The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-01-12
HUGE SUM PAID
BY UTILITIES IN
EXPANSION WAR
Trade Commission BareS
Exoribant Prices Spent
by Firms.

WASHINGTON. Jan. 12-Days Of
mad competition among utility hold
ing companies for expansion were
described to Congress by the Fed
eral Trade Commission today in a
new chapter Of its report on electric
and gas utility Investigations.
IN an extreme case. the commits
sion found that Associated Gas and
Electric Co. paid s531O4 a share for
stock in a minor holding company
which had a book value Of s2.97 a
share. The purchase price, $4,000
290. was 179 times the real book
value Of s2.97 a share. The company
acquired was w. s. Barrow g. Co.,
Inc. a holding company which con-
trolled General Gas & Electric
Corp, which in turn controlled oper-
ating companies along the East
Coast.
In 1881, the Insull-controlled Ma
tioal Public Service Corp. paid 1851
a share for controlling stock in the
Eastern New Jersey Power Co.,
which stock had been accumulated
in the seven previous years by a
Harry L. Clarke concern at si33.28
a share.
In 1927 Standard Gas and Electric
Co. acquired Wisconsin holdings
with a book value Of $1,000 1854 for
s8,147,526.
Other Instances Cited
The New England Power Associa-
ton. in competition with another
firm, paid s223.6O a share for $4,000
shares in the Worchester Electric
Co, which. the Commissions &C
c~ountants found, had a book value
of S7O.61.
Citing other similar instances
the Commission declared them
typical Of the competition for pur-
chase Of desirable properties.
Despite this competitive situation,
many instances we're noted of the
cooperative acquisition of properties
lying between two large holding
company groups and the parcelling
of distribution areas.
Similarly, joint ownership and
control of generating and trans
mission facilities were common.
Holding Companies Unregulated
Cooperative arrangements in in
translate business are generally sub
jected to state regulation, the COM
mission reported. But it pointed out
that holding companies, natural gas
producing companies and natural
gas transmission (pipe-line) COM
psnies are not subjected to any sort
of control.
The development Of intra-state
natural gas lines, the Commission
said, may well raise the question
whether such lines should be classed
as common carriers or public util-
tiles. and their use made available
to other interests as well as those
owning the line.
AT the present. the only way that
an independent producer of gas can
find an outlet for his gas is 70 sell
it to me of the interests controlling
the line.
Thus independent producers are
placed more or less at the mercy of
those controlling the pipe lines"
State Commissions Handicapped
Hoint ownership of generation and
iansmisSion facilities, especially
fhen interstate, raises the question
of need for Federal regulation. the
report said. explaining that state
commissions have great difficulty in
determining the amounts which
should be allowed for investment
and expenses in the various juris-
dictionS.
Investment bankers. described in
one instance as hungry" for util-
tiles security issues, had great IN
fluence in building vast holding
companies, the report said.
In the heyday of holding COM
pany explorations just prior to the
depression. investment bankers not
only furnished financial aid when
requested by holding companies but
solicited the flotation of additional
security issues and came to depend
on holding companies for business"
il WAS rppOrfpd