Evening star., 1940-04-07
Utility Defies 5. f. {.
On Death Sentence
Challenges Legality
Engineers Public Service
First to Reply, Fights
Integrotion Proceedings

First to Reply. Fights
lnteerotion Proceedings
BACKGROUND
Center of bitter congressional
fight, Holding Company Act was
passed fue years ago in effort to
break up complicated financial
structures Which link major utili-
ties. So-called death sentence"
clause requires utilities corporate
structures to be Simplifed and
directs that operating companies
OF holding company form single
system or be in contiguous areas.
By the Associated Press.
The Governments attempt to en-
force the holding company death
sentence" against the Nations nine
largest power systems met blunt
resistance yesterday from the first
company to reply fully to the Sc
curities and Exchange Commissions S
show-cause order.
While acknowledging that Its
operations were not confined to the
single integrated public utility sys-
tenn" defined by the Holding Com
pany Act, Engineers Public Service
Co. declared that the death SEN
tence" was unconstitutional. II pc
titioned the commission to dismiss
integration proceedings.
Last February the commission
started serving notices on nine
companies that, in its opinion, their
systems did not comply with the
law and asked each company what
action it proposed to take. Tenta-
tive dates for hearings were set.
Electric Bond & Share Co., the
Nations largest system, replied first,
but merely asked an extension of
time for filing its formal answer.
Sweeping Attack on Act.
Engineers Public Service met the
deadline for its answer yesterday
with a sweeping attack on the in
tegration section of the act.
The other seven major companies
against which the S. E. c. is NOV
ing are: The Middle West Corp,
the United Gas improvement Co...
Cities Service Power G Light Co.,
the Commonwealth & Southern
Corp, Standard Power & Light
Corp. the North American Co. and
the United Light g. Power Co.
Wendell L. Wiiikie, outspoken big
business critic of the administra-
ton, who has charged that the New
Deal is "out to get" him, is presi-
dent of Commonwealth & South
ern.
In instituting proceedings, the
S. E. G. emphasized that they were
"in no sense punitive or prosecu-
tory" but merely an attempt to learn
what each company should do.
No official comment on Engineers
reply was made Immediately. How
ever, S. E. C. procedure requires
public hearings, and a court test of
the death sentence" appeared prob
able, since s. E. c. orders are subject
to court review.
Forced Liquidation Charged.
Engineers contended that, to COM
ply with the integration section, 1t
would be forced to dispose of large
blocks of securities and other assets
within a maximum period of two
years. which would result in "a
forced liquidation" of its assets.
1t would not be possible in a de-
pressed market, the company con-
tended, for Engineers to realize "the
fair value" of its holdings and its
common stock would be greatly de-
preciated in value by virtue of priori-
ties of preferted stockholders"
The section, Engineers contended,
would destroy investments, limit the
rights and powers OF the several
subsidiary companies under State
laws and charters, breach contracts
and limit the rights conferred on
officers and directors by State law.
Therefore, the company contended
that the section is unconstitutional
on the grounds that it interferes
with intrastate commerce, unlaw-
fully exercises the commerce powers
of Congress, denies due process Of
law. takes private property without
just compensation, unlawfully dele
gates legislative and judicial power
to the s. E.. G. and otherwise vio-
lates the Constitution
Engineers Public Service controls
electric companies in is States and
gas companies in three of those
States. The subsidiaries are West
ern Public Service Co., Key West
Electric Co., Savannah Electric &
Power Co., Northern Kansas Power
Co., Cult States Utilities Co., Mis-
souri, Service Co., Mesilla Valley
Electric Co., Virginia Electric q
Power Co., Ell Paso Electric Co. and
Puget Sound Power l. Light Co.
During the Chinese new year col
lectous In Teutsin jumped q PEI
cent.