Nixon, Shultz & Mitchell on Economic policy and Wage and price freeze

9:39We got a full weekend, not this week that we're in, but the week before that.
9:46Friday and came back Sunday.
9:50It was nice.
9:51Enjoyed it and relaxed and didn't really do anything much.
9:58Played some golf with Bill and Rose came down and spent the afternoon and evening with us.
10:04They're about two hours away and we just sort of
10:08Lonesome Grown's a little stuck to this morale.
10:11He talked to me about this gold idea that I think Bob talked to you about, and we're working on that, the business of the right of a citizen to hold gold.
10:26And so we're trying to see what the legal aspect and also the substantive aspect is.
10:33I'll send Ryan Moran over to John Connolly, I guess, on it as well as keeping you posted on it.
10:38It's very impressive.
10:41It's sort of a, from all I can figure out, it just wouldn't make any particular difference at all.
10:47But it's something that, I mean, substantively, it just doesn't cut any ice one way or another.
10:54Yeah.
10:55But it could make a splash with a group that's been upset.
11:01Sure, sure.
11:04But Milton is very pleased with the international moves and with the tax and expenditure determination.
11:16And, of course, he's very upset about the wage and price business.
11:19It probably upsets him even more that...
11:24are kind of psychologically that this all goes along with the talk that the free enterprise system has failed and now that we're going to have a managed economy from here on, that we have to have a managed economy.
11:38This hasn't worked, and that first killed Milton, and I told him that the president was about to buy that.
11:45I don't know.
11:46I don't know.
11:49I don't know.
11:52Well, I, uh, yesterday afternoon had a, uh, backgrounder that Chuck arranged, and they, they had him in today's papers.
12:00Oh, that's, that was the story I was going to end on.
12:06That's good.
12:06And, uh, I, they asked if this was a presidential decision, and I said, well, we haven't had a big brief and options and so on for the president, but, uh, he's familiar with these arguments, and we didn't think it was a question worth considering.
12:19That's right.
12:20And, uh,
12:21That's the way that stands.
12:23But what you wanted was the three tax changes that you proposed, and that was that.
12:29And they raised other kinds of tax questions, and I said that in your speech you talked about other tax things, but this isn't the time for that.
12:42You may have some things to propose next year, but these are three simple, clear, easy, well-known things
12:51and they're not complicated to do, don't need a lot of debate, and they point us to them promptly.
13:02We have a few lingering issues you ought to talk about them.
13:09First of all, on the West Coast longshore strike, Bridges came in yesterday with a proposal on this jurisdictional issue about who loads the
13:22cargo into containers.
13:23It's divided the Teamsters and the Pacific Maritime Association of Bridges.
13:29So the proposal that the PMA is quite agreeable to.
13:34And they took it in.
13:36I think they're a little worried about how the Teamsters are going to react.
13:41But if they react negatively, that can be a matter for the National Labor Relations Board.
13:47At any rate, the chances are very strong that
13:51about in their meeting this morning, California time, the PMA will accept that bridge's proposal, and they have a scheduled meeting with them.
14:06So by this afternoon, our time, we should know whether or not that is the case, but it all looks very good.
14:12The current council information is that there's a
14:20quite a good chance that with that, Bridges will put people back to work without an agreement on wages, pensions, and so forth.
14:31That's not for sure by any means, but that's a strong possibility on the grounds that he couldn't negotiate an increase during the freeze, so people might just as well go back to work, and he will then be negotiating
14:48during the balance of the freeze time for the contract that they'll have after that.
14:55So I think there's at least a strong probability that we'll get those people back to work by the time the weekend is over.
15:03If they aren't, and this should somehow fall apart, then we'll be prepared with whatever further information there is, but we'll also
15:15have the necessary work done to go ahead with Taft-Hartley.
15:18If you should decide that you want to do that, you have to have amputated so there's an emergency to go on.
15:25We're working that stuff out.
15:29So we'll be ready to move in whatever direction.
15:32But the Taft-Hartley route is, is, uh,
15:40right now anyway, resisted by employers, the PMA, and also other California employers.
15:46So Hudson tells me that the PMA, particularly, since their experience is that when they have a test, the workers go back to work, but they don't do much work.
15:58So they get paid, but they don't do much, and it's a big losing proposition for the employers.
16:08But anyway, I think that that's
16:10shaping up.
16:15We have one issue that I'd like to get your okay on as far as the budget cuts are concerned.
16:24In one way or another, we find that we can get us now to about $4.9 billion.
16:30So we're in good shape as far as the $4.7 billion is concerned that we started out for at Camp Davidson.
16:41We have a snag with respect to an item that is small, relatively in dollars, but which has a big symbolic significance to it.
16:53And that's the cutback of 50% in the OEO Community Action Grants.
16:59That is worth about $62 million.
17:06In the law,
17:08We're now, of course, operating on a continuing resolution, but in the law that sets up OEO and in the both versions of the OEO extension that are now current House and Senate, there's a earmark that sets a lower limit on what the flow of funds can be to community action.
17:30As it says, if OEO spends more than this amount, then community action must get some.
17:37And we have pushed them down to that floor in the regular budget.
17:49So we're on very shaky legal grounds to push them down below that floor.
17:55I think apparently there can be an argument about whether during a period of a continuing resolution we can do that.
18:04And a lawyer can make a case that we are all right, but apparently it's quite a shaky case.
18:11And I wondered if, in view of that, and in view of the fact that the line of attack being made on the new program is that it favors the business at the expense of the poor and so on, whether you want to take that on.
18:32There's two ways.
18:33We can handle the $4.7 billion all right with this.
18:42And I know at the same time there is the point about wanting to take the OEO on.
18:50I think there's going to be plenty of opportunities to do that, and I just wonder whether this is the one.
19:00Please take some of them off.
19:02We can be sure that we're right down to that floor that is specified, and we don't spend a dime over that.
19:14That much we can be sure of.
19:16My impression is that that is what we did in the budget season as such, but I can go back over that ground and be absolutely positive on that.
19:24Well, just squeeze it on in.
19:26I'll put it that way if you're good.
19:33Next week we'll be testifying on the new program.
19:37John, I believe, goes Wednesday and I go Thursday.
19:43And, of course, I'll be asked about the budget aspects of it.
19:48And I think we have a major strategy question on whether we, in effect, show a new 1972 budget.
19:58That is, whether we give a reassignment of the
20:02total outlays and the total receipts as we now see them, and with an estimate of the deficit as we now see it.
20:11The deficit, as it's now being estimated by the technicians, is in the neighborhood of $29 billion.
20:25I have some questions in my mind about that.
20:27I think they're being overly pessimistic about profits.
20:31Profits are a big swing item in the way these revenues come in.
20:36But, and of course, we don't know.
20:40I don't control that now.
20:43You can avoid it.
20:47What would be the argument for doing it now rather than later?
20:54The argument, well, the argument for doing it would be that
20:59Most of the appropriations have been passed, so we know that.
21:03We can't argue that they haven't.
21:04We still have the big defense bill to come, but we can simply assume the president's budget and then say what would happen if that passed, if exactly what you recommended passed.
21:17That's, you know, all of our budget presentations.
21:22We always assume the president's budget unless the president has changed it or the Congress has changed it and said,
21:29signed by the president.
21:30That's what the OMB comes to say, so we can do that.
21:34Given that, it's not difficult to calculate what the outweighs are, and lots of people have done it.
21:44Proceeds is more tricky, partly because you have to refigure what you think the GMT is going to be.
21:55And, of course, we can
21:56We can say that we have a new program.
21:59We think it's going to produce strong results.
22:04We want Congress to act.
22:05We want them to act promptly.
22:07We don't know how promptly they're going to act.
22:09The more promptly they act, the better it's going to be.
22:13But this is an uncertainty, and we think there's a pretty wide range of possible revenues to handle it like that, but the outlay is out there.
22:26But the argument would be that we do know pretty well what the facts are.
22:33We presumably do have an estimate.
22:38We had an estimate prior to the new action.
22:42Presumably we thought about the new action and we figured out that it would stimulate things and so on.
22:47So we ought to tell about that.
22:50And that...
22:52that numbers are widely circulated and we might just as well hit it now.
22:56It's likely to be better than what is now estimated rather than worse.
23:01And why don't you do that?
23:03It's probably putting out a number that takes into account the new action in the arsenal.
23:14And they're going to give us some of it and not all of it and so forth.
23:17And if they don't, we change it then.
23:20Could you do that?
23:22Yes, we can concentrate on the change.
23:24We can say, this is the tax change, this is the expenditure change.
23:27We can then estimate it as a 25, whatever it is.
23:31I don't know how much it should be.
23:36We can give a rate, or we can give a number.
23:42I would give a more optimistic number on it.
23:44But it would be a little pessimistic later.
23:45I don't know what it is.
23:52Having in mind the fact that we've got all these actions there, and the Congress delays things, I wouldn't worry about whether or not our, shall we say, our bullet judgments are ever going to be wrong.
24:21and why they might need more.
24:28Would you do that, or is it better not to do it?
24:30Well, let me work at it on the notion that you don't want to have a gigantic deficit that gets up in the neighborhood, up so close to $30 billion, and $30 billion is not a good number, but that we will probably want to say something about it
24:48but to leave it a little bit loose and let me try to work out a formulation, a testimony, and then talk to you again about it.
24:54In the meantime, I'll talk to John about it when he comes back.
24:57Well, you know what to do with it.
25:00I know what your restrictions are.
25:01Just give the best recommendation you can.
25:16Generally what we've done in things like this is not with the kind of chart that we've used with you and the Camp David meetings and so on, but
25:34testimonies say, here's where the President's budget started, and here's what's happened to it as a result of congressional action and uncontrollables and so on, and the outlays have built up.
25:44And then here's the receipt, and here's what's happened to them as a result of tax changes and this and this and this.
25:53That's where they end up.
25:53And here's the full employment revenue.
25:56We'll have to be our... We are surely in a position of accepting a full employment debt, and I don't see how we
26:03Well, I think prior to now, we could say it was because of congressional action.
26:12From August 15, the decisions are by way of saying that we could have just reduced the budget by $4.7 billion and taken the surcharge and not made any other tax changes.
26:32and brought the budget into full employment balance, if that had been your decision.
26:37So you had it within your power to do that, and you didn't.
26:41So I think in that way, we have more or less accepted it.
26:49Although I guess the way I would be inclined to put it in the testimony is that as a result of congressional actions we got to hear on the full employment budget basis,
26:59And the President is determined to stay as close to that as he can.
27:02And that's why it's so important to have this care on the expenditure side to go with a simulation.
27:08We don't make what you people have done worse.
27:12And we give ourselves a chance to get into balance as we get into 73 and 74 when we expect to be operating here on point.
27:19And that's the way I would try to do it.
27:22But I think we're going to get there.
27:23As most people probably think it's going to be that.
27:30I know that this isn't the time to have any
28:00big discussion of the phase two operation.
28:06But obviously, that's a big discussion, a big problem.
28:10And I think there is sort of a level of discussion about it that says we want prices to go up by no more than 2%.
28:26Productivity might go up 3%, or maybe a little more.
28:31And some of that's due to inter-industry shifts and occupational shifts.
28:37And so, therefore, you add the 2%, 3% to the 2%.
28:40You're going to do prices or wages of 4% or maybe 5%.
28:46And that's what your standard is.
28:49And you have that level of discussion.
28:53That is what Ackley and Okun and others are putting forward.
28:56And there's that kind of a guideline.
28:58That's what ARCA wants.
29:01There's another way of thinking about it, and I'll just put it in terms of the problem as it worries me.
29:10Let's take the Harry Bridges business that we were just talking about.
29:15Harry has, on the table from the employers right now, 37% for three years.
29:22That's only because nobody thought
29:26there was any point in it that the employers haven't put more money on the table.
29:29They've been dying to put the money on the table, and we've told them, don't do it.
29:33You're not going to get an agreement with it, so save it.
29:36So everybody knows that there's over 40% in three years in that contract.
29:42Now, when the freeze ends, Bridges will get that contract, I presume, in some way.
29:50The employers will want to have it.
29:54They aren't resisting it.
29:56And we've had a long enough strike out there.
29:58We don't want to have the strike start up again.
30:01So there we are.
30:03How do we handle that?
30:04And it's just way out and beyond 5%.
30:08And then we have, and we talked about some in Camp David, the East Coast docks, the coal miners and so on there.
30:15They're going to come in for this.
30:18Well, what that, I think, suggests is that
30:23And another way of going about this is in terms of labor and management people and what do they think is a realistic way to approach the problem of getting things into better and better shape, sort of the way you did in the construction industry, where the posture was not what is the ideal and let's get into that,
30:51But the situation is bad now.
30:54Let's see if we can't make it better.
30:57And maybe gradually we can get it toward the ideal, but the big thing is to start making it improve.
31:05So there are these different ways of looking at the meeting and all the labor leaders pretty much.
31:15Maybe the Senate?
31:16Well, they...
31:22very much favor the second approach.
31:24I think they would just draw up their hands and have nothing to do with an approach that is like the Kennedy approach and the guidelines.
31:35In fact, Meany said to me, he said, talking about public members who are good people on the public side, which you have confidence in, I asked him.
31:46And he said, well, first of all, nobody from Brookings, not Oakland, not Ackley,
31:52Not Helen.
31:53We won't have anything to do with any of those guys.
31:55Well, that's because those people preach to the labor people and they know how the world ought to be.
32:04And he doesn't quite see how that world will work and puts up problems like the Bridges problem and the Gleason problem and so on.
32:16So I don't think they would go for the enunciated guidelines
32:23I don't mean to rule that out because they wouldn't go for it.
32:27It's something that you could do and try to hold them accountable.
32:32And whether that would satisfy the desire for a realistic and working system following the freeze, I think, is a real question.
32:52come all the way to this great guideline.
32:56Well, I wouldn't say that too quickly because I'm talking.
33:03He's been away this week, but the messages from him and what he said on other occasions are along the line that we have to have a guideline that is a low rate of settlement.
33:20Now,
33:21We'd all like that.
33:23I'd like that.
33:24And maybe that's what we should do.
33:27But I don't think it's going to command labor support.
33:33And maybe we... And there is a lot of sentiment for saying, well, now's the time to crack labor.
33:39Make them put up a ridiculous... Well...
33:48Somewhere there has to be a goal set.
33:51I think that's for sure.
33:52And it has to be something that is a long-term thing that we can live with.
33:58And then the arithmetic is relentless.
34:01If you say 2% inflation is what your goal is, and then you just have so much productivity, and that's that.
34:10And some wage changes have to get into that line.
34:13You can say wage changes must...
34:21Or you could conquer them some in the same way.
34:27Well, you can get mixed in with productivity.
34:33And there are ways in which it seems to me if you have the right kind of labor management group, they might divide all kinds of
34:42ways to get around things and so on, which you recognize are probably that, but nevertheless, this is a big cosmetic gain to a considerable extent.
34:51And you say, where people have made extraordinary gains in productivity, why expect that to be shared with the workers?
34:59And so you then have something called productivity bargaining.
35:06There's no question regarding me and the labor leaders generally that we
35:11are looking down their throat from a public opinion standpoint.
35:14The problem is that, whatever that may be, we can still confront the fact that they, an involuntary system has to volunteer.
35:28That's right.
35:29That's the reason we can't put them on fire.
35:33Well, we want to let them all out and be good politicians.
35:39I think that
35:42they need to be taken on in the context of the administration having fed over backwards to be reasonable and to have tried hard to put together a package and some machinery that genuinely tried to consult with them and give them a voice and so on, then it seems to me you can't be faulted.
36:12at least my own instinct is, any kind of machinery that includes public representation is sooner or later going to get into a posture where labor will walk out on it.
36:25And the question is, when do you want to have that blow up?
36:31If you want to know what we'll save in free markets and free collective bargaining, it'll be labor.
36:36Yeah, I appreciate it.
36:41We knew we were walking into this, didn't we?
36:43It was what I call a lot of thinking to it.
36:48My general feeling is to just leave as much room as we can.
36:53And politically, to put it simply, to play the laborer as the bad boy here.
37:01If that's a good idea, then have it in mind.
37:14I had a long session with many individuals and I think Bob reported that too.
37:20I haven't done anything more about that or talked to any other labor people pending your own feeling about how we should proceed but I think that if it were thought to be a good idea a meeting could very easily be arranged
37:42that mean you would be quite agreeable to involving, let's say, the labor and management members of the Productivity Commission, plus the head of the NAM and the Chamber and Fitzsimmons, or a group like that, with some public participation, and have an assignment.
38:02What do you people think?
38:04They'd come up.
38:05We know fairly well what they'd come up with.
38:08So that could be put together fairly.
38:11although I haven't made any moves to do that.
38:13There are all sorts of other things that could be put together.
38:20The labor people get a great deal out of a war labor board, wage stabilization board type of setup, tripartite setup, because, first of all, they will
38:39insist on what they call equity that is and they're two dimensions that one is the deferred increases get made up and i think that they'll absolutely insist on that there's no way around that a second that where you find people who have gotten less than the average they should be brought up to the average now i think there are two aspects of that one is that of course
39:07That means that the net impact of this machinery, for anybody who will be realistic about it, is that average wages are going to be higher than they would have been without the machinery.
39:20And that's one of the clashing problems with this.
39:23Second is that since many of these lower-paid people are non-union, it puts the union in a very strong position for organizing those workers.
39:34Because they go and they say, well, you see, this is the way you get represented.
39:38Well, that is a problem with this kind of thing.
39:45And, of course, government workers being focused on in the policies will be a special target for drumming by the unions and organizational activities and so on.
39:57So there is...
40:03Well, another approach is not to have this overall board kind of thing, but to have maybe some kind of general group, but industry by industry groups, and use the construction industry thing as a model, and just have one for...
40:22or industries where it's felt that we have problems.
40:25And we're not going to try to be comprehensive.
40:28Yeah.
40:29I defer the latter just as little as we can have.
40:35Well, certainly.
40:36I mean, I feel, I mean, because I don't think it'll work.
40:42I'm just trying so much.
40:45And I don't know what cosmetic.
40:46I think we can goosey it up, probably,
40:51gussied out so it wouldn't look cosmetic enough.
40:54I kind of lean in service to the latter.
40:57The least, the less formalized it is, the better.
41:01If I didn't go fight it, it gave enough insurance to those that are concerned about the crisis and business and so forth.
41:18Well, it has to be
41:19something that people will say is a serious effort.
41:23Yeah.
41:24And we will do certain things if they don't come around.
41:28And the people who don't come around, we'll clobber them somehow or other if they're serious about that.
41:33And you clobber somebody sometimes, too.
41:41That's the other thing we have to do.
41:42Well, you know, if our thinking is correct and our plans were getting to work anyway, and I guess the work
41:48What's the rate this year compared to last year?
41:50Did it down?
41:51It was quite sharp, .6 to 3.8.
41:53I don't know what it is, something like that.
41:57Well, assuming that's the case, about all week, 3.5.
42:03We may be riding on fucking Broncos at times, ready to be broken.
42:10I hope.
42:10Of course, that wholesale price index is a rather starving number, isn't he?
42:18I think that all of the talk about wage and price intervention of some kind, and the sort of advisory letter that I know John Connolly was showing you one day and you handed to me when I came in here, that raise your prices because there may be something happening.
42:42That is all being reflected in that wholesale price thing, because that's a list price.
42:47I don't have any evidence other than my suspicion that that's what's going on.
42:55But it's a pretty strong case, I think.
42:57The unemployment figure is a disappointing figure.
43:02My reaction when I heard that was, thank God we've got a new economic program.
43:07We'll be suffering.
43:08It would have been a real bomb.
43:09Really, almost catastrophic.
43:13You could have come up to us a few years earlier and been talking to us.
43:17then everybody would have squealed for something, just exactly the wrong thing, when it's spent $50,000 or more.
43:22No, I think that the whole thing has come off you.
43:28On that, too.
43:28It just may be that I don't water down the sun.
43:41Unless we're in one of those spaces where the workforce is growing considerably faster
43:48Well, that rise was large, but it wasn't exceptional.
43:56And we have this continuing difficulty with the problem of seasonal adjustment.
44:01And it's just, it's a difficult technical problem when you have a very large number.
44:06I went to look at the numbers, 61, 2, and 3, month by month, to see if they had any wild escalations.
44:13I remember recalling they did, but I couldn't follow them.
44:17Yeah.
44:21We also have a big statistical problem about the freeze, that is to figure out what the statistics mean.
44:30And we've put together a little group to work on that, and we've been trying to alert people like Ed Dale and so on that now you better be aware that the freeze has a special impact on statistics.
44:44For example,
44:46seasonal adjustments based on normal patterns at a particular time of year are very likely to be affected by the freeze because you've injected a big massive thing that's supposed to affect wages and prices we hope will affect sales and employment and so on and so your usual seasonal pattern will apply well but some season was there and how much is there well no one is ever going to be able to say exactly so it'll be a
45:15difficult thing to interpret.
45:17Some of the indexes will be mixed in the sense that the consumer price index, you know the food at home component of that is collected early in the month and other parts of the index are collected later in the month.
45:36So some of it is collected after the freeze and some before.
45:41And so on.
45:42So there are a lot of these kinds of things.
45:44And we're going to have to prepare for having that there month-plus termology.
45:49Something to have it go up this time of year.
45:51You can see it.
45:52Why don't you just glance at the figure, please.
45:57The problem here, here's a civilian labor force.
46:00The change is in it.
46:03By month, 71.
46:04And you can see that was growing.
46:07And here's the big influx of
46:10teenagers into the labor force in june and july and then slackens off in august and that you can sort of explain that well then they try to adjust it seasonally and here's where all the statistical argument was yeah it went up a lot but didn't go up as much as usual so there was a huge drop in the labor force i see then there was a rise well that's a pretty darn good sized rise that's a lesser rise
46:39But when you put it in the light of this, and you look at the .
46:44So now rather these things can wash themselves out, but they're also difficult to do.
46:48How's that for money?
46:50Mainly in terms of you just gotta be sure that that number starts coming down.
46:54Well, it's just got to come the retail sales.
46:59I saw the retail sales on paper this morning.
47:02They've been moving along and the real deal of the new policy will not come in two weeks.
47:10You know, people don't pick up their minds that fast.
47:14Their decisions regarding buying a car made in a day, they're usually made in a couple weeks.
47:23Now that it's going to move this next month, I think that it will move pretty good.
47:30Well, I can't help but believe it's going to be very strong.
47:36And then it will move down.
47:39And we'll have, at least my guess is, next year at this time, what we'll have is a clear, unambiguous boom.
47:51no question that the economy is expanding our problem will be inflation and it'll be very important to be in the stance of being the guy who was against inflation yeah one way or another and that's partly keeping the fiscal structure in reasonable shape and giving attention to that and and having it well
48:19If the damn thing just gets out of line again, and if there's enough public sentiment to slap on another wage price freeze, I hate my health to go and start jeering around with an economy.
48:31Well, I want to say one thing for sure, though.
48:32What we have done is sort of so right about the international situation.
48:36We've gotten into a bargaining position now.
48:43We're off that silly business of international monetary crisis.
49:01It's having a great effect, and if there's anything at all for the confidence business, we've got it.
49:14It was a curious thing that the day the NFL figures came up, I noticed the stock market went up a couple of points.
49:21Yeah.
49:22Unbelievable, isn't it?
49:24It was good, though.
49:26Before Labor Day.
49:28It's there again.
49:29It's sitting up there.
49:34Well, next month will be quite a month.
49:37Senate, House back, arguing, fighting.
49:41We may keep a lot of momentum going now.
49:45Well, I think that was the reason why it seemed to me some kind of move, possibly this address that Ping worked on.
49:56Congress?
49:56Before Congress, as a way of keeping that initiative and keeping them on the spot.
50:01Because they'll try to rip us right.
50:04You know, I've seen the two drafts that they've had so far.
50:12The Hershey moves.
50:15It does have the notion of calling a labor and industry group together.
50:41And that was one reason why I mentioned this phase two business, because I think before you say that, that wasn't where you really want to go on that.
50:58The cost of living council, even an executive session, I don't think is a very good forum for discussing the phase two.
51:06You've just got too many people.
51:09and uh to me that's probably something very very mixed group how does it work oh it's working working fine all the time i saw hartman last time he seemed to be very thrilled about being on yeah oh yeah everybody and the tenants is good at the meetings and we go in there we decide these ridiculous things that uh just what if spanish spanish arguing that we ought to relax and live in everything
51:38Sort of.
51:38He argues the business case on everything.
51:41Well, the hell with that.
51:42The dividend thing is, my God, I don't want anything but problems with the dividend.
51:47There's no excuse for it.
51:48There's no harm to do it.
51:49He's on board on that.
51:51And we sent out telegrams yesterday to these firms that are supposedly raising him and calling him in here to tell us why.
51:58No, sir.
51:59No, sir.
52:03but Murray tends to argue that's not the case.
52:07But you get such things as, here we have, here's a typical thing to do in a freeze, and this is why you can't have a freeze for very long, our new little Enterprise Amtrak, you know, the railroad passenger thing.
52:24They come along in the pre-Amtrak time.
52:28Most of the railroads have one.
52:34to have less passengers, they were trying to discourage it.
52:37But they didn't do things of salesmanship, sort of like giving a reasonable commission to a travel agent to sell a ticket, and making it easy for you to buy a ticket, and so on, the way the airlines have done.
52:50So Amtrak comes along and they say, well, we want to get control on the train.
52:55And let's have reasonable commissions.
52:57Well, that's a violation of the freeze.
52:59So we don't do it.
53:02We don't care about that.
53:03What are your views about the government?
53:07Weber, he's doing a good job.
53:10He's terrific.
53:12Just sensational.
53:15He's doing a good job.
53:16He has pitched in, worked hard.
53:19He has...
53:26Well, they would appreciate it.
53:29Weber is around in Lincoln.
53:31His family's in Chicago, and he's going this afternoon.
53:36Oh, he's been good.
53:37He's done a very good job, substantively, and then he makes a terrific appearance.
53:43He's on the Today Show every Thursday.
53:46He describes himself as the Captain Kangaroo in The Cost of Living Castle.
53:52But we, there's no question that the Senate and the country, though, is strong for it.
54:01Yes, it's overwhelming.
54:02Yesterday in Chicago, they sort of think it's their patriotic duty to hold the price that way.
54:09Yeah, yeah.
54:10So I think that's good.
54:11I don't mean, I don't mean that others live on it too long.
54:16It's people who leave patriotic, so they're,
54:21self-interest and disgust for me, compared with, but there was, for reasons that were no harder contributed to it in arms than some on hand in the media.
54:35But we were in the sidelines, so.
54:40That's unbelievable.
54:41You hadn't done much down with these figures, but doing this, George, it just, what did you do?
54:50I read what the economists are all saying.
54:55They're all confused, too.
54:56They don't know what to tell them.
55:02Go ahead, go.
55:03You want me to get a hold of Weber, Lincoln, or do you want to leave out?
55:08Why don't you come in with them and we'll get through it this fall.
55:17Yeah, exactly.
55:19So you've got them together, if you would.
55:22There are two, aren't there?
55:25You've got them together.
55:26Paul McCracken has been acting in John Connolly's place.
55:30I'd like to bring him in, too.
55:32Maybe he could come in, too.
55:36All right.
55:37Fine.
55:38Why don't you stay at 1030 for a brief meeting so I can call him.
55:42Okay.
55:42I appreciate the long work.
55:44I'll take off in a couple of hours.
55:50Mr. President, we don't bring our problems over here, but we've got one that I thought you'd better consider.
56:04No, it's this Will Wilson situation.
56:08Will?
56:08Wilson.
56:09Oh, yeah, yeah.
56:19I don't know how much you know about it.
56:24Well, Will, of course, is a former Attorney General, Chief Justice of the Supreme Court of Texas, ran against Conley.
56:34He's always had a tremendous reputation down there.
56:38Good law enforcement officer.
56:40He's done a good job in the Department of Justice, absolutely straight and square, aggressive.
56:47Now the sharp business comes out.
56:51And the reason that I'm bothering you this morning is that Time magazine...
56:59They're going to chop him up.
57:01They're going to chop him up in their... Well, this has been done.
57:07I don't know if Time will or not.
57:10I imagine they will.
57:12But they have a story.
57:16which is true, to the effect that Sharp, who owns a bank down there, did own the bank, bought some electronic gear, not telephone tapping, but the listening devices, put it into the bank for their own purposes.
57:38Then the examiners of the federal and state banks got in there
57:44They were overheard on this material.
57:48The president of the bank sent the bill over to Wilson's law firm, $2,500.
57:54He paid the damn bill and got a fee for the $2,500.
57:59So it looks on the record like Wilson was involved in the shenanigans of bugging the federal and state bank examiners.
58:09So this is what Time was going to put into that paper.
58:15I firmly believe that Wilson is an honest, able citizen, but he has had these combination of things develop in his relationship with Sharp, which certainly casts a very bad light on it.
58:32Now, the other side of the coin where I think you have a prime and vital interest is the politics in Texas.
58:40As you know, this Sharp thing has
58:43just about destroyed the Democrat Party down there and will continue to as it builds up.
58:51Wilson, of course, is involved with Sharpe, the governor and the Speaker of the House and the head of the Democratic Party, et cetera, et cetera.
59:03So we have the hard choice to make as to whether to admit that Wilson has a lawyer for Sharpe
59:14was involved with the Sharpe situation, which of course he was in some of these areas, not illegally.
59:21There's never been anything illegal done.
59:25Or we can toss him to the wolves and get him out of here and say he's just part of that Texas so-and-so and then we're losing the stroke that we have in Texas with the leg up on the Democrats.
59:41So it's a choice that
59:43uh is rather difficult and of course i've been quite close to this picture and i thought it was something that i would run by you and see if you've got some reactions to it connolly and i have talked about this situation from time to time and particularly in
1:00:13trying to take care of his boy, Ben Barnes, to see that he didn't get.
1:00:17He's in it, you know.
1:00:24He is not involved in the fixing of the legislation like the other Democrats are, but he's got a lot of things to answer to down there.
1:00:36Now, what Wilson has done, he has done all except one thing, has done as a lawyer for Sharpe.
1:00:43When he was out of public office, he borrowed some money, which was a damn fool idea because he could borrow the money from any place because he's got a net worth of a million and a half dollars.
1:00:55It's just that he had been borrowing from the...
1:00:58He has really three things that are disturbing.
1:01:02Borrowing the money, which of course is not illegal or immoral or unethical.
1:01:10He bought that stock
1:01:13in National Bankers Life at the request of Sharpe, transferred it over to this bank examiner, and Wilson claims that he just did this as a favor, that he didn't know whether he was a bank examiner or a friend of Sharpe's.
1:01:28He was represented as a friend of Sharpe's.
1:01:31And this stock was bought before Sharpe had owned any interest in National Bankers Life, and Wilson had been trading in it.
1:01:38That was the stock that Shivers had in that company at the time.
1:01:42That and this running through of the bills on the bugging equipment are the three things that can be criticized.
1:01:52None of them are illegal, but the inferences can be made reasonably clearly that Wilson was involved with Sharpe more than just being a lawyer.
1:02:04That's the inferences that are drawn from.
1:02:08Now, Wilson,
1:02:10in both of these cases, claims, and with some justification based on his secretary's records, that he didn't know anything about these transactions.
1:02:21They were just done as an accommodation to a client.
1:02:26If that's the case, why, everybody's going to say, well, he's pretty damn naive.
1:02:33Well, what's the effect on the Democrats?
1:02:35Is it to wash the case out on them and Wilson as well?
1:02:40uh they will try and do this this gonzalez the congressman you know has got a pr firm writing some stuff for him and he's beaten up on wilson all the time because he can't uh demonstrate that anything's illegal or immoral it's just the inferences that come out of it and they draw these inferences
1:03:04Yeah, down locally they are.
1:03:06The newspapers are doing that, and so are some of our so-called spokesmen in Texas.
1:03:14What's Tower?
1:03:17Tower, the last time I talked to Tower on it was two weeks ago, I guess.
1:03:26Tower's opinion is that, and of course, remember, he recommended Wilson and is close to Wilson.
1:03:34close politically.
1:03:35Tower says that we're 90-10 in the political battle, that they don't believe Gonzales.
1:03:45Will Wilson's had a great reputation, you know, as law enforcement and so forth, and unless and until Wilson has actually proven to have committed something, they think that this is the political return.
1:04:11Of course, one of the things that they hit us with, these newspapers that don't bother going to the facts, is that here is the Justice Department, the Nixon administration, standing for law and order, and you have this fellow who is mixed up with this guy.
1:04:29By the way, apparently Sharpe was quite a supporter of Connolly.
1:04:35I guess he was, of all the politicians down here, because of the way he was.
1:04:38He was clever enough not to be in it, but you know what I mean?
1:04:42All those sections are that way, John.
1:04:45I wouldn't be surprised.
1:04:47I'd be surprised if I didn't need to work, so I guess I wouldn't ask for him.
1:04:51I hate him.
1:04:52I could go to him, of course, but I'm a bitch.
1:05:04That's the one side of the coin.
1:05:07Here's a guy that's spent his life in public service.
1:05:12So you rule him?
1:05:14Yeah, basically.
1:05:16Sure, you can accept his resignation, and he can say that he's resigning to go down and clear his name, et cetera, et cetera, et cetera.
1:05:25But it gets... What does he mean?
1:05:28What does he suggest to you?
1:05:33What he suggested yesterday afternoon, that if he could find a way to get out of the administration and save some part of his reputation, you know, the natural approach, he'd do anything, but he'll do anything for you anyway.
1:05:57He recognizes the problem
1:06:01And his greatest chagrin is the fact that he is putting you and the Justice Department in this position by these foolish acts.
1:06:14But as I say, my coming to you is because I'm too close to the thing, and I don't think I can judge it on a proper basis.
1:06:30Thank you.
1:06:32First it's gone along with the whole idea that we have to be as pure as the earth and snow on the other side to get away from murder.
1:06:41I mean, I think that we live to be more than, better than they are, because basically we are.
1:06:44You know.
1:06:45And I look back on that ad, I was saying, you know, it was just ridiculous to allow ourselves to be influenced by that person, but to get to fight with a coach and throw him off the
1:07:00It was horrible.
1:07:04It showed a lack of fortitude.
1:07:05It was disgusting.
1:07:07And it was also poor damn politics.
1:07:09It was poor politics.
1:07:12They now call it the Adams scandal.
1:07:20I was just writing that truth for a while.
1:07:24What good does it do to get out and let time run their piece?
1:07:27I suppose that the next time I have a press conference, they'll say, I want your confidence in Mr. Wilson.
1:07:34Or you have a press conference.
1:07:36What about Mr. Wilson?
1:07:39Is that a point?
1:07:43No, I have no problem with that.
1:07:45As a matter of fact, if I were to make the decision based on what has gone before in this creeping paralysis,
1:07:55I don't believe that this particular event of time is going to add that much more to it.
1:08:03I think that we can take the position publicly that Mr. Wilson has not done anything illegal or immoral.
1:08:11And the minute he does, or if he had done, or if it was disclosed that he had done, we would be the first ones to act.
1:08:20But until that time, there is no sense of...
1:08:24wasting or losing the services of a very able prosecutor, which Wilson has been, both in state and local, because of past services rendered in connection with some client that turned out to be less than moral or honest.
1:08:47If... Oh yes, yes.
1:08:50The only thing he did while he was in government
1:08:53was to borrow some money.
1:08:56And this is rather a funny story.
1:08:58It's tragic in fact.
1:09:00He borrowed the money when you said if you had money, you would buy some stocks.
1:09:07Wilson had $70,000 in cash.
1:09:10He borrowed $30,000, $35,000, whatever it was, and went into the market at that low ebb and bought the stock.
1:09:16But as he explains that,
1:09:22He said he could have gone to any bank in Texas.
1:09:24He just called up the loan officer in the Sharpstown Bank because he'd been doing business with them for the years when he'd been representing the bank.
1:09:33And I can understand this is plausible.
1:09:37Sure, in fact, it's an unsecured loan.
1:09:38You're wrong.
1:09:39It doesn't need security for a million bucks.
1:09:44A million and a half, most of which he inherited or made in real estate deals in the stock market.
1:09:51I'm beginning to feel that the total sharpening has been fully explored because of the fact that it had the SEC in there, in these transactions, for about nine months.
1:10:08And they have been leaking everything to the press they can get, those local people in the SEC.
1:10:14There has been...
1:10:18I don't know.
1:10:19I don't suppose he feels that he can in this delicate situation that would begin to look like a cover-up.
1:10:27Secondly, they've had a legislative investigative committee going down there, which they've obviously been trying to find something on the other side, the Republican side, and they haven't.
1:10:40They have had three grand juries going, one in Austin, one in Dallas, and one in Houston.
1:10:48and i'm sure if there was anything further they dug up in the and i'm talking about the relationship of sharp to wilson and they're talking about the fact that i believe that he's covering up any illegal activities because if he were we would have thrown him out a long time ago but it isn't a pretty picture because of all the innuendo that can be made from these circumstances
1:11:17correctly short-term interim step uh we can hold this thing to see what the reaction has to the my reaction is to do that to the uh to the magazine right a while and uh if the reaction gets big wilson and salt will come in and say look i'm making this crap
1:11:40I had been inclined to do that.
1:11:42I had never inclined to anticipate trouble unless, be like Cesar's wife, when we learned about this and we're...
1:11:53I had a way a little more of a tough time.
1:11:54We're there because of the taste of the blood here.
1:11:56I mean, any man, anybody that's been practicing law, I don't think they're going to have something done that perfect client, right?
1:12:05No question about it.
1:12:06That's what he had.
1:12:07And just by way of confession in that area, our firm, you know, represented Bache and Company, which is a big investment, second largest in the country, in connection with a bond issue down in West Virginia a number of years ago.
1:12:24And we've just got a confession out of the governor who was involved in receiving part of a fee that Bache paid a local lawyer.
1:12:34down there in connection with that bondage because the firm, our firm, Wofford, didn't know anything about it.
1:12:39But had you put all this story out on the table, it's just exactly like what Wilson was involved in.
1:12:54I believe he did.
1:13:02I believe we're going to keep these backers scared.
1:13:04I don't want to express to people that they're going to publish documents to ensure a foreign policy.
1:13:12We're going after the sons of bitches.
1:13:15As I've said, I think this is the greatest deterrent possible is the use of that polygraph and let it get out and around that they're going to be used.
1:13:24And I think we ought to use them in a few other places.
1:13:28Well, but with Mr. Cook over in Richardson's office and... Yeah, that's not a glitch.
1:13:34Yeah, you know, they all went off to Alaska for a month or whatever it was, so he wasn't available to be interviewed.
1:13:41But they're after him again now.
1:13:46We've got another hot issue, Mr. President, that I'll... On Wilson's annual issue.
1:13:50For a while.
1:13:51Well, we'll...
1:13:52Right after a while.
1:13:53Yeah.
1:13:53That's your guy's issue.
1:13:54That would be my judgment, yeah.
1:13:57Because we can always, always move, and I think we ought to see how this one plays out.
1:14:03That's a good point.
1:14:05Keep it there in the interim period.
1:14:09Yeah.
1:14:25The other problem is Hoppe and Fitzsimmons.
1:14:34I've met with Fitzsimmons, that son of a bitch, last week.
1:14:39He wants the clemency and the pardon, but he's now made a speech, taped a speech for delivery on...
1:14:50Labor Day in which he's publicly asking you to do this when I told him that this had to be handled very delicately and very gently in consideration of the timing of this.
1:15:01Excellent.
1:15:03So, here's another...
1:15:09You know, he ought to be out, because it's just hotter than a firecracker gun.
1:15:13You can't let a labor leader out, any labor leader out, so to say.
1:15:16Well, let me, here again, I've been fending off this Hoppa thing, as you know, with the police for two hours.
1:15:22I think he ought to be out.
1:15:23I do, too, but as I say, I'm too close to it.
1:15:28Well, they get a little insane at times.
1:15:34But here, you're right, he should be out.
1:15:39There's no reason to keep them in there.
1:15:43Time-wise, they're not gonna reconsider that parole for another nine months or 11 months or whatever it is.
1:15:51You have two factors involved with respect to clemency.
1:15:54One, of course, is campaign support, which is what you would want, but you wouldn't want the public to look at it that way.
1:16:04The other one is labor support
1:16:07labor support for your programs on behalf of the nation and that he could provide that now this this may have to be sold if you decide to do this but here again i would hope that you would have somebody check this out other than me because as i say i i'm so damn sick and tired of hearing about jimmy hopper being in jail and the pressure is on the rest of us
1:16:40The fact is that the second point's a cover, but the first one is that Jimmy Hoffa has more stroke with the members of that teamster than Fitzsimmons will ever have.
1:16:52Oh, yes.
1:16:56And I think with a lot of other rank-and-file labor people around the country, because he's just a tough...
1:17:02beer drinking, no good SOP like most of them are.
1:17:09And they like his swagger, they like his guts, they like his telling off the establishment and George Meany and everything else.
1:17:18Fitzsimmons, who has been pushing me, including out in California, for this clemency, says that he will get a commitment out of Papa that he will never go back into.
1:17:32the disruption of the Union, and that he will go all out in support of you in 1972.
1:17:39He will get those commitments from Hoppe personally, and of course, he will have more stroking connection with him than anybody else.
1:17:48That also would mean that Fitzsimmons would support us in 1972.
1:17:51The problem I think we have, John, is that even if you've got those commitments, it's the other side of all the hell breaking loose.
1:18:00I don't doubt that they'll scream.
1:18:10Well, as I say, somebody should assess the possibility of your, if you want to do it, doing it in connection with the public interest of the country.
1:18:22I'm curious that Simmons, who has done a support review, has come out for it, et cetera, et cetera.
1:18:27As I say, here again, I think I've been too close to it.
1:18:31I think somebody ought to take a look at that.
1:18:34And tell me what you do.
1:18:36Would you mind talking about it with Schultz a little?
1:18:38I mean, he's probably not going to be a sailor.
1:18:43Can we justify that?
1:18:45We don't talk about politics.
1:18:47It's an amazing support for all the different places.
1:18:57I like it.
1:18:59You get, of course, you have Barry Goldwater, Johnny Rhodes.
1:19:03Oh, yes.
1:19:04I've never met him, but I like him.
1:19:10I like him because Bobby Kennedy took him on.
1:19:14Well, the Ruger didn't like him.
1:19:18He couldn't get along with me because there was a conflict of personalities as much as anything else.

Nixon, Shultz & Mitchell on Economic policy and Wage and price freeze

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