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Samuel Insull, in glasses, during his 1932 battle to avoid extradition to the United States to face fraud and embezzlement charges.

Wizard of the Wires

By Sarah Richardson
February 018 • American History Magazine

Edison was a genius, but a bright young Englishman, Samuel Insull, made him rich 

THOMAS EDISON dreamed up the incandescent light bulb, but his business manager, Samuel Insull, lit up Chicago—linking the city of the big shoulders to communities in Wisconsin and Michigan in what was the world’s biggest electric grid.

In 1881, Insull arrived in New York from London. Edison, in the midst of figuring out how to introduce electric current as a substitute for gas lighting, had hired the 21-year-old as his private secretary. Insull’s memories of their first meeting illustrate the attention to detail that brought him success: “There was nothing in Edison’s dress to impress me. He wore a rather seedy black

Insull in 1881. He parlayed a job as Edison’s private secretary into a fortune in utilities, but lost it all in the Depression [Granger, NYC].

diagonal Prince Albert coat and waistcoat, with trousers of a dark material, and a white silk handkerchief around his neck, tied in a careless knot falling over the stiff bosom of a white shirt somewhat the worse for wear,” Insull wrote. “What struck me above everything else was the wonderful intelligence and magnetism of his expression and the extreme brightness of his eyes…His appearance, as a whole, was not what you would call ‘slovenly,’: it is best expressed by the word ‘careless.’

Insull, never careless, turned nearly every situation to his advantage. As a neophyte clerk at a London auction house, he learned shorthand and the intricacies of doing business. He read about Edison and, wanting a new job, deliberately sought a position with a banker who was the American inventor’s European representative. Edison’s man hired him, and from that perch Insull pitched himself to the big man as the fellow to be his secretary. Offered that opportunity, Insull lunged. He was in transit to New York City even before he had confirmed details of the job.

Working for Edison meant managing Edison, and Insull did that well, though Edison’s Midwestern diction collided with Insull’s Cockney accent. Soon the 117-lb., 5’ 3” bespectacled Englishman had his portly boss’s complete trust. Edison assigned Insull to steer the company, including power of attorney and authority to draft letters. On September 4, 1882, Edison Electric Illuminating Company of New York opened a power plant on Pearl Street in Manhattan. Six coal-fired dynamos, each weighing 27 tons, made the steam that powered a grid a mile square. Insull had been integral to persuading city officials, sometimes with bribes, to approve the project, which needed to bury 100,000 feet of wire.

For the grid to make money, customers had to consume power constantly, and hunger for indoor daytime lighting in homes, businesses, and factories spurred that demand. By 1889, the Pearl Street plant was in the black. When J.P. Morgan bought Edison’s company in 1892, Insull sought another challenge. A power company in Chicago needed a president. He took a pay cut and a three-year contract to make it harder for him to return to New York. The Windy City had some 20 power companies. By 1907 Insull had crushed his employer’s rivals, in time establishing a grid that served most of Illinois and parts of adjoining states.

Unlike competitors, Insull relished the concept of a utility as a regulated monopoly. A major grid required a huge investment. Support from local government—with accompanying oversight of performance and rates—promised stability, spurring Insull to pioneer the regulated monopoly utility common today. He also built a grid using alternating current, able to travel much further than the one-mile range of the direct current Edison used.

Insull’s achievements allowed him to invest in the expansion of Chicago’s rail system, another customer for his electricity. Neighborhoods grew along the train lines, which brought access to electricity that encouraged sales not only of lamps and bulbs, but also irons and refrigerators. According to John Wasik’s masterful 1999 biography, The Merchant of Power, Insull eventually had five major power plants, with 99 substations delivering power to 800,000-plus customers using 30,000 miles of wire. When municipalities talked of building utilities, Insull cut rates. So many businesses—at one point 84—operated under Insull that his empire was dubbed the “House of Insull.” Employees enjoyed pensions and cultural clubs. Insull had so soft a spot for opera he built a skyscraper to house the Chicago Opera, reserving the upper stories for offices and his residence, which Chicagoans called Insull’s Throne.

The edifice opened days after the 1929 stock market crash. Insull’s confidence had always prodded him to expand. Part of the business model for his umbrella company, Middle West Utilities, was to encourage small investors to buy Middle West shares. The crash left these investors livid and threw so many people out of work that his light rail system bled money. The House of Insull began to collapse.

Mired in debt, Insull’s businesses couldn’t pay their bills. He had not stockpiled a personal fortune; all he had was his stake in his empire, which the crash ravaged. Scandal so enveloped the collapse that during his 1932 presidential campaign candidate Franklin Roosevelt thundered about “the Ishmaels and the Insulls, whose hand is against everyman’s.” Insull’s flagship businesses were declaring bankruptcy, and to escape busted investors’ rage Insull fled overseas. Extradited from Turkey, he faced trial in 1934 in Chicago for fraud, violation of federal bankruptcy laws, and embezzlement. In three separate trials, however, jurors voted to acquit. He moved to Paris where in 1938 he died on the stairs of the Metro, apparently of a heart attack.

Insull’s vision of a wired world inspired the Tennessee Valley Authority, which FDR established in 1933 to bring power to remote rural communities. The controversies Insull weathered foreshadowed energy trading firm Enron, which in 2001 went from feted innovator to a reviled failure. Insull was a dangerous virtuoso at accounting, shifting debt among his businesses and credit lines—but also a visionary, switching from steam-powered engines to more powerful steam turbines adapted from European models. Insull and his ambition, temperament, love of opera, and fantastic failure made him one of the real-life figures Orson Welles threaded into Citizen Kane

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