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FROM
Darryl R.

I

’

Francis

‘ i

Speech before Osceola, Ark. Rotary Club
At Osceola, Ark. on August 30, 1966




NATIONAL FINANCIAL-TRENDS AND AGRICULTURE

R

today -

H

re - The

ir

Jemand.

Government's concern with optimum utilization
of resources.
Production.

Plant - Labor.

A necessary influence to long-run stability.
Accepted doctrine among economic thinkers.
The doctrine in action - from 1961.

Public programs
The tax cut - a series over the period

The Vietnam war

The resulting fiscal pressure.
The high employment budget.
Reinforcement by monetary policy




Normal counteraction absent

-2Rates of growth of money.

6 from June

to June.

Supply fell in July and August to date.
The Fiscal-Monetary Mix -

is^Dual expansionary forces
The build-up to excessive demand.
Over-taxation of our ability to produce.

Plant capacity - 93% (over optimum level)
k

Labor capacity - (4 million vs. 4 million

plus)
Prices -

Wholesale - steady '58 - '64

Starting rise from n^i^964 (64 to 65
Rises have accelerated (so far '66
about 4%)

Industrial component since last
year 3% -1965 year 1.49%

Cost of Living '58 to '64 - 1.2% annual rate.

\



Past year at 3%
Since Jan. '66 - 3 1/2%.

-3Money market reactions - supply and demand.

Tremendous demand for credit.

Government
Business to meet demand

xpansion

Past 12 months -18%
Jan. to July 22%
May to July - 32% annual rate.
The resulting tightness in money markets.

Despite record growth of money supply.
Demand forces rates upward

What

State of economic intoxication may lead to

National economic frustration.
Everybody has it so good.

Close our eyes to threatening clouds of
inflation.
We seem unwilling to take chances with




-4 our present comfort to do what's needed to
assure long-run well-being.
How it can be solved - with a lag

Fiscal adjustment
Reduce spending
Increase taxes - while holding spending.
Restore the Fiscal-Monetary Mix.

On monetary policy do the trick?
Perhaps - if - - but

If - economic forces only concern
But - social and political issues involved.
Restrictive monetary - expansive Fiscal

Non-selective in impact.
Somebody gets hurt - housing.

Social to political issues.

Then comes talk of legal control - And
the great debate goes on.
Prices continue to move - They don't




roll back.
Inflation continues to take its toll.

-5The solution -

Restoration of Fiscal-Monetary Mix.

Agriculture Production assets quadrupled since 1940

A greatJnf lux of capita I
Less than 50 td almost 200.

Concern about future I don't share it.

The long-run outlook
Additional capital need

Individual reinvestment
Family cooperation

Public
Loans

Cost of loan funds will vary
Supplies will be adequate
Credit supplements by equities.