Address at Economic Mobilization Conference of the American Management Association.

I find my position here tonight a refreshing and somewhat novel one. For some months now we in the government have spent a large part of our waking hours acting on proposals by private citizens on what the government could do about the business downturn.

Now this group of private business leaders has invited some of us from government to suggest to businessmen what they could be doing about the downturn. Needless to say, this is a welcome turning of the tables. I begin by reminding ourselves of one simple, inescapable fact:

America is not going to stand still. America is going to grow--and grow and grow.

The question that faces us today is not whether America is going to continue to grow and make progress, but how quickly our economy is going to resume its full and healthy advance.

My answer tonight is this: reports from the country strongly indicate that the economic decline of recent months is slowing down. Not all our economic troubles are over by any means. But there is a change in the making. That it will prove to be a change for the better, I have no doubt.

What America must do now is to gather all its forces for a new offensive to promote an early upturn and renewed economic growth that is vigorous and sound. No single person and no single group, however wise and well-informed, can name the day or the week when that upturn will begin. But there is reason to believe that much of the adjustment which a free economy experiences from time to time has already occurred. from this point on, the conscious determination of the American people-together with the resultant actions--can make the difference in lifting the economy to higher and higher levels.

It is at this point that the wisdom, the venturesomeness, the resourcefulness of our business leadership are put to the test.

We have about "caught our breath."

There is nothing wrong with our oxygen supply. Now, what do we do to get climbing again?

The emphasis of this conference is on private action, and rightly so. But we all know that the job of recovery is a joint effort in which business leaders, labor leaders, farm leaders, professional leaders, consumers, together with government, must all play a part. I could not in good conscience come here tonight and call on you as businessmen to do your full part unless I felt confident that the government was fully alert to its own responsibility.

Government--while it cannot guarantee prosperity--has a continuing responsibility in times like these to use its powers to help counteract recession. It has a duty to alleviate human hardship and protect our human resources, to help promote an upturn in production and employment, and to help build a solid foundation for long-term growth. All this it should seek to do in a way that strengthens the vitality of our private enterprise system, and that includes safeguarding the integrity of our currency.

Carrying out this responsibility, your government has acted over a period of many months in many ways to counter the recession and foster recovery. Let me cite the main items in this record of action.

First, the independent federal Reserve System has increased the availability of credit and has helped reduce its cost to borrowers.

Second, a series of actions starting last August has been taken to promote private housing construction and to step up activity in such fields as urban renewal and college housing.

Third, measures have been taken toward accelerating approved public construction in many categories, such as Post Office modernization, water resource projects, hospitals and highways. The accent has been on the speeding up of going or authorized work on needed facilities. I am determined not to get bogged down in a slow-starting, emergency public works program, which would provide a minimum of jobs now and a maximum of budgetary headaches in the years ahead.

One truth we should always hold before our eyes: reckless expenditures in the name of economic stimulation is both wrong and self-defeating.

Fourth, steps have been taken to accelerate markedly procurement for needed defense and civilian requirements.

Fifth, recommendations have been made to Congress to deal with special problems. An example is my proposal of March 25th to provide temporary unemployment insurance benefits to individuals who have exhausted their regular benefits. This proposal goes directly to the heart of the problem of relieving human hardship arising from the recession. There can be arguments about the details, but there is no arguing about the personal anxiety and hardship that this proposal will alleviate. We need its prompt enactment by the Congress.

There is another area of policy that has aroused intense interest, both in and out of government. That is taxation.

Everyone in this country is, I know, concerned about taxation. We would like to achieve improvements in the tax structure. We would like to assure maximum equity in the tax burden. We would like to achieve further simplification. We would like a tax structure which least interferes with sound economic growth.

The timing of such changes always poses problems. During periods of high business activity and high employment there is concern with inflationary effects. In a time like the present, with its rising government expenditures, we are particularly sensitive to tax burdens, but there is likewise great concern with the future impact of increasing current deficits.

After consultation with Congressional leaders, certain decisions will shortly be taken in the field of taxation. They will be made in the light of the latest information regarding the economic situation and with a full evaluation of the probable short and long range consequences. This matter of taxation is so important to the American people that by no means should it be the subject of political competition.

While we are talking of government activity, we cannot forget defense reorganization, mutual aid and world trade. Through our security establishment, we help produce the confidence essential to prosperity at home. Through our mutual aid program we help other free-world nations develop their strength in order to maintain their defense establishments against Communist threats, and in order to bring the economic improvement that spells hope for their people. And through expanding world trade we increase jobs at home and economic strength here and abroad. In these three vital areas we need decisive Congressional action. Now I want to turn to the field of private business action.

I have been gratified by the underlying purpose and accomplishments of this conference. Business leaders have been reporting precisely what they and their industries are doing in creating new products and designs, reducing costs, modernizing plants and facilities, and merchandising more effectively. All this will create new and better job opportunities. These reports show that American businessmen are engaged more and more in the best kind of creative competition--investing their resources, their ambitions, their imaginations and themselves to build stronger positions for their companies. Thus they will help build a stronger America and a stronger free world.

They do this because they are deeply convinced of this plain truth about American life:

Achievement and progress cannot be created for our people; they can only be created by our people.

Americans would have it no other way. Our future is in our own hands. Our prospects are limited only by our vision and by our exertions.

Our economy has always moved ahead to set new records after every period of pause or recession in our history. It will do so again.

One salient fact should be clear. We can never pep-talk our way to prosperity. No one here is proposing that we try. We are simply suggesting that businesses do what is dearly in their own interest. We are suggesting, further, that it be done in the time-honored American way of self-reliance and self-starting initiative. Our economy has grown strong because our people have made jobs for each other and have not relied on the government to try to do it for them. What is our economy anyway?

Emphatically our economy is not the Federal Reserve System, or the Treasury, or the Congress, or the White House.

This nation of 43 million families, 174 million people--what we all think and what we do--that is our economy.

Our economy is the result of millions of decisions we all make every day about producing, earning, saving, investing and spending. Both our individual prosperity, and our nation's prosperity, rest directly on the decisions all of us are making now.

This Conference has been concerned with guides for such decisions by business. Let us look at a few.

The first is this: the best hope of continued progress and growth is for businesses to keep offering the American consumer something better. This means to create better values.

Creating better values, in turn, calls for vigor and imagination in forging ahead with new and improved product developments, and in product and market research.

In a free economy, people do not always buy just because they have money. Theirs is the sovereign right of choice. One of the hopeful developments of recent years is that new knowledge is rapidly being accumulated about the aspirations and wants and motivations of our people. Many businesses are extending their research activities further into these fields in order better to find out what people want, and how products can better be adapted to their customers' needs. Thus businesses can serve us all better. These vital activities should be intensified.

One great challenge that our economy has always faced, and met superbly well, is this: to produce the most good, as well as the most goods for the benefit of the people.

The second guide to business action has to do with inventories.

We have reports of some manufacturers and distributors who are going along on a hand-to-mouth inventory basis.

One businessman told me recently that this kind of timidity had been bad business for him. He was convinced that it had caused him to lose sales. Another told me that his company's policy, back in 1949, of letting inventories fall below normal requirements left it unable to keep up with its competitors when the upswing came.

The guide in this inventory question seems a commonsense one: buy to normal requirements. Is that not good business?

Closely related is a third problem, that of investment in plant and equipment.

Now, no one is going to urge a business with ample capacity to add more facilities just because it might be good for the economy as a whole.

On the other hand, very few of the 4,300,000 individual businesses in this country feel that they do not need some modernization or improvement. first they expect to create better values for better business today: likewise, they want to get ready to win their full share of the unprecedented markets that certainly lie ahead. Many of these companies are doing these things now, for the simple reason that now is a good time to get them done.

What time could be better than the present for making these outlays? Money and materials are more readily available today, and in many cases on better terms, than they have been for some time--or than they may be for some time.

As I have indicated, the Government is following this simple rule: for purchases and investments which must be made anyway, acting now makes sense for the Government, and it gives the economy a lift when it's most helpful. I suggest that there are numerous opportunities for private business profitably to adapt the same principle to its operations. My fourth comment is on prices.

No feature of America's economic life has been more at the heart of our rapidly rising and widely shared levels of living than the daring of this Nation's businesses in pricing for volume and taking their chances on profits. It is no accident that this policy has characterized our most profitable industries. If we are to maintain the vigor and vitality of our free economy, this drive for the widest possible markets must continue. A price policy designed to bring increasing volume should be nothing short of an article of faith for every business man.

My fifth observation is this: the economic recovery and growth we bring about must take the form, not of higher costs and prices, but of more production and more jobs.

Let's be realistic. If as earners we obtain such large increases in our incomes each year that the costs of production move always upward, then as customers we will find only higher price tags in the stores.

The American people believe in good wages, both in private and public employment. Good wages reward effort and build markets. But the American people are going to be looking over the shoulders of those sitting at every bargaining table to see whether the wage settlement and subsequent price decisions are consistent with a stable dollar, or whether they mean another dismal sequence of ever-rising costs and prices.

Inequities in the wage structure must, of course, be adjusted. But consumers are not going to be satisfied with less and less value per dollar of price, which is the inevitable result of less and less production per dollar of cost. If businessmen and labor union leaders forget these truths, the consumer will remind them in ways that are clear and painful. And in the process the whole economy will suffer. These are not theoretical considerations. They have a direct bearing on specific industries today.

Perhaps this is a good time to ask ourselves whether some dangerous rigidities of thought and policy have not been settling in on us in recent years.

There used to be a periodical feature entitled, "We nominate for oblivion . . ." Let me suggest a few ideas that I would like to nominate for oblivion: --the idea that the consumer is not price conscious anymore;

--the notion that without paying the piper in higher prices, we can as a nation overpay ourselves for what we produce;

--the idea that management can be lax about costs without pricing its product, not only out of foreign markets, but out of the American market as well;

--the idea that large annual wage increases can be regarded as a matter of course;

--the delusion that more rigid farm controls and larger surpluses to dispose of at taxpayer expense can lead to a prosperous farm economy; --the notion that we can export without importing;

--the doctrine that a competitive enterprise economy can be free of all loss, failure and disappointment, and that government can take all the bumps out of the road of business.

All these and similar illusions are threats to that resiliency which enables private enterprise to adjust itself to new conditions. More than that, they are threats to recovery and to our capacity to achieve a vigorous and orderly economic growth. I once more nominate the whole kit and kaboodle of them for oblivion.

Three years ago last October, I discussed the state of the economy in an address at the Forrestal Memorial Dinner in Washington. As you will recall, that was also a period of some uncertainty. Cross-currents were evident. Unemployment had risen. Output was below that of the previous year. Dire predictions filled the air.

On that occasion, I urged that we take the long view, venturing the opinion that ours could be a $500 billion economy within a decade if we were wise in our policies. I meant to be conservative in my estimate: it is clear now that I was.

We see all around us evidence that Americans share this confidence in our economy's long run expansion. It rests upon solid facts like these:

Our population is burgeoning at a rate of 3 million Americans a year. That is equivalent to adding a Kentucky to the Union every twelve months.

Even in this recession year, business is spending more than $30 billion to maintain productive equipment, expand capacity, and provide for the creation of new products. In the last five years these outlays have reached the staggering sum of more than $150 billion.

State and local governments are spending nearly $ 10 billion each year for new schools, better streets, and the other facilities that our people want and need.

Nowhere is this faith in the future better exemplified than in the $7 billion which will be spent by industry on research and development this year--outlays that have been growing at the rate of 10 per cent a year. The wonders of recent years--nuclear energy, miracle drugs, synthetics, electronics--will be dwarfed by new wonders to come.

Today 3 million of our young people are in colleges and universities, preparing themselves for the opportunities of tomorrow.

We are now moving forward swiftly on the vast highway program which I proposed a few years ago. It will provide a 41,000 mile nationwide system of new and improved highways for the rapidly enlarging volume of traffic generated by our expanding economy. After 50 years of indecision the great St. Lawrence Seaway project is moving toward completion. In the field of aviation, plans are well advanced to receive the jet age. Abroad, prospects of new markets are opening to our trade.

In short, the future is bursting with vitality and promise: it is welcomed by rising aspirations of our people; our advancing productivity to meet those expectations; the vast areas of new enjoyment, utility, and adventure opened up by scientific advances; the growth of schools, hospitals, research centers; the rapid strides in wide sharing of personal income, education, and security.

The question, then, is going to be--not one of surmounting our problems-but one of rising to our opportunities.

But remember: these are fast-moving times. The faint-hearted and the doubters who hang back today are apt tomorrow to be trampled in the rush of progress. It has been the tough-minded optimists whom history has proved right in America. It is still true in our time.

The economy of the American people has served this nation faithfully and well. It stands as living evidence of the toil of this generation and those who have gone before. It has yielded the material counterpart to the dignity that is every American's birthright. It has afforded not only material comfort, but the resources to provide a challenging life of the mind and of the spirit. It has provided the strength to make our homes secure against those who would attack us and destroy our way of life. It has given us the means to work unceasingly for a just and lasting peace among the nations of the world.

All this we can keep and strengthen by our faith and by our exertions. May we so conduct ourselves today that, when we look back upon this time, we can say: We met the test.