Young on Insull

Looking very prim with a black-ribboned pince-nez, Owen D. Young last week spent five hours in Manhattan explaining his business dealings with Samuel Insull. His questioner was Lewis F. Jacobson, counsel for the owners of $60,000,000 worth of debentures in Insull Utility Investments Inc. He sought "to prove complete knowledge by the officials of the General Electric Co. of the financial structure of the bankrupt and the restrictions against pledging securities."

The first financial relationship between Lawyer Young and Utilitarian Insull was when Mr. Insull formed holding companies to retain control of his empire.

That was in 1929 and Mr. Young gladly subscribed for some stock. He never looked at the company's balance sheets "not because I deal carelessly with invest ments but because it would have made no difference with this particular investment. I could not have sold at any time during that period without incurring Mr. Insull's displeasure." In December 1931, Mr. Insull asked General Electric for a $2,000,000 loan and received it. "The directors all knew that Mr. Insull had heavy obligations." said Mr. Young. "And I do not think they were surprised when he came to the General Electric. He was a large customer and if he was in need of a million or two. it was not extraordinary that he should come to us." Mr. Young told Counsel Jacobson that no questions were asked because "knowing Mr. Insull as you do . . . and bearing in mind that he had offered a note with a collateral margin of 40% which he offered to maintain and in addition endorsed the note personally, you will understand that I, as chairman of the General Electric, would not have asked Mr. Insull what he was going to do with the money." "Didn't you know by February 1932, that Samuel Insull was financially irresponsible?" asked Counsel Jacobson.

"Yes," said Mr. Young. "I think we all came to that conclusion." But Mr. Young did not inquire into the Insull finances because "it was Mr. [Gerard] Swope's business rather than mine. We certainly do not duplicate our work more than necessary."

By April Mr. Young was attempting to prevent Mr. Insull's bank creditors from closing in on him. His desire was to keep the Insull structure solvent because a failure "might impair the credit of utilities everywhere, and when you impair the credit of utilities you impair their buying power from the General Electric."

"You did it to save a customer?" prodded Mr. Jacobson.

"To save a customer on one side," answered Mr. Young, "and that was consistent with saving the investors on the other side. Besides I had known Mr. Insull for 20 years, and I respected highly what he had done in the power and light field."

After the testimony Mr. Young asked the newspapermen to listen to a statement "which should be made in fairness to the old man." He pointed out that Mr. Insull's steps "were sound at every point if you assume, as he did, either that the Depression was temporary or that his operating stocks were worth much more than the market price. The fact that his Commonwealth Edison should ever sell for 50 and 55 [present price: $73] was just incomprehensible to Mr. Insull. The most you can say about that old man is that he had too much confidence in his country and in his own companies."

P: "That old man" was still in Athens last week while the Greek Foreign Office prepared an official translation of the 225 pages of documents covering his indictment in the U. S. When the job is finished Mr. Insull will be formally tried under Greek law. The provisions of the extradition treaty limit Mr. Insull's period of detention to two months, which will expire Jan. 4.

This file is automatically generated by a robot program, so reader's discretion is required.