FRIDAY, JUNE 30, 1967
TILE MICHIGAN DAILY
PAGE THREE
llusinessmen Support Tax Boost, Spending
Cuts
a
NEW YORK (P)--Many business
leaders say a boost in income taxes
would help cool an overheated
economy. But they and some con-
gressional leaders add that a cut in
government spending also would
help.
"Unless federal expenditures are
cut promptly, the deficit will be
very large," says Albert L. Nicker-
son, chairman of Mobil Oil Corp.
"Inflationary forces, a 1 re a d y
strong, would accelerate as the
year goes on, I believe a tax in-
crease will be needed."
The same views are held by
other leaders queried in a nation-
wide survey. In a similar survey
earlier in the year, most business
men were opposed to the six per
cent surcharge on personal and
corporate income taxes first pro-
posed by President Johnson six
months ago.
Congressional action on the
President's plan was urged anew
this week by two top officials, Wil-
liam McChesney Martin Jr., chair-
man of the Federal Reserve Board,
and Gardner Ackley, chairman of
Johnson's Council of Economic ad-
visers.
Both Martin and Ackley said the
surcharge, which in effect is a tax
on income taxes, should be at least
six per cent.
Heavy government spending on
both domestic programs and the
Vietnam war is expected to in-
crease the federal deficit to any-
where between $13.5 billion and
$29.2 billion. The war alone costs
an estimated total of $20 billion
a year.
Supporters of the surcharge
think it would serve as a revenue
builder that might help offset a
deficit in government financing
and also lessen the Treasury's bor-
rowing needs.
Sen. William Proxmire (D-Wis),
chairman of the Senate-House
Economic Committee, said he felt
Congress should be cautious about
enacting an increase. He said
economic developments should be
watched to see whether a reduc-
tion in buying power caused by
higher taxes would be unduly
harmful.
Rep. Thomas B. Curtis (R-Mo),
a member of the committee, said:
"The administration should come
forward with more information
and with proposals as to econ-
omies and exactly what tax and
what effective date they want.
Then Congress could discuss ra-
tionally what mix of taxation, bor-
rowing and sale of assets should
be used to finance the deficit."
And Rep. Gerald R. Ford of
Michigan, House Republican lead-
er, said: "They have not convinced
me a tax increase is necessary.
You would think the administra-
tion would make an effort to cut
back expenditures, but they just
don't try."
But Charles E. Walker, executive
vice president of the American
Bankers Association, said, "A
sharp cut in federal spending
would be economic, but politically
it isn't achievable."
Dr. Armand Ha'mmer, president
of Occidental Petroleum, said: "I
think business people would rather
see a tax increase rather than
tight money again. Last time
money got to tight that business
was paralyzed. At that time, if
we'd had a modest tax increase,
it wouldn't have been so bad."
"In the absence of greater fiscal
restraint, a tax increase may well
be necessary by next year," says
John V. Deaver, vice president and
associate director of economic re-
search of New York's Chase Man-
hattan Bank. "Efforts to reduce
the deficit are essential, and first
priority should be given to cutting
back now on such things as de-
fense expenditures."
A vice president of one of At-
lanta's large department stores
says he hopes a tax increase won't
be necessary but notes: "We have
to do something with the Vietnam
ftar costs and social welfare needs.
I suppose the pruning of expenses
is the best thing to do."
However, Mills B. Lane Jr., pres-
ident of Citizens & Southern Na-
tional Bank at Atlanta, says: "An
income-tax increase is very de-
finitely in order. Whether it should'
be six per cent or not, I don't
know, but the sooner the better.
With the high degree of govern-j
ment expenditures this year, to-
gether with the increase in con-
sumer purchases and a $20-billion
deficit, inflation is going to heat
the economy more."
As an alternative, Lane suggests
the government reduce its "spend-
ing on needless programs, or in
the ones that can be put off."
Differing views were voiced by
Walter W. Williams, board chair-
man of Continental, Inc., a Seattle'
mortgage company, and John
Fluke, president of a Seattle
manufacturing company.
Williams said he felt there'
should be a tax increase and that
it should be over six per cent but
cautioned that "too much would
dampen the economy." He said he1
recommended a cut in government
spending if the increase was not
approved.
"I don't think the increase is
necessary," Fluke said. "I think
we ought to watch government
spending before we talk of increas-
ing taxes."
Leon . H. Keyserling, former
chairman of the Council of Econ-
omic Advisers, told a meeting in
New York that he considered a
surcharge "ill-timed and unwise
and it would further restrain an
economy which now needs a pro-
gram for balanced acceleration of
the rate of growth."
In San Antonio, Tex., Morris
Jaffee, a financier, said he felt a
tax increase was needed.
"We ought to have at least a six
or seven per cent increase," Jaffee
said. "I would like to see it im-
mediately. I'd rather pay taxes
and have a healthy economy. Peo-
ple ought to realize we're fighting
a war and you have to pay for it."
In Chicago, Joseph Bock, chair-
man of Inland Steel, said "that in
the light of the apparently very
great budget deficit, a tax increase
is necessary no later than Jan. 1 to
prevent further drastic inflation.
The only other way is a sharp cut-
back on nondefense spending."
H. Frederick Hagemann Jr.,
president and board chairman of
State Street Bank & Trust Co. in
Boston, said a tax increase was
"necessary under existing circum-
stances," adding that "there could
be inflationary pressure late this
year" if the budget remained well
out of balance and spending were
not cut.
Annexed Jerusalem
Opens to Commerce
In Spite of Threats-
TARIFFS CUT:
Johnson Gives U.S. Approval
To Geneva Trade Agreement
JERUSALEM (RPI-Divided for
nearly two decades, Jerusalem be-
came one city yesterday, and thou-
sands of Jews and Arabs streamed
0 through the open gates, mingling
and fraternizing in the streets.
Israel, by act of Parliament
Wednesday, annexed the Old City,
wrested from Jordan in the Middle
East war. Thus Israel ignored the
warnings of the United States.
Britain, the Soviet Union and
4 France and a plea from Pope Paul
VI that Jerusalem be internation-
alized.
LUN May Call
For Israeli
Withdrawal
UNITED NATIONS, N.Y. ()-
Israel came under mounting at-
or tack in the General Assembly yes-
terday for annexing the Old City
of Jerusalem. But Israel sought to
stem the tide by declaring its ac-,
tion brought peace to the once
divided city and access by all
faiths to the holy shrines.
It appeared likely the assembly
w would vote today on two rival
resolutions, each calling for with-
drawal of Israeli troops from Arab
territory occupied in the recent
war.
There was no indication, how-
ever, that any assembly action
would shake Israel's determination
to rule all of Jerusalem.
The United States, Britain and
Canada worked behind the scenes
to produce a rival resolution call-
ing for a troop withdrawal, but
tying it in with a demand for an
end to the state of belligerency by
all sides.
Peace Prospects
The resolution also would call
on Secretary-General U Thant to
send a special representative to
the Middle East to explore the
prospects for a peaceful settle-
ment.
Both sides expressed confidence
they could win the necessary two-
thirds vote.
Soviet publications in Moscow
endorsed the nonaligned resolu-
tion, thus indicating the Russians
had dropped demands for con-
V demnation of Israel as an aggres-
sor and payment of war damages
to the Arabs. The Soviet Union
had requested the convening of
the assembly in emergency session
to press those demands.
U.S. Won't Press
Similarly, the United States was
understood to have decided against
pressing to a vote its resolution
calling for direct Israeli-Arab
negotiations and omitting any
mention of immediate troop with-
drawals
All the parties were agreed on
giving priority to the nonaligned
resolution. The Western powers
theorized that the resolution would
be defeated, and the road opened
for an immediate vote on their
own proposal.
Against this backdrop of behind-
the-scenes negotiations, debate
continued in the assembly, where
speakers assailed the annexation
move by Israel and asked for in-
ternationalization of Jerusalem.
Annexation
Raja Aznam, the delegate from
Malaysia, asserted that annexation
was not acceptable to his country,
but added that he considered in-
ternationalization should be ap-
plied only to the Old City. The
UN partition plan for 1949 called
for that status for the entire city.
Ambassador Zenon Rossides of
Israel's press backed up govern-
ment declarations that Israel never
would give up the Old City, but
from Cairo to Baghdad. Arab press
and radio assailed Israel. Some
called for holy war to liberate
Jerusalem, sacred to Moslems as it
is to Christians and Jews.
The checkpoints and barbed-wire
barriers between the Jewish and
Arab sectors came down after the
Israel radio had announced that
the gates were being thrown open
for traffic in both directions.
A combined Jewish and Arab
police force stood by as thousands
poured through gates in the 400-
year-old wall surrounding the Old
City.
Most of the traffic was through
historic Jaffa Gate. The approach
road there had been cleared of
rubble and the litter of war ac-
cumulated since 1948-49 when in
the Palestine war Jordan seized
the Old City and Israel took over
the new sector
Israelis passed through the gates
with guide books and shopping
bags. Arabs came with new Israeli
money they had exchanged for
their Jordanian dinars at the Is-
rael State Bank offices in the Old
City
An Arab entering the New City
for the first time helped to break
the ice. He opened a bottle of wine
in the street and invited those
nearby to "drink to peace" Sev-
eral joined him in the toast
In the Meah Shearim quarter of
the New City, home of the severely
Orthodox Hasidim Jews, an Ara-
bic-speaking Israeli, black-garbed
and bearded, explained to an Arab
the value of the Israeli currency.
Shops in both sectors did thriv-
ing business. In the Old City, Is-
raelis bought Arab souvenirs,
cheap Oriental spices they had
mised for years, pancakes of Arab
bread and Old City maps bearing
the imprint "Jerusalem-Jordan."
Arab traders from the old sector
set up stalls in the Jewish half
of the city. They sold trinkets and
Oriental sweets.
While Arabs and Jews here for-
got their mutual distrust, at least
temporarily, the Arab world seeth-
ed at Israel's annexation
Radio Cairo said the Islamic,
Council at an emergency meeting
called on Moslems the world over
to wage a holy war to liberate
Jerusalem.
A similar call came from Presi-
dent Abdel Rahman Aref of Iraq.
Broadcasting from Baghdad, his
capital, he declared the Jews were
"seeking to destroy Islam" and
urged all the world's Moslems to
joih in a struggle to recover Jeru-
salem.
-Associated Press
FIRST HAT IN THE RING
E. Harold Mun, associate dean of Hillsdale College won the Prohibition party nomination for the
1968 presidential race at the conclusion of the party's national convention in Detroit yesterday.
Pinning a "Munn in '68" button on him is delegate Mark R. Shaw of Melrose, Mass.
OTHERS DIVIDED:
RhodeIs and's Gov. Chafee
Campaigns for Romney in '68
WASHINGTON (P)-President
Johnson ordered the U.S. repre-
sentative at Geneva, Switzerland,
yesterday to sign the 53-nation
signing of new tariff agreements
today. It would reduce U.S. duties
on imports worth $7.5 billion to
$8 billion a year.
The cuts are balanced, the gov-
ernment said, by foreign tariff
reductions on an equal amount of
U.S. exports. On both sides the
reductions average 35 per cent,
it said.
A 15-page summary of the
s t o r m y, three-year "Kennedy
Round" of tariff talks, completed
in May, was issued by the office
of the President's special repre-
sentative for trade negotiations,
William M. Roth.
It gave no details but an-
nounced these highlight results:
-"Import duties are being cut
in half on a broad range of in-
dustrial products." The recipro-
cal cuts range from 35 to 50 per
cent "on many more products."
-European Common Market
tariffs were cut on farm products
with a U.S. export trade value of
$200 million. But over-all tariff
reductions in agriculture are
"considerably more modest" than
in industry.
--Anantidumping code has
been accepted, under which other
countries will apply "fair and
open" procedures similar to U.S.
practices in the case of import
goods unloaded at less than
market value.
Still not available from Roth's
office are the more than 4,000
pages of new tariff rates needed
to permit item-by-item, country-
by - country, before - and - after
comparisons of the complete tar-
iff schedules.
The details will be available at
the office in Washington next
week, the announcement said,
but will not become available in
published form until mid-July.
Roth's deputy, W. Michael
Blumenthal, was designated to
sign for the United States in a
ceremony this morning.
Approval by Congress is not
needed. The legal authority was
given in advance, in the Trade
Expansion Act of 1962, to the late
President John F. Kennedy. The
negotiations were given his name
in recognition of his leadership.
However, a two-thirds vote of
the Senate will be needed to ratify
a new world grains arrangement
negotiated at Geneva.
And the proposed elimination of
the so-called "American selling
price" system for reckoning tar-
iffs on chemicals, drugs and dyes
Expect North Viet Offensive
Despite U.S. Bombing Raids
-which produces higher duty
than other pricing methods-
must be approved by Congress
before European countries will
make the full cuts contemplated
in their own chemical tariffs.
And controversy looms over the
antidumping code.
Some members of Congress
contend that congressional ap-
proval is needed for the new rules
to regulate cut-price dumping-
rules under which this country
would shorten the periods in
which foreign goods are barred
from sale during price investiga-
tions.
JACKSON, Wyo. (A') - Rhode
Island Gov. John H. Chafee em-
barked yesterday on a campaign
of "missionary work" for the pres-
idential cause of Michigan's Gov.
George W. Romney. But a New
England colleague rejected the
idea of an early lineup behind
any White House contender.
Gov. John A. Volpe of Massa-
chusetts said he might seek to
become New England's favorite
son in the 1968 Republican race.
That could pose a problem for
Romney in the crucial season-
opening New Hampshire presiden-
tial primary next March.
Joins Chafee
New York Gov. Nelson A. Rock-
efeller, insisting he will not run
for the White House, Joined Chaf-
ee in seeking to convince his col-
leagues at the Republican Gov-
ernors Conference that they should
line up behind Romney.
And the absent Romney wired
assurance of his determination to
fashion "a vitally necessary na-
tional Republican victory in 1968."
Presidential politics overshad-
owed the formal, closed-door con-
ferences on highways, federal-
state relations and medical care
programs as 21 Republican gover-
nors convened at this Grand Te-
ton National Park resort.
New Mexico Gov. David F. Car-
go pressed his quest for a guber-
natorial outline of the kind of
candidate the party should nomi-
nate for the White House.
Cargo said moderate and liber-
al GOP governors were making
progress in that direction. But
he acknowledged that their pri-
vate caucuses have foundered in
debate about some of the men
who now loom in the presidential
running-Romney, former Vice-
President Richard M. Nixon and
California Gov. Ronald Reagan.
"They were pretty well agreed
that Reagan was cutting the feet
out from under Nixon," Rockefel-
ler said.
Romney, Reagan Absent
Like Romney, Reagan was ab-
sent, both reporting that the press
of state business kept them at
home.
Chafee and Rockefeller joined
in an effort to revive the appar-
ently faltering Romney campaign.
Chafee said he had eight or
more allies among the Republican
governors in the effort to assist
Romney. But he acknowledged: "I
don't think that you are going to
get 25 governors out backing any-
body at this early state of the
game."
However, Chafee said, Romney
ndu
has more support among the gov-
ernors than any other potential
nominee. He said some governors
are cautious about an endorsement
because of uncertain prospects at
home.
Chafee said he hopes to build
a New England coalition for Rom-
ney and, in the process, help the
Michigan governor prepare for the
crucial New Hampshire primary.
While moderate Republican gov-
ernors such as Oregon's Tom Mc-
Call still talk of Rockefeller as
a presidential contender, Chafee
said of the New Yorker: "He's
not a candidate so I don't spend
my time thinking about that."
SAIGON ()'-Communist mil-
itary ranks are thinning, and re-
pair of bomb damage is slowing,
but North Vietnam is expected
to mount another major offensive
in South Vietnam this summer, a
U.S. spokesman said yesterday.
The spokesman told newsmen
the crossover point - the time
when the enemy's troop losses be-
come greater than his gains-was
reached some time ago, probably
last March.
The expectation, nevertheless, is
that Red regiments will hit again
within a few weeks at allied hold-
ings just below the border demil-
itarized zone and in the central
highlands, w h e r e Communist
thrusts were turned back with
heavy fighting in the spring.
U.S. Casualties Climb
The U.S. command disclosed
American combat casualties had
climbed sharply last week. Con-
tributing to these losses was the
heavy mauling of two rifle com-
panies, one in a Mekong River
delta fight and the other in the
central highlands.
The American toll was more
than double the losses among the
armed forces of South Vietnam
and the other allies.
The American spokesman in
Saigon, in touching on broad as-
pects of the war, defended the
air offensive against North Viet-
nam.
Speaking 24 hours after Sen.
John Stennis (D-Miss) disclosed
in Washington his subcommittee
of the Senate Armed Services
Committee was investigating the
effectiveness of the bombing, the
spokesman said if it were not for
the bombing, the North Vietnam-
ese capability to wage war in
South Vietnam would be many
times greater than at present.
Along the same line, Rear Adm.
Roger W. Mehle, who directs Navy
air attacks on North Vietnam told
correspondents that "the war
would be a lot more difficult for
our ground forces" if the bombing
stopped.
"You would be giving North
Vietnam the ability to introduce
far greater amounts of material
and far greater numbers of men
into the south than they can do
now," Mehle said.
Cited at the Saigon briefing was
a lag in the "construction capabil-
ity" of the North Vietnamese in
the face of bomb damage.
The spokesman said wrecked
bridges once were repaired in 24
hours but that American fliers
now report some are still in ruins
48 hours after they have been
knocked out.
The air strikes, aimed to impede
the movement of troops and war
supplies, also have taken a tre-
mendous toll of North Vietnam's
trucks and railroad cars, he said.
<f,
Sessions of Viet Armed Forces Council
Lead to Rumors of Military Dissension
World News Rou
By The Associated Press
HAVANA - Alexet N. Kosygin
and Fidel Castro apparently have
recessed Havana consultations for
a first-hand look at Cuban Com-
munism in the countryside before
Kosygin's expected departure to-
day.
The Soviet premier and the Cu-
ban government chief held their
last formal talks Wednesday and
then, according to Soviet sources,
went to Guane. Near Cuba's west-
ern tip, this is the site of one of
Castro's pet agricultural projects.
* * *
TOKYO - Two hundred thou-
sand Chinese besieged the Burm-
ese Embassy in Peking yesterday
to protest "the Burmese reaction-
ary clique," Peking Radio report-
ed.
The broadcast said the walls
around the embassy building, its
front gate and streets leading to
A Peking broadcast said British
military helicopters flew seven
sorties over islands of Kwang-
tung province June 5 as a provo-
cation.
* * *
WASHINGTON-A nuclear test
of low yield, less than the equiv-
alent of 20,000 tons of TNT, was
conducted underground yesterday
at the AEC's Nevada test site,
the commission announced.
It said there was a small re-
lease of radioactivity, most of it
deposited within the test site, but
"very low levels of radioactivity
have been detected on the ground
near the site."
* * *
NEW ORLEANS-Actress Jayne
Mansfield and two men were killed
early yesterday when their car
rammed the rear of a truck, slowed
by a cloud of mosquito spray fog
across the road.
deaths on the U.S. ship, the
court was told.
Navy
* * *
MONTGOMERY, Ala. - Gov.
Lurleen Wallace, suffering from
cancer, will enter the M.D. Ander-
son Hospital at Houston, Tex.,
next Tuesday, the governor's of-
fice said yesterday.
The goverior announced Mon-
,day that tests at a Montgomery
hospital last week had disclosed
that she was suffering from a re-
currence of cancer.
SAIGON (')-South Vietnam's
Armed Forces Council met all day
yesterday, lending substance to a
flood of rumors that there was
dissension in the military govern-
ment that rules the nation.
The all-day meeting followed
similar meetings Tuesday night
and Wednesday night.
The rumors had it there was an
argument among the ruling gen-
erals over the current presidential
race in which Premier Nguyen Cao
Ky and the chief of state, Nguyen
Van Thieu, are candidates.
Unconfirmed reports persisted
that there were troop movements
involving South Vietnamese mar-
Phone 434-0130
Euta n. 4 ARPENTER ROAD
FIRST OPEN 7:00 P.M. FIRST
RUN NOW SHOWING RUN
ts~DUBE.the
thesorxs .
the actionI
when
ines in the 3rd Military Corps,
which surrounds Saigon.
Such troop movements usually
precede a military coup d'etat, or
could signal a maneuvering for
leverage in the discussions now
going on among the generals. The
marine commander, Lt. Gen. Le
Nguyen Khang, is loyal to Ky.
U.S. sources said they saw no
possibility of a coup and that no
unusual troop movements had
been reported.
But reports circulating widely in
Saigon said the major topic of the
I
I!
!
meetings was a charge against
Premier Ky of using unfair cam-
paign tactics in his race for the
presidency. The race has produced
controversy between Ky and
Thieu, and it appeared Ky's posi-
tion had weakened in the last few
days.
Some sources said the council
voted no-confidence in Ky yester-
day morning, but others said that
if there had been such a vote, Ky
would no longer be heading the
government.
/I I Igl q
Jair
Lane
CINEMA II
presents
JOSEPH LOSEY'S
THE SERVANT
(1963)
-'I
i
FESTIVAL
DEARBORN CAMPUS,
The University of Michigan
"Curlew River"
WED., July 5, 8:30
"Burning
Fiery Furnace"
THURS., July 6, 8:30
TICKETS:
DIRK BOGARDE
JAMES FOX
SARAH MILES
WENDY CRAIG
Phone 434-0130
C aMN CO MNTG AUD
COMING! COMING!
. .......6_ 3 .. &-
Screenplay by Harold Pinter
A fascinating, penetrating view of
modern corruption. Winner of three
Pv;i L AA-,1/4 ,AwiaL. nira Pih-
I
i
I