The Bad Apples

PURISTS WILL INSIST THAT ANY STORY OF CHICAGO’S GREAT FORTUNES must include mention of the city’s most notorious crooks, Charles Tyson Yerkes and Samuel Insull. Both, to be sure, are impressive figures. Yerkes—supposedly the original of Theodore Dreiser’s character Frank Cowperwood in The Financier , The Titan , and The Stoic —came to Chicago from North Dakota in 1881. In the next twenty years he built a network of street and elevated railways, including four routes that cast a grimy, noisy, metallic clasp around the heart of downtown that thenceforward was known as “the Loop.” He achieved this by energy and will, and by some dubious expedients. Yerkes was a master of “frenzied finance.” He would buy or organize a company with almost no investment of his own, then use its assets as collateral for more loans, with which he would buy or organize more companies, in a dizzying, fragile pyramid. Some of the money from stock and bond issues went into the construction and operation of transit lines. Much more went into the pockets of Yerkes and the Chicago aldermen whom he liberally bribed for the necessary franchises.

Yerkes lingered long enough to be hated and courted, and to give a magnificent observatory to the University of Chicago. But he was a bird of passage. He left Chicago to work his wiles on the London subway system in 1902, and he died—estranged from his family and surrounded by kingly possessions—in the Waldorf-Astoria in New York in 1905. Behind him in Chicago he left thousands of stockholders burdened with impossible debts, and a municipal political structure spattered with mud.

Insull, an English immigrant, showed up in 1892 as the thirty-three-year-old president of the Chicago Edison Company. He became the architect of a huge, interlocking network of electric generating companies, gas plants, and interurban railways that spread throughout the Midwest, with Chicago the hub. Insull unquestionably created durable goods. As his biographer Forrest McDonald once said, “he made the lights go on” for a vast and important region. And in purely Chicagoan terms he gave the city, among other things, an ornate and spacious opera house to adorn the bank of the north branch of the Chicago River.

But he also was addicted to balloon financing. His empire of holding companies rested on a perilously narrow asset base and was kept alive by considerable Peter-to-Paul transferring of assets. When the Crash of 1929 hit, the empire collapsed, leaving thousands of outraged and bilked investors to curse him. He was indicted on various counts of mail fraud, violating federal bankruptcy laws, and embezzlement and, although acquitted, died in exile and disgrace.

—B.W.