Pro-Palestinian propaganda is always making up false quotes and taking things out of context. When I find any I shall put them here. Happily the NYT is making its archive available online, and the quote I am talking about presumably comes from the New York Times April 1, 88 and indeed I found it here.
The original accusation which is surfing the 'net reads like this:
“The Palestinians should be crushed like grasshoppers, their heads smashed against boulders and walls.” -- Israeli Prime Minister, Yitzhak Shamir.
Further research shows that it is purported to have come from the NY Times. Most of the accusations do not bother to even source it, and it is accepted as true. At any rate, at no time does Shamir make that statement. He is clearly referring to "the rioters" though he refers to the Palestinians, from the long perspective of Jewish history in the region, as "grasshoppers" compared to the Jews. At no time does he make the statement above.