Business & Finance: After Insull

Chief casualty of the famed 1932 crash of Samuel InsulTs public utilities empire was the gigantic catch-all corporation called Middle West Utilities. Not to be confused with Insult’s three Grade A Chicago properties (Commonwealth Edison, Peoples Gas Light & Coke and Public Service of Northern Illinois), Middle West was a holding company for a heterogeneous parcel of small and large utility companies serving 5,321 villages and towns in 36 States from Maine to Texas.

Receivership and bankruptcy proceedings riddled this catch-all with holes through which slipped many a subsidiary by foreclosure and receivership. Over-capitalized at nearly a billion dollars, Middle West Utilities was reorganized into Middle West Corp., remained the groggy skeleton of a Midwest power empire which still included 44 active subsidiaries giving electricity, gas, ice to 2,100 communities in 15 Midwest States and Ontario, Canada. For this empire Middle West’s creditors and stockholders fought bitterly for three and a half years in Chicago’s Federal District Court. Winners were the banks who for their secured loans got 1,710,000 shares of Middle West Corp.’s 3.300,000 new shares. Bondholders got 1,290,000 new shares. The rest went to the 600,000 stockholders who for their original $220,000,000 got some 300,000 shares at the rate of one new one for 100 old common or 4 old preferred.

For the long job of rehabilitating Middle West, the old creditors put into the presidency long-headed Daniel Crandall Green, able, onetime vice president of Electric Bond & Share. The principal banks in whose portfolio Samuel Insull’s empire had ended were Manhattan Bankers Trust with 568,000 shares (18%), and two Chicago banks, First National with 14% and Continental Illinois National Bank with 14%. The RFC had taken over the 5% holdings of Central Republic Trust Co.

The real value of Middle West stock remained a blank mystery. Some subsidiaries were earning, some losing money. The job of drawing up a consolidated financial statement was described by its officers as “nearly impossible.” President Green had estimated that net income for 1936 would be more than $1,000,000 or better than 30¢ a share on the common stock, the new company’s sole capitalization. The temptation to make and stake a guess on Middle West’s real value last week proved too much for two Chicago brokers.

In Chicago, glib, young polo-playing Charles Foster Glore, president of Chicago Corp. as well as a partner in the brokerage house of Field, Glore & Co., told newshawks that Chicago Corp., an investment company, and A. G. Becker & Co., investment bankers, had bought Continental Illinois National Bank’s holdings in Middle West Corp. Chicago Corp. takes three-fifths of the purchase, Becker & Co the rest. The price: $12 a share, giving Continental, in which Chicago Corp. has large holdings, a small profit on its once forlorn investment in Middle West Corp.

Declared Mr. Glore last week. “Our only motive is to make a profit.” He had he said, first tried and failed to buy the Middle West holdings of First National and Bankers Trust. Asked whether it was true that Floyd B. Odium’s Atlas Corp the East’s No. i utilities trust, had unsuccessfully bid $8 a share for Continental’s share of Middle West, Mr. Glore only replied that Chicagoans were anxious to keep Middle West control in Chicago Said he: “Middle West is a desirable property. We don’t think it’s as bad a mess as many people believe. Anything that has been depreciated in a few years from $975,000,000 to $40,000,000 presents an attractive picture from the banker’s point of view.”