I WANT to talk to you today about one of the great success stories in the history of our Nation---the modern American economy.
You leaders of the Business Council can claim authorship for some of its most exciting and significant chapters.
I do not say that lightly, or take your efforts for granted. It has been my privilege as President to have you as partners for 5 eventful years. You have given me strength, comfort, and satisfaction to last for all my years. I thank you most heartfully for that.
I will leave the White House next January as many of my predecessors have, carrying a debt to America's businessmen in my bags.
I share it, for instance, with Abraham Lincoln--one of numerous Presidents to receive invaluable advice and assistance the business community.
For example, there was the day that President Lincoln and his Secretary of the Treasury, Salmon P. Chase, faced a great dilemma. They were preparing to issue a new greenback, but there was no gold in the Treasury to back it up. The problem was the inscription that should be put on the new currency: What on earth could it say?
President Lincoln and Secretary Chase racked their brains. Then they had a brilliant idea--one that has occurred to me on more than a few occasions: Call in the businessmen.
So they did. The Business Council of that day convened. They heard long and elaborate explanations of the problem, and then there was a great silence. President Lincoln was really getting worried when, finally, one of the businessmen stood up and said, very softly: "Mr. President, I think there is only one inscription that currency can carry." "And what is that?" asked the President. "I believe, sir," said the businessman, "that it would be best to put on it what Peter said to Paul: 'Silver and gold have I none, but such as I have give I thee.'"
That is the kind of hard-headed business advice that a President learns to appreciate.
And the same is true for ex-Presidents. I have been told of how Herbert Hoover, shortly after leaving the Presidency, was walking down a street with his Secretary of the Treasury, the very businesslike and tough-minded Andrew Mellon.
Very few people recognized them as they walked along. Suddenly, Mr. Hoover remembered that he had to make a phone call. He asked Mr. Mellon for a nickel, explaining that he had to call a friend. Andrew Mellon shrugged, dug down in his pocket and held out his hand, saying, "Here's a dime. Call both of them."
I don't know if I will be walking down any streets with Secretary Fowler, but if I do, I hope he will at least hand me a dollar's worth of change. And if he does, I will probably use it to telephone some of you--good friends with whom I want to keep in touch.
I believe there will be many moments in the years ahead when we will be happy to look back and count the blessings of these years.
I happen to think that America needs to count its blessings once in a while--as well as its faults. And the particular blessing I'm talking about, America's unparalleled prosperity, is going to go a long way toward correcting our faults, if we have the foresight to preserve it and the wisdom to use it properly.
When I ask my advisers to describe this prosperity in concrete terms, they reply, as your advisers do, with a list of figures a block long. I am going to use some of those figures here; not because I am enamored of figures, or because I want to celebrate the virtues of this administration, but because the figures tell a story of what Americans have achieved by using their intelligence and listening to their conscience in these years.
Today, the United States is in the 94th month of the longest uninterrupted period of economic growth we have ever known.
Our gross national product has grown by almost 75 percent since January 1961. For every dollar of increase in GNP due to higher prices, there were $3 due to greater production. That's equivalent to almost $300 billion real growth in today's prices.
But this is only the story outline. It is the story-within-the-story that must be read today, because it holds the greatest lesson for tomorrow.
It is the great human drama of what we have done with our enormous wealth; how we have used it to better the lives of our people; how we have invested it in our people and resources to lift the level and quality of American life.
In all our history, we Americans have never gone so long without recession or depression, without unemployment throwing chaos into our work force and fear into the hearts of families, without sales and profits hitting the skids. More Americans are working today--earning more, spending more, living better--than ever before. With sustained and rapid growth adding 50 percent to the real output of our Nation:
--we have raised America's living standards;
--we have increased and modernized the productive capacity of American industry;
--we have made great progress in meeting the public needs of our citizens.
Now I know that prosperity is not the complete answer to America's problems. But anyone who thinks we can solve these problems without a strong and healthy economy just does not understand the world we live in. What we have tried to build in the last 7 1/2 years is a rich nation that is able to exercise its social conscience.
When I first entered public life, America was torn by two opposing economic theories: the "trickle-down" theory and the "sock-it-to-'em" theory.
The "trickle-down" theory argued that all America needed was prosperity for the business community and the money would eventually find its way down to the people at the bottom of the economic ladder.
It worked just like it sounded. By the time the money got down to the poor people, it was nothing more than a trickle--a drip, and that was when things were prosperous. If we had a recession, the money stopped altogether.
It's like the farmer said down in my part of the country about the Great Depression: "It wouldn't have been so bad if it hadn't come right in the middle of hard times."
The "sock-it-to-'em" theory called for a heavy taxation of profits and a reduction of the living standards of the middle-income and upper-income families to raise living standards for the poor.
But this becomes dangerous if you carry it too far. If you take too much away from the top, you discourage industrial expansion, which creates new jobs and you slow the expansion of the economy as a whole, which creates even more jobs, and more money.
In the long run, each theory is just another way of slicing the same pie.
But in this administration, we set about to do something new--to use a "New Economics."
We decided to bake a larger pie each year; a pie with more and bigger slices, including some for a direct attack on our neglected social problems.
In 5 years we enlarged that real economic pie by $180 billion--after allowing for price increases. That $180 billion has no inflation in it. That gain has given millions of Americans access to goods and services they needed, but despaired of achieving in their lifetimes.
Consider what has happened to the people's income since late 1963: --Total personal income increased by almost half or $220 billion.
--Total wages and salaries are up by $150 billion, nearly one-and-a-half times the Nation's 1967 food bill.
--Corporate profits are up by nearly half, both before and after taxes, and dividends grew by more than half--reaching all time highs.
But the most significant fact of all may be this: All major groups have shared in the growth of the pie. Measure the gains in profits, dividends, wages and salaries, and you discover that the gain has been about 50 percent for each. And these gains have generated a spectacular rise in the living standards of Americans; a bonus of over $2,000 a year for an average family of four.
Consider what has happened to the people's jobs:
--In these 5 years, employment has increased by 7 3/4 million persons--enough to absorb an increase in the labor force of 6 1/2 million, while reducing unemployment by 1 1/4 million.
--The unemployment rate, which equaled 5.5 percent in November 1963, averaged 3.8 percent in 1966 and 1967, and was 3.6 in October.
--This gain in jobs has been the single most effective counterstroke against poverty in America.
Consider how this record has changed attitudes about our economy: We don't have scare talk of automation any more; or the clamor for short workweeks and early retirements; or the chilling thought in the Nation that our economy was tired out and others would soon pass us.
The nagging question now is: Have we invested our prosperity with wisdom and prudence? Have we been a nation with the commitment and the courage to make private affluence the servant of social progress? I think the answer is "yes."
Federal expenditures for health, education, and welfare--including those from self-financed trust funds--have risen from $28.5 billion in 1964 to $55 billion this fiscal year.
This approximate doubling reflects dramatic innovations such as Medicare and dramatic increases in social security benefits. They are also clear evidence of this administration's concern for innovating programs that protect and enlarge upon the fundamental rights of every American to good health, good homes, good schools, good opportunities for self-advancement and a good life when the years grow long. It has gone:
--into better education--from Head Start programs to graduate degrees;
--into better health--from prenatal care to Medicare;
--into better housing--from city apartment to rural home;
--into better conservation and more recreation areas--from city parks to national seashores;
--into the fight for better justice and opportunity for all Americans--from minorities denied full citizenship to men denied an equal chance for a decent job.
Eight and a half million Americans rose from poverty between 1963 and 1967. In the past 2 years alone, more Negroes and nonwhites have escaped the poverty trap than in the previous 6 years.
The education gap between young whites and nonwhites has been cut to less than half a year--as measured by years of school experience.
In 1963, only about two-fifths of young nonwhite adults were graduating from high school. Today the proportion is three-fifths.
• Our investment in the ability of the poor and the deprived to lift themselves up has already paid rich dividends.
• Between 1963 and 1967, the proportion of nonwhite families earning at least $8,000 rose by almost two-thirds--from 15 to 24 percent.
• The jobless rate for nonwhite men dropped from 9 percent late in 1963 to 3.8 percent in the 3d quarter of 1968.
Now I did not come here to say that these statistics, and what they represent, have solved America's problems. But the facts cannot be begged. The record is clear: Economic growth has been the most powerful social weapon in our hands.
America's economic success story does have a major blemish--inflation--and I would be less than candid to gloss over it. Prices have been rising in the last 3 years faster than should be tolerated. Although our overall price record surpasses that of other industrial nations, it is not good enough. We can do better.
We are working to do better. With taxes and spending cutbacks, we are getting a reduction in the Federal deficit of considerably more than $20 billion in this fiscal year-the biggest swing toward restraint in 20 years. We are beginning to see some return from this investment in fiscal moderation. The economy is no longer plagued by the fever that it had earlier this year. But the slowdown is coming very gradually. Private spending is remarkably strong. In part, that's a testimonial to business and consumer confidence in the future of our economy; in part, it's a reminder that once a wage-price spiral gets going, it can't be stopped dead in its tracks.
The campaign for healthy, noninflationary economic growth is not going to end next January 20 or next June 30. It is going to have to be fought in the next administration and in fiscal years to come. It is going to take patience and perseverance.
If we stop persevering, we will have an irresponsible budget that would pour new fuel on the fires of inflation. If we lost patience and demand a sudden slowdown in prices and wage costs, we will court recession. As the experience of 1957-58 reminds us, even a recession won't give us instant price stability, but it would give instant misery throughout our economy.
This Nation should not and will not accept falling profits, high unemployment, forced retirements, rising bankruptcies, and shriveling markets as a remedy for our present problems. We have to find the path which brings us to price stability without destroying prosperity.
I hope my successor will use the tools of economic policy forcefully. I hope he will insist on using them to guarantee full employment. For without full employment he cannot succeed in his other urgent objectives. God help us if we find ourselves returning to a period of high unemployment, with the "haves" fighting off the "no longer haves" for precious jobs. That is a prescription for social disaster.
And neither can American business today prosper without the right policies by the Government. We knew we needed action on taxes in 1966. Many of you in this room will remember what happened when, in the month of March 1966, I asked how much support you would give me. Not a hand went up. And I was told that I could get but four votes in the tax committee of the Congress out of 25.
And we knew we needed taxes in 1967. Many of you in this room will remember my plea for support then, too. I am glad that the business community fought for a tax increase this past year.
I would hope my successor will do what he can to insure the utmost cooperation from business and the utmost responsiveness from Congress in the job of setting fiscal policy. Perhaps some limited tax authority for the Presidency could be worked out. I think it would be highly desirable, subject to necessary checks by the Congress.
The persisting problem of inflation can only be met when business and labor use voluntary restraint on the price and wage front. The economic goals of this country-continued growth, high employment, stable prices, economic opportunity for all, health in our balance of payments--these goals demand enlightened partnership.
I began today by reminding you all of how far America has come in a few short years. I leave you with a challenge. How you meet it will decide how far America will go in the next few years.
The challenge is to be realistic--to realize that we have only just begun to reap the benefits of social progress. It is to realize the promise of our prosperity; to maintain it, to enlarge it, continuing to make it the shining instrument of human advancement and social good. That is what I have tried to do in my time in the Presidency. I am grateful to have had your strength on my journey. And I am made hopeful by knowing that you will continue as wise partners of the next President in years to come.
He will need all your help to insure we preserve our most precious asset--the health and vitality of the American economy--on which all of America's hopes and so much of mankind's future depends.
God bless you and guide you on that journey.