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Remarks of the Vice President at the National Association of Manufacturers Luncheon in New York [Speeches by Others]
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Remarks of the Vice President at the National Association of Manufacturers Luncheon in New York [Speeches by Others]
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Digitized from Box 18 of the White House Press Releases at the Gerald R. Ford Presidential Library
FOR IMMEDIATE RELEASE
DECEMBER 5, 1975
Office of the Vice President
(New York, New York)
REMARKS OF THE VICE PRESIDENT
AT THE
NATIONAL ASSOCIATION OF MANUFACTURERS LUNCHEON
THE WALDORF-ASTORIA HOTEL
NEW YORK, NEW YORK
(AT 12:40 P.M.)
Thank you very much, Don, particularly coming from a fellow
New Yorker, while we are speaking of that and His Honor, the Mayor
is here to honor this distinguished group. Don't forget your
Christmas shopping while you are here.
(Laughter.)
That city sales tax is going to be very helpful. Ladies,
don't especially hold back at all.
(Laughter.)
To Dave and to Dick, and I would like to say how much I
enjoyed that speech of yours, Dick. It covers so beautifully and
so effectively the role of free enterprise, themeaning of free
enterprise and the responsibility of free enterprise in this great
free nation of ours and the system that is under some challenge
in the world today.
Heath who is just starting, I would like to congratulate
him also, and say what a pleasure it is to be associated with him
in Washington, on this Productivity Commission which is a matter of
tremendous interest to all of us in this room.
To Doug Cannon, congratulations and I would like to
especially mention Dick's invocation. I thought that was very
beautiful, very sensitive. I would like to thank him and say we
need a little more of that in this country.
To all of you ladies and gentlemen, thank you very much
for inviting me and giving me the opportunity of being here. It
is a great honor.
I like your slogan, or whatever you want to call it, for
this year, for the members of the future. That is what I would
like to talk about today. I was very impressed with Dick's
comment about the delicate balance between hope and fear. Of course,
government's role in that can tip that balance one way or the other,
which is good or bad, depending on which way you tip it.
The bureaucracy and the red tape are unfortunately on
the negative side if not handled properly and it can be a deterent
which can be very serious. That is one of the things I have
talked about in previous meetings with some of you. But that is
not the purpose of what I would like to say today.
MORE
Page 2
First, I would like to pay a tribute to the men and women
who are in this room because as Dave was telling me, you represent
80 percent of industrial production in this country, 80 percent of
industrial employment. Of course, as we all know, private enter-
prise pays 85 percent, directly or indirectly, the taxes of Federal,
State and local government.
What happens in your lives as individuals and as corpora-
tions is vital to the future of this country and this country's
capacity to meet its responsibilities in the social fields on a
sound basis and internationally.
You represent here in this room, the creative genuis of
America, the managerial skill, the ability to apply research and
technology to the meeting of America's needs.
It is your vision and your courage, your willingness to
take the risks that Dick was talking about and invest the capital
that has built America and given it the extraordinary strength
which we have enjoyed. But we have to remember the future.
That is the question. Are we going to preserve this
system with its vitality or are we going to see this country move
in the direction that unfortunately some other great capitalist
societies have moved in.
I just happen to think that it is the greatest and the
most productive system that civilized man has ever invented. We
have got to keep it. I am delighted. Dave has been telling me at
lunch about the plans that you and the other national organizations
are working on in relation to education of the people in this
country of the meaning of this system, of how it works, what it
takes to make it work.
Of course, a very sensitive and important part of that
is the relationship with government and the framework which freedom
of government can create, and must create and therefore, the
importance of the relationship of Congress and the Executive Branch.
Today I would like to talk about energy and our national security
and our economic and social vitality.
Let's face it, ladies and gentlemen, we have got to have
the courage to tell it like it is and look at the hard realities
and face up to those realities. This is one of the fields that
I think is most important that we do it in.
Scotty Reston had a very interesting piece in The Times
this morning, his column. I am one of his fans. He said, "Cheer
up," which is the title of this, "Cheer up, things are terrible."
(Laughter.)
Then he says in the first two opening paragraphs, "The
only happy thought around these days is that so many things are
going wrong that maybe something will finally be done about them,
but only maybe.
MORE
Page 3
"It is a well known rule in Washington that nothing
compels reform like some imminent disaster or spectacular
stupidity. Now we have got so much of both on the national
agenda that you have to have some hope."
(Laughter.)
I would like to make one other quote. That is from
Governor Briscoe of Texas. I was down there last month on a
Domestic Council hearing which we were having on domestic
policy and program review, which we have been having a series
around the country for the President.
Speaking on the subject of energy, Governor Briscoe
said that if we had responded to the attack on Pearl Harbor
as we have as a nation responded to the energy crisis, he
said we all would be speaking Japanese by now, here in the
United States.
(Laughter.)
That wasn't a bad analogy. Secondly, he went on to
say that at that time, Senator Vandenberg, who many of us knew
and all of us admired, immediately came out for a bipartisan
foreign policy and that our domestic-political squabbles should
stop at the water's edge and that we should be united in facing
the problems in the world.
The Governor said and I agree with him, that the time
has come politically to be united in solving one of the most
serious problems that we face; that is, the energy crisis.
It happens to be within our country, but is of course, closely
related to the international situation.
I think we have got to halt the domestic-political
squabbles on this subject, just as they did at that time on our
international affairs. What this nation can do when it puts
its mind to it, when the people are determined, just is abso-
lutely unlimited.
Let's take a look at, a minute, on the increasing
growing dependence that we have on imported oil, resulting in a
growth of our vulnerability to our national security. Those
of you who come from the East Coast know we depend on about 80
to 90 percent of the oil for heating and generation of electricity
and so forth which depends on imported energy, and for the basic
strength and vitality of our economy, increased job opportunities
and our way of life.
Energy is the basis of an industrial society and it is
the basis of our way of life. We accept it. We take it for
granted. We have enjoyed cheap energy for generations. Now
it has been very difficult for us as a nation and as a people to
face up to the hard realities.
You won't believe it, but I was at a Mid-west Governors'
Conference and none other than Governor Exon asked me whether
there really was an energy crisis. He said, "How can there be
an energy crisis when we have plenty of gas and oil at the pumps?"
MORE
Page 4
I said, "You summarized it perfectly. We have plenty
of gas and oil at the pumps because we are importing now close
to 40 percent or some 38 percent."
But if we were faced with the same kind of situation
we were faced with two years ago, let's face it, we are living
in a world of accelerated change. We are living in a world
where there is growing interdependence internationally, inter-
dependence between States, between various elements of the free
enterprise system.
In that situation, if the political situation didn't
get solved in the Middle East, and if there was another boycott
of energy, what we went through before which cost us about
$10 million and a half-million jobs, what we went through then
would just be child's play as to what we would go through now.
There is a very serious question as to how, at least
in certain parts of the country, we would be able to preserve
a vitality and viability of our economic and political life.
It wouldn't be a question of waiting in line for energy at a
pump. There just wouldn't be any.
So, from a security point of view, from an economic
point of view, we are playing a very risky game, doing what we
are doing. It is two years since that first boycott situation
took place.
I don't think to this sophisticated audience one has to
say very much of how we got into this situation. We a 11 know
this country was the greatest producer of energy. In the sixties
we started to go from a surplus producer to a net importer.
In the mid-sixties, of course, then the situation
developed where the OPEC countries finally realized then, stimu-
lated by the political situation in the Middle East, that they
had an opportunity to move and they did. They increased the
prices 500 percent. Now they are up 700 percent over what they
were before. They have called for another meeting in June to
consider how much of an additional increase they will place.
This is a totally new concept in international relations,
political, economic. We talk of free markets. Energy certainly
has been a free market in the world marketplace. The President
of the United States recognizing the situation, after the studies
he went through a year ago, in the State of the Union Address
in January, he called for energy independence by 1985. And he
presented legislation which was about a 500 and some page bill,
for energy independence, which would achieve it by 1985.
When he did that and declared this was national policy,
he automatically was taking the free market as far as the United
States was concerned, from an international market to a national
market, as far as production was concerned. This became national
policy as far as the Administration was concerned.
Congress has had a pretty tough time with this problem
because it is very hard, politically. It isn't only Governor
Exon who is not aware of the fact it is a crisis.
MORE
Page 5
A very large percentage of the American people aren't
sure there really is a crisis because the energy is coming in.
We have all kinds of old legislation. So, old production is
held at Four Dollars and some cents a barrel. New production is
at a higher rate. So, the net result is there is not incentive
to increase the production either for oil or for gas.
That has been under regulations since 1954, I guess it
was. Of course, we know what the result is there. They brought
the price down. This is a perfect example what disaster government
can create when it moves into the free marketplace and sets a
price, sets an artificially low price.
Perhaps it wasn't in the beginning because it was a
byproduct in '22, or whenever they started this regulation.
Now you have got the most desirable fuel, which is gas, government-
regulated at a price way below the other fuels. Therefore, it
has grown tremendously as far as the consumer is concerned,
whether it is industrial or residential, at a totally artificial
price.
Now, we are in a situation where there is no point in
producing more because the price doesn't make it worthwhile.
Therefore, we are getting into greater and greater shortages
in that field. It is different with oil because that is an
international situation. But as far as this country is concerned,
we face a situation where we are living on borrowed time, in a
sense, domestic production going down, foreign imported energy
going up.
It ought to be close to $30 billion next year, foreign
exchange. If it hadn't been for Iowa and a lot of other States
that have this extraordinary capacity to produce food and the
world needs food, we are exporting now close to $20 billion of
grain and other food products, we would have the most tremendously
serious balance of payments problem in this country right now.
But it is just thanks to the farmers and industry which
supports them and their ingenuity in bringing in 60 million new
acres. What other country in the world could have done that,
except the free enterprise country and farm industry, backed by
the free enterprise industry, which has kept our system in
balance which is lucky.
You can't rely on luck too long without a little forward
planning. There is no other group in the world known for forward
planning, after careful analysis of the problems, more than
American industry. You have this down to a science.
Yet, here we are with the basic requirement of our
industrial society and our whole way of life, which is energy,
and there is no consistent effective national planning, in terms
of action, that is being done today to protect the future, and
not only of each one of your industries. I am talking about Ohio,
our good friend, the Governor there who just got reelected. He
has been in Washington twice on this problem of gas because they
lost 600 thousand man days of work last winter due to the
restrictions on gas that was allocated to homes.
MORE
Page 6
We had warm winters for the last two winters. Wait until
we have a cold winter. Let's pray to God that we don't. But
we should have added that to the invocation.
(Laughter.)
If we have a cold winter, we have had it. I won't get
into that because I am praying, too. But what has happened is,
and it is understandable, we have got a political situation with
a Republican Administration and a Democratic Congress, and an
election. The Congress is trying to read the public and they
are trying to figure what is going to happen next year and how
they are going to get reelected. That is the business they are
in. You have a one-year cycle. They have got a two-year cycle.
It now looks as though they were coming out of conference
between the House and the Senate with a compromise bill that would
lower gas prices until after everybody is reelected, and then
they start going up again.
By lowering them it will encourage increased consumption.
As a result of increased consumption there is further discouragement
of further production, we are going to have increased imports. And
we are going to be further dependent on a potential boycott.
I have to say in this world, in conflicting ideologies
that exist, and with what the Soviets are doing in their develop-
ment of perhaps the most unique development in the history of
naval operations, the Navy now has developed in the last
18 years or 10 years -- 18 years Admiral Gorshkov has been
responsible -- has a capacity now worldwide.
If for any reason they decide after we got into some kind
of a conflict somewhere, they can cut off the supply so it isn't
only the countries that produce it, but it is the control of the
sealanes which increasingly are getting out of our hands.
Everybody takes freedom of the seas for granted. But,
believe me, ladies and gentlemen, forget it as far as that being
something you can take for granted in the future. It just isn't
going to be true the way things stand today.
Therefor, we are doubly vulnerable on the imports. The
extraordinary thing is we have this unbelievable God-given wealth
of natural resources. We have the capability to produce the
energy from a series of different sources here within our own
country.
Obvicusly, the days of cheap energy are gone. But we
have that capacity and you have the technology to develop, or you
have the scientific capabilities and technological capabilities
to develop the production, if the incentives are there and if that
balance between the risks and the fears, or the advantages and the
fears, or whatever. What did he call it? Opportunities and fear,
whatever it was, that balance if the incentive is there.
MORE
Page 7
It has been estimated that to produce an economy in this
country that is self-sufficient in energy, will take a capital
investment of approximately $600 to $800 billion by 1985. That
represents $600 to $800 billion out of what is estimated to be
needed in capital formation between $4 trillion 300 billion. That
is the estimate.
There is a little shortfall there, capital formation.
I think that is a subject I don't want to get off on too much.
But I think you ought to take a look at the figures. In the
last 13 years the U. S. has averaged 17.5 percent of GNP, capital
formation. France has averaged 24.5, West Germany 26, and Japan
35. So, we are not doing so well on percentage of GNP going into
capital formation. But that gets back to the government policies
and the incentives.
I think and feel very strongly about it. I know I
reflect the President there. There is a time for bold actions
here based on long range planning, the best interests of America
and of the American people with bipartisan support and business,
labor and government cooperation and support.
As I have said, we have got the resources. We have got
the managerial ability in the private enterprise system, to
achieve it. I have given you the costs. But we need clear
government policy and clear government incentives.
The President has recommended to the Congress of the
United States an Energy Independence Corporation with authorized
borrowing power of $75 billion and capital of $25 billion to
stimulate and take the area of risk, to get off dead center, as
far as this country is concerned in becoming self-sufficient in
energy and getting ourselves back so that we have the ability
to get, not only self-sufficiency but to then get our economy
rolling and get the jobs that are necessary and to get the
growth that is necessary and to get the strength that is necessary
and the capacity to meet people's needs at home and our responsi-
bilities throughout the world.
One could say, well, this is getting the government
into private enterprise. Just take off the restrictions and
private enterprise won't do it. That is wonderful and the
President has recommended in the bill to remove these restrictions
which are inhibiting the risktaking and making the risk too
great. But this is, as I said, an election year. There isn't
going to be action on that bill.
We might as well face that one realistically. We have
got the problem here. As the Governor from Texas said, we would
be speaking Japanese if we had acted like that in Pearl Harbor.
Let me cite some few examples of what government has
done when national policy wanted to get something achieved.
Let's go back to the railroads when we wanted railroads across
the United States.
MORE
Page 8
The government made available land, free to the rail-
roads and enough for cities or communities for which the railroad
could sell, which gave them extra money.
Take the automobile industry. That has built and
prospered because State and Federal governments have built high-
ways and communities.
Take aviation, research and development on military
airplanes, 75, 85 percent responsible for the development of our
commercial airplanes, and the government has put a lot of money
into airports and the control of airways.
Or take the nuclear industry, which is a major industry
in this country that grew out of government research and
development. Take American agriculture, which I just mentioned
and the extraordinary job which it has done. The American farmer
has had the benefit of the Federal Farm Credit system, which
is one of the most ingenious and extraordinary credit systems
in the country; the Rural Electrification, take housing, like
the automobile industry, another basicindustry in the country.
The FHA mortgages or the Veterans Administration mortgages,
these are all where we have had government action, cooperating
with private enterprise to create objectives or achieve objectives
through the free enterprise system.
Some of it has been consciously planned. Some of it
has just happened. It just seems to me that the objective has
got to be energy independence and that the Energy Independence
Corporation gives the possibility of achieving that.
I will give as a small illustration, the problem that
is probably the closest. During World War II, when the natural
rubber supply was cut off, the RFC set up the Rubber Reserve
Corporation. They worked with 5, 6, 7 companies in developing
synthetic rubber.
I don't know what the numbers are. But four or five
of them succeeded. The government sold the plants at the end.
A new industry developed. The government got its money out of
it and America is now self-sufficient in rubber, if it wants
to be.
This is not something new and to be afraid of Let
me take some of the objections. One of the principal objections woul
be the loss of capital allocation by government. When the
President or the United States said this country must become
elf-sufficient in energy and it will cost between $600 and $800
billion, if it is achieved by private enterprise, there has got
to be a capital allogation or you won't achieve it.
It hasn't gotten off dead center because of the risks,
the uncertainties. Therefore, for government to invest on a
self-liquidating basis, which is the purpose of this corporation,
either through loan guarantees, investments, lease-purchase
contracts, and then at the end of each year the corporation can
make no further commitment at the end of 10 years, it goes out of
existence. So, we are not building a permanent new bureaucracy.
And the objective is to sell all of these investments as rapidly
MORE
Page 9
as can be sold and get out of it. The government is simply
a
catalyst in getting an objective through the free enterprise
system. If you just take the $30 billion we will be spending
next year and if that $30 billion were spent in the United States
in producing energy here, that would produce at least a million
jobs directly.
Looking for jobs at this moment in the country, I think
we have got to have the economy rolling. As far as capital
allocation is concerned, I don't think that argument holds up.
As I said before, the arguments given, we will take off the
restrictions and regulations and so forth, and we will do it.
But, that is unrealistic in terms of the present situation in this
œuntry.
If you look at the polls, you will find out that the
American people are for government regulation by quite a substan-
tial margin. They are against red tape and bureaucracy, deeply
bitter about red tape and bureaucracy in Washington. But they want
regulation.
Therefore, it is a very delicate balance as to how that
is going to be adjusted. Another comment is, this is the first
step of government takeover. I would like to say as one who
has been, in a modest way, a beneficiary of the free enterprise
system --
(Laughter.)
That I think the real danger is, and let's face it,
we have got to talk realistically here, the real danger is that
we will not produce what is necessary. A crisis will come and
then those who don't happen to believe in the free enterprise
system, believe me, ladies and gentlemen, there are more of them
in this country than you realize. Probably, you do realize. There
are some in Congress and many on the staffs of Congress that when
that moment comes and the crisis comes, these people will say, "The
industry has failed. We have got to take over."
There are a lot of them who see that coming and are
waiting for it and who don't want to see things done to make it
possible to have the private enterprise system meet this need
for our national security. I don't think it is a takeover. The
thing has been designed exactly the opposite. I think it is the
best insurance to avoid that possibility.
How does it work? I mentioned the capitalization. These
are some of the criterion that only projects contribute to national
elf-sufficiency or independence would be eligible, only projects or
programs, or whatever you want to call them, projects that cannot
be financed by private capital.
In other words, anything the private capital financed,
then this wouldn't have anything to do with it. In order to ensure
that this would be the case, there is a provision in the law as
presented by the President that no loan would be made at a lower
rate than the average of the successful operations that are going
on now.
MORE
Page 10
So, this would not be pushing the private capital out
of the field. It would be simply supplementing.
The third point is to the maximum degree possible,
private capital would have to participate in the project. So,
it would be in there and would be done through private enter-
prise and self-liquidation. I mentioned the eight and ten years.
Let's take nuclear energy. Last year, 20 more nuclear
power plants were cancelled, 120 were delayed. The President
in his message in January called for 200 nuclear power plants by
1985.
We all know the delays and the problems. One of the
problems, I know right here, in this state is you can't get the
costs of a nuclear power plant. Let's say it is a billion on your
rate base. You come on stream. You have got all of the restric-
tions, and economic problems. It may take 11 years.
Therefore, it is almost impossible to finance it. There
is no reason this corporation on a lease-purchase basis could not
build a nuclear power plant and contract with a private corporation
and working with the local regulatory body, get the rate increase
agreed to in advance, when the energy comes on stream, and then
the private power company takes it over and starts to buy it through
a lease-purchase and the rates are increased.
Sure, it is difficult, and it is a little innovative.
But this is true in gas, gasification of coal, liquidation of coal.
It is not unknown. This is expensive. But there are plenty of
industries who want to get the gas and are willing to pay for it.
As far as oil is concerned, we have four times as much
oil in shale in this country as the known reserves in the entire
Arab world. The problem is, how to get it out. There is no
problem about taking oil out of shale, if you cook it, mine the
shale. But the trouble is you end up with more of what I call
talcum powder, in the form of the shale, which has been cooked,
the oil taken out. Therefore, the problem is what do you do with
it?
This comes out of Colorado and areas in the West, where
there is very little water. You can fill the valleys in it.
But it blows away if there is a wind. You have this talcum powder
blown all over the West. And the ecologists -- well, I don't even
have to say.
(Laughter.)
But, on the other hand, the laboratories, which have done th
most important work in this country in connection with research
and development in the military field, they feel you can drill down
into the shale, what is known as the in situ process, set it on
fire, do the process underground, take the oil up in the form of
gas in the pipe and condense it on the surface.
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Page 11
There is a lot of people who don't think that is
possible or who think it is way out and probably a commercialized
plant would cost $200 million. It is too risky for private enter-
prise to take that risk. But why shouldn't it be done in combi-
nation with government and private enterprise, and sold, if it is
successful. Maybe we will produce a source four times as great
as the resources in the Arab world, in the OPEC structure.
The same can be done for gas and coal, deep coal mines,
narrow veins, hard to mine. There is no reason why this process
couldn't work, in situ, and avoid the problems. Burn it under-
ground, take it out.
There are lots of problems. But let's face it, ladies
and gentlemen, when that little group of scientists went to
Roosevelt and said it was possible to produce an atomic bomb,
there were lots of problems then. A lot of skeptics said it
couldn't be. Yet, that may have been true. Yet, the willingness
of the President to take that risk at that time may well have
been the thing to help preserve the freedom of America and the
world.
Maybe we have to do this to solve our problem so we
can't be blackmailed and so we can continue to have the growth
which you all are producing, but which is based on energy.
I don't need to go into anything further on this,
except to say this bill provides for related facilities, such
as roadbeds on railroads and an investment in railroads that
has to affix its roadbeds; the pipelines, if they build more
coming down from Alaska. The Senator tells me you can produce
six million barrels a day in Alaska, if you really go down; and
lots of gas, too.
But we have got the capacity. We have got the resources.
We have got to get off dead center. We have got to get our
economy rolling if we want to keep this society as it is and have
it open in 10 years, 10,000 years from now. I want to be sure
we are okay 10 years from now.
I would like to say in closing with your support, as
well as that of labor, that this bill can pass the Congress.
Without it it won't -- I want to be frank, the result will be
to get us off dead center, as I have said, on energy development,
economic growth and jobs.
We can and must meet our energy needs. I would like to
say, ladies and gentlemen, we can meet your energy needs and our
ecology needs. We don't need to get into that fight. The
scientists and technologists have got the capacity to get these
problems solved. I don't worry about it.
It costs us a little more, but it is essential for our
society. So, we can restore the strength for America. I would
like to say, in closing, I have faith. As I said when I was
sworn in, which was just a year ago, and I have one more year to
go -- I copped out.
(Laughter.)
MORE
Page 12
Maybe I should say to you that while you were very
gracious about my responsibility while the President is away,
I don't want to disillusion you there. There is no responsi-
bility, except the honor of presiding over the Senate which
is a great pleasure, except that I can't speak without
unanimous consent. They have only given me that twice.
(Laughter.)
(Applause.)
If I have talked a little long today, you will know
it is because I have been quiet before.
(Laughter.)
Except for that, I am the staff assistant to the
President. Let's be honest about it. This Vice President stuff --
(Laughter.)
I referred to it in 1960 as standby equipment. But
at that point I wasn't interested in it. Let me just say in
conclusion, that I have faith and there is nothing wrong with
America that Americans can't right.
Let's do it, ladies and gentlemen. Thank you
very much.
(Applause.)
END
(AT 2:20 P.M.)