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American Bizness Club, October 21, 1970
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American Bizness Club, October 21, 1970
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Gerald R. Ford Congressional Papers
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The original documents are located in Box D30, folder "American Bizness Club, October
21, 1970" of the Ford Congressional Papers: Press Secretary and Speech File at the Gerald
R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. The Council donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
am. Bizness
m Office Copy
REMARKS BY REP. GERALD R. FORD, R--MICH.
REPUBLICAN LEADER, U.S. HOUSE OF REPRESENTATIVES
BEFORE THE AMERICAN BANKERS ASSOCIATION
AT MIAMI BEACH, FLORIDA
10:30 a.m. OCTOBER 13, 1970
FOR RELEASE ON DELIVERY
Walk into almost any union hall these days and you will see posters depicting
breadlines and soup kitchens and carrying the message that it could happen again.
This is the kind of campaign of distortion being carried on by the Democratic
Party this year in league with their political allies. These are the tactics being
employed by the Democrats and their friends in search of political advantage.
I regret such tactics and not merely because my political party is the target.
I regret it because it is based on falsehood and is calculated to scare the
country. I take comfort in the belief that the American people are too savvy to be
taken in by such trickery.
I could talk today only about growth in the economy, ignoring inflation, as
my Democratic colleague, Mr. Boggs, is accustomed to doing. However, I think we
should deal with the whole picture. And certainly to understand what is happening
in the economy today we have to consider the impact that inflation and counter-
inflationary efforts have had on economic growth.
Bankers, like lawyers, are interested in facts. The facts are on my side in
this discussion, and so I am not alarmed about anything Mr. Boggs might say.
Let me begin by saying that the evidence is accumulating that the economy is
moving along the right path. The Administration's original game plan is working out,
with the rate of inflation diminishing and production reviving. The prospects are
encouraging that we will reach our goal of rapid economic growth with reasonable
price stability.
This change in our situation and prospects, from the overheated and unstable
economy of January 1969, is unquestionably the result of policies steadily pursued
start
by the Nixon Administration since it first assumed office.
The economy is in the process of turning up. There is widespread
anticipation of economic growth.
The
recent
behavior
of
the
stock
market
is
sign of this.
We have month-to-month fluctuations in the economic indicators, of course.
These should be kept in perspective. These temporary fluctuations cannot deny the
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BERALD FORD LIBRARY
Digitized from Box D30 of The Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
-2-
underlying trend.
Why do I say the economy is turning up? Over the course of recent months,
we have witnessed a general expansion in the following key indicators: New orders
for durable goods, the stock market, the money supply, housing starts, personal income
from the private sector, and the composite leading indicators themselves. The
economy clearly is moving toward expansion.
The upturn will be moderate, accompanied by continued measurable progress in
bringing down the rate of inflation. The performance of both consumer prices and
wholesale prices in recent months has been reassuring on the downturn in the rate
of inflation.
There has been a marked dampening in the rate of inflation this year,
evidenced most recently by the 0.2 per cent rise in the consumer price index in
August, which translates into a 2.4 per cent annual rate. The August rise was the
smallest since September 1967. The rise in the three months June, July and August
was the smallest for any three-month period since the fall of 1967.
the rate in in August
The inflation rate has been cut
in half from
These figures
are supported by a low rate of increase of industrial prices at wholesale and by the
effect of recent productivity gains in holding down labor costs. Unit labor costs,
which rose sharply in most of 1968, 1969, and early 1970, showed their smallest rise
in three years in the second quarter of 1970.
Leaving off the question of inflation for the mo ent, let me point to
indications of growth in the economy.
Total employment was higher in the third quarter than in the second.
Non-agricultural payroll employment levelled out in September. The basic
unemployment rate, purged of statistical aberrations, has risen little since May.
With total production now rising, we can look forward to a reduction in the
unemployment rate. Even Walter Heller, chairman of President Kennedy's Council of
Economic Advisers and certainly not our friendliest critic, says that "the worst is
now over. "
When these two sides of the equation are taken together--production and
employment on the one hand and prices on the other--they show that we are well on
the way to the unique achievement of slowing down an inflation without a recession.
That is the news about whan is happening in the economy today.
The 5.5 per cent unemployment figure reported for the month of September is
not news because it is a distortion due to unusual circumstances. It is a phantom
(more)
GERALD FORD LIBRARY
-3-
figure, not real. If the estimate is revised, as it should be, the actual September
rate will turn out to be about 5.3 per cent.
We suffered from an unusual amount of phantom unemployment in September--
young people who ordinarily would have returned to school by the time the
September unemployment survey was made but had not done so as of survey time this
year.
Ninety-two per cent of the reported increase in unemployment was accounted
for by persons under age 25. Almost all of the reported increase in unemployment was
in the group of 16 to 24 year olds who move back and forth between school and the
labor market.
The basic national employment situation shows no deterioration from August to
September. The unemployment rate for members of the work force 25 years and over
of
was practically unchanged at 3.5 per cent.
Here
It's true that employment in September 1970 was about a half million below
its January 1970 peak but at the same time it was more than 200,000 above September
1969.
There is no question that our transition from a wartime to a peacetime
economy is having a heavy impact on employment. Increases in unemployment from
May 1969 to May 1970 were severest in aircraft and ships, as well as construction
and apparel.
You have heard much about the Administration's "game plan" for achieving
relative price stability and healthy growth in the economy. The term "game plan"
is not facetious. It is used in the same sense that it is used in football. It's
our basic strategy--and I think it is paying off.
How did we accomplish what we have?
First, the Nixon Administration has struggled--so far with success--to keep
the Federal budget non-inflationary.
Second, the Administration, through its own fiscal policy and through
consultation with the Federal Reserve, has contributed to a monetary policy which
tightened up enough in 1969 to help slow down the inflation and then relaxed enough
in 1970 to support a healthy revival.
Third, the Administration firmly resisted mistaken suggestions that our
economic difficulties could be resolved by throwing overboard the free price and
collective bargaining system. And now even George Meany agrees we were right.
It was on the budget front that the Administration fought its most decisive
battle.
(more)
-4-
The previous Administration generated rapid inflation by allowing a
$25 billion deficit in fiscal year 1968. A belated attempt then was made to bring
the budget under control with the 10 per cent tax surcharge and a spending ceiling.
But this didn't make a dent in the inflation which had reached runaway dimensions.
Consumers kept on spending as though taxes had not been raised.
The Nixon Administration devised and fought for a durable anti-inflationary
budget, cut $7.5 billion out of Federal spending during 1969 alone, and persuaded
Congress to continue the surcharge. Without this we could have had a $20 billion
deficit in fiscal year 1970, and the inflationary fires would have burned
more fiercely than ever. As it was, the deficit was about $3 billion which under
the surrounding circumstances turned out to be helpful and not inflationary.
During calendar year 1969 the Administration succeeded in keeping the budget
balanced and thus permitted the Federal Reserve to carry on a restrictive monetary
policy without having to worry about the borrowing needs of the Treasury. The
Administration also encouraged the Federal Reserve in that policy, despite complaints
about tight money, because we knew that a restrictive policy was a necessary part
of the route to lessened inflation and lower interest rates.
At the beginning of this year, however, the Administration also made clear
its belief that the time had come for a shift to easier money.
One of the great achievements of this Administration was its ability to keep
cool in the face of demands for wage and price controls, direct or indirect. There
is no question in my mind that Democrats in Congress pushed controls at the President
not because they wanted him to use them but because they knew he would not. They
simply hoped to embarrass the Administration.
Now we are seeing the payoff of the Administration's determined effort to
keep cool and steer a steady course. Victory over inflation and a new era of healthy
economic growth will result because the Administration has stuck to its "game plan.'
The payoff is a faster reduction of inflation and, ultimately, new vigor in
the great free enterprise system that has served us so well.
# # #