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It's the power of Mr. Dunlop.

Can you imagine those thieves?

I mean, the doctors were before he had their income, and again, he was in charge of the election.

Again, he has the power to reach, to come and make their time alive.

Let me suggest one thing, though, that this, that Arthur makes a very, very coaching political point.

Part of the reason that some of the congressmen and senators were willing to vote for an extension, even in this half-assed way that we got it, was that they figured the administration was going to do something.

In other words, there's been talk about a freeze and so forth.

Now, therefore, expectations that we're going to, quote, do something have been raised.

Now, secondly, yet when these numbers come up,

Friday, we'll say, yeah, all right, fine.

When these numbers come out, we say, no, we're just going to talk it through.

Then we have a rather significant problem.

Now let's see what the problem really is.

And while I say this, they can squeal, and the commentators will squeal, and the congressmen will squeal, and all that sort of thing, and I'll have some more boycotts.

But I don't think there's a hell of a lot they can do, because in terms, if they're really concerned about the inflation, they've got to stand with us on the budget.

Because that would make it worse, correct?

Right.

So, on the other hand, Arthur's point about the confidence of the country is that the country can lose confidence because the war is over, and the war is going to lose confidence because of the big boom in prices in July.

And so, for me, it just may be that the American people will usually look at one paternalism.

And maybe someday they're going to have to do it.

But they should have said, well, I'm going to get it from me.

And they're not.

So now what we have to do, though, is try...

I've got to do the math.

Particularly God.

And put in a few teeth there.

There may be a hell of a lot more other things we do.

Do a lot more selling of what we do.

When I say selling, frankly, 11 of the people say, yes, of course you've got to do it.

They're high.

rate of inflation that greatly concerns us.

That's why we're fighting the back of the budget.

That's why we put a ceiling on meat prices.

That's why we have pre-notification.

That's why we're doing these things.

But, folks, it's going to get better.

And you've just got to tell them that.

And it just can't stay at this level.

It can't do that anymore.

You don't think that we are.

You don't see 10% for the next three, four months, do you?

No, I don't.

I've got another suggestion to be honest with you.

I'm telling you.

And that is, this is going to add to your burden, and maybe it's impossible, and I hate to say it for the sake of this, but I don't have the confidence in this advisory board that George Church has.

Am I saying that George is wrong, and I'm right, or am I just telling you?

I'm right, of course, they're right.

Yeah, this advisory board.

Now, if you would do

If you would join that group as its leader, how often do they meet you?

Hell, yes.

How often?

If you would, they would.

I'll meet them every month.

You'll meet them and just ask them, God damn it all, to respect that wage guideline and work towards knocking it down.

Yeah.

Please.

I know.

That's right.

We can't ask them to knock you down at this time.

I realize that.

For God's sakes, to stay with it, not to go about it.

And to indicate to the country, that is what you're doing.

That you're going to work with that committee from now on.

You'll be the chairman.

Now, that's a very healthy influence psychologically and in substance.

Because you can influence these elements, Mr. President.

If I get my bags...

Why, Joe, you know, to do something, sure, you've got a tougher group.

But look, you're the president.

You're the president, and believe me, there are very, very few people in the country who can take on the president.

Congressmen may, but businessmen, even trade union leaders, I don't think will.

And if they do, they're going to lose.

George, when you try to take him on and buy Joe, you remember that?

You tuck him on in his old... You can't help it.

Yes, may I ask a question about pre-notification?

I can go so far as pre-notification, I assume it means that phase three criteria, I guess, for pre-notification to take place, but what effect would it really have on prices if we look ahead...

you can see announcing it, and it would be some sort of indication of action.

But first, you'd expect it to have any effect on prices except for a little bit of delay.

And second, even free notification has to come off at some time.

And what are the consequences at that day when it comes off, let alone the consequences of having probably minimal effect on prices, even if we had it?

So maybe only get a free notification is the announcement that you're having free notification.

further problem to come off at a later time.

And then you have to say when will that be relative to the next election, which may be even worse.

So maybe pre-notification doesn't lie very much, except for the very day that it's announced.

Well, I think that gets you the bureaucratic lag.

But as far as we know, as far as we can tell, companies that raise prices are not violating the standards.

They're just doing it quicker.

and whatever like that, because they don't have to get a bank to prove.

But in this case, you know, violating the standards, why do you say that?

The profit rate now is shooting up.

There is first quarter profits, we estimate, from the other quarter country.

I think the threshold question...

exceeded this 1.5% average price increase.

And on the whole, they haven't.

Well, I...

I... George?

I have not examined it.

And I'm not speaking from direct knowledge.

But I have some practical intuition about economic affairs.

My guess is, and I'd lay a wager, that a large number of them have exceeded it.

Well, hardly so.

Though we have examined it.

Yes.

We might go a step further than pre-notification.

We might ask those who have raised their prices since January 10th, the largest companies, to come in and justify, to submit a justification for what they have done up to now.

Pre-notification is a requirement for the respect of the future.

uh, we would then see whether artists' practical intuition is correct or not, and whether they can't justify it within these standards.

That would also, also add to the bureaucratic load of activeness, uh, so you can't raise any price to justify what you've done until, since January 10th.

And, uh, if there are cases, that would access, that would access the standards.

But, that would, that would sound, uh, I take it, a little more frantic.

There's nothing that you do in such things as lumber and some of these other critical problems, I suppose.

It's a supply problem.

Okay.

But if you have a pre-notification and debt, except for a very minimal amount like one-tenth of one percent, prices were affected.

We've got a system of pre-notification that turns out that this practical judgment or intuition wasn't right, but instead Georgia's statement was right.

And now we've got the system, and it has affected prices in no meaningful way at all, not already.

So secondly, I think the kind of threshold question here, we've been talking about prices to a great extent, but the threshold question, will pre-notification have any bearing on what labor settlement expectations might come out of this year's settlements?

If the answer to that is yes, then that's probably a good thing.

If the answer to that is no,

Then where are we with pre-notification having no effect on those numbers?

If the pre-notification is more than work, it means the cost of the living council is alive and active and holds up for some increases.

There'll be a delay, but maybe it did not affect the delay.

The bureaucratic delay is... What you define as a delay, and that is one dimension, and the second dimension is...

getting a smaller increase than would otherwise take place, apart from the delay, or possibly getting no increase at all.

And I think there will be some variety of cases like that come along, and they're bound to have some effect on wage market.

There is another side to that.

I believe it is true to say that most of the prices are lower because of Phase 3 than they would have been with all the machinery in Phase 2.

And as all those people were in for price increases,

and they would have gotten some and they have withdrawn them except for chrysler and i think chrysler must be getting beaten down in the marketplace in reality so that i think these processes pull price increases to some extent and i think myself all of this talk in the last six weeks about reasons

A little bit of a rest.

We will give you

That's the average weighted price increase that we would permit.

That's how we got the term-level pricing idea.

We said we would allow you to find wires.

They first said 2%, then they said 1.8%.

We said we would allow you to do that in the course of the year on the average without pre-notifying.

Otherwise, they would have been swamped with all these pieces of paper.

And what we did in phase three was to extend that term-level pricing idea.

Instead of 1.8, we made it 1.5.

We said, without notifying,

You can make an increase of 1.5% on your average price.

Now, it is easy to think of 500 companies.

He's coming in with a little piece of paper.

But when you think of what the Dow Chemical is coming with, or U.S. Steel, or General Electric, it's an awful lot of money.

How's your answer to that, Arthur?

Well, they could come in, you see, they could come in on their major products rather than on the one hundred or one thousand different things in their major products.

They could come in with an average of their major categories, and you can keep down the pieces of paper in that fashion, and then you pick your cases.

Now look,

In this committee, in the interest of the other ones, we have a hell of a lot of pieces of paper.

We don't have a standard looking piece of paper.

We pick out a few key ones and go, you know, go to buy a number of those.

So that, well this isn't a large part, Mr.

Frost.

Look, this is a nuisance.

But the, the question is, can you escape it?

Or will you not get something a hell of a lot worse?

We are in the throes of the energy address.

We've had a lot of candor in the President's energy message.

He says in his energy message that natural gas prices have got to go up a lot, not just a little bit.

We see in the oil industry that where we put on mandatory controls with pre-notification on sub-Earth,

And what we got out of that was a shift in where oil companies will deliver to the places where they already have high margins and away from things like mass transit systems and school districts and so forth where they don't have high margins.

So they have the effect of raising their price, their average price charge, but they haven't changed a single price.

And it's just driving us crazy trying to take care of all these little districts around.

So we're always, I think, with that kind of a problem.

But we have started down the road of candor in the energy situation by saying that there's a problem here and one of the answers has got to be our process.

Mr. President, the question I asked earlier, what is your estimate of the effect on the wage settlements of whether we do or don't have pre-notification, putting aside prices, because that's kind of the threshold as to whether we will have done any good from the whole process of whether we can affect the wage settlements.

Will it make a difference one way or the other with this pre-notification?

Well, if it does, it will be marginal.

It may have some effect, not so much.

through the attitude, as through the attitude, that it may set them up in their bargaining if they feel that they can't just somehow or other pass it through.

I think that that would be the only .

I would just suggest as great an effect would be the suggestion that the president would adversely be known that he's terribly interested in the conduct of the labor, as would be

Well, it seems to me that one thing that we could do and bring back to the president is sit down now and make a program for giving a stronger administrative standard to phase three.

At the time that the Economic Stabilization Act renewal is signed, and whether it should contain pre-notification or not would be a question.

Or anything else.

But we have done an awful lot of things during the pandemic.

What we want to do is this.

What we can do.

and believe me, do some things that maybe just we all know isn't gonna work too much.

Frankly, it's psychological.

And then what we said, I realize that having gone through the business of the ceiling on meat prices and not having accomplished too much in terms of psychology, that maybe this is an argument, but anyway.

We've got to have something to do.

There's something to do and something to say.

We have to have that so that we can get there.

And then a program of how we lead on this thing.

So if we're in the House, then can we get this?

Would you mind putting your best efforts to this?

Prenotification appeals to me.

Let me say this.

I think something, I don't, I'm concerned about the idea of getting people used to thinking that controls is the answer every time the economy gets in trouble.

Mark, you got your point?

But I also am concerned about our standpoint.

I'm highly sensitive to the political thing that expectations have been built up as a result of the way this economic stabilization has gone.

That if we don't do something, there could be one hell of a letdown.

Let's say, oh, their administration has got this power and they're going to do it.

Now, whether pre-notification means much, I don't know.

Mr. President, can I have a question?

I would tell the truth, really, is the question.

My own view is, my own view is, after hearing all of this, my own view is that there is nothing that we can do that's really going to help.

Not really.

It's all marching on and controlling inflation.

On the other hand, we do have the usual psychological problem where we have to do something to deal with that because that occurred very badly.

It gets out of the line.

So, and I know it's a tough assignment for you, and I know you had to be slutted about it for a week before we came here, but, and I'll think about it, too, in technical terms, but the expert is something we can do, and then a program of what we say.

I think that's .

Could we, in the, oh, there's, yes?

trying to move the psychology toward the free market that is pointing up really what the market pressures are that have to be recognized.

And the energy picture is a key case in point that we know that we're gonna have to have higher prices, and we might as well face up to that.

There are choices between higher prices or greater prices.

And have some of that,

noted there as well as administrative things on page three the problem with that first words we'll take care of lots of things lots of problems is that certainly signaling to the labor unions that we're now in moving toward free markets in the negotiations they're about to enter into and that they feel that we've now taken off the restraints that we expect them to live by

I'm sure wordsmithing can do our job here, but it's very easy to say.

I'm not proposing to lose anything that we have.

But I agree we propose to make some adjustments which are in a tightening direction.

But also, we're telling people that the ultimate solution to this problem does not lie in this box, but to go backward seriously with respect to it would be adverse to their interest in many ways, I think.

When does this thing, has this thing passed?

It's not.

My last reading an hour and a half ago was that it looks like

This is not on April 30th at noon, but that's what John Dunlop told me that they're doing.

They're going to, I'll tell you 10 times again, that's not on April 30th.

They're kicking it right here until then.

There's a lot of maneuvering going on, I think.

There's different ways of presenting it.

I would start by congratulating the Congress.

And when mad money is about rollbacks, prices freezing, all prices roll over back, freezing interest rates, and let that happen, we've got disaster in the country.

And have a few paragraphs of that.

Right.

Congratulate.

Make them feel that they'll cost you nothing.

Sure, sure, sure.

I read them all.

It raised expectations for a while, but then those expectations got punctured.

When those people got up to it and they began to feel the pressure, they backed off.

Go ahead.

You can't ignore it.

and there are certain measures where we will rely primarily on monetary and fiscal policy.

There are certain little things that must be done, and this is what I'm going to do.

I'm going to spell out the program.

In that setting, rather than really try to make this any general question about the free market as such, you've got to bring that back in.

It'll be in the way.

An abandonment of free market disaster would have been wrought by the Congress.

Now we're fighting at the fiscal policy level.

We're going to continue to exercise leadership in terms of trying to level the upward pressures of wage price demands.

I think they are.

I mean, I can't see them not .

I mean, a better thinker, but the American people never have.

They're really not there at all, you know, just rising phenomenally.

You know, the statistics here can be just .

You know, an economist or a government official,

He sees what?

Consumer prices going up, going up.

And he looks at the wage curve going up, going up.

And he relates the two, and he may reach the conclusion here, meaning the loans for his consumer prices will be disturbed.

That's the way the government looks at the facts.

And that's the way some government officials look at the facts.

But that's not the way the wage earner or the man who works for a salary looks at the facts.

The curve on consumer prices for him is real.

It goes up month by month.

That's what has been happening.

What about his wager salary?

He's been on a fixed wager salary for three years, or two years, or one year, or six months, because wage changes take place by steps, isn't it?

Now, if you cut your wage in Greece,

A week ago, oh there, you feel very good.

Not so worried about the cost of living.

A month ago, the same way.

Six months ago, you would have forgotten that.

Three months ago, hell, all that you see is deterioration.

Therefore, the typical attitude...

of the wage earner, who sees a step-like wage curve, and the wage curve horizontal costs of living rising, he sees his own position deteriorating.

Now this is a psychological fact we have to recognize in our policy making.

And to say that people are better off is one thing.

To recognize that they don't feel better off, we have to recognize that.

Because feelings are a fact in and of themselves.

recognize that as a question of whether we can do anything to make people recognize the truth.

And I think we have to do both.

We have been making obeisances to the ignorance of the public for a long time.

We're going to go on doing it.

We ought to sort of try to correct a little bit.

I think our little gestures of that

complimenting the Congress on backing away from these silly things is a good way to teach that lesson.

Now, where do we go from here?

When would we be ready to meet again?

Well, let us try to construct a substantive program and try ourselves on the statement of some kind.

Right.

That might accompany the signing of the act.

Yeah.

We will thereby try to combine whatever programmatic we can think of with some words that you could use.

How about a meeting of this flavor management group?

Is that a good idea right now?

I guess we need to blow the damn thing right off the roof.

Well, we have one scheduled.

There's a meeting scheduled for May the 2nd.

And I know Willie Brand is here, those first and second, but if he could spend some time with those second, I think that would be quite desirable.

And they're all in the industrial piece side.

Sure, sure, sure, sure, he'll all be there.

But we ought to build it up.

We're going to go there and have a real go at it.

Try to cool me off before he gets there.

I don't know if you want to change the numbers for that time.

No.

As of now, I think he is...

Not scheduled to be there.

Substantial to be there.

But maybe you can rearrange that.

I just don't know what the plan is.

Would this statement be come out the time that the bill were enacted?

If in fact it's delayed all the way to April 30th, which you would have anticipated, or tied to whenever it comes out, whether it be soon or whether it be April 30th?

The difficulty with this, I think it has to be April 30th for this reason.

If we act, and they all say, well, this action is so stinking little, then they're likely to pass a lousier bill.

So the best thing to do, I don't think we can say anything about what we're going to do until April 30th.

Or whenever the bill becomes helpful.

Yes, if they have Congress acts, don't you agree, Arthur?

Because they start to say, well, they might do something down there.

And we mustn't give them that excuse to vote against us on this thing.

Let's get the best bill we can, Roy, and then make a little pitch.

And a good one, too.

I mean, I work hard on it.

I'll be glad to meet with you, talk to you as much as I can contribute to it, but whatever role you want, play, I'll play it.

We're all ready.

I know it's tough, and it's definitely, it's a, don't get discouraged about it.

What the hell do you think, man?

What I'm saying, though, is in this case, the American people are in the middle of a him or a whom.

And there are an awful lot of jobs around this country.

They ought to be happy.

And basically, a lot of people are happy.

The point that I make is that, and we also are going through one of those traumatic experiences

terrible bulge in a wage price, particularly a price development, that's just scaring the hell out of people.

There were times before these numbers were on television and on big charts, and there would be commentators talking about it, but people wouldn't even know it too much.

It's too bad, and they would sort of tighten their belts, and then eventually the prices come down.

But it is, we deal, we live with a different fact.

But what I'm saying is this, let us do nothing

In order to curb the inflation, we'll destroy the boom.

And that is, I don't mean by that, that if we see that the inflation is going to run, I mean, in other words, if something will work to curb the inflation, that's entirely different.

Then let's do it.

Because I'm not trying to curb the inflation and have no boom.

No question.

But if what we do to curb the inflation is just a grandstand flood,

I mean, a six-month freeze, as we saw, or a year's freeze, if you remember.

That kind of a thing is a grandstand play that will not work, and will not hurt the inflation.

It will prick the boot, and they hold it.

There are very big political problems and shortages, too, which are harder to grasp and often prices.

One thing, Mr. President, that we might consider including in this statement is something about the current budget situation.

Now, on the one hand, we're fighting against additional spending.

So if you say that you've got more revenue than you expected, it has a direct potential impact.

We still have a couple of weeks.

We've got the deficit down some from where it was.

That is worth recording.

And the financial community is becoming aware of this very rapidly.

And you're beginning to see stories speculating about what the budget numbers are going to turn out to be and so on in the last week or so.

now see a budget turning up with a full employment surplus?

No, the full employment picture remains the same.

But the real receipts, actual receipts, are up so that the actual deficit is less.

In other words, the just exactly the kind of movement that we anticipated as a state budget.

And we welcome it and say, let's look at this right now, and let's keep after it.

What's your resolution?

What's your deficit?

Well, putting together George's numbers and ours, we're going to be at less than $20,000,000 in actual deficit.

My problem is that I have $10,000,000 to $18,000,000.

That's good.

That's a little far.

We think that I have $10,000,000 to $18,000,000.

At less than $10,000,000.

That's pretty good.

That's a lot.

Not according to our numbers, but that's a raise for gaining on the problem, aren't there?

$24,000,000.

Yeah.

You have to be a little $20,000,000.

probably at least $10 billion less deficit together than we were interested in.

Well, you wouldn't.

Provided the Congress, not understanding the full employment budget, says, here's money to go spend.

And they'll, that's the, but they'll say that since our revenues are four, five, six billion higher than planned, then now we've got a windfall, let's spend it.

So, I thank you for all your time.

I just regret it because I told you that you weren't quite ready.

And I obviously want to thank you so much.

You've got two new members of the board.

And from now on, everything that has not been your fault will go on board.

On the board.

Take care.

And don't get downhearted.

My daughter, you've got to remember her.

She's, I guess, one of those 30-somethings.

you know, the economic side of it.

I say it's... Let's put it this way.

Those of us who went through the journey when we had, I say again, when we had a recession and inflation, I much prefer this.

We made a terrible decision this meeting.

We didn't have any right here.

I was going to say... Don't get your mind confused with this.

You made a terrible mistake and not an action for this one, so I agree with you.

George...

You let me know what you want to see, and I'll be ready.