“NOT VALID”

Southland Times, Issue 22734, 9 November 1935, Page 5

“NOT VALID”

HOLDING COMPANY ACT RECENT AMERICAN LEGISLATION DEMORALIZING EFFECT (United Press Assn—Telegraph Copyright.) (Rec. 5.5 p.m.) New York, November?. A message from Baltimore says that the 1935 Holding Company Act, designed to give the Government power for sweeping reorganization of the utility industry, was held to be invalid in its entirety by Federal District Judge William Coleman in instructing the trustees of the American States Public Service Company to treat the Act as invalid and of no effect.

Judge Coleman said that Congress had flagrantly exceeded its lawful power in enacting the measure, by which the elimination of most of the Holding companies in the country’s vast utilities network was sought. The matter will probably go to the Supreme Court of the United States. A later message states that Mr Roosevelt’s new deal received another rude shock with the declaration by Judge Coleman that the public utility measure passed by Congress last session after so much travail, so many investigations and so much relentless pressure by the President upon legislators was unconstitutional, since “Congress by its enactment has flagrantly exceeded its lawful power under the commerce clause of the Constitution.” The measure is considered one of the keystones of Mr Roosevelt’s programme of basic reform in contradistinction to recovery. It will still have to undergo a Supreme Court test, but the effect of the lower court’s decision is unmistakable, since once again it has thrown the pall of unconstitutionality _ upon the Rooseveltian machinery for righting America’s economic evils.

The prices of utilities stocks soared upon the exchanges with the announcement of the good news, and the Administration suffered another defeat which, even if only temporary, is too reminiscent of the N.R.A. disaster to be anything but demoralizing.