Conversation 706-005

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Well, I understand you've got a few little odds and ends.

You've got the department around you.

It's still there.

We've got an outstanding undersecretary, this fellow, Glenn.

He's one of the best guys in the U.S. government.

Great.

Okay.

On the foreign economic side, if I could just spend two minutes on that, having spent a year at it.

As you probably know, there's this legislation before Congress on commercialized shares.

We hear about that.

A lot of discussion.

My view about that, Mr. President, the more I live with this problem, is that this is really a piece of a much larger problem than

This commercial I was chasing is really a piece of a much, much larger problem.

It may surprise you because I know there's some other points of view, but I'm not so sure that just putting commerce cars around the country is really going to solve the fundamental problem, which I think really is

the people in our foreign policy apparatus really should become you know more economics oriented than the men at the top over there and i just just want to express my concern that if this thing is seen just as a hard power player uh that it really isn't getting at the real problem remember you think that you can indoctrinate the foreign service officers and economics they're smart enough to understand that you think they

that with the kind of background they have, they believe in a private enterprise system.

So that's the problem.

Maybe you could.

Maybe the thing that is needed there, you suggest, is a very strong undersecretary in charge.

I think what I'm saying is that if the men at the top don't take your tough-minded point of view about a lot of these problems, then I don't think the organizational problem is going to solve it.

And I think whatever you decide to do about organizations,

the more I sit through textual problems and whether we can compete or not in agriculture and problems like that, the more it sounds to me like we ought to consider post-72 election, strengthening the top side as well as whatever you decide to do about these attachés.

On the Soviet thing, I don't know if I assume Henry and Peter have kept you up to date,

I spend an awful lot of time on that.

And I just want to say, be sure we're all together on the fundamentals of this thing.

The question here, I think, is how fast to go and what to be stated.

And what kind of linkage do we want?

The more I have looked at these deals, the more clear two or three things become.

One is that

They seem to need a lot more from us than we do from them.

Secondly, these big deals, the raw materials and the ventures and all the oil and gas that you're familiar with, when you really dig down deep into those, you find out that they require a tremendous amount of capital.

I've got late assessments here on the oil deals.

They're now over $7 billion as they begin to price them out.

It's a lot of front money, Mr. President, and the payout on those is, you know, eight years out.

Now, our entire ex-in financing is only about $12 billion now.

And the thing that is concerning me is if we don't do this gradually and linked and on a phased basis, we could end up that instead of having positive linkage, we end up with reverse linkage, where they owe us so much money that they, you know, that there's a potential here for using it against us rather than

a plus for us.

So our thinking is moving more and more toward gradual, you know, some XM, some FM, MFM.

Keep a lot of things in our pockets.

Don't approve some of these big deals until we, you know, can get something important for it.

And I assume Henry Peter talked to you, but just want you to know the more I live with this problem, the less enthusiastic I am about saying

going to grant xm or we're going to grant this other i see a much more phased operation rather than you know kind of an open and these raw material deals that casigan is very excited about when you really look into those there i think here we've six seven eight year payouts billions of dollars they're gonna need our credit and

If we're going to do that, which is a big question, I'd rather save that until you've really got something big for us.

Whereas if we just kind of open up, we've kind of given the chips away before we've played them.

So I don't know where you stand on all this, but I just want to report I'm a little less euphoric about moving fast on this than one might expect as I get into it.

It has to be linked to other things, which, of course, is not the usual way to do it.

We're not going to handle that here.

The point is that this is true for them, not for us.

It begins to look like we've really put the numbers down.

By quite a margin.

Businessmen talk about their huge sales and the rest of it is nonsense.

Or there's something.

Oh, yes.

And there's enormous amounts of equipment required for these sort fields.

But frankly, I'd rather have them a little disappointed because you haven't gone all the way.

You had to let them build their hopes way up, and then finally had to pull the string in a couple of years.

It just got out of hand.

Well, OK. Up to this point, have you talked to Brady?

Yes, I've talked to him several times.

Several times.

And Petalicet, I haven't taken any substantive line.

I'm just making the arrangements.

What line are you taking?

I mean, it's just that, well, we aren't ready to do it.

Well, Petalicet will be over, hopefully, at the end of the month.

He's the trade minister.

And we're just making the arrangements.

And he keeps wanting to get me to say something about XM and FN.

My line is that that will be the subject of the discussion.

So I haven't given him any line on what the substance of our position is.

I've just been making donations to get them.

Before we go, .

Your opinion is so mature.

What logic should we take of that from an economic standpoint?

In other words, it's not an end in itself.

I agree with that.

And then you sort of say, well, from an economic standpoint, it would not be in our interest to do this or that.

It would be in our interest to do this so that we can get the picture done.

And we'll know what the trade-off is.

We won't give it something that's more advantageous to them than to us.

Right.

Absolutely.

All right.

So on XM, for example, instead of saying you're going to give XM, you simply say we're going to give this much XM for these purposes.

Yeah, that's all.

Then you'd save the rest for later.

Save the rest for later.

And on the MFN, you can do exactly the same thing.

I think Peter and I and Henry are all agreed that MFN this year pre-election is a very dangerous political gambit for you to get in.

You have to go to Congress for that.

I pray that that would open up a real... We have no problem there.

Is your attitude the same on polling?

I understand that...

Our attitudes on Yugoslavia and Romania are one of it.

Henry's comments have been to go a little slow on the Polish thing right now because of some of your points.

It's interesting that they all three want to visit us, Poland, Yugoslavia, and Romania.

And I think we've agreed, Peter, one of the things we have to organize is how we're going to stage the Eastern European countries, basically Europe, what you want to do before, what you want to do after.

Yeah, yeah, yeah.

But it's no accident that they all want to come over here.

I want to, but I want from you a memorandum on Russia.

Don't look at politics or economics, because I've had the same feeling about this all my life.

It's sort of a myth, but I have many people like my good friend Don Handel who tells me it's the greatest thing since...

So, you know, most of your business people may say that.

But it depends on where you're going to look at it.

Just to say what's in it for us economically, what's in it for them.

And then you see that it's also a fighting game.

There's a lot in it for us if you're willing to extend it to someone's credit.

Oh, yeah.

That's the point.

That's the point, right.

Our businessmen are very happy to make big sales as long as we can.

Yeah.

Sure.

We are a great organization.

Sure we are.

And when push comes to shove, they all want a guarantee, without exception.

They want either their investment guarantee or their credit guarantee.

So you end up .

All right, on the energy situation, as you know,

Peter and John are both involved in that.

I just want to very briefly register that the more I get into that problem, the clearer it is that that's going to be really one of the tough, long-range problems.

And it just cuts across to the whole government, politics, everything else.

There's one aspect that perhaps you haven't been briefed on.

You know, we have a maritime administration over there.

And Andy Gibson, who's another very good man, but he's not very good.

I'm sorry to say.

we've been projecting how what the maritime implications are some of these imports and you know peter there's that one in testament it's the high one that we might have to import as much as half of our oil and andy's laid out what it means in terms of ships and it means a maritime fleet that's equivalent to the entire tanker fleet of the world at the present time you're aware of these super tankers that the japanese and others are using

What I have not realized, Mr. President, is the enormous economic demand.

You know, the Japanese have been using it.

It costs 60% more to ship oil than the regular tankers, and it does that.

And then you get into this damn problem of the docks.

You know, those super tankers require these deep docks.

You know, the docking.

And we don't have any of those.

And the only candidate we've got is one out in Delaware, John, that we mentioned where there's a political problem.

Well, I have a feeling this one is really going to require all of your resources to get reconciled.

Yes, the problem here is the fact that we have a, that it's going to require an awful lot of subsidy.

In other words, the building of the tankers and so forth.

I mean, I can certainly see what you're, I mean, just looking at it straight, assuming it is going to require subsidy, it is going to be a budget problem.

Your point is that we need to work on that.

You're either going to have to do something major on the domestic front,

which gets you in the business of incentives and all of those problems, environment and all of those problems.

Or you're going to have to import more, or probably feed a lot more coal, would be my guess.

And to the extent that you import more, it's going to raise these major questions about supertankers and docks.

Now, you probably know this, but I haven't, but these supertankers are now landing outside the United States.

I don't know if you're aware of that.

Up in Canada.

and the Bahamas, and then they're reloading and bringing them to the United States.

And the whole name of the game on this business is these deep docks that go with the supertankers.

And we just don't have any of those docks at the present time.

Remember the Japanese steel industry case we talked about, the way they take people out from Australia and they land on the shores?

They are using these supercarriers.

But what are your feelings on where you sit?

You would strongly recommend we move in this area, but you would also recognize that Schultz's budget problem has to be considered.

Let me suggest this.

I think you ought to push it then.

Do you understand?

Here's the way I feel it ought to be.

It's your job as a cabinet officer to push like hell for having in mind the fact that we'll either do that or we'll give it to the damned welfare.

or one of these other, I guess, programs around here, which are a waste of money, in my opinion.

So in my view, I don't mean, I mean by that, I would push the case on that thing, and then let us, so that when people line up at the trough to see what they're gonna get, well, I am much more interested in putting things in what I call hard goods and soft goods.

The great mistake we've made in the past three years is we've been jacking around here, and we're going for this goddamn welfare program, and this summer youth program, this and that and the other thing, billions of dollars, and the necessary in order to keep the country cool, but not enough for people for the other things.

At least that's my view.

But on the other hand, one of the reasons is that the case for the hard goods haven't been made particularly strong in two regions.

What I think your job is, is to get in here, and I don't know whether Pete Meininger agrees or not, I'm sure John does, because John knows what it is that we sit down every time we have budget time, we go down the list and hear all these damn programs.

The soft-coats people, you know, the liberals and the rest, always win.

Virtually always.

I mean, except when it's daycare centers, that's the only...

Actually, what I'm getting at is that the demands on that side, because of the democratic political pressures, because of the liberal pressures, and all the rest, are infinitely bigger.

But let's face it, what you're in, insofar as this is concerned, is a hell of a fight.

And you've got to, and you, despite the fact that you naturally have a...

kind heart and the rest will, I suppose, tend to be a little bit.

I want you to be a hard-nosed advocate of the business side, the job side, you know?

And let the other people, there'll be plenty of others in here advocating the other side.

Now, unless this thing, you know, I hadn't known about this tanker thing.

I didn't until I read this.

But Schultz is aware of it, though.

I think he leans this way of solving it.

As I understand it, Pete is more concerned with the docs

Yeah.

I had to get in and build in the docks and bring the tanks in and so forth.

Let's do it.

We had a big fight on this out in the city of North West.

It was a trouble.

It was an environment.

And the local jurisdictions will fight tooth and nail on this.

It's as bad a sight as a power plant.

And they just assume it doesn't happen.

They want them to come in elsewhere.

Is there any place else we can look for them?

Is there any local jurisdiction that would not point you?

Even Maine.

Well, Maine.

What about down in, how about the Gulf of Mexico?

How about some of the Louisiana places like that?

Texas.

I see we're having trouble with offshore releasing.

The whole energy problem.

Well, there it is.

What about that?

Well, the whole energy problem, you know, he screwed up Alaska now, you know, that's all fouled up because maybe we should just leave the oil out there.

But that's the next thing.

The problem with the energy battle, Mr. President, which is going to have to be the major one next.

Right, absolutely.

Every one of it is political.

It's either environmental, cost to the consumer, domestic ownership, and we have to...

I don't think it's worth fighting half of it.

Let me say that the fight is coming.

I know that it should be decided now.

It's a lousy political issue to be raised now, but it's right for the country, and it's your job between now...

And budget time, that's what I'm talking about.

It's the next budget.

You see what I mean?

Because Schultz has already submitted things.

And I want you folks to watch this.

You watch it, Ken, because you'll be going at it.

But between now and the next time, I want to be sure, Pete, that the business side is strongly represented.

And we'll have to fight out the environment then.

Because if we should survive the election, then we'll have to fight some of these things.

Let her hang on.

Right, Chester.

All right, the next subject.

Incidentally, could I suggest this?

Would it be possible to get some of your business friends to perhaps start talking in terms about this problem and build some public sentiment up for it?

Is that possible?

Or are the oil people, the tank people, and all the rest so totally oblivious to it that they won't?

You may have noticed Raj Morton testifying yesterday with a new summary.

on the power shortage and the nature of the crisis and all that.

I've got a lot more of it.

Can I suggest this, that you try to mobilize the sales part within the department

and with Rog and the rest, let's get a little backfire built.

You know, see, Rog is a great environmentalist, too.

But I think we've got to build it because we just can't sit back and fail to do things because the environmentalists say that it's going to hurt the environment any more than we can fail to knock out

some tanks and guns and so forth from Vietnam because some people think that it's wrong to defend somebody against a communist state over.

I mean, sure, it's wrong.

That's probably what most people think.

But that doesn't mean you don't do it.

But I think in this case, we need a hell of a lot of sale size.

And you'd be a good one to sell it.

You'd be a good one to sell it at the right time, not before the election, because basically your credentials

I mean, you're not going to, like, let's face it, Spaniards is considered to be all pro-British and the rest.

You're an active pro-British, but they think also that you, you know, associate with the liberals.

I didn't associate with them.

That's true.

Would you agree?

Yes, sir.

I'm jealous of them.

Oh, yeah.

All right.

The next subject is this competitiveness.

You gave me the assignment when we pressed Chad about what to do about that.

I'm rapidly coming back.

That we can talk about.

Oh, I think that that would be a very good subject.

What I've pretty much decided is what we need is a complete competitive intelligence system in which we know so much more about our domestic economy than we know how we're doing competitively.

Remember last spring when we first talked about steel output and the Japanese, and then we talked about new plant equipment and how much they were doing and so forth?

What we plan to put together is a total system in which we take strategic industries, for example, machine tools, steel, other things,

see where they're competitive, where they're not competitive, what's happening on depreciation, write-offs, that sort of thing.

One of the things we're finding, Mr. President, is an interesting policy.

When you say we, let me ask you, if you're just curious about how you're working, I mean, just your department, are you working for Pete's crowd?

Well, we're going to lay out a program.

You're drawing from the whole administration.

You're talking, say, to a commons crowd.

Yes.

He did it in this, but he didn't have any staff.

Well, we have lots of people over there, you know, on domestic congressmen.

We've got loads of people we're going to put to work on this.

One of the things we find out is not only are depreciation policies very different in the rest of the world, which explains perhaps why they're putting up so much plant equipment than we are, but they have a selective policy, apparently, Mr. President.

That is, they'll pick certain strategic industries, and they will make exceptions for those industries that they will not do for other industries.

No, we don't.

We have a policy right.

I was wondering if we didn't do this great tax reform bill that they brought me into signing a few years ago.

But anyway, that must have been the most miserable damn bill that ever came across here.

Yes, it was.

Really?

Why did we sign it?

I guess we were too new in the job.

Huh?

I guess we were too new in the job.

Oh, there he was.

Everybody should pay some taxes before you pay none.

That was the whole thing.

So the Congress came in and they put you, unbelievably, they didn't do anything to the score.

And you know exactly what they did.

Some of it to the extent that...

One of the first times, incidentally, one of the first times, Pete, that I had her talk to Connelly, I'm very sure of that, was at San Clemente.

He came out there in 69 or so with that, you know, edgy console.

He walked out, and I called the person, and I didn't know him, and he says, I want to tell you something.

He says, that attachment was terrible.

He said, I guess you never signed it, but he said, I think a long time before, he was the person talking to me about Cannelly.

He said to Lucas, item after item.

But here again, and I strongly suggest that you get the case.

I'd like to have you note this, but now I think it's very important for us to get a line drawn.

I'd like for you to be sure that Conway is sober on this, too, so that he also knows what to talk about.

See, let me tell you a problem I see here to understand.

We all ought to talk about these things.

And sometimes we maybe don't advocate the same things or we don't have the same facts.

Connolly, he knows something's wrong.

And he says something.

We ought to do something about it.

And I think we need these facts to get them around.

And the next one, this idea of using depreciation like a rival sounds great to me.

What do you think of it, John?

We do use it.

Well, we use it to perpetuate the wrong kind of housing, for one thing.

There hasn't been very much intelligence done in depreciation offices for a long, long time.

Of course, you know, we've fiddled around a little with that weather.

What do you call it now, the job investment?

ADR.

Oh, I just want two fronts here.

ADR.

ADR combined with the investment.

Let me tell you that I have heard for years, and I'm probably a total amateur in this, but at least when I was out of office in New York,

We used to hear about the Germans and Japanese.

How were they doing it?

They were goosing the economy through a tax system, particularly the Japanese, which was enormously effective.

Right, I mean, that's correct.

Remember, your office, once we talked about it, it's probably Japanese.

And what the hell are our guys doing?

So if you could come up, if...

Oh, I'd love to have that.

Particularly if you could tie it all into jobs again.

You could say, hey, 90 million jobs.

In fact, remember when I thought of 100 million jobs?

That speech has got to be made.

It's got to be made for you.

It should be made after July.

I mean, we're out of August.

100 million jobs by so-and-so.

And tie this into it.

Don't you think so, Ryan?

Mr. President, our experience last fall was if you will present the Congress with detailed facts instead of a lot of theories on what the competitors are doing, like we did, remember, when we won the investment tax credit, and they saw the Japanese were putting twice as much into plant equipment and knew what it was going to put in.

I think that's the best way to get them on the table.

Because they're very responsive to this competitive thing.

They know we've got a problem.

All we've got to do now is get them on the line.

Well, you're convinced after being a congressman about all that, too.

There's a problem, and this will help me.

You know what they all say, if you know, if this poses some problem politically, because they'll say, ah, taxes want the rich, not the bright core.

But if it's put in terms of jobs, that takes some time, but it has to be done.

Well, anyway, I share the concern about it, and I'd like to see something that we don't.

See, Treasury is, and I still haven't been convinced of this, but Treasury is terribly unimaginable.

IRS and Treasury, when it comes to tax reform suggestions, you know, they always work.

They were against it.

Conley and I have got a very long session a week from Friday.

I'm going to really take them through this and detail what we're doing.

If you could point these out and say, look, if he could get a guy over there who was an activist on the tax reform side.

Tax lawyers are strange.

They just want to get it more confused.

Another thing he asked me to look at carefully was this technology and the use of technological technology.

We've launched a study on what's happened to all these government patents.

Information we have is not very new, but you might be interested in what's going on here.

You, the government, now own about 22,000 patents.

The vast majority of them are royalty-free, non-exclusive licenses available to foreigners as well as the United States.

I mean, that's kind of been the policy.

We can only find that about 2% have ever found their way into commercial

production anywhere.

That is, you know, where they're used by somebody.

We think, Mr. President, that we really have to look at our whole patent policy, both when we grant the contracts and what we do with the ones we got now.

As an ex-businessman, I can tell you that these new products are awfully risky business, and the R&D is only about 10% of the total bill.

This non-exclusive royalty-free business looks like it's very democratic, you know, it's in the public interest.

But I'm afraid that what the business people are telling us is, you know, what's everybody's business is nobody's business.

And, you know, if this thing is free to everybody, they're not likely to do much about it.

So we're getting very much involved.

In fact, we've got a big group of... Patent officers here.

Yes, that's right.

On a new set of tax policies, patent policies here.

Tell me this.

Can I ask in this connection?

What is...

We're still working on our, what was our, I remember I had something to say to you about research.

We sent a special message.

It's underway.

New technological opportunity.

You talk about it.

But on this, what are you recommending here?

What we're saying is on the new contracts that we're letting, we'd like to try some new wrinkles.

Such things as cost-sharing.

where we get the companies to put up some of their own bills.

They'll have more of an interest in whether they exploit it or not.

Perhaps let them have patent rights to pay the government back out of their sales.

But what we've got to do is get more of this into the commercial production.

Because what I'm afraid of, Mr. President, is we're spending $17, $18 billion now in government R&D.

And my appraisal is that not much of it is getting into the commercial sector.

But Reuter is out selling.

Yeah.

Can I add to that?

Go ahead.

Can I just say one thing that I want you to do?

All these things are important to these programs that you're talking about.

You've got seven months now before the election.

And I want you to, to the extent that you can, to let your good young guys over there run that shop and come up with some good ideas and remember that

Greatest ideas in the world that are not sold like stillborn babies.

And we want any.

Now what we really need here is that I feel that you, as I said when you took this office, are a hell of a salesman.

And I'd like to have just enough, and I have all the facts, just enough that you got and hit not only these things but other things, everything from

Well, defending the, defending the administration against the charge that we're pro-business and against the poor folks, hitting the job thing, hitting the, uh, the exchange you can, the, uh, the price problem, uh, looking to the future with regard to, you know, the jobs, the hundred-weighted jobs, uh, sort of lifting the curtain a bit on R&D and the rest, lots of people, the rest of the world isn't fair to these other people that have,

I think that the idea that the administration is progressive in the area of jobs is a pretty good one.

And I think also you could be in a position of always practicing everything saving.

You're all in environmentalists, but then go on.

But I do feel that I just don't want you to bury your light over there in that bush over at the Commerce Department.

And I'm going to have John Ehrlichman take a stab at looking at some along with the three other folks and the rest at that scene.

But if you've done your thinking, John, since I wrote you a few days ago.

Yes, sir.

But I mean, if you haven't, you know what I have in mind with regard to Pete.

He has got to be out in the country selling.

And he's got to sell it with conviction about the fact that we are deeply interested in the jobs.

We're deeply interested in keeping on the coastline.

We're deeply interested in the strong, effective business community.

And...

I think it might help to change the image of business.

I don't know whether that's solid or not.

It might help to the administration, which is under an arms fire because of IDD and the rest for the wrong reasons, is saying we just don't give a damn about the little problem we want to care about being conglomerates.

Let me give you, if I may, two other quick ones.

Are you aware of the National Industrial Pollution Group?

You know, that's the group you spoke to one day.

I guess it's got more than half the PMP.

Let me just communicate to you what some of them are saying about quality of life and environment, just so you hear it directly.

Yeah, sure.

There's all this talk, you know, about zero growth.

There's this big study in Rome that says we shouldn't grow much.

I don't believe in that.

And here's what they're saying.

What are our quality of life programs going to cost us in this country out five years?

We keep adding them, you know, one or two at a time.

And I just pulled some data together here from OMB to illustrate the point.

They tell me that our current quality of life programs, just the current ones that are in your current program, will cost us $75 billion, roughly more, by 76.

This does not include the environmental programs, the safety programs, and so forth.

Now, the point that the businessmen are making, Mr. President, and I would have to say I think it's a good point, this is health programs, welfare, mass transit, the whole business.

This is without safety and a lot of these environmental programs.

I think a very important discussion that someone like me can have is to start projecting some of this material into the future.

and start getting a real discussion going about who's going to pay for all of these things that everybody seems to want.

I talked to John on Saturday about if we could figure out some mechanism by which these costs could be projected out in five years, so we could start having a rational dialogue, because what the quality of life people are saying is zero growth, but we want billions of dollars for the programs.

And the business community is uneasy about this, understandable to them.

Because they wonder, who's going to pay for all these programs?

And don't you need growth and jobs to pay for this stuff over here?

We talk about this, John, but I think we're going to have to do some projecting into the future so we can start having, you know, some intelligent discussion.

Because when I confront these guys with $75 and $100 billion and say, no, you say you don't want any growth, how are you going to have all these other things you tell me you want?

And you see, they're often the same people.

Very often the environmental people are also the quality of life people and the welfare people and all this sort of thing.

But I think we're going to have to engage this issue in some way, because we're listening by each other.

Basically, they're all listening.

On the Productivity Commission, you may remember that I took over from George on the Productivity Commission.

We think maybe Abel and Woodcock will stay on.

I see where you were at.

You think they will stay on?

Well, Abel Munkoff may stay on.

We have got a first-class political communication problem here of somehow getting productivity from sex appeal.

You know, it's just a cold concept every time.

So we're going to try a couple of things.

One, talk to the advertising council people about launching a major effort that somehow gets you identified with this.

And this could be a wild one.

It's a little premature, I guess.

But this is a problem, you know, Mr. President, the entire world is having.

This whole cost-wage push problem is going on all over the world, you know, in Germany and France and all this stuff.

And you remember that great feeling in this country post-August when you announced the white wage price freeze?

There was a little bit of a sense that we were all in it together.

I'd like to get some of your breaststrings working on how we could give productivity a little bit of a...

How can I put it?

Almost a moral, spiritual, bringing the country together, you know, international kind of thing.

But we've got to lift it out of the grubby mud where it is at the moment, I'm afraid.

The other thing the business community keeps saying, and you know this is not a new point of view, but to those who say, well, the bargaining system is going to work post-phase 2, what they're reporting to me is, what's going to make it any different post-

phase two than it was pre-phase one.

But we can't have strikes in this country.

Very few companies really are willing to take strikes because, as you know, Mr. President, there are all sorts of benefits for strikers.

Most of the companies that have tried having strikes end up concluding it wasn't worth it.

And when John Connolly had this meeting with the food chain the other day, they gave us quite a lecture on that subject about strikes, that everybody who's had one has been sorry he took it.

So let's get this again in the post-election and what we ought to do about this bargaining labor thing.

Again, it's nothing pre-election.

No, I haven't heard George.

I know he's pretty hot on this subject.

There's a danger here that some of your business community is primed in this pre-election.

And it could put us in a very tough situation.

No, no, no.

Go after it later.

No, I don't think you do it.

No, don't do it now.

You've got to elect a few people first.

You can't run the votes.

The final subject is this minority economic development.

I've been out to talk to four or five of those.

The more I live with that problem, I told John on Saturday that I don't think we're ever going to appeal to the segment of the voters, you know, who want the passionate rhetoric and the soul and all that sort of thing.

But I think this black economic development theme may be our best one politically.

But the thing that's worrying us... What?

We called it the greatest addiction four years ago.

I think our problem is, I've been in Chicago, New York, one other city, making speeches to these audiences, and I think our problem is that a lot of the general voters, you know, the moderates, the independents, even the fair amount of black community,

doesn't seem to know too much about this program, as he knows more than he should.

I know.

But I'm telling you that there is a very select group of people who are in the field that admire it and think it's great.

But when I go beyond the experts, you know, in this field.

Well, I think we have, I told John, I think we've got to consider two or three bold steps between now and November.

One might be whether we could get attracted some real stars to help us promote this activity.

You know, some really well-known blacks who would be willing to go out in the field and sell the virtues of this program.

The theory being that if I mentioned that we have to be sure we check them out politically and they won't come out against you.

But if we could get a couple of these stars, a couple of these athletes who are well-known in this field to say, by God, this Nixon has really got a good program here.

We think we need something like that.

And finally, I met on just the other night in New York at a big black dinner with some Chicago black Catholics.

And you remember your campaign team in 68.

He made an interesting suggestion.

He said, I wonder if you fellows don't need something rather big pre-election.

And he had the following thought that I mentioned to John.

He said the inner cities of America are going to hell, you know, the blacks, the ghettos, and that sort of thing.

What would you think of trying to come up with some notions of what the president's going to do to stimulate the development, the economic development, you know, the jobs, the factories, the plants of the inner cities?

Because what's happening is we're losing all our sources of revenue.

And within the ghettos, the blacks have to spend their money outside of it.

And he suggested that perhaps you could get, and this comes back to the theme of black capitalism, which you started in 68.

He suggests maybe you focus on the business economic side of this issue.

Perhaps bring in some of these leaders in, you know, here from time to time.

And pre-election have one or two rather major ideas, you know, in this field.

I guess what I'm trying to say to you, Mr. President, is we've done great work with Messick.

Maury did a terrific job

But I just can't get a feeling that we've, I don't know whether John agrees or not, that we've somehow made a sale to the general population on this.

And we need something.

It's not getting out.

What about the productivity?

I've spoken to this group about three times.

I know we've gone over the Indian Creator Room once over here, once over there.

It does seem to make a glitter.

Yeah.

What about the, uh, you talk about the productivity that you didn't, uh, you, you, you have a record, you're going to make a recommendation as to how to deal with it.

Yes, sir.

It won't do just to me.

Oh, no, no, no, no, no, no.

Well, aside from the advertising council, the wild idea, you might want to think about something, you know, really get, well,

Every country in the world, industrialized country, is terrified about the union wage cost push, the way it's ruining the middle class.

This might be before the election.

What?

This might be before the election.

Something very big and unproductive.

I'm saying it's premature.

I haven't got it formed.

All right.

Well, I can't see because that's something I'd like to hear.

We've got to let that pass.

All right.

Give us a couple of weeks and we'll see.

I'd like to get a rundown.

Give me a good memory.

We're just talking about it.

All right.

How are you?

All right.

How are you feeling?

All right.

Good, thank you gentlemen.

Sit down, sit down.

Well, I guess the main subject we have here is how many vacancies we got with one.

One vacancy as of today.

We're hoping that he'll take an advantage of this credit that we have.

We haven't actually offered anything yet.

But we're getting to the point of submitting something.

It's our problem, of course, is he gets...

somebody removed.

You see, one advantage of his taking the ambassadorship and his non-vote black reference is that he, unlike them, doesn't have to worry about the election because anybody that's a black will never get removed.

And he knows this.

So the point is, Fred, as I told you,

But Gary, you're riding hard on this now, because I told Rogers that we tried that in New York, and he wouldn't take it for that, would he?

Well, we could get acceptance around the horn, which depended not only on Rogers, but on the Secretary General.

Yeah, that's nice.

But I think we can certainly open up a good ambassadorship, which is a question of whether you'll take it.

But there are a couple of European embassies that are possible.

And of course, he'd be an ideal candidate to put up at this point.

Nobody could say anything bad about him.

He'd get confirmed?

He'd get confirmed.

Well, you still want that done?

He'd like it.

Well, it's a good way to cap his career.

He'd get faster and so forth.

particularly if it's a European country rather than a black country, which I don't get something.

He wouldn't say the blacks.

Well, that's something we're doing, which we deserve a little credit for.

So we've been sending the blacks to the white countries, and that's a very nice thing for them.

Well, and it's right to do.

It's right to do.

Holland, that's the defendant.

Very well, I understand.

Holland, oh, yes, he's so good that Roger wants to bring him back.

So I'll be leaving him there.

Is he the fellow from Hampton?

Holland?

Yeah.

Yeah?

Yeah, he's a good man.

Yeah, where is he now?

Great.

He was a former football player in Cornell, or Colgate.

I read about him.

Very honest, yes.

He's back in Sweden?

Yeah.

I didn't realize.

How long has he been there?

Oh, about a year and a half, two years.

Oh, longer than two years.

And he's done very well, and that's a very delicate post, because the Swedes are not particularly our friends at times.

But he just, they first came to hell, and all of a sudden they found out he was quite a fellow.

And he has been very, very good.

Very good.

He's the one we can't think of for another post.

And he's been good.

Well, let's come to this one, I understand.

Well, basically, we have two names.

It's very good.

From the west.

We have Mr. California weapons, San Francisco and Los Angeles.

Well, doesn't this have to be in that region?

Yeah.

No.

No, it doesn't have to be in that region.

That's right.

Well, it has to be in this or another region.

We can see we have seven members of the board, 12 regions, and there are five districts.

Nobody could say anything bad about it.

He didn't confirm it?

He didn't confirm it.

Well, you still want that done?

He'd like it.

Well, it's a good way to cap his career, to get faster and so forth.

particularly if it's a European country rather than a black country, which I don't get something.

He wouldn't say the blacks.

Well, that's something we're doing, which we deserve a little credit for.

So we've been sending the blacks to the white countries, and that's a very nice thing for them.

Well, and it's right to do.

It's right to do.

Holland has been very well understood.

Holland, oh, yes, he's so good.

I just want to bring him back.

I'll be leaving him there.

He's a fellow from Hampton.

Holland?

Yeah.

Yeah, he's a good man.

Great.

He was a former football player in Cornell, or Colgate, rather.

Oh, yeah.

He's back in Sweden?

Yeah.

I didn't realize.

How long has he been there?

Oh, about a year and a half, two years.

Oh, longer than two years, John.

And he's done very well, and that's a very doubtful post, because the Swedes are not particularly our friends at times.

But he just, they first came to him, and all of a sudden they found out he was quite a fellow.

And he has been very, very good.

Very good.

He's the one we can't think of for another post.

And he's been good.

Well, let's come to this one, I understand.

Basically, we have two very good from the west.

California 11, San Francisco 11, and Los Angeles.

Well, doesn't this have to be in that region?

Yeah.

No.

No, it doesn't have to be.

I'm sorry.

Well, it has to be in this or another region.

We have seven members of the board, 12 regions, and five districts are open.

That's right.

Are these the two that I saw?

I think they did.

Yeah.

What is, uh, What is, uh, Butcher?

Buehler.

I guess you pronounced that with B.

The other is Cripps.

They're both very good.

quite .

He's from Los Angeles.

And Fred is from Los Angeles.

You prefer .

No, I prefer .

Oh, yeah, it's the age factor, I think.

Perhaps it's the older one.

It's 59.

All right.

Not much to say.

Not much to say about it.

Well, the thing I hate about it, Art,

But I'd like to see a, I would like to see the board, it's like the appointments I made to the Supreme Court.

The difficulty of the three of them is that they're just on the edge of the H-factor.

Paul is over the edge, but we had to take him because he was the only southerner

with the great advantage of restless chances that he will be there in time, and he will be a fine, fine judge.

Generally speaking, I feel that this is going to be huge.

You start with the situation, and we've all got to figure out what we're going to leave.

And on the board, you've got a 12-year term and a 14-year term.

So you take a follow-up, 59, 73.

I don't expect anybody to serve forever, and maybe have a follow-up either.

But I like the idea of taking a follow-up who is younger.

In fact, I told on the court, I'm not going to consider anybody from now on who's older than 45.

If I get any more court complaints, they're going to be 40 to 45.

Because then they'll serve 30 years.

They can go to their 75, they're going to be pretty good.

Or I'm dead.

Others can't.

And we had to take Berger, who was 60 and 61.

We had to take Blackman, who was 61.

We had to take Powell, who was 63 and 64.

And you see the problem.

I guess that's what I feel about our community.

Well, I feel the same way as you do.

There's one fact you ought to know.

Well, there's several things you ought to know about the siege factor.

New York wants this job for a very limited period, and after he's here for a while, he wants to go into banking again and head up one of the big banks in the country.

He's an honest fellow, and he told me that explicitly.

And in fact, he told me

Well, I asked them.

You know, I had long interviews with these fellows, and they were very frank, and I asked them what they said.

Yeah, I asked them, why did you pursue the Fed?

They said, well, I said, I'll tell you frankly, it'll advance my career.

I've come here two years.

I can go out and become the head of one of the big banks.

Well, and I said, well, I can understand that, but from the Fed's viewpoint,

and take about two years before you're broken in properly.

He said, well, then I'll stay longer.

He did say that.

Well, that's what he looks forward to, and he's very honest and direct about that.

So I don't think he's going to stay on.

You think he's going to work?

Well, I suppose he would.

The other fellow, I think this is his last job.

He'll stay on.

No, I doubt it.

Now, there is another dimension.

Let's suppose we look for a banker.

Now, whether that concept is right or not, one can debate it.

Probably isn't.

Oh, yes.

Well, I thought we ought to have one on the...

We ought to have somebody to know something about the practical side of banking on Federal Reserve.

I know, I know.

You're being much too generous.

Go ahead.

This fellow, this fellow, Craig, is an experienced, highly experienced, all-around banker.

Very well thought of in the banking community.

Beor is much younger and just hasn't had that range of experience.

Now, I can't be helpful to you, Mr. President, unless I'm absolutely frank.

I need a man, particularly this year, of pretty good and mature judgment on whom I can depend.

I'm a little sure of Craig's.

I think, Mr. President, the Chairman's point of longevity is a good one.

It's true that Buehler is a very ambitious young guy.

He wouldn't be where he is at 39 years old.

I've talked to someone, particularly after your comments,

He acknowledges that he wants to go out and hit a major bank.

But I think I have a feeling that if he is challenged, he will stay longer.

The other point I think that we have to consider about Buehler is the very ambition that might move him out would also make him a very good candidate for another position in the administration sometime during the second term.

He has the generalist capacity to be used in different ways.

Can I ask a question, John, from your judgment?

I think they did pretty well.

I could picture it already.

Kreb was very quiet, obviously a well-informed, well-trained banker.

He's a quiet man.

that does appear to instill confidence in you, Judge.

You're, on the other hand, is a...

is a tall, young, aggressive, vital fellow.

He just, his health is just between 39 and 59, except he's magnified.

This is a... You're not 59 too much.

Well, I understand.

But between 39 and 59 is the best.

That's right.

In certain areas anyway.

But Ewer is a very attractive young fellow.

I think Arthur's right.

I doubt that he'll stay there 14 years, but I think he'll stay...

around some five years.

I think he would stay down through the next term, and then he might want to leave, and I wouldn't much blame him if he did.

Let me ask this question, Arthur.

You've got to look at it both ways.

You wouldn't say that you lean to credits.

Buehrer, however, is impressive, as he agrees, impressive young fellow.

Seems to have quite a record.

I've interviewed

Fair number, and these are the two men that we've agreed on, and I'd be happy with either one.

Let me ask you this.

I'll decide it later.

I think we're going to ask this.

What do you say about the prayers?

I mean, it's obvious you feel a little more comfortable with him.

It is that that you feel that you don't stay long or so long.

But let's look at it another way.

If you were to get fewer, get fewer, couldn't you, just looking at it pretty cold-bloodedly, take him and help to mold him for what it really needed?

And that is for somebody who understands this damn economy the way you understand it, the movement on it.

Would you do that?

Now, take this other young fellow just a point.

How's he working out?

The follower.

Thanks, Joe.

Well, I'll tell you exactly how he's working out.

He's fine in board meetings.

Yeah.

But his influence is not great.

His influence on other people is zero.

It takes time to build up.

Exactly.

You don't get far with that.

That's right.

And that's coming.

Now this fellow, this fellow, if I were thinking, you see, for the long run, if I didn't care about the next year very much, I'd say I'm going to take my chances with the younger man.

And I'll work on him, I'll work on him for, you know, next year, two years.

He's going to turn into a very kind, responsible board member.

Yes, he is.

How well will he perform?

This year.

I don't know.

I've tested, I've tested.

I've spent about four hours with him, and I've talked to people and known he's going to behave very responsibly in critical policy discussions.

Be aware, probably will as well, unless you're

And I don't say that to purchase it.

The United California Bank, of course, is the most go-go bank in that part of the country.

I think it's still a little too go-go organized.

It's a go-go country.

I mean, you know, there are times the Bank of America for years was so overwhelmed, and the security person, which used to be the State Bank, began in the United California, sort of too big for its riches for two or three years, but it's quite a gang.

Bob Volk, of course, came in the election.

Prudential, he was the vice president.

His son, his son is very active.

Bob Volk, he'd be a good one.

Well, we looked him over.

First class, but he wouldn't take it.

Well, when I say first class... You know, the man I would really want...

Both of you are superb at doing this.

The man I'd really want is Harvick.

Do you know him?

Oh, sure.

You know, I don't have... Everybody wants him.

And I had days past of work on him.

You mean the farmer's standard man?

That's right.

Oh, yeah.

Hell of a guy.

What's he doing sitting out in the joint co-op?

Well, he's doing very well in the business school.

And I talked to him about Krebs.

I've seen both of them.

It's good to have a choice of two.

Yeah, it really is.

Usually it's only one.

Well, we combed with Mr. Malick's assistance, and he and James, they worked awfully hard.

Well, that's a definite, but I have to do one other thing, speaking of combing, having the grimmer thing in mind, if we start combing right away on the next one, so we'll have another good choice.

Well, Mr. President, there's another possibility which may shape up, and that is Governor Robertson, you know, the Vice Chairman,

Now there I brought Holland.

He's our executive director around the other day.

I wanted you to see him.

He knew more of the technicalities than I did.

Well, that wasn't the only reason for my bringing him around.

Holland would be an ideal man for the board.

He is a good Republican.

He's been in the public service all his life, an economist, a good Republican, highly respected throughout the banking world.

And this would be the very first time, Mr. President, that a member of the Federal Reserve staff would have been elevated to the board.

And I think this would be the first time.

That's right.

I just wanted you to...

It would be an ideal appointment.

If Robertson leaves, and he is, you know, the way our retirement rules work, if he leaves July 1st, then his pension will be $1,600 a year larger than if he leaves after that date.

So he's, uh... That's a crazy damn thing.

I know.

Yeah, well, I can't tell you the kind of... Well...

Some kind of an incentive.

He loses money?

He loses money for staying too long.

That's right.

It's been said to get him out.

Oh, my God.

He must be 65, 64, 75.

He was in here somewhere.

I thought he was 10 years over then.

What was Robinson doing?

He was here at the Flaring Inn.

Where were you going to see him?

I don't know.

I know about the Sheehan, but he was here in another matter or something.

Maybe there was a church there or something.

I saw him.

So he's pondering that possibility.

He's a good man, though, isn't he?

Not from my viewpoint.

Not from the viewpoint of the banking community.

From the viewpoint of the populace of the country, he's a very good man.

He's not a populist anyway.

He wants every small bank.

The thing you've got to think of is not simply, we've got to think of this next year.

It's critical.

But we also got to think of all three of these appointments.

We've got to think of building this board for the future the very best that we can and leading something.

You know, that some other guy can't leave.

I've got a list of that.

Of course.

Well, of course.

I've thought a great deal about that.

And that's why we've got the list on with two names.

And we were going to present you with three names.

That's the third name to give you.

No creps would be a very, very fine appointment.

Muir has the advantage of abuse and vitality.

It's clear.

Do you like them both, though, as individuals?

I mean, the main thing is Muir is incompatible with, well, President Bobby, is Muir incompatible with you?

No, no problem.

It's the main thing, as I've told you, I don't want to put anybody, I've told Frederick the same thing, I don't want to put anybody on the court, I don't want to put anybody on the court incompatible with the chairman.

I mean, they can't agree with you on everything, but you know, it's compatibility is the important thing.

See, you see, I've got problems.

Now, I don't know if you wrote today's paper.

Well, I had quite a session in January, you know.

I had three dissents.

Well, by February, I had only one dissent, and by March, I had no dissent.

I brought the group around.

Well, I can't afford to have too many dissents.

Not this year.

But you got it pretty well on the phone now.

Oh, yeah.

It's beautiful.

Are they good?

Yeah.

Yeah, I haven't bothered you with the figures much.

I'll go tell them.

Just the old experts.

Arthur's done an excellent job of working around the New York Bank problem.

Yeah, Hayes is a great friend.

Well, Arthur is, yeah.

He's fixed that up for me.

I told him, I've always challenged Arthur Beardy about Hayes, and he never would.

He tries.

think you've got him under control now i've got his staff under control that's better let me uh let me do a little more thinking about it i like to i i want to do a little checking on that i have on my own california side a little conversation if you don't mind

In the meantime, this is a good way to do this.

But I prefer, if you can, to get one name.

But if you can get two, sometimes that's fine.

But this is a good way to do it.

And the main thing is to have in mind the fact that we want to build a strong part of the future, as well as some guys in the right, totally.

OK?

Yes, sir.

All right.

John, I've got it.

I suppose I'd like to leave you some information.

Do you want it?

I'll send it to you.

on the federal budget, what means have you seen it?

Oh, I've got copies for each of you.

Well, we've got the deficit down, according to one stand, by $10 billion, and the cash finance needs by $13 billion.

Really, that meeting, which I should have mentioned, but I was mentioning to John, really shocked me.

Peterson, though, was a very, very imaginative fellow.

He's going to do a fine job in commerce, but he's going to talk to you about this.

And you know, he's got a pretty good staff in commerce, I think.

He says it's good.

But he says that he priced out what they call this quality of life stuff, you know what I mean?

Everything, all these...

And by 1976 or 76, 75 theater colleges were his punches.

And the people would say,

et cetera, et cetera.

Where in the head are you going to get the $75 billion in your money?

Now, Peter said this.

I told him to check it here to see whether he actually said he had.

But John is going to raise this review.

And I'm going to talk about this because we're in a situation in this country right now that really worries me.

Because I must say, I started this while I didn't start it.

But this population thing, you know, about the world population message, and now we want the population message here.

And you've got the idea of no growth in population, no growth in the economy, no growth in this and that, and the other things, so that you keep the environment.

But the question is, Arthur, that this is the part that Peter Suresh, have you talked to him recently about this?

I ran a program to mention it to you, and if you want to hear about it.

The point is that we can talk all we want about all these good things, you know.

They take a very small way.

I know nothing about this, but apparently we need an awful lot of oil.

Now, the way to get that oil is through huge hankers, because it saves a lot of money.

In order to get those huge hankers, you've got to have huge docks.

As a result of the environmentalists, they're in the dam, and I ask even about Texas, where they're either standing or isn't, a major port in this country that will allow, at least presently, the building of the docks.

Now, and I say because of the environmentalists' point that I make, is that if this country is, time after time, is going to make decisions

on the side of the environment, on the side of the road, and continue to put more and more family assistance, $2,500 and $4,000, $3,500 and $4,000, and daycare centers, and all these other things, George, that you're constantly pushing me on.

He's changed, obviously.

He's got the money.

But really, I hadn't realized, he said he talked to you about it.

Well, Mr. President, these figures scare me.

Well, these figures come out of Georgia, but I'm sure the five-year contest is not a number that anticipates the additional cost of about $75 billion.

And with no good programs whatsoever, no good initiatives, it'll be five years from now before you have any legal whatsoever in your place of training.

I think there's an additional point out that the material here is a ton of meters past.

You can't count that.

which, if passed, will mean

hundreds of thousands of people will be thrown out of work the day after it's passed.

Kaiser, Edgar Kaiser, he's a great Democrat, you know, a great liberal.

And Edgar Kaiser says, we will close my steel plant.

Close it, period.

Now, would you arrange, I just said, I want you to arrange for Peterson to give this message to him.

He's going to be seeing it.

Because we don't want to talk about it at a general, I think a general economic meeting, you know.

as we look ahead, as we consider this thing, because I don't think it's something we can fight effectively too well right now in the political atmosphere we're in.

But looking at the future, we simply can't, we cannot dodge the fact that this economy has to continue to grow if we're going to be able to provide for all these social needs that everybody's for.

Where are you going to get the money?

Now, let's suppose we're not programming systems.

We probably won't meet with a congressman leaving that health.

So, George, look at this damage to upper education.

The education goes up.

The health program.

All of these things, it goes up and up and up.

The summer youth program.

Where did they tell him?

And then they go, I wonder how much the economy grows.

Right, Arthur?

Do you people think about the Fed?

No.

Now really, that's the truth here, Arthur.

You have people who have to, now this was an Iowa man, Pete.

Because, you know, he comes from Chicago, and he's kind of a little, you know, runs with the Percy and the liberal crowd out there.

And I think he's turned around like that.

I mean, he didn't go jizzing.

Well, you listen to him.

I'll read these things.

Mr. President, read these two sentences.

They're good news.

It doesn't interest you?

Very, very important.

This hurts the executives.

Yeah, yeah.

I got it.

Keep it going.

As I told Gerald Gordon Metcalfe, I said, get your stocks up and keep those damn prices down.

I said, well, how can we do that?

I said, you just do it.

He said, I said, 2%?

I said, no, 1%.

Come on, come on, let's do it.

Get the stocks up, prices down.

Prices, what, they sell?

Yes, sir.

No?

Three weeks, and...

people there for a dinner honoring the chief justice of the texas supreme court

And I'm going to try to take off a few days.

Yes, I think I would.

I think more than anything else, I've got two quick letters.

I leave with these damn problems too much, you know, if it was present.

And I let them worry.

I let them just... You read the damn papers, the television.

You read all the reports.

Oh, I read them all.

And the thing too, the thing too is that...

I let these weaknesses in our government bother me too much.

Oh, they should.

I'm too occupation about it.

Let me say this.

The thing is...

I wish you would do another thing.

You know, you've never done this, but I really mean, I wish that you would, you know, like Bob was saying, in the middle of the week, now tomorrow, for example, I had a chance to get that damn Canadian speech hash, so tomorrow at noon, about three o'clock, we're going to find this guy in a helicopter, spend the night at the end of the day, finish it up, come back the following day.

It's good for me.

It's that that brings, I think it keeps the pressure down, as far as I'm concerned.

And I don't think you do enough of that.

No, I don't do any of that.

You don't, you get the hell out of the can, David.

You should go out and play that golf twice a week, because you drive yourself awful hard.

You're a driver.

power, you know, dynamic, I don't know what you like, but when you make a speech, you reg yourself up, and you put yourself through hell.

And this is what affects you.

And on the other hand, on the other hand, it'll pass, but you just, you take off whatever time you need.

I'm going to have to because I'm not going to kill myself.

It's just not worth that.

The world goes on.

I just don't feel out.

So I'm going to have to.

I'll watch it.

I'm not going to do the work about it, but I'll have to.

I don't know how it works.

I just haven't felt good.

I'm pressing myself.

And I've got to quit that somehow.

So I've got to add a spooch.

I know a spooch.

I don't know what to do about it.

I just, you know, I push to try to correct some of these things and get some things done.

What I try to do is to...

You know, we've got this current situation in Vietnam, and so I...

I read it.

I mean, I read it in the summer, but I always read it when I'm in a good mood.

You know, when I know I'm not going to...

But the main thing is that, as I told Paul at the end of the day, I said, I'll hear you.

I said, except for things that have to be done.

and some things that I ought to consider.

I've got to be at my best to make the really critical decisions that will depend on whether we, after all this damn sacrifice in the early days, that's what we're doing.

Henry told me he built you in somehow, if you want.

Basically, what I can tell you, we are, if you get that damn Air Force to fly us out of that weather, they'll even doubt that.

But I think you should know,

If we get run out of Vietnam,

We can't go to any Soviet something.

I've told him that he's not in his damn mind.

We won't have a foreign policy if we get run out.

That's what these left-wingers don't realize, because then the Russians will have succeeded in India, and then they will have succeeded in Vietnam, and then they'll try the Middle East, and then they'll try Europe.

So we're playing a very hard game.

That's why I gave a little shot across the bow yesterday where I went over to sign that jackass treaty on biological warfare and non-suicide violence.

It isn't just arms limitation, it's an end in itself.

We've got the non-proliferation treaty, biological warfare, and the sea beds.

Because with all the arms limitation in the world, there's still not arms left to blow up the world many times over.

What we need is restraint on the part of the great powers.

And you may have noticed that I said that that means that every great power must not be exercised, restrained in the use of force.

as an instrument of aggression.

But it must not encourage, directly or indirectly, any other power to use force, which was a direct shot at the Russians.

It was intended to bring them to sit right there, and yet, right after, they still wanted something.

And they do at a time.

But the Navy, who you'd be glad to know, is doing a hell of a good job out there.

They've gone out there, and we've got over 30 destroyers and four cruisers in there.

and I shovel that dam road that runs along the coast clear up there 75 miles up to Vietnam.

And of course, we're pounding the southern battlefields with everything we've got.

So my view is I can give a goddamn.

I don't want to see any polls.

I don't want to see any.

I said I don't care about the critics.

I don't care about what Kennedy said and the rest.

I said right now, what really matters is whether this comes out all right.

If it does, the country will be saved.

If it doesn't, there's no foreign policy.

I have no problems there.

Everything I say is going extremely well.

How is he doing?

Hard?

Very well.

He's encouraging this interest rate to slide back up a little bit, I think.

How is he doing in the money supply?

He's still all right.

And how is he doing with regard to his talk about our problems in Europe and all the rest?

He's all right, but he doesn't know anything.

We haven't talked to him, really.

But the European situation is quiet.

Volcker went over, had a bunch of good meetings, and I'm going to start letting these fellows hold some press conferences, and we're going to...

I don't think we're doing something.

He's going to start talking.

Gee, he talks.

He's going to talk all the time.

There's no advice you have on those goddamn Canadians, isn't there?

No, except I hope you don't get any very specific trade negotiations with them.

No, no.

All we're going to do is sign a trade place agreement on some pollution.

But I suppose that's all right.

I need to go, but I've got to go to Canada.

Your speech, they sent it over this morning.

I took a bit of the draft of the draft.

It looks like a hell of a speech to be honest with you.

I certainly had no suggestion that it was a good speech.

No, there isn't really.

But we can at least show the people that we respect their right to be a big country.

They never will be, but we say we respect it.

But don't worry about Trudeau.

I'd like to see him lose, frankly.

And so I'll just do the very minimum I can get away with it, I'm sure.

I noticed this morning they got a

help in Quebec to come out with a secession program.

They've got their whole damn platform on what they can do to nationalize certain things and so forth.

So he's got lots of problems on his hands.

I've already spoken on this, and I appreciate what they've said.

I mean, I can't tell them about Secretary of Trade or some silly man, because he's just doing the, you know, they all do this, all these things.

When they're running for election, kick the ante.

Oh, sure.

They'll kick us in that situation.

They'll kick me, because I'm coming.

Well, they'll kick you.

That's all right.

They'll kick you.

I'm not running for office, Ken.

I couldn't care less.

As a matter of fact, I will.

They'll kick me a little.

I'm reaching for it.

They're not going to kick you.

They'll kick me.

This helps us, and this helps you and the American businessmen.

Who think that we're fighting back?

I bet you.

You betcha they did.

And I had a bunch of them tell me that in Chicago yesterday, because after this luncheon speech, I was in the national broadcasters.

Then I met with all the top, about 150 of the top business leaders in Chicago.

Where did you have that?

At the Athletic Club?

No, at the Continental Plaza Hotel.

Continental Plaza.

And the Google Hotel.

And it's the tourist week.

We did it under the auspices of the Tourist Bureau, which, you know, 150 of you cover all of Chicago.

And every country is that way.

In Dallas, you can meet 100 people.

In fact, Dallas.

So we were in Houston the same.

We had a question and answer for over an hour.

All these things right after the press conference.

So, and we talk about everything in the world.

We talk about foreign policy, taxes, loopholes, productivity.

How do you handle all that?

I say, basically what I say is, what loopholes?

I said, Aristotle once said, if you speak with me, define me in terms.

And I said, you had two major tax reforms in this quarter century that I don't know anything about.

One was under Eisenhower in 54, and one was under President Nixon in 69.

I said, those are the only two tax reforms we've had, and, coincidentally, they've been under Republican presence.

I said, all these fellows that are out on the stump talking about tax reforms have had 109 years, I believe, if I recall, George Wallace, service in the Senate.

And I said, I don't recall a single bill that carries their name dealing with taxes.

And I said, now, they've got a newfound interest in talking about loopholes.

And I said, what loopholes?

I said, now, what's a loophole to one man is a job to another.

And I said, now, let's talk about the unpopular trade wire.

I said, they're talking about doing away with interest on home mortgages, on the deductibility of interest on home mortgages.

And I said, I'm not on that.

I don't think that's unpopular.

I said, that's a conscious decision to encourage home ownership in America.

I said, they're talking about knocking out the tax-free municipal bonds.

And they said, well, we'll subsidize the cities.

I said, now, the only thing wrong with that is cities don't want to be subsidized.

They want to live their way.

They want to issue their municipal bonds.

And this is a conscious, deliberate decision because the government has failed it.

That's right.

They have to take over the decision.

And I said, and furthermore, they tried this ploy in 1969.

These same fellows tried to remove the exemption from municipal bonds in 69.

And I said, they couldn't get anywhere in either house.

I said, politically, they can't do it.

Well, they can't even talk about it.

But I said, so that's that blue code.

I said, now let's talk about charitable contributions.

I said, Father, how strong are you for that?

There's a priest sitting on the front row.

And I said, you'd be jumping as high as that chandelier there if you really thought this was going to seriously knock out deductions for charitable contributions.

Because I said, you'll destroy every church and every museum and every institution and every university in this country.

And I said, I'm not for that loophole being knocked out.

They call it a loophole.

I said, now let's talk about capital gains.

I said, do you want to talk about capital gains?

I said, do you want to see the Dow Jones hit 500 in five days?

Let them believe.

Let the American businessman and the American investor believe that you're really going to knock change the whole structure of the laws of tax laws in this country with respect to capital gains.

I said, I'm not for it.

But I said, that's what they're talking about.

These are the loopholes they're talking about.

I said, now, I could go on down the list.

I said, now, they're talking about depletion.

They call that a loophole, mineral depletion.

I said, they reduced it by 5% last year, in 69.

And I said, that was a mistake.

I said, truth of the matter is, you've got an energy crisis in this country.

And I said, in spite of the so-called loopholes, we're not able to produce enough hydrocarbons to meet the needs of this country.

And I said, the gas we're paying 14.5 cents for in West Texas, we're supplying with 14.5 cents a thousand cubic feet.

We're supplying with $1 a thousand cubic feet of material.

I said, that's what it's going to cost you.

I said, it's not going to save you money.

It's going to cost you enormously.

to destroy the mental interest of this country.

So I said, I'm not for that.

And I said, now, I can go on, but there's no point.

These are the loopholes they're talking about.

I said, casualty losses.

I said, the man goes out here and loses his home.

Why shouldn't he be able to charge it off?

I said, the state taxes that you pay, don't you want to get credit on your federal taxes for those?

Those are loopholes.

That's what they're talking about.

And I said, I'm not for knocking that out.

So I said, this is a basic disagreement.

Well, and this is the answer that I give to it.

So I just don't like it.

I think it was interesting that Peterson, the reason I went here to go see him, is that I was concerned about putting him in this job because I thought he, you know, could lead to my liberal side.

But he had security trigger.

I liked on him on and on.

You know, he was talking about the competitive position for him.

You know, he's come to the conclusion, and he's the same crowd, I'm sure that you feel the same way.

He says, we've got to use this depreciation to be more effective than we have.

We've got to do it with the Japanese and the Germans, too, and that is give more depreciation for those things you want, for President Reynolds.

Do you know what I mean?

That would be a loophole.

That's coming up with the rich, isn't it?

Sure.

Today, Grace Jones, that's correct, had Tyler Cruz, please, if he'd come around so far.

Come around completely.

but you see if apollo's exposed to that problem enough he doesn't realize that all this democoptery is correct you know well it's exactly that that's all it is sure enough

the ITT, they caught the son of a bitch.

Not in law, but he'd been pissing on everybody else.

John, here's this guy, they talked to this little secretary, says that he treated the ITT as if it was his private office.

And he took from everybody, from all of them.

He's no good.

Tell me about a couple things, if I can.

Can I ask you about that over-withholding thing?

Anything more we can do there?

Yes, sir.

We can do one thing that we haven't yet done.

Give them the money and come with me.

Well, we can do two things, I guess.

Of course, you hire some more agents and let them do it.

In other words, maybe it's worth doing.

We may have to.

Well, the first thing we need to do, I'm going to wait until the 15th to do it.

Because people don't normally, the average person will not go and fill out a W-4 and claim another exemption.

until he gets ready to work out his income tax.

He just won't go through all that trouble.

So we hope that as a result of all the activity that we've had, the spot announcements, the mail campaigns, and everything else that we've had through the corporations, through the employers, that when they file their income tax return on the 15th, a great percentage of them will file that day before and claim this additional exemption.

Now, if they don't, then for about $7 million,

We can have a meeting to every box-holder in America.

And what does it say?

Well, in effect, it says, go here, here's the form, and fill out this form, and claim exemption, and so forth.

Could I suggest this as a line, which I think would be very interesting?

And then also, I'm sorry.

I mean, I haven't checked the shelter, but it's just something, if you think, well, I can do it.

I used to make out my own farms, I don't know, in magazines when I studied tax theology.

And the average person, of course, doesn't, most people right now, even people of modest means, go to somebody and have a tryout.

I was wondering, since this is something that, if you could, perhaps, for maybe $10 million or so,

get additional agents in various offices and set up the IRS office will help you make your form and others so that people can come in.

I don't know, does that have anything to do with this?

Those of us who, I mean, you don't make up your terms, and I don't make mine up, but the average person can't afford it.

If you could give them an idea, and you should make the announcement that we're going to provide,

You're putting on a special task force of so many agents to help you make out this farm.

They're not sure about a minute apiece, I would say.

Yeah, we do that.

We do it anyway.

Yes, we might need more agents.

Yes, we might.

Maybe big companies, corporations, we could put them right in there, you know, where they would get papers.

I'll get on that Saturday night.

I don't know.

The other thing that I was going to tell you that I agreed to read is relating to agents, and we'll probably get back to you on this.

When I was down in Florida, I met these two nice customs boys who had made that bystander call.

And so we talked a little about it with the local guy about it.

I said, this is quite good.

I said, have you got enough?

He said, well, they have 500 now, I understand.

And so I said, how many, if you were to do adequately, the planes, the automobiles, and the ships, how many could you really use?

And the fellow with arms, what's his name?

customs man uh i mean the guy that's working the same set and the local guy they said we could they said we could we could use 2 000. now and i said well now you get all the receipts and let's see it seems to me that i said how many more are we asking questions and we're asking for 300 because that's all the budget will allow and my view john if you can use 2 000 agents in this field

searching those damn ships and so forth and so on, using them.

I don't know what you have found, but don't let finance be a worry about a thing like that.

Well, it has been, of course, and the number of people, I mean, we've, y'all have increased the number of customers, we believe, more.

I'll check into it again.

We've increased the number of

He said you have.

But he said for this kind of work, the kids on the ports, they have 500.

We are short.

And he says they can use 1,500 more than that.

I said, how long will it take you to train?

He said, we can train it out in two months.

I would say, he's talking about port officers.

Port officers.

That would be for ships.

planes, and we don't have any, and cars.

Now, why don't you, and this thing, you just drive hard and...

Because, you know, it's quite amazing.

These guys came in and out and all they had was one little suitcase and the damn things were five million dollars.

Well, Mr. Rochon, he didn't bring up it.

We didn't push it.

I didn't push it.

We took cuts.

And our request should have done it.

Well, we took cuts in customs.

We took cuts in the Internal Revenue Service.

That's not what I did.

Well, I know we shouldn't, but we did it simply to try to keep them being an exception now.

Let me say now that I'd like to change it on both.

IRS, I think you ought to ask for 4,000 or 5,000 digits.

You can find it.

Go out and help people make all the returns.

The other thing, do this thing.

These are things that are good political issues.

God damn it.

Let's spend the money on these things.

All right.

If that's all right with you, let me ask you one question.

First of all, I believe, and I didn't want to be sure without committing to today's 11th, I guess, and we've got until the 15th, but I think we can at least turn loose an enormous number of people to assist in preparing these returns.

Right now?

Right now, as of tomorrow.

But I think we have, like, I hate to use the big time, but I think we've helped a pair of 30 cities and towns last year.

Just to give you an idea.

But that isn't enough.

We'll do some more, and I understand your point.

More than that, I don't know if you've seen the clips today or not, but I sat in Chicago yesterday, and here's where we were really in control.

It is.

It is quite serious.

Johnny Walters, by the way, could also do some very serious planning on it.

We did a survey in southeast of the United States, just finished, of the preparer returns.

That's these people that go to these little places that say income tax.

Not H&R Block, necessarily, but that type of thing that individuals do to help.

And we sampled over 400 returns.

Ninety-seven percent were fraudulent.

I saw that, but you said that, did you, did I, I gathered the impression that you comforted a bit by saying you weren't sure it was always intentional.

It wouldn't be fraudulent if it weren't intentional.

No, no, it's fraudulent.

See, we think that we do.

You do.

Yes, sir.

Ninety-seven percent of these over 450,000 people

or these little people that are the others.

It primarily is the fellows who help them prepare the returns.

And they're just trying to say they're gambling on the odds if we're not going to check the returns.

And the average that it cost the Treasury was, I believe, the figure was $285 per return.

And that's not cheap.

Let me go after that.

Let's don't get after our folks.

You know what I mean?

God damn it, that son of a bitch must be saying that I didn't pay any income tax.

If I had said that, or you had said that, we would have been trimming out of public life that next day, right?

And now the press sort of thinks, well, maybe it is a little confusing or something.

Now, what the hell?

They paid $250 million here with the tax, didn't they?

I think that's right.

But I don't know that they said that.

I saw them for sale.

Well, they didn't sell anything the worst thing.

I'm going to ask you, I'm going to tell you one of these.

You know, the thing that really had the greatest impact was what you did with food prices.

That had a hell of an impact.

We'd sit in there and check it out afterwards.

And after your weekend, when you hit that damn thing, our support in his pool for our economic policies went up about eight points.

And he said, we got on the MSC.

He strongly urges, he called Colson down here yesterday, he strongly urges T-bomb the offensive on this thing.

Now, on the food price thing, it's not only what happens, but it also is what we say.

On this instance, it seems to me we're getting a little break in terms of what happened to the wholesale price index last month.

Do you have any ideas as to what more could be said or not?

You know what?

If it's being said today, it's going to be said tomorrow or the next day.

She's great for herself over here.

And all these farmers and ranchers and packers and retail stores are all up for a grant for sales committee.

Yet I'm here today.

And they're going to be before the price commission a bunch of periods tomorrow.

And it's going to be big news.

And are we going to be on the right side of that?

We'll be on the right side of that.

But you hit the thing right in the nose and not blame on the farmers.

Some people say, well, it's a straw man that's like a middle man.

The hell it is.

The Department of the Biddlemen, you all, we all know the situation.

Those retailers, Safeway and the rest would not have lowered their prices, John, unless you talked to them.

That's why they did it.

And they know what people buy, and they buy on reason.

That's why they're making their profits, and they're selling all this other damn stuff as lost leaders.

Can I ask you one other thing?

Are you considering...

what we might do, say, two months before the election, the food thing.

Because there is, you know what I mean?

We can do even something that, if we don't have to live with it for longer than two months, we can do anything.

And we talked about that all around.

But considering the terms of without breathing anybody, doing whatever we have to, putting the freeze back on this economy.

Well, could you put freeze in food prices?

Could you freeze the food prices?

We've never done that before, which you could have done, shouldn't we?

Would it work reasonably well for a short period?

If we knew it, would you do it without leaving the whole farm open?

Well, I'd freeze the, I'd risk that.

I'd risk that in the sense that, or you could be selective.

You might freeze the packer level, which is the effect of freezing the hoe at the production level.

Sure, I've thought about it.

But I sure would.

Well, I know.

I sure would.

First of all, first of all.

Oh, God.

Oh, this is no time.

Oh, even that's the topic.

Oh, it goes down a bit.

It seems I'm going in the right direction.

What I'm convinced of is that, see if you, I have a feeling, John, that the economy is moving reasonably well.

Very well.

You agree?

Very well.

I have a feeling that the unemployment figure, it was nothing to be concerned about at 5.9.

Not at 5.7.

I think the damn figure is probably phony.

But be that as it may, I think just so it's moving pretty good next October, we're okay.

I don't find much concern about the unemployment at the moment.

Do you?

No.

I think on the inflation side, it's a question of whether the housewife is stirred up by the goddamn networks as an issue.

And here, if we could keep writing it,

The difficulty is we need bigger guns, the big guns.

You see, you can't shoot you every month, every week.

You can go about once a month.

You know what I mean?

And then go with the band.

But somebody, well, my vinyl apparently did fairly well in giving out the figures.

But you will watch that in terms of... Now, let me say this.

I'm not going to be as quick on the trigger as some of your people here.

Some of your people here just watch that goddamn news every day.

They just want to react to it.

I don't want to do that.

I just think we're wrong.

Let me tell you why I think it's wrong.

I just thought about this when I was in Florida.

You know, it depends.

It depends.

In one sense, the people want excitement.

In the other sense,

Other sense, people, my daughter, who's at Cambridge, said a very interesting thing when she looked there.

She said, it's a complete turnaround in the colleges.

She says, nostalgia's back.

Oh, she says, sure.

The kids wear long hair and smoke pot and all that.

But she said, nostalgia's back.

And they want a feeling of stability, of confidence.

They don't want drastic change.

She says that she thinks that people like Teddy and Muskie and the rest are out of step.

Maybe not with their party, but with the majority of the people.

What do you mean people?

She's absolutely right.

This is from Harvard.

She's absolutely right.

People now... That's why I don't think we should jerk around every time the unapologetic goes up in the night.

Not a bit.

You've defended this part of us.

The other side.

I took this figure on yesterday.

Somebody asked me in the press conference about the unapologetic.

I said, what are you worried about?

Look at it in perspective.

Who are these unemployed?

There are 5.2 million of them.

We say, let's take that figure.

Assume it's right.

60% of these people have never been employed.