Conversation 126-002

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Go ahead.

Oh, that's right.

Who was missing?

Is he coming?

We called his office and we don't have the answer.

He told me he was coming.

Wait, would you mind just waiting?

We can begin on the other side.

Great job.

This is the store here in Washington.

This is the store.

Before, while we're waiting for the other two, let me touch briefly on a subject that we'll cover in greater detail tomorrow when Mr. gets back.

As you know, we've had some good news from Paris today.

That was a very, very close

I must say, over the last weekend, a number of messages going back and forth, letters and so forth and so on, and talking and calling on people to speak for that purpose.

We expected to have you yesterday.

That's why we had tentatively called you for 11 o'clock yesterday.

The communicator was coming along yesterday.

But then it went over for 24 hours because we didn't have a group from the south.

We worked it out and it did.

When I would come on in, I'd sit out right over there.

details which Henry Kissinger will cover tomorrow.

Let me say first, what is involved here is not a news agreement on Vietnam and Southeast Asia.

What is involved here is a

An agreement, basically, to strengthen those areas of the present agreement where, for example, the provisions with regard to infiltration, with regard to violence, of course, these fires, etc., etc., etc.

It sounds very simple.

But I must say that it's taken us weeks to negotiate.

We think we consider it very important.

I cannot tell you, in that very dangerous part of the world, and very volatile part of the world, the Vietnam as well as Cambodian battles, the Cambodian retreats, that everything is...

And the fact that the four parties have signed this communique is a very significant step forward.

We think it will reduce the number of violations.

We think it will certainly do a lot with regard to the time for the MIAs, which so many of you get letters on.

And that's one of the things I insist it must be.

It will help on Laos.

Cambodia is more difficult, but I will not react to that by accepting that we can't accept to say that Cambodia requires working in other areas as well as Vietnam.

Uh, the, uh, I understand that arrangements have been made with the leaders, that Kissinger will come down and brief tomorrow at 10 o'clock in the Senate.

I don't know, Mike, until the end of the year.

And 11 in the House of Representatives.

All Senate bills.

Uh, let me say that procedure is about 11 for you folks to work out.

I told them that we could do it brief.

He can break the usual numbers, but whenever you have a case like this, and all senators want to come as prisoners, and then he will do a press brief.

I've already gone over the matters, but he says we'll be the administration's decision.

So since you'll all be there, I won't go into it at this point.

Except I did want to explain why we sort of suddenly canceled the meeting at 11 o'clock yesterday.

We didn't have anything to talk about.

All I can say is this.

any of you who've been here.

I've been to Oregon, South Iowa State, and Oregon, and Hawaii before.

They split off, so a few of us have been there.

But I can only say that we had an amazing difficult part of ourselves.

And the fact that we've come this far, and all the field companies are coming, and both sides are getting to see that their interests are going to be served better by, possibly better by,

A second point I should make is with regard to, before we get into the major subject for discussion, is with regard to the depression.

They have been very, very thoroughly prepared over the past several months.

As a matter of fact, I was talking at considerable length with Mr. De Greener yesterday on some of the final details.

There will be a number of sedating agreements.

Some of you will anticipate.

Others are, cannot at this time be discussed, should not be discussed.

I can only say that there will be

the broadest possible consultation with both of the Senate and House with regard to the visit as we move into it.

But the prospects for this meeting being even more constructive than the meeting we had a year ago are very good.

Now, having said that,

But we still have some very tough negotiating to do on some very close islands.

And that's why we're going to take the weekend off.

So we will start on Monday and finish the following Monday.

And the talks will go on.

If what happened in Moscow is any indication, far into the night.

But the preliminary work has been done so successfully and had been around the track once.

already in a previous summit, and we think this one will move in a very effective way.

If agreements are reached, when they are reached, and I'm not saying all agreements are reached, we would like for as many members of the House of Senate in particular areas who are interested to attend

those particular ceremonies where they are signed.

This is a, I say this because of the Soviet Union that has always done, as you may have noticed in the picture you saw there, the whole polyphor came up with the idea to sign even the spaces in it, let alone the pyramids.

So I'm not suggesting that you break a date for it or something, but it is interesting to be there.

Most of the signings we will have are probably strong.

The purpose of this meeting tonight, as all of you know, is to discuss the economic program.

And before discussing it, I want to hear Jack.

Good.

I'm glad you waited.

Go ahead.

Why I waited?

I don't care.

I appreciate your patience, please.

I can see you're ready to wreck me, buddy.

All right.

Now, Jack, now that you're in, I'll turn around so they can see you.

I'll try it by the left.

Can you hear anything?

Some of them are all great, Mr. President, but you just saved the scene.

You know that?

This challenge we waited for the governor of the United States to put this together.

We wanted to make it work.

It's actually working.

I love that thing.

It's going to go longer, actually.

It's going to go there.

There you go.

The reason this has to be done in this particular field is it has to be done

as it is in the national markets.

I know there's speculation on that.

And this is the moment you were invited.

And if you didn't know, and they're not known.

But for that reason, I want to talk to you.

The talk that I will make tonight will be available in one hour at 7 o'clock.

It will be distributed to the press at that time and to all of you at that time.

If you have left, which you may have,

Bill, you'll see this hand-delivered to all the members here in one moment.

They would all like to see it in talk, although you will get, basically, you'll get from our economic team, from George Shultz, who was on his side, and from Bert Stein, John Dunlop.

If you've got any details that you want, even more details that are in the talk, the talk has a certain flavor, which I will try to convey briefly.

And we'll see that.

First, let me say that with regard to this problem of the economy, I am keenly aware of a rather broad difference of opinion within the Congress and within the labor community and management.

You can go from one extreme, those who believe we should have

permanent controls on wages, prices, profits, interest, etc.

Not infinite.

Another is training those who say that what we should do is not just stay with the status quo, but to move quickly from it to what we would almost recall.

And then there are various positions in between.

Needless to say, I have noted your positions.

I have noted the positions of various members of our own administration, cabinet and all.

We've had extended conversations in our own economic team.

And I've also taken note of some of the other views that have been expressed by experts in the economic field, economic experts and so forth.

And I find everybody's an expert in this field.

At least they know what they want.

The question is how to get there.

I begin by pointing out what the dilemma that we face in the present time.

This country is in the midst of an unprecedented boom.

The rate of growth, the increase in reels by labor unions.

The increase in numbers of jobs is at a fantastic level.

In fact, the highest in 21 years.

There was a bulge 21 years ago that was somewhat like this that came just when they took the lid off of the World War II controls.

Now, with that unprecedented boom, we also, however, have a very nagging problem.

The problem is that we have an unacceptable rise in prices.

Everybody knows about the rise in prices.

It's what you hear about.

You can get letters about it.

I hear it.

I'm going to hear it from you.

I hear it from people right here.

Our own people.

The rise in prices was very well under control at the end of last year, as you recall.

It was down to 3.2, which was half the rate

average rate for the industrial nations of the world.

It is now escalating.

Any escalation that has occurred, about 85 to 90% of it is due to a rise in food prices.

And so we have a problem of inflation which can be pretty much

described as centralized on primarily blame on food prices to be in one place, but blame.

On the other hand, too, we have to recognize that in the last month's wholesale price adjustment, there was not a very significant, but I would say somewhat

disturbing increase in non-food prices.

As I say, not very significant, it's a bad chunk.

It is significant enough to be disturbing.

By that, it could have been just an aberration, but it's something to watch.

But basically, the culprits of food prices, the major culprits of food prices, and another element I'll mention in my remarks.

The question is, how do you deal with the inflation without busting the moon?

That's the critical question.

Everybody wants the moon to go ahead.

Many feel that, well, we ought to moderate it.

We shouldn't grow at a rate of 6.5% and 7% and 80% .

We should have it at about 4%.

I don't know why the economists think that 4 is the magic number, but they seem to think we should grow it if we did it.

If we were controlling our economy, we could have the economy grow at approximately a quarter percent a year.

That would not be inflationary.

It would not create a demand, a pull of inflation.

Whether they're right or not is a material point.

Back to the matter is that there's no one, none of the labor leaders I've had through yesterday, none of the business leaders I've had with them, I have very good members of Congress, that want to sacrifice the boom.

They say, what we've got to do is to control inflation and continue to have more jobs, higher wages, basically, to continue to have this economy move forward.

Because the worst of both worlds is to have inflation with a recession or inflation with a flat economy.

At the present time, we have inflation with a very, very strong upsurge.

But that does not excuse inflation.

We must deal with it.

Now, dealing with the inflation, and this is not said in criticism, as I am, of those who have a different point of view.

It's only to indicate the reason I reached the decision that I did.

There is one extreme, an extreme that was supported by, as I understand it, most of the members of the Senate in their caucus.

of the Democratic members, at least I know many Republicans as well, and that is that we should have an across-the-board 90-day freeze followed by a very tight control program, tighter than phase two, covering prices, wages, profits, interest rates.

Now, let me say that I have concluded that that would make a great headline tomorrow and a big headache about six months from now.

I regret I didn't reach that conclusion because I would like to do, we all like to do, and everybody would say this is just great that the president finally moved to better control it and so forth and so on, and our prices are going to be held down.

But the analysis that we've had, and I look to them often, but they're very, very close to me, is that any time that the economy isn't

an enormous surging position to attempt to put that kind of control on.

It just won't work.

And all we have to do is to go back to the time that you, Jack, and I came to the Congress and some of the rest of these folks were here.

Carl and I was here.

And that is, let me give you after World War II, when we had enormous demand.

Price controls went right out the window.

You had black markets.

You had rent.

Of course, we had the reaction to black markets, even with the recession.

And of course, eventually, the recession.

And so my view at this point is that that kind of action not only would lead to a permanent controlled economy, which I think we do not want, but it also would not deal with the inflation, in my opinion, except temporarily.

It would be a great grandstand play, but not an effective long-run play.

And I say that with all due deference to those who may have a different view, because you may be right, I may be wrong, but I have to make the decision.

This kind of claim, there are those, there are some here, who believe that we should just do what we're doing.

And we have done quite a bit.

Phase 3 is a lot stronger than most people realize.

The difficulty with that is that at the present time, Phase 3 does not speak adequately to the food price problem.

And also, in terms of this late, in terms of the expectations of some action by government, we find inflationary pressures showing itself in other areas.

In other words, people are just assuming there's going to be inflation.

And consequently, prices are going up.

They're being jacked up.

So under these circumstances, doing more than simply sitting where we are is required.

So I want you to know the goal that I have in mind.

The goal that I have in mind is to deal with the inflation, to deal with the defective, to do enough that will be effective, but at the same time, not to do so much

That will destroy the boom because we, the ideal, our goal is prosperity, boom, call it what you want, without unacceptable inflation.

Now, this is why this decision has taken some time.

because it requires very fine judgments.

We hope they're right.

I think they're right.

I will describe it tonight.

George will describe it more.

He will answer some questions.

And one of the reasons that I've asked you down here is that it's going to require, if I may, action on an urgent basis by the Congress on three or four matters that I've sent down.

Matters that I don't think are too controversial.

And I'll mention those particularly in my remarks tonight, but I wanted to mention you first.

What I have decided is that we will have a 60-day freeze on prices.

Wages will not be included.

They will not be included because in looking at the present inflationary situation, we find that wages are not the culprit.

Wage settlements have been highly responsible in meeting with the business members as well as the labor members of the management of wages.

As long as wage settlements, and I emphasize this, remain responsible, they will not be broken.

Now, that's the only fair thing to do.

Now, most of the big wage settlements are out of the way.

You have two coming up this year.

Teenagers, they're in the middle of one.

Now, a lot of old bills, they'll come up in September.

The present anticipation is that both of those may be responsible.

If, if, that's the big thing, that's another reason for this action that I'm taking.

If they can tell their members that there will be some leveling off of the increase in food prices.

Because food prices particularly hits home for labor.

Remember, this is not just a tweet, it's a fire one.

that wages will not be included for that reason in the freeze.

I have not included rents in the freeze.

I know it would be highly popular in some areas to include it, but I have seen rent control all over the world.

I've seen it in some cities in the United States.

Rent control

does, in my opinion, do this.

One, it creates swamps.

And another thing, it doesn't really control the rents.

What happens is, if you've been to New York and how many other areas they have it, it is that it really has the effect of creating shortages in housing.

And it's only with the housing boom we're having at the present time

we find that rents are not a significant problem.

And I go back also to that.

In analyzing the elements and the rise in prices in the first six months of this year, rents are not a significant factor.

They have not gone up significantly.

That's a fact, facts of business.

They're not.

So we find that wages are not one of the causes of our present problem, one of the major causes, I should say.

And rents are not one of the major causes of our present problem.

Interest rates and dividends will remain under the same control as they are now.

And that requires the most decision to be made by others that some of you experts know more about than I.

We deal with that as much as we can.

something, an area that we are acting on.

I have not mentioned in my remarks, although it would be a highly popular demographic way.

We're gonna move on an item that does disturb a lot of people and that is an excessive increase in executive salaries.

That's what the cost of living council will fight on.

Because that's an area that we, a number of the laborers and members of the chiefs raised.

But also some of the management people believe that that's not an issue.

However, that, the reason I'm not mentioning it tonight, is that basically that does not get after any of the problems.

The cost, the prices, the grocery store, and other places.

All right.

The elements then will be a 60-day freeze on crisis, maximum of 60 years.

During that 60 days, we consider that the period in which we hope the Congress will act in the ways that I will describe in a moment, and in which the administration will act to set up the new procedures, so-called phase four, which we'll deal with.

the elements that we think are dangerous in the present inflationary spiral.

This will be, there will be, the organization will require some more personnel.

It will require also some more rules.

I won't go into the details, but George will cover those if you have questions on that, if you may.

Now, let me address the subject of food for just a moment.

Several of you represent a farm district, as a matter of fact, I'm going to be in one, Friday, if you're not going to ever jerk since, because I don't know how many of you do.

That's fine.

Real fine.

Well, anyway, we all know that here we are confronted with a problem.

that frankly just do several factors.

One, an unprecedented increase in demand for farm products and particularly meat and poultry all over the world, not just in the United States.

Second, unprecedented bad weather and crop failures all over the world and in the United States.

I have signed more disaster declaration relief in the first six months of this year than any six months in the history of this company.

The reason is that, you know, Russell was just being held, and that's had a terrible effect on the farm.

We think, if Butts is right, that the weather cleared up just soon enough that they got the corn in.

I think they did less, right?

A few other things.

This fall, that we're going to have some, shall we say, improvement in that situation, because that is going to help the situation this time.

So with an increase in demand, and that means we increase our exports, with an increase also, a decrease in supply, the inevitable pressures have come on prices, and prices have gone up.

Now, how do we deal with that problem?

Many have suggested that what we ought to do is put raw agricultural products under a freeze.

I consider and reject it.

And I reject it because it won't work.

When I say it won't work, don't let me be that categorical.

I don't think it'll work because I don't know what you're going to do about the products that they come.

I think what people

not when the consumer goes out and buys it.

Raw agriculture products.

You understand this ceiling we talked about will cover everything that we do.

Raw agriculture products is not our thing.

Raw agriculture products, they put under any kind of ceiling.

will inevitably lead the farmer to something else.

It'll lead to shortages, and it'll lead to higher prices, and it won't deal with the problem.

At least that is the judgment of those who have advised me in this field.

That's the reason we have included it.

However, we're moving on the agricultural costs in other places.

One, as you know,

We hope we get out of this Congress eventually a non-inflationary farm bill.

I'm not going to discuss what it should be.

I know how debatable that thing is right here because we hacked that around here a couple weeks ago in the public leadership meeting.

Except that at this particular time, for a farm bill to come to the Congress, that would have the effect of pushing prices up.

rather than pushing production out, it would be a tragedy.

And I would hope that all of you would consider that, and consider what environmental distortion you have.

The other point that I make, however, is that, which we can work on, apart from the ceiling, because the ceiling is effective only if the supply is there.

Otherwise, it's the black market.

The other thing is to do about the exports.

I hear we're fighting very difficult moments.

Our board of policy people say, well, our whole board of policy depends upon it.

The secretary of the treasury tells me that our balance of payment depends upon it.

And, of course, the farmers' life exports have run.

It was only a couple, three years ago, an arm or two afraid, can't you sell our meat or what?

Can't you sell everything else that runs?

Because we had food surplus.

We don't have that.

And so, if the choice has to be made,

I've got to make it.

Between exporting more abroad in the interest of American foreign policy and putting meads and apes and poultry on the table of the American Housewives of Houghton and Pricessheath and the board of the American Housewives of Houghton and Pricessheath.

Now that's going to be a policy.

Now how do we carry that out?

The difficulty we have here is that we do not have on the books at the present time, according to the lawyers, legislation that is adequate to control the exploits.

And what we would like, this on an urgent basis, is an amendment to the Economic Stabilization Act, which would give the President the authority, an authority which I trust we will have to use quite sparingly, and I hope this crisis will pass in the world in the United States as well, but authority

If and when it seems that feed grains going abroad, the is so great that it's going to create scarcities at home for wage prices, authority to have licensing of that food.

I'm not saying at the present time that we will control, we'll license or any of that sort.

I'm simply saying that we need that, I think, and need it very soon as something that we can get right at the heart of the product, of the supply.

of what goes into trends, what goes into hogs, what goes into...

So the other legislation, I do get a few arguments on that.

Some say you could use the Trade with the Enemy Act, but that would be, it might be just unhelpful.

I can't use the Trade with the Enemy Act.

The other state would use the, there's a present,

administration or something like that.

There's one.

But we checked it.

A legal basis would be just too long.

So what we have to do, what we need, is an amendment to the Economic Socialization Act to locate that authority.

Second, with...

Excuse me.

Hold it here while I...

I hope tomorrow, we'll have that tomorrow.

In fact, I've been working on it.

Let's get it tomorrow.

That's what I'm saying tonight.

The other point is that it's a very simple one.

And the administration, and there are a lot of blood spilling on the floor.

The second point is, and this I know is going to take some time, Russell, and the rest of you, but we need action for treaty building.

Now, we need that in the trade deal for a reason.

It very directly affects the food thing.

It affects the food thing because, for example, it sounds like a small item, but the three-cent-a-pound tariff on imported meats, it makes no sense in the present time.

it ought to come off and we can't do anything about it and uh that doesn't mean that it can stay on permanently i mean the situation may change and if it changes we will get back what we need and so uh

Well, if we pull it to the Senate and can't pay the revenue bill, if we go ahead and do this thing, the bill is still without something.

We've got an executive session next week.

Sure.

I know you've got it there.

That's on the top of the plate.

The economic stabilization act would be a banking currency.

Yes, sir.

All right.

Well, I didn't want to put more in ways of nature.

I know you would get to that.

The third area is, of course, is the authority to dispose of surplus commodities.

We've got something down there at the present time on that.

Now, that has not directly attacked, to a certain extent, attacked the foods in the situation, but it attacks a number of other items that are very important, like I said, etc.

And we would like that authority.

And then, in terms of what the Congress can do, I don't want to get here into any, I think it's too controversial, but I would say that at this time it's very important to hold the line on the overall budget numbers, because the budget

In the present inflationary climate, everything else we do will be forgotten.

So these are the items that I will mention tonight in my remarks that I would like to help the Congress on.

As far as the administration is concerned, we will go forward, as I said, with a phase four.

that will be tighter to the page three.

More companies will be required to report.

The next period will be January.

What was the January one?

before Phase 3 started to get started.

The base variable is that and the number of companies that will be required to report will be doubled.

And one other item should be mentioned.

Now this is a hot topic.

I decided we should deal with the problem not only of stabilizing food prices, but of gas at the park.

Now, that is not a problem in many places, but in some areas, particularly in the west and the Midwest, there have been shocking increases

the price of gasoline in the service stations.

And consequently, I have directed the cost of living council, Dr. Dunlop, et cetera, to develop a program that will stabilize those prices.

We're not going to allow that.

Now, I must come down to the other side of that, the supply side.

We need an elastic pipeline.

I know this is a problem with environmentalists.

Big question is, we ought to build new cameras, which, incidentally, is fine.

You don't want to wait five years.

But the point is, the Alaska pipeline is essential in terms of dealing with our energy needs looking toward the future.

I will also be sending the Congress a new energy message.

That will be first next week.

I'll be announcing a new energy message at the end of this week.

And there will be some proposals there, right George?

Because this is also one of our nagging problems.

The gas is something that naturally you can see we have to get it in the controller.

To give you an example, may I just give you an example of how we cannot be totally perverse

of these madmen in the Mideast.

But look at it.

They complicated Hunter-Hunters, right?

And that's just a shot across the bow.

What they're going to do next, I don't know.

But my point is, that doesn't affect us too much.

It affects Europe.

80% of their supplies come from the Mideast and 90% of Japan's.

But all in all, as you know, the industrial world is all part of my bank, and so we have some problems.

I don't think the elastic pipeline can solve them.

The elastic pipeline, plus what we're going to do with coal, but with nuclear and many other areas, looking for the long term, we believe, can be very, very big energy problem.

A couple of thoughts in regard to what we're not doing.

I've already indicated that we're not going to cross the border.

We're not having a follow-on program that should be permitted.

I do not believe in control.

The follow-on program that I've directed all those administrators to have as their goal will be one that will have as its aim to get out of the control business just as soon as the problem

I believe that the best hope of this country in the long run is an economy that can be as free as possible, rather than one that is in a straitjacket of controls.

On the other hand, I recognize, as all of you do, as political men, and not just political men, but people concerned, the family budget, that we just can't go along and allow these escalating crises to bust the family budget.

That's why we are taking these measures.

a stronger phase four program than we have in phase three.

There's a particular emphasis on the major public food act, but I do emphasis also in the area of gasoline .

That, in essence, is the outline of what I will present tonight.

Mr. President, what do you mean by raw agricultural products?

Well, by raw agricultural products, as I understand it, we're talking about wheat, corn, soybeans, etc.

If, for example, it is a product that is sold directly to a consumer, that's something else again.

But if it's something that's processed, for example, what you take, for example, as I understand it, you go to the store today and you buy some tomatoes.

They told me that the cost of the tomatoes, about 15% is the cost of the carbon, and the rest of it is packaged and wrapped in the carbon.

What I've managed to see is what we're trying to do is the raw agricultural product just

It's just that there's no way you could do it.

If we could, we would.

And also, there's another thing about raw animal products.

They escalate the production price.

Excellently.

Depends on the weather.

Up and down.

The weather is so...

If the weather is bad and there's a sharp crop,

They go, take soybeans, let me give you an example.

There's a lawyer.

Soybeans a year ago were $3.

Today they're $11.

A lot.

A number of things.

With demand, et cetera, et cetera.

If you put a price like that, I don't want to have them at $11.

We want them to get down a little less, even though you grow the darn thing.

Mr. President, we have another problem.

In Carl Helmer's statement, my sweet harvest is stalled because of the shortage of fuel.

The combine is a great wheat crop.

We expect one of the best wheat crops in many years.

We hope to have a good crop in Europe too this year.

Mr. President, are you by any chance moving to mandatory allocations of control on gasoline?

We're having a terrible time.

You told us.

We have hearings going on now.

They've been...

Thursday, Bill Simon is running a holding hearing on that to see whether or not, under the authority we have in the Economic Stabilization Act, that should be imposed.

We have a voluntary program, as you know, at this point in time, and we have a program in Congress as well.

you folks may know, is that the independent guy is really getting squeezed in the present time.

The ministers always, you know, kick the independents around.

That'd be Clinton, you know, and short of that.

Now, this mandatory thing, though, George, is like, you won't know what I marked the other day.

By God, let's have it if we can do it.

Well, Mr. President, if it's necessary, if it's necessary, we can do it because we don't need to have these independents squeezed off of the majors.

The majors get along.

Well, Mr. President, I'm willing to cooperate, and I don't, we all, all of us will work together to keep these little people from just being squashed in these choice days because it's, I've heard these major oil companies complain that when they start some voluntary type things, the guys,

always wind up getting the work done.

His competitors improve their position by cheating and chiseling on the deals.

So you always wind up, you're not just a damn fool to do what you asked him to, what George Shooks asked him to.

If we could have something in the law, for that purpose, it would be better for that big surtax on somebody who, in this time of shortage, declines to sell as much to his outside customers as he did before.

let me tell you one of the other options that for the present we are not considering, but long-term we do.

Arthur Burns feels very strongly about the tax front, the variable investment tax rate on the three to 15%.

He's talked a number of you about it, so it's no secret here.

But the difficulty, we're considering that, and it's very possible that we'll ask you to consider it too.

But the difficulty is that does not speak to the problems we've got in July, August, September, and October.

Every man in this room knows there isn't a prayer to get a tax bill out of here for six months, right?

Yes, but I stated something different, so I'm not going to go ahead and ask.

If you want to do it, I don't think times would hesitate to put a big tax on a major producer of oil or paper or something of that sort without anything else on it who took advantage

All the Senate-produced, material-producing, relative to the tech these may become, did not have a big chance to put all their heads in their own stations and not sell their pennies.

Russell, the point that I make is this.

You have an open rule in the Senate, always.

And now the House has got an open rule.

You need to tell me that if we sent down a tax bill, any of that particular thing, that you could put it without having a Christmas tree.

Well, I didn't.

I don't have any doubt that we can, time and time, even on your trade bill, the debt that it might take, might wind up being a question of critical use, the unloading of most of the art, before it gets to your desk and so on.

Anyway.

I talked to Arthur about this, and I said, Arthur, fine, let's consider these things.

But let's, we've got to be real.

The things that I have mentioned here today, we can all do.

The Economic Stabilization Act, if you could give us that.

Let me put it in canon.

We ought to have that authority anyway.

When I say we, whoever is the president ought to have the authority to control the movement of our commodities abroad.

Every other country has it.

We're the only country in the world that sits here, you know, and lets them all pick on us.

Well, that's the problem I'm worried about, though.

I don't have any doubt with what you gave me there, but I'm talking about this thing of requiring a major corporation like the oil companies.

and the paper companies, just to generalize a little bit, who customarily sell a substantial portion of their production to independents, to continue to sell to those independents, because now you can't do it through your price control regulations.

We need to get out into the tax laws, just tax the hell out of them if they use a distribution pattern.

which, in fact, holds up all of our production for their own company, all of our clients.

And I'm sure... Let me say what I would like, George.

If you would talk, you and your colleagues, I'd like to have consultation with the members who are here.

with regard to what majors the tax crimes could be taken you know you know why we didn't include because i i just told you pragmatically just that it was unrealistic to hold out to the people this is the answer to the inflation problem because it isn't right at the moment all prices with no exceptions

except to rent, which is specified, everything, and profits, and everything else is covered.

Raw agriculture products, rents,

I use the term maximum of 60 days for a reason.

That if we can get something more effective in the way of a, in our phase four, the movement.

But in my view, 60 days is what is the question.

We want 30 days of consultation.

We gotta consult with business, we gotta consult with labor, we gotta consult with the Congress.

so that everybody will know that the end of the 60-day period certainly is what's going to come.

You see what I mean?

But the 60-day period is what I am.

I am opposing it for 60 days, and I'm going to take a look and see.

When you say the base period, does that mean that you go back to George's?

George said it was the first.

the freeze would be effective on prices as of last week.

That is, there's been so much talk about freezes and whatnot that people have been putting to prices.

It's been a very inflationary factor in and of itself, all this talk.

So the freeze will be as of last week.

But when we look at phase four, when we look, for that matter, at prices under the freeze,

We're now getting the first reports on phase three.

The phase period will be January 10th, 1973.

And I should point out, let me just say, because I have the George's, George's and .

The point is, for example, the freeze for 60 days doesn't mean that they're all going to be in January, June, whatever it is, because if the reports

that we get in 30 days indicate that January, that there's been an excessive thing, the cost of a big council will move on before that period, before the brief is over.

We're not bringing in that positive.

We could move down if necessary.

Their current price exceeds the price that would be allowed under the

rules that they've been operating under, we can roll that back.

You can roll it back before the 68 years or whatever brings fire down.

Exactly.

Phase 3 still stays in effect.

still stays in effect.

If anybody has violated those guidelines and we're doubling the number of employees and so forth, we'll move on to the period of 60 degrees.

We don't want to freeze things.

High on the people.

You know, just nearly, but not more.

Beyond that, one of the things we've found is that taking the base period back to August of 1971 means

that we had many prices as of January 10th, 1973 that were at or below the August 1971 level.

In other words, the marketplace was controlling them very effectively.

Then with the boom in the fourth quarter of last year and the first quarter of this year, the markets opened up and those prices rose.

And they're perfectly within the rules of the so-called audit trail going back to the middle of August and coming up to the present.

So we have felt we better take the water out of the system.

by establishing January 10th as the new basis, and then going on from there on the basis of the rule that we've had of a 1.5% per year increase as present.

I think it's a very good program, and it's going to be very well received, I pray.

And I would just add one word to Russell Long's thoughts on taxes.

Looking at the people, I think they expect direct, not indirect, action.

And I would hope that whatever...

of judgments you get from Russell, you will bounce against your own instinct that people want ultimates now.

They don't want somebody punished for not giving them gas.

They want the gas.

And I think that that's something you and Russell and all of us want to consider.

I think this is a time that people want reality.

and not fancy regulations, you'll get them in the end.

This is what I meant.

The difficulty with Archer's approach is that it is basically indirect and might affect it maybe 10, 12 months from now.

Maybe it's right.

And I'd like for her and Russell and the rest to continue.

Yes, sir.

On the matter of taxes, your fiscal, your unified budget for fiscal 74 is almost in balance.

It's less than $3 billion.

And if you bring in a lot more money in 1% surcharge, you bring in about $1.5 billion.

Well, if you bring in a lot more money, you're going to have the pressure for more fiscal spending.

That's another argument against taxation, I think.

If we bring in more money, we're going to spend more money.

You're defending a lot of our budgets.

The effort should be made to pay on the national debt and increase the taxes that we can get over and above what we must have.

I'm hopeful that will happen.

I ran on that well, certainly.

I think feeders produce about half of the beef.

Most of them are feeders.

$50 to $70 to $100.

And they hope to get to $45 to $47 when they're finished.

You couldn't, you'd better watch that meter.

You'll put your finger on a reason why you kept the freeze at this short period.

Because, basically, if you struck that breeze at 90, 120 days, and you know the farmers, you know the feeders, and the rest, believe me, we'd have wonderful prices for all that stuff.

And you'd have no meat, and you'd have no... Look what's happened to broilers.

You know what's happened to broilers.

Practically, like that.

We did too good a job.

We controlled them.

Now we control them.

Fortunately, I don't like that.

Could I just get this one thing that does concern you, but it does concern you, these independent fueling stations.

Do you have anything in this program that's going, other than voluntary cooperation, that's going to make these major oil companies sell these little independent, they want to take the attitude that they want to sell those people that surplus gasoline at the time you don't have any surplus,

before you respond, and that is these independent jobbers are the ones that provide fuel for the farmers for the most part.

And this is where our wheat harvest is stalled, and this is going to exacerbate the man-pull situation.

It's not done by me.

Well, my views are very strong on this, George, as you know, and I expect Simon to...

I don't know what's being done.

I think I know what's being done, and I think he's faithlessly...

Because you remember this phrase, wasn't it, Jerry, two weeks ago in the meeting?

Yes, sir.

Right.

You remember what I said then?

That's right.

So a voluntary allocation program, of course, does instruct people, so to speak, that they should allocate on a historical basis.

Somebody who had an allocation of their product a year ago should have it now.

That's the whole structure of it, and that's what...

In your mandatory program, you would make mandatory rather than voluntary.

You have all sorts of problems, such as over the past year, absent all of these programs, some customers have been dropped off a particular company and others haven't.

So how do you work that in?

Given the fact that you're working with something scarce, so everybody can't have everything they want and you're allocating.

So that's the nature of the problem.

And we are having three days of hearings.

We've just finished up three days of hearings to see how the Valentine's...

When I say this, whether it be George, you, George, John, and others that have this problem, get this word that he's here, you know.

I mean, we need an individual to know what the, what the, what the, what the complaints are.

Right.

Because that's what we're there to have hearing for.

We're here for that.

Because we had this with our Republican thing, and I know it wasn't just one of them.

That's good.

So, Russell, if you've got some specifics on this, go ahead.

Well, the point is, Mr. President, we've talked about this kind of thing for years, and I've never seen anything affected done in that area.

And I'd be happy to use a direct approach if you guys can make a statement.

If you can't, I'd rather tax the apples off of them than let them get away scot-free with quite a brutal murderous form.

That's my own fairness concern.

Mr. President, if I could say something on that, I brought it up in our Republican meeting with you a couple of weeks ago.

That's the science.

And that's being straightened up.

Which is it?

I think.

Thank God.

Yeah.

I think Russell's approach is wrong for this reason.

There are some major oil companies, I don't want to name them here, who are cooperating as a voluntary program.

If you have your approach, you penalize them as well as the non-cooperative people.

I think you've got to go to mandatory controls because it makes everybody then in the same boat.

And you don't have some backsliders who are playing it cozy and who are trying to cheat a little bit here and a little bit there.

Even the ones who cooperate, I think, today would say, we're all better off if we're under mandatory controls.

Right.

I want you to get your views in to Simon.

Because we've given him the portfolio on this.

Let me say that I know there are other questions so far, but I'm supposed to go over and put a finishing touch on this little remark, and I'll be on at 8.30 or 9.

Don't listen to me.

I have a question for the leaders.

It just occurred to me, when we were in Moscow, if you remember, we had a number of agreements.

After each of those agreements, we went out, I mean, we'd go out and read the press.

Now, we will have some agreements around this, but now we're in Washington.

Now the point is,

It would be, and we need to do it more thoroughly, if the leadership would like to work out, depending upon the existing state, let's suppose the agreement is an agreement, I don't know whether it would be, let's suppose it's an agreement of states, or it's an agreement of a field of trade, or an agreement of a field of arms, we've got various things that comes across.

I would be glad to arrange

that as the meetings go on, rather than waiting until the end of the summit, which is going to be eight days, I would be glad to arrange, if you would find it worthwhile, to have the key head of the people brief as we went along on the various agreements.

Would that be a useful thing?

Yes, yes.

Bill?

Yes, sir.

Al, is Al here?

Yes, sir.

Al, I think I better ask you because you don't know about it.

We could have Henry and Bill Rogers, you see, to do some.

Absolutely.

And Henry Bill and Shelby to arrange.

All right, the arrangement will be for each of the three of them.

I would like the members free and we will indicate to you what the agreement is so that you can pick the ones.

It isn't something we go to the whole Congress because they're not going to be interested.

And we want to understand that we vote the Senate and the House because it's just not what we think of all treaties.

And even if it does, the House, who knows, they may start competing.

That's right.

All right.

This is the agreement.

No.

That's right.

Like for example.

The chairman.

Well, it's like we have a chair and a ranking member, you know.

It'd be your big five plus the ranking members in the committee.

That way, rather than you're picking up the press and reading it through their eyes, you wouldn't have it correct.

I think it'd be a very good idea.

Otherwise, I'd do it at the end.

But by that time, everybody would be focused only on one agreement, in my opinion, or two.

And you'd miss the others, which are very important.

See the...

I don't want to indicate how many there are, because you never know how many we're going to get.

But there are going to be several.

And I want to get you right, Mr. President.

Moscow, four or five, they were really just a ball from the shovel.

Nobody ever heard of them.

They never knew that we had a marvelous degree of scientific exchange, cooperation in space, environment, and the rest of it.

And about all anybody ever heard of Mike at the end was the one on the beer arms because that was so big.

So we will arrange for briefings as we go along.

And Al, you will work with Phil Tennant's office and Henry's office for regular briefings.

Where can we do those things?

Let's see, we have a problem.

Let me tell you what the problem is in a nutshell.

Some of our meetings, the first couple of three days will be here, as I understand it.

That's right.

Then we'll have a couple of days in Camp David.

Camp David.

A good seating there.

Some there.

But we could send a breeder down.

And Al, you could do some of the breeching, couldn't you?

Yes, sir.

You are so confident.

But what I meant is, if we're stuck up there.

But Al, you can be sure that Al in this field, of course, is, after four years, is highly sophisticated.

He can do some of the breeching.

Bill Rogers can do some of it.

in certain areas, and Henry can do it in other areas.

And I think in some areas where time permits, I'll do it myself.

I'd like to do at least one of those agreements.

So we'll arrange that so that at the end of the summit, you will not just pick up a communique and read it all, and you will not really get the full flavor.

Mr. President, other Ucoma, except for very major items, would it be held on the hills?

Absolutely.

I want you to know that in all briefings, this is something that we're doing now since Al has come along.

We think it will serve your convenience more for Henry and others to come up to the Hill and do the briefings.

Unless I am in it.

When I am in it, then it's frankly a little easier for me if you don't mind to do it here.

I'm afraid to go to the Hill.

But we will come to the Hill because I think it's much easier.

You set it up though under proper circumstances.

allow us to get on and we appreciate your time gentlemen don't buy any meat

And now we're going to take a look at some of the drivers that are on the board.

Thank you.