Evening star., 1938-09-20
CHANGES
TO COME SLOWLY
S. E. c: Likely to Consider
Investors in Enforcing
Death Sentence.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, Sept. 20.-The S. E. c.
can probably be relied upon to pro-
ceed slowly and with due regard to the
positions of investors in administering
the integration provisions Of the Utility
Holding Company Act in the opinion
of the Standard Statistics Co. ,..
Thus. in the process of dismember-
ment, sale, interchange and integra-
ton there is little reason to fear any
destruction of actual values. But in
the process, as Chairman Douglas has
pointed out, in many cases lack Of
value will be revealed. In other words,
there are a number of holding COM
pany equities that have little, if any.
apparent liquidating value. That Is
why even at present low prices some
of the more speculative holding COM
pany equities still fail to discount the
threat of the death sentence"
Since the S. E. c. won its case
against the Electric Bond & Share Co.
last March there has been some clari-
fication of the position of utility hold
ing companies under the Holding
Company Act. All holding companies
have registered and have filed the
required data with the commission,
thereby indicating their willingness to
conform with regulatory features of
the law. Even as regards section
lib, the so-called death sentence
there has at least been an approach
toward agreement. The holding COM
panies, while maintaining allegiance
to the principle of investment diversi-
f1cation, have promised to cooperate
with the S. E. c. on the problems
under lib.
Letters Sent by S. E. c.
Last month, letters were sent by
the S. E. c. to 66 utility holding COM
panies, requesting the latter to SUBJ
NIT plans before December /, for con-
formance with the integration Q1b)
and capital simplification 1lD pro-
visions of the Holding Company Act.
The reason expressed by Chairman
Douglas of the S. E. c. for this move
was the necessity of having at hand
the plans Of all holding companies,
since the integration proposals of one
company might we'll affect other sys-
TENS. This development by no means
changes the status of utility holding
companies. 1t simply shows that the
S. Es c. is seeking to initiate action
by the holding companies.
1T is understood that practically
every holding company is working on
tentative plans despite the fact that
the law itself is obscure and that mos.
utility executives are still of the opin-
ion that complete physical integration
OF holding systems is impossible BY
submitting plans they will conform
with the law, yet will leave the actual
integrating Of properties, with the at
tendant problems Of financing acquisi-
tlons, paying capital gain taxes, etc.,
with the S. E. c.
Utilities Power Watched.
"Of considerable importance in de-
termining the prospects for utility
holding companies generally will be the
outcome of the S. E. C. hearings in
connection with the integra lion of
properties Of the Utilities, Power &
Light Corp. The S. E. c., by taking
the initiative under section lib against
this particular company, cannot avoid
its Interpretation Of what constitutes
"lntegration' as defined by the act.
In this particular case. of course, the
S. Z. c. may precipitate court action
as to the constitutionality of the act.
If legal action is taken before De-
cember, it may have an important
bearing on the action of utility COM
panles in complying with the order to
file plans with the S. E. C..