BIG LITTLE MAN

By Warren Haskin

Presented to

The Chicago Literary Club

November 15, 2004

In late October 1929, the stock market crashed. A few days later, November 4th, the Chicago Civic Opera opened at its new permanent home on the ground floor of the forty-two storey building at the corner of Madison Avenue and Wacker Drive. The building, and the opera theatre it housed, were the brainchildren of Samuel Insull, who controlled both Commonwealth Edison and Peoples Gas.

Although no one realized it at the time, the stock market crash marked the start of the Great Depression. Insull was not alarmed. In fact, one of his first moves was to rescue those of his employees with margin accounts who had to respond to margin calls from brokers. He did this by supplying them with additional capital from his own personal holdings. In January 1930, when the city of Chicago was unable to pay its employees, he went to its aid and enabled it to pay its police, firemen and teachers. He spent hugely on capital improvements during 1930, one of the few captains of industry who actually heeded President Hoover’s plea to continue business as usual at the start of the Depression (in fact, Insull embarked on a huge expansion program). For almost three years following the crash, Insull operated as though nothing had changed, and his companies appeared to thrive. But his fortunes changed and in 1932 his holding companies, although not the operating companies, went into receivership.

Today, if he is remembered at all, Insull is remembered as one of the biggest scoundrels of the business world. Indeed, he topped the list in a 1960s poll of more than 400 business executives conducted by a professor of business at the University of Michigan. Now, after a period when he seemed to vanish into relative obscurity, Insull is again mentioned in the press by way of comparison to present-day executives who have been indicted for business fraud. When the names Enron, Global Crossing, World Com and Adelphia are mentioned, the name Insull is likely to leap to the minds of persons familiar with Chicago’s business history. An editorial in the Chicago Tribune in December 2003 reported, as though these were proven facts, that Insull and his companies crashed because of “the crooked accounting, the hidden debt and the stock fraud.” A business writer in the same year said Insull’s Commonwealth Edison was “exposed as an abusive monopoly built on systemic fraud.” Edwin Darby in a 1986 book said that Insull had “put together a vast utility empire with watered stock, bonds and ‘Chinese paper.’” Words such as “disgraced,” “rogue,” “infamous,” “bandit,” “stock manipulator” are used when referring to Insull. But in the eyes of many, Insull is only a scapegoat for the age when so many lost so much.

Why is Insull remembered as a scoundrel and does he deserve that reputation?

Insull was born in 1859 in London, the son or a lay preacher. Physically, he was small, hence the title of this paper. (I will mention here that when I was asked in May for the title of my paper, I had not decided what my subject was going to be. I selected the title “Big Little Man,” thinking that this would preserve the tradition of the Club of not giving away the subject by the title while at the same time allowing me flexibility. I could talk on any number of famous, or not so famous, persons who had a connection to Illinois, such as, for example, Stephen A. Douglas or Kenesaw Mountain Landis. When the name Samuel Insull occurred to me, I discovered, sure enough, that he was of less than average size.) Sam’s father wanted him to become a minister but Sam had other ideas. At age 14, after an education that was probably average or above average for someone of his class, Sam found a low-paying job as an office boy with a firm of auctioneers. While employed by the firm, he learned shorthand and was able to supplement his income by working as a stenographer several evenings a week.