SUNDAY, SEPTEMBER 5, 1965 THE MICHIGAN DAILY P~t'.E r~ix~lV rafjL itint 1 H Steel Pact Permits Growth ithout Inflation By JACK MEYER President Johnson's eleventh- hour efforts to avert a nation- wide steel strike reflected the basic economic goal of the cur- rent administration - sustained growth without inflation. Sustained economic growth re- suits from continuously expanding production. High levels of business activity insure high levels of em- ployment. A strike by the steel- workers would have crippled pro- duction in the nation's largest in- dustry, thereby seriously dampen- ing aggregate production. The recessionary effects of a steel strike would have been heightened by the reverberating effects of the strike upon other industries and sectors of the economy. Automobile production and similar bulwarks of our pres- ent prosperity, would be forced to reduce output and lay off work- ers. Other less obvious examples of industries which would suffer from a strike can be cited. A steady supply of steel is the lifeline of commercial and indus- trial construction. The produc- tion of machinery and machine tools would grind to a halt by a steel shutdown. , In short, the adverse effects of a steel strike would diffuse throughout the nation, leaving many workers of diverse skills unemployed. An abrupt curtail- ment of the four-and-one-half year sustained boom would ensue, shattering the economic aspira- tions of the Administration. The President, however, was not striving to avoid a strike at any cost. For he and his economic advisors are committed to the maintenance of price stability as well as economic growth. Johnson was anxious not only for a settlement, but for a good settlement. Unnecessary wage hikes can be inflationary by put- ting pressure on employers to raise their prices in order to main- tain existing profit levels in the face of rising labor costs. The considerations were cer- tainly in the President's mind as he exhorted the bargainers to reach a reasonable agreement. He did not approach the nego- tiators unprepared. He was able to refer the union and industry rep- resentatives to the wage-price guideposts that his economic plan- ners have carefully established as standards for wage increases. The guideposts are based on the productivity of the labor force. They are effective in avoiding in- flationary pressures because they attempt to confine wage increases to, a level that is commensurate with productivity gains. Productivity is measured by out- put per man hour. As a worker's productivity rises, he produces more for his employer in a given amount of time, thereby cutting the employer's unit cost. Realizing this savings, the worker feels jus- tified in claiming a higher wage. If wages rise only in proportion to productivity gains, the em- ployer's profits are theoretically unaffected. If wage hikes exceed produc-) tivity gains, the employer will be tempted to raise his price to his customers to maintain his profits. Price increases in the steel in- dustry would probably be trans- mitted to other sectors of the economy in both direct and in- direct fashion: -Industrialists and builders who purchase steel would find their costs going up due to the higher price of the steel. -Even non-steel industries would be tempted to follow the lead of the steel industry; their expectations might warn them of an immanent rise in the cost of living that would squeeze profits if they do not raise their price. If a chain reaction of price in- creases led to a general inflation, the damage to our domestic pros- perity and to our balance of pay- ments situation could be severe. As domestic demand is discourag- ed by higher prices, our growth rate would falter. As foreign demand for our ex- ports drops off, our trade balance and general payments position worsens. The Council of Economic Ad- visors has set current wage guide- posts at approximately 3.2 per cent, although they recognize the necessity for some. Industry-by- industry variation. Wage in- creases that stay within the boun- daries of these guideposts will be noninflationary, the Council feels. Thus, both empirically and theoretically, the President was able to portray to both sides of the dispute the type of settlement that would be in the national in- terest. Papandreou Immediate Presses Greek "Dominican or Government _. Recognized B52 RAIDS CONTINUE: South Viet Forces Strike CT v ULUtt At Guerillas in Swamps ATHENS, Greece (P) - Ex- Premier George Papandreou made a startling offer Saturday for ending Greece's serious political crisis. It put heavy pressure on King Constantine to back down in their bitter personal struggle. Papandreou, 77, leader of the Center Union party, unexpectedly proposed that the eight-week crisis be solved by holding im- mediate elections under the su- pervision of his political enemies, the rightist National Radical Union-ERE. Panayiotis Canellopoulos, head of ERE, had suggested such a solution previously but few thought it would be accepted. Ca- nellopoulos, apparently caught by surprise, hurriedly met with lead- ers-of his party and then issued a statement reiterating his ac- ceptance of such a solution, al- though many of his lieutenants are reported to oppose and fear the idea. Whether the proposal is carried out rests entirely with Constan- tine, who until now has firmly rejected elections before 1968, re- gardless of who conducts them. He repeatedly has stated the country should wait until the term of the present Parliament expires before voting takes place. The king flew to Corfu Satur- day to join Queen Anne-Marie without indicating whether he would alter this stand in the light of Papandreou's offer. The pres- sure on him to do so could prove hard to resist. First reaction of Western dip- lomats who have watched the deepening crisis was that political veteran Papandreou had outma- neuvered Canellopoulos and the 25-year-old king. Suggestion They felt Canellopoulos' sug- gestion that his party form a government to hold elections, first presented at a crown council last Wednesday, had been made in the almost certain belief it would be rejected. It is generally accepted that Canellopoulos and his rightist fol- lowers are basically just as op- posed to elections now as the king. They fear Papandreou would win an overwhelming victory which would be a thinly veiled plebiscite against the royal family. A by-product of the crisis has been almost nightly demonstra- tions in support of Papandreou, against the king and, for some reason against Americans. Most of the demonstrations have been organized by leftist organizations. IJohnson Makes Large U.S. Aid Commitment WASHINGTON (A) - President Johnson announced yesterday U.S. recognition of the new govern- ment in Santo Domingo, thus closing one chapter in the Do- minican story which began with a bloody revolt in April. J'hnson called the next chapter a "begzinning a new road to peace, frerdom and hope for the Domini- can people." To help it on its way he pledged $20 million in U.S. aid. Much more American assistance is planned in the long process of reconstructing t h e Dominican. economy. In the months ahead, negotia- tions with the new interim regime of Hector Garcia-Godoy are ex- pected to lead also to the with- drawal of the Inter-American military force. Some 9,400 U.S. troops and 1,779 Latin Americans from five countries now make up t>'^ OAS peace force there. Tn a statement issued at his One Sentence Papandreou's surprising nouncement came in one an- sen- tence: "We accept the formation of a Radical Union (ERE) under the government from the National premiership of Mr. Panayiotis Canellopoulos to conduct elections within the constitutional limit of 45 days." At about the same time, the king was meeting with caretaker Premier Elias Tsirimokos at the Texas ranch, Johnson said the agreement by rival Dominican factions on a provisional govern- rhent under Garcia-Godoy 'mark- ed the end of an impasse which -Associated Press had brought danger and hardship .ihto the Dominican people during PARTY HEAD Pauayiotis Canellopoulos, shown In this 1958 four long and difficult months." picture, would supervise elections in Greece under a new com- Td rmsdths." promise move by ex-Premier George Papandreou. The President promised the full U.S. support to the new regime palace. Afterward Tsirimokos in- offer simply represented an agree- and called on the OAS to lead in dicated to reporters that the king ment between two parties, adding the rehabilitation effort. was aware of Papandreou's state- "I assume the party leaders will Administration sources in Wash- ment but would make no move in ask to see the king. Let's wait ington gave this analysis of the the crisis before Monday. and see what happens. It will take Dominican experience: Tsirimokos said the Papandreou some time yet." 0 Johnson feels he acted as re- quired in sending in U.S. troops and that he did not act a moment too soon. * Johnson is well aware of the SAIGON (1P)-South Vietnamese troops hit the Viet Cong in the steaming swamps of the Mekong River delta south of Saigon yes- terday and U.S. B52 jet bombers pounded suspected guerrilla posi- tions in the highlands far to the north. In the air war over North Viet Nam, a U.S. Air Force Phantom jet crashed after failing to pull out of a diving attack on a bridge. The pilot was presumed killed. Heavy antiaircraft fire was re- ported in the area. The eight-engine B52s, flying from Guam, hit targets in Quang Tin Province, 320 miles northeast of Saigon. It was the 18th B52 strike of the war. No Details U.S. military spokesmen gave no further details of the strike, pre- sumably another saturation bomb- ing of areas in which the Viet Cong guerrillas were believed dug in. In the jungle swamps of the Mekong River delta, the govern- ment force was reported to have killed 53 Viet Cong. But elsewhere in the Mekong area, the guerrillas attacked ar government outpost 135 miles south of Saigon, inflicting heavy casualties. Regional forces event- ually drove the attackers off. Government Force A government force ranging around Vinh Binh Province 75 miles southwest of Saigon cap- tured 24 guerrillas Friday in a battle that was launched Thurs- day at the mouth of the. Bassac River, 25 miles west of the pro- vincial capital of Phu Vinh. U.S. officials listed as missing a. U.S. Air Force pilot whose plane was brought down by North Viet- namese gunners Thursday 100 miles west of Hanoi. In Saturday's raids on the North, U.S. planes hammered at warehouse areas, bridges and trucks. Two U.S. B57 jet bombers -Associated Press AFTER A CLASH with the Viet Cong yesterday on Tan Dinh Island, South Vietnamese soldiers march by the body of another South Vietnamese slain in the fighting. WORLD NEWS ROUNDUP: Schweitzer in Coma, Death Approaching By The Associated Press LAMBARENE, Gabon-Dr. Al- bert Schweitzer lapsed into a coma again yesterday in the hospital he built for Africans on the jungle banks of the Ogooue River. A message sent aboard to relatives and close friends said: "He is dy- ing." "There is no more hope of hu- man effort that can save him," said his daughter, Rhena Schweit- zer Eckert. PITTSBURGH, Pa. - Steel union officials meet here today to vote on a contract agreement that would hike steelworkers' income almost 50 cents an hour over three years. Swift approval is expected. The optimism stems from the firmness of President Johnson's announcement Friday that nego- tiators "have reached essential agreement." Also, a union source indicated no difficulty is expect- ed; and approval by the ten maj- or steel companies is expected to be merely a formality. *' * . NATCHEZ, Miss. - Mississippi National Guardsmen assigned to prevent racial rioting planned yes- terday to remain in Natchez through the Labor Day weekend. The city remained calm. A boy- cott called by Charles Evers, state field director of the National As- sociation for the Advancement of Colored People was the only move pressed by civil rights forces. * ,. * KUCHING-British and Malay- sian forces have stepped up ground ,and air patrols in Malaysian Borneo after a rash of Indonesian guerrillas hit-and-run raids, mil- itary sources in Kuching said yes- terday. At least 32 Indonesian raiders and two British Gurkha troops were killed and another two Gur- khas were wounded in the four raids. * * * BOMBAY - Religious r io t s swept the west Indian city of Poona for the fourth day yester- day. Hindus tried to burn down a po- lice outpost and four other burn- ing incidents were reported in the anti-Moslem rioting. Police ar- rested about 40 Hindus. The out- breaks were far less severe than on Friday, when two persons were killed, scores injured and 1,938 persons arrested. * * * KODIAK, Alaska - A sharp, rolling earthquake shook this south-central Alaska fishing town early yesterday, but apparently caused little if any damage. The earth tremor was felt over a wide area of south-central Alaska including Anchorage, bad- ly damaged in the quake last year. JOHNSON CITY, Tex.-Presi- dent Johnson announced yester- day he will name diplomat William J. Porter as deputy ambassador to South Viet Nam. Porter is the hand-picked choice of Ambassa- dor Henry Cabot Lodge. cost in American lives and funds. There were 26 U.S. servicemen killed and 155 wounded, so far. The new Dominican provisional government ran into its first po- tentially serious problem Satur- day as opposition to civilian dis- armament developed in the rebel quarter. Rebel leaders indicated they would oppose the collection of weapons from civilians unless pro- visional President Garcia-Godoy dismisses certain military leaders, chief among them Gen. Elias Wes- siny Wessin, commander of the armed forces training center. attacked a fiery complex with five tons of bombs 85 miles southeast of Vinh. The planes drew light ground fire but both were said to have returned safely. * Forty other U.S. Air Force jets roamed the skies over the North in 10 different missions to hit targets of opportunity. U.S. air action in South Viet Nam included strikes against troop positions, rest and supply areas and base camps. There were these developments abroad: t W. Averell Harriman, U.S. ambassador at large, told newsmen in Helsinki, Finland, the Soviet Union is coneerhed about the Vietnamese war and -wants a peaceful solution. Harriman had private talks with Soviet leaders in Moscow in July. *Communist C h i n a again warned Britain on what Peking calls the movement of U.S. mill- tary planes and ships through Hong Kong en route to South Viet Nam. Hong Kong is a British colony. """"""" I I I ALL THIS AND MORE, IN THE EXPOSE-FILLED ISSUE OF THE '4 "BUNYY HUG" S~R~ IV, : f '": ' ' r mow; :' ".1C '".: :1 : .{'.tl Sc"BUNNYHUG" SHIFTGW THIS SUNDAY 10:30 a.m. "LIFE" 5:45 p.m. "IMPACT" (with supper) 7:00 p.m. "WHAT CAN I BELIEVE?" calvin malefyt, speaking university reformed church at East Huron and Fletcher loves students HEADQUARTERS for STUDENT and OFFICE SUPPLIES OFFICE FURNITURE, TYPEWRITERS and FOUNTAIN PENS SMITH-CORONA & OLYMPIA TYPEWRITERS Portable ALL MAKES, bought, sold, rented TERMS: We try to suit customer. I - DEALER for A. B. Dick Mimeographs and Supplies ....-- - I.- / FOUNTAIN PENS all makes Sales & Service (24 Hrs.) by Factory-trained men. 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