The Holding Company: Its Public Significance and Its Regulation

The Holding Company: Its Public Significance and Its Regulation

The Holding Company: Its Public Significance and Its Regulation

The Holding Company: Its Public Significance and Its Regulation

Excerpt

This study of the American holding company is the outgrowth of the authors' special interest in the regulation of public utilities. Within the last few years, the control and management of local utility companies throughout the country have become centralized through the creation of a few great holding-company systems. Whatever may be one's conclusions as to the public advantages or disadvantages of this amazing concentration of control, one must at least recognize its significance and its bearing on the problem of utility regulation.

The control of enterprise by holding companies has by no means been restricted to the utility field. The United States Steel Corporation in the field of the industrials, the Pennroad and the Allegheny corporations in that of the steam railroads, the Transamerica Corporation in commercial banking, illustrate the importance of the holding company throughout all branches of large-scale enterprise. Wherever corporations have become important as a device for bringing together the funds of many investors under centralized management, supercorporations have also been created to combine, in turn, the operating companies.

Because the holding company performs similar functions in the various fields of enterprise in which it exists, its full significance can be understood only by a general survey, which compares its use in one field with its use in other fields. Even the specialist in public utilities, for example, cannot afford to overlook the experience of courts, legislators, business men, and economists with the problems that the holding company presents when used as a device for combining railroads, industrials, and financial institutions. In many respects, to be sure, the legal and economic problems are not the . . .

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