I urge that my perfecting amendment, because that is exactly what it is, be adopted.

Mr. SPARKMAN. Mr. President, acting for the chairman of the committee [Mr. FULBRIGHT], we shall be pleased to take the amendment to conference.

The PRESIDING OFFICER. The question is on agreeing to the amendment of the Senator from Louisiana to the committee amendment in the nature of a substitute, as amended.

The amendment to the amendment was agreed to.

Mr. ELLENDER. Mr. President, I move to reconsider the vote by which the amendment to the amendment was agreed to.

Mr. MORSE. Mr. President, I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Mr. MORSE. Mr. President, I should like to address myself to the Senator from Alaska for a moment. Does the Senator from Alaska wish to offer his Latin American military aid amendment now, before I offer mine?

Mr. GRUENING. Mr. President, I wish to call up my amendment No. 235, and ask that it be stated.

The PRESIDING OFFICER. The amendment offered by the Senator from Alaska, for himself, and other Senators, to the committee amendment in the nature of a substitute, as amended, will be stated.

The LEGISLATIVE CLERK. It is proposed to insert between lines 8 and 9 on page 41 the following:

(d) Section 505(a) of the Foreign Assistance Act of 1961 (Public Law 87-195) is hereby amended by changing the period at the end thereof to a cc nma and adding the following proviso: "Provided, That, except (1) to the extent necessary to fulfill prior commitments and (2) to the extent that the President finds, with respect to any Latin American country, that the furnishing of military assistance under this Act is necessary to safeguard the security of the United States, and so informs the Congress, no further military assistance under any provision of this Act shall be furnished to any Latin American country.”

Mr. DIRKSEN. Mr. President, may I ask the majority leader and the sponsor of the amendment, which involves a rather broad policy, whether it is proposed to consider and dispose of this amendment tonight?

Mr. MANSFIELD. Mr. President, it is my understanding that the distinguished senior Senator from Oregon may possibly have an amendment pending. If that is the case, it is the intention of the leadership to move to have the Senate adjourn until tomorrow at 12 o'clock.

Mr. MORSE. Mr. President, the amendment offered by the Senator from Alaska opens up the entire issue of military aid to Latin America. The Senator from Alaska offers this amendment in keeping with his long-expressed conviction on the floor that he thinks military aid does more harm than good, that there is a great deal of money in the pipeline anyway, and that he would eliminate such aid.

There are other amendments on the same subject pending, depending on the disposition of this amendment. Although I do not think it will call for too long a debate, it will be discussed in some detail, because we are dealing with a very serious matter in connection with the Alliance for Progress program. I suggest that this amendment be made the pending amendment, and that we proceed to discuss the whole question of military aid to Latin America, using this as the basic amendment, tomorrow.

Mr. MANSFIELD. That is satisfactory with me. I thought I had understood the Senator from Oregon to ask the Senator from Alaska whether he was going to withdraw the amendment which he asked to have read. I may have misunderstood him. That is why I made the statement I did.

Mr. MORSE. The Senator either misunderstood the question, or I misspoke. There had been a discussion of which amendment was to be called up first. I asked him whether he wished to bring up his amendment before I offered my amendment, on this general subject. I judge he wants to offer his amendment first. If his amendment is defeated, I shall offer another amendment. There are several amendments on the subject. Mr. MANSFIELD. That explains the situation.

I now ask unanimous consent that the Senate stand in recess until 12 o'clock tomorrow morning

Mr. DOUGLAS. Mr. President, will the Senator withhold that request? Mr. MANSFIELD. I withhold that request.

MOTION TO RECONSIDER

Mr. DOUGLAS. Mr. President, I enter a motion to reconsider the vote whereby the amendment of the Senator from Kansas [Mr. CARLSON] to the committee amendment on page 53, line 20, was agreed to.

I shall call this motion up at a time satisfactory to the Senator from Massachusetts or the Senator from Kansas.

Mr. MANSFIELD. Mr. President, I withdraw my request. I understand the Senator from Maryland [Mr. BREWSTER] desires to make a speech.

For the information of the Senate, there will be no further votes tonight, only speeches and remarks.

Mr. BREWSTER. Mr. President, the Senate has now been considering the 1963 foreign aid authorization bill for 11 days.

This debate is the culmination of the most searching review of the program since its inception with the Marshall plan in 1948.

The intensive study was first undertaken by the distinguished Committee under Gen. Lucius Clay. The report of this Committee suggested certain guidelines be established for future aid spending. It argued that we have been attempting too much for too many with too little concern for quality and too much for quantity.

This report prompted a reduction of the budget request by almost $420 million.

Extensive hearings and study by the Foreign Relations Committee under the distinguished leadership of Senator FULBRIGHT produced an aid bill which we are now debating.

I have consistently advocated the fullest participation of the United States in international affairs. international affairs. I continue to believe that the United Nations is our best hope for improving relations among nations-for providing moral leadership and peacemaking, peacekeeping machinery in times of crisis. The U.N. has saved inestimable American lives and dollars since its inception.

Our system of alliances and our mutual security program are equally vital to our national interest.

We are the world's most powerful nation-the custodian of freedom for our own people and for others throughout the world. This irrefutable fact imposes upon our Government awesome and burdensome responsibilities.

There can be no serious thought of abrupt withdrawal from our basic commitments, both military and economic. We must continue our effort to shape and enlarge the free world into an ever stronger and more cooperative economic, military, and political unit.

It is clearly in our interest-our selfish interest if you must-to do so. In so doing, we continue to thwart Soviet economic and military expansion while at the same time we broaden the oversea markets for the goods and services of the American economy and strengthen our allies' military resistance to communism.

For these reasons, I shall vote for a continuation of our aid program on final passage.

In the meantime, I shall continue to appraise the many amendments offered to this bill in accordance with the constitutional responsibility of the Congress to determine broad policy, and in accordance with what I believe to be in the best long range interest of the United States and its allies.

Foreign aid can, when handled wisely, succeed in doing what it sets out to do. When the program is mishandled, unrealistic, administered without policy direction and clearly defined goals, it is an unwarranted and unwise burden. The pocket of the American taxpayer must not be an international grab bag.

Our sincere and genuine desire for freedom and liberty for all people should not be thwarted by corrupt and dictatorial governments of the peoples we seek to help. We cannot continue to invest in countries whose leaders will make no effort to affect the land and social reforms essential to a climate of growth.

Recent events in South Vietnam give graphic credence to the allegation that we have too often supported despotic, authoritarian regimes which are constantly-and for good reason-threatened by internal revolt.

These convictions have formed the basis for my votes on the amendments thus far considered.

I have voted to improve the climate for private investment opportunities in investment countries receiving our aid.

I have voted to lower the authorization for the Development Loan Fund and to require annual reconsideration of this program. The language in both the Clay report and the Foreign Relations Committee report indicates the necessity for a continual review of this program with major reorganization and reorientation.

Such a revamping cannot be assured unless the Congress withdraws its blanket authorization for succeeding years and makes clear its desire that future aid programs be more selective and rely more on the facilities of multilateral agencies such as the International Bank for Reconstruction and Development. The United States cannot be expected to continue to bear the total aid burden nor continue to assist nations now economically prosperous.

I have voted to restore $75 million of the original cut in funds for the Alliance for Progress. I did so, firm in my conviction that the unusual importance of this area to American security demands a long term venture of extraordinary complexity and scope.

I have supported amendments barring aid to countries engaged in or supporting aggression against the United States or nations receiving American assistance. I have joined with a unanimous Senate in barring aid to Communist countries. While I have refused to grant to the President discretionary authority on these two matters, I have refused, and will continue to refuse, to tie the hands of the Chief Executive in other areas where freedom to act and to act quicklyto adjust policy to circumstances-is surely in the interest of the United States.

In accordance with my conviction that the best hope for reduction of American aid lies in the expansion of American trade, I have voted to extend most favored nation treatment to Poland and Yugoslavia. These governments do not now receive American aid, but the improvement of trade relations with these nations continues to serve our interest.

The primary justification for the tremendous investment that American taxpayers make in foreign assistance is the safety and security of the United States.

arm of American policy, this program serves us best when it clearly serves our interest. I hopefully preI hopefully predict that our deliberations and votes will produce a final bill which does precisely that.

I further hope that our final vote may come soon so that we may turn our attention to the other pressing matters which must be acted upon before the end of this session.

JOINT ECONOMIC COMMITTEE'S

KEY ROLE IN SOLVING U.S. BALANCE-OF-PAYMENTS PROBLEM Mr. PROXMIRE. Mr. President, yesterday, the Joint Economic Committee had before it two of the outstanding economists in the world on the subject of balance of payments. One was Prof. One was Prof. Friedrich Lutz, professor of economics at the University of Zurich; the other

was Prof. Arthur Bloomfield, professor of economics at the University of Pennsylvania.

Both of these men indicated that the balance-of-payments problem, which was so serious in the second quarter of this year-probably more serious than ever in our history-and which was at an annual rate of about $4 billion a year or more, stated that the reason for the vast improvement in the third quarter was primarily due to the administration's announcement of its interest equalization tax proposal, and that this had a very distinct and immediate effect on the outflow of capital.

I believe that the country and Members of the Senate should be aware of this conclusion by these two eminent economists, and should recognize that the balance of payments may be improving sharply and may now be within the control of the administration.

I say this because, as a member of the Joint Economic Committee, I am proud of the fact that the proposal for the interest equalization tax was first made at a meeting of our committee on February 1 of this year by the newly appointed member, at that time, of the Federal Reserve Board, George W. Mitchell, who is superbly qualified as a monetary specialist.

Mr. Mitchell said at that hearing before the Joint Economic Committee: The United States has the largest and most accessible capital market in the world, and it ought to be kept free of exchange restrictions. It is proper and desirable that capitalpoor developing countries should utilize this market to meet a portion of their enormous needs for foreign capital. It is not so clear, however, that it is either necessary or desirable for advanced countries, with balanceof-payments surpluses, to have recourse to our capital market on the recent large scale while they restrict and hamper entry of outside borrowers to their own capital markets. If these countries are unwilling to open their capital markets, possibly we should look toward tax measures that might help to remedy this unbalanced position. In general, we need to explore the possibilities of various tax measures that might, consistent with our obligations as an international good neighbor, and with the status of the dollar as a world reserve currency, discourage capital movements that appear to flow uphill to countries that are already capital rich.

Governor Mitchell had this conception, and I believe that it is certainly one reason why the administration has made the very wise proposal of an interest equalization tax, which has had such a profound effect on our balance of payments.

I should like to call the attention of the Senate to the fact, if the interest equalization tax does have the effect of discouraging capital outflow and does really solve our balance-of-payments difficulties, it will be particularly incumbent upon the money managers of our economy to use their new freedom to follow a monetary policy that will encourage economic growth and economic development domestically.

The fact is that interest rates have been kept at a relatively high level, in spite of the fact that we have heavy unemployment. The speculation of many

outstanding financial experts has been that in the event we have a tax cut and the economy is stimulated, the Federal Reserve Board and the Treasury will follow policies which will have the effect of pushing interest rates up and keeping the economy under some restraint.

Many of us feel this would mean that the two principal Government economic weapons would be in opposition to each other. Fiscal policy would be used to expand the economy, and the monetary policy would be used to contract it. In other words, one would be stepping on the gas, and the other would be putting its foot on the brake, and the tax cut which is supposed to stimulate the economy would be limited.

A number of economists have made studies of the many tax cuts that we have had in this country, and they have found that when these tax cuts have been coupled with monetary ease, they have been expansionary, and that when the tax cuts have been coupled with monetary restraint of the kind the Federal Reserve Board indicates it will follow, then the result has been that a tax cut has not been stimulating, but has resulted in a deficit.

The reason why I call this subject to the attention of the Senate is that many of us sometimes feel that our nonlegislative committees, which have a primarily investigative function-whether it be the Select Committee on Small Business or the Joint Economic Committee, or some other committee-have very little influence. It seems to me that if the Joint Economic Committee had never done anything else, the fact that it was an instrumentality in giving birth to an apparent solution to our very serious balance-of-payment problem makes the work of the committee very worthwhile and makes its contributions most important.

RECESS TO 12 O'CLOCK NOON
TOMORROW

Mr. MORSE. Mr. President, I move that the Senate stand in recess until 12 o'clock noon tomorrow.

The motion was agreed to; and (at 8 o'clock and 45 minutes p.m.) the Senate vember 14, 1963, at 12 o'clock meridian. recessed until tomorrow, Thursday, No

NOMINATIONS

Executive nominations received by the Senate November 13 (legislative day of October 22), 1963:

IN THE ARMY

The Army National Guard of the U.S. officers named herein for appointment as Reserve commissioned officers of the Army, under the provisions of title 10, United States Code, sections 593 (a) and 3392:

To be brigadier generals Col. Alfred Carlisle Harrison, O311380, Adjutant General's Corps.

Col. Erwin Case Hostetler, O336226, Adjutant General's Corps.

Jutant General's Corps.
Col. Robert Louis Stevenson, O343589, Ad-

Col. Thomas Roberts White, Jr., 0348796, Adjutant General's Corps.

The Cotton Bill: A $500 Million-Plus Gain for American Consumers

EXTENSION OF REMARKS

OF

HON. HAROLD D. COOLEY

OF NORTH CAROLINA

IN THE HOUSE OF REPRESENTATIVES Wednesday, November 13, 1963

Mr. COOLEY. Mr. Speaker, on Friday last, November 8, the gentleman from Illinois, Representative FINDLEY, charged, in a statement entered into the RECORD of the House that H.R. 6196-the cotton

bill-provides multimillion-dollar payments to textile mills. He contended that the bill provides for such payments as subsidies to the mills. I ask the indulgence of the House to set the record straight.

H.R. 6196, now awaiting action in the House, does not subsidize domestic cotton mills. It simply makes American cotton available to our own mills at the same price as American cotton is sold to foreign mills, and thereby removes a Government-imposed cost disadvantage under which our own mills have been agonizing since 1956.

Mr. Speaker, the greatest benefactor under this legislation will be the American consumer. Americans will enjoy lower prices for American-made cotton goods, at savings amounting to more than $500 million a year.

Moreover, the legislation will revitalize the whole cotton industry, in which more than 10 million Americans are associated in the production of cotton on the farms, in ginning, marketing, transporting, milling, and in the manufacture and merchandising of cotton goods.

This legislation will protect the livelihood of the millions of people who work with cotton.

Mr. FINDLEY is a member of the House Committee on Agriculture and accurate information is available to him. For some reason unknown to me he has chosen to oppose the cotton bill, and has refused to avail himself of the facts or to attempt to understand the purposes upon which this legislation is proposed.

He apparently has not read the committee report.

Had he listened to the testimony before the committee and had he studied the report it would be evident to him in a way that denies contradiction, that the American consumer of textile goods not the textile mills-will be the great beneficiary in bringing the cost of raw cotton to American mills down to the

For it was shown to our committee that a rise or fall in the cost of cotton is almost invariably and completely accompanied by a rise or fall of the same degree in cotton cost prices. The Department of Commerce established this as a fact in the hearings of our committee.

I am not addressing my remarks today particularly to the farm problem, because we all know that a reduction in consumption of cotton in the United States means contracting acreage allotments and disaster in the cotton growing areas of the country. I am directing my remarks primarily to what it means to consumers and to all of those people in the highly populated areas of the country who are dependent upon the textile industry for their livelihood.

Our price support program has resulted in American cotton being higher priced than foreign grown cotton. To preserve our export markets, the Government since 1956 has made American cotton available to foreign mills at prices far below the domestic price. Currently, cotton is sold for export at $42.50 a bale less than it can be bought by domestic mills. The American mill must pay onethird more for American cotton than its competitor in Hong Kong or in any other foreign land. Since 1939, American mills have been prohibited from buying foreign grown cotton in excess of 30,000 bales a year-less than the amount consumed by U.S. mills in 1 day.

What will H.R. 6196 do to correct this situation? It will make cotton available to American mills at the same price it is made available for export to foreign mills. It is beyond me to see how any fairminded person could possibly object to giving the same treatment to an American industry which we accord to its foreign counterpart. It is absolutely impossible for an American mill to be competitive with foreign-made goods when it is forced by its government to pay onethird more for its raw material on top of a substantially higher wage scale.

Laws, which the Congress of the United States passed, have created what President Kennedy so aptly has called this unique burden. The President himself has asked for the elimination of the grossly unfair cost disadvantage which has been legislated on this American industry. H.R. 6196 would do away with the cotton cost difference between U.S. and foreign textile producers.

A subsidy to the textile industry. This is utter nonsense. Such a charge is completely irresponsible. Mr. FINDLEY'S

show how much money some of the larger firms would receive.

A private research firm conducted a study of the relationship of the price of cotton to the price of cloth. Its findings are on pages 8, 9, and 10 of the committee report. tee report. I urge you to read it all. I especially urge Mr. FINDLEY to read the report. Over a period of 38 years-including war and peace-depression and prosperity-cotton cloth prices have gone up and down with raw cotton prices. Let me read to you just one sentence from the report:

When consideration is given to the long span covered, the varying political and economic conditions during this time period, the great and minor depressions, the two wars and the two postwar periods, this record verges upon the unbelievable.

Certainly those of us who believe in the private, competitive, free enterprise system will agree that competition among the 5,000 companies which manufacture textiles in the United States will force an immediate and comparable reduction in cotton cloth prices when the price those companies pay for cotton is reduced.

Any person who says the textile industry will be subsidized or receive a windfall under H.R. 6196 either does not know the facts or refuses to accept them.

H.R. 6196 in addition to great benefits to consumers and millions of off-form wage earners will do the following things directly for cotton:

First. On the domestic market it would remedy a price disadvantage which is largely responsible for a competitive loss of 1,700,000 bales in annual rate during the past 3 years-a loss which is now continuing with no end in sight.

Second. It would eliminate the twoprice system and thereby remove the main cause of rising cotton textile imports which have reached the equivalent of 693,000 bales in annual rate during the first 7 months of 1963. These imports are delivering our domestic market to foreign cottongrowers and, in addition, they are generating powerful opposition to the export subsidy upon which our whole export market now depends.

Third. It would remove the necessity, otherwise inevitable, of reducing the statutory minimum acreage allotment below 16 million acres, possibly even in the next Congress. This season, even under the optimistic offtake estimates of the Department of Agriculture, the minimum allotment is producing 1.2 million bales more than can be sold, and the carryover will reach 12.4 million bales next August 1.

Fourth. It would protect the income This week Capt. Edward Dwight, comof the farmer. mand test pilot, graduate aeronautical Fifth. It would remove such imminent engineer cum laude, boxing champion risks as the following: who nearly tied the world 100-yard track The loss of a great source of foreign record-a Negro American-was named exchange;

to the exclusive astronaut club. On this The creation of new depressed areas man we will pin our hopes-black and all over the Cotton Belt; white-for national prestige in the lunar probe.

The impact of acres diverted from cotton upon the markets of other farmers;

Conversion of more cotton plants to synthetic fibers, and construction of large new rayon plants, by managements which are now waiting to take their cue from the decision of Congress on H.R. 6196.

Civil Rights: Dr. Haldane Reviewed

EXTENSION OF REMARKS OF

HON. ROBERT L. LEGGETT

OF CALIFORNIA

IN THE HOUSE OF REPRESENTATIVES Wednesday, November 13, 1963

Mr. LEGGETT. Mr. Speaker, a segregationist colleague of mine from Texas inserted material a few weeks ago into the CONGRESSIONAL RECORD pointing up his opposition to civil rights legislation on the basis that men are only equal in the eyes of God and that civil rights legislation is erroneously premised on the basis that all men are physically identical in ability and intelligence. Prof. Prof. J. B. Haldane is the authority cited supporting the basic thesis that races are different and unequal.

With the major civil rights bill expected to reach the House floor the first half of December, I thought I would make a further effort to see if we could not get our facts straight before the debate.

PROFESSOR HALDANE REVIEWED

Nobody means to say that all Negroes are astronauts-nor whites-and perhaps percentagewise there is scientific evidence to infer that potentially more Caucasians possess this inordinate ability. The Germans and the Swedes might on the average outperform the Italians and Latins. Reasonable men of goodwill, however, do not conclude that you accentuate these differences by educating, employing, housing, and accommodating only the very able.

RIGHT EQUALITY NOT IDENTITY

The American Anthropoligical Association at its 1962 meeting, I believe, enacted a resolution which should lay this issue to rest:

Be it resolved, That the American Anthropological Association repudiates statements now appearing in the United States that Negroes are biologically and in innate mental ability inferior to whites, and reaffirms the fact that there is no scientifically established evidence to justify the exclusion of any race from the rights guaranteed by the Constitution of the United States. The basic principles of equality of opportunity and equality before the law are compatible with all that is known about human biology. All races possess the abilities needed to participate fully in the democratic way of life and in modern technological civilization.

I will support the bipartisan civil rights legislation among other reasons because I think it basically unjust that counties like Jefferson County, Miss., with a census population of 1,666 white persons and 3,540 Negroes have a voter registration of 1,643 white-98.6 percent-and zero Negro; and like Greene County, Ala., having a total of 1,649 I researched Dr. Haldane's 1938 work white persons and 5,001 Negroes with a on heredity and politics. He there points out very clearly that on most intelligence tests the Asiatic peoples do as well as Caucasians. On the other hand, the averages of Indian and Negro peoples are below. Haldane points out that it is obviously nurture or environment and not nature or heredity that accounts for the difference. He points up that in the Army intelligence tests, Negroes tested below Caucasians in both the North and the South, but on the average northern Negroes tested equal to or higher than southern whites.

Haldane concludes:

My own view is that probably there would be slight differences found in the results of intelligence tests if all peoples were brought under a precisely similar environment, but I would hesitate to say in which direction they would be found, except to suggest that as the intelligence tests have all been devised by whites, they would be likely to show a certain superiority of whites over Negroes *** it is quite likely that Negro examiners could design tests on which their own race could beat the whites.

Haldane suggests that we could learn something from the racetrack where horses of many colors are rated exclusively on their performance.

voter registration of 1,979 white-120 percent-and 275 Negroes-5.5 peraimed at establishing identity of races cent. The pending legislation is not but merely equality of legal rights.

Compassion and simple fairness dictate that the sovereign States of Mississippi and Alabama yield to the interests of a better America on this issue.

Al Reid, Newspaperman With a Heart

EXTENSION OF REMARKS

OF

HON. ROBERT R. BARRY

OF NEW YORK

IN THE HOUSE OF REPRESENTATIVES Wednesday, November 13, 1963

Mr. BARRY. Mr. Speaker, Mr. Al Reid, distinguished writer and correspondent of the Home News & Times in Yonkers, N.Y., has been leading a worthwhile effort to help the Cross Country Hospital in Yonkers and the Lawrence Hospital in Bronxville.

He calls this effort "Operation Trading Stamps." Under this charitable plan,

people send their trading stamps to Al Reid who then uses them to buy items such as toys and games for the two hospitals.

Al Reid says, "I licked every stamp." To date, this amounts to over 50,000. This is certainly a highly original idea. Moreover, it is one that other communities can use in order to bring comforting items to the children and adults in our hospitals.

Activities of this type are making Al Reid known as "the newspaperman with a heart."

Fiscal Policy: Debt and Taxes

EXTENSION OF REMARKS

OF

HON. THOMAS B. CURTIS

OF MISSOURI

IN THE HOUSE OF REPRESENTATIVES Wednesday, November 13, 1963

Mr. CURTIS. Mr. Speaker, it is not often that I put speeches of mine in the RECORD. Recently, though, I have made several speeches on Federal fiscal policy which express my views on the subject of tax reform and the Revenue Act of 1963. With unanimous consent, I wish to place in the RECORD at this time the speech I made before the annual conference of the National Tax Association on Tuesday, November 12, in Milwaukee, Wis.:

FISCAL POLICY: DEBT AND TAXES (By the Honorable THOMAS B. CURTIS, Republican, Second District of Missouri)

It is my belief that the purpose of taxation is to obtain the revenues necessary to pay for

the goods and services we wish to receive through the mechanism of political government. I think that tax policy should be as neutral as we can possibly make it in its economic impact. I hold that to deliberately use a tax system to produce economic results by indirection damages the tax system in attaining its primary objective and damages ment. the very process of representative govern

Likewise, I feel that the purposes of government debt which, in essence, is deferred tax collection should be spelled out directly. And debt should not be used indirectly to achieve other economic results.

We have great latitude in governmental decisionmaking to produce the economic

results we seek directly, through expenditure policy. Here is where policy can be made after forthright public debate. Why should we shy away from the direct way of doing things, to act by indirection, unless those who are in charge of running the Government are seeking to confuse the process of government decisionmaking?

President Kennedy stated that the proposed Revenue Act of 1963 was the most important measure to face the Congress in the past 15 years. I countered by stating that if the economic and political philosophy underlying this proposed Revenue Act prevailed, it was probably the most important measure that has faced the Congress in its 177 years of existence.

Surely it has now become clear to the general public that the fate of the Revenue Act of 1963 is wrapped up in a major and revolutionary theory of fiscal policy called planned deficit financing, rather than in the

details, important as they may be, of the tax bill itself.

This is not just a matter of the soundness of the economic theory that cutting tax

rates already insufficient to produce the revenues needed to meet our Federal expenditures will stimulate the economy to greater economic growth. It goes to the basic question I posed at the beginning of my remarks. Should tax policy be used to achieve these kinds of economic purposes?

In one sense, what I seek to point out may seem to be quibbling. There is little question that our present Federal tax structure has gone beyond the point of diminishing returns and is slowly eating away the very base upon which it relies for its future revenues. In other words, our tax structure is creating considerable economic impact, and of the wrong kind, just in trying to do its indisputed job of collecting revenues to meet our ever increasing and seemingly insatiable Federal expenditures.

Furthermore, when tax rates are high, however one alters any specific in the tax code one is bound to produce considerable economic impact as a byproduct, for good or for ill. However, I contend this is no quibble. There is considerable difference in the end product in writing tax laws to gain revenues as efficiently as possible with the minimum amount of impact upon the economic decisions in the marketplace and to deliberately interject Government economic decision into the marketplace through the use of the tax structure.

Indeed, I still have my doubts about how long the neo-Keynesians are going to stay in agreement with the neutralists on the theory that our Federal income tax rates are so high they are creating economic damage. To use tax policy for economic purposes most effectively, one needs to have high rates to start with. Otherwise, the differentials written in the tax laws are ineffective in forcing economic decisions.

The neo-Keynesians have joined the neutralists only recently in urging rate reduction, and I am not at all sure it was not forced upon them for practical political considerations necessary if they were to surplant our traditional policy of tax neutrality with that of using it as a major economic tool. After the principal has been established, they can then increase the rates again.

Burning in my mind is the phraseology used by the President in his message to the Congress first advocating tax rate reduction. He said that if releasing spending power to the private sector through tax reduction did not produce the economic growth he sought, increased Government spending was the alternative. The objective is to increase total spending, Government plus private; if the private sector does not do the spending, then Government must.

When one grasps this line of thought, it is not difficult to understand why President Kennedy has fought so bitterly the attempts of some of us in the Congress to tie the tax bill to expenditure reform by deeds rather than words.

The President won a temporary victory in the House when an intent of Congress was put in the tax bill in lieu of a requirement that the expenditure rates be cut.

It is important if we are to carry forward the debate on this fundamental fiscal policy to understand where the areas of agreement and disagreement lie.

I find the President and Dr. Heller, the Chairman of his Council of Economic Advisers, have created a series of straw men which they have been attacking with great vigor.

While they do battle with these straw men, however, they carefully avoid the real opponents. The success they have achieved is essentially one of getting their story to the public and preventing their opposition from being heard. They have the microphone, as it were, of the national news media so that their arguments and their version of the battle done against the straw men is heard around the country. The microphone is

jerked away when we who differ on this matter speak, and so our arguments have not been heard.

Let me establish a basic point of agreement. Hoarding is the real enemy of economic growth. If people, and that includes the people's servant-government-do not spend, economic activity indeed will decline. It is very important to emphasize that investment money is money spent-not hoarded money. Investment money is spent for capital assets, and training and gathering together manpower. Investment money comes only from savings. The savings can be generated internally or externally. Use of external savings is borrowing someone's else savings.

The President's statement that his opposition is opposed to all borrowing-all debt, whatever its kind or source, is untrue. As

a matter of fact, I have been seeking for sometime, without success, to have a full study in the Joint Economic Committee on the economic aspects of Federal debt to establish what aspects are economically desirable and what are not, and particularly what criteria should we establish to determine the proper levels of Federal debt.

Why have the President and Dr. Heller avoided a straightforward discussion of the economic part the Federal debt plays in our society? I think it is fair to suggest it is because the present level of Federal Governmental debt is the real villain in our economic picture right now and any further increase in this debt through further deficit financing, as the President would have us engage in, would make our unemployment picture and our balance of international payments situation worse. If this happened, the great economic growth we have been experiencing in spite of poor fiscal policy in the postWorld War II decades would be seriously hampered, not enhanced. The President and his advisers have failed to identify the tremendous economic growth going on under their very noses because they have been using incomplete aggregate economic statistics never designed to measure true economic growth. They call our economy, which is suffering from serious growing pains-we have been growing so fast-tired, lethargic, and in need of a shot in the arm.

They identify obsolete, inefficient, and unwanted plant equipment as idle plant capacity, as if it could be put to good economic use if we only had more purchasing power. They identify the unemployed, concentrated as they are among the obsolete skilled, unskilled, and semiskilled people, as manpower available for immediate economically meaningful employment. They count on the inefficient, unwanted, and obsolete plant capacity and the obsolete skilled, unskilled, and semiskilled manpower to sop up the increased purchasing power they would inject into our economy through tax cuts accompanied by increased Government expenditures so no additional inflationary forces will be let loose. This is whipping the sea for following its tides.

They ignore the fact that corporate liquidity and consumer purchasing power are at all time highs and that today the question of spending vs. hoarding is related to the motivation for spending, not to the capacity to spend. Why are our corporations not investing in their own endeavors here in the United States to the extent that they have the power to do so? Why are personal and corporate funds increasingly being sent abroad for investment, so that the administration now asks Congress to impose an excise tax on these investments to keep them at home? To encourage them to be idleto be hoarded?

I think it is about time we looked into the question of what makes men hoard by being idle themselves and letting their money and their assets be idle. I suggest that it has directly to do with what return they expect

to receive for the discipline they exercised in saving and the risk they take for the saved dollar they invest. What sort of confidence do they have in their own personal and business economic future? People hoard if they are uncertain, and the greater the uncertainty, the greater the tendency to hoard. A governmental fiscal and monetary policy has more to do with hoarding than any other factor.

A government policy which says it will spend if its people are too stupid to spend and then seeks to finance the increased Government spending, not through taking the savings of the people, through increased taxes (which, of course, would create problems of its own), but through selling more Government bonds, is only going to aggravate uncertainty and encourage an ever greater incident of hoarding. This would set off a dangerous spiral all of its own, even if an inflationary spiral did not accompany it. Indeed, at a certain point, a deflationary spiral might set in and this could only be broken by massive Government intervention, which would deprive us of the right to call ourselves a free society.

Debt, whether corporate, personal or government, is related to two things. Assets to secure the debt and earning capacity to pay off the debt. Innovation, which is the sole source of economic growth, is financed by savings largely of one's own, not of someone else. The financing can be a mix of partly one's own savings and partly the savings of someone else. The more risky the venture is, the greater the part of the savings will tend to be one's own. Also, the more risky the venture, the higher the return must be for the borrowed dollars. So, the greater the innovation, the greater is the economic benefits to the society. So we must encourage not deter risk taking if we are to have maximum economic growth.

Debt backed up by physical assets tends to be less risky than debt backed up by anticipated earnings.

President Kennedy and Dr. Heller have sought to relate Federal Government debt to personal debt, to corporate debt and to local and State governmental debt. They do this to allay the fears of our people about the Federal debt.

The bulk of our Federal debt, just as the bulk of Federal spending, is for the defense of our country. And this is as it should be. But defense expenditures create little or no capital assets and what assets there are certainly produce little or no earnings. Military hardware must go on the books at $1. Most military buildings, being single purpose buildings, must also be listed at a very low value. Most of that small portion of the Federal debt which has created wealth or earning power has resulted from the Federal expenditure policies which are under the most controversy. Indeed, there is a great deal to be said for the point that if the purposes of the expenditure is to create wealth and earning power the matter should be handled in the private sector and not the governmental sector. Government is not the partner of the people. It is the servant.

Local and State governmental debt, it is to be noted, almost invariably relates to specific wealth creating expenditures, for highways, schools, sewers, community facilities, etc., and is often reflected in sinking fund and revenue bonds. This kind of debt, aside from reflecting the creation of real wealth, is also a device for spreading the cost of the