economy's potential growth path is a more difficult task than that of merely attempting to moderate wide swings in output. In a slack economy, it was often sufficient for the indicators merely to point in the right direction. Now more accurate information about the speed of the movement and the distance from full employment is called for. The need for early and careful diagnosis of the extent and location of inflationary dangers also requires comprehensive information about the price, cost, and productivity performance of various sectors of the economy. Capital markets and especially the mortgage market have taken on a key role, calling for more comprehensive data and indicators. The current importance of our international trade position places added emphasis on the need for better information about export and import prices."

The 1968 report of the CEA proposed 10 key items for improvement in the area of economic statistics. Although FSUC agrees with and recognizes the need for economy and establishment of priorities in connection with Federal programs, we supported those 10 key items because we considered them priority items. We further agreed with the Economic Report in its statement that each improvement was recommended because it met these tests: "That it assist current policy formulation, that the proposal be capable of rapid implementation and that its costs be moderate, given the present budgetary stringency."

We are pleased to learn that action has been initiated to implement the recommendations on four of these 10 key items. However, no action has been taken on six of these items, because the Congress failed to approve the 1969 budgets requests of the three agencies involved in implementing the recommendations. They are the Office of Business Economics, the Bureau of the Census, and the Bureau of Labor Statistics. The six items are:

(1) Nonmanufacturing industries.—Additional information on employment, wages, investments, sales, and other indicators for trade, services, and finance that will bring the data closer to the coverage and quality of the data now available for manufacturing industries.

(2) Business investment.-Extension of coverage of the plant and equipment survey to all nonfarm industries, and collection of separate quarterly data on business investment in plant, as distinguished from equipment.

(3) International price competitiveness.-A better comparison of price trends of internationally traded goods.

(4) Improved price indexes.-Covering individual industries systematically, emphasizing actual transactions rather than quoted prices, and developing methods to make more adequate allowance for quality changes in our measurement of prices.

(5) Quarterly data on national product by industry.-A new economic tableau that will ultimately provide comprehensive information on output, labor input, prices, and productivity by major sectors on a quarterly basis.

(6) Manufacturing inventories.-Expanded coverage and increased detail.

The fiscal 1968 budget also included appropriation requests for some of these improved programs, but the Congress failed to approve

the requests. The range in costs of these individual programs is from $100,000 to $200,000. The total cost for all would approximate $800,000-$900,000.

The 1968 Joint Economic Report emphasized that high priority should be accorded to research in the area of prices and price indices and also that Government agencies should push rapidly ahead with the development and regular publication of industry data on output, productivity, prices, capital, labor, and incomes. In view of this we wish to call the committee's attention to the fact that the following programs of the Bureau of Labor Statistics (included in the 1968 and 1969 budget requests and denied by the Congress) were not even included in the 1970 budget:

(1) Inauguration of a semiannual survey of general changes in wage rates and benefits in the nonmanufacturing sector.

(2) Extension of wholesale price index series to 75 additional industries.

(3) Collection of data on transaction prices rather than list or quoted prices for 40 major commodities in wholesale markets. (4) Initiation of work on obtaining price data for commodities in U.S. import and export trade.

These are certainly high-priority items so far as our economic information needs are concerned, but rate a low priority when it comes to appropriation of funds.

The 1970 budget includes a request of the Office of Business Economics for $100,000 to strengthen the plant and equipment survey by expanding its coverage to include the service-type industries and nonprofit institutions, and to obtain from all industries a separation of their investment activity as between plant and equipment. In the previous 2 fiscal years, the OBE had requested, but was denied, funds for beginning the preparation of real GNP by industry on a quarterly basis ($76,000). The 1970 budget does not include this program. Other priority items included in previous budget requests of OBE are not in the 1970 budget. These include: Publication of personal income by States on a quarterly basis, and initiating work on estimates of the total tangible capital stock of the United States.

The total budget of the Office of Business Economics ($3.3 million estimated for 1970) is indeed small considering the significance and widespread use made of its data for measuring the state of the U.S. economy and for guiding decisionmakers regarding economic policies and programs.

The need for the above-listed improvements has long been recognized. How much longer must we wait before constructive action is taken to implement these recommendations? Although the most sig nificant increases in statistical programs in recent years has been in the area of social statistics, major advances in economic statistics must not be neglected. We respectfully urge that the Joint Economic Committee emphasize in its report that these are priority items deserving immediate attention and funding.

At this point, we wish to call the attention of the committee to developments in the Congress that could impair the future collection of vital economic data and particularly at subnational levels. The first is a proposal that would allow only six mandatory questions in the 1970 Census of Population and Housing, all other questions being on a vol

untary basis, including questions on education, employment, housing and income. If this legislation is passed, there is a good possibility that it would eliminate data on a block basis; it would severely limit, or perhaps completely eliminate certain data on a census tract or county basis; and that it would severely reduce, or make questionable, the reliability of data for larger cities, SMSA's, larger counties, and even for some States. Officials concerned with urban and rural problems have a crying need for more and better information on the economic characteristics of the population at these various subnational levels. The need for data for very small areas has grown rapidly as more and more communities analyze their own problems and make plans for dealing with them, neighborhood by neighborhood. Their ability to deal with these problems would be severely impaired if certain types of data are denied them at the desired area levels.

A second proposal would place all questions contained in the 5-year economic censuses on a voluntary basis. If this is done, then there is a real danger that the comparability of data as between censuses would be greatly diminished and especially at subnational levels. There is even a possibility that some of the economic censuses would be of no value whatsoever because it might not be possible to obtain meaningful totals for certain industries. This could result, for example, if several major firms in an industry category should decide not to participate in the census.

We must also point out that there is a great deal of misinformation and misunderstanding about the purposes of these censuses and the valuable contribution they make toward a better understanding of the nature and composition of our economy and society. Those who are proposing a curtailment of the population, housing and economic censuses need to be made aware of the serious effect such proposals would have on the continued collection of adequate, reliable, and comparable data that have been so carefully developed over the years to aid us in dealing with the myriad of problems that beset this Nation today. In our opinion, passage of this type of legislation would be the most damaging step Congress could take regarding our statistical system and it would reverse the intent and policy of the Congress which has been repeatedly expressed over the long history of the census.

On the more positive side, we agree with the Report of the Council of Economic Advisers which says: "Although there are still gaps in economic statistics, considerable progress has been made in recent years by the Department of Commerce, the Department of Labor, and other Federal Government agencies in increasing the quantity and improving the quality of statistical data available for assessing the performance of the economy."

We believe that the following examples of recent accomplishments are worthy of note:

By the Bureau of the Census.-Launching of a new publication, Defense Indicators, which replaces the Department of Defense publication, Selected Economic Indicators; enlargement and improvement of Business Conditions Digest (formerly Business Cycle Developments); extension of the business censuses and greater use of administrative records to minimize reporting burden; initiation of first census of construction industries to be taken since 1939; and initiation of a new monthly report of Export and Import Merchandise.

By the Office of Business Economics.-Completion of estimates of personal income for selected years through 1966 for all standard metropolitan statistical areas (SMSA's) and for all counties lying outside SMSA's; calculation of alternative measures of corporate profits based on investment statistics in the national accounts; updating of the measurement of fixed business capital in the United States to extend the estimates through 1966.

By the Bureau of Labor Statistics.-Publication, jointly with_the Bureau of the Census, of a report entitled "Social and Economic Conditions Affecting Negroes in the United States"; publication of the standard household budgets for differing family and rural or urban situations; launching of a comprehensive data collection system in the slums of six large cities to measure in depth job problems and barriers to employment of slum area residents; and studies of labor force characteristics in the 20 largest metropolitan areas and 14 central cities; and the poorest one-fifth of the neighborhoods in the Nation's 100 largest metropolitan areas.

In conclusion, we wish to thank the Chairman and the committee for inviting our comments on the economic issues which concern the Nation and our own organization. We also wish to commend the committee for the vital, necessary, and leading role it has played in the development of improved statistical programs. It has indeed become a strong voice urging and defending adequate and proper economic statistics. We pledge our continued support and cooperation to the work of the committee.

MACHINERY AND ALLIED PRODUCTS INSTITUTE

By CHARLES STEWART, PRESIDENT

The institute is always privileged to receive an invitation from the Joint Economic Committee to submit comments on the economic issues which concern the Nation and private business, including the capital goods and allied equipment industries which we represent. In responding to such an invitation, we try to give central consideration to our view of the public interest as well as attempting to underline problems and opportunities affecting our sector of the economy.

THE INFLATION DILEMMA

We have delayed our response until we could make available to the committee a very timely, and we feel quite informative, economic study conducted by Research Director Terborgh of the institute as a part of the total research effort of MAPI. This study is entitled, "The Inflation Dilemma." It is presently being printed as a pamphlet but we thought that the committee would appreciate having access to an advance copy in mimeographed form.

The study speaks for itself but it might be useful to call the attention of the committee to the central point in the conclusion to the document which is stated by Mr. Terborgh as follows:

A final comment on our present predicament. If we are right that the principal inflationary dynamic of the past few years has been rising labor costs, if exhortation has failed to restrain them, and if direct controls are out, only one effective remedy remains: relaxing the labor market. So long as we continue to have a drumtight market in the major wage-determining category-adult males-the chance of slowing down the advance of hourly compensation, and with it the advance of prices, is slim.

I commend this study to the readership of the committee.

INVESTMENT TAX CREDIT

The Joint Economic Committee has consistently expressed interest in the investment tax credit, and during the recent hearings this matter was again raised, at least during periods of interrogation. The institute has given extensive study to the investment tax credit and supports it unequivocally as a permanent part of our tax structure. Moreover, our study work and the 1966 experience with attempting to use the investment credit as an economic control device, in our judgment, demonstrate conclusively that the investment credit is totally unsuitable for manipulative application as a device for economic control purposes. We submit for the record Capital Goods Review No. 67 published in September 1966 entitled "The Investment Credit as an Economic Control Device." We suggest respectfully that we should learn from the lessons of the past and the 1966 experiment with manipulation of the investment credit was a debacle and should not be repeated. Also in this connection, we call your attention to the statement