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We got a full weekend, not this week that we're in, but the week before that.

Friday and came back Sunday.

It was nice.

Enjoyed it and relaxed and didn't really do anything much.

Played some golf with Bill and Rose came down and spent the afternoon and evening with us.

They're about two hours away and we just sort of

Lonesome Grown's a little stuck to this morale.

He 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.

And so we're trying to see what the legal aspect and also the substantive aspect is.

I'll send Ryan Moran over to John Connolly, I guess, on it as well as keeping you posted on it.

It's very impressive.

It's sort of a, from all I can figure out, it just wouldn't make any particular difference at all.

But it's something that, I mean, substantively, it just doesn't cut any ice one way or another.

Yeah.

But it could make a splash with a group that's been upset.

Sure, sure.

But Milton is very pleased with the international moves and with the tax and expenditure determination.

And, of course, he's very upset about the wage and price business.

It probably upsets him even more that...

are 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.

This hasn't worked, and that first killed Milton, and I told him that the president was about to buy that.

I don't know.

Well, I, uh, yesterday afternoon had a, uh, backgrounder that Chuck arranged, and they, they had him in today's papers.

Oh, that's, that was the story I was going to end on.

That's good.

And, 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.

That's right.

And, uh,

That's the way that stands.

But what you wanted was the three tax changes that you proposed, and that was that.

And 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.

You may have some things to propose next year, but these are three simple, clear, easy, well-known things

and they're not complicated to do, don't need a lot of debate, and they point us to them promptly.

We have a few lingering issues you ought to talk about them.

First of all, on the West Coast longshore strike, Bridges came in yesterday with a proposal on this jurisdictional issue about who loads the

cargo into containers.

It's divided the Teamsters and the Pacific Maritime Association of Bridges.

So the proposal that the PMA is quite agreeable to.

And they took it in.

I think they're a little worried about how the Teamsters are going to react.

But if they react negatively, that can be a matter for the National Labor Relations Board.

At any rate, the chances are very strong that

about in their meeting this morning, California time, the PMA will accept that bridge's proposal, and they have a scheduled meeting with them.

So by this afternoon, our time, we should know whether or not that is the case, but it all looks very good.

The current council information is that there's a

quite a good chance that with that, Bridges will put people back to work without an agreement on wages, pensions, and so forth.

That'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

during the balance of the freeze time for the contract that they'll have after that.

So 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.

If they aren't, and this should somehow fall apart, then we'll be prepared with whatever further information there is, but we'll also

have the necessary work done to go ahead with Taft-Hartley.

If you should decide that you want to do that, you have to have amputated so there's an emergency to go on.

We're working that stuff out.

So we'll be ready to move in whatever direction.

But the Taft-Hartley route is, is, uh,

right now anyway, resisted by employers, the PMA, and also other California employers.

So 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.

So they get paid, but they don't do much, and it's a big losing proposition for the employers.

But anyway, I think that that's

shaping up.

We have one issue that I'd like to get your okay on as far as the budget cuts are concerned.

In one way or another, we find that we can get us now to about $4.9 billion.

So we're in good shape as far as the $4.7 billion is concerned that we started out for at Camp Davidson.

We have a snag with respect to an item that is small, relatively in dollars, but which has a big symbolic significance to it.

And that's the cutback of 50% in the OEO Community Action Grants.

That is worth about $62 million.

In the law,

We'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.

As it says, if OEO spends more than this amount, then community action must get some.

And we have pushed them down to that floor in the regular budget.

So we're on very shaky legal grounds to push them down below that floor.

I think apparently there can be an argument about whether during a period of a continuing resolution we can do that.

And a lawyer can make a case that we are all right, but apparently it's quite a shaky case.

And 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.

There's two ways.

We can handle the $4.7 billion all right with this.

And I know at the same time there is the point about wanting to take the OEO on.

I think there's going to be plenty of opportunities to do that, and I just wonder whether this is the one.

Please take some of them off.

We can be sure that we're right down to that floor that is specified, and we don't spend a dime over that.

That much we can be sure of.

My 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.

Well, just squeeze it on in.

I'll put it that way if you're good.

Next week we'll be testifying on the new program.

John, I believe, goes Wednesday and I go Thursday.

And, of course, I'll be asked about the budget aspects of it.

And I think we have a major strategy question on whether we, in effect, show a new 1972 budget.

That is, whether we give a reassignment of the

total outlays and the total receipts as we now see them, and with an estimate of the deficit as we now see it.

The deficit, as it's now being estimated by the technicians, is in the neighborhood of $29 billion.

I have some questions in my mind about that.

I think they're being overly pessimistic about profits.

Profits are a big swing item in the way these revenues come in.

But, and of course, we don't know.

I don't control that now.

You can avoid it.

What would be the argument for doing it now rather than later?

The argument, well, the argument for doing it would be that

Most of the appropriations have been passed, so we know that.

We can't argue that they haven't.

We 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.

That's, you know, all of our budget presentations.

We always assume the president's budget unless the president has changed it or the Congress has changed it and said,

signed by the president.

That's what the OMB comes to say, so we can do that.

Given that, it's not difficult to calculate what the outweighs are, and lots of people have done it.

Proceeds is more tricky, partly because you have to refigure what you think the GMT is going to be.

And, of course, we can

We can say that we have a new program.

We think it's going to produce strong results.

We want Congress to act.

We want them to act promptly.

We don't know how promptly they're going to act.

The more promptly they act, the better it's going to be.

But 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.

But the argument would be that we do know pretty well what the facts are.

We presumably do have an estimate.

We had an estimate prior to the new action.

Presumably we thought about the new action and we figured out that it would stimulate things and so on.

So we ought to tell about that.

And that...

that numbers are widely circulated and we might just as well hit it now.

It's likely to be better than what is now estimated rather than worse.

And why don't you do that?

It's probably putting out a number that takes into account the new action in the arsenal.

And they're going to give us some of it and not all of it and so forth.

And if they don't, we change it then.

Could you do that?

Yes, we can concentrate on the change.

We can say, this is the tax change, this is the expenditure change.

We can then estimate it as a 25, whatever it is.

I don't know how much it should be.

We can give a rate, or we can give a number.

I would give a more optimistic number on it.

But it would be a little pessimistic later.

I don't know what it is.

Having 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.

and why they might need more.

Would you do that, or is it better not to do it?

Well, 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

but 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.

In the meantime, I'll talk to John about it when he comes back.

Well, you know what to do with it.

I know what your restrictions are.

Just give the best recommendation you can.

Generally 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

testimonies 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.

And 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.

That's where they end up.

And here's the full employment revenue.

We'll have to be our... We are surely in a position of accepting a full employment debt, and I don't see how we

Well, I think prior to now, we could say it was because of congressional action.

From 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.

and brought the budget into full employment balance, if that had been your decision.

So you had it within your power to do that, and you didn't.

So I think in that way, we have more or less accepted it.

Although 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,

And the President is determined to stay as close to that as he can.

And that's why it's so important to have this care on the expenditure side to go with a simulation.

We don't make what you people have done worse.

And 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.

And that's the way I would try to do it.

But I think we're going to get there.

As most people probably think it's going to be that.

I know that this isn't the time to have any

big discussion of the phase two operation.

But obviously, that's a big discussion, a big problem.

And 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%.

Productivity might go up 3%, or maybe a little more.

And some of that's due to inter-industry shifts and occupational shifts.

And so, therefore, you add the 2%, 3% to the 2%.

You're going to do prices or wages of 4% or maybe 5%.

And that's what your standard is.

And you have that level of discussion.

That is what Ackley and Okun and others are putting forward.

And there's that kind of a guideline.

That's what ARCA wants.

There's another way of thinking about it, and I'll just put it in terms of the problem as it worries me.

Let's take the Harry Bridges business that we were just talking about.

Harry has, on the table from the employers right now, 37% for three years.

That's only because nobody thought

there was any point in it that the employers haven't put more money on the table.

They've been dying to put the money on the table, and we've told them, don't do it.

You're not going to get an agreement with it, so save it.

So everybody knows that there's over 40% in three years in that contract.

Now, when the freeze ends, Bridges will get that contract, I presume, in some way.

The employers will want to have it.

They aren't resisting it.

And we've had a long enough strike out there.

We don't want to have the strike start up again.

So there we are.

How do we handle that?

And it's just way out and beyond 5%.

And then we have, and we talked about some in Camp David, the East Coast docks, the coal miners and so on there.

They're going to come in for this.

Well, what that, I think, suggests is that

And 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,

But the situation is bad now.

Let's see if we can't make it better.

And maybe gradually we can get it toward the ideal, but the big thing is to start making it improve.

So there are these different ways of looking at the meeting and all the labor leaders pretty much.

Maybe the Senate?

Well, they...

very much favor the second approach.

I 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.

In 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.

And he said, well, first of all, nobody from Brookings, not Oakland, not Ackley,

Not Helen.

We won't have anything to do with any of those guys.

Well, that's because those people preach to the labor people and they know how the world ought to be.

And 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.

So I don't think they would go for the enunciated guidelines

I don't mean to rule that out because they wouldn't go for it.

It's something that you could do and try to hold them accountable.

And whether that would satisfy the desire for a realistic and working system following the freeze, I think, is a real question.

come all the way to this great guideline.

Well, I wouldn't say that too quickly because I'm talking.

He'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.

Now,

We'd all like that.

I'd like that.

And maybe that's what we should do.

But I don't think it's going to command labor support.

And maybe we... And there is a lot of sentiment for saying, well, now's the time to crack labor.

Make them put up a ridiculous... Well...

Somewhere there has to be a goal set.

I think that's for sure.

And it has to be something that is a long-term thing that we can live with.

And then the arithmetic is relentless.

If you say 2% inflation is what your goal is, and then you just have so much productivity, and that's that.

And some wage changes have to get into that line.

You can say wage changes must...

Or you could conquer them some in the same way.

Well, you can get mixed in with productivity.

And 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

ways 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.

And you say, where people have made extraordinary gains in productivity, why expect that to be shared with the workers?

And so you then have something called productivity bargaining.

There's no question regarding me and the labor leaders generally that we

are looking down their throat from a public opinion standpoint.

The problem is that, whatever that may be, we can still confront the fact that they, an involuntary system has to volunteer.

That's right.

That's the reason we can't put them on fire.

Well, we want to let them all out and be good politicians.

I think that

they 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.

at 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.

And the question is, when do you want to have that blow up?

If you want to know what we'll save in free markets and free collective bargaining, it'll be labor.

Yeah, I appreciate it.

We knew we were walking into this, didn't we?

It was what I call a lot of thinking to it.

My general feeling is to just leave as much room as we can.

And politically, to put it simply, to play the laborer as the bad boy here.

If that's a good idea, then have it in mind.

I had a long session with many individuals and I think Bob reported that too.

I 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

that 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.

What do you people think?

They'd come up.

We know fairly well what they'd come up with.

So that could be put together fairly.

although I haven't made any moves to do that.

There are all sorts of other things that could be put together.

The 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

insist 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

That 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.

And that's one of the clashing problems with this.

Second 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.

Because they go and they say, well, you see, this is the way you get represented.

Well, that is a problem with this kind of thing.

And, 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.

So there is...

Well, 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...

or industries where it's felt that we have problems.

And we're not going to try to be comprehensive.

Yeah.

I defer the latter just as little as we can have.

Well, certainly.

I mean, I feel, I mean, because I don't think it'll work.

I'm just trying so much.

And I don't know what cosmetic.

I think we can goosey it up, probably,

gussied out so it wouldn't look cosmetic enough.

I kind of lean in service to the latter.

The least, the less formalized it is, the better.

If I didn't go fight it, it gave enough insurance to those that are concerned about the crisis and business and so forth.

Well, it has to be

something that people will say is a serious effort.

Yeah.

And we will do certain things if they don't come around.

And the people who don't come around, we'll clobber them somehow or other if they're serious about that.

And you clobber somebody sometimes, too.

That's the other thing we have to do.

Well, you know, if our thinking is correct and our plans were getting to work anyway, and I guess the work

What's the rate this year compared to last year?

Did it down?

It was quite sharp, .6 to 3.8.

I don't know what it is, something like that.

Well, assuming that's the case, about all week, 3.5.

We may be riding on fucking Broncos at times, ready to be broken.

I hope.

Of course, that wholesale price index is a rather starving number, isn't he?

I 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.

That is all being reflected in that wholesale price thing, because that's a list price.

I don't have any evidence other than my suspicion that that's what's going on.

But it's a pretty strong case, I think.

The unemployment figure is a disappointing figure.

My reaction when I heard that was, thank God we've got a new economic program.

We'll be suffering.

It would have been a real bomb.

Really, almost catastrophic.

You could have come up to us a few years earlier and been talking to us.

then everybody would have squealed for something, just exactly the wrong thing, when it's spent $50,000 or more.

No, I think that the whole thing has come off you.

On that, too.

It just may be that I don't water down the sun.

Unless we're in one of those spaces where the workforce is growing considerably faster

Well, that rise was large, but it wasn't exceptional.

And we have this continuing difficulty with the problem of seasonal adjustment.

And it's just, it's a difficult technical problem when you have a very large number.

I went to look at the numbers, 61, 2, and 3, month by month, to see if they had any wild escalations.

I remember recalling they did, but I couldn't follow them.

Yeah.

We also have a big statistical problem about the freeze, that is to figure out what the statistics mean.

And 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.

For example,

seasonal 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

difficult thing to interpret.

Some 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.

So some of it is collected after the freeze and some before.

And so on.

So there are a lot of these kinds of things.

And we're going to have to prepare for having that there month-plus termology.

Something to have it go up this time of year.

You can see it.

Why don't you just glance at the figure, please.

The problem here, here's a civilian labor force.

The change is in it.

By month, 71.

And you can see that was growing.

And here's the big influx of

teenagers 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

But when you put it in the light of this, and you look at the .

So now rather these things can wash themselves out, but they're also difficult to do.

How's that for money?

Mainly in terms of you just gotta be sure that that number starts coming down.

Well, it's just got to come the retail sales.

I saw the retail sales on paper this morning.

They've been moving along and the real deal of the new policy will not come in two weeks.

You know, people don't pick up their minds that fast.

Their decisions regarding buying a car made in a day, they're usually made in a couple weeks.

Now that it's going to move this next month, I think that it will move pretty good.

Well, I can't help but believe it's going to be very strong.

And then it will move down.

And we'll have, at least my guess is, next year at this time, what we'll have is a clear, unambiguous boom.

no 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

If 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.

Well, I want to say one thing for sure, though.

What we have done is sort of so right about the international situation.

We've gotten into a bargaining position now.

We're off that silly business of international monetary crisis.

It's having a great effect, and if there's anything at all for the confidence business, we've got it.

It was a curious thing that the day the NFL figures came up, I noticed the stock market went up a couple of points.

Yeah.

Unbelievable, isn't it?

It was good, though.

Before Labor Day.

It's there again.

It's sitting up there.

Well, next month will be quite a month.

Senate, House back, arguing, fighting.

We may keep a lot of momentum going now.

Well, I think that was the reason why it seemed to me some kind of move, possibly this address that Ping worked on.

Congress?

Before Congress, as a way of keeping that initiative and keeping them on the spot.

Because they'll try to rip us right.

You know, I've seen the two drafts that they've had so far.

The Hershey moves.

It does have the notion of calling a labor and industry group together.

And 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.

The cost of living council, even an executive session, I don't think is a very good forum for discussing the phase two.

You've just got too many people.

and 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

Sort of.

He argues the business case on everything.

Well, the hell with that.

The dividend thing is, my God, I don't want anything but problems with the dividend.

There's no excuse for it.

There's no harm to do it.

He's on board on that.

And we sent out telegrams yesterday to these firms that are supposedly raising him and calling him in here to tell us why.

No, sir.

but Murray tends to argue that's not the case.

But 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.

They come along in the pre-Amtrak time.

Most of the railroads have one.

to have less passengers, they were trying to discourage it.

But 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.

So Amtrak comes along and they say, well, we want to get control on the train.

And let's have reasonable commissions.

Well, that's a violation of the freeze.

So we don't do it.

We don't care about that.

What are your views about the government?

Weber, he's doing a good job.

He's terrific.

Just sensational.

He's doing a good job.

He has pitched in, worked hard.

He has...

Well, they would appreciate it.

Weber is around in Lincoln.

His family's in Chicago, and he's going this afternoon.

Oh, he's been good.

He's done a very good job, substantively, and then he makes a terrific appearance.

He's on the Today Show every Thursday.

He describes himself as the Captain Kangaroo in The Cost of Living Castle.

But we, there's no question that the Senate and the country, though, is strong for it.

Yes, it's overwhelming.

Yesterday in Chicago, they sort of think it's their patriotic duty to hold the price that way.

Yeah, yeah.

So I think that's good.

I don't mean, I don't mean that others live on it too long.

It's people who leave patriotic, so they're,

self-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.

But we were in the sidelines, so.

That's unbelievable.

You hadn't done much down with these figures, but doing this, George, it just, what did you do?

I read what the economists are all saying.

They're all confused, too.

They don't know what to tell them.

Go ahead, go.

You want me to get a hold of Weber, Lincoln, or do you want to leave out?

Why don't you come in with them and we'll get through it this fall.

Yeah, exactly.

So you've got them together, if you would.

There are two, aren't there?

You've got them together.

Paul McCracken has been acting in John Connolly's place.

I'd like to bring him in, too.

Maybe he could come in, too.

All right.

Fine.

Why don't you stay at 1030 for a brief meeting so I can call him.

Okay.

I appreciate the long work.

I'll take off in a couple of hours.

Mr. President, we don't bring our problems over here, but we've got one that I thought you'd better consider.

No, it's this Will Wilson situation.

Will?

Wilson.

Oh, yeah, yeah.

I don't know how much you know about it.

Well, Will, of course, is a former Attorney General, Chief Justice of the Supreme Court of Texas, ran against Conley.

He's always had a tremendous reputation down there.

Good law enforcement officer.

He's done a good job in the Department of Justice, absolutely straight and square, aggressive.

Now the sharp business comes out.

And the reason that I'm bothering you this morning is that Time magazine...

They're going to chop him up.

They're going to chop him up in their... Well, this has been done.

I don't know if Time will or not.

I imagine they will.

But they have a story.

which 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.

Then the examiners of the federal and state banks got in there

They were overheard on this material.

The president of the bank sent the bill over to Wilson's law firm, $2,500.

He paid the damn bill and got a fee for the $2,500.

So it looks on the record like Wilson was involved in the shenanigans of bugging the federal and state bank examiners.

So this is what Time was going to put into that paper.

I 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.

Now, the other side of the coin where I think you have a prime and vital interest is the politics in Texas.

As you know, this Sharp thing has

just about destroyed the Democrat Party down there and will continue to as it builds up.

Wilson, 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.

So we have the hard choice to make as to whether to admit that Wilson has a lawyer for Sharpe

was involved with the Sharpe situation, which of course he was in some of these areas, not illegally.

There's never been anything illegal done.

Or 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.

So it's a choice that

uh 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

trying to take care of his boy, Ben Barnes, to see that he didn't get.

He's in it, you know.

He 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.

Now, what Wilson has done, he has done all except one thing, has done as a lawyer for Sharpe.

When 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.

It's just that he had been borrowing from the...

He has really three things that are disturbing.

Borrowing the money, which of course is not illegal or immoral or unethical.

He bought that stock

in 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.

He was represented as a friend of Sharpe's.

And this stock was bought before Sharpe had owned any interest in National Bankers Life, and Wilson had been trading in it.

That was the stock that Shivers had in that company at the time.

That and this running through of the bills on the bugging equipment are the three things that can be criticized.

None of them are illegal, but the inferences can be made reasonably clearly that Wilson was involved with Sharpe more than just being a lawyer.

That's the inferences that are drawn from.

Now, Wilson,

in both of these cases, claims, and with some justification based on his secretary's records, that he didn't know anything about these transactions.

They were just done as an accommodation to a client.

If that's the case, why, everybody's going to say, well, he's pretty damn naive.

Well, what's the effect on the Democrats?

Is it to wash the case out on them and Wilson as well?

uh 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

Yeah, down locally they are.

The newspapers are doing that, and so are some of our so-called spokesmen in Texas.

What's Tower?

Tower, the last time I talked to Tower on it was two weeks ago, I guess.

Tower's opinion is that, and of course, remember, he recommended Wilson and is close to Wilson.

close politically.

Tower says that we're 90-10 in the political battle, that they don't believe Gonzales.

Will 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.

Of 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.

By the way, apparently Sharpe was quite a supporter of Connolly.

I guess he was, of all the politicians down here, because of the way he was.

He was clever enough not to be in it, but you know what I mean?

All those sections are that way, John.

I wouldn't be surprised.

I'd be surprised if I didn't need to work, so I guess I wouldn't ask for him.

I hate him.

I could go to him, of course, but I'm a bitch.

That's the one side of the coin.

Here's a guy that's spent his life in public service.

So you rule him?

Yeah, basically.

Sure, 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.

But it gets... What does he mean?

What does he suggest to you?

What 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.

He recognizes the problem

And his greatest chagrin is the fact that he is putting you and the Justice Department in this position by these foolish acts.

But 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.

Thank you.

First 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.

I mean, I think that we live to be more than, better than they are, because basically we are.

You know.

And 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

It was horrible.

It showed a lack of fortitude.

It was disgusting.

And it was also poor damn politics.

It was poor politics.

They now call it the Adams scandal.

I was just writing that truth for a while.

What good does it do to get out and let time run their piece?

I suppose that the next time I have a press conference, they'll say, I want your confidence in Mr. Wilson.

Or you have a press conference.

What about Mr. Wilson?

Is that a point?

No, I have no problem with that.

As a matter of fact, if I were to make the decision based on what has gone before in this creeping paralysis,

I don't believe that this particular event of time is going to add that much more to it.

I think that we can take the position publicly that Mr. Wilson has not done anything illegal or immoral.

And 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.

But until that time, there is no sense of...

wasting 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.

If... Oh yes, yes.

The only thing he did while he was in government

was to borrow some money.

And this is rather a funny story.

It's tragic in fact.

He borrowed the money when you said if you had money, you would buy some stocks.

Wilson had $70,000 in cash.

He borrowed $30,000, $35,000, whatever it was, and went into the market at that low ebb and bought the stock.

But as he explains that,

He said he could have gone to any bank in Texas.

He 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.

And I can understand this is plausible.

Sure, in fact, it's an unsecured loan.

You're wrong.

It doesn't need security for a million bucks.

A million and a half, most of which he inherited or made in real estate deals in the stock market.

I'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.

And they have been leaking everything to the press they can get, those local people in the SEC.

There has been...

I don't know.

I don't suppose he feels that he can in this delicate situation that would begin to look like a cover-up.

Secondly, 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.

They have had three grand juries going, one in Austin, one in Dallas, and one in Houston.

and 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

correctly 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

I had been inclined to do that.

I had never inclined to anticipate trouble unless, be like Cesar's wife, when we learned about this and we're...

I had a way a little more of a tough time.

We're there because of the taste of the blood here.

I mean, any man, anybody that's been practicing law, I don't think they're going to have something done that perfect client, right?

No question about it.

That's what he had.

And 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.

And 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.

down there in connection with that bondage because the firm, our firm, Wofford, didn't know anything about it.

But had you put all this story out on the table, it's just exactly like what Wilson was involved in.

I believe he did.

I believe we're going to keep these backers scared.

I don't want to express to people that they're going to publish documents to ensure a foreign policy.

We're going after the sons of bitches.

As 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.

And I think we ought to use them in a few other places.

Well, but with Mr. Cook over in Richardson's office and... Yeah, that's not a glitch.

Yeah, you know, they all went off to Alaska for a month or whatever it was, so he wasn't available to be interviewed.

But they're after him again now.

We've got another hot issue, Mr. President, that I'll... On Wilson's annual issue.

For a while.

Well, we'll...

Right after a while.

Yeah.

That's your guy's issue.

That would be my judgment, yeah.

Because we can always, always move, and I think we ought to see how this one plays out.

That's a good point.

Keep it there in the interim period.

Yeah.

The other problem is Hoppe and Fitzsimmons.

I've met with Fitzsimmons, that son of a bitch, last week.

He wants the clemency and the pardon, but he's now made a speech, taped a speech for delivery on...

Labor 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.

Excellent.

So, here's another...

You know, he ought to be out, because it's just hotter than a firecracker gun.

You can't let a labor leader out, any labor leader out, so to say.

Well, let me, here again, I've been fending off this Hoppa thing, as you know, with the police for two hours.

I think he ought to be out.

I do, too, but as I say, I'm too close to it.

Well, they get a little insane at times.

But here, you're right, he should be out.

There's no reason to keep them in there.

Time-wise, they're not gonna reconsider that parole for another nine months or 11 months or whatever it is.

You have two factors involved with respect to clemency.

One, of course, is campaign support, which is what you would want, but you wouldn't want the public to look at it that way.

The other one is labor support

labor 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

The 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.

Oh, yes.

And I think with a lot of other rank-and-file labor people around the country, because he's just a tough...

beer drinking, no good SOP like most of them are.

And they like his swagger, they like his guts, they like his telling off the establishment and George Meany and everything else.

Fitzsimmons, 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.

the disruption of the Union, and that he will go all out in support of you in 1972.

He will get those commitments from Hoppe personally, and of course, he will have more stroking connection with him than anybody else.

That also would mean that Fitzsimmons would support us in 1972.

The 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.

I don't doubt that they'll scream.

Well, 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.

I'm curious that Simmons, who has done a support review, has come out for it, et cetera, et cetera.

As I say, here again, I think I've been too close to it.

I think somebody ought to take a look at that.

And tell me what you do.

Would you mind talking about it with Schultz a little?

I mean, he's probably not going to be a sailor.

Can we justify that?

We don't talk about politics.

It's an amazing support for all the different places.

I like it.

You get, of course, you have Barry Goldwater, Johnny Rhodes.

Oh, yes.

I've never met him, but I like him.

I like him because Bobby Kennedy took him on.

Well, the Ruger didn't like him.

He couldn't get along with me because there was a conflict of personalities as much as anything else.