erp1963 appendixes 2

Appendix B

REPORT TO THE PRESIDENT ON THE

ACTIVITIES OF THE COUNCIL

OF ECONOMIC ADVISERS

DURING 1962

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LETTER OF TRANSMITTAL

DECEMBER 31, 1962.

The PRESIDENT.

SIR: The Council of Economic Advisers submits this report on itsactivities during the calendar year 1962 in accordance with the requirementsof Congress, as set forth in Section 4(d) of the Employment Act of 1946.

Respectfully,WALTER W. HELLER, Chairman

GARDNER AGKLEY

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Report to the President on the Activities of theCouncil of Economic Advisers During 1962

COUNCIL MEMBERSHIP

Walter W. Heller continued during 1962 as Chairman of the Council;James Tobin resigned in the summer, when his leave-of-absence fromYale University expired, to resume his duties there as Sterling Professorof Economics; and Kermit Gordon resigned at the end of the year tobecome Director of the U.S. Bureau of the Budget.

Mr. Tobin was succeeded on August 3 by Gardner Ackley, on leavefrom his position as Professor of Economics at the University of Michigan.Mr. Ackley served in Government from 1940 to 1946, with the Officeof Price Administration and the Office of Strategic Services, and in 1951and 1952 as Assistant Director of the Office of Price Stabilization.

The President has announced his intention to appoint John P. Lewis,Professor and Chairman of the Department of Business Economics andPublic Policy, Graduate School of Business, Indiana University, to fill thevacancy left by Mr. Gordon's appointment as Budget Director. Mr.Lewis will assume his Council duties early in the spring of 1963. Heserved on the staff of the Council and as Assistant to the Chairman from1950 to 1953.

Following is a list of all past Council members and their dates ofservice:

Name Position Oath of Office Date Separation Date

Edwin O. NourseLeon H. Keyserling..

John D. Clark.

Roy BloughRobert C. TurnerArthur F. BurnsNeil IT. JacobyWalter W. Stewart. . .Joseph S. DavisRaymond J. Saulnier.

Paul W. McCrarken..Karl BrandtHenry C. WallichJames TobinKermit Gordon

ChairmanVice ChairmanActing ChairmanChairmanMemberVice ChairmanMemberMemberChairmanMemberMember _Member . . .Member. _Chairman.MemberMemberMember __.MemberMember

August 9,1946August 9, 1946November 2, 1949May 10, 1950August 9, 1946May 10, 1950..June 29,1950September8,1952March 19, 1953September 15,1953December 2, 1953May 2, 1955April 4, 1955December 3,1956December 3, 1956November 1,1958May 7, 1959January 27, 1961January 27, 1961

November 1,1949.November 1, 1949.May 9, 1950.January 20, 1953.May 9, 1950.February 11, 1953.August 20, 1952.January 20,1953.December 1,1956.February 9, 1955.April 29, 1955.October 31, 1958.December 2, 1956.January 20, 1961.January 31, 1959.January 20,1961.January 20, 1961.July 31, 1962.December 27, 1962.


COUNCIL STAFF

At the end of 1962, the members of the professional staff of the Councilof Economic Advisers were Michael F. Brewer, William M. Capron, CharlesA. Cooper, Richard N. Cooper, Rashi Fein, Catherine H. Furlong, FrancesM. James, Edward D. Kalachek, Marshall A. Kaplan, Robert J. Lampman,David W. Lusher, Richard R. Nelson, George L. Perry, Fredric Q. Raines,Vernon W. Rut tan, Paul S. Sarbanes, Norman J. Simler, Warren L. Smith,Nancy H. Teeters, and Betty J. Willis.

A number of staff members join the Council on a leave-of-absence basisfrom posts in private life or government. During 1962 the following per-sons returned to those posts: Kenneth J. Arrow, Arthur M. Okun, Lee E.Preston, Robert M. Solow, and Lloyd Ulman. The following resigned toaccept other positions: Richard E. Attiyeh, Barbara R. Berman, Walter F.Stettner, Leroy S. Wehrle, and Sidney G. Winter, Jr.

As in past years, the Council had frequent occasion to call upon theservices of outside consultants. Those working in this capacity with theCouncil during 1962 were Kenneth J. Arrow, Martin Bronfenbrenner, E.Cary Brown, Robert Dorfman, James Duesenberry, Otto Eckstein, Dale E.Hathaway, Burton H. Klein, Edwin Kuh, John Lintner, John R. Meyer,Richard A. Musgrave, Arthur M. Okun, Joseph A. Pechman, Lee E. Pres-ton, William A. Salant, Paul A. Samuelson, Charles L. Schultze, RobertSolomon, Robert M. Solow, Charles A. Taff, James Tobin, Robert Triffin,and Robert W. Tufts.

The Council continued in 1962 the summer student intern programbegun in 1961. Those participating in the program this past summerwere Donald W. Katzner, Edward H. Moscovitch, Michael J. Piore, T. PaulSchultz, and Karl L. Shell.

COUNCIL ACTIVITIES

The Council, responding to Presidential requests in a changing economicenvironment, had materially expanded its activities in 1961. This broaden-ing of responsibilities continued in 1962. In particular, work in the fieldsof economic growth, international economics, and consumer economics wasconsiderably expanded. At the same time, the Council continued to devoteits major attention to fiscal, monetary, and other policies to promote"maximum employment, production, and purchasing power" in accordancewith the Employment Act of 1946.

Participation in Interagency Activities

The Council's advisory duties involve not only informal consultations withother government agencies, the Congress, and the public but also formalparticipation in numerous interagency activities:

1. The Chairman regularly attends meetings of the Cabinet.2. He serves as Chairman of the Cabinet Committee on Economic

Growth and as a member of the Cabinet Committee on Balance ofPayments.


3. The Secretary of the Treasury, the Director of the Bureau of theBudget, and the Chairman of the Council continue to serve the Presidentas a coordinating committee on economic, budgetary, and revenue develop-ments and forecasts.

4. These three officials and their associates, together with the Chairmanof the Board of Governors of the Federal Reserve System, form an advisorygroup on domestic and international monetary matters which meets peri-odically with the President.

5. The Chairman of the Council (or one of the other two members ashis alternate) served on the three interagency committees named in 1962by the President to examine the issues raised by the Report of the Com-mission on Money and Credit:

a. The Committee on Financial Institutions, chaired by the Chair-man of the Council, to consider changes in government policytoward private financial institutions that would contribute toeconomic stability, growth, and efficiency;

b. The Committee on Federal Credit Programs, chaired by theSecretary of the Treasury, to review policies and programs forFederal direct lending as well as Federal guarantees and insurancefor private loans;

c. The Committee on Corporate Pension Funds and Other PrivateRetirement and Welfare Programs, chaired by the Secretary ofLabor, to review the implications of such funds and programs forthe financial structure of the economy, for the Nation's economicsecurity system, and for the utilization and mobility of manpower.

6. Council members or staff participated in the work of numerous othercommittees whose concern was primarily with domestic economic matters:

a. Cabinet Committee on Foreign-flag Shipping and Cargo Pref-erence;

b. Panel on Civilian Technology which was established under thejoint sponsorship of the Council, the Department of Commerce,and the Office of Science and Technology;

c. Natural Resources Committees of both the Federal Council forScience and Technology and the National Academy of Science;

d. Interagency Committee on Transportation Mergers;e. International Air Transport Policy Study Committee;f. Committee on Federal Mental Health Programs;g. Interdepartmental Advisory Committee on the U.S. National

Health Survey;h. Interagency Group on Housing Credit Policy.

7. The Council continued its work with the President's Advisory Com-mittee on Labor-Management Policy, including participation by Councilmembers and staff in the Advisory Committee's spring White House Con-ference on National Economic Issues and its autumn Conference on Fiscaland Monetary Policy.

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8. The Council participated with the Bureau of the Budget and mem-bers of the White House staff in the review of measures proposed forinclusion in the President's legislative program.

The Cabinet Committee on Economic Growth

The Cabinet Committee on Economic Growth was established by thePresident on August 21, 1962, to coordinate Federal activities and policiesin this field and to advise the President on steps to accelerate the growth ofthe U.S. economy. The members of the Committee are the Secretary ofthe Treasury, the Secretary of Labor, the Secretary of Commerce, theDirector of the Bureau of the Budget, and the Chairman of the Councilof Economic Advisers, who serves as Chairman. The President's chargeto the Committee directed it to consider itself a steering group which wouldconsult closely with the other government agencies having a contributionto make to economic growth policies and to report to the President fromtime to time on:

a. Ways to utilize the interest, energy, initiative, and experience ofprivate industry, agriculture, and labor for national economicgrowth;

b. The impact of existing government programs and private eco-nomic trends on current and foreseeable rates of growth;

c. Additional administrative measures and legislative proposals thatmight be desirable, together with their budgetary implications; and

d. Ways to organize the Federal Government more effectively topromote economic growth.

In its first report in November, the Committee—joined by the Secretaryof Health, Education, and Welfare and the Director of the Office of Scienceand Technology—recommended or endorsed a number of measures whichare included in the President's program for 1963.

The work of the Cabinet Committee is supplemented by that of the Inter-agency Growth Study Committee. This group, which comprises repre-sentatives of the Council, the Bureau of the Budget, the Department ofLabor, and the Department of Commerce, was chaired first by Mr. Tobinand since his departure at the end of July by Mr. Ackley. It is responsiblefor developing and supervising an integrated program of studies of U.S.economic growth.

International Economic Activities

The growing importance of the international dimension of U.S. economicpolicies and problems was again reflected in the Council's activities. Theimportance of the balance of payments in today's economy was indicatednot only by the Council's participation in the Cabinet Committee onBalance of Payments, but also by its undertaking to finance, in conjunc-tion with the Treasury and the Bureau of the Budget, an extensive studyunder a contract with the Brookings Institution on the five-year outlook

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for the U.S. basic balance of payments. A preliminary confidential reportwas submitted in October, and the final report was in preparation at theend of the year.

The Council continued to participate actively in international meetingsand in consultations of international organizations.

1. The Chairman of the Council was a member of the U.S. delegation to:a. The second annual meeting of the Cabinet-level United States-

Japan Joint Committee on Trade and Economic Affairs, whichmet in Washington for three days in early December;

b. The September meetings in Washington of the InternationalMonetary Fund and the International Bank for Reconstructionand Development;

c. The International Conference on Middle-Level Manpower inPuerto Rico in October.

2. The Council was heavily involved in the work of the Organization forEconomic Cooperation and Development (OECD) :

a. Mr. Heller continued to serve as Chairman of the U.S. delegationto the meetings of the Economic Policy Committee of the OECD;

b. Mr. Tobin and Mr. Gordon were members of the U.S. delegationto the Committee's Working Party on Balance of Payments Equi-librium;

c. Mr. Gordon was Chairman of the U.S. delegation to the Com-mittee's Working Party on Costs of Production and Prices;

d. Mr. Solow, and subsequently Mr. Ackley, served as Chairmanof the U.S. delegation to the Committee's Working Party on Pol-icies for the Promotion of Economic Growth;

e. Mr. Ackley headed the U.S. delegation for the annual reviewof the U.S. economy undertaken by the Economic Developmentand Review Committee of the OECD, and was a member of theU.S. delegation to the second Ministerial Meeting of the OECD.

3. Other Council activity in the international area included sendingrepresentatives to the meeting of Senior Economic Advisers held bythe United Nations Economic Commission for Europe in Geneva inNovember, and participation by Council staff in the work of such groups asthe Committee on Balance of Payments Information, the Interagency Com-mittee on Foreign Trade Statistics, and the National Advisory Council onInternational Monetary and Financial Problems.

CONGRESSIONAL TESTIMONY

Apart from its appearances before Appropriations Committees of theCongress in support of its own budget request, the Council testifiedbefore Congressional Committees as follows during 1962:

1. On January 25, the Council led off the Joint Economic Committee'sHearings on the 1962 Economic Report of the President.


2. On March 26, Mr. Heller and Mr. Gordon appeared before theCommittee on Public Works of the House of Representatives in supportof the Standby Capital Improvement Bill of 1962 and a proposed amend-ment authorizing an immediate capital improvements program for re-development areas and areas of substantial unemployment.

3. On April 12, Mr. Heller testified on the capital improvement meas-ures before the Committee on Public Works of the Senate.

4. On August 8, the Council appeared before the Joint Economic Com-mittee during its Hearings on the State of the Economy and Policies forAchieving Maximum Employment, Production, and Purchasing Power.

5. On August 9, Mr. Heller appeared before the House Committee onWays and Means during its Executive Hearings on the Status of theEconomy.

NONGOVERNMENTAL MEETINGS AND ACTIVITIES

The President's call, in his address in June at the Yale University Com-mencement Exercises, for a serious dialogue on the pressing economic issuesof the time underlines the importance of active public discussion of thesevital matters. The Council members and staff sought to contribute tothis discussion by means of speaking engagements before various privateorganizations, articles in popular and professional publications, andoccasional appearances on radio and television.

The present Council has also undertaken—in response to the provisionsof the Employment Act—a vigorous program of consultation with a varietyof interested private groups and individuals. In addition to frequentmeetings of the Council members and staff with academic, labor, business,agricultural, and financial economists and executives, the Council holdsperiodic meetings with several advisory groups:

1. The Liaison Committee of the Business Council including—in addi-tion to Roger Blough, past Chairman, and Frederick Kappel, presentChairman, of the Business Council—the following: Chairman of theLiaison Committee, Donald K. David, Vice-Chairman, Ford Foundation;Paul C. Cabot, Chairman, State Street Investment Corporation; JohnCowles, President, Minneapolis Star and Tribune; Joseph B. Hall, Chair-

man, Kroger Company; and Charles K. Mortimer, Chairman, GeneralFoods Corporation.

2. The Economic Policy Committee of the AFL-CIO including—in addi-tion to George Meany, President, and William F. Schnitzler, Secretary-Treasurer, of the AFL-CIO—the following members: Walter P. Reuther,Chairman; James B. Carey; David Dubinsky; George Harrison; A. J.Hayes; Joseph Keenan; O. A. Knight; David J. McDonald; Paul L. Phil-lips; Emil Rieve; Joseph Rourke; Peter T. Schoemann; and JamesSuff ridge.

3. The Conference of Business Economists, a group of 50 businesseconomists, chaired in 1962 by Walter Hoadley of Armstrong CorkCompany.

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CONSUMER ADVISORY COUNCIL

A significant new advisory group was established in 1962 in the field ofconsumer interests. The Presidential Message on Consumers' Protectionand Interest Programs directed the Council of Economic Advisers to createa Consumer Advisory Council to examine and provide advice to theGovernment on issues of broad economic policy, on governmental programsprotecting consumer needs, and on needed improvements in the flow ofconsumer research material to the public. Carrying out this Presidentialdirective, the Chairman of the Council announced the appointment, effec-tive July 1, 1962, of the following persons to the Consumer Advisory Coun-cil : Dean Helen G. Canoyer, New York State College of Home Economics,Cornell University, Chairman; David W. Angevine, Information Director,Cooperative League of the U.S.A.; Persia Campbell, Professor and Chair-man, Economics Department, Queen's College, New York; Stephen M.Du Brul, Jr., Partner, Lehman Brothers; Mrs. John G. Lee, Past President,League of Women Voters; Edward S. Lewis, Executive Director, UrbanLeague of Greater New York; Walter F. Mondale, Attorney General, Stateof Minnesota; Richard L. D. Morse, Professor and Head, Department ofFamily Economics, Kansas State University; Helen E. Nelson, CaliforniaConsumer Counsel; Sylvia F. Porter, Syndicated Columnist, New York Post(later resigned); Caroline Ware, Consultant; Colston E. Warne, President,Consumers Union of U.S., Inc. and Professor of Economics, AmherstCollege.

The Consumer Advisory Council held meetings in July, September, andNovember. It formulated a plan of work which includes several smallcommittees that will pursue some of the leading issues in the consumerfield. The general subjects selected for current study are as follows:

1. Consumer standards of identity, quality, quantity, safety, and productperformance, including an assessment of systems of grades, labels, andquality designation;

2. A survey of present and possible governmental and nongovernmentalmaterials and programs dealing with the two-way flow of information be-tween government and the consumer;

3. Institutions and procedures for achieving greater and more effectiverepresentation and participation of the consumer in government;

4. An examination of consumer credit and of procedures which will pro-vide continuing economic indicators of consumer welfare; and

5. The interrelationship among Federal agencies and between Federaland State agencies in the areas of consumer protection.

By the end of the year, committee work on these topics was well underway. Furthermore, in response to a Presidential directive, 22 departments

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and agencies whose activities bear significantly on consumer welfare havedesignated an official as special liaison to the Consumer Advisory Council.The opinion of the Consumer Advisory Council has been sought by theAdministration on a number of current proposals for increasing the pro-tection accorded consumer interests. The Consumer Advisory Councilconstitutes an important part of the Administration's effort to assure fulland fair consideration of the consumers' needs and point of view.

PUBLICATIONS

In 1962, the present Council prepared its first Annual Report which wastransmitted to the Congress in January together with the Economic Reportof the President. The usual distribution of copies of the Report was madeto members of the Congress, the press, government officials, and depositorylibraries. In addition, the Superintendent of Documents sold 22,125copies to the public, the largest public sale to date of an Economic Report.

Since 1948, under the direction of Miss Frances M. James, the Councilhas prepared the monthly Economic Indicators, which is published by theJoint Economic Committee of the Congress. After reviewing with theJoint Economic Committee its needs and those of other users of the pub-lication, the Council introduced a number of changes in the November1962 issue. Sales of Economic Indicators to the public by the Superintend-ent of Documents in 1962 totaled more than 10,000 a month; in addition,under the authority of a Joint Resolution of the Congress, copies were fur-nished to members of the Congress and to depository libraries throughoutthe country.

APPROPRIATION S

For the fiscal year 1963, the Council requested—and was granted by theCongress—an appropriation of $584,000, an amount identical with its ap-propriation for the fiscal year 1962. For the fiscal year 1964, the Council'sbudget request, which contemplates no increase in staff size, is again un-changed, except for an adjustment to take partial account of staff salaryincreases resulting from the pay increase legislaiton in 1962.

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