Conversation No. 554-7

Date: August 4, 1971
                                               21

                            NIXON PRESIDENTIAL MATERIALS STAFF

                                      Tape Subject Log
                                        (rev. 10/06)
                                                                 Conv. No. 554-6 (cont.)


Time: 2:19 pm - 2:55 pm
Location: Oval Office

The President met with John B. Connally.

     Connally’s schedule
         -Forthcoming trip

     President’s schedule
          -Trips
                -Workload
                      -H. R. (“Bob”) Haldeman

     Unknown reading material
         -Cartoon [?]

     Economy
         -Press conference
              -Connally's assessment
              -Foreign policy
              -Wage and price policy
                    -Arthur F. Burns and George P. Shultz
                         -Pay increase
                    -Burns
                         -Monetary and fiscal policy
                         -Agreement with the President

Stephen B. Bull entered at an unknown time after 2:19 pm.

     Shultz’s [?] arrival

Bull left at an unknown time before 2:55 pm.

                      -Duration
                           -Left-wing theories
                                 -John Kenneth Galbraith
                           -Performance or short-term
                      -Need for enforcement procedures
                      -Bureaucracy
                      -Penalties
                      -Secretary of Labor [James D. Hodgson]
                                     22

                NIXON PRESIDENTIAL MATERIALS STAFF

                             Tape Subject Log
                               (rev. 10/06)
                                                                 Conv. No. 554-7 (cont.)


                  -Negotiations
            -National Commission on Productivity
                  -Forthcoming meeting
            -Enforcement
            -Government action
                  -Connally’s line
            -National Commission on Productivity
            -Cooperation with Congress
            -Scope
                  -Small and big business
            -Enforcement
                  -Wage and price board
            -Need for action
            -Business
-Negative impressions
      -News magazines
      -Wall Street
      -Consumer Price Index [CPI]
      -Leading indicators
            -Retail sales, silver standard, housing, construction, inventories
-Unemployment rate
      -Figures
      -Estimates
            -Burns
-Burns
      -Inflation
-International market action
      -Gold window
      -French action
            -Impact on exchange rates
                  -Belgium, Netherlands
                        -Swiss
      -Swiss proposal
            -Two rate system
            -Penalties
                  -French business
                        -Dollar speculation
      -Dollar intake
            -Switzerland, Belgium, France
      -French action
            -Valery Giscard D'estaing's recent speech
                                  23

               NIXON PRESIDENTIAL MATERIALS STAFF

                          Tape Subject Log
                            (rev. 10/06)
                                                           Conv. No. 554-7 (cont.)


                -Holding dollars
                -Control on dollar speculation
    -Stock market
    -British
    -Japanese
    -France
          -West Germany
    -Dutch, Belgians
          -Impact of policies on US
          -International Monetary Fund [IMF]
-Domestic economy
    -Psychological impression
          -Figures
          -Need for change
          -Prognosis
          -Connally's meeting with Charles W. Colson, Peter M. Flanigan, Paul W.
                McCracken
          -Pessimism
                -Congress and media
                -Negative factors
                      -International conditions
                      -Dollar's standing
                      -Steel settlement
                -Pierre Rinfret's comments
                      -Investment tax credit
                            -Political strategy
                                   -Memoranda’s business
                            -Wilbur D. Mills
          -Critics
                -Interest rates
                      -Inflation
    -Money supply
          -Interest rates
          -Prime rate
          -Meeting
                -Connally and bankers
                      -Lockheed
                      -Bank of America
                            -[Louis B. Lundborg]
                      -Morgan guarantee
                -American Bankers Association
                                   24

               NIXON PRESIDENTIAL MATERIALS STAFF

                           Tape Subject Log
                             (rev. 10/06)
                                                         Conv. No. 554-7 (cont.)


                      -Connally’s remarks
                            -Interest rates
                -Investment bankers
                      -Connally's remarks
    -Turning point
    -Change in attitude
    -Need to face problems
          -Congress
          -International
          -Defense
          -Space
          -Demobilization
                -Employment
          -International
                -Japan
                      -US automobile industry
                            -Ford, Chevrolet, Plymouth
                            -Datsun, Toyota
                -Germany
                      -Volkswagen
          -Textiles
    -President’s focus
          -Foreign affairs
          -Domestic affairs
                -Business community
    -Connally's recommended response
          -Timing
                -Japanese businessmen’s meeting
                      -Possible cancellation
                            -David M. Kennedy’s view
                      -Dinner with the President
                -Forthcoming IMF and World Bank
                -President's press conference
                      -Connally’s statement
                      -Burns
          -Need to turn tide
                -Connally's stampede analogy
                -Lack of Congressional allies
                -Democratic Congress
-Unemployment during Democratic administration
    -Lack of publicity
                                              25

                          NIXON PRESIDENTIAL MATERIALS STAFF

                                      Tape Subject Log
                                        (rev. 10/06)
                                                                Conv. No. 554-7 (cont.)


               -Placement of blame
          -Michael J. Mansfield's statement
               -1960's conditions
          -Contact with Shultz

     Reorganization
          -Burns
               -Federal Reserve Board [FRB]
                     -Fear of takeover by Treasury Department
          -Ash Council
               -Office of Management and Budget [OMB]
                     -Shultz
          -Shultz’s suggestion
               -Burns
                     -Control banker

Shultz entered at an unknown time after 2:19 pm.

     Edwin S. Cohen's meeting with Connally
         -Larry Woodruff and Mills
         -Proposed tax program
               -Tax code
                     -Timing
               -Import tax
               -Investment tax credit
               -Shipping taxes
                     -Liberian, Panamanian, Greek ships
               -Shipping tax
               -Standard deduction raise
               -Value-added tax
               -Property tax reduction
               -Depreciation on new plant equipment
               -Cohen’s response
                     -Morale of division
               -Connally's response
               -Woodruff and Mills
                     -Similarity of views to Administration’s
               -Cohen
                     -Previous tax bill
               -Interest in preparing law
                     -House Ways and Means Committee
                                             26

                          NIXON PRESIDENTIAL MATERIALS STAFF

                                     Tape Subject Log
                                       (rev. 10/06)
                                                                         Conv. No. 554-7 (cont.)


                -Cohen

Manolo Sanchez entered at an unknown time after 2:19 pm.


**********************************************************************

BEGIN WITHDRAWN ITEM NO. 4
[Personal Returnable]
[Duration: 17s ]


END WITHDRAWN ITEM NO. 4

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Sanchez left at an unknown time before 2:55 pm.

          -Cohen
               -Interest in politics
                     -Value-added tax

     Busing
          -Dallas
               -John D. Ehrlichman
               -President's statement [on Austin case, August 3, 1971]
                     -Dallas
                           -Press coverage
               -Administration plan
               -Importance
               -Austin

     Economy
         -Connally
         -Pressures for action
              -Rinfret
                    -Tax reform
         -Negative impressions
              -News media
                    -Time, Newsweek, New York Times, Washington Post
                                               27

                          NIXON PRESIDENTIAL MATERIALS STAFF

                                      Tape Subject Log
                                        (rev. 10/06)
                                                                            Conv. No. 554-7 (cont.)


                      -Reaction to President’s foreign policy initiatives
                      -1972 election
                -Partisan split
                      -Foreign policy
                            -People’s Republic of China [PRC] initiative
                                 -Democrats
                -Psychological recession
                      -Unemployment
                      -Inflation
                -Consumers
                -Business community
                      -Attitude
                            -Inventories
                -Publicists
                      -Effects
                -Administration response
                      -Wage and price controls
                      -Consumers
                -Negative attitude
                      -Time, Newsweek, Dun's, Rinfret, Fortune

Sanchez entered at an unknown time after 2:19 pm.


**********************************************************************

BEGIN WITHDRAWN ITEM NO. 5
[Personal Returnable]
[Duration: 9s ]


END WITHDRAWN ITEM NO. 5

**********************************************************************


Sanchez left at an unknown time before 2:55 pm.

     Economy
         -Negative impressions
              -Business leaders and politicians
                                    28

                NIXON PRESIDENTIAL MATERIALS STAFF

                            Tape Subject Log
                              (rev. 10/06)
                                                      Conv. No. 554-7 (cont.)


     -Television
           -Dan Rather
     -Need to counteract
-Proposed administration actions
     -Timing
     -President’s press conference answers
           -Wage and price board
           -National Commission on Productivity
     -Timing
           -Holding action
           -Congress
                -Return from recess
           -Budget
                -Blue-collar workers
           -House Resolution [HR] 1
           -Symbolism
                -Fiscal restraint
     -Import tax, excise tax, investment tax credit
     -Investment tax credit
           -Percentage
     -Research and development
     -Budget
           -Space program cutbacks
                -Jobs
                       -Manned space flights
                             -Symbolism
                       -Cost
                       -Scientific value of flights
                       -Manned space flights
                -H. R. 1
                       -Russell B. Long
     -Wage and price freeze
           -Import tax
                -Inflation
           -Enforcement
           -Comprehensiveness
           -Possible study
                -Possible leaks
                       -Consequence
           -Recommendations
                -Jacob K. Javits and allies
                                  29

               NIXON PRESIDENTIAL MATERIALS STAFF

                          Tape Subject Log
                            (rev. 10/06)
                                                           Conv. No. 554-7 (cont.)


                       -National Commission on Wages and Prices
           -Wage and price board
                 -Connally’s view
                 -Shultz's view
                       -Problem of removal of freeze
                 -Guidelines
-Negative impressions
     -Wage and price freeze
           -Psychological effect
           -International
           -Stock Market
           -Newspapers
                 -Chicago Tribune
                 -Texas
                 -Ohio
                 -Iowa
     -Shultz's meeting with Senators
           -Gordon L. Allott
                 -Colorado unemployment rate
                 -Budget deficit
     -Administration’s response
           -Psychological terms
           -World War II analogy
           -Press
           -Ezra T. Benson
           -Symbolism
-Wage and price freeze
     -Impact
     -Duration
     -Wage and price board
     -Price increases
     -Timing
           -Connally's recommendations
                 -Separate imposition on as part of package
                       -Political aspect
           -President’s view
                 -Reasons for delay
                       -Thorough analysis
                       -Avoiding precipitous action
                       -Congress’ return
                             -Connally’s recommendations
                                    30

                NIXON PRESIDENTIAL MATERIALS STAFF

                            Tape Subject Log
                              (rev. 10/06)
                                                              Conv. No. 554-7 (cont.)


                                  -Forthcoming meetings
                                        -Japanese visitors
                                        -Finance ministers and central bankers
                                              -Consultation with governments
                            -Closing gold window
                -Confidentiality
                      -Peter G. Peterson
                      -The President, Connally, Shultz
                      -H. R. (“Bob”) Haldeman
                      -Line
                            -Budget
          -Controls
                -President's instructions to Shultz
                      -Treasury, Commerce Departments and FRB
                      -Equalization tax
                            -Congress
                -Division of responsibility
                      -Office of Emergency Preparedness [OEP]
                            -Contingency plans
                            -Wage and price board
                -Study proposal
                      -Republican request
                      -Testimony
          -Administration
                -OEP
                      -Bureaucracy
                -Treasury Department
                      -Internal Revenue Service [IRS]
                      -Secret Service
                      -Banks
-Administration proposals
    -Woodruff
    -Excise tax
    -Property tax reduction
    -Budget
          -Revenue sharing
                -Future Congressional action
                -Personal exemptions
                      -Investment tax credit
                -Mills
                      -President’s bill
                                               31

                            NIXON PRESIDENTIAL MATERIALS STAFF

                                       Tape Subject Log
                                         (rev. 10/06)
                                                                   Conv. No. 554-7 (cont.)


                                  -Health insurance
                                  -Tax proposals
                                  -Health insurance
                            -Timing
                      -Strategy
                            -Spending delay
                 -Nelson A. Rockefeller
                 -Significance
                 -Connally’s metaphor
                 -Wage and price board
                      -Timing
                            -Freeze
                      -Political appeal

Connally left at an unknown time before 2:55 pm.

     President’s schedule
          -Burns

     Economy
         -Public psychology
         -Burns
              -Statement
         -Democratic action
         -August 1971
         -Burns

Shultz left at 2:55 pm.