Business: Foshay’s Fall

Not the tower but the man who built it fell last week.

The tower was the Foshay Tower in Minneapolis. Modelled after the Washington Monument, its 32 stories rise 447 ft. 3 in. above street level from a larger square base two stories in height. Last August when Secretary of War James William Good helped dedicate it, it was ecstatically dubbed the “Washington Monument of the Northwest.”

The man was short, plump, roundfaced, grey-haired, swift-speeched, handshaking Wilbur Burton Foshay, whose custom it has always been to give weekly dinners to his Minneapolis employes.

The fall included himself, the W. B. Foshay Co. (holding company for public utilities, commercial and industrial enterprises), the Public Utilities Consolidated Corp. (subsidiary operating utilities), the Foshay Building Corp. (real estate). The value of the three companies was estimated at $20,000,000. But their liabilities last week were put at $12,500,000 and they went into the hands of a receiver (Minneapolis Merchant-Banker Joseph Chapman).

When General Lafayette romantically left France to help liberate the Americancolonies he brought with him a young man, Joseph Fouche, whose father was chief of police under Napoleon. The descendant of that young man is the Wilbur Burton Foshay who last week calmly agreed to the receivership of all his properties.

W. B. Foshay, born in Ossining, N. Y., started out to be an artist. But his father’s businessfailure put an end to his art courses at Columbia University.* For four years he workedwith the New York Central Railroad Co., later he joined Electric Bond & Share Co. His career, however, did not start until the day he walked into Minneapolis, independent, 36, with little money but a shrewd knowledge and liking of public utilities. His plan: to own and operate public utilities. His method of finance: selling Foshay securities to the public. Within one year he owned public utilities in Minnesota, South Dakota, Kansas, Nebraska, was making money. Eight years later his holdings were estimated at $10,000,000 and he sold to Eastern buyers. Immediately he started another chain of utilities which in 1927 was appraised at $25,000,000 and which again Mr. Foshay sold to the East. His last chain of public utilities, operated in twelve states and five countries (Canada, Nicaragua, Honduras, Mexico, U. S.), included as subsidiaries three Twin City banks, owned in 30 states, such industries as wholesale and retail drugs, hotel companies, textile and shoe factories, rubber plants, flourmills, retail furniture.

Although the Foshay failure last week closely coincided with the Stock Market crisis it was not born of it. No Foshay enterprises were financed except by Foshay securities which were sold to employes or businessmen in districts which Foshay companies served. Causes of the Foshay failure seemed to be overexpansion and the depreciation of real estate holdings. The failure was chiefly remarkable for two things: it was the largest in the history of the Northwest; the man who failed had thrice made a fortune and might make a fourth.

*His love for art, however, still remains. It was he who had the inspiration for the Foshay Tower. His home and office are cluttered with statues.