INVESTMENT ADVISORY AND SERVICE AGREEMENT THIS AGREEMENT, dated and effective as of the 1st day of July, 1993, is made and entered into by and between AMERICAN BALANCED FUND, INC., a Maryland corporation, (hereinafter called the "Fund"), and CAPITAL...

 
 
                   INVESTMENT ADVISORY AND SERVICE AGREEMENT
 
     THIS AGREEMENT, dated and effective as of the 1st day of July, 1993, is
made and entered into by and between AMERICAN BALANCED FUND, INC., a Maryland
corporation, (hereinafter called the "Fund"), and CAPITAL RESEARCH AND
MANAGEMENT COMPANY, a Delaware corporation, (hereinafter called the "Adviser"). 
The parties agree as follows:
 
                                       1.
 
     The Fund hereby employs the Adviser to determine what securities shall be
purchased or sold by the Fund with respect to the investment and reinvestment
of the assets of the Fund.  The Adviser hereby accepts such employment and
agrees to render the services and to assume the obligation to the extent herein
set forth, for the compensation herein provided.  The Adviser shall, for all
purposes herein, be deemed an independent contractor and not an agent of the
Fund.
 
                                       2.
 
     The Adviser agrees to provide supervision of the portfolio of the Fund and
to determine what securities or other property shall be purchased or sold by
the Fund, giving due consideration to the policies of the Fund as expressed in
the Fund's Articles of Incorporation, By-Laws, Registration Statement under the
Investment Company Act of 1940 (the "1940 Act"), Registration Statement under
the Securities Act of 1933 (the "1933 Act"), and prospectus as in use from time
to time, as well as to the factors affecting the Fund's status as a regulated
investment company under the Internal Revenue Code.
 
     The Adviser shall provide adequate facilities and qualified personnel for
the placement of orders for the purchase, or other acquisition, and sale, or
other disposition, of portfolio securities for the Fund.  With respect to such
transactions, the Adviser, subject to such directions as may be furnished from
time to time by the Board of Directors of the Fund, shall endeavor as the
primary objective to obtain the most favorable prices and executions of orders. 
Subject to such primary objective, the Adviser may place orders with brokerage
firms which have sold shares of the Fund or which furnish statistical and other
information to the Adviser, taking into account the value and quality of the
brokerage services of such broker-dealers, including the availability and
quality of such statistical and other information.  Receipt by the Adviser of
any such statistical and other information and services shall not be deemed to
give rise to any requirement for abatement of the advisory fee payable pursuant
to Section 5 hereof.
 
                                       3.
 
     The Adviser shall furnish the services of persons to perform the
executive, administrative, clerical, and bookkeeping functions of the Fund,
including the daily determination of net asset value and offering price per
share.  The Adviser shall pay the compensation and travel expenses of all such
persons, and they shall serve without additional compensation from the Fund. 
The Adviser shall also, at its expense, provide the Fund with suitable office
space (which may be in the offices of the Adviser); all necessary small office
equipment and utilities; and general purpose accounting forms, supplies, and
postage used at the offices of the Fund.
 
                                       4.
 
     The Fund shall pay all its expenses not assumed by the Adviser as provided
herein.  Such expenses shall include, but shall not be limited to, custodian,
stock transfer and dividend disbursing fees and expenses; costs of the
designing, printing and mailing of reports, prospectuses, proxy statements, and
notices to its shareholders; taxes; expenses of the issuance and redemption of
shares of the Fund (including stock certificates, registration and
qualification fees and expenses); legal and auditing expenses; compensation,
fees, and expenses paid to directors; association dues; costs of stationery and
forms prepared exclusively for the Fund; and costs of assembling and storing
shareholder account data.
 
                                       5.
 
     For the services to be rendered and/or the facilities to be furnished as
provided in Sections 1, 2 and 3, the Fund shall pay and the Adviser shall be
entitled to receive an aggregate fee as follows:
 
(a) 0.42% of net assets of the Fund up to $500 million per annum
(b) 0.324% of net assets of the Fund over $500 million to $1 billion per annum
(c) 0.30% of net assets of the Fund over $1 billion to $1.5 billion per annum
(d) 0.282% of net assets of the Fund over $1.5 billion to $2.5 billion per
annum
(e) 0.27% of net assets of the Fund over $2.5 billion to $4 billion per annum
(f) 0.264% of net assets of the Fund over $4 billion
 
     Such fee shall be computed and accrued daily at one three-hundred-
sixty-fifth (1/365th) of the applicable annual rate set forth in (a), (b) and
(c) above.  The net asset value of the Fund shall be determined in the manner
set forth in the Articles of Incorporation and prospectus of the Fund as of the
close of the New York Stock Exchange on each day on which said Exchange is
open, and in the case of Saturdays, Sundays, and other days on which said
Exchange shall not be open, as at the close of the last preceding day on which
said Exchange shall have been open.  The amounts thus computed and accrued
during each calendar month shall be paid to the Adviser on or before the tenth
(10th) day of the succeeding calendar month, provided, however, that in the
event of any termination of this Agreement, such fee shall be computed and paid
to the date of such termination.
 
                                       6.
 
     The Adviser agrees to reduce the fee payable to it under this Agreement by
the amount by which the ordinary operating expenses of the Fund for any fiscal
year of the Fund, excluding interest, taxes and extraordinary expenses, shall
exceed one and one-half percent (1 1/2%) of the first $30 million of average
net assets of the Fund determined pursuant to Section 5, plus one per-cent (1%)
of such average net assets in excess thereof.  Costs incurred in connection
with the purchase or sale of portfolio securities, including brokerage fees and
commissions, which are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, shall be accounted
for as capital items and not as expenses.  Proper accruals shall be made by the
Fund for any projected reduction hereunder, and corresponding amounts shall be
withheld from the fees paid by the Fund to the Adviser.  Any additional
reduction computed at the end of the fiscal year shall be deducted from the fee
for the last month of such fiscal year, and any excess shall be paid to the
Fund immediately after the fiscal year end, and in any event prior to
publication of the Fund's annual report as a reduction of the fees previously
paid during the fiscal year.
 
                                       7.
 
     Nothing contained in this Agreement shall be construed to prohibit the
Adviser from performing investment advisory, management, or distribution
services for other investment companies and other persons or companies, or to
prohibit affiliates of the Adviser from engaging in such businesses or in other
related or unrelated businesses.
 
                                       8.
 
     The Adviser shall have no liability to the Fund, or its shareholders, for
any error of judgment, mistake of law, or for any loss arising out of any
investment, or for any other act or omission in the performance of its
obligations to the Fund not involving willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder.
 
                                       9.
 
     This Agreement shall continue in effect until the close of business on
November 30, 1994.  It may thereafter be renewed from year to year by mutual
consent, provided that such renewal shall be specifically approved at least
annually by (i) the Board of Directors of the Fund, or by the vote of a
majority (as defined in the 0000 Xxx) of the outstanding voting securities of
the Fund, and (ii) a majority of those directors who are not parties to this
Agreement or interested persons (as defined in the 0000 Xxx) of any such party
cast in person at a meeting called for the purpose of voting on such approval. 
Such mutual consent to renewal shall not be deemed to have been given unless
evidenced by a writing signed by both parties hereto.
 
                                      10.
 
     This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Fund or by the vote of a majority (as
defined in the 0000 Xxx) of the outstanding voting securities of the Fund, on
sixty (60) days' written notice to the Adviser, or by the Adviser on like
notice to the Fund.  This Agreement shall automatically terminate in the event
of its assignment (as defined in the 1940 Act).
 
     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their officers thereunto duly authorized as
of the day and year first above written.
 
AMERICAN BALANCED FUND, INC.        CAPITAL RESEARCH AND MANAGEMENT COMPANY
By /s/ Xxxxxx X. Xxxxxx             By /s/ Xxxxx X. Xxxxxxxx  
   Xxxxxx X. Xxxxxx, President         Xxxxx X. Xxxxxxxx, Vice Chairman
                                       of the Board
 
By /s/ Xxxxxxx X. Xxxx              By /s/ Xxxxxx X. Xxxxx  
   Xxxxxxx X. Xxxx, Secretary          Xxxxxx X. Xxxxx, Vice President
                                       and Secretary
 

              RENEWAL OF INVESTMENT ADVISORY AND SERVICE AGREEMENT
 
     THIS AGREEMENT, made this 24th day of October, 1996, between AMERICAN
BALANCED FUND, INC., a Maryland corporation (hereinafter called the "Fund") and
Capital Research and Management Company, a Delaware corporation (hereinafter
called the "Investment Adviser").
 
                             W I T N E S S E T H:
 
     WHEREAS, there is now in effect an Investment Advisory and Service
Agreement dated July 1, 1993, to be in effect through November 30, 1996,
between the Fund and the Investment Adviser, providing for research, portfolio
management services, and administrative services, to be furnished to the Fund
by the Investment Adviser on certain terms and conditions and subject to
certain provisions set forth therein; and
 
     WHEREAS, said Agreement was approved by the vote of the holders of a
majority of the outstanding shares of the capital stock of the Fund at a
Special Meeting of Stockholders held June 22, 1993, and said Agreement provides
for year to year renewals by mutual consent, upon certain specified conditions,
and the renewal of such Agreement has been approved by the Board of Directors
of the Fund on October 23, 1996; and
 
     WHEREAS, the Fund and the Investment Adviser wish to renew said Agreement
for an additional period of 12 months from December 1, 1996 through November
30, 1997, and such renewal has been approved as required by the terms of the
Agreement;
 
     NOW, THEREFORE, such parties agree as follows:
 
     1. The Investment Advisory and Service Agreement dated July 1, 1993, is
hereby renewed for the additional period of 12 months, beginning December 1,
1996 and ending at the close of business on November 30, 1997.
 
     2. In all other respects said Investment Advisory and Service Agreement,
as now amended and in effect, is reaffirmed and shall continue in effect for
the period provided by such Agreement as renewed by this Agreement.
 
     3. This Agreement shall be executed in several counterparts, each of which
shall be original.
 
    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their corporate names by their duly authorized officers as of the
day and year first above written.
 
AMERICAN BALANCED FUND, INC.
 
By--------------------------
  Xxxxxx X. Xxxxx, Chairman
 
By--------------------------
  Xxxxxxx X. Xxxx, Secretary
 
 
CAPITAL RESEARCH AND MANAGEMENT COMPANY
 
By--------------------------
  Xxxxx X. Xxxxxxxxxx, President
 
By--------------------------
  Xxxxxxx X. Xxxxxx, Secretary