Samuel Insull Trial: 1934

Meantime, Insull acquired small electric companies in surrounding counties. Eventually his Public Service Company of Northern Illinois served half the state—some 6,000 square miles. Insull built the world's largest generating plants, with long transmission lines, reducing production costs and consumer rates and increasing efficiency and profits. A reliable "power pool," as he called it (it was entirely his idea), supplied the network covering all Chicago and northern and central Illinois.

By the 1920s, Insull had reorganized the near-bankrupt People's Gas Light & Coke Company (its stock rose from $20 to $400 a share). He controlled Chicago's elevated rail lines and its commuter trolleys. His utilities companies operated in 39 of the 48 states. The man was worth more than $100 million. To trusting investors, his name was magic.

In 1907, when Chicago banks refused to handle the unknown Commonwealth Edison Company securities, Insull had found Halsey, Stuart & Company. Over the years, the firm, headed by Harold L. Stuart, had sold more than 2 billion dollars of Insull properties stock.

Threatened with loss of control when the 1926-29 bull market saw new investment trusts buying up shares in his companies, Insull organized Insull Utility Investments, Inc. He and Halsey, Stuart would hold enough securities of the operating companies to keep him in command. The investment company's common stock opened at $30 a share, boomed to $147, then settled at $100.

Next, in September 1929, Insull created another investment company, Corporation Securities Company of Chicago. An offering circular was mailed to potential investors. Despite the "Black Friday" stock-market crash five days later, faith in Insull was so strong that within a year the public had bought $100 million of the new securities.

But the Great Depression steadily overpowered the Insull empire. By 1932, his holding companies were petitioning for bankruptcy. The operating companies—Commonwealth Edison, Peoples Gas, and Public Service of Northern Illinois—survived, with Insull still in charge. In June, however, he resigned, citing ill health and advanced age (he was 73). He and his wife sailed for Europe.

By September, word reached Insull in Paris: His affairs were under investigation. The Insulls moved to Greece, which had no treaty of extradition with the United States.

Accountants announced findings: Investors in Middle West Utilities had lost more than $700 million. Those in Corporation Securities had lost $85 million. Collateral had been "cross loaned" between the Insull companies. Favored creditors had been given preference. Millions in questionable brokerage fees had been taken from assets. Padded payrolls had included Insull's relatives and friends. Immense secret profits had been paid to as many as 1,600 favorites. They had bought 250,000 shares of Insull Utility Investments common stock at $12 before it opened at $30 and zoomed to $147; selling at only the opening price would have produced $4,500,000 in profits.