Chicago Sunday Tribune, April 13, 1952
By JAMES DOHERTY
HALF a dozen times before May 13, 1934, I had had interviews with Samuel Insull on routine matters. But the interview this day was different. No longer did Sam Insull glare at reporters, imperiously brushing questions away. This time he was a broken man. He had just been freed from the Cook county jail, but was to stand trial on several charges.
This was the most important interview Samuel Insull had ever given. For the first time in his life, he really wanted the public to know him and to understand him.
I remembered, as we prepared to ask our questions, those other interviews. Then Insull was one of the financial leaders of the country. Few men in all history ever had as much money, power, or luxury. And few had less patience with newspaper reporters.
Insull was always a good story, of course, and he knew it. Born in London in 1859, he started his business life as a clerk in a London real estate office. While he was still very young he was fired without cause, and it was characteristic of him that he never forgave the man who fired him—thus sending him on his way to amazing success and riches.
“My pride was hurt as it was never hurt before or since,” Insull said years later.
His next job was as secretary to Col. George E. Gouraud, London representative of Thomas Alva Edison, who had shortly before invented the electric light When Edison wanted a secretary, Insull was sent over to the United States. He soon proved himself to be what Edison needed even more—an efficient business man. He became manager of the Edison Machine works in New York, helped to form the General Electric company, and became vice president of that company. But when he failed to get a promotion in 1892, he decided to quit.
Insull came to Chicago. The directors of the Chicago Edison company were seeking a manager and had asked Insull to recommend someone for the job. He recommended himself.
The rest is well known history. In Chicago, Samuel Insull built up the greatest utility and financial empire in history. By 1920, his Middle West Utilities group controled the supply of electricity, gas, and ice in 5,300 towns of the middle west, and in addition supplied many of these communities with water and public transportation. Besides this big holding company, which owned much of the stock of some 235 operating companies, Insull directly controled three big operating companies in Chicago, providing gas, electricity, and transportation, and two huge investment trusts. He was a director of 85 different companies in various fields.
Sam Insull was the boss of finance in the middle west. He was the boss of the Chicago Opera company, housed in a fine $20,000,000 structure he built; he was the boss of Chicago society, and he bossed politicians in both political parties. He was an arrogant man, who accepted no one as his equal. This was in the twenties, before the crash of his empire ruined many men, including himself.
I was sent to see Insull first when he was attending a convention of utility tycoons. I was accustomed to talking to gangsters, criminals, police officials, and politicians. It was a new experience to me to be putting questions to the man who bossed the men who ruled the politicians. In that day a dollar was worth a dollar, everybody played the market, hoping to make a million. Sam Insull, who had made countless millions, was respected.
I may or may not have been properly awed—I don’t remember. But I was impressed. I got to Insull only after I explained my business to three or four secretaries guarding him. He wasn’t a big man physically, and he wasn’t a pleasant one. They said at the time he never jested, and only scowled when someone tried to make a joke. Certainly he glowered at me.
But he answered my $2 questions. When I pointed out that he had some obligations to the public, he seemed startled. I suppose he thought he’d get rid of me more quickly if he talked a little.
The Civic Opera House (Insull’s Throne)
Later, I saw him again, in his magnificent suite atop the Opera house. Whenever I managed to reach his inner sanctum, I was made to feel that great honor was being conferred on me. I was being allowed to address the mighty one and to have him utter a few words before he dismissed me with an imperious gesture. Usually the really big men at the top are considerate, even friendly. But I don’t remember that of Samuel Insull.
He never smiled nor thawed out during my few minutes with him. He’d merely nod toward a chair, letting me wait while he finished reading. Then he’d glare my way, his signal that I could begin. It was always over with in a hurry.
Thru the years, bits of information about the fabulous Insull began to come out. As a budding political writer, I learned that Insull never took chances on politics. He played both sides, making lavish campaign contributions. Insull was having no trouble with legislation—far from it City councils, state assemblies, and the national congress were all most obliging to utility companies in those days. Mergers, expansions, holding companies, interlocking directorates— they could try anything they wished.
It wasn’t until 1927, however, when the United States senate ousted Frank L. Smith, newly elected from Illinois, that many of the facts came out. Smith was accused of getting elected with big amounts of Insull money. Smith had been chairman of the Illinois Commerce with the power to regulate utility rates.
When Insull heard that the senate had named Jim Reed, of Missouri to look into the matter, he laughed, one of the few times when something seemed funny to him. He denied the charges. When Reed summoned him, he refused to come. But the threat of contempt proceedings changed his mind.
Reed forced Insull to admit he had given $150,000 to the Smith campaign. Later he raised the figure to $197,000. What was more surprising, Reed trapped Insull into an admission he had also given $10,000 to the campaign of Smith’s opponent.
“I’m not used to being cross-examined,” Insull complained to Reed. “You’re too smart, for me.” That was a rare compliment.
As a result of the hearings, Smith was excluded from the senate and there were people who began to think that Insull might have feet of clay.
Later it was disclosed that Insull made gifts of money to hundreds of politicians, the big and powerful as well as youngsters just getting their start. This was done indirectly, thru his “preferred lists.” When a new stock was to be issued, selected politicians had an opportunity to buy below the price that would be quoted the first day the stock was on the market. Even so, the politicians had to make no more than a six per cent deposit to get his shares.
When the stock was listed, Insull forces got behind it to give it a ride. When the public started buying heavily, those on the inside could unload. Those on the preferred list were sure of making money, unless their greed kept them hanging on too long.
Insull on Time
Left to right: November 29, 1926; November 4, 1929; May 14, 1934
Insull played no favorites. Representatives of both parties and many of the city s business and civic leaders were included. One man on the list was Anton J. Cermak, mayor of Chicago, who put up $6.000 cash to buy $100,000 of a new Middle West utilities issue in 1929. Roger Sullivan, ruler of the Democrats, and his successor, George Brennan, both accepted campaign contributions from Insull, and it was no secret that the Thompson-Small-Lundin Republican forces then in power were heavily financed by the utilities tycoon.
Thruout this period, Insull was spreading out, especially in Ohio and Indiana and into the south. The politicians who took orders from Insull in various states would soon be able to control delegations to the na- tional conventions, as they already controled delegates from Illinois. It seemed possible that In close contests, Insull could control the nomination of candidates on both national tickets.
Then came the crash. Insull had been an efficient business man, an able organizer. But in the field of finance he got himself into trouble. He had put together service companies in the Chicago area which had total assets of $680,000,000, but he wasn’t satisfied. He built up a four billion dollar empire by creating paper assets that had value only so long as he enjoyed public confidence. That confidence dwindled after the market collapse of 1929. In the depression that followed, stocks didn’t sell and Insull properties couldn’t earn the dividends needed for his enormous stock issues.
Samuel Insull wasn’t dis- mayed. He was too big for a depression. He put on spectacular pageants in his new, 45-story Civic Opera house. He was the center of a glittering social whirl. He commanded 72,000 employees in his companies, which were said to be worth $4,000,000,000.
But, while Insull was reaching out, into other states, Cyrus Eaton and eastern capital were attacking him at home, buying into Insull’s pet companies. When Insull discovered what was happening, he had to borrow $56,000,000 to get ready cash to buy Eaton’s holdings.
Shortly, there was more trouble inside the Insuli empire. Every Insull employe was forced to become a stock salesman. I knew one of them well. He said he had to sell a certain amount of stock or he’d be fired. Insull wanted Chicago citizens, not outside capitalists, to get it, said my friend. Thus my family and I took a slight loss when the crash came. We never blamed Insull, tho. We thought he was a victim of the depression, as we were, and thousands of others like us, 330,000 to be exact.
When the Insull bubble finally burst, and there was talk that his complicated operations were not entirely legal—a matter of opinion later ruled wrong in the courts—the ex-czar of Chicago finance slipped off to Europe. There was a big hunt for him. He was finally returned to the United States by the government of Turkey. He was taken to the Cook county jail and then released on bail after a short stay in a celL He was at St. Luke’s hospital when I interviewed him again.
No longer was Insull the imperious, arrogant man who’d permit no one to talk back. White haired and pale, he seemed extremely nervous. His empire was in receivership. This time he tried to be pleasant. He was smart enough to realize that he had better begin creating a bit of good will for himself before he had to face a jury or two.
“Affable Insull Gives a Talk to His Public,” read the headline over the story I wrote of this interview. “Samuel Insull, who says he hasn’t $200 or a job,” the story began, “spent an agreeable hour yesterday with reporters and camera men who knew him way back when he had $200,000,000 and 40 or 50 jobs and had few moments for either writers or photogs.”
Insull used the opportunity to get over to his investors this thought:
You may say I made a mistake, but you will be convinced I was not dishonest
No man could have been friendlier to representatives of the press.
It paid, too, because he was acquitted, in state and federal courts, of the criminal charges placed against him. His public wasn’t after revenge. It felt he should be let alone to spend his remaining years in peace.
Four years later, Insull died in Paris. He had 84 cents In his pocket, few friends, but, so far as I know, no enemies. The tremendous organizations he built still rumble on, serving the public, which soon will forget Sam Insull.
Excerpted from The New Yorker, February 27, 1971
By Pauline Kael
Herman J. Mankiewicz (screenwriter for Citizen Kane) was working overseas for the Chicago Tribune, a paper owned by the McCormicks (who dominated the Midwest newspaper world), when Harold McCormick and his wife, Edith Rockefeller McCormick, were divorced, in 1921. The McCormicks had been the leading patrons of opera in Chicago; they had made up the Chicago Opera Company’s deficits, which were awe-inspiring during the time the company was under the management of Mary Garden (she chose to be called La Directa), rising to a million dollars one season. After the divorce, McCormick married Ganna Walska, the preëminent temperamental mediocre soprano of her day. Mankiewicz combined this scandal with a far more widely publicized event that occurred a few years later, replacing Hearst and Cosmopolitan Pictures with Samuel Insull and his building of the Chicago Civic Opera House. Insull didn’t build the opera house for his wife (dainty little Gladys Wallis didn’t sing), but there was a story to it, and it was the biggest opera story of the decade. After the McCormick-Rockefeller divorce, their joint largesse to opera ended, and the deficits were a big problem. Insull, “the Czar of Commonwealth Edison,” who also loved opera (and dallied with divas), wanted to put it on a self-supporting business basis. He concluded that if an opera house should be built in a skyscraper, the rental of the upper regions would eventually cover the opera’s deficits. The building was started in 1928; it had forty-five stories, with the opera company occupying the first six, and with Insull’s office-lair on top. The structure was known as “Insull’s throne,” and it cost twenty million dollars. The opening of the new opera house was scheduled for November 4, 1929; six days before, on October 29th, the stock market crashed. The opening took place during the panic, with plainclothesmen and eight detective-bureau squads guarding the bejewelled patrons against robbers, rioters, and the mobsters who more or less ran the city. (The former Mrs. McCormick attended, wearing, according to one newspaper report, “her gorgeous diamond necklace, almost an inch wide and reaching practically to her waist”; Mrs. Insull wore pearls and “a wide diamond bracelet.”) Mankiewicz must have placed the episode of the opera house in Chicago in order to give it roots—to make it connect with what the public already knew about Chicago and robber barons and opera. (Chicago was big on opera; it was there that the infant Orson Welles played Madame Butterfly’s love child.) Insull’s opera house never really had a chance to prove or disprove his financial theories. Mary Garden quit after one year there, calling it “that long black hole,” and in 1932, when Insull’s mammoth interlocking directorate of power plants collapsed and he fled to Greece, the opera house was closed. Insull was extradited, and in the mid-thirties he stood trial for fraud and embezzlement; he died two years before “Citizen Kane” was written.
The fretful banality of Susan Alexander is clearly derived from Mankiewicz’s hated old adversary Mrs. Insull—notorious for her “discordant twitter” and her petty dissatisfaction with everything. The Insulls had been called the least popular couple who had ever lived in Chicago, and there was ample evidence that they hadn’t even liked each other. Opera and the Insulls provided cover for Mankiewicz and Welles. George J. Schaefer, who is quite open about this, says that when he couldn’t get an opening for “Kane,” because the theatres were frightened off by the stories in the Hearst press about injunctions and lawsuits, he went to see Hearst’s lawyers in Los Angeles and took the position that Kane could be Insull. No one was expected to be fooled; it was simply a legal maneuver.