UTILITIES: Wall Street Reds

Wall Street long ago got acclimated to the oratorical williwaws blowing north from Congress. But last week, even Wall Streeters’ toughears tingled. Oklahoma’s bulldog-jawed Democrat Lyle Boren, head of a sub-committee probing the Holding Company Act, had unearthed an amazing “conspiracy” on the part of some of Wall Street’s staidest investment bankers and financiers. The plot, said he, was to socialize the $18 billion U.S. electric utility industry and make “many billions” in the process.

Careful to speak before the House, so that he could not be sued for libel, Democrat Boren charged: “Two men . . . are the chief instigators of ‘Swindle, Inc.’ The [foremost] is a Wall Street financial agent, one Guy C. Myers, known as ‘Flash’ Myers to his friends back in Montana before he made a hurried exit from that state. . . . His opposite number among the holding company gang is Howard L. Aller, president of American Power & Light Co.”

Pay the Fiddler. The swindle, said Boren, consists in selling utilities at inflated prices to cities which want to own their own. A prime example: sale of Nebraska Power Co., a subsidiary of American Power, to a citizen’s committee of Omaha by Promoter Myers and Aller (TIME, Jan. 8). As part of the deal, Boren said that the Omaha Electric Committee “deliberately” paid $14,400,000 for “stock that cost the American Power $815,000,” and whose earning power “might possibly justify a price of $5,000,000.”

“The Committee set the pattern for ‘Swindle, Inc.’ Aller’s company received three times the rightful price. . . . Aller and his pal, Flash, are cooking up even more ambitious deals … in Seattle, Portland, Ore., Spokane. . . . Louisville [is] listed on the bankers’ books. Some of the blue chip banking outfits of the country are involved: Blyth & Co., Nuveen & Co., First Boston, Dillon, Read and others.”

Like the Tune. Hardly had Aller time to snort “ridiculous” before irate Nebraskans rose up to smack down Democrat Boren. The sale price of Nebraska Power, said the Omaha Committee, was set after months of negotiations, valuations by two private firms. Since the sale, the Committee has paid off $600,000 on the purchase. It hopes to save another $324,000 yearly by calling in the $7,452,300 in preferred stock, which pays dividends of 6% and 7%, replace it with bonds paying 2½% interest. Committeemen were sure that Boren had been needled into his blast by 1) Omahans who still oppose public ownership, 2) preferred stockholders who hate to give up their well paying investment. Actually, Omaha is well pleased with its buy.

Democrat Boren’s “conspiracy” collapsed. In a master-weaseled statement he promptly said that his inquiry was merely “to begin a study of what appears to be an example of what might be an evasion of the purpose of the Holding Company Act.” Then, having summoned only two witnesses before his committee, he hastily called off his probe for the summer.