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National Federation of Independent Businessmen, Washington, DC, May 19, 1971
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National Federation of Independent Businessmen, Washington, DC, May 19, 1971
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Gerald R. Ford Congressional Papers
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Vietnam War, 1961-1975
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The original documents are located in Box D31, folder "National Federation of
Independent Businessmen, Washington, DC, May 19, 1971" 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States of America his copyrights in all of his unpublished writings in National Archives collections.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 D31 of the Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
NATIONAL FEDERATION OF INDEPENDENT
BUSINESSMEN, WEDNESDAY, MAY 19, 1971,
AT 7.30 P.M., AT THE WASHINGTON HILTON
North
HOTEL.
1000'lbe
28th
Press
gul
11.Vmj
GOOD EVENING. IT IS A GREAT
PLEASURE TO BE HERE AMONG MEN WHO ARE
TRULY INDEPENDENT AND WHO ARE DEVOTED TO
THE PRINCIPLES OF FREE ENTERPRISE.
LIFE IS DIFFICULT FOR THE SMALL
BUSINESSMAN IN THIS AGE OF COMMERCIAL
GIANTS, I KNOW. BUT/I FEEL THAT TIMES
WILL BECOME STEADILY BETTER IN THE MONTHS
Eine
Contr
AHEAD--AND I DO NOT SAY THIS ONLY BECAUSE
TEND TO BE ETERNALLY OPTIMISTIC.
THINGS HAVE ALREADY BECOME A
LITTLE EASIER FOR POLITICIANS IN THIS
AGE -- THE SPACE AGE. THERE WAS A TIME
WHEN WE ONLY PROMISED PEOPLE THE MOON.
NOW WE CAN ACTUALLY DELIVER ON THAT PROMISE.
-2-
THERE ARE ALSO, OF COURSE, A FEW
THINGS WE CAN PROMISE HERE ON EARTH AND
DELIVER ON, IF GIVEN ONLY A LITTLE HELP
BY THE AMERICAN PEOPLE.
THOSE WORDS -- A LITTLE HELP --
ARE TERRIBLY IMPORTANT, PARTICULARLY IF THE
PROMISE IS A PLEDGE TO END THE VIETNAM WAR
IN A WAY THAT WILL HELP TO AVOID FUTURE
WARS.
I DON'T KNOW IF WE CAN END THE
VIETNAM WAR -- BECAUSE IT TAKES BOTH SIDES
TO MAKE PEACE at The larguing table.
BUT, I DO BELIEVE WE CAN END
U. S. INVOLVEMENT IN VIETNAM IN THE RIGHT
WAY -- IF NOT THROUGH A NEGOTIATED PEACE
IN PARIS, THEN BY TURNING THE WAR OVER TO
THE SOUTH VIETNAMESE IN AN ORDERLY AND
WELL-TIMED FASHION.
-3-
I AM NOT SPEAKING IN A PARTISAN
VEIN TONIGHT. THIS IS ONE REASON I HAVE
CHOSEN TO SPEAK WITH YOU ABOUT VIETNAM AND
WHAT THE FUTURE MAY HOLD THERE. IF THERE IS
ANY SUBJECT WHICH SHOULD BE NONPARTISAN, IT
IS VIETNAM.
IT HAS BEEN SAID THAT THE WORLD
IS NOW TOO DANGEROUS FOR ANYTHING BUT
TRUTH. I CERTAINLY BELIEVE THAT, AND SO I
WOULD LIKE TO SPEAK A FEW TRUTHS HERE
TONIGHT THAT HAVE ESCAPED SOME OF US
LATELY.
ONE OF THOSE TRUTHS IS THAT THE
PRESIDENT OF THE UNITED STATES IS THE ONLY
MAN WHO CAN LIQUIDATE THE AMERICAN ROLE IN
VIETNAM AND EXTRICATE US FROM THAT HORRIBLE
WAR.
ANOTHER OF THOSE TRUTHS IS THAT
THE PRESIDENT IS AS ANXIOUS AS ANYONE ELSE
-4-
IN THIS COUNTRY TO BRING ABOUT U.S.
DISENGAGEMENT FROM THE VIETNAM WAR AS
QUICKLY AS PRACTICABLE.
STILL ANOTHER TRUTH IS THAT
PUBLIC POLICY -- AMERICAN FOREIGN POLICY
AFFECTING WAR AND PEACE -- CANNOT SAFELY
BE MADE IN THE STREETS. THE APRIL 24
PEACE MARCH NOTWITHSTANDING, CROWD
DIPLOMACY IS NO SANE SUBSTITUTE FOR
CAREFULLY CONSIDERED AND ORDERED POLICY
FORMULATED AT THE HIGHEST LEVELS OF THE
UNITED STATES GOVERNMENT. CHANTS OF
"OUT NOW," EVEN IF LED BY A UNITED STATES
SENATOR, ARE NO ANSWER FOR THE FEARFULLY
COMPLICATED QUESTION OF HOW BEST TO END OUR
INVOLVEMENT IN VIETNAM.
WE ALL WANT TO END OUR
INVOLVEMENT IN VIETNAM. ALL OF US. THE
PRESIDENT, WHO INHERITED THE WAR, AND YOU
AND 1.
542,000
261,500
805,645
-5-
THE PRESIDENT, REGARDLESS OF
THE WAR'S HISTORY, HAS THE TERRIBLE BURDEN
OF ENDING THE AMERICAN ROLE IN VIETNAM.
WE SHOULD HELP HIM WITH IT.
HOW CAN WE HELP THE PRESIDENT
LIQUIDATE THE AMERICAN ROLE IN VIETNAM?
WE CAN AND SHOULD SUPPORT HIM AS HE
PURSUES HIS POLICY OF GRADUAL WITHDRAWAL
FROM VIETNAM -- A POLICY WHICH HAS REDUCED
U.S. STRENGTH IN VIETNAM TO A CURRENT
LEVEL OF 262,500 AND WILL BRING IT
Bear wind in
TO 184,000 BY NEXT DECEMBER
1
The IF us. for withhold TROOP WITHDRAWALS FROM
approvity There
has cut been
VIETNAM CONTINUE BEYOND DECEMBER 1 AT THE
a
"lash
PRESENT PACE, WE WILL BE DOWN TO 55,000
The
TROOPS BY NEXT SEPTEMBER 1 -- THE FIGURE
GENERALLY TALKED ABOUT AS A "RESIDUAL
FORCE." OUR GOAL IS TOTAL WITHDRAWAL.
IT WILL BE ACHIEVED.
-6-
THERE ARE THOSE WHO ARE CALLING
FOR A PUBLICLY ANNOUNCED PULLOUT DATE, AS
DEMANDED BY THE NORTH VIETNAMESE AND THE
VIET CONG. THE DATE MOST FREQUENTLY
MENTIONED IS DECEMBER 31, 1971. WHAT
PURPOSE WOULD IT SERVE FOR THE PRESIDENT
TO ANNOUNCE WE WOULD PULL OUT BY THAT DATE?
IS SUCH AN ANNOUNCEMENT IN THE BEST
INTERESTS OF OUR SIDE? NO NO,/IT WOULD ONLY
SERVE THE PURPOSES OF THE ENEMY.
WE WOULD BE REMOVING THE ENEMY'S
INCENTIVE TO END U.S. INVOLVEMENT SOONER
BY NEGOTIATION
WE WOULD BE GIVING THE ENEMY THE
INFORMATION NEEDED TO MARSHAL ATTACKS
AGAINST OUR REMAINING FORCES AT THEIR MOST
VULNERABLE TIME.
SO A PUBLICLY ANNOUNCED PULLOUT
DATE SERVES NO USEFUL PURPOSE, AND IN ANY
-7-
CASE WE WILL BE SUBSTANTIALLY OUT OF
VIETNAM BY EARLY NEXT FALL. WHEN WE TALK
ABOUT EARLY NEXT FALL AS AGAINST DECEMBER 31,
1971, WE ARE REALLY TALKING ABOUT ONLY A
FEW MONTHS' DIFFERENCE IN TIME.
WHY ARE SOME OF THE LEADERS OF
?
THE APRIL 24 PEACE MARCH AND THE MAY DAY
DISTURBANCES SO DETERMINED TO GET US OUT OF
VIETNAM NOW? BECAUSE THESE LEADERS ARE
ANXIOUS TO PROMOTE A COMMUNIST VICTORY IN
VIETNAM. NOT TO TAKE ANYTHING AWAY FROM
THE THOUSANDS OF WELL-MEANING AMERICANS
WHO FOLLOW THESE LEADERS WITHOUT REGARD
madical
The
FOR THEIR IDEOLOGICAL COLORATION.
THEY NO
1
DOUBT ARE SINCERE. BUT POLICY ON THIS
VITAL ISSUE CANNOT BE MADE IN THE STREETS
AND IT CERTAINLY SHOULD NOT BE MADE BY
CRES
RADICALS WHO TRY TO TEAR DOWN THE AMERICAN
FLAG AND RAISE THE VIET CONG FLAG IN ITS
PLACE
-8-
WE ARE SUCCEEDING IN THWARTING
A COMMUNIST TAKEOVER IN SOUTH VIETNAM BY
FORCE. IF WE NOW WERE TO WITHDRAW ALL OF
OUR FORCES SWIFTLY AND PRECIPITOUSLY, WE
WOULD BE ACQUIESCINGATHE COMMUNIST
CONQUEST OF VIETNAM.
I KNOW THE AMERICAN PEOPLE ARE
TIRED OF THE VIETNAM WAR. BUT IS SURRENDER
IN VIETNAM WHAT THEY REALLY WANT? I DON'T
BELIEVE IT FOR A MINUTE, AND A POLL BY THE
OPINION RESEARCH CORPORATION SUBSTANTIATES
IT. WHEN ASKED IF THEY FAVOR PULLOUT OF
ALL AMERICAN TROOPS BY THE END OF 1971
EVEN IF THIS MEANT A COMMUNIST TAKEOVER,
ONLY 27 PER CENT SAID "YES," AND
57 PER CENT SAID "NO." THE REST WERE
UNDECIDED.
NORTH VIETNAM AND THE VIET CONG
HAVE REPEATEDLY MADE IT PLAIN THAT THEY
-9-
EXPECT GROWING PROTESTS IN THE UNITED
STATES TO SPEED THE END OF THE VIETNAM
the community
WAR ON THEIR TERMS.
I DON'T BELIEVE THAT
IS GOING TO HAPPEN.
I BELIEVE THE MAJORITY
OF THE AMERICAN PEOPLE SUPPORT THE
PRESIDENT ON THE CRUCIAL ISSUE OF GRADUAL
WITHDRAWAL WITH SUCCESS VERSUS PRECIPITOUS
WITHDRAWAL AND DEFEAT.
DO WE HAVE ANY BUSINESS BEING
IN VIETNAM? IS THE VIETNAM WAR A CIVIL
WAR IN WHICH WE HAVE INTERVENED WITHOUT
GOOD CAUSE?
ANYONE WHO BELIEVES THE VIETNAM
WAR IS A CIVIL WAR IS EITHER NOT
KNOWLEDGEABLE OR IS FORGETFUL OF THE
FACTS -- THE FACT THAT AFTER THE INDOCHINA
with
the
WAR ENDED NORTH VIETNAM REFUSED TO ACCEPT
THE U.S. PROPOSAL OF UN-SUPERVISED
ELECTIONS, THAT NORTH VIETNAM AND FRANCE
-10-
WERE THEREFORE THE ONLY NATIONS WHO SIGNED
THE GENEVA ACCORDS IN 1954, THAT THE
COMMUNIST PARTY IN NORTH VIETNAM EXECUTED
MORE THAN 50,000 PEOPLE DURING THE
FOLLOWING TWO-YEAR PERIOD, THAT THE
COMMUNIST PARTY IN NORTH VIETNAM HERDED
MORE THAN A HALF MILLION PEOPLE INTO FORCED
LABOR CAMPS OR RE-EDUCATION CENTERS, THAT
THE COMMUNIST PARTY OF NORTH VIETNAM HAD
ALSO ORDERED 80,000 TO 100,000 SOUTHERN
COMMUNISTS TO GO NORTH AT THE TIME OF THE
GENEVA CONFERENCE TO TRAIN AND PREPARE IN
THE NORTH TO RETURN TO SOUTH VIETNAM TO
ORGANIZE THE COMMUNIST VOTE IN THE SOUTH
IN 1956, THAT THESE SOUTHERN MEN RETURNED
TO THE SOUTH UNDER NORTHERN ORDERS TO BEGIN
A GUERRILLA WAR, THAT MOST OF THESE
SOUTHERNERS HAD BEEN SENT BACK TO THE SOUTH
BY HANOI BY 1964, THAT IN SEPTEMBER AND
-11-
OCTOBER OF 1964 THE FIRST REGULAR ARMY
UNITS OF THE NORTH VIETNAMESE ARMY MOVED
DOWN THE HO CHI MINH TRAIL THROUGH LAOS
196h
INTO SOUTH VIETNAM.
contact
beginn
IT WAS ONLY THE U.S. RESPONSE
WITH COMBAT FORCES THAT PREVENTED THE
COLLAPSE OF SOUTH VIETNAM. THERE ARE TODAY
SOME 160,000 NORTH VIETNAMESE SOLDIERS
IN THE SOUTH, A FORCE THAT CONSTITUES AN
ACTUAL INVASION OF THE SOUTH FROM THE
NORTH.
THE ONGOING U.S. TROOP
WITHDRAWALS FROM SOUTH VIETNAM ARE TIMED
SO AS TO ENABLE SOUTH VIETNAM TO MEET THE
COMMUNIST CHALLENGE FROM THE NORTH.
THE WAY THE WAR CAN BE MOST
SPEEDILY RESOLVED IS BY MEANINGFUL
NEGOTIATIONS AT PARIS. IF HANOI CONTINUES
TO REFUSE TO NEGOTIATE, THEN PRESIDENT NIXON'S
-12-
VIETNAMIZATION PROGRAM -- THE STRENGTHENING
OF THE SOUTH
MILITARILY, POLITICALLY
AND ECONOMICALLY -- IS A CONSTANT REMINDER
TO THE NORTH THAT AS THEY DALLY THE SOUTH
VIETNAMESE ARE BEING GIVEN MORE TIME AND
WEAPONS TRAINING TO DEAL WITH THEM.
WE HAVE BEEN ACTIVELY FIGHTING
IN VIETNAM FOR SIX YEARS. THAT IS A LONG
TIME. BUT THE COMMUNIST NORTH HAS BEEN
TRYING TO CONQUER SOUTH VIETNAM FOR
17 YEARS -- EVER SINCE THE GENEVA ARMISTICE.
THIS WAR BELONGS TO THE VIETNAMESE
AND WE SHOULD GIVE IT BACK TO THEM. BUT WE
MUST DO IT IN ORDERLY FASHION, IN A WAY THAT
BESTOWS STRENGTH ON THE SOUTH VIETNAMESE AND
DISCOURAGES COMMUNIST AGGRESSION -- NOW AND
FOR THE FUTURE.
PRESIDENT NIXON IS SALVAGING THE
TREMENDOUS INVESTMENT WE HAVE MADE IN
-13-
VIETNAM. YOU CAN ARGUE THAT WE NEVER
SHOULD HAVE BECOME INVOLVED IN VIETNAM IN
THE FIRST PLACE -- THAT BOTH PRESIDENTS
1
KENNEDY AND JOHNSON MADE A MISTAKE. BUT
I DON'T THINK YOU CAN ARGUE AGAINST
PRESIDENT NIXON'S SALVAGE OPERATION.
IT IS NOT A MATTER OF SAVING FACE.
IT IS A MATTER OF GIVING SOUTH VIETNAM A
DECENT CHANCE TO SURVIVE AS AN INDEPENDENT
NON-COMMUNIST NATION.
SINCERE ADVOCATES OF PRECIPITOUS
WITHDRAWAL FROM VIETNAM ARE IGNORING THE
CONSEQUENCES OF SUCH ACTION. OUR ALLIES IN
SOUTHEAST ASIA ARE WAITING TO SEE IF THE
COMMUNISTS ARE RIGHT IN SAYING AMERICANS
DO NOT HAVE THE MORAL STAMINA TO PERSEVERE
IN THE DEFENSE OF FREEDOM IN SOUTH VIETNAM
AND THE PRESERVATION OF THE DIVERSITIES
THAT THE PROUD PEOPLES AND SOCIETIES OF
ASIA REPRESENT.
-14-
I BELIEVE IN FREEDOM, AND I
BELIEVE FREEDOM IS DIMINISHED THROUGHOUT
THE WORLD WHENEVER ANOTHER COUNTRY
DISAPPEARS BEHIND THE BAMBOO OR IRON
CURTAINS.
RECENTLY, SHARP ATTACKS HAVE
BEEN MADE ON THE PRESIDENT AND HIS VIETNAM
POLICY. SAY LET US SUPPORT THE PRESIDENT
IN HIS QUEST FOR PEACE AMERICANS MUST
RALLY BEHIND THEIR PRESIDENT, FOR WITHOUT
THE SUPPORT OF THE PEOPLE NO PRESIDENT CAN
END THE U.S. INVOLVEMENT IN VIETNAM WITH
HONOR AND RETAIN THE RESPECT AND REGARD OF
OTHER NATIONS.
JOIN WITH ME. LET US NOT TURN
OUR BACKS ON FREEDOM. LET US ACHIEVE
PEACE WITH HONOR -- A PEACE THAT WILL
THWART THE CONTINUED COMMUNIST ATTEMPT TO
POACH ON FREEDOM'S SHRINKING PRESERVE.
-15-
SETTING A DATE FOR UNILATERAL AMERICAN
WITHDRAWAL CAN ONLY REDUCE HANOI'S INCENTIVE
TO NEGOTIATE AND LENGTHEN THE TIME IT TAKES
TO ACHIEVE A REAL PEACE. THIS IS
ESPECIALLY TRUE AS SOUTH VIETNAM PREPARES
TO HOLD ITS SECOND ROUND OF NATIONAL
FROM
ELECTIONS
THE PRESIDENCY TO THE VILLAGE,
BEGINNING IN MAY AND ENDING IN OCTOBER.
IT IS NO MERE COINCIDENCE THAT HANOI ASKS
AMERICA TO SET A WITHDRAWAL DATE TO DISRUPT
THIS PROCESS.
ASL MENT LONED EARLIER, HER, PRESIDENT
NIXON HAS CONSISTENTLY WOUND DOWN THE WAR.
HE HAS CUT OUR FORCES IN VIETNAM BY MORE
THAN HALF. HE HAS ALSO SLICED OUR VIETNAM
WAR EXPENDITURES IN TWO.
AS WE HAVE WOUND DOWN THE WAR,
THE IMPACT ON OUR ECONOMY HAS BEEN
IMMENSE. WE ARE PRESENTLY IN THE MIDST
-16-
OF A TRANSITION FROM A WARTIME TO A
PEACETIME ECONOMY.
}
JUST AS PRESIDENT NIXON FOUND
THE VIETNAM WAR ON THE WHITE HOUSE
-
DOORSTEP, SO HE ALSO INHERITED AN ONGOING
INFLATION AND THE SEEDS OF EVEN GREATER
INFLATION.
IN A SPEECH DELIVERED NOVEMBER 10,
1969, FORMER SECRETARY OF THE TREASURY
HENRY H. FOWLER ACKNOWLEDGED THAT INFLATION
WAS FLOURISHING WHEN MR. NIXON ENTERED THE
WHITE HOUSE. AN INFLATIONARY SPIRAL HAD
BEEN GENERATED, HE SAID, BY "A STEEP
ADVANCE IN GOVERNMENT EXPENDITURES,
COUPLED WITH SHARP EXPANSION OF BUSINESS
SPENDING ON PLANT AND EQUIPMENT AND OF
PERSONAL INCOME."
DURING THE TWO-YEAR PERIOD
BETWEEN JULY 1, 1966 AND JUNE 30, 1968,
-17-
FEDERAL SPENDING INCREASED BY $44.1 BILLION
OR 32.7 PER CENT. THE TIMING AND THE
NATURE OF THIS SHARP JUMP IN FEDERAL
OUTLAYS BUILT UP INFLATIONARY PRESSURES.
THIS WAS A TIME WHEN TOO MANY DOLLARS WERE
CHASING TOO FEW GOODS -- PRODUCING THE
CLASSIC DEMAND-PULL TYPE OF INFLATION.
DURING THIS SAME TWO-YEAR PERIOD,
FEDERAL REVENUE FAILED TO MATCH FEDERAL
SPENDING. TO COVER THE DEFICIT, THE
GOVERNMENT WENT INTO THE MONEY MARKET TO
BORROW $25.9 BILLION. THIS CREATED AN ACUTE
CREDIT SHORTAGE -- AND PUSHED UP INTEREST
RATES.
BY 1969, WHEN RICHARD NIXON TOOK
OFFICE, DEMAND-PULL INFLATION HAD ALREADY
GIVEN WAY TO ANOTHER KIND OF INFLATION --
COST-PUSH.
-18-
THE PROOF OF THIS IS THAT IN
1968, OUTPUT PER MAN HOUR IN MANUFACTURING
GREW 4.7 PER CENT BUT WAGES PER MAN-HOUR
INCREASED 7.1 PER CENT.
DUE TO THE EFFECTS OF INFLATION
PLUS HIGHER TAXES, REAL SPENDABLE EARNINGS
AS OF DECEMBER 31, 1968, HAD DROPPED TO
$103.99 A WEEK. THIS CONSTITUTED A
43-PER CENT DECLINE IN PURCHASING POWER OVER
A THREE-YEAR PERIOD. LABOR THEN NATURALLY
SET OUT TO RECAPTURE THIS LOSS IN REAL
EARNINGS.
THE SEEDS OF THE SLOWDOWN IN THE
1969,
ECONOMY WERE PLANTED BEFORE RICHARD NIXON
ENTERED THE WHITE HOUSE.
ON JUNE 28, 1968, PRESIDENT
JOHNSON SIGNED A BILL IMPOSING A 10-PER CENT
SURTAX ON INDIVIDUAL AND CORPORATE INCOME
AND IMPOSING A $180.1 BILLION CEILING ON
-19-
FISCAL YEAR 1969 SPENDING. THIS RESULTED
IN A $28.1 BILLION TURNAROUND IN THE
FEDERAL GOVERNMENT'S FISCAL STANCE -- AN
ABRUPT CHANGE FROM STIMULATION TO
RESTRAINT. AT THE SAME TIME, THE FEDERAL
RESERVE BOARD WAS ALSO PURSUING monetory A POLICY
which
OF RESTRAINT AND CONTINUED IT INTO 1969.
IRS
nation
THE NIXON ADMINISTRATION WAS FORCED
TO PAY THE PRICE DURING 1969 AND '70 FOR
THE INFLATIONARY BINGE OF THE LATE 1960'S.
THE PRICE HAS BEEN PAID. WE ARE
NOW COMING UP ON THE PLUS SIDE OF THE
LEDGER.
THE RISE IN PRICES THAT WE
EXPERIENCED IN 1969 AND 1970 HAS BEEN CUT
IN HALF. DURING THE FIRST THREE MONTHS
OF 1971, PRICES ROSE AT AN ANNUAL RATE
OF 2.7 PER CENT -- THE LOWEST QUARTERLY
INCREASE IN FOUR YEARS AND HALF THE
-20-
INCREASE RECORDED LAST YEAR.
THE COST OF BORROWING MONEY
HAS DROPPED SHARPLY. AT THE END OF THE
FIRST QUARTER OF 1970, THE PRIME INTEREST
RATE HAD DROPPED TO 5½ PER CENT FROM
8 PER CENT IN THE FIRST QUARTER OF 1970
AND FROM A HIGH OF 8½ PER CENT IN
JANUARY 1969.
THE NATION IS NOW PRODUCING MORE
THAN EVER BEFORE. THE GROSS NATIONAL
PRODUCT INCREASED BY $30.8 BILLION IN THE
FIRST QUARTER OF 1971 -- THE LARGEST SINGLE
ABSOLUTE INCREASE IN OUR HISTORY. THIS
DOESN'T QUITE FULFILL THE MOST OPTIMISTIC
FORECASTS BUT IT IS FAR BETTER THAN WAS
PREDICTED BY THE PESSIMISTS.
A HOUSING BOOM IS UNDER WAY.
TOWARD THE END OF THE FIRST QUARTER OF THIS
YEAR, THE ANNUAL RATE HAD GONE ABOVE
1.9 MILLION.
-21-
CONSUMER CONFIDENCE IS GROWING.
RETAIL SALES IN THE FIRST QUARTER INCREASED
3.3 PER CENT. AUTOMOBILE SALES SET
RECORDS.
PRODUCTIVITY IS ON THE RISE.
AFTER TWO YEARS OF VIRTUALLY NO GROWTH,
PRODUCTIVITY INCREASED 3.3 PER CENT DURING
1970. AND IN THE FIRST QUARTER OF 1971,
THE RATE INCREASED 5.3 PER CENT. ALTHOUGH
THIS REFLECTS THE REBOUND AFTER LAST
YEAR'S AUTO STRIKE, IT INDICATES THAT
PRODUCTIVITY IS LIKELY TO RISE MORE THIS
YEAR THAN LAST. THIS MEANS A HIGHER
STANDARD OF LIVING, WITH LESS INFLATIONARY
PRESSURE.
WHAT ALL THIS signals IS THAT THE
PRESIDENT IS EMINENTLY RIGHT WHEN HE SAYS
WE ARE BRINGING INFLATION UNDER CONTROL,
THAT 1971 WILL BE A GOOD YEAR, AND THAT
-22-
1972 WILL BE BETTER.
EARNINGS IN THE FIRST QUARTER
ADVANCED BY 8 PER CENT ON A WIDE FRONT.
IT'S TRUE THAT PROFITS STILL ARE IN A
SQUEEZE. BUT EVEN WITHOUT FIGURING IN
GENERAL MOTORS, PROFITS WERE 4 PER CENT
AHEAD OF A YEAR AGO. SO THE PICTURE is/
THAT PROFITS ARE BOUNCING BACK.
THE RECOVERY IS ACCELERATING.
THERE IS UNDERLYING STRENGTH IN THE ECONOMY.
INFLATION IS COMING UNDER CONTROL.
WE CAN ALL LOOK FORWARD TO
BETTER TIMES AHEAD. AND ON THAT NOTE I
LEAVE YOU.
--END--
Do you approve or disapprove of the way Richard Nixon is
handling his job as President?
Approve
Disapprove
No Opinion
55
34
11
Do you approve or disapprove of the way President Nixon is
handling the Vietnam situation?
April
March
Approve
48
41
Disapprove
40
47
No Opinion
12
12
A proposal has been made in Congress to require the U.S.
government to bring home all U.S. troops before the end
of this year. Would you favor the withdrawal of all U.S.
troops by the end of 1971 even if it meant a communist
takeover of South Vietnam?
Yes
No
No Opinion
27
57
16
Would you favor withdrawal of all U.S. troops by the end of
1971 even if it threatened the lives or safety of U.S. POW's
held by North Vietnam?
Yes
No
No Opinion
12
71
17
FORD & LIBRARY GERALD
by Opinion Research Corp. of Princeton, r.d.
Private nation wide telephone poll taken April 12-13, 1971 of 1092
responses 18 and above.
Distribution Full
Galliries 11:30a 5/20/71
maffice Copy
mail
pm
=
AN ADDRESS BY REP. GERALD R. FORD, R-MICH.
REPUBLICAN LEADER, U.S. HOUSE OF REPRESENTATIVES
BEFORE THE NATIONAL FEDERATION OF INDEPENDENT BUSINESSMEN
AT THE WASHINGTON HILTON HOTEL
7:30 p.m., WEDNESDAY, MAY 19, 1971
FOR RELEASE ON DELIVERY
Good evening. It is a great pleasure to be here among men who are truly
independent and who are devoted to the principles of free enterprise.
Life is difficult for the small businessman in this age of commercial giants,
I know. But I feel that times will become steadily better in the months ahead--and
I do not say this only because I tend to be eternally optimistic.
Things have already become a little easier for politicians in this age--the
Space Age. There was a time when we only promised people the moon. Now we can
actually deliver on that promise.
There are also, of course, a few things we can promise here on earth and
deliver on, if given only a little help by the American people.
Those words--a little help--are terribly important, particularly if the
promise is a pledge to end the Vietnam War in a way that will help to avoid future
wars.
I don't know if we can end the Vietnam War--because it takes both sides to
make peace.
But I do believe we can end U.S. involvement in Vietnam in the right way--if
not through a negotiated peace in Paris, then by turning the war over to the South
Vietnamese in an orderly and well-timed fashion.
I am not speaking in a partisan vein tonight. This is one reason I have
chosen to speak with you about Vietnam and what the future may hold there. If there
is any subject which should be nonpartisan, it is Vietnam.
It has been said that the world is now too dangerous for anything but truth.
I certainly believe that, and so I would like to speak a few truths here tonight
that have escaped some of us lately.
One of those truths is that the President of the United States is the only
man who can liquidate the American role in Vietnam and extricate us from that horrible
war.
Another of those truths is that the President is as anxious as anyone else in
this country to bring about U.S. disengagement from the Vietnam War as quickly as
practicable.
GERALE FORD LIBRARY
(more)
-2-
Still another truth is that public policy-American foreign policy affecting
war and peace--cannot safely be made in the streets. The April 24 Peace March
notwithstanding, crowd diplomacy is no sane substitute for carefully considered and
ordered policy formulated at the highest levels of the United States Government.
Chants of "out now," even if led by a United States senator, are no answer for the
fearfully complicated question of how best to end our involvement in Vietnam.
We all want to end our involvement in Vietnam. All of us. The President,
who inherited the war, and you and I.
The President, regardless of the war's history, has the terrible burden of
ending the American role in Vietnam. We should help him with it.
How can we help the President liquidate the American role in Vietnam? We can
and should support him as he pursues his policy of gradual withdrawal from Vietnam--
a policy which has reduced U.S. strength in Vietnam to a current level of 262,500
and will bring it down to 184,000 by next Dec. 1.
If U.S. troop withdrawals from Vietnam continue beyond Dec. 1 at the present
pace, we will be down to 55,000 troops by next Sept. 1--the figure generally talked
about as a "residual force." Our goal is total withdrawal. It will be achieved.
There are those who are calling for a publicly announced pullout date, as
demanded by the North Vietnamese and the Viet Cong. The date most frequently
mentioned is Dec. 31, 1971. What purpose would it serve for the President to
announce we would pull out by that date? Is such an announcement in the best
interests of our side? No, it would only serve the purposes of the enemy.
We would be removing the enemy's incentive to end U.S. involvement sooner
by negotiation.
We would be giving the enemy the information needed to marshal attacks
against our remaining forces at their most vulnerable time.
So a publicly announced pullout date serves no useful purpose, and in any
case we will be substantially out of Vietnam by early next fall. When we talk about
early next fall as against Dec. 31, 1971, we are really talking about only a few
months' difference in time.
Why are some of the leaders of the April 24 Peace March and the May Day
disturbances so determined to get us out of Vietnam now? Because these leaders
are anxious to promote a Communist victory in Vietnam. Not to take anything away
from the thousands of well-meaning Americans who follow these leaders without regard
for their ideological coloration. They no doubt are sincere. But policy on this
vital issue cannot be made in the streets, and it certainly should not be made by
(more)
-3-
radicals who try to tear down the American Flag and raise the Viet Cong flag in its
place.
We are succeeding in thwarting a Communist takeover in South Vietnam by
force. If we now were to withdraw all of our forces swiftly and precipitously, we
would be acquiescing in Communist conquest of Vietnam.
I know the American people are tired of the Vietnam War. But is surrender
in Vietnam what they really want? I don't believe it for a minute, and a poll by
the Opinion Research Corporation substantiates it. When asked if they favor pullout
of all American troops by the end of 1971 even if this meant a Communist takeover,
only 27 per cent said "yes," and 57 per cent said "no." The rest were undecided.
North Vietnam and the Viet Cong have repeatedly made it plain that they
expect growing protests in the United States to speed the end of the Vietnam War on
their terms. I don't believe that is going to happen. I believe the majority of
the American people support the President on the crucial issue of gradual withdrawal
with success versus precipitous withdrawal and defeat.
Do we have any business being in Vietnam? Is the Vietnam War a civil war in
which we have intervened without good cause?
Anyone who believes the Vietnam War is a civil war is either not knowledgeable
or is forgetful of the facts--the fact that after the Indochina War ended North
Vietnam refused to accept the U.S. proposal of UN-supervised elections, that North
Vietnam and France were therefore the only nations who signed the Geneva Accords
in 1954, that the Communist Party in North Vietnam executed more than 50,000 people
during the following two-year period, that the Communist Party in North Vietnam
herded more than a half million people into forced labor camps or re-education
centers, that the Communist Party of North Vietnam had also ordered 80,000 to
100,000 Southern Communists to go North at the time of the Geneva Conference to
train and prepare in the North to return to South Vietnam to organize the Communist
vote in the South in 1956, that these Southern men returned to the South under
Northern orders to begin a guerrilla war, that most of these Southerners had been
sent back to the South by Hanoi by 1964, that in September and October of 1964 the
first regular Army units of the North Vietnamese Army moved down the Ho Chi Minh
Trail through Laos into South Vietnam.
It was only the U.S. response with combat forces that prevented the collapse
of South Vietnam. There are today some 160,000 North Vietnamese soldiers in the
South, a force that constitutes an actual invasion of the South from the North.
(more)
4
The ongoing U.S. troop withdrawals from South Vietnam are timed so as to
enable South Vietnam to meet the Communist challenge from the North.
The way the war can be most speedily resolved is by meaningful negotiations
at Paris. If Hanoi continues to refuse to negotiate, then President Nixon's
Vietnamization program--the strengthening of the South militarily, politically
and economically--is a constant reminder to the North that as they dally the South
Vietnamese are being given more time and weapons training to deal with them.
We have been actively fighting in Vietnam for six years. That is a long
time. But the Communist North has been trying to conquer South Vietnam for
17 years--ever since the Geneva Armistice.
This war belongs to the Vietnamese and we should give it back to them. But
we must do it in orderly fashion, in a way that bestows strength on the South
Vietnamese and discourages Communist aggression--now and for the future.
President Nixon is salvaging the tremendous investment we have made in
Vietnam. You can argue that we never should have become involved in Vietnam in the
first place-that both Presidents Kennedy and Johnson made a mistake. But I don't
think you can argue against President Nixon's salvage operation.
It is not a matter of saving face. It is a matter of giving South Vietnam a
decent chance to survive as an independent, non-Communist nation.
Sincere advocates of precipitous withdrawal from Vietnam are ignoring the
consequences of such action. Our allies in Southeast Asia are waiting to see if
the Communists are right in saying Americans do not have the moral stamina to
persevere in the defense of freedom in South Vietnam and the preservation of the
diversities that the proud peoples and societies of Asia represent.
I believe in freedom, and I believe freedom is diminished throughout the
world whenever another country disappears behind the Bamboo or Iron Curtains.
Recently sharp attacks have been made on the President and his Vietnam
policy. I say let us support the President in his quest for peace. Americans must
rally behind their President, for without the support of the people no President
can end the U.S. involvement in Vietnam with honor and retain the respect and regard
of other nations.
Join with me. Let us not turn our backs on freedom. Let us achieve peace
with honor--a peace that will thwart the continued Communist attempt to poach on
freedom's shrinking preserve. Setting a date for unilateral American withdrawal
can only reduce Hanoi's incentive to negotiate and lengthen the time it takes to
(more)
achieve a real peace. This is especially true as South Vietnam this year prepares
to hold its second round of national elections from the Presidency to the village,
beginning in May and ending in October. It is no mere coincidence that Hanoi asks
America to set a withdrawal date to disrupt this process.
As I mentioned earlier, President Nixon has consistently wound down the war.
He has cut our forces in Vietnam by more than half. He has also sliced our Vietnam
war expenditures in two.
As we have wound down the war, the impact on our economy has been immense.
We are presently in the midst of a transition from a wartime to a peacetime economy.
Just as President Nixon found the Vietnam War on the White House doorstep,
SO he also inherited an ongoing inflation and the seeds of even greater inflation.
In a speech delivered Nov. 10, 1969, former Secretary of the Treasury Henry
H. Fowler acknowledged that inflation was flourishing when Mr. Nixon entered the
White House. An inflationary spiral had been generated, he said, by "a steep
advance in Government expenditures, coupled with sharp expansion of business
spending on plant and equipment and of personal income.'
During the two-year period between July 1, 1966 and June 30, 1968, Federal
spending increased by $44.1 billion, or 32.7 per cent. The timing and the nature
of this sharp jump in Federal outlays built up inflationary pressures. This was a
time when too many dollars were chasing too few goods--producing the classic
demand-pull type of inflation.
During this same two-year Period, Federal revenue failed to match Federal
spending. To cover the deficit, the Government went into the money market to
borrow $25.9 billion. This created an acute credit shortage--and pushed up interest
rates.
By 1969, when Richard Nixon took office, demand-pull inflation had already
given way to another kind of inflation--cost-push.
The proof of this is that in 1968 output per man hour in manufacturing grew
4.7 per cent but wages per man-hour increased 7.1 per cent.
Due to the effects of inflation plus higher taxes, real spendable earnings
as of Dec. 31, 1968, had dropped to $103.99 a week. This constituted a 43-per cent
decline in purchasing power over a three-year period. Labor then naturally set out
to recapture this loss in real earnings.
The seeds of the slowdown in the economy were planted before Richard Nixon
entered the White House.
(more)
On June 28, 1968, President Johnson signed a bill imposing a 10-per cent
surtax on individual and corporate income and imposing a $180.1 billion ceiling on
fiscal year 1969 spending. This resulted in a $28.1 billion turnaround in the
Federal Government's fiscal stance--an abrupt change from stimulation to restraint.
At the same time, the Federal Reserve Board was also pursuing a policy of restraint
and continued it into 1969.
The Nixon Administration was forced to pay the price during 1969 and '70 for
the inflationary binge of the late 1960's.
The price has been paid. We are now coming up on the plus side of the ledger.
The rise in prices that we experienced in 1969 and 1970 has been cut in half.
During the first three months of 1971, prices rose at an annual rate of 2.7 per
cent--the lowest quarterly increase in four years and half the increase recorded
last year.
The cost of borrowing money has dropped sharply. At the end of the first
quarter of 1970, the prime interest rate had dropped to 5.5 per cent from 8 per cent
in the first quarter of 1970 and from a high of 8.5 per cent in January 1969.
The Nation is now producing more than ever before. The Gross National
Product increased by $30.8 billion in the first quarter of 1971--the largest single
absolute increase in our history. This doesn't quite fulfill the most optimistic
forecasts but it is far better than was predicted by the pessimists.
A housing boom is under way. Toward the end of the first quarter of this
year, the annual rate had gone above 1.9 million.
Consumer confidence is growing. Retail sales in the first quarter increased
3.3 per cent. Automobile sales set records.
Productivity is on the rise. After two years of virtually no growth,
productivity increased 3.3 per cent during 1970. And in the first quarter of 1971,
the rate increased 5.3 per cent. Although this reflects the rebound after last
year's auto strike, it indicates that productivity is likely to rise more this year
than last. This means a higher standard of living, with less inflationary pressure.
What all of this means is that the President is eminently right when he says
we are bringing inflation under control, that 1971 will be a good year, and that
1972 will be better.
Earnings in the first quarter advanced by 8 per cent on a wide front. It's
true that profits still are in a squeeze. But even without figuring in Genral
Motors, profits were 4 per cent ahead of a year ago. So the picture is that profits
are bouncing back.
(more)
-7-
The recovery is accelerating. There is underlying strength in the economy.
Inflation is coming under control.
We can all look forward to better times ahead. And on that note I leave
you.
###
AN ADDRESS BY REP. GERALD R. FORD, R-MICH.
REPUBLICAN LEADER, U.S. HOUSE OF REPRESENTATIVES
BEFORE THE NATIONAL FEDERATION OF INDEPENDENT BUSINESSMEN
AT THE WASHINGTON HILTON HOTEL
7:30 p.m., WEDNESDAY, MAY 19, 1971
FOR RELEASE ON DELIVERY
Good evening. It is a great pleasure to be here among men who are truly
independent and who are devoted to the principles of free enterprise.
Life is difficult for the small businessman in this age of commercial giants,
I know. But I feel that times will become steadily better in the months ahead--and
I do not say this only because I tend to be eternally optimistic.
Things have already become a little easier for politicians in this age--the
Space Age. There was a time when we only promised people the moon. Now we can
actually deliver on that promise.
There are also, of course, a few things we can promise here on earth and
deliver on, if given only a little help by the American people.
Those words--a little help--are terribly important, particularly if the
promise is a pledge to end the Vietnam War in a way that will help to avoid future
wars.
I don't know if we can end the Vietnam War--because it takes both sides to
make peace.
But I do believe we can end U.S. involvement in Vietnam in the right way--if
not through a negotiated peace in Paris, then by turning the war over to the South
Vietnamese in an orderly and well-timed fashion.
I am not speaking in a partisan vein tonight. This is one reason I have
chosen to speak with you about Vietnam and what the future may hold there. If there
is any subject which should be nonpartisan, it is Vietnam.
It has been said that the world is now too dangerous for anything but truth.
I certainly believe that, and so I would like to speak a few truths here tonight
that have escaped some of us lately.
One of those truths is that the President of the United States is the only
man who can liquidate the American role in Vietnam and extricate us from that horrible
war.
Another of those truths is that the President is as anxious as anyone else in
this country to bring about U.S. disengagement from the Vietnam War as quickly as
practicable.
(more)
-2--
Still another truth is that public policy-American foreign policy affecting
war and peace--cannot safely be made in the streets. The April 24 Peace March
notwithstanding, crowd diplomacy is no sane substitute for carefully considered and
ordered policy formulated at the highest levels of the United States Government.
Chants of "out now," even if led by a United States senator, are no answer for the
fearfully complicated question of how best to end our involvement in Vietnam.
We all want to end our involvement in Vietnam. All of us. The President,
who inherited the war, and you and I.
The President, regardless of the war's history, has the terrible burden of
ending the American role in Vietnam. We should help him with it.
How can we help the President liquidate the American role in Vietnam? We can
and should support him as he pursues his policy of gradual withdrawal from Vietnam--
a policy which has reduced U.S. strength in Vietnam to a current level of 262,500
and will bring it down to 184,000 by next Dec. 1.
If U.S. troop withdrawals from Vietnam continue beyond Dec. 1 at the present
pace, we will be down to 55,000 troops by next Sept. 1--the figure generally talked
about as a "residual force." Our goal is total withdrawal. It will be achieved.
There are those who are calling for a publicly announced pullout date, as
demanded by the North Vietnamese and the Viet Cong. The date most frequently
mentioned is Dec. 31, 1971. What purpose would it serve for the President to
announce we would pull out by that date? Is such an announcement in the best
interests of our side? No, it would only serve the purposes of the enemy.
We would be removing the enemy's incentive to end U.S. involvement sooner
by negotiation.
We would be giving the enemy the information needed to marshal attacks
against our remaining forces at their most vulnerable time.
So a publicly announced pullout date serves no useful purpose, and in any
case we will be substantially out of Vietnam by early next fall. When we talk about
early next fall as against Dec. 31, 1971, we are really talking about only a few
months' difference in time.
Why are some of the leaders of the April 24 Peace March and the May Day
disturbances so determined to get us out of Vietnam now? Because these leaders
are anxious to promote a Communist victory in Vietnam. Not to take anything away
from the thousands of well-meaning Americans who follow these leaders without regard
for their ideological coloration. They no doubt are sincere. But policy on this
vital issue cannot be made in the streets, and it certainly should not be made by
(more)
--3--
radicals who try to tear down the American Flag and raise the Viet Cong flag in its
place.
We are succeeding in thwarting a Communist takeover in South Vietnam by
force. If we now were to withdraw all of our forces swiftly and precipitously, we
would be acquiescing in Communist conquest of Vietnam.
I know the American people are tired of the Vietnam War. But is surrender
in Vietnam what they really want? I don't believe it for a minute, and a poll by
the Opinion Research Corporation substantiates it. When asked if they favor pullout
of all American troops by the end of 1971 even if this meant a Communist takeover,
only 27 per cent said "yes," and 57 per cent said "no." The rest were undecided.
North Vietnam and the Viet Cong have repeatedly made it plain that they
expect growing protests in the United States to speed the end of the Vietnam War on
their terms. I don't believe that is going to happen. I believe the majority of
the American people support the President on the crucial issue of gradual withdrawal
with success versus precipitous withdrawal and defeat.
Do we have any business being in Vietnam? Is the Vietnam War a civil war in
which we have intervened without good cause?
Anyone who believes the Vietnam War is a civil war is either not knowledgeable
or is forgetful of the facts--the fact that after the Indochina War ended North
Vietnam refused to accept the U.S. proposal of UN-supervised elections, that North
Vietnam and France were therefore the only nations who signed the Geneva Accords
in 1954, that the Communist Party in North Vietnam executed more than 50,000 people
during the following two-year period, that the Communist Party in North Vietnam
herded more than a half million people into forced labor camps or re-education
centers, that the Communist Party of North Vietnam had also ordered 80,000 to
100,000 Southern Communists to go North at the time of the Geneva Conference to
train and prepare in the North to return to South Vietnam to organize the Communist
vote in the South in 1956, that these Southern men returned to the South under
Northern orders to begin a guerrilla war, that most of these Southerners had been
sent back to the South by Hanoi by 1964, that in September and October of 1964 the
first regular Army units of the North Vietnamese Army moved down the Ho Chi Minh
Trail through Laos into South Vietnam.
It was only the U.S. response with combat forces that prevented the collapse
of South Vietnam. There are today some 160,000 North Vietnamese soldiers in the
South, a force that constitutes an actual invasion of the South from the North.
(more)
The ongoing U.S. troop withdrawals from South Vietnam are timed so as to
enable South Vietnam to meet the Communist challenge from the North.
The way the war can be most speedily resolved is by meaningful negotiations
at Paris. If Hanoi continues to refuse to negotiate, then President Nixon's
Vietnamization program--the strengthening of the South militarily, politically
and economically--is a constant reminder to the North that as they dally the South
Vietnamese are being given more time and weapons training to deal with them.
We have been actively fighting in Vietnam for six years. That is a long
time. But the Communist North has been trying to conquer South Vietnam for
17 years--ever since the Geneva Armistice.
This war belongs to the Vietnamese and we should give it back to them. But
we must do it in orderly fashion, in a way that bestows strength on the South
Vietnamese and discourages Communist aggression--now and for the future.
President Nixon is salvaging the tremendous investment we have made in
Vietnam. You can argue that we never should have become involved in Vietnam in the
first place--that both Presidents Kennedy and Johnson made a mistake. But I don't
think you can argue against President Nixon's salvage operation.
It is not a matter of saving face. It is a matter of giving South Vietnam a
decent chance to survive as an independent, non-Communist nation.
Sincere advocates of precipitous withdrawal from Vietnam are ignoring the
consequences of such action. Our allies in Southeast Asia are waiting to see if
the Communists are right in saying Americans do not have the moral stamina to
persevere in the defense of freedom in South Vietnam and the preservation of the
diversities that the proud peoples and societies of Asia represent.
I believe in freedom, and I believe freedom is diminished throughout the
world whenever another country disappears behind the Bamboo or Iron Curtains.
Recently sharp attacks have been made on the President and his Vietnam
policy. I say let us support the President in his quest for peace. Americans must
rally behind their President, for without the support of the people no President
can end the U.S. involvement in Vietnam with honor and retain the respect and regard
of other nations.
Join with me. Let us not turn our backs on freedom. Let us achieve peace
with honor--a peace that will thwart the continued Communist attempt to poach on
freedom's shrinking preserve. Setting a date for unilateral American withdrawal
can only reduce Hanoi's incentive to negotiate and lengthen the time it takes to
(more)
achieve a real peace. This is especially true as South Vietnam this year prepares
to hold its second round of national elections from the Presidency to the village,
beginning in May and ending in October. It is no mere coincidence that Hanoi asks
America to set a withdrawal date to disrupt this process.
As I mentioned earlier, President Nixon has consistently wound down the war.
He has cut our forces in Vietnam by more than half. He has also sliced our Vietnam
war expenditures in two.
As we have wound down the war, the impact on our economy has been immense.
We are presently in the midst of a transition from a wartime to a peacetime economy.
Just as President Nixon found the Vietnam War on the White House doorstep,
SO he also inherited an ongoing inflation and the seeds of even greater inflation.
In a speech delivered Nov. 10, 1969, former Secretary of the Treasury Henry
H. Fowler acknowledged that inflation was flourishing when Mr. Nixon entered the
White House. An inflationary spiral had been generated, he said, by "a steep
advance in Government expenditures, coupled with sharp expansion of business
spending on plant and equipment and of personal income."
During the two-year period between July 1, 1966 and June 30, 1968, Federal
spending increased by $44.1 billion, or 32.7 per cent. The timing and the nature
of this sharp jump in Federal outlays built up inflationary pressures. This was a
time when too many dollars were chasing too few goods--producing the classic
demand-pull type of inflation.
During this same two-year Period, Federal revenue failed to match Federal
spending. To cover the deficit, the Government went into the money market to
borrow $25.9 billion. This created an acute credit shortage--and pushed up interest
rates.
By 1969, when Richard Nixon took office, demand-pull inflation had already
given way to another kind of inflation--cost-push.
The proof of this is that in 1968 output per man hour in manufacturing grew
4.7 per cent but wages per man-hour increased 7.1 per cent.
Due to the effects of inflation plus higher taxes, real spendable earnings
as of Dec. 31, 1968, had dropped to $103.99 a week. This constituted a 43-per cent
decline in purchasing power over a three-year period. Labor then naturally set out
to recapture this loss in real earnings.
The seeds of the slowdown in the economy were planted before Richard Nixon
entered the White House.
(more)
On June 28, 1968, President Johnson signed a bill imposing a 10-per cent
surtax on individual and corporate income and imposing a $180.1 billion ceiling on
fiscal year 1969 spending. This resulted in a $28.1 billion turnaround in the
Federal Government's fiscal stance--an abrupt change from stimulation to restraint.
At the same time, the Federal Reserve Board was also pursuing a policy of restraint
and continued it into 1969.
The Nixon Administration was forced to pay the price during 1969 and '70 for
the inflationary binge of the late 1960's.
The price has been paid. We are now coming up on the plus side of the ledger.
The rise in prices that we experienced in 1969 and 1970 has been cut in half.
During the first three months of 1971, prices rose at an annual rate of 2.7 per
cent--the lowest quarterly increase in four years and half the increase recorded
last year.
The cost of borrowing money has dropped sharply. At the end of the first
quarter of 1970, the prime interest rate had dropped to 5.5 per cent from 8 per cent
in the first quarter of 1970 and from a high of 8.5 per cent in January 1969.
The Nation is now producing more than ever before. The Gross National
Product increased by $30.8 billion in the first quarter of 1971-the largest single
absolute increase in our history. This doesn't quite fulfill the most optimistic
forecasts but it is far better than was predicted by the pessimists.
A housing boom is under way. Toward the end of the first quarter of this
year, the annual rate had gone above 1.9 million.
Consumer confidence is growing. Retail sales in the first quarter increased
3.3 per cent. Automobile sales set records.
Productivity is on the rise. After two years of virtually no growth,
productivity increased 3.3 per cent during 1970. And in the first quarter of 1971,
the rate increased 5.3 per cent. Although this reflects the rebound after last
year's auto strike, it indicates that productivity is likely to rise more this year
than last. This means a higher standard of living, with less inflationary pressure.
What all of this means is that the President is eminently right when he says
we are bringing inflation under control, that 1971 will be a good year, and that
1972 will be better.
Earnings in the first quarter advanced by 8 per cent on a wide front. It's
true that profits still are in a squeeze. But even without figuring in Genral
Motors, profits were 4 per cent ahead of a year ago. So the picture is that profits
are bouncing back.
(more)
-7-
The recovery is accelerating. There is underlying strength in the economy.
Inflation is coming under control.
We can all look forward to better times ahead. And on that note I leave
you.
###