Remarks at the Signing of the Interest Rate Control Bill

Mr. Secretary of the Treasury, Chairman Martin, Chairman Robertson, Chairman Patman, Chairman Randall, Chairman Horne, Members of the Congress, distinguished visitors:

I am pleased to ask you to come here to be with us today when we put into the hands of the Federal Government a new weapon to preserve the strength of our economy.

Among the most dangerous threats to a sound and healthy economy in America are spiraling interest rates. They tend to feed upon themselves. They place an unnecessary burden on our citizens. They disrupt the even flow of credit, putting money where the economy is already overheated.

Competition has always been the hallmark of our free enterprise system. This competition has helped us achieve the highest standard of living that has ever been known to man. In our own time, it has given America 5 1/2 years of unparalleled--and unbroken-prosperity.

But, today, in our banking community, healthy competition has given way to a fierce race. To meet the growing demand for money, our lending institutions have been offering higher and higher interest rates for the dollars our citizens are saving.

The results of these spiraling interest rates are threefold:

--First, they force lenders to charge even higher interest rates on the money they lend;

--Second, they divert funds away from homebuilding, making it very difficult for thousands of Americans to build, or buy, or to sell their homes;

--Third, they weaken some of our financial institutions.

The bill I am signing here in the Cabinet Room this morning--H.R. 14026--I hope will help to correct these conditions.

A few weeks ago, in an effort to curb the competitive rate race between banks and thrift institutions which were competing for savings, the Federal Reserve Board and the Federal Deposit Insurance Corporation reduced the ceiling rates of interest which banks could pay on certain types of deposits.

Under this new law enacted by the Congress, these agencies, and the Federal Home Loan Bank Board, can take one more step in that direction--a step which will serve the purpose of preventing further escalation of rates, while we strive--and I can assure you we are going to strive--to use effectively both monetary and fiscal policy to cope with inflationary pressures.

I am advised that the details of their actions will be announced later today. Secretary Fowler will plan to have a press conference along with the appropriate agencies to give the details.

This bill that I am signing this morning is a very important part of the four-point program that I outlined in my message to the Congress on September 8.

We must attack inflation on all fronts.

We have pledged to do our part by reducing low-priority Federal spending.

Just as soon as we get the remaining authorization bills and the eight appropriation bills that are still pending in the Congress, we will carefully review those measures, promptly take action, submit our judgments to the Congress with a statement as to what we propose to do, and then ask Congress to do whatever may be necessary in order to keep this Nation fiscally sound, to prevent runaway inflation, and to see that we keep our dollar sound.

I have urged labor in this country--and will do so again and again in the days to come--and management to exercise prudence and restraint in their wage and price decisions.

I have asked the Congress to act quickly on two very important anti-inflationary measures that are now pending before it--the temporary suspension of the 7 percent investment tax credit and the use of accelerated depreciation.

I applaud the Congress for its action on the bill that I am signing today, and I urge prompt action on the remaining recommendations.

I thank the membership for the cooperation they have extended the executive branch. I assure them, all present this morning including the regulatory agencies, and the people of this country, that the executive branch of the Government is going to take whatever action it can in an attempt to drive down interest rates, in an attempt to keep our dollar sound, and in an attempt to match our expenditures with revenues.

As soon as we know how much we will be allowed to spend for running the Government next year, we will take appropriate actions shortly thereafter.

Thank you very much.