[PRCo] Opening Gun: Utility Divestiture Act

[Fred Schneider]

http://news.google.com/newspapers?id=fwAdAAAAIBAJ&sjid=ZY4EAAAAIBAJ&pg=1994%2C3235878
 (Look to the right of the item the link pulls up.)

 Pittsburgh Press, Friday January 11, 1935, Page 20 (Both Print and Digital match)

 

WAR ON HOLDING FIRMS PLANNED

President Expects to Act About Feb. 1 – Gets

Commission Report

By the United Press  WASHINGTON, Jan. 11 – President Roosevelt’s program to eliminated “evils of holding companies” will get under way within two or three weeks, he said today on receiving a Federal Power Commission report on distribution of securities of utilities holding companies.

   The president said his program was now being drafted and should be ready either in the form of a special message to Congress or Congressional committee recommendations around Feb. 1.

    His determination to limit the scope of holding companies to continue with his hard-hitting government “yardstick” power policy was emphasized by the power commission report.

    The commission declared fears of small investors their life insurance, trusts or savings accounts would be imperiled by Federal action against power holding companies was unjustified.

Rayburn Opens Attack

 

   The commission declared that despite five depression years, public utility bond holders of 51 standard life insurance companies are estimated to be worth $109,441,000 more that at the peak in September, 1929. 

    The Power Commission report coincided with an attack on holding company evils made on the floor of the House by Representative Sam Reyburn (Dem., Tex.), chairman of the House Interstate Commerce Committee.  Mr. Rayburn indicated his address was a prelude to legislation to be introduced to curb questionable practices which he described.

    Life insurance holdings, the Power Commission declared, are almost entirely in the bonds of operational utilities rather than holding corporations.

 

Highest in Last 15 Years

 

   The commission found 51 standard life insurance companies held $1,658,000,000 in such bonds a year ago and that these holdings are now quoted at more than $100,000,000 above the boom peak prices.

    The commission declared these bonds now sell at the highest prices in the last 15 years.  The average appreciation has been 32 points or more than 40 percent.

    The commission referred to fears expressed by President Frederick H. Ecker of the Metropolitan Life Insurance Company, in December 1933, as to the future of electric utility bonds held by the Metropolitan.   It is estimated utility bonds and preferred stocks held by the Metropolitan had increased in value approximately $40,000 since the time of Mr. Ecker’s statement.