“Before There Was Enron, There Was Insull”

From a review of John Wasik’s The Merchant of Power, a biography of Samuel Insull:

“LONG before Enron, a young Chicago financier began building and buying utility companies. He promoted electricity to housewives, peddled his stock to their husbands and amassed (thanks to his cunning grasp of finance) an energy empire spanning most of the country.

Has this country ever produced a financial magician who did not end his days fighting prosecution and public disgrace?

Samuel Insull, at any rate, was not the exception.”

It goes on:

“Hubris is not the worst crime — merely the one that guarantees the surest retribution. And Insull’s capital structure was more reckless than his politics. Addicted to debt, he pioneered a corporate form — the holding company — in which one company was literally stacked atop another. This allowed him to control an empire worth $500 million with only a tiny $27 million sliver of equity. Come the crash, some 65 of his enterprises were perched like the unlucky subjects of Yertle the Turtle: down they went. Insull fled to Greece, leaving 600,000 shareholders ruined. He returned to face federal prosecution and was likened to Al Capone.”