The Los Angeles Times from Los Angeles, California • 52

v- continental light 'CAB uis Approved by New Tax Could Hinder Sales of Latest Jetliners Surcharge Raises Cost of Tristar Engines; Sections of DC-10 Also Are Imports C. Arnholt Smith Times photo PUC Thinks Smith Still Keeps Control Over Golden West The California Public Utilities Commission has declared it believes "Westgate-California Corp. andor C. Arnholt Smith still have control over Golden West Airlines," possibly in violation of federal and state law. Smith, the San Diego industrialist and financier, and Westgate, the tuna, taxicab and real estate conglomerate that is the keystone of his business empire, were required by the Civil Aeronautics Board in 1968 to divest control of a predecessor company of Golden West.

Since then, control of that commuter airline, the nation's biggest, has changed hands at least twice, most recently falling to Hollis Roberts, a Porjterville agribusinessman. But in a filing made with the CAB Jn Washington and obtained by The Times, attorneys for the PUC say it appears to them that Roberts and Smith "are close friends and have" had numerous business i dealings together for their mutual benefit, and that such friendly dealings also involve Golden West Airlines." Please Turn to Page 15, Col. 6 Profit-Taking Trims Stock Prices Again; Dow Declines 5.40 NEW YORK Mild profit taking pushed market prices moderately lower Thursday, but selling was fainthearted and trading well below the levels of earlier this week. i The Dow Jones average of 30 industrials fell 5.40 to 880.77. Added to Wednesday's nearly 14-point drop, this erased almost half the market's sharp gain at the beginning of the week.

Although most analysts said the market's consolidation was normal in view of the Dow's nearly 43-point climb, they pointed out it was apparently losing momentum. Trading was Subdued "Trading was much more subdued, and most price changes were relatively small," declared Newton Zin-der, analyst with E.F. Hutton Co. News that mutual fund redemptions exceeded sales for the third straight month also may have depressed the market, Zinder said. Strong opposition by organized labor to President Nixon's wage-price freeze also added to investor caution, analysts added.

Volume on the New York Stock Exchange slipped to 14.19 million shares, from the 20.68 million shares traded Wednesday. The Big Board index of some 1,300 common stocks dropped 0.25 to 54.28. Of the 1,551 stocks traded on the Big Board. 478 advanced, and 893 declined. There were 27 new highs and 38 new lows.

Airlines, rails, utilities and mail order retail were higher. Chemicals were mixed, and other groups were generally lower. Standard Poor's 500-stock index fell" 0.44 to 98.16. A total of 117 blocks of ,10,000 shares or over were traded on. the Big Board, compared with 140 Please Turn to Page 13, Col.

8 International Leisure has previously reported consolidated net income of $2,803,552 or 43 cents per share compared with $1,949,342 or 30 cents per share in the corresponding period last year. Kerkorian was known to have borrowed heavily at high interest rates to finance his purchases' of controlling interest in Metro-Gold-wyn-Mayer and Western Airlines. However, a spokesman had no comment on whether Kerkorian's new cash acquisitions would be used to pay off those loans. Kerkorian has previously declared he will pay off the last of his foreign borrowings this year. BY CHARLES D.

WOOD Timet Staff Writer A whiplash effect from the Nixon Administration's import tax could result in making it more difficult to sell this country's newest jet airliners. The goal of the import surcharge was to make U.S. goods more competitive in world markets by forcing a currency revaluation which would enable them to be sold at cheaper prices abroad. If the import surcharge and the cutting loose of the dollar from gold backing does indeed bring an effective devaluation of the dollar it eventually may help out the cost of the new wide-bodied trijet airliners the Lockheed L-1011 and the McDonnell Douglas DC-10. Prices Forced Up But in the meantime the surcharge means that the price tags on both airliners go up by about $300,000.

They previously sold for about $16 million each. John Connally, secretary of the Treasury, made it certain Thursday that the British-made Rolls-Royce jet engines for the Lockheed L-1011 won't be exempted from the 10 general import surcharge President Nixon has ordered. Neither, he said, would imported assemblies of the DC-10 be exempted. The three engines needed for each L-1011 cost about $3.3 million per ship set, and thus the import tax would increase the cost per plane bv more than $300,000. The Treasury estimates that about 1 I71 1 1 70 of the Burbank-built L-1011 is imported and therefore subject to the taxprincipally the engines.

It also estimates that about 15 of the Long Beach-built DC-10 is assembled abroad the entire wing is constructed in Canada and certain tail assemblies come from Italy. Aircraft industry executives here said the Treasury figures aren't far off. It all depends on how long it takes for the dollar to settle down to its new deflated level, at which time the Administration indicates it will eliminate the import tax. Neither Lockheed nor McDonnell Douglas would comment officially on the situation. However, the Rolls-Royce engines which are coming into the country now remain the property of Rolls-Royce because they are here strictly for flight test purposes.

First deliveries of the L-1011 to Eastern Airlines and Trans World Airlines are scheduled about April Please Turn to Page 15, Col. 5 Authorized to Write 5-Down Home Mortgages The Federal Home Loan Bank Board Thursday authorized federal savings and loan associations to make conventional home loans with down payments low as 5. Most loans are currently being made on a 20-down basis. Board Chairman Preston Martin said the policy is intended to assist "great numbers of American families having only a modest down payment." Martin said the board's plan is geared to purchasers of single-family dwellings in the $22,000 to range, and added that it will be particularly useful to moderate and low-income persons who are buying homes for the first time. The FHLB program is designed to supplement rather than to compete with housing finance arrangements of the Federal Housing Administration and the Veterans' Administration, who normally require a down payment of about 30.

Savings and loan associations would not be required to make any 5 down payment loans unless they wished to do so. They could not put Please Turn to Page 13, Col. 6 Safeties 12 Part III FRIDAY, AUG. National freight traffic climbed 1 4.3 lost week over the previous week. The Assn.

of American Railroads tjscted in Washington, however, that khe figure was still 2.6 below the like 1970 period. Volume last week -totaled 14.4 billion ton-miles, up rbm 12.6 billion the previous week TSrhen operations were curtailed for the first two days because of the rail rgtrike. Volume in the comparable 1970 week totaled 14.8 billion top-miles. Cumulative volume for the sfirst 33 weeks of 1971 amounted to 473.2 billion ton-miles, 2.1 below the like 1970 period. Itetoi! store sales fast week "rose 8 from a year earlier.

totaled $7.42 billion last Week, the Commerce Department reported In Washington, up from the week last year but unchanged torn the previous week, The year- toy ear gain matched the 8 aver-, increase in the last four weeks aad was ahead of the 7 gain for the year to Durable goods sales, at $2.34 billion, were up 12 irm a year ago, while sales of non-' durables were up 6 at $5.08 billion, report said. The largest gain was registered in the automotive group. The NYSE called an industry-wide meeting to discuss a central market. ai-rThe move was taken by the ex-l change's board of governors follow- frig a study of this and other propo-i sals mentioned in a special report on the securities industry released by former Federal Reserve Board Chairman William McChesney Mar-. tin.

The exchange said it would also form a task force to consider the Martin proposal for a reorganization the New York Stock Exchange. NYSE's governors said they fcava been studying the question of Institutional membership, and gdded they hoped to speed up a final A feasibility study a consolidated communications System for all stock markets would be ready for board review in September, the exchange added. i it i King Resources said it would go i olong with reorganization requests. The Denver-based natural resources company, which has suffered several financial setbacks in recent i months, said it was in the best interests "of all parties associated with -Hhe company" that it acquiesce. A I petition seeking the reorganization jMnder Chapter 10 of the Federal bankruptcy Act was filed earlier 'this month by creditors in Federal District Court in Dallas.

The petition alleged that the company has an on-going concern that should be iCommerciol banks' net borrowed reserves rose sharply last week. The New York Federal Reserve iBank estimated the nation's banks leveraged borrowed reserves of $891 million in the week ended Wednes- 10 3G if IN IMIUldNS 30 53- 28 26 U22 is i10 8 79 716 723 730 86 813 820 WEEKS ENDING YESTERDAY A i NEW YORK The Dow Jones 30 Indus-Urial stock average, closed ot 880.77, down High during the day was 889.68; 'the low, 873.90. The Amex dosed off 0.07. LONDON The Financial Times index of industrial stocks closed at 405. 1, up 2 4.

The 1971 high of 413.2 was set July 27. The 1971 low of 305.3 was set March 2. "TO 'Si ll i i i I li 1.1 1 80 -ti-t i ir Jf t-i 4 at 1 i i i II go 1 1 I 1 jjBSO il nice 20, 1971 day, compared with a revised, hor- rowed reserve figure of $569 million the previous week. Member bank borrowings from the Federal Reserve System averaged $1,180 billion in the week, up from $593 million the week before. The New York Fed said the nation's money supply averaged $228.7 billion in the week, up from $226.7 billion a week earlier.

Commercial and industrial loans at major New York City banks rose $348 million, compared with a rise of $9 million in the previous week. California Arden-Mayfair and Telautograph signed a final merger agreement. Under terms of the agreement, Los Angeles-based Arden will issue shares of its common' stock for the outstanding stock of Telautograph, also headquartered in Los Angeles. The Arden shares are worth approximately $10.9 million. The exchange ratio calls for each Telautograph stockholder to receive 710s of a share of Arden common for each share of Telautograph.

Arden said the merger is still subject to approval by stockholders of both companies and receipt of a favorable income tax ruling from the IRS. First Surety elected a new chairman ond vowed to fight Community Bank. Donald E. Butler, 44, was elected to the post, replacing John Canaday, who retired. Butler was formerly president of SSP Industries.

First Surety's board of directors adopted a resolution acknowledging "recent 'activities' of Community Bank (which owns 26 of First Surety Corp.) to effect a takeover of the affairs" of First 1 Surety, a savings and loan holding company headquartered in Burbank. Community Bank, headquartered in Huntington Park, acquired its controlling interest in First Surety in 1970. The World Air France and BOAC both reported sharply lower profits for the year. British Overseas Airways Corp. said in London net income for the year ended March 31 fell to $8.2 million from $46.3 million a year earlier.

Operating revenues for the year totaled $469.2 million, compared to $475.2 million last year. Air France, Paris, said that 1970 earnings equalled $1,876,800, down sharply from the $4.6 million reported for 1969. Revenues were $600,576,000, up 17.2 from the previous year. Men at the Top James A. Hughes was elected chief executive of Diamond Shamrock Hughes, who was also elected chairman of the board, succeeds Raymond F.

Evans who rejm-quished both positions and became chairman of the executive committee. C. A. Cash was named to succeed Hughes as 'president of the Cleveland-based company. Bekins Moving Storage elected Marvin E.

Egeland as president. Egeland succeeds R. Anderson, who is on an extended medical leave of absence. Egeland was formerly executive president of operations for the major subsidiary of Bekins headquartered in Los Angeles. Briefly Told Standard International Corp.

said operating income dropped about 11 for the year ended June 30 despite a 2 jump in sales. El Paso Natural Gas Co. said it plans to construct a $250 million commercial plant for the conversion of coal into gas suitable for pipeline transmission Directors of Dan River Mills Inc. voted to omit the quarterly dividend of 272 cents on the $1.10 cumulative convertible preferred stock that would have been payable Oct. 1 The Department of Housing and Urban Development said bids will be opened Sept.

29 on $258.2 million worth of local housing bonds Presley Development Newport Beach, said it has been approved for listing on the American Stock Exchange Reynolds Metals cut its quarterly dividend to 15 cents a share from 27 Vt cents American Airlines said its DC-10 carried more than passengers and achieved a load factor of over 80 during its first 10 days of operation in the Los Angeles to Chicago market I International Harvester Co. said it will phase, out its Milwaukee works foundry over the next year Kodak a British unit of Eastman Kodak said it has received government permission to build facilities at Milton Keynes, England. Fi Kerkorian Sells Last Million International Leisure Shares 29 Slash in LA. N.Y. Connections Among Reductions BY PAUL E.

STEIGEIt Tim stiff writer The Civil Aeronautics Board Thursday approved a proposed plan for massive cutbacks in transcontinental service by United Air Lines, American Airlines and Trans World Airlines. The three airlines had worked out the plan in joint discussions which the CAB authorized despite resis tance by the Justice Department. It will now go into effect beginning in October. It is the first such plan ever approved. The plan will result in a 29 reduction in the number of flights connecting Los Angeles with metropolitan New York, and a 10 reduction in flights between Los Angeles and the Washington-Baltimore area.

In addition, New York-San Francisco service will be cut back a whopping 38 and Chicago-San Francisco flights will be reduced 28. Heavv Losses Cited In granting approval, the board noted that the three big transcontinental lines have suffered heavy losses, and said it believes the agreement "can make a significant contribution to solving excess capacity and financial distress without an adverse impact on the public or on competing carriers." "While economic forces should ultimately resolve the problem of the, board added, "thev misht do so too slowlv to avert serious injury to some of the carriers and the air transport system as a whole." The five-member CAB approved the flight-reduction plan with only a single, partial dissent: by Joseph G. Minetti, who said he felt the plan should be limited to a six-month period (as the Justice Department argued) rather than to a year, as is the case. The board said the objective of tti agreement, between the three airlines is to raise the percentage of seats sold on these routes up to the 52.5 level the CAB has found to be advisable. Present load factors on these routes have been running an abysmal 26 to 36, the.

board said. Some Waiting Possible While the load factors aimed for under the plan call for the planes on these routes to be little more than half full, that is only the average figure, and the reduction of flights could increase the likelihood that a passenger might not be able to get a reservation at certain peak times. The plan actually calls for two stages. Until May 31, the number of round-trip, non-stop flights will be reduced as follows: Los New York, 132 flights per week from the present 185; Los Angeles-Washington, 66 from 73; Chicago-San Francisco, 105 from 147; and New York-San Francisco, 89 from 143. Then, in the peak summer period, June 1 to Sept.

16, the plan calls for the number of flights to come back up slightly: Los Angeles-New York will get 157 flights a week; Los Angeles-Washington, 69; Chicago-San Francisco, 126; and New York-San Francisco, 121. chief executive officer, told the quiet group at the Los Angeles Hiltcn that, despite encouraging operations of the company's three major subsi-diaries, the outlook remains "criti-cal." Palmieri, who took control of tha company in October with Bruce C. Juell, vice president and Palmieri's sole partner in a Los Angeles counseling and investment firm, said his work with Great Southwest included "the most difficult sef of business problems I have ever encountered." Those problems resulted in the company's previously reported net loss of $143,093,795 in 1970, compared to net earnings of $34,363,493 in 1969. The company reported on Thursday a net loss for the first half ended June 30 of $2,706,268, or 13 cents a share. Because a number of operations in 1970 were discontinued, first half comparison figures are not relevant, the company said.

Critical Spinoff Deal Palmieri said there is "a good chance to be in the black" for the company's year-end report. Palmieri said the company's future may rest with its ability to complete an agreement, now pending, to spin off from the Pennsylvania Co. An agreement in principle was announced May 24 by Penn Central Transportation following a congressional mandate to give up its non-railroad assets. Thus, the rail-Please Turn to Page 13, Col. 2 Great Southvest's Chief Ties Firm's Future to Credit Deal BY GEORGE A.

GLADNEY Tlfflit Staff Writer Kirk Kerkorian, Las Vegas Thursday sold to Hilton Hotels Corp. the last of his holdings in International Leisure Corp. one million shares for at least $13.5 million. Under a complicated formula involving International Leisure's net income per share the payment could go to $18.24 per share, or a total additional amount of $1,740,000. The minimum per-share price without the earning increase is $13.50.

At the same time Kerkorian announced he no longer has any equity interest in the firm which owns and operates the Las Vegas Hilton (formerly the International Hotel) and the Flamingo Hotel in Las Vegas. Kerkorian resigned as an International Leisure director. Sold by Tracinrla The sale, technically, was made by Tracinda Investment entirely owned by Kerkorian and a successor to his former investment vehicle, Tracy Investment Co. Barron Hilton, president of Hilton Hotels said in Beverly Hills that his firm now owns 5,644,430 shares or 85.6 of International Leisure's 6,577,699 shares. Nearly all of the shares were purchased from Kerkorian; Hilton acquired 1,355.580 shares in July.

The total of the July purchase and the one reported Thursday amounts to a minimum of and a maximum of $42,965,780. International Leisure shares were quoted Thursday on the national over-the-counter market at $16.25 bid, $16.62 asked, up 12 cents. For the six months ended June 30 Long-Term Rx Bank of America warned that the United Stat.e3 and its ailies must work' on a long-term strategy "before the time advantage of the Nixon initiatives is exhausted." Bank of America said its public policy statement was made available to the White House, key U.S. monetary officials and members of Congress, "The chronically unsatisfactory, U.S. balance of payments," said the 21-page statement, "underlies the dollar's weakness.

The United States itself must take a leading part in redressing that imbalance." Ever since the I960 London gold FOLLOW-UP TO NIXON'S FIRST AID The president of Los Angeles-based Great Southwest Corp. told shareholders at an annual meeting Thursday that the future of the loss-plagued company may well depend on an extended credit "treaty" with 25 financial groups here and 50 in Europe. He hinted, however, that the success of a refinancing program may depend oa.the completion of a proposed spinoff from the Pennsylvania part of the bankrupt Penn Central Transportation Co. Victor H. Palmieri, president and for Sick Dollar panic, this nation and its friends have taken many remedial steps, the bank said.

But, though some were constructive, they were "patch upon patch." 'The recent conditions of world markets have dramatized the inadequacy of this approach," the white paper said. our country is to nurture.and stimulate the competitive spirit described by the President, 'temporary' non-market regulatory devices must give way to a reasoned and deliberate course of action leading to a comprehensive and practical strategy." Please Turn to Page 13, Col. 1 of A Writes BY ALjvDELUGACH TlmU Staff Writer The temporary medicine administered by President Nixon "requires a long range follow-up treatment to nurse the U.S. dollar back to health in international affairs. In support of that diagnosis, the Bank of America (the world's' largest commercial bank) issued its prescription Thurs- day.

The Rx calls for greater flexibility in exchange rates and liberalization of trade policies at home and abroad. Stating that Mr. Nixon's suspension of the convertibility of the dol-' lar is an "interim tactical device,".