Evening star., 1943-04-15
Utility Death Clause
Arguments Heard
In Supreme Court
Parent Of Pepco and
Capital Transit Fights
Holding Company Curb
BY the Associated Press.

NoPitoI lTunSIt TI9ntS
Holding Company Curb
BY the Associated Press.
Litigation involving the constitu-
tionality of a section of the 1885
Public Utility Holding Company Act,
requiring interstate gas and electric
holding companies to limit their
operations to a single integrated"
system, came before the Supreme
Court today for argument.
The disputed section. usually
called the death sentence" require
ment, was challenged by the North
American Co., one of the largest
holding companies, after being di-
rected by the Securities and Ex-
change Commission to confine it's
activities to a system centering
around St. Louis.
The North American system, the
Justice Department said, consists of
so companies operating in II States
and District of Columbia, from
Washington, D. c., to California and
from Northern Michigan to South
ern Kansas and Missouri. The sys-
tenn was said to control companies
whose assets are carried on their
books at more than $2,300,000, 900.
Pepco, Capital Transit in System.
The two Washington operating
companies in the system are the
Potomac Electric Power Co. and the
Capital Transit Co. North Amer
ican owns 1856 per cent of the
stock of the Washington Railway g.
Electric Co., which, in turn, has all
the voting stock of Pepco and half
of the voting stock of the transit
firm.
Charles E. Hughes, jr., son of the
retired Chief Justice and attorney
for the holding company, contended
in a brief that enforcement of the
commission order would deprive
North American "of large properties
and important property rights and
inevitably visit upon it and its stock
holders an enormous destruction of
values"
He said the assets of which the
company had been ordered to divest
itself cost s190,0O0,OOO.
Mr. Hughes also asserted that sub
stantially all abuses in connection
with the operation of holding COM
panies "are eliminated through the
far-reaching regulatory sections of
the act other than the section at
issue"
Solicitor General Charles Fahy
said the legislation was designed to
1ntegrate and simplify a s150OO.-
100000 industry throughout the
United States and was passed after
Congress found there were many
evils growing out of holding COM
panies.
1nfationary Write-ups Charged.
Those included, he said, "infla-
tionary write-ups," acquisition of
properties at grossly inflated prices"
and "preoccupation of management
with financial maneuvering rather
than efficient production and dis
trloutlon of gas and electricity and
the meeting of local needs"
Constitutionality of the death
sentence" provision was upheld bv
the Federal Circuit Court in New
York in sustaining the commits
sion's order against North Ameri-
can.
Meanwhile, officials Of the Alumi-
mum Co. of America, saying they are
puzzled and handicapped" and "do
not know what to do" have appealed
to the Supreme Court for a DISPOSE
ton OF the antitrust litigation on
which the tribunal has been unable
TO act because of lack of a legal
quorum OF six qualified justices.
In highly unusual procedure, the
company filed brief asserting that:
This litigation, with its threat of
dissolution, hangs over Alcoa like
a black cloud, diverting the atten-
ton and hampering the war effort
OF the company's personnel"
Four Justices Ineligible,
The law requires that Supreme
Court business must be transacted
by at least six of the nine justices.
-Four justices have declared them
selves ineligible to act on the con-
troversy because of previous connec-
ton with this or other litigation
affecting the company while serving
as Justice Department officials.
They are Chief Justice Stone and
Justices Murphy and Jackson, for
mer Attornies General, and Justice
Reed, former Solicitor General.
In its original complaint, the JUS
tlce Department charged Alcoa with
violating the Sherman Antitrust
Act by possessing a monopoly in the
production and sale of aluminium.
After 26-month trial, the long
est in history, the Federal District
Court at New York held that the
department had failed to prove its
accusations. The department then
appealed this decision to the Su-
preme Court.
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