In this press photo of December 30, 1943, Louis H. Egan is not “having the finest time in the world,” as the 1925 profile was titled. With wife Fannie grasping his left arm and deputy U. S. Marshal Davidson holding his right, the tall, disgraced executive clutches a cigarette with a gloved hand. We tell the story of Egan’s glaring error in management that led to his downfall in Damming the Osage: The Conflicted Story of Lake of the Ozark and Truman Reservoir:

Cutline on the press photo dated 3-5-42 showing Egan with a federal eagle behind him, posed as if to sink his claws into him:
“Louis H. Egan, former president of the Union Electric Company of Missouri entering federal court in St. Louis, Mo., where he was found guilty of violating the Corrupt Practices section of the Utility Act. “

Egan’s downfall began when he foolishly fired a Union Electric vice president named Oscar Funk, who, as the July 29, 1940 Time article put it “knew where the bodies were.” A muckraking St. Louis Post-Dispatch reporter named Sam Shelton had suspected the utility had been paying politicians for years. Funk spilled the beans to Shelton who in turn confided the information to the Securities and Exchange Commission. The reporter got an explosive series of articles and the SEC got Egan. In the Post Dispatch and in court, it was revealed that Union Electric had been demanding sizable kickbacks from lawyers and contractors. From this slush fund, they bribed newspapermen, paid elected officials, and illegally contributed to political campaigns. Egan and his cronies also enriched themselves. Union Electric sued Egan, VP Frank Boehm, and even whistle-blower Oscar Funk to recover $400,000. Funk sued Union Electric for being unjustifiably fired. Several vice presidents did short sentences for perjury, but Louis Egan was convicted of violation of the Corrupt Practices Section of the Holding Company Act of 1935. Union Electric paid an $80,000 fine. Egan paid $10,000 and was sentenced to two years. His appeals failed and on December 31, 1943, the $68,000-a-year former executive entered the federal penitentiary at St. Petersburg, Florida.

The cut line pasted on the back of the photo of Egan leaving for jail said he was headed for federal prison at Terre Haute. Another source had him released a few months shy of two years later from a penitentiary in Florida. He died in 1950 at his home in Clayton, Missouri at the age of sixty-nine of bronchopneumonia.

The names of Egan and the other felons who managed Union Electric during the building of Bagnell Dam are cast in bronze on this plaque attached to the powerhouse. It was Egan’s pond, but his role in this enormous undertaking has been forgotten.

Some of the laws Louis Egan broke regarding campaign financing by corporations were not in place when he began his career. Recently businesses have again been allowed to contribute to political races. Even the Public Utility Holding Company Act of 1935 was repealed in 2005, replaced by a new set of regulations that consumer advocates objected to.

In the text of Egan’s appeal, the court upheld his conviction but noted, “the evidence also tends to show that the whole subject of political expenditure was distasteful to him and that his preference would have been to have nothing to do with such matters.” Nevertheless Egan approved for years the “raising a secret fund for political purposes.”

Sordid as the history of building Bagnell Dam is, we suspect public records reveal only a small percentage of the crimes and skullduggery committed by its creators. When the federal government subsequently took over dam building, they too began to lie and subvert regulation, just like the capitalists. Who regulates the regulators?

Three men were essential to the building of Bagnell Dam, which created Lake of the Ozarks: a banker, a lawyer, and the president of a power company. Only one stayed out of federal prison. The head of Union Electric was not that lucky one.

Louis Henry Egan was born in 1881 in Lacrosse, Wisconsin. Egan followed his father’s profession and graduated from Yale with a degree in engineering. The “moose tall” president of Union Electric, as Time magazine described him, was profiled in the January 1925 issue of The American Magazine as a can-do, overly optimistic executive. The subtitle of the puff piece read, “’There isn’t any job you ever heard of that can beat mine,’ says Louis H. Egan one of the leading public utility men in the Middle West – It was this attitude that helped him at the age of thirty-eight, to become president of a big electric light company.” Above all, the article stated, Egan despised complaining slackers who he called “Whimper Whine-ies,” who are always “crying a pond.”

The concrete obstacle in the Osage River that ponded Lake of the Ozarks was one of the last significant privately built dams in the United States. It was a project birthed in the Roaring Twenties when free enterprise had been released from strict government regulation after an era of “trust busters” and reformers like Teddy Roosevelt and Woodrow Wilson. Bagnell Dam, as Project No. 459 came to be called, was completed in 1931 just as big government was about to snatch the reins back from hard-charging businessmen who had created both phenomenal wealth and crippling debt and were being blamed for the ensuing Great Depression. Egan, prototypical of these Twenties boomers, had built the St. Louis utility into a profitable part of The North American Company’s holdings.

When equally expansionist Kansas City banker Walter Cravens diverted his Land Bank assets into his speculative dam scheme, he ran afoul of federal law and was forced to sell his overly ambitious, underfinanced project. When his original backer pulled out, Cravens took his project to Wall Street, looking for investors. Many firms passed on the opportunity, but he finally connected with Dillon, Read & Co., an investment-banking company with connections to Stone & Webster, Inc., a New England engineering services company founded in 1889, which specialized in public utility projects, especially hydropower facilities. Together they bought a one-year option to buy Cravens’ valuable permit to impound the Osage. In July, 1929, the license was retroactively transferred to Union Electric ninety days before the Wall Street crash that signaled the start of the Great Depression. Cravens was paid $300,000. He needed a good bit of it for lawyers.

North American Company Annual Report, 1947. Sometime in the late 1920s this octopus of a holding company acquired control of Union Electric’s stock. North American, known for its bare-knuckle practices, encouraged the St. Louis utility to build a slush fund from kickbacks and use it to illegally finance politicians and bribe public officials. This notorious holding company was broken up by the feds in 1946. Many online sources state that Union Electric was divested at that time, but this 1947 report still lists the St. Louis utility as an asset. The holding company for Union Electric today is Ameren.

The two new project owners had approached The North American Company, among whose holdings was the St. Louis utility, Union Electric. North American also owned ten percent of Stone & Webster. The construction company’s chairman was on the board of the giant holding company as well. Several years earlier Louis Egan had turned down Cravens who was looking for a market for the electricity Project 459 would eventually produce. When a similar proposal came to UE from The North American Company, Egan jumped on board. Union Electric had had no use for the electricity when first approached, and still didn’t, having just finished a huge coal-fired power plant at Kahokia, Illinois near St. Louis. In the late 1920s sophisticated companies like all these involved with the Bagnell Dam project were aware that financial storm clouds were gathering. This $36 million project promised to be one of the last big deals possible before the looming Wall Street deluge of plummeting stock prices.

Had the deal not been expeditiously done, Bagnell Dam would not have been built. Even the reputable construction company was damaged by the crash. Ten shares of Stone & Webster common stock valued at $1,133.75 in 1929 were only worth $62.50 in 1933.

Had the private power company not built the big dam on the Osage River, decades later, the U.S. Army Corps of engineers would have undoubtedly used this superior dam site instead of building their big Osage River dam at the decidedly inferior Kaysinger Bluff site at Warsaw, Missouri. The Miller County location permitted a much higher dam to be constructed, but the capitalist builders were afraid of the political uproar of flooding Warsaw, a town of more than a thousand at the time. Flooding five hundred people at Linn Creek was an overcome-able public relations problem. The disaster that Truman Reservoir became might not have happened if the dam on the lower Osage known as Bagnell had become a larger federal project.

Bagnell Dam, planned in the Roaring Twenties and barely finished as the Great Depression set in, was one of the final privately financed major water resource developments.

NEXT POST: THE FALL OF UNION ELECTRIC’S LOUIS EGAN