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Annual Convention of the Pennsylvania Bankers Association, Atlantic City, NJ, May 26, 1969
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Annual Convention of the Pennsylvania Bankers Association, Atlantic City, NJ, May 26, 1969
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Gerald R. Ford Congressional Papers
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The original documents are located in Box D27, folder "Annual Convention of the
Pennsylvania Bankers Association, Atlantic City, NJ, May 26, 1969" of the Ford
Congressional Papers: Press Secretary and Speech File 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. The Council 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States of America his copyrights in all of his unpublished writings in National Archives collections.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 D27 of The Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
ANNUAL CONVENTION OF THE PA. BANKERS ASSOC,
ATLANTIC CITY, NEW JERSEY, 10:30 A.M.
MONDAY, MAY 26, 1969
GOOD MORNING, GENTLEMEN: IT'S A
GREAT PLEASURE FOR ME TO JOIN YOU HERE IN
THIS EXCITING RESORT CITY.
I HAVE ALWAYS FELT AT HOME TALKING
Virgen WITH BANKERS BECAUSE I HAVE ALWAYS FELT
THEY HAD MY INTEREST AT HEART.
MARK TWAIN, OF COURSE, HAD A LITTLE
DIFFERENT OUTLOOK ON BANKERS. HE SAID
"A BANKER IS A FELLOW WHO LENDS YOU HIS
UMBRELLA WHEN THE SUN IS SHINING AND WANTS
IT BACK THE MINUTE IT BEGINS TO RAIN." "
my good frands
I HAVE A HUNCH MAYBE DAVID KENNEDY
AND BOB MAYO WISH THEY HAD GOTTEN THEIR
UMBRELLAS BACK BEFORE THEY LEFT CHICAGO FOR
FORD
WASHINGTON. BUT THEN SECRETARY KENNEDY
DIDN'T REALIZE THAT HOUSE BANKING AND
GERA
CURRENCY CHAIRMAN WRIGHT PATMAN CALLS HIMSELF
-2-
"THE LITTLE OLD RAINMAKER."
A
HOMESPUN PHILOSOPHER WHO ALSO
HAPPENED TO BE A SONG WRITER ONCE SAID,
"INTO EACH LIFE SOME RAIN MUST FALL
RIGHT NOW I THINK WE'RE ALL ENJOYING
our home + A
CONSIDERABLE QUANTITY OF SUNSHINE.
I RECALL A TIME LAST YEAR WHEN THE
MILITANTS IN THIS COUNTRY WERE SHOUTING THAT
THEY WERE GOING TO "TURN THIS COUNTRY
AROUND" OR BURN IT DOWN.
Hopefully t
medically
WE ARE TURNING THIS COUNTRY AROUND
slowly but surely
TURNING IT TOWARD PERMANENT PEACE AND
GENUINE
Because the PROSPERITY. vast majority of americans are becomeny alamed of & arrund
WE ARE TURNING THIS COUNTRY AROUND
AWAY FROM THE ARSONISTS AND ANARCHISTS.
THERE IS A NEW FIRE IN THIS COUNTRY --
THE FIRE OF FAITH. THE FIRES OF FAITH HAVE
BEEN RELIT IN THIS COUNTRY -- FAITH IN OUR
FREE INSTITUTIONS, FAITH IN THE FREE
ENTERPRISE SYSTEM, FAITH THAT THE PRINCIPLE
-3-
OF FREEDOM ULTIMATELY WILL PREVAIL IN THE
SCALES OF WORLD JUSTICE, FAITH THAT OUR
NATIONAL GOVERNMENT WORKING WITH STATE AND
LOCAL LEADERS AND OUR PRIVATE INSTITUTIONS
CAN SOLVE THE CRUSHING PROBLEMS OF OUR
TIMES.
THERE HAS BEEN A VAST CHANGE IN THE
MOOD OF THE AMERICAN PEOPLE, A SHIFT IN
THE TIDE. THERE IS A TIDE FOR CHANGE, BUT
IT IS A TIDE FOR CHANGE BASED ON CAREFULLY
REASONED DECISIONS AND ON THE GREAT FORCE
FOR GOOD THAT FLOWS FROM PEOPLE WORKING
WITH PEOPLE CHANGE RISING FROM EVOLUTION
AND NOT REVOLUTION.
THE FORCES OF REVOLUTION ARE AT WORK
IN THIS COUNTRY BUT THEY WILL NOT PREVAIL.
AS THE GREAT PHILOSOPHER PLUTARCH PUT IT:
"PERSEVERANCE IS MORE PREVAILING THAN
GERALD LEGARET
VIOLENCE; AND MANY THINGS WHICH CANNOT BE
OVERCOME WHEN THEY ARE TAKEN TOGETHER YIELD
-4-
THEMSELVES WHEN TAKEN LITTLE BY LITTLE."
WE HAVE BEEN LIVING UNDER A NEW
NATIONAL ADMINISTRATION FOR FOUR MONTHS.
THE ADMINISTRATION CHANGED, BUT THE PROBLEMS
REMAINED. THEY DID NOT DISAPPEAR.
ONE DIVIDEND FROM A CHANGE IN
NATIONAL ADMINISTRATIONS IS A CHANGE IN
OUTLOOK -- REEXAMINATION OF THE PROBLEMS,
A SEARCHING-OUT OF DEFICIENCIES, A DEVISING
OF NEW APPROACHES.
THE NEW ADMINISTRATION HAS FIRST OF
ALL ESTABLISHED THE PROCESS OF EFFECTIVE
DECISION-MAKING AND HAS GIVEN OUR NATIONAL
PROBLEMS FRESH ANALYSIS.
2 believe
AS A RESULT, WE HAVE MADE SUBSTANTIAL
PROGRESS IN JUST FOUR MONTHS -- AS A NATION
AND AS A PEOPLE.
THIS IS TRUE BY ANY
STANDARD
WE NOW SEE A REALISTIC MOVEMENT
TOWARD PEACE IN VIETNAM SOME PROGRESS
became The migotiators are ducusing issues not the shape f The table
-5-
TOWARD CREATING A FRAMEWORK FOR
SRAELI -ARAB PEACE NEGOTIATIONS IN THE
MIDDLE EAST A PULLING TOGETHER OF THE
WESTERN ALLIANCE, AND STEPS TOWARD ARMS
CONTROL TALKS WITH THE SOVIET UNION.
WE HAVE MADE PROGRESS TOWARD
Supreme
organizal inms pronography t absept marchtics
COMBATING CRIME; PROGRESS TOWARD REBUILDING
OUR CITIES; PROGRESS TOWARD BRINGING
INFLATION UNDER CONTROL; PROGRESS TOWARD
REFORMING OUR TAX STRUCTURE.
THERE WILL BE TAX REFORM THIS
YEAR -- AND IT PROBABLY WILL GO BEYOND THE
NIXON ADMINISTRATION'S RECOMMENDATIONS.
THE NATIONAL MOOD UNDERSCORES THE NEED FOR
IT, AND CONGRESS WILL RESPOND.
ADMINISTRATION OFFICIALS ARE WORKING
CLOSELY WITH THE HOUSE WAYS AND MEANS
COMMITTEE. THE COMMITTEE IS ON SCHEDULE.
THE PLAN IS TO MOVE A TAX REFORM BILL
GERALD
DILBRARY
THROUGH THE HOUSE BEFORE THE CONGRESS TAKES
mid august
-6-
A SUMMER RECESS IN MID-AUGUST.
This is handget one
THIS POINT IT IS IMPOSSIBLE TO
SAY WHAT THE WAYS AND MEANS COMMITTEE WILL
DO IN DEALING WITH TAX-EXEMPT BONDS. THIS
IS THE MOST COMPLEX PROBLEM FACING THE
COMMITTEE. as you know There are constitutional X other
THERE IS SOME TALK OF TAXING STATE make
problems. 2 do not agree with The political demogozues who it
appear
AND MUNICIPAL BONDS AND THEN REIMBURSING there
is
Mr
ment wa TH
STATE AND LOCAL UNITS OF GOVERNMENT FOR THE
ADDITIONAL INTEREST COSTS RESULTING FROM
ELIMINATION OF TAX EXEMPTION. BUT WHO WOULD
DECIDE EXACTLY HOW MUCH INTEREST ADD-ON
OCCURRED IN EACH INSTANCE? HOW WOULD IT BE
COMPUTED?
AND OF COURSE THERE ALSO IS THE
INEQUITY TO INDIVIDUALS THAT ARISES FROM
TAXING NEW ISSUES OF STATE AND MUNICIPAL
BONDS WHILE OUTSTANDING BONDS CONTINUE TO
BE TAX-EXEMPT.
NOW MEETING IN EXECUTIVE SESSION,
-7-
THE WAYS AND MEANS COMMITTEE HAS BEFORE IT
PRESIDENT NIXON'S TAX REFORM PROPOSALS PLUS
THE CONTINUING ADVICE OF ADMINISTRATION
OFFICIALS AND THE BENEFIT OF TESTIMONY
TAKEN IN THE COMMITTEE'S PUBLIC HEARINGS.
THE LEGISLATION SHAPED IN THESE EXECUTIVE
SESSIONS COULD BE QUITE FAR REACHING. BUT
ONE WOULD HAVE TO POSSESS THE WISDOM OF
SOLOMON TO PREDICT THE NET RESULT.
AT THIS POINT I WOULD LIKE TO SAY
A FEW WORDS ABOUT PROSPECTS FOR BANK HOLDING
COMPANY LEGISLATION IN THE 91st CONGRESS.
again
THE SHAPE OF THE LAW TO COME IS
UNCLEAR BUT I AM CONVINCED THE 91st CONGRESS
WILL ENACT SOME FORM OF BANK HOLDING COMPANY
LEGISLATION. AT THIS POINT, THE TIMING
ALSO IS UNCERTAIN.
AS YOU KNOW, THE NIXON ADMINISTRATION
HAS SPONSORED A BILL WHICH IS DIFFERENT IN
MANY RESPECTS FROM EITHER THE PATMAN OR
LIBRARY
-8-
PROXMIRE BILLS.
BECAUSE OF THE STRONG ANTI - BANK BIAS
OF CHAIRMAN PATMAN I DO NOT THINK THE
to put it mildly
BILL REPORTED OUT BY THE HOUSE BANKING AND
CURRENCY COMMITTEE WILL necessary DETERMINE THE
ULTIMATE FORM OF THE LEGISLATION AS ENACTED.
I WOULD ADD THAT I DO NOT THINK CONGRESS AS
A WHOLE WILL TREAT THIS SUBJECT IN PARTISAN
FASHION.
I WOULD LIKE TO SOUND THIS NOTE OF
CAUTION. I AM CONCERNED THAT MANY BANKERS
REGARD THIS SUBJECT AS PURELY A BANK HOLDING
COMPANY ISSUE. BANKERS EVERYWHERE SHOULD
REALIZE THAT THE EXTENT TO WHICH CONGRESS
DEFINES BANK-RELATED ACTIVITIES FOR HOLDING
COMPANIES IS BOUND. TO AFFECT THE FUTURE
DEFINITION OF RELATED ACTIVITIES FOR
INDIVIDUAL BANKS AS WELL.
YOU ALSO ARE INTERESTED IN THE
FORD LIBRARY
TRUTH-IN-LENDING ACT, WHICH WILL BECOME
-9-
EFFECTIVE IN MANY RESPECTS ON JUNE 30
THROUGH REGULATION Z. I AM AWARE THAT THE
BANKING INDUSTRY OPPOSED THIS LEGISLATION
TO SOME DEGREE. BUT MANY OF THE BANKING
INDUSTRY'S LEADERS NOW SEE THE SITUATION AS
A GREAT OPPORTUNITY FOR BANKING, AND I
AGREE.
MANY COMPETITIVE BENEFITS WILL RESULT
FOR BANKS FROM THE FACT THAT DISCLOSURE OF
ANNUAL FINANCE CHARGES WILL NOW BE REQUIRED
WITH REGARD TO CONSUMER CREDIT TRANSACTIONS
AND CREDIT ADVERTISING.
THERE IS ONE BY-PRODUCT OF THE
TRUTH-IN-LENDING ACT WHICH CONCERNS ME. AT
THE SAME TIME I SEE IT AS AN OPPORTUNITY
FOR OUR NATION'S BANKS.
IN MY VIEW, SPONSORS OF THE
LEGISLATION WERE OVERZEALOUS IN THEIR DESIRE
all the complicated mathematics
TO DISCLOSE EVERYTHING TO THE CONSUMER ABOUT
HIS OR HER CONSUMER CREDIT TRANSACTION. IT
-10-
APPEARS THAT ON A TYPICAL INSTALLMENT
CONTRACT REGULATION Z REQUIRES MORE THAN
20 SEPARATE COMPUTATIONS OF DOLLAR AND
PERCENTAGE FIGURES. OPEN-END CREDIT
on wen greater
AGREEMENTS WILL INVOLVE A SIMILAR NUMBER
OF COMPUTATIONS.
IN MANY CASES THE CONSUMER WE ARE
TRYING TO PROTECT WILL SIMPLY BECOME
CONFUSED. I FURTHER PREDICT THAT MANY
SMALL AND MEDIUM SIZE RETAILERS WILL EITHER
REFUSE TO GRANT CREDIT OR WILL TURN TO BANKS
FOR ASSISTANCE.
IN MANY INSTANCES, THE BANK CREDIT
CARD WILL BE THE MOST CONVENIENT ANSWER FOR
THE SMALL RETAILER.
FEDERAL RESERVE BOARD AND FEDERAL
TRADE COMMISSION REPRESENTATIVES HAVE BEEN
URGING LOCAL RETAILERS TO CONSULT ATTORNEYS
ON HOW TO COMPLY WITH THE TRUTH-IN-LENDING
LAW. THIS IS AN UNREALISTIC APPROACH AND
LIBRARY
-11-
FAR TOO COSTLY FOR MANY SMALL BUSINESSMEN.
THUS THE BANKING INDUSTRY HAS AN
OPPORTUNITY TO MAKE MANY FRIENDS, SIMPLY
BY EXTENDING A HELPING HAND TO SMALL
RETAILERS THROUGHOUT THE COUNTRY.
THE NATIONAL ADMINISTRATION ALSO HAS
AN OPPORTUNITY -- AN OPPORTUNITY TO KEEP
THE AMERICAN ECONOMY GROWING WITHOUT SHARP
UPS AND DOWNS, TO DIRECT IT ON A COURSE OF
STEADY AND SOUND EXPANSION AS OUR POPULATION
GROWS.
THE PRESIDENT BELIEVES THAT WE CAN
DO THIS IF WE STEER A COURSE THAT AVOIDS
DRASTIC SWINGS IN FEDERAL SPENDING AND
CREDIT POLICY, A COURSE BASED ON THE THEORY
THAT THE BEST ECONOMICS IS THE BEST
POLITICS.
AGAINST THAT BACKGROUND OF ADMINIS-
TRATION POLICY, CONGRESS HAS SOME MAJOR
DECISIONS TO MAKE IN THE WEEKS AHEAD. THE
-12-
MOST CRUCIAL OF THESE DECISIONS INVOLVES
THE 10 PER CENT SURTAX.
IN MY VIEW, WE CAN MAKE THE RIGHT
DECISION ON THE SURTAX ONLY IF WE LOOK AT
IT FROM THE STANDPOINT OF WHAT IS BEST FOR
THE ECONOMY -- WHICH IS TO SAY, WHAT IS
BEST FOR THE AMERICAN PEOPLE.
EVERYONE WITH EVEN A RUDIMENTARY
KNOWLEDGE OF ECONOMICS RECOGNIZES THAT
THE GREATEST PROBLEM CURRENTLY FACING OUR
DOMESTIC ECONOMY IS CONTINUING STRONG
INFLATION AND A DEEPENING OF THE INFLATIONARY
PSYCHOLOGY THAT HAS TAKEN HOLD IN THIS
COUNTRY IN RECENT MONTHS.
CONSIDER THIS: AS 1965 ENDED, THE
CONSUMER PRICE INDEX STOOD AT 109.9 PER CENT
OF THE 1957-59 PRICE LEVEL. AS OF MARCH 31,
1969, PRICES HAD RISEN TO 125.4) PER CENT.
THAT'S A 14.1 PER CENT COST-OF-LIVING JUMP
IN JUST 39 MONTHS
LIBRARY
-13-
DEMAND-PULL WAS THE INFLATION CULPRIT
IN 1965. SINCE MID-1967 PRICES HAVE BEEN
PUSHED UP BY A COMBINATION OF DEMAND-PULL
AND COST-PUSH FORCES.
WE CAN ATTAIN PRICE STABILITY
THROUGH THE OPERATION AND INTER-ACTION OF
THREE FORCES -- FISCAL POLICY, MONETARY
POLICY AND THE LONG-RUN REACTION OF THE
MARKET PLACE TO PRICE CHANGES.
I WOULD LIKE TO FOCUS THIS MORNING
ON FISCAL POLICY, BECAUSE A DECISION ON
EXTENDING THE SURTAX IS QUITE IMMINENT IN
THE CONGRESS.
THINK WE ALL AGREE THAT WHEN
INFLATION IS RAMPANT, GOVERNMENT FISCAL
POLICY SHOULD BE AIMED AT TAKING THE STEAM
OUT OF THE BOOM. SPENDING SHOULD BE RESTRICTED
AND OR TAX RATES SHOULD BE INCREASED.
FORD
conspending ME
INFLATION IS RAMPANT, AND YET THE
LIBRARY
ON
GET FROM MY LIEUTENANTS IN THE HOUSE
-14-
IS THAT EXTENSION OF THE SURTAX MAY BE IN
TROUBLE. Int. Rev. story 1 2 can understand
ON APRIL 21 PRESIDENT NIXON PROPOSED
THAT THE SURTAX BE EXTENDED AT THE 10 PER
CENT LEVEL UNTIL NEXT JAN. 1 AND THEN
REDUCED TO 5 PER CENT AND THAT THE 7 PER CENT
INVESTMENT TAX CREDIT BE REPEALED AS OF
THAT DATE. THE REVENUE LOSS RESULTING FROM
CUTTING THE SURTAX IN HALF WOULD BE OFFSET
BY REPEAL OF THE INVESTMENT TAX CREDIT.
WHAT COULD BE MORE REASONABLE? AND
YET THE SURTAX EXTENSION IS IN TROUBLE.
THE TROUBLE IS IS/THAT THAT CONGRESS HAS NOT
YET LOOKED AT THE SURTAX EXTENSION IN THE
PROPER LIGHT. THE QUESTION REALLY IS NOT
WHETHER THE SURTAX SHOULD BE EXTENDED BUT
with battle against Whatson
WHETHER THE TIME IS RIGHT FOR A TAX CUT,
BECAUSE THAT'S WHAT FAILURE TO EXTEND THE
SURTAX WOULD MEAN -- TAX REDUCTION at The federal Level.
NOW, IF WE ARE GOING TO CUT TAXES
LIBRARY
-15-
must
WE HAVE TO TELL OURSELVES THAT THE ECONOMY
NEEDS A PEP PILL. CAN ANYONE HONESTLY SAY
THAT'S THE CASE?
THE PRESIDENT'S COUNCIL OF ECONOMIC
ADVISERS HAS JUST ISSUED ITS ECONOMIC
INDICATORS REPORT FOR THE MONTH WHICH ENDED
APRIL 31. WHAT DO THE KEY INDICATORS SHOW?
TOTAL CIVILIAN EMPLOYMENT IN APRIL
WAS 77,605,000, NOT ONLY AN ALL-TIME HIGH
BUT 2,452,000 GREATER THAN FOR APRIL, 1968.
UNEMPLOYMENT AS A PERCENTAGE OF THE
TOTAL CIVILIAN LABOR FORCE WAS 3.5 PER CENT --
THE SAME FOR APRIL 1968.
AVERAGE HOURLY EARNINGS FOR
NON-AGRICULTURAL WORKERS -- ADJUSTED TO
CURRENT PRICES -- WERE $2.99 LAST MONTH --
A 19-CENT JUMP OVER APRIL, 1968.
TOTAL PERSONAL INCOME WAS AT A
$730.5 BILLION ANNUAL RATE, AN INCREASE OF
$2.8 BILLION OVER THE PRECEDING MONTH.
-16-
TOTAL INDUSTRIAL PRODUCTION REACHED
171.5 PER CENT OF THE 1957-59 AVERAGE AS
COMPARED WITH 162.5 IN APRIL, 1968.
NEW CONSTRUCTION REACHED AN ANNUAL
RATE OF $91.1 BILLION COMPARED WITH
$85.3 BILLION IN APRIL, 1968.
WHAT OTHER CONCLUSION CAN WE REACH
THAN THAT THE ECONOMY IS IN MANY RESPECTS
EVEN MORE BUOYANT NOW THAN IT WAS IN
APRIL 1968.
I
MUST THEREFORE WARN ALL WHO WILL
and
HEED MY WORDS THAT A TAX CUT WOULD NOT BE
lyang
FISCALLY SOUND AT THIS TIME.
TAX REDUCTION NOW WOULD BE THE WRONG
MEDICINE FOR THE ECONOMY AT THE WRONG TIME.
IT WOULD ESCALATE INFLATIONARY PRESSURES.
BUT I SUGGEST THAT A DROP IN THE
SURTAX TO 5 PER CENT NEXT JAN. 1 LIKELY WOULD
BE A GOOD PIECE OF TIMING. I SAY THIS FROM
THE STANDPOINT THAT REPEAL OF THE INVESTMENT
-17-
TAX CREDIT WILL HAVE NO IMMEDIATE IMPACT
BUT WILL EXERT DRAG ON THE ECONOMY AT A TIME
WHEN IT MAY NEED A STIMULANT RATHER THAN A
DEPRESSANT.
I FEEL SURE THAT THE BANKING
INDUSTRY SEES THE DANGER IN TAX REDUCTION
WHEN INFLATION IS STILL UNCONTROLLED.
YOU COULD REMAIN ALOOF AS SO MANY
PEOPLE DO WHEN THEY TURN TO THE OTHER FELLOW
AND SAY, "THAT'S YOUR PROBLEM."
MY FEELING IS THAT INFLATION IS
YOUR PROBLEM, Too, IN FACT, IT'S
EVERYONE'S PROBLEM.
CURRENTLY THERE IS TOO MUCH PERSONAL
INVOLVEMENT IN THIS COUNTRY BY INDIVIDUALS
SEEKING CONFRONTATION WITH THE FORCES OF
LAW AND ORDER AND WHAT THEY CALL THE
ESTABLISHMENT, THE RADICALS WHO ARE TRYING
TO TEAR DOWN OUR INSTITUTIONS.
THE KIND OF PERSONAL INVOLVEMENT WE
-18-
NEED IS THAT OF AMERICANS WHO BELIEVE THAT
OUR DEMOCRATIC FORM OF GOVERNMENT IS THE
what we meed
BEST EVER DEVISED, THAT WHAT'S REQUIRED TO
MAKE IT SUCCEED IS CONSTRUCTIVE CONFRONTATION
WITH THE PROBLEMS OF OUR MODERN SOCIETY.
ASK YOU THIS MORNING TO BECOME
INVOLVED -- TO MAKE YOUR WEIGHT FELT IN
SOLVING THE PROBLEM OF INFLATION. I ASK
YOU TO BECOME CONCERNED AND COMMITTED
CITIZENS -- CONCERNED ABOUT LOCAL, STATE
AND NATIONAL PROBLEMS AND COMMITTED TO
PERSONAL ACTION IN HELPING TO SOLVE THEM.
I DO BELIEVE THE FIRES OF FAITH HAVE
BEEN RELIT IN THIS COUNTRY. WHAT I SAID
EARLIER THIS MORNING WAS NOT JUST RHETORIC.
IT WAS AN EXPRESSION OF MY OWN PERSONAL
FAITH THAT DEMOCRACY CAN BE MADE TO WORK IN
AMERICA. AND THAT -- MAKING THE DEMOCRATIC
PROCESS WORK -- IS THE BEST POSSIBLE
FORD
ANSWER TO THE RADICALS WHO ARE TRYING TO
LIBRARY
-19-
TEAR THIS COUNTRY DOWN.
LET US THEN JOIN TOGETHER
LET US
LINK ARMS TO MOVE THIS COUNTRY FORWARD.
WE HAVE NEW LEADERSHIP -- SOUND,
DETERMINED, SKILLED IN THE PROCESSES OF
GOVERNMENT.
IN SUPPORT OF THAT LEADERSHIP LET US
MAKE OUR CONTRIBUTION -- THE INDISPENSABLE
ELEMENT -- FAITH IN OUR NATION, FAITH IN
EACH OTHER, FAITH THAT WE CAN MOVE TOGETHER
TOWARD A HIGHER ORDER FOR ALL MEN. FOR FAITH
IS THE TALISMAN OF GREATNESS FOR ALL AMERICA.
-- END --
GERALD, LIBRARY FORD
Distribution:
an mail 2:00p.m. 5/22/69
Galleries 10:00 a.m. 5/23/69
M Office copy
AN ADDRESS BY REP. GERALD R. FORD, R-MICH.
AT THE ANNUAL CONVENTION OF THE PENNSYLVANIA BANKERS ASSOCIATION
AT ATLANTIC CITY, NEW JERSEY
10:30 A.M., MONDAY, MAY 26, 1969
FOR RELEASE ON DELIVERY
Good morning, gentlemen: It's a great pleasure for me to join you here in
this exciting resort city.
I have always felt at home talking with bankers, because I have always
felt they had my interest at heart.
Mark Twain, of course, had a little different outlook on bankers. He said
"a banker is a fellow who lends you his umbrella when the sun is shining and
wants it back the minute it begins to rain."
I have a hunch maybe David Kennedy and Bob Mayo wish they had gotten their
umbrellas back before they left Chicago for Washington. But then Secretary
Kennedy didn't realize that House Banking and Currency Chairman Wright Patman
calls himself "the little old rainmaker."
A homespun philosopher who also happened to be a song writer once said,
"Into each life some rain must fall."
Right now I think we're all enjoying a considerable quantity of sunshine.
I recall a time last year when the militants in this country were
shouting that they were going to "turn this country around" or burn it down.
We are turning this country around
turning it toward permanent peace and
genuine prosperity.
We are turning this country around away from the arsonists and
anarchists.
There is a new fire in this country the fire of faith. The fires of
faith have been relit in this country faith in our free institutions, faith in
the free enterprise system, faith that the principle of freedom ultimately will
prevail in the scales of world justice, faith that our national government working
with state and local leaders and our private institutions can solve the crushing
problems of our times.
There has been a vast change in the mood of the American people, a shift in
the tide. There is a tide for change, but it is a tide for change based on care-
fully reasoned decisions and on the great force for good that flows from people
working with people, change rising from evolution and not revolution.
(more)
LIBRARY
-2-
The forces of revolution are at work in this country but they will not
prevail. As the great philosopher Plutarch put it: "Perseverance is more
prevailing than violence; and many things which cannot be overcome when they are
taken together yield themselves when taken little by little."
We have been living under a new national administration for four months.
The administration changed, but the problems remained. They did not disappear.
One dividend from a change in national administrations is a change in
outlook -- reexamination of the problems, a searching-out of deficiencies, a
devising of new approaches.
The new administration has first of all established the process of
effective decision-making and has given our national problems fresh analysis.
As a result we have made substantial progress in just four months -- as a
Nation and as a people. This is true by any standard.
We now see a realistic movement toward peace in Vietnam, some progress
toward creating a framework for Israeli-Arab peace negotiations in the Middle East,
a pulling together of the Western alliance, and steps toward arms control talks
with the Soviet Union.
We have made progress toward combating crime; progress toward rebuilding
our cities; progress toward bringing inflation under control; progress toward
reforming our tax structure.
There will be tax reform this year -- and it probably will go beyond the
Nixon Administration's recommendations. The national mood underscores the need
for it, and Congress will respond.
Administration officials are working closely with the House Ways and Means
Committee. The Committee is on schedule. The plan is to move a tax reform bill
through the House before the Congress takes a summer recess in mid-August.
At this point it is impossible to say what the Ways and Means Committee
will do in dealing with tax-exempt bonds. This is the most complex problem facing
the committee.
There is some talk of taxing state and municipal bonds and then reimbursing
state and local units of government for the additional interest costs resulting
from elimination of tax exemption. But who would decide exactly how much interest
add-on occurred in each instance? How would it be computed?
And of course there also is the inequity to individuals that arises from
taxing new issues of state and municipal bonds while outstanding bonds continue
to be tax-exempt.
(more)
-3-
Now meeting in executive session, the Ways and Means Committee has before it
President Nixon's tax reform proposals plus the continuing advice of Administration
officials and the benefit of testimony taken in the committee's public hearings.
The legislation shaped in these executive sessions could be quite far reaching.
But one would have to possess the wisdom of Solomon to predict the net result.
At this point I would like to say a few words about prospects for bank
holding company legislation in the 91st Congress.
The shape of the law to come is unclear but I am convinced the 91st Congress
will enact some form of bank holding company legislation. At this point, the
timing also is uncertain.
As you know, the Nixon Administration has sponsored a bill which is different
in many respects from either the Patman or Proxmire bills.
Because of the strong anti-bank bias of Chairman Patman, I do not think
the bill reported out by the House Banking and Currency Committee will determine
the ultimate form of the legislation as enacted. I would add that I do not think
Congress as a whole will treat this subject in partisan fashion.
I would like to sound this note of caution. I am concerned that many
bankers regard this subject as purely a bank holding company issue. Bankers
everywhere should realize that the extent to which Congress defines bank-related
activities for holding companies is bound to affect the future definition of
related activities for individual banks as well.
You also are interested in the Truth-In-Lending Act, which will become
effective in many respects on June 30 through Regulation Z. I am aware that the
banking industry opposed this legislation to some degree. But many of the banking
industry's leaders now see the situation as a great opportunity for banking, and
I agree.
Many competitive benefits will result for banks from the fact that
disclosure of annual finance charges will now be required with regard to consumer
credit transactions and credit advertising.
There is one by-product of the Truth-In-Lending Act which concerns me.
At the same time I see it as an opportunity for our nation's banks.
In my view, sponsors of the legislation were overzealous in their desire
to disclose everything to the consumer about his or her consumer credit trans-
action. It appears that on a typical installment contract Regulation Z requires
more than 20 separate computations of dollar and percentage figures. Open-end
credit agreements will involve a similar number of computations.
(more)
-4-
In many cases the consumer we are trying to protect will simply become
confused. I further predict that many small and medium size retailers will either
refuse to grant credit or will turn to banks for assistance.
In many instances, the bank credit card will be the most convenient answer
for the small retailer.
Federal Reserve Board and Federal Trade Commission representatives have
been urging local retailers to consult attorneys on how to comply with the
Truth-In-Lending Law. This is an unrealistic approach and far too costly for
many small businessmen.
Thus the banking industry has an opportunity to make many friends, simply
by extending a helping hand to small retailers throughout the country.
The national Administration also has an opportunity -- an opportunity to
keep the American economy growing without sharp ups and downs, to direct it on a
course of steady and sound expansion as our population grows.
The President believes that we can do this if we steer a course that avoids
drastic swings in federal spending and credit policy, a course based on the theory
that the best economics is the best politics.
Against that background of Administration policy, Congress has some major
decisions to make in the weeks ahead. The most crucial of these decisions
involves the 10 per cent surtax.
In my view, we can make the right decision on the surtax only if we look
at it from the standpoint of what is best for the economy -- which is to say,
what is best for the American people.
Everyone with even a rudimentary knowledge of economics recognizes that
the greatest problem currently facing our domestic economy is continuing strong
inflation and a deepening of the inflationary psychology that has taken hold in
this country in recent months.
Consider this: As 1965 ended, the Consumer Price Index stood at
109.9 per cent of the 1957-59 price level. As of March 31, 1969, prices had
risen to 125.4 per cent. That's a 14.1 per cent cost-of-living jump in just
39 months.
Demand-pull was the inflation culprit in 1965. Since mid-1967 prices
have been pushed up by a combination of demand-pull and cost-push forces.
We can attain price stability through the operation and inter-action of
three forces -- fiscal policy, monetary policy and the long-run reaction of the
market place to price changes.
(more)
-5-
I would like to focus this morning on fiscal policy, because a decision on
extending the surtax is quite imminent in the Congress.
I think we all agree that when inflation is rampant, government fiscal
policy should be aimed at taking the steam out of the boom. Spending should be
restricted and/or tax rates should be increased.
Inflation is rampant, and yet the word I get from my lieutenants in the
House is that extension of the surtax may be in trouble.
On April 21 President Nixon proposed that the surtax be extended at the
10 per cent level until next Jan. 1 and then reduced to 5 per cent and that the
7 per cent investment tax credit be repealed as of that date. The revenue loss
resulting from cutting the surtax in half would be offset by repeal of the
investment tax credit.
What could be more reasonable? And yet the surtax extension is in trouble.
The trouble is that Congress has not yet looked at the surtax extension
in the proper light. The question really is not whether the surtax should be
extended but whether the time is right for a tax cut, because that's what failure
to extend the surtax would mean -- tax reduction.
Now, if we are going to cut taxes we have to tell ourselves that the
economy needs a pep pill. Can anyone honestly say that's the case?
The President's Council of Economic Advisers has just issued its economic
indicators report for the month which ended April 31. What do the key indicators
show?
Total civilian employment in April was 77,605,000, not only an all-time
high but 2,452,000 greater than for April, 1968.
Unemployment as a percentage of the total civilian labor force was
3.5 per cent -- the same as for April 1968.
Average hourly earnings for non-agricultural workers -- adjusted to current
prices -- were $2.99 last month -- a 19-cent jump over April, 1968.
Total personal income was at a $730.5 billion annual rate, an increase of
$2.8 billion over the preceding month.
Total industrial production reached 171.5 per cent of the 1957-59 average
as compared with 162.5 in April, 1968.
New construction reached an annual rate of $91.1 billion compared with
$85.3 billion in April, 1968.
What other conclusion can we reach than that the economy is in many respects
even more buoyant now than it was in April, 1968.
(more)
-6-
I must therefore warn all who will heed my words that a tax cut would
not be fiscally sound at this time.
Tax reduction now would be the wrong medicine for the economy at the wrong
time. It would escalate inflationary pressures.
But I suggest that a drop in the surtax to 5 per cent next Jan. 1 likely
would be a good piece of timing. I say this from the standpoint that repeal of
the investment tax credit will have no immediate impact but will exert drag on the
economy at a time when it may need a stimulant rather than a depressant.
I feel sure that the banking industry sees the danger in tax reduction when
inflation is still uncontrolled.
You could remain aloof as so many people do when they turn to the other
fellow and say, "That's your problem."
My feeling is that inflation is your problem, too. In fact, it's everyone's
problem.
Currently there is too much personal involvement in this country by
individuals seeking confrontation with the forces of law and order and what they
call the Establishment, the radicals who are trying to tear down our institutions.
The kind of personal involvement we need is that of Americans who believe
that our democratic form of government is the best ever devised, that what's
required to make it succeed is constructive confrontation with the problems of
our modern society.
I ask you this morning to become involved -- to make your weight felt in
solving the problem of inflation. I ask you to become concerned and committed
citizens -- concerned about local, state and national problems and committed to
personal action in helping to solve them.
I do believe the fires of faith have been relit in this country. What I
said earlier this morning was not just rhetoric. It was an expression of my own
personal faith that democracy can be made to work in America. And that -- making
the democratic process work -- is the best possible answer to the radicals who
are trying to tear this country down.
Let us then join together
let us link arms to move this country forward.
We have new leadership sound, determined, skilled in the processes of
government.
In support of that leadership let us make our contribution -- the indis-
pensable element -- faith in our Nation, faith in each other, faith that we can
move together toward a higher order for all men. For faith is the talisman of
greatness for all America.
###
Office Copy
AN ADDRESS BY REP. GERALD R. FORD, R-MICH.
AT THE ANNUAL CONVENTION OF THE PENNSYLVANIA BANKERS ASSOCIATION
AT ATLANTIC CITY, NEW JERSEY
10:30 A.M., MONDAY, MAY 26, 1969
FOR RELEASE ON DELIVERY
Good morning, gentlemen: It's a great pleasure for me to join you here in
this exciting resort city.
I have always felt at home talking with bankers, because I have always
felt they had my interest at heart.
Mark Twain, of course, had a little different outlook on bankers. He said
"a banker is a fellow who lends you his umbrella when the sun is shining and
wants it back the minute it begins to rain."
I have a hunch maybe David Kennedy and Bob Mayo wish they had gotten their
umbrellas back before they left Chicago for Washington. But then Secretary
Kennedy didn't realize that House Banking and Currency Chairman Wright Patman
calls himself "the little old rainmaker."
A homespun philosopher who also happened to be a song writer once said,
"Into each life some rain must fall."
Right now I think we're all enjoying a considerable quantity of sunshine.
I recall a time last year when the militants in this country were
shouting that they were going to "turn this country around" or burn it down.
We are turning this country around
turning it toward permanent peace and
genuine prosperity.
We are turning this country around
away from the arsonists and
anarchists.
There is a new fire in this country the fire of faith. The fires or
faith have been relit in this country faith in our free institutions, faith in
the free enterprise system, faith that the principle of freedom ultimately will
prevail in the scales of world justice, faith that our national government working
with state and local leaders and our private institutions can solve the crushing
problems of our times.
There has been a vast change in the mood of the American people, a shift in
the tide. There is a tide for change, but it is a tide for change based on care-
fully reasoned decisions and on the great force for good that flows from people
working with people, change rising from evolution and not revolution.
(more)
-2-
The forces of revolution are at work in this country but they will not
prevail. As the great philosopher Plutarch put it: "Perseverance is more
prevailing than violence; and many things which cannot be overcome when they are
taken together yield themselves when taken little by little."
We have been living under a new national administration for four months.
The administration changed, but the problems remained. They did not disappear.
One dividend from a change in national administrations is a change in
outlook -- reexamination of the problems, a searching-out of deficiencies, a
devising of new approaches.
The new administration has first of all established the process of
effective decision-making and has given our national problems fresh analysis.
As a result we have made substantial progress in just four months -- as a
Nation and as a people. This is true by any standard.
We now see a realistic movement toward peace in Vietnam, some progress
toward creating a framework for Israeli-Arab peace negotiations in the Middle East,
a pulling together of the Western alliance, and steps toward arms control talks
with the Soviet Union.
We have made progress toward combating crime; progress toward rebuilding
our cities; progress toward bringing inflation under control; progress toward
reforming our tax structure.
There will be tax reform this year -- and it probably will go beyond the
Nixon Administration's recommendations. The national mood underscores the need
for it, and Congress will respond.
Administration officials are working closely with the House Ways and Means
Committee. The Committee is on schedule. The plan is to move a tax reform bill
through the House before the Congress takes a summer recess in mid-August.
At this point it is impossible to say what the Ways and Means Committee
will do in dealing with tax-exempt bonds. This is the most complex problem facing
the committee.
There is some talk of taxing state and municipal bonds and then reimbursing
state and local units of government for the additional interest costs resulting
from elimination of tax exemption. But who would decide exactly how much interest
add-on occurred in each instance? How would it be computed?
And of course there also is the inequity to individuals that arises from
taxing new issues of state and municipal bonds while outstanding bonds continue
to be tax-exempt.
(more)
-3-
Now meeting in executive session, the Ways and Means Committee has before it
President Nixon's tax reform proposals plus the continuing advice of Administration
officials and the benefit of testimony taken in the committee's public hearings.
The legislation shaped in these executive sessions could be quite far reaching.
But one would have to possess the wisdom of Solomon to predict the net result.
At this point I would like to say a few words about prospects for bank
holding company legislation in the 91st Congress.
The shape of the law to come is unclear but I am convinced the 91st Congress
will enact some form of bank holding company legislation. At this point, the
timing also is uncertain.
As you know, the Nixon Administration has sponsored a bill which is different
in many respects from either the Patman or Proxmire bills.
Because of the strong anti-bank bias of Chairman Patman, I do not think
the bill reported out by the House Banking and Currency Committee will determine
the ultimate form of the legislation as enacted. I would add that I do not think
Congress as a whole will treat this subject in partisan fashion.
I would like to sound this note of caution. I am concerned that many
bankers regard this subject as purely a bank holding company issue. Bankers
everywhere should realize that the extent to which Congress defines bank-related
activities for holding companies is bound to affect the future definition of
related activities for individual banks as well.
You also are interested in the Truth-In-Lending Act, which will become
effective in many respects on June 30 through Regulation Z. I am aware that the
banking industry opposed this legislation to some degree. But many of the banking
industry's leaders now see the situation as a great opportunity for banking, and
I agree.
Many competitive benefits will result for banks from the fact that
disclosure of annual finance charges will now be required with regard to consumer
credit transactions and credit advertising.
There is one by-product of the Truth-In-Lending Act which concerns me.
At the same time I see it as an opportunity for our nation's banks.
In my view, sponsors of the legislation were overzealous in their desire
to disclose everything to the consumer about his or her consumer credit trans-
action. It appears that on a typical installment contract Regulation Z requires
more than 20 separate computations of dollar and percentage figures. Open-end
credit agreements will involve a similar number of computations.
(more)
-4-
In many cases the consumer we are trying to protect will simply become
confused. I further predict that many small and medium size retailers will either
refuse to grant credit or will turn to banks for assistance.
In many instances, the bank credit card will be the most convenient answer
for the small retailer.
Federal Reserve Board and Federal Trade Commission representatives have
been urging local retailers to consult attorneys on how to comply with the
Truth-In-Lending Law. This is an unrealistic approach and far too costly for
many small businessmen.
Thus the banking industry has an opportunity to make many friends, simply
by extending a helping hand to small retailers throughout the country.
The national Administration also has an opportunity -- an opportunity to
keep the American economy growing without sharp ups and downs, to direct it on a
course of steady and sound expansion as our population grows.
The President believes that we can do this if we steer a course that avoids
drastic swings in federal spending and credit policy, a course based on the theory
that the best economics is the best politics.
Against that background of Administration policy, Congress has some major
decisions to make in the weeks ahead. The most crucial of these decisions
involves the 10 per cent surtax.
In my view, we can make the right decision on the surtax only if we look
at it from the standpoint of what is best for the economy -- which is to say,
what is best for the American people.
Everyone with even a rudimentary knowledge of economics recognizes that
the greatest problem currently facing our domestic economy is continuing strong
inflation and a deepening of the inflationary psychology that has taken hold in
this country in recent months.
Consider this: As 1965 ended, the Consumer Price Index stood at
109.9 per cent of the 1957-59 price level. As of March 31, 1969, prices had
risen to 125.4 per cent. That's a 14.1 per cent cost-of-living jump in just
39 months.
Demand-pull was the inflation culprit in 1965. Since mid-1967 prices
have been pushed up by a combination of demand-pull and cost-push forces.
We can attain price stability through the operation and inter-action of
three forces -- fiscal policy, monetary policy and the long-run reaction of the
market place to price changes.
(more)
-5-
I would like to focus this morning on fiscal policy, because a decision on
extending the surtax is quite imminent in the Congress.
I think we all agree that when inflation is rampant, government fiscal
policy should be aimed at taking the steam out of the boom. Spending should be
restricted and/or tax rates should be increased.
Inflation is rampant, and yet the word I get from my lieutenants in the
House is that extension of the surtax may be in trouble.
On April 21 President Nixon proposed that the surtax be extended at the
10 per cent level until next Jan. 1 and then reduced to 5 per cent and that the
7 per cent investment tax credit be repealed as of that date. The revenue loss
resulting from cutting the surtax in half would be offset by repeal of the
investment tax credit.
What could be more reasonable? And yet the surtax extension is in trouble.
The trouble is that Congress has not yet looked at the surtax extension
in the proper light. The question really is not whether the surtax should be
extended but whether the time is right for a tax cut, because that's what failure
to extend the surtax would mean -- tax reduction.
Now, if we are going to cut taxes we have to tell ourselves that the
economy needs a pep pill. Can anyone honestly say that's the case?
The President's Council of Economic Advisers has just issued its economic
indicators report for the month which ended April 31. What do the key indicators
show?
Total civilian employment in April was 77,605,000, not only an all-time
high but 2,452,000 greater than for April, 1968.
Unemployment as a percentage of the total civilian labor force was
3.5 per cent -- the same as for April 1968.
Average hourly earnings for non-agricultural workers -- adjusted to current
prices were $2.99 last month -- a 19-cent jump over April, 1968.
Total personal income was at a $730.5 billion annual rate, an increase of
$2.8 billion over the preceding month.
Total industrial production reached 171.5 per cent of the 1957-59 average
as compared with 162.5 in April, 1968.
New construction reached an annual rate of $91.1 billion compared with
$85.3 billion in April, 1968.
What other conclusion can we reach than that the economy is in many respects
even more buoyant now than it was in April, 1968.
(more)
-6-
I must therefore warn all who will heed my words that a tax cut would
not be fiscally sound at this time.
Tax reduction now would be the wrong medicine for the economy at the wrong
time. It would escalate inflationary pressures.
But I suggest that a drop in the surtax to 5 per cent next Jan. 1 likely
would be a good piece of timing. I say this from the standpoint that repeal of
the investment tax credit will have no immediate impact but will exert drag on the
economy at a time when it may need a stimulant rather than a depressant.
I feel sure that the banking industry sees the danger in tax reduction when
inflation is still uncontrolled.
You could remain aloof as so many people do when they turn to the other
fellow and say, "That's your problem."
My feeling is that inflation is your problem, too. In fact, it's everyone's
problem.
Currently there is too much personal involvement in this country by
individuals seeking confrontation with the forces of law and order and what they
call the Establishment, the radicals who are trying to tear down our institutions.
The kind of personal involvement we need is that of Americans who believe
that our democratic form of government is the best ever devised, that what's
required to make it succeed is constructive confrontation with the problems of
our modern society.
I ask you this morning to become involved -- to make your weight felt in
solving the problem of inflation. I ask you to become concerned and committed
citizens -- concerned about local, state and national problems and committed to
personal action in helping to solve them.
I do believe the fires of faith have been relit in this country. What I
said earlier this morning was not just rhetoric. It was an expression of my own
personal faith that democracy can be made to work in America. And that -- making
the democratic process work -- is the best possible answer to the radicals who
are trying to tear this country down.
Let us then join together let us link arms to move this country forward.
We have new leadership -- sound, determined, skilled in the processes of
government.
In support of that leadership let us make our contribution -- the indis-
pensable element -- faith in our Nation, faith in each other, faith that we can
move together toward a higher order for all men. For faith is the talisman of
greatness for all America.
# # #