Speech

REMARKS OF SECRETARY OF THE TREASURY G- WILLIAM MILLER AT THE 1981 GEOGRAPHIC CENTER TOP MANAGEMENT MEETING CHICAGO SAVINGS BOND CAMPAIGN KICKOFF CHICAGO, ILLINOIS NOVEMBER 19, 1980 IT IS ALWAYS A PLEASURE TO TALK WITH SAVINGS BOND VOLUNTEERS, AND IT IS A PARTICULAR PLEASURE TO BE HERE TODAY WITH MEMBERS OF THE CHICAGO COMMITTEE AND THE ILLINOIS STATE COMMITTEE- YOU HAVE SOME EXCEPTIONALLY CAPABLE PEOPLE PROVIDING YOUR LEADERSHIP- JOHN H- BRYAN, JR-, HAS DONE AN OUTSTANDING JOB IN THE LAST YEAR AS THE CHICAGO GEOGRAPHIC CENTER CHAIRMAN- THE CAMPAIGN MANAGERS' SEMINARS JOHN HAS CONDUCTED HAVE PROVIDED INVALUABLE TRAINING AND GUIDANCE FOR MANY OF YOUR VOLUNTEERS. FRANK W- CONSIDIIJE IS STARTING HIS FIRST YEAR AS CHAIRMAN OF THE ILLINOIS VOLUNTEER SAVINGS BONDS COMMITTEE, AND WE AT TREASURY ARE LOOKING FORWARD TO WORKING CLOSELY WITH HIM- WE KNOW HE WILL DO A FIRST-RATE JOB- WE ALSO HAVE TWO OTHER IMPORTANT MEMBERS OF THE SAVINGS BOND TEAM IN ILLINOIS WITH US TODAY: A- J- BOUTTE, OUR AMERICAN BANKERS ASSOCIATION COORDINATOR, AND FREDERICK G- JAICKS, THE NATIONAL STEEL INDUSTRY CHAIRMAN- Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -2- WITH ALL OF THESE PEOPLE LEADING THE WAY FOR US, I AH CONFIDENT THE 1981 CAMPAIGN IN ILLINOIS IS GOING TO BE A GREAT SUCCESS. AS 1 AM SURE MOST OF YOU KNOW, SAVINGS BONDS HAVE PLAYED AN IMPORTANT ROLE IN OUR NATION'S HISTORY FOR ALMOST HALF A CENTURY- WHEN THE PROGRAM BEGAN IN 1935 WIDESPREAD BANK FAILURES HAD ROBBED THE COUNTRY OF ITS CONFIDENCE THAT MONEY COULD BE SAFELY SAVED ANYWHERE EXCEPT UNDER A MATTRESS- THE INITIAL "BABY BONDS" HELPED TO RESTORE THAT CONFIDENCE- THEY AIDED IN FINANCING THE GOVERNMENT EXPENDITURES THAT WERE NEEDED TO GET AMERICANS OFF BREADLINES. SIX YEARS LATER - WITH THE ADVENT OF AMERICA'S PREPARATION FOR WORLD WAR II - THE FIRST SERIES E DEFENSE BONDS WENT ON SALE- THE PUBLIC RESPONDED BY BUYING MORE THAN 39 BILLION DOLLARS WORTH BETWEEN 1941 AND 1945- THIS PROVIDED SOME OF THE ECONOMIC AMMUNITION TO WAGE A GLOBAL WAR AGAINST TOTALITARIANISM- TODAY, SAVINGS BONDS, AND THE REGULAR SAVINGS HABIT THEY HELP TO PROMOTE, HAVE A ROLE TO PLAY IN THIS ERA'S GREAT CHALLENGE: REVITALIZING THE NATION'S ECONOMY- WITH YOUR HELP, I AM CONFIDENT THAT WE CAN MAKE THAT AN ESPECIALLY VALUABLE ROLE- TO UNDERSTAND BETTER THE PART SAVINGS BONDS CAN PLAY, LET ME TAKE A FEW MOMENTS TO REVIEW WITH YOU THE ECONOMIC CLIMATE IN WHICH WE ARE LAUNCHING THE 1981 CAMPAIGN- Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -3- OBVIOUSLY, THE LAST YEAR HAS BEEN A DIFFICULT ONE FOR OUR ECONOMY. MASSIVE SHOCKS FROM THE 1379-80 OPEC PRICE INCREASES LED TO SOARING INFLATIONARY EXPECTATIONS AND INTEREST RATES. THESE WERE FOLLOWED BY SHARP QUARTERLY DROPS IN OUTPUT. UNEMPLOYMENT ROSE AND THE HOUSING AND AUTOMOTIVE INDUSTRIES SAGGED- THERE WERE TEMPTATIONS FOR THE GOVERNMENT TO RESPOND WITH STRONG STIMULUS ACTIONS. BUT THOSE OF US RESPONSIBLE FOR CHARTING THE NATION'S ECONOMIC COURSE FELT THAT THE GREAT STRENGTH, RESILIENCE AND BALANCE WITHIN OUR ECONOMY PROVIDED INHERENT SELF-CURATIVE POWERS- WE BELIEVED WHAT WAS NEEDED WAS LESS GOVERNMENT INTERVENTION AND MORE RELIANCE ON THE MARKET SYSTEM- WE PROCEEDED ON THAT BASIS AND NOW IT SEEMS THAT THE RECESSION OF 1980 MAY PROVE TO HAVE BEEN ONE OF THE SHORTEST ON RECORD- THERE ARE A NUMBER OF SIGNS THAT ECONOMIC RECOVERY HAS BEGUN. BOTH AUTO AND HOUSING SALES IMPROVED AFTER A PERIOD OF WEAKNESS- THE INDEX OF LEADING ECONOMIC INDICATORS HAS RISEN STRONGLY OVER THE LAST SEVERAL MONTHS- INDUSTRIAL PRODUCTION ROSE BY 1-6 PERCENT IN OCTOBER AND GAINS IN EARLIER MONTHS WERE REVISED UPWARDS. LABOR MARKETS HAVE ALSO STRENGTHENED- THESE ARE WELCOME SIGNS, OF COURSE. THEY POINT TO PROSPECTS FOR STEADY UPTURN, AND REAFFIRM OUR BELIEF IN THE ECONOMY'S BASIC Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -4- VITAL1TY- IT REMAINS FOR US TO MAKE SURE THAT WE CONTINUE TO MANAGE THE ECONOMY SO AS TO NURTURE THAT UPWARD TREND- BUT THAT IS ONLY THE SHORT-TERM CHALLENGE FACING AMERICAN INDUSTRY AND AMERICAN GOVERNMENT- THE LONG-TERM CHALLENGE IS TO TAKE THE STEPS THAT WILL EFFECTIVELY REINFORCE AND STRENGTHEN THIS RECOVERY WITHOUT REKINDLING INFLATION- THIS WILL BE A MOST DIFFICULT TASK- IT WILL INVOLVE A FUNDAMENTAL REVITALIZATION OF OUR ECONOMY. INFLATION IS A MALIGNANCY WHICH HAS DEEPLY EMBEDDED ITSELF IN OUR SYSTEM-OVER THE PAST 15 YEARS- IT THREATENS OUR ECONOMY, OUR NATIONAL SECURITY AND OUR FUTURE PROGRESS AS A NATION- IT IS AN EVEN MORE INSIDIOUS ENEMY BECAUSE ITS VICTIMS ARE ALSO ITS ALLIES- AS THAT LATE, LAMENTED PHILOSOPHER, POGO, WAS WONT TO SAY, "WE HAVE MET THE ENEMY, AND HE IS US-" ALTHOUGH WE HAVE MADE STRIDES TOWARD GREATER CONSERVATION, WE ARE STILL A SOCIETY OF CONSUMERS, A SOCIETY WHICH HAS PAID TOO LITTLE ATTENTION TO SAVING AND INVESTMENT. THIS COMPOUNDS OUR PROBLEM IN FIGHTING INFLATION- WHILE THERE ARE MANY HISTORIC REASONS FOR THE CURRENT INFLATION, THE TWO KEY ELEMENTS ARE SKYROCKETING OIL PRICES AND THE DECLINING RATE OF OUR PRODUCTIVITY. Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -5- WE WILL NEVER SOLVE THE PROBLEM OF INFLATION UNTIL WE DECREASE OUR DEPENDENCE ON IMPORTED OIL - UNTIL WE ARE ABLE TO PRODUCE ADEQUATE AMOUNTS OF ALTERNATE ENERGY HERE IN OUR OWN COUNTRY. AT THE SAME TIME, WE MUST IMPROVE OUR RATE OF PRODUCTIVITY. IN THE TWO DECADES FOLLOWING WORLD WAR II, AMERICA EXCELLED IN THE RATE OF PRODUCTIVITY IMPROVEMENT. AND WE ARE STILL THE MOST PRODUCTIVE NATION IN THE WORLD- BUT SINCE 1965 WE HAVE ALLOWED OUR GAINS TO LAG SLOWLY UNTIL THEY ARE NOW ALMOST NONEXISTENT- IF WE DO NOT CORRECT THIS FUNDAMENTAL PROBLEM, OUR COMPETITIVE­ NESS IN THE WORLD MARKETS WILL CONTINUE TO ERODE AND WE WILL LOSE NOT ONLY IN THE SHORT TERM BUT IN THE LONG TERM AS WELL- THERE ARE NO QUICK, EASY FIXES FOR THESE PROBLEMS OF PERSISTENT INFLATION AND DECLINING PRODUCTIVITY- TO SOLVE THEM WE WILL HAVE TO EXTEND OUR VISION FAR BEYOND THE NORMAL ECONOMIC HORIZONS AND SEEK A PERSPECTIVE WHICH PERHAPS GOES BEYOND WHAT IS POLITICALLY POPULAR. PART OF THAT PERSPECTIVE IS THE RECOGNITION OF AN UNDERLYING ECONOMIC FACT OF LIFE- AND THAT IS THAT FOR TOO LONG NOW — FOR SOME 15 YEARS — WE AS A NATION HAVE SOUGHT INSTANT GRATIFICA­ TION, HAVE PURSUED THE LIFE OF CONSUMPTION AND AFFLUENCE, AND HAVE NOT BEEN PUTTING ENOUGH BACK INTO OUR SYSTEM TO ENSURE ITS RENEWAL AND CONTINUED STRENGTH. AS THE OLD CHINESE PROVERB PUTS IT, "LIFE IS LIKE A COOKIE JAR. IF YOU ONLY TAKE OUT AND NEVER PUT BACK, THE JAR IS SOON EMPTY." Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -6- THE TIME HAS COME FOR US TO START REPLENISHING THE JAR. WE NEED TO PUT BACK INTO OUR ECONOMY THE INVESTMENTS THAT ARE NECESSARY TO MODERNIZE AND REVITALIZE IT. NATURALLY, I CANNOT SPEAK FOR THE INCOMING ADMINISTRATION. BUT 1 CAN OFFER OBSERVATIONS FROM MY OWN EXPERIENCE- IF WE ARE TRULY GOING TO REVITALIZE OUR NATION'S ECONOMY, THEN WE MUST ACCEPT THE FACT THAT THE AGENDA FOR THE NEXT DECADE IS AWESOME: - TO BUILD THE PRODUCTIVE CAPACITY OF OUR CONVENTIONAL SOURCES OF ENERGY -- OIL AND GAS AND COAL AND NUCLEAR POWER. - TO DOUBLE OUR OUTPUT OF COAL IN THE NEXT 10 YEARS, SUBSTITUTING AMERICAN COAL FOR OPEC OIL IN WORLD MARKETS. - TO BUILD A WHOLE NEW SYNTHETIC FUELS INDUSTRY, NOW UNDERWAY WITH THE HELP OF THE SYNTHETIC FUELS CORPORATION. THIS WILL REQUIRE LITERALLY HUNDREDS OF BILLIONS OF DOLLARS, PRINCI­ PALLY PRIVATE CAPITAL. - TO CREATE NEW INDUSTRIAL PROCESSES, TRANSPORTATION SYSTEMS AND STRUCTURES THAT ARE ENERGY EFFICIENT- -- TO MODERNIZE ALL OUR BASIC INDUSTRIES ACROSS THE BOARD — FOR EXAMPLE OUR AUTOMOBILE INDUSTRY, WITH THE GREATEST INVESTMENT EVER UNDERTAKEN IN SUCH A SHORT PERIOD OF TIME- Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -7- ALL OF THIS MUST BE ACCOMPLISHED IF WE ARE TO DESTROY THE INFLATIONARY TUMOR EATING AT OUR SYSTEM, AND REENERGIZE OUR PRODUCTIVITY GAINS WHICH FOR SO LONG WERE OUR GREAT STRENGTH AND WHICH GAVE US PREEMINENCE IN THE WORLD- WE CAN ONLY ACHIEVE THESE GOALS IF WE ARE WILLING TO MAKE A SIGNIFICANT SHIFT IN OUR ECONOMY FROM CONSUMPTION TO INVESTMENT- AND THAT WILL REQUIRE A GREAT DEAL OF UNDERSTANDING AND COMMIT­ MENT ON THE PART OF ALL AMERICANS- IF WE ARE TO UNDERTAKE A DECADE OF UNPRECEDENTED INVESTMENT AND REVITALIZE OUR ENTIRE ECONOMIC SYSTEM, THEN WE MUST ALSO HAVE THE SAVINGS AND THE ATTITUDE ABOUT SAVINGS THAT WILL MAKE OUR ENDEAVORS POSSIBLE- AND THIS IS WHERE THE SAVINGS BOND PROGRAM CAN PLAY A ROLE- I WOULD BE MISLEADING YOU IF I WERE TO SAY THAT THE SAVINGS BOND PROGRAM IS A LARGE PART OF THE ANSWER TO OUR REVITALIZATION PROBLEMS. BUT IT CERTAINLY CAN AND SHOULD BE AN IMPORTANT PART OF IT- LIKE THE ECONOMY, THE SAVINGS BOND PROGRAM HAS WEATHERED SOME STORMY SEAS- I WON'T GO BACK OVER THE DISTRESSING TIMES YOU HAVE HAD TO FACE WITH EXCESSIVE REDEMPTIONS AND DECLINING SALES BECAUSE OF UNPRECEDENTED MARKET INTEREST RATES- I ONLY WANT TO THANK YOU FOR NOT ALLOWING THIS PROGRAM TO LAPSE WHILE WE WERE SEEKING THE MEANS TO STABILIZE AND ENHANCE IT- Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -8- FORTUNATELY, WE HAVE SUCCEEDED- THE PRESIDENT, AS YOU KNOW, RECENTLY SIGNED LEGISLATION THAT ALLOWS A ONE PERCENT INCREASE IN SAVINGS BOND INTEREST DURING ANY SIX-MONTH PERIOD- HE THEN PROMPTLY APPROVED MY RECOMMENDATION FOR A ONE PERCENT INCREASE WHICH BECAME EFFECTIVE NOVEMBER 1, RAISING THE INTEREST RATE ON EE BONDS FROM 7 TO 8 PERCENT- THE ONE PERCENT INCREASE APPLIES TO ALL OUTSTANDING E, EE, H AND HH BONDS AS WELL- FURTHER REVIEW OF THE INTEREST RATE WILL BE POSSIBLE NEXT MAY 1- WITH OUR HEW LEGISLATIVE AUTHORITY, WE ALREADY HAVE MADE BUYING AND HOLDING SAVINGS BONDS MORE ATTRACTIVE. WE WILL NOW BE ABLE TO ASSURE HOLDERS OF SAVINGS BONDS THE FAIR RETURN THAT THEY SHOULD HAVE- I HOPE, AND I EXPECT, THAT THIS WILL BE REFLECTED IN INCREASED SALES AND REDUCED REDEMPTIONS IN THE MONTHS AND YEARS TO COME- THOSE HOPES AND EXPECTATIONS ARE BASED ON THE KNOWLEDGE THAT WE HAVE AH EXCELLENT PROGRAM TO OFFER THE SMALL SAVER, ONE WHICH OFFERS HIM A UNIQUE BLEND OF SECURITY, FAIR RETURN, OPPORTUNITY FOR LONG TERM APPRECIATION AND LIQUIDITY- IT SEEMS TO ME THAT THERE ARE THREE THINGS WHICH WE MUST DO TO ENSURE SUCCESS OF THE 1981 CAMPAIGN- FIRST, WE MUST MAKE SURE AMERICANS UNDERSTAND THE SPECIAL ASPECTS AND ADVANTAGES OF THE PROGRAM- Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -9- SECOND, WE MUST PRESENT THE PROGRAM FACTUALLY- WE MUST AND WE WILL REPRESENT IT FAIRLY, AND WE MUST AND WE WILL PROMOTE IT OBJECTIVELY. THIRD, WE MUST MAKE IT AVAILABLE TO ALL AMERICANS, PARTICULARLY WHERE THEY WORK, BECAUSE THE PAYROLL SAVINGS PLAN IS THE VERY HEART OF THE SAVINGS BOND PROGRAM. LET ME TAKE A FEW MOMENTS TO TALK ABOUT THE PROGRAM'S ADVANTAGES. THERE IS NO SAVINGS SYSTEM THAT IS ANY SAFER; IT HAS THE COMPLETE BACKING OF THE FEDERAL GOVERNMENT- NOR IS THERE ANY OTHER SYSTEM THAT CAN OFFER A BETTER BALANCE BETWEEN THE SMALL AMOUNT SAVED AND ITS LIQUIDITY. WE HAVE AN INSTRUMENT THAT DOES NOT RUN ANY MARKET RISK AS TO ITS PRINCIPAL- THOSE WHO HAVE $10,000 TO INVEST MAY PREFER TO BUY A MARKET INSTRUMENT. BUT IF THEY SUDDENLY NEED THE MONEY, THEY MAY TAKE A LOSS OR REALIZE A GAIN- THEY CANNOT PREDICT WHICH- BUT WITH SAVINGS BONDS, THE PRINCIPAL IS THERE, THE LIQUIDITY IS THERE AND THE OPPORTUNITY FOR LONG TERM APPRECIATION IS THERE- ON TOP OF THAT, THERE ARE TAX DEFERRAL FEATURES- BECAUSE OF THOSE CHARACTERISTICS THE PROGRAM OCCUPIES A SPECIAL NICHE AS A SAVINGS INSTRUMENT. SAVINGS BONDS ARE QUITE SIMPLY A CONVENIENT, EASY, SAFE WAY TO SAVE SMALL AMOUNTS OF MONEY - ESPECIALLY FOR THOSE WHO NEED TO DEVELOP THE HABIT OF SAVING- Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -10- TKIS COULD BE IMPORTANT TO YOUNG AMERICANS TODAY WHO HAVE NOT CULTIVATED THAT HABIT- AS OSCAR WILDE ONCE SAID: "YOUNG PEOPLE NOWADAYS IMAGINE MONEY IS EVERYTHING- AND WHEN THEY GROW OLDER, THEY KNOW IT-" CYNICAL, YES, BUT THERE IS AN ELEMENT OF WISDOM THERE, TOO, AND THE TRICK IS TO GET THE YOUNG TO REALIZE IT BEFORE IT IS TOO LATE- OF COURSE, WE ARE NOT AIMING OUR EFFORTS AT JUST THE YOUNG- WE WANT EVERYONE — YOUNG, MIDDLE AGED AND SENIOR CITIZENS -- TO BE AWARE OF WHAT WE HAVE TO OFFER- WE WANT THEM TO KNOW THAT BY INVESTING AS LITTLE AS A DOLLAR AT A TIME — ROUGHLY THE EQUIVALENT OF A SUNDAY NEWSPAPER OR A GALLON OF GAS — THEY CAN BUILD A BRIGHTER FUTURE FOR THEMSELVES, AND AT THE SAME TIME AID IN THE REGENERATION OF OUR ECONOMY- RECENT INTERNATIONAL POLITICAL AND ECONOMIC EVENTS HAVE CAUSED SOME TO SUGGEST THAT THERE IS LITTLE ANYONE OF US CAN DO ABOUT THEM- THAT SIMPLY IS NOT TRUE- THERE IS SOMETHING EACH OF US CAN DO: INVEST IN AMERICA- HELP OUR COUNTRY BY HELPING OURSELVES. I HAVE HEARD SOMEONE DESCRIBE THE BUYING OF SAVINGS BONDS AS "STAR-SPANGLED SELF-INTEREST-" THAT HAS A SOLID RING- AND THAT IS OUR MESSAGE- IT BRINGS ME TO MY SECOND POINT, THE PROMOTION OF THE PROGRAM- WE HAVE NO DESIRE TO PRESENT THE SAVINGS BOND PROGRAM TO PEOPLE IN SOME FORM THAT CONFUSES OR MISLEADS THEM, OR MAKES THEM BELIEVE IT IS SOMETHING IT IS NOT- AFTER RECENTLY REVIEWING THE ADVERTISING CAMPAIGN DEVELOPED BY Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -11- THE LEO BURNETT COMPANY AS A VOLUNTEER AD AGENCY WORKING WITH THE ADVERTISING COUNCIL, I DON'T BELIEVE WE HAVE ANYTHING TO WORRY ABOUT. THE PRINT AND DISPLAY ADVERTISEMENTS, AND THE NEW RADIO AND TV SPOTS, ARE EFFECTIVE AND BRING TO LIFE THE REALITY OF THE SAVINGS BOND PROGRAM IN A SENSIBLE, SOUND FASHION- THE LEO BURNETT COMPANY AND THE ADVERTISING COUNCIL ARE TO BE COMMENDED FOR AN OUTSTANDING AND PROFESSIONAL PROGRAM- IF WE ALL SEE TO IT THAT THESE NEW ADS GET OUT, AND REPLACE THE OUTDATED MATERIALS, I FEEL CERTAIN THE COUNTRY WILL KNOW THE REAL FACTS ABOUT SAVINGS BONDS- THE THIRD THING WE MUST DO IS TO MAKE THIS PROGRAM AVAILABLE TO ALL AMERICANS, PARTICULARLY AT THE PLACES WHERE THEY WORK, IT IS THROUGH THE PAYROLL SAVINGS PLAN THAT THEY CAN GAIN THE BENEFIT OF THE PAINLESS, SIMPLE, SAFE WAY OF PUTTING AWAY SMALL SUMS OF MONEY WHICH CAN BUILD INTO A HEALTHY NEST EGG FOR THE FUTURE NEEDS- AND THAT IS WHY YOUR SENSE OF PURPOSE AND PATRIOTISM AND UNDERSTANDING IS SO CRITICAL TO OUR SUCCESS- THE DRAMATIST HENRIK IBSEN ONCE WROTE: "A COMMUNITY IS LIKE A SHIP; EVERYONE OUGHT TO BE PREPARED TO TAKE THE HELM-" AMERICA IS A VAST COMMUNITY, ONE UNITED IN ITS RESOLVE NOT TO ALLOW INFLATION TO DESTROY ITS FREEDOMS AND ITS WAY OF LIFE- THE PROBLEM IS THAT THE INDIVIDUAL FREQUENTLY FEELS HELPLESS TO DO ANYTHING ABOUT IT- Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -12- YOU CAN HELP — AND YOU ARE HELPING- YOU ARE TAKING A TURN AT THE HELM- YOUR LEADERSHIP WILL RECHARGE THE SAVINGS BOND PROGRAM AND SET IT ON A COURSE OF NEW PROGRESS- BY GETTING OUR MESSAGE ACROSS TO YOUR EMPLOYEES AND THEIR FAMILIES YOU WILL BE MAKING AN EXTRAORDINARY CONTRIBUTION, BOTH TO THOSE WHO BUY THE BONDS AND TO THE NATION WHICH WILL BENEFIT FROM THIS OFF-MARKET FINANCING IN WAGING THE WAR AGAINST INFLATION AND RESTORING AMERICAN PRODUCTIVITY GAINS- THOSE OF US IN THE TREASURY WELCOME THE OPPORTUNITY TO WORK WITH YOU- WE ARE GRATEFUL FOR YOUR PUBLIC SPIRIT AND YOUR PUBLIC SERVICE. WE STAND READY TO HELP YOU IN EVERY WAY POSSIBLE IN OUR COMMON EFFORT. THANK YOU VERY MUCH- Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Date: November 18, 19 80 MEMORANDUM FOR: Secretary Miller From: Executive Secretariat Subject; Your Savings Bonds Kickoff Speech in Chicago, Wednesday, Nov. 19, at the Mid- Amcrica Club, Standard Oil Building, 200 E. Randolph Street You are scheduled to speak at the l9bl Geographic Center Top Management Meeting. About 250 area executives will attend. A detailed scenario is at Tab B. A 3o-minute press conference will begin at 11:45 a.m. followed by luncheon at 12:30 p.m. After lunch and the opening remarks by GEO Chairman John Bryan, you are scheduled to speak at about 1:30 p.m. for 15-20 minutes. The meeting is to adjourn at 2:0o p.m. You will be met at Midway Airport by Lou Negri, Chicago District Director. Your speech text is at Tab A. An economic checklist is at iao C • Attachments initiator Reviewer Reviewer Reviewer Reviewer Ex. Sec. bzz Surname SE:KButton j / L/ / ~T~ Initials Date Form OS 3129 Department of Treasury Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis DEPARTMENT OF THE TREASURY U.S. SAVINGS BONDS DIVISION SCENARIO FOR -- Secretary G. William Miller QUOAy LON -- 1981 Geographic Center Top Management Meeting, Chicago Savings Bonds Campaign Kickoff 'DACE DATE -- Chicago,November 19, 1980 LOCATION -- Mid-America Cl ub/Standar d Oil Building TIM!NG'CHRONOLOGY -- il:uf am (approx.) -- Midway Airport. Secretary will be met by Lou Negri, Chicago District Director, U.S. Savings Bonds Division. Secretary will be driven to Mid-America Club, 200 E. Randolph. 11:4 ; am -- Press Conference/Mid-America Club. Coverage expected b> print and broadcast media. 30 minutes. 12: Luncheon. Attendance by approximately 250 top area executives Pres iding - John H. Bryan, Jr., Chairman and CEO, Consolidated Foods Carp)., 1981 Chicago Geographic Center Chairman, U.S. Industrial Payroll Savings Committee. jjejld lanljf Seating - John H. Bryan, Jr., to Secretary’s left. To Secretary’s r ight will be Frank W. Considine, President- and CEO, National Can Corp., Illinois Volunteer Savings Bonds Chairman. Others at head table will be members of Chicago Geographic Committee. i : .m Open i r.g Remar ks / Reading of Governor's Proclamation and Introduct ion by John H. Bryan, Jr. ’ 1:32 pm -- Remarks by Sec re ta t y/apprr>x imately 15-20 minutes. 2:00 pm - - Ad jou r nment. NOTE: Mr. Negri will drive Secretary to airport immediately after meet inq. Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis * J z a ■ J ' ' I Ilf f0 PUBLIC APPEARANCE FACT SHEET -- 3 '. o Date 11/6/80 To — Office of Public Affairs ( Copy to Director of Sales ) From — Chicago District - US Savings Ponds Division_________________________ Concerning G, William Miller______________________________________________ ( Name ) Visit and speech in Chicago. Illinois_______________________________ ( City and State ) 1. Date and time of speech November 19, 1980________________________ 2. Location Mid-America Club - Standard Oil Building. Chicago. Illinois 3. Details — Speaker is x is not ____ expected to attend reception/luncheon/dinner, preceding X or following ____ speech at 12:00 Noon_______ ; Mid-America Club, Chicano______________ • ( Time ) ( Place ) Occasion is formal ____ informal x There will ____ will not X be a receiving line. Question-and-answer period ( following speech ) is ____ is not X contemplated. 4. Will there be a press conference? If so, state where, when and whether there will be TV coverage -- There will be press-radio and TV coverage of the meeting-11:45 to 12:15. 5. Sponsoring group Consolidated Food Co. (GEO Chairman's company)_________ 6. Purpose of gathering 1981 Top Management Meeting____________________ Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2 7. Anticipation size and composition of audience Approximately______ 250 executives from industry, business and financial and media,.----------------------- 8. MC or presiding officer John H, Bryan, Jr., GEO Chairman_______________ ( Name and Title ) 9. Time allotted for speech 15-20 minutes_____• ( Be sure allotted time is clearly understood by program sponsor. ) 10. Purpose of speech? Particular points to be stressed — Information and motivation of GEO Market participation for the 1981 campaign.______________________________ ____________________________________ _ —_ 11. Citations? If presentation is to be part of speech, give necessary details, including name and title of person hon­ ored, reason for award, whether Headquarters or Field Office is to prepare citation — None______________________________ 12. Are there other speakers? No______ If so, indicate what part of Savings Bonds story each will relate — Governor's proclamation will be read and Mr. Bryan, GEO Chairman's opening remarks and introduction will precede Secretary Miller.____________________ Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 3 13. Should speaker acknowledge volunteers or VIPs present in his remarks? If so, list names, titles, reasons -- No 14. If event is luncheon or dinner, list names and titles of those to be seated with speaker at headtable, particularly those to his left and right -- Arrangements being made.__________ Mr. John Bryan, Jr.to the left and Mr. Considine to the right. Mr, John Bryan, GEO Chairman & Chairman of Consolidated Foods___________ Mr. Considine, State Chairman & President and CEO of National Can Corp. 15. Speaker will be free to leave function at 2:0Qpm____________ (Time) 16. If speaker is from Headquarters Staff, list other commit­ ments, such as calls on bankers, press-radio-television in­ terviews, payroll savings calls, presentations of awards, staff meetings, etc. ( Be specific as to times and places. None 17. List contact/s or name/s of person/s who will meet and es- Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 4 cort speaker to and from function/s — Mr. Louis J. Negri. Chicago District Director. 18. Send ___ biographical sketches and - photos of speaker to -_______________________ ___________________________ _ ___________ 19. Accommodations Mid-America Club, Chicago __________________ (Hotel and Address)- Dates November 19, 1980_______________________________________________ 20. Identify meeting rooms, names and locations, for all func­ tions Mid-America Club, Standard Oil Building, 200 E. Randolph, Chicago, IL 21. Attach agenda detailing speaker's timetable -- including time involved airport/hotel, hotel/speech/interview, etc. —% in chronological order, from arrival to departure. 22. Comments -- Mr. Miller will be met at Chicago's Midway Airport on arrival on or about 11:00 a.m. on November 19, 1980, by L. Negri, Chicago District Director. We will drive Mr. Miller directly to the Mid-America Club in the Standard Oil Building at 200 E. Randolph for an 11:45-12:15 press conference - Mr. Miller then will proceed to the Luncheon in same area - and Mr. Miller's speech is scheduled for approximately 1:30 p.m. and adjournment at 2:00pm -- and transportation to Midway Airport for flight return to Washington. DISTRIBUTION — Regional/State Director mails two copies, with agenda, to National Office ( Director of Sales, Director, OPA ). State Director also mails one copy to Regional Director. SBD-1149 Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis November 18, 1980 CHECKLIST RECENT ECONOMIC DEVELOPMENTS AND THE ECONOMIC OUTLOOK Earlier in the year, the private consensus forecast had been calling for a moderate recession ending later this year or early next year, with a peak to trough decline in real GNP of about 3-1/2%. This was consistent with the Administration's forecast in the Mid- Session Budget Review, and compares with an average 2.6% decline in postwar recessions and 5.7% in 1973-75. Recent statistical readings suggest that the economy has turned around sooner than expected. Toward the end of the second quarter and throughout the third, signs of improvement were evident. Early indications suggest that the expansion is continuing in the fourth quarter. Areas of concern are inflation, which has generally continued at a high rate, and interest rates which have risen at a much earlier stage of the cyclical sequence than is customary. The money supply, which fell more sharply after mid-March than in any comparable period of time in recent decades, rebounded equally sharply in the third quarter, and has continued to grow at or above the upper boundary of the Fed target ranges. Business Developments Gross national product. Real GNP edged up by a 1.0% annual rate m the third quarter, based on preliminary data. This followed a record 9.6% annual rate of decline in the second quarter. The third-quarter rise resulted from a rebound in real final sales at a 3.7% annual rate, while inventories were being drawn down at a moderate pace. Stepped-up consumer spending was the principal force behind the increase in real final sales, and this contributed to a decline in the personal saving rate to 4.6% from 4.9% in the second quarter. Prices, as measured by the fixed-weighted GNP deflator, rose by a 9.7% annual rate in both the second and third quarters. (Revised third quarter GNP results are scheduled for release on Wednesday, November 19.) Retail sales were about unchanged in October, based on the advance estimate. This followed four months of rising sales during which gains averaged 1.8% per month. In October, there was a decline in the automotive category (contrary to the more reliable unit count of new car sales). Moderate increases were registered for most other categories of discretionary spending—general merchandise, apparel, furniture, and appliances. Sales of domestic and imported cars were at a seasonally adjusted annual rate of 6.8 million units in October, up from 6.2 million units in September but the same as in August. Sales were at a 6.4 million unit pace during the final ten days of the month, down from 6.9 million and 7.2 million during the previous two tenday periods. Import sales rose to 2.3 million units in October and the import market share remained relatively unchanged at 25.3%. In the first ten days of November, sales of domestic models were at a 6.7 million unit annual rate, about in line with the full month of October but up some from the final ten days of that month. Also in the consumer sector, consumer credit outstanding expanded by $1.45 billion in September, a 5.8% annual rate of growth. Aside from a negligible increase in August, the September advance was the first since March. All credit types and all creditor groups shared in the September increase. Extensions of credit rose sharply and liquidations were up only moderately. Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2 Inventory. The book value of business inventories rose by $2.51 billion (or 0.6%) in September, according to preliminary data. That was the third straight month of increase in the $2.5 billion range. Inventories rose by only an average $0.9 billion per month in May and June, following large increases averaging $4.6 billion per month in the first four months of the year. Business sales jumped by 3.1% in September and the inventory-sales ratio declined to 1.43, down from 1.47 in August and the recent high of 1.52 reached in May and June. New orders for manufacturers’ durable goods in September rose by 9.7T% (or $6.5 billion) according to advance estimates. September increases were spread among 14 of the 15 major industry categories, with the largest rise in transportation equipment partly because of a rise in aircraft orders which are volatile on a monthly basis. Excluding transportation equipment orders, the September increase would still have been 6.3%. Over the past three months, new orders have increased by 17.5%. This raises the possibility that the early stages of this cyclical expansion may be stronger than generally anticipated. Industrial production increased by a strong 1.6% in October. In addition, results for August and September were revised upward and now show increases of 1.0% and 1.3%, respectively. Gains were broadly based in October. Major increases included a 12% increase in auto production and a 9% increase in primary metals (mostly steel). Production of business equipment rose by 0.7%, following little change over the prior three months and steep declines earlier. Employment and unemployment. The unemployment rate edged back up to 7.6% in September from 7. 5% in August. Employment was about flat in the household survey, but rose by a strong 257,000 on the generally more reliable payroll survey. Strong job gains were posted in construction and manufacturing. The unemployment rate for adult men declined, while the rate for women rose sharply. Housing starts in September rose by 9.0% to a seasonally adjusted annual rate of 1.54 million units. This was the fourth straight month of increase and raised starts 70% above the low of 0.91 million reached in May. The September rise was led by the multi-family sector and may have been influenced by efforts to get starts of Federally subsidized units underway before the start of the fiscal year. From May lows, starts of both singles and multis have increased strongly. Permits to build new homes rose by 14.7% in September, representing a fifth straight month of increase. Perhaps as an initial indication that the rebound in mortgage rates will restrain housing activity, New single family home sales in September were down 14% to 554,000 from the 646,000 averaged in July and August. (October housing starts are scheduled for release on Wednesday, November 19.) Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 3 Leading indicators increased 2.4% in September according to preliminary data. This was the fourth successive monthly rise in the index. In September, eight of the 10 available indicators rose and two fell. The index of coincident indicators, which is a monthly approximation of current economic activity, edged up by 0.2%. On the basis of more complete data August was revised down to show a 0.1% decline. Prices, Wages and Productivity Consumer prices rose 1.0% in September. This compares with an increase of 0.7% in Xugust and no change in July. Food and beverages rose 1.6%, the second consecutive large monthly increase. The housing component, which had been a major moderating influence in July and August, rose by 0.7%. For the three months ended in September, the CPI rose at a 7.0% annual rate. This compares with increases of 18.1 percent during the first quarter and 11.6% during the second quarter. The housing component accounted for the slowdown in the third quarter. Producer (wholesale) prices rose by 0.8% in October, following a slight decline in September and substantial advances in both July and August. Half of the October increase of 0.8% in the finished goods price index was due to higher prices of motor vehicles, while higher consumer food prices accounted for most of the rest of the advance. At the intermediate level, prices were up 0.9% compared to 0.6% in September. Crude materials rose 1.9%, higher than the 1.3% rise in September. Wages and productivity. Productivity in the private nonfarra business sector increased at an 2.6% annual rate in the third quarter after two quarterly declines. Compensation per hour rose by an 8.4% annual rate, yielding only a 5.7% annual rate of increase in unit labor costs, down from a outsized 15.0% jump in the second quarter. Despite the latest rise, nonfarm productivity over the past year has declined by 0.4%, compensation has risen by 9.8%, and unit labor costs have risen by 10.3%. Money supply. Ml-A rose $700 million to $387.2 billion in the week of November 5, half the gain of $1.4 billion to $411.9 billion for Ml-B. Ml-A and Ml-B were revised slightly lower by $100 million and $200 million, respectively, in the previous period. Ml-A is $2.7 billion below its upper target band, but Ml-B is $2.6 billion above its target ceiling. Ml—A rose at a 12.0 percent annual rate in the latest 13-week period, compared to a 14.5 percent rate for Ml-B. Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 4 Interest rates. Effective November 17, the Federal Reserve Board raised the discount rate from 11% to 12%, and adopted a surcharge of two percentage points on frequent use of the discount window by large borrowers. In the wake of this Federal Reserve action, all major commercial banks, led by Chase Manhattan Bank, raised their prime rates from 15-1/2% to 16-1/4% on November 17. The credit markets have also weakened early this week. Interest rates on three month commercial paper and on three-month CD’s increased 60-80 basis points on November 17, after declining by about one-half percentage point in the week ending Friday, November 14. The three-month Treasury bill rate averaged 14.31% at the auction on November 17, up 80 basis points from the previous auction. Yield increases on Treasury coupon issues on November 17 ranged between 15-75 basis points following a week of mixed changes. The Bond Buyer 20-year yield index fell 14 basis points to 9.50% last week, but corporate bond yields were fractionally higher. Short-term business credit. Short-term business credit soared $3.3 billion in the week of November 5, the largest weekly gain since the week of January 3, 1979. Most of the increase in early November was in business loans at large commercial banks, which rose $2.8 billion, following a fractional decline in the previous week. Com­ mercial paper issued by nonfinancial firms rose $497 million in the latest period, the first increase in four weeks. Trade Balance In September, the "all-f.a.s." Census trade deficit rose slightly to $760 million from an extremely low $130 million in August. This reflected a small drop in exports and rise in non-oil imports (autos and gold), partly offset by lower oil imports (due to declines in both volume and price). The B/P-basis trade deficit for Q3 was only $2.7 billion, the smallest quarterly deficit since Q2-1976. This represented a substantial improvement from deficits of $10.9 billion and $7.6 billion in Q1 and Q2; the improvement stemmed mostly from reduced oil import volume, but also reflected continued weakness in non-oil imports due to a sluggish U.S. economy. The current account was in deficit by $2.5 billion in the second quarter, nearly unchanged from Q1—despite the reduction in the trade balance. Main reason was impact of one-time-only writeoff of nationalized assets of oil-producing affiliate in the Middle East, which substantially reduced B/P direct investment income. Since this is a non-recurring event, direct investment income should recover, which, combined with big reduction in trade deficit, should bring near-record quarterly surplus on current account in Q3. Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 5 Foreign Exchange. The dollar traded in a fairly narrow range for most of the summer, though pressures developed from time to time. Participants remained sensitive to movements in interest rates. Renewed dollar demand emerged late in July and in August as U.S. interest rates increased. In September, indications of wide­ spread Mid-East and other investor demands for foreign currencies and precious metals weighed on market sentiment toward the dollar, but commercial demand for the dollar strengthened and rate movements were modest. An upswing in dollar demand was evident during October partly due to interest rate considerations. In November, the dollar appreciated on the strength of rapidly rising U.S. and Euro-dollar interest rates while the DM was on offer intermittently. Gold prices moved below $600 in early November after trading near the $650 range in late October. By mid-month gold was trading in a narrow range above $600. Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis

G. William Miller (1980, November 18). Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/speech_19801119_miller

@misc{wtfs_speech_19801119_miller,
  author = {G. William Miller},
  title = {Speech},
  year = {1980},
  month = {Nov},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/speech_19801119_miller},
  note = {Retrieved via When the Fed Speaks corpus}
}