193 – Nathan Jones’ Fall From Grace

Nathan Jones had gone from a 23-year-old small town electrician to a regional utility magnate. He built a big company and made a fortune. He was a philanthropist. He had a model dairy farm and a stable of show horses and a private airplane.

Nathan L. Jones – 1929

Nathan Jones’ early business dealings had gained him praise and acclaim.

His customers got good service. His employees had good jobs and advancement opportunities. His investors received regular dividends on their investments.

But as his companies grew, Jones turned more to leveraged financing of holding companies instead of his core businesses of utility operating companies. It was the way the utility industry worked across the county.

Throughout the Roaring 20s and the first years of the Great Depression of the 30s, Jones’ companies continued to set growth records.

Ralph Jarvis had followed Nathan Jones throughout his entire career and had also prospered greatly. Then, Ralph died suddenly in February 1932.

That same year, things began to unravel for Nathan Jones and his empire.

A horse sale – April 1932

The Kansas City Star – April 8, 1932

In April 1932, just two months after Ralph Jarvis died, Nathan Jones began to sell his prized horses. At one sale in Kansas City, his saddle horses were the featured attraction of an auction.

His horses were a passion. Why would he want to sell them? Was this a sign of trouble?

A tax lien – May 1932

A month later, in May 1932, an Internal Revenue investigator filed a tax lien against Nathan Jones. The lien charged a back tax amount of $17,828.76, plus interest. It was for underpayment of Nathan Jones’ personal income taxes for 1928, 1929, and 1930.

Tax Lien – Nathan L. Jones – 1928, 1929, 1930 – $17,828.76
The Parsons Sun – May 27, 1932

Was Nathan Jones cheating? I don’t think we can read too much into this tax lien. For someone with complicated finances, it could be shrewd maneuvering by his accountants. It wasn’t mistakes because he had the best accountants in Salina.

The years referred to in the tax lien were before the worst of the Great Depression, so it’s hard to believe that Jones’ personal finances were suffering. But…

A bond default – August 1932

Uh oh. On August 1, 1932, Western Power, Light and Telephone Company defaulted on a bond issue for $465,802. That means the bond holders not only didn’t get their interest payment, they also didn’t get their principal amount repaid. They lost it all.

Western Power was one of Jones’ main holding companies. Were things starting to unravel?

A cattle sale – August 1932

The Kansas City Star – August 24, 1932

The same month, August 1932, Jones held an auction to sell the prized Jo-Mar herd of Guernsey cattle. In one of the biggest auctions of its kind in the Midwest, the herd of 96 cattle sold for an average price of $100.

Was Nathan Jones trying to liquidate what he could before it was all taken away?

Sell Ford dealership – October 1932

The Salina Journal – October 29, 1932

In October 1932, Nathan Jones announced that he had terminated his Ford dealership contract and would have a close-out sale.

It’s becoming obvious.

Western Power into receivership – November 1932

Big troubles. After Western Power, Light and Telephone defaulted on the August 1 bond repayment, the bondholders went to court to try to get their money. There were upcoming bond issue repayments of $1 million coming up in December and $3 million due in February 1933. Bondholders were frantic.

On November 14, 1932, the judge threw the company into receivership. That means appointing someone as receiver to take over all the assets of the company and try to salvage as much as possible.

The Hutchinson News – November 14, 1932

Everything else into receivership – July 1933

Council Grove Republican – June 22, 1933

Public Utility Investment and Diversified Utility Investment Companies were the top two holding companies in Nathan Jones’ portfolio.

On June 22, 1933, those two holding companies were thrown into receivership.

Nathan Jones was out.

The Hutchinson News – June 26, 1933

In a bit of irony, the news reported on the Jones family polo team the same week the holding companies went into receivership.

Epilogue – Nathan Jones

Council Grove Republican – July 19, 1934

In 1934, his empire gone, Nathan Jones sold his beautiful Salina home for $15,000.

The Manhattan Mercury – August 14, 1936

In 1936, Nathan Jones was reportedly selling gold mining stocks in Colorado.

The Hutchinson News – September 7, 1938

By 1938, Jones had moved back to Kansas and was speculating in oil wells around central Kansas.

In the late 1940s, Nathan Jones founded Town & Country Homes, a housing development company. He expanded rapidly, with projects in towns in Kansas, Nebraska, Oklahoma, and Texas. He pre-sold houses and took deposits from buyers. Unfortunately, he didn’t always deliver.

By 1951, he was arrested on swindling and mail fraud charges. He pled guilty to 17 counts of swindling and 10 counts of mail fraud. Nathan Jones served 18 months in the Texas State Penitentiary at Huntsville, Texas. In December 1952, he was released on three-year conditional probation.

The Salina Journal – June 4, 1951

In 1951, Nathan’s wife Blanche divorced him.

She later moved to Topeka, where she lived and worked until her death in 1977.

The Liberty Vindicator – January 24, 1952

In January 1952, Nathan Jones married Marie Nelson. Marie had been a nanny and governess in the Jones home in the 30s and 40s. Nathan was age 60 and Marie age 42.

Nathan and Marie Jones moved to Garden Grove, California, in the late 50s.

Nathan Leroy Jones died December 10, 1966, in Hollywood, California. He was buried at Forrest Lawn Cemetery in Hollywood Hills. He was age 74.

The Salina Journal, front page – December 2, 1966

Death Comes to a Deposed Salina King

Leroy was his middle name, and in the roaring 20s, even when he was disgraced in the 50s, Nathan L. Jones acted as if he were a king.

His death Dec. 10 in Hollywood, Calif. went largely unnoticed, but in his heyday he commanded a $20 million Kansas utility empire and brought bell boys groveling with $100 tips.

The flamboyant touch continued to the end.  He was buried Dec. 13 in the famous Forrest Lawn cemetery of Hollywood Hills after a service in Mt. Calvary Episcopal Church.  He was 74.

At one time, he was Salina’s first citizen, to be seen daily riding his Cadillac from his house on Country Club hill.

Mr. Jones was born June 25, 1892, in Seattle, Wash., the son of a farmer who later moved to Halstead.  After a term of college at College View, Neb., Mr. Jones learned the electrician’s trade at Kansas City.

He moved to Kansas in 1914 as an electrical contractor and began building small city power plants and power lines through the southern and western parts of the state.  In 1921, he became an officer in the United Light and Power Co., at Abilene. 

With that start, he moved to Salina in 1924, organizing the Public Utility Investment Co., a holding corporation with the Western Power, Light and Telephone Co., as its principal subsidiary.

Mr. Jones’ empire grew until it operated in 275 communities.

Salina became Mr. Jones’ town.  He was president of the Chamber of Commerce, chairman of the finance board for Kansas Wesleyan University, on the board of St. John’s Military School, a member of the National Council of the Boy Scouts, a leader in the YMCA and the Episcopal Church.

He organized the Jo-Mar 4H Calf Club which made possible the development of 1000 purebred Guernseys and created interest in mixed farming.

He belonged to the Elks and Eagles, was a leader at the Country Club, and developed a fondness for horseback riding.  His horses and stables were the finest.

He was able to borrow $1 million at Dallas to purchase an ice firm there.  His attempts to buy the Kansas City, Kan., power plant created a two-state controversy until he withdrew the offer.

Empire Crashes

Then came the depression and the crash.  In 1932, Western Power, Light and Telephone went into receivership when the company defaulted on a bond issue of $456, 802.

Mr. Jones attempted a comeback after World War 2, launching a series of real estate operations in the mid-west, selling houses to returning veterans.

He still had the old gold-plated tastes but he somehow had lost the touch.  His Town and Country Homes, Inc., at Salina went into receivership, his state real estate license was lifted, and in 1951 he was indicted by a federal grand jury on a charge of using the mails to defraud.

He was accused of accepting deposits for building houses that were not constructed.  Found Guilty, he was sentenced to prison by federal and Texas courts.  After his release, he moved to California as a salesman.

He is survived by his wife, Marie, of the Hollywood home; three sons by a previous marriage, Nathan E. Jones, Hollywood, the Rev. Marx A. Jones, Crystal Lake, Ill., the Rev Scott N Jones, Evanston, Ill.; two sisters, Mrs. Mabel Miller, Long Beach, Calif., Mrs. Berniece Farmer, Clovis, N. Mex.; and nine grandchildren, including children of his late son, Clark H Jones, who was killed in an auto accident in 1964.

Among the pallbearers was Milo W. Sutton, Palos Verdes Estates, a former Salina newspaperman.

Nathan Jones obituary, The Salina Journal, front page, December 6, 1966 – by Whitley Austin

Nibbles Extra Credit – Great Depression – 1933

Things were still terrible, but there were glimmers of hope in 1933. The inflation rate turned positive at 1%, and GDP growth turned slightly positive by summer. But 2 million Americans were homeless. Industrial production was half of its 1929 high.

Unemployment

Unemployment was at its highest yet – 25%.

Unemployed men outside a soup kitchen opened in Chicago by Al Capone

Franklin D. Roosevelt

President and Mrs. Roosevelt and Senator Joseph T. Robinson on Inauguration Day – March 4, 1933

Roosevelt was inaugurated March 4, 1933, the 37th President of the United States.

A week later, he began his “Fireside Chats”, keeping the country informed and encouraged about the government’s efforts to fight the Depression.

The New Deal

Whereas Herbert Hoover had done “too little, too late”, Roosevelt introduced a flurry of legislation and executive orders. In his first hundred days, fifteen laws are passed to fight the Great Depression.

Five days after being sworn in as President, Roosevelt created the Emergency Banking Act, closing all banks to stop bank runs and failures. It was the first major action of the New Deal.

The New Deal was a series of public projects, financial reform, and regulations.

The public works projects were accomplished by new agencies that would hire millions of unemployed to build government infrastructure.

The Civilian Conservation Corps (CCC) hired 3 million to maintain public lands. The Tennessee Valley Authority built power grids throughout the mid-South. The Emergency Farm Mortgage Act was to save family farms. These and many more programs began to make a dent in unemployment.

The financial reforms imposed on Wall Street were meant to prevent a repeat of the financial crisis.

The Dust Bowl

48 dust storms hit the Midwest. The first wave of Okies left Oklahoma and surrounding states for California.

Prohibition ends

In December 1933, Prohibition is ended by the 21st Amendment. A tax on alcohol sales helped government revenues, and citizens were only too happy to pay it.

A coup

In April 1933, Roosevelt eliminated the gold standard. This move precipitated the “Business Plot.”

Alarmed by Roosevelt’s plan to redistribute wealth from the rich to the poor, a group of millionaire businessmen, led by the Du Pont and J.P. Morgan empires, plans to overthrow Roosevelt with a military coup and install a fascist government modelled after Mussolini’s regime in Italy. The businessmen try to recruit General Smedley Butler, promising him an army of 500,000, unlimited financial backing and generous media spin control. The plot is foiled when Butler reports it to Congress.

Timelines of the Great Depression – 1933

Timeline – 1933


Sources

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s