The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-07-17
ASSOCIATED GAS
NO. | bad GUY
IN UTILITY WAR
Roosevelt Cited Company as
Sort He Wants to
See Eliminated.
BY RUTH FINNEY
Times Special Writer

=
headlines through the long utility
fight
Associated" was named by Presi-
dent Roosevelt as an example Of the
sort of holding company structure
he believed should be eliminated.
II was the Associated, along with
several other companies, which the
committee Of public utility execu-
tives refused representation on its
Washington organization for oppos-
ing the holding company bill.
It was the Associated which SEN
atOr Alben Barley ID, KyD accused
Of publishing newspaper advertise
mentS containing not a single
truthful statement" in their effort
10 defeat the holding company bill
and Of spending 100000 for sdver-
tisements.
Accused Of Huge Write-up
1t was the Associated listed by the
Federal Trade Commission as hav-
ing more Write-ups in its top COM
panies. sub-holding companies and
operating companies than any other
utility system. The total listed by
the trade commission as a write-up
IN this systems securities, was 1854
140.6l6.
1t was the complicated structure
OF ASSOciated-262 companies cover
ing % states that Rep. Sam Ray
burn ID. Tex was trying to show
the House of Representatives when
Republican members accused
Thomas Corcoran. RFC attorney, of
being in the lobby Improperly. Mr..
Corcoran was fastening Mr.. Ray
burns chart on an easel.
It was the Associated cited by
Senator George w. Norris (R., NebD
as one Of the striking examples Of
how operating companies are re-
moved from their owners by as much
as 10 layers of holding companies.
Norris Classic Example
This is Senator Norris example
"PatchogUe. a city in New York
of about 5000 people, is supplied with
electricity by the Patchogue Electric
Co. Of New York. The Patchogue
Electric Co. of New York is owned
by the New York Electric and Gas
Corp. incorporated in New York.
The New York Electric and Gas
Corp. is in turn owned by the New
York Electric Co. incorporated in
Delaware The New York Electric
Co. is owned by the Mohawk Valley
Co. Of Delaware. The Mohawk VAL
ley Co. of Delaware is owned by the
Mohawk Valley Co. of New York.
The latter company is owned by the
Rochester Central Power Corp. in
CorpOrated in Delaware. That is
owned by the Associated Gas and
Electric Corp. of New York, owned
by another corporation known as
Associated Securities Corp, incor-
porated in Delaware. The Associ-
ated Securities Corp. of Delaware is
owned by the Associated Gas and
lectric properties, incorporated in
Massachusetts, and that corporation
is o"ned by Hopson and Mango"
265 Per Cent Profit
Federal Trade Commission records
disclose that j. 1. Mango and H. c.
Hopson own and control the entire
5000, 100000 Associated Gas g. Elec-
trio system by reason of an invest
ment of $298,318 in Associated Sc
curities Co. On that investment
they Melted return of 164 per cent
in 1929.
Investment of another $4,000 in
two-nan trust association. Asso-
ciated Gas e. Electric properties. as
sured them of perpetual control of
the system. On this investment they
Melted POS per cent in 1929
The trade commission reports that
Associated Gas 81 Electric Co. had
three classes of common stocks, six
classes of preferred stocks. four
classes of preference stock. seven is
sues of secured bonds and notes, "a
closes of debentures. (many of
them convertible into preferred and
common stocks of the holding COM
panY Of its subsidiaries or afiliates.)
and four series of investment GER
tificateS.
Case Held Extreme
In addition the company had va
rious stock purchase warrants and
rights outstanding from time to
time.
The commission commented that
this is perhaps an extreme case:
that the company has disposed OF
securities to the public which is
undoubtedly perplexed to understand
intelligibly the status of any par
ticular security" and which would
tax the ability of a financial ex-
pert"
A trade commissioner examiner
testified he found two cases where
the board of directors of Associated
Gas & Electric Co. passed retroactive
resolutions ratifying various issues of
securities put out without advance
permission.
Intricate Service System
The trade commission has report
ed on an intricate system by which
top companies have collected Servic-
ing fees from the operating COM
panieS.
New York State Electric and Gas
Corp, the commission says. paid in
two years a total of 1857 ,940.42 in
management fees to the j. G. White
Management Corp, an A. G. & E
subsidiary. and in addition another
s473.4S278 to A. G.. & E. Co. and
Associated Electric Co. for the same
purpose.
The report says: Representa-
tiveS OF Associated Gas and Elec-
trio Co. admitted to the commits
Sion's examiner that Associated
Electric Co. performed no services
and that in respect to any services
rendered by Associated Gas ano
Electric Co. there were no ex-
penSeS."
Ss,970,944 Paid in Fees