812
  $ADV 00
Adv for Yearend Editions
Caribbean Economic Yearender 450 two takes total 820
By HAROLD J. LIDIN
Associated Press Writer
    SAN JUAN, P.R. (AP( - The past year saw the English-speaking
Caribbean begin to develop economic ties with Cuba, and virtually
all the Caribbean countries announce their desire to expand
interisland trade and industry.
    Trinidad and Jamaica exchanged technicians with Cuba, and
in October Barbados and Guyana joined these two nations in
an agreement to establish economic and diplomatic relations
with Cuba. The same four nations also agreed to convert their
Caribbean Free Trade Association into a common market.
    The Dominican Republic and Puerto Rico remained aloof from
any Cuban contacts, but did dispatch trade missions across
the Caribbean and into Central America in search for buyers
of its agricultural and industrial products.
    Behind the Cuban exchanges was at least partly the hope that
Cuban technicians might help rescue the Caribbean's staggering
sugar industry. Cuba, since Castro's advent to power in 1959,
had its own serious sugar production problems, but has generally
been more successful than the capitalist nations of the Caribbean
in the sugar sag.
    Last year the six countries that form the commonwealth Caribbean
sugar bloc - all of them former British colonies - had a total
production of only one million tons. This was the worst performance
in 10 years. One of the six, Antigua, produced no sugar at
all.
    In Puerto Rico, a U.S. possession, sugar production slumped
to 295,000 tons, scarcely one-third of its assigned quota
in the U.S. market.
    Only in the Dominican Republic did the sugar industry show
a substantial production gain over 1971, an achievement made
possible by the availability of labor from neighboring Haiti.
    Success with sugar was just a part of a generally improved
economic picture in the Dominican Republic. Mining, light
industry and construction all were vigorous, and the building
of additional cement plants to meet the pressing demand is
a matter of immediate public interest. Gulf & Western Industries,
in combination with the Ferre Enterprises in Puerto Rico,
will satisfy some of the demand with a new plant to be built
near Santo Domingo.
    In next door Haiti, the economy - spurred by an influx of
small manufacturers - continued along the upward path it began
about three years ago. Part of the upturn comes also from
tourism, whose growth reflects the more relaxed atmosphere
that pervades the nation since President Jean Claude Duvalier
took power following the death of his late father, strongman
Francois ''Papa Doc'' in April 1971.
    MORE
    2153pES 12-04


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  $ADV 00
    SAN JUAN Caribbean Economic Yearender take two: April, 1971. 370
    The tourist upswing was most dramatic in Haiti, but other
Caribbean islands also reported an improved tourist situation.
Jamaica claimed a 6 per cent increase for the first seven
months of 1972, compared to the previous year, and in Puerto
Rico the hotelkeepers reported an occupancy rate of 74 percent
for the first six months of the year, a hefty 9 per cent increase
over the same period the year before.
    Much of the over-all improvement was credited to an improved
U.S. economy and the resultant willingness of American tourists
to pay the high cost of Caribbean vacations.
    Caribbean tourist executives remained apprehensive, however,
about the future of their industry. Their high costs were
one concern; another was the quiet worry that racial frictions
could sour the ''paradise'' image. The slaying of four tourists
at the Fountain Valley Country Club in St. Croix, on Oct.
6th, sharpened these fears although there was no clear evidence
that the killings were racially motivated.
    In their anxiety to build ''a lasting tourism,'' members of
the Caribbean Hotel Association met in Haiti last year and
agreed to promote the small, locally owned and operated hotel
as a way of breaking down the isolation of the tourist from
the ''real'' Caribbean.
    Puerto Rico, the major center of Caribbean manufacturing,
held general elections that saw a change of government but
which apparently portended no change in that island's commitment
to private enterprise and tax exemption as the wellsprings
of industrialization. The victorious Popular Democratic party,
like the outgoing administration of industrialist magnate
Luis A. Ferre, looks to outside capital to fund continued industrial
expansion.
    But a nationalistic approach flavored governmental policy
in some former islands. The Trinidadian Government negotiated
the takeover of British Petroleum service stations, and
in Jamaica the word ''Jamaicanization'' became an everyday
expression in official and business circles.
    The Jamaican government also took stiff action to combat
the drop in foreign reserves. In November no less than 56
items were placed on a list of banned imports, including many
models of automobiles and electrical appliances.
    End Adv for Yearend Editions. Sent Dec. 4
    2159pES 12-04


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818
  $ADV 00
Adv Yearend Editions
East Asia Economic 440, Three Takes Total 1,150
By PHIL BROWN
Associated Press Writer
    TOKYO (AP) - Except for a severe setback in the Philippines - a
calamitous flood - East Asia generally reported satisfactory
economic performance in 1972, with Taiwan, Hong Kong and Singapore
booming.
    A survey of nations excluding economic giant Japan showed
the Philippines looking for economic improvement under martial
law, Thailand enjoying stabilization after a two-year slump,
Malaysia advancing, thanks to improved rubber prices, South
Korea vigorously boosting exports and Indonesia looking for
increased earnings from its oil.
    South Vietnam has been suffering from economic stagnation
since the North Vietnamese offensive began last April, but
the belief was that if peace comes without economic turmoil,
economic and other money will pour in and the economy will
begin to move.
    On the minus side elsewhere were a giant jump in Hong Kong's
cost of living and a diminution of its ''shoppers' paradise''
reputation, a decrease in South Korea's growth rate, slow
progress in promoting tourism in Malaysia, a lag in growth
of farmers' income in Taiwan and a rice shortage in Indonesia.
    Politics turned out to be an important influence in Hong
Kong, where investors were encouraged by British Foreign Minister
Alec Douglas-Home's report, after his November visit to Peking,
that there was little likelihood of China seeking an early
change in Hong Kong's status as a British colony.
    But in Taiwan, where the Nationalist Chinese government feared
foreign investment would decline after its expulsion from
the United Nations in October 1971, international politics
apparently did not figure heavily in the economic situation. Not
only has foreign investment increased, but Taiwan enjoyed a
60 per cent increase this year in its trade with European nations
which have no diplomatic relations with the Nationalist Chinese.
    In the Philippines, President Ferdinand E. Marcos' imposition
of martial law Sept. 26 was expected to remove some of the
bureaucratic roadblocks that impeded economic activity.
    Meanwhile, however, the country had not recovered from floods
which Marcos said might have set the economy back as much
as five years. Damage has been estimated at more than $500
million.
    Hong Kong boosted its exports of manufactured products by
10 per cent over 1971 levels. Stock market share prices rose
steadily and soared spectacularly in October and November despite
experts' warnings that most issues were overpriced.
    Stock brokers attributed the rise in part to better profits,
merger reports, the weakening of the British pound and Hong
Kong's growing political stability since the 1968 end of eight
months of Communist-led riots and terrorism.
    More
    2056pES 12-06




819
  $ADV 00
    Adv Yearend Editions
    TOKYO, East Asia Economic Take Two: terrorism. 460
    Although final figures were not available, government officials
said exports of Hong Kong products would reach $2.7 billion
compared to 1971's $2.41 billion.
    Hong Kong food prices shot up 20 per cent in 1972 and, with
the exception of government-subsidized housing for refugees,
rents for apartments and business buildings increased 30 to
40 per cent.
    While 1.1 million tourists were expected to visit Hong Kong
this year compared to 970,295 last year, officials warned that
rising prices, including hotel room rates, were a threat to
the future of the industry.
    Singapore expected a 13 per cent growth rate in 1972 despite
the withdrawal of British troops in 1971. Several industries,
particularly oil refining and shipbuilding and repairing,
have added to the already busy economic activity that has
come with the island nation's trade center position.
    Singapore last year passed the $1,001 per capita income level,
becoming the only Southeast Asian nation considered to be in
the developed category.
    On Taiwan, Nationalist Chinese officials said foreign investment
hit $126.1 million in November, compared with $112 million
for all of last year, and money was flowing increasingly into
heavier and more sophisticated industries.
    The government's area of most serious economic concern is
Taiwan's six million farmers. Although 40 per cent of Taiwan's
people are farmers, they account for only 18 per cent of the
gross national product.
    In recent months, fertilizer prices have been lowered, equipment
loans increased, roads improved and marketing systems streamlined
to eliminate middlemen.
    Slightly more than one year ago, experts were alarmed at
the downward trend of Thailand's economy, which had enjoyed
a boom in the previous decade. But the economy appears to
have stabilized, with rice exports in the first 10 months
of 1972 greater than in all of 1971 and in a position to surpass
the record years of 1964 and 1965.
    Experts noted that the export upsurge was caused chiefly
by calamaties elsewhere, with big purchases by the typhoon-ravaged
Philippines and famine-threatened Bangladesh.
    Malaysia was badly hit by depressed prices for its main commodity,
rubber, but improved prices toward the year-end led to hopes
of a small surplus in the balance of payments and a growth
rate of about 7 per cent in gross national product.
    The government has begun a concerted drive to industrialize.
But despite Malaysia's efforts in organizing the recent Pacific
Area Travel Association conference, the expected tourist boom
appears slow in arriving.
    MORE
    2105pES 12-06




820
  $ADV 00
    Adv Yearend Editions
    TOKYO, East Asia Economic Take Three: arriving. 250
    South Korea's exports continued to grow rapidly in 1972,
but the economy as a whole failed to recover from a year-old
depression. Government planners hoped the gross national product
would grow by 7 to 8 per cent, below last year's 9.8 per cent
and the target average of 8.6 per cent.
    In Indonesia, the government appeared to have the rice shortage
crisis under control and announced it would proceed with plans
to cut its original rice production target of 15.4 million
tons to 14.8 million for 1973.
    In South Vietnam, the cement, construction and iron and steel
industries have been hard hit by stagnation while some consumer
goods - beverages and textiles - are doing relatively well. Also
doing well are businesses operating under U.S. military procurement
contracts, with the military buying such items as batteries
and barbed wire in South Vietnam and giving them to the South
Vietnamese rather than importing them.
    The two main exports presently are frozen shrimp and pine
logs. Exports totaled $16.5 million in 1971 and reached $18
million through Oct. 14, 1972.
    American sources predict the maximum economic growth rate
at between 4 and 5 per cent for each of the next four or five
years. If peace comes, South Vietnamese economic experts believe
the United States, Japan and France will provide massive aid
for postwar recovery.
    End Adv Yearend Editions-moved Dec. 6
    2109pES 12-06


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822
  $ADV 00
Adv Yearend Editions
Mexico Economic 470, Two Takes Total 700
By CHRIS ANGELO
Associated Press Writer
    MEXICO CITY (AP) - The Mexican economy recovered from its
1971 slump during the last half of this year in an atmophere
of change brought on by legislation and statements aimed at
increased ''economic independence'' and additional government
intervention in some sectors.
    Leading the list of legislation was a bill sent to Congress
by President Luis Echeverria in November to tighten controls
on the importation of foreign technology
    In an introduction to the bill, expected to be passed, Echeverria
said many contracts for foreign technology increased production
costs for the purchaser, prohibited or limited their exports
and blocked their expansion or development of their own technology.
Such cases were among 15 types of contracts which the law would
prohibit.
    One recent government decree eliminated free importation of
sophisticated electronic equipment and created a research center for
development of Mexico's own telecommunications technology. Another
required ownership of auto parts manufacturers to be 60 per cent
Mexican and components of autos for domestic sales to be 60 per cent
Mexican-made.
    Echeverria said the government also was preparing ''legal means''
to eliminate ''threats and pressures'' on Mexicans to sell
businesses to foreigners.
    Expressions of uncertainty over future government plans,
prompted by increased government participation in parts of
the private sector, brought answers from other officials.
''What you do not do, the state will,'' Partimony Minister
Horacio Flores de la Pena told Monterrey businessmen. ''The
state will go as far as you push us.''
    Recent government acquisitions included an additional 3 per
cent cownership in Telefonos de Mexico, the telephone monopoly,
to give it controlling interest; 34 per cent of stock in Azufrera
Panamerican, which controls three-fourths of sulphur production,
to put total ownership in Mexican hands; and interests in
a bank, television station, newspaper chain and hotel chain,
acquired as payment for long overdue debts to the government.
A new company with 52 per cent ownership by the government
and 24 per cent by farm laborers was created to handle all
domestic and foreign sales of tobacco, as well as production
planning and financing.
    ''If Mexico moves toward the left,'' Flores de la Pena said,
''it will be due to strong pressures from the powerful countries.''
    When the head of a Monterrey industrial group accused the
government of intervening in the economy at the expense of
freedom, Deputy Minister of the Presidency Fausto Zapata said:
''We are not headed toward a model of socialism by the state.
Sacrifice of freedom or part of freedom in exchange for an
expanded range of action . . .is not the road we've chosen.''
    Zapata said the government changed the course of economic
development ''when all the signs warned of an imminent social
crisis of serious dimension.''
    MORE
    
    2241pED 12-09


823
  $ADV 00
    Adv Yearend Editions
    MEXICO CITY, Mexico Economic, a822, Take 2: Dimension. 230

    Both government and private sources consider the need for
a more equitable distribution of income to be the country's
major economic problem. Directly related to it is widespread
unemployment, especially in rural areas.
    Finance Minister Hugo B. Margain said, ''The wealthiest 10
per cent of the population receives 50 per cent of the national
product while 50 per cent of the people only receive 12 per cent of
the national product.''
    To aid rural sectors the government emphasized construction
of feeder roads with manual labor. A new law limits the amount
of irrigated land of any one landholder to 20 hectares. Tax
breaks and other incentives for industries locating outside
the industrial centers were authorized to stimulate rural
development and curb migration to urban areas. Credits for
agriculture increased and were boosted by a $23 million
interamerican development bank loan for irrigation, to be matched
by the government.
    Employment and industry both will benefit from a government program
to build 100,000 low-cost housing units a year, financed by a five
per cent payroll tax.
    Government officials estimated that gross national product
growth would be back to 6.0 to 6.5 per cent this year, after
a drop to 3.7 per cent during the 1971 setback caused by
international economic crises and the withdrawal that traditionally
accompanies the start of a new administration in Mexico.
    End Adv Yearend Editons Moved Dec. 9
    
    2245pED 12-09


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824
  $ADV 00
Adv Yearend Editions
South Asia Economic 370, Three Takes Total 1,030
By WILLIAM C. MANN
Associated Press Writer
    NEW DELHI (AP) - The more than 750 million people of the Indian
subcontinent, traditionally among the poorest in the world, became
poorer in 1972 as a result of war, insurrection, mismanagement and
drought. There was little prospect for economic improvement.
    The three most populous countries - India, Pakistan and
Bangladesh - suffered terribly from the economic aftershock of the
December 1971 war that split Pakistan and created Bangladesh.
    Two others, Ceylon and Afghanistan, went further in debt and
neared bankruptcy.
    All five struggled against drought imposed by an erratic
monsoon that made the people's pocket existence more meager.
Many South Asians - an estimated 16,000 in Afghanistan alone -  
starved.
    Even as India proudly proclaimed its military victory over
Pakistan, it admitted its inability to deal with its major
internal problem, the feeding of 567 million people, increasing
by a million every month.
    As the year began, Prime Minister Indira Gandhi announced
that India was independently wealthy in foodgrains and had
ended its traditional dependence on others for its food.
    As the year ended, the government was trying to lessen the
shock of a November announcement that, despite the earlier
boasts, India would indeed have to import.
    The extent of imports was not known, but one western economic
specialist said, ''The most they will ask for, we think, is
2 1/2 million tons, mostly from the United States.''
    Because of the impact on the world market of the U.S. sale
of $1 billion worth of wheat to the Soviet Union, India will
have to pay about $40 million more for its imports than if
the contract had been signed earlier.
    Estimates are that India's wheat bill could run as high as
$300 million, which will have to come from a foreign exchange
reserve of slightly more than $1 billion.
    The reserves declined by $65 million in 1972, mainly because
of suspension of most forms of U.S. assistance and mammoth
debt service obligations of $680 million a year. In addition,
India's trade with the Soviet Union, which includes all Soviet
aid, amounted to a $90 million deficit during the last three
years.
    MORE
    
    2335pED 12-09


825
  $ADV 00
    Adv Yearend Editions
    NEW DELHI, South Asia Economic a824 Take Two: years. 450

    Bangladesh's ascension became a major headache for New Delhi
because of the Dacca government's virtual client-state status
during the early months.
    India never recovered from the influx of 10 million Bengalis
during the 1971 civil war in East Pakistan.
    As 1972 came to an end, the 1,200 miles of India-Bangladesh
frontier remained closed despite a trade agreement signed
early in the year declaring a free-trade zone within 50 miles
of the border.
    The young Bangladesh government blamed hoarders and smugglers
for the inflation that cut the value of its currency, the
taka, by as much as 50 per cent. Sheik Mujibur Rahman, the
prime minister, went so far as to threaten capital punishment
for saboteurs of the economy. His words remained only threats,
however, and smuggling, hoarding and official corruption continued
millstones on the government's neck.
    Professing socialism, Mujib moved early to take over a few
industries like jute production and export. But midway through
the year the government was telling prospective investors
privately that there would be no more expropriation in the
near future and foreign money was welcome.
    Bangladesh also was trying to implement a plan to readmit
to its skilled labor force the Urdu-speaking Bihari minority,
outside the areas of extensive Bihari collaboration with the
Pakistanis during the civil war. That was said to be a year
away, however, and in the interim most skilled jobs in Bangladesh,
with much of its 25-million-man work force unemployed, went
begging.
    On the other side of the subcontinent, Pakistan ran into
many of the same and some different troubles as it tried to
recoup the loss of the 75 million Bengalis who had been a
ready market for Pakistani goods.
    Inflation forced a devaluation of the Pakistani rupee from
4.76 to the dollar to the realistic open market rate of 11
rupees.
    Businessmen claimed that industrial production dropped by
50 per cent, mainly because of labor unrest in April and again
in October.
    Investment in the private sector declined by 41 per cent
and in the public sector by 13 per cent. Banks overflowed
with money because industrialists were unsure about the
nationalization policies of President Zulfikar Ali Bhutto.
    There was doubt that Pakistan ever would satisfy its foreign
debt of more than $4 billion dollars, even if Bangladesh agreed
to take over 25 to 35 per cent of it, which is unlikely.
    But debt rescheduling arrangements with Pakistan's major
creditors - the United States, West Germany and Japan - and with
Yugoslavia, a barter country - started a flow of new aid, primarily
commodity assistance to provide raw materials for idle factories.
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    2346pED 12-09


826
 $ADV 00
    Adv Yearend Editions
    NEW DELHI, South Asia Economic, a824-825, Take Three: factories.
220

    South of the subcontinent, in Ceylon, the Communist-backed
socialist government floundered under military expenditures
it incurred to right a short-lived insurrection in April, 1971.
    The debt servicing bill payable by the end of 1972 was $167
million. The country owed another $279.5 million and there was no
end to the borrowing in sight.
    In Afghanistan, the government offers many excuses for failure
to dig out of its problems, but its just-completed third development
plan failed to meet a single goal.
    A major reason for the government's stagnation was its failure
to implement a number of foreign-aided projects already studied
and surveyed.
    Under the Afghanistan constitution, both houses of parliament
must approve all foreign loans. By mid-November, the autumn
session which convened a month earlier had failed to approve
loans totaling $226 million - a figure which would easily have
met the third plan's goal of $357.6 million in aid. The amount
contracted was 40 per cent less, or $217.1 million.
    Massive debt servicing and a severely unfavorable foreign
trade deficit cost the government more than one-third of its
meager foreign currency reserves of $46.8 million.

    End Adv Yearend Editions; sent Dec. 9.
    0001aED 12-10


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827
  $ADV 00
Adv Yearend Editions
Japan Economic 370, Two Takes Total 700
By Sehyon Joh
Associated Press Writer
    TOKYO (AP) - Japan braces itself against foreign pressure for
another revaluation of the yen as it goes into 1973 after recovering
from a 17-month-old recession and the shock of a currency
revaluation in 1971.
    The 16.88 per cent yen revaluation of Dec. 19, which some
government officials and businessmen had predicted would deal
serious blows to the nation's economy, turned out to be not
so bad after all. Imports did increase, but exports continued
to exceed them, giving the nation more large trade surpluses.
    On the domestic business side, however, it impeded recovery from
the business recession which began in September 1970. The recession,
the longest in postwar years, resulted mainly from a slowdown in
capital investment in plants and equipment and industrial
overcapacity.
    A number of companies reported unfavorable financial results,
many of them for three consecutive half-year terms beginning
in the six-month period ended March 31, 1971. And when domestic
business was slow, they naturally looked to overseas markets.
    In the first nine months of this year, exports rose to $20.27
billion from $17.22 billion in the same period a year earlier while
imports increased to $16.81 billion from $14.54 billion.
    The Economic Planning Agency said Japan's total imports in fiscal
1972, ending March 31, 1973, would rise 21 per cent from the
previous fiscal year to $19.70 billion and exports 13 per cent to
$27.90 billion. They will leave a trade surplus of $8.20 billion.
    To cut down the surplus and, in effect, stave off foreign
pressure for another revaluation of the yen, the government
in late October introduced a five-point yen defense measure
calling for invocation of export controls, if necessary.
    Other key points of the measures included lowering tariffs,
expanding import quotas, improving the preferential tariff system,
simplifying import procedures and relaxating foreign exchange
controls.
    The government also obtained parliamentary approval for a
supplementary budget which Prime Minister Kakuei Tanaka said, would
result in a $300 million to $500 million reduction in Japan's
balance of payments surplus in fiscal 1972.
    (MORE)
    0019aED 12-10


828
  $Adv 00
Adv Yearend Editions
    TOKYO, Japan Economic a827, Take Two: fiscal 1972. 330

    Tanaka said the nation should try to avoid another currency
revaluation because it would cause confusion among domestic
industries, particularly small firms. He said the government
would have to take political responsibility if the country
is forced to revalue its currency again.
    Despite repeated assurances by Tanaka and other responsible
government leaders, speculation on a revaluation in early 1973
persisted both at home and abroad.
    Japanese financial sources predicted the yen would be revalued
upward to a new rate of 280 yen to the dollar after the general
election Dec. 10.
    The domestic business recession, meanwhile, hit the bottom
in August government officials said they believed business
activity was returning to a normal level.
    With domestic business booming again, Japan stands in a position
to rouse dissatisfaction and suspicion among foreign countries
unless the government effectively checks rising exports and
removes restrictions against imports.
    The United States, Britain and other European Common Market nations
already are pressing for further efforts to balance Japan's trade
with them, in addition to their demand for a revaluation of the yen.
    Seeing little prospect for trade with these countries, Japan turned
toward markets in mainland China. With a lightning stroke, Prime
Minister Tanaka established diplomatic relations with Peking in
September.
    In other Asian countries such as Thailand, whose markets are
flooded with Japanese goods, Japan is provoking antipathy with its
aggressive trade tactics. In a recent meeting of ambassadors
stationed in Southeast Asian countries, the envoys decided to urge
Japanese firms to be orderly and discreet in their exports.
    At home, Tanaka's government is under heavy pressure from
opposition parties and the people for a switch in its past
policy favoring big business to that of social welfare and
reconstruction of the nation with less environmental pollution.
    End Adv Yearend Editions-Moved Dec. 9
    0027aED 12-10


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829
  $Adv 00
Adv Yearend Editions
    BEIRUT, Middle East Economic a800-802 of Nov. 29, moved in
advance for yearend editions, in 10th graf a801, 21st graf
story x x x regime has not been completely successful in marketing
x x x sted completely successful.
End Adv Yearend Editions-Moved Dec. 9
    
    0046aED 12-10


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831
  $ADV 0 Editions
    WASHINGTON Take 2, Economy: October. 420
    Price Commission Chairman C. Jackson Grayson Jr. has urged
employers to refrain from paying any more than 5.5 per cent.
The commission doesn't allow companies to include wages over
5.5 per cent as part of the costs that must be used to justify
price boosts.
    Labor unions have a counter argument. They can point to the
recent price indicators showing a possible renewing of inflationary
pressures. The psychology will be important.
    The Nixon administration set as its target for wage-price
controls a slowing of the rate of inflation to the range of
2 to 3 per cent by the end of 1972. All the evidence won't be
in until mid-January, but the figures released late in the
year showed a rate closer to 3.5 per cent.
    The effectiveness of wage-price controls probably will be
debated for years. Grayson believes they have trimmed inflation
by as much as 1.5 per cent from what the rate might have been
without controls. The Brookings Institution agrees with this
conclusion.
    The Economic Stabilization Act under which Nixon imposed
controls on Nov. 14, 1971 expires officially April 30, 1973.
Congress must extend the law, or the controls must be dropped.
    The President has committed himself to keeping them until relative
price stability is achieved.
    That phrase has never been defined. ''Relative price stability,''
in the final analysis, will mean what the President decides
it to mean, as far as the impact on controls is concerned.
    Not to be pushed into the background by the emphasis on controls
is the administration's efforts to control federal spending.
For the fiscal year that ends next June 30, the President
wants to keep spending to $250 billion, but he must withhold
several billion dollars voted by Congress to achieve this
goal.
    The fiscal 1974 budget that will be submitted to Congress
in a few weeks will be an austere one, officials in the Office
of Management and Budget indicate. Just the same, it will
be difficult to keep the budget from being a tool for triggering
inflation.
    The budget deficit for fiscal 1973 is expected to approach
$30 billion. In fiscal 1974, the administration will try to
hold it under that amount.
    But the important thing is whether the budget is in deficit
on a ''full-employment'' basis, the guide Nixon has been using
in his spending program.
    As Nixon's officials describe it, this means holding spending
to a theoretical limit: the amount of money the nation's tax
system would produce if the economy were operating at 4 per
cent unemployment. This means deficits in bad or slack economic
times. It means surpluses in good or relatively good times.
    MORE
    2213pES 12-11


832
  $ADV 00
    Adv Yearend Editions
    WASHINGTON, Take 3 Economy: good times. 340.

    But if the budget ever goes beyond this theoretical ceiling,
it is considered to be inflation-inviting fiscal policy. The
outlook for fiscal 1973 and fiscal 1974 is for two full-employment
budget deficits unless tighter spending controls are adopted.
    Democratic economists believe the administration is overly
concerned with this problem at this time, saying the economic
recovery that began in late 1971 has yet to bring the nation
full prosperity. They say the Republican administration can't
stand enough of a good thing.
    The months ahead also will determine how Nixon's new economic
setup will work. He has in effect demoted his Council of Economic
Advisers and installed Treasury Secretary George P. Shultz
as an economic czar in over-all charge of domestic and international
economic policy.
    While the domestic economy usually gets most of the attention,
international economic policy will be more crucial in 1973
than ever.
    It is a year in which the United States and 124 nations will
be negotiating a new world monetary system which will determine
economic relationships for perhaps two decades. Final agreement
could come as early as September, when the International Monetary
Fund holds its annual session in Nairobi, Kenya.
    The United States will be pushing for fairer rules governing
changes in currency values of nations. Long troubled with
balance-of-payments deficits, mainly because of its role in
rebuilding Europe and Japan after World War II, the United States
wants rules to help overcome this imbalance.
    Basically, it is seeking a deal in which nations with payments
surpluses would face strong pressure to raise the value of
their currencies, just as a country with deficits is under
pressure to devalue.
    And, also, the United States wants no part of a dollar-centered
currency system. The dollar should enjoy the same privileges
that other currencies have in the system, it says.
    The debate is complicated, but key to the nation's hopes
of turning around its balance-of-payments problems as well
as competing with Western Europe and Japan.
    Also slated for significant action in 1973 is a new round
of trade negotiations. The United States wants barriers against its
products, erected in both Japan and Western Europe, lowered.
These talks should be carried out simultaneously with monetary
talks, the Treasury Department argues.

    End Adv Yearend Editions-moved Dec. 11.
    2221pES 12-11


************************************************************


835
  $ADV 00
Adv Yearend Editions
Securities Industry 420, Two Takes, Total 750
By JOHN DORFMAN
AP Business Writer
    NEW YORK (AP) - For men who deal in stocks and bonds, 1972
may go down as the year the logjam broke.
    As the year drew to a close, brokers, members of stock exchanges,
and investors were still arguing about many of the same issues
which had long preoccupied the securities industry. But solutions
now seemed within reach.
    The knotty question, for example, of financial institutions
such as insurance companies and mutual funds belonging to
stock exchanges seemed about to be settled. The formula for
solution was one which would allow the big traders in, provided
they left part of their baggage outside.
    In more technical terms, the proposed plan was known as the
80-20 formula. It meant that institutions could have brokerage
subsidiaries, as long as the subsidiaries did 80 per cent
of their business with the public at large and only 20 per
cent with the parent companies.
    The 80-20 rule was endorsed in principle by the Securities
and Exchange Commission, the New York and American Stock exchanges,
and finally - more surprisingly - by the PBW (formerly Philadelphia-
Baltimore-Washington) Exchange, the only current stronghold of
institutional membership.
    At the end of November, the PBW said it would accept the
rule if its current institutional members were given until
1975 to comply.
    Another source of seemingly endless controversy on Wall Street
and in some committees of Congress has been the fee a broker
charges as a commission for executing a stock trade.
    Until 1971, all commission fees were fixed. Starting in April
1971 customers could haggle about fees on that portion of
a trade which exceeded $500,000.
    Surveys indicated that big-ticket customers were gaining
as a result of the negotiation, at the expense of brokers.
In April 1972 the cutoff point for negotiation was lowered
to $300,000. The New York Stock Exchange agreed to monitor
the effect of the lower break-point.
    Some congressmen and the antitrust division of the Justice
Department pressed for an early lowering or abolition of the
breakpoint, expressing the opinion that any fixed-fee schedule
was a violation of antitrust laws.
    Meanwhile, brokerage firms were taking it on the chin. Low
trading volume, especially during the summer months, combined
with the new rate structure and sometimes top-heavy personnel
policies to produce a profit squeeze.
    In the fall, New York Stock Exchange economists called in
television cameras, newspapermen and brokerage firm heads
for a chart and graph presentation. The message was that the
time was not ripe for any further change in the fee structure.
    MORE
    2337pES 12-11


836
  $ADV 00
    Adv Yearend Editions
    NEW YORK, Take 2 Securities Industry: structure. 330

    Then came Henry Kissinger's ''peace is at hand'' announcement,
President Nixon's landslide re-election, and the Dow Jones
industrial average's breaking of the 1,000-point barrier.
Trading picked up, and brokers began to get the scent of some
profits.
    In December the NYSE announced it was re-examining the question
of rates with a view towards lowering them again, and trying
to do something for the small investor which would be, in
the words of NYSE Chairman James J. Needham, ''more than symbolic.''
    In other highlights of the securities industry during 1972:
    - Needham, a former CPA and member of the Securities and Exchange
Commission, was named NYSE chairman Aug. 28. He proved a decisive
and active leader, visiting Moscow to promote East-West trade,
pressing for longer exchange hours, and urging the merger
of all stock exchanges into a central system.
    - Both the NYSE and the American Exchange (Amex) named new
20-member boards of directors, of whom half were drawn from
the public, as opposed to strictly from the brokerage community.
    - The Amex announced it would seek out public opinion - presumably
through hearings - before making any policy decisions which
could affect individual investors. It also announced a program
to monitor the financial condition of its listed companies,
and to press for public disclosure of any unusual conditions
detected.
    - Automation of trading floor activities was pushed by the
Amex under the banner of its AMCODE program, and by the NYSE
and Amex jointly through the Securities Industry Automation
Corp. (SIAC).
    - As automation proceeded, the idea of a nationwide centralized
stock trading system came closer to reality. Such a system
was almost universally endorsed by stock exchange and government
officials, and some exchanges started appropriating the money
for the necessary hardware.
    In the proposed system, an investor or his broker would be
able to look at a unified trade reporting system, often called
the ''consolidated tape,'' and tell where in the country at
that moment he could buy or sell stock at the best price.

    End Adv Yearend editions-Moved Dec. 11

    2346pES 12-11


************************************************************


840
  $ADV 00
Adv Yearend Editions
Canadian Economic 470 two takes total: 740
By TOM MITCHELL
Canadian Press Writer
Written for The Associated Press
    OTTAWA (AP) - The report on Canada's economic health at the
end of 1972 is the sort of mixture a middle-aged patient could
expect:
    Not bad basically, but with a dubious outlook in the political
region, some overindulgence in inflation and not enough attention
to a nagging unemployment problem.
    There also could be psychological problems ahead, with severing
of some long-standing ties to the British parent and continuing
potential for problems with the next-door relative, the United
States.
    In the political area, questions arise from the Oct. 30 election,
when the Liberals under Prime Minister Pierre Trudeau lost
the majority position they held in the elected House of Commons.
    Trudeau has conceded that the skid in Liberal popularity
was due to some of the party's economic policies and these
will be changed. His new program, and any changes in economic
thrust, will only be unveiled to the public when he meets
Parliament early in January.
    Both inflation and unemployment, rising hand in hand through
1972 to the bafflement of some economists, played a major
role in the Liberal election setback.
    All prices in the first nine months of 1972 went up by 3.3
per cent, indicating a rise of 4 per cent once last-quarter
figures are in. Council of Canada, an independent survey body,,
has recommended an outside limit of 3 per cent annually
for the years 1972-75.
    The unemployment rate appeared headed for a year-end total
of about 6.3 per cent of the labor force for the year - far
beyond the council's recommended limit of 4.5.
    Gross national product, measurement of wealth produced, ran
at an annual rate of $102.7 billion in the third quarter,
well up from the 1971 GNP of $93.1 billion but with a heavy
inflationary factor included.
    Actual volume of output in 1972's first nine months increased
only 4.5 per cent in uninflated terms, well below the council's
suggested minimum annual growth rate of 6 per cent.
    The Liberals introduced a budget last spring, whittling down
corporate income tax rates for manufacturing and processing
industries in an effort to encourage more job production. Since
the election they have said this will be implemented.
    But they also have left the postelection door open to personal
tax cuts as an economic spur, something they refused to do
before the election deprived them of absolute Commons control,
In fact, a 3 per cent personal tax cut introduced in 1971
was to be withdrawn at the start of the new year.
    Still in a sort of limbo at year's end were Canada's vital
future trade relations with the United States, author of a
number of recent protectionist moves, and Britain, moving
out of the old Commonwealth preferential trading and into
the European Common Market.
    More
    2230pES 12-18


************************************************************


840
  $ADV 00
Adv Yearend Editions
Canadian Economic 470 two takes total: 740
By TOM MITCHELL
Canadian Press Writer
Written for The Associated Press
    OTTAWA (AP) - The report on Canada's economic health at the
end of 1972 is the sort of mixture a middle-aged patient could
expect:
    Not bad basically, but with a dubious outlook in the political
region, some overindulgence in inflation and not enough attention
to a nagging unemployment problem.
    There also could be psychological problems ahead, with severing
of some long-standing ties to the British parent and continuing
potential for problems with the next-door relative, the United
States.
    In the political area, questions arise from the Oct. 30 election,
when the Liberals under Prime Minister Pierre Trudeau lost
the majority position they held in the elected House of Commons.
    Trudeau has conceded that the skid in Liberal popularity
was due to some of the party's economic policies and these
will be changed. His new program, and any changes in economic
thrust, will only be unveiled to the public when he meets
Parliament early in January.
    Both inflation and unemployment, rising hand in hand through
1972 to the bafflement of some economists, played a major
role in the Liberal election setback.
    All prices in the first nine months of 1972 went up by 3.3
per cent, indicating a rise of 4 per cent once last-quarter
figures are in. Council of Canada, an independent survey body,,
has recommended an outside limit of 3 per cent annually
for the years 1972-75.
    The unemployment rate appeared headed for a year-end total
of about 6.3 per cent of the labor force for the year - far
beyond the council's recommended limit of 4.5.
    Gross national product, measurement of wealth produced, ran
at an annual rate of $102.7 billion in the third quarter,
well up from the 1971 GNP of $93.1 billion but with a heavy
inflationary factor included.
    Actual volume of output in 1972's first nine months increased
only 4.5 per cent in uninflated terms, well below the council's
suggested minimum annual growth rate of 6 per cent.
    The Liberals introduced a budget last spring, whittling down
corporate income tax rates for manufacturing and processing
industries in an effort to encourage more job production. Since
the election they have said this will be implemented.
    But they also have left the postelection door open to personal
tax cuts as an economic spur, something they refused to do
before the election deprived them of absolute Commons control,
In fact, a 3 per cent personal tax cut introduced in 1971
was to be withdrawn at the start of the new year.
    Still in a sort of limbo at year's end were Canada's vital
future trade relations with the United States, author of a
number of recent protectionist moves, and Britain, moving
out of the old Commonwealth preferential trading and into
the European Common Market.
    More
    2230pES 12-18


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843
  $ADV 00
Adv Yearend Editions
    Russian Economic SUB
    MOSCOW, Russian Economic a316-318 of Nov. 27, sub 23rd graf:
United States.
    For the first 11 months of 1972 labor productivity was up
only 5.4 per cent compared with 6.3 per cent for 1971 and
a planned average increase of 6.8 per cent for 1971-75.
    The bad year, 24th graf.
    ---
    Sub next to last graf: weaknesses.
    Gross industrial production for the first 11 months of the
year was up 6.7 per cent, below the planned target of 6.9 per
cent for the year.
    But singled, last graf.
    End Adv Yearend Editions, Sent Dec. 19
    1920pES 12-19


************************************************************


844
  $ADV 00
Adv Yearend Editions
    Common Market-Western Europe SUB
    LONDON Common Market-Western Europe a803-805 of Nov. 29
sub 3rd graf: Britain.

    Eminent economists, including those of the Organization for
Economic Development, warned the action was insufficient and
even Britain's outright freeze had little effect on price
rises during November, its first month of operation.
    Annual rates of inflation in the quarter of 1972, according
to the OECD, ranged from 6.6 per cent in Denmark to 12.3 per
cent in Spain. The average for Western Europe was 9.6 per
cent compared to a 4.8 per cent rate six months earlier. The
U.S. rate was a mere 3.4 per cent.

    Yet 1972: 4th graf
---
Sub first line 15th graf

    BRITAIN - The British government, fighting an 11.3 per cent
rate

---
Sub 4th line, 19th graf (West Germany):

prices rising at a rate of 8.6 per cent. Most economists agreed

---
Sub 2nd line, 24th graf (Netherlands):

10 per cent inflation, but foreign trade moved ahead strongly,

---
Sub 2nd line, 25th graf (Belgium):

- 7.9 per cent - the Belgian state bank still moved in November to

---
Sub 1st line, 26th graf:

    SWITZERLAND - The Swiss cost of living index climbed 7.9 per cent

---
Sub 28th graf (Italy):

    Strikes and a rising cost of living rate of 10.3 per cent
made the future for Italy anything but rosy.

---
Sub first line, 29th graf:

    AUSTRIA - With an inflation rate of 8.8 per cent, Austria was
worse

---
Sub first line, 31st graf:

    SPAIN - With the c98 )gn2ng rising at 12.3 per cent, Spain
was

End Adv for Yearend Editions, Sent Dec. 19
    1925pES 12-19


************************************************************


845
  $ADV 00
Adv Yearend Editions
Stock Market Yearender 430 two Takes Total 740
By DAVID BURKE
AP Business Writer
    NEW YORK (AP) - The stock market soared to new highs in 1972,
as New York Stock Exchange volume topped the four billion share
mark and the Dow Jones industri$l average cracked the magic
1,000-point 8losing level.
    Signs that the economic recovery was gathering momentum, and
growing hopes for a Vietnam peace helped push the market to
new peaks in the latter part of the year.
    The year began in the throes of an intermediate rally which
began in November 1971, with the Dow under 800.
    That rally, spurred by 1971's Smithsonian agreements on monetary
reform and expectations for an improving domestic economy,
continued through April, when the Dow topped out at 970, Larry
Wachtel, an analyst at Bache & Co., noted.
    Then came a consolidation phase, during which on three occasions
the Dow got back up to the 970 level and each time fell back - in
May, August and September.
    The market then entered an intermediate ''bear phase'' from
April through October, Wachtel said, triggered in part by
the rising presidential star of George McGovern and his ''somewhat
radical economic stance.'' While the Dow was moving laterally,
the market was going steadily lower in terms of advances and
declines.
    When the Dow broke through the 970-980 resistance level in
early November, ''everything else was icing on the cake,''
Wachtel said
    On Nov. 14, the Dow shot up 6.09 points to close at 1003.16,
the first time ever above what always seemed to be the chimerical
1,000 level.
    ''Breaking the 1,000 barrier was psychologically important
to everyone,'' said Charles M. Lewis, managing partner of
Winkler, Cantor, Pomboy.
    About this time, the Vietnam peace talks began to heat up,
adding new impetus to the market's upward momentum. Economic
statistics were also strong, and President Nixon's landslide
re-election reassured jittery Wall Street investors, Wachtel
noted.
    ''Many of the worries and concerns that disturbed investors
at the beginning of the year began to wear down,'' said Monte
Gordon, research director at Dreyfus Corp. It became apparent,
he said, that there would be no repetition of the credit crunch
that plagued investors in 1969-70.
    Meanwhile, corporate earnings reports showed that price controls
and profit margin restrictions were not unduly disrupting
business profits.
    ''There was a feeling that everything was in balance, and
investor confidence began to pick up,'' he said.
    More
    2200pES 12-19


846
  $ADV 00
    Adv Yearend Editions
    NEW YORK, Stock Market Yearender, Take 2: said. 310.
    So the market entered a new intermediate term bull phase,
Wachtel noted, ''a phase which should continue well into 1973.''
    During this period, various market indicators touched all-time
highs. On Dec. 11, the Dow Jones industrial average closed
at a record 1036.27 and the Big Board index of more than 1,400
common stocks hit a record 65.14.
    On the previous trading day, Friday Dec. 8, the NASDAQ
over-the-counter composite index also closed at a all-time peak at
135.15.
    Analysts noted that the market's strength had spread out from
the blue chip sector to include virtually all segments of the
Big Board and many of the secondary over-the-counter and American
Stock Exchange issues.
    Trading climbed to record levels on the Big Board, prodded in part
by heavy institutional activity. On March 14, a 5,245,000-share
block of American Motors was sold by Kaiser Industries, in
line with its previously announced intention to get out of
the auto business.
    The sale represented the largest single block ever traded
in terms of number of shares. The previous record holder had
been a 3,248,000-share Allis Chalmers block traded Feb. 8,
1971.
    Snags in the Vietnam peace talks caused the market to pull
back somewhat in late December, but most analysts were still
anticipating a bullish 1973.
    ''There is a strong feeling that next year will be a better
year than 1972, and we expect the Dow to be in the 1,200 area
by mid-1973,'' said Lewis.
    ''The biggest risk next year is the threat of possible restimulated
inflationary pressures,'' declared Robert Johnson, analyst
with Paine Webber, Jackson & Curtis. ''It's a big labor negotiating
year, and everybody will be keeping an eye out on the autoworker
talks scheduled for September,'' he said.
    End Adv Yearend Editions, Moved Dec. 19
    2206pES 12-19


************************************************************


847
  $adv 00
    Adv for Yearend Editions
    The Year in Business 470 Two Takes total 940
By CAROLE MARTIN
AP Business Writer
    NEW YORK (AP) - The trade thaw with the Soviet Union and mainland
China and an upturn in the U.S. economy in 1972 boosted American
companies' hopes for a strong business expansion in the coming year.
    Expectations of good business in 1973 were nearly unanimous
among economists and economic consulting firms, suggesting
that businessmen and investors could plan ahead with confidence.
    Three days before his historic trip to mainland China in
February, President Nixon liberalized trade curbs, putting
the People's Republic of China in the same category as the
U.S.S.R. The move legalized the sale of goods such as locomotives,
construction equipment, internal combustion engines, rolling
mills and many industrial chemicals.
    Then the United States and the Soviet Union signed a trade
accord expected to triple U.S.-Soviet business dealings to
perhaps $1.5 billion over its three-year life.
    The Soviets then purchased $1 billion worth of U.S. grain.
    In July, Occidental Petroleum and the Soviet Union signed
a multi-billion, five-year pact covering oil-gas exploration,
production and usage, fertilizers and chemicals, metal treatment
and plating, hotels and utilization of solid wastes.
    And Boeing Co. cracked the Communist aircraft market with
$150 million in Chinese orders.
    Other trade developments included agreement by Japanese electronics
makers to restrict exports voluntarily. The agreement included
reducing export volume or increasing export prices. The move
sought to forestall possible U.S. or European import curbs.
    As the economy improved, business turned upwards and U.S.
corporate profits climbed to record, seasonally adjusted levels.
    When the Dow Jones Industrial average, a closely watched
stock market indicator, cracked the 1000-mark on Nov. 14 after
six years of trying, it provided another strong psychological
boost for business.
    In January, the Price Commission granted exemptions to small
retailers, easing small business's burdens and allowing the
commission to focus its attention on large industries.
    The West Coast dockers' 135-day port strike ended in February,
but the Pay Board reduced the settlement agreement, cutting
the first-year wage hike to 14.9 per cent from 20.6 per cent.
    The bank prime rate, the interest banks charge their best
corporate customers, opened the year at 5 1/8 per cent, but had
dropped to 4 1/2 per cent at the end of January. In February
the prime rate dipped to 4 3/8 per cent, the lowest level in
almost 12 years, but the decline in money rates was over,
and the prime rate started back up in March, finishing the
year generally at 5 3/4 per cent, although a few banks pushed
their rates to 6 per cent.
    There were a number of top level executive changes in the
past year, including Pan Amerinan World Airways' board's ouster
of Najeeb E. Hallaby as chairman and chief executive officer.
He was succeeded by William T. Seawell.
    MORE
    2339pES 12-22


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848
  $Adv 00
    Adv for Yearend Editions
    NEW YORK, The Year in Business, Take Two: Seawell. 470

    John D. deButts was named chairman, and Robert D. Lilley,
president, of American Telephone & Telegraph Co.; F. J. Dunleavy
was elected president of International Telephone & Telegraph Co;
Edgar B. Speer succeeded Edwin H. Gott as chairman of U.S. Steel
Corp.; Frank T. Cary replaced T. Vincent Learson as chairman of IBM,
and Fred W. O'Green became president of Litton Industries when
President Nixon tapped Roy L. Ash to head the Office of Management
and Budget.
    Other new faces included J. Paul Lyet, chairman of Sperry
Rand Corp.; Elton H. Rule, president of ABA; Walter A. Fallon,
president of Eastman Kodak; James L. Ferguson, president of
General Foods Corp., and Arthur R. Taylor, president of CBS.
    In the automotive industry, the Price Commission allowed
auto price increases to reflect the cost of newly required
safety equipment. and pollution control while auto safety
standards proposed by the Transportation Department were delayed,
in some cases several years. The postponements, blamed on
''lack of manpower'', excluded air bags.
    The Supreme Court ordered Ford to divest itself of the sparkplug
making business acquired in 1961 from Electric Autolight,
and said Ford must not make spark plugs for 10 years.
    In other developments:
    -Gulf Oil announced it would write off some $250 million
of marginal and unprofitable operations, including substantially
all of its retail and related distribution operations in the
Midwest and Northwest. Some 3,500 stations were affected.
    -The Federal Trade Commission charged that Alcoa had illegal
interlocking directorates with Kennecott Copper and Armco Steel on
grounds they were competitors because while their metals were
different they were interchangable for many uses. Two directors
resigned one board post each in an effort to resolve the matter.
    -Robert L. Vesco, International Controls, 20 other men and 20
companies, funds and banks were charged in a Securities and Exchange
Commission suit with draining $224 million from IOS, the
international financial complex. The suit alleged ''self-dealing''
transactions ''detrimental'' to IOS funds' holders and to
public stockholders of companies whose shares the funds held.
    -Wilson Sporting Goods was merged into Pepsico, and Pepsico
acquired Rheingold Corp. through its tender offer for the
beer company's stock. The offer attracted over 2.6 million
shares, or approximately 82 per cent of the common.
    -Kennecott Copper took a $50.4 million loss on a mine expropriated
by Chile for an after-tax write-down of $26.2 million. It
gave the company a $4.8 million third quarter net loss, although
earnings had tripled to $21.4 million before the charge.
    -The Justice Department tentatively asked that IBM be broken
up into an unspecified number and variety of independent companies.
    -Ampex, FAS International and Stirling Homex were among companies
filing Chapter 11 petitions for bankruptcy protection.
    End Adv For Yearend Editions Sent Dec. 22
    0003aES 12-23


************************************************************


849
  $ADV 00
    Adv Yearend Editions
    Oil and Gas 400 Three Takes total l,l00
By MAX B. SKELTON
AP Oil Writer
    HOUSTON (AP) - The domestic petroleum industry moves into
1973 with all of its old problems and with a certainty oil
and energy are to figure prominently in major decisions at
the Washington level.
    Studies were under way at year-end on possible actions dictated
by shortages of domestic supplies of both crude oil and natural
gas, shortages that could intensify with severe winter conditions
in the East and Midwest in early 1973.
    The studies center on two points - a need for spiraling quantities
of foreign supplies and a need for increased emphasis on the
development of conventional domestic supplies and of such
alternatives sources of domestic energy as coal gasification
and the extraction of petroleum from vast oil shale deposits.
    There was indication that President Nixon early in the new year
will take ''comprehensive and bold'' steps aimed at resolving
the nation's energy problems. His 1971 proposal for establishment
of a Department of Natural Resources drew little congressional
support and there has been speculation a new approach may
call for an ''energy czar'' within the Executive Branch.
    There is general agreement in industry and government that oil
imports will jump from 4.6 million to from 12 to 15 million
barrels a day by the mid-1980s. Domestic demand for petroleum
in 1972 exceeded 16 million barrels a day. This is an increase
of nearly 7 per cent over 1971, and projections for the
remainder of the century indicate annual increases of at least
4 to 5 per cent.
    Industry and government also are in general agreement that the
era of cheap energy is over. While domestic producers wrestle
with depressed prices and increasing costs, the cost of foreign
supplies continues to climb. After a series of price hikes,
Middle East members of the Organization of Petroleum Exporting
Countries were negotiating at year-end ownership contracts
that would permit them to take over 25 per cent interest in
foreign-controlled firms almost immediately and 51 per cent
by 1983.
    In view of the shortages and anticipated increases in demand,
billion dollar deals for vast quantities of liquefied natural
gas from such sources as Russia and Algeria also were in the
discussion stage, but, like oil imports, were prompting criticism.
    Numerous consumer areas, particularly along the Atlantic
Coast, have objected, mainly for environmental reasons,
to having gas processing plants or offshore oil superports
in their areas. Gigantic federal subsidies for tankers also
have raised questions at the congressional level.
    MORE
    1802pES 12-28


850
  $ADV 00
    ADV Yearend Editions
    HOUSTON Oil and Gas Yearend Take 2: level. 400

    At the same time, both Texas and Louisiana have established
superport commissions, and groups of companies also are studying
the feasibility of private development of such ports designed
to permit jumbo tankers to supply foreign oil to the sprawling
refinery centers of the coastal areas of the two states.
    Complicating the long-range outlook, however, is a total absence
of major domestic oil refinery expansion projects. Operating
at near capacity, U.S. refineries processed more than 11.6
million barrels of oil a day in 1972, but site selection problems
and the uncertainty of future pollution standards have caused
a shutdown of new plant projects despite increasing demand.
Oilmen say demand trends indicate the equivalent of four new
150,000-barrels-a-day refineries should be built each
year between now and 1980.
    The American Petroleum Institute, oil's largest trade group,
underscored the seriousness of the supply situation in mid-November
by calling for the development of oil products standby rationing
programs for prompt use in the event of serious oil import
disruptions.
    Even in Texas, the No. 1 producing state, there were spot
shortages of natural gas in December and the state's crude
oil output, despite a 100 per cent allowable since April,
was not meeting demand. Louisiana also was producing at near
capacity, but the United States produced less crude oil in
1972 than in 1971.
    A minor increase in domestic drilling operations, only the
second in eight years, was among the few bright spots of 1972,
but total well completions for the year were estimated at
only 27,900 compared with a record 58,160 in 1956.
    While it is too late to turn the tide of rapidly increasing
imports the next decade or so, industry spokesmen contend that
increased incentives - higher prices for crude oil, products,
and natural gas, and more realistic environmenatal policies -
are needed for the development of conventional and nonconventional
domestic resources they say would be adequate to meet long-term
requirements.
    Although a court challenge brought by environmentalists continued
to halt development of the vast resources of Alaska's North
Slope, oilmen clearly demonstrated their confidence in long-
term domestic possibilities in mid-December by submitting
high bonus bids totaling a record $1.6 billion for 119 federal
drilling tracts off the Louisiana coast. Just three months
earlier, high bids had totaled $585 million in a similar sale
that reopened federal offshore development after postponements
prompted by the reaction of conservationists and environmentalists
to the Santa Barbara oil spill of 1969.

    MORE
    1810pES 12-28


851
  $ADV 00
    Adv yearend editions
    HOUSTON Oil and Gas Yearend take 3: 1969.

    A threatened drilling rig shortage, particularly for those
capable of operating in deep water, could slow development
of the new federal leases. Numerous rigs are under construction,
but many were moved to such areas as the North Sea during
the uncertainty prompted by the delay of new lease sales after
Santa Barbara.
    With worldwide production climbing to nearly 42 million barrels
a day, the North Sea figured prominently in 1972's exploration
highlights. Some sources now are estimating the area's production
may ready three million barrels of oil and eight billion cubic feet
of gas a day by the late 1970s, with still further progress
in the 1980s.
    Nigeria, continuing its comeback after civil war disruptions,
saw its oil production approach two million barrels a day during
1972's third quarter.
    Accelerated leasing of federal lands for petroleum exploration,
both onshore and offshore, is part of a seven-point program
Frank N. Ikard, president of the Petroleum Institute, has
proposed for 1973 to improve the nation's energy supply outlook.
    Other points include deregulation of natural gas prices and
the strengthening of tax incentives.
    Such tax incentive prospects are clouded, however, by a certainty
the new Congress will produce renewed attacks on the industry's
tax structure, including the oil depletion allowance that
was cut from 27 1/2 to 22 per cent in the 1969 Tax Reform Act.
    Much of the industry's hopes for ''comprehensive and coherent''
national energy policies may rest with Sen. Henry M. Jackson,
D-Wash., whose Interior Committee has spent nearly two years
on a National Fuels and Energy Policy Study.
    The impact the report could have is indicated by Jackson's
expressed concern over the nation's increasing dependence on
foreign supplies. He says there has been unwarranted optimism about
the security of supplies from the Middle East, the area that will
have to provide the bulk of future increases in U.S. oil imports.
    ''The desire of the nations of the Middle East to control their
own destinies, to manage their own resources and to own both
production and downstream oil facilities has a momentum that is
greatly underestimated by the oil industry and the U.S.
government,'' Jackson says.

    End Adv Yearend Editions, Sent Dec 28
    1823pES 12-28


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852
  $ADV 00
    Adv Yearend Editions
Stock Market Yearender SUB
    NEW YORK, Stock Market Yearender, A845-846 of Dec. 19, sub
3rd graf from end, a846: 1971.

    Big Board volume for the year totalled 4.14 billion shares,
compared with 3.89 billion in 1971.
    Snags in the Vietnam peace talks caused the market to pull
back near the end of the year from Dec. 11 peaks when the Dow
Jones average hit a record 1036.27 and the Big Board index
of more than 1,400 common stocks closed at an all-time high
of 65.14.
    Prices firmed on the last trading day of the year, however,
and the Dow ended 1972 at 1020.02, while the Big Board index
stood at year's end at 64.48.
    The American Stock Exchange closed the last trading day at
26.36.
    The strong upturn was expected to carry over into 1973.
    ''There is, 2nd graf from end, A846 of Dec. 19.
    End Adv Yearend Editions, Sent Dec. 29
    1935pES 12-29


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