Evening star. [volume] (Washington, D.C.) 1854-1972, 1938-08-08
s. f. C.'S UTILITY
PLANS REVEALED
Program for 'UnsCramb|ing'
Assets Described as
Evolutionary.
H the Associated Press.

b the Associated Press.
mission is writing new and exciting
chapter in the history of the public
utility industry.
When it is completed, historians
probably will call it: "Integration-
u how $4,000, 100000 of utility as
sets were unscrambled."
Chairman William o. Douglas Of
the commissions asked heads of Sc
utility holding Ar,ilpanies last week to
submit their ctans for corporate and
geographic simpllfication under the
Public Utility Holding Company Act.
The task may take years. but tn"
commission will not endeavor to
hasten the work unduly The job is
Evolutionary rather than revolution
Gy." Mr. Douglas commented
During the last 20 years the utility
Industry has grown spectacuiarly.
Curious Hodge Podge.
In the l920's there was a franctic
scramble by numerous financial in
terests to acquire control of the OPP
Grating units in individual cities
These purchasing concerns-holding
mpanies-bought controlling inter-
ests in operating plants throughout
the country
The result was a curious hodge
podge of financial and corporate rela-
nuH;.c,,ips. The holding companies.
most of which had headquarters in
the large r>,ancial centers, were in
effect the Arents.
But the operating members of the
family 500" became iumbled in their
relationship to each other. Further
more, when strung together. many OF
these systems presented no closely knit
biographical units Subsidiaries of
iival companies cut across each others
territory, and in some instances these
operating units were flung helter-
Gkelter half way across the continent
The Public Utility Act of 1885 was
designed to put an end to all that.
i was bitterly fought by some holding
company executives who contended the
holding companies afforded the bene-
fits of mass production efficiency.
System Defended.
They insisted that through the hold
Ing company system. small operating
units got the benefits of highly skilled
technical staffs They argued also
that with their banking connections,
financing could be arranged on more
advantageous terms for subsidiaries.
Some legal experts think the indus
ty may contest the legality Of the
qualification section of the law. but
n,ly the utility chiefs themselves can
Rasver that question. Meanwhile the
eecurities Commission has the Job OF
SEEING that this provision is enforced.
What is IMMIGRATION" What steps
must the S. E. c. take to bring 1t
shout?
Officials have outlined some Of the
commissions views as follows:
/. An "integrated" system means
me whose utility assets are physically
iaterconnected. or one which can be
Erlng together into single Closely
Welded system in a single area
2. The S. E. c. will not condone in
definitely development of power sys-
TENS which stand in the way OF cheap
PRODUCTION, uniformity Of rates and
simple corporate structures.
3. The industry will be urged to
5ollow those paths which will lead to
elimination of absentee management
and control in financial centers.
4. Without laying down any hard
and fast rules, approval will be given
to limitation of systems to a radius OF
a few hundred miles. Some elasticity
will be allowed for special circum-
stances.
6. As the commission piles up fur
ther experience under the law. it may
appear that amendments may help.
If So the S. E. c. will be ready to ad-
vocate any such changes.