Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-10-01
BUSINESS THREAT
SEEN BY lands
New S. E. c. Head Outlines
Control Issue Facing
Supreme Court.
BY DAVID LAWRENCE.

face the courts In the forthcoming
battle to determine whether Congress
and the President have again violated
the Constitution with piece Of So
called reform legislation.
Mr.. Lands has a tough job. He Is
obliged to administer law which, as
he remarks, is questioned at the out
set on constitutional grounds by the
industry most affected by its terms.
To the credit of Mr.. Lands it must
be said that, while his spirit Of ap-
proach is one of humility in the exer-
else of new powers without vindic-
tiveness" and with an open mind"
nevertheless he reiterates quite firmly
the philosophy Of the New Deal
namely, that the Federal Government
has a right to regulate, indeed to
control" the management, if neces-
sary, of a given industry in order to
bring about a so-called protection for
investors.
This function has hitherto been re-
garded as one for the States alone to
exercise and even this has been lin
tied by Supreme Court decisions.
View Goes Beyond Regulation.
Mr.. Lands has made. therefore, a
revealing speech-one that undoubt-
edly will be quoted in the courts by
opponents of the public utility law be-
cause it plainly defines the objective
of the act as going beyond the mere
sc lot tho colo
State lines of securities issued, but as
empowering a Federal commission to
say what is and what is not an eft1-
GENTLY managed company and also
what, in the judgment Of the COM
mission, constitutes properly set-up
system Of operating companies from
an economic standpoint.
After pointing out that under the
law all holding companies must file
a registration statement giving certain
data as to Its characteristics and
composition" Mr.. Lands makes this
amazing confession of purpose:
Out of registration springs the
mechanism of control"
Chairman Lands thereupon Is not
content to leave the impression that
this control seeks merely Ito prevent
stock jobbing in utility securities and
their issuance under circumstances
where sober Judgment would show the
impossibility of any hope of contin-
uing returns sentiment with which
all fair-minded people will agree and
which also is supported by high court
decisions as to the right to prevent
frauds or Misrepresentation in the sale
In interstate commerce Of securities.
Aims at Management.
Instead, Mr.. Lands goes on to say:
But that control extends much
farther than to the sale OF securities.
It strikes at many features Of man
agement Of the kind where disre-
gard OF the public interest leads to
the ruin of both enterprise and Sc
curity holder"
But, it will be asked what right has
the Federal Government Ito strike at
many features of management" OF
private companies? Where in the
Constitution are to be found the spe-
cific powers granted to Congress to
exercise a guardianship over manage
ment or a supervision or dictation as
to how business shall be managed?
Also, If the power to legislate on
this point does exist, where is the
authority of Congress to delegate this
legislative function to Federal COM
mission to fulfill?
Mr.. Lands himself discloses. per-
,haps inadvertently. the weakness from
constitutional standpoint Of what
Congress has written in the public
utility law when he adds:
THE act represents solemn judg-
ment by the Congress that the hold
ing company as a financial and an
operating device tends to be destruc-
tive of the better values in our civili-
zation. II the system is permitted to
expand beyond the natural boundaries
established by economic and geo.
graphic limitations.
The boundaries Congress has not
specifically defined, nor could it do
so, but 1t has left to our commission
this standard to be applied in the
light of continuing and concrete
study"
But isn't this precisely what that
liberal and progressive minded friend
of social welfare, Justice Cardozo. re-
ferred to as delegation run riot" when
he and his eight colleagues voted
unanimously last Spring that the
code-making power without specific
standards to guide Federal bureau
was an unconstitutional delegation of
power by the Congress?
Terms Are Underlined.
Naturally Congress did not define
what it meant when it ordered all
holding companies TO die unless they
could be geographically and econom-
ically migrated" Congress didn't
know how to do 1t because there is
no definition beyond dispute which
explains economic migration" any
more than there is a clear definition
today of what the New Dealers, either
individually or collectively, mean by a
planned economy"
To write such phrases into the
statute is simple enough, but to get
the courts to sustain these vague
words as q justification for running
thousands of innocent investors who
would be deprived of their property
without due process" is something
else again as long as we have writ
ten Constitution.
To understand how far-reaching
this particular law happens to be
and what it will mean to all bus
inesses and industries if the Federal
Government is by chance sustained
as within the Constitution in what 1t
is trying to do with holding COM
panies, it Is pertinent to examine the