Architect and Prime Mover of the Electric Utility Business in the United States
Using the career of Samuel Insull as a template, this chapter describes the origins and development of the electric power business in the United States from the 1890’s to the early 1930’s. During that span, Insull (once Thomas Edison’s right-hand man) created the basic features of the utility industry that continue to this day. To defeat venal municipal politicians, he advocated state regulation of electric and gas utilities, regarded as natural monopolies. To serve an ever-widening customer base, he adopted Edison’s central station concept, wedded it to long, alternating current transmission lines, and became a shrewd salesman for an essential service. He was an unceasing proponent of low-cost power, driven by mass production based on efficient gas turbines. In a regulatory vacuum he built a holding company empire that eventually commanded ten percent of the entire U.S. power market but collapsed in the early 1930’s under the weight of political opposition and too much debt. An anathema to New Deal enforcers, Insull was brought to trial in federal court for fraudulent sale of securities but, remarkably, was acquitted. New Deal legislation dismantled the holding company structures he and others had created and closed the regulatory gap that permitted them to flourish. To many he remains a pariah. He was nonetheless seen for decades as a business genius and is, unquestionably, a principal architect of the private electric utility industry in the United States.
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