Evening star., 1942-09-16
North American
Control Of DC,
Utilities Hit
PUG Asks Probe
Of Relationships
Of Four Firms

4ii a. lIlOFc WiiiCu may i6dQ JO
action to dissolve foreign" con-
troll over three Washington util-
ity corporations, the Public Util-
tiles Commission today formally
called on the Securities and Ex-
change Commission to investi-
gate the relationships between
the North American Co. and the
Washington Railway 81 Electric
Co, Potomac Electric Power Co.
and the Capital Transit Co.
The request was based on section
l8 te) of the Public Utility Holding
Company Act of 1885, which states
that the Federal agency, on its own
motion or on the request of State,
may investigate holding companies
and subsidiaries.
All Pertinent Facts Asked
In announcing the request-which
is expected to be granted, since the
SEC already has made some find
lngs as to the future of the North
American, a giant utilities holding
company James H. Flanagan,
chairman of the PUG, said the Dis
trlct agency by earlier actions al
ready had cast doubt on the le-
gality of North American holdings
here and that it wanted "all per-
tinent facts" before taking pros
pective steps.
The North American owns 1878
per cent of the common stock of
the WRECO, but none of its pre-
ferred stock, and therefore holds
1886 per cent of WRECO's voting
power, according to statements as
of December 81, 1941, Mr.. Flanagan
said. WRECO holds all the voting
power of the PEPCO, 66.7 per cent
of control over the Great Falls Rail-
way Co., full control over the WASH
ington and Rockville Power Co. of
Montgomery County and so per cent
OF the voting power of the Capital
Transit Co.
The Washington and Rockville
Railway Co., in turn, owns all the
Braddock Light and Power Co. and
1873 per cent of the Great Falls
/
Co. has full control over the Mont
gomery Bus Lines, Inc, and the
Glen Echo Park Co.
PEPCO-WRECO Merger Studied.
Some months ago, during debate
over the request of WRECO to buy
10000 shares of common stock of
PEPCO at 500 per share-permis-
sion for which was granted by the
PUG spokesmen for WRECO
agreed that this holding company
no longer was an essential entity
and said consideration was being
given to a merger of WRECO and
PEPCO.
The PUG request for the North
American investigation was con-
tained in letter to Orval l.. Du
Bois, secretary of the SEC, which
stated in part:
This commission is interested in
developing information with request
to the following specific questions:
Il. When, under what circum-
stances, from whom, in what
amounts and at what price did the
North American Co., either directly
or through associated companies or
nominees, acquire securities from
the above-named companies?
Data Asked on Control.
2. In what manner, if any, did
the North American Co. directly or
indirectly control any of the public
utilities named above?
3. When, under what circum-
stances and in what amounts did
the North American Co. receive
dividends or other payments either
directly or through associated COM
panies or nominees from the COM
panies named above?
a. When, under what circum-
stances, to whom, in what amounts
and at what price did the North
American Co. either directly or
indirectly or through associated
companies or nominees dispose of
securities of the companies named
above?
In citing the foregoing specific
questions, it is not intended to limit
the scope of the investigation which
is herein requested. In general, it
is our desire that your commission
ascertain all facts which will as
sist this commission in the determi-
nation of the true nature of the
relations of the North American Co.
with utilities within the District"
Long Battle Continues.
A battle has been going on for
years, intermittently over the North
control over Washington
particularly in regard to
the La Toilette Anti-merger Act of
1913, which made it unlawful for
any foreign" corporation to own
or to obtain control over District
utilities except as may thereafter be
specifically authorized by Congress,
Some company spokesmen have
argued that North American hold
lngs in WRECO and therefore in
PEPCO and the Transit Co, were
legalized by the act of Congress
permitting merger of WRECO and
the old Capital Traction Cd.
Last April Is the SEC announced
that 1t had found from its investi-
cations under the Holding Company
Act that the North American Co.
may not retain its interest in
but that WRECO might re-
tain its interest in PEPCO and the
Montgomery County railroad con-
Germ and that the latter might con-
tinue its interest in the Braddock
Light & Power Co.
IL