June 5, 1947
THE PRESIDENT. I have a couple of announcements to make this morning, and a statement to read to you.
[1.] Dwight Griswold, former Governor of Nebraska, and Director of Internal Affairs for General Clay, will be Chief of the United States Mission to Greece. And Richard F. Allen will be Field Administrator for Relief for the $350 million. In 1940 Mr. Alien became Delegate for Europe of the American Red Cross, and directed the relief program in Europe. He directed important relief programs in France before and after the Germans invaded France, and worked closely with Admiral Leahy, then Ambassador to France. We will furnish you all that detailed information after this conference is over.
Q. Will Governor Griswold be in charge, overall, of Greece and Turkey ?
THE PRESIDENT, Just Greece.
Q. Just Greece?
THE PRESIDENT. We haven't decided on the Turkish situation as yet.
[2.] Now I have got a statement here that I want to read to you. It is mimeographed, and you will get copies of it. It is rather long.
[Reading] "Senator Taft is reported to have said that 'apparently the President and the administration are abandoning talk of keeping prices down in favor of heavy spending abroad that will keep them up.' The Senator said that loans to other countries for the purchase of goods here increase the competition on home markets and thus force prices up.
"The administration did not advocate the Greek-Turkish aid program for the purpose of bringing prices down. It advocated that program for two important reasons--first, to extend aid to starving millions and to help restore their economies so that the world may regain its prosperity in the long run; and second, to help those nations which want to preserve their freedoms and to set up a bulwark against totalitarian aggression. The administration fully recognized that these foreign aid programs would place some strain upon the American economy, particularly in the current inflationary situation caused by the high domestic demand and the shortages of some goods. But the fact that necessary foreign aid programs add to our economic problems at home makes it all the more important that we handle these domestic problems with vigor and commonsense.
"Price reductions, wherever they are possible, are made even more urgent because of the additional strain which the world situation inescapably places upon our economy. To say that we should abandon our efforts directed toward enduring world peace and freedom because these efforts create economic problems is like saying that we should have abandoned our war effort because it created economic problems.
"During the war, the tremendous demand for goods would have forced prices to unfortunately high levels except for price control. With price control, we held prices at reasonable levels. Yet, because of the tremendous volume, business made fine profits even after taxes. We now have a tremendous peacetime demand, domestic and foreign, but we have no price control. In such a situation, it is up to those whose profits are high at the current inflated prices to reduce these prices voluntarily--in their own interest as well as the interest of the American economy and the world situation. The very heart of my request for voluntary price reductions is that business intelligence must now take the place of Government regulation if our economy is to operate in the interest of all the people.
"The economic implications of Senator Taft's arguments should be fully recognized. The Senator states that the only way to bring prices down is to reduce the demand for goods. If this were true of foreign demand, it would also be true of domestic demand. Let us see where this would lead us. If the Government were to abandon its vitally necessary loan and expenditure programs, if wages were reduced, if savings were exhausted, and if unemployment set in, then there would be less demand and prices would drop. Senator Taft would call this an adjustment. I would call it a tragic recession or a depression. There is nothing novel and nothing worthy about getting a price collapse through reducing demand. That is the typical road to depression.
"The problem facing the American people is to maintain full employment, full production, and high demand, and still keep prices at reasonable levels. This is the problem to which I have constantly addressed my efforts. Senator Taft's argument that high demand justifies or necessitates high prices is fallacious and dangerous. It is based upon the idea that prices should seek as high a level as the traffic will bear, rather than the lowest level that is consistent with fair profits. That kind of practice is indefensible, and in the long run it would destroy both prosperity and profits. The higher and more stable the demand, the more opportunities there are to sell goods--and with assured high volume operations there is less and less justification for wide margins of profit per unit.
"Senator Taft's economic philosophy follows the old idea of boom and bust. Under this economic philosophy, when demand is high, those who have it within their power to administer prices charge every penny that they can get. After a while, purchasing power is unable to keep up with the excessive price level. Then unemployment, business failures, cuts in production, and price reductions all follow in rapid succession.
"For my part, I utterly reject this defeatist economic philosophy, and I believe in maintaining a full employment and full production economy. This necessarily means a high demand economy. But a high demand economy should not be a high price economy. On the contrary, high demand makes it feasible to earn good profits at reasonable prices. The boom and bust approach could endanger our prosperity even at a time when underlying economic conditions are favorable.
"My interest in voluntary price reductions is undiminished. They are as important now as ever before--if not more important.
"The drive for voluntary price reductions, while it has not gone far enough, has already yielded substantial results. First, the peaceful wage adjustments in some of the major industries took place without corresponding price advances, and this helped to bring production and purchasing power into better balance. Second, in recent months, the trend toward extraordinary price increases which commenced with decontrol has been checked and moderate price declines have taken place. This is illustrated in the following table."
I won't read the whole table, but it shows that all commodities have decreased 2 points. Farm products have increased 5.8. Foods have increased 9.1. All others have decreased 0.1 of a point. You can analyze that table when you get your mimeographed sheet.
"Price reduction in many items of farm products and foods is as important as in the case of industrial products. As the table shows, these prices have been reduced recently. Further reductions may be anticipated. Neither the individual farmer, however, nor the trader, nor the Government can--in the absence of price control-determine agricultural prices. They depend largely on competitive market conditions.
"On the other hand, in the case of many industrial products deliberate voluntary price reduction is feasible, and in some cases, such as construction and construction materials, high prices impede activity of the highest economic and social importance. Yet, as the table shows, industrial prices have not come down as much as prices of farm products and food. They have been more resistant to desirable decreases. It is true that intensive foreign demand has kept some farm prices higher than they otherwise would be. But this is no reason for keeping industrial prices high where they could now be reduced for the long-run advantage of business and the country."
You will get a copy of that when you go out. Now I am ready for questions.
[3.] Q. Mr. President, across the country I have found that they blame not so much the purchasing of wheat for relief abroad but the method used by the Agriculture Department in failing to consult the users of grain in this country before they went into market.
THE PRESIDENT. I don't think that is true at all because those purchases remain after consultation with the very people you are talking about.
Q. They just claim not.
THE PRESIDENT. Of course they want something to hide behind.
[4.] Q. Can you give us an advance on what the President is going to do on the tax and labor bills ?
THE PRESIDENT. No, I cannot. I will give you that when I get those bills and analyze them.
Q. Mr. President, can you tell us when you expect to act on the tax bill?
THE PRESIDENT. As soon as I get it officially.
Q. You haven't received the bill officially?
THE PRESIDENT. It came up officially yesterday afternoon, and I haven't seen it. As soon as I can, I will give you an announcement on it.
[5.] Q. Mr. President, so many people have criticized in this field, I wonder why you picked Senator Taft?
THE PRESIDENT. Senator Taft made a statement that wouldn't hold water the other day, and he had to be answered. He represents that sort of economy, and I think that's a thing I should comment on.
[6.] Q. What is your comment on the Kansas City vote fraud investigation?
THE PRESIDENT. The Kansas City vote fraud investigation should be carried through to its logical conclusion. No one wants to condone vote frauds. It is the worst thing that can happen in a democracy.
Q. Mr. President, does that mean a grand jury investigation of the primaries?
THE PRESIDENT. I can't answer that, sir. The grand jury investigation of the primary has been made by State courts.
Q. Federal grand juries?
THE PRESIDENT. I don't know anything about that. I don't know what the laws are in regard to Federal powers in a primary investigation. You will have to look it up.
Q. Have you discussed the matter with Attorney General Clark?
THE PRESIDENT. No, I have not.
[7.] Q. Mr. President, a few weeks ago you said that Messersmith was on a temporary mission in Argentina. Has he finished that mission now, sir?
THE PRESIDENT. Yes, he has.
Q. Does that mean he is coming back right away?
THE PRESIDENT. I judge so.
Q. Have you selected a successor for him?
THE PRESIDENT. No I have not. He hasn't come back yet.
Q. Will he remain in the diplomatic service, Mr. President?
THE PRESIDENT. Well now, he will have to answer that question.
[8.] Q. Mr. President, do you want to say anything at all about this Hungarian situation? 1
THE PRESIDENT. I think it's an outrage. The Hungarian situation is a terrible one. And we are having it looked into right now.
1On May 30 in a coup d'etat Hungarian Communists had installed a pro-Communist government, forcing the resignation of Premier Nagy.
Q. May I go a little further on that?
THE PRESIDENT. Sure.
Q. I think the Star--Evening Star tells you what to do. [Laughter]
THE PRESIDENT. Do they ? Nobody in the country can--
Q. Shake a fist, not a finger, something of that sort, which leads up to the question which I think you answered--you said it's an outrage and you don't intend to stand by
THE PRESIDENT. Idly by. And that we are looking into the matter. The State Department is making a complete investigation.
Q. Will the State Department withdraw the loan to Hungary for the purchase of American cotton?
THE PRESIDENT. You will have to ask the State Department on that. I don't know what they have done--only what I see in the paper.
[9.] Q. Mr. President, going back to Argentina, I believe you answered the question, but I didn't hear. Can you say when Mr. Messersmith is coming back?
THE PRESIDENT. NO, I can't.
[10.] Q. I want to ask you about Henry Savage 1 who is running for Congress in the Third District.--
THE PRESIDENT. He is the nominee of the Democratic Party, and he will be supported by the National Democratic Committee. Is that what you want?
1The reporter may have been referring to Charles R. Savage, Democratic candidate for U.S. Representative for the 3d District of the State of Washington. In a special election held on June 7, 1947, Mr. Savage was defeated by Russell V. Mack, a Republican.
Q. Yes sir. [Laughter]
[11.] Q. Mr. President, isn't Governor Griswold a Republican?
THE PRESIDENT. He has been the Republican Governor of Nebraska for 6 years.
[12.] Q. On--with regard to Ambassador Messersmith, have you accepted his resignation?
THE PRESIDENT. No. I haven't received any resignation from him as yet.
Q. I would like to get this clear. Have you recalled him?
THE PRESIDENT. I have taken no action on it at all. That is up to the State Department. They will handle the matter. His mission is completed, and he went down there with the understanding that when his mission was completed he would want to come home.
Q. Do you regard his mission as successful, Mr. President?
THE PRESIDENT. Yes, I do.
[13.] Q. Mr. President, the Democratic pamphlet "Capital Comment" says, "Watch for further Democratic action soon on housing." Can you tell us anything about that action ?
THE PRESIDENT. NO comment.
[14.] Q. Mr. President, can you say specifically what the Messersmith mission wasp
THE PRESIDENT. It is accomplished. We are on friendly terms with Argentina. That is what he went there for.
[15.] Q. Mr. President, was Senator Taft correct in saying that foreign loans and advances exert an inflationary influence on the domestic price level?
THE PRESIDENT. It will have some effect of that sort, but I don't think it is a dangerous effect. I have answered that in the statement which I just made.
Reporter: Thank you, Mr. President.
THE PRESIDENT. You're welcome.
NOTE: President Truman's one hundred and eighth news conference was held in his office at the White House at 10:30 a.m. on Thursday, June 5, 1947.
THE PRESIDENT. I have a couple of announcements to make this morning, and a statement to read to you.
[1.] Dwight Griswold, former Governor of Nebraska, and Director of Internal Affairs for General Clay, will be Chief of the United States Mission to Greece. And Richard F. Allen will be Field Administrator for Relief for the $350 million. In 1940 Mr. Alien became Delegate for Europe of the American Red Cross, and directed the relief program in Europe. He directed important relief programs in France before and after the Germans invaded France, and worked closely with Admiral Leahy, then Ambassador to France. We will furnish you all that detailed information after this conference is over.
Q. Will Governor Griswold be in charge, overall, of Greece and Turkey ?
THE PRESIDENT, Just Greece.
Q. Just Greece?
THE PRESIDENT. We haven't decided on the Turkish situation as yet.
[2.] Now I have got a statement here that I want to read to you. It is mimeographed, and you will get copies of it. It is rather long.
[Reading] "Senator Taft is reported to have said that 'apparently the President and the administration are abandoning talk of keeping prices down in favor of heavy spending abroad that will keep them up.' The Senator said that loans to other countries for the purchase of goods here increase the competition on home markets and thus force prices up.
"The administration did not advocate the Greek-Turkish aid program for the purpose of bringing prices down. It advocated that program for two important reasons--first, to extend aid to starving millions and to help restore their economies so that the world may regain its prosperity in the long run; and second, to help those nations which want to preserve their freedoms and to set up a bulwark against totalitarian aggression. The administration fully recognized that these foreign aid programs would place some strain upon the American economy, particularly in the current inflationary situation caused by the high domestic demand and the shortages of some goods. But the fact that necessary foreign aid programs add to our economic problems at home makes it all the more important that we handle these domestic problems with vigor and commonsense.
"Price reductions, wherever they are possible, are made even more urgent because of the additional strain which the world situation inescapably places upon our economy. To say that we should abandon our efforts directed toward enduring world peace and freedom because these efforts create economic problems is like saying that we should have abandoned our war effort because it created economic problems.
"During the war, the tremendous demand for goods would have forced prices to unfortunately high levels except for price control. With price control, we held prices at reasonable levels. Yet, because of the tremendous volume, business made fine profits even after taxes. We now have a tremendous peacetime demand, domestic and foreign, but we have no price control. In such a situation, it is up to those whose profits are high at the current inflated prices to reduce these prices voluntarily--in their own interest as well as the interest of the American economy and the world situation. The very heart of my request for voluntary price reductions is that business intelligence must now take the place of Government regulation if our economy is to operate in the interest of all the people.
"The economic implications of Senator Taft's arguments should be fully recognized. The Senator states that the only way to bring prices down is to reduce the demand for goods. If this were true of foreign demand, it would also be true of domestic demand. Let us see where this would lead us. If the Government were to abandon its vitally necessary loan and expenditure programs, if wages were reduced, if savings were exhausted, and if unemployment set in, then there would be less demand and prices would drop. Senator Taft would call this an adjustment. I would call it a tragic recession or a depression. There is nothing novel and nothing worthy about getting a price collapse through reducing demand. That is the typical road to depression.
"The problem facing the American people is to maintain full employment, full production, and high demand, and still keep prices at reasonable levels. This is the problem to which I have constantly addressed my efforts. Senator Taft's argument that high demand justifies or necessitates high prices is fallacious and dangerous. It is based upon the idea that prices should seek as high a level as the traffic will bear, rather than the lowest level that is consistent with fair profits. That kind of practice is indefensible, and in the long run it would destroy both prosperity and profits. The higher and more stable the demand, the more opportunities there are to sell goods--and with assured high volume operations there is less and less justification for wide margins of profit per unit.
"Senator Taft's economic philosophy follows the old idea of boom and bust. Under this economic philosophy, when demand is high, those who have it within their power to administer prices charge every penny that they can get. After a while, purchasing power is unable to keep up with the excessive price level. Then unemployment, business failures, cuts in production, and price reductions all follow in rapid succession.
"For my part, I utterly reject this defeatist economic philosophy, and I believe in maintaining a full employment and full production economy. This necessarily means a high demand economy. But a high demand economy should not be a high price economy. On the contrary, high demand makes it feasible to earn good profits at reasonable prices. The boom and bust approach could endanger our prosperity even at a time when underlying economic conditions are favorable.
"My interest in voluntary price reductions is undiminished. They are as important now as ever before--if not more important.
"The drive for voluntary price reductions, while it has not gone far enough, has already yielded substantial results. First, the peaceful wage adjustments in some of the major industries took place without corresponding price advances, and this helped to bring production and purchasing power into better balance. Second, in recent months, the trend toward extraordinary price increases which commenced with decontrol has been checked and moderate price declines have taken place. This is illustrated in the following table."
I won't read the whole table, but it shows that all commodities have decreased 2 points. Farm products have increased 5.8. Foods have increased 9.1. All others have decreased 0.1 of a point. You can analyze that table when you get your mimeographed sheet.
"Price reduction in many items of farm products and foods is as important as in the case of industrial products. As the table shows, these prices have been reduced recently. Further reductions may be anticipated. Neither the individual farmer, however, nor the trader, nor the Government can--in the absence of price control-determine agricultural prices. They depend largely on competitive market conditions.
"On the other hand, in the case of many industrial products deliberate voluntary price reduction is feasible, and in some cases, such as construction and construction materials, high prices impede activity of the highest economic and social importance. Yet, as the table shows, industrial prices have not come down as much as prices of farm products and food. They have been more resistant to desirable decreases. It is true that intensive foreign demand has kept some farm prices higher than they otherwise would be. But this is no reason for keeping industrial prices high where they could now be reduced for the long-run advantage of business and the country."
You will get a copy of that when you go out. Now I am ready for questions.
[3.] Q. Mr. President, across the country I have found that they blame not so much the purchasing of wheat for relief abroad but the method used by the Agriculture Department in failing to consult the users of grain in this country before they went into market.
THE PRESIDENT. I don't think that is true at all because those purchases remain after consultation with the very people you are talking about.
Q. They just claim not.
THE PRESIDENT. Of course they want something to hide behind.
[4.] Q. Can you give us an advance on what the President is going to do on the tax and labor bills ?
THE PRESIDENT. No, I cannot. I will give you that when I get those bills and analyze them.
Q. Mr. President, can you tell us when you expect to act on the tax bill?
THE PRESIDENT. As soon as I get it officially.
Q. You haven't received the bill officially?
THE PRESIDENT. It came up officially yesterday afternoon, and I haven't seen it. As soon as I can, I will give you an announcement on it.
[5.] Q. Mr. President, so many people have criticized in this field, I wonder why you picked Senator Taft?
THE PRESIDENT. Senator Taft made a statement that wouldn't hold water the other day, and he had to be answered. He represents that sort of economy, and I think that's a thing I should comment on.
[6.] Q. What is your comment on the Kansas City vote fraud investigation?
THE PRESIDENT. The Kansas City vote fraud investigation should be carried through to its logical conclusion. No one wants to condone vote frauds. It is the worst thing that can happen in a democracy.
Q. Mr. President, does that mean a grand jury investigation of the primaries?
THE PRESIDENT. I can't answer that, sir. The grand jury investigation of the primary has been made by State courts.
Q. Federal grand juries?
THE PRESIDENT. I don't know anything about that. I don't know what the laws are in regard to Federal powers in a primary investigation. You will have to look it up.
Q. Have you discussed the matter with Attorney General Clark?
THE PRESIDENT. No, I have not.
[7.] Q. Mr. President, a few weeks ago you said that Messersmith was on a temporary mission in Argentina. Has he finished that mission now, sir?
THE PRESIDENT. Yes, he has.
Q. Does that mean he is coming back right away?
THE PRESIDENT. I judge so.
Q. Have you selected a successor for him?
THE PRESIDENT. No I have not. He hasn't come back yet.
Q. Will he remain in the diplomatic service, Mr. President?
THE PRESIDENT. Well now, he will have to answer that question.
[8.] Q. Mr. President, do you want to say anything at all about this Hungarian situation? 1
THE PRESIDENT. I think it's an outrage. The Hungarian situation is a terrible one. And we are having it looked into right now.
1On May 30 in a coup d'etat Hungarian Communists had installed a pro-Communist government, forcing the resignation of Premier Nagy.
Q. May I go a little further on that?
THE PRESIDENT. Sure.
Q. I think the Star--Evening Star tells you what to do. [Laughter]
THE PRESIDENT. Do they ? Nobody in the country can--
Q. Shake a fist, not a finger, something of that sort, which leads up to the question which I think you answered--you said it's an outrage and you don't intend to stand by
THE PRESIDENT. Idly by. And that we are looking into the matter. The State Department is making a complete investigation.
Q. Will the State Department withdraw the loan to Hungary for the purchase of American cotton?
THE PRESIDENT. You will have to ask the State Department on that. I don't know what they have done--only what I see in the paper.
[9.] Q. Mr. President, going back to Argentina, I believe you answered the question, but I didn't hear. Can you say when Mr. Messersmith is coming back?
THE PRESIDENT. NO, I can't.
[10.] Q. I want to ask you about Henry Savage 1 who is running for Congress in the Third District.--
THE PRESIDENT. He is the nominee of the Democratic Party, and he will be supported by the National Democratic Committee. Is that what you want?
1The reporter may have been referring to Charles R. Savage, Democratic candidate for U.S. Representative for the 3d District of the State of Washington. In a special election held on June 7, 1947, Mr. Savage was defeated by Russell V. Mack, a Republican.
Q. Yes sir. [Laughter]
[11.] Q. Mr. President, isn't Governor Griswold a Republican?
THE PRESIDENT. He has been the Republican Governor of Nebraska for 6 years.
[12.] Q. On--with regard to Ambassador Messersmith, have you accepted his resignation?
THE PRESIDENT. No. I haven't received any resignation from him as yet.
Q. I would like to get this clear. Have you recalled him?
THE PRESIDENT. I have taken no action on it at all. That is up to the State Department. They will handle the matter. His mission is completed, and he went down there with the understanding that when his mission was completed he would want to come home.
Q. Do you regard his mission as successful, Mr. President?
THE PRESIDENT. Yes, I do.
[13.] Q. Mr. President, the Democratic pamphlet "Capital Comment" says, "Watch for further Democratic action soon on housing." Can you tell us anything about that action ?
THE PRESIDENT. NO comment.
[14.] Q. Mr. President, can you say specifically what the Messersmith mission wasp
THE PRESIDENT. It is accomplished. We are on friendly terms with Argentina. That is what he went there for.
[15.] Q. Mr. President, was Senator Taft correct in saying that foreign loans and advances exert an inflationary influence on the domestic price level?
THE PRESIDENT. It will have some effect of that sort, but I don't think it is a dangerous effect. I have answered that in the statement which I just made.
Reporter: Thank you, Mr. President.
THE PRESIDENT. You're welcome.
NOTE: President Truman's one hundred and eighth news conference was held in his office at the White House at 10:30 a.m. on Thursday, June 5, 1947.