The Rise and Fall of Amforp

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William J. Hausman is professor of

economics and chair of the

Department of Economics at the

College of William b Mary in

Williamsburg, Virginia.

John L. Neufeld is professor of

economics at the University of North

CaroIina af Greensboro.

They are the authors of numerous

.articZes on the history of the U.S.

electric utility industry and are

working on a book on the subject.

46

The Rise and Fall of TheAmerican & Foreign PowerCompany: A Lesson from thePast?

Given the expertise of American utility companies, it is no

wonder that they want a piece of today’s fore&

investment action. But we have been there before and

foreign adventures don’t always work out as anticipated.

In-addition to normal business risk, includingfluctuating

exchange rates, unforeseen political risks can seriously

affect rates of return on investment.

William J Hausman and John L. Neufeld

US. utility investment in for-

eign electric utilities has be-

come a topic of heated discussion

and action in the electricity indus-

try An article in a major industry

trade association journal describes

foreign investment in electric utili-

ties as “among the most exciting

new frontiers” confronting the in-

dustry’ But this frontier has been

crossed before. There has been

precious little recognition by

those in the industry that this is

not the first time foreign invest-

ment in electric utilities has been a

hot topic.

The “roaring ’20s” was an ex-

ceptional era in many ways, not

the least for electric utilities. It

was a period during which for-

eign investment was pursued

with a vigor not seen again until

recently In fact, foreign investment

in electric utilities comprised the larg-

est single component of U.S. foreign

direct investment in the last halfof

the 2 920s. The expansion was dra-

matic, but the results were not as

The Electricity Journal



expected. The anticipated eco-

nomic returns from the invest-

ment boom of the ’20s were not re-

alized: Money was lost, and with-

drawal from foreign

entanglements proved to be ex-

ceedingly difficult. This article

documents the quantitative im-

portance of U.S. foreign direct in-

vestment in electric utilities dur-

ing the ’20s and examines in

detail the rise and fall of the larg-

est investor in foreign electric utili-

ties during the period, The Ameri-

can & Foreign Power Company, a

subsidiary of Electric Bond &

Share, one of the high-flying util-

ity holding companies of the pe-

riod.

I. U.S. Foreign Direct

Investment in the 1920s

Around the turn of the 20th

century the United States, for the

first time in its history, became a

persistent net exporter of goods

and services. Between 1896 and

1914 the positive U.S. trade bal-

ance averaged $270 million per

year(versusdeficitsaveraging

$70 million per year over the pre-

vious 15 years). During the first

World War and its immediate af-

termath, the positive trade bal-

ancerose to unprecedented

heights,averaging$3.5billionper

year from 1916-1920. Withreturn

to “normalcy,“the trade balance

declinedbutremainedpositive,

averaging $1.3 billion per year

from 1921-25 and $1.1 billion per

year from 1926-30.2

Te positive trade balance

gave Americans foreign cur-

rency balances and substantial

claims on foreign assets and the

U.S., for the first time in its his-

tory became a net investor in for-

eign countries. Between 1914 and

1919 total net U.S. foreign invest-

ment increased by $7.4 billion. Di-

rect investment is one form of in-

ternational capital transfer. Its

distinctive feature is that it im-

plies the acquisition of manage-

rial control of the foreign enter-

Tablel: U .S. oreign irectInvest ment ,1919-1929

TotalDI

FDl1919 FD11924 '% ;?; I?$ FDIl?29 %Change %Change

($m i l . ) ($m i l . ) - ($mll.) 1924-29 1919-29

3,880 5 ,389 t39 7,553 t40 t95

Public Utllltles 138 224 t62 1,025 +358 +643

Manufacturing 795 1,252 t57 1 ,821 t45 t129

Oi l roduct ion

Distribut ion 604 967 t60 1 ,341 t39 t122

Sales

Purcha

sing

Organizat ions 255 314 +23 378 t20 t48

Banking 125 125 0 125 0 0

M ining 876 967 t l0 1 ,227 t27 t40

Agricul ture

Rai lroads

587 918 t56 986 t7 t68

297 347 t17 309 -11 t4

prise. The other forms are portfo-

lio investment (primarily corpo-

rate bonds) and investment in for-

eign government securities. Most

foreign investment in the first half

of the 1920s was portfolio invest-

ment, but during the second half

of the decade the share going to

direct investment gradually rose,

with dramatic increases occurring

in 1928 and 1929.3

Te components of U.S. for-

eign direct investment in

the 1920s are presented in Table

L4 Between 1914 and 1919, in-

vestment in public utilities in-

creased only slightly, from $133

million to $138 million. This

changed dramatically during the

foreign investment boom that en-

sued. Public utility investment

was the fastest growing compo-

nent of foreign direct investment

throughout the 192Os, and in the

last half of the decade comprised

nearly 40 percent of the total in-

crease in foreign direct invest-

ment.5 That such a large and

growing share of direct invest-

ment was in the public utility

sector was intimately related to

events in the domestic industry

The boom coincided with the

dramatic rise in the U.S. stock

market, and occurred in the

midst of a major restructuring of

the domestic electric power in-

dustry, which was being driven

by a vigorous utility holding

company movement. The stocks

of electric utility holding compa-

nies were among the highest of

the high flyers in the stock mar-

ket frenzy of the late 1920s. Be-

tween June 1928 and September

1929 utility holding company

Ianuarylfebrua y 1997 47





operating management were pro-

vided for a fee based on gross

revenues. The first holding com-

pany created by Electric Bond &

Share was American Gas & Elec-

tric in 1906, followed by Ameri-

can Power & Light Co. in 1909,

National Power & Light Co. in

1921, and American & Foreign

Power Co. in 1924. At least partly

in response to an impending Fed-

eral Trade Commission investiga-

tion (and partly because their in-

terests had diverged), General

Electric spun off Electric Bond &

Share in February 1925.9

E

ectric Bond & Share was to

become by far the single

largest U.S. investor in foreign

electric utilities. The strategy be-

gan during the First World War

when Electric Bond & Share was

approached by the U.S. govem-

ment about the possibility of pur-

chasing electrical properties in

Panama. The government was

concerned about the war and its

possible effects on the Panama Ca-

nal and suggested to Electric

Bond & Share that it purchase theelectric systems in Panama City

and Col6n. After a careful study

the company purchased the prop-

erties in 1917. As a publication of

the company stated,

An important considerationwhichmade the projectedven-tureof Bond & Share seem desir-

able from the standpoint of broad

public policy was the knowledge

that the remodeling and expan-

sion of these Latin-American util-

ity plants would lead to the pur-

chase of machinery and

equipment in this country (in-

stead of in Europe as had pre-

viously been the practice) and

materially help to sustain em-

ployment in the United States.

Furthermore, it was reasonable to

assume that the investment of

large amounts of American capi-

tal in Latin America would help

to maintain a better under-

standing between the United

States and the Latin-American re-

publics?

In 1919 the State Department

again contacted Electric Bond &

Share about obtaining properties

Electric Bond & Share

created American G)

Foreign Power Co. to

carry out foreign ek-pansion, citing the

need to divers& inter-nationally as well as

domestically.

seized from the Germans by the

Guatemalan government. A tem-porary lease was arranged and in

1920 the electric utility was pur-

chased. In 1920 Electric Bond &

Share and International General

Electric built an electric railway

and hydroelectric plant for the

state government of Santa Ca-

tarina in Brazil, which also was

the first of a series of investments

in that country** The first Cuban

property was acquired in 1922 inSantiago. It was the genesis of the

Cuban Electric Co., which, after

acquisition of properties in Ha-

vana, was to become the largest

single holding of American & For-

eign Power. 2 By 1923 Bond &

Share had invested a relatively

modest $17 million in Panama,

Guatemala, and Cuba.

I1924 Electric Bond & Share

created the American & For-

eign Power Co. to serve as a vehi-

cle for further foreign expansion.The first annual report of the com-

pany asserted that if domestic di-

versification was a reasonable

strategy, then it made sense to di-

versify internationally, citing as

justification the principle fol-

lowed by Lloyds for over 200

years.I3 Over the next six years

American & Foreign Power ex-

panded dramatically, with total as-

sets rising to nearly a billion dol-lars (roughly $7.6 billion in 1996

dollars).‘* It acquired properties

from national interests, as well as

from Canadian and British inves-

tors, in Ecuador, Costa Rica, Chile,

Argentina, Mexico, and India, and

expanded its holdings in Brazil.15

In 1927, ElectricatWorld ook note

of these developments: “Amer-

ica’s capital surplus is finding an

attractive market in the develop-ment of public utilities abroad. By

the proposed acquisition of a

group of utilities in South Amer-

ica, France and Japan, The Ameri-

can & Foreign Power Company

moves forward to first place in

the control of public utility com-

panies in the foreign field.“”

In 1929, American & Foreign

Power moved into China with the

purchase of Shanghai Power Co.,the oldest and largest electric util-

ity in China, established by for-

eign investors in 1882. The Shang-

hai Municipal Council had

decided to sell the company and

]anuary/February 1997 49



solicited bids. The Municipal

Council had purchased the utility

in 1893 and had once previously

tried to sell it. American & For-

eign Power made the highest of

three offers and purchased the

company for $32 million (roughly

$240 million in 1996 dollars),

which made it the largest single

American investment in China.‘7

Eectric Bond & Share created

other holding companies to

purchase minority interests in a

variety of foreign utilities. Electric

Investors, Inc. (S.Z.Mitchell, Presi-

dent) was organized in 1909 for

the purpose of trading, dealing,

and underwriting securities. By

1928 it held interests not exceed-

ing six percent in Shawinigan

Water & Power (the Canadian

power company controlled by J.E.

Aldred), British Columbia Power

Corp., Toho Electric Power Co. (Ja-

pan), Great Consolidated Electric

Power Co. (Daido Denryoku

Kabushiki Kaisha) of Japan, and

the Italian Superpower Corp.”

Electric Bond & Share main-

tained a special relationship withAmerican & Foreign Power. It

was the only holding company in

the system in which it claimed to

hold majority ownership.”

Mitchell’s biographer, quoting the

Securities and Exchange Commis-

sion, noted that ‘between 1925

and 1931 Bond and Share realized

$288,580,000 from the sale of its

own securities and the greater

portion was invested in Americanand Foreign Power.“2oWhen Elec-

tric Bond & Share was reorgan-

ized on March 13,1929, its invest-

ment account increased overnight

from $93 million to $493 million.‘*

The astonishing $400 million

write-up was attributed entirely

to an increase in the “market

value” of the holdings of Ameri-

can & Foreign Power.

B t then the stock market

crashed and depression en-

sued.” Whereas the creation of

American & Foreign Power oc-

curred rapidly over the period of

a few years, its demise was a con-

tracted and often painful process

that was not complete until 1976.

During the first two years of the

depression American & Foreign

Power completed the acquisition

of several properties and contin-

ued to improve existing proper-ties, investing an additional $24

million in 1932. However, because

of exchange rate deterioration in

several Latin American countries,

dollar denominated revenues be-

gan to fall and the company sus-

pended dividend payments, first

on common stock, and in 1932 on

all classes of preferred stock. By

the end of 1938 the cumulative

dividends on preferred stock notpaid amounted to $189 million

[about $1.4 billion in 1996 dollars).

In addition, several operating

zompanies defaulted on their3onds, the Mexican and Cuban

governments forced electricity

rate reductions, and a number of

countries instituted exchange con-

trols, making it exceedingly diffi-

cult to repatriate funds of any

kind. The Annual Report ofAmerican & Foreign Power in

1938 lamented that if exchange

rates prevailing at the time of ma-

jor acquisitions had been main-

tained in 1938 the company’s re-

ported dollar earnings would

have been nearly twice as high as

those actually reported. But this,

of course, is one of the main risks

of foreign investment. Through-

out the 1930s construction expen-

diture remained at around $5-9

million annually (while produc-

tion of electric power continued

to increase). In 1939 the company

was able to make a small divi-

dend payment to holders of pre-

ferred stock for the first time since

1931.

Te company survived the

second World War, al-

though it had to write off its

Shanghai property in 1941, and

the government of Argentina hadexpropriated several of the com-

pany’s properties in 1943. After

the war a new sense of optimism

pervaded the company In 1952

American & Foreign Power was

reorganized and its capital struc-

ture simplified under the Public

Utility Holding Company Act of

1935. Expenditure on construction

increased to around $40 million

annually? In its 1953 Annual Re-port the company announced its

intention to double capacity in

Cuba by investing an additional

$130 million, and the President of

50 TheElectricity Journal



the company, WS. Robertson, ex-

uded confidence in the future:

As a pioneer United States enter-

prise in the foreign investment

field, Foreign Power has had to

contend with a variety of difficul-

ties and obstacles which were un-

foreseen by its founders in thedays when currencies were firm,

exchange was free, and it was

taken for granted that legitimate

investments were made for profit

and were entitled to earn it. Since

the early 30’s we have had many

problems and have learned to

live with them. Although those

early years were mainly a strug-

gle for survival, the more recenthistory of Foreign Power hasbeen one of steady growth andexpanding service. The Foreign

Power system now is close to be-ing a billion dollar enterprise;and it is the largest public utilitysystem in Latin America, wherethe field for future power devel-opment is virtually Iimitless.24

The 1950s generally were good

for the company although particu-

lar countries, such as Argentina,

continued to cause problems, and

its properties in India were sold.

Largely due to improvements in

remaining properties, the total as-

sets of the company rose to over

$1.2 billion by 1959.

Bt the optimism of the

1950s proved to be mis-

guided. ln 1959 the Cuban govem-

ment arbitrarily reduced electric-

ity rates and the following year

Fidel Castro expropriated Ameri-

can & Foreign Power’s properties,

at the time the largest holding in

the system. The government of

Brazil expropriated one of the

comRany’s properties and all

Mexican properties had to be sold

to the government, with the pro-

ceeds of the sale limited to invest-

ments in Mexico. It was proving

to be exceedingly difficult to with-

draw any funds invested in Latin

American countries. In its 1960

Annual Report, a major change of

strategy was announced by A&FP

President Henry B. Sargent:

As I have had occasion to point

out in the past, one of the greatest

obstacles to successful private

utility operation in Latin America

has been the economic instability

from which many countries have

suffered, combined with the in-

ability of the utilities to obtain in-

creases in service rates to com-

pensate for the added costs of

doing business. . . . It is manage-ment’s belief that Foreign

Power’s future lies in the conver-

sion of its investments from the

utility business to diversified in-

dustrial enterprises. . . . It should

be clearly understood that where

the Company’s subsidiaries are

permitted to earn a fair return on

their utility properties, the sub-

sidiaries will continue to meet

their obligations to provide the

highest quality of utility services,

and expand their facilities to

keep pace with the growth of de-mand. Where they are not permit-

ted to do so, there is no apparentalternative to the sale of the util-

ity properties.25

In 1961 American & Foreign

Power was exempted from

PUHCA and became a registered

investment company Over the

course of the 1960s its properties

continued to be sold off and its as-

sets dropped to around $500 mil-

lion. By 1965 half of the com-

pany’s total revenues were

comprised of interest earned on

foreign government obligations.

In 1967 Electric Bond & Share and

American & Foreign Power for-

mally merged, retaining Ebasco

Services as a subsidiary. The fol-

lowing year the name of the com-

pany was changed to Ebasco ln-

dustries, a closed-end,

non-diversified management in-

vestment company ln 1968

Ebasco Industries merged with

Boise Cascade, a forest-products

firm. Properties continued to be

liquidated in the early 197Os, and

in 1973 Ebasco Services was sold

to Halliburton Company In 1976

Ebasco Services again was sold,

this time to Enserchz6 (formerly

Lone Star Gas Co.), and Boise Cas-

cade liquidated its last remaining

Latin American utility property

(in Ecuador). These transactions

signified the end of American &

Foreign Power as a business en-

tity, although Boise Cascade con-

tinues to carry some debentures

of the company on its books.

III. Lessons Learned

The story of American & For-

eign Power may contain some les-

sons for today’s utility executives.

The company grew spectacularly

during the boom of the late 1920s

and became a billion dollar com-

pany with electric utility holdings

around the world. Unlike other

foreign utility investors (such as

/anuay/Februa y 1997 51



addition to the normal risks of

business, including fluctuating ex-

change rates, there are unforeseen

political risks that can seriously af-

fect rates of return on investment.

Regulatory regimes can change

dramatically with a change in gov-

ernments. Utility properties al-

ways seem to be ripe for expro-

priation. Once an investment has

been made, it may be difficult or

impossible to withdraw if events

don’t turn out as anticipated.

Intercontinents Power), the com-

pany survived the depression, al-

though it proved to be a difficult

struggle and a financial night-

mare. Although there was a pe-

riod of renewed optimism and in-

creased investment in existing

properties in the late 1940s and

195Os, pervasive economic and

political problems in the 196Os, es-

pecially in Latin America, forced

the company to shed (or be shorn

of) virtually all of its utility invest-

ments. In the end, the investments

in foreign electric utilities pro-

vided a very poor return on the

capital expended.

Its not likely that the mis-

takes of the past will be re-

peated today Conditions are dif-

ferent now than they were in the

late 192Os, but another foreign in-

vestment boom in electric utilities

appears to be under way. The

need for foreign capital in this

most capital-intensive of indus-

tries is real and the prospects are

enticing: “China and India alone,

with less than 10 percent of to- None of this may happen in the

day’s demand, plan to build what business environment of today,would amount to a quarter of the but all of it happened to Ameri-world’s new capacity If Chinese can & Foreign Power, which has a

electrical demand were to grow history at least worth contemplat-

no faster than the economy over ing. n the coming decades, say at 7 per-

cent a year, the country would Endnotes:

need to open a medium-sized 1. Edward R. Anthony, Toward a Global

power station a week by 2000 and Paradigm, ELEC. PERSPECTIVES, July-

one every few days thereafter.‘“7 Aug. 1993, at 20. See also Thomas W.

Gven the recognized exper-

Lippman, An Electrifying Opportunity,

tise of American utilityThe Washington Post, April 20,1993,

section D, and Power to fhe People, THE

companies, it is no wonder that ECONOMIST, June 18,1994.

they want a piece of the action. 2. U.S. DEPT. OF COMMERCE, HISTORICAL

But we have been there before STATISTICS OF THE UNITED STATES, Part 2,

and foreign adventures don’t al- 867 (1975).

ways work out as anticipated. In 3. Id., at 869.

4. Data in the table are from MIRA

WILKINS, THE MATURING OF MULTINA-

TIONAL ENTERPRISE 55 (Harvard Univ.

Press, 1974) and CLEONA LEWIS, AMER-

ICA’S STAKE IN FOREIGN INVESTMENT 605

(Brookings Inst., 1938). It is not possi-

ble to precisely separate electric utility

investments from other types of pub-

lic utility investments. Electric plants

often were operated in conjunction

with tramways (which declined in im-

portance during the 1920s) and inter-

urban railroads, gas works, ice plants,

and waterworks. But the bulk of pub-

lic utility investment during the 1920s

was in electric plants, high-voltage

transmission lines, and distribution

networks. By 1936 electric and gas

utilities comprised 84 percent of total

foreign “public utility” investments.

U.S. DEPT. OF COMMERCE, AMERICAN DI

RECT INVESTMENTS IN FOREIGN COUN-

TRIES - 1936,18 (1938).

5. The Bureau of Foreign and Domes-

tic Commerce identified 119 foreign

public utility investments (including

transportation in the case of Canada)

between 1925 and 1929, versus 21 in

the previous five years. U.S. DEPART-

MENT OF COMMERCE, AMERICAN DIRECT

INVESTMENTS IN FOREIGN COUNTRIES -

1936,47 (1938). Portfolio investment

remained important during the 1920s.

From 1914 to 1928, $723 million worth

of foreign public utility bonds were is-

sued in the United States: 40 percent

of the total were of European origin

(with German companies being the

largest single borrowers at $149 mil-

lion), 26 percent were Canadian, 18

percent were Latin American, and 14

percent were Japanese. ELEC. WORLD,

Oct. 6, 1928, at 710.

6. ALFRED COWLES 3RD & ASSOCIATES,

COMMON STOCK INDEXES 68-69,86-87,

96-97 (Principia Press, 1939). , Eugene

White also made this point, although

he did not distinguish between hold-

ing companies and operating compa-

nies. E. White, The Stock Market Boomand Crash of 2929 Revisited, J. ECON. PER-

SPECTIVES, spring 1990, at 71.

7. For a recent discussion of the

merger see W. BERNARD CARLSON, INNO-

VATION AS A SOCIAL PROCESS: ELIHU

THOMSON AND THE RISE OF GENERAL

c;? TheElectricitu Toumal



ELECTRIC, 1870-1900,292-301 (Cam-

bridge Univ. Press, 1991).

8. The original portfolio of Electric

Bond & Share contained a number of

foreign stocks, amounting to some

$349,000 or 18 percent of the total

value of stocks in the portfolio. As an

indication of the risk involved, the to-

tal value of all stocks in the portfoliohad a combined book value 32 percent

below par value. None of the $1.2 mil-

lion in bonds held by the company

were foreign. SIDNEY A. MITCHELL, S.Z.

MITCHELL AND THE ELECTRICAL INDUSTRY

62-64 (Farrar Straus & Cudahy, 1960).

Also see Carlson, id., at 224.

9. FEDERAL TRADE COMMISSION, CONTROL

OF POWER COMPANIES xxvi-xxvii (1927).

Also see Federal Trade Commission,

Utility Corporations. Summary Report

of the Federal Trade Commission to

the U.S. Senate, No. 72A, 86-87 (1935).(This multi-volume work is one of the

main sources of information on invest-

ment in foreign electric utilities and

will be referred to hereafter as FTC,

followed by the volume number.)

10. American & Foreign Power Co.,

Inc., The Foreign Power System 8

(1953) (published by the company)

11. Mitchell, supru note 8, at 106-07.

12. Id., at 107-08.

13. Id., at 110.

14. One billion dollars in 1929 was

roughly equivalent to $7.6 billion in

1996 dollars (using the CPI as a defla-

tor). But comparing the size of the

company’s investment to the size of

the GNP in 1929 makes the number

even more impressive. One billion dol-

lars in 1929 compared to the 1929

GNP would be roughly equivalent to

$70 billion today. (That is, $1 billion in

1929 was 0.97% of GNP in 1929. That

same proportion of the 1996 GNP-us-

ing a very rough estimate, since GNP

figures are no longer produced-would be roughly $70 billion, which is

more than twice the size, measured by

assets, of the Southern Company to-

day.)


Annual Reports, 1927-31.

16.90 ELEC. WORLD 761 (Oct. 8,1927). ’

There is no mention of European or

Japanese investments in the annual re-

ports of American & Foreign Power, al-

though they are noted, atong with

Canadian investments, in Moody’s In-

vestors Service reports of 1928, 1929

and 1930. A table presented by Segreto

indicates that American & Foreign

Power held interests, jointly with the

Ziirich-based Elektrobank, in Iberian

Electric Corp., Ltd. (Montreal), Euro-

pean Electric Corp. of Canada (Mont-

real), and British & International

Utilities Ltd. In addition Electric Bond

& Share held an interest in the Belgian

utility holding company, Soci&? Finan-

c&e de Transports et d’Industries

Blectriques (Sofina). See LucianoSegreto, Du ‘Made in Germany’au

‘Made in Switzerland’: Les sociPtits finan-

cie’res suisses pour Z’industrie 6lectrique

dans l’entre-deux-guerres, BLECTRICITB ET

BLECTRIF~CATIONDANSLEMONDE 360

(Presses Universitaires de France,

Monique T&de, ed., 1992).

17. Electric Util ity Regulation Board,

National Construction Commission,

Electric Power Development in China,

TRANSACTIONS OF THE THIRD WORLD

POWER CONFERENCE 105-30, vol. 11 (us-

GPO, 1938). The purchase of theShanghai property is also discussed in

FRANKH.H. KING,THEHISTORYOFTHE

HONGKONGANDSHANGHAIBANKING

CORPORATION 338, vol. III (Cambridge

Univ. Press). The bank held a substan-

tial amount of the debentures of

Shanghai Power.

18. In 1930 Electric Investors merged

with Electric Bond & Share. MOODY'S

MANUALOFPUBLICUTILITYSECURITIES

(Moody’s Investors Service, 1930).

19. Moody’s (1930). In 1929,22 percent

of the gross revenues of the companies

supervised by Electric Bond & Share

originated outside the United States.

FTC, supra note 9, ~01s. 23,24, at 410.

20. Mitchell, supra note 8, at 110-11. By

the mid-1940s American & Foreign

Power produced 30 percent of the elec-

trical power in Mexico, 15 percent in

Brazil, 13 percent in Argentina, 75 per-

cent in Chile, and 90 percent in Cuba.

Since there was little foreign direct in-

vestment in utilities in the 1930s these

numbers probably accurately reflect

their position in at the beginning of

that decade. SIMONHANSON,ECONOMIC

DEVELOPMENTINLATINAMERICA 292-

315 (Inter-American Affairs Press,1951).

21. The $400 million showed up on the

liability side as an increase in surplus.

Mitchell’s obituary claimed that he

may at one time have been the wealthi-

est man in the world; if so, this prob-

ably would have been between March

and September, 1929. NEW YORK TIMES,

Jan. 19, 1944.

22. In December 1931, Electric Bond &

Share wrote down the value of its in-

vestments by $400 million. FTC, supra

note 9, vol. 66, at 1266,1274. The “arti-ficial” write-up of utility properties

was subsequently considered to be

one of the major abuses of the holding

companies. FTC, vol. 72A, at 298-301,

845-48.

23. The company and its foreign sub-

sidiaries employed 31,000 people at

the time.


Annual Report, 1953,6.


Annual Report, 1960, 4-5.

26. Interestingly, the acquisition wheel

continues to turn, as Enserch is again

being acquired, this time by TU Elec-

tric for $1.7 billion.

27. Power to the People, THE ECONOMIST,

June 18,1994, at 7.

Janus y/Februa y 1997 53

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The Rise and Fall of Amforp

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