Box 16, Folder 5, Document 7

Box 16, Folder 5, Document 7

Publishedevery day in thayear i The New York Times Company

———S—
ADOLPHE s, OCHS, Publisher 1998-1988
ORVIL H. PRYFOOS, Publisher 1962-1058



Fiscal Policy at Last
The immediate impact of President Johnson’s
new anti-inflationary program is mainly psycho-
logical, It should help to calm and reassure the
netion’s financial markets, which have been under-
gomg convulsions in recent months. During this
time the markets have appeared distressed and dis-
‘heartened in reacting to the Federal Reserve's
increasingly tizht money policy and to the un-
_ certainties posed by the Administration's failure to
make use of its own fiscal weapons. .

Now Mr, Johnson has ended his self-imposed
paralysis. In asking for a temporary suspension of
both the 7 per cent investment tax eredit and ac-
celerated depreciation benefits, he is hoping to slow
the boom in business spending. He also promises to
limit Federal outlays and has asked the Treasury
to cut down on sales of participations in Govern-
ment assets, which were originally designed to
reduce the budget deficit but which have had the
unfortunate effect of reinforcing the money
squeeze.

The President thinks that these fiscal measures
will serve to curb demand for credit, enabling the
Wederal Reserve to follow a more moderate mone-
tary policy, one that does not carry the risk of
tightening eredit to the point where it could choke
off the expansion in business. To clarify his posi-
tion he has called on the Federal Reserve as well
as the nation’s commercial banks to cooperate “to
lower interest rates and to ease the inequitable
‘burden of tight money.”

Now that monetary policy does not have to carry
the whole burden of opposing inflationary pres-
sures, there is a good chance that the fears that
have plagued the marketplace will subside. Money
may still be tight, but once fiscal policy begins to
play a part, however modest and belated, the
psychological threat of a monetary panic becomes.
“much less a danger,

But the prattical effect of most of the Presi-
deritis program will not be felt until next year.
“There is no stopping the current rise in business

investment, Nor is there an effective brake against
price and wage increases. The dose of inflation that ©

is now infecting the economy will go unimpeded.
These weaknesses stem directly from the overly

expansive fiscal and monetary policies pursued by

Washington long after stimulation was needed.
What has been done cannot be undone by the

President's program. But by acting now, Mr. John-

son may help to minimize the damage wrought by
too much reliance on monetary policy and too little
use of fiscal policy.

A Nod to Peking

Confusion now engulfs the remarks that Chen
Vi made to Japanese members of Parliament on

their visit to Peking, but the United States has

taken the eorrect course in publicly weleoming the
mild version originally published in Tokyo.

Some of the legislators apparently thought ae
munist China’s Foreign Minister had said his
country was “mot necessarily dismissing’ the pos-
sibility of talks with the United States about the
war in Vietnam. This would indeed represent a

THE NEW YORK TIMES INTERNATIONAL i BOEIONG SATURDAY - SUNDAY, SEPTEMBER 10-11, 1966.

ARTHUR HAYS SULZBERGER.
: cate none os eee

Fidi at and Publisher
@
HARDING F. BANCROFT, Executive Vico Presiden’
ANDREW FISHER, Vice President
MONROE GREEN, Vice President
IVAN VEIT, Vice President.
FRANCIS A, COX, Seoretury-Treasurer —
e
TURNER CATLEDGE, Executive Editor
JOHN B, OAKES, Editorial Page Bditor
e
LESTER MARKEL, Associate Editor
JAMES RESTON, Asaociate Hditor



sharp turn in Peking’s policy. Instead of denigrat-

ing the report, the State Department was right to -

respond promptly and positively to the remarks
attributed to the Foreign Minister, a response
echoed by President Johnson at his press con-
ference Thursday. His response underscores Wash-

ington’s recognition that mainland China has a

legitimate stake in resolving the conflict and bring-
ing peace to Southeast Asia.

There is, of course, 9 more dramatic, more con-
structive, way for the United States to demon-
strate, in the President’s words, that it will use
“every means available” to improve relations with
China and bring that country into responsible
participation in international affairs: Washington
could drop its opposition to the admission of
Peking to the United Nations, provided a separate
membership were retained for Nationalist China
on Taiwan.

At a time when Peking is steadily alienating

even the other Communist regimes in Asia and

frightening most of its neighbors, the temptation
for Washington to sit tight and bar the United
Nations door for one moré year will be great.
But a period in which Peking is maintaining its
truculence toward much of the world, while under-
going the internal convulsion of Mao’s “cultural
revolution,” might be the best time to open the
United Nations door. There must be elements in
China—Foreign Minister Chen could be among
them—who fear China's growing isolation.

A. “two-China” solution is certainly favored by
a big majority of United Nations member Govern-
ments, however they finally vote in the Assembly.
And this policy would remove from the United
States the heavy onus of keeping out of the only
functioning peace-keeping organization a Govern-
ment that rules, however badly, more than a fourth
of the human race.

The Riot in Atlanta

An artificially induced riot involving a few

hundred susceptible Negroes shattered the calm of
an Atlanta afternoon, and it may have shattered

much more. There is_no_way of gauging fully its.

effect on a Southern community that had been
deservedly considered a model in race relations.
Particularly dismaying was the abusive treat-
ment accorded Mayor Ivan Allen Jr. when he
rushed to the scene and tried to calm the rioters,
They had been whipped to frenzy, reportedly by

the so-called Student Nonviolent Coordinating

Committee, which espouses the separatist and in-
flammatory slogan of “black power.”

Such was the mood of the mob, hastily recruited
after a Negro suspected of stealing a car had been
wounded while fleeing from the police, that Mayor
Allen was jarred from the top of a police car and
subjected to a barrage of bricks, bottles and verbal
abuse as he courageously stood his ground and
tried vainly to restore sanity.

This was an ironic reward for one of the few
Southern officials who supported the Civil Rights.

Act of 1964, To the degree that S.N.C.C., in its
new militancy was responsible for this violence, it
has done a gross disservice to the evolution of
racial harmony and the progress of the Negro in
Atlanta and elsewhere in the South.

| By TOM WICKER





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