[21100001] |Westinghouse Electric Corp. said it will buy Shaw-Walker Co.
[21100002] |Terms weren't disclosed.

[21100003] |Shaw-Walker, based in Muskegon, Mich., makes metal files and desks, and seating and office systems furniture.

[21101001] |Israel has launched a new effort to prove the Palestine Liberation Organization continues to practice terrorism, and thus to persuade the U.S. to break off talks with the group.
[21101002] |U.S. officials, however, said they aren't buying the Israeli argument.

[21101003] |Israeli counterterrorism officials provided the State Department with a 20-page list of recent terrorist incidents they attribute directly to forces controlled by PLO Chairman Yasser Arafat.
[21101004] |Mr. Arafat publicly renounced terrorism Dec. 15, satisfying the U.S. precondition for a direct "dialogue" with the PLO.

[21101005] |A U.S. counterterrorism official said experts are studying the Israeli list.
[21101006] |"We have no independent evidence linking Fatah to any acts of terrorism since Dec. 15, 1988," he said, referring to the specific PLO group that Mr. Arafat heads.
[21101007] |"So far, this list doesn't change our view.
[21101008] |Israel wants to end the dialogue, but our analysts take a different view than theirs."

[21101009] |Israeli Prime Minister Yitzhak Shamir's top adviser on counterterrorism, Yigal Carmon, was here Monday to present the report to members of Congress, reporters and others.
[21101010] |Mr. Carmon said he also presented the list last week to William Brown, U.S. Ambassador to Israel.

[21101011] |Separately, the New York Times reported that the Israeli government had provided its correspondent in Jerusalem with different documents that Israel said prove the PLO has been conducting terrorism from the occupied Arab territories.
[21101012] |The State Department said it hasn't yet seen copies of those papers.

[21101013] |"If the dialogue was based on the assumption that Arafat or the PLO would stop terrorism, and we have evidence of continued terrorism, what would be the logical conclusion?" Mr. Carmon asked.

[21101014] |Israel has long claimed Mr. Arafat never meant to renounce terrorism, particularly because he and his lieutenants reserved the right to press "armed struggle" against the Jewish state.
[21101015] |Now, Jerusalem says it is backing up its contention with detailed accounts of alleged terrorist acts and plans linked to Mr. Arafat.
[21101016] |It blames most of these on Fatah.

[21101017] |The new accusations come at a delicate time in U.S. efforts to bring about talks between Israel and Palestinian representatives.
[21101018] |The State Department said it had received a new letter on the subject from Israeli Foreign Minister Moshe Arens, restating Israel's previous objection to negotiating with any Palestinian tied to the PLO.

[21101019] |Deciding what constitutes "terrorism" can be a legalistic exercise.
[21101020] |The U.S. defines it as "premediated, politically motivated violence perpetrated against noncombatant targets by subnational groups or clandestine state agents."
[21101021] |To meet the U.S. criteria, Israel contended it only listed incidents that involved civilians and occurred inside its pre-1967 borders.

[21101022] |At the heart of Israel's report is a list of a dozen incidents Jerusalem attributes to Fatah, including the use of bombs and Molotov cocktails.
[21101023] |But U.S. officials say they aren't satisfied these incidents constitute terrorism because they may be offshoots of the intifadah, the Palestinian rebellion in the occupied territories, which the U.S. doesn't classify as terrorism.
[21101024] |In addition, the officials say Israel hasn't presented convincing evidence these acts were ordered by Fatah or by any group Mr. Arafat controls.

[21101025] |U.S. terrorism experts also say they are highly uncertain about the veracity of the separate documents leaked to the New York Times.
[21101026] |The papers, which Israel says were discovered in Israeli-occupied Gaza, refer to terrorist acts to be carried out in the name of a group called "the Revolutionary Eagles."

[21101027] |Some supporters of Israel say U.S. policy on Palestinian terrorism is colored by an intense desire to maintain the dialogue with the PLO.
[21101028] |But State Department officials accuse Israel of leaking questionable claims to embarrass the U.S.

[21102001] |The dollar finished lower yesterday, after tracking another rollercoaster session on Wall Street.

[21102002] |Concern about the volatile U.S. stock market had faded in recent sessions, and traders appeared content to let the dollar languish in a narrow range until tomorrow, when the preliminary report on third-quarter U.S. gross national product is released.

[21102003] |But seesaw gyrations in the Dow Jones Industrial Average yesterday put Wall Street back in the spotlight and inspired market participants to bid the U.S. unit lower.

[21102004] |UAL's decision to remain an independent company sent share prices tumbling.
[21102005] |By midmorning, the DJIA had plunged 80 points and foreign-exchange dealers quickly drove the dollar down.

[21102006] |When the DJIA modestly rebounded, the dollar bounced back in choppy dealings but ended the day below the levels of late Monday.
[21102007] |Stock prices, meanwhile, posted significant gains in later trading and closed down by only 3.69 points on the day.

[21102008] |Some dealers said that the market's strong reaction to Wall Street reflects a general uneasiness about the dollar.
[21102009] |They added that the DJIA's swift drop proved an easy excuse for the market to drive the U.S. currency in the direction it was already headed.

[21102010] |In late New York trading yesterday, the dollar was quoted at 1.8355 marks, down from 1.8470 marks Monday, and at 141.45 yen, down from 141.90 yen late Monday.
[21102011] |Sterling was quoted at $1.6055, up from $1.6030 late Monday.

[21102012] |In Tokyo Wednesday, the U.S. currency opened for trading at 141.57 yen, down from Tuesday's Tokyo close of 142.10 yen.

[21102013] |Tom Trettien, a vice president with Banque Paribas in New York, sees a break in the dollar's long-term upward trend, a trend that began in January 1988.

[21102014] |He argues that the dollar is now "moving sideways," adding that "the next leg could be the beginning of a longer term bearish phase."

[21102015] |Analysts peg the dollar's recent weakness to an underlying slowdown in the U.S. economy, highlighted by recent economic data, particularly a surprisingly sharp widening in the August U.S. trade gap.

[21102016] |They also point out that narrowing interest-rate differentials between the U.S. and its major trading partners tend to make the U.S. currency less attractive to foreign investors.

[21102017] |Despite several spurts of dollar trading, it was noted that mark-yen cross trade grabbed much of the market's attention.

[21102018] |Following the dive in U.S. stocks, the mark has strengthened more than its major counterparts.
[21102019] |Traders attribute the mark's surge to a robust West German economy and higher rate differentials.
[21102020] |But, they add that the mark's strength is in part a reflection of a shift away from U.S. assets by Japanese investors into West German investments.

[21102021] |"The question remains: how much can the West German market absorb?" says one senior dealer.

[21102022] |Some dealers say that Bank of Japan Governor Satoshi Sumita's reassurance that Japanese monetary policy won't be changed for the time being has given investors an added excuse to push the yen down even further against the mark.

[21102023] |Despite the yen's weakness with respect to the mark, Tokyo traders say they don't expect the Bank of Japan to take any action to support the Japanese currency on that front.

[21102024] |Meanwhile, sterling slumped on news that the United Kingdom posted a wider-than-expected trade deficit in September.
[21102025] |The news also knocked the British unit to below 2.95 marks in London, but a bout of short-covering helped sterling recoup some of its earlier losses.

[21102026] |On the Commodity Exchange in New York, gold for current delivery jumped $3.20 to $370.20 an ounce.
[21102027] |The close was the highest since Aug. 15.
[21102028] |Estimated volume was a light two million ounces.

[21102029] |In early trading in Hong Kong Wednesday, gold was quoted at $368.25 an ounce.

[21103001] |Boston Co., the upper-crust financial services concern that was rocked by a management scandal late last year, has had a sharp drop in profitability -- mainly because a high-risk bet on interest rates backfired.

[21103002] |Boston Co.'s fall from grace is bad news for its parent, Shearson Lehman Hutton Holdings Inc., which has relied heavily on the banking and money management unit's contributions in recent years.
[21103003] |In 1988, for example, Boston Co. had an estimated pretax profit of at least $110 million, while Shearson managed net income of just $96 million.

[21103004] |Shearson doesn't break out the earnings of its subsidiaries.
[21103005] |But people familiar with Boston Co.'s performance say the unit had profit of around $17 million for the third quarter, after barely breaking even for the first six months.
[21103006] |Shearson, meanwhile, posted net income of $106 million for the first nine months of the year, down slightly from $110 million for the year-ago period.

[21103007] |Moody's Investors Service Inc. last week downgraded the long-term deposit rating of Boston Co.'s Boston Safe Deposit & Trust Co. subsidiary, to single-A-1 from double-A-3, citing problems in the company's "aggressively managed securities portfolio."

[21103008] |John Kriz, a Moody's vice president, said Boston Safe Deposit's performance has been hurt this year by a mismatch in the maturities of its assets and liabilities.
[21103009] |The mismatch exposed the company to a high degree of interest-rate risk, and when rates moved unfavorably -- beginning late last year and continuing into this year -- "it cost them," Mr. Kriz said.

[21103010] |Mr. Kriz noted that Boston Safe Deposit "has taken some actions to better control asset-liability management and improve controls in general, and we think these will serve to improve credit quality."
[21103011] |As some securities mature and the proceeds are reinvested, the problems ought to ease, he said.
[21103012] |But he also cited concerns over the company's mortgage exposure in the troubled New England real estate market.
[21103013] |Boston Co. officials declined to comment on Moody's action or on the unit's financial performance this year -- except to deny a published report that outside accountants had discovered evidence of significant accounting errors in the first three quarters' results.

[21103014] |An accounting controversy at the end of last year forced Boston Co. to admit it had overstated pretax profits by some $44 million.
[21103015] |The resulting scandal led to the firing of James N. von Germeten as Boston Co.'s president and to the resignations of the company's chief financial officer and treasurer.
[21103016] |The executives were accused of improperly deferring expenses and booking revenue early, in an effort to dress up results -- and perhaps bolster performance-related bonuses.
[21103017] |Mr. von Germeten, in turn, attributed the controversy to judgmental errors by accountants and accused Shearson of conducting a "witch hunt."

[21103018] |Mr. Kriz of Moody's said the problems in the securities portfolio stem largely from positions taken last year.
[21103019] |The company's current management found itself "locked into this," he said.

[21104001] |Mexico exported an average of 1,296,800 barrels of crude oil a day at an average of $15.31 a barrel during 1989's first eight months for a total of $4.82 billion, Petroleos Mexicanos S.A. said.

[21104002] |The state petroleum monopoly said sales in the period gained 15%, and $262.4 million more than originally projected at an average of $10 a barrel on an export platform of 1,250,000 barrels a day.

[21105001] |CHICAGO -
[21105002] |Sears, Roebuck & Co. is struggling as it enters the critical Christmas season.

[21105003] |Yesterday, the retailing and financial services giant reported a 16% drop in third-quarter earnings to $257.5 million, or 75 cents a share, from a restated $305 million, or 80 cents a share, a year earlier.

[21105004] |But the news was even worse for Sears's core U.S. retailing operation, the largest in the nation.
[21105005] |Sears said its U.S. stores had a loss of $6.9 million, their first deficit for the period in more than five years.
[21105006] |Analysts estimated that sales at U.S. stores declined in the quarter, too.

[21105007] |The results underscore Sears's difficulties in implementing the "everyday low pricing" strategy that it adopted in March as part of a broad attempt to revive its retailing business.
[21105008] |Under the new approach, Sears set prices that were somewhere between its old "regular" and "sale" prices.
[21105009] |The company said it would resort far less often to slashing prices to woo shoppers.

[21105010] |Sears officials insist they don't intend to abandon the everyday pricing approach in the face of the poor results.
[21105011] |Instead, a spokesman blames the dismal third-quarter showing on "an environment that is being distorted by a very harsh climate for sales of durable goods," which account for roughly two-thirds of Sears's annual merchandise volume.

[21105012] |The new pricing strategy "is working," the spokesman asserted.
[21105013] |He added that, after an initial surge triggered by an advertising blitz in March, Sears expected that the pricing program wouldn't have any effect on revenue.
[21105014] |Sears has been counting on growth coming from the large displays of brand-name merchandise it is adding to its stores over the next two years in what it calls "power formats."

[21105015] |But analysts say Sears faces an especially daunting challenge on the eve of the Christmas shopping season.
[21105016] |"I believe everyday pricing in the current environment doesn't work," says Walter Loeb of Morgan Stanley & Co., pointing to soft durable-goods sales.
[21105017] |"Sears is likely to be unsuccessful if it continues with its pricing policy when everyone else is offering unusual values."

[21105018] |In what amounts to an admission that the transition hasn't gone as smoothly as Sears had hoped, the giant retailer is now trying new ways to drum up business without appearing to abandon its seven-month-old strategy.
[21105019] |The company is highlighting more special deals in its advertising and stores, and it's offering to defer finance charges on certain big-ticket items.

[21105020] |Sears is also stepping up its television ads and changing its message.
[21105021] |In a new TV ad, for instance, a woman going through the Sunday newspaper brands as hype claims by other stores that they are offering goods for "50%, 60% and 70% off.
[21105022] |" By lowering prices throughout its stores, she says, "Sears has the right idea."

[21105023] |But the ad also mentions Sears's sales -- a topic that the retailer has avoided since switching to everyday pricing.
[21105024] |"When Sears has a sale at a special price," the woman in the ad declares, "it's something you don't want to miss."

[21105025] |Recent surveys by Leo J. Shapiro & Associates, a market research firm in Chicago, suggest that Sears is having a tough time attracting shoppers because it hasn't yet done enough to improve service or its selection of merchandise.
[21105026] |The number of people who said they were more likely to shop at Sears fell in September to 37% from 66% in March, when Sears blanketed the airwaves with ads about its new pricing strategy.

[21105027] |Moreover, the number of people who spontaneously cited lower prices as the reason for their interest in Sears declined to 16% in September from 33% in March.
[21105028] |Just 5% of the respondents mentioned brands in September, up slightly from 2% in March.
[21105029] |Only 2% of the people in September cited Sears's "friendly personnel."

[21105030] |"The power of price as an appeal, which was very considerable in driving traffic in March and April, has diminished," says George Rosenbaum, president of Shapiro & Associates.
[21105031] |"You see some improvement in these other areas, but it's a very small and slow process."

[21105032] |For the third quarter, Sears said its total revenue rose 4.8% to $13.18 billion from $12.57 billion a year earlier.

[21105033] |Net income at Sears's merchandise group, which includes international and credit card operations, as well as U.S. stores, fell 25%.

[21105034] |Profit at Sears's Allstate insurance unit fell 38% to $126.1 million because of Hurricane Hugo, which inflicted the greatest single storm damage loss in the company's history.
[21105035] |Sears said claims from the storm, as expected, reduced its third-quarter net by $80 million, or 23 cents a share.

[21105036] |Allstate is expected to absorb another big hit in the fourth quarter as claims pour in from the San Francisco earthquake.
[21105037] |But a spokesman said the quake won't have as big a financial impact on Allstate as Hurricane Hugo did.

[21105038] |Net income at Sears's Dean Witter Financials Services group, meanwhile, rose nearly 32% to $35.7 million, reflecting improvements in its basic stock brokerage and Discover credit card businesses.
[21105039] |Profit at Sears's Coldwell Banker Real Estate Group nearly quadrupled to $81.2 million because of gains on sales of property.

[21105040] |In New York Stock Exchange composite trading yesterday, Sears shares closed at $40.50, up 87.5 cents.

[21106001] |Oil imports to Japan rose 12% in September from year-earlier levels, according to statistics released by the government's Ministry of International Trade and Industry.

[21106002] |The imports, totaling 98.5 million barrels, were 11% lower than August levels.

[21106003] |The year-on-year rise was partly because of higher demand for petroleum products, and partly because of tax changes in 1988 that left oil companies with high inventories in the late-summer/early-FALL PERIOD.

[21106004] |Imports of crude from the Middle East grew 17% from year-earlier levels, and Southeast Asian crude imports grew 43%.

[21106005] |While Mideast crude imports were higher compared with year-earlier levels, they fell 18% compared with August imports.
[21106006] |Southeast Asian crude imports, however, were 3.6% higher than August.

[21107001] |This is in response to George Melloan's Business World column "The Housing Market Is a Bigger Mess Than You Think" (op-ed page, Sept. 26).

[21107002] |In Houston, we have seen how bad the housing problem can become.
[21107003] |Unused houses deteriorate rapidly, affecting the value of nearby homes; in a domino effect, the entire neighborhood can fall victim.
[21107004] |At this stage some people just "walk away" from homes where the mortgage exceeds current market value.
[21107005] |But most of them could have afforded to keep up their payments -- they chose not to do so.

[21107006] |The problem is so vast that we need to try innovative solutions -- in small-scale experiments.
[21107007] |Here are some ideas:

[21107008] |1) Foreclosed homes could be sold by the FHA for no down payment (the biggest obstacle to young buyers), but with personal liability for the mortgage (no walking away by choice).

[21107009] |2) Encourage long-term occupancy by forgiving one month's payment (off the tail end of the mortgage) for every six months paid; or perhaps have the down payment deferred to the end of the mortgage (balloon), but "forgiven" on a monthly pro-rata basis as long as the owner remains the occupant.

[21107010] |3) Develop rental agreements with exclusive purchase options for the renter.
[21107011] |An occupant will, in most every case, be better for the home and neighborhood than a vacant house.
[21107012] |In this way, the house is not dumped on to a glutted market.

[21107013] |John F. Merrill

[21107014] |Houston

[21107015] |The Federal Housing Administration, Veterans Administration and the Department of Housing and Urban Development further aggravate the problem of affordable housing stock by "buying in" to their foreclosed properties (of which there are, alas, many) at an inflated "balance due" -- say $80,000 on a house worth $55,000 -- instead of allowing a free market to price the house for what it's really worth.

[21107016] |Worse, the properties then sit around deteriorating for maybe a year or so, but are resold eventually (because of the attractiveness of the low down payment, etc.) to a marginal buyer who can't afford both the mortgage and needed repairs; and having little vested interest that buyer will walk away and the vicious cycle repeats itself all over again.

[21107017] |Paul Padget

[21108001] |Italy's unemployment rate rose to 12% of the labor force in July from 11.9% in April, and was up from 11.7% a year earlier, according to quarterly figures from the state statistical institute.

[21108002] |Istat said a national survey during the first week of July showed the number of job seekers was 2,888,000 up from 2,822,000 in April, and from 2,853,000 a year ago.

[21108003] |The unemployment rate was by far the highest in the southern, so-called Mezzogiorno region.
[21108004] |The southern unemployment rate rose to 21.3% in July from 21.2% in April and from 20.6% a year earlier.

[21108005] |Istat said 369,000 more people were employed in July than in April.

[21109001] |Xerox Corp.'s third-quarter net income grew 6.2% on 7.3% higher revenue, earning mixed reviews from Wall Street analysts.

[21109002] |Quarter net for the business-machines and financial-services company rose to $155 million, or $1.41 a share, from $146 million, or $1.37 a share, in the year-earlier period.
[21109003] |Revenue rose to $4.45 billion from $4.15 billion.

[21109004] |In New York Stock Exchange composite trading, Xerox closed at $62.75 a share, up $1.

[21109005] |Sales growth and profit in business products and systems -- Xerox's main business -- were "disappointing," said B. Alex Henderson, who follows the company for Prudential-Bache Securities Inc.

[21109006] |Sales of Xerox copiers and other office products grew 1.6%; "we expected growth of 6% to 7%," Mr. Henderson said.
[21109007] |Operating-profit margins slipped almost 18%, to 4.3% of sales, the analyst noted.

[21109008] |Still, with competitors such as Eastman Kodak Co. faltering in copier sales, Xerox's sales increases "were encouraging," says Eugene Glazer of Dean Witter Reynolds Inc.
[21109009] |"They are holding their own in a weak market, and the restructuring is working," he says.

[21109010] |David T. Kearns, Xerox chairman and chief executive officer, cited the restructuring and "strong" cost controls for the 13% growth in profit from business products and systems operations.

[21109011] |Mr. Glazer expects Xerox to experience tough sledding, though, in financial services because of rate pressures and uncertainty surrounding tax treatment of capital gains.

[21109012] |In the quarter, the Crum & Forster insurance unit reported $200 million before tax of capital gains from property and casualty operations.
[21109013] |The subsidiary also increased reserves by $140 million, however, and set aside an additional $25 million for claims connected with Hurricane Hugo.

[21109014] |For the nine months, Xerox earned $492 million, or $4.55 a share, up 5.8% from $465 million, or $4.32 a share.
[21109015] |Revenue rose 7.6% to $12.97 billion from $12.05 billion.

[21110001] |New orders for durable goods fell back slightly in September after shooting up the month before, reflecting weakening auto demand after a spurt of orders for new 1990 models, the Commerce Department reported.

[21110002] |Orders for military equipment, household appliances, machinery and other goods expected to last at least three years dipped 0.1% last month, to $126.68 billion, after leaping 3.9% in August, the department said.

[21110003] |Most analysts had expected a sharper decline after the steep rise in August.
[21110004] |Moreover, a recent government report showing widespread layoffs in manufacturing had contributed to perceptions that the manufacturing sector of the economy had slowed to a crawl.

[21110005] |But many economists pointed to a 1.8% September rise in orders outside the volatile transportation category.
[21110006] |That "suggests the manufacturing sector is not falling apart," said Sally Kleinman, an economist at Manufacturers Hanover Securities Corp. in New York.
[21110007] |She added, however: "It is not robust by any means."

[21110008] |While a decline in orders for cars and civilian airplanes pulled down the orders total, an enormous jump in orders for heavy military equipment propped it up.
[21110009] |Orders for capital defense goods skyrocketed 56%, and a government analyst said nearly all areas saw increases, including airplanes, missiles, ships, tanks and communications equipment.

[21110010] |Orders for military goods usually catapult in September, government officials say, as the Pentagon scrambles to spend its money before the new fiscal year begins Oct. 1.
[21110011] |While all the numbers in the durable goods report were adjusted for seasonal fluctuations, a Commerce Department analyst said that the adjustment probably didn't factor out all of the wide-ranging surge in defense orders.

[21110012] |Without the increase in defense bookings, September orders would have plummeted 3.9%.

[21110013] |Analysts were most unsettled by evidence the backlog of orders at factories is slipping.
[21110014] |Unfilled orders for durable goods rose 0.4% in September, to $476.14 billion, after declining for the first time in 2 1/2 years in August.
[21110015] |In July unfilled orders grew 1%.
[21110016] |But analysts noted that excluding transportation-where what they believe was a temporary surge in auto demand pushed up the figures-order backlogs have declined for three months in a row.

[21110017] |"It means we're eating into the bread that keeps us going.
[21110018] |That is a little disturbing," Ms. Kleinman said.
[21110019] |"It also means if you have a real drop-off in orders, production will likely fall off very quickly because there is less to keep things going."

[21110020] |Capital goods orders outside of the defense sector tumbled for the second month in a row, posting a 5.6% drop after a 10.3% decline.
[21110021] |Such steep drops in a category seen as a barometer of business investment would customarily be grave news for the economy.
[21110022] |But a Commerce Department analyst said that in both months orders would have risen had it not been for a drop in civilian aircraft bookings, a category that is showing declines only after a huge surge earlier this year.

[21110023] |Still, Milton Hudson, senior economic adviser at Morgan Guaranty Trust Co. in New York, said: "If you look back a half-year or so the evidence was pretty good of affirmative strength in the capital-goods sector.
[21110024] |Now at least there are question marks about that, and without any question the pace of growth has slowed.

[21111001] |Norfolk Southern Corp. directors authorized the railroad company to buy back as many as 45 million of its shares, which would have a current value of more than $1.7 billion.

[21111002] |The buy-back, coupled with a nearly completed earlier purchase of 20 million shares, would reduce shares outstanding by more than 26%.
[21111003] |The Norfolk, Va., company has 172.2 million shares outstanding.

[21111004] |In a statement, Arnold B. McKinnon, chairman and chief executive officer, noted that the new repurchase program "should serve to enhance shareholder value."
[21111005] |A spokeswoman said the company will finance the buy-back with cash on hand, borrowing and "cash Norfolk expects to generate."

[21111006] |Analysts said they expected the action, and investors applauded the move.
[21111007] |In composite trading on the New York Stock Exchange, Norfolk Southern shares closed at $37.875, up $1.125.

[21111008] |Still, analysts don't expect the buy-back to significantly affect per-share earnings in the short term.
[21111009] |"The impact won't be that great," said Graeme Lidgerwood of First Boston Corp.
[21111010] |That is in part because of the effect of having to average the number of shares outstanding, she said.
[21111011] |In addition, Mrs. Lidgerwood said, Norfolk is likely to draw down its cash initially to finance the purchases and thus forfeit some interest income.

[21111012] |Longer term, however, the buy-back is expected to increase earnings, especially after 1990, Mrs. Lidgerwood said.

[21111013] |Moreover, the extensive program in effect establishes a floor for the stock price, said Joel Price, analyst for Donaldson, Lufkin & Jenrette.
[21111014] |The buy-back "is really a comfort to those who want to buy the stock that there is a {price} floor," he said.
[21111015] |"At a certain price, if the management thinks {the stock} is cheap, they can go in and buy it."

[21111016] |Under the program, Norfolk plans to acquire shares in the open market.

[21111017] |Under the earlier plan, Norfolk was authorized in 1987 to buy up to 20 million shares.
[21111018] |It has purchased about 19 million of them.

[21112001] |John B. Curcio, 55 years old, resigned as chairman of this diesel truck manufacturer, effective upon appointment of a successor.
[21112002] |Last month, Mr. Curcio was succeeded by Ralph E. Reins as chief executive officer following several quarters of lackluster or declining performance.

[21113001] |Falcon Holding Group Inc. said it agreed to acquire about 54,000 subscribers from First Carolina Cable TV Limited Partnership for about $100 million, or roughly $2,000 a subscriber.

[21113002] |The subscribers are in 52 different communities in Georgia, Alabama and Mississippi.

[21113003] |Completion of the sale is expected early next year, Falcon said.

[21113004] |Currently, Falcon has about 750,000 cable-television subscribers around the nation; the company's cable-television unit reported 1988 revenue of about $100 million.

[21113005] |In composite trading on the American Stock Exchange, Falcon closed at $20, unchanged.

[21114001] |Richard W. Lock, retired vice president and treasurer of Owens-Illinois Inc., was named a director of this transportation industry supplier, increasing its board to six members.

[21115001] |USX Corp. said it delayed the proposed initial public offering of common stock of RMI Titanium Co. because of market conditions.

[21115002] |RMI Titanium is owned jointly by USX and Quantum Chemical Corp.

[21115003] |USX, which hadn't set a date for the offering, didn't disclose any timetable for the offering.

[21116001] |Your Oct. 2 editorial "Reding, Wrighting & Erithmatic" on the recent "education summit" was like most pieces on the subject of education: It had little to say.
[21116002] |Oddly, though, on the very same page you printed a comment that addresses one of the most serious shortcomings of the American education system.
[21116003] |Unfortunately, the comment was buried in another article, so it could not stand out in an education context.

[21116004] |In the Manager's Journal, Atsushi Kageyama, in commenting on many differences between American and Japanese culture, said, "Japanese children are raised in a way many Americans would find severe.
[21116005] |After a wonderfully frivolous early childhood, they are exposed to rigid discipline as soon as they enter school."

[21116006] |What far too many people concerned about education either fail to understand or choose to ignore is that American children, on the whole, are among the most undisciplined in the world, making any attempt at improvements in the mode of education potentially unsuccessful.
[21116007] |Unless parents and educators alike start to develop more discipline in children, all the worthy concern, discussions and actions will not solve the problem.

[21116008] |Allen B. Richards Peterborough, N.H.

[21117001] |Retired Adm. William J. Crowe, former chairman of the Joint Chiefs of Staff, and Robert P. Luciano, chairman and chief executive officer of Schering-Plough Corp., were elected directors of this securities firm.
[21117002] |The board expanded to 17 seats.

[21118001] |Tuesday, October 24, 1989

[21118002] |The key U.S. and foreign annual interest rates below are a guide to general levels but don't always represent actual transactions.

[21118003] |PRIME RATE: 10 1/2%.
[21118004] |The base rate on corporate loans at large U.S. money center commercial banks.

[21118005] |FEDERAL FUNDS: 8 3/4% high, 8 5/8% low, 8 11/16% near closing bid, 8 11/16% offered.
[21118006] |Reserves traded among commercial banks for overnight use in amounts of $1 million or more.
[21118007] |Source: Fulton Prebon (U.S.A.) Inc.

[21118008] |DISCOUNT RATE: 7%.
[21118009] |The charge on loans to depository institutions by the New York Federal Reserve Bank.

[21118010] |CALL MONEY: 9 3/4% to 10%.
[21118011] |The charge on loans to brokers on stock exchange collateral.

[21118012] |COMMERCIAL PAPER placed directly by General Motors Acceptance Corp.: 8.45% 30 to 44 days; 8.25% 45 to 68 days; 8.30% 69 to 89 days; 8.125% 90 to 119 days; 8% 120 to 149 days; 7.875% 150 to 179 days; 7.50% 180 to 270 days.

[21118013] |COMMERCIAL PAPER: High-grade unsecured notes sold through dealers by major corporations in multiples of $1,000: 8.55% 30 days; 8.475% 60 days; 8.45% 90 days.

[21118014] |CERTIFICATES OF DEPOSIT: 8.09% one month; 8.09% two months; 8.06% three months; 8% six months; 7.94% one year.
[21118015] |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.
[21118016] |The minimum unit is $100,000.
[21118017] |Typical rates in the secondary market: 8.55% one month; 8.50% three months; 8.35% six months.

[21118018] |BANKERS ACCEPTANCES: 8.48% 30 days; 8.30% 60 days; 8.28% 90 days; 8.10% 120 days; 8% 150 days; 7.90% 180 days.
[21118019] |Negotiable, bank-backed business credit instruments typically financing an import order.

[21118020] |LONDON LATE EURODOLLARS: 8 11/16% to 8 9/16% one month; 8 5/8% to 8 1/2% two months; 8 5/8% to 8 1/2% 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.

[21118021] |LONDON INTERBANK OFFERED RATES (LIBOR): 8 11/16% one month; 8 11/16% three months; 8 1/2% six months; 8 1/2% one year.
[21118022] |The average of interbank offered rates for dollar deposits in the London market based on quotations at five major banks.

[21118023] |FOREIGN PRIME RATES: Canada 13.50%; Germany 9%; Japan 4.875%; Switzerland 8.50%; Britain 15%.
[21118024] |These rate indications aren't directly comparable; lending practices vary widely by location.

[21118025] |TREASURY BILLS: Results of the Monday, October 23, 1989, auction of short-term U.S. government bills, sold at a discount from face value in units of $10,000 to $1 million: 7.52% 13 weeks; 7.50% 26 weeks.

[21118026] |FEDERAL HOME LOAN MORTGAGE CORP. (Freddie Mac): Posted yields on 30-year mortgage commitments for delivery within 30 days.
[21118027] |9.78%, standard conventional fixed-rate mortgages; 7.875%, 2% rate capped one-year adjustable rate mortgages.
[21118028] |Source: Telerate Systems Inc.

[21118029] |FEDERAL NATIONAL MORTGAGE ASSOCIATION (Fannie Mae): Posted yields on 30 year mortgage commitments for delivery within 30 days (priced at par) 9.75%, standard conventional fixed-rate mortgages; 8.70%, 6/2 rate capped one-year adjustable rate mortgages.
[21118030] |Source: Telerate Systems Inc.

[21118031] |MERRILL LYNCH READY ASSETS TRUST: 8.59%.
[21118032] |Annualized average rate of return after expenses for the past 30 days; not a forecast of future returns.

[21119001] |Roy E. Parrott, the company's president and chief operating officer since Sept. 1, was named to its board.
[21119002] |The appointment increased the number of directors to 10, three of whom are company employees.
[21119003] |Simpson is an auto parts maker.

[21120001] |Japan has climbed up from the ashes of World War II and a gross national product of about $800 per capita to reach the heavyweight class among industrialized nations.
[21120002] |Now this remarkable economic growth seems to be coming to an end because the government has not converted itself into a modern, democratic, "developed nation" mode of operation.

[21120003] |Until 1980, when Japan joined the $10,000 per capita GNP club of the advanced countries, it was a model developing nation.
[21120004] |The government built ports, bridges, highways, schools, hospitals and railways.
[21120005] |When industries were weak, it protected them.
[21120006] |It gave the Japanese people a value system, based on the rationalization that given the country's lack of natural resources, they must work hard to create value through exports and buy food with the surplus.
[21120007] |Individual prosperity inevitably would result.

[21120008] |That system has worked.
[21120009] |The standard of living has increased steadily over the past 40 years; more than 90% of the people consider themselves middle class.

[21120010] |The people have given their leading and only credible political party, the Liberal Democratic Party, clear and uninterrupted power for those 40 years.
[21120011] |The LDP won by a landslide in the last election, in July 1986.
[21120012] |But less than two years later, the LDP started to crumble, and dissent rose to unprecedented heights.

[21120013] |The symptoms all point to one thing: Japan does not have a modern government.
[21120014] |Its government still wants to sit in the driver's seat, set the speed, step on the gas, apply the brakes and steer, with 120 million people in the back seat.
[21120015] |In a modern system, the government's role is to give the people as much choice as possible and to keep them well informed so they are capable of making a choice.
[21120016] |It also allows people to buy the best and the cheapest goods from anywhere in the world.

[21120017] |The Japanese government doesn't allow this.
[21120018] |The Ministry of Agriculture and Fishery actually is a ministry for farmers and fishermen instead of a ministry of provisions.
[21120019] |The Ministry of Health and Welfare is a ministry of doctors and pharmaceutical companies rather than an organization dedicated to protecting the health of the people.
[21120020] |The Ministry of Education is nothing but a cartel for licensed teachers, and certainly does not act on behalf of students.
[21120021] |The Ministry of Construction spreads concrete throughout the country and boasts in international conferences that Japan's paved roadway per capita is the longest in the world, but they seldom think of the poor commuters who spend so much time sitting in traffic.
[21120022] |The Ministry of Transportation serves the industry, certainly not the passengers who must pay extraordinarily high prices.

[21120023] |And the Ministry of Foreign Affairs works for itself, supporting Japanese diplomats who sprinkle abundant aid money around the world to ensure that their seat at the dinner table is next to the host's.
[21120024] |This ministry has done nothing to correct the misunderstandings and misperceptions that are at the root of Japan's deteriorating image.
[21120025] |Instead, it seems to be using foreign pressure and even the trade conflict to expand its sphere of influence vis a vis other ministries.

[21120026] |All this illustrates that Japanese ministries still have a "provider" mentality; they do not serve the people, and particularly not consumers.
[21120027] |They serve the industries and the special-interest groups.
[21120028] |The rest of the world accepted such methods when Japan was developing.
[21120029] |Japanese put up with it because the government provided job stability and growing paychecks.

[21120030] |Japan is not a political country.
[21120031] |It is a bureaucratic country.
[21120032] |The Diet plays a minor role compared with the powerful bureaucratic system.
[21120033] |Most bills are drafted by bureaucrats, not politicians.
[21120034] |The Diet doesn't normally even debate bills because the opposition parties are so often opposed to whatever LDP does that it would be a waste of time.
[21120035] |So most bills are passed without full discussion; particularly difficult bills are passed in the absence of the opposition parties.

[21120036] |A recent example is the 3% consumption tax on all commercial activities.
[21120037] |This makes enormous sense in Japan, where direct tax accounts for more than 70% of revenues and the capture rate of direct tax is so unfair.
[21120038] |If you are a salaried man, Amen! 100% captured.
[21120039] |If you are a retailer, 50%, and a farmer, 30%.
[21120040] |To correct this inequality, most people would have favored an indirect tax, like the consumption tax.
[21120041] |But the bill was passed without debate in the Diet, in the absence of the opposition.
[21120042] |As a result, the Japanese people didn't know what to expect when the new law was introduced on April 1.
[21120043] |They were frustrated by the longer queues at the cashier and the small coins given as change.
[21120044] |All of a sudden, prices were no longer in denominations of 100 or 200.
[21120045] |They were 103 or 206.
[21120046] |Pockets exploded with one-yen coins.

[21120047] |While people were jingling their change, the LDP politicians were caught in scandals.
[21120048] |Money, such as in Recruit's political donations, and women, as in the cases of Prime Minister Sosuke Uno and Secretary General Tokuo Yamashita, seldom have caused political scandals in Japan.
[21120049] |Whereas most men were a bit ambivalent about the sex scandals (though they were furious about Recruit), women were upset about both and surged to the polls.
[21120050] |In the recent Upper House and Tokyo metropolitan congressional elections, in which the Socialist Party won a runaway victory, 60% of all women voted, as opposed to the usual 40%.
[21120051] |It is difficult to analyze how much of their anger was due to Recruit, the sex scandals, or the one-yen coins in their purses, but they obviously were voting to punish the LDP.

[21120052] |Taken by surprise, the Socialist Party is busy changing its doctrines.
[21120053] |It's now OK to deal with the U.S., but not the Soviet Union.
[21120054] |Nuclear power plants are acceptable.
[21120055] |The U.S.-Japan Security Treaty can continue, sort of.
[21120056] |And so on.

[21120057] |Against the rapid cosmetic overhaul of the Socialist Party the LDP has been paralyzed.
[21120058] |Now is the time to reform the government from a provider, developing-country vanguard role to that of a modern, industrialized nation in which consumers have the ultimate choice.
[21120059] |If the LDP, as currently composed, can't make the transformation, then it should split into two parties.
[21120060] |One party could stand for consumer interests, small government, free trade and globalism to put Japan clearly among the most developed and open countries.
[21120061] |The other party could continue on the traditional track of the LDP, representing the manufacturers' preference for larger government, control, regulation and protectionism.

[21120062] |The LDP must make a decision immediately; Lower House elections must take place before June.
[21120063] |In the current mood of the Japanese people, journalists and even some industrialists, giving power to the Socialists might be good for the LDP, cleansing it of past sins.
[21120064] |We must not forget, however, that such a humble political experiment could cause a global tidal wave of shocks in real-estate and financial markets.
[21120065] |At the most there is only nine months before the LDP fuse burns out.

[21120066] |Mr. Ohmae is managing director of McKinsey & Co. in Japan.

[21121001] |Early this century, diamond mining in the magnificent dunes where the Namib Desert meets the Atlantic Ocean was a day at the beach.
[21121002] |Men would crawl in the sand looking for shiny stones.
[21121003] |It was as easy as collecting sea shells at Malibu.

[21121004] |Men are still combing the beach with shovels and hand brushes, searching for that unusual glint.
[21121005] |But only after a fleet of 336 gargantuan earthmoving vehicles belonging to De Beers Consolidated Mines Ltd., the world's diamond kingpins, do their work.
[21121006] |Last year, 43 million tons of desert were moved from one dune to another to recover 934,242 carats, which comes to 46 tons of sand per carat, or one-fifth gram.
[21121007] |Oh yes, the Atlantic was also pushed back 300 yards.

[21121008] |"If there's diamonds out there, we'll get to them," says Les Johns, De Beers's engineering manager.

[21121009] |Here, wedged between shifting dunes and pounding waves at the world's most inhospitable diamond dig, lies the earth's most precious jewel box.
[21121010] |Thanks to centuries of polishing by Mother Nature -- first in the gentle current of the Orange River that carried the stones from South Africa's interior, then in the cold surf of the ocean, and finally in the coarse sands of the desert -- 98% of the diamonds uncovered are of gem quality.
[21121011] |While other mines might yield more carats, a higher percentage of them go to industrial use.

[21121012] |Since this treasure chest is too big to fit in a bank vault, it has been turned into one.
[21121013] |Months after railway worker Zacharias Lewala first picked up a diamond from the sand in 1908, the German colonialists who controlled Namibia proclaimed a wide swath of the desert -- about 200 miles north from the Orange River and 60 miles inland from the Atlantic -- a restricted area, a designation normally reserved for military operations.
[21121014] |When the Germans lost World War I, they lost Namibia to South Africa and the diamonds to Ernest Oppenheimer, patriarch of Anglo American Corp. and De Beers.
[21121015] |Today, no one gets in or out of the restricted area without De Beers's stingy approval.

[21121016] |The mining zone has thus remained one of the most desolate places in Africa.
[21121017] |Ghost towns dot the Namib dunes, proving diamonds aren't forever.
[21121018] |Oranjemund, the mine headquarters, is a lonely corporate oasis of 9,000 residents.
[21121019] |Jackals roam the streets at night, and gemsbok, hardy antelope with long straight horns, wander in from the desert to drink from water sprinklers.
[21121020] |On most days, the desert's heat and the cool of the ocean combine to create a mist like a damp rag.
[21121021] |The wind, stinging with sand, never seems to stop.

[21121022] |Still, miners from all parts of Namibia as well as professional staff from De Beers's head offices in South Africa and London keep coming.
[21121023] |And Oranjemund boasts attractions besides diamonds.
[21121024] |There are six video rental shops, three restaurants, one cinema and 34 sports and recreation clubs for everything from cricket to lawn bowling.
[21121025] |The pride of Oranjemund is the 18-hole golf course -- with the largest sand trap in the world.
[21121026] |Last year, when the rising Orange River threatened to swamp the course, the same engineers who are pushing back the Atlantic rushed to build a wall to hold back the flood.
[21121027] |"Nothing is too good for our golf course," says Tony George, a mining engineer.

[21121028] |Despite fears the mine may be partially nationalized by the new Namibian government following next month's elections freeing the country from South African control, De Beers engineers are working to extend the mine's productive life for another 25 years, from the current estimate of 10.

[21121029] |Huge machines that look as though they came from the Star Wars desert-battle scene lumber among the dunes.
[21121030] |Mechanized vacuum cleaners probe the sand like giant anteaters; a whirring ferris wheellike excavator, with buckets instead of seats, chews through layers of compacted sand; tracks and conveyor belts, shuttling sand to the screening plants, criss-cross the beach.

[21121031] |Then there is the artifical sea wall, 600 yards long and 60 yards thick, jutting into the ocean.
[21121032] |Made of sand, it receives around-the-clock maintainence against the battering waves.
[21121033] |When the mining in front of the wall is complete, it is moved northward.
[21121034] |A companion jetty that helps hold back the sea looks like a rusting junkyard.
[21121035] |Engineers first used concrete blocks to bolster the barrier, but the ocean tossed them aside like driftwood.
[21121036] |Then someone decided to try broken-down earthmoving equipment that, inexplicably, held against the waves.

[21121037] |"The Caterpillar people aren't too happy when they see their equipment used like that," shrugs Mr. George.
[21121038] |"They figure it's not a very good advert."

[21121039] |Despite all these innovations, most of the diamonds are still found in the sand swept away by the men wielding shovels and brushes -- the ignominiously named "bedrock sweepers" who toil in the wake of the excavators.
[21121040] |Laboring in blue and gray overalls, they are supposed to concentrate on cleaning out crevices, and not strain their eyes looking for diamonds.
[21121041] |But should they spy one, the company will pay a bonus equal to one-third its value.
[21121042] |For these workers at the bottom of the mine's pay scale, this is usually enough to overcome the temptation to steal -- a crime that could earn them up to 15 years in jail.

[21121043] |Still, employees do occasionally try to smuggle out a gem or two.
[21121044] |One man wrapped several diamonds in the knot of his tie.
[21121045] |Another poked a hole in the heel of his shoe.
[21121046] |A food caterer stashed stones in the false bottom of a milk pail.
[21121047] |None made it past the body searches and X-rays of mine security.

[21122001] |DISASTER STATES aren't jumping to raise taxes for relief and recovery.

[21122002] |Not yet, anyway.
[21122003] |Just after Hurricane Hugo battered South Carolina, some officials talked of perhaps adding a penny to the state gasoline tax or raising property taxes.
[21122004] |Gov. Campbell responded, "They're mentioning rope when there's been a hanging in the family."
[21122005] |A spokesman says the governor believes he can avoid increases by relying on federal aid and shifting funds in state programs.
[21122006] |Still, Hugo's impact may revive unsuccessful proposals to give local governments authority to levy sales taxes.

[21122007] |A spokesman for North Carolina Gov. Martin says Hugo hasn't prompted proposals for state or local increases.
[21122008] |California, where earthquake damage may top $5 billion, plans a special legislative session.
[21122009] |Property-tax relief is likely.
[21122010] |Legislators are talking about temporary rises in sales or gasoline taxes, although Gov. Deukmejian says they should be a last resort.
[21122011] |Needs aren't clear, and the state constitution makes increasing taxes and spending very difficult.

[21122012] |But some legislators think the time may be ripe to revise the constitution.

[21122013] |THE IRS WILL PAY if its error burdens you with bank charges.

[21122014] |Policy statement P-5-39 sets out terms.
[21122015] |As a result of an erroneous IRS levy on a bank account, a taxpayer may incur administrative and overdraft charges.
[21122016] |If the IRS admits its error and the charges have been paid, it will reimburse a taxpayer who hasn't refused to give timely answers to IRS inquiries or hasn't contributed to continuing or compounding the error.
[21122017] |The IRS recently amended the policy to cover stop-payment charges for checks lost by the IRS.

[21122018] |If the IRS asks for and gets a replacement for a check that it concedes it lost in processing, it will reimburse the taxpayer for the stop-payment charge on the original.
[21122019] |Reimbursement claims must be filed with the IRS district or service-center director within a year after the expense accrues.
[21122020] |If the IRS seeks late-payment interest because of the lost check, you should request interest abatement, publisher Prentice Hall notes.

[21122021] |JUST FIVE ACRES MORE are all we need to feel really at home, they say.

[21122022] |A couple we'll call the Blandings spent nearly $800,000 on a 15-acre plot and main home and have an old $175,000 mortgage exempt from the new limit on mortgage-interest deductions.
[21122023] |They plan to expand the home site by buying five adjoining acres for $200,000, borrowed against a first mortgage on the five acres and also collateralized by the 15 acres.
[21122024] |Their debt will be well under the $1 million limit -- on borrowing to acquire, build, or improve a home -- that qualifies for mortgage-interest deductions.

[21122025] |As you can guess, the Blandings want to deduct home-mortgage interest on the $200,000 loan.
[21122026] |But, IRS private ruling 8940061 notes, no rule or court case bears directly on the issue of adding land to a principal residence.
[21122027] |So the IRS has drawn a rationale from the sale of a home site split in two and sold in different years to the same buyer; a court let the seller in that old case treat this as the sale of one residence.

[21122028] |Thus, the IRS says, the Blandings' $200,000 loan is home-acquisition debt, and interest on it is fully deductible.

[21122029] |EARTHQUAKE VICTIMS facing imminent filing and payment deadlines will get extensions and penalty waivers like those provided for Hugo's victims; IRS Notice 89108 has details.
[21122030] |Notice 89-107 offers added relief for hurricane-hit concerns that must file pension and benefit-plan returns.

[21122031] |REPORTS OF PAYMENTS to independent contractors for services must be filed by businesses, but don't bet that contractors' unreported income will be detected that way.
[21122032] |The General Accounting Office estimates that 50% of IRS audits don't spot companies that fail to file the reports.

[21122033] |UH HUH:
[21122034] |A claim by Peter Testa of New York that a stranger paid him $500 to go into a bank and change $44,400 in small bills into large bills "is unconvincing," the Tax Court found.
[21122035] |It held that Testa is taxable on $44,400 of unreported income.

[21122036] |WHY BE A MIDDLEMAN for charitable gifts? a retiree asks.

[21122037] |A retired electrical engineer we'll call Ben works part-time as a consultant, but he doesn't want to earn so much that Social Security reduces his benefits.
[21122038] |So he has arranged for a university foundation to set up a scholarship fund for undergraduate engineering students.
[21122039] |He plans to tell clients to pay certain fees directly to the foundation instead of to him; he would omit those fees from income reported on his return.
[21122040] |So he asked the IRS if the plan would work.

[21122041] |Well, notes IRS private ruling 8934014, "a fundamental principle" is that income must be taxed to whoever earns it.
[21122042] |The rule goes back at least as far as a 1930 Supreme Court decision, Robert Willens of Shearson Lehman Hutton says.
[21122043] |If you assign your income to another, you still have controlled its disposition and enjoyed the fruits of your labor, even if indirectly.

[21122044] |Ben earns any fees sent directly to charity and is taxable on them, the IRS says; of course, he also may take a charitable deduction for them.

[21122045] |BRIEFS:
[21122046] |Ways and Means veteran Gephardt (D., Mo.) moves to the House Budget Committee; Rep. Cardin (D., Md.) replaces him. . . .
[21122047] |Seattle's license fees for adult peep shows vary from those for other coin-operated amusements without serving a substantial government interest and are unconstitutional, the ninth-circuit appeals court holds for Acorn Investments Inc.

[21123001] |Blue-chip advertisers have plenty of complaints about the magazines they advertise in, ranging from inadequate consumer research to ad "clutter" and a seemingly unchecked proliferation of special interest magazines.

[21123002] |Criticism from such big advertisers as Estee Lauder Inc., Colgate-Palmolive Co. and Seagram Co. put a damper on the euphoria at the American Magazine Conference here.
[21123003] |The conference opened Monday with glowing reports about consumer magazines' growth in circulation and advertising revenue in the past year.

[21123004] |"Magazines are not providing us in-depth information on circulation," said Edgar Bronfman Jr., president and chief operating officer of Seagram, in a panel discussion.
[21123005] |"How do readers feel about the magazine?
[21123006] |How deeply do they read it?
[21123007] |Research doesn't tell us whether people actually do read the magazines they subscribe to."

[21123008] |Reuben Mark, chief executive of Colgate-Palmolive, said advertisers lack detailed demographic and geographic breakdowns of magazines' audiences.
[21123009] |"We need research that convinces us that magazines are a real value in reader's lives, that readers are really involved."

[21123010] |The critics also lambasted the magazine industry for something executives often are very proud of: the growth in magazine titles during the 1980s.
[21123011] |Leonard Lauder, president and chief executive officer of Estee Lauder, said consumer magazines are suffering from what he called "niche-itis,"the increasing number of magazines that target the idosyncratic interests of readers.

[21123012] |"Niche-itis fragments our advertising dollars," said Mr. Lauder.
[21123013] |"We are being over-magazined.
[21123014] |We are constantly faced with deciding which partnerships {with magazines} we can keep."
[21123015] |He added: "There's probably even a magazine for left-handed golfers . . . but the general interest magazine is something we all miss, and it should come back."

[21123016] |Mr. Lauder also attacked what he sees as the wide imitation of Elle, a fashion magazine published by Diamandis Communications Inc., and criticized the practice of stacking ads at the front of magazines.
[21123017] |"Readers don't want to face all those ad pages at the front of a magazine," he said.

[21123018] |Magazine editors did not take the criticisms lying down.
[21123019] |"We spend a fortune on research information," said Steve Burzon, publisher of Meredith Corp.'s Metropolitan Home.

[21123020] |And Tina Brown, editor of Conde Nast Publications Inc.'s Vanity Fair, said advertisers are frequently asked to take advertising positions in the back of her magazine to relieve ad clutter.
[21123021] |"But advertisers wouldn't think of it," she said.

[21123022] |Bernard Leser, president of Conde Nast, added: "Our research shows we sell more of our heavier issues . . . because readers believe they are getting more for what they pay for.

[21124001] |Wall Street securities giant Salomon Inc. posted a big, unexpected earnings gain in the third quarter, buoyed by its securities trading and investment banking activities.

[21124002] |Salomon said net income soared to $177 million, or $1.28 a share, from $65 million, or 38 cents a share, a year earlier.
[21124003] |Revenue more than doubled to $2.62 billion from $1.29 billion.
[21124004] |A Salomon spokesman said its stock, bond and foreign exchange trading, as well as its investment banking operations, were mostly responsible for the earnings jump.

[21124005] |"The earnings were fine and above expectations," said Michael W. Blumstein, an analyst at First Boston Corp.
[21124006] |Nevertheless, Salomon's stock fell $1.125 yesterday to close at $23.25 a share in New York Stock Exchange composite trading.
[21124007] |"I suspect October wasn't as good as the third quarter, and they'll have difficulty matching the third quarter in the fourth quarter," Mr. Blumstein said.

[21124008] |But some analysts say Salomon has turned the corner.
[21124009] |"I upgraded the firm to my buy list because I certainly see signs of improvement," says Lawrence Eckenfelder, an analyst at Prudential-Bache Securities.
[21124010] |"The market has been overly harsh to them."

[21124011] |Analysts say investors remain skittish toward Salomon because of its volatile earnings.
[21124012] |In the first quarter, Salomon had a record loss of $28 million on revenue of $1.54 billion.
[21124013] |But in the second quarter, Salomon posted a record $253 million net on revenue of $2.33 billion.

[21125001] |For the real estate industry, a watchword for the 1990s will be buy, more than build.

[21125002] |That's the word expected to be on the lips of the more than 3,000 developers, pension-fund advisers and real estate financiers slated to attend a four-day conference, beginning here today, sponsored by the Urban Land Institute.
[21125003] |The ULI is a non-profit research and education group based in Washington, D.C., with 14,000 members nationwide.

[21125004] |With the market overbuilt, builders are finding limited opportunities and increased risks.
[21125005] |Developers and money managers are looking for bargains among the thousands of financially troubled properties around the country.
[21125006] |Real estate professionals now often bill themselves as "turnaround experts" and "workout specialists."

[21125007] |Conference attendees are expected to be buzzing about the workings of the recently formed Resolution Trust Corp., a federal agency charged with disposing of an estimated $200 billion of real estate dumped in government hands by insolvent savings and loans.

[21125008] |Developers are also eyeing the real estate portfolios of major corporations.
[21125009] |Some plan to pursue foreign development ventures, mostly in Europe.
[21125010] |And other developers may shift from commercial to residential development in the U.S.

[21125011] |"There aren't as many economically viable alternatives for real estate developers in this country as 10 years ago," says Charles Shaw, a Chicago-based real estate developer. "
[21125012] |So developers are saying they will look into distressed properties.
[21125013] |They'll go into someone else's pasture as long as it's greener than the one they're in now."

[21125014] |Developers are also forming more joint ventures with pension funds and insurance companies that can finance big projects.
[21125015] |The builders are more willing to give up some equity and rely on management and consulting fees to stay afloat in the soft market.
[21125016] |"Developers are teaming up with institutions often acting as project managers," says Smedes York, ULI president and president of York Properties Inc., of Raleigh, N.C.
[21125017] |"They are growing more pragmatic about their role."

[21125018] |Real estate firms are also using their alliances with financial institutions to amass acquisition funds.
[21125019] |"Why should you beat your brains out fighting the environmentalists, the neighborhood groups, dealing with traffic mitigation, sewers and fighting city hall, then try to convince a lender to lend you money in an overbuilt market when you can get pension fund money, buy a portfolio, sell off pieces off it and play your own game?" says Jack Rodman, managing partner of the Los Angeles office of Kenneth Leventhal Inc. a national accounting firm.

[21125020] |But experts say that when it comes to distressed properties, finding diamonds in the rough isn't easy.
[21125021] |The level of interest in the RTC's properties has been greater than expected, and has come from larger companies than initially anticipated, says Stan Ross, Leventhal's co-managing partner.
[21125022] |And to succeed in the turnaround business, he says, developers may have to put in a lot of money and time.

[21125023] |Finding pension funds and other sources willing to invest is a high priority.
[21125024] |Quips David Shulman, director of real estate research for Salomon Brothers Inc.: "A theme of the Urban Land conference will be `take a pension fund manager to lunch.

[21126001] |Sheraton Corp. and Pan American World Airways announced that they and two Soviet partners will construct two "world-class" hotels within a mile of Red Square in Moscow.

[21126002] |U.S. and Soviet officials hailed the joint project as a new indication of the further thaw in U.S.-Soviet relations.
[21126003] |"This is an outstanding example of how the East and the West can work together for their mutual benefit and progress," said Soviet Ambassador Yuri Dubinin, who hosted a signing ceremony for the venture's partners at the Soviet embassy here.

[21126004] |Commerce Secretary Robert Mosbacher, who attended the ceremony, called the undertaking a "historic step" in the evolution of U.S.-Soviet ties.
[21126005] |He added that it likely will have a "mulitiplier effect" in stimulating further trade between the two countries.

[21126006] |The project will be the largest U.S.-backed joint venture to be undertaken in the Soviet Union in recent years.
[21126007] |One of the hotels, to be called the Sheraton Moscow, will have 450 rooms and will cost an estimated $75 million to build.
[21126008] |The six-story hotel will be on Gorky Street and initially will cater mostly to business travelers.
[21126009] |It will have a Russian tavern, an English pub, a discotheque and Japanese and Italian restaurants, according to a Sheraton announcement.
[21126010] |The hotel is scheduled to open in 1992.

[21126011] |The second hotel, to be called the Budapest Hotel, is to be constructed at a site even closer to Red Square.
[21126012] |Details about its size and cost haven't yet been determined.

[21126013] |Sheraton, a subsidiary of ITT Corp., will have a 40% share in the two hotels; Pan American, a subsidiary of Pan Am Corp., will have a 10% share.
[21126014] |The Soviet owners will be Mossoviet, Moscow's city governing body, and Aeroflot, the Soviet national airline.

[21126015] |Although a Finnish group has a minority interest in an already operating Moscow hotel, the Sheraton-Pan Am venture will be the first joint-venture hotels in the Soviet Union to have as much as 50% foreign ownership.

[21126016] |U.S. companies account for less than 8% of the 1,000 or more Soviet joint ventures that have been announced since the Soviets began encouraging such undertakings in 1987.
[21126017] |But some U.S. companies are negotiating projects that could be among the biggest ones to be launched.
[21126018] |Chevron Corp., Amoco Corp., Archer-Daniels-Midland Co., and Eastman Kodak Co. are among the U.S. companies known to be considering such ventures.

[21126019] |Sheraton and Pan Am said they are assured under the Soviet joint-venture law that they can repatriate profits from their hotel venture.
[21126020] |The Sheraton Moscow will charge about $140 to $150 a day for each of its rooms, and it will accept payment only in currencies that can be traded in foreign exchange markets, according to a Sheraton executive.

[21126021] |Thomas Plaskett, Pan Am's chairman, said the U.S. airline's participation is a natural outgrowth of its current arrangements with Aeroflot to jointly operate nonstop New York-Moscow flights.
[21126022] |He said the rising volume of passenger traffic on this route justifies a major investment in new high-standard Moscow hotels.

[21127001] |David Shaffer was named to the new post of executive vice president of the Maxwell Macmillan group of this communications giant.
[21127002] |Mr. Shaffer takes primary responsibility for the electronic and technical-services group.
[21127003] |He had been group vice president of the electronic-publishing group.
[21127004] |Also, Sheldon Aboff, formerly a vice president at Maxwell, was named group vice president with responsibility for various electronic and publishing-group companies.

[21128001] |Soichiro Honda's picture now hangs with Henry Ford's in the U.S. Automotive Hall of Fame, and the game-show "Jeopardy" is soon to be Sony-owned.
[21128002] |But no matter how much Japan gets under our skin, we'll still have mom and apple pie.

[21128003] |On second thought, make that just mom.

[21128004] |A Japanese apple called the Fuji is cropping up in orchards the way Hondas did on U.S. roads.
[21128005] |By 1995 it will be planted more often than any other apple tree, according to a recent survey of six apple-industry sages by Washington State University horticulturist Robert Norton.
[21128006] |Some fruit visionaries say the Fuji could someday tumble the Red Delicious from the top of America's apple heap.

[21128007] |It certainly won't get there on looks.
[21128008] |Compared to the Red Delicious, the exemplar of apple pulchritude, the Fuji is decidedly more dowdy -- generally smaller, less-perfectly shaped, greenish, with tinges of red.
[21128009] |To hear most U.S. growers tell it, we'd still be in Paradise if the serpent had proffered one to Eve.

[21128010] |But how sweet it is.
[21128011] |It has more sugar "than any apple we've ever tested," says Duane Greene, a University of Massachusetts pomologist, or apple scholar.
[21128012] |It has a long shelf life and "doesn't fool the public," says Grady Auvil, an Orondo, Wash., grower who is planting Fujis and spreading the good word about them.
[21128013] |"It doesn't look nice on the outside while getting mealy inside."

[21128014] |Mr. Auvil, razor sharp at 83, has picked and packed a zillion pecks of apples over the past 65 years.
[21128015] |He is known as the father of the U.S.-grown Granny Smith, a radically different apple that the conventional wisdom once said would never catch on.
[21128016] |It did, shaking the apple establishment to its roots.
[21128017] |Now, even more radical changes seem afoot as the grand old maverick of American apples plays the role of Hiroshi Appleseed.
[21128018] |"The Fuji is going to be No. 1 to replace the Red Delicious," he says.

[21128019] |The Delicious hegemony won't end anytime soon.
[21128020] |New apple trees grow slowly, and the Red Delicious is almost as entrenched as mom.
[21128021] |Its roots are patriotic -- with the first trees appearing in 1872 in an orchard near Peru, Iowa, to be exact.
[21128022] |For more than 50 years, it has been the apple of our eye.
[21128023] |A good Delicious can indeed be delicious.
[21128024] |More than twice as many Red Delicious apples are grown as the Golden variety, America's No. 2 apple.

[21128025] |But the apple industry is ripe for change.
[21128026] |"Red Delicious has been overplanted, and its prices have dropped below the cost of production," says Washington State's Mr. Norton.
[21128027] |The scare over Alar, a growth regulator that makes apples redder and crunchier but may be carcinogenic, made consumers shy away from the Delicious, though they were less affected than the McIntosh.
[21128028] |The glut and consequent lower prices, combined with cancer fears, was a very serious blow to growers.
[21128029] |"A lot of growers won't be around in a few years," says Mr. Norton, although they have stopped using Alar.

[21128030] |One may be William Broderick, a Sterling, Mass., grower.
[21128031] |"This is beautiful stuff," he says, looking ruefully at big boxes of just-picked Red Delicious next to his barn.
[21128032] |"But I'm going to lose $50,000 to $60,000 on it.
[21128033] |I'm going to have to get another job this year just to eat."

[21128034] |Besides rotten prices, he has been hit recently by hail, a bark-nibbling horde of mice, fungi and bugs.
[21128035] |Some 500 insects and 150 diseases wiggle, chew and romp through growers' nightmares, including maggots, mites, mildew, thrips, black rot and the flat-headed borer.
[21128036] |Even if a grower beats them back, his $2,000 rented bees might buzz off to the neighbors' orchards instead of pollinating his, Mr. Broderick says.

[21128037] |Though growers can't always keep the worm from the apple, they can protect themselves against the price vagaries of any one variety by diversifying -- into the recently imported Gala, a sweet New Zealand native; the Esopus Spitzenburg, reportedly Thomas Jefferson's favorite apple; disease-resistant kinds like the Liberty.
[21128038] |"I've ripped out a lot of Delicious" and grafted the trees with many different shoots, says Steve Wood, a West Lebanon, N.H., grower, tramping through his 100-acre Poverty Lane Orchard on a crisp autumn day recently.
[21128039] |"I've got 70 kinds of apples.
[21128040] |Here's a Waltana," he exclaims, picking one off a tree.
[21128041] |He bites it, scowls and throws it down. "
[21128042] |It's a real dog."

[21128043] |Supermarkets are getting into the variety act, too.
[21128044] |They still buy apples mainly for big, red good looks -- that's why so many taste like woodchucks' punching bags.
[21128045] |But freshness counts more than it once did, and stores are expanding shelf space for unconventional, but tastier, and often pricier, apples.
[21128046] |"Rather than sell 39-cents-a-pound Delicious, maybe we can sell 79-cents-a-pound Fujis," says Chuck Tryon, perishables director for Super Valu Inc., a Minneapolis supermarket chain and food distributor.

[21128047] |The Fuji is a product of meticulous Japanese pomological engineering, which fostered it 50 years ago at a government research orchard.
[21128048] |Japanese researchers have bred dozens of strains of Fujis to hone its color, taste and shelf life.
[21128049] |Now the best of them age as gracefully as Grannies, the industry's gold standard for storability.
[21128050] |In the cornucopia of go-go apples, the Fuji's track record stands out: During the past 15 years, it has gone from almost zilch to some 50% of Japan's market.

[21128051] |"The Japanese apple market is very keyed to high quality," says David Lane, a scientist at a Canadian horticulture research center in Summerland, British Columbia, and so apples are more of a delicacy there than a big food commodity.
[21128052] |The U.S. Department of Agriculture estimates that this year Americans will eat about 40% more fresh apples per capita than the Japanese.

[21128053] |The Fuji is still small potatoes in the U.S., sold mainly in fruit boutiques.
[21128054] |But in California, says Craig Ito, a Fuji-apple grower, "There's a Fuji apple cult.
[21128055] |Once somebody eats one, they get hooked."

[21128056] |Mr. Auvil, the Washington grower, says that he could sell Fujis to Taiwan buyers at $40 a box if he had them.
[21128057] |(Taiwan already is a big importer of Fujis from other places, he adds.)
[21128058] |But his first crop won't be picked till next year.
[21128059] |"I expect to see the demand exceed supply for Fujis for the next 10 to 15 years," he adds.
[21128060] |Washington Red Delicious, by the way, are wholesaling for less than $10 a box these days.

[21128061] |Mr. Auvil sees Fujis, in part, as striking a blow against the perversion of U.S. apples by supermarkets.
[21128062] |"When the chain stores took over, there was no longer a connection between grower and consumer.
[21128063] |A guy is sitting up in an office deciding what you're going to eat."

[21128064] |After all, until the 1950s even the Red Delicious was a firm, delectable morsel.
[21128065] |Then, as growers bred them more for looks, and to satisfy supermarket chains' demands of long-term storage, the Red went into decline.
[21128066] |Now, those red applelike things stores sell in summer are fruitbowl lovely, but usually not good eating.
[21128067] |They do deserve respect, however -- they are almost a year old, probably equal to about 106 in human years.

[21128068] |The Fuji, to be sure, has blemishes too.
[21128069] |It ripens later than most apples, and growing it in U.S. areas with chilly autumns may be tricky.
[21128070] |Moreover, the frumpy Fuji must compete with an increasingly dolledup Delicious.
[21128071] |Mr. Broderick, the Massachusetts grower, says the "big boss" at a supermarket chain even rejected his Red Delicious recently because they weren't waxed and brushed for extra shine.
[21128072] |And he hadn't used hormones, which many growers employ to elongate their Delicious apples for greater eye appeal.
[21128073] |Still, Mr. Auvil points out, Grannies became popular without big, red looks, so why not Fujis?
[21128074] |He sees a shift in American values -- at least regarding apples -- toward more emphasis on substance and less on glitz.
[21128075] |"Taste has finally come to the fore," he says.
[21128076] |Or, for that matter, the core.

[21129001] |Brush Wellman Inc. said its board increased the number of shares of common stock to be purchased under a previously authorized program to 3.9 million from 2.9 million.

[21129002] |The maker of engineered materials has acquired more than 2.7 million shares under the program.

[21130001] |The state attorney general's office filed suit against five New York brokerage firms, charging them with responsibility for much of a $200 million loss incurred by the state treasurer's office in 1987.

[21130002] |The suit sets the firms' liability at more than $185 million.

[21130003] |The firms are Morgan Stanley & Co., Salomon Brothers Inc., County Natwest Government Securities Inc., Greenwich Capital Markets Inc. and Goldman, Sachs & Co.

[21130004] |The firms have all said that West Virginia's suit is without merit.
[21130005] |On Friday, the firms filed a suit against West Virginia in New York state court asking for a declaratory judgment absolving them of liability.
[21130006] |That suit is pending.

[21130007] |The suits relate to a $200 million loss, disclosed in December, that was suffered by West Virginia's consolidated investment pool.
[21130008] |The pool invested idle cash for many state agencies and local governments.

[21130009] |In its suit, the attorney general's office alleges that brokers encouraged members of the treasurer's office to engage in high-volume, high-risk transactions that benefited the brokers.

[21131001] |Few people are aware that the federal government lends almost as much money as it borrows.
[21131002] |From 1980 to 1988, while federal budget deficits totaled $1.41 trillion, the government issued $394 billion of new direct loans and an additional $756 billion of new primary loan guarantees.
[21131003] |These figures omit secondary guarantees, deposit insurance, and the activities of Government-Sponsored Enterprises (a huge concern in its own right, as detailed on this page May 3).

[21131004] |Federal credit programs date back to the New Deal, and were meant to break even financially.
[21131005] |Since the 1950s, federal lending has experienced extraordinary growth in credit volume, subsidy rates, and policy applications, spurred on by the growth of government in general and budget gimmicks and deceptive management in particular.
[21131006] |As we will see, many of these obligations don't show up as part of the federal deficit.

[21131007] |But recent events indicate that federal credit is out of control.
[21131008] |Student loan defaults remain high at about 12%, and the program has been rocked by allegations of fraud and mismanagement.
[21131009] |Farmers Home Administration (FmHA) loans have turned into de facto giveaway programs; losses over the next three years are expected to exceed $20 billion.
[21131010] |Defaults on Veterans Affairs loan guarantees have quadrupled in the past eight years.

[21131011] |Last month, the General Accounting Office reported that defaults in Federal Housing Administration guarantees were five times as high as previously estimated, and that FHA's equity fell to minus $2.9 billion.
[21131012] |GAO's findings are particularly troubling because the FHA has about $300 billion in obligations outstanding and had previously been considered one of the most financially secure credit programs.

[21131013] |Scores of other credit programs, subsidizing agriculture, small business, exporters, defense, energy, transportation and others, are less visible but in no better shape.
[21131014] |If the programs continue their present path, the potential government losses are staggering: The federal government holds $222 billion in direct loans outstanding and backs an additional $550 billion in primary guarantees.
[21131015] |(Secondary guarantees of pools of FHA- and VA-backed loans by the agency known as Ginnie Mae currently exceed $330 billion.)

[21131016] |Although external events have contributed to the morass, the principal causes of the current crisis are internal and generic to all programs.
[21131017] |To reduce the risks while still retaining the legitimate benefits these programs can provide, credit policy must: 1. Use credit to improve the operation of capital markets, not to provide subsidies.

[21131018] |There is a fundamental conflict between providing a subsidy and maintaining the integrity of a credit program.
[21131019] |If the program is meant to provide a subsidy, collecting the debt defeats the original goal.
[21131020] |Thus, subsidized loans tend to turn into giveaway programs, with increasing subsidy and default rates over time.
[21131021] |To avoid this problem, government should issue credit only if it intends to use every legal method to collect.

[21131022] |In contrast, credit programs can be appropriate tools to improve the operation of capital markets.
[21131023] |For example, legal restrictions on interstate banking once inhibited the supply of credit to the agricultural sector.
[21131024] |Farm lending was enacted to correct this problem by providing a reliable flow of lendable funds.
[21131025] |However, this in no way justifies the huge government subsidies and losses on such loans.

[21131026] |Credit policy should separate these two competing objectives and eliminate aspects that provide the subsidy.
[21131027] |For example, student loans currently attempt to subsidize college attendance and mitigate problems created by the fact that students' future earnings are not accepted as collateral.
[21131028] |The program provides highly subsidized loans to any student whose family earns less than a particular amount.
[21131029] |High default rates, a low interest rate, and government coverage of all interest costs while the student is in school make program costs extremely high.
[21131030] |Families that do not need the loan can make money simply by putting the loan in the bank and paying it back when the student graduates.

[21131031] |In contrast, a student loan program that was meant solely to correct capital-market imperfections would allow loans for any student, regardless of family income, at market or near-market rates.
[21131032] |While the student was in school, interest costs would either be paid by the student or added to the loan balance.
[21131033] |This program, combined with cash grants to needy students, would reduce program costs and much more effectively target the intended beneficiaries.

[21131034] |2. Provide better incentives.

[21131035] |Given the structure of most credit programs, it is surprising that default rates are not even higher.
[21131036] |Guarantee rates are typically 100%, giving lenders little reason to screen customers carefully.
[21131037] |Reducing those rates moderately (say, to 75%) would still provide substantial assistance to borrowers.
[21131038] |But it would also encourage lenders to choose more creditworthy customers, and go a long way toward reducing defaults.
[21131039] |For example, the Small Business Administration has had reasonable success in reducing both guarantee rates and default rates in its Preferred Lenders' Program.

[21131040] |Borrowers' incentives are equally skewed.
[21131041] |Since the government has a dismal record of collecting bad debts, the costs to the borrower of defaulting are usually low.
[21131042] |In addition, it is often possible to obtain a new government loan even if existing debts are not paid off.
[21131043] |Simple policy prescriptions in this case would be to improve debt collection (taking the gloves off contracted collection agencies) and to deny new credit to defaulters.
[21131044] |These provisions would be difficult to enforce for a program intended to provide a subsidy, but would be reasonable and effective devices for programs that attempt to offset market imperfections.

[21131045] |3. Record the true costs of credit programs in the federal budget.

[21131046] |Since the budget measures cash flow, a new $1 direct loan is treated as a $1 expenditure, even though at least part of the loan will be paid back.
[21131047] |Loan guarantees don't appear at all until the borrower defaults, so new guarantees do not raise the deficit, even though they create future liabilities for the government.
[21131048] |By converting an expenditure or loan to a guarantee, the government can ensure the same flow of resources and reduce the current deficit.
[21131049] |Predictably, guarantees outstanding have risen by $130 billion since 1985, while direct loans outstanding have fallen by $30 billion.

[21131050] |The true budgetary cost of a credit subsidy is the discounted value of the net costs to government.
[21131051] |This figure could be estimated using techniques employed by private lenders to forecast losses, or determined by selling loans to private owners (without federal guarantees).
[21131052] |Neither technique is perfect, but both are better than the current system, which misstates the costs of new credit programs by amounts that vary substantially and average about $20 billion annually, according to the Congressional Budget Office.
[21131053] |A budget that reflected the real costs of lending would eliminate incentives to convert spending or lending programs to guarantees and would let taxpayers know what Congress is committing them to.

[21131054] |4. Impose standard accounting and administrative practices.

[21131055] |Creative accounting is a hallmark of federal credit.
[21131056] |Many agencies roll over their debt, paying off delinquent loans by issuing new loans, or converting defaulted loan guarantees into direct loans.
[21131057] |In any case, they avoid having to write off the loans.
[21131058] |Some agencies simply keep bad loans on the books; as late as 1987, the Export-Import Bank held in its portfolio at face value loans made to Cuba in the 1950s.
[21131059] |More seriously, FmHA has carried several billion dollars of defaulted loans at face value.
[21131060] |Until GAO's recent audit, FHA books had not been subject to a complete external audit in 15 years.

[21131061] |The administration of federal credit should closely parallel private lending practices, including the development of a loan loss reserve and regular outside audits.
[21131062] |Establishing these practices would permit earlier identification of emerging financial crises, provide better information for loan sales and budgeting decisions, and reduce fraud.

[21131063] |Government lending was not intended to be a way to obfuscate spending figures, hide fraudulent activity, or provide large subsidies.
[21131064] |The reforms described above would provide a more limited, but clearer, safer and ultimately more useful role for government as a lender.
[21131065] |Without such reforms, credit programs will continue to be a large-scale, high-risk proposition for taxpayers.

[21131066] |Mr. Gale is an assistant professor of economics at UCLA.

[21132001] |Malcolm S. Todt was named vice president and senior officer in charge of equipment leasing to municipalities, a new effort of this bond insurer.
[21132002] |Mr. Todt had been vice president and treasurer of Insilco Corp.

[21133001] |President Bush is considering casting a line-item veto as a test to determine whether the courts will rule that he has such authority.

[21133002] |Mr. Bush has long campaigned for passage of a bill or a constitutional amendment that would explicitly give him a line-item veto, which would enable him to kill individual items in a big spending bill without having to kill the entire bill.
[21133003] |He has argued that such presidential power is necessary to rein in congressional spending.

[21133004] |But some analysts, particularly conservative legal scholars, have urged Mr. Bush not to wait for explicit authorization but simply to assert that the Constitution already implicitly gives him the power to exercise a line-item veto.
[21133005] |Such an assertion most likely would bring about a court challenge from Congress that would clarify whether a president already has such power.

[21133006] |White House spokesman Marlin Fitzwater, confirming comments made this week by Vice President Dan Quayle, said Mr. Bush is "interested" in finding a suitable test case.
[21133007] |But he also said that exercising a test line-item veto isn't a "top initiative" on the president's agenda because he faces more-pressing budget issues at the moment.

[21134001] |Harris Ravine, executive vice president of customer satisfaction, was named executive vice president, finance and administration of this maker of data storage equipment.
[21134002] |Mr. Ravine succeeds William R. Mansfield Jr., who will remain with the company until the end of the year to support the transition and to complete important projects.

[21135001] |The Bush administration said it is submitting a "comprehensive" proposal for overhauling agricultural trade that could help break an impasse in the current round of multilateral trade negotiations.

[21135002] |The proposal reiterates the U.S. desire to scrap or reduce a host of trade-distorting subsidies on farm products.
[21135003] |But it would allow considerable flexibility in determining how and when these goals would be achieved.
[21135004] |The U.S. plan also would ease the transition to freer agriculture trade by allowing some countries to convert non-tariff barriers into tariffs that, together with existing tariffs, then would be phased out over 10 years.

[21135005] |Trade Representative Carla Hills, who along with Agriculture Secretary Clayton Yeutter unveiled the proposal, said she is confident it will gain considerable support from the U.S.'s trading partners.
[21135006] |Mr. Yeutter, seeking to allay European objections to an earlier U.S. plan that called for eliminating all farm-trade barriers by the year 2000, said the new U.S. proposal wouldn't "put farmers out of business" but would only encourage them to "grow what the markets desire instead of what the government wants."

[21135007] |The U.S. is submitting the proposal today in Geneva, hoping that the initiative will spur members of the General Agreement on Tariffs and Trade to reach agreement on new trade rules before their current negotiating round concludes in December 1990.
[21135008] |Another U.S. proposal filed Monday urges more "fair play" in services trade, including predictable and clear rules and equality in the treatment of foreign and domestic service companies.

[21135009] |Unlike the earlier U.S. farm-trade proposal which struck European countries as too extreme, the latest plan would provide some room for maneuver.
[21135010] |For instance, the new U.S. package makes clear there would be a transition period during which GATT members could use a combination of tariffs and quotas to cushion their farmers from foreign competition.
[21135011] |It also says countries could temporarily raise tariffs on certain products if they experience an unusually heavy volume of imports.

[21135012] |Instead of proposing a complete elimination of farm subsidies, as the earlier U.S. proposal did, the new package calls for the elimination of only the most tradedistorting ones.
[21135013] |Less objectionable ones would be subject only to some restraints, and others with a "relatively minor trade impact" would be allowed to continue under certain conditions.

[21135014] |The new U.S. plan also would establish procedures to prevent countries from using health and sanitation rules to impede trade arbitrarily.
[21135015] |The goal would be to resolve disputes such as one prompted by the European Community's current attempt to bar imports of beef from hormone-treated U.S. cattle.
[21135016] |The U.S. contends that the rules aren't justified on health grounds.

[21135017] |To encourage more competition among exporting countries, the U.S. is proposing that export subsidies, including tax incentives for exporters, be phased out in five years.

[21136001] |Procter & Gamble Co., helped by a gain from a lawsuit settlement and continued growth overseas, posted a 38% rise in fiscal first-quarter net income.

[21136002] |Net for the quarter ended Sept. 30 climbed to $551 million, or $1.66 a share, from $400 million, or $1.18 a share, a year earlier.
[21136003] |Per-share figures have been adjusted for a 2-for-1 stock split effective Oct. 20.
[21136004] |Sales increased 6% to $5.58 billion from $5.27 billion.

[21136005] |Earnings at the consumer-products giant were boosted by a gain of $125 million, or about 25 cents a share, stemming from last month's settlement of litigation with three of P&G's competitors over patents on P&G's Duncan Hines cookies.

[21136006] |Excluding the gain, P&G's earnings were close to analysts' predictions of about $1.40 a share for the quarter.
[21136007] |Wall Street had expected a modest rise in the company's domestic sales and earnings, and more substantial increases in overseas results.
[21136008] |One factor helping sales and earnings was a 3% price rise for most P&G products, except coffee, analysts said.

[21136009] |Unit volume, or amount of products shipped, rose about 11% in the international segment, with P&G continuing to win market share in Japan's diaper and detergent markets.
[21136010] |Jay Freedman, analyst with Kidder, Peabody & Co., said P&G's Always sanitary napkin, sold under the Whisper name in Japan, has firmly established itself as a leading brand.
[21136011] |He figures P&G will expand its personal-care product line in Japan to "continue that momentum."

[21136012] |P&G's U.S. shipments were up just 1%, partly because the company decided to shift more promotions and sales for health and beauty products to the fiscal second quarter.
[21136013] |Hugh Zurkuhlen, analyst with Salomon Bros., predicts the shift will mean P&G's sales growth in the second quarter will be "in the double digits."

[21136014] |Also slowing growth in the U.S. were lackluster results for P&G's cooking oils, which had a strong year-earlier first quarter.
[21136015] |Last year's drought in the Midwest prompted retailers to stock up on oils ahead of anticipated price increases, boosting sales for Crisco and Puritan oils, analysts said.

[21136016] |For fiscal 1990, analysts expect P&G's sales to continue to grow, with earnings climbing between 15% and 20%.
[21136017] |Lynne Hyman, vice president of equity research for First Boston Corp., expects P&G to post net of about $4.20 a share, on a post-split basis.
[21136018] |"But I'm recognizing there's a good chance they'll do a bit better than that," she says.
[21136019] |In fiscal 1989, P&G earned $3.56 a share, adjusted for the stock split.

[21136020] |One big factor affecting the fiscal second half will be the new stewardship of Edwin L. Artzt, who becomes chairman and chief executive officer in January.
[21136021] |Because of his remarkable success turning around P&G's international operations, analysts have high hopes for his tenure.
[21136022] |"If he does to the domestic operations what he did internationally," says Mr. Zurkuhlen, "this company will earn $6 or $7 a share in a few years.

[21137001] |The Voting Rights Act of 1965 was enacted to keep the promise of the Fifteenth Amendment and enable Southern blacks to go to the polls, unhindered by literacy tests and other exclusionary devices.
[21137002] |Twenty-five years later, the Voting Rights Act has been transformed by the courts and the Justice Department into a program of racial gerrymandering designed to increase the number of blacks and other minorities -- Hispanics, Asians and native Americans -- holding elective office.

[21137003] |In the 1980s, the Justice Department and lower federal courts that enforce the Voting Rights Act have required state legislatures and municipal governments to create the maximum number of "safe" minority election districts -- districts where minorities form between 65% and 80% of the voting population.
[21137004] |The program has even been called upon to create "safe" white electoral districts in municipalities where whites are the minority.

[21137005] |Although Section 2 of the act expressly disclaims requiring that minorities win a proportional share of elective offices, few municipal and state government plans achieve preclearance by the Justice Department or survive the scrutiny of the lower federal courts unless they carve out as many solidly minority districts as possible.

[21137006] |The new goal of the Voting Rights Act -- more minorities in political office -- is laudable.
[21137007] |For the political process to work, all citizens, regardless of race, must feel represented.
[21137008] |One essential indicator that they are is that members of minority groups get elected to public office with reasonable frequency.
[21137009] |As is, blacks constitute 12% of the population, but fewer than 2% of elected leaders.
[21137010] |But racial gerrymandering is not the best way to accomplish that essential goal.
[21137011] |It is a quick fix for a complex problem.

[21137012] |Far from promoting a commonality of interests among black, white, Hispanic and other minority voters, drawing the district lines according to race suggests that race is the voter's and the candidate's most important trait.
[21137013] |Such a policy implies that only a black politician can speak for a black person, and that only a white politician can govern on behalf of a white one.
[21137014] |Examples of the divisive effects of racial gerrymandering can be seen in two cities -- New York and Birmingham, Ala.
[21137015] |When they reapportion their districts after the 1990 census, every other municipality and state in the country will face this issue.
[21137016] |New York City:
[21137017] |Racial gerrymandering has been a familiar policy in New York City since 1970, when Congress first amended the Voting Rights Act to expand its reach beyond the Southern states.
[21137018] |In 1972, the Justice Department required that the electoral map in the borough of Brooklyn be redrawn to concentrate black and Hispanic votes, despite protests that the new electoral boundaries would split a neighborhood of Hasidic Jews into two different districts.

[21137019] |This year, a commission appointed by the mayor to revise New York's system of government completed a new charter, expanding the City Council to 51 from 35 members.
[21137020] |Sometime in 1991, as soon as the 1990 census becomes available, a redistricting panel will redraw the City Council district lines.
[21137021] |The Charter Revision Commission has made it clear that in response to the expectations of the Justice Department and the commission's own commitment to enhancing minority political leadership, the new district lines will be drawn to maximize the number of solidly minority districts.
[21137022] |Blacks and Hispanics currently make up 38% of the city's population and hold only 25% of the seats on the council.

[21137023] |Several of the city's black leaders, including Democratic mayoral nominee David Dinkins, have spoken out for racial gerrymandering to accord blacks and Hispanics "the fullest opportunity for representation."

[21137024] |In this connection, it is important to note that several members of New York's sitting City Council represent heterogeneous districts that bring together sizable black, Hispanic, and non-Hispanic white populations -- Carolyn Maloney's 8th district in northern Manhattan and the south Bronx and Susan Alter's 25th district in Brooklyn, for example.
[21137025] |To win their seats on the council, these political leaders have had to listen to all the voices in their district and devise public policies that would benefit all.
[21137026] |Often they have found that the relevant issue is not race, but rather housing, crime prevention or education.

[21137027] |Birmingham, Ala.:
[21137028] |The unusual situation in Birmingham vividly illustrates the divisive consequences of carving out safe districts for racial minorities.
[21137029] |In Birmingham, which is 57% black, whites are the minority.
[21137030] |Insisting that they are protected by the Voting Rights Act, a group of whites brought a federal suit in 1987 to demand that the city abandon at-large voting for the nine member City Council and create nine electoral districts, including four safe white districts.
[21137031] |The white group argued that whites were not fully and fairly represented, because in city-wide elections only black candidates or white candidates who catered to "black interests" could win.

[21137032] |No federal court has ruled that the Voting Rights Act protects a white minority, but in June the Justice Department approved a districting plan for Birmingham that carves out three white-majority districts and six black-majority districts.
[21137033] |Richard Arrington, Birmingham's black mayor, lamented the consequences.
[21137034] |"In the past, people who had to run for office had to moderate their views because they couldn't afford to offend blacks or whites," he said.
[21137035] |"Now you go to districts, you're likely to get candidates whose views are more extreme, white and black, on racial issues."
[21137036] |Two hundred years ago, critics of the new United States Constitution warned that the electoral districts for Congress were too large and encompassed too many different economic interests.
[21137037] |A small farmer and a seaport merchant could not be represented by the same spokesman, they said.
[21137038] |But James Madison refuted that argument in one of the most celebrated political treatises ever written, No. 10 of the Federalist Papers.
[21137039] |Madison explained that a representative's duty was to speak not for the narrow interests of one group but instead for the common good.
[21137040] |Large, heterogeneous election districts would encourage good government, said Madison, because a representative would be compelled to serve the interests of all his constituents and be servile to none.

[21137041] |Madison's noble and unifying vision of the representative still can guide us.
[21137042] |As long as we believe that all Americans, of every race and ethnic background, have common interests and can live together cooperatively, our political map should reflect our belief.
[21137043] |Racial gerrymandering -- creating separate black and white districts -- says that we have discarded that belief in our ability to live together and govern ourselves as one people.

[21137044] |Ms. McCaughey is a constitutional scholar at the Center for the Study of the Presidency in New York.

[21138001] |The Justice Department has distributed these new guidelines for U.S. Attorneys prosecuting RICO cases.
[21138002] |A related editorial appears today.

[21138003] |Under {RICO}, the government may seek a temporary restraining order (TRO) upon the filing of a RICO indictment, in order to preserve all forfeitable assets until the trial is completed and judgment entered.
[21138004] |Such orders can have a wide-ranging impact on third parties who do business with the defendants, including clients, vendors, banks, investors, creditors, dependents, and others.
[21138005] |Some highly publicized cases involving RICO TROs have been the subject of considerable criticism in the press, because of a perception that pre-trial freezing of assets is tantamount to a seizure of property without due process.
[21138006] |In order to ensure that the rights of all interested parties are protected, the Criminal Division has instituted the following requirements to control the use of TROs in RICO prosecutions.
[21138007] |(It should be noted that these requirements are in addition to any other existing requirements, such as review by the Asset Forfeiture Office.):

[21138008] |1. As part of the approval process for RICO prosecutions, the prosecutor must submit any proposed forfeiture TRO for review by the Organized Crime and Racketeering Section.
[21138009] |The prosecutor must show that less-intrusive remedies (such as bonds) are not likely to preserve the assets for forfeiture in the event of a conviction.

[21138010] |2. In seeking approval of a TRO, the prosecutor must articulate any anticipated impact that forfeiture and the TRO would have on innocent third parties, balanced against the government's need to preserve the assets.

[21138011] |3. In deciding whether forfeiture (and, hence, a TRO) is appropriate, the Section will consider the nature and severity of the offense; the government's policy is not to seek the fullest forfeiture permissible under the law where that forfeiture would be disproportionate to the defendant's crime.

[21138012] |4. When a RICO TRO is being sought, the prosecutor is required, at the earliest appropriate time, to state publicly that the government's request for a TRO, and eventual forfeiture, is made in full recognition of the rights of third parties -- that is, in requesting the TRO, the government will not seek to disrupt the normal, legitimate business activities of the defendant; will not seek through use of the relation-back doctrine to take from third parties assets legitimately transferred to them; will not seek to vitiate legitimate business transactions occurring between the defendant and third parties; and will, in all other respects, assist the court in ensuring that the rights of third parties are protected, through proceeding under {RICO} and otherwise.

[21138013] |The Division expects that the prosecutor will announce these principles either at the time the indictment is returned or, at the latest, at the first proceeding before the court concerning the TRO.

[21139001] |Sales of North American-built cars and trucks plunged 20.5% in mid-October from a year earlier, as domestic manufacturers paid the price for heavy incentives earlier this year.

[21139002] |"People are waiting for {new} factory giveaways," said Ben Kaye, sales manager of Bob Brest Auto World in Lynn, Mass., whose sales are slow.

[21139003] |This trend appears to be especially true at General Motors Corp., which used both dealer and consumer incentives to ignite sales in August and September.
[21139004] |Since then, deliveries have slumped.
[21139005] |GM's car sales dropped 24.8% in mid-October to 69,980, while truck sales fell 26% to 37,860.
[21139006] |GM also had dismal results in the first 10 days of the month, while other auto makers reported mixed results.

[21139007] |All of the Big Three suffered in the just-ended period, however, with sales of all domestically made cars, including those built at Japanese-managed plants, falling 19% to 158,863 from a year earlier.
[21139008] |The seasonal adjusted annual selling rate was six million vehicles, a small improvement from the 5.8 million rate of early October, but a big drop from the 7.1 million rate a year ago.

[21139009] |Sales of domestically made trucks also continued to be sluggish in mid-October, dropping 22.8% to 94,543 from a year ago.

[21139010] |The Big Three auto makers already have slashed fourth-quarter production plans 10.4% below year-ago levels, but that may not be enough to prevent inventories from ballooning if sales don't improve.
[21139011] |Industry analyst John H. Qualls, a vice president with Hill & Knowlton in St. Louis, forecasts that domestic auto makers will have a 93-day supply of cars at the end of the year, even if car sales improve to a 6.5 million vehicle rate for the quarter.
[21139012] |Ford Motor Co. reported a 21.2% drop in sales of domestic-made cars to 46,995 and a 24.2% drop in domestic trucks to 31,143.
[21139013] |The sales are being dragged down by a glut of 1989 vehicles, said Joel Pitcoff, a Ford analyst.
[21139014] |The earlier use of incentives depleted the market of "scavengers" for bargain-basement 1989 cars, he said.

[21139015] |Town & Country Ford in Charlotte, N.C., still needs to move about 850 1989 cars and trucks.
[21139016] |Business had been fairly strong until Hurricane Hugo hit the area, but has been down since.

[21139017] |Chrysler Corp. also hit the rocks in mid-October.
[21139018] |The No. 3 U.S. auto maker had a 23.7% plunge in car sales to 22,336 and a 17.5% drop in truck sales to 22,925, which include its minivans and Jeeps.

[21139019] |Honda Motor Co., which continues to have short supplies of domestically made Accords, saw its sales of North American-built cars fall 14.1% to 8,355.
[21139020] |But sales of domestic cars and trucks at Nissan Motor Corp. rose 26.1% to 5,651.
[21139021] |A Nissan spokesman attributed the increase to the use of incentives this year and not a year ago and to higher fleet sales.
[21139022] |Toyota Motor Corp., which opened a plant in Georgetown, Ky., last year, saw sales triple to 6,256 vehicles.

[21139023] |a-Totals include only vehicle sales reported in the period.

[21139024] |c-Domestic car

[21139025] |d-Percent change greater than 999%.

[21139026] |x-There were 9 selling days in the most recent period and 9 a year earlier.
[21139027] |Percentage differences based on daily sales rate rather than sales volume.

[21140001] |Short interest in Nasdaq over-the-counter stocks rose 6% as of mid-October, its biggest jump since 6.3% last April.

[21140002] |The most recent OTC short interest statistics were compiled Oct. 13, the day the Nasdaq composite index slid 3% and the New York Stock Exchange tumbled 7%.
[21140003] |The coincidence might lead to the conclusion that short-sellers bet heavily on that day that OTC stocks would decline further.

[21140004] |As it happens, the Nasdaq composite did continue to fall for two days after the initial plunge.
[21140005] |However, the short interest figures reported by brokerage and securities clearing firms to the National Association of Securities Dealers include only those trades completed, or settled, by Oct. 13, rather than trades that occurred on that day, according to Gene Finn, chief economist for the NASD.
[21140006] |Generally, it takes five business days to transfer stock and to take the other steps necessary to settle a trade.

[21140007] |The total short interest in Nasdaq stocks as of mid-October was 237.1 million shares, up from 223.7 million in September but well below the record level of 279 million shares established in July 1987.
[21140008] |The sharp rise in OTC short interest compares with the 4.2% decline in short interest on the New York Stock Exchange and the 3% rise on the American Stock Exchange during the September-October period.

[21140009] |Generally, a short seller expects a fall in a stock's price and aims to profit by selling borrowed shares that are to be replaced later; the short seller hopes the replacement shares bought later will cost less than those that were sold.
[21140010] |Short interest, which represents the number of shares borrowed and sold, but not yet replaced, can be a bad-expectations barometer for many stocks.

[21140011] |Among 2,412 of the largest OTC issues, short interest rose to 196.8 million shares, from 185.7 million in 2,379 stocks in September.
[21140012] |Big stocks with large short interest gains as of Oct. 13 included First Executive, Intel, Campeau and LIN Broadcasting.

[21140013] |Short interest in First Executive, an insurance issue, rose 55% to 3.8 million.
[21140014] |Intel's short interest jumped 42%, while Campeau's increased 62%.
[21140015] |Intel makes semiconductors and Campeau operates department-store chains and is strained for cash.

[21140016] |Meritor Savings again had the dubious honor of being the OTC stock with the biggest short interest position on Nasdaq.
[21140017] |Meritor has headed the list since May.
[21140018] |First Executive and troubled Valley National Corp. of Arizona were next in line.

[21140019] |Short selling isn't necessarily bad for the overall market.
[21140020] |Shorted shares must eventually be replaced through buying.
[21140021] |In addition, changes in short interest in some stocks may be caused by arbitrage.
[21140022] |For example, an investor may seek to profit during some takeover situations by buying stock in one company involved and shorting the stock of the other.

[21140023] |Two big stocks involved in takeover activity saw their short interest surge.
[21140024] |Short interest in the American depositary receipts of Jaguar, the target of both Ford Motor and General Motors, more than doubled.

[21140025] |Nasdaq stocks that showed a drop in short interest included Adobe Systems, Class A shares of Tele-Communications and takeover targets Lyphomed and Jerrico.

[21140026] |The NASD, which operates the Nasdaq computer system on which 5,200 OTC issues trade, compiles short interest data in two categories: the approximately two-thirds, and generally biggest, Nasdaq stocks that trade on the National Market System; and the one-third, and generally smaller, Nasdaq stocks that aren't a part of the system.

[21140027] |Short interest in 1,327 non-NMS securities totaled 40.3 million shares, compared with almost 38 million shares in 1,310 issues in September.

[21140028] |The October short interest represents 1.04 days of average daily trading volume in the smaller stocks in the system for the reporting period, compared with 0.94 day a month ago.

[21140029] |Among bigger OTC stocks, the figures represent 2.05 days of average daily volume, compared with 2.14 days in September.

[21140030] |The adjacent tables show the issues in which a short interest position of at least 50,000 shares existed as of Oct. 13 or in which there was a short position change of at least 25,000 shares since Sept. 15 (see accompanying tables -- WSJ Oct. 25, 1989).

[21141001] |From the Sept. 30-Oct. 4 issue of The Economist:

[21141002] |What defeated General Aoun was not only the weight of the Syrian army.
[21141003] |The weight of Lebanon's history was also against him; and it is a history Israel is in danger of repeating.

[21141004] |Like Lebanon, and however unfairly, Israel is regarded by the Arab world as a colonial aberration.
[21141005] |Its best hope of acceptance by its neighbours lies in reaching a settlement with the Palestinians.
[21141006] |Like Lebanon, Israel is being remade by demography.
[21141007] |In Greater Israel more than half the children under six are Muslims.
[21141008] |Within 25 years Jews will probably be the minority.
[21141009] |Yet Israel will neither share power with all these Arabs nor, says its present prime minister, redraw its borders closer to its pre-1967 Jewish heartland.

[21141010] |By not choosing one of these options, Israelis will condemn themselves, as the Maronites did, to perpetual war with the Muslims in their midst, and so to the internal erosion of their state.
[21141011] |Unlike the Maronites, Israel's Jews will not let themselves become the weakest force in a system of private armies; Jerusalem will become Belfast before it becomes Beirut.
[21141012] |But that is not much of a consolation to draw from the failure of General Aoun.

[21142001] |The Nasdaq over-the-counter market didn't fully recover from a selling stampede, and closed down 1.2%.

[21142002] |The effects on the market of the mostly computer-driven sell-off among exchange-listed stocks irked many market makers, who watched the Nasdaq Composite Index tumble in sympathy with the Dow Jones Industrial Average, and then saw it get left behind in the subsequent rally.

[21142003] |After plummeting 1.8% at one point during the day, the composite rebounded a little, but finished down 5.52, at 461.70.
[21142004] |In contrast, the industrial average recovered almost completely from its skid and closed down 0.1%.
[21142005] |The New York Stock Exchange Composite was 0.4% lower for the day.

[21142006] |As usual, the over-the-counter market's biggest technology stocks were hardest hit.

[21142007] |Microsoft, battered by profit taking in recent sessions, sank as much as 4; but it finished at 80 7/8, down 2 1/4 on volume of one million shares.

[21142008] |MCI Communications, the most active issue, finished down 5/8 to 42 1/8.
[21142009] |MCI traded as low as 41 3/8 during the session.
[21142010] |Other active stocks included Jaguar, whose American depositary receipts added 1/8 to 11 1/4.
[21142011] |Apple Computer improved 7/8 to 47 5/8; Intel slipped 1/4 to 33 1/4, and Valley National Corp. was up 1/8 to 15 1/8.

[21142012] |"The market started with several strikes against it," said Peter DaPuzzo, head of retail equity trading at Shearson Lehman Hutton, referring to news that the labor-management buy-out of UAL Corp. continued to unravel, and reports that the junk-bond market is disintegrating.

[21142013] |But the computer-guided selling in response to those developments dealt a serious blow to the over-the-counter market, Mr. DaPuzzo said.

[21142014] |Even though the over-the-counter market usually doesn't fall by as much as listed stocks during program-selling blitzes, he said, "when the market does recover, the damage is done and it leaves Nasdaq down more than the Big Board."

[21142015] |Mr. DaPuzzo also complained that the sharp swings in stock prices lately is scaring away retail and foreign investors.
[21142016] |While Shearson doesn't do computer-guided program trading for its own account, the firm does execute orders for clients involved in the buying and selling of shares tied to movements in certain stock indexes, Mr. DaPuzzo acknowledged.

[21142017] |The volatility inherent in program trading troubled other traders, too.
[21142018] |They don't like the risks they are forced to assume when prices swing so drastically.
[21142019] |Market makers are supposed to keep supplies of stocks on hand to maintain orderly trading when imbalances occur.
[21142020] |That means that on days when prices are tumbling and sellers abound they must be willing to buy shares from sellers when no one else will.
[21142021] |In such an environment, a market maker can absorb huge losses.

[21142022] |But the recent volatility in stock prices caused by the program trading has made some market makers less willing to soak up the stocks that are for sale.
[21142023] |The market makers say they aren't comfortable carrying big positions in stocks because they realize prices can tumble quickly.

[21142024] |The situation makes it harder to buy and sell shares quickly, exacerbating the rise and fall in stock prices during program-dominated trading.
[21142025] |Groused Robert Antolini, head of over-the-counter trading at Donaldson, Lufkin & Jenrette: "It's making it tough for traders to make money."
[21142026] |He said that when sell programs kick in, many traders believe that "there's no sense in sticking your nose out because you're an instant loser."

[21142027] |Kinder-Care Learning Centers added 1/4 to 4 7/8 on 461,200 shares.
[21142028] |Lodestar Group said it will make a $6-a-share offer for the remaining Kinder-Care Learning Center common stock if it acquires a majority of the company's shares in a pending rights offering by Kinder-Care Learning Center's parent, Kinder-Care Inc.
[21142029] |Shares of KinderCare Inc. closed at 3 1/2, also up 1/4, on volume of 700,000.

[21142030] |Ohio Casualty dropped 2 1/8 to 49 1/2.
[21142031] |The company posted third-quarter earnings of 95 cents a share, down from $1.26 a year earlier.
[21142032] |The company estimated that losses from Hurricane Hugo reduced net income by 32 cents a share in the most recent quarter.

[21142033] |The company said losses from the Oct. 17 earthquake in California haven't yet been determined, but that it provides earthquake coverage to about 1,400 properties in the stricken area.
[21142034] |Any quake-related losses will be reported in the fourth quarter, the company said.

[21142035] |North Atlantic Industries jumped 1 to 5 3/4.
[21142036] |The electronics-instruments maker is to be acquired by Asset Management Associates for $7.25 a share.

[21142037] |LIN Broadcasting slid 1 3/8 to 108 3/4, despite reporting third-quarter net of 46 cents a share, up from 39 cents the previous year.
[21142038] |The company said the latest quarter included about $3.4 million in special legal and financial advisory costs related to McCaw Cellular Communications' bid for the company and LIN's merger pact with BellSouth.
[21142039] |McCaw was unchanged at 40.

[21142040] |XL/Datacomp slid 2 1/4 to 16 1/2 amid continuing concerns about the company's contract negotiations with International Business Machines.
[21142041] |IBM is reviewing its entire business-partners program, and XL/Datacomp confirmed earlier this month that it was in talks with the company about possible modifications to its current IBM-remarketer contract.
[21142042] |Remarketers make modifications to IBM's computer hardware and resell the products.

[21142043] |Omni Capital Group surged 1 3/4 to 16 1/4.
[21142044] |The company said net rose to 38 cents a share in its fiscal-first quarter ended Sept. 30, from 35 cents a shares a year ago.

[21143001] |Probably the most clear-cut Soviet violation, for example, is the Krasnoyarsk radar.
[21143002] |-- "Arms Control Reality," Nov. 20, 1984, the first of some 20 Journal editorials saying that Krasnoyarsk violated the ABM treaty.

[21143003] |-- "Whether the installation is for early warning or space track, it clearly is not deployed," the lawmakers said.
[21143004] |"Thus we judge it to be not a violation of the ABM treaty at this time."
[21143005] |The delegation included a reporter from the New York Times, aides to Sen. Edward M. Kennedy and Rep. Les AuCoin, and Natural Resources Defense Council staff members.
[21143006] |-- The Washington Post, Sept. 9, 1987.

[21143007] |-- The U.S.S.R. has taken unprecedented unilateral measures of openness, by giving American representatives a possibility to inspect the building site of the Krasnoyarsk radar as well as radar vans in the areas of Gomel and Moscow, so as to see for themselves that there are no violations of the ABM treaty of 1972 on the part of the Soviet Union.
[21143008] |-- Letter from Eduard Shevardnadze to U.N. Secretary-General Perez de Cuellar, reported in Tass, June 10, 1988.

[21143009] |-- The construction of this station equal in size to the Egyptian pyramids constituted, I say it directly, a clear violation of ABM.
[21143010] |-- Eduard Shevardnadze, Oct. 23, 1989.

[21143011] |We're happy, we guess, to receive confirmation of the Krasnoyarsk violation from the Soviets, five years after we started writing about it.
[21143012] |Perhaps even the American apologists will now accede.
[21143013] |Without question, something intriguing is going on in the policy chambers of the Politburo.
[21143014] |As it bids for new agreements, new loans and indeed admission to the civilized world, the Soviet government has recognized it has a credibility problem.
[21143015] |So after 70 years, it is confessing the obvious, hoping to be believed about other things.

[21143016] |It's not enough.
[21143017] |If the Soviets want to be believed, they need to start telling the truth about more than the totally obvious.
[21143018] |Our own test of "glasnost's" authenticity would be a Soviet decision to open itself to a complete international examination of one of the most troubling mysteries in U.S.-Soviet relations -- the reported 1979 anthrax outbreak at a Soviet military facility in Sverdlovsk.

[21143019] |The U.S. government has never waivered in its assessment of this incident as an accident at a biological weapons facility there, and hence a violation of the 1972 Biological Weapons Convention.
[21143020] |The Pentagon's recently issued "Soviet Military Power," though in general adopting a softer line, repeated the Sverdlovsk assessment.
[21143021] |It also was detailed in Congressional testimony this past February: An explosion at the Microbiology and Virology Institute in Sverdlovsk released anthrax germs that caused a significant number of deaths.

[21143022] |Since Mr. Shevardnadze did not address this topic before the Supreme Soviet, the Soviet Union's official position remains that the anthrax deaths were caused by tainted meat.
[21143023] |We doubt this claim just as we doubted Mr. Shevardnadze's assurance last year that Krasnoyarsk didn't violate the ABM treaty.
[21143024] |And just as we did not believe the tendentious claims of the Congressmen and arms-control advocates who visited Krasnoyarsk, we are in no way persuaded by the assent to the tainted-meat theory by a U.S. team of scientists who met with Soviet counterparts in Washington last year.

[21143025] |The Soviets' explanation is that the anthrax came from one lot of animal feed made from the bones of cattle that grazed on soil that was naturally infected with anthrax spores.
[21143026] |Harvard's Matthew Meselson -- who we read has sold something called the "scientific community" on the notion that "yellow rain" attacks on the Laotian Hmong were in fact the result of fecal showers by giant bees -- found the Soviet anthrax scenario "completely plausible."

[21143027] |We don't believe it.
[21143028] |And we certainly do not believe that Mr. Gorbachev or any of his emissaries yet deserve to have the West take their word for it.
[21143029] |Sverdlovsk is a large gray cloud over glasnost and indeed over the legitimacy of the arms-control process itself.

[21143030] |The U.S. government's Sverdlovsk complaint, as with Krasnoyarsk, is no mere political posturing.
[21143031] |Biological weapons violations have figured little in political debate, and indeed have not been pressed vigorously enough by the U.S. government.
[21143032] |But the stated U.S. position is detailed and specific, and the prospect of biological warfare is profoundly chilling.

[21143033] |The Soviets should be willing to set in motion a process that would allow them to acknowledge that Sverdlovsk violated the 1972 agreement or, alternatively, that would give U.S. specialists reasonable confidence that this was a wholly civilian accident.
[21143034] |Until that happens, glasnost cannot begin to deserve the kind of credibility Mr. Shevardnadze was bidding for with his confessions on Monday.

[21144001] |Manville Corp. said it offered to buy $500 million of its convertible preferred stock from the Manville Personal Injury Settlement Trust in a move that would improve the trust's liquidity and reduce the potential number of Manville shares outstanding.

[21144002] |Manville said it made the offer within the past several weeks as part of an effort to improve shareholder value.
[21144003] |It said it would purchase the stock at market price.

[21144004] |Manville and a spokeswoman for the trust said that the two are discussing the proposal but a decision hasn't been made.
[21144005] |"We are considering that offer along with all other alternatives," the trust spokeswoman said.
[21144006] |"We need to look at how to maximize our cash flow to pay our beneficiaries."

[21144007] |The trust, created as part of Manville's bankruptcy-law reorganization to compensate victims of asbestos-related diseases, owns 7.2 million of the Series A convertible preferred shares, which are each convertible into 10 Manville common shares.
[21144008] |The trust also owns half of Manville's 48 million common shares outstanding.

[21144009] |Based on Manville's closing price yesterday of $9.25 a share, Manville's offer would purchase about 5.4 million of its preferred shares, or about 75% of the trust's preferred stock holding.

[21144010] |In addition to the stock and 20% of Manville's profits beginning in 1992, the trust is supposed to receive $2.5 billion over its 27-year life.
[21144011] |But it initially was funded with about $765 million and may soon face a cash crunch.
[21144012] |As of June 30, it had settled about 15,000 of 81,000 claims filed and its unpaid claims totaled $136 million, a large portion of its $268 million in cash and marketable securities.
[21144013] |Since most of its assets are tied to Manville, a forest and building products concern, the trust might also want to diversify its holdings.

[21144014] |As part of its offer, Manville said it requested changes in some covenants between it and the trust to allow Manville to "reflect a more typical corporate ownership and financial structure."
[21144015] |A Manville spokesman wouldn't elaborate on the proposed changes.
[21144016] |But he said they are "to a large degree, housekeeping," although some may generate some disagreement.

[21144017] |Manville said the shares issued to the trust were intended to be sold, as needed, and that Manville has the right of first refusal to buy those shares.

[21145001] |Northeast Utilities raised its bid for Public Service Co. of New Hampshire, which is operating under Bankruptcy Code protection, to $2.25 billion from $1.85 billion.

[21145002] |Northeast's raised bid, which was supported by PS of New Hampshire's official shareholder committee, is a prelude to what is expected to be a round of higher bids by the other groups trying to acquire the company, the largest utility in New Hampshire.

[21145003] |The $2.25 billion value claimed by Northeast, based in Hartford, Conn., is the highest yet given to a bid.
[21145004] |Some of the three other bidding groups are expected to increase their offers tomorrow, a date set for revised offers by a bankruptcy court judge.
[21145005] |A hearing is set for Nov. 15, but participants don't expect a resolution until July 1990.

[21145006] |Under the new Northeast Utilities plan, it would pay $1.65 billion in cash to creditors and assume $100 million in pollution control bonds.
[21145007] |Secured creditors would recover both principal and interest, while unsecured creditors would receive only principal and interest accrued before PS of New Hampshire filed for Bankruptcy Code protection in January

[21145008] |The biggest change in Northeast's offer was in improvements made for equity holders who had been given short shrift previously.
[21145009] |Assuming full operation of the Seabrook nuclear power plant, which is completed but isn't yet operating, equity holders would receive up to $500 million in cash, preferred stock and new 10-year Seabrook bonds.
[21145010] |Northeast's previous offer had proposed that equity holders receive just $165 million.

[21145011] |In addition, Northeast promised the State of New Hampshire that rate increases would be limited to 5.5% annually for seven years.
[21145012] |Its previous proposal had conditioned rate limits on Seabrook operations and other contingencies.

[21145013] |Wilbur Ross, financial adviser to the equity holders said, "Given the state's strong bargaining position . . . we believe the NU plan provides the best recovery available" to PS of New Hampshire's equity holders.

[21145014] |Officials of PS of New Hampshire couldn't be reached for comment.
[21145015] |The company has filed an internal reorganization plan it valued at $2.2 billion that would require 5.5% rate increases.
[21145016] |That plan would leave existing preferred shareholders with at least a 41% stake and give common shareholders as little as 13%.

[21145017] |New England Electric System, Westborough, Mass., has proposed buying the company for $2 billion as part of a plan that would require rate increases of only 4.8% annually for seven years.
[21145018] |The state of New Hampshire has favored that plan.

[21145019] |The other bidder is United Illuminating Co., New Haven, Conn., with a bid valued at $2.2 billion and and a proposal for seven years of 5.5% rate increases.

[21146001] |The Polish rat will eat well this winter.

[21146002] |Tons of delectably rotting potatoes, barley and wheat will fill damp barns across the land as thousands of farmers turn the state's buyers away.
[21146003] |Many a piglet won't be born as a result, and many a ham will never hang in a butcher shop.
[21146004] |But with inflation raging, grain in the barn will still be a safer bet for the private farmer than money in the bank.

[21146005] |Once again, the indomitable peasant holds Poland's future in his hands.
[21146006] |Until his labor can produce a profit in this dying and distorted system, even Solidarity's sympathetic new government won't win him over.
[21146007] |In coming months, emergency food aid moving in from the West will be the one buffer between a meat-hungry public and a new political calamity.

[21146008] |Factory workers on strike knocked Poland's Communist bosses off balance last year; this year, it was the farmers who brought them down.
[21146009] |In June, farmers held onto meat, milk and grain, waiting for July's usual state-directed price rises.
[21146010] |The Communists froze prices instead.
[21146011] |The farmers ran a boycott, and meat disappeared from the shops.
[21146012] |On Aug. 1, the state tore up its controls, and food prices leaped.
[21146013] |Without buffer stocks, inflation exploded.

[21146014] |That was when the tame old Peasants' Party, desperate to live through the crisis, broke ranks with the Communists and joined with Solidarity in the East Bloc's first liberated government.

[21146015] |But by the time Solidarity took office in September, the damage was done.
[21146016] |"Shortageflation," as economists have come to call it, had gone hyper.
[21146017] |The cost of raising a pig kept bounding ahead of the return for selling one.
[21146018] |The farmers stayed angry.
[21146019] |They still are.

[21146020] |At dawn on a cool day, hundreds travel to the private market in Radzymin, a town not far from Warsaw, hauling pigs, cattle and sacks of feed that the state's official buyers can't induce them to sell.
[21146021] |Here, they are searching for a higher price.

[21146022] |In a crush of trucks and horse carts on the trodden field, Andrzej Latowski wrestles a screeching, overweight hog into the trunk of a private butcher's Polish Fiat.
[21146023] |"Of course it's better to sell private," he says, as the butcher trundles away.
[21146024] |"Why should anybody want to sell to them?"

[21146025] |The young farmer makes money on the few hogs he sells here.
[21146026] |He won't for long, because his old state sources of rye and potatoes are drying up.
[21146027] |"There's no feed," he says.
[21146028] |"You can't buy anything nowadays.
[21146029] |I don't know why."

[21146030] |Edward Chojnowski does.
[21146031] |His truck is parked across the field, in a row of grain sellers.
[21146032] |Like the others, it is loaded with rye, wheat and oats in sacks labeled "Asbestos. Made in U.S.S.R."
[21146033] |The farmer at the next truck shouts, "Wheat!
[21146034] |It's nice!
[21146035] |It won't be cheaper!
[21146036] |We sell direct!"
[21146037] |A heavy, kerchiefed woman runs a handful through her fingers, and counts him out a pile of zlotys.

[21146038] |"Country people breed pigs," says Mr. Chojnowski, leaning against the back of his truck.
[21146039] |"They can't buy feed from the state.
[21146040] |There isn't enough.
[21146041] |Some state middlemen come to buy from me.
[21146042] |I sell -- a little.
[21146043] |I am waiting.
[21146044] |I have plenty more at home."

[21146045] |On this morning, he doesn't sell much in Radzymin, either.
[21146046] |At closing time, farmers cart out most of what they carted in.
[21146047] |A private market like this just isn't big enough to absorb all that business.

[21146048] |The hulk of Stalinism, it seems, will not quickly crumble away.
[21146049] |State monopolies will keep on stifling trade, "free" prices or not, until something else replaces them.
[21146050] |Polish agriculture will need a whole private network of procurement, processing and distribution -- plus a new manufacturing industry to supply it with tractors, pesticides, fertilizers and feed.

[21146051] |The Communists spent 40 years working to ensure that no such capitalistic structures ever arose here.
[21146052] |Building them now will require undergirding from the West, and removal of political deadwood, a job that Solidarity has barely started.
[21146053] |But Polish agriculture does possess one great asset already: the private farmer.

[21146054] |"We are dealing with real entrepreneurs," says Antoni Leopold, an economist who advises Rural Solidarity, the union's countryside offshoot.
[21146055] |"There are a lot of them, and they have property."

[21146056] |Polish peasants, spurning the collectivizers, were once a source of shame to orthodox Communists.
[21146057] |Now, among Communist reformers, they are objects of envy.
[21146058] |Food is the reformer's top priority, the key to popular support.
[21146059] |As the Chinese have shown and the Soviets are learning, family farms thrive where collectives fail.
[21146060] |Ownership, it seems, is the best fertilizer.
[21146061] |The Poles have had it all along.

[21146062] |Poland's 2.7 million small private farms cover 76% of its arable land.
[21146063] |On it, a quarter of the country's 39 million people produce three-quarters of its grain, beef, eggs and milk, and nine-tenths of its fruit, vegetables and potatoes.
[21146064] |Like the Roman Catholic Church, the Polish peasant is a pillar of the nation.
[21146065] |Try as they might, the Communists could neither replace nor break him.
[21146066] |And they did try.

[21146067] |A few miles past Radzymin, a dirt road narrows to a track of sand and leads into Zalubice, a village of tumbledown farms.
[21146068] |Czeslaw Pyszkiewicz owns 30 acres in 14 scattered scraps.
[21146069] |He grows rye and potatoes for a few hens, five cows and 25 piglets.
[21146070] |In patched pants and torn shoes, he stands in his barnyard eyeing the ground with a look both helpless and sardonic.

[21146071] |"It's bad soil," he says.

[21146072] |Until 1963, it was good soil.
[21146073] |Then the state put in a reservoir to supply the area with drinking water.
[21146074] |Farmers lay down before the bulldozers.
[21146075] |Their protest was ignored.
[21146076] |The dam caused the water level to drop in Zalubice.
[21146077] |Mr Pyszkiewicz smiles and his brow furrows.
[21146078] |He expected as much.

[21146079] |In his lifetime, 47 years, the Communists brought electricity to his village and piped in drinking water from the reservoir.
[21146080] |No phones.
[21146081] |No gas.
[21146082] |"We wanted them to build a road here," he says.
[21146083] |"They started, and then abandoned it."
[21146084] |A tractor, his only mechanized equipment, stands in front of the pigsty.
[21146085] |"It's Russian.
[21146086] |Good for nothing.
[21146087] |Parts are a tragedy.
[21146088] |Even if I had a lot of money, I couldn't buy what I need."

[21146089] |The farmer can say the same for coal, cement, saw blades.
[21146090] |In Poland, only 4% of all investment goes toward making things farmers want; in the West, it is closer to 20%.
[21146091] |The few big state farms take first crack at what does get made.
[21146092] |They use 60% more fertilizer per acre, twice the high-grade feed.
[21146093] |Yet their best boast is that they produce 32% of Polish pork.

[21146094] |"I've heard from friends that state farms are subsidized," Mr. Pyszkiewicz says as his wife, Wieslawa, sets some chairs out in the sun.
[21146095] |"We have one near here.
[21146096] |There is a lot of waste.
[21146097] |A private farmer never wastes anything."

[21146098] |The state quit shoving peasants onto its subsidized farms over 30 years ago.
[21146099] |But it never did let up on the pressure.
[21146100] |Until recently, a farmer with no heir had to will the state his land to collect his pension.
[21146101] |The pension's size still depends on how much produce he sells the state.
[21146102] |His allotment of materials also did, until the state couldn't hold up its end of that bargain.
[21146103] |Yet the state alone sells seeds and machines.
[21146104] |When supplies are short, it often hands them over only in exchange for milk or grain.

[21146105] |A private farmer in Poland is free to buy and sell land, hire help, decide what to grow and how to grow it.
[21146106] |He is free to invest in chickens, and to fail for lack of chicken wire.
[21146107] |He has plenty of freedom -- but no choices.

[21146108] |"I'm on my own land," Mr. Pyszkiewicz says.
[21146109] |"I don't have to listen to what anybody tells me to do."

[21146110] |"Sometimes," says his wife, "we're happy about that."

[21146111] |By starving the peasant, the Communists have starved Poland.
[21146112] |Villages like Zalubice exist in a desert of poor schools and few doctors.
[21146113] |Farm income is 15% below the average.
[21146114] |The young leave, especially girls who won't milk cows by hand.
[21146115] |Some men stay, their best friend a bottle of vodka, but two million acres have gone fallow.
[21146116] |Without machines, good farms can't get bigger.
[21146117] |So the potato crop, once 47 million tons, is down to 35 million.
[21146118] |Meat consumption is at 1979's level, pork production at 1973's, milk output at 1960's.

[21146119] |If a food crisis undid the Communists, a food revolution will make Solidarity.
[21146120] |The potential is displayed along every road into Warsaw: row upon row of greenhouses, stretching out behind modern mansions that trumpet their owners' wealth.
[21146121] |Vegetables are abundant and full of flavor in Poland, the pickles and sauerkraut sublime, the state monopolies long broken.
[21146122] |Grain, milk and meat come next.

[21146123] |A private challenge to the monolithic tractor industry will take more time and money than Poland can spare, although a smokehouse or a local dairy can spring up fast.
[21146124] |Poland makes no machinery for a plant on that scale.
[21146125] |Solidarity wants it from the West.
[21146126] |Maria Stolzman, one of its farm experts, lays it on the line: "The World Bank will be brought in to help us destroy the old system."

[21146127] |Felix Siemienas is destroying it now.
[21146128] |He packs pork.
[21146129] |A law went on the books in January that let him smoke bacon without breeding pigs.
[21146130] |He cashed in.
[21146131] |Poland is short on enterprises, not enterprise.

[21146132] |"I pay a lot to the farmer and five times the state salary to my employees," he says.
[21146133] |He is in Warsaw to open a shop.
[21146134] |"I hire transportation, and my customers have fresh cold cuts every day.
[21146135] |I don't subsidize anyone.
[21146136] |Everyone around me lives well.
[21146137] |Yes, my prices are high.
[21146138] |If nobody buys, I bring my prices down.
[21146139] |That's the rule.
[21146140] |That's the market."

[21146141] |Mr. Siemienas is making a fortune -- $10,000 a month, he says.
[21146142] |He has bought some trendy Western clothes, and a green Mercedes with an American flag in the window.
[21146143] |But the meat-processing machines he picked up are 50 years old.
[21146144] |"I don't want expensive machines.
[21146145] |If the situation changes, I'll get stuck with them."

[21146146] |That's politics.
[21146147] |By taking power in a deal with the Peasant Party's onetime Communist stooges, Solidarity has spooked the rural entrepreneur.
[21146148] |Rural Solidarity objected, to no avail, when Solidarity leader Lech Walesa accepted the Peasants' support.
[21146149] |It objected again in September when Prime Minister Tadeusz Mazowiecki reluctantly named a Peasant Party man as his agriculture minister.

[21146150] |Both the Peasants and Rural Solidarity are forming new political parties for farmers.
[21146151] |The Peasants can make a credible case, against Solidarity, that hell-bent reform will drive millions from the land.
[21146152] |Next Spring, the two will battle in local elections.
[21146153] |But until then, and probably long afterward, the Communists' apparat of obstruction -- from the head of the dairy co-op to the village bank manager -- will stay planted in the Polish countryside.

[21146154] |"We know how to get from capitalism to socialism," Sergiusz Niciporuk is saying one afternoon.
[21146155] |"We don't know how to get from socialism to capitalism."
[21146156] |He farms 12 acres in Grabowiec, two miles from the Soviet border in one of Poland's poorest places.
[21146157] |Now he is mounting the steps of a stucco building in a nearby village, on a visit to the Communist administrator, the "naczelnik."

[21146158] |"Many people in Poland hope this government will break down," says Mr. Niciporuk, who belongs to the local council and to Rural Solidarity.
[21146159] |"That's what the naczelnik counts on.
[21146160] |He is our most dangerous enemy.
[21146161] |Every time he sees me, he gets very nervous."

[21146162] |The farmer barges into the naczelnik's office.
[21146163] |A thin man in a gray suit looks up from a newspaper.
[21146164] |Mr. Niciporuk sits.
[21146165] |Anatol Pawlowski's leg begins jiggling beneath his desk.

[21146166] |"Solidarity doesn't care for the good of this region," he says after a few pleasantries.
[21146167] |"They want to turn everything upside down in a week.
[21146168] |Mr. Niciporuk here wants 60 acres used at the moment by a state farm.
[21146169] |He can't guarantee that he can use it any better."

[21146170] |"I am ready at any moment to compete with a state farm."

[21146171] |The naczelnik averts his eyes.
[21146172] |"What have you got?
[21146173] |Not even a tractor.
[21146174] |And you want to make wicker baskets, too."

[21146175] |"I can do five things at once -- to be a businessman."

[21146176] |"Big business," Mr. Pawlowski snorts in English.
[21146177] |The farmer stands to go.
[21146178] |The naczelnik stands, too.

[21146179] |"I care very much for this post," he says.
[21146180] |"Eight years I've had it.
[21146181] |A cultural center has been built, shops.
[21146182] |Suddenly, I am not a comfortable man for Solidarity.
[21146183] |I have accomplished too much.
[21146184] |They want to do more.
[21146185] |I wish them all the best!"

[21146186] |The farmer leaves.
[21146187] |And the naczelnik shuts his door.

[21147001] |The House approved a short-term spending bill to keep the government operating through Nov. 15 and provide $2.85 billion in emergency funds to assist in the recovery from Hurricane Hugo and the California earthquake.

[21147002] |The 321-99 roll call vote reflected broad support for the disaster assistance, but the cost to the Treasury is sure to aggravate budget pressures this year and next under the Gramm-Rudman deficit reduction law.

[21147003] |By a lopsided 401-18 margin, the chamber rejected an effort to waive Gramm-Rudman for purposes of addressing the two disasters, and budget analysts estimate the increased appropriations will widen the fiscal 1990 deficit by at least $1.44 billion unless offsetting spending cuts or new revenues are found by Congress.

[21147004] |The budget impact will be greater still in fiscal 1991, and the issue forced a confrontation between the Appropriations Committee leadership and Budget Committee Chairman Leon Panetta, whose California district was at the center of the earthquake last week.
[21147005] |Going to the well of the chamber, Mr. Panetta demanded the costs be fully counted.
[21147006] |His prominent role put him in the awkward position of challenging the very committee members on whom his state will be most dependent in the months ahead.

[21147007] |"We do not come to this House asking for any handout," said the California Democrat.
[21147008] |"We do not intend to hide these costs from the American people."

[21147009] |The $2.85 billion package incorporates $500 million for low-interest disaster loans, $1 billion in highway construction funds, and $1.35 billion divided between general emergency assistance and a reserve to be available to President Bush to meet unanticipated costs from the two disasters.
[21147010] |The funds are in addition to $1.1 billion appropriated last month to assist in the recovery from Hugo, bringing the total for the two disasters to nearly $4 billion in unanticipated spending.

[21147011] |Because of the vagaries of Gramm-Rudman, the immediate impact is relatively small.
[21147012] |But the appropriations set in motion spending that adds to an already grim budget picture for fiscal 1991.
[21147013] |Within the appropriations process, the situation is even more difficult since the costs will be counted against the share of funds to be allocated to those subcommittees that recently have had the greatest difficulty in staying within the budget.

[21147014] |The underlying bill approved yesterday is required to keep the government operating past midnight tonight, and this urgency has contributed to the speed -- and, critics say, mistakes -- that have accompanied the package of disaster assistance.
[21147015] |The hastily drafted measure could hurt California by requiring it to put up more matching funds for emergency highway assistance than otherwise would be required.
[21147016] |And the state's delegation is fearful that the new funding will be counted against a separate $185 million in federal highway funds it would expect to receive under its normal allocation this year.

[21147017] |Also, the high price of San Francisco real estate puts the state at odds with federal regulations more attuned to the national average.
[21147018] |For example, disaster loans, which will go to small businesses and homeowners, offer credit as low as 4% in some cases.
[21147019] |But the San Francisco delegation finds itself asking that the cap per household be lifted to $500,000 from $100,000 to assist the hard hit but often wealthy Marina district.

[21147020] |The Senate is expected to make some modifications today, but both the White House and Congress appear most anxious to speed final approval before tonight's deadline.
[21147021] |Administration pressure discourages any effort to add to total funding, and the Senate changes are expected to be largely technical -- dealing with highway aid and lifting the ceiling on total Small Business Administration loans to $1.8 billion to accommodate the increased activity expected.

[21147022] |Yesterday's floor action came as a House-Senate conference approved a nearly $8.5 billion fiscal 1990 military construction bill, representing a 5% reduction from last year and making severe cuts from Pentagon requests for installations abroad.
[21147023] |An estimated $25.8 million is allocated to continue work in Oman.
[21147024] |But all funding is cut for the Philippines, and projects in South Korea are cut to $13.6 million, or less than a sixth of the administration's request.

[21147025] |Closer to home, the negotiators were more generous.
[21147026] |An estimated $38.9 million was set aside for military installations in the home state of North Carolina Rep. W.G. Hefner, the House chairman.
[21147027] |And $70.2 million would go to projects in Tennessee represented by his Senate counterpart and fellow Democrat, Sen. James Sasser.
[21147028] |Texas and California are traditionally powerful within the conference, but equally striking is the dominance of Alaska, Pennsylvania and West Virginia because of their power elsewhere in the appropriations process.
[21147029] |Senate Appropriations Committee Chairman Robert Byrd (D., W.Va.) even added report language listing $49.4 million in projects he wants in the budget next year.

[21147030] |No individual illustrated this mix of power more yesterday than Sen. Daniel Inouye (D., Hawaii), who chairs the Senate defense subcommittee.
[21147031] |In the final trading, the House was insistent on setting aside $500 million to carry out base closings ordered to begin in fiscal 1990.
[21147032] |But it gave ground to Mr. Inouye on a number of projects, ranging from a $11 million parking garage here, to a land transfer in Hawaii, to a provision to assist the Makwah Indian Tribe in Washington state.
[21147033] |The tribe is one of the poorest in the Pacific Northwest.

[21147034] |Mr. Inouye, who chairs the select committee on Indian Affairs, used his power to move $400,000 from the Air Force to the Bureau of Indian Affairs to assist in renovating a decommissoned base to accommodate a drug and alcohol rehabilitation center.

[21147035] |Meanwhile, House-Senate negotiators have tentatively agreed on a $3.18 billion anti-drug and anti-crime intitiative, cutting other federal spending 0.43% to pay for it.
[21147036] |A formal House-Senate conference is expected to ratify the accord later this week.

[21148001] |Mobil Corp. is preparing to slash the size of its work force in the U.S., possibly as soon as next month, say individuals familiar with the company's strategy.

[21148002] |The size of the cuts isn't known, but they'll be centered in the exploration and production division, which is responsible for locating oil reserves, drilling wells and pumping crude oil and natural gas.

[21148003] |Employees haven't yet been notified.
[21148004] |Sources said that meetings to discuss the staff reductions have been scheduled for Friday at Mobil offices in New Orleans and Denver.

[21148005] |This would be a second round of cuts by Mobil, which along with other oil producers and refiners reduced its work force by 15% to 20% during the mid-1980s as part of an industrywide shakeout.
[21148006] |Mobil's latest move could signal the beginning of further reductions by other oil companies in their domestic oil-producing operations.

[21148007] |In yesterday's third-quarter earnings report, the company alluded to a $40 million provision for restructuring costs involving U.S. exploration and production operations.
[21148008] |The report says that "the restructuring will take place over a two-year period and will principally involve the transfer and termination of employees in our U.S. operations."

[21148009] |A company spokesman, reached at his home last night, would only say that there will be a public announcement of the reduction program by the end of the week.

[21148010] |Most oil companies, including Mobil, have been reporting lower third-quarter earnings, largely as a result of lower earnings from chemicals as well as refining and marketing businesses.

[21148011] |Individuals familiar with Mobil's strategy say that Mobil is reducing its U.S. work force because of declining U.S. output.
[21148012] |Yesterday, Mobil said domestic exploration and production operations had a $16 million loss in the third quarter, while comparable foreign operations earned $234 million.

[21148013] |Industrywide, oil production in this country fell by 500,000 barrels a day to 7.7 million barrels in the first eight months of this year.
[21148014] |Daily output is expected to decline by at least another 500,000 barrels next year.

[21148015] |Some Mobil executives were dismayed that a reference to the cutbacks was included in the earnings report before workers were notified.
[21148016] |One Mobil executive said that the $40 million charge related to the action indicates "a substantial" number of people will be involved.
[21148017] |Some will likely be offered severance packages while others will be transferred to overseas operations.

[21149001] |The Justice Department is in the process of trying to gain control over a law that federal Judge David Sentelle recently called a "monster."
[21149002] |Needless to say, he was talking about RICO.
[21149003] |With its recently revised guidelines for RICO, Justice makes it clear that the law currently holds too many incentives for abuse by prosecutors.

[21149004] |The text of the "new policy" guidelines from the Criminal Division are reprinted nearby.
[21149005] |They strongly suggest that Justice's prosecutions of Drexel Burnham Lambert, Michael Milken and Princeton/Newport violated notions of fundamental fairness.
[21149006] |Justice is attempting to avoid a replay of these tactics.
[21149007] |This amounts to an extraordinary repudiation of the tenure of New York mayoral candidate and former U.S. Attorney Rudolph Giuliani, who was more inclined to gathering scalps than understanding markets.

[21149008] |The new guidelines limit the pretrial forfeitures of assets of RICOed defendants and their investors, clients, bankers and others.
[21149009] |This follows earlier new guidelines from the Tax Division prohibiting Princeton/Newport-like tax cases from masquerading as RICO cases.
[21149010] |The forfeiture memo cited "considerable criticism in the press, because of a perception that pre-trial freezing of assets is tantamount to a seizure of property without due process."
[21149011] |It told prosecutors not to seek forfeitures if there are "less intrusive" alternatives, such as bonds, and in any case not to seek forfeitures "disproportionate to the defendant's crime."

[21149012] |These changes come a tad late for Princeton/Newport, the first RICOed securities firm.
[21149013] |It was forced into liquidation before trial when investors yanked their funds after the government demanded a huge pre-trial asset forfeiture.
[21149014] |Princeton/Newport investors, including McKinsey & Co. and the Harvard endowment, made the rational decision to withdraw their money; for the firm, the liquidation was sentence first, verdict later.
[21149015] |Prosecutors wanted $23.8 million in forfeiture for alleged tax fraud of some $400,000.

[21149016] |The experience of Princeton/Newport and initiation of other RICO-forfeiture cases against legitimate businesses taught Drexel that a RICOed investment bank would be an ex-investment bank.
[21149017] |Drexel therefore agreed instead to an arrangement allowing it to plea to charges "which the company is not in a position to dispute" because of RICO.
[21149018] |Part of Drexel's plea was to cut Mr. Milken loose.
[21149019] |So after all the prosecutorial hoopla no one has established what, if anything, Drexel did wrong.

[21149020] |So two cheers for the new rules.
[21149021] |Justice has finally recognized its employees' abuses, thanks largely to the demands for reform by former U.S. attorney in Washington Joseph diGenova, who wants to salvage RICO for real criminals.

[21149022] |But prosecutorial guidelines are effective only if someone at Justice is willing and able to supervise hyperactive prosecutors.
[21149023] |Judge Sentelle, of the appeals court in Washington, made this point at a Cato Institute conference last week in a remarkable speech titled, "RICO: The Monster That Ate Jurisprudence."
[21149024] |He said ours is supposed to be "a government of laws not of men," and yet RICO defenders "tell us that we should rely on prosecutorial discretion to protect against overbreadth of RICO."
[21149025] |No prosecutorial guidelines, observed or unobserved, limit civil RICO cases by plaintiffs for damages.

[21149026] |What now for Princeton/Newport officials, Drexel and Mr. Milken?
[21149027] |Justice should review these cases to see what other prosecutorial abuses may have occurred.
[21149028] |We suspect that Justice will some day agree that only the complete repeal of RICO can guarantee an end to injustices in its name.

[21150001] |"The Famous Teddy Z," which CBS Inc. had hoped would emerge as one of the few bright spots in its otherwise lackluster prime-time schedule, isn't turning out to be the hit the network envisaged.

[21150002] |Although the half-hour situation comedy seen Mondays at 9:30 p.m. Eastern and Pacific time isn't a candidate for cancellation, it is slated for fine-tuning and by next week the network may announce "Teddy Z" is moving to 8:30 p.m. from its 9:30 time slot, replacing "The People Next Door," which became the first network show to be canceled this season.

[21150003] |"Teddy Z," which centers on a mailroom clerk-turned agent at a Hollywood talent agency, was scheduled in the coveted 9:30 p.m. slot to follow "Murphy Brown," a situation comedy about a television news magazine, starring Candice Bergen.
[21150004] |"Teddy Z" was boosted by favorable reviews and a network-wide promotional tie-in contest with K mart Corp.
[21150005] |It was promoted on cable services, including MTV, Nick at Night and VH-1, and premiered as the No. 22-rated show for the week.

[21150006] |But five weeks after the premiere, the series has floundered.
[21150007] |In figures released yesterday by A.C. Nielsen Co. "Teddy Z," produced by the television unit of Columbia Pictures Entertainment Inc., was in 37th place.
[21150008] |Worse, every week it suffers audience drop-off from "Murphy Brown" and viewership on CBS picks up again once "Teddy Z" is over and is followed by "Designing Women."

[21150009] |"There is strong indication that `Teddy Z' is not compatible with the shows it is surrounding," said John Sisk, senior vice president at J. Walter Thompson Co., a unit of WPP Group PLC.

[21150010] |Last week, "Murphy Brown" was viewed by 14.1% of the available television households, while the number dropped to 12.6% for "Teddy Z" and rose to 14.2% for "Designing Women."

[21150011] |CBS executives said the program is also slated to undergo some plot changes.
[21150012] |Creator Hugh Wilson, for example, included the lead character's Greek family in the cast, "but that is not the right focus anymore," said one CBS executive.
[21150013] |Instead, CBS hopes the show will increasingly highlight the talent agency and the business of being an agent.

[21150014] |"We're making adjustments on the show, yes, but nothing radical," said Craig Nelson, the story consultant on "Teddy Z."
[21150015] |"But we hope to keep a balance between the office and the family."
[21150016] |The opening credits are being redone, Mr. Nelson said, "to make Teddy's situation clear to viewers who have not been with us since the beginning.
[21150017] |Those viewers find the show confusing.

[21151001] |The stock market's woes spooked currency traders but prompted a quiet little party among bond investors.

[21151002] |Prices of long-term Treasury bonds moved inversely to the stock market as investors sought safety amid growing evidence the economy is weakening.
[21151003] |But the shaky economic outlook and the volatile stock market forced the dollar lower against major currencies.

[21151004] |The bond market got an early boost from the opening-hour sell-off in stocks.
[21151005] |That rout was triggered by UAL Corp.'s announcement late Monday that the proposed management-labor buy-out had collapsed.
[21151006] |The 80-point decline in the Dow Jones Industrial Average during the morning trading session touched off a flight to safety that saw investors shifting assets from stocks to Treasury bonds.
[21151007] |At its strongest, the Treasury's benchmark 30-year bond rose more than a point, or more than $10 for each $1,000 face amount.

[21151008] |As the stock market recovered some of its losses later in the day, bond prices retreated.
[21151009] |But analysts said the combination of a second consecutive decline in monthly durable-goods orders and lackluster mid-October auto sales helped prop up the Treasury market.
[21151010] |A slowing economy and the implication of lower inflation and interest rates tend to bolster bond prices.

[21151011] |On the surface, the decline in September durable goods -- only 0.1% -- didn't appear very weak.
[21151012] |But orders for non-defense capital goods, a precursor of future plant and equipment spending, were off 5.6% after falling 10.3% in August.

[21151013] |Auto makers reported that mid-October sales were running at an annual rate of about 5.8 million units, far less than the 6.6 million units analysts had expected.
[21151014] |Taken together, the auto-sales and durable-goods reports confirmed perceptions that the economy is bogging down.

[21151015] |Although analysts don't expect the Federal Reserve to ease credit policy soon, reports like those yesterday help build the case for lower rates.
[21151016] |Now bond investors are looking toward next week's report from national purchasing managers and the government's October employment report as potentially prompting the Fed to lower rates.

[21151017] |The stock market's precipitous drop frightened foreign investors, who quickly bid the dollar lower.
[21151018] |But as stock prices recovered some of the early losses, so did the U.S. currency.
[21151019] |Although dealers said investors are becoming more bearish toward the dollar in the wake of the stock market's recent troubles and as the U.S. economy weakens, the dollar ended down only modestly.

[21151020] |In major market activity: Bond prices rose.
[21151021] |The Treasury's benchmark 30-year bond gained nearly half a point, or about $5 for each $1,000 face amount.
[21151022] |The yield on the issue slipped to 7.89%.

[21151023] |The dollar retreated.
[21151024] |In late New York trading the currency was quoted at 1.8355 marks and 141.45 yen, compared with 1.8470 marks and 141.90 yen Monday.

[21152001] |"Lifestyles of the Rich and Famous" may be visiting some new venues in the near future.
[21152002] |Judge Robert ("Maximum Bob") Potter sentenced Jim Bakker to 45 years in the big house yesterday, while a Beverly Hills judge tucked away Zsa Zsa Gabor for three days, plus 120 hours of work with homeless women.
[21152003] |Miss Gabor recanted her earlier-expressed fear of jailhouse lesbians.
[21152004] |Mr. Bakker said he was guilty of sin but not fraud.
[21152005] |We can only wonder who will be the next lost soul chosen to be America's Celebrity Convict.

[21153001] |Boeing Co. said Trans European Airways ordered a dozen 737 jetliners valued at a total of about $450 million.
[21153002] |The 300 and 400 series aircraft will be powered by engines jointly produced by General Electric Co. and Snecma of France.

[21153003] |Currently, Boeing has a backlog of about $80 billion, but production has been slowed by a strike of 55,000 machinists, which entered its 22nd day today.

[21153004] |Last week, a mediator failed to rekindle talks between the company and the strikers, who have rejected a pay raise offer of 10% over three years.

[21154001] |When the good fairy assigned to Slovakia hovered over the cradle of Edita Gruberova many years ago in Bratislava, she sprinkled her with high E flats, sparkling Ds, clean trills, and coloratura ornaments silvery as magic dust.
[21154002] |Maybe she could drop by at the Metropolitan Opera and bring along what she forgot, a little charm, a few smidgins of thespian skills and a nice wig.

[21154003] |Cast as Violetta Valery in a new production of Verdi's "La Traviata," Ms. Gruberova last week did many things nicely and others not so well.
[21154004] |It isn't every day that we hear a Violetta who can sing the first act's high-flying music with all the little notes perfectly pitched and neatly stitched together.
[21154005] |Never once did she gasp for air or mop her brow.
[21154006] |She was as cool as a cucumber.
[21154007] |But as you may know, things are not going well for Violetta.
[21154008] |There are times when she must show a little emotion.
[21154009] |She has TB, after all, and a weak-kneed lover; and though a successful courtesan, she is just about overdrawn at the bank.

[21154010] |Worse, her walls move all the time -- at least in this production.
[21154011] |Just when Ms. Gruberova sat down away from her guests to cough in private, her salon began sliding around the stage; her country hideaway also has a very active set of drapes.
[21154012] |Hold on to those funny braids! you wanted to caution her as the sets started to roll around once more.
[21154013] |This is the most moving "Traviata" I've ever seen.

[21154014] |Normally, Violetta can go about her business without wondering whether she is moving as gracefully as the scenery.
[21154015] |But this is a production designed and directed by Franco Zeffirelli and paid for by Sybil Harrington, who has no need to count her pennies, unlike Violetta, down to 20 louis at the opera's end.
[21154016] |Seeing all those millions in action, I was just so relieved that Ms. Gruberova, gawky thing that she is, didn't accidentally smother herself in a drape.

[21154017] |Large and lavish, "Traviata" is another addition to the Met's growing stock of cast-proof productions mostly by Mr. Zeffirelli.
[21154018] |They have a life of their own and can be counted on to look good and perform whenever a cast isn't up to either.
[21154019] |If a strike ever hits the Met, the company can still sell tickets to his "Boheme" and "Turandot" and boom out recordings (of another era).
[21154020] |Last week's discerning audience gave a bigger hand to a greenhouse than to the tenor Neil Shicoff, who sang an aria inside it.
[21154021] |Inexplicably costumed as a rabbinical student, tottering around on lifts, Mr. Shicoff hardly seemed the fellow to catch a fancy cocotte's eye.
[21154022] |I wish he could wear lifts in his voice.
[21154023] |Not nearly in his best form, the tenor made dullish sounds along with his usual clumsy hand gestures.
[21154024] |Maybe Mr. Z. was too busy taming his set to work with his naturally ungainly Alfredo.
[21154025] |Or is it that Mr. Z. is getting a little tired of "Traviata"?
[21154026] |This is the same production already seen in Paris and Florence, and its scenic ideas echo the movie he made with Placido Domingo and Teresa Stratas.
[21154027] |Decades earlier, Maria Callas sang the Dallas staging that introduced the flashback idea.
[21154028] |In an invention that drives Verdi purists bananas, Violetta lies dying in bed during the prelude, rising deliriously when then she remembers the great parties she used to throw.
[21154029] |The entire opera is her dream.

[21154030] |Given the prelude's thematic connections with the music preceding the last act, the idea is more worn than bad, though as luck would have it, for a change there actually was a conductor in the pit whom we wanted to hear, Carlos Kleiber, trying to make memorable music while we all waited for the bed lump to stir into song.
[21154031] |Once she did so, the big-souled German maestro with the shaky nerves who so often cancels offered a limpid, flowing performance that in its unswagged and unswaggering approach was totally at odds with the staging.

[21154032] |Of heart-pounding moments there were nearly none, and whether this has to do with Mr. Kleiber or the wooden cast is hard to say.
[21154033] |In any event, Ms. Gruberova barely ventilated Violetta's anguish in her long meeting with Wolfgang Brendel, who as Germont seemed fairly desperate trying to inject an Italianate lilt into his heavy, teutonic baritone.
[21154034] |"Di Provenza" wasn't much of an advertisement for sunny, southern France.
[21154035] |Perhaps Mr. Kleiber could let him substitute one of the songs about dead children and dark nights from Mahler's "Kindertotenlieder."

[21154036] |Speaking of dark nights, the Met's next-door neighbor, the New York City Opera, has canceled its season after failing to reach a settlement with its musicians, who wanted pay parity with the the Chicago Lyric and San Francisco Opera orchestras.
[21154037] |Well, they can now go and audition there.
[21154038] |Good luck.
[21154039] |Common sense suggests that people who play for a company that charges about half what those houses do for a ticket are not in the same market.

[21154040] |The cancellation bodes poorly for a company already beset with an identity crisis exacerbated by the retirement of general director Beverly Sills and the amazing appointment of Christopher Keene as her successor after his years of feckless toiling in the pit.
[21154041] |As the Met discovered years ago following a belated December opening, it is nearly impossible to recapture subscribers once they have had time to ponder their entertainment choices.

[21154042] |I, for instance, was perfectly happy at Avery Fisher Hall the other day listening to Helmuth Rilling conduct the Messa per Rossini, a strange piece written by 13 different Italian composers to honor Rossini after his death in 1868.
[21154043] |Each of them contributed a section at the behest of Verdi, who was nearly driven to his own early grave by the troublesome arrangements.
[21154044] |For all that, the piece landed unperformed in a dusty archive after Bologna refused to supply a chorus and orchestra.

[21154045] |We know Verdi's own contribution was mighty impressive since the operatic "Libera me" was reworked for the Manzoni Requiem, of which he wrote every note himself having learned his lesson.
[21154046] |The surprising discovery of the evening at Fisher was the high standard achieved by some of his now-obscure colleagues, notably Raimondo Boucheron.
[21154047] |His melodious "Confutatis" was smoothly sung by bass Brian Matthews.
[21154048] |Also, Teodulo Mabellini's "Lux aeterna" was intriguingly scored and splendidly put across by Mr. Rilling.
[21154049] |He brought along his Stuttgart-based Gaechinger Kantorei chorus, and even better, the Czech soprano Gabriela Benackova.
[21154050] |She was in her most radiant, expressive voice.
[21154051] |Maybe she could step across the plaza to the Met -- where she has still to make her debut -- and help out her Czech compatriot by singing the slow parts of "Traviata."

[21154052] |The Tokyo International Film Festival was no match for the Cannes Film Festival in terms of prestige, but it made its mark: It awarded the largest cash prize of any film festival to young and first-time film makers.

[21154053] |At this year's event, the third since the festival got under way in 1985, Idrissa Ouedraogo of Burkina Faso won the Sakura Gold prize of $143,000 for "Yaaba" ("Old Woman").
[21154054] |By comparison, Cannes now gives $39,000 to the winner of its young director's award.

[21154055] |Says director George Miller ("Mad Max"): "I think the Tokyo festival may become known as a major attraction for young directors because of the money as well as the recognition."

[21154056] |There are drawbacks.
[21154057] |Vincent Tolentino, a correspondent for the French magazine Telerama, says of the recently ended Tokyo festival: "No one makes deals . . . and most of the films have been seen before at other festivals."

[21154058] |Belgium decided that investors who demand the delivery of their securities when they buy shares or domestic bonds will have to pay an additional 100 Belgian francs (about $2.60) for each transaction, bringing the total fee to 200 francs.
[21154059] |While no figures exist, it is thought that many small investors in Belgium store securities privately, in some cases to avoid paying high inheritance taxes.
[21154060] |The law could redound to the advantage of brokers and banks, who incur high administrative costs to deliver securities to investors.

[21154061] |Japan is considering giving aid to Hungary and Poland to support their recent political reforms, a spokesman for the Foreign Ministry said.
[21154062] |"This is the first time, if we decide to do so, for Japan to extend aid of this kind to Eastern European countries," the spokesman said.
[21154063] |He said Prime Minister Toshiki Kaifu also is studying the possibility of a visit to the two Eastern bloc nations and to Western Europe next January.

[21154064] |Drugs were a major issue in two days of talks between French President Francois Mitterrand and Spanish Prime Minister Felipe Gonzalez.
[21154065] |"I demand the utmost severity in the fight against drug traffickers," President Mitterrand said after the meeting in Valladolid, Spain.
[21154066] |He added: "Banks must open their books."
[21154067] |The leaders' talks coincided with a meeting in Madrid of anti-drug experts from the U.S., France, Italy, Spain, Peru, Bolivia and Colombia.
[21154068] |That conference, which began yesterday, was expected to cover such matters as police training and extradition agreements, Spanish officials said.

[21154069] |Three Soviet government officials -- the ministers of railroads, of foreign economic relations and of heavy-machine building -- will visit Tehran next month for talks, Iran's official news agency reported.
[21154070] |Under an agreement signed last June, the Soviets will help Iran in oil exploration and other areas in return for exports of Iranian natural gas.
[21154071] |And in Paris, Mahmoud Vaezi, Iran's vice minister of foreign affairs, began a five-day visit to discuss such matters as compensation to French enterprises for contracts broken by the Khomeini regime.

[21154072] |Toto Co., a Japanese ceramics maker, has developed a toilet that can check the user's health.
[21154073] |A Toto spokesman said the toilet not only tests blood pressure, pulse and urine, it also stores the data for up to 130 days.
[21154074] |Nippon Telegraph & Telephone Corp. and Omron Tateisi Electronics are involved with Toto's new product, which will go on the market in about two years time.
[21154075] |"It will be very expensive," the spokesman warned.
[21154076] |"The price cannot be less than $7,000."

[21154077] |Since Mexican President Carlos Salinas de Gortari took office last December, special agents have arrested more than 6,000 federal employees on charges ranging from extortion to tax evasion.

[21154078] |Hector Castaneda Jimenez, chief prosecutor at the Attorney General's Office, said that an estimated $82.8 million in government property and unpaid taxes have been recovered in the campaign to root out official corruption.

[21154079] |Mr. Castaneda's office will reportedly issue warrants during the next six months for the arrest of another 10,000 federal employees.
[21154080] |Those employees are suspected of illegally gaining an estimated $376.8 million, the prosecutor was quoted as saying by the Excelsior news service.
[21154081] |He added that federal agents hope to recover at least half that amount.

[21154082] |"The rest will probably not be recoverable either because the statute of limitations expired or because many prefer to spend additional time in jail rather than return the money," the prosecutor said.

[21154083] |The United Nations, which is distributing farm tools to returning refugees in Namibia, is rethinking a plan to hand out machetes because of the tense political climate during preparations for independence from South Africa.
[21154084] |"The decision to distribute machetes at this time, which could be used as weapons, is under review," said a U.N. spokesman. . . .
[21154085] |Sources close to the family of Pakistani Prime Minister Benazir Bhutto said she is expecting a second child, probably early next year.

[21155001] |Cray Research Inc. forecast that 1990 will be a no-growth year for its supercomputer line.

[21155002] |In what has become a series of bad-news announcements, the world's largest maker of supercomputers said that after reviewing its order prospects, "we have concluded it is prudent to plan for next year on the assumption that revenue again will be flat."

[21155003] |Cray jolted the market in July when it slashed revenue and earnings projections for this year, citing a slowing economy that has delayed orders from government as well as commercial customers.

[21155004] |The company made its 1990 projection -- an unusual event for Cray -- in announcing improved net income for the third quarter.
[21155005] |Cray said it earned $30.6 million, or $1.04 a share, up 35% from $22.6 million, or 73 cents a share, a year ago.
[21155006] |Revenue gained 45% to $210.2 million from $145.2 million.

[21155007] |For the nine months, earnings totaled $36.6 million, or $1.24 a share, down 46% from $68.1 million, or $2.19 a share, a year earlier.
[21155008] |Revenue was $454.6 million, a 6.9% gain from $425.4 million.

[21155009] |Cray made its announcement after the stock market closed.
[21155010] |In New York Stock Exchange composite trading yesterday, Cray closed down $1.125 at $34.25.

[21155011] |Cray said its order backlog at Sept. 30 was $315 million, down $25 million from June 30.
[21155012] |Marcello Gumucio, president, said the company "did well in the quarter as far as revenues and earnings are concerned, and not quite as well in terms of signing orders."

[21155013] |As for the current period, Mr. Gumucio said, "We anticipate that fourth-quarter revenue and earnings will be substantially greater than any of the preceding three quarters, but not up to the record levels of last year's fourth quarter" when Cray earned $88.5 million, or $2.80 a share.

[21155014] |He added that the company expects "strong" operating profit for the year, "but at a level significantly lower than last year."
[21155015] |He said 1989's net income could be 11% to 13% of revenue, which, assuming current expectations, would be 40% to 45% below 1988's level.
[21155016] |Last year, Cray earned $156.6 million, or $4.99 a share, on revenue of $756.3 million.

[21155017] |Next year "looks dismal," said analyst Paul Luber of Robert Baird & Co., Milwaukee.
[21155018] |Noting that Cray doesn't have a low-end supercomputer to compete with the likes of Convex Computer Corp. and International Business Machines Corp., Mr. Luber said such a machine would be necessary "to get things back on line here."
[21155019] |Cray has indicated it will decide on whether to build such a machine before year end.

[21156001] |Johnson & Johnson reported a 10% rise in third-quarter net income on a 12% sales increase-results that were driven particularly by new products including pharmaceuticals and the company's professional operations.

[21156002] |Net for the New Brunswick, N.J., maker of health-care products climbed to $265 million, or 80 cents a share, from $240 million, or 71 cents a share, in the year-earlier period.
[21156003] |Sales rose to $2.45 billion from $2.2 billion.
[21156004] |The year-ago per-share earnings are adjusted to reflect a 2-for-1 stock split last May.

[21156005] |In a statement, Ralph S. Larsen, chairman and chief executive officer, said the company was pleased with its third-quarter sales performance, "especially in light of the extremely competitive environment in domestic consumer markets and the negative impact of unfavorable exchange rates this quarter."

[21156006] |David J. Lothson, an industry analyst for PaineWebber Group Inc., said Johnson & Johnson's results slightly exceeded his expectations for the third quarter.

[21156007] |In New York Stock Exchange composite trading yesterday, Johnson & Johnson shares fell 37.5 cents to $54.625.

[21156008] |Mr. Larsen noted "substantial sales growth" for the recently introduced Acuvue disposable contact lens and Hismanal, a once-a-day antihistamine.
[21156009] |Eprex, used by dialysis patients who are anemic, and Prepulsid, a gastro-intestinal drug, did well overseas, he said.

[21156010] |Despite health-care cost controls and programs to hold down inventory, the professional division, which makes products including sutures and surgical stapling equipment, "achieved solid growth," Johnson & Johnson said.

[21156011] |But domestic consumer sales slipped 1.2% for the quarter, to $490 million from $496 million.
[21156012] |The company cited softness in the retail health and beauty aids category, "as well as the intense competition in the company's sanitary protection product line."
[21156013] |Overseas sales were stronger, principally because of a rebound in Brazil, where economic turmoil had hurt year-earlier results, Johnson & Johnson said.

[21156014] |Mr. Lothson of PaineWebber said the company's sales pace has been picking up largely because the effect of unfavorable exchange rates has been easing -- a pattern continuing this quarter.
[21156015] |He cautioned, however, that a "tough tax-rate comparison" may slow the company's earnings growth for the current quarter.
[21156016] |For last year's fourth quarter, the company's tax rate was less than 20%, he said.

[21156017] |While the third period contained no major surprises, Mr. Lothson said, the results show how sensitive the multinationals can be to developments in a single country such as Brazil.
[21156018] |He also questioned whether recent gains in that country can be sustained.

[21156019] |The following issues were recently filed with the Securities and Exchange Commission:

[21156020] |Bergen Brunswig Corp., proposed offering of liquid yield option notes, via Merrill Lynch Capital Markets.

[21156021] |Columbia Gas System Inc., shelf offering of up to $200 million of debentures.

[21156022] |Laserscope, initial offering of 1,656,870 common shares, of which 1,455,000 shares are to be sold by the company and 201,870 by holders, via Alex. Brown & Sons Inc. and Volpe, Covington & Welty.

[21156023] |TeleVideo Systems Inc., proposed offering of 1,853,735 common shares, to be sold by holders.

[21156024] |Western Gas System Inc., initial offering of 3,250,000 common shares, of which 3,040,000 shares will be sold by the company and 210,000 by a holder, via Prudential-Bache Capital Funding, Smith Barney, Harris Upham & Co. and Hanifen, Imhoff Inc.

[21157001] |Insiders have been selling shares in Dun & Bradstreet Corp., the huge credit-information concern.

[21157002] |Six top executives at the New York-based company sold shares in August and September.
[21157003] |Four of those insiders sold more than half their holdings.

[21157004] |The stock, in New York Stock Exchange composite trading yesterday, closed at $51.75, up 62.5 cents, well below the $56.13 to $60 a share the insiders received for their shares.
[21157005] |Much of the recent slide in Dun & Bradstreet's stock came late last week, after negative comments by analysts at Merrill Lynch & Co. and Goldman, Sachs & Co.

[21157006] |A company spokesman declined to comment and said that the officials who sold shares wouldn't comment.

[21157007] |One of Dun & Bradstreet's chief businesses is compiling reports that rate the credit-worthiness of millions of American companies.
[21157008] |It also owns Moody's Investors Service, which assigns credit-ratings to bonds and preferred stock; A.C. Nielsen, known for its data on television-viewing patterns, and Yellow-pages publisher Donnelley.

[21157009] |Last March, this newspaper reported on widespread allegations that the company misled many customers into purchasing more credit-data services than needed.
[21157010] |In June, the company agreed to settle for $18 million several lawsuits related to its sales practices, without admitting or denying the charges.
[21157011] |An investigation by U.S. Postal inspectors is continuing.

[21157012] |Among the insider sales, Charles Raikes, the firm's general counsel, sold 12,281 shares in August, representing 46% of his holdings in the company.
[21157013] |He received $724,579 for the shares, according to insider filings with the Securities and Exchange Commission.

[21157014] |John C. Holt, an executive vice president and Dun & Bradstreet director, sold 10,000 shares on Aug. 31 for $588,800, filings show.
[21157015] |He retains 9,232 shares.

[21157016] |William H.J. Buchanan, the firm's secretary and associate general counsel, sold 7,000 shares in two separate sales in September for $406,000.
[21157017] |The shares represented 66% of his Dun & Bradstreet holdings, according to the company.

[21157018] |The other insiders, all senior or executive vice presidents, sold between 2,520 and 6,881 shares, representing between 8% and 70% of their holdings, according to SEC filings.

[21157019] |Dun & Bradstreet's stock price began its recent spiral downward last Wednesday, when the company reported third-quarter results.
[21157020] |Net income rose to 83 cents a share from 72 cents a share the year-earlier period.
[21157021] |But analysts focused more on the drop in revenue, to $1.04 billion from $1.07 billion, reflecting in part a continuing drop in sales of the controversial credit-reporting services.

[21157022] |Last Thursday, Merrill Lynch securities analyst Peter Falco downgraded his investment rating on the firm, according to Dow Jones Professional Investors Report, citing a slowdown in the credit-reporting business.
[21157023] |He cut his rating to a short-term hold from above-average performer and reduced his 1990 earnings estimate.
[21157024] |Mr. Falco continues to rank the stock a longterm buy.
[21157025] |The stock slid $1.875 on more than four times average daily volume.

[21157026] |The stock received another blow on Friday, when Goldman Sachs analyst Eric Philo advised that investors with short-term horizons should avoid Dun & Bradstreet stock because it is unlikely to outperform the market.
[21157027] |The stock fell 75 cents.

[21157028] |Insider selling is not unusual at Dun & Bradstreet; in fact, the recent pace of selling is just about average for the company, according to figures compiled by Invest/Net, a North Miami, Fla., firm that specializes in tracking and analyzing SEC insider filings.

[21157029] |But previous sales have often been sales of shares purchased through the exercise of stock options and sold six months later, as soon as allowed, said Robert Gabele, president of Invest/Net.
[21157030] |The most recent sales don't appear to be option-related, he said.

[21157031] |TASTY PROFITS:
[21157032] |Michael A. Miles, chief executive officer of Philip Morris Cos.' Kraft General Foods unit, bought 6,000 shares of the company on Sept. 22 for $157 each.
[21157033] |The $942,000 purchase raised his holdings to 74,000 shares.

[21157034] |The stock split four-for-one on Oct. 10.
[21157035] |Mr. Miles's newly purchased shares are now worth $1,068,000, based on Philip Morris's closing price of $44.50, up 62.5 cents, in composite trading on the New York Stock Exchange yesterday.

[21157036] |A spokesman for Mr. Miles said he bought the shares because he felt they were "a good investment."
[21157037] |The executive made his purchases shortly before being named to his current chief executive officer's position; formerly he was Kraft General Foods' chief operating officer.

[21157038] |SHEDDING GLITTER:
[21157039] |Two directors of Pegasus Gold Inc., a Spokane, Wash., precious-metals mining firm, sold most of their holdings in the company Aug. 31.
[21157040] |John J. Crabb sold 4,500 shares for $11.13 each, leaving himself with a stake of 500 shares.
[21157041] |He received $50,085.
[21157042] |Peter Kutney sold 5,000 shares, all of his holdings, for $11.38 a share, or $56,900.

[21157043] |Gary Straub, corporate counsel for the company, said the directors sold for "personal financial reasons."
[21157044] |Both insiders declined to comment.

[21157045] |On Wall Street, Merrill Lynch & Co. analyst Daniel A. Roling rates the stock "neutral" and Drexel Burnham Lambert Inc. lists it as a "buy."
[21157046] |Pegasus Gold "has been on a lot of recommended lists as a junior growth company stepping into the big leagues," says Marty McNeill, metals analyst at Dominick & Dominick, a New York investment firm.
[21157047] |"It's a good company, and growing; there's nothing that would warrant that it be sold."

[21157048] |Yesterday, in composite trading on the American Stock Exchange, Pegasus closed at $10.125, up 12.5 cents.

[21158001] |Medieval philosophers used to hold the sensible belief that it was more perfect to exist than not to exist, and that to exist as a matter of necessity was most perfect of all.
[21158002] |Now, only God exists as a matter of absolute necessity; it is built into His nature.
[21158003] |But since the time of Darwin, we humans could at least claim a sort of natural necessity for the existence of our species.
[21158004] |Aren't we, after all, the inevitable culmination of that stately pageant called evolution?
[21158005] |If mutation and natural selection slowly but surely give rise to more and more advanced forms of life, then it was only a matter of eons before splendid beings endowed with reason, self-awareness and taste shimmered onto the scene.

[21158006] |Now along comes Stephen Jay Gould to dash this flattering illusion.
[21158007] |His credentials are excellent for the task.
[21158008] |Star lecturer at Harvard, author of numerous popular books on science, and scourge of the creationist lobby, Mr. Gould is perhaps the world's most eminent evolutionary theorist.
[21158009] |Yet he puts quite a twist on the old story handed down from Darwin.
[21158010] |For him, natural history is anything but a gradual, predictable march from primordial slime to human consciousness; it is a careening, chaotic affair in which the emergence of a featherless biped was a one-in-a-million shot.

[21158011] |In "Wonderful Life: The Burgess Shale and the Nature of History" (Norton, 326 pages, $19.95), Mr. Gould makes his case for "the awesome improbability of human evolution."
[21158012] |The argument turns on the discovery in 1909 of an amazing fossil quarry high in the Canadian Rockies called the Burgess Shale.
[21158013] |Here, in an area smaller than a city block, lay buried traces of countless weird creatures that had frolicked more than 500 million years ago -- creatures whose anatomical variety far exceeded what can be found in all the world's oceans today.

[21158014] |Such an embarrassment of riches was inconceivable to the man who discovered the Burgess Shale, one Charles Doolittle Walcott.
[21158015] |The received Darwinian wisdom of the day said that animals living so long ago must be simple in design, limited in scope and ancestral to contemporary species.
[21158016] |Accordingly, the hidebound traditionalist reconstructed hypothetical organisms from the Burgess fossils in such a way that they could be shoehorned into familiar categories.

[21158017] |It was not until the early 1970s that Cambridge Prof. Harry Whittington and two sharp graduate students began to publish a reinterpretation of the Burgess Shale.
[21158018] |By making clever inferences about how the squashed and distorted fossil remains corresponded to three-dimensional structures, this trio was able to piece together a series of wondrous beasties quite unlike anything currently on the planet.
[21158019] |One was so fantastic in appearance, it was dubbed Hallucigenia.

[21158020] |Would that Mr. Gould's minute descriptions of these creatures was always so colorful.
[21158021] |A good deal of the book is boring, particularly the endless allusions to high and pop culture and the frequent jokes festooning the text.
[21158022] |These turns do not provide sufficient relief from sentences like, "Most modern chelicerates have six uniramous appendages on the prosoma."

[21158023] |Interest picks up, though, when Mr. Gould gets around to discussing the meaning of the Burgess oddities for the theory of evolution.
[21158024] |Not long after the appearance of life, evidently, there was an explosive proliferation in the number of animal designs seen on the earth.
[21158025] |The vast majority of them, however, were wiped out by a succession of environmental upheavals that were too sudden and catastrophic for the normal rules of natural selection to operate.
[21158026] |Consequently, the winnowing process was like a lottery "in which each group {held} a ticket unrelated to its anatomical virtues.
[21158027] |" So much for survival of the fittest.

[21158028] |So much, too, for the notion that we humans triumphed in the Darwinian struggle by evolving big brains.
[21158029] |Our mammalian forerunners lucked out through the extraterrestrial impact that did in the dinosaurs because they were small, not smart.
[21158030] |If anyone has difficulty imagining a world in which history went merrily on without us, Mr. Gould sketches several.
[21158031] |In one, birds are the dominant carnivores; in another the seas abound with "little penises."

[21158032] |Back when the Burgess fauna were flourishing, it seems, human evolutionary hopes hung on the survival of a little worm with a backbone called Pikaia.
[21158033] |Mr. Gould finds this oddly exhilarating; like an existentialist of old, he views our contingency as "a source of both freedom and consequent moral responsibility."
[21158034] |I, by contrast, cannot help feeling that if some other curiosity from the Burgess Shale had survived instead, beings at once wiser and less boorish than Homo sapiens might have eventually gained earthly dominion.
[21158035] |But even if no conscious life had evolved here at all, the universe is a big place, and given the right conditions, sympathetic to creating some form of life.
[21158036] |Surely at some other cosmic address a Gouldoid creature would have risen out of the ooze to explain why, paleontologically speaking, "it is, indeed, a wonderful life."

[21158037] |Mr. Holt is a columnist for the Literary Review in London.

[21159001] |The Justice Department scrambled to play down the significance of its new guidelines concerning prosecutions under the federal racketeering law.

[21159002] |The guidelines were distributed to U.S. attorneys last summer but were disclosed for the first time by press reports this week.
[21159003] |They discourage prosecutors, under certain circumstances, from seeking court orders seizing the assets of racketeering defendants prior to trial.
[21159004] |But David Runkel, chief Justice Department spokesman, said the guidelines "are a codification and a clarification far more than a new direction."

[21159005] |Use of the Racketeer Influenced and Corrupt Organizations law against white-collar defendants, as opposed to alleged organized-crime figures, has come under attack from some defense lawyers and legal scholars.
[21159006] |Critics have complained that the law unfairly strips defendants of assets before a jury determines they have committed a crime and that aggressive use of the forfeiture provisions can ruin corporate defendants or force them into unfavorable plea bargains.

[21159007] |In the new guidelines, the Justice Department says that in attempting to freeze disputed assets before trial, "the government will not seek to disrupt the normal, legitimate business activities of the defendant" and "will not seek. . .to take from third parties assets legitimately transferred to them."

[21159008] |The guidelines also state, "The government's policy is not to seek the fullest forfeiture permissible under the law where that forfeiture would be disproportionate to the defendant's crime."

[21159009] |Another provision clarifies certain limits on when prosecutors may use tax-fraud charges as a basis for bringing a racketeering case.

[21159010] |Mr. Runkel declined to speculate on whether the guidelines would curb racketeering prosecutions against corporate defendants.
[21159011] |"The impact, if there is any, will be impossible to judge ahead of time because the decision whether to use {racketeering charges} is made in individual cases" by Justice Department officials in Washington, he said.

[21159012] |In a memorandum describing the guidelines, Assistant Attorney General Edward Dennis Jr. said that government efforts to freeze defendants' assets pending racketeering prosecutions "have been the subject of considerable criticism in the press."
[21159013] |But Mr. Runkel said the government isn't "backing off on these kinds of matters at all.

[21160001] |California legislators, searching for ways to pay for the $4 billion to $6 billion in damages from last week's earthquake, are laying the groundwork for a temporary increase in the state's sales tax.

[21160002] |The talk of a sales tax rise follows a rebuff from Congress on the question of how much the federal government is willing to spend to aid in California's earthquake relief efforts.
[21160003] |The state had sought as much as $4.1 billion in relief, but yesterday the House approved a more general scaled-back measure calling for $2.85 billion in aid, the bulk of which would go to California, with an unspecified amount going to regions affected by Hurricane Hugo.

[21160004] |That leaves the state roughly $2 billion to $4 billion short.
[21160005] |A sales tax increase appears to be the fastest and easiest to raise funds in a hurry.
[21160006] |According to the state department of finance, a one-penny increase in the state's six-cent per dollar sales tax could raise $3 billion.

[21160007] |Willie Brown, speaker of California's Assembly, said that Gov. George Deukmejian has agreed to schedule a special session of the legislature within two weeks.

[21160008] |California's so-called Gann limit effectively prevents the state from spending new tax money and so drastically limits its options in an emergency.

[21160009] |Both Mr. Brown, the state's most influential legislator, and Gov. Deukmejian favor a temporary sales tax increase -- should more money be needed than the state can raise from existing sources and the federal government.

[21160010] |According to a spokesman, the governor is also studying the possibility of raising state gasoline taxes.
[21160011] |Mr. Brown, meanwhile, believes "only one tax will be feasible, and it will be a one-penny sales tax increase," said Chuck Dalldorf, an aide.

[21160012] |One immediate source of money is an emergency fund set up by Gov. Deukmejian.
[21160013] |The fund has about $1 billion and is set up to handle "precisely the kind of emergency" the state faces, said Tom Beermann, the Governor's deputy press secretary.
[21160014] |But the fund's size is disputed by Mr. Brown's office, which estimates the fund holds from $630 million to $800 million.
[21160015] |Moreover, an aide to Mr. Brown said Gov. Deukmejian "has expressed a desire not to spend all the reserve on this."

[21160016] |To push through a sales tax increase, however, the state will have to suspend the Gann limit, citing an emergency.
[21160017] |And then it will be required to lower taxes by a corresponding amount during a three-year period after the temporary tax increase ends, said Cindy Katz, assistant director of the state department of finance.

[21160018] |A sales tax increase would require two-thirds approval in both houses of the state's legislature.
[21160019] |But observers expect broad support.
[21160020] |"If there's an emergency and there aren't sufficient funds from elsewhere, I think the attitude will be supportive," said Kirk West, president of the California Chamber of Commerce.

[21160021] |But others think property owners ought to pay a higher portion of the state's earthquake relief tab.
[21160022] |Since the late 1970s, California property owners have benefited from a tax rollback as a result of a state ballot initiative known as Proposition 13.

[21160023] |The state could also increase gasoline taxes; every one penny increase in the tax would yield $11 million a month.
[21160024] |But Gov. Deukmejian and others are reluctant to do anything to harm the state's chances of sharply raising gasoline taxes on a permanent basis.

[21160025] |To raise more highway funds, a measure to double the state's nine-cent a gallon tax over five years is set to appear on the state's June election ballot.
[21160026] |But some fear imposing a temporary gasoline tax increase in the meantime could undercut support among voters for the measure.

[21160027] |Not everyone is convinced the state must raise new revenue to meet its earthquake needs.
[21160028] |"It's possible, though not probable," that the state could get by with its existing resources and federal help, said Quentin Kopp, chairman of the state senate's transportation committee.

[21160029] |Separately, two men injured in last week's earthquake-triggered freeway collapse in Oakland began a legal battle against the state over whether officials adequately heeded warnings about the structure's safety.

[21160030] |The claims, which were filed with the State Board of Control but will probably end up in court, are the first arising out of the collapse of the so-called Cypress structure viaduct.

[21160031] |The men can defeat immunities that states often assert in court by showing that officials knew or should have known that design of the structure was defective and that they failed to make reasonable changes.

[21160032] |A Board of Control spokesman said the board had not seen the claim and declined to comment.

[21161001] |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:

[21161002] |Exxon Capital Corp. -- $200 million of 8 1/4% notes due Nov. 1, 1999, priced at 99.60 to yield 8.31%.
[21161003] |The notes, which are noncallable, were priced at a spread of 45 basis points above the Treasury's 10-year note.
[21161004] |Rated triple-A by both Moody's Investors Service Inc. and Standard & Poor's Corp., the issue will be sold through Salomon Brothers Inc.

[21161005] |Citicorp -- $200 million of 8 3/4% notes due Nov. 1, 1996, priced at 99.64 to yield 8.82%.
[21161006] |The noncallable issue was priced at a spread of 98 basis points above the Treasury's seven-year note.
[21161007] |Rated single-A-1 by Moody's and double-A by S&P, the issue will be sold through Salomon Brothers.

[21161008] |Boatmen's Bancshares Inc. -- $150 million of 9 1/4% subordinated notes due Nov. 1, 2001, priced at 99.821 to yield 9.275%.
[21161009] |The noncallable issue was priced at a spread of 140 basis points above the Treasury's 10-year note.
[21161010] |Rated single-A-3 by Moody's and single-A-minus by S&P, the issue will be sold through underwriters led by Morgan Stanley & Co.

[21161011] |Xerox Corp. -- $150 million of 8 3/4% notes due Nov. 1, 1995, priced at 99.555 to yield 8.85%.
[21161012] |The noncallable issue was priced to yield 105 basis points above the Treasury's fiveyear note.
[21161013] |Rated single-A-2 by Moody's and single-A-plus by S&P, the issue will be sold through underwriters led by Salomon Brothers.

[21161014] |American General Finance Corp. -- $150 million of 8.45% notes due Oct. 15, 2009, through Bear, Stearns & Co., being offered at a price of 99.661 to yield 8.50%.
[21161015] |The noncallable issue, which has a one-time put Oct. 15, 1999, was priced at a spread of 66 basis points above the Treasury's 10-year note.
[21161016] |The issue is rated single-A-1 by Moody's and single-A-plus by S&P.

[21161017] |Baltimore Gas & Electric Co. -- $100 million of first and refunding mortgage bonds, due Oct. 15, 1999, through Shearson Lehman Hutton Inc., offered at par to yield 8.40%.
[21161018] |The noncallable issue is rated double-A-3 by Moody's and double-A-minus by S&P.
[21161019] |It was priced at a spread of 55 basis points above the Treasury's 10-year note.

[21161020] |Massachusetts -- $230 million of general obligation bonds, consolidated loan of 1989, Series D, due 1990-2009, through a Goldman, Sachs & Co. group.
[21161021] |The insured bonds, rated triple-A by Moody's and S&P, were priced to yield from 6.00% in 1990 to 7.20% in 2009.

[21161022] |Broward County School District, Fla. -- $185 million of school district general obligation bonds, Series 1989, due 1991-1999 and 2008, tentatively priced by a First Boston Corp. group to yield from 6.20% in 1991 to 7.30% in 2008.
[21161023] |There are $120.7 million of 7 1/8% term bonds due 2008, priced to yield 7.30%.
[21161024] |Serial bonds are priced to yield to 7% in 1999.
[21161025] |The bonds are rated single-A-1 by Moody's and double-A-minus by S&P.

[21161026] |Culver City Redevelopment Financing Authority, Calif. -- $145 million of revenue bonds, Series 1989, tentatively priced by a Stone & Youngberg group.
[21161027] |The issue includes $100 million of insured senior lien bonds.
[21161028] |These consist of current interest bonds due 1990-2002, 2010 and 2015, and capital appreciation bonds due 2003 and 2004, tentatively priced to yield from 5.75% in 1990 to 7.14% in 2010.
[21161029] |Bonds due 2003, 2004 and 2015 aren't being formally reoffered.
[21161030] |There are also $40 million of uninsured subordinate lien bonds, due Dec. 1, 2008, and Dec. 1, 2015.
[21161031] |There are $15,015,000 of 7 1/2% bonds priced at par and due 2008 and $24,985,000 of 7.6% bonds priced at par and due 2015.
[21161032] |The insured bonds are rated triple-A by Moody's and S&P.
[21161033] |The uninsured subordinate lien bonds aren't rated, according to the lead underwriter.

[21161034] |West Virginia Parkways, Economic Development and Tourism Authority -- $143 million of parkway revenue bonds, Series 1989, with current interest bonds due 1990-2002 and 2019 and capital appreciation bonds due 2003-2008, tentatively priced by a PaineWebber Inc. group to yield from 6% in 1990 to 7.31% in 2019.
[21161035] |There are $86,525,000 of 7 1/8% bonds priced at 97 3/4 to yield 7.31% in 2019.
[21161036] |Current interest serial bonds are tentatively priced to yield to 7.05% in 2002.
[21161037] |Capital appreciation bonds are priced to yield to maturity from 7.10% in 2003 to 7.25% in 2007 and 2008.
[21161038] |The bonds are insured and rated triple-A by Moody's and S&P.

[21161039] |Connecticut Housing Finance Authority -- $132.8 million of housing mortgage revenue bonds priced by a PaineWebber Inc. group.
[21161040] |The $82.8 million of Series B bonds, which aren't subject to the alternative minimum tax, were priced at par to yield from 6.85% in 2000 to 7.20% in 2009.
[21161041] |Meanwhile, the $50 million of Series C bonds, which are suject to the alternative minimum tax, were priced at par to yield from 6.25% in 1990 to 7.10% to 2000.
[21161042] |The issue is expected to receive a double-A rating from Moody's, the underwriter said.
[21161043] |An S&P rating of double-A-plus has already been confirmed.

[21161044] |Montgomery County, Md. -- $75 million of general obligation, Series B, consolidated public improvement bonds of 1989, through a Manufacturers Hanover Trust Co. group.
[21161045] |The bonds, rated triple-A by Moody's and S&P, were priced to yield from 5.75% in 1990 to 6.90% in 2006 to 2009.

[21161046] |Federal Home Loan Mortgage Corp. -- $500 million of Remic mortgage securities being offered by Prudential-Bache Capital Funding Inc.
[21161047] |There were no details available on the pricing of the issue, Freddie Mac's Series 108.
[21161048] |The issue is backed by Freddie Mac 8 1/2% securities.

[21161049] |Hanwa Co. (Japan) -- Two-part, $800 million issue of bonds due Nov. 9, 1994, with equity-purchase warrants, indicating a 4 3/8% coupon at par.
[21161050] |European portion of $700 million via Yamaichi International Europe Ltd.
[21161051] |Asian portion of $100 million via Yamatane Securities Europe Ltd.
[21161052] |Each $5,000 bond carries one warrant, exercisable from Nov. 28, 1989, through Oct. 26, 1994, to buy shares at an expected premium of 2 1/2% to the closing share price when terms are fixed Oct. 26.

[21161053] |Japan Storage Battery Co. -- $100 million of bonds due Nov. 9, 1993, with equity-purchase warrants, indicating a 3 7/8% coupon at par via Nikko Securities Co. (Europe) Ltd.
[21161054] |Guaranteed by Mitsubishi Bank Ltd.
[21161055] |Each $5,000 bond carries one warrant, exercisable from Nov. 27, 1989, through Oct. 26, 1993, to buy shares at an expected premium of 2 1/2% to the closing share price when terms are fixed Nov. 1.

[21161056] |Sanraku Inc. (Japan) -- $100 million of bonds due Nov. 9, 1993, with equity-purchase warrants, indicating a 3 7/8% coupon at par, via Nomura International.
[21161057] |Guaranteed by Dai-Ichi Kangyo Bank Ltd.
[21161058] |Each $5,000 bond carries one warrant, exercisable from Nov. 21, 1989, through Oct. 19, 1993, to buy shares at an expected premium of 2 1/2% to the closing share price when terms are fixed Oct. 31.

[21161059] |Nippon Signal Co. (Japan) -- 80 million marks of bonds with equity-purchase warrants, indicating a 1 1/2% coupon, due Nov. 9, 1994, and priced at par, via Commerzbank.
[21161060] |Guaranteed by Fuji Bank.
[21161061] |Each 5,000 mark bond carries one warrant and one certificate for four warrants, exercisable from Dec. 18, 1989, to Oct. 26, 1994, to buy shares at an expected premium of 2 1/2% above the closing share price when prices are fixed Oct. 30.

[21161062] |Miyoshi Oil & Fat Co. (Japan) -- 120 million Swiss francs of privately placed convertible notes due Dec. 31, 1993, with a fixed 0.25% coupon at par, via Union Bank of Switzerland.
[21161063] |Put option on Dec. 31, 1991, at a fixed 107 to yield 3.43%.
[21161064] |Each 50,000 Swiss franc bond convertible from Nov. 28, 1989, to Dec. 20, 1993, at a 5% premium over closing share price Oct. 30, when terms are scheduled to be fixed.

[21161065] |Fokker N.V. (Netherlands) -- 150 million Swiss francs of convertible bonds due Nov. 15, 1997, with a fixed 4% coupon at par via Union Bank of Switzerland.
[21161066] |Each 5,000 Swiss franc bond convertible from Jan. 3, 1989, to Oct. 31, 1997.
[21161067] |Fees 2 1/8.

[21161068] |Sapporo Lion Ltd. (Japan) -- 50 million Swiss francs of privately placed convertible notes due Dec. 31, 1994, with a 0.25% coupon at par, via Yamaichi Bank (Switzerland).
[21161069] |Put option on Dec. 31, 1991, at an indicated 107 7/8 to yield 3.84%.
[21161070] |Each 50,000 Swiss franc note convertible from Dec. 1, 1989, to Dec. 16, 1994, at 5% premium over the closing share price Oct. 26, when terms are scheduled to be fixed.

[21161071] |Credit Local de France -- 100 million Swiss francs of 6%, privately placed notes due Dec. 1, 1996, priced at 100 1/2 to yield 5.91%, via Swiss Bank Corp.

[21162001] |People start their own businesses for many reasons.
[21162002] |But a chance to fill out sales-tax records is rarely one of them.

[21162003] |Red tape is the bugaboo of small business.
[21162004] |Ironically, the person who wants to run his or her own business is probably the active, results-oriented sort most likely to hate meeting the rules and record-keeping demands of federal, state and local regulators.
[21162005] |Yet every business owner has to face the mound of forms and regulations -- and often is the only one available to tackle it.

[21162006] |There is hope of change.
[21162007] |Last week, Sen. Malcolm Wallop (R., Wyo.) held hearings on a bill to strengthen an existing law designed to reduce regulatory hassles for small businesses.
[21162008] |"A great many federal regulations are meant for larger entities and don't really apply to small businesses," says Marian Jacob, a legislative aide to Sen. Wallop.
[21162009] |Other lawmakers are busy trying to revive the recently lapsed Paperwork Reduction Act, which many feel benefited small enterprises.

[21162010] |Thus, optimistic entrepreneurs await a promised land of less red tape -- just as soon as Uncle Sam gets around to arranging it.
[21162011] |Meanwhile, they tackle the mounds of paper -- and fantasize about a dream world where bulk-mail postal regulations and government inspectors are banished.

[21162012] |To find out what red tape riles entrepreneurs most, the Journal asked a completely unscientific, random sample of business owners to fantasize about the forms and regulations they would most like to get lost in the mail.

[21162013] |Some entrepreneurs say the red tape they most love to hate is red tape they would also hate to lose.
[21162014] |They concede that much of the government meddling that torments them is essential to the public good, and even to their own businesses.

[21162015] |Rules that set standards for products or govern business behavior, generally the best regarded form of red tape, "create a level playing field and keep unscrupulous competitors away," says Sidney West, president of TechDesign International Inc., a Springfield, Va., business that designs telecommunication and other products.
[21162016] |Mr. West cites the Federal Communications Commission and its standards for telecommunications equipment: "They monitor product quality and prevent junk from flooding the market."

[21162017] |Some gripes about red tape are predictable: Architects complain about a host of building regulations, auto leasing companies about car insurance rules.
[21162018] |Determining when handicapped access is required can be a nightmare for architects, says Mark Dooling, president of Dooling & Co., a Newton, Mass., architectural firm.
[21162019] |There is such a maze of federal, state and local codes that "building inspectors are backing away from interpreting them," Mr. Dooling says.

[21162020] |Taxi, leasing and other companies that maintain fleets of vehicles devote substantial resources to complying with state insurance laws and a host of agencies.
[21162021] |"It's very costly and time-consuming," says Phil Rosen, a partner in Fleet & Leasing Management Inc., a Boston car-leasing company.
[21162022] |One senior executive at his firm spends nearly 20% of his time on insurance, he says.

[21162023] |Other forms of red tape are more pervasive.
[21162024] |The most onerous, many entrepreneurs say, is the record-keeping and filing required by tax authorities.
[21162025] |Complying with environmental and workplace regulations runs a close second.
[21162026] |But gripes run the gamut.
[21162027] |Here is the red tape that irks surveyed business owners the most:

[21162028] |ENVIRONMENTAL REGULATIONS:
[21162029] |Next to medical insurance, "costs of compliance" are the fastest-growing expense at Impco Inc., a Providence, R.I., chemical company.
[21162030] |Peter Gebhard, the company's owner, says spending on regulatory paper work and the people to do it -- mostly to comply with federal, state and local environmental laws -- will rise almost 30% this year to $100,000.
[21162031] |Mr. Gebhard adds that spending on environmental red tape amounts to between 6.5% and 7.5% of Impco's total operating expenses.

[21162032] |Eastern Reproduction Corp., a Waltham, Mass., maker of thin metal precision parts, must report to five federal and state agencies as well as to local fire, police, hospital and plumbing authorities, says Robert Maguire, president.
[21162033] |One state environmental regulator returned a report because "it wasn't heavy enough, it couldn't have been correct," Mr. Maguire says.

[21162034] |WITHHOLDING RULES:
[21162035] |Employers must deposit withholding taxes exceeding $3,000 within three days after payroll -- or pay stiff penalties -- and that's a big problem for small businesses.
[21162036] |It's especially nettlesome "if you're on the road and you're the one responsible," says Eddie Brown, president of Brown Capital Management Inc., a Baltimore money-management firm.

[21162037] |EMPLOYEE MANUALS:
[21162038] |Revising employee manuals on pensions, health care and other subjects costs over $25,000 a year for Bert Giguiere, president of Professional Agricultural Management Inc., a Fresno, Calif., provider of business services to farmers.
[21162039] |An employer leaves itself open to a great deal of liability if its employee manuals don't reflect the most recent laws, he says.
[21162040] |But the ever-changing laws are usually so complicated and confusing that "you need professionals to help you; you can't do it yourself," he adds.

[21162041] |PENSION AND PROFIT-SHARING RULES:
[21162042] |Complying with these is enough to make business owners look forward to their own pension days.
[21162043] |Yearly changes in federal benefit laws force small businesses to repeatedly re-evaluate and redesign existing plans.
[21162044] |Alice Fixx, who runs her own public-relations concern in New York, says she has had to overhaul her pension and profit-sharing plans three times in the past three years.
[21162045] |"It doesn't increase benefits, but it's costly and time-consuming," Ms. Fixx says.
[21162046] |Compliance added 15% to 20% to her accounting bill last year, she says.

[21162047] |SALES TAX RECORDS:
[21162048] |Advertising agencies and other service companies are exempt from city and state sales tax in most locales -- but the exemption comes at a price of exhaustive records and rigorous reviews.
[21162049] |To justify their exempt status and avoid penalties, these businesses must show once a year that each and every transaction on which they didn't pay sales tax was a legitimate business expense.
[21162050] |"You need one person to just take care of sales tax," says Jennie Tong, executive vice president of Lee Liu & Tong Advertising Inc., New York.

[21163001] |When the Trinity Repertory Theater named Anne Bogart its artistic director last spring, the nation's theatrical cognoscenti arched a collective eyebrow.
[21163002] |Ms. Bogart, an acclaimed creator of deconstructed dramatic collages that tear into such sacred texts as Rodgers and Hammerstein's "South Pacific," is decidedly downtown.
[21163003] |Trinity Rep meanwhile is one of the nation's oldest and most respected regional theaters, still hosting an annual "A Christmas Carol."

[21163004] |How would this bastion of traditional values fare in Ms. Bogart's iconoclastic hands?
[21163005] |She held her fire with her first production at the Trinity earlier this season.
[21163006] |It was a predictable revival of her prize-winning off-Broadway anthology of Bertolt Brecht's theoretical writings, called "No Plays, No Poetry."

[21163007] |Now, with the opening of Maxim Gorky's bourgeois-bashing "Summerfolk," Ms. Bogart has laid her cards on the table.
[21163008] |Hers is a hand that will test the mettle of her audiences.
[21163009] |For Ms. Bogart, who initially studied and directed in Germany (and cites such European directors as Peter Stein, Giorgio Strehler and Ariane Mnouchkine as influences) tends to stage her productions with a Brechtian rigor -- whether the text demands it or not.
[21163010] |And Gorky, considered the father of Soviet socialist realism, did not write plays that easily lend themselves to deliberately antirealistic distancing techniques.

[21163011] |Gorky was a loyal if occasionally ambivalent proletarian writer committed to enlightening the masses with plain speaking rooted in a slightly sour version of Chekhovian humanism.
[21163012] |And "Summerfolk," penned in 1904 as a kind of sequel to Chekhov's "Cherry Orchard," is a lawn party of Russian yuppies engaged in an exhausting ideological fight to the finish between the allrightniks and the reformers.
[21163013] |Along the way there also are lots of romantic dalliances.

[21163014] |Wisely Ms. Bogart has kept Gorky's time and place intact.
[21163015] |Despite the absence of samovars (and a tendency to turn the furniture upside down), the production is rich in Russian ennui voiced by languorous folk sporting beige linen and rumpled cotton, with boaters and fishing poles aplenty.

[21163016] |But beyond this decorative nod to tradition, Ms. Bogart and company head off in a stylistic direction that all but transforms Gorky's naturalistic drama into something akin to, well, farce.
[21163017] |The director's attempt to force some Brechtian distance between her actors and their characters frequently backfires with performances that are unduly mannered.
[21163018] |Not only do the actors stand outside their characters and make it clear they are at odds with them, but they often literally stand on their heads.

[21163019] |Like Peter Sellars, Ms. Bogart manipulates her actors as if they were rag dolls, sprawling them on staircases, dangling them off tables, even hanging them from precipices while having them perform some gymnastic feats of derring-do.
[21163020] |There are moments in this "Summerfolk" when the characters populating the vast multilevel country house (which looks like a parody of Frank Lloyd Wright and is designed by Victoria Petrovich) spout philosophic bon mots with the self-conscious rat-a-tat-tat pacing of "Laugh In."
[21163021] |"Talk hurts from where it spurts," one of them says.
[21163022] |The clash of ideologies survives this treatment, but the nuance and richness of Gorky's individual characters have vanished in the scuffle.
[21163023] |As for the humor that Gorky's text provides, when repainted in such broad strokes (particularly by the lesser members of the ensemble) it looks and sounds forced.

[21163024] |Ms. Bogart does better with music than with words when she wants, as she so often does want, to express herself through Gorky's helpless play.
[21163025] |Here she has the aid of her longtime associate Jeff Helpern, whom she appointed Trinity's first-ever musical director and whom she equipped with a spanking new $60,000 sound system and recording studio.
[21163026] |For Gorky, Mr. Helpern provided an aural collage of Debussy and Rachmaninoff, which is less a score than a separate character with a distinct point of view.

[21163027] |Like Brecht, and indeed Ezra Pound, Ms. Bogart has said that her intent in such manipulative staging of the classics is simply an attempt to "make it new."
[21163028] |Indeed, during a recent post-production audience discussion, the director explained that her fondest artistic wish was to find a way to play "Somewhere Over the Rainbow" so that the song's "original beauty comes through," surmounting the cliche.
[21163029] |The danger that Ms. Bogart seems to be courting here is one of obfuscation rather than rejuvenation, a vision so at odds with the playwright's that the two points of view nullify, rather than illuminate, each other.

[21163030] |Ms. Bogart's cast is part and parcel of the problem.
[21163031] |Ed Shea and Barbara Orson never find a real reason for their love affair as the foolish, idealistic young Vass and the tirelessly humanitarian doctor Maria Lvovna.
[21163032] |Cynthia Strickland as the long-suffering Varvara is a tiresome whiner, not the inspirational counterrevolutionary Gorky intended.
[21163033] |Better to look in the corners for performances that inspire or amuse.
[21163034] |Janice Duclos, in addition to possessing one of the evening's more impressive vocal instruments, brings an unsuspected comedic touch to her role of Olga, everybody's favorite mom.
[21163035] |Marni Rice plays the maid with so much edge as to steal her two scenes.
[21163036] |But it is the Trinity Rep newcomer, Jonathan Fried (Zamislov, the paralegal) who is the actor to watch, whether he is hamming it up while conducting the chamber musicians or seducing his neighbor's wife (Becca Lish) by licking her bosom.

[21163037] |Ms. de Vries writes frequently about theater.

[21164001] |(During its centennial year, The Wall Street Journal will report events of the past century that stand as milestones of American business history.)

[21164002] |MORGAN STANLEY, THE ONCE STODGY investment house, in 1974 helped a corporate client complete a hostile takeover.
[21164003] |It was the start of a boom in unfriendly, even ungentlemanly, mergers.

[21164004] |On July 18, 1974, International Nickle of Canada -- advised by Morgan -- offered $28 a share, equal to $157 million, for ESB, a Philadelphia battery maker.
[21164005] |ESB said it was given only a three-hour advance warning on a "take it or leave it" basis from Inco, as the Toronto company is called.

[21164006] |"ESB is aware that a hostile tender offer is being made by a foreign company for all of ESB's shares," said F.J. Port, ESB's president.
[21164007] |"Hostile" thus entered the merger-acquisition lexicon.
[21164008] |Joseph Flom, of Skadden, Arps, Slote, Meagher & Flom, which became a leading legal firm in merger cases, said the case "made takeovers respectable."

[21164009] |ESB spurned Inco and within five days ESB had a "white knight" as United Aircraft -- headed by Harry Gray, a shrewdly friendly acquirer of companies -- offered $34 a share.
[21164010] |Gray was advised by Goldman Sachs and Merrill Lynch.
[21164011] |ESB directors warmly accepted, but a whirlwind bidding match ensued.
[21164012] |Within a few days in July, Inco raised its bid to $36 and United matched it.
[21164013] |On a single day Inco lifted its offer to $38 and then to $41, equal to $225.5 million.
[21164014] |United met the $38 but then withdrew.

[21164015] |ESB on July 29 accepted the Inco offer and the brief battle -- unlike the intricate and lengthy big takeovers of 1984-1989 -- was over.
[21164016] |The new gritty game became a money maker for Wall Street's once austere old-name houses.
[21164017] |Inco paid Morgan an advisory fee of about $250,000, a paltry figure by today's measures.
[21164018] |Early this year Morgan and three other investment houses each received $25 million in advisory fees from Kohlberg Kravis & Roberts in its $25 billion friendly buy-out of RJR Nabisco.

[21165001] |HomeFed Corp. said third-quarter net income slid 14% to $23.9 million, or $1.10 per fully diluted share, from $27.9 million, or $1.21 a fully diluted share, because of increased bad assets and unexpected trouble in unloading foreclosed property.

[21165002] |The decline surprised analysts and jolted HomeFed's stock, which lost 8.6% of its value, closing at $38.50 on the New York Stock Exchange, down $3.625.

[21165003] |HomeFed had been one of the handful of large West Coast thrifts that in recent quarters had counteracted interest-rate problems dogging the industry by keeping a lid on problem assets and lending heavily into the furious California housing market.
[21165004] |Analysts had been projecting fully diluted earnings in the third quarter in the range of about $1.30 a share.

[21165005] |However, HomeFed's loan originations and purchases plunged 26% in the quarter, to $1.4 billion from $1.9 billion a year earlier.
[21165006] |Meanwhile, non-performing assets rose to $593 million from $518.7 million.
[21165007] |Some $380 million of the troubled assets is repossessed real estate, a 55.6% surge from the $244.2 million of repossesed property HomeFed held a year ago.
[21165008] |HomeFed has $17.9 billion of assets.

[21165009] |HomeFed said most of the troubled assets are apartment complexes, shopping malls and other commercial real estate.
[21165010] |It said about half are in California, with the rest scattered across the country.
[21165011] |It said sales of such properties were slower than anticipated in the third quarter, but it expects sales to pick up in the rest of the year.

[21165012] |HomeFed said the slide in loan originations was more a matter of design than a sign of cooling in the California market.
[21165013] |Any such downturn in California would be grim news for West Coast thrifts, particularly the less healthy ones, which have performed poorly even with a torrid market.
[21165014] |But HomeFed said it purposely curbed loan originations in the quarter because of uncertainty over the new capital requirements and regulations that will emerge from negotiations over implementing the government's massive thrift bailout bill.
[21165015] |It said its real-estate operations earned a record $21.7 million, more than double year-earlier real estate profit of $9 million.
[21165016] |And analysts said they see no signs of an imminent swoon in California real estate, even with last week's earthquake.

[21165017] |The thrift said earnings also were nicked in the quarter by a $4 million provision for losses associated with its previously reported plan to liquidate a real-estate franchise network.
[21165018] |For the nine months, HomeFed earned $82.5 million, or $3.52 a fully diluted share, a 4.3% increase from year-earlier net income of $79.1 million, or $3.43 a fully diluted share.

[21166001] |Yields on certificates of deposit at major banks were little changed in the latest week.

[21166002] |The average yield on six-month CDs of $50,000 and less slipped to 7.96% from 8.00%, according to Banxquote Money Markets, an information service based here.
[21166003] |On one-year CDs of $50,000 and less, the average slid to 8.02% from 8.06%.
[21166004] |Both issues are among the most popular with individual investors.

[21166005] |"Because of shrinkage in the economy, rates can be expected to decline over a one-year horizon," said Norberto Mehl, chairman of Banxquote.
[21166006] |"It's unclear how much rates can fall and how soon."

[21166007] |Changes in CD yields in the week ended Tuesday were in line with blips up and down within a fairly narrow range for the last two months.
[21166008] |Interest rates generally began declining last spring after moving steadily upward for more than a year.

[21166009] |The average yield on small-denomination three-month CDs moved up two-hundredths of a percentage point in the latest week to 7.85%.
[21166010] |Long-term CDs declined just a fraction.
[21166011] |The average yield on both two-year CDs and five-year CDs was 7.98%.

[21166012] |Only CDs sold by major brokerage firms posted significant increases in average yields in the latest week, reflecting increased yields on Treasury bills sold at Monday's auction.
[21166013] |The average yield on six-month broker-sold CDs rose to 8.29% from 8.05% and on one-year CDs the average yield rose to 8.30% from 8.09%.
[21166014] |The brokerage firms, which negotiate rates with the banks and thrifts whose CDs they sell, generally feel they have to offer clients more than they can get on T-bills or from banks and thrifts directly.

[21166015] |T-bills sold at Monday's auction yielded 7.90% for six months and 7.77% for three months, up from 7.82% and 7.61%, respectively, the week before.

[21166016] |So-called jumbo CDs, typically in denominations of $90,000 and up, also usually follow T-bills and interest rate trends in general more than those aimed at small investors.
[21166017] |Some jumbos posted fractional changes in average yields this week, both up and down.
[21166018] |The average yield on threemonth jumbos rose to 8.00% from 7.96%, while the two-year average fell by the same amount to 7.89%.
[21166019] |Six-month and oneyear yields were unchanged, on average.

[21166020] |"The (CD) market is unsettled right now," said Banxquote's Mr. Mehl.
[21166021] |"It's very easily influenced by changes in the stock market and the junk bond market."

[21166022] |The small changes in averages reflect generally unchanged yields at many major banks.
[21166023] |Some, however, lowered yields significantly.
[21166024] |At Chase Manhattan Bank in New York, for example, the yield on a small denomination six-month CD fell about a quarter of a percentage point to 8.06%.
[21166025] |In California, Bank of America dropped the yield on both six-month and one-year "savings" CDs to 8.33% from 8.61%.

[21166026] |Yields on money-market deposits were unchanged at an average 6.96% for $50,000 and less and down just a hundredth of a percentage point to 7.41% for jumbo deposits.

[21167001] |Lion Nathan Ltd. agreed to buy the franchise to bottle, distribute and market Pepsi-Cola soft-drink products in Australia, the company said.

[21167002] |The New Zealand brewing and retail concern didn't disclose terms.

[21167003] |The agreement is effective Jan. 1 and is subject to approval from Australia's Foreign Investment Review Board.

[21167004] |Cadbury Schweppes Australia Ltd. has held the Australian Pepsi franchise for the past four years.
[21167005] |Lion Nathan and PepsiCola Australia, a unit of PepsiCo Inc. of the U.S., didn't say why Cadbury Schweppes will no longer hold the franchise.

[21168001] |Wang Laboratories Inc. has sold $25 million of assets and reached agreements in principle to sell an additional $187 million shortly, Richard Miller, president, said at the annual meeting.

[21168002] |He said Wang had reached an agreement with a "major financial firm" to sell for $150 million its domestic equipment lease portfolio and that of its Wang Credit Corp. subsidiary.
[21168003] |He said it also agreed to sell a portion of its European real estate unit for $37 million.

[21168004] |Mr. Miller said that Wang has already sold some $12 million of miscellaneous assets and disclosed that it had received $13 million from Compaq Computer Corp., Houston, in the previously announced sale of its Stirling, Scotland, plant.

[21168005] |Mr. Miller repeated that in the next six months he plans to sell another $200 million to $300 million of assets to repay debt and reduce interest costs at Wang, a minincomputer maker in Lowell, Mass.

[21168006] |In response to questions after the annual meeting, Mr. Miller said the company is no longer looking for an equity investor.
[21168007] |During the summer, Wang executives had said they might seek outside investment.

[21169001] |Murata Mfg. Co. said it is establishing a subsidiary in Britain to produce electric parts, including ceramic condensers.

[21169002] |The Tokyo maker of ceramic capacitors said it purchased a plant in Plymouth.
[21169003] |The company didn't disclose a purchase price or capitalization figures.
[21169004] |Murata said, however, it will invest about 1.4 billion yen ($9.9 million) in the new company.
[21169005] |Production is slated to begin in April.

[21169006] |The company, which has a European foothold, Murata Europe Management G.m.b.H. in Germany, said the latest venture is designed to meet demand for electric parts in European Community countries ahead of the creation of the unified market by the end of 1992.

[21169007] |Murata expects sales at the unit of about 1.5 billion yen in the first year.

[21170001] |Safeway Stores Inc. reported a 69% decline in profit for the fiscal third quarter, but said operating improvements were masked by unusual gains in the year-earlier period.

[21170002] |The Oakland grocery retailer, closely held since a $4.2 billion leveraged buy-out in 1986, said profit for the three months ended Sept. 9 was $7.1 million, compared with $23 million a year earlier.
[21170003] |But it said the year-earlier results included gains of $23.5 million from divestitures.

[21170004] |Sales rose 4.2% to $3.31 billion from $3.2 billion.

[21170005] |For the nine months, the company said profit fell 49% to $23.5 million from $46 million in the year-earlier quarter, which included divestiture-related gains of $50.6 million.
[21170006] |Sales increased 5.5% to $9.81 billion from $9.3 billion.

[21171001] |Benjamin Jacobson & Sons has been the New York Stock Exchange specialist firm in charge of trading stock in UAL Corp. and its predecessors since the early 1930s.

[21171002] |But the firm has never had a day like yesterday.

[21171003] |At first UAL didn't open because of an order imbalance.
[21171004] |When it did a half-hour into the session, it was priced at $150 a share, down more than $28 from Monday's close.
[21171005] |It sank further to as low as $145, but a big rally developed in the last half hour, pushing the stock back up to close at $170, down just $8.375 from Monday.
[21171006] |In the process, 4.9 million shares traded, making UAL the second most active issue on the Big Board.

[21171007] |Munching pizza when they could and yelling until their voices gave out, the two Benjamin Jacobson specialists at the Big Board's UAL trading post yesterday presided over what can only be described as a financial free-for-all.

[21171008] |"It was chaotic.
[21171009] |But we like to call it 'controlled chaos,'" said 47-year-old Robert J. Jacobson Jr., grandson of the firm's founder.
[21171010] |He manned the UAL post yesterday with Christopher Bates, 33, an energetic Long Islander who's a dead ringer for actor Nicolas Cage.

[21171011] |Who was doing all the selling?
[21171012] |"Options traders, arbitrage traders -- everyone," said Mr. Bates, cooling down with a carton of apple juice after the close yesterday.
[21171013] |Added Mr. Jacobson, "There were some pretty bad losses in the stock."

[21171014] |Big Board traders said a 200,000-share buy order at $150 a share entered by Bear, Stearns & Co., which was active in UAL stock all day, is what set off the UAL crowd in the late afternoon.
[21171015] |A subsequent rally in UAL helped the staggering stock market stage an astonishing recovery from an 80-point deficit to finish only slightly below Monday's close.

[21171016] |Both Jacobson traders, who had been hoping UAL trading would get back to normal, read the news about the unraveling of UAL takeover plans on the train into work yesterday morning.
[21171017] |The news told them it would be a while longer before UAL resumed trading like a regular airline stock after months of gyrations.
[21171018] |When Mr. Jacobson walked into the office at 7:30 a.m. EDT, he announced: "OK, buckle up."

[21171019] |Messrs. Jacobson and Bates walked on the Big Board floor at about 8:45 a.m. yesterday and immediately spotted trouble.
[21171020] |Already entered in the Big Board's computers and transmitted to their post were sell orders for 65,000 UAL shares.

[21171021] |The UAL news had already caused a selling furor in the so-called third market, in which firms buy and sell stock away from the exchange floor.
[21171022] |UAL, which closed on the Big Board Monday at $178.375 a share, traded in the third market afterward as low as $158 a share.
[21171023] |There were rumors of $148-a-share trades.

[21171024] |In the 45 minutes before the 9:30 opening bell, the Jacobson specialists kept getting sell orders, heavier than they imagined.
[21171025] |And at 9:15, they posted a $135 to $155 "first indication," or the price range in which the stock would probably open.
[21171026] |That range was quickly narrowed to $145 to $155, although traders surrounding the post were told that $148 to $150 would be the likely target.

[21171027] |When UAL finally opened a half hour late, some 400,000 shares traded at $150.
[21171028] |There was "selling pressure from everyone," said one trader.

[21171029] |This month's Friday-the-13th market plunge spurred by UAL news wasn't as bad for the Jacobson specialists as yesterday's action.
[21171030] |On that earlier day, the stock's trading was halted at a critical time so the specialists could catch their breath.
[21171031] |Not yesterday.

[21171032] |Mr. Jacobson, his gray hair flying, didn't wear out his red-white-and-blue sneakers, but he sweat so much he considered sending out for a new shirt.

[21171033] |Mr. Bates usually handles day-to-day UAL trading on his own.
[21171034] |But yesterday, the heavy trading action eventually consumed not only Messrs. Jacobson and Bates but four other Jacobson partners, all doing their specialist-firm job of tugging buyers and sellers together and adjusting prices to accommodate the market.
[21171035] |About 30 floor traders crammed near the UAL post most of the day, and probably hundreds more came and went -- a "seething mass," as one trader described it.
[21171036] |The 4.9 million-share volume flowing through the Jacobson specialist operation was about five times normal for the stock.

[21171037] |The heavy buying in the last half hour led the specialists to take special steps.

[21171038] |The Bear Stearns order that marked the late-day turnaround caused a "massive buying effort" as UAL jumped $20 a share to $170 in the last half hour, said Mr. Bates.
[21171039] |With 15 seconds of trading to go, Mr. Jacobson, with what voice he had left, announced to the trading mob: "We're going to trade one price on the bell."
[21171040] |That meant no trading would occur in the final seconds, as a way of making sure that last-second orders aren't subjected to a sudden price swing that would upset customers.

[21171041] |About 11,000 shares sold at $170 on the bell, representing about eight to 10 late orders, the specialists estimate.

[21171042] |Big Board traders praised the Jacobson specialists for getting through yesterday without a trading halt.
[21171043] |In Chicago, a UAL spokesman, "by way of policy," declined to comment on the company's stock or the specialists' performance.

[21171044] |Leaving the exchange at about 5 p.m., the Jacobson specialists made no predictions about how trading might go today.
[21171045] |Said Earl Ellis, a Jacobson partner who got involved in the UAL action, "It all starts all over again" today.

[21172001] |Britain's current account deficit dropped to #1.6 billion ($2.56 billion) in September from an adjusted #2 billion ($3.21 billion) the previous month, but the improvement comes amid increasing concern that a recession could strike the U.K. economy next year.

[21172002] |The Confederation of British Industry's latest survey shows that business executives expect a pronounced slowdown, largely because of a 16-month series of interest-rate increases that has raised banks' base lending rates to 15%.

[21172003] |"The outlook has deteriorated since the summer, with orders and employment falling and output at a standstill," said David Wigglesworth, chairman of the industry group's economic committee.
[21172004] |He also said investment by businesses is falling off.
[21172005] |Of 1,224 companies surveyed, 31% expect to cut spending on plant equipment and machinery, while only 28% plan to spend more.

[21172006] |But despite mounting recession fears, government data don't yet show the economy grinding to a halt.
[21172007] |Unemployment, for example, has continued to decline, and the September trade figures showed increases in both imports and exports.

[21172008] |As a result, Prime Minister Margaret Thatcher's government isn't currently expected to ease interest rates before next spring, if then.
[21172009] |Chancellor of the Exchequer Nigel Lawson views the high rates as his chief weapon against inflation, which was ignited by tax cuts and loose credit policies in 1986 and 1987.
[21172010] |Officials fear that any loosening this year could rekindle inflation or further weaken the pound against other major currencies.

[21172011] |Fending off attacks on his economic policies in a House of Commons debate yesterday, Mr. Lawson said inflation "remains the greatest threat to our economic well-being" and promised to take "whatever steps are needed" to choke it off.
[21172012] |The latest government figures said retail prices in September were up 7.6% from a year earlier.

[21172013] |Many economists have started predicting a mild recession next year.
[21172014] |David Owen, U.K. economist with Kleinwort Benson Group, reduced his growth forecast for 1990 to 0.7% from 1.2% and termed the risk of recession next year "quite high."
[21172015] |But he said the downturn probably won't become a "major contraction" similar to those of 1974 and 1982.

[21172016] |Still, Britain's current slump is a cause for concern here as the nation joins in the European Community's plan to create a unified market by 1992.
[21172017] |Compared with the major economies on the Continent, the U.K. faces both higher inflation and lower growth in the next several months.
[21172018] |As a result, Mr. Owen warned, investment will be more likely to flow toward the other European economies and "the U.K. will be less prepared for the single market."

[21172019] |Britain's latest trade figures contained some positive news for the economy, such as a surge in the volume of exports, which were 8.5% higher than a year earlier.
[21172020] |But while September exports rose to #8.43 billion, imports shot up to #10.37 billion.
[21172021] |The resulting #1.9 billion merchandise trade deficit was partly offset by an assumed surplus of #300 million in so-called invisible items, which include income from investments, services and official transfers.

[21172022] |Despite the narrowing of the monthly trade gap, economists expect the current account deficit for all of 1989 to swell to about #20 billion from #14.6 billion in 1988.
[21172023] |Increasingly, economists say the big deficit reflects the slipping competitive position of British industry.
[21172024] |"When the country gets wealthier, we tend to buy high-quality imports," Mr. Owen said.

[21173001] |Vickers PLC, a British aerospace, defense and automotive conglomerate, said it reached an agreed cash bid of #108.2 million ($173.3 million) for Ross Catherall Group PLC, a maker of specialty alloy and ceramics.

[21173002] |The company said it expects to receive acceptances for its offer of 253 pence ($4.05) per share representing at least 67% of Ross Catherall's issued share capital, or 12.7 million ordinary shares.

[21173003] |Vickers said its offer also includes an option to receive a redeemable loan note in lieu of cash.
[21173004] |The notes can be redeemed starting in July 1991.

[21173005] |The company said its acquisition of Ross Catherall will be covered largely by cash raised in its July disposal of Howson-Algraphy for #241.7 million.

[21174001] |If bluebloods won't pay high prices for racehorses anymore, who will?

[21174002] |Breeders are betting on the common folk.

[21174003] |The Thoroughbred Owners and Breeders Association, a Lexington, Ky.-based trade group, has launched "seminars" for "potential investors" at race tracks around the country.
[21174004] |The group, which has held half a dozen seminars so far, also is considering promotional videos and perhaps a pitch to Wall Street investment bankers.

[21174005] |"People in this business have been insulated," says Josh Pons, a horse breeder from Bel Air, Md.
[21174006] |"But the real future of this game is in a number of people owning a few horses."

[21174007] |At the Laurel race track, the breeders are romancing people like Tim Hulings, a beer packaging plant worker.
[21174008] |Right now, Mr. Hulings is waving his racing program, cheering for Karnak on the Nile, a sleek thoroughbred galloping down the home stretch.

[21174009] |Mr. Hulings gloats that he sold all his stocks a week before the market plummeted 190 points on Oct. 13, and he is using the money to help buy a 45-acre horse farm.
[21174010] |"Just imagine how exciting that would be if that's your horse," he says.

[21174011] |But experts caution that this isn't a game for anyone with a weak stomach or wallet.
[21174012] |"It's a big-risk business," warns Charles C. Mihalek, a Lexington attorney and former Kentucky state securities commissioner.
[21174013] |"You have to go into it firmly believing that it's the kind of investment where you can lose everything."

[21174014] |And many have done just that.
[21174015] |Consider Spendthrift Farm, a prominent Lexington horse farm that went public in 1983 but hit hard times and filed for bankruptcy-court protection last year.
[21174016] |A group of investors recently bought the remaining assets of Spendthrift, hoping to rebuild it.

[21174017] |Other investors have lost millions in partnerships that bought thoroughbred racehorses or stallion breeding rights.
[21174018] |One big problem has been the thoroughbred racehorse market.
[21174019] |From 1974 to 1984, prices for the best yearlings at the summer sales rose 918% to an average of $544,681.
[21174020] |Since then, prices have slumped, to an average of $395,374 this summer.
[21174021] |But that's for the best horses, with most selling for much less -- as little as $100 for some pedestrian thoroughbreds.
[21174022] |Even while they move outside their traditional tony circle, racehorse owners still try to capitalize on the elan of the sport.
[21174023] |Glossy brochures circulated at racetracks gush about the limelight of the winner's circle and high-society schmoozing.
[21174024] |One handout promises: "Pedigrees, parties, post times, parimutuels and pageantry."

[21174025] |"It's just a matter of marketing and promoting ourselves," says Headley Bell, a fifth-generation horse breeder from Lexington.

[21174026] |Maybe it's not that simple.
[21174027] |For starters, racehorse buyers have to remember the basic problem of such ventures: These beasts don't come with warranties.
[21174028] |And for every champion, there are plenty of nags.
[21174029] |Katherine Voss, a veteran trainer at the Laurel, Md., track, offers neophytes a sobering tour of a horse barn, noting that only three of about a dozen horses have won sizable purses.

[21174030] |One brown two-year-old filly was wheezing from a cold, while another had splints on its legs, keeping both animals from the racetrack.
[21174031] |"You can see the highs and lows of the business all under one roof," she tells the group.
[21174032] |"There aren't too many winners."

[21174033] |Perhaps the biggest hurdle owners face is convincing newcomers that this is a reputable business.
[21174034] |Some badly managed partnerships have burned investors, sometimes after they received advice from industry "consultants."
[21174035] |So owners have developed a "code of ethics," outlining rules for consultants and agents, and disclosure of fees and any conflicts of interest.

[21174036] |But some are skeptical of the code's effectiveness.
[21174037] |"The industry is based on individual honesty," says Cap Hershey, a Lexington horse farmer and one of the investors who bought Spendthrift.

[21174038] |Despite the drop in prices for thoroughbreds, owning one still isn't cheap.
[21174039] |At the low end, investors can spend $15,000 or more to own a racehorse in partnership with others.
[21174040] |At a yearling sale, a buyer can go solo and get a horse for a few thousand dollars.
[21174041] |But that means paying the horse's maintenance; on average, it costs $25,000 a year to raise a horse.

[21174042] |For those looking for something between a minority stake and total ownership, the owners' group is considering a special sale where established horse breeders would sell a 50% stake in horses to newcomers.

[21175001] |BUELL INDUSTRIES Inc. halved its quarterly dividend to five cents a share, payable Nov. 17 to stock of record Nov. 3.
[21175002] |The company's quarterly dividend had been 10 cents a share since April 30, 1988.
[21175003] |Buell recently said it would incur an aftertax charge of about $3.6 million in its fourth quarter ending Tuesday, in connection with the sale and discontinuance of several lines at a plant.
[21175004] |The Waterbury, Conn., maker of industrial fasteners and metal stampings has 2.3 million shares outstanding.

[21176001] |Dunkin' Donuts Inc., battling a takeover proposal by Canada's DD Acquisition Corp., said that its directors will evaluate takeover offers submitted by Nov. 10.

[21176002] |Dunkin' Donuts, based in Randolph, Mass., previously said it would explore "alternatives," including a leveraged buy-out of the company, but hadn't set a date for submission of proposals.

[21176003] |Dunkin' Donuts Chairman and Chief Executive Robert M. Rosenberg said "a sale is one alternative being considered," but he added the board hasn't decided whether to sell the doughnut franchiser.

[21176004] |DD Acquisition, jointly owned by Unicorp Canada Corp.'s Kingsbridge Capital Group unit and Cara Operations Ltd., has made a $45-a-share tender offer valued at $268 million for Dunkin' Donuts.

[21176005] |Dunkin' Donuts' announcement followed DD Acquisition's request to the Delaware Court of Chancery Monday to set a trial date for its suit against the company.
[21176006] |The trial had been postponed to allow Dunkin' Donuts to seek alternatives to DD Acquisition's offer.

[21177001] |Combustion Engineering Inc. said third-quarter net income of $22.8 million, reversing a $91.7 million year-earlier loss.

[21177002] |The Stamford, Conn., power-generation products and services company said per-share earnings were 56 cents compared with the year-ago loss of $2.39.
[21177003] |Sales fell 1.5% to $884 million from $897.2 million.

[21177004] |Strong profit in the process industries, including chemical and pulp and paper, were offset by higher interest expense and by lower earnings as the company closed out certain long-term contracts.

[21177005] |Combustion reported improved profits in its automation and control products businesses, and it narrowed its losses in its public sector and environmental segment.
[21177006] |Power generation had higher sales but lower earnings; the company cited factors including work on certain low profit-margin contracts from previous years.

[21177007] |Net in the latest quarter included a pretax gain of $22.4 million from the sale of Combustion's minority interest in Stein Industrie to GEC Alsthom N.V. of the Netherlands.
[21177008] |Last year's results reflected a gain of $28.2 million on disposition of assets and a $165 million pretax provision mainly from costs of completing certain waste-to-energy and other power plants.

[21178001] |Claude Bebear, chairman and chief executive officer, of Axa-Midi Assurances, pledged to retain employees and management of Farmers Group Inc., including Leo E. Denlea Jr., chairman and chief executive officer, if Axa succeeds in acquiring Farmers.

[21178002] |Mr. Bebear added that the French insurer would keep Farmers' headquarters in Los Angeles and "will not send French people to run the company."
[21178003] |Axa would also maintain Farmers' relationships with the insurance exchanges that it manages.

[21178004] |Mr. Bebear made his remarks at a breakfast meeting with reporters here yesterday as part of a tour in which he is trying to rally support in the U.S. for the proposed acquisition.
[21178005] |The bid is part of Sir James Goldsmith's unfriendly takeover attempt for B.A.T Industries PLC, the British tobacco, retailing, paper and financial-services giant that acquired Farmers last year for $5.2 billion.
[21178006] |Axa has agreed to acquire Farmers from Sir James's investment vehicle, Hoylake Investments Ltd., for $4.5 billion plus a $1 billion investment in Hoylake.

[21178007] |Any acquisition of Farmers needs the approval of insurance commissioners in the nine states where Farmers operates, and Mr. Bebear's trip will take him to Idaho, Arizona and New York after his stay here; he will meet with insurance regulators, legislators, industry excutives and the press.

[21178008] |Hearings on Axa's acquisition application have been set for Nov. 13 in Idaho; Nov. 20 in Illinois; Nov. 24 and Dec. 4 in Arizona; Dec. 11 in Washington state; and Jan. 8 in Oregon.
[21178009] |Hearings haven't yet been set in Texas, Ohio and Kansas.
[21178010] |California's insurance commissioner doesn't hold hearings on acquisition applications.

[21178011] |Although Axa has been rebuffed by Farmers and hasn't had any meetings with management, Mr. Bebear nonetheless appears to be trying to woo the company's executives with promises of autonomy and new-found authority under Axa.
[21178012] |He said Mr. Denlea would be a member of the top management team of the Axa-Midi group of companies, and would "help define policies and strategies of the group."

[21178013] |Farmers was quick yesterday to point out the many negative aspects it sees in having Axa as its parent.
[21178014] |For one, Axa plans to do away with certain tax credits that have resulted in more than $600 million paid to the Farmers exchanges during the past few years to offset underwriting losses.

[21178015] |Those credits result because of taxes that Farmers, as the management company, has paid, and have "proved to be very important for the exchanges," a Farmers spokesman said.
[21178016] |Mr. Bebear contended that the tax cost to the exchanges under the revised structure would be about $8 million a year, which he described as "peanuts.

[21179001] |Honeywell Inc., Minneapolis, said it completed its previously announced sale of 16% of the shares outstanding in its Japanese joint venture, Yamatake-Honeywell, for $280 million.

[21179002] |The stake was acquired by a group of 10 Japanese financial institutions and industrial corporations, primarily insurance companies, Honeywell said.

[21179003] |Proceeds will be used to repurchase as many as 10 million shares of Honeywell stock, as previously announced.

[21179004] |Honeywell said a second sale of Yamatake-Honeywell is still being negotiated.
[21179005] |The company, which now holds a 34% stake in the venture, has indicated that it intends to retain at least a 20% stake long term.
[21179006] |A 20% stake would allow Honeywell to include Yamatake earnings in its results.

[21179007] |A company spokesman said the gain on the sale couldn't be estimated until the "tax treatment has been determined.

[21180001] |OPPENHEIMER CAPITAL LIMITED PARTNERSHIP increased the quarterly distribution to 40 cents a limited partnership unit from 36.25 cents.
[21180002] |The distribution represents available cash flow from the partnership between Aug. 1 and Oct. 31.
[21180003] |It is payable Nov. 30 to units of record Oct. 31.
[21180004] |The money manager is controlled 67.7% by its top officers and top officers of Oppenheimer & Co., a securities firm.
[21180005] |Both firms are in New York.
[21180006] |Oppenheimer Capital has about 7.9 million limited partnership units outstanding.
[21180007] |In New York Stock Exchange composite trading yesterday, the units closed at $15.125, up 12.5 cents.

[21181001] |Bank of Montreal said it added 850 million Canadian dollars (US$725.8 million) to its reserves against losses on Third World loans, bringing the total it has set aside this year to C$1 billion.

[21181002] |The bank said the C$1 billion in reserves will result in a charge of C$595 million against earnings but said it still expects to report a profit for the year ending Tuesday.
[21181003] |The bank reported net income of C$389 million for the nine months ended July 31.
[21181004] |The bank said the increase in loan-loss provisions won't affect the payment of dividends.

[21181005] |The bank said reserves now amount to 61% of its total less-developed-country exposure.
[21181006] |Excluding Mexico, reserves equal 95% of LDC exposure.

[21181007] |In Toronto Stock Exchange trading, Bank of Montreal closed at C$33.25, up 87.5 Canadian cents.

[21182001] |Knight-Ridder Inc. said third-quarter earnings jumped 18%, partly because of the sale of two of its media properties.

[21182002] |The media concern said net income rose to $37.8 million, or 72 cents a share, from $32 million, or 57 cents a share, in the year-earlier period.
[21182003] |The latest results include a gain of $4.2 million, or eight cents a share, on the sale of television stations in Oklahoma City and Flint, Mich.

[21182004] |Revenue increased 7.5% to $540.9 million from $503.1 million.

[21182005] |Robert F. Singleton, Knight-Ridder's chief financial officer, said the company was "pleased" with its overall performance, despite only single-digit growth in newspaper revenue.
[21182006] |That division's revenue rose 2.3% to $472.5 million from $461.9 million in the year-ago period.
[21182007] |Gains in advertising revenue, however, resulted in operating profit of $78.4 million -- up 20% from $65.6 million.

[21182008] |In New York Stock Exchange composite trading, Knight Ridder closed at $51.50 a share, down 12.5 cents.

[21183001] |ALBERTA ENERGY Co., Calgary, said it filed a preliminary prospectus for an offering of common shares.
[21183002] |The natural resources development concern said proceeds will be used to repay long-term debt, which stood at 598 million Canadian dollars (US$510.6 million) at the end of 1988.
[21183003] |The company plans to raise between C$75 million and C$100 million from the offering, according to a spokeswoman at Richardson Greenshields of Canada Ltd., lead underwriter.
[21183004] |The shares will be priced in early November, she said.

[21184001] |General Electric Co. executives and lawyers provided "misleading and false" information to the Pentagon in 1985 in an effort to cover up "longstanding fraudulent" billing practices, federal prosecutors alleged in legal briefs.

[21184002] |The government's startling allegations, filed only days before the scheduled start of a criminal overcharge trial against GE in Philadelphia federal district court, challenge the motives and veracity of the nation's third-largest defense contractor.

[21184003] |In a strongly worded response summarizing a filing made in the same court yesterday, GE asserted that "prosecutors have misstated the testimony of witnesses, distorted documents and ignored important facts."
[21184004] |The company attacked the government's allegations as "reckless and baseless mudslinging," and said its management "promptly and accurately reported" to the Pentagon all relevant information about billing practices.

[21184005] |The case strikes at the corporate image of GE, which provides the military with everything from jet engines and electronic warfare equipment to highly classified design work on the Strategic Defense Initiative, and could cause a loss of future defense contracts if Pentagon and Justice Department officials take a tough stance.

[21184006] |The company has been considered an industry leader in advocating cooperation and voluntary disclosures of improper or inflated billing practices.
[21184007] |But the government now claims that a group of company managers and lawyers engaged in an elaborate strategy over five years to obscure from federal authorities the extent and details of "widespread" fraudulent billing practices.

[21184008] |The problems were uncovered during a series of internal investigations of the company's Space Systems division, which has been the focus of two separate overcharge prosecutions by the government since 1985.
[21184009] |The dispute stems from pretrial maneuvering in the pending court case, in which prosecutors have been demanding access to a host of internal company memos, reports and documents.
[21184010] |Last November, a federal grand jury indicted GE on charges of fraud and false claims in connection with an alleged scheme to defraud the Army of $21 million on a logistics computer contract.

[21184011] |The company, for its part, maintains that many of the disputed documents are privileged attorney-client communications that shouldn't be turned over to prosecutors.
[21184012] |A hearing is scheduled on the issue today.

[21184013] |The government's 136-page filing covers events leading up to the current case and an earlier indictment in March 1985, when GE was accused of defrauding the Pentagon by illegally claiming cost overruns on Minuteman missile contracts.
[21184014] |GE pleaded guilty and paid a fine of more than $1 million in the Minuteman case, which involved some of the same individuals and operations that are at the center of the dispute in the Philadelphia court.

[21184015] |In order to show that all of its units had corrected billing problems and therefore should become eligible again for new contracts, prosecutors contend that "high-level GE executives" and company lawyers provided "misleading statements" to then-Air Force Secretary Verne Orr and other Pentagon officials during a series of meetings in 1985.

[21184016] |Overall, the government contends that GE's disclosure efforts largely were intended to "curry favor" with Pentagon officials without detailing the extent of the management lapses and allegedly pervasive billing irregularities uncovered by company investigations.

[21184017] |Prosecutors depict a company that allegedly sat on damaging evidence of overcharges from 1983 to 1985, despite warnings from an internal auditor.
[21184018] |When GE finally disclosed the problems, prosecutors contend that Mr. Orr "was erroneously informed that the {suspected} practices had only just been discovered" by GE management.

[21184019] |In its brief, the government asserted that it needs the internal GE documents to rebut anticipated efforts by GE during the trial to demonstrate "its good corporate character."

[21184020] |GE, which was surprised by the last-minute subpoena for more than 100 boxes and file cabinets of documents, countered that senior GE managers didn't find out about questionable billing practices until 1985, and that the information was passed on quickly to Mr. Orr at his first meeting with company representatives.
[21184021] |Subsequent meetings, initiated after the company and two of its units were briefly suspended from federal contracts, were held to familiarize Mr. Orr with the company's self-policing procedures and to disclose additional information, according to GE.

[21184022] |GE's filing contends that the billing practices at the heart of the current controversy involved technical disputes rather than criminal activity.

[21184023] |The company's conduct "does not even raise a question of wrongful corporate intent, ratification or cover-up," GE's brief asserts.
[21184024] |"On the contrary, it shows a corporation reacting swiftly and aggressively to very difficult issues in largely uncharted waters."

[21184025] |Mr. Orr couldn't be reached for comment yesterday.

[21185001] |Applied Solar Energy Corp. of City of Industry, Calif., said it and its majority shareholder, American Cyanamid Co., signed a non-binding letter of intent for the acquisition of Applied Solar by McDonnell Douglas Corp. for about $38 million.

[21185002] |The proposed acquisition provides for a cash payment of $10 a share at closing and a contingent payment of as much as 80 cents a share placed in escrow.
[21185003] |Details of the escrow agreement haven't been completed, the companies said.
[21185004] |There are 3.5 million shares of Applied Solar, of which American Cyanamid owns 2.7 million.
[21185005] |American Cyanamid is a Wayne, N.J., chemicals, drugs and fertilizer concern.

[21185006] |Completion of the acquisition is subject to execution of a definitive agreement, approval by all three companies' boards and the approval of Applied Solar's shareholders.
[21185007] |An Applied Solar spokesman said completion is expected at the end of the year or early next year.

[21185008] |A spokeswoman for the St. Louis aerospace and defense concern said it wanted the acquistion because Applied Solar is involved in solar cells and solid-state laser components, and this fits with McDonnell's business of laser applications for military space.

[21186001] |Trading in Cineplex Odeon Corp. shares was halted on the New York and Toronto stock exchanges late yesterday afternoon at the company's request, Toronto Stock Exchange officials said.

[21186002] |Brian Hemming, a spokesman for the company's committee of independent directors, established in May to solicit and evaluate offers for the company, said it was expected to make an announcement early this morning.
[21186003] |But Mr. Hemming said he wasn't aware of the nature of the talks under way between committee members and their advisers.

[21186004] |Cineplex traded on the New York Stock Exchange at $11.25 a share, up $1.125, before trading was halted.

[21186005] |Analysts have speculated in recent days that the value of offers received by the committee fell well short of what they had hoped, or even that the company's chairman, president and chief executive officer, Garth Drabinsky, is the only bidder for the company as a whole.
[21186006] |The current effort to auction off the company was triggered by a dispute between Mr. Drabinsky and the Toronto-based movie chain's major shareholder, MCA Inc.

[21187001] |London share prices closed sharply lower Tuesday on the back of Wall Street's steep drop and renewed fears over U.K. economic fundamentals.
[21187002] |Tokyo's winning streak came to an end, and stocks fell in Frankfurt and across Europe as well.

[21187003] |London's Financial Times 100-share index shed 40.4 points to finish at 2149.3.
[21187004] |At London's close, the Dow Jones Industrial Average was 51.23 points lower at 2611.68.

[21187005] |Dealers said the initial pressure came from mildly disappointing U.K. trade figures for September and a worrisome report by the Confederation of British Industry that a decline in orders for manufactured goods is depressing both business optimism and investment plans for the coming year.

[21187006] |The trade and CBI reports refocused attention on high interest rates and corporate profitability and helped rekindle underlying concerns over prospects for a recession in the U.K., dealers said.

[21187007] |The 30-share index fell 33.3 points to 1739.3.
[21187008] |Volume was a modest 405.4 million shares traded, but better than the year's lowest turnover of 276.8 million Monday.

[21187009] |Market watchers also noted an absence of institutional interest later in the session helped pave the way for broader declines when Wall Street opened weaker.

[21187010] |They added that market-makers were knocking share prices down in midafternoon in a bid to attract some interest, but the action largely helped open the way for London's late declines.

[21187011] |Insurance stocks provided some early support to the market, partly on favorable brokerage recommendatons and talk of continental European interest in British life and composite insurers.

[21187012] |British life insurer London & General, which firmed 2 pence to 356 pence ($5.70), and composite insurer Royal Insurance, which finished 13 lower at 475, were featured in the talk.
[21187013] |On the life insurance side, Pearl Group finished 5 lower at 640, and Sun Life dropped 15 to #11.53.

[21187014] |Jaguar finished 4 lower at 694.
[21187015] |Dealers said the market didn't react substantially to Ford Motor Co.'s disclosure to the U.S. Securities and Exchange Commission that it will seek 100% of Jaguar's shares outstanding when U.K. government share regulations are lifted at the end of next year.

[21187016] |Tokyo stocks closed easier, posting their first loss in six trading days, partly because of programmed index-linked selling by trust investment funds in the afternoon session.

[21187017] |The Nikkei index fell 58.97 points to 35526.55.
[21187018] |The index gained 99.14 points Monday.

[21187019] |In early trading in Tokyo Wednesday, the Nikkei index rose 17.92 points to 35544.47.

[21187020] |On Tuesday, the Tokyo stock price index of all first section issues was down 6.31 at 2681.22.
[21187021] |First section volume was estimated at 900 million shares, up from 605 million Monday.

[21187022] |Observers said the market again failed to find a trading focus, discouraging much participation by investors.

[21187023] |The market, however, is expected to remain stable and expectations for future gains are high, traders said.
[21187024] |Such sentiment is being supported by word that a large amount of cash from investment trust funds is scheduled to enter the market later this week and in early November.

[21187025] |The expected amount is said to be 700 billion yen ($4.93 billion) to 1.05 trillion yen -- the second largest amount this year in a given period, following the record high set at the end of July, according to market observers.

[21187026] |In addition to a large amount of investment trust fund cash, analysts generally see the market environment improving compared with the past couple of weeks.

[21187027] |Toshiyuki Nishimura, an analyst at Yamaichi Securities, said, "The market sentiment is bullish, simply because there are few bad factors."

[21187028] |Buying activity Tuesday centered on a wide range of midcapitalization, domestic demand-related shares whose prices range from 1,000 to 2,000 yen.
[21187029] |Investors expect these shares will be targets of investment trust funds, which often buy small amounts spread across a wide range of issues.

[21187030] |On the other hand, high-priced shares such as Pioneer Electronic and Sony failed to spark investor interest because these issues are unlikely to be bought by investment trust funds, observers said.

[21187031] |Tuesday's notable losers were highpriced shares such as Pioneer, which shed 210 yen to 5,900 yen.
[21187032] |Sony was down 130 to 8,590.
[21187033] |TDK fell 120 to 5,960, Fuji Photo Film declined 160 to 4,830, and Fanuc dropped 160 to 7,440.

[21187034] |Share prices on the Frankfurt stock exchange closed sharply lower in thin dealings as worried investors remained idle as the result of two potentially destabilizing domestic developments.
[21187035] |The DAX index fell 15.85 to end at 1507.37.

[21187036] |Cutting against the downward trend was Continental, which jumped 4 marks to 346 marks ($187) in heavy trading on rumors that the tire maker is about to be taken over.
[21187037] |It jumped 7.5 Monday.

[21187038] |Traders said the market was exceptionally thin, as small investors remain on the sidelines.
[21187039] |Market participants say investors are not only licking their wounds following the turbulence last week, but they have also been made nervous by two events in West Germany.

[21187040] |On Sunday, the governing Christian Democratic Union suffered a series of setbacks, the extent of which became fully known only late Monday, in municipal elections in Baden-Wuerttemberg.
[21187041] |Traders say investors are worried that the CDU won't be able to hold office in federal elections at the end of 1990.

[21187042] |And statements by the chairman of the IG Metall labor union, Franz Steinkuehler, also cast a cloud over trading, dealers said.
[21187043] |Mr. Steinkuehler said at a convention in West Berlin that the union has to prepare for "a big fight" to achieve its main goal of a 35-hour workweek, down from current 37-hour workweek.

[21187044] |The decline in prices cut broadly through the blue-chip issues, as Siemens tumbled 7.5 to 544, Deutsche Bank plunged 7 to 657, and the auto makers fell sharply as well.
[21187045] |Daimler-Benz dropped 12.5 to 710.5, Bayerische Motoren Werke dropped 10.5 to 543.5, and Volkswagen lost 7.1.

[21187046] |Elsewhere, share prices closed lower in Zurich, Amsterdam, Milan and Stockholm.
[21187047] |Uneasiness about Wall Street was cited in several markets.

[21187048] |Prices closed lower in Sydney, Singapore and Wellington, were mixed in Hong Kong and higher in Taipei, Manila, Paris, Brussels and Seoul.

[21187049] |Here are price trends on the world's major stock markets, as calculated by Morgan Stanley Capital International Perspective, Geneva.
[21187050] |To make them directly comparable, each index is based on the close of 1969 equaling 100.
[21187051] |The percentage change is since year-end.

[21188001] |Directors of Bergen Bank and Den Norske Creditbank, two of Norway's leading banks, announced they had agreed to the formal merger of the banks.

[21188002] |The merger would create Scandinavia's seventh largest bank, with combined assets of 210 billion Norwegian kroner ($30.3 billion).

[21188003] |The banks said an application for a concession to merge into one entity to be called Den Norske Bank AS was sent Monday to the Finance Ministry.

[21188004] |The two boards said in a joint statement that the proposed merger agreement was considered in separate board meetings in Oslo Monday.

[21188005] |They said the agreement will be submitted to their respective supervisory boards next Wednesday.
[21188006] |Extraordinary general meetings, to be held Nov. 28, will decide the share exchange ratio.

[21188007] |The merger requires the approval of Norwegian authorities.

[21189001] |Savings and loans reject blacks for mortgage loans twice as often as they reject whites, the Office of Thrift Supervision said.

[21189002] |But that doesn't necessarily mean thrifts are discriminating against blacks, the agency said.
[21189003] |The office, an arm of the Treasury, said it doesn't have data on the financial position of applicants and thus can't determine why blacks are rejected more often.

[21189004] |Nevertheless, on Capitol Hill, where the information was released yesterday at a Senate banking subcommittee hearing, lawmakers said they are worried that financial institutions are routinely discriminating against minorities.
[21189005] |They asked regulators to suggest new ways to force banks and thrifts to comply with anti-discrimination laws.

[21189006] |Sen. Alan Dixon (D, Ill.), chairman of the subcommittee on consumer and regulatory affairs, said, "I'm not a statistician.
[21189007] |But when blacks are getting their loan applications rejected twice as often as whites -- and in some cities, it is three and four times as often -- I conclude that discrimination is part of the problem."

[21189008] |James Grohl, a spokesman for the U.S. League of Savings Institutions, said, "The data is a red flag, but lacking the financial data you can't make a case that discrimination is widespread."
[21189009] |The trade group official added: "Certainly the federal government should take a hard look at it."

[21189010] |Sen. Dixon held the hearing to follow up on a provision in the savings and loan bailout bill that required regulators to report on evidence of discimination in mortgage lending.
[21189011] |The legislation also requires broad new disclosures of the race, sex and income level of borrowers, but that information won't be gathered in new studies for several months at least.

[21189012] |The Federal Reserve said its studies in recent years, which adjust for income differences and other variables, showed that blacks received fewer home mortgages from banks and thrifts than whites.
[21189013] |But John LaWare, a Fed governor, told the subcommittee the evidence is mixed and that the Fed's believes the vast majority of banks aren't discriminating.
[21189014] |For instance, he noted, the Fed studies have shown that blacks receive more home improvement loans than whites.

[21189015] |Several lawmakers were angered that the bank and thrift regulators generally said they have been too busy handling the record number of bank and thrift failures in the past few years to put much energy into investigating possible discrimination.
[21189016] |"We would be the first to admit that we have not devoted the necessary amount of emphasis over the past several years" to developing examinations for discrimination, said Jonathan Fiechter, a top official of the Office of Thrift Supervision.

[21189017] |"If we've got folks out there who are being turned away in the mortgage market improperly and unfairly," said Sen. Donald Riegle (D., Mich.), chairman of the banking committee, "then that is a matter that needs remedy now, not six months from now, or six years from now, or 26 years from now."

[21189018] |Officials of the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency said they have punished only a few banks for violations of anti-discrimination laws.
[21189019] |The FDIC said it has issued five citations to banks over the past three years for discriminatory practices.

[21189020] |The comptroller's office said it found no indications of illegal discrimination in 3,437 examinations of banks since April 1987.
[21189021] |The comptroller's office also said that of 37,000 complaints it received since January 1987, only 16 alleged racial discrimination in real estate lending.
[21189022] |The agency investigated the complaints but no violations were cited.

[21189023] |Thrift regulators didn't give any figures on their enforcement actions.

[21189024] |Mr. Fiechter said that among the possibilities being considered by regulators to fight discrimination is the use of "testers" -- government investigators who would pose as home buyers.
[21189025] |The Department of Housing and Urban Development has used testers to investigate discrimination in rental housing.
[21189026] |Using testers could be controversial with financial institutions, but Mr. Grohl said the U.S. League of Savings Institutions hadn't yet taken any position on the matter.

[21190001] |Time Warner Inc. is considering a legal challenge to Tele-Communications Inc.'s plan to buy half of Showtime Networks Inc., a move that could lead to all-out war between the cable industry's two most powerful players.

[21190002] |Time is also fighting the transaction on other fronts, by attempting to discourage other cable operators from joining Tele-Communications as investors in Showtime, cable-TV industry executives say.
[21190003] |Time officials declined to comment.

[21190004] |Last week, Tele-Communications agreed to pay Viacom Inc. $225 million for a 50% stake in its Showtime subsidiary, which is a distant second to Time's Home Box Office in the delivery of pay-TV networks to cable subscribers.
[21190005] |Tele-Communications, the U.S.'s largest cable company, said it may seek other cable partners to join in its investment.

[21190006] |Tele-Communications is HBO's largest customer, and the two have a number of other business relationships.
[21190007] |Earlier this year, Time even discussed bringing Tele-Communications in as an investor in HBO, executives at both companies said.
[21190008] |The purchase of the Showtime stake is "a direct slap in our face," said one senior Time executive.

[21190009] |Time is expected to mount a legal challenge in U.S. District Court in New York, where Viacom in May filed a $2.5 billion antitrust suit charging Time and HBO with monopolizing the pay-TV business and trying to crush competition from Showtime.
[21190010] |Executives involved in plotting Time's defense say it is now preparing a countersuit naming both Viacom and Tele-Communications as defendants.
[21190011] |The executives say Time may seek to break up the transaction after it is consummated, or may seek constraints that would prevent Tele-Communications from dropping HBO in any of its cable systems in favor of Showtime.

[21190012] |Viacom officials declined to comment.
[21190013] |Jerome Kern, Tele-Communications' chief outside counsel, said he wasn't aware of Time's legal plans.
[21190014] |But he said that any effort by Time to characterize the Tele-Communications investment in Showtime as anti-competitive would be "the pot calling the kettle black."

[21190015] |"It's hard to see how an investment by the largest {cable operator} in the weaker of the two networks is anti-competitive, when the stronger of the two networks is owned by the second largest" cable operator, Mr. Kern said.

[21190016] |In addition to owning HBO, with 22 million subscribers, Time Warner separately operates cable-TV system serving about 5.6 million cable-TV subscribers.
[21190017] |Tele-Communications controls close to 12 million cable subscribers, and Viacom has about one million.
[21190018] |In its suit against Time, Viacom says the ownership of both cable systems and cable-programming networks gives the company too much market power.
[21190019] |Time argues that in joining up with Tele-Communications, Viacom has potentially more power, particularly since Viacom also owns cable networks MTV, VH-1 and Nick at Nite.
[21190020] |Ironically, Tele-Communications and Time have often worked closely in the cable business.
[21190021] |Together, they control nearly 40% of Turner Broadcasting Systems Inc.; Tele-Communications has a 21.8% stake, while Time Warner has a 17.8% stake.
[21190022] |But since Time's merger with Warner Communications Inc., relations between the two have become strained.
[21190023] |Each company worries that the other is becoming too powerful and too vertically integrated.

[21190024] |Meanwhile, some legal observers say the Tele-Communications investment and other developments are weakening Viacom's antitrust suit against Time.
[21190025] |Viacom accuses Time in its suit of refusing to carry Showtime or a sister service, The Movie Channel, on Time's Manhattan Cable TV system, one of the nation's largest urban systems.
[21190026] |But yesterday, Manhattan Cable announced it will launch Showtime on Nov. 1 to over 230,000 subscribers.

[21190027] |Showtime has also accused HBO of locking up the lion's share of Hollywood's movies by signing exclusive contracts with all the major studios.
[21190028] |But Showtime has continued to sign new contracts with Hollywood studios, and yesterday announced it will buy movies from Columbia Pictures Entertainment Inc., which currently has a non-exclusive arrangement with HBO.

[21191001] |The Federal Trade Commission said it authorized its staff to seek a preliminary injunction barring Imo Industries Inc. from acquiring the shares outstanding of the U.S. unit of the British company, United Scientific Holdings PLC, for $69 million.

[21191002] |The FTC said it "had reason to believe that the proposed acquisition could substantially reduce competition" in the production of certain image intensifier tubes, which are important components of night-vision devices sold primarily to the defense industry.

[21191003] |The FTC said it would seek to enjoin the proposed acquisition in a federal trial court, but declined to specify which one.
[21191004] |Under federal law, if the court grants a preliminary injunction, the FTC must begin administrative proceedings to determine the legality of the proposed stock purchase within 20 days.

[21191005] |Officials at the United Scientific unit, Optic-Electronic Corp. of Garland, Texas, and at Imo Industries of Lawrenceville, N.J., couldn't be reached for comment.

[21192001] |The airline industry's fortunes, in dazzling shape for most of the year, have taken a sudden turn for the worse in the past few weeks.

[21192002] |Citing rising fuel costs, promotional fare cuts and a general slowdown in travel, several major carriers have posted or are expected to post relatively poor third-quarter results.
[21192003] |Yesterday, USAir Group Inc., recently one of the industry's stellar performers, posted a worse-than-expected $77.7 million net loss for the period.

[21192004] |So far, the industry's fourth quarter isn't looking too strong either, prompting many analysts to slash earning projections for the rest of the year by as much as one-fourth.
[21192005] |And they say the outlook for 1990 is nearly as bad.
[21192006] |Airlines in 1989 "came in like a bang and are going out like a whimper," said Kevin Murphy, an airline analyst at Morgan Stanley & Co.

[21192007] |This turn of events has put a big damper on an industry that seemed almost invincible last spring, when fares were rising at double-digit rates and many carriers seemed to be growing fat on near-monopolies in certain markets.
[21192008] |Now, many airline companies might become a lot less attractive as takeover targets on Wall Street.
[21192009] |The downturn also raises questions about the carriers' ambitious orders for new airplanes, which currently total $32.5 billion over the next three years.

[21192010] |For travelers, though, the industry's problems have had some positive effects.
[21192011] |In recent weeks, airlines have cut numerous fares in leisure markets to try to win back customers.
[21192012] |Others have tried to spruce up frequent-flier programs.
[21192013] |Previously, airlines were limiting the programs because they were becoming too expensive.

[21192014] |Just last week, for example, Trans World Airlines and Pan Am Corp.'s Pan American World Airways went so far as to offer cash rebates or gift checks of $200 to $1,000 to certain frequent-flier members making trans-Atlantic flights in business class or first class.
[21192015] |The industry's slowdown became apparent this month when AMR Corp., parent of American Airlines, reported an 8.8% drop in third-quarter net income and said its fourth quarter would be "disappointing."
[21192016] |Shortly before that, USAir had said its third-quarter results would be "significantly lower" than a year earlier.
[21192017] |Yesterday, it provided the details:
[21192018] |Its loss of $77.7 million, or $1.86 a share, contrasted with net of $68.5 million, or $1.58 a share, in the 1988 third quarter.
[21192019] |Revenue rose only 3.3% in the latest period, to $1.53 billion from $1.48 billion.

[21192020] |For the nine months, the Arlington, Va., company's net plunged 73% to $38.5 million, or 76 cents a share, from $142.2 million, or $3.28 a share.
[21192021] |Revenue rose 12% to $4.75 billion from $4.22 billion.

[21192022] |The results surprised many analysts, because USAir has almost no competition in its Pittsburgh hub and has expanded operations by completing its acquisition of Piedmont Airlines.
[21192023] |Shortly after announcing its quarterly loss, USAir's stock tumbled $3 a share.
[21192024] |It ended at $40.125, down $2.375, in New York Stock Exchange composite trading.

[21192025] |"Nobody was expecting this size of a loss," said Paul Karos, an analyst with First Boston Corp.
[21192026] |One airline executive, who declined to be identified, called the loss "amazing."

[21192027] |In announcing the results, USAir cited many of the same problems that several other industry officials have named recently.
[21192028] |It said the industry's domestic traffic was flat in the third quarter; analysts say this was because hefty fare increases earlier in the year scared off many leisure travelers this summer.
[21192029] |To try to combat the traffic slowdown, airlines started reducing fares; average fares rose only 1.7% in August, in contrast to increases of 16% each in February and March.
[21192030] |But so far, the effort has failed, and traffic is still slow.

[21192031] |Some other fare promotions have backfired.
[21192032] |This summer, the industry introduced a "kids fly free" program, in which children were allowed to fly free if they were traveling with an adult.
[21192033] |Airlines tried to restrict the program substantially by limiting the offer to certain days of the week, but it still was apparently used far more heavily than the airlines expected.

[21192034] |Airlines also say their frequent-flier programs are squeezing profits because awards are being redeemed at a heavier-than-normal rate.
[21192035] |One airline official said about three times as many free-travel coupons are being turned in as in previous years -- not surprisingly, as the airlines last year allowed many travelers to build up mileage at triple the normal rate.

[21192036] |Rising operating expenses are another problem.
[21192037] |Fuel costs were up 10% in the third quarter.
[21192038] |Labor costs, which leveled off in the past few years because of lower pay scales for newer employees, are on the upswing again at many carriers.
[21192039] |And some carriers are facing other unexpected headaches: USAir, for example, blamed some of its loss on merger expenses and on disruptions caused by Hurricane Hugo last month.
[21192040] |"We cannot quantify the total adverse effects of Hugo," said Edwin Colodny, chairman and president of USAir Group.

[21192041] |Whatever the cause for the downturn, few people are predicting any sudden improvement.
[21192042] |Airline Economics Inc., an aviation consulting firm, is projecting an industrywide operating profit of $2.5 billion for 1989, compared with earlier forecasts of $3 billion to $3.5 billion.
[21192043] |As for 1990, the firm predicts that profit will slip to between $1 billion and $1.5 billion.

[21193001] |Good grief!
[21193002] |Charlie Brown is selling out.

[21193003] |Those Metropolitan Life ads were bad enough.
[21193004] |But now, Charlie Brown is about to start pitching everything from Chex Party Mix to light bulbs.
[21193005] |Why is he cashing in now?
[21193006] |Turns out that next year, Charlie Brown, Snoopy and the gang turn 40 -- and Scripps Howard's United Media unit, the syndicator and licensing agent for Charles Schulz's comic strip, sees a bonanza in licensing the cartoon characters to a bevy of advertisers for ads, tie-ins and promotions.

[21193007] |"Peanuts has become a major part of American culture," says Peter Shore, United Media's vice president of marketing and licensing.
[21193008] |The comic strip "has a magical, everlasting quality about it.
[21193009] |Our plan is to honor Charles Schulz and the strip all year long."

[21193010] |The effort will make the Peanuts gang very familiar pitchmen in 1990.
[21193011] |General Electric plans to use the characters to plug its Miser light bulb.
[21193012] |Teleflora will run TV ads at Valentine's Day promoting its "Snoopy's Love Bouquet."
[21193013] |Ralston Purina will promote its Chex Party Mix's three new flavor packets named for Charlie Brown, Lucy and Linus.
[21193014] |The characters will also be featured in a new public service effort for the United Way.

[21193015] |Beyond the advertisements, the syndicator is planning a traveling arena show, new TV specials for CBS and even an exhibit at the Smithsonian Institute.
[21193016] |The yearlong schedule of festivities will be kicked off officially with a combination live and animation half-time special at the Super Bowl in January.

[21193017] |All the tie-ins, though, have some marketing experts questioning whether the party may go too far.
[21193018] |"There are too many people participating," says Al Ries, of Trout & Ries, a Greenwich, Conn., marketing consulting firm.
[21193019] |"If you want to cut through the clutter, you have to make your message as distinct, sharp and individual as possible.
[21193020] |Sharing a character with other advertisers isn't a way to do that."

[21193021] |But United Media says it's very scrupulous with the contracts it hands out.
[21193022] |"We're not interested in promoting every single product that comes along," Mr. Shore says.

[21193023] |Metropolitan Life ad executives couldn't be reached about the use of the Peanuts characters by others.
[21193024] |But Mr. Shore says that company's exclusive advertising rights extend only to the insurance and financial services category.

[21193025] |Berry Rejoins WPP Group

[21193026] |Norman Berry, the creative executive who was apparently squeezed out of Ogilvy & Mather in June, is returning to Ogilvy's parent company, WPP Group PLC.

[21193027] |Mr. Berry, 58, had resigned after being asked by Ogilvy's chairman and chief executive officer, Kenneth Roman, to give up his title as creative head of the New York office and to take a fuzzier international role.
[21193028] |Yesterday, just a day after Mr. Roman announced he would leave to take a top post at American Express, WPP said Mr. Berry would return to take an international role at the parent company.

[21193029] |Mr. Berry said the timing was a coincidence and that his decision was unrelated to Mr. Roman's departure.

[21193030] |RJR Taps FCB/Leber

[21193031] |RJR Nabisco Inc. awarded its national broadcast media-buying assignment to FCB/Leber Katz Partners, the New York outpost of Chicago-based Foote, Cone & Belding.

[21193032] |The naming of FCB/Leber Katz Partners as agency of record for Nabisco Brands Inc. and Planters LifeSavers Co. follows RJR Nabisco's announcement last week that it will disband its RJR Nabisco Broadcast division and dismiss its 14 employees Dec. 1. to cut costs.
[21193033] |New York-based RJR Nabisco wouldn't say what it spends annually, but industry executives say it will spend more than $140 million this year, down from about $200 million last year.

[21193034] |Ad Notes. . . .

[21193035] |EARNINGS:
[21193036] |Interpublic Group of Cos. said third-quarter net rose 15% to $6.9 million, or 21 cents a share, from $6 million, or 18 cents a share, in the year-earlier period.
[21193037] |Revenue increased more than 5% to $283.2 million from $268.6 million.

[21193038] |HOLIDAY PROMOTION:
[21193039] |PepsiCo Inc. will give away 4,000 sets of "Game Boy," Nintendo's new hand-held video game in a two-month promotion scheduled to begin Nov. 1.
[21193040] |Pepsi said it will spend $10 million advertising the promotion.

[21194001] |International Business Machines Corp. agreed to acquire a 15% stake in Paxus Corp., an Australian computer-software and information-services concern, for 20 million Australian dollars (US$17 million).

[21194002] |The investment will be made through IBM Australia Ltd., a unit of IBM, the two companies said yesterday.

[21194003] |IBM can raise its stake in Paxus to 20% over three years, but agreed to not go beyond 20% in that time.

[21194004] |Paxus said in a statement it has several "well developed product and services relationships" with the U.S. computer company, and plans to expand these links.
[21194005] |The company earns about half its revenue overseas and plans further expansion.

[21194006] |A majority stake in Paxus currently held by NZI Corp. will be diluted to slightly less than 50% after IBM acquires its interest.

[21194007] |The agreement requires approval from Australia's Foreign Investment Review Board and National Companies and Securities Commission, and from shareholders of Paxus.

[21195001] |Bond Corp. Holdings Ltd.'s consolidated debt totals 6.9 billion Australian dollars (US$5.32 billion), including A$1.6 billion of bonds convertible into shares.

[21195002] |Alan Bond, chairman and controlling shareholder of the cash-strapped Australian media, brewing, resources and property concern, disclosed the debt figures yesterday.

[21195003] |The disclosure follows last Friday's news that Bond Corp. incurred an overall loss of A$980.2 million for the fiscal year ended June 30, the largest loss in Australian corporate history.

[21195004] |The debt load would have been higher but for a reduction of A$5 billion over the past year from asset sales, Mr. Bond said at a business gathering.

[21195005] |Mr. Bond indicated the consolidated debt figures, which include debt of units such as Bell Group Ltd., will be published soon in Bond Corp.'s 1989 annual accounts.

[21195006] |He predicted the debt will be reduced by another A$3.8 billion this fiscal year ending June 30, 1990, but didn't explain how this will be achieved.

[21195007] |Mr. Bond blamed rising Australian interest rates and the acquisition of Bell Group "with its very high levels of shortterm debt" for producing a condition "that was no longer sustainable.

[21195008] |"In order to restore confidence and ensure the support of our principal lenders," Mr. Bond said, "we embarked on fundamantal changes in the structure and direction of the group."

[21195009] |That reassessment resulted in continuing asset sales, as well as write-offs exceeding A$1.1 billion last fiscal year.
[21195010] |"In essence we have made a decision to clear the decks," Mr. Bond told the meeting.

[21195011] |While some assets have been written down, others are undervalued in the accounts, Mr. Bond maintained.
[21195012] |Among these are the company's Australian brewing assets, in the books at A$950 million but actually worth A$2.5 billion, he said.
[21195013] |An investment in Chile's telephone company is carried at US$300 million but really worth US$500 million, and the company's property portfolio is undervalued by at least A$250 million, Mr. Bond said.

[21195014] |Mr. Bond forecast that by next June, "what will emerge will be a company with a honed sense of purpose . . . a stable balance sheet, with good-quality assets in brewing, telecommunications, media and property."

[21195015] |He didn't name energy resources in that list, signaling that all the company's coal and oil interests might be for sale in total or in part.
[21195016] |Some of the oil interests already have been sold.

[21196001] |Mercedes-Benz of North America Inc., Grosse Pointe Shores, Mich., estimated it will sell about as many cars in 1990 as the 75,000 it expects to deliver this year.

[21196002] |Mercedes officials said they expect flat sales next year even though they see the U.S. luxury-car market expanding slightly.
[21196003] |Erich Krampe, president of the U.S. sales arm of West German auto maker Daimler Benz AG, predicted luxury-car sales will rise to 840,000 in 1990 from 830,000 this year primarily because of the new Japanese makes.

[21196004] |Most of the growth, he said, will come in the $35,000-to-$50,000 price range, where Mercedes has a 35% U.S. market share.
[21196005] |Mercedes sold 82,348 cars in 1988.

[21196006] |Mr. Krampe also said that Mercedes plans to bring out new models every year through the mid-1990s and it will shorten its product development cycle to eight years from 10 or 12 years to compete more effectively with Toyota Motor Corp.'s Lexus, Nissan Motor Co.'s Infiniti and Honda Motor Co.'s Acura luxury-car divisions.

[21197001] |Homestake Mining Co., San Francisco, blamed the continued slump in gold prices for an 83% plunge in third-quarter net income to $2 million, or two cents a share, from $11.2 million, or 12 cents a share, a year earlier.

[21197002] |Revenue rose 5% to $110.4 million from $105.4 million.

[21197003] |In New York Stock Exchange composite trading, Homestake closed at $15.25, down 25 cents.

[21197004] |"A significant increase in gold sales to 248,279 ounces for the quarter from 188,726 in the third quarter of 1988 was more than offset by the continued decline in average gold price realization to $367 from $429 per ounce," the company said.

[21197005] |For the nine months, the mining company posted a 40% drop in profit to $30.1 million, or 31 cents a share, from $50.6 million, or 52 cents a share, on a 6% rise in revenue to $323.2 million from $305.7 million.

[21198001] |The Treasury plans to raise $1.8 billion in new cash with the sale Monday of about $15.6 billion in short-term bills to redeem $13.81 billion in maturing bills.

[21198002] |The offering will be divided evenly between 13-week and 26-week bills maturing Feb. 1, 1990, and May 3, 1990, respectively.

[21198003] |Tenders for the bills, available in minimum $10,000 denominations, must be received by 1 p.m. EST Monday at the Treasury or at Federal Reserve banks or branches.

[21198004] |The Treasury said it will alter the auctions unless it has assurance of enactment of legislation to raise the statutory debt limit before the scheduled auctions Monday.

[21199001] |Apogee Enterprises Inc. said profit for the third quarter ending Dec. 2 will fall below the year-earlier results because of an after-tax charge of $1.9 million related to a project that was guaranteed by the company.

[21199002] |A year ago, the Minneapolis glass products and aluminum window maker earned $4 million, or 30 cents a share, on revenue of $114 million.

[21199003] |Apogee said the charge stems from a building supply contract in which the company guaranteed a contractor's performance.
[21199004] |Apogee said a subcontractor had severe cost overruns and was unable to fulfill the contract terms on its own, making it necessary for Apogee to advance cash to ensure completion of the project.

[21199005] |The company said its core businesses have performed well and it expects them to continue to do so in the remainder of the fiscal year.