In 1926, Insull gave $160,000 to Illinois Republican Senate Candidate Frank Smith, who went on to win the party nomination in a hard-fought primary against Senator William McKinley. Before becoming a senator, Smith had served as the chairman of the Illinois Commerce Commission, which regulated Insull’s utilities. Perhaps Insull justified the obvious conflict of interest by telling himself that buying a senator was a calculated risk—one that would exact revenge against a long-resented political opponent and business competitor. To the public, however, Insull simply denied the obvious, stating that the Illinois Commerce Commission had “never granted any of my companies anything they were not strictly entitled to.” While Smith had never been “Insull’s boy”—he had blocked all of Insull’s rate hikes during his tenure as chairman, in addition to approving rate cuts totaling $42 million—the picture looked ugly.
The Senate protected its reputation against corruption allegations by refusing to seat Smith, nullifying his election, and launching an investigation into campaign corruption. The investigation spanned two years, during which newspapers dragged Insull’s name through the dirt from coast to coast. (News magnate William Randolph Hearst was a friend of Insull’s who assured him it wasn’t personal; but Hearst, the leading purveyor of “yellow journalism,” was never one to let mere friendship get in the way of sales). When the Senate committee brought Insull in for questioning, he initially refused to divulge his campaign contributions for fear that the evidence would damage the other campaigns he was bankrolling in upcoming municipal elections. The Senate held him in contempt of Congress, the consequences of which Insull dodged by releasing the details of his contributions himself—after the municipal elections, when the evidence could no longer hurt him or his politicians. He displayed no remorse and repented not at all.
Insull got off, but his growing success, combined with the visibility of his hand in political affairs, began to draw the ire of Progressive holdovers, including Senator George Norris of Nebraska. Norris was a die hard public power activist who despised the utility industry’s baronial influence on American life, calling the entire industry a “gigantic trust that has fastened its fangs upon the people of the United States from the Atlantic to the Pacific and from the Great Lakes to the Gulf.” He spent the better part of the 1920s fending off private acquisitions of Muscle Shoals, a public hydropower dam in the Tennessee Valley, which had been built to power fertilizer production during WWI. The dam was finished after armistice, which left it mothballed. It was Norris who militated the Senate against seating Frank Smith. “God only knows how many Senatorial campaigns Mr. Insull has financed,” he said. When the investigation into Insull’s political influence in senatorial campaigns went belly-up, Norris turned his attention toward Insull’s other affairs. The Senate would authorize the Federal Trade Commission to begin what became a seven-year probe into the inner workings of the utility industry. Its results wouldn’t see the light of day until Insull was already on the brink of destruction.
