BROKER-DEALER AGREEMENT



                                     between



                              BANKERS TRUST COMPANY



                                       and



               MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED



                                   Relating to



                          AUCTION TERM PREFERRED STOCK



                                       of



                     THE NEW AMERICA HIGH INCOME FUND, INC.





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     BROKER-DEALER AGREEMENT dated as of May 20, 1998 between BANKERS TRUST

COMPANY (the "Auction Agent"), a New York banking corporation (not in its

individual capacity but solely as agent of The New America High Income Fund,

Inc. (the "Fund") pursuant to authority granted it in the Auction Agent

Agreement, and Merrill Lynch, Pierce, Fenner & Smith Incorporated (together with

its successors and assigns, the "BD").



     The Fund has currently issued three series of shares of Auction Term

Preferred Stock, par value $1.00 per share, liquidation preference $25,000 per

share, and proposes to designate a fourth series of shares of Auction Term

Preferred Stock, par value $1.00 per share, liquidation preference $25,000 per

share, pursuant to its Articles of Incorporation, as amended, and the Articles

Supplementary establishing each such series. This Agreement shall apply

initially to the Fund's Series D Auction Term Preferred Stock. In the event that

the Fund establishes one or more additional series of Auction Term Preferred

Stock to which it desires that this Agreement be applicable or determines that

it would be desirable for other existing series to be subject to this Agreement,

the Fund shall so notify the BD in writing. If the BD is willing to render such

services on the terms provided for herein, it shall notify the Fund in writing,

whereupon such series of Auction Term Preferred Stock (such series, together

with the Auction Term Preferred Stock then subject to this Agreement, the "ATP")

shall become subject to this Agreement.



     The Articles Supplementary will provide that, for each Dividend Period of

any series of ATP then outstanding, the Applicable Rate for such series for such

Dividend Period shall, under certain conditions, be the rate per annum that a

bank or trust company appointed by the Fund advises results from implementation

of the Auction Procedures for such series. The Board of Directors has adopted a

resolution appointing Bankers Trust Company as Auction Agent for purposes of the

Auction Procedures for each series of ATP.



     The Auction Procedures contemplate the participation of one or more

Broker-Dealers for each series of ATP.



     NOW THEREFORE, in consideration of the premises and the mutual covenants

contained herein the Auction Agent and BD agree as follows:



1.   DEFINITIONS AND RULES OF CONSTRUCTION.



     1.1    TERMS DEFINED BY REFERENCE TO ARTICLES SUPPLEMENTARY. Capitalized

terms not defined herein shall have the respective meanings specified in the

Articles Supplementary.



     1.2    TERMS DEFINED HEREIN. As used herein and in the Settlement

Procedures, the following terms shall have the following meanings, unless the

context otherwise requires:



            (a)   "Articles Supplementary" shall mean the Articles Supplementary

authorizing the issuance of the relevant series of ATP filed by the Fund with

the office of the secretary of the State of Maryland.



            (b)   "Auction" shall have the meaning specified in Section 2.1

hereof.



            (c)   "Auction Agent Agreement" shall mean any Auction Agent

Agreement between the Fund and the Auction Agent relating to the ATP.



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            (d)   "Auction Procedures" shall mean the auction procedures

constituting Part II of the Articles Supplementary.



            (e)   "Authorized Officer" shall mean each Senior Vice President,

Vice President, Assistant Vice President, Trust officer, Assistant Treasurer and

Assistant Secretary of the Auction Agent assigned to its Corporate Trust and

Agency Group and every other officer or employee of the Auction Agent designated

as an "Authorized Officer" for purposes of this Agreement in a communication to

the BD.



            (f)   "BD Officer" shall mean each officer or employee of BD

designated as a "BD Officer" for purposes of this Agreement in a communication

to the Auction Agent.



            (g)   "Broker-Dealer Agreement" shall mean this Agreement and any

substantially similar agreement between the Auction Agent and a Broker-Dealer.



            (h)   "Existing Holder" shall have the meaning set forth in the

Articles Supplementary, and for purposes of this Broker-Dealer Agreement and

with respect to the Auction Procedures as referred to in this Agreement, shall

also include, as the circumstances may require, a Person who is listed as the

beneficial owner of ATP in the records of a Broker-Dealer.



            (i)   "Master Purchaser's Letter" means a letter substantially in

the form of or containing provisions similar to those in the form attached

hereto as Exhibit A, which is required to be executed by (1) each prospective

purchaser of shares of ATP or (2) the Broker-Dealer through whom such shares

will be held.



            (j)   "Potential Holder" shall have the meaning set forth in the

Articles Supplementary, and for purposes of this Broker-Dealer Agreement and

with respect to the Auction Procedures as referred to in this Agreement, shall

also include, as the circumstances may require, any other Person, including any

Existing Holder of shares of ATP, who may be interested in acquiring shares of

ATP (or, in the case of an Existing Holder, additional shares of ATP).



            (k)   "Settlement Procedures" shall mean the Settlement Procedures

attached hereto as Exhibit B.



     1.3    RULES OF CONSTRUCTION. Unless the context or use indicates another

or different meaning or intent, the following rules shall apply to the

construction of this Agreement:



            (a)   Words importing the singular number shall include the plural

number and vice versa.

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