Evening star., 1940-01-29

together again. 'SSSE' S''%:'
The clock for David Lawrence.
the moment is the electric light and
power industry, but if what Con-
gresS has authorized is really con-
stitutional then all the other clocks
composing the American economic
system can be taken apart any time
a whimsical majority in Congress
says the word.
If the combining of two or more
persons to possess an ownership in
a electric light and power holding
company is not legal, then Congress
has the constitutional power to say
whether two or more farmers can
get together and own more than
one farm in given county or in
counties not adjacent and whether,
indeed, any kind of joint ownership
of property in America that is not
geographically integrated is one spot
selected by a bureaucratic commits
sion is permissible.
The present adventure in tinker
Ing with a $12,O00,O00,00O industry
means that for the next few years
there is bound to be stagnation If
not deflation while the whole power
industry is plunged into chaos, thus
interfering with expansion and re-
employment.
Was Twice Rejected.
Responsibility for this piece of
radicalism, though it more closely
resembles fascism than any other
ism, can be placed solely on the
shoulders of a rubber stamp Con-
gress which in 1884 was whipped into
subservience by a specious cry Of
supporting the President" The
House of Representatives twice re-
jected the death sentence" for
holding companies and then the
Senate passed the provision by the
narrow margin Of one vote. The
bill that finally was adopted after
conference between both houses was
a compromise so ambiguously word
ed that it gives discretionary power
to commission of five without pre-
senting any standards.
Many persons have been misled
into thinking that the proposed dis
solution of holding companies is
Just like the disintegration of the
tobacco and oil trusts ordered sew
eral years ago by the Congress and
the Supreme Court. But the diff
ference is that the tobacco and oil
companies acquired their properties
In what was regarded as an illegal
manner after the Sherman anti
trust law had been passed forbiddlng
such combinations.
All the utility holding company
properties were lawfully acquired
and approved under State govern
mental authority before the new
Federal law was passed. In other
words, an American investor who
put his savings in piece of prop
erty whose management complied
with the letter and spirit of the
State and Federal laws then existing
must now subject his holdings to the
hazards of a dissolution by the Fed
eral Government, the threat OF
which has already forced market
prices downward and produced in
calculable losses to honest investors
and honestly financed companies.
Associated Gas Action.
The proposed application of the
"death sentence" was never in
tended by public opinion to affect
any but the intermediate holding
companies. With the removal OF
the Associated Gas & Electric Co.
structure from the scene by means
of the recently initiated bankruptcy
proceedings, the only important case
of pyramided holding companies has
really been eliminated.
What the country faces now is an
interference with the arrangements
of hundreds of well-adminfstered
operating companies. While the
Securities and Exchange Commits
sion officials insist that investors
will be protected, this sort of assur-
ance from New Dealers has proved
meaningless in connection with the
handling of the T. v. A. purchase,
where money paid for common stock
was wiped out by Government con-
fiscation, so that reliance concern
ing protection Of investments cannot
be placed on what is promised now
by New Deal agencies.
The present ambiguously worded
law permits the S. E. c. to favor one
holding company against another
because the discretionary power is
so broad. What Congress ought to
do is to legislate an exact method
Of integrating holding company sys-
TENS, prescribing the right formula.
The utility companies, however, are
virtually estopped from asking Con-
gress to clear up the mess because
in the public utility holding COM
pany law is a provision which nulli-
fies the constitutional right OF petit
ton. Any utility company execu-
tive who talks with any member OF
Congress must in effect secure per-
mission from the s. E. G. first. Un-
der those circumstances the $12,-
OO0,000,000 industry is helpless, and
the Nazi party in Germany could
hardly have formulated a better de-
vice to prevent autocracy from be-
ing checked in the arbitrary exer-
else of its powers than the wording
of the "anti-lobby" clause in the
existing law.
Congress is not in the same mood
today that it was in the rubber
stamp days Of 1884. But will Con-
gress rise to the occasion before a
year of deflation and economic
chaos is introduced? The utility
companies are under State regula-
ton and they can be placed under
severe Federal regulation. But the
present law goes farther than mere
regulation by ordering the owner
ships dissolved and managements
upset, which means that expansion
programs, purchases of raw mate
rials and employment will be ad-
versely affected. The death sem
tence" provision of the utility law,
which probably would be upheld if
taken to the New Deal Supreme