Conversation 470-018

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Hi, how are you?

How are you?

Have you been here all this time?

Have you had a coffee ever?

No, sir.

Oh, yes, sir.

Oh, I see.

Let me get something.

Oh, thanks, Lee.

I wanted to see you for some time.

Things haven't been going quite so well since you took some of the numbers away from me personally.

I didn't want to talk to somebody.

But now I am.

He would be precious no matter what.

I had a free living at a great age.

So was my old teacher, Wesley Craig Mitchell.

You know, he was the outstanding economist in this country.

He and I became collaborators.

We wrote several books together.

I was his biographer.

His memory is very dear to me.

A second was my friendship with Eisenhower, which became very deep and very personal.

Third, my friendship with you, which has lasted many years.

I was your friend, you were my brother, and I was your friend.

Maybe, you know... Oh, geez, I've got to step up.

I've got to step up.

I want you to know that whatever you ask, I accept.

First of all, I have a deep faith in you.

I'm not a believer.

Second, I have been completely lost in an old book.

This thing I had to do in my life, literally, was to support you on the welfare program.

I disagree with you.

But I did.

I don't know whether you know it or not, but I have many friends from Capitol Hill, many who characterly lean on me.

I've never said one word in criticism of anyone.

Megaton.

Now, in doing my duties as a fed, I've got a lot of time.

I'm running with my problems.

I mentioned the other day, just in passing, how I saved a million dollar, billion dollar bank.

Now I'm keeping it alive.

you would have had massive failures of brokerage firms if I hadn't intervened.

Now the, I've taken my, when I was here as counselor to you, I considered myself successful in my job when I kept things from your desk.

I know.

That's your one measure of success.

It's not when I came to you crying, you had a big problem.

You said, what the hell, what good is that?

You said, you don't have any worries.

And I'll be, you know, I'm doing my basic job in the bed.

Power.

I'm a dedicated man to serve the health

and strength of our national economy, and I've done everything in my power, as I see it, to help you impress your reputation for standing in American life and in history.

I've never seen a conflict between the two.

But I want you to know this.

A conflict could arise.

The moment a conflict arises, I'm going to be right here.

And I'll tell you about it when we talk it out.

And try to decide together where to go next.

Now I want to put this before you because, well,

A lot of gossip.

My friends, they talk to me.

They write a great, great column.

I don't know much of what has been inspired by well-meaning, well-meaning people, but it's so wrong.

You know, well-meaning people right here in the White House.

What good does it do to carry on a fight for the faith?

What good does it do?

Mr. President, there's only one thing he changed on the axis of his head, you see.

New evidence.

I work at it and work at it harder.

I've prepared myself over a lifetime for this position that's taking you in, and that's why you're going to be doing it.

Going to the press, you know, what good does it do?

I'll do what I think is right.

And I'll do what I, and as I said to you, if and when I ever see a conflict between what I think is right and political fortune, your personal fortunes, I'm sure that if there was the slightest conflict, I'm going to be ready to take it on.

That has to occur.

Now,

What is the difference between this?

The government, the rate of interest down, Treasury bills, as I mentioned, from 8.1% to 8.3% in the period of one year.

I could drive it enough faster than this person.

I could.

No, I'm not doing it, you see.

I'm not doing it first.

I am talking to you about the possibility of an international monetary crisis.

That's closer than it was.

I have reached the conclusion that an international monetary crisis will cause financial and economic havoc at home, quite a part of what it does to our political prestige in Europe.

is wrong, and that is a terribly considered judgment.

And I'll lay out the facts for you in due course.

I've got a memorandum underway, too.

I've got the Treasury working on this problem because I want to try to prevent it.

We may succeed or not.

I believe the contingency plans, in the event that we can prevent it, are to minimize the shock to our domestic economy and to our foreign relations.

I want to advise you to the best of my ability on that, and I'm working with the Treasury.

The drop in interest rates lower, I think, will run the risk of accelerating an international monetary crisis, which will do us no good, you know, domestically.

Second, put the international factors on the side.

They have already fallen so low in the short-term market, which is the only market I can really influence,

months ago, that there was a great danger.

When you're near the floor, you can only go one direction.

Now, it's my duty as an economist, I've always looked more than a month ahead or two months ahead, and I've got my target, you see, for the next two years.

1972.

If interest rates go down further through my actions, they may go down because of force that I can't control but something else.

They go down further through my actions,

The probability, as I see it, is as they grow up later on in the year, in 1972, housing, which is recovering very nicely, may dangle into a Texas in 1972.

Where will it be?

As a country, as a party, any person?

I think it's wrong and stupid.

I have been for some time, and it took some doing with my complicated system.

I'm not the secretary of the president whose boss, but I've achieved, you see, a certain rule and authority over my shop, and if there's any blank, place it on me.

I can't place it on others because I've pulled them along, and they've passed it in accordance with my views.

Now, the...

Now, take history as a rough guide.

We were on a six percent track with a narrow median.

Currency and circulation plus exchange policy.

That's checking accounts.

Six percent rate growth.

That rate of growth has been exceeded in the post-war period in only three years.

1946, an extreme year of limitation.

1966, a new one.

Worry taking chances.

But I thought it was right to take some chances.

You can't get anywhere in life by playing it safe.

To go further, Mr. President, I think runs the risk of me becoming an economist.

I may be wrong, but I'm acting out of deep conviction and out of deep and prolonged and continuous study, and I don't have a rigid mind on that or anything else.

I've trained myself as a scientist.

And I'm looking at others.

Now, I thought I'd go ahead and have this heart-to-heart talk with you, because I know you.

I have felt the recent conversation you've had sometimes.

It's nice, for sure.

You don't see me often, but I have had this with you many times in the past, about the economy.

I mean it with seeing you now.

I don't think so.

And look, I'm on years.

I have some purposes in life.

I came here as a little boy.

I've done well.

In my profession, I rose to the top.

In the business world, I have the command of higher peace than any economist.

When did I come here?

I came for two reasons.

First, I owe debts to America.

My patriotism is fierce.

The debt is large.

I thought I could repay it.

That's why they gave me the opportunity.

Second, I wanted to work with you.

And to hell with it, because I thought I heard it.

That's why some people ask me to do it.

Well, I don't know what to say to you, sir.

I don't know what to say to you, sir.

I don't know what to say to you.

and loyalty or anything like that.

I know that you have, I know too that from a practical standpoint, you have to realize that you have a different situation now than you did when you were counsel to the president.

Then you, that program is independent.

And you have, you cannot,

You cannot be on a position without independence.

I realize that.

I think the important thing to bear in mind is the one that you raised.

I think that we could have that kind of understanding.

There could be a solution to problems.

It may be that we ought to do this before we have a meeting.

Uh, maybe, maybe sometime we ought to write a comedy on Dicker or Treasury.

He's not a good man.

He's practical.

He knows what he doesn't know.

He's like I am.

He knows what he does know.

The point about this is that where do you... Where do you want to go, boy?

Where do you know?

Uh...

I think our goals are the same.

I think the great advantage you have over Bill Martin is that Bill, while he was good in terms of his own public relations, in other words, he always stood out there on the gracious bridge, that Bill, first, didn't have the economic understanding that you have, and second, he basically wasn't as good a politician as you are, in my opinion.

You have the same

The good thing about this, the good thing about this is that wherever I could have this kind of talk with Martin, I can't with you.

You and I have the same philosophy.

We want this.

This is the last chance, really, let's face it.

This is the last chance that anywhere near like a conservative administration can survive.

Let's face it, the alternative to this is going to be, it is going to be Sue Jackson.

It'll be, well, Hubert Humphrey, Mosky.

But it'll all go on wildly.

There's no question about it.

They can't go in any other direction.

So, under these circumstances, we have to do our very best to be responsible and do our very best to make it go.

And we are very blessed, particularly, to make it look good next year.

Now, we were hoping, of course, it would look reasonably good this last year, but it didn't work out.

And that's just, in a sense, you know, our mutual friend, Milton Friedman, thinks it's a good thing.

He says, he wrote me, I remember, a long letter.

You may have seen it.

I mean, it's sent around to you.

He wrote me a long letter.

That's how he did the work.

He said, he said, don't, don't, don't, don't do too much now.

And when it's, when it seats at 70, the risk of having the economy low at 72, whatever he said, that's why I'm a Christian.

The point is that we have the same goals.

We want the same general principles here, family assistance.

We can have this agreement about that, but that's over and done with.

The point that we've now come to is that

We've got to have, we've got to do the best that we can and get the very best judgment we can to see that this economy moves up.

Now, to be very frank with you on that point, I am not too, I'm not as concerned as some about it's not moving in so fast right now.

I have everybody talking about 1065, and here's my view, and I can demonstrate this beyond this room.

My view is that I would rather have it move a little bit slower now so that it can go up and get a real big burp later.

I think, for example, now

that we ought to take a look at it around, when we get the April figures in, let's look at March and April.

Then in March and April, we all find, we find that things are not moving as it should.

Then it seems to me, then we'll have to reconsider our aid plan.

This is whether or not the investment tax rate or the acceleration of that should go.

I think between now and then,

However, it would be well not to take that position for fear that it will indicate a lack of confidence that we know what the hell we're doing.

And we're only detained.

Well, and you don't change six weeks after you went in.

You don't change.

I know.

I saw it.

I think that...

that when they, their testimony down there, and I talked to Conley about this because he raised the same point.

He told me he talked to you this time.

And he said he agrees that we do testify on this investment tax credit and the

in the matter of the social security, the other tax matters and so forth, that actually the press really made something out of it that you haven't really said.

At least this is an answer to your question.

The thing that I want to start about... Yeah.

Yeah, I'm sorry.

I'm looking at the problem.

Pretty common.

If it turns out that further stimulation should be necessary, these are items on the public calendar.

I see that.

And I see, but the point of that, however, is this.

See, you're in a very different position.

Again, I say,

the relationship that Eisenhower had with Martin, or that I had with Martin, for that matter.

Eisenhower wasn't close to Martin, and I, of course, wasn't close to him at all.

But again, everybody knows that you and I have been personal and political friends, and that you've been a counselor, a president on the economic matters, both when he was vice president, when he was out of office, when he was in the campaign, and before you went to bed.

Consequently, the...

What you say in this field, and that's why I think this kind of understanding is so important, is anything you say is bound to be seized upon by the press and try to make it appear that you are differing with me.

And we've got to avoid that.

You must not have, understand, that has nothing to do with the independence of the veterans.

But I think we've got to bend over backwards to be sure that we don't give any ammunition to our, quote, friend, quote, the press.

They say, well, Burns is fighting with the president or the president's staff, et cetera, et cetera.

Now, that's two-way thinking, too.

It has to be both ways.

Connie understands this.

I go here to the Center about Schultz and so forth.

We all understand that.

But I think that your position, as you can all see, is still very different because of the personal relationship.

Now, that doesn't mean that you should go out and simply be a presidential puppet.

I'm not suggesting that at all.

I don't know any puppets.

I want, of course, your best advice and everything you can get.

I do think, however, that we've got to be extremely careful that we not

Allow them to say, well, Art Cripps and others want us to bail.

Well, the plan the administration has must be bad because Art Burns, the president's counselor, is disaffected.

You see, that's what they're going to write back.

In fact, that's some of the stuff that crops up.

And that's why I'm being very sensitive, and you knowing politics, if we could just watch that situation.

And I think that whenever you see something like that, you let me know, and I'll let you know, on your economy or something.

He'll see it purely politically.

That's the main thing.

You see, to me, Africa is more a political than an economic problem.

Look, who they don't know is how they're going to have an economy.

Nobody can be sure.

Some can be more sure than others.

The only thing I do know is that, from a political standpoint, and also from a confidence factor, it's extremely important for there not to be, not at least appear to be in the public mind, a great

cleavage between the President and the Secretary of the Federal Reserve, who not only is the Interim Chairman, but who is his friend.

And see what I mean?

Because you see, you've got, you both have a lot of the same friends.

That's the way it works.

There's the policy to know that there must be some problems.

Now, I know that there are things we ought to consider, and we will consider.

I must say, if you think we all have been around, I'd say we got the figures around the 10th of May, between the first and half of the first of May.

Basically, you get figures that probably we're all thinking.

But we got the figures for the month of April.

Then I think we ought to examine the first four months.

That's basically it.

And then we've got to decide whether we go on another tax campaign or what else we do.

How does that sound to you?

Now, the way we ought to go in the meantime is to

I think on the money thing, I read your paper, I don't still understand it, but I understand more of it now.

And on the money thing, all that I can say is this, you know, when I saw a comment and I talked to him, I said, all that I know is that you had told me that

you were going to see to it that we would have a 5%.

5% was your goal, and that that was something you could achieve.

Because I said, it depends upon you to do it.

And that's what I do, as a matter of fact, which will be understood.

So as far as I'm concerned, I'm not going to watch the figures every month.

I don't know nothing about it.

But I do know that you've got to watch them every month, because you're sort of basing things on that 5% matter.

Well, I think that's right.

I understand.

I don't know whether it should be, you could tell me 15 or 3, I don't know the difference.

But to be that as a man, we've got to count on you.

And that's why I do, to have that money supply thing, I have a good, strong name.

which is 5% or 6% or whatever it is.

And in the meantime, on the other policy, when we get into our fiscal policy, with our cash policy and our budget policies, I would suggest that we, sir, that we could have very thorough discussion

But we probably should have a moratorium on any public statements about it.

Well, now, what should we do now?

Right now, let's say, well, things, for example, somebody said that in the month of February it was disappointing.

Well, it was.

Well, let's look at March.

I mean, I have much more, I have much more balance in this than most have, because I've been, you know, you've been up and down a bit, you get a little more balance.

And I've seen too many people panic on the basis of two months' stay at home.

See?

So now you don't panic, that's the thing.

You have a sense of respect.

And that's what I want you for.

So what I'd like to do is have a relationship where you and I can talk about this any time, and you can be sure to talk about your concerns.

So if it's forgotten, let's say,

You get your best advice.

And then publicly, however, I think both of us, I'll try to, I'll handle my people.

And actually, as you know, I've got to defend my people.

Whatever they are, I've got to defend them.

Why not staff?

But I'll see to my people, and that includes fun.

I see that we play the game.

That'll be the responsibility.

I would like to ask you to do one thing that I think would be very important.

I would like for you, on your initiative, because he's a kind of a man who will not bother you, I'd like for you to develop a very close relationship with the company.

Well, I mean, see, very often, and talk about this, for example, because he's going to, you see, he's going to do this.

and all of a sudden, he learns fast.

And then, on occasion, you see, here's the other thing.

Let's look at why.

Basically, Schultz is extremely able to hold, McCracken is extremely able to hold, and he's not a man.

However, neither of them knows anything about politics.

You, Connelly, and I know something about politics.

I, therefore, and I would like to, sometime, maybe just the three of us, and maybe the way we'll do this, I may put Connelly on the phone so that it doesn't appear to, I'll make the call.

That's all right.

But the three of us, perhaps, on occasion, just ought to sit down and talk to me.

So you might mind me.

Not in terms of the way you're on the clock yet, but just simply in terms of the political effect of all this stuff.

Because you know, you understand politics, aren't you?

You know, you know things better than you said before.

And Connolly is a genius as a man.

He's really as good as Johnson.

Well, he's a strong man.

He's learning fast.

He knows a lot more about it than I do, than I realize.

But I think the key to this is first, you and I stand close together, which we will do.

uh, on the property address, uh, to be sure that they, uh, uh, we all, uh, I mean, uh, we're very frank, and we'll try to keep everybody in line, so, and knock down his, his recorder, and keep it frank, and the rest, if I knock it down in there, they ask me, oh, you're perfect, and, uh, but I know that they're, I mean, senators, I, I understand, I know the problem, you don't need to stop, but I, I read enough of the stories, and, and, uh,

We've got to, let me take a look.

My feeling is this, that if we pull it off,

It'll be a miracle, the economic miracle of the century.

Just like that in this war, which I think we're going to do, and save Vietnam at the same time, will be the diplomatic miracle of the century.

I think this, if we pull this economic thing off, and I don't mean by that that you've got to get down to 3% on the climate.

That wouldn't be good.

The direction has to be the direction, and the direction both ways.

If we can pull off our...

It's an enormous accomplishment, whether it can be accomplished.

I was just reading this and having a great concern, terrible problems, poor heat is happening, all the labor people are going to hell.

The polls now show that a majority of the British people, polls entry to the market and so forth and so on.

But nevertheless, he's in provide here so that he can take his lunch now.

But the running of an economy in a modern state,

particularly the great, well not history, but a thousand billion dollars.

I mean, it's just unbelievable, isn't it?

How intricate it is, how difficult it is, and you push this button and that button and say, well now, we're gonna estimate how much we're gonna have, so is it gonna be 1065 or 1050?

I don't know.

I just hope that it's stopped.

It's stopped.

Just a little bit.

That shouldn't come too fast, though.

My view on the unemployment, see, what do you think?

Is it harder to make it than it is next year?

Don't let it go any higher, but I hope we can .

But I think we've really got to think of

shall we say, late summer and fall this year, and I'll be back next year, because you know there's a hell of a lag.

Because you remember in 1960, when Jim Mitchell came in to see me down there, down in my little office as a captain, and said, my God, we've got to do something about this, remember, about the economy.

I don't want to refresh your memory.

I place a call to you late February 1968.

Late February 1960.

Rosemary Woods, sir, will make it to your filibuster when you're tired.

Well, I'll get to it.

All right.

Any day they need to slow down, he got screwed.

And he breaks it down to spirit concentration.

So when I say something, he's waving a little carrot at me.

And I'm eating it.

And when I get out there, you know, they call me the best part of my life.

Not on a piece of paper, really.

And all the members, practically all the members of the Banking and Heresy Committee are here.

And the goddamn question under the sun, every ruck, you see, is thrown my way.

Well, you know, the fellow has to ask more or less a character or agency's usefulness, even if it's out of respect.

Thank you.

But then, I say something, even against the backdrop that has been created in the press, confrontation, or what the hell, one of these days, I don't think that's real.

So what we have to do is get a commission count.

Oh!

With the understanding of your will to do what you said.

You said you're going to give them 5% of the total.

You do that.

I'm not paying on that.

As long as I'm in control, it's gonna be fine.

Why not?

You know it's a complicated system.

Well, I've heard the control number.

But my other point is that I said that, and what we wanted to do is try as much as we can at this point.

We were still friends.

And I think we could have a nice show, and we'd have a front that's on the bridge, and we'd talk together, and we'd play together.

And I think the very fact that you and I are meeting is a good idea, and there's a lot of folks that would put up.

And what you would do, you'd call it a, what's another good name?

So, uh, I appreciate it if you could sit and let me know if you need to keep pushing on.

I know that the quadratmeters, remember, the solvents and the cranking, they, they, it also meant that, uh, they got something to use.

And let's take a few minutes around.

And then about, as I say, about May the 10th, if that sounds all right.

You tell me the date.

I don't think the date is long enough.

The date would even be in about the fall of the year, you know, about May 10th.

The rules of the year are not going to be about the 15th of July.

Let's, in other words, the April figures, whenever the April figures, we'll have a year.

It might even have that, or it might even have a year in that time.

It's going to be a little bit of a mistake.

Oh, no, I guess you're right.

I already got the message.

I guess it's hard work.

That's all.

I said you look great.

I think that's all.

That's it.

Number one.

Yeah.

Uh, the Senate Department has introduced a, you know, a law for tenders sometimes, but it's less important to make sure he wants to be out of court.

You do that, and that's it.

And welcome to call number two.

Good, good.

Let's regard it.

Actually, no, you would say we would not make any decision in total, but keep the options open.

In the meantime, follow some comments.

I'm not going to give an example.

Our senator probably asked me something about the Congress of the United States.

I'm not going to say that.

I'm not going to say that this is my opinion.

I take care of it.

We'll be the main thing that's moving up.

We believe our plan is right.

You know, I'm not going to make any predictions.

You just said that the process of science and ethics can't be as short as the first one.

That's true.

How'd you get that out?

I don't know.

When do you go to Europe again?

Do you want to call down the bankers?

I don't think he's running for it, but I'm glad I have to go.

You've got to go to the mall.

That's what I was saying.

Well, he's a big A.I.

on the seat of Hockadoo.

So, I'll stop all smarties, and I'll stop all these clowns.

Good.

Harris, Harris is not going to get anything done.

I want you to come to the front, or to London, and I can start you with something.

Well, Hockadoo is a city in Greece, and it's a very good city, and you can serve more than one person.

And he's in a conference, and he comes back every weekend.

And he was a father, and he loved it.

He loved it.

He called it an American relationship.

He's never been good with it, but it's, you know, he had a terrible time with it.

But it's just, he was a son to me.

All right.

This will all be...

All right.