With contracts signed in summer 1915 to deliver electricity to Argonia, Milan, and Mayfield, Nathan Jones set about organizing a company to finance and build the lines.
Sell stock to finance the project
Jones would sell stock to local investors to raise the $10,000 for construction of the high line. The investors were some of the prominent local business leaders and farmers. They would be the directors and officers. This gave more credibility to the organization and gained the trust of the local community.
Jones would get some stock, and he would be the general manager of the company.
The business model
Nathan Jones didn’t invent this business model. But he was in the right place at the right time. Similar organizations in the utility industry were being formed all over the country. This was the first of many companies that Jones would organize using the same concepts.
The company name, Western Sumner Light and Power Company, was indicative of the location of the three towns and service area of the company in western Sumner County. Jones applied and got a charter from the State of Kansas for the utility company.
Regulation of electric utility companies
From the beginning years of electrification, most regulation was at the municipal level.
If the municipality owned its electric plant, it determined the rates, and it had the power to build poles and lines in city easements.
If a private company provided electricity, it negotiated a franchise with the municipality. The franchise agreement dictated rates, and gave the utility the right to build on city easements.
That’s why Nathan Jones had to get a franchise contract with each town. He secured franchises from Argonia, Milan, and Mayfield.
In the mid-1910s, states also began to regulate utilities. State regulation required standard accounting practices, and the right to audit the utility company’s books.
That’s why Nathan Jones had to apply to the state of Kansas to get a charter.
Benefit of regulation
A regulated electric utility company seemed safe and secure to investors, making it easier for the company to sell stock shares and bonds. In practice, financial investments weren’t regulated by either municipal or state regulations.
It was September 1915. Nathan Jones had organized his first company. He was age 23.
Argonia got electricity, and good service. On May 2, the current was turned on. The city was lighted. It celebrated the new service.
Electricity was also delivered to Milan and Mayfield, the two towns along the high line route. And farmers on the route signed up for electricity.
How ’bout electric appliances?
Jones soon opened a retail store selling electric appliances. Now that a resident had electricity, how about an electric fan, or an iron, or an electric washing machine?
Can you imagine in the era before air conditioning what a delight the electric fan must have been?
One of the investors, Dale Wornam, would operate the store and look after the maintenance of the lines.
The Idle Hour, a movie theater in Argonia, bought and advertised that they had four large size electric fans.
Throughout his career, Nathan Jones was aware of the power of advertising.
How ’bout guaranteed investments?
In addition to the electric utility, and electric appliances, Jones began to advertise investment products. They were “non-speculative”, and could earn 6% or 8%.
Were these investments too good to be true? Utility companies’ financial investments weren’t regulated. They could do as they pleased. For many years, investors poured money into these investments, and were rewarded with high dividend payments.
The business model
Nathan Jones had organized a company that built transmission and distribution lines to three small towns. The funding was provided by prominent local people buying stock in the company. Jones received stock and was general manager.
Jones also formed a company to sell retail electric appliances.
And Jones sold investments, shares of utilities that promised a high dividend.
This was a business model he would repeat. He was in the right place at the right time, and he took every advantage.
Jones delivered on his promises in all three of these areas. Customers received good service. There was demand for electric appliances. And investors received dividend payments on a regular basis.
Where were Ralph Jarvis and Chleo Webb?
In spring 1916, Ralph Jarvis had arrived in Larned. Larned had voted bonds for a municipal electric plant in 1914, and the plant was coming online in spring 1916. Ralph worked as a lineman and learned the trade, stringing lines and poles through Larned alleys and streets, and wiring houses.
That’s where and when he met Chleo Webb. Ralph was age 22, Chleo was age 16.
Timeline – 1916
- Image – contract – Wikimedia Commons
- Newspaper articles – newspapers.com
- Photo – Rock House in Larned Kansas – Jarvis Family Documents – Chleo Webb Jarvis collection
- Map composite – Western Sumner Light and Power service towns – Google Maps 2021