Sidney Zollicoffer Mitchell was an American public utility executive.
Background
Sidney Zollicoffer Mitchell was born on March 17, 1862, in Dadeville, Alabama. He was the youngest of the three sons of William Mandon Alexander Mitchell, a physician, and Elmira (Jordan) Mitchell. On both sides of the family he came of old Virginia stock, his forebears having moved west to the cotton kingdom of antebellum Alabama. His mother died when he was three, and Sidney and his brothers were brought up on the nearby plantation of their widowed maternal grandmother, Ann (Spivey) Jordan, a well-educated woman who came of a long line of Presbyterian ministers.
Education
Because local schools were of poor quality, Mitchell received his early education chiefly from her. At the age of seventeen, to prepare for a competitive examination for the United States Naval Academy, he spent six months at Colonel Slade's School in Columbus, Georgia. He was admitted to Annapolis and, after graduating in 1883, spent two years at sea, during which time he installed a pioneer incandescent lighting system aboard the U. S. S. Trenton. Upon receiving his commission in 1885, Mitchell resigned from the navy to work for Thomas A. Edison, who had recently opened his Pearl Street electric generating plant in New York City.
Career
After a short but intensive management training program in which he learned every facet of the fledgling electric power industry, Mitchell went to Seattle, Washington, as Edison's sales agent for the Pacific Northwest. Since there were as yet no electric plants in this part of the country, Mitchell had to create a market for Edison products by organizing electric companies and helping them plan and install their equipment. He began with companies in Seattle and Tacoma, and in 1886, he established the Northwest Electric Supply and Construction Company, which over the next two years organized thirteen electric lighting companies in Washington, Oregon, Idaho, and British Columbia. Responding to mounting demands for electric service and to such technological innovations as the changeover from direct to alternating current, Mitchell became increasingly absorbed in the problem of financing the expansion and modernization of existing facilities. He was among the first to recognize that because electric utilities had to attract new consumers by offering low rates, they could not, in contrast to other businesses, finance growth from retained earnings; they required from four to eight dollars of investment capital for every dollar of annual gross revenue. Mitchell's major task, therefore, was to find new sources of capital. The merger of the Edison companies in 1892 with the Thomson-Houston Company brought into being the General Electric Company, which for a time had surplus capital, but the depression of 1893 dried up this source. Capital might have been raised by forming new companies, but Mitchell was convinced that increased competition would generate losses to producers without benefiting the consumer. Indeed, he favored the consolidation of existing electric companies in order to eliminate wasteful competition, increase efficiency, and make utilities more attractive to potential investors. After handling one such consolidation, of the Tacoma Railway & Power Company, for Boston financial interests led by the engineering firm of Stone & Webster, Mitchell left General Electric in 1902 to head the Tacoma company. He returned to General Electric in 1905 to help set up and manage the Electric Bond & Share Company, which Charles Coffin, president of General Electric, was organizing in New York City. Its purpose was to convert unsalable securities of operating companies, received in partial payment for electrical apparatus, into marketable assets.
To improve the management of these companies, most of which served small cities and towns, Mitchell assembled a group of engineers, managers, rate experts, and lawyers who for a fee gave them the advantage of advice previously available only to large concerns. In 1925, Mitchell organized the Electric Power & Light Corporation (1925), and in 1923, at the request of the State Department, he established the American & Foreign Power Company, which controlled electric utilities chiefly in Latin America. With the exception of the last, Bond & Share did not own a majority interest in any of its sub-holding or operating companies. This may be taken either as a sign of restraint or as an illustration of the evil of "pyramiding, " which made control possible without majority ownership. How effective holding companies were in promoting economies through the common management of widely separated utilities is a matter of controversy. They were widely accused of "milking" operating companies through excessive fees; criticism of this sort persuaded General Electric in 1925 to give up its controlling interest in Bond & Share. As a device for financing further expansion, however, the holding company was a success, it attracted new investment capital through the principle of economic leverage, which greatly enhanced the potential value of its common stock.
Mitchell also brought new capital into the utility industry through such techniques as open-end mortgages, unsecured debentures that matured in a hundred years, option warrants that permitted the owner of debentures and preferred stock to purchase common stock at a later date, and campaigns to promote the sale of preferred stock to small investors. When the depression of 1929 shook the financial stability of public utilities, many of these devices were criticized as having contributed to the development of an unsound business structure, and some were later outlawed by such New Deal legislation as the Public Utility Holding Company Act (1935). As the head of the largest electric utility holding company in the country, Mitchell was especially vulnerable to such criticism, but his companies, in contrast to those of Samuel Insull, were relatively free of abuses. Mitchell retired in 1933 and devoted most of his remaining days to hunting in Alabama, a lifelong avocation. Mitchell died of a heart attack at his Fifth Avenue home in New York City. He was buried in Portland, Oregon.
Achievements
Under Mitchell's direction, the service staff of Bond & Share pioneered in a number of technological innovations, the most important of which was the integration of scattered systems and the use of generating plants large enough to take advantage of the diversity of load conditions. Drawing on his previous experience in the Pacific Northwest, Mitchell consolidated a number of small, contiguous operating companies, enabling them to take advantage of large, centrally located turbine generators, and then organized sub-holding companies under Bond & Share to manage their financial affairs. His enterprises expanded rapidly, and by 1924 the Bond & Share system controlled more than 10 percent of the nation's electric utility business. It included among its major holdings American Gas & Electric Company (1906), of which Mitchell was chairman of the board, 1906-23 and 1926-33; American Power & Light Company (1909); and National Power & Light Company (1921).
Connections
On October 25, 1893, Mitchell had married Alice Pennoyer Bell of Portland, Oregon, by whom he had one son, Sidney Alexander. After the death of his first wife in 1941, he married in 1942 Neva Fenno Palmer, a widowed neighbor in Mountain Lake, Florida.
