STATE DEPARTMENT BILL H.R. 3518

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85-00003R000300020006-3
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• Document Page Count: 4
• Document Creation Date: December 20, 2016
• Document Release Date: May 2, 2007
• Sequence Number: 6
• Publication Date: November 12, 1981
• Content Type: OPEN SOURCE

Approved For Release 2007/05/02 : CIA-RDP85-00003R00030002
November 12 1981 CONGRESSIONAL RECORD-Extensions of Remarks
TO LOWER ,INTEREST RATES,
GO FORWARD TO GOLD W,
HON. JACK F. KEMP
OF NEW YORK -
IN THE HOUSE OF REPRESENTATIVES
Thursday, November 12, 1981
? Mr. KEMP. Mr. Speaker, the admin-
istration has made great progress in
reforming tax, spending and regula-
tory policy. But the final pillar of eco-
nomic recovery-monetary reform-
has not yet been established. The
thinking of the Federal Reserve, as ex-
plained recently in the Wall Street
Journal, is that it is necessary to slow
down the economy and raise unem-
ployment, in order to lower interest
rates. While the most significant of
President Reagan's tax incentives will
not begin until next year, the economy
is now suffering from recession, with
the highest unemployment rates since
1975. The problem-the tragedy-is
that, despite the human suffering
caused by current Federal Reserve
policy, it will not cure the underlying
problem of inflation and high interest
rates. Once the "going out of busi-
ness" sale is over, interest rates will
remain high, because people have no
long-term confidence in money.
The answer, I am convinced, is to go
forward with a monetary reform
which will make the dollar once again
as good' as gold. Jude Wanniski, presi-
dent of Polyconomics Inc., recently ex-
plained this fact In an excellent
column in the Washington Post. I
commend the article to my colleagues.
The article follows:
To LOWER INTEREST RATES, Go BACK TO
GOLD
(By Jude Wanniski)
There are only two ways to bring down in-
terest rates: decrease the demand for credit
or increase the supply of credit.
President Reagan has been struggling
with record-shattering interest rates be-
cause his administration has been almost
wholly occupied with the first of these two
options. The Keynesian and monetarist
"demand-side" economists have dominated
thinking about the interest-rate dilemma.
They focus on trying to reduce the demand
for credit.
Budget director David Stockman, once a
supply-sider, has been drawn into this
demand-side exercise, hacking away at
school-lunch programs, Medicaid and na-
tional defense in a desperate attempt to
reduce the federal government's demand for
credit.
The monetarists sprinkled through the
administration likewise have no interest in
the supply of credit. Indeed, they specifical-
ly argue that the Federal Reserve should
pay no attention whatever to the price of
credit, i.e., interest rates. They aim at con-
trol of the "money supply," as they define
money. If there is less "money," people will
be able to demand less in the way of wage
and price increases.
For the monetarist solution to work, we
are told, there must be a period of recession
and unemployment in which "people" real-
ize they can't ask for more, because there
isn't enough "money" in the system.
Federal Reserve Chairman Paul Volcker is
not a monetarist per se, but he Is a big be-
liever in recessions a way of bringing down
0
t inflat on is . 1 Posakzemarks yen, sterline francs or
Interest rates. He believes t1to
causedd l wor r ose money. a ~f . e olla`, w o dv y . -
Ind sines r i) e~dei>tal~ds an o td rem
He thus will support any id niduee a re no eeause ewe
cession, a goal he has now ed. because N
The Supply-side' =econo ts- ut their Y tha dev ? i S d~~a 1 r
focus on the supply of credi# 1f we csb#d nt o gn let rave v a da arfes
crease the supply of credit We could avoid ,: monetarists. pe su de"cl`Nixon to float the.
using a recession as a way of lowering inter-
est rates. If we could increase the supply of
credit rapidly enough, we could even experi-
ence a rising demand for credit with falling
Interest rates.
The chief Instrument to bring down inter-
est rates, though, could not be fiscal policy.
Supply-side economists (excepting a few
supply-side fiscalists such as Treasury Un-
dersecretary Norman Ture) have always as-
serted that monetary policy is the key to in-
terest rates. Of course, they believe any as-
sault on credit demand is doomed to failure.
The recession only shrinks the economy and
its tax base, setting the stage for lower in-
terest rates next year.
The only way to break this spiral is by In-
creasing the supply of credit, basically by
making it so much more attractive to be a
creditor that people will once again be
happy to lend long at low interest rates.
How can this be done? The supply-siders
say it can only be done with a gold standard.
Only by announcing that we are going to
move toward the opening of the gold
window that President Nixon closed in 1971
will people be encouraged to lend long
again. Only by guaranteeing the dollar's
value as a unit of account, in. a specified
weight of gold, can the current global li-
quidity crisis end without inflation, And It
surely is a global crisis. It was Robert Mun-
dell, the Canadian economist, who observed
10 years ago when the gold window was
closed that It was the first-time in 1,500
years that the world was without a single
currency convertible into gold or silver. We
are in a Greenback era, in which all govern-
ments can change the value of their curren-
cies annually, monthly, weekly, daily,
hourly.
In the past decade, the U.S. government
has repeatedly defaulted on its debt to
bondholders-by devaluing the dollar rela-
tive to real goods. Prospective lenders to
either government or the private sector
demand enormous premiums in the form of
interest rates. Why should anyone lend to
anyone else when the banking Is done in
dollars or other non-convertible currencies
that constantly melt in real value?
It Is, after all, not only government that
defaults on debt when the monetary stand-
ard shrinks, all creditors lose. The more
they lose, the less they lend. For this
reason, there is almost nothing better that
the government can do for its people than
maintain a constant value, of its unit of ac-
count, its currency. People make most of
the important decisions of their lives
around the value of the government official
unit of account. When the government
alters its value, or "floats" it, as Nixon did,
everyone loses. The debtors may momentar-
ily gain, but inflation poisons the communi-
ty at large in which debtors live too,
When the dollar is convertible into gold,,
this is impossible. There are no windfall
losses or windfall gains. Debtors pay what
they promised; creditors receive what was
pledged. As a result, there are no inflation
premiums in the interest rate. Once again,
people lend long at low interest rates.
If Reagan tomorrow announced a return
to covertibility, the rest of the world would
rush to join the system. No nation could
afford to stay on the paper standard if it
wished to continue conducting International
banking services. Who would bank in float-
Apr'
+tE
dollay altogethei iii- 1973 so. -they could try
another, of history's periodic experiments
with a paper standard:
Stockman believes convertiblity would
mean an initial period of illiquidity, a wave
of bankruptcies. But, that is what we are
now experiencing. Gold ends the liquidity
crisis that is endemic on a global scale be-
cause there is no international monetary
standard of value. When the supply of
credit expands, interest rates tumble and re-
lieved debtors and creditors can-happily re-
finance.
Before we get to that point, though, there
must be a general awareness In Washing-
ton-in the White House and on Capitol
Hill-that there is more than one way to
bring down interest rates. Cutting : the
demand for credit, the method attempted,
thus far, is the wrong way. The ''cure" is -
worse than the affliction in that it embraces'
poverty and unemployment as necessary"
side effects to lowering interest rates.
Expanding the supply of credit is the only
positive solution. It can only be done by
reestablishing the dollar's link with gold,
reestablishing the value of the accounting
unit in real terms. Until the President
moves decisively toward this positive solu-
tion, he and his administration and the
world-economy will . continue to suffer, and
it will,get worse.? - - -
VETERANS NOT RECEIVING
NEEDEb BENEFITS
HON. MIKE SYNAR
'
OF OKLAHOMA
IN THE HOUSE OF REPRESENTATIVES
Thursday, November 12?1981
? Mr. SYNAR. Mr. Speaker, yester-
day, November 11, 1981, ceremonies
were held all around this country cele=
brating Veterans Day, the, anniversary
of the armistice signed at -the end or
the First -World War. Unfortunately,
that war did not mark the end to the
armed conflicts the young men ancd:,
women of the United States have been
asked to fight in. The battle to pre-
serve the rights of a free society was
continued in another world war and in
the Korean and Vietnamese conflicts.
It is only fitting that Americans take
the time to commemorate friends and
relatives who have sacrificed so much
of "their own perspual well-being for
their country. Veterans of each of
these wars need to. know that we ap-
preciate their `sacrifices and we are
willing to do all we can. to pay back
our debts. Recently, however, our vet-
erans have been alarmed by signals.,
they are receiving from Washington,
and rightly so.
I am, concerned about the recent
proposals being circulated through-
Congress calling for additional spend-
ing cuts in the range of $450 million in-
VA health care programs. We hav:
sent our men and women to war and
they have come home suffering from
 rov, d For Release 20071-05/02 CIA RDP85-00003R000300020006-3
1vover oer .i , 1Yd 1 ~.lJ1V V n~JJi l~rai s*,:v w?k
Many Foreign Service personnel who have Capt. Jon.Codma .6
this proposal'is to establish some of the lev- rivileged to wear the Naval urger
erage necessary to negotiate more normal Medal and have brought honor to our,
working and living conditions in the Com- . ation are Lt. Cmdr. Guy Stillman,
munist countries for our diplomats and to r.+ it 'T [Aarrlarvu Cant. F_ $. Wald-
REAR ADMIRAL KIDD'S NAVAL
ORDER MEDAL FOUND IN
U.S.S. "ARIZONA"
HON. ELDON RUDD
OF ARIZONA
IN THE HOUSE OF REPRESENTATIVES
Thursday, November 12, 1981
? Mr. RUDD. Mr. Speaker, recently, I
had the distinct honor of speaking
before the Naval Order of the United
States at its biennial congress held in
San Diego. Present at the congress
were many of the distinguished mem-
bers of the Naval Order who have so
nobly served America in the U.S. naval
service.
Of interest to all of us, particularly
Arizonans and those families and
friends of the brave men aboard at the
time of its sinking, is the relationship
of the Naval Order to the U.S.S. Arizo-
na which is now a national monument.
Following the attack and destruction
of the fleet at Pearl Harbor, attempts
were made to raise the sunken U.S.S.
Arizona and to bring up the bodies of
the men entombed, including the re-
mains of Rear Adm. Isaac Kidd, Sr.
These attempts were abandoned be-
cause of the loss of life.. However, the
ship continued to be used as a training
school for divers. In one of these dives,
the jewelry box of Rear Admiral Kidd
was retrieved and is now in the posses-
sion of his son, Adm. Isaac Kidd, Jr.
The box contained mementos of the
cruise of the Great White Fleet, in-
cluding medals and decorations re-
ceived from foreign nations. Among
them was a medal that Isaac Kidd, Jr.
could not at first identify. Recently,
the admiral identified the questioned
decoration as the medal of the Naval
Order of the United States._
Rear Adm. Isaac Kidd's Naval Order
Medal, signifying his membership in
the order, had been brought up from
the historic U.S.S. Arizona lying as a
national monument on the bottom at
Pearl Harbor. It is even more signifi-
cant to know that his son, Admiral
Kidd, Jr., dedicated the beautiful Ari-
zona Memorial near the Cincpacflt
landing at Pearl Harbor, which is vis-
ited by thousands each year.
While the story of Rear Admiral
cial to all of its members, there are
many other famous, :some illustrious,
companions in the Naval Order.
Among them: Adm. George Dewey,
Loyall Farragut (son of David Farra-
gut), Rear Adm. John Grimes Walker,
HON. JOHN J. LaFALCE
OF NEW YORK
IN THE HOUSE OF REPRESENTATIVES
Thursday, November 12, 1981
? Mr. LAFALCE. Mr. Speaker, every
Member of Congress deals on a regular
basis with members of the news media.
From frequent contact with mem-
bers of America's press corps, one scan
develop a deep respect for the talents
and powers of the fourth estate. As a
profession, they share our concerns
for the Nation and the ever-present
demands of timeliness and accuracy.
However, sometimes those demands,
especially the latter, are not met.
What then?
Sixty-five years ago, the first nation-
al press council was established in
(B?y'Dae d i
~ in NewYor a a p cridontdteamany.
supporters col' Ieslti?n
cs not.idcn
Ro Wan at es
.in
dkiduarls a religio iix es
any t er
same-stories.
that they are 1orceA to ,abandon a wansoz
Well, he can file a formal -complaint witl&,
respectively. the British Press Council, the
National News Council or the Minnesota
accuracy, unfairness and irresponsibility in
the media. -
In those three cases, the various' councils
involved decided the complaints were war-
ranted-and they censured the newspapers
involved. The complaining parties were vin-
dicated, and the newspapers were publicly
embarrassed.
In the case involving the gratuitous Idennti-
Times is either insensitive to justifiable
criticism or is condoning careless editing."
Sweden. In the nation known as the It has-been 45 years since the first nation
e
-den.
birthplace of the modern-day ombuds- al presscouncil was ,established in Sw
man, an organization was created to Now there are more than 30 press 'councils
Serve as watcnaog on the autaviuluo vi Some councils-like those in Indonesia
the news media. Today more than 30 and Sri Lanka-were created by the govern-
press councils, taking a variety of ment. primarily to'muzzle the press.
Mr. Speaker, what recourse does a and Switzerland-were -established -and -are
private citizen or public official have run exclusively by the media, 'ith neither
when a news story is reported inaccu- government intrusion nor lay -public repre-
rateiy wrist recourse apes a rengluus, But the most effective press councils are ?
social or government organization generally modeled after the British Press
have when the news-gathering activi- Council-independent of the government
ties of the news media breach coin- but with members of the lay public joining
monly accepted standards of privacy? journalists in investigating and ruling upon
Beyond a tart letter to the editor or complaints against the media.
perhaps an expensive, time-consuming The British Press Council was initially
and risky libel suit, there are few ave- created as a purely journalists body in 1953,
upon the recommendation of a government-
nues available for addressing these appointed Royal Commission on the Press.
complex and serious occurrences. After a second Royal Commission report in
A recent article by David Shaw out- 1963, the council voted to include lay mem-
lines one method of dealing with this ' bers.
problem. In the :article printed below, Despite the government's role in the' es-
ML Shaw reports on the history, the tablishment of the British Press Council,
the government has taken role in its
successes and the failures of the news de .fi-,
Wanting, membership or decision-making,
many in the British media who. grec?t-
stem of monitoring the news Thus
ouncil s
,
y
c
,media. ed the formation of the council about as
o
utbreak,
While it is certainly not a perfect warmly as one would welcome an.
means of resolving the serious dangers of typhus are now enthusiastic supportegs
reporting it does of the council. They think its very existence
posed by reckless + has enabled the press to avoid restrictive`
provide a system by which the public government regulation,,
can watch the watchdog. That is precisely ...why some, American
Given the importance of the news journalists supported the creation, of
ited States
the U
il i
u
n
n
nc
media and accurate reporting to the National News Co
proper functioning of our form of de- in 1972. _
hail
, then vice president;
Spiro Agnew,
I commend this article and
been traveling around the country .accusing=
its insights to my colleagues. the press of a liberal bias. Many Anthe
The article follows: media feared-that the Nixon admmistaatioa
 Approved For Release 2007/05/02 : CIA-RDP85-00003R00030002Qp06 '
E 5280 CONGRESSIONAL RECORD-Extensions of Remarks November 12, 1981
might try to enact restrictive-coercive-leg-
unless the media made a serious
effort to monitor its own performance.
Hence, the National News Council.
The idea of a National News Council was
not new. The Hutchins Commission on the
Freedom of the' Press recommended' cre-
ation of such a council in 1947, but press
resistance-indeed hostility-delayed its es-
tablishment until a task force of the Twen-
tieth Century Fund made a similar proposal
in the wake of Agnew's attacks 25 years
later.
In the interim, perhaps two dozen commu-
nity press councils were formed in various
parts of the country. Most gradually died;
the Honolulu Community Media Council is
probably the largest of those now function-
ing.
But a statewide news council was estab-
lished in Minnesota in 1971, and both it and
the New York-based National News Council
continue to be enormously controversial
within the media, despite their attempts to
design complaint procedures to offset media
resistance.
Before either the National News Council
or the Minnesota News Council will agree to
investigate a citizen complaint, for example,
the complaining party must sign a waiver,
agreeing not to pursue any legal claim
against anyone "based on the subject
matter of my complaint."
Complainants must first try to resolve
their complaints directly with the news or-
ganization involved. Then, if they are not
satisfied, the complaint is subject to a
screening procedure by the council or its
staff before it is finally accepted for investi-
gation and a public hearing.
The vast majority of complaints are set-
tled, withdrawn, dismissed or rejected as
outside the council's purview before the
formal investigative process begins. The Na-
tional News Council has formally investigat-
ed only 198 of the 853 complaints it has re-
ceived in nine years. The Minnesota News
Council has investigated only 43 of the 349
complaints it has received in 10 years.
Of those complaints investigated, the Min-
nesota council has ruled that about half
were warranted. The national council has
found only 30 percent warranted (although
that figure has jumped to 60 percent in the
last three years, largely because the initial
screening process is now more rigorous).
Although many editors who have worked
with news councils on complaints against
their papers tend to praise the councils'
work, most American editors continue to
oppose the entire news council concept.
Journalists in the United States are fierce-
ly protective of their First Amendment
rights. They know there are countries that
issue (and revoke) journalists' licenses, and
they know there are press councils in other
countries empowered to impose jail sen-
tences on reporters and tolevy heavy fines
No thanks, most American editors say. We
don't want a press council here. It would
just be a first step toward government regu-
lation.
"Peer pressure can lead to regulatory
pressure," says A. M. Rosenthal, executive
editor of The New York Times.
Frequently ignored (or criticized) by what
is generally regarded as the best paper in
America-the paper of record-the council
has had great difficulty gaining nationwide
acceptance, credibility and impact.
But news councils in the United States
were not created by the government, they
receive no government financing, have no
government membership and can take no
punitive or coercive action.
Council defenders insist that the specter
of council-deliberation-cum-government reg-
ulation is counter-productive, self-justifying
paranoia. "Nonsense and in some cases ...
sophistry" George Chaplin, editor of the
Honolulu Star-Bulletin, said.
"These councils have no authority at all
beyond their persuasive power and their
ability to make public reports," Chaplin
pointed out. "If we're putting out the kind
of paper we should, we have nothing to
worry about (from them). And if we're not
putting but the kind of paper we should, we
ought to *get kicked in the tail on those
areas of dereliction."
Most council supporters say that the
councils help prevent government regula-
tion and save newspapers from some expen-
sive libel suits by providing critics with an
alternative means of vindication.
The basic argument in favor of a news
council is relatively simple:
The press is more powerful than ever
before thanks to the pervasiveness of net-
work television, the growth of media con-
glomerates and monopoly newspapers, the
celebrity status of some journalists and the
loosening of libel restraints by the courts,
dating back to 1964.
Therefore, since the people who report
and edit the news, being only human, occa-
sionally make mistakes-of both omission
and commission involving questions of both
accuracy and fairness-some independent
body should monitor and pass judgment on
their performance when specific complaints
arise.
After all, the press criticizes every other
institution in society; why shouldn't the
press, too, be criticized and be held account-
able-in public? Doctors and lawyers have
internal watchdog groups that monitor ethi-
cal standards. Why shouldn't the press do
the same thing?
Most editors reject that line of rea-
soning, though. Their attitude was best
summed up by Claude Jean Bertrand who
studied press councils worldwide while a re-
search fellow at the American Council of
Learned Societies:
"Newspeople, accustomed as they are to
criticizing others and not being criticized,
resent having their work publicly evaluated
by arrogant colleagues and incompetent
strangers."
Thus, few newspapers report National
News Council rulings, and only a few major
media companies contribute money to the
council.
Only 26 percent of the council's funding
comes from the media. The rest comes from
foundations, corporations and private indi-
viduals.
There are small signs that media resist-
ance may be lessening, though.
When the council was founded for exam-
ple the Los Angeles Times editorialized
against it, arguing that the press was al-
ready subject to pressure from government
and from the courts and that the added in-
timidation of a news council might improp-
erly influence individual newspaper deci-
sions on what to publish or not to publish.
But Times Editor William F. Thomas says
he is no longer quite as worried about the
council's powers of intimidation as he once
was, and he says he would cooperate with
the council any time it wanted to investigate
a specific complaint against the paper. Nor
would he object to a corporate contribution
to the council.
Thomas says the council "has behaved in
every case I've noticed, very responsibly ...
It does a pretty good job."
The Washington Post has always cooper-
ated fully with council investigations, too-
most recently in the Janet Cooke-Pulitzer
Prize case-but only in the last two years
has the Post supported the council finan-
cially.
In fact, Post Executive Editor Benjamin
C. Bradlee still thinks "the council's target
is wrong. Why do you (the council) target
the best of American journalism, rather
than the worst of American journalism?"
The council has heard more complaints
against CBS and The New York Times, for
example, than against any other news orga-
nizations. But that's because CBS and The
New York Times are not only the best in
their fields, they are also the most visible
and the most influential.
"The way you keep the press in line is to
pick on the best," Newsweek Editor Lester
Bernstein said.
The National News Council has issued
more findings critical of CBS than of any
other single news organization in the United
States, council officials say. But CBS con-
tinues to support the council financially.
CBS News President William Leonard says
the council performs "a useful service."
There are, however, some valid criticisms
of the council-most recently over its ruling
against the Village Voice in New York for a
story on Dennis Sweeney, the accused killer
of former Congressman Allard Lowenstein.
In some ways, the council almost seemed
less upset by the Voice's journalistic trans-
gressions than by suggestions in the Voice
story that Lowenstein had engaged in ho-
mosexual activity.
"I don't think the council applied the
same standard of ethics and accuracy in
those proceedings as it demands of the
press," said Osborn Elliott, dean of the
Graduate School of Journalism at Columbia
University.
The news council can also be faulted on
other grounds-beginning with the very
composition of its membership.
The council is supposed to be composed of
eight people from the media and 10 from
the general public, according to its bylaws.
But four of the present "public" members
are former journalists, and all four are
clearly media-oriented in their experience
and outlook.
It raises an important question: Is the
media-oriented imbalance on the council-in
truth, 12 of its 18 members are media fig-
ures-a major reason why the council finds
only 30 percent of the complaints it investi-
gates against the media to be warranted?,
Most Council members-and most council
decisions-do not seem biased. "I was very
favorably impressed and to some degree sur-
prised by the amount of objectivity," said
William Rusher, publisher of the National
Review and a member of the council from
1972 to 1980.
As a conservative magazine publisher and
outspoken press critic, surrounded by what
he perceived as a group of liberal newspaper
editors, Rusher says he fully expected to
"see myself in a den of inequity." But that
didn't happen.
Nevertheless, the council selects its own
members, and the stacking of the council
with media representatives creates at least
the appearance of impropriety and raises le-
gitimate questions of credibility-the very
kinds of issues the council is supposed to be
investigating.
Chairman Norman Isaacs himself con-
cedes that is a problem and he says a coun-
cil committee is studying the matter. He
says that what the council really needs is a
new "outside re-evaluation" to more clearly
define its purposes.
Isaacs is particularly sympathetic to the
charge that the council largely ignores the
truly significant issues facing the media
today.
The council rarely, if ever, looks into such
issues as newspaper monopolies, concentra-
tion of media ownership, the small percent-
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