The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1914-02-09
'SNAG IS STRUCK
in FRAMING Bill
Distinction Must Be Made Be
tween Good and Bad
Holding Companies.
PROBLEM DIFFICULT ONE
Committee Members Hard at Work
and Measure Will Be Pre-
sented This Week.

The administration bill prohibiting
holding companies" will be presented to
the House this week. The measure 10
being whipped into shape by Chairman
Clayton and Messrs. Cariin. Of Virginia
and Floyd, Of Arkansas. Democratic
members Of the Committee on the Ju-
dietary. The task of framing this bill.
regarded as the most important feature
Of the administrations program OF anu
trust legislation. Ia din1cult one. accord
ing to Chairman Clayton
Mr.. Clayton and his associates started
their labors on the theory that all hold
ing companies should be prohibited.
President Wilson recommended law
breaking up holding companies, and MI.
Clayton proceeded to comply with the
Presidents request literally.
Hearings on the antitrust bills have
given the Clayton subcommittee nav
light. Lawyers in whom they have con-
there are good holding companies ana
bad holding companies, and that Con-
gress would work great mischief In the
land IL legal prohibition were applied
to all alike. For this reason Chairman
Clayton and the other members OF the
committee are working with great de-
liberation on the bill dealing with the
supposed evils in the holding company
system.
Problem to De Solved.
A solution Of the problem would be
easy IL the Judiciary COMMITTEES had
jurisdiction over the administration bill
providing for the creation Of an Inter
state Trade Commission. This particular
bill Is in the hands OF the COMMITTEES on
Interstate and Foreign Commerce. q COM
49, l. 80 q
powers in an interstate trade commission.
1t is conceded by the Democratic lead
ers that this bill In its present form
merely enlarges the power now exercised
by the Commissioner Of Corporations
This is Just as the Interstate Commerce
Committee would have It.
The Interstate Commerce Committee Is
understood to be violently opposed to a
trade commission exercising power such
as would be conveyed by an authority
TO decide whether a holding company Is
good or bad" and by this test to de-
terrnine whether such organizations
should be permitted to continue in busi-
ness.
Members Of the Judiciary Committee
say that it will be exceedingly difficult
to frame a Law unless discretion il lodged
In some administrative body. defining the
sort of holding company that Is legal
and the sort that is Illegal
Two illustrations Cited.
In citing the difficulties that stand In
the way of the framing of bill aimed
at holding companies the subcommittee
members recall two illustrations made by
witnesses who sought to show that there
are good holding companies. Ono Of
these witnesses told about the eAper'
fences Of four little oil companies IT
Texas that found 1t impossible to oper.
ate independently. They were merged
under a small. capitalization by hold
ing company formed for the purpose
Thus combined, the four companies wers
enabled to do business. through capita
obtained by the holding company. ir
competition with the Standard Oil Com
pany to the advantage OF the Texas con
sumner. This particular holding company
the witness argued, was a good holding
company. and should be permitted Il
continue to do business.
The other illustration was that OF Z
number of gas plants operated in small
cities These gas plants, II was argued
through the medium OF a holding com
pany, were enabled to obtain money Il
make needed improvements and extern
sions. II the services Of a holding com
pany were not available under such cir
cumstances, the witness argued, small
gas plants would not be able to marke
their bonds IN time of need. This kins
of a holding company also was classified
as a good holding company.