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November 21, 1967 - Image 3

Resource type:
The Michigan Daily, 1967-11-21

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LONDON () -Prime Minister The
Harold Wilson's Labor party ac- expect
cepted pound devaluation with- censur
out serious complaint yesterday year-ol
and the government weathered a The
storm in Parliament where oppo- start i
sition Conservatives demanded its This
resignation. uation
"Out! Out!" shouted Tory mem- carried
bers as Wilson entered the House prime
of Commons on the first working ald in
day since he trimmed the value 1949. 1
of the pound sterling Saturday Britai
to $2.40 from $2.80. ard,
Then as Chancellor of the Ex- $4.86
chequer James Callaghan rose to $4.90
explain the devaluation the Con- War I
servatives chanted: "Resign, re- from $
sign." Repi
Both ignored the cries. Calla- valuat
ghan blamed the Conservatives around
for Britain's plight. in ma
"You left us in this state," he openin
said. except


Conservatives, however, are
ed to introduce a motion of
e against Wilson's three-
ld government.
big round is expected to
n Parliament today.
was Britain's third deval-
in 36 years-all of them
d out under Labor party
ministers, Ramsay McDon-
1931 and Clement Attlee In
The first devaluation,. when
n went off the gold stand-
dropped the pound from
to $3.20, but it edged up to
at the outbreak of World
I. In 1949 it was dropped!
$4.03 to $2.80.
ercussions of the new de-
ion continued to be felt
d the world. Stock markets
jor nations plummeted at
gs with most stocks down
gold shares, which rose.

London's markets were closed. But
gold trading is expected to be
heavy when they reopen today,:
because the devaluation triggered
currency fears, dealers said.
When Britain devalued the
pound in 1949, stocks around the
world fell but soon came back.
The devaluation brought some
heartening news to Britons who
favor British membership in the
European Common Market.
Market foreign ministers meet-
ing in Brussels authorized the
chairman of their executive com-
mittee to contact the British to
see how the devaluation affects
Britain's bid for membership. This
was considered a break-through
toward negotiations which France
up to now opposes.
President Charles de Gaulle
voted against the British entry in

[ory t
Before the Parliament session
got under way, Wilson summoned
his aides to No. 10 Downing St.'
and drew up plans to bring Bri-
tain back to solvency. The de-:
valuation was forced upon the
Labor government because the
nation was spending more abroad
than it earned.
Informants said Wilson order-
ed his Cabinet to start work on
holding down wages and prices,
cutting spending on defense and
welfare, tightening credit even
further, encouraging increases in
exports and intensifying efforts to
get into the Common Market.
Callaghan's task in the first
round in Parliament was to ex-
plain the reasons for the devalua-
tion. As the overseer of Britain's
treasury it was he who advised
the devaluation.
He said Britons will have to

pay a stiff price to make devalu-
ation work.
The Tories held their full fire
until the start of the economic
debate today. But Edward Heath,
Conservative party leader, went
on television to answer Wilson's'
broadcast Sunday night. He re-
minded the nation of Wilson's
pledges not to devalue. He said he
made the pledges 20 times in 37
months in office.
He said the Labor government
had thrown away the confidence
and ruined the affluence the Con-
servatives had built up in office.
Rubbing in the 14.3 per cent
cut in the pound's overseas value,
he said: "You who work in Brit-
ish industry will have to produce
nearly 15 per cent more exports.
You who sweat out your guts
selling abroad will have to sell
nearly 15 per cent more even to

stay in our present position. That
is the real cost of devaluation."
lanin MacLeod, Conservative
spokesman on economic affairs,
demanded Callaghan's resigna-
tion, and he was backed by per-
sistent shouts from his party.
But Callaghan said he would
stay on an'd see the devaluation
through, at least until the new
rate of $2.40 settles into stability.
Callaghan was facing a per-
sonal crisis and a political one.
He had to defend a complete
about-face in the Labor govern-
ment's three-year policy of pre-
serving the value of the pound. It
meant eating his own words in
And eat them he did. He re-
minded the House that back in
July he had said: "Those who
advocate devaluation are calling
for a reduction in the wage levels

and the real wage standards of
every member of the working
He explained the government's
new economic strategy. It boiledl
down to shifting production from
the home market to exports. In
effect, British workers will be
making cars, washing machines:
and consumer goods for foreign-
ers to buy - and not for them-
selves. The new lower rate of the:
pound should make these goods
more saleable. The earnings over-
seas, as the government sees It,
will put the balance of payments
into the black in about 18
Callaghan went on: "This is:
the price we shall have to pay.1
When we come to 1969 we should
be able to afford a rise in per-
sonal consumption. . . Then we
shall begin to feel the benefit of

the action we have now taken."
The normally affable chancel-
lor who goes by the nickname of
"Sunny Jim" read his statement
in a low, almost faltering voice
and practically lost his audience
at some points to the hecklers.
Then the questions began to
roll in. Callaghan, leaning on the
big red dispatch box with increas-
ing confidence, handled them
deftly .
One by one, the various factions
of the often warring Labor party
weighed in, and each one sup-
ported devaluation.
Michael Foot, most articulate
spokesman for the party's left,
told Callaghan: "Many MPs now
rejoice that we have got this al-
batross off our necks." Callaghan
thanked him, saying: "I need
friends at the moment."

proar Over


. I

., .,.,.,_.. ._ .,.,.., __ w ,

----- --- ----




WASHINGTON (P)-A possibili- Congressional sour
ty that the congressional roadblock administration plans
to a tax increase may be demolish- strong push to meet t
ed emerged yesterday among the despite the short tim
financial shock waves created by That could mean pr
devaluation of the British pound. session until Christm
Rep. Wilbur D. Mills, holder of The surtax had be
the key to tax legislation as chair- dead for this session
man of the House Ways and Means conceded on Friday a
committtee, announced the com- ference.
mittee will meet Nov. 28 to hear But on Saturday
new administration proposals for valued the pound fr
reduced spending. $2.40. On Sunday the
Deep spending cuts are the con- serve Board moved t
dition set by the committee for dollar from speculati
considering President Johnson's its discount rate.
proposal for an anti-inflationary Mills, an Arkansa
10 per cent surtax on individual disclosea in a speech a
income and corporation taxes as of Ark. that Secretary of
Jan. 1. Henry H. Fowler advi



ces said the
to mount a
hat deadline,
ne remaining.
rolonging the
en considered
; Johnson so
Lt a news con-
Britain de-
rom $2.80 to
Federal Re-
o defend the
on by raising
as Democrat,
at Hot Spring,
'the Treasury
sed him, dur-

ing the eventful weekend, that the( Rusk discussed the matter withI


Stocks Tumble,

Make Fast Recovery

NEW YORK-The stock market'
was driven to a heavy loss yester-
day by the initial impact of de-
valuation of the British pound and
increases in British and U.S. in-
terest rates. But it steadied and
erased most of the decline.
A wave of selling hit the market
at the opening bell and prices re-
treated on a broad front.
The Dow Jones average of 30
industrials tumbled 14.96 points in
the first half hour of trading. The
blue chip stocks that make up this
index began firming around mid-
day and the loss was cut to 4.33
points at 857.78 at the close.
* Losses Exceed Gains
But of 1,482 issues traded, losses
exceeded gains by 1,172 to 193.
Robert Johnson, an analyst for
a brokerage house, called the mar-
ket's performance "most reassur-
"The panic selling which was
obvious in early trading subsided
and was replaced by selective buy-
ing," he said.
Volume on the New York Stock
Exchange spurted to 12.75 million
shares from 10.06 million Friday.

Leading issues suffered losses
ranging to several dollars a share.
Gold mining stocks rallied against
the general trend as they will be
worth more in pounds sterling and
other devaluated currencies.
'American' Also Hit
Prices also fell sharply on a
broad front in heavy trading on
the American Stock Exchange.
The Tokyo stock market suffered
its worst setback in 18 years. Small
Japanese trading firms which do
business with Communist China
were expected to be hard hit since
China was scheduled to pay more
than $50 million to them in
World Development
The Bank of Canada raised its
rediscount rate from 5 to 6 per
In other developments, Israel
cut its pound from-3 to the dollar
to 3.5. Denmark cut its currency
from 6.97 - to the dollar to 7.5.
Spain cut from 60 to the dollar to
70. Malaysia's old sterling cur-
rency was cut by 14.3 per cent.
Hong Kong, Bermuda, Ireland, and
Guyana also cut their currency the
same as Britain.

administration has prepared a new'
plan for spending cuts for the
committee to consider.t
Fowler, Budget Director Charles
Schultze, and Chairman Williamt
McChesney Martin of the Federali
Reserve Board will be the witnesses
at the Nov. 28 hearing, Mills said.z
Must Agree on Spending
When it shelved the tax bill, the
Ways and Means Committee said
it would take up the issue again if
Congress and the administration
came to an agreement on reducing
government costs.
Apparently Mill considers Fowl-j
er's proposal worth considering.
And on the Senate side, Dem-
ocratic Leader Mike Mansfield of'
Montana called on Congress to
forget its mid-December adjourn-
ment plans and stay in session. He
urged an even larger tax boost
than Johnson has asked.
The stock market slumped in
heavy early trading, then recover-
ed most of its loss. The morning
selling wave was a reaction to the
devaluation and to the Federal
Reserve's defensive tightening of
its discount rate-an increase from
4 per cent to 4.5 per cent in the'
interest rate it charges in lending
money to commerical banks.
Officials Satisfied
American officials voiced satis-
faction and relief by nightfall as
the behavior of American and
world finandial markets following
the shock of devalution.
"Everything has gone as ex-
pected-very orderly," said a
Treasury spokesman.
A Reserve Board source said:
"The markets are doing very, well.
Bonds are off a little-about as
much as expected."
The dollar remained strong in
the money markets of Europe.
Secretary of State Dean Rusk
said he is pleased that "most of the
important governments" did not
follow Britain's lead and devalue
their currency.
Rusk said the United States will
act now to minimize the impact
of the British action in this coun-
try, and to "keep our export mark-
ets in good shape."

newsmen after a closed session
with the Senate Foreign Relations
Majority Leader Mike Mansfield
called on the Senate to forget its
mid-December adjournment plans.
It should hike income taxes, even
more than the 10 per cent sur-
charge asked by President John-
son, the Montana Democrat said.
"Much as I hate. to say so, much
as I abhor the possibility, I think
the welfare of the country and the
stability of the dollar come before
any adjournment plans," Mans-
field told newsmen.
Symington in Agreement,
Sen. Stuart Symington (D-Mo),
was among those who agreed that
Congress might have to prolong
the session. "It is time for this
government to face up to financial
reality," he said.
There was a rumble of disagree-
ment from the Republican side.
Senate Minority Leader Everett
M. Dirksen of Illinois said the Fed-
eral Reserve's move "should ease
the pressure for a tax increase,
but only for a while."
Dirksen said he still believed
Congress might be able to adjourn
about Dec. 15. But in any case, he
said, until the House acts, "our
hands are tied."

Plane Flies
To Havana
Russian Allegedly
Waylays Light Craft
Bound for Bahamas
HOLLYWOOD, Fla. (A") - The
pilot of a twin-engine plane
chartered for a flight to the Ba-
hamas was forced into Communist
Cuba yesterday by an armed hi-
jacker he described as a Russian.
"This man is armed and he in-
tends to take this plane to Ha-
vana," the pilot, J. V. Raymond of
Pompano Beach, radioed shortly
after takeoff from Hollywood.
The message was received by
the Federal Aviation Administra-
tion at Miami as Raymond was
flying southward toward the Flor-
ida Straits.
Cuba Remains Mum
In Havana, the Cuban Foreign
Ministry said it had no informa-
tion about the plane and Cuban
radio made no reference to it in
Newsmen who approached Lib-
erty Airport near Havana saw
what appeared to be a twin-en-
gine blue and white or blue and
green plane parked on the land-
ing strip surrounded by Cuban
security cars and a van. The ve-
hicles drove off and the ulane
was pushed to the side of the run-
It was the same field where
Maj. Richard Harwood Pearce
landed in a small plane when he
defected to Cuba last May. He
was the highest-ranking U.S. of-'
ficer to defect in the cold war.
George Naismith of Crescent
Airways in Hollywood said the
Piper Apache 23 was rented by a
man who identified himself as
Felix S. Marisy and said he want-
ed to go to Bimini, 60 miles east
of Miami to pick up his wife,
Jets Follow
"Two fighter jets from Home-
stead Air Force Base south of
Miami were scrambled up to head
off the plane but fell back when
the hijacker went on the radio
and warned he would kill the pilot
and co-pilot, Jeff White, if the
two F104 intercepters did not get
off his tail.
The FAA received a radio mes-
sage from Havana that the hi-
jacker would be allowed to disem-
bark and that the plane would be
free to return to the United

Cambodian A m b a s s a d o r Huot
Sambath opened the annual die-
bate on the seating of Red China
yesterday by telling the UN Gen-
eral A s s e m b I y "international1
agreements can not be reached
. without representation of1
China, a nuclear power.
"The Chinese people, like the
American people, or any other
people, are perfectly entitled to
adopt the political system of their
choice," he said, adding that the
question is not whether to admit
China to the United Nations but
to decide who represents the 750
million Chinese on the mainland.
He said a simple majority vote,
rather than the two-thirds ma-
jority vote sought by the United
States and 13 others, is all that
is needed for council action.
Sambath called for the expulsion
of Nationalist China from the
United Nations.
The other speakers on the
question yesterday - Nationalist
China, Japan, and the Philippines.
- opposed seating Communist
Nationalist Foreign Minister
Wei Tao-Ming. whose island re-
public has a population of 12
million, rejected the idea that
Peking has the support of the
people of mainland China, assert-
ing that only five of the 26 main-
land provinces "remain under Pe-
king's active control."
Wei warned that to admit Pe-
king "purely on the basis of fear
is to encourage it to move from
aggression to aggression until
there remains no tolerable alter-
native to war." he said.
As usual, all representatives of
the Soviet bloc walked out when
Wei began speaking. Assembly
president Corneliu Mannescu, for-
eign minister of Romania, left the
rostrum before he began to speak
and one of the vice-presidents,
Ambassador Jose Rafael Molipe-
Urena of the Dominican Republic,

MOSCOW-Four young Ameri-I
can sailors who left their ship in
Japan to protest the Vietnam war
said yesterday they had accepted
Soviet help to come here on the
way to a neutral country.
The four appeared on Moscow
television to condemn the U.S.
war effort in Vietnam in calm,
measured terms.
The four were described as be-
ing "in transit from Japan."
Their destination was not dis-
closed, but they said they wanted
to get in touchwith "international
forces advocating peace and ac-
tively support these forces."
* * *
States has expressed official re-
gret to India for "any casualties
that might be caused" the Inter-
national Control Commission in
Hanoi by American air attacks on
targets in the North' Vietnamese
The State Department, in the
announcement yesterday, refused:
to confirm, however, that U.S.

UN General Assembly Opens
Debate On Chinese Admission

presided during Wei's speech.
Philippine Ambassador Salva-
dor P. Lopez opposed the seating
of Red China, saying:
"The Chinese people themselves
must break down the new Great
Wall of fanatical doctrine which
their leaders have built around
their country."
Japanese ambassador S e n in
Tsuruoka, whose country is a co-
sponsor of the resolution calling
for a two-thirds majority vote on
seating Red China, said it must
be considered an important issue
-requiring a two-thirds vote-be-
cause replacing Nationalist China

with Red China "would inevitably
upset the balance of power in
southern Asia."
The China debate is to resume
today and a vote is expected Fri-
day on a resolution by Cambodia
and nine nonaligned and Com-
munist countries seeking to sub-
stitute Communist Chinese for
Nationalist Chinese delegates in
the United Nations and all re-
lated organizations.
Sources close to the Chinese
delegation anticipate a vote of 59
to 45 against the pro-Peking
resolution. Last year the vote was
57 to 46 on a similar resolution.

World. News Roundup

aircraft were responsible for the
casualties reported last week.
Supreme Court told the Reagan.
administration yesterday it could
not cut back Medi-Cal by $210
million a year.
In a 5-2 decision, the high court
upheld a decision by Sacramento
Superior Court Judge Irving H.
Perluss that invalidated new
regulations adopted by Spencer
W. Williams, Health and Welfare
Department administrator.
Justice Raymond L. Sullivan,
writing the majority, 47-page
opinion, said the amended regula-
tions violated mandatory require-
ments of the Medi-Cal Act.
DETROIT-Five thousand tool
and die workers yesterday struck
54 Detroit tookmaking firms.
Blaine Marrin, president of
United Auto Workers Local 157,
said the strike was called to sup-
port demands for a $1 hourly in-
crease in wages and a 25-cent
hourly hike in. fringe benefits.
Present hourly wage is $4.46.

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