The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-05-02
Liberal Viewpoint
by DIR. HARRY ELMER RARNES

OPPONENTS of the NEUTRALITY-SUSPICIOUS. hin
" designed to dismantle parasitic ho1diro
companies IN the electric utility industry arc
pIIlghg forth in great volume appealing sob
SUN on the alleged ruin to investors which
would follow in the wake of this bill
FOR example, Wendell L. WiIIkie president
VI the commonwealth and Southern Corn has
ueCiatea Cnat The bill will destroy or greatly
impair the value Of investments now hold by
millions Of men, women children. colleges hoe
pltals' churches, and the like throughout The
country" "e4io"' Vlle
In the same vein Philip H. Gadsden chair
man OF the Committee of Public Utility Fly
ecutlVeS' contends in plaintive terms that "the
ISSUES are simple. Shall innocent investors
everywhere throughout the country have Their
investments destroyed to further an untried and
Otoplan scheme of economic reform?
1t would be amusing and enlightenino to
to suggest to such men that they submit the
facts as to what happened to the interests of
investors IN their companies in the four years
between March, 1929, and March, 1885, a pc
Rod in which the utility holding companies
were entirely free from any of the alleged ma
licious Intervention of the Roosevelt Admins
tration.
Such "solicitude" for investors comes with
very bad taste from the responsible officials of
those companies which have, at one and the
same time, both Quilted and drained their sub
sidiary operating companies and ruined their
own investors
HENCE, the timeliness of an excellent article
in The Nation by the able economist, A.
Wilfred May, on How the Holding Companies
Milk Investors" He clearly reveals the bunk in
the light of the utility holding companies against
the Wheeler Rayburn bill alleged to be carried
on in the interests of holding company investors
and the consuming public:
What are the facts? Has the holding COM
company has crucifled both the investor and
the consumer? The truth is that the holding
company has crucifed both the investor and
the consumer 1t is and always has been, both
in theory and in practice. a gigantic instrument
Of spoliation and injury to a great army Of in
vestors-that is, to the real investors, who hold
the limited income securities of the operating
and other underlying companies.
Through the employment of multitude of
devious methods, the holding company has
siphoned of and captured the assets properly
belonging TO these real investors. AS the holder
of the common stock of the operating companies
it has shown total disregard Of the interests
of the senior security holders-that is, of the
real investors
MIR. WILLKIE recently sought to make il
1VA appear that the holding company is a
financial reservoir for the benefit of the oper-
ating company. This is sheer buncombe It
is the operating companies that have provided
the reservoir; the parasitic holding company
has been the drain Under general corporate
financial practice and its system Of absentee
ownership the bondholder has little enough pro-
lection against all manner of dilutions.
We have no space here to so into the de-
tailed statistical exhibit presented by Mr.. May
but most reasonable and informed persons will
be likely to agree that it amply confirms his
final conclusion that:
From the investors point of view holding
companies have no reason for existence. They
are anti-social financial devices serving no use
full puri oSe. They have offered a legal method
for parasitic high finance to garner huge profits
to itself and TO cruelty the real investors in
the subsidiary companies. The Wheeler-Ray-
burn bill is not perfect but it is move in the
right direction. If no other way can be found
to restore the rights of genuine investors then
J the holding company must be abolished"