Text of- CONTENTS Adams, Hon. Brock_. STATEMENTS BY MEMBERS OF CONGRESS ADDITIONAL INFORMATION SUBMITTED FOR THE RECORD Alexander, Hon. Bill, letters exchanged with William H. McLean, vice chairman of the board, Commerce National Bank, Little Rock, Ark., "Decline in Money-Market Quotas Eases Pressure Supporting Record Prime Rate," article from the Wall Street Journal, March 23, 1970- "Inflated Housing," article from the Wall Street Journal, March 24, "Treasury Bill Rates Hit Lows," article from the Washington Post Public Law 91-151, passed during first session of 91st Congress_ Yields on long-term Government bonds, public and private debt, and Charts showing history of increase in interest rates_ List of cosponsors of resolution calling upon the administration to 1 A CALL FOR A ROLLBACK OF HIGH INTEREST RATES TUESDAY, MARCH 24, 1970 HOUSE OF REPRESENTATIVES, COMMITTEE ON BANKING AND CURRENCY, Washington, D.C. The committee met, pursuant to call, at 10:05 a.m., in room 2128, Rayburn House Office Building, Hon. Wright Patman (chairman) presiding. Present: Representatives Patman, Barrett, Reuss, St Germain, Gonzalez, Galifianakis, Bevill, Griffin, Chappell, Widnall, and Brown. Chairman PATMAN. The committee will please come to order. We have this morning for consideration, House Concurrent Resolutions 522 and 523, which will be placed in the record at this point. (The text of House Concurrent Resolutions 522 and 523 are as follows:) CONCURRENT RESOLUTION Whereas a high interest rate policy has been followed for the past fourteen months as part of the administration's fight against inflation; and Whereas the higher interest rates paid by manufacturers, distributors, transporters, retailers, and all others involved in the production and marketing processes tend to become part of the end cost of the product, thereby adding to the growth of inflation; and Whereas consumers and small businessmen, to whom credit is vital and who operate on smaller margins, ultimately pay the cost of interest rate increases; and Whereas the high interest rate policy, continued over an extended period, has served to blunt the Federal goal of attacking the problem of inadequate and substandard housing on a massive scale by systematically reducing the availability of low-cost financing; and Whereas extended periods of high interest rates have traditionally and historically been followed by recessions: Now, therefore, be it Resolved by the House of Representatives (the Senate concurring), That it is the sense of the Congress of the United States that the administration should make every effort to reverse its policy of high interest rates in all programs and at all levels, and that the Federal Reserve Board should take steps to gradually roll the prime interest rate back to 6 per centum. Chairman PATMAN. I have a short statement I would like to read. The resolutions before us this morning should tell official Washington that the Congress is dead serious about a rollback in interest rates. This should clear away any doubt about the Congress' desire for immediate action. There is no economic reason why the prime lending rate could not be rolled back before this hearing is completed today. I hope President Nixon is keeping in touch with the developments in this hearing room and that he will at long last stand up and tell the big banking community that he wants an immediate lowering of interest rates. (1) The President could walk out on the front porch of the White House, stand before the television cameras and issue a statement demanding action. The big banks would get the message in a matter of minutes and the Nation would have a rollback of interest rates. Unfortunately, the President missed a great opportunity a few weeks ago when a handful of the smaller banks broke the line and reduced interest rates. If the President had moved in and issued a statement asking the big banks to follow the lead we could have had lower interest rates. But he did not act. Unless we do have a quick rollback of these usurious interest rates, the Nation faces a severe recession, possibly a full-scale depression. In fact, we already have a depression in many parts of the economy. The motor industry has seen a sharp decline with major layoffs of workers. The construction industry continues to decline and today we have an unemployment rate of nearly 8 percent in the construction trades. Eight-percent unemployment is a depression. In an administration that promised us "credibility,” I am surprised that we have had so many confusing and misleading statements about the economy. One group of administration spokesmen apparently has been assigned the task of telling the American people that they are whipping inflation. A second group has been given the job of telling the American people there is no recession. Just after a series of these "we are whipping inflation" statements, the Consumer Price Index came out last week and reported that prices in February were up 6.3 percent above a year ago. Eighteen months ago we had a lot of politicians running around telling everyone that just a one-half of 1 percent increase in prices was inflationary. So, now I wonder just what are are supposed to call a 6.3-percent increase in these same prices. And for those who keep assuring us there is no recession, we also have a new set of figures. Amid these "no recession" assurances, the Labor Department issued a release last week which showed that unemployment was the highest in 4 years and obviously still climbing. And, as I mentioned, the unemployment figure is up to 8 percent in some very large and important industries. The economic policies of the administration-centered around a fantastic reliance on high interest rates have brought the Nation both inflation and recession. It is the only period in our history where we have had what is commonly becoming known as an "inflationary recession." I want to commend my good friend and colleague, Jim Wright of Texas, and Bill Alexander of Arkansas for drafting and circulating this fine resolution. This will mean much in the fight for lower interest rates. This is a tremendous job and all the signers of these resolutions-both Republican and Democrats-have done a wonderful thing in the public interest. Mr. Wright, would you like to start, sir? You are recognized now. STATEMENT OF HON. JAMES C. WRIGHT, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS Mr. WRIGHT. Mr. Chairman, Mr. Alexander and I appear today on behalf of some 85 Members of the House who have joined us as cosponsors of the resolution calling upon the administration to roll back interest rates. |