Dance of Power

Until 1929, J. P. Morgan & Co. refrained from touching public utilities. But that year they joined with the Bonbright and Drexel interests in the sponsorship of a new holding company to be called United Corp. This company, it was soon seen, would foster a community of interest between the big utility systems of the Atlantic Seaboard.

The ultimate destiny of United Corp. will be to hold at least working control of a giant utility system, closely coordinated if not actually merged. Last week by a huge barter United Corp. came one step nearer this destiny. From St. Regis Paper Co. it acquired 4,070,000 shares of Niagara Hudson Power Corp. in exchange for 2,170,000 shares of United stock. Added to United's previous holdings of 1,673,000 shares of Niagara Hudson, the deal gives it a 22.1% interest in the big northern New York system. Rumors blew hot that United will also get the 2,500,000 shares of Niagara Hudson owned by Aluminum Co. of America and the 3,500,000 shares controlled by the rich and powerful Schoellkopf family. This would give United a 45% interest in Niagara Hudson, not counting the 7.4% held by United Gas Improvement Co.--total, 52% control.

Intricate have been the steps of United's ponderous dance of destiny. Some stocks have been purchased. Others have been bartered in private. Others have resulted from public barter. United's holdings in United Gas Improvement Co. now amount to 26%, and its holdings in Public Service Corp. of New Jersey come to 17.9%. In addition, U. G. I. has a 35.7% interest in Public Service Corp. United also has 20% of the stock of Columbia Gas & Electric. Less important is its 5.3% interest in Commonwealth & Southern Corp. But should United desire to enlarge this, it might well make a deal with its good friend American Superpower Corp., holding 13.2% of Commonwealth & Southern. Superpower owns a 5.4% interest in United, would probably be not averse to getting further United stock in an exchange.

Biggest plum in the eastern utility field is Consolidated Gas Co., world's richest electric utility. United has only a 1.7% interest in Consolidated, and the entire Morgan-Bonbright-Carlisle group is said to have only 10%. But the election of Floyd Leslie Carlisle. Niagara's chairman, to New York Edison's chairmanship last fortnight (TIME, March 2) was taken as an indication that the ties between the two companies are being strengthened. Last year Niagara Hudson acquired 201,500 shares of Consolidated, believed in part to represent the holdings of the late Nicholas Frederic Brady.

The pattern of United's destiny dance was, of course, laid down by the Morgan-Bonbright interests. That in less than two years after their decision to enter the utility field they have done so well, have acquired so much stock, is to be considered a tremendous tribute to power. Men do not surrender tens of thousands and millions of shares in sound operating companies for shares in a minority-interest holding company unless they have great faith in the holding company. Each of United's 14,500,000 shares is a testimony to that faith.

Although the Morgan-Bonbright interests patterned United's dance, the dancemaster is George Henry Howard, 47, graduate of Phillips Exeter Academy, Dartmouth (1907), Harvard Law School. Soon after United was formed he was asked to take the presidency and accepted. A long legal career in connection with utilities fitted him for the position. Much of this was gained in Electric Bond & Share, itself an expert master in the ballet of utilities. Mr. Howard's Bond & Share connection has brought co-operation between that company, United and Superpower. His first position was with Simpson, Thacher & Bartlett, attorneys, when Dwight Whitney Morrow was a partner. This probably led to his connection with the Morgan group. In addition to his position with United, he is chairman of Niagara Hudson's executive committee, a director of U. G. I. and of Chase National Bank. Hence he has little time for his favorite recreation, trout fishing.

The rise of United Corp. has had a great influence on the career of Floyd Leslie Carlisle, who now looms as the biggest Eastern figure in the electric utility world (TIME, June 9). He and associates control St. Regis Paper, which with its 2,170,000 shares of United Corp. is twice as big a holder as the Bonbright interests, four times as big as the Morgan and Drexel interests. To speak of United Corp. as the Morgan-Bonbright group is no longer correct. It is the Morgan-Bonbright-Carlisle group. And to serve history fully, a fourth name should be added to the hyphenated group, that of Schoellkopf, the family which has been carried to wealth and power by Niagara Falls. In 1850 Jacob Fred Schoellkopf started a flour mill above Niagara Falls, powered by an old-fashioned water wheel. In 1890 the use of water for electric power was introduced and he put in a plant, made long term contracts of 40 to 50 years, but up to the time of his death in 1899 no big returns were received. His sons, however, expanded his power business, provided many plants along the river with electrical equipment at practically no expense in return for an agreement that they could use the excess power. All of their properties were put into the $220,000,000 Buffalo, Niagara & Eastern Power Co. which became a unit of Niagara Hudson Power Corp. upon whose directorate sits Jacob Fred Schoellkopf Jr., now 73, whose president is his nephew, Paul Arthur Schoellkopf, 47. Vice president and general manager is another nephew, Alfred Hugo Schoellkopf, 37.

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