Evening star., 1938-04-04
Holding Firms Death Sentence
In Hands of Ex.Lumber Man
C.. Roy Smith Describes
Self as Practical
Progressive.
BY the Associated Press.


Back in the days when the utility
industry was booming ahead, pushing
the gas light into history, a young
boy got job stacking planks in a
western lumber yard.
On good days he made as much as
so cents. The most important thing,
his foreman said, was to get the align
ment straight.
Today, bulky, plain-faced man Of
38, the one-time lumber-stacker has
another job of getting the alignments
straight. This time he is working, not
with planks but public utility assets
totaling ,OO0,oO0,0Oo.
His name is c. Roy Smith; his job,
director of the public utilities division
of the Securities and Exchange Com
mission.
1t is this division, tucked away OBJ
scurely in back corner of the S. E. c.,
which swings into action now that the
Supreme Court has decided that the
registration provision of the holding
company act is legal
Sponsored by Healy.
OF the divisions work, S. E. c..
Chairman William o. Douglas said
recently, Perhaps the most important
task which lies ahead of us is the ad-
mlnistration Of the public utility act
of 1885,
Sponsor of the utility section is
Commissioner Robert E. Healy, who
as general counsel for the Federal
Trade Commission, beginning in 1928,
laid bare the facts which eventually
led to passage of the holding company
act.
Mr.. Healy-spare tall and white
headed Vermonter-Will hold the tiller
OF policy. But to Mr. Smith. heading
large battery of lawyers, accountants
and statisticians, falls the RESPONSE
hility OF actually getting the work
done
The job is to carry out what some
utility men have called the death
sentence" on utility holding companies.
In the less spectacular terminolopy
OF the holding company act itself. this
section of the law is headed merely:
"Slmplification of holding company
systems"
Tangled Relationships.
Most holding companies grew up
fast. AS they grew-the S. E. c. and
Others contended-they made many
nasty corporate marriages and did a
sood deal of careless adopting. The
result was that many systems deyel-
oped tangled family and financial re-
lationships.
lhere were, in effect. first cousins.
uncleS, step-fathers and fourth-cous-
ms twice removed At the base of
the family tree were the operating
companies. These ground out the
power and made the profits.
But the profits in some instances
traced an intricate course back into
the pockets of the other members of
the family. Those on the receiving
END IN return performed varying serv-
ices. Some helped the offspring raise
money. Others farned out their en-
glneering experts.
The holding company act calls for a
malt to all this. 1t saws there must
be a wholesale series of divorces and
olslnherltances. Summed up. it aims
10 cut down the utility family to thA
simplest form-a grandfather, parents
and children. All the rest must go.
Man of Interest.
Since he will stand at the neck
OF the bottle through which must flow
the S15,000,000,0O0 utility assets on
thelr passage to a simpler family, Mr..
smith becomes man of some interest.
Some around the S. E. c. think he
stacks up against one of the toughest
Jobs in Washington today.
Who is he? What are his uualifi-
cations? What are his attitudes to-
ward the task he faces? How did he
reach his present post?
He was born in Delta, Iowa. in
1899. His life, he says, was a routine
affair until his family moved to Cali
fornia. He studied law at the Univer-
slty of Southern California, was
graduated in 1922.
Private law practice in that State
followed-and with it series of cases
which eventually led him to the
S. E. c. Curiously enough, he was de-
tending some oil interests against
charges by the S. E. C. He won.
Later he got call from Washington
asking him to take over the COM
missions oil and gas division. This
he did with so much energy that last
summer when the commissions utility
chief. William Gilman. resigned, Mr..
Smith got the post There he stands.
In looks he is not far from homely.
He tops 6 feet by inches, has thick,