Two-story Pyramid

In 1903, age 30, Harrison Williams emerged from an Ohio bicycle factory to try his hand in Wall Street. In 1906 he helped splice a group of Midwest and Southern utilities into American Gas & Electric Co., six years later created another holding company, Central States Electric Corp. Central States presently got working control of North American Co., itself a utility holding company, whose total assets today are $900,000,000. By 1924 Mr. Williams held 96% of Central States' stock. By 1929 its shares had been split 60-for-1, the value of a single original share had risen from $10.50 to $5.660 and Mr. Williams' holdings amounted to 7,500,000 shares worth $612,000.000. Mr. Williams' yacht was the largest in the world.

By 1931 hard-pressed Harrison Williams had sold nearly half his holdings for a mere $28,000,000. His remaining 51% control of Central States, through a bizarre series of other holding companies, gave him a net interest of 18.3% in North American. This is the sort of setup the Public Utility Holding Company ("death sentence") Act of 1935 was specifically designed to alter. Shrewd Harrison Williams was the first of the major utility tycoons to submit to its painful yoke, and North American registered with SEC in February 1937. By last fall when SEC finally forced the rest of the industry into line, Mr. Williams was all set to flatten his pyramid.

He lopped off the top last December by selling enough North American common to reduce his interest to less than 10%. Last week the pyramid was cut to two-story height. To liquidate North American Edison Co., huge intermediary holding company between it and the actual operating companies, and to refund some of its own outstanding obligations, North American Co. offered $70,000,000 worth of debentures and $34,829,000 in $50 par value preferred stock. A syndicate of 127 underwriters headed by Dillon, Read & Co. sold the issues like hot cakes.

In a week full of important utility events (see p. 58), North American's successful reshaping was not the least significant. It was: 1) the first publicly offered bond issue of 1939, and thus broke the capital market's ominous stagnation; 2) the first major public utility holding company financing since passage of the death sentence drove the industry into financial hibernation four years ago.

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