Samuel Insull - Life in Chicago

Life in Chicago

The Western Edison Light Co. was founded in Chicago in 1882, three years after Edison developed a practical light bulb. In 1887, Western Edison became the Chicago Edison Co. Insull left General Electric and moved to Chicago in 1892, where he became president of Chicago Edison that year. Chicago Edison was struggling, losing money, until Insull discovered a way to make it profitable during a Christmas visit to Brighton, England in 1894. To his surprise, he saw shops which were closed, but every light in them was burning; something that never happened in the US. Finding the head of the town's electric company, he asked him how this could happen and was told the secret to it was not a flat rate bill, but use of a demand metered billing system, measuring not only total power consumption, but a set of rates for low-demand and high-demand electric use times. By 1897, Insull had worked out his formulas enough to offer Chicago electric customers two-tiered electric rates. With the new system, many homeowners found their bills lowered by 32 percent within a year. In 1897, he incorporated another electric utility, the Commonwealth Electric Light & Power Co. In 1907, Insull's two companies formally merged to create the Commonwealth Edison Co. As more people became connected to the electric grid, Insull's company, which had an exclusive franchise from the city, grew steadily. By 1920, when it used more than two million tons of coal annually, the company's 6,000 employees served about 500,000 customers; annual revenues reached nearly $40 million. During the 1920s, its largest generating stations included one on Fisk Street and West 22nd and one on Crawford Avenue and the Sanitary Canal.

Insull began purchasing portions of the utility infrastructure of the city. When it became clear that Westinghouse's support of alternating current was to win out over Edison's direct current, Insull switched his support to AC in the War of Currents.

His Chicago area holdings came to include what is now Federal Signal Corporation, Commonwealth Edison, Peoples Gas, and the Northern Indiana Public Service Company, and held shares of many more utilities. Insull also owned significant portions of many railroads, mainly electric interurban streetcar lines, including the Chicago North Shore and Milwaukee Railroad, Chicago Rapid Transit Company, Chicago Aurora and Elgin Railroad, and Chicago South Shore and South Bend Railroad. He helped modernize these railroads and others.

As a result of owning these diverse companies, Insull is credited with being one of the early proponents for regulation of industry. He saw that federal and state regulation would recognize electric utilities as natural monopolies, allowing them to grow with little competition and to sell electricity to broader segments of the market. He used economies of scale to overcome market barriers by cheaply producing electricity with large steam turbines. This made it easier to put electricity into homes.

Samuel Insull also had interests in broadcasting. Through his long association with Chicago's Civic Opera, he thought the new medium of radio broadcasting would be a way to bring opera performances into people's homes. On hearing of the work of Westinghouse to establish a radio station in Chicago, he contacted the company. Together the two companies arranged for a radio station to be built in Chicago which would be operated jointly by Commonwealth Edison and Westinghouse. KYW's first home was the roof of the Edison Company building at 72 West Adams Street in Chicago, and it went on the air November 11, 1921. It was Chicago's first radio station.

Though the partnership came to an end in 1926, with Westinghouse buying out Edison's interest in KYW, Insull's interest in broadcasting did not stop there. He formed the Great Lakes Broadcasting Company in 1927 and purchased Chicago radio stations WENR and WCBN; the two stations were merged on June 1, 1927, with Insull paying a million dollars for WENR alone. Insull moved the stations first into the Strauss Building, then into the Chicago Civic Opera House, where WENR became an affiliate of the NBC Blue Network. Insull's Great Lakes Broadcasting Company also included a mechanical television station, W9XR, which began in 1929 after the company installed the first 50,000 watt radio transmitter in Chicago for its two radio stations. When Insull's fortune started to fade, he sold both WENR and WCBN along with W9XR, to the National Broadcasting Company in March 1931. Two years after its purchase of the radio stations and the mechanical television station, NBC shut W9XR just as it had done with W9XAP, which came with its purchase of WMAQ (AM).