The Waterbury Democrat., 1935-05-25

luiulstIattOn dTS eu8a8Cu AH one of the bitterest. most signific history.
 Passage Of the trust-busting mean eventual dissolution Of the loosely applied to the system thro control three.fourths of the nation
 Behind the holding companies stand the Morgan, Chase National Bank, and other huge financial groups which control them, vio- lently opposing Roosevelt's thus far unswerving effort to break down the concentration of eco- homie and political power now vested in the power trust"
 Few have read the long, compli- cated bill. Anyone who does will realize why the utilities have been waging mighty campaign of pub. licity and backstage effort which knows no precedent.
 Plundering Charged
 Roosevelt and the various fed- erai agencies involved take the stand that the utility holding sys- tenn is gigantic milking machine which has plundered investor and consumer--often on shoestring in- vestments--and is inherently ifi- furious to both: that its manifold sins are revealed through scores of volumes of federal documents: that community toIeration of utilities as natural monopolies" cannot justify control by few powerful groups over plants scattered through many states; that it has become so huge and impossible to regulate as to interfere with demo. cratic government: and that 1t must be trimmed down to units of size and power which can be regu- lated for protection of investors and the public.
 So Title of. the bill--as re- ported by the Wheeler committee to the senate--provides that within five years holding companies--de- fined as companies owning, directly or indirectly, 10 per cent voting control of gas or electric com pany, or oterwise as exercising controlling infiuence-must choose between:
 i. Turning themselves into
 Investment trusts and relin-
 quishing control of manage.
 nsent Of operating companies.
 Reducing holdings So each
 controls hut a single system Of
 operating companies, either
 prcdominantly intrastate Or
 geographically and economical.
 ly integrated.
 8. Distributing securities and
 assets equitably among their
 own security holders.
 The Securities Exchange com- mission would supervise these oper- ati0ns and could extend the time limit one or two more years if nec- cssary to prevent loss.
 Bill Branded RuinOus
 Holding company executives in- siss this would destroy" the in- dustry and cause huge losses in securities values as securities were dumped on the market.
 The senate committee replies that at least five-sixths of the pub- lic's investment in utilities Is in operating companies; that dumping isn't necessary when holding com panies have five years to rearrange their affairs and can distribute securities among existing securities holders; that S5 per cent of hold ing company stock shrinkage pre- ceded the Roosevelt administra. tion; that such stocks have in- creased since the bill was intro- duced: and that holding company security holders will emerge from congratulations with better stocks than they went in with-their divi- dends undepresscd by big fees, high salaries, and bonuses to holding company officers and bankers or purchase of securities from cor porate insiders at exorbitant prices. Plan Immediate Control
 Pages after pages of Title I are devoted to give the SEC imme- diate, continuous. and effective con- troi over holding company opera tions from now on.
 That's to eliminate ''iniquitous" practices of holding companies at once and to guarantee 8 square deal to investors and consumers in the reorganization process instead of leaving them exposed to devices for which some holding companies are declared to have been famous.
 All holding companies must register with SEC by October 1 and make complete reports of holdings, salaries. business rec Iationships. balance h c { s, bonuses and so on.
 Inter company relationships would be thoroughly regulated to prevent further alleged milking" Service charge profits on operating companies would be wiped out by next April and dividends of sub- sidiaries brought under control. Teeth in Act
 Title II would still be major measure even if there were no T tile I. It would regulate elec- tricity in interstate commerce. which can't be, regulated by the states.
 Although not providing for fixing of local rates. it gives the federal power commission Jurisdiction over production. transmission. and sale of energy in interstate conn- merce and power to determine cost of production and transmission as we'll as valuation for all utilities.
 After putting several teeth in the present federal water power act \ LUNsllsfK ASO MEALS N . q aA \