Answer. No; it represented a holding company at that time. Question. Oh, its subcompanies maintained their individual existence, then?

Answer. Yes; it was owned and controlled by Morrison and McCall.

Question. Of St. Louis?

Answer. Yes.

Question. On pages 12, 13, and 14 is there a list of this holding company's acquisitions with the dates acquired, and their location? Answer. There is.

Question. That is a list of how many companies?

Answer. About 85 companies, I think.

Question. These were not all electric utility companies?

Answer. No, sir.

Question. There are many ice companies and some water companies?

Answer. Yes, sir; and some railway companies.

Question. Trolley or interurban companies?

Answer. Street-railway companies.

Question. When was the Miami Gas Co. acquired?

Answer. 1924.

Answer. To the Electric Bond & Share Co.

Question. There was a steamship company acquired in 1920, was there?

Answer. Yes, sir.

Question. What was that?

Answer. There was more than one of them. The steamship companies acquired in 1920 were intended to operate in the ChileanAmerican coastwise trade.

Question. You treat of that organization somewhat at length in this report?

Answer. I do; later on.

Question. We will not go into it now. Was that a profitable venture for the Central Power & Light Co.?

Answer. No; it was very unprofitable, and the companies were liquidated in 1925 and 1926.

Question. With a resulting loss?

Answer. With a resultant loss of about $600,000.

Question. Who were the owners that controlled the Central Power & Light Co. at that time?

Answer. R. W. Morrison and W. S. McCall.

Question. Beginning on page 15 and running over to page 16 it shows the companies that were merged into other companies inside of this Central Power & Light Co. prior to the time the Central Power & Light Co. became a part of the Central & South West group; is that right?

Answer. That is right.

Question. There are a good many of those. You have named them before by date of acquisition. They are named here in groups or showing what they are merged into.

Answer. There must be 40 or 50 of them.

Question. The next group, or the Chickasha Gas & Electric Co., is in section 5. That was in Oklahoma, was it?

Answer. Yes.

Question. Formed when?

Answer. November 1912.

Question. It came into this Central & South West in August 1925. The next is the Public Service Co. of Oklahoma. What was it? A holding company?

Answer. No. It was an operating company?

Question. Only?

Answer. No. It was also a holding company.

Question. When was it organized?

Answer. In May 1913 under the laws of Oklahoma with principal offices at Oklahoma City.

Question. Where were its properties?

Answer. In Oklahoma.

Question. When did it come under control of the Insulls, prior to the Central & South West formation or at that time?

Answer. Prior.

Question. When?

Answer. The Public Service Co. of Oklahoma was practically organized by the Middle West Utilities Co. in 1913.

Question. For the purpose of bringing together the Oklahoma properties?

Answer. Exactly.

Question. That it either had or wanted to acquire?
Answer. Yes.

Question. This shows that after its formation it acquired properties in 1916, 1917, and 1923, 1924, and 1925?

Answer. Yes, sir.

Question. So that by the time the merger took place into the Central & South West it was taken up and was a merger or combination of a lot of prior independent companies. Is that right? Answer. That is right.

Question. In section 7, on pages 20 and 21, what do you show? Answer. List of the companies owned or controlled by the Central & South West Utilities Co. as of August 1, 1925, which is 1 day after it was organized.

Question. They are in the three groups stated, American Public Service Co., Central Power & Light Co., and Southwestern Securities Co., plus the Chickasha Gas & Electric Co. and the Public Service Co. of Oklahoma?

Answer. That is right.

Mr. CHANTLAND. Now, this brings us to section 8, which treats of the acquisitions by the Central & South West after this original merger at the time of its formation in August 1925.

Examiner AVERILL. We will recess until 2 o'clock.

(Thereupon, at 12:25 p.m. a recess was taken until 2 p.m.)

AFTERNOON SESSION

Examiner AVERILL. Are you ready, gentlemen?

Mr. CHANTLAND. Yes; Your Honor.

Examiner AVERILL. Proceed, sir.

Mr. CHANTLAND. Before resuming, Your Honor, I think I had better put in the original letter from President Barbor of the Central & South West Utilities Co. to the chief counsel, dated January 1, 1934, and have it marked "Exhibit 5607-A", in order that it may have a proper filing place.

Examiner AVERILL. The letter will be admitted in evidence and marked "Exhibit 5607-A."

(The letter referred to was received in evidence and was marked "Commission's Exhibit 5607-A, Witness Depue."

CARL H. DEPUE resumed the stand and testified further as follows:

Direct examination (continued) by Mr. CHANTLAND:

Question. Before lunch, Mr. Depue, we had completed your historical part in chapter I of the various organizations taken over and becoming a part of the Central & South West group at the time of its organization in 1925, about August. Now, we will begin with section 8 of your chapter I, which deals with subsequent acquisitions, mergers, reorganizations, and sales in this group. We will take up first, your section 8 (a), which deals with the 1926 transactions. Did they make a number of additions and acquisitions in 1926?

Answer. They did.

Question. Will you describe them?

Answer. The Central Power & Light Co., previously a holding company, became primarily an operating company May 31, 1926, when to it were conveyed all of the properties of its subsidiaries except those pertaining to ice business in Houston and San Antonio and the street railways in Corpus Christi and Laredo, Tex., and Matamoras, Mexico.

Mr. CHANTLAND. Off the record a moment. (There was a discussion off the record.)

By Mr. CHANTLAND:

Question. By saying that these subsidiary properties were conveyed to them, you mean to say that the subsidiary corporations from that time on were either dissolved or became inactive?

Answer. They were dissolved and the properties transferred. I am not sure whether the charters were in all cases surrendered, but the properties were transferred.

Question. What were the two largest subsidiary properties which came into the Central & South West group in this manner?

Answer. The Texas Central Power Co., which then served 56 communities, and the Valley Electric & Ice Co., which then served 18 communities.

Question. Where were these Texas Central properties in southern Texas-down in the "Valley ", as they call it?

Answer. The Valley Electric & Ice Co. covered the Valley proper.
Question. But only the lower portion of it, I think.
Answer. Yes.

Question. Later during the same year, were there other transfers? Answer. Yes, sir.

Question. Proceed.

Answer. Soon thereafter, the Central & South West Utilities Co. transferred to the Central Power & Light Co. utility properties in 25 additional towns and cities of Texas. The Central Power & Light Co. also brought the Comfort Electric Light & Power Co., of Comfort, Tex., and the Citizens Gas Light Co., of Fredericksburg, Tex., from the Middle West Utilities Co., and sold to the latter the Emporia Gas Co., of Emporia, Kans.

Later, during 1927, the Emporia Gas Co. was transferred by the Middle West Utilities Co. to its subsidiary, the National Electric Power Co., and by the latter to its subsidiary, the Kansas Electric Power Co., which already owned electric utilities in Emporia.

Question. Were there still other companies which came into the Central Power & Light Co. during 1926?

Answer. There were.

Question. Go ahead.

Answer. The electric properties at Orange Grove, Waring, and Wellington were also acquired by the Central Power & Light Co. during 1926. Most of the properties of the Central Power & Light Co. were located in the southern part of Texas. Properties in several towns which were served by the company or its subsidiaries at some distance from its major territory were transferred during 1926 to other operating subsidiaries of the Central & South West Utilities Co.

Question. Orange Grove, I notice, is about half-way up to Corpus Christi [indicating on map].

Answer. Yes, sir.

Thus, in the towns of Center, Carthage, and Tenaha, in eastern Texas, the ice and electric properties were conveyed, respectively, to the East Texas Ice Co. and the East Texas Public Service Co., both subsidiaries of the American Public Service Co.; the electric and ice properties in Ashdown and Mena, Ark., were transferred to the Southwestern Gas & Electric Co.; the McAlester Gas & Coke Co., that served gas to the city of McAlester, Okla., was transferred to the American Public Service Co.

Question. That seems to have been a gas property only.

Answer. Yes, sir.

Question. Go ahead.

Answer. The Central & South West Utilities Co. transferred to the Southwestern Gas & Electric Co. properties located in Fulton, Waldron, and Washington, Ark.

The American Public Service Co. acquired the Home Light & Ice Co., of Pittsburg, Tex., in January 1926, and immediately transferred the latter's electric and ice properties to the East Texas Public Service Co. and the East Texas Ice Co.

Question. The Arkansas properties are down in the southwest corner of Arkansas?

Answer. Yes, sir.

Question. Go ahead. What became of the Southwestern Securities Co. in 1926?

Answer. The Southwestern Securities Co. was eliminated as a subholding company in April 1926 when its investments in stocks

of the Southwestern Gas & Electric Co. and the Bethany Oil & Gas Co. were transferred to the Central & South West Utilities Co.

Though left without any assets, the Southwestern Securities Co. was continued in existence, and its stock was assigned by the Central & South West Utilities Co. to the Middle West Utilities Co. in consideration for assumption by the latter of all liability for any franchise taxes that might thereafter accrue against the Southwestern Securities Co.

Mr. CHANTLAND. Off the record.

(There was a discussion off the record.)

By Mr. CHANTLAND:

Question. I will ask you at this moment to turn over to pages 34 and 35 and to state the subsequent revival and the later final inactivity of this company.

Answer. The Southwestern Securities Co., which had been inactive since its liquidation in April 1926 and whose existence had thereafter been perpetuated merely by noncancelation of its capital stock, again became active in December 1929 when the Middle West Utilities Co. surrendered to the Southwestern Securities Co. the latter's capital stock, which the Middle West Utilities Co. had meanwhile held, and the Southwestern Securities Co. then reissued some of its capital stock to the Central & South West Utilities Co. in exchange for about 25 percent of the outstanding common stock of the Southwestern Light & Power Co.

Question. Now, carry on from there and finish up the Southwestern Securities.

Answer. By similar exchanges during 1930 and January 1931 the Southwestern Securities Co. acquired from the Central & South West Utilities Co. substantially all of the additional outstanding common stock of the Southwestern Light & Power Co., but that situation was changed in December 1931 when the Southwestern Securities Co. was again liquidated, except with respect to nonsurrender of its common stock by the Central & South West Utilities Co.

In the process of that liquidation, the Southwestern Securities Co. transferred its aforementioned holdings in common stock of the Southwestern Light & Power Co. to the Public Service Co. of Oklahoma in exchange for approximately 30 percent of the common stock of the latter then outstanding.

The Southwestern Securities Co. thereupon transferred all of its investments, which then consisted only of the above-mentioned current acquisition of common stock of the Public Service Co., to the Central & South West Utilities Co., and the latter surrendered its previous holdings of preferred stock of the Southwestern Securities Co. to that company for cancelation, but retained its holdings in common stock of the Southwestern Securities Co., evidently for the purpose of perpetuating the existence of the latter until the desirability of its utilization might again arise.

Question. So that, with these transactions just recited, it again became inactive in 1931, and the only thing which stood was the fact that the top company kept some of its capital stock?

Answer. That is correct.