Electric Bond and Share Company

Electric Bond and Share Co. was the largest utility holding company in the United States during the 1920s and 1930s. It controlled about 10% of the electricity generated in the country.

The company had its origins in the 1890s when General Electric Co. organized the Electrical Securities Co. of Boston to assist small utilities who wanted to buy generating equipment. Electrical Securities bought the stocks and bonds that were being issued by these electric companies and used them as collateral in financing the purchases of G.E. products.

After the panic of 1893 when large numbers of electric and gas companies went bankrupt, these securities became virtually worthless. Therefore, in 1905, G.E. formed Electric Bond & Share in order to try to convert its portfolio of utility company stocks and bonds into marketable securities.

EBASCO's president, S. Z. Mitchell, who had many years' experience in managing and financing small utilities in the Northwest, was seen by G.E. as being well suited to bring order to the utility industry. Under his direction EBASCO helped to revitalize hundreds of small electric companies by making technical, managerial and financial consultants available to them. The goal was to integrate these utilities into a rational generating and distribution system. To this end, EBASCO constructed an elaborate pyramid of holding companies including American Gas & Electric Co., which controlled the Scranton Electric Co., and Lehigh Power Securities Corp., which controlled Pennsylvania Power & Light. EBASCO "supervised" these holding companies, staffing them with interlocking directors and officers. Mitchell, for example, while chairman of EBASCO also served as director of Lehigh Power Securities Corp.

As public attention increasingly focused upon General Electric's alleged efforts to monopolize the utility industry, chairman, Owen D. Young, sought to separate his company from EBASCO. In January 1925, G.E. formed Electric Bond & Share Securities Corp. which acquired all of EBASCO's stock. Four years later these two companies merged to form Electric Bond and Share Co. The new EBASCO claimed that it was no longer a holding company since it did not have majority control over any of the companies it "supervised".

The Federal Trade and Securities and Exchange Commissions did not agree with this assessment. Late in 1935, following the enactment of the Public Utility Holding Company Act, the SEC brought suit in U.S. District Court, charging EBASCO with failing to register as a holding company. EBASCO fought this action, maintaining that the 1935 law was unconstitutional. It did, however, terminate its service contracts with American Gas & Electric and Lehigh Power Securities Corp. After the Supreme Court ruled that EBASCO had to comply with the law, the SEC moved to break up Electric Bond and Share. As a result, Pennsylvania Power & Light became an independent utility in 1947. EBASCO was also forced to give up its control of American Gas & Electric and the Scranton Electric Co.

From the description of Records, 1923-1932. (Hagley Museum & Library). WorldCat record id: 122355336