Evening star., 1932-09-22

vestment made In property, to pyramid
capital through holding companies and
without restraint of law, to sell billions
Of dollars Of securities which the public
has been falsely led into believing were
properly supervised by the Government
itself.
And now for a personal word. I am
speaking to you as the Governor of a
tackled by the propaganda of certain
utility companies as a dangerous man
have been attacked for pointing out
the same plain economic facts that I
state here tonight.
Claims New Converts.
My answer has been, as it is tonight,
to point out these plain principles that
seek to protect the welfare Of the people
against selfish greed If that be trea-
son, then make the most Of it.
But I have found new converts to my
treason.
The Presidents Federal Trade Com
mission has Just come out with re-
port which, If am not mistaken, Is a
last-minute effort to fall in line with
the plain implication Of the present
temper of the public. Some OF its con-
illusions bear careful reading, in the
light of what the President has said on
many occasions in the past.
In 1925 the then Secretary Of Com
merce, now the President, said: Moth
ing could be more hideous extension OF
GENERALIZATION in Federal Government
than those to undermine State utility
commissions and State responsibility.
1ofn hn H..
ment is sometimes used that the power
situation Is parallel with the railroads,
where Federal regulation has been
found absolutely necessary. This is an
illusion. 1t differs in several profound
respects. Power has no such interstate
implication as transportation. Further
more. there has been outrageous exag-
geration of the probable extent of in
terstate power. For economic reasons
these power districts will in but few
cases reach across State lines" Thus
spoke the present President Of the
United States in opposition to Federal
regulation and control of power public
utilities. His statement Of facts then
is now contradicted by his own Federal
Power Commission.
1t states what have long been say
ing, that power has grown into inter-
state business Of vast proportions and
requires the strict regulation and con-
troll Of the Federal Government. They
say: Analysis Of information fur
nished by 81 holding companies shows
that 48 major projects under public
utilities are subject to control by 10 top
companies and these groups serve 12,478
communities with population OF more
than 100000"
Let me give you an illustration. Not
only to show the vast extent of opera
tions Of some of these great companies
but the unsound conditions created by
the policies of the Federal non-inter-
ference which the President Of the
United States still so valiantly main
tains.
Cites insult Crash.
The crash of the insult empire has
given excellent point to the truth OF
what I have been arguing for for long
time.
The great "Insull monstrosity," made
up Of a group Of holding and investing
companies and exercising control over
hundreds of thousands of operating
companies, had distributed securities
among hundreds of thousands Of in
vestors and had taken their money to
an amount running over sl.500,0 900.
The insult monstroSity'' grew during
the years of prosperity until it reached
a position where it was an important
factor in the lives of millions of people.
The investing public did not realize
then, as it does now, that the methods
used in building up of these holding
companies were wholly contrary to every
sound public policy.
They did not realize that there has
been arbitrary write-upS of assets, in
flation Of vast capital accounts. They
did not realize that excessive prices had
been paid for property acquired. They
did not realize that the expense of
financing had been capitalized. They
did not realize that payments of divi-
dends had been made out of capital
They did not realize that sound sub
sidiaries had been MIXED and milked
to keep alive the weaker sisters in the
great chain. They did not realize that
there had been borrowings and lendingS
an interchange Of assets. Of liabilities
and of capital between the component
parts of the whole. They did not realize
that all these conditions necessitated
terrific overcharges for service by these
corporations.
The insult failure has opened our
eyes 1t shows us that the development
of these financial monstrosities was such
as to compel ultimate ruin; that prac-
tees had been INDUCED in, that suggest
the old days of railroad wildcatting;
that private manipulation had out
smarted the slow-moving power OF Gov
ernment.
As always, the public paid. and paid
dearly; as always, the public Is begin
ming to understand the need for re-
form after the same public has been
fleeced out of millions Of dollars.
I have spoken Of new deal" for
the American people. I believe that
that new deal' can be applied very
definitely to the relationship between
the electric utilities on the one side and
the consumer and the investor on the
other. True regulation is for the equal
benefit of the consumer and the in
vestor, and the only man who will suf-
fer from true regulation Is the specu-
lator or the unscrupulous promoter who
levies tribute equally from the man who
buys the service and from the man who
invests his savings in this great in
dustry.
Remedies Proposed.
I seek to protect both the consumer
and the investor. To that end I pro-
pose and advocate now, as have pro-
posed and advocated heretofore, the
following remedies on the part Of the
Government for the regulation and
control of public utilities engaged in
the power business and companies and
corporations relating thereto:
l. Full publicity as to all capital
issues Of stocks, bonds and other Sc
curities Liabilities and indebtedness,
capital investment, and frequent infor-
nation as to gross and net earnings.
2. Publicity on stock ownership of
stocks and bonds and other securities,
including the stock and other interest
of all officers and directors.
3. Publicity with respect to all inter-
company contracts and services and in
terchange of power.
4. Regulation and control of holding
companies by Federal Power Conmis-
sion, and the same publicity with re-
gard to such holding companies as pro-
vided for the operating companies.
S. Cooperation of Federal Power