431 Days: Joseph P. Kennedy and the Creation of the SEC
Friendly Enforcement
The Public Utilities Holding Company Act
While most of the reforms carried out by Joseph Kennedy's SEC could be classified as friendly, the Public Utilities Holding Company Act was an exception. The passage of the Utilities Act was one of the last big events during Kennedy's tenure and one he had hoped to avoid.
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| Cartoon on PUHCA by Rollin Kirby, New York World-Telegram (courtesy of the Library of Congress) |
The Utilities Act was meant to ensure that financial constructions like Samuel Insull's utilities empire were never allowed to exist again. It had long been on the agenda of Franklin Roosevelt who had fought this "overconcentration of economic power" while Governor of New York State. In 1935 the team of Cohen and Corcoran drafted a bill that sharply limited the allowable scope of holding companies. The bill provided that if the SEC determined that certain holding companies bore no economic or geographic relationship to the general activity of the company, it would be able to order dissolution. The fight over the Utilities Act and its so-called "death sentence" was unprecedentedly bitter: the utilities lobbied hard and orchestrated a huge letter-writing campaign.
Late in the process an unexpected voice raised concerns about the bill. In letters to both Roosevelt and to Senator Burton Wheeler, a friend who was leading the effort, Joseph Kennedy warned that placing the burden of imposing the "death sentence" on the SEC would subject the Commission to pressures it might not be able to withstand. To Kennedy, the Utilities Act went far beyond the principles of "sunlight" and disclosure to place business and government in an untenable adversarial relationship.
Although Kennedy had some involvement in framing the legislation, he was gone before the Act took effect in December 1935. When it did, companies began bringing suit against the SEC and the Commissioners, and James Landis prepared to sort it all out in the Electric Bond and Share case.
Related Museum Resources
Papers
Letter from Joseph P. Kennedy to Louis Howe on utilities holding company reform [Transcription] (with permission of the John F. Kennedy Library Foundation)
Letter from SEC Chairman Kennedy to Jane Breed on the utilities bill [Transcription] (with permission of the John F. Kennedy Library Foundation)
Letter from Joseph P. Kennedy to Representative Sam Rayburn asking for postponement of effective date of PUHCA [Transcription] (with permission of the John F. Kennedy Library Foundation)
Letter from SEC Chairman Kennedy to President Roosevelt on the utilities bill [Transcription] (with permission of the John F. Kennedy Library Foundation)
Letter from SEC Chairman Kennedy to Senator Burton K. Wheeler on the Utility Bill [Transcription] (courtesy of the National Archives)
Letter from Representative Samuel B. Pettengill to SEC Chairman Kennedy on the Utility Bill (courtesy of the National Archives)
Letter from SEC Chairman Kennedy to Representative Samuel B. Pettengill on the Utility Bill [Transcription] (courtesy of the National Archives)
Letter from Representative Samuel B. Pettengill to SEC Chairman Kennedy on the Utility Bill (courtesy of the National Archives)
Letter from SEC Chairman Kennedy to William Chamberlain, Chairman, United Light & Power Company [Transcription] (courtesy of the National Archives)
SEC Release of Speech by Chairman James M. Landis on PUHCA [Transcription] (courtesy of the Library of Congress)
Letter from SEC Commissioner Robert Healy to Joseph P. Kennedy on the repercussions of the Utilities Act [Image] (with permission of the John F. Kennedy Library Foundation)
Letter from SEC Commissioner Robert Healy to Joseph P. Kennedy on the repercussions of the Utilities Act [Transcription] (with permission of the John F. Kennedy Library Foundation)