The Wallet on the Platform
On July 16, 1938, a short, heavyset man in a rumpled suit collapsed on a platform of the Paris Métro. He was seventy-eight years old, alone, and carrying in his wallet precisely eighty-four centimes — roughly enough, in that summer's exchange, to buy a glass of milk. Before his body cooled, someone knelt beside him and took the wallet. The thief would have found nothing worth stealing: no gold card, no club membership, no evidence that this man had once controlled $4 billion in assets, drawn $500,000 a year in salaries, sat on the boards of eighty-five corporations, and held the fourth-largest city in the United States in what a contemporary journalist called "the hollow of his hand." The man was Samuel Insull, and his death — anonymous, penniless, robbed of even the pittance he carried — was so perfectly calibrated to his fall from grace that it might have been scripted by a Victorian moralist. Which is precisely the problem. The morality tale is too neat, too satisfying, too useful to the politicians who made him a scapegoat and the historians who accepted their framing. The real story of Samuel Insull is stranger, more instructive, and more unsettling than the parable of the greedy tycoon. It is the story of a man who did more than any person outside the inventors themselves to electrify America — who turned light from a luxury into a utility, who pioneered the regulated monopoly model that still governs how power reaches your home, who built the grid — and was then destroyed not by his own corruption but by the lethal intersection of leverage, macroeconomic catastrophe, and a democracy's hunger for villains.
He was acquitted three times. Nobody remembers that part.
By the Numbers
The Insull Empire at Its Peak (c. 1929)
$4BCombined assets of all Insull companies
600,000Stockholders in Insull companies
5,000+Cities and towns served
32States with Insull operations
~15MPeople served by Insull utilities
85Corporate boards on which Insull sat
$500KAnnual salary from his companies
The Temperance Hotel and the Help Wanted Ads
The father was a dreamer. Samuel Insull Sr., a nonconformist minister in London, cared more about crusading for religion and temperance than about feeding his five surviving children. The mother, who ran Insull's Temperance Hotel, was the practical one — the parent who understood that before a man could pray, he had to eat. Between them they produced, on November 11, 1859, a second son who would inherit his father's imagination and enthusiasm and his mother's ruthless pragmatism, and who would spend his life oscillating between those poles until the tension tore him apart.
For eight years, the family's finances depended on William Gladstone. When the prime minister's first ministry elevated the temperance movement, Sam's father secured a paid secretarial post with the Oxford Kingdom Alliance, which was just lucrative enough to send three boys to a private school where they were tutored by Oxford students. Sam excelled in mathematics, devoured history and political economy, and was inspired by Samuel Smiles's The Lives of the Great Engineers — a book that, in the Victorian tradition, made saints of men who bent iron and bridged rivers. He preferred the concrete to the abstract. "He learned to see to the heart of relations between things, or between men and things, or between men and men," his biographer Forrest McDonald later wrote, "and to grasp the underlying principles so clearly that he could perceive ways to shift them around a bit and make them work the better."
When Gladstone's ministry ended in 1874, the father lost his job. The family retreated to London. Sam was fourteen. His father wanted the boy to study for the ministry. Sam wanted to work. His father arranged a position at Thomas Cook's tourist agency, months hence, and demanded patience. The two argued. Sam stormed out, walked to the London Times office, and studied the help wanted advertisements. He found a job as an office boy at a firm of real estate auctioneers. It paid approximately $1.25 a week — less than the cost of daily railway fare and lunch. So Sam walked to work and skipped lunch. He was never to retire voluntarily, never to take a proper holiday until he was forced to learn relaxation in old age, and even then it did not come easily.
That storming-out — the boy choosing the help wanted ads over his father's piety — contains the whole character in embryo. The impatience. The conviction that destiny was a newspaper you could read if you got up early enough. The absolute inability, as McDonald put it, "to imagine the possibility of his own failure." These traits would make him. They would also, eventually, unmake him.
The Secretary's Secretary
The next four and a half years were an education in velocity. At the auction house, Insull absorbed real estate, penmanship, and the mechanics of business under a mentor who was exacting about form. He moonlighted as a stenographer. He took dictation for Thomas Gibson Bowles, editor of Vanity Fair magazine, which sharpened his facility with language and his taste for proximity to important men. And he read — voraciously, omnidirectionally, with what McDonald described as "a capacity for racing through large quantities of reading material, effortlessly perceiving its important assumptions and generalizations, and thoroughly assimilating its salient details."
At eighteen, he answered a classified advertisement for a secretary. The employer turned out to be Colonel George E. Gouraud,
Thomas Edison's London representative, a banker whose home was a minor replica of Menlo Park, stuffed with phonographs and electrical devices. Gouraud was a promoter, a talker, the kind of man who collected interesting protégés the way others collected snuffboxes. But Insull was not a collectible. He was a machine designed to make himself indispensable.
He memorized every one of Edison's European contracts. He wrote unsolicited weekly letters to Edward Johnson, Edison's chief engineer, summarizing the fluctuations in the telephone situation and outlining Edison's shifting interests. These letters — written by a teenager, on his own initiative, to a man who had not asked for them — turned out to be the best possible résumé. Johnson recommended Insull to Edison. When Edison expressed a desire for a private secretary, the path was clear.
In February 1881, at twenty-one, Insull boarded a ship for New York. His family warned him against it. He had no confirmed details about the job, no contract, no guarantee. He went anyway. "Caution," McDonald noted, "like relaxation, was unnatural to him."
The Language Barrier and the Demonic Energy
Their first meeting was a comedy of accents. Edison's Ohio twang baffled Insull; Insull's Cockney brogue baffled Edison. The inventor — in a seedy black Prince Albert coat, a white silk handkerchief tied carelessly around his neck, trousers of indeterminate dark material — had "nothing in his dress to impress me," Insull later recalled. "What struck me above everything else was the wonderful intelligence and magnetism of his expression and the extreme brightness of his eyes." Edison, for his part, saw a 117-pound, five-foot-three, bespectacled Englishman who looked like a filing clerk and worked like a turbine.
That first day, Edison kept him up until midnight dictating, then told him to be ready at six in the morning. It was a test. Insull passed it and kept passing it for eleven years.
He awoke early, abruptly, completely, bursting with energy; yet he gained momentum as the day wore on, and long into the night. Sam had near-demonic energy.
Within months, Insull had Edison's complete trust — power of attorney, authority to draft letters, effective control of the business side of the enterprise. This was necessary because Edison, for all his genius, had "an almost pathological hostility to any form of system, order, or discipline imposed from without." He was a man who could invent the future but could not balance his checkbook. His assets were tied up in various companies that supplied Edison Electric. He had no cash and was embarrassed that he could barely meet his household expenses. Insull and Edison frequently huddled over the company's books, mulling schemes to put off creditors. In matters of finance, Edison deferred to Insull — though Insull himself later admitted he "knew little or nothing" about the subject at the time.
What Insull did know was how to learn. He developed an ability to concentrate on a single subject and completely shut out everything else, no matter how pressing. He read contracts the way other men read novels — for plot, character, and the hidden clause that could change everything. When Edison Electric needed to bury 100,000 feet of wire beneath Manhattan for the Pearl Street power plant, it was Insull who persuaded city officials — sometimes with bribes — to approve the project. On September 4, 1882, six coal-fired dynamos, each weighing twenty-seven tons, powered a grid one mile square. By 1889, the Pearl Street plant was in the black.
When Edison put Insull in charge of the struggling Edison General Electric Company in Schenectady, New York, the company employed 200 men and was hemorrhaging money. When Insull left, less than a decade later, it employed 6,000, and Insull, at thirty-three, earned $36,000 a year — a princely sum in an era when a laborer was lucky to clear $500. But working for Edison meant forever working for Edison. And Edison's idealism — his stubborn attachment to direct current, his refusal to adopt the superior alternating current technology — was becoming a strategic liability that the practical-minded Insull could not abide.
The Self-Recommendation
In 1892,
J.P. Morgan merged Edison General Electric with its competitor, Thomson-Houston, to form General Electric. Edison lost control of the company that bore his name. Insull, who had expected a promotion to the top, found himself outmaneuvered in the corporate politics of the new entity. He was restless. He wanted to be out from under Edison's thumb — and, now, out from under Morgan's.
The directors of the Chicago Edison Company, a small and struggling power concern in a city that had some twenty competing electrical providers, were looking for a president. They asked Insull to recommend someone for the job.
He recommended himself.
This was characteristic. Insull did not wait for opportunity to find him; he walked to the Times office and read the advertisements, he wrote unsolicited letters to men who had not asked for them, he recommended himself for jobs that no one had thought to offer him. The salary was a third of what he had been earning at General Electric. He took it anyway. And to make the move irrevocable — to sever the psychological cord that might tempt him back to New York — he signed a three-year contract and borrowed $250,000 from Marshall Field to buy a substantial stake in Chicago Edison's stock.
He arrived in Chicago in 1892. He was thirty-two years old. The city was preparing for the World's Columbian Exposition, which would open the following year with a Tower of Light, an illuminated Ferris Wheel, a model electric kitchen, and Westinghouse AC dynamos that would demonstrate to millions of visitors what electricity could become. Insull watched all of this with the attentiveness of a man who understood that the future was not in inventing electricity but in selling it.
The Meter at Brighton
In the early 1890s, electricity was a luxury product. Customers were charged by the number of bulbs installed in their homes or offices — a pricing model as crude as charging for water by the number of faucets. Insull wanted scale. He wanted to lower prices and sell to as many people as possible. But the economics were intractable under the existing model.
The answer came, as consequential answers sometimes do, from exhaustion. On a trip to England in 1894, Insull, worn out by his frenetic pace, went to the seaside resort of Brighton for a rest. As evening fell, the town lit up. Every shop, no matter its size, blazed with electric light. This was startling — in America, only the wealthy and commercial establishments used electricity with such abandon. The manager of the local power plant, it turned out, had invented a meter that could measure how much electricity each customer actually used. This made possible a revolutionary business model: instead of paying by the bulb, people could pay by consumption, with an additional charge covering the capital invested in the infrastructure.
"We had to go to Europe," Insull later explained, "to learn something about the principles underlying the sale of the product."
He imported the concept to Chicago. The Wright demand meter became the interface between the generating company and the customer, and it changed everything. Insull could now price electricity by usage, discount non-peak rates, and encourage consumption. He lowered the residential rate from twenty cents per kilowatt-hour to thirteen cents. The effect was immediate and multiplicative: cheaper electricity meant more customers, more customers meant greater economies of scale, greater economies meant even cheaper electricity. It was a virtuous cycle — the same logic that would later drive the semiconductor industry, the same insight that made Henry Ford's Model T possible.
If you price your product cheaply enough, you will greatly increase your sales, and you will begin to realise the possibilities of this business, and these possibilities may exceed your wildest dreams.
By 1897, Insull had adopted Westinghouse's rotary converters, which could switch AC into DC, and begun expanding his electrical network beyond the loop and into homes across Chicago. He opened the "Electric Shop" for appliances in 1909. He launched a mass-market campaign through a magazine called Electric City. He coined the slogan "Give something electrical for Christmas." He replaced the sadiron with the electric iron. He wired department stores, display windows, nickelodeon theaters, roller coasters at Riverview Park. By 1912, 80,000 homes in Chicago were wired. Marshall Field's windows blazed. Chicago became the illuminated sign capital of urban America.
And at the center of all of it, drawing current from a single source, was Samuel Insull's company.
The Obligations of Monopoly
Most of Insull's competitors and peers in the electrical industry operated on the assumption that competition was the natural order of things — messy, wasteful, but fundamentally American. Insull looked at the same landscape and saw redundancy. Twenty companies stringing twenty sets of wires across the same streets, building twenty small generating stations when one large one would suffice, competing themselves into insolvency. The waste offended his practical soul.
His first move was political jujitsu. When a clique of Chicago political operators — Roger P. Sullivan, George Brennan, and former mayor John P. Hopkins — attempted a classic shakedown by chartering the Commonwealth Electric Company to compete with Chicago Edison, Insull refused the bribe. Instead, he quietly bought controlling interest in the dummy company itself. Then he ran both companies until he merged them in 1907 into Commonwealth Edison, securing a forty-year exclusive franchise to distribute electric power within the present or future limits of the municipality of Chicago.
But the franchise was not enough. Insull wanted something more durable than a political arrangement — he wanted a structural argument. In a 1910 speech that would prove more consequential than most legislation, he laid it out: electrical utilities were "natural monopolies." The best service at the lowest possible price could only be obtained "by exclusive control of a given territory being placed in the hands of one undertaking."
Competition was not merely inefficient; it was, in the utility business, the enemy of the consumer.
The twist — and this is what made Insull genuinely radical, what shocked his peers and confused his later critics — was the corollary. If monopoly was natural, then regulation was obligatory. "The obligations of monopoly must be accepted," he declared. Utilities should welcome state regulatory commissions. A single operator should be granted an exclusive franchise to provide electricity at prices fixed by state commissions based on "cost plus reasonable profit." Competition would cease, customers would see their bills drop, and utility stocks and bonds would become stable enough to attract cheap capital from banks.
His peers in the National Electric Light Association scoffed. Welcoming regulation looked like bad business. It sounded un-American. But the current of the times — the Progressive movement, the rise of technocratic governance, the public appetite for accountability — flowed in Insull's direction. The historian Forrest McDonald, writing in the Business History Review, called it "one of history's sardonic pranks that the forces deriding business efficiency and clamoring for regulation made Samuel Insull a favorite scapegoat. He had built his early electric system in Chicago with vision, administrative and political skill, and a conspicuously advanced concept of public relations." Insull had not merely accepted regulation; he had fought for it, lobbied for it, built the intellectual framework that made it possible. The regulated monopoly utility — the model that still governs how most Americans receive their electricity — is substantially his invention.
The Fisk Street Bet
On a day in 1903, Insull stood inside the Fisk Street Station on the Chicago River, where his engineers were preparing to start up a steam turbine generator far larger than any previously used. The engineer in charge suggested that Insull leave the room.
"Why?" Insull asked.
"Well, I don't know just what is going to happen."
"Well, then you'd better go out too."
"No, it's my duty to be here, and it isn't yours."
"Is the thing going to blow up?"
The engineer, dubiously: "I don't think it is."
"Well, if it blows up the whole company will blow up and I'll blow up too, so I might as well stay here."
It did not blow up. The turbine worked. It made production cheaper, permitted the transportation of power over longer distances, and became the technological foundation for Insull's expansion beyond Chicago into the surrounding countryside. By 1917, his system supplied electricity to most of Illinois and parts of neighboring states. He established the first all-steam-turbine generating station in the world. He championed rural electrification years before the federal government took it up. He unified transit — acquiring the Chicago Rapid Transit Company, interurban railroads, bus lines — into an integrated electrical conglomerate that served not just the city but the region.
The Fisk Street anecdote is usually told as a story about courage, and it is. But it is also a story about the particular psychology of a man who could not imagine his own failure. When the thing might blow up, Insull stayed in the room. When the salary was a third of what he'd been earning, he took the job. When the loan required borrowing $250,000 from Marshall Field, he borrowed it. This was not recklessness — not yet. It was the conviction, rooted in decades of evidence, that his judgment was sound, his energy inexhaustible, his understanding of the business superior to anyone else's.
The trouble with such conviction is that it does not come with a dimmer switch.
The Pyramid
To build his empire beyond Chicago, Insull turned to the great financial innovation of the Gilded Age: the holding company. The structure was elegant in its leverage and terrifying in its fragility. A holding company would be created to control part or all of the interest in operating companies — the actual power plants. Then another holding company would be created above it, holding a controlling interest in the first. And another above that. Each tier amplified the returns on invested capital, because a relatively small outlay at the top of the pyramid could control enormous assets at the base.
The first of these was Middle West Utilities, formed in 1912. It became the vehicle through which Insull acquired local electric utilities across the Midwest, closed their small and inefficient power plants, and replaced them with larger, centralized stations connected by high-voltage AC transmission lines. The logic was sound — it was Insull's natural monopoly argument applied at scale. Consolidation reduced redundancy. Centralization improved efficiency. The customer got cheaper electricity. The investor got reliable returns.
By the mid-1920s, the pyramid had grown beyond anything Insull or anyone else had originally envisioned. His varied enterprises operated in thirty-two states, served more than 5,000 cities, towns, and villages. He was chairman of sixty-five companies, president of eleven. His holdings included electric plants, gas plants, water plants, ice plants, streetcar lines, bus lines, electric railroads. Six hundred thousand persons owned stock in his companies; half a million more had bought his bonds. His personal net worth reached $150 million by 1929, though virtually all of it resided in shares of his holding companies — paper wealth, contingent on the market's continued faith.
In what McDonald described as "the hero-worshipping postwar decade, Insull became the Babe Ruth, the Jack Dempsey, the Red Grange of the business world. The people — butchers, bakers, candlestick-makers who invested their all in his stocks — fairly idolized him, and even titans viewed him with awe."
He built the Civic Opera House on Wacker Drive in Chicago — a $20 million French Renaissance Revival palace with an auditorium larger than any in North America save the Metropolitan Opera. He was the principal sponsor of the Chicago Civic Opera. He gave generously to charities, pushed Chicago's wealthiest to support causes they would not have chosen themselves — the Chinese YMCA, the education of African doctors. He paid to send a young African American singer on a study tour of Africa and an African American Pullman conductor on a European trip. He was an arrogant man, by most accounts, who accepted no one as his equal. But his arrogance was leavened by a genuine civic generosity that his later detractors found inconvenient to acknowledge.
He was past seventy and an industrial tyrant. He absolutely dominated everything he had anything to do with, ran all matters as he pleased. There was nobody to tell him "No."
It is no exaggeration to say that he was the most powerful man in Chicago. He held the world's fourth largest city in the hollow of his hand. Bankers courted his favors, politicians cowed before him.
The Zero
Warren Buffett has a line about leverage: "Any series of positive numbers, however impressive the numbers may be, evaporates when multiplied by a single zero."
The zero arrived on October 29, 1929.
The stock market crash did not immediately destroy Insull's empire. The operating companies — the actual power plants, the actual wires — continued to function. People still needed electricity. But the pyramid of holding companies, each layer leveraged upon the one below it, was exquisitely sensitive to declines in asset values. When stock prices fell, the collateral backing the loans at each tier lost value. When collateral lost value, lenders demanded more. When the calls came, there was no cash — only more stock, which was itself declining.
Insull fought. He poured his personal fortune into his failing companies — the entire $150 million, then borrowed more. He went to New York to confer with Owen D. Young of General Electric and with the powerful bankers of Continental Illinois and First National. Representatives thronged from Chicago to Manhattan and back again. The problem, as TIME magazine described it in April 1932, was "how to reorganize the vast Insull structure so that neither noteholders nor bankers will step in and disrupt it."
But the Depression was not a problem that could be managed by one man's energy or credit. Passenger traffic on Insull's railroads dropped. People who lost their jobs cut expenses by using less electricity. Both developments cratered revenue at the operating level, and the effects cascaded upward through the pyramid with geometric force. In June 1932, the Chicago Rapid Transit Company went bankrupt. The dominoes fell. Middle West Utilities collapsed. Corporation Securities Company of Chicago collapsed. Insull
Utility Investments collapsed. The combined receiverships represented losses that dwarfed the Kreuger crash in Europe by a factor of ten.
In six months, Insull aged a dozen years, according to those who saw him. The fire faded from his eyes. His once brisk manner yielded to an air that was described variously as dejection or confused bewilderment. His $100 million personal fortune was gone — tossed into his failing companies in a futile effort to stem the tide. Lost was the 4,300-acre estate at Libertyville, Illinois, with its $125,000 mansion of Italian Riviera architecture, its bird sanctuaries and sunken gardens. His Chicago apartment on the Gold Coast was for rent. So was his penthouse atop the Civic Opera Building. Not only had Insull lost everything he had; he was also $15 million in debt.
He was seventy-two years old. He had been in the electric business as long as there had been an electric business. And he was ruined.
The Scapegoat Express
Someone had to take the blame. The Depression had wiped out the savings of millions, and the public demanded a face to hate. Franklin Roosevelt, running for president in 1932, provided one. He referred contemptuously to "the Ishmaels and the Insulls, whose hand is against every man's." The allusion was devastating — Ishmael the outcast, Insull the thief. It didn't matter that Insull had lost more money than any of his investors, that he had poured every dollar of his personal wealth into a doomed effort to save the companies that employed tens of thousands. He was the symbol, and symbols do not get the benefit of nuance.
In October 1932, with Insull in London, a Cook County grand jury indicted him for fraud and embezzlement. Federal charges followed months later. Insull, rather than return to face trial, fled — first to Paris, then to Greece, then to Turkey, dodging authorities for over a year in a fugitive's circuit that seemed to confirm every suspicion of guilt. It was the worst possible optics for a man whose actual crime, if any, was being overleveraged in a depression that no one foresaw.
He was arrested in Istanbul in the spring of 1934 when the Turkish cabinet decided to allow extradition. Brought back to Chicago in handcuffs, he was tried three separate times: for fraud, for violation of federal bankruptcy laws, for embezzlement.
He was acquitted all three times.
The trials revealed what the indictments had obscured: Insull's holding companies were overleveraged and his corporate governance was often tangled, but there was no evidence of personal theft or deliberate fraud. He had not looted his companies. He had not enriched himself at the expense of his investors. He had, in fact, impoverished himself trying to save them. The jury took two hours to acquit him on the first charge — a span of time that suggested the case should never have been brought.
But acquittal is not exoneration in the court of public opinion. Insull's name remained synonymous with corporate fraud for decades. The Insull collapse prompted Congress to pass the Securities Act of 1933, the Securities Exchange Act of 1934, and — most directly — the Public Utility Holding Company Act of 1935, which dismantled the pyramid structure that Insull had pioneered and required extensive financial disclosures by utility companies. The Rural Electrification Act of 1936 followed, federalizing the work that Insull had begun privately. These were, in many cases, good laws. They were also built on the grave of a man who had been found innocent.
The Man Behind the Monopoly Man
After the last trial, Insull left the United States for good. He and his wife, Gladys — a former actress he had married in 1899, when he was nearly forty and she was twenty-three — retreated to Paris. They lived modestly. The man who had once commanded four billion dollars in assets now depended on a small pension arranged by loyal associates.
He dictated his memoirs in 1934, a rambling but revealing document that covered his early years in England, his time with Edison, the evolution of the electric utility business, and the financial catastrophe of the Depression. It was, like the man himself, more practical than reflective — heavy on operational detail, light on self-pity. He maintained to the end that he had done nothing wrong, that he had been made a scapegoat by demagogue politicians.
He had a point. But having a point and being heard are different things.
There is a persistent legend — unverifiable but widely repeated — that the cartoon Monopoly Man, the mascot of the Parker Brothers board game introduced in 1935 while the Insull trials were front-page news, was modeled on Samuel Insull himself: the cookie-duster mustache, the top hat, the air of jaunty plutocratic entitlement. Whether or not the resemblance was intentional, it captures something true about how America metabolized the Insull story. He became a caricature — the greedy capitalist, the holding-company villain, the man who deserved to lose everything because he had dared to accumulate so much.
What was lost in the caricature was the other Insull: the fourteen-year-old who walked to work because he couldn't afford the fare, the secretary who memorized every contract because no one asked him to, the executive who stayed in the room when the turbine might blow up, the monopolist who demanded that the government regulate him, the philanthropist who funded causes that embarrassed Chicago's comfortable elite. The man who made light cheap.
On July 16, 1938, Samuel Insull's heart stopped on a platform of the Paris Métro. A stranger took his wallet. Inside: eighty-four centimes.
