Evening star., 1938-03-29

holding company -. ,-
law, they would ' 1"'en's'
become subject to other provisions Of
the law which are in their Judgment
plainly outside Of the power of Con-
gress.
The Securities and Exchange Com
mission appealed to the utilities to
register and formally pledged that
they would not lose any constitutional
rights or the privilege of raising con-
stitutional questions when other
clauses OF the law came into opera
ton. But the say-so of the S. E. c..
was insufficient. The utility COM
panies chose to have this point adjudi-
Gated by the Supreme Court of the
United States because. after all, ex-
ecutive commissions change rules
from day to day and some of them do
whatever the President in his political
moods happens whimsically to desire
them to do.
Assured on Registration.
Today the utility holding companies
know that by filing registration Ger
tifcates they incur no other obliga-
ton. They now have such an assur-
ance from the Supreme Court of the
United States in the following Ian
guage of the opinion by Chief Justice
Hughes:
"All rights and remedies as to all
other provisions of the act are, as We
have seen. expressly reserved to the
defendants by the decree. Nor can
1t be said that this reservation is
1llusory. II this decree is affirmed it
Will constitute specific adjudication
that registration will be without preju-
dice to future challenge of the validity
OF any provision Of the act, or require
ment of the commission outside of
sections IA and (the registrat ton
provisions)
Thus does the Supreme Court limit
to the narrow point Of registration
It's decision on the Public Utility
Holding Company Act. It might we'll
be asked why the utilities fought the
suit If registration was in itself con-
sidered innocuous, or why the mere
disclosure of data as required by the
registration statement met with their
opposition in the courts.
Lands Frightened Companies.
The answer Is that the regulatory
power as invoked by the New Dealers,
especially at the outset of the present
administration, really knew no limits.
Thus James M. Lands, who was
chairman of the Securities and Ex-
change Commission at the time the
public utility holding company law
was enacted, made public address
IN which he insisted that registration
was the essence of regulation and con-
troll. This naturally alarmed the hold
Ing companies, who wanted something
more definite on which to base their
submission to the formula of regis
tration. The making of a rule by the
3. E. c. to the effect that registration
did not in any way constitute a waiver
by the holding companies of their
constitutional right to attack other
provisions of the law was considered
At the time as merely a ruse to draw
the holding companies into registra-
ton. Then it would have been simple
matter for the s. E. C. or some other
part OF the Government, like the
Department of Justice, to contend, as
happened in one case, that acceptance
Of the benefits Of statute precluded
an attack on the constitutionality of
that statute.
But now, at all events, the Supreme
Court has written into a formal opln-
Ion the assurance that registration
means registration and nothing else,
and that whatever the S. e. c. now
does as q part Of its effort 10 enforce
other provisions of the Public Utility
Holding Company Act stands separate
ly and will doubtless be ruled upon
in the courts as each issue of alleged
unconstitutionality arises in a specific
case.
Death Sentence" Test Likely.
The probabilities are that the ia
NOUS death sentence" clause, which
is the heart of the Public Utility Hold
ing Company Act, will now be tested
in separate case. In other words,
all the holding companies will regis
ter. and when the S. E. G. takes its
next step the courts will be asked
OF rule on whether Congress has the
actual right to abolish holding COM
panies and force the loss of billions
ct dollars of actual money invested.
Incidentally, the Supreme Court cau-
uously expressed its opinion on the
matter of forbidding the use of the
mails to companies violating the Pub
lie Utility Holding Company Act.
The court did not say that the with.
drawal of the privilege to use the
mails could be applied to any pro-
vision Of the law but only to COM
panies refusing to register. Said the
Supreme Court:
And while Congress may not exer-
else its control over the mails to en-
force . requirement which lies outside
It's constitutional province, when Con-
gress lays down a valid regulation
pertinent to the use of the mails it
may withdraw the privilege of that
use from those who disobey."
This Is but another way of saving