The President's News Conference

THE PRESIDENT. Good afternoon.

[1.] I understand that part of today's press conference is being relayed by the Telstar communications satellite to viewers across the Atlantic, and this is another indication of the extraordinary world in which we live. This satellite must be high enough to carry messages from both sides of the world, which is, of course, a very essential requirement for peace; and I think this understanding which will inevitably come from the speedier communications is bound to increase the well-being and security of all people here and those across the oceans. So we are glad to participate in this operation developed by private industry, launched by Government, in admirable cooperation.

[2.] Q. Mr. President, again there are reports that the Soviet Union is preparing to sign an early and separate peace treaty with East Germany. These reports come at a time when the Soviet attitude on Berlin seems to harden and at a time when Mr. Rusk's talks with Gromyko have reached a standstill. Can you tell us what you know of Soviet intentions and how you view the present prospects for a Berlin settlement?

THE PRESIDENT. We have made no progress recently on a Berlin settlement. Mr. Rusk, of course, will be seeing Mr. Gromyko again before he leaves Geneva, and in fact would stay in Geneva if a useful purpose could be served. There has been a strong difference of opinion in regard to Berlin, its viability and its guarantees, and we have not been able to reach an accord on our very different and vigorously held positions. So that I cannot report progress; and it is, of course, of concern to us all because, as I said from the beginning, when the vital interests of great countries are involved, in one area on which there are very varying views, it's a source of concern and some danger to us all.

[At this point transmission to Europe via Telstar began. ]

We hope that an accord can be reached. We continue to try to reach one. But we've not made progress recently forward.

[3.] Q. Mr. President, the Russians appear to insist on being the last ones to conduct nuclear tests because we were the first. Would you see any basis for hope that there could be an agreement on a test ban reached after they finished their next series of tests?

THE PRESIDENT. Well, the tests that we carried out were due to the breach of the moratorium by the Soviet Union last fall. We will have to make an analysis of their tests and see whether they present a further risk to our security. In this constant pursuit, everyone desiring to be last, of course, increases the danger for the human race. We are very reluctant to test. We will not test again unless we are forced to because our security is threatened and because as a result of new Soviet tests we find ourselves unable to meet our commitments to our own people and those who are allied with us. We will, therefore, have to wait. I'm sorry the Soviet Union is testing. They tested-they broke the agreement and tested last fall. We tested in response. Now they carry out another series of tests and the world plunges deeper into uncertainty.

[4.] Q. Mr. President, as a result of some of the congressional action on measures you've submitted to them, including the vote on the Medicare plan in the Senate, some Republicans on the Hill have suggested that perhaps this Congress could not accomplish anything further, that it might be best to adjourn and go home. Would you go along with that view, sir?

THE PRESIDENT. Well, that would be a disastrous course of action. There are still most important measures, which I recognize a good many Republicans oppose, the trade bill, the youth employment and opportunities bill, aid for higher education, the U.N. bond issue--these are merely some of the bills which are still before the Congress and on which the Congress should act before it goes home. The tax reform, the farm bill-Congress has no farm bill, and we would be reduced to relying on the 1958 act if the Congress doesn't act this year. Now I recognize that the Congressmen who said that the Congress should go home oppose our action in all these areas. But I believe this Congress should stay here and take action on them, and I think it will. But I think we have in that one statement a very clear indication of what the issue is going to be this fall, those who are opposed to action on all these fronts and those who feel that there should be action. The choice, of course, will belong to the American people.

[5-] Q. Mr. President, was the decision of the Ways and Means Committee to open hearings on the tax cut, proposed tax cut, taken at your recommendation?

THE PRESIDENT. No, I had a consultation with Chairman Mills. I'm not sure that the description of the purposes of the hearing are exactly the ones that--as I understand it they're looking at the economy and getting recommendations from various groups. I discussed it with Congressman Mills and it was his decision and that of the Committee but I thought it was useful.

[6.] Q. Mr. President, several times recently you expressed concern about the gold drain. Why does the United States, of all of the major nations in the world, permit foreign holders of its currency to exchange it for gold, and while this practice continues, even if we achieved a balance of international payments, would we be able to stop the drain of gold?

THE PRESIDENT. If the United States refused to cash in dollars for gold, then everyone would go to the gold standard and the United States, which is the reserve currency of the whole free world--we would all be dependent upon the available supply of gold, which is quite limited.

Obviously, it isn't enough to finance the great movements of trade today and it would be the most backward step that the United States has taken since the end of the Second World War. We have substantially improved our position this quarter, the second quarter over the first quarter. Our loss is down to almost a third of what it was in the first quarter. Our loss, based on the first and second quarter of this year, is about half of what it was last year, and about a third of what it was the year before. We hope that we can bring our balance of payments into balance by the end of next year.

We are not going to devalue. There is no possible use in the United States devaluing. Every other currency in a sense is tied to the dollar; if we devalued, all other currencies would devalue and so that those who speculate against the dollar are going to lose. The United States will not devalue its dollar. And the fact of the matter is the United States can balance its balance of payments any day it wants if it wishes to withdraw its support of our defense expenditures overseas and our foreign aid.

[Telstar's transmission of the conference ended at this point.]

Now, these have been undertaken, and we have put over $50 billion into Europe alone since 1945. We are not requesting them to do anything but to meet their responsibilities for their own defense, as we are helping to meet them. We spend $1.5 billion in the defense of Europe and the NATO commitments. Thirty percent of the infra structure of NATO is paid for by the United States. We don't object to that. We are not going to devalue. We are going to be able, we think, to bring our balance of payments into balance by the end of next year, and I feel that those who hold dollars abroad have a very good investment and-we have over $16.5 billion here in the United States; we have over $50 billion held by American citizens in investments overseas. This country is a very solvent country. So that I feel it requires a cooperative effort by all those involved in order to maintain this free currency, the dollar, upon which so much of Western prosperity is built.

I have confidence in it, and I think that if others examine the wealth of this country and its determination to bring its balance of payments into order, which it will do, I think that they will feel that the dollar is a good investment and as good as gold.

[7.] Q. Mr. President, a great many people are giving their opinion of the domestic economy. Could you give us your evaluation at this time?

THE PRESIDENT. No. I think that--as you know, there are some indications which are very good and some indications which are disappointing. I've said from the beginning that I think we can probably get a better look at what prospective actions the Congress and the Executive should take when we get the July figures. We can make a better determination then as to whether we are in a plateau, or whether this is a period which would require more vigorous Executive action. Some of the profit reports which came out last weekend showed that some of our major companies are making the highest profits in their history. In fact, as you know, General Motors, RCA, and others were far beyond--50 to 75 percent above last year. There are encouraging indications--auto sales, consumer purchases have held up. Investment is down. Housing has been down. They've been, as I say, a mixed bag, and I think we can get a better look at where we're moving when we get the July figures in early August.

[8.] Q. Mr. President, there's been some confusion over what Arthur Dean did or did not say at Geneva a week ago. I wonder if you can clarify for us whether he was suggesting that it might be possible to enforce a nuclear test ban without going into the Soviet Union?

THE PRESIDENT. That's not the position of the United States at this time. As you know, there has been additional information gathered as a result of our underground tests, in the ability to detect an underground test at a range, and to distinguish between an underground test and an earthquake. This material which has just come through the Defense Department is being studied by the Disarmament Agency, the State Department, and the Defense, and whatever information we have will be made available to the disarmament conference at Geneva very shortly. The national governmental considerations of this information should be concluded by the end of this week. It is information which is in a sense encouraging as to our ability to distinguish. But whether we can do--the range at which we can do it, the sharpness of the distinction, what kind of instruments would be required, what would be the role of inspectors themselves--those will have to wait until our conclusions in the next few days.

[9.] Q. Mr. President, I think you welcomed the President of Ecuador to Washington today, and you mentioned a moment ago the expense of this Government in the defense of Europe. I wondered if you feel that countries such as Ecuador and others are getting enough help from Europe in their economic and social development programs?

THE PRESIDENT. Well, what concerns me is not only this question of whether sufficient aid has been given. As you know, actually there hasn't been aid in the sense that we understand it. There've been some long-term loans, but at reasonably high rates of interest. What has concerned us most about Latin America has been the fact that these countries are nearly all of them dependent upon very few commodities. Ecuador itself is dependent really on the export of three commodities; these prices have been dropping in the same way that coffee has been dropping. They are dependent upon the European market, and we are concerned that the Common Market will be open and 'not take restrictive steps against the importation's from Latin America, which would increase greatly their already very, very serious problems. So that what we are most concerned about now is not the question of aid, but rather that Europe will be open to the commodities of Latin America--the bananas, the cocoa, the coffee, and the others upon which these countries depend. Otherwise, their foreign exchanges are going to drop out of sight and you're going to have more and more desperate internal situations. So we're asking Europe to make the Common Market, as I've said from the beginning, an increasingly open institution which radiates prosperity, and not a closed shop with particular ties to former colonial possessions in Africa. But this is, of course, a matter we must negotiate with the Western Europeans, and I'm sure that Monsieur Monnet and others who have been so instrumental in developing the Common Market, share this view of an expanding free world economy.

[10.] Q. Mr. President, some have criticized the administration for withholding aid from the military dictatorship which has taken over Peru, and at the same time asking Congress for permission to give aid at your discretion to Communist dictatorships such as Yugoslavia and Poland. Do you feel free to discuss with us reasons for this distinction?

THE PRESIDENT. Well, at the present time the President of Peru is imprisoned. President Prado, who was a guest of this Government a short while ago, and who was a guest of Franklin D. Roosevelt during World War II, is in prison. We are anxious to see a return to constitutional forms in Peru, and therefore until we know what is going to happen in Peru, we are prudent in making our judgments as to what we shall do.

We think it's in our national interest, and I think the aid we're giving in the other areas is in our national interest, because we feel that this hemisphere can only be secure and free with democratic governments. We wish that were true behind the Iron Curtain, and it is to encourage a trend in that direction that we have given some assistance in the past, and advocate it now.

[11.] Q. Mr. President, the Congo appears to be receding rather than progressing towards integration.

THE PRESIDENT. That is correct.

Q. Do you have thoughts on this and what might possibly be done?

THE PRESIDENT. Yes, we have been very concerned about the Congo because we have been unable to reach an accord between the Katanga and the Government of the Congo and all and time is not running in favor of the Adoula Government. It has very little funds. The great resources of the Congo are in the Katanga. Mr. Tshombe and Mr. Adoula have been unable to get together. This is very, very serious. The Union Miniere, the company which controls these vast resources in the Katanga, pays its taxes just to the Katanga, not to the central government. It leaves Mr. Adoula without resources. It has weakened his position and I think that those who are sympathetic to the Katanga's effort are liable to find complete chaos in the rest of the Congo. So that I support the United Nations effort there to encourage the integration of those areas on a reasonable and responsible basis. The United States stands very strongly behind that policy and I'm hopeful that under the leadership of U Thant we can make that policy effective, with the support of Mr. Adoula and Mr. Tshombe, who will come to see that together this country can be viable, and separate it will be chaotic.

[12.] Q. Mr. President, Dr. Martin Luther King said yesterday that you could do more in the area of moral persuasion by occasionally speaking out against segregation and counseling the Nation on the moral aspects of this problem. Would you comment on this, sir?

THE PRESIDENT. I made it very clear that I'm for every American citizen having his Constitutional rights, and the United States Government under this administration has taken a whole variety of very effective steps to improve the equal opportunities for all Americans, and will continue to do so.

[13.] Q. Mr. President, in the absence of any agreement on Berlin, could you discuss with us what the consequences might be were the Russians to go ahead now and sign a separate peace treaty with East Germany?

THE PRESIDENT. Well, I would rather not look into that clouded crystal ball because, of course, our rights to Berlin are based upon World War II and the agreements coming out of World War II, and are not subject to unilateral abrogation. But I think I'd rather talk about what we can do to work out an equitable solution rather than to talk about what might happen under these conditions. At the present time we are still talking with the Soviet Union, still negotiating, and I think that we ought to continue on that track as long as we possibly can before we consider where we are going to go on other roads.

Q. Mr. President, are you making any progress toward a direct telephone line to Mr. Khrushchev for use in case of emergency?

THE PRESIDENT. I have not done that, no. We have communications with the Soviet Union. I think the problem is not at the present time communications. The problem is that there is a difference of viewpoint. We understand each other, but we differ.

Q. In that same connection, sir, could you tell us anything about your talk with Ambassador Dobrynin and whether or not this was the beginning of perhaps a series of direct consultations between you and the Ambassador?

THE PRESIDENT. Yes. I hope to see Ambassador Dobrynin periodically. Mr. Khrushchev is seeing our Ambassador fairly frequently. And I think that it's useful in order to indicate our viewpoint. I've said for a long time that any study of history, particularly of this century, shows the dangers of governments getting out of touch with each other and misunderstanding each other. Therefore, I want to be sure that we have the closest understanding of our position and of their position. These meetings, I think, help indicate what we believe and also they are very helpful to me in hearing an exposition of the Soviet viewpoint. So I will continue to see him.

[14.] Q. Mr. President, according to Dr. Gallup's latest poll, there's been a sharp rise in pro-Republican sentiment in the Middle West and a parallel or opposite drop in your popularity stock of about 10 points. Do you have any explanation of your own for this phenomenon, if it is one, and does it bother you with the administration facing now a mid-term election?

THE PRESIDENT. Well, I think it said I dropped personally from 79 percent to 69 percent. I think that if I were still 79 percent after a very intense congressional session I would feel that I had not met my responsibilities. The American people are rather evenly divided on a great many issues and as I make my views clearer on these issues, of course, some people increasingly are not going to approve of me. So I dropped to 69 percent, and will probably drop some more. I don't think there is any doubt of that.

President Eisenhower, I think, in the November election of 1954 was down to 58 percent. But he survived, and I suppose I will.

Now, as to the congressional drop, I thought it was abnormal in the winter, before the Congress began. I think what the American people have to understand is that the Republican Party, by and large, with very few exceptions, has opposed every measure that we have put forward, whether it's in agriculture, whether it's in medical care, whether it's in public works, whether it's in mass transit, whether it's in urban affairs. And they have been joined by some Democrats who for a great many years have opposed a good many Democratic programs.

Now this grouping has cost us--we lost Medicare, a change of 2 votes would have won it, and in the House a change of 10 votes would have passed our farm bill. And that's why this election in November is a very important one. If the American people are against these programs, then of course they'll vote Republican, and we will have a state of where the President believes one thing and the Congress another for 2 years, and we'll have inaction. There are those who believe that is what we should have. I do not. That is why I think this election is quite important. I think the choice is very clear, in other words. November 1962 presents the American people with a very clear choice between the Republican Party which is opposed to all of these measures, as it opposed the great measures of the 1930's, and the Democratic Party--the mass of the Democratic Party-the administration, two-thirds or three-fourths of the Democratic Party, which supports these measures. Fortunately, the American people will have a choice. And they will choose, as I have said, either to put anchor down or to sail. So we'll see in November.

Q. Mr. President, do you plan any reprisals against the Democrats who haven't supported you?

THE PRESIDENT. No, I think that most of the Democrats who have not supported me are in areas where--are in one party areas. And what I am going to do is attempt to elect, to help elect, Democrats, though I've never overstated what a President can do in these matters. I'm going to help elect Democrats who support this program. The areas I will be campaigning in are seats where there will be a very clear choice between Republicans who oppose these actions and Democrats who support them. That's where I am going to go.

[15.] Q. In view of the increase in strikes and other major labor disputes, could you tell us, sir, why you have not yet sent up a labor message, and when you intend to do so?

THE PRESIDENT. I don't think there has been an increase in strikes.

Q. I think the figures show they are up this year over last year.

THE PRESIDENT. Well, these figures are still very limited in the amount of strikes. There was a serious one out in California in the construction trade that went on for some length of time. But we are attempting to use the powers which have been given to us, and also particularly the Mediation and Conciliation Service, and the Secretary of Labor, and myself to attempt to bring about peaceful solutions. We will continue to do that. If I thought there were any congressional power that would assist us, then I would ask for that, but I'm not aware or any strike which we've had this year, which would have been settled more amicably and more responsibly by an additional grant of power by the Congress.

[16.] Q. Mr. President, there are reports that President de Gaulle is irritated over your swift appointment of Gen. Lyman Lemnitzer to be Commander in Chief of U.S. Forces in Europe upon the retirement of General Norstad on November 1. Would you please tell us if you have received the same reports, and also give us your opinion on whether the next Supreme Allied Commander of NATO should necessarily be an American?

THE PRESIDENT. General Norstad informed me in May when he was here that he wished to retire this fall. After that, during the Secretary of State's visit, and by other means, we discussed this matter with other governments, including the French Government, to find out whether they wished--if it was in their view satisfactory to have an American appointed. Now we were informed that they accepted the appointment of an American, and supported it. Then when General Norstad came this time to see me, it was arranged that his resignation would become effective October 1, and we then sent in the name of General Lemnitzer, who is our senior military officer, and a distinguished one.

So that I am not aware that there was haste in the matter of naming an American, or nominating an American which is after all the responsibility of the North Atlantic Council. And quite obviously if the North Atlantic Council asked us to nominate an officer, I would nominate our senior officer, General Lemnitzer, who is very adequately equipped to deal with these matters.

Now, I've seen some stories that might suggest a contrary view, but the fact of the matter is General Lemnitzer could have retired in October and there would have been a vacancy as Chairman of the Joint Chiefs of Staff. Therefore, when I nominated him to be the Commander of American forces in Europe and also indicated that if we were invited by the North Atlantic Council to nominate an American, that he would be our nominee. I did it with complete freedom, because I felt that after working with General Lemnitzer for a year and a half, he was the best officer for that position at this time.

Now, I am sorry that General Norstad is leaving. He did an extraordinary work, and he was particularly--I found his judgment to be particularly reliable during this last spring, and I think every one in Europe shares the same feeling of confidence. I think that they'll develop the same confidence in General Lemnitzer. So I'm not sure that the stories are wholly accurate.

[t7.] Q. Mr. President, in your January economic report you said that if demand falls short of current expectations a more expansionary policy will be pursued. Actually, sir, as you know, demand has fallen substantially short of your target for the past 6 months. I wonder if you can tell us what the factors are that have caused you to postpone taking action to stimulate the economy.

THE PRESIDENT. I think I made that rather clear, that we are waiting until the end of July, the July figures. The expansionary policy which we've talked about is in the area of a tax cut, which is a matter, of course, which must go through the Congress. And I think the Congress, as well as the administration, would want to be convinced that this remedy, which is not an easy one and which can be very controversial, that this remedy is the most desirable at this time. And I think that as long as the figures are as mixed as they are, as long as there are such strong differences of opinion among people who are well informed about where the economy is going, I think that it's wiser to wait for the July figures to see if that will give us a clearer picture. Because we may be in a plateau which may carry through 5 or 6 months to January of next year, when we've proposed a tax cut anyway, or we may be in a different period. But there are all kinds of figures and many of them are contradictory.

As I said, the profit figures for the first half in some industries are extraordinary. The consumer purchasing power is held up. What has been particularly disappointing has been investment, and we have to consider whether a tax cut, and if so, what kind of a tax cut, would stimulate investment, if that becomes our need. This matter is so complicated, must go through so many different committees of the Congress, and will be subject to the most careful scrutiny, that we want to be convinced that the course of action we're advocating is essential before we advocate it.

[18.] Q. Mr. President, the other day Gunnar Myrdal, the Swedish economist, said in Stockholm, after a return from a visit to the United States, that he regarded it as inexcusable for so rich a country as ours to have so many slums, to have inadequate schools, and lacking a variety of social services. And he described our economy as stagnant and he traced the roots of this alleged stagnancy to the Eisenhower administration. Would you care to comment on this estimate of our situation?

THE PRESIDENT. Well, I think it is regrettable that we have not been able to develop an economic formula which maintains the growth of our economy. If we were moving ahead at full blast today, of course you would have full employment. Also, he made the point that a stagnant economy falls heaviest on the Negroes, who, of course, are the first out of work and the last re-employed. I think he felt that the emphasis upon the traditional budget had served us ill. I have been exploring that question somewhat myself.

[19.] Q. Mr. President, on the political front, what is your goal in November, given the fact that despite the big Democratic majority currently, you're having a lot of trouble? Does that mean your goal is to increase the House Democrats, say by 20, and the Senate by some number?

THE PRESIDENT. Well, as you know, we lost 20 seats in 1960. As I've said before, the rules fight, which I regarded as a very important one in January 1961, we won by only 5 votes, with 19 Republicans. Now, we don't get any Republicans any more for any measure--with the exception of the trade bill, and even there the leadership opposed us--but fortunately I think a good many Republicans realized that this was not a party issue, but a national issue. And I hope that they feel the same way in the Senate, because I regard it as such, and the bill has equal sponsorship from the Republican and Democratic sides. So we put that and the aid bill outside of the political dialog, fortunately.

But I would like to see us win even a few seats. I am not as ambitious as your figures would indicate, because history is so much against us. If we can hold our own, if we can win 5 seats or 10 seats, it would change the whole opinion in the House, and in the Senate, because we lose by 5 votes. There really isn't a measure before us that I don't think we couldn't pass with a change of 5. That was the farm bill and the same is true in the Senate on Medicare, a change of 1 or 2 seats in the Senate. So we're not required to do any more than hold our own and gain between and 10 seats. Now that, of course, is going to be an extremely difficult job and has been done, I believe, since the Civil War only twice--in this century, of course, only once.

[20.] Q. Mr. President, now that the U.S. image is being transmitted instantaneously overseas by Telstar, do you think the U.S. networks should make a greater effort to do something about the "vast wasteland"?

THE PRESIDENT. I'm going to leave Mr. Minow to argue the wasteland issue.

[21.] Q. Mr. President, the other day after the Medicare vote, you said that a handful of Democrats voted against you. There were 21. This prompts two questions: wasn't it a pretty big handful, and won't this tend to inhibit you in setting this forth as an issue?

THE PRESIDENT. No. Two-thirds of the Democrats voted for it, a third of the Democrats voted against it. About six-sevenths or seven-eighths of the Republicans voted against it. So that this combination of almost total Republican opposition with a third of the Democrats defeated us by 52 to 48.

Now the issue in November, every seat that is being contested between Republicans and Democrats, really, I would say, in 80 percent or 90 percent of the cases, would be between those who oppose Medicare and those who are for it. So that there isn't any doubt that there is in a party as large as the Democratic Party those who do not support a good many of the programs. The alliances may change but, of course, we lose a third or a fourth, and we have since 1938. But the fact of the matter is this administration is for Medicare and two-thirds of the Democrats are for Medicare and seven-eighths of the Republicans are against it. And that seems to me to be the issue.

Reporter. Thank you, Mr. President.