Evening star., 1940-02-26
A Harmful Effort

A Harmful Effort
Responsible members of the New
Deal family. notably Attorney Gen.
eral Jackson and Secretary Morgen-
thau, have taken a position with
respect to the appointment of a
trustee for the bankrupt Associated
Gas and Electric system which may
seriously prejudice the reorganization
of that billion-dollar concern. Pos
sibly with the best Of intentions,
they have, in effect, sought to bring
about the selection of a trustee of
their own choosing by undermining
public confidence in any other choice.
At the moment the Associated Gas
and Electric case is before Federal
Judge Vincent L. Leibell of New
York, who must select trustee for
the huge public utility system.
Judge Leibell's task is not an easy
one, for the position Of trustee In
this case is one of great Importance
and responsibility.
Private holders of the systems
assets and liabilities are reported to
have united in urging the appoint
ment as trustee of John w. Hanes.
who recently resigned as Under
secretary of the Treasury. Under
ordinary circumstances this indicated
preference for man of Mr.. Hanes'
recognized ability and integrity
would carry great weight with the
court, but since Mr.. Hanes is not
New Dealer" his selection has been
vigorously opposed by New Deal
spokesmen, including the two cabinet
officers.
BY virtue Of $5,7OO0O0 tax claim,
the Attorney General and the Secre-
tary of the Treasury have direct
though relatively small financial
interest in the case and they have
exerted every effort to have the
Securities and Exchange Commission
designated as trustee. Unfortu-
nately for their purposes this pro-
jected excursion of the New Deal into
the field of public utility manage
ment encountered the opposition Of
Senator Wheeler and House Majority
Leader Rayburn, sponsofs of the
Public Utility Holding Company Act,
and the s. E. c. finally voted four-to-
one against accepting the trustee
ship.
This refusal was followed by COM
ments from Attorney General jack
son and Secretary Morgenthau
which, whatever their true intent,
unfortunately give the wholly
unwarranted impression that the
selection of a man Of Mr.. Hanes'
caliber might result in something
less than the fullest protection Of
the rights of all interested parties.
For some reason, the comments
of the two officials were set forth
in letters to. Senator Norris Of
Nebraska, who has no connection
whatsoever with the case, except
that, on the strength of information
cleaned from a newspaper article, he
had expressed the conviction that
the general body Of creditors and
security holders can never be con-
vinced of the complete independence
and disinterestedness" of Mr.. Hanes.
The Norris statement obviously
had two undesirable consequences.
First, it was calculated to limit the
freedom Of choice which Judge Leibell
should have in selecting a trustee,
and, second, it tended to destroy
public confidence in Mr.. Hanes If
ultimately he should be chosen. In
stead of lending public support to
such an unfortunate statement, the
Attorney General and the Secretary
OF the Treasury should have been
doubly careful to refrain from any
act which might in the long run
prove harmful to the reorganiza-
tion.