Banner Graphic, Volume 10, Number 176, Greencastle, Putnam County, 29 March 1980 — Page 2

The Putnam County Banner Graphic, March 29,1980

New economic restraints planned Carter hints tougher Iran strategy

WASHINGTON (AP) - President Carter is preparing to announce a further cutback in Iranian diplomats in the United States and new economic restraints to try to gain the release of American hostages, administration sources say Ruled out. according to a senior official, is any U S military action or any other “belligerent" moves against Iran However, the official, who refused to be identified, said Friday that "the military options are not permanently excluded " A military operation against Iran, he said, would carry "high risks" for the Americans held hostage since Nov -4 and would damage US and Western relations with the Islamic world "Wove not. by any means.

Allegedly became pregnant by hostage Iranian woman hanged by her brother

B> The Associated Press A 23-year-old Iranian woman student was hanged by her brother because she became pregnant by one of the Americans being held hostage at the U S Embassy in Tehran, the Tehran newspaper Kavhan reported today A spokesman for the Islamic militants holding the hostages confirmed they were aware of the case and were “prepared to hand him (the hostage' over to the revolutionary prosecutor’s office to be questioned.'’ The spokesman said the American was a “military man.” but neither the militants nor the newspaper identified

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lost hope that there can be a negotiated settlement or a release of the hostages," he said. "There are strong forces in Iran that believe they have very heavy domestic, internal problems that are aggravated by the presence of the hostages" Other sources said Carter was about to reduce the permissible Iranian diplomatic for ce in the United States and impose long-delayed regulations to tighten restrictions on trade and credits for Iran. These sources, who also asked not to bo identified, said the administration does not intend to break relations with Iran. However, if the hostages are held indefinitely, they said, the nine nations of the European

him It was unclear whether the alleged affair took place before or after the U S Embassy was seized Nov 4 A State Department spokesman in Wash ington said officials were not aware of the reported incident. The militants announced, meanwhile, that Iranian Chris tian clergymen would conduct a service for the 50 hostages on Easter Sunday. April 6 They said the service will be conducted by clergymen with revolutionary backgrounds, the Ira nian news agency Pars said The prelates were not named The hostages, who are in their 147th day of captivity today, oh served Christmas with a ser

Common Market may move jointly with (he United States to cut ties. Only last month. Carter told a group of magazine editors here that he was looking forward to establishing ‘ ‘normal relations" with Iran and was optimistic about an end to the hostage impasse Since then, the senior administration official said, “High hopes for a negotiated, early release of the hostages have been disappointed by a number of events.” He cited Ayatollah Ruhollah Khomeini’s failure to back President Abolhassan Bani Sadr in a power struggle with the militants who control the U S Embassy. “I think we can look for some new actions of the United

vice conducted by three American clergymen and an Algerian prelate allowed to visit them The captives were visited on Eeb. 8 by a Greek Catholic ar chbishop, Hilarion Capudji, a supporter of the Palestine Lib eration Organization He was accompanied by Ahmad Khomeini. the son of Iranian revo lutionarv leader Ayatollah Ruhollah Khomeini. In Egypt, deposed Shah of Iran Mohammad Reza Pahlavi was reported in stable condition

Volcano causing melting, mud slides

e. 1980 N.Y. Times PORTLAND. Ore. Mount St. Helens continued to spray steam, ash and small boulders Friday, while heat from deep within the suddenly active volcano melted a snow pack and caused mud slides that threatened to overflow reservoirs on the mountain’s shoulder No lava flow has been seen, according to scientists with the United States Geological Survey who are monitoring this first eruption within the 48 contiguous states since Mount Lassen’s display in northern California in 1917 A statement from the Geological Survey warned that “the principal danger posed at this point is a combination of flooding and mud flows on the north flank of the peak if eon-

Banner-Graphic “It Waves For All" (USPS 142-020) Consolidation ol The Daily Banner Established 1850 The Herald The Daily Graphic Established 1883 Telephone 653-5151 Published twice each day except Sundays and Holidays by luMar Newspapers, Inc. at 100 North Jackson St., Greencastle. Indiana 46135. Entered in the Post Office at Greencastle. Indiana, as 2nd class mail matter under Act of March 7,1878. Subscription Rates Per Week, by carrier $ gs Per Month, by motor route $3.70 Mail Subscription Rates R.R. in Rest ol Rest ot Putnam Co. Indiana U.S.A. 3 Months $10.25 $11.25 $13.75 6 Months 20.25 22.50 27.25 1 Year 40.25 44.00 54.45 Mail subscriptions payable in advance . . . nol accepted in town and where motor route service is available Member of the Associated Press The Associated Press is entitled exclusively to the use tor republication of all the local news printed in this newspaper.

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States. not of a belligerent character,” the official said. Most of Iran’s diplomats in the United States were ordered home by the State Department last December. The more than 200 in the country then were to be reduced to 35 embassy in Washington and five each at Iranian consulates in New York, Chicago, Houston and San Francisco. Only 51 definitely are known to have departed, according to State Department estimates Friday. An additional 38 are seeking political asylum in the United States, 15 are in Immigration and Naturalization Ser vice proceedings and 121 have not been located. “We presume some of them have departed,” a department official said.

and doing well today after doe tors removed his enlarged, can eerous spleen at a military hos pital near Cairo. The operation was performed Friday night by a U S -Egyptian medical team led by Houston surgeon Dr. Mi ehael Doßakey. A brief medical bulletin said pathological tests were being performed on the 60-year-old former monarch, apparently to determine if the lymph cancer he has been suffering for six years had spread beyond the spleen.

tinued activity produces large amounts of melting.” The Pacific Power and Light Co., which operates a hydroelectric system on one of the mountain's rivers, said it was lowering reservoir levels to accommodate heavy runoff that might be produced The Geological Survey observations, which were severely restricted as a storm enveloped the mountain in heavy cloud cover, turned up several small mud slides bran ehing down the northeast slope of Mount SI Helens, which is 9,677 feet above sea level. The slides were at the 6,400-foot level, 2,000 feet above the timberline. Officials have ordered the evacuation of about 100 persons from areas that could be reached by lava flows, if they come, or by fast-moving mud slides. Some slopes have been hit in the past week by avalanches of snow and rock loosened and sent crashing down by the earthquakes that preceded the steam and ash eruption “We’re standing next to a dynamite keg. and the fuse is lit,” said David Johnston, a volcanologist with the Geological Survey. “How long is the fuse?” Sylvia Brucchi, a spokesman for the United States Forest Service, said that scientists “tell us it isn’t a matter of progression, that it isn’t building toward anything that they can see, but they don’t know what to expect.”

Credit crunch 'They trained us one way and now they're changing the rules'

By ISADORE BARMASII r. 1980 N.Y. Times News Service NEW YORK Janice Fried, a real estate agent in New York City, borrowed to the $1 ,50ft limit of her Citibank Ready Credit checking account last year to help pay for the renovation of her home. Soon afterward, Citibank sent Mrs. Fried a letter inviting her to increase her limit to $3,500. She accepted and subsequently she and her husband used part of the account to help pay for a new Peugeot. Then, last Tuesday, Mrs. Fried and thousands of other Ready Credit customers received another letter from Citibank Her credit line, it said, was being cut to a mere SSOO. “That really got me,” said Mrs. Fried “They trained us one way and now they’re changing the rules ” Borrowers and lenders alike are learning the new rules, bending to the government’s latest assault on runaway inflation The move on consumer credit, announced by President Carter two weeks ago and carried out bv the Federal Reserve Board, has already begun to stifle the tremendous growth of borrowed funds that consumers have been using, along with their savings, to try to close the gap between their incomes and ever-rising prices. The whole business of borrowing has turned upside down in recent months As loan interest rates rose but state usury laws remained unchanged, the giant, most creditworthy corporations found themselves paying more to borrow than consumers (the prime interest rate of some banks went up to 194 percent last week). Even the banks themselves were spending more for the money they borrow than they could get back in lending it out to their consumer customers. The new offensive is, in some ways, unprecedented. Although the Fed in the tight money market of 1966 asked banks to slow loan growth in an informal way, its new money and credit terms have a formal structure and fix a ceiling of 9 percent on bank and credit loan growth. And to assure that it happens, lenders must pay a 15 percent noninterest-bearing deposit on additional consumer credit that they grant beyond a level they reached on March 14 Inevitably, the new controls have raised costs to lenders and forced them to cut back their lending activities. How well the new program will work, however, is uncertain. “If the spirit of the program is adhered to as much as the letter.” says Carol A. Stone, senior economist of Merrill Lynch Economics, New York, “the near-term results will be not only a sharp further escalation in the cost of credit but also a contraction in its supply.” As a result, she said, there should be a slowdown all across the economy in industrial production, home building and capital spending Although credit spending has been singled out as a major cause of inflation, the growth of consumer credit outstanding has been declining. But slowed growth or no. the new strictures make it clear that borrowing won’t be the same for some time to come. Here is how the Fed’s moves have affected ma jor areas in the new world of consumer lending and credit CREDIT CARDS Credit cards, spurred by aggressive promotion and wide circulation, continued to boom last year. At the end of 1979. credit-card volume outstanding peaked at $55.5 billion against $47 billion in 1978. Now banks are clamping down. Citibank says it will no longer issue any new Master Cards or Visa cards even to depositors. The Bank of America, the nation’s largest bank, raised the minimum monthly payment on its Visa and Master Cards to 6 percent from 4 percent or from $lO to $25. whichever was higher Chase Manhattan has followed Citibank’s lead and doesn’t plan to issue new cards. Manufacturers Hanover has cur tailed its credit-card promotion and says it will apply tougher standards in screening new applicants. The Bank of America, after having increased the monthly payment, will more rigidly scrutinize new card applicants. In the past, fees for the privilege of using Visa or Master Cards have been rare imposed only by a few small banks But more banks are beginning to charge, including the First National Bank of Chicago, the nation’s ninth-largest bank, which on July 1 will impose a S2O annual fee on its 2.9 million Visa card holders and increase monthly payments on charge cards from 4 to 5 percent on the outstanding balance Annual fees on bank cards (prohibited in New York State) are ranging from $lO to S2O compared with $lB to S3O annually on the so-called travel and entertainment cards. The largest T&E cards in circulation are American Express. Diner's Club and Carte Blanche. The sponsors of these cards

say that they are getting close to a decision on whether to raise their fees. Usually these cards do not offer credit terms; monthly bills are payable in full Oil-credit cards, such as those distributed by Exxon. Texaco and Mobil, continue unchanged in their terms But spokesmen for the companies say they will seek some form of relief under state usury laws and from the Department of Energy. MORTGAGES “We are still in the mortgage business.” said Richard M Kovacevich, Citibank’s senior vice president, but there was a touch of wistfulness in his voice. The word on their availability is tight. Citibank was holding to its week-old rise to a 164 percent interest rate from 154 percent on home loans. But a higher rate at Citibank could be only a few days away. The Chase Manhattan Bank increased its interest rate Friday to 17 percent from 16 percent. The Bank of America has increased its down-payment requirements on real-estate loans from 20 percent to 25 percent and will increase the rate it charges on mortgages on one-family homes to 17 percent from 16’ •_> percent. The squeeze is also being applied to second mortgages. The Bank of America has suspended accepting applications for second mortgages In Los Angeles, the Security Pacific National Bank says it will limit second trust deed borrowings on real estate to a maximum $20,000 instead of $50,000. In the upper Middle West, mortgage loans are tight, with interest charged at 16 percent to 17 percent plus 2 points. DEPARTMENT STORE CREDIT Sears. Roebuck & Co., the nation’s largest retailer, raised the minimum monthly payment on its charge accounts to $lO from SB. while the J.C. Penney Co., the third-largest chain, increased the minimum purchase on its installment plan to S2OO from sl9 And Mobil’s Montgomery Ward, the fifthlargest retailer, says it will increase its monthly interest on charge accounts in Illinois and four other states where the usury laws permit it Stores such as Macy’s. Bloomingdale’s. and Lord & Taylor say they are reviewing the situation. Federated Department Stores was preparing what some trade sources believe will be altered terms on revolving credit, but the Cincinnatibased operator of such stores as Bloomingdale’s and Abraham & Straus declined to furnish any hints A Federated spokesman said Friday that any recommendations to its store division would have to await a meeting scheduled for Wednesday at the Fed Retailers are hoping that the Fed will relent enough to allow retailers to use as a credit base the average volume between March 14 and the same date the year before Most large stores offer three types of credit charge accounts. revolving credit and installment accounts. Interest ranges in New York from 1.5 percent monthly on balances up to SSOO and 1 percent above. Some other states, such as Illinois, allow higher interest, up to 1.8 percent monthly, to local lenders What to expect; a rise in monthly payments, a lower line of credit and tougher handling of late payers and especially of delinquents AUTOLOANS Chase Manhattan will accept applications from deposito'uHhs standing or who have a good payment record of six months The same with Citibank No others need apply Terms are 14 percent interest (the federal maximum plus 1 percent) and up to 60 months to pay If one wants to buy a fan cv car. Chase may give the applicant up to $15,000 if he qualifies. In Minneapolis, the Northwestern National Bank will provide loans at 14 percent interest but local car dealers say that even before the Fed's action loan money had become very tight INSTALLMENT LOANS Effective last week. Citibank. Chase Manhattan. Bank of America and many other banks stopped accepting applications from new customers. Citibank says it will consider applications from regular customers on a case-by-casen Chase reports that it will continue to accept applications from its customers for passbook loans, as well as requests for higher education loans both from customers and noncustomers At Bankers Trust, installment loans are being limited to current depositors or borrowers I he Marine Midland Bank says its new maximum on unsecured loans will be $5,000. compared with sir, 000 previously and only regular customers will get the loans No more unsecured loans at First Chicago The Bank of America is restricting personal loans to current customers