The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-07-20
Liberal Viewpoint
BY DIR. HARRY ELMER BARNES

IT HE useless and worse than useless utility
4 holding companies have temporarily es-
capped the death sentence" embodied in the Ad
miniStration measure amended by the House Of
Representatives.
But there is no ground in this for any hilar-
ity on the part of business. The refusal of bust
ness to curb the overt piracy involved in holding
companies and their procedure will impose the
death sentence on all American business Per-
haps it is more accurate to say that by per-
hitting holding companies to exist and operate,
American business is surely and not too slowly
committing suicide.
The great ma joTity of American business life
is today in the control of the corporation. More
than half of the corporate wealth of the country
today is controlled by only 200 giant corpora
tons and holding companies out of some $780,
900 corporations in the country as a whole in
Guiding banking corporations. Through various
devious legal devices the actual control of these
great corporations and holding companies is in
the hands of a small clique of insiders who
rarely own even much as 5 per cent of the
stock OF the corporation or corporations which
they dominate.
Hence, we have perfect Set-up to encour-
age the robbery Of investors and the public
alike II the governing clique manages the bust
ness efficiently and honestly they will receive
only per cent of the proceeds of their efforts
and industry, assuming that they own as much
as per cent of the stock But if they rob from
graft they get at least 95 per cent of this pilfer-
ing. In an economic order which is dominated
by the profit motive, the dominating moguls of
holding companies would be something more
than human if they gave their attention to ef-
hcient management rather than to legalized
robbery.
N his important work on Main Street and
4 Wall Street." Prof. William = RIPLEY makes
the following comments on .se devastating re-
suits of holding company manipulations:
What an amazing tangle this all makes of
the theory that ownership of property and re-
sponSibility for its efficient farsighted and pub-
ic-spirited management shall be linked the one
TO the other. Even the whole theory of business
profits, so painstakingly evolved through wears
OF academic ratiocination, goes by the board All
the managers, that is to say the operating men.
are working on salary, their returns, except on
the SIDE being largely independent of the net
result OF company operation year by year.
The motive of self-interest NAV even have
been thrown into the reverse, occasionally, so
lar as longtime upbuilding in contradstinction
10 quick turnover in corporate affairs is con-
cerned And what has become of the relation
between labor and capitall What guaranty NAV
POSSIBLY be given by the real owners to the work
ing class that there shall not be taken from
1t an opportunity for future welfare and de-
velopment as a result of these changes?
Verltaoy the institution Of private property
underlying our whole civilization. is threatened
at the root unless We take heed"
ME suicidal character of these holding COM
Il pany methods is all summarized bv Ben
janin Mandel in commenting on the authorita-
tive work Of Berle and Means The Modern
Corporation and Private Property"
The corporate revolution has changed the
very motives Of those at the head of industrial
enterprise. In the operation of the corporation
the controlling group can serve their own
pockets better by profting at the expense of
the company than by making profits out of it.
AS their proportion of the holdings decrease.
and both profits and losses of the company &C
crue less and less to them the opportunities of
pro1ting at the expense of the corporation ap-
pear more directly to their benefit
The ruling princes of industry have become
disloyal to the interests Of the huge corporate
empires they have themselves created, in their
desire to pursue their own provate stock-pobbing
designs Thus the corporate monster devours its
own children. the principles of private property
which have served as its legal justification and
undermineS the efficiency of the productive pro-
cesses. its economic basis"
Much sob stuff" has been disseminated by
the utility lobby concerning the interests of in
vesters in preserving the holding companies
What has actually happened to investors at the
hands of these holding companies is we'll de-
scribed by Prof. Ripley:
"A multitude Of people-a horde of bewildered
investors little left in the world but ashes
These are all that remain of the precious fruits
of years of self-denial and of hard labor A
raid upon the thrift and industry which lie at
the very roots of our orderly civilization and
culture has been, and still is. under way.