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Many Economists See Fed Delay on Rates. WASHINGTON, Nov. 13 — Despite mounting evidence that economic growth has slowed to a crawl, the Federal Reserve is likely to shun further immediate steps to trim interest rates, many economists said today.</br></br>The dominant view is that the central bank’s main policy body, the Federal Open Market Committee, will conclude at its meeting on Tuesday that the clear, albeit modest, rate cut of a week ago is all that is needed, or can be afforded, for now.</br></br>"We think there will be no further policy move,” said Kathleen Stephan-sen, senior economist at Donaldson, Lufkin & Jenrette, noting that the rate on Federal funds — overnight loans among banks — promptly fell one-quarter percentage point, to 8Vi percent, after last week’s rate cut, which was reportedly decided upon in an unusual telephone meeting. Over the longer term, however, Ms. Ste-phansen said the funds rate could slide to 7% percent by summer if, as she expected, the economy’s path remains only barely positive.</br></br>The Open Market Committee, composed of the seven members of the board of governors plus the presidents of the 12 regional Federal Reserve banks, has eight scheduled meetings a year, with Tuesday’s intended to set the nation’s monetary course for the subsequent five weeks. Occasionally, the Fed finds it necessary to take action between meetings by convening by telephone.</br></br>The Fed has so far refused to officially acknowledge last week’s session, but economists and analysts are convinced that published accounts of the move, presumably inspired by the steady recent stream of poor to mediocre economic and profit reports, are accurate.

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Mutual fund investors primarily took world tours last month.. Monthly cash flows into stock mutual funds, in billions of dollars. Figures include sales, redemptions and net transfers, but exclude reinvested dividends.</br></br>USING the investment vehicle that served them so well in the United States stock market last year — mutual funds — individual investors turned their attentions overseas last month, putting a record amount of money into funds that invest both here and abroad and pushing foreign markets up sharply in the process.</br></br>The broad American market, as measured by the Standard & Poor’s Corporation index of 500 stocks, is up 5.5 percent this year, and yesterday the Dow Jones industrial average rose 32.51 points, to 5,492.14, its eighth record high in nine sessions. But other markets around the globe have recorded similar — or better — gains.</br></br>For example, Germany’s DAX index has risen 8.5 percent, or 5.5 percent in United States dollars, while Mexico’s Bolsa index has gained 8.3 percent, or 11.7 percent in American dollars. In the Far East, the Hang Seng index, which measures the Horig Kong stock exchange, is up 13 percent since the start of the year.</br></br>According to estimates released yesterday by the Investment Company Institute, roughly $24.5 billion in net new cash flowed into domestic and international stock funds in January — a third more than the previous one-month record of $18.3 billion, set in January 1994, and 44 percent more than in December, which was the best month of cash flows in 1995.

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MARKET DROOPS AS VOLUME FALLS: Dow Slides 8.21 to 759.79 While Many Investors Sit Out Day on Sidelines STRIKE IMPACT LINGERS 14 of the 15 Most Active Stocks Decline Losers Top Winners 3 to 1 Stock Prices Register Decline Of 8.21 to 759.79 on Dow List. The stock market took "an-other tumble yesterday, .yrith many investors sitting on . thq sidelines in the wake of "dis* appointing news, developments earlier this week. :</br></br>As traders continued to pony der the economic impact • at the Genera! Motors settlement and the slim quarter-of-a-poinf cut in the discount and prims rates, there was a scarcity of; buying interest on the New; York Stock Exchange.</br></br>Friday, Nov. 13. 1970 N.Y. Tlmei Industrial! ... 753.93 —10.60 N.Y. Tlmei Railroads .... 95.00 —1.0* N.Y. Tlm»! Combined ....424.4* —5.57 close at 759.79, the low point of the day. The New York Times combined average of*5Q stocks fell 5.52 to 424.46. -c</br></br>Technicians noted that Of# market has given up about half of the gains that began • ttj mount toward the end of Octo* her. Some of the analysts adds ed that the current level could be a base for a new move* ment upward, while others-felt that further downward correo tion could be in the offing.</br></br>Brokers cited a couple oS bearish Government reports that may have helped to push prices lower. October personal income declined after a rise the previous month and the real gross national product for the third quarter was up only 1.5 per cent.

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CREDIT MARKETS Treasury Bills Decline Again: Yields Lowest Since February Strengthening in Tax-Exempts Key Rates. After their record swing toward lower interest rates last week, the credit markets paused yesterday and then gave back a little ground. Even so, Treasury bill rates in the Government's weekly auction yesterday dropped to their lowest levels since February.</br></br>Trading became less active as dealers and investors tried to assess the outlook in the wake of the market’s impressive price gains last week. Through the end of the afternoon, this evaluation continued and appeared to reach no consensus. On the one hand, the credit markets had advanced sharply in price on the reasoning that the recession was about to strike in force, but on the other, it seemed that bond prices already reflected much of the anticipated business slowdown.</br></br>ground, the Treasury auctioned three-month bills at an average discount rate of 13.818 percent, somewhat higher than the 13.70 percent rate at which these short-term securities closed late last Friday. The rate was lower, however, than the 14.424 percent rate set a week ago, and it was well below the 16.532 percent peak rate set March 24. The average rate yesterday was the lowest since Feb. 25.</br></br>In the auction of six-month Treasury bills, the average discount rate dipped to 13.549 percent from 13.70 percent at the close of secondary-market trading last Friday. The rate in the six-month bill auction, like the three-month bill sale, was down from 14.226 percent last week and from the record 15.7 percent set March 24. The new six-month rate was the lowest since Feb. 15.</br></br>The six-month bill rate is used to establish the rate that banks may pay on six-month money market certificates, so these certificates beginning Thursday will carry an interest rate of 13.549 percent, down from the 14.226 percent still to offered today and tomorrow. Treasury bills and money market certificates are offered in minimum amounts of $10,000.

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Critics Want Fed Power Accountable. WASHINGTON, Nov. 13 — The Federal Reserve holds an anomalous position in the American system. An enormously powerful Government agency, it is only loosely accountable to the public and to elected officials, and it allows private citizens, basically a banking elite, to help set the Government'seconomic policy.</br></br>When the economy is sour, as it is now, this odd structure lends to become a focus of attention, a sponge that soaks up frustrations over the way the economy is going.</br></br>Critics of the central bank had a new twist this morning. At a Senate hearing, several prominent lawmakers, an economist who holds a Nobel Prize and a former vice chairman of the Federal Reserve Board testified in favor of legislation to make the agency more politically accountable. The measure would prevent the presidents of regional Federal Reserve banks, who hold no Government office and answer to no Government official, from voting on Government policy as they do now.</br></br>The bill is not likely to be enacted, at least not any lime soon, but the legislation has stirred up a new debate on the extent to which the Fed operates outside the bounds of an open society.</br></br>“Power without accountability does not fit the American system of democracy," said Representative Lee H. Hamilton, an Indiana Democrat who is a frequent critic of the Federal Reserve and one of the most widely respected members of Congress.

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DOW INCHES UP 0.33: Turnover Remains Brisk at 245 Million Shares, but Pace Is Slower Market Is Steady and Tension Eases. New York: Today, mostly sunny, mild. High 61-66. Tonight, increasing clouds. Low 46-53. Tomorrow, variably cloudy, few showers. High 59-63. Yesterday: High 61, low 46. Details on page 60.</br></br>While many stocks fell, the market’s volatility eased and trading returned to more manageable levels. The Dow Jones industrial average, the market’s most watched indicator, actually inched up. And hope began to build that the crisis might be over.</br></br>“Today was the ideal script,” said John J. Phelan Jr., chairman of the New York Stock Exchange. “The market needs time to breathe.”</br></br>Measures taken by the New York exchange and imitated by the rest of the market were largely credited with fostering the more stable atmosphere. The major markets closed yesterday at 2 P.M., two hours earlier than usual. Regulators’ efforts to limit a controversial trading strategy blamed for market volatility also contributed to the calm.</br></br>As a sign that these efforts had an effect, traders absorbed both good and bad news without disrupting the market. Gloomy reports from stock exchanges abroad, a falling dollar and storm clouds on the international horizon seemed to have little effect. Nor did reassuring economic numbers coming out of Washington have a dramatic effect.

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Incomes Keep Pace With Prices: Massachusetts Settles With U.S. In Dispute Over Offshore Drilling Argument for More Protection Marine Sanctuary Designation. WASHINGTON, Dec. 22 (AP) — Americans increased their spending and cut their savings last month, as personal incomes kept slightly ahead of inflation, the Commerce Department reported today.</br></br>Economists said the trend indicated that consumers remained relatively confident and were finding ways to weather rising interest rates.</br></br>The Commerce Department said personal income in November rose $24.9 billion, or 1.1 percent, to a seasonally adjusted annual rate of $2.26 trillion. That follows two consecutive monthly increases of 1.2 percent.</br></br>Consumer prices, meanwhile, have been climbing about 1 percent a month. November’s inflation figures are due tomorrow.</br></br>The department also reported that personal spending last month jumped $21.3 billion, or 1.2 percent, to an annual rate of $1.75 trillion. It had risen $28.6 billion, or 1.7 percent, in October.

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Running A Bed and Breakfast: Talking Quest Rooms Running Bed and Breakfast. flttS the “bed-and-breakfast” concept grows in popularity, more and more homeowners, especially those in or near seasonal resort areas, are considering it as a way to augment household income.</br></br>All they normally need for overnight guests, they are told, is an extra bedroom or two and an available bathroom. Then they may join about 6,000 homeowners around the country who are making on average about $40 a room a night in season by operating</br></br>But is it that simple? Are there prudent steps to take before launching such a business? According to professionals who manage listing agencies or run such establishments, there are several issues that must be addressed before a house may be considered ready for its first guests.</br></br>Among them is the possible need for zoning permits or clearances from the local fire or health department. Care should be taken to limit the number of guests to the permissible maximum without coming under hotel-type regulation.</br></br>Insurance coverage also should be reassessed because under some circumstances, a flow of guests could be considered a violation of a homeowner’s policy and void his right to make damage or theft claims.

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All the Wrong Moves on the Deficit. THE agreement on the budget deficit is doomed to failure. All that time and effort were spent debating the wrong problem. The budget deficit is not the cause of our ailing economy, it is a symptom. By focusing on the deficit, our leaders found political accommodation but they did not begin to address the economy’s actual short- or long-term problems, let alone solve them. In fact, the budget agreement could actually make our economic situation worse.</br></br>The United States has probably already entered its ninth postwar recession. Cutting spending or raising taxes — or both — will only slow the economy still more. Fiscal tightening at this time should be deemed a political felony — reckless endangerment of the economy. In addition to taxing away more of our incomes, our elected officials will cause many of us to lose our jobs as the economy slows.</br></br>What got lost in the debate is that both the Federal deficit and total Federal debt are not at emergency levels. Today’s outstanding debt is equal to about 42 percent of our gross national product — not too bad by historical standards. During the post-World War II boom, total debt was gradually brought down from more than 100 percent of G.N.P. immediately after the war to about</br></br>Robert Ortner was Under Secretary of Commerce during the Reagan Administration. He is author of "Voodoo Deficits." 25 percent a decade ago. It was brought down gradually through economic growth and not with debt-reduction measures.</br></br>The United States has been growing at about 2 percent to 2.5 percent or less each year while Japan has been growing at 4 percent to 5 percent. The reason Japan outstrips us in growth is that it allocates a much larger share of its domestic output to research and development and to capital spending than we do. While Japan invests about a quarter of its national income in new plants and equipment, we manage to invest only an eighth. Japan’s investment allocation is highest among the major industrial countries. Ours is the lowest. The inevitable result is that productivity in Japan, especially in manufacturing, is growing more than twice as fast as in the United States.

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Personal Income Up 0.6% in May: Ways and Means Votes Business Tax Reduction Strategy a Surprise. Americans’ personal income rose six-tenths of 1 percent in May, the Commerce Department reported yesterday. Economists said that the modest increase indicated that the economy was slowing from this year’s robust first quarter and that consumer pay-' checks were barely keeping pace with inflation.</br></br>"The figures show the consumer and inflation running neck and neck,” said Dr. Walter Heller, chairman of the Council of Economic Advisers under Presidents Kennedy and Johnson.</br></br>In a separate report yesterday, the Federal Reserve Board said that American manufacturers operated at 80.1 percent of capacity in May, the highest level in 13 months but an Increase of only one-tenth of a percentage point over April's revised level of 80 percent, another indication of the slowing economy. [Page D7.]</br></br>The Commerce Department report said personal income in May rose to a seasonally adjusted annual rate of $2.37 trillion. The figure comprises all sources of individual income, including salaries, dividend earnings, interest through rate reduction to all corporations, whereas the Administration’s approach would deliver tax write-offs only to companies that invest in plant and equipment.</br></br>The votes in the Ways and Means Committee late this afternoon were the first of many that must occur in committees and on the House and Senate floors before a 1981 tax-relief bill becomes law.

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Steels: A Pat on the Head: WALL STREET Lackluster Steel Stocks. An investment generation ago, steel stocks were a big deal in the stock market. But the watershed year was 1959, when United States Steel shares sold at an all-time high of 108%.</br></br>For U.S. Steel and other major producers, there followed a bleak period of erratic profits, dividend cuts, occasional strikes, foreign imports and shrinking Wall Street interest in steel shares. “Big Steel,” the company J. P. Morgan put together at the turn of the century, traded at 25 in 1971.</br></br>But things have been looking up lately for this once-mighty group, and brokerage houses are uttering a few kind words about specific companies.</br></br>Industry sources, meanwhile, project record mill shipments of at least 96 million tons of steel products in 1973, compared with slightly less than 92 million tons last year.</br></br>Production has been booming at an unusually brisk rate, fed by a demand for capital goods in the current economic upturn. In the final week of March, the nation’s mills poured nearly three million tons of steel.

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Globeconomics. WASHINGTON, Jan. 14 — In preparation for bis meeting in Stockholm with Soviet Foreign Minister Andrei Gromyko, the experts on U.S.-Soviet relations here provided Secretary ol State George Shultz with a stack of briefing books on all recent policy and medical reports out of Moscow.</br></br>But somehow they didn’t give him a list of Russian proverbs that Mr. Gromyko has been using in his negotiations with the nine U.S. Secretaries of State he has survived since the last world war.</br></br>At sticky points in his debate with all these Secretaries of State from John Foster Dulles to George Shultz, Mr. Gromyko had a way of saying: «T*Learn good things — the bad will teach you by themselves.” q“Fear has big eyes.” q“The Russian has three strong principles: perhaps, somehow, and nevermind.”</br></br>*3“Once a word £s out of your mouth, you can’t swallow it again.” q“Only a fool will make his doctor his heir.” ^“Before a fight, two men are boasters; afterward, only one.” q“A gold hammer will break down an iron door.”</br></br>9“Wag your tongue as much as you please, but don’t wave your g^m.” <l“There are two fools in every market: one asks too little, one asks too much.” <i“When we sing, everybody hears us; when we sigh, nobody hears us.” q“Make peace with men and make war with your sins. ”

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POINT OF VIEW: Fighting the Battle of Stagflation. It should by now obvious that stagflation is not just a short-run problem encountered in the recent recession. It is also a long-run structural problem. The combintion of inflation with high unemployment, and with lower than average growth rates is a salient feature of most developed market economies, still operating well below capacity.</br></br>The current phase of the business cycle is largely determined by substantial overinvestment, which preceded the 1974-75 recession. Relative stagnation in general investment followed the recessions of 1948-49 and 1957-58, lasting three or four years.</br></br>And it is highly probable that the current phase will continue another one or two years. Until old investments have paid off and the way has been cleared for a new upsurge, economies will be operating in an uncertain and unstable environment There will be constant danger of recurring inventory recessions provoked by relatively small causes.</br></br>Current inflation is helping exacerbate this instability. Business is hoping that price increases will help revive investment. But rising prices keep biting into real incomes, adversely affecting consumption and aggregate demand.</br></br>Inflation confuses corporate planing. Large companies tend to make gross errors in decisions about prices and output Such errors helped aggravate the 1974 crisis and came very close to producing another recession in

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RATES STILL RISE FOR SHORT TERM: Interest on Slowly Maturing Bonds Declines Slightly RATES STILL RISE FOR SHORT TERM. Short-term Interest rates continued to rise yesterday as the Treasury sold $4>bilUon of bills maturing next March and April. Long-term interest rates declined slightly.</br></br>Prices of Government securities, ranging from the longest-term bills to Treasury bonds coming due in 1993 rose yesterday. Some climbed as much as 18/32.</br></br>Treasury bill rates, however,' which have climbed extraordinarily sharply for more than a week, continued to rise yesterday. Three-month Treasury bills, which were auctioned at an average rate of 3.46 per cent on June 26, were quoted at the 4.30 per cent bid level yesterday.</br></br>These price moves were more a continuation of trends already under way in the credit markets than any new departure. Long-term rates have become high enough to attract increasing numbers of investors. The short-term market has the problem of a huge supply of bills, enlarged by $4-blllion yesterday. '</br></br>As the two $2*billion tax anticipation bill issues were auctioned, the Federal Reserve was reported to have injected a large amount of credit into the banking system by negotiating repurchase agreements with nonbank Government securities dealers.

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How to Postpone Taxes On the Sale of a Home: Your Taxes A Guide to Preparing 1980 Returns Fifth of 12 articles. Postponing Taxes On Sale of a Home A Strict Interpretation Tax Advantage Determining a Gain. The family home is the best hedge against inflation for millions of Americans, in large part because the nation’s tax laws encourage home ownership.</br></br>Not oniy are reai estate taxes and mortgage interest on a house deductible year after year, but people who sell their homes at a profit can postpone paying tax on the gain indefinitely, as long as they purchase another home within a certain time. Furthermore, people aged 55 or over have a “once-in-a-lifetime” opportunity to exclude from income up to $100,000 of their house sale profits.</br></br>And as a result of a recent I.R.S. ruling, elderly people whose apartments are converted into condominium units may also be able to claim the $100,000 exclusion.</br></br>•IYou must buy and occupy the new house within 18 months before or after you sell the old house. If you are building a new house, you must begin construction within 18 months before the date of sale and occupy it within two years after you sell the old house.</br></br>•IThe new house must cost at least as much as the amount you received from the sale of the old house. If it costs less, part or all of your gain is taxed, but usually at favorable capital gains rates.

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EARNINGS LOWER AT MERRILL LYNCH: High Interest and Inflation Are Blamed--First Boston Rebounds After Deficit $8.9-Million Net. Wall Street firms continue to blame record high interest rates and double-digit inflation for eating away their profits. Yesterday, Merrill Lynch & Co., Inc., parent of the biggest brokerage firm, became the latest to cite these factors as it reported a 34.5 per cent quarterly earnings decline from the same period last year and a “The combination of inflation and soaring interest rates continued to hurt the stock and bond markets,” Donald T. Regan, chairman, and George L. Shinn, president, said in a statement accompanying the earnings report.</br></br>A few firms have been bucking the trend, however. The latest is the First .Boston Corporation, which lost $936,928 in the first quarter but recovered in the second quarter with a profit of $1.4-million, or 44 cents per share, on revenues of $20.2-million. In the second quarter a year ago, the leading investment banking house earned $1.1-million, or 34 cents per share, on revenues of $14.9-million.</br></br>First Boston attributed much of the gain to improved underwriting earnings. “No par-ticular deal stood out,’* Paul</br></br>L. Miller, president said. Like Merrill, though, that firm also blamed inflation and interest rates for retarding earnings.</br></br>Because of the first quarter’s loss, First Boston earned only $485,364, or 16 cents per share, in the first half. In the first six months last year, the firm earned $ 1,4-million, or 43 cents per share. Revenues were $38.4-million this year, compared with $28.3-million a year ago.

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Stock Market Outlook: It Depends on U.S. Economy's Progress, Which in Turn Reflects Global Problems Economic Analysis: Stock Market Outlook Is Linked to U.S. and Global Economic Trends. saying? It doesn’t seem to be saying anything clearly at the moment, just asking questions: Where is the economy going? Is this a recession or a depression? Are interest rates continuing Economic downward or does Analysis Treasury Secretary William E. Simon know what he is talking about when he says they will go up? Will President Ford listen to his cautious economic advisers, worrying about inflation, or to the politicians, worrying about unemployment and the 1976 election?</br></br>Hope springs if not eternally at least periodically on Wail Street—especially on greater volume and improved brokerage profits.</br></br>But, as C. Gordon Tether, the uncommon scold of The Financial Times of London, points out, “The Wall Street debacle of 40 years ago proceeded in a fashion very different from the popular conception.”</br></br>The crash began with a spectacular tumble, but that was followed by a series of massive alternating rallies and slumps. When the stock market final- in 1932, Mr. Tether notes, it stood at one-ninth of its 192.9! high and at one-fifth of its 1929; iow. The steadily falling econo-, mv had won every tug-of-war! with the ever-hopeful and ever-* selling Wall Street.</br></br>The election victory of Fran-1 klin D. Roosevelt in 1932 and: the coming of the New Dealj were required to start both the! economy and the stock market! moving more steadily upward.! As the market dropped faster! than the economy on the wav' down, it recovered faster than, the economy on the way back1 up.

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Bad Tidings for California Banks: New Rules Coming; Closings Expected More Bad Tidings for Shaky Banks in California. ; LOS ANGELES, Dec. 14 — Even without tougher national banking regulations that take effect on Saturday, California banks face serious problems in the coming year because of ■continued weak real-estate markets and a stubborn regional recession.</br></br>Federal regulators, banking analysts and officials of small and large banks agree that — new rules or not there may be as many as 30 fewer banks in California next year as a result of the current problems.</br></br>The new rules require regulators to start closing a bank or savings and loan if its shareholder capital drops to less than 2 percent of its assets. The rules are intended to reduce taxpayer land deposit insurance losses from failed institutions by allowing regulators to seize them before they are insolvent</br></br>Rules Known for a Year During the Presidential campaign, the independent candidate Ross Perot, among others, charged that the Bush Administration was hiding bank problems and that once the new regulations took effect the problems would suddenly flood the nation. But |most banking experts contended ithen, as they do now, that there would ;be no such “December surprise.”</br></br>The banks have known about the jnew requirements for a year, the experts say, and have been raising Icapital to comply with them. Indeed, 'nationwide, the condition of many jbanks has vastly improved in recent imonths, the Federal Deposit Insurance Corporation said last week.

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Treasury Bond Prices Surge: Oil Reports Spur Trading. Treasury bond prices rose sharply late yesterday as traders and spetm-lators were encouraged by reports that agreement on a price cut by the Organization of Petroleum Exporting Countries was possible and by a late afternoon decline in short-term interest rates.</br></br>The surge of enthusiasm in the bond market yesterday afternoon mirrored the rally in the final half hour of stock market trading.</br></br>By late in the day, the closely watched 11% percent Treasury bonds due in 2014 were traded at prices slightly higher than 105% and were offered at about 105% to yield 11.09 percent. Late trading in this bellwether issue carried its price above the 105 14/32 level briefly touched last Thursday and left bond yields at their lowest level since mid-1983.</br></br>Dealers in Government securities said investor demand for notes and bonds was modest, and they attributed much of the late afternoon jump in prices to speculative buying — including one larger order for longterm bonds by a securities firm.</br></br>There was conjecture, but no confirmation, that the order was related to the efforts of one firm to position itself for heavy sales of zero coupon bonds for Individual Retirement Accounts during the weeks before the April 15 deadline on contributions to I.R.A.’s for 1984 income tax returns.

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From Schubert to Chopin--35 Fantastic Musical Years: Recordings. MUIV/HHJHHESie begin-nlng of Schubert’s -A. J mature composing career in 1814 and the death of Chopin in 1849 lay 35 years of fantastic musical productivity that, among many other things, provided pianists with much, if not most, of the repertory that sustains them today.</br></br>In addition to the entire piano output of both Schubert and Chopin, these three-and-one-half decades saw the composition of Beethoven’s piano sonatas from Op. 90 on, all of Schumann’s significant works and a huge stack of Liszt’s original piano works and transcriptions. There was also Mendelssohn and the quantity and variety of it all staggers the imagination.</br></br>We are too close to the past 35 years to know how they will impress future observers, but it is difficult, somehow, to think that 20th-century composers have provided us with comparable riches since 1939.</br></br>^In any case, pianists who do not busy themselves with music composed by somebody between 1814 and 1849 are apt to be idle pianists.</br></br>So it is not really surprising that a stack of recent recordings consists entirely of piano music by Schubert and Chopin. The Schwann Catalogue is definitely not lacking for listings of these composers, but wherever there’s a'pianist (and a willing record company) hope always springs eternal that a new interpretaton will surpass more fun to play tSan to others win a Grammy awartfsten t0, and this Sonata arid sell out at Sam Goody %,ay qualify for inclusion in * that category. Still, there

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Europe's Central Banker Engineers His Economics. FRANKFURT - The day artel' the Federal Reserve's emergency Interest rate cut two weeks ago, Jcan-Chutdc Trlchct went before the European Parliament to deliver perhaps the most eagerly awaited speccli of his four years as president of tile European Central Dank.</br></br>tt was a dense, technical presentation, packed with meaty thoughts on how Europe’s financial system could navigate the credit crisis spreading from the United States. But his audience cared about only one thing: Would Europe's central bank follow the Fed’s cut?</br></br>The answer, which Mr. Trl-chel saved for the end of the talk, was no. Fighting inflation, he said, was still the bank’s cardinal goal — the "needle of our compass,” to use his well-worn phrase, which dltl not mean, of course, that tile bank would never cut rates again.</br></br>It was a vintage performance by the world's other most important central banker, showing off both Mr. Trlchet’s cool-headed response to the market turmoil and his iron resolve that Europeans chart their own course in reacting to the troubles in the United Stales.</br></br>"In this situation, we're lucky to have a genuine son of Brittany," Alexandre Lamfa-lussy, former head of the European Monetary Institute, a forerunner to the central bank, Continued on Page 7

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Precious-Metals List Gains As Stocks Continue Slide: PRICES OF STOCKS CONTINUE TO DROP Oil-Related Groups Slip Dome Mines Advances Percentage Gains Percentage Drops. The stock market was essentially a study in weakness yesterday as price declines ranged from former glamour favorites to more recent popular sectors such as the oils and oil-related issues.</br></br>Gold and silver stocks—Wall Street’s newly discovered glamours, in a sense — stood out, however, with thumping price gains.</br></br>The Dow-Jones industrials, underscoring the diminished lister even of prominent blue chips in the current nervous mood of investors—slipped 8.06 to 820.40. The drop for the full week came to 23% points, under the main depressants of the Arab oil embargo and the work stoppage by independent truckers.</br></br>Volume at the New York Stock Exchange, meanwhile, limped along at 12.99 million shares—a level that means operating losses for most brokerage houses.</br></br>Simplicity Pattern, the volume leader, fell 2% points to 17%, after plummeting 12 points on Thursday. Once a high-flying glamour, Sim- plicity’s stock was shaken by a management statement that earnings would decline for the quarter ended Jan. 31.

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Voluntary Loan Curbs to Combat Inflation Urged by Reserve Board: LOAN CURB SOUGHT BY RESERVE BOARD Unapproved Type Named Approved by Attorney General Subcommittee Members. WASHINGTON, March 12—The Federal Reserve Board called on the financial community of the nation today to help fight inflation by refusing to make loans not required for financing the defense program or the legitimate needs of agriculture, commerce and industry.</br></br>The board acted under the Defense Mobilization Act and after conferences with representatives of insurance companies, banks and investment bankers. It promulgated an industry-wide voluntary code requiring careful scrutiny of individual loan applications to see that they conformed with prescribed standards of propriety.</br></br>As part of the voluntary program, the Reserve Board said it would soon name a twelve-member Voluntary Credit Restraint Committee tcf direct and implement the plan. This group would be expected to appoint regional subcommittees to consult with financ-</br></br>Pending the appointment of the national committee, the Reserve Board proposed as a criterion for sound lending whether the loan would "commensurately increase or maintain production, processing and distribution of essential goods and services.” It listed as "proper,” the following types of loans: “1. Loans for defense production, direct or indirect, including fuel, power and transportation.</br></br>“2. Loans for the production, processing and orderly distribution of agricultural and other staple products, including export and import as well as domestic, and of goods and services supplying the essential day-to-day needs of the country.

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PRICES VACILLATE IN BRISK TRADING But Firmer Tone Expected This Year as the Country's Export Outlook Brightens. Like a swimmer treading rater before hL next move forward, the Japanese stock market had been resting in recent months waiting for economic currents te change. Unlike the United States, whose economy has been drifting sidewise lately, the Japanese had been catching their breath in their recovery from a definite but slight recession.</br></br>More than in the United States, the stock marke. in Japan follows economic tides. Bac? in July, 1961, stocks on the Tokyo Stock Exchange reached a record high of 1,829, as measured by the Japanese version of the Dow Jones average. That was several months ahead of the peak on the New York Stock Exchange, which was reached Dec. 13, 1961, when the Dow Jones industrial average stood at 734.91.</br></br>However, by the end of 1961 the Japanese stock market had been affected by some international exigencies, coupled with a reaction to overspeculation, and that month its average fell to 1,258. During 1962 stock prices vacillated but a new low. was set on Oct 29, 1962, when the average dropped to 1,216.</br></br>Again this contrasts with the New York Stock Exchange, where stocks suffered a sharp break on May 28, 1962, and the Dow Jones industrial average sank to a level of 535.76 in Jur.- 26, 1962.</br></br>Japan depends so heavily on foreign trade that its stock market reacts quickly to Government measures. When the Japanese Government found that imports had increased much faster than exports, leading to a worrisome trade deficit, it put a curb on the hectic ipansion of the economy by raisine the interest rate sharply in 1961. Th§ high price of money plus some voluntary cut-l ks in capital expenditures by business s’owed the economy. Imports of machinery, technological assistance and raw materials dropped sharply.

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Metals Prices Drop Sharply Over Fears About Economy. The prices of precious metal futures plunged yesterday as persistent weakness in the prices of raw materials raised renewed fears that the economy was again slipping into recession.</br></br>On the other commodity markets, grain and soybean futures were lower, cotton futures rose, oil futures advanced and livestock and meat futures were mixed.</br></br>Platinum led the collapse in metals. Platinum for delivery in October dropped $13.40, to $354.30 an ounce, on the Mercantile Exchange in New York. On the Commodity Exchange in New York, gold for August fell $8.70, to $338.60 an ounce; September silver tumbled 12 cents, to $3,775 an ounce.</br></br>Analysts said the stage was set for the selloff on Tuesday, when the Commodity Research Bureau’s index of( 21 agricultural and industrial commodities fell below 200 for the first time in six years. Weak commodities prices indicate a lack of demand for raw materials by manufacturers,; which bodes ill for the economy.</br></br>Precious metals reacted because a slowing economy means less industrial demand for platinum and silver and low inflation means less investment demand for precious metals, which are historically viewed as a hedge against rising prices. i “The whole atmosphere of the com-' j modities has shifted from one of modest optimism into one of economic malaise, slow growth, low inflation — the kind of psychology that existed in 1991," said William O’Neill, senior futures strategist for Merrill Lynch Futures.

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No. 1 Whistle Blower Derides Deficit Figures. WASHINGTON, April 23 — The Bush Administration and members of Congress may have been impressed by their recent plan to to keep next year’s budget deficit under $100 billion, but to the Government's independent auditor, the accord is almost a sham.</br></br>“The rosy projections are not real numbers any more,” said Charles A. Bowsher, the Comptroller General of the United States, who heads the General Accounting Office. “The situation with the deficit is much worse than it is being portrayed.”</br></br>For the 58-year-old head of the G.A.O., an investigative arm of Congress, such statements can make for prickly relationships with two titans. Congress and the executive branch. But they define the type of agency Mr. Bowsher has tried to develop, one that is independent enough to challenge prevailing sentiments.</br></br>Members of Congress and private accountants agree that the agency has grown in stature in recent years to a point where it has blown the whistle on a number of problems and has taken a tough line on fiscal responsibility.</br></br>For example, the G.A.O. shocked the savings industry in 1986 when it concluded that the Federal Savings and Loan Insurance Corporation was insolvent to the tune of $6 billion. After the 1987 stock market collapse the agency documented how breakdowns and undercapacity in the com- puter systems of the New York Stock Exchange aggravated the plunge. And it has repeatedly criticized the Federal Home Loan Bank Board for understating the thrift crisis.

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U.S. Extends Effort to Ease Tight Credit Into 2010. WASHINGTON - With banks still tightening their lending standards, and borrowers skittish about taking on debt, the Federal Reserve and the Treasury extended one of their main emergency credit programs — the Term Asset-Backed ,Securi- _ ties Lending Facility, or TALF — for several more months. '''</br></br>Despite signs of an economic recovery, and vast government assistance to financial ' institu-" tions, the Fed reported on Monday that banks were still tightening their lending standards and did not expect to reverse course until the second half of next year.-In the Fed’s latest survey of \ senior loan officers, about 30 percent of banks said they were still I: tightening standards for . both I consumer and business loans. g That was a smaller percentage B than the Fed's survey in April, fi but it meant that, on balance, IJ banks were still clamping'dpwn j| as they worried about the' eco- K nomic outlook and tried’to"c.BH-' if serve capital. .Mimar |</br></br>About 55 percent of banks said | their lending standards for bdsi- $ ness loans would remain tougher | than long-term average levels J until the second half of 2010; i A | similar percentage said stand- | ards for prime home mortgages | would remain tougher than aver- g age for another year, and about | 40 percent said mortgage stand- t ards would be stricter than aver- 1 age for the foreseeable future. .</br></br>At the same time, consumers and businesses were still relug: tant to borrow. About 40 percent of banks reported that rierriarid for loans by big corporations waj weakening, though that J'was a smaller percentage than in April.</br></br>On the consumer side, low in1 terest rates have spurred de-’ mand for home mortgages, mostly by people refinancing their loans. But the Fed reported that mortgage demand increased much more slowly in July than in,

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Money Fund Investors' New Tack: Market Place Investors in Money Funds Are Accepting a Bit of Risk. Investors’ headlong rush toward the safest type of money market funds seems to have slowed, perhaps reflecting lower interest rates and reduced fears about the fragility of America’s financial system.</br></br>Since the beginning of 1991, investors have added money to ordinary money market funds at about the same pace as they have added cash to the super-safe funds that invest only in Federal Government securities.</br></br>“Yields have dropped to the point where investors are looking for a little pickup in yield,” said Martha Witt-brodt, editor of IBC/Donoghue’s Money Fund Report.</br></br>That is a sharp turnabout from the attitudes that prevailed in late 1990, when investors , seemed to value safety above all else. In the final four months of the year, those money funds that do not promise to buy only Treasury securities, or Treasuries and Government agency paper, saw their total assets fall by $3.4 billion, or almost 1 percent, according to IBC/ Donoghuc.</br></br>By contrast, those funds that restricted their investments to Treasury securities picked up $8.3 billion over that period, a gain in assets of 41.7 percent. And funds that take on only a bit more risk, by adding Government agency securities to Treasuries, added $5.7 billion, raising their assets by 21.4 percent.

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MARKET CHURNS IN HEAVY TRADING: Average Drops 0.99 Point as Volume Increases to 5,170,000 Shares ANALYSTS ARE BULLISH Turnover on the American Stock Exchange Second Largest in History MARKET CHURNS IN HEAVY TRADING. Tire stock market reverted yesterday to the type of performance that was common during the early part of this year. The word for it is “churning.”</br></br>Although trading was heavy, prices on the New York Stock Exchange closed down slightly on average. There was no clear-cut pattern in the market, either of advance or decline.</br></br>There was some disappointment—but not surprise—in Wall Street over the market’s failure to continue last week's strong advance. Last week prices scored the best gain for a week in six months. However, on technical grounds alone some readjustment had been expected and that was largely the story yesterday.</br></br>The analysts and the observers, almost to a man, remained convinced that stocks were in time headed for new highs, that the bullish influence would not be denied. This comment by a major brokerage house expressed the majority view: “The vigor with which seasoned equities rebounded last week from a brief corrective action demonstrated * * * that stock prices probably still had further to go before culmination of the sustained advance beginning last autumn."</br></br>“Instead of highly speculative ‘magic’ stocks dominating the current trend, the movement is more selective and the better quality securities are making the more favorable showing — always a healthy sign.” This was not to say that speculation as a factor had disappeared from the market. The consensus was that there was still a good deal of ill-advised |or wishful-thinking investing going on. For that reason, several market advisers were urging switching, particularly from issues that had sharp run-ups recently and represented “an element of risk.”

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Sidelights: A Balance Seen in the Market Outlook Good but Cloudy Voice on Options The Mail Bag Tournament Delayed Follow the Leader?. In the stock market these days, unpredictability and balance go hand in hand, it would seem. Keith Funston, president of the New York Stock Exchange, said yesterday: "The market is much less predictable than in 1929 because there are 15,000,000 investors involved in it today. But this is not necessarily bad, because you get the influence of contrary opinion this way."</br></br>He noted that this balance of opinion was shown on May 29. That was the day the : market rallied, following the i sharp drop on May 28.</br></br>Mr. Funston’s remarks were made after an address to the American Society of Corporate Secretaries in Atlantic City.</br></br>"We don't like this stock market. What effect it may , have on new construction remains to be seen. But the fact is our business is in a stronger position than ever.”</br></br>Such a statement could probably come from quite a few business men, but this was made yesterday by Melvin H. Baker, chairman of the National Gypsum Company.

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U.S. Posts $13.4 Billion Trade Gap: Strong Dollar Called a Factor. WASHINGTON, June 30 (AP) — The United States posted a $13.4 billion trade deficit in June, the second highest on record, the Commerce Department said today. It said that demand for foreign cars and oil soared.</br></br>The merchandise trade deficit was $12.7 billion in May. For the first six months of the year, the trade deficit — totaled $70.7 billion and the country seemed certain to far surpass last year’s record deficit of $123.3 billion.</br></br>Commerce Secretary Malcolm Baldrige said the dollar was still too strong compared with other currencies for American industry to compete in world markets. A strong dollar hurts export sales and opens the country to a flood of cheaper imports. While the dollar has declined by about 12 percent from its record highs in February, it is still 40 percent above its 1980 average. "A much larger drop is necessary to improve our competitiveness in the world economy,” Secretary Baldrige said in a statement.</br></br>The battering United States manufacturers have taken from foreign competition is cited for the sluggish performance the overall economy has turned in this year.</br></br>“The dollar has not declined enough to get us out of the competitive hole we have gotten ourselves into,” said Jerry Jasinowski, chief economist for the National Association of Manufacturers. Mr. Jasinowski said growth in the current quarter will be “substantially weaker than the Administration expects because of the continuing drag of the trade deficit and the unwillingness of businessmen to build up inventories because of what has been going on.”

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The Mayor Has Added Many Jobs, and Lost Some, Too. Adela Valdez earns about $14,000 a year as a home care aide for Joseph Martinez in Queens. She once earned $21,000 annually in a factory job.</br></br>During much of his tenure, Mayor Michael R. Bloomberg has taken credit for helping to create hundreds of thousands of jobs in New York City, from high-paying construction work to sales jobs at dozens of new big-box stores. Even as the city plods through the recession, the mayor has set a goal to "retain and create” an additional 400,000 jobs over the next six years. f</br></br>The debate over how much influence a mayor, a governor or a president has over jobs is one that may never be settled. But if Mayor Bloomberg can be judged on the numbers he has used as evidence of his own success, those numbers, while generally accurate, also contain some warning signs about the future of employment in the city.</br></br>Even in the downturn, the city has 130,000 more jobs than it had when Mr. Bloomberg became mayor, according to state labor statistics. Working-class New Yorkers who kept their jobs or stayed in the same field saw their pay rise faster</br></br>But the overall job market constantly shifts, particularly in a recession, when the economy sheds jobs and even whole industries. And in New York, middle- and working-class jobs that have disappeared — in fields like manufacturing, wholesale distribution and administrative services — have been replaced by jobs in sectors like retail, food service and home health care that generally pay less.

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The Fed: A Monetarists' Scapegoat: Built-In Failure Understandable Moves. The Federal Reserve is becoming everyone’s whipping boy. If one listens to the Fed’s critics, it seems that our central bank can never do anything right. There are those who claim that the Fed is largely responsible for our miserable inflation record — some extremists say the Fed is exclusively to blame. Part of this group also criticizes the Fed for having waited too long to tighten credit and that its steps last October were ineffectual. And then there are those who contend that those measures were sufficient to dampen the inflationary pressures and that the stringent credit controls and other restrictions imposed in mid-March represented overkill and will contribute to an excessively deep recession. And now, there are some who maintain that the Fed is easing too quickly. This melange of views reflects the woeful lack of understanding of our monetary processes and the difficult choices facing our central bank.</br></br>To hold the Fed largely responsible for the inflationary spiral is about as credible as the accusations made at the Salem witch trials. The Fed’s critics oversimplify what is an exceedingly complex set of relationships. The Fed, it is true, can abet inflation through following misguided policies; but in no way can the brunt of the blame be laid at its doorstep. There are many nonmonetary factors influencing price movements that seem to be virtually immune to the pressures of monetary policy. Also, when expectations and commodity speculation, such as in silver, are seriously affecting the behavior of prices, only drastic action appears to be able to counter such forces.</br></br>These nonmonetary influences cannot be adequately described here. A few examples, however, provide some impression of what they are. Foremost is the Organization of Petroleum Exporting Countries, which has learned to adjust supply to control prices. And monopolistic pricing is not a new phenomenon. Surely, there are many industries where such practices still exist. In addition, some labor unions are in very strong bargaining positions and can exact wage increases far in excess of productivity gains. Furthermore, there are many Federal practices and programs that contribute to rising prices, such as agricultural price supports, health-care outlays, noncompetitive bidding on Federal contracts, wasteful flood control and waterway projects, and a host of loan programs. Finally, but not exhausting the list of examples, is commodity speculation.</br></br>In the face of such influences, the best the Fed can do is to curb the availability of credit in the hope of dampening the public’s buying power and inflationary expectations. But as we have seen time and time again, the Fed has to become progressively tighter to achieve any meaningful success.</br></br>Because the Fed does not know at all times where the economy is on the business curve, it starts out at first following a policy of gradualism lest it abort a recovery. Subsequently, it is concerned that it might push the economy into a steep decline. But unfortunately, as our recent experience suggests, as long as inflationary pressures are very intense and stem largely from nonmonetary causes, the Fed is not likely to achieve any success until it abandons a “go-slow” policy and adopts drastic measures.

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A Fading Icon: The Gold Rush Is Now to the Exits: THE MARKETS Market Place. Jean-Marie Eveillard, the portfolio manager of the Sogen Gold fund, takes heart by recalling a recent comment by Alan Greenspan, the Federal Reserve</br></br>No you can’t. But you can’t bank on gold anymore, either. Indeed, in the nearly six years since Mr. Eveillard started the gold fund, it has lost, on average, about 8 percent a year for its investors. Only the threat of a worsening global financial crisis last fall stopped Mr. Eveillard from liquidating the fund at the end of 1998.</br></br>In fact, gold — once the dependable haven for millions of worried investors — looks a lot like just another sinking commodity these days in a world financial system dominated by inflationfighting central bankers. Even Swiss bankers, the doyens of gold, do not push it anymore as part of a properly diversified portfolio because there are now many more efficient ways to hedge risk. And a whole generation of investors can only imagine the glory days when the price of gold cleared $800 an ounce for two days in January 1980.</br></br>“At some point I have to say I think I have been wrong so long that maybe I am missing something,” Mr. Eveillard admitted reluctantly. “Maybe 1 was just being stubborn."</br></br>In the nearly two decades since the price of gold peaked, there have not been many good seasons for the precious metal. It last touched $500 an ounce in December 1987, and it has not fetched $400 since April 1996. Its average price for 1998, $294 an ounce, was the lowest in 20 years.

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Once a Key to Recovery, Detroit Adds to the Pain. With General Motors about to follow Chrysler intp. bankruptcy, the nation’s ability to bounce back from the steep recession is being hobbled.</br></br>Although housing and a credit freeze caused the current collapse, manufacturing lias played an outsize role in past recoveries, with the auto industry contributing significantly to the growth. It was manufacturing that led the economy back from the last steep recession, in 1981-82. It did so by stepping up production and hiring more quickly than others in anticipation of rising demand.</br></br>20 percent in 1980 — manufacturing could have a bigger impact than its size suggests, because of its tendency to respond quickly.</br></br>“and today it could have played a decisive role if G.M. and Chrysler had remained viable companies. Without their contribution, the economy simply can’t recover as quickly as it has in the past.”</br></br>Those two giants alone accounted for 10 percent of the upturn after the early 1980s recession, Mr. Zandi said, but this time they will be a drain on growth rather than a contributor to it.

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Government Spending: Both Business and Government Should Combat Recession, It Is Felt. The issue of Government' spending to combat recession, debated lately in your letter columns by Miles Penny-backer, Raymond K. Price and Alfred Baker Lewis, is continued in your news story of June 11, quoting an address by Leon Keyserling.</br></br>Perhaps the issue can be clarified by examining more closely: (a) what has caused the slow-down; (b) what, if anything, business might do about it; (c) what forms government spending might take.</br></br>(a) Few would dissent f»om Mr. Pennybacker’s explanation that "the pent-up demand for consumer and capital goods” is beginning to taper off. (Expenditures ’for the Marshall Plan and for armaments, mentioned also by Mr. Pennybacker, are being paid for by taxation; henoe have acted mainly , to retard the catching-up process, instead of creating additional income as he implies.) With no Marshall Plan, and with important differences in detail, we had a similar experience after the First World War. We did not then know what was happening; this time we think we do.</br></br>I comes, but the goods for which they would willingly have exchanged their money did not exist. The market for current goods (especially durables) was partially saturated and new offerings were lacking. So spending and employment spiraled downward, while the funds that should have gone into new product development and expansion went into Wall Street instead.</br></br>(b) In contrast to the Nineteen Twenties, the “catching-up” process today is gradual and spotty (e. g., building is far behind). So, naturally, is j the tapering-off. But incomes now, as i then, are generally adequate. Thanks to the fine work of the Committee for Economic Development and economists elsewhere, industry today sees clearly that what is needed to save the situation is large-scale new development to keep the wheels turning. But industry’s hands are largely tied, partly by a tax structure which penalizes the sort of venturesome investments now needed and partly also by the unwise use made by labor unions of their political power. Only the most promising ventures are started today. If industry’s hands were untied, blueprint projects now "on ice” would become real and an immediate upturn would follow.

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STOCKS REGISTER A SHARP ADVANCE: International News Lends Bullish Note to Day's Trading--Volume Up INDEX REACHES 349.92 Good Economic Reports Also Add to Optimism--Best Gains Made by Oils Upturn Indicated Average Up 3.47 STOCKS REGISTER A SHARP ADVANCE Auto Stocks Active. | The stock market shifted back into high gear yesterday. Prices rose steadily during (he day and closed near their highs.</br></br>I Leading market indicate m '.easily recovered ground lost in |Monday’s mild decline. The upsurge was sparked by selected (issues in the oil, electronics, aircraft, chemical and steel groups.</br></br>The market was affected by bullish news. On the international front. Premier Castro backed down on his plan to keep Soviet, bombers in Cuba, another apparent success for the United States in that tense situation. In another development, the Chinese Communists made an unexpected announcement of a cease-fire in their military operations against India, .On the home front, there was a string of economic reports indicating an upturn in October. Personal income, durable goods orders and housing starts showed gains for the month. A Presidential labor-management committee urged a “prompt and significant” reduction in personal and corporate income taxes. There were indications of sharp increases in military spending.</br></br>In the market itself, there was widespread anticipation of a sharp increase in the short-interest figures. The report, issued after the close, showed short-interest positrons — sales of borrowed stock — at a high. Wall Street tends to regard high short-interest as bullish because stocks have to be purchased to cover the positions.</br></br>Volume on the New York Stock Exchange rose to 4.29f>.-000 shares from 3.410,000 on Monday. Issues traded declined to 1,287 from 1,307 a day earlier. There were 770 advances and 293 declines; 224 issues closed unchanged. Fifteen stock made highs for the year and tone — McCrory preferred — a inew low. _

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U.S. STEEL DENIES ROLE IN INFLATION: Reply to Kennedy Says Its Prices Are Not Cause U.S. STEEL DENIES IT AIDS INFLATION. Special to The New York Times. WASHINGTON, Sept. 13— The United States Steel Corporation told President Kennedy today that its concern for inflation was no less than his, but that steel prices and profits were not the cause.</br></br>Roger M. Blough, chairman of the board of the country's largest steel producer, chided Mr. Kennedy and his Council of Economic Advisers for their efforts to forestall a price increase when steel workers’ wages go up Oct. 1.</br></br>In a letter replying to one that the President, sent to the heads of twelve steel companies last week, Mr. Blough said that the advisers “seem to be assuming the role of informal price-setters for steel.” "If for steel, what then for automobiles, or rubber, or machinery or electrical products, j or food, or paper, or chemicals —or a thousand other products?" Mr. Blough asked.</br></br>conclusions" regarding the prices it will be charging in' the foreseeable future, but he( cited all the arguments for rais-' ing them. “There is little justification for the belief that improving productivity-output per man per hour—will offset the cost of the Oct. 1 wage increase during any reasonable period of time," he said. “Moreover, I must note that during the past few months there have been a number of wage settlements which by no stretch of the imagination can be considered to be noninflationary.”</br></br>“In spite of your own commendable concern regarding the inflationary effect of wage movements, there seems to have been—in this same period—a noticeable absence of any observable restraint by unions in their demands,” he continued.

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Little Change Reported in Prices: Questions Raised On Fed Rate Policy. A steep late-afternoon drop in the overnight rate for bank loans yesterday kept alive suspicions that the Federal Reserve might be encouraging lower short-term interest rates. But those suspicions caused little change in prices or in rates, partly because interest rates have already fallen sharply in the last month.</br></br>Shortly before noon, after the Fed had temporarily drained reserves from the banking system, analysts were satisfied that no signs of a push by the Fed to lower short-term interest rates were clearly evident. But when the overnight rate for bank loans in the Federal funds market fell to 4 percent, from 6 7/16 percent, analysts were unable to offer any explanation, and speculation about an easing in Fed policy was revived.</br></br>The overnight funds rate is a benchmark for other short-term interest rates that is closely watched in financial markets as a signal of changes in monetary policy.</br></br>Rates Slightly Lower By late in the day, Treasury bill rates were lower by only a few hundredths of a percentage point, with the three-month issue at 5.60 percent. Before tomorrow's auction of new one-year bills, the outstanding one-year issue was at 6.12 percent, down from 6.16 percent.</br></br>In the Treasury note market, the new 7% percent notes due in 1991 were offered at 100 7/32, up 5/32, to yield 7.29 percent, while the 8y8 percent issue due in 10 years was offered at 99 30/32, up 10/32, to yield 8.13 percent.

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Dow Closes Above 5,300 on Rate-Cut Hopes. The stock market rose yesterday, as traders responded to strong earnings reports and hoped the Federal Reserve would cut interest rates this we$k.</br></br>“If rates are cut, that will set an optimistic tone for the market,” said Barbara C. Marcin, vice president of Citibank Global Asset Management. “And with companies reporting better earnings, that should make for a good year.”</br></br>The Dow Jones industrial average once again reached a new record, gaining 33.23 points to close at 5,304.98. It was the first time that this key indicator closed above 5,300; the Dow first exceeded 5,200 on Dec. 13, 1995.</br></br>Another high was also achieved by the Standard & Poor’s 500-stock index, which advanced 2.60 points, to</br></br>Advancing issues on the New York Stock Exchange outnumbered de-cliners by 1,325 to 970. Big Board volume fell to 363.3 million shares, from 385.7 million shares on Friday.

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Solar Institute Is Sought on Island: A Solar Institute Is Sought on the Island. Worker secures solar collectors on solar-heated home. Long Island is bidding tor solar research institute.</br></br>MINEOLA — Long Island, besieged for several years by a high rate of unemployment despite its wealth of scientific, technological and business resources, has started a strong bid to have a federally funded Solar Energy Research Institute in the bicounty area.</br></br>Nassau and Suffolk Counties, which have been in the forefront of the aeronautics and space programs, arc instituting a program to persuade the Federal Government that because of the Island’s resources and technical know-how the facility should be placed on Long Island to investigate the possibilities of using solar energy to replace the nation’s reliance on fossil fuels.</br></br>Six states are bidding for the opportunity to run the project, which is expected to have a $50-million budget each year and provide employment for as many as</br></br>Each of the states will submit proposals for the project to develop means for converting the sun’s rays into usable energy forms. The Federal Energy Research and Development Administration established the Institute as part of an over-all program to cost $4-billion

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9 Towns Spare No Effort to Snare New Plant: No Effort Is Spared to Snare a Plant. Will new jobs and tax revenue make up for costly incentives?. LOS ANGELES. Dec. 17 — At a time when most regions have been battered by the recession and many manufacturing industries are shrinking, the McDonnell Douglas Corporation is offering a potential economic bonanza to some lucky community: a new aircraft plant that could ultimately create</br></br>But as it examines nine competing sites from Alabama to Arizona, McDonnell Douglas is looking for a lot in return. In addition to 600 acres adjacent to an airport, the company is seeking hundreds of millions of dollars in financial aid from state and local governments, including tax breaks and worker-training programs. The company also wants to avoid the heavy regulation and high costs of doing business in the current home of its jetliner</br></br>The selection is extremely important to McDonnell Douglas, the nation’s largest military contractor and the second-largest builder of commercial jetliners, after Boeing. The company needs to build a highly efficient plant at the lowest possible cost to produce a new long-range jumbo jetliner, the MD-12, which it is counting on to help it</br></br>The process also suggests the rewards — and the considerable risks — for cities and states as they battle one another to attract businesses and give their economies a lift. The nine cities wooing McDonnell Douglas are Fort Worth; Houston; Kansas City, Mo.; Mesa, Ariz.; Mobile, Ala.; Salt Lake City; Shreveport, La.; Tulsa,Okla.,and Belleville, 111., which is just across the Mississippi River from St. Louis, where McDonnell Douglas is based.</br></br>Nine cities are competing for a new McDonnell Douglas plant. The company is based in St. Louis and has major aircraft operations in Long Beach, Calif.

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FILM VIEW: New York Is Revival City. recession and tight money may have delayed e start of the New York Cinematheque, it that delay has become purely academic is summer. The entire city is currently a ndmatheque. Every summer there have been vival programs but I can’t remember a in which there appeared to be such a number of them offering such a variety of programs.</br></br>Could it possibly be an optical illusion? Because there have'been so few openings of new films in the last several weeks, the revivals and reissues aTe the films that occupy our principal attention—which is all to the good.</br></br>’ Better by far to spend a hot Saturday afternoon discovering (or maybe rediscovering) the high spirits of George Marshall’s “Destry Rides Again” (1939), and particularly the wit of James Stewart (which matches that of Marlene Dietrich), than sitting through 6ome newly released nonsense like "Rollerball.”</br></br>A lot of the things being reissued are strictly for the buffs, which is fine. A lot of other ones seem to be available more or less regularly, with or without a general surge in revivals: the Marx Brothers comedies and the films of Ingmar Bergman, Satyajit Ray, Kurosawa and Ozu. Many, however, are films that are rarely 6een. Some for such good reason that you should pick your way carefully.</br></br>• I don’t quite understand the popularity of the reissue of “The Hound of The Baskervilles” (1939) at the D. W. Griffith Theater. The film is of some historic importance as the film that began the hugely successful series of Sherlock Holmes-Dr. Watson movies with Basil Rathbone and Nigel Bruce. Yet "The Hound” is nowhere near as entertaining as the second film in the series, “The Adventures of Sherlock Holmes,” based on the William Gillette play now being revived on Broadway.

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Dollar Declines Again; Gold Prices Are Mixed. The dollar continued to fall against most other currencies yesterday, despite predictions of higher interest rates in the United States.</br></br>Gold prices were mixed, with the l&.te quote at the Republic National Bank in New York at $383.50, unchanged from Wednesday.</br></br>Analysts said the dollar rallied briefly in the middle of the trading day in the United States when two leading private economists, Henry Kaufman of Salomon Brothers and Gary Wenglowski of Goldman, Sachs & Company, predicted higher interest rates in the near future. Rising interest rates in the United States usually make the dollar more attractive to foreign investors.</br></br>In Tokyo, where the business day ends as Europe’s begins, the dollar dropped to 233.25 Japanese yen from / 233.53 yen.</br></br>Later in London, the dollar lost ground against the British pound, which rose to $1.4630 from $1.45265 Wednesday. In the United States, the pound closed at $1.4626, up from $1.4522 late Wednesday.

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Coast Thrift Units Prospering: Revamped Coast Thrift Units Basking in Profits. Califori^^i^ft Units Gain Strength Holding Company Quarterly Earnings in millions of dollars period ' period ending; ending; Sept. 30, Sept. 30, 85 84 Percentage increase Total Assets in billions of dollars. Nov. 5. 85</br></br>LOS ANGELES, Nov. 5 — In perverse moments, Herbert M. Sandler almost wishes interest rates would rise.</br></br>That is an extraordinary musing for a thrift unit officer such as Mr. Sandler, chairman of the Golden West Financial Corporation, a $12 billion savings and loan institution based in Oakland, Calif. Higher interest rates would raise the price that thrift units pay for money at a time when hundreds of them around the country are already fighting for survival.</br></br>But Mr. Sandler would not mind showing “how far we’ve come.” That is because, while the public perception is that the industry is on the ropes, many thrift units, including Golden West Financial, are earning record sums this year, and are also restructuring their balance sheets to reduce their vulnerability to a new round of higher interest rates.</br></br>Mr. Sandler’s comment thus reflects the dichotomy between the many flourishing thrift units and those that he calls “the walking dead." Some of these have a negative net worth and are being kept open only by the intervention of regulators, and many others would suffer substantially if interest rates surged.

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Rates Slip After Budget Vote: 3-Month Bills Off 0.13 Point. Prices of Treasury securities rose and interest rates fell yesterday immediately after traders learned that the House of Representatives had approved Republican budget proposals calling for an estimated deficit of $99.3 billion in the 1983 fiscal year, which begins Oct. 1. The market reaction was subdued because most traders had left work, but late trading in a few active issues clearly showed rising prices.</br></br>The price of three-month Treasury bills, for example, rose enough to reduce the bid rate to 11.92 percent late in the day from 12.05 percent at 4 P.M. The 14 percent Treasury bonds due in 2011, a bellwether issue, rose to a bid price of 102 19 / 32, to yield 13.62 percent, from 102 at 4 o’clock.</br></br>Although credit market participants remained skeptical about the ability of the Government to reduce deficits, the approval of a fiscal year 1983 budget reduced the fear of an impasse that could result in an even larger deficit.</br></br>“The market should view this favorably,” said Jay Goldinger, a broker in Treasury securities and editor of “Early Warning.” He noted that while</br></br>American investors were nervous about the prospect of heavy Treasury borrowing, which could put upward pressure on interest rates, foreign investors continue to prefer investments in dollar securities and were eager buyers of Treasury bills.

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What Tsai Bought: $250-Million Worth: TSAI INVESTMENT: $250-MILLION PLUS. Gerald Tsai Jr., whose new mutual fund has dazzled Wall Street with its spectacular sales, put more than one-quarter of a billion dollars in the stock market during the six weeks ended March 31.</br></br>The biggest single investment of the Manhattan Fund, which Mr. Tsai (pronounced Sigh) heads as president, was 65,000 shares of Motorola at a cost of slightly more than $12-million.</br></br>The fund, whose investment j objective is to seek “long-term| capital appreciation,” purchased a total of 56 common stocks during the six-week period. The I • The answer is available now in proxy, statements that the Manhattan Fund began mailing out yesterday to niore than 125,-000 shareholders. Inasmuch as this is the fund’s first proxy statement, it also contains the portfolio of investments.</br></br>Shareholders will meet May 20 at the Americana Hotel to vote on a number of business matters, including an increase in the fund’s authorized capital stock to 300 million shares from the present 50 million shares.</br></br>Other large investments made by the Manhattan Fund in its initial reporting period included Pan -American World Airways, Zenith Radio, Xerox, Syntex, Radio Corporation of America, United Airlines amjl Fairchild Camera.

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Bond Prices Surge on Inflation Data. An exceptionally favorable report on inflation prompted a sharp rally in the credit markets yesterday, pushing interest rates down as prices of Treasury notes and bonds rose.</br></br>The rise in prices wiped out much of the steep declines registered earlier in the week, but long-term bond yields were still higher at the close of trading yesterday than they were a week ago.</br></br>The inflation report showed that prices at the producer level rose by just one-tenth of a percent last month and were unchanged when food and energy prices were excluded. That was much better than most Wall Street economists had anticipated. Exceeding Expectations “The inflation numbers were as good as you could hope for, and were considerably better than people had thought,” said Donald J. Fine, chief market analyst at the Chase Manhattan Corporation.</br></br>For market participants, the good inflation news was bolstered by a report on retail sales, which rose by an anemic one-tenth of 1 percent during September, once automobile purchases were excluded.</br></br>The data renewed speculation that the Federal Reserve Board would move quickly to lower short-term interest rates another notch. But the Fed chose not to initiate that move yesterday.

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Borrowings by Member Banks Rose $19,000,000 Last Week. Daily average borrowings by member banks of the Federal Reserve System rose by $19,-000,000 to $74,000,000 in the week ended Wednesday, the Federal Reserve Bank of New York reported yesterday.</br></br>Daily average reserves in excess of requirements decreased by $12,000,000 to $537,000,000. As a result, daily average net free reserves—excess reserves less borrowings — declined by $31,000,000 to $463,000,000.</br></br>At the end of the statement week on Wednesday, borrowings by member banks at Federal Reserve banks had increased by $36,000,000 to $282,000,000. Excess reserves were off from the preceding Wednesday by $188,000,000 to $740,000,000. Net free reserves were down by $224,000,000 to $458,000,000.</br></br>On Nov. 1, 1961 Government securities held in custody by the Federal Reserve Banks for foreign account were $5,996,000,000, a decrease of $153,000,000 for the week and an increase' of $368,000,000 from the comparab le date a year ago.</br></br>Contingent liability on acceotances purchased for foreign correspondents— (aher deducting participations of other Federal Reserve Banks amounting to)...

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For Workers, a Productivity Incentive: Worker opposition to increased productivity can be transformed into cooperation ifmanagers grant bonuses for greater output. Suggestion: Find aWay To ShareNew Gains POINT OF VIEW. Though there are differences among leaders of labor, industry and government on how best to contain inflation, there is general agreement that increased productivity is one effective way.</br></br>But agreement stops there. Increased productivity as a national goal is one thing, implementation plant by plant is quite another. The closer the discussion gets to the workplace, the greater the resistance from workers.</br></br>As workers’ pay Improved and their job security was assured, social theorists thought that workers would be more receptive to increased productivity. But this notion was contradicted by the General Motors strikes in</br></br>Worker opposition to increased productivity can be transformed into cooperation if managers grant bonuses for greater output.</br></br>The famous Lordstown, Ohio, strike was characterized at first as a revolt of the youth against the tyranny of the assembly line. But the parallel strike at the nearby Norwood plant by a United Auto Workers local with many older and experienced members was the longest strike in G.M. history.

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Nonfood Home Products Thrive Despite the Recession. Whatever economic concessions Americans may be making because of the recession and rising prices, they clearly do not include any lessening demand for nonfood household staples.</br></br>This is one of a series of articles, appearing from time to time, on how various industries are being affected by the recession.</br></br>of detergents, paper towels, light bulbs, toilet soap and toilet tissue—the five leading household products sold in the nation—as well as scores of other items for the home.</br></br>Despite the recession, specialists who monitor sales of such goods expect the industry's revenues again to show a 6 per cent rise in</br></br>The most recent exception was 1973, when the industry’s revenues rose only 3 per cent because of raw-materials shortages, price controls and manufacturing changeovers to accommodate antipollution laws, which proscribed the use of certain chemicals in detergents.

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Only Narrow Movements Shown in Credit Markets: Treasury Bill Prices Utility Issue 8.95 Percent Yield. Orlg. A<k*»d Price Yield Price Quote Chng. 8%sl6 99.375 99% + V» 8.65 9%s06 101.568 102% —Vs 9.15 9%s06 99 101 9.66 “7 JOHN H. ALLAN Prices and interest rates in (lie credit markets yesterday mo' ed within only a very narrow range, although investment hankers nevertheless handled a substantial volume of new-issue activity at yields for investors that Credit generally were .Markets slightly lower than last week’s. The expectation that crop'; up most frequently in the credit markets now is that interest rates will remain stable for several weeks. Federal funds, the rale at which overnight loans are made between hanks, opened trading yesterday at the 5 7/16 percent lewd and then they slipped to 5% nercent. the lower limit of the an S8.88 annual dividend on range in which the Federal Rc-' those securities, priced them at serve is thought to want them SI01.485 a share to yield 8.75 to trade. i percent and estimated them to</br></br>ers viewed its inaction as a perate issues to be offered for-'■li"ht indication that the Fed mally this morning, mmht he willing to tolerate j Metro - Goldwyn - Mayer will -o me what lower rates for a: raise S30 million by selling SoO Treasury bill prices tradei within an exceptionally narrov range in trading that was de scribed as unusually light Three-month Treasury' bills auctioned at an average rah of 5.356 percent Monday after noon, were offered late yester day at 5.35 percent rate.</br></br>To some traders, the bil market's ability to hold stead; while virtually no trading wa taking place was impressiv: t". idence that interest' rates ari not headed upward yet. Nor mally. inactivity causes price: to drift, downward.</br></br>tn the agency securities . market, the Federal Nationa Mortgage Association set a ratt of 7.95 percent on the $300 mil l:on of 10-year debentures that it plans to sell today. The 7.95 percent rate is IE basis points, hundredths of t percentage point, above trie I 7.SO percent yield on the Treasury's 77r percent notes that also mature in 19S6, a spread that investment bankers described as about normal. A yield of 8 percent on the Fannie mae issue would have caused "a fire sale.” and a yield nl 7.90 percent would have caused many investors to turn back the debentures they had enta-tively ordered, one agency securities dealer suggested.</br></br>In the corporate bond market, the United States Steel Corporation's $400 million of convertible debentures, priced to yield 5% percent and convertible into common stock at a 12.S percent premium over Monday's New York Stock Exchange closing, were reported all sold. The Duquesne Light Company sold $80 million of 30-year bonds, rated Aa by Moody’s and AA by Standard & Poof’s, that were subsequently offered to investors at a vield’of 9 percent.

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Family Money. WITH short-term interest rates on the rise, the nation’s thrift Institutions — savings banks and savings and loan associations — are losing deposits. Savers in search of higher yields are taking their money elsewhere.</br></br>Among the major beneficiaries of that quest are the so-called money-market funds — mutual funds that specialize in United States Treasury securities, bank certificates of deposit and other comparatively safe short-term investment vehicles.</br></br>There are almost 50 such funds in the field. All of them have the same basic objective: to provide maximum current income with minimum capital risk. The funds pursue those objectives in different ways.</br></br>Some invest in Government securities. Others trade off some of the safety of Government securities for the somewhat higher yields that can be found in commercial paper—corporate I.O.U.’s.</br></br>Thus, the return to investors varies with the portfolio mix. At the moment, money-market fund yields range from around 5.4 percent to 7 percent or more. The average is probably closer to 6.2 percent, considerably more than the basic 5.25 percent most big-city thrift in-

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Money Ease Seen Continuing: Reserve Sets Policy MONETARY POLICY CONTINUES EASY. The Federal Reserve System continued its moderately easy money policy during the last two weeks, banking data published yesterday showed.</br></br>But despite the central bank's efforts, the rate of growth in the nation’s money supply slowed noticeably — perhaps as a reflection of the over-all sluggishness in the economy.</br></br>Meanwhile, the money managers took vigorous action on Wednesday to prevent an undue degree of ease from developing in the money market.</br></br>They sold almost $1.5-billion in Treasury bills under matched sale-purchase agreements that require the buyers to sell these same bills back to the Reserve on a specified date.</br></br>These so-called “reverse repos" have the effect of absorbing a temporary glut of funds in the marketplace.

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JOHNSTON, DISALLE ASK NEW CONTROLS: CITES ECONOMIC SITUATION TO HOUSE BANKING COMMITTEE. WASHINGTON, May 11 —Eric Johnston, economic stabilizer, and Michael V. DiSalle, price administrator, warned Congress today of the need for intensified efforts to control inflation. They called for adoption of the Defense Production Bill before the present act expires on June 30.</br></br>Mr. Johnston told the House Banking and Currency Committee that if runaway inflation came “Congress will be unable to pass tax bills fast enough to balance the budget.”</br></br>Both witnesses defended the recent rollback of beef prices when Republican committee members complained that constituents among cattle producers and live' stock feeders had protested against it.</br></br>Mr. Johnston said that the Government aimed to establish a stabilized price line and then to hold it. He insisted, however, that “trying to push all prices back to pre-Korea days would be like trying to push toothpaste back into a tube.”</br></br>Eric Johnston using a chart during hearing on proposals to change the Defen ice Stabilizer Michael V. DiSalle is listening to th„ PrOT,nmj^ 11 pose rollbacks on a great many items, he declared, but was not promising any general rollback to levels of last June.

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THE FINANCIAL WEEK: Traders Surprised by Sharp Rebound in Stock Market -- Volume Remains Small. For the stock market to act otherwise than most people anticipate, surprising many traders and investors, is an old story in Wall Street. However, last week’s performance showed such marked inconsistencies that it raised many questions among professionals.</br></br>The sharp decline in stock prices on June 8 and 9 was the first reaction worthy of the name since last September. After such a shake-out—5.05 points to be exact—it was only normal to expect one of two things: either a period of consolidation with plenty of backing and filling, or a continuation of the decline to a more favorable support level.</br></br>Instead, the stock market advanced sharply. The net gain for last week was 4.48 points, the sharpest advance since December, 1951. More important, however, was the fact that railroad shares were in the lead and for a while it appeared that there would be no limit to their move.</br></br>The railroad component of The New York Times index, which has failed consistently to penetrate its December, 1952, bull market high of 75.63, moved up on Wednesday to 73.17.</br></br>This made an advance of 12.46 points since last January. It was the best level for rail stocks since March, 1953.

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On 'Roseanne,' The Recession Is a Laugh Riot: TELEVISION VIEW President Bush would probably be thrilled to learn that the Conners are investing in a loose-meat business.. about the economy filling the nightly news, the talk shows and the campaign documentaries, it is a pleasure to announce that the Conners are having a good recession. Yes, Dan’s motorcycle shop conked out to begin the season, which sent Mark, his young helper, and daughter Becky eloping to Minneapolis, where a job awaits. Roseanne can’t get work of her own; there are squabbles over money, problems with mortgage payments and worries about the electricity bill. (The telephone still operates, or how would a sitcom get along?) But the main thing is that the wisecracks keep coming and ratings stay high.</br></br>Making jokes out of dire circumstances is a treasured American characteristic, a way to cope and no doubt a sign of mental health. Probably that is how Roseanne’s nearest and dearest, punchy from punchlines, manage to stay on this side of neurosis. “I knew we shouldn’t have gone into business for ourselves,” Roseanne says to Dan by way of commiseration. “There’s no one to steal from.”</br></br>But whereas in life, gags may be a cushion against hard knocks, in a sitcom the knocks are merely occasions for the gags. You can be sure that nothing too drastic will happen to the Conners; that’s the difference between a sitcom and a soap opera. When, a few weeks ago, Becky, that good girl, became upset enough to attack dear old Dad for ruining her life by his incompetence, it struck a shrill and false note, and in a moment the show went back to snappier tunes.</br></br>Be assured that Dan and Roseanne Conner will survive the tough times without losing too much sleep or a single pound. (I imagine Roseanne Arnold and John Goodman are contractually obligated by ABC to maintain a certain heft.) Even if they have to go through their savings, they will be yakking it up all the way from the bank. “1 like the kids poor,” cracks Roseanne. “That way they don’t fight to be the favorite.”</br></br>The reality quotient in “Roseanne” seems high: the house at Third and Delaware, Lan-ford, 111., Middle America, is busy and crowded ; the inmates can hardly stay out of one another’s way. Somebody is always doing the laundry or fixing a meal or gobbling junk food while staring at the tube. But this is camouflage. The world is not allowed to strike too deep. Spirits never flag, even when the cable service is in jeopardy. Roseanne is able to joke about not getting hired after waiting around for hours for an interview for a job that requires no skill or experience. The show is brilliant at coaxing audience empathy without risk of making anyone too depressed to watch.

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The Shifting Gold Role: Status as Monetary Tool Open as Bars to Trading Ease Effective Demonetization The Shifting Gold Role Interpretations Differ Big Sales Unlikely Matter of Action. First came the announcement last week by Arthur F. Burns, chairman of the Federal Reserve Board, that the United States and six European nations had agreed to end the two-tier gold system, which had prevented governments from buying or selling gold on the free market since 1968. Then came the state-, ment this week by</br></br>Analysis Secretary of the Treasury, that individual American citizens might soon be able to buy or sell gold—something they have not been able to do, since 1933 when Congress raised the buying price from $21 to $35 an ounce and called in private bullion holdings.</br></br>Does all this mean that gold is on the way back? Or, on the contrary, does it mean that gold is on its way out as a monetary instrument—even for governments?</br></br>The United States has contended that the metal is on its way out as a form of international money. But Europeans, on the whole, think just the opposite. They have insisted that for the foreseeable future gold must remain an integral part of the world monetary system.</br></br>Gold had been effectively demonetized by the now-dead 1968 two-tier system. With the official gold price at $42.22 an ounce and the free-market price in the neighborhood of $100, no government was willing to settle its debts with another government in gold at the official price.

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11 NATIONS WIDEN CREDIT TO AVERT CURRENCY CRISES: Immediate Effect of Action Is to Provide Further Support for Pound FRANCE NOT INCLUDED Hope Expressed That Move Will End All Speculation on Sterling Devaluation CREDIT EXTENDED TO BACK STERLING. WASHINGTON, Sept. 13 — The United States Federal Re- , serve Board, the Bank of England and the central banks of nine other countries announced today a major expansion of the credits they are willing to grant, each other to head off currency crises.</br></br>The most immediate effect of the announcement was to; provide further support, if needed, for the British pound. The central banks hope that the announcement will end ail Speculation about an imminent devaluation of the pound. -If the speculation ends, the credits will probably not have to be used, but they are now regarded as large enough in any event to meet even a heavy wave of pound selling.</br></br>[In London, financial circles were buoyed by the expansion in credit arrangements with the Federal Reserve Board and other central banks and . by news that British exports ■ set a record in August while: imports declined slightly. Page 63.]</br></br>Credit Lines Raised Besides the added support for, Britain, the announcement pro-, vides massive potential short* term credits for the United States, if they should ever be heeded. * ' ■ The Federal Reserve, the announcement said, has increased its mutual credit arrangements, known technically as “swaps,” with 10 other nations and the Bank for International Settlements from $2.8-billion to $4.5-billion.</br></br>Of this total,, $1.35-billion is with Britain, an increase of $600-million over the former line of credit. The announcement said that as of the end of last month Britain had drawn $300-million of this credit, leaving now more than $l-billion available.

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U.S. Trade Deficit Hits $7.1 Billion: Import Surge Fueled Record August Total U.S. Trade Deficit Hits $7.1 Billion. WASHINGTON, Sept. 27 (UPI) — The nation’s merchandise trade deficit soared to a record $7.1 billion in August, widened by a renewed American appetite for foreign-made goods, the Commerce Department reported today.</br></br>The August deficit followed a $2.3 billion trade shortfall in July and a $3.4 billion deficit in June.</br></br>The value of imports jumped 20.2 percent in August, to $24.6 billion, compared with the previous month, when imports declined 8.1 percent, the report said. The value of exports was down 2.9 percent in August, to $17.5 billion, compared with July, when the valueof exports was down 4.2 percent.</br></br>Trading patterns so far this year have suggested that the 1982 merchandise trade deficit could exceed last year’s $39.7 billion shortfall, Commerce Department officials said.</br></br>Mr. Lund said the import surge alone might also have set a record. “I’m impressed by the breadth of that rise,” he added.

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Treasury Issues Continue to Gain: Budget Statement Still Bolsters Rally. Financial Co. Commercial Paper Non-Financial Co. Commercial Paper Fed Holdings of Gov't Securities for Int’l Accounts... 398,326 152,042 227,365 R 401,517 R 148,619 R 224,589</br></br>The credit market rally continued yesterday, as prices of Treasury securities rose and interest rates dipped in moderately active trading. For the first time this week, dealers said, retail customers were significant buyers of securities.</br></br>“For now the market is under the trance of a budget accord,” one Government bond trader said, “and there is nothing of substance to get in the way of that feeling until we get to the employment numbers a week from Friday.”</br></br>Most market participants remain skeptical that Congress and the Bush Admnistration will come up with a meaningful package to reduce the Federal budget deficit. Nevertheless, President Bush’s statement earlier in the week that tax revenue increases will be needed as part of a comprehensive effort to cut the deficit is still ringing in Wall Street’s ears.</br></br>"Whether traders believe what Mr. Bush said or not is not the issue,” said Ward McCarthy, a managing director at Stone & McCarthy Research Associates, a Princeton, N.J., firm “At this juncture, they are afraid not to believe it. There is a clear nervousness about selling securities right now, especially when they are holding meetings in Washington to look for ways to cut the deficit.”

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ALBANY FORESEES NO RECESSION NOW: Higher Budget Reflects Hopes -- Income, Business Taxes Form Chief Bulwarks. ALBANY, Feb. 1 —Governor Dewey’s hopes of balancing his 1954-55 budget are keyed to the continued high level of prosperity in the year just past and a conviction that no serious economic recession is in sight.</br></br>To cover the expenditures he plans for the fiscal year beginning April 1, the Governor expects revenues of $1,125,750,000, which is more than the state has ever collected in any year and $40,000,000 more than last year’s record.</br></br>Mr. Dewey, In his budget today, is relying principally on two of the State's biggest moneymakers—the personal income tax and the corporation franchise tax —to produce this extra revenue. He estimates that the first will be $14,650,000 greater next year and the second $10,000,000 larger.</br></br>In both cases he is on relatively solid ground. These taxes, although paid in 1954-55, are based on. income received in 1953-1954, a period during which business activity and employment in the state reached record levels.</br></br>Of the twenty-four taxes and revenue sources listed in the Governor’s budget, only four are expected to produce less money in the 1954-55 fiscal year than the present estimate of what they will bring in during the year now closing.

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More Women Are Using Nassau Job Counselors: Inflation and Recession Force Many Wives to Bolster Their Family's Income. MINEOLA, L. I„ Feb. 13— Many women forced to return to work to help supplement their families’ incomes because of rising unemployment and economic hardships on Long Island are turning to Nassau County’s vocational guidance center for women.</br></br>The center has a staff of seven professional counselors who provide free service for housewives interested in returning to work and for those seeking to advance themselves in business.</br></br>The county facility is not an employment agency. Rather it channels its applicants toward career and job opportunities by providing information on the local job market, career guidance, vocational training and college programs.</br></br>The center is intended primarily to help women evaluate their potential and to find the best, solutions to their individual needs.</br></br>The demand for jobs as a result of economic recession can be seen in the number of women who have sought aid at the center in the last few years. In 1967, 300 women sought assistance at the center. In 1968, there were also 300 aided. In 1969 the number rose to 573 and in 1970 it dipped to 551. The number of women seeking employment at the center this year has increased to the point where there is a waiting list for interviews.

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NIXON SAYS PLAN TO REDUCE TAXES IS STILL NOT FIRM: Indicates Public Works Are Under Consideration as Anti-Recession Move STATEMENT A SURPRISE Indecision in Administration Disclosed Despite Prior Preference for Levy Cut NIXON SAYS PLAN ON TAX ISN'T FIRM. WASHINGTON, March 22-Vice President Richard M. jNixon said today that the Eisenhower Administration had not lyet made a choice between tax jrellef and major public works as a possible anti-recession | weapon.</br></br>President Eisenhower and other Administration spokesmen, including: the Vice President, have repeatedly indicated a preference for tax cuts if a continued economic decline should warrant drastic measures.</br></br>While Mr. Nixon restated his preference for broadly based tax reductions, the effect was to 1raise the possibility of a contrary decision by President Eisenhower.</br></br>Tells of Plans for Trip The Vice President called in reporters to tell about his plans to visit eight Latin-American countries April 26 to May 15 as President Eisenhower's representative. However, he answered questions on other subjects.</br></br>In reply to a question as to his role as a tax spokesman for the Administration, Mr. Nixon said that he was giving his personal views on policies not yet firmly established.

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Market Place: If You Gamble, Try U.S. Bonds. YOU’RE a gambler by instinct and you’re tired of a stock market that looks as idle as a painted ship upon a painted ocean. You want to play the fastest game in town.</br></br>Let’s see: there is always instant death for the masochist in the commodity markets. But then maybe that’s not your bag. Well then, if you really want to be with it—and you have a stomach strong as a pot-bellied stove —give the United States Government bond market a try.</br></br>Thats right, those dull-as-dishwasher securities offer a fast and dangerous play at a time of little excitement in stocks.</br></br>But let’s let Charles J. Miller, senior partner of D.H. Blair & Company tell us how it’s done. He warns in a letter right off the bat that you’ll be borrowing more money than you are ever likely to have and that it is a game that is “distinctly not for widows or timid souls.” “To be specific, one is permitted to purchase $ 1-million of United States Government bonds with an equity (cash down payment)' of $50,000 or 5 per cent. As a practical matter, most member firms would not be willing to give such an accommodation but would impose its own house rules . . . we would require 8 points of $80,000 per million.</br></br>“This not withstanding when one looks back at the years fluctuations even over so-called quiet periods in the bond market, one observes swings that could represent in relation to the small equity opportunities to make and lose as much as 100 to 150 per cent on your equity.”

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Senators Chastise Labor Officer on Jobless Aid. WASHINGTON, July 29 — Labor Department officials encountered ridicule and scorn from senators of both parties today when they emphatically restated the Reagan Administration’s opposition to an emergency program of unemployment insurance.</br></br>John F. Cogan, Assistant Secretary of Labor for policy and research, said that the Administration “strongly opposes” an extension of benefits. The proposed 13-week extension would be “inequitable, Ill-timed and costly,’ ’ he said.</br></br>Republican and Democratic members of the Senate Finance Committee, at a hearing, criticized the Administration’s position, saying it would force people to go on welfare when they exhausted their insurance benefits. Senator Max Baucus, Democrat of Montana, summarized the proceedings when he said, “The panel is not at all receptive to the Administration's views.”</br></br>The House Ways and Means Committee has twice approved legislation to extend unemployment compensation by up to 13 weeks. A similar bill was introduced in the Senate by Senator John Heinz, Republican of Pennsylvania, where thousands of steelworkers are unemployed. He said it was “a neces-1 sary and humane response to the hundreds of thousands of Americans who will soon be losing their eligibility’’ for benefits.</br></br>Senators expressed dismay when they perceived the Administration had no proposal to help people who had been unemployed for more than nine months.

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U.S. Stocks Lose Out To Europe's: Dow Declines 27.95; Focus Put on Rates. U.S. Stocks Post Losses As Focus Shifts Abroad. Money flowed into stocks in EurofJe yesterday, where currency turmoil has raised hopes for lower interest rates.</br></br>The shift hurt American stodKs, with the Dow Jones industrial a Visage falling 27.95, to 3,539.47. >•’, "The assumption by many y(|5. stock traders is that interest rates won’t continue to fall,” said Robert €. Walberg, equity analyst for MMS International.</br></br>"That usually means higher stock prices, so you’re beginning to see people moving money into those markets,” he continued. Germany’s refusal to lower its discount rate to help the sinking French franc set off the currency crisis and cast doubt about plans for future European currency union. It also pushed the major stock indexes of France, Britain, Spain and Italy higher, and that of Germany down.</br></br>The decline of the Dow yesterday pushed it further from Monday’s closing record high of 3,567.70. Some analysts expressed doubts whether sUch an easily spooked market could sustain the long-awaited, oft-deferred summer rally. Indeed, despite setting the record on Monday, the Dow lost</br></br>Weighed down by computer, drug and steel stocks, most other leading '' domestic market indicators also sank yesterday. The Standard & Poor’s ■ index of 500 stocks fell 2.11, to 448,13, ; and the Nasdaq composite dropped

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Short-Term Rates Up Sharply: Worries Cited On Fed Policy. Short-term interest rates rose sharply yesterday as bond traders’ concerns about Federal Reserve Board policy intentions and next week's $29 billion Treasury refunding overshadowed interpretations and reinterpretations of the latest trade deficit figures.</br></br>Rates on three-month Treasury bills were up nearly one-tenth of a percentage point, to 5.61 percent, while rates on six-month bills rose 14 basis points, or hundredths of a percentage point, also to 5.61 percent. The rate for one-year bills was 5.63 percent, up a tenth of a percentage point.</br></br>“People think the Fed may be up to something because it has allowed the , Federal funds rate to remain firm,” i one trader explained. That rate, which is what banks charge each other for overnight borrowings to meet reserve requirements, has been above 6 percent for the last two months. It traded between 6 3/16 and 6% yesterday.</br></br>Robert H. Schumacher, a vice president at Nomura Securities, said speculation about Fed intentions might have taken on an extra dimension because of Thursday’s report of a rise in borrowings at the Fed’s discount window. "There’s always some new gimmick the market wants to key in on, and the latest, along with trade, seems to be borrowed reserves,” he said.</br></br>The credit markets initially responded favorably to a smaller-than-expected trade deficit for December and a large downward revision in the

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Dow Up 4.07 for 5th Gain in Row; Amex Value Index at a High Again: Superior Oil Up 3 Points DOW UP FOR 5TH DAY; AMEX AT HIGH AGAIN Class A Resorts Stock Rises. On the eve of President Carter’s long-; awaited message on inflation, energy and : the declining dollar, the stock market j pushed higher yesterday for its fifth con-1 secutive advance.</br></br>I In the absence of any untoward news j developments, stock prices forged steadily higher yesterday during the afternoon.</br></br>| The Dow .lones industrials finished at ! 773.65 with a gain of 4.07 points. In the four previous sessions, the blue-chip indicator had gained more than 17 points, lifting above the 740-760 band of resistance marked by some technical analysts on stock charts.</br></br>Meanwhile, underscoring the continuing interest of investors in secondary-rank issues, the marxet value index of the American Stock Exchange forged a new high for the fifth day in a row. The index, started in September 1973, rose 0.46 to j close at 132.27.</br></br>I Natural gas stocks performed as one I of the best groups on the New York Stock Exchange. Superior Oil, after gain- : ing 6 points on Friday, moved up 3 points to 254. Superior, which holds ; | vast reserves of natural gas both in the 1 j United States and Canada, benefited from ; an article in a current publication.

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LARGE BOND ISSUE SOLD BY FLORIDA: $39-Million Moved on Third Try Below 5 1/2 % Ceiling LARGE BOND ISSUE SOLD BY FLORIDA. In a financing made possible by the decline in interest rates this month, the .Florida State j Board of Education, which had tried twice before, successfully sold yesterday $39-million of bonds at a cost below a 5 y2 per cent interest rate ceiling.</br></br>The state agency originally1 had scheduled the bonds for, sale on April 1, but it failed to attract any bids. It rescheduled the financing a week later, and again failed to sell the bonds.</br></br>Yesterday, a syndicate of investment banking firms managed by Smith, Barney & Co., Inc.; Lehman Brothers; Blyth & Co., Inc., and Halsey, Stuart &l Co., Inc., won the bonds byi making a bid that will mean an interest cost of 5.4195 per cent. A White, Weld & Co. group bid would have meant “It scared the living daylights out of us, i’ll tell you,” Floyd Christian of the Florida agency admitted yesterday in talking about the two earlier attempts to sell the bonds. On June 30, the utility tax supporting the bonds expires.</br></br>The winning underwriting group offered the bonds, which are rated Aa, at prices to yield from 4:20 per cent on those due in 1970 up to 5.60 per cent for those maturing in 1998.</br></br>Sales were rapid, and the unsold balance at the end of the afternoon was reported at $6.4-million. Some $4.5-million of the sales, however, consisted of short maturities of the issue to investment bankers who plan to sell them at a price to cut their yields 10 basis points.

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Governor Signs Bills on $407-Million Fiscal Package for State. ■ ‘ ALBANY, Jan. 5 — Governor 'Rockefeller today signed a SW-tnillion package of tax Ms voted by the Legislature yesterday. The package is aimed at : easing a 15-month budget deficit of $1.5-billlon as well qs lightening the workload of the 1972 Legislature.</br></br>The lawmakers perfunctorily Convened the 195th regular session today, which came on the heels of the special session called by the Governor on the utate’s finances. The regular Session was quickly adjourned and the legislators departed the Cqpitol until Monday.</br></br>Many legislators believe that enactment of the tax package — which, in effect, condensed the normal bartering and haggling over budgets into seven days instead of the weeks it usually takes — would make their work easier during the election-year session.</br></br>But there were those who predicted plenty of wrangling on how the new budget — which is expected to be $7.9-billion, the same as the current one — would be allocated.</br></br>And there was still unhappiness among others who believed that the Legislature had abrogated its responsibilities by granting Mr. Rockefeller a 15-month revenue package without first having had the details of his spending program for the

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Bloomberg and City Unions Draw the Lines, Far Apart: Mayor Insists That Concessions Precede Raises Showdown Over Contracts. John V. Lindsay's tenure was defined by strikes, the first one hitting only hours after he was sworn in. Edward I. Koch and Rudolph W. Giuliani started off talking tough, but ended up awarding hefty raises to municipal workers that left the city in a bind when recessions hit. David N. Dinkins squeezed some of the same unions that had helped elect him and then never got a chance to serve a second term.</br></br>The success or failure of a New York City mayor, or at least his reputation as a leader or wimp, hinges in part on his finesse in handling labor negotiations Now it is Michael R. Bloomberg’s turn.</br></br>In hard times especially, the outcome of contract talks can mean the difference between a clean city and a filthy city, a happy work force and a foot-dragging work force. It can mean stability for taxpayers or a heavier burden. Next year it could even mean tax relief.</br></br>For the last year, Mr. Bloomberg's attention was focused on the city's budget deficit. But meanwhile, contracts for all but 7,500 of the city's 286,000 full- and part-time employees — including New York City's teachers and principals, police officers and firefighters, correction officers and sanitation workers — have expired.</br></br>Mr. Bloomberg has kicked off the negotiations with an aggressive opening line: there will be no wage increases, unless the unions agree to changes in work rules or benefits that save enough money to pay for the raises.

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Will the Hard-Core Starbucks Customer Pay More? The Chain Plans to Find Out. SAN FRANCISCO - As the recession wears on and fewer people are splurging at Starbucks, the coffee chain’s response is to raise prices. On Thursday, Star-bucks stores in several cities started charging up to 30 cents more for some specialty beverages, though the company is charging less for some basic drinks.</br></br>The move comes as Starbucks toes a tricky line between remaining a premium brand while retaining price-sensitive customers who can buy cheaper coffee at other shops. This summer, Starbucks has been fending off competition from McDonald’s, which has introduced a new iine of lower-priced espresso drinks that have proved popular.</br></br>The price of sugary Starbucks concoctions with several ingredients, like Frappuccinos and caramel macchiatos, will increase an average 10 cents to 15 cents, but</br></br>The price of the most popular beverages — 12-ounce lattes and brewed coffees — will decrease an average of 5 cents to 15 cents. This is the first time Starbucks has lowered prices, she said. It last increased the price of drinks by 5 cents in 2007.</br></br>"The goal of it is really to continue to find ways to balance the value we’re providing for bur customers with the business responsibilities,” Ms. O’Neil said. In the three months ending June 28, sales at Starbucks stores open at least a year fell 5 percent from the same period the year before. Starbucks is also experimenting with other ways to make more money, like selling alcoholic beverages in a few stores in Seattle.

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Fed to Curb Banks' Funds Transfers: Fed Seeks to Limit Banks' Electronic Overdrafts. Concerned about the electronic payment systems that banks use to send money around the nation, the Federal Reserve Board is moving to introduce a sweeping change in how the systems are operated.</br></br>The Fed has asked the banks to set limits voluntarily on how much they may overdraw their accounts at the Fed when using Fedwire, a system of computers and Telex connections operated by the central bank. Fedwire is the principal means by which banks exchange funds in transactions</br></br>The self-determined limits on overdrafts, which have been criticized by Wall Street analysts, are due at the Fed tomorrow and are scheduled to take effect in March. Each bank’s limit will also apply to the negative balances it builds up in other wire-transfer systems, such as the Clearing House Interbank Payments System, or Chips, the primary means by which banks exchange money internationally.</br></br>The negative balances, known formally as daylight overdrafts, arise because of timing differences between when banks receive and make payments to each other. Daylight overdrafts also occur because of longstanding practices in the industry — for example, banks generally return overnight borrowings to other banks in the morning but carry negative balances at the Fed until they borrow again at day’s end.</br></br>In recent years, as the volume of money sent around the nation has mushroomed — to more than $3.9 trillion weekly, the size of the annual gross national product — banks’ ' negative balances in electronic payment systems have also grown

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A Late Slide For the Year Of the Rally. Thursday brought a glimmer of hope, as optimism over the strength of economic recovery helped keep markets near their highest levels in 14 months.</br></br>When the final bell of 2009 sounded, shares were down substantially for the day, falling sharply in the final minutes. But that did little to damp enthusiasm over what has been a stunning comeback year for the stock market. The Dow Jones industrial average climbed 18.8 percent in 2009, the Standard & Poor’s 500-stock index rose 23.5 percent, and the technology-dominated Nasdaq was up 43.9 percent — the largest gains since 2003.</br></br>Still, stocks remain sharply below their pre-recession records; the Dow, for instance, is about 26 percent lower than its October 2007 highs.</br></br>Light trading exacerbated Thursday’s declines. The Dow ended the day down 120.46 points, or 1.14 percent, at 10,428.05 points.</br></br>The broader Standard & Poor’s 500-stock index fell 11.32 points, 1 percent, to 1,115.10 points, and the technology-dominated Nasdaq was down 22.13 points, 0.97 percent, at 2,269.15 points.

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Someone Should Have Checked This Summer's Market for Vital Signs. Not since Bill Clinton was skirmishing with Newt Gingrich has the market shown as little volatility as it did in the third quarter, which just ended. That is true no matter how volatility is measured, and whether one looks at the performance of the Standard & Poor’s index of 500 stocks or at the more volatile Nasdaq composite index.</br></br>Not all excitement is good, of course, and few investors yearn for a return to the high volatility days of the market plunge after the highs were reached in 2000. But whether one is buying shares or selling them short in hopes of a decline, it is not easy to make money if prices hardly move.</br></br>Moreover, periods of low volatility are often followed by market gains that are smaller than those following periods of high volatility. That could be a negative indicator for those hoping for rapid gains in prices in coming months.</br></br>The charts at right show one measure of volatility — the percentage of days that the S.& P. and Nasdaq indexes move sharply, measured from close to close. In the quarter just ended, the Nasdaq composite moved at least 1 percent on 19 percent of its days, nearly once a week on average. That was the lowest figure since the fourth quarter of 1996, and a small fraction of the excitement in the second quarter of 2000, when the Nasdaq peaked and began to move south. Back then, the average moved at least 1 percent on 86 percent of the days, meaning many weeks never had a dull day. There were no 2 percent moves in the quarter just ended, something that has not happened since the second quarter of 1995.</br></br>For the S.& P., the movements have always been smaller, but the trend is the same. In the quarter just ended, only 5 percent of days had

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Prestigious Co-ops Nearing Price Peaks of 4 Years Ago: Prices Up at the Top. Amid a surge of interest from Wall Street buyers, the price of a prestigious Park Avenue address Is now approaching levels not seen since the real estate market peaked four years ago and then tumbled along with a declining stock market, brokers say.</br></br>A study of the most expensive coops in the city, typically large prewar apartments on the Upper East Side and Central Park with grand views, found that average prices of high-end apartments, defined as those costing more than $4 million, surged nearly 15 percent last year, to $7.2 million. That figure was 5 percent below the peak of the market in 2000.</br></br>The study's author, Kirk Henckels, director of private brokerage at Stribling & Associates, said the sales of these luxury homes accelerated throughout the fall, with prices rising further in agreements reached in the last few weeks in exclusive Fifth Avenue and Park Avenue buildings.</br></br>The study identified 91 luxury coops that sold for more than $4 million last year, a number that included 15 higher-priced trophy homes selling for more than $10 million each. There were more sales in the last half of 2003 than during the first half of 2000, when the market hit a peak, Mr. Henckels said. “In co-ops the pressure has continued," he said. “We have some outstanding town houses available, but in co-ops there is precious little left to sell.”</br></br>This finding is supported by other brokers, who say that a surge of buyers, buoyed by end-of-year Wall Street bonuses, entered the market intent on taking advantage of extraordinarily low interest rates. Interest rates have long been credited with driving up demand for lower-priced housing across the city and the country, but the link to the luxury housing market has traditionally been more tenuous.

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ANXIETIES ON ASIA PUSH U.S. STOCKS DOWN NEARLY 3%: WEEK IS WORST SINCE '89 But Bonds Jump as Investors Expect Economy to Slow and Fed to Cut Rates THE MARKETS STOCKS & BONDS New Wave of Asia Anxiety Pushes U.S. Stocks Down. The stock market suffered its worst drop since the plunge of late October yesterday, driven down by huge waves of selling on fear over how deeply America’s economy could be hurt by Asia’s festering financial crisis.</br></br>The Dow Jones industrial average fell 222.20 points, or 2.9 percent. Equally large declines in broader measures gave the stock market its steepest weekly loss since 1989.</br></br>The concern over Asia has been ebbing and flowing since the crisis began last summer. At the first peak of worry the Dow fell 554 points, or 7.2 percent, on Oct. 27. Yesterday’s decline came after the apparent stabilization of Asia last month gave way to sharp new declines in stocks and currencies.</br></br>More and more investors are worried that American corporations will increasingly feel the pinch of a global economic slowdown caused by the rapid deterioration in Asia.</br></br>But while Asia is bad news for stocks, it is good for investors in the bond market, where interest rates are determined. That could signal good news for homeowners and consumers, who will probably feel the benefits of lower rates on loans.

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Academic Capitalism Helps Make Ends Meet: As old ways prove inadequate, colleges fry high-risk, high-return projects. ABOUT four years ago Lawrence University, in Appleton, Wis., faced a problem many small investors face daily: how to get a better return on its money. The 14 percent the university had been earning on its endowment amounted to less than ID percent after Inflation — not enough, officials of the 1,100-student liberal-arts school said at the time, to keep up with the school’s rising operating costs.</br></br>So Lawrence trustees voted to form a new company, the Lawrence Corporation of Wisconsin, whose mission would be to invest in high-risk, high-re turn projects. The new corporation immediately plowed $2 million of the college’s money into a shopping-center project and a health-care investment. It currently is looking into financing corporate takeovers and high technology.</br></br>“The intent is to operate more independently and more quickly than the trustees,” said G. Gregory Fahlund, Lawrence’s director of external affairs. “What we want to do is have at least a portion of our endowment where it can score rather than be in a position where we are prudent and conservative and discover that our endowment is just keeping up with Inflation.”</br></br>Indeed, Lawrence University has been told by its investment advisers that in return for the added risk it is taking, the school can expect returns exceeding 30 percent a year.</br></br>Also in unorthodox college fashion, Lawrence raised $10 million for a new sports complex recently through the sale of industrial revenue bonds. Because the bonds are tax-exempt, Lawrence will pay only 8.5 percent interest on them, enabling it to keep its own money invested at 14 percent.

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AUTHOR IACOCCA: INSTANT BEST SELLER. • The day the Ford board of directors cut the company’s quarterly dividend 20 cents, the members’ yearly fees were raised from $40,000 to $47,000, effectively “neutralizing ’’ their potential opposition.</br></br>• A colleague and friend of 25 years never spoke to Mr. lacocca again after he was fired from the Ford presidency and did not attend the funeral of Mr. Iacocca’s wife, Mary, last year. "I never mentioned him by name,” Mr. lacocca said in a recent interview, one of the few he has given since publication of his book. “I didn’t want his name in the index.” • In 1975 Mr. Ford, seeing ruinous times ahead because of rising gasoline prices, gutted the company’s product-planning programs by slashing $2 billion from the budget. His action delayed the introduction of the Tempo and Topaz, small, front-wheel- drive cars that went on sale in 1983, by up to five years. This left the company without an appealing product in the late 1970’s, when buyers desperately wanted small cars.</br></br>• The president’s office was a virtual hallway through which executives trooped freely, coffee cups in hand. • The company had poor coordination — people in engineering had no communication with those in manufacturing — and almost no central financial controls. It also had an unsold inventory of 80,000 cars, which soon ballooned to 100,000.</br></br>To understand Mr. lacocca and his book, it helps to know something of his background and about Detroit.</br></br>Chatting one evening recently In the Chrysler Corporation’s New York offices, on the 54th floor of the Pan American Building, he sipped a highball as an antidote to a week’s work and a Friday night drive through New York traffic. A tall, fit-looking man, whose hobbies are reading and listening to jazz records, he spoke bluntly against the code of “parochial Detroit." He condemned the rule of the “Grosse Pointe-Bloomfield Hills establishment” that “you should never talk about peers, a former boss,” that “you don’t speak out against the king. He’s powerful, he’s got money.” “They’re not an immigrant,” said Mr. Iaoccca, who is not one either, but thinks of himself as one. “They can talk that way.”

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A Slowdown in a Sensitive Sector May Bode Ill for Stocks, or Worse. TH E most volatile part of the American economy has slowed significantly in the last nine months, providing a warning of both recession and lower stock prices.</br></br>The measure looks at growth in three broad areas that arc the most sensitive to economic changes and to interest rales — consumer purchases of durable goods, residential construction spending and business investment in equipment and computer software. They can be called the sensitive sector.</br></br>In the fourth quarter of 2005. and again in the second quarter of this year, that part of the economy actually shrank, although a strong first-quarter performance meant that even that sector was up a little for the nine months.</br></br>As the accompanying charts show, the sensitive sector is more than three times as volatile as the rest of the economy. But it has usually been a better performer. Since the end of 1954, a period of more than half a century, the sensitive sector has grown at an average rate of 4.6 percent a year, compared with 3 percent for the rest of the economy.</br></br>Over time, a good indicator of bolh the economy and the stock market has been the relative performance of the two parts of the economy over nine-month periods. Most of the time, Ihe sensitive sector does belter. But when that sector turns In poorer performance after a sustained period of outperformancc. It Is a warning. And that is what has happened. Over the nine months through June, the sensitive sector grew at an annual rate of 2.1 percent, while the rest grew at a rate of 3,7 percent.

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Economic Scene: Growing Worries On Dollar's Rise. THE changing business climate, with the economy slowing, the inflation rate flattening and interest rates edging down, has called forth a burst of speculative buying of stocks, bonds and dollars. But the superstrong dollar is worrying business executives with goods to sell abroad and Government officials who fear that a rising dollar will, sooner or later, worsen the United States trade deficit and add to protectionist pressures.</br></br>In Japan this week, a senior Finance Ministry official called the sharp rise in the dollar against the yen a one-shot phenomenon, caused by speculation and not by a real change of economic fundamentals, by which he apparently meant the persistent United States trade and current-account deficits and the big American budget deficit. Bank of Japan sources said the bank was prepared to carry out concerted intervention with other central banks to stem a further yen decline and dollar rise.</br></br>But in West Germany, the Bundesbank failed to raise its discount or Lombard rate, which would have eased upward pressure on the dollar. "I’m surprised,” said Stephen Axilrod, a former Fed official who is now vice chairman of Nikko Securities in the United States. "I don't know what they're waiting for.”</br></br>The dollar got another upward thrust from reports of a sharp improvement of the trade deficit in March and from an apparent slowdown in the rate of increase in producer and consumer prices. Although the overall Consumer Price Index for April rose seven-tenths of 1 percent, most of the rise resulted from higher energy costs; without energy, it would have risen only two-tenths of 1 percent.</br></br>Furthermore, political uncertainties abroad make dollar assets look like a safe haven for surplus funds. Despite foreign complaints about United States economic "fundamentals,” capital is still flooding into dollar assets from abroad. The Japanese are loaded with capital both from their huge domestic savings, now likely to be augmented by a new tax on consumption, and from their big trade surpluses. Yen, marks, pounds and other currencies are drawn here by the spread between American and foreign real interest rates and by the perceived cheapness of United States assets, including everything from factories to real estate to stocks and bonds and just plain dollars — for holding, not spending.

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Speculating in Zero-Coupon Bonds: They appreciate more than conventional bonds when rates drop, but their value can fall sharply if rates rise.. Active, independent investors choose Fidelity Brokerage for our low commissions plus the fast and accurate service that makes Fidelity a leader in discount brokerage.</br></br>Fidelity Brokerage can help you save up to 76% on stock trades vs. full-cost broker commissions? After all, why pay for advice you don’t need?</br></br>You can call our no-pressure traders anytime to initiate a trade, check a price quote, or obtain current market information.</br></br>Unlike most other discount brokers, Fidelity employees will handle all aspects of the service process. We’ll mail your confirmation within 24 hours of execution, and we can confirm most trades through our own order system while you’re still on the phone. Call now and receive a free Brokerage Handbook with your new account •Based on the maximum commission charged by a representative full-cost broker during an April 1989 survey. Minimum commission $36. Fidelity Brokerage Services, Inc. Member NYSE/SIPC. 161 Devonshire St., Boston, MA 02110.</br></br>Chef required for Manhattan restaurant specializing in pancakes, omelets, souffles, salads, sandwiches and soups.

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Market Place Nervous Action In Bank Stocks. A series of headlines emphasizing the somewhat hostile environment in which banks have had to operate of late has had a predictable effect in the stock market. Shares of many leading banks are at their lowest ebbs in over a year.</br></br>Bank-stock analysts are concerned, but there is nothing unusual in that. Analysts naturally like to see the stocks they follow go higher.</br></br>But there is considerable feeling among the analysts that investor reaction to the bad news—specially yesterday’s news that the Franklin National Bank might need the Federal Reserve System’s assistance in solving a liquidity crisis —has been overdone.</br></br>Bank stocks setting new lows yesterday include the Bank of New York, which dropped % to 28'/2; Bankers Trust, off % at 45; Chase Manhattan, off % to 41 y2:, Chemical Bank, down 1% at 37%, and the First Chicago Corporation, down 1 at 6214.</br></br>Meanwhile, J. P. Morgan gained % to 60%. Manufacturers Hanover added 1% to 32% recovering some ground lost on Friday, when it was down 4%.

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U.S. JOBLESS RATE CLIMBS PAST 6%, HIGHEST SINCE '03: A BIG JUMP IN AUGUST Candidates Cite Report and Call for a New Stimulus Plan. The unemployment rate jumped to 6.1 percent in August, its highest level in five years, pushing the troubles of American workers to the center of the political debate as the presidential campaign enters its final weeks.</br></br>For the eighth consecutive month, the nation’s employers shed jobs, 84,000 last month, the Bureau of Labor Statistics reported Friday. In all, 605,000 jobs have been lost since January. The steady rise in unemployment, from 5.7 percent in July and 5 percent in April, is one that many economists associate with recession.</br></br>Both presidential candidates — Senators Barack Obama and John McCain — said through spokesmen that they would favor an economic stimulus package from Congress this fail.</br></br>Mr. Obama jumped on the latest report, declaring that Democrats would do more to help struggling Americans. “You would think that George Bush and his potential Republican successor, John McCain, would be spending a lot of time worrying about the economy and all these jobs that are being lost on their watch,” he said at a campaign stop in Duryea, Pa. But, “if you watched the Republican National Convention over the last three days, you wouldn’t know that we have the highest unemployment rate in five years.’’</br></br>Mr. McCain issued a brief statement in which he said that “Americans are hurting and we must act to create jobs.” He add-Continued on Page A15 ed that "as president, 1 will enact a jobs for America economic plan that creates jobs, helps small businesses, expands opportunities and opens markets to American goods.”

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PAY RISES CALLED INFLATION CAUSE: Saulnier Scores Senate Bill to Limit Price Increases Through U. S. Action PAY RISES CALLED INFLATION CAUSE. WASHINGTON, April 23— The chairman of President Eisenhower’s Council of Economic Advisers today laid the major blame for- the most recent period of inflation on excessive wage increases.</br></br>Raymond J. Saulnier, the chairman, made his assertion as part of a letter to the Senate opposing a bill aimed at curbing price increases in "adminis-tered-price” industries by requiring advance notification and justification before the Federal Trade Commission.</br></br>The administered-price theory holds that most of the recent upward movement of prices can be accounted for by “concentrated" heavy industries, which have the power to raise prices regardless of demand. Gardiner</br></br>Mr. Saulnier’s letter was written to Senator Estes Kefauver, Democrat of Tennessee, chairman of the Senate Antitrust subcommittee, which is considering the bill. It was introduced by Senator Joseph C. O'Mahoney, Democrat of Wyoming, who termed it "the first step to bring inflation under control."</br></br>The Saulnier letter, with its economic and political implications for the forthcoming steel wage negotiations, was only one of a series of developments on the first day of hearings on the bill: •SDavid J. McDonald, president of the United Steelworkers, opposed the bill and presented a lengthy justification for his union’s contention that (the industry can and should

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Heating The Floor, Not the Air. AFTER n winter Hint seemed more unpredictable than even the stock mar-Lket, the time may finally hove come for homeowners to shut down their gas-, oll-nnd electricity-guzzling healing systems.</br></br>While most people would rather not think about thermostats, radiators, registers and fuel-oil deliveries tor nt least five or six months, homing experts say that now Is the Ideal lime for any major renovation or replacement of a home’s heating system. And by many accounts, one of best ways to heat a house is with n radiant healing system.</br></br>“For comfort, ease of maintenance, value and energy-efficiency, you ’re not going to bent radiant heat," sold David Lovesky, the owner of C&N Mechanical, a heating and air-conditioning contractor In Bloomfield, Conn. "We’re talking about a system that can cost up to 40 percent less to operate thun a conventional warm-nlr system and comfort that Is unsurpassed."</br></br>Mr. Lovesky explained that with conventional heating systems — Including forced-wnrm-nir, hot-water baseboard, steam- or hot-water radiator and electric baseboard — the temperature In the house Is maintained by Iteatlng up the nlr. Since air Is not very good at retaining heat, however, and since the air In a room tends to move around quite a bit, homing n house by using wnrmcd air can result In drafts and uneven heating.</br></br>"What happens with a radiant system Is that Instead of heating air, we're heating objects," Mr. Lovesky said. "Basically, the whole floor becomes a radiator.’' He said that with a radiant heating system, water or other liquid that has been heated is circulated through hydronic tubing Imbedded In the floor or attached to Its underside. The floor, then, transfers heat to objects on It — sofns, tables, chairs, appliances, draperies and even walls — with the warmth In the room concentrated where the people are.

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Economic Scene: Money Policy: Hard Choices. PRESIDENT CARTER and his top advisers feel that the Presidnt had "absolutely no choice,” as Ambassador Robert S. Strauss put it, but to nominate a tough and independent monetary conservative like Paul A. Volcker as chairman of the Federal Reserve Board.</br></br>But they recognize that, if the economy goes into an even deeper recession than they currently are expecting, the Administration’s economic policy could face a cruel dilemma — and the President could face a grave political problem — over whether to stick with a restrictive monetary policy with unemployment mounting in an election year.</br></br>Nevertheless, the White House went with Mr. Volcker to reassure the markets that the dollar was not headed for a still-worse nosedive. In the view of Mr. Carter’s advisers, the dollar has become a critical measure of the American economy’s performance— and a determinant of how not just foreigners but the American people themselves feel about their country. In the short run, Mr. Volcker has unquestionably been worth some huge multiple of his weight in gold, even at more than $300 an ounce.</br></br>There was general recognition at the top of the Carter Administration that, in the midst of the developing dollar crisis, monetary policy would be more con- strained for the immediate future than under normal circumstances, no matter who was chairman of the Fed—Mr. Volcker, his predecessor; G. William Miller, who is the newly designated Secretary of the Treasury, or anyone else.</br></br>"In the context of a renewed attack on the dollar,” Stuart E. Eizenstat, the President’s assistant for doomestic affairs and policy, said in an interview, “if we hadntt moved boldly, the nation would never have got to the long-term dilemma, no matter who the new Federal Reserve chairman was.”

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STOCKS WlPE OUT MONDAY'S LOSSES: Market, Led by Blue Chips, Makes Largest Advance Since Last Summer DOW-JONES RISES 11.80 Turnover Continues Heavy at 9.34 Million Shares -869 Issues Climb STOCKS WIPE OUT MONDAY'S LOSSES. The stock market bounced back spectacularly yesterday aftef Monday’s decline. Blue-chip issues came up with solid gains to lead the list in the most impressive one-day rise since last summer.</br></br>Volume of 9.34 million shares was unusually heavy, although it did not match Monday’s explosive trading. On Monday, 11.44 million shares changed hands on the New York Stock Exchange after the Federal Reserve Board had risked the wrath of the Johnson Administration with an interest-rate increase over the weekend.</br></br>I The Dow-Jones average of 30 industrials finished with a gain of 11.80 at 951.33, easily erasing Monday's drop of 6.57. It was the biggest daily gain since the 16.63 advance on June 30. Tire wild fluctuations of Monday, when prices plummeted in the first hour and then climbed swiftly in the afternoon, were not repeated yesterday. Instead, a heavy inflow of buying orders engulfed the market from the opening to the closing gong.</br></br>The Dow-Jones industrial list opened with a rise of 3.17 and continued upward, remaining more than 11 points higher from noon onward. Among the 30 issues that make up the Dow average, 24 were up, five down and one unchanged. This was one of the best performances of jthis blue-chip list all year, j Standard & Poor's composite | index of 500 stocks, embracing |more than four-fifths of listed values, added 0.80 at 91.39. The New York Times weighted average of 50 stocks made it unanimous with a 7.61 rise to</br></br>Among the 1,420 issues traded, advances far outnumbered declines—869 to 336—while 215 stocks finished unchanged.

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Bonds Decline on Solid Retail Sales Report. Treasury securities tumbled in heavy trading yesterday after the Commerce Department reported stronger-than-expected retail sales for February, feeding investor concern that the economy is growing fast enough to accelerate inflation and cause the Federal Reserve to push up interest rates.</br></br>The Fed’s policy-setting Federal Open Market Committee is set to meet on March 25, and the chances of a rate increase seem to be improving.</br></br>- Maureen Mooney, an analyst with Govpx Inc., a bond pricing service, said the value of securities traded went above $100 billion for only the fifth time this year. Yesterday’s sell-off sent the price of the benchmark 30-year bond, by which many lending rates are set, down %, to 85%, pushing its yield up to 6.95 percent, ii percent on Sept. 24, a result of the e1 market building in an expected quarts ter-point rate rise.</br></br>•Estimated dally average, Tolerate ••Realized dollar amount rises with Inflation •••Municipal Bond Indox, The Bond Buyer Sources: Salomon Brothers and Telerata tor Treasury's bellwether bonds, notes and bills sales rose five-tenths of 1 percent. Sales in January were revised to reflect a gain of 1.5 percent, the biggest in more than a year.</br></br>Adding to concerns about growth and bolstering the case for a Fed rate increase was a separate report that first-time claims for unemployment insurance fell by 5,000 in the week ended March 8 to 307,000; analysts had expected a drop of 2,000. One report that did not point to robust growth was the Atlanta Fed’s survey of business activity, which showed a nationwide business slip for manufacturers based in the

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Fed Is Vague On Timing; Stocks Jump. serve were concerned about a credit squeeze and uncertain about the direction of the economy when they decided to lower interest rates last month, but they made no clear predictions on the timing of any future cuts, minutes of the meeting showed yesterday.</br></br>Wall Street responded with a rally, with the Dow Jones industrial average jumping more than 40 points just minutes after the report’s afternoon release. Fed officials predicted that inflation would remain steady in the fourth quarter, which cheered investors who were hoping for additional rate cuts after last month’s aggressive half-point reduction.</br></br>But Fed policy makers, clearly worried by sudden downturns in the market, took unusual measures at the Sept. 18 meeting to show they were uncertain about the lasting effects of the summer's financial shocks.</br></br>In a rare move, the members decided not to discuss relative inflation risks in their statement that accompanied the rate cut, noting that “such a characterization could give the mistaken impression that the committee was more certain about the economic outlook than was in fact the case.”</br></br>Analysts said yesterday that the Fed was likely to lower rates again but were mixed about whether that would happen this Continued on Page 5 month. “The market still thinks that the Fed is going to cut," said Ryan D. Larson, senior equity trader at Voyageur Asset Management. “I don't necessarily think you’re going to see a cut at the.October meeting.”

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Foreclosures Push States To Try a Mix Of Solutions. By JOHN LELAND as me teuerai govermnent cie-balcs responses to tile foreclosure crisis, stoles nre experi-mcntlng with n brand range of.so-lulions, Including emergency lonns and agreements to limit high interest rates, The result is n rapidly changing patchwork of local' approaches, some far-reaching, others modest, according Jo it survey Issued Tuesday by ,tho Pew Charitable TVusts. ;</br></br>Among other measures, 20 states Itave created intervention programs, 13 have set up counseling hot lines, 1<I Itave assembled task forces and 9 itave established funds for emergency loans or refinance loans, totaling $450 million. ^ -I "States Itave Itnd to step Into the void because the federal government has not moved," said Tobi Walker, a senior program officer at Pew. "The nature of the problem changes quickly; lliuf’s why it’s important to look,', to states, which can be far more Innovative. They can adapt solutions to local circumstances.” ,</br></br>The states face an uphill battle, in part because of resistance from the lending industry to new regulation. Only nine states, require mortgage brokers to cpn-sider the best Interests of borrowers when making loans, and only seven require lenders to assess borrowers’ ability to repay.</br></br>At the same time, state governments are hamstrung by declining revenues us a result of pie housing meltdown.</br></br>to represent borrowers free if charge, and the state set up a hpt line to direct borrowers to .'the lawyers. ' "We need more help from the federal government," said Gdv. Ted Strickland of Ohio, a Demb-crat. "The states are in troub/d. States do not have resources 6r mechanisms to deal with this1 ik-sue." .''']

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UNCERTAIN TONE HOLDS IN STOCKS: Average Drops 0.59 Point -- 575 Issues Advance and 479 Decline VOLUME IS AT 5,170,000 Lack of Pattern in Market Puzzling to Observers -Business News Mixed UNCERTAIN TONE HOLDS IN STOCKS. The stock market failed yesterday to break loose from its indecisiveness. After much churning, prices on the New York Stock Exchange ended down a bit on average.</br></br>Trading was heavy and the ticker tape ran late on several occasions. It was behind in reporting transactions at the close when the market was staging something of a rally.</br></br>The best gains were shown by^pirline, distilling and specialty issues. A good deal of profit taking was evident in recent favorites.</br></br>The latest business news was mixed and this may have given pause to observers of the economic scene—both professional and amateur—who have been forecasting a quick recovery from the recession. Auto production this week will be the highest for any week so far this year, the factory work week lengthened in April and the Government reported a “substantial improvement” in the gold-and-dollar drain during the first quarter. However, consumer spending — counted on heavily to spark an economic recovery—• dipped in April.</br></br>The market’s behavior—failing to set a definite pattern— appeared somewhat baffling to many observers. One analyst tried to describe just what was going on this way: are spectacular, while others have lost much of their pep. Some of the conventional stocks are doing well, with others entirely neglected. The thing that has not changed is the public’s appetite for capital gains. That is as keen as ever, as evidenced by the effectiveness of buying suggestions in the services and the demand for exotic new issues.”

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Audubon's Birds Return For Rarae Aves at $6,960: In Paperback?. With the spring'blrd^yaSfttQtfi^^v printed words, but ing, season in the offing, a 372-page written studv by kind of inflation has come to Audubon, “A Synopsis of the the bird-book:,^industry. A Birds of North America,’1, is subsidiary cifr Harcourt Bracesent free to purchasers, who Jovanovich is selling a big so far have been mostly (39V2 inches by 26y2 inches), dealers and private individu-four-volume reprint edition of als. A handful of libraries Jotojlathes Audubon’s mas- have bought sets.</br></br>- terwork, “The Birds of Amer- what made the project so ica,” for $6,960, plus tax. expensive was "the ‘elaborate “But it really isn’t all that color reproduction rjvprk, the expensive,’’ its publisher, size of the book and the fact Frederick Rappaport, insisted that it’s such a short printing yesterday. And economy- run,” Mr. Rappaport said. But minded booklovers can al-he and many of cus- __ .</br></br>isThfff expensive Tcw.p^ Frederick Rappaport, publisher, sits in front of a book of Audubon prints, dffeM°tbTtfflfe time that Audubon’s originaF engravings have been reprinted all together in full color and in full size.</br></br>"People are very interested in it, but when we tell them how much it costs, they get sort of ill,” Nat Simons, a salesman, said yesterday. “They always ask when it w|l^ be available in paper- ActUally, .Johnson has no paperback : plans,' -and even, laying hands on the, hard-coyer edition. ,;'s~ .a. time-con-suhisiiig proposition. The first twb volumes are available to buyers with a month’s delay, and the latter two are expected to be ready later this year.</br></br>“It’s a hand-bound thing, and that’s the problem,” Mr. Rappaport said. "There’s some little old binder sitting over in Holland binding up these books, and if he gets sick a week, there’s a week’s delay.”

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Suffolk Politicians Expect Corruption to Be '75 Issue: Integrity May Be Suffolk Issue. HAUPPAUGE—The political tone of the 1975 campaign in Suffolk County is being shaped not oniy by such issues as the performance of officeholders and the rising unemployment rate but also by the actions of this traditionally Republican county’s new District Attorney, the first Democrat to be "elected to the office.</br></br>Last week, a high official in the District Attorney’s office, said: ’’This year’s campaign will be heavily influenced not bv what happens in Blue £oint or Holbrook but what happens in Henry’s office.”</br></br>Blue Point is where the headquarters of the Suffolk Republican party is situated and Holbrook is where the county’s Democrats are based. ’’Henry” is Henry F. O’Brien, the Suffolk District</br></br>Attorney. In his campaign last year, when he overwhelmingly defeated Henry G. Wenzel 3d, the incumbent Republican, Mr. O’Brien, a former Republican, repeatedly promised that he would seek political indictments to combat what he charged was massive corruption in the county.</br></br>So far, there has been one major indictment—that of Jack Wallice, Suffolk’s watchdog for real estate matters, who was charged recently with soliciting and receiving

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A Frightening Momentum: Almost a Million New Jobless, and More to Come. In presenting his budget for fiscal 1976, President Ford said he believed that if Congress adopted his proposals, they would mean average unemployment of 8.1 percent in 1975 and 7.9 per cent in 1976; the consumer price index would rise an average of 11.3 percent in 1975 and.7.8 per cent in 1976. The President's projections went further, as shown in the accompanying charts.</br></br>The nation is in its worst economic crisis since World War II, thrust there by an enormous increase in the number of. Americans who have no jobs, and the potential for still greater dis-• location is being magnified by the vacillation and futility that have characterized the search for solutions.</br></br>The unemployment rate reached 8.2 per cent in January, meaning that 1950,000 persons were added to the rolls and that at least 7,500,000 persons are now jobless, the inflation rate continues at 11 per cent, showing .only small signs of relenting, diminishing the purchasing power of employed and unemployed alike. President Ford has presented what he believes to be the best budget possible .for the times—and in it he declares, in -effect, that the only way out of the .'situation is to suffer that unemployment and continuing inflation this year 'and next.</br></br>■■ There are no clear answers to all the important questions: How long will the precipitous recession last? What part of the population will suffer most, either by deliberate policy, by uncontrollable economic force, or both? Do the Democrats in Congress, the Republican President or economic experts have the solution to ap economic condition, inflation and recession at once, that none has confronted before? Does anyone?</br></br>Except for the painful course proposed by Mr. Ford in the budget, there is neither comprehensiveness nor clarity in Washington’s view of the future. A few days after disclosing .his economic plans, the President said he was “concerned” about the new unemployment figures and was ready to revise the plans if it got worse. Democrats in control of Congress acted on the economy with unusual speed, but not in passing their own total program, only in thwarting parts of the President’s; the House went on a ten-day vacation, delaying action by at least that long on a tax relief bill.

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Unemployment Rate Jumped Last Month On Surge of Layoffs: Jobless Rate in November Jumped Sharply, to 5.7% Consumer Borrowing The Labor Picture in November. By DAVID LEONHARDT A vast wave of job cuts In November sent the unemployment rate up sharply, to 5.7 percent from 5.4 percent the previous month, the government reported yesterday, suggesting that the current recession will be more painful than many forecasters had expected.</br></br>300,000 jobs in November and have cut nearly a million jobs in the last three months, the fastest pace of reductions in more than 20 years. The layoffs have come in an unusually wide array of businesses — from the normally stable service sector to typically volatile manufacturing industries — as profits have plunged across corporate America The report, depicting a nation m which millions of families are struggling more than they have in nearly a decade, added more heat to the debate in Washington between Republicans and Democrats over competing economic stimulus packages. And despite the bleaker outlook, negotiations broke off yesterday in Congress in partisan rancor. [Page B6 1 “This is another miserable employment report," Brian M Jones, an economist at Salomon Smith Barney, said. “There's really nothing good you can say about it." employment rate, which is adjusted to take account of normal seasonal variations, has risen from 3 9 percent, a 30-year low, to its highest point now in more than six years</br></br>"Today’s unemployment numbers are troubling, and they underscore that we must act to ensure America’s economic security,” President Bush said in a statement released by the White House Mr Bush said the Senate should quickly pass a bill consisting mostly of tax cuts for businesses and well-off Americans, which Republicans say will increase Investment and lift the economy. Democrats want to increase benefits for jobless workers more than Republicans do, saying those people need help and they would quickly spend any money they received.</br></br>"People who have lost their jobs are starting to lose hope," said Senator Tom Daschle of South Dakota, the majority leader</br></br>The dismal jobs numbers also made another Federal Reserve cut in interest rates a near-certainty when the Fed’s policy-making group meets on Tuesday, analysts predicted Since January, the Fed has reduced its crucial short-term interest rate, which affects a wide variety of credit card, small-business and home equity loans, a total of 10 times, lowering it from 6 5 percent to 2 percent.

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RATES ARE HIGHERIN CREDIT MARKET: Rise Ascribed to Lack of Moves to Curb Inflation Interest Rates in Credit Markets Continue to Rise New Bond Issues. Interest rates continued to climb yesterday in the absence of action to tighten economic controls. Trading, however, was described as light and the bond market recovered some of its losses late in the day following reports that the Administration was studying moves to cool off the business boom through higher taxes. Her-, bert Stein,, the Credit President’s chief suggested one such; measure might be a reduction in the tax credit allowed corporations on capital outlays.</br></br>Money-market . rates were mostly higher, including those on Treasury bills and some bankers’ acceptances and commercial paper.</br></br>Certificates of deposit, however, steadied at 7.80 per cent for three-month maturities and! specialists said dealers seemed more willing than they were last week to take some inventory at that level. Some banks here were reported to have paid 7.35 and at least one in! Chicago paid 7%.</br></br>Federal funds, overnight loans of uncommitted bank reserves, traded in a 6% to 7% per cent range, with the Reserve raising some eyebrows by draining money from the system at the relatively high lower level.</br></br>'Its latest Bond Outlook called mesent levels “tenuous” and "further price declines can expected in both tax-ex-pts and corporates.” >“•» ,h‘ fr“ ”arkf; Sited and8 markets Kn&ish, The triple-A securities fell ft , see little incentive for new 98% asked, where the y\e Investment.” was increased to 7.46. The First A major test of the top-quali-oo ’ account Pat$ taxable market will come "•587> this morning when the Bell

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Day Is Frenetic As Investors Start Looking For Bargains: STOCKS Day Is Frenetic as Investors Look for Bargains. In another day of stock market sound and fury, the Nasdaq composite index took a pounding, but the broader market averages closed with only modest losses.</br></br>Portfolio managers, encouraged by the action, said investors seemed to shift out of a sell-everything mode and were beginning once again to differentiate between stocks that are cheap and those that are not.</br></br>At the close of trading, the Nasdaq composite index had fallen 50.15 points, or 3.9 percent, while the Dow Jones industrial average ended the day flat, at 8,186.31. The Standard & Poor's 500-stock index lost 4.75 points, or about a half of 1 percent. With about 2.5 billion shares changing hands on the New York Stock Exchange, trading was frenetic.</br></br>“I was sort of encouraged by what happened in the market because it’s giving us the first indication that we’re beginning to see differentiation,” said Charles I. Clough, of Clough Capital Partners in Boston. "Until now, it’s been massive liquidation, week after week. The Nasdaq gave out, but that’s where the economy is most weak and where there is still some washout to occur.”</br></br>Stocks were in free fall by midafternoon, with the Dow industrials down 245 points and the Nasdaq hitting a new intraday low of 1,220.93, a loss of 70 points. Both indexes recovered, but the Nasdaq could not struggle back to its previous closing level.

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Lambs Among the Bulls and Bears. ing queasiness, that it's not the cozy, inviting place depicted by their brokers. This sudden cooling of middle-class ardor may well slow the small investor’s striking evolution from the pariah of the stock market to its motive force, a trend that gathered strength with the mutual fund boom.</br></br>A retrospective glance reflects the shift. In the late 19th century, market panics came regularly, at roughly 10-^ear intervals, shaking out all but tardened speculators. Leery of common stock, magnates like John D. Rockefeller Sr. packed their portfolios with gilt-edged railroad bonds. In :hose halcyon days, selling a piece of lypothetical future earnings (stocks) rather than guaranteed interest payments (bonds) was regarded as falling just shy of snake-oil salesmanship. The creation of United States Steel and other trusts electrified the public, yet J. Pierpont Morgan couldn’t, in good conscience, recommend common stock to small investors.</br></br>Nevertheless, some Wall Street graybeards of the 1900's were scan-lalized that the House of Morgan lent its august imprimatur to stock Flotations. Individual investors saw Wall Street as the raffish haunt of swindlers and slick city operators, and they either shied away from the market altogether or were the gullible rubes whose late arrival signaled that a rally had crested.</br></br>Stocks began to shed their stigma with the Liberty Bond drives of World War I, which broadened the investing public. In the 1920’s, Wall Street made Its first audacious bid to entice small investors, with banks setting up securities affiliates that promoted stocks with the subtlety of carnival barkers and blurred the distinction between saving and speculating.</br></br>Ron Chernow, the author of “The House of Morgan’’ and “The Warburgs,’’ is currently writing a biography of John D. Rockefeller Sr.

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