Power & Light Housecleaning

When he reforms, no one reforms more violently than the penitent rake. Prime bad boy of U. S. industry, in the eyes of the public, Congress and Federal Trade Commission, has been the electric light & power business. Three years ago the Trade Commission focused attention on the vigorous propaganda work which the National Electric Light Association, controlled by disgraced Samuel Insull, was carrying on in schools and colleges (TIME, Aug. 31, 1931). Later the Insull crash threw into bold relief such practices as the looting of operating companies by holding companies, the publication of misleading financial statements and unscrupulous lobbying carried on by certain N. E. L. A. members.

At Atlantic City last June, Floyd Leslie Carlisle served notice on the N. E. L. A. that it must purge itself if it wished to avoid stringent Federal supervision. Floyd Carlisle comes from that centre of natural power, upstate New York. He is the robust board chairman of six companies (one of them, Niagara Hudson, is world's largest producer), speaks for the Morgan utility interests, is the nation's No. 1 power tycoon. Last week he and Board Chairman Bernard Capen Cobb of Commonwealth & Southern Corp. did something about it. They invited the nation's utility tycoons to a dinner at Manhattan's Metropolitan Club. Out of the repentant ashes of the N. E. L. A., founded at Chicago's Grand Pacific Hotel three years after Thomas Alva Edison opened his first central power station in Manhattan's Pearl Street, was formed the most autocratic trade association so far set up in the U. S. Name: Edison Electric Institute, "a permanent tribute to Thomas A. Edison . . . to foster the Edison tradition."'

To be president of the E. E. I. was elected President George Bruce Cortelyou of Consolidated Gas Co., N. E. L. A.'s old president. Several other officers of the N. E. L. A., shortly to be junked, were retained by the new association. But the new group had something beside a new name. A set of sharp-toothed regulations to curb unethical practices was enacted such as would never have been dreamed of in the days of Insullism. Four-point code:

1) Members must issue financial statements, audited by outside accountants, at least once yearly, a practice for which the New York Stock Exchange has been clamoring faint-heartedly.

2) All reports must be "accurate and clearly indicate their source."

3) No exorbitant fees may be charged to operating utility companies by holding companies for management, supervisory, purchasing, construction, engineering or financing services. Thus prevented was the boom-time operation known as "milking."

4) Members must at all times be prepared to answer questions regarding business conduct put to them by E. E. I. trustees.

At the Metropolitan Club dinner all but 15% of the old association's membership agreed to join the new one. Dissenters, whom Mr. Carlisle hopes may later reconsider: Henry Latham Doherty's Cities Service, the Harley Lyman Clarke interests' Utilities Power & Light, Howard Colwell Hopson's Associated Gas & Electric, Frank Theodore Hulswit's American Commonwealths Power. Unlike the N. E. L. A., the Edison Institute will not be open to manufacturers.

The E. E. I. will be one of the few of Floyd Carlisle's interests of which he is not actual top man. He likes to yacht, is commodore of the Manhasset Bay Yacht Club. The boat he backed for the America's Cup race in 1930 won the trials and the cup. He has always liked boating. Once when a boy he fell on the deck of his craft, broke his leg, gamely directed the companions who set it. At Cornell (1903) he was president of the senior class. When he descended on Manhattan ten years ago he at once set up his own investment house. His physical stature makes him stand out in a board room. When he is not speaking with impressive authority on Power, he has his boyish side.*

Said he and Messrs Cobb & Cortelyou of the power & light housecleaning: "The formation of this body is looked upon as providing a definite answer to demands made by public utility leaders . . . of the national electric light association . . . that the industry divest itself of all semblance of propaganda activities, that it assume an attitude of frankness and ready co-operation in its dealings with the public and with regulatory bodies. . . ."

Said Chairman George Otis Smith of the Federal Power Commission: "I am interested. . . ."

*At a hearing before the New York State Commission on Revision of the Public Service Law he once testified: "A corn popper--if you like to pop corn,--I do. A corn popper would use 11 kilowatt hours and cost you 33-c- a year. Bottle warmers--and I won't discuss what kind of things in bottles would be warmed--but you can warm anything in a bottle for 30-c- a year at 3-c- per kilowatt hour. . . ."

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