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The Dangers of Tinkering With Benefits. JAT A TIME when more than 8 mil-JEm li°n Americans are officially Jrm jobless, there is a curious lack of public attention to serious efforts to get them back to work. Although the current jobless rate is high by historical standards, it is significantly lower than the worst point of the 1982 recession. As a result, the public is lulled into accepting a 7 percent unemployment rate as the norm.</br></br>Against this background, various proposals have been put forth in Congress that suggest new uses for the assets of the unemployment insurance system. While these plans deserve credit for recognizing that mass unemployment is neither acceptable nor inevitable, and that it will not cure itself, they fall short of the bold and innovative action needed to move the country toward genuine full employment.</br></br>Representative Ron Wyden, Democrat of Oregon, has proposed a bill that would authorize several demonstration projects in which the jobless could use unemployment compensation funds to start their own businesses. The idea, based on recent experiments in Britain and France, has a certain intuitive appeal. After all.</br></br>Ellen Vollinger is director of the Full Employment Action Council, a i coalition of civil rights, labor, religious and other organizations.</br></br>The program is aimed at a tiny minority — 5 percent of those eligible for unemployment compensation (and only a third of the unemployed are eligible for compensation). Moreover, it is likely to involve the best-off among the jobless, those who have been in stable employment and are receiving more generous benefits.

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Business Diary: THE ECONOMY February 19-24 COMPANIES. On Wednesday, Alan Greenspan spoke the magic words that people have waited a year to hear: the economy, he told Congress, “may finally be slowing.” What he meant — or what the markets assumed he meant, because he wields such vast power that he’s got to be vague — was that the Federal Reserve may be ready to stop tightening the screws with that drumbeat of interest-rate increases. And the next day, the stock market, which stalled out a year ago when those rate rises started, chalked up another milestone, with the Dow industrials closing over 4,000 for the first time ever — and, yes, inched to another record on Friday. Whoop-de-do, some traders said — no inflation, no recession, smooth sailing. But others cautioned that perhaps any celebration is premature. After all, the Dow is up just 0.8 percent in 13 months.</br></br>It was a snapshot that showed a far larger picture. There’s a lot of talk about the decline of the old media, the rise of the new.</br></br>But a single mid-life job hop last week summed it up at a stroke. Howard Stringer restored CBS’s might after becoming its broadcasting president in 1988, but times have been rough lately — ratings are down, it’s the only network with no cable stake and rumors of a sale abound. And last week, after 30 years at CBS, Mr. Stringer quit to join a media-technology venture formed by three phone companies. It’s rare “at this age to do something new and exciting,” he said. "It’s a big leap of faith” — the type of leap the whole media universe is taking.</br></br>That 100 days — you know: the time it’ll take Republicans to recreate the world — came to its halfway point last week, with the budget, as always, a hot topic. In the House, the budget-cutters looked everywhere for trims. One proposal would take a huge bite — $5.7 billion — out of public housing. Another was far more modest but powerful in its symbolism — a $171,000 cut for the Executive Office of the President. And the push to get a balanced budget through the Senate got two big allies in Tom Harkin and Joseph Biden, surprising Democratic defections.</br></br>New York City would be wise not to expect any political favors these days — like, say, Federal money to rebuild that rats’ maze called Penn Station. Last week the House voted to take back $40 million already set aside for the project; if the Senate goes along, it’ll be the death of travelers’ dreams. The House said the money was needed to help put $3.2 billion into the military, but Representative Nita Lowey, a Westchester Democrat, had another explanation, saying, “New York-bashing is always in season.” For surely Amtrak’s busiest station deserves something like the glories of Washington’s Union Station.

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THE NATION. Tbs recession so far has' been marked by this absolute In a situation otherwise fraught with economic variables: after more than seven months of downturn, the optimists are still optimistic, the pessimists are still pessimistic. Both offer strong arguments for their points of view.</br></br>The optimists point to such factors as the continuing high levels of employment and consumer demand. They fee 1 confident that such stabilizers as Government spending (already being Increased to counter the recession), credit availability, unemployment Insurance and population growth will contribute to early resumption of economic expansion without the need of re Anting to drastic measures. They feeL that—in the President’s words—this is "a period of consolidating the gains of recent years.”</br></br>The pessimists say the optimists are counting on upward forces that aren’t being felt either soon enough or in sufficient strength to counteract downward Influences. They point to such basic indicators as the continuing decline in outlays for new plants and equipment, and the persistent low production schedules in the key industries of autos and steel. They maintain that unless quick, strong action is taken, the recession will be feeding on itself, as unemployment cuts into purchasing power and thus leads to further production cutbacks and further unemployment.</br></br>Last week, new indicators of the course of the economy were released. The reaction to them demonstrated the conflicting points of view.</br></br>On Tuesday, the Labor and Commerce Departments issued a report which had been billed in advance as a likely policy-setter— the March unemployment figures. It showed that joblessness for the month reached 5,198,000, up 25,000 over February, which set a sixteen-year record. Adjusted for seasonal factors, this meant that 7 per cent of the labor force was out of work, compared with 6.7 per cent in February. The principal trouble remained in manufacturing. These jobs were down 200,000 from February and 1,500,000 from March, 1957, and reflected cutbacks in production of automobiles, machinery and primary and fabricated metals, particularly steel. However, the reports also showed that over-all employment in March increased— to 62,311,000, or 323,000 more than in February. The gain was mostly in farming and construction.

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Banks Raising Savings Rates; State May Lift Ceiling Today: Franklin National, Others Will Pay 3% Beginning Jan. 1--Mutual Group Studies Corresponding Action BANKS INCREASING RATES ON SAVINGS Time Deposits Shrinking Savings Bank Action Seen. The Federal Reserve Board’s action on Monday, lifting the ceiling on rates that commercial 'banks may pay on savings, touched off a number of responses yesterday. Among them were: <IThe Franklin National Bank, Franklin Square, L. I., largest in Nassau County, said it would raise its interest rate on savings from 2 V2 to 3 per cent on Jan. 1, when the 3 per cent ceiling becomes effective.</br></br>«3The Bankers Trust Company and the Guaranty Trust Company said they were advising foreign depositors that the new higher rates on time deposits, if approved by the New York State Banking Board, would be paid after the first of the year.</br></br>•IThe State Banking Board scheduled a regular meeting for today at which discussion of a rise in the ceilings on interest rates for state banks was viewed as likely. Their top rates have been the same as those of national banks.</br></br><JThe Savings Banks Association of New York State said members would undoubtedly consider further increases in dividend rates.</br></br>Savings banks are owned by their depositors and may accept only savings deposits. All are state chartered institutions. They make loans, largely for home mortgages, but may not lend out more than the savings on deposit.

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Stocks and Bonds Plunge on Inflation Specter: Stocks and Bonds Fall on Inflation Specter. • In 30 minutes of trading frenzy, the stock and bond markets plunged yesterday morning in response to a Government economic report that raised the specter of accelerating inflation. Both markets calmed by 10 A.M., but the damage was done.</br></br>As bond prices dropped, the yield on the benchmark 30-year bond, which moves in the opposite direction, jumped to 7.77 percent, the highest since the end of June 1992 and up from 7.63 percent on Thursday. The spurt in the yield also pushed it out of a trading range it had been in since July.</br></br>Although traders and analysts predicted a more steady mood in the bond market next week, several said that yesterday’s economic report, which showed that manufacturing production jumped more than expected last month, would increase pressure on the Federal Reserve to raise short-term interest rates after its policy meeting Sept. 27. Before yesterday, many analysts had expected the Fed to wait until its November meeting, which is after this year's elections, to raise interest rates again.</br></br>The markets were jolted, traders and analysts said, by the Federal Reserve's report on industrial production. The Fed said that factory use reached a capacity of 84.7 per- cent in August, up four-tenths of 1 percent from the previous month, and matching the highest operating rate since March 1989. Many traders and investors contend that when the production level of America’s factories gets this close to full capacity prices begin to rise because manufacturers cannot meet demand.</br></br>In the same report, the Fed said that industrial production jumped seven tenths of 1 percent in August, the 15th consecutive monthly advance. This increase was more than many analysts expected.

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Greenspan Sees Robust Growth Slowing Down: Investor View: No Quick Rate Rise; Others Differ Greenspan Sees Economy Slowing, but Says Fed May Have to Act. WASHINGTON. July 18 — Alan Greenspan, the Federal Reserve chairman, said today that the robust economic growth of recent months should moderate later this year, but he warned that the central bank might have to raise interest rates anyway to insure that the slowdown happened promptly enough to avert a surge in inflation.</br></br>Investors interpreted Mr. Greenspan’s remarks as a reprieve from the threat of an immediate rate increase, but many economists drew the opposite conclusion and said Mr. Greenspan was providing the markets with an unusually clear warning that the Fed was close to a decision to tighten monetary policy.</br></br>"Mr. Greenspan was putting the markets clearly on notice that the Fed is on track for a policy tightening, most likely sooner rather than later," said John Lipsky, the chief economist at Salomon Brothers.</br></br>In testimony before the Senate Banking Committee, Mr. Greenspan, as is usual in his public statements, gave no explicit statements about the Federal Reserve’s plans for interest rates.</br></br>But while he painted a picture of an economy in which there has been no rise in inflation despite the unexpectedly strong growth rate of the first half of the year, he cited a number of warning signs.. He suggested that economic indicators due in coming weeks, including assessments of job growth and wage increases, could lead the Fed to a pre-emptive strike against inflation by raising rates this summer.

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Wall Street Braces for Job Shifts: WALL STREET SET FOR JOB CHANGES. Wall Street brokerage houses, already hard hit by a paperwork crisis and the Hong Kong flu in a period of heavy stock-market activity, are bracing for a post-Christmas burst of job switching by clerical employes.</br></br>At another large member firm of the New York Stock Exchange, a back-office worker stated he had just gotten a job at a rival house, effective at the end of the year. “It pays $75 more a month,” he declared.</br></br>Interviews with brokerage-firm officials and clerical workers disclosed a variety of reasons for the job-switching plans. •</br></br>Some employes are unhappy because their Christmas bonus this year Is lower than in 1967. Others are smarting under what they consider a lack of recognition. Then there is a group that simply feels tired of working the long hours brought on by the paperwork logjnm that has hobbled the securities industry for several months.</br></br>Yesterday marked another "trndeless Wednesday” In Wall Street ns brokers prepared for a resumption of the five-day trading week on Jan. 2 when exchanges will open at 10 A.M. and close at 2 P.M., or 90 minutes earlier than usual.

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Stock Decline Helps Bonds Rise 3d Day: Inflation Data Today A Focus of Traders. Prices of Treasury securities gained for a third consecutive session yesterday as investors focused on inflation data due today and a swirl of opinions about Federal Reserve monetary policy.</br></br>The price of the 30-year bond rose 10/32, to 87. The bond’s yield, which moves in the opposite direction from the price, fell to yield 7.05 percent, from 7.08 percent on Wednesday.</br></br>Traders said investors took profits in early trading yesterday after the previous day’s rally, pulling prices lower. But bonds recovered as stocks tumbled, prompting a flow of money out of stocks and into the short end of the Treasury market, "Much of the flight to quality went into the bill market, which is the shortest and fastest and most liquid , place to park assets while you're waiting for the next shoe to drop,” said Jack Regan, chief market strategist at Josephthal, Lyon & Ross.</br></br>; Short-covering by investors who had bet that Treasury prices would fall also bolstered the market, he said, as did buying of longer maturities by hedge funds.</br></br>“But initially it was the money from the selling of stocks going into the bill market that propelled Treasury prices,” Mr. Regan said.

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G.N.P. Fell 0.1 Percent In Quarter: Dow Hits New High As Revised Data Lift Hopes for Rate Cut G.N.P. Declined 0.1% in Second Quarter. WASHINGTON, Aug. 28 — The economy contracted during the second quarter instead of expanding, revised Government figures showed today, suggesting that the recession lasted longer than had previously been thought.</br></br>Total output of goods and services edged down at an annual rate of a tenth of 1 percent, a tiny decline that nevertheless contrasted with the Commerce Department's estimate a month ago that output rose at a pace of four-tenths of 1 percent in the April-June period.</br></br>Most analysts tended to dismiss the fact that gross national product has now shrunk for the latest three quarters and remained confident that the recovery from recession, although almost certainly a desultory recovery, is now under way.</br></br>"It doesn’t change the outlook very much — and might even improve it,” said Robert H. Chandross, the chief economist for Lloyds Bank North America in New York.</br></br>President Bush, when asked in Kennebunkport, Me., whether today's report meant continued recession, said he did not think so. "I feel all right about things,” he said. “There are some statistics up and some down, but basically I think it’s doing all right.”

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JOBLESS TOTAL DECLINES IN U.S.: Fewer Than 3 Million Are Without Work -- Lowest Number Since 1957. WASHINGTON, Oct. 7 — The number of nation’s unemployed fell below .3 million last month'Tor the first time since 1957 as the unemployment rate held around the eight-year low achieved in the previous two months.</br></br>The Labor Department reported today that civilian unemployment in September fell to 2,875,000 from 3,258,000 in August. This was slightly more than a seasonal drop, it said, and was the lowest unemployment total since 2,509,000 were without jobs in October, 1957.</br></br>The unemployment rate slipped to 4-4 per cent last month from 4.5 per cent in July and August. This was down from a</br></br>The Labor Department said the decline in the jobless rate from August to September was insignificant and that “in very broad terms the situation in September wasn't much different from August.” Most of the changes that occurred were roughly seasonal,</br></br>Nevertheless, the fact that the jobless rate held steady last month brought the third quarter rate to 4.5 per cent. This was the lowest quarterly average since the rate stood at 4.3 per. cent in the 1957 third quarter, and compared with 4.7 per cent in the 1965 second quarter and 5.1 per cent in the 1964 third quarter.

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Reactions Mixed to Settlement of Westchester Desegregation Suit. Chappaqua is among the Westchester suburbs that are likely to be affected by a desegregation settlement announced last week.</br></br>; CHAPPAQUA, N.Y. - The median household ihcome in this woodsy hamlet is $198,000 a year, and a typical home costs close to St million. It is not surprising,' then, that the idea of Chappa-qua's becoming a site for housing people of modest income — as a way to draw more black and Hispanic residents to the area — gets a mixed reaction here.</br></br>While residents were generally supportive of such a plan, some raised questions about how easily inexpensive land could be found for the new apartments that would be needed. Others feared higher taxes to support an influx of new school students. But cultural disparity was a frequent theme among those who expressed any reservations.</br></br>"Children are children, and they can be mean,” said Bill Ward, 54, an accountant. “If a child has less fancy clothing to Wear, they’re going to be put out-■side the group.” • Chappaqua, part of the town of 'New Castle, and two dozen other prosperous, mostly white suburbs will have to grapple with just such issues in coming years.</br></br>1 Under a desegregation settlement announced last week, West-"chester County must spend more "than $50 million over seven years ' to build or find 630 homes in overwhelmingly white locales for ’families who earn up to $53,000 as renters and $75,000 as home-'owners. The settlement requires the county to aggressively market the homes to black and Hispanic residents of the New York ‘City area, but it set no firm racial 'quotas. An additional 120 homes for people with moderate incomes will have to be developed ’in localities that have somewhat greater concentrations of black ’and Hispanic residents.

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Stocks Fall on Inflation Fears Raised by March Retail Sales Data. Breaking a three-session rally, traders bid stock prices sharply downward, after an unexpectedly strong retail sales report fanned fears of inflation. The same report drove down bond prices, despite a surprise strengthening in the dollar overseas.</br></br>In the absence of similar market-moving economic reports, the dollar may be the main driver of the stock and bond markets in advance of the policy-setting meeting of the Federal Reserve on Tuesday.</br></br>• But the dollar may have only short-lived speculative reasons for rising, analysts said. “When markets start trending, a lot of people who are not normally in the market start swooning and say, ‘Oh, this will be easy money,’ ” said Graham Broyd, managing director for foreign exchange at Westdeutsche Landesbank Girozentrale. “We call these people amateurs.”</br></br>The value of the dollar is important to the stock market because a weaker dollar penalizes foreign investors, who have become an increasingly important source of capi- tal for the financial markets in the United States. The Dow Jones industrial average, for example, has risen 6.21 percent so far this year in terms of dollars, but has fallen 3.08 percent in terms of German marks.</br></br>The plight of the dollar is “worrisome” for stocks, said Dirk van Dijk, equity strategist for C. H. Dean & Associates, which manages $4 billion in stocks and bonds. “You’ve got the world reserve currency, the dollar, for the most part, going down the tubes.”

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CREDIT MARKETS Interest Rates Drop Slightly: Analysts Split On Fed Plans Rate Was 19 Percent in July $5.6 Billion Below Target 'The Markets Could Suffer' Pennsylvania Issue Sells Well. Interest rates declined slightly yesterday in financial markets rife with comments that the Federal Reserve had eased monetary policy.</br></br>Despite lower short-term rates, most investors still prefer issues due in less than six months, rather than risky long-term bonds.</br></br>Many analysts doubt, however, that the Fed has eased monetary policy even though the drop in the rate for overnight bank loans in the Federal funds market is undeniable. The lower funds rate, they say, is the market’s belated reaction to a slight easing by the Fed more than a month ago, and is not a sign of a more recent easing move.</br></br>The funds rate has fallen from 19 percent in July to 18.19 percent in mid-August, 16% percent last week and about 15% percent yesterday.</br></br>said John D. Paulus, a financial economist at Goldman, Sachs & Company. He added that, “for the Fed to ease before budget cuts are in place and before there is clear evidence of wage pressure abatement, would be wrong; I wouldn’t expect it.”

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Reports on Business Throughout U.S.: New York Philadelphia Boston Chicago St. Louis Cleveland Atlanta Richmond Kansas City Minneapolis San Francisco Dallas. Department store sales in the nation for the week ended Aug. 24 were 1 per cent above sales for the corresponding week of last year, the Federal Reserve Board has reported.</br></br>The biggest increase was in Minneapolis, up 6 per cent. Declines were reported in Cleveland, down 4 per cent; Boston, off 3 per cent, and St. Louis and Atlanta, each down 1 per cent.</br></br>In the four weeks ended Aug. 24 sales were 2 per cent above volume for the like period of last year. In the year to date sales were up 2 per cent.</br></br>Department store sales in the New York metropolitan area last week were 9 to 11 per cent higher than in the comparable week of last year, according' to estimates of store executives.</br></br>In the apparel field, children’s and ready-to-wear were strong. Shoes and accessories were7 up, and jewelry sales were heavy. Sales of furniture, appliances and television sets were reported good in some quarters. White sales broke even with last year’s, according to store officials.

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Commercial Realty in New York Shows Signs of a Strong Recovery: Commercial Realty Market Shows Evidence of Recovery. They cannot agree on how much space still languishes empty, or on what the average rents are. But on some things, New York’s commercial real-estate brokers and building owners are unanimous: Buildings are filling up. Landlords are getting more from tenants and giving them less. Some companies are even buying buildings again. All told, brokers and landlords say, the real-estate recession is ending.</br></br>“If February's numbers are an indication of what the rest of 1994 will look like, the New York real-estate market is in for a sustained period of recovery,” said Barry Gosin, chief executive officer of Newmark & Company Real Estate.</br></br>Peter L. Malkin, a lawyer who is part owner of the Empire State Building and several other Manhattan properties, agreed. “We haVe definitely turned the corner," he said.</br></br>Average midtown rents, which have plunged from about $40 a square foot per year five years ago to as little as half that amount now, have stopped their slide. The Edward S. Gordon Company, a large brokerage company, says average asking rents — the rents at which landlords market space, but which can usually be negotiated downward — are $31.16 a square foot a year now, and brokers and landlords say they are inching up even more.</br></br>Concession packages — months of free rent and landlord contributions toward the cost of customizing a tenant's space — are tightening, too.

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CHRISTMAS SALES ARE DISAPPOINTING ACROSS THE NATION: Retailers Say Rate of Increase Will Be Half of 1986 Gains -- '88 Outlook Weaker Retailers Disappointed With Christmas Sales. The results of this year's Christmas shopping season, reflecting in part the effect of the stock market doldrums and hinting at next year’s economy, were disappointing across the nation.</br></br>Sales averaged about 3 percent above 1986 results. Because that is below the level of inflation, which is running at a 4.7 percent annual rate so far this year, most merchants suffered declines in real terms.</br></br>"It wasn’t a blood bath in profits," said William N. Smith, an analyst for Smith Barney, Harris Upham & Company. “The profit proportions will be much less than expected.”</br></br>In general, retailers who responded to a telephone survey agreed that while the season will be profitable, the rate of gain by most companies will be half of what it was last year.</br></br>The results varied, however. While stores catering to affluent shoppers showed 8 percent to 12 percent gains, those serving moderate-income consumers, with some exceptions, showed reductions or smaller increases.

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5.3% JOBLESSNESS HELD NIXON LIMIT: Scott Says President Would Take Action at That Point. I WASHINGTON, Jan. 29-President Nixon has set a political ceiling of 5.3 per cent on the national unemployment rate this year. Senator Hugh Scott, the Senate Republican leader, said today.</br></br>The Pennsylvanian predicted that it would be “difficult to explain away” an unemployment rate that was higher than the average for the period from the end of the Korean War through 1968, which he said was 5.3 per cent.</br></br>An increase of the present unemployment rate to that level would add approximately a milion people to the 2.8 million already without jobs.</br></br>The Money Supply If the unemployment rate, which was 3.4 per cent last month, should threaten to rise above this arbitrary ceiling of 5.3 per cent. Senator Scott told reporters at a breakfast meeting Mr. Nixon would take steps to loosen the money supply, creating new jobs.</br></br>"The President has no intention of seeing unemployment o0 above the previous average,” Mr. Scott declared. In response to a question, the Senator denied setting the danger-point figure high enough to make it unlikely that it would be reached before elections are held this year.

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Reagan vs. Fed: The Fallout: Fallout in Reagan's Dispute With the Fed. WASHINGTON, Jan. 29 — The Reagan Administration and the Federal Reserve Board are drifting into an election- year feud that, some analysts contend, could make it more difficult for the Fed to do its job. News The consequence, in turn, could make it more sonalities involved: a strong-willed Treasury Secretary, Donald T. Regan, and a “hang tough" Fed chairman, Paul A. Volcker. Neither seems likely to back down. Already the Fed, according to top officials, believes it is being needled on a complex issue — monetary policy — that the Treasury Secretary does not understand very well.</br></br>Top officials at the Fed are used to criticism. In fact, they always expect a certain amount of blame for eco-_ nomic conditions. The Fed's vice chairman, Frederick H. Schultz, often refers to the Fed as a "lightning rod.”</br></br>Says another governor, "When things are not going well in the economy and you have a politically sensitive Administration, it's probably natural to take as little blame as possible. That’s what the Fed is here for."</br></br>Relations are not at the breaking point yet, but Mr. Regan obviously realizes they could be improved, as evidenced by his efforts to keep his personal contacts friendly. After cracking a joke this week about the chairman's "cheap” ’cigars, Mr. Regan sent Mr. Volcker a $50 box of Partagas cigars. The cigars now sit on Mr.-Volcker’s cluttered desk.</br></br>The dispute, which began last summer with criticism of Fed monetary policy as too tight, is now going a lot further than the traditional use of the Fed as a whipping boy, say some Fed and Administration officials.

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U.S. TRADE DEFICIT INCREASES SHARPLY AND UNEXPECTEDLY: JUNE'S GAP SET A RECORD Surge in High-Priced Imports Outpaces Export Gains -- Persian Gulf a Factor U.S. Trade Deficit Grew by $15.71 Billion in June. WASHINGTON, Aug. 14 — The i United States imported $15.71 billion more than it exported in June, a figure that represents the largest trade deficit for any month, the Commerce Department reported today.</br></br>The unexpected deterioration reflected a quickening pace of higher-priced imports. These included oil, which Government and industry analysts said was being bought in anticipation of Persian Gulf hostilities.</br></br>Exports continued the rise that has been in evidence since the third quarter of last year, but they were outpaced by a $2 billion May-to-June import surge.</br></br>The report made it likely that trade will remain a hot political issue and intensify protectionist pressures on Capitol Hill.</br></br>“Today’s record-shattering trade statistics should silence the Pollyannas on trade in this Administration," said the Senate majority leader, Robert C. Byrd of West Virginia. Even the White House voiced concern about the situation.

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THE NATION. President Kennedy was asked at his news conference last week whether he had purposely avoided using the word “recession” in a speech the previous day about the national economy. He replied that “to put it precisely * * * I would call this a recession."</br></br>At the other end of Pennsylvania Avenue, Senate Republican Leader Everett Dirksen said "recede means to come down from a high level, and in that respect I guess we have a recession.” He went on to say, however, that statements such as the President’s may "talk the country into a recession.”</br></br>This semantic contest underscored the sharp contrast in attitude between the White House and the Capitol over the state of the economy. President Kennedy took office convinced that the nation was in a slump, and he.set out immediately to apply restoratives. He has ordered a variety of stimulants on his own authority and has bombarded Congress with requests for the kind that require legislation.</br></br>But so far Congress has adopted none of the President’s proposals and in most cases has not even begun action on them. This attitude stems partly from Congress’ traditional lethargy in its opening weeks. But a more fundamental problem for the President is the attitude of the Republican leadership—an attitude shared generally by the economically conservative Southern Democrats.</br></br>The Republicans contend that Mr. Kennedy has overstated the economic situation for political reasons, and therefore they refuse to go along with calls for hurry. “We do not believe this is the time to push the panic button,” Senator Dirksen said last week.

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INDUSTRIAL LOANS FELL LAST WEEK: Total Off 5 Million -- Chicago Area Rise Partly Offset a 61-Million Drop Here. WASHINGTON. April 8—'Thej Federal Reserve Board reported! today that the condition state-j ment of weekly reporting member banks in ninety-four leading cities showed the following prin-; cipat changes for the week ended April 1: ®Increases of 5590,000,000 in loans adjusted^ SI.178.000,000 in holdings of United States Government securities, $731,000,000 in balances with domestic banks, $2,604,000,000 in United States Government deposits, and $1,051,000,000 in demand deposits credited to domestic banks.</br></br>Commercial and industrial loans decreased $5,000,000 at all reporting member banks; the principal changes were decreases of $61,000,000 in New York City and 515,000,000 in the Boston district and increases of $42,000,000 in the Chicago district and $16,000,000 in the San Francisco district.</br></br>The total of such loans at the reporting banks was thus reduced to 530,589,000,000- This was S276,000.000 higher than the total a year earlier.</br></br>So far this year, commercial! and industrial loans have de-j creased by $208,000,000, com-; pared with decrease of 51,405,-.' 000.000 in the 1958 period.</br></br>Loans to brokers and dealers: for purchasing or carrying! United States Government and, other securities increased $305,-000,000 in New York City,I $123,000,000 in the Cleveland district, and a total of $459,000.-000 at all reporting member banks. “Other” loans increased $66,000,000.

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Stocks Are Mixed as Technology Issues Show Big Losses. The stock market closed mixed yesterday, but technology stocks lost big, in part because of the prospect of slowing sales and in part because of profit taking by traders.</br></br>Intel, the big semiconductor company, fell 5%, to 110%, for example, after orders for equipment used in making microchips dropped for a second consecutive month in April.</br></br>Intel was also the most active stock, at 15.1 million shares, or double or triple the volume of the next 12 stocks, all of which were high-tech* stocks as well.</br></br>“Tech stocks have been the leader in this market, so they were the first to go,” said Bill Allyn, director of listed equity trading at Jefferies & Company.</br></br>William R. Rothe, managing director of Alex. Brown & Sons, said technology prices had soared too high. “The carnage, if you will, was long overdue,” he said.

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REPUBLICANS ON INFLATION. farm price subsidies for another year. 1 Finally, jt should be added that, what-•ever mistakes Mn Truman made in dealing with inflation in 1945 and 1946, he has been well out in front of the Republicans in his proposals for dealing with the new inflation potential stemming from the rearmament and foreign aid programs.</br></br>Reading the innocuous statement of the Republicans’ position on inflation in their 1948 platform, one is forced to conclude that the party leaders are still largely unaware of the dimensions of this problem or of the enormity of their own failure to date to grapple with it.</br></br>The Republican National Convention hsJs quite properly given a place near the top of the 1948 platform to its statement of the party’s position on inflation. There is probably no domestic issue in which more Americans have a direct and personal interest than the one to which the authors of this section refer as that of “present cruelly high prices.” Over and above this consideration, moreover, is the fact that until and unless the forces of inflation can be contained they must be regarded as a continuing threat to that stabilization of the American economy which is so essential to world recovery and world peace.</br></br>There is less room for approbation, unfortunately, in the platform’s analysis of this problem and its program for dealing with it The high cost of living, this section declares, “is due to the fact that the Government has not effectively used the powers it possesses to combat inflation.” Instead, it has “deliberately encouraged higher prices.” As for the Republican party, the platform pledges it to “attack the basic causes of inflation" from these directions: (1) “Progressive reduction of the cost of Government through elimination of waste"; (2) “stimulation of production”; (3) "fiscal policies to provide increased incentive for production and thrift”; (4) "a sound currency,” and (5) “reduction of the public debt.”</br></br>In accusing “the Government" of failure to deal effectively with the inflation problem, the Republicans have reference, presumably, to the period from the termination of the fighting war in 1945 to January, 1947, when the Democrats were still in control of Congress. And there is no doubt that the record of the Administration over those months abundantly warrants such criticism. Mr. Truman elected, at the war’s end, to listen to his New Deal economic advisers (including those closely associated with Henry A. Wallace). These advisers, unhappily, succeeded in convincing him that the nation was headed for deflation and depression unless industry granted wage increases sufficient to restore and maintain labor’s wartime level of “take-home pay.” The President threw the weight of the Administration behind this anti-deflation thesis, and as a result doomed to failure the Administration’s subsequent pathetic efforts at price control. Although Mr. Truman liked to place the blame for the collapse of OPA on the opposition party, there can be no doubt that it was the Administration’s own reluctance to move on the wage and farm aspects of the problem that made it necessary, if only in the interest of intellectual honesty, to put an end to the farce of price control.

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Big Concerns Alter Capital Search: Sales of New Shares Showing Growth. Big corporations, increasingly encouraged by the strength of the stock market, are expected to turn to Wall Street this year to raise an estimated $12 billion of new capital by selling stock.</br></br>If investors respond—as they are widely expected to do— businessmen will attract more new money through stock than at any time since the hectic days of 1972, when stock offerings soared to well over $15 billion and the Dow Jones industrial average zoomed toward 1,036.72 late in the year.</br></br>Businessmen badly want to sell stock after several years of piling up debt through bond offerings. Stockbrokers, severely hurt by a string of poor years, hope to recover now with the heavy trading volume and the greater-than-usual profits that new offerings bring.</br></br>But warning signs are beginning to develop that too heavy a flow of money into new offerings could interrupt the upward momentum of the stock market and that investors, regarded now as considerably more sophisticated than in years past, may not be so eager to respond as they once were.</br></br>The build-up, nevertheless, has already begun. A tabulation by the Securities Industry Association showed that while new equity offerings in January stood at only $497 million, compared with $551 million a year earlier, they have moved ahead substantially since.

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The 75-Year Plan. Washington khe economy is growling. Inflation is well under control. The budget is moving into surplus. And this economic strength has shrunk the Social Security deficit. Now is the time to close it complete-</br></br>President Clinton’s proposal to allocate'part of the projected Federal budget surpluses to Social Security reserves, and to invest about 15 percent of the reserves in private securities, would close nearly two-thirds of)$£ projected long-term deficit. It is irtiportant for Congress to approve the1' President’s plan because it weitil'd' boost our national saving and help pe,store long-term financial balance to the Social Security system.</br></br>But’ additional measures are necessity to assure Social Security’s sbfvency for the next 75 years. Along witti such well-known Social Securi- ty jgxjj'erts as Henry J. Aaron, Robert M. Ball, Peter Diamond, Robert Greenstein and Alicia H. Munnell, I urgei'Congress to adopt two further changes to meet these goals.</br></br>, First, Congress should raise the Social Security tax ceiling on the An^fjcan wage base to cover 90 percent of total earnings, instead of</br></br>Robert D. Reischauer, a senior fel-low CU the Brookings Institution, is a former director of the Congressional Budget Office.

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News Summary and Index: The Major Events of the Day International National Metropolitan The Other News Quotation of the Day CORRECTIONS. Defense Secretary James R. Schlesinger said that the United States was seeking a solution to rising oil prices through “amicable discussions” and was not contemplating military action against the oil-producing nations of the Middle East. However, he said that inflation, brought about in part by oil price increases, could upset the relative military balance between the Western alliance and the Soviet Union. [1:2.]</br></br>The high holidays in Israel this year have been dominated by memories of the war that erupted without warning a year ago on the Hebrew calendar. Reinforced security patrols are visible all over Jerusalem and members of the Israeli civil guard were given special permission to carry their weapons while attending Yom Kippur services in their synagogues. [1:8.]</br></br>In one of the strongest actions yet by any Western nation to reduce fuel bills, the French Cabinet has set a $10.1-billion ceiling on spending for oil imports next year. It also has ordered cutbacks in industrial and home-heating consumption. [1:2-3.]</br></br>The higher cost of foreign oil continued to be the major factor in the worsening United States trade picture last month. The Commerce Department reports a record monthly deficit of more than $1.1-billion in its trade with foreign countries, placing most of the blame on oil imports. [1:1.]</br></br>A dime-sized area of former President Richard M. Nixon’s right lung has been destroyed by a piece of blood clot that broke away from his phlebitis-damaged left l^g, according to Mr. Nixon’s physician, Dr. John C. Lungren. The physician said the embolus, disclosed'by the use of a radioisotope technique, called a lung-scan, “is a potentially dangerous situation but it is not critical at this time.” He said Mr. Nixon reported experiencing no chest pains. [1:5-7.]

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RECESSION IN 1961 IS SEEN POSSIBLE: But Chase Manhattan Aide Tells Oil Parley That 1960 Will See Expansion BUSINESS CYCLE CITED Methods of Control Listed -- World Supplies Held Ample in Petroleum RECESSION IN 1961 IS SEEN POSSIBLE. CHICAGO, Nov. 10—A vice president of the Chase Manhattan Bank said today that business activity would move ahead strongly in 1960, resulting in “a year of great prosperity." But, he added, there is a prospect of another recession in 1961.</br></br>Speaking at a meeting of the American Petroleum Institute (A.P.I.) here, William F. Butler said it was "too early to talk in any specific fashion about the precise timing of the next business downturn.” But, he added, business men "should watch with increasing vigilance for signs of the next recession as we move through 1960 and into “Despite the many sweeping changes in our economic affairs iri the past few decades, the business cycle has not been repealed,” Mr. Butler asserted.</br></br>Elected chairman of the in-| stitute was Monroe Jackson Rathbone, president of the Standard Oil Company (New Jersey). He will take office tomorrow succeeding H. S. M. Burns, president of the Shell Oil Company. Henderson Supplee Jr., president of the Atlantic Refining Company, was elected vice president for transportation of the A.P.I. and Frank M. Porter, president of Fain-Porter Drilling Company, Oklahoma City, was re-elected president.</br></br>"The next two months will be a period of shortages; of scrambling for steel and other supplies, of trying to increase production of metals and metal products to meet urgent demands.</br></br>"The first half of next year promises to be a period of very rapid expansion in production and employment. Shortages should be worked off and inventories rebuilt. Production will move towards practical capacity In most lines.

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PRICES OFF AGAIN IN BOND MARKET: Indications Are Seen Late in the Day That Dip May Have Hit a Turning Point PRICES OFF AGAIN IN BOND MARKET. I Bond prices declined yesterday, continuing the trend to-|ward higher interest rates that began last Thursday with President Nixon’s address to Congress.</br></br>Late in the afternoon, however, there were several indications that this move might have reached a turning point. Government bonds maturing through 1978 and industrial-company bond prices rose lightly and some municipal bond prices closed above their lowest levels of the day.</br></br>7.90s01 100 7%s0? 100.357 7%sll 99.6B 7%s01 101.76 8s2001 102.30 7%s01 101.25 7.60s08 100 7^s96 100 8%s96 100.527 102% 8S2001 100.568 102 -% 7%s96 100 8.35S91 100 7%s91 99.50 8VgS96 100 7.85S01 100 8VSS96 100 7%s96 100 8.20S96 100 7%s91 100 8'/«s96 99 NOTES</br></br>tions in the money market. The Federal funds rate — the] rate banks charge each other for overnight loans of excess reserves at the Federal Reserve — closed at 5 Vi per cent, or somewhat below its 5% per cent-to-5% per cent recently. Against this background, investment bankers marketed $200-million of Southwestern Bell debentures and notes with what seemed to be reasonably good results and they priced $250-million of Federal National Mortgage Association convertible debentures and $200-mil-lion of Mobil Oil Corporation debentures for sale today.</br></br>Southwestern Bell’s $125-million of 38-year debentures were priced to yield 7.75 per cent—15 basis points higher than the preceding Bell System offering on Aug. 24—and the issue appeared about half sold by late afternoon.

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A Pragmatist to Tackle the Budget. JIM JONES labors under few illusions. As the new chairman of the House Budget Committee, he knows that there are no quick or painless fixes for inflation. But the task of the 97th Congress that convenes next month, he says, is to convince the American people that Washington means business in the battle against rising prices.</br></br>“We have to send clear signals,” he said in an interview, “that over an extended period of time, the Government is serious about fighting inflation.”</br></br>The Democrat lawmaker from Tulsa, Okla., added: “I’mone who puts a higher premium on national attitudes and psychology with regards to the economy than most economists. I believe people react to what they perceive conditions to be, and those reactions become self-fulfilling prophecies. The perception for the last decade has been that inflation is here, there’s nothing we can do about it, so let’s live with it. And people react accordingly.”</br></br>To counteract this inflation psychology, Mr. Jones is planning a slew of new proposals for the next Congress: proposals to increase depreciation on capital assets, place an overall cap on Federal spending, and reduce income and capital-gains taxes. Most of his ideas represent a compromise between extremes.</br></br>“Everybody has to give a little and get a little,” the Congressman explains. "No one will be fully satisfied, but in times of restraint, that's the only way a consensus can be built. ”

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Reserve Bank Here Had an Ally In War on 'Bills Only' Policy: 'BILLS ONLY' RULE HAD 2 OPPONENTS. WASHINGTON, March 9—The Federal Reserve Bank[ of New York won an ally last year in its long fight against' the Federal Reserve System’s so-called “bills only” rule. The| annual report of the system’s Board of Governors, published today, showed that the president of the New York bank was joined by the president of the Philadelphia bank in voting against renewal of the rule last spring.</br></br>“Bills only” is short-hand for a 1953 directive of the system’s Open Market Committee. It declared that when the system was exercising its influence on credit conditions through the purchase and sale of Government securities in the open market, it should confine its transactions to short-term securities. In practice, this meant Treasury bills, almost exclusively.</br></br>The rule was-abandoned just last month, on the ground that the present mixture of economic problems — a recession and a balance-of-payments deficit — required purchases of longer* term securities now. But William McC. Martin Jr., Reserve Board chairman, told, the Joint Economic Committee of Congress on Tuesday that disagreement over "bills only” within the system “has been more marked and more continuous than on any other [question] that I can recall in my ten years in the Federal Reserve.” President Kennedy even made it a campaign issue last fall.</br></br>The New York bank’s'historic opposition to “bills only” has been that the written rule tied the system's hands, and unnecessarily.</br></br>The 1960 annual report discloses now that when the annual renewal of this and other rules was voted last March-three weeks late—Karl R. Bopp, president of the Philadelphia bank, voted “no” with Alfred Hayes, president of the New York bank.

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Some Alarming Portents for the Years After Armageddon: THE COMING CRISIS. By Fritz Sternberg. 280 pp. New york: The John Day Co. $3.50.. THE United States is proceeding- headlong toward the worst economic crisis of all time. That is the unqualified prediction of Fritz Sternberg, who. unfortunately, is a prophet with a remarkable record for accuracy.</br></br>The introductory portion of this book amounts to a sort of revision, in the light of late history, of the works of Karl Marx and Frederick Engels. Sternberg points out a few miscalculations they detected in their early writings and corrected themselves, as well as a few more miscalculations now apparent to Sternberg and corrected by him. These somewhat tedious chapters should not keep the reader from his highly important and perhaps historical analysis of the immediate fate of this country.</br></br>Although Sternberg leans heavily on the more enduring products of Marx and Engels, he carefully buttresses his observations with such radically different sources — conservatively different sources, rather—as the reports of the Securities and Exchange Commission and the publications of the Brookings Institution.</br></br>The heart of Sternberg's case is based on the acknowledged fact that in the course of World War II the industrial plant of the United States developed so rapidly that it is now able to produce 50 per cent, more goods than in 1940. Obviously, we want to keep right on producing that extra 50 per cent. The Office of War Mobilization and Reconversion declared after Japan surrendered: “We are not seeking to go back to previous levels of employment or output. We are seeking to expand our output rapidly to forty or fifty per cent above former peacetime levels.” This means that, with Government purchase of war materiel dropping off sharply, peacetime sales — consumption—must be increased permanently by 50 per cent. Sternberg believes that we will find this-impossible after the present rosy transition period in which our economy is kept rolling by war-delayed capital investments and by pent-up consumer demands presently met primarily by war savings.</br></br>^ FTER this transition, what? Pessimists believe that post-war plans of the Army and Navy might absorb 10 per cent of our 50 per cent production increase. No optimist believes foreign trade will absorb 10 per cent more. The balance of between 30 per cent and 40 per cent must therefore be absorbed by the people of the United States, and Sternberg holds that this cannot be done unless the total sum of real (not dollar) wages increases by the same 30 per cent to 40 per cent compared to pre-war levels. Is such a wage increase likely? Sternberg states, “I know of no serious publication which dares to suggest that there is any such likelihood.”

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Questions of Conflict Sting Mutual Funds: Questions of Conflicts Sting Mutual Fund Managers' Investments. For a decade, millions of Americans trying to avoid the pitfalls and predators of the stock market have turned to mutual funds, relying on the funds’ professional managers to avoid the mistakes of an amateur investor.</br></br>Among those millions are many unsophisticated savers seeking higher returns than they can get from banks or Government bonds, now that interest rates are lower than they were for many years.</br></br>turn the mutual fund industry into one of the deepest oceans of cash in the world, totaling more than $2 trillion at the end of June, up 100 percent in just three years. More money is controlled by mutual funds than by life insurance companies or savings and loan institutions.</br></br>vestors move into mutual funds, the investments that some of those funds make are becoming more exotic and complex.</br></br>Looking for a competitive edge in a business that has grown to about 4,900 funds, from 3,100 four years ago, some fund managers are plunging into the riskiest corners of the securities markets. They are buying the stocks and notes of very small companies whose prospects are much more uncertain than those of larger, more established businesses.

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Senate Votes Unanimously for an Audit of Fed's Actions in Financial Crisis. WASHINGTON - The Senate voted unanimously on Tuesday to require an audit of the Federal Reserve’s emergency actions during and after the 2008 finan-' cial crisis as part of broad legislation overhauling the nation’s financial regulatory system.</br></br>The amendment, proposed by Senator Bernard Sanders, independent of Vermont, would require tile Government Accountability Office to scrutinize sopie S2 trillion in emergency loans that the Fed provided to some of the nation’s biggest banks.</br></br>Mr. Sanders, a professed socialist, has long demanded greater transparency at the central bank, and his original plah could have subjected the Fed to continuing audits of some of its routine operations. But he agreed to scale it back in the face of opposition from the White House, the Fed, the Treasury and some Senate colleagues.</br></br>While the Senate ■ provision would require an audit of the Fed's emergency operations beginning on Dec. 1,2007, the House approved tougher audit requirements late last year In its version of the financial regulatory legislation. Once the larger Senate bill is</br></br>Senator David Vilter, Republican of Louisiana, put forward an amendment that would have mirrored the stricter House language. But the Senate rejected it Tuesday, 62 to 37. Mr. Sanders and six Democrats joined 30 Republicans in favor.

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Interest Rates Rise Slightly: Financing Costs Cited. Interest rates rose modestly yesterday as traders were disappointed and cut prices because of the continued high cost of financing inventories and lackluster investor demand.</br></br>With financing costs still higher than expected at 14 percent, dealers are less willing to hold Treasury issues whose yields are less than the cost of financing. The willingness to lighten inventories was one reason why the price of outstanding three-and six-month Treasury bills declined enough to increase their rates by about an eighth of a percentage point, to 12.3 percent, in secondary market trading.</br></br>At the regular weekly auction of new Treasury bills, however, financing costs were less of an immediate concern since dealers need not pay for their purchases until Thursday. Thus, they were willing to pay prices that resulted in average rates of 12.189 percent and 12.187 percent for three-and six-month bills, respectively. A week ago, the average auction rate was</br></br>In the note and bond sector, securities dealers had to pay yesterday for their purchases of die $5.25 billion of 14*/8 percent Treasury notes due in May 1985 and $4 billion of 13% percent notes due in 1992. Both issues were “I think buying interest was pretty much exhausted around the time of the May refunding,” one dealer said. “Investors are now waiting on the sidelines.”</br></br>So far, buyers of the two newest Treasury note issues have fared well, despite declines in yesterday’s trading. Both issues sold at an average price of 99.893, while the 14*4 percent notes closed at 101, down % point, to yield 13.7 percent and the 13% percent notes closed at 100%, down nearly a point, to yield 13.62 percent.

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Dow Below 2,600 After Volatile Day. merited, between Duquesne Light Company and Motion Bank, N.A., successor by merger to Mellon National Bank and Trust Company, as Trustee, Bonds totalling $4,K ... *• •- ** * ________________________„_________________________________________ . - r to Mellon National Bank and it Company, as Trustee, Bonds totalling $4,100,000. principal amount Issued under the following Supplemental Indentures, and bearing tho below-listed numbers, rates, and maturities, have been selected by lot for redemption on October 1, 1987 pursuant to their respective Sinking Fund provisions. Said Bonds will become due and payable on and after said redemption date at a redemption price equal to 100% of tho principal omount thereof, together with Interest accrued thereon to said redemption date:</br></br>65th Supplemental Indenture dated as of March 1, 1984 13%% due March 1,1991 Call of 9500,000. principal amount Bond Numbers 56th Supplemental Indenture dated as of January 1, 1980 1214% due January 1, 2010 Call of $600,000. principal amount Bond Numbers</br></br>62nd Supplemental indenture dated as of April 1, 1983 12%%.due April 1, 2013 Call of $600,000. principal amount Bond Numbers Bond Principal Amount Principal Amount to be Bond Principal Amount Principal Amount to be Bond Principal Amount Principal Amount to be</br></br>P 294 P 295 P 296 P 297 P 298 P 299 P 300 P 301 P 302 P 338 P 377 P 378 P 444 P 445 P 446 P 568 P 581 P 582 P 591 64th Supplemental Indenture dated as of December 1, 1983 13% due December 1, 2013 Call of $500,000. principal amount Bond Numbers Principal Principal</br></br>7lat Supplemental Indenture dated as of December 1,1985 11%% due December 1, 2015 Call of $1,250,000. principal amount Bond Numbers

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MARTIN AND DEWEY CONFER IN ALBANY: Speaker Later Says Truman Has Never Actually Tried to Control Inflation. ; ALBANY, Aug. 18—Joseph W. Martin Jr., Speaker of the House ; of Representatives, told reporters [this afternoon following a visit ‘with Gov. Thomas E. Dewey that ^President Truman had never "■shown any intention of controlling ^inflation.</br></br>5 As for the housing situation, on twhich Mr. Truman has also been ^attacking the Republican - controlled Congress, Mr. Martin said -“we Republicans are proud of the fact that people are getting houses :as fast as they can be built.”</br></br>Under Wilson Wyatt, former housing expediter in the Truman Administration, the people got only blueprints, he added.</br></br>The inflation and housing issues were'among the political subjects he discussed with Governor Dewey at a luncheon conference today, Mr. Martin informed reporters.</br></br>Asked if he intended to defend the record of the Eightieth Congress, which President Truman has assailed repeatedly and apparently intends to make a key issue, Speaker Martin said: "The Eightieth Congress needs no defense. We’re going to brag about the Eightieth Congress. It was one of the best in years. Mr. Truman, after three barren years, has nothing to talk about in a constructive way, and so he is attacking Congress.”

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A Noted Bear Turns Bullish on Stocks: Elaine M. Garzarelli believes the Fed will be accommodative, helping the economy avoid lurching into a recession.. If you are not dependent on a broker's advice to make your investment decisions, you are paying quite a premium for a service that you don’t really need. Rose & Company offers independent investors commission savings up to 75% compared to full-commission brokers’ rates as well as a wide range of impressive investment services.</br></br>Enjoy substantial commission discounts as well as impressive services like instant verbal confirmations on most market orders and free quotations, 24 hours a day, by trading through Rose & Company.</br></br>For our free discount trading brochure and an application, call us or return this coupon to: Rose & Company, One Financial Place, Chicago, Illinois 60605.</br></br>Elaine M. Garzarelli believes the Fed will be accommodative, helping the economy avoid lurching into a recession.</br></br>WHEN Elaine M. Garzarelli was just a market strategist, she could make stock market judgments and simply deliver them to her clients, the institutions and individuals who invest through Shearson Lehman Hutton Inc.

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Strong Credit Demand Pushes Interest Rates Up: New Bond Issues Reoffering Yields Up Vermont Sells Bonds. Interest rates spiraled upward again yesterday under continued strong demand for short-term credit and, the psychological depressant of the unresolved situation in foreign exchange.</br></br>Banks and other institutions were reported to be actively disposing of bonds, with the result that rates</br></br>Markets Money rates, meanwnile, continued to hold much of. the attention as they raced ahead on Treasury bills, commercial paper and certificates of deposit. More New York City banks joined in increases in the charges made on loans to stock brokers, which</br></br>Orlo. Asked Price Quote Chg. Yld. Con Edit 7%s03 100.582 97% -Vi 7.99 ChesPotWVa 7!Asl3 >99.35 97 -% 7M Comml Edit 7%s03 100.885 100'/. -14 7.80 Phi la Elec 71W9 100 99% ..7.52</br></br>Detroit Ed 7Kis03 100.357 9914 -Vi 7.58 OTHER BONDS IntHarv 7%s94 99.50 99 -% 7.58 Deere Cr 7VSs98 99.50 99 -45 7.58 West’h’e Cr 7.60S97 100 99% -'/a 7.62 now range as high as 7 per cent. This loan rate usually has been at the prime rate, now 6)4 per cent, but has advanced independently in recent weeks since the prime rate has been

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CUT OF 6.6 BILLION IN BUDGET IS URGED: Economic Development Group Says Such a Reduction Would Justify Tax Relief in 1953. WASHINGTON, April 7—The Committee for Economic Development said today that a $6,600,000,-000 reduction in Federal expenditures would be sufficient to justify tax relief this year, even though it would entail a $3,300,000,000 budget deficit.</br></br>The committee, a private research organization of business leaders, noted that such a cut would bring the “cash”'budget into balance "without canceling tax reductions scheduled to take effect automatically this year and next.</br></br>“We believe,” it added, “that of-1 ficial recognition should he given to the fact that it is the cash budget that should be balanced.”</br></br>The cash budget measures actual cash exchanged between the Government and the public, whereas the administrative budget, which is .commonly referred to simply as the Federal budget, excludes such items as Social Security taxes while including intra-Governmen-ta! transactions.</br></br>The administrative budget sent to Congress by President Harry S. Truman shortly before he left office last January calls for expenditures of $78,600,000,000 in the 1954 fiscal year, which starts next July 1, and estimates receipts at

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Treasury Securities Rise in Erratic Session. Prices of Treasury securities rose and interest rates fell in thin, erratic trading yesterday, as traders positioned themselves for another cut in interest rates by the Federal Reserve Board.</br></br>After the Labor Department released weak employment data for January, market participants were expecting the Fed to move soon to lower interest rates.</br></br>The initial reaction in the market to the news that non-farm payroll employment fell by 91,000 last month and that the manufacturing workweek dropped sharply was uniformly > positive, and prices across the maturity spectrum moved higher.</br></br>But those anticipating a speedy move by the Fed were disappointed because the central bank sent no such signal when it conducted its late-morning open market operations.</br></br>The gains recorded early in the session began to erode after it became clear the Fed would not ease policy immediately. But the way prices fell defied the strange logic that normally governs trading patterns.

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Fed Rules Urged for Dealers in Treasury Issues. Large banks and securities firms that dominate the largely unregulated market in Treasury debt issues yesterday came out in favor of legislation that would give the Federal Reserve the ability to regulate the Treasury securities market.</br></br>The topic has become heated following the collapse of E.S.M. Government Securities last month and the failure of six dealers in Government securities in the last three years.</br></br>However, E. Gerald Corrigan, the president of the New York Federal Reserve Bank, declined to endorse any particular plan for controlling the market until the completion of a new study within 90 days by the Fed, the “I'm not satisfied with the current arrangement,” he said at hearings held by the House Subcommittee on Domestic Monetary Affairs in New York. But Mr. Corrigan urged the legislators to proceed cautiously to avoid measures that could inadvertently hurt the market and cause higher interest rates on Treausury debt. He said the interagency study should focus on securities firms that operate in the Treasury market without supervision by the Fed, without falling under the rules of any banking regulator or the S.E.C.</br></br>Government and agency securities division of the Public Securities Association, and a senior vice president at Aubrey G. Lanston & Company, a firm dealing in Government securities, said securities firms and their customers “would be best served” by legislation broadening the New York Fed’s authority over the unregulated firms in the market.</br></br>“A common thread” among the failed securities firms, Mr. Kelly said, was that “none were subject to any ongoing regulatory oversight.”

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HELLER SEES NEED FOR 1974 TAX RISE: Holds Increase in Federal Levy Would Be Deterrent Against Inflation Heller Sees Need for Federal Tax Increase in 1974. BOCA RATON, Fla., Nov. 12 —A Federal tax increase of be-! tween $10-bil!ion and 515-billion will be required in 1974 to j avoid a resurgence of inflation I at that time, Walter W. Heller said here over the weekend.</br></br>Speaking to the closing session of the 79th annual convention of the Savings Banks Association of New York State, Professor Heller — who was chairman of the Council of , Economic Advisers under Presidents Kennedy and Johnson— said that the deficit of more than $30-billion now in prospect for the Federal budget in the current fiscal year does “not portend a new inflation."</br></br>But then the lanky University of Minnesota economics professor added a crucial caveat: this would only be the case "provided that we’ve got the intelligence, and the responsibility and the guts to put in a tax increase in 1974 when we will be getting up very close to full employment, and when we should have a balanced budget or even a surplus in the budget.”</br></br>Separately here at the savings bank meeting, Frank Wi|le, the chairman of the Federal Deposit Insurance Corporation, warned his audience of bankers that the S. D. I. C. was determined to press ahead with the adoption of regulations that it has proposed to implement provisions of the Civil Rights Act of 1968 that'requires nondiscrimination in real estate lending.</br></br>The proposed regulations have been strongly criticized by some banking groups, including the savings bankers.

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Too Poor to Make the News. THE human side of the recession, in the new media genre that’s been called “recession porn,” is the story of an incremental descent from excess to frugality, from ease to austerity. The super-rich give up their personal jets; the upper middle class cut back on private Pilates classes; the merely middle class forgo vacations and evenings at Applebee’s. In some accounts, the recession is even described as the "great leveler,” smudging the dizzying levels of inequality that characterized the last couple of decades and squeezing everyone into a single great class, the Nouveau Poor, in which we will all drive tiny fuel-efficient cars and grow tomatoes on our porches.</br></br>• But the outlook is not so cozy when we look at the effects of the recession on a group generally omitted from all the vivid narratives of downward mobility — the already poor, the estimated 20 percent to 30 percent of the population who struggle to get by in the best of times. This demographic, the working poor, have already been living in an economic depression of their own. From their point of view "the economy," as a shared condition, is a fiction.</br></br>This spring, f tracked down a couple of the people I had met while working on my 2001 book, “Nickel and Dimed," in which I worked in low-wage jobs like wait-ressing and housecleaning, and I found them no more gripped by the recession than by “American Idol”; things were pretty much “same old.” The woman I called Melissa in the book was still working at Wal-Mart, though in nine years, her wages had risen to $10 an hour from $7. “Caroline,” who is increasingly disabled by diabetes and heart disease, now lives with a grown son and subsists on occasional cleaning and catering jobs. We phatted about grandchildren and church, without any mention of exceptional hardship.</br></br>As with Denise Smith, whom I recently met through • tile. Virginia Organizing Project and whose bachelor’s degree in history qualifies her for seasonal $10-an-hour work at a tourist site, the recession is largely an abstraction. "We were poor,” Ms. Smith told me cheerfully, '’and we’re still poor.”</br></br>But then, at least If you inhabit a large, multiclass extended family like my own, there comes that e-mail message with the subject line "Need your help," and you realize that bad is often just the stage before worse. The note was from one of my nephews, and it reported that his mother-in-law, Peg, was, like several million other Americans, about to lose her home to foreclosure.

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CAR MAKERS CITE RECOVERY SIGNS: lacocca of Ford Sees Long Climb Back G.M.'s Estes Expects Solid-Based Rise LAYOFFS DROP SLIGHTLY Traditional Spring Selling Lift Awaited Union Aide Discounts Talk of Upturn CAR MAKERS CITE RECOVERY SIGNS. - DETROIT, April 17 — The presidents of the Ford Motor Company and the General Motors Corporation said today that the industry was beginning to recover from the worst recession in their industry since World War II.</br></br>“I don’t want to mislead anyone or to spread false hopes-r-unemployment is awful," Lee A. lacocca, president of Ford, said in a speech in Boston. "From the bottom of the trough we’re in, it’s a long climb back to business as usual. Even with all the qualification, however, things are getting better, not worse.”</br></br>Jn December dealers were only selling cars, at a seven million annual rate:. Spurred‘by the rebates, sales jumped to an 8.3 million ahnual rate in*January aud then.hit over a nine million annual rate in February.”</br></br>He conceded that sales went hack down aL the end of the rebates. During March sales went down to an annual rate of 7.8 million. V "But with hard work and hard selling.” he said, "we believe the sales momentum will be maintained in what is traditionally the spring pickup in our business.”</br></br>Lynn Townsend, chairman of the Chrysler Corporation, said at the company’s annual meeting Tuesday that “we are through the worst of; it. In my judgment we have seen the bottom of the automobile and truck market.”

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16 STATES FORCED TO GET U.S. LOANS TO PAY THE JOBLESS: 9.5% Rate of Unemployment Is Blamed -- Cuts in Benefits Possible in Some Areas 16 States Facing Squeeze on Funds for the Jobless. Unemployment compensation funds in 16 states are experiencing painful cash squeezes and have to borrow regularly from the Federal Government to pay benefits to jobless workers.</br></br>With the national unemployment rate at 9.5 percent, the highest in four decades, more than 4.2 million people are drawing benefits, an increase of a million and half in the last year.</br></br>In addition to the 16 states, the District of Columbia, Puerto Rico and the Virgin Islands have had to borrow from the Federal Government, and before the economy recovers, about half the state funds are expected to have to turn to Washington for help.</br></br>While Washington is obligated to aid states with short-term difficulties, new Federal rules severely penalize states that habitually pay out more in jobless benefits than they take in from employers.</br></br>Many of these states, largely in the industrial North, are working urgently to revise their programs to lower the deficits and escape the penalties. Both New Jersey and Connecticut have substantial deficits, but New York, where benefits are significantly lower, has not run into trouble.

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Experts Say Motivation Counts As Temperatures Rise at Work. Workers may feel mildly uncomfortable with the temperature at 78 degrees,. researchers and physiologists say, but if it affects their productivity, the explanation is more likely to be found in motivation than in physiology.</br></br>“Physiologically, there is no reason, one can't perform as well at 78 degrees as at 72,’’ Jan Stplwijk, an epidemiologist at YaleUniversity, said yesterday. “However, the psychological effects of mild discomfort are highly variable.” \ “If you are a jogger and you are uncomfortably' hot while running,” he continued, “you ire not going to be resentful. But if you are in an office and you feel people shouldn’t,do that to you. you may well get resentful — and that mechanism could have an effect on pro-diictiyity."</br></br>Researchers agree that; 7g .degrees represents the outer limit of the “comfort zone,” and they say that peeling off a few layers of clothing offsets virtually all of the discomfort added by the new 7fWegree thermostat levels instituted yesterday at President Carter’s order.</br></br>The American Society of Heating, Refrigerating and Air-Conditioning Engineers sets 86 degrees as the level at which temperature may impair effective performance. But statistics are often vague.</br></br>“In other words, except in extreme conditions there are more important factors than temperature,” he said. ways reflect the temperature one feels ■ in a room, researchers noted. Heat radiated by the sun and air in motion can substantially increase the effective temperature.

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Fluor to Cut 5,000 Jobs and Reorganize Operations. IRVINE, Calif., March 9 — The Fluor Corporation, suffering from the Asian economic crisis and its own bloated cost structure, said today that it would cut 5,000 employees, reorganize its operations, and narrow the range of construction projects it undertakes.</br></br>Fluor, the nation’s largest engineering and construction company, said the moves were expected to reduce overhead costs by $160 million annually but would require a $130 million pretax charge against earnings in the current quarter.</br></br>“We have a cost structure that is unsustainable,” Philip J. Carroll, the company’s chairman and chief executive, told shareholders at the annual meeting here today. He said a reorganization would have been needed even if business conditions had been better.</br></br>But those conditions continue to deteriorate. The company said today that it expected only $6 billion in new construction orders this year, about half the level of two years ago and less than the $8 billion it had previously been forecasting for this year.</br></br>Fluor said it expected to record net income this fiscal year of $107 million, or $1.42 a share, after the restructuring charge. That is less than half the $235 million, or $2.97 a diluted share, it earned last year on revenues of $13.5 billion. Even excluding the charge, which amounts to $1.23 a share, expected earnings of $2.65 a share are below the $2.99 or so that analysts have been estimating.

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INDUSTRIAL LOANS OFF $280,000,000: Declines in Week Shown in All but One District. WASHINGTON, Jan. 17—i The Federal Reserve Board reported today that the condition statement of weekly reporting member banks in leading cities showed the following principal changes for the week ended Jan. 10: ^Decreases, of $1,156,000,000 in loans adjusted, $298,000,000 in holdings of United States Government securities, $758,-000,000 in reserve balance with Federal Reserve Banks and $2,-</br></br>Commercial and industrial loans decreased in all but one district a net of $280,000,000; in the same period last year the decrease was $139,000,000.</br></br>This lowered the total of such loans at these banks to $32,539,-000,000. This was $657,000,000 higher than the total a year earlier.</br></br>Since mid-1961, commercial and industrial loans have increased by $770,000,000 compared to $31,000,000 in the same period last year.</br></br>Loans to brokers and dealers for purchasing or carrying Government securities decreased $276,000,000, and their loans for purchasing or carrying •‘other” securities decreased $142,000,000. Loans to sales and personal financing institutions decreased $306,000,000; these loans decreased $259,000,000 during the same 1961 week.

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Point of View: After Cooling Last Year, Cost-Push Inflation Is Rising Once Again. The following article was written by James J. O’Leary, executive vice president and economist for the United States Trust Company of New York.</br></br>noted that the Nixon Administration and the Federal Reserve authorities recognized that the expectation of continuing inflation had become a powerful destabilizing force in our economy, and that fiscal and monetary restraints were being directed to dampen down the widespread belief that a persistent high rate of inflation was inevitable. The purpose or tms article is to examine how we stand today in our efforts to combat the expectation of inflation — how much progress, if any, has been made toward cooling it.</br></br>The expectation of inflation is the conviction widely shared by investors, corporate planners, labor leaders, consumers, public officials and the public at large that, for the foreseeable future, the general price level of the United States is likely to continue to rise at a very high rate by any historical standards. This expectation has, of course, been nurtured by the accelerating rate of in-'' crease in prices during much of the past four and one-half years. It is based to a large degree today on the belief that the wage - price spiral cannot be broken by fiscal and monetary restraints so long as the Government is unwilling to tolerate more than a moderate and shortlived increase of unemployment.</br></br>As the expectation of inflation has built up since mid-1965, it has had a profound effect upon decision-makers in our economy. It has made investors unwilling to buy straight bonds and mortgages except at very high interest rates—and it has thus built an “inflation premium” into long-term interest rates. The belief that the cost of capital projects will continue to rise at a rapid rate provides part of the explanation for the surprisingly high rate of capital spending.</br></br>Organized labor is seeking in its bargaining not only to catch up with past rises in the cost of living but also to anticipate sizable increases in the future. State and local government capital projects are being pressed in the present to avoid the higher costs expected in the future. Expeditures for housing and consumer durables are undoubtedly being sustained in part by the belief that it is wise to muke such expenditures today before prices rise further. There is hardly any area of economic-decision-making that is not being influenced by the expectation of Inflation.

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New Skating Derby League Getting Back on the Track. The Roller Derby, which was flourishing at the box office just two years ago, has come on hard times, but its troubles go deeper than the recession as the cause.</br></br>The other night at the Long Island Arena here, a new league, the World Skating Derby Roller Races, put on its first show, featuring the New York Sky Chiefs against the Penn Panthers. Despite the presence of a few well-known skaters on both teams, the fans were notable by their absence. Only 600 or so were on hand to occupy the 6,000 seats available.</br></br>"A couple of years ago, games in this same arena drew capacity crowds,” said Diana Schrader, a young schoolteacher who owns and edits “Trackings,” a two-year-old monthly newspaper that covers the sport. “The championship game of the International Roller Derby League had 27,000 people at Shea Stadium in the spring of 1973.</br></br>“But then the I.R.D.L. sold out to the National Skating Derby Roller Games and the result was pure disaster,”</br></br>Miss Schrader said. “Instead of the I.R.D.L.’s hard skating and exciting play. Roller Games turned the sport into a circus with pies-in-the-face, clowns as infield managers, midgets, chases with clubs, horns, bells — the whole shmear.

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Researchers Assert 'New' Inflation in U.S. Can't Be Cured by Conventional Methods: RESEARCHERS FIND 'NEW' U.S.INFLATION. WASHINGTON, Aug. 7—The nation is experiencing a new form of inflation that cannot be curbed by the "conventional economic policies” being pursued by the Carter Administration, concludes a report issued today by a Washington-based economic research group.</br></br>The report, issued by the txpiutaluiy Project for Economic Alternatives, argues that this new type of inflation is being generated by factors such as world weather conditions, oil price increases, and waste, and is immune from such traditional fiscal controls as tightening the money supply or restraining Federal spending.</br></br>The study’s conclusions echo views aired increasingly by labor leaders at informal meetings sponsored by President Carter’s economic advisers.</br></br>The so-called new inflation described in the report refers to price increases in the four basic necessities—food, housing, health and energy—according to the report's author, Leslie Ellen Nulty, an economist formerly with the United Auto Workers. The four items, which together comprise 70 percent of the average family’s consumption budget, have accounted for two-thirds of consumer price inflation from 1970 to 1976. Moreover, the study concludes, the average annual rate of inflation during the period in the four necessities was 44 percent greater than for the nonessential components of the Consumer Price Index.</br></br>that most energy consumption is related to necessary functions, such as travel to and from work and heating homes. Similarly, the study finds that the increase in food prices has been caused by the growth of world demand, and domestically, by the vastly increased importance of the middleman in the United States food system.

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O.E.C.D.FAVORS SLOW RECOVERY: West's Unemployment High, It Says, but Fast Growth Would Worsen Inflation OUTLOOK GOOD FOR U.S. Strength Found in Economy of Major Nations Despite Uncertainty on Europe O.E.C.D. FAVORS SLOW RECOVERY. PARIS, July 27—The economic watchdog of the Western industrialized nations says ;heir recovery is proceeding too slowly to make much of a dent ‘.n unemployment, but it warns that any faster growth would accelerate inflation and start a new boom-and-bust cycle.</br></br>The Organization for Economic Cooperation and Devel-jpnient predicts that in the United States, where conditions for continued expansion are dej scribed as “particularly favora-jle,” unemployment in a year's time will be no lower than S\A percent of the work force, com--pared with more than 7 percent today. . ;</br></br>The thrust of the O.E.C.D.’s latest assessment of the Western world’s economic perform-; :»nce is that there is still enough strength in the recovery from the severest postwar recession to prevent a fizzling out later this year.</br></br>But some comments in its semiannual review, entitled The Outlook, show that uncertain-, tics still weigh heavily on the analysis. ': “The improvement of - consumer and business confidence is crucial to the sustainability of the recovery,” The Outlook says. “Recent developments give grounds for optimism in this respect in- North America and probably Japan, but the picture in Europe is much less clear.”</br></br>The recovery so far in Europe has been largely confined to France and West Germany. They account for less than half of the European output of goods and services.

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Stocks Fall in Slow Day On Interest-Rate Climb: Rate Rise Noted Stock Market Slumps in a Slow Day Percentage Gains Percentage Drops New 1973 Highs/Lows Odd-Lot Transactions. Tbe stock market absorbed another beating yesterday in lethargic trading as Wall Street contracted a new set or jitters over risrg interest rates.</br></br>The Dow-Jones industrial average toppled 1.1.14 points and closed at 880.57 in its biggest plunge in two weeks. Volume on the New York Stock Exchange sank, however, to 9.83 million shares, the lowest since last Oct. 9, a semi-holiday in observance of Columbus Day.</br></br>The slow trading indicated that most investors were on the sidelines and that the market’s weakness stemmed from an absence of active buyers rather than a stampede to sell. Nevertheless, the slide was discouraging to analysts who had. been hoping last week’s three-! day upsurge had signaled an end to the recent wave of selling.</br></br>Wall Street was clearly nervous over the Federal Reserve Board’s decision late Friday to increase the discount rate from 6y2 to 7 per cent. This action touched off another round of increases in the prime lending rate of commercial banks, from 7% to 8 per cent.</br></br>The prime, which is the basic lending rate for business loans, is now back at the same level as early 1970, when the stock market was in deep trouble. Rising interest rates are not considered bullish for stock

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Reports on Business Conditions Throughout U.S.. Department store sales across the nation for the week ended on Aug. 11 were 7 per cent higher than in the same period last year, according to The Federal Reserve Board.</br></br>All Federal Reserve distncu registered increases. The best gain was turned in by St. Louis, with 14 per cent, and the smallest by Minneapolis, with 1 per cent.</br></br>Sales for the four-week period ended Aug. 11 were 4 per cent higher than in (he 1955 period, according to the Federal Reserve Board. ,</br></br>Following are reports of business activity in the various districts in the latest-, weeks for which data are available.</br></br>New York ’ Store executives estimated that volume of the nine major department stores last week was 4" to 6 per cent higher than a year before.

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Let Unemployment Benefits Run Out: Extending them only delays the recovery.. If the Democrats had their way, the nation would have a new system of increased benefits for unemployed workers. Though President Bush is expected to kill the Emergency Unemployment Compensation Act that Congress approved last week, the Democratic leadership has already promised to push similar legislation when Congress returns in September. The debate, in short, is just beginning, but almost no one, least of all elected officials, is willing to be identified with the strong case against these benefit increases.</br></br>The U.S. has a basic unemployment system in which qualified workers receive 26 weeks of benefits averaging about $160 a week. If unemployment in a state is very high — between 9 and 12 percent — then workers in that state who use up their benefits can qualify for an additional 13 weeks. In 1975 and 1982, the two most recent recessions. Congress added another tier of temporary benefits, which generally extend the</br></br>Though we seem to be at the end of a recession, the Democrats have proposed a revamped unemployment system that would provide millions of workers with benefits for 20 weeks beyond the basic 26 weeks. While both parties agree that the U.S. should provide unemployment benefits and that we should give additional benefits in high unemployment states, the agreement ends there.</br></br>The Democrats, for whom labor has been a major constituency, want more benefits for more people. The image of unemployment portrayed by the Democrats is of a worker laid off by declines in his industry, spending every day looking for a job, running out of money.</br></br>Many Republicans want basic coverage and additional coverage under truly difficult circumstances as well. But unlike the Democrats, we realize that the U.S. economy is dynamic; capitalism is creative destruction. Between 1970 and 1988, for example, the primary metal industries lost half a million workers, or 40 percent of their workforce. Over the same period, the number of employees in business services increased by nearly four million people. Despite the loss of millions of jobs and types of jobs, employment rose from 58 percent to

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Health Claims Cause Turmoil In the Cellular-Phone Market: Health Claims Stir Turmoil In Cellular-Phone Market. It began last week when a Florida man said on a national television talk show that his wife’s incessant use of a pocket-size cellular telephone had led to her fatal brain cancer. The next day, stock market investors, putting their faith in the man’s story — or fearing that others would take it on faith — began dumping cellular telephone, stocks. The cellular industry scoffed at' such a wild notion and defended the phones as safe.</br></br>But yesterday it became clear the issue would not go away. Wall Street continued to batter the shares of companies involved with cellular phones, the kind that have antennas next to the head and allow users to make calls from just about anywhere. They are different from cordless phones that broadcast a radio signal only a short distance within the home.</br></br>The shares of Motorola Inc., the biggest maker of cellular phones, have lost 20 percent since the scare began. In yesterday's trading, Motorola 1 shares lost $4,875 to close at $51. McCaw Cellular Communications Inc., which is the largest provider of cellular service, has seen its shares skid 15 percent, including a drop of $3,375, to $32.50, yesterday. [Page 36.)</br></br>All week, the companies have rushed to insist that there is no scientific evidence to indicate that there is any danger in using the phones, but scientists say that no one knows for sure.</br></br>While there is no proof that there are health risks, there is no research that specifically addresses the effects of cellular phones on the human body and the human brain. Even the Environmental Protection Agency says it does not have sufficient information to declare unequivocally that cellular phones are safe.

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In Refinancing, a Chance to Manage Your Debt. The Weinbaums — Richard, top, Andrea and Noah — at home in Scarsdale, N.Y. Money from a mortgage refinancing will help the family with many projects, including a kitchen renovation.</br></br>WOULD you like to improve your monthly cash flow, wipe out some debts or have more money to invest’ For millions of American homeowners in these days of low interest rates, those goals can be easily attained through a mortgage refinancing Refinancings now accoont for a record 78 percent of alt mortgage activity. their popularity has soared as mortgage rates have fallen in recent months The rate on the 30-year fixed-rate loan, for example, stood at 6,51 percent last week In the previous week, it was 6 -15 percent, the lowest in 30 years of record-keeping Andrea and Richard Weinbaum of Scarsdale, N Y., decided to refinance their three-bedroom co-op on the advice of Anthony LoCascio, who runs Investment Counseling Inc in Clinton, N J Since they bought the unit 10 years ago, it has gone up in value by about $80,000, so they are taking out $26,000 from the equity, known in the industry as cash-out refinancing The money will let them to renovate their kitchen and bathroom, trade in a 10-year-old Honda Civic for a newer vehicle, pay off credit card debt with interest rates up to 17 percent and increase payroll deductions for retirement plans “We’re not day traders," said Mrs Weinbaum, -14, a public relations consultant, adding that she and her husband, a 43-year-old computer analyst, “are very conservative people ”</br></br>Even though their home equity was reduced, their monthly mortgage payments will still be $10 below what they pay now The Weinbaums worked through a mortgage broker, the Manhattan Mortgage Company, and are moving to a 65J percent, 30-year mortgage at Citibank from a 7\'s percent mortgage at Chase The fees for the refinancing total $1,600.</br></br>Asked if he was recommending refinancing to many clients, Mr LoCascio replied' "Absolutely. This is the cheapest form of money right now "</br></br>One of his clients had both a first and second mortgage on her home, car payments and credit-card debts. A refinancing that consolidated all that into one mortgage saved her $900 a month, he said.

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BROAD JOB LOSSES AS COMPANIES FACE SHARP DOWNTURN: Unemployment Rate Highest in 16 Years-- Experts See More Cuts Ahead. The nation lost 524,000 jobs in December, reflecting a pervasive fear among employers that if they fail to shed workers quickly their companies may go under in a recession poised to become the worst since the 1930s.</br></br>The unemployment rate, meanwhile, jumped to a 16-year-high of 7.2 percent, the Bureau of Labor Statistics reported on Friday. The growing army of the unemployed, at 11.1 million, is nearly 50 percent bigger than at the start of the recession a year ago.</br></br>Responding to the report, President-elect Barack Obama said Congress must enact an economic stimulus plan quickly.</br></br>The December decline in jobs came on top of similar losses in October and November. Not since 1980 has the work force shrunk so much in just three months. Companies across all industries are grappling with sales that are deteriorating rapidly just as they lose easy access to loans.</br></br>“The simplest way for a company to hoard cash is. to drain their inventories and fire their workers,” said Robert J. Barbera, chief economist at the Investment Technology Group, a research and trading firm, “and everywhere you look, that is what is happening.”

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INDUSTRIAL LOANS DOWN $100,000,000: Decline Since First of the Year Is Nearly Twice That in '57 Period. WASHINGTON, Feb. 19— The Federal Reserve Board reported today that the condition statement of weekly reporting member banks in ninety-four leading cities showed the following principal changes for the week ended Wednesday, Feb. 12: ^Decreases of $188,000,000 in reserve balances with Federal Reserve banks, $332,000,000 in demand deposits adjusted, $196,-000,000 in United States Government deposits, and $155,-000,000 in demand deposits credited to domestic banks.</br></br>Commercial and industrial loans decreased a total of $100,-000,000. The principal changes were declines of $50,000,000 in New York City, $32,000,000 in Chicago $21,000,000 in the San Francisco district, $15,000,000 in the St. Louis district, and an increase of $10,000,000 in the Dallas district.</br></br>This reduced the total of such loans to $29,887,000,000. This was $70,000,000 higher than the total a year earlier.</br></br>So far this year, commercial and industrial loans have decreased by $1,966,000,000, compared with a decrease of $1,031,-000,000 in the corresponding period of last year.</br></br>Loans to brokers and dealers for purchasing or carrying United States Government and other securities increased $73,000,000.

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At Tiny Rates, Saving Money Costs Investors. Millions of Americans are paying a high price for a safe place to put their money: extremely low interest rates on savings accounts and certificates of deposit.</br></br>The elderly and others on fixed incomes have been especially hard hit. Many have seen returns on savings, C.D.’s and government bonds drop to niggling amounts recently, often costing them money once inflation, fees and taxes are considered, "Open a Savings Plus Account today and get a great rate," read an advertisement in the Dec. 16 Newsday for Citibank, which was then offering 1.2 percent for an account. (As low as it was, the offer was good only for accounts of $25,000 and up.)</br></br>“They’re advertising it in the papers as if they’re actually proud of that," said Steven Weis-man, a title insurance consultant in New York. “It’s a joke." The advertised rate for the Savings Plus account has expired, according to the bank’s Web site; as of Friday, the account paid an interest rate of 0.5 percent. The bank’s highest-yield savings account, the Ultimate, Continued, on Page AI6</br></br>Joe Parks, a retired accountant, said retirees and the elderly would take up to a three-quarters of a percent cut in income.</br></br>The best deal Mr. Weisman has found is 2 percent on a one-year certificate of deposit offered by ING Direct, an online bank that has become a bit of a darling among the fixed-income crowd.

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THE CONSUMER PLAYS BIG ROLE IN RECESSION: Shift in Buying Habits Has Hit Durable Goods Hard. WASHINGTON, May 17— The American consumer—the fellow who absorbs two-thirds of the total output of the economy—has played a big role in the recession. And yet there is no solid evidence that he has. engaged in a buyers' strike. j</br></br>This paradox is the plague of Detroit and Pittsburgh, the, puzzlement of Washington andi the joy of the farmer, the ciga-! rette maker and Jhe drug store, j For the consumer, in all his. majesty, has decided to spend' his money on different things without significantly reducing his total spending.</br></br>This whim of the consumer has been partly forced upon him by a whim of the price indexes, which in turn has been affected] by a whim of the weather. Beyond these factors, the purely ii.dependent causes of the shift, are complicate^ and not entire-; Jy explicable by the known facts. But whatever the reasons, the shift has definitely made the recession worse.</br></br>In a word, he has cut his spending on durable goods—the “big ticket*’ items ranging from automobiles to furniture, plus, some smaller items like appliances—and spent the extra money on food, tobacco, drugs; and a wide variety of services.! In the process of doing so, he1</br></br>In the first quarter of 19571 consumers bought durable goods i at the annual rate of $35,900,-j 000,000. In the first quarter of, 1958—with total incomes actu-| ally higher despite the reces-j sion—they bought durables at the rate of only S31.500,000,000, a staggering 12 per cent drop.

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Dow Falls by 30.23 on Trade Deficit Fears. ■ » ' V n Deposit $5,000 or more in a 5 yr. CD and /n.1. I —1 1-i | receive FREE a genuine Quartz Analog watch IBHl JJL JL (One per customer. Witch style may vaty.) •Annual yield assumes funds and accrued imprest remain on deposit for one year at the cuncnt rate. For CD. early withdrawals are subject to consent of the bank and substantial penalties. Insured Money Director Account rates may change daily and assume average monthly balance of at least $ t .000 for Individual Accounts and $10.000 for Business Accounts. Rates and offer subject to change without notice.</br></br>The Centre At Purchase—strategically located in Westchester's corporate core, is already home to AT&T. Apple Computer, International Paper, MONY. Nestle. * ‘ US Sprint and many others. A few choice spaces remain.</br></br>Now available—spaces from 1.500-9,000 sq. ft. Soon available—your own 85.000 sq. ft. building—Three Manhattanville Road.</br></br>Prix Fixe $27.00. Appetizer, entree and dessert flawlessly prepared to your schedule. A la carte selections available. Dinner. Prix Fixe and Pre/Post Theater Menus. Monday thru Saturday. Saturday and Sunday Brunch. Sunday Supper. Reservations suggested.</br></br>Scudder New Asia Fund is a diversified closed-end investment company whose shares are listed on the New York Stock Exchange.

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Monetary Policies Draw Fire Abroad: Money Policy. WASHINGTON — The United States Government— in this case meaning primarily the Treasury Department and Federal Reserve Board —has come under fairly severe criticism since about mid-January on the international monetary policy front.</br></br>In one view of things, this can be regarded as a record-short honeymoon. The Smithsonian agreement on a new pattern of currency exchange rates, generally applauded .at the time, is only two months old and the carping began after only a month, just about all of it directed at •the United States Government, both from within and without the country.</br></br>In that sense, if the honeymoon is so unsatisfactory, the marriage has glum prospects. The world is in for trouble, political as well as economic, and someone better "do something." But that •JThe first, as much a political as an economic criticism, is exemplified by Fred Borgsten, a former assistant to I-Ienry Kissinger, assistant to the President for National Security Affairs, under President Nixon. It is that the United States should be moving much faster in getting negotiations going on longer-term world monetary reform. The danger seen is that delay will bring a divided monetary and political world, with tho Europeans in particular moving toward a controlled and "inward-looking” system of their own, with many restrictions on tho free flow of goods and money.</br></br>*JThc second, identified with Edward M. Bernstein, a Washington economic consultant, is that the United States should move urgently on one front—an Interim convertibility of the dollar into monetary reserve assets, with safeguards—to protect the new pattern of exchange rates and to head off much the same kind of danger that Mr. Berg-sten secs.</br></br>that the United States should alter its stubborn position on nonconvertibility of the dollar at least to the extent of permitting normal operations of the I.M.F.—specifically to "convert” some dollars so that Britain can make a large repayment to the I.M.F. due in June. •JThe fourth, probably most widespread, can be identified with Robert Roosa, the former Under Secretary of the Treasury, and a number of unidentified European central bankers. It is that the Federal Reserve should never, in its pursuit of a larger domestic money supply or other goals, have driven domestic shortterm interest rates so low, with the result of deterring a flow of funds back to the United States or even fostering a further outflow. A companion criticism is sometimes raised about the huge domestic budget deficit, which seems the wrong sort of thing to do for a country that has just had a devaluation of its currency.

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N. M. U. TO PROPOSE JOBLESS PAY PLAN: Curran Warns of Permanent Loss of Manpower, Calls on Industry for Benefits. C. I. 0., has, served notice on shipowners that an industry-! wide unemployment benefit plan financed by employers will be a| "major objective” of forthcoming contract negotiations.</br></br>The plan is being offered by' the union in place of a campaign for a guaranteed annual wage. The latter goal will be deferred "until the industry is so constructed” to make it feasible, the union declared.</br></br>The union’s passenger-freight-, er, tanker and collier agreements will expire on June 15 and talks on a new contract are ex-1 pected to begin early this month.</br></br>Other N. M. U. proposals include unspecified "wage adjustments,” the clarification of certain contract provisions that halve been open to different interpretation by shipowner and union and extension of the expiring pension and welfare agreement.</br></br>The union will also ask that, the vacation planbe continued and will propose that vacations must be taken by seamen after one year work. This latter suggestion was seen as a move to spread the work in the industry, which has lost thousands of berths over the last several years with the decline of the American merchant fleet.

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Reserve Hardens Its Rejection Of Old 'Bills Only' Market Rule: Annual Report Gives 'Continuing' Status to Shift in Dealings From Short-Term Issues to Various Maturities RESERVE HARDENS 'BILLS ONLY' BAR. Annual Report Gives <Continuing> Status to Shift in Dealings From Short-Term Issues to Various Maturities | WASHINGTON, March 8— |The Federal Reserve System’s abandonment of the controversial "bills only" rule for its dealings in the Government securities market has been made more permanent.</br></br>The system's annual report! for 1961, published today, dis-| closed that in December the policy of dealing in securities of various maturities, instead of, only in short-term Treasury { bills, was written into a “continuing authority directive.” Until that time it had been a policy subject to renewal every; month.</br></br>Purchases and sales of Gov-, crnment securities in the open, market are the means by which! the Reserve System exerts day-' to-day influence on money conditions. The buying and selling is done through the Federal Reserve Bank of New York within the policy and instructions laid down by the system's Open Market Committee.</br></br>serve Board of Governors and the presidents of five Federal Reserve Banks, meets in Washington every three weeks. It was the record of the committee’s 1961 policy actions that revealed the December change, i Starting in 1953, and continuing until late 1960, the system confined its open market operations almost exclusively to Treasury bills, on the theory that that was the best way to manage this delicate business. Over the years, the “bills only" rule came under increasing criticism, particularly from Democrats who wanted to see the system’s influence applied to the reduction of long-term interest rates.</br></br>Two weeks before the 1960 election the system ventured into securities other than bills, but still short-term. In February, 1961, it declared that it would deal also in longer-term issues “some of which will exceed five years." was that the recession in this country called for lower longterm rates while the outflow of short-term funds to investment abroad called for higher shortterm rates.

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Business Leaders Assert Recession Nears a Low Point: Businessmen See Recession Near End. Even as the nation suffers from some of the grimmest economic conditions since the nineteen-forties, a number of industrialists and businessmen across the country say they are convinced that the current recession is reaching its low point.</br></br>“The worst that can happen already has,” said Malcolm Baldridge, chairman of the Sco-vill Manufacturing Company in Waterbury, Conn. “Most businessmen are still very concerned with the present recession, but we've seen the beginning of the end.”</br></br>In Washington yesterday the Department of Commerce, reporting on new home-building and individual income levels in March, found that the pace of the business downturn was slowing but disclosed no indication of an upturn. [Page 57.]</br></br>Reginald H. Jones, chairman of the General Electric Company, agreed that the rate of decline in the economy had clearly slackened. "We should reach bottom by the end of the second quarter, or the early part of the third quarter,” he added.</br></br>American cities, and in informal discussions with many more. Some of the officials represented large manufacturing concerns. Most of the heads of smaller companies have served as spokesmen for their industries, and their views have been solicited by the Administration in the past.

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11 Major Banks to Lend $250-Million To Franklin National on Secured Basis: Federal Reserve Board Apparently Backing Aid Agreement Aiding the Franklin National 11 Major Banks Agree to Lend Franklin National $250-Million Solvent Condition. Eleven major New York banks, with the apparent backing of the Federal Reserve Board, have agreed to lend $250-million—on a secured basis—to the financially pressed Franklin National Bank.,</br></br>Franklin announced the arrangement yesterday afternoon in a three-paragraph statement, but the bank still did not issue the long-awaited restatement of its first-quarter results, expected to show a loss.</br></br>Ranked as the 20th Largest bank in the United States at the end of last year, Franklin disclosed four weeks ago that it had suffered up to $39-mil-lion of previously undetected foreign-exchange losses. Since then, it has lost one-fifth of its deposits and has borrowed an estimated $l-billion, or more, directly from the Federal Reserve.</br></br>The new rescue arrangement was made with 1L banks that are members of the New York Clearing House—an association of 12 of the city’s big-giest banks, including Franklin —and with “other banks that enter into the agreement,” the</br></br>In the agreement announced yesterday, Franklin will get the money by borrowing so-called Federal funds, which are reserves that commercial banks must legally hold. When they have more than they need, they can lend them to other banks. Normally such loans are unsecured, but in Franklin’s case the bank will be required to put up collateral.

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Chicago Council Runoff Campaign Churns Mud Down to the Finish. CHICAGO, April 28 — When runoff elections are held Tuesday in two city wards, the voters may be thinking of potholes, crumbling buildings and unemployment. But the big guns of Chicago politics will be thinking of power.</br></br>As City Council Election Day, Part 2, approaches, dirt has been slung in one race, the Ku Klux Klan has tried to intrude on the other and the political titans have come out in force to push for their candidates in both.</br></br>Over the weekend Mayor Harold Washington walked through the 15th Ward and visited churches with Marlene C. Carter, the candidate he supports. The Rev. Jesse Jackson, the civil rights leader, also stumped for Mrs. Carter. The Mayor also made his way to the 26th Ward, where he is supporting Luis V. Gutierrez.</br></br>Trying to drum up votes for Manuel A. Torres, Mr. Gutierrez's opponent, were Alderman Edward R. Vrdolyak, who knocked on doors in the ward on the Near Northwest Side, and Jane M. Byrne, the former Mayor, who joined Mr. Torres for a walk through the neighborhood and a bit of softball. The ward is predominantly Hispanic.</br></br>In the 15th Ward, Mrs. Carter, who is black, is expected to defeat the incumbent, Frank J. Brady, who is white. That West Side ward is 75 percent black, and voters are being asked to help Mrs. Carter become “the 25th vote.” 25 supporters on the City Council, the same number as Mr. Vrdolyak. In case of ties, the Mayor would cast the deciding vote.

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A Big Tax Bill, And Then Some. The Congress has passed legislation providing tax cuts and other benefits amounting to $22.8-billion, a package different in size and shape thari many Congressmen and President Ford had wanted. The intent is to help get the nation out of recession, and though almost all economists and most Washington officials agree the bill addresses that intent, nobody can be certain it will work as supposed.</br></br>The President, in a speech for a nationwide television audience, said he would sign the bill reluctantly, because the need for action left him no choice. He said he considered the total amount of the cuts reasonable, : though inadequate relief was given middle-income taxpayers.</br></br>He objected to a number of provisions not directly related to tax cutting which he said were ill-considered.</br></br>And he foreshadowed future conflict with the Democratic Congress by asserting he .will veto all future spending bills -.except those related to energy' and national defense.</br></br>Congress acted in time to meet President Ford’s April 1 deadline and, probably not incidentally, in time to take its Easter recess. The legislation Congress passed: • Provides that about $ 10-billion go to individuals during May and June in rebates of up' to $200 on 1974 income taxes and in one-time "bonus” payments of $50 to each recipient of Social Security-; and other supplemental Government benefits.

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Smartphone Rises Fast From Gadget to Necessity. In today’s recession-racked economy, penny-pinching is a national pastime. But people are still opening their wallets for smartphones.</br></br>Sales of BlackBerrys, iPhones and other smartphone models are rising smartly and are projected to increase 25 percent this year, according to Gartner, a research business. Widely anticipated new models like the Palm Pre, which went on sale nationwide on Saturday, will help fuel that growth. Meanwhile, total cellphone sales are expected to fall.</br></br>The smartphone surge, it seems, is a case of a trading-up trend in technology that is running strong enough to weather the downturn. And as is so often true when it comes to adoption of new technology, the smartphone, story is as much about consumer sociology tand psychology as it is about chips, bytes and bandwidth.</br></br>For a growing swath of the population, the social expectation is that one is nearly always connected and reachable almost instantly via e-mail. The smartphone, analysts say, is the in- strument of that connectedness — and thus worth the cost, both as a communications tool and as a status symbol.</br></br>professor of psychology at the University of Michigan. “If you don’t, it is assumed you are out to lunch mentally, out of it socially, or don’t like the person The spread of those social assumptions may signal a technological crossover that echoes the proliferation of e-mail itself more than a decade ago. At some point in the early 1990s, it became socially unacceptable — at least for many people — to not have an e-mail address.

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STOCKS, BONDS GAIN: Dollar Falls Against Mark in Seeming Reflection of U.S. Policy Shift Bonn Reduces Interest, As Washington Urged. WASHINGTON, Nov. 5 — In the first strong sign of international economic cooperation after a month of turbulence in the financial markets, West Germany ordered reductions in interest rates today to speed up its economy. The Reagan Administration and other governments had urged Bonn to lower its rates because they feared the onset of a worldwide recession caused partly by high interest rates.</br></br>Stock and bond markets in the United States greeted the news favorably. On the New York Stock Exchange the Dow Jones industrial average rose 40.12 points, or 2.06 percent, to 1,985.41. Bond prices also rallied in the face of a widespread decline of an important American interest rate — the prime rate, which banks charge on loans to blue-chip corporations — to 8% percent.</br></br>In accordance with the apparent shift in Administration policy away from supporting the dollar, the dollar sank, especially in relation to the West ■ German mark. Declines in the value of the dollar help the American economy because they spur exports and eventually make imports more expensive.</br></br>Washington’s new dollar policy, at least for now, appears to be working since its aim was partly to help avoid a recession by encouraging the drop in interest rates. Removing support for the dollar put pressure on Germany to lower its rates because industry there would need more stimulus if it could not sell as many products in the United States because of the weaker dollar.</br></br>Lower interest rates in Germany also encourage its economy to buy more imported goods, including from the United States.

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Reserve's Role in New Game Plan: Economic Analysis: Exploring Reserve and New Game Plan. What is to be the role of monetary policy in President Nixon’s New Game Plan for stopping inflation and moving the economy back toward full employment? The one major omission in the President’s New Economic Policy, which he has called the most comprehensive economic program since</br></br>This omission may:have been partly a matter of fence-mending between the White House and the Federal Reserve. Only a few weeks before the President’s switch of policy on Aug. 15, Chairman Arthur F. Burns had been in the White House doghouse because of his long and stubborn campaign for an</br></br>But in shifting to the N.E.P., complete with an even broader and more interventionist incomes policy than the Federal Reserve chairman had called for, the President did not mean to exempt Dr, Burns from service in the cause of pushing down interest rates. Secretary' of the Treasury John B. Con-: nally sees lower interest rates as essential to a strong economic recovery.</br></br>Mr. Nixon has in effect sought to bring the nominally independent Federal Reserve into his /Administration by appointing Dr. Burns chairman of the N.E.P.’s Interest and Dividend Committee, whose primary mission is holding interest rates down.</br></br>In Congressional testimony this week, Dr. Burns said he wanted no arbitrary ceilings on interest rates but would try to persuade lenders to reduce

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A Rise in the Prime Ends a Long Slide. Major banks raised the prime rate to 7% percent, from 7^, an indication that interest rates have bottomed out after a long, slow slide. The increase, started by Citibank, was the first in nearly three years. The prime’s importance has faded and is now mostly symbolic, and most analysts said the increase will not be fully felt at the consumer level for some time. The increase means that the supply of available credit is tightening as businesses expand, which could signal a stronger economy in months to come.</br></br>A wild week in stocks and bonds saw the Dow Jones industrial average drop 57.39 points on Monday, in concert with a huge drop in bonds, be-; cause of uncertainty over the effect of trade action taken by the United States against Japan. But the mar-| kets shook off the effect, and a rally in! bonds late in the week led to a record 69.89-point rise in the Dow on Friday, to a record close of 2,390.34, a gain of 54.54 for the week.</br></br>by the United States against Japan on semiconductors spread throughout world financial markets as Japan scrambled to find ways of appeasing the Administration. The rout of the dollar continued, as investors fled from it into the yen or the German mark and the Fed did not interfere. The activity spilled over into the United States markets, where the weaker dollar made investments here less attractive.</br></br>The roiling of markets from the trade action, which was really against just six Japanese chip makers and was considered largely symbolic, showed how sensitive the markets have become, many analysts said. And it also seemed to indicate that the traders and investors could be girding for darker times.</br></br>President Reagan is in Canada for trade talks, and a pact is expected soon. The talks have been particularly rough between these two largest trading partners, and a far-reaching pact would do much to ease tensions.

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Federal Reserve Ponders A Plan for Asset Sales: Meeting's Minutes Show Disagreements. By SEWELL CHAN WASHINGTON - The Federal Reserve indicated that it would wait until after it started raising interest rates before selling the huge store of assets that it acquired in response to the financial crisis. The goal would be to gradually, complete the sales about live years after they begin.</br></br>While that strategy is not yet definitive, it is preferred by a majority within the Federal Open Market Committee, the Fed’s policy-making arm, according to minutes released Wednesday from the committee’s most recent meeting, on April 27 and 28.</br></br>But the niinutes also revealed disagreements over when the sales should begin and how quickly the assets should be sold.</br></br>According to the minutes, a minority on the committee preferred announcing a schedule for asset sales, without necessarily waiting for the Fed to raise Interest rates. A few wanted to start sales “relatively soon.” should start slowly, but increase gradually to let the markets adjust. But a few thought that the sales could be completed over three years, and that “a relatively brisk pace of sales” would reduce the risk of inflation expectations being set off.</br></br>For now, the committee did not make any decisions, agreeing that the Federal Reserve Bank of New York, which conducts the Fed’s open market operations, should continue its current practice of rolling over Treasury securities as they mature and of allowing the Fannie Mae and Freddie Mac debt to mature and the mortgage bonds to be prepaid over time.

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Government Securities Fall After Burns Statement. The Government securities out a round of reverse repur* market, pausing yesterday] chase agreements, a reservemorning after a substantial absorbing action. Last week the advance for more than a week,]Fed executed a series of repur-started to slip yesterday after- j chase agreements, which have noon. Prices relinquished much1 the effect of adding to the re-of their gains for! serves in the commercial bank-the day. The turning system, in the market came largely after Arthur F. Burns, chairman of the Federal Reserve Board, told Congress that the central bank would “not open up the spigot and permit the money supply to increase rapidly.” . To many dealers, the Burns statement—carried over news wires shortly after 2 o’clock— was a good enough reason to think that interest rates had declined about as much as they were going to for a while.</br></br>Short-term rates, which have been backing down for most of the last week, continued in that direction despite what some analysts viewed as some ."fine tuning” by the Federal Reserve in the Federal funds market. Federal funds—uncommitted commercial bank reserves—tend to move erratically on Wednesdays, the weekly Federal Reserve member bank settlement day. Yesterday, with Federal funds trading in the 8!/j per cent to 8% per cent range, the Fed carried</br></br>Yesterday's Fed action was viewed in some quarters as a mild, midweek restraining fac tor in the money markets. Even so, however, the Treasury bill market remained strong and finance companies weighed in with some additional reductions in commercial paper rates. Bankers acceptance rates were also marked down.</br></br>In the second day of the Treasury Department’s three-day refinancing, $2.25-bi!lion of 3^-year notes with 6% per cent coupons were auctioned and were traded at modest premiums on a when-issued basis. Today the Treasury will complete the refinancing with an auction of up to $300-million of additional bonds due Aug. 15, 1993. These longer-term bonds were initially offered in August, 1973.</br></br>jset for the bonds maturine’maturity, were not reoffered 'Feb. 25, 1980. Both issues will publicly. They were retained in I be priced at par. jthe portfolios of a group of j The tax-exempt market was'19 banks scattered throughout busy yesterday with severable country. Another group, new offerings that met with [bidding on the Los Angeles good first-day receptions. The'revenue notes, had set a net New York State Housing Fi-jannual interest cost of 4.26 per nance Agency sold $168-millionjcent' of bonds to underwriters head- Underwriters headed by Citi-

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Miller Suggests Fed Moved Too Quickly: Uncertainty on Third Step. WASHINGTON, Oct. 31 — Secretary of the Treasury G. William Miller suggested today that the Federal Reserve might have moved too quickly in changing the way in which the nation’s money supply is managed.</br></br>“Had I stayed at the Fed, my timing would have been different,” said the former central banker, who left the Fed post in mid-July. But, he added, “I certainly support the effort. ”</br></br>Until now, Mr. Miller and other top Administration economic official have discussed the Fed’s Oct. 6 credit-tightening moves only in general supportive terms.</br></br>Today, Mr. Miller offered a more detailed analysis. He gave full support for two of the Fed’s actions — an increase in the interest rate on bank borrowings from the Fed and a new reserve requirement — by likening them to similar steps he took while in the central bank post.</br></br>As for the third step, a decision by the Fed to focus directly on the money supply rather than on interest rates, he expressed more uncertainty.

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The New Poor: ESSAY. WASHINGTON—If you are making more money now than you ever made before, but inflation and the “tax bracket creep" have reduced the purchasing power of your take-home pay, then you are a member of The New Poor.</br></br>If you used your life savings to buy a home, and rising property taxes are forcing you to sell and move to a neighborhood where houses are cheaper, you are a member of The New Poor.</br></br>The growing resentment of The New Poor will make itself felt next week in a taxpayers’ revolt in California; a chain reaction is likely to follow in other states, as voters turn on their bureaucratic tormentors.</br></br>The source of this resentment is a combination of furies. Not only do The New Poor believe that Government programs have become too bloated and expensive, they also believe that Government policy is directed against their interests. Cartemomics stimulates the economy to reduce unemployment and help the “old” poor, while it causes runaway inflation that, create^ legions of the new poor.</br></br>The Consumer Price Index released’ today, showing a 10.8 percent yearly rate of inflation, will be explained away as temporary, caused by flukes or greedy capitalists or bad v/eather. But double-digit inflation (a phrase coined in March 1974 by Times economic writer Leonard Silk) is wiggling its victory sign, and the Administration in power cannot pass the buck.

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Living Abroad: Hong Kong: Crab Roe, $5 Jade And a 25-Foot Junk. A FAVORITE pastime in Hong Kong is shopping. But with the vast improvement in the standard of living that resulted from the successful industrial development of the last few years, along with worldwide inflation and the decline of the United States dollar, shopping is no longer the bargain that it once was.</br></br>Some local antique dealers now travel to Europe or the United States to buy Chinese porcelain or jade and sell it in Hong Kong at higher prices to Chinese collectors or tourists. A tailor-made suit at one of the better shops, say A Man Hing Cheong, where former President Richard M. Nixon always went, now starts at S1S0 for the least expensive fabric. And the shop won’t make them overnight for the tourists.</br></br>But for the knowledgeable, there are still some bargains. One of the most popular with Chinese and foreigners alike is the morning jade market on Canton Road in Kowloon, across the harbor from Hong Kong Island. There, in front of jewelry stores stocked with jade, other street vendors sell everything from raw pieces of stone, presumably containing a valued chunk of jade, to intricately carved jade animals. Prices range from S5 to $50,000.</br></br>For the clothes-conscious, the best buys may be the inexpensive—and in Hong Kong perfectly legal— copies of Paris or Rome fashion. At the Nancy Shoe Store in Happy Valley, near tne Hong Kong Race Course, you can get a perfectly crafted imitation of Charles Jourdan shoes for less than S20. In other shops, you can purchase copies of Christian Dior sunglasses, with the trademark initials, C.D., on the frames and the words, “Made in France."</br></br>Another favorite activity in Hong Kong is eating, and the best Chinese food in Hong Kong is seasonal. The subtle, underrated cuisine of Canton prevails and the seasonal foods are snake, tiny rice birds, fresh bamboo shoots, and in the cold winter months, dog.

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Stocks Rise to 41-Month High; Dow Ends at 1,011.21, Up 8.10: Market at '76 Peak Glamour Issues Pace Advance STOCKS ADVANCE TO 41-MONTH HIGH. Propelled by the lingering effects of last week’s positive economic news, the stock market pushed its way yesterday to both a 41-month high and a 1976 record.</br></br>Despite a retreat at lunchtime, the Dow Jones industrial average, which opened with a rise of more than 3 points, closed at 1,011.21, a gain of 8.10 and the fourth consecutive increase. This put the market at its highest level since Jan. 23, 1973, when it closed at 1,018.66, and above this year’s high of 1,011.02, reached on April 21.</br></br>Analysts say that the market' is coasting on two major factors: the 0.4 percent June increase reported Friday in the Wholesale Price Index and the virtual halt in the growth of the money supply over the last month.</br></br>Money market experts now believe that the Federal Reserve has decided not to curb monetary growth any further and has even encouraged growth slightly. This has been accomplished by the lowering of short-term interest rates— which always makes Wall Street happy — principally through a reduction in the Federal funds rate, the rate at which banks lend excess reserves to each other.</br></br>the bond markets, which yesterday continued last week’s advance. Lower interest rates tende to make stocks and bonds more attractive, relative to other popular investments such as certificates of deposit. Yesterday’s rally, in which advances led declines by more than 2 to 1, was paced by the glamour issues, nearly all of which increased sharply. Teledyne rose 4i/2 to 75%, Texas Instruments was up by 2l/s to 126%, International Business Machines closed at 279%, up 1%, and Eastman Kodak rose 17s to 102%.

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Iowa Now Feeling Pinch of Recession: Iowa Is Now Feeling the Pinch of Recession. DES MOINES, Feb. 23—For months Iowa has had the lowest unemployment rate in the nation, but now even this prosperous farming state has been caught in the deepening recession.</br></br>Already shivering in the embrace of the long, gray prairie winter, lowans are beginning to feel a new kind of chill—the one that comes from spreading layoffs, shortened work weeks and plant closings.</br></br>Slowly but increasingly, the economic downturn, which until recent weeks had pretty much bypassed the state, has been dimming the prosperity.</br></br>other concerns and businesses have been feeling the pinch, some laying off help, some cutting back hours, some just watching and waiting nervously- "You just can’t sit in the middle of the country and expect to sell your products when income is going down,” said</br></br>W. Ronald Sagraves, Iowa’s director of economic affairs who is also chairman of Gov. Robert D. Ray's Council of Economic Advisers.

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Prototype of B-1 Bomber, Plagued by Infiation and Facing 2 Years of Tests, Is Rolled Out for Display. PALMDALE, Calif., Oct. 26— The prototype of the controversial manned B-l bomber—like the taxpayers who financed it, a victim of inflation—was rolled out of its assembly hangar here today in traditional pomp and circumstance.</br></br>Secretary of Defense James R. Schlesinger told a gathering of Air Force officials, Congressmen, defense contractors and the press that the newest component of the nation's nuclear to prove itself technically in nearly two years of testing before a decision would be made to mass produce the plane.</br></br>Inflation, rather than cost overruns that . stirred widespread criticism of defense projects in the nine’teen-sixties, has produced increasing Congressional sentiment toward cancellation of the project. Total program costs have soared from $9.8-billion, when the project was tet to the Rockwell International Corporation in late 1969, to an estimated minimum of 813-billion. Develop</br></br>The swing-wing, supersonic craft, designed to replace the Strategic Air Command’s 20-year-old B-52 fleet, would supplement the nation’s so-called Triad nuclear force of land-based Minutenkan 3 intercontinental ballistic missiles and the submarine - carried Polaris missiles.</br></br>Should the Air Force decide to order its planned 244 B-l’s for initial deployment in early 1981, it is estimated that each plane would cost $76.4-million, compared with the driginal' es timate of 840-million.

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Top Priority Is Stabilizing The Patient: ECONOMIC SCENE. Barack Obama and his advisers have spent much of the last three years devising policies to deal with the economy’s big, long-term problems, like inequa ity, health care, the budget deficit. In the process, they came up with an agenda that’s serious, detailed and mostly cogent.</br></br>Instead, the initial thrust of their economic policy will be on keeping the economy from falling into a recession that’s nastier than most of us have ever experienced.</br></br>This year’s election coincided with an important moment in die financial crisis. The credit markets have stabilized in the last few weeks and even improved a bit. But the rest of the economy is deteriorating fairly rapidly. It’s now in danger of falling into a vicious spiral, in which spending cuts by consumers and businesses lead to further layoffs and then more spending cuts. ■</br></br>To prevent that from happening, the Obama administration will need to move quickly — before it takes office — to put together some emergency plans for the financial markets and the broader economy.</br></br>Mr. Obama and his advisers acknowledge that their focus has to shift, but the change is still likely to be challenging, and a bit disappointing. “Unfortunately, the next president’s No. 1 priority is going to be preventing the biggest financial crisis in possibly the last century from turning into the next Great Depression," says Austan Goolsbee,an Obania adviser. “That has to be No. 1. Nobody ever wanted that to be the priority. But that’s clearly where we are.” about the financial crisis, he liked to turn the conversation back to his long-term plans, by saying that they were meant to solve the very problems that had caused the crisis in the first place. Back in January, he predicted to me that the financial troubles would probably get significantly Continued on Page G

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Stocks Halt Four-Day Decline: Dow Up 0.22, To 1,242.27. The stock market broke its four-day slump yesterday, but only barely, as prices closed mixed in a session where takeovers provided the only excitement.</br></br>Once again, analysts said, investors were preoccupied with disappointing corporate profits and the deteriorating economy. On top of this, an expected $2.7 billion jump in the basic money supply kept many buyers out of the market.</br></br>The Dow Jones industrial average, which had fallen nearly 43 points in the previous four sessions, inched 0.22 point higher, to 1,242.27.</br></br>The New York Stock Exchange composite index was up 0.27, to 103.62, the Standard and Poor’s 500-stock index rose 0.64, to 179.01, and the average share gained 9 cents. There were 804 issues that fell in price and 714 that advanced.</br></br>Volume expanded to 107.7 million shares, from 101.6 million on Wednesday. Atlantic Richfield contributed heavily to yesterday’s turnover as the stock’s volume of better than seven million shares again put it atop the active list. Arco earlier this week announced a major restructuring that included the repurchase of up to $4 billion worth of its stock. The stock repurchases began Wednesday, the company said.

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PRICES TURN EASY IN STOCK TRADING: Technical Moves Indicated After 8 Days of Gains-- Volume Is Also Down LIONEL SHARES ACTIVE Changes in Motor and Rail Issues Are Slight--Most Electronics Lose Ground Pace Slow All Day 1,290 Issues Dealt In PRICES TURN EASY IN STOCK TRADING Electronics Moved Down. The stock market turned downward in the late afternoon yesterday after following an indecisive t^end earlier. Virtually all groups participated in the decline, with final prices on the New York. Stock Exchange near their lows for the season.</br></br>The easiness followed eight days of modest gains and generally was considered a technical readjustment. It was orderly and accompanied by only a slight increase in activity. Losses were mostly small, and seldom exceeded more than a point.</br></br>Trading was slow throughout the day, with the volume dropping to 350,000 shares between 1 and 2 P.M. For the full session, transactions amounted to 673.73 after being up slightly in the first hour. The rail index finished unchanged at 151.58 after holding to the up side in the earlier dealings. The utility group, however, bucked the trend and finished 0.58 higher at 135.55. .</br></br>Standard. & Poor’s index showed all the. three major divisions of the market declining. The industrials were down 0.35 to 68.62 and the rails 0.09 lower at 34.55. The utility section declined 0.11 to 63.34. The 500 stocks included in these indices showed a decline of 0.31 to 65.60.</br></br>The New York Times combined average of 50 stocks declined 1.44, to 372.67. The 25 rails were off .10, to 111.93, and the 25 industrials were down 2.78, to 633.40.

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Note and Bond Rates Fall: Money Supply Off 3.4 Billion. Interest rates fell yesterday, with the sharpest drops occurring in the note and bond market where investor buying activity was much greater than earlier in the week.</br></br>The market’s enthusiasm was tempered late in the day, however, when new Federal Reserve data seemed to indicate that the central bank was not moving as aggressively toward promoting lower interest rates as some analysts predicted. Borrowings by banks and other financial institutions from the Fed, which would tend to decline if the Fed were easing monetary policy, averaged $741 million during the two weeks ended Wednesday, little changed from the $754 million average for the two weeks ended Sept. 12. The bank borrowing figure excludes more than $6 billion of special extended loans to troubled institutions, primarily the Continental Illinois National Bank.</br></br>“The street was hoping for a lower level of borrowings,” said William Sullivan, senior vice president at Dean Witter Reynolds. “The fact that borrowings were little changed suggests that there has been no further move to ease by the Fed and that the drop in the Federal funds rate earlier this week was due to technical factors.”</br></br>Other Fed data showed the nation’s basic money supply fell by $3.4 billion in the week ended Sept. 17, about as expected, and that business credit demands were brisk.</br></br>The drop in the M-l money supply measure, which followed a revised $8.1 billion increase in the previous week, leaves the closely watched measure of money available for spending well within the Fed’s annual growth target. At $549.6 billion, M-l is about in the middle of the Fed’s 4 percent to 8 percent growth target. M-l consists of currency plus all kinds of checking accounts.

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U.S. Productivity Rises By Only 0.2% in Quarter. WASHINGTON, Feb. 5 (AP) — American workers’ productivity rose a barely perceptible two-tenths of a percent in the fourth quarter, while hourly labor costs rose at an annual rate of 6.9 percent, the Government said today.</br></br>For the year, nonfarm productivity, defined as the output per hour of work, was up only slightly more, by nine-tenths of a percent; it was the worst showing since the 1981-82 recession. Houriy labor costs for 1989 jumped 5.5 percent, the Government said.</br></br>The annual increase in nonfarm productivity was less than half of the 2 percent gain recorded in 1988.</br></br>While attributing part of last year’s poor performance to an overall slowdown in economic growth, analysts worried that the combination of weak growth in productivity and higher labor costs would further weaken America’s ability to compete internationally.</br></br>"That’s a recipe for trouble," said Allen Sinai, chief economist for the Boston Company. It is symptomatic, he added, “of an economy that is near the end of expansion.”

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3M Fell 7.9% and Textron 43.1% in Period. The Minnesota Mining and Manufacturing Company said yesterday that a combination of the recession and foreign-exchange fluctuations caused its earnings in the second quarter to drop 7.9 percent, while sales rose about 1.4 percent.</br></br>The St. Paul company, which has more than 45 major product lines, said that net income in the latest three months dropped to $158.6 million, or $1.35 a share, from $172.2 million, or, $1.47 a share, in the corresponding quarter last year. Sales rose to $1.69 billion from $1.66 billion.</br></br>‘‘The results were better than I thought they would be,” said Peter Enderlin, who follows 3M for Smith Barney, Harris Upham & Company. “We were estimating $1.30 a share, and they came in at $1.35.</br></br>“As with other multinationals, 3M was affected by the strength of the dollar abroad and the recession,” he added. “In the second quarter of 1981, they apparently began to experience the costs of changes in marketing</br></br>Lewis W. Lehr, 3M’s chairman and chief executive officer, said in a statement that the company’s sales and earnings were adversely affected by continued sluggishness in the United States economy, and by the effects of a stronger American dollar overseas on sales and earnings.

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Negroes: 'Being Trained for Unemployment' 'Last Resort' Jobs and Race Exploring Subsidies. z Negro unemployment is edging up again, even though last rsummer’s 'riots in the 'ghettos Jof Detroit, Newark and other -big cities burned into the consciousness of government, industry and labor an awareness that mtore jobs-must have top priority in plans for defusing the Elums. • > ; The unemployment rate ramong Negroes has been double ithat among white workers ever ^since the Korean war, but Federal figures for September and ^October show an abrupt widening of the gap. Since August ‘white joblessness has gone from ;3.5 per cent to 3.8 per cent; :Negro joblessness has climbed jn the same, period from 6.9 tper cent to 8.8 per cent, r An especially worrisome aspect of this upsurge is that imuch of it. stems from an increase in idleness among Ne-Igro teen-agers, the group most ^conspicuous in all the summer Explosions. .Normally about one-fluarter of the Negro youths looking for jobs can’t; find them; tin October the ratio was just jshort of one-third. For' white -teen-agers the comparable fig: Ere was a trifle over one-eighth.</br></br>; Short-term fluctuations in iinemployment are seldom a trustworthy guide, so officials ;are awaiting further statistics before they decide anything has basically worsened in the Negro's job outlook. But the longterm trends are bad enough to Jiave made them the subject of jiozens of gloomy conferences ■jail over the country in recent Iweeks under the auspices of</br></br>Z In 1965, a 14-member Na-| tional Commission on Tech-i nology, Automation and Ec-= onomic Progress, appointed ; by President Johnson, recti ommended a "program of I public service employment,</br></br>J providing, in effect, that the I Government be an employer = of last resort, providing work : for the ‘hard-core unem-l ployed.'" It also urged that : "economic security be guar-; antced by a floor under : family income." public . agencies,, universities, foundations and newly organized alliances of industry, unions and civic leaders.</br></br>Out of all these sessions come declarations of joint resolve to create expanded job opportunities for slum dwellers; but translating these pledges into actual placements : is< proving slow work. A century of discrimination, plus the special handicaps born of the postwar mass migration from impoverished Southern farms to impoverished' Northern ghettos, have left many'Negroes so barren of education, -skills, work habits and motivation that remedial programs require enormous invest; ment of interest and ingenuity

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Business Diary: May 23-28 THE ECONOMY Round One of the Budget Battle Goes to Clinton. After a long wait. Bill Clinton enjoyed a significant victory, albeit by a weak margin; when the House passed, 219 to 213. the President’s budget plan. Approval was seen as a prerequisite if Mr. Clinton hopes to Have any clout on the rest of his agenda: health care, trade and so on. The plan that passed includes what is by some measures the largest tax increase ever, with the goal of accomplishing what may be the greatest Federal deficit reduction ever. The taxes come in several varieties and are likely to affect all but the very poorest people. In addition, spending on automatic benefit programs will be reduced by almost $100 billion and freezes in discretionary spending are supposed to save about $100 billion more over five years. Mr. Clinton pushed hard for this victory, giving in on some details, but retaining most of wharhe wanted. Still, the House vote was seen as the easy one, and a number of Senators are determined to amend the plan.</br></br>The United States economy, which was cruising along at a growth rate of 4.7 percent in the last quarter of 1992, misfired in the first quarter of this year even more badly than was previously thought, the Government disclosed. It now appears that the gross domestic product grew at an annual rate of only nine-tenths of 1 percent in January through March. That was only half the 1.8 percent rate estimated a month ago. It was the weakest economic growth since the fourth quarter of 1991.</br></br>As it became clear that the three research teams competing to develop high definition television, known as HDTV, in the United States all had worthy technologies, the focus shifted to nontechnological matters, including jobs. So, there was a sense of relief when the rivals agreed last week to join forces, presumably heading off lawsuits by those not chosen. But the euphoria was shortlived. Experts quickly suggested that it might be impossible to reconcile crucial technical issues without alienating television equipment companies or computer companies.</br></br>When the Socialists held the reins in France, they stopped the privatization of Government-owned companies. But now the Socialists are gone, and the new Prime Minister has designated 21 companies for privatization, starting next fall. Added to the list for the first time was Renault, which has done surprisingly well in the crowded European auto market.</br></br>Among the world’s rich and famous, there are few people as rich and as famous as the Aga Khan. But this counts for little these days in Italy. When the Aga Khan’s investments in luxury resorts faltered and his main holding company failed to make a loan payment, his creditors moved to seize assets, and the Milan stock exchange suspended trading in his companies.

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Leaders of Organized Labor Convene to Hear Pro Forma Speeches About Predictable Resolutions. SAN FRANCISCO, Oct. 5—In the midst of the nation’s gravest economic crisis since the nineteen-thirties, organized labor is meeting here without any new program and without any sense of urgency about finding one.</br></br>The speeches are pro forma, the resolutions are predictable and the 1,000 or so delegates to the biennial convention of the American Federation of Labor and Congress of Industrial Organizations seem mostly bored by the proceedings.</br></br>‘.'It's going to be a dull convention,” everyone was saying last week as the delegates, alternates and labor hangers-on were arriving. That has proved a better prediction than any recent economic forecast.</br></br>Even with four Democratic Presidential hopefuls—Hubert H. Humphrey, Henry M. Jack-son, Lloyd M. Bentsen and Birch Bayh — scheduled to speak tomorrow, there is little hope for a sudden infusion of excitement, though a number of people expect that "Hubert will bring them to their.feet.” in favor of more jobs and better unemployment Insurance and is against the Ford Administration and ddtente. But it has no plan for creating jobs, and it is at a loss for a Presidential candidate to support. "Any Democrat but George Wallace,” is the consensus in the hallways.</br></br>For the most part, the delegates are a homogeneous group of national president* and local labor potentates whose positions and power are assured

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Hard Thinking on a Soft Landing for the Dollar. Leonard Silk (“How to Soften the Dollar Landing,” column, July 26) reports that the conventional wisdom of economists urges a reduction in the $150 billion trade deficit by a soft landing (i.e., a not-too-rapid dollar devaluation of perhaps 20 percent) plus a significant reduction in the $200 billion Government fiscal deficit. But erven a soft landing, devaluation and indiscriminate budget-deficit reduction may cause more barm than good.</br></br>First, as The Economist (July 19) reported, more than half tire United States trade deficit comes from trading with non-oil-exporting Latin American and Asian, countries whose currency is tied to the' dollar ($22 billion), plus oil imports ($55 billion), whose price is also fixed in dollars. Hence a devaluation of the dollar will not increase competitiveness in these areas; moreover, it would hurt the export earnings of Latin American countries that already have difficulty paying their debts to U.S. banks.</br></br>The main gain from devaluation might be by way of an increased agricultural-export surplus, but former importers of U.S. grain (India, China, Saudi Arabia) now pay their farmers subsidies to prevent using up dollars on grain imports, and hence it is not clear that these countries would increase the dollar value on grain imports even at a lower dollar cost. Ac- cordingly, even a soft-landing lower dollar will only marginally improve the trade deficit, while it threatens the U.S. banking system because of its impact on the ability of debtor nations to service their loans.</br></br>Second, any deliberate reduction in the budget deficit will cut the trade deficit by lowering the gross national product and employment, and therefore imports, below current levels, thus exacerbating any weakness in the economy, which already shows signs of slowing down. A U.S. recession is the last thing the world needs.</br></br>Although it looks as if the U.S. is caught between a rock and a hard place, there are some things that can be done. For one, the oil trade deficit should be attacked directly through a large, perhaps $10-a-barrel, tax on crude oil or products imported from any Organization of Petroleum Exporting Countries source (thereby excluding Canada, Mexico, Britain, etc.). I advocated this discriminatory import levy against OPEC over a decade ago in testimony before Congressional committees as a way of encouraging the collapse of a cartel; now it can help significantly reduce our trade deficit as well.

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Elster Is Sitting and Fuming. ATLANTA, July 15 — He is 24 years old and again in that state of temporary unemployment known as “benched." It has happened to Kevin Elster before. But now anger has replaced acceptance, and disgust, not diplomacy, dominates his conversation.</br></br>“To have to sit and watch is the worst,” said Elster, the young shortstop for the Mets. “A guy my age having to sit. It’s just awful.”</br></br>For the moment, and perhaps for as long as the rest of the season, Elster has been supplanted at shortstop as part of Dave Johnson’s shake-up for the second half. Much as he hates tc sit Elster, ths rnsinciger of ths loves offense more, and as a consequence he has, since Keith Hernandez’s return to first base on Thursday, installed Dave Magadan at third base and moved Howard Johnson to shortstop.</br></br>“If I was on any other team. I’d be stuck out there every day,” said Elster, who has been replaced almost exclusively because of his prolonged problems at the plate. “But I’ve got a manager who loves offense. That’s how he is.”</br></br>“He doesn’t have to speak to me,” Elster said when asked whether Johnson had spoken with him about his removal from the lineup. “And I could care less if he did.” For his part, Johnson has said El-ster’s inability to hit has been the greatest setback of the season, and that is a sentiment believed to be shared by the team’s management. Elster, whose .214 average last year was explained as adjustment, is hitting .210.

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Bankers Say Latest Action by Reserve Could Spur Another Prime-Rate Rise: Substantial Moderation in Granting of New Loans Is Also Predicted Bankers Say Reserve's Action Could Lead to Higher Interest. The Government’s drive against inflation may well push1 the cost of money to another new high in the days ahead; leading bankers said yesterday; , The prime rate, which rose to a record lx/2 per cent two_ weeks ago (its fourth monthly! increase), could well go up again, bankers said. ></br></br>The chief executive officer of one of the nation’s • largest banks, cautioned that a further rise was by no means certain, but could not be ruled out The1 prime rate is the minimum inJ terest charged on loans to the biggest and most creditworthy corporations.</br></br>But the most significant impact of the Federal Reserve [Board’s action yesterday in raising the discount rate to 6 per cent, the highest since October, 1929, and in raising banks’ reserve requirements? bankers said, may be on the availability of bank credit. s It would be very unlikely; said the head of a major corporate bank, that any large' bank would have to call any outstanding loans. However, he said, a substantial moderation in the rate at which new loans; are being extended is not only, likely but also probable. And this, he-said, could push interest rates higher.</br></br>The fact that the Federal Reserve had left unchanged the 6% per cent interest ceiling on large corporate time deposits, bankers said, means that the lendable funds of money center [banks will continue to erode; as deposits are shifted to higher-yielding investments elsewhere. •</br></br>James C. Cooper, economist at the Irving Trust Company in New York, said that the Federal Reserve might be moving too quickly. The central bank’s policy of "gradualism” may have come to an end, he said, adding that “six months from now we may look back and feel that such economic restraint wasn’t needed.” . i

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Economic Scene: It looks like red ink and the ills that can go with it are back to stay for a while Return of the Deficits. THE budget President Bush submitted Inst month should have come with the warning, “They’re baaackl" Deficits arc re-emerging as a major problem. Goldman, Sadis recently raised its estimate of the federal budget deficit this year to $375 billion, and warned that it could go even higher. That works out to more than $1,400 for every man, woman and child. With the impending retirement of the first baby boomers, the red ink is expected to last as far as the eye cun see.</br></br>This dire predicament inspired the Committee for Economic Development, a nonpartisan business organization, to issue a report yesterday calling urgently for lax increases and spending cuts to put the government’s fiscal house In order. Unless corrective action is taken, the group warned, investment, productivity and living standards will suffer.</br></br>Although the group's recommendation of higher taxes is unlikely to be popular, past experience with deficits suggests that tax Increases are virtually inevitable before the</br></br>Alan B. Krueger is the Bcndhcim professor of economics and public affairs at Princeton University and a co-editor of The Journal of the European Economic Association.</br></br>decade Is out. Even Ronald Reagan ended up raising taxes to try to make up for the big shortfall from the 1981 cuts.

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BETHLEHEM LIFTS STEEL PRICES BY 3%: Strauss and Bosworth Praise the Limitation of Increase Bethlehem Price Rise 3% Average Increases Cited Pressure on Other Companies. The Bethlehem Steel Corporation, the nation's second-largest steel company, announced yesterday that it was increasing prices by about 3 percent, a level that won immediate praise from two of the Carter Administration’s top inflation fighters, who urged the rest of the steel industry to act similarly.</br></br>Bethlehem said that it would not increase prices again for the rest of the year, “barring unforeseen circumstances and assuming that inflationary pressures arc brought under control."</br></br>Bethlehem’s increase was the third in the steel industry this year. An industrywide price increase of 5.5 percent went into effect in February and one of about</br></br>The liming of the Bethlehem decision to limit price increases resulted from Administration coaxing to head off larger increases by others. Page DIO.</br></br>it the White House that the move by Bethlehem was a "first-rate example of good corporate citizenship." Mr. Strauss, who has been meeting with top corporate *nd labor leaders in an effort for voluntary control of prices and wages, said that the 3 percent announced by Bethlehem “is the precise figure I askea them to announce three weeks ago." said at the briefing that the 3 percent increase would not completely cover Bethlehem’s costs and that the company’s fourth-quarter profits would be squeezed. He estimated that 1978 cost increases for Bethlehem would be 9 to 10 percent and that price increases so far this year were about 8 percent.

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Citibank Mortgage Rates Rise: Higher Rates Than Chase Less Mortgage Demand. Citibank, which says it is the biggest mortgage lender in New York, yesterday announced higher interest rates to finance the purchase of homes and cooperative apartments.</br></br>On fixed-rate mortgages for homes and condominiums, Citibank’s new rate is 16% percent for full-relationship customers, those who maintain checking and savings accounts with Citibank, and 17% percent for others, the bank said. These rates are up three-quarters of a percentage point.</br></br>On variable-rate mortgages, the rates were increased by one percentage point, to 16 percent for full-relationship customers, and to 17 percent for others. The interest rate on variable-rate mortgages is readjusted every three years in line with prevailing interest-rate trends.</br></br>In addition, Citibank charges a 2% percent “origination fee” on the total value of the mortgage at the time the mortgage is made.</br></br>Citibank’s rates are now higher than those offered by the Chase Manhattan Bank, another major mortgage lender in the New York area.

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The Economy Picks Up the Pace: The recession that some were expecting has not come. But growth this year -- and next -- will not be very strong. The Economy Picks Up the Pace. The recession that some were expecting has not come. But growth this year — and next — will not be very strong.</br></br>Khun Over all it is growing, though just barely, m I and factories and farms have tumbled into a recession. Yet signs of worse to come are scarce. Inflation, particularly, is comatose, and oil prices are ebbing again. The Federal Reserve Board, the ogre behind the severity of the recession in 1981 and 1982 when it forced up interest rates to stop inflation, is the angel this time around for letting interest rates fall. The White House and Congress seem committed to cutting the budget deficits at least enough to reverse their growth. Such restraint might normally flatten a soft economy, but the gratified financial markets are already responding with further reductions in interest rates, complementing the Fed and helping the economy. Color the outlook reassuring.</br></br>The mostly dollar-driven decline in farming and manufacturing will fan through the rest of country, crippling the companies that supply and service them, the banks where they save and borrow, the stores where farmers and factory workers shop. Other strong countries, notably Japan and Germany, will ignore Reagan Administration appeals to stimulate their economies and buy more American goods. Congress, aghast, will curb imports, swathing the injured but reviving inflation. Consumers, deeply in debt, short of savings and wary of the future, will stop buying. Many healthy businesses will put off spending and borrowing until they know how the President’s tax plan plays out in Congress, and they won’t know that before late fall. Color the outlook recession gray.</br></br>FOR all the economy’s apparent weakness, for all their demurrals and caution bom of faulty earlier forecasts, most economists endorse the sunnier scenario. With reports like the big ones last week — the Commerce Department’s “flash” / estimate of 3.1 percent growth in the second quar- V ter, after a mere three-tenths of 1 percent rise in the first, and the banks’ reduction of their prime lending rate to 9y2 percent, putting it below two digits for the first time since late 1978 — experts assume that the recession a few once expected has not come, and won’t.</br></br>In the widespread view of those who monitor it, the too-weak economy that set in late last summer has finally been shaken off. Economic activity will pick up some speed as the summer unfolds and next year might be still better. Not one of the 50 economists who file their forecasts with the Blue Chip Economic Indicators newsletter sees a recession this year. Just two see one in 1986, while six see the growth exceeding even the Reagan Administration’s assumed 4 percent rate then. Thus, the economy appears positioned to defy the 45-month lifetime that expansions have averaged over the last 40 years.

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Economic Scene: Dangers Found In Auto Credit. AT one stage in the California real estate frenzy a few years ago, lenders who had placed un-realistically high values on property suffered steep losses when inflation suddenly cooled and values dropped.</br></br>The go-go automobile market of the last six years, in which Americans bought more than 90 million new cars and trucks, has spawned similar excesses. Banks and auto company credit subsidiaries — willingly assisted by car dealers and auto makers — have relaxed standards of creditworthiness, made questionable valuations of vehicles and lengthened terms of payment to latch onto the boom.</br></br>Now lenders are discovering that vehicle resale values and residual values — the wholesale value of vehicles at the time leases expire — are not holding up according to plan. Finance companies owned by the Ford Motor Company and the General Motors Corporation have spoken frankly about their loan losses and have begun to tighten credit standards and to encourage shorter-term loans. Major banks, such as the First Interstate Bank of California, have withdrawn from riskier segments of the market, such as indirect retail lending through car dealers.</br></br>Yet many banks remain in relatively risky areas and are ‘‘cruising for a bath,” according to Robert Reich, president of the automotive lending unit of the Marine Midland Bank. Specifically, Mr. Reich warns that stagnant used-car prices are threatening the quality of the nation’s automotive debt — passenger cars account for some $290 billion in debt.</br></br>To facilitate new-car purchasing, around 1985 banks and finance companies began lengthening the repayment terms on their loans to five years and longer. That reduced the monthly payment but increased interest cost. The thinking today clearly has become more conservative, says William Lovejoy of the General Motors Acceptance Corporation. One reason is that the longer loans ultimately inhibit new-car buying because it takes several years to build up enough equity to trade for a new car, the companies believe.

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Wood, Field and Stream: Who Gets Stuck When You Hook a Skin Diver? -- A Few Other Problems. WHEN and if the cold war is settled, the problem of inflation solved, Jacqueline Kennedy decides on one hairdo and income taxes become only a memory, someone ought to do something for-fishermen.</br></br>Here are congenial, peace-minded, quiet-loving citizens who bear malice toward none, fish excepted. They provide a cross-section of American life. An angler can be a yachtowning tycoon with the latest in fishing gear or a hobo who has nothing more than matted twine for a line and a twisted, rusted nail for a hook.</br></br>Actually, there should be no problem. Fishing is a simple business. Even youngsters, barely out of the toddling stage, do well at it. But leave it to the grown-ups. They keep having troubles.</br></br>Take the skin-diving situation in New Jersey’s Barnegat Bay. Theodore W. Weeks, the captain of the fishing boat Dolphin, has been forced to raise a delicate legal question for State Attorney General David D. Furman.</br></br>“What is my legal position if any of my clients hook a skin diver?" the good captain asked the other day.

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INFLATION CURBS CHRISTMAS SALES: Shorter Shopping Season Also Cited by Stores as Buyers Stretch Funds. : Inflation, unemployment, layoffs and concern over what the ■ national economy holds next [year have produced generally j disappointing Christmas sales Iso far for merchants across the I country.</br></br>With only three shopping days left, the nation’s consumers have apparently approached their Christmas giftgiving in a sober, even somber mood. They are paring their shopping lists, keeping a tight rein on buying by using cash more than credit and by purchasing fewer holiday decorations.</br></br>"I’m spending less because of the inflated prices," Mrs. Diane Yamano, the mother of two young children, said in a Los Angeles shopping center, “and I’m only spending a certain amount for each person." make up the sales slack in the last few days of the season which ends Tuesday night. But because of sluggish consumer buying in November and the jfact that the holiday season has five fewer selling days than a year ago, most merchants believe that even if sales revive, the over-all results will be only slightly above a year ago.</br></br>The Christmas shopping season, which is made up of 22 days this year, is crucial for retailers who count on it for about 20 per cent of their total year’s business and, more important, for about 30 per cent of annual profits.</br></br>surrounds holiday gift-buying is absent this year and that many merchants are reporting that Christmas selling is “tough."

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