MAGNATE'S CRASH

Evening Post, Volume CXIV, Issue 122, 19 November 1932, Page 13

MAGNATE'S CRASH

TWO FATAL MOVES

SAMUEL INSULL

A' TRAIL OF RUIN

(From '.'The Post's" Representative.) NEW YORK, 2Gta October.

In recent American history there is no parallel for the rise and fall of Samuel Insull, who began life in London, his birthplace, as a junior clerk, at five shillings a week, at tho age of fourteen, and became the greatest oneman corporation controller in the United States, dominating £600,000,000 —more than Rockefeller or Ford ever controlled —in capital investments, extending over 32 States of the Union.

Insull was iborn in Westminster Bridge road on 11th November, 1859, His father was a lay preacher and temperance worker. Samuel was one of five He walked several miles to work each day, and studied shorthand .at' night. When he became a good shorthand writer, he got a job in the office of Gibson Bowles, editor of "Vanity, Fair." Then he answered an advertisement inserted by the London office of.' the Edison Telephone Company. Thus came'his opportunity to go to America.

Insull landed at Castle Garden, the immigration'-.portal'of those days, in 1881, at the age of 21, wearing-. sidewhiskers. He travelled with Edison, on the day of,-Ms arrival, to the in-1 ventor's laboratory at 6 a.m. For eleven years he was personally associated with Edison, writing letters, keeping books, even buying Edison's clothes for him. He helped Edison to organise three manufacturing companies. When, in 1889, they .were combined in the Edison General Electric Company, Insull was appointed to direct the manufacture and sales department, with the title of vice-president. At the age of thirty he drew a salary of £6000 a year. In 1892, he was sent to Chicago to take charge of the Chicago Edison Company. A CONTROLLING- MAGNATE. It was about this time that Insull began to devise plans to secure a monopoly of electric.utilities in Chicago and the Middle West. He linked up the eleetrie services of forty towns, nortlt and north-west of Chicago, in the Public Service Company, of Northern, Illinois. The company prospered, and, five years later, in; 1912, he formed the Middle West Utilities Company, whose consolidated assets were £250,000,000. It did not operate electric services, but controlled them by stock ownerships, financed them when necessary, and formulated their policies. Nearing the zenith of his power, Insull made two fatal moves. Ivar Kreuger made the same mistake, of "pyramiding" his empire through investment trusts, in order to perpetuate his control. The greatest stock market boom in history was in its heyday when the first was formed. The second was actually born in the ill-fated month'of October, 1929, when the Wall Street bubble burst. ' To accomplish it, Insull paid a rival 6,000,000 dollars more for his holdings than they were. worth at that time, on the stock market, eight months after the Wall Street collapse. UNDERESTIMATED THE DEPRESSION. Insull defied the stock crash and went on buying stocks, through his trusts. His crowning mistake, at which everyone marvels, was in estimating the life of the depression at not more than three months. . He actually went to President Hoover, and assured him he would not shorten sail, but would operate all his. companies at full capacity, for the good of the nation. tv^! c"?is came in April last, when Middle West Utilities -v*nt into receivership, through inability to meet a paltry 6,000,000 dollars, due in June. Next aay, Insull's second investment company followed. On 6th June a Federal Judge ordered his removal from control. Tho following day he resigned from 56- corporations, and S> 11. ,°/ Eur°Pe- More than 77,000 os°nnn I" 8 have beea wiped out; 98,000 others have been informed they have, little hope of retrieving a fraction of their.investment, and that is only tho beginning of the end.