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Cedar Rapids Gazette (Newspaper) - August 19, 1974, Cedar Rapids, Iowa The Cedar Rapids Gazette: Mon., Aug. 19. 1974 Highest Odds Since 1966 Inflation Spurs Business Failures By Sylvia Porter NEW YORK - lf you go into business for yourself in this era of business downturn, roaring inflation and pervasive unease, the odds against your surviving even five years will be close to six out of IO — the highest odds against you since 1966 and signaling a degree of risk that many astute gamblers would refuse to take. What’s more, for the first time in this decade to date, just about every bankruptcy trend is heavily adverse to the individual among you still dreaming the great American dream of going into your own business and being your own boss. The number of failures was up 6.4 percent in the first five months of 1974 over the same period of 1973, the first rise in three years or since the 17 percent jump during the recession of 1969-70. This trend suggests that unless there is a sharp business comeback in the remaining months of the year — most unlikely — the number of actual business failures reported to Dun & Bradstreet, Inc , by the time 1974 ends will have crossed 10,000. Much more significant, among the bankruptcies, there has been a steep climb in big million-dollar failures, “particularly in the general merchandise category,” reports Dr. Rowena Wyant, | Investor's Quid* J Awwwwwxvwwvw C By Sam Shulsky Q — I’m thankful for the financial help I’ve received from your column but I’m puzzled by the lack of information for younger people. I live in an area with large plots of acreage for sale and have thought of buying but I’m skeptical about fast profit land deals. In other words, how could I invest a thousand dollars and earn more than the 5^ percent return from savings institutions or the percent obtainable by tieing up money for four years? A — I haven’t kept score on the age of readers but I suppose it is natural to assume that since most queries are from those who have money to invest they would come from older, rather than younger, people. However, I feel a fair share of the column has been devoted to those who are still on the sunny side of middle age. I’ve often written that real estate can make a good investment, both for capital appreciation (for the young) and for income (for those who are living on their capital) if Sam Shulsky the investor knows what he is' about or has access to real estate expertise. What puzzles me about your query is the fact you are looking for income from investment in vacant land (not to mention the fact you are considering such an investment with only modest capital). Vacant land obviously should be bought with appreciation in mind. And when you talk of gain on any investment it is not with the idea of realizing a profit of 5 or 7 or 9 percent a year. You should be investing for much higher stakes And finally, I don’t understand how you can turn to vacant land if you want to keep your investment more liquid than it would be in a savings deposit. • * * Q — I’m looking forward to retirement in two and a half years and will have about $30,000 to invest. You've writ ten about tax-exempt bonds yielding 8^ percent. What are these? How often do they pay interest? A — I don't think I vc urged investment in tax-exempts yielding 8^2 percent because such a tax-exempt yield would indicate a relatively high risk. I’d urge you to Sylvia Porter manager of D & B’s Business Economics Dept. “This rise began in 1973 and has accelerated substantially this year.” The average dollar liability per failure is topping the quarter-million dollar milestone for the first time since Dun & Bradstreet began keeping records in 1920. The total liabilities of firms that fail in 1974 almost certainly will approach an historic high of $2.5 billion, already are running 52 percent higher than in 1973. Even a casual scanning of the day-to-day reports in the financial section of any newspaper from coast to coast underlines the extent to which the bankruptcy trend is broadening, deepening, starting to cross all lines of financial as well as non-financial institutions: savings institutions, mortgage bankers, retailing concerns, food chains, real estate investment trusts and, obviously, brokerage houses. The outlook for brokerage firms is admitted to be as bleak as it has been since the depression BIG GEORGE! of the early 1930s. Wall .Street is a disaster area in a generally depressing atmosphere. And a new, most fundamental point which you must not underestimate in any way is that the strains that are developing throughout the U. S. economy are strains that policymakers of the federal reserve system want to see developing. Their objective, which they are trying to make unmistakably clear through repeated public statements as well as actions, is to force businessmen to become more cautious because of the bankruptcies and spreading troubles they see and. thereby, to help break inflational expectations. Daily Contacts While the staffs of the 12 federal reserve banks are making daily, direct contacts with businesses in their districts to make sure that an unexpectedly dangerous collapse does not set off a “domino effect,” spokesmen for the central bank insist that its function is not to subsidize inefficient business organizations. The federal reserve will act to avert a credit crunch or a money panic but not to bail out companies that have gone in for inexecusable wheeling and dealing. As an illustration of what the federal reserve is hoping will happen elsewhere is the sharp decline in currency speculation Virgil Partch “W h> the k> glare?” lower your sights to either side of a 6 percent yield. Tax-exempt bonds pay interest semi-annually. * * * Q — I'm a young man who holds considerable airline stock at much higher prices. Should I buy more to bring down my cost? A — Yes — if you think the stocks are going back up again. I get too many letters about this method of “bringing down my cost,” however, to let it go at that. I am making no predictions about airline shares. But it should be perfectly understood that buying more of a stock at IO, after having paid 21 for your first purchase, does not cut your cost — or loss — on the first block unless the stock recovers. If you bought IOO at 21 and buy another IOO shares at IO, you now have — it is true — 200 shares at an average cost of percent. But nothing you’ve done has wiped out your current $1,100 deficit on your first purchase. It is still a very real loss. If the stock recovers, of course, your break even point is now 15^, instead of 21 (as on the first block) — but it must recover. Also you now have $3,100 flying with the company. (And, as the brokerage letters say: This is not to bt* construed as an offer to buy or sell stock ) * * * Q — We have bought a $30,000 condominium. Should we pay cash (we have about $140,000 in assets) or borrow about 80 percent on a mortgage? A — Assume that a mortgage will cost you about 9 percent — which is the same as your $24,000 could earn for you if invested in top-quality bonds. So, the tax deduction you get on your mortgage interest will be wiped out by the income taxes ROBERT-A-READ-Photographer ■J*    ’J    J    .    -    * Graduation Specials 1133 Thirty fifth Street, NE'363-7694 Continental Albums you pay on the interest your money earns. Even steven, so far But in addition to the mortgage interest there is the monthly amortization — the so-called “forced savings,” since it builds your equity in the property. Now you must figure out for yourselves whether that extra monthly amortization payment will cramp your monthly budget. I’d lean toward paying cash * * * CAPITAL STOCK: All shares representing ownership of a corporation. This includes preferred as well as common shares. * * * Mr Squishy (welcomes written does ♦ions, but he will be able to provide answers only through the column For information to check on obsolete securities, please include a self addressed, stamped envelope Address your reauest to Sam Shulsky, core of The Octette Utility Cited for Conservation WASHINGTON (AP) - The Federal Energy Administration has given an energy conservation award to an electric utility that tells its customers whether they have been using more or less electricity than a year ago. FEA administrator John Sawmill gave the agency’s first conservation award to the Atlantic City, N.J., Electric Co. Last March, the company started printing on its monthly bills to some 250,000 customers a computer print-out showing how much the customer’s electricity use has increased or decreased compared with a year earlier. by small and medium-size banks following the failure of the West German bank, Hers-tatt, and the extreme difficulties of the Franklin National bank of New York. Virtually overnight, the total volume of trading in currencies in the New York market, in dollar terms, plunged from $60 billion a day to $36 billion a day — and it hasn’t gone back up. This is a “healthy” contraction, authorities argue — the sort that is needed in many areas to curb inflationary psychology'. Primary Causes On the surface, the apparent causes of the business failures of 1974, says Dr. Wyant, are, primarily, heavy operating expenses; inventory difficulties particularly in manufacturing but also in retailing and wholesaling, a slump in sales; poor location, rise in competition; excessive overhead; shortage of credit, etc. But underlying the failures in an overwhelming nine cases out of IO are the basics: the manager’s incompetence, inexperience, ineptitude. Into the balance of IO percent may be bunched all the other explanations — including fraud, disaster, neglect. Does this mean you should be discouraged from going out on your own? No! But it does mean you must make sure you know the rules, obey them, and are prepared to win. Say Methadone Killed More Than Heroin NEW YORK (AP) - New York City’s acting medical examiner says methadone, a synthetic drug used to treat narcotic addiction, killed almost twice as many people as heroin here last year. Deaths directly attributable to all narcotics declined, however, from 924 in 1972 to 745 in 1973 — the first reduction since the medical examiner’s office began keeping statistics in 1962 Dr. Dominick DiMaio said on Thursday that 181 deaths in 1973 were caused by methadone poisoning, compared with #8 attributable to heroin. While methadone deaths in the last half of 1973 more than doubled over the first half of the year, heroin deaths remained the same for both six-month periods, he said. City officials have for some time been concerned with the growing black market in methadone, which is supported by a current shortage in the supply of heroin Methadone, in supervised treatment, is taken in regulated oral doses and creates a tolerance to any narcotic. Some 33,500 addicts here are being treated with methadone, compared with 3,000 in 1970 DiMaio also said that in 1973, methadone combined with one or more substances such as barbiturates, alcohol and cocaine, caused 196 deaths, compared with 65 deaths from a combination of heroin and such substances. Alchemy The ancient science of alchemy was based upon the futile attempt to change lead, iron and other base metals into gold. ON THIS DATE in 1973, George Papadopoulos was sworn in as the first president of Greece. He lifted Martial law and granted amnesty to about 300 political prisoners. LAFF - A - DAY “THAT’S the problem The magic never goes out of oui marriage ” RENT A NEW PIANO All Rent Will Apply lf You Decide To Buyl IIILTIIIIIWMIS HS SECOND STREET SE Per Month No Cartage or Dr a yoga subject Ut •filer apprest WIN AT BRIDGE By Oswald & James Jacoby Jim: “George Gooden and Frank Thomas have written an amusing book called ‘Sherlock Holmes-Bridge Detective’. It is a collection of 44 hands. The bidding is unimportant since each one illustrates some point in play in the form of a dissertation by Holmes.** Oswald: “The first hand shows Holmes at a four-heart contract. West leads three rounds of diamonds. East ruffs NORTH A A Q4 2 V 842 ♦ Q IO 5 A K J4 WEST A J 10 6 ¥975 ♦ A K J 6 4 2 A 7 SOUTH (D) A 7 3 ¥ A K Q J 6 3 ♦ 87 ♦ A 106 East-West vulnerable 19 EAST A K 985 ¥ io ♦ 93 ♦ Q 9 8 5 3 2 West North East South lf Pass U Pass 39 Pass 49 Pass Pass Pass Opening lead — K ♦ dummy’s queen. Holmes overruffs, plays three rounds of trumps and loses the spade finesse. East leads back a spade to dummy’s ace. Holmes ruffs a third spade.” Jim: “Holmes promptly leads a club to dummy’s king; finesses against East’s queen and claims his contract before West has had time to play to the trick. West says, ‘It looks as if you knew my partner had the queen.’ ” Oswald: “Of course, Holmes did. It wouldn’t require much effort on anyone’s part to know. When East trumped the third diamond it meant West held six cards in that suit. West had shown up with three spades and three hearts and followed to the first club. Thirteen cards were accounted for. He could not have another club.” 9+CHRD Sen*** The bidding has been: 19 West North East South 14 Pass 24 Pass 44 Pass 4 N T. Pass 54 Pass O You, South, hold 4 A Q 6 5 4 9 A Q 6 5 4 ♦A K ♦ 2 What do you do now? A—Bid five notrump. This tells your partner that your side holds all the aces. TODAY S QUESTION Your partner jumps to seven clubs. What do you do now’ Answer Tomorrow Israel Reduces Sentences of 18 In Spying Ring TEL AVIV (AP) - The supreme court has reduced the sentences of 18 persons convicted of being part of a Jewish-Arab spy ring uncovered two years ago. The court rejected an appeal by one Jewish prisoner, Yehezkel Cohen, who is seeing a nine-year term. But the sentence of David Cooper, a Jew, was lowered from seven to five years. The other 17 prisoners were Arabs Most of their sentences were reduced one or two years. The high court rejected a lower-court ruling that the defendants wanted to overthrow the state. The supreme court said there is a difference between overthrowing the state and harming its government or security. A month ago, the supreme court reduced the prison terms of two other Jews who were convicted of meeting a Palestinian guerilla agent to give him information harmful to Israel’s security. Expert 3-DAY Service on Watch ond Jewelry Repair Specfollilnu In Diamond Remounting ond Diamond Appraisal* Malloy Jeweler* 229 SECOND AVENUE SE For Better Health Grandfathers Can Suffer from Ulcers Too By Dr. S. L. Andelman Grandfathers are as likely to get ulcers as struggling young executives, according to a New Jersey doctor. Dr. Eddy Palmer says doctors find new ulcers in many patients age 60 and over. ‘‘This is important,” Dr. Palmer says, “since it doesn’t go along with the popular picture of the ulcer patient — a vigorous young man fighting his way upward in life.” Dr. Palmer’s study, which appears in the July issue of American Academy of Family Physicians, states that half the gastro-duodenal ulcer patients over 60 have no ulcer problems until they pass 55. Two-thirds of the ulcer patients over 80 years old — with symptoms severe enough to require hospitalization — have the gastrointestinal symptoms for less than two years. Among three groups of ulcer patients (totaling 7,675), the problem began after age 69 in 9 percent. After age 69, the percentage of patients with chronic gastric ulcer disease was higher than those with chronic duodenal ulcer disease. The figures suggest that stomach ulcers are more of a geriatric disease than chronic duodenal ulcers, and that stomach ulcer patients .are more likely to put off their initial trip to the doctor than the duodenal ulcer patients. Ulcer patients are basically healthy people. They can get relief from their pain, can continue all reasonable activities and can look forward to getting their ulcers under control — as long as they cooperate with their doctors. An ulcer is a small shallow Dr. S. I. Andelman wound in the stomach or duodenum, the connecting area between the stomach and the small intestine where some digestion takes pjace. This wound is so small that it would heal in a week if it were on the surface of the skin. But, of course, it’s not, and it has to contend with the acid and pepsin which is produced near it. A doctor will treat the ulcer patient with a modified diet, medicines and strong suggestions about reorganizing this schedule to allow for sufficient physical rest, while avoiding as many irritants as possible. The prescribed diet will be based on the patient’s own needs but will almost certainly avoid very rough, very hot, very cold or highly spiced foods. Thoughts on Transition at White House By Bob Considine NEW YORK - By this time, we all must have heard IO,IMH) comments on the departure ‘‘until we meet again" of Richard Nixon. The one I’m going to remember is the wonderful non sequitur of our friend and housekeeper, Gloria. “They shoulda left him keep his job,” Gloria said. /‘Nobody’s perfect.” * * * Not much doubt that President Ford is the best athlete ever to make his way to the White House. He was a good lineman at Michigan, good ballplayer, and knows his way around a golf course and tennis court. As a member of Congress Marching and Chowder Club, he had done more marching than chowdering. Did some boxing as a younger man, too. Which gives him a margin over his predecessor: He’ll know how to roll with the punches. * * * In his understandably emotional farewell to his tearful troops, Nixon said none of the staff ever profited at the expense of the public till. He added with a wistful smile that he wished he were a wealthy man, sh that he could compensate them for their long and devoted services . . . but he had to pay his taxes. Then he flew off to his $1,200,060 place at San Clemente. * * * Susan Ford, 17! has had secret service guards for six months. Her father resisted this protection very strongly when it was first offered, He felt it would hamper the girl’s schooling, social life, and freedom. He changed his mind abruptly when he was informed that Susan’s name was on the Symbionese Liberation Army list as a kidnap target — right up there with Patricia Hearse * * * Nixon broke millions of hearts with his farewell remarks, including, from time to time, his own. But as he stepped into Air Force One for the last time as President, he gave the triumphant appearance of his days on the campaign trails and his departures from once-hostile capitals where he had reached historic accords. He thrusted at the cameras the old V-for-vie-tory sign. with arms held high HEATHCLIFF "PLEASE HOLP THE ROMANCE UNTIL IVE FINISHER PUTTING YOO OUT/" and his pearlies smiling in the TV lights. It was an emphatic exit, as if his troubles were over, ever more. Alas, they are not, * • * Ford’s acceptance remarks could have been written by Lincoln If he continues in that vein, there is no telling how popular he will become, until the traditional honeymoon ends. “May our former President who brought peace to millions find it for himself.” he said at the end. That ranks with Abe’s “With malice toward none; with charity toward all.” (Second Inaugural Speech.) • • * Nixon has been urged to appear before both houses of congress and make what the proposer suggested would he a "clean breast” speech about his role in all the facets of Watergate. the milk. ITT. Howard Hughes, and Dr. Lewis Fielding capers, lf he does, he should demand 50 percent of the television commercial profits, plus immunity. * * * Ford would have given up his seat in the house in 1976 He had promised his wife he would close out his quarter of a century of congressional service and go into the practice of law , w here he could make some real money for a change. So they agreed that he’d re-take his seat in ’74 and call it quits two years later. Suddenly . . . * * * Nixon made a kind of poverty plea before he shuffled off to San Clemente. The day before that happened, I talked to a top official of a $2-billion-a-year business whose chairman has been Nixon’s close friend for years, “W’e’d take him in a minute,” the man said "So would any of a dozen more big corporations. He won’t have to worry about where the rent's coming from. Any publisher would give him a million-dollar advance against royalties.” Makes his $60.(HH) a year pension, $30,000 a year expenses, lifetime secret service protection. an office, a staff, and government transportation, sound like peanuts. GAZETTE TELEPHONE NUMBERS for Nom, Sports, Bookkeeping. Generoi infor motion ond Offset Not luted Below CoN    398    82H i relation Subscription Dept.    398    8333 Mon thru Sat Bam to I pm. Sundays Until 12 Noon Holidays 11 o rn to I p rn. 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