Evening star., 1935-03-12

The text Of President Roosevelts
message to Congress on holding
companies follows:
I am transmitting to you here
with report submitted TO me by
the National Power PolSS Com.
mittee. I named this committee
last Summer from among the de-
partments of the Government
concerned with power problems to
make q series Of reports to CO.
ordinate Government policy on
such problems. This report I am
submitting to you is the recon-
mendation OF the committee with
respect to the treatment Of holding
companies in the public utility
field. It deserves the careful at
tention of every member OF the
Congress.
The so-called public utility hold
ing company bill (dtle I Of House
bill 5423 and Senate bill 1725),
which was drafted under the direc-
ton Of congressional leaders. in
corporates many Of the recon-
mendations of this report.
I have been watching with great
interest the fight being waged
against public utility holding
company legislation. ! have
watched the use of investors money
to make the investor believe that
the efforts Of Government to pro-
tect him are designed to defraud
him. I have seen much Of the
propaganda prepared against such
legislation-even down to mimeo-
graphed sheets Of instructions for
propaganda to exploit the most
far-fetched and faliacious fears.
I have seen enough to be as unim-
pressed by it as I was by the SINH
lar effort TO stir up the country
against the securities exchange
bill last Spring. The securities
exchange act is now generally ac-
cepted as a constructive measure,
and feel confident that any fears
now entertained in regard to pro-
posed utility holding company
legislation will prove as groundless
as those last Spring in the case OF
the securities exchange act.
Sees Safeguard for Investor.
So much has been said through
chain letters and circulars and by
word of mouth that misrepresents
the intent and purpose Of new law
that it is important that the people
of the country understand once
and for all the actual facts OF the
case. Such a measure will not de-
stroy legitimate business or whole
some and productive investment.
1t will not destroy a penny OF
actual value Of those operating
properties which holding companies
now control and which holding
company securities represent in so
far as they have any value. On
the contrary, it will surround the
necessary reorganization OF the
holding company with safeguards
which will in fact protect the In
vestor.
We seek to establish the sound
principle that the utility holding
company, so long as it is permitted
to continue. should not profit from
dealings with subsidiaries and af-
filiates where there is no semblance
Of actual bargaining to get the
best value and the best price. If a
management company is equipped
to offer a genuinely economic n1ari-
agement service TO the smaller
operating utility companies. It
ought not to own stock in the
companies 1t manages, and its fees
ought to be reasonable. The hold
ing company should not be per-
mitted to establish a sphere Of in
fiuence from which independent
engineering, construction and other
private enterprise Is excluded by
none too benevolent private pater-
nalism. If a management company
is controlled by related operating
companies, 1t should be organized
on a truly mutual and cooperative
basis and should be required to per-
form its services at actual cost,
demonstrably lower than the serv-
ices can be obtained In free and
open market.
Points to Confusion in Past.
We do not seek to prevent the
legitimate diversifcation Of in
vestment in operating utility COM
panies by legitimate investment