Government: New Faces At the Fed; Business Notes Hotels Holiday Inn Himalaya-Style

Who will succeed Paul Volcker as chairman of the Federal Reserve Board when his term expires next year? A new front runner may have emerged last week when the President nominated Manuel Johnson, 37, a Fed member for only three months, to be vice chairman of the board, replacing Preston Martin, who resigned in April. Reagan also named a new board member: Bank of America Economist H. Robert Heller, 46.

Some Wall Streeters speculate that Heller might join forces with Johnson and the two other Reagan appointees to form a new majority in favor of faster money growth and lower interest rates. That could undermine the leadership of Volcker, who fears that stimulative policies could rekindle inflation. Heller, though, was playing the diplomat. Said he: "I have a lot of respect for the chairman."

It seems that there is no place on earth too remote to have a McDonald's restaurant, a Coca-Cola bottling plant or a Holiday Inn hotel. The Memphis- based Holiday Corp. lodging chain said last week that it had agreed to manage Tibet's ten-month-old Lhasa Hotel, a 500-room, $30 million complex.

Visitors have complained that the Lhasa, now run by the Tibetan Tourism Co., offers food and service that are poor by Western standards. Holiday Corp., though, is expected to make the "rooftop of the world" more hospitable. The chain operates 23 hotels in Asia, including the 1,029-room Holiday Inn Lido Hotel in Peking.

To American dairy farmers, U.S. agricultural policy makes no sense these days. At a time when the Government is paying farmers about $2 billion a year to buy up surplus milk, Masstock International, an Irish dairy company, is receiving a federal tax break to construct a large dairy plant in Macon County, Georgia. Most of the funding for this project will come from $4.5 million in municipal bonds, which are exempt from federal taxes. The bonds were issued by Macon County officials, who hope to create new jobs in their area.

But many Congressmen, particularly those from dairy states, are furious. Republican Senator Robert Kasten of Wisconsin has introduced two bills that would deny tax privileges and other benefits to foreign firms that invest in U.S. agriculture. Says Kasten: "Right now we've got two federal policies that are on a collision course."

BUSINESS NOTES

LAWSUITS

A Passage

To India

After a cloud of deadly methyl isocyanate gas from the Union Carbide pesticide plant in Bhopal, India, killed more than 1,700 people and injured an additional 200,000 in December 1984, American law firms representing the victims filed suit in the U.S. Damage awards are generally much lower in India than in the U.S., and Carbide, not surprisingly, argued that the case should be handled in that country. In Manhattan last week, U.S. District | Court Judge John Keenan ruled that because nearly all the witnesses and evidence are in India, the suit should be heard there.

Union Carbide Chairman Warren Anderson said he was "pleased" with the decision, but his company will have to agree to stringent conditions if the case is transferred. Carbide must accept the jurisdiction of the Indian courts, pay any judgment assessed and abide by the same rules for pretrial disclosure of information that would apply to a civil case being tried in U.S. federal court.