I came here as an immigrant boy. I’ve done well. The profession—in my profession, I rose to the top. In the business world, I could command higher fees than any economist. Why did I come here? I came for two reasons. First, I owe a debt to America. My patriotism is fierce. The debt is large. I thought I could repay it. I'm glad you gave me the opportunity. And secondly, I wanted to work with you and to help you, ‘cause I thought I could [unclear].
Well [background noise] . . . stating it so . . . [Unclear.] Let’s say that—I don’t—I have no question, Arthur, [unclear] loyalty or anything like that, but I think—
I know that you have a—I know, too, that from a practical standpoint, we have to realize that you have a different situation now than you had when you were counselor to the president. Then you [unclear] independent. And you have a . . . that you cannot be in a position of undermining that independence. I realize that. I think that the—I think the important thing to bear in mind is the one that you’ve raised. But I think if we could have that kind of understanding, there’d be a—that’s—we could solve most of the problems. It may be that what we ought to do is to—from time to time, we may [unclear] before we have a [unclear]. Maybe sometime we ought to bring [John B.] Connally in on—particularly for Treasury matters.[note 1] John B. Connally was secretary of the treasury from February 1971 to May 1972. He’s a—he’s very—
Connally’s a competent man.
Practical. He’s practical.
He’s a good man.
He knows what he doesn’t know. He’s like I am. He knows what he does know. But the point about this is that where you . . . where we want to avoid, as you know . . . I think the . . . I think our goals are the same. I think that the great advantage you have over [William McChesney] Bill Martin is that Bill, while he was good in terms of his own public relations—in other words, he always stood out there like a [unclear] , but Bill, first, didn’t have the economic sense that you have, and second, he basically wasn’t as good a politician as you are, in my opinion.[note 2] William McChesney Martin was chairman of the Board of Governors of the Federal Reserve Bank from 1951 to 1970. We have [unclear]—the thing about this—thing about, is that . . . where I couldn’t have this kind of a talk with Martin, I can with you. You and I have the same philosophy. We want this—this is the last chance—
—really, let’s face it. This is the last chance that anywhere near likely a conservative administration can survive.
Let’s face it: The alternative to this is going to be—it isn’t going to be [Henry M.] Scoop Jackson.[note 3] Henry M. “Scoop” Jackson was a U.S. senator [D-Washington] from January 1953 to September 1983. It’ll be, well, Hubert Humphrey, [Edmund S.] Muskie, [Edward M.] Teddy Kennedy, you name it.[note 4] Hubert H. Humphrey was vice president of the United States from December 1964 to January 1969, and a U.S. senator [D-Minnesota] from January 1949 to December 1964, and January 1971 to January 1978. Edmund S. Muskie was a U.S. senator [D-Maine] from January 1959 to May 1980. Edward M. “Teddy” Kennedy was a U.S. senator [D-Massachusetts] from November 1962 to August 2009, and served as Democratic Whip from 1969-1971.
But it’ll all go hog wild.
No question about where they're going to go. They can’t go in any other direction. So, under these circumstances, we have to do our very best to be responsible, do our very best to make it go, and do our very best, particularly, to make it look good next year.
Now, we were hoping, of course, that it would look reasonably good this last year. Well, it didn’t work out.
And that it just—and in a sense, you know, our mutual friend Milton Friedman thinks it’s a good thing it didn’t, because he says—he wrote me, I remember, a long letter.[note 5] Milton Friedman was a University of Chicago economist and statistician. You may have seen it. I may have sent it around to you.
He wrote me a long letter—
He sent me a copy.
That’s right. He did—where he said—he said, "Don’t do too much now and win seats in ’70 at the risk of having the economy low in ’72."
Yeah, well, at any rate, whatever he said, that’s water under the bridge. The point is that we have the same goals. We want the same general principles. Sure, Family Assistance, we can have a disagreement about that, but that’s over and done with. The point that we’ve now come to is that we’ve got to have—we’ve got to do the best we can and get the very best judgment we can to see that this economy moves up. Now, to be very frank with you on that point—
I want you—
I’m not too conc—I am not as concerned as some about us not moving so fast right now. I hear everybody talking about 1065 and all that stuff, and here’s my view—and I would never bring this beyond this room: My view is that I would rather have it move a little bit slower now, so that it can go up and get a real big verve later.[note 6] The President refers to the administration's targeted GNP for fiscal 1971, $1,065,000,000. I think, for example, now that we ought to take a look at it around—well, look when you get the April figures in, let’s look at March and April. [Burns acknowledges throughout.] Then, if in March and April, we all find—we find that things are not moving as it should, then, it seems to me, we then will have to reconsider our game plan. This is whether or not the Investment Tax Credit or the other, you know, the acceleration of that should go. I think between now and then, however, it would be well not to take that position for fear that it will indicate a lack of confidence that we know what the hell we’re doing.
And it’s too early to change.
Well, and you don’t change six weeks after you [unclear].
No, you don’t—you don’t change—
And I know I was—I saw, incidentally—I think that when they—your testimony down there, and I talked to Connally about this, because he raised the same point. He told me he talked to you, incidentally.
And he said he agrees that when you testified on this Investment Tax Credit and the . . . in the matter of the Social Security, the other tax matters and so forth, that actually that the press really made something out of it that you hadn’t really said.
This was an answer to a question. The thing that I’m concerned about—
—also I didn’t say . . . [unclear]. [background noise and overlapping voices]
Yeah. Sorry. [Unclear exchange.]
[Unclear] wrong. [Unclear] if it turns out that growth stimulation should be necessary, these are items . . . on the public calendar, they ought to be considered the next time.
I see that and I see—but the point to that, however, is this: See, you are in a very different position, again I say, from the relationship that [Dwight D.] Eisenhower had with Martin or that I had with Martin for that matter.[note 7] Dwight D. Eisenhower was president of the United States from January 1953 to January 1961. Eisenhower wasn’t close to Martin and I, of course, wasn’t close to him at all. On the other hand, everybody knows that you and I have been personal and political friends and that you’ve been a counselor to the president on economic matters both when he was vice president, when he was out of office, when he was in the campaign and before you went to the Fed. Consequently, the—what you say in this field—and that’s why I think this kind of understanding is so important, is—anything you say is bound to be seized upon by the press to try to make it appear that you are differing with me. And we got to avoid that. We must not have it. Understand I—has nothing to do with the independence of the Fed [unclear]. But I think we’ve got to bend over backwards and be sure that we don’t give any ammunition to our, quote, friends, unquote, in the press so they can say, well, "Burns is fighting with the president or the president’s staff," et cetera, et cetera. Now, that’s a two-way thing, too. It has to be both ways. Connally understands this. I know you’re concerned about [George P.] Shultz and so forth.[note 8] George P. Shultz was secretary of labor from January 1969 to July 1970, director of the Office of Management and Budget from June 1970 to May 1972, and secretary of the treasury from May 1972 to May 1974. We all understand. But I think that your position, as you can well see, is so very different because of the personal relationship. Now, that doesn’t mean that you should go out and simply be a presidential puppet. I’m not suggesting that at all.
Of course, you’re not.
I don’t know anything about it. I want your, of course, your best advice whenever you can get it. I do think, however, that we’ve got to be extremely careful that we not allow them to say, "Well"—our critics and others that want us to fail—"Well, the plan must—the administration has must be bad because Arthur Burns, the president’s counselor—his disaffected former counselor—" You see, that’s what they’re going to write. In fact, that’s some of the stuff that crops up. That’s why I’m being very sensitive about it. And you, knowing politics—if we can just watch that situation, and I think that whenever you see something like that, you let me know and I’ll let you know through Connally or something [unclear] and he’ll see it purely politically. That’s the main thing. You see? To me, Arthur, it’s more a political than an economic problem.
Look, who the hell knows how the—what’s going to happen with the economy? Nobody can be sure. Some can be more sure than others. The only thing I do know is that from the political standpoint, and also on the confidence factor, it’s extremely important for there not to be—not, at least, appear to be in the public mind—a great cleavage between the president and the secretary of the Federal Reserve, who not only is the—I mean, the chairman—who is his friend. And see what I mean? Because, you see, you’ve got—we both have a lot of the same friends. [Unclear] politics know that it must be something wrong.
Now, I know that there are things we ought to consider and we’ll consider them. I must say if you think well of it, then around—I’d say when we get the figures around the 10th of May—between the 1st and 5th—after the 1st of May—go over and basically when we get—you get figures—they’re probably raw [unclear], but when you get the figures for the month of April, then I think we ought to examine the first four months. That’s basically a third of the year. And then we’ve got to decide whether we go on another tax kick or what else we do. How does that sound to you?
Now, the way we ought to do it in the meantime is to present a united front—
I think on the—on the money thing, I read your paper. I don’t still understand it, but I understand more of it now. And on the money thing, all that I can say is this: You know, we—when I saw Connally and I talked to him, I said, all that I know is that you had told me that you were going to see to it that we could have a five percent—five percent was your goal and that that was something you could achieve.
[Unclear] that I simply depended upon you to do it. And that’s what I do, as a matter of fact. That’s what we understood. So as far as I’m concerned, I’m not going to watch the figures every month. [Burns acknowledges.] I don’t know enough about it. But I do know that you’ve got to watch them every month because—
I watch them every day.
I—we’re sort of facing things on that five percent matter.
It’s at six percent now. I got it up to six [unclear].
Well, I think that’s good. I- . . . understand. I don’t know whether it should be—you can tell me 15 or 3; I don’t know the difference. But be that as it may, we’ve got to count on you and that’s why—to have that money supply thing at a good strong rate, which is five percent or six percent or whatever it is. Then in the meantime on the other policy, where we get into our fiscal policy, into our tax policy and our budget policies, I would suggest that we—so that we could have a very thorough discussion, but we probably should have a moratorium on any public statements about, "Well, now, what should we do now?" [Burns attempts to interject.] Right now, let’s say, "Well, things . . . " For example, there are so many who said the month of February was disappointing. Well, it was. Well, let’s look at March. I mean, I’m a much more—I have much more balance on this than most have because I’ve been, you know, when you’ve been up and down a bit, you get a little more balance. And I’ve seen too many people panic on the basis of two months’ figures. [Burns acknowledges throughout.] See? So, now, you don’t panic. That's—you have a sense of perspective and that’s what I want you for. So what I’d like to do is to have a relationship where you and I could talk like this any time, and you can be sure, as far as I’m concerned, it’s forgotten what’s said. You give your best advice. And then publicly, however, I think that both of us—I'll try to—and I’ll handle my people. And naturally, as you know, I’ve got to defend my people. That's—they're—whatever they are, I’ve got to defend the White House staff. But I’ll see that my people—and that includes Connally—I’ll see that we play the game. That’ll be the responsibility we have. I would like to ask you to do one thing, though, that I think would be very important: I would like for you, on your initiative, because he’s a—he’s the kind of a man who will not [unclear]—I’d like for you to develop a very close relationship with Connally.
Oh, I am.
Good. Well, I mean, see him very often.
And talk about this, for example, because he’s going to—you see, he’s going to [unclear] [background noise] interest rates and all this other—
I like him.
And he learns fast.
He does. [Unclear]—
And I think the thing to do—if you and he can talk first—[Burns attempts to interject]—and then on occasion, you see, here’s the other thing: Let’s look at [unclear]. Basically, Shultz is an extremely able fellow. [Paul W.] McCracken is extremely able: both damn good economic men.[note 9] Paul W. McCracken was chairman of the Council of Economic Advisers from January 1969 to November 1971. However, neither of them knows anything about politics. You, Connally, and I know something about politics. I, therefore—and I would like to, sometime, maybe just the three of us—and maybe the way we’ll do this—I may put Connally up to it, so that it doesn’t appear to . . . well, maybe I’ll do it. That’s all right. But the three of us, perhaps on occasion, just ought to sit down and talk a little. See my point? Not in terms of going around the Quadriad, but just simply to [unclear] of the political effect of all this stuff. Because you know—you understand politics, Arthur. You know the effect of what is said and what is done, fortunately. And Connally is a genius at the damn thing. [laughing] He’s really is probably as good as [Lyndon] Johnson.
I tell you, you made a brilliant appointment.
Well, he’s a strong man. He's learning fast. He knows a lot more about it than I thought he would—than I realized. But I think the key to this is, first, you and I staying close together, which we will do. Second, on the Quadriad, let’s be sure that they . . . we all, I mean, we’re very frank and we’ll try to keep everybody in line, so—and knock down the whole idea that there’s discord between the president and the rest. I knock it down whenever they ask me.
Ooh, you’re perfect.
You know it.
But I know that there—I make some—there’s—I understand. I know the problem. You don’t need to spell it out. But I’ve written off those stories. And we’ve got to [tapping] . . . we need to take a look. My feeling is this: that if we pull it off, it'll be a miracle—the economic miracle of the century. Just like ending this war, if we—which I think we’re going to do and save Vietnam at the same time—would be the diplomatic miracle of the century. I think this—if we pull this economic thing off—and I don’t mean by that that you’ve got to get down to three percent unemployment. That wouldn’t be good.
The direction has to improve.
The direction and the direction both ways. If we can pull it off, Arthur, it’s—it'll be a—it's an enormous accomplishment. Whether it can be or not remains to be seen. I was just reading this morning with great concern the terrible problems poor [Edward R. G.] Heath is having.[note 10] Edward R. G. Heath was prime minister of Great Britain from June 1970 to March 1974. You know, the Labour people are giving him hell. The polls now show that a majority of the British people oppose entry into the [Common] Market and so forth and so on. But nevertheless, he’s in for five years so that he can take his lumps now. But the running of an economy in a modern state, particularly a great one like this, where you’ve got a thousand billion dollars, I mean . . . you know, it’s just unbelievable, isn’t it, the concept, what we’re—how intricate it is, how difficult it is, and you push this button and that button and then say, "Well, now we’re going to estimate how much we’re going to have and so, is it going to be 1065 or 1050?" I just hope that it’s up.
And get the unemployment down a ways.
Just a little bit. That shouldn’t come too fast, though. My feeling on the unemployment—let’s see what you think—is, Arthur, the main thing is next year, now that unemployment has got to—let’s don’t let it go any higher, but I hope we can—
That’s what I have my eye on.
Yeah. But I think we’ve really got to think of goosing it.
Shall we say late summer and fall this year in order to affect next year?
As you know, there’s a hell of a lag.
Because you remember in 1960, when you and [James P.] Jim Mitchell came in to see me down there—down in my little office in the Capitol—and said, "By God, we’ve got to do something about this," you remember, about the economy?[note 11] James P. “Jim” Mitchell was U.S. secretary of labor from 1953 to 1961. [Burns attempts to interject.] [Unclear.]
I wanted to refresh your memory. I placed a call to you, late February ’68—this—late February of 1960. Rose Mary Woods told me that you were [unclear] a filibuster . . .[note 12] Rose Mary Woods was President Nixon’s personal secretary.
“Richard Nixon and Arthur F. Burns on 19 March 1971,” Conversation 470-018 (PRDE Excerpt A), Presidential Recordings Digital Edition [Chasing Shadows, ed. Ken Hughes] (Charlottesville: University of Virginia Press, 2014–). URL: http://prde.upress.virginia.edu/conversations/4006733