New Devil?

Last week was a good one for stock brokers. Volume of business on the New York Stock Exchange one day swelled to 1,500,000 shares. And by the end of the week prices stood just about where they were a year ago, with one notable exception. While industrial and rail shares had risen approximately 150% above their Depression lows of July 8, 1932, the battered utility averages were only one point above that subterranean ooze. An investor who bought the premier U.S. power & light stock, Consolidated Gas, at the 1932 low of $31.50 per share could not have sold it last week without taking a 29% loss.

On the very day Congas sold down to $22.37 1/2 per share, the great New York City utility was formally celebrating its 50th anniversary. The exercises were far from gay. President George Bruce Cortelyou, who at one time or another served Roosevelt I as Secretary of Commerce & Labor, Secretary of the Treasury and Postmaster General, was moved to wonder whether, for Consolidated Gas, the first 50 years were really the hardest.

Results of public ownership propositions in local elections on Nov. 6 had been anything but reassuring. By last week it looked as if the utilities were in for one of their worst spells of political badgering. In Washington the Federal Trade Commission, in the eighth year of its holding company probe, released a fresh batch of hair-raising findings. The new Federal Communications Commission announced a thoroughgoing investigation into American Telephone & Telegraph Co. A.T. & T. stock promptly plunged $10 per share, and President Walter Sherman Gifford felt impelled to assure his security holders that there were no skeletons in the $5,000,000,000 A.T. & T. closet. And President Roosevelt's trip through the Tennessee Valley, with his warm praise for TVA wonders (see p. 11), did not improve the sleep of jittery utilitarians.

Most alarming utility news of the week, however, was a report which Chairman Frank P. Walsh of the New York Power Authority submitted to the White House. In a 400-page survey of the cost of power distribution, it declared that the average domestic rate of 6-c- per kilowatt hour in New York, New Jersey, Pennsylvania and New England could be cut to 3 1/2-c- and still leave the private utilities a "fair" profit. By certain accounting formulas which left utility operators blinking in amazement, Mr. Walsh calculated that development of the St. Lawrence Waterway power would save consumers in those States no less than $194,000,000 annually.

From the White House went a statement that the report "establishes a yardstick on rates for the Northeastern area of the U. S. which can be applied to every city, town and rural community in connection with the development of the St. Lawrence River as a public power project." That statement left no doubt about the real purpose of the Walsh report. When President Roosevelt brings up the St. Lawrence Waterway treaty again next year, the Walsh report will serve as a rolling barrage of statistics to clear the ground for Senate ratification.

Sensing dark days ahead for the utility business in general, the New York Herald Tribune last week observed: "What is a reforming Administration without a whipping boy? The bankers served Mr. Roosevelt admirably in this capacity from inauguration day, when he lashed them out of the temple, to the late love feast in Washington. Mr. Walsh's report is just one more sign that the wicked utility companies are to be promoted from relative obscurity to this new and important post as the Administration's principal devil."

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