Evening star., 1935-06-19
PRESIDENT FAVORS
HOLDING COMPANY
CLAUSE IN BILL
Expresses Opinion as House
Group Recommends
Drastic Revision.
AMENDMENT WOULD
GIVE S. {. c. POWER
Roosevelt Says Senate Provisions
Eliminating Utilities Structure
Would Avoid Evils.
BY the Associated Press.

BY the Associated Press.
Approval of the controversial Sec
tion of the utilities holding company
bill providing for eventual elimination
of holding companies not in adjoining
territory was voiced today by Presi-
dent Roosevelt.
He spoke at a press conference al
most at the same time that House
Interstate Commerce Subcommittee
recommended to the full committee a
substitute measure drastically amend
ing the provision of the Senate bill
for abolishing this type of holding
companies.
Under the amended bill, the Securi-
ties and Exchange Commission in
general could require each holding
company system to "confine its op-
erations to one integrated public
utility system"
A statement issued by the subcom-
mittee said that 'if the commission
finds that such a limitation is not
necessary in the public interest, it is
to require the limitation of the op-
erations of the holding company
system to such number of integrated
public utility systems as it finds may
be included in the holding company
system consistently with the public
interest"
The Senate-approved bill for which
the subcommittee hoped to substitute
its version contains the controversial
abolition feature but provides that
final arbitrary dissolution does not
have to be accomplished until 1912.
Tax Provision Inserted.
Another variation from the Senate
measure proposed by the House group
was a provision that holding COM
panies, all of which must register with
the commission, will have to pay, after
December 81, 1887, corporation income
tax on is per cent of any dividends
received from subsidiaries or other
holding companies or their sub
salaries.
This was viewed as a concession to
Representative Pettingfll, Democrat.
Of Indiana, who has held out, through
the long weeks the subcommitte
wrestled with the measure, for q 2
per cent corporation tax applying to
dividends received by each company
from another company in the group,
with a view to discouraging pyra-
mided set-ups.
Chairman Rayburn of the full COM
mittee hopes the measure may be re-
ported to the House by the end of
this week. There was every indication
that, with President Roosevelt not hav-
ing receded from his abolition stand,
efforts would be made to put the So
called death sentence" clause back
in the bill.
Intrastate Unaffected.
In response to an inquiry at his
regular press conference, the Presi-
dent emphasized that the legislation
which has been locked in the House
Interstate Commerce Committee did
not affect intrastate companies, such
as the Public Service Corp. OF New
jersey and the Niagara Hudson Co.
In New York.
He went on tc explain what he
termed evils which he hoped to elm
mate by the legislation.
He referred TO the Associated Gas g.
Electric Co. and a chart represent
ing an organization Of this type
he said the chart would show per-
haps 100 little circles at the bottom
of the sheet-oDerating companies.
Most of these companies, he said, were
properly capitalized and making
money, for instance, 81 on a 500
investment
This 81 return, ne said, then goes
up in a zig-zag course on the chart
through perhaps as many as $500
circles-representing the intermediate
holding companies, the supply COM
panies, the financing companies and
the like.
On the way up, he said, this 81 is
MIXED all along the line, so that when
it gets to the top holding company, If
lucky, it represented about 81.
To Eliminate Firms.
The objective, he emphasized, Is TO
eliminate intermediate companies so
that when the 81 gets to the top it
viii be somewhere near ST.
Again he emphasized no objections
to holding companies which represent
operating companies in adjoining ter
ritory, but he asserted that when these
holding companies related to busi-
nesses scattered over wide area, they
became investment companies.
In response to inquiry, Mr. Roose-
welt disclosed ne would not object to
stock being held by one company in
another if it were broken up into sep
arate groups, so long as these COM
panies did not attempt interlocking
management.