Evening star., 1938-10-15

1--WE tOtSS dlc aW&88$ II
needei-when it -
is bit unpleas-
ant to inject the matter Of what the
record shows. Maybe, too, the admin
iStration wants to let bygones be by
cones and is trying to retreat from the
clumsy position into which it forced
itself on the utility problem, and 1t
ought to be permitted to retreat as
gracefully as possible.
But even if the utility spokesmen
are ready to forget the past and try
to work out peacefully their problems
with the Securities and Exchange
Commission, it is more important that
the investors who have funds in utili-
ties or those who might be tempted to
put their savings in new issues Of util-
ity securities should have all the facts
lest the press be accused of going along
again with the ballyhoo of speculation
which in 1929 caused no small amount
of inconvenience if not loss to the
persons with savings.
When the death sentence" was
proposed, it came in the form Of
, message from the President of the
United States to Congress. He didn't
give any quarter then. He wanted
holding companies abolished. Con-
gress alone revised the death SEN
tence" clause after a bitter struggle
with the Administration lobbyists of
the brain trust who insisted on the
full letter of the abolition plan.
death Sentence" Revision.
1t Is true that Congress did finally
revise the death sentence" clause so
z that there would be a certain amount
of discretion placed in the hands of
the Securities and Exchange Commits
sion. Holding companies which were
geographically integrated and which
could meet other requirements of the
S. E. c. we're to be permitted to live.
If they didn't conform, they were to
die.
The utilities fought the issue out in
the courts. They thought that "regis-
tration" with the S. E. c. meant con-
troll and possibly death. The courts
in effect assured them that one step
would be taken at time and that if
after registration the government
tried to take their property without
due process the conStitutionality of
the death sentence provision could be
challenged.
Now Chairman Douglas Of the S.
E. c. and his associates are much more
pratical minded than some of the
brain trusters who inspired the origi-
nal law and there is a clear recogni-
ton by the S. E. c. that the utility
industry has right to have the sword
of Damocles removed instead of kept
hanging over its head. Accordingly,
when the chairman of the board Of the
Electric Bond &, Share Co. announces
in his annual report to stockholders
this very week that he wants to CO.
operate with the S. E. c. and work
out a plan under the so-called death
sentence" clause, the Administration
is quite happy about it.
Presidents Enthusiasm.
Publicity from Administration
sources pointing to this evidence of
cooperation has been Well-timed by
the Administration and the President
himself showed his qualification at the
Friday press conference going SO far
in his enthusiasm as to change the
name of the death sentence to a
health sentence"
This is important neWs-at least for
the time being. Discretionary authori-
ty is not permanent authority and
the utility industry which makes its
peace with one set Of Commissioners
may find much different interpreta-
ton under another personnel, a risk
which the investor is supposed to know
about. But while the Administration
was rejoicing about the Electric Bond
g. Share statement to its stockholders,
it discreetly didn't emphasize para
graphs of that report which revealed
more than anything else why utility
companies have hard time borrow
ing money. And until that obstacle
is removed the utility industry will
have hard time borrowing new
money on common stocks. This part
of the report says:
Now I want again to bring to your
attention the subject of federally
financed competition with privately
owned utilities. The Government
stake in the power business has in
creased many fold in the last five and
half years"
Competitive Projects.
Mr.. Groesbeck went on to outline
the various projects, and added:
AT the present time projects, which,
in our opinion. are competitive with
the private industry number approXi-
mately 140. The ultimate capacity of
the Government-finance plants is
estimated at almost 100000 kilo-
watts, equal to more than 20 per cent
of the capacity of all the private plants
in the country.
More than half of the Govern
ment's investment in the power field
is in these new generating plants, con-
structed in areas where an ample
power supply already exists. The large
markets in these areas already are
served adequately by existing utilities.
BY building these new power plants
and by giving and loaning money to
construct transmission lines and COM
peting distribution facilities in cities
and towns which are centers of power
demand, the Federal Government has
brought about situations where the
private companies are faced with
either selling out at sacrifice prices
practically dictated by the purchaser,
or the alternative, destructive COM
petition"
And maybe in a few weeks the
President will announce that there is
to be no more T. v. A. competition
opd ants m cities ore to ho with