Evening star., 1935-08-02
DEATH PROVISION
: HELD SECONDARY
Utility Bill Deadlock Jeopar'
dies All Regulation
Sought.
BY DAVID LAWRENCE,

Dh
Another conspicuous controversy
which could be handled within the
Constitution is that relating to uunty
holding companies.
The Senate aud House conferees
are at the moment deadlocked on the
question of whether the utility hold
ing companies shall be regulated or
destroyed altogether. and neither
group of conferees has seemed willing
. to recede.
= But it would be most regrettable II
the bill failed entirely because apart
from the discussion of the death
sentence" there is much merit in the
proposal to prevent abuses and evil
features of holding companies from
being perpetuated.
The utility business in so far as
holding companies are concerned con-
sists of these phases-the furnishing
of capital for sound engineering prof.
ects and for the gradual increase OF
facilities, the sale of that capital to
investors generally. and the manage
ment or supervision of a series of cleo
trio light and power companies by
parent company.
Evil in Security Sales.
Now. the chief trouble is that the
parent or service companies have not
been confined to that function, but
have in some instances developed into
speculative devices for the sale OF
securities or for the extraction OF fees
for the benefit of affiliated companies
ranging all the way from management
of the engineering kind to financial
advice
Many of the practices complained
of that relate to the sale of securities
have been corrected by the securities
exchange law. but to the extent that
this law relates only to new issues OF
securities. it doesn't of course touch
existing financial operations.
So there is need for Federal law
TO supplement State laws with refer
ence to the marketing of utility Sc
curities and To make sure that there
is no Misrepresentation of assets or
earning power or any other material
fact about the business State laws
moreover, should be strengthened and
State commissions urged to scrutinize
inter- company transactions.
There is also need of a Federal
statute governing the sale Of electric
current across State lines, as this is
a field in which the Supreme Court
has indicated that the States have
no rights.
Reachahle by State Laws.
Undoubtedly there are some COM
binations of capital which foist upon
companies they control certain fees
or management costs that are unfair
to minority stockholders. piling up eX
penses and preventing the local COM
panies from earning enough to get a
fair return and still reduce rates to
consumers. These are reachable by
State laws plus Federal laws that
clearly relate to transactions of an
interstate character.
The impasse that has developed In
conference should not be difficult TO
iron out. The Senate conferees feel
that experts should be present at the
sessions. They defend the practice of
securing the advice of technicianS and
those who help draft legislation. The
House conferees object to this.
The way out is simple The Senate
conferees could meet separately with
the experts and then gather formally
with the House members and the
amenities would be preserved 1t has
been a long and arduous session.
Senator Wheeler, head of the Senate
confereeS, has delicate task in trying
to get bill satisfactory both to the
Senate, which divided evenly on the
death sentence, and to the admins
tratlon, which insists on abolition of
the holding companies.
Hand of President.
Nobody has done such yeoman serv-
ice for the administrations program
as Mr.. Wheeler. He is unquestionably
an experienced legislator quite capable
Of reconciling the differences in the
measure without experts. His anxiety
Is. however, to follow the Presidents
wishes by having the experts present.
The same may be said of Chairman
Rayburn of the House Committee. who
wants to go along with the President
on the holding company issue.
Unfortunately. therefore. these en-
trenched positions have been too much
whereas the paramount
need is for solution in some legisla-
ton instead of having no legislation
ht all to regulate holding companies.
The utility companies would be per-
fectly happy to have the bill lost in
IN indefinite deadlock and carried
over till next session, because they
think they will gain instead of lose
strength. especially since the investor
groups constitute a very large and
aggressive body of voters. The utility
men have been heartened by the House
vote in sticking to its guns notwith-
standing the pressure brought to bear
to change.
But persons like the writer, who do
not have and have not had a financial
Interest in or income of any kind from
utility investments, or from any utility |
companies, are desirous of seeing fair
play and of having the uncertainty
ended which envelops a $4,000 ,000, 900 !
industry and one which is capable of |
putting to work many of the unem-
ployed.
Unemployment Is Stake.
Undoubtedly the expenditures of |
the utility industry had much to do |
with employment in previous years |
and If Congress passes law of some
kind and it is promptly tested in the
courts the unemployment program will |
be accelerated.
The utilities also buy raw materials
from the metals groups of industries
and this, too, is said to have made up
\ large part of what was an average
Of 81 900 900, 900 a year be-
lore the attack on the utilities began.
That's why the Senate and House /
,onferees ought to get together on a
ALL onl Iirx1znn 49,. sz-,.-