Evening star., 1928-12-02
COURT IS INVOKED
TOOBTA|N RECORDS
Desired by Trade Commission
for Probe of Financing
of Power Utilities.
BY the Associated Press.

BY the Associated Press.
The Federal Trade Commission went
into the courts yesterday in an attempt
to obtain authority to compel officers
and employees of the Electric Bond &
Share Co, to produce records desired
by the commission in carrying out its
inquiry into the financing of power
utilities.
The commission filed an application
in the Southern District Court of New
York for authority to obtain the rec
ords which officials of the company re-
fuse to produce at hearing early in
the Fall.
At the time they refused to submit
the records the officials announced that
they wanted a judicial determination
as to whether their constitutional rights
were being violated in the trade COM
mission inquiry.
Monopoly Claimed.
The petition placed with the court
took the position that the company
through its connections possesses a
virtual monopoly of the sale and trans
mission of electrical energy in Inter-
state Commerce" constituting bur-
den on such commerce.
1t maintained that the records re-
fused by the cmopany "are necessary
to determine whether such a burden
has in fact been created in violation
of the antitrust laws"
The petition outlined the argument
of the company's legal counsel which
questioned, first, the commissions
power to issue subpoenas under the
Senate investigation order; second.
rl1afI fI1aVs IA t. l..
Interstate Commerce, and third, wheth-
er the attempt to examine the records
Subpoenaed is violation of the con-
stitutional prohibition of unreasonable
searches and seizures.
The brief argued that the company
came within the terms of the Senate's
resolution. that it ''is engaged in or
has substantial control over interstate
commerce in electrical energy or gas.
that 1t occupies directly or indirectly
monopolistic position in various Sec
tions of the country, and that 1t is the
dominating force and influence in large
numbers Of companies which it docs
not directly own
Cites Holding Companies.
In support of its contention that the
company had monopoliStic control, the
commission cited 1.-THE organization of
a number of holding companies to
which it has transferred the stock
owned by it of operating public utility
companies +:
Among these holding companies"
the brief said, "are the American Gas
& Electric Co.. American Power &
Light Co.. Carolina Power & Light
Co., Electric Power & Light Corpora
ton, and National Power az Light Co."
ton and National Power and Light Co"
Each of these holding companies. the
petition continued, owns a majority of
voting stock in number of operating
public utilities companies selling elec-
trio energy or gas to purchasers in
other States.
The establishment of interlocking
boards of directors between the Electric
Bond & Share Co. and various pub
lie utilities companies also was cited,
as we'll as contracts by which 'impor-
tant features of management of such
companies becomes vested in the Elec-
trio Bond & Shares CO.
Fees amounting to more than So
100000, equivalent to over 43 per cent
of the Electric Bond & Shares Co. 5
gross profits during 1927" the petition
read, were paid by controlled and
affiliated companies under said super
vision contracts for management, super
vision, engineering and construction
services. More than half these fees
were for general supervision as dis
tinguished from engineering and con-
stuction services. .
Compensation Claimed.
I'm some instances the Electric Bond
& Share Co. and in some instances its
officers personally, have received special
compensation for services given in the
promotion, formation. financing and
consolidation of said operating and
holding companies, in the form of fees
and bonuses consisting of stock, securi-
ties. or options to purchase stock or Sc
curitieS of said company"
In conclusion the petition affirmea
that "by reason of the absence Of sub
stantial diversity of interest between
the individuals and corporations involve
ed in such transactions. the Electric
Bond & Share Co.. and its officers and
directors. are in a position to create,
impose and enhance, through COLLISION
and combination, burden upon inter-
state commerce in electrical energy
which may be undue, unreasonable and
detrimental to the public" s
The commission yesterday also sent
to the Senate its eighth interim re-
port on its public utilities lnvestiga-
ton, outlining details of the Electric
Bond & Share Co. case and the action
taken in applying to the New York
court for enforcement Of the commits
Sion's subpOenas
The report said this company had
been the only one of the holding and
operating companies investigated TO re-
fuse access to its books, although it
had submitted for examination state
mentS of fees and commissions received
and various other information. 1t wasI
added that commission examiners wereI
still at work in the company'S offices
and had experienced no hindrance be-
yond the refusal to produce the operat-
ing expense ledger and vouchers of dis-|
bursementS for publicity.