Conversation 086-004

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Robert, how are you?

You should never have seen this.

I deliberately, I deliberately filibustered about a subject I know nothing about.

Now, anybody here seen this word again?

Now, it's essential to manage this understanding.

Of course, it's the actions of Congress.

John, what that means, what the price of gold means, what the valuation means.

I will sum it up by saying that

Actually, the first reaction of the unsubstituted to this is devaluation of the dollar.

And when people mention devaluation of the dollar, they think, oh my God, prices are going to go up.

On the contrary, it does not mean that at all.

It does mean if you travel for one, it does mean if you buy, if you purchase many ones and so forth, that your dollar will buy a little less.

But for the 95% of the Americans who buy America and live in America, then nothing changes at all.

It's what we're really talking about, is getting fair treatment for the dollar abroad.

And that means more jobs for Americans, not extra jobs.

We'll continue something here.

Now, having stated it in that unspecified way, I'm going to present John Connelly, one of the people who gives us leaders.

Well, Mr. President, gentlemen, I will first disavow

that I'm an expert in this field at all.

I have acquired some little knowledge about it.

I've had enough to hold my own with Dr. Burns, to help Paul, to help with Cindy, negotiations that we did, and let me go back to the wrong meetings, because I think that's where serious negotiations first begin.

In the long weeks, we were confronted with a hard-line position, enunciated by the British, based, it seems, upon the entire European community.

The group of states, plus themselves, which we have left behind now, the group of southern states, that had to be more firmly discussed.

There was no hope for any settlement, whatever, unless the United States contributed to

at the Rome meeting.

It was obvious not to that point that

The European community had not taken seriously, or if they had, they had not responded in a serious manner.

To our request, we had to add up some changes in trade, in trade matters.

In fact, you ran it, John, against a total brick wall on trade, and the fact that...

And also, they actually said, I want to report it to the press and after the result.

I don't think I'm afraid about her either.

They said, we can further, they don't think they were willing to discuss what's possible with re-evacuation and on an attack.

That's correct.

That's all.

And they just said, if you will re-evacuate, then we will consider some of these other matters.

And we responded by simply saying that it is an inherent assumption that there can be no international settlement unless we agree to devalue the dollar in terms of the price of gold.

Then it also must be an inherent assumption on your part that there will be no international settlement unless two other things happen.

Unless, number one,

We get some trade concessions, and number two, that we get a realignment that holds some promise for giving us easier to deny balance payments.

I said, now that much is true.

And at that time, they were saying that the United States had to devalue the dollar by 5%.

We took the position then that we were not prepared to...

to commit Steve Adler to dollar, that we could not agree to King's price goal, and I was not authorized.

The only thing that I basically could not commit to was King's price goal, and that was a recommendation which the president had to make, and he did not make that decision, and if he had made the decision, all he could do is recommend to the Congress.

But I said, I can assure you of one thing, and this is what it takes in all sincerity, that the president will never recommend to the Congress the price of gold he gains, unless and until we can go to the Congress and say that, number one, we have got some help on burden sharing, and number two, we have got some help on trade.

This broke out into a four-hour discussion.

They said, well, we're not here prepared to talk about it.

We didn't know this was the right period to turn.

And we said, it's a matter of serious discernment.

The president said it.

He suspended the convertibility of the dollar.

We said it the next day at a press conference.

We said it at every single public conference we've had since that time.

The trade was essential element in this package.

And we said, now we want to know, and it got to be quite an intensive four-hour discussion, and almost was one of the embarrassing, where we said, we want to know whether or not you're willing to commit your representatives to the European community here and now.

So we were met with a hard line on their part.

And without going into too many details, let me, you guys, have all been in lots of bargaining.

And lots of negotiations, one kind or another.

And I assure you, it's not the easiest type of negotiation.

When you're sitting there with 10 nations represented, and you have to...

You were in an adversarial position with respect to every one of them, and every one of them speaking with the same objective in mind, and they hit you from one side and they hit you from another.

So, yes, we came out of it with a, how long we've been, with somewhat of a tough stance and a hard stance, and we made no apologies for it, because you can stand off nine nations.

When they're all putting pressure on you, the mere sound of their own voice convinces them that they have the security of numbers, and that they must be persuaded that we're alone.

So we did try to hold our own in these negotiations.

But central to the whole discussion, there was a current...

That France was probably the key, and we don't want the public to say that they were the key, because this tends to reflect on the creation of the nation.

The truth of the matter is that France was in a key position for a number of reasons.

First, because they had very little trade with us.

...from the flow of currencies.

They don't want to take dollars, they don't take dollars.

They still let them in.

They control their entire banking system in a unique fashion.

So they're almost impervious to international monetary movements if they want to be.

So, plus, they have very ideological commitments to gold.

It's been a matter of centuries, wasn't it?

So, they had a fixation back then.

First, they didn't overcome it.

They won't overcome it.

So, they were sitting in a very key position.

The Germans won't accept it.

Other nations won't accept it.

But all of them were interrelated, which you all know.

The Japanese were settled, but they were settled in the European community.

The Germans want to settle, but they want to know what their relationship to the French is going to be.

They want to settle with us.

We have no problem if we could just settle with them.

But they have twice as much trade with the French as they do with us.

So, the remarked relationship to the French is much more important to them than the remarked relationship to the dollar.

The same is true of the account search, and the same is true of the attack of the barrel.

So it was absolutely essential.

that we recognize that there were three elements.

First, the key element of the European community was France.

Canada is a separate problem.

Japan is a separate problem.

Canada would not move and may not yet move.

They still won't move.

They have yet agreed to become a part of the explosive national settlement.

Japan is not going to move until she knows what the European community is doing.

Because she wants to pierce that European community to a greater extent than she

We take 30% of their world trade.

Europe, which is basically as big a market as ours, takes 5%.

And the reason they take 5% is because they won't let the Japanese products in.

They all talk about what great free traders they are.

And they're not free traders.

They have divisions and barriers erected against the Japanese as well as against us.

So we're trying, in the process of getting this realigned,

to break down some of these trade barriers if we can.

And we don't kid ourselves.

We know where the money is.

The money is in the realignment.

But we took the position, we insistently take the position, that we're not going to settle for what we know is an absurdly insufficient realignment.

And let the world think we settled the problem.

And we took the position that 5% was an insufficient, half an insufficient realignment.

We weren't going to do that.

So, Paul Volker, in the vetting meeting just prior to Rome, hit them with 11% weed average reliant, which, on our calculations, would result in a...

The improvement in our dollars was payments for about, on the high side, frankly, about $9 billion, which is a lot of money.

Now, they said this was too much.

They couldn't do that at all.

The French were very quiet.

You run into all kinds of problems, and if you let me switch the comments, then one of the problems we have is knowing how much authority the various ministers of finance have.

It so happens in France that you start to say that the finance minister is the leader of one of the parties in France.

who has a great aspiration to be president.

And the president wants to do what's on him as a rival.

They're not even the same party.

So he obviously doesn't want to start the same, get too much credit for anything.

So this company, it's our negotiations.

So the president felt that if we really were going to try to solve this problem, and we, again, the president felt that we

We cannot only be either political or military leaders in the free world, we also have to recognize that the leadership extends to the economic front, because we are the largest trading nation.

Our TNP comes in each year, our increase, and TNP creates a new president, a new president, every year.

Next year, most economists will agree that, heard you and Paul correctly, if you think I'm wrong, most people will agree that we'll have the increased GDP of approximately 100 million dollars next year.

This is the total of the GDP of Great Britain, the basis of the total of France.

And when we're confronted with problems where we compare rats and horses, because they both have four feet,

Great Britain, for instance, said in Rome that they were crying.

We're in terrible shape.

We've got a terrible depression.

We've got high unemployment.

We just can't give.

If you go, if anybody more than 5%, we'll have to go there with you.

And the French and Italians say the same thing.

The week after we got home, Great Britain announced that this year their policy payment surplus would be $3 billion.

The largest in the history of the United Kingdom.

And in terms of our equivalent, that would mean that we would have, if we were as good a state as they were in our balance of payments, we would have a surplus of $33 billion.

And we're looking at $11 billion next year.

So, this puts in perspective the problem that we have.

So these were the things that led up to the president's feeling that when he met with Congress, that if we were going to really try to get it covered, frankly, we've gone further than any of the other countries have in spite of their public utterances.

They're stand-up politicians.

They're better than we are because they play their politics as the press.

Because we're the largest nation in the world, we don't bear to live with it.

We had to take it.

So they accused us of being the instructions.

And yet we've been more outpoured.

We've been pushing this stuff much harder than any other country has.

But we were afraid, the president was, and it's incorporated to Pompidou without a basic understanding.

that we probably would have lost our chance to negotiate and we would have suffered.

So as a result of a day and a half of very tough bargaining, the French have essentially agreed to the following.

They have never given any indication that they would permit us to devalue more than 5.5% and for them to stay still.

and not be valued with us.

It's very clear now that they will go beyond that, depending on what other countries do.

They will go considerably beyond that.

This is of the process of negotiation of competence.

They have always maintained that they want no widening of the margins.

Let me explain that.

Most of them sure know, but under the present IMF setup,

We may say that

In this period of uncertainty, that there should be wider bands, some have talked about 3%, during the 9-up meeting year, we talked about 3% up and 3% down, like here's your swing of 6%, which is a very substantial amount.

The French have been far, far away opposed to it.

are very, very dedicated to fixing changes with practically no margins at all.

They only like 1%, very frankly.

And they have consistently said that under no circumstances will they go beyond 1.75.

Well, they went 1.75 down, and they said that's far too much.

But it's resorting to the medium and the authority.

They won't go beyond that.

No question.

And what should...

will again depend on what the total settlement is.

The French have been the strongest nation in the community with respect to the protection of trade and policy in the common market.

On Saturday, last Saturday, just prior to our departure here, they took a position in the European community.

Two months.

After hours and hours of debate, he refused to let the European Community Department of Representatives talk to us about trade matters.

He refused to.

Although the five nations agreed to open negotiations with him, to me, the French were intractable on that point.

So, when the President met with Pompidou, he said, in fact, there can be no settlement unless you want to talk trade with us.

And as an upshot, the French have agreed to talk trade with us.

And they have instructed.

Their people have been communicating carries to some indication.

Now we have not specified, we do not want to specify precise trade items, because this always does build up back pressure all over Europe.

But we have a list of specific items.

We can talk to them about that.

They understand what those are.

And they're some of the toughest things that they have to deal with because some of them are right here in the middle of Asian countries.

But they have agreed to instruct their permanent representatives to give them a mandate to immediately begin negotiations.

And they understand that these trade negotiations are an integral part

of this whole trade.

Now, we separately have been carrying on trade negotiations with Canada.

Intensive negotiations.

We had a team over the weekend, when we were going to the Azores, we had a team in Hawaii, talking to the Japanese, and we were carrying on extensive trade negotiations with the Japanese, and each of these groups, we almost characterized them as three groups, Japan, Canada, and the European community.

We're going to carry on separate negotiations as far as trade matters are concerned.

As it is, it is very important for us.

It has to be out there in time for the first stage.

What they're trying to do, all these countries are trying to get us to move just in the field of real animals.

Forget trade, forget burden sales.

Now the president's already won a major victory, he told you he was going to go, by gaining the best offset agreement he's ever had, by gaining the scenario forces to agree to put up a billion dollars a year, more than they've been putting up for their own, for our common defense in Europe.

Now we've got trade.

And we stood on that, and we also said, and I must say to you and all candidates, we used it as a bargaining lesson.

Because we said, we're not, the president's not going to recommend a change in Congress without some trade.

Unless we go there and say, here's what we need to do the burden sharing and trade.

And we don't think they're passionate.

So that's the posture that we're in.

This is the posture that we're in right today, if you're considering returning.

We think that having broken ground with the French, that this sets up where we possibly can get a resolution to solve that issue.

We have some indication the Japanese actually wanted that before the premier soccer league was mentioned.

Let me ask you something.

Are you going to have to have congressional action to follow in this?

Yes, sir.

No, not next week.

Why don't you say why you did tell them a little, why some of the thoughts of the person that suggested that they should act now.

There's been some suggestion of Congressman Royce and others that said we ought to pass a resolution right now.

Well, assuming that you could, and assuming this reflected the will of the congressman,

We can do a question, and we ought to do that right now, because frankly, we take away one of the big parking levers that we have for these folks.

We're staying good, and we're staying good, unless we go up and say to y'all that we've been given a break.

I understand that we're being completely frank and honest with you.

that we are going to have to have progressive action.

We hope it stops being that there's no partisanship in it at all, that we're going to make the very best deal we can make using every device, every maneuver, every lever that we have.

And the time is going to come when we will have to have progressive action, and we would want it as soon as it is possible, simply because

We've got a very difficult technical problem of how you affect a realignment without the orthodontist.

I think Mary said that the question came up first, and so...

Every viewer sitting in, you might quite often be directed in front of that problem.

And the way we get at it, basically, is just quite often on the trade thing.

And it becomes emblematic when Congress has a problem.

Yes, yes, yes.

I mean, when we do send it to President W. on the United States of America change, and it does go through the proceed,

He didn't want to be associated with the trade thing.

He seemed to be blackmailed into the trade thing.

The president said that his problem was that he couldn't go to Congress.

Men have to put a blind check without being able to go to Congress.

We all can't go to Congress.

He would have to tell you.

Everything else would have to go to Congress.

and put before them the recommendations of speedy action and total kindness.

And then you would undertake to do that much that you could not ask for it.

Well, the truth of the matter is that we trust ourselves more than we trust them.

They want us to be back, and then they'll talk to us about trade, but we won't deal with them.

We won't know where we're going to trade the pork.

We finally take a step to get back in the box.

It's not just a question of trust, but they give it up, each of these nations have given up a great deal to this European common market.

So they high-five and go to that individual, and they say, well, we can't deal with that.

That's not a European community process.

Those European communities, they say, well, we can't do anything.

We have a mandate from all the countries.

And they run you around and stuff all day long.

And it's extremely difficult to get all you... You could end up on a train very frankly.

So we don't want to give them love.

I said approximately 9 million dollars, but since we make a point of this, now let me, there are estimates that for every percentage point in this wage marriage realignment system,

We pick up from 500 to 800 million.

None of us sold the ship.

We think it's a little less than 850.

Georgia, I'm not sure what his position is.

Arthur, folks in Ted have a position.

But it's in the range, I would say, that I would call history.

That's what I'm saying.

I would say 800 is an outside figure, although there are one or two people who think that it's not the outside figure.

We think that it's gross.

The, uh, could I, could I ask, could I say something that I think is very important, that we can even all believe that, well, apart from, apart from the legislation, that we should be fine with that.

It's very important to avoid the imagination.

As to who won and who lost.

As you know, the first story is very, very French.

And the second story is very American.

Let me just say this.

We got a very good deal.

Let me also say, Pompidou, in terms of his problem, got a very good deal.

There isn't anything in this Q&A that we have created where if one completely whips the other, and Pompidou is deterred, then the end of the year is time, it is amen.

He said, I said, well, I said, John, what is worse, I was sitting in the office, and Henry was there to do the discussion, and then John would be meeting with the president, and I said, you know, the secretary, the treasurer doesn't like to be alive, but he decides to be alive on the day of the weekend, so I think, of course, what the things are, is that what John says, and so it's a good thing.

But I think you really think it's been an unpredictable surrender for us.

We're both, but I think you say one word about how important it is for us to, frankly, work together.

Thank you for watching!

that almost everything in the secondary treasury is set out to get, we are very close to get it.

But the price of gold, we must emphasize, I think we'll hear this, this is part of the great question, the price of gold to a tax minister.

or to a French political leader, while it is serious to us.

So that is the theology of a political leader.

It says the same word about what the French do, ever since the...

The goal is...

Det var svært svært svært svært svært svært svært.

So this is the political requirement that when we do that, and therefore it is important, depending on that, that we don't characterize ourselves as American tribes or American states, but we still need that cooperation.

It was one against nine.

It really was.

And frankly, we had to do now.

Mr. President, we did have to.

We had to take this to the Senate.

It had not been for Dr. Burns who sat at these meetings and said, along with the other senators, thanks, Governor, for the nation, and all voters.

We sat there, and we got called over to the Senate because I'm chairman of the U.S. Senate, and I said I want to maintain some objectivity as chairman, and we had a call over to speak to the U.S. Senate.

At large, it was a call over about learning where we are in terms of the negotiations.

But I would say that the problem is, let's show you what we have to get to, so that you can see why it's an emergency.

You see, we didn't have to make a deal.

We didn't have to.

We think that our long-term interests are better served by some stability in the international economy, but our option was not to make a deal with Europe.

And that's of course to pick off the others, right?

Maybe we look at Canada, maybe we look at Japan, although it would be very unlikely we may look at Japan because Europe would give them the future more than we can because they have so little under their belt.

But our alternative was, which we had over the last, we just needed a float.

That was a great idea.

We became in a lot of instability.

It would also mean that it would pose problems for them.

So populism had also made no change in the price of gold.

So far as populism is concerned, he's able to go back and say, look, the Americans were in this position, but they weren't building it.

And if we hadn't moved on this, we wouldn't have got a retreat from the price of gold.

That being a fair statement, the opposite.

But he used that argument.

And we, incidentally, we're considering that.

If we haven't ever gotten, if we have not gotten, but we haven't gotten yet, we've got to make a deal.

with the group that had an order over the next two or three weeks to wrap it all up.

But if we had not had this option, there would have been no incentive for the French to take it.

It's a little trade with us to make it go along.

The others have some incentive to drive, and these have some incentive because the surcharge affects them so much.

But here's the difference.

The vertical trade is a spring level affected by the surcharge.

So, it's not cold and violent.

So it helps us make the less part of the bargain.

And equally importantly, I think we all need to start something to get rid of it.

Without being specific.

Break.

They have great strength with the Italians and with others.

They agreed to help us with all the irritated communities, not alone, but on the face of realignment.

This is why I think this is a good chance that we can get.

They want to trade for realignment.

It's just the toughest, I believe it's the toughest kind of bargaining.

If they give a great deal on realignment, then they want to cut out on trade.

If they give on trade, they want to cut out on realignment.

So we're just trying to get everything we can get.

Only the assumptions that whatever we get is probably not going to be enough.

Because, again, we go back into a private tax position, and other countries have a pretty good move, either in revaluation or devaluation, that is denied the United States because of the tax.

So we're trying, we know, that whatever we get now is about all we're going to pay for.

That is why we've had to hold out for a much higher number than 5%.

I was at the present, I would, if there were no questions, or even before there were questions, I would sure like to get some expression from the leaders in here about how we ought to proceed, and whether or not they would take away the attitude, or whether they would indicate some support for you in January, and what I actually had in mind.

Because this is absolutely crucial to us.

Mr. President, can I ask the Secretary, what kind of legislation is it?

Is it relatively simple, or is it complex?

We treat birds, birds, birds.

Here's what we would anticipate the readers to do.

The way the play will work out, you'll have a meeting with the group, and possibly have an arrangement to have it worked out in that time, or we could hold it.

It might take some time to wrap it up.

It's all a school thing.

We've got it on the weekend.

Assuming that the group of 10, who are finance ministers, do not want to wait until there are meetings at the high political level, they might want to do that, but we don't think they will.

We would then have a number, but we were thinking about in terms of how much the prices will be raised.

And then we would ask Congress to buy any change for all of us, specifically to ask Congress for approval after... Well, there's more than one way of doing it.

It's a straightforward way.

You just ask Congress specifically for authority to propose a change in the bar value of the dollar in terms of gold in the IMF.

And that's provided for in the Brentwoods Act.

It's a very simple act to say, here's the new change in the price of gold that you may propose to the IMF.

Uh-huh.

We can do it another way, but we maintain that we're not going to do it that way.

We can do it through the IMF itself, subject to later ratification by the Congress, but we think that we're not going to presume on the Congress' powers unless the IMF does it, subject to ratification by the Congress.

We just take the position that we want a frontal approach, but we're at it through the Congress, and it also helps with our bargaining.

Mr. President, may I ask a question?

The authority we would give, would give the president the flexibility to do it, it wouldn't be automatic.

Would there be flexibility in terms of amount, or would it be a specific amount?

It would be a specific amount if it was time, but you're going to run into a long one, so don't fix it.

But we will have a specific number of others.

And that's why I'm here with you.

I've run into this thing where I've been.

I've said that I'd be willing to increase the price of gold in order to get properly aligned with the currency of the world.

And these older people, I ran into them at New York University when I graduated in 1912, and when I...

I know you don't know what to say to him, but...

Honestly, it's just that person, which is in the church.

I've been there since 1934, and we've been there since 1912.

I don't see any game trail, but I've found it's easier to do it.

It's 5%, whatever it is, it's less dollars, calories, the price of gold.

That's the reason that we have resisted, frankly, the idea which has been expressed by some members of the Congress.

Whether to give them discretionary authority to do it, you see what I mean, which puts them in a position to make the decision, and then ask the Congress for approval of the deal, which in other words, as I say to you, which will remove the uncertainty.

Is that, if I were correct, John, if I were to state what the machine does, that's absolutely correct.

But we would like to know, and you do know, that it's a very great matter for the President to speak for the country, in effect, basically.

We have to remember that we've been around this track before.

The first thing I say is that I am in the reaction part of the conversation.

Extraordinarily good.

It's been good, but actually, everything that I've read is disseminated from the Senate to the House.

There's been conditions of all the satisfactory relations that have been tried there.

I think that the leaders should say, in fact, let's just play it out.

If the leaders, if you believe what Carson Cooper said, that if they decided that you got a part in the tech trade, the tech trade is going to conduct these very sensitive negotiations over the weekend,

And we hope that the satisfactory settlement is made, and you believe that there will be bipartisan support of the Congress for the years where they're going to be.

That's really how that's going to be over at that time.

So, yeah, thank you.

I've had a word of criticism so far.

But it's because it's too much competition.

President, I feel it's the most generalized of all the recommendations.

Royce and James.

Well, they're all here today.

So, I hope I don't have any questions.

I don't know what they were saying.

How did they tell you this?

They came to the office.

One of them was whistling

Overland, I'm talking about, was the road in Franklin.

The road, there were two footbikers, and they were playing weed.

That was the same thing that you've got biker centers in.

A lot of times, that was the light.

The light, they sucked us.

So that's kind of pretty much, that's what they did.

That's what they did.

That's the market.

I think that's the market.

I think it was, they raised the price of gold.

They would pay for gold, but...

We still have not gotten our price up to what is about the world price.

We'll still be under there.

World price is over $40.

We're not talking about that in the world price.

They thought that we had to give them that.

Our objective is to increase the price of foreign currencies in terms of gold.

We want to be 11% advantage.

Now, when you get down to 5%, they can reduce the appreciation of other currencies in terms of the dollar.

Now by going higher, we can get a higher rate of appreciation.

You know, when they say 5% they're not just trying to do us a favor.

They're trying to tend down the appreciation of foreign currencies in terms of dollars.

In general terms, that would give us a correction of about 4 billion dollars.

in our ballot space, and that led us to figure out about 40, the 5%, as opposed to the 9% we're talking about.

Because we weren't talking about doing exactly what we would do on the other side.

They were talking about doing more.

We are not asking, let me say to the leaders, I think, and I must say, and I guess Mike, you were both pointed out, that members of Congress have been very helpful in what you have said all along, and pretty much what you said after this, and I think you're going to look into it.

But I can only say that as far as what we have agreed with Funk to do, it is something I can give you an assurance that all of you will approve.

Now, all we, what we really want to do today is to say that we can, is to have some expression of confidence in the Secretary of Creation as he negotiates

This is one of the things, because you can't do development, but it's something where it has to be done, or it's sort of up or down.

It's almost, I think it would be fair to say it's somewhat in the category of let it be.

I mean, you can't go on and put on codicils, or what do you call them?

It wouldn't work.

Because we are, when you get down, believe me, it's been an eye-opener to me.

I think you can follow up on that.

I don't know how you can do that.

If you're reading down the very fine points, you're talking about a quarter of a point here, and a half of a point here.

You're talking about the bands.

We've got to be in a position that is, the Congress doesn't say anything.

Because we can't go back to ten days.

If we have a prolonged debate about it in Congress, all it's going to do is develop wild kind of speculation worldwide in all the money markets in the world.

That would happen, wouldn't it, if, say, you succeed this weekend and you make your announcement, and then Congress has to act a month later?

This is one of the technical problems we have here.

No doubt about it.

What we're saying is that only the fact that most of the major currencies in the world are pouring in, and if we get it either, if we cut it either,

I think we know what we're going back to, and no one's down to earth.

But that's possible, because most of them are floating.

France is not, but they've got such controls that they won't be affected too much no matter where they go.

Well, does that mean that there shouldn't be much leak time between me and us?

Absolutely.

The time has come.

That's what I'm asking you.

It smells better.

But we may want to announce them.

You know, if you get the group of territory, as far as any announcements, it will go out like that.

As a matter of fact, I would not let you say that my standard that we have with pumpkin, of course, is very specific.

We will not put it out.

But who knows whether that number will get out, or those numbers.

We won't put it out, because I frankly thought we would have won it, and I don't think we would.

But it's very close to, you know, Secretary of State, Secretary of State, and so on.

I guess the entire video that you made, Bill,

I don't think I'm overstating.

When I say that I don't mean everything that we want, but it is a very good deal.

Would you care to tell us about it?

Absolutely.

Now, one way we can do it is to get the Congress to do what we prefer.

We can technically do it.

If we make it equal, go on and let the IMF

to effect to placing the new race structure study to ratification from the congress that we do it and that's one way to go is by the law of resolution could you do it in the federal period that's what I'm getting at

The other advantage of that is that our trains, whatever they are, are not delayed 30 days.

Because the trains have to take time.

You know, we've been making this a novel train that's been affected for six months.

So the pressure we can get, I think that's about it.

If you go this way, Mr. President, you offset the possibility of some pressures developing against Congress in the next place, because you've got it in operation.

This is another huge question.

We're still submitting it to the Congress.

Yeah, right there.

Let's see if you can answer it.

I agree with the goal and the emotional nature of this country.

And anything that's done that will generate pressure on Congress will be a disturbing factor.

And the more that's minimized, I think, the better.

Well, do you agree, right, with the use of this international program as a device?

That has some feel.

It also has some attention.

It gives time to generate opposition.

And distrust.

I know it is this versus doing nothing.

Oh yes, that is indeed.

If I had something, I had to.

And so here it is, operation.

Yeah.

And he could wait in that period.

See the benefits of trade.

There's one other thing, right?

There's one other thing that it would do.

What she suggested earlier.

In that 30-day period, all the fears that people had, when they raised the price of gold, it couldn't be dispelled.

That's what happened.

I understand a lot of it is about dragging money on board.

There are a lot of folks who feel that way.

It grows about memories as you go off the gold standard.

We've probably been talking about that for years, but it's necessary.

Because Mike and I have been talking, and we both feel that I have had to say, that's not the right way to manage our business.

Then we have a specific proposal to validate things easier, and that's very easy for me to say.

What you still have, aren't you, is the idea that you talked about, is that in the 30 days after you're 18, potential times may be an announcement that you're going to pursue a course with a specific thing.

I want to make two points, John, at this point.

We may not solve it this weekend.

We will not have another meeting until the chances are after the first of these premieres stop.

But we are going to solve it at 15.

And when you say that we're not solving it this weekend, let me say it.

To reassure the members of the leadership here, that we have broken the law, and the solution is now certain.

I mean, you may not get it done this weekend, because it's so complicated, but take a look at the trade thing.

It may be on that.

We won't do anything on that until we get to Moscow, right?

I'm sure that's right.

So there's another reason.

I'm moving out of that place.

Bye.

It's the best way to do it.

Thank you very much.

I think the people would be a very big surprise if you didn't have to serve them for a little bit.

Yeah, yeah.

I understand what you're talking about.

It's a fact.

The amount of money in legal tender today is, we have about $50,000 today.

Right.

As long as that's funny, we'll pay you again.

We're going to test you on the dollar.

We've got to get that lost.

We've got to do anything for all of us to realize that all of this is talking about the dollar.

I mean, the world.

What we're getting here is spare treatment for the money.

I've got no doubts about the dollar.

We're doing better than they are.

We've probably been present.

It's fair to say we have now less inflation than any major destination.

Thank you.

Let me ask you one question.

Sure.

What we're talking about is using IMF as a temporary law.

Correct.

We're still coming to the Congress.

Yes.

We're still trying to build.

We're trying to build.

We're basically currency committees.

I think that's correct.

Is that right?

Yes.

Thank you for watching!

A big problem is the last you might mention, the question of whether it interested people if we wanted to agree on the timeline or not.

I suppose that would be a problem right now.

I can tell you that the tax resolution has a lot more in it.

I like our previous attitude, this is occasionally how we started to pass everything, it's time to go home and increase the pressure on us as well

Mr. President, have you made any decision on the money you would give the State of the Union?

Well, I think around the 20th century.

I suppose the tenant has that step-up data on the house?

Yes, yes, and that house didn't do it.

That doesn't count.

Gentlemen, I want to say and express a great deal to tell you, you know, before the meeting today I was trying to think of some of the gadgets we could give you.

Although I understand that is the bad word.

Hopefully it didn't work for him.

We promised you had virtually everything that we expect to have around here in the meadows.

But I did find something that I've been pretty bored to have.

This is a very unusual thing.

It's a presidential money flip.

Ha ha ha ha!

I'm going to say it over.

You've already got one.

Give it to that guy that's trying to attack you.

It's all good.

It's funny.

It's still going to be worth as much to me.

I'm going to say it over.

What are the comments that would please be careful not to give away any position with respect to how this will be handled through the IMF?

That's right.

What would you like us to say?

I've got all four of them.

Basically, I would hope that you just say that the President is impressed with you on the status of all the negotiations, and what he's learned, and if there's some hope for

Thank you very much.

The Chamber of Commerce.

In the fifth step side of Moscow, I met with the Deputy Chairman and members of the Council of Ministers of the Council of the Russian Republic, and the Chairman and Deputy Chairman and members of the Council of the Ministers of the Georgian Republic.

Also the mayors of Leningrad, Baku, Belize, all over us.

and forced to the red carpet.

And I had occasion, for instance, to trip down inside of the meet with approximately 100 American businessmen who were in the Soviet Union at the time, and to look over at trade prospects.

I also visited some industrial installations, a generator manufacturing plant in Leningrad, named Electric Steel.

There's a tiny steel plant there in Belize, a very large plant, employing 30,000 people.

From the Golden Department Store in Moscow, I had a visit with a manager in the service line, who seems to show us all his figures and so forth.

In Baku, we visited the oil field, we were taken out on a boat to see the oil store running its operations there.

in Malaysia's Industrial Achievement Exhibition, which is a permanent affair.

And I want to say also that we were well entertained, and I mention this simply because it illustrates the attitude of receptivity, the desire to please on the part of these people.

In eleven days, eleven nights that we were there, we saw five ballets, one opera, the Moscow Circus, the Georgia State Dancers, and had four state dinners.

which adds up to 12.

They put a jet plane at our disposal, a TU-134, that sees buddy people remove it from their musket, land-grab bag, and also give us a villa approximately equal to their idea of their house.

There were no restrictions on travel, no restrictions on talking to anyone, Poseidon said in his first meeting, that I could go anywhere and talk to anyone.

And I did.

I talked to factory employees that I walked to.

I talked to customers in the stores.

I talked to employees that were steel mail shoppers at Utopa.

The two high points besides the opening visit with Poseidon, strictly from a personal standpoint, were that

In that first visit, he talked about his five-year plan.

He said he was going to present it to the Supreme Soviet on Wednesday morning at 11 o'clock.

He said, I think it would be very nice if you could attend, and I hereby invite you to come.

And I accepted.

I went to the Supreme Soviet expecting to be up in the balcony somewhere, but I was escorted right out to the door among the delegates, right behind the delegates from Kazakhstan.

and participated in the entire discussion and presentation of the five-year plan.

I'm told it's the first time, I'm not sure.

It's the first time anyone from a western country has ever been on the floor of the Supreme Soviet for a session.

The second was in the field of entertainment, but the other one simply forgot because it demonstrated the other to be pleasant to us.

In Belize, the capital of the Georgian Republic, on Saturday night they put on a special performance at the Georgian State Tennis School for an hour and a half.

We're at a new opera house and see 3,000 people, the only people there to see the show are the 10 people, 9 people in our party, plus a few Russian escorts and protocol officers.

But on this magnificent show, there's a sensation in the United States.

Now, just by way of identification, Moscow is here.

This is a tremendous country.

Moscow is here, Leningrad is to the north, Syria is to the west.

Baku is down here on the Caspian.

But you see the capital of the Georgian Republic is over here.

Now you see, the population center of the Soviet Union is here in Georgia.

What's the distance from Moscow to Baku?

Moskva to Baku is three hours on the plane, about 900 miles.

It was in a jet, so it must take about 1200 miles.

And a little less here.

But this tremendous country here is important in our discussions because the natural resources that they apparently have are almost unbelievable, and I'll refer to the map again, talking about natural gas.

The substance of the conversation were a certain stride, but I understand there would be no negotiations, no commitments of any kind, no agreements.

It was an exploration.

And we can point to that, an exploration of the trade potentials in both elections, the trade problems that were in the way of realizing those potentials, possibilities for investments in one bank and another, and tourism.

All the meetings that I had were very friendly, very direct, very businesslike.

There was no ideological propaganda of any kind anywhere.

No notes, talks about how superior they were, so on and so forth.

It was all as you would expect if you went to Spain or France or Italy or strictly on the south.

From the substance of the talks, I really keynoted in my first talk with Chairman Sagan, which I said lasted almost three and a half hours.

He greeted me with members of the press there, and with photographers.

And the press said, during the first opening remarks, which was quite unusual, he opened for about five minutes, started saying, as I said earlier, it was probably because it was high hopes,

They saw it as a means of improving relations with the United States, and he thought they ought to establish some kind of order of priority to indicate a major shift of policy on the part of both countries.

They were prepared to make that major shift with respect to economic and commercial ties.

At that point, after having just talked along that line, their desire for understanding who the United States was for Biden, he just met a surprise.

He said, I think that's enough for them to print for one time, let's go ahead.

So, I responded, and I agreed with the approach, and I wanted to talk about the kinds of things they had to sell, the kinds of things they were required to buy, what they meant when they were talking about joint ventures,

I hope we can accelerate the promotion of tourism in both countries.

It will mean that there is changing understanding.

I referred to the greening contract and expressed satisfaction with that, and that I thought the special efforts we had made indicated that the United States did want to do more business.

I also referred to the fact that we issued a billion dollars of export licenses to the Kama River plant, and that we were reducing, slowly but gradually, reducing the export controls that the United States had unilaterally imposed.

President said that was all fine, but he wanted to go into more detail because he thought we ought to go back to the attitude that prevailed in the 20s and early 30s when the United States and the Soviet Union did have significant economic collaboration.

He said, what we have now that we call trades, a few leasing machines coming over to some of our factories, and a few sales for vodka and caviar, and that's still a trade.

Last year, between the two countries, he said it all amounted to only about $150 million, whereas we did $5 billion for the trade for the Western countries.

And he said, that's still a trade.

It's a...

Italy, France, and we're doing very little.

And he was a bit scornful of that.

Between the two largest economies in the world, we're dealing in those figures.

He said, however, that we have to approach it seriously, and I have a number of subjects I want to raise, and I'm sure you have some you want to raise, and how do we get there?

He said the first is that we feel that there's discrimination in the United States against Soviet products and the Soviet Union.

That, anyway, they do not have most of their things in treatment for their goods, which means that they would have to pay extra tariffs on anything they ship to the United States.

And the other is also not only...

The Kokan control list of the major western countries limiting what they will sell to the Soviet Union, but the United States has its own list of thousands of items which it will not sell.

He said, he particularly...

He felt that the co-cop list was the public evidence of discrimination that he didn't think was any more pertinent.

He said, we don't want to sell the United States, but we don't publish a big list of it.

He said, if there's something you don't want to sell us, sell us some.

And we'll work within that framework.

And we would understand there's some things you don't want to sell us.

So why do you have to publish a long list of things and then from time to time add a few items or take off a few items?

He said that just called public attention to the fact that

You are discriminating against us.

You send in trade.

We send credit in our export transactions to...

for as much as ten or twelve years, and we get similar terms from other countries.

The United States gives us no credit.

And we think that the practical possibility is that we can't buy a great deal unless you do extend credit or credit guarantees.

And he said, also, I think this kind of goes on, we'd like to establish a Soviet bank in the United States, a French bank in the United States, that helps in trade transactions.

He said, really without credit, we can't build up the trade as we'd like to.

But he said, there are some things in the way of products that have great possibilities between us, and I think we should study those very carefully on both sides and protect the quantities.

As he said, you know, we work within a five-year plan, and we do have to have some relationship in our current activities to what is projected in the five-year plan, even though there's some flexibility.

He said, also, I think there ought to be a separate study in grain, that we can't grow corn in Soviet Union.

I didn't think it was any more pertinent.

He said, we don't want to sell the United States, but we don't publish a big list of it.

He said, if there's something you don't want to sell us, tell us so.

And we'll work within that framework.

And we would understand there's some things you don't want to sell us.

So why do you have to publish a long list of things and then from time to time add a few items or take off a few items?

He said that just called attention to the fact that you are discriminating against us.

He sends in trade.

We send credit in our export transactions to...

as much as 10 or 12 years, and we get similar terms from other countries.

The United States gives us no credit, and we think that the practical possibility is that we can't buy a great deal unless you're doing 10 credit or credit guarantees.

And he said, also, I think as time goes on, we'd like to establish a Soviet bank in the United States, a French bank in the United States, that helps in trade transactions.

He said, really without credit, we can't build up the trade as we'd like to.

But he said there are some things in the way of products that have great possibilities between us, and I think we should study those very carefully on both sides and protect the quantities.

As he said, you know, we work within a five-year plan, and we do have to have some relationship in our current activities to what is projected in the five-year plan, even though there's some flexibility.

He said also, I think it ought to be a separate study in grain.

That we can't grow corn in the Soviet Union.

And we have decided we want to increase the protein consumption of our people, so that means we have to raise a lot of meat.

We want some meat cattle.

He said up until now we've had dual purpose cattle producing milk and food.

He said now we want to produce single purpose meat cattle.

And he said, that's going to take a lot of grain.

And he said, for example, if the United States would do us credit, similar to the terms it gives other nations, we should be willing to enter into an agreement for two or three million tons of corn a year for five years.

And perhaps even other products as well.

We spired a little bit on credit terms, assuming that credit was available, but I indicated that this was not a time to negotiate those terms.

Then he went off into the possibility of participating in the United States companies in developing their actual resources, where he would contribute capital and technology, and they would contribute the local costs, and the resources would then be developed, and the United States company would get repaid for its investment out of the product, and the nation would have a 20 or 30 year supply contract.

As an example, he cited natural gas, where he said they have great resources, and they have steels and drilling, and some technology which they believe is very hard in drilling.

He said what we would need is a pipeline capital from the United States, and the liquefaction plants in the port, so that we could send the gas to the United States.

And of course the tankers, which carry the gas, and these are special.

He said, this sort of thing will take time, it will have to work out in advance, so it's illegal.

Commercial details, established principal continent of the United States, and Soviet law, within which the United States companies and our enterprises can negotiate with.

But he displayed quite a bit of knowledge to our fuel situation.

He said your fuel and power needs are getting accused now.

They're going to be much more so in 10, 20, 30 years.

And he said, assuming that there is an improvement in relations between our two countries, there would...

It would make total sense for you to buy some of your supplies from the Soviet Union, and use the proceeds, we would use the proceeds on the paper every night.

He said, we can deliver up to 120 million tons of gas for a while a year, and we're talking billions of dollars.

He said, I understand this has to be done on a business-like basis.

Either side is interested in sharing, and your companies are interested in profit.

We recognize all that.

He said, we're even interested in ventures in the Soviet Union that would relate to third countries.

He said, when Henry Porter was here, I offered to have him build an automobile plant for us, at which they would provide technology and some capital.

And after the money was all repaid, Porter could take 20% of the output and sell it anywhere in the world they wanted to sell it.

He said, now we're getting ready to build another truck factory in addition to the Connor River plant.

The start of that is in our five-year plan toward the end.

He said, I think we ought to look into formulas for collaboration of that type.

He said, another area is paper and pulp.

We've got tremendous resources of paper in that area.

The vast Siberia there.

He said that we worked out the formulas.

I think we could find ways to show you items of that type that you need.

Plus the non-ferrous metals.

Platinum, copper, germanium, titanium, zinc.

That we don't have much in, unfortunately.

But all of these are available either to sell to you, or on a joint venture basis in an economic collaboration.

He said, you believe in such a diamond, he said, the world doesn't know yet.

Very generally, but we now produce 60% of the world's diamonds.

I didn't know that either.

He then went on to say, continuing his monologue, which went on for quite a time, I've been thinking about how to make your visit really useful.

He said you could go one of two ways.

This could be a nice series of conversations.

You could have a pleasant time and go back and nothing would happen.

Or he said we could try to make some progress on some fronts here and lay the groundwork to the moon bridge for the visit of President Nixon.

He said that if we agree that it is desirable to accomplish something before he comes here, he said I think we could exchange a paid memoir and conclude it here with it, in which we would agree on a reciprocal desire to develop economic ties and establish four task forces of X groups.

One would deal with legal matters such as most favored nations, trade restrictions.

The second would deal with financing, banking, credit, and so forth.

The third would be an analysis of the commodity categories to identify areas of maximum potential in both directions.

The fourth would be joint ventures, general economic ties, third country, sales, and so on.

I said, if you would agree to do that, we would not impose any restrictive instructions, we'd give them constant encouragement, they could work longer than they did between Moscow and Washington.

But he said, I'd like to see them accomplish something within three or four months.

He said, I'd be willing to help, personally, meet with them in order to keep things moving, and he said, I would hope you would be willing to do that on your side.

Well, the time came for me to respond.

And I said at some length that in the framework of the kind of relationship he was talking about, all the suggestions he made were possible, although there were a number of factors involving time that had to be considered.

There were legal and legislative problems that had to be resolved, and they would all have to be dealt with in the framework of the public opinion and the political relations of the two countries.

I said, you know very well that public opinion has been shifting in the United States.

for the kind of arrangement you're talking about.

I assume it's consisting of the Soviet Union.

But President Nixon is now still leaking public opinion and seeking a closer collaboration.

And it's very important to be sure that there is support and that we take these steps in the right sequence so that we can accomplish objectives that we might hope for.

I said...

The restricted trade lists, for example, were created in an atmosphere of flooding pressure some years ago.

The public is now receptive to the reduction of those restricted lists.

The Congress set new standards at the end of 1969 that requires that we consider the availability of a product somewhere else before refusing to sell it from the United States.

And we are applying that standard.

I said that as far as the most favored nation is concerned, this request is a congressional action.

I could make no commitments of any kind with respect to that.

As far as trade credit is concerned, the Congress has just given 60 days ago to the President the authority to decide.

When we send credit to the socialist countries, and if somebody was receiving and would receive consideration, I could indicate to them whether or not there should be a change in our position.

It certainly is what we consider as part of our report.

He went back to the subject of long-term credits and said he had a fiat deal for the automobile plant.

They had a 12-year credit.

And similar terms were applied to other equipment purchases in Europe, either from the seller or from a bank.

I indicated that the United States credit did not extend for quite that long.

The exchange bank was in a sort of a lower frame position.

He then said gratuitously that he thought I ought to know that during the early August run on the dollar, the Soviet Union had deliberately decided not to dump a single dollar or conduct any operations that was undermined.

He said that anything like that, that these pinpricks were unnecessary among the big powers, and I expressed thanks for their restraint on that point.

They went back again to their armies for cash and oil, metals and minerals, referred to as talks with Henry Ford, referred to the Colmar River situation, in which MacTucket indicated an interest and then withdrew.

So they were now decided to go ahead and build the plant themselves, but they would buy equipment for their various countries, including the United States.

I would say that before we could consider that we had all the items on the table, I wanted to bring up a few which were very important to us.

One was that the American businessman was a very difficult business in the Soviet Union.

He could not get an office, he could not get hotels, he couldn't get living quarters for his personnel, he was just a child.

and had other kind of gifts, including the plans of users of his equipment.

He had a deal with the Minister of Foreign Trade, and that I intended to pursue this subject with him, with the Minister of Foreign Trade, and he said he recognized it as a matter which, of course, there would have to be dealings to work things out.

Then I said there's another factor that's very important in the public opinion in the United States, which I certainly think has to be dealt with as part of any arrangement we come to, and that is the Lend-Lease debt created during World War II.

My recollection is that the United States is making no claim for the Lend-Lease equipment which was damaged and destroyed during the war.

And there has been payment to the United States for the land lease equipment which was sent after the end of the war.

What we're talking about is reusable equipment still in the Soviet Union at the time the war ended.

Negotiations on that went on in the fifties and ended about ten years ago, and nothing's been done or said about it since.

And I think it's very important, if we're going to develop public opinion in the United States to support extending credit or doing other things, that there be a prompt resumption of negotiations and a settlement of this debt.

I did not mention to him that the difference apparently is that we offered to accept $800 million 10 years ago, and he offered $300 million at that point.

Again, he made a deal to consider his proposal for a memorandum establishing these joint study groups.

He said that he recognized the importance of public opinion in the United States, and thought I excited to read it a bit, because he had been there once.

He said he'd never encountered hostility, and he said, of course, there are small groups of malcontents, and you have some now.

You see conflict, and there will always be tensions, but he said the real Americans are not hostile to the Soviet people anymore.

Uh...

I then told him that since he was going to see the president in May, I thought he might let me know something about him, because I had been a close friend of the president for many years, and I thought it was interesting to him that all the men were going to meet with him.

I explained to him that he was a man of great intelligence, modest and quiet, with a profound anger, one of the ways issues carelessly take the far-seeing approach.

and had the confidence of a majority of American people, although he was elected with only 43% of the vote.

The economy was strong, and with the president's efforts to ensure peace in the world, with his political opponents in disarray, I was confident that he would be re-elected by a wise margin.

And I thought that this would mean that there were another five years in which there could be...

relationships developing between the two countries if that was the will of the Soviet people.

And there was no doubt that the president, by the letter that he had sent to the chairman, did want to see improved political and economic relationships.

Well, he was very interested in discussions about President Nixon, asked a few questions about him and so forth.

And I assured him that I thought they were two people who could talk things over in a very business-minded way.

The president in turn was very much interested in my appraisal of Terremont for speaking.

I said this, that he was very obviously a very able resident man.

Whether he would be around another five years or something, I couldn't judge at all because he was 67 years old.

But he is not at all the dour, serious character that his pictures portray.

He is businesslike and intents his business discussions.

But he also has a great sense of humor.

He loves banter.

He likes to break in a serious conversation with an irrelevant but friendly remark.

For example, at one point, after we'd been talking for an hour, they brought in tea and glasses.

He took his and started to gulp it down, and I grabbed for mine, and it was so hot I had to let it go.

And he laughed.

He said, we drink our tea hot in Russia.

We make it in a salad bar.

Have you ever had tea made in a salad bar?

And I said, no.

He turned to the Minister of Foreign Trade and said, I want you to go out and buy a nice salad bar and give it to the Secretary and send me the bill.

And he turned to me and he said, that's the only way to make tea.

Well, that kind of intrusion a half dozen times in the course of the conversation, that made it interesting and made it evident that the guy is still in the country, and he's on the pressure in England.

At one point we were talking about the dangers of the itself of the United States, and he went through with this, and he said, Oh, I understand that...

Some of you Americans like to buy old bridges.

He said, we've got a lot of old bridges.

I don't think some silly American would come over here and buy some of your bridges.

I don't care how silly he is, as long as he has money.

Western-type conversation.

He likes that kind of discussion.

He went back to technology.

He said that Europe has very low oil and gas.

We've got unlimited potentials.

Our hydro water price is very large, but it is limited.

But we have great supplies of natural fuel.

We can develop a large production for Europe and for the United States.

He said in science and technology, joint ventures or divisions of research could be worked out to avoid duplication of batteries.

I think we ought to set up a fifth working group to see what we could do in the whole field of science and technology.

So that in the environment or in space and all those things, maybe we could work together instead of duplicating.

Well, I said, Mr. Chairman, I think that's a very interesting thought, and you're suggesting that when we get ready to go to Mars, instead of competing, we go together.

Well, in the translation, this came out as a personal invitation.

He said, well, no, I don't want to go to Mars.

I'm going to stay right here on Earth.

I said, well, I intend to watch it on television.

He said, well, I'll watch it on television with you.

That gives you some tone to make a conversation.

He did not raise any political subjects.

There was no discussion of China, no discussion of the other communist countries or anything like that.

He did talk a bit about the five-year plan.

He pointed out that their great purpose was to increase the amount of consumer goods in their five-year plan as distinguished from the

from cattle goods, and that this was one of the reasons that they wanted more trade, because they needed technology in that field.

She then urged me to see what I could do to provide a sound basis for the president's visit, and consider some kind of an ace memoir before I left.

I agreed with him, I desire to believe, going as far as we could, but said that this was not...

answer his suggestion as to creating working groups and so forth, the latter I had met, ministers and government, and was in a position to know more fully just what the possibilities were.

Well, that was a general tender, a meaningless decision.

I had one part, here's still a trend of their imports from the industrial west, these were sent against the other countries over the last ten years, obviously we were

They're standing still, not doing any of that.

And another crisis here shows the difference in consumption expenditures.

50% in the Soviet Union, 68% in the United States against investment.

30% in the Soviet Union against 17%, this is the capital goods area.

Japan's 13% against 9%, and so forth.

And then he talks to the various ministers with more detail of the same subtleties.

I won't go into them in any way, except to point out a few things.

The minister of natural gas, this is only one minister for natural gas and one for petroleum.

Minister of Natural Gas pointed out all the gas fields they have.

Considerable number in the east, surrounding here and in the south, some over here, again in the north and south, and a tremendous field that he says is over in here.

If there were any land that should be brought to a port that would be open a large part of the year, we could ship out of there, otherwise...

We probably have to move considerably over to the vaulting in order to, with pipelines, in order to move the gas out.

But there's also a lot of natural gas and apparently oil and minerals over in this area, which we said could be brought down to Vladivostok and shipped from the parts in that area.

I assume that the charts were valid and no reason to question it.

They do seem to have a very good amount of resources.

Now I'd like to go on to the, that's the second part of what I want to present, to the third part, which are the impressions, the conclusions, and the significance.

The plants I saw were not very modern, even though they were selected by them.

They had much older equipment, the housekeeping wasn't too good, the floors weren't prepared and so forth.

But the morale of the employees seemed to be good.

They were friendly.

They were friendly when I spoke to them.

I broke off the protection to the plants and talked to some of them from time to time.

They were friendly.

I noticed they had suggestion systems along the walls, just like we do in our plants.

They also had, of course, the Soviet propaganda signs, and so on.

As far as the people are concerned, the average income, according to them, is 150 rubles a month.

That's very little even in the power of exchange, which would be $165.

But, on the other hand, everything is in proportion.

Rents are 4% of income, so an average worker pays $6 a month in rent.

He gets all his medical, hospitalization, education, retirement, paid free, no taxes.

Income taxes are rolled 10-12%, and they don't apply on the first part of that income.

A cabinet officer, in case any of you is interested, makes 700 rubles a month.

That would be $777.

But, and prices are high of many things.

A black and white ordinary seat would be around 440 rubles, which would be, for the average worker, a three month pay.

And I'm not sure that they can deliver them immediately.

On the other hand, the shortages of the urethra dinosaurs don't exist.

There's an awful lot of floating food and appliances and a great many other things.

The major shortages, the ones they will concede, are in housing.

And there are great shortages in housing.

And of course, there will be a theme at the end of the next five-year plan.

They won't be making a lot of money this year against our tenement.

And the rate of exchange is such a thing because there's a black market and the rate of about 3 to 1 for the dollar, the 1 to 1.

And they have special stores in which higher currency buyers go, with dollars or Swiss francs and so forth, where the prices in rubles are about half, or one third of what they are in the regular stores for their own people.

So, incomes are very low, but on the other hand, so are expenses very low.

From all the people I talk to, I get an impression, which can only be one person's impression, of course, that it is an improving nation, that it is a rather comfortable nation.

They want to advance their living standards now.

They're just thinking in some ways the capitalist concepts, because they now use the profit motive at the enterprise level.

Where once they worked only to five year targets.

They used profit motive and they used part of the profits to create incentives and make bonuses to the employees and so forth.

So we've gone quite a ways for our system in that respect.

And on the average, my impression would be they're a generation behind the United States in the welfare of the people.

But it is a country of growing strength, conscious of the strength, and no longer seems to have an inferiority complex with a lot of blusters and so on.

There was no boastfulness, no illogical rhetoric in any of the discussions.

Apart from a couple of other conclusions, one is that with their immense natural resources and that tremendous range of desired area, which is bigger than the United States, apparently they have an awful lot of areas that haven't been researched for.

They can be a very strong rival to the United States in a period of time.

I had a feeling that, overall, they had the habit of silence, and the attitude of being number two, and they had their sights on the United States as number one.

Kosygin's remarks in his five-year plan were misinterpreted.

He did not say that in five years it would be equal to the United States.

He said that in five years, in most measurements, it would be up to where the United States is today.

And when you translate that in terms of our growth in five years, and also the per capita difference, because they have 20% more people than we do, that means that in five years, they will still be 40-45% behind the United States in most respects.

One other question I got, one of the characters of government is that business...

The way they do it in the United States is not for the small companies, even the medium sized companies.

This is something that takes the companies in the big chips.

It had a big capital, a big know-how.

It was negotiated in big terms.

A three billion dollar gas deal, a billion dollar automobile plant deal, things like that, are just as likely as a ten million dollar order for machine tools.

There will be a lot of those, too.

But there won't be any small trades.

Coming up, the issues.

They want mostly remission treatment, because they're exports to the United States, admitting that it's mostly psychological, and it's not of any great significance in keeping goods out.

It's not because they don't have the kind of goods.

It would be subject to it.

They want credit facilities for their imports.

So that they can buy more and pay more on time, including normal credit on agricultural products.

And they know, of course, that we grant credits to Poland and other countries on agricultural products now.

They want a reduction of our unilateral list of export controls.

They consider them to be an obstacle, discriminatory and psychologically unsatisfactory, even though the practical effects may not be too great.

They want to increase scientific cooperation, and they would like to work with us in research and development and whatever fields we can work on.

They would like to have a trade agreement.

After all of these things are worked out, they have trade agreements, more than 100 trade agreements with other countries, they take them into account in their five-year plan.

Similarly, the State Committee on Science and Technology would like, as I said in the room, a scientific and technical cooperation such as they have with Canada and France now.

The issues that are of importance to the United States

We sold out, and incidentally, I'll tell you in a minute how I dealt with this proposal for five task forces.

We won most of our nation's treatment in their terms, in the Soviet Union.

We want procurement practices that don't discriminate against our products.

We want earlier and better market information as to what products they need that we can supply, instead of waiting until the Ministry of Foreign Trade says we want to buy 100% gold.

And we want greater opportunities for American businessmen to contact the users of the products, not just the Ministry of Work and Trade.

Secondly, we want a better commercial infrastructure.

We want the opportunity to open offices and salesmen, attainable experts in those offices, housing for their people, telecommunications.

and we want a greater ability to travel around the country, and we want a procedure for setting commercial disputes by some type of arbitration, third-party arbitration, so that we don't build up a great deal of differences.

We are interested, we'll take a look at their joint ventures,

recognizing that under the American system, again, that has to be done primarily by private business.

The only thing the two countries can do is create the atmosphere in which private negotiation can be successful.

We are interested in selling them increased agricultural products, and indicated that we would follow through on that upon our return to Washington.

We quite expressed again

and all of our discussions the need for a settlement of the land lease debt as evidence of their fairness and as a necessity in creating the right atmosphere in the United States.

The conclusions and the significance that we reach are something like this.

or I might say what we did with respect to this proposal.

The action that we took over there at least, we committed only to continue the discussions between the Ministry of Foreign Trade and the Department of Commerce, and agreed to accept a delegation on four or five of them, as by a deputy minister, to do strictly a fact-finding tour on trade opportunities.

not to deal with financing our most favored nation.

We left a letter expressing the views, their views as we understood them, and our views as to what needed to be done, and I got in return a letter from him confirming

those points of approach, with slight changes in emphasis on their part, but no difference expressed.

Also, as I said, I got a personal letter proceeding to President Nixon, and invited the Minister of Foreign Trade to come to the United States as my guest, probably after the President's visit to Moscow.

Conclusions...

Obviously they want more trade with the United States, and they can speak progress of their, sort of towards their economic and social goals, particularly if they can get credit.

They need capital, and they get capital in three or four ways.

They get credits per month for selling us more goods, by getting our investments in their ventures, and by letting more money to tourism.

And there's no doubt there are great tourist attractions there if they build the facilities.

I could not sell them on the idea of American-style hotels, but I think they will go to that point because the hotels are not of the standard that will attract American tourists.

In a meeting of the Minister of Petroleum, he gave me a shopping list of almost 100 items of equipment they would like to buy at this time, and some items of technology they would like to get.

Our people have looked over the list, and about 90% of it does not give any problems of licensing under our present procedure.

But again, I don't need to point to acquired credit.

The second conclusion I have is that increased trade with the Soviet Union would benefit the United States, because the main items they would buy for several periods of time would be cattle goods and equipment, later intensive items.

The main things they would sell, except, of course, agriculture, which is less intensive, but is nevertheless important to us to back them up politically, the main things they would sell would be the area of raw material, minerals, water products, fuel, natural gas, and so forth.

And our relationship could almost be the reverse of what they are with Japan, where we sell raw materials and buy back many goods.

And we could probably, to a very large extent, in the early years,

for the first 5-10 years sell manufactory goods and buy back raw materials.

We could also advance our positions against the other European countries where last year we only supplied 1% of their imports and took 1.5-1% of their exports.

And so far as the joint ventures are concerned, this is not a new thought.

They negotiated, oh, 50 or more of them with other countries.

They have joint venture deals with western countries for timber development, building ports, coal mines, nickel mines, pipe mines.

glass manufacturing, nickel refining, gas mining, diesel engines, automobile manufacturing, chemical plant construction, and a number of other things.

That's their arrangement already.

But it will take some time for American companies to negotiate that kind of a deal.

I would say the growth of trade between our two countries, my third conclusion will be raised by most favored nations and export credit facilities.

American exporters have a lot to learn about doing business over there.

They've got a lot to learn about doing business in the United States, and they'll never be able to sell consumer products until they do market research here as to what it is with the public.

The economy over there is going steadily, and this does continually increase the potential for trade between the two countries.

The next five year plan calls for 47% increase in industrial production and 49% increase in consumer goods.

Calls for an overall productivity of 7.5% per year for five years.

This is dependent upon getting the high technology equipment that they need.

So the potentials for trade looking ahead are very high.

I've resisted making any estimates for anybody publicly.

I've clearly said that I think that it can be a multiple of present trade.

But I think it's not a reasonably expected value.

In five years we could have our exports up to a couple billion dollars.

If we found ways to buy part of that.

So there is long-term opportunities.

It's going to take a while to negotiate politically.

It's going to take a while to negotiate in terms of business.

I've made it quite clear to everybody I've talked to that this is a development that could take place only in parallel with improvement in political relations.

I think collaboration on raw material extraction and processing is feasible.

I don't think there's any doubt they have the reserves to go all the way with it.

And my final point here is the significance of it.

And again, this is one man's analysis.

They are ready to step up economic relations because they want to advance the living standards of their people.

To do that, they need capital.

And they want to do it in a business-like way.

They wasted no time anywhere on protocol, proceeding with direct, but right to those proposals.

They're ready to step up all the economic contacts and face the trade and negotiate access to their markets in any way that's necessary.

Obviously they need to catch up on technology if they're going to meet their appetites and the appetites of their people.

They have the one advantage that their industry operates on a scale similar to our industry.

What they do is in terms of big plans, big industry, big orders, big transactions.

They have a great respect for American management techniques.

The realities...

Of course, they're talking in terms of their narrow self-interest.

They're going to be top bargainers on any coin.

Right-hand companies have not had to be the case so far.

And then they even have begun to believe their own propaganda that our economy needs their market in order to help extradite ourselves from our present economic difficulty.

That, as he had said in his five-year message.

There's an opposite side to this self-interest part, and that is that a communist government is cumbersome and is advised to production and distribution.

You'll see that every way to go in every conversation.

Certainly, if they acquire our capital and technology, it will advance conditions in the Soviet Union by itself.

It won't make the system operate any better.

It will still be clumsy.

Another point, they're going to remain anti-capitalist.

They're not going to change their ideology.

They're not going to insulate themselves totally from our ideological contamination as more people and more business enter the Soviet Union.

They probably will no longer be anti-U.S.,

And there's a considerable decrease in that in the press and other signs in the last year.

But they will be anti-capitalist, they'll be strongly pro-communist.

I don't believe that trade and economic contacts will make it necessarily easy to deal with on major political issues, but I think it could, if there is more trade and tourism, it will help to establish a better overall relationship.

If the economic benefits could then become large, they could make a stronger effort to want to cultivate a better image.

But realistically, we have to recognize that we're communists, and we're capitalists, and free-handers of our measures, and that this is not going to be an easy course in order for it all to happen over time.

We have to base our decisions...

with due regard to national security and to the economic factors.

The businessmen generally will take care of most of the economic factors.

If it presents those significant strategic risks, then we should foster and stimulate this trade and economic cooperation.

If it promises profits for American business, and if it gives strength to the American economy, then I think we ought to seek to normalize the relationship.

I normalize to get our share of trade and content.

Perhaps in time, excitement of this will arise on the political side.

Only time will tell, but I feel that the doors are wide open for movement on both sides as we want them.

Poland was anti-climatic after all that.

They expressed the same desires for greater trade, greater economic collaboration with the United States.

They are interested in joint ventures in Poland along the same pattern.

They now have most bigger nation treatments for the United States, but they would like credits.

And they presented to me a 350 million dollar shopping list of things they would buy within the next year if they had credit to finance most of it.

The relationships between the United States and Poland have considerably more to build on.

Of course, there are many Poles in the United States.

We have been doing business with them.

And I understand that the consideration is being given, or will be given, certainly to extending exporting and coordinating credits to Poland as we did to Romania a short time ago.

I think that took a lot more time.

Sorry, that was extremely well done and very definitive.

I'm sure we've all learned a great deal from what you've had to say.

Before I throw this open to general discussion, I just...

First I want to ask one question, and that is,

Was there any response or indication to some of the points you raised, for example, the Lend-Lease debt, the debts in the U.S., things of that sort?

Did they respond at all or just receive that information without comment?

With the Lend-Lease debt, the response was not very positive.

It was a recognition that it was something on the table that dealt with no commitment to deal with it.

The best communication we've had on that since is from the American ambassador to Japan, who got it from the Soviet ambassador there, who recorded all these visits and said the only hard one to deal with would be the landing step.

I think you put your finger right on, really, what has to be a very principal concern in the United States, and that is

to weigh very carefully the impact on our national security of whatever we do.

The very fact that what they want from us is a technological improvement, rapid technological improvement, which means finished goods and sophisticated techniques for basic productions, which can rapidly be turned to overcoming some of their

Disabilities.

It makes us have to be very cautious when you stop and think that the preponderant strength and size of the country and a disciplined workforce, a completely regulated economy that they have, makes it very difficult for us to compete without a very superior technology.

We must be extremely careful that we don't supply all their deficiencies, particularly as long as they adhere to this rigid ideology that prohibits things like inspections, direct contact, as you mentioned, with the people who are in production and so forth.

I think it's probably that one.

He said, you know, we can buy anything we want, anything we need.

And he said, I started to object, he said, well, I know some of it isn't as good as the American equipment, but it'll do almost all we need to have done, a little less efficiency.

So he said, we can do all the things that we need to do, and your technology will really advance at some point in time, we can get there.

Now, on the other subject, on the American business management so far,

They were very forthcoming.

They said to apply for offices and show us why you need them, and we would allow you to have offices to help you get the communications in the living quarters.

And there's nothing that prevents you from visiting the plant if you have a reason to go there.

So if you don't want American children running around in one factory or another,

Unless there's a purpose to it, on our side.

But American companies that are selling equipment for a purpose can go to the plants to see how it's working, and to see that it's all right, and to see that it's prepared and cut up and all that.

We won't talk about that.

On that, I would say it's as forthcoming as I could expect, since it's something that would be part of a negotiation, but they're not as pleased as that would be no problem.

Mark, I could give you one illustration of what can happen, and maybe premature in telling this story, but I got a cable from Howard Clark of American Express the day I arrived, saying we have an office in Moscow and we've been trying for 11 years to get a telecommunications agreement.

Will you bring it up?

So then I saw they had tourist people, and one of the things I brought it up and said, now, how do you expect to develop your tourism with that kind of a relationship?

Well, they professed not to know, and said they'd look into it.

The next day, at 6 o'clock, there was a messenger at the embassy to say that American Express would have their telephone equipment within three days.

Sorry, I just wanted to talk about what the Vice President had to say.

I was there a few years ago.

Frankly, no matter how much technology we provide, until such time as the end of the century or amongst workers,

And at that time, they had status as proper children, as the golden citizens, and so forth.

But you could go around, as I did, to quite a few of their factories and other things that were destructed, which was a plan for the purpose of our visit to inspect their destructions.

And you see some simple employees, and usually your America boss comes along the way, you know, a few employees, the load is quite heavily on the boss, and some of my friends go to get back to work, to make back at them, so that fellow just gets on loading, gets on smoking, and the fact that the boss came along didn't mean a thing.

And there's a corporation like here as well, I believe.

But the main thing that I find when they express me on...

What the recommendation I might have was that, I suppose, how you can use your superintendents to inform them.

Because it seems to me that's the key to the success of a corporation.

And they get it in any term.

Fine, you know, what comes out is, generally speaking, the guys who get the bigger money, the guys who, you know, form so-called body blocks.

It makes no difference whether the guy was on a construction job in his life before or not.

And I said, until that time, if you train your management personnel, even with all the advanced technology you want there, unless they have some people who know what they're doing, they're not going to go very far.

And I think probably this is what...

Senator, you've got to admit that they've gone pretty far now, with technology and leavenry and things like that.

They've gone far.

A job, and trying to do a good job at it, such as they have in space, and so forth.

They do a hell of a job, and I am spoiled.

They were better than anything I've ever seen.

But when I think of housing, for instance, why had they to throw their hands right through holes between the concrete panels?

And they were proud to show you these things.

The floors, the factories, just as dirty as can be.

I mean, they have no sense of houses or anything else.

So they've got a long way to go, and I'm just interested to find out whether or not they have improved on their worker output or productivity.

John's already told us that it wasn't there a few years ago if you worked with them.

I would say they must have improved some in morale and sensitivity, but they're still far from efficient.

They would be shocked if they went through a United States steel plant or a generator factory to see how efficient federal electricity is, for example.

They recognize it, to a degree, but not to the extent that they really should.

They don't know how far behind they are.

First, I'd like to...

Comment on that.

Your report is certainly a very fine, comprehensive report.

Further, I'd like to make two comments that deal with, first, the actual security aspects of this problem, and secondly, the political ramifications which I believe are involved this year.

I would hope that we would take no steps to request further discretionary authority in the field of the most favored nation requirements, which does require congressional action in this next session of Congress.

And secondly, I would hope that there would be no action to extend further credit arrangements as far as the Soviet Union.

I know that I'm in the minority and was between Treasury, State and Congress.

In regard to the billion dollar technical and other implements that was made available for this, so we do need to go forward with the truck.

And my position was the minority position.

I understand that I don't appreciate Congress making a big thing in their press briefings about how the test was overruled and this, but that's all right.

I understand that you had a little games and shit down there at Congress departments and in your briefings.