Rep. Birmingham joined with Wallace H. Walker, secretary of the Public Finance League, and others to urge favorable action on their measures to ease setting up municipal electric plants, during a March 4 hearing of the Legislative Committee on Light and Power.
Birmingham pushed for enactment of legislation to prevent power companies, “drunk with exorbitant profits,” from appealing to federal courts, according to a report in the Boston Globe, March 5, 1931, p. 4. The state should have the sole authority to determine the amount of property and price for a town to set up a municipal power plant, he argued.
The previous year, a special legislative commission set up to probe control of electric and gas companies in Massachusetts. The commission noted that these companies make profits through contracts for management, engineering, purchasing, and other services, which it regarded as a “very serious abuse,” according to an article in the National Municipal Review, May 1930, pp. 322-323.
Instead, the commission recommended that control over these contracts be vested in the Department of Public Utilities, which should have the power to terminate any contract where the charge is unreasonable. The panel did not recommend the direct regulation of electric and gas holding companies and opposed legislation intended to break up the existing electric and gas system or to restrict consolidation.
In response, Birmingham issued a dissenting report in which he criticized the commission for not holding public hearings. He said there was a need for a fixed rate base and favored a system of contracts in which companies would agree to the state’s cost system or face the loss of valuable rights under the law.
Birmingham also supported enabling municipalities the ability to take over ownership of electric and gas provisioning without being required to purchase company properties. He argued that the rates for electricity and gas were excessive and that the public had not been adequately protected.
In 1932, 1933, and 1934, Birmingham introduced a number of bills that would regulate rates charged by electric and gas companies, but none of them made it out of committee.
In July 1926, Rep. Birmingham urged Gov. Alvan T. Fuller to commute the death sentences of John J. Devereaux, John J. McLaughlin, and Edward J. Heinlein, who were convicted in the murder of James H. Ferneau, a watchman on duty at the Boston and Middlesex Street Railway office in Waltham, during a 1925 robbery.
At a July 13 meeting of the Massachusetts clemency committee in Brighton, Birmingham noted that the three men convicted in the Waltham car barn murder case had served in the U.S. armed forces and that this would be the first time that veterans had been put to death in the state. He urged the female members of the committee to redouble their efforts to stop these men from being put to death, according to an article in the Boston Globe (July 14, 1926, p. 14).
Also urging clemency at the meeting were Rep. Thomas S. Kennedy of Jamaica Plain and attorney Thomas Vahey. Kennedy said that interest in the petition calling for clemency was spreading throughout the state. Vahey noted that during his career as a lawyer he had been involved in 20 capital cases in Massachusetts and no clemency request had better or sounder reasons behind it than the Waltham car barn murder case, according to the newspaper.
The murder occurred during a robbery at the railway's office by the three men. According to prosecutors, Devereau killed Ferneau during a struggle in which the watchman was shot and beaten. At the time, McLaughlin and Heinlein were robbing the railway cashier on the second floor. The jury found that all three men were guilty of first degree murder and given the death penalty.
Despite the efforts of Birmingham, Kennedy, Vahey, and the Massachusetts clemency committee, the three men were put to death by electrocution on Jan. 6, 1927, at the Massachusetts State Prison in Charlestown.
In June of 1930, Rep. Birmingham urged Attorney General Joseph E. Warner to investigate investment trusts, which were widely blamed for contributing to the Great Stock Market Crash of the preceding October, according to a report in the Boston Globe (June 6, 1930, p. 42).
Birmingham criticized the lack of supervision of these trusts. “In my opinion these organizations are handling their funds contrary to all the general acceptances of sound investment trust financing and ought to be investigated before another crash and the barn door is locked after the horse is stolen,” he stated.
Investment trusts, which proliferated in the months prior to the Crash, were set up to hold stock in other companies, which then held stock in other companies—a scheme known as pyramiding, according to an article by John Kenneth Galbraith in the January 1987 issue of The Atlantic.
As an example, Goldman, Sachs and Company set up an investment trust, the Goldman Sachs Trading Corporation, in December 1928. That corporation sold preferred and common stocks to the public, but retained enough stock to exercise control, the article explained.
In July 1929, the trading corporation joined with Harrison Williams to set up the Shenandoah Corporation, which sold preferred and common stock to the public. Again, a controlling interest was retained by corporation. Then in the fall of 1929, the Shenandoah Corporation set up the Blue Ridge Corporation. Stock was sold to the public but the corporation retained a controlling interest. Ultimately, Goldman Sachs retained control of all of the corporations and received revenue and value from them.
This entire structure was based on debt and leverage. When the stock market crashed, the structure collapsed and shareholders in all of the corporations were left with nothing, explained the article.
It was this practice that Birmingham wanted investigated, given the devastating consequences of the crash on his constituents and Massachusetts residents in general. He favored having the Boston Stock Exchange implement a rule forbidding investment trusts from retaining or buying their own shares, a ruling that the New York Stock Exchange had implemented not long before.
“The Attorney General has assured me that he has already given serious attention to the whole situation of investment trust financing, and intends to seek authority from the Legislature that will enable his department or the State Bank Department to protect the public in these enormous operations of so-called investment trusts,” Birmingham stated.