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International Council, Morgan Guaranty Trust Company, San Francisco, CA, February 8, 1973
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International Council, Morgan Guaranty Trust Company, San Francisco, CA, February 8, 1973
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The original documents are located in Box D34, folder "International Council, Morgan
Guaranty Trust Company, San Francisco, CA, February 8, 1973" 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States of America his copyrights in all of his unpublished writings in National Archives collections.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 D34 of the Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
MEMO TO MR. FORD FROM MR. MILTICH RE: SAN FRANCISCO TAIK
You will be speaking to the "International Council" of the Morgan Guaranty
Trust Company, a group of busine ssmen and people retired from public service
who are called upon by Morgan Guaranty Trust for advice with regard to its
international business.
You will
speak at 10 a.m. Thursday, Feb. 8, at the
Fairmont Hotel, S.F.
Your
subject will be: "The New U.S. Congress its composition and
balance of power and what the prospects are for legislative accomplishments,
They would like you to speak X for about a half hour on an
off-the-cuff.
off-the-record basis (no press will be present) and then answer questions for
about a half hour.
I have put together some material which I think will be helpful to you. I think
the remarks I prepared for La. State...on the fiscal responsibility confrontation
between the President and the Democratic-controlled Congre SS would be apropos,
along with some comment on the accretion of power by Speaker Albert.
--Paul
nominal of change = exchange rate change of a foreign
currency vis vis the us dollar
effective of change = net only. result to a particular country
or currency of an exitange - rate
valigment in which all major
currencies change. Net unit
is obtained by. weighting,
according to belateral trade,
exchange rate changes.
For example, in pachage Aa B
the German mark would uvalue
7.89% vis a vis the US dollar,
but remain unchanged vis-a-vi
France, Belginn, Halland etc,
its main trade partners. n would
in fact, devalue vis - a- in the
year 10%). As a unit, a
realigment d enclange rates indicated
in pachage # or B, would willd
rather small effective changes
for most European curren ires.
m my view; these changes word
be acceptable to the world, but
it regines a tion by the
us + Japan
Two hypothetical exchange rate realignments assuming U.S. initiative.
Package assumes increase in U.S. gold price to $41 per ounce or 7.89%
dollar devaluation and package an increase to $42 or 10.53% devaluation.
nominal Normal
Effactive
Effective
% change
change
% change
change
U.S.
-4.73
-
-6.29
Canada
-.90
-
-1.59
Japan
+17.89
+14.95
+20.53
+16.37
U.K.
-7.89(240.0)
-12.88
-4.06(250.0)
-10.20
Germany
+7.89
+2.94
+10.53
+3.61
France
+7.89
+3.07
+8.00
+.89
Italy
-
-5.45
+3.00
-4.13
Belgium
+7.89
+2.06
+10.53
+2.71
Netherlands
+7.89
+2.47
+10.53
+2.82
Switzerland
+7.89
+3.20
+10.53
+3.59
Austria
+7.89
+2.76
+10.53
+2.84
Denmark
+5.00
+2.15
+7.00
+1.78
Norway
+5.00
+1.73
+7.00
+1.44
Sweden
+5.00
+1.66
+7.00
+1.35
Australia
+7.89
+3.88
+10.53
+4.30
In addition to the U.S. action, Japan is assumed to revalue the yen 10%
in terms of SDRs. Furthermore, the Canadian dollar would continue to float.
If the Canadian dollar floats from 100 to 101, this would add 24 basis points
to the effective dollar depreciation, etc.
*
At Smithsonian effective dollar depreciation was 10.35% in which was
included the effect of the floating of the Canadian dollar for 92 1/2 on
June 1970 to 100.34 on Dec. 18, 1971. On the other hand, even fewer LDCs could
be expected to follow a U.S. action now than in 1971.
it was 12% vis-a-vis Grampol Ten mmus Canada
(over)
10.35%
11
"
"
plus Canada
7-7½2 "
word as awls. awhle.
February 5: 1973
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
INTERNATIONAL COUNCIL
PROGRAM
NINTH MEETING
SAN FRANCISCO, CALIF.
FEBRUARY 8th & 9th, 1973
IRRARY
MEMBERS OF THE COUNCIL
THE RT. HONORABLE LORD SHAWCROSS
*THE RT. HON. SIR ROBERT G. MENZIES
Chairman
Melbourne, Australia
Program
London, England
JOHN M. MEYER, JR.
THOMAS S. GATES
New York, New York
Vice Chairman
New York, New York
MAERSK Mc-KINNEY MOLLER
THURSDAY
STEPHEN D. BECHTEL
A. P. Moller
Senior Director
Copenhagen, Denmark
FEBRUARY 8th - Morning
Bechtel Corporation
JOHN H. MOORE
San Francisco, California
President
AT THE FAIRMONT HOTEL
HARRY O. BERCHER
Brascan Limited
Director
Toronto, Canada
International Harvester Company
Chicago, Illinois
AKIO MORITA
8:15 Breakfast - CIRQUE ROOM
President
CHARLES E. BOHLEN
Sony Corporation
Washington, D.C.
Tokyo, Japan
9:30 Assembly - FRENCH ROOM
FRED J. BORCH
Former Chairman
ROBERT D. MURPHY
General Electric Company
Honorary Chairman
9:45 Opening Remarks by the Chairman
THE RT. HON. LORD SHAWCROSS
New York, New York
Corning Glass International
New York, New York
JORGE BORN
Welcoming Remarks by MGT Chairman
ELLMORE C. PATTERSON
Chairman and President
DONALD S. PERKINS
Bunge & Born S.A.
Chairman
Jewel Companies, Inc.
10:00 The New U.S. Congress
THE HONORABLE GERALD R. FORD
Buenos Aires, Argentina
DR. GIORGIO CAPPON
Chicago, Illinois
Minority Leader, House of Representatives
General Manager
POL PROVOST
Istituto Mobiliare Italiano
Chairman and President
11:15 Briefing Session on U.S. and
Rome, Italy
N.V. Houtindustrie de Coene & Co.
BERT S. CROSS
Kortrijk, Belgium
International Financial Markets
Guy E. NOYES
Chairman of the Finance Committee
Minnesota Mining & Manufacturing Company
GEORGE RUSSELL
DENNIS WEATHERSTONE
St. Paul, Minnesota
Director
RIMMER de VRIES
*PROF. DR. KURT HANSEN
General Motors Corporation
Detroit, Michigan
Chairman
Farbenfabriken Bayer AG
*WILLIAM S. SNEATH
12:15 Morgan Guaranty's International Business
Bayerwerk, Germany
President
and Plans for the Future
LEWIS T. PRESTON
EDWARD R. KANE
Union Carbide Corporation
Senior Vice President
New York, New York
12:30 Lunch - PACIFIC UNION CLUB
E.I. du Pont de Nemours & Company
JUAN T. TRIPPE
Wilmington, Delaware
Honorary Chairman
VASCO T. LEITAO da CUNHA
Pan American World Airways, Inc.
Rio de Janeiro, Brazil
New York, New York
HOBART LEWIS
WILLIAM S. VAUGHN
FEBRUARY 8th - Afternoon
President and Editor-in-Chief
The Reader's Digest Association Inc.
Director
Pleasantville, New York
Eastman Kodak Company
AT THE FAIRMONT HOTEL - FRENCH ROOM
Rochester, New York
ROGER L. R. MARTIN
President
DR. ALBERTO J. VOLLMER
Compagnie de Saint-Gobain-Pont-a-Mousson
Central El Palmar S.A.
2:30 The Corporate Board of Directors
Paris, France
Caracas, Venezuela
*Not attending this meeting.
How to organize and select members; responsibilities,
duties and liabilities of members.
REPRESENTING MORGAN GUARANTY
Its powers and relationship to management.
ELLMORE C. PATTERSON
WALTER H. PAGE
Chairman of the Board
President
Introductions
THE RT. HON. LORD SHAWCROSS
DeWITT PETERKIN, JR.
LEWIS T. PRESTON
Vice Chairman of the Board
Executive Vice President
BORIS S. BERKOVITCH
BORIS S. BERKOVITCH
GUY E. NOYES
Senior Vice President and Secretary
Senior Vice President and Economist
Presentations by
DR. GIORGIO CAPPON
ALFRED H. VON KLEMPERER
DENNIS WEATHERSTONE
Senior Vice President
Senior Vice President
JOHN H. MOORE
GEORGE E. AUSTIN
RIMMER de VRIES
AKIO MORITA
Vice President
Vice President
DONALD S. PERKINS
From Morgan Guaranty International Bank of San Francisco:
RICHARD C. STARRATT
4:30 Adjournment
Vice President and General Manager
6-7 INFORMAL COCKTAIL PARTY FOR MEMBERS AND WIVES
ARRANGEMENTS
at office of Morgan Guaranty International Bank of San Francisco,
MRS. CHRISTINE S. DAVIN
400 Montgomery Street.
FRIDAY
FEBRUARY 9th - Morning
AT THE FAIRMONT HOTEL - FRENCH ROOM
9:30 Assembly
9:45 The Stockholm Conference on the Environment -
follow up and present situation
BERT S. CROSS
10:45 The Energy Problem
Financial and Balance of Payments
Aspects
EMILIO G. COLLADO
Executive Vice President, Exxon Corporation
International Political Aspects
JAMES E. AKINS
Director, Office of Fuels and Energy,
U.S. Department of State
Factors involved in a National
Energy Policy
DR. THOMAS O. PAINE
Vice President and Group Executive,
General Electric Company
Introduction to Discussion
STEPHEN D. BECHTEL
12:30 Lunch - THE FAIRMONT HOTEL - CIRQUE ROOM
FEBRUARY 9th - Afternoon
AT THE FAIRMONT HOTEL - FRENCH ROOM
2:00 Finish up Energy Session
4:00 Summing up and Closing Remarks
THE RT. HON. LORD SHAWCROSS
4:15 Adjournment
6:30 RECEPTION AND DINNER FOR MEMBERS, WIVES AND GUESTS
(Black tie)
at Bohemian Club, The Red & Owl Rooms, 624 Taylor Street.
BIFORD
LIBERTY
GERALD
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
23 WALL STREET, NEW YORK, N.Y. 10015
NewYork
THOMAS S. GATES
October 24, 1972
The Hon. Gerald Ford
Congress of the United States
Office of the Minority Leader
House of Representatives
Washington, D.C. 20515
Dear Gerry:
I would like to invite you to join a meeting of our
bank's International Council in San Francisco on Thursday,
February 8, 1973. As part of a two-day meeting we would
like to have a session on that morning to discuss the balance
of power. prospects for legislative accomplishments. etc.. in
the new Congress. I wonder whether you could speak to us on
this subject for, say, thirty minutes to be followed by a
question and answer period of similar duration. These are
entirely informal off-the-record meetings with no press in
attendance
We established our International Council, of which I
am now the Vice Chairman, a few years ago. We were seeking a
group of businessmen and people retired from public service
on whom we can call for advice on our international business.
You will find a list of its members on the inside of the back
cover of our enclosed Annual Report. The Council meets formal-
ly about once every nine months during which we have a two-day
program with subjects which are of interest and instructive
for both our members and ourselves. Enclosed is a copy of our
last program which will indicate to you the nature of these
meetings. The political session in which you are asked to
participate is a traditional and very popular one. In the
past we have always had members of the press as the speaker.
FORD
On the afternoon of February 8th we will have a meeting
to discuss the duties, responsibilities and organization of
GERALD
LIBRARY
MORGAN GUARANTY TRUST COMPANY.
OF NEW YORK
-2-
The Hon. Gerald Ford
October 24, 1972
Boards of Directors and most of Friday will be taken up with a
discussion of the Energy problem. You are, of course, cordially
invited to attend all of the formal sessions and the social oc-
casions if they are of interest to you.
Perhaps the timing will be a bad one for you. If it is
not, we would be greatly honored by having you with us. I
could not think of a better way of giving our domestic and
foreign members and ourselves the feel of the political situa-
tion in the U.S. Ellmore Patterson joins me in this invitation
and we would both be most grateful for your participation in our
meeting.
Sincerely,
Tomparis
Enclosures
deny -
This a impire and very top group - small and
off the record. Ian enfedent you would enjoy /
Can have a date to descuss is with you - after
the election ?
of
FORD LIBRARY
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
23 WALL STREET, NEW YORK, N.Y. 10015
NewYork
THOMAS S. GATES
January 4, 1973
The Honorable Gerald R. Ford
Congress of the United States
Office of the Minority Leader
House of Representatives
Washington, D.C. 20515
Dear Jerry:
Unfortunately, I was not able to get to Washington as
I had intended to talk to you further about the meeting of our
International Council in San Francisco on February 8th. There-
fore, this note. Our program has now been finalized and a copy
is attached. Also enclosed is a questionnaire which we have
sent to the Council members and speakers on the social events
during the two days. We would love to have you and Betty to
any or all of them at your pleasure. Please return the ques-
tionnaire in the self-addressed envelope. Could you let us
know if you want us to make any arrangements for your trans-
portation and housing?
You will see from the questionnaire that in addition to
the formal dinner on Friday some of us also intend to get to-
gether informally on Thursday evening. The members of the
Council and speakers, with wives, who would like to spend the
evening together will have an opportunity to do so through
three or four small gatherings which some of us will host in
local restaurants.
As to your part in the formal program you will notice
that you are scheduled to start us off in the morning of Thurs-
day, February 8th. This would be a session concerned with the
composition and balance of power of the new Congress and what
the prospects are for the legislative accomplishments. We al-
ways have a session on the domestic political situation at these
meetings. In the past we have usually had a prominent journalist
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
-2-
The Honorable Gerald R. Ford
January 4, 1973
such as Jim Reston as the speaker. This is an entirely informal,
off-the-record session and there is no press in attendance.
You will hear from us further during the next few weeks.
If there are any questions in the meantime, please give me a
ring, or I could call on you in Washington.
With best wishes.
Sincerely,
Tonfacer
Enclosures
GERALD R. FORD
-
1
PROGRAM
INTERNATIONAL COUNCIL - SAN FRANCISCO MEETING
February 8th and 9th, 1973
THURSDAY
FEBRUARY 8th - Morning
AT THE FAIRMONT HOTEL
8:15 Breakfast - Cirque Room
9:30 Assembly - French Room
9:45 Opening Remarks by the Chairman
The Rt. Hon. Lord Shawcross
Welcoming Remarks by MGT Chairman
Ellmore C. Patterson
10:00 The New U.S. Congress
The Honorable Gerald R. Ford
Minority Leader, House of Representatives
11:15 Briefing Session on U.S. and
International Financial Markets
Guy E. Noyes
Dennis Weatherstone
Rimmer de Vries
12:15 Morgan Guaranty's International Business
and Plans for the Future
Lewis T. Preston
12:30 Lunch - Pacific Union Club
:
FEBRUARY 8th - Afternoon
AT THE FAIRMONT HOTEL - FRENCH ROOM
2:30 The Corporate Board of Directors
How to organize and select members; responsibilities,
duties and liabilities of members
Its powers and relationship to management
Introduction
The Rt. Hon. Lord Shawcross
Boris S. Berkovitch
Five members of the Council representing
different types of companies in different
countries will speak briefly about the
practice followed in their own companies.
4:30 Adjournment
V 6-7 INFORMAL COCKTAIL PARTY FOR MEMBERS AND WIVES
at office of Morgan Guaranty International Bank of San Francisco,
400 Montgomery Street.
FRIDAY
FEBRUARY 9th - Morning
AT THE FAIRMONT HOTEL - FRENCH ROOM
9:30 Assembly
9:45 The Stockholm Conference on the Environment -
follow up and present situation
Bert S. Cross
10:45 The Energy Problem
Financial and Balance of Payments
Aspects
Emilio G. Collado
Executive Vice President, Exxon Corporation
International Political Aspects
James E. Akins
Director, Office of Fuels and Energy,
U.S. Department of State
Factors involved in a National
Energy Policy
Dr. Thomas 0. Paine
Vice President and Group Executive,
Power Generation Business Group,
General Electric Company
Introduction to Discussion
Stephen D. Bechtel
12:30 Lunch - The Fairmont Hotel - Cirque Room
FEBRUARY 9th - Afternoon
AT THE FAIRMONT HOTEL - FRENCH ROOM
2:00 Finish up Energy Session
4:00 Summing up and Closing Remarks
The Rt. Hon. Lord Shawcross
4:15 Adjournment
on
7:30 DINNER FOR MEMBERS AND WIVES - (Black tie)
at. Bohemian Club, The Red & Owl Rooms,
624 Taylor Street
Social Program, Breakfasts, Luncheons, etc., for
International Council Meeting, February, 1973
Common Breakfast for Council Members
Thursday morning at the Fairmont Hotel - no wives.
Thursday Evening
Council members with wives are invited to drop in
for a drink at the new offices of Morgan Guaranty
International Bank of San Francisco.
No organized plans for dinner but for those who would like
to spend the evening in each other's company, with wives,
Messrs. Patterson, Page, Gates, Shawcross and Peterkin
will host separate informal dinners at a variety of
typical San Francisco restaurants.
Friday Dinner
Bohemian Club with wives - BLACK TIE - Guests will
include some of Morgan Guaranty's business, banking
and other friends from the San Francisco Bay Area.
Mrs. Bechtel's Lunch
Mrs. Bechtel will ask member wives to join her for lunch
on Thursday.
January 12, 1973
Honorable Thomas S. Gates
Morgan Guaranty Trust Company
23 Wall Street, Ne
New York, New York 10015
Dear Tom:
Thank you for your letter of January 4th with which you enclosed
the copy of the program for your International Council. I have
completed the questionnaire and have sent it on to Mr. Alfred H.
Von Klemperer as you requested.
I am planning to arrive on the evening of February 7th but as
yet do not know the exact arrival time. I will therefore need
overnight accommodations for February 7th and 8th. Would very
much appreciate your making the arrangements for me.
It certainly appears to be a great program and I am eagerly looking
forward to participating.
Thank you again and warmest personal regards.
Sincerely,
Gerald R. Ford, M. C.
GRF:1
GERALD R. LIBRARY FORD
Statement by Rep. Gerald R. Ford for Roll Call January 1973
The 93rd Congress will almost certainly see a renewal of the tug-of-war
between the President and the Democratic majority over excessive Federal spending.
Apart from that, there is much major legislation hanging over from the
92nd Congress which will get early attention in the new Congress.
These subjects include a major overhaul of the Nation's welfare program,
reorganization of cabinet departments, a comprehensive national health insurance
program, banning of all busing beyond the school nearest a pupil's home, pension
reform, a new omnibus housing program, and creation of a new consumer protection
agency.
There no doubt will also be a rematch of the fight over diverting highway
trust fund money to finance mass transit.
Less certain is the possibility that the President will seek the power to
head off national emergency strikes in transportstion.
There may be tax reform action in 1973 but I do not foresee a tax increase.
As for tax reform, I am opposed to wholesale repeal of so-called tax loopholes,
with some of them to be put back on the books. I cannot conceive of wiping out
deductions for interest on home mortgage loans or for charitable contributions.
I therefore feel the better approach to tax reform is to consider the various
provisions of the tax code without the sle dgehammer approach of broad-scale repeal.
I look for a productive first session. Considering the size of the
President's election win, it seems to me the Congress will have to be responsive
to some extent even though controlled by the opposition party.
#####
GLEATO FORD LIBRARY
Written for the Kent County Republican Committee newsletter
Misc Statements
1/26/73
Spending
Supplants War
As Key Issue
BY SEF. GERALD R. FORD
Congress is described in the press as having convened Jan. 3 in a defiant
mood, with Vietnam and Presidential impoundment of aprropriated funds as the sore
points.
The Vietnam peace agreement has erased the war as a source of friction between
the President and the Congress. The residue of resentment that remains revolves
about the issue of Federal spending and claims that the President has been taking
over the powers of the Congre SSo
If you analyze closely what has happened in the Congress, you are forced to
conclude that the President has not seized any powers--Congress has abdicated them.
There has been am erosion of congressional power, particularly the power of the
purse.
Why is this true? It is SO because Congress has failed to exercise its
responsibility for making the hard spending decisions necessary to maintain at least
a semblance of Federal fiscal sanity.
I am not being partisan in making this charge. Consider these words spoken by
Senate Democratic Leader Mike Mansfield at a caucus of Democratic senators on Jan. 3,
1973:
"The fault lies not in the Executive Branch but in ourselves, in the Congress.
We cannot insist upon the power to control expenditures and then fail to do SO. If
we do not do the job, if we continue to abdicate our Constitutional responsibility,
the powers of the Government will have to be recest so that it can be done elsewhere."
The question being posed is whether Congress is willing to change its archaic
budget-handling procedures to make itself a modern institution which deserves to
have the power of the purse.
This fiscal year the Federal deficit is expected to be $25 billion--and then only
because the President is holding Federal outlays to $250 billion. Our national debt
is now approximately $444 billion, and the interest on that debt is $23.1 billion a year.
It would not be necessary for the President to impound funds if the Congress were
more responsible in its handling of the taxpayer's dollars.
In the closing hours of the last session, the Congress created a Joint Committee
to recommend procedures for improving Congressional control over the budget. That
committee will submit an interim report to the Congress on Feb. 15.
The committee's task is to formulate answers to weighty questions concerning the
Federal budget. How do.we divide an overall figuro among the various major priorities
and programs. Who will exercise a degree of control over expenditures proposed in
-2-
legislation?
If the Joint Committee on the Budget can come up with satisfactory answers to
these questions, it may be the Congre SS will resolve the crisis ower governmental
powers which the Congre SS itself has precipitated.
#######
10
Overy of stock prices had been
purchase West German currency but all
chiefly due to foreign speculators.
they can do with it is deposit it in
banks that pay them no interest."
"The speculators can still
Copyr. 1973, NEW YORK TIMES.
DOMESTIC AFFAIRS
SPENDING
Presidential Adviser John Ehrlichman yesterday said the Nixon
Administration will not spend money appropriated by the Congress even
if Congress re-authorizes the spending by overrriding a Presidential
veto. "The Congress appropriates," he said, "but the President is
charged by law with expending and the laws impose on him the duty to
make savings and to spend only at a rate which is not wasteful." The
President's right to impound funds, he maintained, is not
affected should Congrèss override his veto on an appropriations bill.
He said the Administration is not usurping Congress' Constitutional
powers and said "We'd like Congress to get more involved in such things
as setting spending limitations, improving budgetary procedures, (and)
avoiding new taxes."
'IS IMPOUNDMENT CONSTITUTIONAL?'
been exercised by many chief exec-
utives.
Arthur Miller
(WASH.
STAR-NEWS,
...
2/4/73):
"The fact seems to be that the
practice first began in any substantial
"....the fight over spending is
sense during the early days of World
the core of a growing confrontation be-
War II, when President Roosevelt with-
tween Congress and the President--sure
held some national defense funds be-
to be the major constitutional problem
cause the particular projects were
of 1973.
considered unnecessary for the war ef-
fort.
"Silences in the Constitution
make the impoundment struggle possible.
"THE BATTLE LINES were clearly
Congress, and only Congress, can ap-
drawn during the Kennedy administra-
propriate money for a variety of
tion. When, in 1963, the U.S. Civil
purposes--and the President is enjoined
Rights Commission recommended that fed-
by the Constitution 'to take care that
eral funds be cut off the Mississippi
the laws be faithfully executed.' But
because of widespread defiance of
spending of appropriated funds is un-
desegregation decrees, President
explored legal territory. Super-
Kennedy in a news conference flatly
ficially, some might think that the
said that he had no authority to do so.
President has little discretion. The
He was not challenged, perhaps because
facts, however, are to the contrary.
impoundment of other funds had gotten
...
little public attention.
"Impoundment, in effect, permits
the President to exercise, as Sen.
"At about the : same time, the
Charles Mathias (R-Md) said in 1971,
Pentagon convinced Congress that it
'an informal line-item veto' over proj-
needed a new bomber (the B-70), a
ects and programs that Congress wants.
weapon opposed by : Secretary of Defense
Nothing in the Constitution or any
Robert S. McNamara. Rep. Carl Vinson,
statute permits such a veto, but it has
D-Ga., the powerful head of the House
11
Armed Services Committee,
was
"This year will be a bruising
determined to have the plane built.
one; 1973 and the other years of
Kennedy talked Vinson out of putting
Nixon's second term may well settle
mandatory language in the defense ap-
whether this country will in fact be
propriation bill, however, so the issue
ruled by "presidential government' or
remained unresolved.
whether the time-honored constitutional
separation of powers will be followed.
"Since then impoundments have
continued, under both Presidents
"A shrewd gambler would, at the
Johnson and Nixon, reaching the
moment, be forced to put his money on
high-water mark of $12 billion under
the President. In broadest terms,
Nixon. The congressional response,
should the President prevail, the Con-
although slow in arising, has become
stitution will have been changed without
increasingly bitter. In March 1971,
benefit of constitutional amendment."
Sen. Sam Ervin, D-N.C., a zealous
guardian of Congressional prerogatives,
held hearings on impoundment.
REPORT PRAISES POVERTY PROGRAM
"The hearings did clear some of
Jack Rosenthal, (NY TIMES, 2/3/73,
the air. For the first time Congress
Washington, Feb.2):
learned of both the magnitude and
specifics of impoundment (it took Ervin
two years to pry that data from OMB).
"Controversy arose today over an
unpublished Federal evaluation report
"For the first time, also, the
that--contrary to Administration
extremely shaky legal basis for
opinion--concluded that the nationwide
impoundment was revealed. Weinberger,
Community Action Program had been
trying to make the best of a bad case,
'highly constructive' in meeting Nixon
maintained that the President could.
Administration goals.
refuse to spend money in order to
"Antipoverty workers, insisting
control inflation and to help the U.S.
balance of payments. But he was unable
on anonymity, said the report had been
to cite specific constitutional or
suppressed because it flew in the face
of the Administration's new proposal to
statutory bases for Nixon's actions.
terminate Federal funding for community
action because it was not working.
"A MAJOR counterattack against
presidential impoundments has now been
launched. Lawsuits have been filed in
"Both this charge and the le-
gitimacy of the report, however, were
Missouri, New York, Florida and
promptly challenged by Howard Phillips,
Virginia; a number of others are
the new acting Federal antipoverty
contemplated.
director. He characterized the report
"The Missouri case is
as the work of 'various people identi-
particularly significant. There, a fed-
fied with previous Administration
eral district judge invalidated im-
policies.'
poundment of highway trust funds in a
suit brought by the state. The case is
now on appeal before the Eighth Circuit
"The Administration proposal to
Court of Appeals, which heard argument
cut off funds for the $320-million Com-
in early January. No doubt it will get
munity Action Program, now operating in
to the Supreme Court.
more than 900 places, was made public
Monday in the new Federal budget.
"The state of Florida has
challenged President Nixon's termina-
"The community action evaluation,
tion of money for a barge canal. This
conducted by the Office of Economic Op-
case posed the constitutional issue
portunity, the Federal antipoverty
squarely --the Missouri case having
agency, was completed two weeks earlier
been decided purely as a matter of
and its results were reported to senior
statutory interpretation.
agency officials.
2
DOMESTIC AFFAIRS
O.M.B.
The Senate yesterday overwhelmingly approved a measure that
would subject the Presidential appointments of the Director and Deputy
Director of the Office of Management and Budget to Senate confirmation.
The vote on the legislation, which now goes to the House, was 63 to 17.
Yesterday's action was the result of Congressional displeasure over
President's Nixon impoundment of appropriated funds, his budget cuts,
and the appointment of Roy Ash as the new Director of O.M.B. Ash was
the head of Litton Corp. when it ran into substantial cost overruns on
Defense Department contracts. Sen. Sam Ervin, one of the leading
supporters of the measure, said the O.M.B. Director is "the second most
powerful official in the Federal government and it is imperative that he
be subject to the thorough scrutiny of the Senate." Minority Leader
Robert Griffin said he was in favor of subjecting the appointments to
Senate approval but said he opposed this bill in that it "provides the
machinery" to remove Ash and his Deputy Frederick Malek from office. He
was referring to that part of the legislation which provides that "no
individual shall hold either such position thirty days" after the bill's
enactment unless they have been appointed with Senate approval.
ECONOMIC CONTROLS
House Banking Committee Chairman Wright Patman yesterday said he
will propose a measure calling for the re-introduction of mandatory
economic controls should "the Administration fail in its Phase III
program." Patman said the controls, which would also cover porfits and
interest rates as well as wages, prices and rents, would be imposed only
if the Consumer Price Index should increase at an annual rate of more
than 3% for any quarter or if it goes beyond 2.5% for a 12 month period.
Patman stated his legislation would not hamper the Administration's
program, saying Treasury Secretary Shultz "made it very clear that Phase
III will be designed to keep inflation within the 2.5% figure through
1973. The mandatory controls would be triggered only if the
Administration failed in its Phase III program."
PHASE 3 'VIOLATES ALL
also, will control prices in a couple of
ESTABLISHED PRINCIPLES OF LAW'
industries but not in others. In its
vagueness, ambiguity and unconcealed
Henry Hazlitt (NY TIMES, 2/5/73, Wilton,
discrimination it violates all es-
Conn.):
tablished principles of law.
"Phase 3 is a compromise. It is an
"It can be safely predicted that it
attempt by the Administration to hold on
won't work. For example, one field in
to price controls while pretending that
which it will keep price control is food
it has let go. It says to business: You
processing and retailing. It would be
are free once more to set your own
hard to think of a field in which such
prices, but if you set them too high
controls are less justified. The compe-
we'll crack down. This is like a traffic
tition is intense. In 1970 and 1971 the
warning that forbids speeding but fails
leading meat-packing firms made an
to specify the speed limit. You are to
average profit of just one cent on every
find that out after arrest. Phase 3,
dollar of sales. In the same two years
7
also restore needed Kuwaiti and Libyan
Jordan--he already had been given com-
financial aid, suspended after the final
mand of forces of Egypt's Arab Confed-
defeat of the Palestinian guerrillas in
eration partners, Syria and Libya--could
Jordan in 1971. Since then, Amman has
also pave the way for repair of the
depended exclusively on more than $150-
fractured diplomatic relations between
million annual U.S. aid and at least as
Egypt and Jordan, thus strengthening King
much Saudi Arabian aid.
Hussein's bargaining position toward
President Nixon."
"General Ismail's appointment in
DOMESTIC AFFAIRS
DEFENSE
STENNIS'S ABSENCE MAY PERIL
will control the 15-man committee's sched-
NIXON'S POLICIES
ule and other procedural matters, but he
and the panel's few other Pentagon
Arlen J. Large (WALL ST. JRNL, 2/1/73,
critics would continue to be outvoted on
Washington):
matters of substance. If Sen. Sten-
nis' wounds require a long recovery,
"A prolonged absence of Mississippi's
the committee's real leader probably
John Stennis from the Senate could spell
would be Sen. Jackson, 60, who's a more
trouble for President Nixon's foreign
energetic legislative tactician.
and defense policies.
"Sen. Stennis had just guided
"As chairman of the Armed Services
through the Senate the nomination of E1-
Committee, Mr. Stennis has upheld the
liot Richardson as Defense Secretary,
Nixon administration's position in count-
and was preparing later this month to
less Senate battles over Vietnam, weapons
set his committee to work on the
procurement, the draft and the U.S.
annual bill authorizing procurement of
military garrison in Europe.
defense hardware. This presumably will
proceed with Sen. Symington as act-
"...his support for Mr. Nixon's
ing chairman, but only later in the
key military moves in Vietnam undoubtedly
session will the weapons bill come to the
kept the Senate from rebelling more of-
big decision-making stage in the commit-
ten and more boldly.
tee and on the Senate floor.
...
"Seniority puts Stuart Symington
"Sen Stennis's absence may be felt
in line for the committee's acting chair-
by the Nixon administration before
manship, a Senator holding quite different
that, however. Sens. Frank Church
views on the U.S. military and diplomatic
ID., Idaho) and Clifford Case (R.,
role in the world and on the primacy of
N.J.) are sponsoring a flat prohibi-
the Executive Branch in foreign poli-
tion against any resumed bombing or
cy. The Missouri Senator, an Air Force
shelling of North Vietnam by the U.S.
Secretary in the Truman administration,
without new congressional authoriza-
became a bitter critic of the Vietnam
tion. The prohibition, which may be of-
war and the nation's military commit-
fered as an amendment to a foreign-
ments elsewhere. Technically, the
aid bill later this month, is opposed
Senate's Democrats could vote to by-
by the administration. Sen. Stennis nor-
pass the 71-year-old Missourian if the
mally would have led the fight against
chairmanship becomes vacant, but senority
it."
has in practice been followed in
picking committee leaders. The next-
RICHARDSON FORESEES FEW CUTS
ranking Democrat is Washington's Henry
Jackson, whose views are closer to
Charles W. Corddry (BALT. SUN, 2/1/73,
those of Sen. Stennis.
Washington):
"As acting chairman, Sen. Symington
"Elliot L. Richardson, the Secre-
8
tary of Defense, said yesterday he has
"Speaking more broadly, Mr. Richard-
launched a thorough review of the pro-
son said he felt 'very strongly' this
posed new defense budget in light of
was no time for 'massive reductions in
the Vietnam settlement, but sees little
our combat capability.'
likelihood of substantial cuts in the
$79 billion spending plan sent to Con-
"Strong forces are essential to
gress Monday.
President Nixon's diplomacy, he said.
The United States cannot negotiate signi-
"In discussing the defense budget
ficant reductions in world tensions, Mr.
inherited from his predecessor, Melvin
Richardson said, if it disarms unilateral-
R. Laird, Secretary Richardson gave the
1y and 'creates vacuums in the interna-
impression that much of his review would
tional structure of security' that others
be designed to buttress arguments for
will be tempted to exploit.
the strong forces he believes are needed,
"That would be 'dangerous,' and
in the face of 'a considerable amount of
pressure' in Congress to cut military
'self-defeating' as far as negotiations
are concerned.
spending.
""I don't want to hold out the
"Secretary Richardson said his focus,
therefore, would be on 'possible'--he em-
prospect that the cessation of hostili-
ties in South Vietnam will have a mas-
phasized the word-tightening of the
budget if it can be done without reduc-
sive impact on our budget requests, he
ing forces.
said, 'but certainly we do need to re-
view them in light of the situation, as-
"He also acknowledged frankly that
suming hopefully, of course, that it con-
he would search for points in the bud-
tinues.
get where he could 'give some ground'
if he had to in the congressional give-
"The $79 billion budget for the
and-take ahead, without losing what
year starting next July 1, prepared be-
seems more important.
fore the Vietnam agreements, has $2.9
billion allocated for Vietnam. Budget
"One specific example, he acknowl-
officials say they do not know yet what
edged, is a proposed boost in pay for
changes in that sum, earmarked both for
retired military personnel, which
South Vietnam and for U.S. forces in
would cost $360 million in the next
Southeast Asia, will result from the
fiscal year but would burgeon to vast-
cease-fire agreements.
1y greater sums in the future."
WATERGATE
The Senate subcommittee investigating the Watergate "bugging" incident
has uncovered information which "strongly indicates that a wide range of
espionage and sabotage activities" carried out against Democrats was con-
nected to the White House, Sen. Edward Kennedy said yesterday. Kennedy, the
chairman of the Administrative Practices and Procedures Subcommittee, made
the claim in a letter to Judiciary Chairman James Eastland that detailed
his panel's report into the incident. The letter states that "The informa-
tion gathered by the subcommittee strongly indicates that a wide range
of espionage and sabotage activities did occur during the recent Presiden-
tial campaign, and especially its primary phase; that these activities were
planned and initiated no later than the middle of 1971; that one key partic-
ipant was in repeated contact with the White House, the White House conven-
tion headquarters, and White House aides during relevant time periods; that
at least part of the financing was arranged through a key Republican fund
raiser who is a close associate of President Nixon; and that neither the
Federal criminal investigation nor the White House administrative inquiry
included any substantial investigation of the alleged sabotage and espionage
operations apart from those surrounding the Watergate episode itself." While
7
NIXON ADMINISTRATION
The Senate yesterday approved President Nixon's nomination of Peter
Brennan for Secretary of Labor and James Lynn as H.U.D. Secretary, leav-
ing H.E.W. Secretary-designate Caspar Weinberger as the only new Cabinet
member as yet unconfirmed. Majority Leader Mike Mansfield has held up
Weinberger's nomination at the request of some Democratic Senators but
yesterday he indicated a desire for a vote on Weiberger before the Feb 8
recess for Lincoln's birthday. Approval of Lynn came by voice vote,
with no opposition heard, after Sen. William Proxmire abandoned his ef-
forts to fight confirmation because of the Administration's freeze on
spending for housing and because of, what Proxmire called Lynn's lack of
"background or experience for the job." The vote on Brennan's appoint-
ment was 81 to 3, with Sens. James Abourezk, Floyd Haskell, and Jesse
Helms voting against confirmation.
Congressional sources yesterday indicated that President Nixon will
name Dr. Dixy Lee Ray to replace James Schlesinger as Commissioner of
the Atomic Energy Commission. Dr. Ray, who is a marine biologist, was
named to the five member Commission last August, the first woman to be
chosen for a full term.
BUDGET
DEMOCRATS VOW FIGHT
MEDICARE BENEFITS CURB FEARED
TO 'REORDER PRIORITIES'
Richard D. Lyons (NY TIMES, 1/31/73,
Bruce Winters (BALT. SUN, 1/31/73, Wash-
Washington):
ington):
"Congress may enact an Administra-
"Democratic leaders of Congress
tion budget proposal to have the elderly
generally agreed yesterday to stay within
pay more for their Medicare benefits, two
President Nixon's $268.7 billion spending
leading Democratic members of Congress
limit next year, but they pledged a fight
said today.
to reorder his priorities.
"The proposal, which is contained in
"Senator Mike Mansfield of Montana,
the 1974 budget sent to Congress by
the Senate's majority leader, reported
President Nixon yesterday would require
this 'consensus' after a breakfast
23 million Medicare beneficiaries to pay
meeting yesterday in which he par-
almost $1-billion a year extra in
ticipated with Representatives Carl
out-of-pocket costs for hospital and
Albert of Oklahoma, the Speaker of the
doctors' bills in an effort to reduce
House; Representative Thomas P. O'Neill,
Federal outlays and discourage too much
Jr., of Massachusetts, the majority
use of the health insurance program.
leader, and Representative John J. McFall
of California, the Democratic whip.
"Social Security experts believe
such a move would be unprecedented; they
"The meeting represented a rare
could not recall an instance in which
display of partisan unity, reflecting a
Congress reduced benefits to groups of
stiffening resolve among congressional
people. Congressional sources also noted
Democrats to challenge the President
that such a benefit reduction would seem
fiscally and philosophically within the
to be politically unattractive because it
framework of his new budget proposals.
would ask legislators to vote against the
elderly.
Mr. Mansfield said he personally
believed significant cuts could be made
"But Representative Martha W.
in proposals for defense, space, foreign
Griffiths, a member of the House Ways and
aid and atomic development, with the
Means Committee, said that it is pos-
savings diverted to more pressing social
sible to get the proposal through Con-
needs."
gress.'
2
DOMESTIC AFFAIRS
STENNIS
Senator John Stennis was shot twice and seriously wounded last night
outside his Washington home during an apparent robbery attempt. He was
taken to Walter Reed Army Hospital where lengthy surgery was performed
immediately to remove the two bullets, one of which entered the left side
of his chest, penetrating the stomach, pancreas, colon and spleen before
lodging in his lower back. The other bullet struck his left leg. A hospital
spokesman described the Mississippi Democrat's condition as stable although
a Stennis aide said Stennis was in "serious to critical" condition.
ECONOMY
President Nixon's annual economic report said yesterday that "all in
all it (1972) was a very good year" and said 1973 "can be a great, year" if
the Congress agrees to hold down federal spending. The President's Council
of Economic Advisers forecasted modest declines in unemployment and infla-
tion and continued overall expansion, saying "the problem will be to pre-
vent this expansion from becoming an economic boom." Specifially, the
report predicted: a 10% ($115 billion) increase in the GNP to $1.3 trillion;
a real annual growth rate (after inflation) of 6.75%; annual price increase
of 3%; and the reduction in unemployment "to the neighborhood of 4.5% by
the end of the year." The Council's predictions were based on the expecta-
tions of public cooperation with Nixon's Phase III guidelines, Congressional
cooperation with the spending ceiling, and the stabilization of currently
spiraling food prices. The report, which Congress will receive today, em-
phasized that "only by holding the line on federal spending will we be able
to reduce the inflation rate further in 1973." While it did not estimate
when the wage-price guidelines might be lifted, it did note that "We must
prepare for the end of controls and show the same courage in taking them
off as was shown in imposing them."
SHULTZ: PHASE 3 DESIGNED
"Shultz described the Phase III pro-
TO GAIN LABOR AID
gram as linked with the President's 'tough'
budget for fiscal 1974. However, Sen, Wil-
John Holusha (WASH. STAR-NEWS, 1/29/73):
liam Proxmire, D-Wisc., called the budget
with its $12.7 billion deficit as fat and
"Treasury Secretary George Shultz
said that 'deeper spending cuts must be
today confirmed earlier reports that the
made for controls to be effective.'
loosened economic controls of Phase III
were designed largely to bring organized
"Under questioning from Sen. Prox-
labor back into the program.
mire, the director-designate of the Cost
of Living Council, Dr. John Dunlop of Har-
"Testifying at the first day of
vard University, said he would have 'no
hearings before the Senate Banking Com-
hesitation' about reimposing direct controls
mittee, Shultz reiterated his assertion
if he felt they were required in a given
that Phase III controls are not weaker
situation.
than Phase II but simply an adaptation
to a changed economic climate. He con-
"Dunlop, who formerly headed the ad-
tinued the tough enforcement stance ad-
ministration's Construction Industry Stab-
ministration officials have been taking
ilization Council which moderated wage in-
in recent days and assured the committee
creases in that field in the past two years,
'somebody will be clobbered pretty soon.'
said he conceived of Phase III as a 'trans-
Budget in Brief
Here are highlights of the budget President Nixon
sent to Congress yesterday:
Spending: $268.7 billion in fiscal 1974, up from
$249.8 billion.
Revenues: $256 billion, aprise of $31 billion.
Deficits: $12.7 billion, down from $24.8 billion this
year.
Taxes: The President says no tax increase needed,
unless Congress goes past his spending totals.
Increases: Defense gets $4.7 billion of the overall
$18.9 billion increase in the fiscal 1974 budget. $5.7
billion is for increased Social Security payments,
another $3.4 billion for Medicare and Medicaid, $1.9
billion in added interest on national debt. Also up
sharply: antipollution spending, and aid to college
students.
Cutbacks: Agriculture and other rural subsidies
down $1.5 billion by end of fiscal 1974. OEO abol-
ished, its antipoverty programs scattered to other
agencies, some cut entirely. Public service employ-
ment program phased out entirely. Further com-
mitments of housing funds halted.
Consolidations: 70 narrow-purpose programs
lumped, if Congress is willing, into four new broad-
purpose programs of block grants to state and local
governments, for education, law enforcement and
criminal justice, manpower training, urban com-
munity development. Total outlays would stay at
$6.9 billion.
Other: $300 million for tax credits to families of
Catholic and other private school children, to cushion
tuition costs. No provision for reconstruction of
Southeast Asia, nothing on welfare reform or prop-
erty tax relief. White House says if any of these
go in later, other programs come out.
Fiscal 1975: A projection of $288 billion in outlays,
just about all that the present tax structure would
yield at full employment, defined as an unemploy-
ment rate of 4.0 per cent.
US programs to be eliminated
To be eliminated by the Nixon
Public facilities grants
budget:
Aid to school districts with
Public service employment
large numbers of Federal, civil-
College housing loans
ian and military families liv-
Urban renewal
ing in them
Model Cities
The Community Relations Serv-
Rent supplement
ice of the Justice Department
Public housing
The Commerce Department's
Neighborhood services
Economic Development Admin-
BERALD LISAREY
Open space grants
istration
Water and sewer grants
Community action agencies
Rehabilitation loans
Farm price supports
2
DOMESTIC AFFAIRS
BUDGET
Jan.29
President Nixon yesterday warned Congress that unless it cooperates
with the Administration in holding down federal spending, it will
"inescapably face the alternatives of higher taxes, higher interest rates,
renewed inflation, or all three." The warning was given in the
Administration's budget message to Congress that requests $268.7 billion
for federal spending while providing $256 billion in revenues, resulting in
a $12.7 billion deficit. Nixon noted that it is normally "the business of
Congress" to set spending standards but said "I am impelled to suggest"
recommendations because of previous Congressional mismanagement with the
budget. He urged Congress to pass his "rigid" spending ceiling for FY '74
of $268 billion before passing a single appropriations bill. He said
Congress' problem is the result of its having no overall agency to review
the effects of the spending recommended by each committee and passed by the
Congress. "These Committees are encouraged by special interest groups and
by some Executive branch officials who are more concerned with expansion of
their own programs than with total federal spending and the taxes required
to support that spending."
The budget message provides for substantial cuts in several areas of
federal spending--H.E.W., Agriculture, foreign aid and others. Nixon said
that unless these cuts were initiated now, the budget would total $288 bil-
lion this year and would climb to $312 billion in FY'75, necessitating a
15% tax increase. Included in the 105 cutbacks are the elimination of
O.E.O., the Admininstration's plans for a $2,400 guaranteed annual income
for a family of four, and "depressed area" programs, the halting of addition-
al funds for student loans under the National Defense Education Act, the
dismantling of the Summer Jobs Program and the phasing out of the Public
Employment Program. Nixon again asked Congress to approve his special
revenue sharing program that would replace 70 single purpose government
programs--including most of those designated to be cut back or
eliminated--with $6.9 billion in grants to state and local governments for
use in education, law enforcement, manpower training, and urban
development.
NIXON ADMINISTRATION
The Senate yesterday overwhelmingly consented to President Nixon' S
nomination of Elliot Richardson for Secretary of Defense. The vote was 81
to 1, with freshman Sen. James Abourezk the sole dissenter. Abourezk said
he would vote against all of Nixon's nominations as a form of protest over
what he sees as White House encroachment on Congressional powers. Sen.
Harold Hughes, who had threatened to delay Richardson's confirmation
because of the President's Vietnam policies, votes in favor of
confirmation, saying he was "pleased" with Richardson's stand on defense
matters although he "regretted.. [Richardson] was not more forthright and
explicit" about the Administration's policy in Southeast Asia.
The Senate Labor and Public Works Committee yesterday unanimously
approved Nixon's nomination of Peter Brennan to be Labor Secretary. Full
Senate endorsement is expected to come easily.
LIBRARY
The White House yesterday disclosed that Dwight Chapin will resign his
post as President Nixon's Appointments Secretary to accept one of
"many five offers" in private business. But Press Secretary Ronald Ziegler
vigorously denied a New York Times' report (see article below) that Chapin
was being eased out. He said the story is "absolutely unfounded and not
13
CONGRESS
HOUSE COMMITTEE CHIEFS
FACE TEST BY VOTE
happened to be the senior man on a
particular panel.
Albert Sehlstedt Jr. (BALT. SUN, 1/23/
73, Washington):
"The automatic vote for committee
chairmen was' approved in the secret
"llouse Democrats agreed yesterday
caucus session by a vote of 204 to 9,
to conduct an automatic vote in approv-
according to Representative Julia But-
ing committee chairmen, a new procedure
ler Hansen (D., Wash.), chairman of a
that should eventually dilute the
study group that has advocated changes
established but much-criticized
in House procedures.
congressional seniority system.
,
"This decision by the Democrats,
"Yesterday's decision by the Demo-
who are the majority in the House and
cratic caucus means that every
therefore decide who sits in each 21
committee chairman will have to be
committee chairs, delighted liberal
approved by his peers, instead of being
groups who feel that a number of
routinely appointed to the job at the
current chairmen are not responsive to
beginning of each new Congress if he
the present needs of the nation."
OIL
NATIONAL RESERVE PROPOSED FOR U.S.
heard the defense testimony as part of a
continuing investgation of the nation's
John Fialka (WASH. STAR-NEWS, 1/22/73):
energy problem.
"Two high Defense Department of-
"Admiral Elmo R. Zumwalt, chief of
ficials, warning that the nation's in-
Naval operations, said in other
creasing reliance on Middle East oil
testimony that reserves would help the
poses grave military security risks,
U.S. negotiate international oil prices
said today that such reliance would
'downward' and 'avoid the blackmail
leave the U.S. vulnerable to a fuel cut-
situation' if hostilities develop.
off or to 'international blackmail' if a
major war develops.
"Jackson said the Navy should make
"They told a Senate Interior sub-
its huge oil reserve holdings opera-
committee that a national oil reserve
tional in order to help the nation sur-
should be established to allow the
vive an oil crisis. He pointed out that
nation to withstand any temporary oil
the Navy currently owns four large oil
fields, two in California, another in
embargo and to give the U.S. more
bargaining power with oil-rich nations
the Teapot Dome area of Wyoming and what
that might otherwise be tempted to
may be the largest reserve of all on the
demand increasingly higher prices.
north slope of Alaska.
"Barry J. Shillito, outgoing as-
"In his testimony, Shillito
sistant secretary of Defense and the
pointed out that currently it would be
Pentagon's chief civilian logistics
'almost impossible' to use these reserve
fields in event of a sudden national
expert, said that a 'mandatory' program
to require oil importing companies to
emergency because the wells have not
maintain oil and oil product reserves
been developed. Such development, he
seems to be the only option the U.S. has
added, 'will be expensive.'
within the next 10 years to 'reduce the
"Zumwalt said that the reserve in
danger of some future interruption in
oil supplies.'
Alaska has been proven to contain at
least 100 million barrels of oil and may
contain 'millions' of barrels.
"Ilis statement won praise from
Sen. Henry M. Jackson, D-Wash., chairman
of the subcommittee. The Senate unit
"To make reserve oil readily ac-
3
effectuation must be left to the medical judgment of the pregnant
woman's attending physician." The states may not interfere at all
during this period with the abortion. In the second three months,
the states are permitted to set up medical standards to insure the
health of the mother during the operation but may not interfere in
any way with the abortion decision. Abortions may only be prohibited
during the final three months, except when the "life or health"
of the mother are in jeopardy. "Health" was spelled out to
in either "physical, emotional, psychological, (or) familial."
Blackmun said the ruling "vindicates the right of a physician to ad-
minister
medical
treatment
up to the point where important state
interests provide compelling justification for intervention. Up to
those points the abortion decision in all its aspects is inherently
and primarily a medical decision.' The decision rejected the argu-
ment that the fetus is a "person" within constitutional terms,
saying use of it in those terms "has application only
postnatally We need not resolve the difficult question of when
life begins. When those trained in the
disciplines
are
unable to arrive at a consensus, the judiciary is not
in
a
position to speculate as to the answers. The Court also decided
that while states can require licensed doctors to perform the
abortion, it cannot demand the approval of two doctors or a
committee before it can be performed nor may it limit abortions to
state residents. Justices White and Rehnquist both wrote dissented;
White termed the decision an exercise of raw judicial power (and)
an improvident and extravagant exercise of judicial review.
CONGRESS
PEACE PACT WILL DEFUSE 'CONSTITUTIONAL
with the White House. It is also due to
CRISIS'
the congenital divisions within the Con-
gress that prevent any cohesive op-
Peter Lisagor (PHILA. INQ., 1/22/73,
position to the Presidency, especially on
Washington):
issues of national security.
"If President Nixon really, finally
"But more than that, as Sen.
and truly ends this country's military
Hubert H. Humphrey has noted. from his own
involvement in Vietnam in the next week
long experience as a legislator and Vice
or so, as White House propagandists
President, the President has 'the upper
strongly imply, what then happens to the
hand' in any confrontation with Congress.
'great constitutional crisis,' developing
He presides over what amounts to a
over the President's war- making powers?
monolithic operation, speaking with one
voice against the dissonant babble of a
"What then will happen to the Sen-
largely undisciplined legislature, acting
ate tigers, snorting fire, pawing the
with single-minded purpose against the
turf like combatants prepared for mortal
timid turns and twists of 535 men and
battle, vowing to cut the arrogant
women who couldn't agree on the condition
President down to co-equal dimensions?
of the weather on any given day.
The chances are they will be turned into
pussycats, disgruntled perhaps, tormented
"The cease-fire that presumably
maybe, but pussycats nonetheless.
will emerge from the new rendezvous in
Paris could have the durability of a
"If, in the light of a Vietnam
plastic trash bag. No matter, it will be
truce, which is the most any realist ex-
portrayed as a 'just and honorable'
pects, the tigers push with any passion
agreement, whatever the meaning of those
to curtail Presidential powers in foreign
words long since debased by their asso-
affairs, it will be the switch of the
ciation with a squalid enterprise.
decade. This is not only because the
Senate lacks staying power in its battles
"Everything else about Vietnam is
4
likely to be forgotten quickly if Ameri-
Johnson once called the 'nervous nellies'
can war prisoners are returned and every
who inhabit the Senate.
last uniformed American evacuated in a
reasonable period of time. The
"Once out of Vietnam, Mr. Nixon is
time-buying deceptions, the tortuous
almost certain to be depicted as the
lies, the demands for a retroactive ac-
steady-handed, unflinching captain who
counting, will be shelved. And those who
got America out of the war, missing his
would put a rein on Presidential powers
own deadline by a mere few weeks. And
will slowly sink out of sight, unheeded.
the Senate pussycats will stop their
pawing and snorting, and go pouting off
"That is the prospect for the
in other directions.
widely-advertised 'crisis' over the
President's unbridled freedom to wage
"Humphrey says that Congress has
war, as he alone sees it, without clut-
been treated by the media with 'jocular
tering up his decision-making apparatus
disdain.' He didn't add that Congress
with clunk-head advice from what Lyndon
got there on merit."
ECONOMY
TREASURY AIDE STRESSES INFLATION FIGHT
"We have the cooperation of labor
James P. Gannon (WALL ST. JRNL, 1/22/73,
and management' in the new program, he
Washington):
said. 'I think people who say labor
negotiations this year are going to be
out of control are mistaken' he added.
"The Treasury's new No. 2 man,
concerned about a revival of inflationary
Whereas unions were 'playing catch-up
expectations, warned that 'Phase 3 is
ball' in previous rounds of bargaining
while the inflation rate was
going to get tough if toughness is
warranted.'
accelerating, as this year's talks begin
'we have cut the inflation rate from
close to 6% to 3%,' he said, suggesting
"William E. Simon, the new Deputy
this would soften labor's demands.
Secretary of the Treasury, said he was
surprised when financial-market reaction
"But if labor or management 'vio-
to the new quasi-voluntary controls
lates the responsibility' of adhering to
systems indicated widespread skepticism
self-administered wage and price
that the government could keep the lid on
standards, he warned, 'We're going to
inflation without mandatory controls.
come down on them and come down hard.
"Many investors, he commented, ap-
parently 'thought it was a cop-out, that
we are walking away from controls.' He
BUTZ PREDICTS FOOD PRICE CUTS
added: 'Nothing could be further from
the truth. We are deadly serious about
NY TIMES, 1/22/73, Washington (UPI):
controlling inflation.' Warning that the
Nixon administration won't hesitate to
"Insisting that American food
use its powers to stop or roll back wage
buyers still get a bargain, Agriculture
or price actions inconsistent with the
Secretary Earl L. Butz held out hope
anti-inflation program, he said that, 'if
today for lower chicken prices by spring
people think they've been given a free
and reduced pork prices next fall. He
rein' under Phase 3, 'they had better
was not so optimistic about a drop in
think again.'
beef prices.
"Speaking unhesitatingly, he re-
"Dr. Butz also continued that
peatedly stressed the Nixon administra-
Government price controls on farm pro-
tion's determination to run the Phase 3
ducts would produce black markets and
controls program so that 'this battle
shortages rather than bumper crops.
against inflation isn't diminished by one
iota.'
"The Cabinet official, designated
5
by President Nixon to have overall
Soviet Union.
jurisdiction during the second Admin-
istration of departments concerned with
He will resist farm organiza-
natural resources, made these other
tion demands for higher support levels as
points in an interview:
insurance against a collapse of the
market if supply should outrun demand.
Food prices are not expected
to rise as fast this year as they did
"In discussing the present outlook,
last year and will not prevent Mr. Nixon
Dr. Butz said that Americans this year
from cutting the annual rate of inflation
would spend less than 16 percent of their
to his goal of 2.5 per cent.
takehome pay for food and that, he said,
means they still are 'getting a bargain
There is no conflict between
on the whole.' He also said that the
the Agriculture Department's goal of
Administration hoped that several steps
higher income for farmers and lower food
taken recently to increase supply would
prices for consumers.
result in some lower prices in coming
months."
He sees a continued market for
American grains and a soybeans in the
Copyr. 1973, NEW YORK TIMES.
NIXON ADMINISTRATION
COLUMNIST SEES NEED
FOR ABLE PENTAGON LEADERSHIP
liberal wing of the Republican Party and
a rapport with the Eastern Establishment,
Lt. Gen. Ira C. Eaker [USAF (Ret.)]
factions which have been harshly critical
(DETROIT NEWS, 1/17/73):
of the President's war and defense
policies in the past.
"It generally is agreed that [Mel-
vin] Laird has been highly successful in
"Richardson's selection also may
indicate a decision to exercise more
management of the vast defense domain
through four critical years.
control over defense management from the
White House in the future.
"He has reduced defense forces by
three million persons, civilian and
"The fear that Richardson's design-
military, as the Vietnam war has wound
ation for Pentagon leadership will mean a
down. He has managed to maintain dis-
return of the Whiz Kids, or that uni-
cipline and morale while the armed forces
lateral disarmament will prevail, is
suffered unprecedented criticism from
considerably reduced by the selection of
William P. Clements Jr. as the No. 1
large sections of the news media, the
Congress and the people. He has managed
deputy.
and maintained effective control of the
"Clements was a leading member of
largest and most complex organization in
the world during a time when it was under
the blue ribbon panel appointed by the
maximum strain and undergoing necessary
President shortly after his first in-
auguration to study Defense Department
change.
organization and management. After near-
"Longtime Pentagon observers, while
ly two years he is fully conversant with
agreeing that Richardson has no discern-
the threat, the present status of the
ible competence which would especially
defense posture and the priorities needed
to maintain reasonable security forces
qualify him for the defense role, point
out that he has keen intelligence, a good
for the future. His clearly was a
fortunate choice for the defense team,
reputation as an administrator, an
understanding of the President's future
especially at this time.
defense plans and unquestioned loyalty to
him and to them.
"One old Pentagon hand, who has
seen the guard change many times, put it
"This appointment may have some
this way: 'Richardson's job will be to
political overtones since Richardson is
reduce the Department of Defense part of
said to have the confidence of the
the federal bureaucracy to manageable
6
proportions. Clements' task will be to
of farmers and other people in rural
ensure that this is done with minimum
America today. The whole shape of rural
damage to our strategic defense forces.'
America has changed, while USDA grinds
along in the same pattern as always.
"Contrary to growing popular eu-
phoria, the need for able leadership in
"But we fail to see how this 'coun-
the Pentagon has not lessened. That
selor' system can improve government ad-
negotiation always can replace confron-
ministration. It looks like a new layer
tation in international affairs is not
of dubious authority which could easily
yet a safe assumption.
lead to antagonisms and confusion. Nixon
already has created uncertainities about
"One ominous fact overrides and
where the power lies in certain fields by
should control all future defense plans.
giving his White House staff apparent
As Clements' panel concluded: 'The
authority.ov old-line departments in
present threat to our security is greater
both foreign and domestic policy. Now
than at any time in the past. If we are
three new super-cabinet officials!
to remain free we must be strong; if we
weaken we will be destroyed.'
"In his message to Congress in
March, 1971, Nixon said, 'The diffusion
of responsibility makes it extremely dif-
ficult to launch a coordinated attack on
CONGRESSIONAL COOPERATION
complex problems. It is as if the
IN REORGANIZATION NEEDED
various units of an attacking army were
operating under a variety of highly
DES MOINES REGISTER, 1/16/73, edit.:
independent commands.'
"The President's general objective
"That seems to us a good definition
in reorganization is commendable, in our
of what the President is doing with his
opinion, as we said when he proposed it,
new 'counselor' system. It would be far
although we might differ slightly about
better to push for congressional
some of the groupings of functions and
cooperation in reorganization of the
programs. The Department of Agriculture,
government by law with clear lines of
in particular, is ill-suited to the needs
authority and control."
REPUBLICANS
IS GOP WOOING THE WALLACE VOTE?
right-wing Young Americans for Freedom.
Phillips' inevitable mandate at OEO: To
Kevin P. Phillips (DETROIT FREE PRESS,
cut it back.
1/19/73, Washington):
"Another of Wallace's favorite
"Consider recent administration
targets was the tax-exempt status of the
policy directions against the backdrop of
multi-billion-dollar liberal foundations
the Alabama governor's spring primary
like Ford, Rockefeller and Carnegie, as
campaigns. Remember how Wallace
well as the exemption of commercially
disparaged 'pointy-head' bureaucrats and
used property owned by U.S. churches.
said he planned to 'throw their
Apparently, the Nixon administration also
briefcases into the Potomac'? Much the
has tax-exempt organizations in its
same objective is obvious in the White
gunsights, because President Nixon's
House's new plans to scythe the
first pick for commissioner of Internal
controversial HEW and HUD bureaucracies.
Revenue, conservative Washington lawyer
George Webster, is an expert in this
"And how about the anti-poverty
field. Because Webster had gone on
program, another frequent subject of
record in too many controversial ways,
Wallace's jibes? The President's new
his nomination was called back Before any
nominee as OEO Director, Howard Phillips,
official announcement was made. Even so,
is a solid conservative who in his
the fact that an exempt organization
younger days chaired a chapter of the
specialist was the White House's first
8
DOMESTIC AFFAIRS
NIXON
NIXON TAKES OATH OF OFFICE
short speech--which was interrupted 12
Frank Van Riper and Paul Healy (NY DAILY
times by applause--Nixon interjected
NEWS, 1/21/73, Washington, Jan. 20 [News
into the prepared text an appeal to his
Bureau]):
listerners to pray to God that he make
the right decisions. He said that he,
"President Nixon solemnly took the
like his predecessors, would need help
oath of office for his second term today
in trying to make America's 'dreams come
amid pageantry and protest and with a
true.'"
confident forecast that 'we stand on the
threshold of a new era of peace in the
world.'
ADMINISTRATION SEES TWO BIG PROBLEMS
",...the 60-year-old Cali-
Bill Anderson (CHICAGO TRIB., 1/19/73,
fornia-born lawyer called upon
Washington):
Americans to 'make a new commitment' of
the heart to work hard and decently
"There are two big problems seen
toward 'a new age of progress' for the
by the administration following the
nation.
hoped for end to American participation
in the war.
"Standing behind a bullet-proof
glass shield on an elaborate $410,000
"One problem is a Congress deter-
platform at the foot of the Capitol
mined to attempt to regain its coequal
steps, Nixon told an estimated 50,000
status with the executive branch of the
shivering spectators and uncounted mil-
government--one that lashes out at the
lions via television at home and abroad:
President with the aid of Republicans.
'We shall do our share in defending
peace and freedom in the world. But we
"Here, tho, the administration--or
shall expect others to do their share.
at least some of those people who have
The time has passed when America will
great influence on the President--does
make every other nation's conflict our
not see the Congress having any great
own.'
success. Congress is considered impo-
tent, incapable of mounting a coordi-
"Referring to 'new initiatives'
nated effort to convince the American
such as his historic journeys to Peking
public it has the ability to deal with
and Moscow last year, Nixon declared
the nation's problems. This bleak
that 'we have made a breakthrough toward
(administration) picture of the legis-
creating a structure of peace that can
lative branch is made more somber by the
last through the generations.'
thought there are not many real leaders
in either the Senate or the House,
"Though he did not mention Vietnam
regardless of party.
by name, or the resumption of peace
negotiations in Paris next week, the
"The second big domestic problem
President presumably had them in mind
is the media of the U.S. Many if not
when he said: 'As America's longest and
most of President Nixon's advisers
most difficult war comes to an end
the
continue to use the now cliche line that
time has come for us to renew our faith
'90 percent of the media' is opposed to
in ourselves and in America.'
the President, his policies, and even
his personal conduct. Now, too, they are
"The core of Nixon's call to
even getting messages that the other ten
greatness was his emphasis on 'the
percent is becoming hostile, like some
placing of responsibility' on individual
of the liberal reporters.
citizens.
"Unless Mr. Nixon changes course,
"Near the end of his relatively
all signs indicate that he will continue
9
virtually to ignore Congress, will court
could give to us citizens not only rea-
the media, and will try to go his own
sonably good government, but what we
almost private way in the conduct of the
need even more, the. knowledge and inner
executive branch.
conviction that we are reasonably well
governed.
"He will go directly to the people
via television, one source suggested.
"None of these things has
That practice as followed before has in-
happened in the 10 weeks since the
volved asking for free television time.
President's re-election. We think our
The advisers are convinced the media
hopes in these directions were widely
have as little credibility with
shared, and that our present disappoint-
the public as does Congress--and that
ment is as well. Thus we find the Presi-
people outside Washington are certain
dent suffering a new wave of criticism
only the executive branch can run the
coming not only from his usual critics
country.
but from some--columnist James Jackson
Kilpatrick for example--whose mood can
"The position is that the media
scarcely be written off either as
are just as fragmented as Congress. This
prejudice against a non-liberal Presi-
opinion is reinforced by marketing re-
dent or as hysteria over bombing North
search, a specialty of this administra-
Vietnam.
tion. The research shows the public
gives less than a commanding faith to
in the end the criticism has
commentators, pundits, and the reporters
a solid core that holds. The
who ask what are considered cream-puff
Cabinet-level appointments for the sec-
questions at the rare Presidential press
ond term are distinguished precisely by
conferences.
the lack of anyone with any political
base other than presidential anointment.
"Yet in these two major areas
The only exception is the Secretary of
which the administration regards as
Labor, an appointment explained by an
problems there are also some small signs
uncommonly narrow view of how to build
it is going to try to improve communica-
political coalitions. Otherwise, all
tions with both Congress and the media.
other considerations seem to have been
Ronald Ziegler, the spokesman for the
subordinated to personal loyalty. With
President, has said he is going to take
due respect for the administration's
another look at his own operations.
difficulties in imposing its will on the
William E. Timmons, the legislative aide
bureaucracy, we do not think this is the
to the President, has made it known he
way to give the people a sense that the
wants more of the previously untouchable
government is their government, not the
(and unquestionable) aides of the White
momentary property of some narrow
House to make themselves available to
circle.
Congress."
perhaps more importantly, take
ADMINISTRATION FAILS
Mr. Nixon's latest big surprises, the
TO PERSUADE PEOPLE
bombing of North Vietnam and Phase 3.
Ironically both are unmistakably actions
WALL ST.JRNL. 1/19/73, edit.:
of principle. Political expediency does
not lie in further military efforts; nor
"A President riding a 60% mandate,
does it lie in relaxing wage- price
we reasoned, could afford to be mag-
controls. The only explanation for these
nanimous. He could try to lead his crit-
actions is that the administration
ics into a calm and enlightening ex-
thought they were right, and of course
change of views instead of a partisan
therefore of political benefit over the
exchange of epithets. He could seek
longer term. But there has been yery
intellect and stature in his appointecs,
little effort to explain:why the admin-
even if he had to sacrifice the differ-
istration thinks any such thing, and it
ence between 100% and 95% personal
is not comforting for the nation to
loyalty. And in this way he could help
guess at what the President might
to bind the psychic wounds the nation
believe.
has suffered over the last decade. He
10
"This lack of persuasive effort
but his successors and the nation will
plagued the administration repeatedly
have been well served.
during its first term. It was never able
to mount a real effort to persuade
"But there is a danger in all this
people who are persuaded by serious
which, for lack of a better term, might
argument. It lacked, as Daniel Patrick
be called personalism. Nixon--and any
Moynihan noted in his leave-taking of
President--has a right to the loyalty of
the White House, a sustained and serious
his subordinates. But that loyalty is
second and third level of advocacy. As
owed primarily to the office of the
if to prove his point, this remark was
Presidency and to the Constitution of
excised from his otherwise acclamatory
the U.S., rather than to Richard Nixon
speech when it was reprinted in the
personally.
Republican house organ.
"By insisting on conformity in
"We had hoped that the second term
everything from dress-styles to intel-
would see a moderation of this defen-
lectual attitudes, a President robs him-
siveness, a broader and more generous
self of options and deprives the country
vision. Perhaps it still can when the
of the labors of some of its most
time is more nearly right. On the bomb-
creative citizens. If he sees and
ing, for example, the administration
listens only to those whose vision of
could scarcely explain the negotiating
America and of life is identical ot his
breakdown without recriminations against
own, he may implement his policies more
Hanoi that would hamper further nego-
efficiently, but he limits his own
tiation. Perhaps more forthcoming expla-
capacity for growth.
nations can be offered later
"At the moment, though, it seems
"There are not enough hours in the
to us that the Nixon administration
day for a President to see as many
simply does not understand that its task
people as he should, let alone for him
is not merely to govern well but to
to see all those who want to see him.
persuade people it is governing well.
There necessarily must be a straining
Unless it can understand that,
process by which that which
is
its political fate is likely to be
superfluous, superficial or irrelevant
winning the battles but losing the war."
can be eliminated from a President's ken
so that he can devote his energies to
the task of running the country.
HEMPSTONE HITS SIMILARITY OF AIDES
"But what can be helped are the
Smith Hempstone (PHILA. INQ., 1/19/73,
tone and atmosphere of the process. A
Washington):
President of the U.S. can be and ought
to be a big man. He can afford,
"In the first administration, the
precisely because he is so powerful, to
Nixon absolutists--the Haldemans,
be generous. There is no need for-- and
Ehrlichmans,
Colsons
and
ought to be no room for--meanness,
Zieglers--established their ascendancy
smallness or vindictiveness within the
within the White House staff. Now, as a
White House. And yet that is precisely
consequence of Nixon's governmental
the odor which at present exudes from
reshuffle (made in the name of
1600 Pennsylvania Ave.: the sour
decentralization but actually a
rectitude of the self-righteous. It is
centralizing operation), their influence
not, to put it mildly, becoming, and the
and authority are extending outward into
President ought to put a stop to it.
the various government departments and
agencies and down to the second and
"Richard Nixon, after four years
third levels.
in office has demonstrated three
qualities of which great Presidents are
"Lord knows, the Federal bureau-
made: intelligence, energy and
cracy is overblown, inefficient, remote
determination.
and unresponsive to either the Presi-
dency or the people. If it can be shaken
"What have been lacking are the
up and resuscitated, then not just Nixon
qualities of warmth and humanity and the
7
plain that fuel distributors are re-
anything we've had in this country for
luctant to make the allocations them-
20 years,' he says, but he adds that
selves and look to federal regulatory
most transportation concerns will be
decisions to bail them out. 'It doesn't
able to get along on between 80% and 90%
make sense for the mayor of St. Louis
of their usual needs.
to be arm-twisting to get fuel for hos-
pitals,' a mass transit-industry offi-
"The American Transit Association
cial says.
ticks off 20 cities that it says soon
will have to start cutting back mass-
"The transportation plight may be
transit service by 10% to 33%, includ-
overplayed by the industries, some gov-
ing St. Louis, Detroit, Denver, Kalama-
ernment analysts say, though an OEP
zoo, Cincinnati, Brimingham and Tucson.
spokesman says it will remain 'serious'
The entire State of New York is in
despite the liberalization of oil import
store for a 25% cut in transit opera-
quotas.
tions, the Washington-based trade
group says. Des Moines and Minneapolis
"I don't think it's too bad,' says
will have to stop all transit opera-
James M. Beggs, Under Secretary of Trans-
tions by Sunday or Monday, the transit
portation. 'Certainly, it's as bad as
association says."
DEMOCRATS
WOODCROCK TO RESIGN
FROM DEMOCRATIC COMMISSION
"Woodcock said in a telephone in-
terview today he is concerned about the
James Doyle (WASH STAR-NEWS, 1/17/73)
demands on his time in a year when he
will be involved in major contract
"United Auto Workers President
negotiations for 700,000 members of
Leonard Woodcock said today he plans
his union.
to resign as chairman of the Democratic
Party's Commission on Delegate Selec-
""I just don't see my way out of
tion, but he denied he was quitting
this,' he said. 'I think the problem
because party chairman Robert S. Strauss
of rules changes is more emotional
plans to expand the committee by 20
than real, but I don't want to be the
members.
centerpiece of a controversial politi-
cal story when my union members ex-
"Woodcock informed Strauss yester-
pect me to be representing them at the
day of his intention to resign, al-
bargaining table.'
though he accepted the chairmanship
only a few months ago and the commis-
"Strauss said this morning that
sion, which will oversee any changes
there was absolutely no suggestion of a
in the makeup of future party conven-
rift in Woodcock's decision to resign
tions, has not even begun its work.
and that the decision was not final."
WELFARE
'RETHINKING WELFARE REFORM'
drawing boards on welfare.
Richard P. Nathan (NY TIMES, 1/18/73,
Washington):
"First, little noticed but far-
reaching, is that welfare for families
"Current conditions and the poli-
has changed over the last four years in
tical setting now indicate that the Nixon
a basic way. When we began designing the
Administration's welfare-reform plan
welfare-reform plan; the 'working poor'
should not be reintroduced in the first
received nothing. (The phrase working
year of the 93d Congress.
poor refers to families headed by men
working full time, but with incomes so
"There are three reasons why the
low and family size so large that they
time is right now for going back to the
are often worse off than if the wife and
8
children were on Aid to Families with De-
to take advantage of the lessons learned
pendent Children). This group is now one
about welfare work incentives over the
of the chief beneficiaries of food stamps,
last four years. I think the
a program which has grown from 2.4-million
Administration's welfare planners did a
participants in 1968 to 11.7-million in
good job, but I think, too, that the
1972. One of the ironies of the defeated
problem is immense and to admit that we
welfare-reform bill was that because it
learned more about it as we worked with
substituted money for food stamps, many
it should be no source of embarrassment.
current working-poor families would have
ended up worse, not better off. Their
"There is however, a 'welfare
food-stamp bonus now is larger than they
trap.' It exists especially when pro-
would have received in Family Assistance
grams come together. A family getting
Plan payments. The whole question of the
A.F.D.C., free school lunches, Medicaid,
working poor has changed.
maybe public housing, and maybe tuition
aid or free Head Start day care faces a
"Second, as an argument for doing
situation where (with Social Security and
more homework and not reintroducing F.A.P.,
other taxes taken into the bargain) our
is a factor related both the the Senate's
own beneficence has caused it to have an
consideration of the welfare reform bill
income limit which it cannot exceed
and the current ferment about the inef-
without losing a great deal. The problem
fectiveness of manpower programs to aid
arises because income-support programs
the disadvantaged. The Senate (partic-
for the poor have been designed by
ularly the conservative Senators who
different Government agencies and dif-
worked hard on welfare) kept coming back
ferent committees of the Congress, often
to the fact that there are not enough
without relation to one another and
jobs for the poor. They charged that a
without any underlying strategy.
work requirement, as in the House and Ad-
inistration plan, would not get people
off welfare.
"There are many who think that the
"Their reasoning was that if eco-
only answer is to tear down all existing
nomic incentives in welfare work supple-
programs and replace them with a
ments were strong enough the jobs simply
completely new plan. They may be right.
weren't available. I believe we never
But before we come to this extremely dif-
gave satisfactory answers to these ques-
ficult stage, we should do everything we
tions. We need to marshal what data we
can to devise (as I think we would be
can to determine how many poor family
able to) a set of less sweeping changes
heads who are employable could be ab-
within the present program that will
sorbed into the force and what would be
hopefully achieve our major aims
"
the labor market effects of different
techniques for doing this. How would the
[Richard P. Nathan, a senior fellow
present working poor be affected? Would
at the Brookings Institution, was Deputy
they lose their jobs? Would their wages
Under Secretary of Health, Education and
Welfare in the Nixon Administration.]
go down?
"Third, and most important, we need
Copyr. 1973, NEW YORK TIMES.
SUPREME COURT
PANEL SUGGESTS ALTERNATE TO BURGER PLAN
now sitting on the 11 U.S. Courts of Ap-
peals, would rule on 400 to 500 cases
Fred Barnes (WASH. STAR-NEWS, 1/17/73):
diverted to it each year by the Highest
court.
"An eight-member panel of the Ad-
visory Council of Appellate Justice will
"The chief: advantage of the new
recommend next month the creation of a
judicial body, according to the panel,
nine-judge 'lower chamber' for the U.S.
is that it would provide final, authori-
Supreme Court.
itative rulings in hundreds of important
cases that the Supreme Court is too busy
"The new chamber, made of judges
to decide.
6
DOMESTIC AFFAIRS
CONGRESS
Senate Democrats yesterday approved a resolution designed to sharply
limit the Administration's use of executive privilege in order to
prevent officials from testifying before Congress. The measure requires
officials to appear before the inquiring committee with a Presidential
letter specifically detailing the areas of privileged information. Sen.
John Stennis, co-sponsor of the resolution, said the decision whether
to accept the plea would be up to each chairman, who could have the matter
referred to the entire Senate. Should the Senate refuse to honor the
request to invoke the privilege, further refusal to testify could result
in contempt of Congress charges. Sen. Sam Ervin said the new rules would
cover all Presidential advisers, such as Henry Kissinger, H.R. Haldeman,
and John Ehrlichman except when they are serving as "intimate advisers."
However Majority Leader Mike Mansfield disagreed, saying he felt Presi-
dential appointments requiring Senate confirmation should be the principal
individuals affected. He said "any President is entitled to have a few
intimate advisers on the basis of absolute confidentiality" adding that
it would be "diversionary and dangerous" to have it otherwise.
Jacob Javits yesterday said a "majority of the Senate" is co-sponsoring
his legislation designed to limit Presidential authority to commit U.S.
troops to military action without Congressional approval. The measure,
which died in the House in the last session after being approved 68 to 16 by
the Senate, requires the President to seek Congressional approval for any
deployment of U.S. forces extending beyond 30 days.
Although House Republicans voted two years ago to abolish seniority
as the sole criteria for determining the ranking member of each com-
mittee and make each selection subject to Conference Approval, the
only formal challenge to the seniority system was overwhelmingly
defeated at yesterday's Conference session. Rep. John Erlenborn
of Illinois, the second ranking member of the important Government Operations
Committee, was defeated 100 to 36 in a move to unseat Frank Horton of New York
as the senior GOP member. Horton received the largest number of negative votes
--William Bray of Armed Services received 33 negative votes--although only
seven of the 21 ranking committee members were the result of unanimous votes.
Those approved without dissent were Ancher Nelson, of the D.C. Committee,
Albert Quie of Education and Labor, William Dickinson of House Administra-
tion, James Grover of Merchant Marine, James Quillen of Ethics, John Hammersch-
midt of Veterans Affairs, and Herman Schneebeli of Ways and Means.
ENERGY
FUEL SHORTAGES MAY CURTAIL
sit operators are meeting with government
TRANSPORTATION SERVICES
officials this week, and plan more meet-
ings today and tomorrow on the fuel
WALL ST. JRNL., 1/18/73, Washington:
crisis. The meetings with Transportation
Department and Office of Emergency Pre-
"Transportation industries report
paredness officials are aimed at urging
they're rapidly running out of fuel and
a national plan at allocating fuel use.
IBRARY
will have to begin to curtail service
Home-heating oil shortages are affect-
soon.
ing transportation needs, they say
"Representatives of trucking, rail-
"The industry representatives com-
road, barge-line, airline and mass-tran-
9
"Relations with the press, always
frey Moore of the Bureau of Labor Sta-
bad, have grown worse. Last month's
tistics, has been fired. The ablest man
speech by Clay Whitehead, director of
in the Cabinet last year was Peter G.
telecommunications,
is
widely
Peterson in Commerce. He dared to rise
interpreted as a further effort to
above the herd. Off with his head!
intimidate the television netowrks.
With the exception of Rogers Morton in
Liberals and conservatives are equally
Interior, the new Cabinet will have not
scornful of the petty, petulant decree
a single member who has held elective
that banned reporters of the Washington
political office. A major appointee,
Post from social functions at the White
Roy Ash as director of the Office of
House. As Peter Lisagor has said, this
Budget and Management, is in deep
was a blush- league stunt; and whatever
trouble with Congress already.
we expect of the White House, we
expect it not to be blush.
"Little or large, these things
form a pattern. It is an image, to
"Personnel changes contribute to
borrow from Patrick Henry, that squints
the melancholy air. The most respected
of monarchy. And we are uneasy."
statistician in government, Dr. Geof-
BUDGET
HILL IMPOUNDMENT STUDY SET
ceiling on spending, control of
'back-door' expenditures mandated by
WASH. STAR-NEWS, 1/16/73:
statutory formulas and the coordination
of spending, revenues and the debt
"Presidential refusal to spend
limit.
money voted by Congress will be studied
by a Senate-House committee on budgetary
"The temporary committee said it
control.
also will consider recommending estab-
lishment of a permanent committee to
"The Joint Budget Committee listed
carry out whatever budget control mea-
the controversy over 'impoundment' of
sures Congress may adopt.
funds by President Nixon on its agenda at
a meeting yesterday.
"Public hearings on budget control
proposals may be deferred until tenative
"Many members of Congress object to
conclusions are reached, the committee
the practice of impoundment as an
said. But it said briefings by present
infringement of their authority. The
and former budget officials are planned.
joint committee was established last
year to find ways for Congress to con-
"The committee said it will depend -
trol the budget and thus reclaim powers
at least initially mainly on the
lost to the President.
existing staffs of congressional ap-
propriations and taxation committees to
"Although the committee has reached
handle its studies.
no decisions, it said the agenda also
will include studying the possiblility
"An interim report to the House and
of recommending an annual congressional
Senate is due by Feb. 15."
7
the loan in anticipation of future
the Cost of Living Council. Like most
price rises. Provided 1973 output
regulatory agencies, the Agriculture
restrictions are removed, there need be
Department has long been dominated by
little fear of a squeeze on supplies in
the industries it is supposed to
the 1973-74 crop year.
supervise, and as a result it has all
too often lost sight of the interests
"Letting the private sector carry
of consumers and processors and of the
most of the farm inventories will also
need to curtail inflation. Recent
have a favorable impact on another
price developments have shown once more
problem area, namely export sales,
that agricultural policy is too serious
especially to Communist countries. As
far as one can tell, there was no gross
a matter to be left entirely to the
impropriety in the unsatisfactory grain
Agriculture Department.
sales to the Soviet Union this summer,
but there obviously was mismanagement
"These developments also show that
resulting in part from the dependence
the tremendous productivity of American
of private traders on government-held
agriculture is not something to be sup-
inventories. If inventories were held
pressed by expensive government
in the free market, government agencies
programs, but rather something to be
could stay out of these transactions
fostered as one of our greatest
for which they appear to have been
national assets. Since the Agriculture
poorly prepared.
Act of 1970 expires this year, we have
an opportunity to adjust our farm
"A number of other things, some of
policy to the realities of the 1970s
them long overdue, are now being done
rather than the overproduction myth of
a generation ago.
to alleviate the food price problem in
the near. term. The suspension of
it can no longer be said that
import quotas on beef was a step in the
the subsidies are necessary to assure
right direction but there are still
us of cheap food. Being linked with
other import quotas that could be
liberalized. The operation of
output restrictions, they do just the
opposite. The new farm programs we
marketing orders, which are especially
need may still involve some government
important in milk and in certain fruits
involvement to prevent excessive price
and vegetables, should be more closely
fluctuations, but they should get away
supervised to ensure conformity with
from output restrictions and income
anti-inflationary policy and with
consumer interests generally. Some of
support to commercial producers. It
these marketing orders permit practices
must be hoped that the emphasis on ade-
quate supply in the Jan. 11 announce-
that would be illegal in any other
ment will be carried over into the new
industry; as a result the price of
farm legislation."
tomatoes, for instance, is probably two
or three times as high as it would be
[Mr. Houthakker, professor of
in a free market. Perhaps the most
economics at Harvard University,
important farm measure announced on
formerly was a member of the Council of
Jan. 11 is one that brings agricultural
Economic Advisers under President
program decisions under the control of
Nixon.]
CONGRESS
ALBERT ASKS COMMITTEE STRUCTURE STUDY
quarter of a century.
GERALD
Marjorie Hunter (NY TIMES, 1/16/73,
"The Oklahoma Democrat's proposal
Washington):
for creation of a special biparitsan
study committee comes at a time when
"Responding to complaints of
Congress is under heavy pressure, from
dwindling Congressional power, House
within and without, to reform its often
Speaker Carl Albert called today for
creaky legislative machinery.
the first sweeping study of House
committee structure in more than a
"The resolution to create the
8
special committee was introduced on
committee structure, Mr. Bolling said
behalf of the Speaker by Representative
today that it was not designed to head
Richard Bolling, Democrat of Missouri,
off more immediate reforms.
an author of several books highly cri-
tical of House procedures; and Repre-
"We just feel that a good look at
sentative David T. Martin, Republican
the even broader picture is long over-
of Nebraska, ranking minority member of
due, he said.
the House Rules Committee.
"The last such study was made in
"The proposed study, if approved
1946 and resulted in reducing the
by the House, would last for perhaps a
number of House committees from 44 to
year and a half and cost up to
the present 21. However, since that
$1.5-million.
time, there has been a rapid
proliferation of subcommittees.
"Meanwhile, Speaker Albert denied
today that he was attempting to stall
"Among the areas that would be ex-
Democratic action on a series of more
plored by the special committee would
immediate reforms, including modifi-
be the number and size of committees
cation of the seniority rule in selec-
and subcommittees, their jurisdictions,
tion of House committee chairmen.
rules and procedures."
"In offering the Speaker's pro-
Copyr. 1973, NEW YORK TIMES.
posal for an in-depth study of
NIXON
KILPATRICK BLAMES WHITE HOUSE FOR CAPI-
"It was the [Vietnam] bombing, the
TAL MOOD
unexplained and unjustified 12 days of
bombing, that created an almost tangi-
James J. Kilpatrick
(BALT.
SUN,
ble pall over Washington. Half a bil-
1/16/73, Washington):
lion dollars spent, scores of airmen
dead or imprisoned, thousands of lives
"A sense of unease is growing in
lost, whole cities shattered--and all
Washington. If the mood cannot be pre-
for what? Was it to bring Hanoi back
cisely defined or wholly explained, it
to the bargaining table? Granted that
can be clearly felt. It results from
the Communists respect strength and
the pattern of the President's actions
treat weakness with contempt: Was this
since his landslide reelection two
terrifying show of strength the one
months ago.
best road back to Paris?
"Mr. Nixon always has seemed a re-
"Yet the mood cannot be explained
mote and indrawn figure. In these past
in terms of Vietnam alone. The
two months he has become more remote
President has failed (and we have to
and indrawn than ever. He has spent
assume the failure is deliberate) to
little time in the White House itself;
make even the most minimial gestures of
he has preferred the isolation of Camp
political accommodation to the
David. Except for a perfunctory
Congress. These are matters of grace,
birthday interview, he has seen the
press not at all. He has made no
of form, of politesse. Mr. Nixon has
attempt, by public explanation and
spurned them. His impoundment of funds
persuasion, to rally public support
appropriated for the abatement of water
behind his drastic measures in Vietnam.
pollution--funds appropriated over his
veto--could have been handled in ways
"The renewed peace optimism this
that might have minimized hostility on
week cannot entirely dispel the feeling
the Hill. The President acted with a
that things have been sliding downhill
kind of imperious hauteur instead.
since November
10
"We think President Nixon is tak-
"But while we think he is taking
ing a risk. It will be a risk that
a risk, we strive not to under-estimate
should be lessened with the extension
him--particularly in this field."
of control power.
NIXON
'NIXON-WATCHERS' BAFFLED
varnished over.
Peter Lisagor (PHILA. INQ., 1/15/73,
"And to impose discipline on the
Washington):
wastrels, he has cut into housing, high-
way, rural electric, farm and assorted
was not surprising that the
social programs, sacred cows all in the
Nixon-watchers braced themselves for daz-
congressional precincts, with a scythe.
zling paradox, bewildering inconsistency,
In a Jeky11-Hyde switch, Keynes has again
become Adam Smith
astounding irony in the second term. No
longer inhibited by the Reelection Im-
perative, the President would 'open up'
"This was 'vintage Nixon,' the form-
and show some of the virtuosity he hus-
sheet conservative, the man thought to
banded in his first term.
have vanished in the midsts of a larger
statemanship. And the Nixon-watchers
"What has happened so far is that
have been made furious by his reappear-
the President has revealed himself to be
ance. They figured him to mix 'em up a
little more.
something of a doctrinaire conservative
in fiscal matters (the way he was
"Some of the more chastened Nixon-
perceived in 1969 before he announced to
a TV interviewer that he had become 'a
watchers have gone back to reporting
Keynesian'). He has returned to the
standup intelligence about the President,
straight-and-narrow of fiscal integrity.
namely, that he never has had a headache
He has approached inflation with what one
or stomach upset in his life (wait till
wag has called 'economic chutzpah,' by
the aspirin and bromide makers hear about
virtually decontrolling wages and prices,
that), and that he weighs the same today
except for areas so flagrantly
that he weighed 20 years ago, 173 pounds.
inflation-ridden that they couldn't be
That's the kind of stuff a reporter can
be confident about and comfortable with."
DEFENSE
'NO JUSTIFICATION' FOR MULTIPLE WARHEADS
ment of the multiple warhead was the un-
certainty over whether the Soviet Union
MILWAUKEE JRNL., 1/10/73, edit.:
was going to deploy a nationwide ballistic
missile defense system. The thousands upon
"A typical example of how strategic
thousands of offensive warheads were meant
weapons generate a momentum wholly their
to overwhelm such a defensive system by
own is the report that the Pentagon is
sheer numbers. But now the strategic arms
asking that all of the 1,000 Minuteman
limitation agreements with the Soviet Uni-
land based missiles be converted to multi-
on limit each side to the deployment of
ple warhead weapons. Current plans call
not more than 200 defensive missile
for 550 of the missiles to get such war-
launchers, a number that theoretically
heads, as well as 496 of the 656 sea based
could be overcome by 201 offensive war-
missiles aboard our 41 Polaris submarines.
heads. Already the U.S. has deployed 5,900
Even holding to existing plans, the U.S.
strategic nuclear warheads. This is ap-
could mount a total of 6,610 individually
proximately 2,000 more than the Soviet
targeted warheads on these launchers--
Union is expected to have deployed by
enough to destroy the Soviet Union,
1977 !
China and a few others several times over.
"The original reason for developing
"The original stimulus for develop-
multiple warheads no longer exists. In
7
a move to delay action on appointments,
mittees.
sources close to the senator said he very
well might join in.
"Three other powerful committee
chairmen have also passed the word priva-
tely that they may well join the delay-
"Senate Democratic leader Mike Mans-
ing movement: Sens. John J. Sparkman (D-
field (Mont.) also has indicated that he
Ala.) of the Banking Committee, Herman E.
might well delay scheduling Senate action
Talmadge (D-Ga.) of the Agriculture Com-
on the appointees even though they are re-
mittee, and J. William Fulbright (D-Ark.)
ported out favorably by the various com-
of the Foreign Relations Committee."
ECONOMY
'MAJOR VICTORY' FOR MEANY SEEN
their satisfaction with the Phase 3 pro-
gram was the appointment of Mr. Dunlop
Philip Shabecoff (NY TIMES, 1/13/73,
as director of the Cost of Living Council.
Washington, Jan. 12):
They said that Mr. Dunlop had long ex-
perience in labor-management relations
"President Nixon's decision to drop
and that, unlike some of the members of
most mandatory wage and price controls
the Pay Board, he was respected and
was described privately by labor of-
trusted by trade union leadership.
ficials today as a major victory for
George Meany that would do much to
"More important, they said, while
promote labor peace in 1973.
running the Construction Industry Col-
lective Bargaining Commission, demon-
"These officials said that the de-
strated that he did not limit himself to
cision to drop the direct controls on
rigid guidelines or numerical standards.
wages, and the decision to name John T.
Instead, he worked to reduce infla-
Dunlop as director of the Cost of Living
tionary wage trends in the construction
Council, was arranged, in part at least,
industry by examining each contract on a
in negotiations between Mr. Meany, the
case-by-case basis, meeting the partic-
president of the American Federation of
ular needs of each situation.
Labor and Congress of Industrial Organ-
izations, and George P. Shultz, the Sec-
"This approach to controlling wages
retary of the Treasury.
is close to the kind of program that
Mr. Meany and other leaders said would
"Mr. Shultz reportedly agreed to
be acceptable even before Phase I began
press for the dropping of controls in
in August 1971, the labor sources com-
return for a promise by Mr. Meany and
mented. Labor was never unduly con-
other labor leaders to return to parti-
cerned about the precise figure of a
cipation in the stabilization program,
wage guideline. What Mr. Meany and the
and to cooperate in seeking noninfla-
unions wanted was relative freedom in
tionary wage increases in this year of
the collective bargaining process and
heavy collective bargaining.
flexibility to meet the peculiar needs
of each contract situation, they said."
"According to the labor officials,
Copyr. 1973, NEW YORK TIMES.
Mr. Meany told Mr. Shultz that the Phase
2 program was not controlling prices and
was, therefore, inequitable and manda-
FEDERAL RESERVE BOOSTS DISCOUNT RATE
tory wage controls should be dropped.
Mr. Shultz, was said to be predisposed
Art Pine (BALT. SUN, 1/13/73, Washing-
toward a voluntary stabilization pro-
ton):
gram and was sympathetic to Mr. Meany's
arguments. One labor leader described
"The Federal Reserve Board an-
Phase 3 as 'a joint Shultz-Meany vic-
nounced yesterday a sharp increase in
tory.'
its discount rate--the interest fee
it charges on temporary loans to
"Labor sources said that the key to
member banks--boosting it to 5 per cent,
4
CONGRESS
Jan.11
The House Democratic leaders yesterday gained what observers called
the firmest control over the powerful Rules Committee in 30 years by
the appointment of three new "sure votes" to the panel. The Democratic
Caucus Committee on Committees nominated Morgan Murphy of Illinois, Gillis
Long of Louisiana, and freshman Clem Mc Spadden of Oklahoma to fill three
vacant seats. All three are considered supporters of the House Democratic
leadership. This, along with the retirement of former Rules Committee
Chairman William Colmer who often fought the leadership's programs, is
seen as giving House Speaker Albert tight control over the panel, which
will now be chaired by Roy Madden of Indiana, a strong supporter of Albert,
One Democratic source was quoted as saying "He (Albert) fought for these
appointments as the first order of business and was not going to back
down. He wanted control of this Committee and he has it with at least
eight (a majority) sure votes." The appointments by the Committee on
Committees must be endorsed by the entire Caucus on Jan 22 but observers
predicted certain approval.
Senate Democrats yesterday unanimously approved a resolution declaring
that all new Presidential appointees of Cabinet-level rank must appear
before an appropriate Senate Committee before confirmation. Majority Leader
Mike Mansfield said the resoltuion reinforces the Constitutional obligation
requiring appointees to testify before Congress. The Caucus defeated, in
a 19-17 vote, a tougher proposal sponsored by John Stennis that would grant
the Senate the power to override the invocation of the plea of "Executive
privilege" by the President should that body determine that the claim for
use of the privilege was unfounded. Mansfield said he had opposed the
measure because the Democratic Policy Committee is currently studying the
problem of the privilege. Other Democrats said yesterday's action
was taken because of the Administration's refusal to consult with Congress
on the Vietnam war and the concern that the reorganization of the Executive
Branch would further limit Congress' ability to gain access to information
from the Administration.
The Senate Republicans Conference Committee on Committees yesterday
announced the nominations of GOP members to fill vacant Republican seats
on the Senate's standing committees. All the nominations are expected
to be approved in today's Conference meeting. Robert Griffin was named
to Foreign Relations, William Scott to Armed Services, Charles Mathias,
Richard Schweiker, and Henry Bellmon to Appropriations, Dewey Bartlett,
Jesse Helms, and Pete Dominick to Aeronautical and Space Services, Helms
to Agriculture and Forestry, Lowell Weicker to Banking and Urban Affairs,
Robert Dole, Robert Packwood and William Roth to Finance, William Brock
to Government Operations, Bartlett and McClure to Interior and Insular
Affairs, Robert Stafford to Labor and Public Welfare, Scott, McClure and
Dominick to Public Works, Bartlett and Dominick to D.C., William Saxbe to
Post Office and Civil Service, Mark Hatfield to Rules and Administration,
and McClure to Veterans Administration. Carl Curtis became ranking member
on Agriculture, making Barry Goldwater ranking member on Space.
WATERGATE
ALD
LIBRARY
E. Howard Hunt Jr. yesterday pleaded guilty to all six charges against
him. in the "Watergate bugging" trial, after a Federal Court judge refused
to accept his plea of guilty to only three counts in the indictment. Hunt
is the former White House consultant who, along with six other defendants,
is on trial for charges stemming from the June break-in and alleged bugging
9
ucation and Labor, Foreign Affairs, Commerce, Judiciary, and Public
Works.
The Senate Republican leadership yesterday announced the selection
of six Assistant Republican whips--James Buckley, Robert Stafford, Ted
Stevens, Robert Taft, Lowell Weicker, and J. Glenn Beall. The Senate
Democratic Steering Committee approved requests from Adlai Stevenson
and freshman William Hathaway for Committee reassignments. Stevenson
will move from Labor and Public Welfare to Commerce while Hathaway will
switch to Labor and Public Welfare from Agriculture.
NIXON ADMINISTRATION
Administration sources yesterday said President Nixon will name
Frederic Malek as Deputy Director of the Office of Management and Budget.
The announcement of the appointment reportedly will be made today. Malek,
who has been referred to as Nixon's "talent scout," joined the Admin-
istration in 1969 as a Deputy Undersecretary of HEW and later moved to
the White House as a Special Assistant to the President. Malek is said
to have been instrumental in the President's reorganization of the Exe-
cutive Branch in preparation for the second Nixon Administration.
The White House announced yesterday that President Nixon will not
deliver his State of the Union Address in person to Congress. Press Sec-
retary Ronald Ziegler said a written address will be sent to the Congress
but that no oral message is contemplated because it would follow closely
the Inaugural Address. Ziegler also disclosed that Nixon's 1974 budget
request would be delivered to Congress during the last week of January.
SPENDING
ISSUE COULD FAVOR GOP
tically reduced. There is no third way,
this side of gigantic deficits and econ-
David S. Broder (PHILA. INQ. 1/9/73,
omic chaos.
Washington):
""By its very nature,' Bell says,
"With every indicator pointing to a
'the spending-and-tax issue is one that
glorious battle of the budget as the
cannot be regarded as the aberration of
running story of the year in the capital,
a single Presidential Democrat such as
it is worthy of note that some conserva-
George McGovern. If President Nixon were
tives in town think the stakes may be
to mount a crusade against the size of
even bigger than they seem.
goverment, the Democratic-controlled
House and Senate would have to say yes
"Jeffrey Bell, a bright pamphleteer
or no. If they said yes, the Republican
of the right, argues in the last issue
administration would get the lion's share
of the Alternative, a lively conservative
of the credit
monthly, that the spending issue may hold
the key to that long-cherished conserva-
"If they said no, and the President
tive dream of a political realignment
convinces the country that the answer
that would produce a genuine Republican
must be yes, then the Republican Party
majority.
will have a realigning issue whose ef-
fects will be felt at all levels in 1976
In the past decade,' Bell writes,
and at some in 1974. For this is an
'the growth of Federal programs and spend-
issue that has to do not only with the
ing has accelerated to the extent that
Presidency, but with the entire Congress
the country must make a landmark decision
and entire Democratic Party as well.'
what government is all about. Either House
and Senate would have to say yes taxes
"Bell notes that in his November
will rise, or government will be dras-
interview with Garnett Horner, Mr. Nixon
10
clearly signaled his intention to fight
Bell describes and that the President
for hold-the-line policies on spending
seems inclined to follow. If the Con-
and taxes. He concludes that if the Presi-
gress can discipline itself to deal
dent is as good as his word, 'realign-
responsibility with the budget, then
ment under President Nixon may not be
the Democrats may be able to make the
quite as dead as political Washington
politically vital distinction be-
thinks it is.'
tween the kinds of spending the public
would willingly see increased (for
"The reasons the argument deserves
education, health, control of crime
serious consideration are these:
and pollution, for example) and the
kinds--including military--the pub-
"--Almost every serious analysis
lic would willingly see reduced.
indicates that we have reached the
limits of government programs that can
"
They can also do one other
be financed by the current Federal tax
thing that is not mentioned among the
system.
options Bell describes.
"--There's little doubt that there's
"They can reform the tax system,
widespread public skepticism about the
so as to ease the inequities that
value of much of that spending and
rightly aggravate so many voters and
strong resistance to paying higher taxes
increase the funds available for de-
for more of the same.
sirable government programs.
"--The President is, as Bell con-
"Congress is ahead of the President
tends, very much on the offensive on
and the Democrats are ahead of the Re-
this issue and it's not clear whether
publicans on the issue of tax reform.
the Democratic Congress is equipped to
If they stay ahead, the scenario Bell
respond.
outlines may be thwarted in the next
four years. But the possibility of Mr.
the Democrats are far from
Nixon bringing it off is a momentous one."
powerless to counteract the strategy
DEFENSE
U.S. CONSIDERING MOBILE MISSILE PLATFORMS
"The 1,000 ICBM's now deployed re-
BALT. SUN, 1/9/73, Washington (Reuter):
ceive limited protection from enemy
strikes by being encased in concrete
"The U.S. is considering develop-
silos below ground.
ing mobile platforms to launch inter-
continental ballistic missiles, informed
"But Pentagon officials now be-
lieve the vulnerability of the missiles
military sources said yesterday.
could be lessened by placing them on
"The sources said that $7 million
mobile platforms on trains or huge
trucks.
would be allocated in the new 1974 bud-
get, beginning July 1, 1973, to study
"We think that mobility is the
the feasibility of intercontinental
best option for improving the surviv-
ballistic missiles by placing them on
ability of the missiles, one official
mobile trains or truck platforms.
said."
GERALD
7
as a construction union negotiator with
some wonder privately why President Nixon
a background of inflationary wage settle-
reached down to a state level to choose
ments and costly work rules and practices,
his labor nominee.
and his generally parochial position that
what is good for the building trades unions
"If Mr. Meany had reservations about
is paramount--no matter what the consequences
Mr. Brennan, it could have been because
may be for other trade unions.
of his recognition of what Mr. Brennan's
appointment might do to efforts to tighten
"Generally, conservatives in the feder-
labor's ranks, and to coalesce labor, civil
ation approve of the nomination, although
rights, liberal forces."
CONGRESS
MANSFIELD MAPPING SPENDING PLAN
low Congress to carry out its constitutional
responsibility of appropriating money
Shirley Elder (WASH. STAR-NEWS,
while retaining the right to decide where
12/6/72)
programs should be cut back, Mansfield
said, noting that the spending priorities
"Senate Democratic leader Mike
of the Democrats in Congress often are
Mansfield will ask Congress to take
sharply different from Nixon's.
the initiative next year and impose its
own ceiling for federal spending in ad-
"At the same time, Mansfield denied
vance of the annual item-by-item analysis
the repeated White House assertion that
of Nixon's budget requests.
Congress is made up of big spenders who
have blown the lid off the budget.
"In an interview, Mansfield said he
shares [President] Nixon's concern over
"In the last four Nixon budgets,
the increased size of the federal budget
he said, the administration has run up
but he believes firmly that the Demo-
a deficit of $104.3 billion while Con-
cratic Congress, not the Republican
gress has cut presidential budget re-
President, should do the trimming if
quests by $20.2 billion.
any trimming is to be done.
"I wish we could have cut more,'
"A ceiling set early in the new
Mansfield said. 'But $20.2 billion
Congress--as soon as the administration's
is not bad and $104.3 billion over four
budget requests are in hand--would al-
years is bad. '''
DEMOCRATS
LABOR BACKS STRAUSS FOR TOP POST
defeat of its national ticket at the
hands of President Nixon.
Jerome Cahill (NY DAILY NEWS, 12/2/72
Washington):
"The AFL-CIO claim of a victory
for Strauss was disputed by sources in
"The AFL-CIO has thrown its support
the camp of Sen. George McGovern, whose
to Texas moneyman Robert Strauss in the
hand-picked party chairman, Jean Westwood,
developing battle for the chairmanship
is the target of the conservative-backed
of the Democratic National Committee,
ouster move.
THE NEWS learned today.
"My guess is that Strauss will be
IBRARY
"A source close to AFL-CIO Presi-
stopped; that he stopped himself when
dent Meany and Alexander Barkan, his
he got the endorsement of his old 201-
top political aide, said that agents
lege roommate, John Connally,' said a
of the labor federation were 'actively'
former high official of the national
working for Strauss and were optimistic
committee who backed McGovern. He
that there were enough votes to put
said the endorsement by Connally, who
him in as chairman when the national
bolted the Democratic ticket to sup-
committee meets here Saturday for the
port Nixon, has unified liberal and
first time since the Nov. 7 landslide
moderate factions in the party against
10
"To get their cooperation, Mr. Nixon
MODIFICATION, RESTRAINT, URGED
may have to pay a price. Controls may
have to be left on small and
BUFFALO EVE. NEWS, 12/13/72, edit.:
medium-sized companies longer than is
necessary or wise. And, more importantly,
"Because these controls limit econo-
labor is likely to demand assurances that
mic freedom, and in some cases can even
food prices will be held down.
become a kind of shield against normal
competitive pressures and efficiency,
"The Administration shrinks from im-
their extension should be of short dura-
posing direct controls on farm prices,
tion to force frequent reexamination of
since making such controls work, without
their emergency nature. And debate now
creating shortages in the process, would
should include standards of decontrol--
be next to impossible. There is talk of
perhaps for market areas where many
restructuring the whole farm subsidy
small businesses compete strenuously, or
system in some way that would work to
in any market where performance shows
hold down prices at the supermarket.
only normal price increases.
But any such move would be controversial
and time-consuming.
"
we have never believed that con-
trols would halt inflation. Nor do we
"The path toward decontrol is bound
now. Whatever program emerges, it will
to be thorny. But if the country is
be most effective if teamed with the
ever going to get back to a free
elimination of some useless artificial
economy, 1973 is the time to start down
props to higher prices and if allied
that path. "
with fiscal and monetary restraints,
which only Washington can provide.'
CONGRESS
MANSFIELD PREDICTS FUND BATTLE
commitments.
John H. Averill (NY POST, 12/18/72,
"Mansfield expressed a willingness
Washington, [LAT]):
to cooperate with the Administration as
long as Congress is treated as a coequal
"Senate Majority Leader Mike Mans-
with the executive branch. But he
field (D-Mont.) has indicated he will
seemed to be skeptical that the White
call on Congress to fight--and go to the
House would deal with Congress on those
Supreme Court if necessary--to stop
terms."
President Nixon from freezing and
impounding funds appropriated by
Congress.
PROXMIRE SIDES WITH LOCKHEED
"'The intent of the Congress has
been flouted and this question must be
Anthony Ripley (NY TIMES, 12/19/72,
faced up. to and a solution found even if
Washington):
it means going to the Supreme Court to
do so,' Mansfield said.
"Senator William Proxmire, D-Wisc.,
long a critic of the Lockheed Aircraft
"Mansfield took this position in a
Corporation's costly C-5A transport
wide-ranging interview in which he left
plane project, found himself in partial
little doubt that he expects the power
agreement with the company today.
struggle between the Senate and the
White House to intensify during the sec-
"The Senator had harsh questions for
ond Nixon Administration.
Lawrence O. Kitchen, president of
Lockheed -Georgia Company in hearings
"Other ingredients of the
before a Congressional subcommittee, but
Senate-White House institutional
Mr. Proxmire joined Lockheed in praise
struggle involve executive branch
of a General Accounting Office report on
secrecy, war-making powers and overseas
the management of the project.
9
cautiously on the rush-rush manned Mars
will be of use in improving the environ-
expedition advocated by Vice President
ment on earth. More accurate weather
Agnew three years ago. Still another is
forecasting, air pollution studies, better
the American-Soviet agreement on a joint
communications--these are some of the
rendezvous-and-docking mission for mid-
more obvious opportunities. These trends
1975, a concept once relegated to polit-
surely justify reasonable financial sup-
ical science fiction. Finally, there is
port to continue a desired momentum in
the very real prospect that experiments
space technology."
and programs conducted from space shuttles
NIXON ADMINISTRATION
SHULTZ'S ROLE EXPANDED
NIXON TO RETAIN TOP ADVISERS
James Keat (BALT. SUN, 12/2/72,
CHICAGO TRIB., 12/3/72, Key Biscayne,
Key Biscayne, Fla.):
Fla., Dec. 2):
"President Nixon yesterday desig-
"President Nixon will retain most
nated his Treasury Secretary, George
of his senior White House advisers as
P. Shultz, as his principal aide in
he begins his second term, the White
economic affairs.
House announced today.
"While continuing to head the
"Among those staying on the White
Treasury Department, Dr. Shultz will
House staff are H.R. Haldeman, the chief
move to the White House as one of the
of staff; John Ehrlichman, chairman of
select few assistants to the President
the domestic council; William Timmons,
who have direct access to Mr. Nixon.
director of congressional relations; com-
munications director Herbert Klein, and
"The former college professor
press secretary Ronald L. Ziegler.
and labor arbitrator will be chair-
man of a new Cabinet-level Council
"Henry Kissinger, Nixon's national
on Economic Policy, which will embrace
security affairs adviser, also will
all agencies involved in economic
remain at the White House.
decision-making at home and abroad.
"Ziegler also revealed the names of
"Ronald L. Ziegler, the White
four Presidential aides who will be
House press secretary, who announced
leaving.
the appointment for the President,
said Dr. Shultz will be the 'local
"Three of those, Charles Colson,
point' and 'overall coordinator' of
Harry Dent, and Robert Finch, have
the economic decision-making process.
served as top political advisers to
Nixon.
"At the same time, Mr. Ziegler
announced that two other presidential
"The fourth member who is leaving
economic aides had been asked to con-
is Robert Brown, a special assistant
tinue in their posts during the sec-
for minority affairs, who was the highest-
ond administration. They are Herbert
ranking Negro on the White House staff.
Stein, 56, chairman of the Council of
Economic Advisers, and Peter M.
"Miss Rosemary Woods, Nixon's long-
Flanigan, 49, executive director of
time personal secretary, will remain at
the Council on International Economic
the White House, Ziegler said, as will
Policy, formed earlier this year."
John Dean, counsel to the President.
12
Commerce Secretary Maurice H. Stans as
hope to become the majority party.
Republican Finance Committee chairman,
and Rep. William Steiger (Wis.) to head
"The lesson of the 1972 election,
a panel reviewing rules of the party's
where the GOP won a White House
national convention.
landslide while Democrats retained
"Virginia Gov. A.Linwood Holton,
control of Congress, is that more and
chairman of the Republican Governors'
more voters ignore party labels, Holton
Association, said in the principal
said. He added: 'The Republican Party
speech to the committee that the
cannot be the party of the unyoung, the
Republicans must break with tradition
unblack and the unpoor' if it is to
and appeal to independent voters if they
achieve majority status."
DEMOCRATS
Democratic National Chairman Robert Strauss Friday proposed the
creation of a high-level advisory board consisting of elected
Democratic officials representing the "spectrum" of the Party. The
council, which would consist of about 40 Democrats, including Senators,
Governors, Congressmen, mayors, and state legislators, would deal "with
the whole gamut of matters affecting the party," Strauss said. He also
indicated that Alabama Gov. George Wallace could serve on the board,
possibly as "one of the spokesmen of the Governors' group. He said
that he recently told Wallace "I thought our party wanted to hear all
its voices and he certainly is one of them. He led me to believe
that we could count on him to participate." Strauss said the proposed
panel, which he outlined before a meeting with Democratic Congressional
leaders and 16 Democratic Governors, would have "not one voice but a
lot of voices. This is reform in its purest sense."
H.E.W.
RICHARDSON CALLS
"This approach has tended to
FOR RADICAL SIMPLIFICATION
'squander' federal funds by spreading
them too thinly, he asserted.
Philip Shandler (WASH. STAR-NEWS, 1/18/
73):
"Richardson made his observations
in what he called a 'final report' to
"The nation's health, education
HEW employes
and welfare services must be 'radically
simplified'--primarily through special
"The recommendations Richardson
revenue sharing--Eliott L. Richardson
made today follow the lines of a blue-
declared today.
print for social services, dubbed the
Mega proposal, which Richardson sent to
"Forecasting a 'crisis of con-
the White House several weeks ago.
fidence,' the outgoing HEW secretary
urged a 'frank recognition of the limits
"Those recommendations included
upon our resources.
the elimination of the present Medicaid
and Medicare programs and the creation
"He criticized the 'prophets of
of a new 'maximum liability health
hope' and accused Congress of engaging
insurance plan.
in a 'political shell game.
"In both papers, Richardson argued
"The apparent political need for
for a reconception of HEW as a counter-
a congressman to get credit for author-
balance to the 'centripetal tendency
ship of a bill of his own,' Richardson
toward big government and the resultant
said, has resulted in a 'plethora of
alienation of many individuals' which he
narrow categorical bills.'
said had developed over recent decades."
Some items in this folder were not digitized because it contains copyrighted
materials. Please contact the Gerald R. Ford Presidential Library for access to
these materials.
A2
Sunday,
Jan.
28,
1973
THE WASHINGTON POST
Carl Albert Starting to Show Mu
By Richard L. Lyons
Washington Post Staff Writer
House Speaker Carl Al-
bert has the look of a much
more muscular leader now.
During the last Congress,
new in the top job, he often
seemed reluctant to step out
front with a statement that
might have made a differ-
ence on an issue, or try to
push the powerful commit-
tee chairmen into acting
more quickly than they
wished, or make anybody
mad.
Now he seems eager to
take and use power. He ap-
pears determined not only
to strengthen the Demo-
cratic leadership in the
House but to recapture
REP. THOMAS O'NEILL
REP. B. F. SISK
REP. CARL ALBERT
some congressional powers
loyal to Speaker
won't be "stooge"
moving decisively
from the President
Here are some actions Al-
Committee chairman to con-
work is done. Rather than
speedy procedure of sus-
bert has taken during the
sider bills, or trying to
assign this task to an exist-
pending the rules:
first three weeks of the
round up a committee ma-
ing committee, Albert had
session:
jority to clear a bill to the
Rep. Richard Bolling (D-
The other repealed an an-
He had the all-member
floor. The days of the Rules
Mo.) introduce a resolution
cient rule that required
party caucus add him to the
unanimous consent for the
Committee as an independ-
creating a special committee
Democratic committee on
which Albert would appoint
House to convene at any
ent power center appear to
committees, and there he in-
hour other than noon. Not
be over.
and thus control. Bolling,
sisted that three Democratic
one of Albert's staunchest
terribly important taken
vacancies on the House
Albert and Majority
alone, this nevertheless
Rules Committee be filled
Leader Thomas P. O'Neill
supporters, presumably will
be chairman.
peeled away another of the
with members totally loyal
(D-Mass.) beat back a pro-
rules that permitted a single
to him. He rejected South-
posal that the caucus elect
On the opening day of
member to tie up the House.
ern demands for one of the
the party whip, keeping for
the session, Albert pushed
Often in previous years
seats, and regained' - for
themselves the power to ap-
through the House over Re-
when he wanted the House
the first time in more than a
point their choice as third-
publican opposition two
to meet at 10 a.m. or 11 a.m.
generation-firm leadership
ranking member of the lead-
rules changes which give
to cope with a heavy sched-
control of this crucial com-
ership.
him more flexibility to
ule, Albert was frustrated
mittee which must clear
Albert decided that if
schedule the business of the
by a lone objection.
most major legislation for
Congress is to move more
House.
As leader of the house
floor action.
vigorously, one of the major
One doubled to four the
of Congress whose principal
No longer will the
needs is an in-depth study of
number of days each month
constitutional power is con-
Speaker have to spend time
the committee structure
when non-controversial bills
trol of the purse, Albert is
persuading a hostile Rules
where the basic legislative
can be taken up under a
especially sensitive about
TOTAL WORLD ENERGY DEMAND
MM B/D OIL EQUIVALENT
250
AVG.- ANN. % CHGE
AREA
60/70 70/80 80/85
U.S.
4.3
4.4
4.2
200
EUROPE
5.2 5.5 5.2
FAR EAST
10.6
8.7
7.3
OTHER FREE WORLD 5.7
6.6
5.5
MM B/D OIL EQUIVALENT
COMMUNIST AREA
5.1
4.8
4.9
150
TOTAL WORLD
5.3
5.5
5.2
COMMUNIST
100
OTHER AREA FREE WORLD
FAR EAST
EUROPE
50
LIBRARY
U.S.
72- 72-7180 7180 STA
EXHIBIT 1
O
1960
1965
1970
1975
1980
1985
TOTAL WORLD OIL PRODUCTION (INCL. NGL)
110
MM B/D
AVG.- ANN. % CHGE
100
COMMUNIST
AREA
60/70 70/80 80/85
AREA
90
U.S. & CANADA
4.1
1.0
4.3
OTHER FREE
LATIN AMERICA
3.4
2.7
3.8
FOREIGN
80
AFRICA
35.6
2.4
0.7
MIDDLE EAST
10.3
10.8
3.7
70
OTHER FREE WORLD
7.2
14.2
11.5
COMMUNIST AREA
8.8
5.9
2.5
MM B/D
60
TOTAL
8.0
6.3
4.1
50
MIDDLE EAST
40
30
AFRICA
20
LATIN AMERICA
10
U.S. & CANADA
72- 7176 72-7176 STA
EXHIBIT 2
O
1960
1965
1970
1975
1980
1985
ENERGY SUPPLY SOURCES
% OF TOTAL ENERGY SUPPLY
1960
1970
1980
EUROPE
INDIGENOUS SUPPLIES
66
38
39
IMPORTS - WESTERN HEMISPHERE
7
5
1
- MIDDLE EAST/AFRICA
22
51
55
- COMMUNIST AREA
5
6
5
JAPAN
INDIGENOUS SUPPLIES
56
15
10
IMPORTS - FAR EAST
6
14
28
- WESTERN HEMISPHERE
10
12
4
- MIDDLE EAST/AFRICA
26
59
50
- COMMUNIST AREA
2
-
8
UNITED STATES
INDIGENOUS SUPPLIES
91
89
71
IMPORTS - WESTERN HEMISPHERE
7
10
12
- MIDDLE EAST/AFRICA
2
1
17
- COMMUNIST AREA
0
0
I
EXHIBIT 3A
ENERGY SUPPLY SOURCES
% OF TOTAL OIL SUPPLY
EUROPE
INDIGENOUS SUPPLIES
7
3
14
IMPORTS - WESTERN HEMISPHERE
14
5
1
- MIDDLE EAST/AFRICA
72
85
81
- COMMUNIST AREA
7
7
4
JAPAN
INDIGENOUS SUPPLIES
0
0
0
IMPORTS - FAR EAST
27
15
27
- WESTERN HEMISPHERE
11
2
1
- MIDDLE EAST/AFRICA
58
82
63
- COMMUNIST AREA
4
1
9
UNITED STATES
INDIGENOUS SUPPLIES
82
77
44
IMPORTS - WESTERN HEMISPHERE
14
19
18
- MIDDLE EAST/AFRICA
4
4
38
EXHIBIT 3B
- COMMUNIST AREA
0
0
-
Energy Account of the U.S. Balance of Payments
Direct Effects
($U.S. Billions)
1972
1976
1980
PAYMENTS
Oil and Gas Imports f.o.b.
(4.6)
(12.3)
(23.3)
Transport Cost
( .6)
( 1.2)
( 3.3)
Total Payments (Landed Cost)
(5.2)
(13.5)
(26.6)
RECEIPTS
Oil, Gas and Coal Exports
1.4
2.0
2.6
Net Upstream Remittances
1.1
1.0
2.2
Shipping earnings, port fees, etc.
.3
.5
1.2
Total Receipts
2.8
3.5
6.0
DIRECT BALANCE
(2.3)
(10.0)
(20.5)
EXHIBIT 4
Energy Account of the U.S. Balance of Payments
Indirect Effects (vs. Producing Countries)
($U.S. Billions)
1972
1976
1980
RECEIPTS
Goods & Services Exports
2.8
4.8
8.1
Investment Inflow
-
3.5
5.6
Total Receipts
2.8
8.3
13.7
PAYMENTS
Remittances on OPEC Investments
-
(.4)
(1.5)
NET INDIRECT EFFECTS
2.8
7.8
12.2
NET ENERGY BALANCE
.5
(2.2)
(8.3)
EXHIBIT 5
Energy Account of the Western European Balance of Payments
Direct Effects
($U.S. Billions)
1972
1976
1980
PAYMENTS
Oil and Gas Imports f.o.b.
11.3
17.4
25.1
Transport Cost
2.7
3.7
4.0
Total Payments (Landed Cost)
14.0
21.1
29.2
RECEIPTS
Oil, Gas and Coal Exports
.1
.2
.9
Net Upstream Remittances
.5
.9
1.7
Shipping earnings, port fees, etc.
2.0
3.0
4.9
Total Receipts
2.6
4.1
7.5
DIRECT BALANCE
(11.3)
(17.0)
(21.6)
9 LIBIHXH
Energy Account of the Western European Balance of Payments
Indirect Effects (vs. Producing Countries)
($U.S. Billions)
1972
1976
1980
RECEIPTS
Goods & Services Exports
6.2
12.0
22.9
Investment Inflow*
-
5.7
6.1
Total Receipts
6.2
17.7
29.0
PAYMENTS
Remittances on OPEC Investments
-
( .9)
( 2.6)
NET INDIRECT EFFECTS
6.2
16.8
26.4
NET ENERGY BALANCE
(5.1)
( .2)
4.8
* Includes long-term portfolio and direct investments,
but not increases in liquid dollar balances.
EXHIBIT 7
Energy Account of the Japanese Balance of Payments
Direct Effects
($U.S. Billions)
1972
1976
1980
PAYMENTS
Oil and Gas Imports f.o.b.
(3.9)
(7.5)
(13.5)
Transport Cost
( .8)
(1.0)
( 1.9)
Total Payments (Landed Cost)
(4.7)
(8.5)
(15.4)
RECEIPTS
0il, Gas and Coal Exports*
-
-
I
Net Upstream Remittances*
-
-
-
Shipping earnings, port fees, etc.
.5
.6
1.3
Total Receipts
.5
.6
1.3
DIRECT BALANCE
(4.2)
(7.9)
(14.1)
* Less than .1
EXHIBIT 8
Energy Account of the Japanese Balance of Payments
Indirect Effects (vs. Producing Countries)
($U.S. Billions)
1972
1976
1980
RECEIPTS
Goods & Services Exports
1.2
2.4
4.2
Investment Inflow*
-
1.8
2.8
Total Receipts
1.2
4.2
7.0
PAYMENTS
Remittances on OPEC Investments
-
( .2)
( .7)
NET INDIRECT EFFECTS
1.2
3.9
6.3
NET ENERGY BALANCE
(3.0)
(4.0)
(7.9)
* Includes long-term portfolio and direct investments,
but not increases in liquid dollar balances.
EXHIBIT 9
PRODUCING COUNTRY INVESTABLE INCOME
($U.S. Billion)
1972
(Est.)
1976
1980
1972-80
TOTAL INVESTABLE INCOME:
All OPEC Countries
5.6
12.7
17.2
102.4
Iran, Kuwait, Saudi Arabia
4.5
10.5
16.7
91.5
Abu Dhabi
Saudi Arabia
2.3
5.9
11.3
55.6
U.S. Business Fixed Investment*
122.0
163.0
225.0
1350.0
Book Assets (1971) Five Largest
56.8
U.S. Oil Companies**
World Foreign Exchange Reserves***
150.8
*
Wharton Model Long-Range Forecast
** Fortune 500
*** IMF International Financial Statistics, December 1972
EXHIBIT 10
PETROLEUM INDUSTRY: CUMULATIVE CAPITAL EXPENDITURES
AND SOURCES OF FINANCING 1972-1980
($U.S. Billions: Current Dollars)
World
U.S.
Canada
W. Europe
Japan
Other
Capital Expenditures
365
185
18
99
33
30
Less:
Depreciation, etc. @
200
100
10
54
18
17
55% of Cap. Expend.
Retained Earnings @
50% Payout Ratio
65
33
3
18
6
5
Shortfall
100
52
5
27
9
8
EXHIBIT 11
FOR THE INTERNATIONAL COUNCIL SESSION ON FEBRUARY 9, 1973
The attached is a revision of Page 19 in the
BRIEFING PAPER on THE ENERGY PROBLEM. The revisions are
noted with an asterisk (*).
BALANCE OF PAYMENTS
Over the next several years, the major consuming areas of the world (U.S.,
Europe, and Japan) will be competing with each other for the most readily available
source of energy, i.e., oil from the O.P.E.C. lands. As shown on Table V, the U.S.
will have to import 14.8 million barrels per day (MMBD) of oil and 6.1 trillion cu-
bic feet of natural gas per year by 1985 to satisfy its needs, unless additional
price and/or tax incentives are provided so as to develop new domestic supplies. If
the imports of oil had a landed cost of $4.00 per barrel in 1985 (compared with a
landed cost of $3.00 per barrel now) the outflow of funds would amount to $21.2 bil-
lion per year in 1985. If the imports of natural gas had a landed cost of $1.00
per thousand cubic feet (Mcf), compared with a cost for domestic supplies in all
markets today of $.55 per Mcf, the outflow of funds would amount to an additional
$6.1 billion per year. Clearly, an outflow of $27.3 billion annually is unsustain-
able to the U.S. balance of payments, as shown in the following table.
1970
1971
1972*
Petroleum
Total
Petroleum
Total
Petroleum
Total
U.S.
Products
Goods
Products
Goods
Products
Goods
Billions
Exports
$ 0.5
$ 43.2
$ 0.5
$ 43.5
$ 0.4 E
$ 49.2 E
Imports
(2.8)
(39.9)
(3.3)
(45.6)
(4.4) E
(55.5)E
Trade Balance
$(2.3)
$ 3.3
$(2.8)
$ (2.1)
$(4.0)E
$ (6.3)E
About 30% of the increase in the U.S. trade deficit for 1972 was a result
*
*
of higher crude oil and refined petroleum products imports. The importance of a strong
energy policy, that will lead to a more self sufficient nation, is obviously empha-
sized by the magnitude of these balance of payments figures. If domestic supplies
can be developed, they will involve a higher cost to the consumer, but at least the
cost is internal and does not involve a permanent loss of funds of such a great mag-
nitude. Furthermore, the domestic supplies would provide jobs and security for the
entire country.
-19-
CHART NO. 3
INTERNATIONAL BANKING
DIVISION
PRESTON EXEC. V.P.
CORRESPONDENT &
PLANNING
DIVISION CREDIT OFFICER
WASHINGTON LIAISON
LOAN SYNDICATION
CENTRAL BANKS
VON KLEMPERER - SR. V.P.
BOCHOW SR. V.P.
NOLTING -
LOUGHRAN V.P.
CHITTENDEN - SR. V.P.
ASST. TO CHAIRMAN
INT'L. CURRENCY
TERRITORIAL
FOREIGN BRANCHES ADM.
MORGAN GUARANTY INT'L.
TRADING & TREASURY
ADMINISTRATION
FINANCE CORPORATION
VAGLIANO SR. V.P.
WEATHERSTONE SR. V.P.
HILL - SR. V.P.
BRACKENRIDGE - PRES.
MORGAN GUARANTY INT'L.
OVERSEAS OFFICES
FOREIGN EXCHANGE
ADMINISTRATION
BANK OF SAN FRANCISCO
DEV. & ADM.
TRADING
STARRATT V.P.
MARTIN . A.V.P.
& GEN'L. MGR.
WILMERS V.P.
VAN ROTEN V.P.
INTERNATIONAL
MONEY DESK
BELGIAN
GERMAN
LONDON
NASSAU
(EURO-CURRENCIES)
BANKING OFFICES
BANKING OFFICES
BANKING OFFICES
BANKING OFFICE
MRS. SHAW A.T.
D'URSEL V.P.
SPAEH V.P.
DAVISON SR. V.P.
STEPHENS - V.P.
& GEN'L. MGR.
& GEN'L. MGR.
& GEN'L. MGR.
& MGR.
FOREIGN EXCHANGE
PARIS
TOKYO
ZURICH
OPERATIONS
BANKING OFFICES
BANKING OFFICE
BANKING OFFICE
SCHERB A.T.
vom HOFE - V.P.
CHALONER V.P
STANGE - V.P.
& GEN'L. MGR.
& GEN'L. MGR.
& GEN'L. MGR.
MIDDLE EAST
BRITISH ISLES, CANADIAN
LATIN AMERICAN
PACIFIC -
& AFRICAN
& SCANDINAVIAN
FAR EASTERN
EASTERN EUROPEAN
WESTERN EUROPEAN
TERRITORY
TERRITORY
TERRITORY
TERRITORY
TERRITORY
TERRITORY
FELTON V.P.
BURNETT V.P.
PORGES - V.P.
WYNN V.P.
SCHMIDT V.P.
GILBERT - V.P.
BEIRUT
CARACAS
REGIONAL
SAO PAULO
AUSTRALIAN
HONG KONG REGIONAL
MADRID
REP. OFFICE
REP. OFFICE
REP. OFFICE
REP. OFFICE
REP. OFFICE
REGIONAL
REP. OFFICE
STEINHART V.P.
deROOS - V.P.
FISHER - V.P.
McSHARRY V.P.
SCHLOSSSTEIN A.T.
SAAVEDRA A.V.P.
INT'L. LIAISON
UNITED STATES
COMMODITIES
PERSONAL ACCTS.
N.Y.C. OFFICES
& EXPORT
TERRITORY
TERRITORY
TERRITORY
BUTLER - V.P.
JEANES V.P.
MORGAN V.P.
SCULLY - V.P.
January 1, 1973
Morgan Guaranty International Finance Corporation
has holdings in financial institutions in 30 countries (industrial investments not included).
Argentina
Banco Frances del Rio de la Plata S.A. - Commercial bank
Industrias Reconquista S.A. - Holding company which owns, among others,
Roberts S.A. de Finanzas, a financiera
Australia
Australian United Corporation Limited - Merchant bank
Financial Leasing Corporation (Australia) Ltd. - Equipment lease
financing
Bahamas
RoyWest Banking Corporation Ltd. - Merchant bank
Belgium
Societe Nationale de'Investissement - Investment bank
Bermuda
Morgan Guaranty Finance Ltd. - Special purpose financial company
Brazil
Banco Finasa de Investimento, S.A. - Investment bank
Cameroun
Societe Camerounaise de Banque - Commercial bank
China (Taiwan)
China Development Corporation - Development bank
Congo, Peoples Republic of the
Banque Commerciale Congolaise - Commercial bank
France
Epargne-Interessement - Investment management for pension trusts
European Enterprises Development Company, S.A. - Venture capital
holding company
Generale Morgan Leasing - Equipment leasing
Morgan & Cie S.A. - Banque d'Affaires
Morgan & Cie International S.A. - Investment bank
Gabon
Union Gabonaise de Banque - Commercial bank
Ghana
National Investment Bank - Development bank
Italy
Banca Morgan Vonwiller, S.p.A. - Commercial bank
Ivory Coast
Societe Ivoirienne de Banque - Commercial bank
-2-
Malaysia
Malaysian Industrial Development Finance (Berhad) Development bank
Mexico
Financiera Banamex, S.A. Industrial development bank and financiera
Morocco
Banque Nationale pour le Developpement Economique (BNDE) - Development
bank
Netherlands
Mees & Hope Groep N.V. Holding company, one of their holdings, Bank
Mees & Hope, is a commercial bank
New Zealand
First New Zealand International Ltd. - Merchant bank
Pakistan
Pakistan Industrial Credit and Investment Corporation Ltd. Development
bank
Peru
Peruinvest-Compania de Fomento e Inversiones, S.A. - Financiera
Rwanda
Banque de Kigali Commercial bank
Senegal
Union Senegalaise de Banque pour le Commerce et l'Industrie (USB) -
Commercial bank
Singapore
National Discount Company Ltd. - Discount company
Spain
Banco del Desarrollo Economico Espanol (Bandesco) - Industrial bank
Switzerland
Morgan Guaranty Investment Services, S.A. - Financial advisory service
Neue Bank, A.G. - Commercial bank
Societe Holding de Financement et de Credit, S.A. (Eurocredit) - Holding
company
Tunisia
Union Bancaire pour le Commerce et l'Industrie (UBCI) - Commercial bank
United Kingdam
Euro-clear Clearance System Limited - International securities clearance
system
Morgan Grenfell Holdings Limited - Holding company which owns Morgan
Grenfell & Co. Ltd., a merchant bank
United States
Private Export Funding Corporation (PEFCO) - Export financing
Zaire, Republic of
Banque Commerciale Zairoise - Commercial bank
Societe Financiere de Developpement (SOFIDE) - Development bank
Organization and Control of Joint Stock Companies in the
Federal Republic of Germany with Special Reference to
Employee Co-determination
The problem of co-determination, or co-management, in joint stock
companies has long been a main topic of political discussion in
the Federal Republic of Germany. Influential social forces are
pressing for increased co-management by employees in the bodies
of large enterprises.
In other industrial countries efforts are also under way to achieve
participation of employees in solving company-specific problems.
For example, the works councils of private companies in France have
the right to delegate representatives to supervisory board meetings.
These employee representatives, however, merely have an advisory
function.
Since company laws differ in various countries, the relevant bodies
of German joint stock companies and their functions are shown in
Appendix 1, Fig. 1. Present drafts of an European company law
(Common Market area) indicate a trend towards the organization
standards of German joint stock company legislation.
Appendix 1, Fig. 2 shows the significant differences between German
and U.S. legislation in respect of the bodies of a joint stock
company and their functions.
Present legislation in respect of employee co-determination in the
Federal Republic of Germany
In business undertakings in the Federal Republic of Germany,
employees participate to a considerable extent in decisions involving
personnel, social and technico-economic problems. For example, the
"Aufsichtsrat" (supervisory board) of German joint stock companies
is made up to two-thirds of shareholders' representatives, and
to one-third of employees' representatives.
A special state of affairs exists with regard to the Act respecting
co-management by employees in the Aufsichtsrat and "Vorstand"
(managing board) of undertakings in the mining industry and in the
2
- 2 -
iron and steel production industry. This co-determination law
prescribes management partition on a parity basis, i.e. the Auf-
sichtsrat is made up of two equal groups of shareholders and
employees. A proportion of these employees is nominated by the
trade unions. The Vorstand includes a Personnel Director to look
after personnel and welfare who cannot be nominated without prior
consent of the employees' representatives in the Aufsichtsrat.
Details are shown in Appendix 2.
Models at present under discussion in the Federal Republic of
Germany for extending employee co-determination
As far as the future is concerned, the large political parties as
well as the trade unions favour an extension of co-determination in
business undertakings. But there are differences of opinion about
the extent of such co-management.
The Social Democratic Party (SPD), one of the two partners to the
government coalition, and the trade unions aim at extending co-mana-
gement on parity basis according to the mining industry and iron
and steel production industry model, to all branches of industry.
The opposition party, i.e. the Christian Democrats (CDU/CSU), and
the employer associations insist on a majority of shareholders over
the employees' representatives in the Aufsichtsrat, which means
they wish the present ratio to be more or less maintained.
The Free Democratic Party which is a partner to the government
coalition, developed two models for the distribution of seats in
the Aufsichtsrat:
Riemer's
Maihofer's
model
model
Shareholders
6
4
Executives *)
2
2
Employees
4
4
The following page is a graphic representation of the models of
employee co-determination.
*) Executives are defined as employees in supervisory capacity on
management level or employees responsibly engaged on account of their
special experience and knowledge in activities which are important
for the company.
- 3 -
Models of employee co-determination
Present co-determination ratios
Shareholders' representatives:
Employees' representatives:
SPD/trade union model
(in analogy to mining and iron
and steel legislation)
Shareholders' representatives:
Employees' representatives
nominated by works council:
nominated by trade unions:
Additional member:
FOP/Riemer's model
Shareholders' representatives:
Employees' representatives:
Executives' representatives:
GERRAG FORD LIBRARY
F,DP/Maihofer's model
Shareholders' representatives:
Employees' representatives:
Executives' representatives:
Appendix 1, Fig. 1
Organization of Aufsichtsrat and Vorstand of a joint stock company in the Federal Republic of Germany
Aufsichtsrat
1. Members of the Aufsichtsrat are elected for a maximum
period of four years.
2. A member of the Aufsichtsrat cannot be at the same
time a member of the Vorstand or a senior executive
in the company.
3. The fufsichtsrat elects its chairman among its
members.
4. Nomination of the Vorstand and supervision of the
Aufsichtsrat
(Supervisory Board)
management activities and policy of the Vorstand.
5. Approval of annual balance sheet together with the
Vorstand.
6. Convening the shareholders' meeting whenever this is
necessary in the interests of the company.
Vorstand
1. Exclusive management and representation on own
responsibility.
2. Intense and frequent reporting to the Aufsichtsrat:
minimum requirement quarterly reporting on state of
business (sales etc. ) and status of the company.
Vorstand
Reporting on profitability of net worth, on intended
(Board of Management)
business policy, and on significant events.
3. Preparation of annual balance sheet and annual report.
4. Convening the annual shareholders' meeting.
Appendix 1, Fig. 2
Organization of the Board of Directors and the Officers of a Corporation in the U.S.A.
Board of Directors
1. Election of Board by stockholders' meeting. No restriction
on re-election.
2. A member of the Board can be an Officer at the same time,
e.g. President.
3. The bylaws provide for considerable freedom in setting
up the organization of the bodies of a corporation and
in laying down the business policy.
Board of Directors
4. Management and representation of the corporation.
5. Laying down the guiding principles of management.
6. Nomination of Officers and supervision of the management
activities of the Officers.
7. Determination of dividend.
President, Officers (Executive Committee)
1. Current business activities within the framework of the
bylaws and guiding principles issued by the board of
President, Officers
directors.
2. In exercising his functions, the President represents
the Corporation in all current administrative matters.
3. The authorization of the Secretary and the Treasurer
to represent the company is regulated by the bylaws.
Appendix 2
Employees' representatives in the Aufsichtsrat of German joint
stock companies (Federal Republic of Germany)
1. Normal case: One-third of the Aufsichtsrat is made up of
employees' representatives elected direct by the employees, but
executives of the company cannot vote. Executives are defined
as employees in supervisory capacity on management level or
employees responsibly engaged on account of their special
experience and knowledge in activities which are important for
the company. *)
2. Special conditions governing the mining and iron and steel
industry: Assuming the Aufsichtsrat consists of 11 members,
it will consist of
5 shareholders' representatives
5 employees' representatives
1 additional member.
One each of the shareholders' and employees' representatives,
as well as the "additional" member, cannot be representatives
of the top organizations of employees or employers, nor can
they be active in the company as employee or employer. They
must be representatives of the public (scientists, members
of Parliament, officers of the provincial or local government
administration etc.).
The five representatives of the shareholders are elected by the
shareholders' meeting. Of the five representatives of the
employees, two are nominated by the works council, while three
are nominated by the trade unions. The five employees' represen-
tatives must include one worker and one salaried employee of
the company concerned.
The "additional" member of the Aufsichtsrat is elected by the
shareholders' meeting after nomination by the remaining members
of the Aufsichtsrat.
*) Bayer AG has a staff of approx. 3,200 executives among a total
of approx. 61,000 employees.
Chart 1
Official-settlements balance on
a monthly basis, and effective
dollar exchange rate*
left scale, billions of dollars
right scale, percentage deviation
from pre-May 1971 parities
1
-9.00
0
-1
- -10.00
-2
-10.35
-3
-
- -11.00
-4
-5 -
-6
-12.00
J F M A M J J A S O N D
*change in effective dollar exchange rate
from pre-May 1971 parities (pre-June
1970 for Canada), vis-à-vis fourteen
major currencies weighted according
to bilateral trade.
Spot exchange rates
percentage deviation from central rates except for British pound and
Canadian dollar, which are expressed in U.S. cents
240.00
102.00
British pound
Canadian dollar
101.00
237.00
100.00
99.00
234.00
98.00
2.25
6.00
2.00
Swiss franc
Japanese yen
4.00
1.00
2.25
0.00
-1.00
0.00
-2.00
-2.25
-2.25
Jan
Feb
Jan
Feb
2.25
2.25
2.00
Danish krone
2.00
Belgian franc
1.00
German mark
1.00
Dutch guilder
0.00
0.00
French franc
Italian lira
-1.00
-1.00
-2.00
2.00
-2.25
2.25
Dec
Jan
Feb
Effective exchange rates
exchange rate changes vis-à-vis a group of 14 major currencies weighted according to bilateraf trade
changes from pre-May 1971 parities (pre-June 1970 for Canada). based on weekly averages of daily exchange vates
-8.00
0.57"
United States
United Kingdom
-10.35°
-16.00
-11.00
10.00
0.00
Canada
Raily
-1.90*
5.58*
2.00
-3,00
15.00
6.00
I
Nathe-mands
-1.17*
11.83*
10.00
-2.00
8.00
6.00
Germany
I
4.54°
+1.51°
0.00
-2.00
9.22
8.00
Beitzerfland
4.00
France
3.69'
-1.31°
0.00
-4.00
A
$
o
N
0
J
A
S
o
N
D
J
*cheope iff effective exchange rajes established under the Smithsonian Agreement (orcept in the care of Canade,
for which the December 17, 1971 raje of 100.34 is used)
Table 1
U.S. Balance of Payments
billions of dollars; excluding SDRs
1971
1972
Merchandise trade
-2.7
-6.8
Invisibles (net)
-0.1
-1.5
Current account
-2.8
-8.3
Long-term capital (net)
-6.5
-1.7
Basic balance
-9.3
-10.0
Short-term capital (net)
-21.1
-0.8
Official-settlements balance
-30.4
-10.8
Table II
U.S. trade pattern
January-November; customs basis; not seasonally adjusted
% changes over a year ago
Trade balance in $ millions
exports
imports
1971
1972
change
Canada
19.7
19.8
-2 076
-2 251
-175
Japan
22.0
29.3
-2 797
-3 887
-1 090
Western Europe
8.1
21.0
1 189
-217
-1 406
Belgium
6.3
12.3
189
153
-36
France
16.2
23.2
236
203
-33
Germany
-1.1
16.1
-781
-1 350
-569
Italy
10.2
25.1
-114
-317
-203
Netherlands
1.8
20.9
1 119
1 046
-73
Sweden
-0.9
32.0
9
-127
-136
Switzerland
2.1
26.3
135
30
-105
United Kingdom
14.4
17.5
-203
-304
-507
Other developed countries
-5.8
29.7
527
139
-388
Australia
-13.6
33.4
109
-280
-101
Eastern Europe
106.7
39.4
120
388
+268
Soviet Union
235.1
53.7
80
366
+286
Less-developed countries
8.3
25.9
1 835
167
-1 668
Brazil
27.9
24.6
180
253
+73
India
-46.0
35.8
303
-76
-379
Israel
-22.4
28.0
499
306
-193
Hong Kong
17.0
30.3
-499
-701
-202
Korea
5.6
56.4
206
9
-197
Mexico
22.1
29.9
328
311
-17
Nigeria
-35.3
111.5
40
-140
-180
Taiwan
22.1
64.5
-262
-627
-365
Total
12.6
23.0
-1 242
-5 689
-4 447
U.S. Trade: Balances of Components
in billions of U.S. dollars
10
8
"technology-intensive"
manufactured products
6
4
2
agricultural products
0
-2
minerals, fuels, and
-4
other raw materials
-6
"nontechnology-intensive"
manufactured products
1966
1967
1968
1969
1970
1971
1972*
*January-November
Table III
U.S. Trade: Balances of Components
in billions of U.S. dollars
1966
1967
1968
1969
1970
1971
1972
Agricultural products
2.3
1.9
1.2
1.0
1.5
2.0
2.9
Minerals, fuels, and other
-3.2
-2.4
-3.4
-3.3
-2.5
-4.1
-5.5
raw materials
Oil and gas
-1.7
-1.7
-2.0
-2.3
-2.5
-3.1
-4.1
"Nontechnology-intensive"
-3.7
-4.1
-5.8
-5.5
-6.1
-8.2
-10.7
manufactured products
Iron and Steel products
-0.7
-0.8
-1.4
-0.8
-0.8
-1.9
-2.1
Textiles, clothing + footwear
-1.0
-1.1
-1.5
-1.8
-2.2
-2.4
-3.3
"Technology-intensive"
8.4
8.9
8.9
9.3
9.6
8.3
6.6
manufactured products
Motor vehicles + parts
0.5
0.2
-0.8
-1.4
-2.2
-3.5
-4.0
Aircraft + parts
1.0
1.5
2.1
2.1
2.5
3.1
2.5
Office machines,
0.5
0.7
0.7
0.9
1.2
1.2
1.2
computers + parts
Chemicals
1.7
1.8
2.2
2.2
2.4
2.2
2.0
Industrial Machinery
4.6
4.8
5.0
5.6
6.3
6.0
6.0
Invisibles: Balances of Components
in billions of U.S. dollars
14
a
12
10
8
6
a
income received from U.S. investments overseas*
4
b
military transactions, net
C
travel and transportation, net
2
d
other transfers and services, net
e
income paid on foreign investments in the United States*
0
-2
C
d
e
-4
-6
b
0
-2
balance of all invisible transactions
-4
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970,
1971
1972e
*income on investments includes: repatriated earnings on direct investments; fees and royalties related
to direct investments; dividends; and interest on loans and securities (government and private)
Table IV
International Investment Position of the United States
(yearend data in billions of dollars)
1960
1965
1970
1971
1972 Est.
Net investment position
45
62
69
58
50
U.S. assets abroad, total
86
120
167
181
192
Private assets, total
50
81
120
135
144
Direct investment
32
49
78
86
92
Stocks
4
5
6
7
7
Bonds
6
10
13
15
16
Claims by banks & corporations
8
17
23
27
29
Government assets
36
39
47
46
48
Government claims
17
23
32
34
35
U.S. reserve assets
19
16
15
12
13
U.S. liabilities to foreigners
41
59
98
123
142
Liab. to foreign officials
12
17
24
51
61
For. direct inv. in U.S.
7
9
13
14
14
Priv. for. holdings of U.S. stocks
9
15
19
21
24
Priv. for. holdings of U.S. bonds
1
1
7
9
10
Other liab. to priv. for.
12
17
35
28
33
(incl. U.S. bank liab. to
their foreign branches)
1960
1965
1970
1971
1972
Ratio of total U.S. assets abroad
to total U.S. liab. to foreigners
2.1
2.1
1.7
1.5
1.4
Ratio of priv. U.S. assets abroad
to total U.S. liab. to foreigners
1.2
1.4
1.2
1.1
1.0
Investment income (net, in billions
of dollars)
2.8
5.3
6.2
8.0
7.8
Table V
U.S. Capital Flows
in billions of dollars
1971
1972e
Change
Long-term capital (net)
-6.5
-1.7
+4.8
U.S. Government (net)
-2.4
-1.2
+1.2
Private (net)
-4.1
-0.5
+3.6
U.S. capital (net)
-5.1
-3.2
+1.9
U.S. corporations
-3.4
-1.7
+1.7
U.S. banks
-0.8
-1.0
-0.2
U.S. purchases of foreign securities
-0.9
-0.6
+0.3
Stocks
_*
0.3
+0.3
Bonds
-0.9
-0.9
0.0
Foreign capital (net)
1.0
2.7
+1.7
Direct investment
-0.1
0.4
+0.5
Foreign purchases of U.S. securities
1.1
2.3
+1.2
Stocks
0.8
2.2
+1.4
Bonds
0.3
0.1
-0.2
Short-term capital (net)
-21.1
-0.8
+20.3
U.S. banks' loans and acceptances
-1.7
-0.5
+1.2
U.S. corporations
-1.0
-0.4
+0.6
Other (including errors + omissions)
-18.4
0.1
+18.5
*Less than $50 million.
Table VI
Balance-of-payments forecast for 1973
ranges in billions of dollars and probabilities in percent
Long-term
Trade balance
Invisibles (net)
capital (net)
Basic balance
possible range
%
possible range
%
possible range
%
possible range
%
-3 or less
5
-1/2 or less
10
-1 or less
15
-4 1/2 or less
10
-3 to -4
20
-1/2 to -1
20
-1 to -2
30
-4 1/2 to -7
20
-4 to -5
40
-1 to -1 1/2
30
-2 to -3
30
-7 to -9 1/2
35
-5 to -6
25
-1 1/2 to -2
30
-3 to -4
20
-9 1/2 to -12
25
-6 or more
10
-2 or more
10
-4 or more
5
-12 or more
10
100
100
100
100
GNP, Prices, and Current Accounts of
selected industrial countries
GNP (% increase)
Prices (% change)
Current Account ($ billions)
1972E
1973F
Consumer*
Export*
1972E
1973F
USA
6.4
6.1
3.4
3.8
-8.3
-5.8
Canada
5.4
6.0
5.1
2.5
-0.9
-0.7
United Kingdom
3.2
4.5
8.4
7.7
-0.1
-1.2
Japan
9.0
11.0
5.5
-3.5
+6.7
+5.4
Belgium
4.5
4.0
6.4
n.a.
+1.1
+1.5
France
5.8
5.0
6.9
0.5
+0.7
+0.7
Germany
3.0
4.0
6.5
0.6
+0.5
+1.3
Italy
3.0
4.0
7.3
1.0
+2.5
+1.8
Netherlands
3.5
4.5
8.2
0.3
+1.3
+1.2
"percentage increase in November or December of 1972 over corresponding month in 1971
third quarter of 1972 over same period in 1971
Table VII
GROSS INTERNATIONAL RESERVE CHANGES
(in millions of US $ and % increase)
Actual
1970
1972
% increase
changes
Group of Ten
USA
14,487
13,150
-9%
-1,337
Belgium
2,847
3,870
36
1,023
France
4,960
10,015
102
5,055
Germany
13,610
23,427
72
9,817
Italy
5,352
6,079
14
727
Netherlands
3,234
4,785
48
1,551
Sweden
761
1,575
107
814
Switzerland
5,132
7,488
46
2,356
Canada
4,679
6,050
29
1,371
Japan
4,840
18,365
279
13,525
UK
2,827
5,647
100
2,820
Other Europe
Greece
310
963 (Nov)
211
653
Portugal
1,504
2,312
54
808
Spain
1,817
5,014
176
3,197
Turkey
431
1,401
225
970
Yugoslavia
140
733
424
593
Latin America
Brazil
1,187
4,000
237
2,813
Mexico
744
1,140 (Sept)
53
396
Venezuela
1,021
1,732
70
711
Middle East
Iran
208
960
362
752
Israel
449
1,128 (Nov)
151
679
Lebanon
386
675
75
289
Saudi Arabia
662
2,512
279
1,850
Libya
1,590
2,925
84
1,335
Asia
Malaysia
733
995
36
262
Philippines
251
551
120
300
Others
Australia
1,693
6,141
263
4,448
New Zealand
126
578
359
452