Plentywood herald. [volume] (Plentywood, Mont.) 1908-current, 1935-02-14
RELIEF FUNDS NEAR END
RELIEF FUNDS NEAR END
NOT so MUCH SPENT
BONUS COMPROMISE
ABOUT HOLDING COMPANIES
WILL BE REGULATED
WHAT ABOUT NRA7

Some fear is expressed by relief
officials that long debate In the Sen
ate on the huge Works Relief bill
will mean that funds for the needy
will be exhausted before final
action on the measure is taken
Meanwhile, observers point out that
it will take many months to spend
the five billions requested. They
point to the record of present spend.
ing agencies to show that PWA, in
eighteen months, disbursed only two
billion dollars, and that FERA in
nineteen months spent or approved
the expenditure OF about s1,70O,.
900, 900.
In other words, the two chief
spending divisions have failed to
spend four billions dollars in about
nineteen months. During this period
industry suffered a relapse and re
covery apparently stalled. At pres
ent, the upward trend seems to be
more pronounced, as shown by the
latest Federal Reserve Board Statist-
les. but 1t is expected by some that
the new year will see a lessened
need for such huge governmental
expenditures.
The troublesome soldier bonus
question opened up on a new front
last week when champions of the bill
sponsored by the Legion and those of
the Patman bill, already twice ap-
proved by the House, opened hostil-
tiles. Representative Patman de-
thrown a monkey wrench" into the
machinery by introducing a rival
measure which placed all bonus leg
islation in jeopardy. He insisted
that the Legion measure is a bank
ers' bonus bill"
The other measure, introduced by
Representative Vinson, seems to
have the right-of-way. It's advocates
declare that they will not allow the
inflationists to use the bonus issue
as a CLOAK" for "fiat money" From
a legislative standpoint the enact
ment of some bonus legislation is
considered a certainty, although the
best Judgment is that a compromise
plan will be worked out. This may
restrict payments to needy veterans.
Considerable political strife is GER
tain before this comes about, but I'M
doubtedly the President will veto
full payment of the entire bonus OBJ
| legation at this time. The general
idea is that the bonus will pass the
| House by an overwhelming majority,
sufficient to offset a veto. The Sen
ate will likewise pass the bill, but,
probably, sustain the veto. After
this the compromise will come
about Talk will be heard and much
discussion of strategy will result be
fore all this happens, but it looks
like the schedule to the writer.
After a six-year investigation Of
gas and electric utility companies,
the Federal Trade Commission sug-
gests sharp regulation of holding
companies, and indicates a prefer
ence for using taxation in preference
to statutory inhibitions. Federal II
censing and incorporation acts. This,
1t was felt, would avoid questions OF
limitation in interstate commerce.
Without going into the specific
taxes suggested by the Commission,
it might be pointed out that many
OF the abuses observed In corporate
structures in this country in recent
years have been attributed to hold
ing companies as distinguished from
operating companies.
The reader may be interested in
the operation of holding companies.
Years ago it was the accepted prin-
ciple In many states that n cor
poration had no right to own stock
In another without specific legisla-
tive permission. Gradually the rule
was liberalized, and most states now
grant charters to holding companies.
To understand the holding COM
pany, let US assume that there are
In this country, five companies en-
gagged in manufacturing a product
"A sixth company Is organized, not
for the purpose OF manufacturing the
product, but to acquire, If possible, a
controlling interest in the stock OF
the other companies. When this Is
accomplished, the holding company
operates the other units for It's own
benefit. 1t frequently charges a
management fee, which has little
basis In fact, and also organizes
other companies to supply the manu-
featuring companies with necessary
materials.
In doing this, the holding company
makes profits out Of Its manipula-
tions, pays dividends, and is able to
work up the value of its own stock.
Very often those who manage hold
ing companies sell n%on-voting stock
to. the public, reserving and voting
stock for themselves, and thus. with
a small investment, exercise control
of industrial giants. When a slump
hits the basic manufacturing COM
panies, on which the holding COM
pany and It's fictitious values are
based, nothing can save the investors
In the latter.
The holding company has de-
veloped with l~uxuriance In the field
OF public utilities, 1t Is sad, control
three-fourths of the light and power
industry OF the country, and even
these have interlocking dir~ectorates.
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