Omaha Daily Bee Newspaper, February 3, 1892, Page 2

i 2 PRESIDENT BEERS ~ SPEAKS Head of the Great New York Life Carefully Reviews His Reviewers, HIS LETTER TO THE POLICY HOLDERS Dotailed Tnformation € pany's Basiness Not Col De n neerning the Co alned in the Tu- S0 surane Artment's Beport Very ting Explanations, address New Yonk, Feb. 2.—The following was given out here today : To e Poricy HoLokns or tne New York Lare INsCRANCE CoMpany: On the 10th day of June, 1501, the following communic was transmitted to the Insurance depart ment of the state of New York New Yonk, June 16, 1801.—Hon. J. F. Pierco, Superintendent Insurauce Depart mont, Albany, N, Y charges that have boen the company and its management in the pub lic press, growing out of matters conneccted with 1ts Spanish-American department, having been cabled to our president in Lon don, we are in recoipt of a cablegram from him in response suggesting that the Insur- ance department be invited 1n the public interests to so make an examination of the eompany for the satisfaction of any polic holders who might be disturbed by these charges, and in accordance with his sug- gostion the finance committee of the company at it rogular mecting held at this date adopted the following preamble and reso lution at a meetiug of the finance committee of the New York Life Insurance company, held this dato tho following proceedings were had: Whorons, mado against Certain charges and eritiolsms nave been mude againgt this company in’ the DUbLle pross, rowing outof certuin’ matters connectod with the Spanish-American depart- ment; and Wherens, The finance committee of the bonrd of trustecs 1s sntisfiod from the state- nts of the offices that there will bo no loss I8 compiny by re son of the matters re- ; but 1t 1s desitous that the pubiie equally sutisfied; therefore, Resolved, That to that end the superin: tendent of insurance of this state be Invited 0 muke o thorough examination of tnls com= pany. In accordance with the foregoin the com- puny wiil bo pleased 1o Tuve this examination Wt your earliest convenience. Yours truly, A H. Weren, Second Vice President Tn accordance with tho above-on the 22d day of June, 1801, the insurauce department was placed ' in charge of the books, records, ete., of this company and remained in charge until the 4th day of January, 1802, Thero ure many reasons why it sécms not only proper but necessary 1o review with vou the insurance department fiudings. First. No_ corresponding tests have ever heen applied to the life insurance business and the results ough to be presented to you, not only without brejudice, but from ~the company’s pownt of view, und to me it scems to be cloar that the only way to achieve this is by personal statement. 1 donot mean by this to reflect in any way on your sources of Information bitherto. 1 say that no corresponding test has “ever beon applied to the busisss of lifo insurance. B, this I mean no investigation by a state in surance department has ever been made of a company whoso assets and general business reach corresponding proportions. Since any tost has been applied to the conduct of this business results have been achieved which a fow years ago scemed 1mpossible. The horizon has expanded and duties and re sponsibilitics have fallen upon me and the exocutive ofticers of tbis company, and of nearly all other life companies whicn, if nov new in kind, are so much greater in degreo as to constitute almost a new world of ex perience in our business. The investigation just closed bas therefore been remarkable for this, os well as for other reasons, and beyond question, 1n addition to its propo; tlons, hus veen the most searching and merci lese inquiry ever made in the executiveoMice ot a life insurance cowpany. The ceutral fact in any such ivestigation is and must be the integrity of the assets of the company. The figrures of the inquiry were brought down to June 50, 1891, and the Insurance depart- ment's general statement is as follows: Assots, 1 N4, Liubilitics, $106,214,0 0.81, Gross surplus on’ policy holders account. B, 708,708, The superintendent of insurance well sai 1n commenting ou the above: “Those inter- ested may be assured that this couolusion is correct Aud trustworthy.” These words will bear reading a second time. They mean something different from a casual statement of financial responsibility on the busin world. They could be uséd ouly after our as- sots had been subjected to a test which might seem from many points of view unnecessarily sovere, but which from the nature of busi- ness and the sacred character of its trust is unquestionably wise. The superintendent, therofore, means thatail doubtful itoms were climinated, that our opinions were nocessa- rily ignored, that disinterested opinion was the standard and that wo were obliged to plead before & bar where mitigating cir cumstances were ruled out of evidence, After such a test, 1 may be allowed to offer my congratulations o our mewmber- ship on the result and to the state that the sther executive officors of the company, as well as myself, share with you 1w the satis- faction of so great an achiévement. I desire personally to emphasize my con- gratulations on this particular and most im- portant viow of the report. It would have been unuatural, I think, if the idea of my- self and associates of the aggregata value of the assets of this company as expected in our last anuual statement had differed to considerable degree from the idea of the gentlemen who fixed the values exprossed in the Insurance department’s stateme Dif- ferences could arise only in certain classes of investments. A large portion of the as- s0ts of such an institution is of such a char acter that there could be no va riety of opinion ay to its vaiue on any given date. But it s equally ‘true that a cousiderable portion of tho assets of this, as of every similar com- pany, is of such i nature that its value at any €1ven tiwe must necessarily be expressed 10 diffevent totals by equally capable ana responsible men. 1'be variation would ex- press no aotusl fluctuation in value, but simply a difference in opinion. Which opin- fon might be for your purpose most nearly correct 1s again @ matter of opinion, and while I concede the wisdom in such investi- goatlons of a conservaiive view, and, under the peculiar circumstances surrounding our request for this examination, the wisdom and necessity of an ultra-couservative view, I cannot avord the counclusion that in these particulurisws the opinions of men who have planned and dircoted the erection of the great company, while they may be accopted as the utterances of special pleaders, are wortby st least of cousideration by you. 1 accept the agereate financial findings of tho Insurance department, as coustituting an oendorsement of the management of this com- pauy at once satisfactory o you and crodita ble to mo and _my assoclates. It is possible that in spite of the peculiar character of this investigation you would uot have expected auy word from me had the watter rested there, but the superintondent of iusurance has seen fit, after anuounciug not only the solvency, butthe great prosperity of the compsuy, 88 evidenced in its gross surplus of nearly $15,000,000, to take up and tiscuss cortain items, and in dolug so has criucised the management of the COMPANY in Lheso de- talls vory sovorely. = This constitutos ao wdded and by itself a suflicient reason why | should 2o with you over the ground traversed by the Insurauce department, in order that our attenton may be called to many re ated facts which donot appear in the re part. The department's criticisms cover soveral phases of management, especiaily luvestmeuts in real estate and agency work. The criticism of real estate matters calls af tention to losses, which way be divided into sotual losses, which [ adwit, aud losses theoretical which arise from differences of oplulon, 1 admit cortain losses which I will point out specifically, with the atlendsnt ciroumstances, and I raise the question of difference of opluion as to the remainder. Before .uurlnf on the discussion of any of these watters, Itis aue to all parties to say the investments are made only with the ap proval of the fluance committes, consisting of five members and of which | am a wember ex-omclo. Plaza Hotel—The report alleges a loss on this property of 825300, The super in- tendent of 1usuraunce uses this language in conneetion: *Io property of this ch aracter, Dear Sir.—The | and of such real estato experts and integrity often abls and conscientious vaiuo this property at higher tigures, and oven beyond its cost.” Tho gentleman who by direction of superintondent of insurance great_ value, the opinions of of equal ability aiffer, and other aporajsers might valued this property at §2,500,000 is a man eminently qualitied ‘to give an opinion on { such a question. But it is also a fact tha another gentieman of equal ability and char. acter within a few weeks testified before the supreme court of the state of New York that in his Judgment the property at presout is worth &,000,000. From your point of view, , 18 1t not fair 10 conclude that the al d loss may after ull be only a matter of opinion, but the case will bear one more com mont. This property is as finely located as any on Manhattan Island for hotel and pertiaps as finely as_any hotel property in the United States. 1t is fa the line of in | creasing values, and in my judgment will | ultimately yield the company & large roturn on the orig | investment. Home Oftice Building—7he report alleges | & 1088 on this property of 64, Its book value 18 §1,904,205, and it enters the superin tendent's report at #1,550,000. To fllustrato arain how opinions vary as to the value of roal ostate, lot us make a paraliel between this and property of a similar_character in New York and draw a conclusion. Take the value placed upon our homo offico building for tho purposes of taxation and place it be- sido the samo vaiuo of the Equitable Life Assurance society’s home offiee building, The ofticial valuation for purposes of taxation of your homo offico buflding is £1,050,000; of tho Taquitable home oftico buildin, 3,500,000 A statement of the figures at which each property was entered in the assets of its re- spective company December 31, 1880, is as follows: Tho home oftice butldiug of tho Now York Lifo, §1,014,000; home oftice of the Kquitable, $15,140,000. The department’s estimate of the value of our property is ap- proximately S0 per cent, whilo the associate’s figures for the purpose of taxation ara little more than 50 per cent of its book value, As the gentieman who appraised our home oftico building hus never madenr appraisal of the vaiue of the Equitable's home oftico building we can hardly draw a conclusion ' from that basis, but fizuring from the value placed upon 1t by the assessors the total valuo would be approximately £,600,000, if the book value of our home oflice were accepted at par. | cito theso figures ns strongly bringing out the truth of my sugzestion concorning opin ions ns Lo real estate values. Iivery one is familiar with the ominent success of the Equitable Life Assurance society, and no ono would be so absurdly unjust to that company as to allezo a loss on _this one parcel of real restate of #,500,000 or, in- deed, any loss at 4l From the policy holders' view, thorefore, is it not worthy of your consideration thatin this case, as in tiie matter of the Flaza hotel, the loss alleged 1s after all perhaps a matter of opinion ! In fact, I could cito you good authority on real estato values in Now York who will place on our home oftice building today a valuation in excess of its cost. ‘There arc many reasons why this estimate vould bo conservative. In the first place, the real estate was purchased in 1569, and i excep- tionally well located. Anyone who knows anything about tne history of real estate values in Now York for twenty years will agroo that there has been during that period ateavy advance in value on this and all proverty similarly situated. Tho building has not been ailowed to deteriorate in any particalar, and-it would seom that our state- ment of uctual cost, $§1,014,000 was a very conservative figure Holbrook Hall (now called tho Yosmite) — On this item a loss has been made. Briefly, the facts aro theso:. In 1882 we made & loan on tiiis property when in course of construc- tion, and aftor the man to whom tho loan had been miade spent not only his own means, “a considerablo sum,” but the money loaned bim as well, he faled and weo were obliged to foreclose. ‘The cost of the property to us after foreclosing was very little more than the amount of the loan. Tre work of completing the structure was then placed in the hands of an eminent construecting en gueer. He supplemented his own knowledgo by employing an architect and the building was finished. It was filled with a desirable class of tenants and would have paid a fair return on its cost, but for two errors which could not havo been forescen and which do not justly subject the finance committee totho charge of making a bad iuvestmentof money. in carrying out a theory of fireproof con- struction the archifeet made the same error precisely that the architect of Vico President Morton’s hotel, tho Shoreham at Washing ton, mace, and both buildings had to be re- coustructed for substantially the same rcasons. The mistake of the architect in cach cace was in creating such s condition that dry rot speedily destroyed the timbers and the building had to be vacated at ouce. It wis then discovered that in addi- tion the foundations of Holbrook Hall pat 1w by the men who first obtained the loan, were insecure, and as a_final rosult the whole structure Liad to come down. It was then rebuilt under the supervision of of MoKimmend & White, on the most ap- proved lines, and there 18 not a finer struct ure of its class in this country. The abso Luto 10ss to us there was approximately tho cost of the first building. This we charged off and entered the property in our annual statement at the cost of the present building and ground. Tho tigures, §720,006, the ap sor of the Insurance department refused tand $450,000 was named instead, and entered in the lnsurance departmont's finding. 1t is proper to add that on our present basis of reatal, this property will yield, wnen fully rented, a net income of §!5 per cent on the value placed upon it by the Insurance dopartment, and would yield & little move than 4 per centon our valuation, (§720,006). [ do not desire to evade full ‘respousibility for myselt and the finance committee in this matter, The claim of infallibility in the investment and reiuvestment of hundreds of millions of dol- lars is one I nave never set up, Four—The Paris Property. This property was purchased somo years ago under tho supervision of the chairman of our finance committee, who was on the ground at the time. His investigations as to the value of the property were wost searching, and_the purchase was made with ail due care. That the rental value of the property has since depreciated is true, and that there is an ap- parent loss is true, but If the superintendent had not only secured aun appraisal of the valuo of the property as it now stands but had also fnvestigated the value of the prop- erty when it was purchased, he could have fully satistied bis duty as oxaminer and at the same time have given you a satisfactory reuson for the original price paid. But no such investigation was made, and us his find- ings seem 1o do us injustice, not only as above cited, but also in the value vlaced ‘upon the property now, tho matter will bear a word more in explanation. It was brought to my notice during the superintendent’s investiga- tion that the figures supplied by the aepas ment of taxation of the Krench government on his request represented values affixed solely for his particular purpose. Our mana- gor at Paris with a great deal of dificulty succeded in getting the Credit Foncier, the largest institution of its kind in France, and 8 society tbe reputation of which is well known throughout Kurope, to have & valua- tion made of our property. This valuation was made with the greatest care by two of its most expericnced inspectors, and their findings properly attested were submitted to the superintendent of insurance. He pre. ferved, however, iuasiuch as he could not procure o the limited time at our disposal an admission from the French government thav its tigures represented taxable value only, to reject tho figures offered. In this way tho estmate of the inspector's excoeds the of the Krench governmoent vy aud their estimate of its prospective value, with the improvements certain to be made by the city of Paris, ex ceeds the figures adopted by the superinten dent by $iU3600. As I understand it, the varlation in the superitendent’s figures from the probable value of this property is similar 1o the loss which would appear if the home office building of the Kquitable Lifo Assurance socioty should be pluced on s schedule of its ussets at #3,500,000, its value for purpose of taxation, aud not at §15,000,000, its book value. 10 place the property of the Equitable in & schedule of its assets at such @ Lotul as 10 show @ 10ss of 11,440,000 would L6 50 UNjust as to become absurd, yet a simi- lar thing seems to have been doue in this case. Five--On Western Buildings. Theg report of the superintendent of insurance values the office bulldings recently ereoted by us in Minucapolls, t. PPaul, Kansas City ana Omabia at tholr cost to the company, but his opiuion of the wisdom of the luvestment seews to be uncertaln, as this language indi ates: “Thero is Do immediate prospect tha they (the buildings) will prove as profitable #s the iuvestments of life insurance compa- nies should.” 1 desire o offer a word in that counection. Thero are two rewsons why the immediate income from these properties is swallor thau we may fairly expect Lo receive THE OMAHA in thoe future, (1) The buildings wore begun under normal conditions but were completed 10 the midst of a period of busiuess depres sion in the four cities mentioned, and accord- 10gly we have had fewer tenants and lower rents than we may rewsonably expect here- atter. (2) The buildings were located with & view to futuro developments ot their res- pective cities, Any one who has observed the rapid growth of the west will appreciate the necessity of considering the future even more thau the present in the location of an ofice buliding. Present revenue was, there fore, not so miuch of a consideration as that the buildings should be o located that the future may tond constautly to incroase and uot decrense the rent-procuring power and value of the property, You will understand of coarse that investmenis of this character ro valuable, because the element of ritk in rvestment 18 practicatly eiiminated. The wonoy expended in this way is a_tixed item for very long period of years. The tull wisdom or folly of such a transaction is developed only by time. You will be inter- osted to know, however, that one of those builaings is already yielding us a fair return on the monoy invested, and I am further ad- vised by compotent authority that since the date of our purchase of the real estate on which these buildings are situated there has beon a not appreciation in its selling value of £00,000, as shown by the appraisals made at the close of (880 and by purchase of adjoin ing property since made by other people, In entering these properties on books and in submitting our estimate of their value 1o the superintondent, which he accepted, we did oot take this evident increase iuto account as evidenco that the ercction of this chain of western Luildings was well considered. I point you 1o tho fuct that 15vestment was entered upon after discussion and approval by the board of trustees, in my theory that it is only fair to the meinbers of a company like this, the nature of whose business makes large ac. cumulations of money necessary, that the money 1o be imvested should go” as far as practicable to thoso sections of the country whenco 1t emanated. In this casoa part of the money roceived was invested amongst the people who paid it. The only theory on which these buildings cun be rated as bud or oven doubtful investments is one which dis- creaits the future growth of tho western states, The report notices that: as adver- tisements of the company that they ngs) 1o doubt have a considerablo value. This is eminently true, the territory in which these buildings serve especially to advertise the compauy include the states of Minnesota, North and South Daicota, Mon tana, lowa, Nebraska, Kansas, Missouri, Texas and Indian Territory. The people of thuse states aro in constant business and social intercourse with one or more of the cities in which the buildings have becn placed. The buildings have, therefore, become widely known or as the superinten- dent's report anys, “‘each of them ferms ono of the attractious of the city in which it is located.” Their influenco upon the com- pany’s businesf is extremely impor- tant. In 1880 the year before tho butldings were begun—the aggregate new insurance written by the company iu the tes ritbry in question was §047,200. This aggre gate has steadily increased until for the year 1891 it amounted to $28,800,950, which is th largest business that was Sccured in that fleld during that year by any life insuranco campany, and rot ouly was the quantity of the business vemarkable, but its quality’ was such as to make it most desirable in evei way. Without the buildings 1t is safe to such results could not have been obtained. 1 may add, by way of geueral commea® on real estate matters, that while the superin- tendent notices that the corapany owns 147 parcels of real estate and has 900 other parcels under mortgage, and the further fact that these properties are scattered not only through many states of this country, but over two contiacnts the nature of such duties mado it necessary perhaps, to omit comment on the real estate transacuions in which profits have been cealized and to confine himsolf as radically to the four parcels which he discusses, but your interests reach further, and you will naturally be pleased to learn in this way not cnly the relation of the items criticized to the company’s total hold- ings, but also the circumstances surrounding each case. If these related facts tell you anything, it is the probable existence today of a surplus lnrt{uly in excess of #15,000,000. Wo all accept the superintendent’s figures. Yet, as you and 1 are particularly interested inthe whole case, we are permitied between ourselves to view the possible offect of these facts. Suppase, for example, that the superiutendent had accepted the well known opinion of one of the heaviest holders of New York real estate as the value of the Plaza Hotel, 2,750,000, and that he had ac- cepted the value of our home oftice building, on a rental basis of 5 per cent net, and that he had accepted the inside figures of the inspectors of the Credit I'oncier, as to the value of the Paris proporty, his net deduc- tious on real estate, including his hoavy deauctions on Holbrook Hall, would have been only $120,300.25. This alone would increase our surplus $500,000. Agency Management—Under the head of agency wanagement, Lhe supermtendent of insurance says that funds of the company to the extent of hundreds of thousands of dol lars have been advanced to theso agents without interest and upon insuflicient se- curity to persons unfamiliar with the life of insurance business, and this statoment would seom to indicate the worst possible manag ment of vur agency department. The facts ought tierefore to be fully explained. The general system upon which advauces have been mado to agents by this company and other life companies may be illustrated as follows, the figures used being merely illus- trative, and not the terms of any actual o isting contract- ‘The company, we will say, enters into a contract with Brown, who is genoral agent for 8 state, that he shall re- ceive a commission of 25 per cent of the first year's premium of ull policies placed by him, and a renowal commission of b per cent on euch renowal prmnlumt{mid on each policy. Browa, of course, finds it necessary to employ Jones and others as sub-agents and ne ordinarily pays them 25 per cont commis sion allowep bim by the company on firsc year's premiums. Brown relies upon his renewed commission for his own compensa tion, but while be continues in active service, be is frequentip allowed to draw on & fixed Amount against commissions for his living expenses, such amount bemg regulated by the clacumstances of the case, As competi- tion increases, Brown finas that in order to retaiu Sub-Agent Jones ho will be obliged to pay more thau 25 per cent commtssions, To do this Brown is obliged to make a new arrangement with the company. Instead of i sing Brown’s first year commission, the compuny agroes to advance to him a sum equal to two renewals or 10 per cent, on the business secured by Jones and to hold all of y Brown's future = renewalo commissions under the contract is security for the advance. Brown is now able to to pay Jonos i3 per cent commission, und so rellove his service, but at the end of'the yoar Brown is apparently in debt to the company in an amount equal to 10 per cent of ali first year promniums secured by Jones, and the larger the business the larger the apparent dobt. This will continue until such time as the old busfuess kepton the books greatly exceeds the amount of the new business an- ially done. In & rapidly increasing busi ners this result will not be reached for soveral years, but if the total amount paid Brown has not exceeded what the business was actually worth, the time will como whon the commissions accruing under his contract will exceod tho total cost of the yepr's busi- ness. Brown's business from this time forth will requiro & less expenditure on the part of the company, and in proportion to its volume than heretofore, and his so-called in- debtedness, appears under his coutract will disappear more rapidly than it accumulated, at which time Brown will realize the profit for which ne has worked. The company having already pald for this business in large part, will have & lower expense ratio to this extent in the future, and its surplus will be correspondingly increased. You will notice that this debt does not represent money which Brown has squandered or re taned for bis own uses. He has simply used the money to carry on the company’s busi- uness. 1f iwshould éver nabpen that Brown's reuewal commissions fail to' eancel the debt, the business has simply cost the company what i cost Brown, and tho company has taken good care that the total smount of commissions ana advance received by Brown should never ve @ sum greater (hau the new busiuess secured by bim was worth. Ou L. C. Naovuxem & Co.—The superin- tondent criticises the agency of Messrs. L. C. Nanuxem & Co., at Philadelpbia, Pa., and alleges 8 debt Lo the company oo account of what he terms “extravagant allowances” of several hundred thousand dollas. Re forriug to the illustration wbove of the wethod on which & geoeral agent's business is conducted and the wauner in whic an ap- parent debt might be contracted when I state that from 1857 to 1801 inclusive, this firm wrote business aggregating $132,000,000, & clear explanation 1s offered you of bow, DAILY e e e e . e 8 e o e ¢ e e BEE: WEDN SDAY, under the aBSVE practice, a large debt micht appear to_oxist. In tbis particalar agency the advance contemplatea in our il lustration took on various forms under various colgracts which, howcve were always suh]&(u our approval, against tho commissionsRarnad, and to be earued, the mombers of thig fira drew advances for lv ing expenses, aplyberore roferrod wnd ad vances on account were made snb. agents, but at no time has the mount of maouey advawest 1o i C. Vanuxen & Co. ex coeded the value of thelr firm's business. Under this system of orguuization it has beon possibif T9F a singlo firm to handle a iarge torritory and by creating ronewal in terest (in this case of very large pronortions) we have avofdefl frequent changes of general agents and bV argely escaped the dangor of naving our busingess carried to other compan ics by An agent Whoso interest 1n any given policy censed with tho first yoar of its exist ence. In this way Messrs, L. . Vanuxem & Co. havo done for years o larger business than the new business of three smaller lifo insurance companies and the largest business of any singlo agency in the United States. It has been done at a not unressonablo expense and the cost of its procurement has been in cluded each year in tho disbursements of tho company. The wholo thoory of this organization and the purpose of the advance Is (1) to produce a large business and (2) to create an incen tive for the general agent or mwanager to pro- cure business at the lowost possible cost, in order that after a period of years ho may begin to realizo a roturn commensurate with the work done. As the cost of the business is charged off each year it becomes neces- sary to keep with the manager a blotter or sub-ledger, ahd tho items are all brought forward from time to time. OFf course ths, under the iilustration whould show for an oftico doing 0,000,000 of new business in a year, and for a series of years, a larze ap parent debt, and the superintendent st fu- suranco, instead of viewing tho business as we have done, as simply business paid for, deciaos to go into this subject and spread bo- fore you the apparent debt. 1t is of fivst im portance that you uaderstand clearly that this _monoy is not due from L. C. Vanuxem & Co, In the dinary acceptance of the word debt.”” Itis duo under the terms of their contract at such time as the commissions carned on the business done will liguidate the money advanced from time to tume for the condiicting of the business. It bas unot benefited them personally and never can until, as stated, the earnings of their busi- ness have liquidated all moneys drawn for overy purpose under the coutract, including advances and agency expenses of every kind. Aud bere let mo call your attention” to an oxuremely important fact which aplies to all discuseion of agency matters by tho superintendont. und which he forgot to men tion, namely, that these advauces in overy to, 10 some case wero charged to expenses in the company’s books when “the ad- vances were wade and the company has never counted them as u part of its assets orsurplus. Tho superintendent, therefore, instead of unearthing with great difficulty something the company desired to conceal, as he states, practicaily set up an arbitrary standard of what he thcught our business cugnt to cost in any given vear ana charged up as a debt the difference between his opin- ion and ours. it would scarcely bo less un- just to tho company had ho alleged in any given year that the aggregate paid for tho account of the:business of that year was £1,000,000 or $2,000,000 too large, and in nis repqrt had set this up as a sum due from the men to whom it was pgid. Right here I desire to state, and I statd'it with all due respect for the opinion of''the ofMicial whose conciusions I differ from, that in matters of this char. acter, the conclusions of men who have thirty years’ experience in this business as to the Drospectsof paying a given sum for given volume ‘gpuslnes: (they alone bemg conversant with all the surrounding circum- stances and dontingencies) are as likely to be correet in thie interests of policy holders, as the opinion 67 a gentleman who, while ominently qualified for the duties of his oftice, cannot be eredited with special knowl- edge 1n the partigular interests now under discussion. _ Spanish Amexigan Department—The super- intendent natirally treats at some length the affulrs of the Spafiish-American department Tne invitution é¥tended to him by our board of trustees to examine the condition of this compAty was calted out chiefly’by an indor- rect and misieading statement relative to an alleged defalcation by one of its manage! for which the company, it was stated, alone must suffer. 1shall refer princinally in the matters ciscussed by the superintendont under this head to this ceutral and to you importunt quesstion—the fact that Mr. Mersevache, one of the managers at ihat timo of the Spanish-Awerican department, became a defalter for a large amount. The statoment as - originally published that Mr. Mersebacher defaulted direct to the compay was an error. Under the contract whick we had with the two man agors of the South American department, each became responsible for the action of both, and Mr. Sanchez, the other general manager at this time and manager of the Spanish-Amerioan department at the present time, accepted, under the terms of his con- tract, full responsibility for the Morsebacher shorfage. This shortage consists of two parts. A direct theft by Mr. Meorse er from Mr. Sanchez of $419, aud $119,069.10 which was an payment by Mr. Mersebacher to the former general manager of tho Spun- ish-American department. Since the date on I the accounts wera made up and the shortage definitely determined, tho item of’ $119,059.10 hias boén considerably reduced on the books of tho company by accruea re- newal commissions retained by Mr. Sanchoz and by him turned over to the company in cash, The larger item, representing the moudy appropriated for his personal use by Mr, Mersebacher, has been reduced since December 81, 1800, by 106,671,589, leaving a balance due January 1st, 1802, £258,151.05. The actual net profits for the year 1501 1o this depart- ment have not yet been fully determined, but its balance sheet shows that they will not fall short of £100,000. This leaves tho bal- ance due the compavy on thia account on this dato a sum but little in excess of $150,000, for which the compauy also holds abundantsecurity. Thesuporiutendent closes his review of the Spanish-American depart- ment with these words: From the foregoing facts we must conclude that Sanchez and Mersebacher wery treated a degreo of liberality inconsistent with the beat interesis of the company. That conclusion 15 uot correct, The depart- went hus always been eminently suceessful and fts business has beea obtainea at a normal cost. S. L. Dinkespiel ~The superintendent ox- presses tho opinion that 8. L. Dinkelspiel wias retained 100 long us awent of the com- company. Mr. Dinketspiel secured for us A& large amount of desirable business. The wen whom he jusured were among the wealthiest and most influential in the cities where he worked. It came to my kuowledge, however, after a tume, that his business methodsiwere objectionablo ana for uhat reason, in theyear 1850, his agency was terminated. N, Iphukelspiel’s contract come under the generyl jllustration cited above, excopt that b yigs personal solicitor oaly and many modifitations were made 1o enable him to bandlo thp pe uliar class of busiuess which be wroté:! Advances were made for the same purpose. "It 15 probavle, however, that whilo thereis today on our books a large volume of busingsyof tho best quality writ ten by Mr - Dinkenspiel, a reasonable renewal interest Wil not finally liguidato the advances made,,asd that this business will ultimately cost:ismore than it should. ror any error u!;u laonl in employing this man, as well as for, pjy ultimate loss, I do not dosire 10 escapd fiom any proper responsi- pility. L Mr. Loomis T Waite, the superinterdent of insurance, disgssed at some longth the relations wnichy have existed for about six teen years betywepgi the New York Life Tn- surance company and Mr. Loomis L. White, & member of its board of trustees aud of ii< finance committee, and Lwo questions are raised. First—As to whether or not a firm, a wem- bor of which was s member of the compsuy's board of trastees and of its finance commiv 1€0, could act for it as brokers without Lav iug the opiniouf of such trustees as to the value of securities affected by the probable commission which the firm would receive oun such transastions. Second—Whether or uot the compau, had the right to purchase securities through such @ firm of brokers. The first question may be briefly disposed of without discussing by # simple statemeut of the results. In the years covered by Mr. White's connection with the New York Life Insurauce company wbout §05,000,000 of se curities have baen” purcuased by the com pan finance committes, and a cousiderable proportion of this through the firm of which Mr. White is a memboer, Messrs. Loomis L. White & Co,, aud ou the 30th of FEBRUARY 3, 1892 | June 1ast the superintondont, after valuing these securities at a tims of depression, found 1 which they are carricd on books. Such a rosult is tho all quesions us to the wisdor of the finan cominitteo's and _in far_as Mr, Wh tion influenced it is an evidence of the value to the company of this connection The second quostion 18 one of which opintons of counsel diffo 1 hava reviewod now with you the graver eriticism’s of the superintendent’s report. | shali stop hero. 1 realizn that there aro other criticisms which I navo nov reforred to and 1 do not deem it necessary to so. 1 have tried to presens to you fairly the facts concerning those of most importance, and | lieve 1 havo shows you that whilo there vo been orrors 1n the mahagement of this company, there has boen no betrayal of trust A full eriticism of errors with an equaily statoment of management doserving commendation would havo hean only fair to vou and perfectly satisfactory to me, how ovor severs those criticisms might have be but tho superintendent pf in snrance, who was invited to examine condition of this company, while prop- erly criticising whatever he deemed criticizable, omitted to state the other side of the case, and in addition un fortunatoly so stated bis criticisis as to meke it probavle that you may have misun derstood and ober rated their importance. 1 desire to reiterate my disclaimor of infali- oility and rnd repeat the message sent from Kurope 1ast summer, that in business of our wagnitude mistakes aro inevitably and we compare favorably with othors. But my in tegrity of purpose cannot bo shaken. Gen eral dot results ave the touch stones in overy business. We need not go far to find confirmation of thi Krrors have been made, verhaps, fn the management of every company doing business, but as there are some of common notorioty, I may refor to them without seeming to’ attack the com- panies themselves, In addition T will say that to the best of my knowledge and beliof all of these cases are natural experiences, in cident to the fact that no one is infallib'e, Thé Connecticut Mutual lost outright $440, 000 through the defaleation of 1ts financial correspondent at Indianapolis in 1888, The Mutual Benefit Life Insurance company of Nowark, N. J., a company eminently conser- vative in all things, lost about tho samo in Elizaboth, N. J., bonds. It is a well-known fact that The Kquitable Life Assurance society marked off in 1850 and 1500 almost $1,000,000 on real estato, and that it carries neavly 000,000 in its published statement of assets and surplus as commuted commis- sions, agency balances, ote., which is practi cally’ “anoihe form of expressing what the superintendent calls a “aebt” in the case of L. C. Vanuxem & Co. In the re- port of the department examination of the Mutual Life .Jnsurance company made in 1800 1t was stated that $080,701.48 had been charged off to profiv and loss on account of its oftice buildings. After naming these casns (and others might be reforred to) wo have simply recited o list of average errors, which, m pro- vortion to the interests at stake, rep sents less loss than tho experionce any busin with whick the ma York Life [nsurance company mvites com- parison. 1 referred: in one of the oponing paragraphs of this letter to the new and largor responsibilitios which have been met 1o the best of our ability within ton years. Amongst these has been the growth of cer- tain_evil practices in the conduct of the business of life insurance. Several sugges tions for their remedy have been offered, but for rheir complete reform it does not seem to mwe that any adequate remedy has yet been named. The worst practices, the most de- moralizing, and in euery way the most.rep- rvehensible, are the giving of rebates to in- surers and the more or less con- stant attempts of companies to entice into their own service the agents of competi tors. Tnis is a natural result of fierce com petition, and in my juogment should be speedily eliminated, and it seems to me that the one and all suficient remedy would be, and I desire to goon record as endorsing that plan to limit by statute the amount of insurance that a company shall place upon 1ts vooks. That aniount having been reached, the incentive of that company for obtain- ing new business is eutirely taken away and it 1s practicay eliminated from the contest. This might disappoiut umbitioas managers (myself included), out from the point of view of a citizen, it would be altogether ben- eficial. Such a law would tend to give the younger and smaller companies a better op- portunity to grow, and would greatly strengthen and extend the boné. ficlont work of lifo insurance, b, at once curtaling orrors in the conduct of the business, and widening the flold of 1ts operations. In couclusion lot me say, when my oficial relations with the New York Life Insurance company began twenty-nine years ago, its the company's bost answer to of ss of which I have kuowledge and ment of the New asscts, after eizhteen of existence, were ' less thon 2000000, and its surplus loss than £200,000. 'Its history sinco. its officially dctorminea nssets June 20th last of $120,000,000, 1ts 813,000,000 in surplus and its annual income of over 30,000,000, 1 submit to your impartial judg: ment as the achievements of my associates and myself during tha administration of our trust.” I remain yours faithiull W. H. Beess, President. - M YESTERDAY'S SECOND EDITION, | Results at Gloueester, Groveesten, N. ., Feb. 1.—Weather clear: track heavy. First r co, five-olghths of n mile, selling Ponzanco (ihie favorite) won, Willlum Henry ond, Eana third, Time: 15, Second rico. six and ono-fourth furlong selling: Umilta (the favorite) won, Jersey second, Comtorter third, Time: 1 Third race. one and otie-clzhth miles, sell- Birthday wou, Crispin (the favori Eblos third, 1hs mile selling: ( nd, Black burn (the cite) third. Time: | Fifth race, five-sighthis of w mile, selling: Guard won, Juck Murray second, Emina J. (the Phnie: 1074, Nixth rac arters of wmile, soilin Richal won. second, Little Addic (the favorite) thira, Time: 1: Hall Coulan't Do 11, Citicaco, Fen. 1.—Tonight at Battery D armory 5,000 people saw Jim Hall, the Australian, try to stop Miko Boden of Phi delpuia in' four rounds with four-oun gloves, 1L was an exciting struggle, but Hall, though plainly Boden’s suparior by far, failed to knovk out the Philulelpbia man: wade Boden clung to wrestling tacties and bt to punish Hall no att IKaxsAs Ciry, Mo, Feb. 1.—Tnore is a pro- ject on fool Lo organizo & new winor western leaguo, and a strong effort wili be made to get the matter in shape. 'I'ne towns which it 1s proposed to have in the new circuit are St. Joseph, Lincoln, Sioux City, Des Moines, Quincy, Kansas City, Kau.,' Topeka and Peoria. A circular hias heon seut out from St. Joseph to all of the towns which it is thought will tako hola of the project, and favorable answers huve been received from u number of the cities, A neeting will proba bly be called shortly to consider the mattor, Golng at Gutt Gurresnera, N.J,, Fob, 1. g P'vack was in fair condition today, the attendance was large, Vlirst race. five furongs: Rlas won, Van Dy ke second, Alzebra third Tie: * 1:0 Second race, six furiongs: Mohlcan won, Juy I, Dee second, Maxim filly third, Time! 11K, Thira race, six and one-half furlongs: Duke John wou, smuggler second, Prince Howurd third ue: 1524, Fourth race, one mile: Mabelle won, Ran- cocus second, Text third, Time: 1:45, Fifth rac ive furlongs: Once Again won, ond, Swifter thi Thme: 1:04 I ruc lo: 1 f 5 Grippe won non second, hird. Toledo WL Have w Club, wEno, 0., Feb. 1.—Special Telegram to Tug Bee | —Valentine 0. Ketchaw and oth ors have nlaced Toledo ou her base ball legs, aud in the Western association. Dresident 0. M. Evaus and Manager Gus H. Sehmels of the Columbus club visited the city today, aud aftor a short talk with Mr. Ketclam conviuced him that Toledo wauts base vall. It was decided Lo weet in Columbus Lomor- row, when Mr. Ketcham will take the vacant vlace made for Toleda at the Chicago meet ing. About §0,000 will be put in tho club, Both Men Were Tired, St Lotis, Mo, Feb, 1.-Iu the wrestling wateh here tonight between Max |uttberg of Now York and B. 5. Mcladden of Missouri for the 140-pound champlouship of the United States, Mefadden won the lirst fall in one hour and twenty-five miuutes, bat owing to the exbausted condition of the men the matoh was declared off. A new one may be mads | agreed that when Governor Bovd went back Dangerous Position of the Big Transatian- tic Liner Bider, HER PASSENGERS SAFELY TAKEN ASHORE Accountsof the Accident Told by the Pas- s O the Vessed's Offic for the ¥ Cooln —A Thick fog Responsit sol Runnlug Aground, Loxnoy, Feb, 1.—On a rocky ledgo of the Tsle of Wight, only nine miles from Osborne hovse, wuere Queen Victoria is, the big steamship Eider of the North German Lioyd company, is rocking fore and aft, her bows and storn in deep water. Two hundred of her passengors have beon landed in surf boats and 300,000 in cotn, which is part of tho steamer's froight, has been brought from tho hoid and piled in sacks on tho storeward sideof the main deck. If serious danger should aevelop this coin will bo aropped overboard upon tho rocky ledge whence it may atauy time be recovored by divers, Cutting Through the Fog, At about 9 o'clock last night the noso of the big steamer was cutting through a denso fog trying to find the Solent between the Isle of Wight und tho English mainland. She was vound in from New York January 23 to Southampton on her way to Bremen, which is her homo port. The Needles and St. Cathurino lights should have been kept on her right side aund the mainland lights at the en- trance to tho Solent on tho left. Iu the dense fog, however, the Eider dropped south of what snould have been hor course and at 10 o'clock was heading doead on to Atherfield ledge, a dangerous formation of rocks on the southwest coast of the Isle of Wight, and soon afterwara stranded upon thom. To judge from her vosition the Eider evidently was carried by a roller about half way over the ledize and was then dropped on the rocks. She lios with ber bow and stern in compara tively deep wator, her midship section reat ing on the ledge, Efforts to dislodge the steamer at the next flow of the tide were not successful but many powerful tugs are about the ship and it 1s yet hoped she may be pulied off. Among the first passongers landed from the Kider by the life boats were Mr. Pickard of Kansas, Mrs. Martin, Mrs. and Miss Grant and two children of Now York, Mrs, Wallsover and threo children of Brooklyn, and Mrs. Hendig, Mr. and Mrs. Abraban, 1. M. Keller, Mr. aud Mrs, Ashendor and Mr. Rankin, Account of a Passeng Mr. Ashender was interviewed after he had reached the shore and e gave an account of the accident and of the scenes attending the stranding of the big steamer. Ho said that at the time the Eider struck on the ledge the weather was foggy and 1t was ouly possible t0 s00 objects a short distance away. Two lights, however, wero visible. Tho passengors were somewhat startied when the stoamer first wenton the ledge, but they were soon reassured by the nows that there was no danger. No confusion occurred among the passengers and no alarm pro. vailed, owing to the assurance of tho steam or's ofticers that the vesscl was safe and as sistance was uear if it was needed. So con fident were the passengers on theso assurances that, actiog under the advice of the captain of the Eider, they were all roluctant to quit the vessel on the Atheriold life boat when the life savers succeeded in reaching the side of tho steamer and offered thom the transfer to the shore. ‘'he life boat remained ai the scene of the accident for some time, but the crew said their services were notnecessary, so they declded to return, and they left the steamer without taking any of the passengers back with them. o Life 1 Arrival of t Whon the Brightstone lifo boat came alongside of the steamer later ou, the cap- tain of the Kider again refused the offers of hielp from the life savers ana the boat started to return to the shore. Thecrew had only rowed a short distance, however, when M. Ashender deciaed that as the steamer still remaned fast on the ledge, and that as there scomed to bo litte likelihood of ber getting aflout, it would perhaps be the safest plan to o ashove, and he there upon_shouted for the life savers to como back and eutered the boat with tweive otners Soon after the two life boats began landing passengers as quickly as possible. These took refugo temporarily at the Black Gane hotel, while those landing at Brightstoue, pro cecded to London. The pussengers con- curred in the statement that there is no ap parent danger to the vessel. By mightfall six tugs had arrived and wore awaiting the attompt to tow the vessel off. During the day the Eidor sunk on the rocks cousiderably about half o mile from shore, thoseas breaking over ber. A dispateh sent at 10 pan. says: “All passongers and the rest of the mails have been safely landed, The crew remained aboard proparing for the at- tempt 1o tow the steamer off. The attempt will' be made at 1 a. m, safely La The last bout-load of passengers was taken oft amid the rejoicing of a largo crowd on the beach. The réscuing crows received an ova tion, The specie remains on board the ship, ‘'he captain thinks the vessel will come to no barm during the night. The weather is finer than during the day, the night being clewr and starlieht. The landing of the Eider's passengzers by the life boats became somewhat risky after 3 o'clock in the evening, when tho wind, which was blowing dead ashore, freshencd considerably and threatened to increase to a “This change 1 the wind rendered tho ations of the life boats very dificult and much care had to beexercised in the manage- ment of the craft, but all were finally drugged fafely through the surf. Tl captain of the Kider took procautions to save the large amount of mouney which was being shipped by the steamer. He gave ovders to bave it carricd from the piace whore it was stored to the deck und a lurge number of bugs, contaiving in all §300, 000 in specie, were soon piied on the deck of the vossel facing the shore. Tne big heap of money was 5o arranged as 10 bo ready should the nocessity arise, to be at once sunk in a safe place among the rocks, wh it could afterwaras be recovered ensily by divers, Mise 1 His Posit Cuptain Addison, ove of the passengors of tho ider, in givinz an account of the acci dent, suid that tho captain of the Eider caloulated that the vessel was o fow miles westward of the Needies, a cluster of three islands 1o the west of the Isle of Wight. The steamer struck on Atherfield lodge Just @s the lead was being hoved. A sounding taken only tive minutes previously had indicated ten fathoms of wate ither the Needles light nor the St Catharines lignt were visible when the Kider struck, “The men i charge of the St Catbarines nts, ed on § re, Ligot say that the fog sireu was 1o full - tion at the time of the stranding of the steamer, and was Glowing all through tho four hours the fog lasted, and that the electric light with which St Cathurines is furmsbed was bu ing at its fullest power. The weather was s0 intensely heavy, however, that al though the Kidor was only threo miles dis- tant from $t. Catharine neither the sound of the siren nor the rays of the light penetrated the fog to give those on the steamer any int mation of the danger with which they were threatened. Kelief for Russin's Starving. Feb. 1.—[Special Telo to Pue Bee|-Saturday evening verybody's Friond” was presented vy local talent for the bonefit of tho Russian sufferors. The house was packed, each per son paying the price he desired for seats, rauging from #1 to&. When the receipts were counted today it was found that over #00 nad heen realizod. Ceoan Rarios, Ta., gram - Will Atford an Escort, The Bamoset club held an impromptu meot ing at Moynihan's last night aud it was to Lincoln to occupy the governor's chair the Samoset club would e iu it. Sevoral prowi uent membars of the club stated that fully W0 members of the orgauization would ko 'RAN O A LEDGE OF ROCKS ! Lem Wworlh to the company something | wore than §4,000,000 above the cost value, at | down with (overnor Hoyd to see him take | possession of the governor's office. At special meeting of the Omans Guards tield Inst evoning, the company decided to #ccompany Governor Boyd on his trip to Lincoin, "This move on the part of the wuards emanatos wholly from a nonpartisan | standpoiut, and the action was taken because Jarces B, Boyd has been declared governor of Nobraska. Fully fifty members of the | ruards will make the trip to Lincoln with tho governor. - FREDA WARD'S MURDERESS. Alice Mitehell and Her Friend, Lillle John- son, Areaigned Mewmpnts, Tonn, Feb. 1.—Miss Alico Mitchell, the murderess of Freda Ward, and her friend, Miss Lillio Johuson, were ar raigned bofore Judeo Dubolse in the crin court this morning. They wera accompanted by several members of their families. Both young ladies were heavily veiled Judge Duboiso ordered the prisoners to stand up and remove their veils while tho indictment was being read. Miss Johuson oboved, but Miss Mitcholl kept her faco covered. Neituer showed any emotion. Deputy Clerlk Huntor read ‘tho indictment and the accused wora called ipon to plead to 1t Miss Jounson said, “I am not guilty,” and dropper heit veil inatanter. Miss Mitchell was immovablo. Not . sound es- caped her lips. Colonel Gant of counsel for the defense in- terposed in hor behalf, saying: “Your hosor, we plead not guilty as to Lillie Johnson ana present insanity a's to Alice Mitchell.” v}'Ill' vrisoners were then returued to the Jai "The defense will present their plea in Miss Mitchell's ease in duo form some time this weel. Itis their intontion to summon number of medical experts to testify bofore the inguisition of the lunacy and will take time to got them in hana. Tn tho event Miss Mi sane which will bo th Miss Johuson's e onel Gant, “In law nono ly ¢ deal,” answered tho colonel It s nov roasonablo to supposo that sane person would conspire with a luaatic to commit murder. No application for bml for Miss Johuson will be made if the case shall be called for trial at an early day Justico P. M. Winters has boon for the defense. hell is declared in- effect of a verdiet on ked a reporter of Col- mory caking, a groat any vetained POLITICS, SOUTH DAKOTA YANKTON, S, D., Fob, 1.—[Spocial Tele- gram to Tue Bee.| -Otto Peemillor of this ity, chairman of the democratic state con- tral committee, has called o meeting of t committeo to oceur in Huron Wednesday, February for the purpose of calling & state convention to clect delogates to the national convention to be held in Chicago. "The state convention will probably be beld in this city Omaha ¥ Yaskros. 8. D, gram to Tue Ber| rms Involved, Feb. 1.—[Spec ~C. M. Wilson. a heavy dealer in general morchandiso at Avon, a small town in_Bonhomme county, was closed on o foreclosure of chattel morteages the shoriff today. Wholesalers in Sioux City, Chicago and Omahu will be losers to the aggregato amount of £12,000. Two Sious City firms are, however, protected. her Ar British Prince from Phil al Tele: At Queenstown adelphia. 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