Samuel Insull Trial: 1934

Defendants: Samuel Insull, Samuel Insull, Jr., Harold L. Stuart, and 13 others
Crime Charged: Use of the mails to defraud
Chief Defense Lawyers: Frederick Burnham, James J. Condon, Harry S. Ditchburne, William H. Haight, John J. Healy, Charles E. Lounsbury, J. Fred Reeve, and Floyd E. Thompson
Chief Prosecutors: Dwight H. Green and Leslie Salter
Judge: James H. Wilkerson
Place: Chicago, Illinois
Dates of Trial: October 2-November 24, 1934
Verdict: Not guilty

SIGNIFICANCE: Many people consider the Samuel Insull case to be the father of the Federal Securities and Exchange Act. The revelations of the trial produced immediate legislation to regulate the issuance of securities, control stock exchanges, and protect the unwary from holding companies. The trial gives insight into a time when a stock manipulator could build a pyramid of commercial wealth, making as much as a million dollars a week, at the expense of thousands of small investors doomed innocently to ruin.

Samuel Insull was a 21-year-old Englishman in 1881 when inventor Thomas Alva Edison brought him to America as his private secretary. Eleven years later, Insull was Edison's most trusted adviser, with discretion to handle all the inventor's financial matters.

In Schenectady, N.Y., the Edison General Electric Company was losing money. Edison dispatched Insull upstate: "Whatever you do, Sammy, make either a brilliant success of it or a brilliant failure. Just do something." Within a few years after Insull took charge, the company had grown from 200 employees to 6,000. Soon it was the well-established General Electric Company, or GE.

In 1892, Insull became president of Chicago Edison Company. He borrowed $250,000 from Marshall Field and began buying the independent electricity-generating plants that were proliferating in Chicago. By 1907, his Commonwealth Edison Company served the entire city, and investors had put in hundreds of millions of dollars.