The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1935-06-19
HOUSE DELETES
BAN UNFOLDING
COMPANIES
Death Sentence Taken From
Bill by Subcommittee,
Defying President
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Modification of the Admins
tration's drastic utility holding
company bill was agreed upon TO-
day by a House Interstate Com
merce subcommittee.
Climaxing months of conSidera.
ton, the committee eliminated
the provision requiring dissolu'
ton of the companies after 1910.
In the face of Congressional
opposition, President Roosevelt
today reiterated his hearty sup
port of section IL, the death
sentence" in the utility bill.
Loss to Investors Cited
At press conference, the
President pointed out how the
earnings of operating companies
controlled by holding companies
are "milked" through an intri-
cate Intermediary structure so as
to deprive the investor of a full
return.
In place of the death SEN
tence," the House committee sub
stituted a provision authorizing
the Securities and Exchange
Commission to require each hold
ing company system to confine
its operations to one integrated
public utility system.
Should the commission find,
however, that such limitation is
not in the public interest, it is to
require the limitation Of the oper-
atoms of the holding company
system to such number Of inte-
grated public utility systems as it
may find included in the holding
company system consistent with
the public interest.
NOn-Utility Holdings Hit
While the commission may order
the companies to divest them.
selves of non-utility properties
whenever it finds the retention
of such properties inconsistent
with public interest, it cannot re-
quire the companies to rid them
selves of their foreign interests.
The committee also drafted a
provision Subjecting the registered
holding companies to the ordinary
corporation income tax with re-
spect to Is per cent of any divi,
dends received from subsidiaries
or from any other holding COM
pany or the subsidiaries thereof.
The committee eliminated a
a prohibition on subsidiaries en-
tering into or performing service,
sale, or construction contracts
with public utilities in the same
holding company system.
Close Regulation Sought
Such services in the future,
however, will be placed under
close supervision of the commits.
sion and cannot be carried for.
ward in contravention Of its
rules, regulations, or orders.
President Roosevelt said he had
no objection to so-called first.
degree holding companies pro.
Vided they operated in substantial.
ly contiguous territory. but point
ed out if their operations were
spread over a wide area they be.
came investment companies.
The bill as it passed the Senate
the President pointed out, would
eliminate such wholly intrastate
holding companies as Niagara
Hudson from the death sentence
Dealing with objectionable
types" Mr.. Roosevelt said that
where an operating company was
earning 81 on a 500 investment
that 81 went up the line through
a series of Intermediary com
panies so that before it reached
the top the investor was lucky
if he got 81.
The organization chart Of the
Associated Gas and Electric Com
pany is most extraordinary in con
nection with this complicated set
up, the President said.