|Michael Weisman on Thu, 5 Mar 1998 22:36:01 +0100 (MET)
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|<nettime> He was the World's Richest Man.
He was the world's richest man. He made his fortune almost by accident. His invention became, soon after it was invented, something everyone needed. Of course, that wasn't the case when he invented it. Soon after the invention hit the market, it was surpassed by other competitors from Europe. The European versions were more efficient, used less costly power, and produced more. But our hero took action to ensure these competitors' products would not be compatible with the US operating system. Soon, the European manufacturers faded from the scene as viable competitors, since they were unable to market their products in the US market, or in other emerging markets that quickly adopted the US operating system. After the threat of competition from superior rivals was ended, prices for the US produced product were hiked. Patents and interlocking system components insured that royalties and license fees from virtual every product of its type would flow back to him. He became hugely wealthy, and was widely considered the richest, or one of the richest, people on earth. He used his wealth to buy other companies. These companies invested in each other. They engaged in joint projects and paid each other inflated fees, and thereby inflated the profits of each companies. The companies looked profitable, at least on paper, and the public, goaded on by stock pickers in the papers and their local investment advisor, demanded the stock. More stock was issued to meet this demand, and each time a new issue hit the market it soared, making huge profits for the investment bankers and brokers who floated the initial offerings. Everyone was making money. People began to wonder if it could continue. The man became something of an icon for a new class of entrepreneurs. In magazine and op-ed articles, he claimed that there was a new economy being born. He claimed that the unique qualities of his invention were the driving force of this new economy, and that this new American prosperity would last forever. The US Justice Department began an investigation of this man's business practices. It looked at whether he abused the monopoly on his inventions, but soon spread into his business practices. Of particular interest to the government was the way the profits from the invention, which everyone needed and had no alternative to, were invested in other companies. The pattern closed off competition, but more than that it also made it impossible to tell whether these companies were solvent or not. Soon, the web of interlocking companies included manufacturers, the media, the building industry, in fact a significant measure of the national economy. Eventually, the bottom fell out. It was discovered the emperor had no clothes when first one company, then the rest, went belly up. Each time one his business started to fail, he rescued it with assets from the others, around and around. Since the major assets of each company was stock in the others, this shell game could continue only so long. Of course, the rich and the banks who held stock suffered, by they survived. The hundreds of thousands of middle class investors who counted on these stocks for their savings and retirement were wiped out. Many committed suicide. Many of the rest went on the public dole. The man was Samuel Insull. His invention was electricity, or at least the means to generate and distribute it. He founded Commonwealth Edison and the company that became General Electric, which by 1930 was probably the world's largest company. He owned approximately 70% of the electricity generation and distribution capacity in the US, and in the UK and parts of Europe. Nearly all electricity in the world was produced using his machines. The Justice Department tried him three times for securities fraud, embezzlement, and violation of the Bankruptcy Act. Each time he was acquitted. Facing a new federal indictment, he fled. First to South America, then to Europe. He died, penniless, on July 16, 1938 of a heart attack in the Paris subway, while disguised as an Arab. Historians credit him with being almost singlehandedly responsible for the Great Depression. "In the near future electric energy and its products will be as essential, as ever present, and as pervasive as the air we breathe. The unregulated domination of such a necessity of life would give the holders of it a degree of personal, economic, and political power over the average citizen which no free people could suffer and survive." from a Grant County (Washington State) commissioner's speech, quoting a 1925 speech of Pennsylvania Governor Gifford Pinchot. http://www.appanet.org//ppeui/conf-clausen.html see also www.seatimes.com/extra/about.html Offered to nettime readers for your consideration, in light of our friend Mr. Gates apparent reincarnation in the soul of Samuel Insull. --- # distributed via nettime-l : no commercial use without permission # <nettime> is a closed moderated mailinglist for net criticism, # collaborative text filtering and cultural politics of the nets # more info: email@example.com and "info nettime" in the msg body # URL: http://www.desk.nl/~nettime/ contact: firstname.lastname@example.org