Chicago wasn’t enough for Insull. With his wingspan too broad and his ambition too large, he began to pressure his entire industry to adopt his perspective on the nature of the utility business. Monopoly wasn’t just right for him; it was right for all of them. If they did as he said, they could grow their territories beyond neighborhoods and cities.
To the members of the National Electric Light Association (the major trade group at the time), Insull argued that utilities were “natural monopolies,” meaning the “best service at the lowest possible price can only be obtained […] by exclusive control of a given territory being placed in the hands of one undertaking.” Didn’t his success in Chicago prove it? He’d gotten rid of all that competition (and the waste and redundancy that came with it) and delivered low rates to even more people. Moreover, monopoly status would make it easier for them to get money from investors, who kept a tight grip on their money whenever they surveyed the chaotic, competitive world of electric power. It was a new industry; new meant risky; risky meant high borrowing costs for utilities.
Yet there was a curious twist in his argument: in order for “natural monopolies” to exist, the government had to formally recognize them as such and enshrine their status in law, which meant welcoming regulation with open arms. Insull’s vision of such a law would involve “a single operator be[ing] granted an exclusive franchise to provide electricity prices fixed by state commissions based on ‘cost plus reasonable profit.’” Competition would cease, customers would see their bills drop, and utility stocks and bonds would become enticing, unleashing a torrent of cheaper capital from banks. In exchange, utilities would bow to state-level regulatory commissions. At first, his peers scoffed. Welcoming regulation not only looked like bad business; it sounded downright un-American.
