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June 16, 1976 - Ford, Kissinger, Canadian Prime Minister Pierre-Elliott Trudeau, Minister of Finance Donald Macdonald
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1553472
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June 16, 1976 - Ford, Kissinger, Canadian Prime Minister Pierre-Elliott Trudeau, Minister of Finance Donald Macdonald
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collections
Memoranda of Conversations (Nixon and Ford Administrations)
Ford Administration Memoranda of Conversations
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Economics
Inflation (Finance)
Summit meetings
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1976
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1976
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File scanned from the National Security Adviser's Memoranda of Conversation Collection at the Gerald R. Ford Presidential Library
MEMORANDUM
THE WHITE HOUSE
WASHINGTON
SECRET/NODIS/XGDS
MEMORANDUM OF CONVERSATION
PARTICIPANTS:
President Ford
Pierre-Elliott Trudeau, Prime Minister of Canada
Dr. Henry A. Kissinger, Secretary of State
Donald Macdonald, Minister of Finance
Ivan Head, Special Assistant to the Prime Minister
Brent Scowcroft, Assistant to the President for
National Security Affairs
Amb. Jack H. Warren, Ambassador to the U.S.
Amb. Thomas Enders, U.S. Ambassador to Canada
DATE & TIME:
Wednesday - June 16, 1976
5:40 - 6:50 p.m.
PLACE:
The Oval Office
[The meeting began without Secretary Kissinger, who was delayed by the
kidnapping of U.S. Ambassador Meloy and Counselor Waring in Beirut.
]
President: The Minister and I were at Libby Dam together. He has had
a change of portfolio since then.
Trudeau: It's a somewhat more difficult one now.
DECLASSIFIED
E.O. 12958, SEC. 3.5
NSC MEMO, STATE DEPT. GUIDELINES,
NARA. DATE 1/27/04
President: We are very pleased you could come down. It is especially
timely in view of the Puerto Rico summit. I met with the planning group
yesterday.
Trudeau: We are very pleased to be here. I want especially to thank you
for getting us into the Puerto Rico Summit. I know you tried at
Rambouillet. We think it is important that we be included because of our
size and relation to you. It is especially useful when the problems are in
common, to be able to deal with them on a personal basis. The EC
BY
CLASSIFIED BY Brent Scowcroft
EXEMPT FROM GENERAL DECLASSIFICATION
SCHEDULE OF EXECUTIVE ORDER 11652
SECRET/NODIS/XGDS
5 (B) (3)
EXEMPTION CATEGORY
AUTOMATICALLY DECLASSIFIED ON Imp to Det
SEGRET/NODIS/XGDS
- 2 -
members meet regularly with each other and that is good. You and I and
our predecessors meet but not on the same informal basis as our ministers
who flit back and forth. I think probably we on the North American continent
should correct that.
President: I agree. I thought it was important before that we all meet,
and now as we pull out of the recession it is very important that we try
to avoid the mistakes which got us into trouble in the first place. We
don't want to reignite the inflation. It is only sensible to try to coordinate
our activities.
Trudeau: Macdonald has just finished presenting the budget. What is
boils down to is if you are doing fine, we are doing fine. 50 percent of
our goods are exported and 50 percent of these are to the U.S.
President: [Discusses economic statistics - - GNP, unemployment,
inflation. We want to get unemployment under 7 percent, inflation
under 6 percent and the GNP above 7 percent.
Macdonald: I am envious of your performance on the inflation.
Trudeau: What happens when labor looks at this -- the growth of 6-7
percent, inflation of 6 percent and says "we need a wage increase of
12 percent? 11
President: [Described the rubber workers' strike and their demands.
]
Hopefully we can keep the rate within the guidelines.
Trudeau: How? Do you have specific guidelines?
President: Not specifically, but labor and industry both know what we
consider reasonable. Labor has been fairly responsible, even in the
construction industry. Management also has been fairly statesmanlike.
Trudeau: I take it then you are relying on a sense of responsibility.
President: Yes. It has worked so far.
Trudeau: Do you think this is a new pattern for our free society, or will
you sink back to the old attitudes?
President: I am an optimist. I think we have made real progress.
Congress is still irresponsible, but not so much so as in the past. They
SEGRET/NODIS/XGDS
SECRET/NODIS/XGDS
- 3 -
have a new budget procedure which is designed to force some fiscal
responsibility. Their ceiling is too high -- $414 billion -- but it's
better than we earlier thought it would be, about $424 billion. Arthur
Burns has set an increase in the money supply of 4-7 percent.
Macdonald: That I would find very restrictive. It should show up in
relative interest rates, but there is still a 3-point spread.
Trudeau: Aren't most sectors of your economy still living in the shadow
of your former controls and thus there is an inducement to responsibility?
But there is still no agreement as to a division of productivity between
labor and management, though.
President: No. But we have a Wage-Price Advisory Council which does
have a PR impact and a kind of psychological pressure.
Warren: And your labor leaders can make things stick when they want
to. Ours are very decentralized.
Trudeau: That is right. The locals may or may not agree. So the leaders
have to adjust to the locals, not vice versa. In public service area,
[Secretary Kissinger arrives. ]
President: You know what happened today.
Trudeau: Yes. Jake told me.
Kissinger: [Described what happened to the Ambassador.]
Trudeau: Is anyone claiming to be the author of it?
Kissinger: No. But the Syrians and Egyptians have already expressed
their outrage.
[Short discussion of Meloy and his quality. ]
Macdonald: Discussed the Canadian economic situation. ]
President: Our agriculture has done a great job. In 1973 and 1974, agricultural
prices went up 12-14 percent and, together with energy, kicked off the
inflation. Our projections for '76 are a 2-4 percent increase. That helps
the price index immensely. We will probably have a record corn crop.
Wheat will be down a bit because of drought, but it will be the 2nd or 3rd
best year we've ever had. Soybeans are a good crop.
SEGRET/NODIS/XGDS
SECRET/NODIS/XGDS
- 4 -
Trudeau: Do you have a hunch that the decade of rapid inflation will
be succeeded by one where commodity prices will taper down to
2-4 percent and things will get under control? My ministers worry
that when controls come off, the same thing will happen again. There
doesn't seem to be any real reason why costs will get back to the
situation more like the postwar years. I gather you don't think so.
President: That is right. I wouldn't rule out a rate of 4 percent or
so in the next couple of years. It looks to us like the public is the key
to putting closer reins on fiscal policy. Of course NY City was a
disaster, but they have now cut back on their extravagance. There
is a public feeling that government has got to have a more responsible
fiscal policy.
Trudeau: The way you describe it is the way a democracy should
work people recognize the peril and become more responsible.
But we still are asking ourselves what happens when we take the lid
off. Are your labor and management or Congress pressing for a
system like the Germans where there is labor on boards of directors,
and so on?
President: There is no real pressure in Congress, but some labor
people argue for it. Is it compulsory or voluntary?
Trudeau: It is compulsory -- there and in Sweden. It seems to hold
prices down.
Macdonald: I think you can argue the opposite. The two people most
intere sted in higher prices are the president of the company and the
union leaders.
Trudeau: Then why the price restraint?
Kissinger: There is a phobia in Germany about inflation.
[Discussion of federal employees here, the wage ceiling at the high
levels, and how we can keep good people in government. ]
SECRET/NODIS/XGDS
2
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DECLASSIFIED
E.O. 12958, SEC. 3.5
NSC MEMO, 11/24/98, STATE DEPT. GUIDELINES
BY
NARA. DATE 7/27/04
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