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This file contains:
The Problems of Urban Transportation. Morgan Guaranty Trust Company. 8 pgs. [Report], n.d.
Business Week. Northern lines are parted at the altar again. 4 pgs. [Newsletter], 5/25/1968
Business Week. Battling over the air traffic jam. 2 pgs. [Newsletter], 5/25/1968
Business Week. New subsidy plans stir up turbulence. 3 pgs. [Newsletter], 5/25/1968
Introduction of Bill to Establish a Commission to be Known as the Commission on Air Traffic Control in the Congressional Record- Senate. 4 pgs. [Report], 7/2/1968
"Airport Aid Plan Increasing Taxes of Users Sought" in the Wall Street Journal. 1 pg. Not scanned. [Newspaper], 5/22/1968
Form letter from Richard Nixon. 1 pg. [Letter], 9/25/1968
SEC Letter. 1 pg. Attached to the previous. [Letter], 9/24/1968
Investment bankers letters. 1 pg. Attached to previous. [Memo], n.d.
Statement by Richard Nixon. The Role of the Securities Industry in the National Economy. 3 pgs. Two duplicates not scanned. [Report], 9/25/1968
Draft Statement by Richard Nixon with writing. The Role of the Securities Industry in the National Economy. 4 pgs. [Report], 9/25/1968
Letter to Mr. Schanck concerning federal policies. 1 pg. [Letter], 9/24/1968
Letter to Mr. Haire concerning federal policies. 1 pg. [Letter], 9/24/1968
Letter to Mr. Kendall concerning federal policies. 1 pg. [Letter], 9/24/1968
Letter to Mr. Davant concerning federal policies. 1 pg. [Letter], 9/24/1968
Draft statementwith writing by Nixon on the Role of the Securities Industry. 3 pgs. [Report], 9/16/1968
Draft statement on the Role of the Securities Industry in the National Economy. 4 pgs. [Report], n.d.
Memo to Allen Greenspan from Chuck Colson. 1 pg. [Memo], 9/17/1968
Draft statement by Richard Nixon on the Roles of the Securities Industry. 3 pgs. [Report], 9/16/1968
"Nixon Promises to Relax US Policy on Securities" in the New York Times. 1 pg. Not scanned. [Newspaper], 10/2/1968
"Everybody's Business" in an unknown newspaper. 1 pg. Not scanned. [Newspaper], n.d.
"A Combination of Stimulants is Propelling a 'Nixon Market'" by Thomas Mullaney in the New York Times. 2 pgs. Not scanned. [Newspaper], 10/6/1968
"Nixon Over Wall Street: His Statement Is a Puzzler" by Terry Robards in the New York Times. 2 pgs. Not scanned. [Newspaper], 10/6/1968
"Capital View: A Bluner" by Eileen Shanahan in the New York Times. 2 pgs. Not scanned. [Newspaper], 10/6/1968
"How 'The Nixon Market' Got That Way" in Newsweek. 1 pg. [Newspaper], 10/14/1968
Weekly Bulletin Shipbuilders Council of America No. 40. 4 pgs. [Newsletter], 10/3/1968
The Candidates Speak: How Humphrey, Nixon and Wallace Stand on Major Housing Questions in the Journal of Homebuilding. 6 pgs. [Newsletter], 10/1/1968
Memo from Tom Cole to Alan Greenspan. RE: Draft Statement on the Role of Securities Industry in National Economy. 1 pg. [Memo], n.d.
Draft statement with writing on the Role of the Securities Industry in the National Economy. 4 pgs. [Report], n.d.
Draft statement with writing on the Role of the Securities Industry in the National Economy. 4 pgs. [Report], n.d.
Handrwitten notes. 1 pg. [Memo], n.d.
Handwritten notes. 1 pg. [Memo], n.d.
Draft statement with writing on the Role of the Securities Industry in the National Economy. 4 pgs. [Report], n.d.
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26126411
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WHSF: Returned, 17-11
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document
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pageCount
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26126411
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contentType
document
title
WHSF: Returned, 17-11
description
This file contains:
The Problems of Urban Transportation. Morgan Guaranty Trust Company. 8 pgs. [Report], n.d.
Business Week. Northern lines are parted at the altar again. 4 pgs. [Newsletter], 5/25/1968
Business Week. Battling over the air traffic jam. 2 pgs. [Newsletter], 5/25/1968
Business Week. New subsidy plans stir up turbulence. 3 pgs. [Newsletter], 5/25/1968
Introduction of Bill to Establish a Commission to be Known as the Commission on Air Traffic Control in the Congressional Record- Senate. 4 pgs. [Report], 7/2/1968
"Airport Aid Plan Increasing Taxes of Users Sought" in the Wall Street Journal. 1 pg. Not scanned. [Newspaper], 5/22/1968
Form letter from Richard Nixon. 1 pg. [Letter], 9/25/1968
SEC Letter. 1 pg. Attached to the previous. [Letter], 9/24/1968
Investment bankers letters. 1 pg. Attached to previous. [Memo], n.d.
Statement by Richard Nixon. The Role of the Securities Industry in the National Economy. 3 pgs. Two duplicates not scanned. [Report], 9/25/1968
Draft Statement by Richard Nixon with writing. The Role of the Securities Industry in the National Economy. 4 pgs. [Report], 9/25/1968
Letter to Mr. Schanck concerning federal policies. 1 pg. [Letter], 9/24/1968
Letter to Mr. Haire concerning federal policies. 1 pg. [Letter], 9/24/1968
Letter to Mr. Kendall concerning federal policies. 1 pg. [Letter], 9/24/1968
Letter to Mr. Davant concerning federal policies. 1 pg. [Letter], 9/24/1968
Draft statementwith writing by Nixon on the Role of the Securities Industry. 3 pgs. [Report], 9/16/1968
Draft statement on the Role of the Securities Industry in the National Economy. 4 pgs. [Report], n.d.
Memo to Allen Greenspan from Chuck Colson. 1 pg. [Memo], 9/17/1968
Draft statement by Richard Nixon on the Roles of the Securities Industry. 3 pgs. [Report], 9/16/1968
"Nixon Promises to Relax US Policy on Securities" in the New York Times. 1 pg. Not scanned. [Newspaper], 10/2/1968
"Everybody's Business" in an unknown newspaper. 1 pg. Not scanned. [Newspaper], n.d.
"A Combination of Stimulants is Propelling a 'Nixon Market'" by Thomas Mullaney in the New York Times. 2 pgs. Not scanned. [Newspaper], 10/6/1968
"Nixon Over Wall Street: His Statement Is a Puzzler" by Terry Robards in the New York Times. 2 pgs. Not scanned. [Newspaper], 10/6/1968
"Capital View: A Bluner" by Eileen Shanahan in the New York Times. 2 pgs. Not scanned. [Newspaper], 10/6/1968
"How 'The Nixon Market' Got That Way" in Newsweek. 1 pg. [Newspaper], 10/14/1968
Weekly Bulletin Shipbuilders Council of America No. 40. 4 pgs. [Newsletter], 10/3/1968
The Candidates Speak: How Humphrey, Nixon and Wallace Stand on Major Housing Questions in the Journal of Homebuilding. 6 pgs. [Newsletter], 10/1/1968
Memo from Tom Cole to Alan Greenspan. RE: Draft Statement on the Role of Securities Industry in National Economy. 1 pg. [Memo], n.d.
Draft statement with writing on the Role of the Securities Industry in the National Economy. 4 pgs. [Report], n.d.
Draft statement with writing on the Role of the Securities Industry in the National Economy. 4 pgs. [Report], n.d.
Handrwitten notes. 1 pg. [Memo], n.d.
Handwritten notes. 1 pg. [Memo], n.d.
Draft statement with writing on the Role of the Securities Industry in the National Economy. 4 pgs. [Report], n.d.
citationUrl
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Richard M. Nixon's Returned Materials Collection
Returned White House Special Files
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Richard Nixon Presidential Library
White House Special Files Collection
Folder List
Box Number
Folder Number
Document Date
Document Type
Document Description
17
11
05/25/1968
Newsletter
Business Week. New subsidy plans stir up
turbulence. 3 pgs.
17
11
07/02/1968
Report
Introduction of Bill to Establish a
Commission to be Known as the Commission
on Air Traffic Control in the Congressional
Record- Senate. 4 pgs.
17
11
05/22/1968
Newspaper
"Airport Aid Plan Increasing Taxes of Users
Sought" in the Wall Street Journal. 1 pg. Not
scanned.
17
11
09/25/1968
Letter
Form letter from Richard Nixon. 1 pg.
17
11
09/24/1968
Letter
SEC Letter. 1 pg. Attached to the previous.
17
11
n.d.
Memo
Investment bankers letters. 1 pg. Attached to
previous.
Friday, May 22, 2009
Page 1 of 5
Box Number Folder Number Document Date
Document Type
Document Description
17
11
09/25/1968
Report
Statement by Richard Nixon. The Role of the
Securities Industry in the National Economy.
3 pgs. Two duplicates not scanned.
17
11
09/25/1968
Report
Draft Statement by Richard Nixon with
writing. The Role of the Securities Industry
in the National Economy. 4 pgs.
17
11
09/24/1968
Letter
Letter to Mr. Schanck concerning federal
policies. 1 pg.
17
11
09/24/1968
Letter
Letter to Mr. Haire concerning federal
policies. 1 pg.
17
11
09/24/1968
Letter
Letter to Mr. Kendall concerning federal
policies. 1 pg.
17
11
09/24/1968
Letter
Letter to Mr. Davant concerning federal
policies. 1 pg.
17
11
09/16/1968
Report
Draft statementwith writing by Nixon on the
Role of the Securities Industry. 3 pgs.
Friday, May 22, 2009
Page 2 of 5
Box Number Folder Number Document Date
Document Type
Document Description
17
11
n.d.
Report
Draft statement on the Role of the Securities
Industry in the National Economy. 4 pgs.
17
11
09/17/1968
Memo
Memo to Allen Greenspan from Chuck
Colson. 1 pg.
17
11
09/16/1968
Report
Draft statement by Richard Nixon on the
Roles of the Securities Industry. 3 pgs.
17
11
10/02/1968
Newspaper
"Nixon Promises to Relax US Policy on
Securities" in the New York Times. 1 pg.
Not scanned.
17
11
n.d.
Newspaper
"Everybody's Business" in an unknown
newspaper. 1 pg. Not scanned.
17
11
10/06/1968
Newspaper
"A Combination of Stimulants is Propelling a
'Nixon Market" by Thomas Mullaney in the
New York Times. 2 pgs. Not scanned.
17
11
10/06/1968
Newspaper
"Nixon Over Wall Street: His Statement Is a
Puzzler" by Terry Robards in the New York
Times. 2 pgs. Not scanned.
Friday, May 22, 2009
Page 3 of 5
Box Number Folder Number Document Date
Document Type
Document Description
17
11
10/06/1968
Newspaper
"Capital View: A Bluner" by Eileen
Shanahan in the New York Times. 2 pgs. Not
scanned.
17
11
10/14/1968
Newspaper
"How "The Nixon Market' Got That Way" in
Newsweek. 1 pg.
17
11
10/03/1968
Newsletter
Weekly Bulletin Shipbuilders Council of
America No. 40. 4 pgs.
17
11
10/1968
Newsletter
The Candidates Speak: How Humphrey,
Nixon and Wallace Stand on Major Housing
Questions in the Journal of Homebuilding. 6
pgs.
17
11
n.d.
Memo
Memo from Tom Cole to Alan Greenspan.
RE: Draft Statement on the Role of
Securities Industry in National Economy. 1
pg.
17
11
n.d.
Report
Draft statement with writing on the Role of
the Securities Industry in the National
Economy. 4 pgs.
17
11
n.d.
Report
Draft statement with writing on the Role of
the Securities Industry in the National
Economy. 4 pgs.
Friday, May 22, 2009
Page 4 of 5
Box Number Folder Number Document Date
Document Type
Document Description
17
11
n.d.
Memo
Handrwitten notes. 1 pg.
17
11
n.d.
Memo
Handwritten notes. 1 pg.
17
11
n.d.
Report
Draft statement with writing on the Role of
the Securities Industry in the National
Economy. 4 pgs.
17
11
n.d.
Report
The Problems of Urban Transportation.
Morgan Guaranty Trust Company. 8 pgs.
17
11
05/25/1968
Newsletter
Business Week. Northern lines are parted at
the altar again. 4 pgs.
17
11
05/25/1968
Newsletter
Business Week. Battling over the air traffic
jam. 2 pgs.
Friday, May 22, 2009
Page 5 of 5
Transportation
banks settled on any given Wednesday should
One additional factor which complicates the
lessen the sharp and erratic swings that fre-
task of trying to gauge the probable impact of
quently occur in money rates toward the close
the Regulation D changes is the possibility that
of settlement periods. This is indicated because
another even more basic change in Federal
three fourths of member banks would be able
Reserve procedures will become operative be-
to trade Federal funds at any given time without
fore next fall. Specifically, the monetary authori-
specific regard to immediate settlement prob-
ties have been engaged in a lengthy and search-
lems. Meanwhile, the need for frequent "touch-
ing study of the use of the discount facility, and
ing-up" operations by the Federal Reserve
important changes in the guidelines governing
System should be greatly reduced. The adoption
member bank borrowings are known to be under
of such a settlement system might well enable
active consideration. Conceivably, a decision
the monetary authorities to cut down on the
may be made to encourage more active use of
volume of "defensive" open market operations
the discount window by banks for meeting tem-
by as much as three fourths.
porary reserve shortages. If this proves to be the
It is impossible to forecast what the precise
case, it would reduce the need for as large a
effects will be of the much more limited change
volume of open market operations as now oc-
in settlement procedures that is actually sched-
curs. In a sense, therefore, final evaluation of
uled. Federal Reserve officials apparently have
the scheduled changes in Regulation D must be
reasoned that from the standpoint of country
deferred until it is possible to relate them to
banks the new privilege of being able to carry
whatever changes Federal Reserve officials de-
forward a limited amount of excess reserves for
cide to make in Regulation A-and also, of
one settlement period will roughly compensate
course, until there has been some actual experi-
for the new burden of having their reserve
ence with the new settlement procedures.
period shortened to one week. It may very well
In spite of the uncertainties that cloak the
be, however, that many country banks-indeed,
amendments to Regulation D, it is encouraging
banks generally-will be hesitant about actually
that Federal Reserve officials are at least experi-
holding a significant volume of excess reserves
menting with change in an area where change
at any given time despite the carry-over privilege.
has long been indicated. This justifies hope that
This is because of the risk that will be involved
further modifications will be made if the new
in exceeding the maximum allowable carry-over
regulations do not produce the improved func-
through miscalculation. The 2% permissible
tioning of the reserve mechanism that the mone-
carry-over does not allow much room for error.
tary authorities anticipate.
The Problems of Urban Transportation
O
F the numerous problems which contribute
time spent threading by car through congested
to the nation's "urban crisis," that repre-
streets and urban highways is so great at times
sented by the poor quality of metropolitan travel
as to appear to offset the advantages gained in
must surely rank as one of the most prominent.
recent years from reductions in the work week.
For many city dwellers and suburbanites the
For those who travel by public transport, the
May 1968
5
Mora Guaranty Survey
physical crowding, lack of ventilation, delays,
3½ million people first enter and then leave the
and the dilapidated condition of many of the
area south of 59th Street.
country's present railway, bus, and subway
Aggregate population figures for SMSA's,
facilities can make the journey to and from
moreover, do not in themselves convey a full
work the most exhausting and dispiriting part of
sense of the way in which demographic develop-
the day. And air travellers find that the time
ments have impinged on transportation. They
savings afforded by the introduction of the jet
fail, for example, to highlight the significant
often are largely absorbed-at least on short-
trend toward suburbanization that has been
haul trips-by the traffic snarls encountered on
going on within the broader trend of gravitation
the highways to and from the airports.
toward metropolitan centers. Particularly in the
But obvious as the basic facts of the situation
years since World War II ended, urban areas
may be, both the causes of and the possible
have tended to grow mainly at their fringes and
cures for the delay, the congestion, and the dis-
outskirts, reflecting a quest for spaciousness and
comfort so common to urban transport are
greenery by millions of citizens once satisfied
highly complex. That is perhaps the clearest
with, or at least resigned to, central-city apart-
message that has emerged from professional
ments. Dramatically, three quarters of the
scrutiny of the problem. Generalization is haz-
growth in metropolitan-area population between
ardous, experts emphasize, particularly because
1950 and 1960 took place in the suburbs.
of the diverse conditions of topography and
During the postwar period, moreover, many
economic history that prevail from one metro-
corporations in choosing locations for office
politan region to another.
accommodations and plants have tended to pre-
The most apparent general cause of urban
fer sites in suburban areas, where land is com-
transportation difficulties is simply urban
paratively cheap and plentiful.
growth-that is, the continuing concentration of
population and industry in the central cities and
in their environs. Whereas in 1900 less than a
Shifting travel patterns
third of the population lived in communities
As a result of the diffusion of residential and
of 50,000 or more persons, the proportion had
job locations, a gap opened up between metro-
risen to almost two thirds by 1960 and is un-
politan-area transportation needs and the capa-
doubtedly continuing to trend upward. Residents
bilities of transportation systems. Most of these
of such communities (Standard Metropolitan
systems originally had been designed to service
Statistical Areas in Census Bureau terminology)
high-density populations situated relatively near
numbered 113 million at the 1960 census; and
central business districts (CBD's). Primarily,
roughly one half of these lived in SMSA's where
this involved travel along a relatively limited
the population was 1 million or more. Given
number of radial lines to and from city centers.
these figures alone, it is hardly surprising that
With traffic moving increasingly between diverse
many Americans are finding it increasingly diffi-
points at the cities' extremities, as well as from
cult to get around. To some extent, it is simply
new suburban areas into CBD's, however, mass-
inevitable that they get in each other's way. In
transit facilities on the whole did not adequately
the extreme case represented by the business
meet the changed needs.
district of Manhattan, it is in a sense remarkable
One manifestation of this development has
that movement at any pace is possible. It is esti-
been a decline in the number of mass-transit
mated that on a typical weekday something like
passengers in the past quarter-century, despite
6
The Morgan Guaranty Survey
substantial growth in both population and total
favored the growth of metropolitan auto traffic.
travel. Between 1940 and 1966, for instance,
This reflected in part a reluctance of city gov-
combined bus, city railway, and subway patron-
ernments to underwrite the substantial capital
age in metropolitan areas fell about one third
outlays that would have been required to tailor
to 8 billion trips. Owing to the fact that most
publicly owned transit systems to the changed
of the drop occurred in off-peak hours while
environments, as well as a reluctance of govern-
peak-hour travel remained about constant, the
ments at all levels to assist privately owned
financial problems of the transit industry have
transit companies with the grants or subsidies
been considerably greater than the decline in
they would have required for the same purpose.
patronage would suggest. The drop in usage has
For the past dozen years, in comparison, vast
not made possible a proportionate decline in
sums of public money have been invested in
industry manhours, and it has made scarcely
upgrading highways and expressways in metro-
any difference at all in real overhead costs.
politan areas.
These rigidities, coupled with the difficulties
many transit organizations have experienced in
getting approval of fare increases, have been
The role of federal funds
reflected in a progressive erosion of profits. Since
Although it certainly was not realized widely
1962, the industry as a whole (almost half of
at the time, the federal government's sponsor-
which is still privately operated in terms of rev-
ship in 1944 of the Interstate Highway System
enue passengers carried) has been operating in
was of profound importance in influencing the
deficit, and many companies, over the years,
course of urban transportation developments.
have been forced into bankruptcy.
Whereas many people have tended to think of
In postwar years, by contrast, a sensational
the System primarily as a network of intercity
expansion occurred in automobile ownership
roadways, about one sixth of its total mileage
and use. Growing at a far more rapid rate than
upon completion will be situated within urban
population, auto registrations climbed from 27
areas; and about half of total Interstate ex-
million in 1940 to almost 62 million by 1960,
penditures, it is now estimated, will have been
and at present something approaching eight
devoted to providing extensions in and near
tenths of families in the country own at least
cities. Particularly after 1956, when the original
one car. And auto travel, as measured by total
legislation was amended to provide for a 90%
vehicle miles, has been growing almost as rapidly
underwriting of Interstate costs by Washington,
in metropolitan areas as elsewhere; urban auto
the impetus to expressway construction in met-
traffic doubled in the 1950-65 period to an esti-
ropolitan areas was tremendous. By contrast,
mated 357 billion vehicle miles.
mass-transit investment, which had no 90-10
A large part of this growth manifestly can be
money to draw on, inevitably came to look
accounted for by dispersal of population into
relatively unattractive to local officials. Thus,
suburban areas. But not all. The substantial
without any systematic evaluation of whether or
increase in per capita incomes recorded in the
not it was in fact desirable and sensible on a
postwar period has afforded many individuals
long-term basis to favor auto travel as against
the freedom of mobility that comes with private
mass-transit travel in metropolitan areas, public
car ownership, thus relieving them of depend-
policy somewhat by happenstance crystallized
ence on mass-transit facilities. Most importantly,
in that direction.
perhaps, public policy somewhat inadvertently
The outcome has been a very substantial
May 1968
7
addition in the past decade and a half to the
Negro ghetto areas, evidence has been uncov-
total mileage of modernized urban expressways
ered which indicates that a deficiency in trans-
-coincident with what in many locales has
portation facilities has been a contributory cause
amounted to little more than maintenance
of unemployment.
efforts in the case of mass-transit facilities. But
Dissatisfaction with the results of heavy in-
while the carrying capacity of urban streets and
vestment in highways has generated renewed
highways has grown tremendously, there has
interest in the possibility of putting more stress
been at least equal growth in usage by urban
in the future on improvements in mass-transit
travelers. Widely around the country, therefore,
facilities, particularly in the more densely popu-
rush-hour auto traffic is not moving much if any
lated urban areas where land scarcity is most
faster now than it used to before the roadway
acute. One of the principal points made in this
improvement thrust began. In many cities traffic
connection is that subways, railways, and buses
experts simply seem to have lost hope of ever
are far more economical in terms of land usage
being able to outpace the burgeoning of demand.
than expressways. It has been estimated, for
example, that under rush-hour conditions a sin-
gle track of railway can carry up to 40,000
Second thoughts
passengers an hour whereas a single lane of
The spectacle of frequently clogged roadways
highway will be performing well if it accommo-
despite all the improvement efforts that have
dates a flow of 3,000 people in cars. While
been made is tending to produce a good many
these particular figures cannot be taken as
second thoughts as to proper public policies
precise guides for all situations, there can be no
with regard to urban transportation. For the
doubt that in general mass-transit operations
first time, really, the implications of the national
use land much more economically than does
policy posture that emerged in the early postwar
automobile travel.
period virtually by default are coming to be
Evidence of the awakened interest in empha-
widely appreciated and debated. And not only
sis on mass transit is to be found in several
is there discouragement over the fact that new
major cities across the country-for example,
roadways have been filled up about as fast as
San Francisco, Cleveland, Boston-that in recent
they have been built; other problems associated
years have initiated large-scale investment pro-
with the emphasis on expressway construction
grams in rapid-transit rail facilities within their
are beginning to be aired more frequently. In-
metropolitan areas. Indicating citizen interest in
creasingly, for example, concern is being
transport improvements, New York State voters
expressed over the diversion of urban land to
last autumn approved a bond issue of $2.5 bil-
parking space, over pollution dangers related to
lion to be used to finance investment in a variety
automotive exhaust, over the loss of municipal
of transportation facilities throughout the state.
taxes that occurs when expressways replace
One of the most significant manifestations of
buildings, and over the esthetic effects of criss-
renewed interest in mass transit is to be found
crossing cities with more and more ribbons of
in federal legislation. After years of almost
concrete and steel. The point also is being made
exclusive focus on highways, Congress in 1961
increasingly that the relative neglect of public
took its first gingerly steps toward support and
transit imposes a particular hardship on low-
subsidization of mass-transit facilities. It did
income families inasmuch as they often cannot
so by authorizing a $50-million loan program
afford automobiles. In fact, in the case of some
to assist states and localities in acquiring new
8
The Morgan Guaranty Survey
transport equipment and by providing $25 mil-
and research in mass transit that otherwise
lion for mass transportation demonstration proj-
would not have occurred and that it also has
ects. These steps, however, did not mean that
prompted an acceleration of transit equipment
Congress' historical reluctance to involve the
acquisitions and other improvements. Many
federal government deeply in municipal trans-
municipalities that previously shied away from
port problems had entirely vanished. This be-
new public transit undertakings now are moving
came clear in 1962 and again in 1963 when
to take advantage of federal help. The research
Congress in both years refused to respond to
stirrings are regarded as particularly significant
pleas from President Kennedy for a $500-mil-
and hopeful, since research only a few years
lion authorization "as the first instalment" in a
ago was almost totally absent from the field.
proposed new long-term program of mass-transit
The market that then existed for new equipment
assistance. Indeed, debate in those years re-
was simply too weak to justify very much experi-
vealed that many legislators continued to harbor
mentation by manufacturers or anyone else.
deep reservations as to the propriety of federal
Because so many different projects have been
involvement on a large scale in what was still
undertaken under the terms of the new federal
very widely thought of as a strictly local prob-
legislation, description in brief terms is very
lem. In 1964, however, with President Johnson
difficult. This is especially so since a good many
enjoying a high degree of success in getting
of the demonstration and research undertakings
Congress to act favorably on a range of domestic
involve relatively small sums of money, often
legislative proposals that had previously been
limited in individual cases to several hundred
stalled, action was taken which dramatically
thousand dollars. There are a few eye-catchers,
confirmed that Washington was in fact moving
such as the acquisition of 400 subway cars in
toward a major role in nonautomobile urban
New York City with the help of federal grant
transport. That year's legislation, The Urban
money and the purchase of 180 new lightweight
Mass Transportation Act of 1964, authorized
transit cars in Chicago with the help of a fed-
federal expenditures of $375 million for capital
eral loan. In a sense, though, such tangibles are
grants and demonstration projects over a three-
less exciting to traffic professionals than many
year period, specifying that up to two thirds of
of the smaller-scale demonstrations and studies
the net cost of transportation projects (that is,
that are aimed at trying to develop techniques
total costs minus revenues) could come from
and technologies for attracting urban-area resi-
the U.S. Treasury. Subsequent legislation in
dents back to mass-transit facilities.
1966, which authorized continued grant ex-
A large number of experiments, for example,
penditures at an annual rate of $150 million
have been conducted with a view to determining
through fiscal 1969, served to impart a look of
the response of potential riders to new conven-
permanence to the program.
ience features and to changes in fares. Typical
of these was a project in which ten minibuses
circulated within the central business district
Minibuses and monorails
of Washington on a fixed route with frequent
Even though Congress has not in any year
schedules and a fare lower than is customary in
appropriated as much money as the basic
the city. Patronage proved to be heavy. In
authorizing legislation permits, there can be no
Illinois a successful experiment was conducted
n
doubt that the new federal initiative has trig-
among a number of people who had in common
F. gered a considerable amount of experimentation
relatively close living and working places. Each
Ma May 1968
9
Mora
day a bus picked up subscribers at or near their
transit systems with enough spurs to gather
front doors in the suburbs and carried them
travelers at points conveniently near their
nonstop to their working places. Monthly billing
homes is bound to be very high. And stress on
and coffee en route were features of the innova-
street and roadway improvement will be espe-
tion. At the drawing board stage, moreover, are
cially indicated in instances in which decentrali-
plans for eventually experimenting in even more
zation tendencies extend to business location as
radical ways-with driverless vehicles on auto-
well as to residences. In such circumstances, the
matic highways, for instance, and with driver-
flexibility of the auto in getting people directly
operated vehicles that would have route
from home to job would give mass transit
flexibility at the pick-up and terminal phases of
exceptionally hard competition.
their runs but which would hook into automatic
On the other hand, mass-transit improvement
traffic lanes for the so-called line-haul part of
will have its greatest attraction in high-density
their journeys. On the technical side, the De-
urban communities that continue to have a
partment of Housing and Urban Development
heavy daily flow of workers in and out of central
has already sponsored a variety of experiments
business districts. In many such urban areas,
including the testing of a gas turbine as a source
acute disadvantages would be involved in the
of power on a commuter train, the operation of
diversion of much more land to expressway use
an air-cushion vehicle across San Francisco Bay,
and parking space. From the standpoint of these
and the evaluation of the Seattle World's Fair
communities, it is crucially important that a new
monorail. This flurry of experimentation and
phase of mass-transit research and experimenta-
innovative thinking is beginning to make a dif-
tion has begun and that federal policy no longer
ference in professional assessments of the future
leans so exclusively in the direction of encourag-
of mass transit. Specifically, the conviction is
ing just one kind of transportation investment.
emerging that the downward trend in mass-
It is also important that a sense of the need
transit ridership is not necessarily inexorable
for comprehensive transportation planning seems
but can be reversed by the introduction of
to be evolving. Far too frequently in the past,
improvements and adjustments.
cities, states, and private transit companies pro-
vided transport facilities in a piecemeal way,
with responsibilities spread among so many dif-
Striking a balance
ferent agencies and regulatory bodies as to make
Just how much emphasis there should be on
effective coordination impossible. U.S. legisla-
investment in mass-transit systems, as distinct
tion now makes comprehensive transport plan-
from continuing investment in highway facili-
ning by state and local bodies a requisite for the
ties, is not something that it is possible to gen-
receipt of mass-transit aid, but even before that
eralize about. The answer will obviously differ
was specifically the case a marked tendency
from community to community, depending on
toward the integration of transportation efforts
local conditions. In metropolitan areas that tend
by state and local governments was in progress.
to be spread out in their geographic reach, or
The principle is now pretty generally accepted
where strong tendencies in the direction of
not only that every part of a metropolitan area's
decentralization exist, stress on roadway im-
transportation system must be developed with
provement to accommodate travel by private
the whole system in mind but also that transport
automobile is likely to persist. This is so mainly
planning must be actively related to over-all
because in such cases the cost of developing
urban planning. Practice and principle are still
10
The Morgan Guaranty Survey
far from being fully joined, but the gap appears
of the Institute of Public Administration reck-
to be rapidly diminishing.
oned that about $10 billion would be needed to
It needs to be recognized, of course, that the
bring the rolling stock of transit systems up to
start that has been made in the direction of
"reasonable" standards and to provide for ex-
more stress on mass-transit facilities could still
tensions and new facilities then under considera-
prove abortive, at least in a sense of really mak-
tion in a number of cities. Clearly local bodies
ing a large difference any time soon in the state
will have to make substantial independent
of urban travel. For one thing, efforts to wean
investment, and this is obviously very uncertain
drivers from their cars may encounter stubborn
of accomplishment in view of all the other
resistance no matter how much effort is devoted
pressing needs with which cities are confronted.
to sprucing-up subway, bus, and rail systems.
Of course, an end to the war in Viet Nam would
Many people clearly prefer the flexibility of the
give rise to the possibility of a greater flow of
automobile with respect to routing and schedul-
financial assistance from Washington, not just
ing, and often are prepared to pay a significant
for use in transit projects but for all purposes.
differential in expense for these advantages.
The issue would then become whether federal
Actually, the automobile will often appear as
assistance should take the form of grants-in-aid
cheap as, or at least not much more expensive
for specific purposes or whether it should be in
than, public transport for the journey to work.
the form of simple revenue-sharing without any
This is mainly because the automobile owner is
earmarking. The latter would give states and
unlikely to add fixed charges and depreciation
localities freedom to determine the allocation of
to the out-of-pocket costs of commuting by car.
its use according to their own best judgments.
Progress in strengthening mass-transit sys-
The experience that the country has had with
tems could also be stymied by financial difficul-
the earmarking of highway money suggests that
ties. The flow of federal grant money is probably
a maximization of local-body discretion in the
most meaningfully viewed as a catalyst. Even at
use of funds would, in fact, be highly desirable
$150 million annually, the amount currently
and that, at the very least, there should be a
authorized, it is not going to be sufficient in
conscious effort in the future to achieve some
itself to finance a dramatic upgrading of mass-
kind of neutrality as between the encourage-
transit facilities. One estimate of mass-transit
ment of expressway investment and mass-transit
needs made several years ago by Dr. Lyle Fitch
investment in urban areas.
May 1968
11
Morgan Guaranty Trust Company
OF NEWYORK
23 WALL STREET, NEW YORK, N. Y. 10015
Telephone (212) 425-2323
MIDTOWN OFFICES
Fifth Avenue at 44th Street, New York, N.Y. 10036
Madison Avenue at 60th Street, New York, N.Y. 10021
40 Rockefeller Plaza, New York, N.Y. 10020
Park Avenue at 48th Street, New York, N.Y. 10017
Telephone (212) 682-1200
Member, Federal Deposit Insurance Corporation
OFFICES ABROAD
PARIS
ROME*
14, Place Vendôme
Via Parigi, 11
Telephone 073 24-20
Telephone 486.706; 481.488
LONDON
TOKYO*
33 Lombard Street, E. C. 3
Palace Building, 10
Telephone 01-626 7890
1-chome, Marunouchi, Chiyoda-ku
Telephone 211-6761/3
31 Berkeley Square, W. 1
Telephone 01-626 7890
BEIRUT*
Beirut Riyad Building, Rue Riyad Solh
BRUSSELS
P.O. Box 5752
27, Avenue des Arts
Telephone 292 101/2; 295 207
Telephone 11.65.10
MADRID*
ANTWERP
Calle del Barquillo, 8
82, Frankrijklei
Telephone 222-7417
Telephone 03/31.48.54
CARACAS*
FRANKFURT AM MAIN
Edificio Luz Eléctrica
Bockenheimer Landstraße 8
Avenida Urdaneta
Telephone 72 90 56; 72 74 51
Telephone 55-9724; 55-9743
Cable (all offices) Morganbank
*Representative Office
MILAN
Banca Vonwiller S.p.A., Via Armorari, 14; Telephone 87 69 41; Cable Vonwiller
Printed in U.S.A.
Transportation
TRANSPORTATION
Northern lines
are parted at
the altar again
It's no novelty for Northern Pacific, Great
Northern, and Burlington to be shunted
off the merger track. It began 75 years ago
J. Pierpont Morgan had been involved with Northern Pacific
since 1873. When he scented a takeover, he teamed with
The presidents of the three railroads
were there, their fountain pens un-
capped; the press was there; the
public relations people were there.
After 75 years of trying, everything
was in readiness to create the na-
tion's longest railroad system by
merger of the Great Northern Ry.,
the Northern Pacific Ry., and the
Chicago, Burlington & Quincy RR.
Then, with only minutes to go be-
fore the scheduled 10 a.m. signing,
Chief Justice Earl Warren issued a
restraining order. Thus, two weeks
ago, the merger was put off for per-
haps another year of litigation, which
most observers believe will wind up
in the Supreme Court-again.
Precedent. Close as the merger
came to passing this time, the pro-
ceedings lacked the high drama
that marked the first such attempt,
around the turn of the century.
That episode culminated in the
handing down by the Supreme Court
of one of the most important de-
cisions in U.S. economic history:
that a holding company was illegally
in restraint of trade in violation of
the Sherman Antitrust Act-a law
that hitherto had been considered to
be without teeth. This 1904 prece-
dent has set corporate and govern-
mental policies ever since.
Hungry eye. Whether the whole
affair would have taken place if the
Northern Pacific had a record for
Theodore Roosevelt's decision to give teeth to the 10-year-old Sherman
solvency equal to that of the Great
Antitrust Act brought historic Supreme Court order that broke up
Northern is for historians to debate.
Northern Securities Co., Morgan and Hill's vehicle for joining three lines.
But the fact is that the NP appar-
100 Transportation
Business Week May 25, 1968
James J. Hill, who then ran his own Great Northern and NP
Edward H. Harriman's attempt to get it for Union Pacific.
together. Next, the partners bid for Burlington, foiling
All subsequent moves to merge the three roads have failed.
ently couldn't, at this time, quite kick
him. But, though Morgan retained
of the NP. Fearing the worst, he or-
the sad habit of falling into receiver-
his interest, the two roads soon be-
dered a special train and a clear
ship every couple of years.
came known as the "Hill lines" be-
track and reached New York in rec-
While the NP was bobbing up and
cause of Hill's force of personality
ord time.
down in red ink, J.J. Hill's Great
and management expertise. Accord-
Storming into the office of Harri-
Northern was successfully operating
ing to an 1897 appraisal by one brok-
man's bankers, Kuhn, Loeb & Co.,
in the same territory-the Plains and
erage house: "The result of the large
Hill demanded to know what was
Mountain States, between Minne-
joint ownership of the two lines is
going on in "Little Nipper"-the
apolis-St. Paul and the West Coast.
that the NP is being operated on a
Street's name for Northern Pacific.
Under the leadership of Hill, known
common-sense basis for the first
Jacob H. Schiff, counsel to Harri-
as "The Empire Builder" among
time in history."
man, quietly told him that Harriman
friends and "The Bald Eagle" by
With both roads operating suc-
had control of Nipper, and thus an
detractors, the GN never had gone
cessfully, Morgan decided that the
indirect interest of almost 50% in
bankrupt. What's more, unlike the
next step was to gain access to an
the Burlington. (The GN and NP,
NP, it had been built and operated
eastern terminal in Chicago, with its
then as now, each held slightly less
by Hill without the aid of federal
rich connections, rather than ter-
than 50% of the Burlington; the re-
land grants.
minating in St. Paul. The Burlington
maining 2% to 3% was public.)
Hill watched the NP's affairs with
was selected as the vehicle, and Hill
Incredulous, Hill retired to the
an interested-if not downright
and Morgan quietly began acquiring
friendly confines of J.P. Morgan &
covetous-eye. After the NP's finan-
its stock.
Co., and immediately cabled Morgan
cial debacle in 1893, he set about
But the Burlington was considered
of Harriman's shenanigans. Aside
acquiring control of the line (through
a plum by more than the Hill-Mor-
from railroad business, Morgan and
a mortgage bond deal) so as to have
gan group. Like the northern lines,
Harriman were intense foes in the
control of both northern roads. His
the Union Pacific-which terminated
game of high finance. "That two-
move was declared illegal by the
in Omaha-wanted entry to Chicago.
dollar broker" was one of Morgan's
Supreme Court in 1896.
And E.H. (Little Ned) Harriman,
more generous terms for his rival-
Partners. Undaunted, Hill then be-
who dominated the UP group, was
the man who had very successfully
gan acquiring large chunks of NP
unaware until late in the game that
revived the Union Pacific after Mor-
stock-a move so distressing to NP's
the Burlington takeover was in proc-
gan himself had turned down the
president that he quit rather than
ess. He then sought an audience with
opportunity.
face the prospect of serving under
Hill and asked for a one-third cut
Lost chance. Morgan immediately
the fiery-tempered Hill. Another who
in the Burlington. Hill refused.
cabled his office to buy 150,000
found Hill's maneuvering nettlesome
"Very well, sir," said Harriman.
shares of NP common. The order
was J.P. Morgan, the Wall Street
"This is a hostile act, and you must
was received Sunday, May 5, with
banker and professional railroad re-
take the consequences."
Monday the first opportunity to be-
organizer, who had been involved in
Surprise. In April, 1901, while Hill
gin trading. As it fell out, Morgan's
the NP since the panic of 73. Mor-
was in Seattle and Morgan was tak-
cable would have been too late if
gan, fearing loss of control to Hill,
ing the waters at Aix-les-Bains, Hill
the Harriman crowd hadn't blown
formed a working partnership with
became concerned at the rising price
the whole deal the day before. As it
Business Week May 25, 1968
Transportation 101
Vancouver
Canada
Winnipeg
GREAT
NORTHERN
Seattle
Spokene
ND
Minn
Helena
Great Falls
Deluth
PACIFIC
Bismarck
Portland
Fargo
Minneapolis
Mich
Butte
Billings
Eugene
S.D.
St. Paul
~/Wyo
Sioux Falls
Ore
Iowa
Sloux City
Calif.
Ind.
Burlington
Bleber
Nev
Utah
Casper
Neb
Omaha
Galesburg
Route
Col
Denver
Kan
St.
Louis
Kansas City
Mo
/KY
Paducal
Ariz
N.M. N
Okia
Ark
[Lines shown
are
Tex
MISS
TAla
the CB&Q-centrelled Colorado & Southern
and Fort Worth & Denver Rys. not
included in the merger but be operated
by the new company)
Dallas
Worth
Houston
Galveston
Shooting for the longest railroad
had happened, Harriman did not
shorts had to dump their holdings
gan (1949), was appalled. He went
have quite all the shares he needed-
in other stocks, and the wild selling
to Washington and saw both TR and
he was about 40,000 short.
caused a general panic and collapse
Knox to protest that Roosevelt might
After a fretful night, he resolved
of prices. Luckily neither the Mor-
have given him the courtesy of ad-
on Saturday, May 4, to pick up the
gan nor Harriman factions wanted to
vance warning.
needed shares, and instructed Kuhn,
press delivery requirements-so the
When Roosevelt explained that
Loeb to do so that day. (At that time
panic was limited to one day only.
that was precisely what the govern-
the Stock Exchange was open for
When it was all over, Harriman
ment had not wanted to do, Morgan
trading on Saturday mornings.) But
had a majority of the total capital
said: "If we have done anything
Schiff was at synagogue when the
stock, preferred and common. But
wrong, send your man [Knox] to see
order came in, and a junior man
Morgan held the majority of com-
my man [a Morgan lawyer], and
waited until he could see Schiff be-
mon-which included the rights to
they can fix it up.
fore executing it. Schiff, confident of
retire the preferred, and Harriman
Historic. To the surprise of most
Harriman's position, negated the or-
with it. Rather than contest the mat-
corporation lawyers of the time, the
der-thus leaving the door open for
ter, a compromise was reached. Har-
Supreme Court in 1904 held (by a
the Hill-Morgan effort.
riman got a seat on the NP board
5-4 decision) that the holding com-
By Monday, Morgan's men had
and a 20% stake in a new holding
pany was in restraint of trade, just as
begun buying the necessary shares,
company, the Northern Securities
an operating company might have
and Harriman saw the futility of try-
Co., into which the NP, GN, and
been.
ing to acquire the 40,000-share mar-
Burlington would be merged.
Justice John Marshall Harlan
gin of comfort he needed.
No warning. Shortly before the es-
ruled that: "This process might be
Panic. It was obvious by the fol-
tablishment of the Northern Securi-
extended until a single corporation
lowing Wednesday that the NP mar-
ties Co., Morgan had put together
owned by three or four parties would
ket had been cornered: the Hill-Mor-
the U.S. Steel trust. Neither the then
be in practical control of both roads
gan and Harriman interests actually
ascendant "muckrakers" of the press
-or, having before us the possibility
owned more stock in Northern Pacific
nor President Theodore Roosevelt
of combination, the control of the
than existed. With both sides claim-
looked kindly on such ventures, and
whole transportation system in the
ing victory, a showdown was in or-
before long the government began
country. I cannot believe that this is
der. Traders who had sold NP short,
investigating the northern lines.
lawful."
in order to cover, began to trade
Early in 1902, Roosevelt instructed
Ties. The current Justice Dept.
wildly in what little NP stock was
Attorney General Philander C. Knox
action against the merger, although
then available-mostly through loans.
to bring suit against the Northern
it is technically based on Section V
NP opened Thursday, May 9, at $170
Securities Co. under the Sherman
of the Interstate Commerce Act ra-
and quickly shot to $225, $300, $650,
Antitrust Act of 1890. The Northern
ther than the antitrust acts grows
$700, and at the height of the melee,
Securities case was the first major
out of the right of the Justice Dept.
a block of 300 shares sold for $1,000
prosecution under the act.
to sue if it thinks any ICC-approved
per share.
Morgan, as Frederick Lewis Allen
merger violates antitrust laws.
To pay the exorbitant prices, the
relates in The Great Pierpont Mor-
While the Northern Securities de-
102 Transportation
Business Week May 25, 1968
cision was historic in its effect on the
concept of holding companies, con-
trol of the northern lines was little
changed. When the company was
dissolved, its shares of NP and GN
were distributed to Northern Securi-
ties shareholders on a pro-rata basis,
The
which reduced Harriman to a mi-
nority holder of NP and maintained
the community of interest between
the two roads.
Obviously, the ties that bind are
not only on the roadbed where the
northern lines are concerned. In suc-
Interstate
cessive attempts at consolidation,
the roads have protested their sep-
arateness and the strength of the
competition between them-but they
have maintained their joint owner-
ship of the Burlington and of the
State.
Spokane, Portland & Seattle Ry. as
well. In a second merger attempt in
the 1920s, the ICC eventually gave
its approval in 1930 on condition
that the Burlington interest would
be jettisoned. The lines refused.
Long road. The latest merger at-
tempt began in 1955 when John M.
Budd, president of the GN, and
Robert S. Macfarlane, then presi-
dent and now chairman of the NP,
When it comes to interstate highways, Tennessee is in
started informal talks. A formal ap-
plication went to the ICC in 1961.
a real crossfire. East-West and North-South interstate
In August, 1964, the merger received
routes just seem to meet up with each other more
a favorable report from an ICC ex-
times in Tennessee than any place else.
aminer, subject to modifications
which would protect employees and
When the entire interstate
the Milwaukee road. Not until April,
1966, did the ICC reveal its decision:
system is complete, Nashville
Thumbs down, by an 8-to-2 vote.
will be one of only five U.S.
Three months later, the roads
cranked up the legal machinery again
cities to have as many as 3
and made a bid for reconsideration,
interstate routes going through
which included protection for the
it. 6 big transportation "spokes".
Milwaukee and for employees. The
go-ahead was finally received from
Memphis will have 4 spokes.
ICC last November, and consumma-
Chattanooga 4.
tion was set for this month-until
Chief Justice Warren hung out the
And Knoxville 4.
red flag and set the legal wheels
turning one more time.
Move your next plant to Tennessee and you'll really
If and when the merger does take
be on the road.
place, Burlington Northern, Inc.,
with 26,500 mi. of rail routes, will
Write for "Industrial Tennessee," Office of the Governor,
be the longest rail system in the
Cordell Hull Building. Nashville, Tennessee 37219.
country, stretching from Galveston
to Seattle through St. Louis, Kansas
City, Chicago, Denver, and Minne-
apolis-St. Paul. Total assets for the
new company, on a post-merger
basis, would be $2.8-billion.
While the legal procedures go on,
the roads maintain close contact.
Tennessee
The general offices of both the GN
and the NP are housed in the same
building in St. Paul built in the 1920s
-the last time they thought they
would merge. Recently carpenters
3 STATES IN ONE
have been literally poking holes in
the plaster so officials of the com-
panies can pass back and forth with
ease. End
104 Transportation
Business Week May 25, 1968
Airliners are breathing down the necks of business and private planes competing for scarce runway space.
Transportation
Air
Battling over the air traffic jam
Commercial airlines and private plane operators each blame
the other for at least part of the mess. The airlines
say: 'Don't block the public.' The answer: 'It's a free country'
Anyone who has flown around the
Construction at the busiest airports,
directed by a ground controller when
Middle West and Northeast this
which is where the problem occurs,
smoke or haze or other local condi-
spring knows that airline service is
takes years.
tions limit visibility. In bad weather,
like the little girl who, when she is
Bogging down. The plan may not
everyone has to fly on instruments,
good, is very, very good, but when
even be passed by this Congress.
and light planes do not fly at all if
she is bad, she is horrid.
Some congressmen are known to fa-
they don't have suitable equipment.
To an increasing degree the serv-
vor alternative financing schemes
Responsibility. VFR means that
ice is horrid. Delays in the sky and
and the House Ways & Means Com-
the pilot is responsible for seeing all
at ramps and runway ends are mount-
mittee is still tied up on general tax
other planes in the sky around him
ing. "Periodically, we have to add 10
matters.
and for being seen by their pilots.
minutes to the scheduled time for
So, any plan will probably be de-
General aviation pilots prefer this
one of our shuttle flights to reflect
layed, and the fight will intensify
system, but airline pilots, with a lot
the amount of congestion it encoun-
before conditions improve.
more to watch inside the cockpit,
ters," said an Eastern Air Lines offi-
Leading the attack for general
do not. Therein lies the difficulty:
cial last week. "But it seems as
aviation is the Aircraft Owners &
Flying can be tricky when both sets
though we just can't add the minutes
Pilots Assn. "While a bus or truck
of rules are in force in the same
on fast enough. Today, some of our
can carry many times what the pri-
block of air at the same time.
jets are taking longer than the old
vate automobile can, that does not
"The airlines' insistence on using
Constellations did just a few years
give it special priority over the pri-
the air traffic control system even
ago."
vate user," says a recent policy state-
when weather does not require it is
Dispute. The passenger cabin and
ment by the trade group.
an attempt to shift some of the re-
the departure lounge are not the only
'Speed limits.' The truck on a pub-
sponsibility for avoiding traffic to the
places where tempers are getting
lic highway, this argument runs, "is
federal controllers," say the Aircraft
short over these delays. A bitter ar-
almost always restricted to speeds
Owners & Pilots. "However, history
gument is breaking out between the
below those allowed for the lighter
has shown that being under the con-
airlines and general aviation-all sec-
and more maneuverable private ve-
trol of the federal system is not a
tors other than commercial and mili-
hicle. The same principle must apply
sure way of preventing collisions."
tary-over who has what right to the
in air." Thus, when airliners operate
Scheduling blamed. General avia-
limited air and ground space. At
in the lower airspace used by most
tion forces also charge that airline
present, landings and takeoffs at air-
small, slower planes, "reasonable
schedules are responsible for much
ports are generally on a first-come,
speed limits must apply to the ve-
of the traffic jam. Cessna Aircraft Co.
first-served basis. Each side tends to
hicle that creates the hazard," AOPA.
says it found, for example, that one
blame the other for at least part of
maintains. This position, of course,
major airport had 16 departures
the traffic jam.
gives airline officials fits.
scheduled for 6 p.m.
Even if the Administration's pro-
Generally, there are two sets of
The airlines insist this isn't as bad
posed $1-billion airport moderniza-
regulations under which it is possible
as it sounds. This bunching happens
tion plan, announced this week, were
to fly: visual flight rules (VFR) and
only at the biggest airports where the
to be passed by the present Con-
instrument flight rules (IFR). There
greatest number of connecting flights
gress, it is doubtful that relief would
is also special VFR, which calls for
have to arrive and depart close to
arrive in time to stave off the crisis.
aircraft operating under VFR to be
each other, they say. But the bigness
Business Week May 25, 1968
Transportation 109
of the airport generally means that
gate positions are widely scattered,
Let Kelly Girl®
so all 16 planes scheduled to leave
the gate at 6 p. m. do not get to the
end of the runway simultaneously.
Furthermore, the airlines note, 6
punch holes in your
p.m. is when the public wants to
travel, and not much can be done
about that.
Counterattack. George A. Spater,
overtime.
president of American Airlines, goes
a step further and asserts: "There
is much more bunching of general
aviation flights at peak hours than
there is of airline flights." According
to a recent survey by the Port of
New York Authority, he says, "42%
of all general aviation operations at
KELLY
LaGuardia peaked between 3 p.m.
and 7 p.m. American schedules only
B
27% of its departures during this
period."
DO!
Spater emerges as a spokesman
for the airlines in this debate, be-
cause American has been singled out
by the Aircraft Owners & Pilots as a
special target; the line's route system
packs many of its flights into the
busiest part of the U.S. airlanes, be-
tween Chicago and St. Louis and the
East Coast.
KLLY
Almost everyone agrees that new
Kelly Girl. Available on a long-range or day-to-
general aviation airports with ade-
SERVICES®
day basis. Help when you need it. For any office job.
quate runways, hangars, and ground
transportation facilities should be
built quickly-away from the air-
space used by airlines. Where possi-
ble, additional shorter and narrower
runways should be built at the major
airports for light planes, where these
runways can be used without con-
flicting with airline traffic.
Meantime, the airlines believe
their increasingly efficient use of air-
space through larger planes should
give them favored positions at con-
gested airports. They estimate that
they will double the number of pas-
senger miles flown within the next
five years, while the number of
YOU NEED
planes will only grow from 2,270 to
MORE THAN
less than 3,500. In the same time
DATA FOR
span, general aviation planes aloft
are expected to increase from 117,-
SUCCESSFUL
000 to upwards of 160,000.
BUSINESS
YOU NEED
"It is plain that unless some order
IN
COMPLETE
and priorities are established, there
JAPAN-
EXPERT
won't be any room for the airlines,"
says Spater. "We are all
entitled
BANKING SERVICE:
to the rights and freedoms of Ameri-
THE KIND
can citizens, but this does not mean
JAPAN'S
most reliable
YOU GET FROM
that 100 people traveling in an air-
line airplane must be subordinated
SANWA BANK
to the two or three people in a gen-
Branches: 208
eral aviation airplane.
Head Office: Fushimi-machi, Higashi-ku, Osaka
"When saturation is reached on
Cable Add: SANWABANK OSAKA
the long runways at an airport like
Tokyo Office: Takehira-cho, Chiyoda-k Tokyo
LaGuardia," he says, "either general
Cable Add: SANWABANK TOKYO
New York Agency: 1 Chase Manhattan Plaza, New York
aviation has to go elsewhere or the
San Francisco Branch: 465 California Street, San Francisco
airlines have to go elsewhere, and
London Branch: 31-45, Gresham Street, London E.C.2
there is no other place for us to
Hong Kong Branch: 20. Des Voeux Road, Hong Kong
go." End
110 Transportation
Business Week May 25, 1968
ured against its new competition.
Against its current competitors, the
Transportation Marine
Post's total audience performance
has been unimpressive: it suffers a
disadvantage of three to one.
New subsidy plans
The new competition will be fun-
damentally the news weeklies: Time,
Newsweek, and U. News & World
Report. Here, the Post's audience
stir up turbulence
will make a far better showing. Of
the three news magazines, only Time
would substantially exceed the Post
Administration proposals to curtail subsidies for aviation
in audience; Newsweek would reach
about the same number of people;
and the merchant fleet encounter stiff opposition from
and the Post would do better than
U.S. News.
the industries and in Congress. Likelihood of passage is dim
What's more, the Post has a higher
proportion of women in its audience
than the news weeklies. Agency men
Two big industries this week felt the
mercial, aviation users from 2¢ per
think this will prove attractive to
sting of the Administration's efforts
gallon to 7¢ per gallon by fiscal 1969
advertisers, who prefer a balanced
to cut the budget, when Transporta-
and to 10c by fiscal 1972. (The air-
audience rather than one heavily di-
tion Secretary Alan S. Boyd pro-
lines would receive a refund on the
rected toward men.
posed two new programs to Con-
current 4¢ per gallon tax they pay
Duplication. The risks for the Post
gress.
on gasoline.)
are apparent, too. The deal could
The programs would revise and,
Impose a new tax on jet fuels
strip the Post of all the desirable
in many areas, reduce the direct sub-
used by general aviation of 7¢ per
subscribers who now read the Post
sidies paid to the aviation and mari-
gallon in fiscal 1969 and of 10¢ per
but not Life. Thus, the Post would
time industries.
gallon by fiscal 1972.
be left with perilously few readers
Both industries have been crying
Bigger share. The new taxes would
who don't already read Life. Esti-
loud and long for increased subsi-
raise an additional $500-million in
mates of the so-called "duplication"
dies, however, and both have power-
revenues in fiscal 1969, nearly
proportion-that part of the Post's
ful friends in Congress. So the bet-
double what is now reaped from the
audience that will read both mag-
ting is that neither program will pass
industry each year. The traffic con-
azines-range in excess of 50%. Life
in the present session unless dras-
trol system is expected to cost $638-
would be able to argue that adver-
tically revised.
million in fiscal 1969.
tisers have no need of the Post.
Loan fund. Instead of the existing
Boyd's revenue plan may not get
There are also advantages and
federal aid program to all classes of
through Congress. Some legislators
risks for Time, Inc. Life, of course,
airports, which has been costing the
prefer a trust fund arrangement
will be strengthened against Look,
government $65-million to $70-mil-
similar to that of the federal high-
its principal competitor. But Time
lion a year, Boyd has proposed a
way system. The Transportation
may have a considerably rougher
$1-billion loan fund to be made up
Dept. rejected this method, fearing
fight against the new Post, which will
from general appropriations. Loans
that it would block all other avenues
be a muscular competitor in the 3-
would be granted to medium-sized
of future federal funds for the in-
million circulation class rather than
airports that are "potentially viable"
dustry.
a weakling among the 7-million
but which lack revenues to float their
Another problem is the work load
giants. Time may even be forced to
own bond issues "at reasonable
confronting Congress before ad-
add circulation fast to counter the
rates." Big airports would have to
journment. The key Senate aviation
Post's challenge in total audience.
raise their own money privately. And
subcommittee headed by Senator
Outlook. In the long run, agency
the little commercial airports-those
A.S. Mike Monroney (D-Okla.) may
executives think Time can take care
served only by local service airlines-
not take up the program this session.
of itself; they also appreciate what
would get outright grants for con-
A day before presenting his avia-
they perceive as Time, Inc.'s un-
struction projects out of a separate
tion program, Boyd touched off a
willingness to see Curtis, one of the
$100-million fund.
furor in the maritime industry-and
great magazine companies in the
In either case, federal money
in Congress-when he outlined the
business, go down the drain alto-
would be used only for runways and
Administration's long-awaited policy
gether. But the admen speculate that
instrumentation. Revenue-producing
on the U.S. Merchant Marine be-
the Time people more than half ex-
facilities such as terminal buildings,
fore a Senate subcommittee.
pect the Post's editorial redirection,
hangars, and parking lots would
The Administration plan, which is
a necessary adjunct to its circulation
have to be financed privately.
strongly opposed by the industry
overhaul, to run out of steam. That,
At the same time, Boyd submitted
and its Congressional supporters,
of course, would leave Life with the
a second aviation measure, a plan to
would:
circulation, and Time still without
increase user charges to make the in-
Reduce the subsidized fleet to
the competition from the Post.
dustry bear the brunt of the soaring
the level necessary for national de-
Thus, the verdict on Curtis is still
costs of the government operated
fense, unofficially estimated at 200
out. Last Monday, some wags in a
air traffic control system. The bill
ships (compared with the 300 ships
publishing office-competitive with
would:
now subsidized).
both Life and the Post-were passing
Hike the tax on passenger tickets
Make subsidies more competi-
around one of Life's promotional ads,
from 5% to 8%.
tive by making them available to a
one of those ads whose tagline reads:
Introduce a new 8% tax on air
larger segment of the industry, in-
"Life. Consider the alternative."
freight waybills.
cluding bulk cargo carriers.
Handlettered in pencil were the
Increase the effective tax rate
Provide construction subsidies
words:, "Post life?"
on gasoline for general, or noncom-
only when Navy shipbuilding in
44
Business Week May 25, 1968
private yards will not support a
G. Magnuson (D-Wash.), chairman
News briefs
minimum shipbuilding force.
of the Senate Commerce Committee,
Allow U.S. shipowners to buy
and Representative Edward A.
cheaper foreign made ships.
Garmatz (D-Md.), chairman of the
House Merchant Marine & Fisheries
An F-111A crash on May 8 was
Bring the Maritime Administra-
blamed by the Air Force this week
tion under the Transportation Dept.
Committee. They were pushing hard
on a defective valve. The Air Force
What it costs. Of the 971-ship
for this year's authorization for a
has now solved five of the seven
merchant fleet, 308 now get operat-
$1.5-billion, five-year construction
F-111A crashes, and says none was
ing and construction subsidies. Since
program that would add 150 to 200
caused by a defect grave enough to
the program began in 1937, the gov-
new ships to the Merchant Marine
shake its faith in the controversial
ernment has paid out $2.5-billion in
fleet.
operating subsidies (the difference
Opposition. As recently as last
fighter-bomber.
in cost between running an Ameri-
February, the legislators had been
A long-term contraceptive, Upjohn
can flag ship and a comparable
led to believe that the White House
Co.'s injectable form of the drug
foreign ship), and $972-million in
would support their plan. When it
Depo-Provera, may receive market-
construction subsidies (which offset
didn't, there were sharp rebukes on
ing approval this year from the Food
the higher costs of building a ship
the Hill.
& Drug Administration. Squibb
in U.S. yards).
With Congress and the White
Beech-Nut, Inc., also is seeking FDA
Congress, meantime, had worked
House poles apart in their approach
approval for a long-term contracep-
on its own maritime program under
to maritime ills, the likelihood is
tive to be administered by doctors
the stewardship of Senator Warren
that there will be no action this year.
only.
The Interior Dept. has reversed its
cancellation of a controversial 7,213-
bbl.-a-day petrochemical import
quota for Standard Oil Co. of Indi-
TEXAS
MISS.
ana, after the Justice Dept. passed
the word that the cancellation had
weak legal footing. However, Interior
plans quick changes in the rules to
LOUISIANA
block double quotas to the company
that processes oil and petrochem-
icals.
U.S. companies that borrow money
abroad could keep it there until
needed, instead of having to ship
Gulf of Mexico
much of it home, under a rule change
proposed this week by the Com-
merce Dept. The old rule has
threatened to shrink the Eurodollar
market, just at a time when borrow-
ing was heaviest. To qualify for the
exemption, companies would pledge
to use up funds borrowed abroad
before transferring cash from the
Oilmen bid high for Gulf leases
U.S.
The Supreme Court this week up-
held a Federal Trade Commission
The oil industry surprised even it-
about offshore operations because:
order that General Foods divest itself
self this week when it put up $602-
New geophysical techniques are
of S.O.S. Co., though the two com-
million in winning bids for 141
more accurately identifying potential
panies were not direct competitors.
federal oil and gas leases in the Gulf
reserves.
The ruling-that General Foods'
of Mexico off Texas.
The profit squeeze on foreign
huge marketing power could be used
The Interior Dept. had figured to
oil production is getting tighter.
to boost S.O.S. sales of steel scour-
get around $200-million for the
Demand for oil is rising fast. By
ing pads-serves as a warning on
leases, and even the most optimistic
1980, U.S. demand will rise to 18-
possible conglomerate mergers to ac-
forecast was only $300-million. Four
million bbl. a day, compared to 12-
quisition-minded executives.
previous federal lease sales in off-
million bbl. now.
shore Texas totaled only $68.1-
One oilman observes: "Going off-
A group of 44 companies in the New
million for 105 tracts.
shore is a matter of survival for some
York area has pledged 2,400 jobs to
The Texas sale is part of the
companies. They simply are not find-\
the National Alliance of Business-
worldwide surge of interest in off-
ing needed reserves onshore." Off-
men-a private organization seeking
shore drilling. Last February, the oil
shore exploration generally costs
to find 200,000 jobs for hard-core un-
companies bid a record $603-million
three times more than onshore.
employed. The single New York
for federal leases in the Santa Bar-
Texaco, Inc., and Humble Oil &
pledge represents 13% of the area's
bara Channel off California. And last
Refining Co., two of the industry's
quota. Social Research Corp. repre-
June, they paid $510-million for the
giants, were the high bidders in the
senting the companies, has applied
right to further exploration in the
Texas sale. Texaco had winning bids
for a Labor Dept. grant of $6.9-mil-
fields off east Louisiana.
totaling $235-million, Humble $140-
lion to provide training and counsel-
Drillers are getting more excited
million.
ing.
48
Business Week May 25, 1968
Depression of the early thirties, and
during the recession of 1937-38, loss-
Highlights of Previous Study
es on common stock were frequent.
on Stock Market Probabilities
But you can't ignore the study's con-
clusion that you could have made
This study, published in 1965, sought
that meant 87,990 possible combina-
money in 91% of all the 820 possible
to determine a hypothetical inves-
tions of monthly purchases and sales
year-to-year holding periods from
tor's chances of making a profit by
throughout the 35 years. For all the
1926 to 1965, ex taxes.
choosing stocks at random during
common stocks on the New York
"How does the rate of return on stocks
the 35-year period from 1926 to 1960.
Stock Exchange during all or any
In other words, how you probably
part of that period, it meant 56,557,-
stack up against other ways I might
would have done if you exercised no
538 possible transactions!
have invested my money?"
judgment. If you had merely fired
Conclusions
darts at the stock pages of your
Another good question. Four years
newspaper to choose your stocks-
If you had been our hypothetical in-
ago, a preliminary study concerning
and at calendars to determine when
vestor, here is what you might have
you bought and when you sold.
expected on average if you had
rates of return in the stock market,
At the Center for Research in Se-
bought single stocks by purely ran-
1926 to 1960, disclosed that common
curity Prices, Prof. Lawrence Fisher
dom selection:
stocks yielded rates of return substan-
figured how you would have made
You would have made a profit on
tially higher than alternative invest-
out if you had bought every stock on
78 percent of your transactions.
ment media for which comparable
the New York Stock Exchange at the
Odds of better than three to one. Of
data were available.
end of every month from January,
course, you would have lost 22 per-
1926, to December, 1960, reinvested
cent of the time.
Specifically, Fisher and Lorie
dividends-and then sold the stock
Your median rate of return would
pointed out that savings in commer-
in each and every succeeding month.
have been 9.8% per year, com-
cial banks, mutual savings banks, and
Take General Motors, for exam-
pounded annually.
savings and loan associations yielded
ple. Dr. Fisher assumed that you
On more than half of your trans-
bought GM in January of 1926 and
less than 4% for most of this period.
actions, you would have at least
sold in February, bought in January
Yields on mortgage loans and bonds
doubled your money.
and sold in March, bought in Janu-
of all kinds were generally lower than
ary and sold in every month right
Over two thirds of the time, your
those available on common stocks.
rate of return would have exceeded
up through December of 1960- a
total of 419 combinations. Then the
5% per year, compounded annually.
"What has Merrill Lynch got to do
researchers went back and assumed
Almost one fifth of the time, your
with all of this?"
you bought GM in February of 1926
rate of return would have been 20%
-and sold in March, sold in April,
per year, compounded annually.
Well, Merrill Lynch has supported
sold in May, and so on through De-
Losses of 20 percent per year oc-
this project-over many years. So have
cember, 1960.
curred only about eight times in a
several major research foundations,
For GM or any other common
hundred; losses of more than 50 per-
stock listed for the whole period-
cent less than two times in a hundred.
because they think the project puts
facts and figures where only guesses
existed previously. No one is more
appreciative of that than the banks,
other words, they are the rates that
the same basis, our $50,000-a-year
insurance companies and other large
would have applied before taxes.
man would have realized 6.1%. The
institutional investors who are now
But Lawrence Fisher and James H.
comparable returns for the postwar
also supporting the work of the Cen-
Lorie-the professors who conducted
years: 10.4% and 8.5%.
ter for Research in Security Prices.
this research job-are very patient and
"Are you trying to tell me that you
Merrill Lynch wants its customers
meticulous men. Their study also
can't lose buying common stocks?"
to know as much as we can tell them
shows exactly how you might have
By no means. People have lost their
about the risks and rewards of invest-
made out after Federal taxes, in each
shirts in the market, and everybody
ing before they put their money into
of the 820 possible periods. First, as-
knows it. In the single year of 1962,
the stock market. That's why, for a
suming you had filed a joint return on
the average rate of return was nega-
great many years, our motto has been:
a taxable income equal to $10,000 in
tive-minus 13.3%. During the Great
Investigate-then invest.
1960, then, assuming you had an in-
come equal to $50,000 in 1960, and
comparable incomes in other years.
The results for each category of in-
MERRILL LYNCH,
507EB
vestor are also shown with reinvest-
PIERCE, FENNER & SMITH INC
ment of dividends, without reinvest-
P. O. Box 333, Wall Street Station, N.Y., N.Y. 10005
ment, even ignoring dividends! All
Findings of the Center for Research in Security Prices
told, there are eighteen separate tables.
Please send me, without charge or obligation, a reprint of the Journal
(Clip coupon for your free copy.)
of Business article, "Rates of Return on Common Stocks, 1926-1965."
Over the full 40-year period-after
NAME
paying commissions and Federal
taxes (and counting dividends but not
ADDRESS
reinvesting them) - our $10,000-a-
CITY
year man would still have realized an
average rate of return equal to 6.9%
STATE
ZIP
PHONE
PT
per year, compounded annually. On
Transportation
July 2, 1908
CONGRESSIONAL RECORD - SENATE
S 8069
By Mr. BROOKE (for himself, Mr.
ing mandatory overtime hours, and their
America in Congress assembled, That in
ANDERSON, Mr. BIBLE, Mr. BURDICK,
resources are being SO overtaxed that
recognition of (1) the ever increasing work-
Mr. CARLSON, Mr. CASE, Mr. CLARK,
their efficiency necessarily suffers. It is
load and stress on air traffic controllers, par-
Mr. DIRKSEN, Mr. DOMINICK, Mr.
ticularly at certain airports in the Nation,
GRUENING, Mr. HANSEN, Mr. HART, Mr.
becoming increasingly difficult to attract
and (2) the fact that, with very large air-
HARTKE, Mr. HATFIELD, Mr. INOUYE,
new men of high caliber who possess the
craft carrying many more passengers soon
Mr. JAVITS, Mr. LONG of Missouri, Mr.
skill and stamina necessary to function
to become operational, the performance of
MCINTYRE, Mr. MONDALE, Mr. SMA-
in this delicate and essential occupation.
such controllers will become even more im-
THERS, and Mr. TOWER)
Besides the drain on human resources,
portant, there is hereby established a com-
S. 3727. A bill to establish a commission
physical facilities are often not adequate
mission to be known as the Advisory Com-
to be known as the Commission on Air Traf-
to the job at hand. Because of insuf-
mission on Air Traffic Control (hereinafter
fic Control; to the Committee on Commerce.
ficient runways and electronic landing
referred to as the "Commission")
(See the remarks of Mr. BROOKE when he
SEC. 2. (a) The Commission shall make a
introduced the above bill, which appear un-
systems, some airports now operating
full and comprehensive study of air traffic
der a separate heading.)
are actually unable to handle the pres-
control and the duties and responsibilites
By Mr. HARRIS (for himself and Mr.
ent traffic and still maintain minimum
of air traffic controllers in order to deter-
MONRONEY)
safety standards. In many facilities the
mine what policies are necessary to assure
S. 3728. A bill to authorize the use of funds
radar necessary for positive control is
that such controllers are of the highest cali-
arising from a judgment in favor of the
obsolete and inadequate; in many other
ber attainable and work under such rules as
Kiowa, Comanche, and Apache Tribes of In-
facilities there is no radar at all. Among
will best insure the-safety of the public. Such
dians of Oklahoma, and for other purposes;
its other deficiencies, our air traffic con-
study shall include-
to the Committee on Interior and Insular
(1) an examination and determination of
Affairs.
trol system has no means of limiting or
the best methods for defining the "work
By Mr. BREWSTER:
even forecasting the number of airplanes
loads" of air traffic controllers and "high
S. 3729. A bill for the relief of Carlota de
which schedule arrivals and departures
density" airport facilities, taking due ac-
Veyra; and
at any single airport at a given time. At
count of other relevant surveys and studies;
S. 3730. A bill for the relief of Erlina R.
major airports, delays are commonplace.
(2) a thorough review and recommenda-
Manzano; to the Committee on the Judiciary.
As these occur, spacing between aircraft
tions concerning air traffic control personnel
By Mr. CASE:
is often shortened to the point where
standards and practices, including problems
S. 3731. A bill to prohibit the use of certain
safety is undermined.
of recruitment, education and training, per-
park and recreational lands for public work
sonel qualification, licensing and classifica-
Our annual increase in air traffic has
projects unless such lands so utilized are
tion, periodic proficiency and medical ex-
replaced by lands of a like kind; to the Com-
been very substantial during the past 5
aminations, compensation, retirement, and
mittee on Interior and Insular Affairs.
years. It promises to continue without
leave policies;
By Mr. BOGGS (for himself, Mr. BEN-
abatement for the foreseeable future. If
(3) a consideration of the desirability and
NETT, Mr. CASE, Mr. COTTON, Mr.
the American people are to have air
feasibility of establishing an academy to
MONTOYA, Mr. SCOTT, Mr. JAVITS, and
transportation that is reasonably de-
conduct specialized education and training
Mr. WILLIAMS of Delaware)
pendable and at the same time meets
for air traffic control personnel;
S. 3732. A bill to create a Catalog of Fed-
(4) any other matter which the Commis-
eral Assistance Programs, and for other pur-
proper safety standards the country
sion deems necessary to carry out its re-
poses; to the Committee on Government Op-
must, without further delay, develop the
sponsibilities under this Act.
erations.
facilities and the manpower which will
(b) The Commission shall submit a com-
(See the remarks of Mr. BOGGS when he
make it possible to manage safely and
prehensive report of its study, including
introduced the above bill, which appear un-
efficiently our rapidly accelerating air
such recommendations for legislation as it
der a separate heading.)
traffic flow.
deems appropriate, to the President and the
It is for these reasons that I send to
Congress within one year after the date of
enactment of this Act. The Commission
S. 3727-INTRODUCTION OF BILL
the desk a bill to establish a commission
shall cease to exist ninety days after the
TO ESTABLISH A COMMISSION
to be known as the Commission on Air
submission of such report.
TO BE KNOWN AS THE COM-
Traffic Control. The Commission shall
SEC. 3. (a) The Commission shall be com-
MISSION ON AIR TRAFFIC CON-
be responsible for making a full and
posed of fifteen members appointed by the
TROL
compresensive study of air traffic con-
Secretary of Transportation. The composi-
trol and the duties and responsibilities
tion of the Commission shall be as follows:
Mr. BROOKE. Mr. President, every
of air traffic controllers. It will serve in
(1) four members appointed from private
time we take off or land in an airplane,
life;
an advisory capacity to the Secretary of
our lives are literally in the hands of two
(2) four members who are active air traf-
Transportation, and will submit a com-
fic controllers appointed from recommenda-
human beings: the pilot in the cockpit
prehensive report of its findings to the
tions by the Professional Air Traffic Control-
and the controller in the tower. We are
President and the Congress within 1
lers Organization, the Air Traffic Control As-
aware of the care with which pilots are
year.
sociation and the National Association of
selected and trained: each airline is re-
I am pleased to have as cosponsors of
Government Employees:
sponsible for its own personnel, and its
(3) one member appointed from recom-
this measure: Mr. ANDERSON, Mr. BIBLE,
safety record is a matter of frequent pub-
mendations submitted by the Air Transport
Mr. BURDICK, Mr. CARLSON, Mr. CASE, Mr.
lic pronouncement. But air traffic con-
Association of America;
CLARK, Mr. DIRKSEN, Mr. DOMINICK, Mr.
trollers, as Government employees, come
(4) one member appointed from recom-
GRUENING, Mr. HANSEN, Mr. HART, Mr.
mendations submitted by the Airline Pilots
under different standards of recruitment
HARTKE, Mr. HATFIELD, Mr. INOUYE, Mr.
Association and the Allied Pilots Associa-
and training.
JAVITS, Mr. LONG of Missouri, Mr. Mc-
tion;
While the pilot may be at the manual
INTYRE, Mr. MONDALE, Mr. SMATHERS, and
(5) one member appointed from recom-
controls of the plane, some of the most
mendations submitted by the Aircraft Own-
Mr. TOWER.
vital decisions are made by the man in
ers and Pilots Association;
the control tower. The controller tells
Mr. President, I introduce this bill and
(6) one member appointed from recom-
the pilot when to take off and to land,
ask unanimous consent that it be printed
mendations submitted by the National Bus-
at this point in the RECORD.
iness Aircraft Association;
how much distance to keep between
planes, where to circle the airport and
The PRESIDENT pro tempore. The
(7) one member appointed from the
Civil Service Commission or its employees;
for how long, the approach to take for
bill will be received and appropriately re-
(8) one member appointed from the Fed-
a landing, and the pattern to follow after
ferred; and, without objection, the bill
eral Aviation Agency;
takeoff. The control of the flow of traffic
will be printed in the RECORD.
(9) one member who is an expert in the
at all of our airports is largely in the
The bill (S. 3727) to establish a com-
field of air traffic control, and who shall
hands of the controllers, and they must
mission to be known as the Commission
serve as chairman.
be well trained.
on Air Traffic Control, introduced by Mr.
(b) Vacancies shall be filled in the same
But air traffic in the United States is
BROOKE (for himself and other Sena-
manner in which the original appointments
rapidly aproaching a critical stage; in
tors), was received, read twice by its title,
were made. Any vacancy. in the Commission
some areas of high-density traffic, crises
shall not affect its powers, and six members
referred to the Committee on Commerce,
of the Commission shall constitute a
already exist. In many areas the sys-
and ordered to be printed in the RECORD,
quorum.
tem is handicapped by a lack of suf-
as follows:
(c) Each member of the Commission who
ficient competent personnel to operate
S. 3727
is appointed from private life shall receive
essential positions and direct aircraft
Be it enacted by the Senate and House of
$100 per diem for each day (including travel
movement. Many controllers are work-
Representatives of the United States of
time) during which he is engaged in the
S8070
CONGRESSIONAL RECORD SENATE
July 2, 1968
actual performance of his duties as a member
sary to carry out the purposes of this Act,
But at least it was an effort. It was a
of the Commission. A member of the Com-
and such contracts or other arrangements, or
start. My colleague's study made it plain,
mission who is in the legislative, executive, or
modifications thereof, may be entered into
judicial branch of the United States Govern-
however, that much more information is
without legal consideration, without per-
ment shall serve without additional compen-
formance or other bonds, and without re-
needed if the many agencies and levels of
sation. All members of the Commission shall
gard to section 3709 of the Revised Statutes,
State and local government-along with
be reimbursed for travel, subsistence, and
as amended (41 U.S.C. 5);
private citizens-are to be able to make
other necessary expenses incurred by them
(4) to make advance, progress, and other
the best use of the programs available to
in the performance of such duties.
payments which the Commission deems nec-
them.
SEC. 4. (a) The Commission is authorized
essary under this Act without regard to the
It is evident that the publication of a
to appoint and fix the compensation of such
provisions of section 3648 of the Revised
personnel as may be necessary to carry out
Statutes, as amended (31 U.S.C. 529); and
compendium such as this bill provides
the provisions of this Act. Such appoint-
(5) to make any other expenditures neces-
would be useful in focusing attention on
ments shall be without regard to the pro-
sary to carry into effect the purposes of this
overlapping functions of various agen-
visions of title 5, United States Code, gov-
Act.
cies. It would certainly also suggest ways
erning appointments in the competitive
for judicious trimming of the budget.
service, and such compensation shall be paid
This bill is in keeping with the spirit
without regard to the provisions of chapter
S. 3732-INTRODUCTION OF PRO-
of a bill I cosponsored in January of 1967
51 and subchapter III of chapter 53 of such
GRAM INFORMATION ACT
which called for the establishment of a
title relating to classification and General
Mr. BOGGS. Mr. President, I intro-
Hoover-type commission to study the or-
Schedule pay rates, but no individual so ap-
pointed shall receive compensation in excess
duce, for appropriate reference, and on
ganization and operation of the execu-
of the rate prescribed for GS-18 in the Gen-
behalf of myself and Senators BENNETT,
tive branch of the Government.
eral Schedule under section 5332 of title 5,
CASE, COTTON, MONTOYA, SCOTT, JAVITS,
Introduction of a clean bill (S. 3640)
United States Code.
and WILLIAMS of Delaware, a bill to
followed hearings on this proposal to
(b) The Commission is authorized to ob-
create a catalog of Federal assistance
eliminate duplication and overlapping of
tain services of experts and consultants in
programs, and for other purposes.
Federal services, activities, and functions
accordance with the provisions of section
We are all familiar with the prolifera-
and to consolidate them where possible.
3109 of title 5, United States Code, at rates
for individuals not to exceed $100 per diem.
tion of Federal programs in recent years.
Hopefully the Senate will get an oppor-
(c) The Commission is authorized to ac-
The tangle of programs frustrates efforts
tunity to act on it before the current ses-
cept and utilize the services of voluntary un-
to ferret out all of those which apply to
sion is over.
compensated personnel and reimburse them
certain individuals or to a particular
I might say, Mr. President, that the
for travel expenses, including per diem, as
agency of State or local government.
intent of the bill I introduce today to
authorized by section 5703 of title 5, United
No one will ever know how many man-
make the operation of the Federal Gov-
States Code.
hours this searching has wasted.
ernment more efficient is also in line with
SEC. 5. (a) The Commission, or, on the
The absence of a reliable cross-refer-
the basic intent of S. 355, the proposed
authorization of the Commission, any sub-
committee or member thereof, may, for the
enced source of information for all Fed-
Legislative Reorganization Act of 1968,
purpose of carrying out the provisions of
eral programs has also undoubtedly
which has been passed by the Senate
this Act, hold such hearings and sit and act
contributed to an overlapping of Fed-
(March 7, 1967), but not by the other
at such times and places, administer such
eral programs, adding needless cost to
body.
oaths, and require, by subpoena or otherwise,
the considerable confusion.
My introduction of the proposed Pro-
the attendance and testimony of such wit-
As a new Member of the House of
gram Information Act follows widespread
nesses and the production of such books,
Representatives, my colleague from Del-
interest shown in the proposal after Mr.
records, correspondence, memorandums, pa-
pers, and documents as the Commission or
aware, the Honorable WILLIAM V. ROTH,
ROTH introduced it in the House. Be-
such subcommittee or member may deem
JR., was constantly being asked about
cause much of that interest came from
advisable. Subpoenas may be issued under
various programs. He determined that
Member of the Senate, he encouraged me
the signature of the chairman of the Com-
he needed more answers than were im-
to introduce it here; and I am very happy
mission, of such subcommittees, or any duly
mediately available. Being resourceful as
to do so.
designated member, and may be served by
well as energetic, he and his staff pro-
I ask unanimous consent that three of
any person designated by such chairman or
ceeded to make an intensive survey of
the comments on the proposal, one by
member. The provisions of section 102 to 104,
existing Federal programs; and from
Roscoe Drummond and the others edi-
inclusive, of the Revised Statutes (2 U.S.C.
secs. 192-194), shall apply in the case of fail-
that study has emerged not only a com-
torials in the Wilmington, Del., Evening
ure of any witness to comply with a subpoena
pilation of nearly 1,300 programs, but a
Journal and the Washington Daily News,
or to testify when summoned under author-
proposal to create an up-to-date com-
be inserted at this point in the RECORD,
ity of this section.
pendium of existing programs. (See
along with a copy of the bill.
(b) The Commission is authorized to se-
RECORD pp. H5434-H5585, June 25, 1968.)
The PRESIDENT pro tempore. The
cure directly from any department, agency,
Mr. ROTH'S efforts have already won
bill will be received and appropriately
or instrumentality of the United States in-
him a wide favorable response; and I
referred; and, without objection, the bill
formation, studies, surveys, and reports to
join many of his House colleagues and
carry out the purposes of this Act. Each
and editorials will be printed in the
such department, agency, or instruemental-
others in congratulating him for the very
RECORD.
ity is authorized and directed to furnish
valuable contribution he has made.
The bill (S. 3732) to create a Catalog
such information, studies, surveys, and re-
The bill which Mr. ROTH introduced in
of Federal Assistance Programs, and for
ports directly to the Commission, upon re-
the House, and which I am introducing
other purposes, introduced by Mr. BOGGS
quest made by the chairman, unless the
today in the Senate, provides that the
President determines that it is in the best
(for himself and other Senators), was
President shall send to the Congress at
interests of the security of the United States
received, read twice by its title, referred
the beginning of each regular session a
that such information, studies, surveys, and
to the Committee on Government Oper-
catalog of Federal assistance programs.
reports not be furnished.
ations, and ordered to be printed in the
SEC. 6. To carry out the provisions of this
The catalog is to outline all the essen-
RECORD, as follows:
Act, the Commission shall have the author-
tial information a potential applicant for
S. 3732
ity-
a Federal program would need. This
(1) to prescribe such rules and regulations
catalog is to be revised at no less than
Be it enacted by the Senate and House of
as it deems necessary governing the manner
monthly intervals.
Representatives of the United States of
of its operations and its organization and
America in Congress assembled,
This catalog is also to be the only
personnel;
SHORT TITLE
compendium of program information
(2) to obtain, upon a reimbursable basis,
from any department, agency or instrumen-
published by any Federal agency or de-
SECTION 1. This Act may be cited as the
"Program Information Act."
tality of the United States, with the consent
partment.
DEFINITIONS
of the head thereof such facilities, services,
Most of us are familiar with the cata-
and supplies as the Commission deems neces-
log developed by the Office of Economic
SEC. 2. For the purposes of this Act-
sary to carry out its duties;
Opportunity. In his study of this catalog,
(a) The term "Federal assistance pro-
(3) to enter into contracts or other ar-
gram" means any program providing Fed-
Mr. ROTH found that it was incomplete
rangements, or modifications thereof, with
eral benefits, regardless of whether it is iden-
State and local governments, and institutions
and the information contained was in
tified as a separate program by law or by
and individuals in the United States, to con-
many cases far too little to be of much
any administering agency, which can be
duct studies the Commission deems neces-
help to a potential program beneficiary.
differentiated from any other such program
July 2, 1968
CONGRESSIONAL RECORD - SENATE
S8071
on the basis of its legal authority, its admin-
deadlines, and the time taken to process or
listed in section 6 as is given in the most
istering office, its specific purpose, the spe-
approve an application.
recent revision of the Catalog shall be re-
cific benefits it provides, or the specific qual-
(7) identify related programs.
tained in any such reprint. All other com-
incations of its beneficiaries.
FORM OF CATALOG
pendiums of program information are pro-
(b) Federal Assistance program "benefits"
SEC. 7. (a) Detailed budgetary informa-
hibited in order to make the Catalog the
include but are not limited to grants, loans,
tion shall be given for each Federal assist-
exclusive source of such program information
mortgage loans, mortgage and other insur-
ance program. Except for budgetary infor-
both for the public and for the program
ance, scholarships, other financial assistance,
mation, similar information for each Federal
officer.
property of any kind, services, technical as-
assistance program may be consolidated.
DELEGATION OF FUNCTIONS
sistance, and expert information.
(b) The program information may be set
SEC. 11. The President may delegate any
(c) A Federal assistance program "bene-
forth in such form as the President may de-
function conferred upon him by this Act to
ficiary" includes but is not limited to a
termine, and the Catalog may include such
the director or other personnel of the Bureau
State, or grouping or subdivision thereof,
other program information and data as in
of the Budget, with authority for redelegation
county, city, other political body, profit or
his opinion are necessary or desirable in order
within that Bureau, but no functions under
nonprofit corporation or institution, any
to assist the potential program beneficiary
this Act may be delegated to any other de-
individual, or any other potential beneficiary,
to understand and take advantage of each
partment, agency, or officer of the United
domestic or foreign, other than an agency
Federal assistance program.
States.
of the United States.
(c) The Catalog shall contain a detailed
AMENDMENT TO BUDGET AND ACCOUNTING
(d) An "administering office" is the lowest
index designed to assist the potential bene-
subdivision of any Federal agency or depart-
ACT, 1921
ficiary to identify all Federal assistance pro-
ment that has direct, operational responsi-
grams related to a particular need.
SEC. 12. Section 207 of the Budget and Ac-
bility for a Federal assistance program.
(d) The Catalog shall be in all respects
counting Act, 1921 (31 U.S.C. 16) is amended
(e) "Federal agency or department" means
concise, clear, understandable, and such that
(1) by inserting "(a)" immediately after
any executive department; independent
it can be easily understood by the potential
"SEC. 207.", and (2) by adding at the end
commission; wholly owned Government cor-
beneficiary.
thereof the following new subsection:
poration; board, bureau, office, agency, or
"(b) The Bureau, under such rules and
SIMPLIFICATION OF APPLICATION PROCEDURE
other establishment of the Government, in-
regulations as the President may prescribe,
cluding any independent regulatory commis-
SEC. 8. The President shall transmit with
shall prepare the Catalog of Federal assist-
sion or board; and the municipal government
the Catalog a report setting forth the specific
ance programs in accordance with the Pro-
of the District of Columbia.
measures taken in the past year to simplify
gram Information Act, shall prepare pro-
and consolidate the various application
EXCLUSION
posals on improvements in the Catalog so as
forms and program guidelines a potential
further to assist the potential program bene-
SEC. 3. This Act does not apply to any ac-
beneficiary would use to benefit from each
ficiary to understand and take advantage of
tivities related to the collection or evalua-
Federal assistance program, and to coordi-
each Federal assistance program, and shall
tion of national security information.
nate, simplify, and consolidate application
make every effort to simplify and consolidate
CATALOG OF FEDERAL ASSISTANCE PROGRAMS
forms and program guidelines of one Federal
the various application forms and program
SEC. 4. The President shall transmit to Con-
assistance program with application forms
guidelines that a potential beneficiary would
gress during the first days of each regular
and program guidelines of other related
use to benefit from each Federal assistance
session a catalog of Federal assistance pro-
Federal assistance programs, administered
program, and to coordinate, simplify, and
grams, referred to in this Act as the Catalog,
either by the same or especially by differ-
consolidate application forms and program
in accordance with this Act. The Catalog shall
ent Federal agencies or departments.
guidelines of other related Federal Assist-
set forth the required program information
MONTHLY REVISION
ance Programs, administered either by the
for each Federal assistance program, sum-
SEC. 9. The President shall revise the Cata-
same or especially by different Federal agen-
mary data and text, supporting additional
log at no less than monthly intervals. Each
cies or departments. In order to facilitate its
detail, required reports, recommendations,
revision-
performance of any function specified in this
and other matter as the President may
(1) shall reflect for each Federal assistance
title, the Bureau of the Budget may--
determine.
program any changes in the program infor-
"(1) prepare information for machine
PURPOSE OF CATALOG
mation listed in section 6.
processing;
SEC. 5. The Catalog shall be designed to
(2) shall further reflect addition, consoli-
"(2) process information by machine by
assist the potential beneficiary identify all
dation, reorganization, or cessation of Fed-
performing mathematical or logical opera-
existing Federal assistance programs where-
eral assistance programs, and shall provide
tions thereon, selective retrieval, integration,
ever administered, and shall supply informa-
for such Federal assistance programs the
or other machine operations; and
tion for each program SO that the potential
program information listed in section 6.
"(3) prepare for presentation or other use
beneficiary can determine whether particu-
(3) shall include such other program in-
information processed by machine.
lar assistance or support sought might be
formation as will provide the most current
The Bureau may acquire automatic data
available to him to use for the purposes he
information on changes in current funding
processing equipment and retain personnel
wishes.
status, on changes in organizations admin-
needed for any activity authorized by the
REQUIRED PROGRAM INFORMATION
istering the Federal assistance prograins, and
Program Information Act."
SEC. 6. For each Federal assistance program,
on other changes of direct, immediate rele-
TRANSFER OF FUNCTIONS
the Catalog shall-
vance to potential program beneficiaries as
SEC. 13. (a) The functions of operating the
(1) identify the program. The identifica-
will most accurately reflect the full scope of
Federal Information Exchange System and
tion may include the name of the program,
Federal assistance programs, and the current
of preparing the Catalog of Federal Assist-
organizational structure of the Federal
the authorizing statute, the specific adminis-
ance Programs administered prior to the en-
tering office, and a brief description of the
agencies and departments that administer
actment of this Act by the Information Cen-
program including the objectives it is de-
such programs.
ter of the Office of Economic Opportunity are
signed to attain.
(4) may include such other program in-
removed from the Office of Economic Oppor-
(2) describe the program structure. The
formation and data as in the President's
tunity and shall be administered instead by
description may include a statement of the
opinion are necessary or desirable in order
the Bureau of the Budget, not to be dele-
eligibility restrictions, the available benefits,
to assist the potential program beneficiary
gated therefrom to any Federal agency or de-
and the restrictions on the use of such
to understand and take advantage of each
partment. Such personnel, records, property,
benefits.
Federal assistance program.
and unexpended balances of appropriations
(3) state the level of funding. This state-
PUBLICATION BY SUPERINTENDENT OF
related to functions under this Act as may
ment may include a tabulation of the appro-
DOCUMENTS
be agreed upon between the Director of the
priations sought, past appropriations, ob-
SEC. 10. The Superintendent of Documents
Office of Economic Opportunity and the Di-
ligations incurred, average assistance given,
shall make the Catalog and all revisions
rector of the Bureau of the Budget may be
or other pertinent financial information de-
thereof available to the public at cost in
transferred from that Office to the Bureau.
signed to indicate the size of the program
quantities adequate to meet public demand,
(b) Sections 613 and 635 of the Economic
and any funding remaining available.
providing subscriptions to the Catalog and
Opportunity Act of 1964 are amended by in-
(4) state the costs to the recipient of re-
revisions thereof in such manner as he may
serting "of the Bureau of the Budget" im-
ceiving assistance or support. This state-
determine.
mediately after "Director" each place it ap-
ment may include a statement of prere-
pears therein.
The Catalog shall be the only compendium
quisites to receiving benefits, and of duties
of program information published by any
The editorials, presented by Mr. BOGGS,
required after receiving benefits.
Federal agency or department. For its own
are as follows:
(5) identify the appropriate officials to
use, any department or agency of the United
contact. The list may include contacts in
[From the Washington Post, June 26, 1968]
States may reprint such parts of the Catalog,
both Washington, D.C., and locally, includ-
together with such other program informa-
DOMESTIC AID CAUGHT IN SPRAWLING CHAOS
ing addresses and telephone numbers.
tion, as it may deem appropriate and may
(By Roscoe Drummond)
(6) describe the mechanics of application.
change the form of the Catalog in any such
WASHINGTON-Federal Administration of
The description may include application
reprint, but all the program information
billions of dollars in aid to millions of Amer-
S8072
CONGRESSIONAL RECORD - SENATE
July 2, 1968
icans is so tangled today nobody knows how
thread his way through the bureaucratic
reaucracy which defies even the expert
bad things are.
maze of federal aid programs to ensure that
searchers of a Congressman's office!
The need is urgent to rescue from itself the
Delaware gets its share of them. Now, his
And LBJ says he has a tight budget!
sprawling, chaotic, inefficient, overburdened,
successor, U.S. Rep. William V. Roth Jr., has
overcostly maze of Federal assistance pro-
come up with an idea that might make Mr.
grams.
McDowell's job obsolete.
SENATE RESOLUTION 311-RESOLU-
Democratic liberals like the late Robert
Mr. Roth's measure to require the federal
TION TO MAKE A STUDY OF MILI-
Kennedy, J.F.K. aides Daniel Moynihan and
government to maintain a complete, up-to-
TARY OVERPAYMENTS
Richard Goodwin and Republican conserva-
date catalog of its aid programs is needed
tives like Congressmen Melvin Laird, Gerald
and long overdue.
Mr. TOWER. Mr. President, I submit
Ford and Charles Goodell have for some time
There is no quarrel with Mr. McDowell's
for appropriate reference, a measure that
been suggesting that the Federal complex has
work-federal aid, which rose an estimated
instructs the Comptroller General of the
become so big, so cumbersome, so overlapping
$5 million to about $50 million in Delaware
that it simply can't any longer do its job.
United States to make a complete study
this year, is an important source of revenue.
The need is to decentralize, not just a little
And as things now stand, without the serv-
of overpayments of compensation and
bit but radically, functions, funds and au-
ices of someone to bridge the information
allowances to members of the Armed
thority SO that State and local Government-
gap between eligible recipient and the gov-
Forces and employees of the executive
near to the people-can begin to do the job
ernment Delaware could easily lose sizable
branch of the Government as a result of
on a scale which is manageable.
sums of federal support for its programs.
administrative error. The number of
New facts which reveal how bad the situa-
Individuals and small local governments,
these overpayments which are not the
tion is come from a heroic effort of a lone
however, cannot afford the services of an
fault of the receiving person, has ap-
first-term Congressman, William V. Roth, Jr.
"aid detective" and may often miss out on
(R., Del.), who set out four months ago to
parently been steadily increasing lately
aid for which they qualify simply because
survey the entire Federal establishment to
of ignorance.
and has been causing much havoc for
find out just how many programs of Fed-
The government provides about $20 billion.
those who receive the money.
eral assistance there are, what they do, how
a year for aid programs, yet there is no cen-
Under the terms of this measure, the
and where they are administered.
tral office where a citizen interested in schol-
Comptroller General shall find out why
His findings justify virtually everything
arship money or a state agency interested in
these overpayments are increasing and
that has been said about the labyrinth of
help for its mental health program can re-
shall devise ways to both decrease their
overgrown national Government. He found:
ceive answers to such basic questions as:
occurrence and prevent them from recur-
That nobody knows how many Federal pro-
How many programs exist? Who is eligible?
grams there are and that there is no place to
ring. In many instances, today, the mem-
What aid is provided? How do I apply?
go in the whole Federal system to find out.
If Mr. Roth's bill passes, as it should, ob-
bers of the armed services and other gov-
That Congress simply does not have the
taining answers to these questions will be-
ernmental employees are underpaid. We
information to judge which programs should
come a more simple matter and another
must take steps to insure such burdens
be kept and which should be stopped.
layer of the administrative bureaucracy that
are ended.
That the executive branch does not have
separates the people from the government
The PRESIDENT pro tempore. The
the information to find overlapping and dup-
will be reduced, if not removed.
resolution will be received and appro-
lication and thereby to unify and streamline
priately referred; and, under the rule,
the operation.
[From the Washington Daily News,
That at the very least the Federal Govern-
the resolution will be printed in the
July 1, 1968]
ment is attempting to administer 1050 assist-
RECORD.
PONDEROUS GOVERNMENT
ance programs designed to dispense more
The resolution (S. Res. 311) was
than $20 billion a year.
William V. Roth is a first term Congress-
referred to the Committee on Govern-
That as many as 10 Cabinet-level depart-
man from Delaware and one of the first
ments and 15 or more agencies operate pro-
things a freshman Congressman learns is
ment Operations, as follows:
S. RES. 311
grams devoted essentially to the same pur-
that his constituents expect him to be a
pose.
fountain of information-especially about
Resolved. That, in accordance with section
No wonder Democrats and Republicans
such things as where in the Government do
312(b) of the Budget and Accounting Act,
alike, conservatives and liberals alike and
we go to get some of the assistance the Gov-
1921 (42 Stat. 26; 31 U.S.C. 53(b)), the
many who used to think let-Washington-do-
ernment has promised us?
Comptroller General of the United States is
it was the answer to every social ill are be-
Mr. Roth soon found that he didn't have
directed to make a complete study with re-
ginning to see and say that functions, funds
much of this information and just finding
spect to overpayments of compensation and
and initiative need to be turned back to
somebody in the Government who did have
allowances to members of the Armed Forces
state and local government.
it was a frustrating job.
and employees of the executive branch of the
This is why Moynihan, Assistant Secretary
As a result, he and his staff spent eight
Government as the result of administrative
of Labor under President Kennedy and now
months in a "massive" effort just to identify
error and through no fault of the member or
head of the Harvard-M.I.T. Urban Affairs
the complex, overlapping assortment of Gov-
employee. The study will cover such overpay-
Center, bluntly asserts that while the Fed-
ernment programs purporting to offer "as-
ments made during fiscal years 1966, 1967, and
eral Government has proved itself massively
sistance to the American public."
1968 and shall include a review of the par-
efficient at collecting taxes, it has shown it-
He finally compiled such a list with brief
ticular reasons for the overpayments and
self massively inefficient at dispensing Fed-
descriptions of these programs and where to
measures that may be taken to eliminate
eral services.
find them, and had it printed in agate type
overpayments.
Representative Roth's titanic study of ad-
in the Congressional Record. The list cov-
SEC. 2. The Comptroller General shall make
ministrative dishevelment ought to stir
ered 148 pages. He says he has 1050 pro-
a report on such study, together with any
Congress and the White House to action.
grams identified; he knows there are many
recommendations for legislation, to the Sen-
His immediate proposal is modest-that the
more but he can't get the responsible depart-
ate on or before June 30, 1969.
Government be directed to put into a single
ments to answer his questions.
catalogue a lucid report on all Federal as-
Some of his other findings:
sistance programs and what the citizen
These programs spend about $20 billion
SENATE RESOLUTION 312-STUDY
needs to know to use them.
of taxpayer money a year; "no one, any-
RELATING TO THE ESTABLISH-
It would be a beginning to get at the
where, knows exactly how many Federal pro-
MENT OF AN INTERNATIONAL
facts. But far more need to be done-and
grams there are," there is not even a "com-
SMALL BUSINESS MANAGEMENT
soon. A special Congressional-Presidential
mon denominator" of what a program is, as
PROGRAM
commission, like the Hoover Commission,
many as 25 agencies of the Government have
ought to be put to work at once to study how
programs in the same areas.
Mr. TOWER. Mr. President, the Senate
best to decentralize Federal assistance pro-
Mr. Roth's chief complaint was that a state
has acted on an Export-Import Bank bill
grams and to report to the new Congress
or municipality or university or individual
designed particularly to increase exports
early enough so that action could be forth-
wanting to take advantage of any of these
from this country to less developed na-
coming next year.
programs couldn't find out where to go, or
tions in the world.
There is little doubt that decentraliza-
even if there was a program to meet their
The act will expand American exports
tion of the unwieldy Federal sprawl is com-
needs, without a staff of birddogs to run
them down.
to such nations by liberalizing the con-
ing. It ought to be brought about in an or-
derly, well planned manner. This is why
So he introduced a bill to require the
ditions of Bank loans, insurance, and
Congress ought to put it in motion now.
President to publish yearly, and update
guarantees covering exports needed in
monthly a compendium of Federal assist-
those countries for development pur-
[From the Wilmington (Del.) Evening
ance programs.
poses; and, to improve our international
Journal, June 26, 1968]
But there is another much more awesome
trade balance-of-payments position.
CLEARING SOME COEWEBS
point to all this.
I am submitting a resolution which I
Former Congressman Harris B. McDowell
Think of the staggering cost of all this
believe belongs in our less developed na-
Jr. is paid $15,000 a year by the state to
duplication, all this red tape, all the bu-
tions package and which can do much
mar. 17
SEC
02
tabs 27-39
RICHARD M. NIXON
P. O. BOX 1968
TIMES SQUARE STATION
NEW YORK, N.Y. 10036
2 CRs
September 25, 1968
10 CRs
Dear
Because of the concern of your
organization with federal policies which
affect the investment community, I thought
you might find of interest the statement
which I have issued today on this subject.
I believe it is vitally important
that the policies of the federal government
provide complete protection for the investor
and at the same time encourage the free flow
of capital so essential to our nation's
economic stability and growth.
With every good wish,
Sincerely,
9 CRs
swe
A/S
SEC Letter
September 24, 1968
Dear
:
Because of the concern of your organization with federal policies which
affect the investment community, I thought you might find of interest the
statement which I have issued today on this subject.
I believe it is vitally important that the policies of the federal
government provide complete protection for the investor and at the
same time encourage the free flow of capital SO essential to our
nation's economyc stability, and growth.
With every good wish,
Sincerely,
SEC
INVESTMENT BANKERS LETTERS
/ Francis R. Schanck, 2 President, (IBA)
in
BANKERS assec
c/o Bacon, Whipple, and Co.
135 So. LaSalle Street
Chicago, Illinois 60603
i Mr. John R. Haire, 2 Chairman
3 Investment Company Institute
c/o Anchor Corporation
Westminster at Parker
Elizabeth, New Jersey 07207
i Mr. Leon T. Kendall, President
J Association of Stock Exchange Firms
120 Broadway
New York, New York 10005
/ Mr. James W. Davant
I Chairman of the Board
3 Association of Stock Exchange Firms
c/o Paine, Webber and Jackson
140 Broadway
New York, New York 10005
Statement by Richard M. Nixon
450 Park Avenue
New York, New York
September 25, 1968
THE ROLE OF THE SECURITIES
INDUSTRY IN THE NATIONAL ECONOMY
Today, one out of every eight Americans owns shares of mutual
funds or common stocks in American industry. Directly, and indirectly,
one hundred million Americans benefit from stock investments by way of
pension plans or insurance policies. This broad base of individual ownership
of American industry is the foundation of our free economy.
The fantastic growth of our securities industry and the dramatic increase
in public participation has over-burdened our Nation's stock exchanges, and raised
questions about the impact of institutional investing on the market and on our
economy, and the effectiveness of existing law in providing full and adequate
protection for the investor.
These are sophisticated, complex questions. The reaction of this
administration to these new challenges, however, has been simply to trot out
the same tired old "cure-alls" of the Democratic party, that is more heavy-
handed bureaucratic regulatory schemes.
What is needed - and it will be a first priority of my administration --
is an independent, comprehensive, economic study of the role of financial
institutions in our economy, the relationship of financial institutions to our nation's
growth, the requirements for investor protection and the inter-relationship of all
financial institutions. Such a study is imperative before steps are taken which
might seriously impair the nation,s ability to continue to raise the capital
needed for its future economic growth.
During the past Congress, a joint resolution was adopted authorizing
-2-
a Securities and Exchange Commission study which would involve some of these
issues. Even before the study could be initiated, however, the Justice Department
and the SEC advanced proposals designed to alter the basic character of the
securities market, involving drastic changes in the stock exchange rate
structure and altering the economic relationships of brokerage firms,
institutional investors and individual investors. Tragically, those who would
suffer most are the small broker dealers, the small independent businessmen.
The Administration has further sought wide sweeping new regulatory powers
over the mutual fund industry, which powers would be tantamount to "rate
fixing" in a highly competitive industry. Agencies of the administration have
sought, sometimes with, but more often without legislative authority, to
establish bureaucratic domination over the competitive relationship and
everyday activities of banks, savings institutions, insurance companies and
institutional investors.
The actions of this Administration have been characterized by a
legalistic and bureaucratic approach rather than one sensitive to the needs of
our free economic system. Another priority of my administration, and an
important plank in the Republican platform, is a thorough and long overdue
study of the Executive Department by an independent commission patterned
after the Hoover Commission. One of the major items on the agenda of that
commission must be a determination of the proper role which those agencies
now regulating our economic institutions are to play in insuring our nation's
economic stability and growth.
The free and healthy operation of the market is of utmost importance
to the investor; to the nation, the orderly growth of the industry and its ability
to attract new investment provides the flow of capital essential to our
-3-
Nation's economic well-being and expansion.
Our securities laws were designed to protect the investor by insisting
upon full and complete disclosure. This has been the order of the day since
the Securities Act of the 30's were written. I believe in the full enforcement
of the securities law to assure absolute protection for the investor; abuses of
laws should be vigorously prosecuted. I believe furthermore that the Federal
Government should be continually sensitive to the needs for improvement in
these laws to assure investor protection. The philosophy of this Administration,
however, has been that disclosure alone is not enough and that the government
can make decisions for the investor better than he can make them for himself.
This philosophy I reject.
By its actions, my administration will evidence its faith in the American
investor and in the strength and viability of American financial institutions SO
essential to the success of our free economy.
Statement by Richard M. Nixon
450 Park Avenue
New York, New York
ince Edinion
rall Hannah
September 25, 1968
2 400
15
THE ROLE OF THE SECURITIES
1726
TELECOPIED FAITH
INDUSTRY IN THE NATIONAL ECONOMY
Copes
Today, one out of every eight Americans owns
shares of mutual funds or common stocks in American
industry. Directly, and indirectly, one hundred million
Americans benefit from stock investments by way of
pension plans or insurance policies. This broad base of
individual ownership of American industry is the founda-
tion of our free econony.
The fantastic growth of our securities industry and
the dramatic increase in public participation has over-
burdened our Nation's stock exchanges, and raised questions
about the impact of institutional investing on the market
and on our economy, and the effectiveness of existing
law in providing full and adequate protection for the
investor.
These are sophisticated, complex questions. The
reaction of this administration to these new challenges,
however, has been simply to trot out the same tired old
"cure-alls" of the Democratic party, that is more heavy-
handed bureaucratic regulatory schemes.
What is needed-and it will be a first priority of
my administration-is an independent, comprehensive,
-2-
repeated
economic study of the role of financial institutions in
our economy, the relationship of financial institutions
in our economy, the relationship of financial institutions
to our nation's growth, the requirements for investor
protection and the inter-relationship of all financial
institutions. Such a study is imperative before steps
are taken which might seriously impair the nation's
ability to continue to raise the capital needed for its
future economic growth.
During the past Congress, a joint resolution was
Securities Exchange Comern issum
adopted authorizing an SEC study which would involve
some of these issues. Even before the study could be
initiated, however, the Justice Department and the SEC
advanced proposals designed to alter the basic character
of the securities market, involving drastic changes in
the stock exchange rate structure and altering the
economic relationships of brokerage firms, institutional
investors and individual investors. Tragically, those who
MOST
would suffer ^ are the small broker dealers, the small
independent businessmen.
The administration has further sought wide sweeping
new regulatory powers over the mutual, fund industry,
which powers would be tantamount to "rate fixing" in a
highly competitive industry. Agencies of the administration
-3-
have sought, sometimes with, but more often without
legislative authority, to establish bureaucratic domination
over the competitive relationship and everyday activities
of banks, savings institutions, insurance companies and
institutional investors.
The actions of this administration have been characterized
by a legalistic and bureaucratic approach rather than one
sensitive to the needs of our free economic sustem. Another
priority of my administration, and an important plank in
the Republican platform, is a thorough and long overdue
study of the Executive Department by an independent
commission patterned after the Hoover Commission. One
of the major items o the agenda of that commission must
be a determination of the proper role which those agencies
now regulating our economic institutions are to play
in insuring our nation's economic stability and growth.
The free and healthy operation of the market is
of utmost importance to the investor; to the nation,
the orderly growth of the industry and its ability
to attract new investment provides the flow of capital
essential to our Nation's economic well-being and expansion.
Our securities laws were designed to protect the
investor by insisting upon full and complete disclosure.
-4-
This has been the order of the day since the Securities
Acts of the 30's were written. I believe in the full
enforcement of the securities law to assure absolute
protection for the investor; abuses of these laws should
be vigorously prosecuted. I believe furthermore that the
Federal Government should be continually sensitive to the
needs for improvement in these laws to assure investor
protection. The philosophy of this administration, however,
has been that disclosure alone is not enough and that the
government can make decisions for the investor better
than he can make them for himself. This philosophy
I reject.
By its actions, my administration will evidence
its faith in the American investor and in the strength
and viability of American financial institutions so
essential to the success of our free economy.
September 24, 1968
Dear Mr. Schanck:
Because of the concern of your
organization with federal policies which
affect the investment community, I thought
you might find of interest the statement
which I have issued today on this subject.
I believe it is vitally important
that the policies of the federal government
provide complete protection for the investor
and at the same time encourage the free flow
of capital so essential to our nation's
economic stability and growth.
With every good wish,
Sincerely,
Mr. Francis R. Schanck, President
Investment Bankers Association
c/o Bacon, Whipple and Company
135 South LaSalle Street
Chicago, Illinois 60603
September 24, 1968
Dear Mr. Haire:
Because of the concern of your
organization with federal policies which
affect the investment community, I thought
you might find of interest the statement
which I have issued today on this subject.
I believe it is vitally important
that the policies of the federal government
provide complete protection for the investor
and at the same time encourage the free flow
of capital so essential to our nation's
economic stability and growth.
With every good wish,
Sincerely,
Mr. John R. Haire, Chairman
Investment Company Institute
c/o Anchor Corporation
Westminster at Parker
Elizabeth, New Jersey 07207
September 24, 1968
Dear Mr. Kendall:
Because of the concern of your
organization with federal policies which
affect the investment community, I thought
you might find of interest the statement
which I have issued today on this subject.
I believe it is vitally important
that the policies of the federal government
provide complete protection for the investor
and at the same time encourage the free flow
of capital so essential to our nation's
economic stability and growth.
With every good wish,
Sincerely,
Mr. Leon T. Kendall, President
Association of Stock Exchange Firms
120 Broadway
New York, New York 10005
September 24, 1968
Dear Mr. Davant:
Because of the concern of your
organization with federal policies which
affect the investment community, I thought
you might find of interest the statement
which I have issued today on this subject.
I believe it is vitally important
that the policies of the federal government
provide complete protection for the investor
and at the same time encourage the free flow
of capital so essential to our nation's
economic stability and growth.
With every good wish,
Sincerely,
Mr. James W. Davant
Chairman of the Board
Association of Stock Exchange Firms
c/o Paine, Webber and Jackson
140 Broadway
New York, New York 10005
TOM
September 16, 1968
3)
Draft Statement by Richard Nixon on the Roles of the Securities Industry
Today, one out of every eight Americans own shares of mutual funds or
common stocks in American industry. Directly, and indirectly, one hundred
million Americans benefit from stock investments by way of pension plans
or insurance policies.
Nowhere is the greatness of the American economic system more dramatically
exemplified than in the tremendous increase in numbers of individual share-
holders in American industry. This growth has been reflected in the accelerated
activity of the nation's stock exchanges, and in the tremendous increase of
institutional investment.
This broad base of public ownership of American industry is the foundation
of our free economic system. Millions of people truly participate, directly,
in the rewards of our free enterprise system. On the one hand this is democracy
at its very best; on the other hand, this investment by millions of individuals
provides the flow of capital so essential to the growth of our nation's
economy.
Government should encourage the free flow of capital, the free operation of
and brad based
our institutions so vital to our economy, and free investment participation by
A
our citizens. The present Administration, of which Vice President Humphrey has
been a part, has all too often shown little faith in the American investor, and
in American financial institutions. Whenever policy questions have arisen
involving the role of financial institutions in our economy, the present
Administration has trotted out the same tired, old "cure-alls" of the Democratic
Party --- that is, more heavy-handed, bureaucratic regulation.
wvcold
Our securities laws were designed to protect the consumer by demanding full
and complete disclosure. "Truth in securities" has been the order of the day since
-2-
the Securities Acts of the 30's were written. This Administration, however,
investor
frequently under the guise of "consumer protection has sought to achieve
more and more governmental control over the everyday operation of
financial institutions. Its philosophy has been that disclosure alone is
not enough, that somehow the Government should make decisions that the individual
80
armed with all relevant information and facts, is incapable of making
himself.
Acting without the benefit of any economic study, for example, the Justice
Department and the SEC have zealously attempted to revise the basis character
of the securities market. Without the benefit of economic analysis, these
Agencies have proposed drastic changes in the stock exchange rate structures,
and in the economic relationship of brokerage firms, institutional investors,
and individual investors. They have further sought wide-sweeping new regulatory
powers over the mutual fund industry, which powers would be tantamount to
rate-fixing in a highly competitive industry. Agencies of the Administration
have sought, sometimes with, but more often without legislative authority, to
establish bureaucratic domination over the competitive relationship and
activities of banks, savings institutions, insurance companies and institutional
investors. Wisely, the Congress has rebuffed these efforts. The actions of
this Administration in areas affecting the viability of our financial
institutions, have been characterized by a legalistic and bureaucratic
approach rather than one sensitive to the needs of our free economic system.
One of the first steps of the new Administration will be to conduct an
independent and comprehensive economic study of the role of our financial
institutions, the relationship of our financial institutions to the growth
-3-
of our economy, the requirements for investor protection, and the ways
in which Government can assist both the investor, and the sound growth
of all financial institutions, banks, savings institutions insurance
companies, the exchanges, mutual funds, and pension plans. Such a study
is imperative before steps are taken which might seriously affect the
nation's ability to continue to raise the capital needed for its future
economic growth.
Another priority of my Administration, andan important plank in the
Republican Platform, is a thorough and long overdue study of the Executive
Department by an independent commission patterned after the Hoover
Commission. One of the major items on the agenda of that commission must
be a determination of the proper role which those Agencies now regulating
our economic institutions are to play in insuring our nation's economic
stability and growth.
Add
ADDJ
A.00
oak)
083X
083X
DRAFT STATEMENT ON THE ROLE OF THE
SECURITIES INDUSTRY IN THE NATIONAL ECONOMY
Today, one out of every eight Americans own shares
of mutual funds or common stocks in American industry.
Directly, and indirectly, one hundred million Americans
benefit from stock investments by way of pension plans or
insurance policies. Nowhere is the greatness of the American
economic system more dramatically exemplified than in the
tremendous increase in the number of individual shareholders.
This broad base of public ownership of American industry is
the foundation of our free economic system.
The fantastic growth of our securities industry and
ever-increasing public participation has created new problems
such as the overburdened condition of our Nation's stock
exchanges. The enormous increase in institutional investment
has raised new public policy questions, the impact of institutional
investing on the market and on our economy, and the effectiveness
of existing law in providing full and adequate protection for
the investor.
The reaction of this administration to these issues,
however, has been simply to trot out the same tired old "cure=alls"
of the democratic party, that is more heavy-handed bureaucratic
regulatory schemes.
1000
ABOD
FAIRST
oB3x,
XERO
(083)
- 2 -
What is needed - and it will be a first priority of
my administration - is an independent, comprehensive, economic
study of the role of our financial institutions in our economy,
the relationship of our financial institutions to our nation's
growth, requirements for investor protection and the inter-
relationship of all financial institutions, banks, savings
institutions, insurance companies, mutual funds and pension
plans. Such a study is imperative before steps are taken which
might seriously affect the nation's ability to continue to raise
the capital needed for its future economic growth.
During the past Congress, a joint resolution was adopted
authorizing a study which would involve some of these issues.
Even before the study initiated, however, the Justic Department
and the SEC advanced proposals designed to revise the basic
character of the securities market, involving drastic changes
in the stock exchange rate structure and altering the economic
relationships of brokerage firms, institutional investors and
individual investors. The administration further sought wide
sweeping new regulatory powers over the mutual fund industry,
which powers would be tantamount to "rate fixing" in a highly
competitive industry. Agencies of the administration have
sought, sometimes with, but more often without legislative
Add
OBEO
OBOX
- 3 -
authority, to establish bureaucratic domination over the com-
petitive relationship and everyday activities of banks, savings
institutions, insurance companies and institutional investors.
In short, in areas affecting the viability of our financial
institutions, the actions of this administration have been
characterized by a legalistic and bureaucratic approach rather
than one sensitive to the needs of our free economic system.
Another priority of my administration, and an important plank
in the Republican Platform, is a thorough and
long overdue study
of the Executive Department by an independent commission patterned
after the Hoover Commission. One of the major items on the
agenda of that commission must be a determination of the proper role
which those agencies now regulating our economic institutions are
to play in insuring our nation's economic stability and growth.
Our securities laws were designed to protect the investor
by insisting upon full and complete disclosure. "Truth in
securities" has been the order of the day since the Securities
Act of the 30's was written. I believe in the full enforcement
of the securities law to assure absolute protection for the
investor; abuses of these laws should be vigorously prosecuted.
I believe furthermore that the Federal Government should be
continually sensitive to the needs for improvement in these laws
to assure investor protection. The philosophy of this administration
oanx)
Annual
1000
OUER
- 4 -
however, has been that disclosure alone is not enough and that
somehow the government can make decisions for the investor better
than he can make them for himself. This philosophy I reject.
By its actions, my administration will evidence its faith in the
American investor and in the strength and viability of American
financial institutions so essential to the success of our free
economic democracy.
September 17, 1968
TO: Allen Greenspan 7587202
The following two statements have been approved
by Tower and Morse. They are not to be distributed,
however, until our negotiations are complete with the
affected groups. Will discuss with you by telephone.
Chuck Colson
September 16, 1968
Draft Statement by Richard Nixon on the Roles of the Securities Industry
Today, one out of every eight Americans own shares of nutual funds or
common stocks in American industry. Directly, and indirectly, one hundred
million Americans benefit from stock investments by way of pension plans
or insurance policies.
Nowhere is the greatness of the American economic system more dramatically
exemplified than in the tremendous increase in numbers of individual share-
holders in American industry. This growth has been reflected in the accelerated
activity of the nation's stock exchanges, and in the tremendous increase of
institutional investment.
This broad base of public ownership of American industry is the foundation
of our free economic system. Millions of people truly participate, directly,
in the rewards of our free enterprise system. On the one hand this is democracy
at its very best; on the other hand, this investment by millions of individuals
provides the flow of capital 80 essential to the growth of our nation's
economy.
Government should encourage the free flow of capital, the free operations of
our institutions so vital to our economy, and free investment participation by
our citizens. The present Administration, of which Vice President Humphrey has
been a part, has all too often shown little faith in the American investor, and
in American financial institutions. Whenever policy questions have arisen
involving the role of financial institutions in our economy, the present
Administration has trotted out the same tired, old "cure-alls" of the Democratic
Party - that is, more heavy-handed, bureaucratic regulation.
Our securities laws were designed to protect the consumer by demanding full
and complete disclosure. "Truth in securities" has been the order of the day since
-2-
the Securities Acts of the 3-'s were written. This Administration, however,
frequently under the guise of "consumer protection" has sought to achieve
more and more governmental control over the everyday operation of
financial institutions. Its philosophy has been that disclosure alone is
not enough, that somehow the Government should make decisions that the individual
consumer, armed with all relevant information and facts, is incapable of making
himself.
Acting without the benefit of any economic study for example, the Justice
Department and the SEC have sealously attempted to revise the basis character
of the securities market. Without the benefit of economic analysis, these
Agencies have proposed drastic changes in the stock exchange rate structures,
and in the economic relationship of brokerage firms, institutional investors,
and individual investors. They have further sought wide-sweeping new regulatory
powers over the mitual fund industry, which powers would be tantamount to
rate-fixing in a highly competitive industry. Agencies of the Administration
have sought, sometimes with, but more often without legislative authority, to
establish bureaucratic domination over the competitive relationship and
activities of banks, savings institutions, insurance companies and institutional
investors. Wisely, the Congress has rebuffed these efforts. The actions of
this Administration in areas affecting the viability of our financial
institutions, have been characterised by a legalistic and bureaucratic
approach rather than one sensitive to the needs of our free economic system.
One of the first steps of the new Administration will be to conduct an
independent and comprehensive economic study of the role of our financial
institutions, the relationship of our financial institutions to the growth
-3-
of our economy, the requirements for investor protection, and the ways
in which Government can assist both the investor, and the sound growth
of all financial institutions, banks, savings institutions insurance
companies, the exchanges, mutual funds, and pension plans. Such a study
is imperative before steps are taken which might seriously affect the
nation's ability to continue to raise the capital needed for its future
economic growth.
d
Another priority of my Administration, an an important plank in the
Republican Platform, is a thorough and long overdue study of the Executive
Department by an independent commission patterned after the Hoover
Commission. One of the major items on the agenda of that commission must
be a determination of the proper role which those Agencies now regulating
our economic institutions are to play in insuring our nation's economic
stability and growth.
WEEKLY BULLETIN
SHIPBUILDERS COUNCIL OF AMERICA
1730 K STREET N. W.
WASHINGTON, D.C. 20006
202|338-7722
Thursday, October 3, 1968 - No. 40
FY '70 CRYSTAL BALL ON NAVY PROGRAM
Careful analysis of testimony in May on FY '69 Defense Appropria-
tions Bill (HR-18707) before Senate Appropriations Committee (released
only recently) indicates Navy is anticipating FY '70 Shipbuilding and Con-
version program of following character:
NEW CONSTRUCTION
Millions
2
SSN
$259.0
2
DXGN
320.0
1
CVAN
535.0
5
DX
246.0
4
FDL
183.6
1
DE (gas turbine)
25.0
2
LHA (number could be 3)
306.0
17 New Construction Subtotal
$1,874.6
CONVERSIONS
9
SSBN to POSEIDON
$685.7
1
Range Instrumentation Ship
25.0
3
DLG
120.0
10
MSO
48.6
23 Conversions Subtotal
$879.3
40 TOTAL
$2,753.9
On basis of "batting averages" lately, it is unlikely that funds of
above magnitude would be requested at start of new Administration or
approved by Congress. Total closer to $2 billion will probably be in-
cluded in FY '70 budget when presented to Capitol Hill next January.
There are also suggestions that updating of current classes of sub-
marine rescue vessels (ASR), salvage tugs (ATS), tank landing ships
(LST), combat stores ships (AFS), replenishment fleet tankers (AOR),
environmental research ships (AGER), surveying ships (AGS) and ocean-
ographic research ships (AGOR) may be initiated through reinstitution of
$3 million for "advanced contract design" recommended by Senate Com-
mittee to be deleted from FY '69 program (see Sept. 26 BULLETIN).
VAdm. J. B. Colwell, USN, Assistant Chief of Naval Operations
(Fleet Operations and Readiness) made strong plea for FDL ships - at
unit cost of $45.9 million - funds for which per our Sept. 12 BULLETIN
were later eliminated by Congress from FY '69 Navy shipbuilding and
conversion program "without prejudice." He also stated that program
contemplated 30 ship multiyear contracts to be funded 4 in FY '69; 10
in FY '70; 8 in FY '71; and 8 in FY '72.
APL/FARRELL/MARAD/INGALLS CONTRACTS SIGNED
Two contracts were signed this morning (Oct. 3) here in
Washington for construction of seven C-6 containerships
at Ingalls Shipbuilding Corp., Div. of Litton Systems, Inc.,
Pascagoula, Miss. Three of these vessels are for Ameri-
can President Lines, Ltd., and four for Farrell Lines, Inc.
Award of pending contract covering 3 Sea Barge vessels for
Lykes Bros. Steamship Co., on which General Dynamics
Corp., Quincy, Mass. Division was low bidder, has been
postponed. GD has extended its bids until Dec. 8.
U.S. SUBMARINE CAPABILITY ASSESSED
Less than 10 days ago (on Sept. 24), Preparedness Investigating
Subcommittee of Senate Armed Services Committee released report on
"United States Submarine Program" culminating investigation started
late last year "to determine the status of our submarine fleet, both as
it exists today and as it is projected into the mid-1970's under presently
approved programs. "
Principal conclusion: "The United States must make up in quality
what it lacks in quantity, having conceded to the Soviet Union a substan-
tial numerical superiority in submarines 11 Chairman John Stennis (D-
Miss.) noted: "Certainly, this is no time to consider stopping our sub-
marine construction program. Therefore, our primary recommendation
is that the United States should have a continuing submarine construction
"
program
On Friday (Sept. 27), same Subcommittee issued another report on
"Status of U.S. Strategic Power" expressing "concern about the adequacy
of our presently approved level of strategic nuclear forces " It is assert-
ed: "Since Hiroshima, our nuclear posture vis-a-vis the Soviet Union has
moved progressively from monopoly to massive superiority to exploitable
superiority to our present posture of what is at best marginal superiority
The Soviets have continued to close the gap in the nuclear race
"The Soviets have about 40 ballistic missile submarines and
about 50 cruise missile submarines. They are placing in-
creasing emphasis on their ballistic missile submarine force
and are building a new nuclear-powered submarine compar-
able to our Polaris submarine that may be able to fire ballis-
tic missiles to a range of 1,500 miles. The first unit of this
class is just becoming operational
11
Coincidentally, NEWSWEEK magazine (Oct. 7) contains report of
"Secret Shipyard For Soviet A-Subs" reading: "NATO intelligence offi-
cers say the Russians have built a submarine shipyard, completely
roofed over to escape reconaissance and satellite observations, that
can turn out more nuclear submarines than all U.S. shipyards combined
have been producing. The Soviet yard's capacity is more than a dozen
submarines a year. The United States currently is producing about two
nuclear-powered submarines each year."
GOP candidate Richard M. Nixon, in statement released at
Williamsburg, Va., yesterday (Oct. 2) said that "the Soviet
Union is making a very impressive bid to become the world's
number one sea power" while "the United States has not been
doing what it should to keep them from overtaking us." Mr.
Nixon also declared: "We face a troubled future for our naval
strength.
11
Investigating Subcommittee further comments with respect to U.S.
capability:
"POSEIDON will start coming into the inventory in the 1970's dur-
ing which time a number of POLARIS submarines will have been con-
verted to POSEIDON, a new missile with greater design accuracy, more
throw weight and potentially more separately targeted warheads than
POLARIS. The present program is to convert 31 submarines to the
POSEIDON. The fate of the remaining 10 POLARIS submarines has not
yet been determined. As currently programmed there will be both PO-
LARIS and POSEIDON missiles in the strategic force in 1976.
"The Joint Chiefs have also supported the ballistic missile ship
(i.e. surface vessel) which would carry a number of POSEIDON mis-
siles. Their fiscal year 1969 proposal to construct a prototype missile
ship in order to preserve an early deployment option if such a force is
required was disapproved by the Secretary of Defense in the final rec-
ord of decision on January 15, 1968. 11
Against this backdrop, as well as other expressions of Congres-
sional and public concern, it is understood Navy is presently consider-
ing establishment of Project Manager Office for submarine development,
reporting directly to Chief of Naval Material. Modus operandi would be
similar to that of POLARIS-POSEIDON, Antisubmarine Warfare and
Deep Submergence Special Projects Offices.
HEARINGS ON "MID-BODY" BILL SET
In curious twist of legislative procedure, Senate Commerce
Committee will conduct hearings next week on bill which has
already been ordered favorably reported (technically this ac-
tion has never been set aside).
Government witnesses as well as proponents and opponents
of HR-163, so-called "mid-body" bill, have been invited to
testify before Committee on Wednesday morning (Oct. 9).
This bill is intended to close loophole by which foreign-built
or rebuilt vessels registered under American-flag have es-
caped 3 year waiting period to qualify for carriage of defense
and preference (AID) cargoes.
HR-163 passed House of Representatives July 15 by vote of
370-30 and was ordered favorably reported by Senate Com-
merce Committee on July 18 (see July 18 BULLETIN).
With adjournment of Congress variously predicted between
Oct. 15 and 19, there is now considerable doubt that bill
will be enacted into law this year.
SEA POWER SUBCOMMITTEE HOLDS FIRST MEETING
As Special Subcommittee on Sea Power of House Armed Services
Committee (see Sept. 26 BULLETIN) held its organizational meeting yes-
terday (Oct. 2) behind closed doors, speculation continues to multiply
as to timing and motivation of this effort.
One body of opinion senses move on part of Democrats to neutral-
ize Nixon's proposal to revive U.S. maritime resources. Announcement
of formation of Sea Power Subcommittee by House Armed Services Com-
mittee Chairman L. Mendel Rivers (D-S.C.) came within hours after
text of Mr. Nixon's maritime statement was generally available.
Another school of thought believes Mr. Rivers' action was prompted
by his continuing misgivings about (1) quality of nation's sea power re-
sources and (2) failure of Administration and Congress to exert leader-
ship in correcting alarming deficiencies in both naval and merchant fleets.
While Subcommittee could not put in motion any effective action prior to
start of 1969, it could set stage for needed programs when 91st Congress
convenes in January.
Tuesday (Oct. 8), Subcommittee will hold hearings with Adm. T.H.
Moorer, USN, Chief of Naval Operations, and VAdm. L. P. Ramage,
USN, Commander, MSTS. Subcommittee staff visited Newport News Ship-
building & Dry Dock Co. Friday (Sept. 27) and has scheduled trip to GD-
Quincy yard tomorrow (Oct. 4). Earlier this week, counsels met with
Pentagon personnel to "get educated" on nation's sea power complex.
THE CANDIDATES SPEAK
How Humphrey, Nixon and Wallace
Stand on Major Housing Questions
A JOURNAL EXCLUSIVE
The great importance that the home-building industry has achieved in
the nation is well illustrated by the thoughtful replies of all three candi-
dates to housing questions submitted by the National Association of
Home Builders. The replies begin in alphabetical order with the name
of the candidate but then are rotated for the sake of equal treatment.
Q.
Over the past few years, including this year, the Congress has passed a wide variety of legis-
lation aimed at solving the housing needs of this country. What do you feel are the future
legislative needs? What would you, as the Chief Executive, propose in this field?
HUMPHREY: As a Nation, we must live up to the
opment of housing, to assure an adequate supply of invest-
commitment to ourselves to produce a housing supply that
ment capital at reasonable interest rates, and to provide the
truly meets the needs of our people. I agree with the
subsidies needed for ownership as well as renting by those
President and the 90th Congress that this means that during
for whom market costs are beyond reach. In administering
the next 10 years we must produce at least 6,000,000
this Act, we must respond to the urgent desire among lower
dwellings with Federal assistance for those of low and
income families for the sense of security and dignity which
moderate incomes and a minimum of 20,000,000 more
homeownership affords.
units for those who can afford housing in the private mar-
The 1968 Act calls for an annual report to the
ket. For the next decade, our cities must be given a top-level
priority in the Nation's agenda of unfinished business. Up-
Congress on the progress toward our 10-year goals. If these
grading the Nation's housing stock is at the very heart of any
reports show a failure to keep pace with our goals, we must
sincere and meaningful effort at reviving our cities and
promptly take corrective action. We must re-evaluate the
providing a suitable living environment.
means by which economic help and financing is made
The Housing and Urban Development Act of 1968
available and the scale of financial assistance required to
could prove to be the most significant housing legislation
support a sustained market. In the discussion below, I
ever passed. It authorized many of the actions we must take
describe additional future legislation to achieve the volume
to solve our housing problems-to encourage all forms of
of housing necessary to provide everyone a decent home in a
homeownership, to facilitate private initiative in the devel-
good neighborhood.
NIXON: The Congress has been very active in the area of
message could be sent to the next Congress.
housing and urban-related legislation in recent years. The
With this in mind, it would be premature to set forth
1968 Housing Act is particularly far-reaching and large in
my specific ideas on new programs. But every avenue for
content. Thus, there is already an abundance of laws on the
unleashing the productive potential of private enterprise and
statute books. Of course, this does not necessarily obviate
individual effort will be explored. I feel that this can be
the possible need for additional legislation in the near
done, for example, through tax credits and other financial
future.
incentives, the creation of urban development corporations
However, the most pressing need for the next Adminis-
and domestic development banks, loans and guarantees, and
tration will be to take immediate inventory of the housing
other technical assistance and self-help vehicles. My admin-
programs now available with a view toward evaluating
istration will bring about a joint venture in urban betterment
which ones should receive priority in funding. Those pro-
between the Federal Government and private enterprise.
grams that are burdened with their shortcomings or duplica-
The Government's role in this urgent undertaking will
tive in their scope should be reoriented, or if need be,
primarily be to provide a climate of incentive and encour-
discarded. It would be my hope that these studies could be
agement for the full involvement of the entire private sector
completed by the middle of 1969, at which time a housing
in solving our urban needs.
WALLACE: I would propose general support payments
localities to devise their own programs and set their own
from the U. S. Treasury, consisting of revenue payments on
priorities to help solve their own unique and most crucial
a per capita basis, with the end result of allowing states and
problems.
36
JOURNAL OF HOMEBUILDING
HUBERT H. HUMPHREY
RICHARD M. NIXON
GEORGE C. WALLACE
Q.
The Congress has not yet acted upon appropriations for funding the programs authorized un-
der the 1968 Act. Funding on an adequate basis, as authorized, is imperative if there is to be
any chance of success. In the context of other national demands for funds in many other fields, and
in view of the budget problem, what relative priority would you give to such funding to get these
new programs moving quickly?
NIXON: The 1968 Housing Act authorizes some $5.5
tion. It calls for the highest priority and emphasis on
billion in urban expenditures. The American people were
meeting the housing needs of those low-income families for
promised a $6 billion cut in Government spending when the
whom the national goal of "a decent home and a suitable
surtax measure was adopted, and our country's budgetary
living environment for every American family" has not
dilemma certainly must be expected to have its effect on
become a reality. With this I agree.
urban spending.
The private home-building industry has produced quali-
While there are priorities that will have to be weighed
ty housing for the vast preponderance of our population
in overall Government spending activities due to current
over the years. But obsolescence and deterioration has taken
budgetary problems, it is both necessary and prudent that
its toll of the housing inventory. and these dwellings are for
priorities likewise be established for expenditures within
the most part occupied by families with such limited finan-
each given area of Government activity. The Federal Gov-
cial means that they cannot secure decent housing in the
ernment has assumed a broad role in the area of housing and
private market unassisted. Theirs are the neighborhoods that
urban affairs. As I have noted, there is a need for concen-
are characterized by blight and despair. These are the
trating available funds in programs where they are truly
families that can become the owners and tenants of decent
needed and they can be expected to do the most good.
housing through the cooperative efforts of Government and
Available funds should be employed in such a manner
free enterprise. The need for producing this housing is most
as to provide financial leverage for the mass infusion of
apparent and pressing. There must be an increase in our
private investment capital into our urban areas. It is not
inventory of standard housing reasonably commensurate
realistic, nor is it possible in light of our fiscal crisis, to ex-
with such spending as is attainable under our urban pro-
pect the Government to do the job in the cities by itself.
grams. This is where the priority lies, and the programs that
The 1968 Act's "Declaration of Policy" clearly defines
can be shown to offer the most promise of progress in this
where the Federal Government should concentrate its atten-
area will receive priority attention in my Administration.
WALLACE: It is of the utmost importance that the war in
their use in solving problems relating to unemployment,
Vietnam be brought to an early and honorable cor clusion.
education and housing-these three areas would, of course,
This is the first priority facing the administration. The
receive prime consideration and as much funding as is
ending of the war would. in itself, free some money to be
used in the other pressing problems facing our nation.
appropriate and available and still be consistent with the
As for the allocation of Federal funds to the states for
national security.
HUMPHREY: The Administration I have worked in-as a
indicate the dimensions I believe are justified for our
Senator and as Vice President-has put the cities and
financial commitment to the American cities of the 1960's.
housing high among domestic priorities. I certainly would
And because I believe in this plan as an investment rather
not do less.
than a cost-just as was our investment in the rebuilding of
Full funding of the new housing programs of the 1968
Europe's ravaged cities-I am willing to ask the Nation to
Act is a minimum and a beginning-not the upper limit. I
face the problem and make the necessary investment to
have used the phrase, "a Marshall Plan for the Cities," to
meet the goals we have set for ourselves.
Q.
Included in the 1968 Housing and Urban Development Act were housing goals for the nation.
This is the first time such goals have been spelled out specifically along with a plan for achiev-
ing them. How do you regard this concept? Would your administration be favorably inclined towards
this approach to evaluating housing needs and progress made annually toward resolving them?
(Continued on next page.)
OCTOBER 1968
37
WALLACE: If we are to make progress toward effecting
concept of evaluating progress toward our goals in every
housing goals, we must intensify coordination and planning
area of government, and making the information so ob-
to meet these necessary ends. My administration would
tained available to private industry and the local govern-
investigate and evaluate our progress in this area as a
ments involved so as to enable them to more effectively
matter of course. Prudent management would dictate the
utilize the funds toward solving our problems.
HUMPHREY: The 1949 Housing Act proclaimed goals—
annual Economic Report focuses attention on the objective
"a decent, safe, and sanitary home in a suitable living
of full employment and the policies and practices necessary
environment for every American family"-but they were
to sustain it, so the annual housing report will help the
not translated into comprehensive programs and specific
Executive Branch and the Congress to keep in mind, hous-
numbers. This made it possible for some people to give lip
ing goals when they make decisions affecting
service to the goals while opposing actions to achieve them.
But I must point out that the Employment Act, not-
The Housing Act of 1968 represents a great step
withstanding its rather general language, has worked be-
forward; first, it rests on a specific assessment of housing
cause the country is committed to it and will not long
needs, including those of low-income families, and a quanti-
tolerate high levels of unemployment. This same kind of
fied schedule for meeting them; and second, it requires the
national and political commitment is necessary to make a
President to make an annual report to Congress on progress
housing policy effective. As President, I would adhere to
toward fulfillment of the 10-year goal.
this national commitment and take all measures necessary
The annual report is most important. Just as the
to achieve the national housing goals.
NIXON: There is a great merit in the housing goals concept
However, the setting of production goals must be
included in the 1968 Act. Housing is certainly one of the
realistic and capable of being achieved. The Federal Gov-
most basic of human needs and should be an integral part of
ernment must not unduly expand its direct involvement in
overall economic and social planning. There should be a
housing, nor assume the sole responsibility for fulfilling the
continuing evaluation and projection of Government-assisted
goals so established. We have long been a nation housed by
and conventional housing programs, and the relevant factors
the efforts and initiative of the private home-building indus-
affecting production, if there is to be tangible progress in
try and private institutions. I feel that it is the Government's
replacing substandard units and coping with housing needs.
proper function to encourage and stimulate this approach.
Q.
Legislation in the housing field is one thing. Producing the housing is sometimes another. What
can a President do to make these laws achieve their full potential?
HUMPHREY: If elected President, I would offer the type
Government fully advised of any factors that adversely
of leadership that would encourage HUD to use accom-
affect housing production so necessary action can be taken.
plishment rather than caution as its guide. Competent and
HUD has taken some actions to expedite housing
committed personnel will be made responsible for the
production. Average time from FHA application to occu-
administration of all housing and urban programs,
pancy has been reduced by one-third. A "turnkey" public
I would count on the NAHB to use its ready access to
housing technique has enabled private builders to improve
both the President and Congressional leaders to prod us if
housing production and serve the low income group. The
our efforts were lagging or if our administration was
1968 Housing Act creates the authority for new urban
cumbersome. The NAHB must keep both branches of the
renewal procedures to make land available faster.
NIXON: The President has much at his disposal to bring
housing industry and be familiar with the problems.encoun-
about the effective implementation of our laws. However,
tered in the field. Past obsession with theory and concepts
the relization of their full potential is dependent not only
must give way to an emphasis upon production, practicali-
upon their inherent workability, but upon the manner
ties and expeditiousness. I will direct an immediate self-ap-
in which the laws are administered. As President I will
praisal by the Department of Housing and Urban Develop-
provide direction in this regard.
ment in order to see how these burdensome hurdles can be
It is not hard to understand why private business
overcome. I have pointed out my interest in enlisting the
shows so little enthusiasm for becoming involved in many
skills and resources of private industry in the field of
of our urban programs. The time consuming delays, red
low-income housing production. In line with the need to
tape and bureaucratic entanglements that have been more
make the production of such housing more attractive to the
the rule than the exception must be eliminated. Administra-
builder and investor, I feel that we should consider central-
tors must be knowledgeable about and communicative with
izing the responsibility for the administering of all low-in-
the industry they are responsible for dealing with. They
come housing programs. This is an area that is much in
must be aware of the technological in's and out's of the
need of streamlining.
WALLACE: As President, I would appoint a commission to
ties administering the program.
study the residential and community needs of the American
Supplying the 1.5 million housing units a year which
people and to recommend solutions for meeting all housing
will be necessary in the next decade would make this
and production needs of the American people, and serve as
a continuing up-to-date information and planning service
question of paramount interest and it would receive my full
for private industry as well as for the states and municipali-
indorsement as your president.
38
JOURNAL OF HOMEBUILDING
Q.
The housing goals of the 1968 Act are based on estimates of the size of the need and demand
for housing in the immediate future, but even meeting present housing needs and demands is
straining credit resources. How would you go about finding and tapping new sources of mortgage
money? And what fiscal, monetary and tax policies would you follow to assure an adequate supply
of credit?
NIXON: As I have stated, the setting of realistic housing
niques for tapping private capital markets for the home-
production goals is a needed addition to overall economic
building industry. I vigorously support the provision in the
and social planning. However, while both need and demand
1968 Act which authorizes the newly constituted Govern-
are readily apparent I am concerned over the realism of the
ment National Mortgage Association to guarantee privately
production goals underlying the 1968 Act.
issued securities backed by FHA, VA and Farmer's Home
Notwithstanding the many obstacles confronting it, the
Administration mortgages. This emphasis on private as
home-building industry produced around 1.3 million units
opposed to direct Government financing has great potential
in 1967 of which some 55,000 were Government-assisted.
for raising mortgage investment funds in the capital mar-
The 1968 Act contemplates Government-assisted starts
kets, particularly from the largely untapped pension trusts
alone of 1.2 million over a three year period. Even if total
and other institutional investors. Additionally, the debenture
production approaches an annual figure of 2 million, as I'm
mechanism of the National Home Ownership Foundation
sure can be done if your industry can operate in a healthier
Act should be explored further. Tax incentive measures
climate than has been the case during the past several years,
should be considered.
the Act tends to edge the Government toward too promi-
But very importantly. my administration will not stand
nent a position in the overall housing picture. The current
idly by and allow a repetition of the policies and misman-
shortage of trained labor, land, materials and mortgage
agement that brought on the tight-money crisis of 1966 and
credit makes it hard enough for the private producer of
precipitated the near collapse of the building industry.
housing to meet conventional market demand. While a
Higher building costs, the drying up of mortgage investment
reasonable amount of publicly-aided housing must be pro-
sources and the highest interest rates since the Civil War are
duced to meet social objectives, such increased competition
the hallmarks of the present administration's inflationary
for these available resources would aggravate the situation.
policies. My administration will implement responsible fiscal
Whatever level of production we set out to achieve,
and monetary policies that will restore the worth of, and
eventual success will depend on the improvement of tech-
confidence in, the dollar.
WALLACE: Effective solutions to finding new mortgage
rising discounts which rob builders of legitimate profits and
money sources may come about through a further attraction
rob homeowners of earned equities at the time of sale or
of pension funds. Mortgage interest rates must remain
resale of a home.
competitive and not be controlled by the whims of political
A premium should not be paid to finance homes in
groups. Effective results must come from the great source
connection with Federally insured or guaranteed mortgages.
of private enterprise with less, not more, Federal assistance,
Financing is a component of the finished home the same as
as I have previously stated, in a fiscally responsible manner,
brick and lumber and should be governed by the law of
so that the housing industry will no longer be plagued with
supply and demand.
HUMPHREY: First, in our pursuit of the twin objectives
establish a National Urban Development Bank with capital
of economic growth and price stability, we must adopt a
privately subscribed so that it would not be a charge on the
mix of credit and budget policies that will not treat home
Federal Budget. It would attract investment capital for
building as a step-child. as has been the tendency in the
housing through Federally-guaranteed bond issues, to invest-
past, but will give housing the high priority it deserves. This
in mortgages and to assure the consistent availability of
means probably more reliance on fiscal actions to keep the
mortgage funds at reasonable interest rates. These bonds
economy growing smoothly, and less reliance on credit
should be purchased as investments by the trust funds of
restraints. It means, moreover, that when credit restraint is
the Federal Government involving social security and other
invoked, precautions are taken to enable home builders to
programs.
participate at least on equal terms in the credit which is
The new Act provides for a National Housing Partner-
available.
ship to attract corporate savings to housing. The single
Over the long run, to finance the growing demands for
purpose of the national partnership will be the development
housing investment on an ever-increasing scale, we shall
of subsidized housing. It offers an opportunity and tax
have to devise new institutions and practices to tap the
incentives for`major corporations to invest in such housing
growing volume of savings. I have already said that I would
on a large scale and to spread the risk over many projects.
Q.
There has been a great deal of attention paid lately to the question of whether there is some
technological breakthrough that will dramatically reduce the cost of housing, or whether this
could be accomplished by some major reorganization of the industry. What are your views?
(Continued on next page.)
OCTOBER 1968
39
WALLACE: I am in favor of a return to the private
tices should come from research programs such as that of
enterprise system of individual builders fulfilling the hous-
the National Association of Home Builders' and suggestions
ing needs of all people. This system has efficiently and
economically produced 35 million housing units in the last
from such groups would receive every consideration during
two decades. Possible cost reductions in construction prac-
my administration.
HUMPHREY: I don't think there's any question but that
million new urban Americans expected by the end of the
more research and development work is needed in housing
century, we have to keep looking for new techniques to
technology. The current Administration pioneered in this
reduce housing costs.
area; only after the formation of the Department of Hous-
We've also got to evaluate the other institutional ar-
ing and Urban Development less than three years ago were
rangements which, together with the home builders, play a
any meaningful funds appropriated for this purpose. As
part in delivering a home to the consumer-the financing
President I would use my best efforts to continue and
of homes, the cost of land, building codes, zoning ordi-
expand this activity. We cannot count on any spectacular
nances and so forth.
breakthrough in housing technology-but if we're going to
In short, we have to look constantly for both techno-
meet our goal of giving every American a decent home and
logical and institutional advances while doing the best we
if we're going to provide decent housing for over 100
can with what we have to cut costs of decent housing.
NIXON: I feel that this technology is for the most part
the housing industry will require a degree of cooperation
available and ready to be applied. although there must be
and understanding between Government, industry and labor
continuing research and experimentation by both Govern-
that seems to have eluded us thus far. Leadership and
ment and industry. The Government should particularly
understanding in negotiating such cooperation will be a diffi-
encourage leadership in this area by private enterprise
cult but essential task of the next administration, for cer-
where the expertise exists, and provide the necessary mo-
tainly something must be done to prevent building costs
mentum by showing more concern over rising building
costs. What the Government should do immediately is to
from outreaching the economy. The home-building industry
encourage the free and unencumbered application of exist-
can best determine the need for its own reorganization, but
ing technology and eliminate the barriers stifling its full
I certainly would hope that the vital role played by the
application. The application of cost-cutting technology in
small and medium size builder remains intact in the future.
Q.
A shortage of labor is plaguing the housing industry. So far we have been unable to make any
real progress in breaking through some of the barriers to correcting this shortage. The current
Labor Department apprenticeship programs are not able to cope with the massive manpower
needs in the housing industry. What do you think might be done in the labor field and through
which Government agencies to correct this problem?
HUMPHREY: The pattern of feast or famine which char-
the demand for workers is such that crash programs must
acterizes the residential construction industry is reflected in
be implemented. it should be possible to employ workmen
the adequacy of the work force. When there is a slowdown
with a limited range of skills and defer further training until
in home building some skilled workmen leave the industry.
the situation is less urgent.
When the pickup comes, there are shortages. Thus, efforts
Besides crash programs and shortened programs, train-
to stabilize the industry are necessary to the maintenance of
ing programs must be expanded, geared to real employment
an adequate work force.
opportunities. In urban areas to be improved with Federal
Moreover, a greatly expanded work force will be
aid, manpower and training programs must increase the
needed to meet our expanded construction goals. In some
employability of the residents of such areas so they can get
cases, current training programs can be shortened, but we
productive jobs in carrying out the assisted activities.
must be sure that they provide the trainee with the skills
We must strive for a situation where any willing and
required to produce housing efficiently. In residential
able young man in this country can learn a trade, become a
construction, however, some operations require only part of
productive member of a growing home-building industry,
the skills generally associated with a specific craft. Where
and can earn a good living for himself and his family.
NIXON: The problem of assuring an adequate supply of
I fully agree that the Labor Department's manpower
trained labor for the building industry must be solved if our
training programs have been ineffective in implementing
nation's housing needs are to be satisfied. The industry has
the Manpower Development and Training Act passed in
yet to fully recover from the aggravation of the shortage of
1962. It was a full six years before the Labor Department
manpower precipitated by the 1966 tight-money crisis, and
launched any meaningful programs under the act. I believe
thus the need for a solution is even more critical than it
that the effective administration of existing statutory au-
would otherwise be. It is estimated that 700,000 additional
thority can do much both to provide employment opportun-
workers will be needed in the building industry by 1975,
ities for those presently having adequate skills and at the
not counting the possible impact of recently enacted Gov-
same time furnish the manpower needed by your industry.
ernment-assisted housing programs. Yet there are thousands
I also believe that much can be done to improve the handling
of unemployed young men and inner city residents who,
of unfair labor practice complaints. A substantial overall
with the proper training, could be added to this labor pool.
streamlining of the NLRB is essential. Improving the co-
40
JOURNAL OF HOMEBUILDING
operative relationship of labor and management can do
marketable skill by the time he graduates. Such an expand-
much to improve the effectiveness of your industry.
ed program should include job categories related to the
I have urged a more aggressive national program for
housing industry, and allow conjunctive work-and-learn
vocational training so that every youngster entering public
"trainee" job opportunities. I have proposed a national
high school will have the opportunity to learn at least one
computer job bank to bring men and jobs together.
WALLACE: As governor of Alabama I instituted a strong
living in ghetto areas who are currently receiving welfare
program of trade schools throughout our state in which
"handouts" and thereby placing those who are willing to
young men could receive training for skilled and semi-
learn and work in the status of employed, productive,
skilled work in the construction industry. Management
taxpaying citizens.
working in close cooperation with trade unions will be
There are certainly sufficient agencies now in existence
asked to advise my administration in establishing such a
program on a national level.
to handle this problem. A consolidation of some overlap-
The tax load on our citizens could be greatly reduced
ping programs would allow this problem to be treated more
by similarly providing training facilities for those persons
efficiently.
Q.
Other impediments to housing production, particularly in the low-income field, are local codes,
local zoning and local attitudes. NAHB has consistently worked to overcome these impedi-
ments. Is there a Federal role that could help? And how do you view Federal inducements and in-
centives in this context?
NIXON: No matter what level of authorizations or appro-
There has been a measure of success in the area of
priations we maintain for the various Federal urban pro-
code enforcement through Federal incentives. But clearly,
grams, if they are inconsistent with local building codes,
the initiative for more uniformity must come from local and
local zoning and local attitudes they will be essentially
state authority and from privately sponsored national
unworkable. Your organization is to be commended for its
groups who pursue these objectives. While I do not feel that
efforts to lower building costs through code improvement.
the Federal Government should unduly intrude on such
The Douglas Commission's upcoming report should con-
purely local responsibilities my administration would en-
tribute to a better understanding of this problem.
courage and sustain efforts in this area.
WALLACE: As stated previously, I am in favor of a
Federally controlled subsidies. Problems, such as codes and
general support payment from the U. S. Treasury to allow
zoning. vary greatly from state to state and can best be
local governments to meet these problems at the level of
solved by local and state authorities aided by the informa-
city government. Cities are becoming overburdened with the
tion services which I have proposed, which could greatly
costs of such governmental actions and should be aided
directly rather than by Federal intervention and funding.
assist the local authorities in modernizing and improving
Local governments can and should solve local problems by
local codes and zoning ordinances where such problems are
a program of Federal revenue sharing rather than by
encountered.
HUMPHREY: We must overcome all impediments to
ments to acquire land for future needs, to permit economical
housing production. Appropriate land use policies will be
and orderly development of housing of all kinds and to
one of the great challenges of the next decade. We must
ensure land for public use at minimum cost to local
face this challenge squarely. To meet our housing goals we
governments.
will have to consume 60% more land per year than we are
Third, we must examine ways to overcome zoning
currently doing.
barriers where they conflict with housing needs. Such barri-
The Federal Government must respond with sound
ers lead to uneconomic use of land and militate against
policies to this challenge. I believe there is a Federal role
sound community development. Needless to say. these prac-
here, primarily in encouraging states and localities to act to
tices also penalize those builders who participate in Federal-
remove these impediments. In this regard I am hopeful that
ly assisted housing programs.
the Douglas Commission, which was charged by the Presi-
Fourth. we must encourage adoption of more uniform
dent to study these very constraints, will add to our under-
building codes. This will stimulate technological advances
standing of their effect on housing production and will
and enable an expansion of the housing market.
recommend alternative courses of action to deal with them.
Fifth, we must develop an active Federal research
The Federal Government can also help to encourage
program that will examine those impediments to housing
rational and economic use of land, which is both a national
production fostered by Federal policies.
resource and a major component of the cost of housing and
The Federal Government should not attempt to exer-
of supporting public facilities.
cise control over such matters as codes and zoning which are
First, we must reduce and stabilize the cost of land.
subject to local authority. However. the Federal Govern-
State and local governments should be encouraged to adopt
ment should use its influence to improve codes and zoning
uniform subdivision regulations to avoid unreasonable addi-
policies. I would hope that encouragement and leadership by
tions to cost. Where feasible, Federal aids for technical
the Federal Government would suffice for this objective but
assistance should be provided.
it may be necessary in allocating Federal resources to assure
Second, we must stimulate and assist local govern-
that there are improvements in these critical functions.
OCTOBER 1968
41
RN NY
JGT WASH
TO: ALAN GREENSPAN
FROM: TOM COLE
RE: DRAFT STATEMENT ON THE ROLE OF SECURITIES INDUSTRY IN NATIONAL
ECONOMY
SENATOR TOWER FEELS, GREENSPAN, BEING WELL VERSED IN THIS FIELD, SHOULD
HAVE MAXIMUM INPUT. PAPER AS NOW WRITTEN MAY BE TOO INDUSTRY-ORIENTED.
FOLLOWING IS COMMENTS FROM GOP BANKING AND CURRENCY COMMITTEE STAFF
MEMBER WHICH MIGHT BE HELPFUL TO YOU:
PARAGRAPH 1
LOOK FOR THIS. S0-CALLED "REGULATORY SCHEMES" WERE RECOMMENDED
BY THE WHARTON REPORT. MAY HAVE TO USE SOME REGULATION, SO BEST
SUGGESTION MIGHT BE TO AIM TOWARD "SELF REGULATION" IDEAS THAT WOULD
ENCOMPASS COMPARABLE PENALTY FOR FAILURE OR BREAKDOWN IN SUCH REGULATION
PARAGRAPH 4
THERE CAN BE NO ENTIRELY "INDEPENDENT" STUDY AS LONG AS SOMEBODY HAS TO
PAY FOR IT. WHARTON STUDY WAS PAID FOR BY SEC. WHETHER THAT HAD ANY-
THING TO DO WITH WHARTON RECOMMENDATIONS BEING FAVORABLE, FOR MOST PART
TO SEC THINKING OR WHETHER IT IS PURE COINCIDENCE IS ANYBODY'S GUESS.
SPARKMAN'S S.J. RES. 160 CALLING FOR A STUDY OF THE TOTAL ACTIVITIES OF
INSTITUTIONAL INVESTMENT WILL BE DONE BY SEC-DIRECTED EMPLOYEES OPERAT-
ING UNDER AN APPROPRIATION IN THE SEC ACT OF $875,000. THIS COULD
HARDLY BE CALLED AN INDEPENDENT STUDY WHICH IS DEADLINED FOR NEXT SEPT.
THIS IS THE TYPE OF PRIVATE ACTIVITY, HAVING GREAT. EFFECT ON THE TOTAL
ECONOMY, WHICH REQUIRES EXPERT KNOWLEDGE OF THE INDUSTRY AND WHICH
CURRENTLY IS IN DEEP CONTROVERSY.
I WOULD, AT LEAST, STRIKE THE WORD "INDEPENDENT" IT MIGHT EVEN BE A
"DEPENDABLE" STUDY.
PARAGRAPH 5
NO STUDY OF THE NATURE MENTIONED IN THIS STATEMENT SHOULD BE MADE
WITHOUT RECOMMENDATIONS FROM SUCH AGENCIES AS THE JUSTICE DEPT.
SINCE IT IS A FOREGONE CONCLUSION JUSTICE WOULD BE INVOLVED. THIS
REFERENCE COULD BE ELIMINATED.
PARPGRAPH 7
IT WOULD SEEM TO ME THE REPUBLICAN NOMINEE COULD FIND SOME OTHER LABET
FOR LEGISLATION THAT "TRUTH" IS ANYTHING. "TRUTH-IN-LENDING", "TRUTH-
IN-PACKAGING", ETC. HAVE ALL BEEN MISNOMERS.
I DO NOT SEE WHY WE COULDN'T USE "ASSURING THE EXACT QUALITY OF SECURI-
TIES" HAS BEEN THE ORDER OF THE DAY
FINALLY, I WOULD MOVE CAUTIOUSLY FOR THE TIME BEING ON THIS SUBJECT
DUE TO WHAT MIGHT BECMOE A REAL CLAMBAKE IN THE SECURITIES FIELD OVER
THE RECENT EXPOSURE ON "TIP SALES"
SEC'S "DOMINATION" OVER THE INDUSTRY MAY NOT BE BLAMED FOR THIS ONE.
END STOP W
Chuck:
adams Comments, as indicated. Call me
DRAFT STATEMENT ON THE ROLE OF
B. Harbow
THE SECURITIES INDUSTRY IN THE NATIONAL ECONOMY
at EX3. 3366 if you would find discussion useful,
This is a great paper
for adams
Today, one out of every eight Americans ownsshares
of mutual funds or common stocks in American industry.
Directly, and indirectly, one hundred million Americans
benefit from stock investments by way of pension plans or
Individual
insurance policies. This broad base of public ownership
of American industry is the foundations of our free
economic Democracy.
lnot
The fantastic growth of our securities industry and
the dramatic increase in public participation has over
been accompanied by an increasingly large
burdened our Nation stock exchanges, and raised questions
about the impact of institutional invest on the market
This development and other changes in securities markets reminder is a
and on our economy
the effectiveness of existing law
that
in providing full and adequate protection for the investor,
must be constantly reviewed.
These are sophisticated, complex questions. The
reaction of this administration to these new challenges,
however, has been simply to trot out the same tired old
"cure-alls" of the Eemocratic party, that is more heavy-
handed bureaucratic regulatory schemes.
What is needed- and it will be a first priority of
my administration- is an independent, comprehensive, economic
study of the role of financial institutions in our economy,
the relationship of financial institutions to our nation's
the
growth, requirements for investor protection and the inter-
relationship of all financial institutions, banks, savings
(Being specific here raises
bank the underwriting such ugly banks problems entering as
the mutual fund area, "parity of
regulation" for S+L's insurance Co's.
etc. The candidateneed not directly
open up this area.
institutions, insurance companies, maiyal funds and pension
plans. Such a study is imperative before steps are taken
which might seriously impair the nation's ability to continue
to raise the capital needed for its future economic growth.
During the past Congress, a joint resolution was adopted
authorizing an SEC study which would involve some of these
issures. Even before the study was initiated, however, the
initiation of that
certain
Justice Department and the SEC advanced proposals designed
to revise the basic character of the securities market,
involving drastic basic changes in the stock exchange rate structure If fully
imple mented and altering the economic
these proposals would drastically
relationships of brokerage firms,
institutional investors and individual investors. Tragically,
those hurt most by these rash proposals were the small
broker dealer, where the small independent businessman, would suffer the
most under these proposals.
The administration further ^ sought wide sweeping new
regulatory powers over the mutual fund industry, which
powers would be tantamount to "rate fixing" in a highly
competitive industry. Agencies of the administration have
sought, sometimes with, but more often without legislative
authority, to establish bureaucratic domination over the
competitive relationship and everyday activities of banks,
savings institutions, insurance companies and institutional
investors.
3
Rather than attempt to dominate the securities markets,
the Federal Government should seek to encourage self-
regulation, which has operated SO successfully in this
industry. over the years. The free and healthy operation
The securities warkets
of the market is of utmost importance to the investor
more
have mabled millions of Americans to articipate in the great leonomic growth in our
over, the orderly growth of the industry and its ability to
Country they provided The market has provided a climate which ancourages
underwriters
attract new investment the fl of equity capital
and to make new investments and provide the capital
essential to our Nation's economic well-being and expansion.
The actions of this administration have been character-
ized by a legalistic and bureaucratic approach rather than one
sensitive to the needs of our free economic system. Another
priority ofmy administration , and an important plank in the
Republican platform, is a thorough and long overdue study
of the Executive Department by an independent commission
patterned after the Hoover Commission. One of the major
items on the agenda of that commission must be a determination
of the proper role which those agencies now regulating our
economic institutions are to play in insuring our nation's
economic stability and growth.
Our securities laws were designed to protect the
investor by insisting upon full and complete disclosure.
"Truth in securi ties has been the order of the day since
the Securities Actsof the 30's were was written. I believe in the
full enforcement of the securities law to assure absolute
protection for the investor; abuses of these laws should be
vigorously prosecuted. I believe furthermore that the
Federal Government should be continually sensitive to the needs
for improvement in these laws to assure investor protection.
The philosophy of this administration, however, has been that
disclosure alone is not enough and that the government can
make decisions for the investor better than he can make them
for himself. This philosophy I reject.
By its actions, my administration will evidence its
faith in the American investor and in the strength and
viability of American financial institutions so essential
Economy
to the success of our free economic demperacy.
Statement By affirmed Richard as - NIXON
DRAFT STATEMENT ON THE ROLE OF
B. Honton
THE SECURITIES INDUSTRY IN THE NATIONAL ECONOMY
450 Park are
5
Today, one out of every eight Americans owns shares
New you k city
of mutual funds or common stocks in American industry.
Sept 25,1968
Directly, and indirectly, one hundred million Americans
benefit from stock investments by way of pension plans or
Individual
insurance policies. This broad base of public ownership
of American industry is the foundation of our free
economic Democracy.
The fantastic growth of our securities industry and
the dramatic increase in public participation has over-
burdened our Nation's stock exchanges, and raised questions
about the impact of institutional investing on the market
and on our economy, and the effectiveness of existing law
in providing full and adequate protection for the investor.
These are sophisticated, complex questions. The
reaction of this administration to these new challenges,
however, has been simply to trot out the same tired old
"cure-alls" of the democratic party, that is more heavy-
handed bureaucratic regulatory schemes.
What is needed- and it will be a first priority of
my administration- is an independent, comprehensive, economic
study of the role of financial institutions in our economy,
the relationship of financial institutions to our nation's
growth, The requirements for investor protection and the inter-
relationship of all financial institutions, banks, savings
institutions, insurance companies, mutual funds and pension
plans. Such a study is imperative before steps are taken
which might seriously impair the nation's ability to continue
to raise the capital needed for its future economic growth.
During the past Congress, a joint resolution was adopted
authorizing an SEC study which would involve some of these
could be
issures. Even before the study initiated, however, the
Justice Department and the SEC advanced proposals designed
after
to
revise the basic character of the securities market,
involving drastic changes in the stock exchange rate structure
and altering the economic relationships of brokerage firms,
institutional investors and individual investors. Tragically,
who would Suffer
are
those hurt most by these rash proposals were the small
broker dealer the small independent businessman.
has
The administration further sought wide sweeping new
^
regulatory powers over the mutual fund industry, which
powers would be tantamount to "rate fixing" in a highly
competitive industry. Agencies of the administration have
sought, sometimes with, but more often without legislative
authority, to establish bureaucratic domination over the
competitive relationship and everyday activities of banks,
savings institutions, insurance companies and institutional
investors.
Rather than attempt to dominate the securities markets,
the Federal Government should seek to encourage self
regulation, which has operated SO successfully in this
industry over the years. The free and healthy operation
To THE
of the market is of utmost importance to the investor;
Nation
the orderly growth of the industry and its ability to
attract new investment provides the flow of squity capital
essential to our Nation's economic well-being and expansion.
The actions of this administration have been character-
ized by a legalistic and bureaucratic approach rather than one
sensitive to the needs of our free economic system. Another
priority ofmy administration , and an important plank in the
Republican platform, is a thorough and long overdue study
of the Executive Department by an independent commission
patterned after the Hoover Commission. One of the major
items on the agenda of that commission must be a determination
of the proper role which those agencies now regulating our
economic institutions are to play in insuring our nation's
economic stability and growth.
Our securities laws were designed to protect the
investor by insisting upon full and complete disclosure.
Tris
11 Truth in securities has been the order of the day since
were
the Securities ActSof the 30's was written. I believe in the
full enforcement of the securities law to assure absolute
protection for the investor; abuses of these laws should be
vigorously prosecuted. I believe furthermore that the
Federal Government should be continually sensitive to the needs
for improvement in these laws to assure investor protection.
The philosophy of this administration, however, has been that
disclosure alone is not enough and that the government can
make decisions for the investor better than he can make them
for himself. This philosophy I reject.
By its actions, my administration will evidence its
faith in the American investor and in the strength and
viability of American financial institutions so essential
to the success of our free
758.8460
X
John Haire
Chairman, Board of Governors
Burestumen T Compusitestite
425-6410
Lucy(98)
Securities Statement -
Insar
A
"
Ratner than actempt to documents
the Security the Fedewa GOUT Should
Self regulation which
See k to encourage ^ for for free of healthy
Gueration of two walketplace has work her operated
by years.
over the
So Sufferefully 19 my. in this industry. & Free
and healthy whanver operation of the
marves is of Critical seal in instance to the
investor huozover, the advaction of
New and the anderly growth of the
and its atility to actuals new investment
industry provides two flow of n equaly
esseytial to
Capital n Sun Nation's E commonic
Expansion well houng and expension.
AMOU
Advid
Current
XERO
(CERO
Gueo BU- from 33
DRAFT STATEMENT ON THE ROLE OF THE
SECURITIES INDUSTRY IN THE NATIONAL ECONOMY
Today, one out of every eight Americans own shares
of mutual funds or common stocks in American industry.
Directly, and indirectly, one hundred million Americans
benefit from stock investments by way of pension plans or
insurance policies
Nowhere is the greatness of the American
economic system more dramatically exemplified than in the
tremendous increase in the number of individual shareholders
This broad base of public ownership of American industry is
the foundation of our free economic Democracy.
The fantastic growth of our securities industry and the
drawitic increase in
I
ever increasing public participation has created now problems
Questions
^
tit
I
overburdened condition our Nation's stock
of
and rained Questions about
exchanges. The enormous increase in institutional investment
has raised new public policy questions, the impact of institutional
investing on the market and on our economy, and the effectiveness
of existing law in providing full and adequate protection for
the
Ill investor. These are Sophisticated Com plax Queotions new Challenges prothers
The reaction of this administration to these issues,
however, has been simply to trot out the same tired old "cure=alls"
of the democratic party, that is more heavy-handed bureaucratic
regulatory schemes.
083X
- 2 -
What is needed - and it will be a first priority of
my administration - is an independent, comprehensive, economic
study of the role of 62112 financial institutions in our economy,
the relationship of BOX financial institutions to our nation's
growth, requirements for investor protection and the inter-
relationship of all financial institutions, banks, savings
institutions, insurance companies, mutual funds and pension
plans. Such a study is imperative before steps are taken which
Empair
might seriously affect the nation's ability to continue to raise
the capital needed for its future economic growth.
During the past Congress, a joint resolution was adopted
SK
authorizing anstudy which would involve some of these issues.
was
Even before the study initiated, however, the Justic Department
^
and the SEC advanced proposals designed to revise the basic
character of the securities market, involving drastic changes
in the stock exchange rate structure and altering the economic
relationships of brokerage firms, institutional investors and
individual investors. OH administration further sought wide
sweeping new regulatory powers over the mutual fund industry,
which powers would be tantamount to "rate fixing" in a highly
competitive industry. Agencies of the administration have
sought, sometimes with, but more often without legislative
those huntmos by these
Traginaly rase printing wer the Sureet
business independent teacher, the Small businesswan
A.W.
our
)
OUJX
- 3 -
authority, to establish bureaucratic domination over the com-
petitive relationship and everyday activities of banks, savings
institutions, insurance companies and institutional investors.
1000
A000
ATTO.)
083X
083X
- 4 -
however, has been that disclosure alone is not enough and that
the government can make decisions for the investor better
than he can make them for himself. This philosophy I reject.
91
By its actions, my administration will evidence its faith in the
American investor and in the strength and viability of American
financial institutions so essential to the success of our free
economic democracy.
insured
In short, in areas affecting the viability of our financial
institutions, the actions of this administration have been
characterized by a legalistic and bureaucratic approach rather
than one sensitive to the needs of our free economic system.
Another priority of my administration, and an important plank
in the Republican Platform, is a thorough and long overdue study
of the Executive Department by an independent
commission patterned
after the Hoover Commission. One of the major items on the
agenda of that commission must be a determination of the proper role
which those agencies now regulating our economic institutions are
to play in insuring our nation's economic stability and growth.
Our securities laws were designed to protect the investor
by insisting upon full and complete disclosure. "Truth in
securities" has been the order of the day since the Securities
Act of the 30's was written. I believe in the full enforcement
of the securities law to assure absolute protection for the
investor; abuses of these laws should be vigorously prosecuted.
I believe furthermore that the Federal Government should be
continually sensitive to the needs for improvement in these laws
to assure investor protection. The philosophy of this administration