Nixon phone call with Shultz on Economic policy and Steel strike

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Yes, sir.

I was just wondering how your meeting finally went over with the Senators.

Well, I thought that we went pretty well.

How long did it go?

How long did you have to be there?

You're probably eating dinner, aren't you?

No, we're just having dinner.

Good.

Well, that's fine.

Did you and John both answer questions, or how'd you handle it?

Well, John asked me to.

Good.

Yeah.

I see.

That's very interesting, you know.

They forgot.

Well, as a matter of fact, the Davis-Bacon didn't make a difference, did it?

Tell me about it because I'm trying to get some things ready for Bohemian Grove Saturday.

Go ahead.

per unit of output for manufacturing after a long period of rise have been virtually stable in the first six months of the year.

That ought to make a difference, George, in the prices.

Certainly profits.

That's what's been counting for the rise in profits.

We haven't got the second quarter productivity figures yet, but...

Pretty good.

Let's see what the overall picture looks like.

Anyway, I kind of gave that.

I tried to emphasize the fact that there's a problem, but... Did you hit the retail sales and automobiles and things like that?

Yeah, that's very hard.

Got a little booklet of stuff.

Good.

Passed out.

There's a number of other items.

And then after I got through, got some heat.

Gave her a good punch.

And talked about some of the politics of it.

Did he?

Yeah.

And talked about how y'all are supporting your president.

And so on.

And gave him a pretty good uplift.

And we had a few questions about that.

I don't know how John would tell about it.

I thought that it was a pretty good team kind of environment.

Good.

Well, you were...

The things I do are a little different than he does.

Right.

I think we kind of do that and not very well.

Good.

But I'll be...

I haven't heard anything from... Yeah.

Yeah.

I'm sure...

I mean, we're prepared to do things, but I don't think we ought to try to do it this weekend.

That's my point.

of a free market economy, but it also has a tremendous impact on the valuation of the dollar.

What do you want to be in that position?

The idea of defeat, to be given up.

There are ways in which it can be turned to our advantage, but it's a very, very big step, and I think we should have a careful, searching, thorough analysis of the problem.

And also see whether we can't do something like those in the Golan and other things.

I've temporized it a little more.

I don't think it's all that bad.

Somewhere there, I'm not following it.

I think I've noticed that these international monetary people, even back in the Ironman, they tend to panic.

Because it's their deal.

Oh boy, this is the biggest thing in the world.

Well, this is the biggest thing.

We do have a real problem with our...

It's not at 9 billion, I know, and I know the balance, that the trade balance for the first time is now negative.

It's an index of the relative expansion of our economy compared with the economies of other countries in the world, which are slowing their rate of expansion or declining.

And when that happens, when we're expanding strongly, we tend to draw goods into our market.

We tend to import.

In other words, when you're depressing, then it goes the other way.

But when you're expanding, it goes just...

I see.

Yeah.

So there's that factor, but I'm sort of insisting that we have a real careful look at this.

It's a very sensitive thing, of course, and one of the difficulties is you can't really discuss it with many people at all for fear that something will get out and, you know, start out speculating rather than somehow...

Let me ask you about a couple of things.

With regard to the economy generally, now let's see, we had the budget thing came on today.

We got that out of the way.

The balance of payments thing was off, right?

That's off.

Now, what other news we have this week that is negative?

Anything else?

Is that just about done?

What about the steel thing?

If they have a strike, George, will they have it over the weekend?

It'll come, say, midnight Saturday is their deadline.

Right now, it's

Is there anything we can do?

Should we do?

If there needs to be something done.

On the other hand, the steel strike, while it could be a depressant, it won't have near the impact of the automobile strike.

They will be closing down on a physical production basis, which is going to be low anyway.

But nevertheless, there's sort of a psychology about a big deal.

Lots of people involved.

We can stand to avoid, I think.

On the green thing, one thing that I didn't realize when you and I and John discussed this that day, I don't know whether you did or not,

John Connolly did a briefing of all the House members at a breakfast about two weeks ago.

So there's a question of whether or not we should do it again.

No, no, no, no, no.

I discovered also that Jaffe did a briefing for them at a regular House breakfast.

Well, that's not drugs.

And out of the 180 or whatever it is, only 20 showed up on the topic as sexy as that.

Maybe we should do the house thing after the reset.

I'm just thinking about how they're going to act when they go in.

Maybe we just pick some key spokesman-type leaders and get them down here in the breach.

Maybe that's the best thing.

Rather than taking the whole group, they're just the mask.

Get the guys that are really going to speak out.

We're going to have a selected group of real movers and shakers.

They're going to look here, boys, let's get off the

Because you know, particularly as we go into next week, next week we'll start to have some better news, like the retail sales comes up next week.

That'll be good.

Can't be bad, anyway.

Right?

Well, that's good.

Yeah.

But all the numbers up to this point, the auto sales, our retail sales for July ought to be good.

You're going to be leaving Friday late.

I'll be back Monday night.

Monday afternoon.

If necessary, I'll come back.

Or, as a matter of fact, I'll go out and do the drove and come back and do them Sunday.

And I really think that we should not have a strike.

I just feel that.

Hell, let's have, let them have a settlement.

Let it be a, you know damn well they're going to have a settlement in the end.

If they have a strike, it is going to be for much less money than if they don't have one.

Do you agree or not?

No, I think we're going to wind up with that aluminum can settlement, by the way.

One of the companies that is not part of the general bargaining authority put that on the table.

All right.

Why don't you take a personal look into this, George, tomorrow?

And let's really, on this one, by God, let's not have a strike.

I'd rather take the heat of the inflation rather than have a strike.

I really would.

That's what I'm doing.

Well, let me explore it a little bit.

I've been going on the assumption, and we've been talking about the laser thing, that you would be willing to be involved

If there were any point in it.

At the same time, if there's no point in it, I don't want to go away from fruitless things that just bring people in and make you look helpless.

You bring them in and then nothing happens.

I don't want to be helpless.

But maybe you've just got to have a confidential talk with them.

Steal leadership and see what the hell they're going to do.

Do you think they want a strength?

I don't really think so, although you could argue that there are these big inventories, and they're going to close their mills anyway for a while.

And they just as soon have the workers out on strike, pulling the tariff off on employment compensation, which in the long run they have to finance.

So I suppose there's a line of reason there.

But I really think that a strike is...

It disrupts the industry.

It disrupts their ability to supply customers promptly.

It bites for and enjoys the flow.

And they don't want to stay away from the traffic.

I think we have to do more aggressively on this thing.

If you can get out of tomorrow and do whatever you can, I can leave on Friday.

I don't care.

I've got all day Friday at 6 o'clock before I have to go.

And I only go out for a day unless I come back Sunday.

We must have, as I say, we just hope that next week we've got a few good numbers to come out.

I think actually that all the stock market deflections, as much as anything else, George, it's

Uh, you know, the speed came right up, and the speed was the center of the jack, so it was great.

What'd you say?

Well, he just asked, I would ask him questions about weight pressure before he got this clutch at the time, and John gave him a good lecture about how this works.

So, uh, with that, I think he's made it hard this night to get that on anybody's mind.

I'm positive that would have a hell of an effect.

Maybe you could say it's based on retail sales.

When do we learn what that number is going to be?

I'm not certain of that.

All right, good.

Okay.

On the rails, right?

Yeah.

The impact is concentrated.

I think there's been a lot of stuff that's been carried by trucks.

Even the truck lines are running the same.

Now, the lines of merchandise are running with a free hand.

That is, they don't have the work rule thing over their heads.

Now, their productivity is up by about 20%, just like that.

So I'm trying to get a little bit of publicity out about that fact, just as a measure of efficiency involved here.

But we will probably water the day with him through the weekend.

We're in that vicinity, and if we don't get there, then I'm afraid we'll have to go to Congress again.

Because I'm just afraid they'll let us invest in it.

Nixon phone call with Shultz on Economic policy and Steel strike

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Nixon Library Finding Aid

Also recorded on July 29, 1971

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