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Conversation 021-126

TapeTape 21StartTuesday, March 21, 1972 at 1:03 PMEndTuesday, March 21, 1972 at 1:09 PMTape start time04:21:47Tape end time04:28:46ParticipantsNixon, Richard M. (President);  Shultz, George P.Recording deviceWhite House Telephone
AI Summary

President Nixon and George Shultz discuss Shultz's recent meeting with labor leader George Meany regarding Meany's potential resignation from the Pay Board amid tensions over wage and price controls. The conversation centers on Administration frustration with Federal Reserve Chairman Arthur Burns regarding rising interest rates, which Nixon views as contradictory to their economic stabilization program. Nixon and Shultz conclude that while they must manage these political optics carefully to avoid appearing as the sole champions of government regulation, they remain prepared to confront both Burns and labor leadership if necessary to maintain control over the economy.

Wage and Price ControlsGeorge MeanyArthur BurnsInterest RatesPay BoardEconomic Policy
AudioNARA Description

On March 21, 1972, President Richard M. Nixon and George P. Shultz talked on the telephone from 1:03 pm to 1:09 pm. The White House Telephone taping system captured this recording, which is known as Conversation 021-126 of the White House Tapes.

Nixon Library Finding Aid
Conversation No. 21-126

Date: March 21, 1972
Time: 1:03 pm - 1:09 pm
Location: White House Telephone

The President talked with George P. Shultz.

[See Conversation No. 690-11C]

     Drug Abuse Office and Treatment Act of 1972 signing

     Shultz’s previous meeting with George Meany
          -Meany’s possible resignation from the Pay Board
          -Questions
                -General program
                -Prices
                -Interest rates
                      -Arthur F. Burns
                            -Wage controls
                            -Earl L. Butz
                      -Bankers
                      -Hobart Rowen
                            -Burns
                            -Dollar

                     -Prime rate
                           -Bankers
                           -John B. Connally
                -Meat prices
                -Food prices
                     -Connally
                           -Cattle price
                           -Consumer Price Index [CPI]
                -Contracts
                -Government regulation
                -Small firm exemption
                     -Pay Board, Price Commission
                -Construction industry

     Interest rates
           -Connally’s possible public statement
                 -Burns
           -Administration policy
           -Prime rate
                 -Connally
                 -Burns
                       -Committee

     Shultz’s previous meeting with Meany
          -Administration position
          -Democrats
          -Controls compared with freedom
Transcript (AI-Generated)

This transcript was generated automatically by AI and has not been reviewed for accuracy. Do not cite this transcript as authoritative. Consult the Finding Aid above for verified information.

Hello?
Hello?
I guess I got you just when you got back.
I just walked in from the drug bill signing.
How'd you get along with the other George?
Will?
Are they going to walk out?
I don't know.
He raised questions about the general program, the price side, interest rates going up.
Arthur Burns abroad saying he wants to get interest rates up and they have the strictest wage controls anywhere in the world right here.
and so on and burns burns saying that is a jackass damn thing it's a terrible thing to say and it's just like it raises the same problems that butts does but in a different way who the hell is for interest rates going up except the goddamn bankers well i told him that joey had had a little discussion and i wish interest rates i wish that uh all this business i mean i know that it's and i you could see this too then hobart rowans which of course is pure burns i
...says that now the government has come around worried about the dollar and all that sort of thing.
The hell with the worry about the dollar.
I'm not worried about the dollar.
Are you?
What I told them was that, first of all, interest rates were a lot lower than they were at the start of the freeze, but I said, you just let that prime rate notch itself up a couple more times, and those bankers are going to hear from us in no uncertain terms.
And I say that off of John's comments this morning about his own ideas about...
calling them in and giving them hell if the interest rates start going up too much.
And we talked about meat prices, food prices, and some of the things that are in the works there.
John is back.
John, got any plan on that one?
Well, I think at wholesale, the last two or three weeks, there has been a decline in the very high cattle prices.
Well, I can say something about that.
Analytically, probably...
that has crested although it is taking a terrific increase this month as i'm sure you've been told um he talked a lot about what's it go to what is the what a two percent increase in one month in the in the food at home component of the cpi yeah and what's the cpi generally i don't know that yet sir that'll be announced on thursday right the and then they talked a lot about the the the
Resentment of having their contracts interfered with, I said, well, you know, if you have a control system, some contracts are going to get knocked down.
Otherwise, there is many.
Might as well not have it.
That's right.
You just can't go approve everything.
And they sort of expressed their distaste for an economy where somebody in government tells you about your wages or prices.
I said, look...
There's nobody agrees with you more on that than I do, unless it's the president.
However, everybody agreed, and George, you were in the forefront of saying that we had to do something.
And everybody did.
And everybody stood for it.
Most people.
And he said, well, how long is this going to last?
I say this.
The sooner it's over, the better, but you can't get rid of it now.
The prices are going up too high, and...
we have to keep the pressure on trying that i said i finally concluded by saying that that i have only uh i talked about the small firm exemption that had gone over to the pay board price commission in the normal course of events right right uh that i had really only two
I didn't plead with him to stay on the board or anything of that kind at all, but just that first, the president is working hard to make this program succeed.
Where we find problems with it, we try to correct them.
And he wants the support of all the main sectors and wants to work with you and the labor movement in making it work.
And we are going to make it work one way or another.
And second...
Whatever you do, the construction industry thing is working pretty well, and we think you'd be doing a disservice to your people as well as to the general thing by disrupting that.
And he, I think... Well, you made as good a case as you could.
We had about almost an hour of discussion.
You made as good a case as you could.
And he said, well, we'll be talking about it tomorrow, and so we'll see where we come there.
In the meantime, we'll be getting up some...
Some suggested talking points on the interest rates today.
Can you do it?
Can you make a public statement?
Meaning?
Arthur, I mean Connolly.
Oh.
There may come a time when we're just going to have to go after Arthur Burns.
Yeah.
Directly.
I don't think this is the time.
You don't, huh?
All right.
Well, the interest rate thing is totally opposed to our policy.
Right, it is.
And the prime rate has now gone up two notches.
It's up to four and three quarters, I think.
And I think if it hits five or a little over, John plans to...
Call in the bankers and take the gloves off, or some such thing.
Well, Arthur's in charge of the damn committee to keep interest rates down, and here he's letting them go up.
That's why he ought to be taken on on that statement.
You can't have the chief controllers advocate interest rates going up.
Right.
So, I think we've done what we can, and gracefully, that is not...
I think you did it the right way.
We just had an exchange of views.
Right.
trying to stay on all fours.
He knows our position.
He has a political problem, I think.
They'd like to blow this thing, but if he blows it, it isn't all that bad for us either, you know.
Then we're going to have to take it on and let our Democratic candidates support George Meany.
I'd like him to do that.
One position that I would hate to see us get maneuvered into is where we are the advocates of controls and our opponents are the advocates of freedom.
and oh god i should say not that we need to be careful of yeah but we will work along on this right oh i know i don't want that i can't i know i understand i understand no you're absolutely right i just uh but i i but i'm going to say i don't think it's going to be that i don't think they can ever come out advocates of freedom hell they don't want for that they're from our controls but we'll see okay all right thank you
Thank you, President.
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