EFFORTS TO ELIMINATE NEGRO POVERTY MUST BE UNDERTAKEN WITHIN A FAVORABLE OVERALL ECONOMIC CLIMATE, AND THE CURRENT CLIMATE IS NOT FAVORABLE BECAUSE MANPOWER AND PLANT CAPACITY ARE NOT FULLY UTILIZED. SUCH FACTORS AS LIMITED JOBS, EXAGGERATED JOB REQUIREMENTS, LOWER EARNING CAPACITY, DURATION OF UNEMPLOYMENT, FLUCTUATIONS OF THE BUSINESS CYCLE, AND RESTRICTIVE PRACTICES CONTRIBUTE TO THE POOR ECONOMIC SITUATION OF THE NEGRO. THE SINGLE MOST IMPORTANT STEP TO IMPROVE THIS CONDITION IS A TIGHT LABOR MARKET IN WHICH UNEMPLOYMENT IS LOW AND JOB VACANCIES ARE PLENTIFUL. HOWEVER, FISCAL AND MONETARY MEASURES TO CREATE FULL EMPLOYMENT IN PEACETIME ARE CONSTRAINED BY THE OBSESSIVE FEAR OF INFLATION AND BALANCE OF PAYMENTS DEFICITS, WHICH IS THE RESULT OF THE FIXED IDEA OF STABLIZING THE GOLD VALUE OF THE DOLLAR. REFORMS IN THE ECONOMIC STRUCTURE WHICH WOULD IMPROVE LABOR MOBILITY AND BREAK THROUGH RESTRICTIVE BARRIERS WOULD MEET WITH ECONOMIC AND POLITICAL RESISTANCE FROM ALL KINDS OF SPECIAL GROUPS. FOR THOSE WITH LOW EARNING CAPACITY SUPPLEMENTAL INCOME IS IMPERATIVE (E.G., AN INCOME ALLOWANCE OR NEGATIVE INCOME TAX) TO REPLACE THE DEMORALIZING, ECONOMICALLY AND SOCIALLY UNSOUND PRESENT PUBLIC ASSISTANCE POLICIES. OTHER MEASURES TO INCREASE INCOME ARE DAY CARE AND PRESCHOOL PROGRAMS TO ENABLE THE MOTHER TO WORK AND THE RETRAINING OF FARM WORKERS FOR URBAN AND INDUSTRIAL JOBS. THIS ARTICLE WAS PUBLISHED IN THE FALL 1965 ISSUE OF DAEDALUS, AN ISSUE ON "THE NEGRO AMERICAN," AND IS AVAILABLE FROM THE PUBLISHER AS A BACK ISSUE. MATERIAL IN THE ISSUE WAS ALSO PUBLISHED AS A BOOK, HOUGHTON MIFFLIN, 1966, $9.50. (NH)