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General Managers Conference, W.E. Long Company - Independent Bakers Cooperative, Chicago, IL, m September 18, 1972
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General Managers Conference, W.E. Long Company - Independent Bakers Cooperative, Chicago, IL, m September 18, 1972
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Gerald R. Ford Congressional Papers
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Economic stabilization
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The original documents are located in Box D33, folder "General Managers Conference,
W.E. Long Company - Independent Bakers Cooperative, Chicago, IL, m September 18,
1972" of the Ford Congressional Papers: Press Secretary and Speech File at the Gerald R.
Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. The Council donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box D33 of The Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
GENERAL MANAGERS CONFERENCE OF THE
W. E. LONG COMPANY -- INDEPENDENT BAKERS
COOPERATIVE, MONDAY, SEPT 18, 1972,
CHICAGO, ILL.
Cality china Vigarets Tegethore Congriss. program
I DEEPLY APPRECIATE THE
OPPORTUNITY YOU HAVE GIVEN ME TO DISCUSS
CURRENT DEVELOPMENTS RELATING TO THE
BAKING INDUSTRY. HOWEVER, I DO NOT WANT
YOU REPRESENTATIVES INVOLVED SO CLOSELY
WITH THIS IMPORTANT FOOD PROCESSING AND
DISTRIBUTION BUSINESS TO ANTICIPATE READY
ANSWERS TO YOUR SPECIFIC PROBLEMS IN THE
MARKET ARENA. I THINK YOU UNDERSTAND THAT
MY FIELD DOES NOT COVER THAT KIND OF
EXPERTISE.
THE COMPLEXITIES OF DOING
FORD
BUSINESS ARE CHANGING DAILY. I SUSPECT
LIBRARY
THAT IS WHY YOU ARE HERE -- TO ADD TO YOUR
-2-
KNOWLEDGE AND CARRY HOME SOME FACTS THAT
WILL HELP YOU OVERCOME ROADBLOCKS TO
REASONABLE PROFIT.
MY BRIEF PART OF YOUR PROGRAM,
AS I SEE IT, IS TO DISCUSS SOME OF THE
INVOLVEMENTS OF GOVERNMENT AND PURSUE
THESE POINTS TO A LOGICAL CONCLUSION.
PRESENTLY AN OBVIOUS PROBLEM IS
PLAGUING THE BAKING INDUSTRY -- THE SHARP
UPWARD TREND IN WHEAT PRICES, COUPLED WITH
A RECENT DECISION BY THE PRICE COMMISSION.
I BELIEVE WE CAN AGREE AT THE
OUTSET THAT THE VALUE OF WHEAT AT THE
FARM IS A COMPARATIVELY MINOR PORTION OF
THE PRICE THE CONSUMER PAYS AT THE GROCERY
CHECKOUT COUNTER. HOWEVER, I ALSO UNDER-
STAND THAT THE PRICE OF WHEAT IS A
FLUCTUATING COST THAT HAS TO BE RECKONED
-3-
WITH IN MANAGEMENT'S STRUGGLE FOR AN
ADEQUATE SHARE OF THE CO NSUMER'S DOLLAR.
IT SEEMS THE BANKER AND YOUR STOCKHOLDERS
ARE INTERESTED.
I THINK, TOO, THAT AS A BASIC
PREMISE WE MUST AGREE THAT FARMERS HAVE
WAITED AT THE ROADSIDE FOR QUITE SOME TIME
AWAITING A CHANCE TO GET ONTO THE MAIN
and
ECONOMIC HIGHWAY OF OUR NATIONAL LIFE
From
THEY HAVE WATCHED THEIR COSTS INCREASE
CONSTANTLY, BUT THE PRICES OF THE
The
COMMODITIES THEY SELL HAVE TOO OFTEN
REMAINED AT THE LEVELS OF A GENERATION AGO
OR EVEN LOWER. WHEAT IS ONE OF THOSE
COMMODITIES THAT HELD AT DEPRESSED PRICES,
ESPECIALLY WHEN YOU CONSIDER THE PRICE AT
THE FARM GATE -- NOT THAT QUOTED AT THE
TERMINAL MARKETS.
-4-
THE CURRENT SITUATION REMINDS ME
OF A FELLOW I KNOW WHO IS NOT THE MOST
PATIENT MAN IN THE WORLD. WHEN HE DRIVES
HIS CAR UP TO A STOP SIGN, WAITING FOR A
SPACE BREAK TO ENTER THE MAINSTREAM OF
TRAFFIC, HIS BLOOD REACHES A SLOW BOIL.
HE THEN BARGES OUT TO FORCE HIS WAY INTO
THE MOVING LINE OF CARS. THAT SOMETIMES
CREATES VISIBLE INDICATIONS OF UNHAPPINESS
ON THE PART OF OTHER MOTORISTS.
LIKE THE FRUSTRATED CAR DRIVER,
THE FARMER TOOK HIS TURN IN THE WHEAT
SITUATION. I REALIZE THE SPACE MARGIN IN
THE BAKING INDUSTRY PROFIT LINE MAY NOT
COMFORTABLY ACCOMMODATE AN EXTRA ENTRY
OF COST. so you & your procestes and deeply concerned +
your
presport
no way understanding
YOU ARE WELL AWARE THAT THE
REAL COSTS OF A LOAF OF BREAD OR A PASTRY
GERALD
RARY
1973 - 700 union contracts
construction
4 million withers -
Trushing
Either inflation on settlements
internal
think
ITEM ARE IN THE FINISHED FLOUR,
TRANSPORTATION, MANUFACTURING AND RETAILING
COSTS, PLUS TAXES
JUST TO NAME A
FEW OF THE STEPS BEYOND THE FARM GATE.
LABOR OF COURSE, IS THE MAJOR FACTOR IN
EVERY PHASE OF PROCESSING AND DISTRIBUTION,
USUALLY FOLLOWED CLOSELY BY TAXES -- LOCAL
AND NATIONAL.
Because Receive 7th recent by
I RECALL A FEW YEARS AGO A FARM
advise
MAGAZINE EDITOR TRACED THE PART TAXES PLAY
THE
Price
IN THE PRICE OF A LOAF OF BREAD BY THE TIME
P.
IT
REACHES THE RETAILER'S SHELF. HE
CONCLUDED THAT TAXES ON EVERY PIECE OF
EQUIPMENT, ON THE LAND, ON BAKERY
STRUCTURES, ON PARKING LOTS, ON EMPLOYEES
AND COMPANIES, WOULD TOTAL ABOUT FIFTY
PER CENT OF THE FINAL LOAF PRICE. THAT
MAY HAVE BEEN EXAGGERATED SOMEWHAT,
1973 - 700 union contracts
construction
4 million workers I
Truching
Either inflation settlements
internal
think
ITEM ARE IN THE FINISHED FLOUR,
TRANSPORTATION, MANUFACTURING AND RETAILING
COSTS, PLUS TAXES
JUST TO NAME A
FEW OF THE STEPS BEYOND THE FARM GATE.
LABOR OF COURSE, IS THE MAJOR FACTOR IN
EVERY PHASE OF PROCESSING AND DISTRIBUTION,
USUALLY FOLLOWED CLOSELY BY TAXES -- LOCAL
AND NATIONAL.
Because Receive The recent agree by
I RECALL A FEW YEARS AGO A FARM
advise
1
MAGAZINE EDITOR TRACED THE PART TAXES PLAY
IN THE PRICE OF A LOAF OF BREAD BY THE TIME
T.
REACHES THE RETAILER'S SHELF. HE
CONCLUDED THAT TAXES ON EVERY PIECE OF
EQUIPMENT, ON THE LAND, ON BAKERY
STRUCTURES, ON PARKING LOTS, ON EMPLOYEES
AND COMPANIES, WOULD TOTAL ABOUT FIFTY
PER CENT OF THE FINAL LOAF PRICE. THAT
MAY HAVE BEEN EXAGGERATED SOMEWHAT,
-6-
BUT IT REVEALS ALL TOO CLEARLY A POINT
WHICH IS DIFFICULT TO EXPLAIN TO CONSUMERS.
ESCALATING TAXES PERHAPS COME
CLOSE TO EQUALING THE COST OF THE
your
INGREDIENTS OF A BAKED PRODUCT.
J.R.S
ALL OF IT POINTS TO THE PROBLEMS
THAT SHOULD BE OF PRIMARY CONCERN TO
CONSUMERS AND EVERYONE INVOLVED IN
BUSINESS -- INFLATION AND THE NEED TO
RELIEVE THE LOCAL TAX BURDEN.
IF NO OTHER LESSON HAS BEEN
LEARNED FROM IMPOSITION OF PRICE AND WAGE
CONTROLS DURING THIS PAST YEAR IT SHOULD
BE THE REALIZATION THAT INFLATION IS
OUR GREATEST DOMESTIC ENEMY. NO GOOD
COULD COME FROM ANNUAL INCREASES IN
EVERY COST, OF REGULAR BUILT-IN RAISES OF
EVERY PRODUCT TO THE CONSUMER, AND
-7-
AUTOMATIC WAGE INCREASE DEMANDS ON AN
ESCALATOR THAT WAS DESTROYING OUR ABILITY
TO COMPETE INTERNATIONALLY. A CONDITION
THAT ACCELERATED IN THE LATE 60s HAD TO
BE DAMPENED. THERE WAS NO ALTERNATIVE.
I DON'T BELIEVE ANYBODY WOULD
SAY THAT BUSINESS OR THE CONSUMER WOULD
BE BEST SERVED BY TURNING VIRTUALLY ALL
PRODUCTION OVER TO OTHER COUNTRIES WHILE
OUR OWN NATION BECAME ONE OF SERVICE PEOPLE.
YET, THAT WAS THE TREND -- TO A POINT
WHERE 100 PER CENT OF MANY ITEMS WAS BEING
MANUFACTURED AND PROCESSED OUTSIDE OF OUR
COUNTRY. PROBABLY MUCH OF YOUR BAKING
EQUIPMENT AND SUPPLIES WAS BEING IMPORTED,
WHOLLY OR IN PART.
THE PRESIDENT USED TRADITIONAL
METHODS THE FIRST TWO YEARS IN AN ATTEMPT
-8-
TO SOLVE THE INFLATION PROBLEM INHERITED
namely frical + monitary action
BY HIS ADMINISTRATION IT BECAME
PAINFULLY EVIDENT THAT THIS WAS NOT
WORKING WELL ENOUGH. INFLATION CONTINUED
PROMPTING LABOR TO DEMAND HIGHER WAGES
TO STAY EVEN WITH THE BOARD OR TO
LEAPFROG FUTURE COST-OF-LIVING INCREASES.
THIS IN TURN ACCELERATED THE TREADMILL.
NONE OF US LIKE CONTROLS -- LEAST
OF ALL THE ADMINISTRATION, WHICH HAS TO
HOLD DOWN THE LID.
I AM FREQUENTLY ASKED, IF THIS
ADMINISTRATION IS SO CONCERNED WITH
HOLDING DOWN PRICES WHY ARE FARMERS
PERMITTED TO GET MORE FOR THEIR
COMMODITIES DURING THIS CONTROL PERIOD.
THAT ONE IS EASY TO ANSWER
BECAUSE IT IS SO OBVIOUS. FARMERS ARE
-9-
PROBABLY THE ONLY LARGE GROUP OF BUSINESS
PEOPLE WHO HAVE LITTLE OR NO CONTROL OVER
THEIR PRICES. THEIR PRODUCTS RIDE UP AND
DOWN LIKE YO-YO'S. IF THE PRICE OF A
COMMODITY LIKE WHEAT HAS BEEN SELLING IN
THE MARKET AT LESS THAN ACTUAL COST OF
PRODUCTION FOR SEVERAL YEARS, THEN
CERTAINLY WHEN DEMAND IS CREATED TO MOVE
THE PRICE UPWARD THE PRODUCER MUST BE
PERMITTED TO RECOUP LOSSES OR HE COULD NOT
REMAIN IN OPERATION. PRICES OF NEARLY
EVERY OTHER PRODUCT WITH WHICH I AM
FAMILIAR, OTHER THAN RAW MATERIALS, RARELY
DROP BACK. RATHER THEY CONTINUALLY MOVE
UPWARD, REFLECTING INCREASES IN COST OF
OPERATION. FARMERS GENERALLY DO NOT HAVE
THAT KIND OF OPTION.
WHAT THEN, IS THE SCORE ON THE
BAKING INDUSTRY DILEMMA?
-10-
BREAD AND RED MEAT ARE THE ITEMS
CONSUMERS WATCH MORE THAN ANY OTHER
PURCHASE. THEY ARE BASIC TO THE AMERICAN
DIET, DESPITE SOME WEIGHT WATCHERS SHYING
AWAY FROM PASTRY PRODUCTS. THAT MAKES
THEM VULNERABLE TO QUICK PUBLIC CRITICISM
IN THE EVENT OF EVEN A MINOR RISE IN
PRICE. BUT, I HAVE A FEELING THAT THE
PRICE OF BREAD MAY BE WEIGHTED MORE THAN
IS WARRANTED IN THE COST OF LIVING INDEXES.
THIS EQUATION IN THE NATIONAL
DIET CAN ONLY BE ASSESSED AS AN ENVIABLE
ONE IN THE SENSE OF CONSUMER ACCEPTANCE.
IT ALSO IMPOSES A HEAVY BURDEN ON
MANAGEMENT TO MAINTAIN A COMPETITIVE
POSITION WITH OTHER FOOD PRODUCTS. THIS
IS PARTICULARLY TRUE IN PERIODS OF
ECONOMIC STRESS.
SCRATO R.FORD LIBERRY
-11-
PREDICTIONS ABOUND THAT TOTAL
CONSUMER, INCOME AFTER TAXES MAY BE UP
7-3%
SEVEN AND ONE HALF PER CENT IN 1972,
WHILE SPENDING FOR FOOD MAY RISE LESS
THAN FIVE AND ONE-HALF PER CENT. THAT
DOES NOT MEAN THAT INDIVIDUAL
BREADWINNERS ARE OBTAINING THE SEVEN AND
ONE-HALF INCREASE. RATHER, IT INDICATES
THAT THE TOTAL NATIONAL INCOME HAS
INCREASED BY THAT MUCH DUE TO CONSIDERABLY
HIGHER EMPLOYMENT NUMBERS. THE POINT HERE
IS THAT DEMAND FOR BASIC NUTRITIONAL ITEMS
IS PUSHING UP THE INDEXES. WHILE BREAD
MAY NOT BE THE HEAVY FACTOR IN THE COST
OF LIVING, IN THE CONSUMER MIND IT IS A
KNOWN INDICATOR BECAUSE OF ALMOST DAILY
PURCHASES AT A GIVEN PRICE.
NOW, TO THE SPECIFIC INVOLVEMENT
OF GOVERNMENT.
-12-
THE BIG PICTURE OF OVERALL
CONCERN TO GOVERNMENT IS TO STABILIZE EACH
SECTOR OF OUR ECONOMY, WITH AN EYE TO ALL
SECTIONS OF THE COUNTRY. THAT'S A GIANT
ORDER, ALMOST IMPOSSIBLE OF FULFILLMENT. They
BUT, THE LEAST WE CAN DO IS TRY HARDER
MOVING FROM A WARTIME TO
PEACE ECONOMY HAS COMPLICATED MATTERS BY
it in I A $
The
Prod.
MAKING IT NECESSARY TO SHIFT MORE PEOPLE
TO CONSUMER-ORIENTED PRODUCTION BUT THIS
-
Defere
1
milting
3,6/2.4
IS BEING ACCOMPLISHED.
3,240,0000
3
THE TAX SITUATION THAT I MENTIONED
PREVIOUSLY AS THE SECOND MAJOR PROBLEM TO
BE CONTAINED IS NOW WITHIN SIGHT OF
ACCOMPLISHMENT. THE PRESIDENT'S REVENUE
SHARING BILL, WHICH HE HAS FOUGHT TO OBTAIN
FROM THE CONGRESS FOR SO LONG, IS NEAR
FINAL ENACTMENT. LOCAL AND STATE TAXES
-13-
CAN BE RELIEVED CONSIDERABLY, OR AT LEAST
STABILIZED BY ITS PROVISIONS. ON THE
NATIONAL SCENE, THE PRESIDENT HAS ASSURED
US THAT HE WILL WORK IN EVERY WAY TO HOLD
Bpending certing "
THE TAX LINE -- ANOTHER ESSENTIAL
INGREDIENT IN THE CONTROL OF INFLATION
FOR TOO LONG PEOPLE HAVE SHOWN AN
UNWILLINGNESS TO ACCEPT THE REAL REASONS
FOR INFLATION. THEY HAVE WANTED THE BEST
OF TWO WORLDS -- HIGH WAGES AT HOME FOR
PERSONAL BUYING POWER, AND LOW-PRICED
IMPORTS MADE POSSIBLE BY WAGES AS MUCH AS
ONE-FIFTH OUR OWN SCALE OF LIVING.
SOMEHOW, MOST OF US FAILED TO
REALIZE THAT INTERNATIONAL TRADE HAS TO BE
A TWO-WAY STREET. WE COULD NOT GO ON
FOREVER BUYING, WHILE SELLING FAR LESS.
OUR FOREIGN SUPPLIERS HAD TO HAVE SOMETHING
$28
-14-
MORE SUBSTANTIAL THAN IOU's OR THE
EQUIVALENT. SINCE MOST COUNTRIES COULD
PRODUCE FAR MORE CHEAPLY THAN U.S. INDUSTRY
BECAUSE OF THE VAST WAGE DIFFERENTIAL,
ABOUT THE ONLY CHANCE WE HAD TO COMPETE AS
THE YEARS TICKED ON WAS IN AGRICULTURAL
PRODUCTS. THAT SHOULD PRETTY WELL INDICATE
THE LOW LEVEL OF FARM INCOME -- EVEN WITH
GOVERNMENT SUBSIDIES.
AGAIN, WE HAVE TO BE WILLING TO
ACCEPT THE FACT THAT AGRICULTURE GENERALLY
HAD TO CATCH UP
WITH SOME EXCEPTIONS.
AMER ICANS HAVE TURNED THEIR BACKS ON
REALITY FAR TOO LONG. DEVELOPMENTS THIS
PAST YEAR HAVE SHOWN THE EFFICACY OF THE
PROGRAM INSTITUTED BY THE PRESIDENT TO PUT
A DAMPER ON THE INFLATION FIRE.
-15-
THE PLANS THIS ADMINISTRATION
DESIGNED TO ACHIEVE A BREAK FOR
FARMERS -- TO PUT THEM MORE NEARLY ON A
PLANE WITH OTHER INDUSTRY AND LABOR -- ARE
BEGINNING TO PAY OFF. COMMODITIES THAT HAD
BEEN IN TROUBLE SUCH AS WHEAT, POTATOES,
SWINE AND FEED GRAINS HAVE MOVED UP FROM
MINUS POSITIONS. AND TAXPAYERS ARE
CERTAINLY GAINING FROM THE SALE OF WHEAT
AND OTHER GRAINS TO THE SOVIET UNION --
BOTH IN CASH AND IN THE LONG-RANGE
PEACETIME VIEW. TAXPAYERS ARE GETTING BACK
ABOUT FOUR DOLLARS FOR EACH ONE EXPENDED
IN ASSISTING THE GRAIN SALES. THIS HAS
COME ABOUT BY SAVINGS IN GOVERNMENT COSTS
OF PROCURING, TRANSPORTING, STORING AND
BORROWING INCIDENTAL TO THE SURPLUSES
PRODUCED BY OUR FARMERS EACH YEAR DESPITE
ACREAGE CONTROLS.
-16-
Chena also.
IT APPEARS LIKELY THAT SOMETHING
OVER ONE BILLION DOLLARS IN EXTRA INCOME
RESULTING FROM THE RUSSIAN SALES WILL MOVE
INTO RURAL AMERICA.
THAT MEANS EXTRA NEW
WEALTH IN THAT VAST AREA COMPRISING ABOUT
98 PER CENT OF OUR LAND. THE LONG LINE
OF BENEFITS DO NOT STOP AT THE RURAL MAIL
BOX. THIS MONEY BEGINS FILTERING
IMMEDIATELY TO THE CITIES AND SEAPORTS
FOR EVEN BETTER EMPLOYMENT OPPORTUNITIES.
AND THAT MEANS MORE BAKERY PRODUCTS WILL
BE SOLD.
I SINCERELY HOPE THAT ALL SEGMENTS
OF OUR LABOR MOVEMENT UNDERSTAND JUST HOW
MUCH IS AT STAKE IN OUR GRAIN DEALS WITH
THE SOVIET UNION. IT IS ESSENTIAL THAT
EVERY BIT OF COOPERATION BE OBTAINED IN THE
WHEAT EXPORTING PROGRAM -- NOW AND FOR THE
FUTURE. TO DO OTHERWISE WOULD IMPOSE A
-17-
SELFISH AND TERRIBLE DISSERVICE UPON ALL
OF AMER ICA -- INCLUDING THE THOUSANDS OF
OTHER WORKERS INVOLVED AT EVERY STEP OF THE
WAY TO THE SHIPS IN THE SEVERAL PORTS.
IT IS INVIGORATING TO NOTE THE
HIGH LEVEL OF EMPLOYMENT INVOLVED IN
HANDLING THIS GRAIN -- IN THE LOCAL ELEVATORS,
THE TRANSPORTATION SYSTEMS, THE TERMINAL AND
SEAPORT ELEVATORS, THE DOCKWORKERS, AND
AMONG ALL THE PEOPLE SERVICING OR SUPPLYING
THESE THOUSANDS OF PEOPLE DOING THE GREAT
WHEAT MOVING JOB.
AMERICA IS NOW, AND CAN CONTINUE
TO BE, THE BREADBASKET OF THE WORLD. DOWN
THE ROAD WE AND THE OTHER COUNTRIES CAN
USE ALL THE AGRICULTURAL PRODUCTS THE
U.S. CAN PRODUCE. A NOT INCONSIDERABLE
SPIN-OFF IS THE GROWING CHANCE FOR LASTING
-18-
WORLD PEACE THROUGH SALES OF FOOD AND
INTERCHANGE OF OTHER PRODUCTS.
IT TOOK CONSIDERABLE DOING TO
REACH THIS POINT, FROM THE PRESIDENT S
VISITS TO CHINA AND RUSSIA DOWN TO THE
ACTUAL WORKING OUT OF AGREEMENTS WHICH
PERMIT US TO COMPETE IN WORLD TRADE. ANY
DEVIATION FROM THE CONDITIONS MAKING THE
SALES POSSIBLE WOULD THROW THE UNITED
STATES RIGHT BACK WHERE IT STARTED. THERE
ARE SEVERAL OTHER COUNTRIES PRODUCING GRAIN
WHICH WOULD SCRAMBLE FOR THIS NEWLY OPENED
MARKET. TO DEPRIVE OUR FARMERS, OUR
LABORERS, AND OUR TAXPAYERS OF THESE
BENEFITS DUE TO panashial SELFISH MOTIVES WOULD BE
TRAGIC INDEED.
I FIRMLY BELIEVE WE MUST ALL
WORK TOGETHER WITHIN THE FRAMEWORK OF OUR
PRIVATE INITIATIVE SYSTEM FOR THE GREATEST
-19-
BENEFIT TO ALL OUR ECONOMIC AND
SOCIOLOGICAL INTERESTS.
WE CAN BE FIERCELY COMPETITIVE
WHILE OPERATING WITHIN FAIR RULES THAT WILL
MAKE OPPORTUNITY AVAILABLE TO THE GREATEST
NUMBER OF OUR PEOPLE. THIS INCLUDES
INNOVATIVE MANAGEMENT TEAMS LIKE YOU
INDUSTRY REPRESENTATIVES WHO ARE MAKING
POSSIBLE THE CONTINUATION OF OUR HERITAGE
AS THE WORLD'S CITADEL OF DEMOCRACY.
THE INFLATION PSYCHOLOGY THAT
PLAGUED INDUSTRY IS ABATING. THAT MEANS
IT SHOULD NOT BE LONG BEFORE A LEVELING
OUT WILL PERMIT RETURN TO THE FULL AND far
PREFERABLE PRIVATE INITIATIVE SYSTEM, WITH
GOVERNMENT ACTING MORE IN THE CAPACITY OF
UMPIRE. The present way / price law springs April hard 30th
Conguess will understandly estend it. In what form it is to protect
nept
year.
BUT, MEANWHILE WE MUST DEMONSTRATE
-20-
THAT NATIONAL INTEREST IS OF FIRST CONCERN.
NO OTHER ALTERNATIVE IS ACCEPTABLE.
THANK YOU.
-- END --
GERALD
Distribution 5 capies to Mr. 7. only M office Copy
REMARKS BY REP. GERALD R. FORD, R-MICH.
BEFORE A GENERAL MANAGERS CONFERENCE OF THE
W. E. LONG COMPANY - INDEPENDENT BAKERS COOPERATIVE
MONDAY, SEPTEMBER 18, 1972
AT CHICAGO, ILLINOIS
FOR RELEASE AT 12:00 NOON, MONDAY
I deeply appreciate the opportunity you have given me to discuss current
developments relating to the baking industry. However, I do not want you
representatives involved so closely with this important food processing and
distribution business to anticipate ready answers to your specific problems
in the market arena. I think you understand that my field does not cover that
kind of expertise.
The complexities of doing business are changing daily. I suspect that
is why you are here -- to add to your knowledge and carry home some facts that
will help you overcome roadblocks to reasonable profit.
My brief part of your program, as I see it, is to discuss some of the
involvements of Government and pursue these points to a logical conclusion.
Presently an obvious problem is plaguing the baking industry -- the sharp
upward trend in wheat prices, coupled with a recent decision by the Price Com-
mission.
I believe we can agree at the outset that the value of wheat at the farm
is a comparatively minor portion of the price the consumer pays at the grocery
checkout counter. However,I also understand that the price of wheat is a
fluctuating cost that has to be reckoned with in management's struggle for an
adequate share of the consumer's dollar. It seems the banker and your stock-
holders are interested.
I think, too, that as a basic premise we must agree that farmers have
waited at the roadside for quite some time awaiting a chance to get onto the
main economic highway of our national life. They have watched their costs increase
constantly, but the prices of the commodities they sell have too often remained
at the levels of a generation ago or even lower. Wheat is one of those commodities
that held at depressed prices, especially when you consider the price at the farm
gate -- not that quoted at the terminal markets.
(more)
GERALD LIBRARY
-2-
The current situation reminds me of a fellow I know who is not the most
patient man in the world. When he drives his car up to a stop sign, waiting for
a space break to enter the mainstream of traffic, his blood reaches a slow boil.
He then barges out to force his way into the moving line of cars. That sometimes
creates visible indications of unhappiness on the part of other motorists.
Like the frustrated car driver, the farmer took his turn in the wheat
situation. I realize the space margin in the baking industry profit line may
not comfortably accommodate an extra entry of cost.
You are well aware that the real costs of a loaf of bread or a pastry item
are in the finished flour, transportation, manufacturing and retailing costs,
plus taxes just to name a few of the steps beyond the farm gate. Labor, of
course, is the major factor in every phase of processing and distribution, usually
followed closely by taxes -- local and national.
I recall a few years ago a farm magazine editor traced the part taxes play
in the price of a loaf of bread by the time it reaches the retailer's shelf. He
concluded that taxes on every piece of equipment, on the land, on bakery structures,
on parking lots, on employees and companies, would total about fifty percent of the
final loaf price. That may have been exaggerated somewhat, but it reveals all too
clearly a point which is difficult to explain to consumers.
Escalating taxes perhaps come close to equaling the cost of the ingredients
of a baked product.
All of it points to the problems that should be of primary concern to consumers
and everyone involved in business, inflation and the need to relieve the local tax
burden.
If no other lesson has been learned from imposition of price and wage controls
during this past year it should be the realization that inflation is our greatest
domestic enemy. No good could come from annual increases in every cost, of regular
built-in raises of every product to the consumer, and automatic wage increase demands
on an escalator that was destroying our ability to compete internationally. A
condition that accelerated in the late '60s had to be dampened. There was no alter-
native.
I don't believe anybody would say that business or the consumer would be best
served by turning virtually all production over to other countries while our own
(more)
-3-
nation became one of service people. Yet, that was the trend to a point where
100 percent of many items was being manufactured and processed outside of our
country. Probably much of your baking equipment and supplies was being imported,
wholly or in part.
The President used traditional methods the first two years in an attempt
to solve the inflation problem inherited by his Administration. It became pain-
fully evident that this was not working well enough. Inflation continued,
prompting labor to demand higher wages to stay even with the board or to leapfrog
future cost-of-living increases. This in turn accelerated the treadmill.
None of us like controls -- least of all the Administration, which has to
hold down the lid.
I am frequently asked, if this Administration is so concerned with holding
down prices why are farmers permitted to get more for their commodities during
this control period?
That one is easy to answer because it is so obvious. Farmers are probably
the only large group of business people who have little or no control over their
prices. The products ride up and down like yo-yos. If the price of a commodity
like wheat has been selling in the market at less than actual cost of production
for several years, then certainly when demand is created to move the price upward
the producer must be permitted to recoup losses or he could not remain in operation.
Prices of nearly every other product with which I am familiar, other than raw
materials, rarely drop back. Rather they continually move upward, reflecting
increases in cost of operation. Farmers generally do not have that kind of option.
What, then, is the score on the baking industry dilemma?
Bread and red meat are the items consumers watch more than any other purchase.
They are basic to the American diet, despite some weight watchers shying away from
pastry products. That makes them vulnerable to quick public criticism in the event
of even a minor rise in price. But, I have a feeling that the price of bread may be
weighted more than is warranted in the cost of living indexes.
This equation in the national diet can only be assessed as an enviable one in
the sense of consumer acceptance. It also imposes a heavy burden on management to
maintain a competitive position with other food products. This is particularly true
in periods of economic stress.
(more)
-4-
Predictions abound that total consumer income after taxes may be up seven
and one-half percent in 1972, while spending for food may rise less than five and
one-half percent. That does not mean that individual breadwinners are obtaining
the seven and one-half percent increase. Rather, it indicates that the total
national income has increased by that much due to considerably higher employment
numbers. The point here is that demand for basic nutritional items is pushing
up the indexes. While bread may not be the heavy factor in the cost of living, in
the consumer mind it is a known indicator because of almost daily purchases at
a given price.
Now, to the specific involvement of government.
The big picture of overall concern to Government is to stabilize each
sector of our economy, with an eye to all sections of the country. That's a
giant order, almost impossible of fulfillment. But, the least we can do is
try harder.
Moving from a wartime to a peace economy has complicated matters by making
it necessary to shift more people to consumer-oriented production. But this is
being accomplished.
The tax situation that I mentioned previously as the second major problem
to be contained is now within sight of accomplishment. The President's revenue
sharing bill, which he has fought to obtain from the Congress for so long, is near
final enactment. Local and state taxes can be relieved considerably, or at least
stabilized by its provisions. On the national scene, the President has assured
us that he will work in every way to hold the tax line -- another essential ingredient
in the control of inflation.
For too long people have shown an unwillingness to accept the real reasons
for inflation. They have wanted the best of two worlds -- high wages at home for
personal buying power, and low-priced imports made possible by wages as much as
one-fifth our own scale of living.
Somehow, most of us failed to realize that international trade has to be a
two-way street. We could not go on forever buying, while selling far less. Our
foreign suppliers had to have something more substantial than IOU's or the equiva-
lent. Since most countries could produce far more cheaply than U. S. industry
(more)
-5-
because of the vast wage differential, about the only chance we had to compete
as the years ticked on was in agricultural products. That should pretty well
indicate the low level of farm income -- even with Government subsidies.
Again, we have to be willing to accept the fact that agriculture generally
had to catch up with some exceptions. Americans have turned their backs on
reality far too long. Developments this past year have shown the efficacy of
the program instituted by the President to put a damper on the inflation fire.
The plans this Administration designed to achieve a break for farmers --
to put them more nearly on a plane with other industry and labor -- are beginning
to pay off. Commodities that had been in trouble such as wheat, potatoes, swine
and feed grains have moved up from minus positions. And taxpayers are certainly
gaining from the sale of wheat and other grains to the Soviet Union -- both in
cash and in the long-range peacetime view. Taxpayers are getting back about
four dollars for each one expended in assisting the grain sales. This has come
about by savings in Government costs of procuring, transporting, storing and
borrowing incidental to the surpluses produced by our farmers each year despite
acreage controls.
It appears likely that something over one billion dollars in extra income
resulting from the Russian sales will move into rural America. That means extra
new wealth in that vast area comprising about 98 percent of our land. The long
line of benefits do not stop at the rural mail box. This money begins filtering
immediately to the cities and seaports for even better employment opportunities.
And that means more bakery products will be sold.
I sincerely hope that all segments of our labor movement understand just
how much is at stake in our grain deals with the Soviet Union. It is essential
that every bit of cooperation be obtained in the wheat exporting program -- now
and for the future. To do otherwise would impose a selfish and terrible disservice
upon all of America -- including the thousands of other workers involved at every
step of the way to the ships in the several ports.
It is invigorating to note the high level of employment involved in handling
this grain -- in the local elevators, the transportation systems, the terminal and
seaport elevators, the dockworkers, and among all the people servicing or supplying
(more)
GERALD
LISERAY
-6-
these thousands of people doing the great wheat moving job.
America is now, and can continue to be, the breadbasket of the world. Down
the road we and the other countries can use all the agricultural products the U.S.
can produce. A not inconsiderable spin-off is the growing chance for lasting world
peace through sales of food and interchange of other products.
It took considerable doing to reach this point, from the President's visits
to China and Russia down to the actual working out of agreements which permit us to
compete in world trade. Any deviation from the conditions making the sales possible
would throw the United States right back where it started. There are several other
countries producing grain which would scramble for this newly opened market. To
deprive our farmers, our laborers, and our taxpayers of these benefits due to
selfish motives would be tragic indeed.
I firmly believe we must all work together within the framework of our private
initiative system for the greatest benefit to all our economic and sociological
interests.
We can be fiercely competitive while operating within fair rules that will
make opportunity available to the greatest number of our people. This includes
innovating management teams like you industry representatives who are making possible
the continuation of our heritage as the world's citadel of democracy.
The inflation psychology that plagued industry is abating. That means it
should not be long before a leveling out will permit return to the full and preferable
private initiative system, with Government acting more in the capacity of umpire.
But, meanwhile we must demonstrate that national interest is of first concern.
No other alternative is acceptable.
Thank you.
###
Q Office copy
REMARKS BY REP. GERALD R. FORD, R-MICH.
BEFORE A GENERAL MANAGERS CONFERENCE OF THE
W. E. LONG COMPANY INDEPENDENT BAKERS COOPERATIVE
MONDAY, SEPTEMBER 18, 1972
AT CHICAGO, ILLINOIS
FOR RELEASE AT 12:00 NOON, MONDAY
I deeply appreciate the opportunity you have given me to discuss current
developments relating to the baking industry. However, I do not want you
representatives involved so closely with this important food processing and
distribution business to anticipate ready answers to your specific problems
in the market arena. I think you understand that my field does not cover that
kind of expertise.
The complexities of doing business are changing daily. I suspect that
is why you are here -- to add to your knowledge and carry home some facts that
will help you overcome roadblocks to reasonable profit.
My brief part of your program, as I see it, is to discuss some of the
involvements of Government and pursue these points to a logical conclusion.
Presently an obvious problem is plaguing the baking industry the sharp
upward trend in wheat prices, coupled with a recent decision by the Price Com-
mission.
I believe we can agree at the outset that the value of wheat at the farm
is a comparatively minor portion of the price the consumer pays at the grocery
checkout counter. However, I also understand that the price of wheat is a
fluctuating cost that has to be reckoned with in management's struggle for an
adequate share of the consumer's dollar. It seems the banker and your stock-
holders are interested.
I think, too, that as a basic premise we must agree that farmers have
waited at the roadside for quite some time awaiting a chance to get onto the
main economic highway of our national life. They have watched their costs increase
constantly, but the prices of the commodities they sell have too often remained
at the levels of a generation ago or even lower. Wheat is one of those commodities
that held at depressed prices, especially when you consider the price at the farm
gate -- not that quoted at the terminal markets.
(more)
GERALD FORD
-2-
The current situation reminds me of a. fellow I know who is not the most
patient man in the world. When he drives his car up to a stop sign, waiting for
a space break to enter the mainstream of traffic, his blood reaches a slow boil.
He then barges out to force his way into the moving line of cars. That sometimes
creates visible indications of unhappiness on the part of other motorists.
Like the frustrated car driver, the farmer took his turn in the wheat
situation. I realize the space margin in the baking industry profit line may
not comfortably accommodate an extra entry of cost.
You are well aware that the real costs of a loaf of bread or a pastry item
are in the finished flour, transportation, manufacturing and retailing costs,
plus taxes just to name a few of the steps beyond the farm gate. Labor, of
course, is the major factor in every phase of processing and distribution, usually
followed closely by taxes -- local and national.
I recall a few years ago a farm magazine editor traced the part taxes play
in the price of a loaf of bread by the time it reaches the retailer's shelf. He
concluded that taxes on every piece of equipment, on the land, on bakery structures,
on parking lots, on employees and companies, would total about fifty percent of the
final loaf price. That may have been exaggerated somewhat, but it reveals all too
clearly a point which is difficult to explain to consumers.
Escalating taxes perhaps come close to equaling the cost of the ingredients
of a baked product.
All of it points to the problems that should be of primary concern to consumers
and everyone involved in business, inflation and the need to relieve the local tax
burden.
If no other lesson has been learned from imposition of price and wage controls
during this past year it should be the realization that inflation is our greatest
domestic enemy. No good could come from annual increases in every cost, of regular
built-in raises of every product to the consumer, and automatic wage increase demands
on an escalator that was destroying our ability to compete internationally. A
condition that accelerated in the late '60s had to be dampened. There was no alter-
native.
I don't believe anybody would say that business or the consumer would be best
served by turning virtually all production over to other countries while our own
(more)
:
-3-
nation became one of service people. Yet, that was the trend to a point where
100 percent of many items was being manufactured and processed outside of our
country. Probably much of your baking equipment and supplies was being imported,
wholly or in part.
The President used traditional methods the first two years in an attempt
to solve the inflation problem inherited by his Administration. It became pain-
fully evident that this was not working well enough. Inflation continued,
prompting labor to demand higher wages to stay even with the board or to leapfrog
future cost-of-living increases. This in turn accelerated the treadmill.
None of us like controls -- least of all the Administration, which has to
hold down the lid.
I am frequently asked, if this Administration is so concerned with holding
down prices why are farmers permitted to get more for their commodities during
this control period?
That one is easy to answer because it is so obvious. Farmers are probably
the only large group of business people who have little or no control over their
prices. The products ride up and down like yo-yos. If the price of a commodity
like wheat has been selling in the market at less than actual cost of production
for several years, then certainly when demand is created to move the price upward
the producer must be permitted to recoup losses or he could not remain in operation.
Prices of nearly every other product with which I am familiar, other than raw
materials, rarely drop back. Rather they continually move upward, reflecting
increases in cost of operation. Farmers generally do not have that kind of option.
What, then, is the score on the baking industry dilemma?
Bread and red meat are the items consumers watch more than any other purchase.
They are basic to the American diet, despite some weight watchers shying away from
pastry products. That makes them vulnerable to quick public criticism in the event
of even a minor rise in price. But, I have a feeling that the price of bread may be
weighted more than is warranted in the cost of living indexes.
This equation in the national diet can only be assessed as an enviable one in
the sense of consumer acceptance. It also imposes a heavy burden on management to
maintain a competitive position with other food products. This is particularly true
in periods of economic stress.
(more)
-4-
Predictions abound that total consumer income after taxes may be up seven
and one-half percent in 1972, while spending for food may rise less than five and
one-half percent. That does not mean that individual breadwinners are obtaining
the seven and one-half percent increase. Rather, it indicates that the total
national income has increased by that much due to considerably higher employment
numbers. The point here is that demand for basic nutritional items is pushing
up the indexes. While bread may not be the heavy factor in the cost of living, in
the consumer mind it is a known indicator because of almost daily purchases at
a given price.
Now, to the specific involvement of government.
The big picture of overall concern to Government is to stabilize each
sector of our economy, with an eye to all sections of the country. That's a
giant order, almost impossible of fulfillment. But, the least we can do is
try harder.
Moving from a wartime to a peace economy has complicated matters by making
it necessary to shift more people to consumer-oriented production. But this is
being accomplished.
The tax ituation that I mentioned previously as the second major problem
to be contained is now within sight of accomplishment. The President's revenue
sharing bill, which he has fought to obtain from the Congress for so long, is near
final enactment. Local and state taxes can be relieved considerably, or at least
stabilized by its provisions. On the national scene, the President has assured
us that he will work in every way to hold the tax line -- another essential ingredient
in the control of inflation.
For too long people have shown an unwillingness to accept the real reasons
for inflation. They have wanted the best of two worlds -- high wages at home for
personal buying power, and low-priced imports made possible by wages as much as
one-fifth our own scale of living.
Somehow, most of us failed to realize that international trade has to be a
two-way street. We could not go on forever buying, while selling far less. Our
foreign suppliers had to have something more substantial than IOU's or the equiva-
lent, Since most countries could produce far more cheaply than U. S. industry
(more)
GERALD LIBRARY R-FORD
-5-
because of the vast wage differential, about the only chance we had to compete
as the years ticked on was in agricultural products. That should pretty well
indicate the low level of farm income -- even with Government subsidies.
Again, we have to be willing to accept the fact that agriculture generally
had to catch up with some exceptions. Americans have turned their backs on
reality far too long. Developments this past year have shown the efficacy of
the program instituted by the President to put a damper on the inflation fire.
The plans this Administration designed to achieve a break for farmers --
to put them more nearly on a plane with other industry and labor are beginning
to pay off. Commodities that had been in trouble such as wheat, potatoes, swine
and feed grains have moved up from minus positions. And taxpayers are certainly
gaining from the sale of wheat and other grains to the Soviet Union both in
cash and in the long-range peacetime view. Taxpayers are getting back about
four dollars for each one expended in assisting the grain sales. This has come
about by savings in Government costs of procuring, transporting, storing and
borrowing incidental to the surpluses produced by our farmers each year despite
acreage controls.
It appears likely that something over one billion dollars in extra income
resulting from the Russian sales will move into rural America. That means extra
new wealth in that vast area comprising about 98 percent of our land. The long
line of benefits do not stop at the rural mail box. This money begins filtering
immediately to the cities and seaports for even better employment opportunities.
And that means more bakery products will be sold.
I sincerely hope that all segments of our labor movement understand just
how much is at stake in our grain deals with the Soviet Union. It is essential
that every bit of cooperation be obtained in the wheat exporting program -- now
and for the future. To do otherwise would impose a selfish and terrible disservice
upon all of America -- Including the thousands of other workers involved at every
step of the way to the ships in the several ports.
It is invigorating to note the high level of employment involved in handling
this grain -- in the local elevators, the transportation systems, the terminal and
seaport elevators, the dockworkers, and among all the people servicing or supplying
(more)
-6-
these thousands of people doing the great wheat moving job.
America is now, and can continue to be, the breadbasket of the world. Down
the road we and the other countries can use all the agricultural products the U.S.
can produce. A not inconsiderable spin-off is the growing chance for lasting world
peace through sales of food and interchange of other products.
It took considerable doing to reach this point, from the President's visits
to China and Russia down to the actual working out of agreements which permit us to
compete in world trade. Any deviation from the conditions making the sales possible
would throw the United States right back where it started. There are several other
countries producing grain which would scramble for this newly opened market. To
deprive our farmers, our laborers, and our taxpayers of these benefits due to
selfish motives would be tragic indeed.
I firmly believe we must all work together within the framework of our private
initiative system for the greatest benefit to all our economic and sociological
interests.
We can be fiercely competitive while operating within fair rules that will
make opportunity available to the greatest number of our people. This includes
innovating management teams like you industry representatives who are making possible
the continuation of our heritage as the world's citadel of democracy.
The inflation psychology that plagued industry is abating. That means it
should not be long before a leveling out will permit return to the full and preferable
private initiative system, with Government acting more in the capacity of umpire.
But, meanwhile we must demonstrate that national interest is of first concern.
No other alternative is acceptable.
Thank you.
###
GERALD LIDRARY FORD