Remarks During a Meeting With Economic Advisers

GEORGE P. SHULTZ [Secretary of the Treasury]. Here are some statistics that will show that the commodity prices have decreased since 'the wholesale price index figures were collected.

THE PRESIDENT. That is the thing you were mentioning this morning.

SECRETARY SHULTZ. Yes. For example, in the middle of August the prices for soybeans were $10.26 per bushel. Yesterday, they were at $7. It has come down $3.26, or 32 percent.

THE PRESIDENT. That is since the figure that we will read tomorrow?

SECRETARY SHULTZ. That is since the figure that we will read tomorrow. Those are the soybean futures for today. It is down here, 29 percent. Wheat is still way up there.

'THE PRESIDENT. Wheat is no problem. It is corn and soybeans.

HERBERT STEIN [Chairman of the Council of Economic Advisers]. Hogs are down'. Hogs are down 21 percent.

THE PRESIDENT. How could hogs be down? Because those hogs were fed on that higher-priced corn, weren't they?

MR. STEIN. Well, people aren't buying them. They went up even though they were fed on the higher-priced corn.

THE PRESIDENT. The Secretary will have a press conference tomorrow before he leaves for talks at the Tokyo meeting. It will be general in character.

There has been a rather dramatic drop. Let me say, since we always say, when we give the briefings, don't pay any attention to one month's figures when they are bad this one-week figure, which was very good and is one which must be kept in context, will report a dramatic drop in soybeans and corn which has taken place since they took the numbers off. They publish tomorrow as to the increase in the wholesale price index which is, of course, very substantial as predicted.

And then he's going on first to Japan and then coming back here and then going to Nairobi, and then you are going from Nairobi to Russia?

SECRETARY SHULTZ. To Russia.

THE PRESIDENT. And then to Bonn?

SECRETARY SHULTZ. Then to Bonn and Yugoslavia finally.

THE PRESIDENT. When are you going to be back here? [Laughter]

SECRETARY SHULTZ. I'll be gone for 2 weeks all together.

THE PRESIDENT. IS that all? Fine, fine. When do you sleep? [Laughter]

SECRETARY SHULTZ. On the airplane.

REPORTER. What time is the press conference?

SECRETARY SHULTZ. Well, I think probably around noon. I think you have a Cabinet meeting at 10, Mr. President.

THE PRESIDENT. The Cabinet is at 10, and you should be ready for that--I consider this, incidentally, an important press conference--and you can also go into these tax matters and all the prospects in that field and so forth.

One of our major problems, incidentally, I might say, is, as you were just talking about the trade bill, Wilbur Mills' incapacity. I don't know whether you knew he has just had an operation, a disc operation, which, incidentally, if he had asked me, I would have told him never to have it. I haven't had one, but I have never known one that was successful.

SECRETARY SHULTZ. Well, it was reported. I talked to him earlier this week.

THE PRESIDENT. Surgeons always want to cut, but nevertheless, I remember when he sat in a chair the other day, one of those straight chairs, that is when be told me about his--when he lectured John Kennedy on the fact. "Look here, Mr. President," he said, "there is no chance for even a Democratic Congress to give a Democratic President the chance to move taxes up and down." Remember, he said that. So, he said, "Please don't ask us for the investment tax credit."

But the problem in Mr. Mills' case is that he is so vital for our trade legislation. He is the leader in this area, not that Mr. Ullman--

SECRETARY SHULTZ. Mr. Ullman is taking hold very well.¹

THE PRESIDENT. He is a top-flight man. But Mills we have counted on, we have been working with a great deal, and when he is not there, we miss him. That doesn't mean we are pessimistic about the outcome. It does mean that our timetable may slow down just a bit.

¹Representative Al Ullman was acting chairman of the House Ways and Means Committee during Representative Wilbur D. Mills' absence.

SECRETARY SHULTZ. Well, the committee met yesterday, and they have met today, and all of our reports and I have talked to Congressman Ullman a couple of times in the last few days--are that the committee is moving well through the bill. And they are, I hope, going to give me a statement that I can make at the opening of the trade negotiations next week, on their expectations about getting the bill through.

THE PRESIDENT. You might want to quest;on the Secretary tomorrow on the trade bill and its various problems.

REPORTER. Mr. President, when you spoke of a dramatic drop, did you mean a dramatic drop in the price of corn and soybeans?

THE PRESIDENT. What we call futures. Here is a little preview to the press conference.

SECRETARY SHULTZ. Here is the average price for soybeans per bushel in the period August 13 to 17.

THE PRESIDENT. That is the figure that is going to come out tomorrow and scare everybody to death.

SECRETARY SHULTZ. I don't know what has happened today. Yesterday, the cash price for soybeans was $7, so that is a decrease of $3.26, or about 32 percent.

THE PRESIDENT. Over a period of 2 weeks.

SECRETARY SHULTZ. When you look at a chart of this, it is really pretty interesting. The price went way up, and now it has come down. The following month, assuming the prices stay around this level, we will see a big decrease. But in the farm area, the prices are very volatile. They go up and down a lot.

THE PRESIDENT. Except lately they have been going up.

SECRETARY SHULTZ. Yes, that is right.

THE PRESIDENT. However, on both soybeans and corn, one of the factors that has been helpful has been the very considerable increase in production, and also a somewhat lessening demand--Herb, you pointed that out this morning to the leaders--abroad, somewhat; isn't that true?

MR. STEIN. Well, the export demand doesn't seem to be quite as big as had been expected.

THE PRESIDENT. That is right. It is less than our expectations, although still big. Don't feel sorry for the farmers. They are doing very, very well in spite of this, right? $2.20 corn, you make plenty of money. They won't make as much as they want, but they will make a lot, right?

MR. STEIN. Right.

THE PRESIDENT. And $7 soybeans, you don't lose any money on that, do you? I don't even know what a soybean is. [Laughter]

REPORTER. Are these August figures, and then you will project for the future?

THE PRESIDENT. Yes, you see the figures come out tomorrow.

SECRETARY SHULTZ. I won't give them out. They will be released by the Department of Labor.

THE PRESIDENT. He will interpret them.

SECRETARY SHULTZ. People have been able to calculate what this index is likely to show fairly well.

REPORTER. What were those prices for, Mr. Secretary, wholesale?

SECRETARY SHULTZ. Well, there are prices in the wholesale market, there is a cash price here on this table. There is a September price, and there is a November price, and I was looking at the cash price and you can see it here.

THE PRESIDENT. Let me keep it all in context by saying that this report, that is somewhat encouraging, does in no way change our attitude toward the urgency of the problem. The problem of rising food costs is still with us and will continue to be with us. but it does indicate that our approach of really pouring the coal on, in terms of getting the supplies up, may be beginning to bear some fruit. Now we will see what happens to the prices next time. If they go up, you were wrong.

MR. STEIN. I am not a forecaster. I just pointed out what has happened. [Laughter]

THE PRESIDENT. We leave the forecasting to Stein. You take the credit or discredit. Economists are expected to be wrong.

MR. STEIN. It averages out. Nine times you're wrong, and once you're right.

THE PRESIDENT. You are batting like the California Angels.

REPORTER. Thank you very much.