September 3, 1975

Munic Assistance Corp on Sept 2 offers to NYS Gov Carey and legis leaders stringent plan to restructure NYC financially, provide for possibility of munic default and virtually erase budget powers of Mayor Beame; plan includes $2.3-billion financing proposal to meet city's cash needs through mid-Dec and recommendations for eventual elimination of $3.3-billion deficit accumulated in operating budget; offers legis to spell out steps city could take in default to postpone debt payments while maintaining services; provides for creation of 5-member Emergency Control Bd that would in essence assume functions of Budget Bur and Controller; basic points apparently represent Carey's thinking; some specifics discussed; Estimate Bd, City Council leaders and Beame conf at Gracie Mansion; apparently concerned over some points; Beame and Deputy Mayor James A Cavanagh illus (L)

US Sec William E Simon warns that another increase in world price of oil would worsen world inflation and jeopardize recovery from global recession, speech, Aug 2 session of IMF and IBRD annual meeting; stresses that those who have suffered most from higher oil prices and deterioration in world econ conditions have been poor and needy of developing countries; Pres Ford cites need for internatl econ system that allows each nations maximum freedom of choice and econ independence; French Min Jean-Pierre Fourcade stresses his deep conviction that generalized floating of currency exch rates can only further dislocate internatl monetary system and delay econ recovery, news conf; calls floating a dangerous phenomenom that disturbs world econ order; Indonesia Min Ali Wardhana says OPEC nations are not immune from events in world and are beginning to feel effects of mounting import bills and face problem that uncertainty of monetary system threatens value of their earnings and reserves; Belgian Min Willy de Clercq says that by diverting large percentage of world income, rise in oil prices has contributed to bringing down demand and employment in some areas without commensurately increasing them in others; Brit Chancellor of the Exchequer Denis Healey cites deflationary effects of rise in oil prices and says another price increase would not be in interest of producing or consuming countries (L)

Gen Carlos Alberto Soares Fabiao, head of Portuguese Army, joins Air Force head Gen Jose Morais da Silva in opposing apptmt of Vasco dos Santos Goncalves as Armed Forces Chief of Staff, Sept 2; asserts that there is no doubt whatsoever that Goncalves 'will not contribute in any way to unity of army'; statement constitutes further direct defiance of Pres Francisco da Costa Gomes's attempted compromise solution to Goncalves conflict; during general assembly meeting interrupted by Goncalves, Goncalves reptdly accused moderates of disrupting armed forces; he left after failing to convince officers to support his policies; Costa Gomes criticizes Silva for making statements that 'tend to make difficult the carrying out of decisions already made'; incidents leading to Goncalves's ouster revd (M)

TRENTON, Sept. 2—Much of this capital city and its surrounding communities ran out of water this evening after the city's water‐supply plant broke down.