were made by the Federal Trade Commission and by Dr. Splawn, and then more recently by the National Power Policy Committee, that I think a word should be said in that connection from the standpoint of the utility companies.

From our viewpoint it is significant that in the Federal Trade Commission's report, having in mind that under the resolution under which they were requested to investigate this matter they were directed to report what legislation, if any, should be enacted by the Congress to correct any abuses that may exist in the organization or operation of holding companies, that that Commission did not make any such recommendation as is found in this bill.

On the contrary, in the summary of their report, found in volume 73-A, filed with the Secretary of the Senate, January 28, 1935, the Commission said [reading]:

The pertinency of some recommendations will depend on their relation to the fundamental policy which may be adopted.

And then going ahead on those points the Commission further said [reading]:

In response to the Senate resolution, this Commission conceives it to be its duty to make such suggestions as the Commission believes to be constitutional and workable and which may possibly aid the Congress in the determination of the character and form of such legislation as may be decided upon. If the public policy is to be one of toleration and regulation of holding companies, certain types of recommendation will be in order. If the public policy is to be one of suppression of holding companies, other recommendations are called for. There is also possible a form of regulation whose main purpose is a partial suppression through restriction. The weight of any given recommendation must be judged by its relation to the fundamental policy which it seeks to effectuate. Which of the above two fundamental policies shall be pursued is, of course, for the Congress to determine.

In other words, the Commission did not make recommendations such as are found in this bill. They proceeded, on the contrary, to make this rather interesting statement [reading]:

If there be no practicable or constitutional way of redistributing the assets of holding companies so as to dissolve their monopolistic elements, or if that is not desired, it might be wiser from a public standpoint to force so far as possible the merger into the parent corporations of all operating subsidiaries. This would simplify the capital structure and be an effective bar against such antisocial manipulation of corporate entities as has all too often taken place in the utility field. At the same time such a simplification of corporate organization and capital structure would preserve all the benefits which have been claimed for the holding company set-up, such as management and servicing. And then the Commission concludes as follows:

If the Congress does not regard the suppression of the holding-company system as a feasible and on the whole a preferable policy, the necessity of strict regulation becomes all the more apparent. If holding companies are to be permitted to continue to control and manage groups of operating or producing companies, there are three methods which seem especially to commend themselves for the exercise of Federal jurisdiction. They are: (1) The taxation method, (2) direct statutory inhibitions, (3) a compulsory Federal licensing act.

It was not until Dr. Splawn made his report recently that the proposal for definite elimination was set out.

In the report of the National Power Policy Committee I was struck with certain language that indicated to my mind that certainly they realized the gravity of what was there discussed. They

referred to the importance of avoiding " undue dislocation of investments." They further referred to the amount of reorganization, transfer of assets, distribution and dissolution required for "dismantling" these huge holding companies.

Senator SHIPSTEAD. Before you go into that let me ask you a question: What was there particularly significant to you about that report of the Federal Trade Commission?

Mr. MOORE. The interesting thing to me was that they really did not make a definite recommendation on the question of abolition or of regulation but stated that they conceived it to be their duty, after finding the facts, to simply leave it to the Congress. And they suggested alternative methods.

Senator SHIPSTEAD. They had in mind that when it come to the matter of establishing the policy, it is the business of the Congress to do that, and they did not know what policy was to be pursued. I do not see how they could make any other report.

Mr. MOORE. They were requested to make recommendations, and I simply wanted to point out at the outset that they merely proposed alternative method. That may be of no significance, but it seemed to me that it was.

I was interested in the statement of Mr. Corcoran as to how long this bill had been prayed over and how much work was done on it. And, of course, we say that when you realize that the problem which

The CHAIRMAN (interposing). Being utilities I can well understand how you would think it peculiar for anybody to pray over it. Mr. MOORE. Well, I did not think it necessary to produce character witnesses, but think Mr. DeVane, over here, who is an old friend of mine, would certify as to my standing. He and I used to practice law in Virginia.

The CHAIRMAN. Oh, that is all right. I was just interjecting a jocular remark.

Mr. MOORE. I was interested in that statement because it would make one realize the difficulties of the task assigned to those gentlemen. They were assigned the task of preparing a bill that was going to dismantle the public-utility industry.

I am going to try to take the bill, in the matter of some of the more important sections, and, so to speak, take them apart and hold them up and show you some of the things you may not have observed, because every time I read this bill I see some new things in it. And you will find the more you read it the more you will discover new things in it.

It is a remarkably well-prepared paper as to form and as to the mechanics by which it works. It is a work of art, and I commend to you that you do study it carefully.

Just for your convenience we have prepared copies of the bill with comments pasted opposite numerous sections, which I trust you gentlemen will take the time to read over at your leisure. They are set up in that way in order to be a little more convenient than would otherwise be the case.

The CHAIRMAN. You are referring to what has been placed on the committee table before each member?

Mr. MOORE. Yes, sir. It is significant at the outset that thisSenator BONE (interposing). Is this your contribution, Mr. Moore? Mr. MOORE. That is a copy of the bill with comments opposite each section, that we have prepared for the convenience of the members of the committee.

Senator BONE. Your direct professional work, as I understand, has been with the Virginia Electric & Power Co.

Mr. MOORE. Yes, sir.

Senator BONE. And that is a Stone & Webster company?

Mr. MOORE. Yes, sir. You had not come in when I stated that to the members of the committee.

Senator BONE. All right.

Mr. MOORE. It was interesting to me to see the approach those gentlemen took in preparing this bill. They approached it in a perfectly natural way. They were assigned the task of eliminating the public-utility holding company; destroying it; getting rid of it. At the same time they realized that there would necessarily be a certain kind of regulation which would have to be used temporarily and also permanently. When you analyze what they have done, you will realize that they have taken certain concepts of regulation in a perfectly natural way, from existing laws, but I am going to show you that they have stretched those very much in many respects. Their minds turned, quite naturally, first to State laws which regulate operating companies. They naturally turned to the Interstate Commerce Act regulating the railroads, then to the Communications Act passed this last year regulating telephone, telegraph, and radio companies. That is what any lawyer on this committee would have naturally done if this task had been assigned to him.

The CHAIRMAN. Senator, Couzens, this is Mr. Moore.

Mr. MOORE. Good afternoon, Senator Couzens.

The CHAIRMAN. You may proceed.

Mr. MOORE. So that from the standpoint of the regulatory part of the bill, in title I, they have drawn from those existing concepts in regard to regulation, stretching them in many respects so beyond anything that has ever been proposed or adopted.

From the standpoint of the second part of the bill, title I, and that is the destructive part of it, their minds naturally turned to existing laws there also. Any lawyer familiar with a matter of this kind would naturally think of the antitrust laws, the Sherman Act, and the Hepburn Act, and laws of that kind. And one would naturally think of the bankruptcy law.

Mr. Corcoran stated it was first thought that perhaps there should be a law modeled along the lines of the bankruptcy statute. So they have drawn, on the one hand, on bankruptcy analogies, and Sherman antitrust law analogies, as to the destructive part of the bill; and as to the regulatory part of the bill they have drawn from the State laws, the Interstate Commerce Act, and the Communications Act.

They were a bit embarrassed, however, by the fact that so recently the Communications Act and the Securities and Securities Exchange Acts had been passed. This developed before the House committee, when Judge Healy was one of the main witnesses in connection with this matter. There was urged in the matter of regulating interstate securities under the Securities Act, as one of the main reasons these very abuses were being talked about; but as was stated there the

Securities and Securities Exchange Acts were largely Federal "bluesky" laws rather than a truly regulatory law in the sense that these State laws regulate the issuance of securities and contracts from the standpoint of exercising a really affirmative judgment.

As you approach the language that is used in this bill there are three controlling questions of policy that you gentlemen, we respectfully submit, will have to consider and determine. It is going to be necessary to determine these three questions before anybody can be of any great service in revising, rewriting, or amending this bill.

The first one is whether or not the Congress desires to adopt as a policy the policy of abolition or elimination of the holding company as the objective, without any effort having been made to prevent abuses by regulation. Or is the policy to be to adopt the theory of regulation, either as a permanent policy or as a temporary policy from the standpoint, as one of the members of the House committee said, of practice and trial and possible error?

That is what you have to decide first, which policy you are going to adopt. Are you first to start out with a definite objective of destroying these companies without ever having tried real regulation so far as holding companies are concerned, or are you at least going to try regulation?

The second important question of policy-and this is of vital importance to every operating company practically in this country-is: To what extent will the Congress deliberately include in title I all these operating companies, and to what extent should these operating companies be left to the control and regulation of the States, so far as title I is concerned.

As I am going to show you in a few moments, there are provisions in this bill which absolutely take away the authority of the States as to these operating companies. So there must be a determination as to what is the sound Federal policy on this question.

The third fundamental question of policy is whether or not this legislation is to be framed, as to title II, with a view of filling just the gap or gaps that may exist in the powers of the States, or should the Congress adopt the policy of ousting State regulation to the very maximum extent that it can be ousted under the Constitution?

The CHAIRMAN. This bill does not oust them to the fullest extent, because it specifically eliminates from Federal regulation retail sales. Mr. MOORE. I am going to show you in a little while, Senator Wheeler, that that is a very small exclusion. Mr. DeVane was very frank in saying to the committee, and I think his statement is worth very great weight, at least in my humble judgment, because I know that he has had years of practical experience as a utility lawyer, and he stated that in his judgment the portion of title II which did not deal with rates was far more important than that which did deal with rates.

The CHAIRMAN. Well, I did not so understand his testimony. I think the policy that deals with rates, which is left to the States, is the thing which is the most important thing so far as the general public is concerned.

Senator WHITE. Mr. Chairman, I feel very positive, at least it is according to my recollection, that that was what Mr. DeVane said. Whether he was right in his judgment, I do not know.

Mr. MOORE. I have the transcript here, Senator Wheeler, and if you would care to take the time I will turn to it, because I have a summary but I am sure that is what he said. And I think he was correct in saying just that, because it is true as I am going to show you. If there is any doubt about it in your mind I will

The CHAIRMAN (interposing). Never mind. You may go ahead. Mr. MOORE. Let us consider for a moment these three fundamental questions which you gentlemen have the responsibility for determining, and then look at the scope of the bill as it has been presented to you. We, of course, appreciate the frankness of the chairman yesterday in saying that he did not do all the things that are in the bill. We do not blame you, Mr. Chairman, for all these things.

The CHAIRMAN. I am perfectly willing to take the blame, but I do not want to take the honor away from the authors of this bill, take the honor away from those who drafted it. I did not draft it. Mr. MOORE. It is quite a work of art, I can assure you, in the matter of form.

The CHAIRMAN. I am perfectly willing to take any blame for it, however.

Mr. MOORE. This bill, as a matter of policy, starts out with a program on this first question of complete elimination of all holding companies practically, large, small, good, bad, and indifferent. There is no distinction made with only two possible minor exceptions and those are discretionary exceptions. In other words, they are not absolute exceptions. The Securities and Exchange Commission has that discretion.

Senator MINTON. Is it control or ownership that you are driving at?

Mr. MOORE. It is control. That brings me to a very interesting point. I followed with a great deal of interest the hearings before the House committee, and was struck with this fact: Dr. Splawn, who probably knows more about this whole matter than, well, more than any of us at any rate, in his original testimony put emphasis on supporting the bill as written, with the dissolution provisions there just like they are. After the House committee had been hearing evidence for 7 or 8 weeks he came back, on April 15, a little over a week ago, and made a summation. In that summation he put the emphasis, however, on something else, namely, the importance of divorcement of control only. And he was very frank in answering questions. You gentlemen were very kind to him as compared to the members of the House committee.

The CHAIRMAN. Well, we are more kind to all of you.

Mr. MOORE. He had a hard day over there. He was very frank. though, in saying that as between abolition or dissolution and the mere divorcement of control, he was-well, I might say that he favored simply the divorcement of control without the dissolution. He went further and said he did not believe that regulation as a practical matter would work out effectively; that logically it would work but that he did not believe it would practically work out effectively as a permanent policy.

Judge Healy testified over there, and he has not testified hereand, of course, I know that you gentlemen are going to make up your own minds about the testimony, but it seemed to me you might be