
minER THE k~TIDUMPING ACT
The Treasury Department annoullced today tnat it iE iSEUing a
no'Gicc of i.l1CCllt to cloce its investiGation with respect to the
poc:sible dumping of ti1iourea from We::;t Germany) exported by Det;ussa,
A. G., Franld'urt/Maln, \Vcst Germany.
The notice) waich will be published in an early issue of tl1e
Federal Register, announces that the investigation i2 being closed
with a de terminati::m that this merchandi:::e is not beinc; nor lite1.v
to be. sold ae les::: than fair value with~n the meaninG of' the AntiduupL1E.; A~t: 1921) as runended (l~ u.s.c. 160 et seq.).
Thiourea j_e a siletlical :i.ntcrmed:·.ate used in the manufacture of
photograph::'c chemical:::; diazo-type coatinGs for office machine
papers .. p.1armaceut:icals; textile chemicals and dyes,. and in the
synthesis of various organic chemicals.
Pronptly afT,er beine; notified that its prices to the United
states were lower than prices to third countries; the exporter made
pril~e revision::: which eliminated the likelihDod of sales beluvl fair
v&lue. Assuran~es were given that) rec;ardles::: of the detcrraination
()f this case, no L'.lture sales to the Uni.ted States will be made at
prices i-lll.;.ch c8uldDe construed as beine; at leGS than fair value
vithin the meani'1[, 0; section 201(a) of -c:ne Antidwnping Acc; 15:'21,
as amended (IS U.S.C. 160(a)). There appears to De no likelii100d
o~; a resumpl:.::'on of prices which prevailed before such price revisio:l.
'fne complainc therea:rter waG v:i.thdrawn.
Appraicement of ti1e auove-described nercnandiGe from ~le:::t Germany, exp8rted by DegLlssa, A. G.; Fra.nKful't/Main Webv Germany)
will continue to be withheld pending further determination.
j
Imports of the involved merchandise received during the period
Janllary 1: 1>66) through April 30, 1967, \Jere valued at approximately $277) 000.
TREASURY CEPARTMENT
mR
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
~2,400,000,000,or thereabouts, for cash and in exchange for
rreasury bills maturing July 20, 1967,
in the amount of
;2,301,411,000, as follows:
9~day bills (to maturity date) to be issued
In the amount of $1,400,000,000, or thereabouts,
lddltional amount of bills dated April 20, 1967,
~ature October 19, 1967,originally issued in the
;1,000,713,000, the additional and original bills
lnterchangeable.
18~day
July 20, 1967,
representing an
and to
amount of
to be freely
bills, for $1,000,000,000, or thereabouts, to be dated
and to mature January 18, 1968.
July 20, 1967,
The bills of both series will be issued on a discount basis under
:ompetitive and noncompetitive bidding as hereinafter provided, and at
1aturity their face amount will be payable without interest. They
lill 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
:rnaturi ty value).
Tenders will be received at Federal Reserve Banks and Branches
Eastern Daylight Saving
,ime, Monday, July 17, 1967.
Tenders will not be
'eceived at the Treasury De:partment, Washington. Each tender must
Ie for an even multiple of $1,000, and in the case of competitive
enders the price offered must be expressed on the baSis of 100,
rith not more than three decimals, e. g., 99.925. Fractions may not
,e used.
It is urged that tenders be made on the printed forms and
orwarded in the special envelopes which will be supplied by Federal
'.eserve Banks or Branches on application therefor.
IP to the closing hour, one-thirty p.m.,
Banking institutions generally may submit tenders for account of
ustomers provided the names of the customers are set forth in such
enders. Others than banking institutions will not be permitted to
ubmlt tenders except for their own account. Tenders will be received
ithout deposit from incorporated banks and trust companies and from
esponsible and recognized dealers in investment securities. Tenders
rom others must be accompanied by payment of 2 percent of the face
mount of Treasury bills applied for, unless the tenders are
ccompanied by an express guaranty of payment by an incorporated bank
r trust company.
-670
- 2 Immediately after the closing hour, tenders will be opened at th
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 Treasur
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 Bank on July 20, 1967,in
cash or other immediately available funds or in a like face amount
of Treasury bills maturing July 20, 1967.
Cash and exchange ten.
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 fr
any Federal Reserve Bank or Branch.
000
TREASURY DEPARTMENT
July 14, 1967
FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN JUNE
During June 1967, market transactions
in direct and guaranteed securities of the
. government for Government investment accounts
resulted in net purchases by the Treasury
Department of $127,709,500.00.
000
F-971
TREASURY DEPARTMENT
:R RELEASE 6:.30 P. M. ,
)ndaYJ July
17, 1967.
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced that the tenders for two series of Treasury
Uls, one series to be an additional issue of the bills dated April 20, 1967, and
le other series to be dated July 20, 1967, which were offered on July 12, 1967,
Ire opened at the Federal Reserve Banks today. Tenders were invited for
.,4.00,000,000, or therea.bouts, of 91-day bills and for $1,000,000,000, or there)outs, of l82-d.ay bills. The details of the two series are as follows:
INGE OF ACCEPTED
lMPETITIVE BIDS:
High
Low
Average
91-day Treasury bills
maturi ng October 121 1262
Approx. Equiv.
Price
Annual Rate
98.933 !:I
4.221%
98.924
4.257%
98.927
4.245% 11
·
182-day Treasury bills
maturw JanuarZ 18 1 1268
Approx. Equiv.
Price
Annual Rate
4.72($
97.614
4.759197.594
97.601
4.745% 11
4
:
·:
·
·
aj Excepting 1 tender of $150 000
of the amount of 91-day bills bid for at the low price was accepted
of the amount of 182-day bills bid for at the low price was accepted
t?%
67%
TAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Boston
New York
Philadelphia
Jleveland
lichmond
~tlanta
~hicago
)t. Louis
fumeapolis
Wlsas City
}allas
ian Francisco
TOTALS
Accepted
Applied For
$ 21,489,000 $ 1l,.389,OOO
992,389,000
1,658,509,000
17,194,000
.34,.389,000
.30,880,000
30,470,000
18,627,000
1l,627,OOO
30,134,000
53,729,000
335,189,000
13.3,142,000
60,443,000
77,093,000
13,514,000
16,929,000
28,345,000
28,.370,000
22,861,000
28,691,000
100·580,000
49 ,250 ,000
:
Applied For
Accepted
: $
7,687,000 $
7,687,000
1,307,850,000
745,235,000
16,144,000
6,794,000
42,055,000
29,055,000
•
1l,01l,OOO
8,Oll,OOO
21,5.33,000
13,433,000
61,311,000
247,301,000
•
46,361,000
33,461,000
11,113,000
13,113,000
12,022,000
10,923,000
13,248,000
19,578,000
59,8J5,oOO
121.78 9,000
·
··
·
·
·
$2,404,475,000 $1,400,758,000 ~ $1,866,444,000 $1,000,106,000
£I
InclUdes $269 242 000 noncompetitive tenders accepted at the average price of 98.927
Includes $129'181'000 noncompetitive tenders accepted at the average price of 97.601
" on a bank discount basis. The equivalent coupon 1ssue
.
'ld5 are
Th ese rates are
-y1e
4.36' for the 91-day bills, and 4.9L$ for the 182-day bills.
11"-973
STATEMENT OF THE HONORABLE FREDERICK L. DEMING
UNDER SECRETARY OF THE TREASURY
BEFORE THE
SENATE FINANCE COMMITTEE
JULY 14, 1967
Mr. Chairman and Members of the Committee:
I am here today to request your approval for the President's
recommendations regarding the Interest Equalization Tax.
These
recommendations have been, to a large extent, incorporated in
H.R. 6098 as passed by the House of Representatives.
The bill,
if amended in accordance with the remaining recommendations,
would:
as in the present H.R. 6098, extend the Interest
Equalization Tax from its current expiration date
of July 31, 1967, to July 31, 1969;
revise the tax rates applicable to foreign borrowing
in the United States to range between the equivalent
of zero and two percent per annum, and give the President discretionary authority to vary the effective
annual interest cost to foreign borrowers within this
range (the current statutory rate is fixed &t one
percent, and the range of discretionary authority in
the present H.R. 6098 runs from one to one and a half
percent); and
F-974
- 2 as in the present H.R. 6098, set the tax rate equivalent to one and one-half percent per annum for
the period January 26, 1967, through the 29th day
after enactment of the legislation.
On the 30th
day after enactment, the tax rate would revert to
the current statutory rate of one percent unless
the President exercised his authority with respect
to the schedule of rates.
The prime and immediate reason necessitating extension
and revision of the Interest Equalization Tax is the U. S.
balance-of-payments problem.
is improving.
The United States trade position
The trade surplus in the first five months of
1967 is running at an annual rate of $4.4 billion as against
$3.7 billion for the full year 1966 and $2.9 billion, annual
rate, in the fourth quarter of last year.
Unfortunately, the
foreign exchange costs of our military presence abroad have
been rising, reflecting primarily the Vietnam War.
In such a
situation we have no recourse but to continue to moderate the
flaw of our capital exports.
The lET helps us to do this.
When we appeared before the House Ways and Means Committee
on February 15, 1967, we were able to report that interest rates
both here and abroad had declined.
A month earlier, Secretary
- 3 -
Fowler had met with several of his European colleagues at
Chequers.
They agreed that the prevailing high level of
interest rates was a barrier to the pursuit of their respective national economic policies; they further recognized the
desirability of working toward a general reduction of these
high rates.
Their efforts met with success.
But by Febru-
ary the spread between rates here and abroad had widened even
though there were absolute declines in rates in both areas.
That prompted us to stress the fact that rate spreads could
both widen and narrow and that future interest rate developments in the U. S. and in Europe could not be predicted with
any precision.
Thus we believed it would be well to have
some flexibility in the lET rates so as to protect against
both types of development.
Since mid-April we have seen one of the most rapid rises
in long-term rates in our history.
Rates on long-term Treas-
ury bonds jumped from about 4.60 percent in mid-April to more
than 5 percent by late June, while rates on high grade new
corporate utility bond issues rose from about 5.57 percent to
6.11 percent in late June.
Recently there have been equally
dramatic increases in short-term rates -- in the thirty days
- 4 -
between June 5 and July 5 the yield on Treasury Bills jumped
from 3.37 to 4.29 percent.
In the last few days, a steadier
atmosphere bas prevailed in the markets but the rate changes
of recent weeks and months are striking.
The rate differential between the U. S. and Europe now
is narrower than it was three months ago.
But there are some
indications that even with slower European growth in prospect
rates in Europe may be ready to move up an. again widen the
differential.
The differential, however, could
als~
widen if interest
rates in the U. S. recede from their current levels which at
the long-end of the market are almost as high as in the summer
of 1966.
It is our hope that such a development will occur.
We also hope that rates in Europe will go down rather than up,
but we obviously cannot be certain that this will take place.
What is clear is that the general movement of interest
rates in the U. S. and in Europe since the lET was proposed
in 1963 has led to a widening of the differential.
the spread between the average yields on outstanding
In 1963,
u.
S.
Treasury and West European government bonds was only 86 basis
points.
(See Table I, attached.)
Since then, the differential
- 5 has widened -- it reached 150 basis points in February 1967.
Today, despite a relatively larger rise in U. S. rates than
those abroad in recent weeks, the spread still exceeds 100
basis points, as compared with 86 in 1963.
The importance attached to the spread between yields on
government bonds reflects the fact that the governments of
countries now subject to the lET were borrowing here at a
seasonally adjusted annual rate of over $200 million just prior
to announcement of the tax in mid-1963.
Securities of these
potential borrowers compete for available investment funds
with U. S. Government and high-grade U. S. corporate issues.
Another important differential is that between the yields
on new issues of foreign bonds, government and corporate, and
the yields on new issues of U. S. corporate bonds.
A rough
measure of this differential is obtained from a comparison of
the average of the yields on new dollar bond issues in international markets by countries subject to the lET and on new
U. S. Aa-rated corporate bond issues in the U. S. market.
Table II shows that yields on new U. S. corporate bonds
reached a peak in September 1966.
By the end of 1966, they
had declined to a level close to that of year-end 1965.
While
- 6 -
the yields in international markets on foreign dollar issues,
subject to the lET, peaked at about the same time as comparable U. S. issues, they did not decline as quickly.
As a result,
the rate differential widened substantially and in March 1967
stood at 120 basis points.
Since then, the rates have converged
until they were separated by about 50 basis points in June -a differential that may grow again if rates in Europe stiffen.
The magnitude and swiftness of these recent swings in the differential also emphasize the need for flexible authority to
vary the rate of tax.
The above comments compared average yields here and abroad.
The differentials between yields on particular U. S. and foreign securities of similar type and quality would in some cases
show even wider differentials than the average yields quoted
above.
In the case of long-term bank loans, it is difficult to
ascertain actual interest-rate differentials between here and
abroad, partly because of lack of information about banks'
policies regarding maintenance of minimum balances by foreign
as compared with domestic customers.
Overdraft loan rates in
a number of European countries, however, have been ranging
from one to two percent higher than the U. S. prime rate --
- 7 -
and this differential probably also exists for longer-term
bank loans.
Furthermore, it is of interest to note that between February 10, 1965, and May 31, 1967, with the one percent rate of
lET tax, private firms and government agencies in developed
countries drew down an estimated $290 million of long-term
funds, gross, under U. S. bank commitments made during that
period.
Their willingness to use funds on which the lET had
to be paid suggests that there was an interest rate inducement
for foreigners to borrow from U. S. banks.
It also suggests
that the lET is a mechanism to moderate the demands on our
market, not to abolish these borrowings.
The Interest Equalization Tax, as you will recall, was
proposed in July 1963.
At that time, the U. S. balance of
payments was continuing to show substantial deficits as it
had during previous years and the dollar was weak in the foreign exchange markets.
A rapid acceleration in the outflow of
private capital from the United States was making this situation even worse; for the first half of that year portfolio
and long-term bank investments abroad reached an annual rate
of $2.4 billion compared with an average of $0.9 billion for
- 8 -
the period 1960-1962.
At mid-year the outflow of funds threat-
ened to continue, if not increase.
When, on July 18, 1963, President Kennedy proposed the
Interest Equalization Tax, this alarming outflow of capital
was promptly halted.
Careful consideration of the capital
outflow problem at that time led to the judgment that the lET
was a more desirable and appropriate corrective measure for
the United States than an imposition of direct capital controls
or an increase in the domestic levels of interest rates.
remains our judgment today.
That
Advantages of the lET over alter-
native policies are:
it operates through the free market-price mechanism;
it does not interfere with domestic economic programs
of full employment and growth; and
it is in accordance with the United States long-term
objective of encouraging the development of a more
effective European capital market.
The lET was not designed to halt completely the outflow
of portfolio capital from the United States, but rather to
return the rate of outflow to a more normal level and, in view
of the failure of countries in balance-of-payments surplus
- 9 -
(principally Continental European countries) to reduce the
size of their c:;urpluses, to restrain the outflow of portfolio
capital to these countries.
In discussing the success of the lET in helping the balance of payments, first let me note the effects of the tax on
~
foreign security issues marketed in the United States.
New issues subject to the tax began to falloff almost immediately after its proposal in July 1963 and remained at a mini-
mal level after the legislation was passed in September 1964.
(See Table III, attached.)
All of the issues marketed during the second half
of 1963 ($110 million) had been arranged before the
tax was proposed and were exempt from the tax.
The two issues marketed in 1964 totaled $20 million
in value and were also exempt from the tax under
various provisions of the law.
In 1965, U. S. residents purchased $80 million of
taxable new securities.
All of these reflected a
special situation of U. K. firms borrowing in the
United States in ordor to finance direct
expenditures here.
~·.nvestment
- 10 In 1966, there were only $9 million of taxable issues.
In the first quarter of 1967, there were no new issues
subject to lET.
The results with respect to trading in outstanding issues
of foreign securities have been equally beneficial to the U.
balance of payments.
(See Tables IV and V.)
s.
From the middle
of 1963 through 1966, U. S. residents were net sellers of foreign securities (bonds and stocks) at an average annual rate
of $200 million.
By contrast,. in the 3-1/2 years preceding
announcement of the lET in July of 1963, U. S. residents were
net purchasers of outstanding foreign stocks and bonds at an
average annual rate of $275 million.
The shift from net pur-
chases to net sales had a favorable effect of almost $500 million on our balance of payments.
In the first quarter of this
year there were net purchases by American residents of $6 million of outstanding foreign issues.
The net sales of foreign securities by Americans since
mid-1963 have been almost entirely in foreign stocks.
During
- 11 -
most of this period there continued to be small net purchases
of foreign ou .. »,nding bonds, although in greatly reduced
amounts as compared with the period before the middle of 1963.
The same situation prevailed in tl:t'!
fi1.·Sl
quarter of this year.
Americans continued to liquidate foreign stocks in an amount
of $34 million while purchasing forei.gn bonds in a net amount
of $40 million.
The effect of the lET on U, S. capital outfl...'Ws in the
form of bank loans is equally impressive.
cial bank loan
commitments~
shown in Table VI, have fallen
markedly for countries subject to lET
percent.
Long-term commer-
~-
by more than fifty
This compares favorably with a small reduction in
commitments to non-lET countries.
Since 1963, our effort to improve the balance of payments
has been reinforced by the addition of the Voluntary Cooperation Program as well
3.5
other measures e
Under that Program,
as you know, guidelines have b€en suggested both for direct
investment abroad by business firms and
al~, J>
for foreign lend-
ing by banks and by other fi.nanciSil '. 7") S ti tiltions.
of the lET in this over-all policy is
~ritical,
The function
and the rela-
tionship of the tax to other parts of the program is of great
importance.
For example, the lET deters some potential
- 12 borrowers in developed countries from even applying for longterm loans at U. S. banks or other financial institutions and ,
by reducing the pressure of foreign demand on these institutions,
it has thereby made it easier for them to observe the guidelines.
In addition, the tax has deterred foreign borrowing
from U. S. persons not covered by the Voluntary Cooperation
Program.
Thus, the Interest Equalization Tax and the Voluntary
Cooperation Program have worked in tandem and have complemented each other as measures for correcting the balance-ofpayments deficit.
The same factors which led the Administra-
tion to strengthen and extend the Voluntary Cooperation Program
last December indicate that a similar need now exists for strengthening and extending the Interest Equalization Tax.
Failure to
extend the Interest Equalization Tax would have adverse balanceof-payments consequences and would place undue strain on other
elements of the Administration's economic program.
To summarize at this point:
Pressures on the United States balance-of-payments
position are likely to continue into the future.
- 13 Present interest rates are too high and it is our
hope that they will recede to a level more in keeping with the healthy operation of our economy.
It is not possible to predict precisely future
changes in the interest rate differential between
the United States and abroad; the differential may
narrow or it may widen and, as we have seen in recent
months, the change may occur with lightening speed.
If it widens, we would face the threat of additional
capital outflows.
In view of these pressing needs and uncertainties, we
recommend,as H.R.6098 presently provides, that the Interest
Equalization Tax be extended for two years beyond its current
expiration date of July 31, 1967.
The lET must be adequate to its task, and it is for this
reason that we have requested that the tax rates be revised so
that they may be fixed within a range of zero to approximately
two percent per annum equivalent extra cost to foreign borrowers.
The tax rates under existing law and under the proposed amendment are shown in Table VII.
H.R. 6098, as passed by the House, would establish an
effective range of rates from one to one and one-half percent
per annum.
But this range is not broad enough to make the
- 14 lET effective under the potential economic situations which
may occur following enactment of the legislation.
To forestall
any possible policy conflict between our balance-of-payments
goals and the needs of our domestic economy, I strongly urge
you to approve the request for rates that would involve a range
from zero to two percent per annum.
The Presidential discre-
tionary authority provided in the House bill could then be
exercised to vary the rates so that the annual cost of the
tax to the foreign borrower might vary between zero and two
percent.
Given the facts
that we want to restrain capital outflows without
prohibiting them,
that considerable uncertainty exists concerning how
the differential between interest rates between here
and abroad will move in the period ahead, and
that we want to phase out the restraining effect
of the lET on capital outflows as our balance-ofpayments position permits,
we believe the range I have indicated is fully warranted.
The provision for flexible Presidential authority, within
the range finally determined upon, is included in H.R. 6098
- 15 and is supported by five major factors:
(1)
The lET was not designed as a source of revenue
but as a regulatory measure.
The Congress is not
being asked to set a precedent for discretionary
Presidential tax authority.
(2)
The problem with which the lET is designed to cope
is really a problem involving capital flows, not
tax matters in the usual sense.
The tax, therefore,
should be flexible enough to enable the President
to respond to changes in international capital flows
brought about by changes in foreign monetary policies.
(3)
The tax is concerned with an international as contrasted with a domestic situation and hence must
respond to the wide variety of factors outside the
United States that can affect its impact.
(4)
If the Interest Equalization Tax had been intended
either as a revenue measure or as an absolute deterrent to the purchase of foreign securities, it would
have been possible to establish an appropriate tax
rate (either low or high) and never deviate from this
rate.
In fact, the lET is designed to reduce
the rate of capital outflow from the United
- 16 States to a level consistent with current balanceof-payments requirements.
As these economic condi-
tions change, the tax rate must be susceptible to
some adjustment.
(5)
Congress, in passing the original lET and in subsequent amendments, has recognized the need for delegating flexible authority to the President.
You gave the President authority to reclassify
as "developed" countries which were originally
designated as "less developed."
You gave the President authority to exempt
"developed" countries from the tax in certain
exceptional cases.
You granted authority to the President to
extend its provisions to bank loans.
You gave the President authority to exempt
from the tax dollar loans by foreign branches
of U. S. banks.
Careful consideration has been given by the President to
the discretionary provisions of the law, and his use of this
authority has resulted in substantial gains for the balance of
payments.
In light of the need to guard against the contingency
- 17 of an adverse international rate differential, the present
request adds one reasonable, but limited, form of flexibility
to enable this tax to achieve its regulatory objectives more
efficiently.
I can assure you that the discretionary authority
will be used to set the rate of tax at a level appropriate to
current economic conditions.
The United States normally earns a current account surplus.
A part of this surplus is used for defraying balance-
of-payments drains resulting from the exercise of our global
political and military responsibilities; a further part is
used -- and quite properly should be used -- for the export
of capital.
Within this framework, good balance-of-payments
adjustment policy requires flexible means for restraining capital
flows in order that neither over-all balance-of-payments deficits
nor surpluses should become chronic.
To achieve this goal and
to maximize the usefulness of the Interest Equalization Tax,
it is important that the flexible authority be applicable within
the full zero to two percent range.
Use of such authority would not, of course, be linked
mechanically to changes in relative interest rates here and
abroad; it would also be based on the development of our balanceof-payments situation.
We would not anticipate using such
- 18 authority to change the lET rate every month or even with every
minor change ·in the monetary indica tors.
The frequency of its
use would depend on events for which no regular time pattern
is foreseeable.
Finally, such authority also insures that when it becomes
desirable to lower the tax, gradual and flexible action can be
taken without fear that speculative or anticipatory pressures
would develop.
Investors would be quick to realize that develop-
ment of such pressures would be met by an immediate reinstitution of the higher rate.
In contrast, failure to grant Presiden-
tial authority to adjust the rate would necessitate its being
set at a level which, under certain economic conditions, would
be arbitrarily high.
Let me now turn to two matters which we think warrant
legislative action.
The first involves the definition of a
less developed country shipping corporation.
Residents of
industrial countries have been forming corporations in less
developed countries to engage in the operation of ships registered under the laws of a less developed country.
While such
ships are engaged in foreign commerce, they have no particular
connection, other than registration, to any less developed
country.
Yet, under the existing exemption, such corporations
- 19 have been raising funds in the United States free of the tax.
It is, therefore, proposed that in addition to the existing
requirements, a foreign corporation may qualify as a less developed country shipping corporation only if 80 percent or more
of each class of its stock is owned by residents of less developed countries, United States persons, or both.
The second matter involves the export exemption applicable where an agency or wholly-owned instrumentality of the
United States, such as the Export-Import Bank, insures or guarantees the payment of a foreign debt obligation.
Under current
law, the exemption is applicable only if the debt obligation
is issued by the foreign importer.
In a number of cases, how-
ever, the debt obligation may be issued by a company affiliated
with the importer, the importer's bank or a semi-public credit
institution.
Where a United States Government agency or instru-
mentality is involved, the export nature of the transaction can
be relied upon because of its participation.
Therefore, the
requirement that the importer and the issuer of the debt obligation be the same person seems unnecessary.
An amendment to
this effect is therefore proposed.
Before concludimg my remarks, I would like to invite your
attention to an important and beneficial consequence of the
- 20 -
Interest Equalization Tax.
The growth of the European capital
market has been a priority goal of U. S. policy for many years.
There has been general recognition that this market could not
be developed to handle all of Europe's needs overnight.
But,
by restraining foreign access to capital and money markets in
the United States, the lET in conjunction with the Voluntary
Cooperation Program for corporations and financial institutions
has operated as one of the primary causes of an important and
exciting change in the size and structure of the European market.
The growth of the international capital market (shown in
Table VIII) has been striking.
In 1962, the volume of new inter-
national bond issues sold in European markets was $360 million.
The flotation of such issues accelerated during the second half
of 1963 and, in 1964, reached a level of $991 million.
In 1966
the amount of new flotations was $1,286 million, an increase of
more than 200 percent over the most recent pre-lET year.
And,
in the first quarter of this 'year, new international issues were
at an annual rate of $1.8 billion.
I am happy to say that the
U. S. investment banking houses have shared in this development
by heading many of the underwriting syndicates.
One of the particularly attractive features of a wel1developed European capital market is illustrated by the increased
use of this market by affiliates of U.
s.
corporations in the
- 21 financing of their investment needs.
Although there were no
sales of new long-term securities abroad for the financing
affiliates of U. S. companies during 1963 or 1964, by 1966,
the amount of such issues had reached the level of $490 million.
There are other welcome developments.
The Common Market
countries are giving a great deal of consideration to capital
market problems and some reforms are being instituted.
The
Organization for Economic Cooperation and Development is
actively working to stimulate improvements.
Some liberaliza-
tion of international capital movements has taken place -- for
example, the recent French measures reducing some of their
remaining restrictions on capital flows.
Unfortunately, progress in this area is not always easily
achieved, and there have also been some setbacks.
The disparity
between the capital export capacity of the U. S. market and
that of capital markets abroad remains too wide to permit us
to remove the lET now.
One 'indication of the problem that would
be faced is suggested by the 8 to 9 percent interest rates which
for some time prevailed in Germany, and by the fact that even
with the substantial -- and welcome -- declines of recent months,
the yield on German public authority bonds has only recently
fallen below 7 percent.
- 22 Another indication of the problem is the inability of
national markets in Europe to satisfy even their own nationals.
The list of borrowers in international bond markets in recent
months has included major companies from Italy, Germany, and
France.
Borrowings by such
fi~,
along with frequent borrow-
ings by Scandinavians and a few others, have led to an increase
in international bond issues by Western Europeans from less than
$300 million in 1962 to over $700 million last year.
Some--
perhaps, many -- of these borrowers would forsake the international bond market in Europe and return to New York if the
disincentive of the lET were removed.
These are compelling reasons for the extension and reinforcement of the Interest Equalization Tax along the lines we have
proposed.
In this new form the Interest Equalization Tax will
continue to make a vital contribution to the current U. S. balanceof-payments program.
In addition, it will serve as an adaptable
policy instrument for dealing with likely changes in the world
economic situation and changes in the international payments
position of the United States.
Our payments position still requires corrective measures.
I, therefore, earnestly request prompt action on the foregoing
recommendations.
- 23 -
I have a supplementary statement of recommendations for
tightening certain provisions of the tax so as to meet a prob-
lem of evasion that has become significant in recent months.
TA~Ll:!;
I
Comparison of Yields on U. S. and Various
Foreign Goverrunent Long-'l'erm Bonds
(P~rccnt per annum; monthly average)
Yield
June 1963 Sept. 1966 Feb. 1967 Max 1967
\'Jestcrn Europe
(avcraqc)
Lelgium
lJen,nark
France
Germany
Italy
i\iethcrlanus
l\!orway
SwccJ.cn
Switzerlanu
U. K.
Foreign Differential over
u. s. Treasur~ Bona Yield
AS
AS
AS ot
Lor
June 1963 Sept. 1966 Feb. 19:fl lIav 1967
or
or
1.36
1.48
1.11
1.10
3.19
.95
4.86
6.15
5.95
5.87
.86
4.00
6.54
5.09
6.03
5 006
4.12
4.66
4.52
3.15
5.44
5.84
8.05
5.45
8.11
5. <Xl
6.45
4.45
5.85
4.25
7.12
5.88
~.B6
v
8.24
4.74
6.40
7.95
5.71 21
6.<Xl V
5.62 .l/
5.81
4.38
5.26
4 67
6.51
2.54
1.09
2.03
1.06
.12
.66
.52
-.85
1.44
1.0;
3.26
.66
3.32
1.11
1.66
-.34
1.06
-.54
2.33
1.41
3.77
1.11
2.93
1.08
1.42
-.06
• <Xl
.27
1.93
.86
1.05
-.38
050
-.09
1.75
4.50
5.17
5.25
5.38
5.25
5.43
5.25
5.49
.50
1.17
.46
.59
.78
.96
049
.73
4.00
4.79
4.47
4.76
5.50
7.40
5.55
5.89
4.41
5.Y!
.
0
2.14
Other dev€' 1 ot'E!(: :
Austr<lli<l
New ZC<llanCl
u. s.
Tre~sury
bunus
II
--
-- - - .---- -- - _._- - - --- -- .
~
1:/
2/
data
April data
f-ii'! .... ch
~ources:
Internat}~nal Financial
St.:~ti~t:_i~E'
HlP
July 11, 1967
TABLE II
Comparisons of Average Yields on ~ Issues of Long Term
Bonds in U.S. and International Markets
(Percent per Annum)
Yield on New Dollar
Bond Issues in International
Markets by Foreign Issuers
Subkctto lET 1/
(1)
Yield on New
U.S. Aa- Rated
Corporate
Issues
Difference
(1) -
(2)
June 1963
n.a.
4.32
n.a.
Sept. 1966
7.17
6.14
1.03
Dec. 1966
6.82
5.98
.84
Mar. 1967
6.75
5.55
1._20
May 1967
6.42
5.90
.52
June 1967
6.55
6.06
.49
17 Foreign issuers subject to the lET include foreign governments, government-
owned enterprises and private corporations.
July 12, 1967
(2)
-- .
TABLE .I11
New Issues of Foreign Securities Purchased
by U. S. Residents, by Area, 1962-1966
($ millions)
1962
1963
First
Second
1964
1965
251
1.063
1,206
219
53
20
15
57
80
52
132
19
80
9
10
Half*
~
NEW ISSUES
1.076
r Countries:
-
999
Jest Europe
Japan
)ther!/
195
101
60
107
17
Subtotal
)f which:
(i) Subject to lET
356
343
(it) Exempt from lET:
teason:
I) Connnitments made
prior to 7-18- 63
» U.S. exportrelated
:) Japanese exemption
1) Other
ler Countries:
:anada
..atin America 1/
)ther countries
[nterna tiona 1
institutions
Subtotal
Ha1f*
=-
20
4
20
52
(110)
(-- )
(-- )
(--) (--)
(-- )
(-- )
(9 )
(-- )
(-- )
(52 )
(--) (--)
(--) (--)
(-- )
(11)1/
(-- )
(10)4( __ )
700
208
131
4
709
37
149
179
92'Z5 /256
1.043
1.074
608
85
102
13
35
23
33
84
720
-
332
110
457
77
1966 1967
Fi.rst
_ _ Qtr.*
141
69
120
80
38
24
1/~
seasona lly adj us ted.
lstralia, New Zea land, South Africa.
lcludes Latin American Development Bank issue of $145 mil. in 1964 .
•sue had rna turi ty less than three years, which was lowes t rna turi ty to
lich tax had applied prior to February 11, 1965.
iSue by Uni ted Kingdom subsidiary of Canadian firm.
~fore deducting $162 mil. of Canadian Gov't purchases from U. S. residents
Outstanding Canadian and other foreign securities in accordance with
~nada' s agreement not to let its foreign exchange reserves rise as a
~sul t of borrowing in the U. s.
)t
June 7, 1967
TABLE IV
NET TRANSACTIONS IN OUTSTANDING FOREIGN
SECURITIES BY U. S. RESIDENTS, 1960-1966
($ million; minus sign indicates net purchases
by U. S. residents and no sign before a figure
indicates net sales by U. S. residents)
U. S. Transactions
with residents of
all countries
1960
-309
1961
-387
1962
-96
1963 first half annual rate
(Average annual rate 1960 - June 1963)
-274
1963 second half annual rate
204
1964
193
1965
226
1966
-323
(Average annual rate July 1963 - 1966)
1967 first quarter annual rate
Source:
-302
--232
-24
Survey of Current Business, Department of Commerce.
July 3, 1967
u.s.
Transactions in New and Outstanding Foreign Bonds and Stocks. 1.959-1.967
(In millions o-C dollars)
i
Period
-
ITOtal
e
1959 • • • • • ••
1960 • • • • • • •
1961 • • • • • • • '
-3
-13
-622
-74
I
Total
:
r=
Stoc~~
B?ndS
-/tB7
-140
-309
-387
--194
-82
-324
-1,002
-96
-25
+54
-227
-63
-71
-1,250
-53
-1,197
-49
+113
-162
-999
-251
-32
-968
-3
-21
-229
-151
+102
+116
-J.4B
-14
-1)063
-4
-1,059
+19)
+210
-17
-1 , 206
-4
-1,202
+226
+297
-71
I
II
III
-302
-3
-299
-329
-303
+49
.-:':130
+108
-59
+76
+67
-14
IV
-2'71
• •
-.36
-329
-304
-1
-542
-271
+46
-52
+323
+253
+70
.. 9
+2
-ll
+122
+1"
+75
+47
+'9
-46
-1,179
I
-406
-34
II
III
IYp
-305
-6
-6
-432
-299
-241
-213
~332
•
19611 I P
lfaludll1i' dimt investment transactions.
+54
+53
-6
-1,225
1966p Total
I
Bonds
4
1963 - Total •
1%; '- Total •
p
Stocks
~et Tran:::;actions in Outstanding Issues
(Net Purchases by Americans -)
1962 • • • • • ••
1964 - Total •
.
-625
I
I
--'
-555
-523
-1 / 076
1st half
2nd half
, - OV
New Issues (Net Purchases by Amerioam -)
-235
-21J
·332
+96
+55
+80
-2'
.6
~J4
-40
Preliminary
Detail may not add to totRls bcc,'\\1se of rounaing.
June 7, 19fJ7
Table VI
Long-Term U.S. Commercial Bank Loan
Commitments to Foreign Countries, by Area, 1964 - 1967
($ millions)
1964
Total
ALL COUNTRIES
Countries, total
Europe ])
~st
11
:her
1965
Jan. 1
Feb. 10
Feb. 11 1/
Dec. 31
1966
1967
1st Qtr.
2,227
1,885
768
1,117
898
158
1 2 246
718
528
1 2 014
396
617
574
234
339
434
162
272
207
101
106
11.
189
245
138
67
8
29
198
47
67
--
29
--
683
690
121
ET Countries!t total
lbject to lET 4/
:empt from lET
25
12
~ason:
export financing
Raw material extrJlction
U,S.
~r
!:
Countries:
981
871
194
Detail may not add to totals because of rounding.
Date When lET made applicable to long-term U.S. commercial bank loans.
Includes Ireland and Portugal from May 5, 1965.
Includes Australia, New Zealand, South Africa; also Bahamas and Bermuda
from May 5, 1965; also Iran, Libya and Saudi Arabia from June 11, 1966.
Excludes Canada beginning September 12, 1966.
To extent of amounts actually disbursed.
July 12, 1967
TABLE VII
Interest Equalization Tax Rates
Rates of tax
under
existing
law
Rates of tax
under
proposed
amendment
(%)
(%)
If the
At
At
At
At
At
At
At
At
At
At
At
At
At
At
At
At
At
At
At
At
At
period remaining to maturity is:
least 1 year, but less than 1 1/4 years
least 1 1/4 years, but less than 1 1/2 years
least 1 1/2 years, but less than 1 3/4 years
least 1 3/4 years, but less than 2 1/4 years
least 2 1/4 years, but less than 2 3/4 years
least 2 3/4 years, but less than 3 1/2 years
least 3 1/2 years, but less than 4 1/2 years
least 4 1/2 years, but less than 5 1/2 years
least 5 1/2 years, but less than 6 1/2 years
least 6 1/2 years, but less than 7 1/2 years
least 7 1/2 years, but less than 8 1/2 years
least 8 1/2 years, but less than 9 1/2 years
least 9 1/2 years, but less than 10 1/2 years
least 10 1/2 years, but less than 11 1/2 years
least 11 1/2 years, but less than 13 1/2 years
least 13 1/2 years, but less than 16 1/2 years
least 16 1/2 years, but less than 18 1/2 years
least 18 1/2 years, but less than 21 1/2 years
least 21 1/2 years, but less than 23 1/2 years
least 23 1/2 years, but less than 26 1/2 years
least 26 1/2 years, but less than 28 1/2 years
28 1/2 years or more
1.05
1.30
1.50
1.85
2.30
2.75
3.55
4.35
5.10
5.80
6.50
7.10
7.70
8.30
9.10
10.30
11.35
12.25
13.05
13.75
14.35
15.00
o
to
"
It
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
"
" "
It
"
" "
" "
2.10
2.60
3.00
3.70
4.60
5.50
7.10
8.70
10.20
11.60
13.00
14.20
15.40
16.60
18.20
20.60
22.70
24.50
26.10
27.50
28.70
30.00
TABLE VIII
New International Bond Issues Floated in Europe l /
($ millions)
Borrower
1962
1963
1964
1965
1966
190
36~
662
660
686
1967
1st.
Qtr.
271
Japan
25
64
209
25
Other Developed
54
90
42
83
40
45
269
516
913
768
726
316
14
14
41
24
37
83
36
8
991
875
796
344
306
490Y
117
western Europe
Jtal Developed Countries
All Other Countries
International Insti tuL.DL.J
346
U.
s.
Subsidiaries 2 /
:and Total
534
14
360
534
991
1,181
20
1,286
461
/ Including issues denominated in foreign currencies as well as in
aollars; also including portion of foreign issues made in New York
and sold to foreigners.
Domestic based as well as foreign based.
Excludes $127 million exchange of convertible debentures for stock
by a U. S. corporation to obtain major interest in a foreign enterprise.
July 3, 1967
(FOR RELEASE AT 10:15 A.M., JULY 14, 1967)
SUPPLEMENTARY STATEMENT OF THE HONORABLE FREDERICK L. DEMING
UNDER SECRETARY OF THE TREASURY
ON H.R. 6098 BEFORE THE
SENATE FINANCE COMMITTEE
JULY 14, 1967
I would like now to discuss with you the Interest Equalization Tax evasion problem.
As you know, the lET does not apply to purchases of foreign
securities by Americans from American sellers.
We have found
that tax evaders are selling foreign securities in the United
States with false representation as to American ownership.
The evidence does not indicate widespread individual noncompliance with lET laws but rather that a limited number of
unscrupulous persons have operated to evade the lET.
Indications
are that the fraud became sizeable toward the end of 1966,
perhaps stepping up in the first part of 1967, and probably
substantially cut back by the end of last month as a result of
our investigations.
The Internal Revenue Service investigations
of evasions over the past six months have identified, on a
projected annual basis, illegal security
order of $100 million to $150 million.
tr~nsactions
in the
If left unchecked,
the amounts involved in evasions could go considerably higher.
We are concerned by any evasion and I want to describe in some
detail both the manner in which evasion has been taking place
and our proposals for stopping it.
- 2 -
Since the law went into effect, the Internal Revenue Service
has conducted an educational campaign about its requirements,
primarily for the benefit of security brokers.
Delinquency
checks were initiated to determine whether the tax was being
paid on taxable purchases.
Reports of alleged fraudulent
transactions have been investigated.
A special Grand Jury
established in the Southern Judicial District of New York has
returned indictments against six individuals and one corporation.
The cases are awaiting trial for lET offenses and are
~cheduled
for hearings in September.
Although considerable publicity has resulted from these
legal actions, they have not achieved the degree of deterrence
hoped for at the time of the establishment of the Grand Jury.
This spring, the
Securities & Exchange Commission provided the
rnten-nal Revenue Service with information obtained from a st'tidY of
foreign securities trading which indicated that lET violations wen:
taking place, possibly on a substantial scale.
For example, there appeared to be a large volume of transactions in which foreign-owned foreign stocks were channeled
through foreign broker-dealers into the United States as if they
were American-owned foreign stocks.
In many cases, the certifi-
cate of American ownership, which was arranged to accompany the
- 3 -
stock, was signed by an American citizen of unsubstantial means ,
residing outside of this country.
These certificates were false.
In some cases, documentation was arranged to make the American
signing the certificate appear as the bona fide owner and seller
of the stock.
In some other cases, the American simply signed a
certificate of American ownership in blank in exchange for a
"fee" which sometimes amounted to $10 per certificate.
The foreign broker-dealer would generally sell the foreign
stocks, accompanied by the false certificates, to a small
American over-the-counter broker-dealer.
Typically, this dealer,
in turn, would then re-sell the stock in the United States to
larger broker-dealers specializing in foreign securities, confirming to them that the stock was American-owned.
In the case
of over-the-counter trading, a written confirmation received
from a member of the National Association of Security Dealers,
an association
covering almost all American broker-dealers,
is accepted as conclusive proof of prior American ownership,
unless the confirmation is qualified, or unless the person making
the acquisition has actual knowledge that the confirmation is
false in any material respect.
The larger broker-dealers
presumably rely on this "clean confirmation" procedure, as it is
called.
In some cases, involving substantial volumes of stock,
the foreign broker-dealers would sell directly to large American
- 4 broker-dealers, some of whom are members of the major national
securities exchanges.
These transactions appear to have been concentrated in
foreign stocks with special appeal.
The prices of these stocks
abroad are generally several points or more below the price of
the same shares when they are sold by one American to another on
a tax-free basis.
This spread of several points furnishes the
profit resulting from these tax-evading transactions.
I come now to the possible solutions.
At one end of the
range of alternatives would be application of the Interest
Equalization Tax to transactions in foreign stocks between
Americans, as well as to the purchase of such stocks by an
American from a foreigner.
To take this action would mean
penalizing many legitimate transactions which do not hurt our
balance of payments, in order to catch those fraudulent transactions which do hurt our balance of payments.
This does not
seem an appropriate solution.
At the other end of the range of alternatives would be an
amendment of the lET law to exempt from the tax the purchase
of outstanding foreign stocks from foreigners.
suggested when the lET was first considered.
This was
The suggestion
was discarded at that time, and I think properly so.
reasons are as follows.
The
- 5 Failure to tax outstanding equities at the same rate as
new issues would lead to their substitution for the new issues
as a means of raising capital in the U. S.
No one can distinw
guish new shares of stock from old once they are issued, and
a sizable potential would be opened for the movement of American funds to Europe through secondary distribution of unissued
stock, or stock assembled for sale from a group of foreign stockholders.
These techniques are well known.
It would not be much
of a problem for a potential European borrower to exchange
new stock for outstanding blocs of foreign stock in his own
stockholder's hand and then offer the latter to American customers
as a means of raising funds tax free in the U. S.
American-
owned foreign companies could be formed to do the same thing.
On the demand side, American investors have in the past
and may again, in the absence of a tax on purchases of outstaning foreign stocks, become heavy buyers of such stocks with
consequent adverse effect
on our balance of payments.
We simply
cannot afford a weakening of this important legislation during
this period of substantial balance-of-payments deficits.
Instead of either of the extreme solutions mentioned above,
we are proposing one aimed, essentially, at eliminating the
possibility of tax-free transactions among Americans in foreign
securities based on false American certificates of ownership.
- 6 -
The Treasury recommends the establishment, effective
Saturday, July 15, 1967, of a new system with respect to
transactions between American buyers and sellers cf foreign
securities.
The new system is designed to prpvent evasion
of the Interest Equalization Tax.
In the past, sellers of foreign securities to American
buyers could exempt the purchaser from payment of the
Interest Equalization Tax by assertion, on their part, of
U. S. citizenship and ownership of the securities in
question.
Proof of American ownership was evidenced by an
American ownership certificate signed by the seller.
Under the new system, the seller must, in addition
to establishing his U. S. citizenship and ownership, establish that he obtained the securities "validly."
The seller can satisfy this requirement in the following
manner:
1.
He can obtain a "validation" from an eligible
broker-dealer.
2.
He can obtain a "validation" from an eligible bank.
3.
He can obtain a "validation" from the Internal
Revenue Service.
- 7 -
The effect of the new requirements is to replace a
system under which certificates of American ownership signed
by any U.S. person exempted the buyer from payment of the
tax with a new system under which certificates issued by a
limited number of institutions and the Internal Revenue Service
are required to provide the buyer with this exemption.
To insure compliance at the "eligible" broker-dealer and
bank level new reporting and record keeping requirements are
being established, involving segregation of transactions in
foreign securities from transactions in domestic securities.
To effect the transfer to the new system, the list of
eligible broker-dealers will initially encompass all members
of the New York Stock Exchange, the American Stock Exchange,
and those members of the National Association of Security
Dealers with net worth of over $750,000 or who engaged in 300
or more transactions in foreign securities either dnring the
week beginning July 2, 1967, or the week beginning July 9, 1967.
The list of these firms will be set forth in the Federal
Register and in Attachment A.
The list of eligible banks will initially encompass
Federal Reserve member banks classified as reserve city banks.
- 8 -
Additional firms and banks will be added to these lists
on appropriate indications that they will meet the reporting
and record-keeping requirements.
Eligible broker-dealers and banks may validate foreign
securities held in their custody for American owners as of
July 14, 1967.
The Internal Revenue Service will establish
by Monday, July 17, 1967, validation procedures with respect to
other foreign securities.
The new procedures, described in detail in Attachment A,
have been prepared in consultation with industry experts in
order to minimize technical problems when trading commences
on the basis of these new rules on July 17, 1967.
In addition,
we are making special efforts to disseminate information on
the new procedures as quickly and broadly as possible; material
is being distributed ID the financial community at this moment,
giving all the necessary information.
I urge upon this Committee the necessary legislative action
on the amendments which will make these new procedures effective
so that this evasion ends.
At tachman t A
DEPARTMENT OF THE TREASURY
OFFICE OF '!'HE S~RETARY
RECOMMENDED AMEN rMENTS TO THE PF()POSED
INTEREST ~UALIZATION TAX EX'rmSION ACT OF 1961
Exemption for Prior American Ownership; Due
])lte
of Interest Equalization
Tax
~ July 14, 1961 the Treasury Department recODDnellded that the
Senate act favorabll on H. R. 6098, 90th Congress, 1st Session (the
proposed Interest Equalization Tax EXtension Act of 1961) as passed
by the House of Representatives but with amendments, effective with
respect to acquisitions of stock or debt obligations made after
July 14, 1961, which would:
(a)
Replace the exemption for prior American ownership with
an exemption for "prior American ownership and compliance".
The new
exanption would apply to the acquisition of stock or a debt obligation
of a foreign issuer or obligor if it is established that the person
from whom such stock or debt obligation vas acquired (the "seller")
(i) was a United States person throughout the period of his
ownership or continuously since July 18, 196), (ii) had not acquired
such stock or debt obligation under an exemption which made him
ineligible to sell such stock or debt obligation as a United States
person, and (iii) had complied with his interest equalization tax
obligations with respect to such stock or debt obligation (Le.,
the seller acquired such stock or debt obligation in an acquisition
- 2 which was not subject to the interest equalization tax or the seller
paid the tax).
(b)
Provide that if stock of a foreign issuer or a debt
obligation of a foreign issuer or obligor was acquired by a United
States person in a transaction subject to the interest equalization
tax, the United States person is required to file an Interest
Equalization Transaction Tax Return accompanied by proper payment
prior to any disposition of the stock or debt obligation if the
acquisition had not been reported on the appropriate Interest
Equalization Quarterly Tax Return accompanied by proper payment.
(c)
~ecity the manner, described below, under which the
exemption for prior American ownership and compliance can be
es tablished.
(d)
Amend the provisions with respect to "regular market"
trading on certain national securities exchanges and "clean comparison" trading in the over-the-counter market set forth in section
4918 of the Internal Revenue Code so that they are applicable only
to those members and member organizations of national securities
exchanges or national securities associat"ionsregistered with the
Securities and EXchange Commission, which have agreed to comply, and
do comply, with the amended statutory provisions and with the docu-
mentation, record-keeping and reporting requirements established
by the Secretary or his delegate (referred to in this Notice as
"Participating Firms").
During the period beginning July 15, 1967
- 3 and until a notice or notices to the contrary are published by the
Internal Revenue Service, 1 t will be presumed that (i) all members
or member organizations of the
!~ew
York Stock Exchange, (ii) all
members and lIlember organization::: of the American Stock Exchange,
and (iii) those members or JIlElllbe:r organizations of the National
Association of Securitie3
DPalers~
Inc., which
eithe~ r~ported
a
net capital (as defined in Rule 1$c3-l under the Securities Exchange
Act of 1934) of ~sr,ooo in the latest financial statement filed with
the Securities and Exchange Commission on Pbrm X-17 A-S prior to
~
I), 1967, or which have effectAd 300 or more transactions
in foreign securi t: as during either the week commencing July 2 or
commencing July 9, 1967
(whi~h
the National Association of
members or
Secu~ties
memb~r
organizations of
Dealers, Inc., are listed below)
have agreed to comply, and are comolying, with such amended statutory
provisions and with the documentation, record-keeping and reporting
requirements a."ld shall be Participating Firms.
Participating Firms As Of July 15, 1967
The Particinating Firms as of July 15, 1?67, are as follows:
All members and member
or~anizations
of the New York Stock
E!cchange.
All members and member organizations of the American Stock
J!!tchange.
The following members and member organizations of the National
Association of Securities Dealers, Inc., not members or member
- 4organiza tions of the New York Stock Exchange or the American Stock
Elcc hang e:
1.
A. E. Ames Co., Inc., New York, New York
2.
Allen & Co., Naw York, New York
3.
Allison-Williams Company, Minneapolis, Minn.
h.
B. C. Ziegler
5.
Bankers Securities Corp., PhUadelphia, Pa.
6.
Barrow, LeaI7 &. Co., Shreveport, La.
7.
Calvin, Bul.lock Ltd., New York, New York
8.
Carl Marks &. Co., Inc., New York, New York
9.
Cartwright, Valleau &. Company, Chicago, Ill.
& Co., West Bend, Wisc.
10.
Childress & Co., Jacksonville, Fla.
11.
City Securities Corp., Indianapolis, Ind.
12.
Collett & Co., Inc., Indianapolis, Ind.
13.
Cumberland Securities Corp., Nashvil.1.e, Tenn.
14.
Dayton Bond Corp., Dayton, Ohio
15. Demps f!q
&. Co., Chicago, nl.
16.
Distributors Group, Inc., New York, New York
17.
Donald B. Litchard, S:>ston, Mass.
18.
Dreyfus Corp., New York, New York
19.
E. L. Villareal Co., Inc., Little Rock, Ark.
20.
E. M. Warburg &. Co., Inc., New York, New York
21.
Eaton &. Howard, Inc., Boston, Mass.
22.
Equitable Securities Corp., Nashville, Tenn.
23.
EXcelsior Option Corp., Boston, Mass.
- 524.
F. Eberstadt & Co., New York, New York
25.
F. I. dUPont, A C. Allyn, Inc., New York, New York
26.
First Boston Corp., New York, Hew York
27.
First Investors Corp. of New York, New York, New York
28.
First Soulliwest Co., Dallas, Tex.
29.
Glover & MacG."f' gar Inc.. Pittsburgh, Pa.
30.
Gordon B. Hanlon & t:o., Boston, Mass.
31.
Gross
32.
H. S. Kipnh
33.
Halsey, Stlla.rt & OJ., :r.c., Chicago, Ill.
34.
Hamil ton Managemen t G. r-p.. Denver, Colo.
JS.
Henry Sple!;-i.i. :Iew
36.
Hettleman & Co.,
~7.
Hickey
38.
Hirsch & Co., Inc., ;-Jew York, New York
39.
IDS Securities Corp., Minneapolis, Minn.
40.
Insurance Secul"'i t.ies Inc., Corp., Houston, Tex.
41.
J. C. Bradford & Co., Inc., Nashville, TenD.
42.
J. S. Strauss
43.
John Nuveen & Co., Inc., Chicago,
hU.
John W. Clarke & Co., Chicago, Ill.
45.
Kalman & Co., In~ .• St. Paul, Minn.
46.
Kenower, MacArthur & Co., Detroit, Mich.
47.
LoomiS, Sayles & Co., Inc., Boston, Mass.
48.
M. A. Schapiro & Co., New York, New York
& Co.,
& Co.,
~s
p.
Angeles, Calif.
C..,., . t.i:-.:i:So, Ill.
Ct~
).I'~.{.
Nel..l
New York
Y'')rk, New York
.. ~- ,
I~l.
& :0., San Francisco, Calif.
m.
- 6 -
49. National Securities
& Research Corp., New York, New York
50.
National Variable Annuity Co. l'la., Jacksonville, Fla.
51.
Parsons & Co., Inc., Cleveland, Ohio
52.
Paul Revere Variable Annuity Ins. Co., Worcester, Mass.
53. Pflueger
54. R.
& Baerwald, San Francisco, Calif.
S. Dickson & Co., Inc., Charlotte, N.
c.
55.
Richard W. Clark Corp., New York, New York
56.
Second District Securities Co., Inc., Naw York, New York
57.
Stephens, Inc., Little Rock, Ark.
58.
Stem Bro thers & Co., Kaneas Ci'G1, Mo.
59.
Stetson Securities Corp., Fairfield, Conn.
60.
Stone & Youngberg, San Francisco, Calif.
61.
Stryker & Brown, New York, New York
62.
The Crosby Corp., Boston, Mass.
63.
'nlOlllaS,
64.
Thomas McDonald & Co., Chicago, Ill.
65.
Troster, Singer & Co., New York, New York
66.
Vance, Sanders & Co. J Inc., Boston, Mass.
67.
Waddell & Reed, Inc., Kansas City, Mo.
68.
Weedon & Co., San Francisco, Calif.
69.
Wellington Management Co., Philadelphia, Pa.
70.
Wheeler, Munger & Co., Los Angeles, Calif.
71.
White Weld & Co., New York, New York
72.
William C. McDonnell, New York, New York
73.
William E. Pollack & Co., Inc., New York, Hew York
74.
Wood Struthers & Co., Inc., New York, New York
Haab & Botts, New York, New York
- 7 Changes In Lis t
or
Participating Firms
Any other member or member organization of a na.tional securities
excha:1ge or a national securities association registered with the
Securities and Eltchange Commission may become a Participating Firm
if it files with the Commissioner of Internal Revenue, Washington, D. C.
20224 (Attention: CP) a letter signed by the member, a partner or an
offIcer (i) requesting designation as a Participating Firm, (ii) agreeing
to comply with the documentation, record-keeping and reporting requirements e~tablished by the Internal Revenue Service (whether established prior or subsequent to the date of the letter), (iii) agreeing
that its books and records no matter where located may be examined
by any employee of the Internal. Revenue Service, and (iv) if the
letter is filed with the Commissioner of Internal Revenue on or after
August
15,
1967 stating" that such documentation, record-keeping and
reporting requirement ~)!'"Ocedures are operational.
Revenu~
The Internal
Service will from time to time publish the names of those
members or member organizations which have become Participating
Firms subsequent to July
15,
1967.
Any member or member organization which became a Participating
Firm prior to August 15, 1967 shall cease to be a Participating
Firm unless on or before August 15, 1967 it files with the Commissioner
of Internal Revenue a letter signed by the aember, a partner, or an
officer setting forth each of the items (i) to (iv), inclusive, of
the preceding paragraph.
A Participating F.lrm may terminate its
- 8 status as such by filing a request with the Commissioner of Internal.
Ravenue.
In addition, if the Commissioner of Internal Revenue has
reasonable cause to believe that a Participating Finn is not
COll-
plying with such statutory provisions, or with the documentation,
record-keeping and reporting requirements, or any part thereof,
he JIlay cause the removal of such firm from the list of Participating
Firms.
The effective date on which a member or member organization
shall become or cease to be a Participating Finn shall be the date
specified in a notice issued by the Internal Revenue Service, which
date shall not be prior to the date following the date on which the
notice was made available to financial publications and wire services.
EstablishmEllt Of Exemption Fbr Prior AIlerican Ownership and Compliance
The Treasury recommended that the amendments to H. R. 6098
authorize the following procedures, effective July
15,
1967, for the
establishment of the exemption for prior .American ownership and compliance:
1.
If a United States person acquiring stock of a foreign
issuer or a debt obligation of a foreign obligor direc~ from
or through a Participating Finn receives in good faith from the
Participating Finn an "IEI' Clean Confirmation" (meeting the
requirements described belOW) applicable to the particular
stock or debt obligation acquired, the exemption for prior
American ownership and compliance shall be deemed to have
been established.
2.
9 -
If a United States person acquiring stock
of a foreign issuer or a debt obligation of a
foreign obligor receives in good faith copies I
and 2 of a Validation Certificate issued by the
Internal Revenue Service to the seller or to
himself applicable to the particular stock or debt
obligation acquired ans in the case where the
Validation Certificate was issued to the seller,
completes and files copy 2 of the certificate with
the Internal Revenue Service, the exemption for
prior American ownership and compliar.ce shall be
deemed to have been estahlished.
3.
If a United States person acquiring stock
of a foreign issuer or a debt obligation of a
foreign obligor establishes that there is reasonable cause for
0n
inability to establish prior
American ownership and compliance in accordance
with one of the foregoing, prior American ownership and compliance may be established by other
evidence which satisfies the Internal Revenue
Service that the person from whom such acquisition was made was a complying United States person
not ineligible to sell as a United States person.
- 10 Sales Effected by Participating Firms
The Treasury further recommended that the amendments
to H. R. 6098 provide that Participating Firms are required
to sell stock of a foreign issuer or a debt obligation of a
foreign obligor as stock or a debt obligation not exempt
from the interest equalization tax by reason of the exem~
tion for prior American ownership and compliance except in
the following cases:
1.
Th?
D~rticipating
Firm (i) held in its
custody at the close Lf basiness on July 14,
1967 for the account of the seller the stock or
debt obligation being sold,
(ii) has in its
possession and relies in good faith on a
certificate of American ownership with respect
to the stock or debt obligation being sold, or
a blanket certificate of American ownership with
respect to such account, and (iii) included the
stock or debt obligation in the Transition Inventory of the Participating Firm duly filed with
the Internal Revenue Service as hereinafter
provided.
- 11 2.
The Participating Firm purchased on or
after July 15, 1967 for, or sold to, the seller
the stock or debt obligation being sold if the
exemption for prior American ownership and compliance applied to the seller's acquisition and
if the Participating Firm continuously held in
its custody such stock or debt obligation or received from the seller the identical stock
certificates or evidence of indebtedness which
it had previously delivered to the seller in
respect of the purchase.
3.
The Participating Firm received the
stock or debt obligation being sold from another
Participating Firm or from a Participating
Custodian with a Transfer of Custody Certificate
meeting the requirements described below.
4.
The Participating Firm has received from
the seller copies 1 and 2 of a Validation
Certificate issued by the Internal Revenue Service
applicable to the stock or debt obligation being
sold and on the date of the sale or the next
business day completes and files copy 2 of the
certificate with the Internal Revenue Service.
- 12 5.
The Participating Firm withholds the amount
of interest Equalization Tax which would be imposed
had the seller purchased in a taxable acquisition
the stock or debt obligation being sold on the day
of the sale.
Information on withholding procedures
will be published shortly.
lET Clean Confirmation
A Participating Firm is authorized to issue an "lET
Clean Confirmation" to a customer with respect to stock or
a debt obligation of a foreign issuer or obligor in the
following circumstances:
1.
In a case where the Participating Firm
purchased the stock or debt obligation as broker
for the customer from or through another Participating Firm in the regular market (in the case of a
purchase on a national securities exchange referred
to in Section 4918(c) of the Internal Revenue Code)
or received a clean comparison from another
Participating Firm under the procedures referred
to in Section 4918(d) of the Internal Revenue Code.
2.
It sold the stock or debt obligation as
dealer to the customer and it was a complying
United States person not ineligible to sell as a
United States person.
- 13 Each lET Clean Confirmation shall state the date of
acquisition, the number of shares or the face amount of
obligations purchased, the description of the stock or debt
obligations, the price paid and the name of the broker
representing the seller and the market on or through which
the purchase was effected.
Only an original document may
constitute an lET Clean Confirmation and each copy or
duplicate shall be marked as such.
All other confirmations
issued by Participating Firms with respect to stock or debt
obligations of foreign issuers or obligors shall be clearly
and indelibly marked so as to be distinguishable from lET
Clean Confirmations.
Issuance of Validation Certificates
Validation Certificates will be issued by all District
Directors of Internal Revenue commencing Monday, July 17,
1967, upon proof that the United States person on whose
behalf the Validation Certificate is requested has complied
with his interest equalization tax obligations with respect
to the securities to be covered by the Validation Certificate.
The Internal Revenue Service will shortly announce the proceduresfor obtaining Validation Certificates.
Each District
Director will reissue Validation Certificates in different
denominations upon request.
- 14 Transition
In~~ntory
The Transition Inventory shall be filed with the
Commissioner of Internal Revenue no later than August 15,
1967.
Each Participating Firm and each Participating
Custodian filing a Transition Inventory (Participating
custodians are described below) shall list those stocks and
debt obligations of foreign issuers and obligors held at the
close of business July 14, 1967, and shall indicate those
held for the accou"
~
~F
held for the accounts of
United States persons and those
othe~
persons.
Participating Custodians
During the period beginning July 15, 1967 and until a
notice or notices to the contrary are published by the
Internal Revenue Service, the Participating Custodians are
the Federal Reserve Member Banks which are classified as
reserVE
city banks.
A bank or trust company insured by the Federal Deposit
Insurance Corporation may become a participating Custodian
if it files with the Commissioner of Internal Revenue,
Washington, D. C. 20224
(Attention:
CP) a letter signed by
an officer (i) requesting designation as a Participating
- 15 custodian,
(ii) agreeing to comply with the documentation,
record-keeping and reporting requirements established by
the InteInal Revenue Service (whether established prior or
subsequent to the date of the letter),
(iii) agreeing that
its books and records no matter where located may be examined
by any employee of the Internal Revenue Service, and (iv) if
the letter is filed with the Commissioner of Internal
Revenue on or after August 15, 1967 stating that such documentation, record-keeping and reporting requirement procedures are operational.
~he
Internal Revenue Service will
from time to time publist. the names of those members or
member organizations which have become participating
Custodians subsequent to July 15, 1967.
Any bank or trust COffi?any which became a Participating
Custodian prior to August 15, 1967 shall cease to be a
farticipating Custodl:.n cnless on or before August 15, 1967
it files with thp
Com~issioner
of Internal Revenue a letter
signed by an officer setting forth each of the items (i) to
(iv), inclusive, of the
Fr~ceding
paragraph.
A Participating
Custodian may terminate its status as such by filing a
request with the Commissioner of Internal Revenue.
In addi-
tion, if the Commissioner of Internal Revenue has reasonable
cause to believe that a Participating custodian is not complying with the statutory provisions related to the interest
- 16 equalization tax applicable to it, or with the documentation,
record-keeping and reporting requirements, or any part thereof, he may cause the removal of such firm from the list of
participating Custodians.
The effective date on which a bank or trust company
shall become or cease to be a Participating Custodian shall
be the date specified in a notice issued by the Internal
Revenue Service, which date shall not be prior to the date
following the date on which the notice was made available
to financial
publicat~o~s
~nd
wire services.
Transfer of Custody Certificates
Transfer of Custody Certificates shall be issued only
by Participating Firms and Participating Custodians and only
in connection with a transfer from the account of a customer
of a Participating F:::rm or Participating Custodian to the
account of the same customervith a different Participating
Firm or Participating Custodian in the following circumstances:
1.
The Participating Firm or Participating
Custodian held in its custody on July 14, 1967 for
the account of the customer the stock or debt
obligation referred to in the Transfer of Custody
Certificate and acquired and holds in good faith
a certificate of American ownership with respect to
>
- 17 such stock or debt obligation or a blanket certificate of American ownership with respect to such
account, if it included such stock or debt obligation in the Transition Inventory duly filed by it
with the Commissioner of Internal Revenue.
2.
The Participating Firm or Participating
Custodian received the stock or debt obligation
referred to in a Transfer of Custody Certificate
from another Participating Firm or Participating
Custodian accompanied by a Transfer of Custody
Certificate.
3.
The Participating Firm purchased for the
customer the stock or debt obligation referred to
in the Transfer of Custody Certificate and in
connection with the purchase either received
(i) a Validation Certificate issued by the
Internal Revenue Service, or (ii) was authorized
to issue an lET Clean Confirmation and in either
case continuously held in its custody the stock
or debt obligation so purchased or received back
from the purchaser the identical securities or
evidence of indebtedness previously delivered to
the purchaser.
- 18 Record Keeping Requirements
The record-keeping- requirements for Participating Firms
are, until further notice, identical to the record-keeping
requirements
f~r
broker-dealers issued pursuant to the
Securities Exchange Act of 1934 with the following required
modifications:
1.
the
Records of original entry (in most cases
purchas~
and sale blotter) shall be prepared
and maintained separately for all purchases and
sales of stock and
a~u~
issuers and obligors.
)bligations of foreign
All entries shall clearly
designate those transactions which involved
foreign-owned securities.
All entries reflecting
a purchase of securities, the acquisition of which
is exempt from the tax under the exemption for
prior American ownership and compliance, shall
clearly designate the documentation received establishing such exemption.
All entries reflecting
a sale of securities regular way on a national
securities exchange referred to in Section 49l8(c)
of the Internal Revenue Code or under the clean
comparison procedure established by Section 49l8(d)
of the Code shall clearly designate the documentation authorizing such sale.
- 19 2.
The securities record or ledger reflecting
separately for each stock or debt obligation of a
foreign issuer or obligor all "long" or "short"
positions (including such securities ln safekeeping)
carried by such firm or custodian for its account or
for the account of customers (commonly known as stock
record sheets) shall be prepared and maintained apart
from those prepared and maintained for all other
securities.
All entries in such record or ledger,
and in each customer's account, shall clearly
designate those of such securities with respect to
which the firm or custodian can issue a Transfer of
Custody Certificate without obtaining further
documentation.
3.
The ledger account itemizing separately the
accounts of such firm or custodian
reflecting all
purchases, sales, receipts, and deliveries of stock
or debt obligations of a foreign issuer or obligor
for the firm's own investment and trading accounts
shall be prepared and maintained apart from those
prepared and maintained for all other securities.
All entries shall clearly designate those transactions
which involve securities on which the firm or
custodian can issue a Transfer of Custody Certificate.
-
20 -
Appropriate files for each of said dealer-owned
foreign securities shall be maintained, in readily
accessible form, to hold all relevant- information
and evidence to substantiate tax free nature of the
acquisitions pursuant to which such securities were
acquired or, if acquired in a taxable transaction,
the retained copies of the tax returns filed with
respect to such acquisitions.
4.
Separate files shall be maintained for all
interest equalization tax reports filed with the
Internal Revenue Service (both for information
and tax paying purposes) including copies of all
documents filed with the Internal Revenue Service
and summaries and supporting schedules.
In addi-
tion, such files shall contain substantiation of
the Transition Inventory filed with the Commissioner
of Internal Revenue.
Cettain Debt Obligations
The foregoing procedures would not apply to those debt
obligations of foreign obligors which are neither convertible
nor listed or traded in domestic or foreign markets.
In such
cases, the exemption for prior American ownership and compliance will, until other procedures are announced, be
- 21 established if the United States person acquiring the
obligation receives in good faith a letter from the seller
certifying to the exemption together with a copy thereof
and files the copy with the Internal Revenue Service.
TREASURY DEPARTMENT
July 14, 1967
FOR IMMEDIATE RELEASE
Success of the Treasury Department's coinage program
in producing si1ver1ess "clad" coins in numbers which can
meet any foreseeable needs has led to a decision to halt
Treasury sales of silver at $1.29 an ounce.
Future Treasury sales of silver will be at going
market prices in amounts up to 2 million ounces a week.
The former price was maintained by Treasury in order to
keep silver coins circulating to meet the needs of the
national economyc
The rights of people who hold U. S. Silver Certificates
to exchange them for silver at the $1.29 rate will not be
affected. Also, the legal prohibition against melting,
treatment or export of U. So silver coins will remain in
effect.
Secretary of the Treasury Henry H. Fowler, acting on a
recommendation made today at a meeting of the Joint Commission
on the Coinage, has halted all sales of Treasury silver at the
$1.29 price, effective immediately, and has stated that the
Department will consult with General Services Administration on
arrangements for conducting future sales of Treasury silver.
It will be sold, as recommended by the Coinage Commission,
under a competitive sealed bid procedure, with small, as well
as large, purchasers given the opportunity to bid for it, and
in amounts to be determined for each sale by the Secretary of
the Treasury. Details of the bidding and selling procedure
will be announced as soon as they are worked out.
The Secretary will make reports from time to time to the
Coinage Commission on Treasury silver supplies and the results
of these sales.
F-972
- 2 Because world demand for silver, which exceeds world
supplies, would threaten the U. S. silver coinage, the
Treasury, in 1965, obtained enactment of legislation to allow
the minting of new dimes and quarters containing no silver,
and a half-dollar with silver content reduced.
Since then, in two years, the Mints have worked on
expedited schedules, to·produce 8~ billion of the new,
silverless dimes and quarters, as compared to total Mint
production of l2~ billion dimes and quarters over the prior
25 years.
The Treasury found it necessary, in mid-May of this year,
to confine sales at $1.29 an ounce to U. S. buyers normally
using silver in their operations and to invoke its legal
authority to prohibit melting, treatment or export of silver
coins. This came about because of a rapid rise in purchases
of Treasury silver which started in early May and threatened
to exhaust esisting stocks. Until then, the Treasury had been
selling at the $1.29 an ounce price to all comers, in order to
keep the world price of silver down until the point could be reached
in new coin production at which the supply of the older silver
coins would not be a critical factor in maintaining orderly
commercial transactions.
At that time, on May 18, the Treasury estimated that
by the end of this year, if not earlier, there should be
enought of the new coins to meet all U. S. needs. Today's
decision represents the conclusion of the Joint Commission on the
Coinage, as well as that of Treasury and Mint officials, that
this point has now been reached.
With an estimated 8~ billion dimes and quarters in
circulation, the Treasury had produced 8t billion new coins of
these denominations as of yesterday. Moreover, Mint production
is planned at a rate of 300 million coins a month for the
balance of this year, and the Treasury has enought of the new
coin blanks on hand to increase this production rate to
700 million a month if necessary.
The attached chart shows how Treasury coinage production
met the need for new coins over the past two and one-half years.
000
PRODUCTION OF CLAD DIMES AND QUARTERS
BILLIONS
COINS
BILLIONS
COINS
ACTUAL
ESTIMATED
..
••
(Dotted lines)
(Solid line)
~
+()~
...
.D+" •• ·
. \\
~"
•••
.~\o ••
..ont~
'\~....... \Iio" P~•••
101t--
10
•• 0 "" •••••
~•• '2..••
------.-- ------------------r---------~~-----
Coins Needed In Ci'culotion (private Sector)
~,.
51-I- -
01
June
30,
5
) I
A
0
1965
BUREAU OF THE MINT
0
I
F
A
I I I
June
A
30,
1966
I
0
0
I
F
I
A
I
I
June
30,
1967
A
I
0
10
Dec.
31
19~7
TREASURY DEPARTMENT
Washington
IMMEDIA TE RELEASE
TUESDAY, JULY 18, 1967
F-975
The Bureau of customs has announced the following preliminary
figures showing the imports for conswnption from January 1, 1967,
to June 30, 1967, inclusive, of commodities under quotas established
pursuant to the Philippine Trade Agreement Revision Act of 1955:
Commodity
Buttons
Established Annual
Quota Quantity
510,000 gross
Imports as of
June 30, 1967
122,085
Cigars
120,000,000 pieces
4,346,665
Coconut oil
268,800,000 pounds
Quota filled
Cordage
6,000,000 pounds
3,843,926
Tobacco
3,900,000 pounds
1,156,686
TREASURY DEPARTMENT
Washington
D~~IATE
RELEASE
TUESDAY, JULY 18,1967
F-976
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 June 30,1967:
Period
Co:mnodity
Quantity
:Imports as of
:June 30. 1967
Tariff-rate Quotas:
....
Calendar year
1,500,000 gallons
i.'.llole Hilk, fresh or sour
Calendar year
3,000,000 gallons
Cream, fre sh or sour
Cattle, 700 Ibs. or more
each (other than dairy
1,023,889
April 1, 1967 June 30, 1967
120,000 he ad
1,810
ibs. each ••••••••..•••
12 mos. from
April 1, 1967
200,000 head
59,296
Fish, iresh or frozen,
filleted, etc., cod,
haddock, hake, pollock,
cusk, and rosefish ••••
Calendar year
24,883,313 pounds!!
Fish •••••••••••••••
Calendar year
69,472,200 pounds
24,342,382
12 mos. from
Sept. 15, 1966
114,000,000 pounds
45,000,000 pounds
Quota filled
Quo ta filled
Nov. 1, 1966 Oct. 11, 1967
84,000,000 pieces
Quota filled
•••••••••••••
Calendar year
1,380,000 pieces
Quota filled
Other brooms ••••••••••••
Calendar year
2,460,000 pieces
cows) •••••••••••••••••
Cattle, less than 200
Tuna
,,;bite or Irish potatoes:
Certified seed ••••••••
Other •••••••••••••••••
Knives, forks, and spoons
wi th stainless steel
handles •••••••••••••••
~\ihiskbrooms
Quota filled
cJi
2,440,2 3
11
Imports for consumption at the quota rate are limited to 12, 44l, 656 pounds
during the first 6 months of the calendar year.
Y
Imports as of July 7, 1967.
-2-
Period
Commodity
··
Quantity
: Imports as Oi
:June 30. 1267
Absolute Quotas:
Butter substitutes
containine over 45%
of butterfat, and
butter oil ••••••••••
Calendar year
Fibers of cotton
processed but not
12 mos. from
Sept. li, 1966
sptm ••••••••••••••••
?eanuts, shelled or not
shelled, blanched, or
othenrise prepared or
preserved (excert
peanut butte:,,)
1,200,000 pounds
Quota fille<
1,000 pounds
12 mos. from
Aug. 1, 1966
F-976
1,709,000 pounds
Quota fill
TREASURY DEPAR1MENT
Washington, D. C.
Dlm>IATE RELEASE
TUESDAY, JULY 18,1967
F-977
Prel1minary 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 amenied, ani as JOOdified bY' the Tariff Schedules of the
United States which became effective August 31, 1963.
('ftle country designations in this press release are those specified in the appeniix to the Tariff Schedules of the
United States. There is no political. cormotation in the use of ouUooded names.)
~'\
"
Country of Origin
SlJpt and Sudan••••••••••••
P.ru •••••••••••••••••••••••
India and Pakistan •••••••••
China ••••••••••••••••••••••
MaKico •••••••••••••••••••••
Brasil •••••••••••••••••••••
Union ot Soviet
Socialist Republics ••••••
•••••••••••••••••
Ha1t1 ••••••••••••••••••••••
Arsent~
Beaador ••••••••••••••••••••
!I
Y
Established Quota
Imports
Country of Origin
783,816
247,952
2,003,483
1,)70,791
8,883,259
618,723
129,523
50,481
Honduras ••••••••••••••••••••
Par~
11
1,250
2Tf
~I
~
9,JJJ
Except Barbados, Bermuda. Jamaica, Trinidad,
EEcept Nigeria am Ghana.
am
••••••••••••••••••••
Colombia ••••••••••••••••••••
Iraq ••••••••••••••••••••••••
British East Africa •••••••••
271,113
475,l24
5,203
Established Quota
Indonesia and Netherlands
New Guinea ••••••••••••• ~ ••
British W. Indies •••••••••••
.1geria •••••••••••••••••••••
British W. Africa•••••••••••
Other, incbxU ng the U.s ....
Tobago.
Cotton 1-118" or more
Established Yearlr Quota lDIpc!rts Auguat. 1. 1966 Stapl.e Length
1-3/an
or .,re
1-5/32" or more and under
1-3/&' (~a.ruru:ts)
45.656.420
Ju.ljy
1bs.
10 , 1967
Allosat.ion
T"P?rts
39, 590,'n8
39,590,778
1 _ ..(YLnnn
'"--
Imports
752
871
l..24
195
2,240
71,J88
21,)21
5,377
16,004
-
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 1-3/16 inches or more
in staple length in the case of the following countries: United Kingdom, France, Netherlands,
Switzerland, Belgium, Germany, and Italy:
Es tablished
TOTAL QOOTA
Country of Origin
United Kingdom ••••••••••••
Canada •••••••••••••••.••••
France •••••••••••••.••••••
India and Pakistan ••••••••
Netherlands •••••••••••••••
Switzerland •••••••••••••••
Belgium ••••••.••.•••.•••••
Japan ••••••••••••.•.•.•..•
China •••••••••••••••••••••
Egypt •••••••••••••••••••••
Cuba ••••••••••••••••••••••
Germany •••••••••• ·•••••••• •
Italy .•.•..•..•...•.•...••
Other, including the U.
s.
4,323,457
239,690
227,420
69,627
68,240
44,388
38,559
341,535
17,322
8,135
6,544
76,329
21,263
~,482,509
11
Included in total imports, column 2.
P~ep.~ed
f.n the Bureau of Cus tome.
Total Imports
Established
Sept. 20, 1966, to:
33-113% of
Julyl.Q, _!261_ ~_--=-_j'otal Quota
34,048
67,453
31,583
16,058
Imports
1/
Sept. 20, 1966 to July 10, 1967
1,441,152
34,048
75,807
31,583
22,747
14,796
12,853
33,839
25,443
7,088
22,148
182,981
1,599,886
81,779
TREASURY DEPAR'DmiT
Washington, D. C.
IMMED lATE RELEASE
F-978
TUESDAY, JULY 18,1967
The Bureau of Customa announced today prel.im1.nary' figures showing the
quantities of wheat and milled wheat products authorized to be entered, or
v.lthdrawn from warehouse, tor con8UDlption un::1er the import quotas established
in the President' 8 proclamation ot May 28, 1941, &8 mod.1tied by the President's
proclamation of April 13, 1942, am provided tor in the Tarit! Schedules of
the Un1t~ States, for the 12 months colDIDencing M&y' 29, 1967, as follows:
••
••
Country
of
Origin
••
·•
·••
Wheat
.
••• Established
Imports
••
Quota
:Kay 29, 1961,
:JU1 10. 1967
-4
0
· (Bushels)
Canada
China
••
795,000
Milled wheat products
••
•••• Established • Imports
••
:Kay 29, 1967,
Quota
iJulf: 10, ] 567
•
POuMS
(Poums)
.
1Buahels) ·
*99,640
3,815,000
24,000
1),000
Hungary
13,000
Hong Kong
8,000
Japan
United Kingdom
Australia
Germany
Syria
100
75,000
100
100
5,000
5,000
1,000
l~OOO
New Zealand
Chile
1,000
1,000
14,000
Netherlsnis
Argentina
Italy
100
2,000
100
CUba
France
1,000
1,000
100
Uruguay
1,000
1,000
1,000
Polard am Danzig
Sweden
Yugoslavia
Nor'W'q
1,000
1,000
1,000
Greece
Mexico
Panama
2,0<X>
12,000
1,000
1,000
1~000
Canary Ia1aD1s
Rwunia
Guatemala
BruU
Union of Soviet
1,000
100
100
Soeiali8t Republics
Belgium
Other foreign countries
or areas
*Adj\~ted
3,815,000
100
100
900.. 000
-99, 61~0
4,000,000
.3,815,000
TREASURY DEPARl'MENT
Washington
IMMEDIATE RELEASE
TUESDAY, JULY 18, 1967
F-979
The Bureau of Customs announced today the following preliminary
figures on imports entered for consumption under the absolute import
quotas provided for in section 12.71, Customs Regulations, for coffee
grown in nonmember countries of the International Coffee Organization
for 12-month period beginning November 15, 1966.
CO',EE
(Green - In pounds)
country
Established
Quota
Total Imports as
of July 10, 1967
BoliviJ.I
1,850,800
1,278,915
Guinea
1,454,200
Quota filled
Liberia
2,511,800
Quota filled
Paraguay
2,644,000
Yemen
1,850,800
291,534
6,610,000
5,895,669
Basket
5:./
--------------------------~/
Only shipments certified to the U. S. Department of
State by the Bolivian Government as bona fide shipments may
be charged to this quota.
2/ Basket quota allocated to unlisted nonmember countries and to
listed nonmember countries after respective quota filled.
STATEMENT OF Pm'ER D. STERNLIGlfl'
DEPUTY UNDER ~RmARY FOR MONEl'ARY AFFAIRS
TREASURY DEPARrMENT
BEFORE THE SUBCOMMITTEE ON ROOSING AND URBAN AFFAIRS
OF THE SENATE COMMrl"l'EE ON BANKING AND CURRENCY
ON VARIOOS BILLS RELATING TO RClJSING AND
URBAN AFFAIRS
TUESDAY, JULY 18, 196'7, 10:00 A. M.
Mr. Chairman and members of the COmmittee, I appreciate this
opportunity to appear before you in connection with your consideration
of the series of bills which are the subject of these hearings.
In
general, the Treasury does not have specialized knowledge of the details
of the various programs which would be amended or in some cases created
by these bills.
I expect that other witnesses will provide expert
testimony on these program aspects.
The Treasury's primary interest
is in the means of financing certain of the programs involved in the
proposed legislation, where Federal credit assistance is involved.
In recent years there have been several major studies of Federal
credit programs.
In 1961 a general analysis of Federal credit programs from the
standpoint of overall monetary and financial policy was included in
the report of the private Commission on Money and Credit.
The
COmmission's report was the subject of hearings by the Joint Economic
Committee of the Congress in August 1961.
In 1962, as an outgrowth of the Conunission's report, an interagency Committee on Federal Credit Programs, appointed by President
Kennedy and chaired by Secretary Dillon, made an intensive review
of the policies and principles applicable to Federal credit programs.
- 2 In 1963 a staff study was conducted by the Subcommittee on
Domestic Finance of the House Banking and Currency Committee.
This
study contains much valuable information on a program-by-program
basis for all Federal credit programs active at that time.
The basic principles and guidelines applicable to Federal credit
programs, which were set down by the Committee on Federal Credit
Programs in its
1962
report, were endorsed by President Kennedy as
a statement of Administration policies.
President Johnson also
affirmed his support of these policies in approving the issuance of
Bureau of the Budget Circul.ar No. A-70, February 1, 1965, setting
out certain guidelines for Federal credit program legislation.
The
experience gained in implementing the credit program policies
recommended by the President's Committee was reviewed in 1966 by
the Treasury in preparing its report pursuant to section 8 of the
Participation Sales Act of 1966 on the feasibility, advantages, and
disadvantages of direct loan programs compared to guaranteed or
insured loan programs.
That report, dated November 24, 1966, together
with certain other material including the Report of the President's
Committee on Federal Credit Programs and Bureau of the Budget Circular
No. A-70, were published as a Committee Print by your full Committee
on January 21, 1967.
An important objective of the Administration's credit program
policy is to structure these programs to provide for disclosure of
the real program costs to the taxpayer.
Full cost disclosure is
- 3 necessary to provide a basis for decisions by the Congress and the
Executive regarding the allocation of scarce budgetary resources to
achieve our national objectives.
Rather than engage in a detailed discussion of the bills pending
before the Subcommittee, I would like to confine my remarks today to
certain broad credit program policy problems raised by several of
the bills.
Federal guarantees of tax-exempt obligations.
Two of the bills would result in Federal guarantees of tax-exempt
obligations.
S.
1198
would authorize a new program of direct Federal
guarantees of the tax-exempt obligations issued by local housing
agencies to finance mortgage loans for low income housing projects.
S. 2000 would amend the existing college housing direct loan program
to authorize a supplementary program of Federal grants to pay a
portion of the interest costs on market borrowings by institutions
of higher education.
Since public institutions would be eligible
to receive the Federal interest grants, the bill could result in
indirect guarantees of tax-exempt Obligations.
Our report of November 1966 on the question of direct loan
programs compared with insured and guaranteed loans, contained a
detailed discussion of the problems in providing Federal credit aids
to state and local governments.
These problems arise from the fact
that interest income from dtate and local obligations is exempt from
- 4Federal income taxation.
Our report concluded that Federal credit
assistance extended to public bodies, ~herever feasible, should be
in the form of direct loans, in order to avoid Federal guarantees
of tax-exempt obligations.
The problem here is essentially one of cost and resource
allocation.
The tax-exemption results in a loss of Federal tax
revenue which exceeds the interest savings to the borrowers.
Thus,
only a part of the benefit of the tax exemption accrues to the local
borrowing authority.
Another part of the benefit goes to taxpayers
in the higher tax brackets -- for whom the opportunity to receive
tax-exempt income is particularly advantageous.
The extension of
a Federal guarantee over tax-exempt issues results, I believe, in
excessive Federal revenue losses without achieving comparable cost
savings for the borrowing units.
As stated
by
the Committee on Federal Credit Programs in its
1962 report to the President:
state and local g~lernments now receive substantial
indirect benefits from the Federal income tax exemption
on income from municipal obligations. As a result, these
governments can usually sell their obligations on a much
lower yield basis than other issues of comparable quality.
The tax exemption makes such obligations very attractive
to institutions and individuals in relatively high income
brackets. As a result, a sizable loss in Federal revenues
occurs, which is greater than the saving in the cost of
state and local financing.
At this point I might add that the excess of the Federsl revenue loss
over the interest savings of state and local governments has been
conservatively estimated at up to a billion dollars
&~rrual1y.
- 5 I would refer the Committee to a paper prepared by the Treasury
Department on this subject and published in December 1966 by the
Joint Economic Committee as Chapter 20 of "State and wcal Public
Facility Needs and Financing" (Vol. 2).
The President's Committee continued:
Guarantees of tax-exempt obligations tend to expand the
volume of such securities issued. The Committee, therefore,
recommends that no program in the future be authorized which
involves guarar~ee of tax-exempt obligations because (a) the
cost in tax revenues to the Federal Government would generally
exceed the benefits of tax exemption received by borrowers,
(b) such federally guaranteed tax-exempt securities would be
superior to direct Federal obligations themselves, and their
increasing volume would adversely affect Treasury financing,
and (c) the availability of increasing amounts of high-grade
tax-exempt. issues would tend to attract funds from investors
that should appropriately seek risk-bearing opportunities.
In concluding that Federal credit assistance to public bodies
should be in the form of direct loans rather than Federal guarantees,
our November 1966 report noted that direct loans at a formula. interest
rate, taking into account the value of the tax-exemption privilege,
could be authorized without increasing the net costs to the Federal
Government of the credit assistance provided.
An approach along these
lines has been proposed by the Administration for the college housing
loan program and is incorporated as section 207 of S. 1445.
Our
report also noted that additional subsidies, if required, could take
the form of capital or debt service grants.
The latter could be
particularly useful when continuing close Federal
project is desirable.
supenr~
c:lon of
R
- 6 Finally with regard to Federal guarantees of tax-exempt obligations, in a report of June 19, 1967, to your Committee, the Department
recommended an amendment to make it clear that loans to public bodies
are not to be insured under section 810 of the National Housing Act
as it would be amended by section 214(f) of S. 1445.
We understand
that the Department of Housing and Urban Development has no objection
to our proposed amendment.
Fixed interest rates.
Two of the bills being considered by your Committee would
establish new lending programs with interest rate ceilings fixed
by statute.
S. 1200 would authorize interest-free Federal loans
to local governments for rehabilitation of substandard housing owned
by such governments.
The loans would be repaid from future income
from the rehabilitated property, whether rentals or sales proceeds.
S. 1434 would provide for FHA insurance of low and moderate income
single family mortgages bearing interest not to exceed 3 percent
and authorize FNMA special assistance purchases of such mortgages.
Thus, although nominally an insured loan program, the program would
in effect be a direct loan program under current market conditions
since there is no likelihood at this time that private lenders would
be willing to hold 3 percent paper.
To facilitate evaluation of the effects on allocation of resources
and on the costs of Federal credit programs involving a subsidy, the
President's Committee on Federal Credit Programs recommended that the
- 7 subsidy element be explicitly recognized.
The first step should be
to compare the interest rate paid by the borrower on direct Federal
loans to the sum of (a) the prevailing market yield on Government
securities of comparable maturity, (b) an allowance for administrative
costs, and (c) an allowance for expected losses.
The Committee also noted that statutorily fixed interest rates
may have perverse effects not intended.
That is because, with a
fixed interest rate, the biggest net subsidy would be provided on
loans made in periods of strong economic activity, and relatively
high interest rates, when the need for granting special advantages
and the case for stimulating the economic system are likely to be
less urgentj and conversely the subsidy element is smaller at times
of slack economic activity and relatively low market interest rates.
Thus the Committee recommended:
••• that in authorizing new direct loan programs or major
expansions of present programs-(a) Future legislation should avoid requirements
for rigid or relatively inflexible ceilings (or floors)
on interest rates; and
(b) If for reasons of public policy it appears
appropriate to charge interest rates below rates for
comparable loans in private markets or below Government costs, the lending agency should be permitted
to vary the rate charged new borrowers from time to
time at least as much as market rates and current
Treasury borrowing costs vary.
I should emphasize that the President's Committee was not
Opposed to providing credit subsidies.
The Committee noted tbat
subsidies can be justified for credit programs, as elsewhere, when
- 8 the reallocation of resources accomplished by the subsidies rec.iultc;
in net o.dditi ':'(18.1 IJublic benefits at least equai to the r,e-;: cost of
the subsidies involved and ",hen the additional publi,::: t'Ii':.rlf,::'.'ir.s are
not obtain:1b'; (~ thrr.)U5t1 alt.ern:J.tive I),pproachr:::; at 101;:e:r costs.
Rather,
the concern here is that3lly subsidies deemed necessary oe provid.ed
in a marmer SUciCclTtlbi.t: of di::::Glosure, review, an.} cont-Lol.
Attacl1lUent B to Bu:;:"enu of the Budget
detailed 1 egislat.ive
progratllS.
'I'his
1.(1nt:~~2LBe
lc!T:~~i..1::Lbe
CirCI;,~f:l.r
for lnterest n)tes ir"
No" A- ~·O contains
:F'('.del·~"'
credit
was carpf'tllJ.y c1rc.i'ted to a:.::sur2 2:gaim;,t the
provistrm of '.lClJ.ntended and uncontrolled va:ciations in Lat.c,.rest rate
Gubsidie::: bY01'c:r:j mr,g
1'0"('
'_::::adirlf; -rates 1eTbi.ch arE; L
"~'">,:Jble
J".:)
respond to moveflle:;,T:"; l.ll Trcasill':l borr0'..ring costs-
which do not
mY!"!
f.lO'vJ iDto the mortgage market.
The Department has long been concerned with the irrrpa~t of
changing fina.!.lcial ma.::KeL.onrli.ttons on the
testimony before this S".::bcormnittee
Ori ,)·.;x
mOl...lcC:;8.3,e
I11e.:rkei"
Ir
- 9 institutions and regulations, in improving the
functioning of the
mortgage market and lessening its hypersensitivity to swings in the
general monetary climate.
These areas included the impact of increased
competition for savings by commercial banks and high short-term market
interest rates on the inflow of fUnds into thrift institutions, the
impact of ceilings on mortgage lending rates, and the extent to which
FNMA and the Federal Home Loan Banks can be used to i.nsulate the mortgage market from the effects of changing financial market conditions.
He also mentioned the need for study of proposals for new institutions
and arrangements, including FNMA secondary market operations in conventional mortgages.
The various reports submitted to this Subcommittee
earlier this year in connection with your study of
mOl~gage
credit
indicate that there is much worthwhile consideration within and outside
the Government but no agreement yet on the best methods of solving
mortgage market problems.
At this point, I would like to reiterate our
COIlC(cOCl1
that the Govern-
ment-sponsored secondary market device not be vim,led. T.IJ.fO'rely as a means
for boosting the total flow of funds into the mortgage market by virtue
of the increased mortgage holdings of the secondary market corporation
itself.
Rather, the secondary market device should serve as a mechanism
for improving the mobility of funds in the mortgage market as a whole,
thereby leading to greater flows and better market performance on the
part of private sector itself.
In this connect::..::'"
l~h::··A~·.::i.".:mt'6
Committee stated:
A Government secondary market, however, may toe (':~edily become
a permanent program for supporting a submarket t}';:.'~
c:redit. In
this case, it is obviously a substitute for, ratlH;! L ..ail a stimulus
- 10 to, an effective private market. As a permanent credit support,
moreover, a secondary market is particularly unsatisfactory because of the false impression it may give of the saJ.ability on
competitive terms of the financial assets pJ.aced with it. To
avoid the danger of a one-way market, therefore, the Committee
recommends that establishment of a aecondary market be reserved
for cases in which there is a real possib1lity of encouraging
sales to private lenders, with purchases being discretionary and
subject to firm supervision and control. In ather words, the
secondary market device should not become the disguised equivalent of a direct lending program.
This observation would seem to apply to the submarket rate-FNMA special
assistance purchase approach proposed in S.
1434.
Regarding competition for savings and the inflow of funds into thrift
institutions, Secretary Fowler transmitted draft legislation on June 12,
1967, which was introduced as S. 1956 and reported by your Committee on
July
13, to extend for two years the authority for more flexible regula-
tion of maximum rates of interest or dividends, higher maximum commercial
bank reserve requirements, and Federal Reserve open market operations in
agency issues under the Act of September 21, 1966 (P.L. 89-597).
The
Secretary's transmittal letter stated:
The flexible interest rate authOrity provided by the above Act
enabled the Federal Reserve Board, the Federal Deposit Insurance
Corporation, and the Federal. Home Loan Bank Board, to take action
last September that has contributed significantly to a moderation
in the excessive competition for consumer savings, has facilitated
an increased flow of funds into thrift institutions, and has substantially improved the mortgage market.
We are pleased to note that yesterday the Senate acted favorably on the
proposed two-year extension of this important legislation.
Speedy passage
by the full Congress should help to ensure a more orderly market for
consumer savings, and resultant benefits for the mortgage market.
TREASURY C~PARTMENT
July 19, 1967
)R
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
2,400,000,00Cbr thereaborts1 for %,Sh and in exchange for
reasury bills maturing Ju Y 7, 9 ,
in the amount of
2,300,800,000, as follows:
91 -day bills (to maturity date) to be issued
n the amount of $1,400,000,000 or the.:c.eabQQt.s,
ddltional amount of bills dated' April L. /, 1':Jb7,
ature October 26, 1967, originally issued in the
1,000,257 ,000, the additional and original bills
nterchangeable.
July 27, 1967
representing an
and to
amount of
to be freely
182 -day bills, for $1,000,000,000, or thereabouts, to be dated
u1y 27, 1967,
and to mature January 25, 1968.
The bills of both series will be issued on a discount basis under
ompetitive and noncompetitive bidding as hereinafter provided, and at
.aturity their face amount will be payable without interest. They
ill 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
p to the closing hour, one-thirty p.m., Eastern Daylight Saving
lme, Monday, July 24, 1967.
Tenders will not be
ecelved at the Treasury De~artment, Washington. Each tender must
e for an even multiple of $1,000, and in the case of competitive
enders the price offered must be expressed on the basis of 100,
lth not more than three decimals, e. g., 99.925. Fractions may not
e used. It is urged that tenders be made on the printed forms and
ONarded in the special envelopes which will be supplied by Federal
eserve Banks or Branches on application therefor.
Banking institutions generally may submit tenders for account of
ustomers provided the names of the customers are set forth in such
enders. Others than banking institutions will not be permitted to
ubmit tenders except for their own account. Tenders will be received
lthout deposit from incorporated banks and trust companies and from
esponslble and recognized dealers in investment securities. Tenders
rom others must be accompanied by payment of 2 percent of the face
mount of Treasury bills applied for, unless the tenders are
ccompanied by an express guaranty of payment by an incorporated bank
r trust company.
F-980
- 2 -
Immediately after the closing hour, tenders will be opened at
Federal Reserve Banks and Branches, following which public announce.
ment will be made by the Treasury Department of the amount and prue
range of accepted bids. Those submitting tenders will be advised
of the acceptance or rejection thereof. 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 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 Bank on July 27, 1967, in
cash or other immediately available funds or in a like face amount
of Treasury bills maturing July 27, 1967.
Cash and exchange tem
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 m
estate, inheritance, gift or other excise taxes, whether Federal or
State, but are exempt from all taxation now or hereafter imposed 00
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 hereunde
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 tM
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and ~i
notice prescribe the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtai~
any Federal Reserve Bank or Branch.
000
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY'S MONTHLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders
for two series of Treasury bills to the aggregate amount of
n,500,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing July 31, 1967,
in the amount of
~,495,2l4,000,
as follows:
274-day bills (to maturity date) to be issued July 31, 1967,
in the amount of $500,000,000,
or thereabouts, representing an
and to
additional amount of bills dated April 30, 1967,
mature April 30, 1968,
originally issued in the amount of
$ 902,02l,000i the additional and original bills to be freely
1nterchangeab e.
366-day bills, for $1,000,000,000, or thereabouts, to be dated
and to mature July 31, 1968.
July 31, 1967,
The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be issued in bearer form only, and in denominations of $1,000,
$5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000
(maturity value).
Tenders will be received at Federal Reserve Banks and Branches
up to the closing ho~r, one-thirty p.m., Eastern Daylight Saving
time, Tuesday, July 25, 1967.
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. (Notwithstanding the fact that the one-year bills will run
for 366 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
F-98l
- 2 -
amount of Treasury bills applied for, unless the tenders are
accompanied by an express guaranty of payment by an incorporated
or trust company.
b~
Immediately after the closing hour, tenders will be opened at ~
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 Treasu
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 tnese 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 Bank on July 31, 1967, m
cash or other immediately available funds or in a like face amount
of Treasury bills maturing July 31, 1967.
Cash and exchange tend
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 w
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 bi lIs are exc luded
fr:::>m consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereunde
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 tm
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and thi
notice prescribe the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained j
any Federal Reserve Bank or Branch.
000
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE
WEDNESDAY, JULY 19, 1967
COpy OF STATEMENT ISSUED IN LONDON ON JULY 18, 1967
BY THE HONORABLE HENRY H. FOWLER
ATT~
CONCLUSION OF A MEETING JULY 17 AND 18, 1967
OF THE MINISTERS AND CENTRAL BANK CHIEFS
OF THE GROUP OF TEN COUNTRIES
The Ministers and Central Bank chiefs of the Group of Ten
nations have concluded another in what is by now a long series
of meetings on the road to a unique step in the history of
international financial cooperation: the deliberate creation
of a new kind of international monetary reserve asset.
Before I attempt to assess the accomplishments of this
meeting, I would like to take a moment to emphasize two
facts:
We have been attempting to do something never
done before. The study and consultation that
have gone into this effort have in themselves
contributed greatly to our ability to cooperate
across international frontiers in the most
fundamental financial matters. They have made
a useful addition to the growing inclination
in the free world to approach the solution to
our international financial and economic
problems along the pathways of constructive
consultation and cooperation.
By comparison with conditions when we set
forth on this enterprise, we have come a
very long way, and we have made very great
progress. This can best be measured, I
believe, by the fact that at the outset there
was a very general skepticism whether it
would be possible to devise a new, deliberately
created reserve asset to supplement world
monetary reserves. In addition, there was
F-982
- 2 -
little knowledge of the dimensions or urgency
of the need for a reserve supplement, and,
consequently, there was little, if any,
agreement that something needed to be done.
The importance to the world economy of the
progress that has been made since those
early days of consideration of this problem, through
the meeting that we have just concluded, is so
great and the relevance of that progress in
assessing the results of this week's meeting
is so considerable that I have outlined below
the main stages of the learning and doing
process that has brought us to our current
position.
In October 1963, the Ministers and Central Bank Governors
of the Group of Ten Countries asked their Deputies to
"undertake a thorough examination of the outlook for the
functioning of the international monetary system and of its
future needs for liquidity."
On the basis of the very thorough study and report
that resulted from this directive the Ministers and Governors
concluded, in a statement of August, 1964, that" the supply
of gold and foreign exchange may prove to be inadequate for
the overall reserve needs of the world economy."
This was in itself a landmark conclusion, and all of
the work and progress toward more detailed agreement that
has since transpired rests upon it.
Having reached the conclusion that there was a possibility
of a shortage of reserves, the Ministers and Governors took
the next logical step, authorizing a study of how to go about
remedying this shortage, through the creation of a new
reserve asset. Since there was little knowledge on this
point, the Ministers and Governors asked for a thorough
report on the technicalities of possible ways in which
monetary reserves might be deliberately brought into being.
From the summer of 1964 through to the summer of 1965,
a group of technical experts from Treasuries and Central Banks
labored to bring into being a body of knowledge in this area.
The result of this pioneering effort was the Report of the
Study Group on the Creation of Reserve Assets -- better known
as the Ossola Group Report, made public in August, 1965. This
report provided an inventory of the techniques by which
- 3 reserves could be deliberately created and an analysis of the
arguments for and against ,the use of each of these techniques.
It was at this point that President Johnson authorized
me to announce, in a speech at Hot Springs, Virginia, in
July 1965, that the United States was ready to participate
in negotiations of a political nature on reserve creation.
At about the same time there became available a report
by the Subcommittee on International Financial Affairs of
the Joint Economic Committee of the Congress of the
United States, called "Guidelines for Improving the
Interna tiona 1 Monetary Sys tern". This, in e ffec t, was a
companion piece to the Ossola Report, the contents of which
were also available to me when I suggested these negotiations.
Where the Ossola Report, by request of the Ministers and
Governors, stuck to the technical aspects of the problem,
the Guidelines Report performed the invaluable service of
providing an estimate of the urgency and dimensions of the
problem under the highly respected imprint of the Joint
Economic Committee. Its basic conclusion was:
"World liquidity needs cannot adequately be met
by existing sources of reserves (gold, dollars
and pounds sterling) or even by the addition of
new reserve currencies. New ways of creating
international reserves must be sought."
The Report stated, further, that
"The need for action is pressing."
It was on the very solid footing of the Ossola study of
ways and means, and of the Joint Committee's unequivocal
assessment of the urgent need for a new kind of reserve asset
that the United States took the initiative in proposing
negotiations looking toward international agreement on a
contingency plan for deliberate reserve creation.
In order to ascertain the views of other countries,
I followed up my suggestions by consultations in Europe with
the Ministers and Governors of the Ten, and also consulted
with the Japanese and Canadian Ministers in Washington. These
consultations revealed further progresso I was able to report
to President Johnson and to Congressional quarters that there
was unanimous approval for the idea of beginning contingen~y
planning for reserve creation.
- 4 -
As a result, at the time of the Annual Meeting of the Fund
in September ,1965 it was agreed that the Deputies of the
Group of Ten Countries should examine the various proposals
for reserve creation and seek a basis for agreement on major
points. In the meantime, the Executive Directors and staff
of the International Monetary Fund were carrying on
constructive studies of the problem. Their findings were
published in the Annual Report of the Fund for 1966.
At a Ministerial meeting of the Group of Ten, July 25-26,
1966 in The Hague, the Ministers and Governors of the Ten
considered a report of their Deputies that represented a year
of sea.t'ch for the essential elements of agreement upon a plan
for deliberate reserve creation. In addition to these
elements of agreement, the Deputies Report contained five
workable schemes for the ways and means of reserve creation.
Basi:ag their work on this report, the Ministers and
Governors, in their Hague Communique, agreed on basic principles
for reserve creation. They reiterated their earlier
conclusion that existing sources of reserves would not provide
an adequate basis for world trade and payments in the longer
run. Finally, they instructed their Deputies to begin a
second stage of negotiations in which the views of the whole
world 'would be represented, through a series of j oint meetings
between the Deputies and the Executive Directors of the Fund.
In the past year there have been four such joint
meetings of the Deputies and Executive Directors. It is
upon the bas is of this ,,,,orld -wide canvas of opinion that the
London Meeting of Hinisters and Govel:'nors of the Group of
Ten made its deliberations.
Now, as to the results of the meeting just ended --
You have heard from Chancellor Callaghan and fro~
Chairman Emminger a summary of what transpired at the meeting,
and of the results. I will not take your time with a
repetition. I do, however, want to give you my assessment of
the results of the meeting.
The London Meeting on July 17 and 18 of the Hinisters and
Governors of the Group of Ten Countries has continued and
advanced the progress made over the past several years in the
direction of agreement upon the creation of a new type of
mternationa1 monetary reserves.
- 5 -
We have not reached complete agreement.
But that was not expected.
The important thing is that our differences on vital
points have been narrowed, that we are still moving ahead.
I think all of us have a better understandtng of the
viewpoints of our colleagues at the political, policy making
levels, and of the concerns that lie at the base of the
remaining divergencies of view.
In the light of this improved understanding, it is my
opinion that sufficient progress has been made here to make
it possible to draft a comprehensive outline of a contingency
plan for supplementary reserve creation for presentation to
the Governors of the International Monetary Fund when they
meet at Rio de Janeiro this fall.
It is my firm position that the differences that still
exist on major points within the Group of Ten must and will be
resolved to a sufficient degree during the summer so that
an outline of a contingency plan such as I have just mentioned
can be presented at Rio de Janeiro.
000
July 21, 1967
FOR IMMEDIATE RELEASE
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 1967
SUMMARY
The June Monthly Statement of Receipts and Expenditures of
the United States Government was released today showing administrative budget expenditures of $125.7 billion and receipts of
$115.8 billion for the fiscal year 1967, which ended on June 30.
The administrative budget deficit of $9.9 billion was
$0.2 billion above the estimate in the President's Budget Message
last January, but $1.1 billion below the estimate of the Secretary
of the Treasury and the Director of the Bureau of the Budget in
their May testimony on the debt limit before the House Ways and
Means Committee and later before the Senate Finance Committee.
FEDERAL FINANCES, FISCAL YEAR 1967
Estimate
January 1967
Actual
Change from
January 1967
Estimate
Administrative Budget:
Receipts ••..•..•.•••...
Expenditures •••••••••••
$117.0
126.7
$115.8
125.7
$-1.2
-1.0
National Income Accounts:
Receipts ..•••••••••••••
Expenditures •••••••••••
149.8
153.6
147.7
155.2
-2.1
+1.6
Consolidated Cash:
Receipts
Payments •••••••••••••••
154.7
160.9
153.5
155.3
-1.1
-5.6
Excess of Receipts (+)
or Payments
(-)
Administrative Budget •••
National Income Accounts
Consolidated Cash ••••••
-9.7
-3.8
-6.2
-9.9
-7.5
-1.8
-0.2
-3.7
+4.4
. . . . . . .. . . . . . . .
F-983
2
Revenues
Administrative budget revenues of $115.8 billion were
$1.2 billion below the January estimate. $0.7 billion of this
shortfall results from lower individual income tax receipts
because of lower final payments and larger refunds than were
expected in January. A smaller shortfall occurred in corporate
income taxes (due primarily to restoration of the investment
credit), excises, estate and gift taxes, and customs receipts.
Miscellaneous receipts, on the other hand, were $0.1 billion
above the January estimate. Among the factors affecting these
receipts were the increased sales of off-shore oil leases and
the credit for lost and destroyed silver certificates written
off under the authority of recently enacted legislation.
Although fiscal 1967 budget revenues fell below the estimate contained in the January budget, they exceeded fiscal 1966
revenues by more than $11 billion, reflecting the effects of
the Tax Adjustment Act of 1966 and continued growth in employment and incomes.
Expenditures
Administrative budget expenditures of $125.7 billion were
$1.0 billion below the estimate made in last January's budget.
This overall change reflects a reduction of $1.-5 billion in
nondefense outlays partly offset by an increase of $0.5 billion
in military spending.
Budget expenditures of $68.4 billion for the military
functions of the Department of Defense and foreign military
assistance were $470 million above the January estimate. This
overrun is well within the normal margin of estimating error
when dealing with so large a total, particularly during a
period of war.
The reduction of $1.5 billion in nondefense expenditures
below the January estimate reflects the net result of a number
of decreases and increases. The major decreases were:
Export-Import Bank disbursements, net, were
$468 million below the January estimate, reflecting greater purchases of outstanding loans by
fore ign buyer s •
3
Subscriptions to International Financial Institutions
are down by $318 million, primarily reflecting a
reduction in the holdings of U.S. non-interest-bearing
notes by the International Monetary Fund. These
maturing securities, which were counted as expenditures
when issued, have been exchanged for letters of credit,
under which expenditures are recorded only when funds
are actually disbursed.
Veterans Administration, down by $205 million, as
benefits under the new GI Bill and compensation payments and pensions were less than had been anticipated.
National Aeronautics and Space Administration, down
$174 million, reflecting the slowdown in the Apollo
program.
Department of Agriculture expenditures, not taking
account of the proposed revolving fund for the
Rural Electrification Administration, were down by
$127 million, about one-third of which was in the
price support activities of the Commodity Credit
Corporation and two-thirds in all other programs of
the Department combined.
Foreign economic assistance, down $120 million, chiefly
because disbursements from development loans authorized
in prior years were lower than anticipated.
Small Business Administration, down by $117 million
as the volume of new loans was somewhat lower than
anticipated.
Office of Economic opportunity, down by $71 million.
Department of Housing and Urban Development, down by
$66 million.
These and other decreases were partially offset by increases
other nondefense programs.
Revolving fund legislation proposed for the REA,
Federal power marketing agencies, and the Mint was
not enacted. This increased expenditures by
$348 million, but is balanced off by a corresponding
increase in miscellaneous receipts and does not
affect the deficit.
4
Department of Health, Education, and Welfare expenditures exceeded the January estimate by $55 million,
as uncontrollable grants for public assistance (both
medical and cash assistance) were up $250 million,
more than offsetting combined decreases of $195 million
in all other activities of the Department.
The detail of changes, by agency, is shown in the attached
table.
OTHER BUDGETARY CONCEPTS
National Income Accounts Budget
On a national income accounts basis, preliminary fiscal
1967 expenditures are estimated at $155.2 billion and receipts
at $147.7 billion, for a deficit of $7.5 billion.
The national income accounts record Federal transactions
as they directly affect national income and production. This
measure of Federal activity differs from the administrative
budget principally by (i) the inclusion of receipts and payments
in the Federal Government's trust funds, (ii) the exclusion of
Federal credit transactions, and (iii) the accounting for receipts
and expenditures on an accrual basis.
As compared with the January estimate, Federal expenditures on a national income accounts basis are up by $1.6 billion.
Of this amount, total Federal purchases of goods and services
show a net increase of $0.5 billion, reflecting an additional
$1.3 billion in deliveries of defense goods and a reduction of
$0.8 billion in Federal nondefense purchases. Another major
component of the total expenditure increase is grants to States,
chiefly for public assistance.
Total receipts are down $2.1 billion from the January
estimate. The bulk of this difference results from a shortfall
in personal taxes ($1.2 billion). The decline in corporate tax
liabilities amounted to $0.9 billion, as a result of somewhat
lower-than-anticipated corporate profits, as well as the reinstatement of the tax investment credit. The small decline in
excise taxes was offset by a similar increase in social insurance
contributions.
5
Consolidated cash budget
The consolidated cash budget measures the flow of cash
between the Fed~ral Government and the public. Last January,
Federal payments to the public were estimated at $160.9 billion,
and receipts at $154.7 billion, for a deficit of $6.2 billion.
The actual consolidated cash deficit amounted to $1.8 billion.
The difference in the consolidated cash deficit compared with
the January estimate is due largely to a net flow of cash into
Government-sponsored financial enterprises. For example, the
net expenditures of the Federal Home Loan Banks were $4.6
billion lower than estimated in January because Federal Savings
and Loan Associations, which had earlier borrowed heavily from
the Home Loan Banks, repaid the loans at a much faster rate
than anticipated.
These transactions of the Federal Home Loan Banks
reduce the deficit on a consolidated cash basis, but do not
affect the administrative and national income accounts budgets,
because (a) all trust fund transactions are excluded from the
administrative budget, and (b) all lending transactions are
excluded from the national income accounts.
Attachment
ADMINISTRATIVE BUDGET RECEIPTS AND EXPENDITURES
(Fiscal years.
In millions)
1967
1966
Description
actual
January
budget
Actual
Change
from
budget
Receipts by source
income taxes •••••••••
corporation income taxes ••••••••
~cise taxes ••••••••••••••••••••
Miscellaneous receipts ••••••••••
l111 other receipts ••••••••••••••
Interfund transactions ••••••••••
$55,446
30,073
9,145
5,865
4,833
-635
$62,200
34,400
9,300
6,781
5,080
-766
$61,475
33,977
9,292
6,860
4,865
-675
-$725
-423
-8
+79
-215
+91
Net receipts •••••••••••••••
104,727
116,995
115,794
-1,201
Branch and the
Judiciary ••••••••••••••••••••••
~ecutive Office of the
311
353
337
-16
President . . . . . . . . . . . . . . . . . . . . . .
26
31
28
-3
1,018
94
968
2,141
103
-336
1,5·80
100
1,000
2,415
47
-654
1,509
111
850
2,295
-13
-318
-71
+11
-150
-120
-60
3,204
2,744
673
3,515
2,236
746
3,472
2,345
757
-43
+109
+11
54,409
1,309
7,552
767
1,437
372
503
888
407
1,276
66,950
1,345
10,746
586
1,456
426
500
1,208
424
1,471
67,570
1,343
10,801
520
1,510
407
506
1,183
411
1,468
+620
-2
+55
-66
+54
-19
+6
-25
-13
-3
12,132
923
2,403
13,508
952
2,270
13,524
1,015
2,264
+16
+63
-6
~dividual
Expenditures by major agencx
~gislative
~unds
Appropr ia ted to the
President:
International financial
institutions •••••••••••••••••
Office of Economic Opportunity
Peace Corps •••••••••••••••••••
Military assistance •••••••••••
Economic assistance •••••••••••
Other ..•••.•••.•
~gricul ture
till . . . . . . . . . . . . . .
:
Commodity Credit Corporation ••
Other •••••••••••••••••••••••••
:ornrner ce • • • • • • • • • • • • • • • • • • • • • • • •
)efense:
M'I'
I Itary •••••• · ••••••••••••••••
Civil ......................... .
~alth, Education, and Welfare ••
lousing and Urban Development •••
[nterior . . . . . . . . • . . . . . . . • . . • . . . .
rUstice •••••••••••••••••••••••••
................... ... . . . ..
........ . .. . ... . .. . .. . . . . .
.abor
lost Off'~ce •••••••••••••••••••••
itate
~ransport a t'lon . . . . . . . . • . . . . . . . . .
~reasury :
Intere st ..••••.•••.•••........
Other •••••••••••••••••••••••••
,tomic Energy Commission ••••••••
2
1967
1966
actual
January
budget
Actual
Chanl
frol
bu~
General Services Administration ••
National Aeronautics and Space
Administration •.•.•..•••••••••••
Veterans Administration ••••••••••
Export-Import Bank of Washington.
Small Business Administration •.••
United States Information Agency.
Other independent agencies ••••••.
District of Columbia •••..••••••••
Allowances, undistributed .•••••.•
Interfund transactions •.••..•.•••
$601
$695
$679
-$
5,933
5,070
-385
-140
167
633
71
5,426
6,195
-340
-239
184
859
84
-1
-635
5,600
6,400
128
-122
184
862
119
100
-766
Total expenditures ••••••••••
106,978
126,729
125,732
-9
Administrative budget surplus
(+) or deficit (-) .•••..••.••••.
-2,251
-9,734
-9,938
-21
-2
-4
-1
-1
-675
+
FEDERAL RECEIPTS FROM AND PAYMENTS TO THE PUBLIC
(Fiscal years.
Federal receipts from the public:
Administrative budget receipts.
Trust fund receipts .•••••••••••
Deduct intragovernmental and
other non-cash transactions •..••
In millions)
104,727
34,853
116,995
44,898
115,794
44,632
5,100
7,231
6,895
-3
134,480
154,662
153,533
-1,1
106,978
34,864
126,729
40,882
125,732
34,493
-9
-6,3
4,026
6,752
4,929
-1 8
Total Federal payments
to the public ....•.•••••••.
137,817
160,859
155,296
-5,5
Excess of cash receipts from
or pal~ents to (-) the public .•.
-3,337
-6,197
-1,763
+4,4
Total Federal receipts
from the public .•••••••••••
Federal payments to the public:
Administrative budget
expenditures ••.....•.••....•..
Trust fund expenditures •••..•••
Deduct intragovernmental and
other non-cash transactions .••..
-1,2 1
-21
'-
\OTE.- Figures are rounded to nearest million and will not necessarily
add to totals.
Prellminary 1 Statement of
Receipts and Expenditures of the United States Government
for the period from July 1, 1966 through June 30,1967
-l
(Cents omitted, therefore details may not add to totals)
TABLE I--SUMMARY (In millions)
Administrative Budget Funds
Fiscal
Year
Net
recPlpts
Trust Funds
Surplus (+)
or
deficit (-)
Net
expenditures
~5tlmated 1968
J ••••••••
n26,937
U35,033
-~8,096
~stimated 1967
J ••••••••
116,995
126,729
-9,734
lctual fiscal year 1967 •••
(Twelve months)
115,794
125,732
-9,938
\ctual flscal year 1966 •••
104,727
106L 978
-2,251
Ictual fiscal year 1965 •••
93,072
96,507
-3,435
Balance In
--- - Publlc Debt
account of
Net
Net
xcess of
(end of
Treasurer
receipb
expendItures receIpts or
perl(xl)
(end of perlOd)
expendltures( -)
-~ :Jt48,142 $44,507 --+$'3,635-~t334~850~--~OO
-=-----=-44,898
40,882
+4,016
326,780
9,000
E
-~~~---cr_---~-+-=,=====
___
--L
Ictual fiscal year 1964 •••
i-
89,459
-
-
-----
97,684
-
--
44,632
----
34 ,8531_
_~_~4,4~~_=F_~u
34 '~6i
29,637
j
j ~~~~2=14====7=,=75=9=
-12
I
319,907 i====12=,=40=7=
+1,410
317,274
c
2~~851
-8,226
+10,139_
+1,446
311,713
12,610
=_--~,-~=1=1=,0=3=6=
TABLE II--SUMMARY OF ADMINISTRATIVE BUDGET AND TRUST FUND RECEIPTS AND EXPENDITURES
----
------
--
Administrative Budget Funds
Fiscal Year 1967
Classification
T ru:;( Funds
FIscal Year 1967
---1------------
To datE'
. •. ;:" 6::~9: 00;1- ...E,' :~i'~ :
Estima(es (net)-'
RECEIPTS
(: )
000
ternal Revenue ., .•••.••••.•.....•.....•
Transfers to trust funds •••.•.•••........
Reimbursement from trust fuods for
refunds of taxes ...•••••.••••.......
Refunds of receipts ........•••••...•....
I148 ,326 ,655,044
-31,608,059,902
~148,153,719,000
499,635,097
-9,509,814,661
465,000,000
-8,195,000,000
-499,635,097
Subtotal--J',"et Internal Revenue ..... .
107,708,415,577
109,000,000,000
31,108,424,805
30,958,719,000
ustoms •••.•••••••••....................
Refunds of receipts ........•••••••...•..
11 other .•.............••....•..••.•....
Refunds of receipts •......•...••••......
Iterfund transactions •.......•••.....••...
1,971,799,790
-71,064,500
6,859,906,375
-107,400
-674,877.946
2,025,000,000
-45,000,000
6,781,092,000
14,765,356,063
14,67.1,246, 000
........ ~766;OiJ2;000
...... ~i;24U145;384
-734,020,000
44,631,835,485
44,897,945,000
2,300,935
539,808
2,155,000
550,000
Net receipts ........•.............
-31,423,719,000
-465,000,000
I
115,794,051,894
116,995,000,000
249,679,120
87,098,250
27,775,919
262,918,000
89,864,000
30,843,000
849,959,911
2,295,059,004
952,877,309
5,817,132,995
756,649,483
1,000,000,000
2,415,000,000
1,390,823,000
5,750,653,000
746,089,000
1,069,214,065
3,578,560
432,336
58,948,927
26,275,850
1,114,964,000
2,817,000
761,000
56,068,000
43,060,000
67,570,472,167
1,342,601,079
10,800,978,809
520,347,613
1 ,"09
J " 923 8°4
;)
406,887,799
506,424,64 7
41,182,581,033
410,796,263
1,468,064,775
66,950,000.000
1,344,984,000
10,746,336,000
586,305,000
1 , 456 , 001 , 000
426,278,000
499,977,000
1,208,245,000
423,719,000
1,470,955,000
20,081,181
30,568,980
25,118, 973 , 541
695,485,003
192,176,664
2,461,793
2,754,002,784
22,291,000
33,448,000
25,302,117,000
1,282,565,000
93,740,000
3,122,000
2,554,892,000
E·..... -..................... ....
13,392,356,054
1,146,575,897
2,264,016,704
13,400,000,000
1,060,138,000
2,270,000.000
· .... ·· .... 39,·i9ii,239
erans Administration... . . . . . . . . .
ler independent agencies ..
... .
ltrict of Columbia
................
Positfunds ...... ::::::::::::::::::::::
~~.rnme~t-sponsored enterprises........
IClpatlOn certificate transactions.......
~~~~~etS, undistributed.................
.
ransactions.....................
6,194,506,564
465,946,675
83,600,600
_._.................
....................
....................
......... . . .. .. .....
-674,877,946
6,400,214,000
1,052,281,000
118,581,000
... __ ...............
....................
817,685,393
3,214,858,248
472,308,809
-1,082,695,529
-2,593,509,800
900,000,000
EXPENDITURES
egislative Branch.......................
he Judiciary.. .. . .. . • . • . . . . . . . • • . . . . . • • .
Kecutive Office of the President. . . • • . • . . . .
mds appropriated to the President:
Military assistance.....................
6conomic assistance. • . • . . . . . . . . . . . . . . . •
ther . . . . . . . • • • • . • . . . • • • . . . . . . . • . • • • • •
~riculture Department. . • • . . . . . . . . . . • . • . •
lmmerce Department.. • • . • . . . . . . . . . . • . . .
!fense Department:
~ilitary...............................
iViI.,. •••••• •••.•••••••••.•.....•.••.
lalt.h, Education, and Welfare Department.
IUSIng and Urban Development Department.
:erior
Department
stice De
artm n ......................
bo D Pet.......................
'st ~ff~partment . . . • . . . . . • • • • • • . . . . . . . . •
't 0 Ice Department. . . . • . . . • • . . . . . • . . .
Ie epartment.........................
ansportation Depart ment 5. • • • • • • • • • • • • • •
easury Department:
~t~rest on the public debt........... ....
) .er·
ml\ nergy Commission.......... •.•.•
f~~~Is:;;~~~~t~~~~JS~~~~i~~d·~::::::::
5,~~~:m:~i~
.. ....... ioo:ooo:OOO
-766,092,000
Net eXpenditures..................
125,731,987,115
126,729,088,000
-9,937,935,220
-9, 734,088,000
-
footnotes on paSe-
12,398,000
3,943,671,000
10,861,473 ,
3,980,457,305
.... · ...... ·39·440·000
,
,
1,191,00~
683,504
5,~66:66~:ggg
ninistrative budget surplus or deficit (-) •
!ess of trust receipts or expend itures (_).
i
~~:~~~
-1,241,945,384
----~--
675,819,000
3,303,693,000
561,338,000
2-1~~'~i3,g~~
,-' ,
,
500,000,000
......... . .. .........
-
~~~:ggo
,
. ............... 20' 000
I
-734,0
,
---t---------- - - - - - - -
34,493,077,986
-~_-__ __-~--- -:!=~
40,881,972~0~
F====~=---"'---=+=--'----~-·-~..----:,--,,-,,,,,,-,jj--=O~-'-+~l--00''',-'-13-8-o-,-7-5~"'1,o-4':'9,.,-~=t=cc-c-=-c--,-",+-c4co~=0-1=5=,=9"'~~3=-,==--0=-=0=0
u
_____.b======~======-="=-~-=-=--------
__
2
TABLE III--ADMINISTRATIVE BUDGET RECEIPTS AND EXP£~'I>ITURES-- "UNE.~O, 1967
Fiset! 1"'.11'
1967
to d.lte
CorreSp\mdHl~
This month
RECEIPTS
Intt.'rn.li
rnonth
last year
Corrt.'spondlng
period
fiscal year 1966
Ht'\TI1UC
lnnhlnu.ll 1lll'()ml' t.1xl'"
Wltltllf'ld , ...............................•......
Otltn' ........ " .............................. .
"4,725,859,163
2,568,964.578
" ,"50,476,959,074
7
18,848.169.528
f.42,811.38I,O
18.486,1'10.4
7,229.481,748
7,294,823,741
69.325.128,603
61.297,551.5
9,324,406,940
1,309,498,823
8,251,391,216
1,148,673,967
34.914,684,186
14.130,143,102
30,834,242.6
13,398,112,0
2,490,095.551
71,766,829
2,041,677
2.653.000,000
63,538,831
2.230,070
Tot.1! ('mplol'ment taxe, ....•...•....•.......•..
2.563,904,058
2,718,768,902
26,955,829,717
20,256.133,2
E,t.1te J.nd ,.;Ift taxes ................••...•.•.•.••••
182,225,658
228,367,665
3,000,869,434
3,093,921.8
19,642,025.493
148,326,655,044
128,879,961,3·
7
N,159,650,346
, 3,069,831,402
fllLll Ind\\'\du"l Incomp t.IX'" .......... ' .......•
CorpllLtt lun
r:xci:--l'
IflCUIlH' taxp:- " .. . ............••...•••
t~lX(,l:' ••••••• , • • • • • • • • • • • • • • • • • • • , . , ••••••••
E mplOVllll'nt LIXP"
F"dl'r.1I In,ur'IlIC" Contributions Act and
Self-Emplol'ment Cuntributlons Act' ..•.. '" .....
H.1ilroad Ill'lirl'mcnt Tax Act ......•..... , •..•....
Fed('ral Unl'mplovment Tax Act ....•...•..........
7
Total internal revenue ......................... ,
'
25,562,637,832
790,447,686
602,744,198
7
2O,.609.517.229!
19,005.488.0
683,630.9
567,014.2
-------
- : -=:.
1,971,799.790
175.721,340 ,
Custom:; .....• , ..................... '" ..•.••...•...
~-.
I
,
98,041,987
155,881,433
-7,352,040
10,917,324
14,699,462
171,046,8C1C1
83,069,036
695,Cl39,274
117, 583, 161
134,164,231
1,362,036
5,ClI8,490
133,580,851
297,774,541
143,246,051
169,653,271
965,304,662
1, 829 , 042,236
601,869,862
173,657,040
104,409,382
1,248,998,128
836,734,039
1,099,891,022
1,222,143,367
1,003,182,636
6,859,906,375
- -----------
5,865,312,6'
- -=- - --:-:-:--~---=====
Subtotal [.\'ro,",,., receipts .••......................
22,007,381,937
20,817,184,581
157,158,361,210
136,556,444,2:
709,655,031
74,694,526
16,257,037
3,840,007
448,104,771
61,501,582
22.401,502
3,540,182
7,849,758,415
937,865,678
186,074,571
36,341,901
5,851,430,1:
761,215,01
216,797,21
27 ,604,51
262,718,875
19,437,375
212,079,3~
211,507,037
138,998
119,771,71
173,2:
5,971,8~9
6,000,31
Deduct:
!lefunds of receipts:'
Internal revenue:
Applicable to bud[.\'C't accounts:
Individual inc()me taxes •.............•......• '
Corporation income taxes .................•..
Excise taxes ...•.. " .•....... " ...• , " ..••.• ,
Estate and ,.;ift taxes ............••.•.........
Applicable to trust ,lecounts:
Federal old-age 'Uld sUf\'i\'llrs ins. trust fund ••
Federal disability insurance' trust fund •.•.....
Federal hospital 'insurance trust fund •.••....•.
Highway trust fund ...................••.....•
Railroad retirement accounts ............•....
Unemplo\'ment trust fund .......... , ........•.
35,000,000
1,166
679,241
5,175
907,650
Total refwlds of receipts .......•.•....•....
536,460,864
9,509,814,661
7,210,667,3~
2,432,204
2,296
71,084,500
107,400
44,60"1,11
846,696,849
538,895,365
9,581,006,563
7,255,579,~
i
~-=--
7
2,040,074,844
" 190,235,675
259,785,031
313,100,000
71,765,663
1,362,436
2,217,000,000
216,000,000
220,000,000
361,100,000
63,533,656
1,322,419
7
Total transfers to trust accounts ......•....•.... _.2~_~7~_323,650_,
33,558,870
1, 636,066
6,778
:\et admllllstra!i\,e budget receipts..............
See fo()tnote, ',m pa"e 11
!
285,1
t-
20,731,593,332
2,066,165,820
7 2,482,722,429
4,440,862,148
790 ,308,687
596,772, 38~ -17
3,078,956,075
45,085,069
3,577,612
7,084
35,201~7~
Total interfund transactions •..........•••...••.
Total deductions ........••.......•.............
7
-1--
lnterfwld transactions:
Interest on loans to Government -owned enterprises
Heimbursements ......•........•.........••.... :
Fees and other charges ..•..•.. " .•.....••.....•.
15,595,6:
6,565.723
4,114
840,127,010
i
Customs •.............•.•.......................
Other ...•.......•..............................
Transfers to tn:st accounts:
Federal old-age and survi\'ors insurance trust fund 6.
Federal disabllit\' insurance tru~t fund 6 • • • • • " •••• ,
Federal hospital insurance trust fund' ...•.........
Highwa\' trust fund .............................. .
Hallroad retirement accounts ..........•..........
Unemplo\,ment trust fund ...•.•......•.•..........
----~.=:::
846.731,2:
1,731,401,:1
359,473,5'
131,782,6;
207,816,41
1,438,500,6:
648,804,1:
500,802,61
I=- -
Subtotal internal re\'enue refunds ... , ........
-=----===--====:
1.811,170.2
j.
l.
Tot,d miscellaneous receipt, .......... , ...•..•.
I
..:: -=:::::::=
~=c,'~
MlsceIl"neous receipts:
Intere,t .....•........•..... " ........... , .. , .... .
Dividends and other earnin[.\'s ...................... .
Ilealization upon loans and investmE'nh ......•...•••.
llecO\'eries and refunds .........•..................
!lovaltles ................•........................
Sales of Government propertl' and pr()ducts •... " . " ..
SelpllOra[.\'E' ..........•............................
Other ................. '" . '" ............•...... ,
-..:=
31,108,424, 805
I
1,442,297,1
862,OOO,OC
3,916,802,91
683,457,7~
561,OI3,8!I
=
4+=~==23=,=93=9=,08=7
657,944,262
16,204,405 .
729,278 I
617,158,34
16,936,00
417,71
.--+- - - - - - .~,66~,7~7--+ .. ___674,8~7,~d=====6=3=4=,5=1=3~
3,758~~2,21=~-+i_~ 3,666,52C~8 j_~_;1,36~,iO~~31~_
18,249,159,721
16,473,515,6f
17,150,663,372
115,794,051,894
I
31,829,180,00
104,72'7,263.i
rABlE III--ADPMNIOT"ATIVE bUOGET RECEIPTS AND EXPENDITURES--JUNE 30, 1967--Continued 3
Classification
EXPENDITURES
This month
!gislative Branch:
Senate ...•..•...••••.••••••..•....•...•...........•
House of RepresE'ntaUves ..•••....•.••••••...... " •••
Joint Items for Senate and House •.•.•••••.....•.••••.
Architect of the Capitol •••.••••..•.••••••••..•••••..
Botanic Garden •.....••••••.•.....•••••.••...•....•
Library of Congress •.••••••••..•..•••.••••..•••.•••
Government Printing Office:
General fund appropriations •••••..••••......••••..
Revolving fund (net) ••••••••....•..••.•••....• " ••.
General Accounting Office 9 • • • • • • • • • • • • • • • • • • • • • • • • • •
Total--Legislative Branch .•.••.••.•••••••..••••
Correspondin~
Fiscal Year
month
last year
1967
Corresponding
period
fis('al year 1966
to date
$3,306,120
6,629,649
130,160
1,752,867
37,810
3,115,788
$3,014,606
10,434,058
157,040
1,912,920
34,796
2,567,455
lI38, 059, 939
76,003,125
9,406,451
22,017,304
503,418
27,950,433
$35,387,962
tJ8,094,653
8,382,174
26,158,381
497,378
25,186,540
2,079,123
4,018,929
3,894,858
2,528,113
-2,573,717
3,586,914
26,384,585
815,058
48,538,803
26,488,468
-4,826,069
46,135,655
2A,965,308
21,662,189
2A9,679,120
231,505,145
198,12A
200,507
34,308
91,194
100,983
2,588,626
431,504
1,246,274
1,412,874
2,498,108
419,019
1,120,765
1,319,667
6,319,141
81,418,970
73,805,135
Ie 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 •• , ••.........•.•••.•.•.••.••••.•.•••.•••
6,843,937
Total-- The Judiciary .... '" ..... '" •••••....••.
7,308,810
6,746,135
87,098,250
79,162,697
12,500
231,136
67,273
16,132
666,982
76,588
46,843
12,500
338,109
81,369
51,618
654,093
74,919
30,265
150,000
2,779,339
741,635
719,023
9,062,996
731,144
513,946
150,000
2,817,723
817,754
686,723
7,626,901
738,168
489,877
31,172
98,450
137,125
I
ecutive Office of the Presldpnt:
:ompensation of the President •...... , . . • . . . . . . . .• .•
rhe White House Office .•••.•.••••••....•...........
lpecial proj e cts ••..•.•....••..•••.......•..........
lxecutive mansion ••••....••.••.••....•••.••••.....
lureau of the Budget •••....••.••••.•.....•.••.•.....
:ouncil of EconomiC Advisers ••••...•...••• '" ••....
~ational Aeronautics and Space Council •...•••••.•....
~ational Courlcil and Commission on Marine Science.
Engineering, and Resources .•.••.••••••••••••••..
~ational Security Council .••••.•..••••.•...•••••••..
lffice of Emergency Planning:
Civil defense and defense mobil ization functions
of Federal agencies •••••••••••••••.•••••.•••...
Other •••••••.•••••••••••••.•••••••••.••.••......
lffice of Science and Technology •••••••••.•••••••...
:pecial representative for trade negotiations ••.•••••..
~iscellaneous ••...••••••••••••.•••••••••••.•••••..
107,513
59,604
...................
408,894
601,427
613,263
558,874
542,614
-98,072
31,995
94,559
112,268
577,814
124,407
98,779
128,275
3,931,285
6,697,016
1,102,457
4,401,213
6,660,262
948,003
532,314
535,2A7
Total--Executive Office of the President. •••••••..
2,414,545
2,330,714
2,600,000
2,055,590
3,810
-1,300,154
21,954
1,136,366
59,226,611
1,095
-40,204,518
4,026
Ids appropriated to the President:
Jaska programs •••....•••••...•...••••••..•..•.•..
lisaster rei ief
mergency fund 'f~'r' th~ P;~;id'e~t' :: : :::::::: :: : ::: : :
,xpansion of defense production (net) •••.••••..•.•....
xpenses of management improvement ••••••••..•••..
Iternational FinanCial Institutions:
Asian Development Bank ••••••••••••••••••••••••..
Investme~t in Inter-American Development Bank ••..
Subsenptlon to the International Development Assn •.
Investment in International Monetary FWld ••••••••..
ffice of Economic Opportunity:
~cgnomic Opportunity Program .......... , .....•••.
U llc enterprise fW1ds (net) ...................... .
~~lce Corps •••...•.......•..•••.•.•...............
IMPPlne ~ducation program ••••••••••••••.•••••.•.
IUth c wor s acceleration •••••• " " •.•••••• ' •.•......
. elasl t hurricane disaster ••• " •••...••.••••.•...•.
I see aneous
ilitary assist~~~~:' .....•..••.••.....••••••.•.....•
~fice of Secretary of Defense ..••••..•••••••.•...•
o par:ment of the Armv .....••••.....•••.•..•....•
O:par ment of the Navy- .........•....•••••••.....•
AUpar t ment of the Air Force .••.•......••...•••....
Fo other agencies •••......•.....•..............•
reign military sales fW1d (net) .................. .
642,804
80,909,788
54,918,153
62,382,161
-186,993
-12,062,983
3,128,520
133,238,524
39,581,748
37,983,277
1,601,168
-35,534,142
8,859,076
i~:~~~:~~~11
6' 185' 000
39'594'995
7' 191' 194
,
,
2,791,187
6,119,136
2 319
_509, 27,
59,154,080
73,586,963
511,657,326
191,664,202
280,128,581
1,045,814
-89,947,897
88,168,149
28,497,570
218,636
129,055,763
331,012,449
_5,630,223
-32,874,164
968,134,990
"49,959,911
2~~:~~:~~~
I
I
14,875,000
43,219,936
8,554,522
11,067,738
9,835,506
36 783 481
42;950;241
63,240,000
580,415,408
112,796,377
98,210,209
69,219,260
207,678,481'
2,295,059,004,
2~;~g;~~
68,805,000
500,356,283
84,615,420
133,735,997
71,809,832
____
~~:~g; ~~
144,978,815
L
988,280,409
29,565,238
94,378,056
401,851,472
290,896,475
661,310,175
676,902,297
-_3_7~----1~, 156, 90_2_-I_ _ _ _ _-_9_,8_2A_,64_2
16,830,260
Total--Economic assistance .••.••.•••••... " .•..
!
179,999,096
1~'~bt'~~~
1,483,217,814
25,671,589
110,972,438
3,400,000
21,132,953
10,408,499
226,293
369,2A2,005
+--------t--
186,602,931
f.............. , ...................... .
footnotes on pagt; 11
1,049,639
173,100
-106,845
225,155,976
2,773,747
13,096,440
. .................. .
4,717,211
4,945,103
4,816
4,502,62A
lociatnce or Progress ••••..•.•.•••••••..••••••••
•
p.rogress fund, Inter-American Dev. Bank ••••
)~~~~rttlng assistance •.•..••...•.•••••••...•••••.•
,,ontmgencies
,a IOnal organizations and programs ••••.••••••
•..•...•.•.•....••.••••.•....••••••.
Ither
'ublic···{······· ....••...•.......•..•••.••.•••.•.
All' en erpnse funds (net)·
o lance for progress, dev'elopment loans •...••...
F~~e~opment loan funds .••••.••.. , ............. .
elgn Investment 6"Uarantee fund •.•.•.•...• " .. .
!€
10,000,000
-77 ,500,000
42,000,000
-628,000,00:)
181,286,776
~___
5,433,400
132,492,310
48,300
-151,995,216
377,837
2,601,212
53,471,391
253,723
-105,006,311
27,706
-27,000,000
anomie aSSistance'
Technical cooperation and development ~rants:
Total'-Funds appropriated to the President
-195,5_6_0+ ______-_20_2-'-,65_2
27,775,919
26,282,285
5,50:),000
Total- -Military assistance .••..••......•••......
~l~eral
46,292
----
de
658,534,illF--~~97,~;,2;~
_
2,140,610,112
4,32A,203,797
'-c.=c'cl ======±======
4
TABLE III--ADMINISTRATIVE BUDGET RECEIPTS AND EX~8ITtlU'"
r
Xl'F~lll
TI)l~
fUHES--Cl)Jltlllued
A,:ricultu!",' [)PI'.l!"1 III "11 I
,'\~rlcullur.tl H"."'.lrcil :ic'n'ice:
[lltr.l~lI',t'!"llnlt'lll.tl fUlld~ (net) ..................... .
Otiler.....................................•......
l 'lldPl'Llti',"tl
~tatl' He~carch
Ser\"!c(' .....•............
r:xtl'll~ltHl ~t'r\ ICE' • • • . • • • • • • • • • • • • • • . • • • • • • • • • • • • • • •
F.lrnH'r Ct10pcr.ltl\t.' SPf\"l('(' • • . . . . • • . • • • • • • • • • • • • • • • •
~()il
COIl:---erLltloll
Correspondln h
month
last veal'
month
JlJIIIf'~, 1967--ContlllUl
Fiscal Yl'ar
Corresponding
period
fiscal year 1966
1967
to dati'
~308,460
S113,705
18,889,649
164,844
678,761
66,365
17,237,479
142,744
1,494,926
94,769
$263,685
221,999,014
56,397,005
92,495,867
1,224,706
-$164,2
202,003,0
52,364,3
89,610,8
1,140,2
9,426,057
9,510,954
2,159,753
695,924
1,550,308
9,195,878
9,310,444
1,624,611
818,071
1,334,048
114,640,882
107,506,784
15,874,979
12,146,317
13,276,101
110,789,'
102,293,t
13,590,50
11,044,51
6,378,603
11,095
8,695,226
12,445,887
13,121,515
442,552
67,437
5,997,135
17,480
7,673,500
11,296,940
8,641,575
-2,012,766
68,455
85,280,341
1, 750,000
96,066,443
208,298,145
114,375,613
145,420,371
851,354
76,907,11
196,658,4:
69,491,1:
117,74C,5f
830,4t
31,682,321
652,042,269
560,385,S
2,243,641
-8,794
104,187
2,243,408
66,843
93,076
21,103,876
343,554
1,304,282
20,096,41
-387,5:
1, 191, 7~
16,480,515
1,013,294
13,745,428
284,641
45,540
1,135,126
75,293
534,643
83,979
11,163,775
7,973,951
26,934,373
298,583
70,901
1,913,448
1,250,134
41,153
6,956
131,685,588
81,657,109
214,840,180
2,786,801
1,637,367
53,338,005
5,689,542
140,712,751
166,466
126,490,0:
87,685,4:
209,515,9727,71
1,921,21
5,591,51
13,189,S(
150,993,3:
214,41
632,513,813
596,329,31
==,t'f\'jCpo
('l)Jl~l'r\.lti{)n Oper.ltlolb . • . • . . . . • . • • • • • • • . . . • • • • • • •
Flll"d prl'\ ('ntwn.
water~lH'd
pr()tection and other ••..
(;rt',-lt PLlins consefLltion pr()~raIl1 •••••.•.•.••.••.
Economic H{'~edr('h Sl'l'\"icc .. , .....•••.... ' . ' ..•.••.
"I.lti~tical
Hepurtlne: Sernc(' ...............•...•....
.wd :"larkl'tinh Sen'ice:
C()IlSUfllt'r protccti\·t'. JIlarkt'tin~ and reh'l1Llt()fy'
pr()granlS ••.............•.....•••••••.••...••••
PLlyn1ents to State~ LU1d PO::--:'~l':--:'~l(Jns ••••••••••••••••
Special milk prllhram .............•........•...•..
Schoul lunch proe:ram ....... " ........•.....•.....
Food stamp pro"ram .....•......•......•.••..•.•..
Hl'mo\',d of ~urplus ahricultural commodities •....•.•
Other, "
41,162,319
Tutal--Cunsumer .md ;'\larketm h Service ......... .
Appalac/llan reg-ion cOllservatlon pr()~ran1 •••.•••••••
Cropland con\'ersion prUhI"<lm ..................•...
Cropland adjustment proe:ram ...... " ............. .
E merhcncv conservatiun me.lsures .............•...
Consen'atlon reserve prohJ"<lm (soil bank) .......... .
Indemnitv pavment~ to dairy f.lrnH'r~ ....•..........
Total- -Ahrlcultural Stab. and
l"()n~er\'ation
I==~--~".
Cummoditv Credit Corporation:
Public enterprise funds (net):
Price ~upport and rl'lated pro~Llms"J ........... .
Special acti\'itles " ......... '" ...•............•
Furei~n assl"t'Ulce and "penal expurt prohrams •.•••..
Total- -Farmers Home Administration •••.•. " .•..
Rural Comrrunlty De\,elopment Sen'ice ...•.•.•••..•.
Office of the Inspector General
Office of General Counsel
••.......•......•.•...
Office of Information ..... : : : : : : : : :: : : : : : : :: : : :: : :: : :
~atlonal Agricultural Libran'
Office of r.ianagement Senices' •..••......•.••.••....
General adnunistration:
- ....•..•..•.•.......• "
IntragO\'ernmental funds (net) .•.••.•••..•.••••••..•
Salaries and expenses .•..•. " .............••••••.•
Forest Sen'ice:
lntrago\'ernmental funds (net) ....•.....•......••.••
Other ...................••.•.......•.......•••..
Total--Agrlculture Department •...•..••.•....•••
"ee footnotes un page 11
-
~
~-
-104,884,200
-11,371,244
157,677,117
Total- -Commodit\' Credit Corporation and foreihn
a"sistance and special e"l)ort prohrams •••.•...•
Federal Crop Insurance Corporation:
Administrati\'e expenses ..................•..•••..
Federal Crop Insurance Corporation fund (net) ••...•.
Rural Electrification AdministratIOn:
Loans ..............................•......•.....
S.llaries and expenses .........................•..•
Farmers Home Administration:
Rural housing grants and loans ••••.• , ••••••••••••••
Community development programs ••••• '" •.•••.•••
Salaries and expenses ............•................
Public enterprise funds (net):
Direct loan account ........•.........•..........
Rural housing insurance fund ..•.•...•........•..
E mer~encv credit re\'oh'ing fund •.........•......
Agricultural credit insurance fund ••.............
Rural housing direct loan account ..... " ........ .
49,653,278
33,398,464
Ser\'ice
:1
I
,
r
I
,
I
I
!
I
I
I
~.
-
c""~~~.=~'-C""=-~==l=====
2,126,873,422
-116,469,682
1,461,946,933
1,535,920,4"
-17,083,01
-48,256,903
3,472,350,673
3,204,381,31
274,085
855,563
412,662
1,162,439
8,618,576
-6,321,297
10,496,31,
37,649,539
941,478
29,905,753
953,540
411,995,104
12,209,527
360,981,e:
11,878,31
.................
. .................
. ...... i2;420;S07
9,252,~
8,224,5t
53,880,327
1,166,71
47,009,5:
-8,623,567
-26,254,543
-583,054
-59,573,176
6,304,328
-440,567,945
34,105,319
9,978,357
-20,428,527
-135,420,928
-31,351,91
31,407,51
18,684,31
87,534,01
3,035,2:
167,537,61
97 ,468
2,954,616
-160,606,828
-25,802,522
-417,199
-203,555
-42,319,706
-222,613,26_2
1,685,544,~
==-=CC.·_=-_=-.CC==~.C.=+==~~~=F======
2,875,196
3,861,353
I
-- - - - - - ...--=-447,001,782
72,443,837
326,301,041
41,421,672
\=====
I
1,750,~
97,~,~
'~=-=~~~F==============~======~~~
f-~~-=~~~
Forelhn Ahricultural Sen'ice ...........••..........•
International Ahricultural De\'clopnH'nt Service ••••...
Commodity' Exchan~c Authortt\ ..................... .
Ahrlcultural StalJilization and Conspn·atlOn Sen'ice:
Expenses ....................................... .
Suhar act prohJ'<lm ............................... .
A~rlcultural consen'atlun pruL':rClm ................ .
14,002,'11
--"~==~~
('l"l~un)('r
-85,677,927
-486,033,089
12,379 I
917,672 iI
323,316
345,158 I
402,869 I
265,462 I
251,961
926,310
323,329
100,780
131,166
246,574
699,565
11,389,980
4,173,528
2,038,549
2,631,190
2,611,950
131,807
276,583
i
90,610
298,737
71,816
3,667,526
3,626,r.
-1,046,049
30,049,409 I
I
10,363,831
-1,979,306
31,063,999
54,637,172
-1,005,171
434,901,424
5,817,132,995
389,344.l1
r
I
I
I
708,21
10,22'7,a:
4,088,111
1,676,91
1,750,81
2,476,0l
119,41
-3,226,91
5,948,579,51
ABLE 1II··ADMlllltSTRATIVE BUDGET RECEIPTS AND EXPENDITURES--JUNE 30, 1967--Continued
- ----
Classification
EXPENDITURES--Continued
-
0
0
•••
••
•••••••••••••••••
0
0
••••••••
0
0
••••••••••••
••••••••••••••
"
•
••
0
••••
00
0
••••
•••
0
0
0
•
0
0
0
0
0
0
=-==~
•••••
Total--Promotion of Induslry and Commerce •....
Science and Technology:
Environmental Science Services Administration ....
Paten! Office ..•..•..
National Bureau of Standards:
Intragovernmen!al funds (net) ..•........••.••...
Other .....................•.....
Office of State Technical Services ..
0
•
0
•••••••••••••••••••••••
0
Total--Science and Technology ...
0
00
••••••••
0
0
•
0
0
0
••
0
000
0
0
••••••
••••••
"
0
0
0
)cean Shipping:
Maritime Administration:
Public enterprise funds (net) .•..•••..••••..•...
Operating differential subsidies .•.....•..••.....
Other .••.••••••••••...••••.••..•...•.••.. '" .
Total--Ocean Shipping
0
0
0
Corresponding
month
last year
This month
mmerce Department:
:Jeneral Administration ••.••..•.••...•....••..••...
SUSlness Econoomics and Stat~stics:
Office of Busmess Economics ••.•..•...•.•.. '" ..
Bureau of the Census .••....•..•....
Economic Development Assistance:
Public enterprise funds (net) .............•..••..•
Other •...
Promotion of Industry and Commerce:
Business and Defense Services Administration ..
International Activities.
Office of Field Services ...........................
participation in U. S. Expositions •......•......
U.S. Travel Service ............ o.
••••••••••••••••••
"
••
--
5
===~==-====-------.----=-------
---
Fiscal Year
Corresponding
period
fiscal vear 1966
1967
to date
----
---f----
-'-
-----
$429,699
-$77,982
$4,266,761
$4, 3M, 160
313,128
4,709,225
85,988
2,620,753
2,624,830
25,391,646
2,643,188
25,619,832
-787,314
-8,682,696
148, 527,}41
-956,133
15,37_21 874
-
-
-5)5~~667
--
-7,949,120
-- -
---
74,~B,180
484,990
1,858,212
495,212
210,487
342,487
326,406
871,583
334,225
19,795
191,381
5, 939,8Oti
16,966,252
4,549,889
4,989,148
3,047,227
5,175,641
15,134,690
4,183,549
992,384
3,100,726
3,391,390
1,743,393
35,492,324
28,586,992
22,624,385
4,258,239
12,176,512
2,557,924
175,679,711
36,424,361
151,842,551
33,809,861
75,960
3,651,388
655,602
-1,806,717
4,589,436
198,853
4,844,660
46,401,198
2,732,627
-5,884,443
60,825,422
1,460,739
31,265,575
17,716,009
266,082,559
242,054,132
-9,860,772
16,659,863
8,475,406
-9,540,695
29,733,251
14,661,221
-3,191,886
175,631,859
110,506,836
4,750,976
186,628,357
111,474,938
15,274,496
34,853,777
282,946,810
302,854,273
69,800,257
50,632,959
756,649,483
673,111,638
lense Department:
llilitary:
Military personnel:
Department of the Army .••••••.•..••••..••...•.
Department of the Navy •••••••.•.•..•••••.•....
Department of the Air Force .•••••••••••.•.•....
Defense agencies ••....••••..•.•.•.••••.••••.•.
684,685,505
537,186,432
478,205,094
162,209,995
714,318,317
490,449,209
459,174,148
138,965,168
7,163,757,538
5,241,767,140
5,423,300,176
1,830,903,531
5,504,777,664
4,639,497,952
5,017,979,702
1,591,096,735
Total--Commerce Department. .....
0
••
0
•••••••••
0
Total--Military personnel .•......•.••........
1,862,287,027
1,802,906,843
19,659,728,385
16,753,352,054
Operation and maintenance:
Department of the Army .....•.
Department of the Navy ..•....
Department of the Air Force •••.•...•••••.•••.•.
Defense agencies •••.•.•••••.•••.••.•••••••.•.•
867,203,129
388,948,088
545,171,495
81,667,597
619,420,578
461,008,330
656,772,997
71,359,254
7,231,574,417
5,018,957,425
5,707,840,606
934,161,841
4,752,060,425
4,057,371,411
5,176,405,921
723,977,415
............
1,882,990,311
1,808,561,160
18,892,534,289
14,709,815,173
Procurement:
Department of the Army ••••••••••••••.••••.••.
gepartment of the Navy .••.•.•......
epartment of the Air Force •••..•....•....•...•
Defense agencies •.......••••...•....•...•••.
184,674,183
676,372,728
835,737,467
5,231,041
330,163,200
571,633,782
768,368,231
-922,680
4,510,297,022
6,417,787,347
8,096,294,221
40,703,083
2,670,775,806
5,236,881,394
6,413,926,415
16,953,776
Total--Procurement ••••••.•••••••••••••••.•.
1,702,015,420
1,669,242,533
19,065,081,675
14,338,537,392
Research, development, test and evaluation:
gepartment of the Army .••••••••.•...••••..•.••
Department of the Navy •••••••.•••••••••••••.••
Department of the Air Force •••.•••.•••..••••.•.
efense agencies •••••••••••••••••••••••.•••••.
114,885,371
136,039,687
256,104,255
57,601,164
161,267,452
120,278,370
246,962,158
66,552,069
1,630,216,743
1,790,443,904
3,229,207,716
521,180,507
1,412,279,038
1,406,831,507
2,948,203,979
491,768,379
evaluatIOn •.••..••....•.••••.....•••.••...
564,630,478
595 ,060,050
7,171,048,872
6,259,082,903
Military construction:
~epartment of the Army ...••......•..•.••••••..
Department of the Navy ••.••••••••• , ...••••••..
of the Air "Fa r c e ...................
Department
f
e ense agencies ••••••••.•••••••••....••.••••.
9,270,504
22,157,413
34,595,427
2,022,960
122,842,925
-56,995,960
75,777,029
1,976,904
439,063,504
530,713,827
515,789,515
14,801,690
332,028,332
451,767,855
526,627,249
23,140,584
Tatal--Military construction •.•••.••.•••••••.
68,046,306
143,600,899
1,500,368,537
1,333,564,021
16,739,955
10,608,258
20,771,287
258,208
22,732,500
15,263,155
21,706,652
236,145
189,729,512
127,756,672
235,869,039
4,084,956
203,611,872
178,827,904
262,613,638
2,416,394
48,377,710
59,938,454
557,440,180
647,469,810
0
•
•••••••••••
0
••
0
•••••••••••••
0
0
0
•
--
Total--Operation and maintenance
0
•••••••
0
•
0
0
0
Total--R~search, development, test and
Family hOUSing:
g~ar~ment of the Army ....•••••••.....••.••...
De art ment of the Navy •..•••••.•...•...•••••••
Def ar men! of the Air Force .••.•.•.•.....•......
ense agencie s ••.•••.....•••..•.•.
0
••••••••••
Total--Family housing ••••••••••••..•••••....
0
-~-~
6
TABLE "'--ADM'NISTRATIVE BUDGET RECEIPTS AND EXPENDITURES.· JUNE 30, 1967--Contlnue
Cla:--.~lfl('atl()n
Tlll~
EX PE!'>DITl!RFo;- -Contlnut'd
la~t
[);olt'n't'Ikp.lrtnll'nt--Continul·d
'-It! ,t .In - -C"nt lnued
C1\ d Dt'!l'n'<' ..•.••..•.•...•.•••..•••.•.•• ··•••••
':-;Pf'('Ltl 111rPl[.!1l currency prngranl ••.•••••••• , •••••
Hl'\'()lun,.: ,Ind m,lna~ement funds (net):
Public C'nterprise funds:
Department of the Arm\' .......•..•.••.•••••••
DqJarlment of the 1\'a\'\' ••.••••••.•••••••••••••
Dep.lrt ment of the Air Force ••..•.•••••.•••••
Dt'f(>11:'(> a!2:pn('ic~
•••••
.o • • • • • • • • ,
•••••••••••••
C II'il defeilse procurement funds •..•••••••••••
Intr.I(,)\'prnllll'nLtI fund,'
[l,'partnll'nt uf till' Arm\' ...... , ..•............
Ikp,lrtnll'nt of the :\,1\'\'" • • • • • • • • • • • • • . • • • • . . • •
IkpartnlPnt of th" Air Furce •..............•...
I)l'fen:--/:'
.l.~pnl'll';:-" • • • • • • , •• , • • • • • • • • • • • • • • • • • • •
l' ndl"l r JlJutl'd stu('k fund transactions •...•......
Fiscal Yt'ar
Correspondll1g
month
month
212,220,723
10.071
.................
28,987,593
2100.074.654
10,271
-1.010
333.220
-6,490
-635
126,976
355.619
-198.986
2,711,967
-3,276,826
-747
-1.189
. ................
... .............
-97
-1,345
266. 107,238
54,304.718
-45.236.690
-39,311164
- 717 343,846
278,631. 579
32,473,885
70,612,063
-6,359,890
-519,326,049
. ................
-143.487,797
624,185,299
m;Ula~pmel1t
funds •..•.•.•.
Total- - \lil itar\' '" ........................... .
-481, 154, 122
------
:86,051,0
. ................
-1.667,5
-593,7
2.m,O
.................
-3
6,613,597
229,005,636
-61.046,201
449,578,049
161,536,1
234,057,0
45,103,7
-159.67'l.1
. ................
--------
------
---------
Tutal--Hel'ohln;: and
Corresponding
period
fiscal year 1966
1967
to date
\Op~lr
281.135.1
--
67,570,472.167
5,944,009,739
5.659,423.928
----
-
~-~
54,409,007,4
_ _ _ _ _ 0_-
-=----=~---:::
("ilil:
Dl'[LlrtJ1lI'nl of the Arlll\,:
C()rp:-- of F ngineer:--,:
Hil'ers ,lIld haruurs ,lnd !loud control .......... .
Inlr,llC;n\ernmenLt! funds (net) ...•...•........•.
The Panama Canal:
Canal Zone GOI'ernment ••••••••••••••••••••••.
Panama Canal Company:
Public enterprise funds (net) ............... .
Thatcher Ferry Bridge . . . . . . . . . . . . . . . . . . . . .
86,617,416
-1.515.441
54.647,698
1,772,359
1,200 .146,295
-1,818,330
3.994,744
4,688,589
37.798,550
36.564,9
-905,233
2,442,484
610
-12,782,585
-4,310,1
-7
Total--The Panama Canal ...... " ....... .
3.089.511
7,131.685
25,015.964
32,254,0
Other •..........•..•...•.....••.•..•.•.•.....
:\an--Wildlife l'OnSl'rLlti'JIl, l'll' •................. ,
A,r rorl'l'--\Vllrllifl- (,OIlSl'!,\'ClII'Jll, "I" ..•.•. ,., .••. ,
3,947.719
314
1,942
2,640,604
87
1,658
39.197.101
11.841
48,206
26,418.9
-1,8
39,5
I'ulal--Ci\'il .... , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92.141.462
66.194,094
1,342,601.079
1.309.158,7
Tot,tl--llcfen s l'lJepartl1ll'nl ...................... .
5, 75~,5~-,-~0
68.913.073.246
55.718.166,2
1.246,251,3
4,196,6
---=-----===-~
........... 4
••••
•
••
----
--=--=...:.::-:-=-=--.:.~
HeCllth, Edu('allon. and W('\fdre Dep,lrtn1l'nt:
F,)(ld ,lnd [)rulC; Adnlllllstratlull:
Publl(, elltl'rpris!' fund (nel) ........•.......... _
Otller
UII ,Ct'
or- i-::i~;':{i ;,;,;:'"
.. _......... , ................ .
rprl~C lunlls (llel):
~tLldl'!l! llJ.lll 1I1~Ur,1Ilce fund
--
I-
t_
221. 647!
6,783, 159 1
6,011,003,833
----------
-73,368
58,291,565
-60.392
3,932.474
l'ul>Itc lilt,
1I1~I't'r "due.ltion f.leiltlie~ l';';';~' i~';d""""""
A:-,:--,i:--l,lIH'l'
~Clll)ld
for
eduC'd.tl{)ll
....•••.••••.
In fedet',llh' ,lfkctt."'ci ·,;r·e·~;:-.,·········
\'OC.ltll)!1.11
.l:--:-..i:--,Ll.llVl"
Flt'IlH n1.i.r\" .tlle! :--l'cond,lr\' edUl'.ltll)llal .ll'ti\"itil:;:::::
1l1;'~ltT CclUt'.ll!l!:l.il .lcti·vitie~ ..... .
f)l'fl'n:-"l' \'due.it i(J!l~d actl\ ltle:-..
••••.••.•••.•••••
01
ill'!' . • . • • • . • • • . • . • • • • • • • • • : :
~: : : : : : : : : : : : : : : : : :
['<1t.11--011l<'l "f t:dllr ltiOll
........... , .... i
-20,332.897 '.
28,981, 922 1
14,493.289,
105,842.669
203,420,737 i
--g:~~:~~j
427,349,290 '
Hciullilitation Adn1inl~tr.itl{)l1:
t;r,.ll1t:-- !In' n:ru.l)illL.U1U!1 :--t>1'\ lCl'::--" and Llcilities ..... .
!
\·lll',l.tl{lJul
) Ot:1('\ ......~ ............... ' . ' .............•.....
I "hIte ,j,>,tlth O>"1'\'i('[':
Bl'.dlll I11.111p()WeI' . • • • • . • • • • • . • . • • . • • "
.••
Di:--l"l.:--C prf":t'lltlUI1 .1nd en\'ironIllental ('untr~i' ..... .
I~t.."',l
it 11
:--(' r
1," \
l't.' ~.
• ••••••
HU:-:'Plt.tl c(.~n::--truC'tiol1 actl\"ltU:':--
Otllt-r .............• " ....... : ~ : :: ::.: .•....•..
:\allLlll,ll [nstitule' elf Heallh " " "
' ' ....... ,
:\,ltlOl1,tl In_'lllllt~ of \[:>nt.lI Health·'···············
~~~IIC enterpme funds (net). " , •. ::::::: :::: : :::: :
It.. I
.•••••••••••••••• : •••••••••••••••••••••••••
T"t.tl--Publll' He<llth Sen'ice
....................
22.879. 687 1
38002~~
5,742,549
17,127,648
15,906,807
29,326.393
-171,565,737
5,725,409
-8,728,470
16,829,874
•..•.....•.•....
23,503,129
22,882,014
110,603,523 ,
18,276,035 I
39,371,116
_17,092.554
j
-87.890,264
250,306.618
447.058.077
1.266,326,987
535.892.584
388.604.015
179, 940 ..,P2
231,728.~73
+_
2,900.238.290-+~~ 1,972.14O.1l
32,875,267
-11.158,068
I
t-==
____
2,711,813
3.164, 378
135. 779.()
409,593,2
815.098.&
154.140,5,
346.497.3
111,031,3
152,521,7:
49.534,41
208,352,047
5~29,351
I
1
61,256.698
249,627.333
i
1
12.154.535 :
9,254,818:
17,218.3991
1,612,090
-4.408 I
27.364.1991
217,284,067 '
261.276.679 1
921,289.110
216,190.051 i
-8,729,724 I
26.930,515 i
F===-=89~,=63=5,,='5=2=5~_=_~_==~~7_3~.~47~5. 828 ~ __1'~~, ~~11
1.841,964
223.,499
374,050.000
25.373,3<
179,486,3'
~1. 739.1:
186,326.31
738.761.S
164.m.f1.
13,~
40.158.3:
1.536.63~
11,213,5:
4.6161
i
-10.012 i
I
I
................
769,122
10,402,114
................
2,848
2,640
406,219,479
26,219,325
9,666,954
200.518. 194
16,199.553
2,160,537
949,850.000
105,000.000
-7,698
1
4,175.589.383
186,169.690
64,683,994
I
-43,1
............:s;g
3.527,534.2
151,382. U
51,9/Ji,8
ABLE III--ADMINISTRATIV£ BUDGE, RECEIPTS AND EXPENDITURES--JUNE 30,1967--Continued 7
-=---~-~=--.:::---=-
---
Classification
EXPENDITURES- -Cont [nued
This month
Corresponding
month
LaEt year
Fiscal Year
Corresponding
period
.
fiscal year 1966
1967
to date
$1,056,944
$212,520
$6,802,8(,4
$2,191,310
27,500
1,961
266,085
2,080,917
100,000
6,140
305,766
1,321,836
1,025,377
230,501
2,718,143
19,231,367
992,196
54,711
3,619,181
16,296,194
-1,149,418
3,585,165
-111,276
2,173,057
-1,062,550
29,393,015
1,229,693,795
634,456,195
10,800,978,809
-235,665,109
445,008,591
270,440,609
72,991,078
6,652,451
Total--Renewal and housing assistance . . ...•. . •.
MetropOlitan development:
Public enterprise funds (net):
Urban mass transportation fund...... • . •••••••••
Other 1 5. ••••••• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
Open space land programs. • . . • • . . • • • • • • • • . • • • • . • .
Water and sewer facilities l6 • • • • • • • • • • • • • • • • • • • • • •
Other........... ...•.. ..•..... ..••••••. . .•••.••.
Total--Metropolitan development ••.••....••.....
Mortgage credit:
Federal NationaL Mortgage A.<;sociation (net):
Loans to secondary market operations fund ••••...
Purchase of preferred stock .•.•••..•••.•••••..•
Management and liquidating functions .....•••.•.•
Special assistance functions ••..•••...•...•.••.•
PartiCipation sales fund ••......••.•••...•.•.•••
Federal Housing Administration:
Public enterprise funds (net):
Federal Housing Administration fund •....••.•..
Other............•.•............•.....•.•...
Other...•.........•..•.•.........•........•...
Total--Mortgage credit.......................
312,359,081
356,720,280
236,745,755
49,902,367
1,830,184
c~~~~~-+_______ ~8~34~,~244~-r~'~'~"~'~"~'~.'~.~.'~'~"~'~
•.
560,261,865
957,557,669
P=~~~=+~~~~~+=~~~~==~~~
42,700,246
-13,847,171
19,859,784
5,691,158
21,848,941
18,659,766
34,083,017
8,387,163
76,252,960
81,180,062
-5.548
-76,891,500
83,761,936
-26,230,000
15,820,304
37,092,631
-105,827 ,981
-22,105,009
3,050,563
-142,015,211
-46,465,024
91,820,304
-114,119,633
-313,524,705
-129,118,778
38,318,846
-122,332
109,491
-3,484,767
-310,279
180,047
55,530,070
-2,162,177
674,618
191,189,259
-3,963,932
252,030
-75,109,107
-104,865,054
-131,387,160
-277,465,455
20,050,114
r-----~--~--~----~~---+------~~---~------~~~
F===========F=========~==~~---=~-
-120,280,000
F=========~========~=========F=========
Demonstrations and intergovernmental relations:
Comprehensive city demonstration programs....... .................
.................
731,766
Other...........................................
493,087
129,542
3,736,293
1,858,233
Departmental management .••..•..••••••••.••••••••• 1=====5==,4~28~,1~8:c:::5=1F===~I~,~6=78~,:c:::8=19~F==~1~0=,7=5~1=,=88~7=F====~3~,9=4=9;,,0=33
Total--Housing and Urban Development Department.
-234,211,219
22,643,183
520,347,613
767,079,543
6,801,192
10,577,591
156,157,628
144,548,353
-398,783
231,315,788
16,710,153
44,768,247
erior Department:
Public Land Management:
Bureau of Land Management ••••••••••.•••••••••••
Bureau of Indian Affairs:
Public enterprise funds (net) •..••••••••.••.•••••
Other .•...•.•.•••...•••.•.•.•..••••••••.•.•••
Bureau of Outdoor Recreation •.......••••..•......
Office of Territories .....•.•.•......••....•...•..
-141,215
17,686,095
8,002,132
834,180
253,580
20,563,227
2,797,702
4,243,513
793,562
224,136,076
68,082,823
41,061,456
Total--public Land Management .....•••.••.....•
33,182,386
38,435,615
490,231,547
436,943,759
7,584,246
5,420,610
79,601,866
74,271,414
2,712,142
5,957,838
518,668
80,637
1,220,042
5,158,962
1,140,203
97,956
23,193,419
49,455,918
9,987,259
734,692
19,281,734
43,998,920
7,124,472
730,998
16,853,533
13,037,775
162,973,155
Mineral Resour~es:
GBeological Survey •........••••••..•..•••.••••••••
ureau of Mines:
~~lic enterprise funds (net) •••••••.••••••.....•
Off er •...••••.•....•.••.•.••....•.•••••••.••.•
Off~ce of Coal Research ..••••.••••...•.•••..•..•.
Ice of Oil and Gas .•..•••••••••..•.•.•.•..••••.
Total--Mineral Resources •..•.......•..•.....•.
.. -
fish ~d Wildlife and Parks:
91,805
11,421
.................
gfflce of Commissioner of Fish and Wildlife ....... .
ureau of Commercial Fisheries'
837,079
-35,595
PUblic enterprl·se fun d s (ne t) ••....••..••.••..•••
.
-534,668
Oth
41,137,628
3,786,663
3,866,662
Bu er •.••••..•.•.•.....•.•..•...••.••.•...•••
90,837,158
eau
9,375,562
8,073,649
N
of Sport Fisheries and Wildlife •••••.•.•..••
120,014,327
12,877,427
13,100,218
a lonal Park Service • .••••••••..••••••••.•.••••• ~------~~~~~~----~~~~---t----
-
145,407,541
j-----
372,054
I
r
-_.-
Total--Fish and Wildlife and Parks ••••••.•••••••
e footnotes on page 11
24,505,861
26,015,480
252,917,999
342,500
38,754,372
87,975,830
135,390,565
t-----
262,835,322
8
TABLE III __ ADMINISTRATIVE BUDGET RECEIPTS AND E~PENDITURfS ••JUN£ 80, 1967-Cont...
I
Classification
This month
EX PEND[TURES- -Continued
llll,'r,,,r f)"p.,rlmpnt--Contlnued
\\.'tl'r ,Inri Power Del'elopment:
Burp.lu of He,Limat ill!):
Pul,li, ('nt('rpri~e funris (net):
Cont inuinc: fund for emerl-':encl" expenses.
Fort Peck project. !'v10ntana ........•..•••... ;
l'pper Colorado RiI'er Basin fund ............... !
OtllPr ...................................•.••.. :
Bonnel'ille Power Administration:
I
PubliC enterprise funds (net) .•.•.•.....•••••..•.. ,
So~tt~~,:~~i~;~ 'P~~~~'Ad~i'n'i~i;~t'i~~;""""""""1
Correspondinr:
month
last year
Fiscal Year
1967
to date
j
-$2,432,296
36,597.822
274,614.585
$7,982
9.669,162
29.464 ,594
-$35.956
2,613,059
24,807,319
r' ;~;;e~~
period
-t4,416,2
00,614.1
310,824,5
................
.................
10,813,192
6,813,678
122,720,117
46,310
536,229
•........ '592;6
1.313,196
8.016,430
16,819,866
130,192,012
12,955,[1
116,508,%
543,923
706,448
216,562
274,791
4,882,205
6,082,423
6,226,381
-553,705
4,674,11
4,856,5,
5,793,9:
1 054 9!
135,426,682
1,509,923,854
1,437,365,8:
78,587,307
185,166,874
79,579,368
168,032,5~
Public enterprise funds (net) ............ , ...... .
Other ............................. ·· .. ······· .
Southwestern Power Administration:
Public enterprise funds (net).. ..... ........ ......
.. ............. .
58_,176
Other, ........................................ f..--______5_
38,008,773
Total--Water and Power Del'elopment ...........•
Water Pollution Control:
1,113,542
Office of Saline Water .•......•...•.•..•... " .. , .••
11,372,844
Federal Water Pollution Control Administration •.•.•
Secretarial Offices:
Office of the Solicitor.............................
562,892
Office of the Secretarv.............................
871,147
Office of Water Resources Research .•••.....•••••.• j
193,609
Virgin Islands Corporation (net) .•••..••••..•.•••••••• ~~~. -296,035
.... --.
Total--Interior Department. .••....••.•.••.•••••. ~=;~27-,16~..._S5~
..
~;=l~=.~.~=~~t==~~
I
Justice Department:
'
Legal activities and r:eneral administration ....•.•..•.. j
Federal Bureau of Iln'est igation ...•..... , .... , '" .... !
Immigration and Naturalizat ion Service ...•.••.•.••••. I
Federal Prison Systems:
'
Federal PrisOl; Industries, Inc. (net) .•••..•..•..•.• :
Other .......................•.....••.•..•....... i
7,380,216 ,
20,151,566 :
5,825,402 '
6,114,777
14,270,858
5,677,713
I
69,~,~
74,812,7:
1
839,559
6,444,953
-520,606 \
-7,300,295
-6,214,OJ
5,341, 569 -t------7-0~,.85~~4".LC'5""4.c..5-t--_ _---=65=.:;98o:.t:....
f!!
Total--Justice Department •....•.•••.••..••••••. :
40,641,699 }~_.~
1=='
Labor Department:
Manpower Administration:
Public enterprise funds (net):
.
Advances to employment securit\' administration
i
account, unemployment trust fund ......•.......
Farm labor supply revoil'inl-': fund ..... " ......... '
33,319,541
Manpower den-lopment and training activities ...... '1
2,840,905
Office of Manpower Administrator ...•..............
690,116
Bureau of Apprenticeship and Trallllllg ..........•....
-1,498,983
Bureau of Employment Securit y ••••••••••• , •••••••• j
UnemploYment compensation for Federal employees ,
6,424,169
and ex-serncemen ............................. :
Other .................................••........ ·.~___ ~-,430,504
Total--Manpower Administration ............•.... <====3"'B.:..,3~4.::.:5:..',.~24..::4~
30,884 , 30~ ..~ =7=.=._~40.=6c.'.,=88=7='=,7~9=9=f======37=2~4=93~«
12
24,693,474 I
1,560,486
562,128 i
-467,548 ,
-3,545,042
41,778
269,371,432
29,051,939
7,914,865
2,282,527
275,484,49
11,064,17
10,067,006 :
218,874
79,153,319
-6,067,905
94,647,00
160 15
j
-2,217,37
-54,04
6,~,~
2,598,88
I
-1C. . '
36,634! 1!Q-t====--~37~8.'.'2O~2~9~13~====388~5=7M't~
1.
Labor-Management Relations .•.•.....•...•...•...... ;
596,476
~~ ____ 5~J991
===~8~24~8'>."'59~6~====.!!7,~OO2!.~91
Wage and Labor Standards:
"'==~-== ~=".--r---=
T
Bureau of Labor Standards. . • . . . . . • . . . • • . • • . . • . . . .
281. 914 ,
257.345
3,225 428
3,140,28
Women's Bureau.................................
62,544 '
64,866
903;090
846,9'1:
Wage and Hour Division...........................
1,536,194 I
1,412,751
22,091,661
~,784,Oll
Bureau of Employees' Compensation:
Emplo)'ees' compensation claims and expenses •.•. ,
8,161,443
6,057,928
56,516,451
48,514,'101
Salaries and expenses ....•....•...•.•••...•.•... _'~_ _ _ _
31_2_,_0_4_9-+1_.26~~T. _ _ _ _..:4'.',..:.73:::6:.',":2::64~+--_~_--=-4,,,,4__00~J_'71A
Total--Wage and Labor Standards .••••.•.••..•.
!
I
10 " 354 148
-"-=i _
87 47
77 776 '/01
8,156, 603_+=~=~,~;.2~,8~9~7=F===~,=='f~..."
Bureau of Labor Statistics ...........................
948,201
1 397 17
Bureau of International Labor Affairs ...•.••••.•••••.. '
-67,387
~375;~30
20,347,858
19,006,451
Office of the Solicitor ..........•••.••••.•••.••..•••• '
388,493
411,995
1,334,790 ,
I,014,~
Office of the Secretarv:
5,494,775 i
5,302,Federal contract compliance and civil rights programs'
95,239
94,389
950,954
401,rr.
Other .....•.....•.....•.•••.....••...••••••••••• -====86==,8,~6=57 =1====goo~~I,g====jClC3~7J.~~1=F====3=,50==1=~
'
,
. 1
-
Total- -Labor Department ..•...••••••••••••••• ====5=1=,5=2=9=,0=7=5=<=c==...;4;:.7~,5;:.7:.;5~,;.59:.;3====506;;;~,4;;24~,;;64;;7==i=====503==,3",,81:.!..-=tn!
Post Office Department:
PubliC enterprise fund (net)--Postal fund
888,195,'131
141,123,610
76,953,0~ 41,182,581,033
State Department:
Admlllistration of foreign affairs:
Salaries and expenses..................... ........
Acquisition, operation and maintenance of bUildings
abroad..........................................
I ntragol'ernmental funds (net)......................
Other ..........•.. " .....••••.•••....•••••••••..
=
994,090
15,708,507
902,404
168,703
432,247
1,305,132
757,830
602,760
I
,
17
184,781,729
177,088,~1
22,066,275
-748,519
3,465,453
18,021,OOZ
_165,Mi
3,63),988
r---~-----
Tot al- - Ad III in 1st rat ion of fore ign affairs ••.••.•••• ,-======2,:..'4=9=7~,=44=6=",=====1=8,=3=7=4~,=23=0=~==~20,=9~,:=-:5;:.64~,9;;3;;9~~====1=98=,::565=582=
11
-
:3ee footnc1tes on page
ABLE 1II--ADMtNISTRATIVE BUDGET RECEIPTS AND EXPENDITURES--JUNE 30, 1967--Continued
-
Classification
---~~
Corresponding
month
last year
This month
EXPENDITURES- -Continued
- .. --
ate Department-- Continued
International organtzat iOns and conferences:
Contributions to Internat iOnal orgall1zatiOns ..•.••••
:\1.440.500
755,6ClCl
Other.•.•••......•....•.•........•.•.....••....•
2,225,889
International com missions ...•.......•....•.....••••
4,780,424
Educational exchange •.•.••• , ••....•.. '" ......•.•.
Other •..••••••••••...••••••.••....•.•..•...•...•• f - - - - - 971,667
-.-+-
all5portation Department: 5
Coast Guard:
Intragovernmental funds (net) .••••.•••••••••.••••.
Other .••••.•..•.•..•.•••••••....••••••••..•.•••
Federal A\'iation Administration:
public enterprise funds (net) •••••.••••••••••.•••••
GrantS-in-aid for airports ...• " .••••••••••....•••
Other ......... , .......•.... " ....•••• " ...•.•••
'Federal Highway Administration:
Bureau of Public Roads:
Advances to the highway trust fund (net) •••....•.•
Other .••••••.••.•....••.•....•.•.....•.......
National Highwav Safety Bureau .•...••••••........
Federal Railroad Administration:
Alaska Railroad (net)..•..•••..•••..••.••••.•.....
Other .•...••.•••.....•.•••••••....•••••••...•••
Saint Lawrence Seaway Development Corporation (net).
Other .•.. , •..•..••••..•.•.•••.•••••.•..•••••••••.
Iterest on the public debt (accrual basis):
PUbliC issues .••••.•••••••••..•.•••••••••.••••••
Special issues ••••••••••••••••••.••••••••••.••••
Total--Interest on the publ ic debt ••••••••..•••••
Total·-Treasury Department •••••••••••••••••••
mic Energy Commission .•••••••.•••••••••• , .•••••
eral Services Administration:
eal property activities:
Construction, public buildings projects ••••.•••••.•
Repair and Improvement of public build ings ••••.•••
~t~:;overnmental funds (net) •••••••••••••••••••••
,rsonai p~~p~~ty 'a'ci;~;t;~;:'" •••••.•••.•••••••••••
intragovernmental fun d s (net) •••••••.•••••••••.•••
Other
~Cords ';C'ti;it;~ ••••..••.•••••••••••••••••••••••.•
ans
.
S ............................... ..
o portatlOn and communications activities ••• " ••.
pterty management and disposal service:
1n ragovernmental f d ( t)
Slrat gi
un s ne •••••••••••••••••••••
un e c and critical materials •••••••••••••••••.•
I lZation and disposal service •••••.•••••••••••••
footnotes on page 11.
,101. 347.541
6,537,223
29,692,779
54,106,265\
9,547,513
;,94,376.088
6,052,815
35,284,122
410,796,263 ,
406, 607, 209
60,821,337
11,507,251
- - - - = = - ; - - - = - - .~'=""----'==-<-'--'---=-======
I
-3 . 202,547
44,124,212
-495,943
30,016,375
2,744,240
493,271,446
-6,818,849
411,848,676
5,743
2,267,741
60,307,324
-4,498
2,806, WI
10,836
64,147,171
819,802,043
5,979
53,989,325
749,923,437
.................
67,105,260
................
7,073,161
. ................
I
................
69,830,829
2,838,715
.................
-105,630 I
1,671,999
108,363 :
1,585,348
-8,346
2,088,741
242,029
42,782
2,339,213
7,253,752
120,183
5,706,341
10,484,949
2,351,148
1,216,429
2,793,947
1,468,064.775
1,276,338,243
.... ' ... 5;375;268
1,945,632
Total--Transportation Department ....••••••••..
easury Department:
Office of the Secretarv:
Federal Farm Mortgage Corp. llquidation fund (net).
Intragovernmental funds (net) '" ••••.•.•.•.•••....
Other •..••.••••••••••....••••••.•..•.•••••••.••
Bureau of Accounts:
interest on uniIwested funds •••••••••••••••••••.•.
Claims, judgments and relief acts ••••••••••••••••
Government losses in shipment fund (net) •••••••.••
Salaries and expenses .•.••••••••••••••••••••••..
Other .........••.•....•....•••••..•••••••••••••
3ureau of Customs:
intragovernmental funds (net) •••••••.....••••.•••.
Other •.•.•••••.••••.•.•...•....... , ....••..•...
3ureau of Engra\'ing and Printing:
Intragovernmental funds (net) . " ••••• , .•...••••.••
Other •••••...•••••••••••.•.•..••••.•••••••••• ,.
3ureau of the Mint .••••••••.••••.••••••••.••••••••
lure au of Narcotics •.••••.•••••••..•••••••••••.•.•
lureau of the Public Debt ••••..••••••••••••••••••••
nternal Revenue Service:
interest on refunds of taxes •••.•.••••••.••••••••••
Payments to Puerto Rico for taxes colle cted •••••••.
Other •................•.•....••..••.•.••.••••••
)ffice of the Treasurer:
Check forgery insurance fund (net~ ••••••••••.•.•••
Other.
I.S. Secr'ei'S~;\:i'c~':::::::::::::::::::::::::::::::
Corresponding
period
fiscal year 1966
1967
to date
:'16,244
476,325
4,417,132
6,690,198
1,076,786
==t=
31,050,918 '
12,671,616 ,
Total--State Department •.•••.•••• " •••...... "
Fiscal Year
9
1
115,083,457 I
1,462
154
468,044
i
-32,491
-40
6,084,811
108,431
2,014,136
4,563
1,117,758
................
12,753,274
48,562,158
57.417
33,624,764
................
13,988,293
38,895,429
135,237
31,599,334
5
328,297
5,444.504
213,393
5,649,589
86,800
86,757,565
900
81,839.006
-1,802.534
190,315
2,372.041
398,054
2,888.358
-1.854,742
363,971
1. 848. 734
393,732
2,858,323
1,046,356
1,990,507
33,439.180
6,207,067
51,924,568
-2,158,699
2,445,256
25,634,320
5,729,144
50,173,829
9,953.474
5,352,692
43,334,742
10,474,210
4,652,150
40,8U3,746
120,148,287
59,306,922
662,059,701
103,696,395
51,764,433
611,166,674
24,078
6,082,349
l:;!.Jilie. . OOQ
2,968
6,096,323
604.112
1609)4
6,319
574,797
____1·.;!2!:L.16.<L
034 .107 555
193,781,535
- ..
~~
--_._"---
890,340,500
177,921. 735
11,368,250.669
2,024,105,384
10,358,670,512
1,655,192,154
1,127,889.090
1. 068.262.241
13,392,356,054
12,013,862.666
1, 221,()81. 661
1,139,192,252
14,538, 9~I,B51
13 ,~!, 653, 149
_147,102,716 ,
224,357,037
2,264,016,704
2,402,925,455
8.715,178
5.278.108
23,789,563
7,638,186
14,200,149
7,584,123
18,121,702
1,904,601
151,842.,602
78,015,898
2,051,883
298,592.,381
166,525,849
90,861,839
3,030,477
276,587,716
-1,659,249
6.,153 . 313
1,236,917
1,127,746
-46,377,099
2,001,501
1,279,822
-1,237,776
29,756,205
76,470,543
18,473,537
1,231,802
-39,704,706
58,651,198
16,512,806
2,831,254
308,917
1,518,498
114,559
150,343
901,377
718.401
184,702
18,576,109
1,650,059
-220,716
15,845,451
9,723,561
~f-:- -
-----
-
.-- - - - - - - - ----
1,811
-237
6,815,320
-2,701
~~ ~
------
................
116
381,610
121,800 .
22,013.549 I
31,145
1, 234,142
t
108,865,723
--_._-.
50,543,201
--1---
-----
t ---
10 TABLE III __ ADMINISTRATIVE BUDGET RECEIPTS AND EXPENDITURES--JUNE 30, 1967--ContIIlUl
ClaSS1ficat1eln
This month
r: )Cpr: "DITCHES - -C,'nt lnued
(;t'lh'r.li
t
It'lll' r
Corresponding
month
I:c;t year
Fiscal Year
1967
to date
:'l'r\·l~'l'''' AdIl1I1l1:-'tLltlon--C t \l1tlI1U€>d
.ll .let i \"\1 It' ..... :
Publ,,' ,'nto-rprl'" [und, (n('tl. ............•.........
\::tr.l~,,\,·rnJl)('ntal fund, (net). . . . . . . . . . . . . . . . . . . . . .
Orh,'!' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,262,438
157,872
~:4, 111
1,349,764
152,875
-.$191,013
323,246
1,977,981
-1182,S(
-1,319,3E
1,858,81
T,'LIl--(;c'I1l'Lll Sen'lces Administration ..•....•.•
55,641,253
745,737
678,955,940
601,001,41
".lt1<",.ll Apron.,uties .md Space Administration ......... .
426,839,361
571,001,387
5,425,596,586
5,932,988,TI
and bl'IH:"fit prlJ~r.lm~ .•.••••.
408,818,973
285,607,563
4,604,615,066
4,272,741,01
Public "llterpnSl' [unds (net):
D,recr luan rcnllnne: fund ......................•.
Loan ~'l..l.lr.lnt\· re\'ol\,ing fund .....•.....•.•.•.•...•
Other ...........................•........•.•.•..
Other ............................•........•.......
-45,293,583
-24,212,127
-11,751,773
123~ 29J~ 879
-57,907,057
19,271,848
-5,560,527
115,751,420
-34,942,515
125,768,334
-60,997,725
1,560,063,403
..s58, 952,62
15,722 ,54
-46,666,00
_1-'!86L 820,18
450,861,368
357,163,247
6,194,506,564
5,069,665,10
22,684
150,776
67,773
6,177
265,209
126,135
185,379
2,005,843
1,431,915
5,006,155
758,885
5,695,010
871,727
62,321,923
11,536,131
74,622,35
10,856,14
73,000,000
67,000,00
\',·ter.,n, ,\dm,n,stLltion:
Cun1pen:--at
ldll.
pl'n~l{)Jl:-:'.
T()tJ.l--Vet('Lln~
Administration ...........•.....
~,800
---
Or he I' ,ndeppndent .1,::enc ips:
Adminhtrath'e Conference 01 the united States .....•..
Ala,ka Development Committees .•..•..•............
AJl1l'ric.1I1 B.lttle Munuments Commission .•....•......
Central Illtl'lli"ence Agency--construction .....•..•...
Cinl Al'run<lutics BO;ll'd:
P.l\Onlents to air carriers ..•......•..........•....
S.ll.Hies .lnd expenses ........•.....•....... '" ...
C1\'i! Sen'ice Cummission:
P.'\JlH'nt to cinl service retirement and di,'ability
fund ....................•..•............ , .....
r;o\'l.·rnn1l'nt pavmpnt for annuitants. employees
hl'.lIth benefits ....•............•...............
o til{' r ...............................•...........
4,914,000
2,955,225
..... "'2;ioo;304
36,644,000 ,
20,231,127 :
29,220,00
26,629,93'
Tot.lI--Ci\'l1 Sen'ice Cummis,.,ion ............... .
7,869,225
2,100,304
129,875,127 '
122,849,93
('"mnll,.,,.,i,,n of fine Arb . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumnll,,;ion on Civil lhghts .................•.......
Equal Fmplo\'l11cnt Opportunity COl11l11hsion ......•..•
Exp,,,·t -Import RInk uf Wa,.,hinl'.1on (nct) ........•.....
F.lrm Credtt Adl11inistrdttun (net):
R"\·"l\'\Ile: fund fur .ldl11lnistrdt ivC' expenses ..•......
Short-term ('redtt inn'stmpnt fund ........•........
flanks fur ('oopeLlti\'es inH'stl11Cnt fund ..........•..
11,741
14,277
178,406
457,080
-368,653,055
117,303
2,441,578
4,609,337
-3:9 , 6~~, 3~.1
-88,566 '
~~~"gM
83,536,450
.. . j
. ................ .
137,81
1,994,46
359,73
103,0J:
1,520,~
2,590,29:
-385,023,38
-568,847
-444 ,427
-3,663,400
-1,553,000
531,13!
2,290,00
-10,051,00
Total--Farm Credtt Admini,stration .............•
-4,232,247
-1,997,427
-7,229,861
Feder3.1 Coal 1\l\ne S,lfetv Bo.lrd of Hc\'iew ...•...•....
FedeLl! CommunICations Commi,.,sioll ...............•
Feder.l! ll"me L".lll Bank Hu.lrd (nct):
Federal ~a\'\nb:S .lnd Lllan Insur.lnce Corp. fund .... .
Otiter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F.'deLl! ;\1.1ritiml' Cunll1tission ......•.......•....•..
Feder.l! l\1edi.ltion .md Concili.ltion Sen'ice ...•..•••..
FedeLtl P()wer Comm issiun ..........•...... , ...... .
FedeLtl H.ldi.lt ion Counctl .....................•....
FedeLl! TLlde Commission ... '" .. , ........ , .•....•
Foreie:n CLlims :,ettlemt'nt ComnllSStOn .•..•.....••..
Historical and ~Iemori,ll Commis,.;ions .............. .
Indi.lIl Claims (',)mmission •...•...•.•......•••.••••
Il1te rgu\'e rnnlE'J1td 1 COIl1nl i~::; ions:
Advison' Commission :111 Inter"o\'ernmental Relations
App.llachi,tn Reg-ional Commis;ion .••....••.••••.••
Commis";1L1n on status of Puerto Hico .....••.•....•
Delaw.lre Hi\'er Basin COlllmbsion ..............•.
Inter';!.lte Cc'mmis';lOn el11 the Potomac River Basin •.
Interst.1te Commerce Commission .........•.......•.
\'.lIional Capital Housing Authoritv .•. " ............••
"ation11 Clpir.ll Planning Commission ........••...••
\'atiunal Capit.l! Transportation Ac;encv ........•.....
\'.ltion.tl Foundation on Arts .md Humanities
\'.lIie1 n.ll Llbor Helations Bo.lrd ....••••.. :::::::::::
\' at tOnal :-'Ied iat ion Bo.lrd ............•...•••....•...
i 011.1 I Science Found.ttion
Prc'sldent 's Adns',lr\ Cummltt;e' 'o'n' L'ab'o'r'-'l\'I;~;;"~~~~t'
Polic\' ......... : ........•...........•...• ~ ..•...
R.1tlro.1d Retirement Board-~1ilitan' sen'ice credlts ••.
Renec::ollation Bo::trd .......•......•......... " ..... .
SeCUrities and Exchanc:e CommiSSIon
6,206
1,435,519
4,715
1,355,757
75,816 I
17,965,489 I
74,05!
17,217,32:
-72,791,379
85,605
279,952
541,720
1,142,559
17,120
1,102,643
153,430
5,662
25,915
-126,509,291
301,799
258,117
517,594
1,078,693
6,247
1,530,236
181,308
18,066
24,599
-157,307,768 I
-156,709 '
3,454,202
7,078,811
14,080,581
106,930
14,108,765
1,654,625
120,398
336,011
-255,423,301
-34,57:
3,091,13!
6,550,18!
13,402,06!
45,403
112,348
235
4,631
36,158
-56,265
10,561
4,648
19,180,626
1,408
91,043
319,829
1,193,938
3,387,634
175,675
37,466,748
2,152,741
-8,180
314,016
252,001
279,581
3,155,680
172,478
45,236,778
''.It
~elect
l\'e
Ser\"!C'P
S\·...;tenl
~ ~
.••••••••.••••
Small Bus1I1es,; Adm'inistr~ti~;l':' ......... '"
........ .
!.'ulJlic emcrprise funds (net) .....•.....•........•.
:oaL1rtes .lnd expense~ , . . . . . . . . . . . . . . . . . . . . . . . . . . .
Olher .............................•.....•.....•.
T(I:al--Small Busines:' Admil1l~tration ..••....•..
3,426
196,877
1,324,804
5,953,370
272,055
1,339,930
4,430,734
-165,869,810
-334, 751,649
1,797,050
399,814
.. ___ ~~~ __ ~_. ______ .139,_208 ~
_-=~6~ 0~~]}3 ...
_ .
cc
83,87:
13,847,65:
1,852,721
120,011<
312,69(
430,451
612,421
384,210
670,202
131,877
156,190
5,000
44,475,642
42,679
1,138,255
2,976,380
9,003,355
30,196,888
1,981,263
414,978,938
368,248,421
1,218
17,201,000
2,518,634
16,681,030
58,035,805
16,558,00:
2,450,39!
15,820,=
54,229,
22'1,~
139,59t
5,1XX
27,283,00(
41,471
!,284,781
1,987,38'1
1,227 ,98:
28,371,~
1,906,62!
44,~
-~
-244,006,396--~i46~~,~
4,913,818 :
6,3 '871
83
120~_~2 t--~
~~3~12,~2_5_l_~=~_____~~~!, 9~2.'~6~J
-~
TABLE 1II--ADMINfSTRATfVE BUDGET RECEIPTS AND EXPENDITURES--JUNE 30, 1967--Continued 11
Classihcation
ther independent agencies --Continued
Smithsonian Ins! itution .•...•....•....••..•.•....•..
Subversive Activities Control Board ••••••••••.•.••••
Tariff Commiss ion ..•.........................•.•.
Tax Court of the United States .•••••...•...........•
Temporary Study Commissions •.••....••.••.....••.
Tenn~ssee Valley Authority (net) •••••••••.•..•.••.••
U.S. Arms Control and Disarmament Agenev ••.......
United States Information Agen~y:
Informational media guarantee fund (net) •••..•.••••
salaries and eKpenses ..•••••..•.•.••••••.•..•••.•
Construction of radio facilities •...•.•••..•..••.••
Other ••••••.••.••.....••••••.....••••.••..••.••
Total-- U.S. Information
Agen~y
Cor respondinl(
month
last year
This month
EXPENDITURES--Continued
$2,642,108
22,378
269,141
177,080
273,016
18,432,829
____ .. ~57,{j35
175,481
28,325,919
2,129,392
677,879
•..•.......•••.. ____
'Water Resources Council ..••.........•............. _.
Total--Other independent agencies .......•.•••.. 1-_ _ _
1--
i
I
~308,o73 1_
70,25~
-14,829,98~
!!'
listrict of Columbia:
Federal payment to District of Columbia...... .••. •••
Advances for general expenses (repayable) .•.•.••••••
Loans to District of Columbia for capital outlay.......
Advances to District of Columbia (stadium fund) ••••••
8,000,000
21,00J,000
4,000,000
340,800
nterfund transactions (-) (See detail on page 2) .. . • • • • • .
-35 201 715 }
\dm_N_ine_i:_ta_r:_~_iv_~_i_:_r_da_~_~V_te_s_:_:_:_~_~_;_~_~_)_:_:_d_~_:u_f_~C_ei_:_(_'-_')_'
_:_:_:_:_:_:_:_:_:...L_=_..
~~::::~~
$3,058,146 ,
28,775
365,274
174,507
555,672
16,546,317
.. _731,742 I
330,446
3,399,647
2,171,885
7,800,501
102,033,739
9,513,017
-272,874
14,184,323
508,401
534,710
115,128
156,218,185
16,503,307
10,804,008
14,954,560:
183,640,629
--- ..
.
.~30, 245,810
-"l1~;~;;-r----
1,969,900
Cor responding
period
fiscal year 1966
!
I
$29,870,642
363,112
3,246,115
2,125,892
5,417,30t
53,905,319
JL 803.... 200
-70,629
154,220,047
7,221,243
5,226,922
166,597,584
I
44,468
-72~.:.~8'39~tl ~ __~~~6,675 ~~_ 275,~38,157
I
.....•........••• I
61,394,000 I
47, 372,OJO
21,000,000
2,800,000
415,800
•.
Fiscal Year
1967
to date
I
-48 669 767
.: :::::::: : : ...
..•..•... .•. ......
21,450,000
756,600
I
-5,000,000
28,325,000
756,600
1
l~~:::r;~t~:::::~:
674 877 946
634 513 049
FOOTNOTES
Source:
-
Prepared by the Untted States Treasury Departn1ent, Bureau of Accounts, UIl the ba&lSofreports rcccivcdfronldisbursing. collecting. and admInIstratIve agenCIes of the Government.
rRevised due to reclassihcation. See footnotes 5 and 9.
This statement is preliminary and is based on reports £I'om dis_
mrsing, collecting and administrative agencies of the Governrnent.
~inal reports of Government disbursing, collecting, and adm.inis-:rative agencies, including certain oversea 5 transactions for the year
mded June 30, 1967, which it has not been possible to include in this
;3tatement, will be incorporated in the final statem.ent for fiscal year
1967 to be published at a later date.
2Includes debt not subject to limitation, which on June 30, 1967,
Imounted to $262,012,656. The statutory debt limitation established
II $2B5 billion by act approved June 30, 1959, has been temporarily
.ncre.sed during the periods covered by th,s table. The dates when
lach increase became effective are as follows: $309 blllion on July 1,
1963; $315 billion on December 1,1963; $324 billion on June 29,
1964; $328 billion on July 1, 19&5; $330 billion on July 1, 1966; and
1336 billion on March 2, 1967 through June 30, 1967.
)From 1968 BUdget Document released January 24,1967.
4Transactions cover the period July 1, 1966. through June 30,
1907 and are partially estimated.
l Transportation Department was established pursuant to P.L.
89·670 approved October 15, 1966 with Executive Order 11340
prescribing April 1, 1967 as the effective date. The expenditures for
Transportation Department include figures whic h were previou 51 y
shown under Commerce, Interior, and Treasury Departments. Fed_
A.viation Agency and other independent agencies.
,
DlstrlbutlOn between income taxes and employment taxes made
~ accordance with provisions of the Social Security Act as amended.
tor transfer to the Federal Old-Age and Survivors Insurance Trust
rund, the Federal Disability Insurance Trust Fund and the Federal
flospital Insurance Trust Fund.
"'Individual income taxes withheld" have been decreased $234,l43,04B to correct estimates for quarter ended September 30, 1966
!nd"Individual income taxes other" have beendecreascd$42,652,503
10 correct estimates for cal .. ndar year 1965 and prior. The total of
Ihe above adjustments ($277,095,551) is shown as an increase of
~Ployment laxes under "Federal Insurance Contributions Act and
Self.Employment Contributions Act" representing increases in appropriations of $233,074,844 for Federal Old-Age and Survivors
~surance Trust Fund; $22,235,675 for Federal Disability Insurance
rust Fund and $21 785 031 ~or Federal Hospital Insurance Trust
Fund,
'
,
1
!Ui
8 The distribution of amounts by type of tax applicable to budget
accounts for the month is partially estimated.
9 Previously under "Other independent agencies '!.
10 Represents residual of gross receipts and expenditures after
reduction for certain costs which are included in alTlounts shown
for special activities.
11 Includes
certain costs transferred from price support operations for which exppnditures may have been made in prior
years. in addition to adjustments for the prior months' transactions.
12 Includes "Other _ Department of the Navy" .
.lJ Previoutily
under IJRenewal and hOUSing aSSIstance _ Public
enterprise funds (net) _ Other".
14 Includes
!lRehabihtation loan fundI! previously sho\V11 sepa~
rately.
15 Includes
I'Liquidating programs 'l previously shown sepa_
rately.
16 Previously included under "Metropolitan development _ Other".
17 Gives effect to reimbursements collected for administrative
support furnished to other agencies amounting to approxim.ately
$lZ4,68Z,tl7Z.
18 Formerly included in "Cnappropriatedl! and is the result of
rec la 5 sification.
19 The proceed6 from the sale of participation certificates amount_
ing to $2,894,150,025 were credited to this fund and paid over to
Special Assistance Functions fund, Management and Liquidatlng
Functions fund, College housing loans, and Public facilities loans.
HUD' Office of Education, HEW; Farmers Home Administration.
Agri~ulture Department; Veterans Administration and Small Business Administration.
20 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 a<..:counts.
2:" Amounts shown for indiVidual classifications are net of refunds
of taxes. For gross amount of administrative budget receipts including Internal Revenue and also trust receipts see Table Ill, page 2 and
Table IV, page 12.
22 "Funds appropriated to the
President" has been changed to
"Military assistance advances· l • "Economic assistance 'l and "Other"
er
have been transferred to l'All oth '1,
23 Breakdown not available.
TABLE IV-- TRUST RECEIPTS AND EXPENDI 'fUR'E'S
12
CI.l:--:--lfic.ltlon
P,l" 11:1..'1)1:-- 1f{l!1! ~:t'llt'r~d
fund ........•..•.•.•....••..
Itt r . . . . . . . . • . . . . . . . . . . • . . . • . . . . . • . • . . • . • • . • • • . •
rhl..' ,JUdlCL1!'\'
,1UdlC!.d "ur'''l\ (Ir:--. .1.11nuit\' fund('\1111 rlllul1lI11:-- • • • • • • • • • • • • • • • • • • , '"
I
•••••••••••••• I
IntCl'l"-l 1)11 \J)\ t':-,t l)lcnts ••• , • • . • • • • • • ,
Fund, ,lppr<Jpri.ltt'ci ttl thl' Prp:--idl'nt'
\ll11t.ln' ,l~sl,t.ln('l' ,ldv,lll(,l'~ .... ,.,."
1,' l'll!l(llll\{'
•••••••••.•• I
I
.... , .. , .....
I
.1 "'~ \ ..... t .111('(> • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • I
."100.684
188,.318
,'208,724
2.621, 180
2,461,81
74,265
4,444
73.632
1.519
883,796
128,628
827.21
10'7,S(
214,101,156
21,784
219,277
3.372.373
1,101,409
133,640,478
391,445
31,519
7,138,861
32,178,019
1,076,878,401
2,640,926
596,720
59,116,666
15,585,145
707,945,3:
2,461,8!
539,1:
6O,798,1(
55,908,6:
7,768
8,005,904
21,849,1~
2,327,577
3,214,401
32,240,458
3, 194,~
31,032,93
20,994,312,207
-262,718,875
1,835,408,825
725,327 ,101
16,685,595,03
-212,0'79,3'1
1
2,217,000,000
-34,880,792
206,281,147
3,042,193
2,317 ,477 ,479
2,391, 442, 549
,.c=====--~-
-t
~193.&
1,392,431,~
588,159,10
78,000,000
873,942
I
------ ----r-
6,689,73
).- . .
I
Total--Fcd('ral ()ld-,I~e and sun'ivurs lIlsurance
trust fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corresponding
period
fis('.ll vear 1966
1967
ttl d,11<'
."}04,303
303,199
Other., ....................•..•...... ·· ... ···•···· ;
[)epartml'nt ............. , . . . . . . . . . . . . . . . . ,
(\)111nll'rCt' I)pp.lrt rlll"'nt .•••.•.••..•• , .•••••.•• , ••••••• I
Dl'il'll:--l' Ikp,lrt nll'nt:
169,631
\Iillt.!n' . , , ............ , .............•....•..•. '" ,
Cinl'
i
1',l\1l1Cllt, fr()m C:l'nl'r,ll fund . . . . . . . . . . . . . . . . . . . . . . ' ................ .
Otilc'r ......... : ... , , . , .... , .........•... , •.. , ... ~
5,432,054,
11t'.1ltl) , Fdul'.ltlUJI, ,md \\'elLlI'(' Department:
:------,-Fedl'r.ll ()ld-,le:l' .mel surdv:)]'~ insurance trust fund:
2,040,074,844
Tran~ft'r:--. Irorn L';()JlcLd tund receipts ••...•.•...••.
I,E'.'-';-" rt'fuIHl...., of taxf:'S . . . . . . . . . . . . . . . . . . . . . . . . . . . I • • • • • • • • • • • • • • • • •
Op!" 'SIts b\' :it.ltes. .. . .• . . . . . . . . . . . . . . . . . . . . . . . . .
175,801
Illterest .lnd profits on inH'stments . . . . . . . . . . . . . . . .
277.226,439
Inl,·'" ' I pa\nH'llts Ir, Hailroad Hetirement Board ••............ , ... ' ..
FedeLll paYnlpnts for nlllitary sen'ice credits ...................... .
Other , ....... , .........•.........•....•.. , ...• ,
394
A~ril'ultlln'
Fl"l'al Ye.lr
Corrpspondinl'
month
1:1-<.;t \,par
This month
Ht:CUPTS
l)1
JUNE 30, l867
23,371,203,202
_-----
18,460,795,57
Fl'deral dis.lbility insurance trust fund:
190,235,675
216,000,000 I
2,085,603,195
Tr.lnsfl'rs from ,.:ener.ll fund receipts ....... " .. , ..
1,457,892,98
Less l'l,tullds of taxes ............. '" ... " ..... '
-19,437,375
-15,595,62
Dl'posit s bv o;tatcs ..... , ...................•.....
26,444,844
15,069,779
183,231,028
114,354,5'1
Intpr",,1 and protit.s on inH'stments .......•........
22,163,186
19,394,056
66,340,400
59,547,()9;
Interl'st p,lyml'nts lJy Railroad Hetlrellll'flt Board ••..
Fed"ral pa\,ments for militar\' sen'ice creciits .... "
.................
.................
16,000,000
Oth" r ... " , .....•....... , .............•.. , ..... _ _ _ _ _ _.:.1.::.:13________-=1.:."5=-4::.:3_~--_....:2::.:8.:.6:...,6_7-=1:.....,f--_ _ _ _---=2;.::6,:.:::.4~
Total--Federal di:--alnlit\' insurance trust fund
227,468,755
261,840,445
2,332,023,920
1,616,225,481
600,580,987
253,334,251
3,088,730,212
915,694,921
~=-===--=~~~====~~~".~-- '~~~~====F============
!
Ft'deral hospital insuranc(' trust fund:
Transfer from ~en('ral fund receiph ..•.... '" ... "
259,785,031
220,000,000
2,482,722,429
862,000,001
Ll'ss refunds of t ,lxes ........ , ........•........
Ikposib b\ o;t,ltt'S ........................•....••
26,444,868
21,528,158
205,961, 977
46,796,91:
Intl'r"st ,md profits on inH'stl1lcnts ............... .
18,217,707
6,889,383
45,882,460
6,898,00'
P,I\'lllcnt froill Hailroael Hetirclllent Board ..... , ... .
16,200,000
Interest p,,,'nll'nts I)\' ILltlroad HNireillent Buard ... .
105,000
Federal p,l\'nll'nts [')1' nHlitar\, sen'ice creelits ..... .
11,000,000
Fpdl'r.ll pClnm'nts fur railro.ld emplon'e,; ....... , ..
Federal pCl\,llll'nh luI' tr.lIl:--itlun,tl cllw'ral'P ........ .
301,050,000
326,850,000
Olh','r ..... , ............ , .. , . . . . . . . . . . . . . . . . . . . . '
90
8,344
TuUI--Ft'ckr.tl huspit.ll lllSuranCc' trust fund .....
FE'dl'r.ll :--UpplCllll'nl.ln' !ll{'dical insurance trust
Premiullls deciuctr'd fr"1ll benefIt IMYlllents .,
Prl'mlullls cieposited b\' States ............ ,
Prt'miullls collected b\' Social ::;ecunty
"ciminbtr,ltion . . . . . . . . . . . . . . . . . . . . . . . . . ,
fund:
...... .
•......
45,148,434
3,83ti,793
527,901,670
32,135,900
....•..
6,850,210
84,775,705
rUI.tl prf>rniu111<"'; •..•...•..•.•••••.••.•.••...•••
55,835,437
644,813,275
Feder.1! contrilJlltlOns ..................•.. , ..... .
Hep,ILlble ,lcJ,'arl('('s froD! "eneral fund ......•......
Illt(>rf'~t J.lld pl'ofit0 on lIl\'estnlents .....••..•......
Otlll'r .......... , .. , .....•. , •.•..........• " .•..
73,000,000
623,000,000
Tot,ll- -I- eder.ll supplementary medical
In::.;ur,ll1('t' tru0t
fund •..........••.•...•......•
8,627 ,047
126
I
137,462,612
===cccc.:....c=
Otller ......... ,., ....•...... , ....•........•... , ..
I:llerll''Ir DepartI11t'Ilt:
lndl,lll tnb.ll rUllcJ~ ............. , ..•...•...•........
r.l\n;ents from ~ener,ll fund ....... " .. , .......•... ,
Otht'r
L.ll>UI Dep~~i~;~!;t' ... , .............. , . , ..............
I
15,013
I
I
~-
5,732,151
16,730,904
1,818,163
l'lll'n,plcl\'Il1en' (ru,t fund:
Empl ',\'lllent seeunt\" ,)cilllllllstr.i1lOn .lcc'nunt:
Tr.lll,;!ers ,Fecier.ll unempln\'Il1ent tax,os'
.-\ppropriated ....... , ... ; ........... ' ... '.... .
2,029,000
l·!l.lpproprl.lted . . . . . . . . . . . . . . . . . . . . ,.........
12,677
i.e" refunds of 'axe, . . . . . . . . . . . . . . . . . . . . . . .
-679,241
,,(h.In,'t" irom c:cneral (re':ol':in,,1 fund, . . . . . . . . . . . . . . . . . . . . . . . . . .
Le" rt'[urn "f ,Id':anee:-- to the -g-ener<,! fund •... 1 ................ .
....................
....................
....................
................... .
....................
....................
).-,-
15,041,275
t ,----- 10,879
;;~C C
:ii+
i
2
2,735,~~~
~~",5-=1~~
2,165,000
65,070
-907,650
1,
"'-.:.2:~,.~:~ 5~:4::='1:=:d='='='="="='="='="=~=:=':=~~
l
ji:m:~~~ i
191958,2O~,
603,769,343
-1,025,144
-5,971,809
278,742,087
-278,742,087
~tIM::
..
12,67~
564,909,346
2,104,~
-6,000,3«1
210,245,448
-210,245,44a
TABLE IY-JrAI..J':3,..RECEI'PTS AND EXPENDITURES--JUNE 30. 1967--Continued
13
----------------
Classification
RECEIPTS--Continued
Corresponding
month
last year
This month
----------+-----Lbor Department--Continued
unemployment trust fund - -Cont inued
state accounts--deposlts by States ..........••.•...
Railroad unemployment insurance account:
Deposits by Railroad Retirement Board ..••••.....
Advances from railroad retirement acco\Ult •••.•..
Railroad unemployment insurance adm. fund:
DepositS by Railroaj Retirement Board .•. " ••••••
Interest and profits on investments .•... '" ..•... '"
Fiscal Year
Cor respond ing
period
fiscal year 1966
1967
to date
$27,899,592
$26,612,450
$2,916,165,481
$3,067,203,557
19,452,323
29,617,145
....................
136,565,334
29,250,000
139, 130,646
40,895,000
1,296,797
140,241,146
1,974,453
112,210,695
9,099,379
383,720,692
9,280,555
308,682,996
----~
Total--Unemployment trust fund .. _ .•.•...••••.•.
190,252,296
171,737,163
4,071,573,276
4,126,206,649
Other .•.•...••.• · ...... '" ••.•....•..........•••.•
~te Department:
Foreign Service retirement and disability fund:
Deductions from salanes and other receipts .....•.•
Employing agency contributions ....•.••.•..........
Receipts from Civil Service retirement and
disabil ity fund .......••.•...•......•.•......•...
Interest on investments ...••..........••••.....•..
Other .. , .......................•..•.•.....•.......
'ansportation Depart ment:'
Highway trust fund:
Transfers from general fund receipts ......•.......
Less r€funds of taxes ..........•......•.........
Advances from general fund .•...•.................
Less return of advances to the general fund ...... .
Interest on investments ..•..•.....................
1,471
49,981
37,509
120,486
471,666
451,091
473,425
453,170
4,246,738
4,143,164
4,142,482
4,013,039
210,989
1,473,117
42,673
55,773
1,45!o!,109
5,030
1,066,088
1,665,326
353,648
933,716
1,630,014
281,145
361,100,000
4,652,369,183
-211,507,037
4,036,574,681
-119,771,762
70,000,000
-70,000,000
7,983,464
-----~=+====~========~===
I
~---348,1oo,000
-35,000,000
f=
Total-·Veterans Administration
6,319,541
-
Total--Civil Service Commission ............. .
lilroad Retirement Board:
Railroad retirement accounts:
Transfers (Railroad Act taxes):
tppropriated ............................... .
nappropr iated ................•..............
F' Less refunds of taxes" ~ •••...............•....
Ln€S and penalties ...............•.............
rn terest and profit on investments ............... .
Interest on advances to railroad unemployment
lIlsurance acct. and R. R. supplemental acct . . . . .
Repayment of advances to railroad unemplovmenc
plllsurance acct. and R.n. supplemental acct. .....
alme,nt from Federal old-age and survivors,
Fdlsablhtyand hospital insurance trust fun:ls .... , .
o~~::al payments for military service credits ....•
.. ..................................... .
~
--
c-_ _ _
----::--
-
807,688
3,348,327
85,000
2,664
--
--
-
,~
-
893,635
5,827
31,853,164
38,863,218
346,126
189,926,336 ,
36,769,019
1,254,514
187,717,322
204,271
1----- - - - - -
255,745,480 ---__
--
7,510,817
32,603,539
530,600
140,159
472,177
.••.• =-----: ••• ...
1,161,798
5,695
28,632,858
_.--
3,924,786,383
I---~~---~,
227,469
3,169,005
..................
2,253
~
--
4,455,087,181
362,447,270
I===~==~-
er independent agencies:
'ivll Service Commission:
Civil Service retirement and disability fund:
Deductions from employees' salaries, etc ••.......
Payments from other funds:
Employing agency contributions •..•..•.........
Federal contribution ................•...•....
~Oluntary contributions. donations. etc .......•...
terest and profits on investments .......•..•....
. ................
. ................
14,225,035
..................
1,347,270
319,419,541
)ther ...•.•.•.•.••••.••••.•.•••••••••••••••••••••.
easury Department ...........................••....
lmic Energy Commission •........•...•.....•...•...
noral Services Administration .....•..••.....•...•..
~ional Aeronautics lnd, Space Administration ..•....•..
:erans Administration:
lovernment life insurance fund:
Premiums and other receipts ..................... .
Payments from general fund ......••............•.
Interest and profits on investments •.. '" .......... .
rational service life insurance fund:
Premiums and other receipts ........•.•••....•....
Payments from general fund .•......•.•.•.......•.•
Interest and prOfits on investments •.•••.•..•....•.•
lther ..............................•.•.•.......•.•
...............................
...................
~--
Total--Highway trust fund. '" '" ., •..••...••....
~
--
I
7,447,197
28,719,369
1,215,000
192,336
20,127
I
13,106,686
71,898
30,397,986
13,859,564
85,072
33,210,367
490,024,581
5,794,457
200,484,801
496,960,122
5,170,556
190,782,526
262'~::;: I.. 74:~:-_84_:_:_::~~~=-_74~::::::::
103,152,181
101,325,838
1,190,467,713
1,096,744,955
103,164,949
101,327,896
1,879,945
544,884,572
1,556,732
488,978,360
1,190,531,809
73,000,000
15,071,828
625,164,699
1,097,453,174
67,000,000
15,814,959
546,357,597
753,081,649
693,188,828
3,094,236,050
2,823,370,686
62,672,184
861,471
794,680,431
677 ,489,109
5,968,623
....................
~------~--~---~.
~--------~
--+--------~~--
~.-
72,176,570
-271,909
-138,998
162,807,548
114,653,357
17,555,000
~~.~~
-138,998
. ............... .
..................
7,869,426
A,232,745
200
150,010,957
9,150,134
10,936,915
12,505,000
90,375,000
81,530,000
468,782,000
538,680,000
17,201,000
468,782,000
16,558,000
9,754,278
...... ~~~..:-.- ................
~.-"-'-"-.~~--=-~
Total--Railroad Retirement Board .•...... , .. ,.
211,843,447
663,935,464
1,608,522,370
1,411 ,275,805
................................ .
516,508
47,617,613
3,187,744
143,202,468
~~~~tS from ta~es, etc .......................... .
19,301,381
17,888,912
327,392,682
311,467,469
61,394,000
33,000,000
47,372,000
42,000,000
ler
ict
~j 'COl~~b;~:
'ed s rom general fund:
era I contribut'
0
\dvan
fin
..•..........................
Les ces or general expenses ................... .
,oans Sf return of advances to general fund •.........
lther lor capItal outlay .......•.......•...........
oans and grants •..•...........•...•..•....
iootnotes on page 11
8,000,000
21,000,000
..................
4,000,000
4,637,579
~~~--~==~=4--~======
·······2i;ooo:ooo
········2;800;000
3,807,502
~3,OOO,OOO
A7,~,OOO
21,450,000
60,565,554
28,325,000
53,925,104
TABLE IV--TRUST RECEIPTS AND EXPENDITURES--JUNE:ro, TS~ eontlnued
14
Cla~~i!lcation
HE CE II'
Corn'"p'llldlng
month
This month
rs - -Cont tnued
la~t )'llar
Fiscal Year
1967
to date
--
Corresponding
period
fiscal year 1966
,-
Inll'r:und Ir.tn~.lclion~ (-):
I',,"n\('nl, 10 C'mpl", {,E''';' rE't,renH'nt fund receipts .....
I'., .. nll'nl" between funds:
FOA;;;I fund to railroad retirE'ment account ........ .
rne:np\(1I"ment trust fund from )',1ilroad retirement
.,('count .. , ................................... .
Other ....... ,."" .... , ... , ... " ........ , .. ··· .
:1,515,G29
,01,438,803
,,18,684,887
';17,(j40.~
. ................
443,820,000
50B,046,OOO
443,820,00
.................
. .................
71,765,847
97,794,077
29,250,000
685,9&4,496
40,895,00
267,487,74
.. ', .........•..
-73,282,476
-543,052,880
-1,241,945,384
-769,843,70
recetpts ", ...... ,."., ... , ............•..
5,253,600 OS5
4,796,365,566
44,631,835,485
34,852,622,97
204,861
18,278
143,380
28,077
2,300,935
539,808
1,915,7,
493,91
166,901,332
952,080
32,357
103,493,890
800,971
24,636
1,069,214,065
432,336
750,871,71
2,40ti,3:
396,6C
1,860,908
5,187,848
3,273,848
2,399,679
5,310,010
-151,771
413,176
58,535,751
26,275,850
2,859,3:
53,882,6:
11,735,61
-9,IG6,525
20,081,181
7,573,1:
2,152
2 735 007
-3,182
30,572,162
-4,8'
30 070 51
38,007,946
289,436,149
443,038,0
-154,703,00)
4,302,862
1,536,754,834
-240,644,5
. ................
Total interfund
:"'('t
1 rusl
tran~a('tions
(-)
EXPENDITURES
Branch. , .... , ., .. " . , ...... , ... , .... , .. .
[he ,Judtciarv--,Judicial sun'i\'ors annuity fund ........ .
Funds appropriated to the President:
'
l\lilitan' assistance ad\'ances ..•....•. , •....••...•.
Economic a~sistance ...... , , ........ , ....•.....•..
Other ... , .. , ........•.......•.......•............
Al'riculture Department:
Trust enterpTlse funds (net) •..........•...........
Other .... , ..... ", ...•...•.................•.....
Commerce Department ....•.....•.....•.. , . '" ..•...
Defense Department:
Militarv ..... , ........••.......................•..
Civil:
Trust enterprise funds (net) ... , ..•.•.•.•.•...•...
OthE'r ......................................... .
Health. Education, and Welfare Department:
Federal old-a~e and survivors Insurance trust fund:
Administrative expenses:
Social Security Administration .........•.......
Heimbursement from Feder.!l disabilit:;. hospital.
and supplementary medical insurance trust funds
Payments to l'eneral fund ............... " .... .
Benefit paYments ............................•...
Vocational rehabilitation senices ............•.•.
Payment to Hailroad Hetirement Buard •...........
Coi,st ruct iun .................................. .
l.,,~,slall\'e
I
663,172
-4,084 II
I
Federal disability insurance trust fund:
Administrati\'E' expenses:
Social Secuflty AdmlllistratlOn .. '" ... '" ...... .
Heimburs2ment to Federal old-age and sun'i\'ors
insurance trust fund ...... , ........... , ..... .
PaYments to l'eneral fWld •.....................
Benefit p.lyments ...................•...........
Vocat lOnal rehabi I itat ion se n'ices •..............•
Payment to H,lilroad Hetirement Board •...•.......
Con~truct ion .. , ... , ................. , '" ...... .
'h79~487
=
;
J
32,355,313
I
.................
97,424 I
443,820,000
1&4,740
-13,949,575
57,409,089
18,885,763,387
90,00:)
508,046,000
1,170,344
I
1,868,341,384
19,727,965,396
18, 769,0i4,!
10, 080, ODD
..................
104,057,807
. ................
I .................
425,157
94,941,170
412,830
146,513,481
1,133,509
24,962,000
-10,980,555
5,3&4,288
1,860,789,690
6,461,587
30,634,000
216,408
184,458,1
4,717,f
1,721,133,1
1,493,1
24,962,(
................
170,761,181
267,962,990
1,996,543,227
1,936,763,1
8,040,00lJ
..................
81,934,065
................
.................
62,784,855
285,154
827,437
6,207,700
2,507,773,014
62,784,
1,706,
I
I
I
4,441,177 II
1,&43,260,309
.................
.................
!
Total--Federal old-al'e and survivors insurance
trust fund .................................. .
,
3,578,560
.----+-- -
I
I
I
i
I
. .................
1,680, 154 , 223
158,738,241
1,517,782
-
Feder.ll huspital insurance trust fund:
Adnlllllstratl\'e expenses:
Sorial Securit\' Adminbtration ......•. '" ...•.•.
Heimbur~ement to Federal old-age and sur\'i\'ors
insurance t rust fund .......•.....•..•.........
PaYment~ to ~eneral fund ................... '"
Benefit pa\'ments .•..................•..........
Pannen' I() Railroad Retirement Board
COnstruCI ion ., ..........•.......... ::::::::::::
404,943
292,885,880
1,526,2
. .................
-
.................
. .................
. .................
. .................
. ................
................
................
. ...............
301,330,824
63,070,003
2,596,742,217
64,491,
.................
Total- - Federal hospital insurance trust fund ...
443,8~,O
I
.................
.................
Total--Federal disability insurance trust fund
49,851,9
18,071,453,2
..................
Federal supplementary medical insurance trust fund:
Admllllstr:ltl\'e expenses:
Social Seeur'it\ AdmInistration ...•..•.•......•.
Reimbursement to Federal old -age and 5uf\'iYors
ll1surance t rust fund ......................... .
Pa\'ments to ~eneral fund ..........•...........
Benefit pa\'nwnts ............................•...
Repavment of ad\'ances from general fund .•••....•.
Constructlon ...... " ..... , ........••....•..•...
11,220,000
...................
108,010,&41
................
I .................
12,078
I
98,510,471
I .................
.................
. .................
. .................
. .................
. .................
25,214,668
1,497,300
662,709,962
. ................
. ................
................
................
................
................
. ...............
Total- - Federal supplementary medical insurance
trust fund , .........•..... : ......... , ..••.•..
109,742,549
..................
797,432,571
...............
8,811
24,033
290,127
221
120,280,000
9,431,861
10,409,695
108,237,697
.................
-91,8ZJ
1,569,888
Other., .................................. .
HousIm: and l,'rban De\'elopment Department:
Federal :\atlonal :-'Ior:gage Ass02iation (net):
Loans for secondary mar:.cet operations and
pur chase of preferred stock ..........•.•.•.•..
Other sec',ndan market operations ...•.......•...
P,lrth'lp.1tI'-'ll s,lles trust fund ." .....•....•.•....
Set: ;·,.\lt~~\'\te:-- ,In p.l:=-:e 11.
i
I
I
-23,455,330
. .................
..................
, 811,393,955
" -115,908,952
............. ..
TABL~ tV--TRUST RECEIPTS AND EXPENDITURES--JUNE 30, 1967--Contlnued
-====
Classification
Corresponding
month
last year
This month
EXPENDITURES--Continued
15
Fiscal Year
Corresponding
period
fiscal year 1966
1967
to date
nterior Department:
~11,771,361
Indian tribal funds ., . • • • • . . . . . . . . . . . • . • . . . . . . . . . . . .
)f7,800,077
~84, 000,508
lt174,217,510
2,029,908
other ......••..................•........•........
1,749,970
13,OG7,391
17,959,154
lustlce Department (net):
29,911
Alien property activIties...... . . . .••..... . .• .......
152,812,591
51,257,816
2,489,959
-13,412
-10,076
-28,165
federal prison System commissary funds ......••.•• F=====~~~=+===
==~~==!====~~~~4======;-~6~3,=b~56~
-----abor Department:
• Unemployment trust fund:
, Employment security administration account:
Salaries and expenses, Bureau of Employment
2,923,275
Security ............•..•..................•..
649,969
18,178,850
16,922,138
Grants to States for unemployment compensation
and employment service administration ........•
80,923,370
66,537,191
539,705,108
476,583,007
payments to general fund:
Reimbursements and recoveries •.............
78,445
901,637
14,368,193
29,772,159
Interest on refunds of taxes ................. .
28,126
40,233
273,817
232,554
Payment of interest on advances from general
(revol ving) fund ..•..•.••........•.••....... ........ ,. . ..........
. .................
3,545,042
2,217,373
Railroad unemployment insurance account:
Benefit payments ....•...•.................•••.
4,733,818
5,524,737
70,986,323
88,119,729
Repayment of advances to railroad retirement acct
17,555,000
12,505,000
90,375,000
81,530,000
Payment of interest on advances from railroad
retirement account. ............•••............
7,869,426
9,754,278
9,150,134
10,936,915
Railroad unemployment insurance adm. fund:
Administrative expenses ...................... .
376,945
329,162
6,101,191
6,737,805
State accounts:
145,453,099
Withdrawals by States ...•.•..•.......•..•.....
103,197,647
2,001,190,682
1,973,966,790
Federal extended compensation account:
Temporary extended unemployment compensation
payments •••••..••..• , .•••.•••.•••••••.••....
-3,463
128,458
-46,128
514
............. .....
. ................
Repayment of advances from general fund •...•...
................
. ....................
~
.
I
~
I
Tolal--Unemployment trust fund ••........•••...
259,938,043
199,568,317
Other ...............•.........•••.•..•.....••••..
Ite Department:
Foreign Service retirement and disability fund ••...•.
125,282
50,862
174,567
188,277
909,159
15,430
814,794
65,091
10,584,971
276,501
9,362,532
422,379
3,973,398,260
Other .••..••••.••..•.••••.... ...•.••.•....••.••••
'ansportation Departmenl: 5
Highway trust fund - Federal-Aid Highways .....•..•. ,
Interest payment on advances ••......•.•............
Other ...•....••.••..••..•.......•....•...........
easury Department. ............................... .
omic Energy Commission ••......••.••.....••..•....
'neral Services Administration:
rrust enterprise funds (net) •••••..•.•.....•• , ..•.•..
)ther .....................••.•...•.•...•...••••.•
ional Aeronautics and Space Administration •....•...
erans Administration:
lenefits, refunds and dividends:
Government life insurance fund .....•..•.•.•...•••
National service life insurance fund •...............
Ither ........................................... .
~r Independent agencies:
,IVlI ServIce Commission:
Civil service retirement and disability fund •.......
Employees health benefits fund (net) ..•..••..•.....
Employees life insurance fund (net) ••••••.•.......•
Rehred employees health benefits fund (net)•.•.••...
198,451,470
.................
818,408
3,470,466
40,268
360,181,225
2,753,828,217
2,687,018,990
.................
. ...............
7,059,044
39,196,239
683,504
3,965,430,752
678,319
7,346,812
26,658,072
1,143,249
-53,643
21,395
5,789
-43,798
45,931
199,100
-223,114
263,181
97,224
-180,792
298,099
506,737
5,213,056
39,554,675
161,872
7,528,534
47,066,095
316,945
82,932,096
732,289,845
2,463,471
68,938,651
484,744,915
4,530,547
171,071,833
-7,081,284
-16,377,795
933,718
156,006,567
-3,570,318
-1,897,018
1,046,021
1,965,094,967
-18,537,868
-69,295,036
-517,892
1,685,970,265
1,328,265
-17,338,143
252,787
Total--Civil Service Commission .••....•...•...
148,546,471
151,585,251
1,876,744,170
I,G70,213,174
a\ional Capital HOUSing Authority (net) •••••.••••••..
allroad Retirement Board:
Railroad retirement accounts:
Administrative expenses •.•.•....•...•....•••••.
Benefit payments, etc. • .•....•..•.........•••.
Payment to Federal hospital insurance trust fund ..
Advances to railroad unemployment insurance
account and R. R. supplemental account ..•.....
Interest on refunds of taxes ••.•.••••••••...••••
-1,152,645
695,182
462,059
720,277
944,511
110,531,816
.................
1,085,811
100,782,883
.................
12,436,174
1,257,342,539
16,305,000
. ...................
21
. ................
95
29,250,000
2,377
40,895,000
2,531
111,476,348
101,868,790
1,315,336,092
1,245,990,951
-40,297
3,119,493
47,999,566
-16,553
919,133
45,295,458
-118,694
22,434,621
472,308,809
-26,581
5,897,829
429,694,693
ltal--Railroad Retirement Board
her'
Tr~t enterprise funds (ne t) •••.••.•••••••.•.•••••
Othe
:ict ~i C~i~~bi~' .......•..•••.••.•.••••••.•.•.•••
. ............ ,. ..
~
'ootnotes on page 11
,.
"
...... ,. ................ .
.................
1,302,216
2,189, lIB
225,569
--
11,530,770
1,193,562,649
TABLE IV-- TRUST RECEIPTS AND EXPENDITURES
16
JUNE 3Q. ,961--ContlJltled
CorrC'~p()Jlding:
Cl.l:--'-"'ltlC,\tillll
Th" Illonth
I"XI'I \[)I rl'lu::;--C,'nt,nul'd
Fi~c.l1
C'lI'rl'sp'lndin~
1 (,-.11
111lHlth
1967
last year
tll d,ltl'
pl'nod
fisCl1 yt'ar 1966
l)t'\) ''''l~
tU'1d .l,'l'\)Unt:-[Hid :--Lltllp . . . l--:--.Ut'd irt'CClpt:--.)·
-,:7,847,885
-14,493,163
20,841,946
463,148,499
<105,812,949
-181,290,839
291,018,102
-1.086,609,844
-64,795,581
-109,135,58:
170,595,771
-517,126,351
37,002,098
461,649,397
-1,082,695,529
-520,461,74:
3,419.578,698
3,865,969,776
-57,520,000
112,120,000
942,0)0
8,300,000
108,727,500
124,647,800
199,065,000
445,505,000
506,247,200
154, 31l,cxx
390,887,CXX
573,545,3(K
-225,910,000
-33,135,008
-3,506,135,000
-238,192,000
1,292, 745,CXX
-227,022,CXX
208,540, 300
-2,593,509,800
2,184,466,30(
-73,282,476
-543,052,880
-1,241,945,384
-769,843,70-;;
3,425,928,221
3,531,457,195
34,493,077,986
34,864,346,28~.
1'.,';111\'111' fr"lll (l'I\CL,l fUl\d .....................
-.?12,090,507
lil"'l''III' Ir"l1l ,.'k,.............................
-13,214,307
I' ",cj '!.lIllP' rl'd'Tllll'd ie'penditure,)...............
30,642,36)
(1I111 r (kp,',lI lund, (l1l't) ........................•.. f--_____3_1_,664,~_
r"l.tI dl'p",'1 fund .,,'(""unt, ......................
~lIl>l"l.tI Iru,( .wd dep",'t fund l'xpcnditul'e,........
C;\I'.vrlltllVllt-:-'!lI)Il:--llI"ed cntE'rpri:--t'~ (net):
(PI' \..'I)(lpcrdtl\'l':-. • • • . • • . . • • • • • . • . • • • • • . • . • .
Fl'der.tI 1I1Il'rn1l'd'.ltl' l'rl'dll b,lnl" ........•.......
~ elk!".ll I.,nd "","k, .. , .......................... .
il'dl'Ltl Hun1l' Lll.ln Il.,nk flu,II'd'
HIJI1lL' l()~l!l i).lJlk~
!
I
•••..•..•.••.•..•••...•.....• , •.
Fl'dcLtl Ik,)u"t In,ural\("" Cllrp"r,lti(ll\ ............•
Tutal
~r==========~.~======-c~=-=
r
..................
--
:\et ,l~"rq.:,ltl' pur('ha,es of p,lrtieip.ltlllil certificates b\'
tn"t "(,(""Ullt, (Sl'P dl'Uil in Table V-A) .............•
~
Illtl'rfund tl',ln'.letillns (-) (See det.til <>n P,l,," 14) •......
L
:\"1 tru~t expenditure, (includin~ ""t purch,lse, of
[llrtHlp,ltlOll «'l'tltH'He' b\ tru't ,IC(llUlllsl...........
I
---+--------~~=
-170,368,000
(jU\ t.'rnllll'llt -~p(\n~()r('d f'lltl'rprlses • . . • . . . • . . ~
Exce" of tl usl rccelph (,) ur
37,428,533,171
-_.----
i
L,rnl Credil AdIll'Ill"tr,lIi"n:
n.lllk:--
~r=============~=====~==-~~
900,00D,000
250, 00:1, OQO
_c_
"Xpelldl\url'~-) _.._~ .......1~~~7,671,~= ~ _ +1,2~~~~3'71 - +io~i3-8,~7_5_7:,:4:9=8~==j=k==~=~===========-=I=I:,:723::,3OC:.
:\OTE' Totail'xpendltures ,h'I\\'n [or indindu,tI
(el) publ ic debt ,lnd ,l"enc\' "ccurit ies or
of publtc d,'bt and ..l[.;ellc\' "'l'uritics an'
are ,hown In the ,1,,~rt'[;,ltC' .tt the end "f
trust accounts do not include the ncl chal'ges to such accounh for purchases (and sales) of
(b) partielpat ion errt I[ic-ltes. Net expend itures of trust accounts for purchases (and sales)
,hul\'n in Table V. Net expenditure,., fol' purchases (and sales) of participation certificates
this T,lble IV and ill detail in Table V -A.
TABLE V--INVESTMENTS IN PUBLIC DEBT AND AGENCY SECURITIES (NET)
PUI)~ll -ent,'rpr:,e-:nds
- -- - - - - -
-r---------
Cumnwrce Dep.ll"tllll'nt " ...... , ............. , . . . . .
l!uU'lIH~ .1Ild L'rll,ln D('H'lupmellt Oep,lrtment'
OffiCe' III ~Iw o;eCrl't,IH (FilA debentures) ....•.....
F,'d"Lll ]\;,l\l<lIl,tI Mort"age AS""'latlOn:
Particip,ltioll s,tles fund:
Public dl'bt "l'('unt,es ...................... ,
I
T"I.II public enterprise funds ..•..................
Trust accounts. etc.:
.Judlnal sun'inlrs .lllllUit\· fund ................•....
Hic:hl\'a\' trust fund
FLlreign sen ice re; i'I:l";l~;l; 'a'lld' di;~b;1 ;t'\' i~,;ci
Federal uld -age ,llld sun'in1rs illsurance' trust fund:
Public debt secuntles ...............•...........
AgenC\' securities (not guaranteed) •. '" ......•.••.
Feder.ll dbabillt\" in~urance trust fund:
Public debt ~ecurities ............... , .......... .
AgenC\" ~ecurtties (not guaranteed) •..•...••.....•.
Federal hospital insurance trust fund:
Public debt securit les .......................... .
A"enc\' ~e("urities (not guaranteed) ..•...••..•••••.
Fedl'Lll ~upplementan medical insurance trust fund ..
lnempl,wmpnt trust fund:
PublIC debt securities
.-\genc\ O'E'l'urities (not' ~;";~;~J;te'ed')::::::::::::::::
:: : :: : :
$750,000
,,152,00
-120,000
-2,592,650
2,592,651
I
-81,360,000
-2,425,000
-:27,454,000
2,740,000
33,820,000
59,442,000
-4,091,00
80,390,00
23,400
-1,067,700
19,550
-1, 848,40l
-103,500
-148,800
-1,635,900
-4,331,11)(
I . ..... ......•....•
-17,400
-25,000,000
-367,450
56,666,000
-11,695,850
-92, 578,lXX
-36,363,60(
: ..................
..................
.................
3,000,000
. .................
-109,200,000..... .............
91,068,000
100,000,000
6,939,000
3,136,000
-8,000,000
387,7()(
13,500,00:
..
A~en('~' ~pcuriti('~ (not i-,ruaranteed) .......... '"
Mana"ellll'nt ,lJhi liqu id,l( ln~ fUl1ct iuns:
Agen('\' ,<'cuntles (guaranteed) (FHA debentures)
Spel' la 1 .l:--~ t:--.t ancf' tUllct lon~ lund:
A"enl'\" ,,'('urit ies (plar,lnteed) (FHA debentures)
Feder.t1 Houslll~ Adm,nistration:
Feder.tl Huusln~ AdministratIon fund:
Publ,,' debt s('curitie>; .....•......•..........
A~cnc\ secunties (~'llaranteed) (FHA debentures)
Othl'r:
A"enc\" '<'('unties (gual'anteed) (FHA debentures)
PublIC Huusin[': Pru[':rams........................
Export-Import Bank of \\'ashin~cton..................
Fl'cieLti Sann~s and Loan Insurance Corp.Jration .....
Othn............................................
"26,000
,
.
I
'
===-=92cc:.'~175,5~ i~
180,000
140,028,000
I
_c.
51 , ' "
81,500,00~
211,567,000
53,545,000
.... · .. 2~;079;ixx
36,651,lXX
.;'5~~-:-~-~-4-73-,-3--B5-,-1-50-+----204-,-54-0-,251
244,500
37,926,000
43:::;;~; I ...... :8::;~:~:
471,500
483,947,000
444,lXX
-27,631,lXX
3'i1i;;;;~
....:~::;:;
-412,937,7I}i
17,430,225
5,906
..................
-13,630,774
226,006,901
93,992,020
..................
310,587,000
-2,161
28,898,000
..................
188,944,000
405,889,000
56,520,894
47B,849,000
..................
.................
-150,IB5,141
-5,836
..................
-10,855,452
777,687,726
317,547,008
.................
...................
785,758,(XXI
1,468,031,28'
JUNE 30, 1967
TABLE V--INVESTMENTS IN PUBLIC DEBT AND AGENCY SECURITIES (NET)--Contlnued
17
~
ClassUication
Trust accounts, etc. --Continued
Federal National Mortgage Association:
Secondary market operations:
Public debt securities •.•..•........•.•.•••.•...
Agency securities ~guaranteed) (FHA debentures) .
Agency securities not guaranteed) •.••.•.... " ..
Participation sales trust fund:
Public debt securities •••.••••••.•..•••••••.•••.
Agency securities (not guaranteed) •••.••..••••..
veterans life insurance funds:
Government lUe insurance fund:
public debt securities ••••••.••••...•.•••.••••••
Agency securities (not guaranteed) •.......••••.•
National servlce life insurance fWld:
public debt securities •••••••••••••........•....
Agency securities (not guaranteed) ••.•••..•.••••
eiv\! Service Commission:
Civil service retirement and disability fund:
public debt securities .....•....••....•.......•.
Agency securities (not guaranteed) •••.•.....•..•
Employees health benefits fund ...•................
Employees life insurance fund •.•.•.•.•...........
Retired employees health benefits fund •............
Railroad retirement accounts:
Public debt securities ...........••••.•...........
Agency securities (not guaranteed) •••.....•.••....
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 •.•..•.•••..
Other:
Public debt securities ...............................
Agency securities (not guaranteed) .....•.....•.••.
This month
.. .... ··:j26S;OOO
.. .................. .............
~
14,850,000
8,590,000
23,637,000
.................
160,815,000
. ..............................
~
534,351,000
.................
2,979,000
-546,000
-1,000,000
98,859,000
Corresponding
month
last year
Fiscal Year
1967
to date
Corresponding
period
fiscal year 1966
.................. . ...................
-$6, 689 ,050
-$1,250
..................... ...................
.. ..... ~5;99i;400
.................
.................
50,942,000
64,940,000
...................
. .................
25, '715,000
-123,643,000
83,250,000
4,216,000
-25,000,000
180,665,000
-368,423,000
184,500,000
. .....................
. .................
. ...................
533,186,000
. ...................
..................
-659,000
-1,100,000
561,572,000
701,009,000
217,500,000
17,951,500
54,980,600
304,000
. ..................
203,973,000
1,111,416,000
. ...................
-4,821,500
14,890,500
-191,000
.................
. .................
61,644,000
175,500,000
-1,500,000
-5,050,000
1,150,000
-147,500
.................
. ..................
-100,000
3,124,000
-307,000
-60,000
-265,210,000
.................
442,000,000
. .................
1,791,400,000
238,192,000
259,925,000
227,022,000
57,367,536
25,225,000
-156,194,105
• ,340,000
613,749,686
117,685,000
460,928,150
-2,915,000
Total trust accounts, etc ••..•••••••.•..... '" ..••
1,434,938,851
2,267,300,329
10,377,542,646
3,357,815,423
Net investments, or sales (-} •••.•.•....•...•••.•.
1,342,763,351
-
2,319,138,379
10,850,927,796
3,562,355,673
.................
-950,000
153,867,000
. ..................
TABLE V-A--PURCHASES OF PARTICIPATION CERTIFICATES BY TRUST ACCOUNTS (NET)
Civil service retirement and disability fund •••.•••••.••
Pederal Old-age and survivors insurance trust fund ...••
Pederal disability insurance trust fund ••....•........•
lederal hospital insuranc e trust fund ••.•••.••.......•
iational service life insurance fund .••••••...........
~l1road retirement account .•....••....••••.•••.....
nemployment trust fund ••.••••.••••.•••••••••••••••
)ther ............................................ .
Net purchases, or sales (-) •••......••.•.•••••.....
25,000,000
$200,000,000
200,000,000
50,000,000
50,000,000
150,000,000
50,000,000
175,000,000
25,000,000
250,000,000
900,000,000
$50,000,000
50,000,000
50,000,000
......................
25,000,000
........ 50;000;000
. TABLE VI--SALES AND REDEMPTIONS OF GOVERNMENT AGENCY SECURITIES IN MARKET (NET)
Iblic enterprise funds:
Guaranteed by the United States:
~ederal Farm Mortgage Corporation in liquidation ••
ederal HOUSing Administration:
~sues (net) to government agencies .....•...•...
H sues (net) to the public ••••••••.•..••.....••..
Nt orne Owners' Loan Co rp0 r at'1 0 n ..................
o guaranteed by the United States:
Home Owners' Loan Corpora t·IOn •••.•..•...•••••••
T
ust eru;essee Valley Authority.......................
~ en erprise funds:
, ot guaranteed by the United States:
itderal National Mortgage Association
ver:co~dary market operations} ••••••••••••••.••••
M en -sPonsored enterprises (net):
guaranteed by the United States:
Farlll Credit Administration:
~a~ks for Cooperatives .•............••.•....•..
Fe/ral intermediate credit banks •.••.•.........
Fed e eral land banks ••••••••.•.......••.•.......
era Home Loan Bank Board:
HOllie loan banks •••••••••••••••••.••••••.•••••
-
Net redemptions or sales (-) •••••••••.•••••••••••
'
$1,500
..................
$4,200
$8,400
486,400
-3,823,500
1,050
$8,273,000
-4,291,200
1,050
15,906,100
-66,573,100
13,950
'45,554,150
83,176,000
1,825
.. ...... :2;200;000
25
-40,000,000
275
-132,200,000
300
-60,000,000
-140,147,000
-125,560,000
-810,151,000
-1,4'71,685,000
59,020,000
-112,120,000
4,108,000
-9,450,000
-108,580,000
-124,647,800
-198,115,000
-445,505,000
-506,147,200
-157,435,000
-390,580,000
-573,485,300
491,120,000
-408,865,000
1,714,735,000
-1,552,670,000
296,446,450
-813,139,925
-428,031, '775
-4,077,314,625
JUNE 30, 1967
TABLE VII--PUBLIC DEBT RECEIPTS AND EXPENDITURES
18
(Includes
('xchan~es)
Correspondin~
Fiscal Year
month
1967
This month
Classliicat!un
l~L<-;t
Ht
('t
)'ear
Corrp'ponding
pl'flod
fiscal \'t'ar 1966
to date
Ijlt:-- (l--:--tlt'...,I.
Puldl~
l:--:-.Ul'~·
\1.,1' "d,IiJ\" ..................................... .
",'r1-Il:,lrkd,liJk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , ..
.312.509. &19.000
855,685,858
.'181.052,545.000
9,857,124.845
'175.398.062,[
11,327.\!)!.€
13.933.228.316
13.365.334.858
190,909,669.845
186. 725,256,e
.................
20,314,323,947
88,818,555,946
1,165,000,000
63,767,562,0
585,325.S
33,679,658,806
280,893.225,792
251,078, 144,~
22,169,191. 898
87.000,000
l~~lll':-- .
SPt'l' 1.\1
Otllt'!'
'13.007.&H.OOO
925.384.316
l:--~\lt''''' . • .
~
36,189,420.214 '
• •---="'::;;.--":;"
E'!H'IHiltUl"t,:--, {rt'11rlll)l'llt~}:
PubliC' i~:--ul':<
\Llrk,t.uJi,
~(lJl-
11l,lrh,'Ltblt"
18,936,868,553
645,269.565
17.068,862,368
1,034,784,038
179,524,514,289
9,587,264 ,180
174,934,7~,7
19,582,138,118
18,103,646,406
189, 111,778,470
186,861,133,7
17,998,627,053
29,609,865 1
83,783,867,659
1,683,729,662
61,297,018,1
286,003,1
274,579,375,793
248,441,955,~
+6,313,849,999
+2,633,188,1
I
21,183,686,861
90,838,192
I:-':-'LJ('~ _ ••
SPt'C I.d
Otllt'I' 1:--.:-.lH' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toldl public debt ('xP"I\CIltun"
I
40.856,663,173
36,131,883 ,325
-4.667,242,958
-2.452,224,518
"
,
11,926,412,9
TABLE VIII--EFFECT OF OPERATIONS ON PUBLIC DEBT
[
Ad,lllrlIS1L.II\·"
1)1Il!~l'1
surplus (- I
"I'
ell'flt'll (. I (T.IU!t- III).
E.\'Ct):-.~ Ilf tru:--t rt'C('lpt:-.
(-J lJi t'\.p(,lldlturt'~ (t-)
(Tault, IVI . . . . . . . . , .... , ....... .
Exl'('~~ IIi lil\'t':-,llllt'llt:--- (+-) ul' :-"tlt,!-- (-
111
J
-,7,711,612,963
-1,827,671,&H
-1,264,908,371
-10,138,757,498 I
+11,723,;
+1,342,763,351
+2,319,138,379
+10,850,927,796 I!
+3,562,355,{
+296,446,450
-813,139,925
-428,031,775 ;
-4,077,314,1
+414,017,051
-232,000,447
+800,789,447
+005,683,1
+803,019,873
+681,747,958
+12,393,110
+50,487,:
+274,992,236
+238,407,160
-73,023,619
+132,000,'
+2,133,268,130
+4 ,330,143,689
-4,648,382,684
-4,667,242,958
330,888,180,753
-2,452,224,518
322,359,312,314
+6,313,849,999
319,907,087,795
+S9, 937,935,220
+$2,251,080,4
1
puullc O('ut
~lnd d.Kt'lh'V ~l'l'Urltj(':-, (T~tt)l{' V) •.. '
E:\.l'(':-'~
i
104,078,206
-,~8,
:-,~ih'~ (-) Ill' l't'dt\!I1ptl(I!}:-' (.) of GI)\'l'rnllH:nt
,'~l'Il(,Y sl'('urll,,·s III 1l1 •• rkl't Inl't) ITablt, \'11 ., .. , .
11lcl't'a~l" (-) III' d{'('r~'~l:-'(' (*) ill cll('ck~ out~U.Jl(hll~ ~lllcl
'(If
dt'lhhltS III {r.lll:-,lt (nt't) .1I)(j uttler aCl'llllllt:-, . , . , . "
lllt'r(\.l~t'
(-1
tIl'
....
ctl'l'rl'~l~t' (t) til putd1c deot lnt{'r~':-,t
.lee rut'rl. . . .
. ............... .
IIHTl',l~l\ (-) or dt'I..Tt'.l~t' (-J III
Trt'aSuri'r'~
.lrl'uunt
U1Clt'.I!"'-(' (o.-} or dl'CI·t'.l~(,
ca:-,h hl'lll (Jllt~ldl)
. . . . . . . . . . . . , ... .
(-l In o~d<lJH't' ()t Trl'.l~Ur('r'~
a('I..'t1llllt . . . , . . . , . , . . . . . . . . . . . . . . . ' . . . . . . . . . . . . . . . . .
11Il·r,' •• ~l'
(.1 "I' (k(,\'l'.l~l' (-I III puuhc <leot (T.lulv \'Il
a\),)\'e) ..................................... , ..... .
'-;rtl~:-' d(\Dt .It lJl'~lnnlll~ tIt perlod • • . . • . . • . . • . . . . . • . . • . •
-202,887,'
t·
+2,633,188,1
317,273,898,1
I
I
(jrtlsc publJe debl .It (,Ilel "f Jll'l'lud .................... .
(ju .• L.1l1l·l'd ,It>bt "f U. S. (;""('!' 1l1l\l'1l1 ,'~l'IlC \l'S • . . • • . • • . .
326,220,937,794
512,196,075
319,907,087,795
461,547,275
326,220,937,794
512,196,075
319,907,087,
461,547,
Tul.d pUiJhe (I"bl
Dl'duct: Dt-'ut nut
326,733, 133,869
262,012,656
320,368,635,070
266,414,118
326,733,133,869
262,012,656
320,368,635,1
266,414,
326,471,121,213
320,102,220,951
326,471,121,213
,,"el e,:U.'l'dlltl'l'ct Sel'Untll'S ............ .
~ubJ(lct ttl :-;Cltutory l1111ltJ.lIUtl • . . • • . • . •
-t "--
i
320,102,220,
L
TABLE IX--SUPPLEMENTARY TABLE OF RECEIPTS AND EXPENDITURES OF
PUBLIC ENTERPRISE (REVOLVING) FUNDS
(Included in expenditures in Table
,~--
Classification
:
I
funds appropriated tn the Preslc!ent:
E.'panslun uf defense productIOn .................... .
Office uf Econullllc Oppurlulllty ..................... .
Mlllt.lfY as;;tstancp--furl'l;:n lililltarv sales fund ..... .
In on
a net basis)
--I--. --,---------J
T
Fiscal year 1967 to date
Receipts
. __ .'
Expenditures
____
Net receipts (-)
or expenditures
I
Corresponding
fiscal year 1966
Net receipts (-)
or expenditures
:138,971,851
8,620,046
190,121,374
::33,965,539
34,291,635
157,247,210
-::105,006,311
25,671,589
-32,874,164
-U51,9Ifi,
AIll.lnce for pr,,;:ress. ctl'vejupmenl luans ......... .
DI.:.,>\,e1l)prllent 11...1.111 funds . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fllrele,:n InI'p;;tlllent c:uJ.rantee fund ............... .
93,351,332
68,277,933
10,330.091
495,202,804
729,588,108
173,188
401,851,472
661,310,175
-10,156,902
290,8116,
676,002,
-9,824,
TUl.ll-- Funds apprupnaled to the President ...... .
509,672,628
1,450,468,486
940,795,857
745,596,
EcunoIl11c 3.S~ I.:-.LlnCt:;
•
29,566,
_89,9f7,
JUNE 30, 1967
TABLE IX--SUPPLEMENTARY TABLE OF RECEIPTS AND EXPENDITURES OF PUBLIC
19
ENTERPRISE (REVOLVING) FUNDS--Continued
(Included in expenditures in Table III on a net basis)
-
Fiscal year 1967 to date
Classification
Receipts
Net receipts (-)
or expend itures
Expenditures
Correspond ing
fiscal year 1966
Net receipts (-)
or expenditures
-~
riculture Department:
~commoditY Credit Corporation:
Price support and related programs 1.' . , , .........
Special activities L • • • • • , • • • . : • • . • . , , , . • . . . • . . . ,
Federal Crop Insurance CorpJratlOn fund, , .. , .......
Farmers Home Administration:
Direct loan account .... , ............. , ..........
Rural housing insurance fund .......... , ..........
Emergency credit revolving fund .................
Agricultural credit insurance fund ................
Rural housmg direct loan account. ................
.
'
$4,712,954,413
211.748.288
31,519.172
,t6, 839,827,835
95.278.606
25.197,875
82,126.873.422
-116.469.682
-6,321,297
$1.535,920,448
-17.083,055
10,496,365
.
.
.
.
.
823,029,114
375.970,844
89,495.601
486,422,275
174,624,642
382,461,169
410,076.164
99,473,959
465,993,747
39,203.714
-440,567,945
34,105,319
9,978,357
-20,428,527
-135,42D,928
-31,351,983
31,407,583
18,684,383
87,534,073
3,035,237
Total--Agriculture Department. ................ .
6,905,764,353
8,357,513,072
1,451,748,718
1.638,643,054
-_.-
mmerce Department:
Economic Development Assistance. . . . . . . . . . . . . . . . . . .
-7,949,120
8,864,112
181,416
-8,682,696
213,600,659
-3,191,886 _ _ _ _ _4-','--7_5_0'--,9_7_6
Maritime Administration ..........•................ 1--_ _ _216,792,545
----'_--'-_-+_ _ _ _
--'-_--'--_+-_ _ _----''-----'-_-+
Tatal--Commerce Department ................. .
225,656,658
213,782,076
-11,874,582
-3,198,144
!fense Department:
Military:
Department of the Army •••••.•••••••.•••••••••••.
Department of the Navv ••••.••••••••••..•••••••..
Department of the Air Force ••••••••••••.••••..••.
Defense agencies ••••••••••••••••••••.••••••••••.
Civil defense procurement fund .•••••....•.•••••..
'Civil-Panama Canal Company ....••••••....•••••••.•
13,136,786
12,087,144
4,420,874
300
1,198
143,575,403
12,937,800
14,799,112
1,144,047
-447
9
130,792,817
-198,986
2,711,967
-3,276,826
-747
-1,189
-12,782,585
-1,667,569
-593,791
2,377,061
. ................
173,221,707
159,673,339
-13,548,368
-4,194,783
3,069,961
2,996,592
-73,368
-234,949
. ................
. ...............
~-----------+-------------+------------~------------
Total--Defense Department .................... .
ealth, Education, and Welfare Department:
Food and Drug Administration ...............•.......
Office of Education:
Student loan insurance fund ...................... ,
Higher education faCilities loans fund ............. .
Public Health Service .....................••.••....
Social Security Administration:
Operation fund, Bureau of Federal Credit Unions ...
Total--Health, Education, and Welfare Department
)using and Urban Development Department:
Renewal and housing assistance:
College housing loans ........................... .
Erban renewal programs ........................ .
ow-rent public housing •.........................
Housing for the elderly 13 • • • • • • • • . • • • . • • • • , • • • • • • •
M~~~~~~~ia'n' d~;~i~p~'e'n't: ......................... .
Urban mass transportation fund ..................•
Other" ~~~d;t:' ................................. .
Mortgage
-346
-4,310,137
................
. ................
87,890,264
8,954,311
.................
224,586
-87,890,264
-8,729,724
. ................
5,460,768
5,450,756
-10,012
-43,113
1-------------+-------------+-----------105,375,306
8,671,936
F=========~====
13,243
-96,703,370
-264,819
712,056,897
479,121,771
159,347,129
6,278,924
220,757
476,391,788
924,130,362
429,787,738
79,270,002
6,873,209
-235,665,109
445,008,591
270,440,609
72,991,078
6,652,451
312,359,081
356.720,280
236,745,755
49,902,367
1,830,184
420,323
100,836,203
43,120,569
86,989,032
42,700,246
-13,847,171
18,659,766
34.083 ,017
1,936,590,000
13,000,000
648,354,721
461,600,506
356,403,290
1,936,590,000
13,000,000
651,405,285
319,585,294
309,938,266
................
................
..................
................................................
982,365,226
2,724,340
1,037,895,297
562,163
55,530,070
-2,162,177
191,189,259
-3,963,932
Total--Housing and Urban Development Department.
5,859,320,092
456,218,917
732,582,966
Federal National Mortgage Association:
Loans to secondary market operations fund ...... .
Purchase of preferred stock ..............•..•..
Management and liquidating functions •...........
Special assistance functions •...................• '
PdarticiPati~n sales fund ....................... .
Fe eral HouslUg Administration:
r;~~::al Housing Administration fund ........... .
3,050,563
-142,015,211
-46,465,024
91,820,304
-114,119,633
~313,524,705
-129,118,778
---,
6,315,539,010
---
eriar Department.
Public Land Management:
Bureau of Indian Affairs
I1meral Resources:
. " .•.•.••..•.•..••.......
BUreau of Mines
~~h and Wildlife 'a~d 'P~~k~:"""'" .............. .
Vat~~ea~ of Commercial Fisheries ..•..............•
B an Power Development:
ureau of Reclamation:
Continuing fund for emergency expenses
t Mon t ana •.••.....•••........
'
UFort Peck pro)' e C,
Bo~pe:l1Colorado River Basin fund ..•.••.•.••.....
eVI
South
e Power Administration .•..••..•.••....•.
Southeastern Power Administration ....•.••••......
,lrgin lsI
western
. ' tra t'lOn •.....•........
d Power Ad milliS
an S Corporation •.•...•••••.•..... " •.....
Total--Interior Department •.•••.•..•...........
footnotes ~n page 'tl
-----,-
----- ---
2,011,122
2,804,684
793,562
-398,783
28,345,698
51,539,117
23,193,419
19,281,734
2,560,128
3,397,207
837,079
342,500
3,747,895
29,716,750
1,315,598
66,314,573
~2,432,296
36,597,822
-4,416,208
60,614,811
................
................
................
.................
.................
.................
.................
................
................
................
. .................
. .................
. .................
-553,705
-553,705
1,054,953
66,381,594
124,817,475
58,435,880
76 479 007
20
JUNE 30, 1967
TABLE IX __ SUPPLEMENTARY TABLE OF RECEIPTS AND EXPENDITURES OF PUBLIC
ENTERPRISE (REVOLVING) FUNDS--Contlnued
(Included in expenditures in Table III on a net basis)
corre8pm~
Fiscal year 1967 to date
Classification
Expenditures
Receipts
Net receipts (-)
or expenditures
flscal year 19
Net receipts (-)
or expenditure.
Labor Department:
Manpower Administration:
Advances to employment security administration
account unemployment trust fund •••..•...•.•.• , .
Farm lab~r supply revolving fund ...........••.....
$282,287,129
2,938
$278,742,087
44,717
-$3,545,042
41,778
-$2, 21.,,3'lI
Total--Labor Department .......•.............
282,290,068
278,786,004
-3,503,264
-2,2'11,_
Post Office Department--Postal Fund ...•.•...•.•......
5,283,737,126
6,466,318,160
41,182,581,033
888,196,'/1
-54,011
Transportation Department: 5
Federal Aviation Administration .....................
Federal Railroad Administration:
Alaska Railroad .................................
Saint Lawrence Seaway Development Corporation ..•..•
10,948
21,784
10,836
5,8'/11
20,628,838
7,073,939
22,968,052
7,194,122
2,339,213
120,183
10,481,111
1 216 GIl
Total--Transportation Department ...•....•....
27,713,725
30,183,959
2,470,233
11 '107 35'1
Treasury Department:
Office of the Secretary .... " ........................
Bureau of Accounts ...•..............•...••.........
Office of the Treasurer ..............•..•.•....•....
................
756
729,446
1,811
58,174
753,525
1,811
57,417
24,078
135,23'/
813,511
83,307
1~,711
Total--Treasury Department ................. ,
730,203
General Services Administration:
General activities .................•..•.•.••...•....
191,013
-32,481
2,888
Total--General Services Administration ...... ,.
191,013
..................
.................
Veterans Administration:
Direct loan revolving fund .............•....•........
Loan guaranty revolving fund ..................•.....
Other .............................................
337,782,973
289,356,190
299,220,700
302,840,458
415,124,525
238,222,974
-34,942,515
125,768,334
-60 , 997, 725
-658,952,838
15,722,5a
-46,666,001
Total-- Veterans Administration ...............
926,359,863
956,187,958
29,828,094
-689,896,090
2,141,420,042
1,001,788,704
-339,631,337
-385 ,023,3111
3,194,083
3,105,517
-88,566
Other Independent agencies:
Export-Import Bank of Washington .•.........•.......
Farm Credit Administration:
Revolving fund for administrative expenses .........
Short-term credit investment fund .................
Banks for cooperatives investment fund .............
Federal Home Loan Bank Board:
Federal Savings and Loan Insurance Corp. fund •....
Other ..•..•..••..•••••.•.•........•.............
Small Business Administration ......................
Tennessee Valley Authority .........................
United States Information Agency ....................
-191,013
-182,581
-191,013
-182,611
13,086,700
.................
..................
................
531,139
2,290,000
-10,051,000
268,816,956
17,191,253
817,280,542
366,466,613
2,698,604
111,509,187
17,034,544
573,274,145
468,500,352
2,813,732
-157,307,768
-156,709
-244,006, 396
102,033,739
115,128
-255,423,309
Total--Other independent agencies •.••.........
3,630,154,796
2,978 026 185
-652 128 611
-739 949 1111
Total--Public enterprise funds ................
23,996,569,142
27,340,781,975
3,344,212,832
2, 653,353,IU
................
-13,086,700
-34,5'13
-146,072,721
53,905,311
-70,821
TABLE X--SUPPLEMENTARY TABLE OF RECEIPTS AND EXPENDITURES OF TRUST
ENTERPRISE (REVOLVING) FUNDS
(Included in expenditures in Table IV on a net basis)
Fiscal year 1967 to date
Classification
Receipts
Agriculture Department:
Farmers Home Administration ..•.....•.. " .........
Defense Department - Civil:
United States Soldiers' Home ......•..•..•...•.......
Housing and Urban Development Department:
Federal National Mortgage Association:
Loans for secondary market operations and
purchase of preferred stock ...•.•...•..........•
Other secondary market operations .•...••.......•.
PartiCipation sales trust fund ..•.............•.....
Justice Department:
Alien property activities ............................
Federal Prison System commissary funds .•.•........
General Services Administration:
Records activities: National Archives trust fund ......
Other independent agencies:
Civil Service CommiSSion:
Employees health benefits fund ....................
Employees life insurance fund ..•..•........•......
Retired employees health benefits fund .••.•......•.
National Capital HOUSing Authority ...•.......•....•..
Federal Communications Commission ...••..•...•. '"
T otal- -Trust enterprise funds ••..•••.•.•..••..•..•
See footnotes on o<ure 11
Expenditures
Net receipts (-)
or expenditures
CorrespondIDg
fiscal year 1966
Net receipts (-)
or expenditures
$5,938,211
$6,351,388
$413,176
$2,859,aa
144,439
141,257
-3,182
-4,.
1,949,590,000
474,960,785
119,421,613
1,949,590,000
1,286,354,741
3,512,661
...............
811,393,955
19-115,908,952
.................
1,206,192
2,781,606
3,696,152
2,753,440
2,489,959
-28,165
152,812,.
831,949
608,835
-223,114
-1111,'/11
591,891,502
209,426,545
21,358,584
19,418,600
406 840
573,353,633
140,131,508
20,840,691
19,800,739
288 145
-18,537,868
-69,295,036
-517,892
462:~
-118
3,397,376,952
4,007,503,195
610,126,243
-91,831,.
1,569,888,111
-63,111
I,.
-17,331
252
~
1,618,
JUNE 3D, 1967
21
(Figures are rounded In millions of dollars and may not add to totals)
TABLE XI--RESUME OF RECEIPTS BY SOURCES AND EXPENDITURES BY FUNCTIONS
Administrative Budget Funds
Classification
--------NET RECEIPTS
Thts
month
.000.0
F. Y. 1967 iF. Y.1966
to
date
---
-
Same
F. Y.1967 F.Y.1966
month
to
to
last year
date
date
This
month
to
date
I
vidual income t;Lxes ......... - - ........... , ........
poration income taxes ...... - , , . - ....... , , , , ........
ployment taxes, . ' ......... , . - , . , .. , ... , . , , ... - ....
ise taxes, , .. , , .............. , ......... , , , ........
mployment tax deposlls by Statps. - . , - ...... - ...... , .
ate and gift taxes .......... , .. , .. - .. - ...... , .......
,toms .... ,',·, , .......... , . , . , . , ...... - - - .........
leral employees retirement. , , , ............ , ........
:rest on trust fund investments. , ...... - .... - ..... - ..
erans life insurance prelllluills , , ........ , , , , ........
:cellaneous receipts •.. , ..•. , , , ......... ' , . , .. , .....
'ffund transactions (-) ...... , , . , ......... , , , .. , .....
Total net receipts
j.,same
month
last year
Trust Funds
•••••••••••••••••••
0
••••
0
•
$6,520
9,250
$6,847
8,190
$61,475
33,977
"55,446
30,073
945
765
9,292
9,145
178
169
225
170
2,965
1,901
Of
........
1, 222
-35
G,860
-675
17,151
115,794
--
- -
'~ __ 18,249
~:~~~
1
,.. 5: 865
-635
104, 727
1
~
••••••••
0
••••••••••••
!
;
I
,
,
I
0,315
350
571
-467
236
-84
-80
761
370
296
1,079
141
70,667
3,443
5,426
3,403
3,323
3,366
689
10,285
3,358
6.211
13,525
2,'110
I
I
... r-
-35
1O,1~5__ j_
Total net expenditures ............................ \
-49
-675
57,7!!l
4,191
5,933
307
3,
3,120
!
2,969
347
7,574
2,834
5,023
,
12,132
2,464
I ........
........
-635
I
168
5
95
54
II
60
19
202
-73
2,783
247
15
360
132
2,653
II
46
55
:,
3
37
250
-73
2
462
1
I
511
3,942
-770
I
_44, 63~
__ 1.4,.!l~~
-,---
I
I
2,269
1,894
-
--
-,
- -------
-
\
II
1
1'20,022
3,917
3,067
2,463
2,274
503
5,609
-1,242 I
4,796
5,254
,[
6,001
417
427
-224
263
191
-85
1,070
297
452
1, 138
233
$26,668
4,441
2,916
207
203
1,350 ,
1,168
38
40
827
824
-73 I
-543
j---
NET EXPENDITURES
anal defense. , , ............ , , . , .... , ... , .. , .... , ..
rnational affairs and finance. , , . , .......•. , . , .. , , , ..
;e research and technology ... , .......... , .. , .......
iculture and agricultural resources ..... , . , , . , . , .....
iral resources .... , , .........
Imerce and transportation ........ , , . , .... , , - , - , ...
sing and community development .... , , ...... , , . , , ...
lth, labor, and we lfare •........... , , ....... , .. , ...
cation ...... , ....•....•... , , , , , .. ' ..... , , . , , ......
~rans benefits and services. , , , . , .....•... , . , , . , . , , .
rest. .. , .•. , , . , ............ , , , , ...•..... , , , , ......
eral government. ............ - .......... , .. , , .... , ,
Dsit funds (net) ..••.•.••••••.• , ..••••.•••••••••••.•
ticipation certificate transactions. , .•..•.•..........
rfund transactIOns (-) •...•••.......••.•••••..••••••
$2,718
361
27
28
3,066
:::
. ......
1,003
-49
:lt2,563
313
.
II
II
II
1,090
,
1,182
243
3,762
-2,336
31,076
3
825
24
-520
32
-1,083
900
-1,242
-543
g,439_1125~732-.l-106,97sj:- ;,:426
760
171
1
1,151
145
3,751
3,202
26,384
2
565
40
. 3, 5nr
-770
34,4;3~_
34,864
TABLE XII--SUMMARY OF FEDERAL GOVERNMENT CASH TRANSACTIONS WITH THE PUBLIC
Corresponding
month
last year
This month
Classification
II
Corresponding
period
fiscal year 1966
Fiscal Year
1967
to date
!fal receipts from the public:
Iministrative budget rece ipts (net) - see Table III
'ust receipts (net)-see Table IV ........ " ........ , , ,
Iragovernmental and other non-cash transactions see receipt adjustments Table XIII ••. , ........... , .
$18,249
5,254
$17,151
4,796
St115,794
44,632
t104,727
-2,065
-1,556
-6,893
-5,100
TDtal Federal receipts from the public .......•... , ..
21,438
20,391
153,533
134,480
nl payments to the pUblic:
Imlnlstrative budget expenditures (net) - see Table III,
ust expenditures (net) - see Table IV .. , , , .•.....•. ,
ragovernmental and other non-cash transactions see payment adjustments Table XIII ....... _.... _ . . . .
10,145
3,426
9,439
3,531
125,732
l06,97f!
-918
-4,929
-4,020
155,296
1:>7,1:)17
-1,763
-3,337
-2,452
6,314
2,63;)
313
rotal Federal payments to the puolic .... , . , ..••.....
-G55
j'
34,853
34,l:lfi4
34,493
f= - -- ~2,916 - --12,052
L
B,522 t_,=c--==--=-"'CCcc-=8~3]8
u
n
55
of cash receipts from or payments to (_) the publIc
borrOWing from the public or re/?ayment (-):
~hc debt increase or decrease (-) see Table
111
-'
II
VII .....
sales of Government agency secur ities in
~arket (net) - see Table VI .... , . , ....... , .... _ . , . .
le~~:~~e;t (-)
-
public debt and agency securitie;,
lef non-cash 't~~~~~~iio'n's' ~~~~. b~;;(;~;r;; ~dj~~i;1~~t~
'able XIII .•. " . .. ................... ~ . . .. .. . . . . .
'atal net cash narrowing from the public or
':::::::",<0"" W:.h .:'O"OH' :::::
-4,667
I'
110
-
:: ::
I,'
-296
t~1'343
I·
I
428
4,D77
-2,319
-10,851
-3,502
45
314
r
__--cc----~=- -
r- --__
2,133
275
2,408
J-
c-
------3'7ll~-l----~_-=-'~b3~
,,----c
_ _
-4,721
I
2,Gl~
649
-71
-
r
I
-530
I
I
f~-=--:~~ ~f -~::;: f
Da1ances - net Increase or decrease (_)_
~S;:rl~r's account ...... , •..•.•... , , . : ...•.... , . . .
e outSIde Treasury .......•... , . , ...... , . , , • .
otal
change S III
. th e cash bala nees.,., ......________ =~
_
than $500, 000
DtQotes on page 11
=t
1- -
4,330
238
-4,646
-73
4,569
-4,721
-203
t
I
---
132
-71
JUNE 30, 1967
(Figures are rounded in millions of oollars and may not add to totals)
22
TABLE XIII-_INTRAGOVERNMENTAL AND OTHER NON-CASH TRANSACTIONS
(Showing details of amounts included as adjustments In Table xn)
Corresponding
month
last year
This month
Classification
Adjustments applicable to receipts:
Intragovernmental transactions:
Interest on trust fund investments •••..........•.••••
Civil Service retirement - payroll deductions for
employees ...•...••••••••••••••.•••..••.•••••••••
Civil Service retirement - employers' share ..•••••••
Other •...•.••••.•••••.•••••.•••••••...••••.••••••
Fiscal Year
1967
to date
CorresPoadlbg
period
fiscal year 1988
$1,340
$1,168
$2,239
102
102
437
101
101
44
1,181
1,181
1,455
Subtotal ••••••••••••••••••••••••••••••••••••••.•
1,982
1,413
6,056
Excess profits tax refund bonds ...................... .
Seigniorage ••..•..••.•••••••••••••••••••••••••••••••
83
"
143"
837
Total receipt adjustments ...••••••••••••.•••.••••
2,065
1,556
6,893
1,982
1,413
6,056
68
-96
-13
-4
620
41
-746
-229
-45
-314
-682
232
-12
-801
Adjustments applicable to payments:
Intragovernmental transactions (see detail under
receipt adjustments) .••••.••••••••••••••••••••••••••
Applicable also to net borrOWings:
Savings and retirement bond increment •••••••••.•...
Discount on securities .......•.•....••.....•..••••.
International Monetary Fund notes ..••..•.....•.....
Other special security issues ••.••••.•.•••••...•.•••
i
72
-182
.................
I
!
"
*
Subtotal ..•..•....•..•••••••.••.••••••••••.•••
-110
Accrued interest on public debt ..•••....•..........•..
Checks outstanding and other accounts ..••.••.•.••....•
-803
-414
Total payment adjustments ....••..•••.•...•......
655
918
4,929
Adjustments applicable to net borrowings:
Debt issuance representing:
Receipts - excess profits tax refund bonds .•...•.....
Payments - (see detail under payment adjustments) •••
-110"
-45"
-314"
Total borrowing adjustments (net) ..•.•••.•.••....•
-110
-45
-314
I
I
II
\
TABLE XIV--COMPARATIVE STATEMENT OF' ADMINISTRATIVE BUDGET RECEIPTS
AND EXPENDITURES BY MONTHS OF' THE F'ISCAL YEAR 1967
Classification
DeAu- Sep- Octo- NoJanu- Febru- March April
gust tem- ber vem- cem- ary
ber
ber
ber
ary
July
RECEIPTS
i
I
~!
I,
I'
1
May
June
Gross receipts ......•.•.•
t4I
1,065: 1,212 1,110;
1,539 1,023 1,274 1;309
1,674: 2,614 1,793 1,220 1,868 1,655, 1,673 3,352 2,353 3,157 3,033 2564
215,
224
214
206'
196:
204:
269' 224
270
352
445 ' 182
158 i 179
170
170
179
161:
160
134
170
150
166
176
373 I 447
555
740
479
832!
502
414
452
442
402 1,222
7,993 :10,58614,833/7,9101 9,819 12,815111,32412,04616,527 19,225 12,072 22,007
157,158
136,556
iii
9,081
500
31,108
675
6,902
354
23,939
635
:II
41,364
31,829
:II
115,794
104,727
til
104,727
.........
I
~~~I ~I' 4,~~
!'
rJr ~~
1,147 1,075
3,
6J~ ~;~~~ d~~ ~,g~
I;
'Less than S500, 000
l 3,807j
7,35C 10,999 3,295 8,10E
Il
31
~
21
I
l
See footnotes on page 11
(JIll
F.
19
$42,811
18,486
30,834
13,398
20,256
3,094
1,811
5,865
Deduct:
Refunds of receipts:
I
Applicable to budget accounts.
221,
19~
158
2121
180
167 -16"
553 2,168 2,195 2,388
811
Applicable to trust accounts .. I
1
3
"
*
4
"
283
6
35
36
127
Transfers to trust accounts .•.. I 2,030' 3,140 2,14711,5621 2,239 2,011 1,731 3,713 2,921 3,355 3,3844 2,876
Interfund transactions .....•• "
40
51
53,
3251
2
31
9,
17
35
8
14
8
Total deductions ••..•....
2,291 3,389 2,358 2,099 1 2,425 2,210 1,93~ 4,289 5,133 5,691 5,783 3,758
~et receipts F. Y. 1967 ........ I 5,702 7,19712,475 5,811 7,39' 10,606 9,38! 7,757 11,395 13,534
6,289 18,249
Comparable totals F. Y. 1966 •.
Esl
mal
$50,477
18,848
34,915
14,130
26,956
3,001
1,972
6,860
m!
~~ t~~
971; 1,249 1,156
EXCise taxes .... .............
Employment taxes ............
Estate and gift taxes..........
Customs.......................
Miscellaneous receipts..........
Comparable
period
F. Y.
1966
'I
Internal Revenue:
I
IndiVidual income taxes withheld. ~3,374 ,$5,095 3,792 t3,434/S5,155 i $3,791 $3,67~5,268 ~4,157 ~3,591 ~4,987$4,160
~~~~~~~:~~ci~~~~~:;;~.t~~~::
Cumulative
thru
June
9,553 6,45:: 8,335 11,297 9,929 8,452 17,151
TABLe XIV··CONlP,&RATIV£ STATEMENT OF ADMINISTRATIVE BUDGET RECEIPTS
23
AND EXPENDITURES BY MONTHS OF THE FISCAL YEAR 1967--Continued
(F1b"Ures are rounded in millions of dollars and may not add to totals)
- -
Sep- Octo- Notemvernber
ber
Auh'Ust
July
Classification
De-
ber
Janu- Febary.
ru- March April
ary
cem-
bel'
May
June
-
~u~~-~.I ~;~ibie ~-~;~;~~
period
, F. Y.
1966
latlve
thru
June
-
I
EXPENDIT URES
islative Branch ............. .
Judiciary .................. .
cutiveOffke Df the PI"[,5[(1<'nt •.
dsappropriatl'dlothl' PreSIdent:
lilitary assistance' ..•.........
conomie assistancl' •..........
ther ........................
'culture DepartnH'nt:
Immodity Credit Curp ....... .
Ireign assistance and
special export prof':rallls •....
her ....................... .
meree Depart llll'nt. ......... .
nsc Department:
llitary:
Department uf thl' Arm) •.....
Department of till' 1\ a V\ • • • • • •
Department of the Air Furcl' •.
Defense a[,:cncl('s .......••...
Undistributedstl1ck fund trans.
Civil defense ............... .
6
29
7,
2
3
2
6
174
127
51
191
136
47
190
130
61
208
17
77
195
114
63 ,
140 1
-232 '
I
59
l.mlO
745
856
-71
-73 !
70
315
l' 53
138
159
" 36
100, 153
130, 285
'81 ,. 45
I
1. 357 1. 723
1,554 1.709
1,719 1,951
319
307
395
25
5,
8
11
1,648: 1. 751
1,580 1.535
1.750,1.68U
307
327
-6 -47
6
7
,10
427,
73:
1, 143
1,272
1.799
237
206
I-
I
To:al Military •.•.........•.. r 4,661
j
1
"
:"20
8i
I'
:~25
7
2
"L
5,353,5.725, 5,285 5,262
1
J'
W)9
r ,Ir15
~i
51
239
169
~~25
-23 :
1
~,
70 I
213
94
165
91
177, 120
159\ ,. 75
1.737
1.659
1,IH7
J'
100
213
r 62
1,903
1,611
1,9UO
5,695
,
5,912
:
5.509
3
2i
60
193
120
-1~2
187
145
178
13
-110
93,
-236
212
270
44,
1831
137'
111
14
117
I,
I
;:2G3
90
31
1232 'I
79 1
2G
1
I
2,295
953 ,:
850
Ii
968
2,141
1,215
1,000
2,415
1,391
2,010
'I
1,519
1,898
164
158
1,462!1
1,686
1,617
265
-31'
2,345:!
2,744,
2,236
43~_ 75~r-=01~ _ _ 74~
I
1
D6
21,171 I' 15,035
19,360
16,205
23,144' 20,393
21,103
18,977
22,59t,
,I
.
1,0::
106
r 115
33
49
113'
119
31
2
121
124
_:::
-245
98
31
50
50
16
82
51
1'124
30
-228
1,108
12
r 80
181
16
390
560
67,570
921
1,345
~c~_,~=
7~:::
II
1U~:::
70U
1,510
407
506
1,183
411
1,468
1,232
1,437
372
503
888
407
1,276!
769
1,456
426
500
1,208
424
1,471
1.154 1,127 1, 103 1,128. 13,392
12
9
133
12
10 '
r77
7/l
84 i 1,014
113
195
100
199 147. 2,264
73
56
37
56 i
679
468
380
441
427
5,426
547, 478
564 451
6,195
12,014
118
923 ,
2,403
601
5,933
5,070
13,400
108
952
2,270
695
5,GDO
G,400
-385
-140
54
746 .
71 II
128
-122
78
967
119
-403
97
18 i
17
6
7
r 49 i r 66
12
1
85 -121
116
127
35
41 i
55
52 '
93
141
30'
13
136
115
li6,950
1,309
1,343 I
9:~ 1~:~~ 1U~::~
4,1::
54,409
c
_
98
20
-75
84
-145
32 -164
5,
13
18
64'
37j
47
-12 ...... I
33
-340
-239
102
943
84
~401 .. ~5i! .. ~531·~:i25 "~2l"~3i :"~921"~i7 "'~8 "~i4 .... ~8U5~iL~i35*- _~~g
i !11
~--'-~4018,9~~,4~1(l,7_50 9.105t9'~f8,:,8QgI8,156;1O'193IB'362t9,055
et expendItures F. Y. 1967 •... II?,
:!t250
87
28
---
1
85
_:~ 1~::: ~:~
26;~~-042t~~-'~~3E~~71-1~;;86
)lus (+) or deficit (-) F. Y. 1967 -4061
ss than $500 000
footnotes on' page 11
7
6,611: 6,057 5,841 5,659
1
tparable results F. Y. 1966 ...
~25
7
"
il
I
(n('t)
F. Y.
1967 J
3~~ 3~~ iI~ 4~li ~~~ ~ir-~rt"~:~~~il ~:~:~
88,
OmparabletotalsF.Y. 1966 ...
:"201
2,059 2.127 1,815 2,144
L907: 1,520 1,656 1,826
2,214, 2,077 2,0662,125
1
, ..
3;
841
2191
-36
I
1,765
1,531
1,917
t'13
7
2
" '14
9
,
-811
ivil .......•..•..............
123
133
135
116
97
149
133
lth, Education, and Welfare Dept.
909,
765
900
767i 702
sing and Urban Dev. Dept.:
:
I
ederal National I\]ortgae:(' Assn. '
444, -253
327
165
133
lher •.......................
172 ;
131
184
192' 155
93; -96
rior Department •............ r 1341
q27 130 1'142
171
121
103
ice Department ...•..........
38
30
34
31
33
39
33
or Department .............. .
66
71 :
70
fl6
71
86
79
t Office Department ..•.......
74
70
124
143
52
123
80
e Depart ment ............... .
40:
70,
28
50
53
41
36
nsportation Department 5 ••••••
130
125
122
135 124
123
133
asury Department:
,terest on the public debt...... 1.091 1,064 1,086 L098 1,100 1.160 1,173
16!
13
8
12
10
10
10
,terest on refunds, etc .. , .. . ..
ther ........................
]' 92 1 1'73 ]'72
r801'114
r70
r81
nie Energy Commission......
226,
180
189
195
174
192
196
eral Services Administration .. I
73'
69,
65'
65,
67
41
62
,onal Aeronautics and Space Ad m. : 494
441· 483'
493, 458
486
464
lrans Administration. ..... . ..
449 I 442
531
5451 553
608
466 '
lr independent agenc ie,,:
'
xport-Import Bank of Washin?;toll
-3
89
-37 !
204
102
-211
-205
mall Business Administration..
-11
28
63
15
20'
17
-137
ennessee Valley Authority.....
4
6\
7
111
8 I
9
7
ther ....... . .. .. . .. .. .. .. ....
124' /' 7? r 1831 r 77 r 85 1 r 73
r 65 I
26
2 ..... I
2
7 I
141
:rictofColumbia ............. I
~~~~et~'a~;~~~i~~~u(t~\~:::.::::
--
,
,!'151
7
2
"14
T'
-
9,512
9,987 ' 9,459
t~} ,845~_593 ~5' 1~5 ~2, 9931~_'O?3__ -601
,6991
9
~_ _._ti."._9._7.~ ,l=2_96_','- 7"_7:;~'-~49_~-
45
,464 bO,915 10,14 39 110265"97,73_-82__ <.0
9
__ I--'-
-1,702\ -304 r,070 f4, §26 ;8104
~
-9,938
~
_F-~2, 25
-!~~4t~'_~40I+l'548J=5~4~_ =9~9 ~_:6 _~!i +!7~r~'1_04 ~_1~5~ -60\:::!~-L=-2~:~1~.i
__ t ,
__
_
· .. _·____:.11--
24
TABLE XV __ COMPARATIVE STATEMENT OF TRUST FUND RECEIPTS AND EXI'(NOITURES
BY MONTHS OF THE FISCAL YEAR 1967
(Flf-rure,.; are rounded in millions of dollars and may not add to totals.)
r
I
CI,,~~iflcJ.ti()n
,
I
'Sep- I
NoAu- 1 tem- ,Octo- ,vembrusl i be
i ber : ber
July
,
1
r
I-----j1
r
I
DeFeb-l
c m_IJanuru- i,March Aprll
e
arv
ary
ber,
-
May
June
'
"p;;~~iel::
Cumulatll'!'
thru
June
period
F. Y.
1966
il
'I
*
(net)
F. Y
196i
f1rCFIPTS
1
II IdlW'IY t ru~t fund ....... " .... ,
l-l'der,l! old-a.;" ,md survivors
in:-;uranc(> trust fund •.••.••••••
Ft'deral dbabil itv insurance
t ru~t fund .... : .............. .
h'd,'r'll hospital lnsurance
tru~t fWld ................... .
Fl'deral supplementarv medical
In:--:Uranc(' trust fund •..•.....•.
Unl'tIlpl()Yment trust fund ...•....
C;",'prnment l1fe insurance fund ..
:\atlonal servic(' life In,,urance
fund ...... , .........•.........
CI\'1l !:'ef\'ice Cummissiun ...... .
Hailroad Retirement Board ..... ,
1\lil it an' assistance advances .. .
A"riculture Department ...• '" .•
Interior Department:
Indian tribal funds .......•....
Ot~er .............•••..•....
TJ"('a~urY Department .......... .
District of COlumbia ...•..•.....
All other ' .................... .
Interiund tr'Ulsactions i-) ....... .
-357
2528
2355
1,500 2,619
1,417
2341
,'362
,,5li9
1,045 2,631
1,817
2352
2319 I 54 .455
2,582 2,926
2,317 I 23.371
S201
.,3.925
!4,5
18.461
23.(
1
164
110
253
204
259
273
227
2.332 ,
251
164
156
320
274
330
381
601 '
3,089
916
3,(
60
825
1
51
85
2
422
196
1
117
565
1
176
66
2
56
157
49
894
137,
1
1
1,283
4,072
44
4,126
47
4,l
43
221
120
88
5
42
261
45'
209
127
46
208
99
84
5
36
194
16,
17
4:
44
223
G72
81
5
696
3,094
1,609
1,077
59 I
693
2,823
1,411
708
61
1
2,S
5
49
231
19
32
5
7
4
3
1
7
2
222
46
21
38
894
-34
-74
-72
4
2
5
39
7
-52
4
2
3
50
9
-73
21
3:
40
2
3
155
242
176
50
179
2
43
201
13
129
3
Net trust receipts Fo Y. 1967 ..
2,8374,973
Comparable totals F. Y. 1966 ..
1,4174,572
90
68
~6
6
3
6
2
35
12
-54
1
3
34
3,
121
-52 , -587
l-- -
190 '
30
226
753
212 :
214 '
3
6
19
3
57
12
-73
1.616
47 ,
51 !
33
471 ,
92 "
:1,242
u
1,5
I,!
39
48 ' ..... .
29
436
284
-770
44,1
2,681
1,954
t
-1"
I::XPENDITURES
Ill"hwav t rust fund ............. .
Federal old-age 'Uld survivurs
insurance trust fund .......... .
Federal disability insurance
trust fund ..... : .....•..•... , , '
Federal hospital insurance
trust fund ..............•.•..•.
Federal supplementarv medical
insurance trust fund .......... .
Unemployment trust fund •......•
Government I ile insurance fund ..
~at ional service hie insurance
fund ........................ .
Cinl Service Commission ...... .
H.lilrll"d Hetlrement Board ..... .
Militarv assistance advances .. .
Agriculture Department •....•...
IInusin" and Urban De\,. Dept.:
Fed. l'.'ational Mol"tgage Assoc.
Inter ior Depart ment:
Indian tribal funds .......•.•..
Other..............•........•
Trcasuf\' Department .•••.•..•..
District of Columbia .•.••.•...••
DepOSit fund accowltS .......... .
GO\'E'fnment -sponsored enterprises .......•.. , " ..........•
All o:her .................... .
P.utiripation certiL transactions
Interlund transactions (-) ....... .
:\et trust E'Joq)enditures F. Y.
1 G6~ ...••••••••••••••.•••••
('ump.lrable totab F. Y. 1966 ..
ExcE", eli trust receipts or
":\lJenditures (-)F. Y. 1967 ..•••.
348
429
491
3,1
19,1
1,1
2,
~
163
7
12
193
6
48
133
101
79
55
155
120
91
54
130
102
76
4
4
4
-198
352
-236
12
20
17
1
I
2
533
37
37
31
223 -535
-78
49,
165'
107
-8,1
4'
-52
1
1
3,
34
-152'
1
9
-72
5
16
14
-34
-74
-72
991
I••••••••••••
~,642
2,627
2,655
-805 +2,347
-26
23
14'
-50
i
105
103 1
251
6
335
16
73
151
113
39
4
85
161
113
45
3
140
168
111
136
643
73
83
6
12
4
2
3
37
-52
2
1
21
2'
3
45
-25
3
40
-385
35'
2
3
35:
-93 1,
-365
10
-304
12
-49'
- 71
83
290
85
277
7
6
48
143
102
142
5
27
55
162
105
53
110
260
5
797
2,754
83
········1
2,687,
6
115
246
6
42
183
114
HiS
8
40
149
111
167
4
44
178
116
83:
5]
7
732
1,877
1,315
1,069
59
485:
1,670 '
1 246 '
, 751
57
3
-11
-96
106
695
1,478 '
28
2
12
2
3
48
37
174
18
39
84 :
13
27
-1,083
-520 ,
-170
12'
250 ,
-73,
-2,594
131
900
-1,242
2,184 !
238 :
4
1
4
45
-10
42
1
-571
-6841 - 713 1
7
7,
12
500 •••••.••.•.•
-52!
-541
-73
1
-444! -300
111
17
150 ••••••
-521 -587
f --;---
472
430
! ••••
2,
~770
----r~---
3,4032,673' 2,4061 2,677: 2,789' 2,897
3,426 1 34,493 ,1
-614!+1,10~_~ -371; c--~--, +2,2~.:"86~+1~~6~:,+2,471_
+1,828, +10 139ii
2,684] 2,617
2,
69:
34,864
40,1
~418 2':l4~~,~,=14=2=2=,=44=7=t;1=2=,=70=7=2,63~;'~8~ 2,6~~2_~____~9~1_3'_3~l3-=l2=_-=L='~=~=It:~=34='=8_""e:=:4}1'-'~~"-.-~"-~.-'-'-~-'-..=t!~-~_
-1,001 +2,223 -1,189 -1,186
I +305
~
-7~i2,097"+1,560j
--I
,ur
-251J~~_120L:,180
'
+1,265:
-'--t'
-121 -.:.- ....
-12
-4,1
-==jp=
j--=
°L,'» t:I'I:t :"500. 000
f,,)dtlln:e- ')n page 11
~e€'
----
-
------------
.. ,
'
F~r sale bv the Superintenden~ of Documents, C. S. Government Printing Office, Washington, D. C. 20402
,
, , ,pt 10'] price, 6, 00 per \ ear (domel-itlc). S 11. 00 per year addltional (foreign mailing), includes all issues of daily Treasury statements
and the 1I!onthlv Statement of Receipts and Expenditures of the U. S. Government. l'.'o single copies are sold,
TREASURY DEPARTMENT
=
JUL 21
AI'l'IWMPIIG PROCEEDIIG
1967
OJ(
HIGH SPEED STEEL !WIST DRILLS
On June 8, 1967, the Commissioner ot Customs received information
in proper rorm pursuant to the provisions ot section 14. 6(b) ot the
customs Resulationa iDdicatina a possibility that hiah speed steel twist
drills and twist drill sets, short leQ!th, straight shank, as tol1o~:
Drills Type B, class 1, tractional. sizes 1/2 ft and under
Type C, wire-gause sizes 1 throuah 20
T,ype D, letter sizes J-T-X-Y-Z
Drill Sets Type B, class 1, 8-piece set, 1/16" to 1/2" by 16ths
Type B, class 1, 29-piece set, 1/16" to 1/2" by 64tbs
lIBJlufactured by Sonoike Tool Mfg. Co., Ltd., 100, Maegava, Tachibanacho,
Ashigara-Shimogun, Kanaiawa Prefecture, Japan; and Kobe Steel Lilli ted,
Nishioike Kanegasak1, Uozusi Cho Akash1 City, Hyogo Prefecture, Japan,
are being, or likely to be, sold at less th&n tair ftlue within the meaning of the Ant1du.ping Act, 1921, as .-ended (19 U.S.C. 160 et seq.).
Pursuant to a deter.mination under section 14.6& ot the Custa.s Regulations, the name of the person who raiaed or presented the question of
dumping is withheld.
Having conducted a s~ investigation pursuant to section 14.6(d)
(1)(i) of the Customs Regulations and having detenained on this bs.sia
that there are grounds for so doing, the Bureau of customs is instituting
an inquir,y pursuant to the provisions ot section 14.6(d)(1)(ii), (2), and
(3) of the Customs Regulations to determne the validity ot the inf'oration.
An "Antidumping Proceeding Hotice" to thi. ettect is beina published
in the Federal Register pursuant to seetion 14.6(d)(1)(1) ot the Custoas
RegulatioDS •
biports ot the 1nvolved JDerchendise expected during the period
31, 1968, will approx~te $2 ,000,000.
JW1e 1, 1967, through Mq
TREASURY DEPA,RTMENT
(
~ RELEASE
6 :30 P .H.,
24, 19670
nday, July
hESULTS OF TREASURY'S \-::E:EKLY BILL OFFERING
The Treasury Department announced that the tenders for two series of Treasury
11s, one series to be an additional issue of the bill,S dated April 27, 1967, and
e other series to be dated July 27, 1967, which were offered on July 19, 1967, were
ened at the Federal Reserve Banks today. Tenders were invited for $1,400,000,000,
thereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 182-day
11s. The details of the two series are as follows:
i\:;b UF ACCEPTED
IfPi::TITIVE BIDS:
High
LOr!
AverE..ge
91-day Treasury bills
maturing October 26 a 1261
Approx. Equiv.
Price
Annual Rate
98.916
4.288%
98.874
4.455%
98.882
4.423% 11
···
·
·
182-day Treasury bills
maturing January 22 z 1268
Approx. l!,;quiv.
Annual Rate
Price
97.470 Y
50004-;;'
5.087;;
97.428
11
97.450
5.044%
~ Excepting 5 tenders totaling $2,925,000
49% of the amount of 91-day bills bld for at the low price was accepted
9'~ of the amount of 182-day bills bid for at the lov! price wo.s accepted
'TnL 'ff1.JDEFLS APPLIED FCJR AND ACCE1-'TLD bY FEDERAL RESERVE DI'::;TRICTS:
District
Boston
New York
f'hiladelphia
GlevelEnd
Richmond
Atlanta
Chicago
St. Louis
l~d.nneapolis
Kansiis City
Dallas
San Francisco
TOTALS
··
·
·
·
AEElied For
$
35,444,000
1,529,737,000
16,715,000
31,885,000
5,825,000
23,570,000
221,999,000
23,605,000
12,008,000
14,606,000
17,130,000
26J210aOOO
Acce,Eted
$
24,534,000
765,682,000
8,715,000
23,319,000
4,925,000
12,770,000
93,989,000
13,432,000
1-1-,308,000
13,606,000
9,130,000
£/
$2,029,434,000
~1,000,092,OOO
:
AcceEted
AEElied For
$
10,1)6,000 $
10,156,000
1,658,768,000
957,843,000
27 ,60~ ,(XlO
34, 6c 3, 000
29,508,000
29,508,000
19,103,000
15,103,000
35,523,OCJO
40,149,000
268,760,000
147,760,000
30,082,000
43,082,000
20,548,000
8,993,000 :
29,676,000
29,676,000
28,802,000
37,802,000
173,454 aOOO
12,1122 000
·
1
·
$2,365,609,000
$1,400,228,000
25!682,~
£/
Includes $249 912 000 noncompetitive tenders accepted at the average prjce of 98.882
Includes $119'466'000 noncompetitive tenders accepted at the average prjce of 97.450
These rates a~e o~ a bank discount basis. The equivalent coupon issue yields are
4.55% for the 91-day bills, and 5.26% for the 182-day tills?
F 984
TREASURY DEPARTMENT
s
RELEASE 6 :30 P.M.,
day, July 253 1967.
RESULTS OF TREASURY I S MONTHLY BILL OFFERIm
The Treasury Department announced that the tenders for two series of Treasury
one series to be an additional issue of the bills dated April 30, 1967, and
other series to be dated July 31, 1967 J which were offered on July 19, 1967, were
,ed at the Federal Reserve Banks today_ Tenders were invited for $500,000,000,
,hereabouts, of 274-day bills and for $1,000,000,000, or thereabouts, of 366-day
,so The details of the two series are as follows:
5,
·
·•
··
··
.
·
Ai ·
,E OF ACCEPTED
'ETITIVE BIDS:
274-day Treasury bills
maturin,g AEril ~Oa 12 68
Approx. Equiv.
Price
Annua.l=Rate
96.084 !Y
5.,i4Y%
96.038
5@206%
96.070
5.164%
High
Low
Average
366-day Treasury bills
maturing July Jla 1268
Approx. Equiv.
Annual Rate
Price
*
94.774
94.744
94.764
W
5.140%
5.170%
5.150%
Y
al Excepting 2 tenders tota..li.ng $l2 OOO: bl Excepting 4. tenders totaling $2,l25,000
10% of tfie amount of 274-day bills -oJ.5d fot af'the low price ",as accepted
27% of the amount of 366-day bills bid for at tG8 low price was accepted
J. IDJ1)ERS k.PPLIED FOR AI]) ACCEPTED BY FEDERAL RESERVE DISTRICTS:
,strict
Iston
!W York
liladelphia
,eveland
.chmond
.lanta
icago
'. Louis
llneapolis
llsas City
lias
n Francisco
TOTAlS
AEE1ied For
2,835,000
892,796,000
5,701,000
24,094,000
6,717,O(X')
J.7,950,000
141,328,000
22,839,000
$
AcceEted
::",835,000
324, 096,000
$
.
·
•
24,094,000 ·
..
717,000
6,850,,000 ·
103, J28, 000 ·
1,701,009
*
4
19,539,000 ~
1,450,000 :
2,424,000
1,034,000
L.,450,OOO
·
6,724,000
11,034,000
60 2 0 20 :°00
$1,196,518,000
···
1~~OOOaOO9
$
500,068,000
£I
AEElied For
44,035,000
1,904,302,000
10,678,000
61,211,000
21,018,000
25,296,000
218,245,000
38,481,000
6,062,000
14,477,000
11,687 tOOO
$
AcceEted
1,335,000
770,580,000
2,243,000
11,011,000
8,558,000
5,581,000
75,945,000
24,781,000
2,062,000
5,277,000
1,687,000
$"
2~lz7J±8aOOO
91},~.OOO
$2,587,240,000
$1,000,298,000
iI
InclUdes $18,613,000 noncompetitive tenders accepted at the average pr~ce of 96.070
Includes $47,006,000 noncompetitive tenders accepted at the aver~ge prJ_~1':' of 94.764
These rates are on a bank discount basis. The equivalent coupon ~ssue Yle1ds are
5.42% for the 274-day bills, and 5.45%ior the 366-day bj~ls0
F-
98.5
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
$2,400,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing August 3, 1967,
in the amount of
$2,303,052,000, as follows:
91-day bills (to maturity date) to be issued
in the amount of $1,400,000,000, or thereabouts,
additional amount of bills dated
May 4, 1967,
~ture November 2, 1967,originally issued in the
$1,000,332,000, the additional and original bills
interchangeable.
August 3, 1967,
representing an
and to
amount of
to be freely
182-day bills, for $1,000,000,000, or thereabouts, to be dated
August 3, 1967,
and to mature February 1, 1968.
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, July 31, 1967.
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-986
- 2 Immediately after the closing hour, tenders will be opened at t
Federal Reserve Banks and Branches, following which public announcement will be made by the Treasury Department of the amount and prue
range of accepted bids. Those submitting tenders will be advised
of the acceptance or rejection thereof. The Secretary of the Treasu
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 Bank on August 3, 1967, in
cash or other immediately available funds or in a like face amount
of Treasury bills maturing August 3, 1967.
Cash and exchange tend
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 dispositioo
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 00
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 an
sold, redeemed or otherwise disposed of, and such bi 11s are excluded
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereundf!
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 tm
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and ~
notice prescribe the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained
any Federal Reserve Bank or Branch.
000
TREASURY DEPARTMENT
FOR IMMEDIATE
---
RELEASE
July 26, 1967
TREASURY ANNOUNCES AUGUST REFUNDING TERMS
The Treasury will borrow $9.6 billion, or thereabouts, through the issuance
of a 15-month 5-1/4~ Treasury note at a price of 99.94 (to yield about 5.30~)
for the purpose of paying off in cash a like amount of the following Treasury
securities maturing August 15, 1967:
$5,610 million of 5-1/4i Treasury Certificates of Indebtedness
of Series A-1967, dated August 15,1966;
$2,094 million of 3-3/4% Treasury Notes of Series A-1967, dated
September 15, 1962; and
$1,904 million of 4-7/8% Treasury Notes of Series E-1967, dated
February 15, 1966.
The amount of the maturing securities held by the public is $3.6 billion.
Interest will be payable on the 15-month notes on November 15, 1967, and
May 15 and November 15, 1968.
The notes will be available in registered and bearer form. All subscribers
requesting registered notes will be required to furnish appropriate identifying
n~bers as required on tax returns and other documents submitted to the Internal
Revenue Service.
Payment date for the notes will be August 15.
Payment may be made in
cash, or in any of the maturing securities, which will be accepted at par, in
p~ent
or exchange, in whole or in part, for the notes subscribed for, to the
ertent such subscriptions are allotted by the Treasury. The notes may not be
paid for by credit in Treasury Tax and Loan Accounts.
The subscription books will be open only on Monday, July 31. Subscriptions
With the required deposits addressed to a Federal Reserve Bank or Branch, or to
the Treasurer of the United States, and placed in the mail before midnight, July
31, 1967, will be considered timely.
Subscriptions from commercial banks, for their own account, will' be restricted
in each case to an amount not exceeding 50 percent of the combined capital (not
including capital notes or debentures), surplus and undivided profits of the
subscribing bank.
F-987
- 2 -
subscriptions from commercial and other banks for their own account, Federallynsured savings and loan associations, States, political subdivisions or instrumenalities thereof, public pension and retirement and other public funds, inter~ional organizations in which the United states holds membership, foreign central
Mks and foreign States, dealers who make primary Markets in Government securitie3
nd report daily to the Federal Reserve Bank of New York their positions with
espect to Government securities and borrowings thereon, Government Investment
ccounts, and the Federal Reserve Banks will be received without deposit.
Subscriptions from all others must be accompanied by payment of 2;~ (in cash,
r Treasury securities maturing August 15, 1967, at par) of the amount of notes
pplied for not su·oj ect to withdrawal until after allotment.
The Secretary of the Treasury reserves the right to reject or reduce any
®scription, to allot less than the amount of notes applied for, and to make
.ifferent percentage allotments to various classes of subscribers; and any action
.e rr.ay take in these respects shall be final. The bas 13 of the allotment will
,e publicly announced, and allotment notices will be sent out promptly upon allotlent.
Subject to the reservations in the preceding paragraph, all subscriptions
'rom States, political subdivisions or instrumentalities thereof, public pension
nd retirement and other public funds, international organizations in which the
nited states holds membership, foreign central banks and foreign States, Governlent Investment Accounts, and the Federal Reserve Banks, will be allotted in full
.f a statement is submitted certifyinc that the amount of the .subscription does
lot exceed the anlount of the three maturinc securities owned or contracted for
lurchase for value, at 4 p .rr.• , Eastern daylight savine; time, July 26, 19C7. Any
;uch subscriber may enter an additional subscription subject to a percentage
.llotment.
All subscri-oers are required to agree not to purchase or to s~ll, or to rJal~e
.ny nzreer..ents vrith respect to the purchase or sale or other disposition of any of
he notes sub~cribed for under this offerinG at a s~ecific rate or price, until
,fter midnight July 31, 1967.
Corrunercial banks in submitting subscriptions will be required to certify
nat they have no beneficial interest in any of the subscriptions they enter for
he account of their customers, and that their customers have no beneficial
ntereGt in the banks' subscriptions for their own account.
TREASURY DEPARTMENT
(
JUL ~ 6 '19&7
FOR DIo1EDIATE RELEASE
TREASURY DECISION 01( DARTBOARDs AIm llARTGAMES
UlDER THE Al'tTIOOMPIltG ACT
The Treasury Department announced t()t}q that it 16 issuing a
notice of intent to close its investigation with respect to the
possible dumping of dartboards and dartgames from England.
The notice, which will be publiehed in an early issue of the
Federal Register, announces that the investigation is beiag closed
with a tentative determination that this merchandise is not being,
nor likely to be, sold at less than fair value within the meaning
of the Antidu.m:ping Act, 1921, as amended (19
u. s. C.
160 et seq.).
Appraisement of the above-described merchandise from England
will continue to be wi thhe1d pending further determination.
Imports of the involved merchandise received during the period
January 1, 1966, through ~ 31, 1967, were valued at approximately
$500,000.
TREASURY DEPARTMENT
•
FOR
n1~EDIATE
RELEASE
JUL ~ 6 '1967
TREASURY DECISION ON TUBELESS TIRE VALVES
UNDER THE ANTIDUMPING ACT
The Treasury Department has made an affirmative determination
that finished tubeless tire valves from West Germany are being, or
are likely to be, sold at less than fair value.
Imports of the
involved merchandise received during the period November 1, 1965,
through November 30, 1966, were valued at approximately $112,000.
The above determination does not include finished tubeless tire
valves (1) TR 413 and 415 produced by EHA Ventilfabrik, Muhlheim Am
Main, West Germany, when purchased in quantities of over 33,000
units per month over a significant period of time; (2) TR 413 and
415 produced by Alligator Ventilfabrik, Wurttemberg, Germany; and
(3) TR 414, 418, 420, 423 and 425 produced by EHA Ventilfabrik,
Muh1heim Am Main, West Germany.
As to these types of valves the
Treasury Department has made a negative determination that such
valves are not being, nor likely to be, sold at less than fair
value.
The case as to these valves is being closed.
These actions are being taken under the Antidumping Act, 1921,
as amended (19 U.S.C. 160 et seq.), pursuant to a "Notice of
Discontinuance of Investigation and Determination Regarding
Fair Value fl published in the Federal Register of May 16, 1967.
The only written submission received in objection to the
notice was not persuasive that it should be changed.
No request
was made of the Secretary of the Treasury for an opportunity to
present views.
Accordingly, this case is being referred to the United States
Tariff Commission for an injury determination with respect to
finished tubeless tire valves from West Germany except those items
identified under :~os. (1), (2), and (3) above.
Notice of the determination and of the reference of the case
to the Tariff Commission will be published in the Federal
Register.
TREASURY DEPARTMENT
July 28, 1967
FOR IMMEDIATE RELEASE
NEW U.S.
- FRANCE INCOME TAX CONVENTION SIGNED
The Treasury Department today announced that a new
treaty on income taxes between France and the United States
has been signed, replacing in its entirety the existing
income tax treaty.
The new treaty, signed today in Paris, will be sent
to the U.S. Se"nate for advice and consent to ratification.
If ratified this year, it will enter into force one month
after the exchange of ra t ifica t ions:
The new treaty is the result of:
Fllndamental changes in the French tax
structure which integrated corporate
income tax with personal income tax;
The desire on the part of both countries
to standardize their international tax
relations, on the basis of the model
treaty developed by the Organization for
Economic Cooperation and Development
(OECD) Fiscal Committee, published in
1963.
Geographical coverage of the tax convention includes
Metropolitan France and the Overseas Departments of
Guadeloupe, Guyane, Martinique, and Reunion, and may,
pursuant to a specified procedure, be extended to other
French overseas territories.
The treaty contains new provisions dealing with items
of investment income. Dividends received by a U.S. company
from a French subsidiary will be subject to tax at a
5 percent rate instead of the 15 percent rate applicable
under the existing convention. For this purpose, a parent-
F-988
- 2 -
subsidiary relationship exists when 10 percent of the shares
of a corporation paying a dividend are owned by the
recipient corporation.
U. S. portfolio investors in French companies will
continue to be subject to the 15 percent rate. Provision
is made for refund of the prepayment (precompte)of tax
required by 1965 changes in French tax law.
Interest income, which is subject to a 15 percent tax
rate in the source country under the existing treaty, would
be subject to tax at a 10 percent rate under the new
convention. Royalties, now exempt from tax in the source
country, would become subject to a 5 percent tax in the
case of patents, but copyright royalties would continue
to be exempt from tax. Capital gains would also continue
to be exempt except in the case of gains on real estate
and in certain other cases.
The new treaty adopts a definition of a "permanent
establishment" which is similar to that contained in the
OECD model convention.
In this context, industrial or commercial profits
earned by a resident of one country would be taxable in
the other country only if the profits are attributable to
a "permanent establishment" maintained by such resident
in the other country. Industrial and commercial profits
are defined to include rentals from the distribution of
motion picture films.
In addition, an insurance company in one country
which insures risks in the other country through an agent
of independent status would not be considered as having
a permanent establishment in the latter country. The
existing treaty is silent on this point.
The existing treaty provision dealing with private
pensions and annuities has been expanded to include
alimony payments, so that alimony received by a resident
of one of the countries will be subject to tax only in
that country.
The elimination of double taxation is accomplished by
the allowance of a credit by the United States for taxes
levied by France. France, on the other hand, will exempt
from tax some items of income received by its taxpayers
from the United States. With respect to other items of
- 3 -
income, France will allow a credit for United States tax
imposed, but not in excess of the French tax on such
income.
Taxpayers receiving income from real property may elect
to be taxed on a net basis. This provision is similar to
the election afforded unilaterally to nonresident aliens by
the Foreign Investors Tax Act of 1966. France also has
agreed to waive its tax on imputed income based on the
rental value of property in certain cases where a U. S.
resident owns property in France.
The Administrative provisions of the treaty include a
mutual agreement procedure under which the authorities of
both countries would seek to reach agreement on various tax
problems. These include the uniform allocation of income
between related companies as well as a uniform determination
of the source of particular types of income. These provisions
authorize both countries to make appropriate refunds when
necessary.
The treaty would have effect with regard to withholding
taxes one month after exchange of instruments of ratification.
With respect to other taxes on income it would be effective
in France for the assessment year 1967 and in the United
States for taxable years beginning on or after January 1, 1967.
The convention may be terminated by either party giving
a notice of denunciation, through diplomatic channels,
at least six months before the end of any calendar year after
1969.
This convention, when it takes effect,will replace in
its entirety the existing income-tax convention of July 25,
1939 (Convention and Protocol for the Avoidance of Double
Taxation and the Establishment of Rules of Reciprocal
Administrstive Assistance in the Case of Income and Other
Taxes) and will replace -- so far as they concern taxes
on income, capital, and stock exchange transactions -- the
Double Taxation Convention of October 18, 1946, the
Supplementary Protocol of May 17, 1948, and the Supplementary
Convention of June 22, 1956.
000
TREASURY DEPARTMENT
~E 6:30
day, July 31,
P.M.,
1967.
RESULTS OF TREASURY'S WEEKLY BILL OFFERltn
The Treasury Department announced that the tenders for two series of Treasury
Is, one series to be an adctiH,:,nal issue of the bills dated May 4, 1967, and the
,er series to be dated AUgU5t 3, 1967, which were offered on July 26, 1967, were
ned at the Federal Reserve Lanks today. Tenders were invited for $1,400,000,000,
thereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 182-day
Is. The details of the two series are as follows:
GE OF ACCEPTED
lPETITlVE BIDS:
High
Low
Average
91-day Tn ",SIT}' bills
maturi!.£ November 2~ 1261
Approx. Equiv.
Annual Rate
Price
98.956
4.13at
4.189%
98.941
1+.182% 11
98.943
·:
·
·
·
·
182-day Treasury bills
maturing Februarz l~ 1968
Approx. Equiv.
Annual Rate
Price
4.601%
97.674
97.647
4.654%
97.655
4.633% 11
94% of the amount of 91-day bills bid for at the low price was accepted
17% of the a.'Tlount of 182-day bills bid for at the low price was accepted
rAL mmERS APPLIED FOR AND ACCEPTED BY FEDmAL RESERVE DISTRICTS:
>istrict
lost on
lew York
)hiladelphia
aeveland
tichmond
\tlanta
ihicago
;t. Louis
1:i.nneapolis
[ansas City
Jallas
ian Francisco
TOTALS
AEElied For
$
24,598,000
1,413,158,000
13,620,000
40,420,000
9,779,000
29,805,000
296,500,000
44,247,000
15,098,000
17,679,000
J.7,640,OOO
96.327,000
AcceEted
$ 1.4,593,000
760,258,000
4,920,000
35,27O,00(;
6,779,000
17,288,000
47,125,O()0
32,847,000
9,898,000
17,079,000
10,810,000
43,227,000
$1,402,964,000 ~ $2,018,871,000
$1,OOO,099,OGO
AEElied For_
}£·S.£,"Jt ed
$
10,758,000
20,776,000 $
:
1,028,207,000
1,656,~.57 ,000
14,105,000
26,111,000
23~015,OOO
23,015,000
23,1]2,000
23,253,000
27,598,000
44,329,000
93,437,000
323,512,000
55,406,0.00
67,424,000
14)
895, Ci()O
20,395,000
2(,,1.37,000
24,137,000
13)7)6,000
2l,856,000
114,528,000
741478,000
·
$2,365,793,000
mcludes $226 786 000 noncompetitive tenders accepted at the average price of 98.943
Includes $131' 090' 000 noncompetitive tenders accepted at the average price of 97.655
These rates a;e o~ a bank discount basis. The equivalent coupon issue yields are
4.30% for the 91-day bills, and 4.83% for the 182-day bills.
-989
TREASURY DEPARTMENT
=
August 2, 1967
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
~,400,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing August 10 1967
in the amount of
~,301,130,000, as follows:
'
,
91-day bills (to maturity date) to be issued August 10, 1967,
in the amount of$1,400,OOO,000,
or thereabouts, representing an
additional amount of bills dated
May 11, 1967,
and to
mature November 9,1967, originally issued in the amount of
$1,000,103,000, the additional and original bills to be freely
interchangeable.
182-day bills, for $ 1,000,000,000, or thereabouts, to be dated
August 10, 1967,
and to mature
February 8, 1968.
The bills of both series will be issued on a discount basis under
competitive and noncompetitive bidding as hereinafter provided, and at
maturity their face amount will be payable without interest. They
will be issued in bearer form only, and in denominations of $1,000,
$5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000
(maturity value).
Tenders will be received at Federal Reserve Banks and Branches
to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Monday, August 7, 1967.
Tenders will not be
received B.t 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,
!lith 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
rorwarded in the spec ial enve lopes whic h will be supplied by Federal
~eserve Banks or Branches on application therefor.
up
Banking institutions generally may submit tenders for account of
:ustomers provided the names of the customers are set forth in such
~enders. Others than banking institutions will not be permitted to
lubmit tenders except for their own account. Tenders will be received
iithout deposit from incorporated banks and trust companies and from
:esponsible and recognized dealers in investment securities. Tenders
rom others must be accompanied by payment of 2 percent of the face
Imount of Treasury bills applied for, unless the tenders are
ICCompanied by an express guaranty of payment by an incorporated bank
Ir trust company.
'-990
- 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 Treasu~
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 Bank on August 10, 1967, in
cash or other immediately available funds or in a like face amount
of Treasury bills maturing August 10, 1967.
Cash and exchange tendel
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 fra
any Federal Reserve Bank or Branch.
000
TREASURY DEPARTMENT
FOR ]:U'1EDIATE RElliASE
August 2, 1967
RESULTS OF TREASURY'S CASH OFFERING OF
5-1/'~
NOTES
Reports from the Federal Reserve Banks show that subscriptions total
$15,609 million for the offering of $9,600 million, or thereabouts, of 5-1/4
percent Treasury Notes of Series D-1968 , due November 15, 1968.
The total
amount of subscriptions accepted is about $9,870 million.
The Treasur;:r vrill allot in full, as provided in the offering circular,
t,324.l1lillion of subscriptions from States, political subdivisions or instrumentalities thereof, pul)lic pension and retirement and other public funds,
international
organi~ations
in which the United States holds membership, foreign
central banks and foreign states, Government Investment Accounts, and the
Federal Reserve Ban;:s, \,-here the required certification of ownership of
securities maturing August 15, 1967, was made.
On subscriptions received SUbject to allotment, the Treasury will allot
in full those up to $100,000 and other subscriptions will be subject to a
35 percent allotment with a minimum allotment"of $100,000 per subscription.
These subscriptions total $5,921 million from commercial banks for their own
account and $3,364 million from all others.
Details by Feder"ll Reserve Districts as to subscriptions and allotments
Hill be announced later this month.
F-991
TREASURY DEPARTMENT
WASHINGTON
FOR IMMEDIATE RELEASE
August 4, 1967
BACKGROUND MATERIAL ON PRESIDENT'S
TAX PROPOSAL
The attached material constitutes background on the
tax proposals in President Johnson's message on the State of
the Budget and the Economy, delivered to the Congress August 3,
1967 .
Included in the attachments are:
Material on the 10 percent surcharge proposal
as it affects individuals and corporations;
Tax tables, showing the effects of the surcharge
on individuals and on corporations;
A description of the acceleration of corporation
tax collections;
Details of the continuation of excise taxes on
automobiles and telephone service.
Attachments
F-992
A
- 1 -
EXPLANATION OF PRESIDENT'S PROPOSAL
FOR A TAX SURCHARGE OF TEN PERCENT
The President's recommendation to increase taxes is a
temporary surcharge of 10 percent on personal income tax
liability and 10 percent on corporate income tax liability.
The surcharge provides an exemption for low income individuals
and families. It is a 10 percent increase in the tax liability
otherwise due, not 10 percent of the taxable income.
The proposal would make the surcharge effective
October 1, 1967 for individuals and effective July 1, 1967 for
corporations. The President has recommended that the surcharge
remain in effect until June 30, 1969, or continue so long as
the unusual expenditures associated with our efforts in
Vietnam require higher revenues.
Under this proposal:
-- A family of four with an income of $10,000, now
ordinarily paying a tax of about $l,lOO,will pay
at most an added tax of $9.25 a month.
-- Those American families whose incomes are below
~O,OOO -- 3 out of every 4 -- will pay less than
this amount.
The 16 million taxpayers in the two lowest income
brackets would be completely exempt from the
surcharge. For example, a married couple with 2
children, with an income of less than $5,000 a year,
would pay no surcharge.
The one out of every four American families who now
pay no income tax would be unaffected by the surcharge.
INDIVIDUALS
This is how the surcharge would apply to individuals:
Since the surcharge would be effective on October 1,
1967 and thus be effective for only one-fourth of the
year 1967, the rate of the surcharge for that year
would be 2.5 percent of the tax for the entire year.
If the tax on an individual for 1967 would be $1,000
under present law, for the income of the entire year
the surcharge would raise this tax by $25, to $1,025.
Since the surcharge would be in effect for all of the
calendar year 1968, the surcharge due on calendar 1968
~ax liability would be the full 10 percent.
On a tax
- 2 -
B
of $1,000 which the individual would otherwise owe, the
surcharge would come to $100 or 10 percent.
Exemption
The exemption from the surcharge covers taxpayers whose
taxable income falls entirely within the first two brackets
of the individual income tax. Generally speaking this
exemption would exclude from the surcharge all single persons
with taxable incomes of $1,000 or less after deductions and
exemptions and all married persons with taxable incomes of
$2;000 or less after deductions and exemptions.
In terms of specific tax liabilities, single returns
having $145 or less tax, joint returns having $290 or less
tax, and head of household returns having $220 or less tax
would be exempt.
As an example, married couples with two children with
earnings of less than $5,000 per year and single people with
earnings of less than $1,900 per year would not be subject
to the surcharge, assuming the use of the minimum standard
deduction.
The exemption will cover about 16 million taxpayers,
or appro«imately one-sixth of the 98 million total of all
taxpayers. Of the 16 million who will not be subject to
the surcharge, approximately 5 million are single individuals
and 11 million are married taxpayers.
CORPORATIONS
This is how the surcharge would apply to corporations:
For calendar year 1967, the surcharge for
corporations would be higher than for
individuals because of the earlier effective
date, July 1 -- for corporations.
For corporations whose taxable year coincides
with the calendar year, the surcharge for
calendar year 1967 will be 5 percent of the
tax for the entire year (as against 2~ percent
for individuals) since the surcharge would be
effective as of July 1 and thus would apply
for half of the calendar year.
- 3 The full 10 percent surcharge would apply for
1968.
For corporations whose taxable year does not
coincide with a calendar year, the rate of the
surcharge would be determined on the basis of
the number of days in the corporations' fiscal
years that fall within the period during which
the surcharge is in effect (July 1, 1967 to
June 30, 1969).
The liability to which the surcharge applies is the
tax liability before allowance of the investment credit
and the foreign tax credit.
A calendar year corporation with profits before tax
of $100,000 will pay an additional $2,075 in 1967, and an
additional $4,150 in 1968.
Revenue Effect
The revenue effect of the surcharge is to increase
fiscal year 1968 receipts by $6.3 billion:
The increase in receipts from individuals would
amount to $4.0 billion.
The increase in receipts from corporations would
amount to $2.3 billion.
000
c
D
TREASURY DEPARTMENT
WASHINGTON
AuguBt 4, 1967
FOR IMMEDIATE RELEASE
TAX TABLES SHOWING EFFECTS OF
10 PERCENT TAX SURCHARGE
The following tables indicate, for 1967
and 1968, effects of the surcharge recommended
by the President on various levels of wage
income and various family situations.
Comparison of 1963-1966 Tax Liability and 1967-1968 Tax Liability
Under Proposed Tax Increase for Illustrative Taxpayers
(Singl~ Individual)
11
Wage
income
$ 1,000
:
1963 tax
$
Y
62
: 1964 'l'a.x Act :
decrease
$
46
1966 tax
$
?J
16
1967 tax
$
Y
16
: : Tax increase :
:over 1966 tax 11: 1968 tax
-- ~
§/
Tax increase
over 1966 tax ~
--
16
1,900
224
77
147
151
$ 4
16?
2,000
242
79
163
167
4
179
16
3,000
427
94
333
341
8
366
33
5,000
818
147
671
688
17
738
67
7,500
1,405
237
1,168
1,197
29
1,285
117
10,000
2,096
354
1,742
1,786
44
1,916
174
12,500
2,887
489
2,398
2,458
60
2,638
240
15,000
3,787
633
3,154
3,233
79
3,469
315
20,000
5,900
982
4,918
5,041
123
5,410
492
25,000
8,324
1,342
6,982
7,157
175
7,680
698
35,000
13,778
2,151
Office of the Secretary of the Treasury
Office of Tax Analysis
1/
2/
-
3/
~/
~
11,627
11,918
291
12,790
$
~
15
( ,,)
Cn
1,163
" J
AU:gust~907
Proposed tax increase of 2.5 percent of the tax in 1967 and 10 percent in 1968 which does not apply to single
returns with taxable income of $1,000 or less and joint returns with taxable income of $2,000 or less.
Tax liability computations assume mlnlmum standard deduction or deductions equal to 10 percent of income
whichever is greater. Tax liability from optional tax table where income is under $5,000.
1967 tax minus 1966 tax.
1968 tax minus 1966 tax.
There is no increase in 1967 or 1968 for a single person whose tax 4t 1966 rates is $145 or less.
-
Ta.ble 2
Comparison o~ 1963-1966 Tax Liability and 1967-1968 Tax Liability
Under Proposed Tax Increase ~or Illustrative Taxpayers !I
(Married Couple, No Dependents)
viag€
income
1963 tax
y
: 1964
Ta2<. Act :
dEcre~e
1966 tax 2/
1967 tax
y
Tax increase
over 1966 tax 11
-- 2L
-- L/
----
1968 tax
y
Tax increase
over 1966 tax
!!/
-- 21
-- L/
$ 2,000
$ 122
3,000
305
101
204
204
3,600
413
119
294
301
*- 7
323
$ 29
5,000
660
159
501
514
13
551
50
7,5 00
1,141
227
914
937
23
1,005
91
10,000
1,636
294
1,342
1,376
34
1,476
134
12,500
2,213
382
1,831
1,877
46
2,014
183
15,000
2,810
475
2,335
2,393
58
2,569
234
20,000
4,192
708
3,484
3,571
87
3,832
348
25,000
5,774
978
4,796
4,916
120
5,276
480
35,000
9,601
1,604
7,997
8,197
200
8',797
800
$
of
64
$
58
$
58
$
58
204
9fflce of the Secretary
the TreasurY
August 3, 1967
Office of Tax Analysis
Proposed tax increase of 2.5 percent of the tax in 1967 and 10 percent in 1968 which does not apply to single
returns with taxabJe income of $1,000 or less and joint returns with taxable income of $2,000 or less.
Tax liability computations assume minimum standard deduction or deductions equal to 10 percent of income
whichever is greater. Tax liability from optional tax table where income is under $5,000.
3/ 1967 tax minus 1966 tax.
~ 1968 tax minus 1966 tax.
5/ There is no increase in 1967 or 1968 for a marrie~ coup12 whose tax at 1966 rates is $290 or less.
y
Y
Comparison of 1963-1966 Tax Liability and 1967-1968 Tax Liability
Under Proposed Tax Increase for Illustrative Taxpayers ~
(Married Couple, Two Dependents)
v:a.ge
inco!1".e
1963 tax
$3,000
$
y
:1964 Tax Act
(1 pcreaB<t·
65
$
61
19G6 ~ax 2/
$
4
1967 tax
$
y
Tax increase
over 1966 tax ]/
-- 51
-- ~I
1968 tax gj
.'5
Tax increase
over 1966 tax ~
4
LI
290
~I
5,000
420
130
290
290
7,500
877
191
636
703
$17
755
10,000
1,372
258
1,114
1,142
28
1,225
111
12,500
1,901
334
1,567
1,606
39
1,724
157
15,000
2,486
424
2,062
2,114
52
2,268
206
20,000
3,800
640
3,160
3,239
79
3,476
316
25,000
5,318
g06
4,412
4,522
no
4,853
441
35,000
9,037
1,508
7,529
7,717
188
8,282
753
<;·f:i CEo of the Secretary G:' the Treasury
Office of Tax Analysis
$
Augu:,'t
J,
11
Y
Proposed tax increase of 2.5 percent of the tax in 1967 and 10 percent in 1968 which does not apply to singl
return:" \"ith ta:('3.b1e income of $1,000 oc' less and joint returns 'with taxable income of $2,000 or le.:;s.
Tax li.abili ty .'omputation.,; assume minimlun standard deduction or deductions equal to 10 percent of income
\'Jhichever is greater. Tax 1 iabi 1 i ty from optional -':;CiX table 'VJ~ere income is Lnder $5,000.
tj
_I
1_
It
,,'(
~ 't:"
r:1~('"1)S
1 ,,/,,/ + :-v·~.
1968 tax minu.:; l"be: tax.
There
is no in:rease in Ig67 or IJb8 for a married couple whose tax at lq66 rates is $2 QO or less.
~
69
H
TREASURY DEPARTMENT
Washington
August 4, 1967
FOR IMMEDIATE RELEASE
CORPORATE CURRENT TAX PAYMENT PROPOSALS
In ~is August 3 Message on the Budget and the Economy,
the PresLdent recommended two proposals relating to coporate
current payments of tax, effective for 1968 tax years. Under
the proposals there would be:
Elimination over a 5-year period of the present
exemption of the first $100,000 of corporate tax
liability from the requirement of payment on a
quarterly estimated basis. This change would put
corporations on the same current tax basis as an
unincorporated proprietor, who must now make
estimated tax payments based on his entire liability.
An increase from 70 to 80 percent that a corporation's
estimated tax for any given taxable year must bear
to ics final tax liability. The 80 percent
requirement is now applicable to those individuals
who are required to estimate their tax liabilities.
Revenue resulting from both proposals would be $800
million in fiscal year 1968 and $400 million in each of the
succeeding fiscal years. The proposals do not increase the
actual tax liabilities of any corporation.
EFFECTS OF PROPOSALS
Under present law, corporate taxpayers are required to make
estimated tax payments only with respect to their estimated tax
liability in excess of $100,000. They are not required to make any
estimated tax payments on their first $100,000 of estimated tax
liability, and if their annual estimated tax liability is $100,000
or less, they are not required to file a declaration of estimated tax.
The first proposal places all corporate taxpayers on a current
tax payment basis with respect to their entire tax liabi~i~y.
This result would be achieved under the proposal by provLdLng
for a gradual elimination of the $100,000 exclusion over a
five-year period, beginning with taxable years 1968.
The provision gears tax payments more closely to accruals of
tax liability and to current developments in the economy.
The second proposal raises from 70 to 80 pe~cent ~he percent
of the tax liability that a corporation may pay Ln estLmated tax
by installments without incurring a penalty. The 70 percent rule
was instituted in the 1954 Revenue Act, and has not been
- 2 I
revised since as respects corporations. The proposed change
to 80 percent conforms to the percentage now required to be paid
by individual taxpayers, as established by legislation
enac ted in 1966.
HOW THE PROPOSALS WORK
payment of First $100,000 of Estimated Tax
The proposed change would require a corporation to file a
declaration of estimated tax for a taxable year if it can
reasonably be expected that its tax liability for the year
(after taking into account credits) will exceed $40, the figure
presently applicable to individuals. As indicated above, the
present exemption for all corporations is $100,000.
The proposal would involve a new definition of "estimated
tax" (which is the basic amount subject to payment by
installment) reflecting the removal of the existing $100,000
exemption over a five year period. During the transition
period, a corporation, in determining the amount of its
estimated tax liability, would be permitted to exclude an amount
equal to the applicable "exclusion percentage" multiplied by
the lesser of (1) $100,000, or (2) the amount which the
corporation estimates as its income tax for the year less the
estimated amount of its credits.
The "exclusion percentage" would be defined as follows:
If the declaration is for
a year beginning in -1968
1969
1970
1971
The "exclusion percentage" is -80
60
40
20
In the case of taxable years beginning after 1971, there
would be no special exemption.
As an example, a corporation which estimates it~ income
tax less credits for 1968 to be $80,000 would be entlt1ed to
an estimated tax exclusion of $64,000 for 1968 -- 80 percent
(its exclusion percentage) times $80,000. Its estimated,tax
liability would, therefore, be $16,000. If the corporatlon
estimates its income tax less credits for 1968 to be $120,000,
its estimated tax exclusion would be $80,000 (80 percent
times $100,000) and its estimated tax liability would be
$40,000.
J
- 3 -
Increase from 70 to 80 Percent Respecting Amount of Estimated
Tax Which Corporations Must Pay in Installments
Under present law, a corporation is not subject to
penalty for an under-payment of estimated tax if its payments
equal or exceed those which would be required on the basis
of estimated tax liability of 70 percent of actual tax
liability. The proposal amends the current law to raise the
70 percent figure to 80 percent. This conforms the percentage
for corporations to that now applicable to individuals.
HISTORIC BACKGROUND
Prior to 1950, corporations were permitted to pay income
taxes, in four quarterly installments, in the year following
the taxable year. Thus, for a calendar year corporation,
the tax for 1948 was payable in four equal installments during
1949.
The first legislation designed to accelerate corporate
tax payments (the Mills plan) gradually advanced payments,
beginning in 1950, to two 50 percent payments in the third
and sixth months following the taxable year (i.e., March 15
and June 15 for calendar year corporations).
In 1954, a five-year transition plan spread over the
years 1955-1959 was adopted to effect a partially current
payment of the estimated tax. When fully effective, a
calendar year corporation paid 25 percent of its estimated
tax in excess of $100,000 on September 15 and 25 percent on
December 15 of the current taxable year. The balance was
payable in two installments the following March 15 and June 15.
The Revenue Act of 1964 provided for a further gradual
acceleration of estimated corporate tax payments which, by
1970, would have required corporations to be on a totally
current payment basis as to tax liabilities in excess of
$100,000; that is, payments equal to 25 percent of the
estimated tax (over $100,000) would have been due on April 15,
June 15, September 15, and December 15 of the taxable year.
(Fiscal year corporations must make estimated payments by the
fifteenth day of the fourth, sixth, ninth and twelfth month
of their fiscal years.)
K
- 4 The Tax Adjustment Act of 1966 accelerated the 1964 plan
by requ1r1ng that the transition to current status (for tax
liability in excess of $100,000) be achieved with taxable
years beginning in 1967. Thus, for taxable years beginning
in 1966, the April 15 and June 15 installments were increased
to 12 percent of the estimated tax. For taxable years
beginning in 1967, 25 percent payments were required on the
April and June payments. For all taxable years beginning
in 1967, therefore, full current payment of estimated
corporate taxes, to the extent in excess of $100,000, will
have been achieved.
000
L
- 5 TREASURY DEPARTMENT
WASHINGTON
FOR IMMEDIATE RELEASE
August 4, 1967
FIGURES ON THE RECOMMENDED CONTINUATION OF EXCISE
TAXES ON AUTOMOBILES AND TELEPHONE SERVICE
The President today recommended postponements of reductions
in the 7 percent manufacturer's excise tax on automobiles,
and the 10 percent excise tax on telephone service, for the
period covered by the temporary surcharge.
For manufacturer's excise tax on automobiles, the
President recommended that:
The scheduled drop to 2 percent on April 1, 1968
be postponed to July 1, 1969;
The scheduled drop to 1 percent on January 1, 1969
be postponed to January 1, 1970.
For excise tax on telephone service, the President
recommended:
The scheduled drop to 1 percent on April 1, 1968
be postponed to July 1, 1969;
The scheduled elimination, now set for January 1,
1969, be postponed until January 1, 1970.
STATEMENT OF
THE HONORABLE JOSEPH W. BARR
THE UNDER SECRETARY OF THE TREASURY
BEFORE THE HOUSE COMMITTEE ON BANKING AND CURRENCY
ON H.R. 11601 (CONSUMER CREDIT PROTECTION ACT)
MONDAY, AUGUST 7, 1967
Madame Chairman and Members of the Committee:
I am very pleased to have this opportunity to appear before
you to testify on H.R.
11601, the "Consumer Credit Protection
Act,"
As you know,
the President on February 16, 1967, in his
Message to the Congress on Consumer Protection, recommended
the enactment of legislation which would require lenders and
credit sellers to provide consumers with full and complete
information on the cost of credit.
The President said:
"I recommend the Truth-in-Lending Act of 1967 to assure
that, when the consumer shops for credit he will be presented
with a price tag that will tell him the percentage rate per year
that is being charged on his borrowing.
"We can make an important advance by incorporating the
wisdom of past discussions on how the cost of credit can best
be expressed.
As a result of these discussions,
I recommend
legislation to assure -"Full and accurate information to the borrower;
and
"Simple and routine calculations for the lender."
The objectives set forth by the President have been sought
for many years in the Senate -- but until this year, without
SUccess.
Former Senator Paul Douglas led a six-year fight for
-
2 -
truth-in-lending legislation, and ironically, only this session,
after the distinguished Senator from Illinois had left the
Senate, did the Senate finally proceed to act on the measure.
S.S, the truth-in-lending bill, was reported unanimously out
of the Senate subcommittee and the full Senate Banking and Currency Committee,
and passed the Senate by a vote of 92 to 0 on
July 11, 1967.
These events provide this Committee with a unique opportunity to take a major step toward improving our consumer credit
system.
If this Committee and the full House see fit
to agree,
effective truth-in-Iending legislation can become law this year.
I believe there can be no doubt as to the importance of a
truth-in-Iending law,
or the need for one.
essential to the American economic system.
Consumer credit is
It finances a large
proportion of all durable goods purchases and a sizeable part
of purchases of nondurable goods and services.
Last year, out-
standing consumer credit, excluding mortgage credit,
$95 billion.
Since new instalment credit extended in a year
roughly equals the amount outstanding,
it appears that consumer
credit financed about $100 billion of individuals'
1966.
totaled
purchases in
This is more than one-fifth of total personal consumption
expenditures as recorded in the national income accounts.
Again leaving aside mortgage credit, last year interest and
other credit charges paid by consumers for the use of consumer
credit totalled approximately $13 billion.
This is a large sum.
- 3 It is approximately as large as the interest payments on over
$300 billion of Federal debt.
for men's and boys'
for electricity,
It is more than consumers spent
clothing -- for
gas,
furniture and appliances
and water -- for doctor and dentist
bills -- or for alcoholic beverages.
It is almost as much as
they spent for gasoline and oil -- over half of what was spent
on women's and children's clothing -- and about half of new
and used automobile purchases.
It is clear that, while the consumer has some knowledge
of the goods and services he is buying, and in almost all cases
knows the price,
few consumers are really aware either of the
dollar cost or of the annual percentage rate paid for the use of
credit.
This lack of knowledge has certainly contributed to the
abuse of credit.
For evidence of this, we need only look to the
rising tide of employee bankruptcies -- cases filed in U.
S.
District Courts in 1965 were 66% above the number in 1960 and over
500% above 1950.
The consumer now finds
it impossible to select from all the
credit sources available that one which is cheapest or best for
his needs.
Because of the wide array of lending practices he is
unable to make a rational choice among the alternatives.
is abundant evidence on this point.
economy that has grown so fast
There
This is an area in our
it has created its own language.
Much of that language is beyond comprehension for most consumers.
Even those sophisticated in finance find difficulty in distinguishing
- 4 "add-ons",
"discounts", '~recomp'.ute",
11
" f 'lnance c h arges,
II
e h arges,
tials", "sales prices vs.
"Rule of 78's",
"service
II.
J.nterest", "term price differen-
cash prices", etc.
The variety of
rate quotations is beyond belief and sometimes ridiculous.
a financial expert,
who knows the ins and outs of credit,
Even
can
find the correct solution difficult in the absence of uniform
standards for disclosure.
Such confusion in a $13 billion
consumer purchase category is not in the national interest.
The truth-in-lending provisions of H.R.
to meet this problem.
11601 are designed
Their most important feature,
the require-
ment to state the finance charge as an annual percentage rate,
in addition to its statement in dollars and cents, will provide
for uniform disclosure of finance charges for the first time in
this Nation's history.
This purpose is clearly within the tradition of our economic
system, which relies on the discretion of informed consumers to
expreS3 their preferences in the market.
Our free enterprise
system is weakened by poorly-informed consumers, or even wellLnformed consumers who are unable to communicate effectively in
the market because of jumbled terminology.
These provisions will give the American consumer the information he needs to compare the costs of credit from different
sources and to make an intelligent credit decision.
Equally im-
portant, he can make a comparison with what he can earn on his
savings.
-
5 -
Disclosure could be handled in a number of ways if comparing credit charges
from one source with another source were
the only objective.
But many consumers also have another
choice -- they can borrow the money or they can use existing
savings.
In the latter case,
consumers need a means of compar-
ing the cost of credit with the earnings on their savings.
In
financial practice the earning power of savings is traditionally
expressed as a percent per annum.
Thus,
it is reasonable to apply
this same standard of comparison to consumer credit,
to have
the total cost of credit -- including interest and other credit
charges -- expressed as a percent per annum on the unpaid balance.
This is exactly the basis called for in H.R.
For years,
11601.
businessmen have been accustomed to dealing
with an annual percentage rate of return in making their own
financial decisions.
This bill would simply extend this prin-
ciple to the area of consumer credit -- and enable the American
consumer to make informed choices in his use of credit.
The practical application of the annual rate requirement
has been studied at length,
and we have concluded that this re-
quirement will impose no significant burden or difficulty with
respect to the overwhelming majority of credit transactions in
the United States.
In fact,
the standardizing of credit termin-
Ology will facilitate credit transactions.
We have had our Treasury staff prepare a set of tables that can be
used to determine the annual percentage rate with a high dpgree of
accuracy
- 6 for even the most complicated credit transactions.
In fact,
given
the reasonable tolerances of accuracy permitted by this bill, a
simple one-page table will suffice for all but the most extreme
cases.
Such a table is already in use under credit regulations
issued by the Department of Defense, and we have prepared a set of
examples illustrating its applicability to H.R.
11601.
Moreover,
testimony before the Senate Committee assures us that tables ean
be produced in quantity for widespread use by the credit industry
once this
legis~atiun
1S
CnaCLea.
After I complete my prepared statement, I would be delighted
to run through a few of these examples for the Committee.
Then,
if you wish, I will take any credit transaction the Committee would
like to suggest, and show how the annual percentage rate call be
found in these tables.
I am confident that this Committee, like
the Senate Committee, will agree with me that if this ex-congressman
can figure the annual percentage rate,
then there is simply no
basis for the assertion that the provisions of this bill are unworkable.
There also is no justification for the claim that the annual
rate disclosure requirement would prejudice lenders under state
usury laws.
The disclosure provisions of H.R. 11601 deal only with
the annual rate of finance charges, not with interest rates.
In
fact the finance charge is defined to include many charges which
clearly cannot be classified as interest.
In addition,
the dis-
closure requirements would not change the legal status of existing
- 7 credit charge practices.
Credit charges which now are lawful
under State usury laws would not become unlawful simply by reason
of being disclosed to the consumer.
The truth-in-lending provisions of H. R.
S.5, the bill passed by the Senate,
11601 differ from
in several respects.
The Senate
bill provides exemptions from the disclosure requirement for small
credit transactions
and first mortgages,
and also exempts credit
insurance from inclusion in the finance charge.
In addition,
the
Senate bill permits the rate on regular revolving credit accounts
to be stated on a monthly rather than an annual basis.
As we advised the Committee in our report on H.R. 11601, we
believe that all types of creditors and all credit transactions
should be treated equally and impartially to the greatest extent
possible.
We therefore support the provisions of H.R.
11601
which
would eliminate these special exemptions.
The bill before this Committee also would extend the disclosure requirement to cover advertising of credit.
more fully implement the President's recommendations,
This would
and would
more effectively inform consumers of the comparative costs of different types of credit.
We therefore also support this provision
of H.R. 11601.
There are a number of other proposals included in H.R. 11601.
These include an 18% limitation on credit charges; a prohibition
against "confession of judgment" notes;
an authorization for reg-
ulation of credit for commodity futures contracts; authority to
-
8 -
restrict consumer credit during national emergencies; and a prohibition against garnishment of wages.
Finally, the bill would
establish a National Commission on Consumer Finance.
The issues presented by these proposed provisions are many
and complex.
Unlike the disclosure requirements I discussed
earlier, these issues have not yet been subjected to the careful
study they merit.
We are dealing here -- in the area of credit
with a subject that vitally affects the successful operation of
our Nation's economy.
I
therefore believe that these major new
issues should receive a good deal of exploration before any final
action is taken.
Whether this study is conducted by the Congress,
by an existing agency of
new Commission,
the Executive Branch, or by the proposed
I am certain that this committee will avoid pre-
cipitous action in this important area.
Moreover, I hope that the Committee will not permit the need
for study of these other issues to delay action on the truth-inlending portions of H.R. 11601.
After long years of effort, and
longer years of need, we should postpone no further providing the
American consumer with the information he needs to make intelligent
use of our vital consumer credit system.
Specific Provisions
H.R. 11601 would:
(1) require every individual or firm engaged in the business
of extending credit to furnish every prospective consumer of credit
a clear, written statement of the amount of the finance charge to
- 9 be paid for the extension or use of credit both in dollars and
cents and as an approximate annual percentage rate.
(2) require equivalent disclosure in advertising the terms
on which credit is available.
There are, however, basic exemptions for:
(1)
Business credit.
(2)
Credit transactions involving the purchase and sale of
stocks, bonds, and other securities which are already under the
jurisdiction of the securities law.
tlCredit" is clearly defined to mean consumer credit and credit
for agricultural purposes.
As a rough rule,
this would mean that
credit incurred in the purchase of "depreciable property," except
for agricultural purposes, as interpreted by the Internal Revenue
Service, would be exempt.
ment agencies,
The bill also exempts credit with govern-
and their instrumentalities and credit transactions
with a broker-dealer registered with the SEC.
"Finance charges" includes most of the charges which result
from the consumer's use of credit and from which he would be free
if he had paid cash or not borrowed from the lender.
The general
guideline -- to which I would subscribe -- is that finance charges
include all of the charges that accompany credit and which the
consumer becomes liable for if he borrows or buys on credit.
Two areas of concern are credit life insurance and housing
closing costs:
With respect to insurance,
some creditors carry this risk
at no direct cost to the individual borrower.
Until 1955, for
- 10 example, small loan companies, operating under the Russell Sage
philosophy that the customer should be quoted one credit charge
only -- to eliminate any temptation to hide the cost of credit
in an underbrush of additional charges
from making additional charges~
were expressly prohibited
including any charges for insurance.
Credit unions typically insure their borrowers for life and
disability; the cost is included in the interest rate paid by the
borrower.
Some other financial institutions also follow this practice
of carrying blanket policies.
Others, however, give consumers the
option of carrying insurance.
And a third group makes the in-
surance coverage a condition of the loan extension.
Clearly the latter class of creditors should include premiums
in the finance charge.
In those cases where insurance is clearly
optional or, as stated in the Department of Defense directive,
neither the vendor or lender has a direct interest in the sale of
the insurance,
then the insurance premiums would not be part of
the finance charge.
What remains, admittedly, is a gray area which would
bear further study of prevailing practices to determine their rightful placement.
With regard to housing costs, I
resubmit for the record the
two statements supplied by the Federal Housing Administration which
satisfy me that guidelines are sufficiently clear for the administrative agency to prescribe rules and regulations which would be
within the intent of the bill and would be welcome by the housing
finance industry.
(1962-page 11
1963-64-pages 12-14)
- 11 -
190
TRUTH IN· t.E!{D!NG-l PO!!
Followlng La tb clA~t1on
J~lun~
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ut4nslon
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of c:edlt
Not Ir.d.
dent to
em!'..!.1oD
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end
10. ReccrdlllZ
thl3 1.1
B (c~
Icr prePi?lIr.. th$ s.;ttl'!I)6!lt ,:..:e.....•..•.•.. X
clter U:.en altorn.ly'sl.
11. App~{{~~:;;.i:~ii~~:~~~~~;;;~ii::::::::::::::::::::::::::::::::::::: :~::::::::: ~
~. Ap~~rt!onm~nt
U. BlOAter s)!ee
lIS uro .
(It
cl1n!tlsl Premium I~r fire "ad Call!.9..lty lnsura.:lC\J ••••••••••••..•••••••••• X
broker obtiilns .6..c.anclIji lor borrower or SOIllB £uvloe ct ~I:&t X •••••••••
1.. E:crows for futurs paym6ntl of taxes. Inslll'!nca (lncludlna: bot~ c!l3ueJ~f •••••••••••• X
and IIle of horro·,.. er).
U. Adjustments of pu;cbse Prloe n;.;U:UIOIl !rOIll supplemet:hJ eLT£~m.et:tI •••••••••••• X
bet"·et'n vendo; ..nd von<!~!. or vendee a!ld otbeN (addJ:lo:l3 to or 1:Jbtn:t1oll! from purch~s J:dce ~csuse at lncluslon or exclu.;.lOll at t:,:r....
lU~b
as draras
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C3lp.::k,).
16. toe'il transler or ad valoNc tues............................................ .••••••••••
17. Not!\rY lee:
•
:x
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ll. lr..!U1one.l1l:l f'To;>uty OHJ' term 01 mo.tr..:o ••••••••••••••••••••••••••••••••.•••••••••••
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I FH A and VA d,
no~ ~t
booe
pU~Msers
to pay dlsoounU.
I bope that this Inlo::omation wlll be ot esslstJ!.nce ro yOU!' cO:nr:ltttce in Il~
consideration of the tI".lth·ln·lendlng bill
Slncerely ,.our~,
Mn.TO!( P. B::l.!z7.. Ocr.~j'cl OO\JMe1.
Senator BE!-n·,,"1:.'IT. Just for the record, some of thesa chr:.rg~s wht.::h
we f'.grce are incident nro not included in the ste.tc;ncnt that you
have mad&, are not included in the printed form thl'.t Mr. Haray
present.ed to us. They aro outside it.
There is just one other area. on which I would like to build a very
brief record.
Mr. SE:m:..'t. Sen!1.tor Bennett, if you are gomg to turn to somethinO'
els.~, I think it might be helpful on this point to show: What shoul~
& roster of items be to which your question ~llOuld be directed 1 I
think that i s Senator BEN~"Z'.£T. That is whf\t I Rm trying to get a.t.
Mr. SEllER. Bc.:£mse you h~ye a closing sheet there which might
have some local ja.rgon in it which D'u~ht not be typical.
Senator BEN~"E1'1'. Right. I am Just interested in a. general list
which can be generally applicable.
Mr. SnU:R. Yes.
In resoon~.3 to e. guestion in n. letter that Senator DO<lglr.s Eent U3
on Dece,~hr 21 of Just ·VC!'..!', "ma.t kind::; of Ch~'!."g2S nre p~:mitted
under Str.te b,."s 1" ThiS' is 'what 1re 1rere rderrin,; to eurEer--
- 12 -
1251
3. Differences in the Typcs and Costs of Fees r.nd ChargQs V~vied
by Din'ercnt TYF.:'3 of 1I1stitutivns Extending HOllSiIi6' Credit
No inform1l.tion i'J F"uihblo on the tyP33 end amounts of fees a.nd
chnrges levied by differf'nt types of in;tllutions in making mortgage
lonns. It should bo noted in this connection, hoY(cnr, thJ.t Inany of
the chnrgc3 paid at tho time of the loan closing are not under the
control of the lcncic!" flnd f.ro not conceted by Of for him, such M for
title insure.ncc, proper~y Slir>ey, Federal and State st~.mp3 on deeds,
recording of mortgftge and deed. Some of the other chefC<?s mnde
JnAy renect work p€>rformed by employees of the lender or hl outsiders,
Buch as, the npprnisr.l of tho propp-rly. The mortgngeo's imtid service
chr,rgc, however, is under tho control of tho lender.
CrediJ Unions
Credit unions are limited, under the Federal Credit Union Act, to ~
lno.ximum interest rnte or 1 pefcent por month on unpaid balwces, and
this rfile ml1S~ include f.ll cllGrge; incident to mn.k.ing tbe loan. Wo
understand that Fcdcre,l crodit unior.3 meke Ycry few [Qo:-t.:;«::;c lo~n9,
probnbly b('cnuse tho maximum 5-ycp.r malu...-ity pe!m.it~d on -loans
they mr.y mr.kc limit-:) their cPC!!'CtiOf!3 in thiJ rcpsct.
Tho) follo\',in'" in{Ol1D::.tion p;:oyidd by the BUJ'8':U of :....i,d;:;.d Credit
Unions, D2pCirtDC.ent or Es,:Jtb E-duc::.t!OD r ~d T,'di'::.:'3, c::p!~.b') tho
tpcciDC cu:-.:rE;;:-.1 ';7bir~ ~J L!c.i'udd cr e-.::c1u.cl:d L7':~l tb.) 1 p:.;c.:,nt
pc: r1c:Jt.h r~',~').
- 13 1252
TRUTH IN
~:-mrno--l~(\3-64
None of the follomng c.()3b L'lcident to r.la~ir~" r. loc.n mI., be
charged to lhe borrower if it resulta in a t.otrJ co;t of mOTa than 1
perC()nt per month (or 12 purcc!lt per ennum) en unp.c.id b~L,!'cu:
1. InspectinG and nppn\i.;ing real or per"3onal prop~rty.
2. Recordinr; of ch r.ttd mort~ebro, reru. eJt~~ mort{;aO'cJ or
other lien instM..lmtn~.
<> ,
3. Title eearch.
4. Brinr;inr, flb?tr,~ct of tit10 to rOfl.l (stl'.lo up tlJ date.
o. Attor:1cy's opi~ir:ln r.'3 to titlo r.nd nJiditv of c;edit union'c
li('n.
ir,~i.'rr,:1ce.
Titl,~ CCrll:!Cr.tC.
6. Titl,
7.
8.
9.
10.
11.
Prcp~ri,!~ dtedo of tru3t, mortguge3, or other lien innlrumBIlUl.
Chattel hen nonming inEl!IMc{;.
Credit inyc::;t:::;[!~icm and credit reports.
Credit life (borrowEr's proU)ction), dWilbilitJ , health, or
Rcciden t in3Urance.
12. Fi1in~ assignments of personal property such C:J lite insurance
policies, mortgages, etc ..
IttlTIq at cost related to tho following have been held to be o'Jtside
t.be limitation of interest charge3, and tho borrower may be r~q'_1ired
to pf.y them:
1. Prepnring relea~e of mortgE\.ge or other lien inntrument.
2. Recording release of lien.
3. Hnzard ir,5uf:>..nce on the property, such £'.!l fire, theft, lir.bUity,
col1i3ion, windstorm, or other
C3.S~!:.WeJ.
4. Restoring clear ti tle to borroy;'er.
~
Fc-cs or CharE;:?s Paid by th~ Borr(\wer on!l Hotis!n~" CNdit
Trans2.ction Which Should Dc ReGarded C9 Incldt!r:t to the
Credit Transaction
While some of theae individual items may be CDnsidf':cd
M
incident.
to the credit transaction, and some may not, there I\~e others which
mp.y fall in either Cf'.tcgo:-y or be divided bet',veen tha t,VfO categoriea,
depending upon th3 p~{fticu1ar circumstances inyo!vcd.
'l'he listing presented below rcpr£'.sent.s an attempt to cll1.:;aiCy into the
cr.tcgories desired, the individur.l items or loen c1o.3ing coatg which
appear in table -1 in tho inrormeticn provided in e.n:w{er to queation 2.
It should be noled that mnny or tht:38 chargeo whi~h are paid at the
time of loan d)3i nO', nre not undcr t he con troi of the lender and ar6
not collected by th~ l()nd~r.
l. Items whlcb may ba con::idered 8.S incident. to th~ credit transf.ction:
Photos
FHA examinl\tion fee
11ortgr.s;o te.x (in the n~t.uru or
MortgL'.gec initid tervic9 (63
stamp t~", etc.)
Mortgf.~ee cppri\i::J f~J
SUI"voy (of pro?:~ty)
Credit r~V-'rt
TRUToH
~ LENDn\a--1963-6~
1253
2. ltc!l1 s which mey not be considered as incident tq tho credit
transnctlon:
Title search.
'ritle nbstract.
Escrow fec (usuo.lly a. charge bYRn a.tt.orney to hold moneys involved
in the settlcment, such as (or paying off an existing second mortgl\go
or other liens, and thereby assures clear title)
Revenue stnmps (on the deed).
Title trnnsfer tnx.
(Prepnid items, such as for rt'nl estcto taxes, s'pccinl assessments
ground rents, hO:7,:nrd insurance prcrnil1ms, and the init·inl FHA mort:
gnge insurance premium nrc excluded from these FIlA dntn M wn.s
previously explained i!l the inrorn1!~tion presented in nn~wor to
(IUestion 2.)
Title insurance. 1\,,11ere required solely for tho benefit or the lender
Ilnd in nmount equal to t.he mortt:ngo amount, the charge should bo
included in catc~ory 1 c.bove. Where the insUl"!'.nce is nlso pro"idcd
for the protection of the owner Ilnd may also be extended to cover hi3
equity in the tlroperty, part of the charge should be included in cate~
gory 2 above.
Preparntion of deed r.nd documents. Would include prepnrat..ion oC
the deed a.nd mortg9.ge, nnd therefore should be di"ided between
categories 1 and 2.
Attorney's fees. practices appear to d.iffer among communities in
the way this item appears on the settlement statements at 100.n closing,
In some arens, the attorney's fee may also include title senrch if conducted by him and possibly prepilration of the deed and the mortgnge. Thus, part J)f this feo may bo included undE'r cntcgorj 1 and
part under ca.tegory 2, depending upon wha.t items are covered ..
Closing fee. Attorney services for the borrower a.t closing. Gen~
orally, this does not include prepnrntion of deed and mort~3~{" but in
some cnses may include this. Probably should be diviaea in some
manner between ca.tegories 1 and 2.
Notary fees (for mortgnge nnd deed). Should be divided between
categories 1 and 2.
Recording fees (for mortgage and deed). Should be divided between cat.egories 1 and 2.
Broker's commission. Under FHA regulations thi3 is optional with
the borrower. ··He may, if he so desires, negotiate with f\ broker to
arrange financin a or. to represent his interests at closin~, This
tha.rge occurs infrequently, but to the extent it does,: it belongs in
category 1 or 2 depending upon the circumstances involved.
Adjusted intere~t. Thi.:; adjustment for interest is mads to cover
the interest for the period botwe!)n tho timo the loan is closed. and tho
da.te of tho flnt monthly pf'.~Tfficnt on the.mortgage. This ·represe1).~.
in effect, a. pre.22:YT1.l6nt of mt-er~ton the lo~~ and would rc.?r~en~
Dllrt of the totBll!ltarc.st to bopeld 07C1' the hIe of the lon::l,
- 15 "Annual percentage rate" means the nominal annual rate determined by the actuarial method.
I would like to emphasize that
this annual rate becomes real and true as it is actually applied
to the periodic credit balances.
As each payment is made,
this
rate is applied to determine the portion of the payment that is
applied to the finance charge, with any remainder of the payment
used to reduce the principal.
This procedure is strictly in
accordance with the United States Supreme Court decision in 1839
and is generally known in consumer finance as the United States
Rule.
It is the rate used throughout the financial world and in
governmen t
t ransac t ions.
The bill recognizes the two major forms of credit:
end or contract credit,
closed-
and open-end or revolving credit.
Contract or closed-end credit is characterized by a schedule
of payments as specified in the contract.
~nts
The disclosure require-
for this type of credit are clearly set forth in section
203(b) and (c).
We estimate that for 95% of these cases there is
no practical problem whatever in determining the annual rate.
Mr. Gushee, of the Financial Publishing Company of Boston, in testifyLng before the Senate Committee, estimated that less than 1 percent
~
)f these transactions cQuld~be handled routinely.
With respect to open-end credit, section 203(d) seems to me
:0
lOW
be straightforward.
I appreciate the fact that many creditors
quoting a monthly rate of 1-1/2% would prefer not to quote 18%.
lut if this is a requirement for all, its impact on anyone creditor
- 16 will be fair.
It does not grant favored treatment to a particular
class of creditor or a particular type of transaction.
I am not
convinced by the argument that this higher rate disclosure will
affect their sales.
So far as I
know,
there is no evidence that
full disclosure requirements in any areas have adversely affected
the interests of legitimate businesses engaged in that area.
Nor
do I believe that quoting the annual rate leads to any inaccuracy.
We, in Treasury,
are regularly quoting annual rates on 90 day bills
and other instruments that are never intended to run a full year.
So we see no problem with quoting 18% on revolving credit accounts
which charge 1-1/2% per month.
accurate,
rna t t e r .
Of course,
so also would be the 18%.
The bill g 0 e s
in t o t his
0
if the 1-1/2% is in-
But that is entirely another
n 1 y t o t h e ext en t
0
f
r e qui r in g
the creditor to specify clearly the balance on which the charge
is imposed and how it is imposed.
Attached to my statement are copies of the one page Defense
Department Rate Table as well as examples illustrating its applicability to all types of consumer contract credit.
I also have
available a limited supply of the Treasury Department Annual Rate
Tables and matching sets of examples.
through these examples with you.
Or,
I would be happy to go
if you wish,
I will illustrate
how these tables can be used to compute the rate for any type of
credit transaction suggested by the Committee.
- 17 In conclusion I would like to urge this Committee to proceed
without delay on the Truth-in-Lending provisions of H.R. 11601.
As I said before, I believe this legislation is needed and needed
now.
Examples illustrating the
applicability of the Department of Defense Rate Table
to H.R. 11601
No.
1 - Equal payments, no de ferment * .
No.
2 - Odd final payment, no deferment.
No.
3 - Equal payments plus deferment.
No.
4 - Odd final payment plus deferment.
5 - Single payment (short term).
No.
6 - Balloon payment.
No. 7 - Skipped payments with odd payment.
No. 7a - Skipped payments with odd payments.
No. S - Irregular single payments.
No.
9 - Add-on purchase.
No. 10 - Multiple disbursement case.
No.
No. 11 - Single payment loan (30 months).
*In the case of monthly payments deferment is
the time by which the first payment period
exceeds the usual 1 month. (When the time to
first payment is less than 1 month, the deferment is negative.)
Note: Examples 1 - 9 are taken from the Treasury
Department's "Annual Rate Tables".
Example 1 - Equal payments, no deferment
The amount financed in the purchase of an automobile is $2000.
The finance charge is $419.92. The monthly payments are $67.22
each for 36 months. What is the annual rate of finance charge?
Form No. I
For level payments which are irregular only because
of deferment or odd final payment (provided the odd final
payment is not more than twice as great as a regular pay_
ment). Use in connection with Defense Department Rate
Table.
step 1 - Move decimal 2 places to the left in the amount to
be financed and divide it into the finance charge.
This gives the finance charge per $100 of amount
to be financed.
= $21.00
step 2 - (a) Double the initial payment period, round it to
the nearest whole month, and subtract 2.
(b) Add (a) to the total number of payments.
step 3 - Read down left hand column of the Defense Department Rate Table to number of payments found in
Step 2 (b). Read across to locate finance charge
per $100 (step 1) and read up to find rate.
Note: This form incorporates the assumption of Section
202 (f)(l)(B) of H.R. 11601 regarding an odd payment. It
has been suggested that Section 202 (f)(l)(C) could easily
be revised to embody the Step 2 correction for deferment
of the first payment.
=
36
=
13%
Example 2 - Odd final payment, no deferment
A TV is purchased for $395 plus a finance charge of $39.50.
It is to be financed by 17 payments of $24 each plus a final
payment of $26. 50. What is the annual rate?
Form. No. I
For level payments which are irregular only because
of deferment or odd final payment (provided the odd final
payment is not more than twice as great as a regular payment). Use in connection with Defense Department Rate
Table.
step 1 - Move decimal 2 places to the left in the amount to
be financed and divide it into the finance charge.
This gives the finance charge per $100 of amount
to be financed.
= $10.00
Step 2 - (a) Double the initial payment period, round it to
the nearest whole month, and subtract 2.
(b) Add (a) to the total number of payments.
step 3 - Read down left hand column of the Defense Department Rate Table to number of payments found in
Step 2 (b). Read across to locate finance charge
per $100 (step 1) and read up to find rate.
Note: This form incorporates the assumption of Section
202 (f)(l)(B) of H.R. 11601 regarding an odd payment. It
has been suggested that Section 202 (f)(l)(C) could easily
be revised to emboqy the Step 2 correction for deferment
of the first payment.
=
18
=
12%
Example 3 - Equal payments plus deferment
A personal loan is arranged for $200. The finance charge is
$16.00. There are to be 12 payments of $18.00 each. The first
payment is due in 3 months 24 days. What is the annual rate?
Form No. I
For level payments which are irregular only because
of deferment or odd final payment (provided the odd final
payment is not more than twice as great as a regular payment). Use in connection with Defense Department Rate
Table.
step 1 - Move decimal 2 places to the left in the amount to
be financed and divide it into the finance charge.
This gives the finance charge per $100 of amount
to be financed.
= $8.00
step 2 - (a) Double the initial payment period, round it to
the nearest whole month, and subtract 2.
6
(b) Add (a) to the total number of payments.
Step 3 - Read down left hand column of the Defense Department Rate Table to number of payments found in
Step 2 (b). Read across to locate finance charge
per $100 (Step 1) and read up to find rate.
Note: This form incorporates the assumption of Section
202 (f)(l)(B) of H.R. 11601 regarding an odd payment. It
has been suggested that Section 202 (f)(l)(C) could easily
be revised to embody the Step 2 correction for deferment
of the first payment.
18
=
10%
Example
4-
Odd final payment plus deferment
A $195.5 0 appliance is financed with 10 payments of $20.00 each
&~d a final pas~ent of $7.80.
The finance charge is $12.30.
The first payment is due in 21 days. What is the annual rate?
Form No. I
For level payments which are irregular only because
of deferment or odd final payment (provided the odd final
payment is not more than twice as great as a regular payment). Use in connection with Defense Department Rate
Table.
step 1 - Move decimal 2 places to the left in the amount to
be financed and divide it into the finance charge.
This gives the finance charge per $100 of amount
to be financed.
= $6.29
step 2 - (a) Double the initial payment period, round it to
the nearest whole month, and subtract 2.
(b) Add (a) to the total number of payments.
step 3 - Read down left hand column of the Defense Department Rate Table to number of payments found in
step 2 (b). Read across to locate finance charge
per $100 (step 1) and read up to find rate.
Note: This form incorporates the assumption of Section
202 (f)(l)(B) of H.R. 11601 regarding an odd payment. It
has been suggested that Section 202 (f)(l)(C) could easily
be revised to embody the Step 2 correction for deferment
of the first payment.
-1
10
13- 1 / 2
%
Example 5 - Single payment
The purchase of $250 of merchandise is to be financed by a
single payment of $257.50 in 3 months 21 days. Find the
annual rate.
Form No. I
For level payments which are irregular only because
of deferment or odd final payment (provided the odd final
payment is not more than twice as great as a regular payment). Use in connection with Defense Department Rate
Table.
step 1 - Move decimal 2 places to the left in the amount to
be financed and divide it into the finance charge.
This gives the finance charge per $100 of amount
to be financed.
$3.00
step 2 - (a) Double the initial payment period, round it to
the nearest whole month, and subtract 2.
5
(b) Add (a) to the total number of payments.
Step 3 - Read down left hand column of the Defense Department Rate Table to number of payments found in
Step 2 (b). Read across to locate finance charge
per $100 (Step 1) and read up to find rate.
Note: This form incorporates the assumption of Section
202 (f)(l)(B) of H.R. 11601 regarding an odd payment. It
has been suggested that Section 202 (f)(l)(C) could easily
be revised to embody the step 2 correction for deferment
of the first payment.
=
6
10%
Example 6 - Balloon Payment
An item priced at $610 is paid for as follows, each series
beginning at the indicated time from contract date.
10 pmts. of $50 each, beginning at 1 mo. 28 days. Total, $500.
1 pmt. of $150, at 11 mos. 28 days. Total, $150.
The total finance charge is $40. Find the annual rate.
?orm No. II
For all irregular cases not covered by Form No. I.
connection with ~efense Department Rate Table.
Use in
step 1 - Move decimal 2 places to the left in the amount to be
financed and divide it into the finance charge. This
gives the finance charge per $100 of amount to be
financed.
= $6.56
step 2 - For each sub-schedule within the main schedule fill in
the following:
A
Initial
period
doubled,
to nearest
month
4
24
B
C
Number
of
payments
Amount
of each
payment
10
1
$50
150
Total =
D
Total
amount
of
payments
Bx C
E
F
Equivalent
payments
DxE
A+
B-2
$500
150
12
23
$65 0
Total
$6000
3450
= $9450
Divide total of column F by total of column D and round to the
nearest integer. This is the equivalent number of payments.
= 15
step 3 - Read down left hand column of the Defense Department Rate
Table to number of payments found in Step 2. Read across
to locate finance charge per $100 (step 1) and read up to
find rate.
= 10%
Example 7 - Skipped payments with odd final payment
An item priced at $346 is paid for by the following groups of
payments, each series beginning at the indicated time from
contract date.
3 pmts. of $20
8 pmts. of $20
7 pmts. of $20
1 pmt. of $30,
each, beginning at
each, beginning at
each, beginning at
due at 19 months 5
1 mo. 5 days.
Total, $60.
7 mos. 5 days. Total, $160.
18 mos. 5 days. Total, $140.
days. Total, $30.
The total finance charge is $44.00.
Find the annual rate.
Form No. II
For all irregular cases not covered by Form No. I.
connection with Defense Department Rate Table.
Use in
Step 1 - Move decimal 2 places to the left in the amount to be
financed and divide it into the finance charge. This
gives the finance charge per $100 of amount to be
financed.
$12:72
Step 2 - For each sub-schedule wi thin the main schedule fill in
the following:
A
Initial
period
doubled,
to nearest
month
2
14
36
38
B
C
D
Number
of
payments
Amount
of each
payment
Total
amount
of
payments
Bx C
3
8
7
1
$20
20
20
30
$ 60
160
140
30
Total =
$390
E
F
Equivalent
Dx E
payments:
A+B-2
3
20
41
37
$ 180
3200
5740
1110
Total = $10 230
Divide total of column F by total of column D and round to the
nearest integer. This is the equivalent number of payments.
= 26
Step 3 - Read do~n left hand column of the Defense Department Rate
Table to number of payments found in Step 2. Read across
to locate finance charge per $100 (Step 1) and read up to
find rate.
= 11%
Example 7a - Skipped payments with odd payments.
A farmer and his wife (who is a schoolteacher) in purchasing an
automobile borrow $2786 for which the finance charge is $444.21,
and the payment schedule is as follows:
Contract date - 7/12/67
9
1
1
7
I
I
7
1
monthly
monthly
monthly
monthly
monthly
monthly
monthly
monthly
payments of $50 each starting 10/3/67
payment of $50 on 10/3/68
payment of $550 on 11/3/68
payments of $50 each starting 12/3/68
payment of $50 on 10/3/69
payment of $550 on 11/3/69
payments of $50 each starting 12/3/69
payment of $880.21 on 7/3/70
Form No. II
For all irregular cases not covered by Form No. I.
connection with Defense Department Rate Table.
Use in
step 1 - Move decimal 2 places to the left in the amount to be
financed and divide it into the finance charge. This
gives the finance charge per $100 of amount to be
financed.
= $15.94
Step 2 - For each sub-schedule within the main schedule fill in
the following:
A
B
C
Initial
per" Jd
doubled,
to nearest
month
Number
of
payments
Amount
of each
payment
9
1
1
7
1
1
7
$ 50
50
550
50
50
550
50
880
5
29
31
33
53
55
57
71
I
D
Total
amount
of
payments
B x C
Equivalent
payments
A+ B- 2
$450
50
550
350
50
550
350
880
12
28
30
38
52
54
62
70
Total $3,230
E
F
Dx E
$ 5,400
1,400
16,500
13,300
2,600
29,700
21,7 00
61,600
Total $152,200
Divide total of column F by ~otal of column D and round to the
nearest integer. This is the equivalent number of payments.
Step 3 - Read down left hand column of the Defense Department
Rate Table to number of payments found in Step 2. Read
across to locate finance charge per $100 (Step 1) and
read up to find rate.
47
7-1/2%
Example 8 - Irregular single payments
An item priced at $400 is paid for by the following single payments, each payment due at the indicated time from contract date.
1
1
1
1
payment
payment
payment
payment
1 payment
1 payment
of
of
of
of
of
of
$100.00 at 1 month 9 days.
$100.00 at 2 months 1 day.
$75.00 at 4 months 10 days.
$65.00 at 5 months 9 days.
$25.00 at 8 months 6 days.
$51.83 at 10 months 8 days.
The total finance charge is $16.83.
Find the annual rate.
Form. No. II
For all irregular cases not covered by Form No. I.
connection with Defense Department Rate Table.
Use in
step 1 - Move decimal 2 places to the left in the amount to be
financed and divide it into the finance charge. This
gives the finance charge per $100 of amount to be
financed.
=
$4.21
step 2 - For each sub-schedule wi thin the main schedule fill in
the following:
ABC
Initial
period
Number
Amount
doubled,
of
of each
to nearest
payments
payment
month
D
Total
amount
of
payments
Bx C
E
F
Equivalent
payments
DxE
A+B-2
----------------------------------------------------------------------
3
4
9
II
16
21
1
1
1
1
1
1
$100
100
75
65
25
52
Total
$100
100
75
65
25
52
$417
2
$ 200
3
8
300
600
10
650
15
375
20
1040
Total = $3165
Divide total of column F by total of column D and round to the
nearest integer. This is the equivalent number of payments.
Step 3 - Read do~n left hand column of the Defense Department Rate
Table to number of payments found in Step 2. Read across
to locate finance charge per $100 (Step 1) and read up to
find rate.
= 8
Example 9 - Add-on purchase
An item. priced at $142 wa. added to an existing contract. In
order to set a unifor.m total ~ent for the account over the
next 12 months, the payments for this item were to be made as
follOW's, each series beg., nni ng at the indicated time fran contract date.
10 pnts. of $10. 50 each, beginning at 1 month. Total, $105.
2 pmts. of $24.50 each, beg"nn1ng at II months. Total, $49.
The finance charge is $12.00.
Find the annual rate.
Form No. II
For all irregular cases not covered by Form No. I.
connection with Defense Department Rate Table.
Use in
step 1 - Move decimal 2 places to the left in the amount to be
financed and divide it into the finance charge. This
gives the finance charge per $100 of amount to be
financed.
= $8.45
step 2 - For each sub-schedule within the main schedule fill in
the following:
A
Initial
period
doubled,
to nearest
month
2
22
B
C
Number
of
payments
Amount
of each
payment
D
Total
amount
of
payments
B x C
10
2
$10.50
24.50
Total =
$105
49
$154
E
F
Equivalent
DxE
payments:
A+ B-2
I
10
22
$1050
1078
Total = $2128
Divide total of column F by total of column D and round to the
nearest integer. This is the equivalent number of payments.
14
Step 3 - Read down left hand column of the Defense Department Rate
Table to number of payments found in Step 2. Read across
to locate finance charge per $100 (Step 1) and read up to
= 13%
find rate.
Example 10 - Multiple Disbursement Case
Disbursements: $100 on 5/1/67
300 on 6/1/67
600 on 9/1/67
Repayments:
12 of $90.02 each beginning 10/1/67.
Form No. I
For level payments which are irregular only because
of deferment or odd final payment (provided the odd final
payment is not more than twice as great as a regular payment). Use in connection with Defense Department Rate
Table.
step 1 - Move decimal 2 places to the left in the amount to
be financed and divide it into the finance charge.
This gives the finance charge per $100 of amount
to be financed.
= $8.02
step 2 - (a) Double the initial payment period, round it to
the nearest whole month, and subtract 2.
3*
(b) Add (a) to the total number of payments.
step 3 - Read down left hand column of the Defense Department Rate Table to number of payments found in
step 2 (b). Read across to locate finance charge
per $100 (step 1) and read up to find rate.
Note: This form incorporates the assumption of Section
202 (f)(l)(B) of H.R. 11601 regarding an odd payment. It
has been suggested that Section 202 (f)(l)(C) could easily
be revised to embody the step 2 correction for deferment
of the first payment.
*Months from 5/1 to 10/1
Months from 6/1 to 10/1
Months from 9/1 to 10/1
=
5 x $100 = 500
4 x 300 = 1200
=
1 x
600
600
$1000
2300
2300
Average time until first payment = 1000 = 2.3 months.
Double 2.3 to get 4.6.
Round to 5 months and subtract 2.
=
15
12%
Example 11 - Single ~ayment Loan (30 month~)
Loan: $100
Repayment: 1 payment of $209.76 at end of 30 months.
Form No. I
I
For level payments which are irregular only because
of deferment or odd final payment (provided the odd final
payment is not more than twice as great as a regular payment). Use in connection with Defense Department Rate
Table.
Step 1 - Move decimal 2 places to the left in the amount to
be financed and divide it into the finance charge.
This gives the finance charge per $100 of amount
to be financed.
= $109.76
step 2 - (a) Double the initial payment period, round it to
the nearest whole month, and subtract 2.
=
(b) Add (a) to the total number of payments.
58
59
Step 3 - Read down left hand column of the Defense Department Rate Table to number of payments found in
Step 2 (b). Read across to locate finance charge
per $100 (Step 1) and read up to find rate.
36%*
(34.74% by interpolation)
Note: This for.m incorporates the assumption of Section
202 (f)(l)(B) of H.R. 11601 regarding an odd payment. It
has been suggested that Section 202 (f)(l)(C) could easily
be revised to embody the Step 2 correction for deferment
of the first ~ent.
*The true rate in this example is 30%. Obviously the level payment table is not well suited for longer term single payments.
A matching "single payment" table (of same size and form as the
existing table) is necessary and can easily be prepared.
DEPARTMENT OF :lEFElI
TAbLE FOR COI/PUTlNG APPROXIIIJlTE ANNUAL PERCENTAGE·
~
Finance charge = ~38j Total amount to be financed
SOLUTION
= i250;
Number of monthly payments • 24
•
step 1 - Divide the finance charge by the total amount to be financed and multiply by $100. This giv>
Step 2 - Follow down the left hand column of the table to the line for 24 months. Follow across this
example $15.20 falls between ~14.66 and $15.80. Reading up between the two columns of figur
annual perctlOtage rate is the rate appearing at the head of the t1lO columns between which th
hundred falls exactly on a tabular value, the lower percentage rate may be used.)
Number ot
:
levelmon~I __~__~__-.~____~__~~____~~__~____~____~____~________~A~p~p~ro~xUm~~te
pgment.ll
ff :
5!%
6%
I
ob:
1
~0.40
$0.44
$0.48
~0.52
2
.59.66.72
.78
_ _....3~______--I.1.f79~_.88
.96
1.04
4
.99
1.10
1.20
1.31
5
1.19
1.32
1.44
1.57.
_ _-=6;-____-:1!'-!.~J9f_ 1.54
1.68
1.83
7
1.59
1.7b
1.93
2.09
8
1.79
1.98
2.17
2.36
Y
1'99
2.20
2.41
2.62
10
2.19
2.42
2.b5
2.89
11
2.39
2.64
2.90
3.15
12
2.59
2.87
3.14
3.~
13
2.79
3.09
3.39
3.68
14
2.99
3.31
3.63
3.95
i~
3.20
3.5~
3.88
4.22
;.40
3.7
4.12
4.48
].7
:3,,(:>0
3.93
4.37
4.75
__!L.... __---..h'!CL_~.~?f
4.61
5.02
19
4.~Jl
4-.1.3
4.86 - 5.29
20
4 •.. .J.
4,66
5.11
5.56
21
4,;~i:!lL _.2.;15
5.83
22
/,.<.
:5.ll
5.60
6.10
2;3
4.~,,'
5.3.3
5.8~
6.37
24
~.• o;:
5.~6
6.10
6.64
25
':2.1
5.79
~
6.91
26
' .• .:..)
6.01
6.60
7.18
27
: .6i
6,24
6.85
1,46
28
5:B4~ 6.1,7
7.1,.)
7,·0
29
G,05
6.70
7.35
8.00
30
~
6.92
7.~bO __ 8,28
31
6-;;.;6 7.15
7-.S5
~: .55
32
6066
7.;38
B.}D
8.82
33
6.r>f7
7.61~:V._,"'?,.},O_
34
7.)8
7.84
8.61
S,'}l
35
'7.28
8.fJ7
8.86
9.65
36
7~/;,,9 ___ ~G
.,2.11
.2.93
37
7.70
3.5;
9.37
10.20
38
7.91
~.76
9,62
10.48
39
8.11 ~_ 9.rZ
10.76
40
8.32
9.22
ID.13
11.04
41
8.53
9.45
10.38
11.32
42
8.74
~.6't
10.64 1l.60
43
8.95
9.92
10.89
11.87
44
9.16 10.15ll.15
12.15
42
9.37
10.38
11.W,
12.44
9.58
10.62
ll.1)6
12.72
46
47
·9.79
10.85
11.92 13.00
48
10,00
n.09 12.19 13.28
49
10.21
11.32
12.44
13.56
50
10.42
11.55 12.70 13.84
51
10.63
11.79 12.95 14.13
52
10.84
12.02
13.21
14.41
53
11.05
12.26 13.47
14.69
54
11.26 12.49
13.73
14.98
55
11,48 12.73
13.99 15,26
56
11.69
12.97
14.25
15.55
57
11.90 13.20 14.5215.84
58
12.11 13.44 14.78
16.12
59
12.33
13.68 15.04
16.41
60
12.54 _ 13.92 15 .30
11).70
,he values in this table have beel. CCIt:puted
$0.56
7% .:
7n
:
8;t
:
1O,t : 11% : 12% : 13%
(Finance charge per $100 0
$0.79 $0.88
$0.96 $1.04
1.19
1.31
1.44
1.57
1.59
1.76
1.92
2,Q2
1.99
2.20
2.41
2.62
2.39
2.64
2.89
3.15
2.79
3.08
3.38
3.68
3.19
3.53
3.87
4.21
3.60
3.98
4.36
4.74
4.00
4.43
4.85
5.28
4.41
4.88
5.35
5.82
4.81
5.33
5.84
6.36
5.22
5.78
6.34
6.90
5.63
6.23
6.84
7.44
6.04
6.69
7.34
7.99
6.45
7.14
7.84
8.53
6.86
7.60
8.34
9.08
7.27
8.06
8.84
9.63
7.69
8.52
9.35
10.19
8.10
8.98
9.86 10.74
8.52
9.44 10.37
ll.30
8.94
9.90 10.88 11.85
9.36 10.37
ll.39
12.41
9.77 10.84 ll.90
12.97
10.19 11.30 12.42 13.54
10.b2 ll.77 12.93 14.10
11.04 12.24 13.45 14.67
1l.46 12.71 13.97 15.24
11.89 13.18 14.49 15.81
12.31 13.66 15.01 16.38
12.74 14. 13 15.54 16.95
13.17 14.61 10.CXi 17.53
13.59 15.09 16.59 18.ll
14.02 15.57 17.12 18.69
14.45
16.05
17.65 19.27
14.89 16.53 18.18 19.35
15.32
17.01 18.71 20.43
15.75
17.49 19.25
21.02
16.19 17.98 19.78 21.61
16.62 18.46 2CJ.32
22.20
17.06 18.95
20.86 22.79
17.50 19.4l.
21.40
23.38
1~.h9)
21.94
23.98
18.38 20.42
22.49
24.57
J.8.82
20.91
23.03
25.17
19.26
21.Q._~_'ilL. 2-5 .,';2
2b or
19.70 21.90
24.13
28.15
22.40
24.68 26.98
20,59
22.92
25.23
27.58
21.04
23.39 25.78
28.19
21.48
23.89
26.33
28,80
21.93
24.40 26.82 29.41
22.38
24.90
27.45
30.02
22.83
25.40
28.00
30.64
23.28
25.91
28.56
31,25
23.73
26.41
29.13
31.87
24.19 26.92
29.69
32.49
24.~
27.43
30,25
33.11
25.10
27.94
30.82
3].74
25.55
28.45
31.39
>4.36
%:
$0.60 $0.65
.0.71
.91
.97
1.06
1.13
1.21
1.29
1.42
1.41
1.51
1.62
1.78
1.69
1.82
1.95
2.13
1.98
2.13
2.27
2.49
2.26
2.43
2.60
2.85
2.55
2.74
2.93
3.21
2.83
3.05
3.26
3.57
3.12
3.35
3.59
3.94
3.41
3.66
3.92
4.30
3.69
3.97
4.25
4.66
3.98
4.28
4.58
5.03
4.27
4.59
4.91
5.39
4.56
4.90
5.24
5.76
4.85
5.21
5.58
6.13
5.14
5.52
5.91
6.49
5.43
5.84
6.25
6.86
5.72 -6.15
6.58
7.23
6.01
6.1.6
6.92
7.60
6.30
6.78
7.26
7.97
6.60
7.09
7.59
8.35
6.39
7.41
7.93
8.72
7.18.
7.23
8.27
9.09
7048
8,04
8.61
9.47
7.77
8.36
8.95
9.84
. 88'.~3 ._ 8.68
9.29
10.22
9.:>0
9.64 10.60
8.66
9.32
9.98 10.97
8.96
2.64 10.32 11.35
9.25
9.96 10.67
ll.?3
9.55
10.28 ll.Ol 12.11
.2..85
10.60 ll.36
12 .49
10.15
10.92
11.70 12.88
10.45
11.25 12.05
13.26
10.75
11.57
12.40 13.64
ll.05
11.89 12.74 14.03
11.35
12.22
l3.09
14.41
11.65
12 .54
13.44 14.80
11.95
12.87
13.ry9
15.19
12.25
13.20 14.U
15.57
12,56 13.52
14'L':: ... 1 5 •• 96
1 6 35
1:<.86
13.85
~,;:'"
13.16
lL..18
15.2U 16.74
13.47
14,51
15.55, )·1,13
13.77
14.84
15.91 "7,53
14.08
15.17 16.26
17.92
g.39. 15.50 16,62 l!3,,.'21
14 .69
15.83
16.98 Ili.7l
15.00
16.16 17.33 1'1.:·_0
15.)1 16.50 17,69 19·5C
15.62
16.83
18.05
19.89
15.92
}7.16 18.41 20.29
16.23
17.50 18.77
20,69
16.54
17.83 19.13
21.09
16.85
18.17
19.49
21049
17.17
18.50 19.85
21.89
17.48
13.84
20.21
22.29
17.79
:9.18
20.58
22.70
1~.;.~~._ ...lli2L._3!hI~_!9.-1h9].-c-~t1L_3}~_.~~r~,by'.,; . . , '."':"liaJ...;~ ..,rumity r1<H.hod ...oj c~·, c,,~Jnnr,8 t.(" tr... 1>. vau
.84
,.
,,·A
1344. 7,
~ay
Z, 66
Attachment B
~5 the finance charge per ;;100 o~ amount to ::>e financed. That is, $38 -+- i250 x $100 = iI5. 2 0.
line until '.cu find the two num'u8rs letween which the finance charge of $15.20 falls. In this
~s you will ~ee that the annual percentage rate is 14%. For the PUIllOse of this directive the
3 finance charge per ~100 of total amount to be financed falls.
(If the finance charge per
annual rn~~~~__~~__77~__~~__~~__~~__~~__~~__~~__~~____~'-~__
~
r
:
15%
:
lC1
: 1%
:
20>:
:
22%
:
24% : 26}{
: 29;(
:
3D;( :
33%
I
3fl1'
:
balance to be financed)
$2.62
$2.08
;1.12 ~1.21 $1.29
$1.58 $1.75
3.95
3.14
2.63
1.69
1.82
1.94
~.38
o
2 26
2
2.
18
2.83
3.04
3.25
3.99
5.
3.40
3.65
3.91
4.80
6.85
~~4~.~27~~4~.~57~,~~~-+~.6~1~~~~-*~__-i7~.~__~8.~0~2__~~--~~--ff~--~~-4.55
4.89
5.23
.43
.51
9.20
5.51
5.90
7.26
9.60 10.39
6.
6. 7
8.08
10.70 11. 8
.77
7.24
8.91
11.81 12.79 13.77
7.40
7.92
9.75
12.93 14.00 15.08
7.,/
8.03
8.59
9.4~,
10.59
14. 05 I ·22 16.40
3.05
8.66
9.27 10.20 11.43
15.18 1 .45 17.72
~.64
9.30
9.96 10.95 12.28
16.32 17.69 19.06
17.47 18,93 20.41
9.23
9.94 10.64 11.71 13.13
9.d3 10.58 11.33 12.46 13.99
18.62
20.19 21.76
jO.43 1l.22 12.02 13.23 14.85
19.78 21.45
23.13
24,51
1,03 11.87
1~.72
13.99 15.71
20,95
22.72
22.12 24,00 25.89
11.63 12.52 13.41 14.76 16.58
~~.2°
13.17 14.11 15.)4 17.45
23.30 25,28 27.29
12.84 1).82 14.82 16.;1.1fl.;n
24.49 26.58 28.69
Q
1;.44 14.48 15.52 17.0
lS.21
25.68 27.88 30.10
:;.. .05 15.14 16.2) 17.cS 28.09
26.88 29.19 31.53
!!:t.e", 1 .80 16.
18.c.) 20.90
28.0
O. 1
lS,2El
1.4
17. 5 19.45
21.37
29.31
31.84
15.89 17.13 18,37 20.24
22.77
27.91 30.53 33.18
It.'l
17.80 19.09 21.04
23.67
29.03
31.76
17.1)
18.47 19.81 21.84 24.58
]0.15
33.00
17.7) 19.14 20.53 22.64 25.49
31.28 34.24
18.38 19.81 21.26 23.4~ 26.40
32.~
3 .49
t
t
22.81
24. 1
2 .42
32.90
23.45
25.30 27.17
33.85
24.0~,~~.00~~2~7·~1~2__~:~__~/.~8~0__~~__~~~~~__~~~~~~~~~~~~~~_
~.73
2b.~O
28.c3
35.75
'5.38
n .,.e' 20.44
3"-.'71
i6:~
;~~~:~~~~)--~~g~:~~7t--~~--~~*~~:~~j~~z~~~:~~5~~~~~~+-~~~~-7~~~~~~~~--~~~
::.:3
·'1.52
31.':)
35.07
39.60 44.22
;7.99 .. ',' 2"
:>= •.:,Q
0 8
.2
:3.~' ~~~0:~9~4--~)~3~.~~~~. ~~~~~~--~~--7f~--~~~~~~~~f-~~~~~~~~~29.;1
)1.66
34.03
:91~: __~i~2~1~37t-_3~4~'78~1__~)8~1~5~O__~~~~~~~~~-t~f--7~~~~~-~~~~~~--~~~
'.I.t'
:3:'.09 35.SG
39.37
33.82
36.37 40.24
'"." __~347·~5~4~~<~7~.1~'__~1~.~11~~~~-f~~~~~~~~~~Tr~~~--~~--~~~~~~
.....
35.27
3".94 41.99
36.00 38.72 42.87
'3.92 ;6.73 39.S2 43.75
).. • 2 ~
'3 7 .46
40.31
44.64
';.:J
38.:<0
41.ll
45.53
~G.C~ ~~8'~--7f~--746~.~2
__~~__~~__f.r~~~~~~~~~~~~~~~~~~~.
47.32
1 ,
..
'O'.'.,}
..
,
'
:£. . '.
~C.-2
~8.21
4'1.12
90.45
108.85
m,03
TREASURY DEPARTMENT
=
wA..:.E 0:30
P.~l.,
X' AUGust 7! 1967.
The Treasury Dep3.rtment announced t hat the tenders for two series of Treasury
, one series to be an additional issue of the bills dated May il, 1967, and the
series to be dated August 10, 1967, which w-ere offered on August 2, 1967, ,,:ere
d at the Federal Reserve banks today. Tenders were invited for $1,400,000,000,
ereabouts, of 91-day bills and for $1,000,000,000, or thereabouts, of 182-iay
• The details of the two series are as follows:
OF
A\~C2PT:E;D
TITIVE
bIDS:
High
Low
A.vera:;e
91-day Treasury bills
maturi.ng November 22 12 61
Approx. Equiv.
i~rice
Annual Rate
98.956
4.1301;
98 934
4.217%
98.945
4.174% 11
0
.:
182-day Treasury bills
maturing Februarl 8 1 1263
Approx. :::'quiv.
Annual hate
Price
97.610
4.727'/0
4.791:S
97.578
4. 757~o .dJ
97.595
37~
of the amount of '?l-day 'clills bid for at the low price was accepted
1% of the amount of 182-daybills 'clid for at the low price was accepted
TEi\U;:R3 ,2PLil:D
trict
Lon
York
Lade1phia
V'eland
hmond
anta
cago
Louis
neapolis
sas City
las
Francisco
TCTALS
FOR
AND ACCEPT:ZD BY FEDZRAL RESERVE
DI.3TRICTS:
AEElied. For
$
19,734,000
1,717,452,000
25,570,000
27,520,000
22,058,OOU
44,594,000
317,738,000
64,735,000
19,804,000
24,899,000
24,060,000
114 a 0 25,OJO
....cceEted
$
9,734,000
927,632,000
18,485,000
27,520,000
22,058,000
33,496,000
140,378,000
56,735,000
18,404,000
24,374,000
18,060,000
102,765,000
AEElied For
$ 16,d81,OOO
1,389,384,000
13,429,000
22,806,000
9,215,000
31,139,000
289,016,000
37,987,000
16,569,000
13,309,000
22,736,000
111,684 J 000
AcceEted
$
6,081,000
711,634,000
5,429,000
22,500,000
9,215,000
19,339,000
85,046,000
23,987,OUO
14,579,OUO
13,309,000
14,111,000
142 007 , 000
~2,422,189,OOO
;"'1,400,141,000 ~ $1,980,155,000
$1,000,037,000
EI
ncludes $233,866,000 noncompetitive tenders accepted at the average pr~ce of 980945
nc1udes $125 622 000 noncompetitive tenders accepted at the average pr~ce of 97.595
'hese rates a~e o~ a b~nk discount basis. The equivalent coupon issue yields ~re
.• 297; for the 91-day bills, and 4.96% for the 182-day tills.
99J
TREASURY CEPARTMENT
August 9, 1967
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
~,400,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing August 17,1967,
in the amount of
$ 2,301,979,000, as follows:
91-day bills (to maturity date) to be issued
in the amount of $ 1 ,400 ,000,000, or there~b9uts,
additional amount of bills dated May 1~, 19b 7 ,
mature November 16,1967, originally issued in the
U,OOO,647,000, the additional and original bills
interchangeable.
August 17, 1967,
representing an
and to
amount of
to be freely
182 -day bills, for $ 1,000,000 000, or thereabouts, to be dated
August 17, 1967, and to mature
Pebruary 15, 1968.
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, August 14, 1967.
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-994
- 2 Immediately after the closing hour, tenders will be opened @~
Federal Reserve Banks and Branches, following which public anno~~
ment will be made by the Treasury Department of the amount and pru
range of accepted bids. Those submitting tenders will be advii~~
of the acceptance or rejection thereof. The Secretary of the Tre••
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 b,
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 Bank on August 17, 1967, t
cash or other immediately available funds or in a like face amount
of Treasury bills maturing August 17, 1967.
Cash and exchange te~
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 ~w
any exemption, as such, and loss from the sale or other dispositim
of Treasury bills does not have any special treatment, as such,
under the Internal Revenue Code of 1954. The bills are subject ~
estate, inheritance, gift or other excise taxes, whether Federal m
State, but are exempt from all taxation now or hereafter imposed m
the principal or interest thereof by any State, or any of the
possessions of the United States, or by any local taxing authori~,
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 an
sold, redeemed or otherwise disposed of, and such bills are excw~
from consideration as capital assets. Accordingly, the owner of
Treasury bills (other than life insurance companies) issued hereWN
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 upoo
sale or redemption at maturity during the taxable year for which t
return is made, as ordinary gain or loss.
Treasury Department Circular No. 418 (current revision) and t
notice prescribe the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtai~
any Federal Reserve Bank or Branch.
000
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY MARKET TRANSACTIONS IN JULY
During July 1967, market transactions
in direct and guaranteed securities of the
government for Government investment accounts
resulted in net purchases by the Treasury
Department of $24,739,700.00.
000
F-995
TREASURY DEPARTMENT
(
RELEASE 6 :30 P.M.,
dSS! August 14, 1967.
RESULTS OF 'I'R.EA3URY IS ';.EEKLY BILL OFFERING
The Treasury Department announcE:;d that the tenders for ~wo series of Treas1ll'Y
is, one series to be an additionc.l. issue of the bills dated May l~, 1967, and "thl~
er series to be dated August 17, 1967, which were offered on August 9, 1967, werE';
ned at the Federal Reserve Banks today. Tenders were invited for $1,400,000,000,
thereabouts, of 91-day bills and for ~l,OOO,OOO,OOO, or thereabouts, of l82-day
1s. The details of the two series are as follows:
91-day Treasury bills
maturing November lOa 1201
Approx. £quiv.
Price
Annual Rate
4.162/;
98.948
4.217,:
98 0 934
98.940
4.19.5;;'
11
CE OF ;..CCEfr~D
PETITIV1 BIDS:
High
Low
Average
·
··
182-day Treasury bills
12, ;!C2 68
Approx. Equiv.
Price
Annual Rate
97.588
4.771%
97.568
4.811;t
11
97.578
4~791%
~turing Februar~
2p of the amount of 91-day bills bid for at the low price was accepted
56% of the amount of 182-day bills bid for at the low price was accepted
AI. TENDERS APPLIED FOR AND ACCEPTED 1:)y FEDEf:.AL RESffiVE DISTRICTS:
istrict
Lnneapolis
,nsas City
lUas
In Francisco
hE:e1ied For
y
22,684,000
1,592,582,000
25,833,000
24,231,000
19,4.31,000
50,603,000
361, 596, (X)()
54,437,000
19,838,000
30,881,000
21,477,000
124 , 703 , 000
TOTALS
$2,348,296,000
~ston
"
ew York
~iladelphia
Leveland
lchmond
~lanta
1icago
;. Louis
AcceEted
12,484,000
9j8,037,OOO
13,781,000
24,231,000
12,431,000
37,873,000
170,666,000
45,223,000
15,388,000
30,881,000
U,477,000
85,043,000
$
$1,400,515,000
·
··
21
A:e:e1ied For
$ 24,664,000
1,343,782,000
15,078,000
20,86.3,000
11,041,000
44,577,000
307,584,000
43,268,000
15,709,000
16,888,000
20,837,000
115,447 1 000
$1,979,738,000
Acce:eted
14,664,000
686,822,000
6,678,000
19,765,000
6,041,000
28,746,000
95,384,000
40,080,000
ll, 649, 000
16,888,000
12,837,000
60, 807, 00q
~
$1,000,361, 000 .~/
InclUdes ~~2)3,947 000 noncompetitive tenders accepted at the average price of 98.SJ·,O
InclUdes $131,496;000 noncompetitive tenders accepted at the aver~ge pri~e of 97. ~'"78
These rates are on a bank discount basis. The equivalent coupon lssue YJ..e1ds are
4.31/0 for the 91-day bills, and 4. 99'j(, for the 182-day bills.
STATEMENT OF THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
BEFORE THE
HOUSE WAYS AND MEANS COMMITTEE
ON THE PRESIDENT'S FISCAL PROGRAM
MONDAY, AUGUST 14, 1967, AT 10:00 A.M.
Thank you for this opportunity to appear before you in
support of the fiscal program recently announced in the
President's Message.
This program includes both tax measures
to increase our revenues and action by the Congress and the
Executive Branch to restrain, cut and control expenditures
so as to reduce the prospective deficit in fiscal 1968 and
thereafter to manageable levels o
I appeared before this Committee in May to ask for borrowing authority needed to finance a war.
In order to keep
the use of that borrowing authority to proportions compatible
with our national economic and financial health, I appear
today to ask for taxing authority for the same purpose and
to plead through this Committee to the Congress that it join
with the President in making every possible expenditure
reduction -- civilian and military
short of jeopardizing
the nation's security and well being.
We are engaged in a costly conflict in Southeast Asia
with no clear prospect of any early endingo
F-997
But it is a
-
2 -
temporary cost and surely one day will terminate when the
enemies of freedom conclude that the price of aggression is
too high.
This unusual and temporary cost must be financed
in a manner consistent with preserving sound, balanced
economic growth without inflation at home o
Fiscal responsibility means differing things in differing circumstances.
In a wartime context it must include the
courage and willingness to raise the money that is as necessary as the guns, planes and materiel needs of our forces in
Southeast Asia.
In current circumstances fiscal responsibility means
that in financing the special and temporary costs of Vietnam
we should obtain as much from temporary tax revenues as
economic conditions permit.
However, it does not mean, under
present circumstances, that we should try to eliminate the
entire deficit by a tax increase -- by a surcharge not of
ten percent, but by one of nearly fifty percent.
Fiscal responsibility also means that we should hold down
and restrain expenditures that can be cancelled or postponed
without damage to our national interest o
It does not mean
- 3 -
attempting the impossible -- the elimination of the deficit
solely by reducing expenditures.
The course of fiscal responsibility is the program
outlined by the President, namely, reducing the deficit
rrby rigidly controlling expenditures, raising as much money
as possible through increased taxes, and then borrowing the
difference."
After an intensive examination of all the facts available to us, my colleagues here and others in the Cabinet
have advised and recommended to the President that the prompt
temporary imposition of a ten percent surcharge on both
corporate and individual income taxes, except for individuals
in the lower income brackets, is a necessary and equitable
financial measure.
We have concluded that this proposal,
supplemented by a speed-up of corporate tax collections and
a temporary deferral of scheduled excise tax reductions, is
not only consistent with the objectives of sustained growth,
high employment and price stability, but necessary if these
objectives are to be successfully pursued o
- 4 Let me now set forth the basic over-all reasoning that
led us to the conviction that the President's program represents the best choice of fiscal measures that the present
circumstances permit.
The Director of the Budget,
Mro Schultze, will cover the budgetary and expenditure
aspects of the President's program in depth, and the Chairman
of the Council of Economic Advisers, Mro Ackley, will deal
in some detail with the economic aspects of the program.
I
will also discuss some of the financial reasons for the
program and explain how the tax measures would be implemented
and how they would affect taxpayers.
I want to emphasize that we have arrived at these views
on the basis of what the President termed "the hard and
inescapable factso"
What are these hard facts?
First, our special Vietnam costs are now being incurred
at a rate in excess of $22 billion per year.
These costs are
at levels that call for more financing from current tax
revenues -- by a temporary surcharge of as much as economic
conditions permit.
Second, without this temporary surcharge, our budget
deficit in the current fiscal year would increase to unacceptable levels.
This statement is based on the original January
- 5 -
budgetary levels of revenues and the expenditures for
Vietnam and all the other defense and civilian programs,
and on the developments outlined in the President's Message
which make it necessary and realistic to revise the expenditure estimates upward and the revenue estimates downward.
Third, despite the Federal Reserve System's continued
application of a policy of monetary ease, resulting in a
substantial expansion of the nation's money supply and
credit, we are witnessing a return of long-term interest
rates to levels near their peaks of late last summer.
Recently, short-term rates which had moved steadily downward
since last fall, have reversed their direction and have
begun to move back up.
This temporary surcharge is there-
fore necessary to avoid the risk of excessively high interest
rates and limited credit in particular sectors, such as
housing.
To the extent that the Federal Government must finance
its growing deficit by borrowings on the credit markets
rather than pay for its additional expenditures by additional
revenues raised through the surcharge, government borrowing
- 6 -
will increase the pressure on these markets and contribute
to high interest rates and the risk of inequitable and
damaging imbalances in credit availability -- even assuming a continuation of the recent high rates of growth of
money supply and bank reserves.
The imposition of the tax surcharge is prompted by
these hard facts of the current cost levels of the hostilities in Vietnam, the current level of the budgetary deficit
that is being incurred, and the current levels of interest
rates and credit conditions in both the long and short-term
areas.
This conclusion does not involve guesswork.
Given
these facts, the only valid reason for failing to impose
this temporary surcharge would be a solid conviction that
it would be inconsistent with preserving sound, balanced
economic growth.
Although a temporary surcharge was included in the
fiscal 1968 budget program to be effective July 1, it is
wise for both the President and the Congress to take this
final decision when the course of economic developments
accompanying the inventory readjustment in progress indicated that the impact of a tax increase would be beneficial
rather than harmful o
- 7 We are now of the unanimous view, and that view is
confirmed by the overwhelming preponderance of economic
fact and opinion, that any real danger of an economic downturn is past.
Indeed, the outlook given the scale of
Federal, State and local public expenditures and private
demand, is for a substantial rate of growth in the period
ahead -- with the debate being confined to exactly how
rapid the growth will be.
This provides the fourth and final reason for a temporary surcharge.
We view the surcharge as a measure of
insurance against the risk that,
without this program
of combining a temporary tax increase with expenditure
restraint, the levels of growth would give rise to
unacceptable inflationary pressures.
This development
would take a toll of our economic balance and stability
or be curbed by excessively high interest rates and tight
money that would provide an unhealthy, unbalanced economy,
ill adapted to a smooth transition to peace with prosperity.
- 8 I.
1.
WE NEED THE TAX INCREASE
To Meet the Special Costs of Vietnam
I am sure that so long as hostilities are continuing
in Vietnam no Member of the Committee would want or has
wanted to deny the finances necessary to permit our fighting men to do an effective job.
In the fiscal year 1966,
the special Vietnam outlays that followed upon our national
decision of late July 1965 added $6.1 billion to our Administrative Budget expenditures
0
However, due mainly to the
accelerated growth of our economy, revenues climbed by
$11.6 billion, so that we were able to close out the fiscal
year 1966 with an Administrative Budget deficit of only
$2.3 billion, which was $3 billion below the $5 3 billion
0
forecast in the original submission of the budget in January,
1965.
The original estimate for special Vietnam costs in
fiscal 1967 as submitted in the January 1966 budget, was
$1005 billion, more than a $4 billion increase over fiscal
1966 costs.
Accordingly, the Tax Adjustment Act of 1966 was
recommended and shortly enacted.
It provided an additional
$1.2 billion of revenues in fiscal 1966 and an additional
- 9 -
$4.6 billion in fiscal 1967, by accelerating collections
and deferring scheduled excise tax reductions.
That Act
did not involve any increase in individual or corporate
liabilities.
In the latter part of the calendar year 1966 it was
apparent that the special costs of Vietnam in fiscal 1967
would be nearly double those originally estimated in the
January budget.
This reflected the rapidly increasing
scale of hostilities and the fact that, with these hostilities likely to continue, it had become necessary to plan
and budget for the continued conduct of hostilities on a
substantially increased scale through fiscal 1968.
A special supplemental appropriation for defense in
the amount of $12.9 billion was, therefore, requested in
last Januaryrs budget message o
A surcharge of 6 percent on
both corporate and individual income taxes to last for two
years, or for so long as the unusual expenditures associated
with our efforts in Vietnam require higher revenues, was
recommended to become effective at the beginning of fiscal
year 1968.
Immediate imposition last January of this surcharge was
not requested because of the temporary period of slack in
- 10 the economy resulting from fiscal and monetary restraints
previously imposed and the inventory readjustment.
Now,
however, inventories have been substantially readjusted,
and the course of the economy is heading upward.
I thus come to the hard, inescapable fact that the
special costs of Vietnam are now being incurred at a
rate
in excess of $22 billion -- that calls for a tempo-
rary increase in the tax liabilities of individuals and
corporations to meet a portion of those costs.
2.
To Hold Down the Deficit
We could, of course, turn away from the course of
responsible actions and attempt to meet our financial obligations without resort to a tax increase.
Consider for a
moment what this would mean in terms of the size of the
deficit that would result.
The budget for fiscal 1968 submitted last January estimated expenditures at $135 billion -- $75.5 billion for the
Defense Department and Atomic Energy Commission, and $59.5
billion for civilian programs.
As the Director of the Budget
will detail, these estimates may be exceeded by as much as
$8.5 billion -- $2.5 billion for civilian programs, $2 billion
- 11 for a possible denial by Congress of the authority to sell
participation certificates in the amount included in the
January budget, and $4 billion for defense.
In addition,
with no tax increase and with expenditures at the higher end
of these contingencies, outlays for interest on the public
debt would also rise, by up to perhaps as much as $700 million.
The President has pledged to take every proper action
to avoid an increase of this magnitude.
But as he pointed
out in his Message to Congress, action by the Executive
Branch alone is not sufficient.
The outcome will also depend
on Congressional action with respect to appropriations and
mandatory spending requirements.
Turning to the receipts side, since last January revenue
estimates have been revised downward by approximately $7 billion:
$800 million as the result of Congressional action
in restoring the investment credit and accelerated
depreciation earlier than the budget had assumed.
$1.3 billion because of lower corporate profits and
$300 million because of lower personal income than
projected six months ago.
$3 billion because of a decrease in estimated yield
from existing income tax rates and $200 million
- 12 because of a decrease in the estimated yield of
gift and estate taxes and customs.
$600 million because of a reduced estimate of
miscellaneous receipts such as stockpile sales
($450 million) and offshore oil revenues ($80
million).
$800 million because of a later effective date for
the surcharge on personal income taxes than recommended last Januaryo
The budgetary consequences of these revised estimates
of revenues and the expenditure contingencies outlined would
imply a deficit of $23.6 billion.
In the event no tax
increase were enacted, and in the absence of tight expenditure control, the deficit could rise to $29 billion (including
$700 million for the higher interest cost on the public debt
that such a deficit would involve).
On the other hand, with
tight expenditure control and with the tax increase programs,
the deficit can be kept within a range of $14 - $18 billion.
Chairman Ackley will develop in detail the broad economic
consequences that are presented by a choice between these two
alternative courses of action.
- 13 3.
To Avoid Excessively High Interest Rates
and Tight Money
I cannot stress too strongly my deep concern about the
pressures that would be exerted on the money and credit
markets by the borrowing requirements associated with a
deficit in excess of a $14-$18
b~ion
range.
The credit markets
£!n accommodate a federal deficit of considerable size.
But
given present private demands for credit, an outsized Federal
deficit, such as would result without the proposed tax rise
and expenditure restraints, cannot be accommodated without
severe disruption to the credit markets, sending interest
rates sky-high and shutting off the flow of credit to sectors
such as the home mortgage market and small business.
Some people may ask why we have to raise taxes and hold
back spending.
Why can't we borrow more?
Government's credit good?
Isn't the U. S.
These questions come naturally
because none of us likes to raise taxes or reduce or deny
funds for many worthwhile programs.
must choose among alternatives:
The fact is that we
one is to raise taxes and
reduce expenditures to the maximum extent feasible, and then
borrow the rest; the other is' to go much deeper into debt
- 14 through very heavy borrowing.
It is my particular assignment
today to explain why unlimited recourse to borrowing would
be risky and unfortunate in the present financial situation.
Some may also ask:
'~at
about World War II, wasn't
there very heavy recourse to borrowing then?"
The answer
is that there was such recourse then, but it was undertaken
only in conjunction with widespread direct controls (complete
allocation of materials and facilities; price, wage and
salary
controls; direct credit controls) that limited activi-
ties not directly related to the war effort.
Even with
these measures there was a substantial inflationary cost.
In the current situation we have avoided those rigid controls,
and also avoided the milder controls of the Korean period.
We propose in the present situation to follow general fiscal
and monetary policies that continue to make it possible to
avoid rigid direct controls.
Now let us consider our financial markets and the demands
on those markets.
To see how the pieces fit together, we
need to look at the whole range of demand and supply factors.
- 15 Concentration on just one part of the whole picture will not
do.
This run-down may be a bit elementary and even tedious,
but I think it is
so important to keep the whole credit market
picture in mind that it is worth going over this with some
care.
On the demand side, the major components are the business
sector, the consumer sector, and Government.
Businesses borrow to expand their facilities and for
working capital, such as to finance inventories.
Consumers borrow chiefly to finance home purchases and
for an increasing variety of consumer goods and services -such as cars, vacations, college expenses.
Governments borrow to finance their cash deficits, which
arise when the net outpayments from spending and lending
programs are not covered by tax and other revenues.
On the supply side, the main sources of credit are the
banking system, other financial institutions, and savings
generated in the business and consumer sectors.
Two of these
sources deserve special mention because of their strategic
importance.
- 16 The banking sector, including the central bank, is a
kind of balance wheel which can be permitted or encouraged
to supply increasing amounts of credit, or discouraged from
so doing by the availability of reserves provided through
the central bank.
The other highly strategic sector is the direct supply
of credit from individuals.
It is strategic because its
variations up or down are closely related to net pressures
on the markets and on interest rates.
Normally, the volume
of credit supplied directly by individuals is small.
Most
individuals place their savings with thrift institutions
which in turn lend these funds to borrowers.
as financial intermediadon.
This is known
When this individual sector is
called on to supply a substantial amount of credit directly,
rather than through savings institutions or other intermediaries, it is usually a sign of market pressure.
This
normally occurs when demand is rising very strongly and
borrowers are more interested in getting their money than
in the rates they have to pay for it.
That is what happened in 1966.
With credit demands
running strong, and supplies limited, interest rates on
- 17 open market paper kept rising until willing investors could
be found -- which in many cases involved the withdrawal of
funds from thrift institutions and direct investment by
individuals in high-rate market paper.
The halt in bank
credit growth thrust further demands on individuals.
Credit
demands had no place else to go, once the banks and other
financial intermediaries could not handle any more.
Either
the demands could be met by the residual sector -- individuals
or they could go unmet.
In the process of sorting out the
demands that would be met and those that would not be met,
interest rates last summer reached the highest levels in
several decades.
Starting a little less than a year ago, there was a
dramatic turn for the better in the credit markets, reversing
some of the forces that had produced earlier strains, but
leaving some scars and vivid recollections.
The factors
making for a change included the temporary suspension of the
investment tax credit, a reduction and rearrangement of
Federal demands on the credit markets, holdbacks in Federal
spending programs, legislation and administrative action to
- 18 restrain the fierce competition for conSumer savings, and
a Federal Reserve move toward easier reserve availability.
By early 1967, credit market pressures relaxed further, as
economic growth abated, monetary policy eased some more, and
the President's fiscal program announced in January proposed
a tax surcharge to begin in fiscal year 1968.
Easier credit was evident in terms of both availability
and cost.
The nation's money supply expanded at a 6 percent
aTInual rate in the first half of this year, while total bank
credit has grown at an annual rate of about 11 percent.
The
discount rate was reduced from 4-1/2 percent to 4 percent, and
the prime bank lending rate from 6 percent to 5-1/2 percent.
Yet, in the face of this expansionary monetary policy,
long-term interest rates, which had turned down from their
peaks of last August and September to substantially lower
levels through March, have more recently moved back up and
reached levels uncomfortably close to last summer's peaks.
Indeed, for some types of Government and corporate bonds,
current rates are as high as those of a year ago.
The decline in short-term rates from last year's peak
levels proceeded into June, and extended to more than two
- 19 full percentage points on some types of securities.
In
recent weeks those rates have also bottomed out, however,
and moved back up as much as a percentage point -- although
they remain well below last year's peaks.
A major cause of the rise in long-term rates since
March is the huge volume of borrowing by corporations and
by state and local governments.
New capital issues by
corporations in the first seven months of 1967 were a record
$1).5 billion, up 23 percent from the similar period in
1966 -- which had been a record-breaking year.
If one ex-
cludes private placements by corporations and looks just
at public offerings, which have a greater immediate market
impact, the volume of new issues was $7.2 billion in the
first half of this year, against $8 billion in all of 1966
and $5.6 billion for all of 1965.
To a considerable extent, this heavy pace of offerings
has reflected a desire of corporations to take advantage of
greater credit availability to rebuild their liquidity and
reduce their dependence on the banking system.
Last summer,
even some of the largest corporations found.their access
- 20 -
to bank credit limited, and this experience is still quite
memorable to corporate treasurers.
States and municipalities have also borrowed very
heavily, and for somewhat similar reasons -- making up for
some postponements of borrowings last year and seeking to
obtain some money needed naw or in the fiture while it is
currently available.
New tax-exempt issues by state and
local authorities came to $8.8 billion in the first seven
months of this year, up about 28 percent from a year earlier.
There is an additional market factor that seems to be
impelling this headlong rush to borrow, even at current high
rates.
Many of these corporations and governmental authori-
ties are said to be pushing their borrowings because they
fear that a greatly increased Federal Government deficit
will produce still higher interest rates and tighter conditions of credit availability in the months ahead.
And they
are apparently concerned thatbLg Federal Government demands
might coincide with an increasing build-up in private demands
that would revive inflationary pressures, in turn boosting
spending and income and eventually stimulating still greater
credit demands.
- 21 The fact that this can happen against a background of
expansionary monetary policy has been demonstrated clearly
in recent weeks and months.
So it is no answer for those
who inveigh against high interest rates to call for easy
money unless they are ready to see higher taxes or unless
they are willing to take the risk of a serious inflation.
A special reason for prompt action to cut the prospective Federal deficit is the desirability of encouraging the
current uptrend in homebuilding and the increased availability
of money inthe mortgage market.
Last year the mortgage
market was starved for funds and homebuilding went through
the wringer -- particularly as thrift institutions lost funds
to higher paying open market paper and bank deposits.
This
year, traditional mortgage lenders have experienced record
inflows of funds.
Some of this inflow has been used to
rebuild depleted liquidity, but
funds has also improved greatly.
the availability of mortgage
Yet there can be no com-
placency about this improvement, for since this spring,
rising interest rates on corporate securities have tended to
attract some funds from thrift institutions into these
securities rather than into mortgages.
The recent rise in
- 22 short-term rates, if it goes much further, could pull savings
funds directly out of the thrift institutions.
These develop-
ments raise the possibility of a new stringency in housing
credit.
We do not present the proposed tax surcharge as.something that will cut interest rates immediately and sharply,
or eliminate all the problems that have faced the financial
markets, the mortgage market, or homebuilding in the past
two years since the Vietnam escalation began.
Even with
a tax increase, there will be a sizable Federal deficit,
and sizable competing demands from the private sector.
But a tax surcharge will reduce the size of the Federal
deficit and the size of Federal borrowing needs.
It will
help assure a continuation of expansionary monetary policy,
and it will reassure borrowers and lenders that there is
no need for a renewed scramble for funds or run-up of
interest rates.
It could well turn the tide in the credit
markets, calm down the precautionary borrowing and produce
freer flows of funds at more reasonable rates of interest.
We have discussed the recent role of certain key private
sector demands on the credit markets, but it is particularly
- 23 important, in weighing the need for fiscal action, to look
at Federal Government demands.
Consider these facts relative
to Federal credit demands on the private sector in the fiscal
year ended June 30, 1967:
The total outstanding volume of Treasury securities,
Federal agency securities, and participation certificates increased by slightly under $10 billion.
But Government investment accounts increased their
holdings of these issues by $11.6 billion, and the
Federal Reserve added $4.5 billion to its holdings.
Thus instead of exerting a net credit demand on
the private sector, Federal credit market operations
actually supplied over $6 billion to the private
credit markets through net repayment of debt.
Even after making an adjustment for the $5 billion
decline in the Treasury's cash balance over the
fiscal year, there was still a net repayment of
credit from the Federal sector to the private sector.
The picture in this current fiscal year will be different.
It will not be a question of net repayment of credit by the
- 24 -
Federal Government to the private market, but of how large
a net demand might be made on those markets.
Illustrative of the possible Federal credit demands,
suppose that the administrative budget deficit in fiscal year
1968, with the proposed tax measures enacted, is $14 billion.
Adding together the increases
i~,
Treasury debt,
Federal agency debt and participation certificates,
there would be an increase in outstanding obligations of s.'roe $20-$21 billion.
Making rough
allowanc2 for purchases by the Government investment accounts and Federal Reserve, the net demand
on the private sector might be around ·$10-$12 billion.
(This $10-$12 billion net demand for th2 L,'l J, fiscal
year should not be confused with the
estim~H.::"::s
recently reported for prospective Treasury
bo~row
ing in the July-December 1967 period; the latter
estimates, which anticipated market borrowing of
$15 billion in Treasury issues and possibly $2
billion in participation sales, include a seasonal
component which would be reversed later in the
- 25 fiscal year when a seasonal surplus of revenues
over expenditures is anticipated.)
Without the proposed tax measures, the Federal
sector's net demands on the private credit market
in fiscal year 1968 would be $7.4 billion greater.
Moreover, added financial requirements could arise,
as they did in 1966, from further demands on Federal
credit agencies, because of tightened credit conditions in the private sector.
The total of Federal credit demands on the private
sector, without tax action, could thus reach $20
billion, or exceed it if expenditures ran to the
higher side of the range of contingencies now
contemplated.
Moreover, the difference between net Federal credit
demands on the private sector on the order of $10-$12 billion,
or on the order of $20 billion or somewhat more, depending
mainly on the presence or absence of tax action, does not
tell the full story.
For along with swollen Federal credit
demands, the failure to hold down the budget deficit would
- 26 create an inflationary environment in which private credit
demand could soar, and in which it would be more difficult
to continue an expansionary monetary policy, and that would
cut down on total available supplies of credit.
Thus private credit demands, in the absence of a tax
. surcharge, would be hit in three ways -- by the enlargement
of Federal credit demands, by a swelling of the private
demands themselves, and by the curtailment of total credit
supplies.
The net result would be a vastly different set
of credit market conditions, imposing a very substantially
heavier net demand for funds that could not be met by institutional lenders, and that could be met only in part by
the
res~.dual
sector made up mainly of individuals.
One can only conjecture about the precise pattern and
sequence of events through which tightened credit conditions
would envelop the market in the absence of a tax increase,
but last year's experience might provide some guidance.
One
could expect, for example, that as the Treasury and Federal
agencies came to .arket in greater and greater volume, higher
- 27 -
rates would have to be paid to draw in additional investors.
Increasingly, the funds might be drawn from the thrift
institutions that are the mainstay of the mortgage market.
In the meantime, corporate borrowers would bid rates
up, and attract investment from institutional lenders that
have the flexibility to shift among Government securities,
corporate issues and mortgages.
Banks might well face
insistent business demands to draw on credit lines, while
lessened reserve availability kept a tighter lid on the
banks' total portfolio, so that less could be put into
Federal Government securities or tax-exempt issues even at
steeply higher interest rates.
Along with the mortgage market, and state and local
government borrowers, other borrowers with relatively
limited bargaining power and limited flexibility of alternative credit resources would also be likely to suffer disproportionately at the hands of tightened credit conditions
including
s~all
business and farmers.
It would be a case
- 28 -
of IIpay up or do without,lI and perhaps a case of "doing
without" even for those willing to "pay up" to a considerable extent.
It would be sheer hypothesis to guess what heights
interest rates might have to scale in the grim process of
sorting out the credit demands that would be met, and
those that would not be met, but the pressures would
clearly be there, in the absence of tax action and tight
expenditures control action, to push rates substantially
higher than they are now.
One need only look around the
world, even at highly industrialized countries, to see
Government bond yields of 7 percent or more -- and indeed
of more than 8 percent during much of last year in Germany.
Rates on prime industrial bonds in the United Kingdom have
ranged as high as 8 percent as recently as a year ago, and
these yields touched 9 percent in Germany.
These, I submit, are not tolerable conditions for the
United States.
- 29 -
I have dwelt at some length on the importance of
the proposed tax increase for the performance of financial
markets and interest rates, because to my mind that is a
key reason for its enactment.
With the proposed tax
increase, and tight expenditure control, the net demand
can be held to tolerable proportions that the credit markets
can handle, given a reasonable supportive monetary policy
climate.
Without the tax increase, we are convinced that
the credit markets could not finance the resulting deficit
except at the cost of sharply reduced availability of
credit to meet private demands, and sharply increased interest
rates.
- 30 -
4.
To Protect Healthy Economic Growth and Price Stability
As I have already indicated, my judgment as to the neces-
sity for the tax increase program is based on hard fact.
I
believe the hard evidence we have at hand clearly indicates
that the economy is now on an upward course and that an
economic recession is not in the picture.
Let me cite just a few of the factors I have in mind:
The growth in final sales (to consumers, to government, and to business for investment other than in
inventories) in the first six months of this year
exceeded the growth in the corresponding period of
1966 -- $31 billion compared to $24 billion.
The growth of total GNP has been held down, of
course, by the inventory readjustment.
readjustment has taken place.
grew at an annual
Considerable
Business inventories
rate of only one half billion
dollars in the second quarter of this year, which
is the lowest inventory growth in six years.
A
return to normal inventory growth will contribute
to a faster rise in GNP.
- 31 Personal income rose $3.7 billion in June, the
largest rise in the past five months.
As personal
income has risen, retail sales have become more
buoyant.
Also the personal savings ratio which
has been abnormally high in recent quarters is
showing signs of returning to a more normal level.
New construction generally has strengthened and
residential housing starts have been rising
strongly from the low point reached late last year.
Total manufacturers' new orders for June rose for
the fifth consecutive month, to $46 billion, the
highest since the record level of September 1966.
Order backlogs are again beginning to rise, and in
June reached the highest level so far this year.
The unemployment rate dropped back to 3.9 percent
in July after rising to 4 percent in June; the
unemployment rate in all categories of workers
either declined or remained unchanged.
The unem-
ployment rate for married men dropped from 2 percent
in June to 1.8 percent in July.
- 32 -
From these and many other related facts which Chairman
Ackley will develop in detail in his statement,we conclude
that from an economic viewpoint a tax increase is an appropriate and desirable measure.
Moreover, it is the best
insurance we have against the possible development of an
inflationary spiral.
I do not argue that excessive growth
of demand is the only factor causing prices to rise.
But
it has been and could again be a major factor, and the one
factor that could produce a rapid upward spiral.
The
restraining influence of the tax increase will thus contribute to stabilizing the level of prices.
5.
To Protect Our Balance of Payments
The tax increase will encourage the sound, balanced
economic growth that is most favorable to our balance of
payments position.
Over the period 1961-1964 when GNP rose
on the average by about 6 percent per annum (money terms),
the United States trade surplus increased almost $2 billion,
from $4.8 billion in 1960 to $6.7 billion in 1964.
Without the tax increase, we run the risk of faster,
less well-balanced growth, and increased inflationary pressure.
As events of the last two years have demonstrated, this
can lead to a substantial increase in imports.
- 33 -
In 1965 and 1966, when GNP rose at annual rates of
between 8 and 9 percent, imports rose by about 15
percent and 18 percent, respectively -- far more
than exports -- with the result that our trade surplus
deteriorated steadily from $6.7 billion in 1964 to
$4.8 billion in 1965 and to $3.7 billion in 1966.
Expressed as a percentage of GNP, imports rose from
2.9 percent, on average, in 1961-64 to 3.1 percent
in 1965, and 3.4 percent in 1966.
Exports over the two years 1965 and 1966, taken together,
continued to grow reasonably well despite higher cost and
price increases than in the preceding period.
How much better
they would have done in the absence of excessive demand here,
we do not know.
We do know that in order to increase our
trade surplus we must not only hold imports to a reasonable
level but we must keep our exports competitive over the longer
~.
The tax increase contributes to this by reducing up-
ward pressures on our costs and prices.
In the first half of this year, our trade surplus has,
in fact, improved from the low annual rate of $2.9 billion
- 34 -
in the fourth quarter of 1966 to an annual rate of $4.5 billion in the second quarter of 1967.
We must not permit a
new outburst of excessive demand to interrupt this trend.
The recently strengthened Interest Equalization Tax and
our voluntary Federal Reserve and Commerce programs will help
hold capital outflows within reasonable limits.
To summarize, then, on why we need a tax increase:
It is necessary to fulfill our obligation to finance
the special cost of Vietnam in a responsible way.
It is needed to hold down the size of the deficit
to acceptable limits.
It is needed to avoid the return of monetary stringency and high interest rates with their distorting
and unfair impact on the economy, particularly in
the horne building sector.
It is appropriate in relation to our current and
prospective economic situation and insures against
the danger of a spiralling of prices.
Without the tax increase our balance of payments
position will suffer.
- 35 II.
THE TAX INCREASE PROGRAM
To produce the needed revenues the President has proposed a three point program:
A temporary surcharge of 10 percent of tax liability (not 10 percent of taxable income) to be
placed on corporations and on those individuals
with tax liability above an exemption level.
To be effective October I, 1967 for individuals, and July 1, 1967 for corporations.
To remain in effect until June 30, 1969, or
continue so long as the unusual expenditures
associated with our efforts in Vietnam requrre
higher revenues.
A speed-up in corporate income tax collections.
A postponement of the scheduled excise tax reductions on automobiles and telephone service during
the period of the temporary surcharge.
1.
The Surcharge Form of Tax Increase
In recent years there has been considerable expert dis-
cussion about the form that a temporary tax increase should
- 36 -
take.
We have concluded from that discussion that an across-
the-board surcharge is generally the most appropriate method.
A surcharge is simple to administer and easy for the taxpayer
to understand.
its impact.
It is relatively prompt and predictable in
It causes minimal disturbance to the existing
pattern of relationships among taxpayers, and this seems
fair and sensible for a moderate, temporary, emergency
increase.
A surcharge is in line with the recommendations of the
Subcommittee on Fiscal Policy of the Joint Economic Committee.
In the Spring of 1966 the Subcommittee held hearings on the
subject of tax changes for short-run stabilization, which
were a thorough and comprehensive investigation of the subject.
The Committee agreed that a uniform percentage addition to,
or subtraction from, corporate and personal income tax liabilities, to be effective for a stated period, best satisfies
the criteria for short-run stabilizing revenue changes.
It was in the light of these compelling considerations
that a general surcharge
modified to avoid imposing addi-
tional tax burdens on individuals in the very lowest income
brackets -- was decided upon as the major measure in the
PreSident's program.
- 37 I want to make quite clear that the choice of the
surcharge form to meet a temporary need by no means implies
a turning away from the need for achieving important permanent structural changes in the tax system.
Indeed, as the President stated in his Economic. Message,
he will be sending a Message proposing comprehensive tax
reform later in this Session.
Both in timing and objectives, however, tax reform
should be distinguished from the present temporary surcharge
recommendation.
The surcharge is needed now for revenue.
Expeditious action is essential if it is to achieve its
purpose.
It is a temporary measure and not a permanent part
of our revenue structure.
The central issues for Congres-
sional concern are the size of the needed increase and its
timing.
The Tax Reform Message will require more deliberate
consideration since it involves proposals for permanent
structural changes and some redistribution of tax burdens
in the interest of a fairer sharing of the load.
Its basic
objective is not to raise revenue but to correct a number
of inequities and abuses in our tax system.
Tax reform is
- 38 -
a job that very much needs to be done.
I hope your Commit-
tee will be giving its consideration to the President's
reform recommendations in the months ahead.
2.
Effect of the Surcharge on Individuals
The 10 percent surcharge wculd be effective for indi-
viduals as of October 1, 1967.
There has been some confusion
about what the 10 percent applies to.
For clarity, let me
repeat that the surcharge percentage applies to the tax
liability of the individual -- not to the individual's income.
A surcharge equal to 10 percent of the tax liability the
individual would otherwise incur under present law would,
of course, equal a much smaller percent of the individual's
income.
Thus, a married couple with two dependents with a
wage income of $10,000 and taking typical deductions, would
have a tax of $1,114 under present tax rates, and a 10 percent surcharge would amount to $111.
But this $111 is only
slightly more than 1 percent of the family's income.
The selection of the October 1 date -- three months
later than the recommended starting date for corporations
reflects certain practical considerations involved in changing
the current payments required to be made by individuals.
- 39 Increased withholding rates for wages and salaries could
not feasibly be put into effect at a much earlier date
because afthe time required both by the Internal Revenue
Service and employers to prepare and implement new withholding schedules.
It is generally desirable to keep down
the slippage of time between the effective date for a tax
increase and the date on which increased withholding becomes
effective, in order to avoid necessitating large payments
by individuals when they file their final returns.
Concretely, the surcharge would apply to individuals as
follows:
Since the surcharge would be effective October 1,
1967, and thus be in effect for only one-quarter
of the year 1967, the rate of the surcharge for
that year would be 2-1/2 percent of the tax for
the entire year 1967. 11
If the tax on an indi-
vidual for 1967 would be $1,000 under present law,
the surcharge would raise this tax by $25 to $1,025.
Increased withholding rates incorporating the surcharge would go into effect October 1, 1967, so that
individuals with wages or salaries would remain on a
current payment basis.
1/ The surcharge applies to the present law tax including the
tax on capital gains.
- 40 -
Since the surcharge would be in effect for all
of the calendar year 1968, the surcharge due on
calendar year 1968 tax liability would be the
full 10 percent.
On a tax of $1,000 which an
individual would otherwisE
incu~the
surcharge
would come to $100 or 10 percent. 1/
Persons of restricted means should not be required,
even in times of emergency, to sacrifice already minimal
standards of living.
Consequently, the proposal provides
an exemption for such persons.
The exemption from the surcharge covers taxpayers whose
taxable income falls entirely within the first two brackets
of the individual income tax. 2/
Generally, this exemption
would exclude from the surcharge:
All single persons with taxable incomes of $1,000
or less after deductions and exemptions; all
married persons with taxable incomes of $2,000 or
less after deductions and exemptions; and all heads
of households with taxable incomes of $1,500 or less
after deductions and exemptions.
1/ The surcharge applies to the present law tax including the
1/
tax on capital gains.
A special provision will also insure that persons receiving
retirement income qualifying for the retirement income
credit will maintain their present parity for income tax
purposes with recipients of Social Security benefits.
- 41 In terms of specific tax liabilities, single returns
having $145 or less tax, joint returns having $290
or less tax, and head-of-househo1d returns having
$220 or less tax would be exempt.
In terms of total earnings, married couples with
two children with earnings of $5,000 or less per
year and single people with earnings of less than
$1,900 per year would not be subject to the surcharge, assuming the use of the minimum standard
deduction.
The exemption will cover about 16 million taxpayers, or
approximately one-sixth of the 98 million total of all taxpayers.
Of the 16 million who will not be subject to the
surcharge, approximately 5 million are single individuals
and 11 million are married taxpayers.
The effects of the proposal may be illustrated by applying the proposed surcharge to a married couple with two
dependents using typical (10 percent of income or minimum
standard deduction) deductions:
With $5,000 earnings, their tax will be unchanged
(and still $130 lower than they would have paid in
1963).
- 42 With $10,000 earnings, their tax will rise $28 in
1967 and $111 -- or $9.25 a month -- in 1968 (their
1968 tax will still be $147 less than they would
have paid in 1963) •
With $20,000 earnings, their tax will rise $79 in
1967 and $316 -- $26.34 a month -- in 1968 (their
1968 tax will still be $324 less than they would
have paid in 1963).
Since the bulk of American families -- three out of
every four -- have an income below $10,000, they will be
paying less than $9.25 a month, down to only about $2.50
a month.
3.
Effects of the Surcharge on Corporations
The 10 percent surcharge would apply to corporations,
effective July 1, 1967.
Thus, for calendar 1967 the surcharge
would be higher than for individuals because of the earlier
starting date.
For corporations whose taxable year coincides
with the calendar year, the surcharge for calendar year 1967
would be 5 percent (compared to 2-1/2 percent for individuals)
since it applies for one-half the year.
surcharge would apply for 1968.
The full 10 percent
- 43 For corporations whose taxable year does not coincide
with a calendar year, the rate of the surcharge would be
determined on the basis of the number of days in the corporation's fiscal years that fall within the period during
which the surcharge is in effect (July 1, 1967 1969).
Jun~
30,
JJ
A calendar year corporation with profits before tax of
$100,000 will pay an extra $2,075 in 1967 and 1969, and an
extra $4,150 in 1968.
4.
Revenue Effect of the Surcharge
The revenue effect of the surcharge will be to:
Increase fiscal year 1968 receipts in the Administrative Budget by $6.3 billion
The increase in receipts from individuals
amounting to $4 billion.
The increase in receipts from corporations
amounting to $2.3 billion.
1/ Thus, a corporation with a November 30 fiscal year would
apply a proportionate surcharge rate to its 1967 fiscal
year determined as follows: 10 percent multiplied by a
fraction the numerator of which is 153 (the number of
days in the taxable year after June 30, 1967) and the
denominator of which is 365, or approximately 4.2 percent.
- 44 -
s.
The Speed-Up in Corporate Tax Collections
Two steps are recommended to place corporations on the
same current tax payment basis as individuals.
Beginning
January 1, 1968, corporations would pay their estimated tax
liability on the basis of 80 percent of estimated tax liability, rather than 70 percent as under present law.
Corporations would then be on the same percentage basis
that individuals, sole proprietorships, and partnerships
have been on since the beginning of this year.
The second proposal to bring corporations to a current
estimated tax payment basis is to eliminate, over a fiveyear period commencing January 1, 1968, the $100,000 of tax
exemption from estimated tax payment requirements.
By this
measure, all corporations, small, medium and large, will
gradually be placed on the same current tax payment basis
as individual proprietors and partnerships.
The five-year
transition period assures that the change to a current tax
payment basis will be accomplished in an orderly and balanced
manner.
All corporations, regardless of size, can plan for
steady implementation of the system, and will not have to
catch up to a totally current basis in anyone year.
- 45 -
The 80 percent requirement would add about $400 million
revenue in fiscal year 1968.
The transition to current payment for the first $100,000
of corporate tax would add about another $400 million revenue
in fiscal year 1968 and equivalent amounts in each of the
ensuing four fiscal years.
These proposals are logical extensions of the transition
to a current payment basis for corporations reflected most
recently by the Tax Adjustment Act of 1966, and are appropriate responses to the obvious need to align corporate
payment rules with those applicable to noncorporate taxpayers.
6.
The Postponement of the Scheduled Excise Tax Reductions
Under present law the excise tax on passenger automobiles
is scheduled to drop from 7 percent to 2 percent April 1, 1968,
and then to 1 percent January 1, 1969.
The excise tax on
telephone service is scheduled to drop from 10 percent to
1 percent April, 1968, and then to zero January 1, 1969.
It is appropriate in the light of our revenue needs that
these scheduled reductions be deferred for the period during
which the proposed surcharge is in effect.
Since these
- 46 -
excises are currently in effect, deferment of their reduction is a relatively simple matter administratively for
business firms and the government
0
Moreover, the burden
of these taxes is widely dispersed over the population and
does not rest disproportionately on a narrow segment of
the community.
The proposal suspends the above scheduled
reductions until July 1, 1969, and January 1, 1970, respectively.
The additional revenue derived would be approximately
$300 million for fiscal year 1968 and approximately $2.5
billion for fiscal year 1969.
The revenue effect for fiscal 1968 of the President's
three-point tax program as a whole, then is to increase
receipts by $7.4 billion:
$6.3 billion from the surcharge.
$800 million from the speed-up of corporate
collections.
$300 million from the deferral of scheduled
excise tax reductions.
Assuming the President's tax program is enacted, total
receipts for the administrative budget for the fiscal year
1968 are estimated at $122.5 billion.
A breakdown of this
- 47 -
revenue estimate is attached.
The size of the deficit
would depend upon the final level of expenditures.
Higher
expenditures affect the deficit directly, of course, but
also indirectly through their impact on private incomes
and thereby on Federal revenues.
Were expenditures to
fall in the high end of the range, for example, revenues
would rise by perhaps as much as a billion dollars.
In summary, the President's proposal provides needed
revenues by balanced and equitable means:
The speed-up in estimated tax payments for
corporations brings this sector of business
into parity with unincorporated businesses.
The effect of postponing the scheduled excise
tax reductions is dispersed widely over the
population.
The surcharge is a temporary measure designed for
relatively simple implementation and termination,
which applies progressively in the same manner as
our basic income tax liability, but appropriately
exempts those who, because of low incomes, should
not be required to shoulder this additional
responsibility.
- 48 -
CONCLUSION
Mr~
Chairman and Members of the Committee:
a point with which I began:
I end on
based on the hard facts we
all face, the President's program for combining a tax
increase with expenditure reduction to diminish the
deficit and the extent of government borrowing represents
a sound, fair and fiscally responsible choice of the
alternatives open to this Committee, the Congress, and
the American people.
Admittedly, no one likes to pay additional taxes even
for a temporary period.
The President does not like to
recommend an increase in taxes; the Secretary of the
Treasury and his colleagues do not like to plead for an
increase in taxes; we know this Committee does not like to
ask the House of Representatives to vote an increase in
taxes.
All of us -- President, Administration officials, this
Committee and the House -- have proven alert and anxious
to reduce the Federal tax burden on the American people.
We have done so, and in recent years this policy of
Federal tax reduction has meant substantial savings for the
- 49 American taxpayer
passed o
0
In 1962 the investment tax credit was
In 1964 the most significant reductions in
personal and corporate income taxes in history was voted.
In 1965 excise taxes were removed on over 200 items.
It
has been my privilege to espouse all of these measures
before this Committee.
As a result of these reductions initiated in the
Congress by this Committee, despite constantly rising State
and local taxes, Americans enjoy a lower tax burden than
any major industrial country in Western Europe -- and this
includes taxes levied at all levels of government, Federal,
State and local.
Figures collected by the Organization for
Economic Cooperation and Development show that as a proportion of total national production, French citizens paid
38.5 percent in taxes; Germany, 34.4 percent; Italy, 29.6
percent; United Kingdom, 28.6 percent; and the United States,
27.3 percent.
As the President said in his Message:
"If Americans today still paid taxes at the
rates in effect when I became President, a little
over three years ago, they would be paying this
year over $23 billion more than they are paying nowa n
- 50 -
The enactment of the proposed surcharge would temporarily take individual tax rates less than one half way up
to the 1963 levels.
Attached to my statement are tables showing precisely
how much better off tax-wise each individual taxpayer will
be in 1967 and 1968 even with the temporary surcharge,
compared to his income tax liability in 1963.
For a little more perspective on what the surcharge
means for the individual taxpayer, let me point out that
the surcharge:
In the aggregate, would amount to only one percent
of individual income before all taxes.
Would place a far lesser burden than the tax
increase of the Korean War, when the average
increase in tax rates was the equivalent of
about a 28 percent surcharge.
Would be in no way comparable to the increase
in tax burden in World War II when the ratio
of income tax to total personal income rose
from 1.3 percent to 10.8 percent, resulting
from increased rates, reduced exemptions and
- 51 rising incomes.
This was a 730 percent increase,
starting from a small base.
For the corporation, the surcharge will be an increase
of 10 percent compared to an average rise of 52 percent
during the Korean War.
In World War II the effective rate
on corporations due to a combination of rate increases and
the excess profits tax resulted in effective rates that
were higher by 174 percent.
Now once again armed conflict involves our security.
As the President said:
"There are times in a nation's life when its armies
must be equipped and fielded, and the nation's business must still go on.
For America that time is now."
The time has come when we must levy a temporary tax
to defray a portion of the cost of the conflict in Southeast
Asia and thereby forward the nation's business.
The nation is determined to see those hostilities terminated, but only under conditions consonant with a future
for peace and freedom that offers no reward for Communist
aggression or its cult of violence and subversion.
- 52 This is an occasion to recall the statement of a great
American of another day, Justice Oliver Wendell Holmes, who
said:
"Taxes are what we pay for civilized society."
We cannot share the sacrifices our brave men are making
in the field.
But we can meet the fiscal challenge a.t home.
We can provide the additional taxes that will help hold the
budget deficit within limits conducive to the maintenance
of a healthy, balanced economy, well fitted for the eventual
transition to a peace with prosperity.
It is my firm conviction that, however unwelcome to
Americans as taxpayers, the President's program is in the
best interest of those same Americans -As consumers who want price stability;
As wage and salary earners who have or seek jobs
in an economy characterized by sustained and
steady growth rather than boom and bust;
As businessmen whose life blood is credit and
steady expanding demand from confident customers;
As home buyers and farmers to whom ever higher
rates, tight money and increased costs are far
more cruel than taxes:
- 53 As poor, elderly, or living on a fixed income
to whom a spiral of inflation is ruinous;
As fighting men who dream of returning someday
to a job, an education and a home.
Members of this Committee share with the Secretat:y of
the Treasury the special responsibility of seeing to it
that the bills of the government are paid -- whether out
of borrowed money or revenues o
I hope you will share with
me the conclusion that the prompt enactment of the President 1 s tax proposals are
ne~essary
and indispensable part
of a program of fiscal responsibility_
Table
l
Comparison of 1963-1966 Tax Liability and 1967-1968 Tax Liability
Under Proposed Tax Increase for Illustrative Taxpayers 1.1
(SL1(~1e Individual)
Wage
income
$
1,000
: 1964 'rax Act:
1963 tax ~
aecrease
$
62
$
46
Tax increase
1966 tax 2/
$
16
1967 tax
$
:
gj :over 1966 tax}/: 1968 tax
-- '2J
16
~
Tax increase
over 1966 tax ~
2J
16
4
162
167
4
179
16
333
341
8
366
33
147
671
688
17
738
67
1,405
237
1,168
1,197
29
1,285
117
10,000
2,096
354
1,742
1,786
44
1,916
174
12,5 0 0
2,887
489
2,398
2,458
60
2,638
240
15,000
3,787
633
3,154
3,233
79
3,469
315
20,000
5,900
982
4,918
5,041
123
5,410
492
25,000
8,324
1,342
6,982
7,157
175
7,680
698
35,000
13,778
2,151
11,627
11,918
291
12,790
1,163
1,900
224
77
147
151
2,000
242
79
163
3,000
427
94
5,000
818
7,500
Office of the Secretary of the Treasury
Office of Tax Analysis
$
$
15
August 14, Fl61
ProposeJ tax increase of 2. c:; percent of the tax i'l 1967 and 10 percent in 1968 which does not apply to single
return::' with ta'.~tb1e income 0: $1,000 or less and joint returns with taxable income of $2,000 or less.
2/ Tax liability f:c,;nputations Ctssume mlnlmum standard deduction or deductions equal to 10 percent of income
\vhi,'h-2'f'?l' is S'·c;at-;r. Tax liability from optional tax table where income is under $5,000.
1967 t ':.- ::, Ll11. 1"" C -, -:.
1968 tax minu~ 1)66 tax.
~/ There is no increase in 1967 or lOh~ for a ~in~l~ person whose tax 4t 1966 rates is $1 4 5 or less.
II
¥;
Table
2
Comparison or 1963-1966 Tax Liability and 1967-1968 Tax Liability
Under Proposed Tax Increase ror Illustrative Taxpayers
!I
(Marrie~ Couple, No Dependents)
v;age
income
1963
tax
?J
: l:;64
Ta).. Act :
c e.C4ea~e
1']"-;('
$
tax ~/
1967
tax
58
$
58
-- 2L
-- _I
5f
$ 2,000
$ 122
3,000
305
101
204
204
3,600
413
119
294
301
5,000
660
159
501
7,500
1,141
227
10,000
1,636
12,500
$
6!f
V
Tax increase
over 1966 tax ]}
y
Tax increase
over 1966 tax ~
1968
tax
$
58
-- 2/
204
-- 2./
7
323
$ 29
514
13
'551
50
914
937
23
1,005
91
294
1,3 42
1,376
34
1,47 6
134
2,213
382
1,83 1
1,877
46
2,014
183
15,000
2,810
475
2,33 s
2,393
58
2,569
234
20,000
4,192
708
3,484
3,571
87
3,83 2
348
25,000
5,774
978
4,796
4, cn6
120
5,276
480
35,000
9,601
1,604
7,997
8,197
200
8-,7g7
800
$
Office of the Secretary of the Treasury
AW~'13t 14,1%1.
Of:ice of Tax Analysis
Propoc;ecl tax inc-t'" "c;co of 2.L') p.ol'cent of the tax l)~ 1:J('7 and 10 rercent in 1968 "ihich does not apply to single
returns 'viLh taxilh1c: lrl l'(lwe ':Jfpl,OOO or 1e33 and joint ret.urns "rith taxable income of $2,000 or less.
Tax
liJ.bi1i ty ~;OlnI1I,d.ctti()ns QSSLUne minimum standflr:i de.:iuction or ded~lctions equal to 10 percent of income
ij
-,vhi.~h~"i~' i
'3CFott~:r. Ta< 1Llbllity from Cbltion3.1 tF\X table \-lhere income is under $5,000.
+'1-'
3/ 1')67 tf,y w.lnus
tax minui 1·\, ta-:.
~
0:,/ rhert' i.e; nc, i',')',O,,(:;'o in ",F7 Ot' 1~.f:)~ for P. :nan' 'If'' 1 :'011 pl" whose tax at 1066 rates is $290 or less.
y
-'
Table
3
Comparison or 1963-l966 T~, Liability and 1967-l968 Tax Liability
Under Proposed Tax Increase for Illustrative Taxpayers lJ
(Married Couple, Two Dependents)
v; age
incon:e
1963 tax
$
$3,000
: 1964
y
Tax Act
cJ pcre&ee
$
65
61
1966 tax
$
4
2/
1967 tax
$
y
Tax increase
over 1966 tax
11
4
-- L/
-- :2/
1968 tax?J
$
Tax increase
over 1966 tax ~
LI
LI
4
290
5,000
420
130
290
290
7,500
877
191
636
703
$ 17
755
$ 69
10,000
1,372
258
1,1l4
1,142
28
1,225
111
12,500
1,901
334
1,567
1,606
39
1,724
157
15,000
2,486
L~24
2,062
2,ll4
52
2,268
206
20,000
3,800
640
3,160
3,239
79
3,476
316
25,000
5,318
906
4,412
4,522
llO
4,853
441
35,000
9,037
1,508
7,529
7,717
188
8,282
753
yi":lce-of the Secretary c: the Treasury
Office of Tax Analysis
1.1
Sf
3/
4/
SJ
Augu2't 14, 1 "Y>7-
Proposed tax increase of 2.:: pereent of the tax in 1967 ani 10 percent in 1968\<!hich does not apply to single
returns ,'lith taxable income of $1,000 or less and joint returns with taxable income of $2,000 or le.3s.
Tax liability computations assume r:tinimulil standard deduction or deductions equal to 10 percent of income
whichever is greater. Tax liability from optional tax table wh~re income is under $5,000.
1'1,,'
+!
l:lLl1ll!3
!
It
+-'_1
1~68 tax minu 1~6 tax.
There i:.; n0 it) 'rea':'"" in l' 7
Or
1 .(,3 fo)" a !'l'lrri,cod coup::'e 'oInos(> ta:-: at
l'·6(~ r'ltps
is $2:10 or less.
Estimated Net Administrative Budget Receipts
in the Fiscal Year 1968
(Assuming President's Tax Program)
($
billions)
Individual income taxes
70.5
Corpora t ion income taxe s .••.•....•.•.•.••.....•..•.......
32. 7
Excise taxes ...............................................................................
9.1
Es ta te and g lit taxe s •.•..•••......•.....••........•.•••.
3. 0
Cus toms ............................................................................................ .
2.0
Miscellaneous receipts ......•...•.........•...•........•.
Net administrative budget receipts .............•......
122.5
Underlying Income Assumptions - Calendar Year 1967
Gross national product ..•..•••.••..••......•.............
783
Personal income .....•...•..•.•...••.•.•••.••.••.•...••.••
625
Corpora te prof its ............................................................................
80
Office of the Secretary of the Treasury
Office of Tax Analysis
August 13, 1967
TREASURY DEPARTMENT
PUR IMMEDIATE RELEASE
SUBSCRIPTION AND
August 14, 1961
ALI,()'H.{ENT
FIGURES FOR TREASURY'S CURRENT CASH OFFERING
The Treasury Department today announced the subscription and allotment
figures with respect to the current offering of 5-1/4i Treasury Notes of
Series D-1968, due November 15, 1968.
Subscr1pt1ons and allotments were div1ded among the several Federal Reserve Distr1cts and the Treasury as follows:
Federal Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
Total Subscr1ptions Received
$
Totals
326,784,000
9,712,155,000
273,683,000
649,436,000
384,777 ,000
460,381,000
1,392,051,000
416,145,000
202,584,000
347,1l5,000
365,290,000
1,088,168,000
41,548,000
$15,660,117,000
Subscriptions by investor classes:
States, political subdivisions or instrumentalities thereof, public pension
and retirement and other public funds,
uternational organizat1ons in which the
United States holds membersh1p, foreign
central banks and foreign States which submitted certification and received full
$ 284,811,000
allotment ----------------------------5,957,111,000
Commercial Banks (own account)---------
Ali Others----------------------------Total
Federal Reserve Banks & Government
mvestment Accounts-------------------Grand Total
F-998
3,333,840,000
$ 9,575,762,000
6,084,355,000
$15,660,117,000
Total
Allotments
$
137,471,000
7,427,784,000
114,009,000
254,122,000
170,661,000
201,668,000
556,822,000
189,946,000
106,171,000
162,535,000
171,203,000
403,412,000
16,098,000
$9,911,902,000
TREASURY DEPARTMENT
=
Q
August 15, 1967
FOR IMMEDIATE RELEASE
PROPOSED TAX MEASURES
SUBMITTED TO CONGRESS
Secretary Fowler, at the request of the House
Ways and Means Committee, today submitted the
Treasury's draft of the Administration's proposed
tax legislation.
Attached are copies of the proposed bill and
a technical explanation.
000
Attachment
F-999
A BILL
To amend the Internal Revenue Code of 1954 to impose a temporary
surcharge tax, and for other purposes
Be it enacted by the Senate and House of Representatives of the
United States of America ~ Congress assemb1e~
1.
SHORT TITLE, ETC.
(a)
Short Title. -..,This Act may be cited as the "Surcharge Tax
Act of 1967."
(b)
Amendment of 1954 Code.--Elccept as otherwise expressly pro-
vided, whenever in this Act an amenanent is expressed in tenlls of an
amendment to a section or other provision, the reference shall be
considered to be made to a section or other provision of the Internal
Revenue Code of 1954.
2.
IMPOSITION OF TAX SURCHARGE
(a)
In General.--Subchaptar A of chapter 1 (relating
to deter-
mination of tax liability) is amended by inserting at the end thereof
the following new part:
"PART V--TAX SURCHARGE
"Sec. 51 Tax surcharge.
"SmJ.
51.
TAX SURCHARGE
"(a)
Imposition of
"(1)
Tax.~-
Calendar year taxpayers.--In addition to the other
taxes imposed by this chapter and except as provided in subsection (b), there is hereby imposed on the income of every
- 2 -
person whose taxable year is the calendar year, a tax equal
to the percent of the adjusted tax (as defined in subsection (c) )
for the taxable year specified in the following table:
Cal9lldar
Year
Percent
Individuals
Corporations
1967
2.5
1968
10.0
5.0
1969
tt
(2)
5.0
10.0
5.0
fiscal year taxpayers.--In addition to the other
taxes imposed by this chapter and except as provided in subsection (b), in the case of taxable years ending on or after
the effective date of the surcharge and beginning before
July 1, 1969, there is hereby imposed on the income of every
person whose taxable year is other than the calendar year, a
tax equal to-II
(A)
Ten percent of the adjusted tax for the
taxable year, multiplied by
nCB)
A fraction, the numerator of which is the
nwnber of days in the taxable year occurring on and after the
effective date of the surcharge and before July 1, 1969,
and the denominator of which is the number of days in the
entire taxable year,
ft()
graph
Effective date defined.--Fbr purposes of para-
(2), the 'effective date of the surcharge' means-"(A)
July 1, 1967, in the case of a corporation,
nCB)
October 1, 1967, in the case of an
and
individual.
- 3 "(b)
ww
Income EKemption.--Subsection (a) shall not apply if
the adjusted tax for the taxable year does not exceed-"(1)
$290, in the case of a joint return of a husband
and wife under section 6013,
"(2)
$220, in the case of an individual who is a head of
household to whom section 1 (b) applies, or
11(3)
$145,
in the case of any other individual (other than
an estate or trust).
"(c)
Adjusted Tax Defined.--For purposes of this section, the
adjusted tax for a taxable year means the tax imposed by this chapter
(other than by this section, section 871 (a) or section 881) for such
taxable year, reduced by any oredi t allowable for such year Wlder
section 37 (relating to retirement income)computed without regard to
this section.
"(d)
Authority to Prescribe Composite Tax Rates and Tables.--
The Secretary or his delegate may determine, and require the use of,
composite tax rates incorporating the tax imposed by this section and
prescribed regulations setting forth modified optional tax tables
computed upon the basis of such composite rates.
The composite rates
so determined may be rounded to the nearest whole percentage point
as determined under regulations prescribed by the Secretary or his
delegate.
If, pursuant to this subsection, the Secretary or his
delegate prescribes regulations setting forth modified optional tax
tables for a taxable year, thoo, notwithstanding section
144
(a),
in the case of a taxpayer to whom a crad! t is allowable for such
- 4taxable year under section 37, the standard deduction may be
elected regardless of whether the taxpayer elects to pay the
tax imposed by section 3.
n(e)
Estimated Tax.--For purposes of applying the provisions
of this ti tle with respect to declarations and payments of estimated income tax due more than
45
days
(15
days in the case of a
corporation) after the enactment of this section-n (1)
In the case of a corporation, so much of any tax
imposed by this section as is attributable to the tax imposed
by section II or 1201 (a) or subchapter L shall be treated as
a tax imposed by such section II or 1201 (a) or subchapter L;
tf
(2)
The tem 'tax shown on the return of the in-
dividual for the preceding taxable year', as used in section
6654
(d) (1), shall mean the tax which would have been
shown on such return if the tax imposed by this section were
applicable to taxable years ending after September 30, 1966,
and beginning before July 1, 1968; and
"0) The term 'tax shown on the return of the corporation for the preceding taxable year', as used in section
6655
(d) (1), shall mean the tax which would have been shown
on such return if the tax imposed by this section were applicable to taxable years ending after June 30, 1966, and
beginning before July 1, 1968.
- 5., (f)
Western Hemisphere Trade Corporations and Dividends on
Certain Preferred Stock.--In computing, for a taxable year of a
corporation, the fraction described in-"(1)
Section
244 (a)(2),
relating to deduction with
respect to dividends received on the preferred stock of a
public utility,
"(2)
Section 247 (a) (2), relating to deduction with
respect to certain dividends paid by a public utility, or
"(3)
Section 922 (2), relating to special deduction
for Western Hemisphere trade corporations,
the denominator shall, under regulations prescribed
by the Secretary
or his delegate, be increased to reflect the rate at which tax is
imposed under subsection (a) for such taxable year.
"~eg)
Withholding on Wages.--In the case of wages paid
after September 30, 1967, and before July 1, 1969, the amount required to be deducted and withheld under section Ju02 shall be
determined in accordance with the following tables in lieu of the
tables set forth in section 3402 (a) or (c)(l).--
- 5a -
Tables to be Used in Lieu of
Tables in Section 3402 (a)
[Insert Tables 1-6, 8J
Table 7--If the payroll period with respect to an employee is
ANNUAL
(a)
Single Person--Including Head of
If
the amount of wages is:
Ho~sehold:
The amount of income tax to be wi thheld shall be:
o
Not over $200
$ 200
1,200
14%
1,200
1,300
$ 160 + 17%
1,300
4,400
177 + 1%
4,4Do
8,800
766 +
8,800
-- 11,000
1,734 + 2P;fo
2,350 + 33%
Over 11,000
(b)
2'C/o
Married Person:
o
Not over $200
14%
$ 200
2,200
2,200
4,400
4,4Do
8,800
8,800
17,700
1 , 530 + 2'C'/o
17,700
22,000
3,488 + 2&J;
$
320 + 1710
694 +
4,692 +
Over 22,000
Tables to be Used in Lieu of
Tables in Section
3402 (c)(l)
1%
3J'/a
- 6 (b)
Minimum Distributions.--Section 963 (b) (relating to re-
ceipt of minimum cH.stributions by do~estic corporations) is amended-(1)
by striking out the head of paragraph (1) and
inserting in lieu thereof the following:
"(2)
Taxable years beginning in 1963, 1967, and 1968.--",
and
(2)
by striking out the heading of paragraph (3) and
inserting in lieu thereof the following:
"0)
Taxable years beginning in 1965, 1966, and after
December 31, 1968. --".
(c)
Clerical Amendrnent.--The table of parts of subchapter A
of chapter 1 is amended by adding at the end thereof the following:
"Part V.
(d)
Tax Surcharge"
Effective Date.--The amendments made by this section shall
app1y-(1)
Insofar as they relate to individuals, with re-
spect to taxable years ending after September 30, 1967, and
beginning before July 1, 1969.
(2)
Insofar as.
they relate to corporations, with respect
to taxable years encH.ng after June 30, 1967, and beginning before JUly 1, 1969.
SEX;.
:1
RAISING FROM 70 PEltCPNT TO 80 PEaCENT THE ESTIMATID TAX
WHICH MUST BE PAID IN INSTALLMENTS BY CORPORATIONS
(a)
In General.--Section 6655 (b) (relating to amount of under-
payment), and section 6655 (d) (relating to exception), are amended
by striking out "70 percent" each place it appears therein and inserting
in lieu thereof "80 percent".
- 7 (b)
Effective Date.--The amendments made by this section shall
apply with respect to taxable years beginning after DecEJl'l.ber 31, 1967.
S~.
4.
(a)
PAYMENT OF FIRST $100,000 OF ESTIMATED TAX.
Requirement of Declaration.--Section 6016 (a) (relating
to requirEl1lent of declaration of estimated tax in case of corporations)
is amended by striking out "$100,000" .md inserting in lieu thereof
"$40".
(b)
Reduction of Exclusion from Estimated Tax.--Section 6016
(b) (relating to the dafini tion of estimated tax in the case of a
corporation) is amended to read as follows:
"(b)
Estimated Tax.-ft(l)
Definition~--l'br
corporation, the term
"(A)
t
purposes of this title, in the case of a
estimated tax' means the excess of--
the amount which the corporation estimates as the aJOOunt
of the income tax imposed by section 11 or 1201 (a), or subchapter L of chapter 1, whichever is applicable, reduced b.Y the
amount which the corporation estimates as the sum of any credi.ts
against tax provided by part 1 V of subchapter A of chapter 1,
over
"(B)
an aroount equal to the applicable exclusion percentage
(detennined under paragraph (2»
multiplied by the lesser of--
$100,000, or
the amount determined under subparagraph (A).
"(2)
means--
Exclusion percentage.--TIle tenn 'exclusion percentage l
- 8 -
If the declaration is for a taxable
year beginning in
The exclusion percentage is
1968
80
1969
60
1970
40
19n
20
1972 or later
(c)
0"
Elcception from Addition to Tax.--Section
6655
(d)(l) is
amended by striking out the phrase "reduced by $1.00,000" and inserting
in lieu thereof "reduced by an amount equal to the applicable exclusion
percentage, determined under section 6016 (b) (2), multiplied by the
lesser of $100,000 or the amount of such
(d)
Section
tax".
Addition to Tax for Underpayment of Estimated Tax.--
6655
(e) (relating to the definition of tax) is amended to
read as follows:
nee)
Definition of Tax.--Fbr purposes of subsection (b),
(d)(2), and
(d)()), the term 'tax' means the excess of--
"(1)
the amount of tax imposed by section 11 or 1201 (a),
or subchapter L of chapter 1, whichever is applicable, reduced
by the swn of any credits against
tax provided
by part 1 V of
subchapter A or chapter 1, over
"(2)
an amount equal to the applicable exclusion percentage,
(detemined under section 6016 (b)(2)), multiplied by the lesser
of--
- 9 -
(e)
"(A)
$100, 000, or
II(B)
the amount determined in paragraph (1)."
Technical Amendment.--C1ause (v) of section 243
is amended by' striking out
(f)
(B)(J)(C)
"$lOO,OOOIl~
Effective Irate.--The amendments made by this. section shall
apply with respect to taxable years beginning after Decanber 31, 1961.
SEt.
5.
(a)
POSTPONJ!Hl!NT OF CERTAIN EXCISE TAX RATE REDUCTIONS.
Passenger Automobiles.-(1)
In general.--Subparaph (A) of section 4061 (a)(2)
(relating to imposition of tax) is amended to read as f011ows:_
II
(A)
Article enumerated in subparagraph (B) are
taxable at whichever of the following rates is applicable:
"1 percent for the period beginning with the day
after the date of the enactment of the Tax Adjustment
Act of 1966 through June )U, 1969.
"1 percent for the period after December 31, 1969."
(2)
Conforming amendments.--Section 6412 (a)(l) (relating to
floor stocks ref'unds on passenger automobiles, etc.) is amended by
striking out "April 1, 1968, or J ..nuary 1, 1969" and inserting in
lieu thereof "July 1, 1969, or January 1, 191()f!
(b)
Communication Services.--Section 4251 (relating to tax on
communications) is arnended-(1)
By striking out subsection (a) (2) and inserting in lieu
thereof:
"(2)
as follows:
The rate of tax referred to in paragraph (1) is
- 10 "Amounts paid pursuant
to bills rendered --
PercEllt
If Before &fu..ly 1, 1969
"After June 30, 1969, and
before January 1, 1970
(2)
10
1"
By striking out subsection (b) and inserting in lieu
thereof:
It(b)
Termination of Tax.--'1be tax imposed by subsection (a) shall
not apply to amounts paid pursuant to bills first rendered on or after
January 1, 1970."
(3)
By striking out alb.section (c) and inserting in lieu
thereof:
II(C)
Special Rule.--Fbr purposes of subsection (a), in the case
of cummunications services rendered before May 1, 1969, for which a
bill has not been rendered before July 1, 1969, a bill shall be treated
as having been first rendered on June 30, 19690
For purposes of sub-
sections (a) and (b), in the case of communications services rendered
after April 30, 1969, and before November 1, 1969, for which a bill has
not been rendered before January 1, 1970,a bill shall be treated as
having been first rendered on December 31, 1969. n
(c)
Effective Date.--The amendments made by this section shall be
effective on the date of enactment of this Act.
TECHNICAL EXPLANATION
SURCHARGE TAX ACT OF 1967
This bill, which is entitled the "Surcharge Tax Act of
1967",
has four substantive sections:
(1)
Section 2 imposes a temporary surcharge on both individual and
corporate income tax liabilities at an annual rate of 10 percent.
(2)
Section 3 raises from 70 percent to 80 percent, the percent
of its estimated tax which a corporation may pay by installments without incurring a penalty.
(3)
Section 4 eliminates, over a five-year period, the $100,000
estimated tax exemption presently granted corporations.
(4)
Section 5 suspends the schedule for the reduction of the
excise taxes on passenger automobiles and telephone services during the
period of the temporary surcharge.
There follows a more detailed description of each of these provisions.
SECTION 1 of the bill sets forth its title.
SECTION 2.
(a)
TAX SURCHARGE.
Imposition of tax.
Subsection (a) of section 2 of the bill adds
a new part to subchapter A of chapter 1 of the Internal Revenue Code vlhich
consists of a new section 51 imposing a temporary tax surcharge on cor~orations
and individuals.
General Provisions.
Subsection (a) of the new section 51 provides
for the imposition of the surcharge.
The tax is at an annual rate of 10
percent of tax liability (adjusted as provided in section 51 (c)) and is
effective From July 1, 1967, through June 30, 1969, for corporations and
from October 1, 1967, through June 30, 1969, for individuals.
For taxpayers
- 2 who report their income on a calendar year basis, the rate of the
surcharge for the calendar years involved is as follows:
Rate of Tax
Calendar Year
Individuals
Corporations
1967
2.5%
5%
1968
10.010
lrf/o
1969
5.010
5%
In the case of taxpayers who report their income on a fiscal year
basis, the rate will be 10 percent for years falling entirely within the effective dates, whereas, in the case of taxable years that
straddle either the commencement or termination date, the tax will be
prorated depending on the number of days in the taxable year falling
within the period the tax is in effect.
Low income exemption.
Subsection (b) of the new section 51
provides an exemption from the surcharge for individuals (other than
estates and trusts) whose tax does not exceed that generally applicable
to the first two brackets of taxable income.
More specifically, the
surcharge will not apply to a husband and wife filing a joint return if
their tax does not exceed $290.
It will not apply to a head of household
whose tax does not exceed $220, or to a single individual (or a married
individual filing a separate return) whose tax does not exceed $145.
In the case of a head of household, the exemption level is determined on
the basis of the tax applicable to $1,500 of taxable income which is
midway between the first two tax brackets of a single individual and the
first two tax brackets of a married couple filing a joint return.
- 3 Tax base on which surcharge is computed.
the new section 51
provide~
Subsection (c) of
that the surcharge shall be computed
as a percentage of the tax otherwise imposed by chapter 1 of the
Internal Revenue Code, with the exception that it shall not be imposed
with respect to the 30 percent tax under sections 871 (a) and 881 on
nonresident alien individuals and foreign corporations receiving income
not effectively connected with a business in the United States.
In the
case of an elderly person who is eligible for the retirement income
credit, the surcharge will be computed as a percentage of his tax liability
after subtracting his retirement income credit.
Similarly, tax liability
shall be reduced by the retirement income credit in determining whether
such an individual is eligible for the low income exemption.
This treat-
ment is afforded the retirement income credit in order to give it the
same effect on the surcharge as the exclusion for social security benefits.
Tax liability would not be reduced by any other credits in computing the
amount of the surcharge.
On the other hand, once the surcharge has been
computed, it may be offset by credits to which the taxpayer is entitled
and which are not absorbed by his regular tax liability.
Authority to prescribe composite tax rates and tables.
Subsection (d)
of the new section 51 provides that the Secretary of the Treasury or his
delegate may compute composite income tax rates incorporating the surcharge and
prescribe regulations setting forth modified optional tax tables computed
on the basis of such composite rates.
The composite rates may be rounded
- 4to the nearest whole percentage point.
If the Secretary or his delegate
exercises his authority under this subsection, he may require taxpayers
to use the rates and/or tables he has prescribed.
Moreover, if he prescribes optional tax tables incorporating the
surcharge, the usual rule that a taxpayer with less than $5,000 of income
may take the standard deduction only if he uses the optional tax tables
will be waived in the case of a taxpayer who is eligible for the retirement income credit.
This special rule is to reflect the fact that the
effect of the retirement income credit on the surcharge cannot be
accurately incorporated into the optional tax tables, with the result
that those claiming the retirement income credit will almost universally
use the regular tax computation.
Under these circumstances, without the
special rule, most taxpayers claiming the retirement income credit would
be precluded from using the standard deduction.
Estimated tax.
Subsection
(~)
of the new section 51 contains pro-
visions conforming the estimated tax provisions to the new surcharge tax.
Under present law, corporations are required to pay estimated tax only
with respect to taxes imposed by section 11 or 1201 (a) or subchapter L
(relating to insurance companies).
The new subsection (e) (1) provides
that any surcharge that is attributable to a tax imposed under these
sections or subchapter shall, for estimated tax purposes, be treated as
a tax imposed under these sections or subchapter and, therefore, subject
to estimated tax payments.
Paragraphs (2) and (3) of the new subsection (e)
- 5 provide that, in the case of the option under which individuals and
corporations may pay their estimated tax on the basis of their prior
year's tax liability, this prior year's liability ,shall be adjusted to
reflect the surcharge tax.
Under the provisions of the new subsection (e), corporations would
be reCJ.uired to reflect the surcharge in their first estimated tax payment
due more than 15 days after the bill is enacted.
For individuals, the
surcharge would have to be reflected in the first estimated tax payment
due more than 45 days after the enactment of the bill.
Western Hemisphere Trade Corporations and dividends on certain
Preferred stock.
The following two provisions of the Internal Revenue Code
nrovide a special deduction with respect to certain income which has the
effect of reducing the corporate tax rate applicable to that income by
14 percentage points.
(1)
These provisions are:
Section 922, relating to the taxable income of
Western Hemisphere Trade Corporations;
(2)
and
Section 247, relating to dividends paid by a
public utility on its preferred stock.
Section 244 provides a reciprocal deduction with respect to amounts
received as dividends on certain preferred stock of a public utility.
In
order to maintain the 14 percentage point differential under these sections,
subsection (f) of the new section 51 provides that the computation shall be
adjusted, under regulations prescribed by the Secretary of the Treasury or
- 6 his delegate, to reflect in the regular corporate tax rate the surcharge
imposed under the new section 51.
New withholding tables.
Subsection (g) of the new section 51
sets forth new tables for computing the amount of income taxes to be
withheld from wages paid on or after October 1, 1967, and before
July 1, 1969.
These tables reflect an increase in the withholding rates
of 10 percent.
(b)
Minimum distributions by foreign subsidiaries.
Subsection (0)
of section 2 of the bill amends section 963 (b) (relating to receipt of
minimum distributions by domestic corporations from their foreign
subsidiaries) to provide for the use of a minimum distribution table
reflecting the surcharge.
beginning 1967 and 1968.
The new table is to be used for taxable years
It is the same table that was applicable for
taxable years beginning in 1963 when the corporate tax rate was 52 percent
(the present corporate tax rate including the additional surcharge is
52.8 percent).
(c)
Clerical amendment.
Subsection (c) of the new section 51
makes a clerical amendment to reflect the addition of the new Part V
imposing the surcharge.
(d)
Effective date.
Subsection Cd) of the new section 51 provides
the effective dates for the surCharge.
These dates are explained in the
discussion under subsection (a) of the bill.
- 7 SECTION 3.
INCREASE FROM 70-80 PERCENT THE AMOUNT OF ESTIMATED TAX
WHICH CORPORATIONS MUST PAY IN INSTALLMENTS.
Under present law, a corporation is not penalized for an underpayment of estimated tax if its payments equal or exceed those which
would be required on the basis of estimated tax liability of 70 percent
of actual tax liability (less $100,000).
Section 3 of the bill amends
section 6655 to raise the 70-percent figure to 80 percent.
This conforms
the percentage for corporations to that made applicable to individuals
beginning in 1967.
This change would be effective for taxable years
beginning after December 31, 1967.
SECTION 4.
PAYMENT OF FIRST $100,000 OF ESTThiATED Tf:\X.
Under present law, corporations are required to make estimated tax
payments only with respect to their estimated tax liability in excess of
$100,000.
They are not required to make any estimated tax payments on
their firs[' $100,000 of estimated tax liability and, if their annual
estimated tax liability is $100,000 or less, they are not required to file
a declaration.
Under section 4 of the bill, the $100,000 exclusion would
be repealed over a five year period.
More specifically, subsection (a) of section 4 of the bill would
amend section 6016 (a) to require a corporation to file a declaration
of estimated tax for a taxable year if it can reasonably be expected that
its tax liability for the year (after taking into account credits) will
exceed $40.
As indicated above, the present exemption level is $100,000.
- 8 Subsection (b) of section
4 of the bill amends section 6016 (b)
to provide a new definition of "estimated tax" (which is the basic
amount subject to payment by installment) reflect~ng the removal of
the existing $100,000 exemption over a five year period.
During the
transition period, a corporation, in determining the amount of its
estimated tax liability, would be permitted to exclude an amount equal
to the applicable "exclusion percentage" multiplied by the lesser of
(1) $100,000, or (2) the amount which the corporation estimates as its
income tax for the year less the estimated amount o~ its credits.
The
revised SUbsection (b) o~ section 6016 would de~ine the term "exclusion
percentage" as follows:
If the declaration is
a year beginning in1968
1969
1970
1971
~or
The "exclusion percentage" is80
60
40
20
In the case of taxable years beginning after 1971, there would be
no special exemption.
As an example
o~
the transition rule, a corporation which estimates
its income tax less credits for 1968 to be $80,000 would be entitled to
an estimated tax exclusion of $64,000 for 1968; 80 percent (its exclusion
percentage) times $80,000.
be $16,000.
Its estimated tax liability would, therefore,
If the corporation estimates its income tax less credits for
1968 to be $120,000, its estimated tax exclusion would be $80,000
(80 percent times $100,000) and its estimated tax liability would be $40,000.
- 9 Subsection (d) of section
4 of the bill amends section 6655 (e)
to reflect the repeal of the $100,000 exemption in the provisions for
determining whether, and if so, to what extent, an addition to the tax
should be imposed for underpayment of estimated tax.
itional rules apply.
The same trans-
Thus, for example, assume a corporation's tax
return for the taxable year ending December 31, 1968, indicates an
income tax liability of $150,000.
To utilize the exception provided
in section 6655 (d) (1) permitting estimated tax payments to be based
on the prior year's tax, such corporation would be required to pay for
1969 an estimated tax of $90,000, computed as follows:
1968 Income Tax Liability
$150,000
Less: $60,000; 60 percent
(the exclusion percentage
for 1969) times $100,000
60 000
$ 90~000
Subsection (3) of section 4 of the bill amends section 243
(b)(3)(C) (relating to estimated tax exemption for members of an affiliated group) to reflect the repeal of the $100,000 exemption.
Subsection (f) of section
4 of the bill provides that the amendments
made by this section shall apply to estimated tax payments for taxable
years beginning after December 31, 1967.
SECTION 5.
(a)
POSTPONEMENT OF CERTAIN EXCISE TAX RATE REDUCTIONS.
Passenger Automobiles.
Under present law an excise tax of
7 percent of the selling price is imposed on the sale by the manufacturer,
producer, or importer of passenger automobiles.
This rate is scheduled to
be reduced to 2 percent on April 1, 1968, then to 1 percent after
December 31, 1968.
- 10 -
Subsection (a) of Section 5 of the bill suspends this schedule of
reductions for the period during which the temporary surcharge will be
in effect.
Thus, the present 7 percent rate will remain in effect ili1til
July 1, 1969.
A rate of 2 percent will apply to sales between July 1, 1969,
and December 31, 1969, with a 1 percent rate applying to all salef after
December 31, 1969.
Conforming amendments are made so that floor stocks
refunds will apply on the corresponding date of each reduction.
(b)
Communication Services.
Under present law, an excise tax
of 10 percent is imposed on amounts paid for local and long distance
telephone service (including teletypewriter service).
A reduction of
the rate to 1 percent is scheduled to apply to amounts paid pursuant
to bills rendered on or after April 1, 1968, with the tax scheduled to
terminate entirely as to bills rendered on or after January 1, 1969.
Subsection (b) of Section 5 of the bill suspends this schedule
of reducl,ions for the period during which
be in effect.
the temporary surcharge will
Thus, the present 10 percent rate will continue to apply
until July 1, 1969, at which time the scheduled reduction to 1 percent
will take effect.
The tax will terminate on January 1, 1970.
A con-
forming amendment makes corresponding changes in the dates applicable
under the special rules established under present law to adjust for billing
practices.
(c)
Effective Date.
Subsection (c) of section 5 of the bill provides
that the amendments made by this section shall apply as of the date of
enactment of the bill.
Office of the Secretary of the Treasury
Office of Tax Legislative Counsel
STATEMENT OF
THE HONORABLE JOSEPH W. BARR
THE UNDER SECRETARY OF THE TREASURY
BEFORE THE SPECIAL SUBCOMMITTEE ON EDUCATION
OF THE HOUSE COMMITTEE ON EDUCATION AND LABOR
WEDNESDAY, AUGUST 16, 1967
Madame Chairman and Members of the Committee:
I appreciate this opportunity to testify in support of
proposed amendments to improve the guaranteed student loan
program, because I believe that this program has a vital
part to play in our effort to make certain that no young
American will be denied a college education for want of
financial resources.
We are about to begin the second full year of operations
under this program, following its enactment in the Higher
Education Act of 1965.
As the Committee knows, the program
got off to a promising start last year, all things considered.
It is clear that the program does help to meet an extremely
important need in this country -- the urgent need of large
numbers of American families for assistance in financing the
high and rising costs of higher education.
Although a good start has been made, it also is clear
that the program has not expanded as rapidly as we all had
hoped.
President Johnson determined to do everything in his
power to remedy any difficulties involved in the program, to
enable it to meet the needs and expectations of American
- 2 students.
Earlier this year, the President announced that
he had instructed all of the Executive agencies concerned -HEW, Treasury, the Budget Bureau, and the Council of Economic
Advisers -- to review the,operations of the program and
recommend any appropriate improvements.
The amendments before this Committee were developed as
a result of the inter-agency study ordered by the President.
In the course of our review of the guaranteed loan program,
we consulted with representatives of the many State and
private
organizations~ncerned
with the program -- colleges,
saving <and loan associations, credit unions, banks and state
and private loan guarantee agencies.
We believe that the
amendments that have been submitted for your consideration
would achieve the objective sought by the President -- we
believe they would eliminate the obstacles to the further
development of this program, and enable it to realize its
full potential.
Briefly, our study of the program led us to the following principle conclusions:
1.
The guaranteed loan program is sound in
conception and can meet the need of many middle
and lower income families for assistance in
financing higher education costs.
The program
has attracted widespread interest and support.
- 3 2.
The terms of the program are adequately
attractive to prospective student borrowers, as
indicated by the heavy demand for loans.
The
major obstacles to the expansion of the program
lie not on the side of "demand," but on the side
of "supply."
Without some changes, there in-
creasingly will be a shortage of lending resources
and of loan guarantee capacity.
3.
To make more loans available to students,
we must encourage increased participation in the
program by all types of lenders -- including
savings and loan associations, credit unions,
mutual savings banks, and commercial banks.
This
can be done only if we reduce the burdensome paperwork and administrative costs involved in the
program, and if we also are able to assure lenders
that they will not have to make these loans at an
out-of-pocket loss, as most of them have been doing
this past year.
4.
To assure the needed guarantee capacity,
we must provide increased support for state loan
guarantee programs.
In doing so, however, we must
make the most efficient use of Federal resources
and encourage the States to do their share in
expanding loan guarantee capacity.
- 4 The Executive Branch~ready is proceeding to make the
changes that can be made administratively to meet these
problems.
HEW and Treasury are cooperating in efforts to
reduce paperwork and encourage greater participation by
lenders.
Along these lines, we have submitted amendments
that would cut the costs of the program for lenders by
consolidating the separate loan programs for vocational
and higher education, and by providing a simplified method
of collecting Federal interest subsidies.
The three major amendments before the Committee are
necessary additional measures to move this program forward.
They would (1) authorize the payment of loan placement and
conversion fees to put the program on a break-even basis
for lenders;
(2) provide for the institution of a reinsur-
ance arrangement to immediately expand State loan guarantee
capacity; and (3) authorize an additional $12.5 million in
assistance to state and private guarantee agency reserves
in next year, on a matching basis, to further spur the
growth of the program.
Placement and Conversion Fees
I would like to turn first to the amendment which would
allow lenders to charge certain fees in connection with the
making of student loans and at the time of their conversion
to a repayment status after the student has left school.
- 5 I want to make the purpose of this amendment absolutely
clear.
It is not intended, nor will it lead to any unjust enrichment of lenders under this program.
We went into this in great detail.
When this program was enacted into law in 1965, the
Congress enacted a 6% ceiling rate of interest which it
felt -- under the monetary conditions then existing -- would
be adequately high to attract lenders into this program and,
at the same time, would not be excessive in terms of other
interest rates.
In fact, considering all of the costs of
making these loans, a 6% rate was then considered to be a
break-even rate not only by the Congress but also by most
potential lenders.
I want to note especially, however, that the Congress
also provided authority for the Commissioner of Education
to raise the rate to as much as 7% in the standby Federal
program if this proved to be necessary to assure the availability
of funds.
In other words, the Congress, even under the monetary
conditions existing in 1965, wanted to provide at least some
flexibility in the ceiling as assurance that this program could
continue to operate if interest rates should rise.
It is no secret to this Committee, or to lenders, or to
borrowers (including the U. S. Treasury Department), that
interest rates today are substantially higher than they were
- 6 during the time the Congress was considering the Higher
Education Act of 1965.
In fact, except in the shorter-term
area, interest rates today are back at the peak levels they
reached last August.
My first point, then, is this:
If the 6% rate was an
appropriate rate in 1965, the rise in interest rates since
that time has increased the appropriate interest rate in
the guaranteed student loan program from 6% to some higher
level.
If we take the increase in rates in the 5-10 year
maturity area for U. S. Government securities as a guide,
we would be talking about an increase of about 1% or a
little more.
Now, when I instructed our inter-agency staff committee
to look into this question, I expected them to do more than
simply compare interest rates in 1965 with current interest
rates.
I expected them to analyze cost data, to make cal-
culations, and to determine, in fact, what kind of return
to the savings and loans, the banks, and the credit unions
would be reasonably competitive with other uses of their
funds, at least in terms of breaking even and not suffering
out-of-pocket losses.
Our task force met with representatives of all types of
lenders.
It looked at data collected by the Federal Reserve
Banks, by the Office of Education, and by lender groups.
- 7 Our task force found wide variability in costs from
one lending institution to another.
But generally we found
reasonably close agreement in the average costs of credit
unions, commercial banks, savings and loan associations,
mutual savings banks, and other lenders.
We found reason
to conclude that on the average the cost of putting a loan
on the books is on the order of $25; that the cost of converting a loan to a repayment status is about the same,
about $25; and that the cost of processing the payments,
following up on delinquent borrowers, etc. is about $1
a month during the repayment period.
The Office of Education also had some estimates as to
the average size of loan, the number of loans that would be
taken by each student, the average repayment period, etc.
putting this information together with the information we
had assembled on lender costs, we then were able to calculate what the average return to the lender on a student
loan would be.
This net return is the return which the lender earns and
has available to cover his own costs of obtaining funds
that is, the interest or dividends that he is paying on
savings and the bookkeeping costs that are involved in
maintaining deposit accounts.
These net returns also are directly comparable with the
net returns that the lender could earn from other uses of
his money.
-
8 -
Now what were the results?
The Committee's calculations show that under the present
law, the net return earned by a lender is 4.66%.
At this
point I would like to submit a table that shows some of these
figures.
How does this compare with rates the lender can earn on
other guaranteed or insured loans?
and VA mortgages is 6%.
The ceiling rate on FHA
Servicing costs on these mortgages
run from 1/4 of 1% to 1/2 of 1%.
Even taking the higher
figure the net return to the lending institutions, if it
makes a 6% FHA or VA mortgage at par, is 5-1/2%, or nearly
1% more than the rate of return on guaranteed student loans.
And I think all of us are keenly aware that it is hard to
find FHA or VA mortgage money and generally these insured
mortgages cannot be obtained without paying points that
raise the net rate of return to the lender.
For example,
4 points on a 30-year 6% mortgage that is prepaid in 12
years, which is about the average length of time a mortgage
is outstanding, gives the lender a gross yield of 6.52%,
or a net (after servicing costs of 1/2 of 1%) of just about 6%
even.
There are a number of other rate comparisons that can be
made.
For example, the current rate on outstanding 5-year
Treasury issues is about 5-1/4% and these securities involve
practically no administrative costs and are extremely marketable.
5-year agency issues are in the market at around 5-5/8%.
- 9 These are just as safe as guaranteed student loans and are
more marketable.
The commercial bank rate on prime business
loans -- loans to the very best businesses, where the risk
of loss is very small -- is 5-1/2%, and this is on short-term
loans, not long-term loans like the guaranteed loans that we
are talking about.
And there are, of course, other examples
as well.
So my second point is this:
Based on a careful analysis
of lender costs and competitive market relationships, clearly
something additional is needed to make the guaranteed student
loan reasonably competitive on a break-even basis with other
uses of lender funds.
I think it is necessary to establish
this relationship to assure the degree of lender participation
in this program that is needed if it is to meet the growing
need for student financial aid.
How much this something additional should be at any
particular time depends on market conditions.
this authority as a flexible tool.
We look on
Fees would be raised
when necessary and would be lowered when possible.
And I
also want to emphasize that this raising and lowering would
be done in a fish bowl with the Congress looking right over
our shoulder to make certain that lenders were not being
unduly enriched.
At an earlier Executive Session I was asked what in my
jUdgment an appropriate fee schedule would be, so I will try
- 10 to answer that question under present market conditions.
Taking into account yields on Treasury obligations and on
agency obligations, interest rates on commercial bank loans
as reported to the Federal Reserve System, and the general
level of other interest rates in the market, I would estimate that these guaranteed student loans would be reasonably
competitive at a net rate of return between 5-1/4 and 5-1/2%.
This would indicate a need for loan placement and conversion
fees for the present school year of approximately $25.
How much this would cost in the budget depends, of
course, on how many loans may be made under the program.
Based on the 1968 budget estimates, the additional cost in
fiscal year 1968 arising from the payment of placement and
conversion fees would be approximately $22 million.
This sum is relatively modest in terms of the benefits
which will be realized both by student borrowers and by the
Nation.
For this cost, we can expect to see about $690 mil-
lion in loans to about 880 thousand students during the
coming acadmic year, and continued growth in the program in
future years.
Reinsurance
The second major amendment to the program would be the
initiation of a new form of assistance to state loan guarantee
programs.
The 1965 Act provided for $17.5 million in Federal
"seed money" advances to help state programs get started.
- 11 These funds now have been largely used up.
In a number of
States, loans cannot continue to be made unless additional
guarantee capacity is provided.
The 1965 Act did provide a backstop arrangement under
which the Commissioner of Education could directly guarantee
loans whenever State guarantees are not available.
Use of
this authority, however, could have a most unfortunate
effect upon State participation in
thi~
program.
If the
Federal Government does come in to guarantee loans whenever
a State fails to continue its own guarantee program, there
may be little incentive for the state to continue its efforts
and participation.
Our proposed amendment attempts to meet the need for
additional guarantee capacity without encouraging some of
the States to abandon their State guarantee programs.
We
propose that the Federal Government reinsure 80% of the loans
guaranteed by State and private non-profit loan guarantee
agencies.
Guarantee agencies generally have been operating on a
1 to 10 ratio -- $1.00 of reserve funds for each $10.00 of
loans outstanding.
By reinsuring 80% of the loans, we can
make it possible for the guarantee agency to guarantee $50.00
in loans instead of $10.00.
This has much the same effect as
the distribution of additional seed money to supplement the
reserve funds, but postpones the actual payment of the money
by the Federal Government until it is needed.
- 12 This arrangement would immediately increase guarantee
capacity in all participating States, but it would encourage
rather than discourage the continuation of State programs,
since it still would be necessary for States to provide
the basic reserve funds, and the Federal reinsurance would
then give the greatest benefits to States which provide the
largest reserves.
The reinsurance arrangement would be a
striking example of creative cooperation between the States
and the Federal Government.
The States, with their superior
knowledge of local conditions, would administer their own
guarantee programs.
The Federal Government, with the
world's best credit rating, would use its credit to help
support the State guarantees.
Now let me comment on how the reinsurance proposal would
work in a specific instance.
In the case of a State in which the seed money has been
exhausted, the adoption of the reinsurance proposal could
have the effect of freeing up 4/5 of the seed money and making
it available to support additional loans to students.
Thus,
if a State now has $100 thousand of seed money backing loans
totaling a million dollars it can, at present, insure no
additional loans.
But with reinsurance covering 4/5 of any
losses that might be incurred, the same $100 thousand of seed
money could support, not just $1 million in loans, but $5
million in loans.
Consequently, enactment of the reinsurance
- 13 provision would glve the State, which might be a State such
as North Dakota, which has now run through its seed money,
the ability to guarantee 4 new loans for every loan which
it has already guaranteed.
Congress has appropriated already$l7-1/2 million of
Federal seed money which would, without state matching,
support something like~75 million of guaranteed student
loans.
Reinsurance will raise this insurance capacity to
$875 million.
Also for a State, such as New York, which has made a
real effort to support the guaranteed student loan program
through its own funds, the reinsurance program will multiply
the effectiveness of the state effort and give to the State
a reward for its efforts and a further incentive to multiply
those efforts in behalf of this great national objective.
How in detail the reinsurance program will operate
can be described best, I think, by the people who are
actually administering the program.
principle is this.
What will happen in
If there is a default the State agency
will pay the lender and then billthe Federal Government for
80% of the loss.
That means, in fact, that the State agency
will only have to cover 20% of the loss so that its dollars
will be able to back 5 times as many loans as they are now
able to back.
- 14 Additional Seed Money
The third major amendment before the Committee would
authorize an additional $12.5 million in seed money advances
for next year, fiscal 1969.
This money would have to be
matched, dollar for dollar, by the States.
These additional advances, in combination with the
State matching funds and the Federal reinsurance arrangement, would provide a further $1-1/4 billion in guarantee
capacity starting in the 1968-1969 school year.
This arrangement is intended to give the program a
major boost next year.
The delay is necessary to allow
time for State legislatures to appropriate their matching
funds.
In the interim, the reinsurance plan will provide
the immediate increase in guarantee capacity that is so
sorely needed in a number of States.
This program is one major part of our commitment as a
Nation to assure that every student admitted to college can
obtain the financial resources to attend.
We are right now
in the midst of the period of heaviest lending activity for
the coming academic year.
I hope that this Committee can
give prompt and favorable consideration to these amendments,
to help carry out this vital national commitment -- so that
students allover this country will be able to obtain the
-
15 -
education loans that they need and want for the coming yeal
Few endeavors are more important to the long-run future of
Ollr
country.
**********************
Fees and Net Lender Returns
y
Fee
$0
Note:
Net Lender
Returns gj
4.66~
5
4.81
10
4.96
15
5.ll
20
5.21
25
5.42
30
5.58
35
5.14
Figures for net lender returns are subject to interpolation errors of 2-3 basis points.
1:1
Amount of fee plyable (a) at t:f.me each loan is put on the
lenders' books and (b) at conversion to a repayment status.
For a student borrowing twice 1 the total fee paid to the
lender would be three times the amount shown; i.e., the
lender would be plid two equal placement fees and one conversion fee of the same amount.
gj
Actuaria~
average of net returns without allowance for
the cost of money.
TREASURY DEPARTMENT
August 16, 1967
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
$2,400,000,000,or thereabouts, for cash and in exchange for
Treasury bills maturing August 24, 1967, in the amount of
$2,300,088,000, as follows:
9~day bills (to maturity date) to be issued
August 24, 1967,
1n the amount of $1,400,000,000, or thereabouts, representing an
additional amount of bills dated May 25 ' 1967 ,
and to
rna t ure November 24,1967,originally issued in the amount of
$1,000,329,000,the additional and original bills to be freely
interchangeable.
18~day bills, for $1,000,000,000, or thereabouts, to be dated
August 24, 1967, and to mature February 23, 1968.
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, August 21, 1967.
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-1000
- 2 Immediately after the closing hour, tenders will be opened at th.
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 Treasu~
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 thr~e
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 Bank on August 24, 1967, in
cash or other immediately available funds or in a like face amount
of Treasury bills maturing August 24, 1967. Cash and exchange tendeI
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 fro
any Federal Reserve Bank or Branch.
000
TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE
STATEMENT BY THE HONORABLE HENRY H. FOWLER
SECRETARY OF THE TREASURY
AT A NEWS CONFERENCE
ON THE
BALANCE OF PAYMENTS RESULTS IN THE
SECOND QUARTER OF 1967
AUGUST 16, 1967 AT 4:30 P.M.
ROOM 4121, MAIN TREASURY
Here are the highlights of our balance of payments
results for the second quarter:
The deficit on the "liquidity" basis was very
little changed from the preceding quarter -dawn to $513 million, seasonally adjusted,
compared with $536 million in the first quarter.
The deficit on the "official settlements" basis
came to $830 million, seasonally adjusted,
compared with $1.825 billion in the previous
quarter.
Our gold stock declined $15 million, compared
to $50 million in the first quarter. Taking
into account sales to licensed domestic users,
the United States was actually a small net
purchaser of gold from foreigners in the
quarter just concluded.
Merchandise Trade
The most encouraging feature of second quarter results
is the further recovery in our trade surplus. Using
seasonally adjusted balance of payments (as opposed to
census) figures:
The net surplus in the second quarter reached an
annual rate of $4.5 billion, up more than $500
million from the first quarter.
F-100l
- 2 -
;or othe full first half, our trade surplus __
ga~n on a seasonally adJousted ba °
__
a $4 25 belle
SlS
ran at
°
•
~ lon annual rate, representing an
lmprovement of $1 2 bOllo
h a lf rate last year.
•
~
lon over the second
Particularly noteworthy is the sharp drop' in the
growth rate of our imports -- from an extremely
high year-to-year increase of more than 18-1/2
percent in the year 1966 to an increase of less
than 8-1/2 percent per annum (over first half
1966) in the first half of this year. In the
second quarter, there was a small absolute
decline in total imports from the seasonally
adjusted level in the preceding two quarters.
The continuing growth in our exports in the first
half of this year as a whole (representing a
7 percent year-to-year increase over first half
1966) is also reassuring. However, I should
point out that our second quarter total exports
were no higher than in the first; this may
reflect the recent slowing down of business
expansion in several of our major markets abroad.
Other Items
New issues of foreign securities (seasonally adjusted)
declined slightly ($20 million) between the first and second
quarters.
Both redemptions and the net of other transactions in
outstanding foreign securities were also more favorable in
the second quarter than the first (by about $70 million,
combined). However, $50 million of this represented
Canadian Government purchases of their own securities and
of IBRD bonds from U.S. holders. These purchases were made
pursuant to our overall balance of payments agreement with
Canada.
Total bank loans to foreigners showed a seasonally
adjusted increase of $170 million in the second quarter,
compared with a $60 million decline in the first. This
reflected:
an accelerated increase in short-term loans (from
a first quarter outflow of about $85 million to a
$330 million outflow in the second); coupled with
- 3 -
a continued decline in long-term loans, amounting
again, as in the first quarter, to around
$150 million .
. At the :nd of the half, the outstanding level of such
foreLgn credLts was still about $420 million below the
suggested ceiling of $9.9 billion in the Federal Reserve
voluntary program.
Inflows of foreign capital through transactions in U.S.
non-Treasury securities and in long-term CD's and deposits
with u.s. banks increased in the second quarter, compared
with the first, but totaled about the same as in the
corresponding quarter of last year.
As you know, these preliminary quarterly balance of
payments releases always include a large residual item,
covering a number of accounts in our balance of payments
for which the latest quarterly data are not yet available.
These include, among others, the tourism, investment-income,
and other "services" accounts; Government grants and
capital; a number of categories of private capital
transactions, including u.S. direct investment abroad; and our
military expenditures. The second quarter net outflow on
all of these residual items plus "errors and omissions" was
quite a bit higher than in the past -- over $2.7 billion.
(seasonally adjusted), compared with about $2.2 billion,
for example, in the first quarter.
The "Official Settlements" Deficit
As I pointed out when we announced the first quarter
results, the extremely large "official settlements" deficit
in that quarter resulted from a reversal of unusual developments
during the second half of 1966. In the first quarter, we
saw:
A return flow of foreign-held dollars into official
U.K. reserves, as private foreigners converted back
into sterling temporary holdings of dollars acquired
during the period of heavy pressure on sterling last
year.
- 4 A return flow to foreign official accounts, through
the Euro-do11ar market, of Euro-do11ar funds which
U.S. banks had obtained in very large amounts from
their overseas branches to meet their domestic needs
during the period of unusually tight money and
credit conditions here last year.
Our sharply reduced but still relatively large deficit on
the "off'~c~a
. 1 se t t 1ements " basis during the second quarter
reflects a continuation, at a much reduced rate, of this
process of readjustment.
Objectives and Policies
As you know, our objective for 1967 is to make as much
progress as possible toward equilibrium as the costs of
Vietnam permit.
The direct foreign exchange cost of Vietnam estimated
in 1966 at a shade under $'1 billion will be higher in 1967
than in 1966. (As I have explained to you before, we do not
yet have the results for the second quarter.) Although some
may take our seasonally adjusted liquidity deficit in the
first half and project from it an annual rate of $2.1
billion, compared with the $1.3 billion deficit for 1966, it
is too early to speculate on the size of the deficit for the
year as a whole. I do not intend to do so today.
Our balance of payments program is comprised of both
short- and long-term measures. We are vigorously pursuing
all aspects of our program.
To reinforce our short-term program, we tightened the
guidelines late last year for the two voluntary programs
administered by the Federal Reserve Board and the Commerce
Department. On the legislative front, we recommended that
the Interest Equalization Tax be extended and reinforced.
On July 31 the Congress passed, and the President signed,
the law extending the lET for two years and giving him
flexible authority to vary the effective rate of tax between
zero and 1-1/2 percent. Under this legislation, the tax
rate is fixed at 1-1/2 percent through August 29, after which
it drops automatically to the previous 1 percent level unless
there is an Executive Order establishing a different level.
- 5 -
We are now studying, in the light of recent changes and
trends in the differentials between interest rates here and
abroad, what lET rate it may be appropriate to apply as of
August 30, 1967.
The new lET law also contains provisions designed to
prevent evasion of the tax such as had been discovered
earlier this year, through'the selling of foreign
securities in the United States with false certificates of
American ownership.
As a matter of both short- and long-term policy, we
will continue to make every effort to reduce the foreign
exchange costs of our various Government programs. These
efforts have been underway for some time; they continue
today; and we are hopeful that they will bear even greater
fruit when the hostilities in Southeast Asia cease.
As I have said before, an increased trade surplus is of
paramount importance in reaching equilibrium over the longer
term. The President highlighted the importance of an
intensified export effort in his May 23 address when he asked
Secretary Trowbridge and the Cabinet Committee on the Balance
of payments "to undertake a far reaching export study." Tha t
study is underway. Its importance should not be underestimated, for even though our trade balance has shown
progress to date this year, we still have a long way to go.
Finally, let me state that none of these efforts, short
or long term, will be successful unless we succeed in
maintaining price and cost stability at home. In this
connection, the President's request for a 10 percent
corporate and personal income tax surcharge represents a
significant reinforcement of our drive toward balance of
payments equilibrium. I attempted to focus attention on the
importance of this measure to our balance of payments position
in my testimony before the House Ways and Means Committee
Monday when I stated:
"Without the tax increase, we run the risk of
faster, less well-balanced growth, and increased
inflationary pressure. As events of the last two
years have demonstrated, this can lead to a
substantial increase in imports.
- 6 -
In 1965 and 1966, when GNP rose at annual
rates of between 8 and 9 percent, imports
rose by about 15 percent and 18 percent,
respectively -- far more than exports -with the result that our trade surplus
deteriorated steadily from $6.7 billion in
1964 to $4.8 billion in 1965 and to $3.7
billion in 1966.
Expressed as a percentage of GNP, imports
rose from 2.9 percent, on average, in 1961-64
to 3.1 percent in 1965, and 3.4 percent in
1966.
"Exports over the two years 1965 and 1966, taken
together, continued to grow reasonably well despite
higher cost and price increases than in the preceding
period. How much better they would have done in the
absence of excessive demand here, we do not know.
We do know that in order to increase our trade surplus
we must not only hold imports to a reasonable level
but we must keep our exports competitive over the
longer run. The tax increase contributes to this by
reducing upward pressures on our costs and prices."
Affirmative action on the President's tax request will
make a signal contribution not only to our domestic financial
policy, but to our international balance of payments as
well.
000
UNITED STATES DEPARTM~NT OF
COMMERCE
Alexander B. Trowbridge, Secretary
Washington, D.C.
Office of
Business Economics
OBE 67-41
FOR IMMEDIATE RELEASE 1oJEDNESDAY, AUGUST
~ralther Lederer:
HOrth 7-3709
16, 1967
THE U. S. BALANCE OF PATIiENTS
IN THE SECOND QUARTER OF 1967
Preliminary second quarter figures for the international transactions of the
United States show little change from the first quarter in the balance measured
on the liquidity basis, after adjustment for seasonal variations, the Department
of Commerce announced today.
The seasonally adjusted balance measured on the official reserve transactions
basis, which was exceptionally adverse in the first quarter, improved by about
$1 billion.
Official reserve assets increased $419 million during the quarter. This
change reflected mainly a $424 million rise in convertible currencies; the U.S.
gold tranche position in the IMP improved by $10 million but gold holdings declined by $15 million. The rise in convertible currency holdings followed a
decline of more than $1 billion in the first quarter of the year. The $5 million
drop in the total of gold and gold tranche assets was even less than the decline
of $20 million in the previous quarter and was the smallest decline since the
middle of 1961.
Liquid liabilities to foreign residents and international organizations increased, however, by $614 million. This amount included a rise of $518 million
in foreign official accounts and a $96 million rise in the accounts of other foreign
official residents and international organizations (other than the D1F). Liabilities with an original maturity of one year or more reported by banks increased
during the second quarter by $632 million, of which $607 million was acquired by
foreign official agencies. Ma.ny of these liabilities--mainly time deposits and
time deposit certificates--approach in quality and liquidity those that are classified as liquid liabilities,
The Department1s Office of Business Economics reported therefore, that the
second quarter balance measured on the liquidity basis, lI\Thich combines the changes
in U.S. official reserve assets and in liquid liabilities to all foreign residents
and international organizations, was adverse by $195 million, and after seasonal
adjustment by $5l~ ~llion. Thi~ compares with a seasonally adjusted a~ve:se
balance of $53 6 Itulilon in the flrst quarter of the year, and of $340 ffilillon per
quarter in 1~66.
(more)
-2-
The second quarter balance measured on the official reserve transaction
basis, which combines the changes in official reserve assets with the changes in
all liabilities to foreign official organizations, was adverse by $699 billion,
and after seasonal adjustment by $830 million. This compares with a seasonally
adjusted adverse balance of $1,825 million in the first quarter and a favorable
balance of $56 million for the quarterly average in 1966.
The difference between the $1 billion improvement in the balance measured on
the official reserve transactions basis and the relatively small improvement in
the balance measured on the liquidity basis was in large part due to the net effect
of two developments:
1. Acquisitions of long-term time deposits, time deposit certificates and
similar assets by foreign official organizations rose from $306 million in the
first quarter to $607 million in the second. These acquisitions resulted in a
statistical improvement of $300 million in the balance measured on the liquidity
basis, but had no effect on the balance measured on the official reserve transactions basis.
2. A change of more than $1.2 billion (after seasonal adjustment) in the
movement of liquid liabilities to foreign private accounts, from a net decline of
about $960 million to a net increase of nearly $280 million.
The decline in liabilities to foreign private accounts during the first
quarter reflected the easing of credit conditions in the United States, which
made it possible for domestic banks to relax their efforts to attract dollar deposits through their foreign branches. Another factor was the improvement in the
balance of payments of the United Kingdom and in confidence in the ability of
British authorities to maintain the current exchange rate of the British pound.
This improvement resulted in a shift of liquid dollar liabilities from foreign
private accounts to the official accounts of the United Kingdom. (In the first
quarter, the United Kingdom used most of these dollar acquisitions to repurchase
sterling from the United States. These repurchases reduced the convertible currency component of U.S. official reserve assets.) Such shifts of dollar liabilities
do not affect the balance measured on the liquidity basis, but they have an adverse
effect on the balance measured on the official reserve transactions basis.
In the first two months of the second quarter, the decline in foreign private
dollar holdings continued, but in June the movement was sharply reversed, so that
for the quarter as a whole foreign private dollar holdings rose again. This may
in part have reflected an unfavorable change in the British foreign exchange
situation, which was intensified by the Middle East crisis. The shift of liquid
liabilities from foreign official to foreign private accounts at the end of the
quarter had a favorable effect on the official reserve transactions balance.
(more)
-3Major international transactions for which data are now available show some
fl'orn th e f"lrs t q uar t cr. The export balance on nonmilitary merchanimprovement
"
dlse
trade
rose
ab out $135 nII"II"lon, and capltal
.
.
flows through security transachons
and
bank
c
~
"dl·
ts
11ad
a
f
b
l
"
"
,.
~"
avora e svnng of over $
100 "
IDllllon,
from a net
outilow In th<-,
first
quarter
to
a
t
·
'''1
.
~ . -,
ne Uu ow In the second quarter. U.S. Government cash reCOlp"0S associated with military sales contracts also increased.
Separate data ~ll other transactions are not yet available, but the balance on
these tr~ns~ctlons can be derived as a residual. In the second quarter this
M1ance lndlcated an exceptionally large i~crease in net payments.
J
The improvement in the nonmilitary merchandise trade balance resulted from
a decline of over $100 million in imports and a srrall rise of $30 million in exports. Second quarter exports were at a seasonally adjusted annual rate of $30.9
billion, imports at $26.3 billion, resulting in a trade balance at an annual rate
of about $4.5 billion. For the year 1966, exports were $29.2 billion, imports
$25.5 billion, and the trade balance was $3.7 billion.
The drop in imports in the second quarter had been preceded by a leveling off
ill the first quarter after a rise that had persisted since 1961. The decline in
U,S. requirements for industrial materials resulting from lower industrial production and from the drop in inventory accumulation as well as the increased
availability of U.S. manufacturing capacity were important factors in reducing
demand for imports. Purchases of industrial supplies from abroad declined $115
~llion, and imports of machinery showed the first significant drop in several
years. Foodstuff imports also declined after a temporary rise in the first quarter.
The small rise in nonmilitary exports was largely in agricultural goods. These
exports increased $40 million in the second quarter, but were still below the 1966
quarterly average. Nonagricultural exports, on the other hand, which expanded
rapidly in the previous quarter, remained nearly stable in the second quarter.
Although the expans ion in these exports was interrupted, they were about $500
mllion higher than the 1966 quarterly average. Exports appear to have been
affected by foreign business developments. BLl.siness expansion in vJestern Europe
and Canada was at a considerably slower rate than last year, but remained strong
ill Japan. Exports may also have been held down by a decline in aid-financed shipments to k3 ia.
U.S. purchases of newly issued foreign securities dropped slightly in the
second quarter and were close to the 1966 quarterly average. Included in the
second quarter purchases 'V'Iere nearl'T $90 million of ~I[orld funk bonds and about
$10 million of bonds issued by the Inter-American Development funk. There was
also a considerable increase in purchases of Israeli bonds.
Redemptions i neluded $30 million of advance repurc~1ases of its bonds by the
Government of Canada.
(more)
-4Transactions in outstanding foreign securities shifted from net U.S. purchases
of $7 million in the first quarter to net U.S. sales of $40 million in the second.
The second quarter transactions included $20 million sales of World Bank bonds to
the Canadian Government.
Claims on foreigners reported by U.S. banks rose $170 million in the second
quarter, after seasonal adjustment. This was the first increase in claims since
the second quarter of 1966, and probably reflected the easing of money market
conditions here. Nevertheless, at the end of June bank loans to foreigners were
still about $420 million below the suggested ceiling under the voluntary balance
of payments program.
Net sales of U.S. securities other than Treasu~ issues to foreigners were
more than $350 million compared with slightly over $100 million inthe first quarter.
International and regional organizations invested about $70 million of the proceeds from new security issues in nonguaranteed U.S. Government agency bonds.
Sales of newly issued securities by U.S. corporations specially organized to obtain
foreign funds for the financing of U.S. direct investments abroad were about $90
million, approximately the same amount as in the first quarter.
U.S. Government cash receipts associated with military sales contracts rose
about $75 million in the second quarter.
Transactions for which data are not yet available include transfers under
milita~ sales contracts, milita~ expenditures, investment income, travel and
other services, Government grants and capital movements, and foreign financial
transactions of U.S. corporations.
The seasonal adjustments for the first and second quarters 1967 were affected
by a $300 million shift in tax payments by American oil companies to Libya, from
the second to the first quarter. This shift required a change in the seasonal
adjustments of direct investment capital movements and in the balances on foreign
transactions measured under both the liquidity and official reserve concepts.
Compared with 1966, this change added $300 million of debits to the seasonal adjustment for the second quarter and $300 million of credits to the adjustment in
the first quarter.
Complete balance of payments tables and their analysis will be published in
the September issue of the Survey of Current Business. The magazine is available
from field offices of the Department of Commerce, or from the Superintendent of
Documents, U.S. Government Printing Office, Washington, D. C., 20402, at an annual
subscription price of $6.00, including weekly supplements; single copy 45 cents.
Data for selected items now available on a preliminary basis are shown in the
following table.
Selected datE> on foI"to·.i/S.n transactIons of" t.he United States in the second quartE'"r of" 1907
<1vailable as of' the middle of" Auguct 1967
_.....il'!illions of' dollars)
Ad.ju.sted for seazonal
Credlts
+j
Dev t,.; -
_____ __
1965
_1966
_11__....!.!.L-
__
IV_
cy, 168
-25) 510
7,n73
-5,919
7,36]
-6.211
7,76"
-fl,792
-1,210
L05
-466
- 30 5
.. 2~1
123
75
121
-9
122
-232
325
337
-81,
127
145
1
l.09'~
947
_2
variation~
1Qh?
l4f,(;
'rqr;"f
~
Yea.r
II
~
~
N
III
MerchandIse, exclud ng mdl tan':
l.
Expo"ts ...•...••.....•.....•...•...
Imports ..• , ................•..•...
2.
3·
L,
y.
26.244
-21,472
Fore.it;n secL.lr,tie:::, ne,dy issued in the
United States .••.. •.••••.•••••. ••••
-1,206
Rec.eITlp-:, i o['.s· • • • •• • •• . • • • ••• • • •••• . . .
22~
OU~el
Ln fore:gn securities,
..................
226
Cldjrn~
7,710
7,)06
7,900
-6,630
-6,606
71 20 3
-6,025
-1ge
89
- 332
-380
-467
-~2:7
125
llS
-:23(
123
-200
lO~
75
'oj
155
55
-7
40
-9
122
155
) ~
-7
4'::
102
229
1n7
- 399
;l9
-59
-21
185
-330
l:"~
-G-
- 320
263
129
179
376
34';)
4?5
u8
-C,536
- 3~~
-3L?
Ie)
reported by \J.e. banks) net
ir.C'rca~e (-):
h.
kng .. tenn
7.
8.
Shor-:-ten ....................... .
u.s.
:::ioverr1"1ent
assrH' i aie,]
:'~to.:r::
contracts ., .•... ,.
9.
10.
11.
12.
~3·
0
••••••••
0
•••
00.
Nonsc'oedulcj repayments on U. S.
Goverrunent ...::redi:s .•..•.•.••..•.•.
22)
42~
7
226
Transactlon.s u: U.~. se~.1rlties other
than Treas~~ry issue::;, ;let sales (+)
192
-3)7
9,)9
173
520
107
109
112
35t
976
55
L41
10,)
350
3'/?
632
-"9
-53
-26
-CJ
"'
53
(*)
.3-:j4
475
27
1,211
071
-7D8
96
-::)2
5"
-5ge
-199
-~3
510
T.oo 5 -term llal;ilitie.s reported by U.S.
banks, ne t 1 DC-TeaSE (+) ...••......
.203
TransactLU!l!;i.;.n nOcl.rn8rketatle. noncO::1vertiblc-, med:urr.-tern, U,G,
Governmen:-, secur:.ties not a$SQciat-2']
wi':.-h ::>pec.'..fic transactions, net sales (+) -7
Llq'..lid li3.billtles to fo).'eign Q.ccouilLG
other t~an offi rial .ctgencies, und to
lnte1nallar~al
14.
s
z.:ties
.f.!~
or~aniZ'iC!.Lons
Y
>.
.·-;-:',.tease (+) or lncrca.sc ( .... )
16.
~2NOIiANDut·!
A.
Po.
~,~::
-1':'",
24t.
14~
?53
j'~',;.'
c26
lS.~
:"7~.
'520
lJ7
lc'9
441
DO
-53
-26
131
<
225
-lC
-1,
')j'~
426
.1.11 U.S.
official reserve asse:S .
a. :c.p l:';<Jld trar.,:he po::) t lon y . , .
b. CO'lverti'J1e ('Ll.rren..;:les •••••••••
C. G:J1i ~/
Othe 1" t 1·~n:,-3..·; lion.., (~lC'r i Ved as
rc.:: ld~3.1). , .•..• , ••..•••••.••••••••
0
73
10
0
157
3"3
4 ~,t;
3c"J
'7Z
G-:.z
-c'3
53
(*)
203
1.129
Cc.:7
-953
2'(c
-8~
-9(;1.
-o..j.,)(
1,4)"
237
3S . .).
ot~lE'r
than the D-::F,
r.et increa:::e (+)
LlqU:C liab~l::.tlf>S (including nODmark€tabl~, conv€rtlble, medlum-tenn
U.S. TreasL.ry sccuritles) to fcrel.iSn
offici3.1 agpnr-ies,
net l:\creaSe (+)
Y
1
-27
-61
•••••••
1,222
56b
-9"
537
-540
60
02
-6
1,0 )'/
-31
-.'}
-c 73
1,1)07
-!,.24
',6
-:"l'~
22
-103
209
173
:',c'l
51
15
-1.)57
-; .192
-2.044
-2,2C4
-l, )14
-'-. ,]47
-'::,105
-2,oe')
-1,';59
-c, _3c',
-2,136
-2,74']
-1,3~;7
-47
-149
-675
-4GJ
-23(,
<~J
.. 651
-122
-le5
-419
- )3/:
-513
::':'5
4'J3
- 31'5
405
-J ,;:'tH
-(ycJ
-443
- 17~'
8C
-1 :'
'~L '::
-.~ 3 ~
-'.49
1.665
-G,6,]:)
4Z:4
134
,71
-7WI
ITJi;N;::
Balance or. liqUl,L ty Jasis:
Ir,-:rcn..:;c ':'n U.S. cff'Jcial n~~erve assets
anc. I~P:; ':'02FLse 1n liquid L a'D1::' ~ t ic s tc
9.11 f'Ql'E':gners
(lines 13, 14 ::\.n.J 15 ·,.. ~tb ,:>lgn reversE-d) ... 1,335
Ba'::'3.nce on be:..:: I::; c·f O:~fl,'ia1 reserve
t ransac:t l{)[J::i:
:ncrea.;:.e i i i 'J.S. offH·,CJ.:;' l~es.(.'l"V':'
a.s.::ets and j~crf'as€' n l:quld and
eer t:::>.in rloIl11q'~ld liaollit:es to foreL;n
orfi·::"io.l a.;en~Le..:; (Lne& 14 and 1), &nJ
P2.yt,~~ 0f 11:""\,';$ 11 f:l.nd 12, ar.d certain
ot::,el- !:'(lnlJ..;'A-·j 1Ld.b.1.lt!.es to forPlgn
afCII·.· Les
..... ; t 11 ..:; i '..:1'1
r.
,304
p.
h-:\'i-.Ot'd.
.trel~mltl3.!,~:.
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.'~
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r h;.1
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market9.tle .lebt ()':1.:..;:::.t.0:1~ ..:
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.-:epo3 1.:
{-;O.ernf',en: ob}:,~ar~O.'L':"
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Ie',':
t r:a.n
one ::<2dr. Cl.[:,i r.'ldr).:etat'l.c 01
H...1'- ',/1 1:- •
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'jI'c :L.3+:.:.'-'~.o:- ~et.veen L::J.,",iJ li2l."bLht
t(.' fu!·,:,l·
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"t:,se:1 on l'e_ol·(j.~ of t...lI1.:~':
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+.'=:1.
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'~','.: ",;("'01 J ::; 1';1.!"~C'1
or !)l)).
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I.
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L. :'Ji:'
. ab ].
~
~rlc1Ul'"
forp:;,~
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
TREASURY'S MONTHLY BILL OFFERING
The Treasury Department, by th1s publ1c notice, 1nv1tes tenders
for two series of Treasury bills to the aggregate amount of
$1,500,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing August 31,1967,
in the amount of
$3, BOs ,643 ,000, as follows:
274-day bills (to maturity date) to be 1ssued
in the amount of $ 500,000,000,
or thereabouts,
additional amount of bills dated May 31, 1967.
mature May 31,1968,·
originally issued in the
$900,146,000, . the add1t1onal and original b1lls
interchangeable.
Augu.t 31, 1967,
repre sent ing an
and to
amount of
to be freely
366-day bills, for $ 1,000,000,000, or thereabouts, to be dated
August 31,1967,
and to mature August 31, 1968.
The bills of both series will be issued on a discount bas1s under
competitive and noncompetit1ve bidd1ng as hereinafter prov1ded, 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, Thursday, August 24, 1967.
Tenders will not be
~ceived at the Treasury De~artment, Wash1ngton.
Each tender must
be for an even mult1ple of $1,000, and in the ease of compet1t1ve
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 the one-year bills will run for
366 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 tender 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 sucn
tenders. Others than bank1ng institut10ns 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
~Sponsible and recognized dealers in 1nvestment securities.
Tenders
F l002
a
- 2 -
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 '.-Jill 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 Bank on August 31, 1967, in
cash or other immediately available funds or in a like face amount
of Treasury bills maturing August 31,1967.
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
FOR IMMEDIATE RELEASE
August 17, 1967
TREASURY ANNOUNCES $2.5 BILLION NEW CASH BORROWING
lhe Treasury Department announced today that it is offering for cash subscription $2.5 billion, or thereabouts,of 3-1/2 year 5-3/8% Treasury Notes of
Series C-1971 at a price of 99.92 (to yield 5.40%).
The notes will be dated August 30, 1967, will mature February 15, 1971,
and will be issued in registered and bearer form. Interest will be payable on
February 15 and August 15.
Subscriptions will be received for one day only, on Tuesday, August 22.
Any subscription, with required deposit, addressed to a Federal Reserve Bank or
Branch, or to the Treasurer of the Uhited States, Washington, D. C. 20220, and
placed in the mail before midnight August 22, 1967, will be considered timely.
The payment date for the notes will be August 30, 1967.
made through credit to Treasury Tax and Loan Accounts.
Payment may be
Subscriptions from banking institutions for their own account, Federallyinsured savings and loan associations, States, political subdivisions or instrumentalities thereof, public pension and retirement and other public funds,
international organizations in which the united States holds membership,
foreign central banks and foreign States, dealers who make primary markets
in Government securities and report daily to the Federal Reserve Bank of New
York their positions with respect to Government securities and borrOwings
thereon, and Government Investment Accounts will be received without deposit.
Subscriptions from all others must be accompanied by payment of 2 percent of
the amount of notes applied for, not subject ,to withdrawal until after allotment.
Subscriptions from commercial banks, for their own account, will be
restricted in each case to an amount not exceeding 50 percent of the combined
capital (not including capital notes or debentures), surplus and undivided
profits of the subscribing bank.
The Secretary of the Treasury reserves the right to reject or reduce any
subscription, to allot less than the amount of notes applied for, and to make
different percentage allotments to various classes of subscribers. Allotment
notices will be sent out promptly upon allotment.
Commercial banks and other lenders are requested to refrain from making
unsecured loans, or loans collateralized in whole or in part by the notes
subscribed for, to cover the deposits required to be paid when subscriptions
are entered, and banks will be required to make the usual certification to
that effect.
All subscribers are required to agree not to purchase or to sell, or to
make any agreements with respect to the purchase or sale or other disposition
of the notes subscribed for under this offering at a specific rate or price,
until after midnight August 22, 1967.
F-1003
TREASURY DEPARTMENT
FOR RELEA..:)E 6: 30 P .r·l.,
~ndaY3 August 21, 1967
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced that the tenders for two series of Treasury
bills, one series to be an additional issue of the billa dated May 25, 1967, and the
other series to be dated August 24, 1967, which were offered on August 16, 1967, were
opened at the Federal Reserve Banks today. Tenders were invited for $1,400,000,000,
or thereabouts, of 92-day bills and for $1,000,000,000, or thereabouts, of 183-day
bUls. The details of the two series are as follows:RANGE OF ACCEPTED
COMPETITIVE BIDS:
92-day Treasury bills
maturing November 24" 1261
Price
98.905 ~
98.884
98.892
High
Low
Average
:
Approx. EquiT.
Annual Rate
4.285%
4.370%
4.336% 11
183-day Treasury bills
maturing Februu;y: 2.21 1268
Approx. Equiv.
Price
.Annual Rate
97.524
4.811%
97.489
4.94($
97.498
4.922% 11
~
ExceFting 1 tender of $200,000
99% of the amount of 92-day bills bid for at the low price was accepted
69% of the amount of 183-day bills bid for at the low price was accepted
TOTAL TENDERS APPLIED FOR ANi) ACCEPTED BY FEDERAL RESmVE DISTRICTS:
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTALS
£I
£I
II
AcceEted
AEE1ied For
11,325,000 $ 11,125,000 :
1,591,367,000
959,867,000 •
25,219,000
13,219,000
16,582,000
16,582,000
8,985,000
8, 985, OCO
27,008,000 :
30,008,000
173,332, COO
345,183,000
36, 214,CXX)
40,514,000
20,350,()C()
20,350,000
759, OCJO
20,
20,759,000
16,521,000
23,521,000
96,187,000
21, 281,000
$
·
··
·
··
···
···
$2,231,100,000
$1,400,149,000
EI
AEElied For
AcceEted
31,834,000 $ 11,834,000
1,432,172,000
737,072,000
13,826,000
5,826,000
21,807,000
26,357,000
5,333,000
5,333,000
20,416,000
13,416,000
321,102,000
97,147,000
20,148,000
11,948,000
10,266,000
15,766,000
16,563,000
16,563,000
21,189,000
32,189,000
48,275,,000
86,525,000
$
$2,022,231,000 $1,000,676,000
sJ
Includes $208,132,000 noncompetitive tenders accepted at the average price of 98.892
Includes $125,661,000 noncompetitive tenders accepted at the average price of 97.498
These rates are on a bank discount bas.is. The equivalent coupon issue yields are
4.46% for the 92-day bills, and 5.13% for the 183-day bills.
F-1004
TREASURY DEPARTMENT
AUG ~ 1 1967
FOR IMMEDIATE RELEASE
REVOCATION OF SALES AT LESS THAN FAIR
VALUE DETERMINATION RELATING TO FINISHED TUBELESS
TIRE VALVES FROM WEST GERMANY
The Treasury Department announced today that it is sending
to the Federal Register for publication a revocation of its
recent Determination of Sales at Less Than Fair Value with
respect to finished tubeless tire valves from West Germany.
The action is being taken for the purpose of making a
correction in the original determination, which could conceivably
have circumscribed the injury investigation of the Tariff Commission in a way which was not intended.
Simultaneously the
Treasury Department is now issuing a new tentative Determination
of Sales at Less Than Fair Value which eliminates exceptions
made in the original determination.
Thirty days are being allowed for comment by interested
parties on the new tentative determination.
Treasury officials noted that their action was not prompted
by any change in the circumstances of the case, but rather by
technical considerations.
TREASURY DEPARTMENT
Washington
FOR P.r-.!. RELEASE
WEDNESDAY, AUGUST 23, 1967
REMARKS BY THE HONORABLE TRUE DAVIS
ASSISTANT SECRETARY OF THE TREASURY
AND UNITED STATES EXECUTIVE DIRECTOR
OF THE INTER-AMERICAN DEVELOPHENT BANK
BEFORE THE VETERANS OF FOREIGN WARS OF THE UNITED STATES
ON ACCEPTING THE 1967 AHERICANISM AWARD OF THE V.F.W.
HOTEL ROOSEVELT, NEW ORLEANS, LOUISIANA
WEDNESDAY, AUGUST 23, 1967, 11:00 A.M., CDT
DEMOCRACY: A CONTINUOUS LIVING PROCESS
The honor that the Veterans of Foreign Wars have bestowed
upon me is one that I shall deeply cherish. In accepting the
Veterans of Foreign Wars 1967 Americanism Award, I am conscious
both of the names of distinguished Americans who have received
it in the past, and of the breadth and depth of their
activities that merited their selection. To have my name
added to this panel of eminent leaders in American business,
finance, labor, public service, and the arts, is a great honor.
My name i." there, I fee I, not for service a lready rendered,
but ~~th~_ for service yet to be accomplished. So I look
to the future, rather than to the past, to participating
in those activities which will help perpetuate the democratic
principles of government that are the strength of our free
society and a goodly portion of the strength of the free
world. By your gracious act you have given me an assignment
that will occupy my attention the rest of my life -- and for
this I am grateful.
P-1005
My presence with you this morning and the award you have
generously bestowed indicate your continued concern with the
nurturing of those principles of government and those
characteristics of our people that contribute to the
enlightened concept of Americanism that most citizens hold.
It is appropriate, I believe, that we take time, not
occasionally, but frequently, to reflect upon the substance
of our beliefs, to evaluate them in the world arena of
political thought, and to examine ourselves to see if we are
fulfilling the personal commitments that democracy imposed
upon each of us -- as individuals, as groups working together
in cornman interests, and as a people moving together toward
the fulfillment of national goals.
- 2 -
The history of our country records many conflicts.
Secretary of War Weeks, for example, listed 56 wars in which
we were engaged from 1776 to 1922. These are recognized
and officially recorded in the historical annals of our
g~vernment.
But there are other conflicts of an entirely
d~fferent nature that only an historical awareness of our
country's development and growth reveal: these are the
conflicts dealing with human rights -- conflicts of a
religious, social, economic and political nature with which
successive generations of Americans have dealt in their
efforts to evolve a living democracy in accordance with the
principles explicitly stated and guaranteed in our Constitution
and the Bill of Rights.
Over the years -- less than 200 years -- we have
succeeded rather well, both as a people and as a government,
in our efforts to solve the numerous conflicts that have
arisen. Where we have failed in human relations we have
acknowledged these failures and attempted to rectify our err~rs
of judgment. Our Constitutional amendments -- in fact, our
entire repository of jurisprudence -- is testament to our
continual concern that our democratic principles of government
should be viable instruments of action in human relations
with each other and with other peoples.
Nowhere have we so carefully exercised this maturity of
judgment than in Vietnam. Never in the history of the
world has so powerful a nation -- with the most devastating
instruments of destruction ever created at its disposal -exercised such tact and restraint and concern for human life
in the pursuit of military objectives. This is not a sign
of weakness. This is a manifestation of maturity -- as a
government and as a people.
One ingredient of maturity is patience. We have exercised
patience in the pursuit of military and pacification objectives
in Vietnam. We have simultaneously exercised patience in
our efforts to arrange a peaceful settlement with the enemy,
in our countless overtures to sit down at a conference table
and negotiate our differences so that we can all get about with
the more serious business of helping the people of Southeast
Asia build a better world in which to live. We shall continue
to be patient in the future, as we have in the past, not only
in Vietnam but in other parts of the world where maturity of
judgment i~ essential in approaching and appraising complex
problems between diverse peoples that affect our, as well as
their, welfare and security.
- 3 On August third President Johnson announced that another
~ort~-five thousand men will be added to our fighting forces
1n V1etnam. At the same time he called upon Congress to
enact a temporary surcharge of ten percent on individual
tax liabilities and a similar levy on corporate taxes. He
asked the Congress to apply these surcharges on corporations
effective July 1 this year, and on individuals effective
October 1.
The President emphasized that these are surcharges on
taxes, not on incomes, and that they are a small price to
pay considering the distasteful and dangerous alternatives
of inflation -- the sneak thief that can pick our pockets
without our knowing it.
Meanwhile, the President has encouraged the Congress to
cut non-essential funds from pending appropriation bills,
and he has pledged that the Executive Branch would cooperate
fully with the Congress by eliminating or deferring unnecessary
expenditures.
The careful application of our national power in Vietnam
reflects coordinated teamwork of the highest order. It is
now time for those of us here who, in overwhelming numbers,
are enjoying the benefits of our great prosperity to
back-up our fighting men and build a strong and prosperous
nation by paying for some of these expenditures as they
occur. Most of us from time-to-time at horne or in business
must assess the future in the harsh light of reality. We
then cut back on our expenditures, defer "nice to have"
luxuries until a later time, and avoid assuming onerous
debts and debt service. To meet our obligations to our men
in Vietnam, as well as to protect the prosperity of all of us,
the President has recommended a series of coordinated
actions by the Executive and the Congress, a vital ingredient
of which is a temporary tax increase. These actions
deserve your attention, your evaluation, and your approval.
Enactment of the proposed temporary tax increase coupled
with prudent fiscal management means that the burdens of
financing the war and the carrying on of essential domestic
programs will be shouldered more evenly by the many elements
that contribute to the vitality of our economy. Last year the
highest interest rates in four decades and the resulting
tightening of money applied unfair pressures on certain groups.
Mortgage money commanded a high premium. Many people
couldn't buy homes, and the construction industry took a
belting. The rate of new construction is improving, but there
is much ground to recover. Insurance companies loaned
millions to their policy holders who were unable to find money
- 4 at the normal sources. The squeeze affected most of us,
but some of us more than others.
Although these dislocations hurt, the average person
enjoyed great prosperity. Real wages were the highest in
history; total after-tax real income of Americans rose
five percent; net income per farm rose nine percent, even
after adjusting for higher prices the farmer paid, and our
gross national product, valued in constant prices, advanced
nearly six percent.
You have honored me with your 1967 Americanism Award.
I accept it with humility and a deep sense of obligation.
My obligation demands that I ask you now to project the
spirit of Americanism -- a fundamental value of this great
body of veterans -- beyond any artifica1 or preconceived
limitations. I ask each of you to support, by your willingness
to pay an additional portion of your existing tax liability,
the financing of the fighting in Vietnam. It is a small
price for us to pay. As you know, we seek a just and
honorable conclusion to the hostilities. But we are veterans
of foreign wars, and we know in our hearts that if we had
not fought wars abroad we would have -- long ago -- been
fighting them on our soil.
It is correct and desirable that the Congress study
deliberately the President's recommendations and that the
Congres:: evaluate the alternatives. But undue delay would
be l ...irmful. "Failure to raise taxes" the President said,
"would not avoid the burdens of financing a war. *~'d(But,
instead of sharing those burdens equitably and responsibly
as an income tax surcharge would do -- inflation, tight
money and shortages would tax the American people cruelly and
capriciously." This, the President added, "would haunt
America and its people for years to come."
Earlier I said that, as a nation, we have exercised
maturity and judgment in the application of tremendous power
against our adversaries in Vietnam. An essential ingredient
of maturity is patience. Our patience will be sorely tried
in summoning the staying-power required to set the stage for
an honorable conclusion of our commitment in Vietnam. And
our patience will be tried when our incomes are taxed to help
pay the large sums required to back up our fighting forces
around the world.
- 5 Our American ideals required the repeated infusion of
p.::l t icnct' and work in strengthening our democratic
institutions. Each of us here must take extra time to study
and comprehend the requirements of our national commitments,
here and abroad. We must be patient with the special
pleadings of the faint-hearted, and press forward to solutions
for the many problems facing us in our communities, in our
great cities, our States and the Nation. To the extent that
each of us participates in local and national efforts toward
the resolution of these problems, to that extent will we insure
the pcrp13tuation of our liberties. Let us remember we strive
to strengthen our democratic processes and our national
institutions not only for ourselves but for those who will
inherit them next year, the next decade, the next generation.
Working together -- in every community and every
State -- there is no problem that we cannot solve, no goal
that we cannot reach, no objective that we cannot fulfill.
This is Americanism.
000
TREASURY DEPARTMENT
5
August 21, 1967
FOR IMMEDIATE RELEASE
UNITED STATES-SWEDISH ESTATE TAX TREATY
DISCUSSIONS TO BE HELD
The Treasury Department today announced that
discussions will take place in the early Fall between
representatives of the United States and Sweden on an
estate tax treaty between the two countries. It is
expected that these negotiations will be the forerunner
in a program of estate tax treaty discussions with other
European countries.
Persons interested in an estate tax convention
with Sweden may wish to consult existing United States
estate tax treaties, such as those with Canada, Italy,
or Japan, which have been published by the Department
of State in the series called "United States Treaties
and Other International Agreements". They may also
wish to consult the "Draft Double Taxation Convention
on Estates and Inheritances l l , a report published in 1966
by the Fiscal Committee of the Organization for Economic
Cooperation and Development (OECD).
Persons wishing to offer comments or suggestions
in connection with the Swedish negotiations are invited
to send their views before September 15, 1967 to
Assistant Secretary of the Treasury Stanley S. Surrey,
United States Treasury Department, Washington, D. C. 20220
000
F-I006
TREASURY CEPARTMENT
FOR Il-fi'lliDIA TE RELEASE
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders
for two series of Treasury bills to the aggregate amount of
$2,400,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing August 31,1967,
in the amount of
$3,805,643,000, as follows:
9l-day bills (to maturity date) to be issued August 31, 1967, in the
amount of $1,400,000,000, or thereabouts, representing an additional
amount of bills dated November 30, 1966, and to mature November 30, 1967,
originally issued in the amount of $900,493,000 (additional amounts of
$499,956,000 and $1,000,993,000 were issued February 28,1967, and June 1,
1967, respectively), the additional and original bills to be freely
interchangeable.
l82-day bills (to maturity date) to be issued August 31,1967, in the
amount of $1,000,000,000, or thereabouts, representing an additional
amount of bills dated February 28,1967, and to mature February 29,1968,
originally issued in the amount of $901,029,000 (an additional
$500,040,000 was issued May 31, 1967), the additional and original bills
to be freely interchangeable.
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, August 28, 1967.
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
~ 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 w1ll be received
Without depos1t from incorporated banks and trust companies and from
F-1007
- 2 -
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 Bank on August 31, 1967, in
cash or other immediately available funds or in a like face amount
of Treasury bills maturing August 31,1967.
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, out 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 frOID
any Federal Reserve Bank or Branch.
000
TREASURY DEPARTMENT
WASHINGTON. D.C.
August 23, 1967
FOR IMMEDIATE RELEASE
ASSISTANT SECRETARY OF THE TREASURY TRUE DAVIS
RECEIVES THE VETERANS OF FOREIGN WARS 1967 AhlRICANISM AWARD
Treasury Secretary Henry H. Fowler today issued the
following statement on the occasion of Assistant Secretary
True Davis' receiving the Veterans of Foreign Wars 1967
Americanism Award at the VFW annual convention in New Orleans:
"We in the Treasury are especially pleased that
the Veterans of Foreign Wars have honored Assistant
Secretary of the Treasury True Davis by presenting
him their 1967 Americanism Award.
"The late Adlai Stevenson once wrote that
patriotism 'is not short, frenzied bursts of
ernoc 'Ln, but the tranquil and steady dedication
of a 1 ife t irue. '
Mr. Davis' life as a bus inessman,
Ambassador to Switzerland, Assistant Secretary of
tbr' '~"reasury and our country's Executive Direc tor
to the Inter-American Development Bank, reflects the
tranquil and steady dedication of an American
citizen to the principles of democracy and to the
strengthening of our cultural institutions that
gIve meaning and subs tanee to these princ ipies.
"Hr. Davis has personally identified himse If
in private and public life with the problems of
his community, his State of Hissouri, and our
country. To these problems he has brought not
only c3n intelligence based upon maturity of
juclgmE:'nt, but a philosophy nurtured by
humanitarianism.
In successfully fulfill'~ng a.
lifetime of numerous public and pri~Jte
responsibilities, he has helped en:::ich our cowman
her itage .1\
000
F ·~·1 {JOS
TREASURY DEPARTMENT
!
:'(;R R..El..i!J•..jE 6:]0 t . i,•• ,
Thursday, August 24, 1967.
i;:i;SULTS OF Th.l~. A~URY 'S HONTHLY BILL OFFhltlNG
The Treasury Department announced that the tenders for two series of Tre.ssury
bills, one series to be ~n additional issue of the bills dated }~y 31, 1967, and the
other series to Le dated AULust 31, 1967, which were offered on August 17, 1967, were
o~ened ut the Federal Re::oerve Jjanks today.
Tenders were invited for :P5CG, UlG,OOC,
or thereabouts, of 274-day bills and for ~:1,OOO,OCO,OOC, or thereabouts, of 366-day
bills. ':;.'he detaj Is of the two series are as follo . . .'5:
~;vG.t ul'
rl.iD
I ,,):
l~,~CS._
~C:'J iTI'r=V~ t
High
Low
ilverage
a/
274-oay l'reasury bills
matur::'n~ l.'~y ~l~ 12 68
jq:;prox. Equiv.
l-rice
Annual Rate
96.164
5.040;G
c6.u99
5 .125~;;
960120
5 .()98'~ 11
3b6-day 'l'reasury bills
hU.;ust ~l~ 1268
Apf.;rox • .t;qujv.
Price
Annual i-~ate
94.881 §:/
5 .O35/~
94.774
5.14O'(
5.10Q.o 11
94.815
maturin~
··
2.X\:eptin<=, 1 tender of :;.;lJUlOOO
dOfo of toe c:..mount of 274-day (nlls '--'id for at the
lov: price '"as c.ccepted
39, of the amount of ]6b-day bills bid for at the low price y,'as accepted
J
District
boston
I,jew York
fhiladelphia
Cleveland
itichmond
A.tlanta
Chicago
St. Louis
.innea1,oli3
Kansas l~it.Y
Dallas
San Francisco
TOV.L:>
y
s!
~Elied
For
1,6CJO,wO
961, 861, cx.;C
14,775,000
1,321,000
6,642,000
11,7u5,oCO
172,797,000
17,843,000
6,817,000
2,714,000
11,1l2,Oc0
87,488,OCO
~1,?96,b75,OOO
Include~ ~20,174,OOO
Includes ~P42,194,OOO
AcceEted
-ii
600,000
389,]61,000
775,000
l,]21,OOC
4,042,000
2,]CJ5,GOO
54,178,000
1,74],000
4,217,000
2,714,000
1,.ll2,00O
37. 08 8.1 00.2
~~
500,056,000
··
EI
Ap,Elied For
$
51,390,UOO
1,352,577,000
9,998,000
65,316,000
7,914,000
16,492,000
162,449,000
22,709,000
8,336,000
4,998,000
12,834,000
185,812,000
Acce,Eted
$
14,29G,uL;U
754,277,000
1, 998,U(;O
2,316,000
6, 914,UOO
3,170,UOO
06,449,000
4,616 ,0uO
5,]36,000
4,998,000
3,834,000
131,882,000
$1,900,825,000
$1,000,080,000
sJ
nonco~petitive tenders accepted at the avera8e price of 96.120
noncompetitive tenders accepted at the average price of 94.8.l.5
II These rates are on a Dank discount basis. The equivalent coupon issue yields are
5.34% for the 274-da.y bills, emd 5.40% for the 366-day bills.
F-I009
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
August 24, 1967
RESULTS OF TREASURY'S CASH OFFERING OF 5-3/8~ NOTES
The Treasury today announced a 38 percent allotment on subscriptions
in excess of $100,000 for the current cash offering of $2.5 billion, or
thereabouts, of 5-3/8 percent Treasury Notes of Series C-1971 due
February 15, 1971.
in full.
Subscriptions for $100,000 or less will be allotted
Subscriptions for more than $100,000 will be allotted not less
than $100,000.
The total amount of subscriptions accepted is about
$2,498 million.
Reports received thus far from the Federal Reserve Banks show that
subscriptions for the notes total $5,990 million, of which $4,603 million
were received from commercial banks for their own account and $1,387 million
from all others.
Details by Federal Reserve Districts as to subscriptions and allotments
will be announced next week.
F-IOIO
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
COMMUNIQUE OF THE MINISTERIAL MEETING
OF THE GROUP OF TEN ON
AUGUST 26, 1967, LONDON.
1. In order to complete the discussions which they
had begun at their previous meeting in London on the 17th and
18th July, the Ministers and Central Banks Governors of the
ten countries participating in the General Arrangements to
Borrow met again in London on 26 August under the chairmanship
of Mr. James Callaghan, Chancellor of the Exchequer of the
United Kingdom. Mr. Pierre-Paul Schweitzer, Managing Director
of the International Monetary Fund, took parE in the meeting,
which was also attended by representatives of the Organization
for Economic Cooperacion and Development and of the Bank for
International Settlements, as well as by the President of the
National Bank of Switzerland.
2.
The Ministers and Governors had before them a revised
Outline of a Contingency Plan for establishing a new facility,
in the form of special drawing rights, which is intended to
meet the need, as and when it arises, for a supplement to
existing reserve assets. This outline was drawn up at the
Fourth Joint Meeting in Paris of the Executive Directors of
the IMF and the Deputies of the Group of 10. It was revised in
the last few weeks by the Deputies to clear up some differences
of view remaining after the July Ministerial Meeting.
3. The Ministers and Governors agreed on the text of an
Outline of a Contingency Plan which they would be prepared to
support at the forthcoming annual meeting of the Governors of
the IMF in Rio De Janeiro
This Outline will now be considered by
the Executive Directors of the Fund.
It is expected that the
Outline as approved by them will be embodied in a Resolution at
the forthcoming annual meeting of the Governors of the IMF in
Rio De Janeiro.
F-10ll
- 2 -
4. The Ministers and Governors concentrated their discussions
at this meeting on a number of key features of the plan, on which
differences had not previously been resolved.
In particular, they
agreed on the following points: Decisions on the basic period for,
timing of, and amount and rate of allocation of the new drawing
rights should be taken by the. Board of Governors of the IMF by a
majority of 85 percent of the total voting power. Members which
use their new drawing rights would incur an obligation to
reconstitute their position in accordance with principles which
will take account of the amount and duration of the use.
For
drawings made in the first basic period of five years, the
principal rule of reconstitution should be that over any period
of five years a member's net average use of the new facility
should not exceed 70 percent of its total allocation.
Participants should also pay due regard to the desirability of
pursuing, over time, a balanced relationship between their holdings
of special drawing rights and other reserves. The reconstitution
rules would be reviewed be~ore the end of this first period.
5.
The Ministers and Governors had an exchange of views
on the form and content of the Resolution to be submitted to the
Governors of the IMF in Rio De Janeiro. The Ministers also
considered ways of bringing rapidly to a conclusion the studies
to be made in parallel with a view to making such changes and
improvements in the present rules and practices of the IMF as
would appear appropriate in the light of experience.
6.
The Ministers and Governors agreed to meet again at
the occasion of the annual meeting of the IMF in Rio De Janeiro.
000
TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE
STATEMENT BY HONORABLE HENRY H. FOWLER,
SECRETARY OF THE TREASURY OF THE UNITED STATES ,
MP.DE IN LONDON ON AUGUST 26, 1967,
AT THE CONCLUSION OF THE
MINISTERIAL MEETING OF THE GROUP OF 10.
I am highly gratified that we have taken a major step
forward in the constructive development of the international
monetary system. This has indeed been one of the great days
in the history of international financial cooperation. It
marks the successful culmination of four yea~s of study and
two years of intensive negotiation.
Our work this year -- in the Joint Meetings and in the
Meetings of the Group of Ten -- has represented the most
ambitious and significant effort in the area of international
monetary affairs since Bretton Woods. The results are, of
course, subject to further consideration and final approval by
the Governors of the 106 countries of the IMF at the annual
meeting at Rio De Janeiro"
I would hope that the Governors will authorize the
Executive Directors to take this Outline Plan and,convert it
into the necessary legal Amendment, or Amendments, to the
IMF Charter within a short period following the annual meetings,
so that the process of final approval by governments can bring
this new facility into existence.
000
F-1012
TREASURY DEPARTMENT
FOR TNMEDIATE 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
$2,400,000,000, or thereabouts, for cash and in exchange for
Treasury bills maturing September 7, 1967, in the amount of
$2,300,509,000, as follows:
91-day bills (to maturity date) to be issued September 7, 1967,
in the amount of $1,400,000,000, or thereabouts, representing an
and to
additional amount of bills dated June 8, 1967,
mature December 7,1967, originally issued in the amount of
$1,000,625,000, the additional and original bills to be freely
interchangeabh.; .
182-day bi 12..2.
'.';Y'
:~·1
,000,000,000,
September 7, 1967, a0d to mature
or thereabouts, to be dated
March 7, 1968.
The bIlls 0f both series will be issued on a discount basis under
competitive and r,(..;c);npetltive bidding as hereinafter provided, and at
maturl ty the 1.:' f ~~C e dtHOunt will be payable without interest. They
will be issued h. bea.rer rom only, and in denominations of $1,000,
$5,000, $10,000, ~50,OOO,
$100,000, $500,000 and $1,000,000
(rna t uri t y va 1 u e ) .
Tenders will be received at Federal Reserve Banks and Branches
to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Friday, September 1, 1967.
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 pr1.ce offered must be expressed on the basis of 100,
with not more than three dec imals, e. g., 99.925. Fractions may not
be used. It 1s urged that tenders be made on the printed forms and
forwarded 1n the sry2cial envelopes which will be supplied by Federal
Reserve BankS or B:t~anches 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-1013
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 tnese 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 Bank on September 7, 1967, lin
cash or other immediately available funds or in a like face amount
of Treasury bills maturing September 7, 1967. 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 co~sidered 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 hereundeT
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 thts
notice prescribe the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained arc
any Federal Reserve Bank or Branch.
000
TREASURY DEPARTMENT
FOR
flli.W~A.3S
~ionday,
6: 30
r-' .lv~. ,
August 28, 1967.
The Treasury Department announced that the tenders for two series of Treasury
bills, one series to be an additional issue of the bills dated November 30, 1966, and
the other series to be an additional jssue of the bills dated February 28, 1967, which
i;ere offered on August 23, 1967, were opened at the Federal. Reserve Banks today. Tenders
i;ere invited for $1,400,000,000, 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:
m~lc:
OF ACC1:!:t-TED
~ONPETI TI~l!.
15IJ.3:
91-day Treasury bills
:
November ~02 1261
Approx. Equiv. :
Price
Annual Rate
•
93.371
4.466%
98.861
4.506%
9~; .865
4. 4907v 11
maturin~
··
··
High
Low
Average
182-day Treasury bills
maturiQg February 222 1968
Approx. t;quiv.
Price
Annual Rate
97.484
4. 977~~
5.uOO;';
97.472
97.475
4.995% 11
8% of the amount of 91-day bills bid for at the low price was accepted
46% of the amount of 182-day bills bid for at the low price was accepted
i 'rOTAL 'f.r..NDERS
APPLlliD FOR AND ACCEPYt:D BY FEDERAL RESERVE DISTRICTS:
uistrict
boston
New York
Philadelphia
Cleveland
Richmond
Atlanta.
Chicago
St. Louis
f!lnneapolis
Kansas City
Dallas
San Francisco
T0fALS
·
AcceEted
AEElied For
$
10,851,000 $
8,178,000
1,659,799,000
890,035,000
27,534,000
14,374,000
22,945,000
22,945,000 ••
15,194,000
14,194,000
42,401,000
20,898,000
170,107,000
111,077,000
37,785,000
57,885,000
5,563,000
8,563,000
27,268,000
30,549,000
12,648,000
22,648,000
235,258,000 •
290,543,000
·
··
·
··
·
·
$2,367,019,000
$1,400,223,000
!I
AcceEted
AEElied For
$
24,864,000 $
2,814,000
1,650,325,000
804,105,000
14,080,000
5,516,000
45,305,000
14,886,000
5,087,000
4,424,000
36,486,000
11,359,000
227,269,000
83,3b9,OOO
11,895,000
45,395,000
9,624,000
5,162,000
11,392,000
13,489,000
8,991,000
19,691,000
103,819,000
.37,393.000
$2,195,434,000
$1,001,306,000
£I
Includes $223,174,000 noncompetitive tenders accepted at the average pr~ce of 98.865
Includes $130 489 000 noncompetitive tenders accepted at the average pr~ce of 97.475
These rates a~e o~ a bank discount basis. The equiValent coupon issue yields are
4.6Z}; for the 91-day bills, and 5.21% for the 182-day bills.
it-lo14
TREASURY DEPARTMENT
August 29, 1967
FOR IMMEDIATE RELEASE
STATEMENT BY SECRETARY FOWLER
AT A PRESS CONFERENCE
TUESDAY, AUGUST 29, 1967, WASHINGTON, D. C.
I am highly gratified that the Ministers and Governors
of the Group of Ten Countrie~ have taken a major step forward
in the constructive development of the international monetary
system" August 26 was, indeed, one of the great days in the
history of international financial cooperation. It marks the
successful culmination of four years of study and two years of
intensive negotiation. Both Chairman William McChesney Martin,
Jr., and I, representing the United States, have been privileged
to participate.
Our work this year -- in the Joint Meetings and in the
meetings of the Group of Ten -- has represented the most
ambitious and significant effort in the area of international
monetary affairs since Bretton Woods. The results are, of course,
subject to further consideration and final approval by the
Governors of the 106 countries of the International Monetary Fund
at the Annual Meeting at Rio. I expect the Governors to authorize
the Executive Directors to take the Outline plan and convert it
into the necessary legal amendment, or amendments, to the IMF
Charter within a short period following the annual meetings, so
that the process of final approval by governments can bring this
new facility into existence.
The agreement reached in London on August 26 demonstrates
that the monetaiY authorities of the major countries are prepared
to continue and strengthen their established record of
international monetary cooperation and, in particular, to take
a unique step in international cooperation by creating a reserve
asset, in the form of special drawing rights in the International
Monetary Fund, to supplement gold and foreign exchange. Thus,
F-1015
- 2 the existing bases for the monetary system, including the
established price of gold, are reaffirmed. In my view, the
essence.of what we have been seeking to do can well be expressed
by putt~ng together two sentences from the Outline we have
agreed upon. The first sentence appears in the Introduction to
the Outline and is as follows:
"The facility described in this Outline is
intended to meet the need, as and when it arises,
for a supplement to existing reserve assets."
The second sentence appears later in the Outline, in the Section
dealing with Reconstitution, under the general heading of Use of
Special Drawing Rights. It reads as follows:
"Participants will pay due regard to the
desirability of pursuing over time a balanced
relationship between their holdings of special
drawing rights and other reserves."
That is, the new facLlity will create special drawing rights
to supplement the holdings of existing reserve assets and to
provide the dynamic element of growth in the world's reserves for
the future -- a growth element of a deliberate character, subject
to joint, collective$ and responsible processes of international
decision. And the new reserve is to be treated, in a general
TJ.]ay, on the basis or a "balanced relationship" with other reserves.
That is, the relationship to be sought is one of equivalence
between the new reserve asset and the traditional reserve assets.
While there are transitional problems to be surmounted through
careful management, cooperation, and experience, the objective
is, thus, clearly the establishment of the full stature of the new
asset, alongside the traditional reserve assets.
A new facility with the objective of achieving full
equivalence with traditional reserve assets -- that is the essence
of what we have agreed upon. I am very pleased that we have been
able to agree on these essential elements of the approach, and
on the substance of the mechanism by which they can be carried
forward. Given this agreement? I am confident as I look ahead
to the future of the international monetA"
system and of
internationdl financial cooperation, cf2nterc;~ in the International
Honetary Fund.
- 3 -
In order that Saturday's event may be viewed in the
perspective of the long and arduous studies and negotiations that
preceded it, it may be useful to review that background -- from
the point of view of the United States.
The negotiations and discussions leading to this agreement
have been long and intense. In October, 1963, the Ministers
and Central Bank Governors of the Group of Ten Countries asked
their Deputies to "undertake a thorough examination of the
outlook for the functioning of the international monetary system
and of its future needs for liquidityo"
On the basis of the very thorough study and report that
resulted from this directive, the Ministers and Governors
concluded, in a statement of' August, 1964, that "the supply of
gold and foreign exchange may prove to be inadequate for the
over-all reserve needs of the world economy."
Having reached the conclusion that there was a possibility
of a shortage of reserves, the Ministers and Governors took the
next logical step, authorizing a study of how to go about
remedying this prospective shortage, through the creation of a
new reserve asset. Since there was little knowledge on this
point, the Ministers and Governors asked for a thorough report
on the technicalities of possible ways in which monetary reserves
might be deliberately brought into being.
From the summer of 1964 through the summer of 1965, a
group of technical experts from Treasuries and Central Banks
labored to bring into being a body of knowledge in this area o
The result of this pioneering effort was the Report of the Study
Group on the Creation of Reserve Assets -- better known as the
Ossola Group Report, made public in August, 19650 This report
provided an inventory of the techniques by which reserves could
be deliberately created and an analysis of the arguments for
and against the use of each of these techniques.
It was at this point that President Johnson authorized me
to announce in a speech at Hot Springs, Virginia, in July, 1965,
that the United States was ready to participate in negotiations
of a political nature on reserve creation, thereby launching
the initiative that culminated in Saturday's agreement.
- 4 At about the same time, there became available a report
by.the Subcommittee on International Financial Affairs of the
Jo~nt Economic Committee of the Congress of the United States
under the Chairmanship of Congressman Henry Reuss of Wisconsi~
called "Guidelines for Improving the International Monetary
,
System." Where the Os sola Report, by request of the Ministers
and Go~ern~rs, stuck to the technical aspects of the problem,
the Gu~del~nes Report performed the invaluable service of
providing a legislative estimate of the urgency and dimensions
of the problem under the highly-respected imprint of the Joint
Economic Committee. Its basic conclusion was:
"World liquidity needs cannot adequately
be met by existing sources of reserves
(gold, dollars, and pounds sterling) or
even by the addition of new reserve
currencies. New ways of creating
international reserves must be sought."
The Report stated, further, that:
"TIte need for act ion is pressing."
It ,va,; on the very solid footing of President Johnson IS
initiative, the Ossola study of ways and means, and of the
Joint Co~mlic~~~'s unequivocal assessment of the urgent need for
a new kind of reserve asset that the United States proposed the
opening of formal negotiations looking toward international
agreement on a contingency plan for deliberate reserve creation.
In order to ascertain the views of other countries, I
followed up my suggestions by personal and individual
consultations with the European Ministers and Governors of the
Ten, having previously consulted with the Japanese and Canadian
Ministers in Washington. These individual consultations
revealed a basis for unified progress.
As a result, at the time of the Annual Meeting of the Fund
in September, 1965, it was agreed that the Deputies of the Group
of Ten Countries should examine the various proposals for
reserve creation to ascertain whether or not there was a basis
for agreement of major points. In the meantime, the Executive
Directors and staff of the International Monetary Fund were
carrying on constructive studies of the problem. Their findings
were published in the Annual Report of the Fund for 1966.
- 5 -
At a Ministerial meeting of the Group of Ten, July 25-26,
1966, in The Hague, the Ministers and Governors of the Ten
considered a report of their Deputies that represented a year
of search for the essential elements of agreement upon a plan
for deliberate reserve creation. In addition to these elements
of agreement, the Deputies' Report contained five workable
schemes for the ways and means of reserve creation.
Basing their work on this report, the Ministers and
Governors, in their Hague communique, agreed on basic principles
for reserve creation. They reiterated their earlier conclusion
that existing sources of reserves would not provide an adequate
basis for world trade and payments in the longer run. They
instructed their Deputies to begin a second stage of negotiations
in which the views of the whole world would be represented, through
a series of joint meetings between the Deputies of the Ten and
the Executive Directors of the Fund, representing the 106 nations
who are members of the International Monetary Fund.
In the past year, there have been four such joint meetings
of the Deputies and Executive Directors, beginning in the fall
of 1966 in Washington. It is upon the basis of this world-wide
canvass of opinion that the July meeting of Ministers and
Governors of the Group of Ten held its deliberations in London.
At the July meeting, the Ministers and Governors tackled the
difficult task of disposing of the unresolved issues. While it
proved impossible to settle all the issues, the Ministers
and Governors did announce, on July 18, that "it is expected
that agreement will be reached on an Outline plan to be embodied
in a resolution at the forthcoming Annual Meeting of the
Governors of the International Monetary Fund in Rio de Janeiro."
The world was entitled to no less from the responsible
financial officials of the Group of Ten countries meeting in
London on Saturday.
They delivered.
----In these two years of negotiations, the United States
delegation to the meetings of the Depu~ies ?f the Group of Ten
and to the Joint Meetings of the Deput~es w~th the Board of
Directors of the International Monetary Fund has been led by
- 6Under Secretary of the Treasury for Monetary Affairs Frederick L.
Deming; Governor J. Dewey Daane, of the Federal Reserve Board
and William B. Dale, United States Executive Director of the'
International Monetary Fund, have served with Secretary Deming
in these meetings.
Within the Executive Branch of the United States Government
a small interdepartmental group has met frequently to plan
U. S. positions and estimate those held by other nations. This
group, under the chairmanship of Under Secretary Deming,
consists of Governor Daane, Francis Bator, Deputy Special Assistant
to the President for National Security Affairs, Arthur Okun,
member of the Council of Economic Advisers, Assistant Secretary
of State for Economic Affairs, Anthony Solomon, and Assistant
Secretary of the Treasury fo~ International Affairs,
Winthrop Knowlton.
The principal staff work has been provided by George H. Willis,
Deputy to the Assistant Secretary of the Treasury for International
Affairs, Robert Solomon, Adviser to the Federal Reserve Board,
and Donald McGrew, U. S. Treasury Representative in Parise Other
staff work has been done by Michael Bradfield and Fred Springborn
of the Treasury Department, Frank Schiff of the Council of
Economic Advisers, and Richard Cooper and John Ghiardi of the
State Department.
During the course of these negotiations informal
consultation with interested individual members of the Congress
and of the Committees primarily concerned has provided
invaluable advice and assistance. In addition, at the outset
of the negotiations in the summer of 1965, President Johnson
designated an Advisory Committee on International Monetary
Arrangements, chaired by former Secretary of the Treasury
Douglas Dillon. This Committee has met approximately twenty times
with Secretary Fowler and other principal U. S. Government
officials concerned to advise on the course of the negotiations.
The members of the Committee are:
Edward M. Bernstein, EMB Ltd.
Kermit Gordon, President, Brookings
Institution, former Director of the
Bureau of the Budget.
Walter We Heller, Professor of
Economics, University of Minnesota.
- 7 -
Andre Meyer, Partner, Lazard
Freres & Co.
David Rockefeller, President,
Chase Manhattan Bank
Robert V. Roosa, Partner,
Brown Brothers Harriman and Co.
Frazar B. Wilde, Chairman of the Board,
Connecticut General Life Insurance
Coo, and Chairman, Board of Trustees,
Committee for Economic Development.
000
TREASURY DEPARTMENT
FOR Th'IMEDIATE RELEASE
August 29, 1967
SUBSCRIPTION AIill ALLOTMENT FIGURES FOR TREASURY I S CURRENT CASH OFFERING
The Treasury Department today announceu the subscription and allotment
figures w"ith respect to the current offering of 5-3/8~b Treasury Notes of
Series C-1971, due February 15, 1971.
Subscriptions and allotments were divided amonG the several Federal Reserve Districts and the Treasury as fol1mvs:
Federal Reserve
District
Boston
Ne\<}' York
Philadelphia
Cleveland
Richn~ond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
Totals
F-I016
Total Subscriptions Received
$ 400,413,000
1,746,429,000
220,841,000
466,193,000
277 ,653,000
365,966,000
883,768,000
288,770,000
240,548,000
336,709,000
227,923,000
546,648,000
839,000
$6,002,700,000
Total
Allotments
$ 160,843,000
682,474,000
93,545,000
193,377,000
117,113,000
156,159,000
382,542,000
132,824,000
111,482,000
163,119,000
97 ,154,000
215,773,000
653,000
$2,507,158,000
@FedFRASER