Memorandum Establishing the Cabinet Committee on Price Stability

Memorandum for the Secretary of the Treasury, the Secretary of Commerce, the Secretary of Labor, the Director of the Bureau of the Budget, the Chairman of the Council of Economic Advisers

In accord with the announcement in my Economic Report transmitted to the Congress on February 1, 1968, I appoint you to serve on a Cabinet Committee on Price Stability.

This Cabinet Committee reflects our deep concern for a more effective Government effort in dealing with the long-run problems of inflation. This step will fortify our fiscal and monetary policies which are the first line of defense against inflation. As I said in my Economic Report, "Existing Government organization is not effectively suited to deal with the full range and dimensions of the problem of prices." We must develop a strong and imaginative program for 1968 and subsequent years through the work of this Committee. This program is intended to strengthen free market institutions.

The Chairman of the Council of Economic Advisers will coordinate the work of the Committee, which I expect will meet on a regular schedule and in addition hold special meetings to deal with any urgent problems that may arise.

The Chairman of the Council of Economic Advisers will recruit and supervise the professional staff necessary to carry out the work of the Committee and will provide administrative services to the Committee.

I assign the highest priority to the work of this Cabinet Committee which must take effective steps this year in the pursuit of price stability. I expect each of you to contribute to the maximum extent possible to the work of this Committee. I am also sending a memorandum to other relevant Government departments and agencies to enlist their full support for your work, and you should call upon them to the maximum extent to which they can be helpful.

As recommended in the Council's report, I anticipate that the Committee will:

1. Prepare and publish from time to time studies in depth of economic conditions in those industries which are a persistent source of inflationary pressure.

2. Study intensively and make constructive recommendations concerning all aspects of Government policy that affect prices in particular sectors.

3. Work with representatives of business, labor, and the public to enlist cooperation toward responsible wage and price behavior and structural improvements that promote the achievement of overall price stability.

4. Hold a series of conferences both with representatives of business, labor, and the public interest at large, and with representatives of particular industries or particular segments of labor:

--to attempt to reach some consensus on appropriate general standards to guide private price and wage decisions;

--to identify remediable problems that inhibit price stability in particular areas, and attempt to design cooperative programs for private and governmental action to deal with these problems.

5. Recommend suitable legislation which would advance the objective of price stability in a free market economy.

At the outset, I ask the Committee to consider pending proposals for legislative and administrative change in order that any actions taken be focused as sharply as possible on contributing to price and cost stability.

I expect the Committee to begin its work promptly.

LYNDON B. JOHNSON

P.S. This will be a small committee but its work is vital. Each of you should not undertake this responsibility unless you can give it your fullest attention and your highest priority.