Federal Trade Commission, Washington, March 15, 1928.
First letter of Submittal To the Senate of the United States.

This letter summarizes the formal introduction and passage of Senate Resolution 83 that was passed on February 15th, 1928.  It starts with the legal wording that of the resolution and the order to the FTC and what the probe of the electric industry should entail.  Known initially as the Walsh resolution as it was introduced by Senator Thomas Walsh (MT) – first attempt took place in June of 1927 – its formal name and passage date February 15, 1928 (S. Res. 88, 70th Cong., 1st session )

directed the Federal Trade Commission to make an inquiry into certain practices and conditions relating to specified classes of public utility corporations and corporations. Further details in the letter laid out its legal powers to carry out the investigation and that it received the formal notice from the senate on Feb. 17th. The FTC then conducted its own initial study of how to proceed and by resolutions made on Feb. 24th and 28th 1928 approved a two part plan:

(1) general investigation and
(2) public hearings.

The former is necessary for the effective development of testimony at the hearings and involves among other things the extensive examination of books of account and of files of correspondence, etc. The commission, therefore, designated Commissioner McCulloch to preside at the public hearings, designated the chief counsel to conduct such public hearings, and directed the chief counsel and the chief economist to cooperate in the conduct of this investigation.

Meantime the commission had subpoenaed certain officers and representatives of the National Electric Light Association and of the American Gas Association and the associations themselves, directing them to appear before it on March 8, 1928, and to bring with them all records and papers pertinent to the subject matter of the Senate resolution. The said officials immediately advised the com mission that they desired to furnish any information they had. Representatives of the commission immediately visited the New York offices of the National Electric Light Association, of the American utility associations, and either took such papers for study as seemed requisite or indicated the papers, documents, or other information which should be produced at the hearing set for March 8. A general public notice of this hearing was given and a special notice to the Senate Committee on Interstate Commerce.

Accordingly a public hearing was held on the above-mentioned date at the offices of the commission in Washington, and representatives of these associations were examined on various matters as indicated by the transcript of record, which included extensive documentary material. The stenographic record of the oral testimony accompanies this interim report in accordance with the directions of the resolution. A list of the exhibits in the record, with descriptive statement of their character, is attached to the transcript of the record.

The commission also addressed the members of the Senate individually and the Interstate Commerce Committee, requesting them to furnish any pertinent information in their possession.

A general questionnaire is being issued to the several thousand electric power and gas utility operating companies in order to aid the commission in determining which or them are engaged in interstate commerce and to furnish data which will aid the commission in measuring the importance of holding-company control and other related matters called for in the Senate resolution.

The commission is also digesting the extensive information furnished in the  proceedings of the Senate, and the recent hearings before the Interstate Commerce Committee of the Senate on this resolution and the hearings before the special committee of the Senate on senatorial elections, together with that furnished by individual Senators; also the extensive documentary material put in evidence in the hearing on March 8, and other data received and obtained by the commission. This digest is necessary in order, first, to utilize evidence immediately available; second, to afford indications of lines of inquiry for obtaining additional facts for the record. A large part of the preliminary work will necessarily consist in the examination of accounts and records relating to the companies under investigation and in interviewing persons conversant with their affairs. It is contemplated that further public hearings will be held as fast as adequate preparation can be made for them. In considering the question of the value or detriment to the public of certain conditions referred to in the resolution the commission expects to obtain the counsel and evidence of competent persons in various walks of life.

The commission realizes that this is a very large and important undertaking and, being desirous of handling it in an adequate manner and of completing it at as early a date as is practicable, is planning to take up with the Director General of the Budget the question of a supplementary appropriation for the next fiscal year. But whether such facilities for the more efficient handling of this inquiry are afforded by the Congress or not, the commission plans to push it with the greatest possible diligence.

By order of the commission. 3-15-1928 William E Humphrey Chairman

Federal Trade Commission,
Washington, April 16, 1928.
To the Senate of the United States:
Pursuant to the direction of the Senate in Senate Resolution 83, Seventieth Congress, first session

(approved February 15, 1928), regarding the investigation of certain electric power and gas utility companies, that this commission “report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation” upon the matters specified in the resolution, and that it transmit therewith the stenographic report of the evidence taken, this second interim report is respectfully submitted.

Since the first interim report the commission has done the following work in this matter:

The commission has already received about 2,000 reports on the first general questionnaire forms from operating companies calling for information as to electric energy and gas utilities, on capacity, production, purchases, sales, interstate business, inter-company relationships, earnings and investment, and this information is now being tabulated as rapidly as the reports can be reviewed by the accountants available.

These reports are coming in daily. Additional schedules are being prepared for detailed reports from companies which come more especially within the purview of the inquiry including those companies which operate utilities in more than one State and holding companies and their subsidiary financial, management, and construction companies. Special schedules of a more limited character have been prepared for municipal utilities supplying electric energy or gas, in order that a complete basis may be obtained for measuring the importance of the holding companies in these two industries.

Systematic examination is being made also of various sources of information with regard to particular transactions in the electric power and gas industries in order to develop specific information regarding the growth of capital assets, the methods of issuing securities and other financial matters specifically mentioned in the resolution. The information collected by these means on the financial methods and practices of these utility companies, after analysis and compilation, will be made the basis of examination of witnesses in the public hearings.

The books and papers at the headquarters of the geographic divisions of the National Electric Light Association at Boston, Mass., at Atlanta, Ga., at Richmond, Va., at Springfield, Ill., at the Boston office of the New England Bureau of Public Service Information, at the Chicago office of the Illinois State Committee on Public Utility Information, at the office of the Public Service Association of Virginia, at the offices of the Copley Press at Aurora, HI., at both the Washington and New York offices of the Joint Committee of National Utilities Associations, at the New York offices of the National Electric Light Association and the American Gas Association have been examined by members of the staff, who have taken various books and papers into their possession. This phase of the work deals particularly with that part of the resolution relating to the expenditure of money or the control of the avenues of publicity in an effort to influence or control public opinion on account of municipal or public ownership of the means by which power is developed and electrical energy is generated and distributed, or to influence or control certain elections, and is done in order to prepare the material and information obtained for introduction into the record.

The digesting and indexing of memoranda, references, and material submitted or obtained from many sources have been diligently pursued.

Public hearings were held at the commission’s office, Washington, April 11, 12, and 13.

April 11

the following witnesses were examined and various exhibits introduced relative to the Copley Press and the newspapers owned or controlled by it, and Ira C. Copley, viz:

• Willis J. Spalding, Springfield, Ill.
• B. P. Alschuler, Aurora, HI.
• John Callan O’Laughlin, Washington, D. C.
• F. M. James, Aurora, Ill.
• W. W. Armstrong, Aurora, Ill.

April 12 the following witnesses were examined:

• R. R. McGregor, assistant director of the Illinois State Committee on Public Utility Information.
• B. J. Mullaney, director of Illinois State Committee on Public Utility Information, and vice president of the Peoples Gas Light & Coke Co. and the American Gas Association.
• R. V. Prather, secretary of the Great Lakes division of the National Electric Light Association.

Many exhibits obtained from their offices by our examiners were introduced into the record.

April 13

the following witnesses were examined:

The said

• R. R. McGregor;
• Samuel T. McQuarrie, secretary of the New England division of the National Electric Light Association and director of New England Bureau of Public Service and Information.

Many exhibits obtained from their offices by our examiners or by subpoenas were introduced into the record. This evidence relates particularly to publicity methods and material.

Herewith are transmitted three volumes containing the stenographic report of the evidence taken April 11, 12, and 13. There as not been time to read them for possible errors and corrections.

A list and a short description of the exhibits is in course of preparation and will be transmitted as soon as it can be completed.

Examination of the books and papers of still other public utility companies and bureaus is in progress.

Because of court engagements, public hearings can not be resumed until April 24, when various officers and employees of the national headquarters of the National Electric Light Association and the American Gas Association will be further examined, as will be officers and employees of both the New York and Washington offices of the Joint Committee, from the Richmond office of the Public Service Association of Virginia, and at least one other officer from the Boston office of the New England division of the National Electric Light Association. Various exhibits have already been obtained from these offices and officers and will be introduced into the record in connection with their testimony.

By order of the commission. William E. Humphrey, Chairman.

Washington, D. C, May 15, 1928.
To the Senate of the United States:

Pursuant to the direction of the Senate in Senate Resolution 83, Seventieth Congress, first session (approved February 15, 1928), regarding the investigation of certain electric power and gas utility companies that this commission “report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation” upon the matters specified in the resolution, and that it transmit therewith the stenographic report of the evidence taken, this third interim report is respectfully submitted.

Since submitting its second interim report the commission has done the following work in this matter:

The commission has received about 4,650 reports on the first general questionnaire forms from electric and gas operating companies calling for information concerning production, purchases, sales, interstate business, inter-company relationships, earnings, and investment which will give bases for measuring the importance of interstate and power group business in the power and gas industries.

This information is being analyzed and tabulated as rapidly as reports are being received.

Additional schedules have been prepared and are now being studied by the commission, calling for comprehensive information upon

(1) the growth of capital assets and capital liabilities of holding company and management groups including their public utility and nonpublic utility subsidiaries and of independent operating companies doing an interstate business;

(2) the methods of issuing, the price realized, and the commissions, bonuses, and fees received or paid by such companies, with respect to the various issues of securities made by them;

(3) the inter-company relationships among holding companies, managing or service companies, and financial, engineering, construction, and electric and gas operating companies; and

(4) the services furnished to electric and gas public utility companies by holding, management, and service companies, the expenses and earnings of such companies, together with the fees, commissions, or bonuses charged by them or their subsidiary or affiliated companies..

Provision is also made in these schedules to secure information concerning political campaign contributions and the expenditure of funds to be used to influence or control public opinion with respect to municipal or public ownership of electric-power enterprises.

Representatives of the commission are now in the offices of certain large holding and service companies in New York City, Philadelphia, and Chicago securing data on the various phases of the inquiry from the official records of the companies. As soon as available other examiners will be sent to other power company groups.

The information collected through the schedule returns described above, and through the examination of the records of the utility companies by the agents of the commission will be used for the compilation of data for introduction in evidence in the public hearings of the commission and as the basis for the questioning of witnesses who appear at such hearings.

Public hearings were held at the commission’s office, Washington, April 24, 25, 26, 27, May 2, 3, 4, 9, 10, and 11.

Since our last interim report, witnesses have been examined as follows :

April 24, 1928:

• George H. Francis, assistant to the treasurer of National Electric Light Association, New York, N. Y.;
• Ira L. Grimshaw, assistant to Stephen Davis, director of joint committee of National Utility Associations, New York, N. Y.;
• Allen B. Tunis, secretary of Public Utility Association of Virginia, Richmond, Va.;
• J. S. S. Richardson, director of department of information of joint committee of National Utility Association, New York, N. Y.;
• Arthur H. Hermann, assistant secretary of Virginia Electric Light & Power Co., Richmond, Va. ; recording secretary of Public Utility Association of Virginia.

April 25, 1928:

• George H. Francis;
• Ira L. Grimshaw;
• Edward S. Mansfield, chairman of the educational bureau of the Edison Electric Illuminating Co. of Boston, Winchester, Mass.;
• Josiah T. Newcomb, counsel for the joint committee of the National Utility Association, Washington, D. C.

April 26, 1928:

• Ira L. Grimshaw;
• Josiah T. Newcomb;
• Stephen Davis, director of the joint committee of National Utility Association, New York, N. Y.;
• J. S. S. Richardson ;
• Orville W. Brewer, cashier of the American Gas Association, New York, N. Y.;
• Kurwin R. Boyes, secretary of the American Gas Association, New York, N. Y.

April 27, 1928:

• J. S. S. Richardson;
• Clark Belden, executive vice president of the Connecticut Chamber of Commerce, Hartford, Conn.;
• Paul S. Clapp, managing director of the National Electric Light Association, New York, N. Y.;
• George F. Oxley, director of department of public information of National Electric Light Association, New York, N. Y.

May 2, 1928:

• Clarence G. Willard, secretary of Connecticut Committee on Public Service Information, New Haven,Conn.;
• A. Bliss McCrum, secretary of Public Utilities Association of West Virginia, Charlestown, W. Va.

May 3, 1928:

• Walter E. Long, vice president of Pennsylvania Electric Association, Ballard, Pa.;
• Walter H. Johnson, assistant to chairman of board of directors of Philadelphia Electric Co., Philadelphia, Pa.;
• A. G. MacKenzie, director of Pennsylvania Public Service Information Committee and of New Jersey Public Service Information Committee, Moorbach Bend, Pa.;
• A. B. Millar, managing director of Pennsylvania Electric Association of the National Electric Light Association, Ballard, Pa.

May 4, 1928:

• J. S. S. Richardson;
• J. F. Schlotterbeck, credit manager, Mayflower Hotel, Washington, D. C.

May 9, 1928:

• George F. Oxley;
• Fred J. Bollmeyer, director of Ohio Committee for Public Utility Information, Cleveland, Ohio;
• Benjamin E. Ling, assistant to the president of Cleveland Electric Illuminating Co., Cleveland, Ohio;
• E. L. Gaskill, secretary-treasurer of East Central Division of National Electric Light Association, Greenville, Ohio;
• Ira L. Grimshaw.

May 10, 1928:

• H. E. Simpson, treasurer of Florida Public Utilities Information Bureau, Miami, Fla.;
• R. J. Holley, director of Florida Public Utility Information Bureau, Sanford, Fla.;
• Willard Cope, vice chairman and executive secretary of Utilities Information Committee of Georgia, Atlanta, Ga.

May 11, 1928:

• Willard Cope.

The following witnesses have been summoned to appear

May 15, 1928:

• Joseph Carmichael, director of Iowa Committee on Public Utilities Information, Des Moines, Iowa;
• Rodney Q. Selby, assistant director of Iowa Committee on Public Utilities Information, Des Moines, Iowa;
• Thorne Browne, director of Nebraska Information Bureau, also of the Mid-West Division of National Electric Light Association, Lincoln, Nebr.

May 16, 1928:

• H. F. Taff, general superintendent of Western Union Telegraph Co., Washington, D. C;
• Thomas P. Dowd, general superintendent of Postal Telegraph-Cable Co., Washington, D. C;
• Charles Clagett, general commercial superintendent of Chesapeake & Potomac Telephone Co., Washington, D. C.

May 17, 1928:

• S. E. Boney, director of North and South Carolina Public Utility Information Bureau, Raleigh, N. C.

Herewith are transmitted 10 volumes containing the stenographic report of the evidence taken on the dates already mentioned. There has been no opportunity to read them for possible errors and corrections.

A list and brief description of the exhibits received in evidence on the hearings from April 24 to 27, both inclusive, is transmitted here with. A similar list and description of the exhibits introduced at the subsequent hearings is being prepared and will be transmitted as soon as it can be completed.

Examination of the books and papers of other State information committees and other geographic divisions of the National Electric light Association is being made.

During the public hearing on May 9, a request was made for consideration of testimony to prove efforts  of the city of Los Angeles, and of a voluntary organization known as the Boulder Dam Association, to influence public opinion in favor of the Boulder Canyon Dam project. The presiding commissioner announced on May 11 that the commission decided that it is beyond the scope of the inquiry, as outlined in Senate Resolution 83, to investigate the activities of municipal owners of utilities, or of other corporations or persons than those connected with privately owned utilities.

The offer of testimony and the announcement of the commission’s decision on the subject are incorporated in the record herewith transmitted.

By order of the commission. William E. Humphrey, Chairman.

Washington, June 15, 1928.
To the Senate of the United States :

Pursuant to the direction of the Senate in Senate Resolution 83, Seventieth Congress, first session (approved February 15, 1928), regarding the investigation of certain electric-power and gas utility companies, that this commission “report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation” upon the matters specified in the resolution, and that it transmit therewith the stenographic report of the evidence taken, this fourth interim report is respectfully submitted.

Since the beginning of the inquiry, the commission has done the following work in this matter:

The commission has received 5,480 reports from privately owned gas and electric public utilities on the first general questionnaire, the first questionnaire called for information concerning production, purchases, sales, interstate business, inter-company relationships, earnings, investment, plant capacity, etc., which will give bases for measuring the importance of interstate and power group business in the electric-power and gas industries. The following tabular statement shows the nature of the reports received to June 9, 1928:

Schedules received:                Number of reports

Complete schedules                               3,423
Out of business                                         376
Sold                                                           228
Not public utilities                                    800
Reported by another company                  203
Returned by post office, unclaimed          205
Produce for own use only                         245
Total                                                       5,480

The data contained in the schedules are being analyzed and tabulated as fast as the reports are received.

A comprehensive schedule is almost completed calling for information upon:

(1) The growth of capital assets and capital liabilities, of holding company and management groups, including their public utility and nonpublic utility subsidiaries, and of independent operating companies doing an interstate business;

(2) the methods of issuing, the price realized, and the commissions, bonuses, and fees received or paid, by such companies, with respect to the various issues of securities made by them;

(3) the inter-company relationships among holding companies, managing or service companies, and financial, engineering, construction, and electric and gas operating companies; and

(4) the services furnished to electric and gas public utility companies by holding, management, and service companies, the expenses and earnings of such companies, together with the fees, commissions, or bonuses charged by them or their subsidiary or affiliated companies.

Provision is also made in these schedules to secure information concerning political campaign contributions and the expenditure of funds to be used to influence or control public opinion with respect to municipal or public ownership of electric-power enterprises.

Representatives of the commission are now in the offices of certain large holding and service companies in New York City, Philadelphia, Boston, and Chicago securing data on the various phases of the inquiry from the official records of the companies. As soon as available, other examiners will be sent to other power company groups.

The information collected through the schedule returns described above, and through the examination of the records of the utility companies by the agents of the commission, will be used for the compilation of data for introduction in evidence in the public hearings of the commission and as the basis for the questioning of witnesses who appear at such hearings.

Public hearings were held at the commission’s office, Washington, May 15, 16, 17, 28, 29, 31, June 1, 2, 12, 13, and 14.

Since our last interim report, witnesses have been examined as follows:

May 15, 1928.

• Joseph Carmichael, director of Iowa Committee on Public Utilities Information, Des Moines, Iowa;
• Rodney Q. Selby, assistant director of Iowa Committee on Public Utilities Information, Des Moines, Iowa.

May 16, 1928.

• Charles T. Claggett, general commercial superintendent of Chesapeake & Potomac Telephone Co., Washington, D. C. ;
• Thomas P. Dowd, superintendent of Postal Telegraph & Cable Co., Washington, D.C.;
• Thorne Browne, managing director, secretary, and treasurer of middle west division of National Electric Light Association and Nebraska section of the geographic division; also supervisor of Nebraska Utilities Information Bureau, Lincoln, Nebr.;
• James T. Bresnahan, office manager of Western Union Telegraph Co., Washington, D. C.

May 17, 1928.

• Samuel Elmore Boney, director of North and South Carolina Public Utility Information Bureau, Raleigh, N. C;
• Thomas P. Dowd (recalled).

May 28, 1928.

• Frederick William Crone, director of New York State Public Utilities Information Bureau, New York, N.Y.;
• Charles H. B. Chapin, secretary of Empire State Gas & Electric Association, New York, N. Y.

May 29, 1928:

• Frederick W. Crone (recalled);
• John Wilbur Lapham, secretary-manager of the North Central Electric Association, Minneapolis, Minn.

May 31, 1928:

• Theodore J. Grayson, Philadelphia, Pa.;
• George E. Lewis, director of Rocky Mountain Committee on Public Utility Information, Denver, Colo.

June 1, 1928:

• George E. Lewis (recalled).

June 2, 1928:

• George E. Lewis (recalled).

June 12, 1928:

• William C. Grant, director of Texas Public Service Information Bureau, Dallas, Tex.;
• George F. Oxley (recalled);
• C. W. Davis, chairman of Texas Public Service Information Bureau, Dallas, Tex.

June 13, 1928:

• S. J. Ballinger, secretary of southwestern division of National Electric Light Association, San Antonio, Tex.;
• Hugh M. Blain, director of Louisiana-Mississippi Committee on Public Utility Information, New Orleans, La.

June 14, 1928:

• Fred R. Jenkins, chairman of Educational Committee of National Electric Light Association, Chicago, Ill.;
• H. J. Gonden, publisher of Public Service Magazine, Chicago, Ill.

Herewith are transmitted 11 volumes containing the stenographic report of the evidence taken on the dates already mentioned. There has been no opportunity to read them for possible errors and corrections.

A list and description of exhibits numbered 1040 to 1646, both inclusive, is transmitted herewith. This includes all exhibits introduced up to and including May 17, 1928. As fast as the work can be done a list of other exhibits which have been introduced will be made and forwarded.

Examination of the books and papers of other State information committees and other geographic divisions of the National Electric Light Association is being made.

By order of the commission. William E. Humphrey, Chairman.

Washington, July 16, 1928.
To the Senate of the United States:

Pursuant to the direction of the Senate in Senate Resolution 83, Seventieth Congress, first session (approved February 15, 1928) regarding the investigation of certain electric power and gas utility companies, that this commission “report to the Senate within each thirty days after the passage of the resolution and finally on the completion of the investigation” upon the matters specified in the resolution, and that it transmit therewith the stenographic report of the evidence taken, this fifth interim report is respectfully submitted.

Since the beginning of the inquiry, the commission has done the following work in this matter:

The commission has received 5,944 reports for companies addressed as privately owned gas and electric utilities on the first general questionnaire. The first questionnaire called for information concerning production, purchases, sales, interstate business, inter-company relationships, earnings, investment, plant capacity, etc., which will give bases for measuring the importance of interstate and power group business in the electric power and gas industries. The following tabular statement shows the nature of the reports received to July 9, 1928:

Reports

Complete schedules                              3,555
Out of business                                        449
Sold                                                          284
Not public utilities                                   924
Reported by another company                 243
Returned by post office unclaimed          234
Produce for own use only                        255
Total                                                     5,944

During the month elapsed since the date of the fourth interim report, second and third requests were sent to about 3,000 companies that had failed to respond to the original request, and many reports were received. The data contained in these reports are being analyzed and tabulated as rapidly as the reports are received.

The comprehensive schedule spoken of in the fourth interim report is in process of printing at the Government Printing Office. Because of technical difficulties involved in the set-up and of the pressure of regular work of like grade at that office, the prospects are that mailing of the schedules to the companies can not begin much in advance of August 1.

Twenty-six representatives of the commission are now in the offices of certain large holding and service companies in Boston, New York, Philadelphia, and Chicago, obtaining data on the various phases of the inquiry from the official records of the companies. The information collected from these sources and from the schedules referred to above will be used for the compilation of data for introduction in evidence in public hearings of the commission and as a basis for the questioning of witnesses who appear at such hearings.

Public hearings were held at the commission’s office, Washington, on June 15, 19, 20, 21, 22, 26, 27, 28, 29, 30, July 2, 3, 6.

Since our last interim report, witnesses have been examined as follows:

• Edward F. McKay, director Oklahoma Public Utility Information Bureau.
• John B. Sheridan, secretary Missouri Committee on Public Utility Information.
• Guy P. Newbern, director Tennessee Public Utility Information Bureau.
• Rex I. Brown, director Arkansas Public Service Information Bureau.
• Earl W. Hodges, former director Arkansas Public Service Information Bureau.
• H. Lee Jones, Information Bureau of Kansas Public Service /Companies.
• John C. Mellett, former executive secretary Indiana Public Utilities Association and Indiana Committee on Public Utility Information.
• William Stokes, executive secretary Indiana Public Utilities Association.
• Arthur E. Scott, director of Public Relations Interstate Public Service Company of Indianapolis.
• Alfred Fischer, former director Michigan Committee on Public Utility Information.
• Arthur W. Stace, director Michigan Committee on Public Utility Information.
• Arthur F. Herwig, director Wisconsin Public Utility Information Bureau.
• John N. Cadby, secretary Wisconsin Public Utilities Association.
• Frank O. Cuppy, legislative agent Indiana Public Utilities Association.

Herewith are transmitted 13 volumes containing the stenographic report of the evidence taken on the dates already mentioned. There has been no opportunity to read them for possible errors and corrections.

A list and description of exhibits numbered 1647 to 2017, both inclusive, is transmitted herewith. This includes all exhibits introduced up to and including June 2, 1928. As fast as the work can be done, a list of other exhibits which have been introduced will be made and forwarded.

With the exception of the Pacific coast and a few Southern States the commission has completed its investigation of propaganda activities by organizations of utility companies. Hearings have been suspended until some time in September, not merely as a matter of convenience, but to enable the investigators to obtain and prepare data for hearings relative to the propaganda activities of individual companies and the formation, growth, and activities of holding companies.

The remaining phases of the inquiry call for a high degree of specialized knowledge and experience and the commission is augmenting its staff of accountants by a number of men who, by reason of their former association with State utility commissions, are qualified to do the work along scientific and approved lines. This necessary work of preparation will be pressed during the adjournment of the public hearings.

By order of the commission. William E. Humphrey, Chairman.

Washington, October 15, 1928.
To the Senate of the United States:

Pursuant to the direction of the Senate in Senate Resolution 83, Seventieth Congress, first session (approved February 15, 1928), regarding the investigation of certain electric power and gas utility companies, that this commission ” report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation ” upon the matters specified in the resolution, and that it transmit therewith the stenographic report of the evidence taken, this seventh interim report is respectfully submitted.

Since the beginning of the inquiry the commission has received reports from privately owned gas and electric companies as shown in the following tabular statement:

Individual reports                               3,675
Reported by another company              287
Sold                                                       315
Out of business                                     482
Produce for own use only                     261
Not public utilities                             1,020
Returned by post office unclaimed      235
Reported as holding companies             10
Total                                                  6,285

The information called for in these reports includes data covering production, purchases, sales, interstate business, inter-company relationships, plant capacity, etc., which afford bases for measuring the importance of interstate business in electric energy and gas, the relative importance of holding company groups, and furnish the commission with an accurate and up-to-date list of companies engaged in interstate business and affiliated with interstate holding company groups.

The last of the printed copies of the commission’s comprehensive report form, entitled ” General Report of Electric and Gas Utilities, Holding and Service Companies for such Utilities, and Affiliated Companies,” were received from the Government Printing Office September 18, 1928, and by October 8, 3,400 copies had been sent out to electric and gas operating companies and to holding companies.

Since the last interim report accountants from the commission’s staff have been examining the books of accounts of some of the principal holding-company groups and making an analysis of service charges, the growth of capital assets, and the issuance of securities.

Public hearings were held at the commission’s office, Washington, on September 18, 19, 21, 25, and 26, and October 3, 4, 10, 11, and 12.

Since our last interim report witnesses have been examined as follows :

• H. P. Weeks, managing director of Iowa section of National Electric Light Association, Davenport, Iowa.
• John W. Bennett, attorney, Federal Trade Commission
• William H. Ross, secretary of New Jersey Utilities Association, Philadelphia, Pa.
• A. Jackson Marshall, secretary of National Electric Light Association, New York, N. Y.
• Paul S. Clapp, managing director of National Electric Light Association, New York, N. Y.
• George F. Oxley, director of publicity of National Electric Light Association, New York, N. Y.
• Howard S. Bennion, director of engineering of National Electric Light Association.
• C. H. Howell, president of New Jersey Electric Association, Atlantic City, N. J.
• Marcey B. Darnall, ” Darnall’s Newspaper Service,” Florence. Ala.
• Clarence M. Kilian, secretary of southeastern division of National Electric Light Association, Atlanta, Ga.
• J. S. Thomas, formerly director of Alabama Utilities Information Bureau, Birmingham, Ala.
• Albert T. Reid, cartoonist, New York, N. Y.
• A. M. McDermott, examiner, Federal Trade Commission.
• Edward Y. Chapin, treasurer of Southern Appalachian Power Conference, Chattanooga, Tenn.
• Thorndike Saville, former treasurer of Southern Appalachian Power Conference, Chapel Hill, N. C. .
• John A. Switzer, secretary of Southern Appalachian Power Conference, Knoxville, Tenn.
• Robert M. Hofer, manager of E. Hofer & Sons, Salem, Oreg.
• William R. Putnam, treasurer of Idaho Committee on Relation of Electricity to Agriculture, Boise, Idaho.
• Mrs. Clare K. Tripp, director of Washington Industries Education Bureau, Seattle, Wash.
• Harry Walther, manager of Oregon Public Utilities Information Bureau, Portland, Oreg.
• Berkely H. Snow, secretary of Northwest Electric Light & Power Association, Portland, Oreg.

Herewith are transmitted 10 volumes containing the stenographic report of the evidence taken on the dates already mentioned. There has been no opportunity to read them for possible errors and corrections. A list and description of exhibits numbered 3671 to 3868, both inclusive, is transmitted herewith. This includes all exhibits introduced up to and including October 10, 1928. As fast as the work can be done a list of other exhibits which have been introduced will be made and forwarded.

By order of the commission. William E. Humphrey, Chairman.

Washington, November 30, 1928.
To the Senate of the United States:

Pursuant to the direction of the Senate in Senate Resolution 83, Seventieth Congress, first session (approved February 15, 1928), regarding the investigation of certain electric power and gas utility companies, that this commission ” report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation ” upon the matters specified in the resolution, and that it transmit therewith the stenographic report of the evidence taken, this eighth interim report is respectfully submitted.

As stated in previous reports to the Senate the commission has prepared for the operating electric and gas utility companies and their holding companies and associated service companies, and sent out a general report for dealing with the principal subjects of inquiry indicated by the Senate resolution including the growth of capital assets and liabilities, financial details regarding their security issues, inter-company relations and methods of control, services furnished to operating companies and the charges and expenses connected there with, and the extent, if any, to which such corporations or their representatives, through expenditure of money or through the control of the avenues of publicity have made efforts to influence and control public opinion on account of municipal or public ownership of the means by which power is developed and electrical energy is generated and distributed, or since 1923 to influence or control certain elections.

The preparation of the answer to one of the questions in the report form caused unexpected difficulty or expense, at least in the case of some companies, and has led the commission to defer that question in order to save undue labor. Reasonable requests for additional time have been acceded to.

Returns are now being received and a part of the accounting staff of the commission is engaged in inspecting them to determine whether the answers indicate the need of further inquiry.

Supplementing this general report, examiners of the commission have been sent to the offices of a number of the largest holding companies which control operating companies in several States, for the purpose of studying the organization of these holding companies, their capital structure and earnings, their service contracts and expenses, together with similar matters, in addition to the more detailed study of some of the other subjects covered in a general way in the report forms above referred to. Considerable progress has been made at all the companies visited and, with one important exception, there have been no difficulties made by the companies in furnishing access to any of their books and papers called for by the examiners of the commission. However, in the case of the Electric-Bond & Share Co., the commission has experienced very serious difficulty in getting what it regards as essential information and is now faced with the necessity of seeking the aid of the courts in the enforcement of what it believes to be its lawful and reasonable demands.

The Electric Bond & Snare Co. does not generally own stock in operating companies, directly, although at various times in the past it has owned such stocks, and according to the reports of two operating companies made to the commission as of March 1, 1928, it was then a stockholder therein. It owns a minority stock interest in several holding companies, the organization of which was caused by or participated in by Electric Bond & Share Co. These holding companies own stocks of numerous operating and other companies, the stocks of these latter companies oftentimes having been acquired, directly or indirectly, from or through the Electric Bond & Share Co., or through syndicates or otherwise. In some instances the men who are officers of the Electric Bond & Share Co. are also officers of certain of the holding companies and operating companies. Officers and directors of the Electric Bond & Share Co. are also stockholders in some of the holding and operating companies.

Certain of the operating companies whose power systems are connected, who engage in interstate commerce and whose transmission lines cover various sections of the country are under contract with the Electric Bond & Share Co. for services of various kinds for which a fee made up of a percentage of gross earnings is generally charged, and also financial, construction, purchasing, and legal services for which substantial fees and commissions are charged. In some instances these contracts are made with the holding company for services rendered the operating companies and the charges are determined in much the same way. In other instances the holding company pays the Electric Bond & Share Co. a fee for financial services.

In those instances where the company making the supervision or managing contract is engaged in interstate commerce the Electric Bond & Share Co. is by virtue of the contract engaged in the actual supervision and management of interstate traffic in power. The Electric Bond & Share Co. receives from operating companies commissions on the sale of the operating company’s stock for services said to be rendered to such companies by the Electric Bond & Share Co. in connection with such sales. One of its regular services is to arrange with banking or financial houses distributing and selling securities throughout the country, for the purchase and sale of various securities of subsidiary and operating companies for which service it receives fees from the company issuing the securities. Part of the various foregoing charges are included in the operating expense of the companies paying them, affect the rates which customers of these companies have to pay and in certain instances directly affect the interstate rate and interstate commerce. The companies in this group comprise, ti holding companies, about 150 operating companies, and over 100 other companies, some of which are inactive. The transmission lines owned by the companies in this group cover large areas in many sections of the country wherein the companies operate for the most part without competition. To discover whether they possess in interstate commerce within these areas a substantial degree of monopolistic control is one of the objects of this inquiry.

The resolution specifically calls for information regarding such services as have herein been described, the charges made therefor, the earnings and expenses of such holding companies and other associated and affiliated and subsidiary companies, and the relation one to the other of such companies. The resolution directs an investigation of the value or detriment to the public of holding companies owning the stock or otherwise controlling public-utility corporations immediately or remotely, and directs the commission to report as to what legislation, if any, should be enacted by Congress to correct any abuses that may exist in the organization or operation of such holding companies.

The Electric Bond & Share Co. furnished the commission’s examiners a statement of fees and commissions received by it for such services as have already been described. Thereupon a routine request was made for its operating expense ledger which, we understand, contains a record of all of such expenses, in order to study the basis and fairness of the several charges reported for the services rendered.

This request, originally made in August, the Electric Bond & Share Co. objected to complying with, chiefly, apparently, as an intrusion into what it claimed to be its confidential affairs. The company furnished the commission with a summary of its total operating expenses separated under 24 general heads, but beyond that it was unwilling to go. The commission insisted upon examining the operating expense ledger and supporting vouchers and documents which would enable an analysis to be made of such reported expenses and of their relation to the charges made for services to operating companies and which would enable the commission to carry out other phases of the investigation. Anything less than that, in the opinion of the commission, would make the inquiry in these respects an empty formality and would be utterly illusory as a means of either justifying or criticizing such service charges and would have been a failure to perform the duty cast upon the commission by the resolution.

The refusal of the Electric Bond & Share Co. to comply with the request of the commission in this matter and the proceedings resulting therefrom has caused a large amount of special work for the purpose of establishing the demands of the commission and has involved considerable delay in the conduct of that part of the inquiry relating to the financial relations and operations of the several important holding companies included in this group. It has also caused delay in the completion of that part of the inquiry which dealt with alleged efforts of the industry to influence public opinion on the subject of public or municipal ownership. It became necessary for the commission to meet the issues raised by the refusal of the Electric Bond & Share Co. Subpoenas were issued early in October.

1928, directed to one of its vice presidents, its secretary, and its comptroller. The subpoenas to the secretary and comptroller directed the production of the operating expense ledger. In response they entered special appearances at a public hearing before the presiding commissioner on October 17, and proceeded to contest the jurisdiction of the commission. Counsel for the company and witnesses appeared specially and objected to the administering of the oath and the interrogation of the witnesses on the ground that the subpoenas were void and beyond the commission’s power to issue, stating three claims:

1. That the subpoenas were void and without authority of law and beyond the power of the commission to issue, and that the witnesses were not required to testify before the commission because neither the witnesses nor the Electric-Bond & Share Co. are engaged in “commerce ” as defined in the Constitution of the United States or the Federal Trade Commission act.

2. That the pending investigation, so far as the same may be within the powers and jurisdiction of the commission, is being conducted under section 6 (a) of the Federal Trade Commission act and not under section 5 or other sections of said act, and the commission has no jurisdiction or authority to issue subpoenas in this investigation.

3. That the subpoena duces tecum is void and of no effect in that it is, in substance, a general warrant for “unreasonable searches and seizure of papers and effects without probable cause,” and constitutes a deprivation of property without due process of law, all in violation of the fourth and fifth amendments to the Federal Constitution.

The statement of counsel may be found in full at pages 5778-5787 of volume 49 of the transcript.

The vice president and the comptroller thereupon declined, upon advice of counsel, to answer many questions touching the growth of the corporation’s capital assets, its inter-corporate connections and affiliations, its payment or receipt of bonuses or commissions on the sale of securities, its earnings and expenses, its expenditures of money or control of the avenues of publicity to influence or control public opinion on account of public or municipal ownership, and touching other subjects which were deemed to be within the scope of the Senate’s resolution. They likewise refused to produce the corporation’s expense ledgers which had been subpoenaed.

While a witness, the company’s comptroller, was directed by the presiding commissioner, on motion of the commission’s chief counsel, to produce at a hearing on October 23 all vouchers of the Electric Bond & Share Co., which showed for three preceding years any expenditures of money to influence or control public opinion on account of public or municipal ownership, or to influence or control the election of President. Vice President, and Members of the United States Senate. This direction was later supplemented by the issuance of a subpoena duces tecum calling for production of such vouchers. In addition the company’s general auditor and director of publicity were subpoenaed.

The hearings were thereupon continued to October 23. On that day all of the witnesses reappeared pursuant to the adjournment.

The vice president being called, counsel representing him and the company stated that the company had made no disbursements to influence or control elections of President, Vice President, or Members of the United States Senate: that witnesses who had searched the records were available to verify this statement and he said: “As to any other matters we respectfully decline to submit witnesses for examination.” The statement of counsel appears in full at pages 5881-5882 of volume 50 of the transcript transmitted herewith.

Thereafter the company’s vice president, its comptroller, secretary, general auditor, and its director of publicity were put under oath but declined, with certain minor exceptions, to answer any questions except such as related to political contributions. The company voluntarily produced two of its accountants to testify that they had

•The page numbers refer to typewritten transcript. The statement referred to will be found at pages 1-4, Inclusive, herein.

searched the voucher records for a period of three years preceding and had found no record of disbursements to influence or control elections. However, when asked whether they had noted any vouchers in their search which related to disbursements to influence or control public opinion regarding public or municipal ownership or to disbursements on account of bonuses and commissions in the handling of securities of affiliated companies, these witnesses declined to answer on advice of counsel.

The testimony of all the witnesses connected with the Electric Bond & Share Co. may be found in the following pages of the transcript transmitted herewith: 5787-5856,[2] inclusive: 5881-5949,[2] inclusive.

The commission’s chief counsel at different stages during testimony of the Electric Bond & Share Co.’s officers and employees, offered as witnesses nine of the commission’s examiners who had knowledge of various facts regarding the business of the company and its associated corporations. Such knowledge was obtained by them either from the officers and records of such companies or from reports made to the commission by such companies. In this way a substantial amount of evidence was put into the record in an effort to carry out the resolution and to show that the Electric Bond & Share Co. is a corporation which comes within the scope of the Senate’s and commission’s resolutions and is engaged in interstate commerce, and to establish probable cause for the belief that the documents subpoenaed and the testimony refused are competent, relevant, and material. Meanwhile the commission’s legal staff has gone into the various procedural and constitutional questions involved for the purpose of enabling the commission to determine the precise remedy which should lie invoked under the circumstances, and is engaged in preparing an application to the courts.

Notwithstanding the attitude of the Electric Bond & Share Co.. as heretofore set forth, representatives of the commission are still in the office of the company examining certain records and books of that company and of several subsidiary companies whose financial records are kept in the same office. The company has permitted and continues to permit an examination of all books and papers, except the operating expense ledger and the supporting vouchers and documents. Although certain other papers have been requested and have not yet been furnished, they have not yet been refused.

The commission will hold further hearings relative to the so-called publicity phase of the inquiry but there will be some delay in this connection because of the time taken up with the controversy of the Electric Bond & Share Co. and because of the accumulation of a volume of office work unconnected with that controversy but relating to the investigation. The introduction of evidence relating:

to the financial phase of the investigation will be begun as soon as the various examinations under way are completed and the information obtained can be made ready for introduction into the record.

[2] Page numbers refer to typewritten transcript. For testimony of these witnesses see pages 5-13, inclusive, and pages 41-68. inclusive, herein.

Following is a descriptive list of all witnesses appearing since October 15:

October 17:

• A. E. Smith, comptroller and assistant secretary Electric Bond & Share Co., New York City.
• Ralph B. Feagin, vice president Electric Bond & Share Co., New York City.
• Calvin C. Davis, exam ner, Federal Trade Commission.

October 23:

• Clarence G. Farwell, John H. Blckley, Daniel Batiste, John Knox Arnold,
• and Calvin C. Davis, examiners, Federal Trade Commission.
• A. E. Smith, comptroller and assistant secretary Electric Bond & Share Co.
• Ralph B. Feagin, vice president Electric Bond & Share Co.
• Benjamin H. Brewster, general auditor, Electric Bond & Share Co.
• C. E. McBride, accountant. Electric Bond & Share Co.
• E. P. Summerson, secretary Electric Bond & Share Co.
• William N. Lewis, accountant, Electric Bond & Share Co.
• Stanley J. Quinn, director of publicity, Electric Bond & Share Co.

October 24 :

• Josephine Corliss Preston, superintendent of schools, State of Washington.
• Robert Montgomery, general sales manager Louisville Gas & Electric Co.

October 25 :

• Calvin C. Davis, examiner, Federal Trade Commission.

October 30 :

• John Knox Arnold, examiner. Federal Trade Commission.
• Smith W. Brookhart, jr., examiner. Federal Trade Commission.
• Calvin C. Davis, examiner, Federal Trade Commission.
• Charles H. Rodgers, examiner. Federal Trade Commission.
• Samuel Meisels, examiner, Federal Trade Commission.

October 31 :

• Asel R. Colbert, examiner, Federal Trade Commission.

A copy of the transcript of the witnesses testimony is forwarded herewith in six volumes, which have not been read for possible errors and corrections. There is also forwarded a descriptive list of the exhibits introduced at the hearings on October 11 and subsequently, comprising Exhibits 3869 to 4047, inclusive. This completes the list of all exhibits introduced since the beginning of the public hearings last March.

By direction of the commission. W. E. Humphrey, Chairman.

NINTH INTERIM REPORT OF THE ELECTRIC POWER AND GAS UTILITIES INQUIRY
Federal Trade Commission,
Washington, December 15, 1928.
To the Senate of the United States :

Pursuant to the direction of the Senate in Senate Resolution 83, Seventieth Congress, first session (approved February 15, 1928), regarding the investigation of certain electric power and gas utility companies, that this commission “report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation” upon the matters specified in the resolution, and that it transmit therewith the stenographic report of the evidence taken, this ninth interim report is respectfully submitted.

The general report forms sent out by the commission are now being returned by the utility companies and are being examined in preparation for analysis and tabulation. These reports cover the growth of capital assets and liabilities, financial details regarding security issues, inter-company relations and methods of control, services furnished to operating companies and the charges and expenses for such services, and other matters pertinent to the Senate resolution.

The large amount of information secured from company records and sent in since May, 1928, by the commission’s economists and accountants, is being examined and analyzed in preparation for hearings to be held later.

During the period covered by this interim report between 15 and 20 accountants have been in the field securing data supplementary to the information called for in the report forms described above. These accountants are working in the offices of a number of the largest holding companies, each of which controls companies in many States.

An application to the United States District Court for the Southern District of New York to compel seven officers and employees of the Electric Bond & Share Co. to answer certain questions, produce certain books and papers, and obey certain orders and subpoenas of the commission was filed in court December 1, 1928. The circumstances which led to the filing of this application were described in the eighth interim report and are further shown in the volumes of the transcript transmitted therewith. Employees of the commission are still in the offices of the Electric Bond & Share Co., and their work is continuing along the lines and within the limits indicated in our last report.

Apart from the limitations on the examination of the records of the Electric Bond & Share Co. referred to above, no serious obstacles appear to exist at present in this phase of the work.

Additional field work is also being done in connection with the so-called publicity phase of the resolution. Study is being made of numerous documents and papers obtained from certain witnesses who have already testified and from other sources, with a view to selecting those which should be offered for introduction into the public record. Consideration is also being given to numerous suggestions that have come from many sources. Court engagements permitting, it is expected that public hearings will be resumed early in January, and it is believed that soon thereafter the hearings in the matter of publicity efforts of electric and gas associations will be completed.

By direction of the commission. Abram F. Myers, Chairman.

Washington, January 15, 1929.
To the Senate of the United States:

Pursuant to the direction of the Senate in Senate Resolution 83,Seventieth Congress, first session (approved February 15, 1928), regarding the investigation of certain electric power and gas utilities companies, that this commission ” report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation ” upon the matters specified in the resolution, and that it transmit therewith, the stenographic report of the evidence taken, this tenth interim report is respectfully submitted.

During the period since the last interim report (December 15, 1928), the comprehensive report forms of utility corporations to the Federal Trade Commission continued to come in and are being examined.

Field work by examiners of the commission was performed during this period in the offices of the Standard Gas & Electric Co., the United Public Service Co., the Electric Bond & Share Co. the Electric Power & Light Corporation, the American Power & Light Co.. the North American Co., the Southeastern Power & Light Co., and the New England Power Association, this work covering the details of capital accounts, security issues, service charges, and other matters pertinent to the Senate resolution.

Work in the office was continued on field reports sent in by agents and on the report forms sent in by the companies, in preparation for hearings to be held later.

The application of the commission to the United States District Court for the Southern District of New York to compel seven officers and employees of the Electric Bond & Share Co. to answer certain questions, produce certain books and papers, and obey certain orders and subpoenas of the commission was returnable, according to the court’s rule to show cause, January 8, 1929. Prior to that date, by consent given by stipulation, the Electric Bond & Share Co. had become a party to this proceeding. The stipulation in the opinion of our counsel preserves to this commission the right “to challenge in law or in fact any defense or claim sought to be interposed or interposed by the Electric Bond & Share Co. or to challenge the right of said Electric Bond & Share Co. to interpose said defense or claim.”

On said return day the respondents filed their answers to the application of the commission opposing the granting thereof on the grounds stated by them before the commission and shown in the transcripts of testimony we have heretofore transmitted and described in our eighth interim report. The presiding judge announced that he found he was disqualified to try the case and continued it to the February term, which convenes February 5, 1929.

Because of the state of the docket and trial calendars it was not possible to ascertain which judge will hear the case and so to have a date fixed for trial.

Employees of the commission are still in the offices of the Electric Bond & Share Co., and their work is continuing along the lines and within the limits indicated in our last report.

Public hearings were held at the commission’s office? Washington, D. C., January 10 and 11, 1929, the following witnesses being examined:

• Leon C. Bradley, former director of Alabama Public Utilities Information Bureau.
• Mrs. John D. Sherman, formerly president of the American Federation of Women’s Clubs, who appeared pursuant to her own request.
• F. G. R. Gordon, of Haverhill, Mass., speaker and writer.

Herewith are transmitted two volumes containing the stenographic report of the evidence taken on the dates mentioned. A descriptive list of exhibits introduced into the record since our last report is transmitted herewith, the last one being numbered 4114. This includes all exhibits introduced up to and including January 11, 1929.

Subpoenas have been issued for other witnesses returnable January 16 and 18, 1929. Then there also will be offered in evidence further papers and documents now in the hands of the commission.

By direction of the commission. Edgar A. McCulloch, Chairman.