Conversation 469-009

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Oh, hi.

Come on in.

All right.

I've got a busy day.

I've got some dollars.

Oh, listen, I'm going to sit in a minute.

Oh, I've got to think about it.

I've got five seconds.

I'm tired.

I've got a busy week.

I've got a couple of small editing changes.

I want to reflect.

I'd like some tea, please.

and, uh, then help them to use that, that as, uh, as the main learnings and so on, if you haven't before.

I hope it works.

Oh, it's going to be the same thing this year.

Hmm.

That's inserted in there.

Where it comes in.

This.

That's going to come there.

And right over there.

Another.

Well, I worked about till I was twelve, so I...

I don't want to attempt to repeat the whole conversation, although I really think it might be helpful to let me give you another short video here of the meeting.

I approached him first on the violence of payments that we've had a little bit of a, we've had an inquiry into feeding the expectants about violence of payments, and I was afraid

that some of the staff, either here or in New York, would make a statement about it would be helpful if interest rates went up in this country.

It would help our balance out here.

So I went over to see him and brought this up first.

Volcker had already talked to him.

He'd already talked to his governors.

He'd already called Al Haynes and said, for Christ's sake, don't let anybody in New York say that.

You know, they're not just making statements.

So we got into that first, and I said, now Arthur,

I said, I'm going to make certain, I'm going to give you certain impressions that I had.

And I said, you can agree with them or not agree with them.

And I said, I mean, none of them is a criticism.

I said, I'm making observations.

And I said, then I'd like to have your reactions.

I said, first, I assume that historically there has always been a great affinity

and close cooperation between the head of the Federal Reserve System and Secretary of the Treasury.

It seems to me that their activities have always been close.

I said, secondly, I have a sentiment that our relationship has been close.

It hasn't been as far as I'm concerned, and it's going to continue to be,

I not only have respect, but I have admiration for you on a personal basis.

And I said, third, I know of no man this time that I think is smarter than you are in terms of what you tell you.

And I said, first of all, you have a very

And I said, and secondly, you have a reputation in me.

an intellectual, a privatist, a man of great intellectual capacity, and also a man of extraordinary political influence.

And I said, I believe all this.

And I said, I know that's true, because I know what you're talking about.

I said, I know that you've been a friend of the President's for many years.

I know you're very fond of him.

I know you want to be helpful.

And I said, I also know

One of the basic assumptions that I started with is that I'm the black sheep in the fold.

And I said, I know that there's suspicion in me and it's all water.

So I said, I worry when I see you going up on the hill and making statements about investment tax credit.

And I said, I worry when I hear you say that the social security changes and revisions ought to be postponed from 71 to 72.

I worry when you talk about wage and income policy.

I said, I know you've been councilman, chairman of the council of economic advisors.

I know you've been councilman of the project chief now, head of the federal reserve office.

Spots.

You've been three out of the four.

I said, you can count me in for us.

I said, you're now very good.

You're now on the federal treasury.

And I said, now I know what you have expertise in all these fields.

But I said, now, I said, I tried not to talk about your business.

I said, inevitably, I keep drawing you into it.

And I tried to stay away from it.

Senator said that I have great confidence in

Dr. Burns, what he's going to do in terms of monetary supplies, I've tried to pin you down, but I still tell you, you've got it.

It is some responsibility for taxes and tax policy under the president in this administration in Europe.

Talk about investment tax credits.

changing the social security from January 71, 72.

Well, he said, now that you tell me how this has happened, and I said, lock this pipe off.

I said, well, you don't have to tell me.

I said, I'm not criticizing.

I'm making observations.

I said, now, I said, I'm not offended.

I said, I'm not benefited.

I said, I didn't want to know what the ground rules are.

And I said, now, if you're going to keep talking about everybody else, I said, frankly, I didn't have a lot of people to be talking about killing people.

And I said, if you don't get yourself in, I said, selfish, I want to know what your policies are going to be.

I said, hell, I got enough trouble without aligning myself with you and the traditional alliance that exists between Treasury and Federal Reserve.

And I said, you're going to keep on if you do this.

And my judgment, you're going to get everybody in town.

to say that, hell, that there ought to be some fundamental changes in the federal infrastructure.

You're not going to have this system.

I said, if you're going to continue to talk about monetary policy, that's one thing.

But I said, Daddy, what you done?

Well, he said, I meant no criticism.

And then he explains how it happens.

He said, I hear it.

He said, they do.

He is an economist.

It's my reputation.

And most of my life, they started asking me all these questions.

And I said, yes, you just admit that you didn't know a hell of a lot about it.

And you started talking to them.

And I said, I don't understand that.

And I said, it's hard, but it's as main as you or I are not to show that we know something.

And he laughed, and I laughed.

And I said, now, Arthur, you're going to have some problems.

And I said, I can see the problem.

I had dinner with the staff the other night.

I said, about 20 of them.

And I said, I don't remember who said what, but I picked up stuff from Treasury, and I picked up stuff from United.

And I said, you're going to get blamed for the force of security change.

And you're going to get blamed for this investment tax credit bill.

And I said, you're laying yourself open for a hell of a lot of things that you're not really responsible for, that you really ought to be concerned yourself with.

And I said, frankly, I was disturbed.

I said, I don't mind telling you.

I said, I don't want you to analyze me, because I was disturbed the other day, the last meeting of the quadrant.

I said, the president flashed anger, and I don't know how to interpret it.

Well, he said it.

Now, I...

That's the way it's gonna be.

And he also, I said he flashed because you'd been criticized, Paul Craggy, George Hulme.

I said, you did that at the meeting before.

And I said, he was reacting to it, or that's the way I read it.

I said, would you agree with that?

He said, yes, I did.

And I said, well, I understand how he's not going to let you criticize his people right in front of him.

I said, hell, have you got any criticism?

Well, he said, I have to say what I believe.

I said, I didn't.

Nobody did.

It's asking you to say anything you don't believe.

No, it's asking you to say anything to compromise your presence.

Well, he said, I want to see you, President.

The President told me, he said, when I went to church, he said, he said, I whispered to him, I want to see him privately.

He said, the next night at the party, he said, I'll call him.

He said, I have not heard from him.

He said, I don't understand how you can get tied up.

He said, I want to see him privately.

I said, I want to tell him that I've got to say these things.

He said, I'm doing what I think is best for him.

I said, now, all right.

And he said, I've got to tell him that I was for him long before either one of us thought he was going to be president.

I've got to tell him I was for him in the lean days.

I said, I've got to tell him that back when he was vice president,

I was for him, and I stood with him through all the intervening period, and I said, well, that's fine.

And he said, I've got to tell him that I love him, and I want to do everything I can to help him.

I said, well, that's fine.

I said, the trouble is, it seems to me, where I said, that you're trying to make the scene of what's troubling one end,

And I said, and maybe you think you're in that position.

I'm not.

I said, I want you to know exactly how, because I'm going to lay everything down on the table.

I said, I'm going to say to the president what I think about these issues.

And I'm going to try to give him the best advice I can, if he'll permit me to do it.

And I'll make as persuasive an argument as I can based on the facts that I have.

But once he makes a decision, I'm not a damn sure if that answer is going to be a decision.

I'm going to follow and promote.

And at the time, there were a couple who were like, he did that.

And I said, you can't sit over here.

And professed to be a great friend, and then he started talking about the economics.

He said, well, he said, he's got some fellows around him looking at these reports every week and every 10 weeks.

And he said, he said, what we're interested in is the long pulls of where are we going to be next year?

I said, I understand that.

And I said, he's not unaware of that.

He's not.

He knows what an election is.

And I said, you don't need any advice from me, but let me give you some advice.

And let me get it to you from a very selfish standpoint.

And I said, don't you go there when you have this private meeting.

I said, don't you go there and start giving him advice and telling him how independent you are or how you're going to stand on principle.

I said, you are his friend.

He's been your friend.

But I said, what you'd better do is reassure him of that friendship.

I said, things change in people's lives and relationships, Arthur.

And I said, hell yes, you can be independent.

You don't, he said, you don't need this job.

You don't need this reputation.

You don't need this money.

I understand that, but he wanted it.

He thought he was doing something.

Did she want it?

Well, he said, I did.

He said, I've been trained for this job.

He said, I've never been taught.

He said, I haven't achieved quite a reputation.

I said, I know you haven't.

I know you haven't.

I said, don't let that reputation and don't let that pride and don't let that vanity destroy you now because we all need you.

I said, we keep saying that.

I said, you're one of the few people in this world that does have a long relationship with it.

You are an extremely competent man in the field of economics, in the field of monetary policy, and in the field of politics on this hill.

And I said, we can't lose you.

And I said, you go there, and you can try to back the president into a corner, and you can lecture him to the point where he never will see you.

I said, he has pride, too, and he has strength, and he has some knowledge.

After all, he's president.

And he's in a fight he's kind of on, which is like, you feel like you have.

And I said, at no point are you trying to show your independence at this stage in life.

I said, what do you want to show it for?

I said, you cut the rest of us completely loose.

And I said, I'm talking from a very selfish standpoint.

I said, I don't know what the situation is.

But I said, I don't think there really is people in this cabinet that have any great influence for the president.

I think you're in a position to have more influence, to be listened to more than anybody around you.

If you handle yourself well,

But I said, you can't ever go in there and lecture you every time, you see.

And if I tell you how independent you are and how you're going to do something, it's his best wish, but you're going to do it for his best benefit.

I said, because he's got a right to make a few decisions and a few choices of his own.

I said, so for God's sake, for my sake, what are you proud of?

And I said, don't stand on your independence.

And I said, when you see him, start off by telling him you want to help him.

And I said, be it.

I said, that's fine.

Get a reputation out of this town about how standoffish you are with the press.

You're a great man with the press.

But I said, that ain't what you want to do.

I said, if you do, you're going to be isolated.

You're not going to have a chance to say anything.

You're not going to have any influence with anybody except these governors around you.

And I said, you may not have that long if you develop to the point where you bring about a confrontation.

And I said, that's the last thing.

And I said, the final not so.

I said, you talked to me about a principle that good things to your country.

I said, this president, like any president, needs your advice.

He needs your counsel.

He needs your help.

He doesn't need your arrogance or your pride or your independence.

It doesn't hold me to that thing any more than mine did.

And in fact, he said, you've given me a new outlook.

He said, I do want to help.

He said, I have to try to help.

He said, in every way that I know I can try to help.

I'm convinced that we're conducting a policy that we're going to do.

And it is helpful to us.

Now and in the long run.

He said, he can't just look at a week or two weeks.

He said, we got to look at this thing over a year.

He said, it's hungry now.

He did it at a fast pace in terms of his approach.

He said, he first told me that he was going to come.

He was going to say this to you, that he was going to have you, but he felt right.

So then he turned around and he said, well, you've given me a new dimension.

And he said, I think you're right.

He said, if I have to do anything for my country, I have to do it through him.

And he said, I think you're right.

I can talk to him, and I want to talk to him.

And he said, I'll talk to your president.

All right, that's about the net.

But he couldn't, he was not in any sense critical.

He obviously thinks he knows more than- Than Schultz or- Than George Orwell.

Correct.

Yeah, very serious.

And, but he was not critical.

I mean, be fair, he was not in the least critical, but he was,

Not a name, but a time to interpret it.

He said there are people over there who advise him on monetary policy who don't know anything about monetary policy.

They don't know anything about monetary policy.

And I said, all right, let's assume that to be true, then why in the hell do you want to destroy your influence?

I said, the important thing is for you to have access whenever you want, and have it on the basis of where the President's gonna listen to you, and be kind to your judge, or at least consider your judge.

And I said, if I read the TV right, that isn't the way things are going, it's going the other way.

I said, you're isolating yourself more and more.

And I said, I said, Frank, I don't want to be isolated with you.

I said, now, from a very selfish standpoint, I don't want to be isolated with you.

I said, hell, I've got to.

I said, normally, that's the trade and Federal Reserve would meet right together.

And that's the way I want it.

But I said, if you're going to isolate yourself, I can't go with you.

So that was the general approach that I took.

And he was very reasonable.

We talked for an hour.

he gave me a lot of figures, he gave me a lot of background, he told me about his, when he was with the council, and he put out an economic report that George Humphrey didn't like, and this was probably an answer that they had a hell of an argument about.

He said,

Gary Hogan was here at the White House at the time.

Hogan said, what's the trouble with you and Humphrey?

He said, it looks to me like you're getting a revolt going.

He said, I better get a hold of Vice President Obita and Jim Mitchell and get you some help.

He said, no.

He said, don't do that.

He said, you're getting a loan.

He said, he wanted to catch me.

He made the economic report.

He said, the first man to speak up was you.

in support of his economic report, Mitchell and all the rest of them did then.

And I said, Humphrey never said a word to the president.

President Eisenhower said it was a great report, and I asked him to go to the letter about it.

He gave me a lot of things like this, and so on.

What are the things that might be important?

And I said, because I believe it.

He was telling me about his long friendship, and this was part of it with you.

And I said, well, I don't question it, but I said, let me tell you something.

I said, things change in the affairs of men.

And their perspective changes.

And their needs change, their desires change, and their loyalties change at times.

Depending on circumstances.

And I said, I have a relationship with men.

President Johnson, that I think is closer than yours to the President actually.

I said, well, back in 1939, we'd been in lots of scrapes together, personal and political, and in the Navy together.

But I said, when he became President, I was the Governor.

I answered when I met the President.

And my ambitions and needs weren't precise as he is.

I said, it was strange of him.

And I said, I tried to tell him to get rid of all the kids.

And I tried to advise him.

But I wasn't around all the time.

And I said, he got a break, he won't hear that from me anymore.

And I said, well, I saw him, but I said, I went trying to advise him, because he thought he was proceeding independently, and I wasn't proceeding independently.

And I said, now your situation is a damn bit different.

I said, whatever your past relationship has been, if you sit over here in your little kingdom and say, I'm independent,

The presence after you is gonna be okay.

You be independent.

You just sit over there, and we'll see what happens.

Now, Pastor Walker, there's one thing he'll regard you as an old friend.

But if that ain't gonna be as an old friend, it won't be as a new friend.

And I said, but I don't have any better human relationship.

And I said, I've been through it.

And I said, you're older and you're wiser than I am.

But I said, I want to give you that little personal relationship.

I said, now today, President Johnson says the great mistake he made in the presidency was cleaning the house with all his care.

And he tells me that.

And he said, I should listen to you.

And I said, I don't say I told you so.

And I said, I shrugged and threw up my hands.

And I said, Mr. President, that's over and done with.

I said, that's behind you.

And so it doesn't do any good to run around town and say, I told you so.

It doesn't do any good to say that we're not going to make 1065 or next year say, well, I told you it wasn't going to work.

I said, that ain't the truth of the damn thing.

So I threw in that personal analysis of a friendship

And I likened his independence as chairman of the Federal Reserve to mine as governor, and the separation, and drew that analogy.

And I said, now, you can't trade on a loan for a chance.

I said, friendship is continually tasked for anybody, except you have to work it.

And I said, you damn sure have to work it when the man you want to be friends with is the president of the United States.

And I said,

That was a kind of show.

It was that fine.

It may be that you may have, because he basically is an intelligent man, that he may have gotten some of this.

His problem is that we all tend to expect cases over the phone.

But he also is very much interested in his own preservation, his own success.

So we had to explain it to him.

Now, your suggestion is that you would recommend that I see him now.

And what do I want to talk to him about?

Well, in the first place, he asked me.

He's a great one.

I've been watching him for a while.

I listened to him, and frankly, I told him, Mr. President, I'll tell you what you want me to do.

One, two, three, four.

And I will review the bidding for him.

He said, you're not chairman of the council.

Now, I'm afraid you may believe me.

If you want to quit, I may name you, but until I do, you quit acting like it.

And you're not over here running office and managing the budget.

You've got your problems, and I'll listen to you about monetary affairs and other affairs, but for God's sake, don't publicly get out here and act like you're pressing, laying down a program to fight inflation on employment, because that's what you've done.

You say you've covered the waterfront, you've covered monetary policy, you've covered wage and price control, you've covered taxes, you've covered the whole economic picture, and that's all a president can do.

And that's not your prerogative to be doing that.

However wise you are, and you ought to do me that favor.

I really am.

And I think you can say these things to him.

I think he can take it in a personal meeting when he would be offended in the quarter end, because he does so well.

And what is your view as to when we should have another quarter end?

Should we have one next week?

I don't think, I don't know any overriding reason to have time unless there's some need for it.

Let me get it a couple of points in that respect.

I, uh, just wanted to hear your thoughts.

And as you know, we've got a little good bounce on the consumer price index.

It's going to be two tomorrow, two tens of a percent.

Well, that's a good one.

You remember it was adjusted.

They adjusted it to two.

Last month it was 1% unadjusted and 3% adjusted.

This month it's 2% adjusted and 2% unadjusted.

And that in spite of a pretty good wall in the food area.

Now, one month doesn't prove anything.

Two months doesn't prove everything.

But two months...

at two months is going to have some salutary effect and some surprising effect because let us suppose you could go at even the rate of, let's face it, at the rate of three percent, three tenths of a percent a month.

If you can get this inflation down to 3.5%, in my opinion, that's damn good.

We wouldn't want below 3, in my opinion.

Not much below 3, maybe 2.5, 2.5, 3.

The time, well, maybe we could get it.

It was down to 1.5 for a while, but the economy was pretty soggy.

But let's put it this way, what we're really feeling for is about three, I think in the back of our minds, between two and three.

But at two tenants, it's two and a half percent per year.

That's pretty good.

I don't know, next month maybe it'll bounce up a bit, but they're two very good months in a row.

Now, on the other side of the coin, and this is what we have to watch, as you know, the personal income thing was lowered, and just like industrial production, it was lowered.

March is, of course, the

a very important month.

And it's still, it's still out of March.

But a few little things in the wind.

They may or may not prove anything.

Car sales are pretty, pretty yeasty.

I don't know how we can sell cars generally.

But I find these people don't know too much about how it's going to come out.

But looking at March,

I'd say this, that by the 15th of April, that we can look back on what is basically the first quarter.

It seems to me that until the 15th of April, that we have to play the same.

We've got to play the game that we've laid out.

We can't abandon the game within six weeks after submitting it.

Do you agree with that?

No, but this is what I'd say.

All right, we're going to hold some controls, and so forth.

Now, on the other version, as I look at it at the moment, on the price side, interestingly enough, it is coming out better than Harvard, at least for us.

You see, many take a note of Friedman.

He just wants to make $10.65.

That's right.

And the reason he wants to make it, he's afraid it's too damn much.

On the other hand, he figures it's too much, and it would be too high.

If we can keep the inflation about where it is, if we can keep the unemployment,

I just like to get it down to around five.

It's just good to have this.

I think to have that unemployment around three is too low.

I think the labor gets too down to cocky.

Great, no question, but this is something we can never say publicly.

Publicly, we all talk about, well, we're shooting, but in our own minds, I just wanted to see if you're making a somewhat long line.

I think that we look at about March 15th.

I don't think that now is the time because of, you see, I just started talking to George.

George said, well, a lot of the people are now these poor economists.

They all...

They all are trying to prove their right.

A lot of them are knocking our estimates down.

I said, don't worry about it.

I said, we can't worry about it.

The main thing is that this is a huge economy.

We're talking about a trillion-dollar economy.

Jesus Christ.

So we miss it by $15 million.

You know what I mean?

It is.

I'm not going to tell you.

Fifteen billion, fifteen billion.

What the hell is the difference?

What's fifteen billion and a trillion?

You know what I mean?

It's a percentage that's so small.

And I hear everybody who says, it's one percent.

One and a half percent.

Well, now what in the hell?

I'm not going to fire anybody for one and a half percent of a trillion or even five.

Now, on the other hand,

It really depends on having a balance at the right time.

I think we've got to ride through these first few months.

They're tough months, and it's taking a little more time for the economy to come back.

The consumers aren't moving quite as fast as we thought they would.

They'll start to move.

They'll start to feel that a lot of things will happen.

The way I kind of visualize things is this.

This may seem totally erotic, but it really isn't, because you've got to sort of see all these things in terms of psychology.

I was talking to a fellow that was in New York for that fight the other night, the boxing match.

He said, you know, he went to the box and said he's not a boxing fan.

He said there were at least a half a million people on the street

He says, all the restaurants were packed.

He says, I went to Mercurial's before dinner.

He says, it was on a Monday night.

They had never been full on a Monday night for years.

He says, they had them lined up for them.

I went to 21 afterwards, and it was at a 3 to 4 o'clock.

Everybody was moving.

There was an excitement.

So people were caught on that because it was an exciting event.

project, you know what I mean?

It's like people getting caught up in a Rose Bowl, or a Sugar Bowl, or a Super Bowl, or that's in the field of athletics, but De Gaulle once said that

France has never been her true self unless she was engaged in the great antipodes.

Now, and so it is with this nation and this people.

As we, our whole psychology is going to change gradually as people get a little bit more confidence.

Now, basically we have to understand the war has eroded confidence a great deal in this country.

is he wrote it because, first, people never understood it.

It should have been titled, In other words, it's a speech I made on November 3rd, 69, and Johnson made it in November of 65.

That's right.

He's sitting here right today.

In other words, you've got to sit out there and do it.

It's too late now to get the American people to go out.

Well, not completely.

We can still leave our country with the chips already down.

But we're seeing it through.

But let's look at what's going to happen to the mountains in here.

First of all, the ocean venture, it'll be complete.

And despite all the asthma they're being treated and all that sort of thing, the main point, John, we say they've been in there, they will have been in there six weeks on Tuesday.

They had totally disrupted the timetable.

There will not be a therefore spring offensive.

There will probably not be any summer offensive.

It means that even for all scheduled interviews, it means that by the 1st of April or 15th of April, they will be out of the box.

It means our casualties will continue to go down.

It means that, and here's what the big play is, that this summer we're going to make a couple of very good announcements.

One about no more combat troops, no more draftees first, and then no more combat troops.

And then after Tuesday's election or reelection or whatever happens to it in November,

We make a final announcement.

Now, all of this, I know exactly what we're going to do.

We're going to do it in a way that South Vietnam has a chance to survive, because if it doesn't survive, free Asia isn't going to survive.

Let me tell you, if after all we've done for this little place, if the communists can take it now, then communism is the way of the future in Asia, period.

That's what you're going to follow.

Now, all of this, and I digress from what we're talking about, but I'm sure you can see how relevant it is.

I believe that it's removed the war thing, and it's possible.

I believe that that will help the psychology of the country, that it will live from that, because they see, well, the thing is going to come out all right.

And we are, I don't think this can count, it's over.

I believe, too, and this is the other very big strength of our vote,

That is, we have made, we very well may have, some progress with the Russians.

This is something that totally nobody knows about.

Rogers has some vague understanding, history knows about the progress in terms of his argumentation.

I can have a psychological impact.

In other words, the feeling that people are, well, things are going to be better.

Now things are better.

They get back to the whole business.

I don't care what it is.

The American people want to begin again.

What they've got to do is really true.

What happened is that we have to face 1967 and 1968.

And I don't blame it on Johnson.

I don't think, I don't, I think you should have fought the war differently, as I'm sure you do.

And that's in your realm.

But those actors in his party, the McCartneys and Peretz and the establishment in this country did something to America's self-confidence in Washington.

That's what happened in this country.

We had the economy continue to bubble along, but it was unhealthy.

And so in 67, 68, we came in at 69.

And you know, at least not believing what has happened here.

The campus is required.

The city is required.

Despite all the criticism of Mitchell, he's running a lot better show than that Ramsey Clark ever ran.

Here we are on the economy.

We had a hell of a bad year in the 70s.

Bad by some standards.

But the economy needed insurance.

It didn't.

Sure.

Had the impact of right now, had profits, it would be better this year.

No doubt.

Due to the fact that some of these damn companies, you know, they were paying these kids too much.

No.

What I feel is this.

I know Paulina and Jerry.

I think we should take a look at April 15th.

A real hard look.

I think you...

We want artists, we want Pauls, we want Georges.

And you'll pick your best people, you'll take a good hard look at the plan, where we are now.

If we decide then that the plan is to be changed, then we can move us in terms of the

Sorry, you're boosting it up through a tax, not even a tax bill, but you could change this.

Now, then we'll do it.

I'm not sure, but I think that bullet, it's not ready to shoot now.

Now, that's my view at the moment, but I think at the present time, what we have to do is to act confident, talk confident.

We think we're on the right track here.

Yes, this number didn't set, but we're pleased with this one, and we're moving along.

I sit here, I sat here with his government now for perhaps 100 of these clowns from all over the world.

They're not clowns, but they represent countries which basically have to play the role.

My God, the United States, that's why when they talk about the balance of payments, I'm sure it's a problem.

But these other countries, we could put them all in our hat.

I mean, we don't have confidence.

This country's got to get its self-confidence back.

And so he said, that's a place where you can help.

I don't help.

I've got to say it.

But here's where Archer comes in.

Every time Archer, who's known to be a top counselor to the president and a friend and confidant, when he expresses gloom about our plans and our programs and so forth and so on, he naturally has a lucky chain of confidence, sir.

I talked all around.

You come in here now and say, if you think this is about the right plan, let's hold on until April 15.

Then we'll take a look.

April 15, then we make a decision.

We either go forward with the same plan for the mountain, or then we may have to decide that we're going to do it.

Uh, go on the tax gate.

Well, let me, let me comment for the moment.

Well, first, I have no argument about the way that you go on.

You have to.

No, whatever.

First place, I don't think it's supposed to be true.

1065 the only thing that's going to do is whether you reach it or not depends on whether you have 11.6 billion dollar deficit or a 15 billion dollar deficit now you don't want 15 yeah of course you'd rather have none but that is the point you've already you've already said i'm for deficit spending this year under all the circumstances so you're going to spend the same amount of money whether you hit 1065 or not if the commerce appropriates

You've asked for it in the budget.

If they give it to you, you're going to spend it.

Now, we may have a shortfall in revenues, but so what?

Now, why go with the person that sent you right now?

That's a huge opportunity.

He says he wants to give it back to me, so let's turn his money around.

The savings loans do have money.

Personal savings are at 7.3%.

They're higher than hell.

The banks do have enormous amounts of money in personal savings.

People are not yet spending it.

That's true.

But why give people more to suck wood?

Exactly.

Arthur's point of basically confidence is the thing.

He said, well, you see, he argued other than the other thing.

Arthur argued on both parts of the line.

He said, give people more money.

On the other hand, he says, don't lose a lot of money supply.

Now, what the hell?

You can get money from either direction.

Now, the truth of the matter is,

that we don't want these interest rates, I keep talking about interest rates coming down, because it's gonna take a tough line to drive these big factories down, and our interest companies primarily, the long-term interest rates, but you don't want them down until next spring, because they're volatile.

We can't hold this interest rate on short-term treasuries, and my judge went down to 3.2 for God's sake.

For 18 months, well, we were at 3.1, probably 3.4 yesterday.

because we announced a five billion dollar financing and what up about 12.12 from 320 to 332 or something like that, but it's incredibly low.

You can't hold it until November 17.

It's going to fluctuate.

Now, if we get these long-term rates down, and two people die too early in 1971, sure, they'll be going back up next year.

That's not the time.

And if you get employment down 4%, it's not going to stay there.

It'll be going back up next year.

Or if you get inflation down, under too much, too tight of control, this year, it's gonna go back down.

Nothing stays flat, as you will know.

It's always moving.

That's going up or it's going down.

That's which way we want it to move.

That's correct.

Now, the truth of the matter is,

that I think we probably locked ourselves into an automatic shortfall by the 1065 in the budget, but that's all right.

Whatever you make, when you get right down to it.

Because I'm not sure you really want 1065 this year, if you can get it.

by the means we're talking about.

4% unemployment this year, and if you get your inflation down to zero, or one or two percent, because you can't stay there for 18 months.

The economic forces in this country won't let you, because people are too damn selfish, and the labor unions are too selfish, and the businesses are too selfish, and they won't let you sit there with them.

No, they don't graduate.

And you're right.

The businessman comes in here and says, what a great patriot he is.

And the labor unions are a bunch of bastards.

They're all bastards.

You know, let's face it.

That's true of all of them.

Everybody's got a big little buck.

Oh, sure.

I understand that.

See, that's how the country gets where it is.

But that had all that to say.

I'm not the least disturbed.

Now, housing, sure he had a two million annualized rate in December, a million in January and February, but I believe he's holding up for two years.

That's awful high.

Oh, it's awful high.

You know, I wouldn't do much here if we get the interest rates down.

If it dropped a little bit, then it came back up, actually.

Both this year.

I guess to get through, I think we have to keep constantly in mind the fact that

All this talk, you know, they call it the columnist, I mean, the financial magazines in Arkansas, all this immolating crap around this and that.

A lot of it is... Let me give you an idea on that.

Most of this is made by these international bankers.

It says, buy the innovation back to all these columnists who want to be the worldwide monetary experts.

And this is where all of this violence and pain comes from.

In the central bank in Europe, our rates are elevated.

just those workers.

I said, you just remind him that one of the head bearers over in the low countries,

that he wasn't cussing.

And that when he's willing to commit as much of his budget to his national defense or to the support of our troops in Europe as we have to commit to protect him and his country, that he's got some reason to grind.

And you also remind him that in 1969, when we borrowed all their damn money and paid them 11% interest, he wasn't complaining.

And now they're complaining because the last several months they've been getting some money because our interest rates are low.

And he just said we couldn't care less about his problems.

And we sent him asking for gold, which he did.

We gave him 25 million dollars for it.

But anyway, and I said, we're so tired of all these countries like Holland, the Netherlands, Switzerland telling us how to run our business, sitting over there and contributing nothing to the cause of freedom or nothing to the cause of world peace.

and us having to bear the whole responsibility for it and sitting on the sidelines criticizing.

And I said, this president couldn't care less what they said.

Now, I may have overstated your case, but the point I want to make to you now, if this keeps up, and these international bankers meeting, because they're over there, David Rockwell's over there now, Harrison's over there now, and the Vice President of the First International over there last week, and they just travel constantly to central bankers to pull all this propaganda talk.

This would be a drastic move, but let me suggest that you, Rogers,

make a statement that, well, you're very concerned about these balance of payments, and you've given instructions to Secretary of Defense to look into the possibility of withdrawing 25,000 troops, and this appears to be the only way.

which have caused shock waves throughout the country.

But, and this may not be the only answer, and I'm not sure that this drastic set is called for.

You don't have to do it.

Ministers all probably had to stay with the quiver in their boots and the French and Russians, so you might not be able to do it unless you get some peace in the Middle East or salt talks or something that you can tie it to.

But if you ever get any kind of encouragement, just don't worry about getting me to stop all this for a year.

would help you in your propaganda and your violence against the economic picture.

It might hurt you on the defense posture, so you might not even do it.

It's just something to turn over your mind.

But we've got to somehow shock these other countries into making them quit feeding all this propaganda.

Because, you think about it, in the luncheon that this ambassador gave,

The State Department people came in on it.

This guy that's the head of the Central Bank in the Netherlands just kind of criticized us for being very unwise, following a very foolish economic policy, and being totally disregarding our responsibilities to the countries of Europe and so forth and so on.

He's called us a bunch of ploppers.

And this is pretty tough to take with that.

And how are the Netherlands?

But anyway, I'm the guest of honor, and that's just something that occurred to me today.

Man, I'll be wise to offer you.

Well, if you agree, let's follow that as our plan.

I think we've got to stick to it.

I don't know too hard.

Now the other, if that's what we're going to do, we're not going to go for these tax gettings and schemes and so forth.

We've got to quit talking about it until we decide otherwise.

That's very interesting.

On monetary policy, I think I've got to say that he said he'd have 5%.

He's got to have 5%.

Isn't that what we have to say?

Sure.

And I don't care what you have to do.

I'm proud of you.

I'll say, you told me you were going to give me five percent, and you gave it to me.

I'm not going to say another word about it from now on.

The other thing is that on the broader spectrum, wages and so forth and so on, there's the price thing.

that you could sense from the end of the month.

There is a field among, we have a few contractors in there, Romney, Romney, both he had a blog, and of course Stan, as to an extent, has had some background there.

So they all are thinking in terms of, without thinking through, of course, some sort of controls.

John, I can tell you we have fought this through, and it just isn't in the cards.

I mean, I don't know that anything will work.

I mean, why don't we talk about a wage freeze or so forth?

I'll put it this way.

We haven't in two months.

We could do almost anything.

But anything you do now, you're going to find out if it works.

So therefore, you can't try anything.

You're not sure if it's going to be a good way to draw it.

Well, I'm concerned about the wage push.

I don't know anybody really interested in it because you freeze the wages and prices for a limited period of time.

But it has to be very limited, or you create so many hardships that you can't justify the enduring.

If you go beyond a very short period of time, then you have to set up boards for extensions.

So you do your own business, you do your own business.

And in this business, and the worst thing in the world, is this wage price.

I'm bored with the person going around holding something here.

In fact, you don't need that, never, because a short, a short mandatory, a mandatory freeze or a short...

The way price is controlled, I just don't think anything is as potent or as powerful as your personal, present personal treatment.

I mean, the price you're reaching by industry, or the way that you like saying something.

Like saying something.

Sure.

Yeah.

Which we will.

And I think that's not, that's more powerful than what they've been saying for a while now.

Sure.

Sure, it's having some effect.

Sure, sure.

Hodgson seems to still think he's going to get some sort of agreement.

Boy, that would be an enormous achievement if they would make some sort of agreement just to hold where it is.

Now he, I don't know, what he's going to try.

I don't think you can do this in this labor company, obviously, because out of hand, Redlock has some pretty good ideas on labor.

But these are legislative ideas, and I'm not sure... You've never done this, Marcus?

No.

No way, no.

You're not kidding.

I mean, we can't... Look, I've got down there...

a whole new transportation, and they ought to adopt, you know, it's a hell of a deal.

You know, we're gonna put all the transportation under, and the railway, and all the rest, but they won't touch it.

This night, there's just too much out of the unorganized labor.

They'll never do anything that's, you know, and what I would do, first, I'd get out of these five red months, where you propose legislation, or you're gonna propose legislation,

requiring labor, bargaining with local bases.

You know, we're actually restructuring the units.

But I wouldn't, I wouldn't submit it.

I'm not even sure I'd submit it until late next year.

Late next year.

We don't want up here to be infamous.

That's the other thing.

On campus, don't be in that field.

And also, you just have, you just draw the sword.

You have this bloody fight.

We have to take a look and see where our friends are.

Well, if he submits something, man, he gets defeated.

Well, then you've done nothing except hang your labor.

And you confess the rest of your energy that you can't do.

You can't do anything else.

But you can wait until last year and come with some of these ideas.

And then have a position.

Then you can have a position.

Sure, you can have a position.

If necessary.

Well, so I don't... Well, this is fine.

Thank you very much.

I'll let you lay it.

Let me ask you, what is the... What is the...

You're really, I guess I'll get Archer in and I'll put that down for him.

I don't think that we'll bother with the Quadri.

I know we should really have one right now.

But I think, since we're talking about April 15th, that's something you ought to do.

The other problem we have, if there really is, I did want to mention this, you know, Maury Stans, and actually Hoxton, Stans and Hoxton, and because of their backgrounds, Blount, Volpe, and Romney, and even for that matter, Harvard today, in fact, the whole domestic side, they all want to get into the economic side.

Uh, I, uh, I suppose it might be a little good to sit down and express some of their views, but, uh, the difficulty is, you know, we can't do it.

What do you think?

Sure, I'll express my opinion.

Yes, sir.

Have a good go.

Yes, sir.

I think we've done it before.

I think, as you well know, you get some criticism from this town because they think they don't have a chance.

They think they don't have a chance to talk to you.

I didn't know.

And, you know, when you follow their advice, not everybody's proud of those very kids where they won't get it.

That's right.

Of course, you follow them, not somebody else.

Right.

And they don't really expect you to always follow them.

But they said, they told us.

But they won't be able to say, I told you so.

We might.

What we might do is to devote the next year, I'm getting used to this, on the economic, on the top of it.

I would add that, sure, we'd look up our... Do I have a reason?

Except to do it.

I think we, just very quickly, I may change my ideas on this Joaquin thing now.

It's probably next week.

We lost that SS team we did in the Howell boy.

That's just the topic.

And I'll tell you now, when this country gets formed with these environmentalists, there's much more trouble in this country.

Oh, God.

Well, of course, we've got trouble.

Let me say, this is a, this is a whole, in this case, of course, I'm not listening, it's the whole damn liberal spectrum.

Yeah, that's right.

Beat the hell out of that.

That's right.

But to lose that, now, I think we've got to continue to fight it.

Maggie and Sue, of course, will try it in the Senate.

Well, I'm going to talk to Benson this weekend, and I just hope to hell I can get his vote, and I think we can.

It makes a lot of difference.

And I'm going to talk to John Sherman Cooper.

Somebody said it's supposed to be the John Mitchell I'm talking to.

He didn't know about it when he came up.

That's a tough one for me.

But I still think it's going to be built.

It's actually going to build and it's going to have to.

And your position is absolutely right.

Would that stick to it?

No question.

The only significant part of it is that in spite of all of the barriers that you have, this combination of the liberals, of the international, the ecology, and this environment combined together to defeat it.

That's right.

But two lousy planes.

Two planes.

Two prototypes.

Yeah, this is the allowance.

Lockheed, you'll know next week.

Yes, sir.

All right.

Yes, sir.

Thanks.