In the first few weeks Hugo Black sat on the U. S. Supreme Court bench, Washington gossip reported Chief Justice Charles Evans Hughes at a high pitch of exasperation because nervous Justice Black's rocking chair punctuated hearings with a high-pitched squeak, squeak. This week, when the Court convened after a two-week recess, Hugo Black's chair no longer squeaked and it speedily became apparent that harmony had been restored. For Chief Justice Hughes and a majority of his fellows, including Hugo Black, saw eye-to-eye on the year's most important case—the test of the constitutionality of the registration requirement of the Public Utility Act of 1935. By a vote of 6-to-1 (sick Justice Cardozo and Freshman Justice Reed not participating; Justice McReynolds, as expected, dissenting) the Court upheld SEC in its test suit against Electric Bond & Share Co.
The New Deal's harshest reform, the Public Utility Act ordered all utility holding companies to register with SEC under the penalty of being forbidden use of mails or other facilities of interstate commerce. SEC would then have power to control their financial transactions and, under the famed "death sentence" clause, to force simplification of any utility pyramid into a single geographically integrated system with only one intermediary company allowed between the top holding company and actual operating subsidiaries. When most of the utility business refused to register, SEC agreed to hold the Act in abeyance while it brought a test case against Electric Bond & Share. In court, however, SEC attempted to limit the test solely to the registration feature. E. B. & S. lost twice in lower courts and last week it failed again to get a complete judgment on the Act. Reading the majority opinion, Chief Justice Hughes refused to consider anything but the issue of registration, left the rest of the law for future adjudication. This there will surely be when SEC starts reforming the industry after it is completely registered. Some 44% of utility assets have already bowed to the SEC yoke. E. B. & S. and the other holdouts must now follow.