Evening star., 1932-06-25
INVESTMENT TRUST
SET-UP ANALYZED
Operations Leading to Con-
troll of Various Firms
Are Recalled.
Special Dispatch to The Star.

NEW YORK, June 25.-The reduc-
ton In the dividend on the common
stock of the Standard Gas & Electric
Co. last week, followed by cut on Mon
DAY In the rate on Standard Power &
Light Corporation common, directs at
tention to the involved financial set-up
of public utility holding companies eff
fected during the boom times and
which today frequently leaves the in
vestor in securities Of this type mysti-
hed and confused when he attempts to
arrive at a conclusion concerning his
equity.
Standard Gas & Electric controls,
among other large public utility cor
porations, the Philadelphia Co. This,
in turn, owns the entire common stock
of Duquesne Light Co, one of the high
est credit companies in the public util-
ity operating field. Standard Gas &
Electric is controlled by Standard Power
6S Light Corporation, a holding cor
poration formed in 1925 to acquire pub
lie utility companies and to supervise
the management, development and OPP
Grafton of utility properties.
New Company Formed.
In 1929 there was formed the United
States Electric Power Corporation, which
subsequently purchased a majority Of
Standard Power & Light Corporation
common stock. United Founders Cor
poration In 1881 obtained voting con-
troll of United States Electric Power.
Its balance sheet that year showed that
it then held 2,478,547 common shares
Of United States Electric Power and
713,105 class "A" shares.
United Founders Corporation owns
y rIo s
of American Founders Corporation
common, which is the chief unit in the
MANAGEMENT investment trust group to
which it belongs. American Founders
holds large blocks of Standard Gas d
Electric and Standard Power q Light
stocks
Both American Founders and United
Founders stocks were, in their day, the
market leaders in the investment trust
group. American Founders was a plo-
neer in developing a diversified portfolio
in domestic and foreign securities. Its
shares reflected not only the income on
its investments, but the trading profits
taken from time to time in them. Its
stock was widely distributed throughout
the United States. According to the
last report there are now over 10000
holders of its common. The total mar
ket value of its investments on Novem-
ber 80, 1881, was in excess of $50 900, 600,
representing about so per cent shrink
age from cost.
United Founders came into the field
during the period of extreme Specula-
ton in stocks and when investment
trust shares were popular with the pub
lie. 1t, too, had great following and
last November reported nearly 100000
90 sfr cI0
not, however, confine its operations, like
those of American Founders, to the set
ting up of a diversified investment port
folio, but ranged through the field of
supposedly good opportunities in the
business world for profitable possessions
in public utility holding companies. In
this venture 1t created the United
States Electric Power Corporation and
at about the same time took a large
slice of the Public Utility Holding Cor
poration of America. This was Or
ganized in September, 1929, by Ameri-
can Founders, United Founders, and
their banking associates, ito invest most
of its resources in large interests in the
important American and foreign public
utility companies where there is an op-
portunity for the realization Of special
profits. in addition to the normal profits
accruing to the investment OF capital.
It's principal holdings are in the United
States g. Overseas Corporation, ASso-
ciated Gas e. Electric, Central Public
Service, the Cuba Co. and electrical
companies in France, South America
and in Germany.
Effect of Depreciation.
The fractional quotations today for
American Founders and United Found
ers stock represent, in large part, the
effect Of the depreciation in the invest
ments of public utility holding COM
panies that are in some way or other
tied in with a chain OF management
corporations in the power and light in
dustry. 1t furnishes one of the most
striking illustrations in these times of
the extent to which corporations, sue
cessful in a specific field, went into
alien business territory in 1923 and in
1929 in order to extract profits that
then appeared easily won. The sequel
was tremendous shrinkages in those in
vestments whose anticipated value to
the owners had been the controlling in
fluence in the bull market for these in
vestment shares in 1929
(COpyriRht, 1927