John F. Kennedy photo

The President's Special News Conference With Business Editors and Publishers

September 26, 1962

THE PRESIDENT. Mr. Secretary.

[1.] You gentlemen look very well after having been talked at all day. But we want you to know how much we appreciate your coming to Washington and giving the members of the administration who are concerned with those matters which are of particular interest to you, and to us, a chance to explain our policies and also, I hope, and from all I've heard, the exchange has been back and forth, so that I think the Government will benefit.

This is an artificial city, a governmental city, and well removed by design from a good many of the influences and pressures of ordinary life which you deal with on every occasion. So that it's very advantageous to us to have you come to Washington and tell us about some of your thoughts on us, which we read about with great interest, and also have a chance to talk to you.

I wanted to just sum up more or less what our view was of the economy, where it is now and where we're falling short, and what our target should be in the coming months. In the first place, I think that while we're all proud of the accomplishments of our economic system, and it has been an extraordinarily effective system in serving the needs of our people over a long period of time, we also do have a responsibility to look with candor at our shortcomings in order to attempt to develop courses of action which will make our system even more effective.

We all know that in spite of impressive economic advances during the last months, the last year and some months, there are several areas across a broad economic front that must still give us serious concern.

First, we have a rate of unemployment which is unacceptably high.

Two, we have significant industrial capacity which is not fully utilized, the steel industry being the most obvious example.

Three, we have persistent economic distress in certain regions. This is an old problem that's been with us for a great many years. But we still have the serious structural unemployment in the coal regions, steel--eastern Kentucky, West Virginia, Pennsylvania, southern Illinois, parts of Indiana, and eastern Ohio. And we still have a shrinking but troublesome deficit in our international balance of payment. And we still have a rate of economic growth which has lagged behind that of other major industrial nations.

These problems affect us all and none of us can escape responsibility for trying to meet them. We have attempted in the past 20 months to set forth policies and carry out programs which would provide a sound and solid basis for economic progress at home and abroad.

For the first time since the war I believe the American economy has moved forward simultaneously towards a number of major economic goals: full employment, though as I say we still have some to go; faster growth, at the same time avoiding inflation; and moving a long way towards a balance of payments equilibrium and also keeping a free competitive market and their functioning in operation.

Your copies of the summary of the 196162 economic expansion policies give you the particulars of what our economic growth rate has been since January 1961. I want to say, however, that with the problems that we still have, I think all of us in Government and in business should be thinking of what additional steps we could take which would be of assistance in maintaining an economic growth rate which will absorb the increase in our population and also those who are technologically dislocated.

We have to do that at home while at the same time maintaining a competitive position abroad, particularly with our European neighbors which will permit us to compete in their markets on a satisfactory basis in order to protect our balance of payments position.

So that, therefore, while we want to maintain a steady growth of the economy here at home, we also want to maintain the strictures that we can against inflation here at home which would deprive us of an increasingly advantageous economic position--particularly a position which has developed in the last 3 years in our ability to get our goods into Western Europe on a satisfactory basis.

This balance is very fine because, quite obviously, if we have an increase in costs, which are excessive in the United States, it could throw our hopes--upon which we are building so much of the success in our trade bill--it could cause us a drop in our exports and an increase in our imports, another critical period for our balance of payments, and therefore for the dollar, with all that that could mean to the United States at home and abroad.

I want to indicate, therefore, how complicated I think our task is. But there is so much slack in our economy that I think we should be able to take steps, and I'm hopeful our tax policies next year will provide an additional stimulus to the economy without threatening us with inflation.

And it seems to me that the fiscal--the monetary--procedures which we have available could effectively prevent any new inflationary pressure which might come because of a particular fiscal policy which we might follow.

I would like to say one word about the competitive market system because I think there seems to be, on occasion, some question among businessmen as to the views of those of us in Washington on this matter. Our experience during the present expansion has also demonstrated our ability to achieve impressive economic gains without shrinking the area of market freedom. I regard the preservation and strengthening of the free market as a cardinal objective of this or any administration's policies.

It is well to remind ourselves from time to time of the benefits we derive from the maintenance of a free market system. The system rests on freedom of consumer choice, the profit motive, and vigorous competition for the buyer's dollar. By relying on these spontaneous economic forces, we secure these benefits:

(a) Our system tends automatically to produce the kinds of goods that consumers want in the relative quantities in which people want them.

(b) The system tends automatically to minimize waste. If one producer is making a product inefficiently, another will see an opportunity for profit by making the product at a lower cost.

(c) The system encourages innovation and technological change. High profits are the reward of the innovator, but competitors will soon adopt the new techniques, thus forcing the innovator to continue to push ahead.

The free market is a decentralized regulator of our economic system. The free market is not only a more efficient decision maker than even the wisest central planning body, but even more important, the free market keeps economic power widely dispersed. It thus is a vital underpinning of our democratic system.

Price and wage controls paralyze the operation of the free market, and that is why we have opposed them. Likewise, unnecessary Government regulation undermines the efficiency of the market. That is why, in my transportation message to Congress last April,1 I urged that Government controls be curtailed, and the scope for competition broadened in the important transportation sector of our economy. A market, of course, is not a fact of nature. It is a creation of man and, as such, we have no guarantee that it will work effectively and impartially if we pay no attention to it.

1 Item 129.

We must encourage and protect the availability of full information, safeguard competition, and extend freedom of opportunity to individuals and businesses to participate fully in the economy in accordance with their desires and their abilities. The full benefits of the market system can only be felt when all of our people and all of our resources are used as wisely and effectively as possible.

It is, of course, natural that we will disagree as to how these goals can be implemented on occasion. Such controversies are essential to the democratic system, and also essential to democratic progress. I think it's important, however, that the controversy be based as soundly as possible on facts and on the most detailed information, that this information be made available as widely as possible in order to make sure that the businessmen of the country play as significant a role as their responsibility warrants.

As editors and publishers of the Nation's business magazines, you have a responsibility to bring to your readers accurate information concerning the activities of the Federal Government in those areas in which you are particularly concerned. I hope that this conference has helped to clarify the substance and rationale of Federal Government programs and policies, and that it will be helpful to you in your task of reporting on these activities to your readers who depend so much upon the information you provide them.

I'll be glad to answer any questions that anyone might have.

[a.] Q. Mr. President, do you believe that your administration is unduly sensitive to the alleged hostility of the business world?

THE PRESIDENT Well, we're unduly and alleged, I would say. [Laughter] I would think that we are sensitive naturally to hostility, if that were the appropriate description, by any segment of the economy. This system of ours really depends upon comity, upon cooperation, if it is going to function. Therefore, hostility from the business section, labor, agriculture, East or West, North or South, would make it much more difficult for us. So I would be sensitive to hostility from the business community.

I recognize that there is a political difference between this administration and most businessmen. I'm not really concerned about that political difference, because I think that it's traditional and, quite honestly, no Democratic administration has banked heavily on the amount of support it would get politically from the business community. What I'm concerned about is, however, in all these very intimate interrelations--whether it's the dollar, whether it's the new trade bill, all the rest, transportation--that we have as close an understanding as possible. A good many of the proposals that we may make to improve the state of the American economy require congressional action. We want to try to make sure to the extent that it's possible that we secure the support where we can of the business community.

In my judgment, we had a good deal of misunderstanding with the business cornmunity which did not serve the public interest this year on our tax bill. We really didn't get the kind of support that the investments credit, in my opinion, would warrant as a stimulus to our economy. The whole fight against the withholding, the impression that was widely created that this was a new tax, rather than a method of collecting a tax which had been in effect for many years-and now, as I look forward to an intensive study of taxes this fall by us, and presentation to the Congress, I would like to describe the relation between business and the Government as one of cooperation, and one of amity, and one that disregards the alternate Novembers, when we may be divided politically, and instead work on the common task of making this economy move ahead.

[3-] Q. Mr. President, you spoke a moment ago of the significance of the free market. May I ask how that statement jibes with what we heard from Mr. Ball 1 this morning, who told us that we have just concluded our first international global commodity price support operation, or how that statement jibes with our current agricultural program?

THE PRESIDENT. Well, I think that if we talk about the first, we are attempting to get an agreement on coffee because if we don't get an agreement on coffee we're going to find an increasingly dangerous situation in the coffee producing countries, and one which would threaten investments, private investments, from abroad, in those countries, and would threaten, in my opinion, the security of the entire hemisphere.

1 George W. Ball, Under Secretary of State.

I must say that I was looking yesterday at some figures on what the drop in coffee prices has done to a country with which we have the closest relations, Colombia. And all the aid that we have given Colombia has, of course, not amounted to the amount that Colombia has lost in foreign exchange due to the drop in the price of coffee.

So I think we have to be concerned with the problem of our primary producers, whose prices have been declining in the last 3 years and who are faced with very serious instabilities in their own countries. So that while we would like to have what we might call a completely free competitive market, I think in these cases the national interest is served by the international agreement.

Now in agriculture we have--of course, a good deal of our agriculture is in the free market. The problems that we have particularly, of course, are in wheat, in the feed grains, and, of course, in cotton, tobacco, peanuts, the so-called basics.

There it has been felt that a withdrawal of governmental support would precipitate a decline in prices which would be of such an extraordinary range that it would bring an economic collapse in the Middle West which would adversely affect the entire economy. The Purdue University study of the effect of a drop in or withdrawal of the Government from the support business has indicated the very serious effects this would have on the entire economy. On the other hand, of course, we pay a very large bill. We have been attempting in this Congress, with some success, but not total success, to provide that those who receive the supports will not plant an unlimited amount.

We have had, as I say, some success. But I think that those members of the business community who feel that the solution is a total withdrawal of the Government's support program, I don't think we're going to see that in the very near future and, number two, I'm not sure that it would serve our long-range interests. But there are, of course, obvious limitations.

The transportation industry is regulated. There are, of course, limitations on the free market. But basically this is a free market economy, and the fact of the matter is, it is the freest market economy of any industrialized society in the world today, and I think we can take some satisfaction in that. It's the freest in the world.

[4.] Q. Mr. President, you mentioned business cooperation. The administration's target date for you to proclaim the Tariff Classification Act is January 1st. Would you give consideration to postponing that about

45 days so that Government and the import trade can get a chance to study that 2-inch volume of our new tariff?

THE PRESIDENT. I will give that consideration, definitely.

[5.] Q. Mr. President, in connection with the problem of inflation, would you agree that the fact that the excessive supply was greater than the effective demand was a greater factor in keeping the prices stable than any Government action?

THE PRESIDENT. Yes, I think that's fair, though I think we made a contribution which was unacknowledged and comparatively unsung last spring.

But I would think that--I would think your thesis is right. I think that as everything has a good and bad side, the good side is the stability of the price level. Unfortunately, it comes from an excess, to a degree an excess of supply. And this is also true of the fact we have wage stability.

The manufacturing wage rate--because we have unemployment--the manufacturing wage rate increase in the United States in 1960-61 was a 2.8 percent increase in annual rate and in 1961-62 was 2.4 percent, which is the lowest it's been since 1947. The reason has been the one that you in part stated.

The hourly earnings in June 1961-62, of the United States show about a 3.0, while Belgium, for example, was 7.7. In fact, we had less than any country except Canada. Germany, for example, was 12.9 percent. As you know, that has been true since 1959. That 's why I say our competitive position has improved but the reasons for it in both the wage rates and in commodities owe a good deal to the reasons you suggested.

[6.] Q. Mr. President, business leaders in the aerospace industry feel very strongly that you have demonstrated your alleged anti-business attitude in forcing a union shop on them. An JAM official has indicated that he is not particularly pleased with this approach to a union shop. In view' of its significance for all industries, would you comment on this?

THE PRESIDENT. Yes. As you know, we set up a committee headed by Dr. Taylor because we--most of these missile companies, aerospace companies are really very much dependent upon the Government. The Government is their major purchaser. Therefore, any contract or any increase would, of course, be paid for in good measure by the Government.

Number one, any interference with production would be paid for by the American people because all these programs are vital. So that I set up a committee which was acceptable to both labor and management which was headed by Dr. Taylor from Pennsylvania, who had performed a similar function for President Eisenhower in the steel case in November of 1959, and included on it an arbitrator for Bethlehem. And it was a panel which, as I say, was acceptable. They made the report.

This was not done by the United States Government. As part of the report was the exceptions to the union shop. The fact is the wage section of the report was not as generous as the unions felt that they must have. On the other hand, the union shop was unacceptable to some of the companies. But as I said the other day at a press conference, the union shop in major industries has been accepted for a great many years--automobiles, steel, aluminum. This is not something new or radical. We've had that, as I say, in our basic industries. I can't think of any of them, really of our basic industries, that have not had the union shop.

So I don't think that this is asking very much. And as I say, it's not my report. It is Dr. Taylor's report. Now you can have an economic struggle out there on the coast in these industries, and you can have a strike, and then where are we all going to be on missiles and planes and all the rest?

So this was an attempt to work out an equitable solution. Obviously, neither side is very happy with it. The unions feel the wage section is too limited, and the companies don't like the union shop section. But I think that probably it's as equitable a solution as you would get from a long economic struggle.

And I think our experience in the steel industry, where you had a 6-month strike and then finally settled on terms you probably could have settled on 6 months before, indicates that if we can prevent the strikes, particularly in the vital industries, it's in the public's interest.

[7.] Q. Mr. President, what is the status of the wilderness bill?

THE PRESIDENT. Well, unfortunately, it's quite far out, in the sense that the bill is unsatisfactory and not very satisfactory in the House. It is in the Senate. And I hope we can get a good bill. I think many of us who travel around the United States know what an asset this is, and I hoped the bill would pass in a form similar to that in which we originally discussed it. I think if I may say so, this bill is an example of some of the problems which we have here in dealing with the business community. This is a bill which conservationists and others feel strongly is in the national interest. It does, possibly, cut across the interests of mineral producers or lumbermen and others, and they, therefore, may feel that the very sponsorship of such legislation is anti-business. But it isn't. It's an attempt to protect the public interest. And it's quite natural that those who may be adversely affected may suffer. But that doesn't warrant the general labeling of anti-business. As a matter of fact, a good many businessmen who complain about the antitrust actions of the Federal Government, this administration or others, if they would see the letters that come in from businessmen demanding that we take such action they would realize how difficult it is to keep all businessmen, or indeed, all of everybody else, happy.

[8.] Q. In the last few months it has become increasingly difficult to report in the aerospace field. There is, however, a DOD order outlining the mechanics of working with the press. Yet the order is secret. How can we get copies of it?

THE PRESIDENT. Arthur Sylvester--I'll ask him about it.

Q. I asked him Tuesday.

THE PRESIDENT. What did he say? You are with which magazine?

Q. Western Aerospace.

THE PRESIDENT. Fine. I will talk to him, without success, I'm sure.

[9.] Q. A couple of weeks ago, Mr. President, you said you'd recommend to the Department of Agriculture that it prepare legislation to eliminate the inequity of the twoprice system in cotton. Did you have in mind the substitution of a one-price system?

THE PRESIDENT. Well, I think that we will, in January, present a program which will eliminate the inequities. I think it would be better for the Agriculture Department to finish its analysis of the various alternatives, but it definitely will be presented. Now there isn't any doubt that when it is presented, it's going to make some people unhappy. It will make the textile manufacturers happy. It will perhaps make some other people less happy. Otherwise, it would have been done long ago. There's no magic to this. It means a struggle, but I think the struggle is worth while, because I think it is really foolish to pile on this extra burden on the manufacturer, and then at the same time try to hang it on another way on the importation of textiles.

Q. Did you have in mind removing the inequity of the one-price system at one step, just eliminate it, or would it be a phased proposal?

THE PRESIDENT Well, I would prefer to wait until we get it through the Department of Agriculture, but we will have it in January.

[10.] Q. Mr. President, what are your views on H.R. 10, the self-employed pension bill?

THE PRESIDENT. I am going to take a good look at it after the Senate has acted, which may be today. It does represent a budget loss, as you know, of $100 million or $125 million, depending on which figures you use. In addition, it would be ideally more suited to a reform bill and I think would be part of any reform bill which we would be presenting next January, so that we have to weigh the factor of the loss versus the factor that it did pass the House unanimously and has widespread support. I expect that it will pass very generously in the Senate if it hasn't already done so, and then will come to us. And then we will have to take action.

It is--the principle has equity to it. The problem is that it does represent additional loss of revenue this year, and there are other groups who have a claim which is equal but which we have suspended in action because of budget losses, and so we really have to decide whether this is the fair way to do it this year for this group or whether it should be part of a package in January.

Perhaps we can have about two more questions. I know you are tired.

[11.] Q. Mr. President, several weeks ago the Director of the Office of Emergency Planning presented to you a study on the crude oil import control program. Have you anything to say at this point particularly as to when there might be a decision, or what direction the decision might take?

THE PRESIDENT. The report was not wholly accepted by me, so that I don't expect any announcement will be made about the matter at the present time.

[12.] Q. Mr. President, in time of a hot war, we are asked to sacrifice time and money and lives. Do you believe that this country can win over the Communists in the long run without greater sacrifices?

THE PRESIDENT Yes, I think that the United States or the free world is going to be successful. And now, the question of sacrifices--I think the United States will do whatever must be done to provide for that success. What is difficult is the operation of a free society and who sacrifices.

Talking about one of our problems, which is gold, we have been attempting to cut down, as you know, the amount of money we lose from the expenditures abroad for the maintenance of our national defense, from $3 billion to about $1.5 billion. There have been suggestions that there be even further cuts. We also have been cutting the $1.3 billion loss we incur in our AID program down to $800 million. To do that, of course, we have to give up a good many projects which are very important. We have the Buy American, and in the case of Viet-Nam it requires them to buy products in the United States, which they could buy next door substantially cheaper. We do that in order to protect our gold balance. At the same time we lose net a billion dollars a year from tourists abroad. Our tourists spend a billion dollars more than their tourists, and therefore that is spent particularly in Western Europe, which already have dollar surpluses.

We also invest abroad about two and a half billion dollars. No other country would permit that kind of movement of capital. But we do it as a free society. I indicate this only because at the time when we're talking about writing a tax bill, which would deal with loopholes, and which would put American businessmen in a position of equity with American companies who might be investing abroad and selling here in the United States the products they make abroad, a good many businessmen felt that was unfair and was perhaps anti-business. But it isn't at all. We just have to attempt to balance what is the national interest between cutting down on the number of troops we have abroad or cutting down the very vital programs abroad as opposed to losing a billion dollars on tourists or two and a half billion dollars here, and other funds other places.

I mention that example because I think it indicates quite clearly the complexities of the alternatives which we have, to us as a Nation, and though you may have a private interest in an expenditure abroad, it also affects the public interest, because each of those expenditures has some effect upon the supply of the United States gold at Fort Knox, and its movement.

So in answer to your question, I've some feeling that a good many of the calls for sacrifice are very genuine. But the difficulty is, without a central authority of a kind repugnant to us, it's difficult to make these sacrifices equitable. And that is where we get into a difference of view. But in answer to your question, I think the job can be done, and I think the United States, as one of a number of countries, can do it.

Delegate: Thank you, Mr. President.

Note: President Kennedy's special news conference for the delegates to the White House Conference of Business Editors and Publishers was held in the State Department Auditorium at 5:30 o'clock on Wednesday afternoon, September 26, 1962. His opening words "Mr. Secretary" referred to Secretary of Commerce Luther H. Hodges.

John F. Kennedy, The President's Special News Conference With Business Editors and Publishers Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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