On February 5, 1973, President Richard M. Nixon, George P. Shultz, Herbert Stein, Roy L. Ash, and John D. Ehrlichman met in the Oval Office of the White House from 4:52 pm to 6:09 pm. The Oval Office taping system captured this recording, which is known as Conversation 849-001 of the White House Tapes.
Transcript (AI-Generated)This transcript was generated automatically by AI and has not been reviewed for accuracy. Do not cite this transcript as authoritative. Consult the Finding Aid above for verified information.
That's what's really people.
They're all.
That's really what's reassuring us.
The majority of the people really do feel that way.
In fact, he was the right guy.
That's right.
That's right.
That's right.
That's right.
That's right.
That's right.
That's right.
That's right.
That's right.
How did you, who'd you break away from?
We both broke away from the Appropriations Committee, and uh, I'm good.
So now, I'm just gonna pick up the kids, and see what's going on.
I rarely admit it, but all day long, I'm listening to their stupid questions.
The questions aren't good, but their answers are worse.
I don't know.
Maybe the questions aren't good, but our answers are good.
And their answers are good, but we have no answers.
Let's start with Senator Lee again.
Well, we had, uh, George Mayo started by posing.
He was the, uh, bastion of police irresponsibility and the president of the big splendor.
And how did we come by this $12.7 billion deficit?
And why did we recommend a tax increase?
That's what we paid for ourselves.
Well, I'm surprised you didn't.
That's the second week out, and that's the way it's going to be.
We're going to ask you to come in.
And then they talk about you.
in a pretty clear date on that.
Yeah.
Uh, I thought it would be useful just to have a, uh, uh, some, uh, run-down of the economic, uh, situation for the rest of the time.
Well, uh, how's the truck feel since it's your first truck?
Everyone in that church is on the scene.
I know, I know.
I'm usually on the scene.
What did you need?
We had one just before the budget, and the United Group part decisions were made.
Well, of course, they said, I've got revenue, that's what it should be, and so on.
Well, as a point of departure, let me pick up Bill Martin's building prediction.
Do you agree with what the director says that
when I have a 4.5% inflation rate.
I don't know what the hell he would have us do about it.
I can say almost the same thing.
I said almost the same thing.
I said almost the same thing.
I said almost the same thing.
I said almost the same thing.
I said almost the same thing.
I guess it comes down to this, they can't play as hard as we're used to.
So often as we both, we remember on the budget, we all remember our budget, no way to perform a budget grant.
And the other point is,
They went on page three, etc.
And of course, I suppose our group, China, would say, well, it's here.
This is their actual monitoring situation for their people, and that's the problem.
But let me ask you to start off, and then we'll get to the chair.
I'm just reading, it's a combination of various people's, I bought back Bill Maher on the one side and Okun on the other side, so when the two of them get together, maybe we ought to read some of our own as well.
Well, it's just our economics at that time was just our social values that are intolerable.
So if I'm not responsible for the social values, I felt quite plagued with what I was said.
And as far as Mark said, Mark might have got into it.
Of course, we all know him.
What does Mark have?
What does he speak?
Well, he's a very, you know, he's a very, you know, he's a leader in the financial community.
He often has to be very worried.
You know, he never wants to stare.
He's always here.
He's a big thinker.
And he...
I had not seen his speech.
He probably had some competition phase three in the money supply thing, or he wasn't a big fiscal leader in the money supply when he was here.
But anyway, I think we all know, too, that the 2.5% goal that George is driving today, getting inflation rate down 2.5%, was an ambitious one.
We felt that was about as far as we could go, you know, that people wanted to
to put a much lower number.
I don't think anything has happened since then, since we set that goal to cast any doubt about the achievability.
In fact, I think that one thing we have done that is very positive and much more positive than I would have dreamt possible was to
I want to bring a special kind of ice tea for these new members.
So, you have coffee.
What do you want?
Not for me.
You're bringing hot tea.
I'm moving on.
A special ice tea for these folks.
Yes, sir.
That's exactly what I had.
Terrible.
Very good.
Very good.
I think, uh, tell me what you think those steps are.
I don't know.
We've made some estimates of what we can now expect out of the agricultural prices on the basis of the increase that we permitted in the production of wheat, production of corn, soybean, grapes, and so on.
And we're now saying that we expect that farms, food products at the farm,
will be no higher in December of 73 than they were in December of 72.
And that food price in the retail will be rising quite slowly in the second half of this year.
In the first half of this year, we'll continue on .
in the last part of the year.
Well, at the farm level there will be a decline in the last part of this year and the retail level rising very slowly.
Now, about phase three and all this
The reporting on it, if you remember, we went through exactly this same thing with the freeze, the first 29 days of the freeze.
We got no stories except total confusion this week in the country.
But now that it's six weeks, everybody said, what a wonderful thing it was.
I remember, too, that the same diet in relation to the stock market, which is reflecting the stock market to a certain extent.
And so, yeah, they were saying, they got insufferable.
They were saying that we had given the store away to the labor people because they were out of pay for it.
So, but still they're having to worry about it.
They're making a great deal of change on this budget.
And it's going to be a continuing fight, as everybody's pointing out, to...
It seems to me there's only one way the budget, the actual expenditures, could go compared to the budget that Crystal said before, and that's up, and it's down, and down.
And now there's this peculiar behavior of money, which I just don't know what Arthur is thinking.
What is that?
Well, for a few weeks, I've been riding pretty rapidly for a couple of months now.
And I assume that the Federal Reserve will get under control.
That is what I've been thinking.
Well, what I don't think is, I don't think it's all over.
I think that, by any means, we do have these mods that you want.
Wiggles are usually average enough, and they don't make much difference.
What about the fear of credit crunch?
That's the other thing.
I don't think credit crunch, because they think that our third wasn't as bad as it turned around.
I don't know if I can finally do that.
I think that with the federal budget position improving as it's projected to, and the tragedy of borrowing, and as much in the next fiscal year as this year, that we're going to be all... What are your views, George, about the effectiveness of any of your statements over the weekend on interest and so forth that you're here to job on?
Well, it scares the banks, and I know it, but over the past three or four months, the trouble I have heard with the backing of some possible things, and I know it quite well, have had some impact, although the impact will be more apparent than real, and the banks are...
right at 6.5% say, or something like that, they will basically rearrange the balances they require people to hold various other places to get the effective rate up.
So I think it's a very hard thing to control, but anyway, they're a lot of edge, and so that's what puts them more on edge, because it suggests we're going to get in and look at their costs.
Let me ask you a question.
Maybe get a guy to put it on there by the way.
And it's really bright and clear.
Is it possible that the deep down businessmen in the whole period of the 60s, like the poor, the blacks, and a whole lot of other American people, did become far more dependent upon and less dependent on the spiritual work of God?
Is it possible that on August 15th, 1971 on, and we had first freeze and then phase two and the rest, the businessmen seeing the government in there fighting their battles with labor, and now they see phase three, and now we can cut on them and say, now you've got to fight.
That possibly, they may be,
But that may even fight us into it.
We just don't want that with all the talk among businessmen and their belief in free enterprise.
There's a hell of a lot of them.
And they're even in front of it.
Maybe it'll frighten them.
Let me get at it another way, too.
We take the whole so-called peace issue and all of it.
The whole period of the war, particularly in the last year, every time the partner tickled up and down, if you read why they tickled up and down, it says it's going to be pessimism because no progress in the peace talks in the peaceful became.
And now, being down, a lot of businessmen are smart enough to know that in the short run, peace is a bad thing for them.
And the law makes it so right.
In other words, it's uncertain.
They know that, so what I'm trying to raise the points here that, you know, are even growing, is for some of them, I think business has become,
dependent on government, but also more dependent than they feel that they have become on government.
In contrast to that, the blacks and the poor kind saw the direct line between themselves and government.
I'm afraid that a lot of businesses going about business tended to have become dependent on it even without realizing it to the same degree.
So many government expenditures had found a way to bear upon their business in some ways directly to them.
have given them that dependency, but I don't think they had the same consciousness on it.
But now they're developing a greater consciousness on it.
But it's going one way.
You don't realize the factors that cause it to go one way or the other way.
Your more conscious way is going down.
And so many expenditures that have gone out from here have, in one way or another, flowed into all kinds of business.
Even the things that, particularly in some of the smaller businesses that have gone out and gone into cities and states and gone from there, the domestic programs have themselves contributed to business in ways that they might not have made and known.
We're now waking up to the fact that they are more dependent on business.
of the wrong governments than they knew they were, and they're now more ready to ask for that dependency back.
But I would think that the easiest ones to wing off of that dependency, because they're intelligent enough, and even the first, I think that, sure, they'll yell, but they won't yell with their heart in the blanks all the time, the blacks and the poor, you know, because they realize that they're working, I guess,
their own basic beliefs and principles, that is not to get so dependent to the old.
That's a good question.
Yeah.
Well, if they just yell is a fine question.
If they act in a, shall we say, in terms of their investment in the future, jobs, and so forth and so on.
Well, let's put it this way.
The line, the other line that we hear about is that we are quite a bunch of children around that buy these
Which isn't how long a turnaround is going to take.
But by the way it's a turnaround, we have combined with ours on the wage and raise front.
We are now catapulting the economy at the same syndrome that brought on the 69-70, shall we say, downturn.
What's your answer to that?
You've seen some of that, haven't you?
Yes, I've seen some of that, but the first thing I have to tell you...
I don't think anybody is forecasting a downturn in the economy.
As you say, the turnaround on the budget side is quite moderate.
I don't detect from the business or financial community any feeling that the budget is going to be too tight or too anti-inflationary.
I think there's more concern about phase three, but I think that will pass.
And I think people who observe it most closely
I have the most confidence in it.
I was out in San Francisco and I talked to the Friday.
I talked to Washington, California, the Chamber of Commerce, and I said to Fred Hartley, Fred Hartley has been nagging us.
I mean, my first encounter with him was when I was in 1969.
I said, I think we ought to have patrols, and he swarmed all over me.
But now he's in space.
He doesn't know.
That's what I've always recommended.
That's just what you should have done.
That's just what I want you to do in 1969.
And I think they feel that there's enough pressure there at the right points
but not too much to overwhelm them.
I found a bit of satisfaction there with what's going on.
There's some degree of confusion about the rules, which I think will be clarified.
But I think that operating business people and financial people are fairly satisfied.
But we still have a project in our offices.
the kind of thing that he and his group had wanted to be done.
I think that the most sophisticated people were on stand-up.
And, um, it's just, uh, we've got to get across that we certainly cannot, uh, I don't think, want to moderate it in the light of cartoons.
And, uh,
Of course, I think as far as the stock market is concerned, it is concerning, but we are at a rise in this right now.
And I guess the international thing always has an effect on the stock market out of proportion to the real meaning of the U.S. economy.
Nevertheless, it is a big worry sign in the international monetary.
What are you charging?
There's a 300-ranger around here.
There's a 300-ranger to get the two controllers.
And the controllers are?
What about?
I'm just reversing almost.
Well, coming back, basically, to the question of Arthur, this is always him speaking.
Confidence, confidence, confidence.
And I suppose it is, if you would be somebody, if you might be, that three of you, three people, are in the first place, go out and talk confidence back.
All right.
This is what I'm thinking.
There's nothing like confidence, I think.
Every other thing we have, new orders are going up.
But that's not going up.
You know, I think we see this.
And, of course, if the economy is as vigorous as we have thought, if we are so concerned about it, then it doesn't overreach itself.
It doesn't have a little culture.
Let me see.
The economy has to slow down in its real way of increasing.
Once you get somewhere near the full use of resources and then the capacity to grow more, you're at 4% to 4.5%.
And we've been growing at 6.5%, 7%, and so on.
So, pretty suddenly, let me interrupt you for a moment with the line.
Jackson said that John Irving has hit off the U.S. news today.
So it's a very clever line.
He said, well, we'll be in the ocean, continue all your social programs and so forth.
And they shouldn't, and they really shouldn't come.
Where are you going to get the money?
It's like this old normal system.
The trouble is that these industries, these economic policies, they just have more growth than for providing the money that we need.
What's your answer to that?
We're already spending the money that we want our folks.
We're spending the money that we want to have if we have the growth.
And we don't even have the money for business.
That's what the full-fledged budget is doing for us.
We're spending as much as we have.
It seems to me, John, that you ought to be sure to get that line, that to Herb and that, George, and to Troy, so that that is hit flat in the face, and it's just to...
I mean, I know that...
I wouldn't let it end.
I say, oh, my God, we're... What is he talking about?
Crowley.
The...
We're spending money.
Why does the budget, for example, go from 250 to 268?
Where the hell are they getting that from except for growth and some inflation, right?
And why does it go over 268?
The fall next year, it grows by 18 days or more.
That's growth, isn't it?
We're spending money.
I'd say on balance, the worry is not so much the lack of confidence in the company, but the worry that we might not be able to hold out all of those
pressures that in one place or other are letting it back loose again.
Will Phase 3 truly work?
Any other questions?
Will the Congress join the $250 billion budget this year and the $268 billion next year, or will they not?
Will monetary policy really be as effective as it should be?
There seems to be no balance.
The arguments are on that side, sort of afraid of a boom plus.
Well, that's part of Jackson's argument.
He says that we're not managing inflation.
These are the three things to do it.
And if they work, we are.
But I think until they work, and certainly Congress has to be a part of the budget, but until they work, there will be those latent.
apprehensions, and I think on balance they're more there.
They translate to interest rates and the worry about that and shorting through money, I think, over here.
Well, the business is worried about money, and banks are worried about how they're going to make it.
I've heard twice that I've made a speech in New York last week in the student of the Chamber of Commerce, which is definitely here.
Yes, sir.
On the basis of about 10 days' hours of time.
Well, on the basis of about 10 days' notice, they organized a meeting on Phase 3.
And they got a thousand people from all around the country to come.
And we put our people in there and explained and so on.
And I gave an appointment and speech to them.
But it's an indication that people are taking it seriously.
They want to know the rules.
And a thousand people.
So they got a thousand people.
I know they don't meet until April.
But one of the points that I've made at both these talks with Jeff and Chris was
Do you remember six or eight months ago when the AEI and everybody was projecting expenditures and saying the budget was out of control and it was impossible to get a 250 ceiling and the president was out of his mind and said it wasn't going to be taxed and so on.
And what is the atmosphere today?
Everybody accepts that we are going to have a 250 ceiling.
See, when the, even in the Congress, when we testified all day today, they were outdoing themselves to say, by gosh, we're going to keep this budget under this number, and if anybody's having to pay for spending, they're all touched about how they're going to change the priority, but they don't want to bust the spending.
And so the point I made was that the President's standard has turned out all wrong, and now, because of his
determination, and the drive on this, the country has swung around, and instead of supporting the position that all you fellas wrote off six or eight months ago, and all your accountants told you to write it off, and now you accept it, and that just shows how things can change, and that this is credible.
And so we are going to fight for it, but we are going to get there.
To read the newspapers up through today, or to today, not through today, but start with the newspapers.
suggest that the congressional reaction to this 250 million number may let it loose and open again.
And I think that in a few days it could well be with a number of the congressmen like the appropriations committee taking no position in that direction, but taking a position
They can't be put to rest on the outranges, but I'm sure they have to be put to rest.
Good magazines were good today.
Were they good?
Yeah.
And I think they're generally a few of them.
Yeah.
Yeah.
Some of the bills are now missing as they come up, but...
We'll require a veto to reconfirm and reconfirm.
The 250 is required.
No problem.
I don't think we can do that.
We have a lot of problems.
Thank you.
I love you.
I'll be in there.
News Magazine is somewhere.
No sound.
They may seem to think that you'd be sustained.
But we'll have a veto list for tomorrow for the leadership.
Yes, sir.
Might as well.
These are all those vetoed before.
They're here.
They're pocket vetoes and flag vetoes in the last Congress.
And they'll be down shortly.
And we didn't see that we had any blues by just giving a list and saying, here's 11 or 12, whatever it is.
And nothing's changed except that we have to hold the line even more than before.
And so pass the word, boys.
Those actions that reinforce the 250 and the reality of Phase 3, the actions that reinforce the workability of Phase 3, I think is what the people will mostly rest on to put aside what could be some weird worries.
You should be there.
I'm terrified before the Joint Economic Committee tomorrow.
I will send a letter to other people.
We're all there.
We're all there.
We're going to get rid of it.
We're going to get rid of it.
We'll get rid of it.
We'll get rid of it.
We'll get rid of it.
We'll get rid of it.
We'll get rid of it.
I think it's probably double.
It just wasn't what the Congress is doing to our people and our cabin officers who are so damn busy.
Now that you've testified, it's all over.
They've got to, poor damn cabin officers have got to think about that night.
He's got to say, when does he have time to think about the damn job?
I don't know.
But anyway, what Eric is about this, George, you don't buy the market.
You aren't broken.
I'm supposed to listen to all these people.
I do.
I really am.
I believe I've seen a whole bunch.
That's exactly what I'm going to do.
Well, I think that otherwise they'll say I'm just listening to Psy and Psy making it all.
It's not you.
Hogan's saying it's a different, I'm very surprised.
Hogan told me that.
Hogan came in a week, a week, and some of the groups we found before the victory, Hogan came.
He was one of them.
He was very much for this kind of thing.
Hogan came out and I did that.
And he also expressed to me that almost what Edward did.
In 1973, we were not going to have very much of a flush because of just the trend of things and the force of what happened last year.
That would slow down the 72 flush.
It was going to be so strong in 73, and 73 was not the year for it.
I hope that Ackley and Heller, the three chairmen of the council, Kennedy, Jensen, we are all supportive of Phase 3.
But what is it, I guess what they were talking about, both of us were talking about, is the intolerable, you know, a social policy that's intolerable.
We've talked about this before.
Jackson wants open and we're going to be just as hard to get.
That was the impression.
I said, oh, no, no, no.
Jackson said, yeah, okay.
Well, one thing you may remember, Bill Martin, as long as I can remember, has always predicted
And then he makes it his route, it's his method, it's his style, going out and saying, Nick, you're going to hell.
And then all the business groups, they're going to hell.
And I say, well, you're sure this isn't going to hell because we're spending too much.
I don't know why he says it now, but he sure is saying it.
Well, and he must believe it.
I mean, he's never been right before, but he could be right now.
Well, I think what they have done.
I say he's never been right.
I think the biggest problem that we have is the Federal Reserve.
It is true that they fund these supplies, but I think more rapidly than is desirable.
Arthur is conscious of that.
It is true that Arthur, we just didn't want to take any chances in that whole period prior to the election.
held off an increase in the discount rate and various other things.
And we'll pay a little price for that.
But my impression of it is that the January money supply figures have run back down.
And I'm very certainly conscious of this problem.
Although we're hoist by our own guitar to some extent because we pushed it.
Well, take our money down, which we
I think would agree, should be the case, will be higher interest rates in the short run.
And Arthur, of course, has this committee on interest and dividends.
He worries about, for instance, the fact that he's going to testify Wednesday.
And that's one reason why this statement was put out today, so that he'll be able to point to it and say, here's how tough I am.
And I am.
And I suggest, Mr. Miller, that you go to the floor here.
I don't know who's to do it, but that's true.
We must find out.
When Arthur testifies, we've got to be as sure as we possibly can that he doesn't go in and make some harmful predictions, because that could end up being joined with
What I remember I told you earlier, John, that she won't be sure Arthur sees, which I'm sure he does, what Martin says.
And, uh, because we're all in this together now, I see that we should read her arguments for Phase 3.
Yeah, that's right.
And now he had doubts and said, well, uh, he was about to make a statement that was important in Phase 3 of his testimony.
I'm sure that, well, he told me that he would state that.
Well, let's see.
I feel like I could go all the way over here.
Yes, I certainly hope you will.
You know that you could have been a little tired and worried about it, but I hope you will not.
I hope it will be useful to get you, perhaps, your attention.
He's anxious to see you, and he wants to tell you about his European trip.
And I don't know about the European trip.
You're going to have to go to Stonewall and so forth.
So I don't know.
Well, I don't mind hearing about the European trip, but I certainly would like to.
At least he's got to know how much rides on his testimony.
And I don't want to have a very statement from him at this time, or a negative statement from him.
It would be very harmful.
Because they're looking for something now.
Would it be useful to bring them in?
I think it would be, apparently.
Why don't you be free?
I don't know.
It's okay.
I'm going to have to meet with you at the end, you see, so we can just have a little quiet talk.
I'll buy a mini four o'clock so we can do three PS4 when we're on the channel.
I don't see it as an idea.
If you need me on lunch, I'll just tell them let's have lunch and you just keep asking questions as long as you want and tell them you can do that.
Okay, John, if you work on it, I can see, which will suit our, in that bigger, bigger hour as well, and it takes that kick and jerk.
But we can put it off.
We can put it on the same ground.
I remember a serious concern on the European situation.
I want to be sure we get the word to him on this testimony.
I'm not so concerned about his statement that he makes, but what he says in answering the questions, he knows.
He knows what's going to be in that paper, too.
It's better than any of us around him.
Mr. President, I think he'll be interested in your comments about Heath, because Heath was much more optimistic with his, with his presence in the common market that they would be making an effort to get along with us and to expand world trade and so on, and had a rather different
Yeah, but an Arthur got from the various, the Westminster parties.
Right.
Right.
Right.
Well, we'll give him that, too.
So, uh, we'll work on it.
We can't work out that.
Right.
We have a, uh, interesting other thing that, um, John Dunlop, the director of the Cost of Living Council, our prospective director,
We volunteered that it would be a good idea if they confirmed him.
And the Senate immediately passed a law saying that he should be confirmed, changed the law.
And the House reaction is, we could care less.
It's just another thing for those brigadons in the Senate to do.
So we'll take our time.
So they cannot construct a process through which they could confirm him.
Now, under the law, he doesn't have to be confirmed.
And, of course, we need to keep the program going.
Rob Stout has been sworn in as Ambassador to NATO.
So... What would you like to do?
Well, I'd like to be on the sworn in.
And even though we have some connection in the morning meeting about this, there are some problems with swearing somebody in who is likely to be required for confirmation later on.
What, are we swearing on the list of things on an interim basis or?
We're swearing at them.
We're swearing at them?
Well, if the laws are comfortable, we can just swear at them and make some comments about Phase 3.
That's how you expect this program to work.
It's just voluntary, it's your income tax and things of that kind.
It would be difficult to do it tomorrow.
And it should be done in the way of the statements that do not acknowledge that we swear somebody in and expect then the Congress to require his confirmation later.
Otherwise, we're sitting in precedent and we won't want to follow him.
Ron, you may go with that, I think, correct?
I think you have some reservations about this, John.
I think it's how you do it better, buddy.
I didn't worry.
Well, I think we ought to go ahead and get him sworn in and get it out of the way.
And if you don't know how to sign it up,
If it were still alive, and if it was possible to get the house, well, they're going to leave.
Of course, they could immediately respond as being sworn in.
They can change their mind.
It's just flexible.
But that's their position.
The house is going to go home Thursday.
They're going to go home for a long time.
Two weeks, almost.
There is another nagging part of this economy that Herb just touched on that certainly bears on the mind of a lot of people, and that is the international economic issues.
It may not be big in numbers, but it has, and it affects a lot of people's view of how the economy is going.
There was a very sensitive, or apparently a very sensitive response to that statement that Maria made about the Econoplata, from which you...
through a lot of exaggeration or something, a devaluation of the dollar.
There's a high sensitivity.
And I think, therefore, a substantial effect in the minds of industry, not just of the consumer, but the minds of industry.
For a party bill, the balance of payments, what if the industry doesn't think?
What if they didn't think of what it's going to do about it?
While small relative to
Gross dollars, I would pick that one out as one that does affect a lot of making decisions, making decisions, and that is yet to be dealt with in a way that makes everybody realize that we've got some more contending issues.
The more that one gets going down the road, the more it just disturbs a lot of people, maybe more than it should be, but that doesn't mean they aren't disturbed.
don't make business plans here they're all thinking about it you're gonna start making your rounds
and she might want to look at her, that I would then use myself, and others who went and talked to somebody would also use, so that we could be talking the same line, seeing what reactions we get.
So we are in motion.
I'm here to find syllables to talk to bills.
We'll talk about the bills at the log and the meeting, and some business group.
Is anybody going to...
Yes.
I think the footage would be pretty cool if you wanted to talk to him in person.
That's what I'd like to tell him.
Brandon, of course, is going to be filled in so he can say the right things.
He doesn't meet with him, so before he goes, is he going down?
I don't know for a fact, but I'd be able to assure that he's going down there.
One thing we might do...
When does the executive counsel meet with you?
Well, they start meetings and they go on for quite a while, and I think the executive council itself meets in the middle of February, but I'm not absolutely certain.
I think it's very important that that council, I'd like to have that council this time really get a full load from us.
I think, uh, I think Brennan, of course, has got to go down.
So if they want to hear something, if they have something on there now, if they want to hear something from the transportation guy or, you know, anything, let's say that to Peter, and he asked me to.
I think it's easy enough for me to do that.
Well, I think this, I think the thing to do is to talk to Brennan about it.
He, uh, he meant to say, now, here's the problem.
If your parents were to give you a cane, you would only go on the day, you know, which is supposed to, so the grantor realizes that the purpose is not to.
Right.
His position and his first counsel meeting must, by all means, not be, you know, all downgraded.
That's important.
Right.
And the fact that he did appear on the story, not answering the questions, I think, I think it has to do basically with this.
Or the possibility that Bill Rogers and I talked about.
Bill is a great fig.
I mean, he's tall.
And he said we might both cadet.
And we can play golf with him and talk with him.
And do the trade subject at that point.
That may be laying out a little thick.
We have to keep it as soon as possible.
I'm happy to consult with him.
The fitness is not there, of course.
The fitness is out of the box.
We'll go out of question and try to get it opened up yesterday.
John, another thing I think would be very good for this is if Bill were down, Bill could get a foreign policy agreement.
They like that.
that I didn't even consider going over myself.
Again, as we can see, that's separate.
That's a little late, isn't it?
The 50.
Let me check those.
Check the base.
Check the base.
I don't know what it is, but I think we ought to be sure to keep those labor people
I mean, there are various ways to, you know, keep, you know, communication with them.
Waterfalls, if you will, they like to talk to us, and so we've got to fill them in on things there, and so forth and so on.
In fact, I might even do it in the summer, right?
Give us as much time as we could.
They love it when they send me a phrase.
That's it.
Well, that's a very good phrase, that issue.
But he has a couple of other things that's common to keep up there.
What is the prospect that you're talking about on this strike?
I was talking to Senator today, he came in and he was, he's a person.
He said that one of the ones that we really need, we've got to avoid this year's major strike.
Well, that's true.
Well, who's going to do it?
Big marketing situations are electrical, general electric, rubber, the Teamsters.
Construction, of course, is going on all the time, and automobiles.
Now, the Labor Management Advisory Committee that we set up with Phase 3 has met twice.
You know, I told you I thought the meeting today was that group.
I didn't realize that they could find any other one, but I'd be glad to meet them.
That isn't around yet.
No, they are going to meet February 23rd, I believe.
But perhaps before then they will have their statement.
They've made a lot of progress on the kind of statement about wage behavior in 1973.
And directly on your point about strikes, they call for responsible and moderated behavior and so forth on strikes.
And I think that the people involved are agreeing to lend their good offices to help them down.
And in the GE electrical thing, I met with Jones, the head of GE, and Bill Ussery has met with
I have some opinions about that both parties are
tell us that they've made a lot of headway with the other party in trying to negotiate this after-down strike.
That is the same spirit we get out of the automobile situation.
Trucking, Fitz has got that structure much better than before.
He's got the Chicago local, which is one of the things that makes it very difficult.
He's got that position better as a result of some of the work we did on the phase two.
Can I ask one thing?
To what extent is spit going to have to be meaner and rougher because of the hopper breathing down his throat?
I saw something in the papers to the effect that the hopper breathing was part of a number of years and years ago, and so forth and so on.
And John, on that point, I just want the message to get out loud and clear that the hopper can't get back to that.
Isn't that true?
Is that what we, whatever we gave to the population, is that what the conditions are?
I'll go back to that.
He is, I think he is, he is sort of gradually violating that.
And he does things that are connected with union activity, like this dinner.
And that is a problem for Fisk, there's no doubt about it.
Well, the reason I think it's a problem for us
Fitz has got to prove that he's a stronger man than Hoffman.
He's going to have to be rough.
But what are we going to do on that, John?
You know, I don't know what the...
I recall very clearly that it was ordered that they would resign.
That Brennan passed the word flatly.
Well, Brennan must get the information, it seems to me.
Fitz knows.
We told him, but through his round, you checked too, and I came back and checked with Colson to see what he's told Fitz.
But I think Brandon's got to know.
I mean, he's got to know what the conditions are on Hoffman.
We were just talking to that Hoffman about this semester.
I think Fitz wants to play ball.
You know, he wants to be responsible.
Yes, he does.
He thinks that he's a lawyer down here, and that's great.
But
If Hoffa is after his job, they can never do it.
Right.
That's it.
Any union activity on his part is a direct violation of the legal code.
Oh my goodness, that's my price.
Anyway, if Hoffa moves at all, the business is going to get tougher with us.
That's what I'm afraid to do with the fact that he's going to have to prove that he's gone local in the restaurant.
This just doesn't hold you accountable.
But maybe let's cool Jimmy down and let's get Fitz in here pretty soon, too.
Particularly if I happen to work it out and go to Miami.
I think it's very important.
I think Brandon knows what he's talking about.
I want to be sure Fitz gets in here.
He's going to get the equal treatment that we need now.
He could be awfully useful.
Fitz has been very good on all these issues.
He's a deal-winner.
Not that he hasn't represented his people well, but he's been willing to listen and try to work around the situation.
And I've worked with him around several of them, including the Chicago one.
But at any rate, going back to your comment from Salinger, I think that despite the fact that we have a lot of collective bargaining coming up, we at least have some prospect that we should have a big strike here.
You have good attitudes.
It's got to be some labor management.
We could have it all.
Just the jackass strikes, you know, which you always have.
We could avoid a big one.
That could make a terrific difference.
This labor management group is taking itself very seriously.
The discussions are excellent.
They're interested in this question.
And it might be that you might want to make them
into this commission on industrial diesel that you talked about.
That was my next question.
Why don't you want to work with that?
And that commission.
And incidentally, on that commission, should we ask Jim Hodge to serve on that?
Or is he on it?
He would be a very good interviewer.
You see what I mean?
He's one of the contributors and experienced .
And we'd better see a recommendation.
It could be that this group is one that we could expand a bit to include a fellow like Jim.
Another one that occurred to me that we might include, and I don't know whether it is now, I just thought it was Martin Goldberg after the Vietnam thing.
How about throwing him in on that?
Can we have him?
I mean, I'd just be worried that... You've always thought we could have him.
Well, I think we can handle it, but I don't know that he has that much to contribute right now.
Maybe we can do something else for him.
Put him back in the Corps or something.
He did all the rules or something.
Oh, I forget it.
But, of course, I think definitely if he'll do it, I would like to have him on this.
What do you think of trying to get this group that's working together to be the Corps that
If they could be, if they were willing to accept the appointments, it is such an extraordinary group.
I don't know whether they would be willing to.
It's a great fly off.
Your earth is pushing so hard to get that farm labor out because the city should have had a staff voucher.
It should have been one of your clients.
Well, yeah.
Well, let me see here.
What thing there could we have a real ally in 50 years?
Well, they're competing for every lender contract and every farm.
They'll bet how long they're going to have to fix it.
You guys should have some of those rulers.
Yeah, yeah, yeah.
That's right.
And he's doing a lot of business on that basis.
Is he?
Sure.
Well, let me ask this.
Let me say the reason I wanted to come was not simply to read formalizes for time.
We just ought to get together for, you know, 45 minutes or so just to be sure.
I'll pick up at a separate hour.
I usually read the weekend news.
And if I see some people are going off on various things, I need to...
have a view that our own people are, and all of you who follow this, that we are not reacting to it, but that we are reexamining our own process and sticking to the plan.
My own view, for whatever its worth, is this.
When I think of the fact that what, the success of what has happened, Herb and George and
And frankly, the cost of living council is a separate voyage for us initially.
When I think of all the dire predictions that were made at the time of Phase II, and frankly, my father's a student, I remember when I said to him, he always said, he didn't know if he drove a good ship, he had a little...
But anyway, after all that, and we look at the economic record in 1972, it was one hell of a record.
Now, we must have done something right.
And all year long, we had these people sniping, sniping, sniping.
Now, we got to keep going.
And we think it's good, but we cannot be absolutely sure.
And we never will in this kind of an economy.
We've never predicted for certain that it's no longer the case.
The three of you, you know, you, you, you, you, you, you, you, you, you, you, you,
John, you are always the person who is out there talking to the radicals so you can talk to what they want.
I mean, I thought this was a very economic thought, but that's pretty radical.
But what I mean is that, John, I didn't do that.
It seems to me that we should approach this whole thing with confidence and we're doing the right thing because if what is reflected in the
and stocks aren't generous, and so forth.
If that is not reflected in the country, then we better handle it.
Now, the other thing is this.
As you know, I'm a care watcher for the business council because of their, shall we say, lack of support in our campaign.
They do, of course, affect people
And they have their meeting.
And you've got to have them go down there.
But I wouldn't send the whole administration down.
I don't want anybody in the foreign policy field to go.
By there, you'll determine.
I don't think John, you should go.
I think Kurt, probably Roy.
But don't spend the whole week on that, because that's the only thing.
Did our friend take it from San Francisco for presentation?
Yes.
Well, I tell you, that's the only reason to go, and that's a good reason to go.
And there are some good people out there.
I came into the state camp three weeks ago, and asked what he could do with that.
It was just before the announcement of Phase 3, and I said, well, you can get some of your business council friends and get them over here in the afternoon or so.
have something to talk about in the wheat and rice business.
And he did.
And he worked in with the pre-made Blue Ribbon Group of American business.
And I talked about phase three.
And then Dave received a lecture that told them that they had to cooperate with this program.
And it was up to them to show some leadership.
And they all started nodding.
I'll let you see it at the end.
Because Dave is such a terrific citizen.
I think we should have a policy of whether he can come in any time.
I don't want another member of council.
I have other people I haven't seen in business now that didn't get in person in so long.
I always, if the business council wants to say anything, they can come in and say it.
But anyway, as far as the administration is concerned, I think we've got such an intimate story to tell that I think we ought to try to, I think, obviously, identify the new secretary.
But he is, he will not be considered anything too sophisticated.
God, I don't know that much, even though he's a member of the outfit.
But you will impress him.
You will impress him.
You can.
It's a great job.
But I mean...
Uh, there's also another thing.
Uh, this, uh, you looked at the steps in the international treaty.
Excuse me, what were you going to say?
The Council of Georgia and I are on for the next meeting that comes up and takes place here in Washington, here in a week from now.
So, uh, we've already got an opportunity to give up on two of them.
Well, I will say that I will say that if their time prevents you for her.
Well, that's what I'm going to say.
They asked me to after he had this meeting.
I'll be on the next day.
I'll be on the next day.
I'll be on the next day.
But I have a feeling myself that, what do you think?
I mean, Roy, you're in the outside, so what do you think?
Is it a good group to share?
And just as you said, they're a better thing.
Yeah.
But what do you think of what we have done?
We didn't enter 1272.
It's an uncertain science, as we know.
But we've got a plan.
We've got to stick to it.
We must be knocked off balance for the fact that things are happening here and there.
All this international thing.
We talked to Heath about it.
We're going to work with Europeans.
We're going to work with the Japanese.
And we'll have them trade bills of some sort out of this.
I think the key basis of the respect that the world has for the economic group here is that it's a group not just a theory but an action.
It's the action that provides the leadership.
The fight right always has to be made in these people.
Because this is a friend of mine.
Look at how it's turned around in a couple of years.
Two years ago, everybody was saying the United States is serious about the dollar, and now it's been two years, and now there's a balance of things.
So you've got a balance of things, $60,000, $100,000, $300,000, $500,000, and that's a whole other thing.
It's kind of a buster system.
here, they sort of stand in awe of what we've done, right?
And who's doing better in the world?
Are the Japanese doing any better?
No.
They're doing, I don't know.
They're tough.
Today, or the weekend since I last talked to you, the Germans put on fairly substantial control over the inflow of dollars.
And today, in the markets, they open rather quietly with the saccharine, and apparently the tempo is picked up, and there is continuing pressure on the dollar.
We did not use, last week, the slot rights that I talked to you about, because we didn't need to.
I'm not certain what has happened with the saccharine, so I'm just admitting we'll be in touch with it.
But having made our contribution, so to speak, I think it's fair to say our group would advise that we not knock ourselves out to keep feeding in more dollars, but a lot of pressure.
And I think the way it's going, the pressure will gradually move around and become very heavy on the Japanese.
You've got a good man here.
Yes, he's great.
But apparently his reports from the multinational corporations are, he has one of the companies in Pittsburgh, that they are moving their money out of dollars now, they're trying to sell dollars, but they don't know quite to who.
It's going to be hard to do it with the bargain.
I suspect they'll wind up at the end of the hour.
So we may have a week of turmoil.
a demi-crisis in this area.
And it may be the kind of package that you and I talked about and wanted to consider.
And I was hard to agree at this point with you.
Yes, you got a little bit here.
Well, we'll meet some more, and as a result of that meeting Saturday, Bill Rodger attended the whole thing.
We will have a trade component of the group, and we'll go over thoroughly with our group, and then we'll see what we're doing.
Well, we're all, you all will find,
would be under on fire and so forth.
We can just hold it for us.
What we all of us throw around on the shop is that we believe we're doing the right thing.
we will go on and have a regional future.
And not just massively hold the course, but hold the course with the power on, so that we're dominating the way that everything is characterized, and if we can, our story is the one that is the one that is necessarily going to be followed back.
In fact, I think the statistics of the next couple months are going to be very, very long, both the price side and the trade side, because if we
If we see some big, a couple of, two or three months, big increases in industrial prices, that's going to worry people.
And if we don't, if we see some more amounts of big trade, that's what we can't do.
So what do we do?
We're almost certain to have a month or two.
rises in industrial and wholesale prices just because that happens when you change the system and the things that were in the pipeline go up.
We'd better say that this kind of thing, we have done that, although I don't know that we've made it as clear as we did in the moving phase, too.
And I think that's right.
We have to make a little more noise about that.
On the trade side, if we have continuing bad trade figures, we'll be ready for this.
This is our challenge.
That's what I, what I, what I feel on the trade side.
The whole trade union, the international, so much of it is psychological.
Now, if we get a very, very strong bill in which, for example, you have that and make a very strong presentation of it and have it as one of the components of this provision first,
stopping the flooding in the market and all that sort of thing.
And whatever other things you can have.
In other words, emphasizing the protections rather than the other faces of what we, because we're doing that in order to sell the other, we've got to have this.
But if we do that, that can have a terrific psychological effect, even though it never gets through.
Do you think so, Larry?
I think so.
The doctor said that we can say something, and I'm now being fairly quick on that.
We can do that very soon.
It is a psychological issue.
Just that you've had such great success in changing the perception of the budget to the full employment concept of the budget and brought a lot of people over to give a perception and give opportunities to the seamlessness of trade and balance of payments to change the perceptions of what it is and the process and don't deal with the psychological most.
And part of it is that we get
concentrating on trade, per se, without the fact that it's really a part of a bigger view of international transactions, international business.
And we need to counterpart it with a full employment approach to the whole business of international trade so that we don't narrow in upon the thing that will quite often be, and maybe continually be, negative, when in fact perceived a different way.
We will affect the psychology of the view of it, and it gives room to
Maybe we could really say, let's do something.
Why don't you people sit down and get away with it.
As I say, we think of a $6 billion deficit and a trillion dollar economy.
And you say that everybody should worry about the value of the dollar.
I'm guessing we can talk later about some of your thoughts or ideas about that.
There's a certain thing I'd like you to say.
You can't... Yeah, we don't want to say that it doesn't matter.
We don't want to see that there's any difference.
Because that's the one thing they do.
What does it say on the full employment budget?
versus, as we call it today, the actual.
We have affected a lot of people's psychology by then.
There are a lot of concepts of bullet blood over and above other bases of knowledge.
So, frankly, I didn't, because I always said to her, because I know that he paid his son when he was over at Brookings.
So I started wondering, well, is it all about that license?
Just, just.
figure, just a way to justify doing something against.
So, but now I can see that probably he was wrong.
I said, but the numbers of health, they're not that many who are smart as we are.
That's all.
Well, the reason is, I think, that at least that's our vision of it.
Examination of the evidence has worked.
The economy has risen.
Inflation hasn't come down.
We said that as the economy came up, we're going to call the rest of London.
We'll call the rest of London.
We're going along.
And the other micro is the so-called actual deficit.
did not prove to be an inflationary force, but the economy was not going to go on a flying run.
That is the chief thing that should be said of the people now.
They have an actual deficit.
An actual deficit, on the other hand, in 1968 of $28 billion, when the economy was having a full-fledged, about a 3% flood, and it was terribly inflationary.
And that's the way I see it in my single-minded way.
Well, I think we could work on that in different ways.
As a matter of fact, let me say, my final thing to George is instead of throwing that trade thing out now, wait until we get the next month's bad figure, and then hit it.
Because if you throw it out now, and then you have two months of bad figures, you see we've already shot them all.
People will say, did we have this?
I kind of think that maybe, and also give you a chance to think it through a little more.
Like, don't rush.
Like, remember I said, let's rush it right out.
But when do the next figures come out about the trade balance, sir?
Well, you need three weeks to work this up much?
I just like to wait.
We need to do it right.
We need to go talk to the law and talk to the House.
We need to see the very fact that they're talking to these people.
We'll get out some service, and that's good.
That the leaves will help someone.
The fact that you're talking about it.
That's what I'm going to have happen, Tom.
And this is one case where I'm going to worry about that we're considering this and that the other day.
Then when you get a figure that comes out of bad news, you can't hit it.
What do you think, John?
Rather than hitting it now, this time.
Because I always find when you hit something and then they forget it three weeks ago, you've already dealt with the problem, at least with some sort of a legislative thing.
I say, oh, he had something that didn't work.
You know, the Congress had to pass it.
You'd be between two bad reports.
Right.
That's what we would think.
Well, maybe that's going to be our strategy.
Aren't you all probably also having problems with the turbulence in these markets?
Well, maybe we actually want to make an acquisition or something about it.
But, well, that's not a big deal.
If you believe, if you believe that coming out with your trade proposition now will help the turbulence in the market, then it's worth growing nothing.
At that very time, I'd say we expect two more bad months.
It's better if we make it straight up.
I just think that we might get at least a number of bad months.
We expect them to get better.
What we expect is that for us.
If we don't get better, the hamburger's going to come down our face on the other day almost.
It's fortunate that we're back.
Well, we got up here.
I've got to go over and see my daughter.
She needs her life.
But we got here, and that's the three of you, and John's the guy who's got to go up here.
I think we've got three people that really understand that we all work together.
You see, the thing that Roy brings, that Kat brought,
He had a political system.
Roy was the great business background for us internationally.
We've got George, we've got Kurt, and I had the three of us sit down and quite candidly throw all of this, if they don't, and then knock them down.
And I want you to feel free, any one of the three of you, when you think there's something that I ought to be or that I haven't, why mention it to John, and John will see if it gets on the schedule around here.
We'll get together.
That's not good to you, all right?
And sometimes we'll meet maybe once a week.
Sometimes we'll meet once a month.
But it depends on what we need.
At this particular time, this program is still on.
I mean, don't let the Congress get you down, brother.
As I told you, I'd like to do better.
I'm on my side.
I'm on my side.
I'm on my side.
I'm on my side.
I'm on my side.
I'm on my side.
The only way we're trying to shape this trade business is to align it with the speech that you made and then that I made over at the IMF.
That is not an approach, that's a strategy.
having to take some implementing steps.
In fact, we have always held that trade matters and money matters were connected and so on.
And I try to make this seem like it really is a sort of continuity in policy and strategy.
This speech, for example, if we do get one on trade, particularly, that has the, let's keep the burners from flooding our markets with goods and products, that this is something I should make, because it's a good political speech.
If, on the other hand, it's a speech that says, let's trade with all these burners, you make it.
Okay, we'll get this speech.
By the way, if you ever get home, don't do it.
I'm now confirming the rumors that I've heard so many times, and as far as the security works, they're four hours from any place out to the private side dispatch.
Now, we give you all a very good example.
Every other Thursday evening, I have a couple of other little steps.
So, let's go see them.
Bye.
You let me know about that time.
Take care of it right now.
Thank you.
Don't move.