Show 7A July 12 1935 Saturday Ogdei Business Drop in discount rate too little too late? By CLIFF THOMPSON Stanoa'd Exanmef business edt'or The half percent drop in the discount rate will have a mild impact on the economy of Utah and the nation but may have been too little too late That was the reaction of Utah financial leaders and economists to Friday's percent cut in the Federal Reserve Board discount rate which was followed by a similar drop in the prime interest rate charged by the major banks There was a consensus both on the national and state level that the Fed's action will give at least a mild boost to the sluggish US economy especially after it was followed by a general drop in the prime lending rate of commercial banks However they also believe the financial marketplace may have already adjusted for the drop in the Fed discount rate which had been anticipated for some time A number of financial institutions had already adjusted the rates on their variable credit lines "We cut our rates by one half percent on July I and I'm expecting another half percent on the first of the next quarter" said James Dawson president of America First the state's largest credit union "A lot of things could happen before then but it does appear that interest rates are in a down environment" Dawson said "This clearly is going to reduce the cost of borrowing by both business and consumer" said Robert H Bischoff president of Commercial Security Bank and immediate past president of the Utah Bankers Association Bischoff said a drop in the cost of borrowing normally would be expected to spark a surge in consumer spending home buying and new borrowing by business But because the half percent cut in the Fed discount rate had been expected he said the economy may already have felt most of its impact University of Utah Economist Thayne Robson predicted the Fed's action will have a "positive but not dramatic impact on the economy It will be marginally significant" "This is simply another effort to boost the national economy which isn't showing the strength that was forecast earlier" said Robson who directs the university's Bureau of Business and Economic Research Robson also felt the Fed's action may have come too late but considered the drop sufficient "I would have preferred it a bit sooner but the percent was enough" he said "A full percentage cut would have caused some dislocation in the econo- my" Robson also believes another half percent drop in the Fed discount rate is possible sometime in September depending on the results of Friday's decline over the next six weeks to two months Utah banks are expected to follow the lead of the leading banks in the Eastern financial centers Standard Examiner wife contract to produce fighter aircraft enfor the Hellenic Air Force of Greece The sale covers engines support equipment and spare parts for 40 Fl 10 fighter craft purchased from General Dynamics RCA is withdrawing from a joint venture with Sharp Electronics Corp of Japan to build a $230 million electronics factory near Vancouver Wash RCA said the decision was prompted by overcapacity in the industry Ford Motor Co said Thursday it is paying $30 million for a 10 percent interest in Kia Motors Corp of South Korea which will begin supplying minicars to Ford for sale in the US next senices gines PE Last Hdi ----- 12's AZP272 A0tLbs84 AetnLI244 AirPrd s i I i Aican80 124 u45'i 280 AldSgnnlBOb s 116 - 40'a 46'a '3- 120 Amax AmHes AmAgr A8rand4 AmCan ACvan 190 AEIPw AmExp 136 AFamls40 AHome310 Amrtch708 AlnGrp44 AmMot AmStd 160 AmStor 120 Ametek Amoco 330 AMP Anacmp Anchor Anheus Anlhny ArchDs Armco ArmWIn Asarco 180 sl40 dl8 j -- ---37261 -18l --47'e -27'a - 66s! 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GPU l'a 180 Gensco GaPac GerbPd 132 GibrFn s " Gdrich 156 Goodvr 160 "i t 2' 32'a 44'i 13'i 49"j i low 09 89 25 Grace GiAtPc - S4'i M II I I I I M 9 2 II M II II M I 16 23 June I I I estate market" National economists generally-saithe discount rate cut will have only a modest impact on the nation's slowing economic real growth M I I I I M I I I 30 widely expected in light of the economy's weakness and had already been built into bond prices over the past several weeks analysts said Following the Fed's move bond dealers waited to see how much impact the new discount rate would have on interest rates charged to businesses and conwas sumers Normally a discount rate reduction leads to declines in charges for a wide range of loans The declines tend to spur economic activity by encouraging consumers and businesses to spend Most active stocks 1950 1925 1900 1875 1850 1825 1800 1775 1750 1725 1700 1675 1650 Dow Jones range - The following gives the NEW YORK (AP) range of the closing Dow Jones averages for the week ended Jul STOCK AVERAGES Last Chg First High Lew 44 182073 1839 00 Ind 26 37 75138 765 25 750 76525 Trn 29 204 204 05 Utl 710 09 70746 71009 65Slk BOND AVERAGES 008 9147 9147 20Bnds 20 9215 9215 9128 Ulils 0 35 90 90 90 90 Indus FUTURES INDEX COMMODITY 11239 11092 11212 - 7 Jury Hokday '- 44'j Feders12 FedNM FedDSl 268 FinCoA FiSBar Firesm 39' - 4749- - GCo'OlSOD ' 1585 4- Hershy HewiPk Holiday !' 4- - Hmslke - i - 7- la l'a s HouslntlSl Houlnd 280 xt99 '- - s Pr si - l'a '- 8- '- IdanoP - 264 lmoCh 272e ImoO INCO20 Ineico lngerR 260 'a 57' II '- 66' 440 IntFiav InWin ln'Paor - 3t?6 - II 64- I- - 48- 6- ui6 - kan&E KanPLt 316 Katyln KaulB s Kelioss! 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— Zions Utah Bancorp " bid asked 37' 27' 263 11' 70"a 69'4 58"i immmm James Dawson "l - 60'4 CnHPSI CenirDt tico - 2- 21'a Caesar CRLk CamSosl 6- American Greeting First Security Iomega IIIMIIIIMIIIIIIIIIIIIIIII " - Mutual funds l'i 6- 22'4 CPCIHI - l'n - l'i 77 30" 32 57 31H 48" 51ta Pillsburv Questar (Mountain Fuel) Pacific Santa Union Pacific Utah Power Light Waste Management (Western Zirc) Westinghouse " 12'l '1 - 37" - -- Price Change '' s 66' 64'' 84'' ' 12" 50H 24' i '1 Steel Corp Parker Hannifin (Bertea) 39" 191 closing prices) (Friday Nucor 34's AtlasCo Augat s Avery AvnetSO C"rvssl OrOvS06 2'i Northern Utah issues Albertson's American Stores (Skaggs) Campbell Soup Elec (Pac Chromalox) Emerson Gutf Resources (GSL Minerals) Hercules Industries (Jetwav) IT8T (Continental) J I i NEW YORK (AP) -- The following is a list of the most active stocks based on the dollar ume The total is based on the median price of the stock traded multiplied by the shares traded Last Name Tot(ilOOO) Sales(hds) 143'a 85548 1237237 IBM 102313 57' J566558 Safewav 7358 62382 $450709 PhilipMors 75 53803 J404867 Soerrv Cp 565a 70240 $389832 ITT Corp 88H 44714 $386776 DiflitalEq 47823 76'i $349432 GenElec 56176 $368655 5'a AssdDGdS X6I230 62' $355899 Sanders 62803 $303809 PanhECo 43i 62195 $784542 SearsRoeb $283348 Kmart 111556 25 $280284 CenteriorEnn 41' i 61593 $254 CocaColas 60 40808 $245868 AmExpress Activity over the past 30 trading days - NEW YORK (AP) New York Slock Exchange selected issues: trading lor the ratio List includes annual (x) hundreds (Hds) high tor week (PE) shares traded (High) low lor week (Low) closing price Friday (Last) and price change since previous week's close — YORK NEW (AP) interest rates steadied and government bond prices were mixed Friday as the credit markets weighed the implications of the Federal Reserve Board's cut in its chief loan rate TreaThe price of the point or sury bond lost about $750 for each $1000 in face amount which raised the key bond's yield to 717 percent from 712 percent late Thursday after the Fed's announcement that it was cutting its discount rate The reduction in the discount rate to 6 percent from 6V2 percent MARKET REPORT NYSE trading this week 1 by drop in chief loan rate spring The first will be a hatchback called Festiva Plans for a $1 billion Ero Disneyland theme park near Paris have been approved by the He de France regional council This removes a stumbling block to reaching a nal contract between Walt Disney Co and the French government Two union locals continued their strike against Alcoa plants in Massena NY and Evansville Ind Seniority recall and layoff procedures are the main issues Union members returned to work at plants in other Alcoa plants after accepting a contract that cuts 95 cents an hour from benefits averaging $ an hour lion The Brazilian government and its foreign creditors plan to sign a agreement covering $31 billion in loans later this month said Chase Manhattan Chairman Willard C Butcher Brazil's $100 billion foreign debt is the largest in the Third World About $3 billion is owed to Chase Manhattan Greyhound is asking its unionized workers for pay cuts including a 22 percent cut for drivers according to a report published by the Arizona Republic Neither union nor company officials would comment on the report General Electric has received a $200 mil £ rates steadied Short-ter- m Business in brief v and cut their prime rates percent early ne t week Banks generally charge the prime rate to their bigger and more valuable business customers Smaller businesses are charged prime plus one or two percent while consumers pay 175 to 25 percent above prime Bischoff believes one of the biggest impacts of a cut in the Fed discount and bank prime interest rates will be felt in the real estate market "The lower mortgage rates fall the more people will qualify for home financing" he said "We're at a point now where the average buyer can qualify for the average home That's the first time we've seen that for several years and it should have a very beneficial effect on the housing industry and '- 54- "37- la 'a |