Remarks at the U.S. Savings Bond Conference.

Mr. Secretary, Gentlemen:

I am delighted to be with you for a few moments this morning. want to thank you for what you have done on behalf of the savings bond campaign and through that on behalf of the United States of America for its fiscal integrity and its economic soundness.

I have been told by the Secretary that through the efforts of this group, 40 percent of our savings bonds are accounted for by the enrollees in the various organizations that you people head or direct. That kind of record speaks for itself.

The readiness of our people to invest their savings into bonds is one of the features that we must count upon, if we are to have a successful America; if we are going to be able confidently and permanently to counter the Soviet threat to our form of life. It is the kind of thing that bespeaks morale and faith in America. Certainly without this kind of work, the debt management by the Federal Treasury would be much more difficult--I would say well-nigh impossible. And when we think that our debt is in the range where already we are spending for interest alone, without a single cent devoted to debt retirement, some eight billion dollars, we realize the kind of volume of work of which you are speaking.

Faith in our bonds certainly connotes a sound dollar. It means confidence in the American dollar, and confidence in the American dollar is certainly vital to our economic growth and expansion. If we are to keep this dollar sound, there are numbers of things that must be done--some by the individual citizen, some by business leaders, some by labor leaders, some by such organisms as the Federal Reserve Board, and some by the Federal Government directly.

One of the duties of the Federal Government is to be careful in expenditures-to make certain that it provides for the necessary operations of the Federal Government and does not waste a cent otherwise. We must do this in such a way as to live within our means. Certainly this is important. It is vital, when we are on a leg of a rising economic cycle. We simply cannot afford to be living now on deficit spending, no matter how much this might be justified in times of grave emergency or very unusual circumstances.

Now, we have many among us who are calling for heavier and heavier expenditures, saying that these heavier expenditures on the part of the Federal Government would mean and, in effect would cause, economic expansion. I cannot think of any doctrine or any statement that is so false as this one.

If the 174 million people of America don't know more about the spending of such money than does the Federal Government, then I for one submit we are getting in an awful fix. This is exactly what we do not want to do: appear under some kind of doctrine, making decisions of what the populace of our country want, what they desire and what they should have. These decisions to the major extent, to the most major extent you can possibly conceive of, should be in the hands of the people and in the localities where they live.

This cry for Federal expenditures claims as one of its features that we are tailoring all our expenditures to fit the possibility of a balanced budget.

Well now, let me say first: I don't know why a balanced budget should be a bad word, although some seem to think it is.

What we are talking about is this: finding out what is necessary. We know that we have to meet the Soviet threat. We know that for some years to come expenditures for this function are incalculable, they are almost astronomical--if I knew of a stronger adjective, I would use it. I would use everything except preposterous, because we have to do it.

But, if we are going to maintain our economic soundness, we do have to pay the interest on our debts, and we have to do those things that could be classed as necessary--of high priority in our whole Federal field. But each should be arranged in accordance to its importance and its priority. We must always remember that if the pressures of any particular group or a combination of groups keep us in an area of deficit spending--in order to get for the moment more dollars for itself that will defeat not only the country but each group. This will be so because each such pressure group action will so depreciate our money that in the long run they won't be getting even so much as they thought they were. And certainly, what they will do to the United States will be terrible.

I have a little passage I want to read, so I do not make any mistakes in what I am trying to say. The fact of the matter is that there is nothing which is more positive and more important to be for than fiscal soundness--in spite of these people of whom I spoke, who said that if you believe in fiscal soundness then you are against everything that America needs. So I say, the most important factor to be for is fiscal soundness. This is an essential condition of our economic health. Without it we can have neither adequate military security nor the adequate provision of other needed services.

Let us not be misled. A balanced budget and all that it means today in the way of fiscal soundness is a highly positive objective. It is the advocates of unbalanced budgets and deficit spending in our present economic environment who are against rather than for the maintenance of healthy growth in America.

When the Government spends more money than it is getting in the form of taxes, the Treasury must do just exactly what a family or a business would have to do, under similar circumstances: it must go out and borrow whatever is needed to finish paying the bills. When part of the borrowing it must undertake comes from commercial banks, the money supply is increased and the conditions are created for an inflationary price rise. Inflation weakens the economy. It brings serious hardship to those of our citizens who are living on pensions or other fixed incomes, and works against those who are unable to bargain effectively for higher wages. Most dangerous of all, inflation weakens the incentive to save. It gives rise to a fear that the dollar will continue to decline in value and that speculation will be the only way to keep ahead of the game.

Secretary Anderson said just recently that if we ever do reach the point where people believe that speculation is safe and saving is a gamble then we are indeed in serious trouble.

Now my friends, I spoke about the Soviet menace. It is something that we have learned and are learning always to live with because it cannot be eliminated merely by wishful thinking. We can be strong in our understanding and in our intellects, in our spirit--meaning our morale in our economy and in our military, to make sure that the United States will not have its rights violated or be unable to perform its responsibilities in the world.

But we can do all that and do it indefinitely and still have a sound and expanding economy, the kind of economy that will support and maintain that defense, if we will--each of us--only remember what are the stakes in this great struggle.

So I leave you by saying merely: savings, and the incentive to save, built this country.

We must not destroy this incentive. It is my conviction that the work you people here are doing is one of the vital steps in saving that incentive.

Thank you very much.