Samuel Insull has not bothered to conceal a mild contempt for bankers. Last week the bankers had him, tied and bound, in their hands.
But what could they do with him? Perhaps nothing except to let him loose— "Biggest Man" in Chicago.
The center of Mr. Insull's power is the control of the gigantic utility companies supplying to Chicago and vicinity electricity, gas, street car and electric railroad, and other services. Never, of course, did Mr. Insull own more than a small fraction of these companies which grew to a combined size of over $850,000,000. But he ruled them, a veritable tsar. He knew how to handle the public (partly by making his customers stockholders). He knew how to handle the politics. He knew how to handle bankers in the bull market days —simply ordered them to sell the securities he gave them.
But his only stock-control of Chicago's nervous system lay in two investment trusts which he formed at the height of the bull market. Into these trusts—Insull Utility Investments, Inc., and Corporation Securities Co.—he put all his own utility stocks. Not only Mr. Insull realized the strategic value of these Chicago properties. The small handle by which he exercised control was tempting to Cyrus Eaton's Continental Shares, which aggressively accumulated large blocks of the stocks. Other interests that might have merged their holdings also threatened the Insull kingdom. But using millions of the public's money and considerable banking accommodation, Mr. Insull's trust acquired a working control of the three giant operating companies, namely about 17% of Commonwealth Edison, 29%, of Peoples Gas, 11% of Public Service of Northern Illinois, and 29% of Middle West Utilities, some of whose principal affiliates have important working arrangements with these Chicago companies.
As market conditions became worse & worse the temporary bank loans became fixtures. Last week, the common stocks of his trusts were practically worthless, and the notes and preferred stocks held by the public brought only nominal prices. What the trusts owed at the banks was barely equal to the market value of the utility stocks which they had put in the banks as collateral. So the two investment trusts, which had working control of Chicagoland's utilities, went into receivership. That was how the banks, principally the Chicago bankers, had got Insull.
If the bankers desire to put the tsar out of Commonwealth Edison, Peoples Gas and Public Service of Northern Illinois, they can. presumably, do so. But last week, as a "reorganization committee" was being formed, no one suggested that they would. Tsar Insull may have lost his entire personal fortune. But who could take his place as tsar in Chicago? No banker was looking for the job.
Also into receivership last week went Middle West Utilities Company. That was a different story. Middle West Utilities is the great nation-spanning owner of hundreds of power plants, mostly in little towns, as mapped in TIME April 18.