POWER: Death of an Era

“I have ceased,” said Samuel Insull one June day in 1932, “to be newspaper copy.” That was the morning when with his fabulous utility empire collapsing around him, Sam Insull was taking leave of the last of the 150-odd companies over which he had long been lord and master. As a news-prophet, Mr. Insull was far from right. His fantastic flight through Europe, his year’s fugitive exile in Greece, his enforced return to the U. S., his sensational criminal trials in Chicago made many a front-page piece of newspaper copy for many a day. But on that morning in 1932 no one knew better than the hardbitten little utilitarian that his downfall marked the end of a financial era.

As an operating chief, Sam Insull knew no peer. His network of gas, light, power and transit companies spread over 32 States from North Dakota to Florida to Maine, served some 10,000,000 people, had securities with a market value of over three billion dollars, had combined earning power of a half billion a year. Sam Insull, however, was not content to be known as an operating genius alone. Through an elaborate series of investment trusts and holding companies, he proceeded to acquire stock control of those same utilities which he already controlled through good management. Because others were bidding against him, he paid fancy prices for almost every share he bought. And then, with well-publicized high-pressure campaigns, he sold them to the public, retaining voting control. Many buyers were poor, many were Insull utility customers who thought their operating wizard could do no wrong. But Insull built his pyramid on the erroneous theory that it did not matter how much anyone paid for his stock so long as he was running the show. In 1929 the pyramid was shaken by the market crash. That it did not topple then was largely due to the resourcefulness and self-assurance of the cocky, onetime clerk from London, onetime private secretary to Thomas Edison, who went out and built a utility empire. He poured most of his own fortune (once estimated at $100,000,000) into the foundations of his doomed structure.

When three years later all was over—when Insulland came a cropper to the tune of $750,000,000, most of it lost by smalltime investors—the U. S. was ready to elect a New Deal, to whom Samuel Insull and his ill-reputed holding companies were anathema. Even though Insull was eventually acquitted of using the mails to defraud, of embezzlement and of violating the Bankruptcy Act, the emotion generated by the Insull crash made it possible for Franklin Roosevelt to secure from Congress a “death sentence” for utility holding companies.

Last week, Samuel Insull made newspaper copy for the last time. Old (78), broken in spirit, for the past year virtually an exile in Europe, living on his pension of $21,000-a-year granted by still-sound de-Insullated operating companies, he returned to Paris from a brief visit to the U. S. just in time to watch France’s Bastille Day celebration. Few days later, while his wife was shopping, he stepped down into the metro subway on his way to lunch. There, alone in the Place de la Concorde Station, his tired heart suddenly stopped. In his hand he still clutched his subway ticket. In his pocket was 20¢.