The stock and money markets calmed down yesterday after three days of wild and sometimes contradictoty reactions to the Federal Reserve Board's new tight money prescriptions.
On Wall Street, the Dow Jones in dustrial average fell 4.10 points -- a trifle comapared to the 49 points it slid ther first three days of the week. The dollar stayed about level in markets around the world, and gold fell a little [Details, Page E1.].
President Carter, meanwhile, tried to reassure an important constituency -- the nation's construction unions -- that the new credit restrictions and high interest rates would not inflict all the pain the unions fear, and have felt from such policies in the past.
Carter, delaring in San Diego that "interest rates are too high," to curb inflation will not cost construction industry jobs.
In a speech to the annual convention of the AFL-CIO Buildng and Construction Trades Department yesterday, the president appeared to back off slightly from support he gave three days ago to the Federal Reserve Board's new policies.
Pledging to preserve exisiting construction jobs "and get some more," the president told the union officials:
"in fighting inflation we do not sacrifice construction jobs. while interest rates have been climbing to record levels because of decisions by the Federal Reserve Board, we have taken special financial measures to sustain credit for construction, especially housing construction," and keep mortgage money from drying up.
Carter did not specify these steps or other measures he will take to fulfill his pledge. but assertng that "interest rates are too high, inflation is too high," Carter added he does not believe the cure for inflation "is to throw millions of people out of work,"
"This has been done by administrations in the past, but I guarantee you that I will not fight inflation with your jobs."
Carter warned, however, that the country is facing a period of austerity that will require cooperation from all segments of the economy.
"we all know that we must pursue a policy of fiscal discipline -- with protection for the poor and disadvantaged," he said. "we cannot spend our way out of this inflation. "austerity is unavoidable and inevitable. we can no longer postpone it.
"if we all continue shoving each other to get more, we will get only more inflation, and ultimately less of everything. but if we respect each other's needs and abilities, if we restrain ourselves and cooperate with one another, we can have less inflation and an expanding economy."
The president flew to San Diego yesterday morning from Albuquerque, N.M., where Wednesday night he met with eight governors from western states to discuss energy policy. The governors, worried about the impact on the west from the crash energy development program advocated by Carter, called the meeting "productive" and were pleased by the president's promise that western states will retain control of their water resources in any energy development program.
Carter's brief visit to the building trades convention had the same political purpose as his dinner meeting with the western governors -- repairing of his relations with a constituency thast has often viewed him with suspicion.
Organized labor could be especially important to Carter's changes of renomination and reelecton next year, but is now widely viewed as more sympathetic to the president's potential Democratic Party rival, Sen. Edward M. Kennedy (D-Mass.). Nonetheless, the 400 convention del egates, representing about for million union workers, and several hundred convention guests greeted Carter warmly as he entered the large yellow-and-white tent outside the Islandia Hyatt House hotel to deliver his speech. But the concern of organized labor over job prospects in a tight money economy was clear from the applause that greeted the president's promises of continued prosperity for the construction industry and its workers.
White House officials said later that Carter's reference to measures that have been taken to maintain construction jobs was to 1978 Federal Home Loan Bank Board decision authoring savings institutions to issue shortterm, high-yield certificates of deposit to investors.
That decision was designed to retain a pool of capital in the savings institutions, a prime source of mortgage money that fuels the construction industry.
However, the White House officials could not say what further steps will be taken if the current credit squeeze begins to hit the construction industry.