September 12, 1985

The chairman of the Federal Reserve Board, Paul A. Volcker, expressed reservations to Congress today about a possible merger of the Government's two biggest deposit-insurance funds. Mr. Volcker acknowledged that a move to combine the Federal Deposit Insurance Corporation and the Federal Savings and Loan Insurance Corporation would ''in principle'' seem ''appropriate.'' But he conditioned his support on the adoption of equivalent regulatory standards for commercial banks and savings and loan institutions, which seemed to imply tougher standards for the thrift units. The central bank chief testified at a Senate Banking Committee hearing on changes in Federal deposit insurance. The question of merging the two insurance funds has come up because the savings and loan insurance fund experienced its first shrinkage last year as payouts to failed and troubled associations exceeded income.

Merrill Lynch Capital Markets appeared yesterday to have made the winning bid to buy the SCM Corporation, but may yet have a major battle on its hands for the giant typewriter, food and chemical company. Joining forces with the Prudential Insurance Company and SCM executives, Merrill Lynch Capital, the investment banking arm of Merrill Lynch & Company, yesterday offered stockholders $74 a share, or $906.5 million, prompting Hanson Trust P.L.C., the British conglomerate and SCM's only other suitor, to withdraw its competing offer of $72 a share. By late yesterday, however, enormously heavy buying of SCM stock hit the New York Stock Exchange, with sources friendly to SCM contending that Hanson was the buyer. These sources estimated that Hanson had purchased between 1.5 million and 2 million SCM shares before the 4 P.M. trading halt, and may have continued buying in other markets after the Big Board closed.

Ten former students at the Choate-Rosemary Hall preparatory school pleaded guilty today to Federal charges of financing a cocaine-buying trip to Venezuela by two other students. The United States Attorney for Connecticut, Alan H. Nevas, said the unsuccessful scheme would have marked the seventh time since 1982 that cocaine had been imported from Caracas, Venezuela, and distributed among students at the private boarding school in Wallingford. ''The use of cocaine at Choate in 1984 was very widespread,'' Mr. Nevas said. A grand jury has subpoenaed school officials in connection with a continuing cocaine investigation, he said.

President P. W. Botha said today that the Government was prepared to discuss steps to restore the citizenship rights of nearly 10 million blacks. They were stripped of their citizenship when their tribal homelands became nominally independent. Addressing whites in Bloemfontein's City Hall at the Orange Free State congress of the governing National Party, Mr. Botha said he was prepared to ''negotiate'' the issue with leaders of the homelands of Transkei, Bophuthatswana, Venda and Ciskei,and proposed that their residents hold dual citizenship. Mr. Botha's offer, which he has mentioned in previous speeches but not previously detailed, represents a major departure from a basic tenet of apartheid, that ultimately there will be no South African black citizens. It was also a further step in his program of limited changes in racial policies.

The Senate Republican leadership blocked a Democratic effort today to force the Senate to vote on the Congressional version of economic sanctions against the Government of South Africa. The proposed measures are stronger than the sanctions ordered Monday by President Reagan. But the Democrats, who supported cloture unanimously and had the backing of some Republicans, said they planned to keep the issue alive for weeks and to force a series of votes intended to underline Congressional objections to President Reagan's policy on South Africa. Strong Feelings Shown In a demonstration of the strong feelings that are developing on the issue, about a dozen Democratic House members who belong to the Congressional Black Caucus walked onto the Senate floor today just as the Senate began to vote on a motion to cut off debate and open the way for a vote on sanctions legislation that has passed the House. The Republican leadership prevented approval of cloture, which would have stopped a filibuster and forced a Senate vote on the sanctions legislation itself. The measure before the Senate contains more stringent provisions than those contained in an executive order signed by President Reagan on Monday.