FEDERAL TRADE COMMISSION,
Washington, November 15, 1934.
To the Senate of the United States:

seventy-first interim report covering the period from October 16, 1934, to November 15, 1934, is respectfully submitted.

Public hearings were held on October 16 and November 7, 1934.

The reports and testimony presented related to the following companies and groups:

• National Electric Light Association,
• Electric Management & Engineering Corporation (of the Insull group),
• Byllesby, Engineering & Management Corporation (of the Standard Gas & Electric System), and
• Standard Gas & Electric Co.’s Appliance merchandising.

The witnesses, all of the Commission’s staff, were Thomas W. Mitchell, Albert A. Hartley, and J. A. Austin.

The reports and exhibits put into the record were:

• Memorandum by J. A. Austin giving tabulated comparison as to rates between a selected group of 20 scattered cities having municipally owned electric plants and similar groups of cities having privately owned plants. (Ex. 6190.)
• Report by Albert A. Hartley on Electric Management & Engineering, Corporation (bankrupt), based upon auditor’s report to the receivers, together with appendixes. (Ex. 6191.)
• Letter from W. T. dºsecretary of Stone & Webster, Inc., in reply to a request for information with respect to the Ontario Hydroelectric situation. (Ex. 6192.)
• Report by Thomas W. Mitchell on Byllesby Engineering & Management Corporation (of the Standard Gas & Electric System). (Ex. 6193.)
• Report by Thomas W. Mitchell on merchandising electricity and gas-using appliances by subsidiaries of Standard Gas & Electric (Ex. 6194.)

Since the last interim report two reports on management companies and one on merchandising electricity and gas-using appliances by subsidiaries of a group were completed.

Field accounting examinations were continued on three operating companies, one electric holding and operating company, a natural gas transportation company, a holding and management company, a natural-gas holding company, and an investment company. Work on the economic inquiry was handicapped by the necessary continued loan of personnel to the textile inquiry, in compliance with an Executive order of September 26, 1934, and the time of both the legal and economic staff has been largely taken up with the preparation of final reports and of material for them.

Transmitted herewith is the transcript of testimony taken at the hearings from October 16 to November 15, 1934 (pp. 45.196 to 45332, both inclusive), together with the exhibits as described (Exs. 6190 to 6194, both inclusive).

By direction of the Commission. Ewin L. DAVIS, Acting Chairman.

Pursuant to Senate Resolution 83, Seventieth Congress, first session, approved February 15, 1928 (as extended by S. J. Res. 115, 73d Cong., 2d sess., approved June 26, 1934), directing the investigation of certain classes of holding and operating electric and gas companies, and associated engineering, finance, management, and construction companies, upon other matters specified in the resolution, and directing that the Commission “report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation,” and that it transmit therewith the stenographic report of the evidence taken this seventy-first interim report covering the period from October 16, 1934, to November 15, 1934, is respectfully submitted.

November 27, 1934.

Dear Sir : I have the honor to transmit herewith an index to the record covering parts 1 to 20, with accompanying exhibit volumes, of the Commission’s investigation of the electric and gas industries made in response to Senate Resolution 83, Seventieth Congress-, -first session, approved February 15, 1928, including topical and personal sections. It is desired that this index be printed in a separate volume as part 71-B.

By direction of the Commission: Garland S. Ferguson, Jr., Chairman.

EXPLANATORY NOTE
The index of association publicity and propaganda is based primarily on the exhibits introduced in the record. For further in formation on the topics the reader’s attention is invited to the testimony at the point where the exhibit was introduced in evidence.

FEDERAL TRADE COMMISSION,
Washington, December 18, 1934.
To the Senate of the United States:

Seventy-second interim report covering the period from November 16, 1934, to December 15, 1934, is respectfully submitted.

Public hearings were held on December 11, 12, and 13, 1934. The reports and testimony related to the following groups:

• Niagara Hudson Power Corporation group and
• American Gas & Electric Co. group (interstate transmission of energy).

The witnesses, all of the Commission’s staff, were Col. William H. England, Harry H. Carter, and Kenneth A. Miller (now with the Power Commission).

The reports and exhibits put into the record were:

• Report by Kenneth A. Miller on the examination of the accounts and records of Niagara Hudson Power Corporation (exhibit 6195).
• Chart of Niagara Hudson Power Corporation. Statement of voting-stock control of companies of the Niagara Hudson Power Corporation system as of December 31, 1932 (exhibit 6196).
• Volume of printed appendixes to exhibit 6195 (exhibit 6197). Map of hydroelectric power and steam-generating plants of the Niagara Hudson system as of December 31, 1932 (exhibit 6198)
• Report by Harry H. Carter on interstate transmission of electric energy by American Gas & Electric Co. group (exhibit 6199).
• Letter from George N. Tidd to Dr. Francis Walker, dated November 8, 1934, with two enclosed extracts of corporate minutes (American Gas & Electric Co. group) (exhibit 6200).

Since the last interim report an accounting report on a large holding company and a report on the interstate movement of electric energy across State lines were completed.

Due to the necessity of loaning personnel to the textile inquiry, to which an order of the President gave precedence, work was suspended on three reports. Work on three accounting reports and on an important engineering report was also suspended in order to complete the general report on electric and gas utilities for submission to the Senate next January.

Field accounting examinations were continued on six holding and sub-holding companies, the examination of one of which involves 17 predecessor and affiliated companies; on four large operating companies, an important natural gas pipe-line company, and a securities selling company.

Reports on the interstate movement of electric energy were being prepared for two companies and on a securities holding company. Field accounting work was begun on an important natural gas pipe-line company.

Since the last interim report (the seventy-first) there has been sent to the Senate in installments the report of the Federal Trade Commission on association publicity and propaganda expenditures of the electric power and gas industries. This report is being printed as part 71-A. The report deals with the publicity and propaganda activities and expenditures of the various associations in the two industries and is in two parts.

Part I states in concise form the ultimate objective or purpose of these activities, the prime means for attaining it, and the agencies and persons employed, how they functioned, and how they were financed. Part II is in the nature of a brief of facts, which with liberal use of quotations gives illustrative examples of the various specific activities engaged in and used. The first section of part II deals with utility activities and expenditures through the press, including newspapermen. It also discusses certain subsidized agencies and publicity issued directly by the utility associations.

The second section of part II deals with expenditures and activities through such utility associations and their representatives among educators, schools, and universities. The third section of part II discusses the outside agencies that were induced to come to the aid of the utility program and certain other activities. The fourth section of part deals with specific instances of opposition to municipal and public ownership and certain other activities as indicated in the table of contents. There follows at the end a brief summary of the report. There are also transmitted 12 appendixes and an index to the report.

The next hearing is scheduled for December 18 when a report on the Cities Service Power & Light Co. will be presented. Transmitted herewith is the transcript of testimony taken at the hearings from November 16 to December 15, 1934 (pp. 45333 to 45602, both inclusive), together with the exhibits introduced as above described (exhibits 6195 to 6200, both inclusive). –

By direction of the Commission. GARLAND S. FERGUSON, Jr., Chairman.

Pursuant to Senate Resolution 83, Seventieth Congress, first session, approved February 15, 1928 (as extended by S. J. Res. 115, 73d Cong., 2d sess., approved June 26, 1934), directing the investigation of certain classes of holding and operating electric and gas companies, and associated engineering, finance, management, and construction companies, upon other matters specified in the resolution, and directing that the Commission “report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation ” and that it transmit therewith the stenographic report of the evidence taken this seventy-second interim report covering the period from November 16, 1934, to December 15, 1934, is respectfully submitted.

June 17, 1935.
The President of the Senate,
Washington, D. C.

Sir: Under several letters of transmittal, the first of which was dated January 10, 1935, there have been submitted to the Senate the 11 chapters constituting the report submitted herewith, namely, chapters I to XI of the Commission’s summary report in response to that part of Senate Resolution 83, Seventieth Congress, first session, approved February 15, 1928, which directs the Federal Trade Commission to investigate and make report upon—

1.  The growth of the capital assets and capital liabilities of public-utility corporations doing an interstate or international business supplying either electrical energy in the form of power or light, or both, however produced, or gas, natural or artificial ; of corporations holding the stocks of two or more public-utility corporations operating in different States; and of non-public utility corporations owned or controlled by such holding companies;
2. the method of issuing, the price realized or value received, the commissions or bonuses paid or received, and other pertinent facts with respect to the various security issues of all classes of corporations herein named, including the bonds and other evidences of indebtedness thereof, as well as the stocks of the same;
3. the extent to which such holding companies or their stockholders control or are financially interested in financial, engineering, construction, and/or management corporations, and the relation one to the other of the classes of corporations last named, the holding companies, and the public utility corporations ;
4. the services furnished to such public utility corporations by such holding companies and/or their associated, affiliated, and/or subsidiary companies, the fees, commissions, bonuses, or other charges made therefor, and the earnings and expenses of such holding companies and their associated, affiliated, and/or subsidiary companies; and
5. the value or detriment to the public of such holding companies owning the stock or otherwise controlling such public-utility corporations immediately or remotely, with the extent of such ownership or control, * * *.

This report is essentially a review of the record which deals with the phases of the resolution quoted above. It is in part a summary of the facts presented in that record. The conditions disclosed, how ever, are not merely stated ; they are also discussed with regard to their bearing on business affairs, the general consumer, and the welfare of the entire Nation. A prior report, submitted to the Senate on January 28, 1935, contained three additional chapters (XII, XIII, and XIV) of the report on this general subject, dealing specifically with the question “propounded by the above-mentioned Senate resolution, namely, 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 , together with a discussion of existing State and Federal regulations affecting holding companies and their subsidiary companies. This report was printed as no. 73A of the Senate print of the record.

The foregoing summary reports constitute a general answer to the requirements of the Senate resolution mentioned above, but in compliance with a recent direction, namely, Senate Resolution 115, Seventy-third Congress, second session, approved June 26, 1934, this Commission is continuing the inquiry until the close of the current calendar year, with special concentration on the natural-gas utility holding companies and their subsidiary and associated companies. As the Senate is advised, the natural-gas industry has acquired a greatly increased importance in the last few years, and presents some special problems of great public concern.

By direction of the Commission. Ewin L. Davis, Chairman.

Federal Trade Commission,
Washington, January 15, 1935.
To the Senate of the United States:

Seventy-third interim report covering the period from December 16, 1934, to January 15, 1935, inclusive, is respectfully submitted.

Public hearings were held on December 20 and 21, 1934. The report and testimony thereupon offered related to the following group : Cities Service Power & Light Co.

The witness, of the Commission’s staff, was Randolph K. Ogle. The report and exhibit put into the record were :

• The report by Randolph K. Ople on the examination of the accounts and records of Cities Service Power & Light Co. (Exhibit 6201.)

Since the last interim report an accounting report on a large sub-holding company was completed.

Due to the necessity of loaning personnel to the textile inquiry, to which an order of the President gave precedence, the suspension of work on three reports was continued throughout the month. Work on three accounting reports and an important engineering report was also suspended in order to complete the general report on electric and gas utilities for submission to the Senate.

Field accounting examinations were continued on 6 holding and sub-holding companies, the examination of 1 of which involves 17 predecessor and affiliated companies; on 4 large operating companies, an important natural-gas pipe-line company, and a securities-selling company.

Reports on the interstate movement of electric energy are being prepared for two companies and on a securities-holding company. Field accounting work was begun on the subsidiaries of an important natural-gas pipe-line company.

Since the last interim report (the seventy-second) there has been sent to the Senate the first three chapters of the summary report of the Federal Trade Commission on the economic, financial, and corporate phases of holding and operating companies of the electric and gas utilities. This summary report is being printed as part 72-A.

Chapter I is entitled ” Origin and Scope of the Inquiry ” and outlines generally the origin of the inquiry, methods of investigation, and the scope of the entire hearings.

Chapter II is entitled ” Growth and Importance of Electric and Gas Industries ” and presents statistics showing the growth of the fixed capital and earnings of corporations engaged in the electric and gas utilities industries, the growth and present importance of holding company control of these industries, the importance of the interstate movement of electric energy and natural gas, the control of natural gas pipe lines by a few large electric holding companies and corporations engaged in the petroleum business, and the proportion of the industry covered intensively by the Commission’s inquiry.

Chapter III is entitled Competition and Combination Affecting the Control of the Electric and Gas Utility Industry ” and summarizes and interprets the facts developed in the public hearings made pursuant to Senate Resolution 83, Seventieth Congress, first session. It deals with the relation of holding companies to local monopoly utilities, competition among holding companies (particularly for control of operating companies), the relations of certain investment bankers with specific holding-company groups, and the competition among investment bankers for electric and gas utility holding-company control.

Transmitted herewith is the transcript of testimony of the hearings from December 16, 1934, to January 15, 1935, inclusive (pp. 45603 to 45864, inclusive) , together with exhibit introduced as above described (exhibit 6201).

By direction of the Commission. Ewin L. Davis, Chairman,

Pursuant to Senate Resolution 83, Seventieth Congress, first session, approved February 15, 1928 (as extended by S. J. Res. 115, 73d Cong., 2d sess., approved June 26, 1934), directing the investigation of certain classes of holding and operating electric and gas companies, and associated engineering, finance, management, and construction companies, upon other matters specified in the resolution, and directing that the Commission ” report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation ” and that it transmit therewith the stenographic report of the evidence taken, this seventy-third interim report covering the period from December 16, 1934, to January 15, 1935, inclusive, is respectfully submitted.

January 28, 1935.
The President of the Senate,
Washington, D. C.

Sir: Under separate letters of transmittal dated January 21, January 25, and January 26, 1935 there have now been sent to the Senate, chapters XII, XII, and XIV, and seven appendixes of its summary report on its investigation of the electric power and gas industries made in response to Senate Resolution 83, Seventieth Congress, first session, approved February 15, 1928.

Chapter XII deals with the efforts of the States to control holding companies. It shows that there is such a dearth of effective State control of holding companies in the electric and gas utilities fields in that a Federal problem is presented.

Chapter XIII deals with the extent to which holding companies “r have been regulated by the Federal Government, the need for en-enlargement of such regulation, the constitutional powers of the Congress under which such regulation might be accomplished, and possible legislative and administrative methods to that end.

Chapter XIV contains the conclusions and recommendations of the Commission, arrived at as a result of its study of the utility holding company situation. It discusses alternatively the suppression or regulation of utility holding companies and the methods by which each of these general policies might be accomplished by the Federal Government. A number of specific provisions are suggested under either alternative policy which Congress may decide to adopt. The recommendations of the Commission are that the abuses revealed as existing in this field may be met by

1. taxation,
2. direct prohibitive legislation,
3. compulsory Federal licensing,
4. a permissive Federal incorporation act. The Commission primarily recommends the adoption of the first two methods mentioned, to wit, (1) taxation, and (2) direct prohibitive legislation.

The seven appendixes (L. 1- L. 7) are law studies supporting the conclusions and recommendations submitted. It is desired that these chapters (XII, XIII, and XIV) and the seven appendixes be printed as part 73-A. Chapter 1 to XI, inclusive, are printed as part 72-A.

By direction of the Commission. Ewin L. Davis, Chairman.

FEDERAL TRADE COMMISSION,
Washington, February 15, 1935.
To the Senate of the United States:

Seventy-fourth interim report covering the period from January 16, 1935, to February 15, 1935, inclusive, is respectfully submitted.

Public hearings were held on January 28 and February 5 and 6, 1935.

The reports and testimony related to the following groups:

• Power & Electric Securities Corporation (Niagara Hudson Power Corporation group).
• Midland United Co. group (interstate transmission).
• General Water, Gas & Electric Co.
• Texas-Louisiana Power Co. Central Public Service Co. (management, supervision, and servicing).

The witnesses, all of the Commission’s staff, were: Louis G. Prichard, Harry H. Carter, Clarence G. Farwell, Frank. Hale.

Reports and exhibits put into the record were:

• Report by Clarence G. Farwell on the examination of the accounts and records of the Power & Electric Securities Corporation. (Exhibit no. 6202.)
• Report by Harry H. Carter on interstate transmission of electric energy and gas by the Midland United Co. group. (Exhibit no.6203.)
• Repprt by Louis C. Prichard on the examination of the accounts and records of General Water, Gas & Electric Co. and its predecessor company, General Water Works & Electric Corporation, and certain others in this group. (Exhibit 6204.)
• Report by Frank C. Hale on the examination of the accounts and records of Texas-Louisiana Power Co. (Exhibit 6205.)
• Report by Louis G. Prichard on management, supervision, and servicing relations of the Central Public Service Co. (Exhibit 6206.)

Since the last interim report (seventy-third), accounting reports on a holding company, a sub holding company, and an operating company were completed.

Field accounting examinations were continued on 5 holding and sub holding companies, the examination of 1 of which involves 17 predecessor and affiliated, companies; on 5 large operating companies and a securities-selling company. Field accounting examination was begun on a large natural-gas sub holding company.

Reports on the interstate movement of electric energy were being prepared for two companies, and an engineering report was being prepared on a large holding-company group.

Also since the last interim report there have been sent to the Senate chapters IV, V, VI, VII, VIII, and IX of the Summary Report (vol. 72—A) of the Federal Trade Commission on the economic, financial, and corporate phases of holding and operating companies of the electric and gas utilities.

Chapter IV deals with the organization, structure, and basis of holding companies and methods of controlling operating companies. It classifies holding companies into three, more or less, well-defined types. These are the large combination type, illustrated by Niagara Hudson Power Corporation, the large city type, illustrated by the North American Co., and the investment type, illustrated by the Electric Bond & Share Co. group. The more important holding-company organizations are described, their holdings are shown, and their capital structures outlined. It shows the methods employed by holding companies in controlling operating companies through the ownership of minority equities, discusses the trend toward the issuance of nonvoting common stock, and low-priced management shares, gives illustrations of and shows the effects of pyramided holding company organizations, and shows the situation with respect to common officers and interlocking directors within holding-company groups and among separate groups.

Chapter V deals with the growth of capital assets, and summarizes the principal facts developed in the course of the Commission’s inquiry. It traces the natural and artificial growth of the holding, sub-holding, and operating companies examined. It deals with the nature of the capital assets of holding companies and of their subsidiary operating companies in connection with such growth, and the effect on both types of companies of construction performed for operating companies, of the purchases of properties or securities of operating companies, of mergers, consolidations, and corporate reorganizations of both types of companies, and of appraisals and revaluations of capital assets of operating companies. It indicates the methods employed in effecting the sales of securities of public utilities for the purpose of avoiding the payment of Federal income taxes, and in effecting the artificial growth of companies and systems through the capitalization of large amounts of write-ups of properties or securities, improperly capitalized intangibles, and inflation.

Chapter VI deals with the growth of capital liabilities and discusses in detail the purposes and methods of issuing the different types of securities and the nature of the consideration received there for by holding, sub-holding, and operating electric and gas utility companies. It also discloses the numerous channels through which these securities were distributed to the investing public. It shows that utility securities were issued and sold not only to the investing public for cash, but were issued to a considerable extent, in whole or in part, in payment for utility properties, for services of bankers, promoters, syndicates, and officers, and as bonuses for goodwill and other intangibles. It also shows that the Commission’s inquiry disclosed that some holding companies have issued a bewildering array of security issues of various types, classes, and preferences. . The report discloses the fact that in numerous instances the stockholders’ preemptive rights to subscribe to new issues of stock of the same class have been abrogated by restrictions or limitations contained in certificates of incorporation which tended to perpetuate the control of managements. It further shows that, for the most part, in order to balance the approximately $1,400,000,000 of write-ups found in the holding and operating companies examined, common, and in some instances also preferred, stocks were issued. It is obvious that in many instances security issues were not supported by real value. The failure to earn revenues adequate to support these excessive security issues has undoubtedly been the principal cause of the receiverships, bankruptcies, and other financial difficulties in which a number of holding-company groups now find themselves.

Chapter VII on income, expenses, and surplus deals with the sources of income of electric, and gas holding and operating companies. It shows, among other things, that certain holding companies paid cash dividends when they did not receive sufficient cash revenues to meet their dividend requirements; some holding companies charged their subsidiaries higher interest rates on advances than were paid by the holding company for borrowed funds; in certain cases the holding company in its corporate reports included the periodic earnings of subsidiaries as their income although subsidiary the sub companies had not declared any dividends. It also shows that certain holding companies acquired securities issues from their subsidiary operating companies and immediately sold these same securities to non-affiliated marketing companies at a profit to the hold company, and in some cases expenses of the holding companies were charged to their operating companies in amounts which appear to place an unjust burden on such operating companies. Many hold companies have failed to distinguish between capital surplus and earned surplus, and a number of companies overstated their earnings through the inclusion therein of write-ups, imputed interest and other items of fictitious income, and through failure to take adequate depreciation, etc.

Chapter VIII is entitled “Methods of Marketing Securities and of Influencing the Course of Their Market Prices.” It describes various methods of marketing securities through “purchasing groups”, “sell groups”, “distribution groups”, “underwriting syndicates”, “ put syndicates”, etc., which were organized by Associated Gas & Electric Co., Cities Service Co., the various Insull companies, and others. It shows how certain managements made voluminous purchases of securities on the different stock exchanges to enhance their market prices while their own salesmen were selling the same securities to the general public, and it summarizes the results of such resolution, both to the companies involved and to the investing public.

Chapter IX classifies and describes the various types of services rendered the operating utility by a servicing organization, which is commonly the holding company or some other company affiliated with the operating utility. The service contract itself is examined and classified, its typical provisions described, and the methods of compensation for servicing provided under the contract are presented.

Illustrations of servicing organizations are set out, showing service income, costs, and profits, so far as these were available. The effects of specialized servicing upon operating efficiency and costs and upon the quality and rates of the services rendered by the utility are considered. Conclusions are drawn with respect to the reasonableness of the servicing charges made on a cost-and-profit basis and on a cost basis and with respect to public regulations of servicing contracts between the operating utility and an affiliated servicing organization.

Likewise, since the last interim report there has been sent to the Senate part 73–A of the Summary Report of the Federal Trade Commission on the Economic, Financial, and Corporate Phases of Holding and Operating Companies of Electric and Gas Utilities. This volume consists of three chapters, chapters XII, XIII, and XIV, and seven legal studies as appendixes.

Chapter XII deals with the efforts of the States to control holding companies. It shows that there is such a dearth of effective State control of holding companies in the electric and gas utilities fields that a Federal problem is presented.

Chapter XIII deals with the extent to which holding companies have been regulated by the Federal Government, the need of enlargement of such regulation, the constitutional powers of the Congress under which such regulation might be accomplished, and possible legislative and administrative methods to that end.

Chapter XIV contains the conclusions and recommendations of the Commission. It discusses alternatively the suppression and regulation of utility holding companies and the methods by which each of these general policies might be accomplished by the Federal Government. A number of specific provisions are suggested under either alternative policy which Congress might decide to adopt. The recommendations of the Commission are that the abuses revealed as existing in this field may be met by (1) taxation, (2) direct prohibitive legislation, (3) compulsory Federal licensing, and (4) a permissive Federal incorporation act. The Commission primarily recommends the adoption of the first two methods, to wit, (1) taxation and (2) direct prohibitive legislation.

The seven legal appendixes are law studies supporting the conclusions and recommendations submitted.

Transmitted herewith is a transcript of testimony of the hearings from January 16, 1935, to February 15, 1935, inclusive (pp. 45865 to 45991, inclusive), together with exhibits introduced, as above described (exhibits 6202 to 6208, inclusive).

By direction of the Commission. Ewin L. DAVIs, Chairman.

Pursuant to Senate Resolution 83, Seventieth Congress, first session, approved February 15, 1928 (as extended by S. J. Res. 115, 73d Cong., 2d sess., approved June 26, 1934), directing the investigation of certain classes of holding and operating electric and gas companies, and associated engineering, finance, management, and construction companies, upon other matters specified in the resolution, and directing that the Commission “report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation ” and that it transmit therewith the stenographic report of the evidence taken, this seventy-fourth interim report covering the period from January 16, 1935, to February 15, 1935, inclusive, is respectfully submitted.

Federal Trade Commission,
Washington, March 9, 1935.
To the Senate of the United States:

Seventy-fifth interim report covering the period from February 16, 1935 to March 15, 1935, inclusive, is respectfully submitted.

Public hearings were held on March 4 and 5. The report and testimony related to the following company: Niagara Hudson Power Corporation (electric physical properties and operations of the operating subsidiaries of).

The witnesses, of the Commission’s staff, were Judson C. Dickerman and LeClaire Hoover.

The report and exhibits put into the record were:

• Report by Judson C. Dickerman on the Electric Physical Properties and Operations of the operating subsidiaries of Niagara Hudson Power Corporation. (Exhibit 6209.)
• Correspondence between Prof. W. T., Ryan, University of Minnesota, and William T. Chantland, attorney in charge of utilities investigations, Federal Trade Commission, giving statement of Professor Ryan’s activities as a member of the educational committee on public-utility problems, and his previous employment by municipalities and private concerns at various times. (Exhibit 6210.)

Since the last interim report (seventy-fourth) there has been sent to the Senate Chapter X of the Summary Report of (vol. 72-A) the Federal Trade Commission on the Economic, Financial, and Corporate Phases of Holding and Operating Companies or the Electric and Gas Utilities. This chapter is a technical discussion of the nature and conditions of use of the operating properties of the utility companies. While the chapter deals primarily with the electric utilities, there are some comparisons and presentations of similarities of gas utility properties and operations. This report analyzes the character of operations, discusses holding-company control of such operations, management-company staffs, nature of production and delivery of electric energy, sources of supply, the effect of financial objectives of property development, depreciation, and other phases of public-utility operations. Analyses of the general character, development of properties, quality of operations, selling policies, and the character of control of typical companies for purposes of illustration are also contained in the report.

Also since the last interim report an engineering report of a large holding company was completed.

Field accounting examinations were continued on 3 holding and sub-holding companies, 4 operating companies, and a securities-selling company.

Reports on the interstate movement of electric energy were being prepared for two companies and an engineering report was being prepared on a large holding company group, and accounting reports were being written on a large sub-holding company involving 17 predecessor and affiliated companies, on two important electric operating companies, and on an important engineering and management company.

The field accounting examination was begun on a large natural gas pipe-line company and an engineering examination of another natural-gas company was commenced.

Transmitted herewith is a transcript of testimony of the hearings from Feb. 16, to Mar. 15, 1935, inclusive (pp. 45,992-46,072, inclusive), together with exhibits introduced as above described (exhibits 6209 and 6210).

By direction of the Commission. Ewin L. Davis, Chairman.

Pursuant to Senate Resolution 83, Seventieth Congress, first session, approved February 15, 1928 (as extended by S. J. Res. 115, 73d Cong., 2d sess., approved June 26, 1934), directing the investigation of certain classes of holding and operating electric and gas companies, and associated engineering, finance, management, and construction companies, upon other matters specified in the resolution, and directing that the Commission ” report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation ” and that it transmit there with the stenographic report of the evidence taken, this seventy-fifth interim report covering the period from February 16, 1935 to March 15, 1935, inclusive, is respectfully submitted.

Federal Trade Commission,
Washington, April 17, 1935.
To the Senate of the United States:

Seventy-sixth interim report covering the period from March 16, 1935, to April 15, 1935, is respectfully submitted.

Public hearings were held at Washington, D. C, on March 28, 29, and April 2, 1935. A hearing was also held at New York City, March 27 and 28, 1935.

The reports and testimony presented at the above hearings related to the following companies :

• Duke Power Co. system.
• Middle West Utilities Co. (Correction of report on.)
• Corporation Securities Co. of Chicago. (Correction of report on.)

The witnesses who appeared at Washington were Thomas W. Mitchell, Roger E. Barnes, Arthur E. Lundvall, Harry Carter, and W. B. Home, all of the Commission’s staff.

At the New York City hearing the following witnesses testified:

• Howard S. Candee, president Howdee Corporation;
• Frederick J. Leary, vice president Central Hanover Bank & Trust Co. ; and
• Walter C. Hayward, clerk, Central Hanover Bank & Trust Co.

The reports and exhibits put into the record were :

• Correspondence pertaining to the service fees, income, and expenses of Byllesby Engineering and Management Corporation, and dividends paid on preferred stocks of subsidiary operating companies of Standard Gas & Electric Co. for 1933 (ex. no. 6211).
• Report by Harry Carter on the interstate transmission of electric energy by Duke Power Co. system (ex. no. 6212).
• Map—Transmission system of the Duke Power Co. and Southern Public Utilities Co. in North and South Carolina (ex. no. 6213).
• Report by W. B. Home on the inter-corporate relations between companies in the Duke power group (ex. no. 6214).
• Report by Roger E. Barnes on the examination of the accounts and records of the Duke Power Co. and constituent system companies (ex. no. 6215).
• Copies of annual reports to stockholders of public-utility holding companies ; Electric Bond & Share Co., 1932 ; Corporation Securities Co. of Chicago, 1929; The North American Co., 1929; Associated Gas & Electric Co., 1928, 1929, 1932 ; Columbia Gas & Electric Corporation and subsidiary companies, 1932 (ex. no. 6216).
• Correction of report of Thomas W. Mitchell on examination of accounts and records of Middle West Utilities Co. and of Corporation Securities Co. of Chicago (ex. no. 6217).
• Summary of write-ups, improperly capitalized intangibles, and inflation included in the capital assets of the top electric utility holding companies, sub-holding companies, and operating companies, at the final dates of their examination (ex. no. 6218).
• Check—dated November 10, 1927, in the amount of $1,200, signed by Howard S. Candee, president of the Howdee Corporation, to the order of G. L. Ohrstrom & Co. (ex. no. 6218a).

Since the last interim report, an accounting report, a report on inter-corporate relations, and a report on the interstate transmission of electric energy of a large holding company were completed.

Field accounting examinations were continued on 3 natural gas holding companies, on 3 natural gas pipe lines, on a securities sales company, and on a large electric operating company. An engineering examination of a large natural gas holding company group was also continued.

Accounting reports were being prepared on a large electric operating company and on a large holding company, and on a sub-holding company involving 17 predecessor and affiliated companies. A field accounting examination was begun on an important natural gas-producing pipe-line transmission and gas-distributing company group ; and an engineering examination was also begun on two large natural gas-pipe lines.

Transmitted herewith is a transcript of testimony of the hearings from March 16, 1935, to April 15, 1935 (pp. 46073 to 46167, inclusive, and pp. 1 to 78, inclusive, of the New York City hearings) , together with exhibits introduced as above described (exhibits 6211 to 6218a, inclusive) .

By direction of the Commission. Charles H. March. Acting Chairman.

Pursuant to Senate Resolution 83, Seventieth Congress, first session, approved February 15, 1928 (as extended by S. J. Res. 115, 73d Cong., 2d sess.. approved June 26, 1934), directing the investigation of certain classes of holding and operating electric and gas companies, and associated engineering, finance, management, and construction companies, upon other matters specified in the resolution, and directing that the Commission ” report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation ” and that it transmit therewith the stenographic report of the evidence taken, this seventy-sixth interim report covering the period from March 16, 1935, to April 15, 1935, is respectfully submitted.

FEDERAL TRADE COMMISSION,
Washington, May 17, 1935.
To the Senate of the United States:

Seventy-seventh interim report covering the period from April 15, 1935, to May 15, 1935, is respectfully submitted.

Public hearings were held on April 15, 16, 17, 19, and May 8, 9, and 10, 1935. The reports and testimony related to the following companies:

• American Natural Gas Corporation.
• Southern Natural Gas Corporation.
• The Commonwealth & Southern Corporation (of New York).
• Allied Engineers, Inc.
• Cities Service Co. (extracts from schedule E).

The witnesses, of the Commission’s staff, were: William H. England, Lewis G. Pritchard, John H. Crabtree, Walter Meleen, Clarence G. Farwell, Harry H. Carter, and A. M. McDermott.

• Mr. William Ritchie and Mr. Buehler Metcalfe, both of Omaha, Nebr., appeared as witnesses at their own request.
• Mr. W. S. B. Winans, of the Cities Service Co., also testified.

The reports and exhibits put into the record were:

• Report by John H. Crabtree and F. X. Patterson on examination of the accounts and records of American Natural Gas Corporation (ex. no. 6219).
• Map, of the pipe-line system of American Natural Gas Corporation and subsidiaries (ex. no. 6220).
• Report by Lewis G. Pritchard on the examination of the accounts and of the Southern Natural Gas Corporation (in receivership) (ex. no.
• Kansas City Gas Co., expenditures by George H. Shaw, agents’ fund, Empire Cos. (Bartlesville, Okla.), as analyzed and reported by Roger E. Barnes, of the Commission’s staff (ex. no. 6222).
• Correspondence between and among officials of the Cities Service Co. and Henry L. Doherty & Co., and subsidiaries and affiliates, concerning B. t. u. gas standards, lower heating value standards, various municipal franchises in certain cities, correspondence between National Bureau of Standards officials and others concerning various gas heating value standards, etc. (ex. nos. 6223 to 6274, inclusive).
• Memorandum by Dr. T. W. Mitchell of corrections of a report by A. R. Col bert relating to records of Insull Co. (exhibit no. 6275).
• Report by Walter Meleen on examination of accounts and records of the Commonwealth & Southern Corporation (of New York) (exhibit no. 6276).
• Report by Clarence G. Farwell on the examination of the accounts and records of Allied Engineers, Inc., and its predecessor company, Stevens & Wood, Inc. (subsidiary of the Commonwealth & Southern Corporation, Delaware) (exhibit no. 6277).
• Report by Harry Carter on interstate transmission of electric energy and gas by the Commonwealth & Southern Corporation Group (exhibit no. 6278).
• Respondent’s exhibits placed in record by Robert Burns on behalf of the Cities Service Co. (exhibits nos. 1 to 7, inclusive, Cities Service Co.).
• Article from Electrical World of May 25, 1929, by P. S. Arkwright, then president of the National Electric Light Association (exhibit no. 6279).
• Editorial from Electrical World, issue of October 14, 1933, entitled “Light Up With Politics” (exhibit no. 6280).
• Letter from Richard L. Metcalfe, Omaha, Nebr., dated April 16, 1935, addressed to Otis B. Johnson, secretary, Federal Trade Commission, concerning a proposal to bring natural gas into Omaha, Nebr. (exhibit no. 6281).
• Photostats of vouchers of payments to William Ritchie, Jr., and certain letters from the files of the Western Natural Gas Corporation (exhibit no. 6219–C).
• Letter from Arthur L. Mullergren, concerning fees for services of William Ritchie, Jr., Omaha, Nebr., in connection with Metropolitan Utilities District contract with Western Natural Gas Corporation (exhibit no. 6282).
• Correspondence between Arthur L. Mullergren: R. C. Allen, of G. L. Ohrstrom & Co.; and others, concerning Missouri Valley Gas Group and Ohrstrom financing arrangements (exhibit no. 6283).
• Statement by William Ritchie re Western Natural Gas Corporation contract with Metropolitan Utilities District of Omaha, Nebr., etc., and campaign respecting same, years 1929 and 1930 (Ritchie’s exhibit no. 1).
• Advertisement concerning Metropolitan Utilities District of Omaha, Nebr., and relative merits of artificial gas and natural gas (Ritchie’s exhibit no. 2).
• Letter from Buehler Metcalfe, dated April 15, 1935, to Edwin L. Davis, Chair man Federal Trade Commission, concerning use of natural gas in Omaha, Nebr., in place of artificial gas manufactured by the Metropolitan Utilities District of Omaha, and giving outline of expenditures for different purposes in connection with the election referendum of 1930 (Metcalfe’s exhibit no. 1).
• Contract, consisting of letter of proposal and acceptance, from Arthur L. Mullergren to Buehler Metcalfe, for a study and service in connection with a proposed natural-gas line from Texas and/or Kansas gas fields to Lincoln, Omaha, and other cities and towns (Metcalfe’s exhibit no. 2).

Since the last interim report accounting reports on a natural gas holding company, a natural gas pipe line company, and three accounting reports on construction and supervision companies were completed. Field accounting examinations were begun on two natural gas holding companies, five natural gas pipe line producing companies, and on a natural gas producing, transporting, and distributing company. Field accounting examinations were continued on 4 natural-gas holding companies, on 4 natural-gas pipe-line companies, on a natural-gas producing company, and on a gas distributing company. Two engineering examinations of large natural-gas holding company groups were also continued. Accounting reports were being prepared on a large electric operating company and on a large holding company and on a sub-holding company involving 17 predecessor and affiliated companies.

Transmitted here with is a transcript of testimony of the hearings held from April 15, 1935, to May 15, 1935, inclusive (pp. 46, 168 to 46,856, inclusive), together with exhibits introduced as above described as exhibits 6219 to 6283, inclusive; respondent’s Cities Service Co. exhibits 1 to 7, inclusive; Ritchie’s exhibits 1 and 2; and Metcalfe’s exhibits 1 and 2).

By direction of the Commission. Ewin L. DAVIS, Chairman.

Pursuant to Senate Resolution 83, Seventieth Congress, first session, approved February 15, 1928 (as extended by S. J. Res. 115, 73d Cong., 2d sess., approved June 26, 1934), directing the investigation of certain classes of holding and operating electric and gas companies, and associated engineering, finance, management, and construction companies, upon other matters specified in the Resolution, and directing that the Commission “report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation ” and that it transmit therewith the stenographic report of the evidence taken, this seventy-seventh interim report covering the period from April 15, 1935, to May 15, 1935, is respectfully submitted.

This preliminary index covers parts 21 to 45, inclusive, of the hearings on certain utility corporations held in response to Senate Resolution No. 83, Seventieth Congress, first session, directing investigation of such utility corporations. (Copy of this resolution will be found on p. VIII.)

The index is divided into three general parts, the first covering oral testimony and the second covering the exhibits which consist chiefly of reports of the examiners of the Commission on interstate transmission of electric energy; inter-corporate relations of utility holding, operating, and other affiliated companies; examinations of their accounts and records, with supporting data; and engineering examinations of physical properties, etc., of operating companies, and the third part being on Index to company publicity and propaganda.

Testimony. —The oral testimony is largely a repetition of information presented in the exhibits. For the sake of economy of time and expense, the testimony was not indexed in detail. The index covers hearings, presiding officers, appearances, witnesses, qualification of witnesses^ statements by presiding officers, statements by counsel of Commission, statements by counsel or representatives of companies, subjects upon which testimony was given, companies on which testimony was given (exclusive of those incidentally mentioned), and exhibits, with brief description of each in order of number, with references to introduction in record.

The subject index of testimony mentioned above was based on the tables of contents in the various volumes. These varied greatly as to detail in which the subjects were covered. Some volumes contained no subject outlines in the table of contents. In these instances the main subjects, such as origin, history, and acquisitions, were covered. It follows that some of the subjects will have many more references than others. Moreover, they may have been dealt with in the testimony at points in addition to those indexed.

Exhibits. —The second general part of this index covers exhibits including the reports of examiners of the Commission heretofore referred to introduced at hearings. This is organized by subjects and by companies. There will be found on page 186 an introductory statement regarding the methods used in compiling the subject index and its necessary limitations.

The material in parts 21 to 45, inclusive, covers over 18,000 printed pages. The original purpose in undertaking the indexing was to facilitate the work of those engaged in writing the final report on utility corporations. Subjects which appeared to be important for the final report were treated more fully, for example, it was not deemed necessary to note every appearance of the name of a company, in tables or text.

Holding companies. —The list of subjects beginning on page 191, preceding the subject index to exhibits, contains only two subjects indexed specifically under holding companies, because the bulk of the entire index relates to holding companies. For example, while the subject “Refinancing Methods” is not limited to refinancing methods of any particular type of company, a large portion of the references under this subject will be found to refer to holding companies.

References to testimony contain the volume number, the letter “T” (designating testimony), and the page number. Thus 22 T 1 refers to testimony, volume 22, page 1.

References to exhibits are similar except for the substitution of the letter ” R ” which originally designated reports, but which also includes all exhibit material.

Federal Trade Commission,
Washington, June 18, 1935.
To the Senate of the United States:

Seventy-ninth interim report covering the period from June 15, 1935, to August 15, 1935, inclusive, is respectfully submitted.

Seventy-eighth interim report covering the period from May 15 to June 15, 1935, inclusive, is respectfully submitted.

Public hearings were held on May 16, 29, and June 11 in Washington, D. C. A hearing on May 21 was held at Kansas City, Mo.

The reports and testimony presented at the above hearings related to the following companies:

• Commonwealth & Southern Corporation (of Delaware).
• Southern Public Utilities Co. (subsidiary of Duke Power Co.).

The witnesses of the Commission’s staff were: John H. Bass, M. C.Steele, and Frank Buckingham.

The other witnesses who testified were:

• D. W. Gugler, cashier, Farmers National Bank, Abilene, Kans. ;
• R. H. Shutts, construction superintendent, State Highway Department, Lamar, Colo.;
• W. S. Morrison, vice president Colorado Gas & Utilities Co., Abilene, Kans. ;
• and Fred M. Betz, publisher Lamar Daily News, Lamar, Colo.

The reports and exhibits put into the record were :

• Report by Frank Buckingham on an examination of the accounts and records of the Commonwealth & Southern Corporation (of Delaware) (exhibit 6284).
• Draft dated June 29, 1931, for $10,000, drawn by Farmers National Bank, Abilene, Kans., on the Fidelity National Bank & Trust Co., of Kansas City, Mo., payable to order of Lee Meadows (exhibit 6285).
• Remittance sheet, dated June 29, 1931, of Farmers National Bank, Abilene, Kans., showing bank record of purchase by Union Electric Co., of draft for $10,000 payable to order of Lee Meadows (exhibit 6286).
• Register of drafts drawn on the Fidelity National Bank & Trust Co, showing record of $10,000 draft to order of Lee Meadows (exhibit 6287).
• Sheet from printed pamphlet called ” The Voice “, dated March 1932, giving list of the so-called ” United Companies”, Abilene, Kans. (exhibit 6288).
• Draft dated June 29, 1931, for $10,000, drawn by Union Electric Co., Abilene, Kans., on the City Bank, Kansas City, Mo., and payable to order of Farmers National Bank of Abilene (exhibit 6289).
• Voucher of Union Electric Co. authorizing payment of $10,000 in favor of Farmers National Bank, of Abilene, Kans., relating to Lee Meadows note (exhibit 6290 A and B).
• Correspondence between W. S. Morrison, of the United Companies, Abilene, Kans., and Lee Meadows, Charles Maxwell, and the Lamar Sparks, Lamar, Colo. ; between Robert E. Healy and Lee Meadows ; between Fred M. Bets and John K. Locke; newspaper clippings, tabulations, etc. (exhibits 6291-6297 inclusive, 6299).
• Letter dated May 23, 1935, from B. F. Napheys, Jr., an attorney for the United Companies. Abilene, Kans., to John K. Locke, examiner, Federal Trade Commission, transmitting promissory note for $10,000, dated June 29, 1931, payable 1 year after date to Union Electric Co., and signed by Lee Meadows, together with stock certificate representing 100 shares of capital stock of Sparks Publishing Co., registered In name of the Charles Maxwell Investment Co., and endorsed by said company (exhibit 6298 A, B, C, D, and E).
• File of correspondence, minutes of meeting, memoranda, agreements, map, contracts, and offers concerning the affairs of Panhandle Eastern Pipe Line Co., Missouri-Kansas Pipe Line Co., Cities Service Co., and Columbia Gas & Electric Corporation (exhibit 6300).
• Report by M. C. Steele on the examination of the accounts and records of Southern Public Utilities Co. (subsidiary of Duke Power Co.) (Exhibit 6301).

Since the last interim report (seventy -seventh) there has been sent to the Senate chapter XI, which is the final chapter of the Summary Report (vol. 72A) of the Federal Trade Commission on the Economic, Financial, and Corporate Phases of Holding and Operating Companies in the Electric and Gas Utilities Industry. This chapter deals with advantages and disadvantages of electric and gas holding companies. The advantages and disadvantages are considered with regard to operating companies and consumers and the public in relation to investments and from the viewpoint of public control.

The possible advantages and the disadvantages with respect to operating companies and the consumer deal with the claims of efficiency through combination of small plants, technical and financial management through central organizations, the possibility of developing service and broadening consumption, the effect of excessive construction and management fees, write-ups, improperly capitalized items and inflation, inadequate provisions for depreciation and inter-company transactions.

The advantages and disadvantages of holding companies with regard to investment consider diversity in character of operating companies, cost of borrowing money, claimed economies of large holding companies, pyramiding holding-company structures, inflation of inter-company profits on transfers of properties and securities, manipulation of stock-market prices and financial and other misrepresentations, and deceptions practiced by holding companies.

The advantages and disadvantages of holding companies in relation to public control deal with the objectives of public regulation of utilities, the attitude of State regulatory authorities, problems of interstate commerce, the circumvention of State laws by holding companies, and possible social and political dangers of holding-company development.

Also since the last interim report accounting reports on an important electric-utility holding company and on a large electric operating company in another holding-company group were completed.

Field accounting examinations were begun on an important company engaged in producing and transporting by pipe line and the distribution of natural gas to consumers, and, on two important natural-gas pipe-line companies. A field-engineering examination was begun on one of the largest natural gas groups. Accounting work was also begun on an engineering and management company.

Field-accounting examinations were continued on 4 natural-gas holding or sub holding companies, on 10 natural-gas pipe-line transportation companies, on a natural-gas producing company, and on 3 gas-distributing companies. Two engineering examinations of natural-gas holding company groups were also continued.

Accounting reports were being prepared on a sub holding company involving 17 predecessor and affiliated companies, on a large electrical producing company, and on a natural-gas producing company.

Transmitted herewith is a transcript of testimony of the hearings held from May 15 to June 15, 1935, inclusive (pp. 46856a to 46902, inclusive, and pp. 1 to 113; inclusive, of the Kansas City, Mo., hear ings), together with exhibits introduced as above described (exhibits 6284 to 6301, inclusive).

By direction of the Commission. Ewin L. Davis, Chairman.

Pursuant to Senate Resolution 83, Seventieth Congress, first session, approved February 15, 1928 (as extended by S. J. Res. 115, 73d Cong., 2d sess., approved June 26, 1934), directing the investigation of certain classes of holding and operating electric and gas companies and associated engineering, finance, management, and construction companies, upon other matters specified in the resolution, and directing that the Commission ” report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation ” and that it transmit therewith the stenographic report of the evidence taken, this seventy-eighth interim report covering the period from May 15 to June 15, 1935, inclusive, is respectfully submitted.

Federal Trade Commission,
Washington, August 15, 1935.
To the Senate of the United States:

No report was submitted for the period June 15, 1935, to July 15, 1935, for the reason that no public hearings were held.

Public hearings were held on August 7 and 8. and the reports and testimony thereupon presented related to the following companies:

• The Granite Trading Corporation (formerly G. L. Ohrstrom & Co., Inc.) and
• Ohio Edison Co. (of the Commonwealth & Southern group).

There was also introduced publicity and propaganda material of the Commonwealth & Southern group; and also certain exhibits of minutes of various companies of the Niagara-Hudson group.

The witnesses, all of the Commission’s staff, were : F. X. Patterson, Frank Buckingham, and A. M. McDermott.

The reports and exhibits put into the record were:

• Extracts from minutes of directors, stockholders, and executive committees of certain companies of the Niagara-Hudson group (exhibit 6302-6306, inclusive).
• Copies of journal entries of the Frontier Corporation (Niagara-Hudson Power Corporation and subsidiaries) (exhibit 6307).
• Report on power development of Valley Improvement Corporation,Fulton, N. Y., for Fulton Light, Heat & Power Co., by Ford, Bacon & Davis, Inc., dated March 8, 1929 (exhibit 6308).
• Proposal from Aluminum Co. or America, General Electric Co., and Du Pont de Nemours & Co. to Frontier Corporation for sale of certain lands and water rights for water-power development in New York on St. Lawrence River for $6,797,162.70 par value of capital stock of Frontier Corporation (exhibit 6309).
• Copy of letter dated October 5, 1929, from C. L. Lycette, of the Pittsburgh office, Aluminum Co. of America, to A. W. Andrews, concerning Frontier Corporation, its history, operation, and management (exhibit 6310).
• Report by F. X. Patterson, of the Federal Trade Commission, on the examination of the correspondence files of Granite Trading Corporation (in receivership), formerly G. L. Ohrstrom & Co., Inc., in connection with Southern Natural Gas Corporation (exhibit 6311).
• American Natural Gas Corporation and Southern Natural Gas Corporation material from files of G. L. Ohrstrom & Co., Inc., New York, N. Y. (pt, I and II) (exhibits 6312 and 6313).
• Report by Frank Buckingham, of the Federal Trade Commission, on an examination of accounts and records of the Ohio Edison Co. (subsidiary of the Commonwealth & Southern Corporation of Dela ware) (exhibit 6314).
• Publicity and propaganda material and expenditures re same, of the Commonwealth & Southern group (exhibits 6315A to 6335B, inclusive).

Since the last interim report an accounting report was completed on an important electric company, and on competitive conditions in connection with the development of an important natural-gas transporting line.

Field accounting examinations were begun on 3 natural-gas holding companies, 5 natural-gas transporting companies, and 2 natural gas distributing companies. An engineering inspection of the physical properties and operations of two large groups of gas companies Field accounting examinations were continued on 4 natural-gas holding companies, 10 natural-gas pipe-line companies, 3 natural-gas distributing companies, 1 pipe-line and distributing company, and an engineering company.

Accountants’ reports on 3 important natural-gas companies and on an electric sub-holding company involving 17 predecessor and affiliated companies were being reviewed, and accountants’ reports were being prepared on 2 large natural-gas transporting and distributing companies, and on the income, expense, surplus, and service charges of a large electric and gas holding company.

Transmitted herewith is a transcript of testimony of the hearings held from June 15, 1935, to August 15, 1935, inclusive (pp. 46903 to 47023, inclusive), together with the exhibits introduced as above described (exhibits 6302 to 6335, inclusive).

By direction of the Commission. Ewin L. Davis, Chairman.

Pursuant to Senate Resolution 83, Seventieth Congress, first session, approved February 15, 1928 (as extended by S. J. Res. 115, 73d Congress, 2d sess., approved June 26, 1934), directing the investigation of certain classes of holding and operating electric and gas companies, and associated engineering, finance, management, and construction companies, upon other matters specified in the resolution, and directing that the Commission ” report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation ” and that it transmit therewith the stenographic report of the evidence taken, this seventy-ninth interim report covering the period from June 15, 1935, to August 15, 1935, inclusive, is respectfully submitted.

September 17, 1935.
To the Senate of the United States:

Eightieth interim report covering the period from August 16, 1935, to September 15, 1935, inclusive, is respect fully submitted.

A public hearing was held on September 13, and the report and testimony thereupon presented related to the following company: Lone Star Gas Corporation group.

The witnesses, of the Commission’s staff, were: William J. Warmack, and Emma B. Kistler. Mr. D. A. Hulcy, vice president of the Lone Star Gas Corporation also testified.

The reports and exhibits put into the record were:

• Report by Emma B. Kistler, of the Federal Trade Commission, on the interstate transmission of gas by the Lone Star Gas Corporation group. (Exhibit no. 6338.)
• Report by William J. Warmack, of the Federal Trade Commission, on the examination of the accounts and records of the Lone Star Gas Corporation (top holding company of the Lone Star Gas system). (Exhibit no. 6339.)
• A map of the Lone Star Gas Corporation system showing pipe lines and territory served, as of December 31, 1934. (Exhibit no. 6340.)

Since the last interim report, the natural-gas investigation has been carried forward as follows:

An accounting report was completed on a large natural-gas holding corporation. The field-accounting examination was completed on 7 holding companies, 14 pipe-line companies, 16 distributing companies, 4 pipeline and distributing companies, 10 producing companies, an engineering company, and a construction company. Reports are being reviewed on 3 holding companies, 3 pipe-line companies, and 1 producing company. Field accounting examinations were continued on 1 holding company and 2 natural-gas transportation companies. Engineering inspection of the operations or operation facilities of companies in the mid-continent and Montana-Wyoming gas field were in progress.

Transmitted herewith is a transcript of testimony of the hearings from August 16, 1935, to September 15, 1935, inclusive (pp. 47024 to 47110, inclusive), together with the exhibits introduced as above described (Exhibits 6338 to 6340, inclusive).

By direction of the Commission. Ewin L. Davis, Chairman.

Pursuant to Senate Resolution 83, Seventieth Congress, first session,approved February 15, 1928 (as extended by S. J. Res. 115, 73d Cong., 2d sess., approved June 26, 1934), directing the investigation of certain classes of holding and operating electric and gas companies, and associated engineering, finance, management, and construction companies, upon other matters specified in the resolution, and directing that the Commission “report to the Senate within each 30 days after the passage of the resolution and finally on the completion of the investigation”, and that it transmit therewith the stenographic report of the evidence taken, this eightieth interim report covering the period from August 16, 1935, to September 15, 1935, inclusive, is respect fully submitted.