Saturday, April 30, 2005

Affordable electricity didn't come cheap

A tribute? That's right. Someday Chicago should recognize the compassionate genius Samuel Insull was. He gave us cheap electricity. Born in London, he was the first operator of Thomas Edison's telephone exchange there, when Edison sent for him in 1881. A very circumspect, stiff Jewish son of lower-class parents, at 22 Insull became Edison's top assistant. The only man who worked harder than Edison, he had mastered shorthand by taking down sermons at Westminster Abbey. Laboring until 4 each morning with Edison's chaotic finances, he mastered them and persuaded J.P. Morgan to fund three factories to build dynamos, lamps and underground conductors for the world's first central power station in New York.

Soon Insull was controlling the entire Edison empire while the great man invented in seclusion. Armed with power of attorney, he organized the credit to build more than a thousand "Baby Edison" power plants in hotels, factories and department stores. As America grew with electric power, Insull was the baton-waving orchestra conductor; he insisted on learning all there was to know about the infant electric industry. He never took a drink, wore natty clothes and kept his formal manner with pince-nez. This non-engineer, non-scientist built a complex that supported 6,000 workers in five years: the acorn for General Electric.

At 25, when he perceived the Morgan interests were conning Edison, Insull gathered enough proxies to force Morgan out and keep the company for his boss. That was a mistake. The Morgans vowed to even the score -- with Edison and particularly the little Jewish dandy with the cockney accent and pince-nez.

At 37 Insull came here as head of a small generating company, Chicago Edison, serving only 5,000 customers in a city of more than 1 million, determined to make power cheap. In those days electricity was so expensive it was turned on only for guests in parlors, in posh restaurants and hotels. He floated a $250,000 bond to finance a new power station, and built it in an unused rail yard on Harrison Street along the river, accessible to coal barges. At his beckoning, the shoreline of Lake Michigan came ablaze with 93,000 incandescent lights, and by the time of the World's Fair, electricity was a major component of the statement this city made after the fire that had decimated it only 22 years earlier. Between 1893 and 1898, Insull bought up all the competing central stations in the Loop, cutting a deal with GE for exclusive rights to electrical equipment.

Insull's radical step was to cut rates below the estimated cost of production. Build it and they'll come, he told the Morgans with a touch of arrogance. He was right, and they hated him for it. He installed meters showing peaks and valleys of consumption: Chicagoans asleep from midnight to 6 a.m. (using only 10,000 kilowatts), rising and rushing to work on the streetcars from 8 to 9 a.m. (46,000), slackening off at lunch (36,000) and going home (46,000). His goal was to find customers whose demand cycles would fill the valleys: The higher the diversity, the greater the profit.

His generosity was legend. He paid his workers for their 46-hour weeks more than most companies paid for 60 to 70 hours, and his personal phone number was available to all. Insull cut household electricity rates by 32 percent in 1898; hired black workers and shamed business to do the same; gave workers free medical insurance and free education benefits. He bypassed -- and angered -- the big banks by selling bonds locally when there were few stockholders. By 1929 Insull was supplying an eighth of all electricity and gas power in 32 states.

The 1929 stock market crash didn't faze Insull. He opened an $80 million pipeline in Texas; he raised $100 million to help Chicago pay its teachers, police officers and firefighters, and built the Civic Opera building. But every time the stock market fell, the New York banks got more of his empire. When the Morgans turned him down for a $10 million loan, they evened the score from long ago: In a single day Insull was forced out of 60 presidencies and directorships. Tried unjustly for fraud, Insull was exonerated but died a pauper. Summarized the old Chicago Times: ''Insull: not guilty; the old order: guilty.''

Read his story in They Made America (Little Brown & Co., 2004) by Harold Evans. Did anti-Semitism play a role? Of course. Insull needs at least a statue. Out of guilt alone for a genius who brought us cheap power and was persecuted unjustly, we should build it.

Saturday, April 23, 2005

Governor deserves credit for helping needy

Recently on my WLS Sunday night radio program, two Republican candidates for governor, appearing individually, attacked Gov. Blagojevich. No news in that. But what struck me was their statements that the governor had actually added to the welfare rolls. As if that were bad. Is it?

I double-checked and found out they were right: Blagojevich indeed has added poor families and poor children. A bad thing? Not if they indeed were needy. What's bad about allowing 50,000 poor parents and children to get state health coverage this year if it's done without raising taxes, which would further depress the economy? For that's what Blagojevich is doing. And rather than praise him for this, the Illinois media are silent, while across the border, the St. Louis Post-Dispatch is contrasting this governor with the Missouri governor and praising Blagojevich.

''In Missouri,'' says the Post-Dispatch, ''Gov. Matt Blunt is pressing hard to cut 90,000 poor people from Medicaid coverage. In contrast, Illinois Gov. Rod Blagojevich plans to add 50,000 poor parents and children to the state health coverage this year. And he's proud of it.'' Call me mushy, but I think a governor should be proud to add deserving poor to the program.

While in Springfield recently I talked the matter over with a man I very much admire: a state fiscal wizard, Budget Director John Filan (In fact, a Democrat who is thinking about running against Blagojevich told me he'd keep Filan as budget guy -- he's that good. Filan's answer is at the bottom of this column). Both Illinois and Missouri are fighting budget deficits and have been for three straight years.

The Missouri governor, says the Post-Dispatch, responds to the problem with ''cold indifference.'' Unlike Blunt, Blagojevich's instinct is to consider health coverage for the poor and ask, ''How many people can we add?'' My gut tells me that Republicans ought not criticize Blagojevich unless they want to be viewed as unfeeling, which is what they have been accused of since the Great Depression. I wince when I hear Republicans blister Blagojevich for this statistic, much as I groaned when one of my earliest heroes, Sen. Robert A. Taft (R-Ohio) declared that since inflationary food prices were caused by people spending too much for food, they should eat less. He said it with his hands shoved deeply into his pockets as his vest and gold watch chain spanned a rather ample belly. I admired Taft for many things, but not that time.

Blagojevich has managed to set a good record on health care for the poor, and Republicans ought to recognize it and concentrate their fire somewhere else. Illinois ranks first in KidCare across the Midwest in the number of new children enrolled: 11,600 from June through December 2003. During that period, Illinois ranked first in rate of enrollment growth in the Midwest. Among all the states in that time frame, Illinois ranks first.

From April 2003 to July 2004, Illinois was one of 26 states that did not make enrollment in KidCare and FamilyCare more difficult by raising premiums, freezing enrollment or complicating the registration process. And among the 10 most populous states in that period, Illinois was one of six that didn't make it more difficult for parents and children to sign up.

You can be reasonably sure I will vote Republican for governor next year as I have in the past, but it depends on who the GOP nominee is. There are two candidates whom I would not vote for and for whom I very well might not vote in the general election; people with whom I disagree on key social issues: Judy Baar Topinka and Ron Gidwitz.

Oh, and when I told Filan about that Democrat's pledge to keep him on in another Democratic administration, the budget director said, ''Now go ahead and ask me if I would stay.'' Meaning he wouldn't.

I like Filan. He's independent. Sorta like me.