Business: Dance of Power

Until 1929, J. P. Morgan & Co. refrained from touching public utilities. But that year they joined with the Bonbright and Drexel interests in the sponsorship of a new holding company to be called United Corp. This company, it was soon seen, would foster a community of interest between the big utility systems of the Atlantic Seaboard.

The ultimate destiny of United Corp. will be to hold at least working control of a giant utility system, closely coordinated if not actually merged. Last week by a huge barter United Corp. came one step nearer this destiny. From St. Regis Paper Co. it acquired 4,070,000 shares of Niagara Hudson Power Corp. in exchange for 2,170,000 shares of United stock. Added to United's previous holdings of 1,673,000 shares of Niagara Hudson, the deal gives it a 22.1% interest in the big northern New York system. Rumors blew hot that United will also get the 2,500,000 shares of Niagara Hudson owned by Aluminum Co. of America and the 3,500,000 shares controlled by the rich and powerful Schoellkopf family. This would give United a 45% interest in Niagara Hudson, not counting the 7.4% held by United Gas Improvement Co.—total, 52% control.

Intricate have been the steps of United's ponderous dance of destiny. Some stocks have been purchased. Others have been bartered in private. Others have resulted from public barter. United's holdings in United Gas Improvement Co. now amount to 26%, and its holdings in Public Service Corp. of New Jersey come to 17.9%. In addition, U. G. I. has a 35.7% interest in Public Service Corp. United also has 20% of the stock of Columbia Gas & Electric. Less important is its 5.3% interest in Commonwealth & Southern Corp. But should United desire to enlarge this, it might well make a deal with its good friend American Superpower Corp., holding 13.2% of Commonwealth & Southern. Superpower owns a 5.4% interest in United, would probably be not averse to getting further United stock in an exchange.

Biggest plum in the eastern utility field is Consolidated Gas Co., world's richest electric utility. United has only a 1.7% interest in Consolidated, and the entire Morgan-Bonbright-Carlisle group is said to have only 10%. But the election of Floyd Leslie Carlisle. Niagara's chairman, to New York Edison's chairmanship last fortnight (TIME, March 2) was taken as an indication that the ties between the two companies are being strengthened. Last year Niagara Hudson acquired 201,500 shares of Consolidated, believed in part to represent the holdings of the late Nicholas Frederic Brady.

The pattern of United's destiny dance was, of course, laid down by the Morgan-Bonbright interests. That in less than two years after their decision to enter the utility field they have done so well, have acquired so much stock, is to be considered a tremendous tribute to power. Men do not surrender tens of thousands and millions of shares in sound operating companies for shares in a minority-interest holding company unless they have great faith in the holding company. Each of United's 14,500,000 shares is a testimony to that faith.