The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-11-28
ELECTRIC BOND
CASE IS Third
COURT TANGLE
Holding Company Suit to
Test ConStitutionality
OF New Act.
BY RUTH FINNEY
Times Special Writer

| WASHINGTON, Nov % - The
Governments suit against Electric
Bond Il Share to test the holding
company act makes the third time
in the last few years that the two
have tangled in Federal courts In
each previous scrap the government
won.
Electric. Bond & Share dafed the
Federal Trade Commission when the
latter began investigating the finan-
cial affairs Of holding companies 1t
refused to open certain of its hooks
to commission examiners. Even
tually it was forced to do so by
Federal court.
The second clash. between the
Government and Bond & Share
subsidiary involved constitutionality
Of the Federal water power act. The
Appalachian Electric Power Co. de-
fed ruling of The Federal Power
Commission that it could not build
q power project on New River with
out subiecting itself to regulatory
provisions Of the water power act.
The courts handed down decisions
that were a substantial victory for
the power commission.
Second Largest Holding Firm
BY most gauges, Electric Bond
81 Share is the second biggest
holding company group in the coun-
try. and it is allied in various ways
with the biggest group. the Nor
gans United Corp.
Electric Bond e. Share controls
companies producing 1876 per cent
Of the total electric energy gener-
ated, and United Corp. companies
produce 1913. Thus the two control
one-third of the countrys light and
power.
Each company owns stock in the !
other, and both own substantial
amounts of stock in Commonwealth
IL Southern. American Super-PoWer
Corp. and Columbia Gas q Electric /
George H, Howard, president of /.
United Corp. is a director of Electric /.
Bond e. Share, and sits with c. f. /
of Electric Bond & Share, on boards /
in which both groups are interested. |.
Serves Is Foreign Countries
Electric Bond Il Share operates
in &c states, serving 2,765,00 fam
lilies III about 5000 cities and towns
In addition it serves 13 foreign I
countries, from Mexico to India.
Immediately under it are three /
other large holding companies |
American Power e. Light Electric .
Power q Light and National Pow
err q Light Under each Of these I
are numerous subholding and OPP
Grating companies.
The trade commission found
write-ups in the Bond q Share sys-
tenn proper Of 1868 ISL ,238. and an
other $88,4926 $50 of write-ups in
American Gas e. Electric, of which
it owns II per cent voting control.
The total, $352,243. 1898, was far
larger than that found in any other
holding company group.
Practices typical of those which ,
called forth the holding company /
act were cited to Congress by the /
trade commission from Electric /
Bond &, Share records.
Report Warns Investors
The commissions report said. In |
1881 Electric Bond & Share received |
$9.870.312 or 80 per cent of its total |
earnings of $50 $50 ,483, from fees for
supervision, engineering, construc-
ton, auditing and special services.
Practically all these fees were col
lected from companies in the Elec-
trio Bond & Share group.
The total expenses Of the COM
pany in 1881 were $7,5l0,399, of |
which $5,547,510 was allocated to
services rendered. exclusive of Fed |
eral income tax. The fees collected |
for services received during 1881 !
were 1T per cent of the expenses /
allocated to services
On behalf of investors in Bond & ,
Share the trade commission said;
The methods used by Electric Bond .
e. Share Co" 49,. (to record receipt !
of stock dividends #. lend them
selves easily to causing very de-
ceptive statement of financial condi-
ton because 'unreauzed income IN
the form of stock dividends received /
should not be recorded as income