[20400001] |After a bad start, Treasury bonds were buoyed by a late burst of buying to end modestly higher.

[20400002] |"The market was pretty dull" for most of the day, said Robert H. Chandross, vice president at Lloyds Bank PLC.
[20400003] |He said some investors were reluctant to plunge into the market ahead of several key economic indicators due this week, especially Friday's potentially market-moving employment report.

[20400004] |During the first hour of trading yesterday, prices fell as much as 1/4 point, or down about $2.50 for each $1,000 face amount.
[20400005] |But market activity was energized as investors started to view the lower price levels as attractive.
[20400006] |And the Treasury's $17.6 billion auction of short-term bills, which generated strong buying interest, helped to lift the bond market out of the doldrums.

[20400007] |"We saw good retail demand by small banks, individuals and institutions and that is one reason why the market advanced" late in the day, said Sung Won Sohn, senior vice president and chief economist at Norwest Corp., Minneapolis.
[20400008] |He said the change in sentiment also reflected perceptions that the slate of economic statistic due this week will be "conducive to a bond market rally."

[20400009] |The employment report, which will provide the first official measure of the economy's strength in October, is expected to show smaller gains in the generation of new jobs.
[20400010] |Other key economic indicators due this week include today's release of the September leading indicators index and new-home sales.
[20400011] |Tomorrow, the October purchasing managers report is due and on Thursday comes October chain-store sales.

[20400012] |Despite yesterday's modest bond market gains, economists say investors are anxious about the Treasury's huge quarterly refunding of government debt, the timing of which depends on Congressional efforts to raise the debt ceiling.
[20400013] |Although the Treasury will announce details of the November refunding tomorrow, it could be delayed if Congress and President Bush fail to increase the Treasury's borrowing capacity.
[20400014] |The debt ceiling is scheduled to fall to $2.8 trillion from $2.87 trillion at midnight tonight.

[20400015] |The Treasury's benchmark 30-year bond rose 1/8 point.
[20400016] |Mortgage-backed securities were up less than 1/8 point and investment-grade corporate bonds were unchanged.

[20400017] |Strong demand for New York City's $813 million general obligation bonds propped up the municipal market.
[20400018] |Traders said most municipal bonds ended 1/2 point higher.

[20400019] |The New York City issue included $757 million of tax-exempt bonds priced to yield between 6.50% to 7.88%, depending on the maturity.
[20400020] |The $56 million of New York's taxable general obligation bonds were priced to yield between 9.125% to 9.90%.

[20400021] |As expected, the longer-term tax-exempt New York bonds had yields nearly as high as those on taxable long-term Treasury bonds.
[20400022] |The yield on the benchmark 30-year Treasury bond ended yesterday at about 7.92%.
[20400023] |Bond dealers said the rates for the long-term tax-exempt New York City bonds were among the highest, as a percentage of Treasury rates, for any New York City issue in recent memory.

[20400024] |A spokesman for New York City Comptroller Harrison Goldin said the high rates reflect investors concerns about the city's financial health and political uncertainties.

[20400025] |New York bonds, which have been hammered in recent weeks on the pending supply and reports that the city's economy is growing weaker, rose 1/2 point yesterday.

[20400026] |Treasury Securities

[20400027] |Treasury bonds ended slightly higher in light trading.

[20400028] |The benchmark 30-year bond ended at 102 7/32 to yield 7.92%, compared with Friday's price of 102 2/32 to yield 7.93%.
[20400029] |The latest 10-year notes ended at about 100 16/32 to yield 7.90%, compared with 100 11/32 to yield 7.93% on Friday.

[20400030] |Short-term interest rates rose at the government's regular weekly Treasury-bill auction.
[20400031] |The average discount rate on three-month bills was 7.78% and the rate on six-month bills was 7.62%.
[20400032] |Those rates are up from 7.52% and 7.50%, respectively, at last week's auction.

[20400033] |Due to the Treasury's need to raise funds quickly before the current authority to issue debt expires at midnight tonight, yesterday's auction was structured differently from previous sales.

[20400034] |The Treasury bills sold yesterday settle today, rather than the standard settlement day of Thursday.
[20400035] |And because of the early settlement, the three-month bills actually have a 93-day maturity, and the six-month bills have an 184-day maturity.

[20400036] |Because of the early settlement, the Federal Reserve was unable to purchase bills for its system account.
[20400037] |However, analysts expect the Fed to buy Treasury bills that were auctioned yesterday in the secondary market.

[20400038] |The Treasury also held a hastily scheduled $2 billion sale of 51-cash management bills yesterday.

[20400039] |Here are details of yesterday's three-month and six-month bill auction:

[20400040] |Rates are determined by the difference between the purchase price and face value.
[20400041] |Thus, higher bidding narrows the investor's return while lower bidding widens it.
[20400042] |The percentage rates are calculated on a 360-day year, while the coupon equivalent yield is based on a 365-day year.

[20400043] |Both issues are dated Oct. 31.
[20400044] |The 13-week bills mature Feb. 1, and the 26-week bills mature May 3, 1990.

[20400045] |Here are details of yesterday's 51-day cash management bill auction:

[20400046] |Interest rate 8.07%
[20400047] |The bills are dated Oct. 31 and mature Dec. 21, 1989.

[20400048] |Corporate Issues

[20400049] |The junk bond prices of Western Union Corp. tumbled after the company said it won't proceed with an exchange offer to holders of its reset notes.

[20400050] |The Upper Saddle River, N.J., communications firm said it is considering alternatives to the restructuring of the senior secured notes because of changes in the high-yield market.

[20400051] |In June, Western Union was forced to reset the interest rate on the senior secured notes due in 1992 to 19 1/4% from 16 1/2%, a move which increased the firm's annual interest payments by $13.8 million.
[20400052] |Although the notes held at a price of 92 to 93 immediately after the reset, they started falling soon afterward.

[20400053] |Yesterday, Western Union's senior secured reset notes fell 3 3/4 points, or about $37.50 for each $1,000 face amount, to close at 50 1/4.
[20400054] |Other Western Union securities were also lower.
[20400055] |The company's 7.90% sinking fund debentures were quoted at a bid price of 14 1/4 and an offered price of 30, while the 10 3/4% subordinated debentures of 1997 were being bid for at 28 and offered at around 34 3/4.
[20400056] |The 10 3/4% debentures last traded at 35.

[20400057] |High-yield traders said spreads between the bid and offered prices of Western Union junk bonds have been widening for some time, and in certain cases, bids for Western Union securities are not available.

[20400058] |Elsewhere, prices of investment-grade and high-risk, high-yield junk bonds ended unchanged.

[20400059] |In the new-issue market for junk securities, underwriters at Salomon Brothers Inc. are expected to price today a $350 million junk bond offering by Beatrice Co..

[20400060] |The two-part issue consists of $200 million of senior subordinated reset notes maturing in 1997 and $150 million of subordinated floating rate notes also maturing in 1997.

[20400061] |Portfolio managers said expectations are for the issue to be priced at a discount with a coupon of 13 3/4% and a yield of about 14%.
[20400062] |The Chicago-based food and consumer goods concern was acquired in April 1986 in a $6.2 billion leveraged buy-out engineered by Kohlberg Kravis Roberts & Co.

[20400063] |Proceeds from the note sale will be used to repay a portion of the bank borrowings used by Beatrice to redeem its $526.3 million principal amount of increasing rate debentures in August.

[20400064] |Meanwhile, underwriters at Morgan Stanley & Co. are expected today to price a $350 million high-yield offering by Continental Cablevision Inc.
[20400065] |The senior subordinated debentures maturing in 2004 are targeted to be offered at a yield of between 12 5/8% to 12 3/4%.

[20400066] |Mortgage-Backed Securities

[20400067] |Mortgage securities ended 2/32 to 4/32 higher in light trading.

[20400068] |Ginnie Mae's 9% issue for November delivery finished at 98 1/2, up 4/32, and its 10% issue at 102 3/8, up 4/32.
[20400069] |Freddie Mac's 9% issue ended at 97 19/32, up 2/32.

[20400070] |In the derivative market, insurance companies have scaled back their purchases of Remic securities, or real estate mortgage investment conduits, as they assess potential claims from the recent California earthquake and hurricane in the Carolinas.
[20400071] |This could mean diminished issuance of derivative mortgage issues during the next few weeks.

[20400072] |Insurance companies have been major buyers of prepayment-protected planned amortization classes (PACs) during the past few months.
[20400073] |The PACs appeal to insurance companies and other investors because they have higher yields than topgrade corporate bonds and carry the guarantee of Freddie Mac and Fannie Mae, quasi-federal agencies.

[20400074] |In the asset-backed market, Beneficial Corp. offered $248 million of securities backed by home-equity loans, the second large deal in the past week.
[20400075] |Last week, a unit of MNC Financial Corp. offered $268 million of home-equity securities.

[20400076] |Both the MNC and Beneficial offering were underwritten by Merrill Lynch Capital Markets, the leading Wall Street firm in the home-equity securities market, which was created early this year.

[20400077] |Municipal Issues

[20400078] |The improved tone in the municipal market, largely an offshoot of the New York City sale's reception, helped municipal futures rebound from early lows, but the spread between the contract and Tbond futures continued to grow more negative.

[20400079] |The MOB spread, or difference between the municipal and T-bond futures contracts, has been near all-time lows in recent trading, driven basically by concerns that new-issue supply would overwhelm demand.

[20400080] |December municipal futures ended up 11/32 point to 92-14, having pulled off a morning low of 91-23 as cash municipals rebounded.
[20400081] |But front month T-bond futures settled the afternoon session up a slightly greater 13/32 at 99-04.

[20400082] |Foreign Bonds

[20400083] |British government bonds ended moderately higher, encouraged by a steadier pound and a rise in British stocks.
[20400084] |The benchmark 11 3/4% bond due 2003/2007 rose 10/32 to 111 14/32 to yield 10.14%, while the Treasury's 12% notes due 1995 rose 7/32 to 103 5/8 to yield 11.04%.

[20400085] |West German government bonds fell as much as 0.60 point in light, nervous trading.
[20400086] |The 7% Treasury bond due October 1999 ended off 0.60 point to 99.35 to yield 7.09%, while the 6 3/4% notes due 1994 fell 0.35 point to 97.25 to yield 7.45%.

[20400087] |Japanese government bonds continued to erode as the dollar remained resilient against the yen.
[20400088] |Japan's No. 111 4.6% bond due 1998 ended the day on brokers screens at 95.11 to yield 5.43%.

[20401001] |So-called cross-border acquisitions totaled $23.1 billion in the second quarter, down from $33.6 billion a year earlier, according to the accounting firm KPMG Peat Marwick.

[20401002] |In a cross-border transaction, the buyer is in a different region of the globe from the target.
[20401003] |Such transactions numbered 670 in the second quarter, up from 527 a year earlier.
[20401004] |However, the total value declined for deals of $100 million and up.

[20401005] |The downturn in total value may be only temporary, suggested Herb Adler, a KPMG Peat Marwick partner.
[20401006] |He explained, in part, that restructuring to prepare for the Common Market expansion due in 1992 "has become more of a strategic priority, both for companies inside and outside the European Community."

[20401007] |In the second quarter, middle-market cross-border transactions -- deals under $100 million each -- numbered 619 and totaled $6 billion, compared with 478 such transactions totaling $4.9 billion a year earlier, the firm said.

[20401008] |Large cross-border deals numbered 51 and totaled $17.1 billion in the second quarter, the firm added.
[20401009] |That compared with 49 such transactions totaling $28.7 billion as year earlier.

[20402001] |Rymer Foods Inc. said its board authorized the purchase of as many as 500,000 of its common stock purchase warrants at a price of $4 a warrant.

[20402002] |The food company, which has 720,000 warrants and about 2.9 million common shares outstanding, said it may increase the offer to purchase any or all warrants that are properly tendered.
[20402003] |A warrant permits a holder to acquire one share of common stock for $17.50 a share.
[20402004] |The warrants expire on Oct. 15, 1992, and may be called by the company at a price of $5.25.

[20402005] |The offer is scheduled to expire on Nov. 28, unless extended.
[20402006] |In New York Stock Exchange composite trading, Rymer closed yesterday at $10.875, down 12.5 cents.

[20403001] |Seasonal Stackup

[20403002] |Air-traffic problems, though often quite grim, This time of year leave us in stitches, When we notice around our airport A holding pattern for witches.

[20403003] |-- Edward F. Dempsey.

[20403004] |Double-Jointed

[20403005] |"I am beside myself," I've said in moments of heat, Without ever bothering To marvel at the feat.

[20403006] |-- Joshua Adams.

[20403007] |Humility Helper

[20403008] |The ultimate blow to the ego is learning that even your mistakes go unnoticed.

[20403009] |-- Ivern Ball.

[20404001] |Gen-Probe Inc., a biotechnology concern, said it signed a definitive agreement to be acquired by Chugai Pharmaceutical Co. of Tokyo for about $110 million, or almost double the market price of Gen-Probe's stock.

[20404002] |The move is sure to heighten concerns about increased Japanese investment in U.S. biotechnology firms.
[20404003] |It is also likely to bolster fears that the Japanese will use their foothold in U.S. biotechnology concerns to gain certain trade and competitive advantages.

[20404004] |Gen-Probe, an industry leader in the field of genetic probes, which is a new technology used in diagnostic tests, last year signed an agreement for Chugai to exclusively market its diagnostic products in Japan for infectious diseases and cancer.
[20404005] |Chugai agreed then to fund certain associated research and development costs.

[20404006] |That arrangement apparently has worked well, and Thomas A. Bologna, president and chief executive officer of Gen-Probe, founded in 1983, said the sale of the company means "we will be able to concentrate on running the business rather than always looking for sources of financing."
[20404007] |Chugai agreed to pay $6.25 a share for Gen-Probe's 17.6 million common shares outstanding on a fully diluted basis.

[20404008] |Yesterday, in national trading in the over-the-counter market, Gen-Probe common closed at $3.25 a share.

[20404009] |Because the U.S. leads in most areas of biotechnology -- largely because of research investment by the U.S. government -- the sale is sure to increase concerns that Japanese companies will buy American know-how and use it to obtain the upper hand in biotechnology trade and competition.

[20404010] |"The biotechnology firms may be setting up their own competitors," said Richard Godown, president of the Industrial Biotechnology Association.
[20404011] |He added that until now the Japanese have only acquired equity positions in U.S. biotechnology companies.
[20404012] |"They are piggybacking onto developed technology," he said.
[20404013] |During the past five years, Japanese concerns have invested in several of the U.S.'s 431 independent biotechnology companies.
[20404014] |Chugai has been one of the most active Japanese players in U.S. biotechnology companies; it has an equity investment in Genetics Institute Inc., Cambridge, Mass., and a joint-venture agreement with Upjohn Co., Kalamazoo, Mich.

[20404015] |The Japanese government, Mr. Godown said, has stated that it wants 10% to 11% of its gross national product to come from biotechnology products.
[20404016] |"It is becoming more of a horse race every day between the U.S. and Japan," he said, adding that some fear that as with the semiconductor, electronics, and automobile industries, Japanese companies will use U.S.-developed technology to gain trade advantages.

[20404017] |Mr. Bologna said the sale would allow Gen-Probe to speed up the development of new technology, and to more quickly apply existing technology to an array of diagnostic products the company wants to offer.

[20404018] |By 1988, when only 10 genetic probe-based tests of diagnostic infectious diseases of humans had been approved for marketing by the Food and Drug Administration, eight of them had been developed and sold by Gen-Probe.

[20404019] |Osamu Nagayama, deputy president of Chugai, which spends about 15% of its sales on research and development, was unable to pinpoint how much money Chugai would pump into Gen-Probe.
[20404020] |"We think Gen-Probe has technology important to people's health," he said, adding: "We think it is important for us to have such technology."
[20404021] |He and Mr. Bologna emphasized that both companies would gain technological knowledge through the sale of Gen-Probe, which will expand "significantly" as a result of the acquisition.

[20404022] |In 1988, Chugai had net income of $60 million on revenue of $991 million.
[20404023] |GenProbe had a net loss of $9.5 million on revenue of $5.8 million.
[20404024] |Recently, Gen-Probe received a broad U.S. patent for a technology that helps detect, identify and quantify non-viral organisms through the targeting of a form of genetic material called ribosomal RNA.

[20404025] |Among other things, Mr. Bologna said that the sale will facilitate Gen-Probe's marketing of a diagnostic test for acquired immune deficiency syndrome, or AIDS.

[20404026] |Chugai also will help Gen-Probe with its regulatory and marketing expertise in Asia, Mr. Bologna said.
[20404027] |The tender offer for Gen-Probe's shares is expected to begin next Monday, the company said.

[20405001] |It was supposed to be a routine courtesy call.

[20405002] |A half-dozen Soviet space officials, in Tokyo in July for an exhibit, stopped by to see their counterparts at the National Space Development Agency of Japan.
[20405003] |But after a few pleasantries, the Soviets unexpectedly got serious.
[20405004] |The Soviets have a world-leading space program, the guests noted.
[20405005] |Wouldn't the Japanese like a piece of it?
[20405006] |The visitors then listed technologies up for sale, including launch services and propulsion hardware.

[20405007] |"We were just surprised," says Tad Inada, NASDA's director for international affairs.
[20405008] |"Shocked."

[20405009] |That Moscow, with its dilapidated economic machine, would try to sell high technology to Japan, one of the world's high-tech leaders, sounds like a coals-to-Newcastle notion.
[20405010] |But "the Soviet Union has areas where it isn't behind Japan," says Mikhail Shapovalov of the Soviet Ministry of Foreign Economic Relations.
[20405011] |"We have obtained through the development of Cosmos {the Soviet space program} technologies you don't see anywhere else."

[20405012] |The sales pitch mightn't be as farfetched as it seems.
[20405013] |Japan-U.S. trade relations are bumpy these days, and some Japanese favor decreasing their reliance on U.S. technology in light of the FSX fighter-plane flap, when U.S. officials reversed an earlier decision and refused to share certain crucial fighter-plane technology.

[20405014] |And, despite its image as a technology superpower, Japan has a lot of weaknesses.
[20405015] |It's a world leader in semiconductors, but behind the U.S. in making the computers that use those chips.
[20405016] |It's a world leader in auto manufacturing, but its aviation industry is struggling, and its space program is years behind the U.S., the Europeans and the Soviets.

[20405017] |One question being debated in the Soviet Union is how to use the defense sector's research-and-production expertise in the rest of the economy.
[20405018] |Many plants that used to make military equipment are now being ordered to produce televisions, videocassette recorders, small tractors and food-processing machinery.
[20405019] |The Soviets also hope to make better use of their considerable expertise in theoretical science, which has helped them win twice as many Nobel science prizes as the Japanese.

[20405020] |Where they lag behind the Japanese is in turning the scientific inventiveness into improved production.
[20405021] |By contrast, the Japanese have proved adept at making use of Soviet inventions.
[20405022] |Kobe Steel Ltd. adopted Soviet casting technology in 1966 and used it for 14 years until it developed its own system.
[20405023] |Kawasaki Steel Corp. bought a Soviet steel-casting patent two years ago and has jointly developed the system with the Soviets.
[20405024] |In 1991, the Soviets will take a Japanese journalist into space, the first Japanese to go into orbit.

[20405025] |Soviet efforts to sell their technology abroad don't appear to worry the U.S., Japan's principal ally.
[20405026] |"We have never opposed the development of economic relations between our allies and the Soviet Union," says a State Department official.
[20405027] |"Frankly, I wouldn't expect the Japanese to get hooked on anybody's technology, least of all the Soviets."

[20405028] |Under Mikhail Gorbachev's perestroika, the Soviets have sought economic ties all over the world, including new export markets.
[20405029] |They believe technology is one of their best bets, and some Soviet officials say Moscow will even consider declassifying military know-how if the price is right.
[20405030] |The Soviets held export exhibitions that included high-tech items in New York and West Germany.
[20405031] |Last week, a Soviet delegation came to Japan to push more space technologies.

[20405032] |Japan is a major target for the Soviets.
[20405033] |In August, representatives of Keidanren, Japan's largest business organization, visited Moscow to explore exports and investments that would help the Soviet economy.
[20405034] |Out of the blue, the Soviet Chamber of Commerce handed over details on 59 technologies that the Japanese might want to buy.
[20405035] |These mainly involved such areas as materials -- advanced soldering machines, for example -- and medical developments derived from experimentation in space, such as artificial blood vessels.

[20405036] |A main motive is hard cash.
[20405037] |But, while the Soviets can't expect direct technology flow from Japan, they also hope to benefit from Japanese manufacturing expertise.
[20405038] |"The Soviet Union has a lot of know-how, but it has been difficult to put that into actual production because of various structural problems in the economy," says Mr. Shapovalov, the Foreign Ministry official.
[20405039] |The Soviets are "contemplating a flexible system under which it would be possible to develop {technology} jointly and even to market it jointly," he says.

[20405040] |Even if the Japanese find Soviet technology desirable, such discussions would be fraught with political complications.
[20405041] |Still stinging from the international backlash over the sale two years ago of sensitive military technology to the Soviets by a subsidiary of Japan's Toshiba Corp., many Japanese are eager to avoid appearing to help the Soviets in any way.
[20405042] |Another hurdle concerns Japan's attempts to persuade the Soviet Union to relinquish its post-World War II control of four islands north of Japan.

[20405043] |So far, the Soviets have provided only the sketchiest information about their technology and business plans.
[20405044] |And what they have shown isn't impressive.
[20405045] |"My impression is that there isn't anything which arouses our interest at first glance," says an official from Japan's Ministry of International Trade and Industry.

[20405046] |Peter Gumbel in Moscow contributed to this article.

[20406001] |(During its centennial year, The Wall Street Journal will report events of the past century that stand as milestones of American business history.)

[20406002] |MAY 1, 1975, SIGNALED A DISTRESSFUL May Day for securities houses, which were forced to end 183 years of charging fixed commissions.
[20406003] |It scared brokers, but most survived.

[20406004] |It took effect after seven years of bitter debate between the Securities and Exchange Commission and traders and exchanges.
[20406005] |Despite warnings from such leaders as former Federal Reserve Board Chairman William McChesney Martin that unfixed commissions would undo the industry, the SEC in September 1973 said full competition must start May l, 1975.

[20406006] |The timing for change was right.
[20406007] |Institutions had become active market players in the early 1970s and sought exchange seats to handle their own trades.
[20406008] |And the industry was rife with brokers trying to secure big client orders by using kickbacks, gifts, women and junkets.

[20406009] |Within three weeks of the 1975 end to fixed rates there were all-out price wars among brokers fighting for institutional business, with rate slashes of 35% to 60% below pre-May 1 levels.
[20406010] |Ray Garrett Jr., SEC chairman, said the "breadth and depth of the discounting is more than I expected."
[20406011] |Even a federal measure in June allowing houses to add research fees to their commissions didn't stop it.

[20406012] |Longer term, the impact is unclear.
[20406013] |The change prompted the rise of discount brokers and a reduction in securities research firms.
[20406014] |But there are currently more exchange members than in 1975, with the bigger houses gaining a larger share of total commissions.
[20406015] |Commissions, however, account for a smaller share of investment-house business as takeover advisory fees have soared.

[20406016] |Foreign stock markets, with which the U.S. is entwined, also have ended fixed commissions in recent years.
[20406017] |It came in London's "Big Bang" 1986 deregulation; and Toronto's "Little Bang" the same year.
[20406018] |Paris is currently phasing out fixed commissions under its "Le Petit Bang" plan.

[20407001] |President Bush said that three members of his cabinet will lead a presidential mission to Poland to gauge how the U.S. can help the new non-Communist government's economic changes.

[20407002] |Mr. Bush announced several weeks ago that he intended to send such a mission, composed of top government aides and business and labor leaders.
[20407003] |The mission will visit Poland from Nov. 29 to Dec. 2, the White House said.

[20407004] |In remarks at a White House ceremony marking Polish Heritage Month, Mr. Bush announced that Agriculture Secretary Clayton Yeutter, Commerce Secretary Robert Mosbacher and Labor Secretary Elizabeth Dole will lead the U.S. group.
[20407005] |Michael Boskin, chairman of the Council of Economic Advisers, also will be a member.

[20407006] |In addition, the White House said that Charles Harper, chairman of ConAgra Inc., and John McGillicuddy, chairman of Manufacturers Hanover Corp., will be among a group of at least 15 business and labor representatives in the presidential mission.
[20407007] |Mr. Bush said the group is to "focus on economic sectors where U.S. expertise and cooperation can indeed make a difference."

[20407008] |Mr. Bush has asked Congress to provide more than $400 million in economic aid and food grants for Poland's new government, but has been chided by Democrats for failing to do more.

[20408001] |Warner Communications Inc. is close to an agreement to back a new recorded music and music publishing company in partnership with Irving Azoff, who resigned in September as head of MCA Inc.'s MCA Records unit.

[20408002] |Warner and Mr. Azoff declined comment, as did MCA, where Mr. Azoff had also been discussing such a venture.
[20408003] |But record industry executives familiar with the talks said Mr. Azoff and Warner came to an agreement yesterday to form a 50-50 joint-venture company funded by Warner and run by Mr. Azoff.
[20408004] |Among other things, they said, Mr. Azoff would develop musical acts for a new record label.

[20408005] |The agreement is said to be similar to Warner's 50-50 partnership with record and movie producer David Geffen, whose films and records are distributed by the Warner Bros. studio and the Warner records unit.
[20408006] |Although Mr. Azoff won't produce films at first, it is possible that he could do so later, the sources said.

[20408007] |Like Mr. Geffen's arrangement, the venture gives Mr. Azoff a link to the world's largest and most successful record distributor; in the U.S. alone, Warner has a 40% share of the market, about double its nearest competitor, Sony Corp.'s CBS Records.
[20408008] |For Warner, meanwhile, it gives the company a second young partner with a finger on the pulse of the hottest trends in the music business.

[20408009] |The 41-year-old Mr. Azoff, a former rock 'n' roll manager, is credited with turning around MCA's once-moribund music division in his six years at the company.
[20408010] |But Mr. Azoff had been negotiating for more than a year to get out of his MCA contract, which expired in 1991.
[20408011] |Mr. Azoff reportedly was bored and frequently clashed with top MCA management over a number of issues such as compensation and business plans.

[20408012] |Mr. Azoff also was eager to return to a more entrepreneurial role in which he had a big financial stake in his own efforts.
[20408013] |In an interview at the time of his resignation from MCA, he said: "I'd rather build a company than run one.

[20409001] |Part of a Series}

[20409002] |Tom Panelli had a perfectly good reason for not using the $300 rowing machine he bought three years ago.
[20409003] |"I ate a bad tuna sandwich, got food poisoning and had to have a shot in my shoulder," he says, making it too painful to row.

[20409004] |The soreness, he admits, went away about a week after the shot.
[20409005] |Yet the rowing machine hasn't been touched since, even though he has moved it across the country with him twice.
[20409006] |A San Francisco lawyer, Mr. Panelli rowed religiously when he first got the machine, but, he complains, it left grease marks on his carpet, "and it was boring.
[20409007] |It's a horrible machine, actually.
[20409008] |I'm ashamed I own the stupid thing."

[20409009] |Mr. Panelli has plenty of company.
[20409010] |Nearly three-fourths of the people who own home exercise equipment don't use it as much as they planned, according to The Wall Street Journal's "American Way of Buying" survey.
[20409011] |The Roper Organization, which conducted the survey, said almost half of the exercise equipment owners found it duller than they expected.

[20409012] |It isn't just exercise gear that isn't getting a good workout.
[20409013] |The fitness craze itself has gone soft, the survey found.
[20409014] |Fewer people said they were working up a sweat with such activities as jogging, tennis, swimming and aerobics.
[20409015] |Half of those surveyed said they simply walk these days for exercise.

[20409016] |That's good news for marketers of walking shoes.
[20409017] |The survey also detected a bit more interest in golf, a positive sign for country clubs and golf club makers.

[20409018] |The survey's findings certainly aren't encouraging for marketers of health-club memberships, tennis rackets and home exercise equipment, but people's good intentions, if not their actions, are keeping sales of some fitness products healthy.

[20409019] |For instance, sales of treadmills, exercise bikes, stair climbers and the like are expected to rise 8% to about $1.52 billion this year, according to the National Sporting Goods Association, which sees the home market as one of the hottest growth areas for the 1990s.

[20409020] |But even that group knows some people don't use their machines as much as they should.
[20409021] |"The first excuse is they don't have enough time," says research director Thomas Doyle.
[20409022] |"The second is they don't have enough discipline."
[20409023] |With more than 15 million exercise bikes sold in the past five years, he adds, "a lot of garages, basements and attics must be populated with them."

[20409024] |Still, the average price of such bikes rose last year to $145.
[20409025] |Mr. Doyle predicts a trend toward fewer pieces of home exercise equipment being sold at higher prices.
[20409026] |Electronic gimmicks are key.
[20409027] |Premark International Inc., for example, peddles the M8.7sp Electronic Cycling Simulator, a $2,000 stationary cycle.
[20409028] |On a video screen, riders can see 30 different "rides," including urban, mountain and desert scenes, and check how many calories are burned a minute.

[20409029] |Nancy Igdaloff, who works in corporate payments at Bank of America in San Francisco, may be a good prospect for such a gizmo.
[20409030] |She's trying to sell a $150 exercise bike she bought about five years ago for her roommate.
[20409031] |But rather than write off home fitness equipment, she traded up: Ms. Igdaloff just paid about $900 for a fancier stationary bike, with a timer, dials showing average and maximum speeds and a comfortable seat that feels almost like a chair.
[20409032] |"I'm using it a lot," she says.
[20409033] |"I spent so much money that if I look at it, and I'm not on it, I feel guilty."

[20409034] |The poll points up some inconsistencies between what people say and what they do.
[20409035] |A surprising 78% of people said they exercise regularly, up from 73% in 1981.
[20409036] |This conjures up images of a nation full of trim, muscular folks, and suggests couch potatoes are out of season.
[20409037] |Of course, that isn't really the case.
[20409038] |The discrepancy may be because asking people about their fitness regime is a bit like inquiring about their love life.
[20409039] |They're bound to exaggerate.

[20409040] |"People say they swim, and that may mean they've been to the beach this year," says Krys Spain, research specialist for the President's Council on Physical Fitness and Sports.
[20409041] |"It's hard to know if people are responding truthfully.
[20409042] |People are too embarrassed to say they haven't done anything."

[20409043] |While she applauds the fact that more Americans are getting up from the television to stroll or garden, she says the percentage of Americans who do "real exercise to build the heart" is only 10% to 20%.
[20409044] |So many people fudge on answers about exercise, the president's council now uses specific criteria to determine what is considered vigorous: It must produce contractions of large muscle groups, must achieve 60% of maximum aerobic capacity and must be done three or more times a week for a minimum of 20 minutes.

[20409045] |One of the council's goals, set in 1980, was to see more than 60% of adults under 65 years of age getting vigorous exercise by 1990.
[20409046] |That target has been revised to 30% by the year 2000.

[20409047] |But even that goal may prove optimistic.
[20409048] |Of 14 activities, the Journal survey found that 12 -- including bicycling, skiing and swimming -- are being done by fewer Americans today than eight years ago.
[20409049] |Time pressures and the ebb of the fitness fad are cited as reasons for the decline.

[20409050] |Only walking and golf increased in popularity during the 1980s -- and only slightly.
[20409051] |Jeanette Traverso, a California lawyer, gave up running three times a week to play a weekly round of golf, finding it more social and serene.
[20409052] |It's an activity she feels she can do for life, and by pulling a golf cart, she still gets a good workout.
[20409053] |"I'm really wiped out after walking five hours," she says.

[20409054] |Most people said they exercise both for health and enjoyment.
[20409055] |"If you sit down all the time, you'll go stiff," says Joyce Hagood, a Roxboro, N.C., homemaker who walks several miles a week.
[20409056] |"And it's relaxing.
[20409057] |Sometimes, if you have a headache, you can go out and walk it right off."

[20409058] |Only about a quarter of the respondents said they exercise to lose weight.
[20409059] |Slightly more, like Leslie Sherren, a law librarian in San Francisco who attends dance aerobics five times a week, exercise to relieve stress.
[20409060] |"Working with lawyers," she says, "I need it."

[20409061] |But fully 90% of those polled felt they didn't need to belong to a health club.
[20409062] |"They're too crowded, and everybody's showing off," says Joel Bryant, a 22-year-old student from Pasadena, Calif.
[20409063] |"The guys are being macho, and the girls are walking around in little things.
[20409064] |They're not there to work out."

[20409065] |But at least they show up.
[20409066] |Nearly half of those who joined health clubs said they didn't use their membership as often as they planned.
[20409067] |Feeling they should devote more time to their families or their jobs, many yuppies are skipping their once-sacred workout.

[20409068] |Even so, the Association of Quality Clubs, a health-club trade group in Boston, says membership revenues will rise about 5% this year from last year's $5 billion.
[20409069] |A spokeswoman adds, however, that the group is considering offering "a behavior-modification course, similar to a smoking-cessation program, to teach people ways to stay with it."

[20409070] |There are die-hard bodies, of course.
[20409071] |The proprietor of Sante West, an aerobics studio in San Francisco's Marina district, which was hit hard by the earthquake, says, "People were going nuts the minute we opened," three days after the quake.
[20409072] |"The emotional aspect is so draining, they needed a good workout."

[20409073] |Perhaps the most disturbing finding is that the bowling alley may be an endangered American institution.
[20409074] |The survey reported the number of people who said they bowl regularly has fallen to just 8% from 17% in 1981.
[20409075] |The American Bowling Congress claims a higher percentage of the public bowls regularly, but concedes its membership has declined this decade.

[20409076] |To find out why, the group recently commissioned a study of the past 20 years of bowling-related research.
[20409077] |Three reasons were pinpointed: a preference for watching bowling and other sports on television rather than actually bowling, dowdy bowling centers, and dissatisfaction with bowling itself.
[20409078] |People who start bowling expecting it to be a pleasurable exercise "have been generally disappointed," the report said.

[20409079] |But not Richard Cottrell, a San Francisco cab driver who bowls in two weekly leagues.
[20409080] |He hit the lanes three years ago on the advice of his doctor.

[20409081] |"It's good exercise," he says.
[20409082] |"I can't do anything score-wise, but I like meeting the girls."
[20409083] |He says bowling helps him shed pounds, though that effort is sometimes thwarted by the fact that "when I'm drinking, I bowl better."
[20409084] |His Tuesday night team, the Leftovers, is in first place.

[20410001] |WPP GROUP'S Ogilvy & Mather expects profit margins to improve to 11.5% in 1990 in the U.S.
[20410002] |Yesterday's edition didn't specify where the improvement would take place.

[20411001] |Concerning your Sept. 29 article "Retailers Face Cutbacks, Uncertain Future": The outcome of our leveraged buyout is looking very positive.
[20411002] |Unlike most of the other retailers mentioned in the story, Jos. A. Bank Clothiers Inc. is not in serious financial problems.
[20411003] |We did experience some difficulties with the initial LBO terms and, as your article made clear, successfully restructured our debt earlier this year, something those other retailers have yet to accomplish.

[20411004] |Your were on target regarding industry problems, but wide of the mark in portraying the financial health of this company.

[20411005] |Chairman and CEO Jos. A. Bank Clothiers Inc. Owings Mills, Md.

[20412001] |Private housing starts in Japan were unchanged in September from a year earlier at 144,610 units, the Construction Ministry said.

[20412002] |The flat report followed a four-month string of declines.
[20412003] |The down trend was partly the result of tighter credit sparked by a discount rate increase by the Bank of Japan in May.

[20412004] |The central bank also unexpectedly raised the base rate by half a percentage point to 3.75% Oct. 11 as part of an inflation-fighting move that indirectly increases interest rates charged on new home construction loans.

[20413001] |If there's somethin' strange in your neighborhood . . .

[20413002] |If there's something' weird and it don't look good.

[20413003] |Who ya gonna call?

[20413004] |For starters, some people call Ed and Lorraine Warren.

[20413005] |When it comes to busting ghosts, the Monroe, Conn., couple are perfect demons.
[20413006] |They claim to have busted spirits, poltergeists and other spooks in hundreds of houses around the country.
[20413007] |They say they now get three or four "legitimate" calls a week from people harried by haunts.
[20413008] |"I firmly believe in angels, devils and ghosts," says Mr. Warren, whose business card identifies him as a "demonologist."

[20413009] |If psychics don't work, but your house still seems haunted, you can call any one of a swelling band of skeptics such as Richard Busch.
[20413010] |A professional magician and musician, he heads the Pittsburgh branch of the Committee for the Scientific Investigation of the Paranormal.
[20413011] |Mr. Busch says there is a scientific explanation for all haunts, and he can even tell you how to encourage the spirits.
[20413012] |"All you have to do is eat a big pizza, and then go to bed," he says.
[20413013] |"You'll have weird dreams, too."

[20413014] |Either way, the ghostbusting business is going like gangbusters.
[20413015] |Tales of haunts and horrors are proliferating beyond the nation's Elm Streets and Amityvilles.
[20413016] |"I get calls nearly every day from people who have ghosts in their house," says Raymond Hyman, a skeptical psychology professor at the University of Oregon.

[20413017] |In a public opinion poll published in the October issue of Parents Magazine, a third of those queried said they believe that ghosts or spirits make themselves known to people.
[20413018] |"The movies, the books, the tabloids -- even Nancy Reagan is boosting this stuff," says Paul Kurtz, a philosophy professor at the State University of New York at Buffalo, who heads the Committee for the Scientific Investigation of the Paranormal.
[20413019] |The committee, formed in 1967, now has 60 chapters around the world.

[20413020] |The spirits, of course, could hardly care less whether people do or don't believe in them.
[20413021] |They don't even give a nod to human sensibilities by celebrating Halloween.
[20413022] |For the spooks it's just another day of ectoplasmic business as usual, ghostbusters say; the holiday seems to occasion no unusual number of ghost reports.

[20413023] |One of the busiest ghostbusters is Robert Baker, a 68-year-old semi-retired University of Kentucky psychology professor whose bushy gray eyebrows arch at the mere mention of a ghost.
[20413024] |Mr. Baker says he has personally bested more than 50 haunts, from aliens to poltergeists.

[20413025] |Mr. Baker heads the Kentucky Association of Science Educators and Skeptics.
[20413026] |Like Hollywood's Ghostbusters, Kentucky's stand ready to roll when haunts get out of hand.
[20413027] |But they don't careen around in an old Cadillac, wear funny suits or blast away at slimy spirits.
[20413028] |Mr. Baker drives a 1987 Chevy and usually wears a tweed jacket on his ghostbusting forays.

[20413029] |"I've never met a ghost that couldn't be explained away by perfectly natural means," he says.

[20413030] |When a Louisville woman complained that a ghost was haunting her attic, Mr. Baker discovered a rat dragging a trap across the rafters.

[20413031] |A foul-smelling demon supposedly plagued a house in Mannington, Ky.
[20413032] |Mr. Baker found an opening under the house that led to a fume-filled coal mine.
[20413033] |When the weather cools, Mr. Baker says, hobos often hole up in abandoned houses.
[20413034] |"People see activity in there, and the next thing you know, you've got a haunting," he says.

[20413035] |On a recent afternoon, Mr. Baker and a reporter go ghost-busting, visiting Kathleen Stinnett, a Lexington woman who has phoned the University of Kentucky to report mysterious happenings in her house.
[20413036] |Mrs. Stinnett says she never believed in ghosts before, but lately her vacuum cleaner turned itself on, a telephone flew off its stand, doors slammed inexplicably, and she heard footsteps in her empty kitchen.

[20413037] |"I was doing the laundry and nearly broke my neck running upstairs to see who was there, and it was nobody," she says, eyes wide at the recollection.

[20413038] |Mr. Baker hears her out, pokes around a bit, asks a few questions and proposes some explanations.
[20413039] |Of the self-starting vacuum cleaner, he says: "Could be Cuddles, {Mrs. Stinnett's dog}."
[20413040] |The flying telephone: "You tangle the base cord around a chair leg, and the receiver does seem to fly off."
[20413041] |The ghostly footsteps: "Interstate 64 is a block away, and heavy traffic can sure set a house to vibrating."

[20413042] |"I'm not sure he's explained everything," Mrs. Stinnett says grudgingly.
[20413043] |"There are some things that have gone on here that nobody can explain," she says.
[20413044] |Mr. Baker promises to return if the haunting continues.

[20413045] |For especially stubborn haunts, Mr. Baker carries a secret weapon, a vial of cornstarch.
[20413046] |"I tell people it's the groundup bones of saints," he says.
[20413047] |"I sprinkle a little around and tell the demons to leave.
[20413048] |It's reassuring, and it usually works."

[20413049] |Oregon's Mr. Hyman has investigated claims of flying cats, apparitions and bouncing chandeliers and has come up with a plausible explanation, he says, for every one.
[20413050] |"Invariably," he says, "eyewitnesses are untrustworthy."

[20413051] |Two years ago, a Canadian reader bet Omni Magazine $1,000 that it couldn't debunk the uncanny goings-on in "the Oregon Vortex," a former Indian burial ground in southern Oregon.
[20413052] |To viewers from a distance, visitors to the spot seemed to shrink disproportionately, relative to the background.
[20413053] |The magazine called in Mr. Hyman as a consultant.

[20413054] |He showed up with a carpenter's level, carefully measured every surface and showed how the apparent shrinkage was caused by the perspective.
[20413055] |"A very striking illusion," Mr. Hyman says now, his voice dripping with skepticism, "but an illusion nevertheless."
[20413056] |The Canadian wound up writing a check.

[20413057] |The Rev. Alphonsus Trabold, a theology professor and exorcism expert at St. Bonaventure University in Olean, N.Y., frequently is asked to exorcise unruly spirits, and he often obliges.
[20413058] |"On certain occasions a spirit could be earthbound and make itself known," he says.
[20413059] |"It happens."

[20413060] |Father Trabold often uses what he calls "a therapeutic exorcism": a few prayers and an admonition to the spirit to leave.
[20413061] |"If the person believes there's an evil spirit, you ask it to be gone," he says.
[20413062] |"The suggestion itself may do the healing."

[20413063] |But sometimes more energetic attacks are required.
[20413064] |To wrestle with a demon in a house owned by a Litchfield, Conn., woman, the Warrens recently called in an exorcist, the Rev. Robert McKenna, a dissident clergyman who hews to the Catholic Church's old Latin liturgy.
[20413065] |I attend, and so does a television crew from New York City.

[20413066] |Mr. Warren pronounces the Litchfield case "your typical demonic infestation."
[20413067] |A Scottish dwarf built the small red house 110 years ago and now his demonic ghost haunts it, Mr. Warren says.
[20413068] |The owner, who begs anonymity, asserts that the dwarf, appearing as a dark shadow, has manhandled her, tossing her around the living room and yanking out a hank of hair.
[20413069] |Two previous exorcisms have failed.

[20413070] |"This is a very tenacious ghost," Mr. Warren says darkly.

[20413071] |Father McKenna moves through the house praying in Latin, urging the demon to split.
[20413072] |Suddenly the woman begins swaying and then writhing.
[20413073] |"She's being attacked by the demon," Mrs. Warren stagewhispers as the priest sprinkles holy water over the squirming woman, and the television camera grinds.
[20413074] |A half-hour later, the woman is smiling and chatting; the demon seems to have gone.
[20413075] |But Mr. Warren says the woman has "psychic burns" on her back from the confrontation.
[20413076] |She declines to show them.

[20413077] |"This was an invisible, powerful force that's almost impossible for a layman to contemplate," Mr. Warren says solemnly as the ghostbusting entourage packs up to leave.
[20413078] |"This time though," he says, "I think we got it."

[20413079] |Lyrics from "Ghostbusters" by Ray S. Parker Jr. 1984 by Golden Torch Music Corp. (ASCAP) and Raydiola Music (ASCAP).
[20413080] |All administrative rights for the U.S. jointly controlled by both companies.
[20413081] |International copyright secured.
[20413082] |Made in USA.
[20413083] |All rights Reserved.
[20413084] |Reprinted by permission.

[20414001] |BROKERAGE HIRING languishes amid market turmoil.
[20414002] |But survivors earn more.

[20414003] |Shearson Lehman Hutton Inc. counts under 39,000 workers, down 100 from the start of the year and off 8,500 from after its merger and the market collapse two years ago.
[20414004] |Another major firm has cut 6,000 workers, 13% of its staff, since Black Monday.
[20414005] |The Bureau of Labor Statistics says securities firms in New York City alone have slashed 17,000 jobs from the December 1987 peak of 163,000.
[20414006] |Average annual earnings of those who have hung on, though, surged to $78,625 last year from $69,553 in 1987.

[20414007] |Any hiring is confined to retail sales.
[20414008] |Illinois Company Investments had been trimming its ranks until last summer.
[20414009] |But then it was acquired by Household International Inc.
[20414010] |Now it offers richer commissions to lure a broker a week.
[20414011] |Interstate/Johnson Lane Inc. this year adds 70 people -- 60 of them in retail -- to its 1,300-member staff.
[20414012] |A.G. Edwards & Sons runs training classes and looks for experienced brokers.

[20414013] |"We're always going to hire someone we consider to be a winner," an Edwards official says.

[20414014] |SKILLED WORKERS aplenty are available to cope with earthquake damage.

[20414015] |"I don't foresee any shortages over the next few months," says Ken Allen, an official of Operating Engineers Local 3 in San Francisco.
[20414016] |Ironically, "up until the quake, we desperately tried to fill jobs," especially for crane and bulldozer operators.
[20414017] |But the Oct. 17 temblor put a halt to much nonessential building, and heavy rains last week slowed the rest, freeing construction workers for earthquake repairs.

[20414018] |The supply of experienced civil engineers, though, is tighter.
[20414019] |In recent months, California's Transportation Department has been recruiting in Pennsylvania, Arizona and Texas for engineers experienced in road and bridge design.
[20414020] |But, with the state offering only $39,000 a year and California's high standard of living, "there aren't too many to choose from," says Brent Scott, a recruiting officer.
[20414021] |He says the department now has 75 openings and wants to hire 625 civil engineers over the next 15 months.

[20414022] |THE IRS may taketh what the Labor Department giveth.
[20414023] |But stay tuned.

[20414024] |Employee-benefit specialists drew a collective sigh of relief in early October when the Labor Department backed away from a proposal that companies let former employees and beneficiaries -- along with active workers -- borrow against balances in 401(k) and similar savings plans.
[20414025] |In an advisory letter, the department said that, starting Oct. 18, loans could be limited to "parties in interest," which generally means active workers but also includes retirees who continue as directors and 10% shareholders.

[20414026] |Now comes word that IRS regulations being drafted could put companies in violation of the tax code if they make loans to retiree shareholders and directors but don't make them available to other former workers who usually earned less.
[20414027] |The IRS says the question won't be settled until the regulations are issued "shortly."
[20414028] |But violation could bring substantial tax penalties to both employer and employees.
[20414029] |"It's a severe case of regulatory whiplash," complains Henry Saveth of consultant A. Foster Higgins & Co.

[20414030] |Frederick Rumack of Buck Consultants has asked Labor to recraft its rule to remove the IRS threat.

[20414031] |CORPORATE DOWNSIZING digs deeper.
[20414032] |Outplacement consultant Right Associates says the average pay of its clients fell to $66,743 last year from $70,765 in 1987; severance pay dropped to 25 weeks from 29.
[20414033] |Both reflect the dismissal of lower-level and shorter-tenure executives.

[20414034] |FIRST TEACH THYSELF.
[20414035] |Executives universally believe workers should know their employer-sponsored benefits.
[20414036] |But three out of four managers can't accurately state the value of their own packages, consultant Noble Lowndes says.

[20414037] |MEA CULPA.
[20414038] |Fully 62% of the doctors surveyed for Metropolitan Life Insurance Co. think their fellow physicians are responsible for rising health-care costs, ahead of hospitals (55%) and patients (48%).

[20414039] |NO, YOU WORK!
[20414040] |Only one in four companies with flexible benefit plans lets workers buy or sell vacation days, consultant Towers Perrin says.
[20414041] |Employees like the option but firms say it's too tough to run.
[20414042] |STUDENTS SHUN burger flipping for jobs tied to careers.
[20414043] |Some even study.

[20414044] |"Fast-food jobs aren't popular no matter what they pay," says a Tufts official.
[20414045] |Working students, she explains, want "some satisfaction."
[20414046] |University of Michigan students look for jobs related to planned careers.
[20414047] |Carnegie Mellon, though, says some students conclude they can help their careers most by hitting the books: "They're opting to build their resumes through good grades and leadership roles in fraternities."

[20414048] |Slowing economies in some areas limit student choice.
[20414049] |Student job postings at Boston University slip 10% this year following a 10% drop in 1988.
[20414050] |Still, the school says there are an ample number and pay is up to $7.20 an hour from $6.90 last year.

[20414051] |M.B.A. candidates at the University of Pittsburgh earn up to $15 an hour on marketing or computer projects.

[20414052] |THE CHECKOFF: Fiery ambition:
[20414053] |Hyatt Corp. hires a University of Wyoming graduate with degrees in geology and petroleum engineering for $7.50 an hour to tend wood fires at a Colorado ski resort. . . .
[20414054] |Is somebody telling us something?
[20414055] |Our copy of Racine (Wis.) Labor comes through the mail wrapped around two sections of Baseball Card News.

[20415001] |Democracy is making a return with a vengeance to Latin America's most populous and deeply indebted country.
[20415002] |On Nov. 15, when Brazilians elect a president for the first time in 29 years, the country's 82 million voters will have 22 candidates to choose from.

[20415003] |The candidates have been crisscrossing this huge country of 145 million people, holding rallies and televised debates in hope of being elected to what must be one of the world's most thankless political jobs: trying to drag Brazil out of its economic and social mess.

[20415004] |"I feel sorry for whoever wins," says a Brazilian diplomat.

[20415005] |Who that winner will be is highly uncertain.
[20415006] |A half-dozen candidates, backing policies ranging from Thatcherism to watered-down Marxism, are given a chance of winning.
[20415007] |"Whoever says he knows which of the six will win is out of his mind," says Antonio Britto, a centrist member of Parliament.

[20415008] |The favorite remains Fernando Collor de Mello, a 40-year-old former governor of the state of Alagoas.
[20415009] |He came out of nowhere to grab the lead in opinion polls, probably less because of his vague program to "build a new Brazil" than because of his good looks, the open backing of the powerful Rede Globo television network and his reputation as a hunter of "maharajahs," or overpaid and underworked civil servants.

[20415010] |But after building up a commanding lead, the moderate to conservative Mr. Collor has slipped to about 30% in the polls from a high of about 43% only a few weeks ago.
[20415011] |To avoid a runoff, one candidate would have to win 50% of the vote -- a feat that most analysts consider impossible with so many candidates running.

[20415012] |Two left-wing politicians, Socialist Leonel Brizola, a former governor of Rio de Janeiro state, and Marxist-leaning Luis Inacio da Silva, currently are running neck and neck at about 15%, and three other candidates are given a chance of reaching the Dec. 17 runoff election between the two biggest vote-getters: Social Democrat Mario Covas and two conservatives, Paulo Salim Maluf, a former governor of the state of Sao Paulo, and Guilherme Afif Domingos.

[20415013] |The uncertainty is sending shivers through Brazilian financial markets.
[20415014] |The dollar, the best indicator of the country's mood, has skyrocketed on the parallel market, as has gold.
[20415015] |Capital flight is reported to be strong.

[20415016] |The big question is whether the new president will have the strength and the political support in Congress to take steps to cure Brazil's economic ills.
[20415017] |President Jose Sarney, who took office in 1985 when the man picked by an electoral college became critically ill, appears to be simply trying to avoid hyperinflation.
[20415018] |The unpopular Mr. Sarney, whose task was to bring about a smooth transition to democracy after 21 years of military rule, isn't seeking re-election.

[20415019] |What comes out of the ballot box could be crucial in determining whether Brazil finally lives up to the potential of the world's eighth largest economy or keeps living up to its other, less enviable title: that of the developing world's largest debtor, teetering on the brink of hyperinflation, mired in deficits and stagnation, with huge economic inequalities and social discontent boiling under the surface.

[20415020] |If Brazil devises an economic strategy allowing it to resume growth and service debt, this could lead it to open up and deregulate its sheltered economy, analysts say, just as Argentinian President Carlos Saul Menem has been doing even though he was elected on a populist platform.

[20415021] |"Depending on the president, we could either be a trillion-dollar economy by the end of the century or stay where we are," says political scientist Amaury de Souza.
[20415022] |"And where we are is bad."

[20415023] |Despite valiant efforts by Finance Minister Mailson Ferreira da Nobrega, inflation came to 36% in September alone and is expected to top 1,000% for the year.
[20415024] |That might have been considered hyperinflation not long ago, but Argentina endured price increases of almost 200% in July before bringing the rate down sharply in August and September.

[20415025] |Still, massive internal debt has forced the government to borrow massively on the domestic market and to offer inflation-adjusted returns of 2% to 3% a month just to get investors to hold on to its paper.
[20415026] |About $70 billion is estimated to be tied up in the short-term money market, which acts both as a hedge against inflation for consumers and an accelerator of inflation and deficits for the government.

[20415027] |By some estimates, Brazil's internal debt, or combined public deficit, could reach 6.5% of its $351 billion gross domestic product.

[20415028] |Much of the money goes into subsidies or keeping inefficient state-controlled companies operating.
[20415029] |Among the results is a frequent breakdown of public services.
[20415030] |It's not uncommon to wait three minutes for a dial tone after picking up the telephone, and then to be interrupted by a busy signal before finishing dialing the number.
[20415031] |Officials also say a national electricity shortage might not be far off.
[20415032] |Economists, businessmen and some politicians agree that the answer is an orthodox economic austerity program including reduced state spending; focusing spending on vital areas such as education, health and welfare; turning state companies private; reforming the tax system, raising public service rates to match costs; and possibly a temporary wage and price freeze and a devaluation of the cruzado.

[20415033] |Analysts also say it's inevitable that Brazil will seek to renegotiate its $115 billion foreign debt, on which it suspended interest payments last month.

[20415034] |Analysts say, however, that a tough economic program would have to be accompanied by measures to shield the poor from its recessionary effects, for instance by subsidizing staple food items.
[20415035] |About 80% of Brazil's voters are believed to live near the poverty level.

[20415036] |Of the three candidates with a serious chance of winning, Mr. Collor comes closest to advocating the sort of measures that economists say are necessary.
[20415037] |But his inexperience raises doubts that he would have the political power to carry them out.
[20415038] |The 67-year-old Mr. Brizola has been vague about his intentions and often inflammatory in his rhetoric, but analysts say he probably would be pragmatic.

[20415039] |Mr. da Silva, a 43-year-old former factory worker and labor leader, is the most radical, vowing to withhold payments on the foreign debt and saying he "wouldn't go around putting the country up for sale to the highest bidder."
[20415040] |But despite the differences in what they say, according to some analysts here, economic constraints mean the next president may not have many choices about what he does.

[20416001] |Hospital Regulation Sparks Kentucky Feud

[20416002] |WHICH IS the best medicine for runaway health costs: competition or regulation?

[20416003] |The question is at the root of a brawl between Humana Inc., the big for-profit hospital and insurance company, and its not-for-profit brethren in its home state of Kentucky.

[20416004] |The battle focuses on the state's certificate-of-need law, which regulates investment in new medical technology.
[20416005] |The law has prevented $216 million of unnecessary expenditures since 1986, according to William S. Conn, president of the Kentucky Hospital Association.

[20416006] |But according to David Jones, Humana's chief executive, it promotes technology monopolies, stifles innovation and raises prices.

[20416007] |If the Legislature doesn't repeal the law, due for revision in 1990, Mr. Jones says Humana may move its insurance operations, including 3,000 jobs in Louisville, to another state.

[20416008] |The company complains that it paid $10 million to non-Humana hospitals in its latest fiscal year for services provided to its insurance plan members.
[20416009] |But Humana says its own facilities could serve its insured for less if they were properly equipped.

[20416010] |Mr. Conn charges that Humana's own actions undermine its argument.
[20416011] |When a hospital in Lexington installed a lithotripter last year, demand for a similar kidney-stone smashing machine at a Humana hospital in Louisville fell 34%.
[20416012] |The Humana hospital responded by jacking up prices to make up for lost revenue, Mr. Conn says, and now charges as much as $8,000 for the procedure, which costs only about $3,500 in Lexington.

[20416013] |Humana contends that $8,000 represents an extreme case and that its regular charge for lithotripsy is $4,900.

[20416014] |Meanwhile, another hospital's proposal for a new-generation lithotripter is pending before the board that administers the certificate-of-need law.
[20416015] |Humana, which wants to acquire one of the new machines itself, is on the record as opposed to the proposal.

[20416016] |Debt-Burdened Doctors Seek Financial Security

[20416017] |HEALTH-CARE experts have long worried that young doctors emerging from medical school with a mountain of debt will choose careers in high-paying specialties instead of primary care, where more physicians are needed most.

[20416018] |Now there's a new wrinkle in what young doctors want: More than half of 300 residents responding to recent survey said they'd prefer a guaranteed salary over traditional fee-for-service compensation in their first professional position.
[20416019] |And 81% preferred a group practice or health maintenance organization, while just 11% favored solo practice.

[20416020] |"Ten years ago, a physician would go to a town and take out a loan (to start a practice)," says James Merritt, president of Merritt, Hawkins & Associates, an Irvine, Calif., physician recruiter that conducted the survey.
[20416021] |"They won't do that very often today at all.
[20416022] |They're looking for something that's very safe."

[20416023] |The numbers behind such fears: The average debt of medical school graduates who borrowed to pay for their education jumped 10% to $42,374 this year from $38,489 in 1988, says the Association of American Medical Colleges.
[20416024] |That's 115% more than in 1981.

[20416025] |Money isn't the only reason for the shift in practice preferences.
[20416026] |It reflects values of a generation that wants more time for families and personal interests, says John H. Moxley III, who directs physician-executive searches for Korn/Ferry International.
[20416027] |"This is a change in the social fabric of medicine," he says.

[20416028] |Related Roommates Trim Hospital Bills

[20416029] |WHEN Catherine Bobar spent several weeks at the Medical Center of Vermont recently with a bone infection in her toe, she shared a room just like most patients.

[20416030] |But unlike most patients, her roommate was her husband.
[20416031] |"It was certainly good to have him handy," Mrs. Bobar says.

[20416032] |The 12-bed "cooperative care" unit is one of about 18 nationwide where a family member or friend helps care for a patient in the hospital.
[20416033] |"The philosophy is to make the patient and the family very responsible for a portion of their own care," says Anthony J. Grieco, medical director of cooperative care at New York University Medical Center, where the concept began 10 years ago.
[20416034] |"It helps us, and them, while they're here, and it certainly makes them a better health-care team when they get home."

[20416035] |It also saves money.
[20416036] |Because patients require less attention from nurses and other staff, room charges are lower -- about $100 less per day than a regular room at the Vermont hospital.

[20416037] |Cancer patients needing prolonged radiation therapy, diabetics learning to manage their blood sugar levels, and cardiac bypass patients are among those who spend time on cooperative-care units.
[20416038] |The approach has generated so much interest that NYU is host to the first conference on cooperative care Nov. 30.
[20416039] |"It's really part of the hospital of the 21st century," Dr. Grieco says.

[20416040] |Odds and Ends

[20416041] |THE CHIEF NURSING officer can be responsible for more than 1,000 employees and at least one-third of a hospital's budget; a head nurse typically oversees up to 80 employees and $8 million.
[20416042] |So says the Commonwealth Fund, a New York philanthropist that's sponsoring a $1 million project to develop joint masters in business and nursing programs at 10 universities. . . .

[20416043] |Meharry Medical College in Nashville, Tenn., launches a new research publication in the spring: the Journal on Health Care for the Poor and Underserved.

[20417001] |A group of Michigan investors has offered to buy Knight-Ridder Inc.'s ailing Detroit Free Press for $68 million but has left unclear how the offer will be financed.

[20417002] |The offer came just prior to arguments before the U.S. Supreme Court over whether the Free Press should be allowed to enter into a joint operating pact with Gannett Co.'s Detroit News.

[20417003] |The group led by Birmingham, Mich., publicist William D. McMaster didn't name an investment banker backing the deal or say how much its members will contribute to the offer.
[20417004] |Indeed, some individuals identified with the group said they haven't committed any money to the bid and weren't aware of it until they heard about it in local news accounts over the weekend.

[20417005] |Knight-Ridder wouldn't comment on the offer.
[20417006] |The company has said the paper isn't for sale, and has rebuffed Mr. McMaster's earlier requests for access to Free Press financial statements.

[20417007] |In his letter to Knight-Ridder President James K. Batten, Mr. McMaster said he arrived at the $68 million figure using Knight-Ridder's corporate financial statements and comments by Knight-Ridder officials that the Free Press has a $50 million value in salvage.

[20417008] |But in an interview, Mr. McMaster said he and his investment banker would need access to full financial records before firming up the offer.

[20418001] |Mitsui & Co. said it started a joint venture with Dae Woong Chemical Co., a major pharmaceutical manufacturer in South Korea, to manufacture antibiotic medicines.
[20418002] |The new company is capitalized at about $3.5 million.

[20418003] |Mitsui expects the antibiotic products to be exported to Southeast Asia and Africa.
[20418004] |It also hopes to enter the U.S. market.

[20419001] |NRM Energy Co. said it filed materials with the Securities and Exchange Commission calling for it to restructure into a corporation from a limited partnership.

[20419002] |The partnership said it is proposing the change largely because the provisions of its senior notes restrict it from making distributions on its units outstanding.

[20419003] |NRM suspended its common distribution in June 1988 and the distribution on its $2 cumulative convertible acquisition preferred units in September.
[20419004] |However, unpaid distributions on the acquisition preferred are cumulative and would total $23 million a year, hurting NRM's financial flexibility and its ability to raise capital, NRM said.

[20419005] |In following several other oil and gas partnerships that have made the conversion to a corporation in the last year, NRM also noted that tax advantages for partnerships have diminished under new tax laws and said it would save $2 million a year in administrative costs from the change.

[20419006] |Under the plan, NRM said holders of its common units will receive one share of new common stock in Edisto Resources Corp. for every 14.97 common units owned.
[20419007] |Holders of NRM's $2 cumulative convertible acquisition preferred units will receive one new common share in Edisto for every 1.342 units they own.

[20419008] |After the transaction, current common unitholders will own about 21.3% of Edisto, current acquisition preferred holders will own 72.3%, and current stockholders of Edisto will own about 6.4%, about the same stake as Edisto owns now in NRM.
[20419009] |Edisto currently is the general partner of NRM.

[20419010] |As the largest holder of acquisition preferred units, Mesa Limited Partnership would own about 28% of Edisto after the transaction.
[20419011] |As part of the transaction, Edisto agreed to give Mesa, an Amarillo, Texas, oil and gas partnership managed by T. Boone Pickens Jr., a seat on its board.

[20419012] |NRM said its $2.60 senior cumulative convertible preferred units will be converted into an equal number of shares of $2.60 senior cumulative convertible preferred stock of Edisto.

[20419013] |The transaction is subject to approval of NRM unitholders of record on Oct. 23, among other conditions.
[20419014] |NRM said it expects unitholders to vote on the restructuring at a meeting Dec. 15.

[20420001] |Sherwin-Williams Co. and Whittaker Corp. said they've discontinued talks toward a definitive agreement regarding Sherwin-Williams' acquisition of Whittaker's chemical coating group.
[20420002] |The companies reached an agreement in principle for the sale in August.
[20420003] |Terms weren't disclosed.

[20420004] |Cleveland-based Sherwin-Williams produces paints and coatings, while the Los Angeles-based Whittaker coatings group produces industrial coatings.

[20421001] |USG Corp. agreed to sell its headquarters building here to Manufacturers Life Insurance Co. of Toronto, and will lease the 19-story facility until it moves to a new quarters in 1992.

[20421002] |The building-materials concern didn't disclose terms of the sale, which will close in the first quarter of next year.

[20421003] |Proceeds from the planned sale of the 250,000-square-foot building "will help reduce the debt incurred as a result of our July 1988 recapitalization," said a USG official.

[20422001] |The recently revived enthusiasm among small investors for stock mutual funds has been damped by a jittery stock market and the tumult over program trading.

[20422002] |After hitting two-year highs this summer, net sales of stock funds slowed in September, according to the Investment Company Institute, a trade group.
[20422003] |The sales recovery screeched to a halt this month, some analysts say.

[20422004] |"Confidence was starting to come back because we didn't have wildly volatile days," says Tyler Jenks, research director for Kanon Bloch Carre & Co., a Boston research firm.
[20422005] |"Now everything" -- such as program trading and wide stock market swings -- "that everyone had pushed back in their consciousness is just sitting right there."

[20422006] |Net sales of stock funds in September totaled $839.4 million, down from $1.1 billion in August, the institute said.
[20422007] |But if reinvested dividends are excluded, investors put in only $340 million more than they pulled out for the month.
[20422008] |October's numbers, which won't be released for a month, are down further, mutual fund executives say.

[20422009] |Investors in stock funds didn't panic the weekend after mid-October's 190-point market plunge.
[20422010] |Most of the those who left stock funds simply switched into money market funds.
[20422011] |And some fund groups said investors actually became net buyers.

[20422012] |But the stock market swings have continued.
[20422013] |The recent outcry over program trading will cast a pall over the stock-fund environment in the coming months, some analysts say.

[20422014] |"The public is very close to having had it," Mr. Jenks says.

[20422015] |Investors pulled back from bond funds in September, too.
[20422016] |Net sales of bond funds for the month totaled $1.1 billion, down two-thirds from $3.1 billion in August.
[20422017] |The major reason: heavy outflows from high-risk, high-yield junk bond funds.
[20422018] |Big withdrawals from the junk funds have continued this month.

[20422019] |Overall, net sales of all mutual funds, excluding money market funds, fell to $1.9 billion in September from $4.2 billion in August, the trade group said.
[20422020] |"Small net inflows into stock and bond funds were offset by slight declines in the value of mutual fund stock and bond portfolios" stemming from falling prices, said Jacob Dreyer, the institute's chief economist.

[20422021] |Many small investors went for the safety of money market funds.
[20422022] |Assets of these and other short-term funds surged more than $5 billion in September, the institute said.
[20422023] |Analysts say additional investors transferred their assets into money funds this month.

[20422024] |At Fidelity Investments, the nation's largest fund group, money funds continue to draw the most business, says Michael Hines, vice president, marketing.
[20422025] |In October, net sales of stock funds at Fidelity dropped sharply, Mr. Hines said.
[20422026] |But he emphasized that new accounts, new sales, inquiries and subsequent sales of stock funds are all up this month from September's level.

[20422027] |Investor interest in stock funds "hasn't stalled at all," Mr. Hines maintains.
[20422028] |He notes that most of the net sales drop stemmed from a three-day period following the Friday the 13th plunge.

[20422029] |"If that follows through next month, then it will be a different story," he says.
[20422030] |But, Mr. Hines adds, sales "based on a few days' events don't tell you much about October's trends."

[20422031] |One trend that continues is growth in the money invested in funds.
[20422032] |Buoyed by the continued inflows into money funds, assets of all mutual funds swelled to a record $953.8 billion in September, up fractionally from $949.3 billion in August.

[20422033] |Stock-fund managers, meantime, went into October with less cash on hand than they held earlier this year.
[20422034] |These managers held 9.8% of assets in cash at the end of September, down from 10.2% in August and 10.6% in September 1988.
[20422035] |Large cash positions help buffer funds from market declines but can cut down on gains in rising markets.

[20422036] |Managers of junk funds were bolstering their cash hoards after the September cash crunch at Campeau Corp.
[20422037] |Junk-portfolio managers raised their cash position to 9.4% of assets in September from 8.3% in August.
[20422038] |In September 1988, that level was 9.5%.

[20422039] |Investors in all funds will seek safety in the coming months, some analysts say.
[20422040] |Among stock funds, the conservative growth-and-income portfolios probably will remain popular, fund specialists say.

[20422041] |"There will be a continuation and possibly greater focus on conservative equity funds, at the expense of growth and aggressive growth funds," says Avi Nachmany, an analyst at Strategic Insight, a New York fund-research concern.

[20423001] |Secretary of State Baker, we read, decided to kill a speech that Robert Gates, deputy national security adviser and a career Soviet expert, was going to give to a student colloquium, the National Collegiate Security Conference.
[20423002] |We keep wondering what Mr. Gates wanted to say.

[20423003] |Perhaps he might have cited Mr. Gorbachev's need for "a stable currency, free and competitive markets, private property and real prices" and other pie-in-the-sky reforms.
[20423004] |Perhaps he'd have called for "a decentralized political and economic system" without a dominant communist party.
[20423005] |Or political arrangements "to alleviate the grievances and demands of Soviet ethnic minorities and republics."
[20423006] |Why, a Bob Gates might even have said, "Nor are Soviet problems susceptible to rescue from abroad through abundant Western credits."

[20423007] |If Mr. Gates had been allowed to say these things, we would now be hearing about "discord" and "disarray" on foreign policy.
[20423008] |Dark hints would be raised that parts of the administration hope Mr. Gorbachev would fail, just as they were when Vice President Quayle voiced similar sentiments.
[20423009] |It's somehow OK for Secretary Baker himself, however, to say all the same things.
[20423010] |In fact, he did; the quotes above are from Mr. Baker's speech of two weeks ago.

[20423011] |So far as we can see, there is no disagreement among Mr. Baker, Mr. Quayle, the Mr. Gates we've read, or for that matter President Bush.
[20423012] |They all understand point one: Nothing the U.S. can do will make much difference in whether Mr. Gorbachev succeeds with perestroika.
[20423013] |Perhaps Mr. Gates would emphasize more than Mr. Baker the many hurdles the Soviet leader must leap if he is going to succeed.
[20423014] |But everyone agrees that Mr. Gorbachev's problems result from the failure of his own system.
[20423015] |They can be relieved only by changing that system, not by pouring Western money into it.
[20423016] |GATT membership will not matter to Donbas coal miners short of soap, nor will a START treaty make any difference to Ukrainian nationalists.

[20423017] |On the other hand, so long as Mr. Gorbachev is easing his grip on his empire, everyone we've heard agrees that the U.S. can benefit by engaging him.
[20423018] |If a deal can be made to cut the world's Ortegas loose from Moscow, why not?
[20423019] |We don't expect much good from nuclear-arms control, but conventional-arms talks might demilitarize Eastern Europe.

[20423020] |There's nothing in the least contradictory in all this, and it would be nice to think that Washington could tolerate a reasonably sophisticated, complex view.
[20423021] |Yet much of the political culture seems intent on castigating the Bush administration for not "helping" Mr. Gorbachev.
[20423022] |So every time a Bush official raises a doubt about Mr. Gorbachev, the Washington community shouts "Cold War" and "timidity," and an administration spokesman is quickly trotted out to reply, "Mr. Bush wants perestroika to succeed."

[20423023] |Mr. Baker seems especially sensitive to the Washington ailment known as Beltway-itis.
[20423024] |Its symptoms include a cold sweat at the sound of debate, clammy hands in the face of congressional criticism, and fainting spells when someone writes the word "controversy."
[20423025] |As one unidentified official clearly in the late stages of the disease told the Times: "Baker just felt that there were some lines in the speech that could be misinterpreted and seized by the press."
[20423026] |In short, the problem is not intra-administration disagreement, but preoccupation with the prospect that perestrokia might fail, and its political opponents will ask "Who lost Gorbachev?"

[20423027] |Mr. Baker may want to avoid criticism from Senate Majority Leader George Mitchell, but as Secretary of State his audience is the entire Free World, not just Congress.
[20423028] |In any case, he's likely to find that the more he muzzles his colleagues, the more leaks will pop up all around Washington, a lesson once learned by Henry Kissinger.
[20423029] |Letting officials express their own nuances can be educational.
[20423030] |We note that in Rome yesterday Defense Secretary Cheney said that European euphoria over Mr. Gorbachev is starting to be tempered by a recognition of "the magnitude of the problems he was trying to deal with."

[20423031] |It is in the Western interest to see Mr. Gorbachev succeed.
[20423032] |The odds are against him, as he himself would no doubt tell you.
[20423033] |The ultimate outcome depends on what he does, not on what we do.
[20423034] |Even if the press is ready to seize and misinterpret, these are not very complicated thoughts.
[20423035] |Surely there is someone in the administration, maybe Bob Gates, who could explain them to college students, or even schoolchildren.

[20424001] |Vernon E. Jordan was elected to the board of this transportation services concern.
[20424002] |Mr. Jordan has served as executive director of the United Negro College Fund, director of the Voter Education Project of the Southern Regional Council and attorney-consultant to the U.S. Office of Economic Opportunity.
[20424003] |His election increases Ryder's board to 14 members.

[20425001] |The American Stock Exchange said a seat was sold for $160,000, down $5,000 from the previous sale last Friday.

[20425002] |Seats are currently quoted at $151,000, bid, and $162,000, asked.

[20426001] |Two gunmen entered a Maryland restaurant, ordered two employees to lie on the floor and shot them in the backs of their heads.
[20426002] |The killers fled with less than $100.

[20426003] |Describing this and other grisly killings, Sen. Strom Thurmond (R., S.C.) recently urged fellow lawmakers to revive a broad federal death penalty.
[20426004] |"The ultimate punishment," he declared, "will protect the law-abiding from the vicious, cruel individuals who commit these crimes."

[20426005] |There's just one problem: The law that Sen. Thurmond is pushing would be irrelevant in the case of the Maryland restaurant murders and almost all other killings.
[20426006] |Most murders are state crimes, so any federal capital-punishment law probably would turn out to be more symbolism than substance.

[20426007] |Yet the bill is riding high on the furor over drug trafficking.
[20426008] |Senate Republicans, after repeatedly failing to attach death-penalty amendments to unrelated legislation, have finally gotten a full-blown death-penalty bill through committee.
[20426009] |The Democratic leadership agreed to allow a floor vote on the issue before the end of the year -- a debate certain to focus on the alleged racial inequality of death sentencing.
[20426010] |Even some Democrats concede that there is probably a majority in the Senate that favors some kind of broad capital-punishment measure.

[20426011] |The pending bill, introduced by Mr. Thurmond, would revive the long-dormant federal death-penalty laws by instituting legal procedures required by the Supreme Court.
[20426012] |In 1972, the high court swept aside all capital-punishment laws -- federal and state alike -- as unconstitutional.
[20426013] |But in 1976, the court permitted resurrection of such laws, if they meet certain procedural requirements.
[20426014] |For instance, juries would have to consider specific "aggravating" and "mitigating" factors before deciding whether to condemn someone to death.
[20426015] |Since that 1976 ruling, 37 states have reintroduced the death penalty.
[20426016] |But congressional Democrats have blocked the same from occurring at the federal level, with the exception of a 1988 law allowing capital punishment for certain drug-related homicides.

[20426017] |The Thurmond bill would establish a federally administered death sentence for 23 crimes, most of which were formerly punishable by death under federal statutes that the Supreme Court invalidated.
[20426018] |Among these crimes are murder on federal land, presidential assassination and espionage.
[20426019] |The Thurmond bill would also add five new crimes punishable by death, including murder for hire.
[20426020] |(Separately, the Senate last week passed a bill permitting execution of terrorists who kill Americans abroad.)

[20426021] |Amid the swirl of punitive rhetoric surrounding the issue, one critical question involves whether a federal death penalty, on top of existing state laws, would deter any would-be criminals.

[20426022] |For one thing, it's unlikely that many people would receive federal death sentences, let alone be executed.
[20426023] |Most of the crimes incorporated in the Thurmond bill are exceedingly rare -- killing a Supreme Court justice, for instance, or deliberately causing a train wreck that results in a death.

[20426024] |In fact, only 28 defendants would have been eligible for federal death sentences if the Thurmond bill had been in effect in the past three years, according to a study by the Senate Judiciary Committee's Democratic staff.
[20426025] |The last federal execution before the Supreme Court's 1972 ruling banning the death penalty took place in 1963, meaning that the federal government didn't exercise its execution authority for eight years.

[20426026] |"In that sense, the whole debate is sort of a fraud," argues a Democratic Senate staff member.
[20426027] |"It's distracting attention from serious issues, like how to make DEA, FBI and Customs work together" on drug enforcement.

[20426028] |Republicans acknowledge that few people would be executed under the Thurmond bill, but they contend that isn't the point.
[20426029] |"Many scholars are of the opinion that the mere existence of the penalty deters many people from the commission of capital crimes," says Sen. Orrin Hatch (R., Utah).
[20426030] |Executions, regardless of how frequently they occur, are also "proper retribution" for heinous crimes, Mr. Hatch argues.
[20426031] |Thomas Boyd, a senior Justice Department official, says the new federal drug-related crimes punishable by death since last November may result in a jump in capital sentences, though that hasn't happened so far.

[20426032] |In addition to resuscitating the old issue of whether death sentences deter criminals, this bill has made race a major part of the death-penalty debate.
[20426033] |Before the bill left committee, Sen. Edward Kennedy (D., Mass.) attached an amendment that would allow a defendant to escape from a death sentence in jurisdictions shown to have meted out executions in a racist manner.

[20426034] |The amendment prompted an ironic protest from Mr. Thurmond, who complained that it would "kill" capital punishment.
[20426035] |A large number of studies suggest that state judges and juries have imposed the penalty in a racially discriminatory fashion.
[20426036] |And the Kennedy amendment would invade not only federal but state sentencings, in two important ways.
[20426037] |It would allow all defendants to introduce statistical evidence showing racially disproportionate application of the death penalty in the past.
[20426038] |And it would shift the burden to prosecutors to disprove that discrimination caused any statistical racial disparities.

[20426039] |"That burden is very difficult, if not impossible, to meet," says Mr. Boyd.
[20426040] |"How do you prove a negative?"
[20426041] |Since most prosecutors wouldn't be able to demonstrate conclusively that racial considerations didn't affect sentencing, executions everywhere might come to a halt, Mr. Boyd explains.

[20426042] |At least 15 major studies purport to show that particular states have imposed the death penalty disproportionately against killers of whites compared with blacks, and against black defendants compared with white defendants.
[20426043] |Conservatives question the validity of the studies and note that the Supreme Court ruled in 1987 that such research, regardless of its accuracy, isn't relevant to a constitutional attack on a particular death sentence.

[20426044] |The Kennedy amendment would, in effect, legislate around the Supreme Court ruling.
[20426045] |Lawyers would eagerly seize on the provision in their death-penalty appeals, says Richard Burr, director of the NAACP Legal Defense and Educational Fund's capital-punishment defense team.

[20426046] |Mr. Kennedy failed to get his amendment incorporated into last year's anti-drug legislation, and it will be severely attacked on the Senate floor this time around.
[20426047] |But if it survives, it could prompt other statutory changes, according to the Mr. Burr.
[20426048] |It might force Congress and the states to narrow the death penalty only to convictions shown to be relatively free of racial imbalance -- murders by repeat offenders who torture their victims, perhaps.

[20426049] |Narrowing the penalty in this fashion would clearly reduce whatever deterrent effect it now has.
[20426050] |And that, in turn, would only strengthen the argument of those who oppose execution under any circumstances.

[20427001] |A state judge postponed a decision on a move by holders of Telerate Inc. to block the tender offer of Dow Jones & Co. for the 33% of Telerate it doesn't already own.

[20427002] |Vice Chancellor Maurice A. Hartnett III of Delaware's Court of Chancery heard arguments for more than two hours here, but he made no comment and asked no questions.
[20427003] |He could rule as early as today on the motion seeking a temporary injunction against the Dow Jones offer.

[20427004] |Dow Jones has offered to pay $18 a share, or about $576 million, for the remaining Telerate stake.
[20427005] |The offer will expire at 5 p.m. EST on Nov. 6, unless extended again.

[20427006] |Robert Kornreich, an attorney for the Telerate holders, told Judge Hartnett the Dow Jones offer is "arrogant" and "hostile."
[20427007] |He accused Dow Jones of "using unfair means to obtain the stock at an unfair price."

[20427008] |Michael Rauch, an attorney for Dow Jones, defended the offer as adequate, based on what the company considers realistic projections of Telerate's revenue growth, in the range of 12%.
[20427009] |He also contended that the plaintiffs failed to cite any legal authority that would justify such an injunction.

[20427010] |Telerate provides information about financial markets through an electronic network.
[20427011] |Dow Jones publishes The Wall Street Journal, Barron's magazine, other periodicals and community newspapers and operates electronic business information services.

[20428001] |Japan's exports of cars, trucks and buses declined 2.4% to 535,322 units in September from a year earlier, the Japan Automobile Manufacturers Association said.

[20428002] |The association attributed the drop to a trend among auto makers to move manufacturing operations overseas.
[20428003] |With the exception of August, when exports rose 2.1%, exports have declined every month from year-earlier levels since March.

[20429001] |Lone Star Technologies Inc. said its Lone Star Steel Co. unit sued it in federal court here, seeking to recover an intercompany receivable valued at a minimum of $23 million.

[20429002] |The lawsuit was filed by Lone Star Steel's unsecured creditors' committee on behalf of Lone Star Steel, which has been operating under Chapter 11 of the federal Bankruptcy Code since June 30.

[20429003] |Lone Star Technologies said it and its subsidiary's creditors agree that the parent company owes the unit money, but they haven't been able to reach agreement on the amount.

[20429004] |Judith Elkin, lawyer for the creditors, said the creditors group is challenging certain accounting entries on the parent company's books and estimates that the receivable owed the steel company could be as much as $40 million.

[20429005] |The Lone Star Steel lawsuit also asks the court to rule that Lone Star Technologies is jointly responsible for a $4.5 million Lone Star Steel pension payment that was due, but wasn't paid, in September and that the parent company can't recover the amount from its subsidiary if the parent company makes the payment.

[20429006] |Separately, Lone Star Technologies said the bankruptcy court granted Lone Star Steel an extension until year end on its exclusive period to present a reorganization plan.
[20429007] |The 120-day exclusivity period was to expire yesterday.

[20429008] |Under Chapter 11, a company continues to operate, but is protected from creditor lawsuits while it tries to work out a plan to pay its debt.

[20430001] |Nothing was going to hold up the long-delayed settlement of Britton vs. Thomasini.
[20430002] |Not even an earthquake.

[20430003] |On the afternoon of Oct. 17, after hours of haggling with five insurance-claims adjusters over settling a toxic-waste suit, four lawyers had an agreement in hand.
[20430004] |But as Judge Thomas M. Jenkins donned his robes so he could give final approval, the major earthquake struck, its epicenter not far from his courtroom in Redwood City, Calif.

[20430005] |The walls shook; the building rocked.
[20430006] |For a while, it looked like the deal -- not to mention the courtroom itself -- was on the verge of collapse.

[20430007] |"The judge came out and said, `Quick, let's put this on the record,'" says Sandy Bettencourt, the judge's court reporter.
[20430008] |"I said, `NOW?'
[20430009] |I was shaking the whole time."

[20430010] |A 10-gallon water cooler had toppled onto the floor, soaking the red carpeting.
[20430011] |Lights flickered on and off; plaster dropped from the ceiling, the walls still shook and an evacuation alarm blared outside.
[20430012] |The four lawyers climbed out from under a table.

[20430013] |"Let's close the door," said the judge as he climbed to his bench.

[20430014] |At stake was an $80,000 settlement involving who should pay what share of cleanup costs at the site of a former gas station, where underground fuel tanks had leaked and contaminated the soil.
[20430015] |And the lawyers were just as eager as the judge to wrap it up.
[20430016] |"We were never going to get these insurance companies to agree again," says John V. Trump, a San Francisco defense lawyer in the case.

[20430017] |Indeed, the insurance adjusters had already bolted out of the courtroom.
[20430018] |The lawyers went to work anyway, duly noting that the proceeding was taking place during a major earthquake.
[20430019] |Ten minutes later, it was done.
[20430020] |For the record, Jeffrey Kaufman, an attorney for Fireman's Fund, said he was "rattled -- both literally and figuratively."

[20430021] |"My belief is always, if you've got a settlement, you read it into the record." says Judge Jenkins, now known in his courthouse as "Shake 'Em Down Jenkins."

[20430022] |The insurance adjusters think differently.
[20430023] |"I didn't know if it was World War III or what," says Melanie Carvain of Morristown, N.J.
[20430024] |"Reading the settlement into the record was the last thing on my mind.

[20431001] |Edison Brothers Stores Inc. said it agreed to buy 229 Foxmoor women's apparel stores from Foxmoor Specialty Stores Corp., a unit of Dylex Ltd. of Toronto.
[20431002] |Terms weren't disclosed.

[20431003] |Edison said the acquired stores would be integrated into its current operations.

[20432001] |BROWN-FORMAN Corp. (Louisville, Ky.) --
[20432002] |David R. Jackson, formerly vice president, managing director of corporate communications for Maxwell Communication Inc., was named vice president and assistant to the chairman of this maker of alcoholic beverages and consumer products.

[20433001] |Your Oct. 4 front page noted that British lawyers have to wear wigs in court and that these wigs are made from horses' tails.

[20433002] |Do you think the British know something that we don't?

[20433003] |Yale Jay Lubkin

[20433004] |Owings, Md.

[20434001] |Applause for "Sometimes, Talk Is the Best Medicine," in your Oct. 5 Marketplace section.

[20434002] |Indeed, the "art of doctoring" does contribute to better health results and discourages unwarranted malpractice litigation.

[20434003] |Elaborating on the concern about doctors' sacrificing earnings in order to spend "talk time" with patients, we are finding the quality of the time spent is the key to true rapport.
[20434004] |Even brief conversations can show caring and trust, and need not restrict the efficiency of the communication or restrain the doctor's earnings.

[20434005] |The issue is far-reaching.
[20434006] |Right now, the American populace is spending about 12% of our gross national product on health care.
[20434007] |That amounts to more than $350 billion a year.
[20434008] |And it is estimated that more than 20% of that, $70 billion, goes to "defensive medicine" -- those measures taken by doctors to protect themselves from the most unlikely possibilities.

[20434009] |So we all stand to benefit if patient-physician relations become a "partnership."

[20434010] |President North American Physicians Insurance Risk Retention Group

[20435001] |Chrysler Corp. Chairman Lee A. Iacocca said the nation's No. 3 auto maker will need to close one or two of its assembly plants because of the slowdown hitting the industry.

[20435002] |In an interview with the trade journal Automotive News, Mr. Iacocca declined to say which plants will close or when Chrysler will make the moves.
[20435003] |But he said, "we have too many plants in our system.
[20435004] |So the older or most inefficient capacity has got to go."

[20435005] |According to industry analysts, Chrysler plants most likely to close are the St. Louis No. 1 facility, which builds Chrysler LeBaron and Dodge Daytona models; the Toledo, Ohio, Jeep plant, which dates back to the early 1900s; and two Canadian plants that build the Jeep Wrangler and Chrysler's full-sized vans.

[20435006] |Chrysler has had to temporarily close the St. Louis and Toledo plants recently because of excess inventories of vehicles built there.

[20435007] |At Chrysler's 1990 model preview last month, Chrysler Motors President Robert A. Lutz said the No. 3 auto maker, along with other U.S. manufacturers, might be forced to "realign . . . capacity" if market demand doesn't improve.
[20435008] |But Mr. Iacocca's remarks are the most specific indication to date of how many plants could be in jeopardy.

[20435009] |General Motors Corp. has signaled that as many as five of its U.S. and Canadian plants may not survive the mid-1990s as it struggles to trim its excess vehicle-production capacity.

[20435010] |The overcapacity problem has intensified in recent years, with foreign auto makers beginning car and truck production in the U.S.
[20435011] |With companies such as Honda Motor Co., Toyota Motor Corp. and Nissan Motor Co. running so-called transplant auto operations, Japanese auto production in the U.S. will reach one million vehicles this year.

[20435012] |"Unless the market goes to 19 million units -- which we all know it's not going to do -- we have the inescapable fact that the transplants are adding capacity," Mr. Lutz said last month.
[20435013] |The Japanese-managed plants eventually will have the capacity to build some 2.5 million vehicles in the U.S. and that will translate into "market share that is going to have to come out of somebody," he added.

[20435014] |Already Chrysler has closed the Kenosha, Wis., plant it acquired when it bought American Motors Corp. in 1987.
[20435015] |Chrysler has also launched a $1 billion cost-cutting program that will cut about 2,300 white-collar workers from the payroll in the next few months.

[20436001] |Revco D.S. Inc., the drugstore chain that filed for bankruptcy-court protection last year, received a $925 million offer from a group led by Texas billionaire Robert Bass.

[20436002] |Revco reacted cautiously, saying the plan would add $260 million of new debt to the highly leveraged company.
[20436003] |It was Revco's huge debt from its $1.3 billion leveraged buy-out in 1986 that forced it to seek protection under Chapter 11 of the federal Bankruptcy Code.

[20436004] |Revco insists that the proposal is simply an "expression of interest," because under Chapter 11 Revco has "exclusivity rights" until Feb. 28.
[20436005] |Those rights prevent anyone other than Revco from proposing a reorganization plan.

[20436006] |Also under Chapter 11, a reorganization plan is subject to approval by bondholders, banks and other creditors.
[20436007] |A financial adviser for Revco bondholders, David Schulte, of Chilmark Partners, had mixed reactions to the offer.

[20436008] |He said he feared a Revco reorganization might force bondholders to accept a "cheap deal," and that the Bass group's offer would give them more money.
[20436009] |However, the group is offering to pay off bondholders in cash only -- $260.5 million -- and no equity.
[20436010] |The Revco bonds are high-yield, high-risk "junk" bonds; holders have $750 million in claims against Revco, Mr. Schulte said.

[20436011] |Revco received the offer Oct. 20, but issued a response yesterday only after a copy of the proposal was made public by bondholders.
[20436012] |Acadia Partners Limited Partnership, a Fort Worth, Texas, partnership that includes the Robert M. Bass Group, made the proposal.
[20436013] |Mr. Bass is based in Fort Worth.

[20436014] |Analysts said the nation's second-largest drugstore chain was a valuable company, despite its financial woes.
[20436015] |Its problem, they say, is that management paid too much in the leveraged buy-out and the current $515 million debt load is keeping Revco in the red.

[20436016] |"If bought at the right price, it could still be profitable," said Jeffrey Stein, an analyst at McDonald & Co., Cleveland.

[20436017] |In addition, Revco's 1,900 stores in 27 states represent a lot of real estate, he said, and demographics are helping pharmacies: The nation's aging population will boost demand for prescription drugs.

[20436018] |Last week, Revco's parent company, Anac Holding Corp., said the company reported a loss of $16.2 million for the fiscal first quarter, compared with a loss of $27.9 million in the year-earlier quarter.
[20436019] |Sales were $597.8 million, up 2.4% from the previous year.

[20436020] |The company, based in Twinsburg, Ohio, said its operating profit before depreciation and amortization increased 51%, to $9.2 million from $6.1 million.

[20436021] |Acadia Partners and the Bass Group declined to comment.
[20436022] |The partnership also includes American Express Co., Equitable Life Assurance Society of the U.S. and Shearson Lehman Hutton Inc.

[20436023] |The offer consists of $410.5 million in cash and the rest in notes.
[20436024] |Acadia would sell up to 10% of the equity in the reorganized company to creditors and bondholders in exchange for the cash distribution, but creditors and bondholders would receive no discount for their shares.

[20436025] |Revco's chairman and chief executive officer, Boake A. Sells, said both the company and the bondholders have put forth reorganization plans, but little progress has been made since negotiations began this summer.

[20436026] |He said he has not met with representatives from Acadia.
[20436027] |Any reorganization proposal, Mr. Sells said, is difficult to assess because it must be agreed upon by the company, bondholders, banks and other creditors.
[20436028] |Revco has $1.5 billion in claims outstanding.

[20436029] |"It's not like the board can decide" by itself, Mr. Sells said, adding, "we're indifferent to (the Bass) plan.
[20436030] |We just want a plan that satisfies creditors and at the end leaves a healthy Revco."

[20436031] |But Mr. Schulte, the bondholders' adviser, said Revco was dragging its feet in responding to the proposal.
[20436032] |"They want to pretend it doesn't exist," he said.

[20436033] |Mr. Schulte, who met with Acadia representatives on Oct. 10, said, "It's certainly a responsible offer.
[20436034] |It's not an effort to steal the company" in the middle of the night.

[20437001] |Copper futures prices failed to extend Friday's rally.
[20437002] |Declines came because of concern that demand for copper may slow down.

[20437003] |The December contract was down three cents a pound, settling at $1.1280, which was just above the day's low of $1.1270.

[20437004] |Futures prices fell during three of five sessions last week, and the losses, individually and cumulatively, were greater than the advances.

[20437005] |Two of the major factors buoying prices, the prolonged strikes at the Highland Valley mine in Canada and the Cananea mine in Mexico, were finally resolved.
[20437006] |Also, the premiums paid by the U.S. government on a purchase of copper for the U.S. Mint were lower than expected, and acted as a price depressant, analysts said.
[20437007] |The mint purchases were at premiums about 4 1/2 cents a pound above the respective prices for the copper.
[20437008] |At the time merchants were asking for premiums of about five cents a pound.

[20437009] |All this has led to prolonged selling in futures, mostly on the part of computer-guided funds.
[20437010] |Prices fell through levels regarded as important support areas, which added to the selling.

[20437011] |The reluctance of traders to buy contracts indicates that they have begun focusing on demand rather than supply.
[20437012] |At least one analyst noted that as production improves, the concern among traders is whether the prospective increased supply will find buyers because of uncertainty over national economies.

[20437013] |"Demand from Japan is expected to continue strong, but not from other areas of the world into the first quarter of next year," he said.

[20437014] |Japan normally depends heavily on the Highland Valley and Cananea mines as well as the Bougainville mine in Papua New Guinea.
[20437015] |Recently, Japan has been buying copper elsewhere.
[20437016] |But as Highland Valley and Cananea begin operating, they are expected to resume their roles as Japan's suppliers.
[20437017] |According to Fred Demler, metals economist for Drexel Burnham Lambert, New York, "Highland Valley has already started operating and Cananea is expected to do so soon."

[20437018] |The Bougainville mine is generally expected to remain closed until at least the end of the year.
[20437019] |It hasn't been operating since May 15 because of attacks by native landowners.
[20437020] |A recent attempt to resume operations was cut short quickly by these attacks.

[20437021] |However, traders disregarded a potential production disruption in Chile and a continued drop in inventories.

[20437022] |Workers at two Chilean mines, Los Bronces and El Soldado, which belong to the Exxon-owned Minera Disputado group, will vote Thursday on whether to strike after a two-year labor pact ends today.
[20437023] |The mines produced a total of 110,000 tons of copper in 1988.

[20437024] |According to Drexel's Mr. Demler, the potential strike is expected to be resolved quickly, which may be one reason why the situation didn't affect prices much.
[20437025] |Another analyst said that, if there was any concern, it was that a strike could encourage other walkouts in Chile.

[20437026] |London Metal Exchange copper inventories fell 550 tons last week to 83,950 tons, a smaller-than-expected decline.
[20437027] |But that development also had little effect on traders' sentiment.

[20437028] |Mr. Demler said that stocks of copper in U.S. producers' hands at the end of September were down 16,000 metric tons from August to 30,000 tons.
[20437029] |Outside the U.S., he said, producer stocks at the end of August were 273,000 tons, down 3,000 tons from the end of July.

[20437030] |Consumer stocks of copper in the U.S. fell to 44,000 tons at the end of September from 54,000 tons a month earlier, and stocks of copper held by consumers and merchants outside of the U.S. at the end of July stood at 123,000 tons, down from 125,000 tons in June.
[20437031] |The high point of foreigners' copper stocks this year was 136,000 tons at the end of April, according to Mr. Demler.

[20437032] |In other commodity markets yesterday:

[20437033] |GRAINS AND SOYBEANS:
[20437034] |The prices of most corn, soybean and wheat futures contracts dropped slightly as farmers in the Midwest continued to rebuild stockpiles that were depleted by the 1988 drought.
[20437035] |Buying by the Soviets has helped to prop up corn prices in recent weeks, but a lack of any new purchases kept prices in the doldrums.

[20437036] |COFFEE:
[20437037] |Futures prices rose slightly in a market filled with rumors that a new international coffee agreement might still be achieved.
[20437038] |The December contract ended with a gain of 1.29 cents a pound at 74.35 cents.
[20437039] |According to one analyst, prices opened higher because of reports over the weekend that Brazil and Colombia, at the Pan-American summit meeting in Costa Rica, had agreed to a reduction in their coffee export quotas for the sake of creating a new agreement.
[20437040] |The reports, attributed to the Colombian minister of economic development, said Brazil would give up 500,000 bags of its quota and Colombia 200,000 bags, the analyst said.
[20437041] |These reports were later denied by a high Brazilian official, who said Brazil wasn't involved in any coffee discussions on quotas, the analyst said.
[20437042] |The Colombian minister was said to have referred to a letter that he said President Bush sent to Colombian President Virgilio Barco, and in which President Bush said it was possible to overcome obstacles to a new agreement.
[20437043] |The minister was also quoted as saying that a new pact could be achieved during the first half of next year, according to the analyst.

[20437044] |PRECIOUS METALS:
[20437045] |Futures prices showed modest changes in light trading volume.
[20437046] |December delivery gold eased 40 cents an ounce to $380.80.
[20437047] |December silver was off 3.7 cents an ounce at $5.2830.
[20437048] |January platinum rose 90 cents an ounce at $500.20.
[20437049] |The market turned quiet after rising sharply late last week, according to one analyst.
[20437050] |Last week's uncertainty in the stock market and a weaker dollar triggered a flight to safety, he said, but yesterday the market lacked such stimuli.
[20437051] |There was some profit-taking because prices for all the precious metals had risen to levels at which there was resistance to further advance, he said.
[20437052] |The dollar was also slightly firmer and prompted some selling, as well, according to the analyst.

[20438001] |Louisiana-Pacific Corp. said its board authorized the purchase of as many as five million of its common shares for employee stock plans and other general corporate purposes.

[20438002] |The forest-products concern currently has about 38 million shares outstanding.

[20438003] |In yesterday's composite trading on the New York Stock Exchange, Louisiana-Pacific shares closed at $39.25, down 37.5 cents.

[20439001] |When the Supreme Soviet passed laws on workers' rights in May 1987 and on self-managing cooperatives a year later, some Western observers assumed Mikhail Gorbachev had launched the Soviet Union on a course that would lead inevitably to the creation of a market economy.
[20439002] |Their only doubt concerned the possibility that Mr. Gorbachev might not survive the opposition that his reforms would arouse and that the whole process might be reversed.

[20439003] |If Mr. Gorbachev's goal is the creation of a free market, he and these Western observers have good reason to fear for his future, as economic liberalization within communist societies leads inexorably to demands for fundamental political reform accompanied by civil unrest.
[20439004] |These fears were clearly apparent when, last week, Secretary of State James Baker blocked a speech by Robert Gates, deputy national security adviser and Soviet expert, on the ground that it was too pessimistic about the chances of Mr. Gorbachev's economic reforms succeeding.

[20439005] |Yet the Soviet leader's readiness to embark on foreign visits and steady accumulation of personal power, particularly since the last Politburo reshuffle on Sept. 30, do not suggest that Mr. Gorbachev is on the verge of being toppled; nor does he look likely to reverse the powers of perestroika.
[20439006] |Indeed, the Soviet miners strike this summer clearly demonstrated that Mr. Gorbachev must proceed with economic reform.
[20439007] |But is he so clever that he has achieved the political equivalent of making water run uphill?
[20439008] |And has he truly persuaded the Communist Party to accept economic change of a kind that will, sooner or later, lead to its demise?

[20439009] |An alternative and more convincing explanation, confirmed by recent events and a close inspection of the Gorbachev program, is that the new Soviet economic and social structures are intended to conform to a model other than that of the market.
[20439010] |For example, while the laws on individual labor activity allow a citizen to earn a living independent of the state, strict provisions are attached on how far this may lead to the development of a free market.
[20439011] |Before becoming self-employed, or setting up a cooperative, workers must seek permission from the local soviet (council).
[20439012] |Permission is far from automatic: The soviets have the legal right to turn down applications and impose conditions, and they appear to be exercising these powers.
[20439013] |Private dressmaking, for example, is allowed in 10 Soviet republics but banned by five; shoemaking is allowed in seven but illegal in nine.

[20439014] |The controls on cooperatives appeared relatively liberal when first introduced.
[20439015] |But that changed following a resolution from the Supreme Soviet banning cooperatives from operating in some areas of the economy, and permitting activity in others only if the cooperatives are under contract to the state.

[20439016] |All independent media activity is now illegal, which perhaps is not surprising, but so is the manufacture of perfume, cosmetics, household chemicals and sand candles.
[20439017] |Medical cooperatives, among the most successful in the U.S.S.R., are banned from providing general-practitioner services (their main source of income), carrying out surgery, and treating cancer patients, drug addicts and pregnant women.

[20439018] |Earlier this month, the Supreme Soviet adopted two more resolutions restricting the freedom of cooperatives: The first enables the soviets to set prices for which goods may be sold; the second bans cooperatives from buying "industrial and food goods" from the state or other cooperatives.
[20439019] |If Mr. Gorbachev is looking toward unleashing the productive forces of the market, these latest resolutions are nothing short of reckless.

[20439020] |Along with some other revealing indicators, these developments suggest that while Mr. Gorbachev wishes to move away from some rigid central controls, he is bent on creating economic structures of a kind that would scarcely find favor with the Austrian or Chicago schools of economic thought.
[20439021] |Mr. Gorbachev has ruled out the use of the market to solve the problem of insufficient consumer goods.
[20439022] |He told the Congress of People's Deputies on May 30: "We do not share this approach, since it would immediately destroy the social situation and disrupt all the processes in the country."

[20439023] |Having rejected central economic planning for economic reasons, and the market for fear of the social (political) consequences, Mr. Gorbachev seeks a "third way" that would combine the discipline and controls of the former with the economic benefits of the latter.
[20439024] |Most important, this would leave the party intact and its monopoly of political power largely undisturbed.
[20439025] |Indeed, Mr. Gorbachev's proposals display a close conceptual resemblance to the tenets of Italian fascism, whose architects spoke specifically of a "third way": of having produced a historic synthesis of socialism and capitalism.
[20439026] |They, too, promised to combine economic efficiency with order and discipline.

[20439027] |The emergence of Russian corporatism had been anticipated in journalist George Urban's introduction to a series of colloquies -- "Can the Soviet System Survive Reform?" -- published this spring.
[20439028] |"Communism will reach its final stage of development in a feckless Russo -- corporation-socialist in form, nationalistic in content and Oriental in style -- that will puzzle the world with alternating feats of realism and recklessness. . . ."

[20439029] |The fascist concept of corporatism envisaged an "organic" society in which citizens were spiritually and morally unified, and prepared to sacrifice themselves for the nation.
[20439030] |This unification was to be brought about through policies and institutions that would unite workers and employers with government in a fully integrated and "harmonic" society.
[20439031] |The key to the creation of the "organic" state lay in the formation of "natural" groups that would undertake the role of decision-making.
[20439032] |By contrast, a parliamentary system based on abstract political rights and groups was held to cause, rather than resolve, conflict.

[20439033] |The closeness of Soviet perestroika to the fascist social blueprint of Mussolini was evident when Mr. Gorbachev presented his economic vision to the Soviet Congress.
[20439034] |In doing so, he neither rejected a socialist planned economy nor embraced the free market.
[20439035] |Instead, he proposed a "law-governed economy," in which there would be a "clear-cut division between state direction of the economy and economic management."
[20439036] |The latter would be undertaken by "enterprises, joint stock companies and cooperatives."
[20439037] |These would not function independently, but would act together to form "combines, unions and associations" to tackle problems and coordinate their activities.

[20439038] |Mr. Gorbachev is in a much stronger position to pursue the corporatist ideal than was Mussolini, who was never able to influence business giants such as Pirelli and Fiat.
[20439039] |The Soviet Communist Party has the power to shape corporate development and mold it into a body dependent upon it.

[20439040] |To ensure the loyalty of the business sector, Mr. Gorbachev may offer concessions and powers that will allow the business community to preserve its own interests, probably by restricting competition.
[20439041] |However, Mr. Gorbachev must ensure that within this "alliance" the business sector remains subordinate to the party.
[20439042] |At the same time, he must give it sufficient freedom to provide the economic benefits so desperately needed.
[20439043] |It is the promise of economic returns that is supposed to make the corporatist model attractive to both the party and labor.

[20439044] |The work force provides the third arm of the "alliance."
[20439045] |Within the alliance it is supposed to act as a balancing force, guarding against excessive control by government or abuse of its economic position by business, for either could result in a deterioration of its living standards (under the new resolutions, workers councils may demand that a cooperative be closed or its prices be reduced).
[20439046] |By providing workers with the opportunity to move into the private sector where wages tend to be higher, and by holding out the promise of more consumer goods, Mr. Gorbachev hopes to revive the popularity of the party.

[20439047] |At the same time, the strategy requires that he deal effectively with those who seek genuine Western-style political pluralism.
[20439048] |The most important development in Mr. Gorbachev's policy for marginalizing the opposition movement is the claim that the U.S.S.R. also suffers from terrorism.
[20439049] |An increasing number of references by the Soviet press to opposition groups now active in the U.S.S.R., particularly the Democratic Union, allege that they show "terroristic tendencies" and claim that they would be prepared to kill in order to achieve their aims.
[20439050] |It is possible that, in perpetuating such myths, the ground is being laid for the arrest of opposition activists on the ground of terrorism.

[20439051] |Mr. Gorbachev would appear to see his central task, however, as that of ensuring that foundations of an alliance among labor, capital and the state are properly laid before the demands for a multiparty system reach a crescendo.
[20439052] |If he were able to construct a popular and efficient corporatist system, he or his heir would be wellplaced to rein in political opposition, and to re-establish control in Eastern Europe.

[20439053] |The weaknesses in his plan do not lie in the political calculations -- Mr. Gorbachev is a consummate political leader, perhaps one of the greatest -- but in its economic prescription.
[20439054] |Contrary to widespread belief, Mussolini failed to live up to his promise to make the trains run on time; it is doubtful whether Soviet-style corporatism will make Soviet trains run on time, or fill the shops with goods that the consumers so desperately crave.

[20439055] |Miss Brady is deputy director of the Russian Research Foundation in London.

[20440001] |New construction contracting climbed 8% in September to an annualized $274.2 billion, with commercial, industrial and public-works contracts providing most of the increase, according to F.W. Dodge Group.

[20440002] |Through the first nine months of the year, the unadjusted total of all new construction was $199.6 billion, flat compared with a year earlier.
[20440003] |The South was off 2% after the first nine months, while the North Central region was up 3%.
[20440004] |The Northeast and West regions were unchanged.

[20440005] |A small decline in total construction for the entire year is possible if contracting for housing doesn't increase in response to this year's lower mortgage rates, said George A. Christie, vice president and chief economist of Dodge, the forecasting division of publisher McGraw-Hill Inc.

[20440006] |The seasonally adjusted Dodge Index reached 175 in September, its highest level this year, from 162 in August.
[20440007] |The index uses a base of 100 in 1982.

[20440008] |Newly contracted residential work edged up 2% in September to an annualized $121.2 billion, largely because multifamily building rebounded from a very weak August.

[20440009] |"At the end of the third quarter, there was still no evidence of renewed home building in response to the midyear decline of mortgage rates," Mr. Christie said.
[20440010] |Housing has been weak all year and especially so in the past five months.

[20440011] |Contracting for non-residential buildings rose 10% in September to an annualized $100.8 billion.
[20440012] |Commercial and industrial construction rose sharply, partly because of three large projects, each expected to cost more than $100 million.
[20440013] |Institutional building, such as hospitals and schools, eased in September following a surge in August.

[20440014] |Although the third quarter was the best so far this year for non-residential building, weakness early in the year held the nine-month total to $69.6 billion, up just 1% from a year earlier.

[20440015] |Public-works and utility projects, also known as non-building contracting, grew 18% to $52.2 billion in September, but the nine-month total of $36.9 billion was down 3% from a year earlier.

[20440016] |The Sept. 30 end of the federal fiscal year may have prodded contractors to get any behind-schedule road and bridge construction under way "before the clock ran out," Mr. Christie said, referring to threatened 5% across-the-board budget cuts.

[20440017] |a-Monthly construction contract values are reported on an annualized, seasonally adjusted basis.

[20441001] |Moody's Investors Service Inc. said it lowered ratings on long-term debt of CS First Boston Inc., the holding company of Wall Street giant First Boston Corp., because of First Boston's "aggressive merchant banking risk" in highly leveraged takeovers.

[20441002] |In downgrading CS First Boston's subordinated domestic, Euromarket and Swiss debt to single-A-3 from single-A-2, Moody's is matching a move made by the other major credit rating concern, Standard & Poor's Corp., several months ago.
[20441003] |Moody's also confirmed the Prime-1 rating, its highest, on CS First Boston's commercial paper, or short-term corporate IOUs.

[20441004] |In addition, Moody's said it downgraded Financiere Credit Suisse-First Boston's senior and subordinated Swiss debt to single-A-2 from single-A-1 and lowered Financiere CSFB N.V.'s junior subordinated perpetual Eurodebt, guaranteed by Financiere Credit Suisse -- First Boston, to single-A-3 from single-A-2.
[20441005] |About $550 million of long-term debt is affected, according to Moody's.

[20441006] |A spokesman for CS First Boston said: "We remain committed to a full range of businesses, including merchant banking.
[20441007] |We think that the ratings revision is unfortunate but not unexpected.
[20441008] |Our commitment to manage these businesses profitably will continue."

[20441009] |First Boston's merchant banking risks mounted last month as highly leveraged Campeau Corp., First Boston's most lucrative client of the decade, was hit by a cash squeeze and the high-risk junk bond market tumbled.
[20441010] |First Boston incurred millions of dollars of losses on Campeau securities it owned as well as on special securities it couldn't sell.
[20441011] |First Boston financings for several other highly leveraged clients, including Ohio Mattress, unraveled as the high-risk junk bond market plummeted.

[20441012] |Moody's said its rating changes actions "reflect CS First Boston's aggressive merchant banking risk as well as the risk profile of its current merchant banking exposures."
[20441013] |It said CS First Boston "has consistently been one of the most aggressive firms in merchant banking" and that "a very significant portion" of the firm's profit in recent years has come from merchant banking-related business.

[20441014] |"Moody's believes that the uncertain environment for merchant banking could put pressure on CS First Boston's performance," the rating concern said, citing "continued problems" from the firm's exposures to "various Campeau-related firms" and to Ohio Mattress.

[20441015] |"These two exposures alone represent a very substantial portion of CS First Boston's equity," Moody's said.
[20441016] |"Total merchant banking exposures are in excess of the firm's equity.

[20442001] |Quotron Systems Inc. plans to cut about 400, or 16%, of its 2,500 employees over the next several months.

[20442002] |"This action will continue to keep operating expenses in line" with revenue, said J. David Hann, president and chief executive officer of Los Angeles-based Quotron.
[20442003] |The move by the financial information and services subsidiary of Citicorp is a "response to changing conditions in the retail securities industry, which has been contracting" since October 1987's stock market crash, the executive added.

[20442004] |Quotron, which Citicorp purchased in 1986, provides price quotations for securities, particularly stocks.
[20442005] |Quotron also provides trading and other systems, services for brokerage firms, and communications-network services.

[20442006] |Independent providers of financial information, including Quotron, have been under some pressure as the major securities houses try to regain their hold on the production of market data and on the related revenue.
[20442007] |Shearson, Goldman, Sachs & Co., Morgan Stanley & Co. and Salomon Inc. are discussing formation of a group to sell securities-price data.

[20442008] |The job cuts, to be made in a number of areas at various job levels, are "a streamlining of operations," a spokeswoman said.
[20442009] |The company has no immediate plans to close any operations, she said, but Quotron may subcontract some work that it has been doing in-house, including refurbishment and production of Quotron 1000 equipment used in delivering financial data.

[20442010] |The spokeswoman said the move isn't directly a response to Quotron's loss of its two biggest customers, Merrill Lynch & Co. and American Express Co.'s Shearson Lehman Hutton Inc., to Automated Data Processing Inc. earlier this year.

[20442011] |The spokeswoman noted that last week, Kidder, Peabody & Co., the securities subsidiary of General Electric Co., chose a Quotron subsidiary to provide order-processing services.
[20442012] |And Oct. 24, Quotron said it will market the automated trading system of broker-dealer Chapdelaine Government Securities Inc.

[20442013] |Quotron isn't profitable on Citicorp's books because of the interest charges the New York bank holding company incurred in buying the financial-data concern for $680 million, says Ronald I. Mandle, analyst for Sanford C. Bernstein & Co.
[20442014] |But Citicorp "does view Quotron) as being crucial to the financial-services business in the 1990s," the analyst added.

[20442015] |This past summer, Quotron sold its customer-service unit, employing 600, to Phoenix Technologies Inc., a closely held computer-service firm in Valley Forge, Pa.
[20442016] |Terms weren't disclosed.

[20443001] |The Oakland Athletics' four-game sweep over the San Francisco Giants in the World Series may widen already-sizable losses that the ABC network will incur on the current, final year of its baseball contract.

[20443002] |The 1989 Series, disrupted by a devastating earthquake and diminished in national interest because both teams came from the San Francisco Bay area, is likely to end up as the lowest-rated Series of this decade and probably since the event has been broadcast.

[20443003] |The first three games were seen by an average of only 17% of U.S. homes, a sharp decline from the 23.7% rating for last year's Series.
[20443004] |A final ratings tally from A.C. Nielsen Co. is due today.

[20443005] |The sweep by the A's, whose pitchers and home-run hitters dominated the injury-prone Giants, will only make things worse for ABC, owned by Capital Cities/ABC Inc.
[20443006] |The network had been expected to have losses of as much as $20 million on baseball this year.

[20443007] |It isn't clear how much those losses may widen because of the short Series.
[20443008] |Had the contest gone a full seven games, ABC could have reaped an extra $10 million in ad sales on the seventh game alone, compared with the ad take it would have received for regular prime-time shows.

[20443009] |ABC had based its budget for baseball on a six-game Series.

[20443010] |A network spokesman wouldn't comment, and ABC Sports officials declined to be interviewed.
[20443011] |But some industry executives said ABC, in anticipation of a four-game sweep, limited its losses by jacking up the number of commercials it aired in the third and fourth games.
[20443012] |A World Series telecast typically carries 56 30-second commercials, but by the fourth game ABC was cramming in 60 to 62 ads to generate extra revenue.

[20443013] |ABC's baseball experience may be of interest to CBS Inc., which next season takes over the broadcasting of all baseball playoffs in a four-year television contract priced at $1.06 billion.
[20443014] |CBS Sports President Neal Pilson has conceded only that CBS will have a loss in the first year.
[20443015] |But other industry executives contend the losses could reach $250 million over four years and could go even higher if the World Series end in four-game romps.

[20443016] |The Series typically is among the highest-rated sports events on television.
[20443017] |Last year's series, broadcast by General Electric Co.'s NBC, was the lowest-rated Series in four years; instead of featuring a major East Coast team against a West Coast team, it pitted the Los Angeles Dodgers against the losing Oakland A's.

[20443018] |ABC's hurdle was even higher this year with two teams from the same area.
[20443019] |The Series got off to a lukewarm start Oct. 14 with a 16.2% rating; the next night it drew 17.4% of homes.
[20443020] |Then came the earthquake and a damaging delay of 11 days.

[20443021] |Some people had hoped ABC's ratings would go up because of the intense focus on the event in the aftermath of the earthquake.
[20443022] |An analyst's opinion to that effect even sent Capital Cities/ABC shares soaring two weeks ago.
[20443023] |But interest instead decreased.
[20443024] |The third game, last Friday night, drew a disappointing 17.5 rating.

[20444001] |Bargain hunters helped stock prices break a weeklong losing streak while bond prices and the dollar inched higher.

[20444002] |The Dow Jones Industrial Average gained 6.76 points to 2603.48 in light trading after losing more than 92 points last week.
[20444003] |Bond prices continued to edge higher in anticipation of more news showing a slower economy.
[20444004] |Although the dollar rose slightly against most major currencies, the focus in currency markets was on the beleaguered British pound, which gained slightly against the dollar.

[20444005] |Trading volume on the New York Stock Exchange dwindled to only 126.6 million shares yesterday as major brokerage firms continued to throw in the towel on program trading.
[20444006] |Kidder Peabody became the most recent firm to swear off stock-index arbitrage trading for its own account, and Merrill Lynch late yesterday took the major step of renouncing the trading strategy even for its clients.

[20444007] |Yet that didn't eliminate program trading from the market.
[20444008] |The Dow industrials shot up 23 points in the opening hour, at least in part because of buy programs generated by stock-index arbitrage, a form of program trading involving futures contracts.
[20444009] |But interest waned as the day wore on and investors looked ahead to the release later this week of two important economic reports.

[20444010] |The first is Wednesday's survey of purchasing managers, considered a good indicator of how the nation's manufacturing sector fared in October.
[20444011] |The other is Friday's measure of October employment, an indicator of the broader economy's health.
[20444012] |Both are expected to show continued sluggishness, which would be good for bonds and bad for stocks.

[20444013] |In major market activity: Stock prices rose in light trading.
[20444014] |But declining issues on the New York Stock Exchange outnumbered gainers 774 to 684, and broader market indexes were virtually unchanged.

[20444015] |Bond prices crept higher.
[20444016] |The Treasury's benchmark 30-year bond gained about an eighth of a point, or about $1.25 for each $1,000 face amount.
[20444017] |The yield on the issue slipped to 7.92%.

[20444018] |The dollar gained.
[20444019] |In late New York trading the dollar was quoted at 1.8340 marks and 141.90 yen, compared with 1.8300 marks and 141.65 yen Friday.
[20444020] |The British pound, pressured by last week's resignations of key Thatcher administration officials, nevertheless rose Monday to $1.5820 from Friday's $1.5795.

[20445001] |If Japanese companies are so efficient, why does Kawasaki-Rikuso Transportation Co. sometimes need a week just to tell its clients how soon it can ship goods from here to Osaka?
[20445002] |Why, until last spring, did the Long-Term Credit Bank of Japan sometimes take several days to correct typographical errors in its paper work for international transactions?

[20445003] |Because the companies have lacked office computers considered standard equipment in the U.S. and Western Europe, Japanese corporations' reputation as hi-tech powerhouses is only half right.
[20445004] |Their factories may look like sets for a Spielberg movie, but their offices, with rows of clerks hunched over ledgers and abacuses, are more like scenes from a Dickens novel.

[20445005] |Now, the personal-computer revolution is finally reaching Japan.
[20445006] |Kawasaki-Rikuso, a freight company, set up its own software subsidiary this year and is spending nearly a year's profit to more than double the computer terminals at its main office.
[20445007] |In April, the Long-Term Credit Bank linked its computers in Tokyo with its three American offices.

[20445008] |Overall, PC sales in Japan in the first half of 1989 were 34% higher than in the year-earlier period.
[20445009] |Combined PC and work-station use in Japan will jump as much as 25% annually over the next five years, according to some analysts, compared with about 10% in the U.S.
[20445010] |And with a labor shortage and intense competitive pressure to improve efficiency, more and more Japanese companies are concluding that they have no choice.
[20445011] |"We have too many people in our home offices," says Yoshio Hatakeyama, the president of the Japan Management Association.
[20445012] |"Productivity in Japanese offices is relatively low."

[20445013] |With Japanese companies in a wide range of industries -- from heavy industry to securities firms -- increasing their market share world-wide, the prospect of an even more efficient Japanese economic army may rattle foreigners.
[20445014] |But it also offers opportunities; Americans are well poised to supply the weapons.
[20445015] |Japan may be a tough market for outsiders to penetrate, and the U.S. is hopelessly behind Japan in certain technologies.
[20445016] |But for now, at least, Americans are far better at making PCs and the software that runs them.

[20445017] |After years of talking about selling in Japan, more and more U.S. companies are seriously pouring in.
[20445018] |Apple Computer Inc. has doubled its staff here over the past year.
[20445019] |Lotus Development Corp. has slashed the lag between U.S. and Japan product introductions to six months from three years.
[20445020] |Ungermann-Bass Inc. has a bigger share of the computer-network market in Japan than at home.

[20445021] |But the Japanese have to go a long way to catch up.
[20445022] |Typical is one office of the Ministry of International Trade and Industry's Machinery and Information Industries Bureau -- the main bureaucracy overseeing the computer industry.
[20445023] |"Personal Computer" yearbooks are lined up on nearly every desk, and dog-eared copies of Nikkei Computer crowd magazine racks.
[20445024] |But amid the two dozen bureaucrats and secretaries sits only one real-life PC.

[20445025] |While American PC sales have averaged roughly 25% annual growth since 1984 and West European sales a whopping 40%, Japanese sales were flat for most of that time.
[20445026] |Japanese office workers use PCs at half the rate of their European counterparts and one-third that of the Americans.

[20445027] |Moreover, Japanese offices tend to use computers less efficiently than American offices do.
[20445028] |In the U.S., PCs commonly perform many tasks and plug into a broad network.
[20445029] |In Japan, many desktop terminals are limited to one function and can't communicate with other machines.

[20445030] |The market planning and sales promotion office of Nomura Securities Co., for example, has more than 30 computers for its 60 workers, a respectable ratio.
[20445031] |But the machines aren't on employees' desks; they ring the perimeter of the large office.
[20445032] |Some machines make charts for presentations.
[20445033] |Others analyze the data.
[20445034] |To transfer information from one to the other, employees make printouts and enter the data manually.
[20445035] |To transmit charts to branch offices, they use a fax machine.
[20445036] |Meanwhile, a woman sitting next to a new Fujitsu terminal writes stock-market information on a chart with a pencil and adds it up with a hand calculator.
[20445037] |In an efficient setup, the same PC could perform all those tasks.

[20445038] |In the U.S., more than half the PC software sold is either for spreadsheets or for database analysis, according to Lotus.
[20445039] |In Japan, those functions account for only about a third of the software market.
[20445040] |Machines dedicated solely to word processing, which have all but disappeared in the U.S., are still more common in Japan than PCs.
[20445041] |In the U.S., one-fifth of the office PCs are hooked up to some sort of network.
[20445042] |In Japan, about 1% are linked.

[20445043] |"Computers here are used for data gathering," says Roger J. Boisvert, who manages the integrated-technologies group in McKinsey & Co.'s Tokyo office.
[20445044] |Some Japanese operations, such as securities-trading rooms, may be ahead of their American counterparts, he says, but "basically, there's little analysis done on computers in Japan."
[20445045] |Of course, simply buying computers doesn't always solve problems, and many American companies have erred by purchasing technology they didn't understand.
[20445046] |But healthy skepticism is only a small reason for Japan's PC lag.
[20445047] |Various cultural and economic forces have suppressed demand.

[20445048] |Because the Japanese "alphabet" is so huge, Japan has no history of typewriter use, and so "keyboard allergy," especially among older workers, remains a common affliction.
[20445049] |"I have no experience before with such sophisticated machinery," says Matsuo Toshimitsu, a 66-year-old executive vice president of Japan Air Lines, explaining his reluctance before accepting a terminal in his office this summer.

[20445050] |While most American employees have their own private space, Japanese "salarymen" usually share large, common tables and rely heavily on old-fashioned personal contact.
[20445051] |Top Japanese executives often make decisions based on consensus and personal relationships rather than complex financial projections and fancy presentations.
[20445052] |And Japan's management system makes it hard to impose a single, integrated computer system corporatewide.

[20445053] |Besides, a computer processing the Japanese language needs a huge memory and much processing capability, while the screen and printer need far better definition to depict accurately the intricate symbols.
[20445054] |Until recently, much of the necessary technology has been unavailable or at least unaffordable.

[20445055] |Some analysts estimate the average PC costs about 50% more in Japan than the U.S.
[20445056] |But the complex language isn't the only reason.
[20445057] |For the past decade, NEC Corp. has owned more than half the Japanese PC market and ruled it with near-monopoly power.
[20445058] |With little competition, the computer industry here is inefficient.

[20445059] |The U.S. market, too, is dominated by a giant, International Business Machines Corp.
[20445060] |But early on, IBM offered its basic design to anybody wanting to copy it.
[20445061] |Dozens of small companies did, swiftly establishing a standard operating system.
[20445062] |That spurs competition and growth, allows users to change and mix brands easily, and increases software firms' incentive to write packages because they can be sold to users of virtually any computer.

[20445063] |If a record industry lacked a common standard, Sony CD owners could listen to a Sony version of Madonna's "Like a Prayer" but not one made for a Panasonic player.
[20445064] |That is the state of Japan's computer industry.
[20445065] |NEC won't release its code, and every one of the dozen or so makers has its own proprietary operating system -- all incompatible with each other.
[20445066] |IBM established its standard to try to stop falling behind upstart Apple Computer, but NEC was ahead from the start and didn't need to invite in competitive allies.

[20445067] |Meanwhile, the big players haven't tried to copy the NEC standard.
[20445068] |Corporate pride as well as the close ties common among Japanese manufacturers help explain why.
[20445069] |Most rivals "have a working relationship with NEC, often through cross-licensing of technology," the Japan Personal Computer Software Association noted recently.
[20445070] |"They hesitate to market NEC-compatible machines; NEC disapproves of such machines, and marketing one would jeopardize their relationship."

[20445071] |The result, according to many analysts, is higher prices and less innovation.
[20445072] |While tens of thousands of software packages using the IBM standard are available in the U.S., they say only about 8,000 are written for NEC.
[20445073] |A year ago, Japan's Fair Trade Commission warned NEC about possible violations of anti-monopoly laws for discouraging retailers from discounting.

[20445074] |In Japan, "software is four to five years behind the U.S. because hardware is four to five years behind, because NEC is enjoying a monopoly," complains Kazuhiko Nishi, the president of Ascii Corp., one of Japan's leading PC-magazine publishing and software companies.
[20445075] |"There are no price wars, no competition."
[20445076] |An NEC spokeswoman responds that prices are higher in Japan because customers put a greater emphasis on quality and service than they do in the U.S.
[20445077] |She adds that some technological advances trail those in the U.S. because the Japanese still import basic operating systems from American companies.

[20445078] |But the market is changing.
[20445079] |The government is funding several projects to push PC use.
[20445080] |Over the next three years, public schools will get 1.5 million PCs, a 15-fold increase from current levels.

[20445081] |In the private sector, practically every major company is setting explicit goals to increase employees' exposure to computers.
[20445082] |Toyota Motor Corp.'s sales offices in Japan have one-tenth the computers per employee that its own U.S. offices do; over the next five years, it is aiming for rough parity.
[20445083] |Within a year, Kao Corp., a major cosmetics company, plans to eliminate 1,000 clerical jobs by putting on a central computer network some work, such as credit reports, currently performed in 22 separate offices.

[20445084] |By increasing the number of PCs it uses from 66 to 1,000, Omron Tateishi Electronics Co., of Kyoto, hopes not only to make certain tasks easier but also to transform the way the company is run.
[20445085] |"Managers have long been those who supervise their subordinates so orders would be properly acted on," a spokesman says.
[20445086] |"But new managers will have to be creators and innovators . . . and for that purpose it is necessary to create an environment where information from both inside and outside the company can be reached easily, and also shared."

[20445087] |Meanwhile, more computer makers now are competing for the new business.
[20445088] |Seiko Epson Corp., a newcomer to the industry, fought off a legal challenge and started selling NEC clones last year.
[20445089] |It has won about 15% of the retail PC market.
[20445090] |Sony Corp., which temporarily dropped out of the PC business three years ago, started selling its work station in 1987 and quickly became the leading Japanese company in that market.

[20445091] |In a country where elbow room is scarce, laptop machines will take a large portion of the industry's future growth.
[20445092] |Toshiba Corp. busted open that sector this summer with a notebook-sized machine that retails for less than 200,000 yen (under $1,500) -- one of the smallest, cheapest PCs available in the country.
[20445093] |Fujitsu Ltd. is lavishing the most expensive promotion campaign in its history -- including a 100,000-guest bash at Tokyo Dome -- for its sophisticated sound/graphics FM Towns machine, which it advertises for everything from balancing the family checkbook to practicing karaoke, bar singing.

[20445094] |Many of the companies are even dropping their traditional independence and trying to band together to create some sort of standard.
[20445095] |Two years ago, most of the smaller makers joined under the Microsoft Corp. umbrella to adopt a version of the American IBM AT standard.
[20445096] |That hasn't generated much sales, but this summer Microsoft rallied all the major NEC competitors to make their new machines compatible with the IBM OS/2 standard.

[20445097] |A healthy, coherent Japanese market could also make it far easier for Japanese companies to sell overseas, where their share is still minimal.
[20445098] |But it could also help American companies, which also are starting to try to open the market.
[20445099] |As with many other goods, the American share of Japan's PC market is far below that in the rest of the world.
[20445100] |U.S. makers have under 10% share, compared with half the market in Europe and 80% at home.

[20445101] |Though no formal trade barriers exist, the Japanese computer industry is difficult for outsiders to enter.
[20445102] |"If it were an open market, we would have been in in 1983 or 1984," says Eckhard Pfeiffer, who heads Compaq Computer Corp.'s European and international operations.
[20445103] |His company, without any major effort, sells more machines in China than in Japan.
[20445104] |Although it has opened a New Zealand subsidiary, it is still only "studying" Japan, the only nation that hasn't adopted IBM-oriented specifications.
[20445105] |And because general retail centers such as ComputerLand have little presence in Japan, sales remain in the iron grip of established computer makers.

[20445106] |But the Americans are also to blame.
[20445107] |They long made little effort here.
[20445108] |IBM, though long a leader in the Japanese mainframe business, didn't introduce its first PC in Japan until five years after NEC did, and that wasn't compatible even with the U.S. IBM standard.
[20445109] |Apple didn't introduce a kanji machine -- one that handles the Chinese characters of written Japanese -- until three years after entering the market.
[20445110] |Critics also say American companies charge too much.
[20445111] |Japan's FTC says it is investigating Apple for allegedly discouraging retailers from discounting.

[20445112] |But the U.S. companies are redoubling their efforts.
[20445113] |Apple recently hired its first Japanese president, luring away an official of Toshiba's European operations, as well as a whole Japanese top-management team.
[20445114] |Earlier this year, it introduced a much more powerful kanji operating system and a kanji laser printer.
[20445115] |IBM just last year started selling its first machine that could run in both Japanese and English and that substantially enhances compatibility with its American products.

[20445116] |"It may take five years to break even in Japan," says John A. Siniscal, who runs the Asia-Pacific office for McCormack & Dodge, a U.S. software company.
[20445117] |"But it's an enormous business opportunity.

[20446001] |From a reading of the somewhat scant English-language medical literature on RU-486, the French abortion pill emerges as one of the creepiest concoctions around.
[20446002] |This is not only because it kills the unborn, a job at which it actually is not outstandingly efficient, zapping only 50% to 85% of them depending on which study you read (prostaglandin, taken in conjunction with the pill, boosts the rate to 95%).
[20446003] |By contrast, surgical abortion is 99% effective.

[20446004] |Abortion via the pill is far more of an ordeal than conventional surgical abortion.
[20446005] |It is time-consuming (the abortion part alone lasts three days, and the clinical part comprises a week's worth of visits), bloody (one woman in a Swedish trial required a transfusion, although for most it resembles a menstrual period, with bleeding lasting an average of 10 days), and painful (many women require analgesic shots to ease them through).
[20446006] |Nausea and vomiting are other common side effects.

[20446007] |Timing is of the essence with RU-486.
[20446008] |It is most effective taken about a week after a woman misses her menstrual period up through the seventh week of pregnancy, when it is markedly less effective.
[20446009] |That is typically about a three-week window.

[20446010] |So far, all the studies have concluded that RU-486 is "safe."
[20446011] |But "safe," in the definition of Marie Bass of the Reproductive Health Technologies Project, means "there's been no evidence so far of mortality."
[20446012] |No one has researched the long-term effects of RU-486 on a woman's health or fertility.

[20446013] |The drug seems to suppress ovulation for three to seven months after it is taken.
[20446014] |Some women clearly have no trouble eventually conceiving again: The studies have reported repeaters in their programs.
[20446015] |But there are no scientific data on this question.

[20446016] |Rather ominously, rabbit studies reveal that RU-486 can cause birth defects, Lancet, the British medical journal, reported in 1987.
[20446017] |However, Dr. Etienne-Emile Baulieu, the French physician who invented RU-486, wrote in a Science magazine article last month that the rabbit-test results could not be duplicated in rats and monkeys.
[20446018] |The drug has a three-dimensional structure similar to that of DES, the anti-miscarriage drug that has been linked to cervical and vaginal cancer in some of the daughters of the women who took it.

[20446019] |All the published studies recommend that women on whom the drug proves ineffective not carry the pregnancy to term but undergo a surgical abortion.
[20446020] |A risk of birth defects, a sure source of lawsuits, is one reason the U.S. pharmaceutical industry is steering clear of RU-486.

[20446021] |One might well ask: Why bother with this drug at all?
[20446022] |Some abortion advocates have been asking themselves this very question.
[20446023] |RU-486 "probably represents a technical advance in an area where none is needed, or at least not very much," said Phillip Stubblefield, president of the National Abortion Federation, at a reproductive health conference in 1986.
[20446024] |Many physicians have expressed concern over the heavy bleeding, which occurs even if the drug fails to induce an abortion.

[20446025] |It typically takes from eight to 10 years to obtain the Food and Drug Administration's approval for a new drug, and the cost of testing and marketing a new drug can range from $30 million to $70 million.

[20446026] |The Health and Human Services Department currently forbids the National Institutes of Health from funding abortion research as part of its $8 million contraceptive program.
[20446027] |But the Population Council, a 37-year-old, $20 million nonprofit organization that has the backing of the Rockefeller and Mellon foundations and currently subsidizes most U.S. research on contraceptives, has recently been paying for U.S. studies of RU-486 on a license from its French developer, Roussel-Uclaf, a joint subsidiary of the German pharmaceutical company Hoechst and the French government.

[20446028] |In the year since the pill went on the French market, the National Organization for Women and its offshoot, former NOW President Eleanor Smeal's Fund for a Feminist Majority, have been trying to browbeat the U.S. pharmaceutical industry into getting involved.
[20446029] |(Its scare-tactic prediction: the pill "will be available in the U.S., either legally or illegally, in no more than 2-5 years.")

[20446030] |Following the feminist and population-control lead has been a generally bovine press.
[20446031] |A June 1988 article in Mother Jones magazine is typical of the general level of media ignorance.
[20446032] |"For a woman whose period is late, using RU-486 means no waiting, no walking past picket lines at abortion clinics, and no feet up in stirrups for surgery," burbles health writer Laura Fraser.
[20446033] |"It also means she will never have to know whether she had actually been pregnant."
[20446034] |Wrong on all counts, Miss Fraser.

[20446035] |RU-486 is being administered in France only under strict supervision in the presence of a doctor.
[20446036] |(Roussel reportedly has every pill marked and accounted for to make sure none slips into the black market.)
[20446037] |Thus, a woman who used RU-486 to have an abortion would have to make three trips to the clinic past those picket lines; an initial visit for medical screening (anemics and those with previous pregnancy problems are eliminated) and to take the pill, a second trip 48 hours later for the prostaglandin, administered either via injection or vaginal suppository, and a third trip a week later to make sure she has completely aborted.

[20446038] |Furthermore, because timing is so critical with RU-486, she will learn, via a pelvic examination and ultrasound, not only that she is pregnant, but just how pregnant she is.
[20446039] |No doctor who fears malpractice liability would likely expose a non-pregnant patient to the risk of hemorrhaging.
[20446040] |Many women may even see the dead embryo they have expelled, a sight the surgical-abortion industry typically spares them.
[20446041] |At seven weeks, an embryo is about three-fourths of an inch long and recognizably human.

[20446042] |At the behest of pro-choice members of Congress, a four-year reauthorization bill for Title X federal family-planning assistance now contains a $10 million grant for "development, evaluation and bringing to the marketplace of new improved contraceptive devices, drugs and methods."
[20446043] |If this passes -- a Senate version has already been cleared for a floor vote that is likely early next year -- it would put the federal government into the contraceptive marketing business for the first time.
[20446044] |It also could put the government into the RU-486 business, which would please feminists dismayed at what they view as pusillanimity in the private-sector drug industry.

[20446045] |We do not know whether RU-486 will be as disastrous as some of the earlier fertility-control methods released to unblinking, uncritical cheers from educated people who should have known better.
[20446046] |(Remember the Dalkon Shield and the early birth-control pills?)
[20446047] |We will not know until a first generation of female guinea pigs -- all of whom will be more than happy to volunteer for the job -- has put the abortion pill through the clinical test of time.

[20446048] |Mrs. Allen is a senior editor of Insight magazine.
[20446049] |This article is adapted from one in the October American Spectator.

[20447001] |On June 30, a major part of our trade deficit went poof!
[20447002] |No figure juggling; no witchcraft; just vastly improved recording of some of our exports.

[20447003] |The result?
[20447004] |The Commerce Department found that U.S. exports in 1988, net of imports, were understated by $20.9 billion a year and understated at the annualized rate of $25.4 billion in the first quarter of 1989.
[20447005] |More than half of the "newly found" net exports were from just a few service-sector categories.
[20447006] |Some of the biggest service-industry exporters -- American financial-service companies, for example -- have yet to be fully included in our export statistics.

[20447007] |Nearly 10 years ago, representatives of service-sector companies worked out a plan with the Commerce Department to improve the data on service-sector exports.
[20447008] |Both groups believed that tens of billions of dollars of service exports -- such as inbound tourism; legal, accounting and other professional services furnished to foreigners; financial, engineering and construction services; and the like -- were not being counted as exports.

[20447009] |The monthly "trade deficit" figure is limited to traditional merchandise trade: manufactured goods and raw materials.
[20447010] |In the quarterly balance-of-payments report, those merchandise trade figures are merged with statistics on exports and imports of services, as well as returns on investments abroad by Americans and returns on foreign investments in the U.S.

[20447011] |Over time, through benchmark surveys, the corrected data on service exports and imports have been gathered.
[20447012] |The first three major areas of the service sector to be revamped were expenditures by foreign students in the U.S. (net after expenditures by Americans studying abroad), some exports by professional firms (a law firm billing a German client for services rendered in watching legislation in Washington is as much an export as shipment of an American jet engine), and improved data from travel and tourism.

[20447013] |In just these three areas, the Commerce Department found $23 billion more exports than previously reported and $11.6 billion more imports, with the net result that the U.S. service surplus in 1988 increased by $11.3 billion, to $19 billion.

[20447014] |Combined with recalculations and revisions in other trade areas, the value of U.S. net exports that had not previously been recorded was about $20 billion a year.
[20447015] |That means that the U.S. trade deficit was running closer to $75 billion than to $95 billion in 1988, and $55 billion (annualized) rather than $80 billion in the first quarter of 1989.

[20447016] |These revised figures also may explain some of the recent strength of the dollar.
[20447017] |The materially smaller trade deficit may have been already discounted in the market.

[20447018] |What does this mean for trade policy?
[20447019] |Too early to tell, but a trade deficit that is significantly smaller than we imagined does suggest a review of our trade posture.
[20447020] |It does not relieve the need for our market-opening efforts for both goods and services, but it does suggest that it is our exports of services, and not just borrowing, that is financing our imports of goods.

[20447021] |Mr. Freeman is an executive vice president of American Express.

[20448001] |The collapse of a $6.79 billion labor-management buy-out of United Airlines parent UAL Corp. may not stop some of Wall Street's top talent from collecting up to $53.7 million in fees.

[20448002] |According to one person familiar with the airline, the buy-out group -- led by United's pilots union and UAL Chairman Stephen Wolf -- has begun billing UAL for fees and expenses it owes to investment bankers, law firms and banks.

[20448003] |The tab even covers $8 million in commitment fees owed to Citicorp and Chase Manhattan Corp., even though their failure to obtain $7.2 billion in bank loans for the buy-out was the main reason for its collapse.

[20448004] |Under a merger agreement reached Sept. 14, the UAL board agreed to reimburse certain of the buy-out group's expenses out of company funds even if the transaction wasn't completed, provided the group didn't breach the agreement.
[20448005] |The failure to obtain financing doesn't by itself constitute a breach.

[20448006] |The merger agreement says the buy-out group is entitled to be repaid $26.7 million in fees for its investment bankers, Lazard Freres & Co. and Salomon Brothers Inc., and its law firm, Paul Weiss Rifkind Wharton & Garrison.

[20448007] |The buy-out group is also entitled to $16 million to repay a fund created by the pilots union for an employee stock ownership plan.
[20448008] |In addition to the $8 million for Citicorp and Chase, Salomon Brothers is also owed $3 million for promising to make a $200 million bridge loan.

[20448009] |A spokesman for the buy-out group wasn't immediately available for comment.

[20448010] |Separately, UAL stock rose $4 a share to $175 in composite trading on the New York Stock Exchange on reports that Los Angeles investor Marvin Davis has asked United Airlines unions if they're interested in cooperating with Mr. Davis in a new bid for UAL.

[20448011] |But neither the pilots nor the machinists appear interested, and Mr. Davis is barred from making a new bid under terms of an agreement he made with UAL in September unless UAL accepts an offer below $300 a share.

[20449001] |Wall Street continued to buckle under the public outcry against computer-driven program trading.

[20449002] |Kidder, Peabody & Co., a unit of General Electric Co., announced it would stop doing stock-index arbitrage for its own account, and Merrill Lynch & Co. pulled out of the practice altogether.

[20449003] |At the New York Stock Exchange, which has been buffeted by complaints from angry individual investors and the exchange's own listed companies, Chairman John J. Phelan Jr. held an emergency meeting with senior partners of some of the Big Board's 49 stock specialist firms.
[20449004] |The specialists, a trader said, were "livid" about Mr. Phelan's recent remarks that sophisticated computer-driven trading strategies are "here to stay."
[20449005] |Many investors blame program trading for wild swings in the stock market, including the 190-point plunge in the Dow Jones Industrial Average on Oct. 13.
[20449006] |A specialist is an exchange member designated to maintain a fair and orderly market in a specified stock.

[20449007] |Mr. Phelan's meeting with the floor brokers comes as he prepares to explain the exchange's position on program trading to key congressional regulators in a closed session tomorrow, according to exchange officials.

[20449008] |A Big Board spokesman would only say, "We're working the problem and looking at the issue and meeting with a broad number of customers and constituents to get their views and ideas on the issue."
[20449009] |The program-trading outcry was taken to a new level when giant Contel Corp. said it and 20 or more of the Big Board's listed companies are forming an unprecedented alliance to complain about the exchange's role in program trading.

[20449010] |The decision by Merrill, the nation's largest securities firm, represents the biggest retreat yet from program trading.
[20449011] |Merrill has been the fourth-biggest stock-index arbitrage trader on the Big Board this year, executing an average of 18.1 million shares a month in such trades, or about one million shares a day.

[20449012] |Merrill's move is one of the most sweeping program-trading pullbacks of recent days, because the big securities firm will no longer execute stock-index arbitrage trades for customers.
[20449013] |Most Wall Street firms, in pulling back, have merely stopped such trading for their own accounts.

[20449014] |Merrill has been one of the main firms executing index arbitrage for customers.
[20449015] |Merrill also said it is lobbying for significant regulatory controls on program trading, including tough margin -- or down-payment -- requirements and limits on price moves for program-driven financial futures.

[20449016] |Merrill, in a statement by Chairman William A. Schreyer and President Daniel P. Tully, said index arbitrage "has been clearly identified in the investing public's mind as a contributing factor to excess market volatility," so Merrill won't execute such trades until "effective controls" are in place.

[20449017] |In stock-index arbitrage, traders buy and sell large amounts of stocks with offsetting trades in stock-index futures and options.
[20449018] |The idea is to lock in profits from short-term swings in volatile markets.

[20449019] |Last Thursday, PaineWebber Group Inc. also said it would cease index arbitrage altogether, but the firm wasn't as big an index arbitrager as Merrill is.
[20449020] |Other large firms, including Bear, Stearns & Co. and Morgan Stanley & Co., last week announced a pullback from index arbitrage, but only for the firms' own accounts.

[20449021] |Kidder made an abrupt about-face on program trading yesterday, after a special meeting between the firm's president and chief executive officer, Michael Carpenter, and its senior managers.
[20449022] |Just a week ago, Mr. Carpenter staunchly defended index arbitrage at Kidder, the most active index-arbitrage trading firm on the stock exchange this year.
[20449023] |Index arbitrage, Mr. Carpenter said last week, doesn't have a "negative impact on the market as a whole" and Kidder's customers were "sophisticated" enough to know that.

[20449024] |But yesterday, Mr. Carpenter said big institutional investors, which he wouldn't identify, "told us they wouldn't do business with firms" that continued to do index arbitrage for their own accounts.
[20449025] |"We were following the trend of our competitors who were under pressure from institutions," he said.

[20449026] |Kidder so far this year has executed a monthly average of 37.8 million shares in index-arbitrage trading, and is second only to Morgan Stanley in overall program trading, which includes index arbitrage.
[20449027] |Most of Kidder's program trading is for its own account, according to the New York Stock Exchange.

[20449028] |Kidder denied that GE's chairman and chief executive, John F. Welch, had anything to do with Kidder's decision.
[20449029] |But at least one chief executive said he called Mr. Welch to complain about Kidder's aggressive use of program trading, and other market sources said they understood that Mr. Welch received many phone calls complaining about Kidder's reliance on index arbitrage as a major business.
[20449030] |Kidder has generally been sensitive to suggestions that GE makes decisions for its Kidder unit.
[20449031] |"Our decision had nothing to do with any pressure Mr. Welch received," Mr. Carpenter said.
[20449032] |"This was a Kidder Peabody stand-alone decision."

[20449033] |A spokeswoman for GE in Fairfield, Conn., said, "Absolutely no one spoke to Jack Welch on this subject" and added, "Anyone who claims they talked to Jack Welch isn't telling the truth."

[20449034] |Supporters of index arbitrage haven't been publicly sticking up for the trading strategy, as some did during the post-crash outcry of 1987.
[20449035] |But Merrill Lynch, in its statement about pulling out of index arbitrage, suggested that the current debate has missed the mark.

[20449036] |Merrill said it continues to believe that "the causes of excess market volatility are far more complex than any particular computer trading strategy.
[20449037] |Indeed, there are legitimate hedging strategies used by managers of large portfolios such as pension funds that involve program trading as a means of protecting the assets of their pension beneficiaries."

[20449038] |Merrill's index arbitragers will continue to do other kinds of computer-assisted program trading, so there probably won't be any layoffs at the firm, people familiar with Merrill's program operation said.

[20449039] |Meanwhile, Bear Stearns Chairman and Chief Executive Alan C. Greenberg said his firm will continue stock-index arbitrage for its clients.
[20449040] |At the firm's annual meeting last night, he told shareholders that index arbitrage won't go away, despite the public outcry.
[20449041] |"If they think they are going to stop index arbitrage by causing a few Wall Street firms to quit, they are crazy," Mr. Greenberg said.
[20449042] |"It's not going to stop it at all."

[20449043] |Mr. Greenberg, noting that stock-index arbitrage rises and ebbs with stock market's volatility, said that for the first four months of the firm's fiscal year beginning in July, stock-index arbitrage had been a "break-even" proposition for Bear Stearns.

[20449044] |In response to a shareholder's suggestion, Mr. Greenberg agreed that European firms will simply pick up the index-arbitrage business left behind by U.S. institutions.

[20449045] |Pressure from big institutional investors has been the major catalyst for Wall Street's program-trading pullback.
[20449046] |And there was speculation yesterday that Fidelity Investments and other large mutual-fund companies might soon follow the lead of Kemper Corp. and other institutions in cutting off trading business to securities firms that do program trading.
[20449047] |A Fidelity spokesman in Boston denied the speculation, saying the program-trading issue was more of a regulatory problem.

[20449048] |But a much smaller mutual fund company, the USAA Investment Management Co. unit of USAA, San Antonio, Texas, said it informed nine national brokerage firms it will cease business with them unless they stop index-arbitrage trading.
[20449049] |USAA, with 400,000 mutual fund accounts, manages more than $10 billion, $2 billion of which is in the stock market.
[20449050] |Michael J.C. Roth, USAA executive vice president, called program trading "mindless."
[20449051] |He said there is "no valid investment reason" for stock-index futures to exist.

[20449052] |A program-bashing move is clearly on.
[20449053] |Charles Wohlstetter, chairman of Contel, who is helping organize the alliance of Big Board-listed firms, said he had no time to work yesterday because he received so many phone calls, faxes and letters supporting his view that the Big Board has been turned into a "gambling casino" by program traders.

[20449054] |"We are reaching the moment of truth" on Wall Street, said Rep. Edward J. Markey (D., Mass.), chairman of the House subcommittee on telecommunications and finance.
[20449055] |"{Wall Street} is beginning to realize -- as Shakespeare said -- the trouble is not in our stars, but in ourselves."

[20449056] |Craig Torres and Anne Newman contributed to this article.

[20450001] |An ancient red-figured Greek kylix, or drinking cup, was recovered backstage at Sotheby's this spring and has been returned to the Manhattan couple who lost it in a burglary three years ago.
[20450002] |Robert Guy, an associate curator at the Princeton Art Museum, was previewing a June antiquities sale at the auction house when he recognized the kylix, which he, as a specialist in Attic pottery and a careful reader of the Stolen Art Alert in "IFAR Reports," knew was stolen.
[20450003] |The timing of his visit was fortuitous; the man who had brought it in for an estimate had returned to collect it and was waiting in the hall.
[20450004] |To confirm Mr. Guy's identification, Sotheby's and IFAR exchanged photos by fax, and the waiting man, apparently innocent of knowledge that the kylix was stolen, agreed to release it.
[20450005] |The cup had been insured, and in short order it was given over to a Chubb & Son representative.
[20450006] |The original owners happily repaid the claim and took their kylix home.

[20450007] |A former curator of the Museum of Cartoon Art in Rye Brook, N.Y., pleaded guilty in July to stealing and selling original signed and dated comic strips, among them 29 Dick Tracy strips by Chester Gould, 77 Prince Valiant Sunday cartoons by Hal Foster, and a dozen Walt Disney animation celluloids, according to Barbara Hammond, the museum's director.
[20450008] |He sold them well below market value to raise cash "to pay off mounting credit-card debts," incurred to buy presents for his girlfriend, his attorney, Philip Russell, told IFAR.
[20450009] |The curator, 27-year-old Sherman Krisher of Greenwich, Conn., had worked his way up from janitor in seven years at the museum.
[20450010] |The theft was discovered early this year, soon after Ms. Hammond took her post.

[20450011] |Sentencing was postponed on Aug. 18, when Mr. Krisher was hospitalized for depression.
[20450012] |His efforts to get back the stolen strips had resulted in recovery of just three.
[20450013] |But on Oct. 6, he had reason to celebrate.
[20450014] |Two days earlier, his attorney met in a Park Avenue law office with a cartoon dealer who expected to sell 44 of the most important stolen strips to Mr. Russell for $62,800.
[20450015] |Instead, New York City police seized the stolen goods, and Mr. Krisher avoided jail.
[20450016] |He was sentenced to 500 hours of community service and restitution to the museum of $45,000.

[20450017] |Authorities at London's Heathrow Airport are investigating the disappearance of a Paul Gauguin watercolor, "Young Tahitian Woman in a Red Pareo," that has two sketches on its verso (opposite) side.
[20450018] |Valued at $1.3 million, it was part of a four-crate shipment.
[20450019] |The air-waybill number was changed en route, and paper work showing that the crates had cleared customs was misplaced, so it was a week before three of the four crates could be located in a bonded warehouse and the Gauguin discovered missing.
[20450020] |Although Heathrow authorities have been watching a group of allegedly crooked baggage handlers for some time, the Gauguin may be "lost."
[20450021] |Chief Inspector Peter Seacomb of the Criminal Investigation Department at the airport said, "It is not uncommon for property to be temporarily mislaid or misrouted."

[20450022] |Officials at the University of Virginia Art Museum certainly would agree.
[20450023] |Their museum had purchased an Attic black-figured column krater and shipped it from London.
[20450024] |It was reported stolen in transit en route to Washington, D.C., in February.
[20450025] |Months later, the Greek vase arrived in good condition at the museum in Charlottesville, having inexplicably traveled by a circuitous route through Nairobi.

[20450026] |Two Mexican college dropouts, not professional art thieves, have been arrested for a 1985 Christmas Eve burglary from the National Museum of Anthropology in Mexico City.
[20450027] |About 140 Mayan, Aztec, Mixtec and Zapotec objects, including some of Mexico's best-known archaeological treasures, were taken.
[20450028] |The government offered a reward for the return of the antiquities, but routine police work led to the recovery.
[20450029] |As it turned out, Carlos Perches Trevino and Ramon Sardina Garcia had hidden the haul in a closet in the Perches family's home for a year.
[20450030] |Then they took the art to Acapulco and began to trade some of it for cocaine.
[20450031] |Information from an arrested drug trafficker led to the two men and the recovery of almost all the stolen art.

[20450032] |Among other happy news bulletins from the German Democratic Republic, the Leipzig Museum of Fine Arts announced that it has recovered "Cemetery in the Snow," a painting by the German Romantic painter Caspar David Friedrich.
[20450033] |The artist's melancholy subjects bring high prices on the world market, and the U.S. State Department notified IFAR of the theft in February 1988.
[20450034] |According to a source at the East Europe desk, two previously convicted felons were charged, tried, convicted and sentenced to prison terms of four and 12 years.

[20450035] |The precious canvas, cut from its frame at the time of the theft, was found in nearby Jena, hidden in the upholstery of an easy chair in the home of the girlfriend of one of the thieves.
[20450036] |No charges were brought against her.

[20450037] |Trompe l'oeil painting is meant to fool the eye, but Robert Lawrence Trotter, 35, of Kennett Square, Pa., took his fooling seriously.
[20450038] |He painted one himself in the style of John Haberle and sold it as a 19th-century original to antique dealers in Woodbridge, Conn.
[20450039] |Mr. Trotter's painting showed a wall of wood boards with painted ribbons tacked down in a rectangle; tucked behind the ribbons were envelopes, folded, faded and crumpled papers and currency.
[20450040] |Mr. Trotter's fake Haberle was offered at a bargain price of $25,000 with a phony story that it belonged to his wife's late aunt in New Canaan, Conn.

[20450041] |The dealers immediately showed their new acquisition to an expert and came to see it as a fake.
[20450042] |They persuaded Mr. Trotter to take it back and, with the help of the FBI, taped their conversation with him.
[20450043] |After his arrest, the forger admitted to faking and selling other paintings up and down the Eastern seaboard.

[20450044] |Ms. Lowenthal is executive director of the International Foundation for Art Research (IFAR).

[20451001] |Ford Motor Co. said it is recalling about 3,600 of its 1990-model Escorts because the windshield adhesive was improperly applied to some cars.

[20451002] |Separately, Ford and Mazda Motor Corp.'s U.S. sales arm said they are recalling about 88,500 1988-model Mercury Tracers and 220,000 1986, 1987 and 1988 model Mazda 323s equipped with 1.6-liter fuel-injected engines to replace the oil filler cap.
[20451003] |Mazda makes the Tracer for Ford.

[20451004] |As a result of the adhesive problem on the Ford Escort subcompacts, windshields may easily separate from the car during frontal impact, the U.S. auto maker said.
[20451005] |When properly applied, the adhesive is designed to retain the windshield in place in a crash test at 30 miles per hour.

[20451006] |A Ford spokesman said the Dearborn, Mich., auto maker isn't aware of any injuries caused by the windshield problem.
[20451007] |Ford said owners should return the cars to dealers so the windshields can be removed and securely reinstalled.

[20451008] |Mazda and Ford said a combination of limited crankcase ventilation and improper maintenance could cause engine oil in some of the Mercury Tracers and Mazda 323s to deteriorate more rapidly than normal, causing increased engine noise or reduced engine life.
[20451009] |They said the problems aren't safety related.

[20451010] |Both companies will replace the oil filler cap with a ventilated oil filler cap.
[20451011] |Both also will inspect and replace, if necessary, oil filters and oil strainers, at no charge to owners.

[20451012] |For owners who have followed the recommended oil maintenance schedule, Mazda will extend to five years or 60,000 miles the warranty term for engine damage due to abnormal engine oil deterioration.
[20451013] |The normal term for the 1986 and 1987 model 323 is two years or 24,000 miles; the term for the 1988 323 is three years or 50,000 miles.
[20451014] |Ford said the term on its warranty is already six years or 60,000 miles.

[20451015] |Separately, Ford said it will offer $750 cash rebates to buyers of its 1990-model Ford Bronco sport utility vehicle.
[20451016] |It said it will also offer buyers the option of financing as low as 6.9% on 24-month loans.
[20451017] |Ford also offered the low financing rate option on 1989-model Broncos, which previously carried a $750 cash discount.
[20451018] |Ford said the new offer will begin Saturday and run indefinitely.

[20452001] |The Supreme Court agreed to decide whether the federal Pension Benefit Guaranty Corp. may require LTV Corp. to reassume funding responsibility for a $2.3 billion shortfall in the company's pension plans.

[20452002] |The high court's decision, expected next spring, may affect the stability of many large corporate pension plans that have relied on the availability of pension insurance provided by the federal pension regulatory and insurance agency.

[20452003] |The agency, which is funded through insurance premiums from employers, insures pension benefits for some 30 million private-sector workers who take part in single-employer pension plans.
[20452004] |It recently reported assets of $2.4 billion and liabilities of $4 billion.

[20452005] |In its appeal to the high court, the agency said the federal appeals court ruling, which favored LTV, threatened to transform the agency from an insurer of troubled pension plans into an "open-ended source of industry bailouts."

[20452006] |The ruling also may determine how quickly LTV is able to complete its Chapter 11 reorganization.
[20452007] |LTV filed for protection under Chapter 11 in federal bankruptcy court in 1986.
[20452008] |The filing was partly the result of the $2.3 billion shortfall in LTV's three pension plans operated for its LTV Steel Co. subsidiary's employees.

[20452009] |In January 1987, as LTV Steel continued operating while under reorganization, the agency terminated the three LTV pension plans to keep its insurance liability from increasing.
[20452010] |Termination means that the agency's insurance assumes the liabilities and pays the pension benefits already owed under the plans, but workers don't accrue new benefits.

[20452011] |A few months later, under pressure from the United Steelworkers of America, LTV instituted a new program to provide retirement benefits similar to those in the terminated plans.
[20452012] |Because the federal pension agency had taken over the old plans, LTV would be responsible only for benefits paid under the new pension plans.

[20452013] |But the agency viewed the creation of the new plans as an abuse of federal pension law and an attempt to transfer the liability of the $2.3 billion shortfall from LTV to federal insurance.
[20452014] |The agency also concluded that LTV's financial status had improved while it was under reorganization.
[20452015] |In September 1987, it ordered LTV to reassume liability and funding for the three original plans.

[20452016] |LTV challenged the order, and a federal district court in New York in June 1988 ruled that the agency improperly ordered LTV to reassume responsibility for the plans.

[20452017] |In May, a federal appeals court in New York agreed that the agency acted unlawfully.
[20452018] |The appeals court said there was no evidence that Congress intended to allow the pension agency to consider a company's creation of new benefit plans as a basis for ordering that company to reassume liability for old plans.
[20452019] |The appeals court also said the agency had to consider a company's long-term ability to fund pension plans, not just short-term improved financial status.

[20452020] |In Dallas, LTV said that it was disappointed that the court agreed to hear the case because it believes the move will further delay its Chapter 11 proceedings.
[20452021] |The company hasn't been able to come up with a reorganization plan, in part, because of the sizable disagreement with the pension agency.

[20452022] |But LTV, a steel, aerospace and energy concern, said it is confident that the Supreme Court will uphold the lower-court decisions and said it expects to continue discussions with the agency about a settlement while the case is being reviewed.
[20452023] |(Pension Benefit Guaranty Corp. vs. LTV Corp.

[20453001] |The commercial was absolutely silent.
[20453002] |Breaking into the raucous Chicago Bears-Cleveland Browns match during last week's Monday night football game, it was nothing but simple block letters superimposed on the TV screen.

[20453003] |"Due to the earthquake in San Francisco, Nissan is donating its commercial air time to broadcast American Red Cross Emergency Relief messages.
[20453004] |Please contribute what you can," the ad said.
[20453005] |The Nissan logo flashed on the screen for a moment, and then came a taped plea for donations from former President Reagan -- followed by the silent print telling viewers where to call.
[20453006] |Within two hours, viewers pledged over $400,000, according to a Red Cross executive.

[20453007] |Call it disaster marketing.
[20453008] |Nissan Motor is just one of a slew of advertisers that have hitched their ads to the devastating San Francisco quake and Hurricane Hugo.
[20453009] |Sometimes, the ads attempt to raise money; always, they try to boost good will.
[20453010] |By advertising disaster relief, these companies are hoping to don a white hat and come out a hero.
[20453011] |But the strategy can backfire; if the ads appear too self-serving, the companies may end up looking like rank opportunists instead of good Samaritans.

[20453012] |That hasn't deterred plenty of companies.
[20453013] |Along with Nissan, Grand Metropolitan PLC's Burger King and New York Life Insurance have tied ads to Red Cross donations.
[20453014] |Other ads don't bother with the fundraising; a touching, if self-congratulatory, American Telephone & Telegraph ad that aired Sunday intermixed footage of the devastation in San Francisco and Charleston, S.C., with interviews of people recounting how AT&T helped.

[20453015] |At Nissan, "we felt we wanted to do something to help them gather money, and we had this airtime on Monday Night Football," explains Brooke Mitzel, a Nissan advertising creative manager.
[20453016] |"What did we get out of it?
[20453017] |We got some exposure . . . and pretty much good will."

[20453018] |The ads are just the latest evidence of how television advertising is getting faster on the draw.
[20453019] |While TV commercials typically take weeks to produce, advertisers in the past couple of years have learned to turn on a dime, to crash out ads in days or even hours.
[20453020] |The big brokerage houses learned the art of the instant commercial after the 1987 crash, when they turned out reassuring ads inviting investors right back into the stock market.
[20453021] |They trotted out another crop of instant commercials after the sudden market dip a few weeks ago.
[20453022] |Nissan created its quake ad in a weekend.

[20453023] |But as advertisers latch onto disasters with increasing frequency, they risk hurting themselves as much as helping the cause.
[20453024] |They chance alienating the customers they hope to woo by looking like opportunistic sharks.
[20453025] |"People see extra messages in advertising, and if a manufacturer is clearly trying to get something out of it . . . if it's too transparent . . . then consumers will see through that," warns John Philip Jones, chairman of the advertising department at the Newhouse School of Public Communications at Syracuse University.

[20453026] |"It can backfire because companies can step across the line and go too far, be too pushy," agrees Gary Stibel, a principal with New England Consulting Group, Westport, Conn.
[20453027] |"The ultimate form of charity is when you don't tell anyone."
[20453028] |Still, he says that only a few of the quake-related campaigns have been "tasteless" and that "the majority have been truly beneficial to the people who need the help.
[20453029] |We don't consider that ambulance chasing."

[20453030] |The companies running the disaster ads certainly don't see themselves as ambulance chasers, either.
[20453031] |Burger King's chief executive officer, Barry Gibbons, stars in ads saying that the fast-food chain will donate 25 cents to the Red Cross for every purchase of a BK Doubles hamburger.
[20453032] |The campaign, which started last week and runs through Nov. 23, with funds earmarked for both the quake and Hugo, "was Barry's idea," a spokeswoman says.
[20453033] |"Barry felt very committed.
[20453034] |He felt we should be giving something back."

[20453035] |While the campaign was Mr. Gibbons's idea, however, he won't be paying for it: The donations will come out of the chain's national advertising fund, which is financed by the franchisees.
[20453036] |And by basing donations on BK Doubles, a new double-hamburger line the fast-food chain is trying to push, Burger King works a sales pitch into its public-service message.

[20453037] |Toyota's upscale Lexus division, a sponsor of the World Series, also put in a plug for Red Cross donations in a World Series game it sponsored.
[20453038] |"The World Series is brought to you by Lexus, who urges you to help relieve the suffering caused by the recent earthquake . . . ," the game announcer said.
[20453039] |And New York Life made a plea for Red Cross donations in newspaper ads in the San Francisco area, latching onto the coattails of the Red Cross's impeccable reputation: "The Red Cross has been helping people for 125 years.
[20453040] |New York Life has been doing the same for over 140 years."

[20453041] |Nancy Craig, advertising manager for the Red Cross, readily admits "they're piggybacking on our reputation."
[20453042] |But she has no problem with that, she says: "In the meanwhile, they're helping us."
[20453043] |The Red Cross doesn't track contributions raised by the disaster ads, but it has amassed $46.6 million since it first launched its hurricane relief effort Sept. 23.

[20453044] |Ad Notes. . . .

[20453045] |NEW ACCOUNT:
[20453046] |Northrup King Co., Golden Valley, Minn., awarded its $4 million field-crop-seeds account to Creswell, Munsell, Fultz & Zirbel, a Cedar Rapids, Iowa, division of Young & Rubicam.
[20453047] |The account had previously been handled by Saatchi & Saatchi Wegener, New York.

[20453048] |TV GUIDE:
[20453049] |Wieden & Kennedy, Portland, Ore., was named to handle the News Corp. publication's $1 million to $2 million trade-ad account.
[20453050] |N W Ayer, the New York agency that had handled the account since 1963, resigned the account about two weeks ago.

[20453051] |NO ALCOHOL:
[20453052] |Miller Brewing Co. will introduce its first non-alcoholic beer Jan. 1.
[20453053] |The brew, called Miller Sharp's, will be supported by ads developed by Frankenberry, Laughlin & Constable, Milwaukee.

[20454001] |RADIO:
[20454002] |Viacom Broadcasting Inc. definitively agreed to acquire KOFY(AM) and KOFY-FM in San Francisco for about $19.5 million from Pacific FM Inc.

[20455001] |The Supreme Court let stand a New York court's ruling that the manufacturers of a drug once used to prevent miscarriages must share liability for injuries or deaths when the maker of an individual dose is unknown.

[20455002] |The high court's action, refusing to hear appeals by several drug companies, is likely to have a significant impact at several levels.
[20455003] |The most immediate effect is in New York, where former manufacturers of the anti-miscarriage drug DES -- the synthetic female hormone diethylstilbestrol -- face the prospect of shared liability for damages in many of the 700 to 1,000 DES lawsuits pending in that state.
[20455004] |The lawsuits stemmed from the development of cancer and other problems in the daughters of women who took the drug.

[20455005] |On a broader scale, the ruling could encourage other states' courts to adopt the logic of the New York court, not only in DES cases but in other product-related lawsuits, as well.

[20455006] |The New York Court of Appeals ruling parallels a 1980 decision by the California Supreme Court requiring shared liability among manufacturers for injuries when it can't be determined which company is at fault.
[20455007] |Paul Rheingold, a New York lawyer who represents DES victims, said that before the New York ruling, only the states of Washington and Wisconsin had followed the California decision.
[20455008] |Now that the New York decision has been left intact, other states may follow suit.

[20455009] |"Generally, when New York and California go one way, it has a tremendous influence on other states, especially small ones," said Mr. Rheingold.
[20455010] |The high court refused to hear appeals by Rexall Drug Co., which went out of business in 1987 and was taken over by RXDC Liquidating Trust; E.R. Squibb & Sons Inc., a unit of Squibb Corp.; and Eli Lilly & Co.

[20455011] |The appeals involved DES, which was approved by the Food and Drug Administration for use from the 1940s until 1971 to prevent miscarriages during pregnancy.
[20455012] |In 1971, the FDA banned the use of DES after studies linked it to cancer and other problems in daughters of women who took the drug.

[20455013] |Lawsuits over the harm caused by DES have flooded federal and state courts in the past decade.
[20455014] |In many cases, the lawsuit was filed long after the drug was used -- the cancer in the daughters was typically not detected for years -- and there is no way to prove which of several companies manufactured the doses consumed by certain women.

[20455015] |Under traditional legal theories, inability to prove which company manufactured a drug that caused an injury or death would lead to the lawsuit being dismissed.
[20455016] |But in its ruling last April, the New York court said that all producers of the anti-miscarriage drug should share liability when the manufacturer of a specific dose can't be determined.
[20455017] |Each company's share of liability would be based on their share of the national DES market.

[20455018] |The New York court also upheld a state law, passed in 1986, extending for one year the statute of limitations on filing DES lawsuits.
[20455019] |The effect is that lawsuits that might have been barred because they were filed too late could proceed because of the one-year extension.
[20455020] |(Rexall Drug Co. vs. Tigue; E.R. Squibb & Sons Inc. vs. Hymowitz, and Eli Lilly & Co. vs. Hymowitz)

[20455021] |Government Contractors

[20455022] |The high court, leaving intact a $4.25 million damage award against General Dynamics Corp., declined to resolve questions about a legal defense against civil lawsuits often used by government contractors.

[20455023] |Last year, the Supreme Court defined when companies, such as military contractors, may defend themselves against lawsuits for deaths or injuries by asserting that they were simply following specifications of a federal government contract.
[20455024] |In that decision, the high court said a company must prove that the government approved precise specifications for the contract, that those specifications were met and that the government was warned of any dangers in use of the equipment.

[20455025] |But last February, a federal appeals court in New Orleans upheld a damage award against General Dynamics, rejecting the company's use of the government contractor defense.
[20455026] |The appeals court said the defense is valid only if federal officials did more than rubber stamp a company's design or plans and engaged in a "substantive review and evaluation" on a par with a policy decision.

[20455027] |General Dynamics appealed to the high court, backed by numerous business trade groups, arguing that the appeals court definition restricts the defense too severely.

[20455028] |General Dynamics was sued by the families of five Navy divers who were killed in 1982 after they re-entered a submarine through a diving chamber.
[20455029] |The accident was caused by faulty operation of a valve.
[20455030] |A federal district court awarded damages to the families and the appeals court affirmed the award.
[20455031] |(General Dynamics Corp. vs. Trevino

[20455032] |Court in Brief

[20455033] |In other action yesterday, the high court:

[20455034] |-- Let stand the mail fraud and conspiracy conviction of John Lavery, a former vice president of Beech-Nut Nutrition Corp., a unit of Nestle S.A.
[20455035] |The conviction stemmed from federal charges of consumer fraud for sale of phony infant apple juice between 1978 and 1983.
[20455036] |(Lavery vs. U.S.)

[20455037] |-- Left intact an award of $1.5 million in damages against Dow Chemical Co. in the death of an Oregon man from exposure to Agent Orange.
[20455038] |The award was made by a federal court to the widow of a U.S. Forest Service employee who contracted Hodgkin's disease after using herbicides containing Agent Orange in a weed-killing program.

[20456001] |It can be hoped that Spanish Prime Minister Felipe Gonzalez will draw the right conclusion from his narrow election victory Sunday.
[20456002] |A strong challenge from the far left, the Communist coalition Izquierda Unida, failed to topple him.
[20456003] |He should consider his victory a mandate to continue his growth-oriented economic reforms and not a demand that he move further left.
[20456004] |If he follows the correct path, he may be able to look back on this election as the high-water mark of far-left opposition.

[20456005] |The far left had some good issues even if it did not have good programs for dealing with them.
[20456006] |It could point to plenty of ailments that the Spanish economic rejuvenation so far has failed to cure.
[20456007] |Unemployment still is officially recorded at 16.5%, the highest rate in Europe, although actual joblessness may be lower.
[20456008] |Housing is scarce and public services -- the court system, schools, mail service, telephone network and the highways -- are in disgraceful condition.
[20456009] |Large pockets of poverty still exist.

[20456010] |The left also is critical of the style of the Socialist government -- a remarkable parallel to the situation in Britain.
[20456011] |Mr. Gonzalez and his colleagues, particularly the finance minister, Carlos Solchaga, are charged with having abandoned their socialist principles and with having become arrogant elitists who refuse even to go on television (controlled by the state) to face their accusers.
[20456012] |In response to this, the Socialist prime minister has simply cited his free-market accomplishments.

[20456013] |They are very considerable: Since 1986, when Spain joined the European Community, its gross domestic product has grown at an annual average of 4.6% -- the fastest in the EC.
[20456014] |In that time more than 1.2 million jobs have been created and the official jobless rate has been pushed below 17% from 21%.
[20456015] |A 14% inflation rate dropped below 5%.
[20456016] |Net foreign investment through August this year has been running at a pace of $12.5 billion, about double the year-earlier rate.
[20456017] |Mr. Gonzalez also has split with the left in reaffirming Spain's NATO commitment and in renewing a defense treaty with the U.S.

[20456018] |Mr. Gonzalez is not quite a closet supply-side revolutionary, however.
[20456019] |He did not go as far as he could have in tax reductions; indeed he combined them with increases in indirect taxes.

[20456020] |Yet the best the far-left could do was not enough to deter the biggest voting bloc -- nearly 40% -- from endorsing the direction Spain is taking.
[20456021] |Now he can go further.
[20456022] |He should do more to reduce tax rates on wealth and income, in recognition of the fact that those cuts yield higher, not lower, revenues.
[20456023] |He could do more to cut public subsidies and transfers, thus making funds available for public services starved of money for six years.

[20456024] |The voters delivered Mr. Gonzalez a third mandate for his successes.
[20456025] |They, as well as numerous Latin American and East European countries that hope to adopt elements of the Spanish model, are supporting the direction Spain is taking.
[20456026] |It would be sad for Mr. Gonzalez to abandon them to appease his foes.

[20457001] |Monday, October 30, 1989

[20457002] |The key U.S. and foreign annual interest rates below are a guide to general levels but don't always represent actual transactions.

[20457003] |PRIME RATE: 10 1/2%.
[20457004] |The base rate on corporate loans at large U.S. money center commercial banks.

[20457005] |FEDERAL FUNDS: 8 3/4% high, 8 11/16% low, 8 3/4% near closing bid, 8 3/4% offered.
[20457006] |Reserves traded among commercial banks for overnight use in amounts of $1 million or more.
[20457007] |Source: Fulton Prebon (U.S.A.) Inc.

[20457008] |DISCOUNT RATE: 7%.
[20457009] |The charge on loans to depository institutions by the New York Federal Reserve Bank.

[20457010] |CALL MONEY: 9 3/4% to 10%.
[20457011] |The charge on loans to brokers on stock exchange collateral.

[20457012] |COMMERCIAL PAPER placed directly by General Motors Acceptance Corp.:8.50% 30 to 44 days; 8.25% 45 to 62 days; 8.375% 63 to 89 days; 8% 90 to 119 days; 7.90% 120 to 149 days; 7.80% 150 to 179 days; 7.55% 180 to 270 days.

[20457013] |COMMERCIAL PAPER: High-grade unsecured notes sold through dealers by major corporations in multiples of $1,000:8.55% 30 days; 8.50% 60 days; 8.45% 90 days.

[20457014] |CERTIFICATES OF DEPOSIT: 8.09% one month; 8.04% two months; 8.03% three months; 7.96% six months; 7.92% one year.
[20457015] |Average of top rates paid by major New York banks on primary new issues of negotiable C.D.s, usually on amounts of $1 million and more.
[20457016] |The minimum unit is $100,000.
[20457017] |Typical rates in the secondary market: 8.55% one month; 8.55% three months; 8.35% six months.

[20457018] |BANKERS ACCEPTANCES: 8.47% 30 days; 8.42% 60 days; 8.25% 90 days; 8.10% 120 days; 8.02% 150 days; 7.95% 180 days.
[20457019] |Negotiable, bank-backed business credit instruments typically financing an import order.

[20457020] |LONDON LATE EURODOLLARS: 8 3/4% to 8 5/8% one month; 8 13/16% to 8 11/16% two months; 8 11/16% to 8 9/16% three months; 8 9/16% to 8 7/16% four months; 8 1/2% to 8 3/8% five months; 8 7/16% to 8 5/16% six months.

[20457021] |LONDON INTERBANK OFFERED RATES (LIBOR): 8 11/16% one month; 8 11/16% three months; 8 7/16% six months; 8 3/8% one year.
[20457022] |The average of interbank offered rates for dollar deposits in the London market based on quotations at five major banks.

[20457023] |FOREIGN PRIME RATES: Canada 13.50%; Germany 9%; Japan 4.875%; Switzerland 8.50%; Britain 15%.
[20457024] |These rate indications aren't directly comparable; lending practices vary widely by location.

[20457025] |TREASURY BILLS: Results of the Monday, October 30, 1989, auction of short-term U.S. government bills, sold at a discount from face value in units of $10,000 to $1 million: 7.78%, 13 weeks; 7.62%, 26 weeks.

[20457026] |FEDERAL HOME LOAN MORTGAGE CORP. (Freddie Mac): Posted yields on 30-year mortgage commitments for delivery within 30 days.
[20457027] |9.86%, standard conventional fixed-rate mortgages; 7.875%, 2% rate capped one-year adjustable rate mortgages.
[20457028] |Source: Telerate Systems Inc.

[20457029] |FEDERAL NATIONAL MORTGAGE ASSOCIATION (Fannie Mae): Posted yields on 30 year mortgage commitments for delivery within 30 days (priced at par).
[20457030] |9.76%, standard conventional fixed-rate mortgages; 8.75%, 6/2 rate capped one-year adjustable rate mortgages.
[20457031] |Source: Telerate Systems Inc.

[20457032] |MERRILL LYNCH READY ASSETS TRUST: 8.70%.
[20457033] |Annualized average rate of return after expenses for the past 30 days; not a forecast of future returns.

[20458001] |Oh, that terrible Mr. Ortega.
[20458002] |Just when American liberalism had pulled the arms plug on the Contras and their friend Ronald Reagan, along comes Mr. Ortega in Costa Rica this weekend to "blunder" into the hands of what are often called conservatives.
[20458003] |Conservatives are the faction in U.S. politics which always said that Mr. Ortega and his friends don't want to hold an election in Nicaragua.
[20458004] |Liberals are the faction that says, Give peace a chance; now they are saying Mr. Ortega should give them a break, lest the conservatives ask them to vote for bullets instead of bandages.

[20458005] |We suspect Daniel Ortega knows the difference between a blunder and a strategy.
[20458006] |He knows that making George Bush look silly in a photograph with him will trigger Noriegan fulminations, and that announcing an end to the liberals' cease-fire will produce mainly their concern over the Contras' military activities in northern Nicaragua.
[20458007] |Mr. Ortega understands better than those who worry about his behavior that what sustains the Sandinista movement is not democratic peace, but nondemocratic unpeace.
[20458008] |It is the presence of internal and external "enemies" which justifies the need for a large, active army that Mikhail Gorbachev's Soviet Union continues to supply with bullets.

[20459001] |Annualized interest rates on certain investments as reported by the Federal Reserve Board on a weekly-average basis:

[20459002] |a-Discounted rate.
[20459003] |b-Week ended Wednesday, October 25, 1989 and Wednesday October 18, 1989.
[20459004] |c-Yields, adjusted for constant maturity.

[20460001] |Cetus Corp. said the government of Spain approved the marketing of its Proleukin interleukin-2 drug to treat kidney cancer.

[20460002] |The biotechnology concern said Spanish authorities must still clear the price for the treatment, but that it expects to receive such approval by year end.
[20460003] |Four other countries in Europe have approved Proleukin in recent months.
[20460004] |Cetus is currently trying to obtain federal regulatory clearance for U.S. distribution.

[20461001] |The Treasury Department proposed that banks be required to keep detailed records of international wire transfers, which officials believe is the main vehicle used by drug traffickers to move billions of dollars in and out of the U.S.

[20461002] |In recent testimony on Capitol Hill, Treasury officials said they were considering the new reporting requirements, and the expected publication of the proposal in the Federal Register today is the first official step toward creating final regulations.
[20461003] |The Treasury is still working out the details with bank trade associations and the other government agencies that have a hand in fighting money laundering.

[20461004] |Among the possibilities the Treasury is considering are requirements that banks keep records identifying the originators and recipients of international wire transfers.
[20461005] |Another suggestion would draw banks more directly into tracking down money launderers by developing a "suspicious international wire transfer profile," which banks would use to spotlight questionable payments.
[20461006] |But banks may prefer using a profile that targets selected transactions, rather than a blanket reporting requirement.

[20461007] |Banks now are required only to report cash deposits or withdrawals of $10,000 or more.
[20461008] |But wire transfers from a standing account -- including those bigger than $10,000 -- aren't reported.
[20461009] |Officials believe this has left a gaping loophole that illegal drug businesses are exploiting.
[20461010] |Authorities estimate that revenues from illegal drugs in the U.S. total about $110 billion annually.

[20461011] |Sen. John Kerry (D., Mass.), chairman of a Senate Foreign Relations subcommittee that oversees the issue of money laundering, criticized the proposal for ignoring wire transfers between foreign banks that are executed and cleared on U.S. wire systems.
[20461012] |The American Bankers Association didn't have any comment on the plan.
[20461013] |The proposal now enters a 60-day comment period, after which the Treasury will propose final regulations, followed by another comment period.

[20462001] |Western Union Corp. took steps to withdraw its proposed debt swap for $500 million in high-interest notes and said it is looking at other alternatives for refinancing the debt.

[20462002] |Western Union had said two weeks ago that it might withdraw the pending offer, which would have replaced $500 million in so-called reset notes, now paying 19.25% annual interest and set to come due in 1992, with two new issues paying lower interest.

[20462003] |Yesterday the company said it had filed a request with the Securities and Exchange Commission to withdraw the registration statement regarding the proposed swap.
[20462004] |A Western Union spokesman, citing adverse developments in the market for high-yield "junk" bonds, declined to say what alternatives are under consideration.

[20462005] |But some holders of the Western Union notes expect the company to propose a more-attractive debt swap that will give them a substantial equity stake in the company.
[20462006] |Western Union has had major losses in recent years as its telex business has faltered in the face of competition from facsimile machines and as other business ventures have gone awry.

[20462007] |The major question, said one holder who asked not to be named, is whether New York investor Bennett S. LeBow, whose Brooke Partners controls Western Union, is willing to offer a large enough equity stake to entice bondholders into agreeing to a new swap.

[20462008] |The $500 million in notes, the largest chunk of Western Union's $640 million in long-term debt, stems from the company's major restructuring in December 1987.
[20462009] |The notes became burdensome when reset provisions allowed their interest rate to be raised to 19.25% last June.

[20462010] |Western Union had offered to swap each $1,000 face amount of the notes for six shares of common stock and two new debt issues: a $500 note paying an interest rate starting at 16.75% annually and rising in later years, due in 1992, and a $500 note, due in 1997, paying a fixed rate of 17% and including rights protecting a holder against a decline in the trading price of the bond.

[20462011] |Western Union must make $48 million in interest payments on the reset notes on Dec. 15, and a company spokesman said it fully intends to meet the payments.
[20462012] |But Western Union has said it must lower the interest rate on its debt to regain full financial health.

[20463001] |Genentech Inc. said the West German distributor of its heart drug TPA reached a joint marketing agreement with a subsidiary of Hoechst AG, which makes the rival anti-clotting agent streptokinase.

[20463002] |The biotechnology concern said the agreement between its longtime West German distributor, Boehringer-Ingleheim's Dr. Karl Thomae G.m.b.H. subsidiary, and Hoechst's Behringwerke subsidiary was an attempt to expand the market for blood-clot drugs in general.

[20463003] |A Genentech spokeswoman said the agreement calls for Hoechst to promote TPA for heart patients and streptokinase for other clot-reducing purposes.

[20464001] |Investors in the over-the-counter market dumped banking and insurance issues, sending the Nasdaq composite index lower for the third consecutive session.

[20464002] |All Nasdaq industry indexes finished lower, with financial issues hit the hardest.
[20464003] |Despite some early computer-guided program buying, the Nasdaq composite fell 1.39 to 451.37.
[20464004] |The OTC market now has declined in eight of the past 11 sessions.

[20464005] |The Nasdaq bank index fell 5.00 to 432.61, while the insurance index fell 3.56 to 528.56, and the "other finance" index dropped 3.27 to 529.32.
[20464006] |The largest financial issues, as measured by the Nasdaq financial index, tumbled 3.23 to

[20464007] |Meanwhile, the index of the 100 biggest non-financial stocks, the Nasdaq 100, gained 0.47 to 438.15.

[20464008] |Profit-taking accounted for much of the slide in OTC stock prices, according to David Mills, senior vice president of Boston Company Advisers.
[20464009] |He said many portfolio managers, whose year-end bonuses are tied to annual performance, are selling now rather than risk seeing their gains erode further.

[20464010] |"The profit locking-in is definitely going on," said Mr. Mills, whose firm manages $600 million for Boston Co.

[20464011] |Tax-loss sellers, those investors who sell loss-making stocks so they can deduct their losses from this year's income, are also getting out, Mr. Mills said.
[20464012] |That's helping put pressure on both the market's winners and its losers.

[20464013] |"The stocks that have been the best are having big pullbacks, and the ones that have been the worst are getting clobbered," Mr. Mills said.
[20464014] |He expects the market to sink further and to reach a low sometime next month or in December.

[20464015] |The selling by money managers and individual investors is turning traders bearish as well.
[20464016] |"We are advising a lot of our clients to make moves that make sense to them, rather than waiting until the last minute, because things have been so volatile," said William Sulya, head of OTC trading at A.G. Edwards & Sons in St. Louis.
[20464017] |Ralph Costanza, head of the OTC trading department at Smith Barney, Harris Upham, said many market players are awaiting some resolution of the current debate over program trading.

[20464018] |Much of the market's recent volatility has been blamed on this large-scale computerized trading technique that can send stock prices surging or plummeting in a matter of minutes.
[20464019] |The problem has been particularly damaging to the OTC market, traditionally a base for the small investor.

[20464020] |Weisfield's surged 14 to 53 after agreeing in principle to be acquired by a unit of Ratners Group for $50 a share.
[20464021] |The stock jumped 9 1/2 Friday, when the company announced it was in takeover talks.
[20464022] |Ratners and Weisfield's said they expect to sign definitive agreements shortly and to complete the transaction by Dec. 15.

[20464023] |Mid-State Federal Savings Bank advanced 1 1/2 to 20 1/4 after it said it is in talks with a possible acquirer.
[20464024] |The bank said the talks resulted from solicitations by its financial adviser.

[20464025] |Jaguar assumed its recently customary place on the OTC most active list as its American depository receipts gained 1/4 to 11 7/8 on volume of 1.2 million shares and Daimler-Benz joined the list of companies interested in the British car maker.
[20464026] |Daimler said it has had talks with Jaguar about possible joint ventures.

[20464027] |Meanwhile, General Motors and Ford Motor continue their pursuit of the company.
[20464028] |Ford has acquired more than 13% of Jaguar's shares, and GM has received U.S. regulatory clearance to buy 15%.

[20464029] |ShowBiz Pizza Time gained 1 1/2 to 13.
[20464030] |The company reported third-quarter operating profit of 37 cents a share, compared with 12 cents a share a year earlier.
[20464031] |A third-quarter charge of $3.5 million related to planned restaurant closings resulted in a net loss for the quarter.

[20464032] |Employers Casualty, which reported a $53.9 million third-quarter loss late Friday, fell 2 1/4 to 13 3/4.
[20464033] |The loss was largely due to a $55.2 million addition to reserves.
[20464034] |Employers Casualty had a loss of $3.6 million in the year-earlier quarter.

[20464035] |Old Stone fell 1 5/8 to 13 1/2.
[20464036] |Late Friday, the company reported a loss of $51.3 million for the third quarter after earning $9.2 million a year before.

[20464037] |The loss came after a $23.3 million addition to loan-loss reserves.
[20464038] |The bank made a $4.5 million provision in the 1988 quarter.
[20464039] |Old Stone repeated projections that it will be profitable for the fourth quarter and will about break even for the year.

[20464040] |Abraham Lincoln Federal Savings Bank sank 4 to 13 1/2 after announcing a shakeup that will change senior management and reorganize the bank's mortgage business as a separate unit.
[20464041] |The bank also said it will establish a loan-loss reserve of $2.5 million to $4 million against a construction loan that is in default.

[20464042] |The bank, which previously said it was for sale, said it has received no offers and that its board will review whether to continue soliciting bids.

[20465001] |Medical scientists are starting to uncover a handful of genes which, if damaged, unleash the chaotic growth of cells that characterizes cancer.

[20465002] |Scientists say the discovery of these genes in recent months is painting a new and startling picture of how cancer develops.
[20465003] |An emerging understanding of the genes is expected to produce an array of new strategies for future cancer treatment and prevention.

[20465004] |That is for the future.
[20465005] |Already, scientists are developing tests based on the newly identified genes that, for the first time, can predict whether an otherwise healthy individual is likely to get cancer.

[20465006] |"It's a super-exciting set of discoveries," says Bert Vogelstein, a Johns Hopkins University researcher who has just found a gene pivotal to the triggering of colon cancer.
[20465007] |"Only a decade ago cancer was a black box about which we knew nothing at the molecular level.
[20465008] |Today, we know that the accumulation of several of these altered genes can initiate a cancer and, then, propel it into a deadly state."

[20465009] |Scientists call the new class of genes tumor-suppressors, or simply anti-cancer genes.
[20465010] |When functioning normally, they make proteins that hold a cell's growth in check.
[20465011] |But if the genes are damaged -- perhaps by radiation, a chemical or through a chance accident in cell division -- their growth-suppressing proteins no longer work, and cells normally under control turn malignant.

[20465012] |The newly identified genes differ from a family of genes discovered in the early 1980s called oncogenes.
[20465013] |Oncogenes must be present for a cell to become malignant, but researchers have found them in normal as well as in cancerous cells, suggesting that oncogenes don't cause cancer by themselves.
[20465014] |In recent months, researchers have come to believe the two types of cancer genes work in concert: An oncogene may turn proliferating cells malignant only after the tumor-suppressor gene has been damaged.

[20465015] |Like all genes, tumor-suppressor genes are inherited in two copies, one from each parent.
[20465016] |Either copy can make the proteins needed to control cell growth, so for cancer to arise, both copies must be impaired.
[20465017] |A person who is born with one defective copy of a suppressor gene, or in whom one copy is damaged early in life, is especially prone to cancer because he need only lose the other copy for a cancer to develop.

[20465018] |Emerging genetic tests will be able to spot such cancer-susceptible individuals, ushering in what some scientists believe is a new age of predictive cancer diagnosis.

[20465019] |Bill and Bonnie Quinlan are among the first beneficiaries of the new findings.
[20465020] |The Dedham, Mass., couple knew even before Bonnie became pregnant in 1987 that any child of theirs had a 50% chance of being at risk for retinoblastoma, an eye cancer that occurs about once every 20,000 births.
[20465021] |Mr. Quinlan, 30 years old, knew he carried a damaged gene, having lost an eye to the rare tumor when he was only two months old -- after his mother had suffered the same fate when she was a baby.

[20465022] |Because of the isolation of the retinoblastoma tumor-suppressor gene, it became possible last January to find out what threat the Quinlan baby faced.
[20465023] |A test using new "genetic probes" showed that little Will Quinlan had not inherited a damaged retinoblastoma supressor gene and, therefore, faced no more risk than other children of developing the rare cancer.
[20465024] |"It made our New Year," says Mr. Quinlan.

[20465025] |This test was the first to predict reliably whether an individual could expect to develop cancer.
[20465026] |Equally important, the initial discovery of the gene that controls retinal cell growth, made by a Boston doctor named Thaddeus Dryja, has opened a field of cancer study, which in recent months has exploded.
[20465027] |"It turns out that studying a tragic but uncommon tumor made possible some fundamental insights about the most basic workings of cancer," says Samuel Broder, director of the National Cancer Institute.
[20465028] |"All this may not be obvious to the public, which is concerned about advances in treatment, but I am convinced this basic research will begin showing results there soon."

[20465029] |To date, scientists have fingered two of these cancer-suppressors.
[20465030] |Dr. Dryja made his retinoblastoma discovery in 1986.
[20465031] |Then last spring, researchers reported finding a gene called p53 which, if impaired, turns healthy colon cells cancerous.

[20465032] |Soon after that report, two other research teams uncovered evidence that the same damaged p53 gene is present in tissue from lung and breast cancers.
[20465033] |Colon, lung and breast cancers are the most common and lethal forms of the disease, collectively killing almost 200,000 Americans a year.
[20465034] |Right now about a dozen laboratories, in the U.S., Canada and Britain, are racing to unmask other suspected tumor-suppressing genes.
[20465035] |They have about seven candidates.
[20465036] |Researchers say the inactivation of tumor-suppressor genes, alone or in combination, appears crucial to the development of such scourges as cancer of the brain, the skin, kidney, prostate, and cervix.
[20465037] |There is evidence that if people inherit defective versions of these genes, they are especially prone to cancer, perhaps explaining, finally, why some cancers seem to haunt certain families.

[20465038] |The story of tumor-suppressor genes goes back to the 1970s, when a pediatrician named Alfred G. Knudson Jr. proposed that retinoblastoma stemmed from two separate genetic defects.
[20465039] |He theorized that in the eye cancer, an infant inherited a damaged copy of a gene from one parent and a normal copy from the other.
[20465040] |The tumor, he suggested, developed when the second, normal copy also was damaged.
[20465041] |But there was no way to prove Dr. Knudson's "two-hit" theory.

[20465042] |Back then, scientists had no way of ferreting out specific genes, but under a microscope they could see the 23 pairs of chromosomes in the cells that contain the genes.
[20465043] |Occasionally, gross chromosome damage was visible.
[20465044] |Dr. Knudson found that some children with the eye cancer had inherited a damaged copy of chromosome No. 13 from a parent who had had the disease.
[20465045] |Under a microscope he could actually see that a bit of chromosome 13 was missing.
[20465046] |He assumed the missing piece contained a gene or genes whose loss had a critical role in setting off the cancer.
[20465047] |But he didn't know which gene or genes had disappeared.

[20465048] |Then, a scientific team led by molecular geneticist Webster Cavenee, then at the University of Utah, found the answer.
[20465049] |The team used a battery of the newly developed "gene probes," snippets of genetic material that can track a gene's presence in a cell.
[20465050] |By analyzing cells extracted from eye tumors, they found defects in the second copy of chromosome 13 in the exact area as in the first copy of the chromosome.

[20465051] |The finding riveted medicine.
[20465052] |It was the first time anyone had showed that the loss of both copies of the same gene could lead to the eruption of a cancer.
[20465053] |"It was extraordinarily satisfying," says Dr. Knudson, now at Fox Chase Cancer Research Center in Philadelphia.
[20465054] |"I was convinced that what was true of retinoblastoma would be true for all cancers."

[20465055] |It was an audacious claim.
[20465056] |But in Baltimore, Dr. Vogelstein, a young molecular biologist at Johns Hopkins Medical School, believed Dr. Knudson was right, and set out to repeat the Cavenee experiment in cells from other cancers.
[20465057] |His was one of two research teams in 1984 to report dual chromosome losses for a rare childhood cancer of the kidney called Wilm's tumor.

[20465058] |Dr. Vogelstein next turned his attention to colon cancer, the second biggest cancer killer in the U.S. after lung cancer.
[20465059] |He believed colon cancer might also arise from multiple "hits" on cancer suppressor genes, because it often seems to develop in stages.
[20465060] |It often is preceded by the development of polyps in the bowel, which in some cases become increasingly malignant in identifiable stages -- progressing from less severe to deadly -- as though a cascade of genetic damage might be occurring.

[20465061] |Dr. Vogelstein and a doctoral student, Eric Fearon, began months of tedious and often frustrating probing of the chromosomes searching for signs of genetic damage.
[20465062] |They began uncovering a confusing variety of genetic deletions, some existing only in benign polyps, others in malignant cells and many in both polyps and malignant cells.
[20465063] |Gradually, a coherent picture of cancer development emerged.
[20465064] |If both copies of a certain gene were knocked out, benign polyps would develop.
[20465065] |If both copies of a second gene were then deleted, the polyps would progress to malignancy.
[20465066] |It was clear that more than one gene had to be damaged for colon cancer to develop.

[20465067] |Their report galvanized other molecular biologists.
[20465068] |"It was the confirming evidence we all needed that {gene} losses were critical to the development of a common tumor," says Ray White at Howard Hughes Medical Institute in Salt Lake City.

[20465069] |But Dr. Vogelstein had yet to nail the identity of the gene that, if damaged, flipped a colon cell into full-blown malignancy.
[20465070] |They focused on chromosome 17.
[20465071] |For months the Johns Hopkins researchers, using gene probes, experimentally crawled down the length of chromosome 17, looking for the smallest common bit of genetic material lost in all tumor cells.
[20465072] |Such a piece of DNA would probably constitute a gene.

[20465073] |When they found it last winter, Dr. Vogelstein was dubious that the search was over.
[20465074] |His doubts stemmed from the fact that several years earlier a Princeton University researcher, Arnold Levine, had found in experiments with mice that a gene called p53 could transform normal cells into cancerous ones.
[20465075] |The deletion Dr. Vogelstein found was in exactly the same spot as p53.
[20465076] |But Mr. Levine had said the p53 gene caused cancer by promoting growth, whereas the Johns Hopkins scientists were looking for a gene that suppressed growth.

[20465077] |Despite that, when the Johns Hopkins scientists compared the gene they had found in the human cancer cells with the Mr. Levine's p53 gene they found the two were identical; it turned out that in Mr. Levine's cancer studies, he had unknowingly been observing a damaged form of p53 -- a cancer-suppressing gene.

[20465078] |The discovery "suddenly puts an obscure gene right in the cockpit of cancer formation," says Robert Weinberg, a leader in cancer-gene research at Whitehead Institute in Cambridge, Mass.

[20465079] |Evidence now is emerging that the p53 suppressor gene is involved in other cancers, too.
[20465080] |Researchers in Edinburgh, Scotland, have found that in 23 of 38 breast tumors, one copy of chromosome 17 was mutated at the spot where gene p53 lies.
[20465081] |The scientists say that since breast cancer often strikes multiple members of certain families, the gene, when inherited in a damaged form, may predispose women to the cancer.

[20465082] |The p53 gene has just been implicated in lung cancer.
[20465083] |In a report out last week, John Minna and colleagues at the National Cancer Institute say that about half the cells taken from lung cancer tissue they tested are missing this gene.

[20465084] |There also are reports from several labs, as yet unpublished, of missing p53 genes in tissue taken from kidney, brain and skin cancers.

[20465085] |At the same time, the Johns Hopkins team and others are rushing to pinpoint other tumor-suppressor genes.
[20465086] |Dr. Vogelstein hopes soon to isolate one on chromosome 18, also involved in colon cancer.
[20465087] |Ray White in Utah and Walter Bodmer, a researcher in Great Britain, are close to finding another gene involved with some types of colon cancer, thought to be on chromosome 5.

[20465088] |Dr. Minna believes people who inherit a defective gene somewhere on one of their two copies of chromosome 3 are especially prone to lung cancer.
[20465089] |Recently, he and others reported that the retinoblastoma suppressor gene may also be involved in some lung cancers, as well as several other more common cancers, too.

[20465090] |Where these discoveries will lead, scientists can only speculate.
[20465091] |Already two major pharmaceutical companies, the Squibb unit of Bristol-Myers Squibb Co. and Hoffmann-La Roche Inc., are collaborating with gene hunters to turn the anticipated cascade of discoveries into predictive tests and, maybe, new therapies.

[20465092] |Some researchers say new cancer drugs to slow or reverse tumor growth may be based on the suppressor proteins normally produced by the genes.
[20465093] |The idea would be to administer to patients the growth-controlling proteins made by healthy versions of the damaged genes.
[20465094] |It may even be possible to replace defective genes with healthy versions, though no one has come close to doing that so far.

[20465095] |In any case, says Dr. Minna of the National Cancer Institute, "We're witnessing the discovery of one of the most important steps in the genesis of cancer.

[20466001] |Many investors give Michael Foods about as much chance of getting it together as Humpty Dumpty.
[20466002] |But now at least there's a glimmer of hope for the stock.

[20466003] |Burger King, which breaks thousands of fresh eggs each morning, is quietly switching over to an alternative egg product made by Michael Foods.
[20466004] |Known as Easy Eggs, the product has disappointed investors.
[20466005] |When the company this month announced lower-than-forecast sales of Easy Eggs, the stock dropped nearly 19%.

[20466006] |Michael won't confirm the identities of any Easy Egg customers, nor will it say much of anything else.
[20466007] |Two Minneapolis shareholder suits in the past month have accused top officers of making "various untrue statements."
[20466008] |These federal-court suits accuse the officers of failing to disclose that Easy Eggs were unlikely to sell briskly enough to justify all of Michael's production capacity.

[20466009] |But at least Burger King has signed on, and says that by year end it won't be using any shell eggs.
[20466010] |The Miami fast-food chain, owned by Grand Metropolitan of Britain, expects to consume roughly 34 million pounds of liquefied eggs annually.

[20466011] |So there is reason to believe that Michael's hopes for a bacteria-free, long-shelf-life egg weren't all hype.
[20466012] |(Easy Eggs are pasteurized in a heat-using process.)
[20466013] |Still, caution is advisable.
[20466014] |A company official says Michael's break-even volume on Easy Eggs is around 60 million pounds a year -- apparently well above current shipments and a far cry from what the company once suggested was a billion-pound market waiting for such a product.
[20466015] |Perhaps to debunk the analysts' talk of over-capacity, Michael today will take some of the skeptics on a tour of its new Gaylord, Minn., plant.

[20466016] |There has been no announcement of the Burger King arrangement by either party, possibly for fear that McDonald's and other fast-food rivals would seize on it in scornful advertising.
[20466017] |But Burger King operators independently confirm using Michael's product.
[20466018] |Other institutional users reportedly include Marriott, which is moving away from fresh eggs on a region-by-region basis.
[20466019] |The extent of Marriott's use isn't known, and Marriott officials couldn't be reached for comment.

[20466020] |Michael Foods has attracted a good many short-sellers, the people who sell borrowed shares in a bet that a stock price will drop and allow the return of cheaper shares to the lender.
[20466021] |Many analysts question management's credibility.

[20466022] |"The stock, in my opinion, is going to go lower, not only because of disappointing earnings but {because} the credibility gap is certainly not closing," says L. Craig Carver of Dain Bosworth.

[20466023] |Mr. Carver says that at a recent Dain-sponsored conference in New York, he asked Michael's chief executive officer if the fourth quarter would be down.
[20466024] |The CEO, Richard G. Olson, replied "yes," but wouldn't elaborate.
[20466025] |(The company didn't put out a public announcement.
[20466026] |A spokesman said later that Mr. Olson was being "conservative" in his estimate.
[20466027] |But the spokesman added that while Michael will earn less than last year's $1.20 a share, it thinks Street estimates of $1 or so are low.)

[20466028] |Analyst Robin Young of John Kinnard & Co., Minneapolis, calls himself "the last remaining bull on the stock."
[20466029] |He argues that Michael Foods is misunderstood: "This is a growth company in the packaged food industry -- a rare breed, like finding a white rhino."
[20466030] |Earnings aren't keeping pace, he says, because of heavy investments in the egg technologies and drought-related costs in its potato business.

[20466031] |Mr. Carver, however, believes the company's egg product won't help the bottom line in the short run, even though it "makes sense -- it's more convenient" and justifies its price, which is higher than shell eggs, because of health and sanitation concerns.

[20466032] |Prospective competition is one problem.
[20466033] |Last week a closely held New Jersey concern, Papetti High-Grade Egg Products Co., rolled out an aseptically packaged liquefied item called Table Ready.
[20466034] |Company President Steve Papetti says Marriott will be among his clients as well.

[20466035] |Michael shares closed at 13 3/4 yesterday in national over-the-counter trading.
[20466036] |Says New York-based short seller Mark Cohodes, "In my mind this is a $7 stock."
[20466037] |Michael late yesterday announced a $3.8 million stock buy-back program.

[20466038] |Michael, which also processes potatoes, still relies on spuds for about a fourth of its sales and nearly half its pretax profit.
[20466039] |But dry growing conditions in the Red River Valley of Minnesota and North Dakota are pushing spot prices of potatoes beyond what Michael contracted to pay last spring.
[20466040] |Company lawyers recently sent letters to growers saying that Michael "would take very seriously any effort . . . to divert its contracted-for potatoes to other outlets."
[20466041] |Still, analysts believe that profit margins in the potato business will be down again this year.

[20467001] |Pierre Peladeau, a Canadian newspaper publisher little-known in the U.S., figures to become a big player in North American printing -- and his ambitions don't end there.

[20467002] |Yesterday, Quebecor Inc., a Montreal printing, publishing and forest-products company 53%-owned by Mr. Peladeau, agreed to acquire Maxwell Communication Corp.'s U.S. printing subsidiary, Maxwell Graphics Inc., for $500 million in cash and securities.
[20467003] |The purchase, expected to be completed by year end, will make Quebecor the second-largest commercial printer in North America, behind only R.R. Donnelley & Sons Co., Chicago.

[20467004] |The printing customers that Quebecor will gain through Maxwell Graphics include the Sunday newspaper supplement Parade, Time, Sports Illustrated and TV Guide.

[20467005] |But the transaction is just Mr. Peladeau's latest step in a larger design: to build Quebecor through acquisitions into an integrated paper, publishing and printing concern with a reach throughout North America.
[20467006] |He already has achieved vertical integration on a limited scale: Quebecor can put a weekly newspaper on almost any Quebec doorstep without using outside help, from chopping down the tree to making the newsprint to flinging it up onto the porch.

[20467007] |Analysts say Quebecor's purchase is part of a trend toward consolidation in the North American printing industry.
[20467008] |Along with Donnelley, says Jacques Massicotte, an analyst with Nesbitt Thomson Deacon Inc. in Montreal, "Quebecor has positioned itself as one of the two key players."
[20467009] |He adds: "I think this is a great strategic move for Quebecor.
[20467010] |They are buying an operation that is running well."

[20467011] |Mr. Peladeau says he isn't trying to catch up to Donnelley, which has annual sales of over $3 billion.
[20467012] |"Size doesn't matter," Mr. Peladeau says.
[20467013] |"What counts is the bottom line."

[20467014] |Some of Mr. Peladeau's ventures, including an earlier push into the U.S. market, haven't paid off on the bottom line.
[20467015] |Quebecor started the Philadelphia Journal, a daily tabloid, in 1977 and closed it three years later.
[20467016] |The venture cost Quebecor $12 million, Mr. Peladeau says.

[20467017] |More recently, some former Quebecor executives started their own printing company, specializing in printing and distributing advertising circulars.
[20467018] |Quebecor still lags in the Quebec circulars market, while Mr. Peladeau's former employees are expanding across Canada.

[20467019] |Mr. Peladeau took his first big gamble 25 years ago, when he took advantage of a strike at La Presse, then Montreal's dominant French-language newspaper, to launch the Journal de Montreal.
[20467020] |The tabloid's circulation soared to 80,000, but plunged to under 10,000 when the La Presse strike ended.

[20467021] |Still, Mr. Peladeau stuck with the venture.
[20467022] |Now the Journal, flush with ads and hugely profitable, is even with La Presse in weekend circulation and outsells it 3 to 2 every weekday.

[20467023] |Mr. Peladeau has never made any apologies for publishing the tabloid, a brash mix of crime and sports.
[20467024] |"I've read Balzac," he answers critics.
[20467025] |"It's tabloid news from A to Z."

[20467026] |Quebecor also publishes a second tabloid in Montreal, the struggling 18-month-old Montreal Daily News; dailies in Quebec City and Winnipeg, Manitoba; and dozens of weeklies covering most of Quebec.
[20467027] |A series of recent acquisitions made it the dominant magazine publisher in Quebec.
[20467028] |After a recent merger, it is also the only province-wide distributor of magazines and newspapers in Quebec.
[20467029] |Finally, with Maxwell Communication, the company controls 54% of Donohue Inc., a Quebec City pulp and paper concern.

[20467030] |In yesterday's accord, Quebecor agreed to pay $400 million in cash for Maxwell Graphics, and to give Maxwell Communication a 20% stake, valued at $100 million, in Quebecor's new printing subsidiary.
[20467031] |The new, as yet unnamed, subsidiary will combine Quebecor's existing printing unit and Maxwell Graphics.
[20467032] |It will have 61 plants from coast to coast and $1.5 billion in annual sales.

[20467033] |Quebecor will own 57.5% of the new subsidiary.
[20467034] |Caisse de Depot et Placement, the Quebec government pension-fund agency, will pay $112.5 million for the remaining 22.5% stake in the printing operation.

[20467035] |Pierre-Karl Peladeau, the founder's son and the executive in charge of the acquisition, says Quebecor hasn't decided how it will finance its share of the purchase, but he says it most likely will use debt.

[20467036] |The Maxwell deal is Quebecor's second big printing acquisition in just over a year.
[20467037] |Last October, Quebecor bought 23 Canadian printing plants from BCE Inc., a Montreal telecommunications, manufacturing, energy and real estate company.
[20467038] |That purchase doubled Quebecor's annual printing revenue to $750 million.

[20467039] |Maxwell's sale of its U.S. printing unit was expected, the last major business to be disposed of in a major reshuffling of assets.
[20467040] |According to its most recent annual report, covering the 15 months ended March 31, Maxwell Communication bought $3.85 billion in assets -- including Macmillan Inc. and Official Airlines Guides -- and sold $2 billion in non-strategic businesses.
[20467041] |Now, Maxwell founder Robert Maxwell says he has an appetite for new acquisitions in the U.S., adding that he could spend "a good deal more" than $1 billion on another U.S. purchase.

[20467042] |In London trading yesterday, Maxwell Communication shares rose nine pence, to 216 pence ($3.41).

[20467043] |In Montreal, Quebecor's multiple voting Class A stock closed at C$16.375 (US$13.94), down 12.5 Canadian cents.
[20467044] |Quebecor Class B stock closed at C$15.375, up 62.5 Canadian cents.

[20467045] |Craig Forman in London contributed to this article.

[20468001] |G.D. Searle & Co. said the Food and Drug Administration approved the sale of Kerlone, a hypertension drug developed by a joint venture between Searle and a French concern.

[20468002] |Searle, a unit of Monsanto Co., said the "beta-blocker" high-blood-pressure drug Kerlone is the first product to reach the market through Lorex Pharmaceuticals, the U.S. company jointly owned by Searle and Synthelabo, a French pharmaceutical concern owned by France's L'Oreal S.A.

[20469001] |The U.S. Equal Employment Opportunity Commission sued New York state for age discrimination against appointed state judges.
[20469002] |The suit, filed in federal court in Manhattan, charges that New York's mandatory retirement age of 76 violates federal law.

[20469003] |Separately, the commission intervened in a Connecticut state judge's age-bias suit in federal court in New Haven.
[20469004] |The commission's filing in that case challenges Connecticut's mandatory retirement age of 70 for appointed judges.

[20469005] |The New York suit was filed on behalf of Justice Isaac Rubin, whose appointment to the state appellate division expires at year end, and all other judges hurt by the alleged age discrimination.
[20469006] |The suit, assigned to federal Judge Kimba Wood, seeks a permanent injunction, back pay for judges who have been forced to retire, reinstatement of retired judges and "other affirmative relief necessary to eradicate the effects of (New York's) unlawful employment practices."

[20469007] |Justice Rubin, a state judge since 1969, said the mandatory-retirement age hurts the court system because it deprives the state of experienced judges still capable of serving on the bench.

[20469008] |"The issue isn't age -- age is just a number.
[20469009] |The issue is one of a judge's experience, his competence and his physical ability to serve on the bench," Justice Rubin said.
[20469010] |"I've had no problems performing my duties and responsibilities."
[20469011] |Because Justice Rubin turned 76 on May 9, he isn't eligible to be reappointed to the bench at the end of the year.

[20469012] |The suit's impact on New York may be narrow, however.
[20469013] |Most New York judges are elected, and the federal age-discrimination law doesn't apply to elected officials, said James L. Lee, regional attorney for the EEOC in New York.
[20469014] |Under New York law, elected judges must retire at age 70, but then can be appointed to two-year terms until they reach 76.

[20469015] |A spokeswoman for the state's Office of Court Administration declined to comment on the suit.
[20469016] |But she said the state currently has 35 appointed judges who are over 70.

[20469017] |In Connecticut, however, most state judges are appointed by the governor and approved by the state legislature.
[20469018] |The parties in the Connecticut case have agreed to stay proceedings pending the appeal of another EEOC age-bias case against Vermont.
[20469019] |In the Vermont case, a federal judge ruled that the state's mandatory age of 70 for appointed judges was illegal; Vermont's appeal of that decision is pending before the U.S. Second Circuit Court of Appeals in Manhattan.

[20469020] |Aaron Ment, Connecticut's chief court administrator, declined to comment on the suit and the EEOC's intervention.
[20469021] |He said the state has 165 appointed judges and 15 "trial referees," who are former judges over age 70 and serve a restricted role on the bench.

[20469022] |ORGANIZED CRIME Strike Forces likely to be abolished next month.

[20469023] |U.S. Attorney General Dick Thornburgh's plan to dissolve the 14 regional organized-crime strike forces is expected to go into effect next month, despite the opposition of Democratic congressional leaders and lawyers in the special units.

[20469024] |The units are autonomous from U.S. attorneys' offices and focus exclusively on prosecuting organized-crime cases.
[20469025] |In February, Mr. Thornburgh announced his plan to abolish the units.
[20469026] |He says the strike-force lawyers will work more efficiently under the supervision of U.S. attorneys.

[20469027] |Mr. Thornburgh will be free to disband the strike forces after Congress approves a $479 million appropriation for federal law-enforcement and drug-interdiction agencies, according to David Runkel, a Justice Department spokesman.
[20469028] |The bill is expected to pass in Congress next month.

[20469029] |Congress temporarily halted Mr. Thornburgh's effort with an appropriation resolution that prohibited him from using budgeted funds to implement his plan.

[20469030] |Opponents say Mr. Thornburgh's plan will needlessly break up longtime, tightly knit crime-fighting units that have successfully prosecuted major organized-crime figures.
[20469031] |They predict that organized-crime activity will increase once the units are dissolved and their responsibilities transferred to U.S. attorneys' offices.

[20469032] |Some former strike-force personnel say the units have already begun to break up.
[20469033] |The Eastern District unit in Brooklyn, N.Y., lost seven of its 15 attorneys this year partly because the lawyers were troubled by the proposed reorganization, says Laura A. Brevetti, who left the strike force to join Morrison Cohen Singer & Weinstein, a New York law firm.

[20469034] |"Those who have left have expressed an opinion that the strike force should continue," Ms. Brevetti says.

[20469035] |But Mr. Runkel contends there has been no exodus of strike-force lawyers.
[20469036] |He says 27 lawyers have left and 21 have been hired since Mr. Thornburgh announced his plan.
[20469037] |At the time the plan was announced, there were 135 lawyers.

[20469038] |Some congressional leaders intend to continue to fight for independent strike forces.
[20469039] |A spokesman for Sen. Edward M. Kennedy (D., Mass.) says Mr. Thornburgh would be required to reinstate the units next year if an proposed omnibus crime bill is passed.
[20469040] |Among other things, the bill calls for a reorganization of the Justice Department.
[20469041] |The Senate is expected to consider the bill shortly, says the senator's spokesman.

[20469042] |Mr. Runkel says he doubts Mr. Kennedy can muster enough congressional support to reorganize the Justice Department.

[20469043] |"We will vigorously oppose the bill," he says.
[20469044] |"I don't think (the reorganization is) going to happen."

[20469045] |WHITMAN & RANSOM recruits lawyers from disbanding firm:
[20469046] |The 204-lawyer New York firm will bring in at least 12 partners and a not yet determined number of associates from Golenbock & Barell, which will dissolve Dec. 31.
[20469047] |Golenbock, with 35 lawyers, has lost several partners during the past year.
[20469048] |Some Golenbock lawyers won't be invited to join Whitman & Ransom, according to partners at both firms.
[20469049] |Whitman & Ransom managing partner Maged F. Riad said the Golenbock recruits will enhance the firm's corporate and litigation departments.

[20469050] |SHORT SKIRTS not welcome in Texas court:
[20469051] |Shelly Hancock, a male county court judge in Houston, refused to let a woman plead guilty to a drunk-driving charge because her skirt stopped three inches above her knees.
[20469052] |The woman appeared in court Thursday to enter her plea, but when she started to approach the bench, she was stopped by Judge Hancock.
[20469053] |He told the woman's lawyer, Victor Blaine, that the short skirt was inappropriate for a court appearance.
[20469054] |Despite Mr. Blaine's protests, the judge rescheduled her case for Nov. 27.
[20469055] |Kelly Siegler, an assistant district attorney who was in the courtroom, disputed suggestions the action was sexist, saying she had seen Judge Hancock turn away male defendants dressed in shorts, tank tops or muscle shirts "many times."
[20469056] |Judge Hancock didn't return phone calls.

[20470001] |Warner Communications Inc. and Sony Corp. resumed settlement talks on their legal battle over Hollywood producers Peter Guber and Jon Peters, but continued to level strong accusations at each other in legal documents.

[20470002] |Warner has filed a $1 billion breach of contract suit in Los Angeles Superior Court against Sony and the Guber-Peters duo, who in turn are countersuing Warner for trying to interfere in Sony's acquisition of Columbia Pictures Entertainment Inc. and Guber Peters Entertainment Co. in two transactions valued at over $5 billion.

[20470003] |Although settlement talks had been dropped, attorneys for the two sides apparently began talking again yesterday in an attempt to settle the matter before Thursday, when a judge is expected to rule on Warner's request for an injunction that would block the two producers from taking over the management of Columbia.
[20470004] |Yesterday, in documents filed in connection with that case, Warner accused Sony officials of falsely claiming that they never read the five-year contract requiring the two producers to make movies exclusively for Columbia, citing Securities and Exchange Commission filings made by Sony that described the contracts.

[20470005] |Warner was referring to documents filed last week in which Sony Corp. of America Vice Chairman Michael Schulof and Walter Yetnikoff, president of its CBS Records unit, said they had taken Mr. Guber and Mr. Peters at their word when the producers told them that getting out of the contract would be no problem because of a previous oral agreement.

[20470006] |Wayne Smith, an attorney at Gibson, Dunn & Crutcher in Los Angeles representing Sony, said the Sony executives hadn't seen the contract because "it wasn't relevant once Guber and Peters told them Warner would let them terminate it at any time."
[20470007] |Mr. Smith said statements about the contract made in SEC filings were made by attorneys who did have access to the contracts but who weren't part of the negotiations between Sony and the duo.

[20470008] |Warner executives also filed new sworn affidavits denying claims by Messrs. Guber and Peters that the two sides had an oral agreement that enabled the producers to terminate their contract with Warner should the opportunity to run a major studio come up.
[20470009] |But Mr. Smith said Sony intends to prove that the oral agreement did in fact exist, and that even the existing written contract doesn't preclude the producers from taking executive posts at another studio.

[20470010] |Warner described as "nonsense" yesterday Sony's assertions in prior court filings that Mr. Guber and Mr. Peters could in theory run Columbia while still fulfilling their contract to produce movies for Warner.
[20470011] |Such a dual role would be "impractical and unethical," Warner said, adding, "that concept is as silly as suggesting that the head coach of the Los Angeles Dodgers could simultaneously be general manager of the San Francisco Giants."

[20470012] |Warner, which is in the process of being acquired by New York-based Time Warner Inc., also said it paid the two producers a fixed annual salary of $3 million.

[20471001] |Dataproducts Inc. said it filed a lawsuit in Delaware Chancery Court to block a tender offer by DPC Acquisition Partners, alleging that the hostile offer violates a standstill agreement between the two concerns.

[20471002] |DPC, an investor group led by New York-based Crescott Investment Associates, had itself filed a suit in state court in Los Angeles seeking to nullify the agreement.
[20471003] |Earlier this year, Dataproducts had rejected a $15 a share offer from DPC, saying it wasn't adequately financed.
[20471004] |DPC last week launched a new, $10-a-share offer for the Woodland Hills, Calif.-based computer printer maker.

[20471005] |DPC said it couldn't comment on the suit.

[20472001] |Boeing Co.'s third-quarter profit leaped 68%, but Wall Street's attention was focused on the picket line, not the bottom line.

[20472002] |In fact, the earnings report unfolded as representatives of the world's No. 1 jet maker and the striking Machinists union came back to the negotiating table for their first meeting in two weeks.
[20472003] |Doug Hammond, the federal mediator in Seattle, where Boeing is based, said the parties will continue to sit down daily until a new settlement proposal emerges or the talks break off again.

[20472004] |Despite the progress, Boeing indicated that the work stoppage, now in its 27th day, will have "a serious adverse impact" on the current quarter.

[20472005] |For the third quarter, net rose to $242 million, or $1.05 a share, from $144 million, or 63 cents a share.
[20472006] |Sales climbed 71% to $6.36 billion from $3.72 billion as the company capitalized on the ravenous global demand for commercial airliners.

[20472007] |Because it's impossible to gauge how long the walkout by 55,000 Machinists rank and file will last, the precise impact on Boeing's sales, earnings, cash flow and short-term investment position couldn't be determined.

[20472008] |The investment community, however, strongly believes that the strike will be settled before there is any lasting effect on either Boeing or its work force.
[20472009] |The company's total firm backlog of unfilled orders at Sept. 30 stood at a mighty $69.1 billion, compared with $53.6 billion at the end of

[20472010] |Although the company could see fourth-quarter revenue shrink by nearly $5 billion if it isn't able to deliver any more planes this year, those dollars actually would just be deferred until 1990.
[20472011] |And the company is certain to get out some aircraft with just supervisors and other non-striking employees on hand.

[20472012] |Before the union rejected the company's offer and the strike was launched with the graveyard shift of Oct. 4, Boeing had been counting on turning 96 aircraft out the door in the present period.
[20472013] |That included 21 of the company's 747-400 jumbo jets, its most successful product.

[20472014] |"It's not a pretty picture," said David Smith, an analyst with Raymond James & Associates.
[20472015] |"But it would just mean a great first and second quarter next year."

[20472016] |Phillip Brannon of Merrill Lynch Capital Markets added: "You don't want to minimize this and say nobody is looking at it.
[20472017] |But the strike hasn't gone on long enough for Boeing to lose business in any real sense."

[20472018] |That's the primary reason the company's share price has held up so well when, in Mr. Smith's words, "most companies would have unraveled" by now.
[20472019] |In New York Stock Exchange composite trading, Boeing closed yesterday at $54.50 a share, off a scant 12.5 cents.

[20472020] |Still, Boeing went through its normal verbal gymnastics and played up the downside.
[20472021] |In a statement, Chairman Frank Shrontz asserted that the company "faces significant challenges and risks," on both its commercial and government contracts.

[20472022] |For instance, he noted that spending on Pentagon programs is shrinking, and Boeing is either the prime contractor or a major supplier on many important military projects, including the B-2 Stealth bomber, the V-22 Osprey tilt-rotor aircraft and the Air Force's next-generation tactical fighter.
[20472023] |Because of cost overruns on fixed-price military work, Mr. Shrontz said, the company's defense business will record "a significant loss" in 1989.

[20472024] |Moreover, Mr. Shrontz added, production-rate increases that have been implemented on the 737, 747, 757 and 767 programs have resulted in "serious work force skill-dilution problems."
[20472025] |Suppliers and subcontractors are experiencing heightened pressure to support delivery schedules.

[20472026] |And, of course, there's the unsteady labor situation.
[20472027] |Besides the Machinists pact, accords representing 30,000 of the company's engineering and technical employees in the Puget Sound and Wichita, Kan., areas expire in early December.
[20472028] |Also, a contract with the United Auto Workers at the company's helicopter plant in Philadelphia expired Oct. 15.
[20472029] |This contract, covering about 3,000 hourly production and maintenance workers, is being extended on a day-to-day basis.

[20472030] |The Machinists rejected a proposal featuring a 10% base wage increase over the life of the three-year contract, plus bonuses of 8% the first year and 3% the second.
[20472031] |On top of that, Boeing would make cost-of-living adjustments projected to be 5% for each year of the contract.

[20472032] |The union, though, has called the offer "insulting."
[20472033] |The company reiterated yesterday that it's willing to reconfigure the package, but not add to the substance of it.

[20472034] |For the nine months, Boeing's net increased 36% to $598 million, or $2.60 a share, from $440 million, or $1.92 a share.
[20472035] |Sales soared 28% to $15.43 billion from $12.09 billion.

[20472036] |In a separate matter, the Justice Department yesterday said Boeing agreed to pay the government $11 million to settle claims that the company provided inaccurate cost information to the Air Force while negotiating contracts to replace the aluminum skins on the KC-135 tanker aircraft.

[20472037] |The settlement relates to four contracts negotiated from 1982 to 1985, prosecutors said.
[20472038] |They added that the settlement is the culmination of a 2 1/2-year investigation into the company's aluminum pricing practices in connection with KC-135s.

[20472039] |A Boeing spokesman responded: "All along the company has said there was no grounds for criminal prosecution.
[20472040] |That was borne out by the Justice Department's decision" to settle the case.

[20473001] |Foothills Pipe Lines Ltd. filed an application with Canadian regulators to build a 4.4 billion Canadian dollar (US$3.74 billion) pipeline to transport natural gas from Canada's Arctic to U.S. markets beginning in

[20473002] |The application by Foothills, owned by Calgary-based Nova Corp. of Alberta and Westcoast Energy Inc. of Vancouver, Canada, is expected to kick off what could be a contentious battle for the right to transport vast quantities of gas to southern markets from still-undeveloped fields in Canada's Mackenzie River delta.

[20473003] |"This is a pre-emptive strike by Foothills," said Rick Hillary, natural gas manager of the Calgary-based Independent Petroleum Association of Canada, an industry group.

[20473004] |"Foothills wants to make it clear to other pipeline companies that it's on first insofar as transporting gas from the Arctic to southern markets," Mr. Hillary said.

[20473005] |At least two rival applications are expected to emerge in coming months, including one from TransCanada PipeLines Ltd., Canada's largest natural gas pipeline operator.
[20473006] |Another is expected from a consortium of oil and gas producers who won conditional approval this month from Canada's National Energy Board to export about 9.2 trillion cubic feet of Mackenzie delta gas to the U.S. starting in 1996.

[20473007] |The producers include Shell Canada Ltd., a unit of Royal Dutch/Shell Group; Esso Resources Canada Ltd., a unit of Imperial Oil Ltd., which is 71%-owned by Exxon Corp.; and Gulf Canada Resources Ltd., a unit of Olympia & York Developments Ltd.

[20473008] |"The {National Energy Board} approval of the exports just waved the starting flag for the next stage, the rush to build facilities to transport the gas," said Bill Koerner, an analyst with Brady & Berliner, a Washington, D.C., law firm.

[20473009] |Foothills' main rival to build a Mackenzie Delta pipeline is likely to be TransCanada PipeLines.
[20473010] |The Toronto-based company, together with Tenneco Inc. of Houston, has had an incomplete proposal filed with Canadian regulators since 1984 that it is now updating.

[20473011] |Like Foothills, TransCanada's Polar Gas consortium plans to build a pipeline directly south from the Mackenzie River delta in Canada's western Arctic with an initial capacity to transport 1.2 billion cubic feet of gas daily.
[20473012] |Industry sources said they expect a fierce battle to emerge between TransCanada, which has a monopoly on Canadian gas transportation east of Alberta, and Nova and Westcoast, which control the pipelines within and running west of Alberta, respectively.

[20473013] |"This is virgin territory, unclaimed, and it's going to be nasty," said one observer, who asked not to be named.
[20473014] |"Neither is going to back down easily."

[20473015] |TransCanada declined to comment on the Foothills application.
[20473016] |But last week Gerald Maier, president and chief executive officer of TransCanada, said the company "intends to be a party to any transportation system that goes up there" and that it would consider joint ventures with other players to ensure it has a role.

[20473017] |A number of issues still need to be resolved before Canadian regulators give any project the final go-ahead.

[20473018] |First, the price of natural gas will have to almost double.
[20473019] |Kent Jesperson, president of Foothills, said the company believes the project would be viable if gas prices reach US$3.25 a thousand cubic feet by 1995, in current dollars, up from a current spot price of about US$1.50.

[20473020] |Mr. Jesperson's US$3.25 estimate is somewhat below the $3.39 floor price that Calgary-based consulting firm Paul Ziff & Co. recently said would be needed for Mackenzie delta gas producers to see a return on their investment.

[20473021] |U.S. gas buyers must also decide whether they want to enter firm contracts for Mackenzie delta gas or develop Alaskan reserves in the Prudhoe Bay area first, a project that has been on hold for more than a decade.

[20473022] |Robert Pierce, chairman and chief executive of Foothills, said it's too early to say whether Alaskan or Mackenzie delta gas would flow to market first.
[20473023] |But Foothills said it plans to seek regulatory approval to build an alternative line, the Alaska Natural Gas Transportation System further north toward Alaska.
[20473024] |If that option is favored by gas buyers and regulators, Foothills said it would build another smaller pipeline connecting Mackenzie Delta reserves to the Alaska mainline.

[20473025] |It's also likely that regulators will try to forge some kind of consensus between the would-be pipeline builders before undertaking any hearings into rival projects.
[20473026] |Douglas Stoneman, vice president of Shell Canada, noted that producers would prefer to avoid hearings into competing proposals that would lengthen the regulatory review process and bog down development.

[20473027] |Interprovincial Pipe Line Co., an oil pipeline operator rumored to be mulling a gas pipeline proposal of its own, said that isn't in the cards.
[20473028] |Instead, Richard Haskayne, president and chief executive of Interprovincial's Calgary-based parent, Interhome Energy Inc., said the company would prefer to work with other "interested parties" on a joint proposal.

[20473029] |As for Foothills' pre-emptive bid, Mr. Haskayne said, "If they think it gives them some kind of priority position, well, that's their strategy.

[20474001] |The Federal Reserve Board said it is delaying approval of First Union Corp.'s proposed $849 million acquisition of Florida National Banks of Florida Inc., pending the outcome of an examination into First Union's lending practices in low-income neighborhoods.

[20474002] |The decision reflects the Fed's tougher stance on enforcing the Community Reinvestment Act, a federal law passed in 1977 to help low-income residents obtain loans.
[20474003] |In recent years, unions and community groups have won big commitments from banks to make low-interest loans in certain neighborhoods by threatening to hold up proposed acquisitions with protests to the Fed about reinvestment act compliance.
[20474004] |Few petitions, however, have actually delayed or scuttled mergers.

[20474005] |The current dispute involves allegations that Charlotte, N.C.-based First Union hasn't lived up to its responsibilities under the reinvestment act.

[20474006] |During the summer, Legal Services Corp., a Florida legal aid group, filed a petition with the Fed on behalf of residents in four Florida counties.
[20474007] |The petition challenged First Union's lending record in the state, saying that the bank-holding company had "shut itself off from contact with the low-income community and is redlining almost every black neighborhood that it serves in the state."

[20474008] |In deferring action on the merger, the Fed said, "The Board does not believe that there is sufficient information in the record at this time to allow {it} to reach a final conclusion on First Union's record of helping to meet the credit needs of the communities it serves in Florida and North Carolina, including low to moderate-income neighborhoods in those communities."

[20474009] |The Fed said the Comptroller of the Currency is expected to begin a Community Reinvestment Act examination of First Union's Florida and North Carolina banking units in the next two weeks.

[20474010] |First Union, with assets of about $32 billion, said it was disappointed by the delay but said it would cooperate with regulatory authorities.
[20474011] |The bank added that it believes the review will "demonstrate that First Union is in compliance with the requirements of the Community Reinvestment Act."
[20474012] |The company has already missed its initial Oct. 1 target date for completing the merger.
[20474013] |It said yesterday it still expects to close the acquisition later this year or early in 1990.

[20474014] |Florida National, if acquired, would almost double First Union's banking franchise in Florida to $17 billion in assets.
[20474015] |That would make it the second-largest bank, after Barnett Banks Inc., in a state widely considered to be the most lucrative banking market in the country.

[20474016] |In New York Stock Exchange composite trading yesterday, First Union shares rose 25 cents to $23.
[20474017] |Florida National stock closed unchanged at $25.875 in national over-the-counter trading.

[20474018] |Earlier this year, the Fed denied an application by Continental Bank Corp. to purchase Grand Canyon State Bank in Scottsdale, Ariz., on grounds that Continental hadn't fully complied with the Community Reinvestment Act.

[20474019] |At the time, the Fed said the denial, the first ever on such grounds, signaled the agency's new emphasis on the Community Reinvestment Act.

[20475001] |Eastern Airlines' creditors committee backed off a move to come up with its own alternative proposals to the carrier's bankruptcy reorganization plans, according to sources familiar with the committee.

[20475002] |In a meeting in New York yesterday, the committee put on hold instructions it gave two weeks ago to its experts to explore other options for Eastern's future, the sources said.
[20475003] |The consultants had been working to finish a report this week.

[20475004] |That means Eastern, a unit of Texas Air Corp. of Houston, can go forward with its pitch for creditor approval as early as today, when it is expected to deliver a revised reorganization plan to the committee.
[20475005] |The committee intends to meet next week to make a recommendation on the new plan.

[20475006] |In another development yesterday, creditors were told that $40 million they had expected to become available for implementing a reorganization may not materialize, according to one source.

[20475007] |Texas Air has run into difficulty reselling about $20 million of debt securities because of problems in the junk bond market, the person said.
[20475008] |And plans to raise another $20 million through changes to an insurance policy have hit a snag, the source said.
[20475009] |An Eastern spokesman said "the $40 million will have no effect whatsoever on the asset structure of Eastern's plan.
[20475010] |Forty million in the total scheme of things is not that significant."

[20475011] |It is unclear what caused the creditors to do an about-face on exploring alternatives to Eastern's new reorganization plan.
[20475012] |However, since Eastern first filed for Chapter 11 protection March 9, it has consistently promised to pay creditors 100 cents on the dollar.
[20475013] |Because the carrier is still pledging to do that, some committee members successfully argued that there's little reason yet to explore a different plan, according to one person familiar with the creditors' position.
[20475014] |Earlier this month the accounting firm of Ernst & Young and the securities firm of Goldman, Sachs & Co., the experts hired by the creditors, contended that Eastern would have difficulty meeting earnings targets the airline was projecting.
[20475015] |Ernst & Young said Eastern's plan would miss projections by $100 million.
[20475016] |Goldman said Eastern would miss the same mark by at least $120 million.

[20475017] |The consultants maintained Eastern wouldn't generate the cash it needs and would have to issue new debt to meet its targets under the plan.
[20475018] |Eastern at the time disputed those assessments and called the experts' report "completely off base."

[20475019] |Yesterday, Joel Zweibel, an attorney for Eastern's creditors committee, declined to comment on whether the experts had ever been instructed to look at other choices and whether they now were asked not to.
[20475020] |He said only that the committee has not yet taken any position on Eastern's reorganization plan and that the two sides were still negotiating.
[20475021] |"In every case, people would like to see a consentual plan," he said.

[20475022] |Eastern and its creditors agreed in July on a reorganization plan that called for the carrier to sell off $1.8 billion in assets and to emerge from Chapter 11 status in late 1989 at two-thirds its former size.
[20475023] |Eastern eventually decided not to sell off a major chunk, its South American routes, which were valued at $400 million.
[20475024] |Such a change meant the reorganization plan the creditors had agreed on was no longer valid, and the two sides had to begin negotiating again.

[20475025] |Eastern has publicly stated it is exceeding its goals for getting back into operation and has predicted it would emerge from Chapter 11 proceedings early next year, operating more flights than it originally had scheduled.

[20476001] |The following were among yesterday's offerings and pricings in the U.S. and non-U.S. capital markets, with terms and syndicate manager, as compiled by Dow Jones Capital Markets Report:

[20476002] |New York City --
[20476003] |$813.4 million of general obligation bonds, Fiscal 1990 Series C and D, including $757.4 million of tax-exempt bonds and $56 million of taxable bonds, tentatively priced by a Goldman Sachs & Co. group.
[20476004] |Yields for tax-exempt bonds range from 6 1/2% in 1990 to 7.88% in 2003-2005.
[20476005] |Yields for taxable bonds range from 9 1/8% in 1994 to 9.90% in 2009 and 2010.
[20476006] |The bonds are all rated single-A by Moody's Investors Service Inc.
[20476007] |The underwriters expect a single-A-minus rating from Standard & Poor's Corp., which has the issue under review.

[20476008] |Collateralized Mortgage Securities Corp. --
[20476009] |$150 million of Remic mortgage securities offered in 12 classes by First Boston Corp.
[20476010] |The offering, Series 1989-3, is by a company established by First Boston for issuing Remics and other derivative mortgage securities.
[20476011] |It is backed by Government National Mortgage Association 9 1/2% securities with a weighted average remaining term to maturity of 29 years and being offered at market prices.

[20476012] |Beneficial Corp. --
[20476013] |$248.3 million of securities backed by home-equity loans through Merrill Lynch Capital Markets.
[20476014] |The offering, with an expected average life of 3.2 years, will float monthly at 20 basis points above the rate on an index of 30-day double-A-rated commercial paper, which now yields about 8.50%.
[20476015] |The issue has an expected final maturity date of 1998.
[20476016] |The offering is rated triple-A by Moody's and S&P, based on the quality of the underlying home equity loans and a letter of credit covering 10% of the deal from Union Bank of Switzerland.
[20476017] |The offering is being made through BCI Home Equity Loan Asset-Backed Certificates, Series 1989-1.

[20476018] |Rochester Community Savings Bank --
[20476019] |$200 million of 8.85% certificates backed by automobile loans priced to yield 8.99% via First Boston Corp.
[20476020] |The issue, through RCSB 1989-A Grantor Trust, was priced at a yield spread of 100 basis points above the Treasury 7 3/4% note due July 1991.
[20476021] |The offering has an expected average life of 1.7 years and a final maturity date of May 15, 1995.
[20476022] |The issue is rated triple-A by Moody's, based on the quality of the underlying auto loans and a letter of credit covering 13% of the deal from Credit Suisse.

[20476023] |South Australian Government Finance Authority (agency) --
[20476024] |125 million Australian dollars of zero-coupon Eurobonds due Dec. 12, 1994, priced at 50.9375 to yield 15.06% less fees via Hambros Bank Ltd.
[20476025] |Guaranteed by the South Australian Treasury.
[20476026] |Fees 1 3/8.

[20476027] |Government Insurance Office of New South Wales (agency) --
[20476028] |A$50 million of 17 1/2% Eurobonds due Dec. 4, 1991, priced at 101.95 to yield 17.06 less fees via Westpac Banking Corp.
[20476029] |Fees 1 1/4.

[20476030] |Swedish Export Credit Corp. (Sweden) --
[20476031] |100 million Swiss francs of 6 1/8% privately placed notes due Sept. 30, 1996, priced at 100 3/4 to yield 5.99% via Citicorp Investment Bank Switzerland.
[20476032] |Call from Sept. 30, 1993, at 100 3/16, declining by 1/16 point a year to to par.
[20476033] |Fees 1 3/4.

[20477001] |West German insurance giant Allianz AG entered the takeover battle between France's Cie. Financiere de Paribas and Cie. de Navigation Mixte.

[20477002] |Allianz said it won French government approval to buy as much as one-third of Navigation Mixte, a diversified financial, transport and food holding company.
[20477003] |The move comes a week after Paribas announced that it was preparing to bid for 66.7% control of Navigation Mixte.

[20477004] |Munich-based Allianz's brief explanatory statement said it is acting to protect its own interests as a shareholder of Navigation Mixte.
[20477005] |That would be a blow to both Paribas and Navigation Mixte.
[20477006] |Each had claimed Allianz, Europe's largest insurance company, as a tacit ally.

[20477007] |The Allianz statement also reinforced the belief that the takeover battle could be a long one.
[20477008] |It led to broad market speculation that Paribas now will sweeten its bid, which is expected to be formally launched later this week, after approval from French government regulators.

[20477009] |Allianz's entry reflects the increasing eagerness of West German companies, looking ahead to the reduction in European Community internal barriers in 1992, to get involved in what until now were considered internal French affairs.
[20477010] |Deutsche Bank, Dresdner Bank and Commerzbank all also have expressed eagerness to expand in France before 1992.

[20477011] |Dresdner Bank this month moved to acquire Banque Internationale des Placements, a small French merchant bank that Deutsche Bank had looked at and passed over.
[20477012] |Commerzbank had hoped to buy a stake in Credit Lyonnais, until the Socialists returned to government last year and canceled plans to privatize the large French bank.
[20477013] |Deutsche Bank has actively sought a French acquisition for at least two years.
[20477014] |Lately, analysts say, Deutsche Bank has shocked some in the French financial community by indicating it wants a strong bank with a large number of branches.

[20477015] |"We are still looking," said a Deutsche Bank spokesman.
[20477016] |"The banks we think would fit into our concept are either government-owned or not for sale, though Deutsche Bank would be able to pay a good price."

[20477017] |While Allianz officials weren't willing to comment in any detail on their plans, they said Allianz currently holds between 5% and 10% of Navigation Mixte, an apparent increase from the 5% stake that Navigation Mixte officials had earlier announced.
[20477018] |Paris market sources said they believed Allianz was buying yesterday morning, and Navigation Mixte moved up 108 francs ($17.19) to close at 1,908 francs in heavy trading.
[20477019] |It was the first day of trading following the suspension of Navigation Mixte shares last Monday, when Paribas announced its plan to pay 1,850 francs for each Navigation Mixte share.

[20477020] |Allianz also holds a 50% stake in Navigation Mixte's insurance subsidiary, one of France's largest insurance groups, which it bought for about 6.5 billion francs just before Paribas launched its bid.
[20477021] |Navigation Mixte holds the remaining 50%.
[20477022] |Allianz said in its statement that it was acting to protect that interest, which ties it to Navigation Mixte as a partner.

[20477023] |Allianz's statement stressed the company's previously announced position that Paribas's offer price is too low.
[20477024] |Allianz also suggested, without saying so directly, that it regrets that Paribas isn't bidding for all of Navigation Mixte's shares.
[20477025] |The problem here, analysts say, is that if Paribas wins its 66.7%, remaining Navigation Mixte shares will fall in value.
[20477026] |That displeases many current holders, such as Allianz, which couldn't be sure of selling all their shares if they tendered to Paribas.

[20477027] |The Allianz statement led to speculation that Allianz eventually could sell to Paribas.
[20477028] |That would be bad news for Navigation Mixte's current management, which was counting on Allianz to help fend off Paribas.
[20477029] |Allianz didn't say whom, if anyone, it will support.
[20477030] |It said simply that it will boost its Navigation Mixte stake as it sees fit over the coming days to protect itself, as long as it has French regulatory officials' approval.

[20477031] |Paribas currently intends to offer 1,850 francs a share for Navigation Mixte shares that receive full dividends this year.
[20477032] |It is to offer 1,800 francs for shares created on July 1, which receive partial dividends.
[20477033] |Alternatively, it would offer to swap three Paribas shares for one Navigation Mixte share.
[20477034] |Paribas already holds about 18.7% of Navigation Mixte, and the acquisition of the additional 48% would cost it about 11 billion francs under its current bid.

[20477035] |The bid values Navigation Mixte at around 23 billion francs, depending on how many holders of Navigation Mixte warrants exchange them for shares before the bid expires.

[20478001] |Penn Central Corp., Cincinnati, said it agreed in principle to acquire Noranda Inc.'s Carol Cable Co. unit for $177 million.

[20478002] |The company said Carol Cable, based in Pawtucket, R.I., is a leading supplier of electrical and electronic wire and cable for the distributor, retail and original equipment manufacturer markets.

[20478003] |Carol Cable, which operates 12 manufacturing plants, had operating profit of $11.7 million on sales of $153.3 million for the first six months of this year and operating profit of $25.6 million on sales of $294.6 million for all of 1988.

[20478004] |The maker of telecommunications and defense equipment said Carol Cable's portfolio and market focus would complement the company's current wire and cable businesses.
[20478005] |The plan is subject to a satisfactory due diligence investigation of Carol Cable by Penn Central, a definitive agreement and regulatory approvals.

[20479001] |Fletcher Challenge Ltd. said its Petrocorp unit agreed to acquire certain Alberta oil and gas interests from Amoco Corp.'s Canadian unit, for about 130 million Canadian dollars (US$110.6 million).

[20479002] |Fletcher Challenge, a big New Zealand-based forest products concern with forestry operations in Canada, said the assets include stakes in four natural gas fields and one oil field near Provost, Alberta, plus gas processing facilities and about 247,000 acres of undeveloped land.
[20479003] |The proposed purchase requires approval from Investment Canada, which monitors large foreign investments in Canada.

[20479004] |Amoco Canada Petroleum Co., which operates the major properties included in the asset package, said the sale is part of a plan to streamline its assets.

[20479005] |Petrocorp, a New Zealand-based oil and gas producer, said the planned purchase would be its first oil and gas acquisition outside its home country, and would form the basis for a new stand-alone exploration and production unit in Canada.

[20480001] |MiniScribe Corp., Longmont, Colo., said it introduced a one-inch high, 80-megabyte hard disk drive that it hopes will prove popular with makers of high-performance laptop and portable computers.

[20480002] |The troubled disk drive maker aims with the new 3 1/2-inch disks to revive its reputation and sales growth.
[20480003] |MiniScribe said the disk drives have more memory capacity than other disks that size.

[20480004] |MiniScribe said it expects to begin full volume production of the drives in the U.S. and Singapore in the first quarter next year.
[20480005] |A drive with 120 megabytes of capacity is scheduled for release during the third quarter of 1990.

[20480006] |MiniScribe has been on the rocks since it disclosed early this year that its earnings reports for 1988 weren't accurate.
[20480007] |After an internal investigation, the company found that senior officials used a variety of schemes to fabricate sales gains, including counting shipments of bricks and defective drives as sales.

[20481001] |The New York Times Co. said it reached a settlement with independent home delivery dealers in the metropolitan New York area that will free the newspaper to expand home delivery circulation.

[20481002] |The settlement stemmed from a lawsuit the dealers filed in 1982 when the Times began its own competing direct delivery service.
[20481003] |The pact calls for the Times to pay dealers $3.6 million over six years, as well as other payments in the form of subsidies over three years, based on the number of "new customers started by the dealers and on pricing structures," the Times said.

[20481004] |The amount of the settlement will be taken as a charge against earnings in the fourth quarter.
[20481005] |The settlement, which involves most of the 300 independent newspaper dealers in the New York area, will allow the Times to freely operate its own direct home delivery system.

[20481006] |Home delivery is the fastest growing segment of the Times's 1.1 million daily circulation.
[20481007] |Currently, about 60% of home delivery subscribers in the New York area receive the paper directly from the Times.

[20482001] |Mercury Savings & Loan Association, Huntington Beach, Calif., reported a third-quarter loss of $3.9 million, or 61 cents a share, compared with net income of $1.4 million, or 22 cents a share, in the year-earlier quarter.

[20482002] |Mercury attributed the loss to rapid prepayments of loans and costs incurred in refinancing many house loans this past spring and summer, when interest rates dipped.

[20482003] |The thrift hired an investment banker earlier this month to advise it regarding a possible sale or merger.
[20482004] |Mercury also is shrinking itself, part of its plan to change its emphasis from buying mortgage loans from mortgage brokers to making loans directly.
[20482005] |Such a focus is "more profitable, more efficient and gives us a greater sense of control," said William A. Shane, Mercury's senior executive vice president.
[20482006] |As of Sept. 30, Mercury's assets were $2.25 billion, down from $2.62 billion a year ago.

[20482007] |For the nine months, Mercury posted a loss of $5.4 million, or 86 cents share, against net income of $4 million, or 63 cents share, a year earlier.

[20482008] |Mercury shares closed yesterday at $4.625, up 50 cents, in New York Stock Exchange composite trading.

[20483001] |Bancroft Convertible Fund Inc., New York, likely will reject a renewed offer from Florida investor Robert I. Green to buy Bancroft for $18.95 a share.

[20483002] |Sigmund Levine, Bancroft secretary and treasurer, said the closed-end fund's directors will consider Mr. Green's offer in a couple of weeks at a regular meeting.
[20483003] |"He hasn't added anything," Mr. Levine said, predicting the board will again reject Mr. Green's proposal.

[20483004] |In a Securities and Exchange Commission filing, Mr. Green said he had boosted his holdings in Bancroft common to 10.4% from 8.5%, and renewed an offer he made in March to acquire the fund.

[20483005] |Mr. Levine noted that Bancroft's shares have been trading at or above Mr. Green's offering price for the last several months.

[20483006] |He said Bancroft attorneys are scheduled to meet with Mr. Green's attorneys in Delaware Chancery Court at the end of this week to respond to the investor's request for company records for the past five years.
[20483007] |Mr. Green couldn't be reached.

[20484001] |Giant Group said a federal court in Delaware has denied a motion by Rally's Inc. seeking to block a group led by Giant Chairman Burt Sugarman from acquiring more of the company's shares.

[20484002] |Rally's, a fast-food chain based in Louisville, Ky., is contending that Mr. Sugarman and two other company directors failed to disclose to the Securities and Exchange Commission that they intended to acquire a big Rally stake.

[20484003] |Mr. Sugarman has in turn contended that the other major shareholder group -- whose interests are represented by three other directors connected to trusts in the name of the children of the company's founder, James Patterson -- has ties to a competing fast food chain, Wendy's International Inc.

[20484004] |The company last week assembled a three-member committee of directors aligned with neither side to analyze the situation.
[20484005] |Each group controls more than 40% of Rally's stock.
[20484006] |The company just went public earlier this month.

[20484007] |Rally's had no comment, but was expected to make an announcement this morning about the situation.

[20485001] |Singer Bette Midler won a $400,000 federal court jury verdict against Young & Rubicam in a case that threatens a popular advertising industry practice of using "sound-alike" performers to tout products.

[20485002] |The decision in Los Angeles federal court stems from a 1985 Mercury Sable TV ad that Young & Rubicam worked up for Ford Motor Co.
[20485003] |The ad agency had approached Ms. Midler about appearing, but she declined, citing a longstanding policy of refusing advertising work.
[20485004] |The agency then turned to a former backup singer for Ms. Midler who appeared in the ad and crooned what was generally considered a more than credible imitation of Ms. Midler's 1973 hit song "Do You Wanna Dance."

[20485005] |The appeals court held: "When a distinctive voice of a professional singer is widely known and is deliberately imitated in order to sell a product, the sellers have appropriated what is not theirs."

[20485006] |The judge in the jury trial said there was insufficient evidence to hold Ford liable in the case.
[20485007] |In a statement, Young & Rubicam called the award "unfortunate but bearable."

[20485008] |Peter Laird, a Los Angeles lawyer for Ms. Midler, said, "We believe that the verdict reaffirms her position and our position that advertisers and advertising agencies cannot with impunity imitate the voices of well-known performers.
[20485009] |That is a property right that belongs to the performer."

[20485010] |The award, although far less than the $10 million, including punitive damages, that Ms. Midler sought, is likely to force Madison Avenue to further rethink how they use famous songs in ads.
[20485011] |Last year's appeals court decision, for instance, spawned several suits, reportedly including a recent action by the heirs of singer Bobby Darin against McDonald's Corp. over its "Mac Tonight" TV commercials, a rough parody of Mr. Darin's "Mack the Knife" trademark.

[20485012] |The appeals-court decision last year was particularly surprising because the same court had dismissed a similar case in 1970 involving singer Nancy Sinatra and a tire ad -- also a Young & Rubicam product.
[20485013] |Ms. Sinatra sued over the use of her "These Boots are Made for Walkin'" song in the ad.

[20485014] |At that time, the court held that such a claim would interfere with federal copyright law, which has always cracked down on the unauthorized copying of songs and musical compositions but never actual performances.

[20485015] |"One thing that is a little unnerving is that you had three old men on the court of appeals in California coming up with a statement that Nancy Sinatra is not distinctive but that Bette Midler is.
[20485016] |I am not sure that judges, many of whom I like very much, are proper repositories for making distinctions about pop singers," said Richard Kurnit, a New York advertising lawyer.

[20485017] |Nonetheless, Mr. Kurnit said that the latest decisions are having a chilling effect.
[20485018] |"It has made people think twice about how they use music and is forcing them to be more circumspect about doing a particular rendition of a song in its most famous form," he said.

[20485019] |Joanne Lipman contributed to this article.

[20486001] |James River Corp., Richmond, Va., said it acquired the tissue operations of Buhrmann-Tetterode N.V. of the Netherlands for about $77 million.

[20486002] |The Dutch unit, known as Celtona B.V., is a leading maker of consumer and away-from-home tissue products for the Benelux region.
[20486003] |In addition, the acquisition includes production assets of Invercon Papermils, a maker of household tissue products for the U.K. and Ireland.
[20486004] |The combined operations had 1988 revenue of about $100 million.

[20486005] |James River, a maker of pulp, paper and plastic products, already has interests in tissue businesses in France, Spain, Italy and Turkey.
[20486006] |The company said it plans to form European ventures with Italian and Finnish companies.
[20486007] |The Celtona operations would become part of those ventures.

[20487001] |Vitro S.A. of Monterrey, Mexico, said its THR Corp. subsidiary has entered into definitive loan agreements in connection with Vitro's $21.25-a-share tender offer for Anchor Glass Container Corp.

[20487002] |The agreements are with Security Pacific National Bank and an affiliate of Donaldson, Lufkin & Jenrette Securities Corp.
[20487003] |Proceeds of the loan agreement, together with funds from Vitro, will permit the purchase of all shares outstanding of Anchor and the payment of all related costs and expenses.

[20487004] |Vitro said the definitive agreements require that Anchor obtain a waiver from its bank lenders of existing covenant defaults under its bank facilities.
[20487005] |Since Anchor is still seeking this waiver, Vitro said the tender offer is being extended until 5 p.m. EST tomorrow.

[20488001] |The dollar finished mostly stronger yesterday, boosted by a modest recovery in share prices.

[20488002] |The Dow Jones Industrial Average climbed 6.76 points in a spate of bargain-hunting following last week's declines.

[20488003] |"Attention is fixed on the stock market for lack of anything else to sink our teeth into," said Robert White, a vice president at First Interstate of California.

[20488004] |Some analysts predict that in the absence of market-moving news to push the U.S. unit sharply higher or lower, the currency is likely to drift below 1.80 marks this week.

[20488005] |But others reject the view, and forecast the dollar will continue to hold its current tight trading pattern.
[20488006] |They argue that weakness in both the yen and sterling have helped offset bearish U.S. economic news and have lent support to the dollar.

[20488007] |In late New York trading yesterday, the dollar was quoted at 1.8340 marks, up from 1.8300 marks late Friday, and at 141.90 yen, up from 141.65 yen late Friday.
[20488008] |Sterling was quoted at $1.5820, up from $1.5795 late Friday.

[20488009] |The dollar rose against the Swiss and French francs.

[20488010] |In Tokyo Tuesday, the U.S. currency opened for trading at 142.32 yen, up from Monday's Tokyo close of 142.17 yen.

[20488011] |Last week, the surprise resignation of British Chancellor of the Exchequer Nigel Lawson sent the British pound into a tailspin.

[20488012] |While sterling bounced back from session lows in a bout of short-covering yesterday, foreign exchange dealers said that any hopes that the pound would soon post significant gains have evaporated.

[20488013] |Traders said that statements made over the weekend to quell concern about the stability of Prime Minister Margaret Thatcher's government and the future of her economic program largely failed to reassure investors and bolster the flagging British unit.

[20488014] |In her first televised interview following Mr. Lawson's resignation, Mrs. Thatcher reiterated her desire to keep sterling strong and warned again that full entry into the European Monetary System's exchange rate mechanism would provide no easy solution to Britain's economic troubles.

[20488015] |She said that the timing of the United Kingdom's entry would depend on the speed with which other members liberalize their economies.

[20488016] |Mrs. Thatcher's remarks were seen as a rebuff to several leading members of her own Conservative Party who have called for a more clear-cut British commitment to the EMS.

[20488017] |At the same time, a recent poll shows that Mrs. Thatcher has hit the lowest popularity rating of any British leader since polling began 50 years ago.

[20488018] |Comments by John Major, who has succeeded Mr. Lawson, also failed to damp market concern, despite his pledge to maintain relatively high British interest rates.

[20488019] |According to one London-based analyst, even higher interest rates won't help the pound if Britain's government continues to appear unstable.

[20488020] |One U.S. trader, however, dismissed sterling doomsayers while acknowledging there is little immediate upside potential for the U.K. unit.

[20488021] |"There is no question that the situation is bad, but we may be painting a gloomier picture than we should," he said.

[20488022] |He predicts the pound will continue to trade in a very volatile fashion, with "fits of being oversold and overbought" before recovering its losses.

[20488023] |Dealers also note that the general lack of enthusiasm for the yen has helped bolster the U.S. dollar.

[20488024] |They observe that persistent Japanese investor demand for dollars for both portfolio and direct investment has kept a base of support for the dollar at around 140 yen.

[20488025] |The dollar began yesterday on a firm note in Tokyo, closing higher in late trade.
[20488026] |In Europe, the dollar closed slightly up in a market dominated by cross trades.

[20488027] |On the Commodity Exchange in New York, gold for current delivery settled at $377.80 an ounce, down 70 cents.
[20488028] |Estimated volume was a moderate 3.5 million ounces.

[20488029] |In early trading in Hong Kong Tuesday, gold was quoted at $376.80 an ounce.

[20489001] |General Electric Capital Corp.'s Monogram Bank USA acquired a Visa and MasterCard portfolio from Commercial Federal Savings & Loan Association, an Omaha, Neb., unit of Commercial Federal Corp. of Omaha.

[20489002] |Terms weren't disclosed.

[20489003] |The portfolio currently includes $95 million in receivables, GE Capital said.
[20489004] |GE Capital is a financial services subsidiary of General Electric Co. of Fairfield, Conn., which also has broadcasting and electrical-products businesses.

[20489005] |GE Capital said Commercial Federal Savings will continue to market Visa and MasterCard programs while Monogram provides "operational and marketing support" and actually owns the accounts.
[20489006] |With the acquisition, Monogram, Blue Ash, Ohio, has more than 2.4 million total accounts, GE Capital added.

[20490001] |EAST GERMANS RALLIED in three cities to demand democratic freedoms.

[20490002] |As the country's new leader, Egon Krenz, prepared to travel to Moscow today for talks with Soviet leader Gorbachev, hundreds of thousands of East Germans massed in the streets of Leipzig, Halle and Schwerin to call for internal freedoms and the legalization of the New Forum opposition group.
[20490003] |Krenz, however, vowed to preserve the Communist Party's hold on political power and said East Germans shouldn't destabilize the nation with unrealistic demands.

[20490004] |Communist officials this month have faced nearly daily pro-democracy protests, accompanied by the flight to the West by thousands of East Germans.

[20490005] |Soviet police clashed with demonstrators in Moscow following a candlelight vigil around the KGB's Lubyanka headquarters in memory of those persecuted under Stalin.
[20490006] |More than 1,000 Muscovites attended the service.
[20490007] |A splinter group demonstrated in Pushkin Square, where the police clubbed and detained a number of protesters.

[20490008] |Police in Yugoslavia dispersed about 1,000 ethnic Albanians who were protesting the trial of the former Communist Party chief of the southern province of Kosovo.
[20490009] |Azem Vlasi and 14 others are accused of inciting riots and strikes and opposing constitutional limits to Kosovo's autonomy.
[20490010] |If convicted, they could be sentenced to death.

[20490011] |A court in Jerusalem sentenced a Palestinian to 16 life terms for forcing a bus off a cliff July 6, killing 16 people, Israeli radio reported.
[20490012] |He also received 20-year sentences for each of the 24 passengers injured.
[20490013] |It was considered the stiffest sentence passed since the start of the 22-month-old Arab uprising in the Israeli-occupied territories.

[20490014] |U.S. and Soviet negotiators opened talks in New York aimed at resolving differences in proposals to reduce chemical-weapons arsenals.
[20490015] |While the Kremlin has urged a ban on output of the poison gases, the White House wants to continue producing the weapons even after an international treaty calling for their destruction is signed.

[20490016] |South Africa's government said peaceful demonstrations such as the anti-apartheid rally Sunday near Soweto have helped ease tensions and assisted political changes.
[20490017] |About 70,000 people attended the anti-government rally, at which leaders of the banned African National Congress refused to renounce violence to end apartheid.

[20490018] |Secretary of State Baker expressed concern that Nicaraguan President Ortega may attempt to use alleged attacks by the U.S.backed Contra rebels as an excuse to scuttle elections scheduled for February.
[20490019] |Ortega had threatened to end a 19-month-old ceasefire.
[20490020] |Baker's remarks came as the White House urged both sides to honor the truce.

[20490021] |The USS Lexington returned to dock in Pensacola, Fla., following an accident Sunday in which the pilot of a training jet crashed into the ship, killing five sailors.
[20490022] |The captain of the aircraft carrier, the oldest in the Navy, said the flier was making his first attempt to land on a carrier.

[20490023] |Four people torched three U.S. flags on the central steps of the U.S. Capitol in a bid to test a new federal law protecting the American flag from desecration.
[20490024] |All four demonstrators were arrested.
[20490025] |The law, which Bush allowed to take effect without his signature, went into force Friday.

[20490026] |Chinese officials said armed police would replace soldiers in Tiananmen Square as part of a scaling down of Beijing's five-month-old state of emergency.
[20490027] |Separately, the U.S. Embassy has filed three protests in as many days with China's government, alleging harassment of diplomats and their families, an embassy source said.

[20490028] |Authorities in Algeria said the toll from two earthquakes Sunday had reached at least 30 dead and about 250 injured.
[20490029] |The heaviest damage was reported in Tipasa, about 40 miles west of Algiers.
[20490030] |As rescue teams continued searching for victims, hundreds of suvivors accused the government of a feeble response following the temblors.

[20490031] |Britain's Thatcher summoned senior advisers for strategy talks as opinion polls showed the prime minister's popularity had hit a record low following the resignation last Thursday of Chancellor of the Exchequer Lawson.
[20490032] |One poll, conducted for the British Broadcasting Corp., found that 52% of voters believed that she should quit.

[20490033] |Lawmakers in Hungary approved legislation granting amnesty to many people convicted of crimes punishable by less than three years in prison.
[20490034] |They also established an office to control government and party finances.
[20490035] |The laws take effect next month.

[20490036] |Died: Robert V. Van Fossan, 63, chairman of Mutual Benefit Life Insurance Co., Sunday, in Morristown, N.J., of cancer.

[20491001] |Fluor Corp. said it was awarded a $300 million contract to provide engineering and construction-management services at a copper mine in Irian Jaya, Indonesia, for a unit of Freeport-McMoRan Copper Co.

[20491002] |Fluor, based in Irvine, Calif., will direct expansion of the mine's capacity to 52,000 metric tons a day from 32,000 metric tons a day.
[20491003] |Completion of the project is expected by mid-1992.

[20491004] |In 1988, Fluor had revenue of $5.1 billion and earnings of $56.4 million, or 71 cents a share.

[20492001] |Nixdorf Computer AG, citing continued profitability problems, said it will have to reduce personnel further, notably in research and development sectors.

[20492002] |The troubled West German computer company said, in a statement to its employees, that the number of persons working in product development will be reduced world-wide to 2,440 from 2,888 by the end of 1990.
[20492003] |The number of workers in production sectors will be cut by 488, to 5,200 by September.
[20492004] |The cuts will be made half within Germany and half abroad.

[20492005] |In the first nine months of 1989, Nixdorf said, sales rose 5% amid good growth in selected areas such as banks and trading companies.

[20492006] |The company also cited some success in damping cost increases and said it wants to return to profitability in 1990.
[20492007] |It cited the expected beneficial effects of a concentration on key products, further structural changes within the group and cooperation agreements with other companies.

[20493001] |GREAT NORTHERN NEKOOSA is being sought by another big paper company, Georgia-Pacific, for $58 a share, or about $3.18 billion.
[20493002] |The tender offer, which surprised analysts because it appeared to be unsolicited, could spark a period of industry consolidation.
[20493003] |Analysts questioned whether Georgia-Pacific will ultimately prevail, saying other paper concerns may make competing bids.

[20493004] |Two more securities firms bowed to the outcry over program trading.
[20493005] |GE's Kidder Peabody unit said it would stop doing stock-index arbitrage for its own account, while Merrill Lynch said it was halting such trading entirely.
[20493006] |Also, the Big Board met with angry stock specialists.

[20493007] |A big pension-insurance case will be reviewed by the Supreme Court.
[20493008] |The justices agreed to decide whether federal insurers can require LTV to take back responsiblilty for funding its $2.3 billion pension shortfall.

[20493009] |Drug companies lost a major liability case.
[20493010] |The Supreme Court let stand a New York ruling that all manufacturers of an anti-miscarriage drug are liable for injuries or deaths if the actual maker isn't known.

[20493011] |Revco received a $925 million takeover offer from Texas financier Robert Bass and Acadia Partners.
[20493012] |The drugstore chain reacted cautiously, saying the plan would further swell its huge debt, which forced the company into Chapter 11 protection last year.

[20493013] |Rockefeller Group agreed to sell a 51% interest to Mitsubishi Estate, a major Japanese developer and property owner, for $846 million.
[20493014] |Officials at some Rockefeller units are said to be unhappy with the agreement.

[20493015] |Continental Air replaced its top executive for the sixth time in as many years.
[20493016] |Chairman and Chief Executive Joseph Corr was succeeded by Frank Lorenzo, chief of parent Texas Air.

[20493017] |United Air's parent may have to pay as much as $53.7 million to the labor-management buy-out group for fees and expenses incurred in their failed $6.79 billion takeover bid.

[20493018] |Gen-Probe agreed to be bought by Chugai Pharmaceutical for about $110 million.
[20493019] |The sale is likely to fuel concern about growing Japanese investment in U.S. biotechnology firms.

[20493020] |Boeing posted a 68% jump in third-quarter earnings, but Wall Street's attention was focused on the continued strike at the aircraft maker.

[20493021] |The Fed delayed approval of First Union's $849 million acquisition of Florida National Banks pending a review of First Union's lending practices in low-income neighborhoods.

[20493022] |Allianz of West Germany entered the takeover battle between France's Paribas and Navigation Mixte.

[20493023] |Maxwell agreed to sell its U.S. printing unit to Quebecor for $500 million, making Quebecor the No. 2 commercial printer in North America.

[20493024] |New construction contracts rose 8% in September, led by commercial, industrial and public-works projects, according to F.W. Dodge Group.

[20493025] |Western Union took steps to withdraw a $500 million debt swap, citing turmoil in the junk bond market.

[20493026] |Markets --

[20493027] |Stocks: Volume 126,630,000 shares.
[20493028] |Dow Jones industrials 2603.48, up 6.76; transportation 1191.86, up 1.43; utilities 216.74, up 0.88.

[20493029] |Bonds: Shearson Lehman Hutton Treasury index 3416.81, up

[20493030] |Commodities: Dow Jones futures index 129.38, off 0.11; spot index 130.09, off 0.71.

[20493031] |Dollar: 141.90 yen, up 0.25; 1.8340 marks, up 0.0040.

[20494001] |Pacific Telesis Group said its Pacific Bell unit sustained property damage of about $45 million to $50 million from the California earthquake earlier this month.

[20494002] |The San Francisco-based telecommunications company said it carries $150 million of earthquake insurance with a $10 million deductible provision.

[20494003] |Sam Ginn, chairman and chief executive officer, told securities analysts in New York that the company expects somewhat slower per-share earnings growth in 1990, although annual growth should return to the traditional figure of about 7% thereafter.

[20494004] |As factors contributing to the temporary slowdown, he cited one-time rate reductions prescribed by California regulators as a prelude to a new framework that removes profit constraints.
[20494005] |He also mentioned increased capital investment by Pacific Bell for network improvements.

[20494006] |Mr. Ginn said the company's cellular operations now serve about 341,000 customers, up 46% from a year ago.

[20495001] |General Motors Corp. is planning to build a new engine plant in Europe that may be built in Britain, provided the company can reach a satisfactory agreement with unions, sources said.

[20495002] |Officials of Vauxhall Motors Ltd., GM's British unit, were meeting with union leaders late yesterday in hopes of winning such an accord.

[20495003] |The engine plant may encompass plans for a joint components venture with Jaguar.
[20495004] |Alternatively, a separate engine plant may be built as part of GM's planned tie-up with the British luxury car maker, the sources said.

[20495005] |Sources said a "complex and detailed" announcement of a joint agreement between General Motors and Jaguar would be made by Jaguar "some time in the next 2 1/2 weeks.

[20496001] |Cray Research Inc. won government clearance for its proposed reorganization of founder Seymour Cray's supercomputer design team into a separate company.

[20496002] |Internal Revenue Service approval of the move as a tax-free transaction was the last hurdle to splitting up the world's dominant maker of supercomputers, which Mr. Cray founded in 1974.

[20496003] |Cray's directors set Nov. 15 as the record date for distribution of shares in the new company, to be called Cray Computer Corp.
[20496004] |It will trade over the counter under the symbol CRAY.

[20496005] |The plan calls for Cray Research holders to receive one share in the new company for every two shares held.
[20496006] |An estimated 14.7 million Cray Computer shares will be distributed, Cray Research said.

[20496007] |Under the accord, Cray Research will transfer to Mr. Cray's fledgling operation $53.3 million of assets primarily related to the Cray-3 development project his team is undertaking and will lend Cray Computer $98.6 million.

[20496008] |Cray Research will retain a 10% interest in the new company, which will be based in Colorado Springs, Colo.

[20496009] |When it announced the planned breakup in May, Cray Research said development costs of several competing projects were squeezing its earnings growth.
[20496010] |After the split, the two companies presumably will be rivals for orders from government and commercial customers.

[20497001] |Interface Systems Inc., Ann Arbor, Mich., said it will report net income for the fourth quarter ended Sept. 30 fell to $470,000, or 11 cents a share, from $805,000, or 19 cents a share, a year earlier.

[20497002] |Chairman Carl L. Bixby said the decline occurred although revenue rose 30% to more than $8.3 million from $6.4 million a year earlier.
[20497003] |The company, which makes computer parts said fiscal 1989 earnings were "down slightly" from $3.2 million, or 74 cents a share, in fiscal l988.

[20497004] |The company said fiscal 1989 revenue increased about 30% to more than $32 million from $25.3 million.

[20497005] |Mr. Bixby said that early signs point to improved earnings and revenue in the first quarter of fiscal 1990.
[20497006] |"The current backlog of orders is strong throughout the corporation," he said.

[20498001] |Priam Corp. said it filed for protection under Chapter 11 of the federal Bankruptcy Code and announced a 35% reduction in its world-wide employment.

[20498002] |The filing in bankruptcy court here follows a string of quarterly losses and product glitches for the maker of harddisk drives for minicomputers and microcomputers.

[20498003] |Priam had a loss of $25.4 million for the fiscal year ended July 7, compared with year-earlier profit of $543,000, or two cents a share.
[20498004] |Revenue for the year fell 13% to $122.7 million.

[20498005] |The 200-person staff cutback announced yesterday will bring Priam's employment to about 380 workers, less than half of what it was before a similar, 230-person reduction in August.

[20498006] |The company yesterday also said it was scrapping one of its major new products, a 760-megabyte drive, which, while technically proficient, didn't hold much promise of generating substantial orders because financing problems caused a nine-month delay in getting the product to market.

[20499001] |The French Economics Ministry approved a planned asset swap between the defense and electronics group Thomson-CSF S.A. and the bank group Credit Lyonnais.

[20499002] |The ministry said the swap, details of which were disclosed last Thursday, will allow both state-controlled companies to reinforce operations in their main markets and argued that the move shows the dynamism of France's state-sector concerns.

[20499003] |The approval also ends any hope that Banque Nationale de Paris, another state-sector bank, might have had about taking Credit Lyonnais's place in the accord.
[20499004] |It hinted over the weekend that it would have been interested in a hook-up with Thomson-CSF.

[20499005] |Under details of the accord, Credit Lyonnais will take slightly more than 50% of Thomson-CSF Finance in exchange for about 14% of its own shares.
[20499006] |The move will help the bank to keep up with international solvency ratios being phased in by the Bank for International Settlements and will also represent the first time that its voting shares have been held by a party other than the government.