Evening star. [volume] (Washington, D.C.) 1854-1972, 1938-01-15

from the utility problem, and before
II was ended the investors In all cor
pora tons that might possibly be called
parent corporations with subsidiaries
had reason to feel uneasy.
For the President did not differen-
tiate. He said he didn't know why
there should be any holding companies.
On the surface this might seem a
plausible question for the President OF
the United States to ask if he had pre-
vjollsly defined Just what he meant by
holding company. But in the law
signed by Mr.. Roosevelt containing
the famous death sentence there are
provisions which sanction holding
companies. Here for instance, is what
section II provides:
THAT the commission shall permit
registered holding company to con-
tinue to control one or more addltlonal
integrated public utility systems. II
after notice, and opportunity for near
ing, il finds that "a each of such ad-
ditional systems cannot be operated
as an independent system without the
. loss of substantial economies Whlch
can he secured by the retention OF
control by such holding company OF
such system. and tb) all such addl-
tional systems are located in one State
or in adjoining States. or IN con-
tiguous foreign country: and (c) the
continued combination of such Sys-
TENS under the control of such holding
company is not so large considering
81 no ort ND
region affected as to impair the adj
vantages of localized management, ef-
fcient operation, or the effectiveness
Of regulation
May Have Own Definition.
The statement that all holding
ron,panies" should be abolished in all
lines of business would seem to lndi-
cate that either MIR. Roosevelt is using
4 definition all his own or that he
wants Congress to go further than 1t
has already gone in the death SEN
tence" clause.
Certainly 1t does not seem plausible
that the President meant any such
thing, for there has been no such leg
islatjon proposed and 1t is not likely
that in a press conference Mr.. Roose-
Welt would communicate matters OF
such vital importance, concerning
which he has not given the slightest
trtimation in his messages to Congress
or conferences with leaders there.
What Mr.. Roosevelt undoubtedly
had in mind was that a holdlr COM
pany with geographically diversified
investments. or a holding company
which exercised undue control over the
operating companies through financial
manipulation or interlocking directo-
rates should be subject to government
tai action of some kind.
If Mr. Roosevelt meant all holding
companies without distinction then
Is per cent of the companies listed on
the New York Stock Exchange would
be included in his alleged proposal OF
a new death sentence" The general
belief is that a parent company with
subsidiaries engaged in cognate opera
tions is immune from the presidential
han and that MI Roosevelt intended
something along that line, but did not
make 1t clear. as indeed he often fails
to do In his catch-as- ca tch-can con-
versations with the newspaper men in
the semi-weekly conferences.
Other Inconsistencies.
Two other elaring inconsistencies
stand out. Mr.. Roosevelt spoke of the
amortization Or paying off of the senior
bonds of operating companies as if
this was matter Of neglect on their
part. He does not realize or did not
stop to think that rates are fixed by
State commissions and that If he
wants higher electric light rates then
amortization can be speeded up.
The other point related to utility
valuation. Mr.. Wilkie having suggested
In his formal memorandum that the
utility companies which had been
valued under rules esta hlished prior
to March 4. 1888, should be confirmed
only up to that date and that the
prudent investment" method favored
by Mr.. Roosevelt be effective subse-
quent to that date. The President said
this would be compromising a felony
because if it were wrong before March
4, 1898. it was wrong now. The Presi-
dent overlooked the fact that the val
uation rules had been sanctioned by
the Supreme Court of the United
States and that it is hardly compound
ing felony for the utilities or any,
body else to obey rules established by
the Supreme Court. If these rules
should some day be reversed, that's
something else again. but even 50 it
Is hardly fair to accuse anybody of
compromising felony because he fol-
lows the rulings of the highest court
in the land Again it was a case of
spur-of- the-moment comment. which
does not put the President in a favor
able light before those who know the
subject or before the general public to
whom these matters must ultimately
be submitted.
On the u. S. in Business.
The Presidents most significant re-
mark related to future use of Federal
funds to drive private companies out
of business He failed to say the
Government would permanently stop
the practice. He merely said there
wasn't money in the budget now for
future commitments of loans to mu-
inequalities and that at the present
time the proportion of territory, pop-
ulation and power not affected by Fed
eral action was about IS per cent.
This is hardly = way to assure con-
hdence. for it Is but another way of
saying: 1.-The Government will not
kill you now, but will torture you to
Death"
How any investors can get conf
dence out of such statements and lend
their savings to utility companies Is
hard to understand. but here again
maybe the President didn't mean 1t
That way. In all fairness, Mr.. Roose-