Asbury Park Press from Asbury Park, New Jersey • Page 72

Stock Quotations 18 Spotlight Stocks 18 Gold Silver 18 Careers 18 Investor's Guide 19 Sylvia Porter 19 D17 Asbury Park Press July 15, 1981 3 Fed tightens money supply reins Trouble Shooter By JOHN M. BERRY The Washington Post WASHINGTON With interest rates at near-record levels, money supply growth running below target, and the economy at a virtual standstill, the stage was set last week for the Federal Reserve to ease its tight grip on credit, most Fed watchers thought. They were wrong. Instead, it has been learned, the Fed's policymaking group in effect decided at a two-day meeting last week to lower a key money growth target as another anti-inflation move. The action probably will mean continued high interest rates in the short run, but it does not necessarily mean rates in coming months will not be somewhat lower than today.

After hours of discussion, the Federal Open Market Committee, or FOMC as the group is known, decided not to change the formal target range for growth of Ml-B, the most closely watched measure of money, sources said. HOWEVER, AS FEDERAL Reserve Chairman Paul A. Volcker is expected to tell the House Banking Committee next week, the Fed will implicitly have a lower target bcause it intends to aim not for the middle of the 3 percent to 6 percent range but the lower edge. Federal Reserve officials acknowledge that their policy stance runs the risk of a slower, weaker economy for the rest of 1980 and into 1981, with homebuilding particularly mired in recession. They also agree the policy will mean a continued threat to the survival of some hard-pressed thrift institutions that are in the red because of the high cost of money.

The officials expect interest rates to ease "only if we get real softness in the economy." Even if that happens, most of the decline will come in short-term rates, with long-term rates moving down less quickly and not as far, they say. While there are strong indications the economy at the moment is more or less marking time, there are still some signs of strength, the officials believe. HIGH ON THE LIST is a heady level of demand for business and commercial loans at banks, which jumped $2.83 billion in the week ended July 1. And if long-term interest rates were to drop a bit, some analysts expect corporations to flood the bond markets with up to $5 billion of new securities a month, partly in an effort to pay down expensive short-term bank loans. Most and perhaps all of the 12 FOMC members are determined to accept the risk of a weaker economy in order not to lose what progress has been made this year in the fight against inflation, a fight they regard as by no means won.

The recent drop in reported inflation rates have encouraged the Fed policymakers that they are on the right course, the sources explained. Increasingly, Fed officials are concerned about what may happen in a series of major wage negotiations during 1982 covering the steel, trucking and automobile industries, among others. Without a "real break" on the wage front next year, control of inflation in the longer term will be far more difficult, they say. THUS, THEY ARE determined not to do anything that would send the wrong signals about future inflation to either labor or management negotiators. Evidence of this increasingly tough stand can be found in FOMC records, such as the minutes of the May 18 meeting published last week.

Beginning in April, the committee sought to counter quickly a surge in money growth with ever more restrictive policies. As of May, there was as yet not "clear relaxation of underlying inflationary pressures, and emphasis was placed on the importance of conveying a clear sense of restraint at a critical time with respect to inflation and inflationary the minutes said. The FOMC decided at the May meeting to provide reserves to the banking system consistent with a growth of Ml-B from April to June at an annual rate of 3 percent or lower. Ml-B includes currency in circulation and checking deposits at financial institutions. The Fed targets are for Ml-B after an adjustment for money being shifted from regular checking accounts into interest-bearing accounts such as NOW accounts.

Another reason for the FOMC decision implicitly to lower its target for Ml-B for the remainder of 1981 is that the committee is paying more and more attention to growth of a broader money measure, M-2. M-2, which also includes savings deposits at commercial banks, shares in money market mutual funds and some other types of deposits, has shown stronger growth than Ml-B. It consistently has been close to or above the upper edge of the Fed's 1981 target range. With this unexpected divergence be- -tween Ml-B and M-2, the Fed has chosen to put more emphasis on M-2 and accept a shortfall in growth of Ml-B. That decision at last week's FOMC meeting means that a significant drop in interest rates is probably not around the corner unless the economy takes a nose dive.

Federal official: 'not viable' Jf A f- 4 im I f00 1 'Oven problems The letter I sent to O'Keefe Merritt Los Angeles, was returned as nndeliverable. I need information about my double wall oven. I wrote to the address pro-j vided with the warranty. Mrs. I.E., Toms River The Major Appliance Consumer Action Panel, Chicago, has contacted O'Keefe Merritt dn your behalf, and you should be hearing from the company soon.

The address is O'Keefe Merritt Division of Tappan, 250 Wayne Mansfield, Ohio 44901. The person there handling your correspondence is Ms. Jan Hunsinger. Account paid I called Government Employees Financial Denver, and asked how much I owed and was told $705 if I paid within two weeks. I immediately sent the full $705.

Since then I keep getting notices that I owe GEFCO an additional $176.50. I called the office which promised to straighten this out. W.H.S., Barnegat Township E.J.Gabriel, senior vice president at GEFCO, says when you called and were advised the pay-off was $705, it was assumed the regular $147.05 installment would be received prior to pay-off. The full amount due was $852.85. However, no installment was received which explains why you were billed for the additional balance due of $147.05.

Gabriel says that amount has now been received, and your account is paid in full. New toaster oven When my toaster oven was returned from the Sunbeam repair service in Philadelphia I found it was damaged. It was returned by United Parcel Service. I took the package to UPS where an employee agreed with me that it had been dropped and damaged. UPS said Sunbeam would have to settle with me but I haven't had any response from Sunbeam.

Mrs. K.C.H., Red Bank Sunbeam Appliance Service Philadelphia, has ordered a new toaster oven and will ship it to you as soon as possible. Sunbeam says it will work out a solution to its claim with UPS. Bill high I don't know where to turn. I got a bill in January for $1,031.18.

That seemed impossible, and my husband and I went to the office. We had only recently moved into the house and nse only three rooms. A man at said our meter hadn't been read in three months. A deferred payment plan was arranged, and the man said the best he could do was to add $200 to our monthly bill to pay off the overdue balance. We just can't afford these payments.

Last month I paid the monthly bill of $70 but couldn't pay the $200. A man came to the house to turn off the electricity. I called the office and was told if I didn't pay $250, service would be disconnected. I am more than willing to pay but just can't meet these terms. Mrs.

D.C.S., Lacey Township A spokesman says the commercial office manager has now arranged a new payment plan which should make things somewhat easier for you. He says your problem began when your meter was misread last September. He agrees the $1,031 bill must have been a shocker but says you should have been alerted when you were billed only $29 monthly for all-electric service. Cable TV Last summer cable television lines were installed on utility poles in the West Keansburg section of Hazlet Township. We still don't have cable service, and we are tired of waiting.

Can yon find out when we will have It? R.C.S., Hazlet Township Robert G. Weigand, Hazlet Township business administrator, says the franchise is held by Fu-turevision Cable Enterprises which is owned by Storer Cable Communications, with offices located in Eatontown. Weigand says Mrs. Barbara Silkworth, of Storer, advised him last week that more than 1,000 hookups have been made in Hazlet Township. The area in which you live, (Area Six), is the last one in the township which will be connected to the system.

Marketing should commence in Area Six in four to six weeks, and connections should be made soon thereafter. Sales representatives will contact residents by mail and in person. Weigand says you should have cable service by early fall if you want it. A map showing the six cable areas of the township is being sent to you. ADVISORY: Yamaha bikes Yamaha International Buena Park, is recalling cast aluminum forks on about 30,000 Viscount brand 10-speed bicycles.

According to the Consumer Product Safety Commission the bicycles are being recalled because the forks may break since they have a potential for fatigue frac-. ture. Fracture of the fork may occur unexpectedly and cause loss of control or separation of the front wheel from the bicycle. About 30 such incidents have been received by Yamaha, which Involved injuries and, in one case, a reported case of paralysis. The recall covers only the front forks of the Viscount 10-speed bicycles which are models GPM, PRC and PRT.

These bicycles were distributed nationwide from September 1974 to October 1977 at retail prices of $189 to $269. Yamaha has not sold Viscount bicycles In this country since October 1977. Owners needing to verify model names can call the Consumer Product Safety Commission toll free Hotline at (800) 638-8326. Recall information can be obtained from Yamaha by calling toll free (800) 854-3155. EDITOR'S NOTE: Readers are requested to submit photocopies of valuable documents and the Asbury Park Press cannot be responsible for their return.

Because many companies and government agencies often refuse to reply unless readers specifically authorize disclosure of information, readers should include a sentence in their letters authorizing release of information. Trouble Shooter cannot accept inquiries by telephone. The Washington Post WASHINGTON In the grimmest assessment to date of the troubled savings and loan industry by a government official, Federal Home Loan Bank Board Chairman Richard Pratt acknowledged yesterday that one-third of the nation's 4,700 with assets of $200 billion are "not viable under today's conditions" of high, volatile interest rates. In Capitol Hill testimony, Pratt confirmed reluctantly that he gave these figures to a closed housing policy meeting last week. The figures he cited then and confirmed yesterday point to deeper industry trouble than federal financial regulators hitherto have acknowledged.

If nothing happens to help the industry and interest rates continue at the near-record levels of the past eight months, Pratt predicted to the commission that one savings institution every day will be reduced to a zero net worth, where all financial reserves set aside to cover losses are used up. HE SAID UNDER A "downside but not wildly, radically pessimistic estimate," the failure of these could produce a $60 billion loss. The sale of assets and federal insurance would offset that figure by $15 billion, leaving a net loss of $45 billion, Pratt said. Pratt previously had used more conservative figures in public, as he did again yesterday in prepared testimony to the House Banking Committee. He said that 263 federally insured are on the regulatory agency's list of most-troubled institutions and that the $6 billion available in federal insurance would be adequate to take care of any losses caused by the failures or forced mergers of such associations.

When committee Chairman Fernand St Germain, asked Pratt to confirm a more pessimistic analysis made last week to a meeting of the President's Commission Associated Press EXPERIMENTAL Ford Motor Co. yesterday showed its experimental two-passenger Super Gnat (top) and seven-passenger Aerovan. Ford says fuel mileage for the autos, which should be similar to cars Ford may sell in the late 1980s and 1990s, could reach 85 miles per gallon on diesel fuel. Du Pont escalates battle for Conoco on Housing, Pratt said an account in Washington Financial Reports, a Washington-based newsletter, was accurate. But he did not discuss it further.

A SPOKESMAN FOR Pratt said yesterday the bank board chief was painting a worst-case scenario to impress the housing commission of the seriousness of the situation, but that mergers and other rescue actions could prevent such a $60 billion loss from ever actually occurring. He denied that Pratt was depicting a worse situation in private than he admitted in public. Although Pratt did not give a time reference in his talk to the commission, one economist who asked not to be identified said yesterday that he thought Pratt meant that if interest rates do not abate and savings and loans are not given any help, the potential loss within a year could be 10 times worse than the potential losses acknowledged at the moment. PRATT ALSO TOLD THE commission that at the end of April, the bottom 10 percent of the industry (395 associations) had a net-worth-to-assets ratio of 1.68 percent, whereas the industry average was 5 percent. Those are losing some $3.50 on every $100 of assets.

Overall, the savings and loan industry still has $31 billion of net worth at this time. Moreover, deposits of up to $100,000 apiece are covered by insurance at federal-; ly insured institutions. Pratt, accompanied by two other feder-; al regulators, testified yesterday on ways to alleviate the situation. They pressed for passage of the so-called regulators' bill, that was nixed a few weeks ago by the Reagan administration as being too costly. The current version calls for interstate and interindustry mergers as a way of assisting failing financial institutions.

The bill also would permit cash infusions to troubled, institutions as an alternative to liquidating them or merging them out of existence. Marine Trades was last Frebruary," Scalpone said. "We've got some big promotions in mind. And with the backing of our 900 manufacturer-members, we foresee the show becoming one of the giants of the circuit and, what's more important to MTANJ members, a major attraction for this great market of affluent boat buyers." he said. OMC STERN DRIVE, a division of Outboard Marine Corporation, has announced that the two winners of its $10,000 international boat design contest have been chosen.

David J. Dowhos of Thunder Bay, Ontario, Canada, took honors in the 1.6-litre trailerability category with his 16-foot Micro-Cruiser. P.S. Boyce of C. Raymond Hunt Associates Inc.

of Boston, won the twin installation 2.6-litre blue water category with. a 38-foot sportsfisherman design. Each will receive $5,000. The design judged best overall sea drive hull will receive the annual Ole Evin-; rude Award at the 1981 Internatinal Marine' Trade Exhibit Conference in Chicago, Illinois. Douglas T.

Newbigin of Stuart Yacht Builders, Stuart, received honorable mention in the 2.6 litre category for his 31-foot design. P.S. Boyce of Raymond Hunt Associates received honorable mentin in the 1.6 litre category for his 18-foot design. The contest to find the best designs for the OMC stern drive units was open to all boat designers. Boat shows purchase to aid marine trades The Washington Post NEW YORK The bidding war for Conoco Inc.

continued to escalate yesterday. E.I. du Pont de Nemours the nation's biggest chemical concern, announced that it would add $500 million in cash and stock to its week-old, $6.9 billion offer to buy the nation's ninth-biggest oil company. Both Conoco and Du Pont boards have ratified the sweetened merger offer, Du Pont said in a statement. The revised Du Pont bid is designed to upstage last Sunday's offer by The Seagram the big Canadian distiller, to pay $85 a share for 51 percent of Conoco's outstanding stock, an offer than would put $3.77 billion of cash into the pockets of Conoco stockholders.

Seagram said that it feels its offer is "still fully competitive." Seagram said it "emphasizes" that unlike Du Pont, which has conditioned its offer on obtaining a majority of the 86 million outstanding Conoco shares, Seagram's offer is unconditional. The distiller will pay $85 for every share it receives up to 44.35 million and reserves the right to purchase more. SEAGRAM'S OFFER HAS cleared the Securities and Exchange Commission. Du Pont's filing with the SEC is expected to be approved later this week. Until it clears the SEC, Du Pont can make no formal offer to Conoco shareholders.

the Justice Department, in a terse announcement, said the Cabinet-level agency and the independent Federal Trade Commission had agreed to let Justice's Antitrust Division "investigate" the New Jersey banks issue mixed earnings reports Du Pont bid for Conoco. The decision, the product of a telephone conversation yesterday between Assistant Attorney for Antitrust William Baxter and Acting FTC Chairman David Clanton, ended a staff disagreement between the two agencies over which would review the merger. Justice also was granted authority to review the Seagram bid. "At some point, you have to make a cut as to who will take on a matter," Clan-ton said in an interview. "We've gotten big ones, too," he noted, pointing out that the FTC will review the proposed takeover of Texasgulf Inc.

UNDER MERGER RULES, the government is given 30 days from notification of a takeover to review the deal for possible anti-competitive conduct. If the government seeks more information from the parties, an additional 20 days for consideration would follow that request. Sources indicated that the Justice Department is unlikely to issue a quick decision on the Du Pont or Seagram offers. Du Pont said yesterday it is willing to pay $95 a share for 40 percent of Conoco stock (about 34.44 million shares) a cash outlay of about $3.27 billion and exchange 1.7 shares of its stock for the remaining Conoco shares. Based on Du Pont's most recent price of $47.25 a share, the stock portion of the transaction is worth about $4.14 billion.

Trading in Du Pont was halted on the New York Stock Exchange at 11:18 a.m. yesterday and did not resume. The total $7.4 billion offer would be the largest corporate merger in history if it comes off. states, earned $6.1 million in the fiscal year ending Jan. 31 on sales of $98.72 million.

Two brothers, Joseph and Harry Kaufman, started the chain in Pittsfield, in 1922 as a wholesale candy company. Kay-Bee opened its first specialty toy and game store in Pittsfield in 1963. kilville owns Thorn McAn Shoe Chess King clothing stores and the CVS chain of health and beauty aid stores. By JOHN GEISER Press Staff Writer RUMSON New Jersey Marine Trades Association members are expected to benefit extensively from the purchase of two Philadelphia boat shows by the National Marine Manufacturers Association. Frank Scalpone, executive vice president of NMMA, told officers of the New Jersey association, that the new move will strengthen the shows with "more qualified people and more sales.

"Under the agreement, which we've signed with MTANJ, not only will MTANJ members receive a discount on their purchases of show space, but equally important, their association will benefit: MTANJ will receive a promotional bonus each time a member purchases bulk space in the show." Ed Swikart executive secretary of the MTANJ, said the in-water show will be called the Perm's Landing In-Water Boat Show. The new management will concentrate on larger and more qualified attendance from a wide area; more boats will be on display and there will be better parking facilities. "We're looking into the surge situation on the river," Scalpone said, "because we know that it's far from an ideal situation. "Dealers have fun making money at cur boat shows," he added. "We'll run it as we do New York and Norwalk.

We take good care of our exhibitors, the press and the public." "The same goes for the winter show," he said. "We've already signed with the Civic Center for both halls, because we know that the show will be a lot bigger than it est rate deregulation and keen competition from non-bank intermediaries such as money market funds, will have a long-term effect on how First National lends and invests, Pierce said. In West Paterson, Greater Jersey parent company of New Jersey Bank, N.A., announced further earnings gains for the first six months of 1981. Income before securities transactions was $4.3 million, or $2.09 per share, up 25 percent from the $3.5 million, or $1.69 per share, during the first half of 1980. Net Income was $3.9 million or $1.91, compared with $3.2 million, or $1.56 per share, for the first six months of 1980.

For the second quarter, income before securities transactions was $2.1 million, up 24 percent from the $1.8 million reported for the second quarter of 1980. Per share earnings were $1.05 versus 86 cents in 1980. "These favorable earnings are attributed to our expanded assets, now over $1 billion, and to higher net interest income despite continuing pressure on the net interest margin," said Ralph Corbin, board chairman and chief executive officer. Melville to buy Kay-Bee The Associated Press TWO NEW JERSEY banks yesterday issued mixed earnings reports. In Totowa, First National Bank of New Jersey reported earnings for the second quarter and the first half of 1981 declined significantly from year-earlier periods.

For the six months ending June 30, the bank reported income before securities transactions of $114,000, or five cents per share, a substantial decline from the $4.4 million or $1.93 per share reported for the first half of 1980. Income before securities transactions for the three months ended June 30 was $36,000 or two cents per share, a decrease from the $2.3 million, or $1.04 a share income reported the year earlier. Total assets rose to $937.6 million at June 30 from $826.6 million at mid-year 1980. Donald E. Pierce, bank president, said, "Earnings have been under tremendous pressure during the first half of 1981 as a result of historically high cost of deposits and borrowed funds." The dramatic changes the bank has experienced in recent years, including inter- i 1 The Associated Press LEE, Mass.

Kay-Bee Toy Hobby Shops Inc. will be sold by Aug. 1 to Melville Corp. of Harrison, N.Y., Melville officials say. Melville President Kenneth Berland said Monday his company will pay $64.2 million for the national toy chain based in Lee.

Kay-Bee, which owns 212 stores in 41.