Conversation 772-008

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For the moment, on the other hand, if others break away, we're going to feel free to break away.

We have lots of industrial users in the United States that are clamoring for gold, and we have private citizens, a Republican platform added in, and private citizens in the U.S. ought to have the right to buy and sell gold, and if they want to open this subject up, okay, we're willing to.

That will just be a wild gold market over there.

We don't have anything as far as our own internal

is concerned, but it will drive the Europeans crazy if that happens.

So that's the position we'd like to be in.

You've got a good plan to go forward.

All right, sir.

What date is it?

Well, the meeting starts, I believe, the 24th, which is a Monday, and that's the day that your speech ought to be.

It is in the nature of a welcoming speech, but we felt that I know your wishes were that just to go and welcome people is not

not what you want to do.

If you've got something to say, then it's worth going.

And I think under these circumstances, you would have a sensational thing to say.

Right.

OK.

I'd like to get your reaction to what we have been doing in the wage price area.

Of course, we are saying that we

As far as when are the controls coming off and so forth, that's another topic.

We're trying to make them work, and we're counting on the auto companies and trying to get these brushes down and all kinds of things.

We're working with the controls.

However, I have got Herbstine and Don Rumsfeld and myself, and we have some

And we have been trying to do this systematically and examine the 73 collective bargaining picture of the problems of the bulge in one thing or another.

that we have in mind is something like this, assuming that the price indexes behave themselves between now and toward the end of the year, which I believe they will.

Our estimate is that while the Rowans and others of this world are calling for continuation of this rule through 1973 as a collective bargaining calendar,

that if we don't basically bring the knife down promptly, the pay board and the price commission and all that machinery promptly, it is going to be almost impossible to do that.

There was never a good time to do it.

So our thought would be if we do something like this, if we announce after the election a big labor management type meeting, say for the middle of December,

And at that meeting, we were prepared to talk about the economy, sort of preview the economic report, preview the budget, give our thoughts about the collective bargaining outlook, kind of a big consensus-forming, job-building major thing.

And either before then or at that meeting,

youth, or I should think, but not necessarily, that as of that month, or as of January 1st, or sometime, the argument for the January 1st is that you carry yourself through the Christmas season.

The control system is changed, and the pay board is through, and the price submission is through, and all the IRS, of course, and effort is

over.

The cost of moving council remains in effect.

We basically take the construction industry effort that has worked well, which they like, and we continue that as an entity that reports in through the Secretary of Labor as it did before.

We set up something like that for the health industry, which

Actually, I think the controls have made a pretty good dent on me.

The rate of increase in prices in the health industry has slowed down quite a little.

And I think perhaps more jaw-boning and arm-twisting and whatnot there might be helpful.

And that we leave the cost of loving counsel in a position to move on individual cases if you want, but that the sort of the formal

structure of controls has drastically changed and we go forward on the basis of a complete return to sort of an open free market situation.

A strong job.

A strong job with the club there.

Well, my feeling at this moment is that we ought to

Because that basically gives you something to work with.

I have always had the opinion, and I don't know that I ever registered this with you from the first day of the administration.

My view has been that a president ought to have the authority to impose wage and price controls.

That ought to be more or less permanently filled in.

But it ought to be built in with a hooker that says he can do it, but within some period of time, three months, six months, or something, the Congress must put into effect, reenact the legislation at that time.

Because it seems to me, as in the Korean period, and this is leaving the present way of processing out of it, that emergencies can arise.

And the president has to be equipped to deal with them.

And this is one of the things that can happen in the Korean thing, if you remember.

The wage prices just went out of sight before the controls got enacted.

The controls were meaningless.

So that I think—whereas the way you did it, putting in the freeze, and then the controls, that's held things in place.

You had the authority to do that, and this went off.

So that would be my thinking on that.

I don't think it's going to work any longer.

It's not going to work.

I don't see, for example, our...

Those guys have been very good.

They've been very good.

And I think that's one way to seal our market.

And later, when we sell them to them, we want to say, look, Paulson, you may want to bring on something else.

The hell with business.

I mean, they've got somebody who wants it.

Well, they're the worst, too.

And they deserve nothing from us, except to kick in the butt.

That's all.

Nothing but to kick in the butt.

One of the most insidious things that has happened is that

business is letting us do the marketing.

All right, why should we have a fight with the Indian?

Well, it's a great argument.

All right.

Pass it on to the government.

No, it's not going to be done.

It's not going to be done.

It will disturb all the new commissions, I think, that you think.

The new Commission on Industrial Peace?

Well, he feels that it is the case.

He feels that it's his idea and that you bought it.

I took that speech over to him, and I went to it page by page, and he made some suggestions, and they got in on us, and he's feeling—he just wishes he could come out for it.

What he did to those reporters.

Well, I think that's fine.

That's what my thinking is, you know.

I think that the man controls.

Well, the only question would be whether we should go further.

and then flush it across to the council.

The different problem that I see with flushing that is it puts it all right in here.

I'd rather have some place to put it off to a little to the side so we can .

I think that you shouldn't use the big guns so often.

I can't call it every damn time.

You'll have old things going on.

The number of people are high.

The doctors and the rest.

I like the possibility of counsel.

I think the legislation should be there.

The rest should go.

That's what I think.

We'll work down that track.

A side argument in favor of doing it this way is that there are quite a few labor contracts, and there may be quite a few price contracts, but we don't have any information

that stipulate that they are automatically opened as soon as the controls are off.

And we can write an executive order that changes this mechanism in such a way that the controls aren't off, but the mechanism has changed.

So that we don't trigger all those .

We're trying to have that .

I got it.

All right.

OK.

The third big thing we're working on in the Treasury, and I would have to say this is the most difficult thing I have ever tackled, is taxes.

It is so hard and frustrating.

It's possible to think up millions of reasons why anything that you suggest is not particularly good.

But let me, and I know John has kept you filled on the different things that we've been trying out.

to get some feedback on that.

We definitely have the short form in the bid.

And along and about the 1st of October, that has been put out to comment.

There's been some newspaper things about it, but there hasn't been any announcement.

Along about the 1st of October, we would take the final decision on precisely how to put that up.

And that is a major simplification in that some 30 million taxpayers

have a much simpler thing.

Incidentally, the Sears Roebuck people have been very helpful.

What's his name?

Send his best catalog man a comic book at the forum.

I don't know if he's still there.

Counselors and lawyers.

We have been trying to make it simple.

There's that.

Now,

One thing that we can do is sort of the following, Carly.

We could say, first, the president proposed a minimum tax back in 1969 that is a way of handling some of these methods of getting around paying taxes.

without throwing the baby out in the bathwater, which you do when you just sort of jump preferences right and left, because the preferences are designed really to draw money into this or that or the other than the purpose.

And just because somebody exploits it, that doesn't mean that you let go of the purpose.

So the minimum tax idea was designed originally to get at that.

Congress did not buy it.

one thing that could be done, and I'm not advocating this here, I'm just trying to see how you react.

We could say, well, here's this thing, it's still on the plate.

It does not raise you very much money.

It basically gets at people who make large use of tax preferences.

And I can't give you the exact number, but

in its full-blown sense, it wouldn't raise more than $600 million.

But it is a tax increase for people of that kind.

It's a tax increase for people who

who have managed to keep their tax way down by the use of tax shelters.

Right, right, right.

The angle here, though, I'm trying to think of things not only in terms of a proposal for next year, but in terms of if you wanted to do something before the election.

I think the angle here is, well, the president's been way ahead of his game.

Here's what we proposed in 1969, and the Congress had acted on it.

we wouldn't be having quite the same kind of discussion.

So let them act on it.

Well, that reminds people that you're not a Johnny Tom Lakely of this subject, and you have been working on it.

And it does raise a small amount of money.

Now, there is the question of the property tax.

And that's a tough one, because there's a large sum of money involved, and you've got to get it from somewhere.

And so if you have a VAT, you raise taxes.

If you have an income tax increase, that's an increase, and so on.

So you've got to get it from somewhere.

How could it possibly be done?

Well, here's a thought on it.

And maybe this will just be thrown out with derision.

I don't know.

You get a little bit of money from the minimum tax.

The alcohol tax is based on gallonage, not value.

That is, you get the taxes, federal taxes, so much per gallon, rather than so much per dollar.

You could say that we're going to tax drinking.

Let's not tax it in a regressive way so that the poor man pays more than the rich man.

Let's tax it on a dollar basis.

If you made that change, you could make it in such a way that you also raised a little bit of money.

We could, in one way or another, find ourselves something on the order of a couple billion dollars between these things.

Now, then, with respect to the property tax, what we could do is to say, well, what we're really concerned about is not the property tax that's paid by a business.

property tax paid by a homeowner.

And we're particularly concerned about the property tax paid by the elderly homeowner, whose income has declined.

And I suppose, in addition to that, we could say something about low income property taxpayers.

But anyway, elderly is where the political element is.

Well, elderly wage earners.

So we want low wage earners.

So we could say, here is that we are going to get out this property tax thing in a sort of a programmatic sense.

We have a plan for doing it.

It's going to take several years to unfold.

You can't do everything at once.

But the first fight is with respect to the others.

Now, I think that we could work the number down probably on the order of a couple of billion dollars.

And therefore, we can say we got that money if you make this

And we could do that, and the elderly could do that basically on their tax form.

And then we would have to have some programmatic way for getting up to a larger sum, which I would guess must be on the order of, say, $10 billion.

of a federal incentive combined with piggybacking, state's piggybacking on the income tax.

This I was proposing to you in connection with the schools' education financing.

The piggybacking concept is in the revenue sharing bill, so that's something that could be built on.

On the other hand, there's no

But that could become a basis for saying, as the years go on, we build up to this amount and we can do something about the property tax.

Well, I recognize that is, in a sense, it's small potatoes compared with $15 billion or $20 billion or even $10 billion.

we're struggling to get at it.

Now, another angle, of course, John mentioned that he talked with you about this, is taking this escalation idea, which Milton Friedman has suggested we've been working on, and saying that we're going to use some of the income generated as a result of that for this purpose.

Now, that's another way of just taking this.

so-called fiscal dividends, and putting it all in more spending.

Right.

We put it in the... We kind of risked it.

So, you could get some tax... some relief in the growth of the economy.

That's his theory.

What kind of numbers are there in this?

Well, the...

The Friedman theory, if I could just pick up on that, and then I'll get to the numbers, is that

Of course, he wants to do anything he can to keep the size of government down.

He figures that the only way you're going to do it is to keep taxes down, and that's the censorship.

And he points out that periodically, as the rate of tax on personal income rises from 10% up, Congress comes along and they cut it in one way or another.

And it has wound up over a considerable period of time at roughly 10%.

And each time that cutting process goes on, then whoever is president, whoever is the chairman of the Ways and Means Committee, stand up and they say, I cut your taxes.

But here's a chance where one president can, in effect, take all the marvels in what's been done, and no subsequent man can.

But nevertheless, once somebody can get up and say, well, let's do this systematically and let us have a annual process or some kind of process in which the extent to which people are paying more because of inflation is milked out of the tax system and they don't have to pay it.

Do you think Wilmer Mills is done?

He thinks Wilbermills is smart, but he thinks this might have a lot of political appeal.

Once.

What?

Yeah, Wilbermills were under two years.

Right.

The other side of the thing is, of course, we're struggling to...

to find the money to take from the budget, even under the strictest of circumstances.

And this would be, in effect, a tax cut.

What's the bottom line?

At the bottom line, it depends on your assumption.

You've got roughly $93 billion being collected in personal income.

If you assume a 3% rate of inflation, when you translate that into what it means in terms of taxes paid because of the bracket escalation,

it would give you slightly over a 4% increase in taxes.

So you apply your 4% to the 93, and so you've got around 4%.

You'd only take the rate of depression.

You wouldn't take any growth of the economy.

Well, you could.

In fact, the federal tax take increases due to three factors.

It increases because the economy gets bigger.

More people are at work and so forth.

That you wouldn't do anything.

It increases because productivity increases and real incomes rise.

That increases because of inflation.

You could take the inflation, you could take the inflation and the real income without sort of a per capita deflated per capita income basis.

I don't think you'd want to do anything with the third because that just

is part of the general growth of the labor force.

But you could do the real income.

And if you figure real income rises about 4% per year, and that breaks out roughly 3% productivity-induced, 1% population-induced.

If you took the whole thing, bear in mind that a figure like that 3 percent to 4 percent inflation that I gave you is a combination of the fact that incomes rise within brackets

and you pay more at the same rate.

And partly because, as that happens, some people move into higher brackets, and you escalate their rate of tax.

One could argue that it's the rate of tax increase that you really ought to be getting at, rather than the whole .

Let me say that I'd like to talk about this later.

I don't know.

We raised the tax on booze.

I'm not sure that's very good.

Who the hell are you policing with that?

There's 60% versus 65% or 70% of the people drinking.

Well, it represents scientists and the Mormons.

That's about all.

A lot of Mormons drink.

It only represents our desperate look around for some money to put with this property tax.

All of it indicates an increase.

Now, there's one thing I think you could say.

I must say that if it hits only people with 50 Gs and above,

like that, but everybody, nobody in the $25,000 bracket completely is able to work out that there may be taxes in there.

Now this minimum tax business, your...

Minimum tax has something to be said, and I'd like to have that explored with a common plan from a political standpoint.

The minimum tax plan doesn't need to be as a tax reform.

And as you say, that will be the beginning.

Here's my view on the property tax thing.

The property tax thing, rather than the gobble it all up and go for all that stuff, it's impossible.

We haven't got the money.

I think we're taking and giving just relief to the owner.

That's all.

Don't worry.

Nobody else.

Not the poor.

Good God, we've got too much already.

I say too much.

We've got to have all the old things that we're going to have to sign and all the rest of it.

I think the poor people don't have properties.

It's too bad.

Why not just the elderly?

At this point, the more people you're talking about here, the more people who are blue collar workers, who are just taxed right out of their pocket.

Well, all right, right.

If you get that deal to date, and that's the labor guys, then how many of those are we talking about who lost?

Well, that's my question.

That isn't like a lot of other frame houses.

That costs a hell of a lot of money.

It sure does.

It does.

The way you get that is out of this.

Here's a three-year plan that appeals to me, George, for a very fundamental reason.

I believe we need a restraint on governance.

I know that 60% of the budget or 70% of the budget can't be touched.

I know that it's interest in the national debt and all the other things, social security.

But on the other hand, I think government is too big.

Believe me, we win this election.

This goddamn White House staff is going to be cut in half.

We'll play the place right here.

and the agency is going to cut their damn stands down down down down everybody's going to come i mean it's it's the whole thing it's it's disgusting what's happening there and it's just going to grow like policy and then i say they're all asking what are our new programs for next year i don't want any new programs none don't spend any more money it's too big it's too big

We've got enough on that plate already.

That's what Friedman's getting at.

Friedman knows that if you figure, well, we've got this much more money, so we're going to spend it.

I don't believe in spending on that.

I think we ought to have a break.

So that's the idea of the philosophy.

I'd like you to go back to the draw accords in terms of that philosophy.

And that, you see, John, my view is about your guy down there.

Don't give it a read right away.

I put it in a four-year plan.

Well, with his numbers, we can do it on a two-year plan.

Don't promise too much.

Do it on a four-year plan.

In other words, we have a four-year plan that we should have this by this and this and this.

That is more realistic.

See my point?

And don't put the tax on booze and all these other things.

I think that the minimum is putting things above the minimum tax.

Well, I was bored to begin with.

Well, I am, too.

Yeah.

But what if I asked for the money next time?

All right.

Now, understand, I don't care about the rich people.

Everybody should pay some.

Remember, I made that speech.

Very simple.

The poor should pay no tax, and the rich should pay some tax.

Everybody should pay the charge.

And then they didn't do it.

What do you think of the piggybacking idea?

There's no political moxie.

No, there's no consensus.

No, I don't.

That one, the policy setting, it's going to look like erasing taxes.

It provides an administrative means by which states can decide whether or not they want to do it.

It gets the federal government out and running.

I'm afraid it's too complicated.

I don't rule it out for later.

Thank you.

Well, you and George, I would like for you to have another talk on politics.

I like this idea of seeing everybody face some tax and pointing out that we called upon the Congress to do what we asked them to do in 1979.

And then that takes us to Jan. That was about the great tax reform.

That I think is a good political thing.

Then we take care of that.

Now that's as far as we're opposed to doing.

The loophole thing is, the loophole's a good thing.

We're for it.

The capital gains thing is a total fraud.

It's a total fraud, in my view, for this reason.

I'm talking about a very rich man, just a little bit in there.

But, what the hell?

What does he have to do with my stock?

My key books, and fire water, and bills, and I don't even sell.

They are going to get the money.

It's not there, George.

Furthermore, when you consider that much of the capital gain is really simply the application of, say, a 48% rate to that

practically confiscates the real game.

We've got to get some words from the people.

What these are are public policy decisions that the Congress made to prevent us from using the tax system for the purpose of

of social purposes in places that we consider to be in the interest of the country.

I mean, John, how are you?

Well, you know, you're working.

Hi, how are you?

You've got a great tan.

That's how I am.

You know, I'm the Secretary of the Treasury, but you're the Secretary of the Treasury.

John, how are you?

We're getting on.

We didn't talk about having a tan, but I'm pretty focused.

We discussed one point here on the deal, which I asked John and George to discuss further.

Otherwise, I'm trying to, okay, goodbye.

We'll see you next week.

The other thing is, George, if you would pull together all of the, as you have suggested, I think John, I think every former secretary of the Treasury, if you can,

to look at this thing.

What do you think?

You get vertigology in them and then have a real punchline.

If they all come in, if they all come in, if you could bring them all in at one time, I'd be very glad to see them.

i think it'd be quite a nice thing sure but they'll all be also a lot of them are parts of ours but you set up first what you've sold before so i don't have to

Thank you.

Jordan, I think you saw the big story of the directors of the funds.

They didn't accept the bill and put it to us.

Sure.

That's nice.

So I think that's all we want to do.

Make sure you work on .

Aren't you guys .

I've got a little bit in California.

What would we name it?

Right.

We have a new movie.

Oh, great.

I'll take a photo.

Do it again.

Get away from me.

Delay the next one.

Yeah.

Then we'll sit down and press photo.

John, you'll sit here.

Jeff, you'll sit here.

Uh, John Collins, you're over here.

Jeff, you'll sit here.

John, you're over there.

You're over here.

Yes, sir.

I'm sorry.

I've been reading about that.

I'm a little...

The VAR.

Well, I haven't been to the field, guys.

The other thing was underground.

Thank you.

You know, I did.

I know.

I actually did.

Julie, my daughter, is a great sister.

She's a great sister.

But I have ever seen two cities in a long, long time.

So the last time I saw them, I thought it was really interesting.

I thought it was really interesting.

I've never, I've always, I've never heard of it.

I've never heard of it.

That was, uh, and I, and, uh, they have the, they have the speech he made with the Tigers on the back of their hand.

And they also have a scene in there where he drew the first draft number.

And, uh, the, uh, and of course several pictures.

And I must say, I watched him as he read his speeches and so forth.

People have wondered since whether he could have done it in the days of tolerance.

Of course, he had this marvelous voice.

And you know, I thank God we get to the radio now and he didn't worry about us.

But he also had a very good, he looked up extremely well.

Look back at that period.

We had a marvelous ability, of course it was with you.

John was a member of the Promise 16th.

Yes.

I bet he had a marvelous ability to deal with my secretary at that time.

That's one of the things I get mad about when the government needs to try to pretend that, you know, the situation in 32 is the same as the situation in D.C. John wrote an article in the New York Times.

That's a job.

The thing that I noticed too was how much the presidency took out of him.

From the period, I didn't realize this, even looking at the movie, from the time that he drew the draft, until even the time of the declaration of war, I saw he was still vigorous and strong and everything.

But I can see the service under his eyes at that rate.

Did you notice?

Yes.

The, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the, uh, the

It didn't change at all.

His voice was as strong as it could be.

That's what the matter was, the voice in those days.

The first time I really noticed it was that picture of his father when he was camping through Brooklyn, New York City, in 1944, when there was a drowning ring off.

I haven't seen it.

It was live, but that picture, I caught it out in the studio.

And I did not recognize one, because I haven't seen it since 40 out of 40.

Well, I agree.

It's okay.

I'm curious.

I was actually a little bit 44.

I was actually out of the Pacific.

You were out of the Pacific?

Yes.

But I remember seeing you standing in that picture during the declaration of war.

That's right.

That's what I had.

You were a tall guy.

Tall guy with a little more hair.

I knew he was sick.

We went out to San Diego, and we were going up to a landing maneuver in San Clemente.

Where I was waiting.

And that morning, he said, he said, stretch me out on the floor.

And I, you know, came out of the bed and stretched him on the floor.

And he said, God, I don't know who's in the room.

And for about four or five minutes, he stretched out and he said, I don't know if I can make it up to Sacramento.

And then a little while later, he felt a little better, and we went out.

And I could see, and I could see something was in the water.

Did you know that he stayed, they told us this, the house we bought is his own by the name of Cotton, who was the Democratic National Treasure at the time, I think.

And one night, he came down on the southern Pacific Railroad, the train stopped.

They brought him up there, and he stayed overnight in that house.

I didn't know that.

That's not quite it.

Oh, yes.

He should have been interesting.

And you've seen the house.

The cop is a great friend and supporter of his, of course.

Yes.

And we've never met.

Right.

That's not quite it.

Sometimes you've got to see them.

There's another room where they were all supposed to play cards or something one night.

Or poker, probably.

That's my name.

What did he play?

Did he play a five card game?

Or did he like wild cards?

I like a five card game.

I like it.

Once in a while, one or two of the others would want to go play a wild game.

Wild games are not poker.

They're fun, but they're not poker.

But you've got the five cards.

You've got the odd cards.

We used to have plenty of loud jams in the day.

The second point I wanted to make is this.

I think it's a great idea that, looking at the septennial, that you would be willing to undertake some, you know, this idea that we have, you know, opening our arms, encouraging people to come over and so forth and so on.

You're going to go over speaking on behalf of that and so forth in Europe.

It would be a great organization to go to everywhere around the world.

Well, we don't know yet.

I don't know yet, but I would think that if you were over Hawaii, I don't know how many Europeans there are yet.

For example, a hell of a lot of Japanese have come.

Yeah, that's funny.

Did you know how many tourists in Hawaii, Japan, there were like 250,000 Japanese came to Hawaii.

They've got dough, they travel there.

That's how it comes.

Somebody told me in a hotel, it's a long tunnel up with Japs.

Yes, sir.

That's right.

And those islands in the Pacific later, that was taken over?

Yeah, about six to seven.

The other thing I would like to say, and I haven't talked to John McConaughey about this, and I would look to John for advice on this certain thing.

But I don't know whether either of you would like to undertake something in, say, the ambassadorial field.

I don't recommend it.

Being an ambassador is probably a pain in the neck.

But there are areas of the world where having somebody who has, frankly, prestige and so forth can be a great deal to us.

And I have found on my own and my own travels around that while we have some good State Department

There are many places, and I think John agrees, after his travels abroad, where having somebody who is directly responsible for the President and holds his allegiance to the Presidents, as well as to the State Department, is very important.

Now, you throw that out, it's something to think about.

What do you think might be, for example, your, you know,

in other parts of the world, but we're going to look those things over.

Ambassadorships these days are something that I, because one of the things we want with our, we want to open up this administration, should we survive, yeah, we should do, on the broadest possible basis.

Another thing that I feel strongly about, and I talked to President Johnson about that,

that I think this country does not adequately use the celebrity value of the first man and the second lady.

That is pretty... Johnson was very good with Eisenhower.

I can't remember his name.

Usually, all of us, Bennett and Bennett and President and so forth, thought they'd go.

But now, at the present time, believe me,

Uh, I don't say this before you're here.

If you, uh, if, uh, if you, if you, if you, if you, if you, if you, if you, if you, if you, if you, if you, if you, if you, if you, if you, if you, if you, if you, if you, if you,

So just keep, put it in the back of your mind.

Let's not talk about it now.

And talk to John about it later.

And if you're interested.

There are other kinds of things of this sort, too, where there are agencies.

There are special commissions.

There are allegations everywhere.

And to an extent, too.

Right.

And actually, I'd rather not do the other thing until after election.

Oh, you should.

Because I think it's...

Well, of course, you know, what I would like to do is not do it, but I would.

Frankly, if you could tell us why the group began to work with us, however I'd like to, you know.

Well, again, it puts the thoughts together, because I do think it's something that I think would be interesting to do.

Well, I think what I'd like, at the present time, of course, we have a commission, and, well,

Probably, of course, with the general commission.

But I would suggest that in the first instance, I would like to bring people up to talk to John who's just been here as the head of the State Council.

John will know, frankly, how to handle that and what will be in the legislation that we have to send after.

Let me say this.

The commission is locked down 2% because the parties in general .

Why not?

We were expected to be here.

What a difference between the job.

He's going to follow through.

And I just get in touch with him directly.

I'll tell him.

I'll tell him to call you.

That's done.

And he'll work the work laid out, you know, together.

shall we say, it's now on the serve.

I know it's had problems.

I'd say talk to Rodney's board a little bit about it.

Well, he's done some work on it already.

And the idea of peels, to me, is just a question of getting it bottomed down in a way that it's soft, so that you're just off your loose ends.

Mr. President, is there a possibility of

the domestic, in other words, all of the states, from the international.

Because your states right now, I find, have a mess, and it's just a political payoff to a local county.

And Rosario, you know, is kind of going to win that.

And the old staff, it's really pretty little.

We have got to get a hold of it, actually.

And I think running from here, what do you think?

Absolutely.

No question about it.

You know, the thing is, too, it ought to be a big thing.

I mean, you know, Philadelphia is out of its mind.

It wasn't theirs, but the city's.

I mean, it's out of its mind.

I went flying over to San Francisco the other day, and I saw the old building.

Of course, they've had two of their nationalities, but they've had one at the end of the 19th century.

There's still some marvelous building there by the Presidio.

Yes, I mean, that world's fair.

People say they're held, but not this one.

This should be the biggest celebration any country's ever had.

It'll be the longest any democracy's ever had, ever lasted.

You see, because it's great.

You've got to recall their honor.

And here we are.

Democracy don't last that long.

would be the oldest country in the world with the same kind of government.

And we all know a lot about it.

I can see great television programs.

movie programs and people being proud of the country right that's why i like to do it with johnny if i could he's a good republican if the two of us could do it together i think we'd have a lot of fun together right it would take away some of the positive shit you know because yeah uh

Do you remember the Atlantic Charter?

The Atlantic Charter, one way or another, has stuck in people's minds throughout history.

It seems to me that this might be an authentic good time to have a Nixon Charter, or whatever name you want to give to it, which would, in essence, try to get all of the countries of the world to implement the words of the Declaration of Defense, which would be saying that all people are at odds with their individual rights.

You might have a hard time getting everybody to agree which rights you would list,

But if you made it as general as the Atlantic Charter was, it was pretty general.

You might have something that every kind of political philosophy could subscribe to and have a kind of something to all set this dish in the world.

out of this one celebration could come.

That kind of international declaration.

And how you set it up would be something we could work on.

If you thought it had any .

It does.

Because they say the words don't matter.

Words really change the world.

There it was, down on that ship, wasn't it?

Yes, sir.

Well, that's right.

And out of it came, it caught the imagination of the world.

You take Wilson, World War I. Wilson, after the war, had hellish problems.

But he's 14 points, probably for the start of the war, but talking directly to the German people.

Sure.

remember about some of those things.

We've got enough time to do the legwork and the planning for it.

We ought to be able to get very smart people to work on this after the election.

I think we'll have a situation where your intellectuals, whatever their events have been before, will want to be on the show.

I think so.

I suggested to James

Oh, the Eisenhower Fellowship Foundation that I've been a trustee of since its inception, like Don and Kate, and Happy Bonds, and some of the graduates of that, some of those fellows that have been, from all over the world, behind the argument, I think, for the other thing.

First, I think, we haven't had anybody through China.

And I think the rest of the world, these people that we can work with in those governments, because I don't know where they, like the Prime Minister of Kentucky was present, I'll graduate here tomorrow.

They had a great seat.

He was very proud of that in his last days.

He used to program high school and went to the high school.

Oh, we're talking about this last time I heard that.

That's true.

Thomas is another one here.

He's great.

He's a great table kid.

Tom, of course, McKay did a great job.

He was not just a nice guy.

Bob Anderson was doing a great job.

What was the situation like when I heard about it briefly?

Yeah, and I had never been there.

This library just started really in the morning, the eyes of the heart.

And now the house is great.

It's an active job.

They've done a great job here.

I thought the library is really, very done well.

And take good care of the house.

It's really beautiful.

I'll go see them one day.

Oh, that'd be wonderful.

I've never been here.

I didn't have anything else to do.

He invited me to bring my three, that school-aged children, in for a 9 o'clock appointment.

We came in, and you know how he was, he just took those kids and talked to them about this school, the curriculum, the history, what they're looking at, and we sat here for almost an hour.

I said, I can't believe it.

Mr. President, I've got one other area that I noticed in your Labor Day speech.

You mentioned appointing a commissioner based on that group piece, which has always been one of my great interests when I was chairman of the Labor Committee.

And I don't know whether...

would be considered, because of that, to be ineligible.

But if not, I'd love to be a consultant or something and put some time in it, because I'm very interested in some kind of problem.

And it's an interesting, it's a vastly interesting area.

And I've watched, I've known the people in England for a long while, and they must be going through a very interesting time, as they've related to the shore.

They go to the sea island.

We are not saying that, well, it's quite clear.

We have kind of been convinced before I made this speech

Major labor leaders will participate in the go after the election does.

Because that machine we have looking at will be, we've got to cooperate with each other.

We've got problems trying to.

We've got to get rid of the word compulsory arbitration.

I think there's some other way to do it.

But basically, that's what it is.

You've got to come some way.

You've got to have some way to help God.

Because business, for example, says, right, at the present time, rather than fighting the thing out with the labor unions, they say, why don't you just pay for it?

Tell them, well, the labor union, on the other hand, it's on the labor union's part that they're actually responsible for it and keep their own leadership.

So they'll have to have to pay for it.

They're just jealous.

but that's when I got the bargain up to a point where I agreed on just a lot of other

in the ballpark about the numbers, but we might get down to a critical issue and we might have a strike, particularly in certain areas that affect the whole class.

You know some of the teacher stress, don't you?

Yes, I do.

Well, if you're one of these people and you stick to the report, let me tell you,

That's the presidential seal and a copy.

That's all you have?

You know, I have a British ally.

Oh, great.

And she can't offset my goal easily under any circumstances.

Well, thank you very, very much.

Well, we're so delighted to have you here.

But I'm amazed that the next thing you know.

I sure will, I sure will.

I'm hoping to remember when you will pass it up, when you will invite one of your assistants to your house.

I'm going to follow this kind of collection of elements.

Right.

Well, at this time, what we're going to do is we're going to hide all the elements.

Right.

It's going to give you a talking crowd.

It's going to give you a talk.

Right.

Excuse me for a minute.

Yes.

Good.

Hi, George, how are you?

Hi.

I was thinking of the, uh, kind of the thing, uh, I don't want to

I want to let her be able to handle it.

We'll cover it.

But we've got to do it in a very, very special way.

We're going to be sure he's covered.

All right, so I understand the problem with breaking Preston and arresting him.

We'll simply say, not on the basis of his campaigning and arresting him because of the threat he knows he's received.

We're covering him like we're going to cover his races.

Not with Secret Service, but with FBI, right?

And then I didn't know.

Oh, imply that we're going to provide security for Israel when they come to the United States?

How the hell do you know?

We are doing some work now in Mercedes trying to figure out legally under what device we could cover.

Well, I think the president can designate a bunch.

I will designate a bunch, but I want you to say that you reported to me.

not submitting his request and he reported to me that he received a number of threatening letters and i suppose as a matter of fact because he's a public figure receiving the number of threatening letters i my designated secret service coverage i sound like it'll stop on the 7th right but forever but that's it that's it but uh we're not gonna let the secret just let me say that let

Well, I will work with the federal government.

Alex knows that you work on the details of the coverage.

You naturally can.

In other words, I don't mean Alex will work on it.

You give the idea of the reason is that you raise the question.

Because of the threatening letters you receive, not because of the canteen.

Because of the threatening letters, we are covered as public figures.

I think we can do it all right.

We want to be sure we're on it.

That's right.

I will do it.

I think we're not going to do it for anybody else.

The other clouds will be out here saying they're covered.

That's it.

We had a spy on Schmidt and Anderson.

And they were, they made an awful racket wanting coverage.

We took that up with the advisory committee, though I have this advisory committee with the speaker and so on.

And we all felt that given the fact that Wallace in that party had received more than 5% of the vote, that even though we found that Gallup and Harris wouldn't even include the names in their polls because they would just clutter it up, we should go ahead and provide that protection.

And Bob suggested all of them.

that if we're going to do that, we should cover Spock, or at least try to.

And so I managed to get that through the advisory committee, or at least they can't object.

We tried to, we offered this to Spock.

It was quite a long time, but finally this morning he's accepted it.

And so we will provide coverage for them.

The Secret Service fellows are just, they think it's all a big joke.

There's no crowds around those people at all.

But anyway, Bob felt that

If we did this, that would tend to build him up a little bit, provide a little crossfire.

So that's going up.

Well, .

That's good.

Okay.

This one I would say we put on the basis of the presidential order.

Well, should I, you know, should I tell Senator Kennedy that?

Yeah, you tell Kennedy so that it's handled at that level.

So because of the threats he's receiving, because I asked him, we can't, of course, cover others because of the threats he's receiving at this time.

What would you think about asking his son, his friend, your father,

How did you know that he told me that he had more drugs than anybody else?

Yeah, he does.

I don't think there's any question about it.

The Secret Service told me that.

I don't know.

Does he turn his stuff over to the service when he gets it?

I think he does.

But anyway, let me check that.

Yeah.

And we'll be sure that we .

As far as the coverage, you can say, well, if we haven't had it, this is all in your direct email.

So that we can get adequate coverage.

No, it's a, it's a, it's a, it's a really a ghoulish and a very, it's a, it's a task force.

Mr. President, I have a few things that I wanted to mention before.

I do want to thank you very much for the taste of wax that I'm wearing.

Oh, yeah.

And the four of these clothes are, they're very much appreciated.

And that's my way of reciprocation for something.

You got a watch from me.

I got a watch from you, a nice note about it.

You have a watch for me for a dollar.

I have these bills that are on the first run of my signature.

The numbers that I've picked out are 1946, 1950, 1952, 1956.

1968 and 1972.

Well, our numbers have had some significance in Europe in these years.

And I get the light with everybody that happens to have a light in their head.

They're all in here.

That's great.

He doesn't like to be paid.

Well, he's going to campaign with McGovern next week.

McGovern has secret service.

There are probably transportation accommodations and communications factors that they figure will be enhanced if he has coverage.

I guess that's part of it.

Well, it's a way to get free transportation, free phones, and all that kind of stuff.

Secret Service communications network, how they operate is really kind of impressive, I think.

And in the convention, since they had all the possibilities, I visited when I testified before the platform committee, their command post looked over their setup, and then I saw it.

I saw an operation during the convention, and I've met with it several times.

I think they do quite a job.

Very impressive.

And any candidate who has them around, particularly I can make these primary candidates get the Secret Service there and practically organize their schedule.

Oh, yeah.

It'll work.

Thank you for that.

No, it hasn't.

But I have been having them come in and meet with me on various subjects and bring along people in the service.

And I ask them questions, and I'm trying to find out who's who and what they're like.

But the idea of bringing somebody from the outside of the Secret Service to be the new head man at some point, I think, is a very live...

thing, I should say.

But basically, I think they do a quite good job.

Oh, I agree with you.

It's awfully hard to take one of them and put them above the others.

It's really hard.

Well, we'll see.

The topic of conversation I wanted to bring up with you has to do with the international area, the IMF.

Following that meeting that we had in San Clemente where we talked about this, I have been working hard to develop a plan without trying to get everything down to the last whipstitch, but to say to ourselves, what is something that we would be willing to live with and that we think would work for others and would be consistent with the general ideas of

We have had it in the background as to what a reasonable reform might look like.

And we have basically put it up in the Treasury.

I had several lengthy discussions with Milton Friedman about it and had him in for a couple of days explicitly as a consultant to the Treasury and have been in touch with him.

And then I've had a series of meetings

with Arthur Burns, Herb Stein, Bill Rogers, and Peter Flanagan.

We added somebody with Peel represented.

And we have developed something that, by and large, that group of people.

I've discussed it at some length with John McConnell.

And John has said he's quite enthusiastic about it.

And then I talked about it very briefly with Henry, but not so much in terms of what does he think of the details of the plan, because he doesn't get inspired to get into that.

But what does he think about sort of the general foreign policy relationship to what we should do in the monetary area?

And he is very strongly of the opinion that now is the time for us in these meetings to take the leadership.

And the only thing that I was going to say, I don't know anything about that, except that it's complicated.

The second point is that I really have to trust you.

And I know that knowing your bent,

that we don't get crazy with the convertibility.

I mean, in a way that we can't turn back.

I don't want to be, I don't want to, want everybody to, well, Colleen is never going to be open to us.

It's awfully hard for the people in the secretary and the treasurer's job not to become influenced too much by their international bureaucracy and by the goddamn Wall Street finance pages and all the rest.

All of them are bitching about what is the United States going to do.

So it's what reassures me that the moment is that you've talked through and know, and I know, to your own biases.

Because the little that I know about it is in case there's no delivery for the goddamn board,

We don't have to do it for ourselves right now.

Later on, we can be responsible.

But you don't have to be very responsible right now.

Right now, talk to the American audience as much as we can.

But that's all I have in mind from that standpoint.

Why don't you go ahead and say what you have in mind?

The type of plan that we would put forward is really simple.

in its overall dimensions.

And it's basically something that Milton suggested.

And it takes the Smithsonian rates, or some system like that, and says, all right, here are some rates calling central values.

And the Smithsonian agreement has quite wide bands around those rates.

to a quarter percent plus or minus, which means that on the extremes you could get a 9% swing between currencies just within those bands.

The trouble with this is that there is no way to change the central values.

That is, if you get to the limits of the band,

There's nothing in the system that tells you what you do then.

So all you do is you try to support at those bands.

That's the old system.

And when you do that with no ability to change, your reserves tend to disappear.

And that's when you get into the kind of crunch we got into on August 15th.

So what is needed is something that provides flexibility for changing those central values.

And the system that we are working from is very simple in concept.

It says, all right, nations, in addition to these rates and demand, nations have reserves.

And we must watch those reserves as they operate in the exchange market.

And ask ourselves, are they growing or are they diminishing for any given country?

And say that what happens to those reserves is your indicator of what must happen to the central race.

And if a country loses reserves and gets to a certain point in its general reserve level, then that country ought to do one of a variety of things.

that will, in effect, change that central rate.

And that should operate symmetrically in the sense that the country accumulating reserves, as in the case of Japan, has as much pressure on it to do something about its trading arrangements or exchange rate as a country that's losing reserves.

So it has a principle of symmetry, which we've been fighting for.

And it also has a mechanism for adjusting the central values

so that you don't get yourself into the squeeze we got into in the August 15 situation.

Now, there is the link between the bands around the central values and the movement of reserves is, in effect, convertibility.

You convert, and that's what changes the reserves.

And so we get back into a system where there is a form of convertibility, but it's a very different system than the one that we had before.

And I think it's probably as close to a floating system as you could devise and still have it be, so to speak, systematic in the sense of being describable in these understood terms.

Now, there's nothing terribly notable about that except for two features.

One is that systems of this kind that call for automatic actions at trigger points tend to break down because as you approach the trigger point, speculation becomes intense.

Because people see that as soon as there's a little bit more movement, there's going to have to be a major change.

And in that case, they can speculate in the currency and make huge amounts of money with very little investment.

We have to have some way to deal with that.

And the way that we have is, in effect, to have these reserves

presumptive rules operating through zones, so to speak.

That is, as you begin to move in a certain direction, then more and more things become permissible to do and then necessary to do, and so on.

And second, we provide for more things than just exchange rate changes.

And one of the things that John was always saying, which I think he was absolutely dead right about European resistance,

was that you can't expect the monetary system to carry the whole load of adjustment.

If you have trading arrangements, as in the case of Japan, that just shut exports out, pure monetary arrangements don't do the job.

So we have built into this system the notion that there are circumstances when a country could put on an import surcharge and take it off and so forth.

So there is built into this the notion that more than just the exchange rate comes into play as part of the adjustment process.

We also have in this proposal, which in this everyone agrees on, the notion that the IMF and the administration of the General Agreement on Tariffs of Trade, the GAAP,

ought to be much more closely linked than they are now as institutional arrangements, so that the interplay between trading arrangements and monetary arrangements is kind of institutionally linked more closely.

Burns, interestingly enough, has bought this essentially Connolly concept, although I don't describe it as a Connolly concept.

But he's bought even more than most of the rest of us, and he thinks the two institutions ought to be merged

Now, we also provide in this plan that while what I've described is the basic system, an edited system, that we would expect the United States, with some transitions, to be willing to operate on, that there is also a floating option, as we can conceive of circumstances, as in the Canadian case, when a country might choose to float on the currency.

And that should be beyond the bounds of anyone's conception of this system.

But if you are going to float, then according to the rules of this land, the float should be what's called a clean float.

That is, the currency should genuinely be subject to market forces.

And the country that floats its currency should be basically prohibited

except for smoothing operations, from intervening in its currency.

And the way you tell whether you're intervening or not is to look at what's happened to your reserves.

If your reserves are increasing, say, it means that you are trying to keep your currency from revaluing upward, as is what the Canadians are, in fact, doing.

So there is a floating option in this.

And there is also what we have called a unit rule in the sense of saying,

If a group of countries choose to form a monetary union, a genuine monetary union, then they can do that and they would be treated as one in this system.

So if the Europeans in the common market, as they are saying, they are intending to create a monetary union, then, so to speak, they would be like one country.

just as the United States are like one country.

And they would be, the unit as a whole, would be subject to these same rules.

But it's up to them whether they can form that monetary union or not.

But the plan does not foreclose that.

And we felt that if we didn't provide that, the Europeans would, I think, quite justifiably say that this is a plan to

which does not really permit a common market in Europe, so we have provided that.

There are a variety of other things, and there are all sorts of complications as one gets into it, but this is the basic thrust of what we have talked about.

And I think there is general agreement in this group on the nature of that plan, with a lot of work to be done still, to be sure.

There is general agreement that it would be a good opportunity, and very constructive from the standpoint of world and international economics, for you to address the IMF.

I have to.

But you might be technical.

Well, the type of speech that we can lead.

I sent you over some sort of numbered points.

And I gathered heard signs and asked

to draft something.

Herb and I talked about that.

And he'll take those points.

You can look through them.

They're not designed as a speech.

They're designed to stand for content.

What you want to include.

But there are three points of content that we think are, so to speak, presidential level.

And while some of them are, in a sense, platitudinous, you have credentials.

say them in a way that has real meaning.

And I think the first thing is that a good international economic and trading order is heavily dependent on a peaceful world.

and that you have been working hard to help bring that about.

It is a necessary condition.

It may not be a sufficient condition, but it's necessary, and there is that.

Second, that for all countries, but especially for a country the size of the United States, an expanding economy

with a discipline as far as inflation is concerned is a tremendous contribution to the world trade order and that we have made great strides in this country and we continue to do and so on.

And that is the first point.

And then third, we think that without your getting into a lot of detail and stuff about any particular plan, it's important to point out some problems and say some things that

show that you're aware of what the nature of the international monetary and trading problems are, and then to indicate some broad outlines of a program and, so to speak, reference a speech that I would make following yours that says that the Secretary of the Treasury will fill in some of these.

Yeah, well, I'd like to say that the Secretary of the Treasury, of course, is responsible for this area.

discussed in the Greenlight decision as far as our own policy is concerned.

And he will further address this group.

His address will represent the position of this administration.

The position of the United States, I'll say.

That puts it straight.

So the hearing of the speech is random.

All right.

Can I?

Now, I think it's just a

Describing all of you is fairly.

Connolly is enthusiastic about going ahead.

Kissinger is, not with reference to the details of the plan, but in foreign policy terms.

I think we should.

Burns, I think, feels now that we should plan to subscribe to that deal.

I think Bill Rogers feels

that while you should definitely make a speech at the IMF, that we shouldn't really say anything that has any major substance to it.

Well, on the question of the world markets, the swap-type arrangements that we put into effect following that conversation I had with you at the time of the British bloke,

We have not intervened very much at all, but it has had a dramatic effect, and we have had stability.

However, that thing can erupt at any time.

These international characters are crisis prone.

They love these crises.

The nationalists, though, yes.

But I think that's right.

I think that's one of the things we get from these people who tend to compromise to this, but they rule next, or interest in speech, or variation of reality.

Well, I think that it will be favorable.

What about our people who are really not foreigners?

What about the jackets of the right?

Well, I think...

Well, fellas like Hobart Brown will criticize anything we do.

He is writing for the Democratic Party.

Sure.

But I think the Ed Dales of this world will see it.

Welcome.

Well, if you have the advantage of this, do a hell of a lot of reading.

Well, I think that... Of Dale, of the responsible men.

Don't read Roe and Lee.

If any of you are true, he's fired.

I mean fired.

Anyone.

Well, we think that if we can say you've decided to go ahead with this, then

that we ought to get in a group of the financial business types.

We ought to try to get all the former secretaries of the Treasury on our side.

We ought to get some of the academic economists who always get quoted on this, see if we can't co-operate with everybody.

And then the writers .

So we'll orchestrate that and hope that we can have in mind the pressure to be very tough with regard to those extraditions that we've got.

The people who will have to oppose it,

Well, we can try.

Well, as far as upsetting exchange rates are concerned, you know, we've taken the view that we stick by the Smithsonian and try to keep stability before the election.

And after that, we're not so concerned about it.

And that has worked out.

Something like this could trigger off problems.

To a certain extent, these people look for excuses to have problems, or whether there's anything inherent.

It could be the other way around, however.

I think that the argument, and this is Henry Kissinger's main point, that we have a vacuum here.

here since the last IMAC meeting.

There's no important country that has put forward anything really substantive.

People look to the United States.

And you could make the argument that if we went through another one of these meetings and there was nothing proposed, that would be very uncivilized.

I agree.

So I think we should say the French and people who think as they do.

And their program basically is

to have a very large increase in the price of gold, like $78, $90 now.

And that having been done, you basically operate on the system that we had before.

Sure.

With regard to the French, what effect will they influence the market with the British?

They will, although we have a probe with the Germans particularly, and we have

On the one hand, from Kloss, the banker that Arthur talks to all the time, that we have been trying to program through Schmidt, the president finance minister, that the Germans are not going to let the common market do anything that we oppose.

Now, I don't know whether they can hold to that or not, whether the British.

We have made it clear, and I want to talk for a minute about gold.

I hope we go ahead on what we propose on that.

But we think we should make it clear that the formation of a gold block by the Europeans right at this point in time and an arrangement for internal settlement among them at a higher price than the official price, at the private market price, which is up around $70 now,

we would regard as a very unfriendly thing and as essential as an effort to derail genuine discussion of monetary reform.

We, the position that we would like to take on the goal is that we think that it is a metal that, and we've said this of course a lot,

that should be phased out as part of the monetary system.

The rate of supply is now no greater than the rate of demand for industrial uses.

It is subject to wild speculation.

And it's not a reliable base for the monetary system, aside from in addition to the fact that the old system didn't work very well.

Beyond that, however, we

I think a good position is to say that the present arrangement, where we don't buy and sell directly into the private market, we're willing to stay in that position if others are, while we have these long-term monetary reform discussions so we don't prejudge the outcome of them one way or the other.

On the other hand, if the common market were to move to a gold block and to raise that

official price up, or if other countries find the private market price so tempting that they want to go in and sell a little gold into that market, then we are going to feel free to do that too.

And I think that by itself is probably enough to discipline the French, because if we proceeded to do some selling, we could knock the daylights out of that market.

And just an announcement that we felt free to do it without doing anything would have a tremendous impact on that market.

So the position we would like to be in is basically that, that we're willing to hold things constant for the moment.

On the other hand, if others break away, we're going to feel free to break away.

And we have lots of industrial users in the United States that are clamoring