October 21, 1975

NYS Emergency Financial Control Bd, approving 3-yr austerity program for NYC, orders that Mayor Beame's planned cuts in capital budget be increased by more than $100-million a yr, or $390-million during period; bd action represents formal setting of severe new course for city; officials say it will mean end to new munic construction (S)

Commerce Dept repts growth in ‘real’ GNP, 3d qr of '75, was at annual rate of 11.3%, bringing GNP annual rate to $1,497.8-billion in inflated dollars; repts GNP deflator is 5%; figures show econ recovery was at faster pace in 3d qr than had been expected by experts; Commerce Asst Sec James L Pate, at news conf, says recession is definitely over; expects moderation in recovery rate; says econ could be adversely affected if antirecession tax cuts are allowed to expire at end of '75; says basic inflation rate is now about 6%; expects rate to drop to 5% by end of '76; largest single element in GNP rise is liquidation of inventories, amounting to $30-billion in 2d qr and $9.5-billion in 3d; pace of liquidation is not likely to continue, and new sources of strength in econ will have to emerge; chart showing GNP, seasonally adjusted, and inflation, in current dollars and '58 dollars, '68 to 3d qr of '75; Pate illus (M)

US Sup Ct on Oct 20 rules states may permit teachers to spank misbehaving students, even over parents' objections, as long as teachers use lesser punishment when appropriate and also give children some procedural safeguards, such as warning them what misbehavior warrants a spanking; ruling does not invalidate statutes prohibiting corporal punishment, but makes such practice legal, provided safeguards are followed; decision stems from case involving Russell Carl Baker, 6th-grade pupil from Gibsonville, NC, who, along with 2 classmates, was paddled for disobeying school rules against ball-playing; parents argued that state law permitting corporal punishment was unconst since it violated mother's right to ‘familial privacy,’ was applied without procedural safeguards, was arbitrary and applied with excessive force; Sup Ct decision affirms decision of 3-judge Fed ct on issue; corporal punishment said to be declining in US, although study conducted by Norfolk, Va, school dist indicates 80% of 70 school dists queried still permit its practice; corporal punishment is prohibited in NYC and NJ schools, but there is no statute specifically banning it in Conn or NYS; NYC School Chancellor Irving Anker calls practice dehumanizing and counterproductive (L)

US Govt announces 5-yr agreement with USSR, effective Oct 1, '76, under which Russians will buy 6- to 8-million tons of US grain per yr; Pres Ford, at same time, lifts 2-mo moratorium on further grain sales to USSR this yr; trade sources say that reprs of US cos are in Moscow even now seeking to close additional deals; Govt sources say that basic grain agreement had been reached early and easily in negotiations but conclusion was delayed by US efforts to link it with oil deal; Pres econ counselor William L Seidman comments (L)

High Ford Adm source says Pres Ford would reluctantly sign legis to ease NYC's fiscal crisis, provided it contains stringent restrictions that Cong is likely to insist upon, since Ford Adm would be in position of having warned of dangers of intervention without risking natl and internatl econ repercussions of NYC default (S)