The third stage occupied the ten years between 1920 and 1030. The holding companies increased in size and in power. Big utility empires such as that of Samuel Insull were formed. Consolidation continued until in 1927 82 per cent. of the electric ower companies were in the hands of 41 holding componies. In 1830 92 per cent. of the Electric Power In-Gustry was controlled by sixteen Companies. The men in charge became In some instances intoxicated with s0 much power. To further the interests fof their companies they brought influence to bear on the State regulatory vadies Yo get favourable treatment. and lent support to friendly candidates at the elections. 'The holding companies became speculative enterprises, Instead of bringing about fur-Ther operating economies and thus permitting further rate reductions they had. in some instances to resist the' efforts of the State Government to lower the rates charged the or-mary householders in order to pay dividends to the investors in the holding company. first only the'State Governments regulated the electric power companies. The holding company. which owned the electric company was ghost like entity about which very Tittle was known. Ti power "was exercised secretly in the various states in which it owned electric operating companies The State Governments in some instances began to feel that they were fighting an unseen and therefore insidious foe. The Federal Government was persuaded set up a Federal Power Commission to regulate electric companies which crossed state lines or derived their power from Waterways. The fight of the political foes of the Holding Company or "PowerTrust" as it began to be called was transferred to Wathing-(on.
1 The chief foe of the "Power Trust" was Senator Norris andthe battle was for awhile fought over the tale of Muscle Shoals, a plant constructed by the Federal Government during the war to ensure an adequate supply' of nitrogen. His campaign made grea: headway partly owing to the -foct that under the strain of the depression many of the holding company empires were cracking and investors began. to feel that. they had been swindled out of their money. The Fecent acquittal of Samuel Insuit shows that this feeling was, transient but it lasted. long enough to enable Senator Norris to get his bill through Congress.
President Hoover vetoed it. In his veto message he said in part "I am firmly opposed fo the Government entering into any business the major Purpose of which is competition with our citizens..... The remedy for abuses the conduct of that industry lies in regulation and not by the Federal Government entering upon the business iHself.... The establishment of 2
Federal operated power and forti factory in the Tennessee valley means Federal Control from Washington overriding of State and local governments, the undermining of state and coal ' responsibility. Muscle " Shoals can only be administered by the People upon the ground responsible to their own communities and not for purposes of pursuit of social Uheories or national politics."
"This was in March 1931. Two years later President Roosevelt established the Tennessee Valley Authority which ran counter to every single principle Inid down by President Hoover. The Government' went into the power business for the major purpose of competing with private industry and "j foreing down Its rates or forcing it out of business, an organization was Set up which "over-rode State and local Governments and one of its main purposes was the pursuit of a social theory. It was a small scale experiment, a baby Gosplan, which might provide the New Deal' with a model for the rest of the country.
Text read from the printed page and cleaned; old type leaves the occasional error.