UF00083766_00031.pdf

UF00083766_00031.txt

UF00083766_00031_pdf.txt

TOPICAL OUTLINE FOR REMARKS TO GENERAL BLECTRlC
MEETING, TUESDAY, MAY 17. 1966, WASHINGTON, D. C.

A. Greetings.

l. Welttuntc to Washington where I. too. am a recent arrival.

2. Note by your agenda this is third day oi intensified briefings
on all phases of official Washington life. interrupted only by
brivi exposures to unofcial Washington scene.

B. in inte rest of brevity will examine Emergency Planning Aspects
of direct interest to you.

i. Note you heard this morning about specifics of the Business
and defense Services Administration. part of the Department
of Commerce with which we have close working relationship.

in) Under the Defense Production Act of 1950. a Defense
Materials System set up by BDSA which is administered
under broad policy guidelines established by 081.

(b) The. Defense Materials System designed to expedite De-
fense orders. help remove production bottlenecks. and.
if necessary. facilitate procurement of scarce items for
completion of priority deiensc orders.

(c) Under this system. quarterly allotments are made tor
three Government agencies u the Department of De-
(tune. the Atomic Energy Commission. National Aero-
nautics and Space Agency. These set-asides. as they
are called. currently include:

about ill". of Nation's copper production
about 1070 of Nations aluminum production
about 257. of Nation's nickel alloy production
about 8. 5% of Stainless Steel

sheet 3. 5% of carbon steel

about 7. of alloy steel

2. Will not further dwell on this subject because you received
in brioling this marning.

C. The Question 0! Controls.

D.

l. Whenever talk of inflation mounts (whether or not it is justified)

the national dialogue revolves around the prospect of consumer
controls.

2. Let me open with at statement: they are not now needed and

not likely to be needed.

3. Part of OEP's responsibility is to maintain in constant state of

readiness documents which form basis of any legislation that

might be needed. This "stand-by" posture is sustained in tran-
quil periods and in periods 0! worsening crisis.

Always these
documents are kept up-to-date.

4. Fact they are ready actually i'urther decreases liklihood they

will be needed by softening threat of psychological ination.
But tact is we who maintain this state of readiness regard
controls as a last resort not to be used except if the economic
picturr has deteriorated far beyond the minor symptoms and

trends we can detect today. and after all other methods have
failed.

We'vv had experience with controls. know how burdensome.
restrictive. they can he; know how inequities can creep in to
most fairly administered system. and know such mechanisms
are a headache (or your government and a handicap [or private
industry. Can all remember the immense relief which swept
country {allowing removal of wartime controls in past. Refer-

ring to OPA some weeks ago. President Johnson pointedly re-

flected this attitude when he said "We don't want to go through
that period again. "

What the Administration has done.

I. Some farm prices stabilised through release of government
stocks.

2. Stackpile of strategic and critical material held in excess to

national security requirements have been sold in orderly way.

bringing dollar dividends to American taxpayer while meeting
urgent industrial requirements.

(a) This is unuther specific responsibility of 08?. We
formulate policy and determine requirements for
stockpiled metals and minerals. Actual buying, selo
ling and management is accomplished by GSA. In
fiscal 65 disposed of $423. 5 million worth of material.

In the first six months fiscal '66 disposals reached a
record of $550 million in sales commitments with

about $1 billion in sales commitments contemplated

{or the entire year. Only last week President Johnson signed
tun bills authorizing disposal of $122 million of materials
such as Vanadium. chromite. t'luorspar. rhodium and others.
TWc-lvo pending bills await Congressional approval.

3. Import restrictions have been eased. particularly the case of copper.

4. The President has asked that industrialists reexamine expansion
plans. Good response.

5. l have asked Governors to hold up capital outlays {or non-essential
State projects.

6. Tax changes u postponement of excise tax reductions. graduated

withholding taxes begun this month. acceleration of corporate tax
payme nip.

7. Eu-nomy in gayernment. Holding the payrolls down. putting of!
least important enterprises and generally developing an attitude
of getting the most out of every dollar spent by Government.

B. What you can do.

i. in addition to meeting the President's request for deferment at some
expansion plans suggest:

(:1) Keep prices of individual items down.

(b) Try to absorb increased costs {or raw materials. but if
they must be passed on. avoid a "chain reaction" of per-
rentage increases which. when they reach the consumer.

amount to more than the percentage 0! increase {or the raw
materials.

(c) Do not over-buy the raw materials you need as a hedge ago
uinst the future. Such over-buying proliferates and more

often than not companies find themseltms with burdensome
inventories alter the threat subsides.

F. Can we lick this th reat?

I. Belivvo we can. and will. and are domg it.

(3) Wholesale price index appears to be steadying. up last.

Not yet passed on to consumer prices but should show.
at least partly. soon.

(b) Major problem remains in industrial commodities.
la rgrly rooted in rising prices for raw materials.

(c) it is a mixed picture, but appears to be more plusses
than minuses. With automobile production tapering off

slightly. pressures on basic commodities could case a
bit.

2. No prophet but do believe private eflorts by consumer. business-
men. great corporations. coupled with sound import-export
policies. and assuming no drastic increase in our defense require-

ments. should lead to a measure of stability without resort to tax
increases. We watch this closely.

3. Our economic surveillance committee meets twice ench week. The
information which they gather and assess is passed on to me. Fol-

lowing my review it goes to the President to be weighed with input
from other evaluating agencies.

4. Bellow: the President will not act hastilywith measures which could
lead not to a cure. but to killing the longest sustained prosperity our
Nation has ever known. Complete condence that his judgment will
be snund and our stability can be preserved. As President Johnson

said in his Economic Report last January. "This nation is mighty
enough -- its society healthy enough n its people strong enough u

to pursuv goals in the rest of the world while building a Great
Society at home. "