1 Dates of peaks (P) and troughs (T) from the National Bureau of Economic Research.

Table 1 suggests, not very surprisingly, a minimum lag of 3 months, a maximum of 6 months, with the average a shade over 4 months. Cyclical contractions in the past have never lasted less than 8 months; they averaged 21 months between 1854 and 1946; 8 since 1946, they have averaged 10 months. Since it takes some considerable time after a trough before the economy returns to full employment, there is opportunity to take action to combat a contraction without running too great a risk of contributing to instability. The risk of destabilizing policies might be unduly great, however, if there are false alarms. In fact, there was none in the period 1946-61. The nearest approaches to false alarms occurred in 1949 and 1954 when some observers were premature in recognizing upturns upturns that actually occurred a little later.

Fortune, ever optimistic, in its issue of September 1949, inquired whether the recession was over and concluded, "the answer, as indicated by the business events of July and August, was apparently yes." U.S. News & World Report, Moody's Stock Survey, and the Guaranty Survey made similar, hedged statements in September, as did Prof. Lewis H. Haney in early October.10 Even though the trough did not occur until October, those who called the turn prematurely should not be blamed. Strikes in the coal and steel industry interrupted the improvement in business that had taken place in the summer. Although the strikes had the effect of postponing the month of the trough as determined by the National Bureau of Economic Research (which has a policy of favoring the later date in case of doubt), the expansion in one sense had actually begun earlier.

In the second quarter of 1954 some statistics showed rises, leading Gabriel Hauge, a close adviser of President Eisenhower, to say, "The recession *** is over." 11 He was wrong; there was a relapse in July and August. Although Hauge was not the only one to make this mistake, his view did not represent a consensus. Moreover, one must distinguish between the public pronouncements of those working for the incumbent administration, which often err on the optimistic side, and the conclusions on which the administration bases decisions, which are generally better founded.

Hauge's premature calling of the turn illustrates a besetting sin of economists, fail

8 Bert G. Hickman, "Growth and Stability the Postwar Economy" (Washington, 1960), 25. The so-called contraction of 1918-19 was only 7 months, but I do not regard this as a genuine exception to the statement in the text.

"Fortune, September 1949, 37.

10 U.S. News & World Report, Sept. 9, 1940, 13; Moody's Stock Survey, Sept. 19, 1949, 246; Guaranty Survey, Sept. 30, 1949, 5; Lewis H. Haney, "Contrasts of Near-Term and LongTerm Business Outlook," Commercial and Financial Chronicle, Oct. 6, 1949, 1. 11 Time, July 26, 1954, 68.

ure to make a sharp distinction between what they know for sure and what is simply their best judgment under circumstances of inadequate knowledge. This failure is the reason why the rather simple and obvious point I am trying to emphasize is so little appreciated. Here is one of the dependable regularities of economic science- or, better, here are two regularities: The finding, thoroughly documented by the National Bureau and buttressed by a long-known long-known theoretical explanation, that the economy has a built-in mechanism that keeps it going in the same direction once it has fairly started; and the finding here, which is hardly new or startling, that turns can be identified with certainty 3 to 6 months after they occur. To be sure, these are dependable regularities, not scientific laws. One cannot feel the same degree of confidence about them that one feels for the speed of light. Nevertheless, the degree of confidence is exceedingly high.

II. SEMIAUTOMATIC STABILIZERS The great problem of anticyclical policy is to take action in time. The well-known lags, of which the recognition lag is only one, together with the difficulties of forecasting and the danger that a contraction will gather momentum, create a cruel dilemma. If the Government rushes in with vigorous measures to forestall an anticipated contraction, the measures may be destabilizing, aggravating inflation; but if it waits until the contraction gets bad, anything done will be too late. The proper time for action comes at the time that the Government's economic experts become agreed that a downturn has occurred. Thus, President Kennedy, who showed a greater disposition toward antirecession action than President Eisenhower, came into office too late. The time for action, if at all, was in the week before the election. By January 20 there was not much else to do but what Kennedy actually did: Namely, very little.12 As a Senator, Kennedy had been less sensible. Although he justifiably voted against an antirecession tax cut in March 1958, the month before the trough and several months after recognition of the preceding downturn, he reversed himself and voted for the cut in June 1958.

Since any conclusions on policy depend on the judgments of the commentator, I had better make my assumptions explicit: I believe that the American economy is depression-resistant but not necessarily depressionproof; that a major contraction of the length and amplitude of 1907-8 and 1920-21 (let alone 1929-33) would be a catastrophe for the United States in the present world situation; that major contractions are most readily checked before they gather momentum; that it is not safe to follow a wait-andsee policy when contractions begin; and that, aside from the admittedly small danger of a major depression, it is desirable to reduce the amount of unemployment associated with cyclical troughs even at the risk of somewhat more inflation. My purpose in ments but to illustrate the uses of the conwhat follows is not to argue for these judgclusions of the last section. Anyone with different judgments can readily alter the conclusions accordingly.

To the usual three categories of automatic stabilizers, discretionary policies, and formula flexibility, we should add a fourth, semiautomatic stabilizers. Automatic stabilizers are good but, it follows from my assumptions, not enough. Discretionary fiscal policies are too slow when dependent on

12 Kennedy made a considerable show of antirecession activity, but in many cases such as the minimum wage bill, he was in reality giving an antirecession guise to measures he would have wanted irrespective of the phase of the business cycle. To use Samuelson's phrase, "he fought the recession by placebo."

action by Congress, too little when limited to present legal possibilities, too risky if new and adequate powers were to be conferred on the President without a sound criterion for determining when to exercise them. Formula flexibility is objectionable because nobody has been able to devise a satisfactory formula. Semiautomatic stabilizers are needed. They would come into play, not in accordance with a formula, since no formula for the business cyle has yet been devised, not at the whim or discretion of any person, but on the occurrence of an objectively identified circumstance.

Discretionary fiscal policy: The Commission on Money and Credit has recommended giving the President discretionary authority to vary the first (20-percent) bracket of the income tax upward or downward by a maximum of 5 percentage points for countercyclical purposes. To exercise this power, the President would be required to issue a statement that "economic conditions are running significantly counter to the objectives set forth in the Employment Act," and Congress would have 60 days in which to would continue in effect for only 6 months The change in tax rates unless renewed by the same procedure.

veto the action.13

The Commission would leave it to the President to decide what is meant by "economic conditions *** running significantly counter to the objectives set forth in the Employment Act." This plainly would require a criterion. Insofar as a temporary cut in the tax rate is concerned, the criterion should be the determination that a downturn has occurred. Similarly, the criterion for rescinding a cut (or for not renewing it) should be determination that an upturn has occurred. In view of the lag involved between action by the President and its maximum impact, any later action-or later rescinding of action-would run undue risk of being destabilizing, as would any earlier action in view of the hazards of predic

tion at other times.14

In

Formula flexibility: In a sentence which, though lukewarm, was subject to dissents by six members, the Commission on Money and Credit said, "A promising approach that merits detailed investigation is formula flexibility wherein changes in the first bracket rate of the personal income tax would be made automatically in response to changes in appropriate economic indicators." 15 his dissent, J. Irwin Miller justly said, "it would be well nigh impossible to select a single indicator or set of indicators to whose movements we could for any period of time safely entrust the determination of tax rates. The danger of destabilizing tax changes would be so great that any formula could not be permitted to operate automatically without Executive review." 16 But he went on to say, "The increasing rapidity of changes in the ebb and flow of our economy seems to

13 "Money and Credit, Their Influence on Jobs, Prices, and Growth" (Englewood Cliffs, N.J., 1961), 137. (See also pp. 272-273.) Three members of the Commission dissented from this recommendation.

14 Within the limit of 5 percentage points, it seems to me appropriate to leave it to the discretion of the President how deep the cut should be, since the right amount will vary with the percentage of unemployment at the cyclical peak, the amount of unemployment that is purely structural, etc.

15 Ibid., 130. In view of the staff at the disposal of the Commission one may wonder why the Commission did not make the "detailed investigation" that this "promising approach * * * merits." No doubt the recommendation is one of those silly compromises so essential to report-writing by a group with widely divergent views.

16 Ibid., 131n.

call for the application of imaginative judgment within prescribed limits," 17 thus missing two points, that "imaginative judgment" will lead to destabilizing actions unless there is available a sound basis for exercising it and that the recognition-of-a-turning-point criterion opens up a possibility that is subject to the limitations of neither formula flexibility nor wholly discretionary authority; namely, semiautomatic stabilizers.

The basic objection to formula flexibility can be illustrated with President Kennedy's proposal for extending the period of unemployment benefits during recessions and depressions.18 (I shall not be concerned with that part of the proposal that would extend the period which a worker employed for at least 78 weeks in the last 3 years can draw benefits for 13 weeks beyond the normal 26week benefit period, even in times of high employment, although I believe that it implies a wrong principle.) As reported in the press, Kennedy's proposal provides for an additional 13 weeks of unemployment benefits when the President and the Secretary of Labor have determined "that a recession exists." 19 Actually the proposal is for formula flexibility; for an "extended duration period" to begin, the formula requires that 1 percent of covered workers must have exhausted their benefits during the preceding 3-month period and that insured unemployment, seasonally adjusted, must have been at least 5 percent of covered employment during each of the 3 preceding months. The extra 13 weeks of benefits (for workers employed less than half the time during the preceding 3 years) ceases to be availablethat is, the "extended duration period" ends when a 3-month period occurs in which less than 1 percent of covered workers exhaust their regular benefits.

Even on first examination, the formula appears to be inferior. In 1960 it would have gone into effect later than the recognition date.20 It provides two criteria for beginning an extended duration period, abnormal unemployment (that is, the onset of recession) and abnormal exhaustions of benefits (that is, proof that the extension is needed). It provides only one criterion for ending an extended duration period, which amounts to a showing that the extra benefits are no longer needed because the proportion of covered workers exhausting benefits has returned to normal. But the formula is open to MILLER'S objection. There is never any difficulty in devising a formula that would have worked pretty well in the past. Such a formula presumably would continue to work for some time into the future. But the history of economics is strewn with formulas that gave a beautiful fit to past data, yet sooner or later broke down. This is particularly true where the formula depends critically on quantitative values, such as 5 percent unemployed and 1 percent exhaustions. To be so certain that the formula will keep on working that one is willing to base an act of Congress on it, it must be founded on dependable scientific regularities. No such formula has yet been devised.

The Kennedy proposal not only runs an undue risk of performing erratically but also promises to be effective for neither economic stabilization nor social justice. The proposal makes the extra 13 weeks of benefits avail

able to all workers who have been employed half the time in the preceding 3 years, irrespective of the phase of the business cycle, and cuts off benefits after 13 weeks for all workers irrespective of how bad business conditions may be. A proper policy would establish a maximum benefit period for times of full employment; 6 months seems to me just right. During times of abnormal unemployment, the benefit period should be extended, preferably without limit, for all eligible workers, both as a countercyclical measure and as a matter of social justice. The extension should go into effect as soon after experts recognize a downturn has taken place as is administratively feasible. When an upturn is recognized, action should be taken to rescind the extension.21

The three-stage tax cut proposed by President Kennedy in January 1963 represents a lost opportunity. Since it aims primarily at stimulating a chronically sluggish economy, the initial cut may go into effect at once, irrespective of the stage of the business cycle; but for Congress and the President to decide in 1963 that further cuts of an amount specified in advance shall go into effect on specific dates in 1964 and 1965 regardless of intervening changes in economic conditions is to miss the chance to time them when they will do the most good and to run the risk that one or the other will aggravate a boom instead of countering a contraction. Instead of advocating that part of the future cut be reserved to take place at the time the next downturn has been recognized, President Kennedy has urged adoption of his proposal on grounds that it may head off recession. As the failure of the tax reduction of 1948 to prevent the recession of 1949 illustrates, heading off recession requires a delicacy of timing and an accuracy in forecasting turning points that are quite impossible. To repeat the obvious but neglected principle, only at the time a turning point has just taken place is it possible to predict business conditions well enough to base policy decisions on the prediction.

[From the Washington Post, Oct. 27, 1963] CUT IN TAXES HELD NO HELP TO BULK OF U.S. UNEMPLOYED

(By Bernard D. Nossiter)

Is the Nation's army of unemployed doomed to continued joblessness until their schooling and skills are increased?

Will a tax cut merely open up jobs for the well-educated who are now in short supply?

These questions have been raised with special force by Charles C. Killingsworth, a labor market specialist at Michigan State University. His thesis has drawn so much attention in the administration that Chairman Walter Heller of President Kennedy's Council of Economic Advisers has himself replied

to it.

of the demand it creates won't be satisfied due to a shortage of skilled workers.

For the administration, Heller readily agrees that the unskilled and unschooled make up an outsized portion of the jobless. But the key question, Heller says, is what has caused the increase in unemployment in recent years. And here the statistical evidence indicates that unemployment is not rising more rapidly at the bottom of the skill ladder.

Between 1957 and 1962, Heller observes, the jobless rate for male college graduates doubled; the rate for those with 8 or less years of school rose only by one-half or about the same as the rise in unemployment generally.

RATE WAS SAME

Moreover, take a look at 1954 and 1962, 2 years in which unemployment was the same 5.6 percent, Heller says. If the unskilled have been losing out, the unemployment rate for the most skilled should have declined. But it didn't. In both years, the jobless rate for the highly trained professional and technical workers was the same, 1.7 percent.

On a homelier level, Heller might have pointed to Detorit. Unemployment in the motor city's labor market was a whopping 11.1 percent in 1961; so far this year, it has average only 5.4 percent. The difference appears to be 2 strong auto years in a row. In other words, increased demand-not a change in the skills of Detroit's labor forceshrank the jobless rolls rapidly.

re

Yesterday, however, Killingsworth turned to the attack in a speech at Michigan State. Heller's figures, he suggested, conceal more than they reveal. Between 1957 and 1962, the number of workers counted in the labor force with 8 or less years of schooling fell sharply and their average age increased; those with college degrees rose rapidly and their average age decreased. It is logical, Killingsworth argued, to expect that unemployment for a younger, growing sector of the labor force would rise faster than the rate for an aging, shrinking group.

As for Heller's professional and technical groups, nearly a quarter have had no college training at all. So, the average jobless rate for this sector may have held constant because the less educated found it harder to get jobs while the better educated found it easier.

INVISIBLE JOBLESS

Having disposed of Heller's statistics to his own satisfaction, Killingsworth came up with some of his own. He makes elaborate calculations for the invisible unemployed. These are the workers who don't show up in the official statistics because they are neither at work or looking for work. However, if jobs were open, they would be seeking employment.

Killingsworth estimates that there nearly 1 million male workers in this officially counted unemployed to calculate shadow class. He lumps them in with the the changes in real unemployment. And he compares the situation in 1950 with 1962. Here is what he finds:

PERCENTAGE CHANGE IN REAL UNEMPLOYMENT
RATES, 1950–62, FOR MALES
Years of school completed:

0 to 4----

5 to 7. 8_____

9 to 11__.

13 to 15___. 16 or more.......

Percent

100

47

53

26

43

-2

-36

As Killingsworth sees it during the 1950-62 period, unemployment generally rose fastest among the least educated and actually declined among the best educated.

This puts the ball back in Heller's court. With the tax bill at stake, he can be expected to smash it back promptly.

TRIBUTE TO FORMER PRESIDENT

HOOVER

Mr. CHURCH. Mr. President, the Saturday Review, under the enlightened editorship of Norman Cousins, is one of the foremost magazines of political, social and cultural opinion in the United States today. Mr. Cousin's usually writes the editorials for this magazine and they are always worth reading. I found his editorial "A Toast to President Hoover" which appeared in the November 9 issue especially worthwhile. In this editorial, Mr. Cousins remarks about the reservoir of good will of the people of the Soviet Union toward the United States, despite the barrage of hostile propaganda to which they have been exposed by their Government. Mr. Cousins attributes part of this good will to the work of Herbert Hoover in his capacity of distributing food to starving Russians under the auspices of the

American Relief Administration.

In the proposed current wheat sale, the situation is quite different than it was in the time of the Hoover food mission from 1921 to 1923. The Soviets are not starving; they will not starve. They are asking not for gifts of wheat but for sales, offering us hard dollars which will help us redress our adverse balance of payments. We should be willing to sell

not

wheat to the Soviets not only as good businessmen but also to give a graphic demonstration to the world that Communist agricultural theories are working out in practice. In addition, there is a moral dimension to this problem which Norman Cousins cogently argues. I wish to call special attention to the conclusion of this editorial:

Herbert Hoover was correct in recognizing that we should make food available, not because it is the strategic thing to do, but because it is the right thing to do. The attitude that sees food in strategic terms leads to a vital shrinkage in our own conception of what this Nation is all about and most certainly to a shrinkage in the idea of America held by the rest of the world. It transforms us into moral midgets, clinging to useless merchandise and losing those things out of which a sensible future can be built.

I ask unanimous consent to have this excellent editorial inserted at this point in the RECORD.

There being no objection, the editorial was ordered to be printed in the RECORD, as follows:

A TOAST TO PRESIDENT HOOVER Three years ago, in a village deep in the interior of Soviet Georgia, I lifted my wine glass in response to a toast to the health of Herbert Hoover. The man who proposed the toast was not a Republican; in fact, he was not even a Democrat. He was a Georgian farmer and, so far as I knew, an authentic Communist.

Since the dinner conversation was being routed through a double set of interpretersGeorgian into Russian into English and back again-I wanted to be sure there had been no error in transmission.

"Would you please ask our host whether he means Herbert Hoover, former President of the United States and the outstanding Republican of his generation?" I asked.

My question went through the double filtration process and produced an instant reply.

"But of course," the farmer said. "Who else? Mr. Herbert Hoover, the man who

was blessed by my mother and father and my grandparents. They prayed for him. Why are you confused? How many Herbert Hoovers do you have in America?"

I said it was now clear we were talking about the same man but I was eager to know why my host should offer a toast to Mr. Hoover and why his parents and grandparents blessed him and prayed for him.

should be used as a political weapon. This is a dangerously volatile assumption, prone to backfire. A food surplus is a moral fact even before it is an economic fact or a political fact. Herbert Hoover was correct in recognizing that we should make food available, not because it is the strategic thing to do, but because it is the right thing to do. The attitude that sees food in strategic terms leads to a vital shrinkage in our own conception of what this Nation is all about and most certainly to a shrinkage in the idea of America held by the rest of the world. It transforms us into moral midgets, clinging to useless merchandise and losing those things out of which a sensible future can be built.-N.C.

The farmer rose to his feet and held his

glass high.

"To Mr. Herbert Hoover," he said, "a very great human being."

"To Mr. Herbert Hoover," we responded, "a very great human being."

For the next 15 minutes, the farmer spoke of his family's ordeal during those early years. He spoke, too, of the vision he had of America as the result of the Hoover mercy expedition. He spoke of letters he had regrated to the United States. As a result, he had a high opinion of the American people.

ceived from distant relatives who had mi

Then he launched into a series of new toasts, at least 15 in number, in which he made known his gratitude and good feelings.

This experience was unusual and memorable but it was not unique. Few facts about the Soviet people today are more significant than their warm feelings toward the American people. Indeed, what seems most to impress visiting Americans about the Soviet Union is the friendliness of the Russian people, notwithstanding years of hostile propaganda. The extent to which the Hoover food supply mission is responsible for these feelings is difficult to say. But it is significant that so many Russians refer to it when they

discuss their attitudes about America.

The existence of a human community beyond national boundary lines is a prime fact of life today. Some governments, especially those of monolithic political character, like to resist identifications higher than or beyond national sovereignty. But the sense of membership in the human family is natural to man and needs only the slightest exercise to become manifest. American foreign policy has been most effective not when it has icy has been most effective not when it has operated on the hard level of formal diplomacy but when it has acted on the broad level where needs and hopes interact.

A case in point exists today. The United States has a surplus of food. The American people are paying more than $1 million a day just to store crops, even as they rot. The Russians have a food shortage. Some claim this is the result of natural causes. Others claim it is the result of fallacious Marxist theories applied to agricultural production. It is possible that both factors are responsible in varying proportions. No matter. The relevant fact is that the American people have a surplus and the Russian people have a shortage. The Russians are not asking us to give them wheat. Nor has the American Government proposed to give them wheat. They are asking to buy and we are offering to sell.

But all sorts of objections are being raised. It is said we should not be giving aid to a Communist government. It is said that we ought to use the food as leverage to gain political ends. It is said we ought to exploit the opportunity to attach conditions.

The trouble with these questions is that they flow out of the assumption that food

WILLIAM BENTON
UNESCO EXECUTIVE BOARD

Mr. CHURCH. Mr. President, former Senator William Benton has sent me a copy of his address to the UNESCO Executive Board, which had its 66th session in Paris last September.

Those of my colleagues who recall the controversies early this year over certain UNESCO publications, and also over a proposed UNESCO agricultural project in Cuba, will find Bill Benton's speech especially interesting. I ask that porthe RECORD, as a part of my remarks. tions of it may be printed at this point in

There being no objection, the excerpts were ordered to be printed in the RECORD. as follows:

STATEMENT BY FORMER SENATOR WILLIAM BENTON AT 66TH SESSION OF THE UNESCC EXECUTIVE BOARD, PARIS, SEPTEMBER 30, 1963

*

At the 12th Conference and in our comments in June to the Director General on the 1965-66 program and budget, the United States made a number of recommendations

concerning (a) the presentation of the budget, (b) conferences and meetings, (c) the nature of UNESCO's support of nongovernmental organizations, (d) training and research centers and institutes, and (e) UNESCO publications.

Now, the many devoted men and women who work on UNESCO in the State Department and in the U.S. National Commission (and I report to this Board that there are hundreds of people in the United States interested in UNESCO who, without pay or compensation, give large parts of their time to it, wholly apart from the professionals in our Government) many will be gratified that some of the U.S. recommendations have been followed or partially followed. Perhaps I should say "mildly gratified," looking at the program as a whole. For example, they will be pleased by these five points:

1. The integrated presentation of the proposed program and budget which shows UNESCO's program as a unit, regardless of the source of the funds; this does indeed contribute to understanding.

2. The subventions have been held generally at existing levels. Let us hope, I may say in passing, that alternative financing can be found as soon as possible. UNESCO should seek to put an end to much of this financing, it seems to us, as soon as possible.

3. The Director General has established terminal dates for financial support to some centers and institutes, and further has begun reducing the support to certain other centers. Very good. UNESCO should indeed aim at what we call a "phasing out" or a "putting them on their own," of most such

centers and institutes.

4. The Director General has indicated the revised budget will reflect a reduction in

meetings and conferences. We welcome this trend; indeed, we applaud it.

5. In general we favor the goal of stabilization evident in the proposed budget in areas other than science and education. We must hope that the goal becomes even more clearly defined in practice.

He

Mr. Chairman, the United States has hoped and expected to see a substantial reduction in the number of publications. Unfortunately the funds for publications under the proposed budget are being increased considerably. May we not hope that the Secretariat will profit by the excellent suggestions made by Mr. Avidor on Friday? He must have been seeking the same goal. suggested cutting back on the number of the Director General's personal reports to the Board-a suggestion that, it would not surprise me, fell on welcome ears. But don't we want also a cutback on our overall publication program. The last General Conference passed a resolution asking the Director General to reduce as much as possible the length of our documents and the number of copies.

Let me now shift for a moment to the Special Fund projects for which UNESCO is the executing agent. Our Executive Board does not, it seems to me, spend enough time discussing these and achieving understanding of them. Perhaps, if our agenda permits, before we adjourn there may be time for a The United more complete discussion.

States as most of you know, puts 40 percent of the money into the total budget of the Special Fund. Further, this money is not assessed against the United States by any vote at a General Conference under which the United States may find it is called upon to make a contribution beyond the one which it thinks warranted. The money given to the Special Fund by the United States is a voluntary contribution, wholly within the hands of the United States. Voluntarily given, it could be voluntarily withdrawn if the United States felt the projects were unsatisfactorily handled. This is an important point, and I want this Board to understand it.

The Director General has proposed new emphasis on two problems of human rights: (1) race relations, and (2) disarmament. He has asked the Board whether there is anything useful UNESCO can do in these areas within its field of competence. He asked whether he was wrong in bringing them up. He solicited our guidance. And I do indeed congratulate him on this approach to the Board, and I shall address myself to these two points.

First, the United States recognizes that UNESCO has a legitimate interest in both areas. Mr. Pompei conceded merely the legitimate interest in race relations; I am willing to admit, over the years which lie ahead, the legitimate interest in both. But only if we stick to our basic charter, as quite properly emphasized by the Director General himself when he presented these two points to us.

Let me first seek to qualify a bit more UNESCO's suitable role on race relations. I wonder whether this Board-and notably, the scholars on this Board, those who come out of a background of scholarship-can't agree that UNESCO will not contribute either to peace or to collaboration among nations-by sponsoring studies that contain propaganda, or by promoting the one-sided views of any member state, or by publishing studies which fall short of high standards of scientific and scholarly objectivity. UNESCO has been guilty of such failings, and this has gravely damaged the prestige of UNESCO. If UNESCO can avoid such

failings, studies of race relations would be greatly welcomed by the United States. Nothing on the record indicates that

UNESCO can do this.

The first consideration, of course, must be whether conditions can be created that will enable UNESCO to employ scholarly and scientific standards in publications which deal with race relations, not merely in Africa and the United States, but in the U.S.S.R., and in all areas of the world. The problem of race relations is not confined merely to the United States and Africa. Our scholars in the United States are striving to establish such standards in their studies of this problem. And as all of us know, it's not easy. But until such standards can prevail, any major or full-scale attack on this subject by UNESCO should be postponed. And here again, the subject is so loaded with political and propaganda overtones that a diversion of any significant part of UNESCO's program into it seems to me at this time to be a mistake. However-and I must end up with this emphatic statement-the chance to take leadership in the scientific and scholarly study of race relations is surely one of UNESCO's important goals over the years ahead, and must be kept in mind and we must attempt to work toward it. The Director General and I come together on this point. Further, the work of UNESCO in the field of racial relations should tie in closely with the great effort to destroy racial discrimination, which is a major goal of the United Nations itself.

*

The Director General seemed somewhat incredulous when I was chatting with him privately the other day, at my suggestion that the fact that certain countries do not pay their moneys into the U.N., the funds which the U.N. and the United States feel are legally expected, that such failures by certain countries could affect the attitude of the United States toward UNESCO. But why shouldn't such failures affect the attitude of the United States toward all the U.N. agencies? UNESCO is a part of the U.N. If the U.N. fails, UNESCO will fail. Make no mistake about it. Let us not kid ourselves. Thus when the United States is forced to underwrite a bond issue to keep the U.N. alive, this does indeed bring under review U.S. policy not merely toward the U.N. but toward all affiliated agencies and the overall pattern of activity by these agencies-including, in the case of UNESCO, the Special Fund.

In conclusion, Mr. Chairman and Mr. Director General, we of the United States find reason for some satisfaction in the progress evident in UNESCO's program, progress more manifest than many of my associates in the United States anticipated a year and 2 years ago. There's much in it on which the Director General warrants commendation. But the United States does not wish at this time, with so much to do and so much unfinished, to risk stretching ourselves beyond the limits of our capacity.

ADDRESS BY LYNN A. TOWNSEND, PRESIDENT OF CHRYSLER CORP.

There being no objection, the address was ordered to be printed in the RECORD, as follows:

REMARKS BY LYNN A. TOWNSEND, PRESIDENT, CHRYSLER CORP., AT THE ANNUAL BANQUET SESSION OF THE 45TH ANNUAL MEETING OF THE ILLINOIS STATE CHAMBER OF COMMERCE, CHICAGO, ILL., PALMER HOUSE, NOVEMBER 1 I am very pleased and highly honored to be here with you tonight to participate in your annual meeting in this great city. We Detroiters like Chicago very much indeed. We think of it as a wonderful place to do business and a wonderful place to come to enjoy life in general. Yet I can't remember any time in all the years I've lived in the Detroit area when we thought as well of Chicago or said as many nice things about it and its people as we did on a certain Sunday afternoon back in mid-Septemberbecause on that particular day the Chicago Bears outplayed and outclassed a football team that is our common problem-the Green Bay Packers. On that particular afternoon the Bears' win made the future look pretty bright for our Lions.

Two weeks later, however, when we sat down to our Sunday dinner, we found ourselves in a somewhat different mood. As I remember it, after that impressive—and, to us, depressing-performance by Billy Wade and his teammates, we just didn't have very much to say at all. And things haven't been quite the same since then with our Lions. But after all, another important Sunday afternoon is coming along soon here at Wrigley Field-and who knows what may happen then? As George Halas says, the National Football League wouldn't be much of a league unless any team could be beaten by any other team any Sunday afternoonor words to that effect.

Athletic competition between the professional teams of Chicago and Detroit, and between the great universities of Illinois and Michigan, has been putting an extra kick into life for all of us in this part of the country for a good many years.

It is characteristic of the Midwesterner to like hard, all-out competition, whether he finds it on the playing field or in his day-today work. And if there are any cities in this country-or for that matter in any other part of the world-where business competition is more intense than it is in Chicago and Detroit, I don't know where they could be. I can speak for all of us in Detroit when I say we believe there is only one way to compete and that is the way they compete down at Indianapolis on Memorial Day-flatout, with no quarter asked and none given.

And if you want to get the real lowdown on the way it feels to be involved in the kind of competition we are accustomed to in Detroit, you just can't do much better than to ask a Chrysler man about it. We at Chrysler have been right in the center of the battle of Detroit for a number of years now, and we've had our share of wins and losses. But business has been looking very good for us for some time and promises to continue good, not only for us but for the automobile industry as a whole-so I warn you that my remarks this evening are going to have a distinctly optimistic flavor.

As I'm sure you know, the automobile business is finishing out an excellent year, one in which we expect to sell a total of well over 7 million cars at retail. For those of you who don't spend your lives in the automobile business, let me explain that 7 million is something of a magic number to an automobile man. Up until 1962 there was

sales at that level. And it had come to be established as something resembling a superstition in our business that if you had a big

year you were bound to pay for it in lower sales in the year following. It just wasn't in the cards to have 2 good years back to back, to say nothing of two 7-million-car years. But now the automobile industry is completing its second successive 7-millioncar year-and there seems to be a real possibility that we may have three 7-millioncar years in a row. Although I am not going to make a flat prediction that the year ahead will be that good, I will say it would not surprise me or anyone else in our business to see another 7-million-car year in 1964.

Our industry has moved up onto a new level. Where we averaged approximately 6 million retail sales a year over the past 10 years-1953 through 1962-we are now confidently expecting to sell at least 7.5 million cars, on the average, over the next 10 years. The industry has moved up onto this new level for the most natural reason in the world because the country itself has moved up onto a new level. When you compare 1963 with 1953 you find that in 10 years the dimensions of the market for automobiles have been increased substantially in every way that we can measure. For example:

In 1953 the population of the United States was 160 million-and there were 46 million households. In 1963 the population of the country is 190 million-and there are 55 million households.

In 1953 there were 46 million cars in use in the United States. In 1963 there are approximately 68 million cars in use. And where cars and trucks together amounted to 56 million in 1953, the combined total today is 82 million.

In 1953 there were 70 million licensed drivers of motor vehicles. In 1963 the estimated number of licensed drivers is 94 million.

In 1953 approximately 4 million households owned 2 or more cars. In 1963, we estimate that close to 12 million households own 2

or more cars.

And finally, in 1953 the national program of highway building initiated in 1956 had not even been started. Since 1956, over 15,000 miles of freeways in the Interstate Systemincluding nearly 700 miles in this State as a whole and the spectacular Dan Ryan Expressway here in Chicago-have been opened to traffic and have provided a basic reason for making car ownership and use more attractive.

Now I am not talking about the promising outlook for the automobile business just to make myself feel confident and happy about the future. Every man and woman in this room-and, for that matter, every man and woman in America-has a stake in the prosperity of the automobile business.

As you know, the U.S. automotive industry, together with all of its related activities, is probably the largest single economic complex in the entire world. It generates more economic activity than the national defense and space establishments combined. It involves one in every seven jobs and one in every six businesses. And when the automobile industry can sell cars at a 7-millionper-year clip, it helps the whole country to

prosper.

Just as an illustration of what this means to you people here in Illinois, it might be of some interest that during the past year Chrysler Corp. bought approximately $29 million worth of automotive components in Cook County alone.

I have spoken of the size of the present automobile market and given some reasons why that market will continue to be big and will continue to grow bigger. But there are many other interesting developments in our business-such, for example, as the way we have extended the range and diversity of the products we build far beyond the

simple three-decker classification of lowprice, medium-price, and luxury cars as we knew it 10 years ago the way we have improved quality and reliability to the point where we can offer the public greatly extended warranties-and the way we have been able, with all the improvements and increased diversity of products, to hold the price line against a variety of cost pressures for 6 years in a row.

It might be nice for someone to suggest that all these accomplishments are due to the fact that we in the automobile business are such bright and hardworking people-but you and I know that isn't the reason at all. They are due to the fact that every company in our business is being pushed relentlessly by the demands of a very choosy and value-conscious buying public. We-like businessmen in every other fieldare caught up in a general upgrading of taste and a universal insistence on a maximum variety of choice and the highest possible quality-at reasonable prices. The pressure is on the manufacturer and on the merchandiser to furnish what the increasingly fastidious consumer wants in the way of both product and service of the productand it is only those companies that are tuned to this new kind of consumer pressure that are going to be consistently profitable.

Now I would like to say a few words about an entirely different variety of competition— but competition of a kind that may be just as important in the long run as the kind I have been discussing. A year from next Tuesday the people of the United Statesafter listening to a solid 12 months of political speeches and debates-are going to decide on the kind of political leadership they want for our country during the ensuing 4 years.

Those next 12 months are going to be far from easy on any of us. The air will be full of verbal flak and the newspapers will be loaded with charges and countercharges. In view of all the political talk we have ahead of us, I am not going to burden you with a political speech tonight. But I would like before the battle begins in earnest-to express a few thoughts as a businessman about one of the key issues of the coming political year. And I can only hope that these thoughts will seem worthy of consideration by you as businessmen and as American citizens, regardless of the nature of your own personal political convictions.

There is one aspect of the present political climate-as it affects the businessman-that is completely and refreshingly different from anything you and I have known in our entire lifetime. Think back for a moment to all the years that the American businessman has been on the defensive in supporting the cause of free enterprise. Think of the uphill pull he has had in arguing for more reliance upon the investment of private funds in private undertakings and less reliance upon the spending of public funds for public works. Think of all the speeches businessmen have given on the need to encourage saving and capital formation by revising the excessive and inequitable Federal income tax schedules. Think of the patient and seemingly hopeless arguments we have made year after year for encouraging capital investment through more flexible governmental policies regarding depreciation allowances.

And now-against that background-in the perspective of years of struggle in which the Nation seemed like a house divided against itself-with great numbers of the American people feeling that financial incentives were closely related to sin-consider the fact that the House of Representatives has passed an income tax reduction bill by a vote of 271 to 155. And also consider the fact that the President has been urging Senate action on

this same bill so he can sign it into law. What is more important still, Republicans and Democrats seem to be joining in the belief that the best way to keep the country moving ahead is to give the private sector of the economy a good sound incentive for working, saving, and investing.

No one of us can afford to underestimate the importance for American business-and the importance for the strength and prosperity of our country-of this startling development. What it means to me is that a profound change has taken place in the minds of the American people with regard to the importance of financial incentives in the national scheme of things. If this were not so, the tax bill would never have gone as far as it has.

It seems to have become clear to increasing numbers of people that the profit system as we know it is this country's secret weapon. And men in positions of political leadershipon both sides of the political fence-knowing that this new trend has set in-are talking far less, if at all, about Government pump priming through public works and far more about stimulating expenditures by consumers and businessmen.

Now that both political parties are in basic agreement in wanting to give the economy some good tangible incentives that will make it grow, we can expect to hear a brandnew kind of political debate. And this debate is going to be a distinct pleasure for the business community to listen to. Over the course of the next year it is entirely likely that Republicans and Democrats will be competing vigorously with ideas, proposed legislation, and party-platform planks, all aimed at convincing both the general public and the business community that they have the key to stimulating the private economy and giving it adequate encouragement. And what could be sweeter music to the businessmen of this country than just that kind of debate?

What I am suggesting here tonight is that, in the year of political decision that lies ahead, the businessmen of America would do well to understand that there is now less need to pound on the old familiar themes and fight the same old fights. At least part of the battle has been won-maybe more as the result of the performance of free enterprise than as the result of its wordsbut won nevertheless.

A new tide has begun to move in the affairs and in the opinions of men-and it is the businessman's great opportunity to move with this tide and speak positively and constructively about the unlimited potential of the country once the disincentives of excessive taxation have been removed. I say let others, if they wish, talk fearfully and negatively and let the businessman start building himself a reputation for being the proponent and apostle of economic growth and the moves that will unleash the dynamics of growth.

To illustrate what I mean, let me suggest three positive approaches that a businessman might take in the current discussion of the tax bill that is now under discussion in the Senate.

First, I suggest that there be far less talk about the desirability of the tax bill as a means of avoiding a recession, and far more emphasis on the real, basic purpose of the bill-that is, to encourage more vigorous growth of the national economy over the long pull.

It would seem highly inadvisable to argue for a step as big and as important as enacting the current tax bill into law on the basis that it is needed to avert a hypothetical recession that may not happen in the near term at all. We in Detroit see no signs of lagging demand for our products, no backing