THE PRESIDENT: Good morning, everybody. I think this is going to be the dullest for news on record. I don't know anything.
Q. You have said that before.
THE PRESIDENT: I know it; it doesn't always work out that way. Who is going to the boat races?
Q. Fourteen of us, so far.
Q. Are you rooting for Harvard?
THE PRESIDENT: I think I could get a White House Correspondents' crew that would beat the Harvard crew.
Q. A 100-yard dash, but no longer than that.
Q. You wouldn't tell Franklin that, would you?
THE PRESIDENT: No. (Laughter)
Q. You think he would be discouraged?
THE PRESIDENT: Yes. I just remarked to the Senator (Young) that this would probably be the dullest conference on record. It has got to the point where I am seriously thinking of organizing a White House Correspondents' crew to take part in the intercollegiate regatta next year.
Q. What would you train them on?
THE PRESIDENT: I would put Mac and Steve (MacIntyre and Early, Secretaries to the President) on the training end.
Q. We could train in the Nelson House bar. . . .
Q. Have you any further messages to Congress in mind right now?
THE PRESIDENT: Yes.
Q. What are they?
THE PRESIDENT: I don't know when the next message will go up. You had better "stick around." One might go up some time today; but I haven't decided and I can't tell you which one it will be.
Q. Are you insisting on the so-called death sentence section of the so-called utilities bill?
THE PRESIDENT: What do you mean, the "death sentence"?
Q. That is the section in the bill requiring some companies to end their existence by 1942 if they do not meet the approval of the Securities Commission. You will remember that some of them wanted to turn that down.
THE PRESIDENT: All I can say is that I am heartily in favor of Section ii.
Q. That is the section.
THE PRESIDENT: Of course the objective is this and I think probably the easiest way to understand it is something along this line: There are certain holding companies which are wholly intrastate such, for instance, as the Public Service Corporation of New Jersey. I think that is wholly intrastate—I am not certain—but it is 95 or 98 percent intrastate. The Niagara Hudson Company of New York is an intrastate company.
Now, as I understand it, we eliminate from the operation of this bill the intrastate companies that do business solely within the State.
Then you come down to certain other types of holding companies like, for example, the Associated Gas and Electric Company. Now take in your own minds—we have talked about this before—take a sheet of paper and on the bottom put a lot of little circles—coming back to my old illustration. Those represent the operating companies. Say there are 100 of them. In most cases the operating companies are properly capitalized, and in most cases they are making good money.
Suppose, for the sake of argument, that they are making an average of $7 on $100 investment. That $7 goes up that sheet of paper in a zigzag line and it goes through, let us say, 33 other circles which are in the middle of the sheet of paper. Those are intermediate holding companies, they are management companies, engineering companies, finance companies. On the way up through these various zigzag lines—the most extraordinary document in the world is the organization chart of the Associated Gas and Electric Company—by the time the$7 comes up through these 33 intermediate companies and gets to the top company at the top of the page, there isn't $7 left. The $7 has been milked all the way up so that when it gets to the top holding company of all, it may, if it is lucky, represent $4.
Now, the objective of the bill is to eliminate the intermediate companies so that the $7 will go up to the top substantially intact.
I suppose that is the easiest way for the layman to be given a picture of what it is all about.
Q. In other words, you have no objection to a holding company in the so-called first degree and eliminating all the rest?
THE PRESIDENT: No. But there is one other feature, and that is that the holding company in the first degree probably should relate to substantially contiguous territory. When that holding company relates to widely disseminated properties all over the United States, it is not a holding company, it is an investment company.
Q. Now, you take the North American Company. It operates in Washington, D. C., it operates in Cleveland, it operates in St. Louis. Would it be possible for the North American to divide into three companies, one for each group?
THE PRESIDENT: I don't see why not.
Q. Could the North American stock be held by an investment company as long as they did not interfere with the management?
THE PRESIDENT: Yes.
Q. In other words, Mr. President, the present investors who hold North American stock, despite the claims of certain officials who have sent out considerable letters, need not necessarily lose anything at all?
THE PRESIDENT: I should say you are absolutely right, but I hesitate to say so on the record for fear somebody would start a boom in North American stock. (Laughter)