The Los Angeles Times from Los Angeles, California • 47

Oil Imports Expected to Bring Payments Deficit usiness Finance FRIDAY, AUGUST 2, 1974 U.S. Bill Estimated at $25 Billion, for $2 Billion Shortfall BY THOMAS O'TOOLE The Washington Pott WASHINGTON The Treasury Department believes the United, States will pay a record $25 billion for the oil it imports this year, a payout that is expected to result in a total U.S. balance of payments deficit of at least $2 billion. Higher prices for foreign oil plus near-record imports have forced the Treasury to revise upward the federal estimate of the nation's oil import bill. The estimate made last January by the National Petroleum Council was $20 billion.

An informed Treasury official said Thursday that the import bill will be at least $25 billion. "The checks that U.S. companies write this year to import oil could easily total more than $25 billion," the Treasury source said. "A lot depends on demand for oil products and on whether the current price levels for imported oil sustain themselves." ''iJi -mT ANTITRUST CRACKDOWN FTC Chairman Lewis A. Engman, town to install Ms.

Carol Emerling as head of the agency's Los Angeles regional office, said he expects the federal agency to file several antitrust cases against food and energy firms by the fall. Times photo by Steve Fontanini FTC Chief Predicts Antitrust Drive on Food, Energy Firms BY ALEXANDER AUERBACH Jimts Staff Writer The source said Treasury officials fully expect the present high prices for oil to stay that way through the rest of 1974. He said the only thing that could force the price down would be a sudden drop in demand, which has not come in any of the industrialized nations. Middle East oil currently sells for a "landed" cost in the U.S. of almost $11 a barrel.

Canadian oil even sells at $10.50 a barrel, despite much lower transportation costs. The highest priced oil coming into the. United States is the low-sulfur crude from Nigeria and Algeria, selling for $12.50 a barrel and higher. "Our landed costs for imported oil are running close to $11 a barrel," the Treasury source said. "It's been that way since the Arab embargo was lifted." While oil imports have not quite reached the record highs set before the embargo was put on last October, they are not far from them.

In June, the United States imported 6,174,000 barrels of oil a day, which is just 400,000 barrels a day less than the October peak. At $11 a barrel, the United States is tiow paying almost $70 million a day for the oil it imports. In the first five months of this year, oil imports were down 3 from last year. But the cost of that oil was up 250, at an average price of $10.21 a barrel. That price was 261 above the early 1973 average.

So far this year, import costs have averaged $10.32 for crude oil, $9.51 for the heavier residual oil used in power plants, $11.59 for oil and home heating oil (27.6 cents a gallon), $18.74 for gasoline (44.61 cents a gallon) and $10.86 (25.85 cents a gallon) for jet fuel. Please Turn to Page 17, Col. 5 Options Exchange Chief Isn't Singing the Wall St. Blues gave the agency $500,000 more this year than it initially asked for, and recently handed it the power to demand previously secret data from big conglomerates on profits and sales by line of business. The bill giving the FTC that power was opposed by both business and the Administration, yet Congress pushed it through as an amendment to the Alaska pipeline bill.

"It was the only issue I've ever seen that produced such a broad and concerted personal effort by company presidents and board chairmen in opposition," Engman said. A court challenge to the bill is expected. Please Turn to Page 19, Col. 1 Port III 15 and Crown Zellerbach had announced in July that newsprint prices-would rise Aug. 1.

West Coast users of newsprint will a a ton-because of higher freight and labor charges. In mid-1973, newsprint prices were about $173 a ton. The pace of construction spending slowed by 0.3 in June from May. The Commerce Department reported building outlays ran at a seasonally adjusted annual rate of $136 down from May's upward revised $136.4 billion when spending edged up 0.1. The May figure, previously reported as an 0.7 drop from April, was revised to reflect additional data.

Measured in 1967 dollars to eliminate the impact of inflation, June expenditures ran at an adjusted annual rate of $81.1 billion, down 1.3 from May's $82.2 billion. Diplomatic pressure was applied against Mexico-Europe flights. U.S. officials have reemphasized to the Luxembourg and Mexican governments that the plans of Air Europe International to start service Sept. 2 between Tijuana and Luxembourg is strongly opposed by the U.S.

Civil Aeronautics Board. Such opposition was expressed earlier before the two countries granted approval for flights by the U.S.-owned maverick airline which reports that its cut-rate ticket sales are going well. The CAB says the-operation would, in effect, be illegal U.S.-EU-rope service. Discussions Tuesday between the CAB, the Transportation Department and its Federal Aviation Administration as to what can be done to prevent Air Europe's service were inconclusive. California A San Diego developer will begin his Recrion tender offer today.

Allen through his wholly owned Argent will pay $44 each for all shares of Recrion owner of the Stardust and Fremont hotel-casinos in Las Vegas. The Teamsters Union Central States Pension Fund has committed a $62.7 million loan to Glick. It would cost Glick $62,275,000 to purchase all 963,492 common shares held by the public at large plus the- 421,844 shares obtained from former chairman Delbert Coleman. The tender 'offer will expire Aug.r 14. Recrion's stock closed Thursday at more than double its price of last last week reported six-month earnings down 43 from last year.

World The World Bank boosted its lending rate to 8 from 7'4. The action, recommended by Robert McNamara, president of. the international lending agency, was approved by executive directors to offset the rising costs of the bank's borrowings. The directors also agreed to transfer $100 million of World Bank earnings to the International Development a bank affiliate that makes low-interest loans to needy nations. The World Bank, which makes loans to member nations, lent $3.2 billion in fiscal 1974, while IDA made loans of nearly $1.1 billion.

At the Top W. R. Grace Co. has elected a chairman, other officers. The New York-based chemical and consumer products firm said that Felix E.

Larkin, president and chief operating officer, was elected chairman by the firm's board of directors. J. Peter Grace, who has been chairman and chief executive officer, was elected president and chief executive officer, resuming his former position. George W. Blackwood, an executive vice president and group executive of the agricultural chemicals group, was transferred to corporate management to be in charge of oper- ations.

Briefly Told Zayre expects second-quarter profits to be lower than last year's 50 cents a share A.C Nielsen Co. said 1974 earnings will be about $1.02 a share, down from the $1.13 a share earned in fiscal 1973 Southern California Gas, a unit of Pacific Lighting, asked the PUC for permission to issue and sell up to $40 million in first mortgage bonds Nissan Motor plans to cut U.S. export shipments of Datsuns by a third this October Rail freight traffic volume last week totaled 16.4 billion ton-miles, up 0.6 from the week before and 1.2 over a year ago, the Assn. of American Railroads reported About 3.8 million shares of Teledyne common stocks were tendered in response to the company's offer to exchange 10 subordinated debentures for the stock Stocks Decline for 6th Straight Day; Dow Loses 6.33 From Times Wire Services NEW YORK The stock market Thursday recorded its sixth broad decline in a row, passing another bear-market milestone. The Dow Jones industrial average, with a 6.33-point drop to 751.10.

stood 300 points below the record closing high if reached just a year and a half ago 1051.70 on Jan. 11, 1973. The widely watched average of 30 blue chip issues, with a loss of more than 50 points since last Wednesday's close, finished at its lowest point since Sept. 22, 1970. Prices headed lower in quiet trading on the American Stock Exchange and over-the-counter market as inflation-pinched investors continued to hold back from buying.

Losers outdistanced gainers 828 to 465 among the 1,727 issues traded on the New York Stock Exchange. The Big Board's composite index, down 0.29 at 41.26, was at its lowest close since August four years ago. NYSE volume limped along at 11.47 million shares, up slightly from 10.9 million Wednesday. About an hour after the opening the market made a stab at a technical rebound, with the Dow advancing more than 2 points. But the upswing failed to attract any support, and prices yielded again to the pressures of concern over inflation, high interest rates, impeachment and the other issues on Wall Street's long list of woes.

After the close, the Federal Reserve Bank of New York reported that business loans at 12 major New York banks registered a relatively mild $25 million increase in the week ended Wednesday. Investors have put particular emphasis on the weekly loan data in the last couple of months as they looked for signs of an easing in upward pressure on interest rates. But it remained to be seen how Wall Street would respond to the latest statistics. Last week, when the Fed reported the first decline in business loans in seven weeks, the market seemed to shrug off the news and declined anyway. The preliminary count on large block trades of 10,000 or more shares, traded on the NYSE, was 84 compared with a revised total of 78 for Wednesday.

Please Turn to Page IT, Col. 4 Charles Lazarus, president of Toys-R-Us, said he has received assurances from major suppliers that they would extend normal trade credit to the firm. Many of Interstate's subsidiaries have had trouble getting merchandise except on a cash basis since the start of bankruptcy proceedings. The financing agreement provides for repayment in three steps: one-third is due Dec. 15, one-third on Jan.

15, 1975, and the last on Feb. 15. As part of the financing arrangement, ownership of the toy chain will be transferred to a sub-holding corporation, Toys-R-Us which will be responsible for all payments and purchasing, and which will operate the chain as a self-financed entity. The toy chain plans to open three new stores during the remainder of the year. These, plus a new store just opened in Houston, will bring the total to 51 stores with an annual volume of $140 million.

Homebuyers ter save with us. Not that a savings account is a requirement for a mortgage. It's a bit more complicated. Savings and loan associations are the source of most home mortgages today. And, to facilitate this role, they are permitted to offer depositors a slightly higher interest rate on savings.

The idea is to assure a flow of mortgage money. The technique worked for a long while. But commercial banks have become more innovative: through various techniques they have narrowed the advantage. Moreover, small investors and depositors discovered the high returns on corporate and municipal which have no government-imposed limitation on the the amount of interest they can pay. Please Turn io Page IT, Col.

1 National Nt borrowed reserves of U.S. banks hit record high last week. The New York Federal Reserve Bank said the nation's commercial banks averaged record net borrowed reserves of $3558 billion in the statement week ended Wednesday versus net borrowed reserves of $3,297 billion the previous week. Member bank borrowings from the Federal Reserve System averaged a record $3,526 billion against $3,486 billion the before. Commercial and industrial loans at major New York banks rose $25 million in the latest period against a $233 million drop the week before and a gain of $217 million a year ago.

The Fed reduced its holdings of government securities by $3,211 billion in the latest week. The nation's money supply declined in the week ended July 24 to $2805 billion from $282 billion the week before. Member firms of the NYSE posted a loss of $1 6.6 million in June. That brought the aggregate loss for the second quarter to $96 million. James J.

Needham, chairman of the New York Stock Exchange, said Big Board members lost $45.9 million in the first half of this year, compared with an' aggregate loss of $182 million in the first half of 1973. Need-ham said he was particularly concerned over some member firms rescinding previously announced commission rate boosts as a result of pressure from institutional customers. Retail sales last week were down slightly from the previous week. The Commerce Department reported sales during the week totaled billion, down 1.6 from the Week before, but 9 above the same week in 1973. Durable goods sales at $3.53 billion were 5 above a year, lago and sales of nondurables at $6.88 billion were up .11.

Sales in all ma-lior retail categories rose from the ear-earlier level, led by a 20 gam gasoline service stations. The figures are not seasonally adjusted. American paper manufacturers raised the price of newsprint'. As expected, most U.S. newsprint makers increased prices to an average of $220 a ton in the East from about $200.

The increase, which puts American paper firms in line with prices charged by Canadian competitors, followed the expiration Thursday of an agreement between the American manufacturers and the Cost of Living Council to hold prices -'at $220 per ton. Two large U.S. paper manufacturers, MacMillian-Bloedel mimv.mi.'.H YESTERDAY A iifW YOBK The Dow Jones 30 industrial jrtocks closed ot 6 new consecutive 1974 low Jof 751.10, down 6.31 High during the day 764.16; the low, 745.61 The Amex 'dosed off 0.63. i AMMM The Financial Times index of 30 -w inArn ctnrks dosed at new consecutive 1974 low of 234.2, off ZZ The 1974 high of 339.3wassetJan.2 irOKYd The Tokyo Stock Exchange 225-flhare index dosed ot 4,491.52, down 0.90. TW 1071 A 787.54 wat set June 1.

10. 1 Irfl 10 1 i 11 i 3D '-t P- --H M- $or I I i 4 24 III i IN MHUONS v22 i I 20 3:16 i Interstate Gets Bank Loan for Surviving Toys-R-Us Unit The Federal Trade Commission will probably file several major antitrust lawsuits against companies in the food and energy industries before the end of the year, the agency's chairman said here Thursday. The FTC believes a lack of competition in some sectors of these industries has contributed to inflation, Lewis Engman told a Los Angeles press1 conference, "If I were a betting man, I would bet that this fall one might begin to see potential litigation coming or (administrative) complaints filed," he added. The agency's bureau of competition, Engman said in an interview after the press conference, has organized task forces to investigate the areas of food and energy, and is planning a third task force to look into the health care industry. The agency already is involved in litigation against the nation's eight largest oil companies, alleging violation of antitrust laws, and has issued administrative complaints against local oil and gasoline distributors in several cities.

Engman was in town to swear in Ms. Carol G. Emerling as the new director of the FTCs regional office in Los Angeles. The office covers Southern California, Arizona and New Mexico. Ms.

Emerling, 43, formerly headed the FTC's Cleveland office. An antitrust expert, she was largely responsible for an antitrust lawsuit the agency filed against Standard Oil of Ohio, which is now about to go to trial. Engman said the agency is not planning to pull back from its agres-sive consumer protection program while it beefs up its antitrust But antitrust operations have been the primary beneficiary of a $6 million increase in the agency's budget this year, and will be strengthened still further if Congress agrees to the budget Engman will request. Approval appears likely. Congress Bankruptcy trustees of Interstate Stores Inc.

said in New York Thursday that a consortium of six major banks has agreed to extend a $10 million line of credit-to Toys-R-Us, the company's profitable toy chain. The money is for the exclusive use. of Toys-R-Us, and is an indication that the toy chain is to expected to survive the financial troubles of its parent. Herbert Siegel, president of Interstate as well as a trustee in bankruptcy, said arrangements are being completed for financing the firm's 20 conventional department stores. These, like the toy stores, are "highly profitable," he said.

Interstate has ceased operation of all of its discount stores, including the White Front stores on the West Coast Interstate, after several years of losses, filed for protection under Chapter 11 of the Bankruptcy Act on May 22. On June 13 the court ordered the firm into Chapter 10 proceedings and put it in the hands of trustees. rate than they can get at any savings institution. That's great, you say, and in the opinion of many, to be identified later, you are correct But others view the offering as destructive. They say it threatens "the system." The savings banks and savings and loan associations fear they will lose deposits.

Their customers, it is argued, will withdraw money from their accounts to buy the Treasury notes. While some small savers might sympathize with the plight of the so-called thrift institutions, they feel even more strongly for themselves. Why should they accept 6 or 7 from a savings and loan if Uncle Sam offers 8 plus? And the savings institutions reply: If these same people want to obtain home mortgages they darn well bet TREASURY THREAT TO Helping Savers Could Hurt BY MARGARET A. KILGORE Timet Staff Writer With overall stock market volume i falling, the Chicago Board Options Exchange brought word Thursday that it is flourishing as the first orga- f. nized floor for buying and selling op- tions on common stock.

Joseph 'W. Sullivan, president of the CBOE, which was formed in April, 1973, gave a status report to the newly formed Los Angeles Op- tions Society. "The CBOE has succeeded beyond any expectations," Sullivan told a luncheon audience of 200 stockbro- kers at the Statler-Hilton. Sullivan estimated that average options volume on the exchange dur-ing the first quarter averaged 1.6 million shares, daily and that an average of 20,000 option contracts per day were handled in July. The volume was exceeded only by the New York and American stock ex- changes, he said Presently, call options are traded on a pilot list of 32 stocks.

A call option represents the right to buy a stock at a pre-determined price any time during the life of the option. Plans for expanding the number of stocks listed for options trading re- main subject to a review by the Se-! curities Exchange Commission. The exchange was formed by the Chicago Board of Trade, the world's oldest established commodity fu-; tures exchange. Instead of giving the right to buy or sell commodity futures, the op tions carry the right to buy or sell common stocks at a fixed price for an agreed period of time. It is lik- to a futures market in stocks.

NEW YORK tfl Depending upon your point of view, the decision by the U.S. Treasury to borrow $4.3 billion in the open market is either further confusion or greater opportunity. The Treasury is always doing 'something of the sort, because with a debt burden of $400 billion or so there is the constant need for refin ancing. But there's a difference this time. In the past the Treasury issued its notes in minimum units of $10,000.

But in this latest financing, scheduled for Tuesday through Thursday of next week, the minimum will be in $1,000 units. That means the small investor and small saver can get in on the act, and quite likely collect in excess of 8 interest from Uncle Sam, a higher.