The MacNeil/Lehrer NewsHour

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[Intro music] [Jim Lehrer] Good evening. In the headlines today, a car bomb killed 60 people and wounded nearly 200 in Beirut. The condition of the surviving six-septuplets has worsened in California. President Reagan warned again against cutting back defense spending and the head of the troubled defense contractor General Dynamics announced his retirement. Robin? [Robert MacNeil] We have three focus sections and a profile after our news summary tonight. Mesa Petroleum's T. Boone Pickens debates corporate takeovers with a congressman who wants to curtail them. From California, a documentary report on local efforts to get American companies out of South Africa. A medical specialist discusses the struggle for life now facing the California-Septuplets. And we profile a Midwestern banker scarred by the farm crisis. [Voice-over] The MacNeil-Lehrer NewsHour is funded by AT&T, the Corporation for Public Broadcasting,

and this station and other public television stations. [MacNeil] Beirut, the city of the car bombs, endured another today. It came in the afternoon rush hour, devastating a residential area of Christian East Beirut. At least 60 people were killed, at least 190 injured. Here's a report from Keith Graves of the BBC. [Graves] The car packed with more than 400 pounds of high explosives had been parked in a busy street in a residential suburb of Christian East Beirut. It exploded in the lunchtime rush hour, setting alight cars and buildings for hundreds of yards around. Many of the dead and injured were children, some traveling in a school bus. Appealing first for civil defense workers to go to the scene where many victims were trapped, and then for blood donors to go to local hospitals, Christian Radio described it as a catastrophic massacre.

Some were so badly injured that an appeal went out on the radio for parents who did not know the whereabouts of their children to go to hospitals to try and identify the victims. Beirut, already reeling from three days of fighting in the Muslim West, is now bracing itself for retaliation for today's bomb. [MacNeil] The car bombing came as fighting between Palestinians and Shiite Muslims entered its third day, although less intensely than before. Palestinian leader Yasser Arafat called for immediate intervention by the United Nations Security Council to stop what he called treacherous aggression against civilians in Palestinian refugee camps. Jim? [Lehrer] President Reagan spent the morning at Annapolis, welcoming the Naval Academy class of 1985 into the U.S. Navy. It was a personal welcome. He shook hands with each of the 1,032 graduating midshipmen, and the president watched the traditional It's All Over Hat Toss. In his commencement address, Mr. Reagan said it was the strong who make peace.

[Reagan] You will hear during your career, as I've heard during times in my life, that maintaining the military at peak readiness, creeping on-- keeping our forces trained and supplied with the best weapons and equipment, is too costly. Well, I say it is too costly for America not to be prepared. Well, today, as throughout our history, it is strength, not weakness; resolve, not vacillation, that will keep the peace. It's about time that those who place their faith in wishful thinking and good intentions get the word. [Lehrer] In St. Louis today, David Lewis, the chairman of General Dynamics, said he will retire at the end of the year. General Dynamics is one of the Pentagon's major defense contractors. Yesterday, Navy Secretary John Lehman canceled two of its contracts and froze new ones because of ethics violations. Lewis said today there was no connection between the two events because he had planned to retire for some time.

And in one further Navy story, a Navy seaman was arrested aboard the USS Nimitz in connection with the latest Soviet spy case. The sailor is Michael Walker, son of retired chief warrant officer John Walker, who was arrested Monday on spying charges. Some of the classified documents the elder Walker was charged with giving the Soviets allegedly came from the USS Nimitz, a nuclear aircraft carrier currently in port at Haifa, Israel. [MacNeil] Doctors said today that the California's septuplets, born yesterday, have a 50-50 chance of surviving. Dr. Carey Worcester, director of the Neonatal Intensive Care Unit at the Children's Hospital in Orange, California, said the baby's condition is critical, maybe slightly worse than yesterday, but they are all fighters. Six babies survived the caeserian birth yesterday to Patricia Frustaci, a 30-year-old school teacher. A seventh child was stillborn. The survivors, weighing from one pound one ounce to one pound thirteen ounces, are suffering from jaundice, lung conditions, and some heart and blood pressure problems. But this is predictable for premature infants, Dr. Worcester said. It's 50-50 until we get out of the woods.

The baby's father, Sam Frustaci, a salesman, spoke at a press conference. [Frustaci] I saw the babies this morning and felt really close to them for the first time, and I was able to press on them so they get used to the touch of their dad, and it was a good experience. They were very movable, and were very active. And as Dr. Worcester has said, every hour is a different type of occurrence that can happen, and so we'll just hope that next hour is a little bit better hour. [MacNeil] Later in this program, we explore the nature of the struggle to keep such premature babies alive and well. [Lehrer] The case for and against restarting the three-mile island nuclear plant was made today in Washington. The Nuclear Regulatory Commission held hearings this afternoon on a proposal to reopen the Unit 1 reactor. The commission is scheduled to vote on the restart request next week. Among those with advice for the commissioners were two Pennsylvania public officials. [Richard Thornburgh] We have been tugging and pulling on issue after issue for six long years, and the exercise has done little to assure the public that the TMI company of 1985 represents a significant change in attitude from the TMI company of 1979.

Given the nature of nuclear power, the history of this particular plant, and the company's apparent interest and success in avoiding a public trial on this matter, I find it disturbing to say the least that you would entertain a restart vote without a full and open hearing of your own. [Donald Ritter] The record must speak for itself. That record shows that the atomic safety and licensing board has found that TMI-1 can be operated safely, so as to assure public health and safety. The record, as it stands today, is sufficient to make a determination on the merits of whether TMI-1 may restart. [Lehrer] The Unit 1 reactor was unharmed in the famous 1979 disaster, which hit Unit 2, but the entire plant was shut down.

The plant's owners and operators have made the request to restart Unit 1. [MacNeil] In economic news, new orders for big, durable goods rose 1 percent in April after two months of decline. The goods include items like cars, machines, and military hardware. Leading economists weighed in today on yesterday's news that the economy grew very sluggishly in the first quarter. Henry Kaufman of Salomon Brothers predicted an economic rebound with real growth snapping back to 4 percent or so. Former government economist Alan Greenspan predicted similar growth rates, but said the next six to eight weeks are critical in determining whether the country is headed for another recession. [Lehrer] Defense Secretary Weinberger and the defense ministers of the 13 other NATO countries met today in Brussels. It was heralded as the shortest and most harmonious meeting of the group in recent memory, and it produced an agreement on a program to improve non-nuclear defenses in Western Europe. Meanwhile, the other side was striking a $1.5 billion trade deal with India.

Soviet leader Mikhail Gorbachev and Indian Prime Minister Rajiv Gandhi signed a long-term agreement at Moscow today for economic, scientific, and technical cooperation. Gandhi told reporters after the signing that Soviet-Indian military ties have also improved substantially, but he said his country also wanted friendly relations with the United States. Gandhi visits the U.S. next month. [MacNeil] Finally, an update. Recently, we reported that the Santa Cruz, California VFW post had been suspended by the National Veterans of Foreign Wars because it voiced opposition to Reagan policy in Latin America. The post sued the National VFW for reinstatement. Today, they announced an out-of-court settlement. Santa Cruz will be reinstated and given two seats on national policy-making committees. In return, its members promise to speak out only as individuals, not as a post. [Music sting] [Lehrer] Suddenly, the glamorous, no-lose world of the corporate takeover doesn't look so glamorous and no-lose anymore. Yesterday, Carl Icahn, the New York financier and takeover man, got roughed up by TWA, his latest target. As Icahn announced a $600 million takeover attempt of the airline, full-page ads appeared in newspapers denouncing Icahn's tactics and fitness. The language was among the toughest ever used against Icahn or any other so-called corporate raider.

Also, Boone Pickens finally lost what? The corporate takeover man from Amarillo, Texas dropped his bid to buy Unocal, the nation's 12th largest oil company. And the word is that for the first time, he actually lost money in the process. Is the bloom among other things off the takeover rose? Well, that is what we ask now in our lead focus segment, and we ask at first of Boone Pickens. Mr. Pickens, are the papers right that you lost $20 to $100 million on the Unocal deal? [Pickens] Ah, the papers are wrong. We haven't lost anything on the Unocal deal. Would you like for me to explain? [Lehrer] Yeah, I would. [Pickens] Okay, our offer, as you recall, was $54 to the Unocal stockholders. And that offer was sidetracked by a self-tender that Unocal did, $72 for 50 million shares. So, we were sidetracked when the Delaware Court ruled a week ago that they-- Unocal-- could discriminate against a stockholder.

Meaning that all stockholders could participate in the 50 million share offer and leave us out, all of the stockholders. When that happened, the dynamics of the whole thing changed, we had a good contest up till then. So, our $54 offer really never got to the shareholders. Now, as to whether we lost or not, we sold 7.7 million shares back in to the company, the other stockholders sold 50 million shares back into the company. And then we will have 16 million shares, which we will then have an opportunity to sell over a years' time. [Lehrer] But didn't you buy at about-- some of this at $54 and have to sell it at $36? [Pickens] No, no. Our average cost was about $45. And then we had expenses in it also. But we believe, see that if you recall, the Unocal Management Board of Directors told the stockholders that the $54 offer by Pickens was grossly inadequate. Now, I believe that the Unocal Management and Board of Directors are going to do something about that. If they thought it was grossly inadequate, I'm confident that they're going to do better than 54 for the stockholders. So, I see an opportunity here where we're going to make a lot of money.

[Lehrer] So, those who were saying, "oh my goodness, Boone Pickens finally got his," forget it, right? [Pickens] Yeah, we're not going to, we will not lose a dime, it's what I'm-- [Lehrer] Are you going to make any money? [Pickens] Well, I feel like the guy that went to Las Vegas and knew that he's going to hit a jackpot. Well, the first thing I do is take my hat off and put it under the spout where the money comes out. And that's the way I feel here, because I feel like the Unocal Management and Board of Directors are certainly going to do something better than 54 if 54 was grossly inadequate. So, I'm looking forward to the payoff, frankly. [Lehrer] What do you estimate your payoff could be? [Pickens] Well, we could-- [Lehrer] In other words, how big a bag do you have under the spout? [Pickens] Okay, if the Unocal Management and Board of Directors are going to do better than 54 eventually for the stockholders here, you know, we could make, we could make two or three hundred million dollars out of it. [Lehrer] So, the bloom is not off the takeover rose from your point of view. [Pickens] I don't, you know, I don't see that we have any prospect for loss here.

[Lehrer] Are you looking for somebody else to go after? [Pickens] Oh, you know, we're, I've got, my troops have been in the trenches for a long time and you've got to get them up out of there and pat them on the back and get their helmets off of them for a while. And that's exactly where we are now. No, we're not looking at anything else now, Jim. [Lehrer] Well, how do you go about doing this? I mean, your troops that you're talking about, when they do finally rest up, you going to call them in a room and say, "okay, guys, let's find somebody else that we can go after and make another two hundred or three hundred million dollars"? [Pickens] Well, the only reason that these situations exist is because managements have done a poor job of delivering for stockholders. Consequently, the price of the stock in the marketplace is substantially below the value of the assets and therein lies the opportunity. [Lehrer] So, that's what you're looking for are companies that are selling for a lower price than you think they're worth. [Pickens] Exactly. And so, and we're quite willing to take these companies over and have wanted to take them over. [Lehrer] But you haven't had to yet, right? [PIckens] Well, when you say you haven't had to, I'd love to run one.

[Lehrer] Okay. Are you only interested in oil companies? [Pickens] That's all we've ever been involved with. I mean, that's where our expertise is and that's what we've done. I won't say that eventually that we may look at some other company, but if we ever looked at another company, we would want to take over that company and run it. [Lehrer] What kind of company? [Pickens] I'm not going to identify any other industry. [Lehrer] I'd love to know what it is. No, but you're not-- there's not going to be something tomorrow that Mesa Petroleum and Boone Pickens are going after, right? [Pickens] There isn't anything this evening, but my people work long hours, so I don't know whether somebody might come up with something in the middle of the night. But it would be very unlikely to see us in a deal for some time here. [Lehrer] Who's getting hurt by what you and Icahn and all the others do, from your perspective? [Pickens] Well, see, I only see winners. If you go back and look over the deals we've been involved in, that about 900,000 stockholders have made about $16 billion. And the federal government has actually picked up over 4 billion in taxes. And so I don't see where anybody has been damaged in this. Second, if you bring it down to the Unocal deal, actually at this point, we haven't made any money.

The management of the company has to do something for us, for us to make any money. But if you look at the other stockholders, they came out quite well in the transaction, because the stock is in the marketplace, and the marketplace has had an enhancement of about $2 billion, where again-- [Lehrer] Somebody had to cough up $2 billion. [Pickens] Well, no, I mean, that's because these assets have been undervalued, and they have been upgraded in the marketplace. No, there's no loser in it. [Lehrer] So you're one of the good guys, not one of the bad guys? [Pickens] We certainly feel that way, but if you look at what the federal government will take off in the Unocal deal, as far as the enhancement has created about $300 to $500 million in taxes for the federal government. [Lehrer] Mr. Pickens, thank you. Robin? [MacNeil] Now we hear from a critic of the recent takeover binge. He is Congressman Jim Leach, a member of the House Banking Finance and Urban Affairs Committee. The Iowa Republican is co-sponsoring legislation which seeks to curb hostile takeovers. Congressman, what's wrong with the recent wave of takeovers?

You just heard Mr. Pickens say there are no losers. [Leach] Well, I think you have a situation in which there are some good advantages to hostile takeovers. If you have lazy management, if you have incompetent management, but there's a downside. We have in this country an antipathy to concentration of wealth. We also have a taxpayer loss. Boone mentioned some advantages to the taxpayer, but we have a system in which interest borrowed to purchase large corporations is tax deductible. I think that's nuts. I mean, a lot of the money that Boone has marshaled has been tax deductible. And frankly, the tax codes encourage mergers. My own sense is, government's not smart enough to tell people when they should merge and when they shouldn't. But government shouldn't be encouraging mergers with the tax laws that we currently have. [MacNeil] Well, apart from some loss to the taxpayers because of the interest deduction, what other harm is there in the takeovers? [Leach] Well, you do have some harm that occurs to some. I mean, you're in fact perhaps jeopardizing the Reagan recovery by concentrating the American dollar base by merging corporations instead of creating new jobs. None of these mergers have created new jobs. In fact, virtually every single one of them have contracted our job base.

[MacNeil] You mean, created more unemployed? [Leach] We've created more unemployed. What we have to be concerned about in this country is encouraging the kind of investment that goes out and builds new buildings, that puts more people under the employment role, not simply the type of concentration of ownership that mergers imply. What we want to do is expand the wealth, not contract it. [MacNeil] What does your legislation propose to do to curb unnecessary takeovers as you see? [Leach] Well, first let me say it doesn't distinguish between hostile and un-hostile takeover bids. All it simply says is that when you have mergers of a substantial size, tax deductibility ought to be taken away. Because tax deductibility implies that you and I, the public at large, is not only encouraging mergers, we help finance it. That's nuts. [MacNeil] So you would just simply make the exception of that in that case interest on that kind of borrowed money would not be deductible. [Leach] Exactly.

[MacNeil] Is there not also a provision in the legislation at least being discussed that the Federal Reserve would have to be notified of a takeover and if it disapproved of it, it could advise banks not to lend the money in this kind of case? [Leach] There's a separate piece of legislation that has that effect. I think that should be seriously considered. In addition, there are lots of other legislation around. For example, legislation that might suggest that when people offer to take over a company and offer to buy more than 20% of the stock, they ought to be mandated to make the same offer to 100% of the shareholders. [MacNeil] On the Federal Reserve involvement, are you in favor of that or is that some other legislation? [Leach] I would be in favor of this. [MacNeil] You would be in favor of that. Wouldn't that give the Federal Reserve an awfully big and busy role and have create a large staff for it and everything to monitor it? [Leach] Well, it would give it a busier role than it currently has and I think maybe it ought to be of a short-term duration. But one of the things that's occurred in the last few years is that because of the tax laws, suddenly a lot of corporations have more assets than they are valued, frankly, at. And I think what we ought to be looking at at this time is expanding this whole jobs base, not simply concentrating wealth and the Federal Reserve is probably the only institution in America that can look at that through the banking system in appropriate ways.

I might also stress here that banks are overextended with a lot of bad debt. If we have an economic downturn, what we're looking at is corporate America, they could also be extended by bad debt. A number of these corporations that have merged are way overextended today because of this merger-mania. [MacNeil] Thank you. Jim? [Lehrer] Mr. Pickens, what would removing the tax deductibility on your money do to your projects? [Pickens] It could make a difference in the offering process if that took place. But remember that when you're borrowing the money, you're also paying interest and the people that are collecting the interest are paying the taxes on that interest. The fact of just removing the deductibility of interest doesn't seem to me to be, and I don't believe that you can just arbitrarily pick out a certain segment of corporate America and say you can't deduct interest for that. I think you're going to have to-- [Lehrer] You can borrow money for the one thing, but you can't borrow it for that. It's really what you're saying, Mr. Leach?

[Leach] No, what I'm suggesting is you set a standard. It might be corporate mergers above 10 million. It doesn't matter if they're hostile or friendly. That there should be no deductibility of interest in that situation because all you're doing is concentrating wealth, you're not creating jobs. [Pickens] I don't understand concentrating wealth. Could you help me with that? [Leach] Well, what you're doing is you're saying that if you will control, you're not saying that more jobs will be created. And that is what concentrating wealth is all about in terms of corporate control. [Pickens] Well, see now, I don't see that as concentrating wealth because here in the deals we've been involved in, 950,000 stockholders have received a pre-tax profit now, of 15 billion. And so you're really spreading it. [Lehrer] Just because the price of the stock went up. [Pickens] Oh, sure. And you're really spreading the wealth over that 950,000 people. And then 15 billion dollars goes right back into the economy, which does create jobs. [Leach] Well, it creates them in very new and different ways. And one of the things that we all have to study is where does the money go. Unfortunately, we're not finding that the small investors returning as money into the stock market, the small investors investing in different things at this time.

[Pickens] Well, they're buying automobiles and refrigerators and other things with that profit is the way it goes, which also cause jobs. [Lehrer] But you're suggesting that the individual company that's involved in the takeover usually contracts as a result of a takeover rather than expands, is that right? [Leach] Well, it contracts in one sense and in another sense, it conglomerates. I mean, what is the social value, for example, of combining a golf oil company with Chevron? What's the social value involved in combining a Texaco and Getty? What we're seeing is the concentration risk. [Lehrer] Or Mesa with Unocal. [Leach] Or Mesa with Unocal. Although in that particular case, it isn't quite the same size, Boone is smart enough that he's taking the small and biting off the large. And to that, I would personally say Congress is at fault, not Boone Pickens. [Lehrer] But what you would really like Boone Pickens to do is to take his money and start a new company. [Leach] You bet your life.

And drill for new oil. [Lehrer] And drill for new oil rather than go out and try to buy somebody else. [Pickens] You know, I did start a company, Mesa Petroleum. I was the founder of the company. And we started out with $2,500 paid in capital in 1956. And in 1964, I went public. We only had a balance sheet that showed assets of less than $2 million. Today, Mesa Petroleum is the second largest independent oil company in the United States and has assets of $4 billion. So now I haven't done a bad job of building a company. [Lehrer] You want to do it again? [Leach] Boone, our hats off to you in that regard. [Lehrer] What about the other idea of putting the Federal Reserve kind of in charge of saying okay or not okay on one of these things? [Pickens] I think that's out of the question. I don't believe the Federal Reserve would want the responsibility of deciding whether one deal-- passing on deals. Now that gets totally away from the free enterprise system, as far as I'm concerned. But the main point here is I think that three of us would agree. And I believe that the people that are viewing tonight are, that who is it that owns the company? It's the stockholders. Those are the people that own the company. The stockholders have the right to decide.

They went out and took the risk. They put their money up. They should have the right to decide whether they want to take an offer or not. They can turn it down or they can take it. And it's just that simple for me. [Leach] Well I would expand it slightly. I mean we do have a great debate frankly that's been launched by people like Boone on what is the nature of capitalism. Is it solely the involvement of the stockholder and ownership or is there a national interest involved too? And I would only say that it's largely the shareholder, but there is an overriding national interest. And if the national interest is not served, then I think we have to recognize there are some public elements that have to be considered. [Lehrer] The government or society has the right to say "no, wait a minute. Let's don't merge Unocal with Mesa." Or "let's don't merge Chevron with Gulf" for whatever you're saying, right? It's not just up to the stockholders. [Leach] There can be situations in which the public interest is at stake. [Pickens] I think you have that protection in the Federal Trade Commission. I don't believe we need any more legislation to take care of that.

It's looked at closely and when it's not in the best interest of the public, well the Federal Trade Commission will stop the deals. [Lehrer] Do you enjoy these takeover battles you get into? [Pickens] Let me say that I don't want anybody to believe that I'm altruistic to the point that we don't expect to make money. I also see stockholders that I believe have been mistreated. So it's a two-pronged approach from our standpoint. We put up huge dollars and go into these situations. And we also, we take all the stockholders with us in enhancing the values for all of them. I don't find it to be unpleasant. [Lehrer] You like it? [Pickens] Yeah, there are parts of it you do. Not every day is a fun day. I can tell you that. The day we got the bad ruling in Delaware was not a fun day for me. [Lehrer] Congressman, do you think that the days of Boone Pickens, Carl Icahn are numbered? Do you think it's what's happened the last few weeks, the last few days means that it may be over soon? [Leach] Well, I think Boone just told you they're not numbered.

He's thinking of new deals. No, I sure don't. [Lehrer] No, but I mean as a result of what's happening in Congress, what you're trying to do and others--? [Leach] I think Congress would be mistaken to say no to hostile takeovers. There's a role. The question is whether you put some prudent guidelines to them. There's a danger in over regulating just as there's a danger in non-regulation at all. But frankly, one of the reasons that Boone has been very active the last few years is that we have a large number of badly undervalued American corporations. If the stock market were to take off three or four or five hundred points, I think that would deter the Boone Pickens of the world more than anything else. [Lehrer] Is that right? [Pickens] The best defense, Jim's exactly right, the best defense is to have your stock price up. There are about three or four factors to me that are very, very easy for me to understand. Stockholders own the company, the stockholders should have the right to sell. Management should do a good job. They won't be vulnerable if they have the price up. [Lehrer] In other words, if the price is up, you're going to leave them alone. There's no point in it, right?

[Pickens] What you're interested in is to buy something that's undervalued in the marketplace to the appraised value. [Lehrer] And that's the reason for the communications industry is going through the same thing. [Pickens] Exactly. But see, I see that as very healthy because it puts management on their toes. See, I see the Unocal, the TWA, the Crown Zellerbach, all those deals as far as I'm concerned are side shows to the main event. The main event is, and we're at a crossroads in America today, is that we're going to decide here whether managements own companies or stockholders own companies. [Lehrer] Do you see it quite that simply, Congressman? [Leach] I think Boone has a partial point, but I wouldn't drive it to a terrific degree. [Lehrer] Congressman Leach, Boone Pickens, thank you both very much. [Leach] Sure. Thank you. [Pickens] Thank you. [Lehrer] Robin? [MacNeil] Still to come on the news hour tonight, California considers South African disinvestment, the struggle ahead for the six surviving septuplets in California, and a profile of a farm state banker caught in the credit crisis. [Musical sting] Former U.N. Ambassador Andrew Young today urged Congress to impose sanctions on South Africa. He told the Senate Foreign Relations Committee there needs to be a message from the United States Senate.

Representatives of the U.S. Chamber of Commerce and several companies oppose the idea of sanctions. The sanctions call follows a widening effort to get American companies to disinvest in South Africa to protest against its racial policies. Besides the U.S. Congress, at least 20 states and cities are considering proposed disinvestment legislation. One of them is California, which is second only to New York in South African investments. Elizabeth Farnsworth, the public station KQED, reports from San Francisco. [Farnsworth] Anti-apartheid protests at the University of California Berkeley campus have mobilized thousands of students this spring. Rallies in front of the administration building seemed a throwback to the free speech demonstrations of the 1960s. This year the demand is for divestment. Students want the governing Board of Regents to rid the University portfolio of investments in 35 companies doing business in South Africa, including IBM, General Electric, and Exxon. These investments represent 40% of the University's retirement and endowment assets, or approximately $2.4 billion.

The protests have spread to other campuses, including the University of California at Davis, 70 miles northeast of Berkeley. Nobel Peace Prize winner Bishop Desmond Tutu was in Davis last week during a whirlwind tour of California. [Tutu] Thank you. Thank you for caring. Thank you for caring so much that you were prepared to jeopardize your grades and good degrees. Because you are saying that there are things that are perhaps more important. [Farnsworth] Bishop Tutu avoided calling directly for divestment during his speeches at UC campuses last week. To call for sanctions is a criminal offense in South Africa. But he let the students know he was grateful for their efforts. The protests have led to hundreds of arrests at UC campuses, 650 at Berkeley alone. The students hoped their tactics would force a showdown at a May 17th Regents meeting, where divestment was the topic of the day.

[Protester] Again, the basic thing is that if they do not vote on full divestment at this meeting, then we're going to initiate a blockade. [Farnsworth] The Regents gathered at the Lawrence Hall of Science, a bunker like building high in the Berkeley Hills. They spent four hours listening to testimony from 10 expert witnesses. [Robert Price] Should you adopt a policy that has real divestment consequences, it will contribute to the growing perception in South Africa, the international situation requires greater freedom for black political expression, and more rapid and fundamental change. If, on the other hand, you adopt a position not to divest, or to engage in a merely symbolic gesture, then this will be taken within South Africa as an indication that the international factor need not be taken seriously. This obviously is not a role of your own making, but you will be playing it nonetheless. [Daniel W. Purnell] I've been in that republic now six times in the last three and a half years.

I sometimes sleep in the black townships. I talk to black people, and I hear them loud and clear, and I want you to know as a great university, that the views are mixed. There are people in South Africa who say disinvest. There are people in South Africa who say, don't divest. [Farnsworth] Daniel Purnell represents a group that pressures U.S. companies in South Africa to adopt the code of anti-discriminatory conduct called the Sullivan Principles. He told Regents that companies which adhere to those principles have a positive impact in South Africa. [Purnell] Let me tell you what's going to change South Africa. We've got to enable the black population in South Africa to add a wherewithall to make the economic demands on that system. [Jennifer Davis] It is a black view that really the codes of conduct, whether they're the Sullivan Principles or the European codes, do not impact on the fundamental problems which face every black worker, both in the plant and as they leave the plant, because at least half the African population in South Africa is never going to get near any city where there is any plant unless we end apartheid. It is locked up in these tiny reservations.

[Farnsworth] Outside the Regents meeting, police prevented protesters from approaching the street they had vowed to barricade. [Protester] So as of now, there is no opportunity to block the cars. Now, this is for people who are planning to blockade, this is your choice. They have said that if people sit down right next to the police line here, they will arrange for people to be around. [Crowd] Oh, come on! [Protester] No, I think from the beginning that was not our purpose, is to simply have people resident-- purpose was to blockade vehicles, right? [Farnsworth] Even with the students stymied by police, one of the Regents, Governor George Deukmejian, was picked up by a state helicopter. The rest of the Regents were whisked away behind police lines. Student anti-apartheid leaders had hoped that the demonstrations of the past month would force University of California Regents to make a decision on divestment before the end of the school year. The Regents refused to comply, except for one small concession. They agreed to refrain from making any new investments in companies doing business in South Africa until June 20th, when the Regents say they'll take a final vote on the issue, after students have gone home for the summer.

To keep the pressure on, anti-apartheid organizers say they'll seek support beyond the student community. [Eric Auchard] We're also planning to really branch out into the community, really try to get labor and church and community groups involved. It is a public issue. It's not simply a student issue. This is of course an issue of conscience and the University of California Regents are a body that's supposedly accountable to the whole of California. [Farnsworth] During his visit to California, Bishop Tutu recognized that the divestment issue has reached far beyond the campuses. He addressed a joint session of the California legislature. [Tutu] You have an enormous responsibility. And we call on the international community of which you are such an important constituent. Please, please for goodness sake, help us. Help us exert pressure. Political pressure, diplomatic pressure, but above all, economic pressure. Help us bring about this tremendous new society.

[Farnsworth] Bishop Tutu's speech spurred efforts in the legislature to do something about the state's $10.2 billion investment in companies doing business in South Africa. On May 14th, a legislative subcommittee voted to withhold more than $1 billion until state pension systems adopt plans to divest. State Legislator Maxine Waters of Los Angeles, who has pressed the issue for the past six years, says it will be difficult but not impossible to get enough votes for the divestment bill to become law. [Waters] It's wonderful to see what has taken place in the past few months just since November. And I think having Bishop Tutu here, all of the news articles that's been done, the national attention that's been given to it, even those who see their role as protecting business now understand something about what apartheid is, how dehumanizing it is. [Farnsworth] As the divestment movement gains popular support, a growing number of city governments are changing their investment priorities.

The city of Berkeley voted to divest in 1979. Berkeley now invests up to $30 million in nine banks and 25 savings and loans, which have signed agreements saying they will not make loans to South Africa. In Oakland, the city council has banned any new investments in South Africa-related institutions. And City Councilman Wilson Riles, Jr. is pressing a more radical measure. [Riles] That we place in our bid proposals language which would indicate that whenever possible, this city would refrain from purchasing goods that were made by companies that do business with South Africa. [Farnsworth] Last month, San Francisco's retirement board voted for full divestment, removing from its portfolio $360 million in stocks and bonds and companies with operations in South Africa. The board's action came after San Francisco voters overwhelmingly adopted a pro-divestment referendum. And on May 7 in Los Angeles, Mayor Tom Bradley announced that he would press for divestment of $400 million in city pension funds there.

As the numbers get larger, so do the risks. [Dewitt Bowman] The actual percentage of U.S. participation within the world economy has actually been shrinking. Investment opportunities are opening up worldwide. In order to obtain the optimal rate of return, I think you have to have the opportunities to invest worldwide. As more and more groups seek to divest, money market funds offering so-called clean stocks are in demand. John Harrington's working assets fund handles investments for some 6,000 depositors who don't want their money going to South Africa. [Harrington] We have found no problem in meeting all of our fiduciary standards, our fiduciary role, as well as maximizing financial return, and as well as having plenty of opportunities to make other investments. I mean, there are just a lot of companies out there, a lot of financial institutions out there that don't do business in South Africa. [Farnsworth] Just about everyone involved in the divestment issue has an opinion on how the movement got this far.

Veteran organizers credit the long and patient work of a loose network of churches, labor unions, and civil rights groups. Students say the issue gives them a target that is close to home and a cause that is conveniently far away. [Auchard] I think a lot of people are projecting their hatred of the racism that exists in America back, well, they're projecting it on to South Africa. And they see so much of the racism in South Africa as an analogy for what goes on here in ghettos, on Native American reservations. [Farnsworth] Whatever the impetus, the divestment movement has growing clout in California, it has already affected investments totaling hundreds of millions of dollars. Until there are fundamental changes in South Africa, divestment is likely to remain a pressing issue in California politics. [Musical sting] [Lehrer] We move next to the story of the septuplets, born yesterday to a 30-year-old high school English teacher in Orange, California. Six of the seven survived the premature cesarean birth, but their condition worsened today. Judy Woodruff has more.

[Woodruff] As we reported earlier, Jim, the six surviving newborns remain in critical condition, each one weighing under two pounds and confronting many complications, common to infants born so very premature. The obstacles they face are relatively new in the medical world, because it's been only recently that doctors could give such infants a real chance to live. One of the fields in which medical science has made its greatest leap forward in the past decade is neonatology, the treatment of very premature babies. Today, doctors are able to keep alive infants who are born as early as 26 weeks into a pregnancy. What has allowed this breakthrough are innovations in respiratory therapy, drug treatment, and surgical techniques. The principal problems experienced by these extremely premature infants involve the heart, lung, and liver, primarily because these organs are not fully formed or functional at such a premature stage. But the cost to keep such babies alive can be enormous, running up bills of $100,000 or more, and the treatment itself can sometimes extend out over months or even years before the children are able to live without medical assistance.

While there are plenty of success stories, the chances for survival are less than 50 percent for a newborn who weighed less than two pounds at birth. The six surviving Frustaci septuplets are, as we said, in very critical condition, experiencing a variety of heart, lung, and liver problems. The smallest of the six weighs only one pound, one ounce, while the biggest is just one pound, 13 ounces. Even so, doctors, while guarded about the babies' chances are encouraged by the fact that they are all very active. [Carrie Worcester] They're moving their arms and legs, and that may not seem like such an important thing, but you've got to remember these are very, very small babies, you know, weighing around a pound, up to almost two pounds. And for them to be moving around and active when they're so ill is a good sign. So I think they're fighters.

[Woodruff] Here to explain the complications that premature infants like the Frustaci babies face is Dr. Maureen Edwards, a pediatrician who directs the newborn service at George Washington University Medical Center. In 1983, Dr. Edwards supervised the care of a set of quintuplets born to a couple from Maryland. Dr. Edwards, what are the most serious hurdles now that these babies face? [Edwards] Well, in addition to just the hurdle of getting born and doing well at the time of birth itself, the babies' biggest problem will be their respiratory condition. We would expect babies in this weight group always to need some assistance in their ventilation and to be on a breathing machine. The severity of that condition, though, will in many ways dictate what other complications are likely to occur for the babies. Is it just that they're not big and strong enough to breathe for themselves, or are their lungs really so poorly developed that they require massive support in assistance with their breathing? [Woodruff] Now, we read that there are also heart and liver problems, but you're saying the lungs are the most serious.

[Edwards] The lungs are the most serious, and in many ways complicate the heart problem. The heart problem that these babies are likely experiencing is something we call patent ductus arteriosus. When the baby is in utero, the blood is naturally not supposed to go to the lungs. It bypasses the lungs and goes to the liver. So, when the baby is a fetus, there's a natural short circuit between the main artery to the lungs, the main artery to the body, the aorta. In term babies this closes at birth. In premature babies, particularly with respiratory disease, it's very likely to stay open. That floods the lungs with blood and complicates their respiratory problem. [Woodruff] What can be done for them? [Edwards] For the respiratory problem, we require special management on special ventilators that are designed for such small babies, extra oxygen, extra pressure to maintain their lungs fully expanded. The patent ductus arteriosus can be controlled, sometimes it's just a question of time, but in addition, there's a medication that we can give that encourages this ductus to close. And then an alternative therapy that's either not indicated or not effective is surgical closure of the ductus.

[Woodruff] What are their prospects? I mean, as much as you can tell from where you are. [Edwards] Well, at the 28-weeks gestation, which I understand these infants are, in most sophisticated nurseries in this country, the survival would be very good in the 90% or better range. However, these babies are of low weight because of the multiple gestation for their weeks of pregnancy, and therefore that puts them at greater risk. In their weight group, most people would report a survival in the range of 40 to 50% at best. The smallest baby is certainly at very great risk, and is that a weight that is of marginal viability given modern technology? [Woodruff] Now, we are saying that the problems they face are like so many other babies who are this premature. Is that really true? Because this could be the first recorded birth of seven babies. [Edwards] The problems, I think, are really very similar. There are some special problems of higher, multiple births, but predominantly these are very premature babies who also have some degree of intrauterine growth retardation that is, they're small for their weeks of pregnancy.

[Woodruff] When do we know-- no way to know when they'll leave the hospital? [Edwards] We generally tell families to anticipate that the babies will leave the hospital around the time of their expected date of delivery. So we would expect at least probably 12 weeks if not greater hospitalization, particularly for the smaller ones, because it takes a while to get big enough to go home. [Woodruff] We hear so much about how much it costs. Why is it so expensive to take care of these tiny infants? [Edwards] It's so expensive because the infants can do nothing for themselves and require very intense personnel management. That is, there must be a nurse available to them, sometimes two nurses for the most acutely ill baby. It requires a bevy of doctors. It requires specialists in respiratory therapy, special people to draw their blood from the lab, and personnel costs are very great. In addition, we must have a whole cadre of equipment that for these little ones is very expensive in an individual piece.

I think you could estimate that individual intensive care bedside, the equipment would probably range in the $20,000 range. [Woodruff] How do parents of multiple births, of septuplets, sextuplets, how in the world can they handle this many, I mean with the attention the babies are needing in the hospital? How in the world do they handle that many? [Edwards] I think they need a lot of support. In recent years, most of the higher multiple births have been heralded by prenatal diagnosis. It is not a surprise as it might have been to the young quintuplets. And so parents have time to consider this, to draw on what their resources in their community, their families may be. But it is very difficult to attach and to work through the problems of one seriously ill infant. [Woodruff] You're seeing more multiple births at your facility at George Washington, is that right?

[Edwards] Well, the university type hospitals will see, I mean, we know that a very high risk, a higher multiple births, a very high risk situation, and therefore we would expect that these patients would be brought to the perinatal centers or university type hospitals. [Woodruff] And do you feel better about our ability in general to deal with them now than... [Edwards] So our ability to deal with them compared to what it used to be is light years. But we are by no means-- neonatology and all of the supports that are offered are not comparable to the human uterus. And I will think we'd like to see many of these babies able to stay in a healthy, uterine environment rather than having to be out in the world in which there's a lot of risk to these children both as terms of their survival, but in terms of their long term outcome. Will they have major complications that will impair them? [Woodruff] Dr. Maureen Edwards, thank you very much for being with us. [MacNeil] Just a few weeks ago, one of the stories dominating national attention was the farm credit crisis.

Although the clamor has died down and spring planting has happened, the farmers' financial problems persist. They're still asking for more federal assistance, but the Reagan administration has bucked at massive aid programs, leaving many farmers dependent on loans from local banks. The bankers are a key element in the farm credit story, and tonight we profile one banker whose business and life in the community have been deeply affected. Our correspondent Kwame Holman has our report. [Holman] The town of Cozad lies in the fertile Platt River Valley of central Nebraska. It is a town that has shared in the nation's agriculture crisis. A crippled economy has hurt farmers, grain dealers, and store owners, but less well-known is the impact of the crisis on farm bankers. Most rural communities have only one or two banks. They are the financial heart of the area.

Farmers here have looked to the Cozad State Bank to finance crops and cattle for 75 years. 80% of the bank's $20 million is invested in farming. Clifford Young, fourth-generation farm banker, family man, president and owner of Cozad State Bank, a man who has thrived on the traditionally close relationship between farmer and banker. [Young] I want to make a profit, but I want to help the people, and I cannot make a financial success out of my bank and my life without that farmer, and I've always known that. [Holman] But now the farmer-banker relationship has been strained by the economic crisis, with banks all over the farm belt failing because of their lenient loan policies, Cliff Young has had to take a tougher stand. Now, when he meets with a farmer about a loan, he is more conservative, and he usually requires loan guarantees from the federal government. [Young] Always before, I've been very comfortable with loaning Alan Kauffman money, knowing that Alan Kauffman is going to take that money, make it work for him, make it profit and pay back.

I'm not sure that the economic climate in agriculture is such that I'm doing you any favor by loaning you any money, whether it's with FHA or not. What we're asking is Uncle Sam guarantees your note. Now, in all honesty, we are limiting this bank's exposure into agriculture until the government comes up with a long-range solution that we feel comfortable with. [Kauffman] I guess I get a little skeptical when it comes to involving government. [Young] We don't have much choice. [Holman] Among the farmers of Cozad, Cliff Young is described as tough but fair, but like other farm bankers, Young is criticized for encouraging farmers to take on too much debt when times were good. Farmer Alan Kauffman has borrowed from Young for over a decade. [Kauffman] I have heard it, talking with other individuals, when times are good, the bank will go along with anything, you know. Go ahead and expand by this, buy that. Then, when times are hard, they want it all, you know, they want it back. [Young] I never encouraged anybody to borrow.

But, if somebody came in here and they had a 10 or 15 year history of making a lot of money and said to me, "will you loan me the money to buy a new tractor?", I said "sure". [Holman] Farmers say that the depressed economy actually has made Young a better banker, but they add that the crisis has taxed his friendship with farmers. And for Young, each loan decision has become personally agonizing. He goes from meeting to meeting, trying to decide how long to keep financing farmers in trouble. [Young] I look at you as a catch 22. If you get out with your machinery and equipment, rain what you expect it to, times are depressed. Will it rain what you expect it to, I don't know. [Cover] You've seen my records. I can produce. [Young] I know you can produce. [Cover] We bought 2500 acres of land too high in the mid 70s. It's only worth a third of what it was. [Young] And it was a good decision in the 70s. By keeping him in business one more year, am I really helping him or am I leading to his demise? And at this stage, I really don't know. Very good. [Cover] All right. [Young] Thank you, Ben.

[Cover] We'll see you in the morning or call you soon. [Young] All right. Good night, Jim. [Holman] Jim Cover is another farmer who has borrowed from Young's Bank for years. [Cover] Well, it's very tough. And the businessmen aren't showing a lot of black ink on the books because we're not showing any black ink. He's showing black ink at the bank. I think it's a normal human tendency to begrudge somebody something. I think the role of the bankers changed in these hard times. These people are angry. They've got to be angry at somebody. Let's be angry with the guy that doles out the money. [Holman] A few weeks ago, Cliff Young was again tested by an episode in the Farm Crisis. Willard Bellamy, a friend, a client, and the man who owned this grain elevator, committed suicide. Cliff Young spent the following day trying to save a financing deal for Bellamy's company, struggling with his own grief and worrying that people in town would blame Cliff Young and his bank for the suicide. [Young] I'm not sure, but what the people downtown are going to have some animosity, are going to have some misunderstanding, are going to blame Cozad State Bank.

Willard was a very popular person in town. Bankers aren't popular people in small towns anymore. [Holman] Due to Willard Bellamy's suicide, the Bellamy grain company faced bankruptcy. Farmers were worried that they would lose the corn they had on consignment in Bellamy grain elevators and demanded immediate payment. A frightened Cliff Young had to stop the run on the grain and get financing to keep the company going. [Young] Can you find him? It's an emergency. Okay, Greg. We've got a problem. They've had a run on the corn. They have issued $105,000 worth of checks. [Holman] After hours in his bank, Cliff Young had worked out a satisfactory deal to save Willard Bellamy's company. [Young] Thank you. Thank you very much. Okay, bye-bye. Got most of what I wanted. Not all, but most. [Farmer] This is a machine that costs too much money. [Young] Yeah, I know. I know a lot of those that are going back.

Why don't you and your neighbors go together and buy one of these instead of each guy having one? [Farmer] I guess we've tried that. But when you're renting ground, somebody else, and he wants his corn out. He doesn't want it to fall on the ground. [Holman] Young says agriculture banking is no longer rewarding work. He is frustrated, undecided about his role as a banker in a declining farm economy. He has brought that frustration home to his family. [Young] My temper tantrums are more out of frustration. I can't do anything about this. I've had a, especially bad day. I've had three or four guys in. We see no real future. It is a depressing day. I'm going to come home and pick up the garbage can and throw it across the kitchen floor. I think, "geez, that's stupid". Biggie looks at me wide-eyed. She knows it's stupid. We pick up the trash and have dinner. And that's happened. [Holman] Today, Cliff Young is having to say no to farmers and others here in Cozad. But unlike most bankers in large cities, Cliff Young is saying no to people he's called personal friends for years, to people he once greeted on these streets every day.

For Cliff Young, being unable to lend money to farmers means a major change in his lifestyle. [Young] We've talked about it. And it bothers us, but we're not bitter. Because if we do get financially straightened out, Joe Doe will come up to me and say, "Cliff, I really appreciate what you did for me. And I know, God damn it. I didn't wave to you for a couple years. And we didn't see each other. And I'm sorry." And I'm going to say, "yeah, I am too. And let's go have coffee and that'll be that". If that doesn't happen, I will get out, not because he didn't wave to me. I will get out because of my inability to help any further. [Lehrer] That report by Kwame Holman. Again, the major stories of this Wednesday, 60 people died and more than 190 were wounded when a car bomb exploded in a Christian section of Beirut. The chairman of General Dynamics announced his retirement. David Lewis said his decision was not connected to yesterday's Navy actions against the company. And the condition has worsened for the six surviving Septuplets in California. Good night, Robin.

[MacNeil] Good night, Jim. That's our NewsHour tonight. We'll see you tomorrow night. I'm Robert MacNeil. Good night. [Voiceover] The MacNeil Lehrer NewsHour is funded by AT&T, reaching out in new directions, the Corporation for Public Broadcasting, and this station and other public television stations. [silence]