University of Virginia Library

Treasury Secretary Kennedy
Defends Inflation Policies

By Alan Featherstone
Cavalier Daily Staff Writer

A gathering of about 500 students
Saturday evening heard United States
Secretary of the Treasury David Kennedy
speak in favor of the Nixon
Administration's domestic economic
policies in a speech entitled. "The
Economy: A View from the Treasury."

Sponsor's Day Banquet

Mr. Kennedy speaking at the
Sponsor's Day Banquet held by the
Graduate School of Business
Administration for its individual and
corporate supporters, focused his
attention on the current problem of
inflation, and the resultant problems of
price instability, unemployment, and
changing levels of consumption.

The Secretary observed that the
United States is "clearly winning its
battle against inflation. We have curbed
the excess demand that caused that inflation."

"Economic controls are a fluke to individual
and economic freedom." Mr. Kennedy said the
economy needed a proper combination of fiscal
and monetary policies to accomplish the ever
present goad of "no inflation with table
prices." He further added that the Nixon
Administration has "followed policies which
represent better and wiser use of government
powers."

Check Inflation

Mr. Kennedy conceded that the current
administration has not "checked the inflation
spiral to the degree we had hoped. But today
the signs that inflation is declining are
unmistakable."

The Secretary of the Treasury cited
numerous data which the administration
considered indicative of the economy's trend.
He noted that interest rates all across the board
have declined. Gross National Product has
actually increased "despite the auto strike."
This is evidence, he added, that the "economy
is again beginning to expand in a favorable
way."

Consumption on the part of the household
sector had not been what the Nixon
Administration had hoped it would be. In the
past quarter the level of personal savings has
increased to 7½ per cent rather than the usual
rate of 5½ or 6 per cent. Looking toward the
next quarter he predicted that "consumers may
be expected to spend more."

Mr. Kennedy observed that during this
period of economic change inventories have not
become excessive and that there is "an
excellent likelihood of an upturn in business
investment."

In addition, the Secretary noted that the
nation's balance of trade could be expected to
improve. In the last few years the United
States' exports have exceeded its imports by
too much. The future export/import ratio
should lessen, he assured his audience.

Successful Results

Mr. Kennedy claimed that the successful
results of Mr. Nixon's policies were due to the
"rejection of government controls over our free
markets and our free society and the reliance
instead on policies more appropriate to a nation
of free citizens policies of economic
restraint."

"We have restrained government
expenditures and held down the growth of the
money supply. In the process, we have
maintained traditional freedoms, while
controlling and reducing the forces that were
primarily responsible for the start and build-up
of the present inflation."

In regard to unemployment, Mr. Kennedy
stated that unemployment "has risen in recent
months, not because of the mild economic
slowdown we have passed through, but also
because the Administration has been speeding
the release of men from the armed forces."

The Secretary added that he believed with
an economic upturn, employment rates would
go up.

In warning of future policies, he stated that
"Fast-mounting Federal expenditures and large
deficits would inevitably limit the freedom of
monetary authorities to expand money and
credit and rebuild liquidity. Such deficits,
furthermore would push interest rates back up
and then to renew an unbalanced flow of
credit."

Photo By Roy Alson

David Kennedy

American Financial Chieftain

Again looking to the near future. Mr.
Kennedy said that the state and local
governments will begin to carry a larger share of
the nation's economic burden. Specifically, he
cited the needs of urban development of the
economy is to progress at an even pace. This, he
said, is within the specific realm of the state
and local governments. A significant start
toward unemployment at all levels of
government is necessary for economic progress.

The Secretary of the Treasury ended his
remarks by citing some of President Nixon's
feelings. He said that we have to continue to
live up to our great heritage and to continue to
work "within the system and not from without
it." Mr. Kennedy concluded by saying. "Who is
the Establishment? If I am — you are. This is
our country. God bless it."