The market had crashed in October 1929. But Nathan Jones’ empire had ambitious growth plans.
When the new year of 1930 dawned, there were big deals in the works.
Four big deals
Ralph Jarvis and his acquisition department had increased the portfolio of holdings by several hundred percent over the last few years. By the end of 1929, after five years in business, Public Utility Investment Company and its affiliates had operations in over 170 communities.
Here are four big deals that happened in 1930.
But first, a promotion
Before we look at the four big deals, here’s another big deal. Ralph Jarvis was promoted to the newly-created position Senior Vice-President of Utility Operations. That meant Ralph oversaw all the utility companies. That’s a big deal.
In 1930, Ralph was age 36.
Since Ralph was responsible for all utility operations, Nathan Jones could focus on some non-utility companies. That’s our first big deal.
Big Deal 1 – Diversified Utility Investments
Nathan Jones had a new vision. If he could build a company and sell investments by acquiring utilities, why couldn’t he do the same in other industries?
Over the last few years, Jones had acquired a few businesses that weren’t utilities. What if he placed these companies under a new holding company and grew it by acquisition through selling stocks and bonds. It wouldn’t necessarily hold utility companies, but any industry that could scale up by acquisition.
Jones formed a new company – Diversified Utility Investments. “Diversified” meant that investments might be in any industry.
Odds and ends holdings
The first holdings were Jones’ odds and ends.
We saw that he bought a short distance airline serving Oklahoma, Kansas, and Nebraska.
He also bought a struggling company in Salina – Follow The Swallow tourist camp. He intended to build it into a large network of hostelries – what we now call motels. Pretty progressive.
Jones bought a troubled company that owned some Dutch Mill gas stations and tourist camps. He would merge it into Follow The Swallow.
Jones had his model dairy farm, Jo-Mar Farm. And he had started a dairy for consumer dairy products, the Jo-Mar Dairy.
Jones created a holding company, Western Pure Milk Products. He placed Jo-Mar into that company. And then he began buying dairy operations in other towns.
Jones owned the Ford dealership in Salina. He owned Consolidated Printing Company to print all company publications. Public Utility Investment Company had its own insurance company. All these companies were put into the Diversified Utility Investments holding company.
Will it work?
Big Deal 2 – Danville, Virginia electric plant
In March 1930, Danville, Virginia requested bids to take over its electric plant. For Western Power, Light & Telephone (a PUIC holding company), this would be a “large” electric plant. They had mostly small-market towns. This would be a step up.
Recall the extended campaign for Woodward, Oklahoma electric plant. Ralph and Western Power won the acquisition for $505,000, after several years of complex haggling. Danville would be much higher profile. It would cost somewhere north of $4 million.
On April 22, the bids were opened. Ralph and Western submitted their bid of $4.1 million. Tri-Utilities of New York submitted a bid of $4.2 million.
A bidding war ensued. The city council adjourned for several hours so the bidders could contact their companies and bankers. The next day Tri-Utilities upped their bid to $4.35 million. Ralph and Western upped their bid to $4.3 million.
Over the course of the next five months, protracted negotiations took place. Ralph traveled to Danville often. He stayed at the Danville Hotel. He even bought a car to keep there, a 1928 Dodge sedan.
Ralph and Chleo took an airline trip to Danville. They visited Washington D.C.
By September, Western Power had won the bid. They would take over the Danville power plant. They also had to fulfill promises they had made. And the sale of the Danville plant to Western had to pass an election by the voters.
Ralph and Western had engaged an attorney in Danville, Jesse Benton. Benton had assisted Ralph in the negotiations.
Now, Ralph put Benton in charge of the PR campaign to win the vote. Benton organized the town into wards, recruiting and assigning volunteers to canvass and campaign in each ward.
Benton was a good host when Ralph was in town. When Chleo came to Danville with Ralph, Jesse and Lizzie Benton took them to the shore and to visit Washington, D.C.
Big Deal 3 – Kansas City, Kansas electric plant
All the while the Danville, Virginia campaign was underway, an even bigger opportunity presented itself close to home.
Kansas City, Kansas owned its municipal power plant. Western Power Light & Telephone wanted to buy it.
Nathan Jones and Ralph Jarvis teamed up for this campaign, a political cat fight.
A $7 million offer
Western made the following offer:
- $7 million dollars for the power plant and all city infrastructure
- Requested a 20 year franchise from Kansas City, Kansas (KCK)
- The head office of Western and Public Utility Investment would move from Salina to KCK
- Western would build a 300-room hotel in KCK
Rejected
The city commissioners rejected the offer.
Western didn’t give up
Ralph began a PR campaign, just as he’d done in Danville. Press, ads, promises.
It didn’t succeed
The Kansas City, Kansas campaign was one of the most ambitious the company had waged. It would have been the signature property, a big city power plant.
But, in the end, the campaign wasn’t successful.
Big Deal 4 – Power, Light & Service Company
Another acquisition, another holding company. The acquisition was the American Service Company, an ice utility serving 54 communities.
Nathan Jones formed a new holding company, the Power, Light & Service Company. It held the new acquisition, the American Service Company and Western Power, Light & Telephone, Jones’ main holding company of utilities.
The alphabet soup of companies continued. It was difficult to determine what company was controlled or held by what other company. Maybe confusion was the point.
But for sure, it’s another highly leveraged organization.
State of the company
Things at were going well for the Public Utility Investment Company and its affiliates.
Customers were getting good service.
Investors were getting dividends. At mid-year 1930, the company increased the dividend.
Employees had good jobs. In August, the company picnic at the Salina Country Club brought out 400 people.
Big deals and more deals
The four big deals in this story were significant, but they weren’t the only deals in 1930. Numerous other holdings were added.
At age 38, Nathan Jones’ empire was still growing.
Read The Parade
The October 1930 issue of The Parade is full of personal stories about its employees and the goings-on of the company.
Read The Parade – October 1930.
Here’s a teaser article. See what readers had to say about The Parade.
Sources
- Image – Big Deals – SFDC 3:16 – http://www.sfdc316.com/2015/03/salesforce-big-deal-alert.html
- News articles – newspapers.com
- Videos – Danville, Virginia – Jarvis Family Documents – Chleo Webb Jarvis collection
- Photos – Danville, Virginia – Jarvis Family Documents – Chleo Webb Jarvis collection
- Photos and quotations of Public Utility Investment Company companies – The Parade, October 1929 – Jarvis Family Documents – Chleo Webb Jarvis collection
- Photos and quotations of Diversified Utility Investment Company companies – Diversified company brochure – Jarvis Family Documents – Chleo Webb Jarvis collection
- Image – Virginia Motor Vehicle Registration card – Jarvis Family Documents – Chleo Webb Jarvis collection
Family Nibbles 