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JUN , ~ 1972
TREASURY DEPARTMENT
The Department of the
WASHINGTON, D.C. 20220
TRfASURY
TElEPHONE W04-2041
~ t.LJ
-<.tl'l-'
1..-«.".
FOR IMMEDIATE RELEASE
July
1, 1971
TREASURY TO RErUND MATURING EURODOLLAE CERTIFICATES
The Treasury today announced plans to refund $1.5 billion of Eurodollar
certificates dated April 9, 1971, and maturing on July 9. The refunding
offer will be made to overseas bran~hes of U. S. banks exclusively and will
take the form of three Eurodo~ar series of certificates of $500 million each
maturing in 32, 46 and 67 days. This spacing, in combination with other
similar issues already outstandiFg, is designed to provide a more regular
pattern of smaller amounts maturing at biweekly intervals.
The rates to be paid on.t~e new certificates will be announced
Tuesday, July 6. Details of the offering are attached.
The Department of the TREASURY
TElEPHONE W04·2041
WASHINGTON, D.C. 20220
July·l, 1971
FOR IMMEDIATE RELEASE
TREASURY TO REFUND MATURING EURODOLLAR CERTIFICATES
The Treasury is offering $1.5 billion or thereabouts of certificates of
indebtedness to overseas branches of American banks. These certificates will
refund $1.5 billion of 5-3/8% Treasury Certificates of Indebtedness, Eurodollar
Series A-1971, dated April 9, 1971, and maturing July 9, 1971.
The new certificates are being offered as a "strip" of three maturities.
Subscriptions are invited only fram foreign branches of U. S. banks and
allocations will be in equal amounts of the three maturities. All certificates
will be dated July 9, 1971, and will mature as follows:
Amount
$500,000,000
500,000,000
500,000,000
Number of days to
maturity
Mature
August 10, ·1971
August 24, 1971
September 14, 1971
32
46
67
Interest rates to be paid by the Treasury on these certificates will be
announced on July 6,1971.
Subscriptions will be received at the Treasury from foreign branches
until 5:30 p.m. (E.D.S.T.) Wednesday, July 7, 1971. Payment will be due on
Friday, July 9, 1971, and may not be made by credit to Treasury tax and loan
accounts.
Subscriptions are invited fram foreign branches of U. S. banks up to any
amount not to exceed the greater of:
(1)
. (2)
The daily average outstanding Eurodollar borrowings of the
subscriber's head office from its foreign branches, and the
daily average of Eximbank notes and Eurodollar series of'
Treasury certificates of indebtedness held by such branches
in the four weeks ended June 9, 1971, or
$10,000,000.
This refunding approach permits all U. S. banks with foreign branches to
subscribe for the new certificates up to at least $10,000,000 whether or not
they have established reserve-free Eurodollar bases. These certificates must
(OVER)
~-
be held by foreign branches and should not be supported by net advances of
funds from head offices.
Subscriptions will be allotted in full in equal amounts of each maturity
up to the principal amount of 5-3/8% Treasury Certificates of Indebtedness,
Eurodollar Series A-197l, held by the subscriber or $3,000,000, whichever
is greater. Allocation of remaining amounts will be on a pro rata basis
according to the remaining amount of each subscription. Allotments will be
rounded to the nearest $3,000. The, Treasury reserves the right to allot a
total amount of certificates in excess of $1.5 billion.
Holdings of the certificates of indebtedness by overseas branches may
be counted as part of the subscriber's reserve-free base, if any, of Eurodollar
deposits established by the Federal Reserve Board. The certificates will be
in registered form and transferrable only with the permission of the Treasury.
The Dtpartmentof the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE W04·2041
FOR IMMEDIATE RELEASE
July 2, 1971
H. J. HINTG EN NAMED
COMMISSIONER OF THE PUBLIC DEBT
Secretary of the Treasury John B. Connally announced the appointment of
H. J. Hintgen, ·on July 1, 1971, to the post of Commissioner of the Public Debt,
heading the Bureau of the Public Debt in the Department's Fiscal Service. He
succeeds Donald M. Merritt who recently retired.
A career official, Mr. Hintgen has been in the Federal service since
November 1934, all with the. Treasury Department. He has been with the Bureau
of the Public Debt since 1946 and has served as Assistant Commissioner since
1967.
Mr. Hintgen is a native of Bismarck, North Dakota, and a graduate of the
University of Minnesota, fram which he received a BA degree.
He is married to the former Betty Campbell of Joplin, Missouri, and
they reside at 1600 South Eads Street in Arlington, Virginia.
C-85
FOR M1EDIATE RELEASE
July 2, 1971
NAMED
COMMISSIONER OF THE PUBLIC DEBT
H. J.
H~GEN
Secretary of the Treasury John B. Connally announced the appointment of
H. J. Hintgen, on July 1, 1971, to the post of Commissioner of the Public Debt,
heading the Bureau of the Public Debt in the Department1s Fiscal Service. He
succeeds Donald M. Merritt who recently retired.
A career official, Mr. Hintgen has been in the Federal service since
November 1934, all with the Treasury Department. He has been with the Bureau
of the Public Debt since 1946 and has served as Assistant CO~~lissioner since
1967.
Mr. Hintgen is a native of Bismarck, North Dakota, and a graduate of the
University of Minnesota, from which he received a BA degree.
He is ma,-r-riecl to t:b.e fOT!::eT Betty C::::....~pbcll cf Joplin, l.1';'.ssouri, ancl
they reside at 1600 South Eads Street in Arlington, Virginia.
C-85
The Department of the
WASHINGTON, D.C. 20220
NTION:
TREASURY
TElEPHONE W04·2041
FINANCIAL EDITOR
RELEASE 6:30 P.M.,
ay, July 2, 1971
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
1he Treasury Department announced that the tenders for two series of Treasury
,s, one series to be an additional issue of the bills dated
April 8, 1971
, and
other series to be dated
July 8, 1971
, which were offered on June 25, 1971,
! opened at the Federal Reserve Banks today,
Tenders were invited for $2,300,000,000,
.hereabouts, of 91-day bills and for $ 1,600,000,000, or thereabouts, of 182 -day
.s. The details of the two series are as follows:
rE OF ACCEPTED
)ETITIVE BIDS:
High
Low
Average
91-day Treasury bills
October 7, 1971
Approx. Equiv.
Price
Annual Rate
182-day Treasury bills
maturin~ January 6, 1972
Approx. Equiv.
Price
Annual Rate
5.538%
97.200'£/
97.140
5.657%
97.162
5.614% !I
maturin~
98.652
98.598
98.618
Y
5.333%
5.546%
5.467%
!I
y Excepting 1 tender 0 f $400,000; E! Excepting 1 tender of $300,000
11% of the amount of 91-day bills bid for at the low price was accepted
31% of the amount of 182-d~ bills bid for at the low price was accepted
AL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
istrict
oston
'ew York
'hi1ade1phia
~leve1and
tichmond
lt1anta
!hicago
~t. Louis
1inneapo1is
{ansas City
Jal1as
:;an Francisco
TOTALS
Applied For
$ 23,600,000
2,645,605,000
20,160,000
32 ,395 ,000
24,980,000
24,000,000
168,705,000
25,295,000
12,725,000
13,720,000
35,180,000
267,640,000
Ap,E1ied For
Acce,Eted
22,310,000
$
$ 11,810,000
1,787,895,000
2 , 72 7 , 145 , 000
20,365,000
40,365,000
43,550,000
52,550,000
16,780,000
16,780,000
34,110,000
38,110,000
166,595,000
166,595,000
45,195,000
49,195,000
17,880,000
17,880,000
38,185,000
38,185,000
31,485,000
36,485,000
86,36°2°°0
127,36°2°°0
$3,332,960,000
$2,300,210,000
£I
$3,294,005,000
AcceEted
3,100,000
1,314,255,000
5,160,000
24,025,00q
12,980,000
13,200,000
111,975,000
13,795,000
10,725,000
11,420,000
13,800,000
65 2630,000
$
$1,600,065,000 ~
Includes $248,370,000 noncompetitive tenders accepted at the average price of 98.618
Includes $121,525,000 noncompetitive tenders accepted at the average price of 97.162
These rates are on a bank discount basis. The eqUivalent coupon issue yields are
5.6~ for the 91-day bills, and 5.87% for the 182-day bills.
6'
The Dtpartmentof the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE W04·2041
MEMORANDill1 TO THE PRES S :
July 5, 1971
Memorial services for Mrs. Dorothy Andrews Kabis,
Treasurer of the United States who died Saturday, are
being arranged for Friday, July 9, at 2:00 p.m. at the
National Presbyterian Church and Center, 4101 Nebraska
Avenue, N.W., Washington, D.C.
The Reverend Dr. Edward L.R. Elson, }iinister of the
National Presbyterian Church and Center and Chaplain of
the United States Senate, will officiate. Dr. Elson will
be assisted by Father Martin J. McManus of San Diego and
Washington, D.C., a personal friend of Mrs. Kabis.
MrL. Kabis will be interred in her family's plot in
Center Cemetery, Sheffield, Mass., on Wednesday, July 7, at 2 p.m.
A memorial service will be held at St. Paul's Methodist Church
in Odessa, Delaware on Thursday, July 8 at 2:00 p.m.
Attached is a copy of a release distributed by the
Treasury Department on July 4 pertaining to the death of
Mrs. Kabis.
ERRATA: There are two corrections in the final paragraph
of the attached release. That paragraph should read:
"She was married to Halter Lawrence Kabis las::
September in Hashington, D.C. Mr. Kabis is prillcipal
of the Charles W. Bush School for the Trainable
Handicapped in Wilmington, Delaware, and is chairman
of the Air & Hater Resources Commission in Delaware."
In lieu of flowers donations can be made to the Heart
Fund and the National MUltiple Sclerosis Soc~ety.
The Department of the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE W04·2041
MEMORANDUM TO THE PRES S :
July 4, 1971
Dorothy Andrews Kabis, 33rd Treasurer of the United States,
and fifth woman to hold the post, died suddenly Saturday in
Sheffield, Massachusetts. She was stricken after visiting her
father's gravesite.
Mrs. Kabis, 54, was appointed Treasurer by President
Nixon in March 1969.
Born in Wilkes-Barre, Pennsylvania, and a long-time resident
of Delaware, Mrs. Kabis served for five years as President of the
National Federation of Republican Women. In May of this year she
received the George Washington Honor Medal Award of the Freedoms
Foundation at Valley Forge for her "outstanding efforts in
building a better understanding of our constitutional government,
the dignity and worth of the individual and our free enterprise
system."
In 1964 Mrs. Kabis was
of the United States as one
in the country, and in 1966
Achievement for the Year by
Women's Clubs.
honored by the League of Women Voters
of twelve outstanding political women
she was selected as Woman of
the Delaware State Federation of
Mrs. Kabis had a long association with the Republican Party
in numerous national, state and local capacities. She had been
actively affiliated with the Daughters of the American Revolution
and the General Federation of Women's Clubs.
Mrs. Kabis was a member of St. Paul's Methodist Church in
Odessa, Delaware, and had served it in both pastoral and
administrative capacities.
She was married to Walter Lawrence Kabis last September in
Washington, D.~.
Mr. Kabis is principal of the Charles W. Bush
School for the Trainable Handicapped in Washington, Delaware,
and is chairman of the Water Resources Commission in Delaware.
- 2 -
~
In addition to her husband, Mrs. Kabis is survived by her
mother, Mrs. Mabel Aston Andrews of Wilmington, Delaware, two
brothers, Henry S. Andrews of Newport, Delaware and
The Reverend Howard A. Andrews of Sterling, Massachusetts,
five step-children and two step-grandchildren.
Mrs. Kabis will be interred in her family's plot at
Sheffield, Massachusetts, Wednesday, July 7. A memorial service
will be held at St. Paul's Methodist Church in Odessa, Delaware,
Thursday, July 8 at 2:00 p.m. Plans for a memorial service in
Washington, D. C. will be announced later.
Flags will be flown at half staff at all Treasury
installations beginning Monday morning July 5 until time of
interrment, Wednesday July 8.
Attached is a statement by Secretary of the Treasury
John B. Connally.
Attachment
- 3 -
Statement by Treasury Secretary John B. Connally:
I am shocked at the untimely death of
Mrs. Dorothy Andrews Kabis and I share with her
husband, her family and her many friends across the
nation a deep sense of loss.
Mrs. Kabis brought extra dimensions to her high
office of Treasurer of the United States.
All of us who were privileged to know her and
to work with her valued her warmth, genuine love
for people, dedication, talent, vitality and loyalty.
I extend my deepest sympathy to her husband,
all the members of her family, and to her many
friends in their bereavement.
\
The Department of the
TREASURY
TElEPHONE W04-2041
WASHINGTON, D.C. 20220
FOR RELEASE ON DELIVERY
STATEMENT BY THE HONORABLe CHARLS E. tvALKER
UNDER SECRETARY OF THE TREASURY
BEFORE THE SUBCOMMITTEE ON INTERNATIONAL FINANCE
OF 'mE HOUSE BANKING AND CURRENCY COMHITTEE
IN SUPPORT OF H.R. 8750, A BILL TO AUTHORIZE
FURTHER U. S. CONTRIBUTIONS TO THE
INTERNATIONAL DEVELOPMENT ASSOCIATION
TUESDAY, JULY 6, 1971, 10:00 A.M.
Mr. Chairman
I
H"R.
Am
8750.
re~uest
~nd
Members of the Subcommittee:
happy to appear this morning in support of
Th.is Bill embodies the Administration
which would authorize U. S. participation in the
Third Replenishment of the resources of the International
Development Association (IDA), an affiliate of the World
Bank.
Under the proposal, the United States would join
with eighteen other developed countries in providing a
total of $2.4 billion, over three years, for development
financing on concessiona1 terms in the poorest of the
developing countries.
The United States would put up
$960 million -- 40 percent .- or $320 million per year.
Maximum annual cash flows will be far lower since our
contribution is made in the form of letters of credit
to be drawn over an extended period.
IDA is the leader in multilateral efforts to help
86
- 2 countries with low per capita incomes and with limited
capacity to borrow internationally.
No comparable
world-wide institution exists to provide hard currency
financing for major capital projects on terms appropriate
for these countries.
IDA is, as well, the cornerstone of our efforts to
have other developed countries share with us the burden of
providing assistance on concessionary terms, mobilizing
contributions from substantially all of the economically
advanced countries.
When IDA started in 1960, those other countries were
providing an aggregate of $85 million a year through this
institution.
In the present replenishment, they are to
provide an aggregate of $480 million a year -- more than a
five-fold increase.
During the same period, the U. S.
share of the rising level of IDA. contributions has declined
moderately.
Mr. Chairman, the situation is urgent.
As of June 30,
the funds which could be committed from the second replenishment were exhausted.
The other economically advanced countries in IDA are
- 3 to provide contributions aggregating $1.4 billion.
Enough
of these countries have taken the necessary steps to
fulfill their pledges so that, with our contribution, the
conditions required to bring the replenishment agreement
into effect would be met.
On the other hand,failure of
the United States to act would make it impossible for the
agreement to come into effect at all.
IDA's management is currently seeking advance commitments from other contributing countries to bridge the gap
left by delay on the part of the United States.
While
there is precedent for this from the last replenishment,
I must emphasize that other countries make such advances in
the expectation that the United States will carry out its
part of the international bargaino
Mr. Chairman, I can well understand how some could ask
why, when domestic needs are so great, the United States
should be providing substantial sums to help meet problems
in other lands.
The brief_answer is that in a world community
where goods, people, and ideas travel rapidly, no nation's
concern with other nations can stop at the border.
Neglect
today may well generate situations that demand our attention
/
I
~
- 4 tomorrow, and at higher cost.
The mature nations of
the free world now recognize the need to help the poorer
nations in their efforts to improve economic and social
conditions.
And, in relative terms, we no longer lead
among the affluent nations in meeting our responsibilities
in this regard.
President Nixon's recent proposal for reshaping our
foreign assistance effort reflects the continuing high
priority this Administration assigns to development
assistance.
The replenishment of IW\ is a vital element
in the President's program, which gives special emphasis
to an increased role for multilateral development assistance.
At least eight arguments can be outlined as the
rationale in support of this shift toward multilateral
cooperation:
1. Burden-sharing. Multilateral agencies are the
most effective means available for achieving an
equitable sharing of the cost of development
assistance.
2. Multinational Expertise. Hith a multinational
staff, the international financial institutions
have a pool of knowledge and expertise on development problems which no single country can provide.
- 5 -
3. Assistance on Basis of Development Need. The
multilateral agencies allocate assistance on the
basis of development need, relatively free of
political coercion and pressures often evident
in bilateral lending between industrialized and
developing nations.
4. Collective Judgment on Development Policies. The
international lending agencies bring international
influence on a collective basis to bear on recipient
countries to maintain economic disipline and to follow
generally acceptable development policies.
5. Flexibility in Imposing Performance Standards. The
international financial institutions have broad
flexibility to set performance standards and loan
conditions because the institutions are not obligated
to the foreign policy of any single donor.
6.
Promote Open Economies and Fair Treatment ~f Foreign
Investment. The international lending institutions
are an important force in developing more open and less
restrictive national economies. The World Bank has a
firm policy not to lend to countries which are not
taking satisfactory steps toward adequate compensation
for foreign capital investment that has been expropriated.
7. Provide a Shielding Device. The international
lending agencies relieve this nation and any other single
donor country of undue responsibility for the economic
development assistance of anyone particular recipient
country.
8. Encourage Self-Help. The international lending
agencies require developing nations to establish their
own sound performance standards, solid programs, and
reasonable development priorities.
These advantages were recognized and endorsed in the
Peterson Report on the future organization of U. S. development
assistance efforts.
This report formed the basis for President
/
/----
.'./
- 6 Nixon's foreign aid message of last September 15, in which
the President said,
"International institutions can and should play a
major creative role in the funding of development
assistance and in providing a policy framework through
which aid is provided.
"Such a multilateral approach will engage the entire
international community in the development effort,
assuring that each country does its share and
that the efforts of each become part of the systematic
and effective total effort. I have full confidence
that these international institutions have the capability to carry out their expanding responsibilities."
I think you will agree that these advantages are indeed
significant.
A clear shift has in fact taken place over the past
decade in the direction of greater reliance on multilateral
channels of development finance.
As is shown in Chart A,
the annual level of multilateral lending to developing
countries has risen from $900 million ten years ago to $3.2
billion in 1970.
At the same time, annual U. S. bilateral
assistance (AID loans and grants) has declined from $2.4
billion to $1.6 billion.
The mix of U. S. resources provided
bilaterally and multilaterally has also changed significantly
in the multilateral direction, as shown in Chart B.
The large volume of multilateral financing -- cumulatively,
$16 billion over the last decade -- was, of course, carried
((
- 7 on with the aid of resources drawn from all the members of
the international institutions.
Chart C shows that our own
contribution of taxpayer funds to help make that volume of
lending possible was only $2.9 billion over the decade.
We
supplemented these with guaranty authority (i.e., callable
capital) of $924 million, which allowed private capital markets
to furnish a major portion of total resources.
These brief statistics make it clear that multilateral
financing can expand dramatically.
As a result, a very
substantial leverage in terms of development financing
results can be obtained -- if the United States takes up
its fair share.
The specifics of the proposed IDA replenishment are
dealt with in detail in the Report of the National Advisory
Council that has been made available to the Committee.
Accordingly, I will not go beyond the outline I have just
given of the proposal, its rationale and its benefits
to the United States, expept to comment on its implication
for the U. S. balance of payments.
I am aware of the fact that there are some who believe
that this replenishment of IDA should incorporate so-called
'~a1ance
of payments safegurads" similar to those which were
part of the second replenishment at U. S. insistence.
In
17
- 8 -
brief, those safeguards provided for accelerated use of the
contributions of others.
Correspondingly, they limited as
long as possible the use of the U. S. contribution to the
amount of IDA-financed goods procured in the United States.
This arrangement deferred the balance of payments impact of
that IDA contribution, but did not eliminate it.
It is not
a tying arrangement, since the principle of international
competitive bidding is preserved.
Although I would not deny that our balance of payments
situation is serious, we should not utilize the technique of
the earlier replenishment.
Such a technique is only a
deferral, and does not attack the real problem.
Let's face the hard facts.
Our balance of payments
problem -- which is essentially that of equity in trading
arrangements and the sharing of military burdens -- will
not be solved by palliatives that fail to deal with root
causes.
Moreover, reliance over the years on such actions
may well have postponed the inevitable confrontation of
these fundamental deficiencies.
I believe, therefore,
that we should proceed with this multilateral agreement as
it was negotiated.
- 9 -
In conclusion, Mr. Chairman, I wish to emphasize that
IDA replenishment is critical to the entire multilateral
effort in development finance.
initiative.
IDA was set up at U. S.
It has served well our development and burden-
sharing goals.
It is out of money and has stopped making
firm new loan commitments.
Eighteen other countries are
ready to put up $1.4 billion as their part of the replenishment agreement.
That agreement cannot and will not come
into effect unless we act affirmatively.
I urge that this committee take the steps necessary
to permit the United States to fulfill its appropriate role
in this vital instrument of economic and social development.
\.I11CU. I..
u.s.
n
BILATERAL ECONOMIC ASSISTANCE COMPARED TO ECONOMIC LOAN
ASSI~TANCE'OF THE INTERNATIONAL FINANCIAL INSTITUTIONS 1962-1970
DOLLARS
3'0001--l---i---t---t---~--~- ~_--:;~L_-J
Millions
__
,500
r-----l~--
••••••••••
.000
2
1,500
..._- .....
.
'••
_L
...
-.•
• • • •
. . . . . . ..
c-~~~~~~fS/~~~.L.~. .~~
1.000
Tota' muhi/ateTa' / '
r ----~------t------r-----i------t-----4------+----~~----J
500 l
O~'------~--------~------~--------------~------~------~--------~------~
1962
'63
'64
'65
'66.
'67
'68
'69
'70
'71 "\.
Fiscal Years*
Sources: AID and IFrs. *108 and AD8 components· calendar years.
J
May 28.1971
~')
Chart B
TOTAL U.S. BILATERAL ECONOMIC ASSISTANCE AND
TOTAL U.S. CONTRIBUTIONS TO MULTILATERAL ORGANIZATIONS 1962-1970
DD LLARS
;~."a;.
Millions
[:::~~r-------t-------t-~:;~~~--~TJot~a~/~m:U~h~u;'a~re~,,=al;-----~------l-----~
3,000
2.500
)I' aod bilateral
...••••••
••••••••••
...
2.000
1
1.
-.•
.......
I
I
Total bilateral./'" ,..........
I
500
1,0001---+----1I
'63
'64
..
I f-.......L.......·1
I
"'""'" ------.........
-- "'~----j
-
I
I
-11---+1-~
_----t-_ --.1,'"
01
1962
\.
...
'65
'66
'67
Fiscal Years*
Source: IFI Annual Repons and AID *108 and A08 components in calendar years
'68
'69
'70
'71
J
May 28. 1971
~
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J
.
,.a
en-'"
·.... 2
=c
a..-
!:~
=2
'-'-
....
en. ....
· en
c ....
-
.... cc
..... y:
.... tJ
'-'2
~c
,-,-2
=. .
...... cC'
:::i2
~
a..c
-....
=cc
:E~
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Z
-
CI)
Q
Cf)
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ft
~
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~C>
~ :E----~~~-----------~~----------~C>~--------~~----------~I
a:: c
«
.......
-
~
~
;L/
:;;:;
--
July 6, 1971
FOR IMMEDIATE RELEASE
INTEREST RATES ON REFUNDING OF
~ODOLLAR
CERTIFICATES
The Treasury announced today that interest rates for the $1.5 billion
strip of Eurodollar Series Certificates of Indebtedness offered on July 1
to refund an equal amount of certificates maturing on July 9 will be as
follows:
SERIES
MATURITY..1971
RATE PER
DATE
DAYS
C..1971
A'Ug. 10
32
6-5/8%
D-1971
Aug. 24
46
6-5/8%
E-1971
Sept. 14
67
6-5/8%
ANNUM
Interest will be computed for the actual number of days to maturity
based on a 365-day year. It will be paid with the principal at the maturity of each series.
2£
The Department of the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE W04·2041
FOR IMMEDIATE RELEASE
July 6, 1971
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
$3,900,000,000, or thereabouts, for cash and in exchange for Treasury
in the amount of $3,809,920,000,
bills maturing
July 15, 1971,
as follows:
9l-day bills (to maturity date) to be issued July 15, 1971,
itt the amount of $2,300,000,000,
or thereabouts, representing an
additional amount of bills dated April 15, 1971,
and to mature
Oct-ober 14, 1971
(CUSIP No. 912793 LM6) originally issued in
the amount of $1,600,225,000, the additional and' original bill~ to be
freely interchangeable.
182- day bills, for $1,600,000,000, or thereabouts, to be dated
July 15, 1971,
and to mature January 13, 1972,
(CUSIP No. 912793 MH6).
The bills of both series will be issued on a discount basis under
competitive and noncompetive bidding as hereinafter- provided, and.at
maturity tqeir face amount will be payable without interest. They will
be issued in bearer form only, and in denominations of $10,000,
$15,000, $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,Ju1y 12, 1971.
Tenders will not be received
at the Treasury Department, Washington. Each tender mus·t be for a
minimum"of $10,000. Tenders over $10,000 must be in multiples of
$5,000. 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
- 2 submit tenders except for their Qwn account. Tenders will be reoe
without deposit from incorporated banks and trust companies and f~
responsible and recognized dealers in investment securities. Te
from others must be accompanied by payment of 2 percent of the fae ,
amount of Treasury bills applied for, unless the tenders are accomP,
by an express guaranty of payment by an incorporated bank or trust \,
;,
company.
~.
"
t.
Immediately after the closing hour, tenders will be opened at
Federal Reserve Banks and Branches, following which public announ~~
will be made by the Treasury Department of the amount and price rangt
of accepted bids. Only those submitting competitive tenders will be
advised of the acceptance or rejection thereof. The Secretary of the
Treasury expressly reserves the right to accept or re1ect any or all
tenders, in whole or in part, and his action in any such respect shall
be final. Subj ect 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 deci~l
of accepted competitive bids for the respective issues. Settlement f~
accepted tenders in accordance with the bids must be made or complet.
at the Federal Reserve Bank on July 15, 1971,
in cash or other immediately available funds or in a like face amQuntl
Treasury bills maturing
July 15, 1971.
Cash and exchange teadel
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.
Under Sections 454 (b) and 1221 (5) of the Internal Revenue Coo
of 1954 the amount of discount at which bills issued hereunder are SD:
is considered to accrue when the bills are sold, redeemed or othe~il
dispo~ed of, and the bills are excluded from conside~ation as capitd
assets. Accordingly, the owner of Treasury bills (other than life
insurance companies) issued hereunder must include in his income tax
return, as ordinary gain or loss, the difference between the price pe
for the bills, whether on original issue or on subsequent purchase, an
the amount actually received either upon sale or redemption at matud
during the taxable year for which the return is made .
. Treasury ~epartment Circular No. 418 (current revision) and th1&
not1ce, prescr1be the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained'f~
any Federal Reserve Bank or Branch.
000
2.J-(
lbeDtpartmentof the
WASHINGTON, D,C. 20220
TREASURY
TElEPHONE W04·2041
FOR IMMEDIATE RELEASE
STATEMENT BY THE HONORABLE CHARLS E. WALKER
UNDER SECRETARY OF THE TREASURY
BEFORE THE
SENATE BANKING, HOUSING AND URBAN AFFAIRS COMMITTEE
ON S. 2202
nuDAY,
JULY 9, 1971 at 10 a.m.
Mr. Chairman and Members of the Committee:
It is a pleasure to appear here today to present the
views of the Administration with respect to S. 2202, a bill
which authorizes emergency loan guarantees to major business
enterprises. I regret that Secretary Connally, who is out
of the city, could not be here today to testify on this
bill. I am appearing in his behalf.
On June 22, this Committee concluded twelve days of
public hearings on S. 1891, which would provide $250 million
in Federal guarantees. It was contemplated that these loan
guarantees would be made available to the Lockheed Aircraft
Corporation and thus would enable Lockheed to continue its
program to produce a tri-jet airbus (the "Tri Star," or
L-10ll), and thereby to avoid bankruptcy. As a result of
the unique agreement which the Treasury has negotiated with
Lockheed's creditor banks, the risk to the Government would
be small.
However, the benefits to this nation would be great.
Previous testimony revealed that:
Over 60,000 jobs could be saved.
More than $1 billion in otherwise almost useless
inventory would be converted into usable equipment.
C-87
-2The nation's largest defense contractor would be
able to continue as a going concern.
The world market for airframes, which is expected
to be substantial, would benefit from additional
competition, and our future export position would
be strengthened.
MQst important is the avoidance of the blow to
confidence which a Lockheed failure surely would
produce. At this stage of a promising and broadbased economic recovery, the maintenance of confidence of both investors and consumers is the highest
priority.
Mr. Chairman, I think the record is very clear on these
points. Our primary interest is to obtain legislation which
would allow temporary assistance to Lockheed in the form of
loan guarantees. However, we understand and support the
Committee's efforts to obtain testtmony on a broader proposal such as S. 2202, which would create standby guarantee
authority in a larger dollar amount (with general standards
and procedures for such guarantees) when they are in the natil
interest.
As you know, the Board of Governors of the Federal
Reserve System proposed enactment of such authority in its
Annual Report, and you, Mr. Chairman, along with Senator
Tower, introduced the "Federal Reserve Bill," S. 2016, on
June 7. Your new bill, S. 2202, is substantially a combination of S. 2016 and some of the more restrictive features
of the original Lockheed legislation, S. 1891.
Mr. Chairman, we were pleased to assist your staff in
drafting S. 2202. Should the Committee decide to act
favorably on S. 2202, we would support its enactment, with
-3the understanding that Congress, in passing the bill, is
in effect approving up to $250 million in loan guarantees
to Lockheed.
S. 2202 would establish an Emergency Loan Guarantee
Board composed of three of the top Government officials
charged with the nation's overall economic and financial
policy--the Secretary of the Treasury, as Chairman, the
Secretary of Ca..erce, and the Chairman of the Federal
Reserve Board.
Since the legislation contemplates only standby
authority, it would Bot appear that a permanent staff would
be required. Staff assistance would be drawn from the
Government units represented on the Board. The statute permits the Board to establish such procedures as it deems
appropriate.
Guarantees may be granted under the bill in circumstances where the Board finds that: (1) the loan is
needed to enable the b9rrower to continue to furnish
goods or services to the public and failure to meet this
need could adversely and seriously affect the economy of
the Nation; (2) credit is not otherwise available m the
borrower on reasonable ter..; and (3) the prospective
earning power of the enterprise, together with the character
of the security pledged, if any, furnishes reasonable
assurance that the enterprise will be able to repay the
loan within the time fixed, and afford reasonable protection
to the United Statea.
Loans guaranteed under the bill would be payable in
not more than five years, but would be renewable for not
more than an additional five years. Guaranteed loans
would bear interest (exclusive of guarantee fees and
service charges, if any) at rates not to exceed a rate
determined by the Board to be reasonable. These provisions
are comparable to those contained in S. 1891.
-4Section 5 of the bill provides that in negotiating •
loan guarantee, the Board should make every effort to
arrange that the pa,aent of the principal of and intereat
on any loan guaranteed shall be secured by sufficient
property of the enterprise to fully protect the Govern_nt. Thia proviaion is different frOID Section 6 in
S. 1891 which requires a first a~d prior lien on the
property of the enterprise. We recognize that the provision in S. 1891 raiaea technical and legal arsuments by
placing the Federal Government ahead of previously secured
creditors.
With respect to Lockheed, however, the Govemment'a
interest is fully protected even if Section 6 in S. 1891
were amended or eliminated, since tbeMemorand. of UDderstanding which Treasury has negotiated with the banks and
Lockheed provides for the collateralization of suificient
assets to fully secure a $250 million loan guarantee. It
is essentially this type of arrangement which the bill
presently before the COIIIIIIittee contemplates. The value of
the property needed for collateral is that amount which
reasonably could be anticipated from a forced sale or
bankruptcy situation.
In a general bill such as S. 2202, language such a8
that in Section 5 provides the Government with the needed
flexibility to deal with companies in varying financial
circumstances and with a wide range of capital structures.
The bill authorizes max~ aggregate guarantees of
$2 billi()n. It would establish in the Treasury an Emergenc,
Loan Guarantee FUnd from which the expenses and obligatl.'
of the Board would be met. The Board would prescribe
and collect a guarantee fee in connection with each loan
it guarantees and such fees would be deposited in the
Emergency Loan Guarantee Fund.
-5Section 12 provides in essence, that if any guarantee
is not fully collateralized as contemplated in Section S,
the Board would have to notify this Committee and the
House Banking and Currency Committee at least ten days
before such guarantee would become effective. (With respect
to Lockheed, notification would not be required since the
Government's exposure is fully collateralized within the
meaning of Section 5.)
We are aware that there is some senttmeDt in this
Commit~ee for the Congress to participate actively in the
final approval of any loan guarantees under this proposed
legislation.
Should the Committee decide to include provisions
establishing procedures for such approval or disapproval,
we would strongly urge that such procedures be waived for
the Lockheed guarantee. The Lockheed situation has already
been intensively reviewed by this Committee, and time is .
a critical element in effectively assisting this enterprise.
Conelusion
Mr. Chairman, a strong case can be made for legiSlation that can be used to help more than one business
concern -- a standby guarantee authority that is effective
in the long run as well as the short run. The collapse
of any productive company is detrimental to the economy;
the collapse of a viable major enterprise should be avoided
if it is'a temporary situation that can be alleviated at
small risk to the GovelDment.
In the Lockheed case, not only would a major disturbance to our economy be avoided, but also continued competition within a major industry would be fostered, u. S.
leadership in a significant export industry would be continued, and the Nation's largest defense contractor would
be retained intact.
-6-
Our immediate concern is to obtain $250 million iD
loan guarantee authority for the Lockheed Aircraft Corporation. If the Committee deems it wiser to recommend.
broader bill, such as S. 2202, then we would support .ucb
legislation and urge its prompt enactment.
0000
1-;
lheDtpartmentof the TREASURY
WASHINGTON. D.C. 20220
TElEPHONE W04-2041
FOR IMMEDIATE RELEASE
STATEMENT OF THE HONORABLE EUGENE T. ROSSIDES
ASSISTANT SECRETARY OF THE TREASURY FOR. ENFORCEMENT,
TARIFF AND TRADE AFFAIRS, AND OPERATIONS
BEFORE THE HOUSE COMMITTEE ON FOREIG~ AFFAIRS
SUBCOMMITTEE ON EUROPE
FRIDAY, JULY 9, 1971, 10:00 A.M.
Mr. Chairman and Members of the Committee:
On behalf of the Treasury Department I welcome
this opportunity to appear before you today to
discuss Treasury's role in President Nixon's antiheroin action program and to comment upon the overall anti-drug abuse program of this Administration.
The problem of drug abuse and particularly heroin
abuse was not created over night,and it will not
be cured over night, The drug prohlem of the 1950's
became the drug crisis of the 1960's. It will take
hard work and cooperative effort in the 1970's by
many groups on the Federal, State and local levels
to win this battle.
Early in his Administration the President
moved on several fronts with a multidimensional
action program:
First, he elevated the drug problem to the
foreign policy level and has taken personal initiatives in soliciting the cooperation of other
governments.
C--88
2
Second, he stressed the crucial role of education, research, and rehabilitation and provided for
increased funds and emphasis in these essential
areas.
Third he recommended differentiation in the
criminal p~nalty structure between heroin and
marijuana; and flexible provisions for handling
first offenders.
Fourth, he provided a substantial increase
in budgetary support for Federal law enforcement
in this area.
Fifth, he recognized the central role of
the states and the need for close Federal-state
cooperation ina unified drive against drug abuse;
and
Sixth, he stressed total community involvement
the private sector as well as governmental agencies
in this anti-drug abuse drive.
For the first time in history, we have seen
not only the total involvement of the institution
of the Presidency in the battle against drug abuse,
but also the personal involvement of the President.
In my judgment this program has arrested the
United States' incredible downward slide into drug
abuse -- although we have a long and steep climb
ahead of us to return to the level from which we
fell -- and has alerted the international community
to the global problem of drug abuse.
1.
Foreign Policy and Presidential Initiative
One of the serious errors of the past was
the failure to appreciate drug abuse as a worldwide
problem calling for an international response. Prior
to this Administration, international activity by the
United States was principally on the enforcement level.
L'
3
President Nixon raised drug abuse to the foreign
policy level at the beginning of his Administration
and took personal initiatives to elicit the cooperation of other governments.
The result of this major change in the approach
of the Executive Branch was to make the Department
of State, as the primary representative for communicating to foreign governments the vital interest
of the United States, responsible for doing everything necessary to advance our anti-drug abuse
policy through diplomacy.
Secretary of State William P. Rogers has given
high priority and personal leadership to the Department of State's efforts in this areao
This role of the State Department in the
Administration's war on drugs has had a unique
and important impact
Through the use of diplomacy
we have achieved a substantial· advance in our objec-'
tives.
0
The Administration's diplomatic efforts have
been worldwide. The President's words, in his
address to the United Nations on its 25th Anniversary
in October, 1970, sum up the problem:
"It is in the world interest that the
narcotics traffic be curbed. Drugs
pollute the minds and bodies of our
young, bring misery, violence, and
human and economic waste. This scourge
of drugs can be eliminated thr0ugh
international cooperationo"
An example of such cooperation is the effective
partnership we have developed with the Government of
Mexico
Operation Cooperation, the successor to
Operation Intercept, has led to joint efforts by
the two governments in the area of opium poppy
and marijuana eradication and smuggling suppressiono
0
4
Both Governments realize that a great deal more
has to be done, particularly along our common
border
0
The French Government has pledged its cooperation and has increased substantially its enforcement efforts against heroin production and trafficking.
The most important and dramatic diplomatic news
was the joint announcement on June 30, 1971, by
Prime Minister Erim of Turkey and President Nixon
that Turkey has decreed that within one year,
in accordance with the law of Turkey, the opium
poppy will no longer be planted in Turkeyo
The Government of Turkey has pledged that,
in the meantime, it would make a full effort to
prevent the diversion of the crop now being harvested.
The President has called the action of Prime Minister
Erim important and courageous o
5
2.
Education, Research, and Rehabilitation
The drug abuse problem is one of both supply
and demand, and President Nixon's response has been
guided accordingly. While we are working to eliminate
the supply at the sources, to stop the smuggling of
illicit drugs into the United States, and to stop the
distribution of illicit drugs internally, eliminating
the demand for drugs among our young is also central
to success.
The key to eliminating the demand for drugs lies
The vast majority of youth, when given
access to the facts, will reject drug abuse as against
their own self-interest as well as against the interest
of their nation.
in education.
President Nixon is convinced that much of our problem
is attributable to the mass of misinformation and streetcorner mythology which has filled the vacuum left by our
failure in the past to deal with the young on a mature,
reasoned and factual basis. In the past, our Government
took the easy but ineffective route of '~o as I say
because I say so" rather than the more difficult route
of clearly presenting the facts necessary for informed
decision.
In his June 17, 1971 message, President Nixon
stressed "reclamation of the drug user himself," and
has requested Congressional approval of a total of
$105 million in addition to funds already contained
in the FY 1972 budget to be used solely for the treatment
and rehabilitation of drug-addicted individuals. He
asked the Congress to provide an additional $10 million
in funds to increase and improve education and training
in the field of dangerous drugs. This will increase the
money available for education and training to more than
$24 million.
6
3.
Differentiation in Penalty Structure and Flexible
Provisions for Handling First Offenders
Before enactment of the Controlled Dangerous
Substances Act of 1970, Federal laws erroneously
treated marijuana as a narcotic drug and compelled
felony sentences upon conviction for any drug offenses
for first offenders. The harsh and unrealistic effects
of the Federal law generated credibility problems with
our youth and posed' enormous problems for Federal
prosecutors and judges in dealing with first offenders.
president Nixon proposed a change in the penalty
structure which for the first tline provided a reasonable
distinction between narcotic drugs and marijuana and
provided the courts needed flexibility in dealing with
the first offender. The courts were granted authority
to clean the slate on the first offender by striking
from the record mention of the first offense without
adjudication of guilt. Both of these measures enhance
credibility and acceptance of our drug laws, not only
with youth, but also with those charged with its
administration.
4.
Law Enforcement
Drug law enforcement is a difficult and dangerous
business. It demands the highest standards of professional
competence of enforcement agents. president Nixon has
increased substantially the budgets of the two Federal
agencies primarily concerned with drug law enforcement .the Bureau of Narcotics and Dangerous Drugs of the
Department of Justice and the Treasury's Bureau of
Customs -- and has initiated a major new Treasury
enforcement program of tax investigations by the
Internal Revenue Service of middle and upper echelon
narcotics traffickers. I will discuss the Treasury
programs later.
--)
)
I
(_/
7
5.
Central Role of the States and Federal-State Cooperation
Federal-State cooperation is one of the essential
elements for success in the struggle against drug abuse
and this Administration is working closely with the
States in this effort
Except for certain areas of
special Federal interest, law enforcement and our
educational system have been and must continue as
essentially State and local responsibilitieso
0
President Nixon has emphasized the Federal-State
cooperation in his message to Congress of July 14, 1969,
on Control of Narcotics and Dangerous Drugs, again at
the Governors' Conference on drugs at the White House
held in December 1969, and as outlined in his more
recent message to the Congress of June 17, 1971.
60
Action Within the Private Sector
The President has stressed that the private
sector must provide community leadership in organizing
drug abuse educational and other action programs.
Religious organizations and community and civic groups
such as Rotary, Kiwanis, Chamber of Commerce, and
Jaycees are best equipped to get directly into the
home where they can assist parents in handling the
problem of drug abuse with intelligence and credibility.
8
Treasury's Role in the President's Anti-Heroin
Action Program
Treasury is playing a major role in the
enforcement phase of the President's anti-heroin
action program. Its Bureau of Customs, the nation's
first line of defense against heroin smuggling, has
achieved spectacular success; and the Internal
Revenue Service is embarked on a major Presidential
program designed to take the profit out of narcoticso
Bureau of Customs
In his September 16, 1968, Anaheim, California,
speech, the President stated:
"Let us recognize that the frontiers
of the United States are the primary
responsibility of the United States
Bureau of Customs o I recommend that
we triple the number of customs agents
in this country from 331 to 1000
0 "
The President has followed through on that
pledge and more. In his July 14, 1969, Message to
the Congress on the Control of Narcotics and Dangerous
Drugs, he stated:
"The Department of the Treasury,
through the Bureau of Customs, is
charged with enforcing the nation's
smuggling 1aws o I have directed the
Secretary of the Treasury to initiate
a major new effort to guard the nation's
borders and ports against the growing
volume of narcotics from abroado There
is a recognized need for more men and
facilities in the Bureau of Customs to
carry out this directive."
~
~
I
I
9
This directive was backed up with a substantial anti-narcotic supplemental budget
request
The Congress responded with full bipartisan support in December of 1969 by passing
an appropriation for 8.75 million dollars for
915 additional men and for equipment for Customs.
0
The hiring of these people, begun in January,
1970, and completed in June of that year, has produced remarkable resu1tso
Customs Seizures
In a two-year period the number of seizures
by Customs has more than doub1edo
Preliminary statistics show that narcotic and
drug seizures by Customs in FY 71 were 9,042, an
increase of 2,500 over the 1970 total of 6,507.
In FY 69, 4,024 seizures were made.
Most dramatic is the increase in seizures of
hard drugs. Customs' seizures of hard drugs in
FY 1971 are over 1200 pounds, more than was seized
in the whole preceding seven years! During the same
period seizures of heroin alone, 906 pounds, in
more than 460 seizures, exceeded the total amount
seized for the preceding 10 fiscal years combined!
Cocaine seizures have also increased with 344
pounds seized this fiscal year as compared to 109
last year o In FY 69 separate statistics for cocaine
were not even kepto
Hashish and marijuana seizures have also increased
During FY 71 there were about 1,208 seizures of hashish with more than 3,000 pounds seized o This is
nearly twice the seizures in FY 70, but the pounds
seized remains constant, 3,122 pounds of hashish
being seized in FY 70. In FY 69 only 623 pounds of
0
10
hashish were seizedo In that same year, 57,164
pounds of marijuana were seized. During FY 71
this figure has grown to 76 tons in 5,490 seizures.
Fifty-two tons were seized in FY 70
0
Over 6,000,000 5-grain units of dangerous
drugs such as amphetamines and barbiturates were
seized during FY 71. This is about half the number
seized last fiscal year, though the number of
seizures increased to about 1,348 from 1,080.
Attached is a chart setting forth Customs' drug
seizures in detail. for the past three fiscal years.
Major seizures of pure heroin have included:
1.
2.
3.
4.
5.
98 pounds (October, 1970--Miami)
210 pounds (December, 1970--Miami)
98 pounds (April, 1971--Newark)
155 pounds (May, 1971--Miami)
247.5 pounds (May, 1971--San Juan)
The men and women of the Bureau of Customs,
under the dynamic leadership of Commissioner Myles
J. Ambrose, deserve enormous credit for these outstanding accomplishments.
These results took dedication, imagination and
total commitment of forceso Let me mention some of
the things Customs has done with the resources provided
by Congress for this drive:
In six months Customs added 915 trained personnel
to its staff o These included an increment of inspectors
who were able for the first time to give priority attention to checking for narcotics enforcement purposes
persons, vehicles, cargo and mail entering the country.
A substantial addition to our force of special agents
enabled us to run down intelligence leads, investigate violations of the smuggling laws, and gather
evidence for the convictions of those apprehended.
Treasury Department
Bureau of Customs
Drug Seizures by Fiscal Year
1/
1969
HEROIN
OPIUM
HASHISH
MARIJUANA
DANGEROUS
DRUGS
OTHER
1970
Seizures
Pounds
240
311
'!:./
COCAINE
1971
Seizures
203
Pounds
45.5
Seizures
462
906
344
88
109
159
42
34
42
21
132
186
623
646
3,122
1,208
2,673
57,164
4,113
630
253
TOTAL
4,024
(Seizures)
3/
4,763,361199
1,080
52 tons
12,271,000
Pounds
5,490
1,348
335
243
6,507
9,042
1/
Preliminary figures (minimum amounts -- there may be slight increases).
2/
Cocaine figures for 1969 included in the OTHER column.
3/
5 grain units.
3,000
76 toi\1J
~
~
6,000,000
' J" _/'
,--}
12
CADPIN, from the initial letters of Customs
Automated Data Processing of Intelligence, has been
installed across the country. One hundred and sixty
terminals, located at every important port of
entry along the Mexican -U.~border, at major
international airports, and at various intelligence
centers now have access to CADPIN's huge data bank.
Merely by punching the keys of his terminal, the
inspector on duty at a border crossing or an airport can obtain an almost instantaneous reply if a
car or person is suspected of smuggling, the car is
stolen, or the person is the subject of an outstanding warrant.
Customs' communications system has been expanded
and modernized, with better radios, repeater stations,
and sector communications centers o Physical equipment, particularly cars, boats and planes, both fixed
wing and helicopters, have been increased, giving
Customs agents the tools with which to deal rapidly
and responsively with smugglers and their syndicates.
Additional Customs stations have been openedo
Two of these are in the remote Big Bend area of Texas,
a favorite section of the border for smugglers.
New laboratories, to provide rapid identification
of narcotic and dangerous substances, now speed the
judicial processing of violators.
The use of dogs specially trained to locate
marijuana in cars or in mail packages entering the
country has been greatly increased, and they are now
making substantial contributions in intercepting that
substance as it enters the country.
Expanded Customs Program - 1971
The President, in his program announced on
June 17, 1971, recognized these accomplishments of
Customs and proposed a budget amendment of $18
13
million to max1m1ze Customs demonstrated capabilities
in interdicting the flow of drugs into the U. S.
This amendment funded major additions to equipment
and 1,000 additional personnel.
The Congress, with bipartisan support, authorized
$15 million and the Appropriations Subcommittees
stated they would entertain a supplemental request
after use of the $15 million. The Congress acted
swiftly, passing the appropriation bill on June 30.
The effects of these additional resources will
be felt from the New York docks to the Florida
airports, from the marinas of Southern California
to sod airfields in the State of Washington, and
along the lengths of the Mexican and Canadian
borders. They will yield better enforcement at
border crossings without increased delays.
The additional funds also provide for major
equipment additions, principally aircraft and boats,
with appropriate detection systems for both new craft
and those in current inventory
The current intelligence indications of extensive smuggling by unscheduled
planes and boats create this substantial need for
detection, communication and interception resource.
These will have particular impact along the Mexican
border and against small craft making end-runs into
Southern California, Florida and Texas.
0
Customs-to-Customs Cooperation
As one part of the anti-drug smuggling program,
designed to disrupt the traffic in drugs between
countries, Treasury established the policy of
fostering and strengthening cooperation between and
among the Customs Services of the various countries.
The Bureau of Customs was directed to put the policy
into effect.
The first Customs-to-Customs contacts, and the
ones that have resulted in the most cooperation, have
14
been with our neighbors to the North and South
In discussions with the Governments of Mexico
and Canada we have improved cooperation in the
attack on the drug traffic through Customs-toCustoms cooperationo
0
Applying the policy of increased Customsto-Customs cooperation to a wider area, the Treasury
Department obtained authorization and appropriations
for Uo S. Customs to become a full member of the
Customs Cooperation Council. This is an organization of the Customs Services of. more than sixty
nations. Its purpose is to foster close working
relationships between and among these services.
At its annual meeting in Vienna last month
this Council adopted a resolution calling for
its member countries to exchange information on
illicit traffic in narcotic drugs and psychotropic
substances
Previously, the Customs services of
many countries had paid little attention to the
drug traffic.
0
The Bureau of Customs has an ongoing program,
sponsored through AID, with the Vietnamese Customs
Service. This has been helpful to the Government
of Vietnam in its efforts to stem smuggling of
heroin into that countryo The Bureau is also preparing
plans now for possible technical assistance to the
Customs Services of other countries of Indochina,
particularly Thailand and Laos.
As part of this ongoing program of full cooperation among the Customs Services, the Commissioner
of Customs recently made an on-the-spot survey and
talked with his counterparts in Yugoslavia, Bulgaria,
Czechoslovakia and Hungary. In these contacts, the
resolution for the exchange of information on the
drug traffic adopted at Vienna was the stepping stone
for talks on increased action against drug traffic
by the Customs Services of each of these countries
against the flow of opium and morphine base from
Turkey to Western Europe
Q
15
Proposed Cargo Theft Legislation
On April 22, 1971, Secretary Connally transmitted to the Congress new legislation designed to
increase the security and protection of imported
merchandise and merchandise for export at ports
of entry in the United States from loss or damage
as a result of criminal and corrupt practices.
This measure is currently pending in both the House
and Senate. We hope that hearings will soon be
held o This legislation is designed to provide
security against cargo theft and will provide
increased protection against the smuggling of
narcotics through tighter control over a major
area within which organized cr.ime has been
operating.
Program for Tax Investigations of Major Narcotics
Traffickers
Included in the June 17, 1971, Presidential
Message, which announced the Administration's
expanded effort to combat the menace of drug abuse,
is a high priority program to conduct systematic
tax investigations of middle and upper echelon
narcotics traffickers. These are the people who
are generally insulated from the daily operations
of the drug traffic through a chain of intermediarieso
Th~program will mount a nationally coordinated
effort to disrupt the narcotics distribution system
by intensive tax investigations of these key figureso
By utilizing the civil and criminal tax laws, our
objective is to prosecute violators and to drastically
reduce the profits of this criminal activity by
attacking the illegal revenues of the narcotics tradeo
Reflecting the high priority given this program
by the President, Congress has provided financial
support for the program amounting to $705 million
in fiscal 1972 and authorization for 541 additional
positions -- 200 Special Agents, 200 Revenue Agents
and 141 support personnelo
16
Certain major features of this program should
be noted:
Treasury will not only coordinate its
efforts with all other interested Federal agencies,
but will actively seek the maximum cooperation
of State and local agencies as well. This is
a vital feature of this program.
(1)
(2) With the manpower provided, our goal.is
to have at least 400 full-scale IRS on-go1ng
investigations
0
(3) In line with the high priority given
this program by the President, the Internal
Revenue Service is assigning, effective
immediately, 100 experienced Special Agents and
100 experienced Revenue Agents, full time to this
program.
We believe that this program will make a major
additional contribution to the President's offensive
against drug abuse
0
INTERPOL
Interpol plays an important role in providing
the mechanism for cooperation and the exchange of
information among the l~ enforcement agencies of
over 100 nations. The United States has been
successful in sharpening Interpol's focus on the
international narcotics traffic. At the 1969 and
1970 Interpol General Assemblies the drug traffic
was the subject of a great deal of productive
attention o
In closing I would like to express Treasury's
appreciation for the bi-partisan support that the
Congress has given the Treasury programs. The support
and swift action of the appropriations sub-committees
of the House and Senate in approving the amendment to
the Treasury appropriation bill for FY 72 made the
funds for the new increased programs promptly
17
available to uS o This was made possible u~der the
leadership of Chairman Tom Steed and Congressman
Howard W. Robison in the House and of Chairman
Joseph M. Montoya and Senator J. Caleb Boggs in
the Senate.
I assure you that all the personnel of Treasury
will do their utmost to express that appreciation in
the way I know that each member of the Congress wants
it to be expressed -- in the most effective possible
attack on the illicit heroin traffic.
000
3(
UNITED STATES SAVinGS BONDS ISSUE'D AND REDEEMED THROUGH June 30, 19'71
(Dollar amounts in millions - rounded and will not necessarily add to totals)
.DESCRIPTION
TURED
;eries A-1935 thru D-1941
;eries F and G-1941 thru 1952
;eries J and K-1952 thru 1957
AMOUNT ISSUEDlI
AMOUNT
REDEEMEDlI
AMOUNT
OUTSTANDINGlI
. "Jo
OUTSTANDING
OF AMOUNT ISSUED
.10
.09
.32
5,003
29.,521
3,754
4,998
29,492
3,742
5
28
12
1,902
8,390
13,492
15,747
12,391
5,635
5,358
5,549
5,495
4,813
4,162
4,356
4,983
5,081
5,295
5,118
4,824
4,713
4,419
4,438
4,510
4,370
4,905
4,750
4,646
5,008
4,959
4,705
4,415
4,596
1,753
365
1,704
7,521
12,129
14,076
10,919
4,803
4,427
4,506
4,386
3,790
3,274
3,407
3,819
3,834
3,950
3,782
3,510
3,326
3,075
2,985
2,893
2,718
2,824
2,755
2,687
2,759
2,688
2,446
2,104
1,605
191
344
198
869
1,363
1,671
1,472
832
931
1,043
1,109
1,022
888
948
1,164
1,247
1,345
1,337
1,314
1,387
1,344
1,452
1,616
1,651
2,081
1,995
1,959
2,248
2,271
2,258
2,311
2,992
1,562
21
10.41
10.36
10.10 .
10.61
11.88
14.76
17.38
18.80
20.18
21.23
21.34
21.76
23.36
24.5'4
25.40 .
26.12
27.24
29.43
30.41
32.72
35.83
37.78
42.43
42.00
42..17
44.89
45.80
47.99
52.34
65.10
89.10
5.75
175,142
129,240
45,902
26.21
5,485
7,881
3,783
2,481
1,702
5,399
31.03
68.51
13,365
6,265
7,101
53.13
188,507
135,504
53,003
28.12
38,277
188,507
226,785
38,23 2
135,504
173,736
46
53,003
53,049
.12
28.12
23.39
~ATURED
leries E2I :
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
1968
1969
1970
1971
Unclassified
Total Series E
Series H (1952 thru May, 1959).Y
H (June, 1959 thru 1971)
Total Series H
Total Series E and H
{Total matured
I Series
Total unmatured
Grand Total
'e
"a cc rued dIscount.
1t redemption value •.
Ion 01 owner bonds may be held and will earn interest for additional periods after ori~inal mBluri.ly dales.
£EM PO 36.2 (RiV. Man 1971) - Dept. of the Treasury- Bureau of the Public Debe
The Department of the
TREASURY
TElEPHONE W04·2041
WASHINGTON. D.C. 20220
ITION:
FINANCIAL EDITOR
:ELEl\S~~
6: 30 P.M.,
ay, July 12, 1971
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
1he Treasury Department announced that the tenders for two series of Treasury
, one series to be an additional issue of the bills dated April 15, 1971
,and
ther series to be dated
July 15, 1971
,which were offered on July 6, 1971,
opened at the Federal Reserve Banks today. Tenders were invited for $2,300,000,000,
ereabouts, of 91-day bills and for $1,600,000,000, or thereabouts, of 182 -day
The details of the two series are as follows:
OF ACCEPTED
rrTIVE BIDS:
91-day Treasury bills
maturing October 14, 1971
Approx. Equiv.
Price
Annual Rate
182-day Treasury bills
maturing January 13 2 1972
Approx. Equiv.
Price
Annual Rate
Ugh
98.650
98.637
98.641
97.242
97.226
97.228
JOW
\verage
5.341%
5.392%
5. '376%
Y
5.455%
5.487%
5.483%
Y
30% of the amount of 91-day bills bid for at the low price was accepted
~l% of the amount of 182-day bills bid for at the low price was accepted
TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
;rict
.on
York
adelphia
eland
mond
nta
ago
Louis
eapolis
as City
as
Francisco
AEElied For
$ 26,635,000
3,118,430,000
60,455,000
84,450,000
27,755,000
55,450,000
286,855,000
72,150,000
27,465,000
46,525,000
40,220,000
247,110,000
AcceEted
$ 25,635,000
1,739,745,000
28,365,000
51,760,000
20,255,000
49,450,000
134,855,000
54,640,000
22,465,000
34,655,000
17,120,000
121,860,000
AEElied For
$ 25,725,000
2,488,735,000
22,460,000
33,260,000
21,640,000
38,980,000
249,490,000
39,235,000
28,350,000
30,370,000
37,510,000
209,345,000
Acce:eted
$ 11,725,000
1,250,105,000
8,285,000
18,060,000
8,640,000
14,130,000
95,125,000
19,665,000
23,350,000
19,370,000
14,710,000
116 2845 2000
TO'rALS
$4,093,500,000
$2,300,805,000
~ $3,225,100,000
$1,600,010,000
EI
tudes $313,245,000 noncompetitive tenders accepted at the average price of 98.641
Ludes $168,015,000 noncompetitive tenders accepted at the average price of 97.228
,e rates are on a bank discount basis. 1he equivalent coupon issue yields are
~ for the 91-day bills, and 5.73% for the 182-day bills.
3?
The Dtpartmentof the
WASHINGTON, D.C. 20220
TREASURY
TELEPHONE W04·2041
FOR RELEASE ON DELIVERY
STATEMENT BY THE HONORABLE PAUL A. VOLCKER
UNDER SECRETARY OF THE TREASURY FOR MONETARY AFFAIRS
BEFORE THE
HOUSE PUBLIC l\ORKS CQM\lITTEE ON
TUESDAY, JULY 13, 1971, AT 10:00 A.M.
Mr. Chainnan:
I am pleased to be here today to express the Administration's
strong support of H.R. 5970, and similar bills, to establish an
Environmental Financing Authority to assist in the financing of
waste treatment facilities. It is gratifying to note that some
99 House Members have joined in introducing this legislation.
Simply stated, the Environmental Financing Authority, or
EFA, would make a significant contribution to our program for
a better environment by greatly facilitating the efforts of state
and local governments to construct waste treatment facilities.
This EFA would do by purchasing municipal waste treatment bonds
which could not otherwise be sold on reasonable terms. To finance
these purchases EFA would issue its own securities in the market.
EFA could not purchase any obligations unless the Administrator
of the Environmental Protection Agency (1) has certified that the
borrower is unable to obtain on reasonable terms sufficient credit
to finance its actual needs; (2) has approved the project as eligible
for a waste treatment construction grant under the Federal Water
Pollution Control Act; and (3) has agreed to guarantee timely
payment of principal and interest on the obligations.
To avoid unnecessarily interfering with the market, the bill
provides an important safeguard: the interest rate at which EFA
would lend would be set by the Secretary of the Treasury only after
considering the current market yields on comparable Treasury or EFA
securities outstanding in the private market as well as the market
yields on municipal bonds. EFA would also be authorized to charge fees
to cover its administrative costs and provide for reasonable contingency
reserves.
In his February message -- "Program for a Better Environment" -President Nixon presented a $12 billion proposal for the construction
of municipal waste treatment facilities -- $6 billion in Federal grants
over the next 3 years, and the remaining $6 billion to be financed
by state and local governments. The President pointed out, however,
that:
- 2 Some municipalities need help in overcoming
the difficulties they face in selling bonds on
reasonable terms to finance their share of construction
costs. The availability of funds to finance a corrummity's
pollution control facilities should depend not on its
credit rating or the vagaries of the municipal bond
market, but on its waste disposal needs.
In order to assure that no municipality in this country is denied
the opportunity to sell its waste treatment plant construction
bonds, the President proposed the creation of EFA.
Concerned people may well differ on the scope of the problem
and the size of the funds necessary to deal with it. But there is
no question that the time has come for the establishment of EFA
if we mean business in fighting waste pollution.
r·lost municipal waste treatment bonds should be readily saleable
in the private market on reasonable terms. EFA will be concerned
only with the one out of perhaps four or five bond issues that is
not readily marketable.
Let me illustrate this specifically with an example of how
EFA would operate. Let's say that tax-exempt waste treatment bonds
of medium quality or better are selling in the current market at
interest rates ranging from 6 to 6 3/4 percent, and that 80 percent
of the bond issues can be marketed within this range. Under such
Circumstances, EFA might stand ready to lend at a 6 3/4 percent
interest rate, so as to provide a reasonable rate for the remaining
20 percent of the bonds issued. Thus EFA would have the effect of
setting a ceiling on the interest rate which state and local governments are required to pay.
At the same time, we do not want to get locked into an inflexible
ceiling rate in the bill, a rate that might get out of line with the
current market. If the rate is too low, for example, EFA would be
~ressured.to purchase many bonds which could have been readily placed
1fi t~e.p:Ivate market.
Accordingly, the bill gives us sufficient
f~exIblll~y to. assure that the EFA lending rate can be adjusted from
tIme to tlIDe WIth changes in overall market rates.
Under ~resent market conditions BFA might be paying about 7 3/4
on Its own long-term taxable borrowings and purchasing tax-exemp'
munICIpal waste treatment obligations at about 6 3/4 percent. Under ~e
per~e~t
- 3 -
the I percentage point difference between EFA's borrowing and
lending rates would be made up by an annual payment from the
Secretary of the Treasury to EFA. It is our belief that this
payment would not involve a net cost, however, since it would
be offset by the additional revenues which the Treasury would
receive because of the substitution of taxable for non-taxable
obligations.
Besides this advantage of being a simple and costless operation,
EFA could contribute significantly to the success of the whole waste
treatment facility program. With EFA standing ready to assure a
market, no essential project need be canceled or delayed because
the state or local government is unable to market its bond issue
on reasonable terms.
I am happy to note, Mr. Chairman, that the EFA proposal was
strongly endorsed last year by the distinguished Advisory Commission
on Intergovernmental Relations. I believe that the Commission is
well qualified to provide a truly intergovernmental view on such
matters, since it includes in its membership a number of governors,
mayors, county officials, and members of State legislative bodies
as well as representatives of the Congress, the Executive branch,
and the private sector. I believe that we have made copies of that
statement available to the Committee.
We strongly urge that this Committee act promptly and favorably
on H.R. 5970, so that we can get on with the job of cleaning up
our environment -- a task too long delayed.
Mr. Chairman, I have attempted in this brief statement only
to describe generally the purpose and operation of EFA, but would
be most happy to answer any questions which you or the Committee
may have concerning this legislation.
000
tfJ
The Department of the
WASHINGTON, D.C. 20220
TREASURY
TELEPHONE WD4-2041
FOR IMMEDIATE RELEASE
July 13, 1971
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
$ 3,900,000,000, or thereabouts, for cash and in exchange for Trea~ury
bills maturing July 22, 1971,
in the amount of $3,803,420,000,
as follows:
91-day bills (to maturity date) to be issued July 22, 1971,
in the amount of $2,300,000,000,
or thereabouts, representing an
additional amount of bills dated April 22, 1971,
and to mature
October 21, 1971
(CUSIP No. 912793 LN4), originally issued in
the amount of $1,401,175,000, the additional and' original "bills to be
freely interchangeable.
182 - day bills, for $ 1,600,000,000, or thereabouts, to be dated
July 22, 1971,
and to mature
January 20, 1972
(CUSIP No. 912793 MJ2).
The bills of both series will be issued on a discount basis under
competitive and noncompetive 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 $10,000,
$15,000, $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 19, 1971.
Tenders will not be received
at the Treasury Department, Washington. Each tender must be for a
minimum'of $10,000. Tenders over $10,000 must be in multiples of
$5,000. 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
- 2 rlbmit tenders except for their own account. Tenders will be recej
without deposit from incorporated banks and trust companies and fre
responsible and recognized dealers in investment securities. Tende
from others must be accompanied by payment of 2 percent of the face
amount of Treasury bills applied for, unless the tenders are accomp
by an express guaranty of payment by an incorporated bank or trust
company_
Immediately after the closing hour, tenders will be opened at thl
Federal Reserve Banks and Branches, following which public announcemer
will be made by the Treasury Department of the amount and price range
of accepted bids. Only those submitting competitive tenders will be
advised of the acceptance or rejection thereof. The Secretary of the
Treasury expressly reserves the right to accept or reiect 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 decimal!
of accepted competitive bids for the respective issues. Settlement fOI
accepted tenders in accordance with the bids must be made or completed
at the Federal Reserve Bank on July 22, 1971,
in cash or other immediately available funds or in a like face amount o.
Treasury bills maturing July 22, 1971.
Cash and exchange tenden
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.
Under Sections 454 (b) and 1221 (5) of the Internal Revenue C~e
of 1954 the amount of discount at which bills issued hereunder are sol(
is considered to accrue when the bills are sold, redeemed or otheNi~
disposed of, and the bills are excluded from consideration as capital
assets. Accordingly, the owner of Treasury bills (other than life
insurance companies) issued hereunder must include in his income tax.
return, as ordinary gain or loss, the difference between the price pairti
for the bills, whether on original issue or on subsequent purchase, d
the amount actually received either upon sale or redemption at maturitl
during the taxable year for which the return is made.
Treasury Department Circular No. 418 (current revis ion) 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
" ij
(if
The Department of the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE W04-2041
FOR RELEASE ON DELIVERY
STATEMENT BY THE HONORABLE EUGENE T. ROSSIDES
ASSISTANT SECRETARY OF THE TREASURY
FOR ENFORCEMENT AND OPERATIONS
BEFORE THE SENATE SUBCOMMITTEE
ON PUBLIC BUILDINGS AND GROUNDS
ON THURSDAY, JULY 15, 1971, AT 10:00 A.M.
Mr. Chairman and Member& of the Subcommittee:
We appreciate the opportunity to appear here today to
request your approval of a revised Prospectus for the
'Gonso1idated Federal Law Enforcement Training Center.
The training to be conducted at this Center is key in
the drive against the largest, most sophisticated, and
dangerous criminals on the American scene. Large-scale
criminal elements today are prepared to "beat" the system.
In order to meet their t~reat, we require quality manpower
in law enforcement w~rk supp~rted with the most advanced
training and equipment possible.
Examples of the duties to be performed by agents to
be trained at the Center underscore the importance we must
attach to this project.
Treasury Agents of the Secret Service will be responsible
for Presidential protection and protection of visiting heads
of state at a time of domestic and international unrest. They
will also have res'ponsibi1ity for safeguarding the nation IS
currency from the increased activities of counterfeiters
aided by modern technology. Chief Rowley will address himself
to the promise the Center holds for the Secret Service mission.
C-90
- 2 Customs agents will be trained to conduct urgent and
dangerous investigations against heroin traffic. Their
predecessors are today responsible for many major heroin
seizures. They will also engage in investigating international trade crimes and abuses associated with the
billions of dollars in value of goods that enter this
country annually.
Special Agents assigned to the Intelligence Division
of the Internal Revenue Service investigate a wide range of
criminal violations of United States tax laws. The tax laws
provide an effective weapon against organized crime and
these agents will be. directly involved in this high priority
effort.
Nineteen federal agencies ar2 here involved with highly
important enforcement missions: for example, the Center
will train Postal Inspectors to protect the integrity of the
U. S. Mail; Game Management Agents to protect this growing
and ,rital conservation interest; U. S. Marshals; and Border
Patrol Inspectors; among others.
These examples mak~ clear that the men to be trained
in this Center are going to be working in criminal ~nf~rcement
areas where the stakes are high indeed and the criminal is
highly sophisticated and well-counselled. These will be men
trained for and many will be called upon to perform undercover
work with great personal danger. The substantive law they
work with is complicated and investigative procedures must
be fully comprehended and followed with meticulous care for
successful criminal prosecutions, and to insure protection
of individual rights.
Let me make two general statements. First, the original
estimate that we used in seeking this Committee's approval
of the prior Prospectus did not anticipate all of the requirements and underestimated the costs.
- 3 -
Secondly, I would hope that the present Prospectus can
be judged on its merits. We think we have the most accurate
estimate possible of what is presently required. I have
prepared a detailed statement explaining the concept of the
Center and the facility requirements. With your permission,
I would like to provide that statement for the record.
We feel that the educational analyses we have made
~e valid.
We feel the architectural and engineering
analyses are sound. We have developed a document which
reflects that work. It is titled Guidance for the Consolidated
Federal Law Enforcement Training Center.
Copies of the document have already been made available
to you and your Committee, Mr. Chairman, for use in your
consideration of the revised Prospectus, as well as copies
of my testimony before Chairman Steed's Appropriation
Subcommittee in support of the Center's FY 1972 budget request.
We feel the current Prospectus is the end product of
a meticulous investigation into every aspect of law enforcement training. In addition, the requirements and costs have
been determined to be favorable to comparable education
facilities.
Director Rowley and I are prepared to discuss the
Guidance document in whatever depth you may desire, and
gentlemen, we strongly recommend this Prospectus to you for
your favorable consideration.
Director Rowley has a short statement setting forth
the imperative need for law enforcement training. It is
urgent that adequate facilities be provided, and I would
like to have Director Rowley speak to this point.
000
FOR IMMEDIATE RELEASE
July 15, 1971
The Treasury Department today issued the following
statement:
It has come to
Department that the
has announced plans
futures deliverable
the attention of the Treasury
West Coast Commodity Exchange
to open trading in gold
in gold coin.
The terms and conditions under which Americans
may acquire, hold, and use gold in any form are
prescribed by regulations issued under the Gold
Reserve Act of 1934.
These regulations do not permit the
speculative trading in gold or gold futures as
proposed by the West Coast Commodity Exchange.
000
C-9l
eft;
The Department of the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE W04·2041
FOR IMMEDIATE RELEASE
July 16, 1971
Treasury Secretary Connally Says
Second Quarter GNP Shows Resurgence
Secretary of the Treasury John B. Connally issued the
following comment upon the second-quarter Gross National Product
figures reported today by the Department of Commerce:
The second-quarter Gross National Product figures confirm
that the economy is on an expansion path. The increase in GNP
of $20 billion in the second· quarter was one of the largest in
U. S. history.
The first-quarter 1971 GNP was the largest absolute
dollar rise in U. S. economic history.
The second-quarter 1971 results are all the more impressive
because they did not depend upon the strike make-up in the production of automobiles, which had influenced the first-quarter
record increase of $32 billion.
These second-quarter results show a resurgence in consumer
demand which, as expected, was a major factor in the upward
momentum.
Because the sharp rlse ln retail sales was accompanied
by a slower rise in inventories, it is likely that there will
be additional production for inventory in the months ahead.
The second-quarter results were also heartening with
respect to price developments.
The GNP deflator rose at an
annual rate of 4.2%, down from 5.3% in the first quarter. Even
after ~aking allowance for special conditions (the Federal
employee pay raise) in the first quarter, the rate of inflation
was measurably lower in the second quarter.
The encouraging second-quarter results follow the firstquarter GNP rise first estimated at $28.5 billion. This later
was revised upward to $30.8 billion and the last revision places
it at $32.4 billion.
C-92
000
FOR RELEASE ON DELIVERY
STATEMENT BY THE HONORABLE JOHN R. PETTY ASSISTANT
SECRETARY OF THE TREASURY FOR INTERNATIONAL AFFAIRS
BEFORE THE SUBCOMMITTEE ON INTER-AMERICAN AFFAIRS OF
THE HOUSE FOREIGN AFFAIRS COMMITTEE
MONDAY, JULY 19, 1971,
10:00 A.M.
Mr. Chairman and members of the Subcommittee:
I welcome this opportunity to
ap~ear
once again before
the Subcommittee on Inter-American Affairs.
In apnearances
before this Subcommittee earlier this year and last year, I
testified on the Inter-American Development Bank.
I believe
those hearings were a useful contribution to the total
of Congressional oversight of U.S. participation in
proces~
mu1ti1ate~a1
financial institutions.
Today, our focus broadens to encompaas the full spectrum
of multilateral financial institutions operating in Latin
America.
I sincerely hope that these hearings will serve to
enhance mutual understanding in the executive and legislative
branches concerning these international programs under the
supervision of the Treasury Department.
My opening statement this morning is intended to serve as
a general framework outlining the rationale for the multilateral
approach to development and the broad structure of multilateral
activities in Latin America.
C-93
A more specific description of
- 2 -
the activities of the World Bank Group in Latin America will
then be presented by the Honorable Robert E. Wieczorowski,
who is Executive Director of the World Bank and a special
assistant to the Secretary of the Treasury.
The Honorable
Henry J. Costanzo, U. S. Executive Director of the
Inter-American Development Bank and also a special assistant
to the Secretary of the Treasury, will follow and similarly
describe in greater detail the role of the Inter-American
Bank.
All three of us will then be prepared to respond to
questions by members of the Subcommittee.
Let me begin by stating, in broad terms, why it is
advantageous for the United States to give increased emphasis
to multilateral institutions as channels for U. S. resources
devoted to international development.
I will categorize our
reasons in eight headings, as follows.
1. Burden-Sharing. Multilateral agencies are the
-most effective means available for achieving an
equitable sharing of the cost of development
assistance.
2. Multinational Expertise. With a multinational
staff, the international financial institutions
have a pool of knowledge and expertise on development problems which no single country can provide.
3. Assistance on Basis of Development Need. The
multilateral agencies allocate assistance on the
basis of development need, relatively free of
political coercion and pressures often evident
in bilateral lending between industrialized and
developing nations.
- 3 -
4. Collective Judgment on Development Policies. The
international lending agencies bring international
influence on a collective basis to bear on recipient
countries to maintain economic discipline and to follow
generally acceptable development policies.
5. Flexibility in Imposing Performance Standards. The
international financial institutions have broad
flexibility to set performance standards and loan
conditions because the institutions are not obligated
to the foreign policy of any single donor.
6.
Promote Open Economies and Fair Treatment of Foreign
Investment. The international lending institutions
are an important force in developing more open and less
restrictive national economies. The World Bank has a
firm policy not to lend to countries which are not
taking satisfactory steps toward adequate compensation
for foreign capital investment that has been expropriated.
7. Provide a Shielding Device. The international
lending agencies relieve this nation and any other single
donor country of undue responsibility for the economic
development assistance of anyone particular recipient
country~
8. Encourage Self-Help. The international lending
agencies require developing nations to establish their
own sound performance standards, solid programs, and
reasonable development priorities.
The advantages of the multilateral approach to development
were recognized by the Peterson Task Force and given formal
endorsement by President Nixon in his Message proposing a
major reshaping of U. S. foreign assistance programs.
A trend toward multilateral channels of finance became
increasingly evident during the last decade.
On the world-wide
- 4 -
scene, the annual level of multilateral lending to developing
countries rose from $900 million ten years ago to $3.2 billion
in 1970.
At the same time, annual U. 3. oi1ateral assistance
(AID loans and grants) declined from $2.4 billion to $1.6
bil15.on.
I have attached several charts to my statement,
and the phenomenon I have just dEscribed is shmvn in Chart 1.
This shift in assistance oper2tions over the decade was
reflected in a changing mix in the total of U. S. resources
devoted to foreign assistance, as between our bilateral
programs and our inputs to multilateral organizations.
Chart
2 shows the marked rise during the Sixties in multilateral
resources on an annual appropri2tions basis, and the marked
decline in bilateral
appro~riat~ons
over the
'I'l",e large volur:le of multilateral
$16 billion over the last decade --
S8me
[in~ncing
\V8S,
period.
-- cumulatively,
of course, carried
on with the aid of reSO'lrces dra'tID from all the members of
the international institutions since the institutions were
established.
Our own input of taxpayer funds to help make that
volume of lending possible, however, was only $2.9 hillion
over the decade, as shm·m in Chart 3.
Ve
supple:nentec these
Hith ne\-: z,uaranty authority of $924 mi.ll ion,
~v!1ich
togetllcr
"7ith guaranty authority made available in the Forties and the
Fifties, allm\7ed private capital markets to furnish a major
portion of total resources. As the title of the chart in~icates,
there is a substantial " leverage ., e ff ect at wor k·In tl-.Lee
- 5 multilateral process, whereby high levels of development
financing are supported by relatively modest levels of U. S.
contributions used in conjunction with those of others.
Latin America offers a striking illustration of the
possibilities for a policy of increased reliance on multilateral agencies.
In the early 1960's, assistance from all
multilateral institutions to Latin America was running
about $475 million annually.
By the opening year of the
1970's such economic ,development assistance was at a rate
of about $1.5 billion or more than three times the rate of
a decade earlier.
By contrast, our bilateral aid programs
in Latin America -- including AID loans and grants but
excluding Export-Import Bank financing -- amounted to about
$420 million per year in the early 1960's and peaked at $584
million in 1966, as shown in Chart 4.
The outstanding record of growth by the multilateral
institutions in the past decade reflects the capacity of
those institutions to handle increasing volumes of development
resources and loan commitments.
Growth in these areas carries
with it, of course, the responsibility for timely adoption
of additional administrative procedures that will ensure
adequate study and adequate follow-through on loans granted.
- 6 In this connection, I think considerable credit is due to
this Subcommittee for initiating last year a series of
hearings on the Inter-American Bank for legislative oversight
pur.poses.
These hearings probed constructively into many
administrative areas.
The resulting discussions benefitted
us in the Treasury and enabled
us to make new policy initiatives
in the Bank that reflected Congressional interests.
Promoting
greater efficiency and effectiveness in multilateral agency
operations is a goal shared by both the legislative and
executive branches.
It is a never-ending task, and I am
satisfied that the international institutions themselves
are paying close attention to it as they address the development financing needs of the Seventies.
Multilateral development finance for Latin America
flows through two main channels.
The World Bank Group of
institutions, which Mr. Wieczorowski will describe, consists
of the World Bank itself and its two affiliates, the International Development Association for concessional-term
lending and the
sector support.
I~ternational
Finance Corporation for private
The Inter-Amrican Development Bank, which
will be ·::overed by Mr. Costanzo, is a regional finan2ing
institution supported by the United States and 22 other
of the Hemisphere.
republi~s
I am leaving out of this account the various
sub-regional institutions, such as the Central
Ameri~an
Bank
- 7 for Economic Integration and the Caribbean Development Bank,
which the United States helps support in various ways but of
which the United States is not a member.
Considered together, the World Bank Group and the
Inter-American Development Bank constitute a complementary
set of institutions tc help meet Latin America's external
financing requirements.
Because each has its unique role
to play, I see neither conflict nor undesirable overlap in
the fact that both a world-wide institution and a regional
institution operate in particular countries at the same time.
As a world-wide institution having access to resources
on a global scale, the World Bank is able to finance major
economic infrastructure projects in Latin America, as well
as heavy industrial projects requiring large amounts of
capital.
As an inter-American -institution closely attuned
to the development aspirations of its Latin American members,
the Inter-American Bank
giv~greater
emphasis in its operations
to lending in social development areas such as education,
housing and health.
It likewise is responsive
to the Latin
American interest in projects that will promote integration of
Latin American economies.
Coordination is the key to the success of the
comp~mentary
World Bank-IDB relationship I have just referred to.
World
- 8 -
Bank Group and IDB resources may be associated on a single
project.
Or, one institution may concentrate on a particular
subsector in a country such as technical and vocational education,
while the other concentrates on a related one, such as
university level education.
Similar projects, such as roads,
may be carried out by both in the same country but in different
geographic areas.
Such dovetailing of operations results
from the extensive coordination that takes place between
staffs of the World Bank and IDB in Washington.
Of course, we in the Executive Branch seek to promote
coordination through mechanisms internal to the U. S. Governmetit,
notably the National Advisory Council on International
Monetary and Financial Policies.
One aspect of this avenue
of coordination involves the relationships between U. S.
bilateral financing agencies and the multilateral institutions.
During the recent past, the respective roles of the ExportImport Bank and the World Bank in certain major Latin American
financing proposals received especially close attention.
A somewhat differently oriented coordination takes place
between the multilateral development finance institutions and
the International Monetary Fund.
While the latter is not
engaged in long-term development finance, its contributions
to the maintenance of conditions of economic stability and
of liberal trade and payments arrangements are profoundly felt
in Latin America.
- 9 In its 25 years of service throughout Latin America,
the Fund has provided over $2.6 billion in three-to-five
year credits in support of programs aimed toward arresting
crippling inflation and liberalizing current foreign payments.
Over half of the Fund's standby arrangements have been with
Latin American countries.
The World Bank Group relies
heavily on the Fund for the fiscal analysis that is a vital
part of the Bank's country economic studies.
Moreover,
Fund personnel participate in missions sent by the Bank to
study the lending situation in particular countries.
We have previously discussed with this Subcommittee
many issues relating to multilateral development assistance
in Latin America.
We are prepared today to discuss at greater
lengths those issues or additional ones, as the Committee
wishes.
I understand, for example, that there is special
interest in the question of whether or not greater reliance
on multilateral institutions permits us, as we have assumed,
to avoid having our bilateral political problems enter into
the development assistance relationship -- or whether we are
simply transferring such problems into a new setting.
such a question
of terms.
I think
requires, at the outset, some clarification
While it may serve a country's purposes to char-
acterize the U. S. stand on a matter such as uncompensated
expropriation as political, we should not forget that
~~-
- 10 -
es·- 5
private foreign investment is a vital element in the economic
development process.
Actions that impede the flow of such
investments have a direct bearing on the prospect for
successful development lending, and are therefore a legitimate
subject of concern for multilateral lending institutions.
It is for this reason that I do not regard our raising the
issue of uncompensated expropriation in multilateral institutions
as bringing a bilateral political concern into that forum,
and there are other examples as well of issues between us
and particular countries that are fundamentally economic
in nature.
With that clarification of the question, I would say
that it is clear on the face of things
that a multilateral
forum such as the World Bank permits issues to be addressed
in a way that does not require the United States to be the
sole exponent of a soundly based view.
We have long felt,
likewise, that discussions in the Inter-American Bank would
benefit from having additional donor country viewpoints
brought to bear and we are looking forward to progress in
bringing other developed countries into closer association
with the lOB.
In brief, I see no necessary reason for believing
why a multilateral framework in which we are one of many
members should do anything but tend to reduce the
likelihood of political differences, and many reasons
- 11 -
to believe that multilateral institutions permit bilateral
questions with an underlying economic basis to be resolved
on the basis of a broad consensus.
This completes my introductory statement, Mr. Chairman,
and I will now ask our Executive Directors of the World Bank
and the Inter-American Bank to describe the roles of their
respective institutions in Latin American development.
Thank you.
u.s.
BILATERAL ECONOMIC ASSISTANCE COMPARED TO ECONOMIC LOAN
ASSISTANCE OF THE INTERNATIONAL FINANCIAL INSTITUTIONS 1962-1970
DOLLARS
Millions
3]00
.500
I
II
~
!
1I
I
~
I~I
~
,---+--
......-
~· •••••••••~t,
•••.......•••
2.00r
1.500
.........l---J
[~--T-~:~-;;~t!!.f~~!!!IIor~~::::~S~~~~......J-=di
~
Total multilateral/
lOOO
----~----~----t-----r---~-----+----~----~--~
500lr
0'
1962
L
'63
'64
'65
'66
'67
Fiscal Years*
Sources: AID and IFrs. *108 and AD8 components - calendar years.
'68
'69
'70
, \~
'71,
J
May 28.1971
~
• -
••• -
_._.
_ ......, . . . . . ..., . . . . _ _ •• _ •••• '"
K •• U
"~~.~IKI,.~I...
TOTAL U.S. CONTRIBUTIONS TO MULTILATERAL ORGANIZATIONS 1962-1970
DOLLARS
Millions
3,000
2.500
[:::~~r-------t-------t-~:;~~~--~TJo~ta~/~m:U~h:u;'a~re~l=a~/----t-------1-------_~~~.....
and bilateral
/
I
.
I
- .--. _-----'
""__
j
-- " ,- -
I
... .••• ••
2000
,
• ••
•••••
./f' ••
.......••
Total bilateral/
1.500
.
•••• ••••••
r- - - ! - -
1,000 i
I--/-I--4-1--~
_---....----J ," '
O.,______
1962
"
~
______
'63
~
______
'64
~
______
'65
~
_________
~
'61
Fiscal Years*
'66
Source: IFI Annual Reports and AID *lOa and ADa components in calendar years
______
~
'68
______
~
'69
______
~
'70
I
______
~
'71
J
May 28, 1971
~
"MULTIPLIER EFFECT" OF U.S. INPUTS
TO INTERNATIONAL FINANCIAL INSTITUTIONS (lFI'S)
DOllARS
Millions
4, 000 I
.....,,~'il-.---+---""1
I
The IFl's provide this much
development assistance * ,
3, 000 I
...".- I
2,000 I
Which we support by ......' _ _- I
appropriations of this amount**
_$-
1, 000 ~••"...b,.",.".~
I
But. O~, those appropria!ions only, this amount
IS U. S. Taxpayers Money expended-***I
\
J""s3;~
~9~-jMk/~1AIWIA I~
'63
'64
'65
'66
'67
'68
Sources: The U.S. Budget and Financial Statements of the IFf's.
* loan commitments
* U.S. paid-in and callable capital appropriated
'69
'70
'71
'72
'73
May 2B. 1971
*** U.S. paid-in appropriated
U.S. BILATERAL ASSISTANCE TO LATIN AMERICA VS.
MULTILATERAL ASSISTANCE TO LATIN AMERICA
DO LLARS
M lIions
~
•
.:
1,400
.:
.:
.:
.:.:
•
1,200
.:
.:
Multilateral " - .:.:
~
......
1,000
~
800
••..•.•
••••••••
~
~
.:
....' ..••
U.S.
.:
.!i
Bilateral
$~~
........
......
....
......
,
400
200
~
##.
##.
##.
##.
##.
##~
~
.....••
V~
•••••••
1.._
'
~.
..
._- ....
• a •••· '
~
.•.
•••••••
•••
••••••••••
•
,
.a••· '
'lOB
,1 10"
,
" "
--------
"
"
"
••••
..-•••••••• <.
••••
,,~
~
~
~
600
I
• •••••••• "
'"
~
It·
o
-_.
'64
'65
'66
'67
'68
'69
'63
1962
'70
'71
'72
Source: AID and If I loan Statements
Note: Data are on muhilateral loan commitment basis and AID program level basis. All data are in fiscal years except for lOB.
'73
~
~
May 28, 1971
The Department of the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE W04·2041
FOR IMMEDIATE RELEASE
July 19, 1971
TREASURY TO REPL~CE $1.0 BILLION EURODOLLAR NOTES OF EXIMBANK
The Treasury announced today that it is offering $1.0 billion or thereabouts
of certificates of indebtedness Eurodollar series to foreign branches of all U. S.
banks. These certificates will replace $1.0 billion of 6% EXIMBANK Series CC
promissory notes matur~ng July 26.
The certificates are being offered as a "striplt of two maturities, as
follows:
Amount
$500,000,000
500,000,000
Issue Date
1971
July 26
July 26
Maturity Date
1971
September 28
October 12
Number of Days
to Matur~ty
64
78
Interest rates "tdll be announced on Wednesday, July 21, 1971.
Subscriptions will be received at the Treasury until 5:30 p.m. (E.D.S.T.),
Thursday, July 22, 1971. Payment will be due on Monday, July 26, 1971. Payment
may not be made by credit to Treasury tax and loan accounts.
Subscriptions are invited from foreign branches of U. S. banks up to any
amount not to exceed the greater of:
(1)
The daily average outstanding Eurodollar borrowings of the
subscriber's head office from its foreign branches, and the
daily average of EXIMBANK notes and Eurodollar Series of
Treasury certificates of indebtedness held by such branches
in the four weeks ended June 9, 1971, or
(2)
$7,000,000.
Subscriptions will be allotted in full in equal amounts of each maturity
up to the principal amount of 6% EXIMBANK Series CC notes held by the subscriber
or $2,000,000, whichever is greater. Allocation of remaining amounts will be on
a pro rata basis according to the remaining amount of each subscription. . The
Treasury reserves the right to allot a total amount of certificates in excess
of $1. billion.
°
The certificates will be transferrable only with the permission of the
Treasury.
The Department of the
WASHINGTON, D,C, 20220
TREASURY
TElEPHONE W04-2041
FOR IMMEDIATE RELEASE
July 19, 1971
TREASURY ANNOUNCES COMPLETION
OF SPECIAL SECURITIES ARRANGEMENT
WITH GERMAN BUNDESBANK
The Treasury today announced the completion of the
sale of $5 billion of special non-marketable Treasury
securities to the German Bundesbank.
This operation was first announced by the Treasury on
June 28, 1971. The special securities involved are medium
term non-marketable Treasury notes with maturities of one
to five years carrying interest rates in line with rates
on outstanding Treasury securities in the U. S. market.
000
C-95
'TENTION:
FINANCIAL EDITOR
H RELEASE 6:30 P.M.,
Inday, July 19, 1971.
RESULTS OF TREASURY'S WEEKLY
BILL OFFERING
The Treasury Department announced that the tenders for two series of Treasury
lIs, one series to be an additional issue of the bills dated April 22, 1971
, and
e other series to be dated July 22, 1971
, which were offered on July 13, 1971,
re opened at the Federal Reserve Banks today. Tenders were invited for $2,300,000,000,
thereabouts, of 91-day bills and for $1,600,000,000, or thereabouts, of
182-day
lIs. The details of the two series are as follows:
N'GE OF ACCEPTED
I1PETITIVE BIDS:
High
Low
Average
91 -day Treasury bills
maturing October 21, 1971
Approx. Equiv.
Price
Annual Rate
98.615
98.591
98.598
Y
182-day Treasury bills
maturing January 20, 1972
Approx. Equiv.
Price
Annual Rate
97.144
97.093
97.106
5.479%
5.574%
5.546%
5.649%
5.750%
5.724%
Y
y
Excepting 3 tenders totaling $4,935,000
35% of the amount of 91-day bills bid for at the low price was accepted
44% of the amount of 182-day bills bid for at the low price was accepted
'AL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
listrict
·oston
ew York
hilade1phia
1eveland
ichmond
tlanta
hicago
t. Louis
inneapolis
9.nsas City
11las
:m Francisco
TOTALS
AEElied For
$ 27,015,000
3,287,515,000
50,950,008
52,990,000
28,680,000
51,005,000
241,450,000
53,390,008
36,845,000
52,180,000
41,830,000
165,485,000
AcceEted
$ 16,115,000
1,755,260,000
27,700,000
47,925,000
15,680,000
38,705,000
150,150,000
42,'490,000
34,845,000
52,180,000
26,830,000
92,485,000
$4,089,335,000
$2,300,365,000
EI
~lied
For
9,690,000
2,315,090,000
7,970,000
59,435,000
29,455,000
24,740,000
267,770,000
28,660,000
26,630,000
34,875,000
30,665,000
146,215,000
AcceEted
9,590,000
$
1,270,090,000
7,970,000
44,435,000
8,455,000
12,440,000
116,970,000
19,060,000
26,185,000
31,075,000
10,665,000
43,115,000
$2,981,195,000
$1,600,050,000
£I
[ncludes $322,595,000 noncompetitive tenders accepted at the average price of 98.598
[nc1udes $148,965,000 noncompetitive tenders accepted at the average price of 97.106
~cse rates are on a bank discount basis.
The equivalent coupon issue yields are
i.72% for the 91 -day bills, and 5.99% for the 182_day bills.
The Department of the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE W04-2041
FOR RELEASE ON DELIVERY
STATEMENT BY THE HONORABLE JOHN B. CONNALLY
SECRETARY OF THE TREASURY
ON H.R. 8432
BEFORE THE
nOUSE COMMITTEE ON BANKING AND CURRENCY
TUESDAY, JULY 20, 1971, 10:00 A.M., EDT
Mr. Chairman and members of this distinguished Committee,
it is a great pleasure to be with you today to present the
Administration's views on H.R. 8432 and related proposals.
I cannot express too strongly my appreciation for the diligent
and expeditious manner in which you, Mr. Chairman, and the
members of this Committee have proceeded in your consideration
of this proposed loan guarantee authority to assist the Lockheed
Aircraft Corporation.
First, I would like to address squarely the Lockheed
situation and the reasons underlying the Administration's
decision to seek authority to guarantee loans to that corporation in an amount up to $250 million. Second, in light of
the action recently taken by the Senate Committee on Banking,
Housing, and Urban Affairs, I would like to advise this Committee of the Administration's views on a broader, generic
authority for loan guarantees to other major enterprises in
need of temporary assistance.
What then are the reasons behind my decision to recommend
assistance to Lockheed?
Foremost in my mind is the imperative need to protect
and foster the rising confidence that will gradually restore
the jobs and growth lost in recent months. There is no need
to recount in detail for this Committee the chain of events
which led to the current economic slack -- massive increases
in Federal spending, without adequate tax increases, in the
late 1960's • . . as a result, an economy captured by inflation
and inflationary expectations . . . and, finally, the firm
application of strict fiscal and monetary policies to restrain
the boom and restore stability.
C-94
- 2 The costs of these necessary restraints have been high -the human cost in terms of unemployment and the material cost
in terms of lost output. Moreover, these costs have been
even greater to our defense industry. While the overall
activity was being restrained, large amounts of resources were
being withdrawn from the defense and space industries, resources which could not be immediately utilized elsewhere.
The opposite of confidence is fear. Restoration of
confidence means, in effect, the elimination of fear. At
this time, with the economy moving ahead and unemployment
topping out, the failure of the nation's largest defense
contractor -- with 72,000 employees earning $830 million a
year, 35,000 suppliers, and $2-1/2 billion in annual sales
would, beyond any shadow of doubt, generate deepseated fears.
Workers throughout the aerospace industry -- not just
those thrown out of work by the bankruptcy -- would face
heightened competition for their own jobs. Thus, a new wave
of anxieties would be created.
Stockholders throughout American industry -- not just those
of Lockheed -- might well question the future values of their
own investments. The result would be market repercussions
that could severely dampen and perhaps even thwart the business
recovery.
Consequently, Mr. Chairman, the basic motivation for our
recommendation is not simply a concern for a particular company
or a particular industry, although we seem prone to forget
the tremendous contributions made by the defense and aerospace
industries to our security and progress. Rather, the primary
motivation is a deep concern for the wellbeing of the American
people.
Let me now turn to the specific consequences of the loss
of the amounts already invested in the Lockheed L-lOll Tristar
airbus. At this point in time, only a fe~.; months from the
date Lockheed had expected to begin delivering planes to the
airlines, its investment (and that of its subcontractors)
amounts to about $1.3 billion. Only a small fraction of this
- 3 -
investment could be salvaged if the L-1011 program is
terminated. In fact, the company estimates that more than
$1 billion of this investment would have only scrap value
in such circumstances .
Underlying this investment in physical inventories are
outside financial commitments that would have to be largely
written off. In addition to the net e.quity of Lockheed's
55,000 shareholders, which now amounts to about $235 million,
subcontractors are estimated to have invested $350 million
in the program, a consortium of 24 banks has loans outstanding
to the company of $400 million, airlines have made prepayments
amounting to about $240 million, and debenture holders have
claims of another $135 million.
Now it's very hard to predict each and every consequence
which would attend a Lockheed failure. But one thing is
certain, the L-1011 would be dead. The stockholders almost
certainly would see the value of their shares wiped out.
Among the company's ~pp1iers, most, probably, would be able
to survive, but perhaps others would not.
Similarly, the airline purchasers of the L-1011 could ill
afford to lose the sums they have deposited with Lockheed as
prepayments. These deposits, for example, amount to $90 million
for TWA; S68 million for Eastern, and $32 million for Delta.
At a time when most airlines are beset by rising costs,
shrinking revenues, and severe operating losses, this added
burden should not lightly be thrust upon them.
Another loser from a Lockhee~ bankruptcy would be the
Federal Government itself. Our own economic analysis is
that the termination of the TriStar project may impose a
social cost on the private economy of $260 to $380 million,
depending on the duration of the adjustment period. This
social cost is the result of lost disposable income of workers
and the foregone gross product of idle capital. Included in
this aggregate economic loss is a Federal income tax loss
. estimated to be $65 to $95 million. However, in addition
to this aggregate cost, loss recognition by creditors, shareholders, and suppliers will result in estimated short run Federal
/]
I
- 4 revenue losses of $275 to $340 million. Finally, additional
unemployment compensation paid out to displaced workers will
amount to $50 to $75 million, depending on the duration of
the adjustment period.
So far, I have been describing the potential losses from
a Lockheed bankruptcy in terms of dollars and cents. But
there is an even more important consequence of the L-lOll's
demise, namely the unemployment it creates. Prior to the
Rolls Royce receivership, there were approximately 17,800
workers employed by Lockheed on the L-lOll program. Since
February, nearly 8,000 have been temporarily furloughed. The
remaining 10,000 will lose their jobs as well if the L-lOll
program is scrapped.
Similarly, Lockheed's suppliers, who were estimated to
have been employing some 16,000 people in 32 states directly
on L-lOll work in January have had to reduce their work forces
to only about 6,500 at present because of the curtailment of
work following the Rolls Royce bankruptcy.
Moreover, though it is more difficult to estimate, it is
evident that for every employee directly laid off, others in
communities where their income was spent will also suffer.
It is estimated that counting this indirect impact, a total
of 60,000 employees will end up without jobs if the L-lOll
is shut down. Even on a direct basis, the cost is heavy, as
the reductions that have already taken place show.
Additionally, I believe that a Lockheed failure would
adversely affect other employees, both of Lockheed and its
suppliers, who are now employed in the performance of Lockheed's
many defense contracts. I do not mean to imply that those
contracts would not be performed ultimately -- for I believe
they would. However, it is my judgment that an enterprise of
Lockheed's magnitude, involving many thousand contractual
relationships with suppliers and subcontractors, could not go
into either a Chapter X reorganization of a liquidation in
bankruptcy without the inevitable creation of delays and
dislocations. This probably would mean increased costs on
- 5 -
those defense contracts, but more importantly, it would mean
human hardships through furloughing of employees until legal
and financial uncertainties were resolved.
The cost of this added unemployment has to be measured
in terms of the impact on particular geographic areas where
unemployment is already well above the national average, and
on the aerospace industry that has already suffered a disproportionate reduction in employment as a result of (1) the
winding down of military orders, (2) cutbacks in the space
program, and (3) the cancellation of the SST.
From a peak of over 1.4 million jobs in 1967, total
aerospace employment declined to less than 1.1 million jobs
at the end of last year and has been projected to be down to
943,000 by the end of this year. This would represent a
cumulative decline of about one-third in four years. Moreover,
of the major metropolitan areas with substantial unemployment,
at least six are in this category primarily because of aerospace unemployment.
At a time when the Government is spending $1-1/2 billion
annually on job training programs, and is about to initiate a
new public service jobs program with a two-year cost of
$2.1/2 billion, it would be iron~c to withhold authority
for guarantees -- guarantees we believe will be costless
that could preserve the jobs of fully trained aerospace workers.
If there are strong reasons for taking action to prevent
the collapse of Lockheed and its L-lOll program, how can we
be sure that the action proposed -- guarantee authority for
up to $250 million of additional loans -- will do the job?
The answer is that we cannot be absolutely sure, but I firmly
believe on the basis of the evidence available to us that it
is enough. I have reviewed the data prepared by Lockheed, and
I have appended to this statement a chart which summarizes
the borrowing requirements as presently projected.
As you can see from that chart, the company forecasts
peak borrowing needs of $650 million in late 1972. By that
- 6 time, it is expected that additional airline prepayments -above and beyond those initially agreed to will have provided
about $100 million of the needed financing. The banks will
continue their $400 million of financing, and in addition
will provide $150 million under government guarantee. The
chart also shows that funds under guarantee will have been
completely repaid by the end of 1974, at which time just over
100 planes will have been delivered.
Now forecasts are just that -- forecasts. Moreover, I
am well aware that Lo~heed's controversies with the Department
of Defense raise questions as to its forecasting ability. I
believe, however, Lockheed has made every effort to prepare
in connection with its L-10ll program what is a fair and
accurate picture of what they expect to take place in the
next five years. Critical to any forecast, however, are the
premises upon which it is based, and I think we should all
take specific note of the major ones. Essentially, they
involve: (1) the actual number of L-10ll's that are sold;
(2) the ability to keep production costs in line with current
estimates; and (3) the ability to generate new defense business.
With respect to the first of these points, Lockheed has
firm orders for 103 L-10ll aircraft, and options for 75 more.
They estimate the market for the basic wide-body airbus to be
775 planes by 1980.
I want to make it clear that I will not use the authority
to guarantee loans unless and until all the major purchasers
have signed firm new contracts renewing their original commitments.
While I am on this point, I would like to be sure the
Committee understands that I am not talking about break-even
p~ints in terms of sales.
It should not be of major concern
to the Government in connection with this proposal whether
Lockheed makes a profit on 220 aircraft. ' As a matter of fact,
they won't. However, they will generate enough cash from
sales well short of that point to payoff the loans guaranteed
- 7 by the Government, and that is really what counts. And of
primary importance to the workers involved, the corporation
would have more than a fighting chance -- indeed, a good chance
to regain its overall financial health and remain a going concern.
The Government also has a big stake here, for Lockheed is the
nation's largest defense contractor.
So far as cost control is concerned, I can give the
Committee some idea of the exposure. The total L-lOll program
for 220 planes, not including propulsion systems, represents
estimated direct costs of $3,300 million. Of this amount,
some $800 million has already been incurred, and the company's
estimating procedures on this amount have held up well.
Finally, with respect to new military orders, I would like
to point out that Lockheed is forecasting that sales to the
U. S. Government will decline from $2.7 billion in 1971 to
$1.4 billion in 1973, with levels of about $1.5 billion projected for 1974 and 1975. Nevertheless, despite this sharp
decline, it is still true that some 50-60 percent of sales to
the U. S. Government in 1974 and 1975 represents new business
that mayor may not materialize.
I have checked with the Department of Defense on thismatter, and I understand they feel that while Lockheed's
estimates on anticipated defense business are much more
realistic than at times in the past, they still may be on
the high side, possibly by as much as 30 percent in the last
years of the forecast (1974-75). I Sh9uld mention at the same
time, that reduced sales to the military do not affect cash
flows to anything like the same extent. For example, I asked
Lockheed to recalculate the impact on cash of reduced sales to
the Government on new orders of 10% in 1973, 20% in 1974 and
30% in 1975, plus a 5% reduction in follow-on sales in each
of these years. The total cumulative reduction in cash ~the amount available to repay government guaranteed loans -by the year 1975, taking account of reduced taxes on lower
profits, was only $20 million.
Apart from the essential assumptions underlying Lockheed's
projections of cash needs, there is the question of the internal
In this connection,
the Department of Transportation is satisfied that the financial program as outlined in Lockheed's projections is internally
consistent with the assumptions made by Lockheed. Arthur
Young & Company, the company's auditors, likewise believes
that the forecast has been compiled to appropriately reflect
the stated assumptions and the estimates. Also the major
banks on the basis of their review believe Lockheed's estimates
to be reasonable.
cons~~l~nc!
l,f the projections themselves.
But what if these projections turn out to be wrong and
the company's fortunes deteriorate? What protection is there
for the taxpayers' money?
I think it is reasonable to assume that in the event of
bankruptcy the taxpayers' money will be fully protected. The
House bill H.R. 8432 provides that in case of bankruptcy the
amount of loan guaranteed by the Government shall be secured
by a prior lien on all of the company's assets and by the top
priority in bankruptcy. In submitting this legislation to
Congress, we felt that under the circumstances the Government
should have this superior status.
I realize that the legislation as written would amend the
Bankruptcy Act, and technical anc legal arguments may be
offered as to why the Government should not come ahead of all
other previously secured creditors. However, even if the
Congress should eliminate or amend the section in the bill
giving the Government this priority (Section 6), I have taken
steps to protect fully the Government's interest.
I have entered into a memorandum of understanding with
Lockheed and the banks which provides that the bank loan to
Lockheed -- the existing $400 million loan plus any additional
loans up to $250 million -- will be secured by a single
collateral pool. This pool will include all of the collateral
the banks have to secure the $400 million they have advanced
to Lockheed plus such other property as I shall approve. In
case of bankruptcy, the collateral will be used first to satisfy the portion of the bank loan guaranteed by the Government
j)
- 9 -
In my opinion, Lockheed has sufficient assets to secure fully
the $250 million that may be guaranteed by the Government.
I think it should also be pointed out that Lockheed has
approximately $10 million of secured debentures presently
outstanding. The banks have agreed to see to it that in the
event of bankruptcy these claims are satisfied so that they
will not endanger the Government's security. In short, the
Government's claim will be paid off first from whatever assets
there are in the collateral pool at the time of bankruptcy.
At this point, let me summarize the case as I see it.
For want of a relatively small amount of additional financing,
it is almost certain that in the absence of federal guarantees
the L-lOll program would be terminated and the company would be
forced into bankruptcy. The whole of the sizeable investment
in the L-lOll would be lost. The costs of such a failure in
terms of lost jobs, scrapped inventories, financial hardships,
and undermined confidence would be very great. I believe there
is a good chance that these adverse consequences can be avoided
if the Congress is prepared to authorize guarantees in an amount
of $250 million to finance Lockheed over its period of peak cash
needs in the next couple of years.
The risks to the taxpayer are very small indeed.
Current projections indicate that all government guaranteed
money will have been repaid by the end of 1974 after delivery
of just over 100 aircraft which is less than current firm orders.
The guaranteed funds will be used on a last in - first
out basis.
In the event of bankruptcy the Gove~nment will have first
lien on all Lockheed assets pledged under the Bank Loan Agreement.
I fully recognize that there are members of this Committee,
and members of the Congress generally, who do not share the
Administration's view that the costs of failure to act far
outweigh the risks of providing guarantees.
/
)
~)
./ J
- 10 The most frequently voiced concern is that the Government,
by acting to help Lockheed Aircraft Corporation in its present
difficulties, is setting an undesirable precedent.
In one sense, of course, credit assistance by the Federal
Government is nothing new at all. One can cite many examples
of ways in which the Congress has authorized credit assistance
to various sectors of the economy. Housing is the most obvious.
According to the President's budget, Federally guaranteed
mortgage loans at the end of the coming fiscal year are expected to exceed $140 billion. In addition, the budget projects
another $10 billion of outstanding Federal guarantees for
low rent public housing and an additional $3.8 billion for
community development loans.
Housing is by no means the only area. The Reconstruction
Finance Corporation played a major financing role in this
nation for almost two decades. Small Business Adrrdnistration
loans and guarantees are expected to reach almost $4 billion
within the next year. Loans plus guarantees by the ExportImport Bank are projected to exceed $9 billion.
Also worth mentioning are the billions of dollars in
banks and savings and loan deposits insured by the Federal
Government, plus the recently enacted legislation establishing
the Securities Investor Protection Corporation.
And, with reference to the Lockheed legislation in
particular, the V-Loan program has provided many guarantees,
through the Federal Reserve banks, to American corporations.
Even though this list is qot exhaustive, it demonstrates
that Federal credit assistance to the private sector is by no
means without precedent.
Mr. Chairman, that concludes my review of the Lockheed
case and our reasons for seeking the authority to provide
temporary assistance to this financially troubled enterprise.
Let me now take a few additional minutes to describe the
legislation formally reported by the Senate Committee and to
give you the Administration's views with respect to it.
(,\
- 11 The bill which was reported to the Senate by a bi-partisan
vote of 10 to 5 provides for a broader loan guarantee authority
than that sought by the Administration. Broadly described,
the Senate Committee's bill is a merger of the Administration
bill with the bill recommended by the Board of Governors of
the Federal Reserve System.
The Senate Committee bill would establish an Emergency
Loan Guarantee Board, composed of the Secretary of Treasury,
as Chairman, the Chairman of the Federal Reserve Board, and
during any period in which an application for a loan guarantee
is pending, the president of the Federal Reserve bank in whose
district the prospective borrower is located. The bill provides standby authority up to $2 billion in the aggregate to
guarantee loans to major business enterprises facing temporary
adversity, where it is determined that failure would seriously
and adversely affect the economy or employment of the Nation
or any region thereof.
As in the Administration's bill, a guarantee could not
be made unless there was a showing that credit was not
otherwise available on reasonable terms. Similarly, there
would have to be a finding of reasonable expectation for
timely repayment of any loan guaranteed.
Other similarities to the Administration's bill are
provisions restricting dividend payments and asset transfers
by the borrowing corporation. Additionally, under the Senate
Committee's bill, the Loan Guarantee Board would be directed
to make every effort to collateralize fully the amount of the
loan guarantee, and the government would have a priority as
to the lender's interest in any collateral securing the
guaranteed loan and any earlier outstanding loans of the lender.
The Senate Committee's bill also includes provision for
Congressional review and veto of any loan guarantee recommended
by the Board. This provision, styled after the executive
reorganization procedures, requires the Board to notify the
Congress of its intention to grant a guarantee, and stays the
/l C,
! )
- 12 effectiveness of that guarantee for a period of twenty calendar
days of continuous Congressional session, during which period
either House of the Congress could vitiate the guarantee by
passage of a resolution. Recognizing that time is an essential
factor in effectively assisting the Lockheed Aircraft Corporation, the bill waives these requirements for notification to
and review by the Congress for any guarantee commitments made
prior to October 1, 1971. The bill limits to $250 million
the guarantee authority for any single borrower and provides
that the authority of the Board to enter into new commitments
shall expire December 31, 1973.
Because the Senate Committee's bill was formally reported
only yesterday, I have attached to my statement a section-bysection analysis of that bill for the information of the
members of this distinguished Committee.
Mr. Chairman, as to the views of the Administration on
the Senate Committee's bill, we find it meritorious and will
accept it. I hasten to add that our principal concern of the
moment is to obtain sufficient legal authority to permit us
to Federally guarantee up to $250 million of additional bank
credit to the Lockheed Aircraft Corporation. We not only need
this authority -- we need it before the Congress adjourns .
on August 6.
Mr. Chairman, out of these several months of involvement
with the Lockheed case, I am personally persuaded that the
standby authority contemplated in the Senate Committee's bill
makes good sense. Their proposal does not create a new
government agency with an additional battalion of bureaucrats.
It utilizes already existing agencies and officers of the
government. Nor does it, I think, start us pell mell down
the road on some new and grandiose program of Federal assistance
to private business.
What the Senate Committee has done, as I see it, is 'to
have concluded, out of its review of the Lockheed case, that
the Federal. Government should have some established and
systematic procedures for dealing with any future situations
- 13 where a major U. S. enterprise faces temporary financial
distress. The pIDposal sent to the Senate establishes a
sensible procedure for the review of future cases. It sets
clearly-defined Congressional guidelines with the residual
power remaining in the Congress to reject any loan guarantee
which it deems to have been proposed in contravention of these
guidlines. I would fervently hope that we will have no more
"Lockheeds," but I am hard pressed to disagree with the Senate
Committee's view that we should be prepared if one eventuates.
Mr. Chairman, that concludes my formal testimony. May
I say once again how grateful I am to you and to your colleagues
on this Committee for the extraordinary consideration that
has been shown in the scheduling and conduct of these hearings.
I hope we have persuaded you that the requested loan guarantee
authority is clearly in the public interest.
-
000 -
FINANCING PLAN & BORROWING REQUIREMENTS
L-I0ll AlP ~
CUMULATIVE
DELIVERIES
2
12
12
22
30
40
44
63
76 90
96
114 128 146 155 173
800-1--~~--~--~~--~~--~~~~--r-~--'-~--1I--r-~~
_
ADD'L $250 MILLION BANK FINANCING GOV;r GUARANTEED
I
700
C
600
FORECAST fiNANCING
. . REQUI RED
500
DOLLARS
IN
400
MILLIONS
300
,
$400 MILLION CURRENT
BANK FI NANC I NG
i "
I
200
"
,
" ,
"
I
ADDITIONAL AIRLINE
PREPAYMENTS
100
~
I
oI
J
"
+:::
SO
71
M J
72
SO
J
M
73
5
D
M J
74
S
0
J
M
75
SO
Section by Section Analysis of Senate Bill
Short Title
Section 1.- The short title of the legislation is
"Emergency Loan Guarantee Act".
Establishment of Board
Section 2.- Creates an Emergency Loan Guarantee 'Board
(hereafter referred to as the "Board") composed of the
Se~retary
of the Treasury as Chairman, the Chairman of the
Board of Governors of the Federal Reserve System and during
the pendency of an application for a loan guarantee the
President of the Federal Reserve Bank in whose district the
prospective borrower is located as determined by the Secretary
of Treasury.
Decisions of the Board shall be by majority vote
of all the members except as to procedural matters, which may
be made by the two permanent members of the Board.
Authority
Section 3.- Provides that the Board on such terms and
conditions it deems appropriate may guarantee loans which meet
the specified requirements.
Limitations and Conditions
Section 4. - (a) (1) Sets forth the economic criteria an d
?rovides that a guarantee of a loan may be made only if the
Joard finds (A) the loan is needed to enable the borrower to
ontinue to furnish goods or services and failure to meet this
eed would adversely and seriously affect the economy of or
/1
/
)
c),
- 2 !mployment in the nation or any region thereof, (B) credit
~s
not otherwise available to the borrower under reasonable
:erms or conditions, and (0) the prospective earning power of
:he borrower together with the value of the security pledged,
:urnish reasonable assurance that it will be able to repay
he loan within the time fixed and afford reasonable protection
o,the United States.
(a)(2)
Requires lender to certify that it would not
ake the loan without such guarantee.
'(b)
Requires that loans be payable in not more than
ive years but may be renewed for not more than an additional
hree years.
(c)
t
Provides that guaranteed loans shall bear interest
rates determined by the Board to be reasonable.
~curity
for Loan Guarrntees
Section 5.- Directs the Board that in negotiating a loan
larantee every effort should be made to arrange that the loan to be
laranteed be secured by sufficient property of the enterprise
• collateralize fully the amount of the loan guarantee.
!guirernents Applicable to Loan Guarantees
Section 6.- Provides that no dividends may be declared by
terprise on common stock during any period in which there is
incipal or interest unpaid on guaranteed loan.
Also, the
- 3 nterprise may make no payment on other indebtedness to
,ender whose loan has been guaranteed while there is any
rincipa1 or interest unpaid on guaranteed loan.
Also provides
hat Board may waive this requirement on determination that
uch waiver would not be inconsistent with reasonable protection
+~t
f~interest5of
the U. S.
(b) Provides if the Board determines need for guarantee
s result of failure of management to exercise reasonable
usiness prudence, Board shall require before guaranteeing
ny toans such management changes as Board deems necessary.
(c) Requires that the Board receive audited financial
tatement before guarantee is made.
(d) Provides no payment shall be made or become due
lless lender has exhausted any remedies which it may have
lder guarantee agreement.
(e) (1) Directs Board to satisfy itself that underlying
>an agreement contains standard covenants and that there
~e
provisions that the underlying agreements cannot be amended
. any provisions waived without prior consent of Board.
(e)(2) Provides that guarantee authority shall be in
rce on each occasion when borrower seeks advance under loan
reement only if lender gives Board ten days notice in writing
~/
- 4 of its intent to provide borrower with funds and lender
certifies that as of date of notice borrower is not in
default and if default has taken place, circumstances
concerning it, provided Board may waive such
defa~lt
where
such waiver is not inconsistent with reasonable protection
of United States.
Borrower must also provide Board with
plan setting forth expenditures for which the advance will
be used and report to Board extent to which such advances
were expended according to plan.
(f) Requires any guarantee agreement to contain
requirement as between Board and lender that Board have
priority with respect to and to extent of lender's interest
in any collateral securing loan and any earlier outstanding
loans.
Term collateral in Section 6(f) includes all assets
pledged under loan agreements and, if appropriate in Board's
opinion, all sums of borrower on deposit with lenders and
subject to offset under Bankruptcy Act.
Inspection of Documents; Authority to Disapprove Certain Transactions
Section 7.- Provides for Board inspection of corporate
books and records and related materials bearing on loan guarantee.
- 5 aximum Obligation
Section 8.- Provides maximum obligation of Board under
11 outstanding loans guaranteed shall not exceed at any time
2 billion.
Board is limited in guaranteeing loans to any
ne borrower to $250 million.
mergency Loan Guarantee Fund
Section 9.- (a) Establishes in. Treasury an emergency loan
uarantee fund to be administered by Board.
(b) Requires Board to prescribe and collect guarantee fee
~
connection with each guaranteed loan.
(c) Provides that payments required to be made as consequence
E any guarantee by Board shall be made from loan guarantee fund.
1
event such funds are insufficient, Board is authorized to
3sue to Secretary of Treasury notes or other obligations and
!cretary of Treasury is authorized to purchase any notes and
:her obligations.
~dera1
Reserve Banks as Fiscal Agents
Section 10.- Provides any Federal Reserve Bank which is
!quested to do so shall act as fiscal agent for Board on
!imbursab1e basis.
otection of Government's Interest
Section 11.- Provides that Attorney General shall take
:h action as may be appropriate to enforce any right accruing
- 6 to United States as result of issuance of any guarantee
Jnder Act.
(b) Provides Board shall be entitled to recover from
)orrower amount of any payments made under any guarantee
19reement and that Board upon making any such payment shall
)e subrogated to all rights of recipient.
:ongressional Review
i
Section 12.- (a) Directs Board shall not guarantee or
commitment to guarantee any loan after October 1, 1971,
~ke
nles~,
at least 20 days prior to making such guarantee Congress
s notified of Board's intention to make such guarantee together
ith detailed justification.
A period of 20 calendar days of
ontinuous session of Congress following receipt of notification
ust elapse without passage by either Senate or House of
epresentatives a resolution stating that Senate and House of
epresentatives, as case may bet does not approve of the proposed
larantee.
!ports
Section 13.· Requires Board to submit annually full report
its operations.
~ll
la~
In addition to its annual report, Board
submit special report not later than June 30, 1973, which
1 include full report of its operations together with
- 7 -
ecommendations as to need to continue guarantee program
eyond termination date specified in Section 14.
ermination
Section 14.- Terminates Board's authority to enter into
ny guarantee on December 31, 1973.
Such termination does
ot affect carrying out of any contract, guarantee, commitment
r other obligation prior to that date.
The Deportment of the
WASHINGTON, D,C, 20220
TREASURY
TElEPHONE W04-2041
FOR IMMEDIATE RELEASE
July 20, 1971
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
$ 3,900,000,000, or thereabouts, for cash and in exchange for Treasury
bills maturing July 29, 1971,
in the amount of $3,803,480,00'0,
as follows:
91-day bills (to maturity date) to be issued July 29, 1971,
in the amount of $2,300,000,000,
or thereabouts, representing an
additional amount of bills dated April 29,1971,
and to mature
(CUSIP No. 912793 LP9 ),originally issued in
October 28, 1971
the amount of $1,401,225,000, the additional and' original bills to be
freely interchangeable.
182- day bills, for $1,600,000,000, or thereabouts, to be dated
July 29, 1971,
and to mature January 27, 1972
(CUSIP No. 912793 MK9).
The bills of both series will be issued on a discount basis under
competitive and noncompetive 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 $10,000,
$15,000, $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 26, 1971.
Tenders will not be received
at the Treasury Department, Washington. Each tender must be for a
minimum'of $10,000. Tenders over $10,000 must be in mUltiples of
$5,000. 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. tractions 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. OtheLs tnan banking institutions will not be permitted to
- 2 submit tenders except for their qwn account. Tenders will be re~.
without deposit from incorporated banks and trust companies and . '...
responsible and recognized dealers in investment securities. TeMen
from others must be accompanied by payment of 2 percent of the face
amount of Treasury bills applied for, unless the tenders are accolllplDl
by an express guaranty of payment by an incorporated bank or trust
company.
Immediately after the closing hour, tenders will be opened at tm
Federal Reserve Banks and Branches, following which public announc. .
will be made by the Treasury Department of the amount and price r~'
of accepted bids. Only those submitting competitive tenders will be
advised of the acceptance or rejection thereof. The Secretary of th
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 'btll
be final. Subj ect to these reservations, noncompetitive tenders fQr
each issue for $200,000 or less without stated price from anyone
bidder will be accepted in full at the average price (in three Qedm
of accepted competitive bids for the respective issues. Settle.~t ffl
accepted tenders in accordance with the bids must be made or COmpletll
at the Federal Reserve Bank on
July 29, 1971,
.:
in cash or other immediately available funds or in a like face amoUnt
Treasury bills maturing July 29, 1971.
Cash and exchange tendl
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.
Under Sections 454 (b) and 1221 (5) of the Internal Revenue~
of 1954 the amount of discount at which bills issued hereunder are f
is considered to accrue when the bills are sold, redeemed or otheNi
disposed of, and the bills are excluded from consideration as cQ!U
assets. Accordingly, the owner of Treasury bills (other than life
insurance companies) issued hereunder must include in his income t~
return, as ordinary gain or loss, the difference between the prkep
for the bills, whether on original issue or on subsequent purchase~i
,the amount actually received either upon sale or redemption at ~
during the taxable year for which the return is made.
~
r
Treasury Department Circular No. 418 (current revision) and thil
notice, prescribe the terms of the Treasury bills and govern the ,
conditions of their issue. Copies of the circular may be obtained fl
any Federal Reserve Bank or Branch.
000
The Department of the
WASHINGTON, D.C. 20220
FOR IMMEDIATE RELEASE
TREASURY
TElEPHONE W04-2041
July 21, 1971
TREASURY ANNOUNCES $5.1 BILLION REFUNDING AND CASH OFFERING
The Treasury today announced that it is offering holders of $5.1 billion of the
Treasury Bonds of 1971 and 8-1/4% Treasury Notes of Series F-1971 maturing August 15,
71, the right to exchange their holdings for a 7% 4-year-3-month Treasury note or a
-year 7% Treasury bond.
.
The Treasury also said that following this operation it will announce the
Junt and terms of a new issue of 18-month Treasury notes to be sold at auction.
ase notes will be dated August 16, 1971.
The securities being offered in the refunding are:
7%
7%
Treasury Notes of Series D-1975, dated August 15, 1971,
due No-:ember 15, 1975, at 99.80 (to yield about 7.06%); and
Treasury Bonds of 1981, dated August 15, 1971, due
August 15, 1981, at 99.20 (to yi~ld about 7.11%).
The public holds $4.1 billion of the securities eligible for exchange, and
ut $1.0 billion is held by Federal Reserve Banks and Government accounts .
.3ubscription books :for the offering will be open until 6:00 p.m., local time,
sday, July 28, 1971. To be timely subscriptions MUST BE RECEIVED by a Federal
re Bank or Branch or by the Office of the Treasurer of the United States by such
except that subscriptions addressed to a Federal Reserve Bank or Branch or to
~fice of the Treasurer of the United states postmarked before midnight, Tuesday,
~7, 1971, will be deemed to be timely.
he notes and bonds will be made available in registered as well as bearer
n denominations of $1,000, $5,000, $10,000, $100,000 and $1,000,000. All
ibers requesting registered securities will be required to furnish appropriate
fiti1'ying numbers as required on tax returrls and other documents submitted to
Internal Revenue Service.
The payment and delivery date for the securities will be August 16 except
t in the case of cash subscriptions the payment must be completed by Friday,
ust 13.
Coupons dated August 15, 1971, on securities tendered in exchange should be
ached and cashed when due. The August 15, 1971, interest due on registered
'~es will be paid by issue of interest checks in regular course to holders
'ecord on July 15, 1971, the date the transfer books closed.
-2-
The bonds are also being offer~d for cash subscription to individuals in
mts not to exceed $10,000 fOJ anyone person. Cash subscriptions for the notes
not be accepted.
Subscriptions for cash must be accompanied by payment of 10% of the amount of
.s applied for. Cash subscriptions will be allotted in full and payment therefor
be completed by Friday, August 13, 1971, in cash or other funds immediately
lable to the Treasury by that date. The Treasury will construe as timely payment
check payable to the Federal Reserve Bank or the Treasurer of the United States
is received at such bank or office by Wednesday, August 11, provided the check
rawn on a bank in the Federal Reserve District of the bank or office to which
subscription was submitted.
Banking institutions in submitting cash subscriptions for customers will be
ired to certify that they have no beneficial interest in any of the subscriptions
enter.
Estimated Ownership of August 15, 1971 Maturities
(In millions of dollars)
. 8-1/4%
.
Note
.
4%
Bond
..
Total
Commercial banks •••••••••••••••••
1,086
1,192
2,278
Mutual savings banks •••••••••••••
27
45
72
Fire, casualty and marine •••••••
2
34
10
76
12
110
Total, insurance companies •••
36
86
122
Savings and loan associations •••
35
78
113
Corporations ••••••.•••••••••••••
25
40
65
State and local governments •••••
197
160
357
All other private investors •••••
516
596
1,112
Total, privately held ••••••••
1,922
2,197
4,119
Federal Reserve Banks and
Government AccountG •••••••••••
335
609
944
Total outstanding ..•••••••.•••.•
2,257
2,806
5,063
Insurance companies:
Life •.••.•••••••••••••••••••••
~.
Office of the Secretary of the Treasury
Office of Debt Analysis
July 21, 1971
lbeDepartmentof the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE WD4·2041
FOR IMMEDIATE RELEASE
July 21, 1971
TREASURY ANNOUNCES PROPOSED RULES FOR TAXING ORIGINAL ISSUE
DISCOUNT ON CORPORATE BONDS, AND CHANGED PROPOSAL ON
DEFERRED INTEREST DEPOSITS
The Treasury Department today announced proposed rules under
which the owner of a corporate bond or other corporate debt
obligation issued at a discount -- that is, for an amount less
than the stated redemption price at maturity -- would include
a portion of the discount in his income each year.
The new rules implement provLsLons of the Tax Reform Act
of 1969 which specified, in effect, that "original issue
discount" should be treated as the payment of interest to the
bondholder each year as it is earned and taxed at that time.
Before passage of the Act, a bond owner was not taxed on the
discount until he redeemed the bond at maturity, or sold or
otherwise disposed of it in a taxable transaction.
The regulations announced today also include reporting
requirements for corporations issuing bonds at a discount.
These requirements include annual notice to the bondholder and
the Internal Revenue Service of the amount of original issue
discount to be included in the bondholder's income for the
year, provided that the amount is more than $10.
On August 25, 1970, Treasury published proposed rules for
the taxation of interest as earned on certificates of deposit
and certain other deferred interest deposits in banks,
savings and loan associations, and other financial institutions.
These rules, with technical amendments, have now been incorporated
in those announced today. Treasury therefore is withdrawing the
earlier regulations and changing their proposed effective date
from August 25, 1970, to January 1, 1971.
C-96
(OVER)
- 2 The new rules implement changes in Sections 1232 and 6G.M
of the Internal Revenue Code made by Section 413 of the
Tax Reform Act. They will be published in the Federal Regist
for Thursday, July 22, 1971. Comments on the proposed
regulations, and requests for a public hearing on them, should
be submitted in writing to the Commissioner of Internal Revenue,
Attention: CC:LR:T, Washington, D. C., 20224, within 30 days
after publication in the Federal Register.
The Internal Revenue Service held a public hearing
October 26, 1970, on the regulations on deferred interest
deposits announced on August 25, 1970. It therefore is
suggested that comments on this section of the new rules be
directed to matters of an administrative or technical nature.
000
The Deportment of the
TREASURY
TElEPHONE W04·2041
WASHINGTON, D.C. 20220
FOR IMMEDIATE RELEASE
July 21, 1971
TREASURY'S MONTHLY BILL OFFERING
The Treasury Departmen,t, by thi s publ ic notic e, invites tende rs for
two series of Treasury bills to the aggregate amount of $ 1,700,000,000,
or thereabouts, for cash and in exchange for Treasury bills
maturing July 31, 1971,
in the amount of $ 1,703,030,000,
as follows:
27c da y bills (to maturity date) to be issued August 2, 1971,
in the amount of $500,000,000,
or thereabouts, representing an
addational amount of bills dated April 30, 1971,
and to mature
April 30 1972
(CUSIP No. 912793 MAl), originally issued in the
amount of $1,200,535,000,
the additional and original bills to be
freely interchangeable.
366 -day bi lIs, for $ 1,200,000,000,
or the reabouts, to be dated
July 31, 1971,
and to mature July 31, 1972
(CUSIP No. 912793 NJl).
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 $10,000, $15,000,
$50,000, $100,000, $500,000 and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up
to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Tuesday, July 27, 1971.
Tenders will not be received
at the Treasury Department, Washington. Each tender must be for a
minimum of $16,000. Tenders over $10,000 must be in multiples of
$5,000. In the case of competitive tenders the price offered must
be expressed on the basis of 100, with not more than th~ee 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.
(OVER)
- 2 Banking institutions generally may submit tenders for acco~
c~3tomers provided the names of the customers are set forth in s~
tenders. Others than banking institutions will not be permitted I
submit tenders except for their own account. Tenders will be reel
without deposit from incorporated banks and trust companies and frOll
respons ible 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 I
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 0
accepted bids. Only those submitting competitive tenders will be
advised of the acceptance or re.iection 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 biddl
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 2, 1971,
in cash or other immediately available funds or in a like face amount oj
Treasury bills maturing
July 31, 1971.
Cash and exchange tendecs will receive equal treatment. Cash adjustm
will be made for differences between the par value of maturing bills
accepted in exchange and the issue price of the new bills.
Under Sections 454 (b) and 1221 (5) of the Internal Revenue Code 0
1954 the amount of discount at which bills issued hereunder are sold is
considered to accrue when the bills are sold, redeemed or otherwise
disposed of, and the bills are excluded from consideration as capital
assets. Accordingly, the owner of Treasury bills (other than life
insurance companies) issued hereunder must include in his income tax
return, as ordinary gain or loss, the difference between the price~U
for the bills, whether on original issue or on subsequent purchase, a~
the amount actually received either upon sale or redemption at matu~ity
during the taxable year for which the return is made.
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 fret
any Federal Reserve Bank or Branch.
000
~\
lheDepartmentof the
WASHINGTON, D.C. 20220
TREASURY
TELEPHONE WD4·2041
FOR IMMEDIATE RELEASE
July 21, 1971
INTEREST RATES ON OFFERING OF EURODOLLAR CERTIFICATES
The Treasury announced today that interest rates for the $1.0
billion strip of Eurodollar Series Certificates of Indebtedness offered
on July 19 to replace an equal amount of EXIMBANK promissory notes
maturing on July 26 will be as follows:
MATURITY
SERIES
DATE
RATE PER
DAYS
ANNUM
F-197l
Sep. 28, 1971
64
6-3/8%
G-197l
Oct. 12, 1971
78
6-3/8%
Interest will be computed for the actual number of days to maturity
based on a 365-day year. It will be paid with the principal at the
maturity of each series.
FOR RELEASE ON DELIVERY
STATEMENT OF SIDNEY S. SOKOL
DEPUTY FISCAL ASSISTANT SECRETARY, U. S. TREASURY DEPARTMENT
BEFORE THE SUBCOMMITTEE ON POSTAL OPERATIONS
OF THE COMMITTEE ON POST OFFICE AND CIVIL SERVICE
UNITED STATES SENATE
ON H. R. 135
THURSDAY, JULY 22, 1971, AT 10 A.M.
Mr. Chairman and Members of the Subcommittee:
I welcome this opportunity to appear before you to
support H. R. 135, a bill designed to provide for the
distribution, to the SO States, and to the District of Columbia,
Puerto Rico, the Virgin Islands, and Guam, of most of the
remaining funds representing unclaimed Postal Savings System
accounts.
This legislation, as passed by the House on May 3,
1971, is similar to H. R. 19400 introduced in the 91st Congress
pursuant to a recommendation of this Department.
Our purpose
In recommending this legislation initially, and for supporting
it now, has been to provide a more practical and equitable
method than presently exists for the SO States and the four
other jurisdictions to obtain an appropriate portion of the
unclaimed amounts, while retaining in the Treasury sufficient
funds to meet possible future claims.
-2Liquidation under Public Law 89-377
I would like to review briefly the Treasury's
1iquidati~
of the Postal Savings System under Public Law 89-377,
March 28, 1966.
enact~
The 1966 legislation discontinued the Postal
Savings System as of April 27, 1966, and transferred as of
July 1, 1967, the remaining funds to the Treasury for deposit
in a trust fund for unclaimed moneys and for liquidation. As
of that date, the Post Office Department transferred to the
Treasury a total of $56,789,000 to cover unpaid principal of
$52,934,000 plus $3,855,000 for estimated accrued interest.
On June 30, 1970, an additional amount of $8,350,000 was
transferred by the Post Office Department to cover the unpaid
liabilities for estimated accrued interest and principal, as
reconstructed by the Treasury, making a total transfer of
$65,139,000.
From July 1, 1967 to June 30, 1971 the Treasury has
liquidated 84.3 percent of the original unpaid balance.
Payments during these four years of liquidation have totalled
$54.9 million, consisting of $44.9 million in principal and
$10.0 million for accrued interest.
In terms of number of
accounts, however, only 104,000 accounts have been paid off.
-3This is about 18 percent of the total number of 580,000 accounts
that were unpaid at the outset of the Treasury liquidation
operation on July 1, 1967.
Available unclaimed funds and pro rata shares of the jurisdictions
As of June 30, 1971 there was an aggregate liability of
$10.2 million, consisting of $8.2 million for principal and
$2.0 million for accrued interest.
This is the liability on
the total of 475,500 unpaid accounts, most of which are small
in amount.
A table attached to my statement shows as of June 30,
1971 the remaining principal balance of the deposits which
were made in each of the 50 States and the four other jurisdictions,
and the percentage, or pro rata share, of each of these 54
entities in the total.
The table also shows the amount of funds
which each of the jurisdictions would have received if a first
distribution of $5,000,000 had been made as of June 30.
These
figures and percentages will, of course, change as the liquidation
continues.
During fiscal year 1971
t~e
Bureau of Accounts paid
out an average of about $130,000 a month on claims.
Outline of the legislation
The first section of H. R. 135 would authorize the
Secretary of the Treasury to determine how much of the balance
-4in the trust fund account need reasonably be retained to pay
future claims from rightful owners and then to distribute the
surplus to the 54 jurisdictions on a pro rata basis.
The pro
rata basis is simply the ratio of the balance of each State
account to the total amount available for current distribution.
This first distribution would be made within sixty days after
enactment of this bill and subseql1.ent distributions would be
made on such dates as the Treasury may set during the four
following years.
The balance finally retained after the fifth
annual distribution would be held available to pay future claims.
I think it is appropriate to state that even with this so-called
retention balance, the States, as a whole, would have a
considerably higher "net profit" under H. R. 135 than through
any other means.
The second section would authorize appropriations without
fiscal year limitation to the trust fund account, in the ev~t
that the trust fund balance, because of the distributions made
under the first section, is insufficient to pay claims.
The
balance which will be retained in the trust fund after the
fifth and final annual distribution will be the amount estimated
to cover future claims.
Inevitably, it will be slightly hiP~
or lower than what will ultimately be needed.
-5Reason for the legislation
Since the passage of the 1966 Act many of the States
have pressed claims, under their laws providing for State
custody or escheat of unclaimed funds, for the unclaimed
accounts of Postal Savings depositors in those States.
This
Department opposed State claims for custody and administration
of these unpaid accounts on the ground that the Department
had no authority to transfer the custody and administration
given to it by the Congress.
However, the Postal Savings System
Act had provided (39 U.S.C. 5222, 1964 ed.), and Federal courts
had determined, that entitlement to an account should be
determined by State courts.
Consequently, the Department
issued regulations on August 12, 1969 (34 F.R. 13031; 31 CFR
257.3) providing for recognition of a State court judgment of
escheat to the State under applicable State law, and for
furnishing to a State, upon request, of records of "inactive"
accounts, i.e., those which had been 20 years without activity
at the time of transfer of records from the Post Office
Department.
Enactment of H. R. 135 would eliminate significant burdens
and expenses for the States, including legislative action to
-6enact an appropriate escheat statute; sorting 'out the
addresses on account cards acquired from the Treasury for all
unliquidated accounts pertinent to the States; advertising
such accounts in the appropriate locality or otherwise
attempting to reach each depos'itor by ma'il j obtaining the
State court judgment of escheat; and handling individual'
claims received after escheat.
All burdens for the Treasury,
which are implicit in the foregoing, would likewise be precluded
by the proposed legislation.
As for the general public, the
bill would preserve for all future claimants the right to look
directly to the United States for their money, promptly upon
submission of their claims, as they fully expe'ct.
I believe that the desirability of this legislation is
recognized by those States which have taken an active interest
in this subject.
In fact, it is our understanding that several
States are refraining from initiating court action to escheat
the inactive accounts in expectation of the passage of this
distribution legislation.
At the request of this
Departm~t
the Director of the Office of Intergovernmental Relations of
the Office of the Vice President has advised the 53 Governors
and the Mayor of Washington of the pendency of H. R. 135.
-7STATUS OF POSTAL SAVINGS ACCOUNTS
As of June 30, 1971, the total unpaid balance for the postal
savings accounts on the books of the Treasury was $10,199,450~
consisting of:
Unpaid principal • • • • •
Accrued interest • •
...•
. $8,204,576
1,994,874
$10,199,450
The attached schedule gives the breakdown of unpaid principal
balances according to each of the 54 jurisdictions that would share
in the distributions (the 50 States plus District of Columbia, Guam,
Puerto Rico and Virgin Islands). It also shows the "sharing" percentage for each jurisdiction.
We expect that a total of $5 million will be freed up for the
first annual distribution. Thus, for example, New York State (which
has the largest "sharing" percentage) would receive about $861,000
in the first year.
Note:
The lI sharing" percentage for each jurisdiction is the
same whether computed on the basis of unpaid principal
balances alone or unpaid principal and accrued interest
combined. This is because the system-wide total of
accrued interest is an estimate, distributable to the
54 jurisdictions proportionately according to the unpaid
principal for each jurisdiction.
-8-
POSTAL SAVINGS SYSTEM LIQUIDATION
UNPAID PRINCIPAL BALANCE BY LOCATION OF DEPOSITORY
AS OF JUNE 30, 1971
ACTIVE
ACCCUNTS
LOCATION OF DEPOSITORY
71.... 146 .00
LASK ....... ' •••
I---- 10 344.00
H IlONA ••••••••••••••••••••••••
41 ~':;.,7 .00
47 f':;.,1.00
RIC.ANSAS • • • • • • • • • • • • • • • • • • • " ' "
hRQ R47.QO
ALlfORNIA ••••••••••••••••
O.
/\1·1\'·11\ • • • • • • • • • • • • • • • • • • • • • • • •
I
4:
j;
91602.00
8,029:006.':;.,12 00
••••••••••••••••
ONNECT I CUT ••••••••••••••••••••
lLAWARE •••••••••••••••••••••••
LOR 10 . . . . . . . . . . . . . . . . . . . . . : •••••
(ORGIA • • • • • • • •
I
•••••••••••••••
.---.45,599.00
107 621.00
8 182.00
334.622.00
104 227.00
40,142.00
5,481.00
-NTUCtl.Y •••••
JU I 5 I A Nil, ••
I
I
•
I
••••••••
•••••••
0
,
54,688'.--00- t--~·;848:-00'·
••••••
"N[ • • • • • • • • • • • • • • • • • • • • • • • • • •
'RYLANO • • • • • • • • • • • • , • • • • • • • • • •
~5SACIIUS(
T T~ • • • • • • • • • • • • • • • • • •
ICI1I GAN ••••
t ••••••••••••••• ,
INN£$OTA ••••
ISSIS~IPp,
I
••
••••
I
••••
;
••
•••••••••
ISSOURI • • • • • • • • • • • • • •
I
lNTANA • • • • • • • • • • "' . ,
••••••
I
I
29,462.00
__ ._.21...6.15_,.99_
14,23'l·00
VADA • • • • • • • • • • • • • • • • • • • • • • • ".
w
5824.00
147 310.00
HAMPSH I Rf • • • • • • • • • • • • • • • • • •
wJERs£r •••••••••• , ••••••••••
w M£xlco • • • • • • • • • • • • • • • • • • ~
W yORK ••••••
I
IRTH CAROL I NA.
lR1H
•••••••••
I
I
•••••••••••••••
DAKOTA • • • . • • • • • • • • • • •
110 • • • • • • • • • • • • • • • • • • • • • •
LAHOMA • .' ••
t •••
I
:E<.;ON • • • • • • • • • • •
••••••••
I
••
I
ISLAND ••••••
lUTH
CAROL I NA ••••••
I
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I
If
0
,
I
f
•••
••••
I
1.0
••
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I
••••••••••••••••••••
riMONT • • • • • • • • • • • • • , • • • • • • • • • •
Rl.IU IA •••••••••••••••••••••••
I
••••••••
S T ViRGINIA • • • • • • • ' "
!'iCONS IN ••
.Jt-\ I
I
•••
00
I
I
•••
•••••••
•••••••••
0
•••
0
Nr. •••••• , • •••••••• "' ••••••
- T" leT
,or
CulU~1(1IA •••••••••••
'" .. .........................
,
: ,(10
~,;
It...
H"
J
•••••• '"
-1.tl6
O.b)
45,623.00
9~,000
33 000
0.55
28,000
----U;71- -----. --35;000--
--~536-:-OO-
6:10
0:60
tI,090.00
49,001.00
5 000
30,000
~-
--
.23._
0.25
17.~~
r.nr1-------~Q7
3.01
462. O_Q.. ___ 2471175 ..00
64,212.00
6,439.00
___--.J:8 , ~~~2_0_ t-___~1l85.!99_
':;., ~6L.Q.Q... r--.
9
2.2b~-
20,628.00
9( ,755.00
8~.00
''In....2l1....QQ.
16,999.00
163 167.00
18,747.00
596.00
'i2.1h'-(:)()
6.n1.00
??"I ~2illh.oQ_
18,199...00
205,085..00
f - - - 12,710~~ _ _ _L.!L8ii.oQ r--~+.2.q. 00
166.00
352.00
186.00
0:" (110...00::.-
39,318.00
15,377.00
27.L9.QQ......_
0.13
1.41~,039.00
1~J6.QQ.. ._ _ 2...2.!±.8.00
21,000
(JJ ,oau
1_~1____ ~ _--2.~ O0<L_
0.23
11....Q9~
-iH
2,925.00
28i ~t7 .00
7,7 8.00
125,000
240,000
._- --31,000-'-
0.53
---.;.J?.L.~~
113,~
12,000
8151,000 I - - GLSloO
-3" 000-
._ r--!~Q.9Q--
0.78
0:1)3
==~i~5-=~·~
0.21
--- 1.99
39,000
f-
4'2;000-l+· _ _--___ • 35
__ ..!J.000
._. ___
10~_
100 2000
0.23
18,151.00
11,000
32 000
o_h4
____ 2Ja.._._ r----l36...oO!L-O~
-
54,695.00
__
..Q..aoo.,..-
- 2J .
'-·0
0.67
34,000
7Fooo
~_ 87,~Ti(.OO-t----3'D73b-.-OOI----r25,Tfs3:00 --i-:-53--::..
20, 12 .. 00
1-.50!E..7.00
2 328.00
-.
••••••••
_=
5.zE_'±.LOO
26,053.00
~.!l~ _ _ _ _1 ,.000 __
11,0:34.09. f-~~1.9~~'0.9-1- __0~7§_.__
3'8",000 ._
.3,551.00
5,879.00
0.07 -- 1 - - - -4.000
..
-.---
,--~~2J!?§:""~9..._
r-- __ ...i~058._QQ..e-. __~~~4.00 - _____~O____ ~ 929.00
929.00
0.01 .
u ••••••••••••••••••••
:I...\N~:'
5,000
13,000
776,000
.-
~5;JZ
13,801.00
43,263.00
4 701.-00 -:'==-_2.~33,j.00
87 00
c---4'~*oo
.
~E31 .~~ - - 1.2.z.::3KOO
---185,713.00
38 ','fio 3':00
13,532.00
1'i':;., 275.00
••••••
0.10
0.26
53,j3~.OO
4ah.!t95...QO___ f----. .Jfi~
••••
•••••••••
••••••••••••••••
~I1INGTON • • • • • • • •
57,773.00
4911~.:..0_
I
XA$ • • • • • • • • • • • • • • • • • • • • • • • • • •
I
19~:713.00
••••
N'~r.:'S[L • • • • • • • • • • • • • • • • • • • , ••
A .........
17,703.00
1,131,942.00
88,9tj7.00
4,312.0Q
••••••••••
NNSYlVANIA • • • • • • • • • • •
IOO[
'UTH UAKClTA ••
••
••••••
5.000
231,000-67 000
.. ----.
2.49
203,905.00
34,119.00
4.tlO
49,577.00
393:bG7.00
0.62
5Q,88b.oo
13, (llf3. 00
-r;,090.00
35,024.00 ---0:113
1.70
24 ii5.00 1---.. i39, 837. OD _.
30,9~4.00
••
BflASKA., • • • • • • • • • • • • • • • • • • • • •
10,UlJU
----r:j"4--
7,971.00
21,240.00
J.,273,663.00
152,563.00
1,698:00
5,868.00
11-;'·742~QO
••••••••
37,000
-.
~
169.786.00
O
34
f - - . i'Oc . ~~
3
3.00
o •••••••••••••••
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11,000
..
29,000
34,000
4t15,000 -.
l8,278.00 r--·--bo~;t84; 6b-- - -.. 6 74 --.. '-- ------37·000---- -
42 5Q§:00
6 392.00
43,133.00
••••••••••
0.74
1.52
0.11
60,316.00
1211;495.00
8,835.00
378,573.00
109,614.00
53.00
43,951.00
5, 3t)? .00
....... "' . . . . . . . . . . . . . . . . . . t · • • • • • • • • •
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r
Ib,~74.00
OWA •••••••••••••••••••••••••••
LLINOIS • • • • • • • • • • • • • • • • • , • • • • •
0.22
0.'58
47.74q.00
14,717.00
1-._
3,370.00
3,203.00
250,470.00
15,t:l42.00
5,433·00
I
I.' ..•.............
1 ,373.00
$
8s1.07.00 _ _ ~~~~~?8. 09- f-.--g~-. . 70
08.00
4 601.00
18 037.00
1,023,193.00
136 721.00
47,90b.OO
lWA II • • • • • • • • • • • • • • • • • • • • • • • •
DAHO • • • • • • •
_11
----~~<::~--- f----- .1'~~. .~L __
.Ji__ ....§~ , 948 . 00
106 061.00-
to'
OLORADO • • • • • • • • • • • • • • • • • • • • • • •
INITIAL
DISTRIBUTION
.ILLUSTRATED
PEBCENTAGE
OF
TOTAL
UNPAID PRINCIPAL
INACTIVE
ACCCUNTS
80,985.00
b ;795.00.
12,488.00
302.0.0
--15"7-1
-
1. 0'7-· - --54,0
tl7 ,780. o(f-
12,,]90.oCf~ __-=-.Q..ib=~~
2
--
____ 92..00~-1
~;uilrorAI •.•................. ~_1..§L~.?L516~-OQ-l-t..b332l013.00 ~!2!±..z.229~Q2.. ___ .3..9~~~__ . __5_,000,000 __
m, MIse ......... , ...... >---jJ).Dll~~
J.AriCE •••••••••••••.•.•••
---------
3.
00
10. D~>---".lL _.
+ ___
n
....
j
•
~~?~~~~~.~Z__L~~n~1~~1.00
-.Le.~~~~~~~_--_..~-~~~~~~_-_-~-~--==_~~_:~j
_----.--_._._ __
-------_._._-----_....
[llustrates a distribution as of
Tune 30, 1971, aBs~ II t!iliW.l
"IQlOunt of $5,000~.
--~--
...
._---
-
....
--- ... -
gJ Less than $1,000
DEPARTMENT OF THE TREASURY
.::..-----------.---.~
UNITED STATES DEPARTMENT OF THE TREASURY
OFFICE OF THE SECRETARY
PRESS CONFERENCE:
HON. JOHN B. CONNALL Y
Secretary of the Treasury
TRANSCRIPT OF PROCEEDINGS
Place: Washington, D. C.
Date:
347-0224
July 15, 1971
MILLER-COLUMBIAN REPORTING
SERVICE
1104 Carry Building
15th and K Sts., N.W.
Washington, D.C. 20005
CERTIFICATE OF OFFICIAL REPORTER
The attached transcript of Press Conference was
prepared from verbatim stenotype notes of the
undersigned attending Official Reporter.
It is hereby certified to be a full and accurate
Transcript of the meeting as the same transpired
July 15, 1971, in Room 4121 of the U.S. Treasury
Building, 15th and Pennsylvania Ave., N.W.,
Washington, D. C.
/ s / WILMA ::.;;;A~
• ...;;M=I=L=L=E......
R_ _ _ _ __
MILLER-COLUMBIAN REPORTING SERVICE
WAMiller
UNITED STATES DEPARTMENT OF THE TREASURY
'Office of the Secretary
PRESS CONFERENCE
Room 4121 Treasury Building
15th and Pennsylvania Ave.,N.W.
Washington, D.C.
THURSDAY, July 15,1971
A General Press Conference was held by the Secretary
of the Treasury on Thursday, July 15, 1971, commencing at
approximately 10:00 o'clock, a.m.
PARTICIPANTS:
HONORABLE JOHN B. CONNALLY
Secretary of the Treasury
DR • MURRAY WEIDENBAUM
Assistant Secretary for Economic Policy
MR. CALVIN BRUMLEY
Special Assistant to the Secretary
(Public Affairs)
and
MEMBERS OF THE PRESS
000
2
MR. BRUMLEY: Good morning. Glad you could be with us
today. On this nice, sunny July 15th Thursday, we
thought we would hold a press conference.
With the Secretary this morning is Assistant Secretary
for Economic Policy, Murray Weidenbaum, sometimes
known as a walking economic encyclopedia. This morning,
he is a sitting encyclopedia.
The Secretary will have a few brief opening
remarks and then he will field your questions.
SECRETARY CONNALLY:
Thank you, Cal.
You know, wherever I am, I try to read the local
papers and, fortunately, I was in Texas last week, in my
home town. I took great pleasure in reading the
Florresville Chronicle Journal. When I got back in
Washington on Sunday, of course, I picked up the Star and
the Post, and I was rather bemused when I picked up the
Financial Section of the Washington Post on Sunday.
You know, when you are in this business, you
become grateful for small favors, and you are intrigued by
things that happen to you and, boy, I am particularly
grateful to you, Bart! I am particularly grateful to you
that, on this layout on the Financial page, you did not put
me to the left of Lenin.
(Laughter)
MEMBER OF PRESS:
You are welcome, sir.
SECRETARY CONNALLY: With what, I hope, was a
note of levity, I will start off simply by saying I have
no announcement to make, this morning, of any particular
significance. This is the first general press conference
that I have held, I believe, since becoming Secretary of
the Treasury. This is what I hope will be a continuing
series of them, from time to time. We will try to make
them as frequent as your interest would indicate, and as
often as the facts justify calling all of you together. I
don't like to do it unless we have something at the moment
to discuss. We have had a very busy week, this week. You
are as well aware of much of what has happened as I am.
3
SECRETARY CONNALLY (CONTINUED): We are making progress
on a great many programs that the Administration has sent to
the Cong~ss. We have had action in the Senate on the
Lockheed proposal. We have had continued activity, in the
Ways and Means Committee, on Revenue Sharing and,
without further ado, I will submit to questions and hope
that I can answer any of them that are of interest to you.
CAMERMAN: Mr. Secretary, a procedural question first.
Do you mind sitting down, sir?
SECRETARY CONNALLY: I will do it, but I think
better on my feet. I assume that you will all make
allowances for that, so I will sit down. (LAUGHTER)
MEMBER OF THE PRESS:
SECRETARY CONNALLY:
Mr. Secretary?
Yes, sir.
MEMBER OF THE PRESS: This plan to have $2 billion
for lending to Industries; is that the equivalent of what
we used to have when we had a National Bank in the days
of George Washington and Andrew Jackson?
SECRETARY CONNALLY: I don't think it can be
directly related to that, or to the RFC. I think it is an
effort on the part of the Finance Committee, rather than the
Banking Committee of the Senate, to provide a means by
which some relief, and some assistance, can be given to
companies and corporate entities in this country that, for
whatever reason, find themselves in dire trouble.
MEMBER OF THE PRESS: Did you find, Mr. Secretary,
that Dr. McCracken's assessment of the economic situation,
last week, before the Joint Economic Committee, was too
pessimistic?
SECRETARY CONNALLY: No. I think Dr. McCracken
tries, as we all do, to be realistic. We don't try to be
either pessimistic, or optimistic. I think we try, as best
we can, to reflect circumstances as they are; the facts
as we know them; and in anticipation offue future, we try
to be as realistic as we know how to be. When he indicated,
for instance, that he could point out about $7 billion in
added fiscal stimulant already in fiscal 1972, I think he
4
SECRETARY CONNALLY (CONTINUED): was not being pessimistic
about it. I think he was being absolutely realistic. I
think that is true. And there may well be further fiscal
stimulant, depending on what Congress does.
MEMBER OF THE PRESS: The GNP figures are due
tomorrow. I am sure you know them. Can you tell us what
they are?
SECRETARY CONNALLY: No, sir. You are right on
both counts. I do know them,; but I cannot tell you. I
don't think it is appropriate that I do. They are not quite
ready for release. As you know, we don't release them in
the Treasury. I think I would be violating confidences if
I did do it.
MEMBER OF THE PRESS: Mr. Secretary, can you tell
us something about the outlook for fiscal 1972 and,
particularly, whether or not we are likely to have a full
employment deficit?
SECRETARY CONNALLY: No, I would hope we would not.
I would hope we would not have a full employment deficit
in 1972. I don't anticipate that we will. Again, we are
crystal gazing, I think, in trying to anticipate what~
going to happen 12 months ahead.
In a very general sense, I think I can say to you
that I am very confident about what the rest of this year
looks like and, frankly, all of next year. I am speaking
now of the calendar year -- the remaining portion of 1971
and all of 1972. I am very confident. I am, for the reason
that a number of things have occurred; that the second
quarter of 1971 is going to be strong. It is going to
indicate, I think, great and broad strength in the economy.
It will not be of such magnitude as was reflected by the
first quarter. Yet, beyond any question, I think it has to
be construed as very strong and, even, perhaps, more
Significant, are some of the factors that go to reflect this
strength, not the least of which is retail sales.
Retail sales, as you know, have been very strong. They
were last month running approximately $33 billion, and thiS,
reflects a very wide, broad strength in the economy. This
is the very thing that we have been looking for -- the
reaction of the consumer. He is expressing himself now in
no uncertain terms.
(0 I
5
SECRETARY CONNALLY (CONTINUED): Another factor that I
think reflects a very broad and expanding strength in the
economy are the 12 leading indicators. They have gone up
for the past seven months, each month, and it would be
unique in economic history if, following such increases over
such a period of time, it does not result in further and
broadened expansion and strength down the road. So I think
we have every reason to be optimistic.
MEMBER OF THE PRESS: Does your optimism about a full
employment balance imply that you are a little more
optimistic than Dr. McCracken about achieving that 1065 goal?
SECRETARY CONNALLY: I don't think we will achieve
1065, very frankly. With the short haul that we have had
in the first quarter and the second quarter, I think to
achieve the 1065 now, we have to have an expansion that is
unprecedented -- ranging approximately 14 percent in real
growth. I don't think we can anticipate that. I don't
think,at this moment in time, that we can expect to hit
the 1065.
MEMBER OF THE PRESS:
SECRETARY CONNALLY:
How did you ever get that figure?
The 1065?
MEMBER OF THE PRESS: Yes.
SECRETARY CONNALLY: Frankly, I did not get it.
I don't know how "they" got it. (Laughter) It was here when
I got here.
MEMBER OF THE PRESS: Does that indicate to you that they
could have improved their calculations a little?
SECRETARY CONNALLY: No. No. No. I think they were
absolutely justified in making the assumptions, or the
estimates, that they did. I think as circumstances now
exist, their anticipations in December and November and
January were somewhat optimistic, but I find no fault with
the conclusions that they reached. They were looking for
a strong year. It is going to be a strong year. It is not
going to be quite as strong as they anticipated. So I
think we will have a short fall so far as the 1065 is
concerned. I find no criticism.
6
MEMBER OF THE PRESS: Mr. Secretary, if we continue
on this path, how high would unemployment be at the end of
the year; and how fast would prices be rising?
SECRETARY CONNALLY: I would think we have reached a
point where we can anticipate that the rate of inflation
should stabilize. I certainly think, with the expanded
economic activity, that we can hope for a stabilization in
the rate.
So far as unemployment is concerned, as you know,
it went down in June as opposed to May -- from 6.2 to 5.6
I think there is a lot of statistical abbe ration in this,
very frahkly. I don't think we ought to view that as a
very significant down trend because I think the reverse will
happen to us, probably, in September, but I think it is fair
to say that the unemployment figures -- if you take the
State unemployment figure on which Unemployment Compensation
is paid, it was stable, and it is stable over the past two
months.
I think you can begin to see in the Fall, with all
of the things that are happening in the economy, with the
monetary stimulation that I alluded to the last time
we were together, a couple of weeks ago, or when I was
with a great many of you; with the fiscal stimulation that
occurs with the $2.2 billion Bill that the President just
signed with respect to Public Service Jobs; with all of the
other activities that are going on in the Administration;
with the summer jobs; with the Alliance for Businessmen,
and the 150,000 jobs that they expect to provide this year;
with the directives which the President has given the
Secretary of Labor on June 11, with respect to the actions
that he wishes him to take; and I can give you those specific
actions -- I don't want to take your time to do it -- but
there are about 6 points that he outlined there that he
wanted the Secretary of Labor to take; with the added job
opportunities; with the ADR, with its application, its
encouragement of new plant expansion, new facilitie's
acquisitioned by business; this certainly should have a'
salutary effect so far as the creation of jobs is concern~.
SECRETARY CONNALLY (CONTINUED): Lockheed, itself, is a
program that is going to preserve at least 60,000 jobs in
this economy_ There are a great many things that are
happening that, in my judgment, are going to provide more
and more jobs in this economy.
Now, I don't want to be too optimistic in terms of
any very great and substantial decrease, simply because
we have more and more people entering the Labor market all
the time. As we bring people home from Vietnam, as they
are released from the Service, as they enter the Labor
market, this is going to put additional stress on the
economy to find jobs for these people. But every effort
is being made to do so.
MEMBER OF THE PRESS: Mr. Secretary, if
Dr. McCracken's analysis of what Congress is doing with the
Budget is correct, you had only, in the Budget that was
submitted in January, $100 million balance of full
employment. Are you proposing major budget cuts in other
areas or, perhaps, a tax increase, to maintain that balance?
SECRETARY CONNALLY: We will have to just see as we
go along, but we are not -- the 1065 figure has nothing
to do with balancing the Full Employment Budget, as a matter
of fact. So I am not prepared to say that we are going to
have to take any drastic action as a result of the items
that he can identify.
MEMBER OF THE PRESS: Mr. Secretary, to get back to
this: As a politician, how do you explain the $2 billion
proposed slush fund for lending to Industry, with the
President's veto of a Poverty Program?
SECRETARY CONNALLY: Well, I don't recall that he vetoed
a Poverty Program. You will have to identify that for me.
Secondly, I don't know what you are speaking of when
you are talking about a $2 billion "slush fund". You wi.ll
have to identify that for me.
MEMBER OF THE PRESS: Well, what I mean is, a lot of
people would like to have that kind of opportunity to bail
themselves out.
SECRETARY CONNALLY:
you speaking of?
What kind of opportunity?
What are
8
MEMBER OF THE PRESS: If they get into business trouble
or financial trouble, the Federal government doesn't help the
little guy. It comes along and makes proposals to help the
big one. That is 'what I am speaking about.
SECRETARY CONNALLY: Well, I don't want, at this pOint,
to become argumentive with you, but I would like -- if I
understand your question, I assume that the $2 billion
that you refer to is the Bill whichthe Senate Banking and
Currency Committee has indicated they were going to pass out
to the floor, with respect to aid to major corporations and
companies and entities of the country_
Is that correct?
MEMBER OF THE PRESS:
That is right.
SECRETARY CONNALLY: I think it is no secret that
we have a Small Business Administration that has been in
existence for some time.
I think it is no secret that we have just created a
new agency -- SIPC
to guarantee investors' money in
brokerage firms.
I dorlt think it is any secret that we guarantee people's
deposits in Savings and Loans.
It is no secret that we insure people's deposits in
banks.
It is no secret that the Export-Import Bank guarantees
all kinds of loans and we, also, under OPIC, now guarantee
overseas investments. We guarantee companies against
expropriation.
All in all, we guarantee housing loans.
All in all, the Federal government has, to this point,
engaged in the guarantees of approximately $160 billion.
So when you pose the question in terms of a "slush fund",
.
I categorically deny that it is such.
I deny that he vetoed any Poverty Program.
Far from it. He just signed the $2.2 billion program to
provide 150,000 jobs throughout the country.
9
SECRETARY CONNALLY (CONTINUED): He did veto the Public
Works Program. H~ issued a statement at that time, giving
his reasons for doing so, and I think that is the best answer I can
give you as to why he did it.
MEMBER OF THE PRESS: Mr. Secretary, the Conference
Board in New York, this week, said that consumer confidence
has dropped considerably within the past two months.
The University of Michigan survey, yesterday, agreed
with th~t conclusion and, also, said that there was a lack
of confidence, by consumers, in the Administration's policy
because of a negative attitude; in saying nothing would be
done. So that this is contributing to lack of consumer
confidence.
You said -- I believe you said -- that there is growing
consumer confidence.
SECRETARY CONNALLY:
about it.
MEMBER OF THE PRESS:
I don't think there is any question
Do you agree with these reports?
SECRETARY CONNALLY: No. My figures that I gave you a
few moments ago, I think, are the best answer that I have
to your question.
MEMBER OF THE PRESS: What figures were they? These
were preliminary figures from the Census Bureau, weren't they,
which are the subject of statistical error?
SECRETARY CONNALLY: Well, if they are, they are
probably low. They will probably increase. That has been
the history all year.
The best evidence of confidence, it seems to me, is in
the retail sales. I just pointed out that, last month,
it was $33 billion.
The month before that, it was $32 billion 4, or
thereabouts.
Retail sales are going up about 12 percent a year.
is extremely strong.
In January, the percentage change was 2.2 percent.
In February, it was up 1.4 percent.
This
SECRETARY CONNALLY (CONTINUED):
an additional 2.1 percent.
In March, it was up
10
In April, it was up an additional 1.8 percent.
In May, it did drop off, 1 percent.
MEMBER OF THE PRESS:
of sales taken on?
SECRETARY CONNALLY:
Is that a pattern of acceleration
Sure, it is.
MEMBER OF THE PRESS: How much of that was accounted for
inflation and population growth?
SECRETARY CONNALLY: Some of it is, obviously, inflaton.
The inflation factor depends on what figure you use. Your
Wholesale Price Index is, roughly, running at the rate of
5 percent for the first six months, but inflation, certainly,
does not account for all of that. I think the figures,
themselves, indicate a very, very strong consumer demand
throughout this country, for a great many products; and I
think it is far more meaningful with a great many other
specific items that you could use, to try to judge the economy.
So I am not sure I agree with the two groups that you
referred to, about the lack of consumer confidence. I
think there is some confusion. I think there is some
concern, very frankly, and there are some factors that
are news, that tend to confuse people and I am not prepared
to say that we are not going to have some bad news. We are.
I think the news that has been out the last couple of months
about our negative balance-of-trade, just in the Mercantile
trade, is not good. It is, both months, approximately a
negative balance of over $200 million, and this is not good.
This does cause some concern. It causes me some concern.
There are going to be some factors that the people just want
to be pessimistic about. If they want to look at something
that they can be downhearted about, they are going to be able
to find it. All I am saying to you is that I think if you
look at the overall poation of this economy; if you look at
the number of people employed, which is roughly, in the
non-farm area, 70.5 million; if you look at the personal
income throughout the country -- the latest figure I have is
$847.4 billion; if you look at retail sales; if you look at
industrial production, which is going up; if you look at the
12 leading indicators, which have gone up, as I said a moment
ago, every month for seven months; now, you cannot come to
any conclusion, it seems to me, but that we are engaged
~
11
an expansion, and an expansion of considerable proportion;
that is broad in its sweep and deep in its track.
Now, to say that we are going to reach a point that every
person in this country might hope we could reach, I
am not prepared to say that.
MEMBER OF THE PRESS: Mr. Secretary, in January, the
Administration said that the country could take confidence
in the 1065 GNP figure because the Government had the power
and the will to make that the GNP for the year.
Now the Government is saying it is not going to be the
achievement.
SECRETARY CONNALLY: Well, obviously, I don't recall
precisely, and I assume you are paraphrasing what the
Government said in January. I don't question that they
proposed the 1065. They inditated that we had some hopes
of reaching it. I don't think we now will do so.
MEMBER OF THE PRESS:
They said they were more than hopeful,
sir.
SECRETARY CONNALLY: I don't think they ever said they
were going to guarantee that we would reach the 1065. I think
they indicated they had the will to do it. I think they do
have the will to do it.
MEMBER OF THE PRESS:
SECRETARY CONNALLY:
MEMBER OF THE PRESS:
He has paraphrased it very accurately.
Sir?
He has paraphrased it very accurately.
MEMBER OF THE PRESS: They said they had the will and the
power to do it. That is my paraphrase.
Now, in January, we find that the will has been lost.
SECRETARY CONNALLY: No. The will has not been lost at all.
I just think that we are going to miss it, but the will is not
changed. We are still extremely interested in providing an
economic expansion. I am saying to you that we are going to
do it.
12
SECRETARY CONNALLY (CONTINUED): Now, I don't think
that the fact that you miss an estimate that is related to
the strength and the vitality of this economy, of something
that is as enormous as this, involving as many people as it
does, and a society as complex as this; I think it is unfair,
indeed, for anybody to assume that, because you are not able
to pinpoint what is going to happen in this country and in
this economy, with all of the vissicitudes of fortune over
a year in the future, it is being unrealistic in their
interpretation of what anybody said.
MEMBER OF THE PRESS:
predicting a new figure?
Would you give us a shot at
SECRETARY CONNALLY: No, of course not. I have just
given you a good reason why I am not going to do that.
(LAUGHTER)
MEMBER OF THE PRESS: Sir, a few minutes ago, you told
us that inflation for this year -- for the rest of the year -.
should stabilize.
The Consumer Price Index -- the last figures out -rose at an annual rate of 7.2 percent.
Is this the rate you expect to stabilize?
SECRETARY CONNALLY: No. No. Take the latest figures.
Again, the thing I want to try to do is try to make it
abundantly clear to you that I think we all can make a
mistake; and I am, frankly, going to try to keep from making
it. I don't want to put too much emphasis on any particular
figure for any particular month; or for any particular point
in time, if it is of short duration, especially. You have
unusual circumstances that occur. You have a change in your
CPl. In January, it was .3 percent. In February, it was
.2 percent. In March, .2 percent. In April, .3 percent.
Now, in May it was .6 percent but I am not willing to assume
that the .6 percent figure is the right figure; not when I am
looking at four months, two that were .3 percent and two that
were .2 percent. I have every reason to assume they are more
accurate than the .6 percent, but I am not even going to
place reliance on those. The rate that I think you have a
right to assume, just from the figures available to you, is
just about .3 percent. I think that would be an assumption
we ought not to make.
./
I 0 Zy
13
SECRETARY CONNALLY (CONTINUED): All I am saying
to you is that I don't think we are doing ourselves ... by "ourselves", I am talking about this Government; this
Country -- we don't do it any good by taking every little
bit of piece of information that we get to either make
ourselves look good, or make ourselves look bad.
We have three basic problems with which we are
concerned. We, obviously, are continuing the fight against
inflation. We are going to continue to do so.
Now, this is a very major, overriding, consideration
because much of the hope for the continued recovery, the
economic recovery, is going to depend, among other things,
on whether or not we can stabilize the long term interest
rates into where we can purge, from the minds of a great
many people in this country, that we are on an inflation
bicycle; that it is just going to keep riding; and that we
have every reason and every hope that we can slow, and we have
slowed, the rate of inflation.
We have the other problem, which I have outlined to
you before. That is, simply, that we have got to keep
working to provide job opportunities for people, because we
cannot abide the rate of unemployment we now have. We are
going to have to decrease it. We are working to decrease it.
The third problem that we have that is of major import
so far as I am concerned, we are going to have to do more to
bring about a more favorable balance-of-trade throughout
the world because this has a direct implication, a direct
bearing on us, in many different ways, not the least of which
is job opportunities in this country.
MEMBER OF THE PRESS: Mr. Secretary, what effect would
a further rise in the minimum wage have on your fight against
inflation and unemployment?
SECRETARY CONNALLY: I am not sure I can accurately
analyze that for you at this moment. I probably better not
try. I don't know how much of a factor it could have. We
would have to take a look at it -- obviously so -- but I
really don't know.
MEMBER OF THE PRESS: Mr. Secretary, will you comment on
Mr. Meany's statement that we are exporting jobs, and the
example he gave of Henry Ford picking ~p a plant in Philadelphia
with several hundred jobs and putting it in Taiwan?
MEMBER OF THE PRESS (CONTINUED): Are we going to do
anything about that, to try to reverse that trend of
exportation of jobs?
SECRETARY CONNALLY: Yes, we ~ertain~y are going to t~
to do something about the exportat~on of Jobs. The
Administration, I must say, has tr ied to do it last year with
its proposal for the Domestic International Sales Corporation.
We are going to go back to the Congress within the next
couple of weeks with a similar type of proposal which will
probably -- I don't know that a name has been given to it;
I call it, at least within our own circles here, the
Export Promotion Act of 1971. The thrust of it, the purpose
of it, is to try to encourage American businesses to build
plants in the United States; to make products and
commodities for shipment overseas, and permit them to do so
in such a way that they are not subject to income taxes until
the income received by the subsidiary is brought back into
the parent corporation. This is basically the proposal that
was submitted to the Congress last year in the Domestic
International Sales Corporation proposal. It will be,
substantially, the same thing.
This has, as its purpose, keeping jobs at home. We
cannot continue to support jobs. We have to recognize that we
are in a highly competitive world. I am not sure the American
people realize this. I am not sure that American Labor
realizes it, to the extent that they should. This is for,
although it was not designed solely for this purpose, the
ADR changes which the Administration made this year. The
Depreciation Schedule was for the purpose of trying to encoura
American industry to modernize its plants; to build new
plants; to acquire new facilities in businesses and farms;
all of which would create new jobs; all of which would have an
impact on job opportunities in this country. This was
basically the thrust of it. I think Labor misunderstood
this because they opposed the ADR' s . They opposed even this
proposal that was submitted last year. I think they did not
understand the import, and the implications, of it but their
is not any question but that we are going to have to be
imaginative in our approach. We are going to have to be aw~r:
of what is happening to us in terms of international compeU tU
We are going to have to be insistent upon fair treatment ~
other nations. We are going to have to insist that there
not only be free trade, but that there be fair trade, because
I
(
"
0v
15
SECRETARY CONNALLY (CONTINUED):
going to continue to lose jobs.
if we don't, we are
MEMBER OF THE PRESS: Mr. Secretary, how does it feel
to be the only Democrat in the Cabinet?
SECRETARY CONNALLY:
well!
(LAUGHTER)
MEMBER OF THE PRESS:
Well, very good!
I feel very
Are you going to remain one for
lifeZ
SECRETARY CONNALLY: Frankly, I have been so busy that
I have not had a chance to worry about my health in those
terms, but I feel fine!
MEMBER OF THE PRESS: Mr. Secretary, I take you back
to the new fiscal year which you just started.
I believe you said that you expect to have a full
employment balance. You hoped to have a full employment
balance.
SECRETARY CONNALLY:
We sure do!
MEMBER OF THE PRESS: I believe you also said that full
employment revenues were not related to the achievement of
the 1065 goal. I don't quite understand that, because the
1065 involves at least half of the current fiscal year. Why
doesn't the short fall in goal also cut your revenue?
SECRETARY CONNALLY: What I was really saying was that
I think -- to try to explain what I said -- I think the economic
activity that is now under way; the broad expansion that is
under way; the vitality that is under way; may well improve
our estimates of revenues. Our revenues may be greater
~han we have even anticipated, as a result of it.
MEMBER OF THE PRESS:
Mr. Secretary, is anything
to support the dollar abroad? I see it has
,unk again in the German market.
~ontemplated
SECRETARY CONNALLY: I don't know what you would refer to
terms of how we would support it abroad. We certainly have
:>een in constant communication, and in constant touch, with
Jther nations around the world. Mr. Volcker has recently been
::0 Paris, to Switzerland, to the Basel meeting.
We are
~n
16
SECRETARY CONNALLY (CONTINUED): constantly working
with central banks of other countries; with Ministers of
Finance and their staffs, of other countries, to arrive at
solutions; particularly, how we can handle short term flows of
money, and a great deal of consideration has been given -as you undoubtedly know -- to the widening of the margins.
There has been some discord; some confusion; some disagreement
among the European countries themselves, but we are very
hopeful that some agreement can be reached by the time of
the September IMF meeting.
MEMBER OF THE PRESS:
Mr. Secretary?
Do we favor widening of margins,
SECRETARY CONNALLY: We have not yet taken a position
which I am prepared to announce.
We think that the widening of the margins, particularly
with respect to short term monetary flows, has some merit.
We have been in discussions with all of the countries about
this and a great many other possibilities for providing for
a stable exchange rate; yet, at the same time, providing
a flexible situation that would take care of these short term
flows that created such a problem this Spring.
We are not yet ready to announce any particular
program or any particular policy.
MEMBER OF THE PRESS: Mr. Secretary, George Meany
said that your statement that the country can't have less
than 4 percent unemployment without a war sounds like
Marxist propaganda -- a Marxist line.
What is your reply to that?
Have you changed your mind about that?
SECRETARY CONNALLY:
I did not say that.
MEMBER OF THE PRESS:
Well, changed my mind about what?
Less than 4 percent unemployment.
SECRETARY CONNALLY: I did not say that. If you go back
and read what I said in the press conference which I held,
I simply said that the talk that 4 percent is the norm -that 4 percent unemployment is the norm that we might expect
in peace time, is a myth; that we never would achieve that
( 6·
17
SECRETARY CONNALLY(CONTINUED): is a historical fact,
on an annual basis, except in war time. I did not say that
was my view. I was merely trying to relate what the facts
are; what the historical facts are. It has nothing to do with
my view.
In that same press conference, I said that we would not
be satisfied; that we are going to try to get unemployment
to 4 percent; when we get it to 4 percent, we are going
to try to get it lower than that. I said so long as there
is a person in this country that is willing to work, that wants
to work, I think we all owe an obligation, both in the public
and private sector, to try to provide the means by which he
can work. That is the idea that I was expressing. The
thought, as you have indicated it, is completely erroneous;
completely without foundation. It is a distortion of what I
said, for whatever reason.
MEMBER OF THE PRESS: Mr. Secretary, the Argus
Research Report says that.mn 1946 -'48, unemployment ran
from 3.8 to 3.9 percent. In post-Korea, '55 - '57, unemployment
was 4.1 to 4.4 percent.
Certainly, in the post war period, your statement would
not be quite accurate, would it.
SECRETARY CONNALLY: Those were quarters. I think
those were quarters. I said that, on an annual basis -MEMBER OF THE PRESS:
Would '46 to '48 be (the) plain?
SECRETARY CONNALLY: I would have to check those.
I don't believe that is correct. I believe what I said was
the last quarter century.
MEMBER OF THE PRESS: '47 and '48 was below 4 percent
annually -- the annual average for both of those years.
Do you believe we can get below 4 percent in peace
time?
SECRETARY CONNALLY: I think we can. I don't know. It
depends on a great many factors. Sure, I think we can do
anything we make up our minds to. Now, I think, as a
practical matter, you are always going to have some
unemployment because the lower the rate of unemployment, the
SECRETARY CONNALLY(CONTINUTED): more mobility you
have in your labor force because people will quit jobs and seek
other jobs that are either better paying, or fo~ one reas~~
another, more attractive. So you are always go~ng to have a
float. So far as the statistical figures are concerned, we
can get below 4 percent. I said that our goal ought to be
trying to provide an opportunity for everybody that wants a
job to have a job.
MEMBER OF THE PRESS:
When can we get below 4-1/2 percent.
SECRETARY CONNALLY: I would not want to specify time,
because it would serve no useful purpose for me to do so.
We are going to get to it as soon as we can. We are going
to try to provide the expansion that is necessary to create
job opportunities, but do it in a very reasonable way, so
that we don't again, fuel the fires of inflation.
Now, this is something that I hope we can convey to
the American people: That it is one thing to provide jobs,
and by any standards, I suppose, any of us can conceive and
concoct ideas that would put a lot more people to work almost
immediately. But whether or not we can do that, and not
compound our problems with inflation, is something else. So
we are trying; this Adminis tration is trying as best it
knows how. We are going to do everything within our power ~.
everything we can think of to both provide a means for the
reduction of the number of unemployed and, at the same time, d
it in such a way that we don't create greater problems by hav~
greater inflation.
MEMBER OF THE PRESS: Mr. Secretary, has the
Administration's proj ection of 4.5 percent unemployment by the
end of the '72 fiscal year gone the way of the 1065 GNP?
SECRETARY CONNALLY:
MEMBER OF THE PRESS:
the goal?
SECRETARY CONNALLY:
No.
I would not assume that at all.
Would you say that that is still
Sir?
MEMBER OF THE PRESS: Is it still the projection, then,
of the Administration, that we will have 4.5 percent
unemployment by June 30, 1972?
19
SECRETARY CONNALLY: By June 30, 1972?
you said the end of 1972.
MEMBER OF THE PRESS:
which ends June 30.
A moment ago,
The end of the fiscal year,
SECRETARY CONNALLY. I am not sure. I certainly am not
prepared, today, to say that we are going to change that
anticipation. I am not prepared to say that we are going
to meet it. I am prepared to say that we are going to
work toward providing full employment opportunities in this
country as quickly as we can without being brash about it;
without being precipitous in our actions, t-o the point where
we compound our problems with further inflation, which is,
in my view, as equally oppressing a problem as unemployment.
MEMBER OF THE PRESS:
you any anxiety?
SECRETARY CONNALLY:
MEMBER OF THE PRESS:
Did this rash of strikes cause
Sure.
How serious is it?
SECRETARY CONNALLY: I don't know, yet. We are,
obviously -- although I am not directly involved -- the
Government, obviously, is making itself available. The Labor
Department has been very, very active, as was the President
himself, in connection with the Steel negotiations. The
Mediation Board is active with the West Coast dock strike,
the Telephone strike, and other potential areas of disagreement
in the Country. We are hopeful that we won't have any long
strikes. We like not to see anything happen that would have
a damaging effect on the economic expansion but, at the same
time, we are hopeful that both Management and Labor will
realize that they, also, have a responsibility not to either
grant or demand wages that are inconsistent, and that are
exorbitant in terms of this economy today.
We think the workers are entitled to a fair return,
obviously, and fair wage increases, but we hope that, as a
result of these negotiations, we are not going to have another
round of catch-up.
I think the Steel negotiations basically represent
the end of a 3-year catch-up period in the major Industries
in the Country.
SECRETARY CONNALLY (CONTINUED): Now, I hope that the
settlement can be such that it does not encourage, and do"
not trigger, another round of high wage increases that would
do great damage in terms of inflation.
MEMBER OF THE PRESS: Mr. Secretary, would you
interpret a second quarter GNP gain of around $20 billion-.
would you interpret that as a strong gain?
SECRETARY CONNALLY:
Oh, I sure would!
MEMBER OF THE PRESS: Mr. Secretary, getting back to
the question of exorbitant wages, the President of your
favorite newspaper -- the Washington Star -- just granted
its reporters a wage increase amounting to 15 percent in each
of two years. Would you like to comment on that?
SECRETARY CONNALLY:
look to its laurels.
Well, I would say the Post better
(LAUGHTER)
MEMBER OF THE PRESS: Mr. Secretary, you mentioned
some opt imism about revenue sharing. Do you have any further
thoughts with relation to that?
SECRETARY CONNALLY: Only that Dr. Walker and many of
the Treasury staff have been sitting in on Executive Sessions.
They have been considering a great many alternatives and,
as they consider each of those alternatives, the Administratid
proposals look better all the time. So I am not going to
attempt to divulge what goes on in those Executive Sessions
except to say that I think every day that passes, our
proposals look sounder, look better, look wiser. I am hopefu:
that we can ultimately come out with a Revenue Sharing Bill
that achieves the aims and the obj ectives which we sought.
MEMBER OF THE PRESS: Mr. Secretary, is your mind, and
the Administration's mind, finally made up against any kind
of an income policy for the year?
SECRETARY CONNALLY: I made the statement that I did
in the time frame in which I spoke. You have to always
assume, I think, that any man who occupies a position of any
responsibility and authority in the Government, who would~
a statement and hope that it would be interpreted as bei~
one that was inflexible and unchanging, probably ought not t'Oj
be in that position.
( (; /J
21
SECRETARY CONNALLY (CONTINUED): Obviously, any
statement I make -- and I did make one about mandatory wage
and price controls; I made one about several things
has to be interpreted in the light of conditions that exist.
There is no reason to change that. I would make those same
statements today. But to say that this is an irreversible, an
irrevocable, an eternal policy; I would not say that.
MEMBER OF THE PRESS: Mr. Secretary, some of the
Democratic Presidential hopefuls are beginning to make noises
about the distribution of wealth and income in this country.
Would you have any views on whether this distribution
is to slanted toward the rich at present?
SECRETARY CONNALLY: Well, no. I would simply say
that I suppose, in the eyes of the beholder, there can always
be changes and improvements in the economic system, in the
economic structure, of this Country; that, for all its
weaknesses, for all of its apparent diversity and, to some,
imbalance of opportunities and imbalance of wealth, I don't
know of any system that I want to trade it for. We are going
to celebrate our 200th birthday here, before long. I
certainly am not going to subscribe to any substantial chan~e
in this free enterprise, this capitalistic system, of
Government. And I am not going to encourage anyone who does.
MEMBER OF THE PRESS: Mr. Secretary, how soon does the
Treasury Department plan to respond to the Federal Court suit
that has been filed, challenging the ADR proposal?
SECRETARY CONNALLY: We will do it as promptly
always, as promptly as we possible can -- simply because we
want this matter finally settled. We think we are on sound
ground.
We think we have been. We are extremely confident of
the ultimate outcome. We will pursue it in every way we possibly
can.
MEMBER OF THE PRESS: Mr. Secretary, someone has asked this
question before. I know you responded to it.
In the Governors' Conference out at Wyoming, the report
we get back is that the Republic Governors, particularly, are
speculatin~ very openly that you are going to be a Vice
Presidential candidate on the ticket with President Nixon. Can
reply to their news speculation?
SECRETARY CONNALLY:
MEMBER OF THE PRESS:
out there.
I have not seen that
speculat~
We get it from our reporters
SECRETARY CONNALLY: Do you? Well, I have not talked to
any of them. I don't know on what basis they are making
those predictions, or those guesses, or why they are so
speculating. I am not a candidate for anything.
MEMBER OF THE PRESS: Mr. Secretary, what is your
reaction to George Meany's assessment of you as the Secretary
of the Treasury?
SECRETARY CONNALLY: Well, I am delighted that he gave
me credit for knowing something about something, and he
did. I think Mr. Meany is a very able, a very outspoken,
a very outstanding American. I have great admiration for
him. I don't always agree with him. I don't think he is alwaYI
right, but I have great respect for him. I wish, when we
proposed the ADR, for instance -~ that had, as one of its
basic purposes to keep jobs at home; supply jobs for America
he would have supported it.
I would have hoped that, when we went to Lockheed to
try to reserve 60,000 jobs at the time we needed jobs, he
would have talked to Mr. Woodcock and have him support us
instead of oppose us.
When we submitted DISC last year, as I outlined a moment
ago -- the Domestic International Sales Corporation -- it
was des igned wholly and completely to keep jobs; and I would
hope that he would have supported us instead of opposing us.
He had his reasons, whatever they might be, and I give him
credit for his sincerity in having those reasons. I am sorry
that he does not have a better impression of me, if indeed,
he doesn't, and his public utterances would indicate
that he does not.
MEMBER OF THE PRESS:
Thank you, Mr. Secretary.
(Whereupon, at 11:15 o'clock, a.m., the Press Conference
was adj ourned.)
000
The Department 01 the
WASHINGTON, D,C. 20220
FO~
TREASURY
TElEPHONE W04·2041
IMMEDIATE RELEASE
July 22, 1971
TREASURY INTENDS TO DISCONTINUE ANTIDUM.PING
INVESTIGATION OF PENTAERYTHRITOL FROM ITALY
Assistant Secretary of the Treasury Eugene T. Rossides
announced today that the Treasury Department will publish
a notice announcing discontinuance of its antidumping
investigation of pentaerythritol and related products
from Italy. The notice will appear in the July 23, 1971,
Federal Register.
The investigation revealed that the Italian
manufacturer responsible for all exports of pentaerythritol
to the United States has cancelled all outstanding
contracts for export to the United States and has
instructed its U.s. distributor not to accept further
orders. Formal assurances have been received from the
exporter that it will make no future sales of
pentaerythritol for exportation to and importation
into the United States. The notice of intent to
discontinue the investigation is based on these
assurances.
During the period January 1970 through December 1970,
pentaerythritol from Italy valued at approximately $190,000
was imported into the United States.
000
The Department of the
WASHINGTON. D.C. 20220
TREASURY
TElEPHONE W04·2041
FOR IMMEDIATE RELEASE
July 22, 1971
The Treasury Department issued the following
statement today in response to queries:
The Treasury confirms that department technical
experts have worked out details of three alternative
Revenue Sharing local distribution formulas at the request
of various members of the House Ways and Means Committee.
The Treasury Department emphasizes that the
Administration has taken no official position
for or
against -- any of the alternative plans.
The alternatives would tend to give more funds to the
bigger and poorer cities than the original formula. They
make no change in state-by-state distributions.
One formula would incorporate the ratio of the
per capita income in a locality to the per capita income
in a state. This is similar to the "equalization process"
used by many states now in allocating educational funds.
Another alternative formula would include a means of taking
into account the taxes raised by a given locality compared
to the total income of the individuals in that community.
In effect, this means allocations on the basis of true
revenue effort -- one of the factors already used in the
Administration bill in its state-by-state distributions.
A third alternative formula combines the other two.
Improved surveys would have to be set up to provide
the needed local figures on an up-to-date basis. One
method would be to take this information from income tax
returns.
000
C-98
The Department of the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE W04-2041
FOR RELEASE UPON DELIVERY
STATEMENT OF WILLIAM L. DICKEY
ACTING ASSISTANT SECRETARY OF THE TREASURY
FOR ENFORCEMENT AND OPERATIONS
BEFORE THE
SENATE SUBCOMMITTEE ON PUBLIC BUILDINGS AND GROUNDS
THURSDAY, JULY 22, 1971
10:00 A.M.
Mr. Chairman and Members of the Subcommittee:
It is my pleasure again to appear before your Subcommittee in support of your approval of the revised
prospectus for the Consolidated Federal Law Enforcement
Training Center (CFLETC). Today I am testifying in place
of Assistant Secretary Rossides who is out of the country.
The questioning from last week and the questions
submitted reflect three primary concerns about the Center:
need, cost and possible relocation.
NEED
In our earlier testimony we highlighted the
importance of the enforcement missions including narcotics,
dignitary protection, and organized crime; the difficult
prevailing enforcement climate; the sophistication required
of our agents; the exposure to danger; and the demanding
standards that must be met by the law enforcement agents to
be trained by this facility. These factors cannot be
overemphasized. As Chief Rowley stated, today's needs
C-97
-2call for an enforcement officer "far better prepared to
carry out his responsibility than his predecessor";. If
we are effectively to perform our enforcement missions,
must provide the training that is to be provided by this
facility.
COST
Concerning costs, Mr. Chairman, I think the basic
issues here are only two: (1) Does the need for this
facility justify the expenditure; and (2) Does our plan
utilize the public money to best advantage?
The Administration believes strongly that the law
enforcement climate today demands that we provide our
criminal investigators with the best possible training.
We have attempted to satisfy those demands in the present
prospectus. Treasury and GSA have worked diligently to
remove any frills and justify each component of this center.
The need justifies the present $52 million prospectus.
We believe all of that money will be spent to good advantage. We all know the $18 million prospectus was in error.
We seek and are planning an advanced, cost-effective
training center to offer optimal conditions of learning.
This is a concept of improving both the quantity and
quality of training. Training efficiency has been a
primary design criteria. In short, we have designed the
physical plant to carry out the educational objective
with maximum efficiency.
Our methods of instruction using modern educational
technology -- the equipment, its management and use, the
educational materials -- are important. We are committed
to implement effectively these concepts. It would be
imprudent to proceed otherwise.
Finally, to conclude the questions of cost, we have
appended to this statement, in question and answer fOnMt,
our answers to the questions raised by the Committee. TM
General Services Administration, in furtherance of the
-3-
Committee's request, will present further illustrative
material.
RElDCATION
The Administration, I think
.
s1dered the approval of the 1969
it is fair to say , conprospectus by Congress
as constituting the critical decision on location, and
no further facts appear at this time that warrant reconsideration of that determination. I submit that we are
substantially beyond that issue today. As of now, we
have spent two years of work, and expended nearly $4
million at the Beltsville Location.
We ought not to abandon our in-place facilities which
have unique characteristics, lose valuable time, escalate
construction costs through added delays, and remove the
Center further from Washington, D.C., generating additional
operating costs and inefficiencies.
As an example, let's consider one portion of the
suggestion that we move to Quantico.
The added twenty miles to Quantico over and above
Beltsville adds forty miles to round-trip commuting time.
Given the extensive interplay we contemplate between the
nineteen participating agencies and the Training Center,
this could aggregate into an enormous loss of manhours,
not only on an annual basis, but over the term for the
existence of this Center.
More importantly, considering the time frame overall,
we will move further away from accomplishment of much-needed
law enforcement training compelling this project. We
cannot afford such a delay, either in the interest of law
enforcement or in cost.
We estimate two years of delay -- at the minimum
to stop and begin again with a new location. It will
require replanning, new Environmental and Community Impact
-4Studies, and recirculation of new proposed plans through
elaborate clearance processes.
We are unable to identify any material advantage
from a move. Both the planned FBI and Consolidated
Center facilities will be fully utilized. To meet our
requirements, we would expend at Quantico more than we
contemplate spending at Beltsville.
While we see advantage in instructional or educational
exchanges, location on the same or adjacent sites will not
necessarily foster the information exchange. The training
missions of the two Centers differ and curriculum overlap
is minimal. Where training overlapping occurs, little, if
any, advantage accrues from proximate location.
The FBI trains law enforcement generalists, and all
agents receive the same general criminal investigation
instruction. Similarly, the State and local police attending the Academy receive training in the same curriculum.
On the other hand, training at the Center is highly diversified, ranging over a wide variety of specialties.
This diversity -- the wide range of subjects to be
taught -- all contribute to the space needs of the Center
and to additional instructor and support personnel. It
also means greater interface directly with the Washington,
DoC 0, headquarters of the participating agencies. Participation by many agencies requires management approaches
completely different from the FBI. Greater scheduling
and classroom and instructional coordination will be required. The range of available training materials must
increase.
CONCLUSION
In closing, I would like to point out that this
proposed Consolidated Law Enforcement Training Center is
an extremely important project to the nineteen participating agencies. It is a project that fulfills the dreams
of many.
-5All of the interested participating agencies have
worked extremely hard to contribute their best ideas and
judgment in formulation of this concept. We have had the
highest caliber of professional consultation, and have,
I believe, pulled together and incorporated the latest in
educational thinking into a viab~e,: practical working
concept as outlined by the prospectus and the Guidance
document we have submitted. The concept of the Center
was considered and approved by this Subcommittee in 1969
as a sound concept. Because of the cost disparities to
which I referred, we find it necessary again to submit the
prospectus.
The House Public Works Committee has approved the
current prospectus. Approval of the Senate Public Works
Committee stands as the last step in what has been a long
history. We most urgently request your endorsement and
approval of the revised prospectus.
0000
The Deportment of the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE W04·2041
FOR IMMEDIATE RELEASE:
July 22, 1971
The Treasury Department today issued the following
statement:
The Treasury Department today amended its gold
regulations, effective immediately, to reaffirm and
clarify the long-standing gold policy of the United
States that speculation in gold in any form is prohibited.
These amendments explicitly prohibit the trading
of gold in any form on commodity exchanges and the
acquisition of American or foreign gold coins of any description for speculative purposes.
The amended regulations were issued under the
authority contained in the Gold Reserve Act of 1934,
Executive Order Nos. 6260, 10896and 11037, and the
Trading with the Enemy Act. Under existing law, violations of these regulations may result in civil and
criminal penalties.
These amendments will not limit in any way the
types of transactions currently engaged in by coin
collectors or licensees under present authority.
The purchase of contracts in gold futures or the
enticing of other~to do so constitutes a violation of
the gold regulations. In accordance with normal practice,
violations of the gold regulations are referred to the
Department of Justice for appropriate action.
A copy of the amendments is attached.
000
C-99
,
{
TITLE 31 -- HONEY AND
FINANCE: TREASURY
CHAPTER I -- MONETARY OFFICES
DEPARTMENT OF THE TREASURY
PART 54 -- GOLD REGULATIONS
CLARIFYING AMENDMENTS
Under the Treasury Department's Gold Regulations, there is a general
prohibition on holding or dealing in gold without a license.
An exception
to this prohibition is made for gold coins of recognized special value
to collectors of rare and unusual coins.
1934, may be acquired
Such coins, if minted before
because of this recognized special value to
collectors of rare and unusual coin, but not for the purpose of acquiring
the gold bullion contained therein.
(9th Gir. 1940).
Farber v. United States, 114 F.2d 5,
Thus collectors of rare and unusual gold coins and
coin dealers are enabled to buy and sell these gold coins for numismatic
purposes without obtaining individual licenses for specific transactions.
This exception was not intended to permit nor does it permit the acquisition of gold coins for speculative rather than numismatic purposes.
In order to state explicitly the intent of the Regulations, amendments are being made under which:
(1) the acquisition, holding, importa-
tion and transportation of gold coin is limited to transactions for
numismatic purposes; and (2) the trading of gold in any form on any
conunodity exchange within the United States is prohibited.
In addition
the overall intent of the Gold Regulations is made explicit by providing
that trading in gold for speculative purposes is prohibited.
I
)
- 2 -
These amendments will not limit in any way the types of transactions
currently engaged in by coin collectors or licensees under present
authority.
Notice and public procedure are not required because there is involved a foreign affairs function of the United States in that these
amendments are important to the proper functioning of the international
monetary system.
Moreover, because there are involved interpretative
fules rather than substantive changes, and because of the relationship
of speculative trading by Americans in gold to the proper functioning
of the international monetary system, it is found that notice and public
procedure are impracticable, unnecessar¥ and contrary to the public interest.
AUTHORITY: Sec. 5(b), 40 Stat. 415, as amended; secs. 3, 8, 9, 11,
48 Stat. 340, 341, 342; 12 U.S.C. 95a, 31 U.S.C. 442, 733, 734, 822b;
E.O. 6260, Aug. 28, 1933, as amended by E.O. 10896, E.O. 10905,
E.O. 11037, 3 CFR, 1959-1963 Comp.; and E.O.-6359, Oct. 25, 1933;
E.O. 9193, as amended, 3 CFR, 1938-1943 Comp.; E.O. 10289, 3 CFR, 19491953 Compo
Subpart B of Part 54 of Title 31 of the Code of Federal Regulations is hereby amended as follows:
Sec. 54.12 is amended by adding at the end thereof the
following:
"Nothing contained in the regulations in this part nor
in licenses issued thereunder authorizes the acqui@tion, sale,
holding, importation or exportation of any present or future
interest, direct or indirect, in gold in any form for speculative
purposes, and such actions are prohibited."
Existing Sec. 54.15 is redesignated as subsection (a)
of Sec. 54.13.
,/ I/
<'
- 3 Existing subsections (a) and (u) of Sec. 54.13 are
redesignated as subs€.
~~ions
(b) and (c) of Sec. 54.13"
respectively.
A new Sec. 54.15 is added to Subpart B to read as follows":
.. Sec. 54 .15
Trt~ding
in gold on exchanges.
No interest" direct or indirect" legal or equitable,
in gold in any form, for present or for future delivery,
shall be acquired under a contract made on or subject to
the rules of any exchange within the United States.
The
.: ;rm "exchange" means any organization, association, or group
of persons, whether incorporated or unincorporated, which
constitutes, maintains or provides a market place or facilities for bringing together purchasers and sellers of gold
in any form and performs with respect to gold in any form
the functions commonly performed by a commodity exchange
as that term is generally understood."
Section 54.20 (a) and (d) are amended to read as follows:
II
(a)
Gold coin of recognized special value to collectors
of rare and unusual coin may be acquired, held and transported within the United states for numismatic purposes without the necessity of holding a license therefor.
Such coin
may not be acquired for the purpose of acquiring the gold
bullion contained therein.
Such coin may be imported only
as permittea by this section or sections 54.28 to 54.30"
-4-
54.34 or licenses issued thereunder, and may be exported
only in accordance with the provisions of sec. 54.25.
(d) Cold cojn made prior to 1934 may be imported for
numismatic purposes without the necessity of obtaining a
license therefor."
Effective date.
These amendments shall become effective
on filing "lith the FEDERAL REGISTER.
Dated:
July 22, 1971
t:~1 f !/ ~~LL:.'1.Paul A. Vo1cker
Under Secretary for Monetary Affairs
Treasury Department
CERTIFIED COpy
*********
*
*
*
SEAL
*
*
*
*********
CERTIFIED TO BE A TRUE COrY OF THE ORIGINAL
The Deportment of the
WASH!NGTON,D,C, 20220
TREASURY
TElEPHONE W04-2041
FOR IMMEDIATE RELEASE
July
23, 1971
TREASURY ISSUES THREE DUMPING FINDINGS
Assistant Secretary of the Treasury Eugene T. Rossides
announced today findings of dumping with respect to pig iron from
Canada, Finland, and West Germany.
A dumping finding automatically
follows as the final administrative requirement upon the Tariff
Commission's determination of injury to domestic industry after an
earlier determination of sales at less than fair value by the
Treasury.
All three findings will be published in the Federal
Register of July 24, 1971.
On March 15, 1971, the Treasury Department advised the Tariff
Commission that pig iron from Canada, Finland, and West Germany was
being sold at less than fair value within the meaning of the Antidumping Act, 1921, as amended.
The Tariff Commission's determination
of injury to U.S. industry was issued on June 15, 1971.
During the period January 1969 through December 1970, pig iron
valued at approximately $28,200,000 was imported from Canada, pig
iron valued at approximately $2,400,000 was imported from Finland,
and pig iron valued at approximately $1,500,000 was imported from
West Germany.
The Department 01 the
WASHINGTON, D.C. 20220
TREASURY
TELEPHONE W04-2041
FOR IMMEDIATE 'RELEASE
July 23, 1971
ANTIDUMPING--TRE.ASURY ANNOUNCES CHANGE IN 25 PERCENT RULE
FOR FAIR VALUE DETERMINATIONS
Assistant Secretary of the Treasury Eugene T. Rossides
announced today a change in the Antidumping Regulations
under which the Treasury may make fair value determinations
~n~the basis of home market prices, even if the quantity of
the merchandise sold for horne consumption is less than
25 percent of the total quantity sold other than for
exportation to the United States. A notice of proposed
rule making to this effect was published in the Federal
Register of April 27, 1971.
In carrying out antidumping investigations, the
Treasury Department normally compares for fair value purposes
the difference between the home market nrice of the merchandise
in the country of exportation with the price at which the
merchandise is sold in the United States. Sales at less than
fair value take place when the nrice in the United States
is less than that in the home market.
The Antidumping Act provides that the price at which
merchandise is sold by the manufacturer to third countries
may be substituted for home market price when the quantity
sold for home consumption is so small in relation to that
sold for exportation to countries other than the United States
"as to form an inadequate basis for comparison."
In declaring what constituted an "inadequate basis for
comparison" for fair value purposes, the Antidumping Regulations have previously provided that "generally" the quantity
of merchandise sold for consumption in the home market would
be considered inadequate if it was less than 25 percent of the
quantity sold other than for exportation to the united States.
This 25 percent rule was rigidly adhered to, notwithstanding
the use of the word "generally." The Treasury Department has
now concluded that continued rigid adherence to this 25 percent
rule is not only inappropriate but inconsistent with the intent
of the Antidumping Act. Mr. Rossides noted that frequently
the quantity of a particular article sold in the home market,
although less than 25 percent of the quantity sold other than
(OVER)
-2-
for exportation to the united States, is nevertheless more
than adequate for purposes of making fair value comparison•.
Accordinqly, the Treasury Department is issuing a
notice eliminating the 25 percent rule. The conseque~oe.
of this will be to enable the Treasury to determine on a
case-by-case basis when the quantity of sales in the
home market is or is not adequate for purposes of fair
value comparison. Before arriving at this decision, the
Treasury Department considered the arguments submitted in
response to the notice of proposed rule making.
This change will take effect upon publication in the
Federal Reqister of July 24, 1971.
000
The Department of the
WASHINGTON, D.C. 20220
fREASU RY
TElEPHONE W04-2041
FOR IMMEDIATE RELEASE
July 23, 1971
The appointment of William Howard Beasley III of
Dallas,Texas, as a special assistant to the Under Secretary
of the Treasury was announced today.
Beasley, a native of Dallas with degrees from Duke
University and the University of Texas, will work on
special assignments for Under Secretary Charls E. Walker.
Beasley received his A.B. Degree from Duke in 1968
with distinction, majoring in economics.
He received his
Masters Degree with honors in accounting and finance from
Texas in 1969.
He received his doctorate at Texas this
June, concentrating on management science and corporate
law.
At Texas he originated a liMen in Modern Management"
television series and was a teaching assistant for three
years.
He also was chairman of the Texas Distinguished
Speakers Series, which brings government leaders and businessmen to the University to meet and talk with students of
the Graduate School of Business.
C-10l
000
The Dtpartmentof the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE W04·2041
FOR D1MEDIATE RELEASE
Friday, July 23, 1971
RESULTS OF TREASURY'S $1.0 BILLION EURODOLLAR OFFERING
The Treasury announced today that it has received $1,403 million
of subscriptions for its offering of a $1.0 billion strip of 6-3/8
percent certificates of indebtedness Eurodollar series to be issued
July 26. A total of $1,103 million was allotted.
Subscriptions were allotted in full up to the amount covered by
a subscriber's holdings of 6 percent EXIMBANK promissory notes,
Series CC, which mature July 26, or $2 million, whichever was greater.
The remaining subscriptions were allotted 23%.
Allotments were allocated equally to each of the two series of
certificates included in the strip. These series, F-1971 and G-1971
will mature, respectively, on September 28 and October 12, 1971.
The certificates were offered only to foreign branches of United
states banks and are designed to provide an investment outlet in the
United States for Eurodollars acquired by the overseas branches.
FOR IMMEDIATE RELEASE
July 23, 1971
The Following statement was issued today by
William L. Dickey, Acting Assistant Secretary of the
Treasury for Enforcement and Operations:
"Certain remarks of Winfield M. Kelly, Jr.,
Chairman, Prince George's County Council, before
the Senate Subcommittee on Buildings and Grounds
on the Consolidated Federal Law Enforcement
Training Center evidently were based on misinformation.
"The Depar,'nent of Treasury is lead agency
for the proposed Consolidated Federal Law Enforcement
Training Center and its 19 participating Federal
agencies.
"Contrary to Mr. Kelly's statement that
'flood conditions would cause 20,000 gallons of
raw sewage to gush directly into "the Potomac River
virtually untreat·d, I no raw sewage from the proposed
Center will ever· enter any stream or river. All·
sewage will be fully treated in full compliance with
both the National Environmental Policy Act of 1969 and
the Federal Water Pollution Control Act concerned
with prevention, control and abatement of air and
water pollution from Federal facilities.
Further, under no circumstances will this Center cost
Prince Georges' County 10,000 jobs or 2,500 residences,
as claimed by Mr. Keller but instead will add:
200 new, full-time, highly trained and carefully
selected professionals with incomes averaging
over $20,000 annually;
a potential new rental market of approximately
100 administrative and operations personnel with
incomes averaging $11,600 annually;
- 2 210 new clerical and service jobs with incomes
ranging between $6,000 and $8,500 to provide
supplemental family income and new or better
employment opportunities for area residents; and
expanded tax resources in the form of property
tax from higher-valued homes and other property,
stimulated commercial activity, increased income
tax surcharges, and greater returns from sales
and other miscellaneous taxes that flow back to
the county from the state."
The Center will bring Prince Georges County a Federal
facility with an annual payroll of $7.7 million and average
salaries of $13,793 which exceeds other major Federal
facilities recently relocated in this metropolitan area,
specifically (HEW) Park1awn with average salaries $11,389
and the Bureau of Standards with $13,692. This economic
benefit to the County will be fu~ther augmented by
personal expenditures of 800 additional students and temporary
instructors.
000
The Department 01 the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE W04·2041
FOR IMMEDIATE RELEASE
The Treasury
July 23, 1971
Depa~tment
today issued
the following statement:
The Treasury Department has postponed
from August 1 to November 1 the effective
date of regulations which would require
financial institutions to report to the
Government currency transactions of more than
$5,000.
The postponement also applies to the
reporting of the physical transportation or
mailing or shipping of large amounts of
currency into or out of the United States.
000
C-l02
lheDtpartmentof the TREASURY
WASHINGTON, D.C. 20220
TElEPHONE W04·2041
FOR RELEASE UPON DELIVERY
REMARKS OF THE HONORABLE EDWIN s. COHEN
ASSISTANT SECRETARY OF THE TREASURY FOR TAX POLICY
BEFORE THE
NATIONAL TAX ASSOCIATION SEMINAR
STATLER HILTON HOTEL, WASHINGTON, D.C.
SATURDAY, JULY 24, 1971, 10:15 A.M.
Foreign Experience With A Value Added Tax
A year ago, at the request of Secretary Kennedy, I
undertook to visit the capitals of most of the European
countries that have enacted a value added tax or have been
giving it serious consideration.
I have now traveled to
all of the six countries of the European Community, with
the exception of Luxembourg, and to Sweden, Denmark and
the United Kingdom.
In each of these countries I have had an opportunity
to confer at some length with my counterparts and their
staffs.
They have graciously supplied us with much infor-
mation and given freely of their time, their insight and
the results of their practical experience.
They are men
of impressive ability and strong dedication, and we are
C-IOO
- 2 most grateful for their willingness to share with us their
analyses of the issues, the solutions they have developed
and their appraisal of the results to date.
In these countries I have also discussed various aspects
of the tax with economists and lawyers, both in and out of
government, and with businessmen, bankers, journalists,
professors, labor party representatives, trade association
representatives, and others.
It has been a fascinating
and profitable experience and has provided a broad overview
of the European value added tax systems.
This was by no means the first time that the Treasury
Department had conducted a study of the value added tax.
Our extensive files on the subject go back at least some
30 years, when consideration was given to the tax in the
early stages of World War II.
But my visits did represent
our first opportunity to review the tax in actual operation
in a number of foreign countries since it came into general
use.
Its first application to all stages of the business
process through the retail level occurred in Denmark in
1967, although it had been applied earlier in France at
levels before the retail stage.
The tax has now been installed
in Sweden and Norway and in all of the Common Market countries
- 3 except Italy, where it is scheduled to go into effect
January 1, 1972.
In addition, the government of the United
Kingdom has recently issued a "Green Paper" concerning the
tax and has announced its intention to substitute it for
the present United Kingdom purchase tax and selective
employment tax.
Some other foreign governments appear to
be moving in this same direction.
Many European countries, before the advent of the
value added tax, had substantial "cascade" or "turnover"
taxes, and the United Kingdom has had a substantial "purchase"
tax.
Those taxes frequently had a number of significant
problems and defects (such as the advantage given to large
integrated companies under the turnover tax), which in
the main are overcome by the new value added tax.
The European form of value added tax requires substantially all sellers of goods and services, including producers,
manufacturers, wholesalers and retailers, to collect tax at
the specified rate or rates on all sales to their customers.
Each seller is required periodically to pay over to the
government the value added tax he has collected from his
customers, but he is allowed to credit against his liability
- 4 to the government the amount of value added tax he has paid
on his own purchases of goods and services.
Thus each seller pays over to the government periodically only the excess of the tax he has collected on his
sales over the tax he has paid on his purchases, the difference
being the tax on what may be said to be the "value added"
by him to the product.
If he has paid out more tax on
purchases than he has collected on sales, he generally is
~llowed
a refund of that difference from the government.
It has sometimes been said that the European decision
to turn to a value added tax was reached primarily because
it was thought to have fewer problems than the previously
unsatisfactory taxes which it replaced -- in essence, because
it was less bad than its predecessors.
While this comment may
be literally correct, my impression is that it is incomplete
and does not adequately describe the European view.
My general impression from my discussions and
observations abroad is that the value added tax has operated
quite successfully there and has been favorably received
by the public -- at least to the extent that any significant
tax can gain public endorsement.
In general, I am inclined
~I
~
5 -
to conclude that Europeans have accepted the value added tax
primarily because of its universality and general uniformity,
its great revenue raising potential for financing increased
governmental services and benefits, and the efficiency with
which it may be imposed on imports and removed from exports.
One hears much abroad of other arguments favoring the tax,
such as its capacity for combating tax evasion and for providing effective tax exemption for purchases of capital
goods; but my impression is that these three points that
I have mentioned -- broad general uniformity, revenue potential and efficient operation regarding exports and
imports -- account primarily for its widespread acceptance
abroad.
It is of interest, I think, to note that after its
initial experiences with the value added tax, Denmark has
twice increased its tax, first from ten percent to 12.5
percent and again to 15 percent -- and Sweden this year
raised its tax from 11.1 percent to 17.65 percent in a single
Jump.
It is of special interest that these recent increases
were either instituted or supported by the labor parties in
/CJ!J t,
,
- 6 -
those countries, because they became convinced that an increase in value added tax rather than in the income tax represented the best means of providing the government with
substantial additional revenue for new initiatives.
None of these European countries has a general value
added tax rate below ten percent at present, although some
have special rates on foodstuffs and the like as low as
four percent.
In general, the Scandinavian countries have
a single rate of value added tax, whereas the Common Market
countries have
~wo,
different goods.
three or four rates applicable to
In addition, of course, the law in each
country provides a zero rate on certain transactions, such
as exports.
The Europeans advise that a single rate value added
tax has the merit of great simplicity, both for taxpayers
and administrators.
For example, the single rate in Denmark
enables them to have the value added tax return printed
on the back of a postcard -- literally on the back of a
postcard -- with no more than five figures to be entered by the
taxpayer.
The taxpayer reports the aggregate tax that he
has collected on his sales, subtracts the tax he has paid
- 7 -
on his purchases, records the difference between the two
figures as his liability for the period, and enters the
aggregate amount of his exports and imports.
Necessarily, where mUltiple rates are involved, the
sales in each category to which a different rate is applied
must be separately stated and the return forms become
longer and more detailed.
When asked about regressivity of a single rate tax,
the Scandinavian countries reply that their overall fiscal
structure is one of the most progressive in the world.
They insist that in judging progressivity or regressivity
of a fiscal system, one should look not merely to the
revenue side but to the expenditure side as well; and
with their extensive programs of social insurance, medical
care, family benefits, and the adjustments they have made in
their personal income tax, they believe they have more
than offset any element of regressivity in their single
rate value added.tax.
The Common Market countries, however, have chosen thus
far to forego the simplicity of a single rate tax and have
dealt with regressivity by resorting to multiple rate structures, with some rates as low as four percent and others
- 8 -
as high as 33-1/3 percent.
For example, the French four-rate
tax varies from 7.5 percent on foodstuffs to 33-1/3 percent
on luxuries; the German tax is 5.5 percent on foodstuffs
and some other articles and 11 percent on other goods and
services (recently scheduled to rise to 12 percent).
The
Italians presently propose to have a general rate of 12
percent, with a lower rate of six percent on foodstuffs
and the like and a higher rate of 18 percent on certain
luxury items.
So far as I know, none of the European countries has
adopted the system, found in a few of our state sales
tax structures, of allowing an income tax credit or a refund
for value added tax paid on a minimum annual amount of consumer purchases, such as $400 or $600 per person.
They
have, however, made adjustments in their personal income
tax structure and in their programs of governmental benefits
and assistance payments to offset increases in consumer
prices that may have been caused by their value added tax.
There has been much interest in the effect that the
introduction of the value added tax in Europe has had upon
consumer prices, and I inquired specifically about this
- 9 subject in each country.
I suppose that the,best advice
I received was that the proper time to introduce a value
added tax is during a period of relative economic calm!
I replied, of course, that I could not quite recall such
a period in our recent history.
A principal difficulty in determining the price effect
of the tax is that the European countries have substituted
the value added tax for other taxes previously existing.
Thus the revenue effect and the price effect of the change
depends upon the effective difference between the old tax
and the new tax, and not upon the effect of the value added
tax alone.
Moreover, in some of the countries there were
general wage increases that had been negotiated several
months before the introduction of the value added tax, and
it was not possible to distinguish between the effects
caused by the tax change apart from the wage change.
Perhaps the clearest test of price effect of the tax
should have occurred in Denmark and Sweden when the rates
of value added tax previously instituted were substantially
increased.
But even in those cases one cannot readily
compare the tax rise with the consumer price index rise
- 10 because the tax does not apply to certain items that are
included in the consumer price index; and, as always,
there were other concurrent factors affecting the price
level.
In any event, there are difficulties in predicting
accurately in advance the price level effect that may result
in a country from the enactment of a value added tax because
the rate and terms of the tax must be decided some months
in advance at the time when the tax is enacted, and the
actual price effect will depend upon economic conditions,
monetary policy and other factors existing at the time
the tax goes into operation.
The Europeans have been pleased with the ease with
which their value added tax systems, all of which are of
the "consumption" type, avoid imposing a tax burden on
purchases of machinery and equipment and other capital goods.
By allowing the business purchaser a credit against his
tax liability (or a refund) for the amount of tax paid on
all his purchases, including purchases of capital goods,
the latter purchases are in effect readily relieved of tax.
Sweden, in particular, had experienced difficulty under
its previous sales tax in relieving capital goods from
- 11 -
the tax, and has been satisfied with the simple manner in
which its value added tax obviated the difficulty.
The European nations, particularly the Common Market
countries, have been especially satisfied with the operation
of the value added tax with respect to exports and imports.
Since all value added taxes paid by an exporter, or by those
preceding him, are credited or refunded to the exporter,
and since there is a zero rate applicable. to the export
of goods, there is no part of a value added tax levied upon
exported articles.
This eliminates the so-called "taxe occulte,"
i.e., the tax paid on business purchases of fuel, supplies,
and other articles that are not resold but are used in the
operation of the business; those taxes may be shifted forward
to the customers of the business under other indirect tax
systems but are not readily or accurately rebated on exports.
The value added tax structure as applied to international
transactions readily relieves exported goods from the tax
in the exporting countries but subjects them to the tax
prevailing in the importing country, where they then compete
on the same tax terms with goods domestically produced.
The European Community has not yet harmonized the rates
and terms of value added tax in the member countries, but
- 12 it hopes to do
80
in the future and thereby to achieve further
simplification for border transactions within the Community.
I understand also that the Community expects to impose a one
percent value added tax on all sales within the Community,
with the proceeds to go to the Community itself, thereby
giving the
Communi~y
a substantial amount of independent
revenue for its operations.
The European nations also believe that the value
added structure has an advantage over other systems in
protection against tax evasion.
Since the business purchaser
takes credit against his own tax liability for the tax paid
by him on his purchases, he will retain his invoices to
establish his right to the credit, and these can be checked
against the tax report of the person selling to him.
They
see this effect as providing a marked aid to their income tax
administration as well.
However, with the long history
of efficient income tax administration in the United States,
this factor would seem far less pertinent here.
While the
European countries have generally administered their value
added taxes in connection with customs and excises, we
might well find it far easier to administer such a tax
IJ1
- 13 in the United States as a part of the income tax system
if it were to be enacted here.
The European value added taxes have, in general, been
applied to a broad base of goods and services, usually
a far broader base than our state and local sales taxes.
Despite the broad base, the Europeans have found some
problems with transactions in particular industries, especially financial institutions, such as banks and insurance
companies, and in real estate and agriculture.
Each country
has reached reasonably satisfactory, though imperfect,
solutions to these problems, the solutions varying somewhat from country to country.
Since the'tax is in many respects a consumption tax,
the Europeans have experienced border line problems that are
reminiscent of similar issues in the income tax.
For example,
some provision must be made for the businessman who takes
items out of his business inventory or supplies for personal
use, since to that extent he should not be allowed credit
against his value added tax liability for the tax paid by
his business on the purchase of those items.
Problems
of this type are similar to those involved in such transactions
- 14 for income tax purposes.
Often pure theory and administra-
tive practicality clash in the value added tax, as they
do in the income tax, but by and large the European authorities seem to be satisfied with the practical solutions
they have reached on such issues.
In broad summary, my travels and interviews abroad
lead me to conclude that the Europeans are reasonably
pleased with the performance of their value added systems.
000
The Department of the
WASHINGTON, D,C, 20220
TREASURY
TElEPHONE W04·2041
FOR RELEASE ON DELIVERY
STATEMENT OF DAVID MOSSO BEFORE THE LEGAL AND MONETARY
AFFAIRS SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS,
HOUSE OF REPRESENTATIVES, CONCERNING THE OPERATION OF
LET'l!ERS OF CREDI'r·IN FINANCING TRJ!;. GRANT-IN:-AID
PROGRAM OF THE LAW ENFORCEMENT ASSISTANCE ADMINISTRATION
TUESDAY. JULY 27, 1971 AT 1U:UO
A.~.
Mr __ Cl1airman and· members of the committee:
I welcome this opportunity to appear before you to discuss advanoe
financing of Federal grant-in-aid programs and the letter-of-credit procedure. with particular reference to the Law Enforcement Assistance
Administration.
Background of the Letter-of-Credit Procedure
First, let me trace the background of the letter-of-credit procedure.
Our letter-of-credit procedure is designed to permit cash to be kept in
the Treasury until actually needed for grantee disbursements.
the grantee authority to draw
direc~lY
It gives
on the Treasury, through its commer-
cial bank and the Federal Reserve System, whenever he needs cash to cover
his disbursementsrt was initiated in 1965 as a result of General Accounting Office
"f~ndings
·thai cash in excess of needs was being invested by some
grantees, and because of concern about the cash management practices of
Fede-J!ij.l agencies in this p-rowing area of operations.
was lidvanced under lettdrs of credit.
In 1965 $1:. 5 billion
That has..since risen ,to a level of
$28 bilUon annually.
In
196.e~
after thr.ee years Of letter-of-credit operati.o:r;l.s, the. Treasury
Department, the Office of Management and Budget and the General Accounting
Office, under the Joint Financial Management Improvement Program, undertook
a review of the procedure.
This study revealed the need for tightening up.
The joint study team recommended that the Treasury, the Office of
Management an"'-
Rl1nap+.~
and the General Accounting Office emphasize as
strongly as pOSsible, in their respective central role_, the
tmDort~
of effective cash management.
aqv~c~s
As a result, the Treasury regulations covering
under
Federal grant and other programs were revised in I\Pl'il 1969;
~cceptabfe
--to spell out more specifically the
advances, with emphasis
o~
the
metbode "t _118
letter~of-c~e4tt met~odt tnel~,
ing if feasible a special type of letter of
grantee'~
downs would be made only when the
cred1~ ~erebl
clea~
checks
.,.••
it.
bank;
--to specifically
requir~
monitoring
program
~y th~
aivances and amoQnts of cash held by
ase~Qy
Of .
~~teee;
~-to require th.t agencies, in $gre~e~ts with ~~ee., .~lpu1-*.
_J.,J.,r
that draweowns
-~to
~der
letters of credit be
make the letter of credit
ir~,voQBble
m~4~ ~nl,
~ing
crejit the e,uivalent of cash for pprposes ot
who must have actual cash on
"",to
r~uire
Federal
a~encies
h~d
prior to
.~~"l
e¥t~' t~.~
tq the
grantee has incurred obligations, thereby
.,
•
a letter qt
t~os~ sraplee~
o~ligation;
to submit a semi,..~ual ,,,pol't tc)
the Treasury on cash held by grantees; and
•• to establish the policy that a
prima~Y
a state fer example, who in turn JUaltes
recipient, a
loc~l
governmeJ4t, must
recipient of,n
adve.nc.~
obfl~rve
,rinci,les with respect to timing of
th,
to a.
aa"'~f
a.c~"
.
,
s~. g~~.l
advan~t~ aAa~ ••pp!t,.)l,
-3The Treasury.role
The Treasury Department's role in grant financing is to prescribe
regulations governing the practices of
timing of payments.
Requir~e.nts
Federal~genoies
regarding the
Treasury Circular No. 1075 and the Treasury Fiscal
Manual are the vehicles
~sed
for thii?
We monitor operations
under our regulations to a limited extent by reviewing reports from agencies
and by. following up on any problems that are brought to our attention
tJ;:trough GAO audit reports, inquiries and other sources of information.
We do. not have .aud it. or investigative machinery for policing our
regulations.
Basic responsibility for financial management generally, as well as
for
ca~+ying
out Treasury regulations,
re~ts
with each program agency.
Cas):l management is an integral part of pr0gram management.
TheTreasury
Department .can help an agency develop. effective policies and procedures,
but
~t
.
cannot get into the day-to-day application of those policies and
I
.
•
procedures, including management review anddnternal audit ,and that is
where any system stands or falls.
I~otwithstanding
the limited scope of the Treasury's operating role,
we are undertaking to do a bit more in·the way of l'eadership tuthis area.
ro this end we started some months ago to pUll; together into'a new division .of the Bureau of Accounts all of the Bureau 1 s functions and operations
~hicp
were primarily concerned with some aspect of .cash management.
It
Ls not yet moving full Speed, but our Division of Cash Management has
low.been formallyl.aunched.
S
Surveillance of letter-of-credit operations
Qneof its functions • .This is not a big thing·in terms of
·esources.
We have heretofore devoted less than one man's time
.4to professional .. level work on letters of credit.
exceed two in the foreseeable future.
I doubt that we will
But I expect some significant
benefits to flow from a stronger organizational structure.
Some developments underway
I would like to mention some things that our new division will be
trying to do in the letter-of-credit area.
Our present regulations call generally for drawdowns under letters
of credit to be made at approximately the same time as checks are iaBU"
by the grantee for payment of program liabilities.
We are beginning to
foster a system which would conserve Treasury cash even more by havins
grantees defer withdrawals for a few days after program checks are
i8'~"'
That way we can absorb the "float," consisting of checks which have b...
issued but not yet cashed, and thus retain cash in the Treasury longer,
We are also beginning to extend the procedure mentioned in our
regulations whereby a grantee authorizes his bank to draw on a letter
of credit when checks issued by the grantee are presented to the bank
for payment.
This is the ultimate in terms of timing drawdowns, but
it may not be applicable in all situations.
To begin with, we are tmq
this approach only in those cases where the entire grant program is
~~.
'by Federal money, without any matching.
We are also
~ursuing
with the Department of Health, Education and
Welfare a systems concept involving a single letter of credit covering
all Federal grant programs within a state.
This would simplify adminis.
trative operations both for the Federal Government and the state
gQve~·
ment, and it should improve control and eliminate a lot of small
pock~s
of cash.
-5I stated earlier that Treasury regulations require Federal agencies
to submit semiannual reports of cash balances in the hands of grantees, as
of June 30 and December
Generally speaking, agencies have been comply-
3~.
ingwith that requirement.
However, there are some gaps in the information,
and'we are presently working toward more definitive regulations Which would
provide for better disclosure, incJ,.uding a clarification of the need for
information on cash held by secondary recipients.
Lastly, I would mention that we intend to dig into one of the most
frustrating issues
which
are
tha~
has confronted us--certain state legal
requ~rements
said to require that cash be on hand before obligattons can be
incurred, often long before the
~ash
is needed for disbursement.
ExcesSive cash balances with ~antees
i
-if the letter-of-~redit procedure were administered properly, there
would be no excess Federal
ca~h
would be no balance at all.)
in the hands of grantees.
(Ideal.ly there
Our principal emphasiS has been, and will
continue to be, to completely avoid excessive balances through voluntary
compliance with Treasury regulations.
The perSistence of large balances,
however, compels us to think of firmer remedies for chronically overdrawn
situations.
The great virtue of the letter of credit is that it gives the
gra~tee
complete'freedb:rnto draw cash promptly when he actually needs it for tbe program
involved.· That virtue
c~
be transformed into a fault if a
I:;he drawdown freedom and draws cash prematurely.
)e to revoke the letter of
~evert
cr~dit
to advancing cash by cbeck.
grante~
Our next.. step may
abuses
h~ve
in cases of serious non-compliance, and
In such a case, we would require that
to
-6the checks be tightly scheduled by the progr8.Jll
issued to coincide with the grantee's actual
a~ency
and. very treqUtIltll
disb~sem~ntneeds •. Ap~
reum~.
agency might take the further step of putting Such a grantee on a
able basis.
We hope such steps will not
.be.nece~s.ary bec~~e
the proc""
are more cumbersome than letters of creqi t~d they run counter to pr. . .
~~inistrative
efforts to streamline and standardize
requirements otall
grant-in-aid programs.
Application to
t~e
Law En!orcement Assistance Administration
applica~le
To this point I have been talking in general terms·
Federal agencies including the Law
En~orcement Assist~ce
to
~l
AQministratioD."
Turning now specifically to the LEM progrrun, .1 ,would first obServe that
it is relatively new and small compared .with _ t{ie I,."grat\t; programs of oth.,
...
,,k
.
-,
_
••
,
'
'
agencies, and we have not heretofore give,n ita great deal of attention:
About 97 percent of the $28 billion drawn. on. letters.
<;>f cr~di t for tisell
.
. ,
year 1971 was generated by eight Federal
,
ae;enci~~,
Health, Education and Welfare with $21 ·billion.
led by the .Department ·01
Disbu;t'sements for the WA
program for the last three fiscal years
in fiscal
. have. been. $33..5 million
.
year 1969; $65.4 million in 1970; and $22.4.6 million in 1971..
We worked with LEAA in the development and approval of their letterof-credit procedure.
And we made a cursory analysis
Of
the semiannual
reports of cash held by LEAA grantees, which in summary showed balance.
of cash on hand as follows:
In December 1969 the balance was $ 5.3 million, a, 65 day supply
In June 1970
"
"
" 6 . 2 million,· a 31 day suPPlY
In D~cember 1970"
"
"21.1 million, a 40 day supply·
I don I t know how much of the total balance was pure excess, but I ha"
to believe most of it was.
Furthermore, all of the figures are under8t~.
-7because they do not include cash held by
that the General
Accounti~g
I understand
sec~ndary reci~i~~t~.
Office has estimated that LEM. funds held by
grantees cost the Treasury close to $1 million' for the eighteen months
end~ng~n
h~ve
December 1970.
We can't verity that precisely becau.se we only
figures for the three <;lates shown above, but it
woul~
cost the
Trea~ur¥
around $1 million to finance a balance of $21 million, ,the amount $hown
fo~
Decenibe,r 1970, for a year.
We wrote to LEAA about the
1969, report.
65~day supp~y
shown in the December 30,
We were advised of three reasons for the
e~ces~
cash:
(1)
a misunderstanding on the part af some states thai; they wollld lQfletiscal
year 1969 money if not drawn before the end of· the fiscal ;year.) a situation
co~rected,immediately,
esti~u!.tj,ng
(2) the difficulty state
the needs of a
com~letelY
~lanningagencies
faQe in
new program because of· w~rking with ,..'
variety of state, regional, and local ewantees and subgrantees witb whom
~hey
had
~ot
worked 'before, and (3) the time required
forSt~teplanning
tgencies to process their requests for cash through the states' finapce
;ystems, a procedure requiring at least two weeks.
We were
~lsO
adviSed
)y LEAA that appropriate corrective action would be taken,
We expected improvement in the report of cash held at June 30, 1970,
md there was--a reduction from a 65-day
~xpected
~upply
to a 31-day supplr.
further improvement in the report for December 30, 1970.
,he cash held had increased from a 3l-day supply to a
~s
40~d~y
We
Instead,
supply.
in discussing the December 30, 1970, cash report with LEAA
It
official~,
hat we learned that the amount pi cash reported did not include that neld
y secondary grantees.
-8Mr. Chairman, before the hearings you asked that we give our ViM OIl
the placement of LEAA funds by grantees in demand or time depOSits, and OIl
the application of income generated by excess cash balances.
Fundamental.1r
and;~t
our answer must be that grantees should not have excess balances,
answer negates both questions.
If we were to set aside that fundamental"
answer and hypothesize, it seems to me that simple prudence dictates an
interest-bearing form of placement and simple equity dictates that
eanU~
accrue to the Federal Government.
Concluding comments
'. I have devoted my statement to problems in the letter-of-creditp:ro.
ced-ure, all involving non-compliance in the form of premature drawdowns.
There are some:' serious .problems, but they have to be looked at. in perspecttve.' Considering that there are over 1,000 distinct Federal
srant
progra,ms 'and tenst"of thousands of grantees, some' problems are to be exPect•.
We are'oertainthat the situation today is vastly better than it was betQN
1965 when quarterly advances, by check,were the rule.
More concretely, the
latest: report from the Department of Health, Education and Welfare, account.
ing for 75 percent of all letter-of-credit drawdowns, shows an average of
just one day's supply of cash in the hands of primary grantees.
We don't
know what exists at the secondary level, and behind that one-day department.
wide average are some extreme Situations, but even so there has been a lot
of progres's, since the beginnings in 1965 and a lot ofha~d work has
sone
into it in HEW.
I feel certain that some of the letter-of-credit problems of'the Law
Enforcement Assistance Administration are symptoms of getting a neW
pr~
I~{
-9underway.
I nave no doubt that LEAA can get turned around
these problems with a concerted effort.
quie~ly o~
We will give them whatever
assistanoe we can.
Mr.
happy to
Ch~ir.man, t~at
answ~r
concludes my prepared statement.
questions.
I will be
lheDtpartmentof the
WASHINGTON, D.C. 20220
~TION:
TREASURY
TElEPHONE W04-2041
FINANCIAL EDITOR
RELEASE 6: 30 P.M.,
.ay, July 26, 1971
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
The Treasury Department announced that the tenders ~or two series of Treasury
s, one series to b~ an additional issue of the bills dated
April 29, 1971
,and
other series to be dated
July 29, 1971
,which were offered on July 20, 1971,
opened at the Federal Reserve Banks today. Tenders were invited for $2,300,000,000,
hereabouts, of 91-day bills and for $1,600,000,000, or thereabouts, of 182-day
s. The details of the two series are as follows:
OF ACCEPTED
~TITIVE BIDS:
91-day Treasury bills
maturin~ October 28 2 1971
Approx. Equiv.
Price
Annual Rate
182.-day Treasury bills
maturin~ Januarl 27, 1972
Approx. Equi v .
Annual Rate
Price
High
Low
Average
98.614
98.593
98.596
97.072
97.043
97.051
~
5.483%
5.566%
5.554%
Y
5.792%
5.849%
5.833%
Y
94% of the amount of 91-day bills bid for at the low price was accepted
15% of the amount of 182-day bills bid for at the low price was accepted
TENDERS APPLIED FOR AJID ACCEPTED BY FEDERAL RESERVE DISTRICTS:
trict
Con
York
.adelphia
reland
mond
nta.
ago
Louis
eapolis
9.S City
?rancisco
AcceI2ted
$ 11,855,000
1,598,330,000
19,880,000
28,585,000
13,345,000
24,930,000
104,280,000
33,010,000
12,980,000
25,880,000
16,590,000
422,215,000
2,647,040,000
17,725,000
101,005,000
19,085,000
37,240,000
388,l85,000
33,160,000
27,265,000
21,840,000
34,020,000
267,015,000
1,212,570,000
6,785,000
21,400,000
8,775,000
16,290,000
242,840,000
17,560,000
12,115,000
16,215,000
10,020,000
32 ,365 ,000
TOTALS
$4,420,050,000
$2,311,880,000 ~ $3,608,770,000
$1,600,625,000
3.S
AEElied For
Accepted
AI2I21ied For
.$ 23,975,000
3,284,825,000
59,71S,000
39,685,000
24,645,000
46,560,000
248,275,000
58,045,000
37,150,000
48,020,000
39,820,000
509,335,000
$
15,190,000
$
~,690,OOO
E!
.udes $276,665,000 noncompetitive tenders accepted at the average price of 98.596
.udes $135,4?D,000 noncompetitive tenders accepted at the average price of 97.051
e rates are on a bank discount basis. The equivalent coupon issue yields are
%for the 91-day bills, and 6.11% ~or the 182-day bills.
The Dtpartmentof the
WASHINGTON,D,C, 20220
TREASURY
TElEPHONE W04~2041
'OR IMMEDIATE RELEASE
July 27, 1971
TREASURY'S WEEKLY BILL OFFERING
The Treasury Dep'artment, by this public notice, invites tenders
lr two series of Treasury bills to the aggregate amount of
3,900,000,000, or thereabouts, for cash and in exchange for Treasury
tils maturing August 5, 1971,
in the amount of $3,807,080,000,
follows:
91-day bills (to maturity date) to be issued August 5, 1971,
l the amount of $ 2,300,000,000,
or thereabouts, reprt:!senting an
Iditional amount of bills dated May 6, 1971,
and to mature
)vember 4, 1971
(CUSIP No. 912793 LQ7),originally issued in
Ie amount of $1,400,240,000, the additional and' original "bills to be
'eely interchangeable.
182- day bills, for $ 1,600,000,000, or thereabouts, to be.pated
19ust 5, 1971,
and to mature
February 3, 1972.
USIP No. 912793 1'11.7).
The bills of both series will be issued on a discount basis under
mpetitive and noncompetive bidding as hereinafter provided, and at
turity their Eac'e amount liltll be payable t>1ithout interest. They will
issued in bearer form only, and in denominations of $10,000,
5,000, $50,000, $100,000, $500,000 and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up
the clOSing hour, one-thirty p.m., Eastern Dayli6ht Saving
(le, Monday, AugUl t 2, 1971.
Tenders will not be received
the Treasury Department, Washington. Each tender must be for a
timum'of $10,000. Tenders over $10,000 must be in multiples of
000. In the case of competitive tenders the price offered must be
,ressed on the basis of 100, with not more than three decimals,
:., 99.925. Fractions may not be used. It is urged chat tenders be
e on the printed forms and forwarded in the special envelopes which
1 be supplied by Federal Reserve Banks or Branches on application
refor.
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
- 2 submit tenders except for their own account. Tenders will be rec~
without deposit from incorporated banks and trust companies and
responsible and recognized dealers in investment securities.
from others must be accompanied by payment of 2 percent of the
amount of Treasury bills applied for, unless the tenders are
by an express guaranty of payment by an incorporated bank or
company.
Immediately after the closing hour, tenders will be opened'
Federal Reserve Banks and Branches, following which public
will be made by the Treasury Department of the amount and price r8~
of accepted bids. Only those submitting competitive tenders will be
advised of the acceptance or rejection thereof. The Secretary of tM
Treasury expressly reserves the right to accept or reiect any or all
tenders, in whole or in part, and his ac tion in any such respect shall
be final. Subj ect 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 decimall
of accepted competitive bids for the respective issues. Settlement fo!
accepted tenders in accordance with the bids must be made or completed
at the Federal Reserve Bank on
August 5, 1971,
in cash or other immediately available funds 'or in a like face amoult
Treasury bills maturing Augus t 5, 1971.
Cash and exchange tea
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.
Under Sec tions 454 (b) and 1221 (5) of the Internal Revenue Code
of 1954 the amount of discount at which bills issued hereunder are so!
is considered to accrue when the bills are sold, redeemed or otheN~
disposed of, and the bills are excluded from consideration as capital
assets. Accordingly, the owner of Treasury bills (other than life
insurance companies) issued hereunder must include in his income tax
return, as ordinary gain or loss, the difference between the pricep'
for the bills, whether on otiginal issue or on subsequent purchase,1
the amount actually received. either upon sale or redemption at maturil
during the taxable year for which the return is made.
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 obtained f
any Federal Reserve Bank or Branch.
000
Removal Notice
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Citation Information
Document Type: Transcript
Number of Pages Removed: 21
Author(s):
Title:
Date:
"Face the Nation", CBS Television Network and CBS Radio Network, Guest: John B. Connally,
Secretary of the Treasury
1971-07-25
Journal:
Volume:
Page(s):
URL:
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
lheDtpartmentof the
WASHINGTON, D.C. 20220
ION:
TREASURY
TElEPHONE W04·2041
FINANC IAL EDITOR
LEASE 6:30 P.M.,
y, July 27, 1971.
RESULTS OF TREASURY'S MONTHLY BILL OFFERING
he Treasury Department announced that the tenders for two series of Treasury
one series to b~ an additional issue of the bills dated April 30, 1971
, and
her series to be dated July 31, 1971
, which were offered on July 21, 1971,
gened at the Federal Reserve Banks today. Tenders were invited for $500,000,000,
reabouts, of272 -day bills and for $1,200,000,000, or thereabouts, of
366-day
The details of the two series are as follows:
ACCEPTED
272-day Treasury bills
[TIVE BIDS: _ _....;.m..;..;a..;..;t;.;.ur;;;...;;;;i.;.;.ng~A......::p:...,r,.....i__l:......3__0.l!..,. . .;1; ;.,9;,. 7;,. 2_ _
Approx. Equiv.
Price
Annual Rate
366-day Treasury bills
maturing July 31, 1972
Approx. Equi v .
Price
Annual Rate
)F
i
.gh
95.591
95.482
95.509
1lW
rerage
5.835%
5.980%
5.944%
,
94.063
93.900
93.948
!.I
~
5.840%
6.000%
5.953%
!.I
"j Excepting 2 tenders totaling $430,000
~% of the amount of 272-day bills bid for at the low price was accepted
i% of the amount of 366-day bills bid for at the low price was accepted
'ENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
ict
n
ork
:lelphia
land
:md
ta
sO
:mis
l.polis
1 City
'ancisco
TOTALS
AEElied For
$
$1,582,050,000
$
500,500,000
1,906,585,000
2,665,000
15,995,000
11,015,000
16,740,000
162,940,000
15,220,000
14,260,000
15,065,000
24,365,000
90,535,000
$2,297,935,000
$1,200,335,000
$
190,000
414,980,000
545,000
865,000
1,585,000
15,835,000
27,990,000
7,160,000
8,745,000
4,975,000
3,665,000
13,965,000
1,357,030,000
545,000
865,000
5,585,000
19,835,000
71,990,000
8,160,000
17,245,000
8,975,000
23,665,000
67,965,000
AcceEted
$
9,300,000
993,085,000
2,665,000
15,995,000
3,015,000
12,740,000
94,690,000
14,220,000
10,610,000
15,065,000
8,365,000
20,585,000
AEElied For
AcceEted
190,000 $
!U'
22,550,000
s./
:des $ 16,020,000 noncompetitive tenders accepted at the average price of 95.509
.des $ 45,420,000 noncompetitive tenders accepted at the average price of 93.948
rates are on a bank discount basis. The equivalent coupon issue yields are
for the 272-day bills, and 6.34% for the 366-day bills.
\~\)
The Department of the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE W04-2041
FOR RELEASE UPON DELIVERY
STATEMENT OF THE HONORABLE MURRAY L. WEIDENBAUM
ASSISTANT SECRETARY OF THE TREASURY FOR ECONOMIC POLICY
BEFORE THE SUBCOMMITTEE ON SCIENCE, RESEARCH AND DEVELOPMENT
OF THE HOUSE COMMITTEE ON SCIENCE AND ASTRONAUTICS
WASHINGTON, D. C.
THURSDAY, JULY 29, 1971, 10:00 A.M., EDT
The Needed Upturn in R&D
If there is any message that I want to get across this
morning it is that there is danger that public policy toward
research and development is swinging from one extreme to
another.
Let us be candid. Ten years ago, or even five years
ago, funding in general for research and development, both
public and private, was very liberal. Far too frequently,
even a slight project justification evoked substantial bequests, often from more than one source. Far too frequently,
the undesirable side effects of technological developments
were blithely ignored. As you know, I then was one of those
unpopular people who raised their voices in criticism.
However, times change and so must our responses to them.
Today, the case often may be becoming almost the reverse of
the earlier experience. At the present time, we often seem
more concerned about avoiding relatively minor side effects
than achieving the major improvements themselves. In my
opinion, there are strong indications that as a Nation we may
now become too niggardly in our overall support of science,
engineering, and the related intellectual activities that are
so fundamental to our growth and progress.
It is my personal belief that at this tOint in time we
need to raise the level of overall su ort or research and
evelopment. We nee to 0 that in a ~ay that wi~l be susta~n
a61e and will help us to achieve, rather than to lnterfere wlth,
other important national objectives. To obtain this balanced
C-I04
"
/!
/ Lr"
!
- 2 -
expansion will not be easy. I hope that the remainder of my
statement will be useful to those attempting to chart that
necessary course.
Where Have We Been Heading?
Certainly, in charting a future course we need to have
some idea of where we are and the direction in which we are
going. Some vital points stand out. First of all, we should
not just look at the absolute dollar magnitudes of outlays
for R&D. Of course, each year we spend more money on R&D
than the year before. With a growing population and a rising
price level (hopefully, we will continue to make progress in
slowing down the rate of inflation), each year we spend more
money on food, clothing, highways, interest, welfare -- on
almost every broad category of human outlay -- than the year
before.
How much more is the pertinent question. For the Nation
as a whole, not that much more is the recent answer in the case
of R&D. I believe that the following three comparisons are
extremely revealing.
1. The growth rate of total R&D s¥endin~ in the United
States has been slowing down substantia ly.rom an average
rise of almost l~rcent a year in the late 1950's, the growth
rate was down to 9 percent in the early 1960's and to less than
5 percent in the late 1960's.
2. When we take out the dollar increase that was necessary
to compensa-se-for inflation, the slowdown in effective national
R&D funding~ear5 ~_o be greater. From an average real rise
of 11 percent in the late 1950's, the growth rate was down to
7 percent in the early 1960's. The real growth of R&D spending
in the United State~ has been three-tenths of one percent a year
in the last five years.
3. Since 1964, this Nation has been investing an ever
;maller share of its national resources in R&1.- This situation
is shown graphically in Chart 1. We certainly need to acknowl~dge that the bulk of this change in trend has resulted from
:he successful completion of a few large developmental projects,
totably in the space program. An important positive offset has
teen the major expansion in civilian R&D funding which has been
ndertaken by the Nixon Administration. Between 1968 and 1~72,
ederal expenditures for civilian R&D (excluding the SST) WIll
ave increased by more than 50 percent.
- 3 .,.
The short-run effect of changing national priorities is
evident in the current unemployment of scientific and technical
personnel a~d the under-utilization of these potentially important nat10nal resources. The longer-run effects, which
I consider to be more serious, influence our basic national
posture. I would like to turn to that consideration at this
point.
Why is R&D So Important?
The fruits of research and development activities are
widespread and well-known -- a better understanding of the
world we live in, a higher standard of living, general progress
and enlightenment, and so forth. From the viewpoint of an
economist, R&D is an important contributor to economic growth
and productivity.
Many individual studies have been made in recent years
in an attempt to quantify the economic effects of R&D. Of
course, the underlying assumptions as well as individual numbers
these studies come up with differ, but the overall results tend
to be quite similar. The contribution of R&D to ~conomic growth
and productivity appears to be positive, significant, and high.
Investment in research and development, both public and
private, has been one of the major sources of growth in output
and productivity in this country. It has been a good investment,
particularly in comparison with the return on other private
and public investments.
To a considerable extent, those industries that have been
heavy tnlles tors- in R&D also tend to have high rates of product~vi ty g~h.
For example, the three industries with the ..
lilgliest ratlOs of R&D outlays to sales -- aerospace, electron1cs,
and chemicals -- all show relatively high rates of increase in
output per man-hour in recent years. As we know, it is the
increase in productivity which provides the noninflationary
expansions in wages and other income and hence the improvements
in our real standard of living. R&D is thus a vital factor to
Our domestic economy
Yet, domestic considerations in these times need to be
Supplemented by a proper concern for the international position
of the United States. We live in a very competitive world.
The adverse condition of our balance of payments and of our
foreign trade position certainly confirms. that . . In ~hi~ connection, the role of our high-technology lndustrles IS lmportant.
- 4 -
What Should Be Done?
We now come to the heart of the matter. What should we do?
For one thing, we should learn from experience and not simply
give R&D a blank check on the Nation's resources or on the
Federal Treasury.
Merely spending more money on R&D is not likely to eliminate poverty or bring lasting peace or make us all happier. It
may not even cure baldness or prevent my hair from turning grey.
That is, science and technology are not a panacea to cure all
our ills.
Rather, R&D should be considered in a cool and objective
manner as one among many ways of investing this Nation's resources of manpower, equipment, and money. In that regard,
I find it useful to make several distinctions -- between research and development, between public and private, and between
gpvernmental encouragement and government sponsorship.
Without getting into the details of technical definitions,
r consider research as that activity which, in the main, is
)erformed by universities, non-profit institutes, and some
industrial laboratories where the professional investigator
ls given a wide scope to pursue his thinking and analysis
lherever it may lead within his field of science. In contrast,
levelopment is that activity which we specifically expect to
:ome up with new products which can be put to practical use.
r believe, therefore, that as a general principle the
~nding
of research (in contrast to development) should be
Ldequate to properly support competent scientists and related
'rofessionals in their efforts to extend human knowledge.
aving tried to do a bit of that at some paint, I am well
ware of the difficulties in setting standards and criteria.
.I{ (y
- 5 -
I have found no alternative which appears to be superior to
the present "peer group" type of internal control to prevent
large scale wastage of our resources.
In terms of policy, it appears to me that what is needed
is a relatively steady trend of funding for research -- stead~
in "real" terms to protect research budgets against the inroa s
of inflation. I emphasize the importance at a steady trend
in research support. It is the wide and rapid gyrations -on either the upside or the downside -- which are so wasteful
and disruptive of genuine progress.
Hence, I would suggest that, as a general matter, the
level of Federal expenditures for research be set in terms of
providing a fairly constant real level of support for the overall activity, allowing adequately for the future inroads of
inflation and for a reasonable expansion in the numbers of
qualified research personnel. I would give some significant
weight to the need for reasonable expansion in our research
efforts.
The funding levels for development activities present
another set of concerns. To be sure, the search for a workable
method of estimating and balancing the collective benefits
against the socia~ costs of proposed large-scale technological
undertakings is most difficult. Obviously there are alternative
uses for the fund~ and hence for the economic resources that
would be required.
Wlthin the public sector, these allocative decisions are
nade through the budget process and the recent changes in pri)rities are quite clear. The massive shift which this Administration has acc.ompJ. ished from defense programs to human
Lnvestment, envirorunental, and other civilian areas of governlent spending is apparent to all. To a very substantial extent
:he pattern of Federal funding of R&D has shifted accordingly,
lut many of these civilian areas do not at present utilize
taD to the extent that the defense establishment has become
lccustomed.
With the growing availability of trained and experienced
;cientists and engineers as a result of curtailments in the
efense and space areas, we should continue to trY.to identify
seful opportunities for applying these resources In other
- 6 public sector areas. My personal preference would be to
emphasize increased funding for substantive areas of R&D
application, rather than for particular groups of institutions
and organizations that require financing.
The Role of the Private Sector
However, when we discuss scientific develo ment activities,
I believe that we nee to turn our prlmary attentl0n to t e
Erikate sector. It is private industry that performs the great
ul of development in the United States -- about 85 percent
of the total at present. Moreover, in the civilian areas
(other than space and atomic energy), the companies themselves
provide most of the financing.
When we examine the various industrialized nations, we
find that each of them has substantial programs underway to
encourage private sector research and development.
The justification for the governmental aid rests in good
measure on the belief that there is a tendency for business
firms on their own to under-invest in R&D simply because much
of the return on such outlay is in the form of benefits to
society as a whole, rather than necessarily to the firm doing
the work.
The major methods currently in use to encourage R&D
include tax benefits, government-sponsored associations and
institutes, patents, and technical assistance. When I last
examined this area (details are contained in the attached
paper), I found that tax benefits were the most frequently
used governmental aid to R&D. Specific provisions included
tax deductibility, tax exemptions, liberalized depreciation
allowances, and tax credits.
For example, Norway has allowed the tax deductibility
of both current costs and capital expenditures for research.
The delivery of goods for scientific or research purposes is
tax-free in several countries.
In Australia, buildings and machinery for R&D can be
written off in a three-year period. In Canada, a special tax
credit of 25 percent of the cost of approved research programs
is allowed and the firm can elect to receive a cash grant of
I)d
- 7 -
the same amount. Austria has granted independent inventors
low tax rates on income from patents that are considered important for the economy. Spain has provided that a portion
of profits under some circumstances may be exempt from taxation
if invested in laboratories and research equipment.
Several Western European countries have formed or
encouraged cooperative research associations and institutes.
Such joint research ventures may at times be an attractive
vehicle through which smaller companies can sponsor research;
also they may provide an opportunity for several large companies to cooperate in a technological project too ambitious
for a single firm. I understand there are over 50 such research
associations in the United Kingdom, covering among them over
one-half of British manufacturing industry. These associations
are financed both by private firms and the British Government.
Norway has raised funds for research in a rather unusual
way, from the profits of betting on soccer games. A portion
of the proceeds of the soccer pools have been distributed
among three semi-governmental research councils representing
government, industry, and the research community.
I believe that we need to continue to encourage private
sector financing and performance of research and, more particularly, of product and process development. My inclination would
be not to rely exclusively on a single mechanism but to utilize
a combination of methods. It might be useful to experiment
with alternative approaches so as to perhaps be in a better
position to identify the most attractive alternatives. It may
be desirable to focus on those industrial areas where this
Nation has a comparative advantage, as measured perhaps by
favorable trade balances.
I do wish to leave the Committee with several basic
points which may be useful in your further deliberations in
this area:
1. A high and rising level of economic activity in and
by itself is extremely important in providing a natural encouragement to private sector R&D. A favorable national econGffirc-environment is a positive factor in two w~ys; it incre~ses
the amount of internal R&D investment funds avaIlable to bUSIness. Also, it provides greater incentive to perform R&D by
brightening the prospect for strong markets for new and
improved products.
- 8 -
2. A favorable tax structure exerts an important influence on the availabilit of com an investment funds for
suc
ur oses as R&D an on t e Incentlveto Invest.
ere
are significant existing tax provisIons w IC are esigned to
accomplish these objectives. They vary from general liberalization of depreciation (such as the recently promulgated "ADR"
provisions) to the specific expensing (immediate write-off
for tax purposes) of all equipment purchased for research and
development work. Despite their immediate (but not necessarily
long-run) cost, we need to remember that the alternative to
these tax advantages to individual firms may well be a larger
public sector and a corresponding diminution of the scope of
private enterprise in this country.
Moreover, the tax route, in contrast to the government
expenditure approach, relies primarily on market forces and
normal business incentives to allocate resources, including
R&D resources. Thus, R&D does not become a free good but
merely a bit cheaper than it would be in the absence of the
governmental assistance. There is still pressure on the
business firm to make sure that it is getting a favorable
return on its R&D investment and thus avoiding obvious waste
and inefficiency.
3. As we shift national priorities and hence resources
from traditionally high technology military activities to at
least currently low technology civilian activities, we need
to consider the desirabilit of takin further advantage of
sUlta Ie opportunItIes or sItIng lortlons 0 t e D cap~
bility. In terms of effectively uti izing available resources,
with lessened defense and space competition for scientific and
engineering capability, the threshhold for doing R&D in some
civilian areas may now be lower and hence their demands might
properly be rising.
4. Economists who have seriously studied the subject
tend to conclude that the United States rna be under-investing
in some civilian areas 0 R&D from t e VIew oint 0 economIC
growt an pro UCtlVlty. However, t e:e IS Itt e gu: ance
as to where new or increased R&D spendIng should be dIrected.
Thus, the wisest course may be a diversified approach not
limited to narrow segments of the economy and covering the
private sector as well as the public sector.
- 9 -
(1)
Chart 1. R&D/GNP
cent
::::
1958
1960
National Science Foundation
1962
1964
1968
1970
The Department of the
WASHINGTON, D.C. 20220
FO~
TREASURY
TElEPHONE W04·2041
IMMEDIATE RELEASE
July 28, 1971
JOINT STATEMENT OF TREASURY SECRETARY JOHN B. CONNALLY
AND
GEORGE P. SHULTZ, DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
ON BUDGET TOTALS FOR FISCAL YEAR 1971
For the third year in a row, a full employment balance
or surplus has been achieved in the fiscal year 1971 after
three successive years of full-employment deficits totalling
more than $40 billion.
In fiscal 1971, which ended June 30, there would have
been a surplus of $2.5 billion had the Nation's economy
operated at full employment throughout the year.
This record is in sharp contrast to that of fiscal
years 1966 through 1968, when full-employment deficits
totaled more than $40 billion.
The budget totals for fiscal year 1971 as announced today
in
the
Monthly Treasury Statement for June:
Receipts:
the
$188.3 billion, $5.9 billion below
Janua~;
Outlays:
estimate.
$211.6 billion, $1.2 billion below the
January estimate.
The deficit:
$23.2 billion, $4.68 billion above
the January estimate.
The full-employment surplus: $2.5 billion, $1.1
billion above the January estimate.
) 7S--
FOR IMMEDIATE RELEASE
July 28, 1971
JOINT STATEMENT OF JOHN B. CONNALLY, SECRETARY OF THE TREASURY
\ND GEORGE P. SHULTZ, DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
ON BUDGET RESULTS FOR FISCAL YEAR 1971
SUMMARY
The June Monthly Statement of Receipts and Expenditures
of the United States Government is being released today.
It
provides preliminary budget totals for the fiscal year 1971,
which ended on June 30.
and
Receipts were $188.3 billion,
outlays were $211.6 billion, producing a 1971 budget
deficit of $23.2 billion.
Had the Nation's economy operated at full employment
throughout the fiscal year, there would have been a $2.5
billion surplus.
This is the third successive year in
which a full-employment balance or surplus has been
achieved, following the three full-employment deficits
ln the fiscal years 1966 through 1968.
Comparative data for fiscal years 1970 and 1971 are
shown in the following table:
2
BUDGET TOTALS
(Fiscal Years, In Billions)
1970
actual
1971
PrelimJanuary
inary
estimate actual
Outlays . . . . . . . . . . . . . . . .
Receipts . . . . . . . . . . . . . . .
$196.6
193.7
$212.8
194.2
Deficit (-) . . . . . . . .
-2.8
-18.6
-23.2
-20.4
-4.7
Full employment
receipts . . . . . . . . . . . . . .
199.2
214.2
214.1
+14.9
-0.1
Full employment
surplus (+) •••••••••••
+2.6
+1.4
+2.5
-0.1
+1.1
Item
Change
$211.6 + $15.0
188.3
-5.4
-$1. 2
-5.9
RECEIPTS
Budget receipts in the fiscal year 1971 fell $5.4 billion below 1970 collections and were $5.9 billion less than
estimated in January.
Income tax receipts accounted for
nearly all of the shortfall, with corporation income taxes
$3.3 billion below the January estimate and individual
income taxes $2.1 billion lower.
The shortfall in corporation lncome taxes was attributable both to corporations' final payments on their
-31970 liabilities and to their first payments on estimated
1971 liabilities.
Profits in calendar years 1969 and 1970
were substantially less than had been reported earlier in
statistical series.
For individual income tax receipts, similarly, most
of the shortfall from the January estimate represented:
(1) lower than expected final payments on calendar 1970
tax liabilities, particularly on capital gains income, and
(2) the failure of first estimated payments on calendar
1971 liabilities to reflect as much growth as had been
anticipated.
Social insurance taxes and contributions were about
$400 million less than estimated in the budget, while a
relatively small decline in excise taxes was almost offset
by increases in the customs duties and miscellaneous receipts.
OUTLAYS
Total outlays in fiscal year 1971 were $211.6 billion,
an increase of $15.0 billion over the prior year, but
$1.2 billion short of the January budget estimate~
The
change in the total was the net result of many increases
and decreases.
-4-
The principal increases above the January estimates
were:
o
Department of Defense (military) and Military
Assistance outlays were up by $991 million,
largely reflecting increases for personnel,
and procurement, which were partially
offset by lower outlays for research, development,
test, and evaluation, construction, and military
assistance.
o
Higher than anticipated outlays for unemployment
benefits and manpower training were responsible
for the $402 million increase in outlays over
the budget estimate for the Department of
Labor.
o
Social Security (OASDI) trust funds outlays
were up by $337 million, mainly because the
10% increase in benefits enacted retroactively
to January 1, 1971, exceeded the 6% increase
estimated in the budget.
-5-
o
I)]
Net outlays of the Department of Agriculture,
excluding the Commodity Credit Corporation, were
$330 million higher, mainly because collections
from asset sales by the Farmers Home Administration,
from timber sales, and from REA loan repayments
which are offset against gross outlays -- were
less than expected.
-6-
These and other increases were substantially exceeded by
the shortfalls below the January estimates.
The largest
of these shortfalls were:
o
Outlays of the Department of Housing and Urban
Development, were down by $441 million.
Net mort-
gage purchases by the Government National Mortgage
Association, outlays for urban renewal, and disbursements of grants for Model Cities were lower
than expected.
These decreases were partly offset
by a rise in mortgage insurance claims paid by the
Federal Housing Administration.
o
Outlays of the Department of Health, Education,
and Welfare, aside from the Social Security benefits
referred to above, were $418 million under the budget
estimate, with Medicare payments accounting for the
largest single decrease.
o
Net outlays by the Commodity Credit Corporation of
the Department of Agriculture, were down by $387
million because sales of soybeans and cotton, and
collections on price support loans for tobacco
were higher than anticipated, and because shipments
under P.L. 480 export programs were slower.
o
Net outlays of the Export-Import Bank were $312
million below the budget estimate.
Easier credit
conditions in the private sector caused a lower
level of loan disbursements to be made by the Bank.
/'-;/ G
-7In addition, the Bank received greater loan prepayments than had been anticipated.
o
The Veterans Administration, underran the January
estimate by $193 million, principally in net
lending programs and in compensation, pensions, and
other benefits.
Other large (but smaller than the above) declines from the
January budget estimates occurred in the Departments of
Justice, Interior, Transportation, Post Office, and in the
Office of Economic Opportunity.
About $300 million was shaved from the January estimate
,
as many agencies found ways -- through economies, improved
productivity, and other savings -- of absorbing a larger
part of the civilian agency costs of the January 1971 gay
raise than had been anticipated.
(The pay raise is reflected
without identification in the year-end figures for each
agency, but was provided for in the January budget as a
lump sum allowance of $500 million for all civilian agencies.)
Additional details are provided in the attached table
and in the June Monthly Statement.
-8-
BUDGET RECEIPTS AND OUTLAYS
(Fiscal Years - $ in millions)
1971
1970
Actual
Budget
Estimate
Actual
90,412
32,829
88,300
30,100
86,164
26,806
39,133
3,464
42,297
3,604
41,699
3,686
-!
3,072
16,800
3,730
2,490
3,800
3,202
16,629
3,709
2,590
3,847
+l
-l
Customs . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous ................ .
2,701
15,705
3,644
2,430
3,424
Total receipts ...........
193,743
194,193
188,332
471
539
526
Description
Receipts by source
Individual income taxes ...... .
Corporation lncome taxes ..... .
Social insurance taxes and
contributions:
Employment taxes &
contributions ............. .
Unemployment insurance ..... .
Contributions for other
insurance & retirement .....
Excise taxes . . . . . . . . . . . . . . . . . .
Estate and gift taxes ........ .
Outlays by major agency
Legislative Branch and the
Judiciary . . . . . . . . . . . . . . . . . . . .
Executive Office of the
President . . . . . . . . . . . . . . . . . . . .
36
50
47
Funds Appropriated to the
President:
Appalachian regional
development programs ...... .
Multilateral assistance .... .
International Security
Assistance:
Military assistance
194
324
273
401
230
330
pro grams . . . . . . . . . . . . . . . . .
731
1,130
923
466
1,008
504
940
461
974
1,796
256
1,620
55
1,487
55
'Supporting assistance
pro gram.s . . . . . . . . . . . . . . . . .
Bilateral assistance ....... .
Office of Economic
Oppo rtun i ty ............... .
Othe r . . . . . . . . . . . . . . . . . . . . . . .
*
Less than $500 thousand.
-2,:
-3,:
+l
--5,1
~
-9-
1971
Description
1970
Actual
Budget
Estimate
Actual
Change from
Budget
Estimate
La~s
by major agency-ltl.nued
11 ture:
)di ty Credit
)oration ................ .
=' ••••••••••••••••••••••••
:,ce ••••••••••••••••••••••
;e:
:ary .................... .
I
-'
...................... .
Education & Welfare .. .
19 & Urban Development .. .
1,
Lor .•..••..•.•.•.....••..
:e ...................... .
I
••••••••••••••••••••••••
)ffice .................. .
........................
)ortation ............... .
4,777
3,530
1,083
4,294
4,408
1,203
3,907
4,739
1,188
-387
+330
-15
77,150
1,211
52,250
2,603
820
640
4,356
1,510
448
6,417
73,370
1,426
61,940
3,333
357
1,071
7,521
2 ,353
482
7,367
74,568
1,376
61,859
2,891
211
914
7,923
2,271
467
7,247
+1,198
-50
-81
-441
-146
-157
+402
-82
-15
-120
19,304
206
2,453
20,800
93
2,275
20,976
47
2,275
+176
-47
350
679
711
+32
446
335
512
+176
3,749
8,653
2,647
219
1,600
253
197
816
3,368
9,948
3,145
128
1,907
276
197
1,362
3,382
9,755
3,164
-184
1,907
333
198
1,279
+15
-193
+19
-312
lry:
'est on the public debt ..
........................
: Energy Conunis s ion
Inmental Protection
~y
•••••••••••••••••••••••
Ll Services Ad.minis.on ••••.••••••••.••.••.••
al Aeronautics and
Administration .....•...
ns Administration ...... .
Service Conunission ..... .
-Import Bank of the U.S.
'ad Retirement Board .....
Business Administration.
nformation Agency ...... .
,Independent Agencies ... .
:nces for:
ncreases (excluding
·rtment of Defense) ..... .
'ngencies . . . . . . . . . . . . . . . .
ributed intrabudgetary
actions:
:ral employer contriions to retirement
ds .••..••••••.•••••••.••
than $500 thousand.
-2,486
-*
+57
+1
-83
-500
-300
500
300
-2,444
-*
-2,611
-125
-101971
Ctianael
1970
Actual
Budget
Estimate
Actual
accounts . . . . . . . . . . . . . . . . . . .
-3,936
-4,711
-4,765
-Q
Total outlays ............
196,588
212,755
211,574
-1,11
-
Budget surplus (+) or
deficit ( -) ..................
-2,845
-18,562
-23,242
-4,680
Description
Budpt
Est~
....
Outla~s
bl major agencl-Contl.nued
Interest credited to
certain Government
NOTE:
".,
Detail will not necessarily add to totals because of rounding.
i
Preliminary1 Statement of
" "{
Receipts and Expenditures of the United States Government
for the period from July 1, 1970 through June 30, 1971
(In thousands, hundreds of dollars not printed, therefore details may not add to totals)
TABLE I--SUMMARY (In millions)
Budget Receipts, Expenditures and Lending
The Expenditure Account
Fiscal Year
Receipts
Loan Account
Surplus (+)
or
Expenditures
Deficit H
Net
Lending
Means of Financing
By Reduction
Budget
By
of Cash
Surplus (+) Borrowing and Monetary
or
from the
Assets
Deficit (-)
Public
Increase (-)
Total
Budget
Financing
By
Other
Means
$1,039
$11,639
17,600
..................
....•......•...
962
18,562
-23,242
19,448
$269
3,526
23,242
-2,845
5,397
-1,570
-983
2,845
stimated 19722••••••••
2
stimated 1971 ........
$217,593
$228,286
-$10,693
-$946
-$11,639
$10,600
194,193
211,143
-16,951
-1,611
-18,562
ctual1971 ............
(twelve months)
188,332
210,653
-22,321
-922
ctual1970............
193,743
194,460
-716
-2,128
TABLE II--SUMMARY OF BUDGET RECEIPTS AND OUTLAYS (In thousands)
Current Fiscal Year to Date
The
The
Total
Loan
Expenditure
Budget
Account
Account
Classification
RECEIPTS
dividual income taxes ...........................................................................
>rporation income taxes ........................ '" '" .. '" '" • '" ... '" • '" ... '" '" .. '" ....... '" '" '" ... '" '" '"
.cial insurance taxes and contributions:
Employment taxes and contributions •••••••••••••••••••••••• '••••••••••
Unem ployment insurance. ...........................................
Contributions for other insurance and retirement ••••••••••••••••••••••
:cise taxes ..................................................................................................................
tate and G1ft taxes .................................................
$86,164,233
26,805,913
................
................
.................
Budget 2
Estimates
$86,164,233
26,805,913
$88,300,000
30,100,000
41,699,377
3,685,607
3,201,963
16,629,272
3,708,909
2,569,973
3,846,882
42,296,771
3,603,975
3,071,831
16,800,000
3,730,000
2,490,000
3,800,007
188,332,129
194,192,584
scellalleous ............................................................................ "................................
41,699,377
3,685,607
3,201,963
16,629,272
3,708,909
2,589,973
3,646,882
rota! ........................................................................................ ..................................
188,332,129
...•.••.....•••.
................
................
................
................
383,788
141,831
47,045
................
................
....•.••....••.•
383,788
141,831
47,045
395,855
142,905
49,822
.......................
1,383,906
1,303,879
1,772,632
8,645,852
1,188,399
1,634,175
1,367,808
1,922,199
8,702,239
1,203,081
74,568,331
1,376,062
61,858,676
2,891,258
211,122
913,715
3 7,923,056
2,271,296
466,784
7,247,433
73,370,000
1,426,367
61,940,128
3,332,650
357,099
1,070,520
7,521,413
2,353,106
481,917
7,367,034
20,976,330
46,787
2,274,693
710,652
511,675
3,382,209
9,755,426
6,696,812
20,600,000
93,354
2,275,046
679,000
335,410
3,367,500
9,948,200
7,014,826
600,000
stoms ••••••••••• " .................... " ..........................................................
I) . . . .
................
................
OUTLAYS
~lative Branch ............................................ .......... 0 .. ,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
~ Judiciary................................................................................................................
lcutive Office of the President ......................................
Ids~ropriated to the President:
l~e at.onal security assistance.....................................
1 ~rn lonal development assistance .................................
~
er .....••.............••...•.....••......•...•••...... .....• ~ ..
lculture Department •••••••••••••••••••••••••••••••••••••••••••••••
amerce Department •••••••••••••••••••••••••••••••••••••••••••••••
ense Department:
rilitary...........................................................
tvll
lth .. Ed- . •••• .... •••• .... •• . ••••••••••••• . •·•••••••••••••• . •....................
.,
ucation, and Welfare Department •••••••••••••••••••••••••••••
,~g and Urban Development Department ••••••••••••••••••••••••••••
~lor~partment ..................................................
ceJ)e partment ....................................................................................................
)bffi partment................... '" ............................................................. '" ..................
: D ce Department ...............................................
epartment .....................................................
ISportation Department.......................................... "
\Sury Department:
it'erest on the publ"IC debt ...........................................
l
tierE· ........ · ........................................................................................................
energy Commission .............................................
ronmental Protection Agency ••••••••••••••••••••••••••••••••••••••
r~ ~vices Administration .......................................
III
ronautics and Space Administration ••••••••••••••••••••••••••
Administration ••••••••••••••••••••••••••••••••••••••••••••••
~
ependent agencies ............................................
~~, undistributed.............................................
I l'l
ed intrabudgetary transactions:
~eral employer contributions to retirement funds ••••••••••••••••••••
erest credited to certain Government accounts ••••••••••••••••••••••
II II •
ra:
Total .......... "" ..... "•• "......
lIS
0
••• " ••••••• "
•••• " ••••• •• '••••••••
(+) or deficit (-) and net lending ................................
JOtnotes on page 3.
1,383,906
1,303,879
1,782,669
8,440,739
1,147,108
74,568,271
1,376,441
61,801,356
2,301,226
203,894
913,715
7,923,058
2,271,296
466,784
7,214,472
20,976,330
46,815
2,274,693
710,652
526,435
3,382,:lI9
9,879,313
6,560,072
................
-$10,037
205,113
41,292
59
-379
57,320
590,033
7,228
................
................
................
··········32;iisi
. ...••....•.•••.
-29
................
................
-14,761
· .. · .... ~i23;887
136,740
••.•.....•...•. ...••••......••. .•••....••.....
-2,610,717
-2,610,717 ................
-4,764,610
-4,764,610 .............•..
210,652,667
-22,320,538
921,655
-921,655
-2,485,788
-4,711,158
211,574,322
212,754,710
-23,242,192
-18,562,126
I\)
TABLE III--BUDGET RECEIPTS AND OUTLAYS (In thousands)
SECTION A--THE EXPENDITURE ACCOUNT
Classification of
RECEIPTS
Gross
Receipts
Refunds
(Deduct)
Net
Receipts
Individual income taxes:
Withheld ••••....•..••.•...•••.••.•..........•.•..•
Other •••.•..••••...•.••.•..•..••....••...••••••.•
4 $6,621,907
43,684,454
Total--Individual income taxes .•.....•••....•....•
10,306,361
$505,585
$9,800,777
Corporation income taxes ....•..••.•....••.••.•.•...••
6,705,070
236,341
6,468,729
Sodal insurance taxes and contributions:
Employment taxes and contributions:
Federal old-age and survivors ins. trust fund:
Federal Insurance Contributions Act taxes .•••••.••
Self-Employment Contributions Act taxes ••.••.•.•
DepOSits by States ••••.•••••.••...•..•.•.•••..•
42,496,304
497,054
5 -46,343
2,496,304
97,054
-46,343
Total--FOASI trust fund ••..••.••..•..•....•..••
2,547,014
Federal disability insurance trust fund:
Federal Insurance Co'ntributions Act taxes .•••.•.•
Self-Employment Contributions Act taxes •.•.••.••
Deposits by States••••••.•.•.•.••••.•••..•••••.•
Total--FDI trust fund •••••••••••••.••..•••••.
Federal hospital insurance trust fund:
Federal Insurance Contributions Act taxes •••••.•.
Self-Employment Contributions Act taxes •••••••••
Receipts from Railroad retirement account •••••.•
Deposits by States ••••.........................
----
Comoarable Period Prior Fiscal Year
Current Fiscal Year to Date
This Month
Gross
Receipts
Net
Receipts
Refunds
(Deduct)
Refunds
(Deduct)
Net
Receipts
$17,416,070
26,235,515
$76,421,568
24,265,271
J, 686, 839
Gross
Receipts
",,651,586
$86,164,
$14,522,'
$13,239,798
$90,411,787
2,207,653
32,829,330
3,535,338
26,805,913
35,036,'
27,127,315
1,554,359
3,066,411
393,870
26,733,445
1,554,359
3,066,411
25,370,826
1,564,817
2,758,436
298,406
25,072,419
1,564,817
2,758,436
2,547,014
31,748,085
393,870
31,354,215
29,694,079
298,406
29,395,673
4341,533
49,565
29,480
341,533
9,565
29,480
3,875,998
227,691
445,590
58,810
3,817,189
227,691
445,590
3,522,284
208,146
371,416
38,488
3,483,796
208,146
371,416
380,577
380,577
4,549,279
58,810
4,490,470
4,101,846
38,488
4,063,358
4370,525
48,767
370,525
8,767
64,935
4,159,504
165,601
63,255
485,873
4,128,895
169,230
61,307
444,864
49,200
4,079,695
169,230
61,307
444,864
4,755,096
J,341,
32,159
32,159
4,224,439
165,601
63,255
485,873
Total--FHI trust fund ..•...•......••.•••..••.
411,451
411,451
4,939,168
64,935
4,874,234
4,804,296
49,200
Railroad retirement accounts:
Railroad Retirement Tax Act taxes .......•.••.•.•
87,847
88,105
980,667
209
980,458
919,544
712
6-258
918,83)1
====ill
Total--Employment taxes and contributions •••••
3,426,890
-258
3,427,148
42,217,199
517,823
41,699,377
~!L!\1I1'7R"
386,806
39,132,'
Unemployment insurance:
Unemployment trust fund:
State taxes deposited in Treasury ••••••.•••••••..•
Federal Unemployment Tax Act taxes •••••...•..•
Railroad Unemployment Ins. Act contributions •...
39,693
6,766
24,142
1,575
39,693
5,191
24,142
2,581,742
984,510
127,328
7,973
2,581,742
976,537
127,328
2,563,745
776,139
130,898
6,500
2,563,
769,
130,
Total--Unemployment trust fund. •••••.••.••.•.
70,601
1,575
69,026
3,693,580
7,973
3,685,607
3,470,781
6,500
3,464,
Contributions for other insurance and retirement:
Federal supplementary medical ins. trust fund:
Premiums deducted from benefit payments ••••••.•
Premiums collected by Social Security Admin •.•••
Premiums depOSited by States ••••.•..••.••.••.••
86,200
8,739
13,350
86,200
8,739
13,350
1,030,554
89,855
131,472
1,030,554
89,855
131,472
763,516
75,276
Total--FSMI trust fund •••••••••••••••••••••••
108,289
108,289
1,251,881
1,251,881
936,000
hderal employees retirement contributions,
ClvU eervlce retirement and dlaabUity fund •••••••
..oretan _rvlce retire_ent. and dlaabUity fund ••••
1«15,0'14
.1$lIi
1.1105.323
1.'12&.518
..-.-.-
.......-
.".,..=-..
Cl*ber. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
T~--. . . . . ..,.
~~~:~~~_'!
................ .
.,·>.D.
.,~.,
...
97,209
..
........... ..
7.. 21:1
2....
.•••••••••••••
........... .
..-..- ~~-.......... .
TABLE UI--BUDGET RECEIPTS AND OUTLATS--Continued (In thousands)
SECTION A--THE EXPENDITURE ACCOUNT--Continued
This Month
Classification of
RECEIPTS--Continued
Social insurance taxes and contributions--Continued
Contributions for other insurance and retirement--Continued
Other retirement contributions:
Civil service retirement and disability fund •••••••••
Gross
Receipts
Refunds
(Deduct)
Comparable Period Prior Fiscal Year
Current Fiscal Year to Date
GrosS
Receipts
Net
Receipts
Refunds
(Deduct)
Net
Receipts
Gross
Receipts
Refunds
(Deduct)
Net
Receipts
$2,851
.............
$2,851
$36,459
............
$36,459
$29,289
............
$29,289
Total--Contributions for other insurance and
retirement ••••••••.••.••••••••••••••.•.••...
276,892
. ............
276,892
3, an, 963
............
3, all, 963
2,700,653
. ..•.•......
2,700,653
Total--Social insurance taxes and contributions •••
3,774,382
$1,318
3,773,065
49,112,743
$525,796
48,586,947
45,691,199
$393,306
45,297,894
Excise taxes:
Miscellaneous excise taxes. •••••••••••••••••••••••••••
Airport and airway trust fund .••••••.•••••••••••••••••
Highway trust fund .•••••.••.•.•••••••.•••••.••.••..•.
1,051,613
50,800
444,lIlO
11,963
al8
9,500
1,039,650
50,592
434,700
10,658,090
564,499
5,664,068
133,197
1,677
122,512
10,524,894
562,823
5,541,556
10,518,563
166,700
10,351,863
5,385,701
32,074
5,353,627
Total--Excise taxes ••.•.•••••••.•••••••.•••••••••••
1,546,613
21,671
1,524,942
16,886,658
257,386
16,629,272
15,904,264
198,774
15,705,490
Estate and gift taxes. ••••.••....••••••••••••••••••••••.•
330,998
4,883
326,115
3,758,114
49,al6
3,708,909
3,680,076
35,655
3,644,421
Customs duties •.•••.••••••••••••.•.•••.•..•.•••.••••..
252,046
3,166
248,880
2,655,923
65,950
2,589,973
2,494,294
64,079
2,430,215
Miscellaneous receipts:
Deposits of earnings by Federal Reserve Banks •.•••••••
All other .•.•..••.•••••••.•••.•..••.•••••....•••.••••
268,028
38,213
. ...........
10
268,028
38,204
3,532,969
313,997
............
84
3,532,969
313,913
3,265,900
158,274
. ...........
60
3,265,900
158,214
Total--Miscellaneous receipts ••••••.••••.•..•.•••••
306,241
10
306,231
3,846,966
84
3,846,882
3,424,175
60
3,424,114
Total--Budget receipts .•.•.•••••..••.•••..••.••••••
23,221,711
772,973
22,448,738
207,288,494
18,956,364
188,332,129
al9, 882, 577
16,139,326
193,743,251
............ ....•....... .....•••......
FOOTNOTES
Source: Prepared by the Department of the Treasury, Bureau of Accounts, on the basis of reports received from disbursing, collecting and administrative
agencies of the Government.
1 This statement is preliminary and is based on reports from disbursing,
collecting and administrative agencies of the Government. Final reports of
Government disbursing, collecting and administrative agencies, including
certain overseas transactions for the year ended June 30, 1971, which it
has not been possible to include in this statement will be incorporated in
the final statement for fiscal year 1971 to be published at a later date.
2From the 1972 Budget Document, released January 29,1971.
3 Transactions cover the period July 1,1970 through June 30, 1971.
4 In accordance with the provisions of the Social Security Act, as
amended, "Individual income taxes withheld" have been decreased and
"Federal Insurance Contributions Act taxes" have been increased in the
amount of $240,638,551 to correct estimates for quarter ended Septem_
ber 30,1970 andprior. "Individual income taxes other" have been increased
and "Self_Employment Contributions Act taxes" have been decreased in the
amount of $11,614,591 to correct estimates for the calendar year 1969 and
prior.
5Includes $61,475,692 distribution to Federal Disability and Hospital
Insurance Trust Funds.
6Includes adjustments for overpayment of refunds inprevious quarters.
7Includes 100/0 retroactive benefit payments to January I, 1971 from the
Federal Old-Age and Survivors Insurance Trust Fund and Federal
Disability Insurance Trust Fund.
*Less than $500.00.
(..)
...
TABLE III--BUDGET RECEIPTS AND OUTLAYS--Contlnued (In thousands)
SECTION A--THE EXPENDITURE ACCOUNT --Continued
Legislative Branch:
Senate •...•.•...••...•..•.••••••••....••.•••.•••
House of Representatives ••••••.•.•..•••...•...••.
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 .••..........•........•.
Cost Accounting Standards Board •......•....•.....
United States Tax Court ..........•.....•....•....
Proprietary receipts from the public .............. .
Intrabudgetary transactions ...................... .
Total--Legislative Branch •......• '" .•••. ' .. .
The Judiciary:
Supreme Court of the United States ..•.............
Court of Customs and Patent Appeals •....•........
Customs Court .•••..........•.••...•.....••....•
Court of Claims •••....•......•....•.•....••.....
Courts of appeals, district courts, and other
Judicial services ...•.....••...••.•.•••••....•.
Federal Judicial Center ....••••....•....•••.....•
Commission on Bankruptcy Laws of the United
States •...•..•..•••...•••...•.•.•...•••....•••
Judiciary Trust Funds •••.....••.•.. '" ....•••...
Proprietary receipts from the public .•••....••....
Expenditures
(Disbursements)
I Applicable
Receipts
Net
Expenditures
I(Disbursements)
Expenditures I Applicable I
Net
Receipts
Expenditures
Expenditures
(Disbursements)
I Applicable
Receipts
Net
Expenditures
$57,583
108,279
13,296
18,796
Jl:5,651
10,615
218
2,201
79
5,552
$5,651
10,615
218
2,201
79
5,552
$65,050
118,238
13,983
22,976
696
55,127
$65,050
118,238
13,983
22,976
696
55,127
$57,583
108,279
13,296
18,796
49,804
49,804
3,773
3,675
7,339
32
3,773
3,675
7,336
32
300
-1,875
-69
47,642
-8,855
79,427
72
3,300
47,642
-8,855
79,406
72
3,300
-13,491
-355
39,956
-5,813
69,857
..............
2,972
39,956
-5,813
69,857
..............
····iii;727
37,489
397,300
383,788
354,872
11,727
344
300
$3
1,875
-69
39,366
1,878
·······s2i
.........
.
13,491
-355
13,512
620
620
-477
·········2;972
-11,727
-477
343,145
58
212
185
4,033
621
2,152
1,902
4,033
621
2,152
1,902
3,386
592
2,054
1,875
3,386
58
212
185
13,758
85
13,758
85
135,341
719
135,341
719
123,934
536
123,934
536
......•••.••.•
1,352
344
1,098
.......•..
1,352
4,043
7
1,098
-4,043
14,857
145,873
4,043
141,831
133,729
21
814
245
51
48
21
814
245
51
48
86
250
7,559
733
1,176
370
1,234
250
3,721
2,497
852
86
250
7,559
733
1,176
370
1,234
169
184
27
169
184
27
1,378
1,378
6
6
402
2,171
693
9,145
149
5
222
5
12
12
Total--The Judiciary •....•••••••..••••....•••
Office of the President:
~ompensation of the President •.•..•••.•... ~ ••..•.
office •••••••••.•...•••••••.. " ••
Comparable Period Prior Fiscal Year
Current Fiscal Year to Date
This Month
Classification of
EXPENDITURES
245
77
1,610
15
245
77
1,610
15
1,438
1,438
161
161
134
5
M
a
222
-12
134
............
--~..,
Ii
56
•
7
946
466
14,786
2,124
2,216
946
466
..............
402
2,171
693
9,145
149
937
14,786
2,124
2,216
···.····4.
............
..............
1,188
..
IIU
en
538
1,418
8,065
53
11,6'16
1,850
1,817
592
2,054
1,875
5,855
-5,855
5,855
127,874
.l:"~rI.UU
r,l-I.u.a.-
':"'D~
... , . . -
~-~
EXPENDITURES--Continued
Expenditures
(Disbursements)
Applicable
Receipts
Expenditures
Net
Expenditures (Disbursements)
Applicable
ReceiPts
Applicable
Expenditures
Net
Expenditures (Disbursements) Receipts
Net
Expenditures
Funds appropriated to the President:
Appalachian regional development programs:
Public enterprise funds .•••.••••••••.•••••..•..•..
Other•••••••••••.•••••••••.•••••••••••••••.••.••.
Disaster relief ••••••••..•.••.•••••.••..•.••..••.•..
Emergency fund for the President .•••••••••••••••••••
Expansion of defense production •.•••.•••.••••..••.•..
Expenses of management improvement ••••••••••••••••
Foreign assistance:
International security assistance:
Defense Department•••.••.••.••.••.•••••.••••••.
All other agencies ••••••••••••••••.••.•••••••.••
Foreign military credit sales ....................
Military credit sales to Israel ...................
Supporting assistance ••••••••••..•.•••••••••.•••
Foreign military sales fund •.•••••.•...•.•.••..•
Military assistance advances •••••••••••••••••••••
Proprietary receipts from the public:
Military assistance advances •••••.•••••••••..••
Other •.•••••••••••••••••.••••••••••••••.•••••
$15
23,280
19,313
78
99
64
...... .... "' . '"
..... "' ... "'.
.............
...........
$328
..... "' .....
$15
23,280
19,313
78
-229
64
$261
230,442
124,992
479
11,288
576
71,199
-5,611
13,149
71,465
35,560
49,889
91,928
............
...........
.......•...
18,132
............
............
.......... .
71,199
-5,611
13,149
53,333
35,560
49,889
91,928
473,348
-6,951
121,937
285,232
461,038
242,701
954,883
......... "' .........
..... "' ..... "'.
52,707
-2,599
-52,707
2,599
327,579
68,239
13,020
13,361
31,143
Total--International security assistance •••••••
$30
230,442
124,992
479
-187,127
576
$700
193,142
144,909
851
85,553
119
548,964
-604
92,516
..............
............
473,348
-6,951
121,937
267,101
461,038
111,628
954,883
..... "' .........
"' .... '"
'" "'. "'
..
963,883
35,194
259,340
2,532,188
... "' .......
."' ...... "' ..
13,020
13,361
........... '"
.
2,977
10,642
724
6,304
",
$231
.. "'."' ..
............
..........•
."'."'
198,415
.. ........
.
"'
"'
........... .
........... "' ..
.... "' ...... "' .
812,694
15,686
-812,694
-15,686
1,148,282
1,383,906
2,278,262
1,081,344
1,196,919
201,124
128,799
. ...... "' ....
. ... "'."' ... '"
201,124
128,799
223,892
99,724
. ...........
...... "' ... '"
223,892
99,724
31,143
312,713
.."'."' .......
312,713
342,868
"' ...... "'
... '"
342,868
268,638
636,165
4,681
-2,913
203
16,778
.."' ... "' .......
33,486
98,775
20,262
13,080
. ...........
235,152
537,390
-15,581
-15,993
203
16,778
-96,707
340,172
602,369
13,221
-782
54,944
126,406
29,564
285,228
475,963
-16,343
-782
",.
.. "' ... "' .......
....
"' .. ...
.......... "'.
49,944
Total--Bilateral assistance ..•.•.•......•..•.
117,913
70,591
47,322
1,236,266
262,310
Total--International development assistance ...•.
144,294
70,591
73,703
1,566,189
262,310
President's foreign assistance contingency fund ....•.
1,598
... "' ........
1,598
26,441
. ..........
Total Foreign Assistance .•••.••••••.•••••.••....
473,472
138,831
334,641
4,124,818
1,410,592
122,045
3,560
8,266
.. "'''' ........
122,045
3,351
8,237
1,492,048
7,332
88,876
2,321
576
1,492,048
4,398
88,646
2,321
-576
... "' ..........
"'
............
209
29
. ......... "'.
. ..... "''''.''' ...
41
-41
..............
. ........ "'.
96,707
........ 2,935
.....
~
230
"'
...... "' ....
Total--Funds appropriated to the President .•...•.
650,193
139,437
510,755
6,083,433
1,612,979
Agriculture Department:
Agricultural Research Service •.•.•..•••••.....•..•••
Cooperative State Research Service .•..••.•.••.•.•.••.
Extension Service •......•........•...••...••..••.•.
Farmer Cooperative Service •.••••..••••.••••••••••••
26,128
8,695
13,494
164
... "' .........
26,128
8,695
13,494
164
282,868
69,633
154,508
1,763
. ..... "' .....
. ........ "' .....
."' ...... "'''' ..
. .... "' ..... '"
.. " ... .. ...
,.
""
."' .... "'."' ..
...... "' ......
548~;
-963,883
-35,194
131,073
15,067
60,639
-472
-6,439
171
-2,844
-49,944
Office of Economic Opportunity:
EconomiC opportunity program •..•.....•...•..•....
Public enterprise funds •.••.•••••••••.••.•••••••••
Peace Corps .•...••.•..•..•..•••••..•••••..........
Miscellaneous ••.••.••..•..•••••.•••••..•••••.••.•••
Proprietary receipts from the public ••••..•••...••..•.
......... "' .
99,511
466,123
220,989
950,275
............... .
18,044
71,282
253
-135
171
-2,844
"'
....... "' .....
·.... ··466;i~
18,132
International development assistance:
Multilateral assistance:
International financial institutions •••••••••••.••
International organizations and programs •..•....
Bilateral assistance:
Grants and other programs .••.••..••.•••••..•.
Public enterprise funds:
Alliance for progress, development loans •.••.
Development loan fund .•..•..•.....•......•.
Housing investment guaranty fund ••....••..•.
Overseas Private Investment Corporation •..•.
Inter-American Social Development Institute •.
Intragovernmental funds ..••.•.•••.•.••••.••••.
Proprietary receipts from the public ••••••......
",
$622
193,142
144,909
851
-13,~~
.. "........
.. .., ............
.. ...........
............
252,964
...........
.
...........
.. "' .........
$78
...... "' ... '"
...........
.......... '"
...............
92,51
-31,97~
950,275
. ........... "'.
. .... "' ........
-5,061
. ........ "' ...
.. .. ...
.........
"' ......
73,800
973,956
1,292,787
284,714
1,008,073
1,303,879
1,616,403
284,714
1,331,689
26,441
32,975
.... "'."' .. "'.
32,975
2,714,226
3,927,640
1,366,058
2,561,583
1,801,705
6,235
90,249
2,159
. ..........
. ............
2,386
233
.."' .........
345
1,801,705
3,850
90,016
.2,159
-345
4,470,454
6,253,263
1,468,611
4,764,652
282,868
69,833
154,508
1,763
267,265
61,870
124,526
1,667
.."'."' ..... "'.
267,265
61,870
124,526
1,667
"''''
•
•
'''
,. ..
~
'''
. . . . 4' . . .
. ..... "' ..... '"
.... "' ...... '"
-5,061
-73,800
(]I
m
TABLE III--BUDGET RECEIPTS AND OUTLAYS--Contlnued (In thousands)
SECTION A--THE EXPENDITURE ACCOUNT --Continued
,
This Month
Classification of
EXPENDITURES--Continued
Agriculture Department--Continued
Soil Conservation Service:
Conservation operations .............•.............
Flood prevention, watershed protection and other ....
Great Plains conservation program ..........•......
Economic Research Service •....•.........•..••......
Statistical Resorting Service ••......•..•.........•...
Consumer an Marketing Service:
Consumer protective, marketing and regulatory
programs ...•....•...............•..•......•...
Payments to States and Possessions ...•............•
Removal of surplus agricultural commodities ....•...
Milk market orders assessment fund ..•.....••......
Other ..••..••..•••.•..••.•••.•••..•..••.••..••...
Expenditures
(Disbursements)
Applicable
Receipts
$11,078
9,939
1,649
834
2,425
...........
...........
I
Current Fiscal Year to Date
Expenditures
Net
Expenditures (Disbursements)
Comparable Period Prior Fiscal Year
Expenditures
Net
Applicable
Receipts Expenditures (Disbursements)
Applicable
Receipts
Net
Expenditures
$150,272
117,670
16,224
15,233
18,574
$138,939
115,365
16,414
15,788
17,253
..........
..........
..........
...........
. .........
$138,939
115,365
16,414
15,788
17,253
..........
$18,192
..........
158,160
1,674
402,898
-1,383
39,348
136,880
1,600
449,540
14,707
36,970
............
.........
.........
$15,650
..........
136,880
1,600
449,540
-943
36,970
618,888
18,192
600,697
639,696
15,650
624,046
7,842
42,073
143,123
90,917
519,427
1,565,831
90,917
519,427
1,565,831
193,039
2,176,174
..........
..........
..........
..........
...........
3,349
-205
268
25,779
1,246
2,671
...........
...........
...........
...........
...........
...........
...........
16,864
3,763
12,412
-856
89
37
9
156,561
85,268
166,176
164
75,723
11,869
891
164
32,318
...........
32,318
496,816
..........
..........
..........
..........
...........
.........
..........
...........
.........
..........
..........
..........
...........
...........
...........
$11,078
9,939
1,649
834
2,425
$150,272
117,670
16,224
15,233
18,574
13,083
133
19,125
1,453
2,878
...........
...........
...........
$1,585
...........
13,083
133
19,125
-132
2,878
158,160
1,674
402,898
16,808
39,348
Total--Consumer and Marketing Service ......•.••
36,671
1,585
35,086
Food and Nutrition Service:
Special milk program ..•.......•........•...•.•••.
Child nutrition programs ..•....•...•.......•......
Food stamp program .•...••..•........•.......•...
7,842
42,073
143,123
Total--Food and Nutrition Service ..•.............
193,039
...........
...........
...........
...........
Foreign Agricultural Service ....••..••.•••...•..•..•
Foreign Economic Development Service ..••..••..••..•
Commodity Exchange Authority ••..•..•••.....•...••.
Agricultural Stabilization and Conservation Service:
Expenses ••..•..••..•••..•...•..•••.••.••...••..•
Sugar act program ••.••.•••..••..•••.....••..••...
Rural environmental assistance program •......•..••
Cropland conversion program •...•..••..••......••.
Cropland adjustment program .••..•••.••...•.•••..
Emergency conservation measures .••..•...••.•.•..
Conservation reserve program (soil bank) •..••.••..•
Dairy and beekeeper indemnity programs .•••.••..••
3,349
-205
268
16,864
3,763
12,412
<*l
-856
89
37
9
Total--Agricultural Stab. and Conservation
Service •••••••.•••.•••...•..••••.•.•.••...•..
...........
...........
...........
(*)
..........
..........
..........
..........
..........
...........
.........
2,176,174
25,779
1,246
2,671
156,561
85,268
166,176
164
75,723
11,869
891
164
...........
.........
..........
..........
959,740
..........
24,862
..........
.............
..........
2,167
...........
152,604
92,976
..........
.........
182,618
.
.........
2,276
..........
77,372
...........
•...•••..
8,304
38,620
..........
126
83,800
299,131
576,810
83,800
299,131
576,810
959,740
24,862
..............
2,167
152,604
92,976
182,618
2,276
77,372
8,304
38,~~
1~
496,816
554,895
.•....•...
554,8'
Commodity Credit Corporation:
Public enterprise funds:
Price support and related programs .••...•••..••.
Intragovernmental funds:
Special activities ••••••••••••..••••••••..••...••
Foreign asSistance and special export programs •..••
294,563
558,821
-264,258
8,187,725
5,302,919
2,884,806
7,723,552
4,003,752
3,719,81
4,239
104,730
...........
2,720
1,519
104,730
128,048
818,483
..........
45,244
82,805
818,483
133,379
921,250
48,175
..........
85:~
921,
Total--Commodity Credit Corporation •.••.••.••..
403,532
561,541
-158,009
9,134,257
5,348,163
3,786,094
8,778,181
4,051,927
4, 726,~
Federal Crop Insurance Corporation:
Admlnlstrative expenses ••.••.••...•....•.•.•.••..
Federal Crop Insurance Corporation fund ...•.......
aural Electrification Administration •......••.•.......
36
3,487
1,230
...........
36
2,996
1,230
12,113
36,850
15,450
37,205
...........
····38;838
J
491
............
..........
12,113
-355
15,450
11,932
48,138
20,835
..•••.....
I,
Classification of
EXPENDlTURES--Continued
Agriculture Department--Continued
Farmers Home Administration:
Community development programs ...................
Salaries and expenses............ ••••. •••• ••••••• •••
Public enterprise funds:
Direct loan account.... •.. ••.•.• .••.. .. •.••...•.••
Rural housing insurance fund......................
Emergency credit revolving fund...................
Agricultural credit insurance fund..................
Other...........................................
Otller ......... ~"""........................................................................
This Month
Expenditures
Applicable
(Disbursements) Receipts
I
Current Fiscal Year to Date
Comparable Period Prior Fiscal Year
Net
Expenditures
Expenditures (Disbursements)
Expenditures
(Disbursements)
Net
Expenditures
$32,307
70,534
$29,387
95,136
$32,307
70,534
$74,852
258,768
3,800
144,315
326
........... .
1,630
9,730
13,897
87,437
8,399
123
60,215
193,277
12,723
174,264
13,193
$72,803
159,523
3,029
143,232
1,314
-12,588
727,798
482,060
245,738
556,514
379,902
176,612
............
1,154
325
427
190
445
232
9
16,810
3,710
5,916
2,411
4,025
3,528
...........
...........
..... ......
...........
...........
...........
...........
9
16,810
3,710
5,916
2,411
4,025
3,528
391
14,769
3,346
5,590
2,455
3,903
3,252
............
............
........ ••••
............
.. ..........
............
............
391
14,769
3,346
5,590
2,455
3,903
3,252
676
633
-58
6,022
...........
...........
·58
6,022
-63
5,2D6
............
............
-63
5,206
1,649
2,092 ...... ......
362,557
296,268 ............
121,957
99,772 ............
115,760
12D,913............
47,328
36,544 ............
-440,053......... .....
489,707
2,092
296,268
99,772
120,913
36,544
-489,707
$2,575
8,278
'" •••••••••
............
$2,575
8,278
$29,387
95,136
11,548
14,913
1,124
18,527
271
14
$11,294
35,928
1,184
17,360
10
••.•••.•••.•
254
.21,015
-60
1,167
261
14
76,481
268,498
17,697
231,752
8,724
123
Total--FarmersHomeAdministration..............
57,251
65,776
-8,525
Rural Community Development Service.. .. .. .. • • • .. • • • ..
Office of the Inspector General.......... ...............
Packers and Stockyards Administration...... ••.. .•..••.
Office of General Counsel •.•.••••.••••••••••••••.•••••
Office of Information .................................
National Agricultural Library..........................
Office of Management Services...... ...................
General administration:
Intragovernmental funds. • • • • • • • . • . . • • . • • • • • • • • . • • • . .
Salaries and expenses............. ..... ..... ........
Forest Service:
Intragovernmental funds.............................
Forest protection and utilization.....................
Forest roads and trails.............................
Forest Service permanent appropriations ••..••••••••.
Other.............................................
Proprietary receipts from the public •••..••.••••..••••.
..............
1,154
325
427
190
445
232
............
............
............
......... ...
............
... .........
............
676
633
• ...........
............
-909
26,673
17,964
1,048
5,648
..............
............
............
............
........ ....
............
94,425
Total--Agriculture Department......................
859,886
723,819
-909
1,649 ...........
26,673
362,557 ...........
17,964
121,957 ...........
1,048
115,760...........
5,648
47,328 ...........
-94,425........ ......
440,053
136,068
14,766,412
409
409
276
7,591
11,880
12,950,486
7,013
7,013
5,899
5,899
276
7,591
3,683
94,106
3,683
94,106
3,625
140,092
3,625
140,092
1,298
............
............
-1,281
17,446
2,424
16,809
197,092
28,006
12,992
...........
...........
3,817
197,092
28,006
11,465
184,424
7,142
822
2,118
-15
212
-36
29
523
............
............
............
............
............
............
............
822
2,118
-15
212
-36
29
523
14,019...........
29,054.... .......
89 .......... •
2,901 ...........
1,919 ...........
255 ." ;.......
4,576 .... .......
14,019
29,054
89
2,901
1,919
255
4,576
3,654
............
3 654
52 813
52 813
17
17,446
2,424
Total--Promotion of industry and commerce........
...........
4,976,023
9,694
31,032
8,440,739
Commerce Department:
General administration •.•.•.••...••••••.••••.••••....•
Business economics and statistics:
Office of Business Economics •••...•.....•....•.••...
Bureau of the Census •••••••••••••.••••.••.••••.••••
Economic development assistance:
Economic Development Administration:
Public enterprise funds .••.••.•••••.••.•.•••••••..
Other............................................
Regional Action Planning Commissions...............
Promotion of industry and commerce:
Domestic business activities. . . ... . • ... • • . • . • • . . . .. ..
International activities •.••.....•..••..•••.. , •••• ••..
PartiCipation in U. S. Expositions.....................
Foreign direct investment regulation.................
Minoritr business enterprise........................
Nationa Industrial Pollution Control Council. • • • • • • • • • •
U. S. Travel Service................................
6,325,673
33,7~
7,974,463
11, 361
............
............
184,424
7,142
12,410............
25,721... .........
246 • ...... ... • •
3,237 ............
887 ............
....... ... ....
... .........
4,840 ........ ....
12,410
25,721
246
3,237
887
• ............. .
4,840
47 341
............
47,341
..,
(Xl
TABLE III--BUDGET RECEIPTS AND OUTLAYS--Contlnued (In thousands)
SECTION A--THE EXPENDITURE ACCOUNT __ Continued
Classification of
EXPENDITURES--Continued
Commerce Department--Continued
Science and technology:
National Oceanic and Atmospheric Administration:
Public enterprise funds •••••••..•••••••••••••••.•
Intragovernmental funds ••••••••••••.••••••••••••
other•••••••••••••••.•.•.••••.•••••.••••••••••••
Patent Office •••••••••••••.•••••••••••••••••.••••••
National Bureau of Standards:
Intragovernmental funds •••••••••••••••••••••••••
Other••••••••••••••••••••••.•••••.•.•••..••••.••
Office of Telecommunications ••.••••••••••••••••••••
Office of State Technical Services •••••••••••••••••••
I
Expenditures
(Disbursements)
Applicable
Receipts
Comparable Period Prior Fiscal Year
CUrrent Fiscal Year to Date
This Month
\
Net
Expenditures )\ Applic,able
Expenditures (Disbursements) ReceIpts
I
Expenditures )\ Applicable
Net,
(Disbursements) Receipts
ExpendItures
1381
-89
252,300
48,673
I
1670
Net
Expenditures
-$289
-89
252,300
48,673
$958
-$612
...........
...........
.•.•....•..
..•......•.
.•..•..••.•
.•.••.••...
266,631
55,378
-112
48,981
2,279
2,233
•..••.•.....•
4,265
139,233
268,021
38,147
12,497
..........
.
.•.•..•....
70,7:ll
89,323
:ll5,732
31,292
...•.......
...••......
-8,232
139,233
268,021
38,147
...........
...........
39
89,323
:ll5,732
31,292
96,164
449,666
12,497
437,169
397,067
70,681
326,386
2,635
-2,635
.•...•..•...•
36,706
-36,706
.........•...
25,484
..•.••.•..
. .........
..••..••..
..........
..........
947,819
610,608
614,426
306,035
9,368,341
6,409,990
6,826,378
3,385,601
9,368,341
6,409,990
6,826,378
3,385,601
9,700,961
6,671,026
6,658,752
2,849,262
I....
·······
. ...•...•..
...•••....•
2,478,890
25,990,310
. .........•
......•.•..
.......••..
...•....•..
......•.•..
25,990,310
25,880,002
7,5:ll,492
5,484,795
6,745,009
1,256,996
7,879,151
5,552,548
6,995,222
1,182,001
21,007,292
21,608,922
$346
$40
-100
22,363
6,861
$182
..........
.
..........
..........
-$142
-100
22,363
6,861
266,631
55,378
-1,466
3,718
648
65
.•.•.••...
...•..•••.
..........
.
..........
-1,466
3,718
648
65
-112
48,981
2,279
2.233
Ocean shipping:
Maritime Administration:
Public enterprise funds •••••••••••••••.•.••.•••••
Ship construction ••••••••••.•••••..•.•••••••.••.
Ship operation subsidies ••••••••••.••..•••••.•••.
other ••••••••••••••••.•••••.•••••.•••••••••••••
991
17,430
74,629
4,111
..........
.....•....
....•.....
997
-7
17,430
74,629
4,111
Total--Ocean shipping •••••••••••••••••••••••••••
97,161
997
Proprietary receipts from the public. ••••••.•••••••••
Intrabudgetary transactions ••••••••••••••.•••••••••
•........•...
Army ..........................
Navy ••••••••••••••••••••••••••
Air Force ••••••••••••••••••••••
•••••.••••••••••••.••••••••••••
947,819
610,608
614,426
306,035
240
...........
240
-215
45,752
4,570
.•.•.......
. •.....•.•.
. .••....•..
. ..........
.•.....•.•.
...........
...........
-215
45,752
..........•...
4,570
Total--Science and Technology ••••••••••••••••••••••
70,681
Total--Commerce Department •.••••••••••••••••••
Defense Department:
Military:
Military personnel:
Department of the
Department of the
Department of the
Defense Agencies
Total--Military personnel ••••••••••••••••••••••
2,478,890
Operation ,and maintenance:
Department of the Army .••••••••••••••••.•••••.••
Department of the Navy ..•••.•••••••••••••••••••.
Department of the Air Force ••••••••.•••••••••••••
Defense Agencies ••.••••••••••••••••••.••••••••••
934,214
637,801
681,160
118,364
Total--Operation and maintenance •••••••••••••••
Procurement:
Department of the Army ..........................
Department of the Navy ••••••••••••••••••••••••••
De~artment of the Air Force ••••••••••••••••••••••
De ense agencies" ..............................
934,214
637,801
681,160
118,364
7,5:ll,492
5,484,795
6,745,009
1,256,996
2,371,539
..•.•..•••
..••...•••
..........
••....••..
....•.••..
2,371,539
21,007,292
539,524
754,383
665,898
8,345
...•..•••.
...•..••..
..••.••...
.....•....
539,524
754,383
665,898
8,345
4,360,683
7,384,670
7,132,765
69,887
.....•.....
. ..........
. ...•...•..
....••.....
..••..•.•..
I"""··...
••••••••••• 1
•••••••••••
;;;38'
4;6'70
7,132,765
.."UJU,.&~...
1
7,944,549
8,362,151
..•••......
I •••••••••••
I.......
·····
•..••..•..
..•........
........•..
I •••••••••••
I··.......•••..
.. ······.
...•••....
\,;.&aSSlllcauon of
EXPENDlTURES--Continued
.4 &....0
Expenditures
(Disbursements)
1{:ece:tpts
Plicable
Comparable Period Prior Fiscal Year
Current Fiscal Year to Date
jYJ.UllLU
Net
Expenditures
Applicable
Expenditures
Net
plicable
1{:ece:tpts
Expenditures
Expenditures (Disbursements) Receipts
(Disbursements)
Net
Expenditures
Defense Department--Continued
MUltary--Continued
Research, development, test and evaluation:
Department of the Army .........................
Department of the Navy ••••••••••••.••••••••.••••
DeEartment of the Air Force .....................
De ense agencies", ...... , .. , .... '" ..... "'" .. "' .... '" ...... '" .. ".. "......
$145,259
192,302
262,385
53,017
••.........
...........
"' ....................
.•....•..•.
$145,259
192,302
262,385
53,017
$1,568,457
2,404,576
2,814,601
517,774
...••••..•
..........
..........
.........•
$1,568,457
2,404,576
2,814,601
517,774
$1,665,477
2,084,248
2,937,137
479,415
.......••.
..........
..........
...... " ...... ,," "
$1,665,47'1
2,084,248
2,937,137
479,415
evaluatio.n.. .. '" "' ........ "'" .. ".... "' ........ "''' '" "' . "............ '" '" '"
652,983
...........
652,963
7,305,408
..........
7,305,408
7,166,277
........ " .........
7,166,277
M11itary construction:
Department of the Army ••••••••••••••••••••••••
Department of the Navy..........................
Department of the Air Force ••••••••••••••••••.•
Defense agencies ..............................
48,817
41,857
27,378
511
48,817
41,857
27,378
511
500,675
309,328
270,414
11,904
.. "' ................
...........
500,675
309,328
270,414
11,904
457,834
333,272
365,760
11,277
...........
...........
........ " .. " "' ....
...... "' ............
....................
457,834
333,272
365,760
11,277
Total--Military construction ••••••••••••••••••
118,584
..•........
...........
...........
.•.•.....•.
. , .........
118,564
1,092,320
..........
1,092,320
1,168,142
..........
1,168,142
Family housing:
Homeowners assistance fund ••••••••••••••••••••
.. Otlter ..................................................................................
720
62,175
...........
$1,045
-325
62,175
8,958
593,783
..........
$6,061
2,897
593,763
12,487
609,780
..........
$8,075
4,412
609,780
Total--Family housing ........................
62,895
1,045
61,850
602,720
6,061
596,659
622,266
8,075
614,192
Civil Defense .......................................................................
Special foreign currency program ••.•••••••••••••
Revolving and management funds:
Public enterprise funds:
Department of the Army ......................
Department of the Navy ••••••••••••••••••••••
Department of the Air Force ••••••••••••••••••
Intragovernmental funds:
Department of the Army •••••••••••••••••••••
Department of the Navy •••••••••••••••.••••••
Department of the Air Force ••••••••••••••••••
Defense agencies ........................................................
4,190
290
...........
...........
4,190
290
72,345
1,609
. .........
...........
72,345
1,609
80,084
884
..........
...........
80,084
884
(*)
109
(*)
.................. ..
(*)
<*l
1
1,155
. ..................
-8
(*)
1
-212
-15
2
931
415
17
1,199
39
-15
-268
376
-74,868
38,992
-14,135
24,355
...........
...........
......................
•...•.•..•.
. ........•
Total--Revolving and management funds, •••••••
-25,547
Trust revolving funds ..........................
3,382
722
Total--Research, development, test and
3
1,367
18
-74,868
38,992
-14,135
24,355
-149,347
65,545
9,502
-247,659
..........
..........
.." .......
-149,347
65,545
9,502
-247,659
-113,292
-44,886
-422,262
-226,056
. ..•..•.••
. •.•....•.
.... ".. "....
. ..................
-113,292
-44,886
-422,262
-226,056
118
-25,664
-320,800
1,385
-322,185
-805,148
1,255
-806,403
6,222
-2,840
722
-16,919
-22
54,120
6,583
53,480
6,934
-6,004
............
-5,374
6,583
-118,694
-6,004
58,126
. ............
59,494
.. ...........
118,694
.............
-6,806
. •..••...•
140,974
. .........
-4,647
6,934
-140,974
-6,806
185,635
74,568,271
77,358,765
208,431
77,150,334
1,360,772
3,684
-32,234
30,602
13
51
-4,944
...............
36,479
1,189,075
. •..•.....
1,189,075
-4,944
-20,189
36,479
34
58
117
Proprietary receipts from the public ••••••.••••••
Intrabudgetary transactions ••••••••••••••••••••••
............
-22
............
16,919
............
Total--Mil1tary ..............................
7,636,018
24,303
7,611,714
74,753,906
CivU:
Department of the Army:
Corps of Engineers:
Water resources development •••••••••.••••••••
Intragovernmental funds ••••••••••••••.••••••••
Proprietary receipts from the public•••••••••.••
............
198,267
-11,400
...........
...........
2,428
198,267
-11,400
-2,428
3,914
1,360,772
3,684
Other ........................ "........ "....................
Other, ... ".• "" .......................... "............
NaVY--Wildllfe conservation, etc •••••••••••••••••••
AirForce--WUdUfe conservation, etc ••••••.•••.••.•
3,914
H
7
..........
.•..•..•..•
...........
............
(*)
7
..............
.. ".. , .... , .. .. .. 32;234
30,602
13
51
. .........
. ....•....
..........
34
58
..........
20,189
..........
. ...•.....
. .........
to
-
o
TABLE III--BUDGET RECEIPTS AND OUTLAYS--Continued (In thousands)
SECTION A-- THE EXPENDITURE ACCOUNT--Continued
Comparable Period Prior Fiscal Year
Current Fiscal Year to Date
Classification of
EXPENDlTURES--Continued
Defense Department--Continued
Civil--Continued
Soldiers' Home:
U. S. Soldiers' Home revolving fund •••••••••••••••
Other ...................................................................................
The Panama Canal:
Canal Zone Government .........................
Panama Canal Company •••.•••••••••••••••••••••
Proprietary receipts from the public ••••••••••.•••••
Intrabudgetary transactions ••••••••••••••••••••••••
$20
883
............
$16
$3
883
$193
10,598
..........
$197
-$5
10,598
$170
10,022
7,579
17,866
............
50,902
175,650
... i76;400
50,902
43,768
168,830
-3,853
............
7,579
-195
-932
-3.853
....... :i4;iS7
22,936
...........
-22,936
-24,167
11
..........•.
-2
-3,851
58,634
81,408
32,002
24,634
26,B01
12,857
153
6,194
359,864
433,918
197,045
262,448
230,335
117,483
152
. .........
1
6,194
359,864
433,918
197,045
262,448
230,335
117,463
233,282
1,607,439 1
152
1,607,2871
1,505,471 1
527
..............
18,061
932
Net
Expenditures
Expenditures
Net
Expenditures (Disbursements)
Expenditures
(Ol"hursements)
Expenditures
(Disbursements)
-840
. .............
1175
-$4
10,022
174,930
19,187
43,768
-6,100
-19,187
-18,270
. ..........
...........
-18,270
. ..........
148
-10,167
342,247
321,721
272,826
272,791
199,863
106,043
.•••...•...
..••...•..•
...........
...........
....•......
Total--Clvl1 .................................................................
Total--Defense Department ••••••••••••••••••••
Health Education and Welfare Department:
Foocl and Drug Administration:
Public enterprise funds •••••••••••••.••••••••••••••
Food and drug control •••••••••••••••••••••••••••••
Other .................................................................................
Total--Food and Drug Administration •••••••••••••
Environmental Health Service ••••••••••••••••••••••••
Health Services and Mental Health Administration:
Public enterprise funds ............................
Intragovernmental funds •••••••••••••••••••••••••••
Mental health .....................................................................
Health planning and regional programs ••••••••••••••
Maternal and child health ••••••••••••••••••••••••••
Medical facilities construction •••••••••••••••••••••
Direct care programs .............................
Other ..•.••••....•••••••••••..•.•••••••••••••.•.•
Total--Health Services and Mental Health
Administration •••••.•.•.•••.•••••••••••.•.•••
-3,851
58,634
81,408
32,002
24,834
26,801
12,857
233,295 1
13
••..........
..••....•..•
............
............
............
............
13 1
. .........
. .........
.•...•...•
.•........
. •........
......•...
National Institutes of Health:
Public enterprise funds ............................
Intragovernmental funds ...........................
Institute research and tra1ning activities ••••••••••••
Health manpower and dental health ••••••••••••••••••
Construction graIlts ••....•.••.•••••.••••••••.•••..
Other •...•••.•..••.•..•••...•.•••.••.•••••••••.••
332
-230,503
144,466
18,557
14,813
15,733
....•••.....
............
...•........
•...........
............
-230,503
144,466
18,557
14,813
15,733
1,272
-6,490
1,001,693
231,401
144,952
139,734
..........
..•...•.•.
. .......•.
......••..
..........
745
-6,490
1,001,693
231,401
144,952
139,734
12,618
-2,042
971,259
173,375
139,075
134,179
Total--National Institutes of Health •••••••••••••••
-36,602
79
-36,681
1,512,562
527
1,512,035
1,428,465
Office of Education:
Public enterprise funds:
loan insurance fund. ......................
facll1ties loan fund. ••••••••••••••
education ...................
d areas.........
................
.............
-365 1
66,001
130,538
9'7. 1lA.1J;.
79
390
466 1
............
............
253
-831
-390 1
66,001
130,~8
""'.111
.111"1:
.
421
3,048
11,013
13,548
412,860 ..........
~,~!
..........
150
...........
. ...•......
1501
362
..•........
........•..
...........
......•....
-3
-10,167
342,247
321,721
272,826
272,791
199,863
106,043
1,505,321
Tb1s Month
Classification of
EXPENDITURES--Continued
Expenditures Applicable
(Disbursements) Receipts
Health, Education and Welfare--Continued
Soclal and Rehab1l1tation Service:
Grants to States for pubUc assistance ••••••••••••••••
Rehabilitation services and fac1l1ties ••••••••••••••••
Work 1n.centlves ................................
Special programs for the aging ••••••••••••••••••••••
Assistance to refugees in the United States •••••••••••
Other........
$1,061,432
69,106
10,503
350
14,522
13,286
Total--Social and Rehab1l1tation SelOvice •••••••••••
1,169,199
Comparable Period Prior FlScal Year
Current Fiscal Year to Date
Net
Applicable
Expenditures
Net
Expenditures Applicable
Net
Expenditures..
Receipts
Expenditures (Disbursements)
Expenditures (Disbursements) Receipts
.....•.....
........•..
•...••.....
.•.........
•...•...•..
•..•.......
$1,061,432
69,106
10,503
350
14,522
13,286
$9,642,239
527,654
129,341
28,615
107,300
108,005
1,169,199
10,544,034
96,891
32,703
2,584,047
319,633
69,941
3,792,067
271
613,026
••.•...•...
•...••.....
••...•.....
...........
•....•.....
.......•...
69,941
3,792,067
271
613,026
Total--Federal old-age and survivors insurance
trust fun.d ....................................................................
4,475,305
....•......
Federal disability insurance trust fund:
AdmlnistraUve expenses and construction ••••••••••
Benefit payments ................................................................
Vocational rehabilitation services •••••••••••••••••
Payment to railroad retirement account ••••••••••••
18,506
7415,345
3,304
13,240
Total--Federal disability ins. trust fund •••••••••
Federal hospital insurance trust fund:
Adminstratlve expenses and construction ••• , •••••••
Benefit payments .............................. 0 . . . . . . . .
\I . . . . . . . . . . . . . \I \I \I \I • • •
\I . . . . . . . . . . . . . . . . . . . . " . . . . . \I "
....................................
Social Security Administration:
Payment to social security trust funds ............... ,
Special benefits for disabled coal miners •••••••••••••
Federal Old-age and survivors ins. trust fund:
Administrative expenses and construction ••••••••••
Benefit payments ................................................................
Vocational rehabilitation services •••••••••••••••••
Payment to railroad retirement account ••••••••••••
<I
.•..•.....
.•........
.........•
.•..•...••
..........
.....•...•
...........
............
$7,445,349
441,365
86,618
27,319
00,141
97,384
8,178,176
....•.....
•..•...••.
•...•...•.
•.....•...
..........
•...•..•..
•.•.....••
2,014,564
10,381
$9,642,239
527,654
129,341
28,615
107,300
108,005
$7,445,349
441,365
86,618
27,319
00,141
97,384
10,544,034
...........
8,178,176
2,584,047
319,633
2,014,584
10,381
............
551,208
31,101,043
1,859
613,026
.••...•...
..•..••..•
.•...••...
......•...
•...•....•
551,208
31,101,043
1,859
613,026
474,006
26,266,282
1,239
578,818
.........•
........•.
...••....•
474,006
26,266,282
1,239
578,818
4,475,305
32,267,135
. ••.......
32,267,135
27,320,345
............
27,320,345
18,506
415,345
3,304
13,240
189,887
3,381,425
21,242
13,240
149,030
2,777,988
16,467
10,439
3,605,794
3,005,794
2,953,943
.•..•...•.
........•.
........•.
.......•..
149,030
2,777,988
16,487
10,439
450,396
.....••...
. .•...•..•
..........
.....••...
. ....••...
189,887
3,381,425
21,242
13,240
450,396
•..••......
••..•......
...........
........•..
.•.........
13,600
400,297
.............
............
13,600
400,297
149,485
5,442,971
..........
...........
149,485
5,442,971
148,669
4,804,242
..........
...•......
148,669
4,804,242
4,952,911
96,891
32,703
7
............
.•..••..•.
.. ................
2,953,943
hospUal1ns. trust fund ••••••••••
493,976
••...•.....
493,976
5,592,456
..•.......
5,592,456
4,952,911
..........
Federal supplementary medical ins. trust fund:
Administrative expenses and construction ••••••••••
Benefit payments .........................................
25,638
178,641
............
••.........
25,638
178,641
247,637
2,034,999
..•...••..
......•...
247,637
2,034,999
217,009
1,979,287
Total--Federal supplementary medical
ins. trust fWld ............................................
204,279
.... ......
204,279
2,282,635
2,282,635
2,196,296
2,196,296
Other.......................................................
-70
-70
-77
Total--SoCial Security Administration •••••••••••••
5,753,479
....••.....
........••.
5,753,479
46,651,624
."" ........
.•.....•..
... ......
......•..••
•...•..••
..........
.."" .......
...•.•...•
39,448,444
•....•.....
...........
•....••....
•...•...•..
............
.•.....•.•.
117
4
274
1,166
4,739
434
1,517
4,149
2,384
8,060
38,920
3,796
...........
............
............
..•..••...
Tota1-~Federal
Special institutions:
American Printing House for the Blind ...............
National Technical Institute for the Deaf •••••••••••••
Model Secondary School for the Deaf •••••••••••••••••
~allaudet College ••••••••••••••••••••••••••••••••••
Offioward University .................................
ce of Child Development, •••••••••. _•••••••••••••••
117
4
274
1,166
4,739
434
""
""
. ......•..
.••...••..
-77
4
46,651,624
39,448,444
1,517
4,149
2,384
8,060
38,920
3,796
•..••...•
....•.•..•.•
....••...••
...........
•........
..•..••...•..• ..........
1,404
2,976
681
5,153
32,725
217,009
1,979,287
4
1,404
2,976
681
5,153
32,725
. .....•.......
See footnotes On page 3.
.....
.....
N
TABLE III--BUDGET RECEIPTS AND OUTLAYS--Contlnued (In thousands)
SECTION A--THE EXPENDITURE ACCOUNT--Contlnued
,
Current Flscal Year to Date
This Month
Classification of
EXPENDITURES--Continued
Health, Education, and Welfare--Continued
Departmental management:
Intragovernmental funds ...............................................
Other ........................................................................................
Proprietary receipts from the public ••••••••••••••.•••
Intrabudgetary transactions:
Payments for health insurance for the aged:
Federal hospital insurance trust fund .•••••••••••••
Federal supplementary medical insurance trust
fund •••••••••••••••.•••••••••••••••••••••••••
Payments for military service credits and special
benefits for the aged:
Federal old-age and survivors insurance trust
fund .........................................
Federal disability insurance trust fund ••••••••••••
Federal hospital insurance trust fund ••••••••••••••
Receipts transferred to railroad retirement account ••
Expenditures
(Disbursements)
Applicable
Receipts
Expenditures
Net
Expenditures (Disbursements)
...........
.........
$7,092
..........
..........
............
..........
.......... ............
.......... ····:626;266
..........
-448,916
-16,000
-11,000
-626,266
..............
..............
..............
-626,266
Comparable Period Prior Fiscal Year
Applicable
Expenditures
Net
Applicable
Receipts Expenditures (Disbursements) Receipts
-$10,666
-$7,944
..........
50,120
6,568
..........
-278 ...............
$278
..............
-862,849
.............. .......... ............
-1,245,282
-96,891
..........
-96,891
-$7,944
6,568
I
~5,373
-$10,666
50,120
-7,092
..............
-862,849
-617,262
-1,245,282
-928,151
..........
..........
..........
..........
-448,916
-16,000
-11,000
-626,266
-442,151
-16,000
-11,000
-589,257
8,394
Net
Expenditures
............
............
$35,821
~5,373
8,394
-35,821
............
............
-617,262
-928,151
.............
...........
.............
...........
-442,151
-16,000
-11,000
-589,257
Total--Health, Education, and Welfare Department.
7,169,967
1,580
7,168,387
61,830,202
28,846
61,801,356
52,193,095
53,477
52,139,618
Housing and Urban Development:
Housing production and mortgage credit:
Federal Housing Administration:
Public enterprise funds:
FHA revolving fund ............................
Housing for the elderly or handicapped fund ••••••
College housing loans and other expenses ••••••••
Low and moderate-income sponsor fund. •••••••••
71,848
433
3,348
152
86,454
1,524
4,313
22
-14,605
-1,091
-965
130
712,419
9,191
131,884
2,102
864,682
14,911
102,179
674
-152,263
-5,720
29,705
1,428
545,526
7,196
158,794
958
692,889
14,090
101,830
340
-147,363
-6,894
75,781
92,312
-16,531
855,595
982,446
-126,850
712,475
809,149
-96,674
7,521
35
7,772
39,671
16,846
165
18,154
..........
-9,325
-130
-10,381
39,671
151,856
363
263,136
13,013
154,142
1,149
214,393
..........
-2,286
-786
48,743
13,013
146,361
48
197,633
-8,347
158,927
48
183,724
............
...... ia;9ci;
Other ••• : ••••••••••••••• I
••••••••••••••••••••••
Total--Federal Housing Administration •••••••••
Government National Mortgage Association:
Public enterprise funds:
Management and liquidating functions .............
Guarantees of mortgage-backed securities ......
Special assistance functions ••••••••••••••••••••
PartiCipation sales fund ........................
Total--Government National Mortgage
~ssoclation •••••••••••••••••••••••••••••••••
Total--Housing production and mortgage credit.
HOUSing management:
Public enterprise funds:
Low-rent public hOUSing program •••••••••••••••••
Other ••••••••••••••••••••••••••••••••••••••••••
Housing assistance payments •••••••••••••••••••••••
Other ••••••••••••••••••••••••••••••••••••••••••••
Community development planning and management:
-: PubUc ente~r1se funds ............................
1"CQ1II\lrebans :va ~~ grants •••••••••••••••••••••
I ~?~~:~
...~ .. ~~~ .~~~~~.::::::::::
'1i'GtIIIIi'nMtt
•' , , >
j
f,W ,..._____ -
56,964
619
.............. .......... ............ ............... .......... ............ .............. ............ ............
-12,5~
-8,34
54,999
35,165
19,835
428~368
369,684
58,684
335,694
342,698
-7,00
130,781
127,477
3,304
1,283,984
1,352,130
-68,166
1,048,169
1,151,847
-103,67
53,905
1,967
32,536
-54
13,853
1,481
40,052
487
32,536
-54
591,470
5,321
175,061
50,066
4,934
541,404
38'1
175,061
454,511
24,391
430,1l
2,123
-2,188
..............
..........
.......•..
...•........•. ..........
5,476 ..........
178 ..........
..............
..........
"
............
5,476
.::~
.......~:~~
1,185 ............
1,
•........
....••••....... .......•...
......•.•.•.
-46
49,718
3,232
178
.......•.... ......••.•••...
,-...-'"
'(':."~"~~
'.,
..........
49,718
...........
........•
3,232
....•...••••
'0"
;,
.---
42,131
2,..
••••••••••••••
.~
125
............
. ...........
• • • • • • • • • • • • ',d .
"",""",-",,'
Classification of
EXPENDITURES--Continued
Expenditures
(Disbursements)
Housing and Urban Development Department--Continued
CommWlity development:
Public enterprise funds:
Urban renewal programs ••••••••••••••••••••••••
Rehabilitation loan fund •••••••••••••••••••••••••
Public facility loans ••••••••••••••••••••••••••••
Model cities programs ...........................
Grants for neighborhood facilities ••••.•••••••••••••
Open space land programs, •••••••••.••••••••••••••
Grants for basic water and sewer facilities •••••••••
$288,308
-1,186
583
48,126
2,031
1,549
10,700
Total--Community development •••.••••••••••••
Federal Insurance Administration:
Public enterprise funds ••••••••••••..•••••••••••••
Other ..................... "' ........
t
.............................................
Research and Technology •••••••••••••••••••••••••••
Fair Housing and Equal Opportunity •••.••••••••.••.••
Departmental Management:
Intragovernmental funds. •••••.••••••••••••••••••••
Other .................................. "' .............
Proprietary receipts from the public •••••••••.•••••••
Comparable Period Prior Flscal Year
Current Fiscal Year to Date
This Month
Applicable
Receipts
$12,874
-1,198
1,728
Expenditures
Net
Expenditures (Disbursements)
Applicable
Expenditures
Net
Receipts
Expenditures (Disbursements)
Department ......................................
Other .•..•••.. "' ..• '" '" "'. '" "' •.• "' ...... "' .............. '"
-'l!!!
11,049,122
............
...................
..........
$1,099,131
1,437
15,951
85,793
23,408
43,414
109,011
...........
..•........
43,4
109,0
1,615,234
77,225
1,538,009
1,378,144
66,229
1,311,9
2,620
2,188
35,549
8,000
..........
..........
15,086
-12,466
2,188
35,549
8,000
-2,075
959
9,579
6,266
...........
...........
-4,669
72,891
...........
...........
•.....•••..
$1,076,463
391
21,493
334,579
22,530
39,198
lID, 580
350,110
13,403
336,707
780
461
3,653
............
3,553
-2,773
461
3,653
$55,898
4,277
17,050
I' . . . . . . . . . . . . . . . . . .
.. ................
..........
-343
1,5
85,7
23;~
26,365
-28,~
........•.....
...........
...........
...
"' .......
23
9:~
6,
-4,66!
72,891
-23
95
.. .. .........
...........
...........
-5,365
1,919
...........
....... .....
2
-5,365
1,919
-2
2,614
80,284
.............. .
. .........
. .•....••.
..........
52,420
2,614
80,284
-52,420
576,347
159,769
416,579
3,855,209
1,553,983
2,301,226
3,055,399
1,276,947
1,778,452
4,319
...........
4,319
187,532
..........
187,532
197,122
"'
197,122
..............
177
8,067
.....
"' .....
...........
.
29,617
10,860
...
.....
"'
.
..........
-6,705
......... .
-177
8,067
29,617
10,860
-6,705
11
86,742
229,022
68,845
70,452
..........
821
......... .
25
56,089
183,940
57,405
66,049
646
...•.......
.........
-810
86,742
229,022
68,845
70,452
....•......
.....•..•..
. ..........
. ......•.•.
-621
56,089
183,940
57,405
66,049
821
454,251
363,508
646
362,861
'"
200,824
72,064
116,550
65,132
.....•...•..
...........
116,550
65,132
'"
..............
...........
Total--Housing and Urban Development
Interior Department:
Public land management:
Bureau of Land Management •••••••••••••••••••••••
Bureau of Indian Affairs:
Public enterprise funds .........................
Indian tribal funds ............................. ,. .......
Education and welfare services ••••••••••••••••••
Resources management •••••••••••••••••••••••••
850,009
1,780
14,440
Net ,,·~iI
EXPendltur'is
$I,OID,565
-3,886
4,443
334,579
22,530
39,198
120,580
$275,434
12
-1,145
48,126
2,031
1,549
10,700
...........
Applicable
Receipts
",;!II
"'
,
Total--Bureau of Indian Affairs ••••••••••••••••
41,838
177
41,661
455,072
Bureau of Outdoor Recreation •••••••••••••.•••••••
Office of Territories •••••••••••••••••••••••••••••
28,057
2,373
...........
..........
.
28,057
2,373
200,824
72,064
Total--Public Land Management •••••••••••••••••
76,587
177
76,410
915,492
821
914,671
742,311
646
741,664
...........
...........
'"
Mineral resources:
Geological Survey •.•••••••••••••••••.••••••••••••
Bureau of Mines:
Public enterprise funds •••••••••••••••••••••••••
Other •...•••.....• ", ... "' ...........................
Office of Coal Research •••••••••••••••••••••••••••
Office of Oil and Gas •••••••••••••••••.•••••••••••
8,919
.•.........
8,919
114,272
..........
114,272
102,692
. ....•.....
102,692
15,470
9,379
1,130
183
...........
807
73,919
87,214
17,573
1,158
8,214
........•.
..........
...........
65,704
87,214
17,573
1,158
42,247
61,982
17,292
1,042
12,018
........
"' ..
............
14,664
9,379
1,130
183
...•••.....
............
......... '"
30,229
61,982
17,292
1,042
Total--Mineral resources •••••••.•••••••••••••
35,081
807
34,275
294,136
8,214
285,921
225,255
12,018
213,236
Fish and wildlife and parks:
Bureau of Sport Fisheries and Wildlife •••••••••••••
National Park Service•••••••••••••••••••••••••••••
8,659
13,231
.............
........
8,659
13,231
128,387
150,099
..........
.•.•......
114,618
138,818
114,618
138,818
Total--Fish and wildlife and parks •••••••••••••••
21,890
...........
21,890
278,486
. .....••.•
128,387
150,099
278,486
. ..•••.....
"'
"'
--,
"'
253,435
. •.•.......
. .•..•.....
---
253,435
....
Co)
~
TABLE III--IUDGET RECEIPTS AND OUTLAYS--Continued (In thousands)
SECTION A--THE EXPENDITURE ACCOUNT--Continued
Comparable Period Prior Fiscal Year
Classification of
EXPENDITURES--Continued
Interior Department--Continued
Water and power resources:
Bureau of Reclamation:
Public enterprise funds:
Upper Colorado River Storage Project ••••••••••
Other ••••••.••••.••.•••••••.••••.••.••.•.••.•
Construction and rehabilitation ••.•••..••...••.•••
Other ••.•.••.•.•...••.•.••••••••....••••••••.••
Alaska Power Administration .•••..•••••••....••.••
Bonneville Power Administration ••...••••••.•••.•••
Southeastern Power Administration .•••..•••••.•...•
Southwestern Power Administration. •••.•••••..•••••
Office of Saline Water ••..••••.••••.••••.•••.•.••••
Net
Expenditures
Expenditures
(Disbursements)
$6,517
7,700
22,359
7,771
78
11,261
46
380
2,834
$3,750
5,895
...•..••...
..•...••...
..•••.••...
...•...••..
..•........
.......... " ..
............
$2,767
l,ro5
22,359
7,771
78
11,261
46
380
2,834
144,747
12,887
194,4211
99,285
1,018
136,886
837
6,276
29,148
6,433
26,243
11,133
130,819
291,503
118,718
-408
4,765
104,191
233,325
37,604
$38,741
10
$3,811
6,990
194,426
99,285
1,018
136,886
837
6,276
29,148
$61,264
-2334
142;128
97,599
1,003
130,368
818
6,853
30,3)4
104,957
252,902
103,997
· .... 2;3>3
130,819
291,503
118,718
-408
165
104,191
233,325
37,604
-2,203
-1,493
3,863
89,683
65,418
25,936
....••...••.•.
.........
..••...••
......••.
.......•.
4,002
...•.•...
...•..••.
......•..
6,803
913,715
645,263
5,289
$40,936
5,897
..•...•..•
..........
.•........
..........
.•.......•
......•...
......•...
....•....
.........
........
...........
.........
........
..........
122,5J
-2,3441
142,128
97,599
1,003
130,3611
811l
6,85~
30,~
Total--Water and power resources •.••••••••••.
Secretarial Offices:
Office of the Solicitor and Office of the Secretary ••••
Office of Water Resources •••..•••..•••••.•..••••.
Proprietary receipts from the public•••••.••••••••••••
Intrabudgetary transactions ...••.••.••••...•••••••••.
Total--Interior Department ••••••••••••••••••••
Justice Department:
Legal activities and general administration ..••••••.•••
Federal Bureau of Investigation •.•••.•••••••••.••...•
Immigration and Naturalization Service •••••••••••••••
Federal Prison System:
Federal Prison Industries, Inc. (net) •••••••••••.•••
Federal Prison commissary funds •••••...•...••.•••
Other ••••.•••••••••••••.•••••••.•.•••••.•..••.•••
Law Enforcement Assistance Administration ••••••••••
Bureau of Narcotics and Dangerous Drugs •••..••••••••
Proprietary receipts from the public ••••••••••••••••••
Total--Justice Department ••••••••••••••.•.•••
Labor Department:
Manpower Administration:
Public enterprise •••.•••••••.•••••••••••••••••.••
Intragovernmental funds ••••••••••••••••••••••••••
Manpower Training services •.•••.••••••.••••••.••
Federal unemployment benefits and allowances •••••••
Salaries, expenses, and other •••••••••••••••••••••
Unemployment trust fund:
Unemployment insurance and employment services:
Federal--State unemployment insurance:
state unemployment benefits ••••.••••••••••••
state administrative expenses ••••••••••••••••
Federal administrative expenses:
Direct expens.es, reimbursements and
pm;.' ' ; '
recoveries ............................ .
"c" . \ "", . ·lnterest on advances ..................... .
~/
tnter_t on rel\mds....................... .
..
P
.. f1ii~"" .
,', .
,-
k:2~.~'
~mp
Dlent 1Dav.rance:
.
11$ IMI-a.ts . . . . . . . . . . . . . .
. ;,;.; iz.t.:i.iz:Qi.ci ................ ...
. _,'..
\!I;.~"'''
........ -_- - ",_ .................... .
6,433
26,243
11,133
.••...•••..
............
.•....•....
... ·····4ii
.........
.
...........
....•.....
•...•...••...
·...... ·325
-730
-3
8,610
27,444
4,174
-325
.............
83,745
766
82,979
920,517
··········472
...........
.. .... ·472
151,438
41,370
3,880
.••...••...
...........
...•..•••..
...........
151,438
41,370
3,880
-1,571
-5, '706
1,135,520
416,687
41,779
......••..••
...•••..•
...........
.........
..........
-1,571
-5,'706
1,135,520
416,687
41,779
-4,379
2,077
417,788
183,554
32,530
..........
........
..........
........
.........
450,083
95,941
..........•
..•..••••..
450,083
95,941
5,229,210
7ro,189
...•••..•
.....•....•
5,229,210
7ro,189
2,792,794
.........
I •.....••.
.......••...
.....•.... ........•
...........• ...........
- _.._....•...
11,822
.........•
11,~
10,_
-730
438
8,610
27,444
4,174
1~
............
......••...
1~
...
1,571
31'7
-- ---
·····4:000
......••..•
...••...•
•...•....
... •........
60,639
1,286
I
..........
104,95~
252,90:
103,991
-1.4~
-13i
89_
8S;4U
25,93t
-I,
· -;a:rus
"" .....I:fUl.c.J;lon m
EXPENJ)lrURES--Conttnued
Expenditures
Applicable
(Disbursements) Receipts
Labor Department--Conttnued
Labor-Management Services Administration •••••••••••
Workplace Standards Administration:
Salaries and expenses •••••••••••••••••••••••••••••
Federal workmen's compensation benefits •••••••••••
Otller.,. .... ~ •...••.. "' ••..•.••••.. 11-". "' •••• '* •••••••
8,099
19,006
40
Total--Workplace Standards Administration •••' ••••
27,145
Bureau of Labor Statistics ............................
Bureau of International Labor Affairs •••••••••••••••••
Office of the Solicitor•.••••••••••.•••.••••••.••••••••
Office of the Secretary. ••••••••••••••••••••••••••••••
Proprietary receipts from the public •.••••••••••••••••
1,919
-64
508
1,807
....... .... ..
Total--Lahor Department••••••••••••••••••••••••••
787,641
Post Office Department: Postal Fund ••••••••••..•••••••
State Department:
Administration of foreign affairs:
Salaries and expenses •••••••••••••••••••••••••••••
Acquisition, operation and maintenance of buildings
abroad ••••••••••••••••••••••••••••••••••••••••
Intragovernmental funds •••••••••••••••..••••••••••
Payment to foreign service retirement and disability
fund •••••••••••••••••••••••••••••••••••••••••••
Foreign service retirement and disability fund ••.••••
Other............................................ I
Total--Administration of foreign affairs•••••••••••
International organizations and conferences:
Contributions to international organizations ••••••••••
Other ............................................
International commissions •••••••••••••••••••••••••••
Educational exchange ••••••••••••••••••••••••••••••••
Other •. "................. "....................................................
_. --
_._-- -
$16,939
..........
8,099
19,006
40
53,177
95,502
397
27,145
149,076
$19
1,919
-64
508
1,807
-19
26,671
1,695
6,287
7,549
...•..••.......
19
787,623
709,116
567,372
-29,748
..........
......... .
..........
....•...•.••
$11,508
$11,506
53,177
95,502
397
41,998
81,481
448
149,076
123,927
.....•..•.
.........
.
. ......•..
$1,398
26,671
1,695
6,287
7,549
-1,398
23,235
1,730
6,663
6,022
......•........
. ...........
........•...
$3,893
23,235
1,730
6,663
6,022
-3,893
7,924,456
1,398
7,923,058
4,359,779
3,893
4,355,886
141,745
9,089,443
6,818,147
2,271,296
8,080,151
6,570,128
1,510,023
-29,748
217,116
225,549
19,623
-40
16,116
-116
. .............
. .•.••..•..•
225,549
19,623
-40
...........
..••.....•
...........
217,116
7,831
-166
2,300
1,989
286
5,258
23,548
3,519
5,258
23,548
3,519
-17,508
269,024
. .••.•..•.
. .......•.
. ...•...••
. •........
480
3,772
612
1,389
5,385
3,203
-480
140,668
6,221
9,606
41,965
10,142
....•.....
......•...
......•...
•.........
.......•..
...........
..••..••..
-17,508
3,772
612
1,389
5,385
3,203
••.•.....•
..........
..........
•.........
..........
2,300
1,989
286
1[ear
'Net
Expenditures
$16,939
......•..•
•........•
....•.....
•..••.....
•.........
•......•..
7,831
-166
PeftOCl.t'rlor JrlSCIU.
-
$1,495
'" "'
Comparable
1"18C8.1 11: ear -'0 ........
Applicable
Net
E:g:nditures
Applicable
Expenditures
Net
,Expenditures (Disbursements) Receipts Expenditures (Dis rsements) Receipts
..........
$1,495
"'
\,;urrent
MonU}
.......
.... "." .....
. .•..•...•
....•.....
..........
'* •••••••••
3
............
. .•.........
..•....••...
. .........•.
............
. ........••.
. ............
41,998
81,481
448
123,927
16,116
-116
....•.........• . ...••..••.• ...•......•..•.
17,213 . ............
17,213
269,024
261,773
. ............
. ....•..•...
. .........
. ....•....
" ...............
. .........
. .........
140,668
6,221
9,606
41,965
10,142
-5,110
128,841
7,114
7,543
36,435
11,678
................
. "' ............ "" .
............
3,012
...........•...
........•...
.. • • • 1> . . . . . . . . . . .
.. .. "
3,012
261,773
128,841
7,114
7,543
36,435
11,678
-5,066
Proprietary receipts from the public ••••••••••••••••.•
Intrabudgetary transactions:
Foreign service retirement and disability fund:
Receipts transferred to civil service retirement
and disability fund ••••••••••••••••••••.•••••••
General fund contributions ••••••.••••••••••••.•••
Other ............................................
................ "..........
-13
-2,300
-72
.....•....
............
•...•.....
-13
-2,300
-72
-5,258
-430
-44
..............
..•.......
. ...•...••
-44
-5,258
-430
Total--State Department. ••••••••.•••••••••••••••
-5,530
480
-6,010
471,894
5,110
466,784
452,820
5,068
447,754
2,655
78,530
3,269
..........
••..•....•
..........
2,655
78,530
3,269
18,564
270,554
12,103
. .....•..•
..........
18,564
270,554
12,103
12,907
111,348
7,690
...•........
...........•
....•...•...
12,907
111,348
7,690
300
-79
-18
55,485
2,692
964
615,814
-52
2,083
2,966
585,318
2,140
..•.........
-57
2,966
585,318
Transportation Department:
Office of the Secretary:
Salaries and expenses •••••• : ••••••••••••••••••••••
Civil supersonic aircraft development•••.•••••' ••.•••
Other ..................................... n . . . . .
Coast Guard:
Trust revolving funds. •.•••••••••••••••••••••••••••
Intragovernmental funds ...........................
Other ............................................
221
-18
55~485
."
....•.•..•
.........•
.
"
5,110
....•....•
2,745
.•••.....•
.••..••...
964
615,914
5,066
-135 ....... "' ...........
-135
.........•.. ...............
..." ... " ................
.
..•..•..•..
-430
-430
..........••
See footnotes on page 3.
-
01
...
(J)
TABLE III--BUDGET RECEIPTS AND OUTLAYS--Continued (In thousands)
SECTION A--THE EXPENDITURE ACCOUNT--Continued
Classification of
EXPENDITURES--Continued
Transportation Department--Continued
Federal Aviation Administration:
~Ublic enterprise funds ••••••••••••••.•••..••••••.••
irport and airway trust fund ••••••••.•••••••.•••••.
Facilities and equipment••••••.•••••••.••••••.••••••
Grants-in-aid for airports •.•••.•••••••.•••••.••.•••
Operations •••••••••••.••••••••••.••••••••••••••.•.
Other •••••••••.•••••.•.••••••.••••••.•••.••••..•••
Federal Highway Administration:
Highway beautification•.•••••••.••.•••.••.••.•.•••.•
Forests and public lands highways ••••.••••••••••••••
Highway trust fund:
Federal-aid highways .••.•••••••••••••.••••••••••
Other ••.••••••...•.••..••.••..•••••..••.•••••••.••
National Highway Traffic Safety Administration:
Traffic and Highway safety .••••••.••••••.•••••...••
State and community highway safety programs •.•••••.
Federal Railroad Administration:
Alaska Railroad ••••••.•••••••.••••••••.•••.•••••••
High-speed ground transportation research and
development•••••••••••.••••••••••.••••••••••••••
Grants to National Railroad Passenger Corporation. •••
Other .............................................
Urban Mass Transportation Administration:
Urban mass transportation fund •••••••••••••••••.•••
Other ••.••.••••.••..•.•.•.•••.•••.••.••••••.•••••.
Saint Lawrence Seaway Development Corporation •••••••
National Transportation Safety Board •.•..••.••.••.•••.
Proprietary receipts from the public••••••••.•••••••••.
Intrabudgetary transactions ••••••••••••••••••••••••••.
Total--Transportation Department ••••.••••••.
reasury Department:
Office of the Secretary:
Public enterprise funds ...................... ".......
Salaries and expenses •••••••••••••••••••••••••.••••
Other ........................................................
Bureau of Accounts:
Salaries and expenses ..............................
Claims, judgements and relief acts ••••••••••••••••••
Interest on uninvested funds •••••••••••••• "•••.•••••••
Government losses in shipment••••••••••••••••••••••
Eisenhower College Grants •••••••••••••••••••••••••
Other ..... ,., ...................................................
Bureau of Customs:
Salaries and expenses ..............................
Intragovernmental funds ................ , .......... ,
OUler ......................................................
Bureau of Engraving and Printing:
lntragovernmental funds ............................
Otb.e~ •• "' .............................. "' ••• "' ••••••••
This Month
Expenditures
Applicable
(Disbursements) Receipts
-$3,008
-$2,405
21,844
13,457
•........•.
•....••.•..
··········79;267 •..........
.•......•..
3,869 ..•..•.•...
1,201 ....•..•..•
393
""
... ,,""""" "
Current Fiscal Year to Date
Net
Applicable
Expenditures
Expenditures (Disbursements) Receipts
3,869
1,2Dl
393
9,922
5,083
•....•...
•..•••...
9,922
5,083
486,734
3,803
4,652,374
32,434
4,652,374
32,434
5,141
9,353
40,271
65,978
""' •• 'iII •• •
•...•....
.....••..
-2
25,963
23,215
2,747
24,915
24 325
172,995
2,893
-3,876
6,177
-22,221
-621,176
7,214,472
6,471,751
57,294
6,414,457
-90
2
9,218
.....•...•..
•...•.....
9,2~
1,886
1,888
2,014
21,125
456
...........
...........
•..•....•..
2,014
21,125
456
24,915
24,325
6,699
134
38,700
173,469
2,693
3,261
6,177
.........
.................
..•.......••.•.•
.•.••..•...
925
..••.......
2,179
•...•.•.•.•
306
-700
526
-2,179
....•.....
.•...•.•.•..••
-621,176
828,190
2,419
825,771
7,273,308
58,836
1
1,128
459
•......•...
...........
1
1,128
459
10,324
1,,391
(*)
1,159
4,891
824
57
178
9
...•..•...•
.............
••.••.....•
............
•.....••••.
............
.•.•..••...
.........•.
..••..••..•
1,159
4,891
824
57
178
9
47,727
109,463
5,393
329
986
35
5,115
-2,884
5,075
153,889
-3,032
6'1,106
...•....•.
........90
..........
........
.. ........
........
.•.••..•..
........
...•...•..
........
.......•.
153,889
-3,032
67,106
...........•
...........
............
181
914
.•.••....
914
38,854
306
225
526
5,115
-2,884
5,075
181
..•.••..•..•.••
............
56
..........
6~699
10,324
1,391
47,727
109,463
5,393
329
986
35
56
9;616
.
.•..•..•.....
•.....•...•.... ............
106,854 •..••...•.•.
83,155 ............
829,425 ...•...••..•
55,658 ...........
13 853 ..•..•...••
83,155
829,425
55,658
13 853
9:616
4,375,174
37,485
24,403
50,417
......•...•.
..•...•..••.
•...•.....••
..••...•..••
4,375,174
3'1,485
24,403
50,417
28,223
28,478
-254
................. . ..•...•...•.
..••.•.•....
.••.........
...•...•...••..
40,271
65,978
.••.....•.
.........
........
475
.........
7,137
"'22;22i
.........
$9
$10
.....•.....•...
106,854
..........
........
.•...••...
........
· .. ··79;267
$3,044
.•..••...
$00
Net
Expenditures
...$3,013
281,636
397,800
183,171
974,273
63,137
5,141
9,353
3",-003
Expenditures
Net
Applicable
Expenditures (Disbursements) Receipts
$31
281,636
397,800
183,171
974,273
63,137
$603
21,844
13,457
."""" .. ",, .. "
.•....•.•..
•..........
••..•...••.
486,734
Comparable Period Prior Fiscal Year
11,185
5,660
105,224
1,517
6,143
5,425
621
•........••.
6,135
•.•....•.•..
...........•...
19,910
............... .•.........
.
46
45,240
52,877
6,226
167
1,800
45
121,360
...............
54,038
..23S
94
.
100
.............
.....•..•..
............
...••..•••.
...........
••.....•••.
.•.........
..............
...........
..•.••...••.
.•.•..••..
11,186
5,660
104 IK)3
1:517
8
5,425
...............
-19,910
-1'19
45,~
52:;
6,1.~
1,~
.,
121,3e
•••••••• i4;&
E:ditures
(Dis
sements)
Treasury Department--Continued
Bureau of the Mint:
Salaries and expenses ••••••••••••••••••••••••••••
Other ......................................................... ............................
Bureau ·of the Public Debt ••••••••••••••••••• , ••••••
Internal Revenue Service:
Salaries and expenses, •••••••••••••••••• , ••••.•••
Revenue accounting and processing. ••••••••••••••••
Compliance .........................................................................
Interest on refunds of taxes •••••••••••••••••••••••
Payments to Puerto Rico for taxes cOllected ••••••••
Federal tax lien revolving fund ••••••••••••••••••••
Office of the Treasurer:
Salaries and expenses ••••.•••••••••••••••••••••••
Check forgery insurance fund •••••••••••••••.•••••
U.S. Secret Service ................................
Office of the Comptroller of the Currency•••••••••••••
-$349
406
6,140
2,4:63
19,969
57,175
14,876
8,047
.. ..........................
Comparable Period Prior Fiscal Year
Current Fiscal Year to Date
This Month
Classification of
EXPENDITURES--Continued
Applicable
Net
Expenditures
Expenditures (Disbursements) Receipts
Applicable
Receipts
............
............
............
............
............
............
...................... .
............
$35
-$349
406
6,140
$15,746
3,452
69,575
2,463
19,969
57,175
14,876
8,047
-35
27,693
225,031
698,961
131,762
84,866
626
...........
.................. " ..
...........
...........
...........
. ....••....
. .... "' .....
.. ....................
$270
...........
Applicable
Expenditures
Net
Expenditures (Disbursements) Receipts
$15,746
3,452
69,575
$16,111
5,900
64,215
27,693
225,031
698,961
131,762
84,866
356
25,302
212,893
631,808
112,671
85,167
107
8,697
-4
44,705
-2,152
7,911
806
30,271
30,351
451
55
4,174
2,960
............
56
............
402
451
-1
4,174
2,558
8,697
671
44,705
35,567
Interest on the Public debt (accrual basis):
Public issues ....................................
SpeCial issues •••••••••••••••••••••••••••••••••••
1,313,717
411,930
............
............
1,313,717
411,930
16,677,239
4,299,090
. .....•....
.................... ..
16,677,239
4,299,090
15,844,149
3,459,521
Total--Interest on the public debt ••••••.•••••.•••
1,725,647
. ••.....•••.
1,725,647 .
20,976,330
. ..•..•....
20,976,330
19,303,670
Proprietary receipts from the public •••••••••••••••••
Intrabudgetary transactions ••••••••.••••••••••••••••
. ..............
-53,271
............
28,339
-28,339
-53,271
..............
-1,236,134
...........
420,232
-420,232
-1,236,134
Total--Treasury Department •••••.••••••••••••••
1,804,937
28,833
1,776,104
21,482,132
458,987
21,023,145
Atomic Energy Commission ••••••••••••••••••••••••••
251,350
12
251,338
2,274,925
232
Environmental Protection Agency .•••••••••••••••••.•••
293,755
1
293,754
710,681
6,606
2,091
5,018
3,125
36,457
586
51,820
5,682
............
........................
............
..............
............
43,149
372,671
83,989
19,138
13,923
5,945
-20,157
88,241
...............
............
...•.•••..
...............
............
6,606
2,091
5,018
3,125
36,457
586
51,820
5,682
435
2,476
9,356
418
............
............
17
2,476
9,356
(*)
General Services Administration:
Real property activities:
Construction, public buildings projects •••••••••••••
Operating expenses, public buildings service •••••••
Repair and improvement of public buildings ••••••••
Sites and expenses, public building projects •••••.••
Intragovernmental funds ••••••••••••••••••••••••••
Other ......................................... .o . . . . . . . . . . . .
Personal property activities:
Intragovernmental funds ••••••••••.•••••••••••••••
Other ................................................
41 • • 41 • •
Records activities:
National Archives trust fund .•••••••••••••••••••••
Other .................................................
Transportation and communications activities, ••••••••
Property management and disposal activities:
Public enterprise funds ••••.•.•••••••••••••••••••
Intragovernrnental funds ••••••••••••••••.•••••••••
Other ••••••.••••••••.••••••••••••••••••••••••.••
..............82
2,548
.............
.""
(*)
............
.............
82
2,548
. ............
............
. ...•••....•
. ...........
. ...........
. ......................
............
.. ......................
$92
Net
Expenditures
$16,111
5,900
64,215
25,30~
212,893
631,808
112,671
85,16?
15
. ...........
701
. ..•......•.
7,911
105
30,271
-5,051
............
.. ......................
15,844,149
3,459,521
. ............
19,303,670
404,526
.. .... :867;525 . ...........
-404,526
-867,525
19,950,415
440,902
19,509,513
2,274,693
2,455,219
2,118
2,453,102
30
710,652
350,324
............
350,324
...........
59,667
329,929
78,456
14,284
-3,635
5,600
.. .................
...........
43,149
372,671
63,989
19,138
13,923
5,945
-20,157
88,241
. ...........
.. ......................
. .........•.
. ...........
. ...........
. ............
. .............
59,667
329,929
78,456
14,284
-3,635
5,600
18,037
82,398
3,678
27,101
6,581
3,495
..........
..............
183
27,101
6,581
2,199
24,234
7,623
. ...........
2,176
..... " .........
23
24,234
7,623
-124
-134
30,822
...........
.......
......
28
-153
-134
30,822
-799
325
25,568
39
. ..•••......
-838
325
25,568
675
. .....•...•
37,719
. ..........
.. ................. ..
"
18,037
82,398
35,402
. ...........
. ...........
-
.. ~
-
TABLE III--BUDGET RECEIPTS AND OUTLA YS--Continued (In thousands)
SECTION A--THE EXPENDITURE ACCOUNT--Continued
General Services Administration--Continued
General activities:
Public enterprise funds ••...••.••.•.......•.•.•.
Intragovernmental funds •••••..•..•......•....•.
Surplus real property credit sales ...•.•....•....
Other ••...•••....•...•••.•••.••.•.••....•.••..
Proprietary receipts from the public •.....••.....•.
I
. ....... 82;046
$1
-40
............
33,299
-$1
2,046
-40
136
-33,299
Net
Expenditures
Expenditures
Applicable
(Disbursements)
Receipts
Net
Exnenditures
136
Year
Comparable Period
Month
Classification of
EXPENDITURES--Continued
CD
-$474
-392
-12,762
1,488
$20
.........
.
132,705
-$494
-392
-12,762
1,488
-132,705
-t8,126
-659
-43,954
1,665
7,432,946
1,870,508
6,338,179
1,652,627
-13,310
7,776
-76,000
105,846
102,218
222,597
85,294
627,471
429,177
81,392
593,069
379,868
S3
164,666
-t8,129
-659
-43,954
1,665
-164,666
Total--General Services Administration .•.••..
National Aeronautics and Space Administration •..••..
Veterans Administration:
Compensation, pensions, and benefit programs ..••.
Medical care ••.•....•..•.•.••..•••.•..••....•...
Public enterprise funds:
Direct loan revolving fund .....•.•..••.......•.•
Loan guaranty revolving fund •...••.•.....•..•.•
Other ..•.....••.•.•..•..•..•...•...•..•.....•.
Benefits, refunds and dividends:
Government life insurance fund •.•...............
National service life insurance ......•.•...•....
Other .....•.•..•..............•.•......••.••....
Proprietary receipts from the public:
Government life insurance fund .•..•••••....••..
National service life insurance fund. •••••••••...•
Other .....••.....•.•......••.•.•••.••.•...•...
Intrabudgetary transactions:
Payments to veterans life insurance funds:
Government life insurance fund •.•••.•.•••••..
National service life insurance fund •.•.•••...•
Total--Veterans Administration .•..•••.•.•.•
.other independent agencies:
I Administrative Conference of the United States •••••
American BatUe Monuments Commission .•••••••••
Arms Control and Disarmament Agency ••••••••••••
Cabinet Committee on Opportunities for SpanishSpeaking People. •••••.•.•••.•.•••••••.•.••.••••
Central Intelligence Agency--Construction .••.••••.
Civil Aeronautics Board:
Payments to air carriers •••..••••••••••••••••.
Salaries and expenses •••••••.••••.•..•••••••••
Proprietary receipts from the public •.••••.••••.
Civil Service Commission:
paK:d~~ .t~. ~~~~ .s.e.r.~i~~. ~~~i~~~~~~ ~~. ~~S.~.i~~~.
Government payment for annuitants, employees
health benefits•••••••••••••••••••••.•••••••.•
elvU service retirement and disability fund ••••••
Employees health benefits fund •••••.••••••••••.
Bmplolraas life insurance fund. •••••••••..••.•.••
~}i"itlreil employeea health benefits fund ••..•...•.•
...2~·
674,698
158,026
4,732
10,592
22,246
9,518
12,168
41,505
10,306
55,485
33,420
890
39,872
197
-4
-237
969,263
674,698
158,026
7,432,946
1,870,508
-4,785
-1,576
-19,259
54,501
101,870
281,066
10,306
55,485
33,420
85,294
627,471
429,177
67,811
94,094
357,066
9,269
469,920
2,274
-890
-39,872
-197
-4
-237
-49
-3,037
-9,269
-469,920
-2,274
-58
-3,324
1,000,435
9,879,313
9,472,413
1,OM,022
3
291
2,877
....••.....•
9,968
254
2,434
10,642
2~1·········(;i
29
258
1,856
291
2,880
9,968
41
(*)
586
(*)
586
(*)
476
(*)
5,463
994
-5
55,152
12,337
55,152
12,337
36,546
11,184
277,738
773,396
773,396
230,817
······gi;si4i ····279;056
40,753
70,405
3, 2M, 106
1,166,333
288,124
13,087
70,405
41,185
2,751,.
915,8'12
m,021
41
(*)
5,463
994
5
277,738
·······279;056
132,695
-3,065
2,295
34,559
237
-37,624
2,058
(*)
106
....••••..
1,192,606
449,419
15,431
~>~t..-"".1,."",,,,,~,
0 .. ,
-106
3,234,106
-26,273
-161,286
-2,M2
-11,528
-13,151
-23,981
-BO,891
81,392
593,069
379,868
-49
-3,037
865,114
(*)
118,997
126,199
303,488
10,123
463,091
2,1M
104,150
1,856
6,338,179
1,652,627
-10,123
-463,091
-2, 1M
-58
-3, 3M
2
1
•••••..•• i25
............
.•..........
·····iii;iii
437,561
11,1H8
Comparable Period Prior F1Bcal Y~
Current Fiscal Year to Date
Applicable
Expenditures
Net
Net' ~J
Expenditures Applicable
Net
Expendltut
Expenditures (Disbursements) Receipts Expenditures (Disbursements) Receipts
This Month
Expenditures
Applicable
(Disbursements)
Receipts
ClasSification of
EXPENDITURES--Contlnued
Other Independ It Agencies--Contlnued
Civil Service :ommission--Continued
other ••••• .
. .. .. " ........................................................
Proprietar receipts from the public, ••••••••••••••••
Intrabudget ry transactions:
Civil ser ice retirement and disability fund:
Receip I transferred to foreign service
retir ,ment and disability fund .................
Genera: fund contributions ••••••••••••••••••••••
....... ...
To' al--Civil Service Commission••••••••••••
Commission : Fine Arts .......................................................
Commission 1 Civil Rights •••••••••••••••••••••••••••
Corporation f r Public Broadcasting ••••••••••.••••••••
District of Co umbia federal payment ••••••••••••••••••
Equal Employ nent Opportunity Commission ••••••••••••
Export-Impo Bank of the United States ••••••••••••••••
Farm Credit ~dministration. " " '" " '" '" '" '" '" '" " '" '" '" '" " .. '" '" '" '" '" '" '" '" '"
Federal Coal l1ine Safety Board of Review ••••••••••••••
Federal Com lunications Commission ••••••••••••••••••
Federal Depo it Insurance Corporation ••••••••••••••••
Federal Field Committee for Development
Planning in
"''' '" "''' '" '" '" '" '" '" "'" '" '" '" '" '" '" '" '" '" '" "' .. '" '" '" '" "'" '" '"
Federal Hom !\laska
Loan Bank Board:
Public ente prise funds:
Federal lVlngs and Loan Insurance Corp. fund •••••
Other ••• '" '" '" '" '" '" ... '" '" " " '" '" '" '" "''' " '" " '" '" '" . '" '" '" '" '" '" '" '" '" '" '" '" '" " '"
Federal Mar lme Commission", '" '" '" '" '" '" " '" " .. '" '" '" '" '" '" '" '" '" '" " '" '"
Federal Med lion and Conciliation Service •••••••••••••
Federal Meta and Nonmetallic Mine Safety Board
of Review. '" " " '" '" "''' '" '" '" .. '" '" '" .. '" '" '" '" "'" " '" '" '" '" .. '" " '" .. '" '" '" '" '"
Federal POWE ~'" Commission
..............................
Federal Trad Commission ...........................
Foreign Clai s Settlement Commission ••••••••••••••••
Historical an, Memorial Commissions •••••••••••••••••
Indian Claim Commission ....•....•.. "...................
Intergovernm ntal agencies:
Advisory C Immission on Intergovernmental Relations •
Appalachian Regional Commission:
Salaries expenses, and other ••••••••••••.••••••••
Intrabud ~tary transactions •••••••••••••••••••••••
Delaware R ever Basin Commission ••••••••••••••••••
Interstate ommission on the Potomac River Basin••••
Washington Metropolitan Area Transit Authority•••••••
Interstate Co lmerce Commission .....................
National Cap al Planning Commission •••••••••••••••••
National Coun ~i1 on Indian Opportunity •••••••••••••••••
National Cre It Union Administration ••••••••••••••••••
National Foun' :lation on the Arts and the Humanities ••••••
National Lab( r Relations Board : ••••••••••••••••••••••
National Med ation Board •••••••••••••••••••••••••••.
National Scie ce Foundation••••••••••••••.••••••••••••
Occupational lafety and Health Review Commission••••••
President's :>mmittee on Consumer Interests ••••••••••
President's DUncil on youth Opportunity •••••••••••••••
"'.
..
............... ..
$4,547
$52,474
(*)
.•............
...........
(*)
$52,474
-578
-449
-277,738
.............
............
-449
-277,738
-2,278
-773,396
..........
...........
-2,278
-773,396
-2,470
-230,817
.. ......................
-230~8
415,078
$126,737
288,341
4,822,251
1,658,033
3,164,218
4,016,500
1,369,473
2,647,0
(*)
9
(*)
(*)
2,193
283
105
3,168
23,000
146,935
15,751
215,985
4,305
7
26,735
276,229
19
458,404
105
3,168
23,000
146,935
15,750
-125,857
-390
7
26,715
-182,175
98
2,902
15,000
118,562
11,627
242,545
3,988
78
23,638
43,144
$4,547
.....•......•
9
330
.............
22,206
1,364
-18,921
359
. •...•....•.
330
.•...•...... ........•..
22,206
1,364
-51,428
-1,092
"" '" '" '" '" '" '" "''' '" '" '"
( *)
32,507
1,451
$578
. .........
"'. "''' '" "''' "' . "
1
341,841
4,695
. .....•••....
•........•..
44
•.........•.
44
206
. .•...••..
206
10,486
1,846
393
774
6,972
1,592
3,514
255
393
774
23,882
23,829
4,520
9,610
143,283
23,473
10
. •...........
....•....•..
-4,546
.... ,,"" .....
................
..........16
2,195
7,251
1,557
1,800
63
43
80
1
6,968
" " ' " .. " ' . '" '" '" <10 '"
(*)
(*)
"'
. ..............
33
............2
(*)
669
(*)
8
2,364
94
29
23
3,570
2,777
191
39,321
16
............
....•••...••
.....••......
........... ............33
(*)
121,116
20,356
15
-257,68'l
28C
........•...
. ............•
739
...........
1,815
-949
233
5
34,832
74,362
1,252
439
-6,713
28,598
40,406
2,358
522,400
21
2,630
-932
200
5
15,757
27,462
1,275
189
6,716
14,835
37,702
2,237
463,795
261
2,366
94
29
692
3,570
2,785
191
39,321
16
-136,571
20,636
3;947
8,770
2,553
-949
233
5
34,832
74,385
1,416
439
7,290
28,601
40,508
2,358
522,866
21
62
. •...•...•..
-10
(*)
............. .....•....•. ..........•5
1,396 ............
1,396
-119,401
356
4,510
9,610
647
60
•...•••...•...
p15
(*)
'
...........
. ..........
23
163
(*)
14,003
3
103
. ..........
466
......•...
.......••.
. ..•...•..
-3,44~
211
654
...••.......
..•.........
11,6~
-73;26:
............
. ........•
60
322
-10
5
(*)
..........
315,806
7,435
J
2;~
15,
118,56.
211
654
80
11
(*)
(*)
. ...•••....•
"'" '" "''''' '" '" '" '" '" '"
. ...........
-2,4
71
23,61!
-328,39C
(*)
(*)
(*)
....••......
6,103
1,798
63
43
(*)
............
$44,81
-3,Of
19
371,534
19,493
22,405
891
456
984
19,510
22,416
891
456
984
2
..•.......
$44,815
······$3;055
......••.•....
. ....•......
515
17,928
19,927
700
216
744
(*)
............18
6
(*)
. ....•....•.
. •..........
. .....••....
729
.............
(*)
............
. ...........
25
230
. ...........
6,980
6
91
(*)
1,184
3;933
8,770
. ..............
17,910
19,921
700
216
744
647
1,901
-932
200
5
15,757
27,437
1,045
189
-265
14,829
37,612
2,237
462,611
. ...•......... . ........... ...............
499 . ....••...•.
499
-237 ............
-237
....
<0
I\)
o
TABLE III--BUDGET RECEIPTS AND OUTLAYS--Contlnued (In thousands)
SECTION A--THE EXPENDITURE ACCOUNT --Continued
Classification of
EXPENDITURES--Continued
other independent agencies--Continued
Railroad Retirement Board:
Payment for military service credits ................ .
Railroad retirement accounts:
Administrative expenses ......................... .
Benefit payments, etc ..................... ·.·····
Interest on refunds of taxes ...................... .
Payment to railroad retirement account ........... .
Payment to railroad unemployment inS. account .... .
Proprietary receipts from the public ................ .
Intrabudgetary transactions:
Railroad retirement accounts:
Payments for military service credits ........... .
Payment from railroad retirement supplemental
account .................................... .
Receipts transferred to railroad unemployment
insurance account ............................. ,
Total--Railroad Retirement Board.............
I .......... -.. - I ---------- I ---.I.
'V,"""
Renegotiation Board •••••••••••• '.•••••••••••••••••••••
Securities and Exchange CommisslOn•••••••••••••••••••
SelectiveServiceSy~tem..............................
v,''"
Small Business Administration:
Public enterprise funds:
Business loan and investment fund •••••••••••••••••
Disaster loan fund ••••••••••••••••••••••••••••••••
Lease guarantees revolving fund •••••••••••••••••••
Salaries and expenses ••••••••••.•••••••••••••••.•••
Other •••••..••••••••••••••••••••••••••.•••••••••••
Proprietary receipts from the public •••••••••••••••••
Total--Small Business Administration.... ..........
o>V,41V
\ -..-)
I
I
.Llv,a.,,,
.... o.IVI
,,,..0,
"I
V,I"~
I
v~.,,~
I
vv
I
I
-.~
I
w.v'wvv
I
~v~'uv.
I
uu'vuu
~wv'u_
I
-A,
.uu
I
A_,~
I
Smithsonian Institution•••••••••••••.••••••••••••••••••
Subversive Activities Control Board ••••••••••••••••••••
Tariff Commission •••••••••••••••••••••••••••••••••••
Temporary study Commissions ••••••••••••••••••••••••
Tennessee Valley Authority:
Tennessee Valley Authority fund •••••••••••••••••••••
Proprietary receipts from the public •••••••••••••••••
Total--Tennessee Valley Authority •••••••••••••••••
United States Information Agency:
Informational media guarantee fund ••••••••••••••••••
Salaries and expenses ••••••••••••••••••••••••••••••
Construction of radio facilities ••••••••••••••••••••••
Otller •••••••••••••••••••••••••••••••••••••••••••••
Proprietary receipts from the public. • • • • .. • .. .. .. .. •
Total--U.S. Information Agency...................
~~:::::::::::::::::::::
I
9'" AR'7
I
"11=0.
88
I
'I"
AJ:..,
I" I
1no of,..,
.. -.e.
---..... .. ...
n_
-
I
.-,~
_-"ren"t
(';.laSS1flcatlon of
EXPENDlTVRES--Continued
Expenditures
Applicable
(Dtsbursements) Receipts
Undistributed intrabudgetary transactions:
Federal employer COntributions to retirement and
social insurance funds:
The Judiciary:
Judicial survIvors annui~ fund ••••••••••••••••••
Health, Education, and We are:
Federal old-age and survivors insurance trust fund.
Federal disability insurance trust fund ••••.•••••••
Federal hospital insurance trust fund •.•••••••••••
State Department:
Foreign service retirement and disability fund •••••
Other independent agencies:
Civil Service Commission:
Civil service retirement and disability fund •••••
United States Tax Court:
Tax court judges survivors annuity fund •••••••••
..$644
-51,000
.6,000
-7,000
-561,000
-79,000
-87,000
-588
-7,376
-161,275
-225,930
.•..••...•.•
•.•.•.......
.•.•.......•
-9
.. ...........
-51,000
-6,000
.7,000
-588
-161,275
-12
Subtotal............... ................................... " .............
Interest credited to certain Government accounts:
The Judiciary:
Judicial survivors annuity fund •••••••••••••••••••••
Defense Department:
Civil:
Soldiers' Home permanent fund ••••••••••••••••••
Health, Education, and Welfare Department:
Federal old-age and survivors insurance trust fund •••
Federal disability insurance trust fund ••••••.•••••••
Federal hospital insurance trust fund •••••••••••••••
Federal supplementary medical insurance trust fund •
Interior Department:
Indian Tribal Funds ...............................
Labor Dercartment:
Unemp oyment trust fund ••••••••••.•••••••••••••••
State Department:
Foreign service retirement and disability fund •••••••
Transportation Department:
Highway trust fund ••••••••••••••••••••••••••••••••
Veterans Administration:
Government life insurance fund •••••••••••••••••••••
National service life insurance fund ••••••••••••••••
Civil Service Commission:
Civil service retirement and disability fund ••••••••••
Railroad Retirement Board:
Railroad retirement accounts ••••.•••••••••••••••••
Other .............................................
..•.........
••..••......
...•...•....
....••..••.•
•.••........
-818
-683,924
-156,716
-89,972
-7,383
-109
-227,416
-1,203
-93,933
-15,436
-124,913
.............
.......••...
..............
............
....•.......
.•..••.•....
. .....•.•...
.•...•..•...
............
...•.•.•.••..
•...•.•....
able Period Prior FiScal Year . '.~
,,",UJDP&U:"~
%ear t.o,uaw
Applicable
Expenditures
Net
Expenditures Applicable
Net
Expenditures (Dtsbursements) Receipts Expenditures (Disbursements) Receipts
..$55
..$55
~~lSCaJ.
.....•....
•...•.....
. ..•..•...
-$644
-$62D
-561,000
-79,000
-87,000
-559,000
-78,000
-91,000
.<.
••...•....
-$620
...........
-559,000
-78,000
-91,000
-7,376
-6,886
-1,875,673
.....••...
...•..•...
..........
..•.......
•...•.....
-1,875,673
-1,708,826
....••.••.
-12
-24
...........
-24
-20
-225,930
-2,610,717
......•...
-2,610,717
-9
-242
...........
-818
-3,294
-683,924
-156,716
-89,972
-7,383
_1,617,222
-324,391
-183,027
-17,268
.. ..................
Net
Expenditures
-6,886
-1,708,826
-2,444,352
..........
.....•...•
-2,444,352
-242
-207
..•.•.....
-207
.•..•....•
............
-3,291
...•....•.
.......•..
...•......
...........
.•..•.•...
-3,294
-3,291
-1,617,222
-324,391
-183,027
-1'7,268
-1,346,096
-221,485
-138,182
-11,536
.. ..••.....
.20
-1,346,096
-221,485
-138,182
-11,536
-109
-10,377
-15,339
-636,509
...........
............
-10,377
-227,416
-636,509
-601,212
-1,203
-2,502
.•..••....
-2,502
-2,319
-93,933
-183,608
-183,608
-115,410
-15,436
-124,913
-31,421
-270,604
-31,421
-270,604
-31,347
-244,995
-555,551
-1,232,371
-1,232,371
-987,284
.......•••
...... ,. ...
...•.....•
..........
....••....
..........
. ....••...
.•..•...••
...........
-251,257
-519
-214,678
-2,996
....•...•.
.......••.
-214,678
-2,996
...4,784,610
-3,936,377
..........
-3,936,377
.•....••..
......•.•.•
..........
-15,339
-601,212
-2,319
-115,410
-31,347
-244,995
..555,551
............
-99,656
• 63
........••.•
-99,656
-63
-251,257
-519
.•........
..........
.....•..••
It . . . . . . . . . . . . . . . . . . . . . . . . . . It . . . . . . . . . . It .. It • • • • • •
-2,057,101
-4,764,610
....•..••.
Total--Undistributed intrabudgetary transactions.
.....•......
•...••..••..
.2,057,101
-2,283,031
-'7,375,327
...........
-7,375,327
-6,380,729
......••..
-6,380,729
234,314,003 $23,661,336
210,652,667
214,'751,199
$20,294,735
194,456,464
Subtotal•.
Total expenditures (excluding net
lending~
........ . . . . . .
22,189,687
•••••••
......
The expenditure account surplus (+) or deficit (-) •••
..
.....
.............
$2,186,610
i\:.··~·;;;tE
-2,283,031
20,003,078
+2,445,660
1;·;.'(·/.·.· • ·;:/··· . •. •. " ............ '.;.
-22,320,538
I,i/.·.·\ . }F··;.·. . '
~
-987,284
-713,214
-
N
I\)
TABLE III--BUDGET RECEIPTS AND OUTLAYS--Contlnued (In thousands)
SECTION B--THE LOAN ACCOUNT
Lgt:~dc'g~
r
Loan
Di::~tSse-
Funds appropriate-d-t-O-th-e-p-r-e-s-id-e-n-t:----------r-=
Economic opportWlity loans .....••...•................
$102
Defense production act.. .. .. • .. .. .. .. . .. .. .. • .. .. .. . ..
..........
J
IThiS~:th I
Net
. Loan
Repayments
Lending
Dl~:nt~e-
I
$645
60
1
I
I\)
-$543
$74
-60..........
Icurr::~isca11 ye::tto DatjeLoan Balances C:i;;;:~elPeri~~riO~ Fisc:::ear
Repayments
$9,484
627
Lending
End of Period
ments
Repayments \
Lending
-$9,410
-627
$65,750
11,459
6,472.........
!11,019
831
-$9,559
-831
209,224
50,475
701,968
847,943
339,924
288,030
86,544
107,128
987,247
895,847
114..........
-11,144
1,704
491,622
174,849
936
86
-145,975
51,894
-20,584
91,401
114
-12,848
316,773
850
Total--Funds appropriated to the President .•••••••..•
Agriculture Department:
Commodity Credit Corporation:
Storage facility and short-term export sales credits....
Farmers Home Administration:
Agriculture credit insurance.........................
Direct loans.......................................
Emergency credit..................................
Rural housing insurance.............................
Self-help housing land development.. .. .. .. .. .. .. .. .. •
State rural rehabilitation ...•.•..•.. ,. ..... ••. ...•...
Rural Electrification Administration....................
Other.. .. • .. .. . ... . • .. . .. . .. .. . .. .. • .. ... . . . . . . . • .. ..
17,843
24,427
-6,585
398,344
277,134
121,210
630,001
40,671
11,372
24,794
152,791
30
-48
67,323
..........
10,279
17,649
2,806
24,623
6
18,546
7
30,392
-6,277
21,988
128,167
24
-48
48,777
-7
462,020
299,831
110,858
1,335,781
150
-7,128
549,411
278
558,193
303,635
86,338
1,543,998
24
458
174,537
116
-96,173
-3,803
24,520
-208,217
126
-7,586
374,875
162
156,482
1,350,413
152,695
703,021
241
4,265
5,717,804
2,346
Total--Agriculture Department............. ..... ....
314,776
98,343
216,433
3,149,545
2,944,432
205,113
8,717,268
2,856,910
2,524,810
14,470
1,019
13,450
60,962
10,122
50,840
393 944
'
65 379
,
7 865
,
..........
..........
179
15
512
109
-15..........
-512
..........
1,.,..~
-~,,,,,...
OV,OJu.. ••••••••
7.559
-7.559
43.663
........ .
11 099
"
5 635
100
463,880
17,372
10 572
24;553
101,759
3260
l' 900
3;716
4,212
116,270
6,104
Commerce Department:
Economic Development Administration:
Economic development..............................
Maritime Administration:
Federal ship mortgage insurance.. .. .. .. • . . .. .. .. . .. .
Other.............................................
National Oceanic and Atmospheric Administration........
(*)
259,699
332,100
I
57 514
,
Total--Commerce Department ...•.•.•.••..•...•.....
15e Department:
Utary:
Jefense production guarantees ...•.••..••••.•..••..•.
,i1:
:onstruction of power systems, Ryukyu Islands .•••.•••
Total--Defense Department •••.•.••••••••••••..•.•.
:h, Education, and Welfare Department:
~lth Services and Mental Health Administration........
:ice of Education:
~lgher education activities ••••.•.•••..••.•...•.•..••
)tudent loans........ ..... ....... ........ ...........
)ther..............................................
ler................................................
1,208
..........
1,208
1,208
97
4,962
1,487
67
-492
347
..........
66
90
4,615
1,487
-582
45,717
14,109
1,427
2,715
6,044
..........
1 297
'419
1 111
'
39,673
14,109
130
2,296
Total--Health, Education, and Welfare Department..
7,232
503
6,729
65,177
7,856
57,320
52'1,477
7,110
15,397
2,026
3,477
2,534
292
3,633
12,863
1,735
186,820
123,122
54,016
38,115
49,877
5,926
148 705
73' 245
48;090
790 172
3 242'593
'515;463
............... .... 18.... _ 1&
u IUO
- •
.............
.................... \
.. - . . . . . . . . . . . . .
<&2.000.
13.3'l5
4IID
-
'f-=&
--~~;,..,:.
(*)
28..
517".4Q1
-.:1*8
~
~
84
1 329
'438
5 535
,
.,
LOAN ACCOUNT:-:C'~nt1nued
Loan
Disbursements
Housing and Urban Development Department--Continued
Housing management:
Low-rent public housing program ••••••••.••.•••••••
Other••••••••••.•••••••••••••••••••••••••• , •••••••
Community development:
Urban renewal programs •••••••••••••••••••••••••••
Rehabilitation loan fund ••••••••••••••••••••••••••••
Public facility loans •••••••••.••••••••.••••••••••••
Loan
Repayments
Net
Lending
Loan
Disbursements
Loan
Repayments
Net
Lending
Loan Balances
End of Period
Loan
Loan
D1sburse- Repayments
ments
Net
LeudtDg
$85,429
-1,355
$187,318
-690
-$101,889
-665
$707,157
1,034
$692,137
2,159
$15,020
-1,125
$104,943
19,975
$720,161
1,722
$721,370
1,426
-$1,208
296
32,348
8,517
4,561
58,738
292
918
-26,390
8,225
3,642
529,067
49,502
43,236
548,006
4,112
6,386
-18,939
45,390
36,849
253,481
127,196
433,824
595,224
38,713
43,727
601,159
3,335
4,749
-5,935
35,378
38,9771
Total--Housing and Urban Development Department.
216,304
298,034
-81,730
2,252,354
1,662,322
590,033
10,577,725
2,628,962
1,804,366
824,597
:erior Department:
Bureau of Reclamation •••.••••••••••••.•••.••••••••••
Other ••••••••••••••••••••••••••.••••.••••••••••••••
172
850
80
230
92
620
4,735
5,795
1,547
1,755
3,189
4,040
144,509
54,177
4,377
4,388
1,418
7,446
2,959
-3,058
Total--Interior Department •••••••••••••••••••••••
1,022
310
712
10,530
3,302
7,228
198,686
8,765
8,864
-100
ransportation Department ••••.••••••••••••••••••••••••
reasury Department •••••••.•••••••••.••••••••••••••••
eneral Services Administration ••••••••
...........
4,935
...........
32,961
. ..........
40
. .........
•••••••••••••••
4,935
-2
-1,534
12,762
29
27,523
32,961
-29
-14,761
40,615
7,616
164,786
3,079
-25
43,954
225
242
23,742
2,854
-267
20,212
eterans Administration:
birect loan program ••..•••••••••••.•••••.•••••••••••
Loan guaranty program •••..•••••••••••••••••••••••••
Government life insurance fund ••.•••••.••.•••••••••••
National service life insurance ••••••••••••.•••••••••••
Other •••••••..••••••••••••••••••••••••••••••••••.••
5,540
14,316
546
9,585
1,125
10,143
6,668
7,960
470
-4,603
7,648
-441
1,625
655
82,616
151,552
7,720
121,755
13,349
153,759
243,210
10,962
88,085
4,864
-71,142
-91,658
-3,241
33,670
8,485
1,303,332
1,283,241
77,169
886,127
48,638
113,914
155,671
12,968
166,970
14,054
87,487
82,866
10,182
74,954
3,718
26,427
72,805
2,786
92,016
10,337
Total--Veterans Administration ••••••••••••••••..•
31,113
26,229
4,884
376,993
500,879
-123,887
3,598,507
463,578
259,208
204,370
13,350
180,693
.. ....................
282,340
13,350
-101,647
91,441
1,405,144
34,351
1,463,625
57,090
-58,481
413,893
5,655,329
129,055
1,569,148
38,705
1,276,827
90,350
292,321
-9,953
-2,082
22
-7,871
-22
5,481
77,023
353
184,841
28,086
110,756
...........
-71,541
-353
.......... . .............
. .........
..........
20,546
834
3
90,210
-834
-3
247,971
93,836
174,794
39,710
73,178
54,126
8,346,786
6,215,465
2,131,321
0
Other independent agencies:
Loans to District of Columbia ..•••••••••••...•••••••..
Export-Import Bank of the United States •..••••••••••••
Federal Home Loan Bank Board:
Federal Savings and Loan Insurance Corporation ••••••
Interstate Commerce Commission •••.••••••••••••••••.
National Capital Planning Commission ••••••••••••••••.
Small Business Administration:
Business loan and investment fund ••••••••••.•..•••••
Disaster loan fund •.••.••••••••.•••••••.••••••••••.
...........
...........
Total--Loan Account ...••••••.•••••••••••••••••••
2
1,574
~87
.. ..........
...........
19,586
46,942
17,309
4,519
2,277
42,423
268,249
195,130
207,753
45,601
60,496
149,529
1,320,121
547,996
841,393
729,821
111,572
7,934,411
7,012,756
921,655
32,536,956
TOTAL BUDGET
(Net Totals)
(Net Totals)
RElceipts (+) (The expenditure account) ••..••••.•••••••••.
Expenditures (-) (The expenditure account)
. .........
..........
..............
Net Lending (+) or (-) (The loan account) .................
I·· ..'. ,·
,
.
.
'.
+22,448,738
·ii'
-111,572
-20,114,650
Total outlays ••.•••••••.••••••••••••••••••.••••••
Budget surplus (+) or deficit (-) .........................
;
.'. '.'.,
-20,003,078
"
..
+2,334,088
i\,: . . . .
............
I" . . "' .ii . . .
'
..
...........•
"
(Net Totals)
+188,332,129
+193,743,251
-210,652,667
-194,456,464
'
-921,655
. -211,574,322
-23,242,192
..,·,····.!l .,•.. . . ) . .'.•.
'
..
....
••••••••••
-2,131,321
-196,587,786
-2,844,535
Note: The loan balances presented in this table are preliminary and may not agree precisely with the later data published quarterly in the Treasury Bulletl.ii;-Table GA-m-2, Loans Outstanding.
I\)
CJ
TABLE IV--MEANS OF FINANCING {In tnousanCl5J
24
Net Transactions
[(-) denotes net reduction of either
liability or asset accounts]
Classification
(Assets and Liabilities
Directly Related to the Budget)
Account Balances
Current Fiscal Year
Beginning of
Fiscal Year to Date
This Month
This Year
C_~
Prior Year
This Year
This Month
'l'hIa ....
LIABILITY ACCOUNTS
Borrowing from the public:
Federal secur ities:
Public debt securities ••.••.•..•..•.••••• · •. ·••··•·
$1,284,555
$27,211,038
$17,198,453
$370,918,707
$396,845,189
-9,340
--420
-91,873
-741
-86,185
-1,811
1,771,770
3,472
1,689,238
3,151
-1,307
-30,335
-60,044
516,853
487,825
-70,000
-1,315,000
-1,280,000
7,320,000
6,075,000
............
-137
-131
2,829
2,692
-11
-20
-2
105
96
.....--
Agency securities:
Defense Department:
Family housing mortgages ...•••.•.•••.••..•••.
Homeowners assistance mortgages .•••.••.•....
Housing and Urban Development Department:
Federal Housing Administration •.•••••.•••.•.••
Government National Mortgage Association:
Participation sales fund:
Participation certificates •••.••••••••••••••.
Transportation Department:
Coast Guard:
Family housing mortgages .•••.•••.•••.•••.••
Treasury Department
Federal Farm Mortgage Corp. liquidation fund .•.
Other independent agencies:
Export-import Bank of the United States:
Agency securities .•••••.•..•.•..••••••.••..
Participation certificates ••..••.•••..•••.•••.
Federal Home Loan Bank Board:
Federal Home Loan Bank Board revolving fund.
Home Owners' Loan Corporation fund .••••.•.
Tennessee Valley Authority •.•.•...••••••.•••..
-500,000
--45
1,000,000
-267,903
-258,145
-321,154
400,000
1,492,799
1,900,000
1,224,941
I,...
I....
............
............
28,000
-241
-18
359,300
-217
-5
268,345
5,634
242
996,000
5.393
224
1,327 ,300
I....
Total agency securities .•...•...•..•••••••..
-553,124
-346,968
-1,739,350
12,509,703
12,715,858
12.11,.
Total Federal securities ..••.•.•••••.••..•••
731,432
26,864,070
15,459,103
383,428,410
409,561,048
410.11,.
Deduct
Federal securities held as investments of
Government accounts (See Schedule B) '" •.•..••.
Non-interest bearing public debt securities
held by International Monetary Fund •.••..•••.•••
1,041,794
7,416,354
10,059,858
97,723,154
104,097,714
IIXi.IJ,1
............ ........... ..............
825,000
825,000
1.-,..
...
....
1.1
•
1,11
•
811•
Totar borrowing from the public •••••.•..••
-310,363
19,447,715
5,399,245
284,880 , 256
304,638,334
301.111.11
Accrued interest payable on public debt securities •.......
-988,995
326,066
305,557
2,073,410
3,388,470
2.1ii,'
Deposit Funds:
Allocations of special drawing rights .....••..•••...•• "
Other .....••••...••••••...• '•••...•....•••..••..... ,
............
713,600
716,900
1,206,488
866,880
-1,185,038
866,880
3,821,017
1,583,700
4,313,904
5,011,1
Miscellaneous liability accounts (includes checks
outstanding etc. ) •....•.•...••••.••••..•••.•.•....••.
-191,035
440,537
461,254
4,849,164
5,480,737
5....
Total liability accounts ...••....••.•.••...
-776,793
22,137,706
5,847,898
296,490,727
319,405,225
318.11,11
2,014,836
894,824
1,912,358
9,015,896
7,895,884
8.110,11
............
289,522
957,188
-400,000
957,188
-400,000
1,246,710
-400,000
I.JII,II
289,522
-545,156
-908,000
557,188
-1,535,676
802,000
557,188
2,816,860
2,412,000
846,710
2,469,810
1,754,000
2.111,'
1.511,'
ASSET ACCOUNTS (Deduct)
Cash and monetary assets:
Within general account of Treasurer. U.S...•...•••....
With other Government officers:
Special drawing rights:
Total holdings .•..••...•.•...•......••••...••.••
Certificates issued to Federal Reserve Banks ...••.
Balance .••......•...•.••••.....•••...••••....
Other .....•.••..•••..•.•••.••....•••.......••....
With International Monetary Fund
....................
Total cash and monetary assets ....•••..•.
Miscellaneous asset accounts ...••••.......••.....•...
............. ...........
............
-198,106
-250,000
..fill,.
811.11
I.!OI,.
1,566,730
-268,810
1,735,871
14,801,944
12,966,404
14.531,11
27,196
-353,505
306,725
2,071,459
1,690,759
1.1\1,.
16.1.!:.!
Total asset accounts ....•....••..........
1,593,926
-622,314
2,042,596
16,873,403
14,657,183
Excess of Liabilities (+) or Assets (-) ....•••••••....•...
-2,370,718
+22,760,020
+3,805,303
+279,617,324
+304,748,062
Add: Transactions not applied to current year's
surplus or deficit .•••••••..•....•.•••. ..........
36,631
482,173
-960,768
............
445,542
481.d
Total budget finanCing [Financing of deficit (+) or
disposition of surplus (-)] •..••••......•.••••.•••••.••
-2,334,088
+23,242,192
+2,844,535
+279,617,324
+305,193,604
~.~
+302.," __
TABLE IV.SCHEDULE
A•• ANALYSIS OF CHANGE IN EXCESS OF LIABILITIES
Fiscal Year to Date
Classification
This Month
This Year
Prior Year
!s of liabilities beginning of period:
led on composition of unified budget in preceding period .
lustments during current fiscal year for changes in
Imposition of unified budget ..••.•.....•••.....••.••..•
$304,748,062
$279,617,324
$275,812,021
.............
............
............
of liabilities beginning of period (current basis) •••...
304,748,062
279,617,324
275,812,021
IS
!t surplus (-) or deficit:
led on composition of unified budget in prior fiscal year.
lustments during current fiscal year for changes in
Imposition of unified budget ••••••.•....••.•••.•...••.
-2,334,088
23,242,192
2,844,535
. ...........
. ...........
............
rt surplus (-) or deficit (Table ill) ••••••••.•••••••...••
-2,334,088
23,242,192
2,844,535
pts and expenditures not applied to surplus or deficit of
:urrent year:
pliorage •.....•..•..•••.•...•...•...•..••...••.•..•
lversion to private ownership of:
,'ederal Intermediate Credit Banks •••••.••••.•••••.••.
lederal National Mortgage Association ••• , •••••••••••••
I:lassification of CCC certificates of interest .••••••••••
-36,631
-378,173
-254,527
............
............
............
. ...........
-104,000
. ...........
-17,705
-350,000
1,583,000
Total •••••••••.••••••.••..••..•.••..••• ··•••••••• .
-36,631
-482,173
960,768
of liabilities close of period ........................
302,377,344
302,377 ,344
279,617,324
:B
(In thousands)
25
TABLE IV-SCHEDULE B--INVESTMENTS OF GOVER""'''''
IN FEDERAL SECURITIES (In thousands)
Securities Held as Inve_...........
Current Fiscal Year
Net Purchases or Sales(-)
Classification
Beginning of
Fiscal Year to Date
This Month
Prior Year
This year
,
t •••
This Year
This Month
Legislative Branch:
Library of Congress .... , ...................•... , .....
-$10
-$10
-$2
$41
$41
The Judiciary:
Judicial survivors annuity fund ........................ .
164
829
786
5,511
6,155
Agriculture Department:
Public debt securities ................................ .
Agency securities ....................•..........•....
-590
-2,394
-5,738
1,741
-5,291
4,650
70,954
65,216
Commerce Department .............•.•......•.....•....•
1,400
9,151
7,574
19,065
26,816
-1
274
62
788
1,062
-878,539
1,308,828
-35,000
3,953,285
29,461,403
640,000
31,648, '770
605,000
105,826
1,277,901
-15,000
1,392,466
-50,000
4,749,855
65,000
5,921,930
50,000
52,719
396,534
-20,000
244,010
-895
693,382
2,583,322
70,000
13,417
1,074
2,927,137
50,000
273,391
179
Defense Department .......•....•................•.•...•.
Health, Education, and Welfare Department:
Federal old-age and survivors ins. trust fund:
Public debt securities .....................•........•
Agency securities .........................••...•.•..
Federal disability insurance trust fund:
Public debt securities ......................•.•.•.•..
Agency securities ............................•...••.
Federal hospital insurance trust fund:
Public debt securities ........................•.•..•.
Agency securities ..........................•.•....••
Federal supplementary medical ins. trust fund ..•.......
Other ..•..•..•..•...•..•..•.•..•..•....•....... , .•..•
HOUSing and Urban Development Department:
Metropolitan Development:
New Communities Guarantee fund ••••••••••••.••••••••
Federal Housing Administration:
Federal Housing Administration fund:
Public debt securities •••••••••••••••••••••••••••••
Agency securities •..•.....•.••••.•.......•....•...
commumty (IlSposal operations fund:
Public debt securities .••.••..•..•..•..•......••..•
Agency securities ..••.....•.........•......••.....
Rental housing assistance fund:
Public debt securities .•...••...............••..•..
Government National Mortgage Association:
PartiCipation sales fund:
Public debt securities ...•...•.............•...••..
Agency securities ••......•••.•........•.•••..•..••
Guarantees of Mortgage- Backed Securities:
Public debt securities ............................. .
Management and liquidating functions fund:
Agency securities ........••............•....•.....
Special assistance functions fund:
Agency securities ..•....•....••...••.......••....•
Federal Insurance Administration:
National Insurance development fund ....•.............
-15,964
-344,554
488
2,846
2,225
2,225
10,493
-276
-6,951
135,383
133,932
-3,361
989,809
77,193
972,364
212,852
34
34
34
78
388
78
388
94
471
-40,181
3,340
221,846
-24,500
-2,413
....,
1
I
1,1
377
-335,503
-33,795
673,297
29,500
935,324
1,660
81,1
5,1
645
645
-220
-•
-2,135
55,037
52,645
418
-3,876
-6,008
109,795
105,502
3,329
14,306
27,976
60,000
70,977
Interior Department:
Public debt securities ..........•..••......•.•....••...
Agency securities ................•.............•...••
3,295
-174,845
180,158
200,405
1,000
22,266
1,000
I.!
Labor Department:
Unemployment trust fund:
Public debt securities ................••..••..•...••.
Agency securities .......................•.•.•.•••..
Other .•....•......•.....•....•.•......•...•....••...
-301,031
-1,646,983
-100,000
-9
552,535
-65,000
-12
12,787,888
200,000
91
11,441,936
100,000
82
\1,I~,
1111,
2,557
40
1,437
100
3,704
-20
51,024
30
49,904
90
51,
1,033,131
1,089,002
24
2,601,737
34
3,580,908
36
3,631,
..........
State Department:
Foreign service retirement and disability fund ...•.....•.
Other ..........••....•••.....••..•.........•......••
Transportation Department:
Highway trust fund .........•••••...•........•....••..
Other .......•................•••......•.....••....•.
1
Treasury Department:
rubliC debt securities ................................ .
gency securities ....................•.......••......
310,938
1,379,912
-3,400
-2,000
34,271
1,103,245
General Services Administration .............•......•.•.
-50
-342
-277
2,026
1,734
II
TAI!•• "
SeHEDUlE B.·INVESTMENTS OF GOVERNMENT ACCOUNTS
IN FEDERAL SECURITIES··Continued (In thousands)
Securities Held as Investments
Current Fiscal Year
Net Purchases or Sales (-)
Classification
This Month
Fiscal Year to Date
This Year
r
27
Beginning of
Prior Year
This Year
This Month
Close of
This Month
'aIlS AdminiStration:
erans reopened insurance fund •••.••••••••••••••••••.
erans special term insurance fund ••.••••••.••••••••.
'ernment life insurance fund:
ublic debt securities ••••••••••••••••••••••••••.••••
ional service life insurance fund:
ublic debt securities •••.•••••••••••••.•••••••••••••
gency securities .............••••••.•.•••••••••••••
ar..............................................................................................
$7,278
3,392
$32,577
26,158
$34,7l4
24,315
$156,422
266,872
$181,721
289,638
$188,999
293,030
5,939
-38,525
-45,088
796,743
752,279
758,218
152,745
-70,000
161,492
-75,000
-326
5,915,145
405,000
1,430
5,970,093
335,000
1,980
6,067,890
335,000
1,430
1,792,567
21,517,490
510,000
93,199
799,753
ID,914
4,480,946
23,351,580
475,000
156,842
931,075
31,615
4, 660, 2ID
24,252,436
475,000
145,949
972,274
28, lID
4,660,668
97,797
...........
-550
. ...........
900,856
2,734,946
-35,000
52,750
172,521
7,ID6
179,722
i1ndependent agencies:
t.vilService
Commission:
service retirement and disability fund:
Public debt securities •••••••••••••••••••••••••••••
Agency securities .•.••••••••.••.••••••.••••.•••••.
nployees health benents fund .......................
nployees life insurance fund ••.•••••••••••.••.•.•••
ltired employees health benefits fund •..•••••.•••••.•
~ral Deposit Insurance Corporation •••••••.••••••••••
"ral Savings and Loan Insurance Corporation:
lblic debt securities ••••••••••••••••.•.••••.•••••.•
~ency securities .............•.....................
ional Credit Union Administration:
ltional credit union share insurance fund ............
lroad Retirement Board:
ilblic debt securities .••..••••••••.••••••••••..•••••
~ency securities. . . . . . . . . . . . • ••..••••••••••••.•••••
r ................................................
...........
-10,893
41,199
-3,495
448
. .........
-13,401
161,560
19,090
327,659
2,288,853
159,550
2,496,468
143,550
2,500,742
143,550
6,273
. .........
..........
. ...........
6,018
6,273
. ..........
7,410
100,823
-110,000
20,208
317,530
-50,000
46,131
4,544,032
160,000
48,124
3,968,735
50,000
60,922
4,644,855
50,000
68,332
tal public debt securities ••••.•••••••.••••.••.•••••
otal agency securities •••••••.•••••••••••••.••••.•.
1,038,533
3,261
7,718,498
-302,144
10,352,447
-292,589
95,169,737
2,553,417
101,849,702
2,248,012
102,888,235
2,251,273
Grand Total ...................................
1,041,794
7,416,354
10,059,858
97,723,154
104,097,714
105,139,508
-12,830
12,830
-5,355
173
12,830
.................
. ...........
r.
...........
4,274
211,889
-16,000
255
676, lID
172,823
MEMORANDUM
"aents in securities of privately owned
!rnment-sponsored enterprises:
,cluded in the loan account:
Federal Savings and Loan Insurance Corporation
(acquired securities) ............................
Indian tribal funds ...............................
Milk market orders assessment fund •••••••••••.•••
! Participation sales fund ..........................
Total ....................................
It applied to current year's surplus or defiCit:
Civil service retirement and disability fund ••••.••••
iFederal old -age and survivors ins. trust fund •••••••
Federal hospital insurance trust fund •.•••••••••••••
!Federal disability insurance trust fund •••••••••••••
Federal Savings and Loan Insurance Corporation ••••
PartiCipation sales fund .•••••••••••••••••••.••••••
RailrOad retirement account ......................
Unemployment trust fund ••••.••••.••.•...••..•••.•
:Veterans life insurance trust funds ••••••••••.•••.•
Total ......................................
............ .......
.................... ..
...........
...........
. ..........
...........
................
.............
...........
...........
...........
...........
...........
...........
...........
........ ..
...........
173
.... .......
............
. .............
..............
173
..............
-12,830
7,648
13,003
173
173
-ID,OOO
-ID,OOO
-66,500
-66,500
-41,500
ID,OOO
ID,OOO
.............
. ...........
. ...........
............
............
173
.................
............
-17,705
-41,500
-66,500
-67,500
...........
-ID,OOO
-20,000
20,000
ID,OOO
............
............
............
............
............
............
-104,000
-367,705
104,000
............
-ID,OOO
-4,000
............
..........
..........
...........
ID,OOO
4,000
...........
............
....................
...................
. .............
...............
..............
..............
..............
..............
..............
. .............
TABLE V--COMPARATIVE STATEMENT OF BUDGET'Pcrr'DTa ......lKn'
28
BY MONTHS OF CURRENT FISCAL YEAR
Aug.
July
Oct.
Sept.
Nov.
Dec.
I
1
i
iJan.
iI Feb.
1
,
!
I March
April
May
I Fiscal
It. Com_
!
II
,
I
HECEIPTS
t~L'\.t:'S
2,745 4494 1 2,6461 2,311 ; 3,475
185
'587
46
106
374
and C()nlfluutums .. .
CIH.'lllpl()YI1lL'nl lI1surance ............ .
C untr ltJUllU11:--' lur other Insurance and
250!
2701
279
1,3091 1,272' 1,237
224
2341
262
223
218'
231
__
2,230
50
I
'
"II
2,2911 4,9761 3,624: 4,378, 5,103: 3,4271 41,699'1 39,m
165
721
77
302
1,005,'
69, 3,686' 3,.
' I
I"
259'
265
264,
247:
288 i
291
258'
2771
1,5491 1,346 1,195 1,505 1
1,459 1,5251
1 1,443! 1,351
239 1 285
269'
280,
329
589 I
379
326,
207
220
199
175'
226
221
2041
249:
__ :3H,
286:
361' _328l ___
I
I
3~6r_3~2: 3~l_-=-8~;-- ~2~
CU~llJlll~ • • • . . • • . . • • • • • • • • • • • • • • • • • • • • •
Tut.ll .......................... .
,
254
1,439
293
218
_
l"etlrt' IHent. . . . . . . . . . . . . . . • . . . . . . • . .
E \.l·l~l' t,L\.L'~ . . . . . . . . . . . . • • . . . . . • . . • . • .
E~Litt' J.Jld ~lft taxes .................. .
~11::-Cl' 1l.1Ilt:'0US • • • • . • • • • • • • • • • • • • • • • • • • •
~,609 ~~~7~ ~8'2~l,4~~
OUTLAYS
14,
248~ 313~_3(){)l
1~15,~9L!-5, 773~, 13~iD'20¥1.024
,I
I
341
Ll'p~lalIW Branch....................
The JudIciary.........................
Executive Office of the President ... " . .
Funds appropriated to the President:
International security assistance......
International de\'elopment assistance..
101
A llowances undistributed ... , ...... '
32:
10,
4'
351
15'
4,,:
32:
111
31
i
93,
104'1
210
50
1081
208 1
i
' I
61
96'
197
281:
10
4,
301
13'1
5
I
I
1,772' 1,917 1,8721 1,975 , 1,7921 2,003 1,83711,684 1,931
2,025 1,6801 1,8411 1,705 ' 1,751'11,952 1 1,713 1,698 1,934
, 2,316' 2,0281 1,941' 2,033 , 1,878 2,074, 1,786 1,8231 1,975
455
429
496j
423,
424
485
434
508
462
I!
51
10
5 ~
61
7,
8
7
7
2,001
1,760
1,840
429
10
374)
72
I
I
1351
89
-167,
249
1381
148
-170
360
92
insurance trust fund ••.•••.•...••..
Federal disability insurance trust fund.
Federal hospital insurance trust fund..
Federal supplementary medical
"
339
3561
75:
293
601
83'
I
178'
70S 1
113
3
,11M
~:=
I
259
384
42
147
1
3Q
128
38
74
1771
1,384
1,3041
1,773
-165
517
168
3,907
4,739,
1,188
1,19'1
1,332
2,348
I
4,'I7l1'
3,~;
1,083 I'
r==='==~=='i====j====F===t==='f===I===I===f===I==0-=i===c=j;F=~=*
,I
I,
1
~,' 5'~O' , '6' ',0' 5'9'1,,' '6' ,'1'60" ;, '6' ,'1'3'9'
,------c,'
~-~ ~:;r-~
(5' ,'8' 5'1' '6' " 5'2'1': . 5' ,'7'7'7'1'5' ,'7'2'0' '6' ,'3'0'9' '6' ,'0'4'1'
-142
134
1181
80
,
94
104
1,771 2,567 23,122
1,695 2,276 22,031
1,844 2,235 23,773
496
529 5,570
2
4
72
!-
24,7251
22,505'
24,868
4,9'72
80
................... . .... ..
5,809 7,612 74,568 77,150 i
120
192
1,376
1,211
,
i
816,
798!
I
7721
2,445 2,482! 2,497
271
276
281
:
439
441 : 428 1
168
192
insurance trust fund .•.•....•••...
191
Other....... ..... ... ...... . . ..... .. !
484
545
686
Housing; and Urban Development
Department. ........................ .
438,
243
217
Interior Department .................. .
79
96
133
Justice Department. .................. .
681
76
70
Labor Department:
Unemployment trust fund ............ .
389
402 1 312
Other ............................. .
671
105
112
Post Office Department ...............
231 1 150
337
State Department. . . . . . . . . . . . . . . . . . . . .. :,
88
15
33
1
Transportation Department:
330 : 3981'
Highway trust fund .. " ..... . .. ...... ,
524
1671
207
Other ......•.......................
198
Treasury Department:
1
1,763 : 762 1,760
Interest on the public debt ........... .
12 1, 12 1
Interest on refundS, etc ............. .
12
Other ..............................
77
46[
- 104 1
810
820
2,520
278
449
2,468
277
429
189
640
191
573
161
85
125
83
69
-lUi
373
106
177
68
417
81
166
40
506
216
448
189
1
1
1
0
97
1
See footnotes on page 3.
37 1
151
5
, I ,
736 I
421
119 I
Total Military...................
CIvil .............................. .
Health, Education, and Welfare
Department:
SocUlI and Rehabilitation Service.. . ...
Federal old-age and survivors
29!
12
41
-94
531
94
I
-721
37 6 '1
82
2331
102
1721
iI
-66
337
88
I
'2,428
221!
'
101:
79,
154,
191,
29
12
4
-158
478,
101
1
-34,
88 '
1
158
3,709
2.590
3,847
i
76
101
122
I
1
13,190,22, 449 188,332 193,7'-1
125
138
170
'I
657
59
112
187
'I
3,202 1
16,62911~:~
" I
I
Ag~~~~t~;~ 'D~p~;t~l~;lt""""'"''''''
Commodity Credit Corporation, foreign
assistance and special export
programs .........................
Other..............................
COlllillerce Department .................
Dde nse Department:
Mlhtary:
Department of the Army...........
Department of the Navy............
Department of Air Force ...........
Defense agencies..................
Civil defense......................
Ii
-6281 '7219, '9 4491 t6 110 1'7181' '6 209'10 5791'64931 '3 366! '9630' '3,846i:9,801::86,164'/$90fl2
"838
'484 1<4;278, '669
'524 '4;484' '526; '372!:3;523!:4;015
623, 6,4691 26,806 11 32:.
IJllII\ ldu.d IIlCl)!llt.' t.LXt'!:l . • . . . . , .. , . • . . . . .
CdrjhlI":.lth>Jl lnCO!l1l' t.l..xe~ .......... '" .
~l)clal lfl:::.uranct' ta-xes and contl"lUutlon:;:.
E::qJluYlllt'llt
r-t----~--
,
, - - - . - - ,C---
:
I Y~~r !~ II
Date Ii Prior C.
!
II F.Y. I
June
1,7~ I 1,74713
-513
94
878
871
945
931
888 1,169 10,544
2,545 2,537
293 1 286
470
463
1
187i
160
696 1 674
2,548
299
446
2,576
298
552
2,584
298
510
2,591 4,475 32,267
299
450 3,606
471
494 5,592
186
700
225
779
192
711
197
697
204
382
2,283
7,567
338
-556
74
225
107
73
148
76
78
221
86
93
195
41
82
335
80
83
2,891
211
914
2,603
546!
78
60 1
651,
672
112
202
32
615
347
171
26
714
200
221
622
25
511
191
95
37
558
230
142
-6
6,130
1,794
320
43
3,555
801
1,510
448
422'
200
327
216
280
196
314
303
211
315
196
487
344
4,652
2,595
4,378
1,695 1,726 20,976
11
16
137
114
35
-90
19,304
119
8'1
846j
2441
255
1,822 1,805 1,709 1,727
6
6
10
11
-129
-25
84
131
163
1,699
16
100
2,271
4a7
8,178 i
27,3~
2,954 ,
4,953 I
2,196
6,648
8~
640
2,039
TABLE y--COMPARATIVE STATEMENl OF BUDGET RECEIPTS AND OUTLAYS
BY MONTHS OF CURRENT FISCAL YEAR--Contlnued
29
(Figures are rounded in millions of dollars and may not add to totals)
Classification
July
Sept.
Aug.
Oct.
Nov.
Dec.
Jan.
Feb.
March April
May
ComFiscal parable
Year
Period
To
Prior
Date
F.Y.
June
Estimates
Current
F.Y.2
OUTLAYS-Continued
Ene~ Commission .•••••••••••
ome
Protection Agency •••••••
! Services Administration •••••••
II Aeronautics and Space Adminis-
...............................
"'
Administration:
ensation, pensions, and benefit
rams ............ •••·••••·•••••
'nment life insurance fund •••••••
w. service life insurance fund •..
$167
12
-19
$172
38
48
$188
39
57
$all
30
34
$186
41
33
$194
39
43
$179
25
51
$170
53
23
$169
40
55
$198
46
42
$198
53
51
268
282
282
302
286
318
262
295
333
252
274
515
10
65
140
529
5
48
181
537
7
59
115
573
6
54
131
632
5
42
148
644
7
59
95
644
5
52
63
644
6
54
90
676
8
67
210
684
6
54
137
250
24~
298
271
261
210
274
248
254
-72
24
210
65
70
24
166
5
19
27
364
25
27
36
334
-al
10
36
177
-116
18
41
294
-55
23
15
211
-8
24
23
al7
-202
-213
-220
-222
-199
-al7
-215
-32
-134
-30
-73
-125 -1,949
-3~
$251 $2,275
711
294
93
512
$2,453
350
446
$2,275
679
335
246
3,382
3,749
3,368
679
6
48
141
675
10
57
128
7,433
82
661
1,579
6,338
84
685
1,545
7,512
83
7al
1,633
288
277
288
3,164
2,647
3,145
47
28
21
316
34
21
32
234
62
37
30
194
-153
44
57
311
-184
333
366
3,017
219
253
211
2,403
128
276
425
3,041
-214
-239
-237
-216
-226 -2,611
-2,444
-2,486
-143
-22
-57
-109 -2,057 -4,765
-3,936
-4,711
800
8
................................
ldependent agencies:
Service Commission ••••.•••••••
't-Import Bank of the
~dStates .......................
. Business Administration ••••••••
,ssee Valley Authority •••••..••••
...............................
Ibuted intrabudgetary
ctions:
~al employer contributions to
~ement funds ....................
1St credited to certain
IUIIts ...........................
Ices undlstributed ...............
lta!······ .....••••.....••...•..
:+) or deficit (-) ................
11
.......... ...... ...... .... ..... ...... ...... ...... ....... ....... . ...... . ..... . .....
........
. ........
19,326 17,495 17,443 17,640 16,728 15,550 17,115 16,546 18,646 17,818 17,152 al,115 211,574
196,588 212,755
-121 -1,341 -1,417 -5,441 +3,206 -3,961 +2,334 -23,242
-2,845 -18,562
-6,718 -2,323 +1,281 -6,147 -2,594
ltnotes on page 3.
TABLE VI--TRUST FUND RECEIPTS, OUTLAYS AND INVESTMENTS HELD (In millions)
Fiscal Year to Date
Current Month
Excess of
receipts
or outlays(-)
Class1f1cation
Receipts
old-age and survivors
nce ........................
disability insurance •••••••••
hospital insurance. " •••••••
supplementary medical
nce ...................
employees retirement •••.•••
employees life and health
110 . . . . . .
s ............................
Deposit Insurance Corp ••••••
IIld airways .................
Outlays
This year
This month
Beginning of
Close of
this month
-$580
106
15
$31,354
4,490
4,874
$29,02!l
3,173
4,449
$2,328
1,318
426
$30,101
4,815
2,653
$32,254
5,972
2,977
$31,375
6,078
3,030
108
169
-715
100
8
884
1,252
1,950
1,020
-636
232
2,586
13
22,027
273
23,827
257
24,727
5
.........
-5
..........
-190
-182
28
42
21
-39
17
-261
114
53
563
5,542
-340
22
4,469
-60
-9
1,636
5,492
-41
::-11
190
182
902
1,073
80
9
-655
-1,807
41
33
54,713
47,796
6,917
..........
........
51
435
......
........
4
................ , .........
4,262
3,859
·retirement•••••••••••••••••
Excess of
receipts
or outlays H
$3,127
275
397
'ment .......................
life insurance •••• " ........
trust......................
:
asSistance advances •••••••••
Outlays
$2,547
380
411
21
393
-21
39
72
330
-114
-50
~·imtd's·:::::::::::::::::
Receipts
Securities Held as Investments
Current Fiscal Year
........
.........
88
69
,
401
. ......
.........
.........
980
3,686
..........
914
4,481
.........
2,602
all
1,120
4,660
............
3,581
23
1,146
4,661
................
3,635
26
......... ..
.. ..........
...............
4,704
12,988
7,118
87
4,019
11,542
7,059
89
4,695
11,241
7,163
88
92,705
97,395
98,123
s,t fund data were developed by extraction from the receipt and outlay data presented as budget results in this publication. Accordingly, certain
from other Government accounts such as Federal payments and contribUtions, Federal employer contributions, and interest and profits
nvestments in Federal Securities are netted against outlays.
~lpts
(.)
o
TABLE VII--SUMMARY OF RECEIPTS BY SOURCE AND OUTLAYS BY FUNCTION (In thousands)
-
~
Current Fiscal Year to Date
This Month
The
Expenditure
Account
Source
Loan
Account
Total
Budget
The
Expenditure
Account
Loan
Account
Total
Budget
Comparable Period Prior Fiscal Year
The
Expenditure
Account
Loan
Account
Total
Budget
NET RECEIPTS
............
$86,164,233
26,805,913
$90,411,787
32,829,330
41,699,377
3,685,607
3,201,963
16,629,272
3,708,909
2,589,973
3,846,882
39,132,959
3,464,281
2,700,653
15,705,490
3,644,421
2,430,215
3,424,114
188,332,129
193,743,251
44,109
. ...........
77 ,620,672
2,993,668
3,382,216
5,282,571
2,680,631
11,363,944
3,383,272
8,639,293
14,480,410
55,712,507
9,786,730
19,659,607
3,964,129
-7,375,327
80,298,046
3,275,374
3,748,927
5,855,148
2,475,244
9,142,186
2,344,770
7,198,459
12,979,918
43,501,784
8,480,240
18,312,577
3,224,520
-6,380,729
210,652,667
921,655
211,574,322
194,456,464
Current
Fiscal Year
to Date
Comparable Period
Prior Fiscal Year
Proprietary receipts •••••••••••••••••••••••••••••••
Intrabudgetary transactions ••••••••••••••••••••••••
$4,606,858
13,389,536
$3,564,262
10,178,778
Total receipts offset against expenditures ••••••••••
17,996,393
13,743,039
Idividual income taxes .•••••••••••••••••••••••••••••••
orporation income taxes •••••••••••••••••••••••••••••••
)cial Insurance taxes and contributions:
Employment taxes and contributions •••••••••••••••••••
Unemployment insurance .••••••••••••••••••••••••••••
Contributions for other insurance and retirement ••••••••
E ICcise taxes .•••••••••••.•••••••••.•••••.•••••••••••••
E ,tate and gift taxes •••••••••••.•.••••••••.••.•••••••••
C Jstoms •••••••••••••••••••••••••••••••••••••••••.••••
M iscellaneous ••••.•••••••••••••••••.••••••••••••••••••
$9,800,777
6,468,729
Total ••••••••••.••••.•••••••••••••••••••••••••••••
22,448,738
3,427,148
69,026
276,892
1,524,942
326,115
248,880
306,231
............
............
$9,800,777
6,468,729
$86,164,233
26,805,913
..............
3,427,148
69,026
276,892
1,524,942
326,115
248,880
306,231
41,699,377
3,685,607
3,201,963
16,629,272
3,708,909
2,589,973
3,846,882
22,448,738
188,332,129
77,621,268
3,052,149
3,382,216
5,077,687
2,677,213
11,078,138
2,947,436
8,512,136
14,479,298
55,710,211
9,910,616
19,659,607
3,920,020
-7,375,327
............
.............
............
............
............
............
............
. ...........
.............
............
............
............
............
............
............
. ...........
............
............
............
............
............
............
............
.............
............
............
$90,411,787
32,829,330
39,132,959
3,464,281
2,700,653
15,705,490
3,644,421
2,430,215
3,424,114
193,743,251
OUTLAYS
II ternaUonal affairs and finance •••••••••••••••••••••••••
ace research and technology ••••••••••••••••••••••••••
~ ;riculture and rural development ••••••.••••••••••••••••
N ttural resources .•.•••••.••••.•••••••••••••••••••••••
C 'mmerce and transportation •••••••••••••••••••••••••••
C ,mmunity development and hOusing ••••.••••••••••••••••
E lucation and manpower •••••••••••••••••••••••••••••••
H 'alth •.•..•....•......••••.••••.••.••••••••••••••••••
In :ome security •••..•••••••••.••••••••••••••••••••••••
V terans benefits and services •••••••••••••••••••.••••••
In erest ••••••••••••••••••••••••.••••••••••••••••••••••
G neral government. ••••.•••••.••••••••••••••••••••••••
U distributed intrabudgetary transactions ••••••.•••••••••
8,079,857
187,668
246,463
-132,300
559,110
1,185,169
498,140
1,163,319
1,332,959
6,234,234
868,738
1,677,623
385,129
-2,283,031
..............
11,562
.............
8,080,104
86,021
246,463
84,137
559,198
1,248,587
395,132
1,182,285
1,334,167
6,233,652
873,622
1,677,623
396,690
-2,283,031
Total •••••••••••••••••••••••••••••••••••••••••••
20,003,078
111,572
20,114,650
N IUonal defense ••••••••..•••••••••••••••••••••••••••••
$247
-101,647
...............
216,437
88
63,418
-103,008
18,966
1,208
-582
4,884
-$596
-58,481
............
204,884
3,418
285,806
435,836
127,158
1,111
2,296
-123,887
............
331,942
3,117
173,874
766,236
240,305
5,535
3,278
204,370
.............
112,087
..............
80,296,303
3,567,695
3,748,927
6,187,090
2,478,360
9,316,060
3,111,006
7,438,764
12,985,453
43,505,061
8,684,610
18,312,577
3,336,608
-6,380,729
2,131,321
196,587,786
-$1,743
292,321
............
MEMORANDUM
Receipts offset against expenditures (In thousands)
For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington, D. C. 20402
Subscription price $6.00 per year (domestic) $11.00 per year additional (foreign mailing), includes all issues of daily Treasury statements and
the Monthly Statement of Receipts and Expenditures of the U. S. Government. No Single copies are sold.
\
The Department of the
WASHINGTON, D,C, 20220
TREASURY
TElEPHONE W04·2041
FOR IMMEDIATE RELEASE
July 30, 1971
Secretary of the Treasury John B. Connally announced
today "vd th deep regret" the resignation of John S. Nolan
as Deputy Assistant Secretary of the Treasury, effective
at the end of August.
"I would far prefer to be announcing his promotion,
and I regret but understand the compelling personal and
financial reasons which forced his
decisio~;
Secretary
Connally said.
Nolan was appointed to the post on April 1, 1969,
and has played a key role in formulatirgand executing
the u.S. domestic and international tax policies.
Originally from Miami, Florida, he was graduated from
the University of North Carolina in 1947 and later from
Harvard Law School.
Prior to joining the Treasury, he
was a partner in "the firm of Miller and Chevalier in
Washington.
He is married to the former Adeline Jean Mosher of
Holyoke, Massachusetts; they have five children and live
in Potomac, Maryland.
C-I05
000
lheDepartmentof the
WASHINGTON, D.C. 20220
TREASURY
TElEPHONE W04·2041
FOR IMMEDIATE RELEASE
July 30, 1971
RESULTS OF CURRENT TREASURY OFFERJNG
The Treasury announced today that $2.7 billion of the $4.1 billion of
the securities held by the general public maturing August 15, 1971, have been
exchanged, leaving $1.4 billion or 33.6% unexchanged. Federal Reserve Bank and
Government accounts exchanged $0.9 billion held by them. In addition, $192
million of the bonds were allotted for cash to individuals. The total amount
of securities to be issued to the public is $2.5 billion of notes and $443
million of bonds.
Following is a summary of the exchanges (amounts in millions):
ELIGIBLE FOR EXCHANGE
3ecurity
B~
the
UNEXCHANGED
Total
Total
~eneral ~ublic
:1:% bonds
3-1/4% notes
Total
3~
Amount
7%
Notes
11/15/75
TO BE ISSUED
7%
Bonds
8/15/81
$2,197
1:922
$4 119
$1,287
1 196
$2:483
$
$
190
61
251
$1,477
1 257
$2:734
720
665
-$1,385
$
Federal Reserve Banks and Government accounts
b% bonds
3-1/4% notes
Total
$
$
617
327
944
$
$
402
190
592
3y Cash Sale
'otal
~52063
$3 2075
$
215
137
352
$
192
$
795
$
617
327
$ 944
$
~3z678
The Treasury also announced that it will auction $2.5 billion of 18-month
notes on Thursday, August 5. The issue date and payment date for the notes
'ill be August 16, 1971. The notes will be sold under competitive and noncompetitive
idding. Tenders will be received until 1:30 p.m., EDST, on Thursday, August 5, 1971.
enders at less than 99.76 will not be accepted. The notes will mature February 15,
973. Qualified depositaries may make payment for 50% of accepted tenders for the
otes by credit to Treasury tax and loan accounts.
-1/2%
The details of this offering are being released separately.
\
The Department of the
WASHINGTON, D.C. 20220
:\ IMMEDIATE RELEASE
TREASURY
TElEPHONE W04·2041
July 30,1971
DETAILS OF TREASURY ANNOUNCEMENT OF AUCTION OF $2-1/2 BILLION OF NEW NOTES
The $2-1/2 billion, or thereabouts, of IS-month 6-1/2% Treasury Notes of
ries C-1973 to be sold at auction under competitive and noncompetitive bidding
Ll be issued on August 16, 1971, and mature February l5, 1973.
The notes will be issued in registered and bearer form in denominations of
,000, $5,000, $10,000, $100,000 and $1,000,000.
Tenders for the notes will be received up to 1:30 p.m., Eastern Daylight
ring time, Thursday, August 5, 1971, at any Federal Reserve Bank or Branch and
the Office of the Treasurer of the United States, Washington, D. C. 20220.
lders received after the closing hour will not be accepted.
Each tender must be in the amount of $1,000 or a multiple thereof, and must
;ate the price offered, if it is a competitive tender, or the term "noncompetitive",
~ it is a noncompetitive tender.
The price on competitive tenders must be expressed
1 the basis of 100, with two decimals, e. g., 100.00.
Tenders at a price less than
1.76 will not be accepted. Fractions may not be used. The notation "TENDER FOR
tEASURY NOTES" should b'e printed at the bottom of the envelope in which the tender
submitted.
Public announcement will be made of the amount and price range of accep:;ed
Those submitting tenders will be advised of the acceptance or rejection
lereof. The Secretary of the Treasury expressly reserves the right to accept or
:ject any or all tenders, in whole or in part, and his action in any such respect
,all be final. Subject to these reservations noncompetitive tenders for $200,000
less will be accepted in full at the average price (in two decimals) of accepted
mpetitive tenders. This price may be 100.00, or more or less than 100.00.
~nders.
Commercial banks, which for this purpose are defined as banks accepting demand
posits, may submit tenders for account of customers provided the names of the
stomers are set forth in such tenders. Others than commercial banks will not be
rmitted to submit tenders except for their own account.
Tenders will be received without deposit from commercial banks for their own
count, Federally-insured savings and loan associations, States, political
bdivisions or instrumentalities thereof, public pension and retirement and other
blic funds, international organizations in which the United States holds membership,
reign central banks and foreign ,States, dealers who make primary markets in
~ernment securities and report daily to the Federal Reserve Bank of New York their
-2l'th respect to Government securities and borrowings
thereon, t and
• d b
(J~)Vernment accounts. Tenders from others must be accompanl.e
y P8¥IDen ot 5
of the face amount of notes applied for.
,0r'l'
• "..,L,l,)!lS W
pel'CeI
t'ilYT;lellt for accepted tenders must be completed on or before Monday, August II
~_J7 ~, at the Federal Reserve Bank or Branch or at the Office of the Treasurer at
ti,e U,'ji ted States in cash, 4% Bonds of 1971 or 8-1/4% Notes of Series F-1971 (whil
":; lit'e accepted at ~a~), or ot~er fun~s imrnediat~lY available to the Treasury br
tnat date. Any quallfled deposltary wl.ll be perml.tted to make settlement by credj
Hl its Treasury tax and loan account for not more than 50% of the amount of notes
'J.llotted to i t for itself and its customers. Where full payment is not canpleted
~n funds available by the payment date, the allotment will be canceled and the
(lepcsit with the tender up to 5 percent of the amount of notes allotted will be
subject to forfeiture to the United States.
Nonbank investors should understand that their checks will constitute p~~t
Monday, August 161
1871, Checks not so collected will subject the investor's deposit to forfei~eu
3et forth in the preceding paragraph. A check payable other than at a Federal
~,~:.;erf~ Bank received on the payment date will not constitute immediately ava.ilable
:",!ilds on that date.
Accordingly, in order that a check will constitute illllIlediately
'c\T2jlable funds to the Treasury by the payment date, it should be submitted
~uf.:::iciently in advance to, assure completion of its collection by Monday, August 16,
~I ?7 i. .
Checks should be drawn to the order of the office to which the tender is
_~.bm.i t t.ed. I f a check for the full amount of the payment is submitted with the
:::~~~)[:;c_ription, it should be, in the case of tenders at a competitive price, equal
t·::, th.:; total purchase price of the notes bid for, or, in the case of noncompetitive
te~ldel's, equal to the full face amount of the notes bid for.
Bidders on a. noncompetitive basis who submit checks for the face amount of the notes bid for nil
be (1) required to pay an additional amount if the purchas e price is more than
100, or (2) paid the difference if the purchase price is less than 100. .
::JnJ.y i f they are fully and finally collected by the payment date
Commercial banks are prohibited from making unsecured loans, or loans
c;·llateralized in whole or in part by the notes bid for, to cover the deposits
l'ec;uired to be paid when tenders are entered, and they will be required to make
the usual certification to that effect. Other lenders are requested to refrain i'rCI
making such loans.
All bidders 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
bid for under this offering at a specific rate or price, until after 1:30 p.m.,
Eastern Daylight Saving time, Thursday, August 5, 1971.
l
The Department of the
WASHINGTON, D.C. 20220
TRfASURY
TElEPHONE W04·2041
FOR IMMEDIATE RELEASE
August 2, 1971
TREASURY BROADENS AREAS OF PUBLIC PARTICIPATION
IN RULEMAKING
Samuel R. Pierce, Jr., General Counsel of the
United States Treasury has announced a shift in the
Department's policy which will broaden public
participation in rulemaking.
As of July 27, 1971, the public may make comment on
proposed regulations in matters relating to public
property, loans, grants, benefits or contracts.
Before the change in policy, Treasury did not invite
comment in these areas, relying on the exception from
public rulemaking procedures provided in 5 U.S.C. 553 (a)(2).
The policy statement appeared in the Federal Register
of July 27, 1971.
Also appearing in the Federal Register of that
date is a Treasury notice on the broadening of information
made available to the public involving submissions made
in response to published notices of proposed rulemaking
by the Treasury Department and its bureaus and offices.
000
C-106
Removal Notice
The item identified below has been removed in accordance with FRASER's policy on handling
sensitive information in digitization projects due to copyright protections.
Citation Information
Document Type: Magazine Article
Number of Pages Removed: 6
Author(s):
Title:
"Nixon's No. 2 Man?" (Re: John Connally)
Date:
1971-08-09
Journal:
Newsweek
Volume:
Page(s):
URL:
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
The Department of the
WASHINGTON, D,C. 20220
TREASURY
TElEPHONE W04-2041
"OR IMMEDIATE RELEASE
August 2, 1971
Secretary of the Treasury John B. Connally today issued the
:ollowing statement concerning the execution of Federal search
larrants at 1014 Quebec Terrace, Silver Spring, Maryland on June 7,
.971 by agents of the Alcohol, Tobacco & Firearms Division and
lontgomery County police.
'~he
morning after the shooting incident I ordered a complete
nd thorough investigation of the facts and circumstances in this
ase and a comprehensive review of all procedures, training and
ontro1 relating to arrest of defendants and the execution of
earch warrants. This review is being conducted by an independent
ask force under the Treasury Law Enforcement School.
'~fter a complete review of the investigative report I have
)nc1uded that the actions of the law enforcement personnel in
~ecuting the search warrant for the Ballew apartment were legally
::,oper under the circumstances. However, several administrativlC" i:!no
lpervisory deficiencies were found to exist and are specified 1" ~~e
lc10sed report. Accordingly, I have ordered the following
)rrective actions be taken immediately:
r~etai1ed
instructions will be disseminated to all ATF
officials to insure-(1) thorough and tighter supervisory control be exercised
in the conduct and execution of search warrants;
(2) tighter control be maintained on the removal of
property by local police under a Federal search
warrant; and
(3) complete and accurate record keeping procedures
be established.
'~o
insure complete adherence to these requirements, I have
structed the appropriate officials in the Department to take
atever steps are necessary to insure that the provisions of the
w will continue to be properly administered and the rights of
1 citizens under the law are protected".
Attached is a summary report of the circumstances and facts
this case.
THE DEPARTMENT OF THE TREASURY
WASHINGTON. D.C.
20220
REPORT OF THE INVESTIGATION REGARDING EXECUTION
OF SEARCH WARRANTS AT 1014 QUEBEC TERRACE,
SILVER SPRING (JUNE 7, 1971)
Basis for Requesting Search Warrants
Apartment #2 (Resident Kenyon F. Ballew)
Following is the sworn affidavit executed by an
Agent of the Alcohol, Tobacco and Firearms Division
and presented to U. S. Magistrate F. Archie Meat yard,
Jr., on June 7, 1971:
"Your affiant stated that on June 7, 1971, he
received information from Det. W. F. Seminuk,
Prince Georges County Police Department, Hyattsville General Assignment Section, Hyattsville,
Maryland to the effect as follows:
that a con-
fidentia1 reliable source (the sources' reliability
is based on three separate reports of burglaries
in the Langley Park area of Montgomery and Prince
Georges Counties, Maryland, which according to
police reports, in fact, took place or were
- 2 attempted) told that detective that on May 5 or
6, 1971, the source observed a quantity of hand
grenades in Apartment #2, 1014 Quebec Terrace,
Silver Spring, Maryland.
The source stated it
also observed a quantity of hand guns in that
apartment.
The source stated that the reported
owner of these firearms is a white male known
as "Ken", who operates a white jeep.
The source
stated that it also observed "Ken" playing with
several hand grenades in the rear of 1014 Quebec
Terrace, Silver Spring, Maryland, in the recent
past.
Det. Seminuk stated that the white jeep,
reported by the source as "Ken's", has 1971 MD.
License HJ-5337 affixed thereto.
Department of
Motor Vehicles for the state of Maryland reveal
that this license plate is registered to Kenyon
Franklin Ballew, 1014 Quebec Terrace, Apartment
#2, Silver Spring, Maryland.
"Your affiant stated that on June 6, 1971,
he received information from Pvt. Royce R. Hibbs,
Montgomery County Police Department, Silver Spring,
Maryland, as follows:
On that date, Det. Sgt. Roger Milstead, MCPD, and
/
.
l~.]'/
- 3 Det. Sgt. Wreford Morris, MCPD, interviewed a
source at Silver Spring Detective Bureau, MCPD,
Silver Spring, Maryland.
The source stated that
it had observed in the recent past, a quantity
of firearms, mainly a carbine, a .44 caliber
pistol, a .45 caliber pistol, and other firearms
in Apartment #2, 1014 Quebec Terrace, Silver Spring,
Maryland.
The source identified the owner of
these firearms as a white male who owns a white
jeep.
"Private Hibbs also advised your affiant that
on an average of once a week, his police department has received reports of firearms being discharged from the vicinity of 1014 Quebec Terrace,
Silver Spring, Maryland.
Upon arrival in the
area, in response to these reports, all firearms
and suspects had disappeared.
"Your affiant stated that on June 5, 1971, he
received information from Private Louis Camillo,
MCPD, Silver Spring, Maryland as follows:
That
on 1/1/71, in the presence of Cpl. James Mahoney,
MCPD, a source, who resides in the vicinity of
1014 Quebec Terrace, Silver Spring, Maryland,
stated that one day the police would receive a
- 4 false criminal report in the vicinity of 1014
Quebec Terrace, Silver Spring, Maryland.
When
the police responded to this call they would be
shot.
Private Camillo stated, to his knowledge,
several other threats of this nature have been
received by this police department.
"Maryland State Police Department records reveal that Kenyon Franklin Ballew was arrested
00
November 20, 1970, for carrying a concealed weapon
(Case No. #24587).
"Your affiant states that a check with the
National Firearms Registration and Transfer
Record, Alcohol, Tobacco, and Firearms Division,
Washington, D. C., by Special Investigator William H. Seals, June 7, 1971, reveals no fireams
are registered to Kenyon Franklin Ballew."
On the bas is of thi s af f idavi t, the U. S. Magis-
trate found sufficient probable cause and issued a
search warrant for Apartment #2, on June 7, 1971.
The warrant directed a search for hand grenades in vio'
1ation of Title 26, United States Code, Section 5861(d)
It must be noted that prior to their appearance before
the U. S. Magistrate, ATF agents spoke with an Assistant United States Attorney.
After hearing the evi-
- 5 -
!
1Lf
dence, the Assistant U. S. Attorney advised that there
was sufficient probable cause to obtain a search warrant.
Apartment 4fo102
Quoted below in part is the affidavit executed by
an ATF agent upon which the U. S. Magistrate issued
the search warrant for Apartment #102:
'~our
affiant states that on June 7, 1971,
he received information from Det. W. F. Seminuk,
Prince George's County Police Department, General
Assignment Section, Hyattsville, Maryland, as
follows:
that a confidential reliable source
(the source's reliability is based on three separate reports of burglaries which were to occur
in the Langley Park area of Prince George's and
Montgomery.Counties, Maryland, which according
to police records in fact took place or were
attempted; these reports were in the recent past)
stated that on May 7, 1971, a Negro male, known
as "Papa" Thomas, attempted to sell the source
a sawed-off shotgun.
The source stated that on
that date, Thomas possessed three sawed-off shotguns, a 12 gauge, a 20 gauge, and a .410 gauge.
The source declined to purchase any of the fire-
- 6 -
arms, but accompanied Thomas to his apartment
located at 1014 Quebec Terrace, Silver Spring,
Maryland.
Thomas stored the above described
firearms in that apartment.
"Your affiant further states that on Jtme 5,
1971, he received information from Pvt. Louis
Camillo, Montgomery County Police Department,
Silver Spring, Maryland, as follows:
"Papa"
Thomas is known to that police department as
James Russell Thomas, a Negro male, who resides
at 1014 Quebec Terrace, Apt. #102, Silver Spring,
Maryland.
According to records of that department,
Thomas has been arrested for armed robbery.
case is still pending.
This
Pvt. Camillo stated that
Thomas is reported to constantly be armed."
Our investigation reveals that there were two
errors in the search warrant for Apartment #102:
(1) The apartment designation was in error;
subsequent information indicates that Mr. Thomas was
a resident of Apartment #103.
This error resulted
from inaccurate police information and records.
- 7 (2) The warrant ordered a search for hand
grenades when it should have stated the search was for
shotguns in violation of Title 26, United States Code,
Section 586l(d).
In view of the error of the apartment designation,
we are prepared to compensate the owners and occupants
of Apartment #102 for physical damage incurred.
Our investigation further discloses that the files
of the ATF Office in Falls Church, Virginia, contained
no files or formal documentation in the Ballew and Thomas
cases prior to the preparation of the affidavits and
search warrants.
Special Investigator Davis did maintain
brief notes in his personal possession.
Although these
latter findings, in our opinion, do not affect the
validity of the search warrants, they have highlighted
certain administrative deficiencies which Treasury is
ordering remedied immediately.
- 8 -
Execution of Search Warrants
Our investigation reveals the following facts.
Subsequent to the
Bethesda,
issuance of the search warrants
~
Maryland, between 3-4 p.m., an ATF briefing
meeting was held in the ATF office in Falls Church,
Virginia.
Thereafter a joint briefing was held at
the Montgomery County Police Department in Silver
Spring, Maryland.
Investigation further reveals that,
prior to the execution of the search warrants, ATF
investigators were advised by the police that the
police had information which indicated that Apartment
2 was booby-trapped and that the occupants would shoot
the police officers.
Upon arriving at 1014 Quebec
Terrace at approximately 8:30 p.m., on June 7, 1971,
ATF investigators and Montgomery County Police Officers
went to Apartment 4fo2 and Apartment. 4fol02 for simultaneous
service of the search warrants.
Apartment 4tl02:
The law enforcement officers assigned to
execute the search warrant at Apartment #102
consisted of four ATF investigators:
Richard
Campbell, who was in charge, Joseph Long, who was
- 9 -
assigned the search warrant for service, Charles A.
Friedrichs and Andrew Ushko, and six police officers:
one uniformed and four plainclothes Montgomery
County Police Department officers and one plainclothes Prince Georges County police officer.
Testimony of the ATF investigators and police
officers assigned to execute the search warrant
disclosed that ATF Investigator Long knocked on
the metal door of Apartment #102 several times and
announced loudly:
"Federal Officer with a search
warrant - open the door" and, receiving no response,
after what was described by ATF investigators and
police officers as a reasonable period of time the
apartment was forcibly entered.
On
entering the
apartment the ATF investigators and police officers
found three small children and no adult present.
The ATF investigators and police officers proceeded
to search the premises.
During the search the
tenant returned to the apartment and identffied
herself and advised that two of the children were hers
and the third was a grandchild.
The search was completed
- 10 -
without finding any violations.
and no arrest was made.
Nothing was setaecl
As previously stated, it
was later determined that James Russell Thomas
res ided in another apartment in the same building.
Apartment 112:
Downstairs at Apartment 112 the group executing
the search warrant consisted of ATF investigators
Marcus J. Davis, who was in overall charge of
executing the search warrants on both apartments
and in direct charge of executing the search
warr~t
on Apartment 112, William H. Seals, assigned to serve
the search warrant, Donald R. Sloan, Montgomery
County Police Officers Royce Hibbs and Louis Ciamillo
in plainclothes and uniformed Montgomery County
Police Officer Harold Kramer.
Interview of ATF
investigators and police officers assigned to execute
the search warrant disclosed that ATF Investigator
Seals knocked on the metal door several times md
announced in a loud and clear voice:
Officers with a search warrant.
"Federal
Open up." After
- 11 what ATF investigators and police officers describe
as a reasonable time, during which Seals and three
other ATF investigators and police officers heard
either scuffling inside the apartment or a voice
saying something they could not understand, Apartment
#2 was forcibly entered.
At the time entrance to the apartment was forced,
uniformed police officer Kramer was stationed at the
front end of the battering ram nearest the door where
he could be seen and one of the first to enter.
When the door gave after six blows from the battering
ram, it only opened 12 to 18 inches due to objects
blocking it from the inside.
Officer Kramer used his
foot to force the door open further and, as he did so,
Seals went past him and entered the apartment first.
Shooting Incident
There were nine shots fired in the Ballew apartment, one by Ballew, two by ATF investigator Seals,
who entered the apartment first with the search warrant, and three each by plainclothes Montgomery
County Police Officers Hibbs and Ciami110.
The
exact order shots were fired, at which point Ballew
fired his weapon, and who fired the shot that hit
Ballew have not been determined.
- 12 Concerning the shooting incident, Seals stated
~t
he entered the living room of Apartment 412 with a search
warrant in his left hand and his sidearm holstered.
In a statement given to the Montgomery County Police
Department on Jt.me 7, 1971, the night of the raid, Seals
stated:
"When the door opened, I entered the apartment
and as I did, I saw a man who was later identified to
me as Kenyon F. Ballew in the hallway leading to the
bedrooms.
At the time I first saw him, he was aiming a
revolver at me."
In a statement signed by Seals on June 9, 1971,
~d
submitted with the ATF report concerning the Ballew case,
Seals stated:
"At that time, I heard a shot.
I looked
toward the rear of the apartment where I saw Kenyon F.
Ballew aiming a revolver at me.
At that time I drew my
side-arm and fired at Ballew."
Seals explained to our investigators that in regard to the difference in his statements, the information in his June 7, 1971, statement is incomplete.
Seals stated that the statement prepared on the night
of June 7, 1971 was prepared in haste and he was still
upset over the shooting and as a result he neglected
- 13 to say that he had heard a shot prior to observing
Kenyon Ballew standing near the bedroom pointing a revolver at him.
Montgomery County plainclothes Police Officers
Hibbs and Ciamillo stated that prior to firing their
weapons at Ballew, they heard gunfire in the apartment and saw Ballew standing in the interior hallway
of his apartment pointing a gun at them.
Although the question of when Ballew fired his
weapon has not been determined, the potential threat
to Seals' life has been substantiated by other officers
at the scene.
When the firing ended, Ballew was lying on the
floor with a head wound.
An ATF investigator removed
a large caliber six-shot cap and ball revolver from
the hand of
Ball~w.
With the exception of one chamber
recently expended, the revolver was fully loaded.
The
investigator itmIlediately arranged for an ambulance to
be called.
The facts obtained in our inquiry and the statements by Seals confirm that the actions were in accord
with Department of the Treasury Administrative Circular
- 14 No. 171, dated May 16, 1968.
This Circular states
the Department of the Treasury's firearms policy as
follows:
"A firearm may be discharged only as a
last resort when in the considered opinion of the
officer there is danger of loss of life or serious
bodily injury to himself or to another person."
Our investigation disclosed that after Mr. and
Mrs. Ballew were removed from the apartment and the
Montgomery County Police Department conducted an investigation of the shooting of Mr. Ballew, a physical
search was made of the apartment by ATF Investigators
assisted by police officers.
Evidence Seized in Apartment #2
Under the authority of the Federal Search Warrant,
ATF Investigators seized the following items which were
listed on the inventory of the search warrant:
One baseball type plas~ic body hand grenade
Two canister hand grenades
One military hand grenade fragmentation type
On July 1, 1971, a supplemental return for the
search warrant listed the following seized items:
s~e
- 15 One Military type rifle grenade
One 1 lb. can of DuPont FFg. black powder,
Lot No. 02-94
One 1 lb. can of DuPont FFg. black powder,
Lot No. 02-94
One can of Hercules 2400 smokeless rifle powder
One can of Hercules 2400 smokeless rifle powder
One can of Hercules "Bullseye" smokeless
pistol powder
One can of Alcan AL-7 smokeless shotgun powder
One 7.1/2" piece of shoulder arm stock
One 13.1/4"piece of rifle barrel
One 3.3/4" piece of double barrel shotgun barrel
Examination by ATF firearms experts disclosed that
of the four grenades seized, three grenades had been
reactivated with homemade fuses.
ATF firearms experts
further advise that two of the three grenades required
only the addition of the seized black or smokeless powder
to be completely functional, while a third required only
a plug made of wood, paper, wax, lead, or similar
substance and powder to be completely functional.
Since all of the necessary materials were readily
at hand, these grenades, according to Government counsel,
constitute "destructive devices" as defined in the Gun
Control Act of 1968.
The arm stock and barrels seized
were sawed-off and therefore according to Government
counsel, could constitute evidence of possible
- 16 manufacturing or possessing unregistered sawed-off
shotguns or rifles in violation of Section 5861(d)
of the Gun Control Act of 1968.
As such, these items
were subject to seizure.
On June 10, 1971, a case report was transmitted
by the Alcohol, Tobacco and Firearms Division to the
U. S. Attorney for the District of Maryland, with a
reconnnendation for prosecution of Kenyon F. Ballew for
violation of Title 26 U.S.C., Section 586l(d) should
his physical condition permit.
In addition to the property seized in violation
of Federal law by ATF Investigators, the Montgomery
County Police have advised that they removed additional
property for safekeeping and as evidence for state
violations.
Including the loaded cap and ball revolver
removed from Mr. Ballew's hand, the police found 26
cap and ball revolvers, shotguns, rifles and flint
lock rifles 16 of which were fully loaded.
Our investigation reveals that tighter control
00
the removal of additional property should have been
exercised by the Federal officers in charge of the search.
Treasury is ordering immediate corrective action to tighten
control in all such situations.
- 17 Issues Regarding Obtaining and Execution of
the Search Warrants for Apartments #2 and #102
Probable Cause
The information that forms the basis for probable
cause in obtaining search warrants is a legal question
which, if disputed, must be adjudicated by the courts.
The U. S. Magistrate found sufficient probable
cause on the basis of the Affidavits for Search
Warrants to issue the search warrants for Apartments
#2 and #102.
Also, prior to appearing before the
U. S. Magistrate, ATF investigator Davis spoke with
an Assistant U.S. Attorney, who, after hearing the
evidence, advised there was sufficient probable cause
to obtain the search warrants.
Timing of Execution of Search Warrants
The search warrants issued for Apartments #2 and
4F102 were "daytime" warrants and specify execution of
the warrants in the day time.
The U. S. Weather Bureau,
Washington, D. C., advises that official sunset on
June 7, 1971, occurred at 8:31 p.m., local time.
- 18 The Department of Justice Manual of Law of
Searches and Seizures, states in part as follows
under subheading "When You can Execute the Warrant":
1.
Normally, you may execute the warrant only
in the daytime
(a)
Rule of thumb - daytime is when there
is enough light to recognize a man's
features at 10 yards.
Our investigation reveals that the warrants were
executed between 8:30 p.m., and 8:35 p.m.
Door of Entry Selected for Execution of the
Search Warrant at Apartment #2.
Investigation disclosed that the door of entry
utilized for execution of the search warrant on the
Ballew apartment is considered to be the front door
of the apartment.
The realtor who manages the apartment building
at 1014 Quebec Terrace advised that the outside entrance
to the Ballew apartment opens on an alley-way behind
the apartment building.
The alley-way has no street
- 19 name and is private property belonging to the
Carroll Apartments, located a short distance away.
The realtor further advised that there is no question
that the steel interior doors of all apartments in
the building, including the ground level apartments
such as the one occupied by the Ballews is the front
door.
A Montgomery County Police Department official
who previously resided in the apartment complex advised
that the metal doors leading from the individual apartments to the hallways in the apartment complex are
considered to be the front doors to the apartments.
In addition, it must be noted that the law
enforcement personnel had received information that
the outside door may have been, rigged with a shotgun
to go off when the door was opened.
Dress and Appearance of ATF Investigators and
Police Officers who Executed the Search Warrant
at Apartment #2 (Ballew's Apartment).
Interviews of the ATF investigators and police
officers who executed the search warrant and subsequent
inquiries determined that ATF investigators Davis,
- 20 -
Seals and Sloan were attired in dress street
clothes with either suit coats or shirts and ties
as their outer garments and their badges attached
to their suit coat or shirt pocket whichever was
their outer garment.
The MOntgomery County Police
Officer in uniform was Harold Kramer.
MOntgomery
County Police Officers Hibbs and Ciamillo were dressed
in casual clothes.
Officer Hibbs was wearing a yellow
shortsleeved sweatshirt and light grey slacks and
Officer Ciamillo was wearing a shortsleeved red and
green horizontally striped polo shirt with dungarees.
Officers Hibbs and Ciami.llo both wore arm bands with
the Montgomery County Police Department shoulder patch
measuring three inches by four and one-half inches.
Both Officers Hibbs and Ciamillo had mustaches, and
sideburns extending below the ears.
None of the ATF
investigators or the Montgomery County Police Officers
who executed the search warrant at Apartment #2 wore
a beard.
- 21 The Knock on the Door - Apartment #2
In a statement given to the MOntgomery County
Police Department on June 7, 1971, Sara1uise Ballew
stated in part that she heard a knock at the door and
went to the door and said, "Who is it?"
She further
stated she heard someone yell something which she could
not understand and she said "Who is it?, . . . and . . .
What is it? again I heard them yell, 'open up'.
Then
they started breaking down the door."
In a statement to our investigators on June 10,
1971, Detective Sergeant Thomas Blount stated that he
was stationed at the outside door to Apartment #2,
1014 Quebec Terrace.
He stated further "I heard knock-
ing & voices coming from the front & then the voice of a
women in the apt.
As the ram hit the door I heard the
woman holler something to the effect 'Who are you, they
are breaking in & how do I know you're police'''.
The Montgomery County Police Department advised
that a neighbor who resides in close proximity to the
Ballew apartment reported when interviewed that he and
- 22 his wife were sitting on the outside stoop of their
apartment at the time of the raid and that they had
definitely heard loud voices shouting, "Officers,
open up".
Condition of Premises of Apartment #2
Photographs taken by news media representatives
following the search which appeared in various newspapers, leave the impression that the state of disarray
was caused by the search.
Our investigation, which
includes interviews with disinterested witnesses,
attest to the fact that the apartment was in a state
of disarray at the time of the officers arrival.
For
example, the ambulance attendant who arrived at the
scene prior to the search stated that as he entered
the living room, he noticed that the place was a shambles
with articles of clothing, books and other items
scattered allover the floor and piled on the furniture.
Alleged Mistreatment of Saraluise Ballew
Saraluise Ballew has been reported as saying that
she was mistreated during the execution of the search
warrant in that she was pushed out into the hallway
- 23 partially undressed; that she was prohibited from
assisting and comforting her husband; that she was
arrested, handcuffed, and taken to the police station
and that on the way to the police station, one of the
officers intimated that there may have been a mistake
but that these things do happen.
Investigation has disclosed no evidence that
Mrs. Ballew was pushed or made to stand in the hall
outside of the aparbment prior to her removal by the
police.
Investigation further reveals that shortly
after officers entered the aparbment Mrs. Ballew was
furnished a wrapping to cover herself.
Investigation
disclosed no information to indicate that Mrs. Ballew
was prevented from giving assistance and comfort to
her husband.
Colonel Kenneth Watkins, Superintendent of Police,
Montgomery County stated when interviewed that
Mrs. Ballew was handcuffed and transported, fully
dressed, to the Montgomery County Police Station in
Silver Spring on the orders of the night duty commander
and was held until later that night as a material
witness.
- 24 -
Investigation disclosed that Mrs. Ballew was
transported from her apartment to the MOntgomery
County Police Station in Silver Spring in a Montgomery
County police cruiser; she sat in the back of the police
cruiser with uniformed officer Anthony Fisher.
Unifo~d
Officer Lawrence Tressler drove the police cruiser and
ATF investigator Alfred Corfield sat in the passenger
seat.
Corfield, Fisher and Tressler have denied the
statement attributed to one of them by Mrs. Ballew -that there had been a mistake but that these things
happen -- and they denied that any similar statement
was made.
Seized Hand Grenades
An examination of the hand grenades seized from
the Ballew apartment by ATF firearms experts disclosed
that three of the hand grenades were functional with
the addition of black or smokeless powder to two of tM
grenades and only a plug made of wood, paper, wax, lead,
or a similar substance, and powder to the third grenade.
Since all of the necessary materials were readily at
hand, these grenades, according to Government Counsel,
constitute "destructive devices" as defined in the
Gun Control Act of 1968.
- 25 Mr. Ballew's attorney has been reported as
challenging the opinion of the ATF firearms experts
as to whether the grenades seized from the Ballew
apartment were functional, stating that he has an
opinion of a qualified fireanns expert that "the
reactivation of the two grenades 'cannot be done'
and that the plastic grenade 'would have no effect'''.
It must be noted that the outside authority has not
examined the evidence in question.
Whether or not the hand grenades seized from
Mr. Ballew's apartment constitute a violation of the
Gun Control Act of 1968 is a legal question for the
courts to decide.
In this connection a recent decision by the
United States Court of Appeals for the Seventh Circuit
dated July 12, 1971, in United States v. Ronald Edward
Shafer, states in part as follows:
All counts except the first two involve
grenades. Defendant argues that since the
grenades in question were disassembled, they
were not "fireanns" as defined in the statute.
- 26 Section 5845(a) (8) of Title 26, defines
a "firearm" as "a destructive device." In
turn, Section 5845(f) defines a "destructive
device" as any "grenade" and "any combination
of parts either designed or intended for use
in converting a device into a destructive
device *** and from which a destructive device
may be readily assembled." We agree with the
government that the grenade shells, fuses, and
powder here may be considered such a firearm,
even though disassembled. See United States v.
Lauchli, 371 F.2d 303, 312-313 (7th eire 1966).
The statute does not specify that the parts
must be assembled before it applies. To place
such a construction upon the language of the
Act would contradict the flexibility expressly
created by Section 5845(f) and would foster easy
evasion to thwart the Congressional intent. We
hold that in context with the phrase "and from
which a destructive device may be readily assembled,"
the phrase "combination of parts" is not limited
to a pre-existing union of parts but includes an
association of the components of a destructive
device.
Notes of Special Investigator Marcus J. Davis
It has been alleged that ATF Special Investigator
Marcus J. Davis refused to turn over his notes relating
to the Ballew and Thomas cases to officers
investigati~
this matter and that disciplinary action would be taken
against him for refusal to turn over his notes.
Initially, Davis was reluctant to furnish his
notes relating to the Ballew and Thomas cases, explaining that interspersed with his notes regarding these
- 27 cases were notes concerning other matters and the
identities of confidential informants.
The confi-
dentiality of informants is respected by all investigators.
On June 26, 1971, Davis did furnish
investigators copies of his notes relating to the Ballew
and Thomas cases, with the identities of confidential
informants deleted.
After obtaining the copy of Davis'
notes, the originals were reviewed by ATF senior officials
against the notes he furnished to our investigators
and they have certified that the copy of his notes
furnished to our investigators is complete with the
exception of the identities of confidential informants.
Accordingly, there is no disciplinary action against
Davis under consideration in connection with his notes.
Allegation That Three Small Children Were Held
at Shotgun Point During Execution of Search
Warrant on Apartment #102.
One report stated that a 10-year old and two
younger children were held at shotgun point.
Our
investigation has disclosed no evidence to support
this charge.
- 28 -
Supervision in Obtaining and Execution of
Search Warrants - Apartments #2 and #102.
As previously indicated in this document, ATF
investigator Davis was in overall charge of obtaining
the search warrants, planning and executing of the
search warrants on both Apartments #2 and #102.
He
was also in direct charge of executing the search
warrant on Apartment #2.
ATF investigator Richard
Campbell was in direct charge of executing the search
warrant on Apartment #102.
ATF investigator William H.
Seals was assigned the search warrant for service at
Apartment #2 and ATF investigator Long was assigned
the search warrant for service at Apartment #102.
There were two ATF Area Supervisors in a government
car parked 40 to 50 feet to the rear of 1014 Quebec
Terrace at the time the search warrants were executed
on Apartments #2 and #102.
Our investigation has revealed questionable
supervisory control and the Department is ordering,.
effective immediately, tighter supervisory control
be maintained.
- 29 Biographical sketches, including ATF experience,
training and law enforcement experience of the ATF investigators participating either directly orciridirectly
in the execution of the search warrants at Apartment #2
and #102, is attached.
The official personnel folder of William H.Sea1s
contains a request for personnel action dated May 18, 1971,
signed by the Chief Special Investigator, recommending
that Seals be promoted from Special Investigator, GS-7
to Grade GS-9, based on his past performance and ability.
As a result of this request Seals was promoted to Grade
GS-9, effective June 13, 1971.
Since the recommendation
for Seals' promotion is dated approximately three weeks
prior to June 7, 1971, his promotion was in no manner
based on his performance in the execution of the search
warrant on Apartment #2, 1014 Quebec Terrace.
Alleged Refusal of ATF Investigators to Testify
Before Montgomery County, Maryland, Grand Jury.
Stories appearing in the news media indicate·
that twelve ATF Investigators, who participated in
the execution of the search warrants, refused to
testify before a Montgomery County Grand Jury and
asked for
~nity
from prosecution regarding their
activities during the raids.
- 30 -
The twelve ATF investigators were authorized by
the Acting Commissioner of Internal Revenue to testify
before the Montgomery County Grand Jury concerning
their activities in connection with this matter.
Our inquiries have disclosed that the twelve
ATF investigators appeared at the County Court House,
Rockville, Maryland, ready and willing to testify
before the Montgomery County Grand Jury.
The ATF
investigators did not refuse to testify.
Nor did they
request immunity from prosecution as a condition to
their testifying.
However, the twelve ATF investigators
were not permitted by the States Attorney to testify
before the Grand Jury unless they signed a "waiver of
immunity."
Government Counsel found the proposed waiver was
contrary to Federal policy.
It. would waive the
protection of 28 U.S.C. 1442, which provides for the
removal to a Federal District Court of any action
commenced in a State Court against any officer of
the United States based on his official duties.
- 31 Accordingly, on the advice of Government counsel, the
ATF investigators declined to sign the immunity waivers.
Consequently, they were not permitted by the States
Attorney to testify before the Grand Jury.
After discussions between the States Attorney and
Government counsel, language for an appropriate waiver
was agreed upon and agents have testified before the
Grand Jury.
ATTACHMENT
Biographical Sketch of Alcohol, Tobacco and Firearms
Division Personnel Involved
WILLIAM H. SEALS, Special Investigator, GS-9 (at door
of entry Apt. #2)
Date and Place of Birth:
February 29, 1942, at Baton Rouge, Louisiana.
Educational Record:
Attended Louisiana State University from 1964-1968,
majored in Accounting.
Military Service:
u.S. Army, March 17, 1961, to January 27, 1964;
Armored Intelligence Specialist, Rank E-5; honorable
discharge.
Record of Employment with the Internal Revenue Service:
8/11/69 - Entered on duty as Special Agent, GS-S,
Intelligence Division, POD: New Orleans,
Louisiana.
3/8/70 - Promoted to Special Agent, GS-7.
6/14/70 - Reassigned to Special Investigator, AT&F,
POD: Forest Heights, Maryland.
7/14/70 - Change of post ~f duty to Falls Church,
Virginia.
6/13/71 - Promoted to Special Investigator, GS-9.
Law Enforcement Experience Prior to Employment with the
Internal Revenue Service:
9/S/66-8/69 - Trooper 1st Class, Louisiana State
Police, Baton Rouge, Louisiana.
1/16/65-2/28/66 - Radio Operator, Louisiana State
Police, Baton Rouge, Louisiana.
Training:
Certificate of Training
Basic Income Tax Law Course
Date awarded - 10/31/69; Duration - 5 weeks.
- 2 Certificate of Training
Special Agent Basic School
Date awarded - 2/20/70; Duration - 7 weeks.
Certificate of Training
Evidence & Procedure Correspondence Course
Date awarded - 4/24/70; Duration - 11 quizzers.
Certificate of Training
ATF Basic Investigator School
Date awarded - 10/22/70; Duration - 4 weeks.
Certificate of Training
ATF Explosives Control Course
Date awarded - 1/29/71; Duration - 40 hours.
Treasury Law Enforcement School
Dates attended - 11/4/69 to 12/19/69.
MARCUS J. DAVIS, Special Investigator, GS-ll (at door of
entry Apt. #2)
Date and Place of Birth:
November 5, 1940, at Washington, D.C.
Educational Record:
Awarded a Bachelor of Science Degree June 4, 1966,
by the University of Maryland, College Park,
Maryland; majored in Psychology.
Military Service:
None.
Record of Employment with the Internal Revenue Serv.ice:
8/8/66 - Entered on duty as a Special Investigator,
GS-5, POD: Dublin, Georgia.
2/12/67- Promoted to Special Investigator, GS-7.
2/25/68- Promoted to Special Investigator, GS-9.
3/9/69 - Promoted to Special Investigator, GS-ll.
10/4/70- Reassigned to Falls Church, Virginia.
- 3 -
Law Enforcement Experience Prior to Employment with the
Internal Revenue Service:
None.
Training:
Treasury Law Enforcement School,
Dates attended - 2/20/67 to 3/24/67.
Certificates of Training
Alcohol, Tobacco, Tax Basic Investigator School,
Date awarded - 6/30/67; Duration - 4 weeks.
Certificate of Training
ATF Explosives Control Course
Date awarded - 1/29/71; Duration - 40 hours.
LEE D. CALLANS, JR., Special Investigator, GS-ll (at
other door Apt. #2)
Date and Place of Birth:
December 27, 1942, at Richmond, Virginia.
Education Record:
Attended Richmond Professional Institute of the
College of William and Mary, Richmond, Virginia,
September 1962 to June 1966; Bachelor of Science
Degree 1966; majored in Accounting.
Military Service:
None.
Record of Employment with the Internal Revenue Service:
6/20/66 - Entered on duty as Special Agent, GS-5,
Intelligence Division, POD: Baileys
Crossroads, Virginia.
1/1/67 - Promoted to Special Agent, GS-7.
8/27/67 - Reassigned to Special Investigator, GS-7,
AT&F, Richmond, Virginia.
- 4 1/14/68
1/26/69
7/13/69
7/12/70
-
Promoted to
Promoted to
Change post
Change post
Special
Special
of duty
of duty
Investigator, GS-9.
Investigator, GS-ll.
to Danville, Virginia.
to Falls Church, Va.
Law Enforcement Experience Prior to Employment with the
Internal Revenue Service:
None.
Training:
Certificate of Training,
"Basic Income Tax Law Course"
Date awarded - 11/10/66; Duration - 5 weeks.
Certificate of Training,
"Special Agent Basic School"
Date awarded - 4/21/67; Duration - 7 weeks.
Certificate of Training,
Alcohol, Tobacco, Tax Basic Investigator School
Date awarded - 5/10/68; Duration - 4 weeks.
Certificate of Training,
Basic Orientation in Automatic Weapons and
Destructive Devices
Date awarded - 12/20/68; Duration - 16 hours.
Certificate of Training,
On-the-Job Instructor/Coach Training
Date awarded - 4/17/69; Duration - 24 hours.
Certificate of Training,
Firearms Enforcement Seminar
Date awarded - 4/30/69; Duration - 24 hours.
Certificate of Training,
ATF Explosives Control School
Date awarded - 1/22/71; Duration - 40 hours.
Treasury Law Enforcement School
Dates attended - 1/9/67 to 2/10/67.
j/\
- 5 -
. r-t::)
DONALD R. SLOAN, Special Investigator, GS-S (at door of
entry Apt. 1;2)
Date and Place of Birth:
March 18, 1940, at Utica, New York.
Educational Record:
Attended Utica College of Syracuse University,
Utica, New York, 1968-1970; received Bachelor
of Arts Degree 1970; majored in Psychology.
Military Service:
U.s. Army, December 27, 1961, to December 28,
1964; Rank: E-5(T), honorable discharge.
Record of Employment with the Internal Revenue Service:
5/16/71 - Entered on duty as a Special Investigator,
GS-5, POD: Falls Church, Virginia.
Law Enforcement Experience Prior to Employment with the
Internal Revenue Service:
1/29/71-5/15/71 - Customs Security Officer, GS-4,
(Sky Marshal) U.S. Customs,
POD: Philadelphia, Pennsylvania.
Training:
Official Personnel Folder contains no record of
training since employment by Internal Revenue
Service. Records of Treasury Law Enforcement
School show SLOAN entered school 6/8/71 and is
scheduled to graduate 7/22/71.
JOSEPH T. LONG, Special Investigator, GS-7 (at door of
entry Apt. 11102)
Date and Place of Birth:
June 21, 1935, at Bluefield, West Virginia.
Educational Record:
- 6 1953-1957 and 1959-1960, Bachelor of Arts
Degree 1960; majored in Sociology.
Military Service:
United States Marine Corps, March 13, 1961 to
September 1, 1966, as Infantry Officer, USMC,
June 24, 1957, to April 1, 1959, enlisted status;
honorable discharge.
Record of Emp loyment with th e Internal Revenue Service:
3/8/71 - Entered on duty as Criminal Investigator,
GS-7, 1811 series. Mid-Atlantic Region
Alcohol, Tobacco and Firearms Division,
Southern Section, Enforcement Branch,
Falls Church, Virginia.
Law Enforcement Experience Prior to Employment with the
Internal Revenue Service:
9/1/66-7/31/67 )- Police Officer, Fairfax County Police
2/15/68-7/13/69) Department, Fairfax, Virginia.
7/14/69-3/7/71 - General Investigator, GS-9, Naval
Inves tiga ti ve Service, Washington, D.C.
Training:
Treasury Law Enforcement School,
Dates attended, 3/16/71 to 4/28/71.
RICHARD (NMN) CAMPBELL, Special Investigator, .GS-l2 (at
door of entry Apt. #102)
Date and Place of Birth:
August 31, 1927, at Enfield, King William County,
Virginia.
Educational Record:
Attended King William High School, King William,
Virginia, completing the 11th grade in June 1947.
- 7 -
Military Service:
u.S. Navy, September 12, 1944, to June 13, 1946;
honorable discharge.
Record of Employment with the Internal Revenue Service:
4/2/62 - Entered on duty as Special Investigator,
GS-7, AT&F, POD: Martinsville, Virginia.
4/14/63- Promoted to Special Investigator, GS-9.
4/26/64- Promoted to Special Investigator, GS-lO.
8/16/64- Promoted to Special Investigator, GS-ll.
7/12/70- Reassignment to POD in Falls Church, Va.
9/20/70- Promoted to Special Investigator, GS-12.
Law Enforcement Experience Prior to Employment with the
Internal Revenue Service:
12/1/49-4/2/62 - Trooper, Virginia State Police,
Richmond, Virginia.
Training:
Certificate of Training,
Demolition & Handling of Explosives
Date awarded - 4/27/62; Duration - 12 hours.
Treasury Law Enforcement School, #586
11/5 - 12/14/62.
Certificate of Training,
Alcohol, Tobacco, Tax Basic Investigator School, #4
Date awarded - 4/26/63; Duration - 4 weeks.
Certificate of Training,
Firearms Program Refresher Training Course
Date awarded - 2/1/67; Duration - 16 hours.
Certificate of Training,
On-the-Job Instructor/Coach Training
Date awarded - 4/17/69; Duration - 24 hours.
Certificate of Training,
Firearms Enforcement Seminar
Date awarded - 5/7/69; Duration - 24 hours.
Certificate of Training,
ATF Explosives Control Course
Date awarded - 1/29/71; Duration - 40 hours.
- 8 CHARLES ALEXANDER FRIEDRICHS, Special Investigator, GS-9
(at door of entry Apt. #102)
Date and Place of Birth:
February 17, 1946, at Washington, D. C.
Educational Record:
Attended La Salle College, Philadelphia, Pennsylvania,
from 1965-1969; Bachelor of Arts Degree 1969; majored
in Psychology.
Military Service:
None.
Record of Employment with the Internal Revenue Service:
12/1/69 - Entered on Duty as Special Investigator,
GS-5, AT&F, POD: Forest Heights,
Maryland.
6/14/70 - Promoted to Special Investigator, GS-7.
7/14/70 - Change of post of duty to Falls Church,
Virginia.
6/27/71 - Promoted to Special Investigator, GS-9.
Law Enforcement Experience Prior to Employment with the
Internal Revenue Service:
None.
Training:
Treasury Law Enforcement School,
Dates attended - 3/10/70 to 4/22/70
Certificate of Training,
ATF Basic Investigator School,
Date awarded - 8/6/70; Duration - 4 weeks
Certificate of Training,
ATF Explosives Course
Date awarded - 1/29/71; Duration - 40 hours.
- 9 ANDREW GEORGE USHKO, Special Investigator, GS-9 (at
door of entry Apt. #102)
Date and Place of Birth:
April 28, 1943, at Flushing, New York.
Educational Record:
Attended Queensborough Community College, Bayside,
New York, 1960-1962; Omaha University, Omaha,
Nebraska, 1965-1967, Bachelor of Science Degree
1967; majored in Law Enforcement and Security.
Military Service:
U.S. Army, October 29, 1963, to September 10, 1965;
Rank SP4 E4(T); honorable discharge.
Record of Employment with Internal Revenue Service:
1/11/70 - Entered on duty as Special Investigator,
GS-7, AT&F, POD: Forest Heights, Maryland.
7/14/70 - Change of post of duty to Falls Church,
Virginia.
1/24/71 - Promoted to Special Investigator, GS-9.
Law Enforcement Experience Prior to Employment with the
Internal Revenue Service:
5/20/68-1/10/70 - Special Agent, Naval Investigative
Service, Washington, D.C.
6/66-6/67 - Police Cadet, Omaha Police Department,
Omaha, Nebraska.
Training:
Certificate of Training,
ATF Basic Investigator School
Date awarded - 10/22/70; Duration - 4 weeks.
- 10 -
Certificate of Training
ATF Explosives Control Course
Date awarded - 1/15/71; Duration - 40 hours.
Treasury Law Enforcement School,
Dates attended - 3/31/70 to 5/13/70.
JIMMIE L. BIVINS, Supervisory Criminal Investigator, GS-12
(stationed in Government vehicle 50-60 feet from outside
entrance to Apartment 2)
Date and Place of Birth:
October 27, 1936, at Norvell, West Virginia.
Educational Record:
Attended Morris Harvey College, Charleston, West
Virginia, from 1960 to 1962; Bachelor of Arts
Degree 1962; majored in Sociology and Social Science.
Military Service:
u.S. Air Force, July 21, 1954, to April 20, 1958;
rank: A/lC, honorable discharge.
Record of Employment with Internal Revenue Service:
11/26/62 - Entered on duty as a Criminal Investigator,
GS-7, POD: Richmond, Virginia.
12/8/63 - Promotion, GS-9.
12/20/64 - Promotion, GS-l1.
11/3/68 - Promotion, GS-12.
5/18/69 - Reassignment - Supervisory Criminal
Investigator, Fores t Heights, Maryland.
6/28/70 - Reassignment - Supervisory Criminal
Investigator, Falls Church, Virginia.
Law Enforcement Experience Prior to Employment with the
Internal Revenue Service:
None.
- 11 Training:
Treasury Law Enforcement School,
Dates attended - 7/15/63 to 8/16/63.
Certificate of Training,
Basic Investigator School
Date awarded - 5/28/64; Duration - 4 weeks.
Certificate of Training
Demolition Training Course
Date awarded - 10/23/64; Duration - 16 hours.
Certificate of Training
Firearms Program Refresher Training Course
Date awarded - 1/27/67; Duration - 16 hours.
Certificate of Training
Basic Orientation In Automatic Weapons and Destructive
Devices
Date awarded - 12/20/68; Duration - 16 hours.
Certificate of Training
Firearms Instructor Training Seminar
Date awarded - 4/2/69; Duration - 24 hours.
Certificate of Training
Basic Supervisor Course
Date awarded - 10/31/69; Duration - 40 hours.
Certificate of Training
Training Program In Oral Interviewing
Date awarded - 10/19/70; Duration - 4 hours.
Certificate of Training
ATF Explosives Control Course
Date awarded - 1/15/71; Duration - 40 hours.
ARTHUR C. MOSS, JR., Supervisory Criminal Investigator,
GS-12 (stationed in Government vehicle 50-60 feet from
outside entrance to Apartment 2)
Date and Place of Birth:
April 8, 1925, at Newport News, Virginia.
- 12 Educational Record:
Attended Newport News High School, Newport News,
Virginia, 1939 to 1943, at which time he graduated.
Military Service:
U.S. Navy, February 5, 1943, to May 1, 1946;
honorable discharge.
Record of Employment with Internal Revenue Service:
8/21/61 - Entered on duty as a Criminal Investigator,
GS-7, POD: Newport News, Virginia.
9/2/62 - Promotion, GS-9.
9/15/63 - Promotion, GS-10.
8/16/64 - Promotion, GS-11.
6/29/69 - Reassignment - Forest Heights, Maryland.
6/29/69 - Promotion, GS-12.
3/10/70 - Reassignment to Falls Church, Virginia,
as Supervisory Criminal Investigator.
Law Enforcement Experience Prior to Employment with the
Internal Revenue Service:
State Trooper, Virginia State Police, October 1952
to May 1961.
Training:
Certificate of Training
Firearms: Raw Materials; Seized Property
Date awarded - 1/11/62; Duration - 3 lessons.
Certificate of Training
Demolition and Handling of Explosives
Date awarded - 2/28/62; Duration - 12 hours.
Treasury Law Enforcement School,
Dates attended - 3/12/62 to 4/20/62.
- 13 Certificate of Training
Basic Instructor Techniques Training
Date awarded - 3/22/63; Duration - 40 hours.
Certificate of Training
Alcohol, Tobacco, Tax Basic Investigators School, #4
Date awarded - 4/26/62; Duration - 4 weeks.
Certificate of Training
Firearms Program Refresher Training Course
Date awarded - 1/24/67; Duration - 16 hours.
Certificate of Training
Firearms Enforcement Seminar
Date awarded - 5/10/69; Duration - 24 hours.
Certificate of Training
Fundamentals of Leadership Correspondence Course
Date awarded - 3/5/70; Duration - not shown.
JAMES K. BRIGHTWELL, Special Investigator, GS-l1 (rear of
1014 Quebec Terrace)
Date and Place of Birth:
August 14, 1937, at Roanoke, Virginia.
Educational Record:
Graduated Roanoke Catholic High School June 1956;
attended Blue Ridge College, Weyers Cave, Virginia,
from June 1968 to December 1968; was enrolled in
Criminal Law and Legal Evidence courses.
Military Service:
None.
Record of Employment with Internal Revenue Service:
12/2/68 - Entered on duty as a Criminal Investigator,
GS-7, POD: Newark, Delaware.
6/1/69 - Reassignment, GS-7, Criminal Investigator,
Forest Heights, Maryland.
- 14 12/14/69 - Promotion,. GS-9, Criminal Investigator ,
2/7/71
Forest He1ghts, Maryland.
- Promotion, GS-Il; POD: Falls Church,
Virginia.
Law Enforcement Experience Prior to Employment with the
Internal Revenue Service:
February 1960 to December 2, 1968, Officer,
Virginia State Police, Charlottesville, Virginia.
Training:
Certificate of Training
Basic Orientation In Automatic Weapons and
Destructive Devices
Date awarded - 12/20/68; Duration - 16 hours.
Certificate of Training
Firearms Enforcement Seminar
Date awarded - 5/3/69; Duration - 24 hours.
Certificate of Training
ATF Basic Investigator School
Date awarded - 8/6/70; Duration - 4 weeks.
Certificate of Training
ATF Explosives Control Course
Date awarded - 1/15/71; Duration - 40 hours.
Certificate of Training
Advance Explosives Training School
Date awarded - 5/28/71; Duration - 2 weeks.
Treasury Law Enforcement School
Dates attended - 2/25/69 to 4/3/69.
- 15 ALFRED W. CORFIELD, Special Investigator, GS-7 (alley
in rear of 1014 Quebec Terrace).
Date and Place of Birth:
October 21, 1944, at Washington, D. C.
Educational Record:
Attended Beckley Junior College, Beckley, West
Virginia, from 1963 to 1964; Richmond Professional
Institute, Richmond, Virginia, 1965, and American
University (night school), Washington, D. Co, from
1966 to 1970; received no degree.
Military Service:
U. S. Marine Corps, June 23, 1962, to December 24,
1962, (active duty); U. S. Marine Corps Reserve
tmti1 1970 •
.Record of Employment with Internal Revenue Service:
6/22/70 - Entered on duty as a Special Investigator,
GS-S, AT&F, POD: Forest Heights, Maryland.
1/24/71 - Promoted to Special Investigator, GS-7,
POD: Falls Church, Virginia.
Law Enforcement Experience Prior to Employment with
the Internal Revenue Service:
1/12/70 - 6/15/70 - Police officer, Metropolitan
Police Department, Washington, D.C.
2/14/63 - 1/6/64; 1/1/64 - 8/25/64; 7/6/65 - 1/11/70 Police cadet and police officer,
Alexandria Police Department,
Alexandria, Virginia.
Training:
Graduate - Treasury Law Enforcement School
Dates of attendance - 9/22/70 to 11/4/70
Certificate of Training
"ATF Basic Investigator School, #36"
Date awarded - 2/4/71; Duration - 4 weeks.
- 16 RONALD E. HOCH S ecial
at front left corner of
(stationed
•
Date arid Place of Birth:
September 16, 1943, at Pennington, New Jersey.
Educational Record:
Attended Mercer County Community College, Trentoo
'
New Jersey, 1961 to 1963, and Un~versity of Maryland,
College Park, Maryland, 1963 to 1965, and 1968;
maj ored in Phys ical Education; awarded a Bachelor
of Science Degree 1970.
.
Military Service:
u. S. Army, February 15, 1966, to January 26, 1968,
rank:
SP5 (T); honorable discharge.
Record of Employment with Internal Revenue Service:
6/29/70 - Entered on duty as a Special Investigator,
GS-5, AT&F, POD: Falls Church, Virginia.
1/24/71 - Promoted to Special Investigator, GS-7.
Law Enforcement Experience Prior to Employment with the
Internal Revenue Service:
None.
Training:
Treasury Law Enforcement School,
Dates attended - 9/22/70 to 11/4/70
Certificate of Training
ATF Basic Investigator School,
Date awarded - 2/4/71; Duration - 4 weeks.
- 17 -'I
~
-1
!
LOUIS E. PACE, Special Investigator, GS-ll (front of
apartment building).
Date and Place of Birth:
September 1, 1931, at Richmond, Virginia.
Educational Record:
Entered Thomas Jefferson High School, Richmond,
Virginia, September 1946 - withdrew October 1947.
Re-entered February 1948 and left in June 1948 to
enter military service. Passed the General
Educational Development Test and awarded certificate
December 10, 1951.
Military Service:
U. S. Air Force, September 3, 1948, to August 1,
1952; rank: A/lC, honorable discharge.
Record of Employment with Internal Revenue Service:
3/14/60 - Entered on duty as a Criminal Investigator,
GS-7, POD: Richmond, Virginia.
4/2/61 - Promotion, GS-9.
4/15/62 - Promotion, GS-10.
7/8/62 - Change in official duty station, POD:
Petersburg, West Virginia.
8/16/64 - Promotion, GS-11.
7/31/66 - Change in duty station, POD: Richmond,
Virginia.
7/12/70 - Reassignment, POD: Falls Church, Virginia.
Law Enforcement Experience Prior to Employment with
the Internal Revenue Service:
State Trooper, Virginia State Police, October 1,
1952, to March 12, 1960.
- 18 Training:
Treasury Law Enforcement School
Dates attended - 11/7/60 to 12/16/60
Certificate of Training
Firearms, Raw Materials, Seized Property
Date awarded - 2/24/61; Duration - 3 lessons
Certificate of Training
Part I - Criminal Investigation Procedures Course
Date awarded - 3/7/61; Duration - 10 lessons
Certificate of Training
Part II - Criminal Investigation Procedures Course
3/26/62; Duration - 10 lessons
Certificate of Training
Basic Instructor Techniques Training School
Date awarded - 7/20/62; Duration - 40 hours
Certificate of Training
First Aid Instructor Training
Date awarded - 3/29/63; Duration - 16 hours
Certificate of Training
Alcohol, Tobacco, Tax Basic Investigator School
Date awarded - 6/28/63; Duration - 4 weeks
Certificate of Training
Firearms Program Refresher Training Course
Date awarded - 1/27/67; Durat'ion - 16 hours
Certificate of Training
Basic Orientation in Automatic Weapons and
Destructive Devices
Date awarded - 12/20/68; Duration - 16 hours
Certificate of Training
On-the-job Instructor/Coach Training
Date awarded - 4/17/69; Duration - 24 hours
- 19 Certificate of Training
Firearms Enforcement Seminar
Date awarded - 5/5/69; Duration - 24 hours
Certificate of Training
ATF Explosives Control Course
Date awarded - 1/29/71; Duration - 40 hours
ortment of the TREASURY
tlllPHONE W04·2041
FINANCIAL EDITOR
3E 6: 30
P.M.,
llgust 2, 1971
RESULTS OF TREASURY'S WEEKLY
BILL OFFERING
ITeasury Department announced that the tenders for two series of Treasury
= series to be an additional issue of the bills dated
May 6, 1971
and
series to be dated
August 5, 1971
,which were offered on July 27, 1971,
=d at the Federal Reserve Banks today. Tenders were invited for $2,300,000,000,
)outs, of 91-day bills and for $1,600,000,000, or thereabouts, of
182-day
Ie details of the two series are as follows:
!\CCEPTED
VE BIDS:
tge
91-day Treasury bills
maturing November 4~ 1971
Approx. Equiv.
Price
Annual Rate
182 -day Treasury bills
maturing February 3, 1972
Approx. Equiv.
Price
Annual Rate
98.678
98.661
98.667
97.170
97.150
97.160
5.230%
5.297%
5.273%
Y
5.598%
5.637%
5.618%
y'
)f the amount of
91-day bills bid for at the low price was accepted
If the amount of 182-day bills bid for at the low price was accepted
)ERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
:isco
Applied For
$ 30,745,000
2,976,015,000
35,655,000
48,570,000
11,850,000
37,330,000
246,425,000
50,195,000
39,630 ,000
34,135,000
40,190,000
251,145,000
Accepted
$ 17,470,000
1,914,480,000
20,455,000
39,600,000
11,650,000
22,530,000
111,030 ,000
36,345,000
19,030,000
31,885,000
18,190,000
57,470,000
'ALS
$3,801,885,000
$2,300,135,000
phia
:i
-is
.ty
Applied For
29,895,000
2,420,740,000
22,200,000
50,880,000
21,830,000
30,175,000
244,815,000
34,035,000
31,135,000
20,490,000
38,735,000
453,680,000
$
~ $3,398,610,000
Accepted
12,645,000
1,380,680,000
7,200,000
13,330,000
11,330,000
9,685,000
45,740,000
17,265,000
8,185,000
15,140,000
12,085,000
67,655,000
$
$1,600,940,000
EI
$274,990,000 noncompetitive tenders accepted at the average price of 98.667
$132,105,000 noncompetitive tenders accepted at the average price of 97.160
tes are on a bank discount ba~is. 1he equivalent coupon issue yields are
r the 91-day bills, and 5. 88cS for the 182 -day bills.
artment 01 the TREASURY
tElEPHONE W04·2041
FOR IMMEDIATE RELEASE
August 3, 1971
TREASURY ANNOUNCES DECISIONS ON
ANTIDUMPING INVESTIGATIONS OF
CLEAR SHEET GLASS FROM
FRANCE, ITALY, AND WEST GERMANY
Assistant Secretary of the Treasury Eugene T. Rossides
announced today a series of decisions involving clear sheet
glass from France, Italy and West Germany under the Antidumping Act, 1921, as amended. A notice of withholding of
appraisement for these cases was issued on May 4, 1971,
which stated that there was reasonable cause to believe
or suspect that there were sales at less than fair value.
Subsequent investigation, including a conference at the
Treasury where interested parties were given an opportunity
to present views, led the Treasury to its final decision.
All determinations will be published in the Federal
Register of August 4, 1971.
In the French case, the Department found sales at less
than fair value on heavy sh_eet glass, and issued a discontinuance of investigation of window glass on the strength of
letters of assurance by the exporter that it would make no
future less than fair value sales. A discontinuance was
found appropriate since the dumping margins on window
glass were minimal in relation to the total value of sales.
During the period September 1969 through April 1970, heavy
sheet glass imports from France were valued at slightly more
than $525,000 while window glass imports amounted to just
under $150,000.
In the Italian case, the Treasury issued a determination
of sales at less than fair value on both heavy and window
glass. During the period January 1, 1970, through April 30,
1971, imports of heavy sheet glass from Italy totaled
slightly more than $800,000, while window glass imports were
in excess of $3,200,000.
In the West German case, the Treasury found sales at
less than fair value on heavy sheet glass while determining
that there were no sales at less than fair value on window
glass from that country. During the period September 1969
through May 1971, heavy sheet glass impor~s from West. Germany
totaled slightly more than $3,400,000. W1ndow glass 1mports
d~ing the same period totaled slightly more than $2,000,000.
IMMEDIATE RELEASE
August 3, 1971
TREASURY WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders
two series of Treasury bills to the aggregate amount of
900,000,000, or thereabouts, for cash and in exchange for Treasury
Is maturing
August 12, 1971,
in the amount of $3,802,040,000,
follows:
91-day bills (to maturity date) to be issued August 12, 1971,
the amount of $2,300,000,000,
or thereabouts, representing an
itional amount of bills dated May 13, 1971,
and to mature
~mber 11, 1971
(CUSIP No.912793 LR5), originally issued in
amount of $1,400,040,000, the additional and" original 'bills to be
ely interchangeable.
182_ day bills, for $1,600,000,000, or thereabouts, to be dated
1st 12, 1971,
and to mature
February 10, 1972
;IP No. 912793 MM5) .
The bills of both series will be issued on a discount basis under
,etitive and noncompetive bidding as hereinafter provided, and at
lrity their face amount will be payable without interest. They will
,ssued in bearer form only, and in denominations of $10,000,
000, $50,000, $100,000, $500,000 and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up
:he closing hour, one-thirty p.m., Eastern Daylight Saving
!,
Monday, August 9, 1971.
Tenders will not be received
:he Treasury Department, Washington. Each tender must be for a
.mum'of $10,000. Tenders over $10,000 must be in multiples of
100. In the case of competitive tenders the price offered must be
'essed on the basis of 100, with not more than three decimals,
,99.925. Fractions may not be used. It is urged that tenders be
on the printed forms and forwarded in the special envelopes which
be supplied by Federal Reserve Banks or Branches on application
efor.
Banking institutions generally may submit tenders for account of
omers provided the names of the customers are set forth in such
ers. Others than banking institutions will not be permitted to
- 2 -
submit tenders except for their Qwn account. Tenders will be reCeived
without deposit from incorporated banks and trust companies and fr~
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 accompanle
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. Only those submitting competitive tenders will be
advised of the acceptance or rejection thereof. The Secretary of the
Treasury expressly reserves the right to accept or reiect 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 decimal!
of accepted competitive bids for the respective issues. Settlement fOI
accepted tenders in accordance with the bids must be made or completed
at the Federal Reserve Bank on
August 12, 1971,
in cash or other immediately available funds or in a like face amount
Treasury bills maturing
August 12, 1971.
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.
Under Sections 454 (b) and 1221 (5) of the Internal RevenueC~
of 1954 the amount of discount at which bills issued hereunder are sol
is considered to accrue when the bills are. sold, redeemed or otherwis~
disposed of, and the bills are excluded from consideration as capital
assets. Accordingly, the owner of Treasury bills (other than life
insurance companies) issued hereunder must include in his income tax
return, as ordinary gain or loss, the difference between the prke~
for the bills, whether on original issue or on subsequent purchase, a
the amount actually received either upon sale or redemption at rnaturl
during the taxable year for which the return is made.
Treasury Department Circular No. 418 (current revision) and thil
notice, presc ribe the te rrns of the Treasury bills and govern the ,
conditions of their issue. Cqpies of the circular may be obtained fl
any Federal Reserve Bank or Branch.
000
YMEDIATE RELEASE
August 3, 1971
TREASURY TO REFUND MATURING EURODOLLA,R CERTIFICATES
The Treasury announced today that it is offering $500 million, or
!about s, of certificates of indebtedness Eurodollar series to foreign
:hes of U. S. banks. These certificates will refund $500 million of 6-5/8%
,ury Certificates of Indebtedness, Eurodollar Series C-1971, maturing
,t 10, 1971.
The certificates being offered will mature October 26, 1971.
will be announced on Thursday, August 5.
The interest
Subscriptions will be received at the Treasury until 5:30 p.m. (E.D.S.T.),
.y, August 6. Payment will be due on Tuesday, August 10. Payment may not
.de by credit to Treasury tax and loan accounts.
Subscriptions are invited from foreign branches of U. S. banks up to any
.t not to exceed the reserve-free base of the subscriber's head office
million, whichever is greater.
Subscriptions will be allotted in full up to the principal amount of the
ing issue held by the subscriber or $1 million, whichever is greater.
ation of remaining amounts will be on a pro rata basis according to the
ning amount of each subscription. The Treasury reserves the right to allot
al amount of certificates in excess of $500 million.
rhe certificates will be transferrable only with the permission of the
llry.
Jrtmento! the TREASUR(
I. D.C. 20220
2
TELEPHONE W04-2041
FOR IMMEDIATE RELEASE
August 3, 1971
MEMO TO THE PRESS
Secretary of the Treasury John B. Connally today
issued the following statement:
I am distressed to hear reports of another increase
in the bank prime lending rate.
Despite reported sluggish
loan demand, the rate was increased only last month.
Further unjustified increases in interest rates,
already high by historical standards, might well jeopardize
the strength of the business recovery.
that the reports are false.
000
C-I07
I hope very much
L·~·
artmentof the TREASURY
TitfPMllftEW04-2041
FOR IMMEDIATE RELEASE
~EMO
August 4, 1971
TO THE PRESS
Treasury Secretary Connally today issued the following
3tatement:
The plans of Senators to introduce legislation for some
:orm of wage and price review board and which would broaden
:he 'authority of ihe White House Productivity Council should
)rovide the forum for a useful discussion of important
~conomic issues.
A great many proposals of this kind have been made recently
Iy economists, businessmen and public officials in spe~ches,
:tatements and papers.
As a result, because the proposals have
lot been specific, confusion exists in the puplicmind as to the
leaning of the suggestions and as to the meaning ,of such terms
.s II incomes policy. f·
While the Administration, which has studied the subject of
age and price controls thoroughly, has found their imposition
nwarranted under current circumstances, a full-fledge9 debate
n the Congress may well serve a useful purpose and focus broari
ttention upon the economic realities facing the nation.
0
Such a review, if it is to help clear up the confusion and
bjectively analyze important questions, must be extensive,
horough and comprehensive.
It should explore the historical
~cord during the periods when we have had ware and price
~ograms, and it should probe carefully the extensive experience
f other nations.
Among the questions which need
1.
08
explorin~
are:
How effective have various approaches been?
'
2
2. What type of organization would be set up to
administer the program? Would there be only one national
Board, or many regional and local ones? How would they be
staffed, by volunteers, government employees?
3.
How would legislation be implemented? How would
it be enforced? What would be the penalties for violation?
Would there be roll back authority? What if workers strike
a-gainst a decision? What type of appeal from decisions would
there be?
4.
What will be the criteria for appropriate wage and
price action? How would it affect escalator clauses in
existing wage pacts? Will industries be allowed price increases
where prices and profits are low to start? Would low wage
workers, say those at the poverty level, be denied wage increases!
5.
How comprehensive should the scope of these measures
be? Would interest rates, both rates paid and received,
be controlled? If interest rates were controlled, would
there also have to be controls on allocation of credit
qetermining who was or wasn't eligible? Would legal and
medical fees be included? Taxes? Prices of homes, businesses,
stocks, bonds, tuition, rents, trade-in's?
6.
What would be the effects upon our balance of trade?
Would any form of controls build in a significant disadvantage for our goods relative to those imported into
this country and to the competitive position of our
prqducts abroad?
7.
What happens when such legislation is no longer
needed? How will we tell when such legislation is no
longer needed?
If these questions are objectively and exhaustively pursued,
analyzed and discussed, the result undoubtedly will be a clearel
definition of terms and conditions presently under discussion and bring into clearer focus the actual economic
situation of the nation.
000
;L;:2~
!portmentol the TREASURY
TEtJPHONE W04-~041
August 4, 1971
OR IMMEDIATE RELEASE
WILLIAM H. LOEB, IRS CAREER OFFICIAL,
NAMED TO DEPUTY COMMISSIONER'S POST
Secretary of the Treasury John B. Connally announced
oday the appointment of William H. Loeb, a career official,
s Deputy Commissioner of the Internal Revenue Service.
r. Loeb will assume his new duties August 5.
Mr. Loeb 1S now Assistant Regional Commissioner 1n
harge of tax collections in the IRS Southeast Region, headlartered in Atlanta.
1
the IRS
In his new post -- the second highest
he will be Deputy to Johnnie M. Walters, whose
)mination as IRS Commissioner was confirmed by the Senate
Secretary Connally said that the appointment of Mr. Loeb
Deputy Commissioner "recognizes his long and distinguished
~rvice
to the IRS and our country, and at the same time
-fleets the Treasury Department's policy of advancing
tstanding career officials."
Mr. Loeb, 58, joined the IRS as an attorney 1n its
ief Counsel's office in 1942.
Except for Army serVlce as
enlisted man 1n 1942-45, he has been with the agency
~tinuously
since that time.
He was an attorney in the
ief Counsel's office and subsequently Assistant Head of
ER )
the Civil Division, 1946-52; Atlanta Regional Counsel,
1952-58; Atlanta Regional Commissioner, 1958-59, and
Assistant Commissioner (Operations and Compliance), 1959-62.
In November 1962 he was named to his present po-st of AssiStant
Regional Commissioner (Collection) for the Soutl)east Region,
which administers the IRS programs in Alabama, Florida,
Georgia, Mississippi, North Carolia, South Caroljna, and
Tennessee.
Mr. Loeb was glven the Treasury Department's
Except~n~
Service Award In 1962.
The new IRS Deputs Conunissioner is a native o:f
Montgomery, Alabama, and was Assistant Attorney General of
that state from 1935 to 1942
He was graduated from the
University of Alabama in 1933 with an A.B. degree,and
received his LL.B. from the university in 1935.
He is a
member of the bar of the State of Alabama, the Uni ted
St~te.
Supreme Court, and the United States Tax Court.
Mr. Loeb is married to the former Merle Ellenbo.gen
of Little Rock, Arkansas.
Hr'. and Mrs. Loeb. arej
tl:l~
parents of two daughters, Julianne, 16, and Tina,:l5..
h
; J
.>~
~"~
~
fj"
,:",';'::."
J
";
epartment 01 the TREASURY
August 5, 1971
IMMEDIATE RELEASE
TREASURY SECRETARY CONNALLY NAMES DONALD C. LUTKEN, SR.,
AS NEW SAVINGS BONDS CHAIRMAN FOR THE STATE OF MISSISSIPPI
Donald C. Lutken, Sr., President and Chief Executive Officer,
;issippi Power & Light Co., Jackson, has been appointed volunteer
:e Chairman for the Savings Bonds Program in Mississippi, Secretary
:he Treasury John B Connally announced today. The appointment
~ffective immediately.
He succeeds Rex Brown, Chairman Emeritus, Mississippi Power
.ght Co., who has served since July 1943. Brown has been named
.rm3.n Emeritus of the Bond Program.
Lutken will head a committee of state, business, financial,
Ir, media, and government leaders which assists in promoting the
s of Savings Bonds. He will work closely with James R. Wynn,
Treasury's new State Savings Bonds Director.
Lutken began his career with Mississippi Power & Light Co. as
ngineer in 1949, progressing through positions of Plant Superndent, Superintendent of Production, Chief Engineer, Vice Presi-Chief Engineer, Vice President-Operations, Executive Vice
ident and Director. He was named President in 1970, and became
ident and Chief Executive Officer in 1971.
He is a member of many business, civic, professional, and social
lizations.
He is a 1946 graduate of the U. S. Naval Academy.
Lutken is married to the former Melissa Turner; they have five
iren -- Melissa ( Mrs. Hugo Newcomb, Jr. ), Isabel, Donald, Jr.,
~ and Poteat.
000
!partment 01 the TRfASURY
roN, D.C. 20220
TELEPHONE W04-2041
August 5, 1971
IMMEDIATE RELEASE
UNITED STATES AND INDONESIA TO DISCUSS
INCOME TAX TREATY
The Treasury Department announced today that
resentatives of the United States and Indonesia will meet
Washington in September to begin discussions of a proposed
atera1 income tax treaty. The discussions are tentatively
eduled to start September 20.
At present there is no income tax treaty between the
countries.
The proposed treaty is intended to prevent double taxation
to facilitate trade and investment between the two
ntries. It will be concerned with the tax treatment of
ome of individuals and companies from business, investment,
personal services, and with procedures for administering
provisions of the treaty.
The "model" income tax treaty developed by the
anization for Economic Cooperation and Development will
taken into account along with recent U.S. treaties with
er countries, such as the treaty with France, which
ered into force in August 1968, the treaties with Trinidad
Tobago and Finland, which entered into force in January
1 and February 1971, respectively, and the treaty with
gium which was approved by the U.S. Senate for ratification
December 1970, and is now before the Belgian Senate.
The Treasurv said that persons wishing to comment
~erning the proposed treaty are asked to send their
nents in writing by August 27, 1971, to Edwin S. Cohen,
Lstant Secretary of the Treasury, U.S. Treasury Department,
lington, D.C. 20220.
000
J.J<
tmentof theTREASuRY
TELEPHONE W04·2041
&.20220
August 5, 1971
FOR D1MEDIATE RELEASE
INTEREST RATE ON REFUNDING OF EURODOLLAR CERTIFICATES
The Treasury announced tod~ that the interest rate for the $0.5
billion of Eurodollar Series Certificates of Indebtedness offered on
A.ugust 3 to refund an equal amount of certificates maturing on
A.ugust 10 will be 7-3/8 percent per annum.
Interest will be computed for the actual number of days to
maturity based on a
at maturity.
365-d~
year.
It will be paid with the principal
2.~ ~
rrtmentof the
D.C. 20220
TREASURY
TElEPHO.NE W04-2041
00 ~I~
For Release Upon Delivery
STATEMENT BY THE HONORABLE EUGENE To ROSSIDES
ASSISTANT SECRETARY OF THE TREASURY FOR
ENFORCEMENT, TARIFF AND TRADE AFFAIRS, AND OPERATIONS
before the
HOUSE FOREIGN OPERATIONS AND
GOVERNMENT INFORMATION SUBCOMMITTEE
OF THE COMMITTEE ON GOVERNMENT OPERATIONS
August 5, 1971
2:00 p.m.
Mro Chairman and Members of the Committee:
I am pleased to appear here today to discuss the activities
of the Treasury Department, as a part of the overall effort of
this Administration, to deal with illicit financial transactions
in Vietnam to which the combination of war and inflation give
rise. We believe that a good deal of progress has been achieved
by U.S. Government action and the actions of the Government
of Vietnam.
Activities of Agencies of the UoS. Government
Significant strides have been made in the last year and
one-half by State, Treasury, Defense and AID to deal with black
marketing--the illegal importation or exchange of commodities
and the illegal exchange of piasters for dollar instruments at
a rate in excess of that established by law--and currency
manipulation
The Interdepartmental Action Task Group, Vietnam
(IATG) ,composed of the State, Treasury, and Defense Departments
and the Agency for International Development, is coordinating
action at the Washington level o The IATG was established in
December, 1969, for the purpose of improving government
agencies' existing procedures and practices in the administration
0
of programs in Vietnam so as to eliminate opportunities for
black marketing and currency manipulation and for the purpose
of exploring the broader aspects of economic conditions which
spawn black marketing and currency manipulation. I have,
for the record, a copy of the Memorandum of Understanding,
which created the LATG.
The American Mission in Saigon, under the leadership of
the State Department and Ambassadors Bunker and Berger, has
spearheaded adoption and implementation of a number of effectiw
policies and new or revised regulations and procedures
applicable in Vietnam.
Importance of the Economic Situation and Related
Financial Factors
Basic to the success of efforts to control illicit
activities is the degree of instability which affects a nation
economy. Economic instability in Vietnam over the years has
been affected by the fact that Vietnam is a small country
engaged in a large war, with its own territory the site of
military combat. Also, large numbers of troops have been locat
in the country, with heavy war-related expenditures sharp~y
affecting the economic and financial situation. History SOOfi
that inflation and economic disruption and black marketi~
have never been easily dealt with in a country engaged in a
maj or war taking place in its own territory. Examples of this
are Europe in World War II, Korea during the Korean War, and
the United States during the Civil War.
The economic environment in Vietnam impacts fundamentally
upon incentives and opportunities for corrupt activity by
Americans and other foreign nationals who serve there, as it
does upon corrupt activities of the Vietnamese themselves.
There appears to have been a considerable improvement in
the economic situation in Vietnam since March, 1970. Retail
1
/
.~
.7
/
3
~ices
and the black market price of the piaster have been
!latively stable since July, 1970, reflecting resurgent
ltional confidence as well as the impact of certain economic
!asures undertaken by the Government of Vietnam in September
Ld October, 1970. Among the economic measures was a change
l the exchange rate for piasters purchased by foreigners for
leir personal accommodation, an action which substantially
!duced incentives to engage in currency black marketing.
~
Economic Policy
The short-term objective of GVN economic policy, as
!flected in the measures undertaken in September/October,
170, and in March, 1971, has been to achieve and maintain
~lative price stability.
The measures undertaken by the GVN in September and
tober, 1970, removed nearly 20 billion piasters from
neral circulation by requiring large advance deposits on
censed imports and by increasing savings deposits through
gher interest rates. The objective of the March, 1971,
asures is to remove another 20 billion piasters from
rculation by permitting anonymous time deposits and by sales
GVN Treasury bills to commercial banks. Over a period of
proximately one year, therefore, the GVN expects to have
eutra1ized" a sum of piasters approximately equal to its
tire budget deficit in 1970, as well as to have increased
N piaster revenues somewhat. The possibility of a resurgence
inflationary pressures always exists, however, and further
onomic reforms should be taken in due course if reasonable
ability is to be maintained.
On October 5, 1970, the rate of exchange for piasters
r personal accommodation of UoSo personnel and other
reigners in the RVN was changed from 118 to 275 to the
lIar. By July, 1971, piaster sales to individuals through
official U. S currency exchange facilities had risen to over
$262.32 per capita per month for civilians and $26.96 per
capita for all U.S. military personnel compared to sales of
$45.98 and $3.95 to those categories of personnel, respectively,
in September. Although the black market rate remained at
about 400 piasters per dollar for UoS. currency or dollar
instruments (the rate for a ten dollar bill as of July 19,
1971, was 371 to 1), the MPC piaster rate in the black market
has been near the 275 to 1 rate or lower. The individual,
therefore, has no incentive to negotiate his MPC for piasters
other than through legal channels.
0
GVN foreign exchange receipts from accommodation sales
have increased substantially despite the decline in U.S.
personnel because the much higher exchange rate provided an
incentive to buy through legal channels. Accommodation
purchases of piasters totaled $3 million in September, 1970,
compared to $11.6 million in May, 19710
The reduction in the black market rate for a $10 bill
has fallen from 426 to 1 in September, 1970, to 371 as of
July 19, 1971, and this means the premium over the official
rate has dropped from 261 percent to 3S percent 0 The premium
on conversion of MPC has turned into a discount with a $10
MPC at a 267 to 1 rate on July 19, 1971.
U.S. Financed Procurement
The size of U. S. financed procurements in support of the
U.S. effort in Vietnam has afforded opportunities for black
marketing, illegal currency manipulation or other corrupt or
undesirable practices, and has demanded particular attention
to prevent, insofar as possible, adverse effects on the GVN
economy.
The total dollar volume of U.S.procurements in the Pacific
command area during Fiscal Year 1970 approximated one billion
5
)llars. The magnitude of contract activities by the prin.pal U.S. contractors furnishing logistical support in
lat area continues to be substantial.
To achieve a balance between the delegated procurement
~sponsibilities of the component military service and the
)ordinating role of the unified commands, the Commander-inlief, Pacific (CINCPAC) has established a Joint Procurement
)ordinating Board (JPCB). Such boards are established both
: the CINCPAC level and in-country at the level of the
tified commands.
~fense
Procurement Circular (DPC) #81
DPC #81 was promulgated on August 21, 1970. It not only
!stated the contract clauses with respect to the method of
lyment to third country nationals, but also tightened the
!quirement that all piaster exchanges by contractors be
:complished at military banking facilities or military
.sbursing offices. In addition, it required that satisfactory
'oof of such exchange be furnished in connection with any
.aster payments under the contracts. The Circular also added
le requirement that all fixed price contracts include a
'ovision that DoSo dollar payments must be made to a bank in
le contractor's country of origin; that the contractor provide
l estimate of his piaster needs and thereafter provide proof
, purchase of that amount from authorized sources; and that
s. nationals and Third-Country Nationals (TCN's) employed
, contractors will be permitted to draw only a limited amount
: Military Payment Certificates (MPC) per month and that they
,11 be provided by the contractor with piasters for their
nimum normal piaster living expenses each pay dayo New
ntracts, with very few exceptions, now contain the required
auses and acceptance of the clauses in the remaining contracts
e expected in due course o
The administration of these clauses is a most critical
area of the procurement environmento MACV, working through
the members of the JPCB Vietnam, is making a concerted
effort to obtain full compliance. All major contractors
have indicated that they have taken steps to enforce the Coat
of living clauses requiring payments to employees in piasters.
Backed up by mandatory Defense Contract Audit Agency (~)
audits on cost contracts, satisfactory compliance should be
assured.
Policing and enforcement of such clauses create a new
obligation, and establish a record and reporting requirement
not normally associated with fixerl-price contracting. Nevertheless, the addition of those requirements as clauses in
fixed-price contracts has proved feasible. Because even
fixed-price contractors are required to maintain books and
records for audit purposes, compliance with OPC f/8l clauses
in fixed-price contracts is now the subject of spot checks by
the OCAA. An audit trail is provided and the follow-up of .
information obtained from the DCAA audits provides a possible
means of enforcement, the threat of which, at least, is
frequently an effective sanction
0
Third Country Nationals (TCNs)
Problems stemming from use of third country national
(TCN) employees have been the subject of continuing attention.
A major concern related to the possible impact on the currency
black market by reason of the method of payment of contractoremployed TCNs. It was believed, in view of the very high
black market exchange rate, that TCN access to U.So dollar
instruments was a real or potential source of entry into the
black market. It has, therefore, been made mandatory in
Vietnam that TCNs be paid in pias ters for their piaster needs
(necessary expenditures on the Vietnamese economy) and that
the remainder of their wages be paid in U S dollars remitted
directly to a bank in their country of origino
0
0
7
'easury's Role and Activities
The Treasury has an important role to play in the control
illicit financial transactions in Vietnam and has (1) served
l an advisory capacity regarding the establishment of
propriate regulations and regarding local enforcement, and
,) offered its full facilities in actual enforcement, primarily
lrough the Internal Revenue Service in terms of evasion of
S. taxes, and through the Bureau of Customs in terms of
nitoring the AID-funded Commercial Import Program (CIP) and
visory assistance to the Vietnamese Customs Service o
Let me note that law enforcement is complicated by the
,ct that the U S. Goverrunent must provide efficient and
fective facilities to assure that our citizens, and especially
,r combat troops, are able freely to discharge legitimate
nancial and other transactions. To help meet this objective,
easury assisted in the establishment of UoS. commercial
nking branches as well as military banking facilities in
etnam and has maintained an active interest in their
eration. Treasury has also assigned a Financial Attache to
e Embassy
0
0
In 1965, Treasury participated in the establishment in
etnam of institutional procedures and facilities to tighten
ntrol over illegal activities involving U.S. money, supplies
d personnelo These include the use of Military Payments
rtificates (MPC) as the circulating medium in U.s. official
:ilities.
u.s.
Banking Facilities in Vietnam
The Treasury Department and the appropriate Armed Servicel
supervise the military banking facilities operated in Vietn.
and the Treasury maintains control over the activities of the
United States Disbursing Officer at the American Embassy in Sait
The Bank of America, Chase Manhattan Bank, and the America
Express International Banking Corporat ion maintain military baak
fac ilities throughout Vietnam. Military fac ilities of the
national banks are subject to examination by the Departments
of the Treasury and Defense. All are considered to be operatina
in accordance with applicable U.S. laws.
The military banking facilities permit U.S. dollar
checking accounts for authorized personnel; however, local
withdrawal can be only in MPC. Treasury has authorized the
military banking facilities to pay interest on demand accounts
at the rate of 5 percent per annum on monthly balances of
$100 or more to encourage savings While at the same time
providing maximum flexibility in the use of accounts. As
of December 31, 1970, military banking facilities in Vietne
maintained 130,831 accounts for individuals, with balances
totaling approximately $48,692,000.
Military Payments Certificates (MPC's)
The MPC system, which is administered by the Departm~t
of the Army, helps control illegal transactions by restrictiDg
use of dollar currency by UoSo military and civilian personnel
and foreign military personnel. MPC can be used, within
prescribed limits, for remittances outside Vietnam or for
conversion without limit into piasters at official facilities.
It is against U.S. regulations in Vietnam for unauthorized
persons to hold MPC, and any held illegally are not redeemed
by the U.S. Government.
MPC issues are changed from time to time, with conversion
to new series limited to authorized holders. The most recent
such conversion was on October 6, 1970. At each such conversid
9
)stantial amounts of the supplanted MPC series have not
~n converted and have thereby become worthlesso
(The
accrues
Llar backing for the unredeemed MPC eventually
the Miscellaneous Receipts of the Treasuryo)
I might note that the sales of piasters to individuals
rough official facilities against MPC have recently been
lning at about $10 million per month o This is somewhat
re than twice the monthly rate existing before the
~roduction of the 275 piaster rate of exchange and should
continue, about $120 million in foreign exchange earnings
~ year will be generated for the Government of Vietnam from
Ls source.
ley Orders
For remittances outside Vietnam, authorized personnel
, purchase U.So dollar money orders at base Post Office
!ilities or at military banking facilities. Money orders
~ also sold by the Army/Air Force Exchange Services, which
lers are drawn on a bank in the United States.
On January 15, 1970, a new postal money order was adopted
issuance at overseas military Post Offices. These money
lers are issued in Vietnam without fee. The new postal
ley orders are not payable through banks outside the
.ted States other than through military banking facilities.
they are cashed at a foreign bank, the Post Office Department
.1 not accept them
The limitation on the negotiability of
.s instrument is intended to help strengthen efforts to stem
! exchange of dollar instruments (purchased with MPC) for
lsters in the black market.
0
Lancial Control Measures
u.S. currency controls in Vietnam are designed to make
risk so great that individuals won't attempt to engage in
.ck market operations. The financial controls are designed,
st, to restrict the flow of MPC's to within authorized
channels thereby inhibiting leakages of MPC's into the han"
of unauthorized persons and, second, to control the conversi~
of MPC's into U.S. dollars
Currency transactions in which
the individual uses MPC' s to purchase dolla r instruments, make
deposits to an MBF account or to the savings deposit progra,
or convert to U.S. currency upon departure from the RVN,are
controlled.
0
There is a $200 monthly limitation on the total of all
such transactions. Exceptions to the limitations are authorized
only when a bona fide personal emergency arises.
The authorized system used to monitor controlled currency
transactions is called CABOTS.
CABOTS was devised and became fully operational in
September 1969 and has been providing a strong deterrent
to illegal transactions. CABOTS was designed to place a
roadblock at one point in the cycle essential to the illegal
operation. It does not stop everyone in the act, but it
does identify illegal operations and provides the data and
evidence necessary to detect, apprehend, and convict
o
A computer record is maintained on each individual
who is authorized to make controlled transactions. At
the operating level, credit card-type equipment and forms
are used. An addressograph data recorder machine is used
at all facilities to prepare the transaction form.
All transactions from MPC to dollar and/or dollar
instruments must be supported by a three-part form which
identifies the individual and the amount of the transacti~.
One copy is a card form which creates input to a computer,
pulling together all transactions for an individual to all~
for the detection 'of those who exceed the monthly limit.
A further control of significant importance was the
establishment in October 1969 of a requirement that money
orders issued through military Post Offices and banking
/
11
~ilities
in Vietnam must immediately be mailed by the
;tal or bank clerk to an address in the United States.
ls requirement and the new money order form recently
)pted has helped to reduce the use of money orders as a
licle for black market operations o
ternal Revenue Service (IRS)
~ome Tax Violations, Investigations and Prosecutions
Violations of the currency laws of Vietnam and other
legal activities by UoS. civilians temporarily in Vietnam
re brought to the attention of the Treasury's Internal
lenue Service early in 1966. These violators were able
operate with impunity, because they were not subject to
3. military authority and because the Republic of Vietnam
; reluctant to investigate and to prosecute U.So citizens
~sent in Vietnam due mainly to the efforts of the United States
assist in the country's defense. Defense Department officials,
~refore, asked the Treasury to send several IRS agents to Saigon
inspect data that had been compiled there and to initiate tax
)ceedings against some of the civilian violators o
In the latter half of 1969, illegal operations disclosed
Vietnam indicated a need for more intensive enforcement
:ivity by the IRS. In August, at the request of the U.S.
)assy in Vietnam, an agent of the IRS was sent to Saigon
examine data on currency violations by U.So civilians in
~tnam.
This infonnation included the now famous Prysumeen
:a,as well as information relating to alleged frauds in the
~ration of NCO clubs in Vietnam.
Also, at about this time,
~ alleged frauds on the NCO Clubs in Vietnam were brought
the attention of IRS by representatives of the Department
Defense, who also sought assistance in determining what
!ome reports had been made to IRS by the alleged perpetrators
the NCO club frauds.
On the basis of the new information and the indicated
lact of illegal activities by V.So civilians in Vietnam on
! achievement of UoS.
objectives there, Treasury initiated
through the IRS new investigations into the income tax affaU8
of all persons known to be or suspected of being important~
involved. Also, the Saigon post was opened for the purpose
of implementing the IRS service-wide Vietnam Enforcement
Program. Three revenue agents were permanently assigned to
Saigon for a period of eighteen months in February 1970.
Two additional agents were assigned on temporary detail in
November 1970.
The Revenue Service Representative, Saigon, is a member
of the Irregular Practices Committee of the Embassy in Saigon.
This committee is composed of key officials of the Embassy
and the heads of all UoSo investigative agencies in Vietnam.
It operates as a team to combat black market and other illegal
activities. It is chaired by ilia able and distinguished
Deputy Ambassador Berger, who did such an outstanding job in
this area while Ambassador in South Korea.
The IRS Vietnam team has concentrated its efforts on
servicing collateral requests by IRS stateside offices for
information important to the development of audits and
intelligence investigations as well as furnishing informational
leads. In addition, audit examinations have been accomplished
in Vietnam, and in one instance, the audit resulted in a tax
deficiency of $1,600,000 now pending in the Tax Courto
The IRS has considered criminal investigations of more
than 50 persons alleged to have received Significant amounts
of income from illegal activities in Vietnam. In 31 cases,
field investigations were initiated.
The IRS currently has ten criminal investigations in
process and it appears that a number of them should rerult m
prosecutions. In addition, IRS has completed the civil
examinations of more than 35 persons, and has more than 60
civil examinations currently in process. The proposed
.
assessments and penalties total more than $ 7,000,000, includi.1l8
more than $4,000,000 in jeopardy assessments in connection
with two of the criminal cases.
c::'
'")
~"
~
t---
13
Many items of information concerning individuals who
y have omitted small amounts of income from a source in
etnam have been referred to field units for appropriate
tion and have not been included in the above figures.
The IRS is continuing its efforts to gather intelligence
ich will enable it to identify persons who have failed to
port significant amounts of income from activities in
etnam. As a result, new examinations and criminal investitions are being initiated from time to time on a selective
sis. Because of the very detailed documentation required
r proof of tax evasion, some investigations require a year
two to complete. Therefore, it will not be possible to
termine the full effect of the IRS Vietnam-related investitions for some time o
The Internal Revenue Service has had a tax administration
visory team in Vietnam since 1966. This team has been
gaged in advisory work in functional areas of audit,
llection and training, particularly. We have been instrumental
the installation of a withholding tax system, the development
an audit program, and the training of auditors and of a
11ection force. The collections of internal revenues have
creased from approximately $7 billion piasters in 1967 to
proximately $38 billion in 1970
An estimated 25% increase
11 occur during the current year.
0
Use of Bank Accounts for Currency Manipulation in Vietnam
This Subcommittee is concerned about the problems ~r
law enforcement which can arise from the use of the domestic
deposit account facilities of any U.S. bank. Except for t~
prohibitions contained in the Foreign Assets Control regulations, banks in the U.S. can, at their option, accept
deposits from anyone capable of making a contract. Such
deposit contracts accepted can usually be terminated by the
accepting bank on its option. However, once accepted, the
bank must honor properly prepared and presented withdrawal
orders. Such withdrawal orders can include written
instructions to withdraw funds from one account and to deposit
the same funds in any other account. The banks are obligated
to comp ly with such instruct ions. They occur by the millions
and they are a long-standing public banking service.
Parties involved in Vietnam in illegal currency
transactions do legitimately use their bank accounts in the
United States and other countries to accomplish their
objectives. For example, party "A" wants payment in the
form of aU. S. dollar credit to his account in a bank in the
United States. Party "B" has a deposit account in the United
States and he can simply instruct his U.S. bank to chargehia
account and trans fer the proceeds to another U. S. bank for
credit to the account of party "A". When party "A" receives
an advice from his bank that his account has been credited,
he pays piasters to party "B".
The instructions from party "B" to his bank can be made
in various ways. They can be made through any bank in
Vietnam which has an office or a correspondent banking
relationship with a U.S. bank. The instructions can be
in a letter or in a cable. The UoS. dollar transfer can
end with the second U. S. bank or it can continue on to a
foreign bank. It is believed that a substantial part oft~
funds channeled into U. S. banks in furtherance of suspected
illegal transactions in Vietnamese currency were ultimately
transferred to foreign banks.
15
In the 9lst Congress, Treasury supported legislation,
JW known as P.L. 91-508, the Financial Recordkeeping and
~rrency and Foreign Transactions Reporting Act of 1970,
esigned to deter use of secret foreign bank accounts for
llegal purposes by U.S. citizens and residents. The
dministration supported the legislation. Treasury, in
estimony, emphasized three fundamental concerns that we
eighed in developing each of our recommendations for
btaining improved law enforcement.
First, we in no way wanted to restrict the regular and
fficient flow of domestic and international business or
iminish the willingness of foreigners to hold and use U.S.
)llars.
The second consideration is our determination to deter
iX and other evasion by U.S. persons through foreign financial
ransactions. We have sought to develop proposals under which
le benefits to our law enforcement objectives exceed the
Lrect and indirect costs which these proposals bring about.
Finally, we have been sensitive to the issue of tradiLonal freedoms, many of which are set forth in our
)nstitution, others which have become identified with our
ly of life. In reinforcing our enforcement activities, we
lSt not jeopardize these principles.
On June 10, 1971, the Department of the Treasury
lblished in the Federal Register for public comment
:gulations proposed to implement P .L. 91-508. We are now
:ceiving the comments and expect to publish finally effective
:gulations on November 1, 1971.
P.L. 91-508 and the implementing regulations constitute
other step forward on the part of the Nixon Administration
deter the use of secret foreign financial accounts to
sist in concealing the substantive violations of securities,
mbling, gold trading, currency and drug smuggling laws and
e untaxed income generated from these and other illegal
tivities.
Major parts of the proposed regulations will affect
purely domestic as well as foreign~related matters.
The proposed regulations in principal part would
require:
--increased recordkeeping on the part of banks
and other financial institutions of both
domestic and foreign-related items;
--domestic financial institutions to report
currency transactions in amounts in excess
of $5,000;
--reports of transportation of currency or its
equivalent in amounts exceeding $5,000 on
anyone occasion to or from the United States;
--maintenance of records by persons having
financial interests in foreign financial accounts;
--recordkeeping for financial institutions
including banks, and brokers and dealers in
securities and commodities; and
--retention for a six-year period of records to
be maintained.
The regulations are designed to insure that those
records kept in the normal course of business are retained
and available for a period of six years.
These proposed regulations are only one part of a
.
comprehensive four-part program launched by this Administratll
I.-
,
/
/)C
17
FIRST: We have elevated this problem to the foreign
olicy level. We have initiated discussions with foreign
overnments to define more precisely where cooperation can
e provided to the United States in criminal matters
nvolving foreign bank accounts.
SECOND: We have conducted and are continuing with a
omprehensive review of current procedures to define and
etermine what further actions can be taken pursuant to
Kisting statutes and treaties. The question on the 1970
ax return, inquiring if the taxpayer has any interest in
r authority over an account in a foreign country, is one
f the measures we have taken, authorized under previously
Kisting legislation.
THIRD: We encouraged, supported, and considerably
trengthened P.L. 91-508 and made recommendations which
le Congress adopted to eliminate from the original bill
averal provisions which would have permitted unwarranted
lvasions of privacy and would have required unjustifiably
Jrdensome paperwork.
FOURTH: We have cooperated with the private sector in
lalyzing and developing appropriate means of dealing with
lis type of illegal activity.
)reign Assets Control Regulations
The Foreign Assets Control Regulations prohibit all
llicensed transactions involving U.S. dollar accounts and
.S. dollar instruments if there is any interest in the
~ansaction of North Korea, North Vietnam, or nationals
lereof. The Treasuryts Office of Foreign Assets Control
is legal responsibility to act if there is evidence indicating
)ssible violation of the Regulations -- in an instance, for
(ample, of dealings by the North Vietnamese in U.S. dollar
Istruments emanating from Vietnam.
In this connection, information is obtained from banking
and commercial sources concerning activities related to
illegal dealings in piasters and the piaster market in
Hong Kong, and particularly, information as to persons
dealing in U. S. currency and instruments. Treasury makes
investigations, as appropriate, in Hong Kong and checks
all information available in its files to determine if any
of the persons known to be handling U.S. dollar instruments
emanating from Vietnam are designated nationals of North
Vietnam. The findings to date have been negative.
Counterfeiting and the Role of the Secret Service
Counterfeiting of U.S. currency in the Far East during
recent years has not constituted an enforcement problem of
significant magnitude. Contrary to reports frequently
received from various intelligence sources concerning
counterfeiting conspiracies allegedly backed by the Red
Chinese, there are very few counterfeit issues stennning from
that area and all those that have been identified as purely
criminal operations are for the most part concentrated in
Hong Kong and the Republic of the Philippines.
Obtaining accurate statistical data concerning counterfeiting activities in the Far East is most difficult. Few
countries with the notable exception of Australia, Japan and
Hong Kong, have established National Counterfeiting Bureaus
as reconnnended by the International Organization of Criminal
Police (Interpol). As a result, enforcement agencies in the
other countries of the Far East know little about counterfeiting and do not report statistics to Interpol HeadquarUn
in Paris. However, liaison has been established with other
U. S. Government agencies, Embassies and Consulates throughout
the area, and Treasury receives a constant flow of information
from this source concerning cases involving counterfeit
U.S. currency.
19
Therefore, all reports are investigated. For example,
1 episode of counterfeiting of U.S. currency in Vietnam
:curred in January 1968, when the South Vietnamese National
Jlice arrested several individuals and seized $250,000 in
artially completed counterfeit $5 Federal Reserve notes.
arly press releases identified the violators as Red Chinese
gents, and the Department immediately dispatched a Secret
ervice Agent to investigate. Inquiries disclosed that the
anspirators were criminals first and Chinese second.
It is my firm opinion that the counterfeiting problem
n Vietnam is minimal at present and has been so in the
ast. Nevertheless, Treasury will continue to monitor
losely the counterfeiting situation in Vietnam and will make
ertain a prompt and thorough investigation is made of all
iolations of this type which come to its attention.
~stoms
Activities in Vietnam
Treasury is cooperating with the AID Mission in Vietnam
V assisting in the institutional development and reorganizalon of the Vietnamese Customs Service and by providing technical
3sistance to AID officials concerned with the Commodity
nport Program.
In late 1965, the Bureau of Customs was requested to
)nduct a survey of the situation in Vietnam with a view to
~tting up a commodity control program for the U.S. AID
)mmercial Import Program (CIP). Shortly thereafter, in
le spring of 1966, a Customs Advisory Group was established.
le Customs Advisor positions, as well as the backup
~tivities performed by the Office of Foreign Customs
;sistance in Washington, are all funded by AIDQ At the
~esent time, thirteen positions are authorized for the
love-described work in Vietnam.
CIP monitoring has been increasingly effective, with
shipments examined increasing from 11 percent of importations in the first quarter of 1967 to 30 percent in the last
quarter of 1970. Attempted violations have decreased
correspondingly. Dock theft and pilferage have been reduc~
by decreasing the average number of days between cargo
discharge and Customs release from 30 in 1966 to 3 at the
end of 1970. Also, a Boat Fleet seeks to deny diversion
of CIP shipments.
The bulk of the responsibility within the Government
of Vietnam for suppressing black market activity and for
currency control falls to the Vietnamese Customs, principally
the Fraud Repression Service. This includes the function of
registering foreign currency brought into Vietnam and
checking official exchange receipts on exit from country.
The GVN currently depends upon the imposition of import
duties and perequation taxes* to recoup for the Treasury of
the RVN the difference between the value of foreign exchange
now sold to importers for 118 piasters (80% of RVN imports)
or 275 piasters (20% of RVN imports) per dollar and the real
piaster value of such imports at port-of-entry. In addition,
still higher duties and perequation taxes on non-essential
imports are intended to result in RVN piaster revenues in
excess of the port-of-entry value of those imports.
Studies of actual versus collectable import duties 'and
perequation taxes have revealed slippages of piasters on
licensed imports in 1970. The apparent causes were underinvoicing, other false documentation, and bribery. In
addition to such losses, potential revenues have been lost
due to smuggling. Further losses have resulted from
diversions of military gasoline and resale of PX tobacco
products. Such losses emphasize the importance of the work
of U.S. Customs Advisors. They will play an irereasingly
important role in helping increase GVN revenues from this
single most important source. Such improvement is essential
if the GVN is to have a viable economy with reduced aid level!
*Taxes on sales of foreign exchange to importers.
r.
1
21
rrangements to Combat Currency Manipulation and Black Marketing
In December 1970, AID authorized an increase in personnel
eilings and provided the funding for two additional positions
a the U.S. Customs Advisory Team. The positions were
stablished as Customs Investigations Advisors, whose task
s to assist the GVN Fraud Repression Service (FRS) operaionally and to act as liaison between the FRS and the U. S.
aforcement community.
With the appointment in May and June 1971, of new
ietnamese officials in the FRS, the work of these two
fficers has facilitated seizures by the FRS of illegally
~orted, exported and held currency.
At the same time, these officers work closely and assist
le Joint Investigations Narcotics Detachment of the U.S.
Llitary Assistance Command in Vietnam, since the purchase
ld trade of narcotics often involves illegal currency
:ansactions.
of U.S. Customs Advisory Team Effort Toward
Operational Objectives
~-Direction
In December 1970, Customs recommended the U.S. Customs
lvisory Team terminate its institutional development
>jectives by June 1972 and seek, instead, to develop an
ldependent, operational audit over GVN Customs trans~tions to lessen the possibility of frauds against the revenue.
A further step looking toward conversion to an opera.onal status came in late May of this year with a GVN
'oposal that the U.S. Customs Bureau furnish two import
lecialists to work operationally inside the GVN Customs
.rectorate on the valuation and tariff classification of
!rc handi s e .
Intensified Examination of GVN Imports
One source of lost Customs revenues has been through
technical smuggling (undervaluation, false invoicing,
and improper tariff classification) at the Saigon harbor.
Technical smuggling has also been an important means of
evading import license restrictions.
The two U,S, Cust~s
Bureau import specialists to be assigned operationally
within the Customs Directorate will be working in the harbor
area to see that GVN laws and regulations on the examination,
tariff classification, valuation, weight and measure, and
entry of merchandise are appropriately followed.
This
project will also provide verification and purification
of input data to a new ADP control system being i~all~.
Document Control Through Automatic Data Processing
In December 1970, the GVN Ministries of Commerce and
Finance passed a joint decree to require that importers
obtain import licenses for all commercial importations
prior to importation in order to restrict the financing of
imports through illegal financial transactions. The U,S.
Customs Advisory Team is gradually securing GVN enforcement
of this decree. Means for effectively implementing this
contrel are being developed through an ADP system for
corroborating and matching import licenses, cargo manif~sts,
and Customs entry documents to see that all exchange transactions for importations represent merchandise that is
actually imported.
ADP controls should also enable the GVN to determine,
with a reasonable degree of accuracy, the amount of
revenue being lost, discern how and where the revenue is
lost, and forecast revenue proj ections for fu ture years.
23
mproved Customs Administration
The GVN Customs Directorate does not have an internal
udit capability at present as that concept is understood
n developed countries. The ADP system I discussed earlier
s expected to form the basis for an independent audit to
e conducted by the Advisory Team after Fiscal Year 1972.
he ADP system will help the GVN to arrive at project goals
egarding illegal currency manipulation, narcotics smuggling,
nd general commercial smuggling.
ightening of Controls at Ton Son Nhut Airport
In December 1970, the GVN, with assistance from personnel
f the U.S. Customs Advisory Team, initiated a drive to choke
ff the flow of contraband through Ton Son Nhut (TSN)
lrport. Besides being an avenue for commercial smuggling,
t was feared that Ton Son Nhut was also an important entry
lint for illicit narcotics.
The drive to cut off contraband at TSN was intensif~
1 April 1971 with the assignment of two u.S. Customs advisors
Ill-time, together with personnel on temporary duty, to
le airport during hours when flights were arriving or
~parting .
At this time, Ton Son Nhut is no longer believed to be
major entry point for commercial or narcotics smuggling,
.though isolated instances are believed to occur. The
.licit trade has been diverted to other channels, such as
. Nang and border areas. The TSN project is believed to
.ve had some effect in the drop in the black market
aster/dollar rate below 400 to 1 to 371 to 1 as of July 19,
71, and the Advisory Team is continuing to encourage the
N to maintain tight controls at TSN, as the GVN acts to
eck other illegal traffic.
Training Program
The Bureau of Customs is providing a training program
for Vietnamese Customs officers. Six members of the
Vietnamese Customs Directorate underwent a training program
during April and May of this year at Bureau headq~arters,
the Customs National Training Center at Hofstra University
on Long Island, and the Customs regional and district
offices. Ten more Fraud Repression Service and Boat Fleet
officers are scheduled for training in the United States
during Fiscal Year 1972. When these officials return to
Vietnam, they will set up training classes for their
fellow officers.
Mr. Chairman, in conclusion, I wish to emphasize that
the Executive Branch is determined to strengthen efforts
to curb black marketing and illicit financial transactions
in Vietnam.
As part of this continuing effort, we have established
a Treasury Task Force on International Financial and Commercial
Crimes and Frauds. This is an outgrowth of the Task Force
on Bank Secrecy. The Task Force is examining this broad
area on a systematic basis and will be developing ways and
means of combatting these illegal activities.
000
ortmento/ the TREASURY
tElEPHONE W04·2041
~OR
August 5, 1971
IMMEDIATE RELEASE
MEMORANDUM FOR THE PRESS
The Treasury Department today made public a letter
sent on July 20 to Senator
Proxmir~
opposing publication
of information about the investment portfolios of the
multilateral lending institutions.
Senator Proxmire
referred to the letter today in making public information
on the portfolios of the multilateral institutions.
C-112
July 20, 1971
Dear Mr. Chairman:
On June 8, 1971, while testifying before your Subcommittee, I opposed your expressed intention to publish
the highly-detailed investment portfolio information on
the multilateral development lending institutions that
was made available to you by the Treasury Department on
a confidential basis.
I want to reiterate that opposition now in the strongest terms, and again request that
you not proceed with the publication of this information.
My basic contention is that this category of information
unlike the great bulk of information on the multilateral institutions that we regularly and willingly make
available publicly -- involves confidential banking relationships between these institutions and the private banking
community here and abroad.
In the considered judgment of
those who work in this field, disclosure would be disruptive
of these sensitive relationships.
It could as easily result
In reduced investment yields to the multilateral institutions
as in higher ones, and thus be financially harmful to them
as well as administratively burdensome.
Moreover, since the confidential information already
made available to you was obtained from the various institutions on the assumption its confidential nature would
be respected, publication would seriously prejudice our
ability to obtain information in the future by giving assurances of confidential treatment.
Insistence on publication of data revealing financially
sensititve transactions of many dozens of private banking
institutions is especially puzzling since any necessary
analysis of the data can be carried out equally well if
it remains confidential.
COP Y
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2 -
Our extremely full presentation before your Subcommittee
should be ample proof that I do not seek to draw any veil
of secrecy around the operations of the multilateral institutions -- quite the contrary.
What I do ask, however, is
that a rule of reason on disclosure prevail.
When, as in
this case, publication of a particular caterogy of information could harm the institutions without yielding offsetting
benefits, reason dictates that pUblication ought not take
place.
Sincerely,
/s/ Charly
Charls E. Walker
The Honorable
William Proxmire, Chairman
Subcommittee on Foreign Operations
Committee on Appropriations
United States Senate
Washington, D. C.
20510
COP Y
ortmento/ the TREASURY
tElEPHONE W04·2041
ATTENTION:
FINANCIAL EDITOR
August 5, 1971
RESULTS OF TREASURY'S NarE AUCTION
The Treasury announced that it has accepted $2-1/2 billion
of the $4.1 billion of tenders received for its new 6-1/2% 18month notES auctioned today. The range of accepted bids vTaS as
follows:
Price
High
101'1
Average
Approximate Yield
100.08 ~
99.87
99.94
6.44%
6.59%
6.54%
~ Excepting 2 tenders totaling $250,000
The $2-1/2 billion of accepted tenders includes 36% of
the amount of notes bid for at the low price, and $0.3 billion
of noncompetitive tenders accepted at the average price.
liT ED STATES SJ\VHlGS BOUDS ISSUED ANO
REDEEME~~~IR~U~'H -
July 31, 1971
(Dollar amounts in millions - rounded and will not necessarily add to totals)
DESCRIPTION
AMOUNT ISSUEDY
5,003
29,521
3,754
1935 thru D-1941
and G-1941 thru 1952
ind K-1952 thru 1957
AMOUNT
, OUTSTANDINGlI
AMOUNT
REDEEMEDY
5
28
12
.10
.09
.32
197
868
1,360
1,669
1,467
830
930
1,042
1,107
1,022
886
949
1,161
1,244
1,342
1,333
1,311
1,384
1,342
1,449
1,612
1,648
2,074
1,995
1,957
2,246
2,266
2,252
2,297
2,940
1,943
-23
lC.35
10.34
10.08
10.59
11.83
14.72
4,998
29,493
3,742
:0
'7" OUT-STANDING
OF AMOUNT ISSUED
--
--
]/:
1,903
8,395
13,1+98
15,757
12,397
5,639
5,363
5,5'55
5,501
4,819
4,167
4,362
4,987
5,085
)41
142
143
144
)45
346
H7
~48
l
5,124
4,829
4,718
4,425
4,444
4,517
4,377
4,913
4,761
4,656
5,018
4,969
I
, ,~'l5
I
5~300
I
~59
1
360
~61
~62
I
)63
~6-l
I
)65 ______
JG6
367
1
-
I
___
~68
I
1+,513
4,394
3,797
3,281
3,414
3,826
3,841
3,958
3,790
3,519
3,335
3,083
2,995
2,904
2,729
2,839
2,766
2,699
2,772
2,703
2,463
1')8
1,669
294
341
H9
350
951
952
953
954
955
956
957
958
1,706 .
7,527
12,138
14,088
10,929
4,809
4,433
17.31+
18.76
20.12
21.21
21.26
21.76
23. 2&"
24.46
25.32
26.01
27.15
29.33
30.33
32.61
35.69
37.65
42.21
41.9C
.42.03
44.76
45.80
47.76
51.91
63.80
86.82
ssified
I
4,425
4,608
2,238
319
Series E
I
175,784
129,681
46,103
26.23
5,485
7,929
3,790
2,504
1,694
5,426
30.88
68.43
13,413
6,295
7,119
53. r,8
~69
no
nl
(1952 thru 1\1ay. 1959)}j
(June, 1959 thru 1971)
r
Series II
r)
;(.,
I-..
Ii
t
-
-----)'
Series E ar.d H
{Total matured
;
Total unmatured
Grand Total
I.
189,197
135,976
53,221
38,277
189,197227,475
38,232
135,976
174,208
45
53,221
53,267
f'd discount.
J(ion
value .
.-ner bvn:fs may be held and will earn in!erest {vr additional periods after original .'11aturity dates.
~l
.-
•
~J
.1"
;::,
28.13
23.42
tElEPHONE W04·2041
FOR IMMEDIATE RELEASE
August 6, 1971
TREASURY ANNOUNCES IMF DRAWING
The Treasury today announced that it will draw the
~quivalent of $862 million in foreign currencies from the
[nternational Monetary Fund on Monday, August 9.
The drawing results principally from the sizeable
repayments of indebtedness to the Fund, also scheduled for
~ugust 9, already announced by the French in the amount of
?609 million and the British in an amount of $614 million.
lhe United States' drawing will be composed of $415 million
~n Belgian francs and $447 million in Dutch guilders.
As part of the same repayment process, France will
lurchase $191 million of gold from the United States. The
;old will be used by France to meet that portion of its
epayment obligation which, as required by Articles of the
MF, must be met with gold. This transaction, similar to a
ale of $282 million of gold to France in May when a portion
fits IMF indebtedness was paid, will complete the French
epayments to the IMF.
In order to provide the gold necessary to cover this sale
o France, and to maintain the gold stock held in the
xchange Stabilization Fund, a transfer of $200 million in
Jld is being made from the Treasury stock to the Exchange
tabilization Fund.
000
113
ortmento/ the TREASURY
tElEPHONE W04·2041
August 6, 1971
FOR RELEASE AT 6:00 P.M., SATURDAY, AUGUST 7, 1971
MEMO TO THE PRESS
The Treasury Department issued the following comment
ln response to inquiries:
The report of the Joint Economic Committee Subcommittee on International Exchange and Payments issued
on Friday, August 6, reiterates the earlier views
expressed by its Chairman, Congressman Henry Reuss.
The limited hearings held by Mr. Reuss did not, in
the opinion of the Treasury Department, reflect or
develop any wide body of Congressional opinion.
No
discussions are planned or anticipated with respect
to exchange rate realignments at the International
Monetary Fund or elsewhere.
As Mr. Reuss stated, the United States qoes face
serlOUS problems with respect to its international
trading position and the support of its overseas military
and economic commitments.
The United States approach
toward these matters was fully discussed in the recent
speech by Secretary Connally at Munich.
The Administration is constantly reviewing measures that would contribute to thebng-term strength of its balance of
payments position, recognizing that, in the end, a
strong trade and payments performance must rest on a
healthy, noninflationary domestic economy.
000
C-114
ortmento/ the TREASURY
tElEPHONE W04·2041
FOR !MMEDIATE RELEASE
Monday, August 9, 1971
RESULTS OF TREASURY'S $500 MILLION EURODOLLAR REFUNDING
The Treasury announced today that it has received $634
million
of subscriptions for its offering of $500 million 7-3/8% Certificates
of Dl,debtedness Eurodollar Series H-1971 to be issued August 10 and
to mature October 26~ 1971. A total of $551 million was allotted.
Subscriptions were allotted in full up to the amount covered by
a subscriber's holdings of 6-5/8 percent Treasury Certificates of
Indebtedness, Series C-1971, which mature August 10, or $1 million,
whichever was greater. The remaining subscriptions were allotted 30%.
The certificates were offered only to foreign branches of United
States banks and are designed to provide an investment outlet in the
United States for Eurodollars acquired by the overseas branches.
artment of the TRfASURY
tElEPHONE W04·2041
IMMEDIATE RELEASE
August 9, 1971
UNITED STATES AND DENMARK TO REVISE INCOME TAX CONVENTION
D TO HOLD PRELIMINARY DISCUSSIONS OF AN ESTATE TAX CONVENTION
The Treasury Department announced today that representatives
he United States and Denmark will meet in Washington in
ber to discuss revision of the income tax convention between
two countries and to consider entering into an estate tax
'ention. The meeting will begin October 12.
The existing United States-Denmark income tax convention
signed in 1948. The forthcoming negotiations will include a
ra1 review of the convention, taking into account the
ft Double Taxation Convention" published in 1963 by the
a1 Committee of the Organization for Economic Cooperation
Development (OECD) and recent conventions concluded by the
countries with other industrial nations. Interested
ons might wish to consult the recent u.S. conventions with
ce, which entered into force in August 1968, with Finland,
h entered into force in February 1971, and the convention
Belgium, which was approved for ratification by the
Senate in December 1970 and is now before the Belgian Senate.
Among the provisions to be discussed by the U.S. and
sh representatives in October will be the rules governing
taxation by either country of income derived by residents
he other country from personal services, investment,
vities on the continental shelf, and permanent establishments.
There is presently no estate tax convention between the two
tries. The discussions of such a convention will take into
lderation the draft model estate tax convention published
~66 by the Fiscal Committee of the OEeD, the recent estate
~onvention between the United States and the Netherlands,
1 entered into force in February 1971, and the provisions of
~oreign Investors Tax Act of 1966.
- 2 -
or
to
to
U.
The Treasury said that anyone wishing to offer comments
suggestions concerning the forthcoming negotiations is ask~
submit his views in writing by September 15, 1971,
Assistant Secretary of the Treasury Edwin S. Cohen,
S. Treasury Department, Washington, D. C. 20220.
000
artment of the TRfASURY
tElEPHONE W04·2041
FINANCIAL EDITOR
SE 6:30 P.M.,
ugust 9, 1971
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
Treasury Department announced that the tenders for two series of Treasury
e series to be an additional issue of the bills dated
May 13, 1971
,and
series to be dated
August 12, 1971 ,which were offered on August 3, 1971,
,ed at the Federal Reserve Banks today. Tenders were invited for $2,300,000,000,
bouts, of 91-day bills and for $1,600,000,000, or thereabouts, of
182-day
he details of the two series are as follows:
ACCEPTED
VE BIDS:
age
91-day Treasury bills
maturing November 11, 1971
Approx. Equiv.
Annual Rate
Price
182-day Treasury bills
maturing February 10, 1972
Approx. Equiv.
Price
Annual Rate
98.667
98.635
98.642
97 .110 ~
97.069
97.083
5.273%
5.400%
5.372%
5.716%
5.798%
5.770%
Y
Except 1 tender of $740,000
of the amount of 91-day bills bid for at the low price was accepted
of the amount of 182-d~ bills bid for at the low price was accepted
DERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
t
lcisco
AEElied For
if; 23,175,000
2,859,280,000
33,670,000
43,760,000
21,140,000
48,190,000
238,910,000
52,550,000
27,345,000
27,820,000
40,825,000
144,915,000
)TALS
$3,561,580,000
k
lphia
1d
I
Ls
)lis
~ity
~s $257,820,000
~s $120,505 ,000
AcceEted
if; 13,175,000
1,838,280,000
24,170,000
41,260,000
19,140,000
35,170,000
128,410,000
42,500,000
20,845,000
25,000,000
24,325,000
88,115,000
AEl2lied For
$ 18,265,000
2,123,030,000
15,660,000
55,880,000
12,685,000
25,305,000
211,410,000
26,340,000
22,705,000
13,760,000
33,995,000
182,995,000
$2,300,390,000 ~ $2,742,030 ,000
$ccep!",ed
7,265,000
1,272,630,000
13,660,000
22,880,000
9,685,000
15,505,000
80,010,000
14,440,000
21,205,000
13,760,000
14,995,000
114,095,000
$1,600,130,000 ~
noncompetitive tenders accepted at the average price of 93.642
noncompetitive tenders accepted at the average price of 97,='83
'ates are on a bank discount basis. The equivalent coupon issue yields are
'or the 91-day bills, and 6.04 %for the 182 -d~ bills.
artment of the TREASURY
tElEPHONE W04·2041
FOR IMMEDIATE RELEASE
August 10, 1971
TREASURY CONTINUES $3.9 BILLION WEEKLY BILL AUCTIONS
In the regular weekly bill auction of Monday, August 16 the
Treasury is maintaining the amount of bills to be sold at $3.9 billion,
the same amount as that sold at recent weekly auctions.
As in previous
weeks, this amount will be divided $2.3 billion three-month bills and
$1.6 billion six-month bills.
It is anticipated that.weekly auctions of
this amount will be continued for the next' few weeks, thus raising some
cash in anticipation of a portion of the Treasury's early September needs.
000
artment of the TRfASURY
tElEPHONE W04·2041
IMMEDIATE RELEASE
August 10, 1971
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders
two series of Treasury bills to the aggregate amount of
00,000,000, or thereabouts, for cash and in exchange for Treasury
in the amount of $3,604,130,000',
s maturing August 19, 1971,
ollows:
9l-day bills (to maturity date) to be issued August 19, 1971",
he amount of $2,300,000,000,
or thereabouts, representing an
tional amount of bills dated
May 20, 1971,
and to mature
mber 1'8, 1971
(CUSIP No. 912793 LS3),originally issued in
amount of $1,401,985,000, the additional and" original "bills to be
ly interchangeable.
182 - day bills, for $I, 600,000,000, or thereabouts, to be dated
st 19, 1971,
and to mature February 17, 1972,
IP No. 912793 MN3).
The bills of both series will be issued on a discount basis under
:!titive and noncompetive bidding as hereinafter provided, and at
rity their face amount will be payable without interest. They will
;sued in bearer form only, and in denominations of $10,000,
)00, $50,000, $100,000, $500,000 and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up
le cloSing hour, one-thirty p.m., Eastern Daylight Saving
Monday, August 16, 1971.
Tenders will not be received
le Treasury Department, Washington. Each tender must be for a
lum'of $10,000. Tenders over $10,000 must be in multiples of
)0. In the case of competitive tenders the price offered must be
!ssed on the basis of 100, with not more than three decimals,
99.925. Fractions may not be used. It is urged that tenders be
on the printed forms and forwarded in the special envelopes which
be supplied by Federal Reserve Banks or Branches on application
for.
I
Banking institutions generally may submit tenders for account of
'mers provided the names of the customers are set forth in such
rs. Others than banking institutions will not be permitted to
- 2 submit tenders except for their qwn account. Tenders will be reed,.
without deposit from incorporated banks and trust companies and fr~
responsible and recognized dealers in investment securities. Tenders
from others mus t be accompanied by payment of 2 percent of the face
amount of Treasury bills applied for, unless the tenders are accompan:
by an express guaranty of payment by an incorporated bank or trust
company.
Immediately after the closing hour, tenders will be opened at thl
Federal Reserve Banks and Branches, following which public announcemel
will be made by the Treasury Department of the amount and p~ice range
of accepted bids. Only those submitting competitive tenders will be
advised of the acceptance or rejection thereof. The Secretary of the
Treasury expressly reserves the right to accept or reiect 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 d&i~
of accepted competitive bids for the respective issues. Settlement fl
accepted tenders in accordance with the bids must be made or complet~
at the Federal Reserve Bank on
August 19, 1971,
in cash or o'ther immediately available funds or in a like face amount
Treasury bills maturing
August 19, 1971.
Cash and exchan~ 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.
Under Sections 454 (b) and 1221 (5) of the Internal Reven~C~
of 1954 the amount of discount at which bills issued hereunder are sol
is considered to accrue' when the bills are sold, redeemed or otherwise
disposed of, and the bills are excluded from consideration as capital
assets. Accordingly, the owner of Treasury bills (other than life
insurance companies) issued hereunder must include in his income tax
return, as ordinary gain or loss, the difference between the price p~
for the bills, whether on original issue or on subsequent purchase"
the amount actually received either upon sale or redemption at matUrl
during the taxable year for which the return is made.
.
Treasury Department Circular No. 418 (current revis ion) and thiSI
notice, presc ribe the terms of the Treasury bills and govern the ,
conditions of their issue. Copies of the circular may be obtained fl
any Federal Reserve Bank or Branch.
I
artment of the TRfASURY
tElEPHONE W04·2041
FOR RELEASE AT 2:30 P.M.
FRIDAY, AUGUST 13, 1971
Secretary of the Treasury John B. Connally today
announced presentation of the Alexander Hamilton Award
to Murray L. Weidenbaum, Assistant Secretary for
Economic Policy.
The award, which includes a gold medal, is one of
the highest honors which Treasury can bestow, and is
presented for "outstanding and unusual leadership" at
the Treasury. The presentation took place today at
ceremonies marking Mr. Weidenbaum's final official day
in office. He is leaving to become a distinguished
professor at Washington University in St. Louis,
Missouri.
Attached is the text of the citation.
000
C-116
CITATION
ALEXANDER HAMILTON AWARD
MURRAY Lo WEIDENBAUM
In two years as Assistant Secretary of the Treasury
:or Economic Policy, Murray L. Weidenbaum applied exceptional
:alent to many different responsibilities. In every instance,
~ has distinguished himself.
His duties included taking part in the creation of the
lation's economic policies through his service in the "Troika"
md the "Quadriad" -- the bodies that formulate and coordinate
:he economic policy of the United States. In this capacity,
lis steady and thorough counsel helped two Secretaries of the
~reasury during a difficult period of economic transition.
Perhaps even more significantly, Mr. Weidenbaum distinguished himself within the Government and throughout the
qation as the spokesman for revenue sharing. He earned his
>lace as the chief architect of the Nixon Administration's
~eneral revenue-sharing proposal.
He further demonstrated his broad abilities in service
)n inter-agency groups concerned with a myriad of issues.
~s a principal Treasury representative to Commissions and
~abinet Committees on productivity, economic growth, rural
jevelopment, housing, credit, and many other topics,
1r. Weidenbaum demonstrated remarkable flexibility in thought
:md analysis.
In every capacity, he has represented the Department of
:he Treasury with the best of judgment, as well as intelligence,
10nesty, and selfless endeavor.
000
ortmento/ the TREASURY
tElEPHONE W04·2041
FINANCIAL EDITOR
:E 6:30 P.M.,
!@st 16 2 1971.
RESULTS OF TREASURY'S WEEKLY BILL OFFERING
~easury Department announced that the tenders for two series of Treasury
a series to be an additional issue of the bills dated
May 20, 1971
, and
series to be dated
August 19, 1971 , which were offered on August 10, 1971,
ad at the Federal Reserve Banks tod~. Tenders were invited for $ 2,300,000,000,
bouts, of 91-d~ bills and for $1,600,000,000, or thereabouts, of
182-d~
~e details of the two series are as follows:
ACCEPTED
VE BIDS:
age
91-d~ Treasury bills
maturins November 18, 1971
Approx. Equiv.
Annual Rate
Price
98.804
98.726
98.756
!I
4.731%
5.04rif,
4.921~
1/
182-day Treasury bills
maturi!!S February 17, I972
Approx. Equi v .
Annual Rate
Price
.
97.424
97.336
97.370
5.095~
5.269~
5.202~
1/
xcepting 2 tenders totaling $2,335,000
of the amount of 91-daylbi11s bid for.at the low price was accepted
of the amount of 182-d~ bills bid for at the low price was accepted
[)ERS APPLIED FOR .AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
t
ncisco
Applied For
$ 24,400,000
2,649,110,000
36,065,000
32,785,000
11,250,000
31,665,000
221,005,000
36,010,000
30,440,000
25,385,000
37,570,000
131,720,000
Accepted
$ 14,235,000
1,873,llO,000
21,065,000
31,785,000
11,250,000
27,665,000
152,005,000
31,060,000
25,440,000
25,385,000
19,570,000
67,470,000
Applied For
$ 13,770,000
2,317,515,000
5,635,000
25,735,000
4,670,000
23,025,000
171,960,000
26,465,000
33,290,000
12,693,000
30,235,000
212,650,000
OTALS
$3,267,405,000
$2,300,040,000
~ $2,877,643,000
k
Iphia
nd
,d
is
olis
City
Accepted
$
3,770,000
1,383,315,000
5,635,000
9,835,000
4,070,000
14,025,000
60,610,000
19,865,000
24,290,000
12,293,000
8,235 ,000
54,330,000
$1,600,273,000 ~
es $240,080,000 noncompetitive tenders accepted at the average price of 98.756
es $124,903,000 noncompetitive tenders accepted at the average price of 97.370
rates are on a bank discount basis. The equivalent coupon issue yields are
for the 91-d~ bills, and 5.43i for the 182-d~ bills.
ortmento/ the TREASURY
tElEPHONE W04·2041
FOR IMMEDIATE RELEASE
August 16, 1971
STATEMENT BY SECRETARY OF THE TREASURY
JOHN B. CONNALLY AT THE OPENING OF
A NEWS CONFERENCE, AUGUST 16, 1971
Good morning.
I have a brief statement that I'd
like to read if I might; then I have a brief announcement
to make.
As most of you know, the President announced a group
of major economic programs last night in his televised
speech. There's no doubt that these Administration
initiatives will have a significant and favorable impact
on most Americans and their economic well being.
I personally believe the President's program contains
the most sweeping, courageous and important economic proposals made in the last 40 years in this country.
I say
that for these reasons:
--First, the programs are designed to create more
jobs and reduce unemployment in this nation.
--Secondly, the Job Development Tax Credits will
strongly stimulate the economy and the vitality of this
country.
--Third repeal of the automobile excise tax should
stimulate car sales by reducing auto prices by approximately
$200 each-.
--Next the Wage and Price Freeze will provide a period
of stability, to bring inflation under control and to provide additional consumer confidence.
--Fourth the program will give the American worker a
chance to increase his productivity because companies will
be encouraged to upgrade and modernize their equipment and
facilities.
(OVER)
-2Both industry and labor will become more competitive
with other countries and will be better able to maintain
our standard of living, both literally and relatively.
Next the temporary import surcharge, coupled with the
Job Development Credit will help return our balance of
trade and balance of payments to a favorable position. The
surcharge will help stem the flow of imports and stimulate
the purchase of American goods made by American workmen.
The suspension of gold convertibility constitutes ~
opportunity for us and our principal trading partners aro~d
the world to begin negotiations, studies and explorations of
methods of improving the' international monetary exchange
system upon which an expanding world trade depends.
And finally, the comb ined actions will give the nation
an opportunity to aSSess its position, weigh the alternatives,
make the decisions and gather the strength to maintain our
vitality and the high sense of moral purpose which has
always characterized this nation.
At the request of the President I want to announce to
you this morning that he will have a meeting at ten 0' clock
in the morning (Tuesday) with the bipartisan leadership of the
Congress and with the additional presence of the Chairm~
of the ranking members of the House and Senate Banking ~d
Currency Committees, the Senate Finance Committee, the.
House Ways and Means Co~ittee, . the House and Senate·
Appropriations Committe-e.
"
The President asked me additionally to tell you he
had been in conversation with Mr. Wilbur Mills, Chairman
of the Ways and Means Committee. They had a very fine
telephone conversation, and he authorized me to say that
he felt that Mr. Mills was in agreement with the major
proposals which the President enunciated 'on last evening.
000
10
QUEST IONS AND ANSWERS
l \uill be glad to attempt to
SECRETARY CONNALLY:
answer any questions you may
~ave.
MEMBER OF THE PRESS:
Irt!-,
Secretary,
I
have
ODe
or two related questions OD the applicntion of the wage freeze.
Would it affect, for example, an individual raise --
an individual merit raise?
SECRETARY CONNALLY:
Yes. it will affect all
individual raises; l.t will affect all merit raises; it will
affect all raises under contract.
MEMBER OF THE PRESS:
All raises without exception?
Cost of living raises?
SECRETARY CONNALLY: That is correct.
Seniority raises?
M.EMl1ER OF THE PRESS:
SECRETARY CONNALLY:
MEMBEll
Yes.
rxperlence raises?
OF 'HIE PRESS:
SECRETARY CONNALLY:
Ye~;
"
MEMBER OF l'RE: PRESS: All of these are fro:ten for
90 days?
SECRETARY CONNALLY: Yes.
MEIAru~n
l"hat
OF THE PRESS:
a Union which is no'" ill
~bout
negotiaticr~ fOj·
the si·l:uation
a new contract?
Will
it be required not Lo ne€:ot i_ute?
SECnETARY CONHAl .. LY:
negotiate, but they will be
It
bOU~ld
~\(JD \ t
be required
again oy the
wa~es
110t
0:(
to
11
that were in effect in the month
preceding August 14.
Thay could negotiate for a
MEMBER OF THE PRESS:
future raissl'
SECRETARY CONNALLY: They could negotiate for a
future raise, beyond the period when the price freeze - ..
the wage price freeze
will end.
But even a contract
that was entered into six months ago. wbere a periodic iacrease
fell during the 90-day freeze period, it would not be permitted
to go into effect.
It would be permi t"ted later
MEMBER OF THE :9RESS:
to go into effect?
SECRETARY CONNALLY:
POBsibly.
We
don~t
know,
exactly, what the future holds.
MEMBER. OF THE PRESS: Mr.
fre2~~r
Secretary, now that we
hav~
a price
ne'~
bU:i'eaucracy to adfilinister it, or enforce it, what should
too, without -- as you say -- any large,
a citizen do if he finds a price going up, anyway?
To whom
wou!.d ;,le turn?
SECRETARY
CO~'TNALLY:
Well, we would hope that the
American people ~lOuld understand tilat the success of this
wage/price freeze, in a large part. is going to depend upon
their individual compliance.
that there is
'1
If a:a American citizen finds
flagrant ·"iolatio'1 on the part of someone, t~
12
can communicate witb the Office of Emergency Preparedness
that will be assigned the administrative task of
and supervising this wage/price freeze.
call upon all Americans -small -- American
mon~toring
But I want to, again,
businessj labor; large and
businessm~n
of whatever kind or character,
to live up to, to adhere, and to comply with the spirit
alld the letter of this freeze.
a special plea
I might at this point make
and a request to all of the American lending
institutions with respect to the interest rates they charge.
We would certainly expect that they w0\41d, also, live up and
comply with the spirit of this wage/price freeze, with respect
to the interest rates that they charge.
HEImER OF THE PRESS:
Mr. Secretary, isnft this program
today an admission that the Administrati·:.nos policies up to now
'have failed?
SECRETARY CONNALLY: Oh, I donet think we viewed
it in terms of an admission of anything.
I would characterize it as a new policy, a new
economic action, or sHries of
act:·~ons,
designed to solve
the really hard core basic problems that this Nation faces
here al1d abroad.
Nop, we again car. enumel'ate those in br ief:
We obviously 11ar1 an unaeceptable rate of unemploymente
It waD too high.
We bad an unacceptable
~ate
of inflation.
13
Now, again, I don?t want to be argumentative about
it but I can say to you that unemployment
has gone down ill
the last several months.
The rate of inflation in the first six months of
this yea.r was less than last yaar, but it is still too higla.
It is still unacceptable.
We obviously had an unacceptable situation with
respect to our balance-oi-trade 1 \"Jhere it looked like, for
the first time since 1693, we might have a deficit in the
This is not acceptable to us.
balance of tra(!e
the balance--of-paymeuts on the
o:~ficial
Last year,
settlement basis was
We looked like we were
$10.7 billion -- much too higil.
headed fc'r a sil11j.lar year, this year.
It was not acceptable.
So a combination of events and circumstances culminated in the time that the President felt it was important
for him to
aC'j: ~
to lay down a whole
nm'J
series of actions
encompassed in one 1::road economic policy directed toward
the solution of these problems.
~~mMBER
OF THE PRESS· Mr. Secretary, the President
s aid last night that, wh:i.le the r:a.gQ-)/price
volunt"rv
a."
it
w).~.l
freez~
is
7Je hacked by (;overnment sallcti.ons, ii
necessary.
How do you. ";lrev(;nt
:l
black market iil goods anti
services from developing, or, put another way, horl do you
14
control, without controlling?
SECRETARY CONNALLY:
Well, in the first place, we
donOt assume that it is going to be the motive of the American
businessman to iJDJDediately begin gouging.
First, I think we
attribute somewhat higher motives to the American people
generally than that.
Secondly, there are sanctions in the Act, tbe
Economic Stabilization Act of
~970,
which- if
for $5,000 penalties lor willful violations.
used, provide
The Justice
Department will be iDunediately authorized to take action, both
in tile form of injunctive relief, or otherwise, to impose
and prosecute those who wilfully violate in a flagrant case
of this type; where it is ouviously the objective to engage
in the
bla(:l~
market operation.
M:t~MBEP..
OF THE PRESS: IsnOt a $5,000 fine, Mr. Secretary,
something of a slap on the wrist to big business like Steel
but a major factor to a sma1·'. business?
hit morc dil"ectly at the prices
()f
So docsn' t this
smaIl business than of
big business?
SECRETARY CONNALLY: No, I don t thi'lk so, for the
simple reason it is
:'nconceivable that a major American
corporation \1ould attempt to violate the wage nnd price freeze.
The public reaction would be so immediate and so intense,
that
no reasonable American business €nterprise would want to incur
theWl'alh of the American people to that extent
15
MEMBER OF THE PRESS: Mr. Secretary, under wbat
compulsion will lending institutions be to comply with aDJth1rc
under tbis program?
SECRETARY CONNALLY: I think they will be under the
compulsion that all Americans are under to adhere to it.
Secondly, they know full well that the President,
under tile Credit Control Act, can ask the Federal Reserve
im~ose
System to
controls on credit and interest rates.
No\f' , the reason it was not done is because we felt
that it might be counter-productive.
We want to make it
ab-.lndantly clear, as we have in the past,
1: thi.nk, that
we think lending institutions have to assume the responsibility
for making
a~Jailable
, to
this American economy and its needs,
money at reasonable rates, so that it will not stifle the
expansion
that is necessary_
Now, we felt that an attempt to control interest
might, actually, dry up the source of fuods alld be counterproductive.
There was no attempt to exempt them, from the
standpoint of exempting them, as such.
It was an action that
was deliberately taken because we thought -- and we still
think --
they most certainly will comply with the spirit
and letter 01 this freeze. Lnd tha"c additional money will be
available under these circumstances, as opposed to wbat would
be true if we tried to control this.
MEUBER OF THE PRESS: II:..... Secretary, wba t do you
tbill
: (/)
j/
16
the practical effect of this will be in terms of devaluation
of the dollar?
How much do you expect it to slide?
SECRETARY CONNALLY: I cannot answer that, and
I
would not cbaracterize the President 9 s action as a devaluation.
I know that many of you do.
It is a question of what happens.
The PresidentVs action, as he took it, does not in itself,
in my terms at least, mean a devaluation.
It means that
it possibly could result in some depreciation, depending
on what other nations do.
In my own judgment, tha dollar is going to rise,
vis-a-vis some
currenc,ies in the world.
vis-a-vis othel' currencies in the world.
It may decline,
But to say that it
is a devaluatioD, ! think is a premature judgment.
I am not
prepared to say what is going to happen in the international
money markets, now.
There is no question but what it shook
them up:
(Laughter)
We can just start with that.
the
President~s
object
But in one sense,
bas already been achieved.
He said,
in effect, that we are going to have to enter into new
negotiations, looking toward a
m~re
satisfactory arrangement
with respect to exchange rates, because we cannot continue
to have a declining balance-oi-trade and a declining balanceof-pavments, a"t tbe same time we are providing the military
17
and the security shield for tbe Free World and
at the same
tiMe that we lead all the nations in the world in the a.ount
of money we contribute in the form of aid of
ODe
type or anotlatr
to the less developed, or under-developed, nations.
We cannot
continue to spend tbat money unless we begin to sbow a favorable balance·oof-trade ..
Now, I think most countries understand tbis.
Tbey ~
the position we are in.
MEMBER OF
~HE
PRESS: Could
we have your analysis
of wbat this does for Amer ican companies that have branches
overseas?
I would not attempt to generalize
SECRETARY CONNALLY:
bel~ause
it depends, I think, too much on wbat type of operatioDS
they have; wilat financial arrangements they have made.
I thiDk
it is too problematical for me ta try to generalize what effect
it would bave.
I would simply
sa~
this:
I think as far as American
businesses at home are concerned, and American workmen at
are concerned, tila t., certa inly ,
hOM
these combined actions are
going to put them in a more competitive position witb their
competitors around the world.
That is part of what this
was designed to CO.
MEMBER OF
~HE pr~ESS:
MJ:".
Sec~:-etary,
sir,
I note
that you made an exception of cotton textiles for paying
the 10% increase . in duty.
18
What about synthetics and shoes?
SECRETARY
categories.
COI1NALLY~
COLton 'i:e:::tiles
\1:::8
one of those
There are two general categories that are
exempted from the levy:l.ng of the 10% import surcbarge.
First. it is levied only on those dutiable items
as they are now defined, and there are a number of things
on which dut ies are '{lot no\.! levi(3.d.
So we are not broadenin.g
the base at ull.
Secondly, thore \'1il1 be 8xemp-::ed from the imposition
of the 10% import surcharge, those items that are covered
u~cler
quantitative qUctas, and cotton textiles is one of those.
It has been
:1
long standing
Su~ar
~,grc0mcnt.
is anoSher, anrl so forth.
There are a :?ew of these tbat will no t be aifec ted
by the 10% :l:"port surcharge.
U'l<'~ln-r,'p
}';.\,,,-,,
, U~/l."
OTi'
.1.
'i'lJii'
PRTi'Sc.'.
_. _'1_..
_ r.:, OJ.
4
~th·.
Secretary r is Stec 1
on'~
of those?
INTERPOSING ~m!tIB:r.;R OF 'rHE pn:css:
illr, Secretary
when you dec ided
to freeze wages, prices, ar~ renes, did you consider at all
freezing proiits?
Lf not, why Bot?
SECRI;T/\RY CONNALLY;
There
";2.S
no
~utjlori'cy
to
freoze dividends, nlthough as you hcardthe Prcsiden't say
night,
l~st
he i:3 call;.Ilg on Americ2i,1 bus:il1('~·::ses to observe the
spirit and letter of it.
19
Again, we felt that to try to analyze and to lib
it apply to profi ts OVI~r a 90-0flY period was not a practical
We felt that, in controlling prieea,
manner of proceeding"
the profits of America!1 business have not been that big. As
buc:ioneSt~s,
a [latter of fact, profits generally, in Americ"n
declined ov€!r the last several years to unacceptable levels.
very :franltly,.
freeze r.)eriod
I:
WFe
,_
felt that by controlling prices during this
i'~ \~lou1
d take care of that problem.
MEi'.lBE:R OF THE PRESS: Mr. Secretary,
when will
the Council •. - the Cost of Living Council -- or tile Office
of Em.ergency Planning, issue wage!i,rice guidelines?
SECRETARY CONNALLY! Basically, we l1ave issued the.
by simp:.y snying °th8.t this free:r.o is all pervasive,
freeze
~pplics
will be a
to :111 wages J prices, and rents.
m0ch~.1l:i..s!:1
This
Now, there
through which except:i.ons can be made
but, even ill saying that,
I am relucta::lt to even sa.y it
because ! want to make it abundantly clear to the American
people that we
11!OS t
dOll
t anticipate making an.y, except in the
extreme and dire cases of hardsbip and inequity, becaU5E
this is a gO-day freeze.
hnl'dship~;
We knew that there will be some
th2re will be some inequities; hut we think, on
bul:1nce, beyond any question, this is going to
benc'ii'~
of the American people in many, many ways.
are goin~ to ask people to
bear
int\re totile
P..nd!1e
bear wha.t sacrifices they !lave \I
in terms OI the inequities that exi:;t, because
we eaJII
20
wc do not-- intend to set up, we could not
the bureaucracies
phy~ically
set up;
necessary to administer the progranl.
This
is why the President has been so unalterably opposed to the
imposition of wage and price controls.
This is why he chose
the route of going the wage and price freeze for a limited
period Qf time.
MEMBER OF THE PRESS: Mr. Secretary, GoMo. and
Chrysler have l'aised new car prices, but Ii ttle American Motors
has not, and Ford bas raised them only on two vehicles.
All
of the car companies have mandatory ignition control and
safety regulations.
What happens to the car companies that have not
announced price raises?
SECRETARY CONNALLY: I
dOll"
t
want to
get into
specific cases here but let me sitlply say this:
With respect to new car prices, if they were not
in effect during the month, and if they did not effect a
substantial portion of the trade or transactions during the
month preceding August 14, they I:lill be frozen.
MEMBER OF THE PRESS!
SECRETARY CONNALLY:
to every company, so I
dOD C t
MI'.. Secretary 1
Tbat same rule would apply
want to get into specifics
on all of the companies, because I
don~t
have the fact
n0\7,
of
when the rai.ses occur, and so forth ..
You call apply that criteria ! ;against all of them.,
21
MEMBER OF THE PRESS: Mr. Secretary,
will retail
foed prices be frozen, even though the prices of raw agricultural products will not be?
SECRETARY CONNALLY: Yes.
MEMBER OF THE PRESS:
Mr. Secretary, what about
denying millions of Americans the lower prices of foreigD
I think of automobiles; Japanese televisions; the
imports.
~lectronics
Industry.
increase in
-~he
Won~t
cost of those items?
SECRETARY COIU,T1\LLY:
import
surch~rge
and
Yes.
The imposi tiOD of the 101
is going to increase the cost of imported
it0ms into the Uni t.ed States.
-t~
this result, really, in an
Tilat is precisely the point;
try to provide a means and a -,ime wh0re An10rican Industry
Am0r;~Cal1
workmen can
regain their competitive spirit
and their coopetitive capabilities.
MEMBER OF THE PRESS: That raises a fundamental
Can the Anlerican Industry compete with the
world market today, without art;ificial protection, such as the
10% surcharge?
SEC!~ETARY COIH-IALLY:
discussion
hc~e,
We get into a very detailed
about what other countries do.
Le-c me make it abundantly
cleal~)
and American
business and American labor ought t:o understand this:
It :i.S the
President\~s positioll
that he is not, by
his speech last night, or any future actions that be proposes
22
to take, to build a tariff wall, or a wall of barriers around
th~tS
American market.
What be is going to try to do, as
a result of the actions that he has taken, be is going to
say to all
fail~
o:~
the nations of the world that, "We believe in
trade as \'Jell as free trade, and we expect to be treated
lil:e \'le have been trea-i;ing you.
tr
Now, the truth of the matter is that we basically
feol that barriers -- administrative and otherwise -- have
bonn
raiset~
It is basically
the vorld.
-U_ons
against Amoz',ican products by many countries ill
·i.;~.l3.t
u~falr,
and part of the negotia-
1,1.':1.11 :i.nov l'i:ably occur as a result of these act :~ons
is
go:.i.nr~
be
sure 'that all of
to be to
tl"]
-~o elim]_nai~c
'~hG
na-l';ions
those instances and to
opl~ra"i.:e
on
1b.e same basis; and
en that basis, we are willing to compete with any nation ir
th£' world,
0'11
[-_ny commodity.
rl:~K:lEER
wO'L~ld i'~
be
::~aJ_r
OF THE PRESS ~
:!r. Secretary,
in effect,
to say you are 1:elying 0n the voluntary, r:ood
instincts of the American pccpleto enforce this wage end price
:i:r€0ze?
Sl!:CRETilRY COn:·:ALLY: Yc:;, -i.:ha-i.: is br.sically \"/11:1 t
I said.
I
~ant
For those who arc not ;-If)i:iv2.i.:c::':i by such ins
to point out
'~h~t
we have
i~:unc~lve
powers'
i:inc-~:
and
we ha.ve the I>ow·~r to levy :fines .J;:' $5,000 per i11cidcni:;
;)'W!
the Department of Justice will be !>reparcd to exercise tho;;c
powers if it becomes necessary.
MEMBER OF THE PRESS:
does this Order
Mr.. Secre tary ,
supercede Executive Order 11158, as to the Construction
SECr~TARY
CONNALLY:
Industrr
It does not.
No..
MEMBER OF TIIE PRESS: I t does not?
SECRETARY CONNALLY: :No.
It does not.
Mr _ Secretary, a contract
!iEMBER OF THE PRESS:
between "tIle Bell Telephone System alld the C":lnmunications
Vlorl~ers
of America was ratified at 1 :00 o\)clock Saturday
afternoon by the Union
M~mbership,
retroactive two weeks.
Will that increase now go into effect?
SECl1.E'rARV CONNALLY: When was it to be effective?
~f8~IBEH
rfll~
OF THE PRESS: I-I.; 'was :."'etroactive two weeks.
contract had 0Apired; it
Sf~CRETA.RY
tool~
two weeks to
r~:tify
it.
CONNALLY! This is why I said a moment
ago I did not want tc get into these fact situutions.
From
what I undern"i;and of what you told me f probably so, but unless
i t
~'JaS
in
p erni.tted
C:~f0Ct
c.lur ing this prior month, it \;rill
110t
be
to go into effect.
MEMBER OF THE PRESS: HII'. Secretary, you mentioned
th~"~
there vlould be some hardships for Americans.
SECRETARY CONNALLY:
Yes.
MEMB:€:R OF THE PRES~ ~ P~rticularly those who are
strnnded overseas noVl, with
What is the
a l:bni tee amount of dollars.
Government going to do until the dollar
6/
24
situation stabilizes to help, for example, the $5.00-a-ctay
college kid overseas?
SECRETARY CONNALLY: He may find his $5.00 is worth
$G.OO!
(Laughter)
You are assuming
that just the bottom is going
to fallout of the dollar.
Let me remind you that, in terms of the Free World
Gross National Product, the United States of America produces
48% of it.
Let me remind you that this is the strongest economy
on the face of the earth.
Let me remind you that every country in the world
pegs the value of their
curl~encies
to the dollar ~
Let me remind you that no one kids theJ!lselv2s.
We get :into periods of disparity here, and diseCiuilibrium..
We have been in one for the last several months
where your sbort term interest rates drew money out of
t118
United States and created instabili"ty in the intc·rnationa1
mOlletary field. But to assume "i:hat because the Presiden-\";
has moved to suspend convertability of -the dollar
the dollar is going to hit rocit bottom is, in my
that
jlldgmen·~,
a very great mistake.
It may
los~
a little bit.
Lool~
what happened on
1
the market this morning.
In the las t report I had,
the .....t
on the Amer iean Market of the Stock Exchange was up 20 poiDta.
They traded over 9 million shares in the first hour. The'_re
to
up/17-1!2 the first hour, which is the largest trade ever 1.
ttl;.) history of the United States. Now, this is nothing in the
world but a manifestation:
are up;
The Bond Market is up;
Municipals
Treasuries are up; the rates; it is nothing in the
world but n manifestation of confidence.
The London Times this morning, in the lead oditorial:
"United. States gets tough, at lnst.u
This is a recognition that the action that the
President has taken is not only going to stabilize things
at hom<1,but it is going to stabilize the dollar around the
world.
mEL~BER
indication
f~om
OF rfHE PRESS: Mr. Secretary, have you any
the
foreign, central banks what they are
going to do?
MEMBER OF THE PRESS (Llterposing):
~iJill
Mr
#
Secretnry,
you c,.,unt 'i:::-,o imports 'as of the 14th, or will you count
the im.ports
~t
the time they are exported from the foreign
country?
SECRETARY CONNALLY:
Ii~
It will apply to goods i.n
t:ran.sit; anything that enter!"s in-;:() the United States aftc!'
the 14th is going to be subject to the surcharge, if
not exempted ntherwise.
it is
26
MEMBER OF THE PRESS: Have you any indication, Mr.
Secretary, from the foreign
central banks as to what action
they are going to take vis-a-vis thj.s floating dollar?
SECRETARY CONNALLY: No, I do not.
I want to say
to those of you who don tI t a lread.y know it tha t, 3.bou t midn ight
lagt night, Under Secretary Paul Volcker, Under Secretary
of the Treasury, left with Governor Dewey
Reserve to go to
D~ne ~f
the Federal
London~
A meeting will be held this afternoon witb the
American Embassy at 4:00
SOii!S
of our
:~rincipal
with representatives of
o~clock,
trading partners i.n London.
Governor n'ne will go to Holland, Belgium and,
probably, Switzerland t today, or ·tomorrow, or the next day,
I dontt know what the itinerary is.
Mr. Volcker might possible also go to Paris and
Bonn.
So our people are tber0.
They are already talking.
Eu', so :far as the reaction of th'3 central bankers in Europe,
fr~ru~ly,
I an unable to tell you, wbat th3ir reaction is.
MEHSER. OF THE
PRE~SS:
freeze, what is going to happen
'ili.r
f
·;':0
Secretary, since the price
the imports
lloW
coming
with ....
~ 'OCJ'
'. " "tax ?
SECRE'fARY COnNALLY: Thr)y are going to h2.ve a tal:
levied on them.
QUBER OF THE PRESS: P~·.. ices wril go up
J
rie;bt?
:i.D
27
SECRETARY CONNALLY: Right.
MEhffiER OF
Tm~
PRESS:
Mr. Secretary, after the
initial response of optimismJ what is your estiaate of the
the !'eacticn of the international bankers to the United States
susPGlld:·~ng
floating the dollar?
SECRETARY CONNALLY: Well, I think the reaction is
going to be good. They know,as well as we know, that over
the past 20 years or, basically
res~rve
since World War II, our
assets hnve been declining; that our liabilities
to foreigilo:'."S, both officially and to individuals, have been
inc::-casing, and those lines on tl'!e chart crossed in 1960,
and ·che s1 tllation has been deteriorating since then.
They knOl'J that we have problems wben we are running
a doficit on our balance-of-trade; when we arc also doing
all
of those other things in terms of aid, economic, humani ..
tarian, and militarY,for other cO"Jntries around tho world;
whop '"Ie are also providing the military shield for the Free
Wor1 d.
~:hey
!:ncw all of this.
I think i"t is going to be
pleasing to them. I think they aro going to be delighted that
the Un! ted
St~. tes
has faced up to the facts; faced up to
reality; and thu·' we are setting about -- the President is
setting about -- to do something Lbout the basic disequilibriUl
th~t Gxists in oU!' relations witll the p:\"incipal trading
a:eou.nd the world.
partners
It cannot do anytbing but breed confidence.
MEUBER OF THE PRESS ~ Mr. Secretary,
how was the·
I
/ l/
28
figure of 5%, in cutting the Federal work
forc~
arrived at?
How much of this is going to have to be achieved
by firing workers?
SECRETARY CONNALLY:
The President felt this was a
very reasonable percentage of reduction.
He felt that every
Department, through attrition, could lose this percentage of
its employees and not do violence to the quality of
service which it
provided~
"a don't now anticipate thnt there will be any
substantial firings at all.
about by
Nearly all of this will come
attrit~on.
MEMBER OF AUDIENCE: Mr. Secretary, on the Steel
settlem~nt,
for the manufactureI' who has felt the increase,
the 8% increase in prices, as we have, as a ma.nufacturer,
we have not had an OPPoI'tunity to be able to pass this on to
onr customE!rs.
Is it the
President~s
planning that we would have
to freeze our prices for the next 90 days?
SECnETARY COUHALLY:
ME~'.BER
Who is "we"?
OF AUDIENCE: We are a manufacturing company,
SECRETARY CONNALLY: We will talk to that at
SOI!ie
other timer
i.
:lm
it in tIl i sway:
not unmindful of your problem. Let me answe:!"
I will answer as I have befo:re,
If you have
not established -- if the subst~ntial portion of your trans-
actions occurred at the price in the preceding month prior
to August 14 -- you cannot impose it.
OF THE
UE~mER
pro~SS:
Mr. Secretary, won \' t this
aC';;iol1 cause pI'ofi ts to accumulate
to the very speculators
tlln t the President was tallting about last night, because
Wile)
anybodJ
sold the American dollar short will profit by this.
Th'a second part of that quest ion:
Won r t you be
punishing the firms and unions which exercised restraint in
the past two or three years, and have not gene into this
be
inflationary cycle, aud/re,Jarding those who got 011 they
possibly could?
SECt1ETARY CON'NAL!JY:
Ar0 you talktng about, st:rictly,
the domestic front now?
~:~Er,~BEF.
Oli' 'rIm PRI:SS: Both on the domestic and the
In·,-e.,..
....... .', i n""l •
' . .!' ... M.d '" 0 ~a
lfon c t
the !.n-cernntional speculators ....
:::ECRETARY CO?lNALl,Y (Interposing)
Let s break it down.
You are talk:ing about apples and orangp.s, here.
(;'n the
r nternation.al
T!le President -coo!t no ~.ction wbatsoever
going to be J.·ew:.trded.
,,',i'ch
l'cr.:pec·~ to the
E~::HEER
up; if
7'\n~_:t
L"'" -
:,~ot!
f:,;:oirt J speculators are not
price of gol"'.i, and doesn~t intend to.
Ol" TEE PRESS: l'f I could follfiltl that point
sold American dollars and got Yen or r;1arks in the
two or .!·hx"',....
f_ r,.,;
I!'....
...
'··~!"\.,7
,~ .':,. \c: ;'-,:..0
,
expecti::lg the value of '(:he dollar
to go o"''''n,
~~~
caa yeu no t b uy more
dol1~rs
now?
(I
I
Y
SECRETARYCONNALLY:
6
I
/
/
V
30
The specula tors -- this is
exactly wbat the President was talking about:
speculators were in the markets
oversea~
that the
nnd he suspended
the convertabillty to try to strike at those very speculators.
This is precisely the point that partially caused his
act~oD.
So far as the American domestic front is concerned,
you call always pick at any particular in time -- you cannot
say that all equity in the United States exists at any particular point in time.
Now, I have already acknowledged that there may be
some inequities.
It is significant thnt most of the bargaining
on the lua,joT contracts has taken place and, so far as we know,
I don r t know of any period of
ti~e
that you .could pick where
less inequities, less hardships, would result from the
imposition of
R
R
wage and price freeze, although
that was not
consideration, very frankly, in the establishment at the
time.
r!ELU3ER OF TUE PRESS:
This is aSGUm0rl, and I would
lihe to clear it up,
Hov about Steel, which is under a
limitaton to foreign countries.
vol~ntary
import
It will be jncluded in the
surcharae, in that correct?
SECRETAD.'l CONHALLY: Rir:ht.
An~!iBER
Canada?
OF THE PRESS: How about automobiles from
31
SECRETARY CONNALLY: Well, I aa responding Dew as I
~Jases.
told you I would not, to specific
I think the surcharge will apply to Steel.
It will
not to cars from Canada because of a specific bi-Iateral
~~
alent that the United States has wi tb Canada with respect to
automobiles.
Mr. Secretary, how far did
MEMBER OF THE PRESS:
you. have to fight portions of this program?
~Laughter)
to lay your job on the line?
SECRET ARY
CO~lNALI,V:
Did you ever have
No. No. No. No. No"
On that point, the answer to that is no, a categorical
Over the last several weeks and months, we discussed
a great many things.
We marched up the hill and down the
hill, on acceptability of this plan, versus this plan, and so
fOI'th.
~bere
has been a tremendous amount of input in to
the President on theory, on practice, on pragmatic solutions
to these problems.
He has never been willing -- and thank
heaven, be d:Ld not -- he has never been willing to act in a
plecemeal fashion to solve these various problems.
an interrelated, cohesive program.
He wanted
Finally, notwithstanding
th€di vorgen"i; views represented among those who were advising
hiT!l, \7hcn the decisions were made, we were al~ in agreement.
No.
Nobody laid their job on the line. There could
not have been a more reasoning,
intellig'~nt,
objective discUS·
32
sion of trying to lay before him alternatives.
MEMBER OF THE PRESS: Mr. Secretary, in Steel, does
this action postpone the 8% price increase for 90 days?
SECRETARY CONNALLY: On Steel?
MEMBER OF THE PRESS:
On Steel. It was not in
effect the 30 days prior to August 14.
SECRETARY CONNALLY:
If it was not effective, if
substantial traDsactions were not engaged in at that price
during the 30 davs prior to August 14, it will not go into
effect.
all of
I don t t know the facts on Steel.
Illy
You have to ·'ake
responses to these particular prodl1cts now, you
have to take them in the light ox my lacking the precise
knowledge as to when these prices went into effect, but
if you are correct -MEMBEll OF THE PRESS: I:l it was not in effect prior
to the 14th, it uould not go into effect?
SECRETARY CONNALLY: That is correct.
MEMBER OF THE PRESS: !1i'. Secretary, two questions:
First:
Will this price freeze affect increases in
college tuition that would have 'caken effect with the beginning
of the new semester?
SECRETARY CONNALLY:
I am not going to respond allY more
to these precise questions. I don(t know the answer_
MEMBER OF THE PRESS:
Mr~
Secretary, a general question:
What 00 you foresee at the end of the 90 days?
33
SECRETARY CONNALLY: I don ~ t know. I don' t know.
One of the
pri~c1pal
charges that the PresideDt . .
given the Cost-of-Living CouDcil is, during this SO-day period,
to talk to Business; to talk to Labor; to talk to every
interested group; to Consumers; Agriculture; Members of
Congress; everybody else tbroughout this Country, "to try to
see what are tbe best plans for following tbis 9O-day wale
and price
fre~ze.
What actions do we Deed to take, if any?
i\iEMBER
OF THE PRESS: W:1.11 the Council have heariDp,
Mr. Secretary?
SECRE'.i.'ARY CONfiALLY: No.
meeting.
We had one
There bas been no Council
scheduled fo):" 10:00 o9clock tbis morniDg
and it obviously has been preempted by the announcement that
I made earlier about the President"s meeting with the leader-
ship.
So we scheduled no heariLlgFo, and I donft know.
MEtffiEU OF THE PRESS: Mr. Secretary, would you please
say what you mean when you refer to a wage increase
effect during the
activity for a
b~se
~)a.rt
period.
b~ing
in
If there were some retro-
of that period, but it bad not gone
into the pay checks yet, what is the effect?
SIECRETARY
CONNA'LLV: Well, aga.in, 1 don( t want to
to ansv/cr' fact situations here 'i:Llat I dont't have time to
analyze.
Le"t me try tc answer it this way:
try
34
Let's assume a contract was entered into and
becaae effective last June, we will say, and
let~s
assume that
in the month of September -- on a specific date -- September 15,
there was supposed to be a 15" increase per hour under the
terms of that contract.
That 15% increase could not become
effective.
~mMBER
did
specul~tion
OF THE PRESS: Mr. Secretary, to what extent
enter into the problem of the dollar?
SECRETARY CONNALLY: I cannot answer that. I dontt
ltn(.w.
Beyond any question, there was some speculation of
considerabl€ proportions but I
don~t
bave the evidence.
I (ion f t have tbe pi'oof to say who was doing it or, really,
fOl'
what pur-lose.
mU(!ll mOlley
But beyond any question, there was too
moving in t be markets around the world.
~EMBER
OF THE PRESS: Mr. Secretary, can you
say that
the 90-day wage/price freeze will surely end at the end of
90 days; will probably end; or mZlY be dependent?
SECRETARY CO!fNALLY: Well, I appreciate your giviilg
me a multiple choice. I have not had any of those since
college days, but 1 donet know,
I
don~t.
know.
That is
goj.ng to be determined by circun13tances tha t occur between
no~'
anti th€ end of the 90 days.
The President
He very much bopes that
90 days.
ha~
Let me answer 5. t this
\'JUy;
not foreclosed any option.
thefree:~e
can end
1'. t
the end of
You know his antipathy toward controls over any
protracted period of ttme.
1 hope that that will occur, but I dontt want to
make any categorical statements about what is going to baPPII
because I, frankly,
don~t
know.
That is why we have a
ThiE: is what we arc going to devote most
Council.
effort to for the next 90
days~
ot our
to try to determine wbat
c an be done, and what series of steps, even, can be taken,
depending on the circumstances.
!IEltBER OF TIlE PRESS:
Vlil1 travel, sir, be included
cons Idel'e1 -- as an import and/or is there a possibility
thnt
II
tax
m~y
be considered on "traveling abroad for Americalll
Jt is a two-part question.
(1)
Would foreign travel be considered an
import under th·g 10% levy?
SECP.ETARY COIiNALLY: No. I don't think so.
MEUBER OF THE PRESS: Where would
frcQ individuals?
\'JC
put the questiol
Where would we put these questions? To
Treasury?
SECRETARY COmTALL Y: Oh, no ~
(I~ ugilter)
SECRETARY CONNALLY: Send them to the Office of
Eme;::-ge:n(y Prepul"edneEs.
S::l'iously,
General L;-llcol::t will have the respoJlSl~
foX' the atirn.:lnistration of this program.
2.9
He is trying to ...,
best as he can, and as quickly as he can.
We
would~
36
we would not bave an enormous
number of questions.
We
hope we won't be inundated because our position, I hope, is
clear.
We intend to make no exceptions, barring an inequity
of major, catastrophic proportions, almost; so, for the most
part,
if people want to satisfy their curiosity, I hope
thl)Y ask
their neighbor
instead of writing us because
we are not going to be equipped to bandle requests from 100
million people.
MEMBER OF THE PRESS:
How does thio affect controlled
rate increases, like the ICC might have?
SECRETARY
OOm~ALLY:
It is going to affect all
increases.
MEMBER OF THE PRESS:
Is it your hope, Mr.Secretary,
that interest rates will remain at their present levels?
SECRETARY CONNALLY: No.
interest rates will come
It is my hope that
dOWD~
ME!mER OF THE PRESS:
Mr. Secretary, if it were
to you, sir, would you accept tile Republican Vice
SECRETARY CONNALLY:
Doesn~t
offered
P1~esidency?
sonlebody want to put
an end to this press conferenc&?
MEAmER OF THE PRESS:
l~.
payer :'enefit ou his 1971 illcome
1
Secretary, will the tax-
from the tax proposals made
last nlgbt by the President?
m~:cn.i?!.'AltY CONNALLY:
Yes.
One of the proposals that
the President made was to recommend to the Co~ress that th~
incre2sed exemption that was scbeduled to take place 08
J a :luary 1, 1. 973, be moved forward to January I, 19'72; 80 till'
tllnre will be a total, in January 1, 1972, of $100 inch...
in the exemption, and just the moving forward of tbe $50
ex.;:mption, trom £73 to 072 , will result in approxi'alntel,
$1 billion of benefit to the taxpayers of the Country.
MEMBER OF THE PRESS: That will be on '72 iDeo.e,
not on f71 i:ilcome?
SECRETARY CONNALLY: I beg your pardon. I misunderstc)ot1 your quest ·on.
~lEJJBER
19~'1
j
OF THE PRESS: Will there be any benef! t for
ncome frcmthe tax
u~l.
proposals?
NOLAN: On the automobile excise tax.
The automobile excise
SECRETARY CON1{ALLY: Yes.
ta::, lr.O:-;t ce:i... tainly, if
the Con 6ress
We certainly a.nticipa te that it will ~
acts favorably on it.
This will mean, for
the 10 n:O.lion people who will boa buying automobiles. $200
per' ca:l.·,
Mi!:ItBER OF THE PRESS:
Is there a possibility, Ir.
Secretary t that the President mi:?;bt ask the Congress to eut
i'~G
recess sllor'~,
:;0
it can act on some of these recommenda-
tiCllS?
sr;C;1ISArrl CONNALLY: No,
I don C t th:il?k so.
lIe
has
asl<.eu aFd pi'oposed t.hat, the effective date of these measures
..
which hrve tc be acted on by the Congress--be effective as of
/)
I~, ~
'LV
U
38
today, or as of yesterday; and I think if the Congress aets
favorably on the., they certainly will act with this
active feature in tbea.
the delay in
t~.
ret~~o-
So that notbing will be lost by
Congressmen are scattered allover this
Hatio~and
allover the world.
sufficient
urlenc~
We don 9 t feel there is
under these circumstances, to call tbe
Congress back into session.
MEMBER OF THE PRESS:
A clarification on auto
prices, sir.
Must the auto companies charge 1971 prices for their
1972 model cars?
Secondly, on tbe excise tax --
SECRETARY CONNALLY: Wait a minute. Let me answer
that one becaause, again,
we
ar~
getting into fact situations
on particular commodities.
Now, I
don~t
know what the facts are.
We will find
rut. I have seen 1n the Press that some increases bave been
announced but unless those prices were in effect to a substantial delree, nffecting a substantial portion of the market,
prio~
to August 14, then the increases will not be allowed
under the wage and price controls.
HErBER OF THE PRESS: Even if it is a new product?
SEa:!RETARY CONNALLY:
MEMBER OF THE
Program:
Ev~n
if it is a new product.
PRESS: Mr, Secretary,
your
Investment
Will tbis affect your proposed administrative cbanges
in depreciation?
SECRETARY CONNALLY: No, it will not.
MEMBER OF THE PRESS: 1Ir.
Secretary, are there IIJ
plnns for the United States to intervene to keep tbe dollu
at a narrower band that it might go in the market,
either upper or lower?
SECRETARY CONNALLY:
We have no plans to do so.
The Secretary of the Treasury bas the power
to do so,if 1t
is deemed to be in the interest of the United States.
MEMBER OF THE PRESS:
"iou have no plans now, to do
so'?
SECRETARY CONNALLY: We have no plans, now, to do so,
UMBER OF THE PRESS: Mr. Secretary, about a 11ttle
more than a montb-and-a-half ago, at the White House, you
defended the President c s actions in refusing to go along witb
a tax cut, in refusing to go along with the
~:r.age
and
~ice
Review Board, and you very strongly de£ende:f tbat, and said thai
was the thing to do,; with confidence; that everything was IO~
along fine.
Don f t you fear tha t you are going to create some
kind of a credibility gap, with this kind of a change, "that
will match th3 credibility gap on the Vietnam Wnr.
SECRETARY CONNALLY: No.
I certainly do not.
In the first place, I said four things on June 27U,
or the 29tb,·
in that press conference:
40
I aaid we were not going to a Wage/PTice Review Board,
and we have not.
I said we were not going to "a.le and Price Contl"ols,
and we have not.
I did say we were not going to ask for any tax
increases.
I w1ll eat those words, but I will say this:
I
will have to eat fewer than a lot of other folks I know.
(Laughter)
But of the four items that I laid down, that we
were not going to do, we are not doing three of thee.
He is asking for increases -- changes in the tax --
simply because it is part of a package.
there is any credibility gap_
service when people in high
Now, I don't think
I think we
dminlstratlv~
all do a dispositions in this
Government enuDciate a new policy, or change of policy _.. ror
beavenfs sake,
there
i~
con9tant except change!
they bad
dolt
2
a saying
~hat
there is nothing
Tbe American people would think
for President if they had one that they
tho·Jght would take a position, and never change it.
I said to the American people on Face The Nation
a c)uple of weeks ago, that a President who was bold enough
to
·~ull
go!nr. tc:
off the China policy
"0
bt~ld,
e:qually
and the China move,
'~lQ,
is
I.ad courageous, in the
administrat:on of policies affecting tbe domestic ecoDomy.
Isn't tbat substantially what I said, Mr. Schorr?
a
IIR. SCHORR:
Tbat is substantially wbat you sald
the course of saying you expected
SECRETARY COltlNALLY:
DO
ta
change in poliey!
I agree witb that ..
Let me address myself to tbat, because tbis dOH
ba 'Ie
s~r ious
conota t iODS ..
What bas the President done here?
Cculu we have, two weeks ago, talked about -- or
three weeks ago, or six weeks ago -- talk:eci about the
imposition of a wage/price freeze
No!
Cert~inly
cot:
OD
the American econoa,?
You could not, bave done it
then.
MEMBER OF THE PRESS: Tbe Democrats were recGmaendiq
it.
SECRETARY CONNALLY: Well, the)- didn't have to act.
When you are out of Office, when you have no responsibility
for decisions, you can be a Statesman and say lots of
ME1IBER OF THE PRESS:
thi~s.
Were you recommending that
twv we6k& ago?
SECRETARY CONNALLY: Let me pursue this.
Ii we had talked about the imposition of a wage/price
freeze, what do you think would have bappened?
this country would have Tl!sbed to rai.se tbeir
wages.
Everybody in
pri~~& ~
increase
You would have destroyed -- it would have been
a counter-pr-oductive move of major proportions.
Now, v:'hen we did not announce to the world tbat
/)7
were going tn J at some fu·t;ure date,
·,4'\'.~
suspend the
convertability of the dollar, of course,
that.
it;
42
we could not do
Of course we could not talk a.bout it; we could not leak
If we had, it would have
we could not hint it.
dj.nastr01.!S
i;l
the
narkets
of the
world.
~een
Billions",
tens of billions, of dollars would have changed bands.
So, because an Administration changes its policies,
01' enullcintafJ
thlS'se,
·i;hr.l:
a new one, wha1 e i, contains elements such as
4
the internationa·t and the Domestic front,
both in
?,~{~Uir0
absolute secrecy, t think it is basically unfair
to Gay, "I,\'lell, :{O" misled us.
r,c~p.~:aEn,
the'>e
IF
OF 'rIlE PRESS:
ti}.in;1":; in T>lini?
3:~CnEri'ARY
CONNALL'{: We
certainly were talking
al):;-~t
tho;],
?F;:;:jER OF 'I'HE PRESS: illI. Secretary, you said
thi~':;
you di.e'::
vBc~tion.
I
e~:pcct
'10"(
expoct theBe
was oaly laEt
whi~h
mC:J:;ur~s
when
yo:_~
ye~; ~:2rday
went on
wee~.
tl1s",,--
n:CCl~ETI1RY
Y.
COHNALL" 1 ,
-- 'co be announced lasi"
"!>(·lieve that -.'las the
In
last evening.
~ny
ji
lr)',·i~.
(i.,-:e~:tion.
event, ! did not 0xpect them to
~e
anncunc~d
I was not in the least surprised '~hat they did
If I had thought they were
occur, within some time frame.
th,lt imminent, I would not have been able to enjoy the one
da: r at home.
Lill:'ilBER O}J
're
PRESS:
Ninety days from
DOW,
where
do you want to see the key economic indicators in order tor
YOll to be able to Gay that this program was a success:
Industrial production, unemploynlent, and so forth.
SE8RETARY CONHALI..Y: I would not want to put any
UEi\mER OF THE PRESS: What sort of progress would you
like to see?
SECRETARY CONNALLY:
Vloald like to
~'ee
-- or figures.
more jobs created.
Obviously, I
I would like to see more
people hir.ed to mee·' what 1 believe are goinf; to be the
ad<U tio'1.(11 d,;}mands of Consumers.
UEr.IBER OF
T~
SB:~RETARY CONNAlILY:
machi~e
Could you quantify that?
PRESS:
I would like to see more orders
tool goods, in particular.
I would like to see
mo~e
orders for dealers for
au·;:omobiles anu the things that ;Jasical1y affect the framework
of the econ.ouic base of AmE!xica.
F.m11BER OF THE PRESS:
Could you put some
SECRETARY COJUTALLY: No. 1"0.
numbers
OD
I don 9 t want tQ put.1f
numbers on it.
I thinlt it is too early
0
rJEMBER OF THE PHESS: Did you consult with tile
AU"~omobile
Industry, particularly Mr a Roche at General
Motors, prior to the public
S~t:CRP.TARY
announcem~nt
CONI'TALLY:
No~
of this program?
Did we consult with him,
in what connection?
Did the Administration
ndvise him of
w~at
these plans w0re?
SECRETARY CONNALLY: No. No.
myself about tho details of
I talked to Mr . Roche
pricing, to try to get
thei:~~
some facts with respect to tile Industry, but beyond that, \"Ie
did not tell him what was in the
prog~am.
Why did the Administration
haV0 to act so ouch more quickly than you had anticipated
last week?
SECRE'fARY CONNALLY: It was
of
::l
series of events.
I dl)ntt
any particular cause to :it.
r~Dally
inc~~.'easing,
wished
"".l
it~o
e,~;!anding
91i;:pand.
hut not [,1!:Z1.!.c!}.cn·i:ly to
h":\
a + "-;"e .,..·.,t
.~ ~ e
...
,::. ilad
'"'
Lnc.w that you could assign
As!. have said, the ecoiJ.omy
was expanding; hut it was not
Prcr:;idcnt
llope~
<.
'.
'.. •
culmination, 1 think,
2
~'jl"l
.• -
~"r---i0
1 _"
,.
as rapidly as th8
The job creatio:"l was
reduce unemploymen'c
m':'1~4';~I')'
1.<: .• - ·-l:-b
·p
y -...
o····rl"'ss;
b
.... •
aQ'~"lll'![jt
a •
influti.on. -- 4% in the firs'i: six months, verSllS 5.5% last
year -- 'bu', it still was not good enough.
Some of the indicators led us to believe that it
45
in the last part of the year.
nligbt even worsen
not be sure.
We could
I think if you had to assign a proximate cause
in terms of the tort language of the lawyers, if you bad
to assign a proximate cause to it, it would be the deterioratlOl
of tbe balance-of-trade figures; the International monetary
situation, where there was a high degree of instability
and, in my judgment, considerable speculation.
~~MBER
OF THE PRESS: What is the balance-of-trade
d.eficit?
IN'I'ERPOS!1ifG QUES'rION BY ANOTHER MEMBER OF TIlE PRESS:
AIr. Sec:cetary, when you say this docs not supercede the
Construction Indus try 1 do you mean this does not apply to the
Construct::i.on Industry at all?
:;:t will
SECRETARY CONNALLY:
mean the
applY1 but it will not
di.shanding of the Order VIi th respect to the
Construe ti(~:.1 Industry.
That was my response.
IvIE1!BEn OF THE PRESS: So the Constructi.on Industry
Sta~ilization
Board would use the criteria set up by this
Execut:~ ve B{)~_rc~?
Sf:C:ETARY COIUJALLo/:
Oh, they will have to b'3 under
the same rules as everyone else.
P,1E?!r3ER OF THE PRESS: flir. Secretary, by reduc :Lng the
Governrr:eat spending at the same time you cut taxes,
blunt the
eco~omic
dont-€; you
impact of the program considerably?
SECRETARY CON!'TALLY:
No# I dont t think so, simply
46
because we tried to eliminate Federal spending in the areas
that were least productive from the standpoint of job creation
and economic expansion.
On the contrary, the President 9 s
very strong view is that the Government cannot hire everybody
that wants, or needs, work in this
Country;
to depend upon the private sector to do it..
hat we have
So that the
st:.Iilulation that is inherent in the various provisions of
this -program, the economic stimulation, ought to be of
sufficient magnitude to far outweigh the reduction of
Federal spending.
On the other hand, be felt that it was, also,
a part of this entire package to say to the American people
th~t
we were committed to fiscal restraint and fiscal responsi-
bility, and that even though he called for a 5% cut in Feder.a1
employment, notwithstanding that, we are also -- well, let
me give you an
~9xample.
Let me just give you a comparison:
For every 100,000 new
25,000 jobs.
~~ars
that are sold, it means
It is not inconceivable that we will increase
the sale of (:ars through th..) elimination of the excise tax
of 10% surcharge, the Investment Tax Credit.
Lt
inconceivable that we will have half-·a-mil1ion
is not
moreC~H'S
sold next year than this year.
If, indeed, you do, you ,\,/i11 provide jobs for 125,000
people by that one thing alone.
So that the way that he had
to do this was the obvious los~ in terms of the number of
47
people employed by the Federal government, yes.
(1)
WheD you
cut the number by S%, you affect some people who want to le.",
for whatever reason, because this is going to come by
you' affect it adversely.
attrition,
But when you sti.ulaq;
when you take the actions that he bas to rebuild the
confidence, to stimulate this economy 1n so many ways;
when
you put so many dollars back in tbe pocket of the
individual Americans, he felt those moves fa:r outweigb the
others.
AffiMBER OF THE PRESS: Following up on that
point, iIlr. Secretary -lilEr,mER OF
~~11E
PRESS (INl'ERVENING):
Mr. Secretary ,
1933 wns one of the historic tur:':ling points in the GoverDllent
getting involved in managing the economy.
In the light of "bat
you just said, do you now feel that this is another one of thOl
h istorie turning points; that, hereafter, the Government will
hat'e to continue playing an increasingly greater role in
the ac<on.onlY'?
SECRETARY CONl\fALLY: Well, we would hope not,
l1cpa nl1t.
We
'fhere are people in this Country who call for
tory control on V/&.ges and prices.
Dr. Galbraith
theory.
concept:
is the leading disciple of this
This Ac1ministrat ion is committed to the opposite
That the prog:w:-ess of this Nation, as a Democracy;
the success of this system, as conceived, bas been the
lOul
mal
48
the imagination, the
Economy.
vitalit~
of the private sector of this
The very thing that we are trying to emphasize
here 1s that the President wants to make abundantly clear that
be is not willing to supplant the private initiative; the
private vigor and vitality
hand of Government.
stood your
ques~ion
~
with Government, and the dead
It is just
~he
reverse of what I under-
to be.
MEMBER OF THE PRESS: Governor Connally, you said
eaTlier that the U.S. is facing up to reality.
The Senate Democratic Leader Mansfield said, "Better
1a te than ilever. It
Why did it take the President so long to face up
to reality'?
:3ECRErARY CONNALLY:
ci:t:'cumstancos
change.
reality today.
tomorrow.
You know, conditions change;
What vias reality six months ago is not
What is reality today, will not be reality
It will be history.
Sn that any President must respond to the
ci:?cumstances that exist a"r, the time of the actions that he
taltes.
~m}mER
give a specific
OF 'rHE PRESS: Mr. Secretary, you did not
anSW31"
earlier on the possibility of
retroactive wages.
Do you expect an Administrative
before the gO days are over?
position on
this
49
SECRETARY CONNALLY: I would not want to try to
anticipate what the CouDcil will do during the next 90 days.
MEMBER OF THE PRESS: One final follow-up questiol,
lair. Secretary.
Wby was the Automobile Industry picked out for tbe
$200
cut in the excise tax; plus, they are certainly goln,
to take advantage of the 101 surcbarge on these foreigD eare
cOluing in,
whe~.
it is a pretty healthy Industry.
ba7ing a good year.
The only real price
They are
comp~titloD
in
this Country, any more, bas come from foreign cars.
SECRETARY CONNALLY: I don't believe Ford, and General
Motors, and American Motors, and Chrysler would agree that
they
compete with one another.
don~t
picIted out.
But they were not
It just so happens that the automobile excise tal
-- outside oX the Telephone tax -- is about the only excise
taA
of this kind left.
It is an inequitable tax.
It was imposed in
1917; it varied up and down many times since then, but this
is a very basic Industry.
The manufacturing that it repres'iDts
is a very basic Industry in America.
It bas an impact on tbis
Vlhcle Economy, particularly on t ae Steel Industry, which is
an even more basic Industry.
It is, I think,
that one
c~ut
estima·~ed
-- and reliably so--
of six people who work in America are directly,
or indirectly, affected by the Automotive Industry.
So it is
50
a very ba.sic Industry.
10
But thnt was not -- there was
attempt to do something particular, or special, for tile
\utomobile Industry beyond this general concept, and it was
111
area \"1hcra we felt tha t, in the final analysis, i. t is an
in:)qui'Gablc tax, im"osed
If you jilGt
~o
:ill
did not
!tl'lOVJ
~ny
~O::-llg
~200
to gc out and picIt exciae taxes
is, bnsicnlly, a!l inerj,uitrltle tax"
aL~oVJed
:)f
~Nant
an Industry.
you could apply therll t'O a whole lot of people ~
apply,
nl:1;;
u~,on
t~le
It has just been
light of circu.'i!s·;:ances that existed.
We
of any het.ter way -- the President did not know
oe·,;te:r \'lay •• - to gi "{TC bacrt to 10 million people, who are
to buy a bas5.c commodi ty produced in this Country, about
each, for those who buy a car.
I think
i~
is going to
l'la I'e a treil'.cndous impac t .
1Z\l:IiBER 01" ~~lij~ PRESS: Tr..lank you, Mr. Secretary.
(Whereupon. n t 1 ~ 00
~oi-'.icrence was
conc! 1 iJded. )
0
\1
I~ lock,
p. 111., the press
artment of the TREASURY
at. 18220
tElEPHONE W04·2041
August 16, 1971
FOR IMMEDIATE RELEASE
Treasury Secretary John B. ConnallY"Chairman of the
Cost of Living Council, said today that Importers will be
permitted to pass along to the Consumer the amount of
the additional duty on imports being levied as of today
in accordance with President Nixon's order.
For example, an item costs $100 to the importer
with a 5% duty on the item making a total cost of $105.
It subsequently retails at $130. Under the President's
order there will be an additional $10 duty, making the
total cost to the importer $115. The additional $10
could be passed along, making the retail price $140.
000
IMMEDIATE RELEASE
Office of the Vlhite
AUGUST 15, 1971
HOllS~
Pres!) Secretary
._---------------------------------------------------------------THE WroTE HOUSE
ADDRESS BY THE PRESIDENT
ON NATION\YIDE RADIO AND TELEVISION
SUNDAY, AUGUST 15, 1971
THE CHALLENGE OF PEACE
EveniDg:
e addressed the nation a number of times over the past two years on
roblema of ending a war. Because of the progres s we have made toward
~ving that goal, this Sunday evening is an appropriate time for us to
our attention to the challenges of peace.
rica today has the best opportunity in this century to attain two of its
:est ideals; to bring about a full generation of peace, and to create a
1:rn Cn"'P ,..ihr v,; tl-t l"'I"t
,~,~.,.
not only requires hold leadership· ready to take bold action - - it calls
the greatness in a great people.
perity without war requires action on three fronts: we must create more
etter jobs; we must stop the rise in the cost of living; we must protect
ollar from the attacks of international money speculators.
re going to take that action. Not timidly, not half -heartedly, not in
:meal fashion. We are going to move forward to the new prosperity
lut war as befits a great 'people _ - all together, and along a broad front.
ime has come for a New Economic Policy for the United States; its
ts are unemployment, inflation and international speculation. Here is
ve are going to attack them.
, on the subject of jobs.
II know why we have an unemployment problem: Two million workers have
released from the Armed Forces and defense plants because of our success
:1ding down the war in Vietnam. Putting those people back to work is one
~ challenges of peace, and we have begun to make progress. Our unemlent rate today is below the average of the four peacetime years of the
But we can and must do better.
The time has come for American in~u8try. which has produced more job.
-higher real wages than any other industrial system ill history to embark~
a bold program of new investment in production for peace.
To give that system a powerful new stimulus, I shall ask the Congre .. .,~
it reconvenes after its summer recess to consider as its first priority the
enactment of the Job Development Act of 1971.
I propose to provide the strongest short-term incentive in our history to
invest in new machinery and equipment that will create new jobs for AmeJ
A 10% Job Development Credit for one year, ef.fective as of today, with.
5% credit after August IS. 1972. This tax credit for investment in new
equipment will not only generate new jobs. but will raise productivity aDd
make our goods more competitive in the years ahead.
1 propose to repeal the 7% excise tax on automobiles. effective today. I
will mean a reduction in price of about $2.00 per car. 1 shall insist thit~
American auto industry pass this tax reduction on to its nearly 8 million
mstomers who are buying automobiles this year. Lower price. will m~
that more people will be abLe to affol'd new ca.rs, and every additional mi
car s sold means 2.5, 000 new job s.
I propose to speed up the personal income tax exemptions scheduled for
January 1, 1973, to Ja.nuarv 1. 1977. -- RO th~t: t~.~n::lV~rq can den",.tll~!
$SO for each exemption one year earlier than planned. This increase in
consumer spending power will provide a strong boost to the economy in
ge neral and to employment in particular.
•
L
•
The tax reductions I am recommending. taken together with the broad u/
of the econo:my which has taken place in the fir st half of this year, willI
us strongly toward a goal this nation has not reached since 1956 .- pro~
with full ernploytnent in peacetime.
Looking to the future. I have directed the Secretary of the Treasury to
recommend to the Congress in January new tax proposals for stirn\ltati~
research and development of new industries and new technologies to he~
provide the 20 million. new jobs that America needs for the young peoplr
will be coming i.nto the job market in the next decade.
To offset th.e loss of revenue from these tax cuts which directly
jobs. 1 have ordered a $4. 7 billion cut in Federal spending.
6timu~
-Tax cuts to stim.ulate employment must be matched by.'.spending cuts t~
inflation.
To check the rise in the cost of govermnent, 1 have order~
ponement of pay raises and a 5 percent cut in government cmpLoymen~
Lve ordered a 10% cut in foreign economic aid .
..dditiOIt, since the Congress has already delayed action on two of the great
:iatives of this Admini'stration, I will ask Congress to amend my proposals
,oetr)Qne the iraplc-::nentatlon of Revenue Sharing for three months and
lfare Reforrn for one year.
his way. I am reordering our budget priorities to concentrate more on
ieving full employment.
~ second indispensable element of the new prosperity Is to stop the ri!;e in
cost of living.
!
of the cruelest legacies of the artificial prosperity produced by war is
ation. Inflation robs every An"lerican. The "20 million who are retired and
ng on fixed inCOITleS are particularl}' hard hit. Homenlakers find it harder
1 ever to balance the familr budget.
And 80 million wage earners have
n on a treadmillj in the four war year 5 between 1965 and 1969, their wage
~eases were completely eaten up by pl-ice increases. Their paycheCks
'e higher t but they Were no better off.
have made progress against the rise in the cost of Living; from the high
tit of 6%
year in 1969, the rise in Corl3umer prices has been cut to
in the first half of 1971. "But just as in our fight against unemployment,
can and must do better.
~
tirT')t' h~~ CM"""p
ff)T" ~prj"'ivp ~('t;"t"
tn
""rp~k
thE" v;r;o'lS CiT<:'.Ie of
~r!?"!\H!"'~
::es and costs.
n today ordering a freeze on all prices and wages throughout the United
~es, for a period of ninety days. In addition, I caLL upon corporations to
~nd that wage-price freeze to all dividends.
Lve today appointed a Cost of Living Council within the government. I have
ected this Council to work with leaders of labor and business to set up the
per mechanism for achieving continued price and wage stability after the
jay freeze is over.
rne emphasize two characteristics to this action: One, it io temporary.
put the strong, vigorous An"'lcrican econolny into a permanent straitcet would lock in unfairness and stifle the expansion of our free enterprise
tern. Two, while the wage- price freeze will be backed by gover nn1cnt
:tions if necessary, it will not be accompa.nied by the establishment of a
e price-control bureaucracy. I am relying on the voluntary c oope ration
.U Americ ans -- workers, employers, consumers -- to make this freeze
'k
..
~king together, we ~ill break the back of inflation, and we will do it without
mandatory wage and price controls tha.t crush economic and personal
~dom.
The third indispensable element in building the neW prosperity is clOsely
related to c:reating new jobs and halting inflation. We must protect the POll
of the American dollar as a pillar of monetary stability around the world.
In the past seven years, thel'e has been an average of one international
monetary crisis every )-"ear. Who gains from these crises? Not the worij
man, not the investor, not the real producers of wealth. The gainers are~
international money speculators. Because they thrive on crises, they help
to create them.
In recent weeks, the speculators have been wagi11g an all .. out war on the
American dollar. The strength of a nation's currency is based on the strea
of that nation's economy -- and the American economy is by far the stroap
in the world. Accordingly, I have directed the Secretary of the Treasury.
take the action necessary to defend the dollar against the speculators.
1 have directed Secretary COllnally to suspend temporarily the convertibilil
of the dollar into gold or other reserve assets, except in: amounts and
conditions determined to be in the interest of monetary stability and in the
best interests of the United States.
Let m.e lay to rest the bugaboo of devaluation.
for you?
What does this action meal
If you want to buy a foreign car. or take a trip abroad, market conditions
cause your dollar to buy slightly less. But if you are among the overwheb
ma,ioritv who bu~rAmp,.;("'~n-~,,~~ r'r""~'.lct~ !.r.. Amcric~ your dollar ·::iHb
worth just as much tom.orrow as it is today.
The effect of this action will be to stabilize the dollar.
This action will not win us any friends among the international money tra~
But our primary concern 15 with the American wprkers, and with fair
competition around the war Ld.
To our friends abroad. including the many responsible members of the
international banking community who are dedicated to stability and the Ilc
of trade, I give this assurance: The United States has always been, and'
continue to be, a forward-looking and trustworthy trading partner. In fuI
cooperation with the International Monetary Fund and those who trade wU
us, we will pres s for the nece s sary reforms to set up an urgently l1eede~
new international monetary system. Stability and equal treatment is in
everybody's best interest. I am determined that the American dollar mu
never again be a hostage in the hands of the international speculators.
I am taking one further step to protect the dollar, to improve our balanct
of payments, and to increase U. S. jobs. As a temporary measure, I am
today imposing an additional tax of 10% on goods imported into the United
States. This is a better solution for international trade than direct contt
on the amo~t of imports.
mport tax is a telnporary acHml -- not ilirected against any other counut an <-,.etion to rrn~;:e certain ll~c\t Arne ric;;; n products will not be at a
rantag(;b~cc..use or uniair exchange rates. 'Vlhen the unfair treatlnent
ed, the import tax will end as well.
~esult
of these acLions, the product of Atnerican labor will be n1.ore
~titive, ar:d the u:1.f~ir edge tb;. . . ~ some of our foreign competition has had
e remo·."eu. That is a n1.ajor reason why our trade balance haf3 eroded
the past fifteen ycal·s.
end of \Vorld War II. the economies of :hc. major industrial nations of
e and Asia were shattered. To help then) get on their feet and to
!t their f?ecd01n, the United Sta.te s haG provided 143 billi.on dollars in
n aid. That was the right thing for us to do •
• large1r with our help, they have regained their vitality and have
le stror.g competitors. Now that other n2..tio11s are economically strong
ne has. Cortle for them to bear their fair share of the burden of defending
)m around the world. The time has come for exchange rate s to be set
ht and _Jr the major nations to cOlnpete as equals. There is no longer
:ed for the United Stctte s to con1.pete with one hand tied behind he r back.
:Lnge of a.ctions I have taken and proposed tonight - - on the job front,
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:conomic Policy to be undertaken by this nation in fou!' .decades.
e fortunate to live in a nation with an economic system capable of
:ing for its people the highest standard of living in the world; flexible
1 to change its ways dramatically when circumstances call for change;
ost important - - re sourceful enough to produce prospe rHy with freedom
,portunity unmatched in the histo~y of nations.
lrposes of the government actions I have announced tonight are to lay
sis for renewed confidence, to make it possible for us to compete fairly,
le rest of the world, to open the door to a new prosperitye
vernment, with all its powers, does not hold the key to the success of
le. That key, my fel1o,~ Americans, is in your hands.
A nation, like a person, has to have a certain inner drive in order to IlCOl
In economic affairs, that inner drive is called the competitive spirit.
Every action I have taken tonight is designed to nurture and stimulate that
competitive spirit, to help us snap out of that self-doubt and self-diaparale,
ment that sap~ our energy and erodes our confidence in ourselves.
Whether this nation stays number one in the world's economy or resigns
itself to second or third or .fourth place; whether we as a people instill OUr
faith in ourselves, or lose that faith; whether we hold fast to the 8treDgth
that makes peace and freedom possible in this world, or lose our grip •• ~
that depends on your competitive spirit, your sense of personal destiny,,.
pride in your country and in yourself.
vVe can be certain of this= As the threat of war recedes, the challenge of
peaceful cotnpetition increases.
au
We welcome this competition, because America is at her greatest when
is called on to compete. And no nation has anything to fear from our com.
petition, because we lead our conlpetitors on to new heights for their own
people.
As there al¥.Tays have been in our history, there will be voices urging us to
shrink from that challenge, to build a protective wall around ourselves, to
C!,:!.'1".'l !~!~~ :: D!:ell ilC tlL ...·~.:;2 u[ i-Ll.;'; \'.'u..:.:lu HlOVC6.i ahead.
Two hundred years ago, a man wrote in his diary: "lv1any thinking people
believe America has seen its best days" II That was just 'befvre the Ameril
Revolution in 1775, at the dawn of the most exciting era in the histo~y oim
Today, we hear the echoes of those voices, preaching a gospel of gloomal
defeat, saying that same thing: "We have seen our best days. "
Let Americans reply: "Our best days lie ahead.
II
As we move :into a generation of peace, as we blaze the trail toward the ~
prosperity, I say to every Ameri~al1: Let us ra.ise our spirits. Let us rI
our sights. Let all of us contribute all we can to the great and good coUDtl
that contributes so much to the progress of manl<ind.
Let us invest in our nation's future; and let us revitalize tha.t faith in our~
that built a great nation in the past, and will shape the world of the future.
FOR RELEASE AT 9:00 P.M., EDST, AUGUST 15, 1971
Office of the White House Press Secretary
---------------------------------------------------------THE WHITE HOUSE
EXPLANATORY MATERIAL
ON
THE PRESIDENT'S~CONOMIC PROGRAM
The attached material provides a more detailed
explanation of the main points of the integrated Economic
Program announced by the President this evening.
divided into five sections covering:
1.
Economic Expansion in a World at Peace
2~
Wage-Price Freeze.
3.
Budget and Tax Measures.
4.
Temporary Import Surcharge.
5.
International Monetary Arrangements.
It is
Auqust 15, 1971
ECONOMIC EXPANSION IN A WORLD AT PEACE
le President has initiated a comprehensive program of
~lated measures to achieve four interreLa~ed objectives:
1.
2.
3.
4.
To increase employment
To achieve price stablity promptly
To strengthen the position of the mnited States
in the world economy
To improve the international monetary and trading
system
he program consists of the following measures:
1. A 90-day freeze of all prices and \Wages. This
will be monitored by the Office of Eme~ency Preparedness
the policy direction of a newly establis~ed Cabinet Cost
ing Council chaired by Treasury Secretary Connally.
2. A second stage of price-wage stabi1ization in which
tion is accomplished from the temporary freeze to the
ation of free markets without inflation. Plans for the
isms to be used during the second stage,. will be developed
Cost of Living Council.
hese steps on the price-wage front will do more than control
ion. They will help to restore confidemce, increase the
itiveness of American products in world '~rade, expand
ment at home and strengthen the Americam dollar.
3. Temporary suspension of full convertibility of dollars
old for foreign treasuries and central banks and the start
ernational consultation'and negotiations to achieve needed
sting reform in international monetary arrangements. In
ocess changes in the exchange rate for the dollar and other
.cies (but not the official dollar price 'of gold) .may be
pated. This will end.excessive speculation and uncertainty
the future value of the dollar and other currencies and
then our international trading and finamcial position.
-24. Imposition of a temporary surgarqe on importsi.
the United States, generally at a rate of 10%. This surchaq
is imposed under the authority of the Trade Expansion Act of
1962. Its purpose is to strengthen the U. S. balance of trade
and payments during a period while more fundamental measure.
coming into effect.
S.. Recommendation that Congress establish, effecuvt
August 15, 1971, a job development credit, an accelerated
investment tax credit at the rate of 10% for one year, to be
followed by a permanent credit at the rate of 5%. This cr~
will encourage investments and thereby stimulate employment,
economic growth and the improvement of productivity. The
improvement of producti vi ty will in turn make U. s. goods more
competitive in world markets. The especially high rate of
credi t for investment during the first year will particularl,
accelerate employment now when it is below par.
6. Recommendation that Congress repeal the excise ta
automobiles, effective August 15, 1971. The tax rate is 7% (
the manufacturer's price, so that the average tax per car is
I shall insist that automobile manufacturers pass the reduct]
on to customers in lower prices. The purpose of this move il
reduce an important item in the cost of living - the price 01
automobiles - and to stimulate production and employment in I
auto industry.
7. Recommendation that Congress advance to January
the increase of personal income tax exemptions scheduled by:
law to take effect on January 1, 1973. This will be in addi
the exemption increase now scheduled to take effect on Janua
1972. The addi tional exemption will be $50 per person. Thi
reduction will stimulate consumers I expenditures and emploj'l
8. Reduction of Federal expenditures in fiscal~U
by $4.7 billion. The main items in this total are a 5% cut,
Federal employment, a freeze for six months of the Federal P
increase scheduled for January 1,1972, and the deferral~
months of the effective date of general revenue sharing, ~d
one year for welfare reform. These expendi ture reductions~
the revenue from the temporary import surcharge, will e~ce
revenue loss in FY 1972 from the recommended tax reductlo~.
of these expenditure reductions are recognition of del~~
Congressional action on the President's programs.
-3-
At the same time that the program reduces Federal expenditures
ative to revenues it will be strongly expansionary as far as
s and production are concerned. That is because the elements
the program which stimulate employment are extremely powerful
relation to the revenue loss they involve -- more powerful per
lar than the expenditures which are being reduced. The strong
i-inflation program including the price-wage freeze will entail
revenue loss but will encourage consumers' spending and employt. The import surcharge will stimulate employment in the U.S.
~ while it yields budget revenue.
The investment tax credit,
1 its new accelerated feature, will give business an incentive
spend money to create jobs in amounts greater than the revenue
~.
The reduction in the price of automobiles will also have
)werful effect on employment. Thus the combined program
!Dgthens the economy while strengthening the budget.
EFFECTS OF PROGRAM ON FY 1972 aUDGET
$ BILLIONS
Revenue Reduction
Accelerated Investment Tax Credit
Accelerated Increase of Personal
Exemptions
Eliminations of Auto Excises
$3.0
$1.0
$2.3
$6.3
Revenue lncrease
Import Surcharge
$2.1
New Revenue Reduction
$4.2
Expenditure Reductions
Freeze of Federal Pay Increase
Deferral of General Revenue Sharing
Reduction of Federal Employment
Deferrals of Some Special Revenue
Sharing
Deferral of Welfare reform and others
Total
Excess~fExpenditure
$1.3
$1.1
$ .5
$ .7
$1.1
$4.7
Reductions over
Revenue Reductions
$ .5
COST-OF-LIVING COUNCIL
secretary of the Treasury, Chairman
Chairman of the Council of Economic Advisers, Vice Chairman
secretary of Agriculture
Secretary of Commerce
Secretary of Labor
Director of Office of Management and Budget
Director of Office of Emergency preparedness
President's Special Assistant for Consumers Affairs
Chairman of Board of Governors of Federal Reserve System,
August 15, 1971
WAGE-PRICE FREEZE
President Nixon today instituted a ninety-day freeze
wages and prices in the United States.
The President,
ting under the authority provided by the Economic
abilization Act of 1970, established a ceiling on all
ices, rents, wages, and salaries at a level not exceeding
at which prevailed during the month ending August 14, 1971.
e freeze on prices covers all commodities and services,
th the exception of raw agricultural products.
Increases
prices, rents, or wages scheduled under existing contracts
II need to be deferred.
The President also established a Cost of Living Council,
Lired by the Secretary of the Treasury, with responsibility
the general administration of the wage-price freeze and
recommend to the President additional policies, mechanisms
procedures to maintain a stable level of prices and costs
minimize unemployment when the freeze expires.
In
ition to the Secretary of the Treasury, the Council is
prised of the Secretary of Commerce, the Secretary of Labor,
Secretary of Agriculture, the Director of the Office of
igement and Budget, the Chairman of the Council of Economic
- 2 Advisers, the Director of the Office of Emergency Prepared.
ness, and the Special Assistant to the President for
Consumer Affairs.
The Chairman of the Board of Governors
of the Federal Reserve System will serve as an adviser to
the Council.
The Chairman of the Council of Economic
Advisers will serve as Vice-Chairman of the Cost of Living
Council.
The Council staff will be headed by an Executive
Director who will also be designated as a Special
Ass~t~t
to the President.
In addition to the Council's responsibility for the
over-all administration of the freeze, it will consult with
representatives of labor, industry, commerce, agriculture,
and the public to promote voluntary action to control
inflation and to solicit their views concerning the
appropriate policies, mechanisms and procedures to control
inflation and minimize unemployment at the expiration of
the freeze.
The monitoring of the freeze and other efforts to
insure compliance will be carried out by .the Office of
Emergency Preparedness, which has an existing field capabil
- '3 Ld has a continuing responsibility for the planning and
lplementation of economic stabilization programs.
Violations of the freeze will be handled by the Attorney
!neral and may be enj oined by the courts or subj ect to a
.ne of up to $5,000.
~der,
Under the terms of the Executive
the wage-price freeze expires November 12,' 1971.
--000--
~(/
/
August 15, 1971
BUDGET ANJ1 TAX MEASURES
The President's program provides a combination of tax
ld expenditure cuts:
1.
We will ask repeal of the Auto Excise Tax,
Efective August 15 -- revenue reduction will be $2.3
Lllion in FY 1972.
2.
~72,
We will ask Congress to advance to January 1,
the increased personal income tax exemptions now
:heduled to go into effect January 1, 1973 -- revenue
!duction of
3.
LX
approx~te1y
$1 billion.
We will ask Congress to enact a Job Development
Credit of 10 percent effective August 15, 1971, reducing
) 5 percent in one year--revenue reduction $3 billion.
The total revenue reduction is about $6.2 billion.
To ensure that these tax reductions will not be inflation:y, and to maintain £iscal responsibility, we will cut
'esently planned expenditures by more than $4.6 billion
FY 1972; and we will gain $2 billion in new revenue from
e Border tax surcharge.
Thus we will mote than balance our tax reductions.
Even
re important, this action now will enable us to make even
re substantial reductions in the 1973 budget we are now
- 2 -
The principal 1972 budget reductions follow:
1.
Defer the effective date of general revenue sharing
to January 1, 1972 instead of October 1, 1971.
2.
year.
Reduce federal employment 5 percent within the
This will be accomplished largely by attrition.
3.
We will postpone for six months the federal salary
increase now scheduled for January 1, 1972.
4.
We will delay the effective date of our welfare
reform and some of the special revenue sharing bills variouslJ
from three months to one year.
5.
-
Numerous other smaller reductions affecting most
executive branch agencies.
--000--
August 15, 1971
TAX PROVISIONS
The immediate and long-range problems of the American
economy require important tax changes as part of a balanced
program of stimulation and stability.
The tax changes are
designed to:
create additional jobs
improve the productivity of our workers
stimulate consumer spending
strengthen American industry so that it can
compete more effectively in domestic and
foreign markets.
To accomplish these objectives, the following major
changes in our tax laws should be enacted by Congress lmmediately upon its return from the current recess:
1.
Acceleration of Tax Cuts.
Tax cuts presently scheduled for January 1, 1973,
should be advanced to January 1, 1972, to supplement
the cuts already scheduled to take effect at that
time. At the present time, the personal exemption lS
$650 per person and will increase to $700 on
January 1, 1972.
The standard deduction is 13
percent with a maximum of $1,500 and will increase
to 14 percent with a maximum of $2,000 on January 1, 1972.
The phase out of the Low Income Allowance is scheduled
to be eliminated as of January 1, 1972, thus increasing
the benefit of that provision also.
Under present
law, as of January 1, 1973, the personal exemption
will increase to $750 per person and the standard
deduction will increase to 15 percent with a maximum
of $2,000.
2
These latter increases, presently scheduled
for January 1, 1973, should be accelerated to
January 1, 1972, so that effective that date the
personal exemption will become. $ 750 per person and
the standard deduction will become 15 percent
with a maximum of $2,000. The combined effect
of the increases already scheduled and these acceler~
tions will be total tax reductions of roughly
$4.8 billion per year for individuals effective
January 1, 1972, of which roughly $2.3 billion is
attributable to the acceleration. This $4.8
billion of additional purchasing power in the hands
of the American public will be reflected in the
form of increased take-home pay beginning January 1,
1972, because of reduced withholding tax. This
additional purchasing power will provide a powerful
stimulation to business activity. Employers may
be expected to begin hiring additional workers at
the present time in anticipation of the additional
demand for consumer goods which will be generated
by this change.
The budgetary impact of this acceleration
(before giving effect to increased revenues from
the resulting activity) would be a revenue loss
of $l~Q Hillion in the fiscal year ending June 30,
1972, and $1.3 billion in the fiscal year ending
June 30, 1973. These amounts are the additional
revenue losses from the acceleration; the cuts
already scheduled to take effect on January 1, 1972,
have previously been reflected in the budget.
2.
Repeal of
Au~omobile
Excise Tax.
The present 7 percent excise tax on automobile
sales should be repealed with respect to all sales
to consumers after August 1 5 , 1971. It is anticipated
that all of this tax reduction will be reflected in
lower automobile prices. This will mean an average
reduction in new automobile prices of $200 per car,
with secondary impacts reducing the cost of used cars.
Until the repeal· is enacted by Congress, the present
tax must be collected. The repeal should provide,
however, for prompt refund of tax (under procedures
similar to those used in 1965 when the tax was
reduced) upon evidence that the refund will be
given to automobile purchasers who have purchased
cars on or after August 16, 1971.
3
Again, this will benefit a broad segment of
American consumers -- the entire automobile buying
public.
It should result in an immediate increase
in demand for automobiles, serving as a powerful
stimulus to business activity and thereby creating
new jobs in the entire broad range of American
industry supporting our automobile production.
The budgetary impact will be a revenue loss
of $2.3 billion in the fiscal year ending June 30,
1972, and $2.0 billion in the fiscal year ending
June 30, 1973, before giving effect to increased
revenues from the fiscal stimulation it will provide.
3.
Adoption of a Job Development Tax Credit.
A tax credit should be provided equal to 10
percent of the cost of new machinery and equipment
produced in the United States and placed in service
on or after August 16, 1971. This credit will drop
to 5 percent for new machinery and equipment placed
in service after August 15, 1972, with appropriate
transition rules as hereinafter described.
No credit
will be allowed with respect to machinery and equipment predominantly produced abroad so long as the
import surcharge recommended for adoption at this
time remains in effect. At the time such import
surcharge is terminated, a credit at the rate of
5 percent will be allowed with respect to such
foreign-produced machinery and equipment. The credit
will be inmost other respects similar to the investment credit which was repealed effective April 18,
1969.
The credit for public utility property would
be allowed at one-half the rates applicable to other
property.
No credit will be available for used
machinery or equipment. The credit will not be
allowable for machinery or equipment with a life
of 4 years or less; will be only one-third of the
amount otherwise allowable for machinery or equipment with a life of 4 to 6 years; and will be only
two-thirds of the amount otherwise allowable for
machinery and equipment with a life of 6 to 8 years.
The credit will be limited to the taxpayer's tax
liability up to $25,000 plus 50 percent of the
tax liability in excess of $25,000. As under the
investment credit, no basis adjustment will be
required.
Transitional rules will be provided at the end of the
period of the 10 percent credit so that new machinery and
equipment then under contract or essential to facilities
then under contract will be 'entitled to the 10 percent credit
if placed in service by February 15, 1973, rather than the
5 percent credit. These transitional rules will be simil~
to those applicable to termination of the investment credit.
This job development credit should result in increased
demand for capital equipment with the stimulus being greater
during the next 12 months because of the larger credit for
machinery and equipment placed in service during that periOO.
There will be manifold effects. Our machine tool and other
capi tal goods producers should experience the· earliest impact,
creating new jobs in these and supporting industries. On a
long-term basis, the replacement of our productive facilit~s
with new, modern equipment will increase the productivity of
our workers, making our domestic industries more competitive
in domestic and foreign markets. This will provide additional
jobs) provide a sound basis for future wage increases where
productivity has increased, and decrease inflationary pressures
on pr~ces.
The limitation on the credit
for machinery and equipment which is predominantly
produced abroad will create a preference in favor 6f United
States produced machinery and equipment.
This will give our capital goods producers an opportunity to
strengthen their capacities to meet the increasing level of
foreign competition which they are experiencing.
This job development credit will result in a revenue l~s
of about $3 billion in the fiscal year ending June 30, 1972,
about $4 billion in the fiscal year ending June 30, 1973, and
about $2.5 billion in the fiscal year ending June 30, 1974.
These amounts do not take into account revenue increases hoo
the additional jobs and increased level of business activi~
resulting from this change.
4.
Adoption of the DISC Export Incentive.
The DISC proposal, providing tax deferral for earnings
from export sales, should be adopted effective January 1, 1972.
This is essentially the same measure recommended to Congress
in 1970 and which was favorably reported by the House Ways
and Means Committee and adopted by the House of Representativesl
5
:ept that the provisions for only partial adoption in the
rst and second years after enactment are undesirable and
~ provisions should take full effect on January 1, 1972.
~ additional feature should be added to permit use of the
SC export earnings to finance industrial economic adjustments,
~luding worker retraining, relocation, and adjustment
sistance, without loss of the deferral benefit. This will
:ilitate in some measure assistance to industries and workers
~ersely affected by increased competition from imports and
h.er causes.
The DISC measure will provide a substantial stimulus to
ited States producers to increase their export sales, with
suIting favorable effects on our balance of payments. This
11 create additional jobs by strengthening the position of
r companies in world markets. We estimate that the DISC will
crease export sales roughly $1.5 billion per year.
The effect of the DISC provisions has already been reflected
the b·udget so that there will be no revenue loss beyond that
ready anticipated. As proposed, the DISC provision will result
a revenue .loss of $100 .million in the fiscal year ending
ne 30, 1972; $400 million in the fiscal year ending June 30,
73; and $600 million in subsequent fiscal years.
These amounts
not give effect to revenue increases reSUlting from additional
bs or the higher level of business activity attributable to
~ption of the DISC provisions.
When, as at the present time,
= economy is not at fuJI employment levels, the DISC will result
utilizing some unused productive capacity. Thus, the DISC
Juld have favorable indirect revenue
effects that will
1d to offset the revenue loss. This is a particularly
~ropriate time to change the tax treatment of export income.
000
TEMPORARY IMPORT SURCHARGE
The rate of increase in imports will be stemmed through
~ broad temporary surcharge designed to achieve relatively
iuick benefits to our balance of trade.
Accordingly, effective today all dutiable imports not subject to quantitative
limitations imposed under statute by the U. S. will be
3ubject generally to a surcharge of 10 percent.
Imports not subject to duty, and therefore excluded
from the surcharge, are ordinarily products not available
Ln the United States.
Notably this exclusion would generally
~xempt coffee, fish, raw materials such as ores, and other
Ltems. To a large extent, this involves exports from the
Lesser developed countries of the world.
The nature of
these excluded products and our propensity to import them
Ls such that the added cost of an import surcharge would
)e unlikely to significantly influence the rate at which
)roducts of this type are imported and only serve to raise
:he domestic price level.
Most of the products covered by mandatory quotas are
llso subject to tariffs.
However, since imports of these
lroducts are already limited, the surcharge will not cover
:hese items.
The most important items in this category are
~rude oil, petroleum products, meat, sugar, dairy products,
md cotton textiles.
Imports bearing the surcharge, that is, dutiable items
~ot also subject to mandatory quantitative restrictions,
'epresent about 50 percent of the value of total imports.
lith total imports running at a rate of over $45 billion
er year, annual revenues are estimated at $2.1 billion.
The Administration also plans to submit to the Congress
romptly legislation providing for a Domestic International
ales Corporation (DISC).
This will afford our exporters
ax treatment more comparable to that provided many of their
ompetitors abroad in the expectation it will contribute to
more vigorous export effort.
The General Agreement Gn Tariffs and Trade allows
members to protect their trade positions when faced with
severe balance of payments difficul ties. The U. S. is prepared to confer on this temporary measure with other members
of the GATT at their convenience.
the
The surcharge will be applied under the authority of
Expansion Act of 1962.
T~ade
Augus t 15, 1971
August 15, 1971
INTERNATIONAL MONETARY ARRANGEMENTS
At the direction of the President, Secretary Connally
is taken a series of actions to restrict the convertibility
E the dollar by foreign monetary authorities into gold or
:her reserve assets.
These technical actions do not in any
ly limit the convertibility of dollars into other currencies,
lt the exchange rate for such conversions will be influenced
r
market forces and the policies of other countries.
Specifically, Secretary Connally has:
(1)
Notified the International Monetary Fund that,
.
effective today, the United States no longer
freely buys and sells gold for the settlement
of international transactions.
(2)
Strictly limited further use of U. S. international reserve assets (gold, SDR's, drawings
on the IMF, or foreign exchange holdings) to
settlement of outstanding obligations and, in
cooperation with the IMF, to other situations
that may arise in which such use can contribute
- 2 to international monetary stability and the
interests of the United States.
(3)
Requested the Federal Reserve to suspend the
virtually automatic use of its swap network for
the purpose of converting dollars into other
currencies; the future operation of these and
other mutual credit facilities with foreign
countries will be determined in the light of
emerging developments.
These actions have been taken in view of widespread
speculative activity in exchange markets, substantial conversions of dollars by other countries into gold and other
reserve assets, and consequent strains on the U. S. reserve
position.
Underlying these
circ~tances
has been a long
period of eros ion in the bas ic balance of payments and trade
position of the United States.
A healthy, non-inflationary domestic economy is essential to the external strength of the United States and to
stability in the international monetary system.
total program is designed to achieve that result.
The President
,..
-
j
-
However, the present combination of circumstances
also points up the need for some fundamental improvements
in international monetary arrangements, and it is the view
of the United States that the time has come to accomplish
such improvements.
As part of that process, some changes
in the exchange parities of the U. S. dollar relative to
other currencies may be anticipated.
The objective is to
promptly restore strength, stability, and confidence to the
position of the U. S. balance of payments and to the functioning of the international monetary system.
The official U. S. dollar price of gold is not altered
by the present action, and the President has directed that
that price be maintained.
Moreover, the functioning of the
two-tier gold system decided upon in March, 1968, should not
)e affected by today's action, nor is it intended to be.
U. S. officials will promptly be meeting with their
~olleagues
from other countries to explain the background
lnd details of the President's program.
They will develop
r. S. proposals for both dealing constructively with the
,mmediate repercussions of today's decision and employing
- 4 in an imaginative and cooperative manner the opportunity
opened by today's actions for speeding the evolution in the
international monetary system in directions that serve the
common needs of trading nations.
While some immediate exchange market disturbance may
ensue, the United States will be actively consulting with
other countries and international organizations to deal with
these immediate market uncertainties and to promote stability
in the markets.
In particular, the United States will be
prepared to collaborate with countries with which swap or
similar faci Lties exist that may find their exchange rates
under downward pressure.
No new decision has been made with respect to the
several restraints on capital outflo\Vs abroad maintained by
the United States (i.e." the Interest Equalization Tax, the
Voluntary Foreign Credi,t Restraint Program, and the Foreign
Direct Investment Program).
The restraints remain in effect,
and their future disposition will be under review.
Today's decision with respect to the convertibility of
the dollar is a part of immediate and longer-term action to
- 5 put our financial and economic position right both at horne
and abroad.
That program recognizes that the international
stability of the dollar must rest on the strength of our
domestic economy.
Today's actions will stabilize the domestic price level
and, therefore, the value of the dollar for our citizens.
In some cases, changes in exchange rates may increase prices
of imported goods.
At the same time, job security and
opportunities for employment will be improved.
As
meas~res
now under way or under consideration are
fully implemented and take hold, we can confidently expect
that the internal and external stability of the dollar will
be reinforced in a context of expanding employment and
production.
--000--
IMMEDIA TE RELEASE
August 15, 1971
Office of the White House Press Secretary
- - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - THE WHITE HOUSE
EXECUTIVE ORDER
. PROVIDING FOR STABILIZATION OF PRICES, RENTS, WAGES,
AND SALARIES
WHEREAS, in order to stabilize the economy, reduce inflation, and
minimize unemployment, it is necessary to stabilize prices, rents, wages,
and salaries; and
WHEREAS, the present balance of payments situation makes it
especially urgent to stabilize prices, rents, wages, and salaries in order
to improve our competitive position in world trade and to protect the
purchasing power of the dollar:
NOW, THEREFORE, by virtue of the authority vested in me by the
Constitution and statutes of the United States, including the Economic
Stabilization Act of 1970 (P. L. 91-379, 84 Stat. 799), as amended, it
is hereby ordered as follows:
Section 1. (a) Prices, rents, wages, and salaries shall be stabilized
for a period of 90 days from the date hereof at levels not greater than the
highest of those pertaining to a substantial volume of actual transactions
by each indiVidual, business, firm or other entity of an,! kind during the 30day period ending August 14, 1971, for like or similar commodities or
. services. If no transactions occurred in that period, the ceiling will be
the highest price, rent, salary or wage in the nearest preceding 30-day
period in which transactions did occur. No person shall charge, assess, or
receive, directly or indirectly in any transaction prices or rents in any
form higher than those permitted hereunder, and no person shall, directly
or indirectly, payor agree to pay in any transaction wages or salaries in
any form, or to use any means to obtain payment of wages and salaries in
any form, higher than those permitted hereunder, whether by retroactive
increase or otherwise.
(b) Each person engaged in the business of selling or providing commodities or se.vices shall maintain available for public inspection a
record of the highest prices or rents charged for such or similar commodities
or services during the 30-day period ending August 14, 1971.
(c) The provisions of sections 1 and 2 bereof shall not apply to the
prices charged for raw agricultural products.
Sec. Z. (a) There is hereby established the Cost of Living Council
which shall act as an agency of the United States and which is hereinafter
referred to as the Council.
more
(b) The Council shall be composed of the following members: The
Secretary of the Treasury, the Secretary of Agriculture, the Secretary of
Commerce, the Secretary of Labor, the Director of the Office of Management and Budget, the Chairman of the Council of Economic Advisers. the
Director of the Office of Emergency Preparedness, and the Special Assistant
to the President for Consumer Affairs. The Secretary of the Treasury shall
serve as Chairman of the Council and the Chairman of the Councll of Economic
Advisers shall serve as Vice Chairman. The Chairman of the Board of
Governors of the Federal Reserve System shall serve as adviser to the
Council.
(c) Under the direction of the Chairman of the Council a Special
Assistant to the President shall serve as Executive Director of the Council,
and the Executive Director is authorized to appoint such personnel as may
be necessary to assist the Council in the performance of its functions.
Sec. 3. (a) Except as otherwise provided herein, there are hereby
delegated to the Council all of the powers conferred on the President by the
Economic Stabilization Act of 1970.
(b) The Council shall develop and recommend to the President
additional policies, mechanisms, and procedures to maintain economic
growth without inflationary increases in prices, rents. wages, and salaries
after the expiration of the 90-day period specified in Section I of this Order.
(c) The Council shall consult with representatives of agriculture.
industry, labor and the public concerning the development of policies.
mechanisms and procedures to maintain economic growth without inflationary
increases in prices, rents. wages. and salaries.
(d) In all of its actions the Council will be guided by the need to maintain consistency of price and wage policies with fiscal. monetary, international and other economic policies of the United States.
(el The Council shall inform the public. agriculture, industry. and labor
concerning the need for controlling inflation and shall encourage and promote
voluntary action to that end.
Sec. 4. (a) The Council, in carrying out the provisions of this Order.
may (i) prescribe definitions for any terms used herein. (i. i. ) make
exceptions or grant exemptions, (i. i. ~ issue regulations and orders, and
(i. v. ) take such other actions as it determines to be necessary and
appropriate to carry out the purposes of this Order.
(b) The Council may redelegate to any agency, instrumentality or
official of the United States any authority under this Order, and may. in
administering this Order, utilize the services of any other agencies.
Federal or State, as may be available and appropriate.
more
3
(c) On request of the Chairman of the Council, each Executive Department or agency is authorized and directed, consistent with law, to furnish
the Council with available information which the Council may require in
the performance of its functior..s.
(d) All Executive departments and agencies shall furnish such
necessary assistance as may be authorized by section 214 of the Act
of May 3, 1945, 59 Stat. 134 (31 U. S. C. 691).
Sec. 5. The Council may require the maintenance of appropriate
records or other evidence which are necessary in carrying out the
proVisions of this Order, and may require any person to maintain and
produce for examination such records or other evidence, in such form
as it shall require, concerning prices, rents, wages, and salaries
and all related matters. The Council may make such exemptions from
any requirement otherwise imposed as are consistent with the purposes
of this Order. Any type of record or evidence required under regulations issued under this Order shall be retained for such period as the
Council may prescribe.
Sec. 6. The expenses of the Council shall be paid from such funds
of the Treasury Department as may be available therefore.
Sec. 7. (a) Whoever willfully violates this Order or any order
or regulation iesued under authority of this Order shall be fined not
more than $5,000 for each such violation.
(b) The Council shall in its discretion request the Department of
Justice to bring actions for injunctions authorized ur..der Section 205
of the Economic Stabilization Act of 1970 whenever it appea.rs to the
Council that any person has engaged, is engaged, or is about to engage
in any acts or practices constituting a violation of any regulation or
order issued pursuant to this Order.
RICHARD
THE WHITEHOUSE,
August 15, 1971.
NIXON
/\Ifi/L/
August 15, 1971
IMMEDIA TE RELEASE
~
_____ __
~~
Office of the White House Press Secretary
~_~M
___________________________ _________ ." ____ ________ "
~
~
THE WHITE HOUSE
IMPOSITION OF SUPPLEMENTAL DUTY FOR
BALANCE OF PA YMENTS PURPOSES
BY THE PRESIDENT OF THE UNITED STATES OF AMERICA
A PROCLAMATION
WHEREAS, there has been a prolonged decline in the interna.tional
monetary reserves of the United States, and our trade and international
competitive position is seriously threatened and, as a result, our
continued a.bility to assure our security could be impaired;
WHEREAS, the balance of payments pOlition of the United States
requires the imposition of a surcharge on dutiable imports;
WHEREAS, pursuant to the authority vested in him by the Constitution
and the statutes, including, but not limited to, the Tariff Act of 1930, as
amended (hereinafter referred to as lithe Tariff Act"), and the Trade
Expansion Act of 1962 (hereinafter referred to as "the TEA II), the President entered into, and proclaimed tariff rates under, trade agreements
with foreign countries;
WHEREAS, under the Tariff A ct, the TEA, and other provisions of
law, the President may, at any time, modify or terminate, in whole or
in part, any proclamation made under his authority;
NOW, THEREFORE, I, RICHARD NIXON, President of the United
States of America, acting under the authority vested in me by the ConR
stitution and the statutes, including, but not limited to, the Tariff Act,
and the TEA, respectively, do proclaim as follows:
A. I hereby declare a national emergency during which I call upon
the public and private sector to make the efforts necessary to strengthen
the international economic position of the United States.
B. (I) I hereby terminate in part for such period as may be
necessary and modify prior Presidential Proclamations which carry
out trade agreements insofar as such proclamations are inconsistent
with, or proclaim duties different from, those made effective pursuant
to the terms of this Proclamation.
(2) Such proclamations are suspended only insofar as is required
to assess a surcharge in the form of a supplemental duty amounting to
10 percent ad valorem. Such supplemental duty shall be imposed on all
dutiable articles imported into the customs territory of the United States
from outside thereof, which are entered, or withdrawn from warehouse,
for consumption after 12:01 a. m., August 16, 1971, provided, however.
that if the imposition of an additional duty of 10 percent ad valorem
would ca.use the total duty or charge payable to exceed the total duty
or charge payable at the rate prescribed in column Z of the TariCf
Schedules of the United States. then the column Z ra.te shall apply.
more
C. To implement section B of this Proclamation, the following
new subpart shall be inserted after sub9art B of part 2 of the
Appendix to the Tariff Schedules of the United States:
Subpart C--Temporary Modifications lor Balance of Payment. Purpo •••
Subpart £ headnotes:
1. This .ubpart contains modification. of the provision. of the
tariff schedules proclaimed by the President in Proclamation 4074.
2. Additional duties imposed. -- The duties provided for in thil
subpart are cumulative duties which apply in addition to the duties
otherwise imposed on the articles involved. The provisions for these
duties are effective with respect to articles entered on and after
12:01 a. m., August 16, 1971, and ahall continue in effect until
modified or terminated by the President or by the Secretary of the
Treasury (hereinafter referred to as the Secretary) in accordance
with headnote 4 of this subpart.
3. Limitation on additional duties. --The additional 10 percent
rate of duty specifiedin rate of duty column numbered 1 of item
948. 00 shall in no event exceed that rate which, when added to the
column numbered 1 rate imposed on the imported article under the
appropriate item in schedules 1 through 7 of these schedules, would
result in an aggregated rate in excess of the rate provided for such
article in rate of duty column numbered 2.
4.
For the purposes of this subpart--
(a> Delegation of authority to Secretary. --The Secretary
may from time to time take action to reduce, eliminate or reimpose
the rate of additional duty herein or to establish exemption therefrom,
either generally or with respect to an article which he may .pecify
either generally or as the product of a particular country, if he
determines that such action is consistent with safeguarding the balance
of payments position of the United States.
(b) Publication of Secretary's actions. --All actions taken by
the Secretary hereunder shall be in the form of ~odifications of this
subpart published in the Federal Register. Any action reimposing the
additional duties on an article exempted therefrom by the Secretary
shall be effective only with respect to articles entered on and after
the date of publication of the action in the Federal Register.
(c) Authority.!2 prescribe ~ ~ regulations. -- The
Secretary is authorized to prescribe such rules and regulations as he
determines to be necessary or appropriate to carry out the provisions
of this subpart.
5. Articles exem:.>t~.!h!. additional duties. --In accordance
with determinations made by the Secretary in accordance with
headnote 4(a), the following described articles are exempt from the
provisions of this subpart:
* * *
more
3
Item
Rates of Duty
Article
1
948.00
D.
Articles, except as exempted mder
headnote 5 of this subpart.
which are not free of duty Wider
these schedules and which are
the subject of tariff concessions
granted by the United States in
trade agree'ments .•••••.••.••••••
Z
10% ad val. No change
(see headnotl!
3 of this
subpart)
This Proclamation shall be effective IZ:OI a. m •• August 16. 1971.
IN WITNESS WHEREOF, I have hereunto set my hand this fifteenth
day of August in the year of our Lord nineteen hundred and seventy-one.
and of the Independence of the United States of America the one hundred
and ninety-sixth.
RICHARD NIXON
""
artment of the TRfASURY
tElEPHONE W04·2041
IMMEDIATE RELEASE
August 17, 1971
TREASURY'S WEEKLY BILL OFFERING
The Treasury Department, by this public notice, invites tenders
two series of Treasury bills to the aggregate amount of
~OO,OOO,OOo, or thereabouts, for cash and in exchange for Treasury
in the amount of $3,703,460,000,
.s maturing Augus t 26,1971,
:ollows:
9~day
bills (to maturity date) to be issued August 26, 1971,
the amount of $ 2,300,000,000,
or thereabouts, representing an
ltional amount of bills dated May 27, 1971,
and to mature
ember 26, 1971
(CUSIP No. 912793 LT1),originally issued in
amount of $1,400,165,000, the additional and" original bills to be
~ly interchangeable.
182- day bills, for $ 1,600,000,000, or thereabouts, to be dated
~st 26, 1971,
and to mature February 24, 1972
SIP No. 912793 MP8).
The bills of both series will be issued on a discount basis under
)etitive and noncompetive bidding as hereinafter provided, and at
lrity their face amount will be payable without interest. They will
~ssued in bearer f~rm only, and in denominations of $10,000,
,000, $50,000, $100,000, $500,000 and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up
:he clOSing hour, one-thirty p.m., Eastern Daylight Saving
~, Monday, August 23, 1971.
Tenders will not be received
:he Treasury Department, Washington. Each tender must be for a
.mum'of $10,000. Tenders over $10,000 must be in mUltiples of
)00. In the case of competitive tenders the price offered must be
~essed on the basis of 100, with not more than three decimals,
,99.925. Fractions may not be used. It is urged that tenders be
! On the printed forms and forwarded in the special envelopes which
" be supplied by Fed~ral Reserve Banks or Branches on application
'efor.
Banking institutions generally may submit tenders for account of
:omers provided the names of the customers are set forth in such
lers. Others than banking institutions will not be permitted to
-
l
-
submit tenders .. except for their own account. Tenders will be reee'
without deposit from incorporated banks and trust companies and f~
respons ib1e· and recognized dealers in inves tment securities. Tendl
from others must be accompanied by payment of 2 percent of the faCt
amount of Treasury bills applied for, unless the tender-s are acco~
by an express guaranty of payment by an incorporated bank or trust
company.
Immediately after the closing hour, tenders will be opened at
Federal Reserve Banks and Branches, following which public ann~~
will be made by the Treasury Department of the amount and price m
of accepted bids. Only those submitting competitive tenders will b
advised of the acceptance or rejection thereof. The Secretary oft
Treasury expressly reserves the right to accept or reiect any or~
tende rs, in whole or in part, and his ac tion in any such respect sh
be final.
Subj ect to these reservations, noncompetitive tenders fa
each issue for $200,000 or less without stated price from any OM
bidder will be accepted in full at the average price (in three d&~
of accepted competitive bids for the respective issues. Settlement
accepted tenders in accordance with the bids must be made or compiel
at the Federal Reserve Bank on
August 26, 1971,
in cash or other immediately available funds or in a like face amO'JI
Treasury bills maturing August 26, 1971.
Cash and exchange tel
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.
Under Sections 454 (b) and 1221
(5) of the Internal Revenue:
of 1954 the amount of discount at which bills issued hereunder a~
is considered to accrue when the bills are sold, redeemed or othe:vl
disposed of, and the b,ills are excluded from consideration as ca1i~
assets. Accordingly, the owner of Treasury bills (other than HI!
insurance companies) issued hereunder must include in his incometl
return, as ordinary gain or loss, the difference between the price
for the bills, whether on original issue or on subsequent purchase l
the amount actually received either upon sale or redemption at mati
during the taxable year for which the return is made.
Treasury Department Circular No. 418 (current revision) and t~
notice, presc ribe the terms of the Treasury bills and govern the,
conditions of their issue. Copies of the circular may be obtainea
any Federal Reserve Bank or Branch.
000
ortmento/ the TREASURY
tElEPHONE W04·2041
OR IMMEDIATE RELEASE
August 17, 1971
TREASURY ANNOUNCES REPAYMENT OF EURODOLLAR CERTIFICATES
The Treasury announced today that it will not rollover the $516
illion of 6-5/8% Certificates of Indebtedness Eurodoll~r Ser~es D-197l
,aturing on August 24, 1971. These certificates will be retired at
laturity on August 24.
The disposition of Treasury Eurodollar certificates maturing after
ugust 24 will be determined and announced in the light of market conditions
ear the t:iJne of their maturity.
ortmento/ the TREASURY
tElEPHONE W04·2041
MEDIATE RELEASE
August 18, 1971
TREASURY'S MONTHLY BILL OFFERING
be Treasury Departmen~, by this public notice, invites tenders for
!ries of Treasury bills to the aggregate amount of $1,700,000,000,
!reabouts, for cash and in exchange for Treasury bills
Lng August 31, 1971,
in the amount of $ 1, 704,310,000,
llows :
27~day
bills (to maturity date) to be issued August 31, 1971,
~ amount of $ 500,000,000,
or thereabouts, representing an
ional amount of bills dated May 31, 1971,
and to mature
L, 1972,
(CUSIP No.912793 MB9 ) originally issued in the
t of $1,200,820,000,
the additional and original bills to be
y interchangeable.
366-day bills, for $1,200,000,000,
or thereabouts, 'to be dated
t 31, 1971,
and to mature August 31, 1972
p No. 912 793 NK8).
The bills 'of both series will be issued on a discount basis under
titive and noncompetitive bidding as hereinafter provided, and at
ity their face amount will be payable without interest. They will
sued in bearer form only, and in denominations of $10,000, $15,000,
00, $100,000, $500,000 and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Bran~hes up
Ie clOSing hour, one-thirty p.m., Eastern Daylight Saving
Tuesday, August 24, 1971.
Tenders will not be received
1e Treasury Department, Washington. Each tender must be for a
num of $16,000.
Tenders over $10,000 must be in mUltiples of
)0. In the case of competitive tenders the price offered mu~t
cpressed on the basis of 100, with not more than th~ee decimals
99.925. Fractions may not be used. (Notwithstanding the fact'
the one-year bills will run for 366 days, the discount rate will
>mputed on a bank discount basis of 360 days, as is currently the
:ice on all issues of Treasury bills.) It is urged that tenders be
on the printed forms and forwarded in the special envelopes which
be supplied by Federal Reserve Banks or Branches on application
!for.
- 2 -
Banking institutions generally may submit tenders for aCCOUltof
customers provided the names of the customers are set forth in such
tenders. Others than banking institutions will not be permitted to
submi t tenders except for their own account. Tenders will be receivec
without deposit from incorporated banks and trust companies and fr~
responsible and recognized dealers in inveStmlent 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
trust company.
Immediately after the closing hour, tenders will be opened at the
Federal Reservp ~~I')~~._. ?~:! Branches, following which public announcement
will be made by the Treasury Department of the amount and price range
accepted bids. Only those submitting competitive tenders will be
advised of the acceptance or re.iection 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 bW
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, 1971,
in cash or other immediately available funds or in a like face amount I
Treasury bills maturing
August 31, 1971.
Cash and exchange tenders will receive equal treatment. Cash adj~tM
will be made for differences between the par value of maturing bills
accepted in exchange and the issue price of the new bills.
Under Sections 454 (b) ?nd 1221 (5) of the Internal Revenue Code
1954 the amount of discount at which bills issued hereunder are sold i
considered to accrue when the bills are sold, redeemed or otherwise
disposed of, and the bills are excluded from consideration as capital
assets. Accordingly, the owner of Treasury bills (other than life
insurance companies) issued hereunder must include in his income tax
return, as ordinary gain or loss, the difference between the pricep~
for the bills, whether on original issue or on subsequent purchase,the amount actually received either upon sale or redemption at maturU
during the taxable year for which the return is made.
Treasury Department Circular No. 418 (current revis ion) and thiS
notice, prescribe the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained £rl
any Federal Reserve Bank or Branch.
000
,artment of the TREASURY
TELEPHONE W04-2041
lN, D.C. 20220
FOR IMMEDIATE RELEASE
August 17, 1971
ARNOLD R. WEBER NAMED EXECUTIVE DIRECTOR
OF THE COST OF LIVING COUNCIL
Secretary of the Treasury John B. Connally, Chairman
of the Cost of Living Council, said today the President
has authorized him to announce the appointment of Arnold R.
Weber as Executive Director of the newly formed Cost of
Living Council.
The Treasury Secretary noted that Mr. Weber, 42,
formerly Deputy Director of Office of Management and Budget,
cancelled plans to return to the University of Chicago in
order to assume the new post.
The Council will play an
important part in carrying out the wage and price freeze
section of the economic program Mr. Nixon announced Sunday
night, Secretary Connally said.
Mr. Weber has agreed to
hold the post for 90 days.
Mr". Weber was named at the organizational meeting of
the Council, held at the White House this afternoon.
By direction of the President, the Council includes
as members:
Secretary of the Treasury John B. Connally,
Secretary of Agriculture Clifford M. Hardin, Secretary of
Commerce Maurice H. Stans, Secretary of Labor James Hodgson,
C-117
(OVER)
-2Director of the Office of Emergency Preparedness George I.
Lincoln, and the Special Assistant to the President for
Consumer Affairs Virginia H. Knauer.
Treasury was designated Chairman.
The Secretary of the
Chairman of the
Council of Economic Advisers Paul W. McCracken was named
Vice Chairman.
Chairman of the Federal Reserve System)
Arthur Burns will serve as Adviser to the Council.
At today's organizational meeting the new Council
discussed a number of substantive issues.
Decisions will
be announced on these matters in the near future.
Mr. Weber, a native of New York City, holds a B.A.
degree from the University of Illinois and an M. A. and Ph.D.
~n
Economics from
Massachusetts Institute of Technology.
He taught for ten years at the University of Chicago and
.
~n
1969 was named Assistant Secretary of Labor for Manpower.
In
Jul~ 197~
he was appointed Associate Directbr of
the Office of Management and Budget, handling general
managerial problems including development of policy and
personnel organizational matters.
He is married to the former Edna Files Weber.
They
have three children; David, 14, Paul, 12, and Robert, 7.
George P. Shultz, Director of the Office of Management
and Budget, praised the "outstanding job" Mr. Weber did as
Deputy Director, and Secretary Connally said, "We are
extremely fortunate and verv delighted that Mr. Weber ha.s
agreed to take the job, as Executive Director of the Cost of
Living Council, at great personal sacrifice.
II
~(){J
!partment 0/ the TRfASURY
fON, D.C. 20220
TELEPHONE W04-2041
FOR IMMEDIATE RELEASE
August 17, 1971
MEMORANDUM TO THE PRESS:
Attached is
~ome
background material on the
international monetary situation and the
U. S. balance of payments, which may be of
assistance.
000
Attachments
u.s.
Official Reserve Transactions Balance
and Net Liquidity Balance
The chart shows that the
u.s.
has had deficits in every year since
1960 on the net liquidity balance but that the
enormously in the first half of 1971.
deficit increased
Measured on the official reserve
transactions basis, we were in deficit in eight of the 11 full years, with a
very large deterioration in 1970 and again in the first half of 1971.
August 15, 1971
Treasury, OASIA
~
~
~
I
I
oI
_ Official Reserve
Transactions Balanc~ .
---- -- ----
-5~1------------+--
.... --
__
~,
\
\
-- ---.-
\'---+------~
,
\
Net liquidity Balance /
\
-10 I
W
,
. -
-15.
.
.lit
-20
I
,
'*
1960
* First
1962
1964
half 1911 seasonally adjusted at an annual rate
Note: 1970 bahllces exclude SOR allocation of $867. ~illion
IIld 1971 balances exclued SOR al~c~tion_ of $7f1 million
SOURCE.; U.S. DEPARTMENT OF OOMMERCE, OBE
1966
1968
1970
~
~
.-
.1
Lv
19n
Measures of the U. S. Balance of Payments
Official Reserve Transactions Balance
and Uet Liquidity Balance
(billions of dollars)
Net
Liquidity 'Balance
Official Reserve
Transactions Balance
60
61
-3.7
-2.2
62
63
-2.8
-2.6
-2.7
64
-2.7
-2.5
-1.5
-1.3
67
-2.1
-4.7
-3.4
68
69
-1.6
-6.1
1.6
2.7
70
71
-4.7 1 /
2
-17.4 /
-10.7 2 /
-23.3-
65
66
-3.4
-1.3
-1.9
0.2
1/
Excludes SDR allocation of $867 million.
Seasonally adjusted annual rate.
$717 million.
Excludes SDR allocation of
August 15, 1971
'l'reasury: OASIl\
u.s.
Reserve Assets and Liquid Liabilities to Foreigners
This chart shows how our reserve assets have declined and our shortterm liabilities to foreigners have risen until the short-term liabilities
are now more than four times our reserve assets.
Our liabilities to foreign monetary authorities, which are included in
the $57.4 billion estimate of total liquid liabilities to foreigners, are
currently estimated to be about $38.2 billion.
~
~
~
August 15, 1971
Treasury: OASIA
u.s.
RESERVE ASSETS AND LIQUID
LIABILITIES TO FOREIGNERS'
$Bil.
I.
Aug.
'S.l
60
Est.
50
U.S. liquid liabilities
to All Foreigners*
40
30
U.S. Reserve Assets
20
"U.S. liabilities, liquid and
Non-liquid, to Foreign Official Agencies
10
o
51
'54
'56
'58
'60
'62
'including non-liquid liabilities to foreign official agencies.
'64
'66
'68
'70
72
u.s.
Reserve
Assets
u.s. Liquid
Liabilities
to All Foreigners 1/
u.s. Liabilities
Liquid & non-liquid
to Foreign Official Agencies
1950
1951
1952
1953
1954
1955
24.3
24.3
24.7
23.5
23.0
22.8
8.9
8.8
10.4
11.4
12.5
13.5
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
1956
1957
1958
1959
1960
23.7
24.8
22.5
21.5
19.4
15.3
15.8
16.8
19.4
21.0
n.a.
n.a.
n.a.
(10.6)
(11.9)
1961
1962
1963
1964
1965
18.8
17.2
16.8
16.7
15.5
22.9
24.3
26.5
29.5
29.7
(12.6)
(13.8)
(15.4)
(16.7)
(16.8)
1966
1967
1968
1969
1970
14.9
14.8
15.7
17.0
14.5
31.1
35.8
38.6
46.0
47.1
(16.0)
(19.3)
(18 .5)
(17.1)
(24.5)
1971 (Aug. 13)
Estimate
12.2
57.4
(38.2)
1/
V·-.-J
~
,
Including non-liquid liabilities to foreign official agencies
August 15, 1971
Treasury: OASIA
u • S. GOLD STOCK AND l10RLD MONETARY GOLD nOLO ING 5
This chart shows a very substantial decline in the
u.s.
gold stock over the past 20 years both in amount and
as a proportion of the world total of monetary gold.
August 15, 1971
Treasury, OASIA
~0
~
'"~
-
40
1'IIIIIIII..
-
1st Orr.
~ .....
WORLD MONETARY GOLD
30
20
-- .........--- ----
-_..., ,
.....
'~
4IIIt
'
.....
......--.
~---- ..........
_-.
u.s. GOLD
~
.....
10
............ ...
---
Aug. 13
.. ~
w
~
~
I
o
1951
SOURCE:
I
I
1954
1956
INTERNATIONAL FINANCIAL STATISTICS
I
1958
I
1960
I
I
1962
1964
I
1966
I
1968
I
1970
1972
3(}) ~
u. S. GOLD STOCK AND "lonLD 1·10t~E'rJ\RY GOLD HOLDINGS *
(Millions cif dollars)
s.
World
Date
U.
1951
22,873
33,925..
1952
23,252
32,900
1953
22,091
34,320
1954
21,793
34,950
1955
21,753
35,410
1956
22,058
36,055
1957-
22,857
37,305
1958
20,582
38,030
1959
19,507
37,880
1960
17,804
38,065
1961
16,947
38,890
1962
16,057
39,280
1963
15,596
40,22{)
1964
15,471
40,840
1965
14,065
41,855
1966
13,235
40,905
1967
12,065
39,505
1968
10,892
38,935
1969
11,859
39,130
1970
11,072
37,180(e)
10,200
36,900
1971
**
Source:
-
1951-1961 IFS Supplement to 66/67 Issues:
1962-1971 IFS, July 1971
• Excludes IMP holdings
*.
August 13. 1971 esttmate
August 15, 1971
Treasury: OASIA
U .. S. MERCHANDISE TRADE
This chart shows that our merchandise trade balance varies greatly from
year to year but that the trend has been down.
Our position is best when
foreign countries are operating at or near capacity levels and our own economy
1S grow1ng less rapidly..
Thus we had a record trade surplus of nearly
$7 billion in 1964, but under similar conditions in 1970 the surplus was only
$2.1 billion.
On the other hand, if the
u.s .
is experienceing a period of
excess domestic demand our trade position tends to be weaker, particularly if
some of our major markets should be going through periods of relatively slower
growth.
The very small trade surplus recorded in 1968 reflects these conditions.
In the first half of 1971, the trade balance moved into deficit.
l~
August 15, 1971
Treasury, OASIA
)J
~\
J
Co.)
c::::
N
-
0
C)
~
CO
CO
C)
co
-
~--------r_--------~~--------~--------~CO
C)
J.!::
~{;
~~
13ct:a
~~
~~
.~
Q)Q)
-----T-----------r----------~----------~~--------~~--------~ C)
~
~
__
~
~
~
~
__ __________ __________
~~
~
N,
~
__________ ________
~,
oCO
• C)
~o
~_+----------_+----------~----------~--------~CO
C)
.-
N
C)
t--r---------r--------~--------~~--------4_--------~~
-
____
q
+
N
u.
S. I-1ERCHl\NDISE TRADl:
(hillions of dollars)
Trade
Balance
1961
1962
5.6
4.6
1963
1964
5.2
6.8
1965
1966
5.0
3.9
1967
1968
3.9
0.6
1969
1970
0.6
2.2
1971
-1.5 1 /
Source:
1/
Survey of Current Business
First half of 1971 seasonally adjusted at
annual rate.
August 15, 1971
Treasury:
OASIA
....,....,.L.I..H ....
'"n~.L.J.vl.'oj
.!oj....
U.
;;,.
TKAUl';
BALANCE SINCE 1964
The U. S. trade balance dropped from a peak surplus of $6.8 billion in 1964
to a deficit of $1.5 billion (first half seasonally adjusted at an annual rate) in
1971.
We experienced deterioration in our trade position with nearly all areas of
the world except for Latin America and parts of Western Europe.
trates, the deterioration in
~ur
As the chart illus-
trade with Canada and Japan exceeded $6.5 billion.
Our deterioration 'with Canada was $3,267 million and our deterioration with Japan was
$3,242 million.
With the Ee, our trade position deteriorated over $1.1
billion.
VJ
~
~
i
August 15, 1971
Treasury:
OASIA
21
I:·:~
,//I//lll/i:1
:-:.:-:.:.:-:-:
<-:-:-:.:-:.:.,
:.:.:.:.:.:.:.:'
:~:}}}i
:-:-:-:.:-:.:.:
11
oI
t:",",:,:,
'71*
".:\IIII·lll·I·' '11*
I
'64
gggg
'64 ~
)c
"I::I:II!IIIII:
:'}"::"
11/111111111:
Ilillllilllll
•••••••.:.....
~
......
:
~xx~ I::<:~
........
~
'64 '71*
'64 '71*
'64 '71 *
'64 '71*
f.E.C.
Other
W. Eur.
latin
America
Other
Countries
I
I
-11
~
~
I~I-------------------------t
-2'
~
~----------------------------------------~
-31
1m
~~----------~~
Canada
Japan
SOURCE:
U.S. CENSUS BUREAU AND SURVEY OF CURRENT BUSINESS
.-
* First Half Figures Adjusted
to
an Annual Rate
:::.
DETERIORATION IN U. S. TRADE
BALANCE SINCE 1964
(millions of do~l~l~a-r-s-r)-----
1964
Japan
200
-3,042
Canada
593
-2,674
2,436
776
942
1,022
74
498
2,404
2,256
EEC
Other W. Europe
Latin America
Other Countries
1/
1st half figures adjusted to an annual rate.
Source:
Survey of Current Business and U. S. Census
Bureau.
August 15, 1971
Treasury: OASIA
u.s.
Balance of Payments on Current
and Long-term Capital Account
This chart shows that the United States has had a deficit on this
balance in almost every year for the last 20 years.
What this means
is that the nation has not received enough from the sales of goods and
services and ffom foreign investments here to offset the long-term
investments made by u.s. industry and government outside the U.s.
August 15, 1971
Treasury, OASIA
l\J
~
~
0
N
•
•
--=:t
*
•
c.o
0')
,........
-c.o
0')
0')
c.o
c.o
0')
C")
c.o
0')
-
o
c.o
0')
,........
Lt')
0')
-
~
Lt')
0')
~
~
'li
::::,
~
q)
~
~
c.,
.~
~
'"
~
§'"
c.,
c.,
~
::::,
~
~
'"
-'"
c.,
-=
L t')
- -*
.-
000')
w
CI)
CI)
~
:;::,
CI)
c:c
w
....z
ICC
ICC
:;::,
~
(.)
c
>
ICC
~
CI)
:;::"
w
(.)
ICC
:;::,
CI)
c
u. s.
of Payments on Current
and Long-term Capital Account
(Billions,of dollars)
Balan~c
951
952
-0.3
-1.7
953
954
-2.6
-0.9
955
956
-1.3
-0.9
957
958
-0.3
-3.5
959
960
-4.1
-1.2
961
962
0
-1.0
963
964
-1.3
'0
965
966
-1.8
-1.6
967
960
-3.2
-1.3
969
970
-2.9
-3.0
971
-·5.7*
1st quarter at a seasonally adjusted annual rate.
August 15, 1971
Treasury: OASIA
u. s.
INVES~MENT
POSITION
This chart shows that although U. S. liquid liabilities exceed
U. S. reserve assets, we are still a substantial net creditor nation.
Total U. S. assets abroad exceed total foreign assets in the United
States by about $70 billion.
We are no longer improving our investment
position significantly, however.
\
\~
.
"-
~
~
J'\ugust 15, 1971
Treasury: ()l\SIA
u.s.
INVESTMENT POSITION-3·E:.
fF
RS
lS
,
Total U.S. assets
abroad
liabilities
to foreigners
..
---
~
--
liquid portion
of U.S. liabilities
-
-
-
"Liquid portion
of U.S. assets
'61
'62
'63
'64
'65
'66
'67
'68
'69
'70
e: Survey of Current Business. Treasury Bulletin and Federal Reserve Bulletin.
U.s. assets include U.S. gold holdings and SORs.
'71
'72
u.s.
Total U.S.
assets abroad
INVESTMENT POSITIO~~
($ billions)
Liquid
Eortion
;
Total foreign
assets in u.s.
Liquid
portion
0
85".8
19.4
41.2
21.0
1
92·9
18.8
46.0
22.9
2
96.4
17.2
46.3
24.1
3
103.9
16.8
51.5
26.3
4
114.6
16.7
56.9
29.0
5
120.5
15.5
58.8
29.1
6
125.1
14.9
60.4
29.8
7
134.7
14.8
69.7
33.1
8
146.8
15.7
81.2
33.6
9
157.8
17.0
90.8
41.9
O~/
166.1
14.4
96.4
43.3
Estimated.
rce:
.
...o •
Survey of Current Business, Tr.e?::E~EX-B2;~t::n. and
Federal Reserve Bulletin.
U.S. assets lncluae O.S. gold holdings and SDRs.
August 15, 1971
Treasury: OASIA
ortmento/ the TREASURY
tElEPHONE W04·2041
FOR IMMEDIATE RELEASE
August 18, 1971
MEMORANDUM TO THE PRESS:
Attached are the first two orders of the
Cost of Living Council.
These have been sent
to the Federal Register for publication.
Attachments (2)
D-118
000
COST OF LIVING COUNCIL
ORDER NO. 1
Delegation of Authority to the
Director, Office of Emergency Preparedness
Pursuant to the authority vested in the Council by Section 4
Executive Order No. 11615 (hereinafter referred to as the
er), it is hereby ordered as follows:
1.
There is hereby delegated to the Director, Office of
rgency Preparedness (hereinafter referred to as the Director),
ponsibility and authority to implement, administer, monitor,
enforce the stabilization of prices, rents, wages, and
aries as directed by Section 1 of the Order.
2.
There is hereby delegated to the Director the authority
ted in the Council by Sections 4(a), 5 and 7 of the Order.
3.
1
All executive departments and agencies shall furnish
necessary assistance to the Director as may be auth0rized by
tion 214 of the Act of May 3, 1945, 59 Stat. 134 (31 U.S.C. 691).
4.
Significant policy decisions shall be made only after
3ultation with the Council.
5.
The Director may redelegate to any agency, instrumentality
)fficial of the United States any authority under this Order,
may, in carrying out the functions delegated to it by this
~r,
utilize the
serv~ces
of any other agencies, Federal or
:e, as may be available and appropriate.
By director of the Council:
lsi John B. Connally
st 17, 1971
John B. Connally
Chairman
COST OF LIVING COUNCIL
ORDER NO. 2
Authority to Increase Prices on Imported Goods
Because of the Imposition of Supplemental Duty
Pursuant to the authority vested in the Council by
Executive Order No. 11615, it is hereby ordered that there
are exempted from the prohibitions of Section 1 of that
Order articles imported into the Customs territory of the
United States from outside thereof, to the extent, but
only to the extent, that any price higher than that permi tted under that Order is to offset the supplemental duty
imposed by Proclamation No. 4074 and paid, directly or
indirectly, by the person charging, as sess ing, or receiving,
the higher price.
Any increase in price, whether at 'whole-
sale or retail or otherwise, which is greater than that
necessary of offset the supplemental duty actually passed
on to, and paid by, the person charging, assessing, or
receiving the higher price, shall be deemed to be in
violation of that Order.
Any person increasing prices pursuant to the authorizati(
contained herein shall maintain adequate records to demonstri
that such increases are in fact authorized by this Order.
By direction of the Council:
/s/ John B. Connally
August 17, 1971
John B. Connally
Chairman
PRICES
Q.
May prlce lncreases announced prior to August 15
take effect in the future?
A.
No.
All prices, unless specifically exempted, are
frozen according to terms of the order.
Q.
Are previously announced increased tuition rates
for the 1971-72 school year permitted by the freeze?
A.
Yes.
These are considered transaction prices, since
commitments have been made, and there are a number
of cases where payments have been made.
~e
Q.
Are stock and bond prices included in
A.
No.
~.
Are prlces of used commodities, such as used cars,
freeze?
antiques, and resales of housing included in the
freeze?
\.
Yes.
~.
Are interest rates included In the freeze?
\.
Ho
Prices - 2
Q.
Will the freeze apply to insurance rates?
A.
Yes, and to all other similar fees and rates.
Q.
Are rates charged by common carrlers and public
utilities included in the freeze?
A.
Yes, whether regulated by government agencles or set
independently.
Q.
Are wholesale
and retail prices included in the
freeze?
A.
Q.
Yes.
In cases where surcharges or other sales or excise
taxes have been increased, is the ceiling for the
price paid by the customer (including these taxes)
raised by a like amount?
A.
Yes.
The price the customer pays is equal to
the base price, pI us these taxes.
This ruling applies
to imported goods as well as other goods which are
directly taxed.
Q.
How do you price new products?
A.
Use the price of the most nearly comparable product
sold by your closest comparable competitor.
Prices-3
~.
Should records be maintained for other than the specified
base period (Sec. l(b)) if another period is used to
establish prices?
1\.
The Order is interpreted to require this.
~.
How should imports be priced with the imposition of the
temporary 10 percent import surcharge?
A.
The additional dollar and cents cost may be passed on to
each purchaser.
Q.
Is there any prlce control over exports?
A.
No.
Q.
If farm prices of "raw agricultural products ll are exempt,
does this exemption of raw products follow through to
retail?
1\.
Yes, if they move all the way ln raw or unprocessed
state.
A head of lettuce is exempt from farm to
housewife.
fresh eggs are not covered.
meat case is covered.
juice is.
Meat in the
Oranges aren't, but orange
Fresh fish is, but frozen fish isn't.
~.
Does the freeze on prices prevent lowering of prices?
\.
No.
On the contrary, it is hoped that this will occur.
WAGES
Are deferred wage or salary increases which have been
negotiated to take effect in the future permitted by
the freeze?
No.
Are future cost-of-living increases built into wage
contracts or provided by management exempt?
No.
There will be no cost-of-living increases during
the gO-day freeze.
Are fees for professional serVlces such as doctors and
lawyers included in the freeze order?
Yes.
No increases in rates or fees for particular
services are permitted during the freeze.
How does the freeze affect people who work on commlSSlon
or piece rates?
Commission rates or plece rates cannot be increased over
those existing in the base period.
Wages-2
Q.
How will wages and salaries be determined for new jobs?
A.
Scales will be determined on the basis of comparable jobs
within the affected business or firm.
If no comparability
exists within such entities, such scales will be determined
on the basis of comparable jobs in nearby firms.
Q.
What effect does the Executive Order have on
cost-of-livin~
wage or salary increases ordered by a municipal government
and to become effective subsequent to the date of the
Executive Order?
A.
State and local governments are subject to the
Executive
Order freezing wages and prices.
Q.
Are the wages of such state and local governmental
employees as firemen, policemen and the like included in
the freeze order?
A.
They are subject to the freeze just as are all wages in
private industry.
Q.
Will increases in the salaries of teachers be allowed?
A.
If the contract period started before August 15, the
salary lncrease may be granted.
If the contract period
starts after August 15, the increase is not allowed.
Q.
Are Federal 'Government employees wages and salaries frozen:
A.
Yes.
Q.
What is the policy on promotions?
A.
a.
Bona fide promotions that constitute an advancement
to an established job with greater responsibility are
allowed.
Wages-3
b.
Increases in certified apprentice and learner's
rates under programs established prior to August 15
are allowed.
c.
Merit and longevity lncreases are not allowed.
RENT
Q.
How will the rent ceiling be determined for new or
previously unrented units?
A.
The standard will be that generally prevailing
for comparable units in the immediate area.
Q.
Are apartment house
the freeze?
A.
Yes.
and other rent fees included in
TAXES
Q.
Are state and local tax rates frozen during this
period?
A.
Q.
No.
In cases where surcharges or other sales or excise
taxes have been increased, is the ceiling for the price
paid by the customer (including these taxes) raised
by a like amount?
A.
Yes.
The price the customer pays is equal to the
base price, plus these taxes.
Tnis ruling applies
to imported goods as well as other goods which are
directly taxed.
ortmento/ the TREASURY
tElEPHONE W04·2041
FOR IMMEDIATE RELEASE
August 19, 1971
Attached is Treasury Department Additional Duty
Order No.1.
This has been sent to the Federal Register
for publication.
C-120
DEPARTMENT OF THE
TP~ASURY
OFFICE OF THE SECRETARY
TREASURY DEPARTMENT ADDITIONAL DUTY ORDER NO. 1
Articles Exempt from Additional Duty Imposed under
Subpart C of Part 2 of the Appendix to the
Tariff Schedules of the United States
Pursuant to the authority vested in the Secretary of
the Treasury by Headnote 4(a) subpart C of part 2 of the
Appendix to the Tariff Schedules of the United States, I
hereby determine that it is consistent with safeguarding
the balance of payments position of the United States to
establish exemptions from the additional duty provided for
in subpart C as set forth in Headnote 5 thereof which I
hereby modify to read as follows:
5.
Articles exempt from the additional duties--
In accordance with determinations made by the
secretary in accordance with Headnote 4(a), the
following described articles are exempt from the
provisions of this subpart:
(a)
Art:lcle-s imported into the united States
before 12:01 a.m., August 16, 1971, and released by
Customs from its custody for consumption prior to
that time; and
- 2 -
(b)
Articles imported into the united States
before 12:01 a.m., August 16, 1971, if prior to
that time any entry for consumption for such
articles had been presented for acceptance at any
customhouse, whether or not such entry had been
accepted by Customs and whether or not estimated
duties had been paid thereon.
This modification of Headnote 5 is published in the
Federal Register pursuant to Headnote 4(b) to subpart C.
of the Treasury
John B. Connally
Secret~ry
Date:
AUG 1 9 1971
August 19, 1971
MEMO TO CORRESPONDENTS
COST OF LIVING COUNCIL
Q & A LIST ~F2
Attached are answers to frequently asked questions about
application and implementation of the 90-day Wage and Price
freeze announced August 15 by President Nixon. This set is in
addition to the Q's and A's released on August 18. The
answers are rulings issued by the Cost of Living Council,
appointed by the President and chaired by Secretary of the
Treasury John B. Connally.
000
C-12J
GENERAL
Q:
How will a substantial volume of transactions be
determined?
A:
The ceiling price is the price at or above which 10% of
the actual transactions during the base period were made,
except that in the case of increases in posted and
effective prices during the base period, the base period
itself will be considered to have begun at the time of
the increase in posted and effective prices.
Q:
Must auto dealers continue to charge the 7% excise tax
on 1971 year-end automobile sales?
A:
Yes, the excise tax remains in effect and must be collected
until such time as Congress rescinds it. The President
has requested authority to rescind the excise tax,
retroactive to August 15. If this authority is approved
by Congress, rebates will be made to automobile purchasers.
RENTS
Q:
If a rent agreement is signed August 1 but effective
date is after August 15, does increase apply?
A:
No.
IMPORTS
Q:
Can the 10% import tax'surcharge be applied to g09ds
~1TP~nv
A:
No.
in
~rnrk?
WAGES
Q:
Does the freeze terminate bargaining for wage changes
during the 90-day period or can these proceed, with
understanding that they cannot take effect until the
Federal Government permits?
A:
The freeze does not terminate bargaining for wage
changes during the gO-day period. However, no wage
increase negotiated during the 90-day period can go into
effect during the period of the freeze.
Q:
Can a union and management negotiate for pay increases
to be effective after the date of the freeze but also
retroactive to cover the freeze period?
A:
No.
Q:
Does the wage freeze apply to all employers regardless
of the number of employees he employs?
A:
Yes.
Q:
In the case of a negotiated increase that became effective
August 9, 1971, with payment for that week received by
the employees on August 13, 1971, is it permissible to
pay the retroactive portion of the increase which is
currently being computed for the employees involved?
A:
Yes.
Q:
If a salary increase was granted and the employee
actually performed under the new rate prior to August 15,
1971, can he be paid at the higher rate if the pay day
is after August l5?
A:
Yes, if there are adequate records to demonstrate that
the increase was put into effect prior to the freeze
date.
PRICES
Q:
What is the selling price for a material if there have
been dual price situations, i.e., a published price and
a discounted price at which actual transactions were
made?
A:
Sales may be made at the highest price at which
substantial volume of actual transactions were made
during the 30-day period of time ending August 14. If
products have been selling at a discounted price and not
at the published price during the base period, the
maximum price would be the highest discounted price at
which substantial transactions were made.
Q:
Are motel, hotel, etc., rates included in the freeze?
A:
Yes.
Q:
I want to sell something I own. I have no idea what
it's price was during the month prior to August 15. What
should I do?
A:
Inqu$re locally as to what comparable items sold for
during the period July IS-August 15. Note down and
retain these facts for your own records before selling.
Q:
What is the price-freeze basing-point for national or
regional retail chains?
A:
Price ceilings are to be set on the basis of the normal
procedures used in establishing market prices. Market
price ceilings are to be established at no greater than
the highest price at which substantial volume transactions were carried out by the firm's individual
normal pricing areas, regardless of whether these pricin~
areas are national, regional, or individual stores.
THE SECRETARY OF THE TREASURY
WASHINGTON
August 19, 1971
Dear Sir:
On Sunday evening, the President set forth the most
sweeping change in economic policy in four decades. You
are undoubtedly familiar with his proposals, and I shall
not describe them here. Suffice it to say that those
actions that he could take administratively -- the wage/
price freeze, the 10 percent surcharge on imports, and the
cuts in both Federal payroll and budget -- he has taken.
Moreover, the prospects for quick approval of the needed
legislation are excellent.
The wage/price "freeze does not now include interest
rates. The President believes that the overall impact
of his program will lower the market rates of interest.
If so -- and thus far his j udgr:~ent has proved correct -ceilings could be counterproductive. A ceiling all too
often also becomes a floor.
The business recovery demands an adequate and steady
flow of credit. A great many financial leaders have
publicly advocated actions similar to the President's
program. Lenders can now no longer assert that they are
singled out for criticism on interest rates while wage
and price raises go unnoticed. Hence, "the President
believes that lenders will voluntarily keep interest
low.
Now that wages and prices are frozen, I not only
hope, I expect that lenders will look beyond short-run
profits when they set rates and consider the broad public
implications of what they do.
I know I
ca~
count on your help and cooperation.
Sincerely,
lSi
John B. Connally
PRICES
Q:
What is the selling price for a material if there have
been dual price situations, i.e., a published price and
a discounted price at which actual transactions were
made?
A:
Sales may be made at the highest price at which
substantial volume of actual transactions were made
during the 30-day period of time ending August 14. If
products have been selling at a discounted price and not
at the published price during the base period, the
maximum price would be the highest discounted price at
which substantial transactions were made.
Q:
Are motel, hotel, etc., rates included in the freeze?
A:
Yes.
Q:
I want to sell something I own. I have no idea what
it's price was during the month prior to August 15.
should I do?
W~t
Inqu~re
A:
locally as to what comparable items sold for
during the period July IS-August 15. Note down and
retain these facts for your own records before selling.
Q:
What is the price-freeze basing-point for national or
regional retail chains?
A:
Price ceilings are to be set on the basis of the normal
procedures used in establishing market prices. Market
price ceilings are to be established at no greater than
the highest price at which substantial volume transactions were carried out by the firm's individual
normal pricing areas, regardless of whether these pricil
areas are national, regional, or individual stores.
THE SECRETARY OF THE TREASURY
WASHINGTON
August 19, 1971
Dear Sir:
On Sunday evening, the President set forth the most
sweeping change in economic policy in four decades. You
are undoubtedly familiar with his proposals, and I shall
not describe them here. Suffice it to say that those
actions that he could take administratively -- the wage/
price freeze, the 10 percent surcharge on imports, and the
cuts in both Federal payroll and budget -- he has taken.
Moreover, the prospects for quick approval of the needed
legislation are excellent.
The wage/price "freeze does not now include interest
rates. The President believes that the overall impact
of his program will lower the market rates of interest.
If so -- and thus far his j udgyr~ent has proved correct -ceilings could be counterproductive. A ceiling all too
often also becomes a floor.
The business recovery demands an adequate and steady
flow of credit. A great many financial leaders have
publicly advocated actions similar to the President's
program. Lenders can now no longer assert that they are
singled out for criticism on interest rates while wage
and price raises go unnoticed. Hence, "the President
believes that lenders will voluntarily keep interest
low.
Now that wages and prices are frozen, I not only
hope, I expect that lenders will look beyond short-run
profits when they set rates and consider the broad public
implications of what they do.
r know
I
ca~
count on your help and cooperation.
Sincerely,
lSi
John B. Connally
ortmento/ the TREASURY
tElEPHONE W04·2041
FOR IMMEDIATE RE LEASE
August 19, 1971
MEMORANDUM FOR THE PRESS:
In answer to queries, Secretary of the Treasury
John B. Connally said today that he does not plan to make
any special exemption from the import surcharge for the
British-built Rolls Royce engine which will power the
Lockheed Aircraft Corporation's L-10ll airplane.
000
C-122
FOR IMMEDIATE RELEASE
August 19, 1971
The nationwide taxpayer assistance network of the
Internal Revenue Service will be used to aid the President's
wage-price program, Secretary of the Treasury John B. Connally
announced today.
Offices will be opened tonight in 58 cities and on
Monday in an additional 145 cities to receive complaints,
analyze the complaints, and investigate them.
In addition,
the IRS offices will answer public questions on a local basis.
The Internal Revenue Service undertook the assignment
at the request of the Office of Emergency Preparedness, which
is the operating arm of the new Wage Price Program.
The IRS
offices will report to the 10 regional office of the OEP
when action at more than local level is needed.
The IRS taxpayer assistance units used for the new service
C-123
(MORE)
-2wdlll be called "Local Service and Complaint Centers."
In announcing the plan, Secretary Connally said, "I
would again like to repeat that we hope the American people
understand that the success of this wage-price freeze in a
large part is going to depend upon their individual compliance."
"If an American citizen finds that there is a flagrant
violation on the part of someone, they can communicate with
these IRS offices
just as they can seek answers to questions
about the program at these same offices. But I want to again
call upon all Americans -- business, labor, large and small,
--to live up to the spirit and the letter of this freeze. It is
designed to help solve one of the really hard core basic
problems of this nation."
(MORE)
-3-
While the local offices will make efforts to be
helpful in every case, they will refer questions about
the new import duty surcharge to the nearest District Director
of Customs, unless the question relates to the impact of the
surcharge on wages, rents or the price freeze only.
Under the Presidential program, the Cost of Living
Council (CLIC) sets policy. Its chairman is Treasury Secretary
Connally and Arnold R. Weber is the Executive Director. Mr. Weber
is also a Special Assistant to the President.
Operations ca~rying out the policies are the responsibility
of the Office of Emergency Preparedness under its Director,
George A. Linco In.
The IRS units will take operational orders from the OEP,
though employees will remain IRS workers rather than be
transferred to the wage-price agency.
Actual prosecutions under the program are the responsibility
of the Justice Department.
The 58 cities where the new informational offices will
be opened tonight are:
North Atlantic Region: Augusta ,Maine; Boston,Mass.;
Portsmouth,NuH o ; Burlington,Vto; Providence,RuI.; Hartford,Conn.;
-4-
Mid Atlantic Region: Baltimore,Md.; Newark,NoJ.;
Philadelphia,Pa.; Pittsburgh,Pa.; Richmond,Va.;
Wilmington,Del.
Southeast Region:
Atlanta,Gao; Birmingham,Alao;
Columbia,S.C.; Greenville, N.C.; Jackson,Miss.; Jacksonville,
Fla.; Nashville,Tenno
Central Region:
Cincinnat~Ohio;
Cleveland ,Ohio;
Detroit,Mich.; Indianapolis,Ind.; Louisville ,Kentucky;
Parkersburg ,W.Va.
Midwest Region: Aberdeen,S.D.; Chicago,Ill.;
Des Moines,Iowa; Fargo,NoDo; Milwaukee,Wis o; Omaha,Neb.;
St.Louis,Moo; St.Paul,Minn o; Springfield,Ill.
Southwest Region: Albuquerque,NoM.; Austin,Tex.;
Dallas,Tex.; Cheyenne,Wyoming; Denver,Colo.; Little Rock,
Ark. ,New Orleans,La.; Oklahoma CitY,Okla
Western Region:
Anchorage,Alas~
o ;
Wichita,Kan.
Boise,Idaho;
Helena,Mont.; Honolulu,Hawaii; Los Angeles,Calif.;
.
Phoenix,Ariz.; Portland,Ore.; Reno,Nev.; Salt Lake City,Utah;
San Francisco,Calif.; Seattle,Wash.
Cities where offices will be opened MOnday will be
announced Saturday, the Treasury said.
000
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Document Type: Transcript
Number of Pages Removed: 22
Author(s):
Title:
"The Today Show" Interview with Treasury Secretary John B. Connally
Date:
1971-08-19
Journal:
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FaR TM}1EDIATE 'RELEASE
August 20, 1971
TREASURY ISSUES DUMPING FINDING WITH RESPECT
TO CLEAR 'SHEET. 'GLASS- F'ROM TA"I1'T.fl.N ' , "
The Treasury Department announced today that it has issued
a dumping finding with respect to clear sheet glass from Taiwan.
The finding will be published in the Federal Register of
Saturday, August 21, 1971.
On April 20, 1971, the Treasury Department advised the
Tariff Commission that clear sheet glass from Taiwan was being
sold at less than fair value wi thin the meaning of the
AnH c1nmI'li'l"lC} Ar.t,: 19? l; as nmended.
On July 21, 1971, the Tariff Commission issued a determination that an industry in the United States is being injured by
reason of the importation of clear sheet glass from Taiwan sold
at less than fair value within the meaning of the Antidumping
Act, 1921, as amended.
After these two determinations, the finding of dumping
automatically follows as the final administrative requirement
in antidumping investigations.
During the period January 1, 1969, through April 30, 1971,
clear sheet glass valued at approximately $3,792,000 was
imported from Taiwan.
# # #
FOR IHIVillDIATE RELEASE
August 20, 1971
WITHHOLDING OF APPRAISEHBNT ON DIAl·IOiJD TIPS
FOR PHONOGRAPH NEEDLES FROH THE UNITED KTNGDOO
Assistant Secretary of the Treasury Eugene T. Rossides
announced today that the Bureau of Customs is instructing
Customs field officers to withhold appraisement of diamond
tips for phonograph needles from the United Kingdom pending
a determination as to whether this merchandise is being,
or is likely to be, sold at less than fair value within
the meaning of the Antidumping Act, 1921, as amended
(19 u.s.c. 160 et seq.).
Under the Antidumping Act the Secretary of the Treasury
is required to withhold appraisement whenever he has
reasonable cause to believe or suspect that sales at less
than fair value may be taking place.
A final Treasury decision in this investigation will
be made within three months. Appraisement will be withheld
for a period not to exceed 6 months from the date of
publication of the " vJithholding of Appraisement Notice"
in the Federal R~gister.
Under the Antidumping Act, a determination of sales
in the United States at less than fair value requires that
the case be referred to the Tariff Commission, which would
then consider whether an American industry is being injured.
Both dumping margins and injury must be shown to justify
a finding of dumping under the law.
The total value of diamond tips for phonograph needles
imported from the United Kingdom during the period from
July 1970 through March 1971 amounted to approximately
$180,000.
.
000
FOR IMMEDIATE RELEASE
August 20, 1971
Secretary Connally today released the following
statement:
"I have just received the recommendations of
the Regulations and Purchasing Review Board that
the purchasing power of government should be
used so as to assure compliance with the
President's Price-Wage-Rent freeze. The Board
recommended in placing government contracts for
goods and services, .officials should consider as
a decisive factor whether the contractors are in
compliance with the Price-Wage-Rent freeze."
'~s
Chairman of the Council on Cost of Living,
I heartily endorse this recommendation."
000
C-124
August 20, 1971
MEMO TO CORRESPONDENTS
COST OF LIVING COUNCIL
Q & A LIST #3
Attached are answers to frequently asked questions about
application and implementation of the 90-day Wage and Price
freeze announced August 15 by President Nixon. This set is
in addition to previously released Q's and A's. The answers
are rulings issued by the Cost of Living Council, appointed
by the President and chaired by Secretary of the Treasury
John B. Connally.
000
1.
GENERAL
Q:
How do you distinguish between raw and processed agricultural
products?
A:
Raw agricultural products include those products that retain
the same physical form that they possessed when they left
the farm gate. All other agricultural and food products
would be considered processed and subject to the freeze.
This would include all products canned, frozen, slaughtered,
milled or processed in some other way that changes the
physical form; packaging would not be considered a processing
activity.
Examples:
Exempt
live animals and poultry
shell eggs
raw milk
sugar cane and sugar beets
all fresh fruit
all fresh vegetables
honey
fresh fish
fresh seafood
Non-Exempt
slaughtered animals
dressed poultry
pasteurized milk
"raw" and refined sugar
canned and frozen fruits
frozen vegetables
Q:
Does the wage-price freeze include Puerto Rico and the Trust
Territories?
A:
The U. S. Customs Zone is the boundary for the freeze. Puerto
Rico is within the Customs Zone so it is included. The Trust
Territories which are outside of the Customs Zone are not
inc luded.
Q:
Are prices in industries which are subject to government
regulation frozen?
A:
Yes. Agencies which regulate these industries may permit
price decreases and change other aspects of the industry,
but no price increases are allowed.
2.
WAGES
Q:
Can an employer reduce wages and other benefits to employees
and use the President's freeze as a justification?
A:
The President's program does not require a reduction in
compensation levels below those in effect on August 15.
Q:
May scheduled pay raises which are dependent upon employees
completing certain educational requirements be payed during
the freeze?
A:
Yes. Where the employer is 'willing to certify that an agreement was in existence that provided for increases in pay dependent on the employees' completing educational requirements
for specific job levels, the pay increase can be granted
because, in effect, the action is a bona fide promotion.
For example, a teacher who has been awarded a master's
degree can receive the increment which is normally given.
If the effective date of the teacher's contract is after
August 14, the increment must be the amount that was granted
last year.
Q:
If teachers ha ve reached a new agreement on pay scales for th
coming school year and the contract does not go into effect
until September 1, may teachers receive the pay increase?
A:
No.
Q:
If employees are severed for normal business reasons can
they receive their severance pay if it is in excess ~f
their normal pay rate that was in effect as of August 147
A:
Yes. If severance pay procedures are a part of the understood c?rporate procedure and the firm is willing to certify
that th~s was the procedure they had in effect severance
pay may be paid.
'
3.
PRICES
Q:
If a business reduces services and maintains the same price,
is this permitted by the freeze?
A:
No, this amounts to an increase in price for a product.
Q:
Can lnerchants and other commercial business pass on to
consumers the cost of an increase in local and state
taxes; i.e., property taxes or business taxes increases?
A:
No.
4.
IMPORTS
Q:
If the price of an import established in the world market
rises during the freeze period, can the importer pass on
the price increase to domestic consumers?
A:
Yes, the importer can pass on the price increase as long as
the product is not physically transformed by the seller or
becomes a component of the good being sold. When the
imported product loses its identity or is incorporated into
another good, at that point, the price increase may no longer
be passed on.
Q:
What about the IO-percent import surcharge?
increases be passed along?
A:
Yes, policy on this has already been announced.
Q:
Can importers, processors, and others in the U. S. include
the supplemental duty increase on foreign imports in
calculating their markup for transaction price?
A:
No. The supplemental duty can be passed on only to the
extent that it was paid on a dollar for dollar basis for
imports made on and after August '15.
Can these price
FOR IMMEDIATE RELEASE
August 20, 1971
MEMO TO THE PRESS:
The Cost of Living Council today requested
the Attorney General to take prompt action to
insure compliance with the President's stabilization
program with respect to the state of Texas.
The
Council expresses its regret that the Governor of
Texas has declined to cooperate with the Government
of the United States, but has chosen a course of
defiance in attempting to raise the pay of state
employees during the 90-day freeze.
000
C-125
artment of the TRfASURY
tElEPHONE W04·2041
FOR RELEASE IN SUNDAY A.M'S
AUGUST 22, 1971
ANNOUNCEMENT OF 360 LOCAL WAGE-PRICE OFFICES
Direct local information about the new wage, price
and rent freeze program will be available in 360 cities
across the nation Monday, Treasury Secretary John B.
Connally announced
Saturday.
The Office of Emergency Preparedness arranged to use
taxpayer assistance experts at existing Internal Revenue
Service offices to aid the Presidential program. Staffing
was completed at 58 centers Thursday and specialists will
be available in an _ additional 302 communities Monday.
The specialists will be able to receive, analyze and
investigate complaints and answerquestibns-, af' tim general
public about the new program.
Policies for the wage-price-rent program are set by
the new Cost of Living Council (CLIC).
Operations are
the responsibility of the Office of Emergency Preparedness.
The list of cities where questions and complaints can
be answered is attached.
000
C-126
ALABAMA
Birmingham*
Huntsville
Mobile
Montgomery
Dothan
Florence
Tuscaloosa
ALASKA
Anchorage*
ARIZONA
Phoenix;':
Tuscon
Mesa
Flagstaff
ARKANSAS
Little
CALIFORNIA
Chico
Fresno
Modesto
Oakland
Redding
Richmond
Sacramento,
Salinas
San Francisco*
San Jose
San Mateo
San Rafael
Santa Rosa
Stockton
Visalia
Yuba City
Hayward
Eureka
Bakersfield
Crenshaw
Downey
El Centro
Glendale
Hollywood
Long Beach
Los An vo-eles ~':
Montebello
Orange County
Pasadena
Pomona
Rock~t:
Page 2
CALIFORNIA (Cont.
Riverside
San Bernadino
San Diego
San Luis Obispo
Santa Barbara
Torrance
Van Nuys
Ventura
West Covina
Westwood
COLORADO
Denver*
Colorado Springs
Pueblo
CONNECTICUT
Bridgeport
Hartford*
New Haven
Stamford
Waterbury
DELAWARE
Wilmington
Dover
Georgetown
DISTRICT OF COLUMBIA
Washington *
FLORIDA
Jacksonville*
Orlando
St. Petersburg
Miami
Fort Lauderdale
Tampa
W. Palm Beach
Daytona
Lakeland
Belbourne
Pensacola
Sarasota
Tallahassee
GEORGIA
Atlanta*
Macon
Augusta
Columbus
Albany
Savannah
HAWAII
Honolulu*
Hilo
IDAHO
Boise*
Page 3
ILLINOIS
Champaign
Decatur
Peoria
Springfield*
Alton
Carbondale
East St. Louis
Mt. Vernon
Quincy
Rockford
Rock Island
Chicago*
Chicago North Area
Chicago South Area
Chicago West Area
Harvey
Joliet
Waukegan
Wheaton
Elgin
Evanston
INDIANA
Evansville
Ft. Wayne
Gary
Hammond
Indianapolis *
Lafayette
Bloomington
Elkhart
New Albany
Richmond
Muncie
South Bend
Terre Haute
IOWA
Cedar Rapids
Davenport
De s Moine s ~':
Sioux City
Council Bluffs
Waterloo
KANSAS
Kansas City
Topeka
Wichi ta~':
KENTUCKY
Lexington
Louisville ~':
Bowling Green
Covington
Owensboro
Paducah
Page 4
LOUISIANA
Baton Rouge
Lafayette
Lake Charles
Monroe
New Orleans*
Shreveport
Alexandria
MAINE
Augusta*
Bangor
Biddeford
Lewistown
Portland
Presque Isle
Waterville
MARYLAND
Baltimore*
Annapolis
Cumberland
Easton
Frederick
Hagerstown
Salisbury
Wheaton
MASSACHUSETTS
Boston*
Springfield
Worcester
MICHIGAN
Ann Arbor
Detroit*
Flint
Grand Rapids
Jackson
Kalamazoo
Battle Creek
Benton Harbor
Dearborn
Highland
Marquette
Mt. Clemens
Pontiac
Lansing
Muskegon
Saginaw
Page 5
MINNESOTA
Duluth
Minneapolis
St. Paul;';
Rochester
Mau Kato
St. Cloud
MISSISSIPPI
Jackson*
Meridian
Tupelo
Greenville
Hattiesburg
Gulfport
MISSOURI
Kansas City
St. Joseph
St. Louis*
Springfield
Clayton
Columbia
Joplin
MONTANA
Helena*
NEBRASKA
Lincoln
Omaha;';
Grand Island
NEVADA
Las Vegas
Reno*
NEW HAMPSHIRE
Manchester.
Portsmouth*
NEW JERSEY
Atlantic City
Jersey City
Paterson
Newark*
Trenton
Asbury Park
Camden
Hackensack
Morristown
New Brunswick
Perth Amboy
Tomsriver
Vineland
Page 6
NEW MEXICO
Albuquerque*
RosVlell
NEW YORK
Brooklyn ~':
Flushing
Jamaica
Mineola
Riverhead
Smithtown
Bronx
Manha t t an )~
Staten Island
Ht. Vernon
New Rochelle
Spring Valley
White Plains
Yonkers
Albany)~
Poughkeepsie
Binghamton
Buffalo~':
Rochester
Syracuse
Utica
Watertown
NORTH CAROLINA
Greensboro~':
Durham
Sanford
Raleigh
Greenville
Asheville
Hickory
Charlotte
Winston-Salem
High Point
Wellington
Fayetteville
NO RTH DAKOTA
Fargo~':
Page 7
OHIO
Cincinnati*
Columbus
Dayton
Akron
Canton
Cleveland*
Cleveland East
Lima
Lorain
Mansfield
Steubenville
Toledo
Warren
Youngstown
OKLAHOMA
Lawton
Oklahoma City*
Tulsa
Enid
Muskogee
OREGON
Eugene
Portland*
Salem
Medford
PENNSYLVANIA
Philadelphia·
Allentown
Bethlehem
Harrisburg
Lancaster
Redding
Scranton
Chester
Norristown
Pottsville
Williamsport
Wilkes Barre
York
Pittsburgh *
Altoona
Erie
Johnstown
Beaver Falls
Greensburgh
McKeesport
Washington
RHODE ISLAND
Providence*
SOUTH CAROLINA
Charleston
Columbia*
Florence
Greenville
Spartanburg
SOUTH DAKOTA
Sioux Falls
Aberdeen* ,
Rapid City
TENNESSEE
Nashville*
Chattanooga
Memphis
Knoxville
Jackson City
Jackson
TEXAS
Austin*
Beaumont
Corpus Christi
El Paso
Harlingen
Houston
McAllen
San Antonio
Waco
Abilene
Amarillo
Dallas*
Fort Worth
Lubbock
Odessa
Tyler
Wion :rcaTaJ.J.s
Page 8
Pacyp
0-
UTAH
Ogden
Salt Lake City*
VERMONT
Burl ington oJ:
Rutland
Montpelier
VIRGINIA
WASHINGTON
WEST VIRGINIA
Richmond*
,Newport News
Norfolk
Roanoke
Bailey's Crossroads
Charlottesville
Seattle*
Spokane
Tacoma
Aberdeen
Bellingham
Pasco
Vancouver
Wenatchee
Yakima
Charleston
Huntington
Wheeling
Parkersburg*
WISCONSIN
Green Bay
Madison
Milwaukee )':
Racine
Eau Claire
WYOMING
Cheyenne*
*offices which opened August 19.
q
Office of Public Affairs
Room 812
1717 H Street, N.W.
Washington, D. C.
Phone:
254-3010
August 23, 1971
FOR IMMEDIATE RELEASE
COST OF LIVING COUNCIL
Q & A LIST #4
Attached are answers to frequently asked questions about application
and implementation of the 9O-day Wage and Price freeze announced August 15
by President Nixon. This set is in addition to previously released Q's and
A's. The answers are rulings issued by the Cost of Living Council, appointed
by the President and chaired by Secretary of the Treasury John B. Connally.
C-128
Q: Are service charges and other fees charged by
deposit boxes) subject to the freeze?
b~
(for example, safe
A: Yes.
Q: Can the rate for renewal of insurance policies be increased?
A: Yes, if the rate increase was announced prior to August 15, and a substantial number of transactions occurred at the increased rate.
additional increases in rates are permitted during the freeze.
No
Q: Can the fees or charges which a state or local government charges for
services provided by the governments be increased?
A: No, fees for water, gas, sewer and similar services may not increase.
But fees for licenses or legal penalties, such as traffic tickets may
be increased.
WAGES
Q:
If a firm has a range of salaries for the same job, what wage or salary
can be paid to a new employee?
A:
The employee may be paid any salary wi thin the range which the qua11f1cat101l
of the applicant justify as long as the average wage paid by the firm in
this job classification does not increase.
Q:
Are wage increases permitted during the freeze for workers whose wages
are closely tied to increases for other workers that were negotiated
before the freeze?
A:
If the following conditions prevail, the increase may be granted:
1.
the agreement to which the increases are linked was reached before
August 15;
2.
prior to August 15 work was performed (by the workers whose wages are
closely tied to the increases reached before the freeze) that would be
eligible for payment at the new rate.
3.
the increased wage rate for the workers whose wages are closely tied
to negotiated increases was 8cheduled to go into effect on the same
day as the negotiated wage increases as a matter of established practice;
4. the workers are employees of the same fir.m; and
5.
the company is able to demonstrate that this procedure is an established
practice.
Q:
Are previously planned increases in pension benefits for those retired
before the freeze or those about to retire allowed?
A:
Yes, but no unplanned increases. For example, a scheduled increase in
penSions Which is planned for October 1 may go into effect. A person
who retires on October 15 may also receive this increase.
Deportment of the
TREASURY
TELEPHONE W04-2041
~ENTION:
FINANCIAL EDITOR
~
RELEASE 6: 30 P.M.,
lday, August 23, 1971.
RESULTS OF 'l'REASURY' S WEEKLY BILL OFFERING
The 1Teasury Department announced that the tenders for two series of Treasury
11s, one series to be an additional issue of the bills dated May 27, 1971
, and
e other series to be dated August 26, 1971
, which were offered on August 17, 1971,
re opened at the Federal Reserve Banks today. Tenders were invited for $ 2,300,000,000,
thereabouts, of 92 -day bills and for $ 1,600,000,000, or thereabouts, of 182 -day
lls. The details of the two series are as follows:
NGE OF ACCEPTED
IMPETITlVE BIDS:
High
Low
Average
92 -day Treasury bills
November 26, 1971
Approx. Equiv.
Annual Rate
Price
182 -day Treasury bills
maturin~ Februarl 24~ 1972
Approx. Equiv.
Price
Annual Rate
97.563 ~
4.820%
97.503
4.939%
97.543
4.860%
maturin~
98.799
98.774
98.787
4.700%
4.797%
4.747%
Y
Y
!I
Excepting one tender of $650,000
31% of the amount of 92-day bills bid for at the low price was accepted
9% of the amount of 182 -day bills bid for at the low price was aCCEl-'L-2d
lTAL 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
TO'rALS
AcceEted
A12121ied For
$ 24,365,000 $ 13,365,000
1,936,210,000
3, 053 , 405 , 000
15,710,000
31,420,000
29,725,000
41,415,000
10,690,000
12,565,000
18,830,000
30,855,000
83,040,000
210,130,000
25,895,000
45,890,000
18,080,000
38,305,000
34,935,000
41,325,000
13,990,000
35,990,000
99,720,000
146,175,000
$3,711,840,000
$2,300,190,000
EJ
AEElied For
$ 16,415,000
2,350,990,000
5,945,000
8,285,000
2,690,O00
26,380,000
144,245,000
26,080,000
26,910,000
19,705,000
28,355,000
166,260,000
AcceEted
n,415,000
$
1,266,890,000
5,945,000
8,285,000
2,690,000
21,915,000
88,245,000
14,715,000
25,610,000
11,705,000
13,355,000
134,260,000
$2,822,260,000
$1,600,030,000 ~
I Includes $239,915,000 noncompetitive tenders accepted at the averaee price of 98.787
: Includes $ 92,675,000 noncompetitive tenders accepted at the average price of 97.543
These rates are on a bank discount basis. The equivalent coupon issue yields are
4.8~ for the 92-day bills, and 5.07% for the 182-day bills.
. 311~
Office of Public Affairs
Room 812
1717 H Street, N.W.
Washington, D.C.
20006
Phone:
254-3010
FOR IMMEDIATE RELEASE
August 24, 1971
COST OF LIVING COUNCIL
Ten million copies of an eight page booklet answering the most
frequently asked questions on President Nixon's wage-price freeze
program are being distributed this week to federal offices throughout
the country, the Cost of Living Council (CLC) announced today.
The booklet, prepared by CLC, is being distributed to post offices,
Office of Emergency Preparedness, regional offices, Internal Revenue
Service offices, and offices of the Agricultural Stabilization and
Conservation Service.
The introduction to the booklet states: "Since August 15, the
Federal Government has received thousands of telephone calls and letters
seeking answers to questions about various parts of the program. Most
of the questions have been about the wage-price freeze, because it has
the most immediate impact on the largest number of people."
The booklet provides questions and answers to questions asked most
often on prices, wages and salaries, and rents.
It is expected that post offices and other federal offices will
have conies available for the public by the end of the week.
C-129
Deportment of the
TREASURY
TELEPHONE W04-2041
FOR IMMEDIATE RELEASE
August 24, 1971
TREASURY ANNOUNCES PROPOSED CHANGES
IN RULES FOR CONSOLIDATED INCOME TAX RETURNS
The Treasury Department announced today proposed
amendments to the income tax regulations dealing with
consolidated income tax returns. Certain groups of
corpoiations that have common ownership are permitted to
:i1e a single consolidated income tax return instead of
a separate return foi each corporation. The income tax
regulations provide extensive and detailed rules governing
the preparation o~ the consolidateJ return.
In large part, the amendments announced today repeat
the provisions of amendments that were previously proposed
but not adopted. In some instances the earlier proposals
have been modified in light of taxpayer comments and other
considerations. In addition, certain new proposals have
been included.
Because of the complexity of the consolidated return
provisions in general, and of the proposed amendments, a
brief technical explanation of the propffied amendments is
also being published. This explanation will help affected
taxpayers to understand the scope and effect of the new
proposals and to comment upon them. A copy of the explanation
is attached.
The proposed amendments will be published in the
Federal Register for Wednesday, August 25, 1971.
ATTACHMENT
000
C-127
Technical Explanation of
Proposed Amendments to
Consolidated Return Regulations
i§ 1.1502-1 (f) and 1.1502-75 (d)
Separate Return
Limitation Year
Common Parent
Sections 1.1502-1 (f) (2) (i) and 1.1502-75 (d) (2)
(ii) are revised by the proposed amendment to clarify the
identity of the common parent for purposes of applying
the separate return limitation year rule. Under that
rule, loss carryovers from prior unaffiliated years of
all members except the common parent are subject to
limitation. The proposed amendment makes clear that
if the common parent is merged into a subsidiary and
the group continues to exist, the former common parent
is to be regarded as the common parent for the purpose
of applying the separate return limitation year rule
to taxable years ending on or before the date of the
merger.
Multiple Surtax Exemptions
In addition, language added to § 1.1502-1 (f) (2)
clearly states that an election of multiple surtax
exemptions may be terminated retroactively for purposes
of the separate return limitation year rule.
§
1.1502-3
Consolidated Investment Credit
The proposed revision of § 1.1502-3 (a) (3) reflects
the amendment to section 46 (a) (2) by section 3 (a) of
P.L. 89-800 increasing the limit on the amount of the
investment credit to 50 percent of the tax liability in
excess of $25,000. The proposed amendment also substitutes
the term I'controlled group" in § 1.1502-3 (a) (3) to
reflect the amendment to section 46 (a) (5) by section 401 (e) (1) of the Tax Reform Act of 1969. Section 1.1502-3 (a) (4) is revised by the proposed amendment
- 2 to reflect the amendments to section 46 (a) (3) made
by section 1 (c) of P.L. 89-384 and section 301 (b) (4)
of the Tax Reform Act of 1969 which, respectively,
exclude from liability for tax for investment credit
purposes any additional tax imposed by section 1351 (d) (1)
(relating to recoveries of foreign expropriation losses)
and the tax imposed by section 56 (relating to minimum
tax for tax preferences).
§
1.1502-11 Consolidated Taxable Income (Circular
Basis Adjustmentsl
Section 1.1502-11 is revised by the proposed amendment by adding a new paragraph (b) to resolve a circular
basis adjustment problem under § 1.1502-32 of the existing
regulations. Under § 1.1502-32 (b) (1) (ii), the basis
of common stock of a subsidiary is increased by the portio
of a consolidated net capital or net operating loss
attributable to the subsidiary which is not carried back
and absorbed in a prior taxable year. Under
§ 1.1502-32 (b) (2) (ii), the basis of such stock
is decreased by a loss in a prior year attributable to
the subsidiary which is carried over and absorbed in
the current year. If there is a disposition of stock
of the subsidiary during a year in which one or both
adjustments are made, the basis of the stock for determining gain or loss depends on the amount of the adjustment. However, the amount of the adjustment depends on
the portion of any consolidated net capital or net
operating loss for the taxable year attributable to the
subsidiary or the amount of a net capital or net operating
loss carryover attributable to the subsidiary which is
absorbed in the taxable year, both of which in turn may
depend on the amount of gain or loss on disposition.
For example, assuming a known basis of stock of
a subsidiary which results in gain on disposition,
such gain would decrease a consolidated net capital
- 3 -
or net operating loss, resulting in a decT2ase in the
basis of the stock and an increase in gain on disposition if any portion of the lof,s were attributable
to the subsidiary. The increased gain would further
reduce the loss, and the circle would be repeated. In
addition, loss carryovers attributable to the subsidiary
may offset gain on disposition but would also decrease
basis, thus increasing gain on disposition. This
circle is repeated until the entire carryover is
absorbed without reducing the amount of taxable gain
on disposition. Because the disposition gain or loss
is capital, adjustments for both current year losses
and carryovers may be present, increasing the complexity
of the adjustments. The circular adjustment can also
exist where there is a loss on disposition.
The proposed amendment resolves the problem created
by these interdependent variables. First, the adjustments under § 1.1502-32 to stock disposed of are based
on a computation of tentative consolidated taxable income
or net operating loss determined without regard to gain
or loss on disposition, and the adjustments are not
thereafter altered. Second, the amount of net capital
or net operating loss carryovers attributable to the
subsidiary which may be carried to the taxable year
may not exceed the amount determined under the tentative
computation of consolidated taxable income. Thus,
carryovers attributable to the subsidiary will not be
endlessly absorbed against disposition gain without
tax benefit. Third, if there is gain on disposition,
the portion of a consolidated net capital or net
operating loss attributable to the subsidiary is removed
from the computation of consolidated taxable income,
thus avoiding a circular absorption of the loss against
the disposition gain. The loss removed from income is
treated as a net capital or net operating loss sustained
in the taxable year and may be carried either to a consolidated return year of the group or to a separate
return year of the subsidiary in the same manner as such
- 4 losses are ordinarily carried in the absence of this
problem, except that any amount carried back cannot
exceed the amount attributable to the subsidiary which
is carried back under the tentative computation. Generally
the amount of the loss removed from the computation of
consolidated taxable income by the formula in the regulation will equal the portion of the consolidated net
capital or net operating loss attributable to the
subsidiary. In the case of a net operating loss, however, the amount removed may be less, because the formula f,
determining the portion of the consolidated net operating
loss attributable to the subsidiary takes into account
any capital loss carryovers attributable to the subsidiary
which are absorbed against other members' income.
§ 1.1502-12
Separate Taxable Income (Transfer of
Depreciable Property)
The proposed amendment revises § 1.1502-12 (g) to
limit the present rule that property transferred from
one member to another during a consolidated return year
does not lose its character as new property for purposes
of section 167. The proposed amendment limits the rule
to transfers which either are deferred intercompany transactions or involve a basis carryover. Thus, the rule
will not apply to a transfer governed by section 334 (b) (2
in which there is a step-up of the basis of the transferred asset without income realization by the transferor.
§ 1.1502-13
Intercompany Transactions (Restoration of
Deferred Gain)
The proposed amendment revises § 1.1502-13 (e) (2)
by adding a new last sentence requiring that any ordinary
income portion of deferred gain be taken into account
first. This provision correlates reporting of deferred
gain with the rule in § 1.1502-13 (e) (3) that a
reduction of the deferred gain account is applied first
against ordinary income.
- 5 §§ 1.1502-13, 1.1502-14, 1.1502-18, and 1.1502-19
(Restoration Rules - Acquisition of Group)
The proposed additions appearing in §§ 1.1502-13 (f)
(2) (i), 1.1502-14 (f), 1.1502-18 (c) (4), and 1.1502-19 (g)
create an exception to rules which require, respectively,
inclusion in the income of a member of deferred gain
or loss on intercompany transactions, deferred gain
or loss on distributions with respect to or in redemption
of stock, the unrecovered inventory amount, and the amount
of the excess loss account. The rules requiring inclusion
of such amounts in income generally apply if a specified
member ceases to be a member of the group (which occurs
if the group ceases to exist) or if some or all memuers
of the group file a separate return. (As defined in
§ 1.1502-1 (e), a separate return year includes a taxable
year for which a member of a group joins in filing a
consolidated return with another group.) The exception
applies under all four sections if the ~roup ceases
to exist as a result of an acquisition of the stock
or assets of the common parent by another corporation,
uut the group continues to Lle included in a consolidated
return. The acquisiti on may be either by a purchase of
the common parent's stock or by a nontaxable acquisition
of the stock or assets of the common parent.
In the case of excess loss accounts, the proposed
amendment provides rules for the adjustment of the
uasis of stock of memoers of the new group which were
not memuers of the old group. The adjustments which
create the excess loss account result from the use by
the group of a subsidiary's losses in excess of the
group's investment in the subsidiary. The use of
such losses produces a decrease in the Dasis or an
increase in the excess loss account both of the stock
of the sUDsidiary and of the stock of all members in
the chain of ownership between the subsidiary and the
common parent. Restoration of the excess loss account
to income is, in effect, a retroactive disallowance
of the use of the subsidiary's losses in excess of the
- 6 group's investment and requires a readjustment of the
basis of stock of members of the group in the chain
of ownership. If the readjustment is attributable
to an excess loss account existing at the time the
terminatinG group is acquired, it should not have any
effect on the basis of stock of the new members of the
succeeding group, and the proposed amendment provides
for this result.
§
1.1502-13 Intercompany Transactions (Restoration
of Deferred Gain)
The proposed amendment revises the rule, presently
appearing in § 1.1502-13 (f) (2) (ii), that deferred
gain or loss of the common parent on an intercompany
transaction is not restored to income if the common
parent owns the property involved and ceases to be a
memoer as a result of a termination of the ~roup (for
example, :;y a liquidation of the sULJsidiary'). The rule
is redesibnated as § 1.1502-13 (f) (2) (ii) (b) and
revised to also apply in the case in which a subsidiary
is the selline, memoer and has s~;cceeded to and become
the owner of sUbstantially all of the assets of the
former common parent (for example, by a downstream
merger).
§
1.1502-15
Built-in Deductions
Section 1.1502-15 (a) is revised hy t~e proposed
amendment. Under the L~eneral rule of para :,raph (a)
of this section, deductions of a mem0er which
economically accrlJed in a separate return limitation
"ear but which are reco',:nized in an unlimited \rear are
not allowai),le to the extent that the a~~'_')re::~ate amount
of such deductions exceeds the member's contric)' ·tion to
consolidated taxable income. However, since the application of this rule depends on tbe date on which tl-,e
corporation with the Iluilt-in deductions i>ecame a memner,
it may ,)e avoided if the assets witi' the :;tlilt-in
deductions are transferred in a section 351 transfer
.'
t..l
.'
- 7 -
to an older member or if it can be arranged to have such
assets acquired in the first instance by an older member
by way of a merger. The proposed amendment revises the
two exceptions of § 1.1502-15 (a) (4) so that they apply
to assets rather than to members and also adds subdivision (ii) to § 1.1502-15 (a) (2) to provide, in
effect, that the built-in deduction rele is to apply
even if there has been a section 351 transfer.
In addition, the de mln1~US exception to the builtin deduction rule -- that the aggregate basis of the
assets at the tiLe of acquisition did not exceed their
fair market value by more than 15 percent -- is clarified
by the proposed amendment to indicate that a marketable
security is to be included as an asset for purposes of
the test if the security is stock of a corporation at
least 50 percent of the outstanding stock of which is
owned by the transferor or new member or if the security
has been held by the transferor or new member for at
least 24 months. In such cases, the security is similar
to a semi-permanent asset and should not be treated as
a cash item.
Technical corrections have been made to the definition of built-in deductions appearing in § 1.1502-15 (a)
(2). Language indicating that a built-in deduction is
not recognized has been removed. (The deduction is
recognized; its allowance is subject to limitation.) A
phrase containing the word "taxwise" has been removed,
since the phrase merely repeats a rule already stated
in the same paragraph.
§ 1.1502-18·
Intercompany Profit Amount
The proposed amendment revises § 1.1502-18 (a) by
excluding from the definition of the term "intercompany
profit amount·' any profits which have been taken into
- 8 -
account pursuant to § 1.1502-13 (f) (1) (viii). The
latter section provides for inclusion in income of
deferred gain on an intercompany transaction when
the property to which the gain is attributable is
included in the inventory of the purchasing member
and is written down to market.
The intercompany profit amount for a taxable year
was intended to reflect the amount of deferred gain under
§ 1.1502-13 for a taxable year which is attributable to
goods included in inventories of the group at the close
of the year. If intercompany profit for a year is
attributable to goods disposed of outside the group
within the same year, and thus not deferred, it is
not included in the intercompany profit amount for the
year. Technically, this occurs because the property
is not included in the inventory of the purchasing
member. However, intercompany profit for a year
which is required to be taken into account in the same
year as a result of a writedown to market will be
included in the intercompany profit amount for the year
since the property to which the profit is attributable
is still included in inventory. The amendment provides
the necessary technical correction to exclude such profit
from the intercompany profit amount.
The proposed amendment also revises § 1.1502-18 (a)
to make clear that intercompany profit includes amounts
attributable to goods included in the inventory of the
selling member itself if the goods have been resold to
the selling member or if the selling member has become
the owner of the property pursuant to § 1.1502-13 (f) (2)
as the result of a downstream or upstream merger.
§
1.1502-19
Excess Loss Account
Complete Liquidations
The existing rule of paragraph (a) (3) of
§ 1.1502-19 provides that any excess loss account
with respect to stock which is considered disposed
- 9 of under paragraph (b) (1) (ii) of that section shall
be deferred and taken into account as provided in
§ 1.1502-14 (b) (3).
Under § 1.1502-19 (b) (1) (ii),
a member is considered as having disposed of a share
of stock of a subsidiary when the member receives a
distribution in cancellation or redemption of such
stock (as defined in § 1.1502-14 (b) (1». Such distributions under § 1.1502-14 (b) (1) can include
distributions in complete liquidation. If there is
a complete liquidation, a member would be considered
under § 1.1502-19 (b) (2) as having disposed of all
of its shares of stock in a subsidiary. and if there
is such a disposition of stock of the distributing
corporation, any deferred gain under § 1.1502-14 (b) (3)
is then taken into account. Thus, an excess loss
account would be taken into account at the time of
a distribution in cancellation or redemption if the
distribution were in complete liquidation. The
proposed amendment revises § 1.1502-19 (a) (3) to
state this result directly.
Foreign Expropriation Losses
The application of the excess loss account rules
to foreign expropriation losses was reserved by
§ 1.1502-19 (g) for taxable years beginning after
December 31, 1965. The proposed amendment deletes
former paragraph (g) of § 1.1502-19, thus applying
the excess loss account rules to foreign expropriation
losses, but adds an exception, appearing in paragraph (a) (5) of § 1.1502-19, to the income inclusion
rule of paragraph (a) (1) of that section. Under the
exception, an excess loss account with respect to stock
disposed of is not included in income to the extent
the excess loss account is attributable to a foreign
expropriation loss occurring in a taxable year beginning
before January 1, 1966, which is absorbed as a carryover
in a taxable year ending before January 1, 1971. Instead,
the regulations applicable to taxable years beginning
before January 1, 1966, shall apply to such disposition.
- 10 Reduction in Basis of Other Investment
The proposed amendment adds paragraph (a) (6) to
§ 1.1502-19 to allow a member disposing of stock of
a subsidiary to reduce the basis of other stock or
obligations of the subsidiary by the amount of an
excess loss account with respect to stock disposed of
rather than include such excess loss account in income.
The purpose of the excess loss account provisions is
to limit the use of losses of a subsidiary to the
group's investment in the subsidiary. However, the
use of a subsidiary's losses will result in an adjustment only with respect to common stock. Consequently,
if part of a group's investment in a subsidiary is in
the form of debt or preferred stock, an excess loss
account may be created with respect to the common
stock before losses of the subsidiary exceed the
group's investment. In such a case, there is no need
to include an excess loss account in income when some or
all of the common stock is disposed of, since the basis
of obligations or other stock may be reduced. By
allowing such reductions, the particular debt-equity
mixture chosen by the group will not be the determining
factor regarding inclusion of an excess loss account
in income. In addition, the original basis of some
common stock of the subsidiary may be lower than other
such stock, and, thus, an excess loss account may exist
with respect to some, but not all, of the common stock.
The rule appearing in § 1.1502-19 (a) (6) allows the
same reduction in basis in such a case as in ilie case
of obligations or preferred stock.
Examples
The proposed amendment revises examples (1) and
(2) of § 1.1502-19 (c) (2) to clarify the relationship
between the restoration of an excess loss account to
income and the basis adjustments under § 1.1502-32 to
stock of higher tier members.
- 11 Nontaxable Liquidations and Reorganization~
The existing rule in § 1.1502-19 (e) provides that
an excess loss account with respect to stock of a subsidiary is eliminated if the subsidiary is liquidated
into the parent (a so-called upstream merger). The
proposed amendment extends the rule eliminating the
excess loss amount to cases where a parent is merged
into a subsidiary in a downstream merger. In addition,
a member owning stock of the transferor corporation
in a downstream merger (or in any transaction to which
section 381 (a) applies) is not considered as disposing
of such stock for purposes of § 1.1502-19. Anye.xcess
loss account with respect to stock of the transferor
corporation is applied to reduce the basis of stock
received in exchange for stock of the transferor.
j
1.1502-23
Section 1231 Net Gain or Loss
The revision of § 1.1502-23 by the proposed amendment is designed to indicate that only the limitations
of paragraph (a) of § 1.1502-15, relating to built-in
deductions, apply to section 1231 assets, and that the
remainder of § 1.1502-15 does not apply to such assets.
§
1.1502-26
Consolidated Dividends Received Deduction
The proposed amendment revises § 1.1502-26 (a)
to apply the limitation of section 596 on a consolidated basis. Section 596, added by section 434 (a)
of the Tax Reform Act of 1969, provides for the
reduction of the dividends received deductions under
sections 243, 244, and 245 if a mutual savings bank,
building and loan association, or cooperative bank,
computes additicns to the reserve for losses on loans
under section 593 (b) (2).
- 12 §
1.1502-31
Basis of Property
The proposed amendment to § 1.1502-31 (b) corrects
a typographical error (the correct reference is to
subparagraph (1) of § 1.1502-14 (b) rather than to
subparagraph (3».
§
1.1502-32
Investment Adjustment
Tier Rules
The proposed amendment revises § 1.1502-32 (b) (1) (iii
and (2) (iv) by incorporating therein the rule presently
appearing in § 1.1502-33 (c) (4) (iii) (d) which provides
that the tier adjustment rules of paragraph (b) (1) (iii)
and (2) (iv) of § 1.1502-32 apply only if the group does
not adjust earnings and profits currently under
§ 1.1502-33 (c) (4) (ii).
Negative Adjustment for Preferred Stock
Subparagraph (3) is added to § 1.1502-32 (c) by
the proposed amendment to prevent a reduction in the
basis of preferred stock because of dividend distributions
out of earnings and profits accumulated in prior consolidated return years in cases \l7here such earnings and
profits have not increased the basis of the preferred
stock but instead have been allocated to and increased
the basis of common stock. The negative adjustment
reducing the basis of stock because of dividend distributions is a correlative adjustment to the positive
adjustment for years in which earnin~s and profits
were accumulated but not distributed. However, because
of the fornrula used to allocate undistributed earnings
and profits between preferred and common stock for purposes
of the positive adjustment, earnings and profits may be
allocated to common stock although such earnings and
profits may be the source of distributions with respect
to preferred stock. Paragraph (d) (1) of § 1.1502-32
provides that the entire undistributed earnings and
profits of the taxable year are allocated to the common
stock if the cumulative dividends in arrears on preferred
- 13 stock on the last day of the taxable year do not exceed
the accumulated earnings and profits as of the first
day of the taxable year. The amendment provides,
in effect, that in cases where the basis of the common
stock has been increased because of such an allocation
of undistributed earnings and profits and such earnings
and profits are later distributed with respect to the
preferred stock, the negative adjustment because of
the distribution is applied to reduce the basis of the
common stock rather than the preferred stock.
Earnings and Profits on Disposition of Stock
Section 1.1502-32 (d) (1) is revised by adding
a new subdivision (i) to clarify the existing rules
regarding the relationship between the investment
adjustment under § 1.1502-32 and the earnings and
profits rules under § 1.1502-33. The investment
adjustment under § 1.1502-32 adjusts the basis of
stock of a member which is owned by other members.
The purpose of these adjustments is to insure that
a member's income or losses already accounted for on
a consolidated tax return are not again taken into
account as investment gain or loss when the member's
stock is disposed of. Accordingly, for each taxable
year, the basis of a member's stock in a subsidiary
is increased by an allocable part of any undistributed
earnings and profits of the subsidiary or decreased
by an allocable part of any deficit in earnings and
profits of the subsidiary which is used to reduce
other income in the year of the deficit or in a
prior year. If the loss of the subsidiary is not
used until a subsequent year, the basis reduction
occurs in the year in which the loss is used. The basis
of stock is also reduced, of course, by the amount of
- 14 any distributions out of earnings and profits accumulated during consolidated return years or preaffiliation years. If the negative adjustments exceed the
basis of the stock, such excess becomes an excess loss
account.
For purposes of making these adjustments, the
earnings and profits of a member are determined under
§ 1.1502-33. Under that section the earnings and
profits of a member may be determined separately for
each corporation or, if the group elects, the earnings
and profits may be determined on a consolidated basis,
so that a member's earnings and profits include the
earnings and profits of its subsidiary. By so electing,
the earnings and profits of a member will be increased
or decreased each year by the amount of any increase or
decrease under § 1.1502-32 in such member's basis (or
excess loss account) for its stock in a subsidiary. If
the group does not so elect, the earnings and profits
of a subsidiary allocable to stock of a member are reflected in the earnings and profits of such member only
when the member disposes of such stock.
The mechanics of the investment adjustment under
1.1502-32 differ depending on.whether or not the group
adjusts earnings and profits currently. For example,
assume that a second tier subsidiary (T) has earnings
and profits which it does not distribute. A first
tier subsidiary (5) owning the stock of T will increase
the basis of such stock by an allocable portion of such
undistributed earnings and profits. If the group adjusts earnings and profits currently, 5 will have earnings and profits in an amount equal to the adjustment
to the T stock, and the parent (P) will increase its
basis for the stock of 5 by the amount of such earnings
and profits. If the group does not adjust earnings and
profits currently, S will still increase its basis for
the T stock by the amount of Tis undistributed earnings
and profits, but S will not itself have earnings and
profits as a result of the adjustment. Consequently,
§
- 15 in order for P to adjust the basis nf the stock of
a tier adjustment rule applies (§ 1.1502-32 (b) (l)~tiii)
and (2) (iv)) for those groups which do not adjust
earnings and profits curently, and P adjusts its
basis for the stock of S by an allocable part of
the adjustment made by S with respect to the stock
of T.
n
In addition to differences in the investment adiustment rules for groups which adjust earnings and profits
currently, there are different rules under § 1.1502-33
for determining earnings and profits of a member resulting
from the disposition of stock of a subsidiary. If the
group adjusts earnings and profits currently, the same
basis for the stock as is used to determine. gain or loss
is used to determine earnings and profits, that is, the
basis as adjusted under § 1.1502-32. However, if the
gIDup has not adjusted earnings and profits currently
and the increase or decrease in the basis of the stock
of the subsidiary as a result of the adjustments under
§ 1.1502-32 has not yet been reflected in earnings
and profits, then it is necessary to use the basis of the
stock without such adjustments in order to reflect in
the earnings and profits of the disposing member the
prior gain or loss of the subsidiary. Thus, in the
example, assuming that S sells the T stock for an
amount equal to the adjusted basis, S would realize
no gain or loss, but S would increase or decrease
its earnings and profits by the amount of any increase
or decrease in the basis of T's stock by using the
unadjusted basis under § 1.1502-32 if the group did
not adjust earnings and profits currently.
oJ
Although it is necessary to use the unadjusted basis
to determine the earnings and profits of a member
disposing of stock of a subsidiary when the group
does not adjust earnings and profits currently, a
duplication of adjustments will occur if the amount
of earnings and profits (or deficit) so determined
is also used for the purpose of adjusting the basis
of the stock of the disposinb member. In the above
- 16 example, the amount of earnings and profits of S
resulting from the disposition of the stock of T
has already been reflected by P in its adjustment to
the stock of S as a result of the tier adjustment rules.
Consequently, solely for basis adjustment purposes,
the earnings and profits of S resulting from the
disposition of the stock of T should be computed without
regard to the increase or decrease in earnings and
profits resulting from the difference between the
basis of the stock with and without the adjustments
under § 1.1502-32. The proposed amendment so provides
by the addition of subdivision (i) to § 1.1502-32 (d) (1).
In addition, proposed § 1.1502-32 (d) (1) (i) provides that the earnings and profits adjustments specified
in § 1.1502-33 (c) (4) (ii) (£) (£) and (1) are not
used for purposes of basis adjustment. These adjustments are transitional rules relating to dispositions of
stock and to distributions out of earnings and profits
for groups which accumulated earnings and profits in
years for which a current adjustment of earnings and profil
was not made. Although necessary to determine the earningl
and profits of a member, the adjustments would duplicate prior basis adjustments to the stock of such member
previously made because of the tier adjustment rules.
For the same reason, the proposed amendment provides
that a different basis is sometimes used for purposes
of § 1.1502-32 than is used under § 1.1502-33 for stock or
an obligation the basis of which has been reduced under
§ 1.1502-19 (a) (6).
Subparagraph (8) of § 1.1502-32 (d) is revised by
the proposed amendment by deleting the statement that
earnings and profits are determined under § 1.1502-33,
since that rule, as modified, has been inserted in
subparagraph (1) of § 1.1502-32 (d).
- 15 in order for P to adjust the basis of the stock of S
a tier adjustment rule applies (§ 1.1502-32 (b) (1) (iii)
and (2) (iv)) for those groups which do not adjust
earnings and profits curently, and P adjusts its
basis for the stock of S by an allocable part of
the adjustment made by S with respect to the stock
of T.
In addition to differences in the investment adjustment rules for groups which adjust earnings and profits
currently, there are different rules under § 1.1502-33
for determining earnings and profits of a member resulting
from the disposition of stock of a subsidiary. If the
group adjusts earnings and profits currently, the same
basis for the stock as is used to determine. gain or loss
is used to determine earnings and profits, that is, the
basis as adjusted under § 1.1502-32. However, if the
gIDup has not adjusted earnings and profits currently
and the increase or decrease in the basis of the stock
of the subsidiary as a result of the adjustments under
§ 1.1502-32 has not yet been reflected in earnings
and profits, then it is necessary to use the basis of the
stock without such adjustments in order to reflect in
the earnings and profits of the disposing member the
prior gain or loss of the subsidiary. Thus, in the
example, assuming that S sells the T stock for an
amount equal to the adjusted basis, S would realize
no gain or loss, but S would increase or decrease
its earnings and profits by the amount of any increase
or decrease in the basis of T's stock by using the
unadjusted basis under § 1.1502-32 if the group did
not adiust earnings and profits currently.
Although it is necessary to use the unadjusted basis
to determine the earnings and profits of a member
disposing of stock of a subsidiary when the group
does not adjust earnings and profits currently, a
duplication of adjustments will occur if the a~ount
of earnings and profits (or deficit) so determlned
is also used for the purpose of adjusting the basis
of the stock of the disposinb member. In the above
- 16 example, the amount of earnings and profits of S
resulting from the disposition of the stock of T
has already been reflected by P in its adjustment to
the stock of S as a result of the tier adjustment rules.
Consequently, solely for basis adjustment purposes,
the earnings and profits of S resulting from the
disposition of the stock of T should be computed without
regard to the increase or decrease in earnings and
profits resulting from the difference between the
basis of the stock with and without the adjustments
under § 1.1502-32. The proposed amendment so provides
by the addition of subdivision (i) to § 1.1502-32 (d) (1).
In addition, proposed § 1.1502-32 (d) (1) (i) provides that the earnings and profits adjustments specified
in § 1.1502-33 (c) (4) (ii) {£} (f) and (3) are not
used for purposes of basis adjustment. These adjustments are transitional rules relating to dispositions of
stock and to distributions out of earnings and profits
for groups which accumulated earnings and profits in
years for which a current adjustment of earnings and profil
was not made. Although necessary to determine the earningf
and profits of a member, the adjustments would duplicate prior basis adjustments to the stock of such member
previously made because of the tier adjustment rules.
For the same reason, the proposed amendment provides
that a different basis is sometimes used for purposes
of § 1.1502-32 than is used under § 1.1502-33 for stock or
an obligation the basis of which has been reduced under
§ 1.1502-19 (a) (6).
Subparagraph (8) of § 1.1502-32 (d) is revised by
the proposed amendment by deleting the statement that
earnings and profits are determined under § 1.1502-33,
since that rule, as modified, has been inserted in
subparagraph (1) of § 1.1502-32 (d).
- 17 Preaffiliation Year
The proposed amendment revises § 1.1502-32 (d) (9)
by adding to the definition of the term " prea ffiliation
year!! an affiliation year preceding a preaffiliation
year. This addition is designed to apply the rule of
§ 1.1502-32 (b) (2) (iii) (b) which reduces the basis
of stock for distributions ;ut of earnings and profits
accumulated in preaffiliation years. There is no provision for the reduction of the basis of stock for
distributions out of earnings and profits accumulated
in affiliation years, because such earnings and profits
are not reflected in the cost basis of stock. However,
if there is a sale and repurchase of the subsidiary's
stock, the basis presumably would be increased by the
amount of affiliation year earnings and profits, and
basis should then be reduced by the amount of distributions
from such earnings and profits.
Basis Carryovers
Section 1.1502-32 (d) (10) is added by the proposed
amendment to eliminate the basis reduction rule of
§ 1.1502-32 (b) (2) (iii) (b) for distributions out of
earnings and profits accumulated in preaffiliation years
if the basis of the stock in the hands of the group does
not reflect such earninss and profits. This would occur
where the stock of the member was acquired in a tax-free
reorganization.
Prior Consolidated Return Years
The proposed amendment adds § 1.1502-32 (d) (11) to
indicate that the term "prior consolidated return years
beginning after December 31, 1965' does not inc lude
consolidated return years of a corporation \vhich precede
the most recent separate return year of such corporation.
The reason for this provision is to prevent a reduction
in the basis of the corporation's stock under
§ 1.1502-32 (b) (2) (iii) (a) for distributions out
I
- 18 of earnings and profits accumulated in such prior consolidated return years, since the basis of such stock
has already been reduced under § 1.1502-32 (g) as a
result of the intervening separate return year.
Carryovers From Years Before 1966
The proposed amendment adds a new subdivision (ii)
to § 1.1502-32 (f) (1) to provide that any carryovers
of net capital or net operatin 6 losses sustained in
taxable years beginning before January 1, 1966, shall
reduce the basis of stock of a subsidiary only to the
extent that such carryovers exceed the amount by which
the basis of the stock would have been increased if the
investment adjustment rules of § 1.1502-32 had applied
to such taxable years.
Deemed Dividend
The existing rule of § 1.1502-32 (f) (2) allml1s
a group with a s"..lbsidiary tvhich is tl1ho11y owned throu.;hout the taxable year to treat the subsidiary
* . '~ ")~ as
having made a distribution on the first day of such
taxable year in an amount equal to its accurrrulated
earninss and profits on such day. 'f The amount distributed
is then treated as a contribution to the capital of
the subsidiary. This provision is designed to apply
to earniobs and profits accumulated in years preceding
the year in which the election is made, but because
of the rule of section 316, the distribution may
possibly be regarded as out of earnings and profits of
the year in which the election is made. The proposed
amendment adds language to eliminate this ambiguity.
'I
Adjustment on Disposition of Stock
Under existing § 1.1502-32 (g), when either a subsidiary or a member owning the subsidiary's stock files
a separate return, the basis of the subsidiary's stock
is decreased by the lesser of the net increase in basis
as a result of the investment adjustments under
- 19 1.1502-32 (e) or the accumulated earnings and profits
of the subsidiary. This rule was designed to prevent
a sale of the subsidiary's stock at a loss after the
earnings and profits accumulated in consolidated return
years are distributed as dividends in separate return
years. Consequently, the reduction in basis was limited
to the amount of accumulated earnings and profits.
However, since earnings and profits need not be
adjusted on a consolidated basis, the earnings and
profits limitation makes the requirement of § 1.1502-32 (g)
ineffective as a practical matter, and, accordingly,
the limitation is removed.
§
The revision of § 1.1502-32 (g) also makes clear
that the reduction in basis can create an excess loss
account which must be included in income. Such an
excess loss account will reflect the amount of distributions in excess of the original basis of the stock
to the group. Such distributions would have been
treated as income under section 301 (c) (3) (A) if
received in a separate return year, but are deferred
under § 1.1502-14 (a) (2) when received in a consolidated
return year.
§
1.1502-33
Earnings and Profits
The proposed amendment revises § 1.1502-33 (c) (4)
to provide for the consolidated current adjustment of
earnings and profits for taxable years beginning after
December 31, 1975.
§ 1.1502-42
Certain Financial Institutions to Which
Section 593 Applies
The proposed amendment adds a new section,
§ 1.1502-42, to provide that in the case of mutual
savinas
banks , domestic buildings and loan associations,
o
and cooperative banks, total deposits or withdrawable
accounts of a member for purposes of section 593 (b) (1) (B)
(ii) shall not include the total deposits or withdrawable
- 20 accounts of other members. The rule merely eliminates
intragroup transfers and is identical to the rule of
§ 1.1502-3lA (b) (2) (ix) (a) of the old regulations
applicable to taxable years beginning before January 1,
1966. In addition, the section specifies the method
of computing a member's taxable income for purposes of
section 593 (b) (2)
§
1.1502-75
Filing of Consolidated Returns
Section 1.1502-75 (d) (3) (i) is amended by adding
a sentence at the end to make clear that separate
acquisitions of stock over a period of time are to be
considered together to determine whether a reverse
acquisition has occurred if the acquisitions are
pursuant to a single plan of acquisition.
The proposed amendment adds § 1.1502-75 (d) (3) (v)
to specify the effect of a reverse acquisition on the
taxable years of the participating corporations. In
general, the reverse acquisition rules provide that
where a large group is acquired by a small group and
the stockholders of the large group receive more than
50 percent of the small group's stock, the large
group must be treated as the acquiring and surviving
group. The proposed rule applies this principle in
determining taxable years by providing that if a consolidated return is filed, members of the small group
must close their taxable years on the date of acquisition,
and the taxable year of the large group must be adopted
as the taxable year of the combined group after the
acquisition. It also provides that for purposes of
determining taxable years under section 381, the
larger corporation, which is acquired in form, is
treated as the acquiring corporation.
The proposed amendment adds § 1.1502-75 (d) (2) (iii)
to provide the same reversal of roles for purposes of
section 381 in the case of a downstream merger of the
common parent.
- 21 § 1.1502-76
Taxable Years
Paragraph (b) (1) of § 1.1502-76 contains the
()asic rule that the consolidated return of a ~roup must
include the income of the common parent for its entire
taxable year and the income of each subsidiary for the
portion of such taxable year that the subsidiary is a
member of the group. The proposed amendment adds
language to indicate which corporation is to be re~arded
t..
as the common parent for purposes of this rule in the
case of downstream mer~ers and reverse acquisitions.
The proposed amendment also revises paragraph (b) (5)
(i) of § 1.1502-76. The existing rule provides that if
a corporation becomes a member of a group within 30 days
of the beginning of its taxable year, it may be considered
to have become a member of the group as of the first day
of such taxable year. The purpose of this rule is to
eliminate the need for a separate return for a short
period of less than 30 days and to allow that period
to be included in the consolidated return.
The proposed amendment adds the requirement that the
group must file a consolidated return for a taxable
year which includes the portion of the 30-day period from
the beginning of the acquired corporation's taxable
year to the date of acquisition. If the group does not
file a consolidated return, the 30-day rule does not
affect or lighten filing requirements in any way, although
it would have other effects (for example, whether earnings
and profits in the 30-day period were preaffiliation
earnings and profits). Also, if the period from the
beginning of the acquired corporation's taxable year
to the date of acquisition is not included within the
taxable year of the group's consolidated return, the
period not so included will have to be in~luded either
in a separate return or in the consolidated return of the
group for the preceding year. Since the 30-day rule
does not eliminate a short period in such a case,
the proposed amendment provides that the rule does
not apply in such a situation.
- 22 §
1.1502-78
Tentative Carryback Adjustments
The proposed amendment revises § 1.1502-78 (a) and
(b), relating to tentative carryback adjustments under
section 6411, to reflect amendments to section 6411
allowing adjustments for an unused investment credit
carryback, added by section 2 of P.L. 89-721, and a
capital loss carryback, added by section 512 (d) of
the Tax Reform Act of 1969.
Deportment of the
TREASURY
TELEPHONE W04-2041
FOR IMMEDIATE RELEASE
August 24,1971
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
SJ,900,000,000, or thereabouts, for cash and in exchange for Treasury
bills maturing September 2,1971,
in the amount of $3,703,200,000,
as follows:
91 -day bills (to maturity date) to be issued September 2,1971,
in the amount of $2,300,000,000,
or thereabouts, representing an
additional amount of bills dated June 3, 1971,
and to mature
December 2,1971
(CUSIP No. 912793 LU8),originally issued in
the amount of $1,394,930,000, the additional and· original ·bills to be
freely interchangeable.
182- day bills, for $ 1,600,000,000, or thereabouts, to be dated
September 2,1971,
and to mature March 2, 1972
(CUSIP No. 912793 MQ6).
The bills of both series will be issued on a discount basis under
competitive and noncompetive 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 $10,000,
$15,000, $50,000, $100,000, $500,000 and $1,000,000 (maturity value).
up
Tenders will be received at Federal Reserve Banks and Branches
to the closing hour, one-thirty p.m., Eastern Daylight Saving
time, Monday, August 30, 1971.
Tenders will not be received
at the Treasury Department, Washington. Each tender must ~e for a
minimum'of $10,000. Tenders over $10,000 must be in mUltip'les of
$5,000. In the case of competitive tenders the price offered must be
expressed on the basis of 100, with not mo,re 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
- 2 -
submit tenders except for their own account. Tenders will be received
without deposit from incorporated banks and trcst 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 rills applied for, unless the tenders are accompanie(
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
cf accepted bids. Only those submitting competitive tenders will be
advised of the acceptance or rejection thereof. The Secretary of the
Treasury expressly reserves the rlght to accept or reiect any or all
tenders, in whole or in part, and his action in any such respect shall
be final. Subject to these rese~v2tions, noncompetitive tenders for
each issue for $200,000 or less without stated price from anyone
bidder will be accepted in full at the average price (in three decimals)
of accepted competitive bids for the respective issues. Settlement for
accepted tenders in accordance \vith the bids must be made or completed
at the Federal Reserve Bank on September 2, 1971,
in cash or other immediately available funds or in a like face amount of
Treasut"y bills ~i1aturing September 2, 1971.
Cash and exchange tenders
will receive equal treatment. Cash adjustments r.Jill be made for
differences between the par value of maturing bills accepted in
exchange and the issue price of the new bills.
Under:- SCLtions 454 (b) and 1221 (5) of the Internal Revenue Code
of 1954 the amount of discount at which bills issued hereunder are sold
is considered to ilccrue tvhen the bills are sold, redeemed or otherwise
disposed of, ~nd the bills are excluded ft"om consideration as capital
assets. Accordingly, the u,mc \. Treasury bills (other than life
insurance companies) issued hel-eunder must include in his income tax
return, as ordinarv gain o~ loss, the difference between the price paid
for the bills, wh~ther on o~iginal 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.
Treasury Depal-tmerlt Cic::ular No. 418 (current revision) and this
notice, prescrihe the terms of the Treasury bills and govern the
conditions of their issue. Copies of the circular may be obtained from
any Federal Reserve Bank or Branch.
000
FOR IMMEDIATE RELEASE
August 24, 1971
ANNOUNCEMENT OF TREASURY DEPARTMENT
ADDITIONAL DUTY ORDER NO. 2
secretary of the Treasury John B. Connally announced
certain exemptions from the 10 percent ad valorem duty
imposed on all dutiable imports under Presidential
Proclamation 4074. The exemptions relate in general to
quota restricted merchandise. Additional Duty Order No. 2
is effective as of 12:01 a.m., August 16, 1971.
The exempted items cover:
(1)
Fresh, chilled, or frozen beef, veal, mutton,
and goat meat, irrespective of country of origin, provided
for in items 106.10 and 106.20, Tariff Schedules of the
United States (TSUS).
(2)
Articles subject to import restrictions proclaimed
pursuant to Section 22 of the Agricultural Adjustment Act.
These are set forth in Part 3 of the Appendix to the Tariff
Schedules and include certain milks, creams, butter, butter
substitutes, cheeses, cheese substitutes, malted milk,
articles of milk and cream, chocolate, animal feeds containing
milk or milk derivatives, ice cream, articles containing
butterfat, wheat, peanuts, and cotton.
(3) Crude oil, unfinished oils, finished oil products,
and certain petrochemicals, which are described in
Presidential Proclamation 3279, of March 10, 1959, as amended
(24 F.R. 178). Shipments of these articles are normally
covered by licenses issued by the office of the Oil Import
Administration, Department of the Interior. This exemption
also includes number 2 fuel oil of Canadian origin shipped
overland from Canada into District I (which includes the
New England states) and crude oil shipped by pipeline from
Canada into District 5 (which includes Alaska, Arizona,
California, Hawaii, Nevada, Oregon, and Washington) .
C-130
-2The crude oils, unfinished oils, and finished products
described above will usually be covered by the following
Tariff Schedule item numbers:
475.05
475.10
475.15
475.25
475.30
475.35
475.40
475.45
475.55
475.60
475.65
475.70.
(4)
Cotton textiles provided for in the list issued
by the Department of Commerce of those products which are
the subject of quantitative restraints under the Long-Term
International Cotton Textile Arrangement. There are
64 categories of these products.
(5)
Sugar which is subject to quantitative controls
administered by the Department of Agriculture. This sugar
is usually provided for in items 155.20 through 155.30, of
the Tariff Schedules.
Attachment:
Treasury Department Additional Duty Order No. 2
DEPARTMENT OF THE TREASURY
OFFICE OF THE SECREl'ARY
TREASURY DEPARTME11T ADDITIONAL DUTY rnDER NO.2
Articles Exempt from Additional Duty Imposed under
Subpart C of Part 2 o'f the Appendix to the
Tariff Sc~edules of the United States
Pursuant to the authority vested in the Secretary of the Treasury
by Headnote 4( a) subpart C of part 2 of the Appendix to the Tariff
Schedules of the United States, I hereby determine that it is consistent with safeguarding the balance of payments position of the
United states to establish exemptions from the additional duty provided
for in subpart C as set forth in Headnote 5 thereof which I hereby
amend to add the following:
(c)
~>tIcles provIded for in items 106.10 and 1u6.20,
Tariff Schedules of the United States;
(d)
Articles provided for in part 3 of the Appendix to
the Tariff Schedules of the United States;
(e)
Articles subject to quantitative limitations imposed
under or pursuant to the Sugar Act of 1948, as amended and
extended (7 U·,S.C. 1100;:!. ~,);
(f)
Articles as to which quantitative limitations have
been imposed pursuant to section 232 of the Trade Expansion
Act of 1962 (19 U.S.C. 1862), whether or not produced in a
country the products of which are subject to such quantitative
limitations;
- 2 -
(g)
Articles irrespective of country of origin described
in the categories set forth in the Federal Register notice of
January 17, 1968 (33 F.R. 582), as amended, established for the
administration of the Long-Term International cotton Textile
Arrangement.
This modification of Headnote 5 is published in the Federal
Register pursuant to Headnote 4(b) to subpart c.
r!~~
7
ecretaxy of the Treasury
Dlte:
August 23, 1971
Department of the
TREASURY
TELEPHONE W04-2041
FOR ]MMEDIATE RELEASE
August 24, 1971
TREASURY ANNOUNCES REPAYMENT OF $500 MILLION OF EURODOLLAR CERTIFICATES
The Treasury announced today that it will not rollover the $500 million
of 6-3/4% Certificates of Indebtedness Eurodollar Series B-1971 maturing on
September 1, 1971. These certificates will be retired at maturity on
September 1.
The disposition of other outstanding Eurodollar certificates 1'Till be
determined and announced in the light of market conditions near the time of
their maturity.
Office of Public Affairs
Roam 812
1717 H Street, N.W.
Washington, D. C. 20006
Phone:
254- 3010
August 24, 1971
FOR IMMEDIATE RELEASE
COST OF LIVING COUNCIL
Q & A LIST #5
Attached are answers to frequently asked questions about application
9O-day Wage and Price freeze announced August 15
set is in addition to previously released Q's and
At B. The answers are rulings issued by the Cost of Living Council, appointed
by the President and chaired by Secretary of the Treasury John B. Connally.
and implementation of the
by President Nixon. This
000
C-131
GENERAL
Q: Are welfare payments covered
by
the wage-price freeze?
A: No. Welfare payments are not payments for services rendered and therefore
are not wages.
WAGES
Q: Are teachers who were eligible to be paid over a 12-month period
but in fact are being paid over a lO-month period eligible for a pay
raise Which was in effect in the school district before August 151
A: Yes; as previously answered in Q&A number 1.
Q: Can a company institute a profit sharing program, for which it had
previously planned, during the freeze?
A: No. Fringe benefits cannot be increased from the base period level during
the freeze.
PRICES
Q: Are the prices of school lunches which are supported
by
the Department
of Agriculture covered by the freeze?
A:
Yes.
Q: The food industry relies heavily on promotional discounts to encourage
retailers to carry a particular item. When such discounts were offered
1n the month prior to August 15, must they be continued through the entire
freeze period?
\: The answer depends on the price at which substantial transactions
were made in the firmls normal marketing area during the base period.
If an item was discounted to certain retailers within a marketing area
who had not previously carried the item while substantial transactions
were also being made to other retailers in the same marketing area at
regular prices, the price can be increased to the non-discounted rate.
otherwise, the dj.scounts must be offered throughout the freeze.
l:
Will the rate increases on maritime freight which were filed before the
freeze to take on September 1 and October 1, be allowed to take effect
as scheduled?
No.
Q:
Will increases in rentals tied to family incomes at rates established
prior to August 15, 1971, be permitted? State-aided and Federal lowrent housing programs mandate that rents raise according to the income
of the individual.
A:
Yes, as long as rates per given amount of family income are not raised.
Q:
If a tenantts lease expires, can his rent be raised to the level which
is being paid by new tenants in similar units?
A:
No.
Deportment of the
TREASURY
TELEPHONE W04-2041
rTENTION:
)R
FINANCIAL EDITOR
RELEASE 6: 30 P.M.,
lesday, August 24, 1971.
RESULTS OF TREASURY'S MONTHLY 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 May 31, 1971
, and
1e other series to be dated August 31, 1971
,which were offered on August 18, 1971,
ere opened at the Federal Reserve Banks today. Tenders were invited for $500,000,000,
r thereabouts, of 274-day bills and for $1,200,000,00Q, or thereabouts, of
366-day
ills. The details of the two series are as follows:
ANGE OF ACCEPTED
OMPETITIVE BIDS:
High
Low
Average
274-day Treasury bills
maturing May 31, 1972
Approx. Equiv.
Price
Annual Rate
366-day Treasury bills
maturing August 31, 1972
Approx. Equiv.
Price
Annual Rate
96.137
96.105
96.126
94.835
94.764
94.789
5.075%
5.ll8%
5.090%
Y
5.080%
5.150%
5.126%
Y
6% of the amount of 274-day bills bid for at the low price was accepted
27% of the amount of 366-day bills bid for at the low price was accepted
JTAL TENDERS APPLIED FOR AND ACCEPTED BY FEDERAL RESERVE DISTRICTS:
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
TOTALS
A£Elied For
$ 11,060,000
1,281,065,000
690,000
25,740,000
940,000
14,410,000
88·,075,000
18,800,000
12,915,000
12,785,000
23,900,000
52,940,000
AcceEted
560,000
$
456,365,000
460,000
740,000
940,000
910,000
14,945,000
1,920,000
2,915,000
2,735,000
1,900,000
15,665,000
A£Elied For
$ 20,510,000
1,716,480,000
2,255,000
4,615,000
6,040,000
16,260,000
296,560,000
22,545,000
10,740,000
17,1l5,000
23,680,000
125,745,000
AcceEted
510,000
$
863,530,000
980,000
2,565,000
1,040,000
2,490,000
250,560,000
6,165,000
740,000
2,415,000
1,680,000
67,345,000
$1,543,320,000
$
500,055,000
~ $2,262,545,000
$1,200,020,000
£I
Includes $ 16,435,000 noncompetitive tenders accepted at the average price of 96.126
Includes $ 31,160,000 noncompetitive tenders accepted at the average price of 94.789
These rates are on a bank discount basis. The equivalent coupon issue yields are
5.34% for the 274-day bills, and5.42 % for the 366-day bills.
Deportment 01 the TREASURY
TELEPHONE W04-2041
FOR IMMEDIATE RELEASE
August 24, 1971
TREASURY ANNOUNCES REPAYMENT OF $500 M!LLION OF EURODOLLAR CERTIFICATES
The Treasury announced today that it will not rollover the $500 million
of 6-3/4% Certificates of Indebtedness Eurodollar Series B-1971 maturing on
September 1, 1971. These certificates will be retired at maturity on
Septemb er 1.
The disposition of other outstanding Eurodollar certificates will be
determined and announced in the light of ~arket conditions near the time of
their maturity.
Deportment of the
TREASURY
TELEPHONE W04-2041
FOR IMMEDIATE RELEASE
August 25, 1971
John B. Connally, Secretary of the Treasury;
Arthur F. Burns, Chairman of the Federal Reserve
Board; and William J. Casey, Chairman of the
Securities and Exchange Commission, met for 2-1/2
hours today at the Treasury Department to formally
organize the Emergency Loan Guarantee Board and
to consider guaranteeing loans to be made by a
consortium of banks to Lockheed Aircraft Corporation.
The Board will meet again later, at a date to
be set, to continue consideration of the Lockheed
loan application.
In other action, the Board designated
Samuel R. Pierce, Jr., General Counsel of the
Treasury, as the Board's General Counsel and Executive
Director, Timothy Greene, Special Assistant to
Judge Pierce, was designated Secretary to the Board.
The New York Federal Reserve Bank was designated the
Board's Fiscal Agent.
000
C-132
Jhe Department 01 the
TREASURY
"TON. D.C. 20220
TElEPHONE W04-2041
FOR IMMEDIATE RELEASE
August 25, 1971
The Deparcment of the Treasury announced today that it
is making pro rata payments to the 50 States, the District of
Columbia, Guam, Puerto Rico and the Virgin Islands, for a total
of $5 million, as tne first of five annual distributions of unclaimed deposit~ in liquidating the Postal Savings System. Each
of the j4 jurisdictions shares in the total amount di8tributed
proportionately, based on amounts of unclaimed depositor. accounts
ori6inally opened in post offices within each jurisdiction.
The 54 payments in today's first distribution of $5 million
range from a high of $867,900 to the State of New York (17.358
perceni.: of the total) to a low of $200 for the State of Vermont
(0.004 percent of the tocal). They are made to the Treasurer,
Comptroller or other chief financial officer of tile jurisdiction,
as desi~nated by its chief executive officer.
The first distribution i8 approximately half of the unpaid
balance of principal and accrued interest in the Treasury's trust
fund for all unclaimed Postal Savings accounts. Future experience
in the liquidation program will permit determination of the amounts
of the next four annual distributions and the total amount to be
retained in the trust fund for all future claims by or for individual depositors.
The distributions are being made pursuant to Public Law
92-117, enacted AU6ust 13, 1971, as recommended by the Department.
The statute, which applies solely to unclaimed accounts of the
Postal Savings System, provides this simple means of distributing
the unclaimed funds as a substitute for what otherwise would have
been a complex and costly procedure for all concerned under state
escheat proceedings. The Treasury's Fiscal Service issued
regulation8 in 1969 concerning such escheat proceedings, based
upon the legal determination that unclaimed deposits in the
Postal Savings System, uniquely, were subject to state escheat.
In light of Public Law 92-117, those regulations have been revoked.
C-134
(OVER)
POSTAL SAVINGS
SYS'l'~',
TN LIQUIDATION
lC'I?A TD PRINCIPAL BALANCE BY STATE AND OTHER ,nnHSDICTIONS
AS OF JULY
31, 1971
PERCENTAGE
tlNPAID PRJNCIPAL
BALANCE
Al.ABAl.',\ ••..•••••....••
ALAC;10\ ••.•.•••••.•.•••
ARl ',\)rJ.-', ............... .
'=A1l FORNI A ••••••••••••
CULORA!\' •••••.•••..•••
~:OIHirJ' i'i 21,)T •••••••••••
DELAHARE ••.••••••••.••
FLOR I :'>A •••••••••••••••
I,EOR,; IA •••••••••••••••
HAWAII •••••••••••••.••
1 DAliU •••••.•..••• " .••
1LLI ,·IUiS ••••••..•....•
lND1ANA •••••••••••••••
lCl\-IA ••••••••••••••••••
KAN:')A.:.~
••.•••..••••....
KENTIICl\Y ••••••••••••••
LO\J I SJANA ............ .
MAINE •••.•••••••••••••
MARyLAND •••••.••.•••••
MASSACHUSETTS .•.••••••
MICHIGAN ••••••••••••••
MINNESOTA ••••..••••••.
MISSISSIPPI ••...••••••
MlSSOURI •••••••• , •••••
MONTANA •••••••••••••••
NEBRASKA •••..•..•.••••
:·:EVADfI...•••....•.. '" .
NEW IIAj·1! 'C;]! au: ....•....
NEW JEHSEY ••••••••••••
fJEW HEX reo .•.......••.
~I};W yORK ••••••••••••••
NORTH CAROLl NA ••••••••
NORTH NV<CTA ••••••••••
Jj:
Il' .•..•••••....•••••
OKLAlIOMA ••••••••.•••••
~nEG0N .••••••..•
, .• " •
l'E:NNS,{LVfJ~IA ••••••••••
HHor,E ISLAND ••••••••••
SOUTH ,AROLINA ••••.•••
SOUTH DAKOTA ••.•••••••
TENl'lFSSEE •••••••••••••
TEXAS •••••••••••••••••
"TAH ••.••••••.••••••••
VERMONT ••••••.••••••••
VI1Cj:~IA •••••.••..••.•
.-iIlSHI'lC?ON ••••••••••••
wr:r·T • IRC INIA •••••••••
\.) ISC'Jil,:JN •••••••••••••
WY(>t,l I I,,~ .............. .
l' J 8TR Ie';' OF C'OLUJvlBIA ••
';I,IAM ••.•••••••••••••••
PiIERT<' RICO ••..••••..•
VIRC'; I I~ ISLANDS ........
~"r'" ~
I'
'~AT
80,938.00
18',373.00
47,290.00
54,893.00
795,150.00
60,210.00
121,895.00
8,831.00
377,461.00
107,088.00
7,971.00
21,240.00
1,263,082.00
143.660.00
53,335.00
43,068.00
58,526.00
60,784,00
8,090.00
46,183.00
202,120.00
382,091 .00
50,750.00
35,024.00
139,824.00
42,692.00
93,924.00
18,987.00
10,638.00
181,955.00
20,621.00
1,408,999.00
95,555.00
5,943.00
246,877.00
64,180.00
67,876.00
571 ,199.00
16,999.00
159,920.00
18,747.(>0
52,027.00
218,275.00
14,196.00
352.00
54,682.00
124,980.00
26,053.00
60,455.00
5,879.00
245,836.00
929.00
87,740.00
12,790.00
AMOln'rr Or'
DISTRIBUTION N0.1
0.997"/..,
0.226
0.583
0.676
9.796
0.742
1.502
0.109
4.650
1.319
0.098
0.262
15.561
1.769
0.657
0.531
0.721
0.749
0.100
0.569
2.490
4.707
0.625
0.431
1.723
0.526
1.157
0.234
0.131
2.242
0.254
17.358
1.177
0.073
3.041
0.791
0.836
7.037
0.209
1.970
0.231
0.641
2.689
0.175
0.004
0.67Q
1.540
0.321
0.745
0.072
3.029
0.011
1.081
0.158
JOO.oo%
T
It., . . . . . . . . . . . . . . . . . . . . . .
T'Al"T:!'1':O :P.J PRocr8S ••.•••••••.•
";\TA':'" r:,"' FRINCIl'iU ...•.....•.
" . - t·,·: "'TO:' ,\CC'Pl1'"0 F:':'EFEST ....
-:-
$
OF
TOTAL
10,0')5.3 6
8,127,23'1.,;;
1, 97? , 929. 3f;
U:JDAIT' DI T?EASURY
T~11:.'T F',rJ!l ...•.•....••.••..•• • $lO,lOO,1~7.
72
$
49,850.00
11,300.00
29,150.00
33,800.00
489,800.00
37,100.00
75,100.00
5,450.00
232,500.00
65,950.00
4,900.00
13,100.00
778,050.00
88,450.00
32,850.00
26,550.00
36,050.00
37,450.00
5,000.00
28,450.00
124,500.00
235,350.00
31 ,250.00
21,550.00
86,150.00
26,300.00
57,850.00
11,700.00
6,550.00
112,100.00
12,700.00
867,900.00
58,850.00
3,650.00
152,050.00
39,550.00
41,800.00
35 1 ,850.00
10,450.00
98,500.00
11,550.00
32,050.00
134,450.00
8,750.00
200.00
33,700.00
77,000.00
16,050.00
37,250.00
3,600.00
151 ,450.00
550.00
54,050.00
7,900.00
~5,OOO,0(10.ClO
LlVIN6C\OU~C'r ne
s
Office of Pub lie Affairs
Room 812
1717 H Street. N W
Wa shington. DC 20006
Phone: 202-254-3010
FOR IMMEDIATE RELEASE
August 25, 1971
COST OF LIVING COUNCIL
Q & A LIST #6
Attached are answers to frequently asked questions about application
and implementation of the 9O-day Wage and Price freeze announced August 15
by President Nixon. This set is in addition to previously released Q's and
A's. The answers are rulings issued by the Cost of Living Council, appointed
by the President and chaired by Secretary of the Treasury John B. Connally.
000
C-133
GENERAL
Q:
Are state payments to people disabled in job-related accidents under
workmen's compensation laws subject to the freeze?
A:
No.
Q:
How is a broker to determine his freeze price when he buys from many
different mills at different prices and sells to several different
cU3tomers?
A:
The broker essentially provides a service, since he legally never takes
title to the product. Therefore, he should freeze his fee for this
service. If his fee is determined on the basis of a percentage of the
value of the product shipment, this percentage is frozen at the same
level as during the month prior to August 15, 1971.
Q:
How is income from family-owned businesses affected by the freeze?
A:
Profits from family-owned businesses are not subject to the freeze.
However, the amount of income to family members active in the management
of the bUSiness, if paid as a salary under an agreed formula during the
base period, is frozen at the formula rate.
These are not prices, wages or rents.
It is important to point out that ceilings have been established for prices
and wages and the President has asked that dividends be voluntarily frozen.
WAGES
Q:
What is the definition of "Wages and Salaries"?
ft.:
As used in the Executive Order, the term ''Wages and Salaries" includes
all forms of remuneration or inducement to employees by their employers,
including but not limited to: vacation and holiday payments; bonuses; layoff
and supplemental unemployment insurance benefits; night shift, overtime,
and other premiums; employer contributions to insurance, savings, or
other welfare benefits; employer contributions to pension or annuity
funds; payments in kind, job perquisites, cost-of-living allowances,
expense accounts, commissions, discounts, stock options payments for deferred compensation, and all other "fringe" benefits. '
In addition, there may be no changes in working conditions which result
in more pay per hour worked (for example a schedule ~hich short~ns
the workweek without a proportionate dec;ease in pay.)
- 2 -
Q:
C:Sl)..;.M,
emoloy:e~
,holu's.
,a,nd~y" qV~l"time
reduce the official work day from eight hours to seven
beginning after the ~even hours?
A:
N~
Wage:J, ~d,salaries include all forms of compensation including
overtime. Indirect means to increase compensation above ceiling rates
are"nQt J)ertll1tt~d
Q:
Can
A:
No.
.~:
Are' Amel"icans working abroad for companies which are incorporated in the
'U. $." sti'bj-ectto the freeze?
an. eD1PloY~r, increase the number of days allowed off for purposes
such as fUnerals. etc.
This constitutes an increase in fringe benefits •
A: Yes.
PRICES
Q:
Are college and school room and board rates exempt from the freeze?
A:
No. School and college roan and board payments are handled just like
tuition. If there were substantial transactions during the base
~:r.\LGd- ~.on1'-d.'rmed by',:'deposits} ,the increase may be charged. If
t,h&rtl ~ ':fto.t a. subatantial, volume, the increase is not allowed.
Q: Can travel agents raise prices on tours abroad?
A:
!rae tZ'ayelr,~nt
e&n raise' prices on tours' 'bo the extent that the
costs ofv:fore-ign '8,ervices: offered in the tour package are increased,
1"e." fonigadlotel;:rates,' restaurant meals , transportation costs , etc •.
He D8IlDot ,,:,,hoWeyer; raise prices on that part of the tour package relatmg
:bQ::sel"YiLoes in the United States nor can he raise his markup for overhea(t:;and~,p:i'Ofitlabove that~\prevailing during the base period. His
records must clearly establish that each increase meets this test, and
if he cannot so demonstrate, this exemption will not apply to his
increase.
- 3 Q:
A:
If quantity discounts are offered, can customers who purchase large
volumes eligible for the discount be charged the applicable higher
price if it reduces the amount of its purchases and thus falls into
a lower quantity (higher price) bracket? In other words, may prices
be changed so long as the rate structure on which they are based is
not changed?
Yes. During the 90 day freeze, customers may be charged in accordance
with rate or price schedules established in the base period prior to
August 15, 1971, but may not increase charges applicable to various
categories of rates or prices set out in effective schedules.
RENTS
Q:
Would a landlord be in violation of the freeze if he attempted to evict a
tenant for refusal to pay rent in excess of the ceiling rent applicable
to his rental apartment or house?
A:
Yes. Section 10(a) of OEP Economic Stabilization Regulation No.1
prohibits any practice which constitutes a means to obtain a higher
rent than that permitted under the freeze. Therefore, such an eviction
would constitute a violation of the freeze.
IMPORTS
Q:
Many bUSinesses have a serious inventory problem due to the import
surcharge. How can such bUSinesses pass on the surcharge when they
have thousands of different'items in inventory, with many new shipments
arriving daily, and they can pass on the surcharge on some it~ and
not on others.
A:
Where pOSSible, surcharge and non-surcharge items shoul.d be stored
separately. Where this cannot be done, the wholesal~r may elect to
charge the base period ceiling price for each item that was in effect
prior to August 15, 19{1, until a quantity has been sold for each item
equal to the quantity on hand prior to the arrival of items with a surcharge added. He may then charge at the old rate plus the exact surcharge.
Jhe Department 01 the
TREASURY
"TON. D.C. 20220
TElEPHONE W04-2041
FOR IMMEDIATE RELEASE
August 25, 1971
DETAILS OF TREASURY ANNOUNCEMENT OF AUCTION OF $1-1/4 BILLION OF NEW NOTES
The Treasury today invited tenders for $1-1/4 billion, or thereabouts, of
5-year 2-month Treasury Notes of Series D-1976. The notes to be sold at auction on
Tuesday, August 31, under competitive and noncompetitive bidding will be issued on
September 8, 1971, and will mature November 15, 1976. The rate for the notes will be
pwlicly announced on Friday, August 27.
The notes will be issued in registered and bearer form in denominations of $1,000,
~,OOO, $10,000, $100,000 and $1,000,000.
Tenders for the notes will be received up to 1:30 p.m., Eastern Daylight Saving
Tuesday, August 31, 1971, at any Federal Reserve Bank or Branch and at the
Office of the Treasurer of the United States, Washington, D. C. 20220; provided, however,
that noncompetitive tenders will be considered timely received if they are mailed to any
such' agency under a postmark no later than August 30.
Each tender must be in the amount of $1,000 or a multiple thereof, and must state
the price offered, if it is a competitive tender, or the term "noncompetitive", if it
is a noncompetitive tender. The price on competitive tenders must be expressed on the
basis of 100, with two decimals, e.g., 100.00. Tenders at a price less than 98.76
will not be accepted. Fractions may not be used. The notation "TENDER FOR TREASURY
NOTES" should be printed at the bottom of the envelope in which the tender is
submitted.
t~e,
Public announcement will be made of the amount and price range of accepted
tenders. Those submitting tenders will be advised of the acceptance or rejection
thereof. The Secretary of the Treasury expressly reserves the right to accept or
reject any or all tenders, in whole or in part, and his action in any such respect
shall be final. Subject to these reservations noncompetitive tenders for $200,000
or less will be accepted in full at the average price (in two decimals) of accepted
competitive tenders. This price may be 100.00, or more or less than 100.00.
Commercial banks, which for this purpose are defined as banks accepting demand
deposits, may submit tenders for account of customers provided the names of the
customers are set forth in such tenders. Others than commercial banks will not be
permitted to submit tenders except for their own account.
Tenders will be received without deposit from commercial and other banks for
their own account, Federally-insured 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
(OVER)
-2-
positions with respect to Government securities and borrowings thereon, and Government
accounts. Tenders from others must be accompanied by payment of 5 percent of the face
amount of notes applied for.
Payment for accepted tenders must be completed on or before Wednesday, September 8
1971, at the Federal Reserve Bank or Branch or at the Office of the Treasurer of the
United States in cash or other funds immediately available to the Treasury by that
date. ~~y qualified depositary will be permitted to make settlement by credit in its
Treasury tax and loan account for the amoW1t of the notes allotted to
it for itself and its customers. Where full payment is not completed in funds availabl
by the payment date, the allotment will be canceled and the deposit with the tender up
to 5 percent of the amount of notes' allotted will be subject to forfeiture to the
United States.
Nonbank investors should understand that their checks will constitute payment
only if they are fully and finally collected by the payment date Wednesday, September 8
1971. Checks not so collected will subject the investor's deposit to forfeiture as set
forth in the preceding paragraph. A check payable other than at a Federal Reserve BaM
received on the payment date will not constitute immediately available fW1ds on that
lute. Accordingly, in order that a check will constitute immediately available funt;ls
tc the Treasury by the payment date, it should be submitted sufficiently in advance
to assure completion of its collection by Wednesday, September 8, 1971. Checks should
be drawn to the order of the office to which the tender is submitted. If a check for
the full amount of the payment is submitted with the subscription, it should be, in
the case of tenders at a competitive price, equal to the total purchase price of the
notes bid for, or, in the case of noncompetitive tenders, equal to the full face amount
of the notes bid for. Bidders on a noncompetitive basis who submit checks for the
[ace amount of the notes bid for will be (1) required to pay an additional amount if
the purchase price is more than 100, or (2) paid the difference if the purchase price
is less than 100.
Commercial banks are prohibited from making unsecured loans, or loans
collateralized in wh01e or in part by the notes bid for, to cover the deposits
required to be paid when tenders are entered, and they will be required to make the
usual certification to that effect. Other lenders are requested to refrain from makin€
such loans.
All bidders are required to agree not to purchase or to sell, or to make any
with respect to the purchase or sale or other disposition of the notes
biel for under this offering at a specific rate or price, until after 1:30 p.m.,
Eastern Daylight Saving time, Tuesday, August 31, 1971.
a~reements
JIIe Department of the
TREASURY
..sTON, D.C. 20220
TElEPHONE W04-2041
FOR IMMEDIATE RELEASE
August 26, 1971
SUPPLEMENTAL DUTY QUESTION AND ANSWER SHEET NO. 1
Attached are current answers by the Treasury
Department to questions most frequently asked about
the application and implementation of the Supplemental
Duty for Balance of Payments Purposes announced
August 15 ~ President Nixon. (Proclamation 4074.)
These Questions and Answers do not cover
matters which may be raised incident to the issuance of
Treasury Department Additional Duty Order No.2,
approved by the Secretary on August 23, 1971.
Questions and Answers on that Order will be the
subject of a further issuance at an early date.
000
C-135
(MORE)
1.
When did the 10 percent supplemental duty go into effect?
Answer:
2.
Must the 10% supplemental duty be paid on merchandise
on a ship in the harbor which cannot now be unloaded
because of the longshoremen's strike.
Answer:
3.
The President's Proclamation provides for the
additional duties to remain in effect until
modified or terminated by the President or the
Secreta~ of the Treasury.
What value is used in calculating the amount of this
10% additional duty?
Answer:
6.
Yes. The supplemental duty is applicable to all
dutiable merchandise except that subjected to a
specific exemption, unless it has been imported
and entered or withdrawn from Customs bonded
warehouse for consumption before the effective
date and time.
How long will this additional duty be in effect?
Answer:
5.
Yes.
Is the 10% supplemental duty applicable to goods imported
under a long-term contract?
Answer:
4.
The supplemental 10% ad valorem duty became effective
at 12:01 A.M., MOnday, August 16, 1971.
The statutory appraised value as determined by
Customs is used. This often tends to be equal
to the invoice value, f.o.b., at the foreign port.
Is the 10% supplemental duty calculated on the basis
of a percentage of the usual duty, i.e., 10% of the
duty amount?
Answer:
No. This 10% supplemental duty is an additional
ad valorem duty. If the normal rate of duty is 8%,
the new levy will be 8% regular import duty, plus 10%
supplemental duty for a total of 18%, or the Column 2
rate as set out in the Tariff Schedules, whichever is lower.
7.
What is the Column 2 rate?
Answer:
8.
Is the additional 10% supplemental duty applied on the amount
over the normal tourist exemption?
Answer:
9.
It is the statutory rate applicable to products of all
countries which have not been granted duty preferences
or concessions.
Yes. The supplemental duty will apply to all articles
acquired by a tourist abroad in excess of the amount
allowed as a tourist exemption.
Can the supplemental duty be passed on to the importer's
customers?
Answer:
The additional dollars and cents cost of the
supplemental duty may be passed on to ea.ch purchaser.
Adequate records to demonstrate the actual increased
cost must be maintained, however.
10. If the price of an import established in the world market
rises during the period of the price freeze, can the importer
pass on the price increase to domestic consumers?
Answer:
Yes. The Cost of Living Council has answered this
question by saying that "the importer can pass on the
price increase as long as the product is not physically
transformed by the seller or becomes a component of
the good being sold. When the imported product loses
its identity or is incorporated into another good, at
that point, the price increase may no longer be passed
on."
11. If the present rate of duty is a specific rate, for example,
10¢ per lb., how will the 10% supplemental duty be applied?
Answer:
The importer will be required to pay the specific rate
(10¢ per lb. in the example), plus 10% supplemental duty
based on the value of the merchandise as described in
the answer to Question 5.
In no event can the total
duties exceed the Column 2 rate.
12.
How is the supplemental duty applied in a case in which an
American firm has established a plant in a foreign country
for the assembly of articles made with u.s. components?
Answer:
13.
Is the supplemental 10% duty applicable to goods stored
in a Customs bonded warehouse?
Answer:
14.
Goods withdrawn from bonded warehouses after 12:01 a.m.,
August 16, 1971, are assessed both the current rate of
duty and the supplemental 10% duty.
What happens if merchandise is released by Customs under
immediate delivery procedures. Does the additional 10%
supplemental duty apply?
Answer:
15.
The 10% duty will apply against the normal dutiable
value, i.e., the full value of the imported articles,
less the cost or value of the United States components.
The additional 10% supplemental duty will not apply,
provided an immediate delivery request was properly
filed with Customs before 12:01 a.m., August 16, 1971.
A manufacturer of merchandise in the United States uses
imported products. If he later exports the manufactured
items, he is entitled under present law to a refund as
drawback of 99% of the duties paid by him on the imported
components. Is he also entitled to drawback of the 10%
additional duty paid by h~?
Answer:
Yes. Upon exportation, the manufacturer will be
entitled to receive drawback on both the regular
and the supplemental duty.
·LIVIN8 COUNCIL
COSlOFnelS
Office of Pub lie Affairs
Room 812
1717 H Street. NW.
Washington. D.C. 20006
Phone: 202-254-3010
FOR IMMEDIATE RELEASE
August 26, 1971
COST OF LIVING COUNCIL
Q & A LIST #7
Attached are answers to frequently asked que &ions about
application and implementation of the 90-day Wage and Price
freeze announced August 15 by President Nixon.
This set is
in addition to previously released Q1s and A's.
The answers
are rulings issued by the Cost of Living Council, appointed
by the President and chaired by Secretary of the Treasury
John B. Connally.
000
C-136
- 1 -
.
GENERAL
Q:
Can "deposits" for rentals of property or articles
be raised during the freeze?
A:
No.
WAGES
Q:
Can an increase in employer contribution be made to a
pension fund to finance a benefit increase which was
granted and became effective before August 15?
A:
Yes.
Q:
May new stock options be issued during the freeze?
A:
No.
Q:
May professional athletes who had not entered into
new contracts prior to the freeze, negotiate contracts
during the 90 day period which call for increases in
salary to cover their services during the freeze?
A:
No.
Q:
Can the freeze be used to continue wage practices which
are illegal under statutes prohibiting discrimination
on the basis of age, sex, or race, e.g., lower pay for
equal work by women?
A:
No·
- 2 -
Q:
Newly hired reporters progress from year to year at a
higher rate of pay until they reach "journeyman" stage.
Are these yearly pre-journeyman advances for reporters
permitted as "certified apprentice and learners's rates,"
. .
d as " experlence
.
" or " senlorl
.
· ty"
or are they prohlblte
increases?
A:
A bona fide apprentice or learners program must be
demonstrated by the existence of a formal program
of on-the-job or classroom training whereby the
apprentice or learner assumes greater responsibilities
or additional functions as he progresses through each
step of the program.
These must be established
programs which were in existence prior to the freeze.
If the conditions specified above apply to a reporter
o~ any other occupation, the person is eligible
for scheduled wage increases under the program.
If these conditions do not exist, these increas~o
are considered longevity increases which may not
be granted.
Q:
1@terans returning to their pre-military service
employment are normally entitled to receive all the
increases they would have received if they had not
served in the military.
Can they receive these
increases when re-hired during the freeze?
A:
Yes, employees are hired at the wage scale existing
during the base period.
PRICES
Q:
Will the special incentive per diem charges on railroad
freight cars which are authorized by the Interstate
Commerce Commission be permitted during the freeze.
A:
Yes.
- 3 -
Q:
Will exceptions from price ceiling regulations be
granted to companies which did not raise their prices
prior to August 15, even though they began paying
higher wages under new labor contracts before that date?
A:
No.
Q:
If retailers bought merchandise for higher prices
during the base period, but had not increased their
own prices prior to the freeze, can they now do so?
A:
No.
Q:
Are commodity futures markets covered by the freeze?
A:
Yes, except for raw agricultural,products.
Q:
What is the price ceiling for commodity futures which
mature during the 90-day freeze period?
A:
The ceiling price for all futures prices which mature
during the period is based on "spot" prices during
the 30-day period ending August 14.
Where spot prices
are not available, the ceiling would be the price at
which a substantial volume of the most recent futures
contract was traded during the base period.
RENTS
Q:
What is the rental rate for property which was not
used for rental purposes prior to the freeze?
A:
The rental rate is based on comparable units in the
immediate area during the base period.
Q:
Prior to August 15, 1971, an owner of a multifamily
project subject to control of rents by a Federal or
local regulatory agency applied for an increase in
rents.
Prior to August 15, 1971, the regulatory
agency authorized the increase, which was to become
effective after August 15, 1971.
May the owner
charge the new rents?
A:
No.
The rent in existence during the base period
is the maximum rent that may be charged.
- 4 -
Q:
A city has approved a new occupancy tax on all rental
dwellings, to become effective after August 15, 1971.
May the property owner increase rents to compensate
for this increase in expense?
A:
No.
Q:
A property owner (such as a public housing authority)
has established a rental schedule based on charging
20% of the tenants' income for rent. Prior to
August 15, 1971, the owner announced to all tenants
that starting after August 15, 1971, the percentage
of income paid for rent would be increased to 25%.
May he collect the increased rent?
A:
No.
He is restricted to that percentage of income
charged for rents which prevailed during the base
period.
Q:
A property owner has a rent schedule in existence
prior to August 15, 1971, which establishes rents
for each individual dwelling.
On that earlier date,
he announces that he is changing to a system of
establishing rents as a percentage of tenants'
income after August 15, 1971.
May he charge such
percentage-of-income rents after August 15, 1911?
A:
Yes, but the rent may be no-higher than the dollar
amount in the base period for any individual unit.
Q:
The property owner of a vacation residence rents
the residence for the season November 1 to May 1 each
year at a season rental of $1,000.
He wishes to rent
the property after August 15, 1971 for the term of one
year.
What rent may he charge?
A:
He may charge the rent generally prevailing
for comparable uni ts in the imm'ediate area for yearround use during the base period.
Q:
If a rental unit becomes vacant during the freeze
period, can a higher rate be charged when it is
rented again?
A:
No.
L+~cr-
COSTOFne
s
LIVIN6 COUNCIL
Office of Pub lic Affairs
Room 812
1717 H Street, NW.
Washington, DC 20006
Phone 202-254-3010
CL-71-1
FOR IMMEDIATE RELEASE
August
26,
1971
Cost of Living Council today issued the following summary of decisions
on wage and salary contracts in the field of education.
If a teacher ~r other educational personne] in a school system has either
performed work prior to August 15 under a new contract calling for a wage
increase or if the teacher was eligible to have earned a salary at the new
rate prior to August 15 the new rate 1s permissible. To be eligible means
that the teacher in fact accrued earnings (at the new rate) which covered a
period prior to August 15, although he or she may not have actually performed
any work during that period.
In many cases a contract may read that its effective date is July 15 or
some other day prior to August 15. The effective date of the pay increase
for purposes of the wage-price freeze for individual contracts i3 determined
by the two criteria--when the work is performed or when the individual is
eligible to receive the new increase. Eligibility is proven by the period
covered by and indicated on the pay check (which may be issued after August 15).
As an example, if a college has five cafeterias, three of which close down for
the summer, and if the cafeteria workers are employed under a wage scale and
under individual contracts keyed to those scales, the increase applies only
to the summer employee who performed work prior to August 150 Those returning
in September who have not performed work under the new contract do not
receive the increase. If, however, there was one uniform system contract for
all, then those cafeteria workers returning in the fall also receive the
increase.
In the case of school systems that have negotiated a system-wide contract
which is applicable to all teachers in the system and which makes all teachers
eligible to receive payment prior to August 15, all teachers may receive these
increased payments if anyone teacher either perfonned work or was accruing
pay prior to August 15.
The question has arisen as to whether this applies to cafeteria workers
and others. Where there is a system contract that meets the above criteria
it applies. Otherwise the rule that applies is that before the increase is
granted work must be performed under the new individual contract or the
individual must have been eligible to accrue pay during a period prior to
August 15.
- 2 -
.'\ distinction is drawn between a systems contract negotiated for all
teacllers, or for other nersonnel, and a pay schedule on which individual
contracts are based. Under the former, all teachers are eligible for increase1
if one teacher has performed under the contract prior to August 15 or was
eligible to earn under it; under the uniform pay schedule each individual
is dealt wi~h individually: If he or she has performed work under a contract
prior to Au~~st l~ or has been eligible to earn the new increase prior to
that date the increase is allowed.
Ano".her question involves multi- year contracts calling for annual
increases on a date after the August 15 freeze. The increases may not go
into effect.
What about longevity increases due after August IS? The longevity
increase is frozen even though the pay raise is approved under conditions
described here.
Does a teacher who has completed courses and received additional degrees
making her eligible for the higher pay rate get a new salary level? Yes.
This is a promotion, not a pay raise.
Can a newly-hired teacher whose contract is si8ned after the 1'reeze
date collect the higher pay in a School system where all the wages are
frozen under these rulings? ~Jo.
The question has been asked as to how this auplies to college teachers.
Where there is a system contract unifonnljr applying to college teachers in
a college or university system, the same rule applies--if work was performed
by anyone faculty member under the new contract prior to August 15, or
if any faculty member accrued the new salary prior to that date even if
no work was performed, all faculty members affected by the contract are
eligible for the increase. Where there are individual contracts, the two
criteria of work performed or eligibility for accruing salary apply.
It is apparent that variations in contracts will continue to raise
questions. School related organizations needing further information for
their particular situations should wire Teacher Information at one of the
10 OEP regional centers (see list below), and state their specific questions
or problems. A response will be made as soon as possible. Only requests
from school related organizations will be honored.
- 3 -
Region
Address. Telephone
States Served
Boston
JFK Federal Building
Room 2003 L
Boston, Mass. 02203
Tel: (900) 223-2490
or 4053
(Area Code 617)
Connecticut
Maine
Massachusetts
New Hampshire
Rhode Island
Vermont
26 Federal Plaza
Room 1355
New York, N. Y.
10007
Tel: (900) 466-8450
(Area Code 212)
New Jersey
New York
Puerto Rico
Virgin Islands
Industrial Valley Bank
Building, Suite 1600
1700 Market Street
Philadelphia, Pa. 19103
Tel: (900) 524-2435
(Area Code 215)
Delaware
Maryland
Pennsylvania
Virginia
West Virginia
District of Columbia
(I)
New York
City
(I I)
Philadelphia
(Ill)
Atlanta
(IV)
Alabama
Florida
Suites 514, 518, 520
Georgia
161 Peachtree StreetiN.E.
Kentucky
Atlanta, Ga. 30303
Mississippi
Tel: (900) 526-4401
North Carolina
or 4545
South Carolina
(Area Code 404)
Tennessee
Chicago
33 E. Congress Parkway
Room 204 A
Chicago, Ill. 60604
'i'e 1 : ( 9 0 0 ) 591- 5111
(Area Code 312)
Illinois
Indiana
Michigan
Minnesota
Ohio
Wisconsin
Federal Building
1100 Commerce Street
Room 4C-38
Dallas, Tex. 75202
Tel: (900) 749-1111
(Area Code 214)
Arkansas
Louisiana
Oklahoma
New Mexico
Texas
(V)
Dallas
(VI)
Continental Ins. Bldg.
- 4 Region
Kansas City
(VII)
Denver
(VIII)
San Francisco
(IX)
Seattle
(X)
Address,
States Served
T(lep~one
New Federal Office Building
601 E. 12th Street, RID. 142
Kansas City, Mo. 64106
Tel: (900) 37L~-5831
(Area Code 816)
Federal Regional Office
Building 710
Denver, Colo.
80225
Tel: (900) 837-4981
Rent
837-3981
Price 837-4856
Wage
837-3876
Admin. 837-3827
(Area Code 303)
IO~la
Kansas
Missouri
Nebraska
Colorado
Montana
North Dakota
South Dakota
Utah
Wyoming
450 Golden Gate Avenue
Arizona
Room 2029
California
San Francisco, Calif. 94102 Hawaii
Tel: (900) 556-7746
Nevada
Wages 556-2452
American Samoa
Prices 556-6260
Guam
Rent
556-7027
(Area Code 415)
Federal Office Building
Room 1095
909 ls t Avenue
Seattle, Wash. 98104
Tel: (900) {,.42-4552
(Area Code 206)
Alaska
Idaho
Oregon
Hashington
Jhe Department 01 the
TREASURY
"TON. D.C. 20220
TElEPHONE W04-2041
FOR IMMEDIATE RELEASE
August 27, 1971
HERMAN I. LIEBLING
APPOINTED DEPUTY DIRECTOR OF TREASURY'S
OFFICE OF FINANCIAL ANALYSIS
secretary of the Treasury John B. Connally today
announced the appointment of Herman I. Liebling as
Deputy Director, Office of Financial Analysis, in the
Office of the Secretary, The Department of the Treasury.
Prior to his appointment, Mr. Liebling was
Assistant Director for Business Economics and Chief
Business Economist in the same office, whose
responsibilities in the Office of the Secretary relate
to analysis of the general economic and financial outlook,
and technical assistance on the development of general
economic policies.
Mr. Liebling has been serving as a career service
representative on the Federal inter-agency group known
as the "Troika" (The Department of the Treasury, Council
of Economic Advisers, and Office of Management and Budget),
which prepares forecasts of overall economic activity and
formulates and proposes national economic policies to the
President. For these activities, he received a
Meritorious Service Award in 1969 for " ... his ability in
forecasting the future performance of the economy." He
has received other commendations from several Secretaries
of the Treasury. His forecasts of economic growth in
19 7 0 and 1971 contributed to the development of the new
economic policies recently announced.
C-137
(OVER)
- 2 -
With the Department of the Treasury since 1962,
Mr. Liebling formerly served as Director of the Economic
Studies Program in the National Science Foundation, and
as an Economist in the National Economics Division of the
Department of Commerce, and as a staff member of the
?urvey of Current Business, a monthly publication of that
Department.
In 1967, he was elected to the Conference on
Research in Income and Wealth. He has published many
articles on methods of forecasting economic activity,
inter-industry economics, etc.
In 1968, he served as
adviser to the Ministry of Finance of the Government of
Morocco in developing a S-year plan to finance public
investment. He is a member of the McGraw-Hill Economic
Outlook Panel.
Mr. Liebling has lectured on business
cycles and macro-economic theory at The American
University and the University of Maryland.
A native of New York City, Mr. Liebling attended
public schools there and received his M. A. and Ph.D.
degrees in Economics from The American University in
Washington, D. C.
Mr. Liebling is married to the former Mabel Barbara
Rudman of Jamaica, New York. They have two children and
live in Bethesda, Maryland.
000
Jhe Department 01 the
TREASURY
"TON. D.C. 20220
TElEPHONE W04-2041
FOR IMMEDIATE RELEASE
August 27, 1971
INTEREST RATE ON $1-1/4 BILLION TREASURY NOTES SERIES D-1976
The Treasury announced today a 6-1/4% per annum interest rate
for the $1-1/4 billion of Treasury Notes of Series D-1976 announced
on August 25 for auction on Tuesday, August 31.
The series title
for these notes will be 6-1/4 percent Treasury Notes of Series D-1976.
The Cusip number is 912827 CK6.
COST OF
LIVIN6 COUNCIL
nels
Office of Pub lie Affairs
Room 812
1717 H Street. NW.
Washington. DC. 20006
Phone· 202-254-3010
FOR IMMEDIATE RELEASE
August 27, 1971
COST OF LIVING CarnCIL
Q & A LIST #8
Attached are answers to frequently asked questions about application
and implementation of the 9O-day Wage and Price freeze announced August 15 by
President Nixon •. This set is in addition to previously released Q's and
A's. The answers are rulings issued by the Cost of Living Council,
appointed by the President and chaired by Secretary of the Treasury
John B. Connally.
NOTE
NOTE
NOTE
Also attached is a partial listing of agricultural products
exempt or covered by the wage-price freeze.
000
1.
WAGES
Q:
Is a transfer of an employee from a job paid on a flat hourly rate to
a job paid by an incentive system a violation of the wage-price freeze?
A:
No. An employee may transfer to a job which is compensated under a
previously established incentive system. However, no new incentive
system can be established during the freeze.
Q:
May an employer change the payment system for a job fran a flat rate
system to a previously established incentive system?
A:
Yes. Provided the employee on that job receives no more than the
ceiling rate for the job established during the base period.
Q;
A company has an established policy of increasing a supervisor's
compensation when he must be temporarily transferred to a different
city for an extended period. Because this is not a bona fide promotion,
may the company continue to pay this extra compensation when transfers
are necessary?
A:
Yes. If the company can document the fact that this is an established
company policy, but only at the rates previously established for such
extra compensation.
Q:
Can business and government continue to make cash awards during the
freeze to employees for outstanding performance?
A:
Yes. Such awards may continue under the same formula and controls as
during the base period. Records will have to be maintained on the
incidence and amount of these awards which demonstrate that these programs
are not used to give employees wage increases in violation of the free~e.
RENT
Q:
Can a landlord require a tenant to pay utili ties after August 15 if
prior to that date utilities had been paid by the landlord?
A:
No.
IMPORTS
Q:
Should the import surcharge be shown in dollars and cents on the sales
ticket or invoice when the charges are passed on to the consumer?
A:
Yes.
Here is a partial listing of agricultural products which are either exempt
or covered by the freeze.
Exempt
Covered
Live cattle, calves, hogs
sheep and lambs
Carcasses and meat cuts
Live poultry
Dressed broilers and turkeys
Raw milk.
Pasteurized milk and processed
products such as butter, cheese,
ice cream
Shell eggs, packaged or loose
Frozen, dried or liquid eggs
Sheared or pulled wool
Wool products
Raw honeycomb honey
Processed and a blended honeybutter product
Mohair
Hay: bulk, pelleted, cubed
or baled
Dehydrated alfalfa meal or
alfalfa meal pellets
Wheat
Flour
Feed grains, including:
Com
Sorghum
Barley
Oa.ts
Mixed feed
Cracked corn
Rolled barley
Rolled oats
Soybeans
Soybean meal and oil
Leaf tobacco
Cigarettes and cia-rs
Baled cotton, cottonseed
cotton lint
Cotton yarn, cottonseed oil,
cottonseed meal
Fresh potatoes, packaged or not
Frozen french fries
dehydrated potatoes
Unmilled rice
Milled rice
All raw nuts--shelled and
unshelled
Roasted salted or otherwise
processed nuts
Fresh mushrooms
Canned or freeze dried mushrooms
Fresh mint
Mint oil
Fresh hops
Dried
~
neas
and lentils
Exempt
Covered
Sugar beets and sugar cane
Raw and refined sugar
Maple sap
Maple syrup and sugar
All seeds for planting
Seeds processed for other uses
Raw coffee bean
Roasted coffee bean
All fresh vegetables and melons,
including:
Tomatoes
Lettuce
Sweet corn
Onions
Green beans
Cantaloups
Cucumbers
Cabbage
Carrots
Watermelons
Green peas
Asparagus
Peppers
Broccoli
Cauliflower
Spinach
Green lima beans
Honeydews
Escarole
Garlic
Artichokes
Eggplant
Brussel sprouts
Beets
'Ca.nned and frozen vegetables
Dill pickles
Packaged slaw
Unpopped popcorn
Popped popcorn
Stumpage, or trees cut from
the stump
Milled lumber
All fresh or naturally dried fruits,
packaged or not, including:
Fresh oranges
Grapes and raisins
Apples
Peaches
Strawberries
Grapefruit
Pears
Lemons
Plums and prunes
Cherries
Canned, artifically dried
frozen fruit or juices
Glazed citrus peel
Canned grapes, wine
Apple sauce
Canned prunes & prune juice
Exempt
Covered
Cranberries
Avocados
Blueberries
Apricots
Tangerines
Olives, uncured
Nectarines
Raspberries
Blackberries
Figs
Tangelos
Limes
Dates
Canned olives
Papayas
Bananas
Pomegrana:tes
Currants
Persimmons
Garden plants & cut flowers
Floral wreath
#
#
#
De Department of the TREASURY
..sTON. D.C. 20220
TElEPHONE W04·2041
FOR IMMEDIATE RELEASE
August 27, 1971
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
$3,900,000,000, or thereabouts, for cash and in exchange for Treasury
bills maturing September 9, 1971, in the amount of $3,702,250,000,
as follows:
9l-day bills (to maturity date) to be issued September 9, 1971,
in the amount of $2,300,000,000,
or thereabouts, representing an
additional amount of bills dated June 10, 1971,
and to mature
December 9, 1971
(CUSIP No. 912793 LV6) originally issued in
the amount of $1,400,480,000, the additional and· original °bil1s to be
freely interchangeable.
182- day bills, for $1,600,000,000, or thereabouts, to be dated
September 9, 1971,
and to mature March 9, 1972
(CUSIP No. 912793 MR4).
The bills of both series will be issued on a discount basis under
competitive and noncompetive 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 $10,000,
$15,000, $50,000, $100,000, $500,000 and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up
to the closing hour, one-thirty p.m., Eastern Daylight Saving
time,
Friday,September 3, 1971.
Tenders will not be received
at the Treasury Department, Washington. Each tender must qe for a
minimum"of $10,000. Tenders over $10,000 must be in mUltip'les of
$5,000. 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.
Bank~ng institutions generally may submit tenders for account 6f
Customers provided the names of the customers are set forth in such
tenders. Others than banking institutions will not be permitted to
- 2 submit tenders except for their own account. Tenders will be received
without deposit from incorporated banks and trust companies and from
re~ponsible 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 accompaniec
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. Only those submitting competitive tenders will be
advised of the acceptance or rejection thereof. The Secretary of the
Treasury expressly reserves the right to accept or reiect 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 September 9, 1971, in cash or other
immediately available funds or in a like face amount of Treasury
uills maturing September 9, 1971; provided, however, that
settlement for tenders submitted to the Federal Reserve Bank of
San Francisco or its Los Angeles Branch must be completed at that
Bank or Branch on September 10, 1971, and must include one day's
accrued interest if settlement is made with other than Treasury
bills maturing September 9. 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.
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 considered to pccrue when the bills are sold, redeemed or otherwise
disposed of, and the bills are excluded from consideration as capital
assets. Accordingly, the o~'mer (o[ Treasury bills (other than life
insurance companies) issued hereunder must include in his income tax
return, as ordinary gain or loss, the difference between the price paid
for the 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.
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
0
COSlOF
LIVINB COUNCIL
ne
Office of Pub lie Affairs
Room 812
1717 H Street. NW
Washington. D.C. 20006
Phone: 202-254-3010
FOR IMMEDIATE RELEASE
August 28, 1971
COST OF LIVING COUNCIL
Q & A LIST #9
Attached are answers to frequently asked que~ons about
application and implementation of the 90-day Wage and Price
freeze announced August 15 by President Nixon.
This set is
in addition to previously released Q's and A's.
The answers
are rulings issued by the Cost of Living Council, appointed
by the President and chaired by Secretary of the Treasury
John B. Connally.
000
C-l40
1
GENERAL
Q:
May prices, wages, and rents which normally fluctuate in distinct
seasonal patterns be adjusted during the wage-price freeze?
A:
Yes, but these adjustments are subject to the following conditions:
(1)
Prices and wages must show a large and distinct fluctuation
at a specific, identifiable point in time, which must be a
documented and established practice that has taken place in
each of the past three years. Examples are Puerto Rican
hotel rates at the beginning and end of the fall/winter
season, auto dealers' selling prices at new-model-introduction
time, and wage rates for some seasonal agricultural workers.
New establishments or activities may determine their qualification from that generally prevailing for similar establishments or activities in the immediate area.
(2)
Each change must be tied to a specific date (e.g., the
introduction of new car models, beginning of resort seasons,
etc.). The price change may not take place earlier this year
than In 1970, unless the date is tied to a specific event
such as a previously planned introduction of new models.
(3)
If the price or wage change qualifies as seasonal by the
above criteria, the seller is permitted a choice of base
periods to use in determining his ceiling price or wage
for the period following the specific event. He may use the
statutory base period (30 days ending August 14 or the most
recent 30 days when sales were made) or he may use the seasonal
period of 1970 (from the date of the specific event through
November 13). His ceiling price is based, therefore, on
the prices realized on a substantial number of transactions
during whichever base period he chooses to use.
(4)
The seller or employer must have adequate records available
to demonstrate the existence of the traditional practice in
the three preceding years and the basis for calculating his
ceiling price from the 1970 period.
Q;
May I increase my contribution to charitable organizations during
the freeze?
A:
Yes.
2
RENTS
Q:
Can an increase in rent be charged for property which undergoes
a substantial capital improvement?
A:
The following criteria apply to rent increases for improvements:
(1) The capital improvement must equal at least three months rent
(with a minimum of $250) on items that would be classified as
capital improvements by the Internal Revenue Service.
(2)
If condition (1) is met the unit may be treated as a new
apartment, with rent to be no higher than the rent charged
on comparable apartments in the market area, subject to the
limitation that the monthly rent may not increase by more
than 1 1/2 percent of the amount spent for capital improvement.
Q:
What is the ceiling price for rental property that was vacant during
the base period?
A:
The ceiling rent is the rent charged the last time the property was
rented.
PRICES
Q:
Are dues subject to the freeze?
A:
Dues are a fee for service, and as such are frozen under the
order. Examples are: professional associations, trade
asaociations, unions, country clubs.
Q:
Are the prices charged for advertising (publishing, television and
radio, etc.) and prices of newspapers, books, magazines, etc.,
~ubject to the freeze?
A:
Yes.
OPENING RDWUCS
BY
ARNOLD R. WEBER
EXECUTIVE DIRECTOR
COST OF LIVING CamCIL
AT N~S CONFERENCE
AUGUST 28, 1971
In the last 12 days, the Cost of Living Council has considered a large
number of issues concerning the wage-price freeze.
Decisions on these issues
have been made in the spirit of the President's basic premise:
that the
inflation threatening the nation's economic stability must be halted.
As
these decisions have been made, we have distributed them to the American
public as quickly as possible, because we know that many critical decisions
hang upon those actions.
Again today we are issuing a press release,
issues decided by the Council.
Q &
A #9, which addresses
One of these is the issue of seasonality,
which I would like to discuss with you now.
SEASONALITY
As you know, the prices and wages associated with a large number of
products and industries follow distinct seasonal patterns.
This 1s the
issue of seasonality and it is not only an important issue, but one that
requires immediate action.
The key question is:
Should prices a.nd wages that follow a distinct
seasona.l pattern qualify for exemption under the wage-price freeze?
The answer is not simple.
To qualify, prices and wages must show a
distinct fluctuation at a specific, identifiable point in time.
There must
also be a documented and established pra.ctice that has taken place in each
of the past three years.
Examples are Puerto Rican hotel rates at the
beginning or end of the fall/winter season; auto dealers' selling prices
at new-medel-introduction ttmet and wage rates for seasonal agricultural
workers.
- 2 -
The important thing here is that each seasonal price change must be
tied to a specific date, e.g., the introduction of new card models, the end
of a specific month as in the case of traditional August furniture sales,
the onset of a specific holiday such as Labor Day, or the start of a particular harvest season.
The price change may not take place earlier this year
than in 19-rO, unless the date is tied to a specific event such as a previously planned introduction of new models or new television programs.
If the price or wage change qualifies as seasonal by the criteria
just stated, the seller is permitted a choice of base periods to use in
determining his ceiling price or wage.
He may use the statutory base
period (30 days prior to August 14 or the most recent 30 days when sales
were made) or he may use the same seasonal period for 1970 (fram the date
of the specific event through November 13).
His selling price is based,
therefore, on the prices he realized on a substantial number of transactions during whichever of the alternative base periods he chooses to use.
The seller or employer must have adequate records available to
demonstrate the existence of the traditional practice in three preceding
years and the basis for calculating his selling price for the 1970 period.
New establishments or activities may determine their qualification fram
that generally prevailing for similar establishments or activities in the
inlnediate area.
Industries that regularly introduce new models require special procedures; separate ceilings must be calculated for the 19-rl models and the
- 31972 models (even if there is no difference in the posted prices of the
two models).
Taking automobiles, washing machines or snowmobiles, for
example, the ceiling for the 1971 models would continue to be based on the
July l6-August 14, 1971 base period, while the ceiling for the 1972 models
would, if the dealer chooses, be based on prices charged for the 1971
models when they were introduced during the comparable 1970 period.
#
#
#
1111MB C\OU;C,r
ne s
Office of Pub lic Affairs
Room 812
1717 H Street. N.w
Washington. D.C. 20006
Phone: 202-254-3010
FOR SUNDAY RELEASE
August 29, 1971
SUMMARY #1
The Cost of Living Council today issued a summary of its decisions
to date establishing official government policy with respect to the wage
and price stabilization program. This summary contains brief descriptions
of policy decisions issued by the Council. For additional guidance or
interpretation of this summary, please consult previously issued Question
and Answer releases numbers 1 through 8 or your local Internal Revenue
Service Office.
r
GENERAL
*
The wage-price freeze covers prices, rents, wages, and salaries.
These four items are listed in the Economic Stabilization Act of
1970, under which the President has the authority to impose the
freeze. The new CLC determines the policies of the freeze and
the OEP answers questions and investigates complaints. Assistance
with information and complaints is provided by local IRS offices
in 360 cities and the Department of Agric~lture's Agricultural
Stabilization and Conservation Service offices in approximately
3,000 cities.
*
Everyone is included in the wage-price freeze - Federal, state
and municipal employees; members of the military services; employees of companies and businesses regardless of size of operation;
and Americans working abroad for companies incorporated in the
Uni ted States.
*
The U. S. customs zone is the boundary for the freeze. Puerto Rico
is within the custom zone so it is included. The Trust Territories
are outside the customs zone and are not included.
*
State or local governments may not increase charges or fees for
government--provided services. For example, fees for water, gas,
sewer, and similar services may not increase. But fees for licenses
or legal penalties, such as traffic tickets, may be increased.
*
Stat,= and local tax rates are not frozen.
*
State payments to people disabled in job-related accidents under
workmen's compensation laws are not subject to the freeze because
these aren't prices, wages, or rents.
*
The freeze covers charges and other fees by banks (for example,
safe deposit boxes).
*
The freeze will apply to insurance rates. However, if a rate
increase was announced prior to August 15 and a substantial
number of transactions occurred at the increased rate, the increase
becomes the established rate. No additional rate increases are
permitted during the freeze.
For example, if a substantial number of policy holders paid a
rate increase in July,the increase is also valid for those policy
holders whose rate increase occurs after August 15.
2
*
Welfill'e payments are not covered by the freeze. They are not
payments for services rendered, therefore are not wages.
*
The 7% excise tax on automobiles remains in effect and must be
collected until such time as Congress rescinds it. The President
has re~uested authority to rescind the excise tax, retroactive to
August 15.
If this is approved by Congress, rebates will be made
to automobile purchasers.
WAGES
*
As used in the Executive Order, the term "Wages and Salaries"
includes all forms of remuneration or inducement to employees
by their employers, including but not limited to:
vacation and
holiday payment; bonuses; layoff and supplemental unemployment
insurance benefits; night shift, overtime, and other premiums~
employer contributions to pension or annuity funds; payments in
kind, job prerequisites, cost-of-living allowances, expense
accounts, commissions, discounts, stock options, payments for
deferred compensation, and all other "fringe benefits."
In addition, there may be no changes in working conditions which
result in more pay per hour worked.
For example, an employer
cannot reduce the official work day from eight to seven hours
without a proportionate decrease in pay, nor can the employer
increase fringe benefits such as days off for funerals, etc.
that are not in accordance with pre-established levels that
provide these benefits.
*
A company's previously scheduled profit-sharing program car-not
be implemented during the freeze.
Fringe benefits, which include
profit sharing programs, may not be increased during the freeze.
*
In the case of a negotiated increase that became effect~ 'Ie
August 9, 1971, with payment for that week received by the employees on August 13, 1971, it is permissible to pay the retroactive portion of the increase which is currently being computed
~or the employees involved.
3
*
If a salary increase was granted and the employee actually performed
under the new rate prior to August 15, 1971, he can be paid at the
higher rate if the pay day is after August 15 as long as there are
adequate records to demonstrate that the increase was put into effect
prior to the freeze date. Otherwise the increase is not allowed.
*
Bargaining sessions for wage changes including labor and management
negotiations can continue during the freeze. However, no wage
increases negotiated d~ing the 90-day period can t&ke effect
during the freeze.
*
A union and management cannot negotiate fer pay increases to be
effective after the date of the freeze, retroactive to cover the
freeze period.
*
Professional athletes who had not entered into new contracts prior
to the freeze, may not negotiate contracts during the 90-day period
which call for increases in salary to cover their services during
the freeze.
*
Scheduled pay raises which are dependent upon employees completing
certain educational requirements may be paid during the freeze where
the employer can certify that an agreement was in existence that
provided for increases in pay dependent on the employees' completing
educational requirements for specific job levels. The pay increase
can be granted because, in effect, the action is a bona fide promotion.
For example, a teacher who has been awarded a master's degree can receive
the increment which is normally given. If the effective date of the
teacher's contract is after August 15, the increment must be no more
than the amount that was granted last year.
*
New stock options may not be issued during the freeze.
*
No cost of living increases will be permitted during the freeze.
*
Wages and salaries for new jobs will be determined through scales
set up on the basis of comparable jobs in the firm or in similar
firms.
*
Commission and piece work rates cannot be increased over those existing
during the base period. A worker's earnings can vary according to how
many pieces he produces or sells. But the commission or piece rate
cannot change.
4
*
J: a finn has a range of salaries for the same job, the employee
r:,ay be paid any salary wi thin the range which the qualifications
of the applicant justify as long as the average wage paid by the
firm in this job classification does not increase.
*
\'iage increases are permitted during the freeze for workers whose
wages are closely tied to increases for other workers whose contracts were
negotiated before the freeze, if the following conditions prevail:
1.
The agreement to which the increases are linked was reached
before August 15;
2.
Prior to August 15 work was performed (by the workers whose
wages are closely tied to the increases reached before the
freeze) that would be eligible for payment at the new rate.
3.
The increased wage rate for the workers whose wages are closely
tied to negotiated increases was scheduled to go into effect
on the same day as the negotiated wage increases as a matter of
established practice;
4.
The workers are employees of the same firm; and
5.
The company is able to demonstrate that this procedure is an
established practice.
*
Previously planned increases in pension benefits for those retired
before the freeze or those about to retire are allowed if they are
planned increases. For example, a scheduled increase in pensions
which is planned for October 1 may go into effect. A person who
retires on October 15 may also receive this increase.
*
Veterans returning to their pre-military service employment during
the freeze are entitled to all the increases they would have received
had they not served in the military. Employees are hired at the wage
scale existing during the base period.
*
An important distinction must be kept in mind regarding promotions:
wage rates for particular jobs are frozen. However, if a person is
promoted to a new job or a job with greater responsibility he will
be able to get the additional wage associated with that job. For
example, if somebody is promoted from assistant manager to manager
of a department store, he would get the pay rate associated with the
position of manager. His salary would not be frozen at that of an
assistant manager's.
Also allowed are increases in certified apprentice and learners' rates
under programs established prior to August 15. Merit or longevity
increases are not permitted.
5
*
If employees are severed for normal business reasons they can
receive their severance pay if it is in excess of their normal
pay rate that was in effect as of August 15. This holds true
only if severance pay procedures are a part of the understood
corporate procedure and the firm is willing to certify that
this was the procedure they had in effect, severance pay may
be paid.
*
The freeze does not cover profits from sources such as stocks
and bonds. The Economic Stabilization Act does not provide for
a Presidential action on Questions of profits. The President
did, however, reQuest that American corporations voluntarily
put a ceiling on their dividends. Likewise interest rates are
not covered by the order.
*
An employee may transfer from a job paid on a flat hourly rate
*
An employer may change the payment system for a job from a flat
*
A company may increase a supervisor's compensation when he must
be temporarily transferred to a different city for an extended
period if the company can document the fact that this is an
established company policy, but only at the rates previously
established for such extra compensation.
*
Business and government can continue to make cash awards during
the freeze to employees for outstanding performance provided that
such awards continue under the same formula and controls as during
the base period. Records will have to be maintained on the incidence
and amount of these awards which demonstrate that these programs are
not used to give employees wage increases in violation of the freeze.
*
Profits from family-owned businesses are not subject to the freeze.
However, the amount of income to family members active in the management of the business, if paid as a salary under an agreed form~la
during the base period, is frozen at the formula rate.
to a job paid by an incentive system. However, no new incentive
system can be established during the freeze.
rate system to a previously established incentive system provided
the employee on that job receives no more than the ceiling rate
for the job established during the base period.
It is important to point out that ceilings have been established for
prices and wages and the President has asked that dividends be
voluntarily frozen.
G-
*
If a teacher has perforrr;ed work prior to August 15 under a new
individual contract calling for a wage increase, the teacher,
(or other educational personnel) may receive the pay increase.
The increased rate is also allowed for a teacher or other
personnel who accrued earnings at the new rate, which covered
a period prior to August 15, although he or she may not have
actually performed any work during the period. For example,
if a college has five cafeterias, three of which close down
for the summer, and if the cafeteria workers are employed
under a wage scale and under individual contracts keyed to
those scales, the increase applies only to the summer employee
who performed work prior to August 15. Those returning in
September who have not performed work under the new contract
do not receive the increase. If, however, there was one uniform
system contract for all, then those cafeteria workers returning in
the fall also receive the increase.
*
In the case of school systems that have negotiated a system-wide
contract which is applicable to all teachers in the system and
which makes all teachers eligible to receive payment prior to
August 15, all teachers may receive these increased payments if
anyone teacher either performed work or was accruing pay prior
to August 15.
*
The same rule applies to college teachers. Wbere there is a system
contract uniformly applied to college teachers in a college or
university system, and work was performed by anyone faculty member
under the new contract prior to August l5, or if any faculty member
accrued the new salary prior to that date even if no work was performed, all faculty members affected by the contract are eligible
for the increase. Wbere there are individual contracts, the two
criteria of work performed or eligibility for accruing salary
apply.
*
Multi-year contracts calling for an annual increase for educational
personnel after August 15 may not go into effect.
*
Longevity increases for educational personnel due after August 15
are frozen.
7
IMPORTS
*
The 10% tax surcharge on imported goods may be passed on to the
consumer only on a penny-for-penny basis.
*
The 10% import tax surcharge may not be applied to goods already in
stock prior to the freeze.
*
An importer can pass on a price increase during the freeze as long as
*
In calculating markups for transaction prices, importers, processors
and others in the U. S. may pass on the supplemental duty increases
on foreign imports only to the extent that it was paid on a dollar
for dollar basis for imports made on and after August 15.
*
Where possible, surcharge and non-surcharge items should be stored
separately. Where this cannot be done, the wholesaler may elect
to charge the base period ceiling price for each item that was in
effect prior to August 15, 1971, until a quantity has been sold for
each item equal to the quantity on hand prior to the arrival of
items with a surcharge added. He may then charge at the old rate
plus the exact surcharge.
*
The import surcharge should be shown in dollars and cents on the sales
ticket or invoice when the charges are passed on to the consumer.
the product is not
a component of the
its identity or is
price increase may
physically transformed by the seller nor becomes
good being sold. When the imported product loses
incorporated into another good, at that point, the
no longer be passed on.
- 8 -
PRICES
*
Individuals, businesses, firms or sellers of any
type cannot charge more for their products or services
than they did during the base period prior to August 15.
Price ceilings are to be established at no greater
than the highest price at which a substantial volume
of transactions
were carried out by the firm's
individual normal pricing area, regardless of whether
these pricing areas are national, regional, or
individual stores.
*
Sales may be made at the highest price at which a
substantial volume of actual transactions were made
during the 30-day period of time ending August 15.
If products have been selling at a discounted price
and not at the published price during the base period,
the maximum price would be the highest discounted
price at which substantial transactions were made.
*
If prices were raised during the 30-day base period,
the base period in determining the highest price that
can be charged will not be the full 30 days.
The
base period will start the day the price went into
effect.
For example, if a restaurant raised its
menu prices on August 6, the base period would be
August 6 to 14, or 8 days.
*
The freeze covers both retail and wholesale prices.
*
The freeze covers professional fees
charged by doctors and lawyers.
*
Utility rates and transportation fares
by the freeze.
*
Prices of used commodities, such as used cars,
antiques, and resales of housing are included in
the freeze.
*
Stock and bond prices and interest rates are not
included in the freeze.
such as those
are covered
- 9 -
*
Price increases announced prior to August 15 may not
take effect during the freeze, unless specifically
exempted.
There will be few exceptions and will be
considered individually and they will be well publicized.
*
Raw agricultural prices are exceptions.
These include
those products that retain the same physical form
that they possessed when they left the farm gate.
All
other agricultural and food products would be considered
processed and subject to the freeze.
This would
include all products canned, frozen, slaughtered,
milled, or processed in some other way that changes
the physical form; packaging would not be considered
a processing activity.
Here is a partial listing of agricultural products
which are either exempt or covered by the freeze.
Exempt
Covered
Live cattle, calves, hogs
Carcasses and meat cuts
sheep and lambs
Live poultry
Dressed broilers and turkeys
Raw milk
Pasteurized milk and processed
products such as butter, cheese,
ice cream
Shell eggs, packaged or loose
Frozen, dried or liquid eggs
Sheared or pulled wool
Wool products
Raw honeycomb honey
Processed and a blended honeybutter product
Mohair
Hay: b~, pelleted, cubed
or baled
Dehydrated alfalfa meal or
alfalfa meal pellets
Wheat
Flour
Feed grains, including:
Com
Sorghum
Barley
Oats
Mixed feed
Cra.cked corn
Rolled barley
Rolled oats
Soybeans
Soybean meal and oil
Leaf tobacco
Cigarettes and cigars
Baled cotton, cottonseed
Cotton yarn, cottonseed oil,
cottonseed meal
cotton lint
- 10 -
"
-I-
~XempL
Covered
Fresh potatoes, packaged or not
Frozen french fries
dehydrated potatoes
Unmilled rice
Milled rice
All raw nuts--shelled and
unshelled
Roasted salted or otherwise
processed nuts
Fresh mushrooms
Canned or freeze dried mushrooms
Fresh mint
Mint oil
Fresh hops
Dried beans, peas, and lentils
Sugar beets and sugar cane
Raw and refined sugar
Maple sap
Maple syrup and sugar
All seeds for planting
Seeds processed for other uses
Raw coffee bean
Roasted coffee bean
All fresh vegetables and melons,
including:
Tomatoes
Lettuce
Sweet corn
Onions
Green beans
Cantaloups
CUcumbers
Cabbage
Carrots
Watermelons
Green peas
Asparagus
Peppers
Broccoli
Cauliflower
Spinach
Green lima beans
Honeydews
Escarole
Garlic
Artichokes
Eggplant
Brussel sprouts
Beets
Canned and frozen vegetables
Dill pickles
Packaged slaw
-11 -
Covered
Unpopped popcorn
Popped popcorn
Stumpage, or trees cut from.
the stump
Milled lumber
All fresh or naturally dried fruits,
packaged or not, including:
Fresh oranges
Grapes and raisins
Apples
Peaches
Strawberries
Grapefruit
Pears
Lemons
Plums and prunes
Cherries
Cranberries
Avocados
Blueberries
Apricc:;s
Tangen!1.es
Olives, . :ncured
Necta.rines
Raspberries
Blackberries
Figs
Ta.ngelos
Limes
Dates
Papayas
Bananas
Canned, artifically dried
frozen fruit or juices
Glazed citrus peel
Canned grapes, wine
Apple sauce
Canned prunes & prune juice
Canned olives
Pomegran~es
Currants
Persimmons
Garden plants & cut flowers
Floral ,.,-reath
*
New products are priced by using the price of the
most comparable product sold by the closest comparable
competitor.
*
A business may not reduce services and maintain the
This amounts to an increase
same price for a product.
in price.
- 12 -
*
Merchants and other commercial businesses may not
pass on to consumers the cost of an increase in
local and state taxes.
*
School lunch prices are covered by the freeze.
*
If the food industry discounts an item to certain
retailers within a marketing area who had not
previously carried the item while substantial
transactions were also being made to other retailers
in the same marketing areaat regular prices, the
price can be increased to the non-discounted rate.
Otherwise, the discounts must be offered throughout
the freeze.
*
Travel agents can raise prices on tours to the extent
that the costs of foreign services offered in the tour
package are increased, i.e., foreign hotel rates,
restaurant meals, transportation costs, etc.
He
cannot, however, raise prices on that part of the
tour package relating to services in the United States
nor can he raise his markup for overhead and profit
above that prevailing during the base period.
His
records must clearly establish that each increase
meets this test, and if he cannot so demonstrate,
this exemption will not apply to his increase.
*
Prices may be changed as long as the rate structure
on which they are based is not changed.
During the 90 day freeze, customers may be charged in
accordance with rate or price schedules established
in the base period prior to August 15, 1971, but may
not increase charges applicable to various categories
of rates or prices set out in effective schedules.
*
There are no price controls over exports during the
freeze.
*
The special incentive per diem charges on railroad
freight cars which are authorized by the Interstate
Commerce Commission are permitted during the freeze.
*
No exceptions from the ceiling price regulations will
be granted to companies which did not raise their
prices prior to August 15, even though they began
paying higher wages under new labor contracts before
that date.
-
13 -
*
Commodity futures, with the exception of raw agricultural
products, are covered by the freeze.
The ceiling for
all prices including commodity futures, which mature
during the period is based on "spot" prices during the
30-day period ending August 15.
Where spot prices are
not available, the ceiling would be the price at which
a substantial volume of the most recent futures contract
was traded during the base period.
*
Increases in college and school room and board and
tuition fees announced prior to the freeze period
may be charged as scheduled if, before August 15,
at least one (1) person paid (confirmed by a deposit)
such charges.
RENTS
*
Rents on apartments and houses cannot be raised
during the freeze period.
Even if an agreement had
been signed before August 15 and scheduled to go
into effect after the 15th, the increase is not
allowed.
*
If a tenant's lease expires, his rent may not be
raised to the level being paid by new tenants in
similar units.
*
The rents for new or previously unrented units will be
set the same as for comparable units in the immediate
area.
*
State-aided and Federal low-rent housing programs
mandate that rents raise according to the income
of the individual.
Increases in rentals tied to
family incomes at rates established prior to
August 15, 1971, are permitted &s long as rates per
given amount of family income are not raised.
*
A landlord may not require a tenant to pay utilities
after August 15 if prior to that date utilities had
been paid by the landlord.
*
"" L:1 n J 1 C l' d i s i II \T i 01 rl t ion 0 f the f r e e z e i f he at t e r. r +~ ~i
t ;] C vic t ::-1- ten ant for ref usa 1 top a y l' e n t i n e x c e s s ,~, l'
the ceiling rent applicable to his rental apartment
or housp.
Section lO(a) of OEP Economic Siqbiliz:lli\)!,
Regulation flo. 1 prohibits any practice which con~;titllt,c~;
2. means
to obtain a higher rent than that permi ttC'u
un d e r the f r e e z e .
The ref 0 r e, s U c han e vic t ion w () u L d
constitute a violation of the freeze.
*
The
rental rate for property which was not used lC'f'
rental purposes prior to the freeze is based on
comparable units in the immediate area d uri n r; the h'l ~
period.
*
If a city has approved a new occupancy tax on all
rental dwellings to become effective after August 15,
1971, a property owner may not increase rents to
compensate for this increase in expense.
*
If a property owner announced prior to the freeze
that, effective August 15, the existing rent schedule
will be changed from one that establishes rent for
each individual dwelling to a percentage of tenant's
income, he may do so.
However, the rent may be no
higher than the dollar amount in the base period for
any individual unit.
t'
UIIII
CIIIFle s
Office of Public Affairs
Room 812
1717 H Street. N.W.
Washington. DC. 20006
Phone: 202-254-3010
FOR IMMEDIATE RELEASE
August 30, 1971
COST OF LIVING COUNCIL
Q & A LIST
#10
Attached are answers to frequently asked que~ons about
application and implementation of the 90-day Wage and Price
freeze announced August 15 by President Nixon.
This set is
in addition to previously released Q's and A's.
The answers
are rulings issued by the Cost of Living Council, appointed
by the President and chaired by Secretary of the Treasury
John B. Connally.
000
C-143
GENERAL
Q:
Can child support payments and alimony be raised during the
stabilization period?
A:
Yes. The above mentioned are transfer payments, not prices,
wages, sal~ies, or rents.
PRICES
Q~
A wholesaler gives advertising allowances in the form of
percentage discounts on prices. Can these wholesalers
cancel these allowances during the freeze?
A:
No. To do so would amount to a reduction in services without
a corresponding reduction in price.
Q:
A dealer buys the same goods from many differeBt sellers
and sells to many different buyers. In his transactions
he takes title to the goods he purchases. His only compensation is the difference between his purchase and sales
prices. Does the price freeze apply to prices charged by
this dealer?
A:
Yes. His price ceilings are determined like those of any
other seller of such goods.
Q:
Are postal rate increases frozen?
A:
Yes.
Q:
Can coal companies which had no transactions over the summer
months increase their price over last year's price to reflect
an increase in freight costs?
A:
No. The companies are frozen to the price charged during the
last period when there were transactions or that of May 25, 1970.
Q:
Which fish and seafood are covered by the freeze?
A:
Fish products are classified as raw agricultural products
and not covered by the freeze until they are shelled,
gutted, shucked, skinned or scaled.
[A fish or other denizen of the seas
When once netted or impaled
Is not subject to the freeze
Un til she lle d, Shucked, skinned or scaled.J
2
RENTS
Q:
Can a landlord require a person to rent or purchase
furniture, or to rent a garage before agreeing to
rent his property, where it is not his established
practice prior to August 15, 1971?
A:
No.
Any practice which constitutes a means to obtain
a higher rent than is permitted under the freeze is
prohibited.
Q:
Do the policies which have been issued on property
prices, rents, and improvements apply to commercial
property.
A:
Yes.
Jhe Department 01 the
TREASURY
"TON. D.C. 20220
TElEPHONE W04-2041
ATTENTION:
F INANC IAL ED ITOR
FOR RELEASE 6 :30 P.M.,
Monday, August 30, 1971.
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 bills dated June 3, 1971
, and
the other series to be dated September 2, 1971 , which were offered on August 24, 1971,
were opened at the Federal Reserve Banks today. Tenders were invited for $2,300,000,00C
or thereabouts, of 91-day bills and for $1,600,000,000, or thereabouts, of 182-day
bills. The details of the two series are as follows:
HANGE OF ACCEPTED
COMPETITIVE BIDS:
High
Low
Average
91-day Treasury bills
maturing December 2, 1971
Approx. Equiv.
Price
Annual Rate
98.872
98.844
98.850
4.462%
4.573%
4.549%
182-day Treasury bills
maturing March 2, 1972
Approx. Equiv.
Price
Annual Rate
97.614 ~
97.560
97.588
Y
4.720%
4.826%
4. 7711~
~ Excepting 2 tenders totaling $600,000
33% of the amount of 91-day bills bid for at the low price was accepted
84% of the amount of 182-day bills bid for at the low price was accepted
roTAL 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
TO'.rALS
A.12plied For
21,790,000
2,173,410,000
20,010,000
21,050,000
3,100,000
22,805,000
149,625,000
33,415,000
29,480,000
28,595,000
28,475,000
84,790,000
Acce.12ted
AI2I21ied For
$ 10,740,000
22,270,000
$
1,978,630,000
3,086,025,000
15,020,000
31,165,000
27,405,000
37,180,000
10,470,000
19,070,000
29,760,000
52,010,000
64,355,000
170,725,000
30,440,000
50,720,000
20,550,000
32,385,000
31,295,000
43,295,000
15,760,000
37,760,000
65,810,000
186,205,000
$3,768,810,000
$2,300,235,000
$
£I
$2,616,545,000
Accerted
$1,490,000
1,323,330,000
10,010,000
21,050,000
3,100,000
17,305,000
94,625,000
22,115,000
28,480,000
21,435,000
6,475,000
40,690,000
$1,600,105,000 ~
~ Includes $231,740,000 noncompetitive tenders accepted at the average price of 98.850
$ 97,700,000 noncompeti ti ve tenders accepted at the average price of 97.588
These rates are on a bank discount basis. The equivalent coupon issue yields are
Rke
OI-dl'J:9' bills, and 4.97 % for the 182-day bills.
V Includes
Y
EXECUTIVE OFFICE OF THE PRESIDENT
UII16
C\'~C'r ne
s
Office of Pub lic Affairs
Room 812
Washington. DC 20416
Phone: 202-254-3010·
FOR IMMEDIATE RELEASE
August 31, 1971
COST OF LIVING COUNCIL
Q & A LIST #11
Attached are answers to frequently asked questions
about application and implementation of the 90-day Wage
and Price freeze announced August 15 by President Nixon.
This set is in addition to previously released Q's and
A's.
The answers are rulings issued by the Cost of
Living Council, appointed by the President and chaired
by Secretary of the Treasury John B. Connally.
000
c-144
WAGES
Q:
If one company (A) purchased another company (B)
after August 15, 1971, can company B employees be
paid higher rates of compensation which may have
prevailed in company A during the base period?
A:
No.
A change in corporate ownership does not
justify a change in the wage ceilings applicable
to the jobs that were in Company B.
Q:
If a labor agreement has been reached prior to
August 14, but has not been placed in effect, can
the employees be awarded the additional wages?
A:
The new rate can be paid if labor and management had reached
an agreement and work was performed or wages accrued prior to
August 15 at the new wage rate.
Q:
A company had in existence prior to the freeze a
policy of increasing the pay of employees transferred to higher cost-of-living areas, for exampleNew York City.
Are such plans prohibited during
the freeze?
A:
No.
However, the employer must be able to document
the existence of such a plan prior to the freeze,
and must not increase the differential during the
freeze.
-1-
-2-
1./
v;J
PRICES
Q:
If one company (A) purchases another company (B)
and the two companies had different prices for
their products, what prices may they charge
after their consolidation?
A:
The price ceilings in force at the time of the
acquisition do not change.
The ceilings that
were applicable to the products of Company B
continue to apply to sales made from that part
of the merged company.
Q:
Can a utility company which produces electricity with imported
fuel pass on increases in cost of the fuel?
A:
No. The production of electricity by fuel is a transformation
of the foreign good from its original state, thus precluding passing
on the increased cost due to changes in the world market price. If,
however, the increase in fuel costs is due solely to the 10% surtax
on imports, the price of electricity may be increased on a cent~for
cent basis to reflect the increase resulting from the surcharge.
These increases are, of course, subject to review by federal or state
regulatory agencies.
Q:
A:
During the base period, a seller received a- l~rge
order for delivery during the freeze.
May thlS
order be included in the calculation of the price
ceiling for this product?
A transaction takes place when the seller ships
the product to the buyer, not when the order -is
received.
In the case of a service, the transaction takes place when the service is performed.
Each commodity or type of service is treated
separately and, if shipments are made to different
classes of purchasers under different terms,
.
separate ceilings are calculated for each commod:ty
for each class of purchaser.
The ceiling price lS
based on the record of all the units of each commodity shipped to each class of purchaser during
the base period, and is calculated as the hig~est
price at or above which 10% percent of the unlts
were shipped to a particular class of purchaser
during the base period.
-3RENTS
Q~
A ten-year lease was negotiated and the tenant
assumed possession on September 1, 1966.
The
terms of the lease called for monthly payments
at $300 for the first five years and $350 for
the second five years.
This contract specifies
a total amount to be paid within a specified time.
Since the payments are due to increase September 1,
can the increase be paid?
A:
No.
The stated total rental is based on the monthly
rate charged.
The monthly rate is frozen at $300
a month.
Q:
Mayan increase in property taxes be passed on to
the tenant if the lease specifically provides for
the tenant to pay increased taxes?
A:
No.
Jhe Department 01 the
TREASURY
"TON. D.C. 20220
TElEPHONE W04-2041
ATTENTION: FINANCIAL EDITOR
August 31, 1971
RESULTS OF TREASURy'S NOTE AUCTION
The Treasury announced that it has accepted $1.25 billion
of the $3.4 billion of tenders for its new 6-1/4% notes to be
dated September 8, 1971, maturing November 15, 1976, which were
auctioned today. The range of accepted bids was as follows:
Price
High
Low
Average
101.44
101.00
101.14
Approximate Yield
5.916%
6.015%
5.984%
Accepted tenders include 28% of the amount bid at the low
price, and $0.3
billion of noncompetitive tenders accepted at
the average price.
Treas.
HJ
10
.A13P4
v.174
U.S. Treasury Dept.
Press Releases
Treas.
HJ
10
.A13P4
U.S. Treasury Dept.
A.UTHOR
Press Releases
TillE
v.174
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