Morgan Power

One of the most appropriate uses to which a capitalist may put his capital is its employment in the field of electric light and power. He must be a potent capitalist, since an investment of millions is needed to turn the currents of rivers into currents of electricity. Once in operation, however, an electric utility is almost a natural monopoly with unlimited possibilities for expansion and a product equally essential to U. S. homes and U. S. factories. A power house is a match to light a thousand lamps, a motor to turn a thousand wheels.

Yet, though the electric utility seems to have been expressly designed for capitalistic development, it is only within the present year that J. P. Morgan & Co., most potent embodiment of U. S. capital, has entered largely into the light and power field. Excited, last week, were U. S. newspapers and U. S. senators when the Morgan utility interests acquired from the Mellon utility interests a group of light and power companies along the St. Lawrence River. Significant indeed was this transaction, but in a larger sense it was only a milestone along the Morgan utility road. When the economic textbooks of the future are written, the year 1929 may well be famed as the year in which the House of Morgan became also a Power House, and the St. Lawrence purchase be cited only as one of many steps in Morgan utility progress.

Tracing the electrical activity of J. P. Morgan & Co. would not be difficult if the matter could be expressed in terms of Mr. Morgan personally exchanging bags of gold for turbines and transmission systems. Unfortunately, however, the utility field does not lend itself to such simplification. The House of Morgan is not sole owner of any of the utility companies in which it is interested; its holdings are usually no more than a substantial minority, not including an operating control; and if it chooses to regard itself as investor in many companies but as manager of none, such a position would certainly be statistically sound. The fact that so powerful a financial institution has become actively interested in utilities may be disconcerting to opponents of privately controlled light and power systems. But only a cartoonist could attempt to personify Mr. Morgan as Big Utility Goblin.

Entrance of the Morgan company into the utility field came in January 1929, with the formation of United Corporation, a company established by J. P. Morgan & Co., Drexel & Co. and Bonbright & Co. and with executive offices at 23 Wall St. (Morgan home). By June 29, United Corp. had the following holdings in the following utilities:

Company Shares

Mohawk Hudson Power 392,357

Mohawk Hudson Power

(preferred) 62,370

Mohawk Hudson Power

(option warrants) 124,740

Public Service of New Jersey 959,921

United Gas Improvement 754,881

Allied Power & Light 340,000

Columbia Gas & Electric 171,000

Commonwealth & Southern 925,000

Commonwealth & Southern

(option warrants) 580,000

On June 29 these holdings were valued at $287, 919,008. United Gas Improvement and Public Service of New Jersey (its subsidiary) are both Mellon-controlled, and are expansions of the original United Gas Improvement Company which supplied gas to Philadelphia. Commonwealth and Southern Corp. is a holding company for Commonwealth Power Corp., which in turn operates companies all the way from Michigan to Georgia. Its largest single holder is American Superpower which has some 10,000,000 shares. Allied Power & Light is also a holding company, operating chiefly in the middle west, its list of operating companies partly duplicating the Commonwealth & Southern group. Columbia Gas & Electric centres in Ohio and West Virginia, Cincinnati being one typical Columbia-served city.

It has been the Mohawk-Hudson power interest that has brought the Morgan Company most of its publicity as a utility factor. Mohawk-Hudson was organized jointly by United Gas Improvement and General Electric. It functions throughout northeastern New York, with Albany its southern centre. In June (TIME, June 24) two other New York state utilities merged with Mohawk-Hudson, extended the Mohawk-Hudson territory west to Buffalo and northeast along the St. Lawrence. The merged company was christened Niagara-Hudson. New York's Governor Franklin D. Roosevelt is said to be dubious concerning the legality of this merger, although his Republican attorney-general has reported it as within the law. Last week's excitement also centred along the St. Lawrence. Niagara-Hudson bought control of Frontier Corp., a company owned by Aluminum Co. (Mellon), General Electric and the du Ponts. One asset of Frontier Corp. is a waterpower site at Long Sault, on the St. Lawrence. Frontier Corp. prepared to develop this site two years ago, was blocked by Governor Alfred E. Smith. It may now make a new attempt, or may postpone operations until after Jan. i, 1931, in the hope that Governor Franklin D. Roosevelt will be succeeded by a Republican executive more sympathetic to superpower development.

Commentators saw in the St. Lawrence transaction a Mellon-Morgan alliance, quickly created a super-superpower project by linking the Mellon-Pennsylvania properties, the Morgan-New York properties, and adding Manhattan's New York Edison and Consolidated Gas for good measure. It was also rumored that Niagara-Hudson was negotiating with Stone & Webster for Eastern Utilities Associates, a group of light and power companies operating chiefly in New England. Out of all the rumors and rumbles, however, salient emerging points were: 1) That J. P. Morgan & Co. has undoubtedly become acutely interested in light and power; 2) That in nine months it has made swift and certain progress; 3) But that the public utility situation, even in New York State alone, should certainly not be interpreted in terms of Mr. Morgan's throwing the switches, breaking the currents.