Evening star., 1935-06-11
COURTS MAY ACT
ON DIRECTOR RULE
Commission Order to Hall
InterIocking Boards
Stirs Speculation.
By the Associated Press,

BY the Associated Press.
out Of discussion stirred by the
Communication Commissions order
against interlockine directorates In the
telephone and telegraph business, these
possibilities emerged today:
!. Some observers predicted the
commissions power to prevent an
executive from serving more than one
company would be challenged in the
courts.
2. A remark some time ago by David
Sarnof, president OF Radio Corp.
of America Communications, was
construed as an indication some af-
fected companies might challenge the
status Of their subsidiaries and operate
them hereafter merely as departments
of the parent organizations.
8. Election of new officers and direc-
tors to some Of the posts now held
by leaders In the industry was de-
scribed in informed quarters as another
possible result.
Order Hits at 0ficiaIs.
BY q vote Of 5 to z, the commission
yesterday ordered 10 officers and direc-
tors of the American Telephone and
Telegraph Co.. the International Tele-
phone and Telegraph Co., the Western
Union Telegraph Co., the Radio
Corp. Of America Communications and
subsidiary organizations to divest
themselves by August o of official con-
nections with more than one Of these
companies.
Sarnoff, who in addition to being
| president and a director of Radio
Corp. Of America Communications,
also heads the Radio Marine Corp. of
America, testified during commission
hearings last February. Under ques-
tioning by Commissioner Stewart he
contended the two companies actually
were only departments Of the Radio
| Corp. of America.
II think the natural thing to do,
II the commission finds against inter-
locking directorates or identical di-
rectorates, would be to 60 back to the
same system we had before and have
the two operations in one company, -
he said at the hearing.
Order Is Sweeping.
! Yesterdays order was one of the
most sweeping Of its kind ever issued
by Federal regulatory body. Those
refused permission to serve on more
than one company are:
Sarnoff: Newcomb Carlton, chair
man of the board Of Western Union;
SostheneS Behn, chairman of the
board of the International Telephone
q Telegraph Co.. which controls
Postal Telegraph; Walter S. Clifford,
president Of the American Telephone
d Telegraph Co., and director in 81
other telephone companies; Edwin F.
Carter, vice president of A. T. Sy r.
and the Cuban-American Telephone
g. Telegraph Co.; Edwin F. Chinlund,
vice president and controller Of Postal
Telegraph; Frank L. Polk, former as
sistant Secretary Of State. director of
All America Gables: Z. Y. Gallaher
vice president and director Of Western
Union; John J. Halpin, assistant treas
urer of Postal Telegraph, and Lewis
MacConnach. secretary of the Radio
Corp. of America Communica-
tions.
When the commission voted Chair.
man Prafl and Commissioners Walker
Payne. Case and Sykes favored re-
fusing the applications and Commits
sioners Stewart and Brown voted to
allow them.
Oflcials could not recall that the
Interstate Commerce Commission
ever had handed down such . sweep
inc darfeia1 IN fpfarlOriyip~ dfraofo-
rates, although the railroad statute
was said to be much the same as the
communications law on this point
The I. C. C. has allowed officials to
serve subsidiary roads and even to sit
on boards of two railroad systems
where they do not compete or connect