No Death Sentence

"As a last resort in a desperate situation," Wendell Willkie, president of vast Commonwealth & Southern Corp. and sometime spokesman for the utility industry, five months ago proposed to Franklin Roosevelt that the Government buy up his utilities in TVA territory. What makes the utility situation seem desperate to such men as Wendell Willkie are two New Deal policies: 1) direct competition with the utilities through such projects as TVA and Bonneville Dam; 2) abolition of all except geographically integrated utility pyramids, which is a main feature of the Utility Holding Company Act of 1935. Result has been the bitterest of all the battles between Franklin Roosevelt and Big Business and the loser has been the nation: instead of spending their normal $700,000,000 a year in expansion and replacement, the utilities have been getting along on $130,000,000. When renewed Depression jabbed this point home to the President last fall there was a sudden splash of headlines about a utility truce. It failed to come off. Last week there was another splash, and this time there was definite progress in settling both major differences.

Offer. In 1934 Tennessee Public Service Co., a $20,000,000 utility in Knoxville, decided to sell out to TVA. Bickerings have gone on ever since with no results. Last week TVA and the city of Knoxville joined in offering $7,500,000 for most of the electrical properties of the company, a million and a quarter more than the previous offer. Simultaneously, TVA Director David Lilienthal let it be known that TVA may limit sales of its power to a definite area, that it was considering buying up Commonwealth & Southern's private lineage in this territory. Apparently all that remained was for Wendell Willkie and David Lilienthal, who call each other by their first names, to work out terms.

Note. Broker Paul Shields, pleased with his success in being "the man behind" the reform of the New York Stock Exchange (see p. 51), several weeks ago set out to do as much for the utilities. He invited Wendell Willkie, Chairman C. E. Groesbeck of Electric Bond & Share and President James F. Fogarty of North American Co. to lunch, proposed that a neutral board of tycoons act as umpires in the battle against the Holding Company Act. Wendell Willkie objected and there was something of a row. The utility magnates wound up by having a conference with SEC Chairman William Douglas, then writing him a cordial note to say they had appointed a committee of five "to cooperate with the Commission in endeavoring to bring about sound and constructive solutions of the problems. ..."

President Roosevelt promptly remarked that he was glad to hear of this olive branch and Bill Douglas, making his first comment since the Supreme Court upheld the registration provision of the Holding Company Act last month, declared in Electrical World: "We do not expect every utility system to present us immediately with a revised map showing revamped, integrated systems. Nor do we propose to draw such a map. ... the statute is not a 'death sentence.' On the contrary it holds the promise of a long life and a happy one. It substitutes order for chaos. ... We are ready and willing at all times to advise and help the industry in working out its problems and to conduct ourselves reasonably and practically. . . ."

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