Show Text of Roosevelt's Message on Utilities WASHINGTON D. D C C. March 12 I The Thc full text lext of or President Franklin D. D Roosevelt's special message message mes mes- sage age to congress on control of public pub lic Hc utilities holding companies follows fol lows low To the Congress of or the United Unite d States I am am transmitting to you ou here herewith with a report submitted to o me bythe by bythe y the thc national power policy corn corn- com com- I named this committee e last summer rummer from among the departments departments de de- of the government concerned con con- with power problems t tomake to tomake make a series of or reports to lo coordinate nate nale government policy on su such h problems This report I am submitting submitting sub- sub milling to you jou is the recommendation ia- ia tion of the committee with respect to the treatment of holding companies companies com com- in the public utility field It deserves the careful ul attention of or every member of oC the congress The so 50 called public utility holding holding holding hold hold- ing company bill bm title I of or the hou house e bill and senate bill 1725 which was vas was dr drafted under th the direction of or congressional ional leaders incorporates many of or the recommendations recommendations recommendations of or this report I have ha been watching with great inter interest l the fight being waged a against public utility holding compan company company com com- pan pany legislation I 1 have watched the use of or investors' investors mone money to make the investor believe the efforts of government to protect him are ared d designed to defraud him I have seen much of or the propaganda prepared prepared prepared pre pre- pared a against such legislation legislation- even en down to mimeographed sheets of instructions for lor propaganda anda to exploit the most far fetched and fallacious fears I have seen enough to be as unimpressed by it as I 1 Iwas Iwas was b by the similar effort to stir up the country against the securities securities ties exchange b bill last spring sprin The securities exchange e act is now generally generally gen gen- en- en accepted as a constructive measure and I 1 feel leel confident that any fears feals now r entertained in regard regard regard re re- re- re gard to proposed utility holding holdin company legislation will prove as groundless roundle as those last ast spring in inthe inthe inthe the case of ot the securities ex ex- changes Will Not D Destroy So much has been said through chain letters Jetters and circulars and by byword byword byword word of or mouth that misrepresents the intent and purpose of ot a new law that it is important that the people of oC the country understand once and md for all the actual facts of or the case Such a measure will not destroy legitimate business or wholesome and productive invest invest- ment It will not destroy a penny of actual value of oC those operating prop properties which holding companies companies com corn panics now control and which holding holding holding hold hold- ing company securities represent in n so far as they have any value On the contrary it will wm surround the necessary organization of the holding company with safeguards which will in fact protect the in in- in vestor We re seek to establish the sound principle that the utility holding company so long as it t is permitted to continue should not profit from dealings with subsidiaries and affiliates affiliates af at- where there i w is no semblance semblance sem sem- blance ce of oC actual bargaining to get the best value and the best price It If a management company compan is Ss equipped to offer oHer a genuinely eco eco- economic economic economic management service ervice to the smaller maJer operating utility companies it ought not to own stock in the companies it manages and its fees ought to be reasonable The holding hold hold- jn ing company should not be permitted permitted permitted per per- to establish a sphere of or Influence in influence influence in- in fluence from which independent engineering construction and other private enterprise I. I is excluded by bya a none too benevolent private pa pa- If Il a management company company company com com- pany is controlled by related operating operating oper oper- operating companies it should be organized organized or or- on a truly mutual and cooperative cooperative coop coop- e basis buis and should be required required required re re- to perform its services at actual cost demonstrably lower than the services can be obtained in a free Iree and open market Contu Confused etl Function We Ve do not seek to prevent the legitimate diversification of investment investment In Investment in- in vestment in operating utility companies by legitimate Investment Investment Investment Invest Invest- ment companies But the holding company compan In the past has confused confused con con- fused the function of control and management with that of oC investment investment investment invest invest- ment and in consequence has more frequently than not failed in both functions Possibly some holding companies may be able to divest themselves of the control control control con con- of oC their present subsidiaries and become investment trusts trust But an Investment company ceases to be an investment company company company com com- pany when it embarks into business business business busi busi- ness and management Investment Investment Investment Invest Invest- ment judgment requires the ju judicial ju- ju appraisal of oC other peoples people's management The rhe disappearance at the end of five years ears of ot those utility holding hold hold- ing companies which can not justify jus jus- jus justify themselves as necessary for the functioning of oC the operating utility companies of ot the country is an objective which congressional al leaders I have consulted deem essential to a realistic and farsighted farsighted farsighted far- far sighted treatment of oC the evils of ot public utility holding companies For practical reasons we should offer a chance of oC survival to those holding companies which can prove to the securities and exchange exchange exchange ex ex- change commission that their existence existence ex ex- is necessary for the achievement of or the public ends Which private utility r companies are supposed to serve For lor such companies and during the interim in in- in period for tor other companies the proposal for tor a comprehensive plan of public regulation and control control con con- Is sound But where the utility holding company does not perform a demonstrably demonstrably demonstrably de- de u useful and necessary function in the operating industry indus indus- industry try and is used simply as a means of or financial control it i is idle to talk of the continuation of or holding holdIng holding hold- hold Ing companies on the assumption that regulation can protect the public against them Re Regulation has small chance of oC ultimate success success suc suc- cess n- n against the kind of or concentrated concentrated concen concen- wealth and economic power pow pow- er cr which holding companies have shown the tho ability to acquire in the utility field No government effort I q I. I can cnn be expected to carry out effective ef effective ef- ef continuous and intricate re regulation of the kind of private empires within the nation which the holding company device has proved capable of or creating S 85 System stem Must Go Except where it is absolutely necessary to the continued functioning functioning functioning of a geographically integrated integrated integrated inte inte- grated operating utility system the utility holding holdin company with its present powers must go If IC we could remake our financial history history history his his- tory In the light of or experience cc certainly certainly eel we would have none of this holing holding hol ing company business It isa is isa isn a n device which d does e not belong to our American traditions of or law lawand lawand lawand and business It is i ionly only a comparatively ely late i innovation It dates definitely from the same unfortunate period which marked the beginning of or a anost host of other in our corporate cor- cor p orate Dorale law w which have brought us uso to o our present disgraceful conditIon condi- condi t Ion tIon of or competitive ing ng between our states tates And it of- of fers too wen well demonstrated temptation tempts tempts- lion ion to and facility facility or for abuse to be tolerated as z c z Teco- Teco business in institution That temptation and that hat fac facility lit arc are Inherent in its very nature It is a corporate invention t lon ion which can give a few corporate insiders unwarranted and intolerable intolerable a able ble powers over other peoples people's mone money In its destruction of local corili and its substitution of absentee absentee ab management it has built up in n the public utility field neld what has justly been called a system of or private private v vate ate socialism which Is inimical to the he welfare of a free people Time rime to Reverse I Most of or us agree that we should take the control and the benefits of the essentially local operating utility industry out of oC a few financial fi- fi lancial centers and give back that control and those benefits to the localities which produce the business busi- busi n ness ess and create the wealth We can properly favor economically inde- inde independent pendent business which stands on onIs its Is own feet icet and diffuses power and r responsibility among the many and frowns frown upon those holding holdin companies comp companies com com- p which through interlocking directorates tes and other devices have given tyrannical power and exclusive exclusive ex ex- ex- ex elusive opportunity to a favored few It is is time to make an effort to reverse that process of the concentration concentration concentration con con- of oC power which has made most American citizens once traditionally independent owners of their own businesses cs helplessly dependent for lor their daily bread upon the favor of oC a very few who by devices such as holding companies companies companies com com- have taken for themselves unwarranted economic power I Iam Iam Iam am against private socialism of or concentrated private power as thoroughly as asI I am against governmental governmental governmental govern govern- mental socialism The one is equally as CIS dangerous as the other and destruction de de- of or private socialism is 15 utterly ut ut- terly essential to avoid governmental governmental govern govern- mental socialism |