September 4, 1975

House Ways and Means Com opens hearings on revision of tax laws; com chmn Al Ullman plans to cover 20 categories of changes within 6 wks; com member Joe D Waggonner Jr objects to timetable; other com members doubt Ullman's timetable could be met; staff members explain how tax shelters work; cite 3 specific cases: doctor with income of $105,000 legally paid no income tax; stockbroker with income of $181,000 paid $1,000 tax, and business exec with income of $448,000 paid $1,200 tax; individuals not identified; staff members describe practice of 'leverage' whereby borrowed money is turned into big tax deduction; Ullman says tax laws should be changed to make sure tax code does not provide main incentive for investment; Repr William M Ketchum says risk capital would not be available without tax shelters; Repr William A Steiger says police and firemen in his dist who invested in duplex houses are concerned over what will happen to them if com 'goes after big boys' (M)

Moderate Repub Sen members tell Pres Ford that conservative tone of his candicacy for full term in White House could cost him electoral votes on crucial indus states next yr; delegation represents all but 2 members of informal Sen Wednesday Club, which is made up of moderate and progressive Repubs; says Ford pledged to give Sons an opportunity to help to shape his campaign platform and orgn; delegation members noted (M)

Retail Sales Gain

$12.6-million proposed settlement to end litigation against former dirs and officers of Penn Central Co, investment bankers, accountants and 2 real estate subsidiaries is agreed to by attys for bankrupt rr's trustees, debenture holders and shareholders; details of settlement not disclosed, but will appear in Sept 5 newspaper by order of Judge Joseph S Lord 3d; notices give dissenters right to request exclusion from settlement and sets Nov 3 for hearing to consider fairness of plan and 2d hearing to consider fees for plaintiffs' attys; contributors to, and amts of settlements include: Howard Butcher 3d and Butcher & Sherrerd stock brokerage firm, $250,000; former rr official Alfred E Perlman, $25,000; 17 former and present rr officers, $25,000; Robert Haslett, former rr official, $2,000; and Penphil Co investment firm, $700,000; other defendants, whose contributions are not disclosed, listed; claim processing described; litigation, consolidation of some 20 suits brought by individual stockholders in behalf of shareholders, involved series of suits brought after Penn Central plunged into bankruptcy on June 21, '70; plaintiffs charged defendants with dereliction of duty and with responsibility for issuing false financial statements and misleading proxy material over period of yrs; Saunders, Perlman and unnamed rr officials illus (T)

Sources on Capitol Hill and at Interior Dept say Pres Ford will nominate ex-Repr Thomas S Kleppe, now Small Business Adm (SBA) head, to be Interior Sec; Kleppe career sketch; nomination expected to come under critical scrutiny by several Dems in Interior Com; com expected to probe Kleppe's sources of wealth for possible conflict of interest; in '69, Kleppe said he owned $1.13-million in IBM stock and $273,600 in stocks of Cardinal Petroleum Inc, of which he was a dir; he valued his total stock and munic bond holdings at $3,514,942; Sen will also probe Kleppe's leadership at SBA; Kleppe illus (M)

major NYC banks on Sept 3 agree to part of Munic Assistance Corp financial plan to bar NYC default; will buy $100-million worth of MAC notes and attempt to persuade other investors to buy $150-million worth; will also undertake to sell $250-million in state note issues, proceeds of which will go to city; Mayor Beame denounces part of plan that would virtually eliminate his budgetary powers; NYS Gov Carey spends day seeking to gain support for MAC proposal; confs with and receives support from ex-Gov Harriman, ex-Treas Secs Dillon and Fowler, ex-Commerce Sec Peterson and ex-Under Sec Ball; meets privately with legis leaders of both parties in Albany; munic labor unions cautious on MAC plan; Beame, at news conf before flying to Albany on night of Sept 3, calls plan 'onerous'; Controller Harrison J Goldin says that he believes plan or something close is only alternative to default; First Natl City Bank exec com chmn Edward L Palmer and Chase Manhattan exec vp Thomas LaBrecque discuss difficulty in underwriting bond issue at present, lrs to MAC finance com chmn Felix G Rohatyn; union officials concerned over future of collective bargaining with city and future layoffs; Victor Gotbaum comments; illus (L)

TRENTON, Sept. 3—Increasing sections of this capital city and parts of nearby Ewing Township began running out of water late tonight after a tight industrial and governmental shutdown and voluntary conservation measures had kept water running, although sometimes at a trickle, all day.

Brokerage officials say that default by NYC on its notes or bonds will probably cost investors millions of dollars regardless of whether they hold securities issued by city; mkt for NYC securities has virtually dried up in recent wks; prices of tax-exempt notes and bonds issued by govt bodies outside NYC have also dropped; Munic Assistance Corp bonds issued to provide NYC with operating funds and cash to redeem short-term notes falling due have been among hardest hit; weakness in corp bonds and recent stock mkt slump also being attributed at least partly to city's problems (M)

Portuguese Army gen assembly demands that Pres Francisco da Costa Gomes cancel his apptmt of Vasco dos Santos Goncalves as Armed Forces Chief of Staff, Sept 3; votes overwhelmingly to endorse opposition to Goncalves expressed by leader Gen Carlos Alberto Soares Fabiao; action follows 15-hr meeting by Army delegates in Tancos (Portugal); earlier part of meeting was disrupted by Goncalves, who arrived unexpectedly and made emotional speech for men's support; delegates are considered Portugal's dominant mil force; also voted to protest Goncalves's apptmt by boycotting Sept 5 meeting of Army gen assembly; action will apparently cripple plan for voting on new ruling High Council of Revolution; Socialist party leader Mario Soares appeals to Costa Gomes for quick decision canceling Goncalves's apptmt, saying that apptmt has paralyzed country; expresses fears that if changes are not made soon, there will be armed encounter; chaotic situation continues in Angola; Portuguese presidential com on Angola announces that Portuguese troop levels of 24,000 men will be maintained in Angola until territory's independence, scheduled for Nov 11; troops were to have begun phasing out on Oct 1; to maintain troop level, more men will have to be sent to Angola as replacements; troops have already stated they will not go; Portugal has taken over control of Angola's Govt (L)

King Hussein tells Sec Kissinger in Amman that Jordan is irritated by Cong refusal so far to go along with sale of 14 Hawk AA missile batteries to Jordan; Kissinger tells Hussein that he is hopeful that as result of Egyptian-Israeli Sinai accord, Cong will not block sale (S)

Cong Dem leaders defer further action on oil prices until after Sept 11, when Sen votes on whether to override Pres Ford's veto of bill extending price controls on most domestic oil; Speaker Carl Albert comments; no accommodation between Ford Adm and Cong is in prospect; Sen Hugh Scott says veto may be sent to Cong as early as Sept 4; Sen Paul J Fannin is confident Sen will sustain veto; expects Ford to pledge to help ind producers and to promise to regulate price of propane (M)

Unidentified member of Aeroflot crew apparently commits suicide with firearm during NYC-London flight (S)