Banner Graphic, Volume 22, Number 220, Greencastle, Putnam County, 19 May 1992 — Page 2

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THE BANNERGRAPHIC May 19,1992

Iraq tried to repay loans on war’s eve WASHINGTON (AP) The Bush administration turned down several Iraqi offers on the eve of the Persian Gulf War to pay back $2.5 billion in U.S. loans, confidential cables show. The Iraqi overtures, which were not made public, were dismissed as ploys to divide the international coalition being assembled by the United States against Iraq after its August 1990 invasion of Kuwait. IT IS HARDLY conceivable to us that the Iraqis intend to use their limited foreign exchange to make payments on debt to the United States,” Deputy Secretary of State Lawrence Eagleburger cabled the U.S. Embassy in Rome. The Oct. 2 cable urged that the 12-nation European Economic Community, some of whose members received similar offers, withhold any response to Iraq until consulting with the United States. In the cable, which was obtained by The Associated Press, Eagleburger noted that in all, Iraq owed the United States about $2.5 billion, of which almost $2 billion were loans guaranteed by the Bush administration for the export of American farm products to Iraq. THE ADMINISTRATION has had to pay back those loans itself. Eagleburger suggested that Iraq was using the offer as “a ploy to promote some other objective” possibly to draw the United States into discussions that would ease the international isolation imposed by punitive U.N. economic sanctions. He said that although the United States didn’t want to be seen as waiving its claim to the money, it also didn’t want to accept the offer and be seen as softening its demand for a total Iraqi withdrawal from Kuwait. IN THE END, the United States

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WE NEED OLD PICTURES OF PUTNAM COUNTY PEOPLE AND PLACES for the Pictorial History Book of Putnam County

If you have any pictures from Putnam County that can be identified to have been taken from the 1800’s to the present, we would like for you to submit them to the Banner Graphic for printing. WE NEED YOUR HELP The history book will contain more than 200 photographs to make it a true collector’s item. The 128-144-page book will be of library quality, bound with a beautiful hard cover. Send or bring photographs to the Banner Graphic, 100 N. Jackson, Greencastle, Indiana 46135. Photos will not be damaged in the printing process and will be returned to their owners as soon as they are processed. The books will be available November 15,1992. Banner Graphic

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SADDAM HUSSEIN Let’s make a deal

and the EEC all rejected the offers, said a Stale Department official who discussed the matter Monday on condition of anonymity. The first offer came on Sept. 17, 1990, as U.S. troops were massing in Saudi Arabia in response to Iraq’s Aug. 2 invasion of Kuwait A note to the U.S. Embassy in Baghdad from the foreign ministry said the Iraqi government “expresses its full readiness to pay off its debts ... immediately and regularly.” It asked the United States to send an envoy “to discuss the method of payment of these debts.” THE OFFICIAL said the Iraqis made several such offers to the United States and to EEC member nations in the months leading up to the Jan. 16, 1991, start of the allied air war against Iraq. “They came to us with one thing after another,” said the official, describing several debt repayment proposals. In a related development, the chairman of the House Banking Committee asked the administration Monday for information regarding the role of Eagleburger’s

Banner Graphic (USPS 142-020) Consolidation of The Daily Banner Established 1850 The Herald The Daily Graphic Establishedlßß3 Telephone 653-5151 Published daily except Sunday and Holidays by Banner Graphic, Inc. at 100 North Jackson St., Greencastle, 1N.46135. Second-class postage paid at Greencastle, IN. POSTMASTER: Send address changoe to the Banner Graphic, P. O. Box 509, Greencastle IN 46135. Subscription Rates Per Week, by carrier $1.40 Per Week, by motor route $1.45 Mail Subscription Rates R.R. IN Rest of Rest of Putnam Co. Indiana U.S.A. 3 Moi.ths $21.00 $23.00 $25.00 6 Months $40.00 $45.00 $50.00 1 Year $78.00 $86.00 $95.00 Mail subscriptions payable in advance ... not accepted in town and where motor route service is available. Member of the Associated Press The Associated Press is entitled exclusively to the use for republication of all the local news printed in this newspaper. Steve Hendershot General Manager/ Marketing Director Eric Bernsee ...„ _... Editor Wilbur C. Kendall Production Manager Gib Farmer Business Manager June Leer Circulation Manager

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LAWRENCE EAGLEBURGER ‘Hardly conceivable’

boss Secretary of State James A. Baker HI in making policy toward Iraq. BAKER HAD disqualified himself from decisions related to Iraqi oil and gas deals because of his holdings in several oil companies. “It is disturbing that the secretary of state has to recuse himself from participating in important aspects of the U.S. policy toward Iraq and the Middle East,” Rep. Henry Gonzalez, D-Texas, said. On Aug. 8, 1990, President Bush exempted Baker and 10 other senior officials from the federal conflict-of-interest recusals so they could advise him in the crisis. But Gonzalez released a document showing that the White House was so intent on keeping the waivers secret that it didn’t even make a copy available to Baker himself. Gonzalez has charged that the administration’s policy toward Iraq encouraged President Saddam Hussein’s aggression. He plans to hold a hearing on the subject later this week, although several of the administration officials he has invited haven’t accepted.

Will the fed cuts interest rates again?

WASHINGTON (AP) - The Federal Reserve, having cut interest rates 16 times since the recession began in July 1990, may be preparing to cut rates again. But don’t look for anything after that, economists say. MANY ANALYSTS believe that the central bank will cut the federal funds rate, the interest banks charge each other, from 3.75 percent to 3.5 percent within weeks. Officials gathered in Washington for a meeting today of the Fed’s top policymaking group, the Federal Open Market Committee. The 12member panel, composed of Fed board members and five of the Fed’s 12 regional bank presidents, meets privately eight times a year to map interest rate strategy. While the decisions made at this week’s meeting will not be announced until early July, analysts believe Fed policymakers will give the go-ahead for one more small rate cut but hold off implementing the action until more data is available on the economy. SOME ANALYSTS said the

Congress is ready to debate Madison amendment again

WASHINGTON (AP) Congress is ready to debate for a second time whether the Constitution should make it impossible for lawmakers to vote themselves instant pay raises. The first time, Congress decided it was a good idea, and suggested that it be added to the Constitution. That was in 1789. THE STATES finally agreed this month that James Madison and the first Congress had an idea worth endorsing. Forty ratified it two more than needed. The head of the National Archives certified it and sent it off for publication in today’s Federal Register. But lawmakers insist they should have a say. New legislation was drafted for introduction today in the House and Senate to let Congress vote to agree that the 27th Amendment is indeed the law of the land. “CONGRESS HAS the constitutional responsibility to decide substantive issues with respect to the ratification process,” said Sen. Robert Byrd, D-W.Va. A vote would “remove any doubt or question or argument” said Rep. Ben Erdreich, D-Ala., author of an earlier proposal to validate the 27th Amendment. Byrd said he wanted to introduce two resolutions today. ONE WOULD declare that the amendment is valid. The second would declare that “out of date and inappropriate” amendments sent to the states without ratification deadlines have now expired. House leadership was writing a resolution of its own to declare that the amendment is legitimate despite the two centuries taken to ratify it On Monday, the archivist of the United States, Don W. Wilson, certified the amendment without fan-

most likely window for the next rate cut will open June 5, when the government reports the unemployment rate for May. If that figure remains stuck at 7.2 percent and other statistics show a sluggish recovery, the Fed will likely act to push the funds rate down. “The good news is that the recovery is here to stay, but the bad news is that it will be weak and uneven,” said David Jones, an economist at Aubrey G. Lanston & Co., a government securities dealer. A QUARTER-point cut in the funds rate should be enough to prod commercial banks to lower their prime rate, the benchmark for many business and consumer loans, from 6.5 percent to 6 percent, Jones predicted. He said the prime rate probably would remain at 6 percent until the fall, when an improving economy and higher demand for credit would likely send it back to 6.5 percent. Economists said an easing in the funds rate in late May or early June should act to hold down long-term rates as well, helping to keep 30year, fixed-rate mortgages in the range of 8.5 percent to 9 percent WHILE MANY economists believe another cut in the funds rate is a strong possibility, that view is not shared by all.

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SEN. ROBERT BYRD Two resolutions ready fare or photo opportunity. THE LAST THREE times amendments were added to the Constitution, formal public ceremonies were staged and the presidents in office at the time signed as witnesses. Richard Nixon witnessed the certification of the 26th Amendment, extending voting rights to 18-year-olds, and Lyndon Johnson witnessed the certification of the 25th and 24th Amendments, setting terms of succession for the presidency and abolishing voting “poll taxes.” Certification of the 27th Amendment was witnessed by Martha Girard, head of the Federal Register. WHEN ASKED why there was no ceremony this time, Archives spokeswoman Susan Cooper said Wilson felt it was his responsibility to quickly certify the ratification to comply with a legal requirement to act “forthwith.”’

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ALAN GREENSPAN A window In June? Lynn Reaser, an economist at First Interstate Bancorp in Los Angeles, said a rebound in growth of the nation’s money supply that occurred last week will probably put any further Fed easing on hold. Even those who are forecasting another modest easing believe *it will be the last one until after the November election. ONCE THE Democratic convention starts in July, the Fed is likely to go underground, preferring

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She noted that presidents aren’t required to sign and are not a required part of the process. In a brief interview last week, Wilson said votes by three-fourths of the states, not his signature, added the amendment to the Constitution. “IT’S THERE now,” he said. “It was there as soon as Michigan ratified.” For the history books, then, the Constitution was changed on May 7, 1992, when Michigan became the 38th state to ratify the 27th Amendment. Two more states ratified later. The document Wilson sent the Federal Register repeats the language Madison envisioned as “Article the Second” but which didn’t make it into the original Bill of Rights. “NO LAW, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened,” it says. The amendment then declares “that it appears from the official documents on file in the National Archives of the United States that the Amendment to the Constitution of the United States proposed as aforesaid has been ratified....” The last time the House raised its pay, the increase didn’t take effect until after the next election, but the Senate voted itself an immediate raise. Since then, both chambers have had cost-of-living adjustments to bring their salaries to $129,500. There’s been no consensus about whether the next scheduled cost-of-living raise will be allowed to take effect in January.

not to become an issue in the presidential campaign, analysts said. “They don’t like sticking their necks out during a presidential election because they get accused of making politically motivated decisions, and that upsets financial markets,” said David Wyss, chief financial economist at DRI-Mc-Graw Hill Inc., a Lexington, Mass., consulting firm. With the Fed on the sidelines and the economy expanding at a modest pace, many economists believe that interest rates for the rest of the year will show very little movement. THE FED LAST cut rates April 9, when it nudged the funds rate to 3.75 percent. Its most dramatic easing occurred last December, when it pushed its discount rate, the interest it charges on loans to banks, down a full percentage point to a 27-year low of 3.5 percent. All of those moves have helped to push various business and consumer interest rates down to levels not seen since the early 19705. Mortgage rates hit a 19-year low of 8.23 percent in early January and then began rising again to a high this year of 9.03 percent in midMarch, according to a weekly survey by the Federal Home Loan Mortgage Corp.

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