.START 

For six years, T. Marshall Hahn Jr. has made corporate acquisitions in the George Bush mode: kind and gentle.
The question now: Can he act more like hard-charging Teddy Roosevelt? 

Mr. Hahn, the 62-year-old chairman and chief executive officer of Georgia-Pacific Corp. is leading the forest-product concern's unsolicited $3.19 billion bid for Great Northern Nekoosa Corp. Nekoosa has given the offer a public cold shoulder, a reaction Mr. Hahn hasn't faced in his 18 earlier acquisitions, all of which were negotiated behind the scenes. 

So far, Mr. Hahn is trying to entice Nekoosa into negotiating a friendly surrender while talking tough. "We are prepared to pursue aggressively completion of this transaction," he says. 

But a takeover battle opens up the possibility of a bidding war, with all that implies.
If a competitor enters the game, for example, Mr. Hahn could face the dilemma of paying a premium for Nekoosa or seeing the company fall into the arms of a rival. 

Given that choice, associates of Mr. Hahn and industry observers say the former university president -- who has developed a reputation for not overpaying for anything -- would fold. 

"There's a price above which I'm positive Marshall has the courage not to pay," says A.D. Correll, Georgia-Pacific's executive vice president for pulp and paper.
Says long-time associate Jerry Griffin, vice president, corporate development, at WTD Industries Inc.: "He isn't of the old school of winning at any cost." 

He also is a consensus manager, insiders say.
The decision to make the bid for Nekoosa, for example, was made only after all six members of Georgia-Pacific's management committee signed onto the deal -- even though Mr. Hahn knew he wanted to go after the company early on, says Mr. Correll.
Associates say Mr. Hahn picked up that careful approach to management as president of Virginia Polytechnic Institute.
Assuming that post at the age of 35, he managed by consensus, as is the rule in universities, says Warren H. Strother, a university official who is researching a book on Mr. Hahn.
But he also showed a willingness to take a strong stand.
In 1970, Mr. Hahn called in state police to arrest student protesters who were occupying a university building. 

That impressed Robert B. Pamplin, Georgia-Pacific's chief executive at the time, whom Mr. Hahn had met while fundraising for the institute.
In 1975, Mr. Pamplin enticed Mr. Hahn into joining the company as executive vice president in charge of chemicals; the move befuddled many in Georgia-Pacific who didn't believe a university administrator could make the transition to the corporate world. 

But Mr. Hahn rose swiftly through the ranks, demonstrating a raw intelligence that he says he knew he possessed early on.
The son of a physicist, Mr. Hahn skipped first grade because his reading ability was so far above his classmates.
Moving rapidly through school, he graduated Phi Beta Kappa from the University of Kentucky at age 18, after spending only 2 1/2 years in college.
He earned his doctorate in nuclear physics from the Massachusetts Institute of Technology. 

Mr. Hahn agrees that he has a "retentive" memory, but friends say that's an understatement.
They call it "photographic". 

Mr. Hahn also has engineered a surprising turnaround of Georgia-Pacific.
Taking over as chief executive officer in 1983, he inherited a company that was mired in debt and hurt by a recession-inspired slide in its building-products business.
Mr. Hahn began selling non-core businesses, such as oil and gas and chemicals.
He even sold one unit that made vinyl checkbook covers. 

At the same time, he began building up the pulp and paper segment of the company while refocusing building products on home repair and remodeling, rather than materials for new-home construction.
The idea was to buffet building products from cycles in new-home construction. 

The formula has paid off, so far.
Georgia-Pacific's sales climbed to $9.5 billion last year, compared with $6 billion in 1983, when Mr. Hahn took the reins.
Profit from continuing operations has soared to $467 million from $75 million.
Mr. Hahn attributes the gains to the philosophy of concentrating on what a company knows best. 

"The record of companies that have diversified isn't all that impressive," he says. 

Nekoosa wouldn't be a diversification.
It would be a good match, Mr. Hahn and many analysts say, of two healthy companies with high-quality assets and strong cash flows.
The resulting company would be the largest forest-products concern in the world with combined sales of more than $13 billion. 

But can Mr. Hahn carry it off?
In this instance, industry observers say, he is entering uncharted waters.
Says Kathryn McAuley, an analyst at First Manhattan Co.: "This is the greatest acquisition challenge he has faced." 

.START 

A House-Senate conference approved major portions of a package for more than $500 million in economic aid for Poland that relies heavily on $240 million in credit and loan guarantees in fiscal 1990 in hopes of stimulating future trade and investment. 

For the Agency for International Development, appropriators approved $200 million in secondary loan guarantees under an expanded trade credit insurance program, and total loan guarantees for the Overseas Private Investment Corp. are increased by $40 million over fiscal 1989 as part of the same Poland package. 

The conference approved at least $55 million in direct cash and development assistance as well, and though no decision was made, both sides are committed to adding more than $200 million in economic support funds and environmental initiatives sought by the Bush administration. 

The agreement on Poland contrasts with the major differences remaining over the underlying foreign aid bill, which has already provoked veto threats by the White House and is sharply confined under this year's budget.
These fiscal pressures are also a factor in shaping the Poland package, and while more ambitious authorizing legislation is still pending, the appropriations bill in conference will be more decisive on U.S. aid to Eastern Europe. 

To accommodate the additional cash assistance, the House Appropriations Committee last week was required to reallocate an estimated $140 million from the Pentagon.
And though the size of the loan guarantees approved yesterday is significant, recent experience with a similar program in Central America indicates that it could take several years before the new Polish government can fully use the aid effectively. 

The action on Poland came as the conference separately approved $220 million for international population planning activities, an 11% increase over fiscal 1989.
The House and Senate are divided over whether the United Nations Population Fund will receive any portion of these appropriations, but the size of the increase is itself significant. 

In a second area of common concern, the world environment, an additional $15 million will be provided in development assistance to fund a series of initiatives, related both to global warming and the plight of the African elephant. 

The sweeping nature of the bill draws a variety of special interest amendments, running from an import exemption for a California airplane museum to a small but intriguing struggle among sugar producing nations over the fate of Panama's quota of exports to the profitable U.S. market. 

Panama was stripped of this right because of U.S. differences with the Noriega regime, but the Central American country would have received a quota of 30,537 metric tons over a 21-month period ending Sept. 30, 1990.
About a quarter of this share has already been reallocated, according to the industry, but the remaining 23,403 tons are still a lucrative target for growers because the current U.S. price of 18 cents a pound runs as much as a nickel a pound above the world rate. 

The potential sales are nearly $9.3 million, and House Majority Whip William Gray (D., Pa.) began the bidding this year by proposing language that the quota be allocated to English-speaking countries of the Caribbean, such as Jamaica and Barbados.
Rep. Jerry Lewis, a conservative Californian, added a provision of his own intended to assist Bolivia, and the Senate then broadened the list further by including all countries in the U.S. Caribbean Basin initiate as well as the Philippines-backed by the powerful Hawaii Democrat Sen. Daniel Inouye.
Jamaica, wary of upsetting its Caribbean Basin allies, has apparently instructed its lobbyist to abandon the provision initially drafted by Mr. Gray, but the greater question is whether Mr. Inouye, who has strong ties to the sugar industry, is able to insert a claim by the Philippines. 

In separate floor action, the House waived budget restrictions and gave quick approval to $3.18 billion in supplemental appropriations for law enforcement and anti-drug programs in fiscal 1990.
The funding is attached to an estimated $27.1 billion transportation bill that goes next to the Senate and carries with it a proposed permanent smoking ban on virtually all U.S. domestic airline flights. 

The leadership hopes to move the compromise measure promptly to the White House, but in recent days, the Senate has been as likely to bounce bills back to the House.
The most recent example was a nearly $17.3 billion fiscal 1990 bill funding the State, Justice and Commerce departments.
And after losing a battle Tuesday night with the Senate Foreign Relations Committee, appropriators from both houses are expected to be forced back to conference. 

.START 

Beauty Takes Backseat 

To Safety on Bridges 

EVERYONE AGREES that most of the nation's old bridges need to be repaired or replaced.
But there's disagreement over how to do it. 

Highway officials insist the ornamental railings on older bridges aren't strong enough to prevent vehicles from crashing through.
But other people don't want to lose the bridges' beautiful, sometimes historic, features. 

"The primary purpose of a railing is to contain a vehicle and not to provide a scenic view," says Jack White, a planner with the Indiana Highway Department.
He and others prefer to install railings such as the "type F safety shape," a four-foot-high concrete slab with no openings. 

In Richmond, Ind., the type F railing is being used to replace arched openings on the G Street Bridge.
Garret Boone, who teaches art at Earlham College, calls the new structure "just an ugly bridge" and one that blocks the view of a new park below. 

In Hartford, Conn., the Charter Oak Bridge will soon be replaced, the cast-iron medallions from its railings relegated to a park. 

Compromises are possible.
Citizens in Peninsula, Ohio, upset over changes to a bridge, negotiated a deal: The bottom half of the railing will be type F, while the top half will have the old bridge's floral pattern. 

Similarly, highway engineers agreed to keep the old railings on the Key Bridge in Washington, D.C., as long as they could install a crash barrier between the sidewalk and the road. 

Tray Bon?
Drink Carrier 

Competes With Cartons 

PORTING POTABLES just got easier, or so claims Scypher Corp., the maker of the Cup-Tote. 

The Chicago company's beverage carrier, meant to replace cardboard trays at concession stands and fast-food outlets, resembles the plastic loops used on six-packs of beer, only the loops hang from a web of strings.
The new carrier can tote as many as four cups at once. 

Inventor Claire Marvin says his design virtually eliminates spilling.
Lids aren't even needed.
He also claims the carrier costs less and takes up less space than most paper carriers.
A few fast-food outlets are giving it a try. 

The company acknowledges some problems.
A driver has to find something to hang the carrier on, so the company supplies a window hook.
While it breaks down in prolonged sunlight, it isn't recyclable.
And unlike some trays, there's no place for food. 

Spirit of Perestroika 

Touches Design World 

AN EXCHANGE of U.S. and Soviet designers promises change on both sides. 

An exhibition of American design and architecture opened in September in Moscow and will travel to eight other Soviet cities.
The show runs the gamut, from a blender to chairs to a model of the Citicorp building. 

The event continues into next year and includes an exchange program to swap design teachers at Carnegie-Mellon and Leningrad's Mutchin Institute. 

Dan Droz, leader of the Carnegie-Mellon group, sees benefits all around.
The Soviets, who normally have few clients other than the state, will get "exposure to a market system," he says.
Americans will learn more about making products for the Soviets. 

Mr. Droz says the Soviets could even help U.S. designers renew their sense of purpose. "In Moscow, they kept asking us things like, `Why do you make 15 different corkscrews, when all you need is one good one? '" he says. "They got us thinking maybe we should be helping U.S. companies improve existing products rather than always developing new ones." 

Seed for Jail Solution 

Fails to Take Root 

IT'S A TWO BIRDS with one stone deal: Eggers Group architects propose using grain elevators to house prisoners.
It would ease jail overcrowding while preserving historic structures, the company says. 

But New York state, which is seeking solutions to its prison cell shortage, says "no." 

Grain elevators built in the 1920s and '30s have six-inch concrete walls and a tubular shape that would easily contain semicircular cells with a control point in the middle, the New York firm says.
Many are far enough from residential areas to pass public muster, yet close enough to permit family visits. 

Besides, Eggers says, grain elevators are worth preserving for aesthetic reasons -- one famed architect compared them to the pyramids of Egypt. 

A number of cities -- including Minneapolis, Philadelphia and Houston -- have vacant grain elevators, Eggers says.
A medium-sized one in Brooklyn, it says, could be altered to house up to 1,000 inmates at a lower cost than building a new prison in upstate New York.
A spokesman for the state, however, calls the idea "not effective or cost efficient." 

.START 

The Labor Department cited USX Corp. for numerous health and safety violations at two Pennsylvania plants, and proposed $7.3 million in fines, the largest penalty ever proposed for alleged workplace violations by an employer. 

The department's Occupational Safety and Health Administration proposed fines of $6.1 million for alleged violations at the company's Fairless Hills, Pa., steel mill; that was a record for proposed penalties at any single facility.
OSHA cited nearly 1,500 alleged violations of federal electrical, crane-safety, record-keeping and other requirements. 

A second citation covering the company's Clairton, Pa., coke works involved more than 200 alleged violations of electrical-safety and other requirements, for which OSHA proposed $1.2 million in fines. 

Labor Secretary Elizabeth Dole said, "The magnitude of these penalties and citations is matched only by the magnitude of the hazards to workers which resulted from corporate indifference to worker safety and health, and severe cutbacks in the maintenance and repair programs needed to remove those hazards." 

OSHA said there have been three worker fatalities at the two plants in the past two years and 17 deaths since 1972.
Gerard Scannell, the head of OSHA, said USX managers have known about many of the safety and health deficiencies at the plants for years, "yet have failed to take necessary action to counteract the hazards." 

"Particularly flagrant," Mrs. Dole said, "are the company's numerous failures to properly record injuries at its Fairless works, in spite of the firm promise it had made in an earlier corporate-wide settlement agreement to correct such discrepancies." That settlement was in April 1987. 

A USX spokesman said the company hadn't yet received any documents from OSHA regarding the penalty or fine. "Once we do, they will receive very serious evaluation," the spokesman said. "No consideration is more important than the health and safety of our employees." 

USX said it has been cooperating with OSHA since the agency began investigating the Clairton and Fairless works.
He said that, if and when safety problems were identified, they were corrected. 

The USX citations represented the first sizable enforcement action taken by OSHA under Mr. Scannell.
He has promised stiffer fines, though the size of penalties sought by OSHA have been rising in recent years even before he took office this year. 

"The big problem is that USX management has proved unwilling to devote the necessary resources and manpower to removing hazards and to safeguarding safety and health in the plants," said Linda Anku, OSHA regional administrator in Philadelphia.
USX has 15 working days to contest the citations and proposed penalties, before the independent Occupational Safety and Health Review Commission. 

Before the USX case, OSHA's largest proposed fine for one employer was $4.3 million for alleged safety violations at John Morrell & Co., a meatpacking subsidiary of United Brands Co., Cincinnati.
The company is contesting the fine. 

.START 

Due to an editing error, a letter to the editor in yesterday's edition from Frederick H. Hallett mistakenly identified the NRDC.
It should be the Natural Resources Defense Council. 

(See "Letters to the Editor: Ozone Dangers Aren't Up in the Air" -- WSJ Nov. 1, 1989) 

.START 

Your Oct. 6 editorial "The Ill Homeless" referred to research by us and six of our colleagues that was reported in the Sept. 8 issue of the Journal of the American Medical Association.
Your comments implied we had discovered that the "principal cause" of homelessness is to be found in the large numbers of mentally ill and substance-abusing people in the homeless population.
We have made no such statement.
It is clear that most mentally ill people and most alcoholics do not become homeless.
The "causes" of homelessness are poorly understood and complex in any individual case. 

In quoting from our research you emphasized the high prevalance of mental illness and alcoholism.
You did not note that the homeless people we examined had a multitude of physical disorders in addition to their psychiatric problems and substance abuse.
They suffered from malnutrition, chest diseases, cardiovascular disorders, skin problems, infectious diseases and the aftereffects of assaults and rape.
Homeless people not only lack safety, privacy and shelter, they also lack the elementary necessities of nutrition, cleanliness and basic health care.
In a recent report, the Institute of Medicine pointed out that certain health problems may predispose a person to homelessness, others may be a consequence of it, and a third category is composed of disorders whose treatment is difficult or impossible if a person lacks adequate shelter.
The interactions between health and homelessness are complex, defying sweeping generalizations as to "cause" or "effect." 

If we look to the future, preventing homelessness is an important objective.
This will require us to develop a much more sophisticated understanding of the dynamics of homelessness than we currently possess, an understanding that can be developed only through careful study and research. 

William R. Breakey M.D. 

Pamela J. Fischer M.D. 

Department of Psychiatry 

Johns Hopkins University 

School of Medicine 

Baltimore 

A study by Tulane Prof.
James Wright says homelessness is due to a complex array of problems, with the common thread of poverty.
The study shows that nearly 40% of the homeless population is made up of women and children and that only 25% of the homeless exhibits some combination of drug, alcohol and mental problems. 

According to Dr. Wright, homelessness is "simultaneously a housing problem, an employment problem, a demographic problem, a problem of social disaffiliation, a mental health problem, a family violence problem, a problem created by the cutbacks in social welfare spending, a problem resulting from the decay of the traditional nuclear family, and a problem intimately connected to the recent increase in the number of persons living below the poverty level." 

Leighton E. Cluff M.D. 

President 

Robert Wood Johnson Foundation 

Princeton, N.J. 

To quote the highly regarded director of a privately funded drop-in center for the homeless in New York: "If you're homeless, you don't sleep for fear of being robbed or murdered.
After your first three weeks of sleep deprivation, you're scarcely in touch with reality any more; without psychiatric treatment, you may well be unable to fend for yourself ever again." 

Some of the homeless, obviously, had pre-existing mental illness or addiction.
But many others have fallen through cracks in the economy into the grim, brutal world of our city streets.
Once there, what ways of escape are open to them other than drink, drugs or insanity? 

Maxwell R.D. Vos 

Brooklyn, N.Y. 

You dismiss as "sentimental" the view that the reduction of federal housing-assistance programs by 77% might have played a significant role in the increased number of men and women sleeping on our city streets during the Reagan-Bush years.
There is no sign that you bothered to consider the inverse of your logic: namely, that mental illness and substance abuse might be to some degree consequences rather than causes of homelessness.
Your research stopped when a convenient assertion could be made. 

Robert S. Jenkins 

Cambridge, Mass. 

Of the approximately 200 sponsors of the recent march in Washington for the homeless, you chose to cite such groups as the National Association of Home Builders and the International Union of Bricklayers and Allied Craftsmen, insinuating that the march got its major support from self-serving groups that "know a good thing when they see it," and that the crusade was based on greed or the profit motive.
But isn't the desire for profit the driving force behind those who subscribe to, and advertise in, your paper?
Why didn't you mention the YMCA or the YWCA or Catholic Charities USA or a hundred other nonprofit organizations that participated in the march? 

As for the findings on the 203 Baltimore homeless who underwent psychiatric examinations, I suggest you conduct your own survey.
Choose 203 business executives, including, perhaps, someone from your own staff, and put them out on the streets, to be deprived for one month of their homes, families and income.
I would predict that within a short time most of them would find Thunderbird a satisfactory substitute for Chivas Regal and that their "normal" phobias, anxieties, depressions and substance abuse would increase dramatically. 

Ruth K. Nelson 

Cullowhee, N.C. 

.START 

ROGERS COMMUNICATIONS Inc. said it plans to raise 175 million to 180 million Canadian dollars (US$148.9 million to $153.3 million) through a private placement of perpetual preferred shares.
Perpetual preferred shares aren't retractable by the holders, the company said.
Rogers said the shares will be convertible into Class B shares, but that the company has the option to redeem the shares before a conversion takes place.
A spokesman for the Toronto cable television and telecommunications concern said the coupon rate hasn't yet been fixed, but will probably be set at around 8%.
He declined to discuss other terms of the issue. 

.START 

The House passed legislation designed to make it easier for the Transportation Department to block airline leveraged buy-outs. 

The final vote came after the House rejected Republican efforts to weaken the bill and approved two amendments sought by organized labor.
The Bush administration has threatened to veto such a bill because of what it views as an undesirable intrusion into the affairs of industry, but the 300-113 vote suggests that supporters have the potential to override a veto. 

The broader question is where the Senate stands on the issue.
While the Senate Commerce Committee has approved legislation similar to the House bill on airline leveraged buy-outs, the measure hasn't yet come to the full floor. 

Although the legislation would apply to acquisitions involving any major airline, it is aimed at giving the Transportation Department the chance to review in advance transactions financed by large amounts of debt. "The purpose of the bill is to put the brakes on airline acquisitions that would so load a carrier up with debt that it would impede safety or a carrier's ability to compete," Rep. John Paul Hammerschmidt, (R., Ark.) said. 

The bill, as it was approved by the House Public Works and Transportation Committee, would give the Transportation Department up to 50 days to review any purchase of 15% or more of the stock in an airline.
The department would be required to block the buy-out if the acquisition is likely to financially weaken a carrier so that safety would be impaired; its ability to compete would be sharply diminished; it would be put into foreign control; or if the transaction would result in the sale of airline-related assets -- unless selling such assets had an overriding public benefit. 

The House approved an amendment offered by Rep. Peter DeFazio (D., Ore.) that would, in addition to the previous criteria, also require the department to block the acquisition of an airline if the added debt incurred were likely to result in a reduction in the number of the carrier's employees, or their wages or benefits. 

Rep. James Traficant (D., Ohio), said the amendment, which passed 271-147, would "let the American worker know that we consider them occasionally." But Rep. Hammerschmidt said that the provision, which he dubbed a "special interest" amendment, was likely to make the bill even more controversial. 

On Tuesday, the House approved a labor-backed amendment that would require the Transportation Department to reject airline acquisitions if the person seeking to purchase a carrier had run two or more airlines previously that have filed for protection from creditors under Chapter 11 of the federal Bankruptcy Code. 

The provision, called the "two-time-losers" amendment by its supporters, apparently was aimed at preventing Texas Air Corp. Chairman Frank Lorenzo from attempting to take over another airline. 

.START 

Follow-up report: 

You now may drop by the Voice of America offices in Washington and read the text of what the Voice is broadcasting to those 130 million people around the world who tune in to it each week.
You can even take notes -- extensive notes, for the Voice folks won't look over your shoulder -- about what you read.
You can do all this even if you're not a reporter or a researcher or a scholar or a member of Congress. 

And my newspaper can print the text of those broadcasts. 

Until the other day, you as an ordinary citizen of this democracy had no right to see what your government was telling your cousins around the world.
That was the law.
And I apparently had no right to print hither what the Voice was booming to yon. 

It was censorship.
It was outrageous.
And it was stupid. 

The theory was that the Voice is a propaganda agency and this government shouldn't propagandize its own people.
That sounds neat, but this government -- any government -- propagandizes its own people every day.
Government press releases, speeches, briefings, tours of military facilities, publications are all propaganda of sorts.
Propaganda is just information to support a viewpoint, and the beauty of a democracy is that it enables you to hear or read every viewpoint and then make up your own mind on an issue. 

The restrictions on viewing and dissemination of Voice material were especially absurd: An agency in the information business was not being allowed to inform. 

In June 1988, I wrote in this space about this issue.
Assuming it wasn't one of those columns that you clipped and put on the refrigerator door, I'll review the facts. 

The Voice of America is a government agency that broadcasts news and views -- some might say propaganda -- in 43 languages to 130 million listeners around the world.
It does a first-rate job.
Its budget$184 million -- is paid for by you.
But a 1948 law barred the "dissemination" of that material in the U.S.
The law let scholars, reporters and researchers read texts of VOA material, only at VOA headquarters in Washington, but it barred them from copying texts.
And, of course, there's that word "dissemination." 

How's that again? "You may come by the agency to read but not copy either manually or by photocopying," a Voice official explained when I asked.
What if I tune in my short-wave radio, transcribe an editorial or program, and print it in my newspaper? "Nor are you free to reprint such material," I was advised. 

That sounded a lot like censorship, so after years of letters and conversations that went nowhere, I sued. 

A couple of weeks ago, I lost the case in federal district court in Des Moines.
At least, that's the way it was reported.
And, indeed, the lawsuit was dismissed. 

But I -- I like to think of it in terms of we, all of us -- won the point. 

For a funny thing happened on the way to the ruling: The United States Information Agency, which runs the Voice, changed its position on three key points. 

-- The USIA said that, on reflection, of course I could print anything I could get my hands on.
The word dissemination, it decided, referred only to itself. "The USIA officially and publicly declared the absolute right of everyone except the USIA to disseminate agency program materials in the United States," my lawyer, the scholarly Mark McCormick of Des Moines, said in a memo pointing out the facts and trying to make me feel good after the press reported that I had lost.
The court noted the new USIA position but, just in case, officially found "that Congress did not intend to preclude plaintiffs from disseminating USIA information domestically." 

-- The USIA said that, on reflection, anyone could view the VOA materials, not just the reporters, scholars, researchers and congressmen who are mentioned in the statute. "The USIA publicly and officially stated in the litigation that all persons are allowed access to the materials, notwithstanding the statutory designations, because the USIA has determined that it will not check the credentials of any person appearing and requesting to see the materials," Mr. McCormick noted. 

-- And the USIA said that all of us could take extensive notes. "The agency publicly and officially declared in the lawsuit that persons who examine the materials may make notes and, while the agency position is that persons may not take verbatim notes, no one will check to determine what notes a person has taken," Mr. McCormick reported. 

I had sought, in my suit, the right to print Voice material, which had been denied me, and I had sought a right to receive the information, arguing in effect that a right to print government information isn't very helpful if I have no right to get the information. 

But the court disagreed. "The First Amendment proscribes the government from passing laws abridging the right to free speech," Judge Donald O'Brien ruled. "The First Amendment does not prescribe a duty upon the government to assure easy access to information for members of the press." 

So now the situation is this: You have a right to read Voice of America scripts if you don't mind traveling to Washington every week or so and visiting the Voice office during business hours.
I have a right to print those scripts if I go there and laboriously -- but no longer surreptitiously -- copy them out in long hand.
But neither of us can copy the material on a Xerox machine or have it sent to us. 

In an era when every government agency has a public-relations machine that sends you stuff whether you want it or not, this does seem odd. 

Indeed, Judge O'Brien ruled that "it would be easy to conclude that the USIA's position is `inappropriate or even stupid, '" but it's the law.
So the next step, I suspect, is to try to get the law changed.
We (I assume you're in this with me at this point) need to get three words -- "for examination only" -- eliminated from the law. 

Section 501 of the United States Information and Educational Exchange Act of 1948 says Voice material shall be available to certain of us (but now, thanks to the USIA's new position, all of us) "for examination only." If those words weren't there, the nice people at the Voice would be able to send you the information or, at the very least, let you photocopy it. 

This is not a trivial issue. 

"You have . . . raised important questions which ought to be answered: What does USIA say about America abroad; how do we say it; and how can American taxpayers get the answers to these questions?" a man wrote me a couple of years ago.
The man was Charles Z. Wick.
At the time, he was director of the 

He had no answers then. 

Now there are some. 

This democracy is suddenly a little more democratic. 

I feel pretty good about it. 

Mr. Gartner is editor and co-owner of the Daily Tribune in Ames, Iowa, and president of NBC News in New York. 

.START 

R. Gordon McGovern was forced out as Campbell Soup Co. 's president and chief executive officer, the strongest evidence yet of the power that Dorrance family members intend to wield in reshaping the troubled food company. 

Herbert M. Baum, the 53-year-old president of the company's Campbell U.S.A. unit, and Edwin L. Harper, 47, the chief financial officer, will run Campbell as a team, dividing responsibilities rather evenly until a successor is named.
The board already has been searching for strong outside candidates, including food-industry executives with considerable international experience. 

Wall Street reacted favorably to Mr. McGovern's departure and its implications.
In heavy trading on the New York Stock Exchange, Campbell's shares rose $3.375 to close at $47.125. 

"The profit motive of the major shareholders has clearly changed for the better," said John McMillin, a food industry analyst for Prudential-Bache in New York.
Mr. McGovern was widely seen as sales, and not profit, oriented. "New managers would think a little more like Wall Street," Mr. McMillin added.
Some of the surge in the stock's price appeared to be linked to revived takeover speculation, which has contributed to volatility of Campbell shares in recent months. 

Campbell's international businesses, particularly in the U.K. and Italy, appear to be at the heart of its problems.
Growth has fallen short of targets and operating earnings are far below results in U.S. units. 

For example, Campbell is a distant third in the U.K. frozen foods market, where it recently paid 24 times earnings for Freshbake Foods PLC and wound up with far more capacity than it could use.
Similarly, Campbell's Italian biscuit operation, D. Lazzaroni & Co., has been hurt by overproduction and distribution problems. 

Such problems will require considerable skill to resolve.
However, neither Mr. Baum nor Mr. Harper has much international experience. 

Mr. Baum, a seasoned marketer who is said to have a good rapport with Campbell employees, will have responsibility for all domestic operations except the Pepperidge Farm unit.
Mr. Harper, a veteran of several manufacturing companies who joined Campbell in 1986, will take charge of all overseas operations as well as Pepperidge. 

In an joint interview yesterday, both men said they would like to be the company's next chief executive. 

Mr. McGovern, 63, had been under intense pressure from the board to boost Campbell's mediocre performance to the level of other food companies.
The board is dominated by the heirs of the late John T. Dorrance Jr., who controlled about 58% of Campbell's stock when he died in April.
In recent months, Mr. Dorrance's children and other family members have pushed for improved profitability and higher returns on their equity. 

In August, the company took a $343 million pretax charge against fiscal 1989 earnings when it announced a world-wide restructuring plan.
The plan calls for closing at least nine plants and eliminating about 3,600 jobs.
But analysts said early results from the reorganization have been disappointing, especially in Europe, and there were signs that the board became impatient. 

Campbell officials said Mr. McGovern wasn't available yesterday to discuss the circumstances of his departure.
The company's prepared statement quoted him as saying, "The CEO succession is well along and I've decided for personal reasons to take early retirement." 

But people familiar with the agenda of the board's meeting last week in London said Mr. McGovern was fired. 

Mr. McGovern himself had said repeatedly that he intended to stay on until he reached the conventional retirement age of 65 in October 1991, "unless I get fired." Campbell said Mr. McGovern had withdrawn his name as a candidate for re-election as a director at the annual shareholder meeting, scheduled for Nov. 17. 

For fiscal 1989, Mr. McGovern received a salary of $877,663.
He owns about 45,000 shares of Campbell stock and has options to buy more than 100,000 additional shares.
He will be eligible for an annual pension of more than $244,000 with certain other fringe benefits. 

During Mr. McGovern's nine-year term as president, the company's sales rose to $5.7 billion from $2.8 billion and net income increased to $274 million from $130 million, the statement said. 

Mr. Baum said he and Mr. Harper both advocated closing some plants as long ago as early 1988. "You've got to make the restructuring work," said Mr. Baum. "You've got to make those savings now." 

Mr. Harper expressed confidence that he and Mr. Baum can convince the board of their worthiness to run the company. "We look upon this as a great opportunity to prove the fact that we have a tremendous management team," he said.
He predicted that the board would give the current duo until early next year before naming a new chief executive. 

Mr. Baum said the two have orders to "focus on bottom-line profits" and to "take a hard look at our businesses -- what is good, what is not so good." Analysts generally applaud the performance of Campbell U.S.A., the company's largest division, which posted 6% unit sales growth and a 15% improvement in operating profit for fiscal 1989. "The way that we've been managing Campbell U.S.A. can hopefully spread to other areas of the company," Mr. Baum said. 

In the interview at headquarters yesterday afternoon, both men exuded confidence and seemed to work well together. "You've got two champions sitting right before you," said Mr. Baum. "We play to win." 

.START 

Wednesday, November 1, 1989 

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

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

FEDERAL FUNDS: 9 1/2% high, 8 3/4% low, 8 3/4% near closing bid, 9% offered.
Reserves traded among commercial banks for overnight use in amounts of $1 million or more.
Source: Fulton Prebon (U.S.A.) Inc. 

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

CALL MONEY: 9 3/4%.
The charge on loans to brokers on stock exchange collateral. 

COMMERCIAL PAPER placed directly by General Motors Acceptance Corp.: 8.55% 30 to 44 days; 8.25% 45 to 59 days; 8.45% 60 to 89 days; 8% 90 to 119 days; 7.90% 120 to 149 days; 7.80% 150 to 179 days; 7.55% 180 to 270 days. 

COMMERCIAL PAPER: High-grade unsecured notes sold through dealers by major corporations in multiples of $1,000: 8.65% 30 days; 8.575% 60 days; 8.50% 90 days. 

CERTIFICATES OF DEPOSIT: 8.07% one month; 8.06% two months; 8.04% three months; 7.95% six months; 7.88% one year.
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.
The minimum unit is $100,000.
Typical rates in the secondary market: 8.60% one month; 8.55% three months; 8.35% six months. 

BANKERS ACCEPTANCES: 8.50% 30 days; 8.48% 60 days; 8.30% 90 days; 8.15% 120 days; 8.07% 150 days; 7.95% 180 days.
Negotiable, bank-backed business credit instruments typically financing an import order. 

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

LONDON INTERBANK OFFERED RATES (LIBOR): 8 3/4% one month; 8 3/4% three months; 8 1/2% six months; 8 7/ 16% one year.
The average of interbank offered rates for dollar deposits in the London market based on quotations at five major banks. 

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

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

FEDERAL HOME LOAN MORTGAGE CORP. (Freddie Mac): Posted yields on 30-year mortgage commitments for delivery within 30 days. 9.82%, standard conventional fixed-rate mortgages; 8.25%, 2% rate capped one-year adjustable rate mortgages.
Source: Telerate Systems Inc. 

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.
Source: Telerate Systems Inc. 

MERRILL LYNCH READY ASSETS TRUST: 8.64%.
Annualized average rate of return after expenses for the past 30 days; not a forecast of future returns. 

.START 

Robert L. Bernstein, chairman and president of Random House Inc., announced his resignation from the publishing house he has run for 23 years. 

A successor wasn't named, which fueled speculation that Mr. Bernstein may have clashed with S.I. Newhouse Jr., whose family company, Advance Publications Inc., owns Random House.
Abrupt departures aren't unheard of within the Newhouse empire. 

In an interview, Mr. Bernstein said his departure "evolved out of discussions with Si Newhouse and that's the decision I reached." He declined to elaborate, other than to say, "It just seemed the right thing to do at this minute.
Sometimes you just go with your gut." Mr. Bernstein said he will stay until Dec. 31 and work with his successor, who is to be named soon. 

Mr. Newhouse, meanwhile, insisted that he isn't unhappy with Mr. Bernstein or the performance of Random House, the largest trade publishing house in the U.S.
The company said the publisher's annual sales volume increased to $800 million from $40 million during Mr. Bernstein's tenure. "Bob has handled the extraordinary growth of the company quite brilliantly," said Mr. Newhouse. "The company is doing well, it's stable, it's got good people.
Bob has an agenda and this seemed like the natural time." 

Publishing officials believe that while Random House has enjoyed spectacular growth and has smoothly integrated many acquisitions in recent years, some of the bigger ones haven't been absorbed so easily.
Crown Publishing Group, acquired last year, is said to be turning in disappointing results.
As a private company, Random House doesn't report its earnings. 

Mr. Bernstein, who succeeded Bennett Cerf, has been only the second president of Random House since it was founded in 1925.
Speculation on his successor centers on a number of division heads at the house.
Possible candidates include Susan Petersen, president of Ballantine/Del Rey/ Fawcett, Random House's huge and successful paperback division.
Some say Anthony Cheetham, head of a recently acquired British company, Century Hutchinson, could be chosen. 

There is also speculation that Mr. Newhouse could bring in a powerhouse businessman or another Newhouse family member to run the business side, in combination with a publishing executive like Robert Gottlieb, who left Random House's Alfred A. Knopf to run the New Yorker, also owned by the Newhouse family. 

Not included on the most-likely-successor list are Joni Evans, recruited two years ago to be publisher of adult trade books for Random House, and Sonny Mehta, president of the prestigious Alfred A. Knopf unit.
When Ms. Evans took her job, several important divisions that had reported to her predecessor weren't included partly because she didn't wish to be a full-time administrator.
Mr. Mehta is widely viewed as a brilliant editor but a less-than-brilliant administrator and his own departure was rumored recently. 

Mr. Bernstein, a tall, energetic man who is widely respected as a publishing executive, has spent much of his time in recent years on human rights issues. 

.START 

Congress learned during the Reagan administration that it could intimidate the executive branch by uttering again and again the same seven words: "Provided, that no funds shall be spent. . . ." This phrase once again is found throughout the many appropriations bills now moving through Congress.
It signals Congress's attempt, under the pretext of guarding the public purse, to deny the president the funding necessary to execute certain of his duties and prerogatives specified in Article II of the Constitution. 

This species of congressional action is predicated on an interpretation of the appropriations clause that is erroneous and unconstitutional.
The appropriations clause states that "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law. . . ." The prevailing interpretation of the clause on Capitol Hill is that it gives Congress an omnipresent veto over every conceivable action of the president through the ability to withhold funding.
This interpretation was officially endorsed by Congress in 1987 in the Iran-Contra Report. 

As partisans of congressional power understand, a "power of the purse" so broadly construed would emasculate the presidency and swallow the principle of separation of powers.
It is not supported by the text or history of the Constitution. 

The framers hardly discussed the appropriations clause at the Constitutional Convention of 1787, according to Madison's notes.
To the extent they did, their concern was to ensure fiscal accountability.
Moreover, the framers believed that the nation needed a unitary executive with the independence and resources to perform the executive functions that the Confederation Congress had performed poorly under the Articles of Confederation.
It would contradict that objective if the appropriations clause (technically a limitation on legislative power) could be read as placing the president on Congress's short leash, making the executive consist of the president and every member of Congress. 

As it went to the conference panel now deliberating, the appropriations bill for the executive office of the president for fiscal 1990 contained some breathtaking attempts by Congress to rewrite the Constitution under the pretext of protecting the public's money.
During the coming weeks, President Bush must decide whether to veto the bills containing them -- or, alternatively, to sign these bills into law with a statement declaring their intrusions on executive power to be in violation of Article II, and thus void and severable. 

The 1990 appropriations legislation attempts to strip the president of his powers to make certain appointments as provided by Article II. Article II places on the president the duty to nominate, "and by and with the Advice and Consent of the Senate" appoint, ambassadors, judges, and other officers of the U.S.
It also empowers the president to make recess appointments, without Senate approval: "The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session." 

Yet Section 605 of the appropriations bill for the executive office provides: "No part of any appropriation for the current fiscal year contained in this or any other Act shall be paid to any person for the filling of any position for which he or she has been nominated after the Senate has voted not to approve the nomination of said person." Thus, with one brief passage in an appropriations bill, Congress repeals the president's power to make recess appointments under Article II. 

Section 605 also imposes unconstitutional conditions on the president's ability to nominate candidates of his choosing.
The language of the appropriations rider implies that any nomination to any position of a rejected nominee will result in the president being denied funding to pay that person's salary.
The president could probably not avoid this restriction by choosing people willing to serve without pay, because the Anti-Deficiency Act prohibits voluntary service to the government. 

The 1990 appropriations bills also contain a number of "muzzling" provisions that violate the recommendation clause in Article II of the Constitution.
Muzzling provisions, which might be called "blindfold laws" as well, prevent the executive branch from even looking at certain policy options, let alone from recommending them to Congress.
Such laws violate the provision in Article II that requires the president to make recommendations to Congress, but which gives the president the discretion to select the subject matter of those recommendations. 

Typically, these laws seek to prevent executive branch officials from inquiring into whether certain federal programs make any economic sense or proposing more market-oriented alternatives to regulations.
Probably the most egregious example is a proviso in the appropriations bill for the executive office that prevents the president's Office of Management and Budget from subjecting agricultural marketing orders to any cost-benefit scrutiny.
There is something inherently suspect about Congress's prohibiting the executive from even studying whether public funds are being wasted in some favored program or other. 

Perhaps none of the unconstitutional conditions contained in the appropriations bills for fiscal 1990 better illustrates Congress's attempt to usurp executive power than Section 609 of the executive-office bill: "None of the funds made available pursuant to the provisions of this Act shall be used to implement, administer, or enforce any regulation which has been disapproved pursuant to a resolution of disapproval duly adopted in accordance with the applicable law of the United States." 

This provision amounts to a legislative veto over the president's execution of the law, since a one-house resolution could be said to be "duly adopted" even though it would require neither bicameral action in Congress nor presentation to the president for his signature or veto.
The Supreme Court's decision in INS v.
Chadha held that legislative vetoes are unconstitutional. 

President Bush should veto appropriations acts that contain these kinds of unconstitutional conditions on the president's ability to discharge his duties and exercise his prerogatives.
If President Bush fails to do so in his first year, he will invite Congress, for the remainder of his presidency, to rewrite Article II of the Constitution to suit its purposes.
What becomes custom in the Bush administration will only become more difficult for future presidents, including Democrats, to undo. 

President Reagan learned that lesson.
By 1987, then-Speaker Jim Wright was discussing arms control in Moscow with Mikhail Gorbachev and then attempting to direct the president, through an appropriations rider, to treat the Soviets as though the Senate had ratified SALT II. 

If a veto is unworkable because it would leave part of the executive branch unfunded, the president could sign the appropriations bills into law and assert a power of excision, declaring the rider restricting his Article II powers to be unconstitutional and severable.
The Constitution does not expressly give the president such power.
However, the president does have a duty not to violate the Constitution.
The question is whether his only means of defense is the veto. 

Excision of appropriations riders that trespass on the president's duties and prerogative under Article II would be different from the line-item veto.
As discussed in the context of controlling federal spending, the line-item veto is characterized as a way for the president to excise perfectly constitutional provisions in a spending bill that are objectionable merely because they conflict with his policy objectives.
The excision of unconstitutional conditions in an appropriations bill would be a power of far more limited applicability.
One could argue that it is not an assertion of a item veto at all for the president, by exerting a power of excision, to resist unconstitutional conditions in legislation that violate the separation of powers. 

There is no downside if the president asserts a right of excision over unconstitutional conditions in the fiscal 1990 appropriations bills.
If Congress does nothing, President Bush will have won.
If Congress takes the dispute to the Supreme Court (assuming it can establish standing to sue), President Bush might win.
In that case, he might receive an opinion from the court that is a vindication of the president's right to perform the duties and exercise the prerogatives the framers thought should be entrusted to the executive. 

If President Bush loses at the court, it might be disappointing, as Morrison v.
Olson was for the Reagan administration.
But the presidency would be no worse off than it is now.
Moreover, the electorate would have received a valuable civics lesson in how the separation of powers works in practice. 

As it stands now, Congress presumes after the Reagan administration that the White House will take unconstitutional provisions in appropriations bills lying down.
President Bush should set things straight.
If he does not, he will help realize Madison's fear in The Federalist No. 48 of a legislature "everywhere extending the sphere of its activity and drawing all powers into its impetuous vortex." 

Mr. Sidak served as an attorney in the Reagan administration.
His longer analysis of executive power and the appropriations clause is to appear in the Duke Law Journal later this year. 

.START 

Despite one of the most devastating droughts on record, net cash income in the Farm Belt rose to a new high of $59.9 billion last year. 

The previous record was $57.7 billion in 1987, according to the Agriculture Department. 

Net cash income -- the amount left in farmers' pockets after deducting expenses from gross cash income -- increased in 33 states in 1988, as the drought cut into crop yields and drove up commodity prices, the department's Economic Research Service reported yesterday.
Most of those states set farm income records. 

The worst crop damage occurred in the Midwestern Corn Belt and the northern Great Plains.
What saved many farmers from a bad year was the opportunity to reclaim large quantities of grain and other crops that they had "mortgaged" to the government under price-support loan programs.
With prices soaring, they were able to sell the reclaimed commodities at "considerable profit," the agency's 240-page report said. 

In less parched areas, meanwhile, farmers who had little or no loss of production profited greatly from the higher prices. 

To the surprise of some analysts, net cash income rose in some of the hardest-hit states, including Indiana, Illinois, Nebraska and the Dakotas.
Analysts attributed the increases partly to the $4 billion disaster-assistance package enacted by Congress. 

Last year's record net cash income confirms the farm sector's rebound from the agricultural depression of the early 1980s.
It also helps explain the reluctance of the major farm lobbies and many lawmakers to make any significant changes in the 1985 farm program next year. 

Commodity prices have been rising in recent years, with the farm price index hitting record peaks earlier this year, as the government curtailed production with land-idling programs to reduce price-depressing surpluses.
At the same time, export demand for U.S. wheat, corn and other commodities strengthened, said Keith Collins, a department analyst.
Farmers also benefited from strong livestock prices, as the nation's cattle inventory dropped close to a 30-year low. 

"All of these forces came together in 1988 to benefit agriculture," Mr. Collins said. 

California led the nation with $6.5 billion in net cash income last year, followed by Texas, $3.9 billion; Iowa, $3.4 billion; Florida, $3.1 billion; and Minnesota, $2.7 billion.
Iowa and Minnesota were among the few major farm states to log a decline in net cash income. 

Despite federal disaster relief, the drought of 1988 was a severe financial setback for an estimated 10,000 to 15,000 farmers, according to the department.
Many lost their farms. 

Department economists don't expect 1989 to be as good a year as 1988 was.
Indeed, net cash income is likely to fall this year as farm expenses rise and government payments to farmers decline.
At the same time, an increase of land under cultivation after the drought has boosted production of corn, soybeans and other commodities, causing a fall in prices that has been only partly cushioned by heavy grain buying by the Soviets. 

Last year, government payments to farmers slipped to less than $14.5 billion from a record $16.7 billion in 1987.
Payments are expected to range between $9 billion and $12 billion this year. 

.START 

After years of struggling, the Los Angeles Herald Examiner will publish its last edition today, shut down by its parent, Hearst Corp., following unsuccessful efforts to sell the venerable newspaper. 

The demise of the 238,000-circulation Herald, once the nation's largest afternoon newspaper with circulation exceeding 700,000, turns the country's second-largest city into a one-newspaper town, at least in some senses.
The Los Angeles Times, with a circulation of more than 1.1 million, dominates the region.
But it faces stiff competition in Orange County from the Orange County Register, which sells more than 300,000 copies a day, and in the San Fernando Valley from the Los Angeles Daily News, which sells more than 170,000.
Nearby cities such as Pasadena and Long Beach also have large dailies. 

In July, closely held Hearst, based in New York, put the paper on the block.
Speculation had it that the company was asking $100 million for an operation said to be losing about $20 million a year, but others said Hearst might have virtually given the paper away. 

An attempted buy-out led by John J. McCabe, chief operating officer, never materialized, and a stream of what one staff member dismissed as "tire-kickers and lookee-loos" had filed through since.
The prospective buyers included investor Marvin Davis and the Toronto Sun. 

The death of the Herald, a newsstand paper in a freeway town, was perhaps inevitable.
Los Angeles is a sprawling, balkanized newspaper market, and advertisers seemed to feel they could buy space in the mammoth Times, then target a particular area with one of the regional dailies.
The Herald was left in limbo. 

Further, the Herald seemed torn editorially between keeping its old-time Hearst readership -- blue-collar and sports-oriented -- and trying to provide a sprightly, upscale alternative to the sometimes staid Times.
Hearst had flirted with a conversion to tabloid format for years but never executed the plan. 

The Herald joins the Baltimore News-American, which folded, and the Boston Herald-American, which was sold, as cornerstones of the old Hearst newspaper empire abandoned by the company in the 1980s.
Many felt Hearst kept the paper alive as long as it did, if marginally, because of its place in family history.
Its fanciful offices were designed by architect Julia Morgan, who built the Hearst castle at San Simeon.
William Randolph Hearst had kept an apartment in the Spanish Renaissance-style building. 

Analysts said the Herald's demise doesn't necessarily represent the overall condition of the newspaper industry. "The Herald was a survivor from a bygone age," said J. Kendrick Noble, a media analyst with PaineWebber Inc. "Actually, the long deterioration in daily newspapers shows signs of coming to an end, and the industry looks pretty healthy." 

Founded as the Examiner in 1903 by Mr. Hearst, the Herald was crippled by a bitter, decade-long strike that began in 1967 and cut circulation in half.
Financially, it never recovered; editorially, it had its moments.
In 1979, Hearst hired editor James Bellows, who brightened the editorial product considerably.
He and his successor, Mary Anne Dolan, restored respect for the editorial product, and though in recent years the paper had been limping along on limited resources, its accomplishments were notable.
For example, the Herald consistently beat its much-larger rival on disclosures about Los Angeles Mayor Tom Bradley's financial dealings.
The Herald's sports coverage and arts criticism were also highly regarded. 

Robert J. Danzig, vice president and general manager of Hearst Newspapers, stood up in the paper's newsroom yesterday and announced that no buyers had stepped forward and that the paper would fold, putting more than 730 full-time employees out of work. 

Hearst said it would provide employees with a placement service and pay them for 60 days.
Some long-tenured employees will receive additional benefits, the company said.
Hours after the announcement, representatives of the Orange County Register were in a bar across the street recruiting. 

The reaction in the newsroom was emotional. "I've never seen so many people crying in one place at one time," said Bill Johnson, an assistant city editor. 

"So Long, L.A." was chosen as the paper's final headline. 

"I'm doing the main story, and I'm already two beers drunk," said reporter Andy Furillo, whom the Times hired away several years ago but who returned to the Herald out of preference.
His wife also works for the paper, as did his father. 

Outside, a young pressman filling a news box with an extra edition headlined "Herald Examiner Closes" refused to take a reader's quarter. "Forget it," he said as he handed her a paper. "It doesn't make any difference now." 

.START 

Olympia Broadcasting Corp. said it didn't make a $1.64 million semiannual interest payment due yesterday on $23.4 million of senior subordinated debentures. 

The radio-station owner and programmer said it was trying to obtain additional working capital from its senior secured lenders and other financial institutions.
It said it needs to make the payment by Dec. 1 to avoid a default that could lead to an acceleration of the debt. 

In September, the company said it was seeking offers for its five radio stations in order to concentrate on its programming business. 

.START 

If you'd really rather have a Buick, don't leave home without the American Express card. 

Or so the slogan might go.
American Express Co. and General Motors Corp. 's beleaguered Buick division are joining forces in a promotion aimed at boosting Buick's sales while encouraging broader use of the American Express card. 

The companies are giving four-day vacations for two to Buick buyers who charge all or part of their down payments on the American Express green card.
They have begun sending letters explaining the program, which began Oct. 18 and will end Dec. 18, to about five million card holders.
Neither company would disclose the program's cost. 

Buick approached American Express about a joint promotion because its card holders generally have a "good credit history" and are "good at making payments," says a spokeswoman for the division.
American Express also represents the upscale image "we're trying to project," she adds. 

Buick has been seeking for the past few years to restore its reputation as "the doctor's car" -- a product for upscale professionals.
Sales were roughly flat in the 1989 model year compared with a year earlier, though industry sales fell.
But since the 1990 model year began Oct. 1, Buick sales have plunged 33%. 

For American Express, the promotion is part of an effort to broaden the use of its card for retail sales, where the company expects to get much of the future growth in its card business.
Traditionally, the card has been used mainly for travel and entertainment expenses. 

Phillip Riese, an American Express executive vice president, says the promotion with Buick is his company's first with an auto maker, but "hopefully {will be} the first of many" in the company's effort to promote its green card as "the total car-care card." To that end, American Express has been signing up gasoline companies, car repair shops, tire companies and car dealers to accept the card. 

Many auto dealers now let car buyers charge part or all of their purchase on the American Express card, but few card holders realize this, Mr. Riese says. 

Until now, however, buyers who wanted to finance part of a car purchase through General Motors Acceptance Corp. couldn't put their down payment on a charge card because of possible conflicts with truth-in-lending and state disclosure laws over finance rates, says a spokesman for the GM finance arm.
But GMAC approved the Buick program, he says, because the American Express green card requires payment in full upon billing, and so doesn't carry any finance rates. 

Mr. Riese says American Express considers GM and Buick "very sophisticated direct-mail marketers," so "by joining forces with them we have managed to maximize our direct-mail capability." In addition, Buick is a relatively respected nameplate among American Express card holders, says an American Express spokeswoman.
When the company asked members in a mailing which cars they would like to get information about for possible future purchases, Buick came in fourth among U.S. cars and in the top 10 of all cars, the spokeswoman says. 

American Express has more than 24 million card holders in the U.S., and over half have the green card.
GMAC screened the card-member list for holders more than 30 years old with household incomes over $45,000 who hadn't "missed any payments," the Buick spokeswoman says.
Some 3.8 million of the five million who will get letters were preapproved for credit with GMAC.
These 3.8 million people also are eligible to get one percentage point off GMAC's advertised finance rates, which start at 6.9% for two-year loan contracts. 

A spokesman for Visa International's U.S. subsidiary says his company is using promotions to increase use of its cards, but doesn't have plans for a tie-in similar to the American Express-Buick link. 

Three divisions at American Express are working with Buick on the promotion: the establishment services division, which is responsible for all merchants and companies that accept the card; the travel division; and the merchandise sales division. 

The vacation packages include hotel accommodations and, in some cases, tours or tickets to local attractions, but not meals.
Destinations are Chicago; Honolulu; Las Vegas, Nev.; Los Angeles; Miami Beach, Fla.; New Orleans; New York; Orlando, Fla.; San Francisco; and Washington, D.C.
A buyer who chooses to fly to his destination must pay for his own ticket but gets a companion's ticket free if they fly on United Airlines. 

In lieu of the vacation, buyers can choose among several prizes, including a grandfather clock or a stereo videocassette recorder.
Card holders who receive the letter also are eligible for a sweepstakes with Buick cars or a Hawaii vacation as prizes.
If they test-drive a Buick, they get an American Express calculator. 

This isn't Buick's first travel-related promotion.
A few years ago, the company offered two round-trip tickets on Trans World Airlines to buyers of its Riviera luxury car.
The promotion helped Riviera sales exceed the division's forecast by more than 10%, Buick said at the time. 

.START 

The United Kingdom High Court declared illegal a variety of interest-rate swap transactions and options deals between a London borough council and commercial banks. 

The ruling could lead to the cancellation of huge bank debts the London Borough of Hammersmith and Fulham ran up after losing heavily on swap transactions.
As many as 70 U.K. and international banks stand to lose several hundred million pounds should the decision be upheld and set a precedent for other municipalities.
An appeal is expected. 

In response to the ruling, gilt futures swiftly plunged more than a point yesterday before recovering much of the loss by the end of the session.
Gilts, or British government bonds, which also fell sharply initially, retraced some of the losses to end about 3/8 point lower. 

The council, which is alleged to have engaged in over 600 deals valued at over #6 billion ($9.5 billion), lost millions of pounds from soured swap deals.
At one point, Hammersmith is reported to have accounted for as much as 10% of the sterling market in interest-rate swap dealings. 

When two parties engage in an interest-rate swap, they are betting against each other on future rates.
Thus, an institution obligated to make fixed-rate interest payments on debt swaps the payments with another making floating-rate payments.
In most of the British transactions, the municipalities agreed to make floating-rate payments to banks, which would make fixed-rate payments.
As interest rates rose, municipalities owed the banks more than the banks were paying them. 

The court hearing began in early October at the request of Anthony Hazell, district auditor for Hammersmith, who argued that local councils aren't vested with constitutional authority to engage in such capital-markets activities.
The council backed the audit commission's stand that the swap transactions are illegal.
Although the Hammersmith and Fulham council was by far the most active local authority engaging in such capital-markets transactions, the court decision could set a precedent for similar transactions by 77 other local councils. 

"While this court ruling was only on Hammersmith, it will obviously be very persuasive in other cases of a similar nature," a solicitor representing one of the banks said. 

Already, 10 local councils have refused to honor fees and payments to banks incurred during various swaps dealings.
Other financial institutions involved include Barclays Bank PLC, Midland Bank PLC, Security Pacific Corp., Chemical Banking Corp. 's Chemical Bank, Citicorp's Citibank and Mitsubishi Finance International. 

If the banks exhaust all avenues of appeal, it is possible that they would seek to have the illegality ruling work both ways, some market sources said.
Banks could seek to recover payments to local authorities in instances where the banks made net payments to councils. 

Officials from the various banks involved are expected to meet during the next few days to consider other arrangements with local authorities that could be questionable.
The banks have 28 days to file an appeal against the ruling and are expected to do so shortly. 

.START 

In the aftermath of the stock market's gut-wrenching 190-point drop on Oct. 13, Kidder, Peabody & Co. 's 1,400 stockbrokers across the country began a telephone and letter-writing campaign aimed at quashing the country's second-largest program trader. 

The target of their wrath?
Their own employer, Kidder Peabody. 

Since October's minicrash, Wall Street has been shaken by an explosion of resentment against program trading, the computer-driven, lightning-fast trades of huge baskets of stocks and futures that can send stock prices reeling in minutes. 

But the heated fight over program trading is about much more than a volatile stock market.
The real battle is over who will control that market and reap its huge rewards.
Program trading itself, according to many academics who have studied it, is merely caught in the middle of this battle, unfairly labeled as the evil driving force of the marketplace.
The evidence indicates that program trading didn't, in fact, cause the market's sharp fall on Oct. 13, though it may have exacerbated it. 

On one side of this power struggle stand the forces in ascendency on Wall Street -- the New Guard -- consisting of high-tech computer wizards at the major brokerage firms, their pension fund clients with immense pools of money, and the traders at the fast-growing Chicago futures exchanges.
These are the main proponents of program trading. 

Defending their ramparts are Wall Street's Old Guard -- the traditional, stock-picking money managers, tens of thousands of stock brokers, the New York Stock Exchange's listed companies and the clannish floor traders, known as specialists, who make markets in their stocks. 

So far, Wall Street's Old Guard seems to be winning the program-trading battle, successfully mobilizing public and congressional opinion to bludgeon their tormentors. 

The Chicago Mercantile Exchange, a major futures marketplace, yesterday announced the addition of another layer of trading halts designed to slow program traders during a rapidly falling stock market, and the Big Board is expected today to approve some additional restrictions on program trading. 

Stung by charges that their greed is turning the stock market into a gigantic crapshoot, almost all the big investment banking houses have abandoned index arbitrage, a common form of program trading, for their own accounts in the past few days.
A few, such as giant Merrill Lynch & Co., now refuse even to do index arbitrage trades for clients. 

The Old Guard's assault on program trading and its practitioners has been fierce and broad-based, in part because some Old Guard members feel their very livelihood is at stake.
Some, such as traditional money manager Neuberger & Berman, have taken out national newspaper advertisements demanding that market regulators "stop the numbers racket on Wall Street." 

Big Board stock specialists, in a bold palace revolt, began shortly after Oct. 13 to telephone the corporate executives of the companies whose stock is listed on the Big Board to have them pressure the exchange to ban program trading. 

Charles Wohlstetter, the chairman of Contel Corp. who is rallying other CEOs to the anti-program trading cause, says he has received "countless" letters offering support. "They said universally, without a single exception: Don't even compromise.
Kill it," he says. 

Wall Street's New Guard isn't likely to take all this lying down for long, however.
Its new products and trading techniques have been highly profitable.
Program trading money managers have gained control over a big chunk of the invested funds in this country, and the pressures on such money managers to produce consistent profits has wedded them to the ability to move rapidly in and out the market that program trading gives them.
What's more, the last time major Wall Street firms said they were getting out of program trading -- in the aftermath of the 1987 crash -- they waited a few months and then sneaked back into it. 

Even some members of the Old Guard, despite their current advantage, seem to be conceding that the future belongs with the New Guard.
Last week, Robert M. Bradley, one of the Big Board's most respected floor traders and head of a major traders' organization, surrendered.
He sold his exchange seat and wrote a bitter letter to Big Board Chairman John J. Phelan Jr. in which he said the Big Board is too focused on machines, rather than people.
He said the exchange is "headed for a real crisis" if program trading isn't curbed. 

"I do not want my money invested in what I consider as nothing more than a casino," Mr. Bradley wrote. 

The battle has turned into a civil war at some firms and organizations, causing internal contradictions and pitting employee against employee.
At Kidder, a unit of General Electric Co., and other big brokerage firms, stockbrokers battle their own firm's program traders a few floors away.
Corporations like Contel denounce program trading, yet Contel has in the past hired pension fund managers like Bankers Trust Co. that are also big program traders. 

The Big Board -- the nation's premier stock exchange -- is sharply divided between its floor traders and its top executives.
Its entrenched 49 stock specialists firms are fighting tooth and nail against programs.
But the Big Board's leadership -- over the specialists' protests -- two weeks ago began trading a new stock "basket" product designed to facilitate program trading. "A lot of people would like to go back to 1970," before program trading, Mr. Phelan said this week. "I would like to go back to 1970.
But we are not going back to 1970." 

Again and again, program-trading's critics raise the "casino" theme.
They say greedy market manipulators have made a shambles of the nation's free-enterprise system, turning the stock market into a big gambling den, with the odds heavily stacked against the small investor. "The public didn't come to the market to play a game; they can go to Off-Track Betting for that," says A. Brean Murray, chairman of Brean Murray, Foster Securities, a traditional money management firm. 

The program traders, on the other hand, portray old-fashioned stock pickers as the Neanderthals of the industry.
Critics like Mr. Murray "are looking for witches, and people who use computers to trade are a convenient boogieman," says J. Thomas Allen, president of Advanced Investment Management Inc., a Pittsburgh firm that runs a $200 million fund that uses index arbitrage. "Just a blind fear of the unknown is causing them to beg the regulators for protection." 

For all the furor, there is nothing particularly complex about the concept of stock-index arbitrage, the most controversial type of computer-assisted program trading.
Like other forms of arbitrage, it merely seeks to take advantage of momentary discrepancies in the price of a single product -- in this case, a basket of stocks -- in different markets -- in this case the New York Stock Exchange and the Chicago futures markets. 

That divergence is what stock index traders seek.
When it occurs, the traders place orders via computers to buy the basket of stocks (such as the 500 stocks that constitute the Standard & Poor's 500 stock index) in whichever market is cheaper and sell them in the more expensive market; they lock in the difference in price as profit. 

Such program trades, which can involve the purchase or sale of millions of dollars of stock, occur in a matter of seconds.
A program trade of $5 million of stock typically earns a razor-thin profit of $25,000.
To keep program-trading units profitable in the eyes of senior brokerage executives, traders must seize every opportunity their computers find. 

The speed with which such program trades take place and the volatile price movements they can cause are what program trading critics profess to despise. "If you continue to do this, the investor becomes frightened -- any investor: the odd lotter, mutual funds and pension funds," says Larry Zicklin, managing partner at Neuberger & Berman. 

But many experts and traders say that program trading isn't the main reason for stock-market gyrations. "I have not seen one iota of evidence" to support restrictions on program trading, says a Vanderbilt University finance professor, Hans Stoll, an authority on the subject.
Says the Big Board's Mr. Phelan, "Volatility is greater than program trading." 

The Oct. 13 plunge was triggered not by program traders, but by news of the unraveling of the $6.79 billion buy-out of UAL Corp. Unable to unload UAL and other airline shares, takeover-stock speculators, or risk arbitragers, dumped every blue-chip stock they had.
While program trades swiftly kicked in, a "circuit breaker" that halted trading in stock futures in Chicago made some program trading impossible.
Susan Del Signore, head trader at Travelers Investment Management Co., says critics are ignoring "the role the {takeover stock} speculator is taking in the market as a source of volatility." Many arbs are "overleveraged," she says, and they "have to sell when things look like they fall apart." 

Like virtually everything on Wall Street, the program-trading battle is over money, and the traditionalists have been losing out on bundles of it to the New Guard in recent years.
Take the traditional money managers, or "stock pickers," as they are derisively known among the computer jockeys.
Traditional stock managers like to charge 50 cents to 75 cents for every $100 they manage for big institutional investors, and higher fees for smaller investors.
Yet many such managers consistently fail to even keep up with, much less beat, the returns of standard benchmarks like the S&P 

Not surprisingly, old-style money managers have been losing clients to giant stock-index funds that use computers to juggle portfolios so they mirror the S&P 500.
The indexers charge only a few pennies per $100 managed.
Today, about $200 billion, or 20% of all pension-fund stock investments, is held by index funds. 

The new Wall Street of computers and automated trading threatens to make dinosaurs of the 49 Big Board stock-specialist firms.
These small but influential floor brokers long have earned fat returns of 30% to 40% a year on their capital, by virtue of their monopoly in making markets in individual stocks.
The specialists see any step to electronic trading as a death knell. 

And they believe the Big Board, under Mr. Phelan, has abandoned their interest.
The son of a specialist and once one himself, Mr. Phelan has nonetheless been striving -- with products like the new stock basket that his former colleagues dislike so much -- to keep index funds and other program traders from taking their business to overseas markets. 

Meanwhile, specialists' trading risks have skyrocketed as a result of stock-market volatility. "When the sell programs hit, you can hear the order printers start to go" on the Big Board trading floor, says one specialist there. "The buyers walk away, and the specialist is left alone" as the buyer of last resort for his stable of stocks, he contends. 

No one is more unhappy with program trading than the nation's stockbrokers.
They are still trying to lure back small investors spooked by the 1987 stock-market crash and the market's swings since then. "Small investors are absolutely dismayed that Wall Street is stacking the deck against them, and these wide swings are scaring them to death," says Raymond A. Mason, chairman of regional broker Legg Mason Inc. in Baltimore.
Stockbrokers' business and pay has been falling.
Last year, the average broker earned $71,309, 24% lower than in 1987. 

Corporate executives resent that their company's stock has been transformed into a nameless piece of a stock-index basket.
Index traders who buy all 500 stocks in the S&P 500 often don't even know what the companies they own actually do, complains Andrew Sigler, chairman of Champion International Corp. "Do you make sweatshirts or sparkplugs?
Oh, you're in the paper business," is one reaction Mr. Sigler says he's gotten from his big institutional shareholders. 

By this September, program traders were doing a record 13.8% of the Big Board's average daily trading volume.
Among the top practitioners were Wall Street blue bloods: Morgan Stanley & Co., Kidder Peabody, Merrill Lynch, Salomon Brothers Inc. and PaineWebber Group Inc.
But then came Oct. 13 and the negative publicity orchestrated by the Old Guard, particularly against index arbitrage.
The indexers' strategy for the moment is to hunker down and let the furor die. "There's a lynch-mob psychology right now," says the top program-trading official at a Wall Street firm. "Wall Street's cash cow has been gored, but I don't think anyone has proven that index arbitrage is the problem." 

Too much money is at stake for program traders to give up.
For example, stock-index futures began trading in Chicago in 1982, and within two years they were the fastest-growing futures contract ever launched.
Stock futures trading has minted dozens of millionaires in their 20s and 30s.
Now, on a good day, Chicago's stock-index traders trade more dollars worth of stock futures than the Big Board trades in stock. 

Now the stage is set for the battle to play out.
The anti-programmers are getting some helpful thunder from Congress.
Program traders' "power to create total panic is so great that they can't be allowed to have their way," says Rep. Edward Markey, a Massachusetts Democrat. "We have to have a system that says to those largest investors: `Sit down! You will not panic, you will not put the financial system in jeopardy. '" 

But the prospects for legislation that targets program trading is unlikely anytime soon.
Many people, including the Big Board, think that it's too late to put the genie back in the bottle.
The Big Board's directors meet today to approve some program-trading restrictions, but a total ban isn't being considered, Big Board officials say. 

"You're not going to stop the idea of trading a basket of stocks," says Vanderbilt's Prof.
Stoll. "Program trading is here to stay, and computers are here to stay, and we just need to understand it." 

Short of a total ban, some anti-programmers have proposed several middle-ground reforms, which they say would take away certain advantages program traders currently enjoy in the marketplace that other investors don't. 

One such proposal regarding stock-index futures is an increase in the margin requirement -- or the "good-faith" payment of cash needed to trade them -- to about the same level as the margin requirement for stocks.
Currently, margins on stock futures purchases are much lower -- roughly 7% compared with 50% for stocks -- making the futures market much faster and potentially more speculative.
Program trading critics also want the Federal Reserve Board, rather than the futures industry, to set such margins. 

Futures traders respond that low margins help keep their markets active.
Higher margins would chase away dozens of smaller traders who help larger traders buy and sell, they say. 

Another proposed reform is to have program traders answer to an "uptick rule"a reform instituted after the Great Crash of 1929 that protects against stocks being relentlessly beaten downward by those seeking to profit from lower prices, namely short sellers.
The Big Board's uptick rule prevents the short sale of a stock when the stock is falling in price. 

But in 1986, program traders received what amounted to an exemption from the uptick rule in certain situations, to make it easier to link the stock and futures markets.
A reinstatement of the uptick rule for program traders would slow their activity considerably.
Program traders argue that a reinstatement of the rule would destroy the "pricing efficiency" of the futures and stock markets. 

James A. White contributed to this article. 

Fundamentalists Jihad .START 

Big Board Chairman John Phelan said yesterday that he could support letting federal regulators suspend program trading during wild stock-price swings.
Thus the band-wagon psychology of recent days picks up new impetus. 

Index arbitrage is a common form of program trading.
As usually practiced it takes advantage of a rather basic concept: Two separate markets in different locations, trading basically the same widgets, can't trade them for long at prices that are widely different.
In index arbitrage, the widget is the S&P 500, and its price is constantly compared between the futures market in Chicago and the stock markets largely in New York.
To profit from an index-arbitrage opportunity, someone who owns the S&P 500 widget in New York must sell it and replace it with a cheaper S&P 500 widget in Chicago. 

If the money manager performing this service is being paid by his clients to match or beat the return of the S&P 500 index, he is likely to remain fully invested at all times. (Few, if any, index-fund managers will risk leveraging performance by owning more than 100% exposure to stocks, and equally few will want to own less than a 100% position should stocks rise.) 

By constantly seeking to own the cheapest widget, index-arbitrage traders hope to add between 1% and 3% to the annual return of the S&P 500.
That represents a very thin "excess" return, certainly far less than what most fundamental stock pickers claim to seek as their performance objective.
The fact that a vast majority of fundamentalist money managers fail to beat the S&P 500 may contribute to the hysteria surrounding the issue. 

As more managers pursue the index-arbitrage strategy, these small opportunities between markets will be reduced and, eventually, eliminated.
The current opportunities arise because the process for executing a buy or sell order in the actual stocks that make up the S&P 500 is more cumbersome than transacting in the futures market.
The New York Stock Exchange's attempt to introduce a new portfolio basket is evidence of investors' desires to make fast and easy transactions of large numbers of shares. 

So if index arbitrage is simply taking advantage of thin inefficiencies between two markets for the same widget, how did "program trading" evolve into the evil creature that is evoking the curses of so many observers?
All arguments against program trading, even those pressed without fact, conclude with three expected results after "reforms" are implemented: 1) reduced volatility, 2) a long-term investment focus, and 3) a level playing field for the small investor.
But many of these reforms are unneeded, even harmful. 

Reducing volatility.
An index-arbitrage trade is never executed unless there is sufficient difference between the markets in New York and Chicago to cover all transaction costs.
Arbitrage doesn't cause volatility; it responds to it.
Think about what causes the difference in prices between the two markets for S&P 500 stocks -- usually it is large investors initiating a buy or sell in Chicago. 

A large investor will likely cause the futures market to decline when he sells his futures.
Arbitrage simply transfers his selling pressure from Chicago to New York, while functioning as a buyer in Chicago.
The start of the whole process is the key-someone must fundamentally increase or decrease his ownership in widgets to make widget prices move. 

Why does this large hypothetical seller trade in Chicago instead of New York?
Perhaps he is willing to sacrifice to the arbitrage trader some small profit in order to get quick and certain execution of his large trade.
In a competitive market, this investor has many ways to execute his transactions, and he will have more alternatives (both foreign and domestic) if his volume is profitable for an exchange to handle.
If not Chicago, then in New York; if not the U.S., then overseas. 

Volatility surrounding his trades occurs not because of index arbitrage, but because his is a large addition or subtraction to a widget market with finite liquidity.
Eliminate arbitrage and liquidity will decline instead of rising, creating more volatility instead of less.
The speed of his transaction isn't to be feared either, because faster and cleaner execution is desirable, not loathsome.
If slowing things down could reduce volatility, stone tablets should become the trade ticket of the future. 

Encouraging long-term investing.
We must be very cautious about labeling investors as "long-term" or "short-term." Policies designed to encourage one type of investor over another are akin to placing a sign over the Big Board's door saying: "Buyers welcome, sellers please go away!" The ultimate goal of any investor is a profit motive, and regulators should not concern themselves with whether investors are sufficiently focused on the long term.
A free market with a profit motive will attract each investor to the liquidity and risks he can tolerate. 

In point of fact, volatility as measured by the annualized standard deviation of daily stock price movements has frequently been much higher than it is today.