Evening star., 1932-10-04

GEORGE o
conservative authorities on constitu-
tional law was simply victory in re-
sponse to a growing popular belief IN
the public need of control Of public
utility that had begun to take on a ma
tional stature. Since 1920 the Federal
Power Commission has administered
this law. the fourfold purpose of which
is improvement of navigation, develop
ment of water power, beneficial use Of
public lands valuable for power and the
regulation, in the public interest, OF
projects under Federal license.
1T was the marvellous expansion OF
the power industry that forced the en-
actnent of the Federal law and the
general strengthening Of many OF the
State regulatory statutes. And these
new and better laws have In no wise
stunted the growth Of the power cor
porations. Indeed. the notable progress
in Improvement Of service and reduc-
ton OF rates may well be credited in
large part to the influence OF regula-
tion-that is, the constructive help
given by public commissions IN protect
ing the industry from itself. I believe
of the power business as practically Q
resultant or compromise between the
driving force of private initiative and
the guiding force of public regulation.
Undoubtedly, society is better served in
that neither force has wholly controlled
either the direction or the rate OF de-
velopment.
In the power situation of today there
are conditions that call for some re-
vamping of the regulatory laws. The
guiding principle in new or amendatory
legislation need be only that of bridg-
ing the gaps in regulation-a legisla-
tive policy of perfecting public control.
These gaps exist, for eight States, most
Of them in the Mississippi Valley. are
even now without any regulation Of the
power utilities And only half Of the
States have statutory authority over
the issue Of power company securities.
"A broader gap IN regulation comes
from the increasing amount OF inter-
state movement of electricity, which,
Of the country's total, seems small, be-
ing less than Is per cent last year. Yet
this country wide average does not tell
the whole story. for two States, Della
ware and Mississippi, import 95 and 80
per cent, respectively. of the power they
use. and on the other hand, Vermont
and New Mexico export 63 and So per
cent Of the power they generate. This
interstate Transmission of electricity on
such a wholesale scale can be brought
under regulation only by action of the
Congress Under the United States
Constitution the Federal Government.
and the Federal Government alone. can
regulate interstate commerce in electric
energy. A Federal agency must occupy
this field simply because no other can;
1t Is Federal regulation or no regula-
tion.
Holding Companies.
still another gap relates to holding
companies. Obviously, to make COM
plete the supervision of the operating
utilities that serve the public. measures
must be taken to regulate these large
holding companies. Moreover, no one
now questions that the investing public
would welcome some restraining infiu-
ence over the issue of securities by
onstrated that wide and dangerous
gap exists there.
"A year ago a high official Of
prominent holding company group
asked me why all this public concern
about holding companies and their con-
troll over subsidiary companies; what
was the public interest involved? The
answer was that the public didn't like
to see the utility cow MIXED to death;
that to justify itself with the public
the holding company must not endanger
the health of the operating company
I regret to add that the figure of speech
] then used proved to be an unhappy
one; several of the cows in that par
ticular herd are now at the point OF
death. And large number OF small
investors have lost thereby their saw
ings. Speaking in my individual capac-
ity. I believe that interstate transmits
sion and holding companies. then, are
the chief items demanding congressional
attention. And the present widespread
recognition of the need should speed up
the legislative machinery. The need Is
not new one nor is its recognition al
together q recent incident; President
Hoover has four times in four years
urged specifically upon Congress legis-
lation for the Federal regulation of in
terstate transmission of power, and the
Federal Power Commission appointed by
President Hoover began more than q
year ago study of holding companies-
a study already resulting in an un-
equlvocal recommendation to the Con-
gress that public control of these COM
panies Is absolutely essential IN the
public interest and that adequate reg
ulation would include supervision Of
the issue of securities to the investing
public.
This policy Of filing gaps need not
involve constitutional difficulties as to
connicting jurisdiction. The proposal
IS not an issue Of Federal versus State,
but rather OF State plus Federal. Nor
is this proposal a new one; like many
others, am no new convert to this idea
OF complete control for I urged it be-