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1975/11/07 - Governor Linwood Holton and Angus Powell
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1534885
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1975/11/07 - Governor Linwood Holton and Angus Powell
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The original documents are located in Box 53, folder "1975/11/07 - Governor Linwood
Holton and Angus Powell" of the James M. Cannon Files at the Gerald R. Ford
Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 53 of the James M. Cannon Papers at the Gerald R. Ford Presidential Library
MEETING WITH GOVERNOR LINWOOD
Friday, November 7,1979
JMCs Office
2:00 p.m.
HOLTON AND Cancelled ANGUS POWELL
7500521
THE WHITE HOUSE
WASHINGTON
October 10, 1975
MEMORANDUM FOR:
JIM CANNON
FROM:
PAUL LEACH
SUBJECT:
E. Angus Powell Paper
This paper covers a lot of old ground, e.g., we must "bring
Government, Business and Labor together in a common effort
to eliminate the root causes of Inflation."
I would recommend against a meeting with the President
Unless Powell (or Holton) is someone you want to court, I
think a meeting with you would also be relatively unproductive.
To the President of the United States
HOW TO ATTACK INFLATION
AND RELATED MATTERS
by
E. Angus Powell
Richmond, Virginia
Business Executive, Former or Present Member
of Boards of Trustees of Institutions of Secondary
and Higher Education, Corporate and Bank Boards,
and the Federal Reserve Bank Board of Richmond, Va.
September 1975
The program outlined herein represents my
personal views on this subject as the result
of years of research and concern over the
impact and effects of Inflation on America
economically and morally.
1
INTRODUCTION
The President and the Congress has the opportunity as well
as the responsibility to successfully attack Inflation. There is no painless
and simple answer to the disease of inflation and it will take time to
accomplish the ultimate goals because the economic cancer called Inflation
has a head start and is well entrenched. Inflation is one of the major
causes of the current recession (or depression).
Any attempt to resolve this scourge will fail unless the program
is designed specifically to bring Government, Business and Labor together
in a common effort to eliminate the root causes of Inflation. Each of the
above groups must share a measure of responsibility for Inflation.
Correspondingly, each group, as well as each American citizen, has a
tremendous stake in the outcome of this battle. If it is lost, the alternatives
are frightening.
This is no time to pass the buck. This is the time for innovative,
fresh and constructive thinking on the part of our Government Leaders,
Business and Professional Leaders, and Trade Union Leaders. We must
analyze and critique the past to chart our future course. But it is dangerous
and wishful thinking if anyone thinks we can turn the clock back. Rather
we must move ahead with a program to move America toward a new era of
"Super-Capitalism" under which many millions more of American working men
and women share in the profits and/or the equity of their respective companies,
thereby receiving premium pay on the basis of a job well done rather than
2
continue the present uneconomic practice of getting more and more
for less and less.
The Government must and can lead the way because of the powers
vested in it.
1. It must set the proper example:
(a) In the area of Fiscal Responsibility.
(b) In the area of Bureaucratic Practices which involve
excessive payrolls and administrative authority without corresponding
accountability.
2. Pass Tax Legislation designed to encourage our American Free
Enterprise System to move ahead vigorously:
(a) To create Investment Capital in the private sector
through increased profits that is needed to create jobs and support
government commitments.
(b) To spread the base of capitalism to a higher
percentage of American citizens (voters).
(c) To encourage business and labor to join in a common
effort to excel in their respective enterprises by reducing costs,
improving quality and increasing profits. Such goals are not only
important domestically but are needed also to strenghten our ability
to meet foreign competition in all markets.
3
To set the stage and lead the way, the President and the
Congress must enact legislation that afforda major tax relief for
companies that adopt programs designed to unify our people and to
create capital to generate business expansion and jobs, and move
America ahead economically and morally. Further, Congress must
demonstrate its commitment to live within the resources of the country.
There is a logical and sensible way the above can be
accomplished.
4
REALISTIC CONSIDERATIONS
There are fundamentals that have to be accounted for and duly
recognized if any orderly and comprehensive attack on Inflation is to
be effective. The attack has to be on a broad front and must take into
account the following:
1. Inflation is a political issue of the first magnitude and
the solution must be politically acceptable not only to Congress but
also to business and labor and a majority of the American voters.
2. It is an utter waste of time to continue policies and practices
which to date have produced our present predicament. Consequently,
the solution lies in taking a fresh look regarding the entire subject of
Inflation and its causes and how it can be stopped.
3. The control of money rates alone by the Federal Reserve can
not do the job nor can wage and price controls. This is a proven fact as
evidenced by the conditions which exist today. The basic solution to
Inflation under our free enterprise system (capitalism) is to stabilize costs
and get our productive capacity more in line with demand requirements -
Americans must work smarter, and harder if necessary, and give value
received and take pride in what they do.
It is obvious that because of certain basic shortages that are
developing in the field of energy and certain basic raw materials, some
type of appropriate governmental controls or guidelines will be needed
in these areas.
5
4. (a) Ask a labor leader what are the major causes of Inflation
and he will usually blame excessive profits and the greediness of business- -
men, and the Republican Party.
(b) Ask a businessman the same question and he will blame
monopolistic and partisan labor laws and excessive government spending
and bureaucracy.
(c) Ask a politician this question and his answer will be
governed to a large extent by the thinking and pressure of his constituents.
The fact is that Government, Labor and Business are to blame for Inflation.
5. To accomplish the above objectives we must acknowledge the
fact that if the private free enterprise system is to survive under a democracy
where one man has one vote and where the majority vote rules, we must
update our economic and business system to parallel in concept our democratic
political system -- we must institute a program that is designed to make the
majority of the American working men and women in this country capitalists
in fact. The place to start is to encourage, but not force, industry to
institute substantive profit sharing and stock purchase plans for its own
employees. If this program is executed fairly and sensibly, the trade off
would be that the demand for across the board wage increases in industry
without regard to productivity would be tempered substantially. On the other
hand, the economic right of American workers would be substantially
strenghtened and the motivational impact would be exceptional.
6
THE SOLUTION RESTS IN THE HANDS OF
THE FEDERAL GOVERNMENT
Many years ago Chief Justice John Marshall said, "The power
to tax is the power to destroy". This classic statement has been confirmed
on many sad occasions in the past.
Conversely, the proper use of the Taxing Power by the government
will result in stimulating desirable and constructive action by corporate
as well as private citizens. This is an established principle already
employed by the government.
There is no conceivable simple solution to combat Inflation but
a decisive step will result if the Congress will promptly enact the following
tax legislation designed to attack the economic and moral cancer facing
America as a result of Inflation:
1. The law would permit any company to deduct as a business
expense in figuring income for tax purposes, 6% to 8% of invested capital
(net worth), provided the company does the following: (The rate would be
determined by a designated government agency and should relate in a
reasonable way to appropriate current money rates.)
(a) Pay out the entire sum deducted in dividends to the
company's shareholders. This would put substantial sums of
money in circulation through the private sector that would in
various ways stimulate investment. Federal tax revenues on
7
this money, in all likelihood, would be as high as
revenues collected directly from corporations under our
present system because of the substantial roll over of
these funds and the regenerative effects they would have
in the marketplace.
(b) The company would have to institute an approved
profit sharing and/or stock purchase plan for its employees
that would be substantive. In order to qualify the plan as
an approved plan for tax purposes the share of profits would
have to be in the range of 20 to 30 percent of pre-tax profits,
depending upon the nature of the business and the capital
requirements per employee. The profit sharing fund would
be used: (1) For cash distribution to all employees - such
distribution to offset demands for any general pay increase
higher than a company's ability to pay such increases without
raising prices in order to maintain a necessary profit level
to finance the needs of the company. (2) To finance the
purchase by the employees of the company's stock. In
the case of listed corporations the objective would be that
approxim ately 20% to 35% of the corporate stock would
eventually be owned by a large percentage of the employees.
8
(c) When General Wood, President and Chairman of
Sears Roebuck for many years, installed such a plan years
ago, his objective was to reward Sears employees for
their contribution to the success of the company and upgrade
their attitude and effectiveness, and thereby make Sears
a more successful company. This plan was not installed
after Sears became highly successful. Rather the plan
has been a major factor in creating Sears' success and
thousands of Sears' employees have become substantial
stockholders in Sears. (The Profit Sharing Research
Foundation, 1718 Sherman Avenue, Evanston, Illinois
60201 (phone 312 869-8787) can furnish substantial
information on profit sharing in American industries today.)
2. Companies adopting the above program would be protected
by law against economic strikes or boycotts. As stockholders and
substantive profit sharers, employees would become substantial economic
partners in the company and receive remuneration as a result of the
success of a company. Obviously economic adversity would likewise be
shared by employees under this plan. The divisiveness which exists between
labor and their respective companies would be greatly reduced, if not totally
eliminated. The role of trade union leaders would continue to be that of
9
monitoring the interests of hourly paid employees but in addition,
their interests and able efforts would be directed more constructively
to the common objectives of the company in question. The motivational
impact on a national basis would be tremendous. Furthermore, a system
that actively encourages employees to become equity owners, will make
better citizens and Americans of them, as well as higher income earners.
3. Legislate a new labor law to create a labor tribunal system
equivalent to our Federal Courts that would have highly specialized
judges properly appointed and qualified to handle and adjudicate labor
management disputes.
4. Institute laws that would permit companies to receive tax
credits as an incentive not to increase prices during periods of Inflation.
The program outlined above is innovative in many ways. It is
not unproven, however. America is in trouble - to deny it it utterly foolish.
Yet our leaders in government, business, labor and the professions
can meet and resolve this challenge if we will put the well-being of our
country first. We must unify our efforts and take a fresh approach in solving
our problem for which all of us must share part of the blame.
The worst thing we can do is to try to hang the cross on the other
fellow. We must pull together and be of a mind to try to move America ahead
10
and save our system of government and business that has made us the
Great Nation America is. The alternatives are frightening. This is no
time to flounder or permit our own self-interest to prevail.
E. Angus Powell
September 1975
Richmond, Virginia
fri. Mov. 7
Z:00
HOGAN & HARTSON
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JAMES H. SNEED
J. WILLIAM FULBRIGHT
OF COUNSEL
October 20, 1975
Mr. James Cannon
Executive Director
The President's Domestic Council
The White House
Washington, D. C. 20501
Dear Jim:
Enclosed is a copy of Angus Powell's letter indicating
a strong desire to talk to you about his productivity program.
If you do have time to see him, I would appreciate it
and will be pleased to set it up if you can give me a couple
of dates.
Cordially yours,
is
Enc.
Jampun
Linwood Holton
LH:mf
of
LAND &
CHESTERFIELD LAND & TIMBER CORP.
1005 SYCAMORE SQUARE
SUITE 202
MIDLOTHIAN, VIRGINIA 23113
CHESTERFIELD
TIMBER CORP
PHONE (804) 794-4464
October 16, 1975
E. ANGUS POWELL
President
The Honorable Linwood Holton
Hogan & Hartson
815 Connecticut Avenue
Washington, D. C., 20006
Dear Lin:
Thank you very much for your letter of October 10 and
your comments regarding the possibility of a visit with
your friend Jim Cannon. I would hope very much that
he would be able to give me an hour of his time for
the questions involved and the programs outlined de-
serve the right comments and explanations.
I have a few short trips out of the city routinely but
can adjust my schedule if given some advance notice.
I am rather tied up through the week of October 20.
Hope you and Jinks may have a chance to visit
Richmond and, if so, that we may be able to catch a
glimpse of you. Very best regards.
Sincerely,
anons
Angus
EAP:c
10