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    "localId": "1534885",
    "label": "1975/11/07 - Governor Linwood Holton and Angus Powell",
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    "title": "1975/11/07 - Governor Linwood Holton and Angus Powell",
    "citationUrl": "https://catalog.archives.gov/id/1534885",
    "collections": [
        "James M. Cannon Files (Ford Administration)",
        "James Cannon's Meetings Files"
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    "subjects": [
        "Inflation (Finance)"
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    "ocrText": "The original documents are located in Box 53, folder \"1975/11/07 - Governor Linwood\nHolton and Angus Powell\" of the James M. Cannon Files at the Gerald R. Ford\nPresidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nDigitized from Box 53 of the James M. Cannon Papers at the Gerald R. Ford Presidential Library\nMEETING WITH GOVERNOR LINWOOD\nFriday, November 7,1979\nJMCs Office\n2:00 p.m.\nHOLTON AND Cancelled ANGUS POWELL\n7500521\nTHE WHITE HOUSE\nWASHINGTON\nOctober 10, 1975\nMEMORANDUM FOR:\nJIM CANNON\nFROM:\nPAUL LEACH\nSUBJECT:\nE. Angus Powell Paper\nThis paper covers a lot of old ground, e.g., we must \"bring\nGovernment, Business and Labor together in a common effort\nto eliminate the root causes of Inflation.\"\nI would recommend against a meeting with the President\nUnless Powell (or Holton) is someone you want to court, I\nthink a meeting with you would also be relatively unproductive.\nTo the President of the United States\nHOW TO ATTACK INFLATION\nAND RELATED MATTERS\nby\nE. Angus Powell\nRichmond, Virginia\nBusiness Executive, Former or Present Member\nof Boards of Trustees of Institutions of Secondary\nand Higher Education, Corporate and Bank Boards,\nand the Federal Reserve Bank Board of Richmond, Va.\nSeptember 1975\nThe program outlined herein represents my\npersonal views on this subject as the result\nof years of research and concern over the\nimpact and effects of Inflation on America\neconomically and morally.\n1\nINTRODUCTION\nThe President and the Congress has the opportunity as well\nas the responsibility to successfully attack Inflation. There is no painless\nand simple answer to the disease of inflation and it will take time to\naccomplish the ultimate goals because the economic cancer called Inflation\nhas a head start and is well entrenched. Inflation is one of the major\ncauses of the current recession (or depression).\nAny attempt to resolve this scourge will fail unless the program\nis designed specifically to bring Government, Business and Labor together\nin a common effort to eliminate the root causes of Inflation. Each of the\nabove groups must share a measure of responsibility for Inflation.\nCorrespondingly, each group, as well as each American citizen, has a\ntremendous stake in the outcome of this battle. If it is lost, the alternatives\nare frightening.\nThis is no time to pass the buck. This is the time for innovative,\nfresh and constructive thinking on the part of our Government Leaders,\nBusiness and Professional Leaders, and Trade Union Leaders. We must\nanalyze and critique the past to chart our future course. But it is dangerous\nand wishful thinking if anyone thinks we can turn the clock back. Rather\nwe must move ahead with a program to move America toward a new era of\n\"Super-Capitalism\" under which many millions more of American working men\nand women share in the profits and/or the equity of their respective companies,\nthereby receiving premium pay on the basis of a job well done rather than\n2\ncontinue the present uneconomic practice of getting more and more\nfor less and less.\nThe Government must and can lead the way because of the powers\nvested in it.\n1. It must set the proper example:\n(a) In the area of Fiscal Responsibility.\n(b) In the area of Bureaucratic Practices which involve\nexcessive payrolls and administrative authority without corresponding\naccountability.\n2. Pass Tax Legislation designed to encourage our American Free\nEnterprise System to move ahead vigorously:\n(a) To create Investment Capital in the private sector\nthrough increased profits that is needed to create jobs and support\ngovernment commitments.\n(b) To spread the base of capitalism to a higher\npercentage of American citizens (voters).\n(c) To encourage business and labor to join in a common\neffort to excel in their respective enterprises by reducing costs,\nimproving quality and increasing profits. Such goals are not only\nimportant domestically but are needed also to strenghten our ability\nto meet foreign competition in all markets.\n3\nTo set the stage and lead the way, the President and the\nCongress must enact legislation that afforda major tax relief for\ncompanies that adopt programs designed to unify our people and to\ncreate capital to generate business expansion and jobs, and move\nAmerica ahead economically and morally. Further, Congress must\ndemonstrate its commitment to live within the resources of the country.\nThere is a logical and sensible way the above can be\naccomplished.\n4\nREALISTIC CONSIDERATIONS\nThere are fundamentals that have to be accounted for and duly\nrecognized if any orderly and comprehensive attack on Inflation is to\nbe effective. The attack has to be on a broad front and must take into\naccount the following:\n1. Inflation is a political issue of the first magnitude and\nthe solution must be politically acceptable not only to Congress but\nalso to business and labor and a majority of the American voters.\n2. It is an utter waste of time to continue policies and practices\nwhich to date have produced our present predicament. Consequently,\nthe solution lies in taking a fresh look regarding the entire subject of\nInflation and its causes and how it can be stopped.\n3. The control of money rates alone by the Federal Reserve can\nnot do the job nor can wage and price controls. This is a proven fact as\nevidenced by the conditions which exist today. The basic solution to\nInflation under our free enterprise system (capitalism) is to stabilize costs\nand get our productive capacity more in line with demand requirements -\nAmericans must work smarter, and harder if necessary, and give value\nreceived and take pride in what they do.\nIt is obvious that because of certain basic shortages that are\ndeveloping in the field of energy and certain basic raw materials, some\ntype of appropriate governmental controls or guidelines will be needed\nin these areas.\n5\n4. (a) Ask a labor leader what are the major causes of Inflation\nand he will usually blame excessive profits and the greediness of business- -\nmen, and the Republican Party.\n(b) Ask a businessman the same question and he will blame\nmonopolistic and partisan labor laws and excessive government spending\nand bureaucracy.\n(c) Ask a politician this question and his answer will be\ngoverned to a large extent by the thinking and pressure of his constituents.\nThe fact is that Government, Labor and Business are to blame for Inflation.\n5. To accomplish the above objectives we must acknowledge the\nfact that if the private free enterprise system is to survive under a democracy\nwhere one man has one vote and where the majority vote rules, we must\nupdate our economic and business system to parallel in concept our democratic\npolitical system -- we must institute a program that is designed to make the\nmajority of the American working men and women in this country capitalists\nin fact. The place to start is to encourage, but not force, industry to\ninstitute substantive profit sharing and stock purchase plans for its own\nemployees. If this program is executed fairly and sensibly, the trade off\nwould be that the demand for across the board wage increases in industry\nwithout regard to productivity would be tempered substantially. On the other\nhand, the economic right of American workers would be substantially\nstrenghtened and the motivational impact would be exceptional.\n6\nTHE SOLUTION RESTS IN THE HANDS OF\nTHE FEDERAL GOVERNMENT\nMany years ago Chief Justice John Marshall said, \"The power\nto tax is the power to destroy\". This classic statement has been confirmed\non many sad occasions in the past.\nConversely, the proper use of the Taxing Power by the government\nwill result in stimulating desirable and constructive action by corporate\nas well as private citizens. This is an established principle already\nemployed by the government.\nThere is no conceivable simple solution to combat Inflation but\na decisive step will result if the Congress will promptly enact the following\ntax legislation designed to attack the economic and moral cancer facing\nAmerica as a result of Inflation:\n1. The law would permit any company to deduct as a business\nexpense in figuring income for tax purposes, 6% to 8% of invested capital\n(net worth), provided the company does the following: (The rate would be\ndetermined by a designated government agency and should relate in a\nreasonable way to appropriate current money rates.)\n(a) Pay out the entire sum deducted in dividends to the\ncompany's shareholders. This would put substantial sums of\nmoney in circulation through the private sector that would in\nvarious ways stimulate investment. Federal tax revenues on\n7\nthis money, in all likelihood, would be as high as\nrevenues collected directly from corporations under our\npresent system because of the substantial roll over of\nthese funds and the regenerative effects they would have\nin the marketplace.\n(b) The company would have to institute an approved\nprofit sharing and/or stock purchase plan for its employees\nthat would be substantive. In order to qualify the plan as\nan approved plan for tax purposes the share of profits would\nhave to be in the range of 20 to 30 percent of pre-tax profits,\ndepending upon the nature of the business and the capital\nrequirements per employee. The profit sharing fund would\nbe used: (1) For cash distribution to all employees - such\ndistribution to offset demands for any general pay increase\nhigher than a company's ability to pay such increases without\nraising prices in order to maintain a necessary profit level\nto finance the needs of the company. (2) To finance the\npurchase by the employees of the company's stock. In\nthe case of listed corporations the objective would be that\napproxim ately 20% to 35% of the corporate stock would\neventually be owned by a large percentage of the employees.\n8\n(c) When General Wood, President and Chairman of\nSears Roebuck for many years, installed such a plan years\nago, his objective was to reward Sears employees for\ntheir contribution to the success of the company and upgrade\ntheir attitude and effectiveness, and thereby make Sears\na more successful company. This plan was not installed\nafter Sears became highly successful. Rather the plan\nhas been a major factor in creating Sears' success and\nthousands of Sears' employees have become substantial\nstockholders in Sears. (The Profit Sharing Research\nFoundation, 1718 Sherman Avenue, Evanston, Illinois\n60201 (phone 312 869-8787) can furnish substantial\ninformation on profit sharing in American industries today.)\n2. Companies adopting the above program would be protected\nby law against economic strikes or boycotts. As stockholders and\nsubstantive profit sharers, employees would become substantial economic\npartners in the company and receive remuneration as a result of the\nsuccess of a company. Obviously economic adversity would likewise be\nshared by employees under this plan. The divisiveness which exists between\nlabor and their respective companies would be greatly reduced, if not totally\neliminated. The role of trade union leaders would continue to be that of\n9\nmonitoring the interests of hourly paid employees but in addition,\ntheir interests and able efforts would be directed more constructively\nto the common objectives of the company in question. The motivational\nimpact on a national basis would be tremendous. Furthermore, a system\nthat actively encourages employees to become equity owners, will make\nbetter citizens and Americans of them, as well as higher income earners.\n3. Legislate a new labor law to create a labor tribunal system\nequivalent to our Federal Courts that would have highly specialized\njudges properly appointed and qualified to handle and adjudicate labor\nmanagement disputes.\n4. Institute laws that would permit companies to receive tax\ncredits as an incentive not to increase prices during periods of Inflation.\nThe program outlined above is innovative in many ways. It is\nnot unproven, however. America is in trouble - to deny it it utterly foolish.\nYet our leaders in government, business, labor and the professions\ncan meet and resolve this challenge if we will put the well-being of our\ncountry first. We must unify our efforts and take a fresh approach in solving\nour problem for which all of us must share part of the blame.\nThe worst thing we can do is to try to hang the cross on the other\nfellow. We must pull together and be of a mind to try to move America ahead\n10\nand save our system of government and business that has made us the\nGreat Nation America is. The alternatives are frightening. This is no\ntime to flounder or permit our own self-interest to prevail.\nE. Angus Powell\nSeptember 1975\nRichmond, Virginia\nfri. Mov. 7\nZ:00\nHOGAN & HARTSON\n815 CONNECTICUT AVENUE\nFRANK J. HOGAN (1677-1944)\nNELSON T. HARTSON (RETIRED)\nWASHINGTON, D. C. 20006\nEDMUND JONES\nKEVIN P. CHARLES\nGEORGE W. MILLER\nSEYMOUR S. MINTZ\nJEROME N. SONOSKY\nDOUGLAS L. PARKER\nGEORGE E. MONK\nJAMES A. HOURIHAN\nRAYMOND E. VICKERY, JR.\nTELEPHONE (202) 331-4500\nEDWARD A. MCDERMOTT\nGERALD E. GILBERT\nERIC A.VON SALZEN\nFRANK F. ROBERSON\nJOHN M. FERREN\nALPHONSO A. CHRISTIAN, II\nMERLE THORPE, JR.\nAUSTIN S. MITTLER\nGAIL STARLING MARSHALL\nCABLE \"HOGANDER WASHINGTON\"\nLEE LOEVINGER\nVINCENT H. COHEN\nMARTIN MICHAELSON\nCORWIN R. LOCKWOOD\nHOWARD R. MOSKOF\nWILLIAM A. BRADFORD, JR.\nWILLIAM T. PLUMB, JR.\nGEORGE U. CARNEAL\nCURTIS E. VON KANN\nTELEX 89-2757\nc. FRANK REIFSNYDER\nGARY L. CHRISTENSEN\nDENNIS J. WHITTLESEY\nGEORGE W. WISE\nOWEN M. JOHNSON, JR.\nM. LANGHORNE KEITH\nROBERT K. EIFLER\nBOB GLEN ODLE\nSAMUEL SHEPARD JONES, JR.\nEDGAR W. HOLTZ\nRICHARD S. RODIN\nWILLIAM S. REYNER, JR.\nWRITER'S DIRECT DIAL NUMBER\nJOHN P. ARNESS\nSTUART PHILIP ROSS\nCHRISTINE O. COOK\nFRANCIS L. CASEY, JR.\nRICHARD J. M. POULSON\nPHILIP C. LARSON\nE. BARRETT PRETTYMAN,JR.\nPETER W. TREDICK\nDAVID J. SAYLOR\nARNOLD c. JOHNSON\nANTHONY S. HARRINGTON\nROBERT R. BRUCE\n331-5753\nLINWOOD HOLTON\nALFRED JOHN DOUGHERTY\nHENRY POLMER\nJOHN J. ROSS\nPETER F. ROUSSELOT\nLEONARD E. SANTOS\nHOWARD F. ROYCROFT\nJAMES J. ROSENHAUER\nR. CLARK WADLOW\nROBERT H. KAPP\nSARA-ANN DETERMAN\nALLEN R. SNYDER\nSHERWIN J. MARKMAN\nJOSEPH M. HASSETT\nSAMUEL R. BERGER\nROBERT J. ELLIOTT\nRICHARD B. RUGE\nH. TOOD MILLER\nJAY E. RICKS\nDAVID S. TATEL\nANNE WHITE FOLEY\nROBERT M. JEFFERS\nJOE CHARTOFF\nALAN J. WILENSKY\nDENNIS J. LEHR\nMARVIN J. DIAMOND\nPATRICK M. RAHER\nARTHUR J. ROTHKOPF\nDAVID J. HENSLER\nJAMES H. SNEED\nJ. WILLIAM FULBRIGHT\nOF COUNSEL\nOctober 20, 1975\nMr. James Cannon\nExecutive Director\nThe President's Domestic Council\nThe White House\nWashington, D. C. 20501\nDear Jim:\nEnclosed is a copy of Angus Powell's letter indicating\na strong desire to talk to you about his productivity program.\nIf you do have time to see him, I would appreciate it\nand will be pleased to set it up if you can give me a couple\nof dates.\nCordially yours,\nis\nEnc.\nJampun\nLinwood Holton\nLH:mf\nof\nLAND &\nCHESTERFIELD LAND & TIMBER CORP.\n1005 SYCAMORE SQUARE\nSUITE 202\nMIDLOTHIAN, VIRGINIA 23113\nCHESTERFIELD\nTIMBER CORP\nPHONE (804) 794-4464\nOctober 16, 1975\nE. ANGUS POWELL\nPresident\nThe Honorable Linwood Holton\nHogan & Hartson\n815 Connecticut Avenue\nWashington, D. C., 20006\nDear Lin:\nThank you very much for your letter of October 10 and\nyour comments regarding the possibility of a visit with\nyour friend Jim Cannon. I would hope very much that\nhe would be able to give me an hour of his time for\nthe questions involved and the programs outlined de-\nserve the right comments and explanations.\nI have a few short trips out of the city routinely but\ncan adjust my schedule if given some advance notice.\nI am rather tied up through the week of October 20.\nHope you and Jinks may have a chance to visit\nRichmond and, if so, that we may be able to catch a\nglimpse of you. Very best regards.\nSincerely,\nanons\nAngus\nEAP:c\n10"
}