New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-03-23
PUBLIC UTILITIES
AND HOLDING LAW
Bill as Approved by the
President Will Not
Injure Them.
DEVELOPMENT AIDED
BY CENTRAL CONTROL
Communities Developed by Aid in
Financing and Management of
Smaller Concerns.

OludlItf NOHCCINS.
Fnanciers and others interested In the
development OF public utilities throughout
the United States have been greatly con
cerned over the impending legislation az
Washington to prohibit holding compa-
MES. Holding companies have played a
large part in the growth Of public utili-
ties Without the employment OF the hold
Ing company principle IL has been main
tanned, there could never have been in
fifty years the tremendous increase in
public utilities and in their enjoyment BY
villages, towns and cities that has coma
in the last fifteen. To prohibit them alto
gether within states as well as between
states, would be 70 check one OF the most
important industries OF the country In the
high tide OF its success.
So far as federal legislation is con-
cerned, however. public utility companies
lave apparently nothing 10 fear. Experts
like Francis T. Homer, OF Bertron, Girls
com 6; jerks. have examined the admins
tratlon bill and found il free OF anything
that would interfere with the progress OF
such corporations
d!scusslon-the one that bears the Presi-
dents indorsement-does not prohibit the
organization Of holding companies con
trolling an interstate business unless they
are calculated to lessen competition. Very
few Of the public utility corporations Go
an interstate business except where it
happens that two cities, like Council
Bluffs, Iowa, and Omaha, Neb., are so
close TO each other that It is only a mat
ter Of simple economy for them 20 make
use Of the same lighting or street railway
service. And in cases such as this ths|
principal result Of combination is not TO
restrain competition. but 70 improve ser
vice. Sometimes the Improvement takes
the form OF providing a universal trans
fer system FOR street railways; sometimes
It is a reduction Of charges for gas or
electric lighting or power. But almost in
evitably there Is a reduction in costs 70
the consumer.
Holding companies. in connection with
public utilities, are Of the greatest value
IN making possible developments that
without their aid could not have been.
Small towns and other communities in
the earlier stages Of growth have been
compelled 10 80 for years without proper
lighting or transit facilities until they
sought aid from some one OF the conbi-
nations OF public utility companies con-
Iolled by holding organization. To OBJ
tain the necessary capital TO build gas
works or a street railway plant for them
selves has been the insuperable difficulty.
Free capital does not abound IN small
towns, or IL is wary Of going into invest
ments not likely 10 show a profit for
stockholders inside or a year, or two at
tine most. Nearly all public utilities take
number Of years 70 get beyond the con-
struction stage TO the point where their
securities can yield interest and div,-
bends. Individual capitalists cannot al
ford to wait that long; holding companies
can.
The holding company controls corpora
lions that are already self-sustaintns
Through them IL obtains funds not only
TO pay dividends on It's own securities, but
to advance to new enterprises. Usually,
and for obvious reasons, an attempt is
made 10 get some local capital into a
new company. Experience has shown,
however. that if the enterprise depended
upon that it would not get very far.
When local interest is stimulated tho
holding company offers 10 exchange its
own securities for those OF tho new COM
pany, thus giving subscribers at once al
income-prOducng investment Meanwhile.
the new company * getting the benefit OF
high class and experienced engineer
which II could not afford 70 pay for alone,
but which tie holding company can en-
ploy because their services are distributed
over a number Of properties. II is get
ting likewise, the guidance OF eminent
hnauciers who have managed 80 MANY
similar undertakings that they arc per
fectly aware OF both the possibilities and
the limitations OF the work IN hand. In
short. the new company is getting ,hc
benefit OF expert advice at the cost OF
mediocre.
The holding company can market securi-
ties where an individual company cannot
IL can buy supplies al cheaper prices and
can afford to tide over high markets. II
can protect a small enterprise I'm bad
financial times and accelerate its work in
good Ii can make available facilities To-
developing communities that they would
have TO forego without its aid. turning
over 20 them az moderate cost. for ex-
ample, plants that have been outgrown by
other communities.
The one great evil that has developed
largely through holding companies con-
trolling railroads or Industrial corpora
tons. overcapitalization, is a danger
mnimized in the case of most public
utility holding companies. for tho reason
that state legislatures and public service
almost Invariably keep a
continuous watch on their doings and reg
ulatc both their charges aud their !nanc.
inc