The producers news. [volume] (Plentywood, Mont.) 1918-1937, 1930-07-25
FOSHAY BRIBERY
SYSTEM DISCLOSED
BY INVESTIGATOR
"Oiling" System Used In Gettinc
Control of Municipal Plants-Is
Discovered By Federal Trade
Commission.

Commission.
Washington = Discovery that
the w. B. Foshay bluesky opera
tons in the purchase and merging
OF utility plants, which blew up
last November with loss of most
If not all of the $29,0O0,OOO which
small investors had put into these
schemes were developed through
bribery of municipal officials, has
been made by the Federal Trade
Commission. Files of the Foshay
companies, taken under authority
of the Walsh resolution for inves-
tlgation of the power trust have
been explained by Ernest R. LUG
as, an examiner for the Commits
sion. These letters show that at
the time when Foshay was pro-
claiming himself the fearless
friend of organized labor, and
was being given free advertising
as such in the labor press of the
country, he was attempting to de-
stroy municipal ownership of cleo
trio light plants in cities from
Colorado to Georgia, and was US
ing sugar" and "oiling" methods
to attain his end. Moreover, he
was trying to get control of humid
reds of small local newspapers, in
order to poison the public mind
against municipal ownership.
Oiliug COunciImen
Take, for instance, Exhibit 1868
in the Commission records. This
begins with letter to R. J. An
drus, president of Foshay's Pub
lie Utilities Consolidation Corpor-
alton, from L. E. Lynch, manager
of Foshay's Public Utilities Kan
sas Corporation, Nov. &c, 1928 on
the plot for getting hold of the
municipal electric plant at Bur
lington, Colorado.
81 have learned" says Lynch.
chat Burlington is being ap-
preached by three of our competi-
tors and at latest reports three OF
the councilmen are in favor Of
selling, and the remaining three
are waiting to see how they will
be oiled before making up theil
minds.
81 know that you do not lool
with favor on the plan of 'oiling
your way through these municipal
sales, and | agree with you tina
such practice is destestahle and j
has been hard for me to final.
, be compelled to admit, regardless
of my feelings contrary to sucl
practice, that at least 8 out of i
councils l have contacted during
my brief acquisition experienc
can only be handled thru the 'Oil
ing system. -.
'I am wondering whether
would not be advisable to let tn
man I mentioned handle the mat
ter for us as broker for regv
lar brokerage fee, he to handl
the fee as he sees fit and if
is necessary to apply 'oiP thu
will be a matter of his and tn
councilmen's consciences to decid
we to be interested only so far {
the amount of the brokerage fl
that we pay our agent is col
cerned."
In January, 1929, Lynch repor
ed to Andrus that the BurlingtC
Council had met and voted to sc
the plant to the Inland Public Sc
vice Co., subsidiary of the Fai
banks-Morse Co. One of t
councilmen, whom Lynch ident
fled as having invited the Foshi
interests to edo a little oiline
a voted for the Inland bid. Andr
| sent a memorandum to ]. S. Dale
| yice-president of his own comp
= nv. reminding him that the Pub
r Utilities Consolidated Corporate
was committed TO pay Shambu
a commission on this" Shambu
= was a councilman who urged
ceptance of the Foshay bid.
: April %, 1929, Lynch telegraph
r H. H. Henley, Foshay executl
Y at Minneapolis: mayor unqu
l. tionably bought and madly scran
10 ling put deal over before n
I. mayor is seated May first"
Did Not Go Thru
Exhibit 4663 deals with attemj
- 70 buv the municipal plant at
milIa. Georgia. c. c. Reyes
the Minneapolis office OF the r
lie Utilities Consolidated Corpo
tim wrote Andrus in June {
july, 1923, of his negotiate
with a law firm, Gardner, Ga
ner & Grow, to "put over" on
ner cent brokerage basis, the d
IN that town. One Gardner '
city attorney and the other
solicitor general. The deal
mt contaminated. Efforts of
Foshav crowd to buy the muni'
al plant at Moultrie, Georgia, {
tered around Mayor Bryan, '
was reported as desiring to
come counsel for the Foshay c.
nanies when he left office. La
BRYAN stated to the Federal II
Commission in answer to its
m,irv as to whether the uti
companies had made propaga