Evening star., 1935-03-07
HOLDING COMPANY.
BILL IN MUDD[E.
Protests From Investors
Bring Promise Of Un-
favorable Amendment.
BY DAVID LAWRENCE.

ILUbCSIS A4AAS~SsAS -
all parts of the country-whoSe life
savings might be wiped out if the
proposed bill to destroy holding COM
panies became law-have led to a
shift of tactics on the part OF the
sponsors of the legislation.
It now is being promised that the
bill will be amened so that holding
companies will not be forced out of
existence by 1910, but that the
authority to impose the death SEN
tence shall be lodged in a Federal
commission.
This means that upon the whlm
or arbitrary judgment of few men
in Washington, whose announced pur-
pose is to destroy as many holding
companies as possible in the electric
light and power field, will depend
whether the investments of those who
now own securities will be worth
something instead of nothing.
Deflation. therefore. would continue
until lengthy inquiries and investiga-
tions have been exhausted over a
period of years.
Not Regarded Concession.
What appears to be a concession,
however, is really no such thing. The
original bill provided for discretion
ary power in a commission to de-
termine what holding companies shall
survive. The question was to be de-
cided upon the basis of economic and
geographical integration, terms suff-
ciently broad to kill of any holding
company at any time.
The investors in holding companies
In the electric light and power indus
try-and there are millions Of them
among the widows and dependents in
this country-will have far more
chance of salvaging their savings
thorugh the courts than they will
through any Federal bureaucracy in
Washington.
For the proposed legislation IS
plainly unconstitutional. There is no
authority under precedents or pre-
vicus decisions Of the Supreme Court
for the idea that holding companies
can be brought under interstate COM
merce.
OPihhoA Va SePt NUeh"
The Supreme Court has held that
the transportation of electricity across
State lines is Interstate commerce,
but that when the electrical energy
or gas reaches a local company for
distribution, the interstate commerce
idea ends. Thus the only possibility
Of. Federal regulation is in connection
with the bringing of energy across
State lines, and this Is the task of
operating companies.
- The holding company is really an
ownership group and is no more sub
ject to Federal regulation than are
two or more persons who decide to
put their holdings in any operating
company together under a single trust
or management.
The sponsors Of the holding COM
pany bill are relying on the inter-
state commerce clause on the ground
that holding companies sell their Sc
curities in interstate commerce. But
the holding companies have already
consummated the sale of their Sc
curities and any new issues Of Sc
curities are subject to the jurisdic-
tion of the Securities and Exchange
Commission anyway.
Judging by the trend of decisions
IN the Federal courts lately, the hold
Ing company bill wouldn't stand up
against suit on its constitutionality.
But meanwhile securities are depressed
and damage is done to those who do
not know whether to sell their rapidly
declining investments or to wait for a
recovery based upon court decisions.
Declared Deprecated.
Some members of Congress who are
somewhat out of tune with public
opinion think that because holding
companies in the electric light and
power business have been the object
OF attack, the investors can be pun
1shed, too. One member of Congress
insists that the securities were not
worth what was paid for them origi-
nally. But neither we're many other
pieces of property. including land and
buildings on which the Federal Gov
ernment is now lending money.
If defiation is to be continued until
everything is reduced to the values to
be set by group OF Congressman in
Washington. then the unemployment
rolls will continue to increase and the
revival of industry will be postponed
indefinitely.
Il don't want to hear any more
about the widows and orphans" is the
remark attributed to prominent
member Of Congress who has been
receiving flood of protests from in
yestors. And that, unfortunately, ap-
pears to be the slogan of not few
persons in the New Deal Some Of
them are not interested in widows and
orphans or anybody else in distress so
long as the public is willing to lend its
money to pay Government deficits that
really ought to be paid out of taxes
collected from business and industry.
But the experience of other countries
teaches us that sometimes the public
loses confidence in the bonds and cur
rencies issued by those who show no
signs of creating the sound economic
conditions out Of which alone budgets
are balanced and the unemployed
given jobs.