August 4, 1973

US BLS repts on Aug 3 that unemployment rate for teen-agers increased in July from 13.3% to 14.4%

Pres Nixon proposes Aug 3 bill that will eventually bring major changes to nation's banks and savings insts, message to Cong; says events during last decade have revealed significant defects in operation of financial insts; specific proposals detailed; Deputy Sec W E Simon says proposals amount to first major restructuring of financial insts since 1865

Fed Reserve Bd Chmn Burns, in Aug 3 testimony before Cong Joint Econ Com, sticks to his view that additional restraints should be put on econ if inflation is to be stopped and foreign confidence in dollar restored; says he favors mixture of monetary restraint, lower Fed spending and temporary tax increase; pledges, however, that red Reserve will not engineer any credit 'crunch'; says he defines 'crunch' as situation in which money supply is not growing at all and that Reserve is determined to keep monetary aggregates expanding but at more moderate rates; says talk of current business downturn is 'premature'; concedes he may be proved wrong, but says this is why he is advocating tax actions that would be 'quickly reversible'; wants Cong to reduce investment tax credit or impose special tax on individuals that would be held in escrow and repaid when econ turns down; in either case, wants Cong to approve Pres standby authority to reverse the action; on Govt spending, says he would be 'extremely happy' if Cong reduced Nixon's budget for fiscal '74 to $260-billion from expected $268.7-billion; stresses his belief that continuing inflation has been caused by forces that could not be affected by monetary policy, citing boom in other nations that has greatly increased demand; commenting on shortages, says he would like to see some special incentives to encourage construction of new facilities in industries where there is shortage of capacity; agrees with Sen Proxmire that this recommendation is somewhat in conflict with his proposal to cut investment credit; but says he would supplement gen policy of restraining investment with policies to induce investment in certain industries; expresses pleasure upon hearing that Sen Govt Operations Com approved 8-0 Aug 3 legis establishing new system for Cong to look at its own spending actions--system that would require conformity with basic econ goals; attributes mistrust of dollar around world to realization that US does not have inflation under control and that Nixon Adm will not reach its goal of 2.5% inflation rate by end of yr; illus

Ex-FBI Acting Dir Gray testifies on Aug 3 before Sen Watergate com that he examined files removed from White House safe of Watergate conspirator E H Hunt Jr before burning them with his Christmas trash; Gray previously said that he destroyed documents without reading them; contends papers were not 'evidence in the case'; says his acceptance of papers constituted 'grievous misjudgment'; says FBI waited 2 wks, at suggestion of White House and CIA officials, to int 2 key witnesses on handling of $114,000 in Nixon campaign funds involved in Watergate break-in; says he informed Pres Nixon on July 6 '72 by telephone that 'people on your staff are trying to mortally wound you by using the CIA and FBI and by confusing the question of CIA interest in, or not in, people the FBI wishes to int'; says Nixon's only response to this, was to instruct Gray to 'continue to conduct your aggressive and thorough investigation'; CIA Deputy Dir Walters testified that, according to what he heard from Gray and had recorded in a memo, Gray had given Nixon much more elaborate warning; quoted Gray as saying that he had warned Pres that Watergate case 'could not be covered up,' that it would 'reach quite high' in those implicated and that Pres 'should get rid of whoever is involved no matter how high'; Hunt files were passed to Gray on June 28 '72 by then White House counsel J W Dean 3d in J D Ehrlichman's office; says neither Ehrlichman nor Dean had 'expressly instructed me to destroy the files' but says he has no doubt that destruction was intended; says file he read contained what appeared to be State Dept cables and that 1st of these implicated officials of Kennedy Adm in assassination of Pres Diem of S Vietnam; cable has since been dismissed as forgery designed by Hunt; Gray disputes testimony by Ehrlichman dealing with telephone conversations between 2 men on Apr 15; Ehrlichman, who placed calls in Nixon's presence, testified that Gray had pleaded for support in denying that he had ever recd files; Gray says 2 calls were 'short, terse and to the point' and each less than 15 seconds in duration; says Ehrlichman 1st said that Dean had been talking to Fed prosecutors, then called back to add that Dean has been talking about the files he gave you, and you better check your hole card'; says he merely responded 'those papers were destroyed long ago' and that Ehrlichman hung up; illus of Sen Gurney, Walters and Gray

US Sen and HR on Aug 3 complete action on compromise 4-yr farm bill, offering farmers guaranteed 'target' prices for basic commodities; bill also imposes limitation of $20,000 in subsidies to any 1 farmer; Nixon Adm reptdly agrees to accept bill, after earlier threats of veto