The evening world. Newspaper, September 29, 1905, Page 3

et PRICE ONE CEN pre RN TR BANKER SCRE ADMITS HE WAS INSURANC E DUMMY Head of Kuhn, Loeb & Co. Frankly Admits as a Witness Be- fore the Insurance Investigators that as a Director and Finance Committee Member He Did Not Know How the Business Was Run. “The Equitable was at the mercy of one man—! either Alexander or Hyde, It seems to me it was all Hyde. Everything was Hyde. “ [he vice of the entire insurance situation has been irresponsible power. | ‘After the last election Cornelius N. Bliss told me that Mr. Hyde had contributed to the Republican campaign fund, “T.PRESUMED THAT THE EQUITABLE’S MONEY HAD NOT BEEN SPENT. “Responsibility for the scandalous conditions in| the Equitable lies with the State Insurance Depart:| ment. can go after the Superintendent of Insurance and be| his bookkeepers? “Il have not asked any favor asa director of the Equitable Life Assurance Society. I have granted many favors. I have not done as a director of the Equitable any wrong or commission. I may have done something by omission, It is a case of hindsight and not of foresight. But my conscience frees me from| any censure of wrong. I have been as good a director as I knew how to be. “I never heard of the J. W. A. No. 3 account or the George H. Squire account or the Louis M. Bailey account while I was a director. I never knew that the Society’s accounts were carried in anybody else’s name except its own.’’—JACOB H. SCHIFF, eS Declaring that in these times the directors of great corporations and institutions are to all intents and purposes no more than dummies, Jacob H. Schiff, senior member of the international banking house of Kuhn, ! Loeb & Co., and formerly a member of the Finance Committee and a director of the Equitable Life Insurance Society, to which his firm has sold | millions of dollars in securities, to-day became a witness before the Legis- lative Insurance Committee. He repudiated the system under which modern life insurance socie- ties are controlled, said he had learned by experience not to figure as a dummy again, acknowledged that although a member of the Equitable Finance Committee he did not know of the society's contribution to the | last Republican National Committee, but supposed that it had been made by James Hazen Hyde personally, and repudiated all knowledge of the “yellow-dog” fund. The calling of Schiff at this stage of the investigation, came as a sur- ef the investigation who has been fol- lowing the inquiry. In the programme of Ohlef Counsel Hughes the banker ‘was not to have been called for a week. It is understood that Mr. Schift asked to be called before the time originally eet, as he will shortly go abroad in comnectton with the flotation of a Rus- sian, loan. In the beginning of his examination Mr, Schiff said that the propriety of his being a director of the Equitable and dealing with the society as a seller of aeourities had been considered; that the advice of “emincat coun: ad been taken. 41 want to say here, Mr. Hugh: continued the banker, “that ander the prevailing system of director- ships in New York a director ts at the mercy of hin executive of- Whey ask for advice and officers of the society. He is asked for advice when it sults the executive offi cers; and !f, under the prevatling ays tom, an executive officer wishes to do wrong or wishes bo conceal anything from his directors or to commit trregu- larities such as have been disclosed here the director ts ¢ ti powerless; he aan oady, act an an aed capacity, and he can much thi eee GL ae Q. Of what See, then’ are direetors, except to pomnely. wiv. the formal pro- vision of the law? AT think tha: ue avery proper question, and they are of very little Mraatioe) us Directors Mere Dummies, Q. Well. you found that to be the gate in the Equitable Life Assurance Scelety; during the they you were simply a. director; the meetings were four times a year, you attended these meetings and you heard what was ald, but very Mkely you had no firrt-hand information as to the matter, and then there would be special meet- ings’ from time to \ime at which you would ear what was said, and if angbody wanted your advice you gave it; otherwise, you know nothing of the transactions personally? A, I don't to say—I gave you a general don't want to say, however, t didn't give advice’ unicss it was wanted. very frequently, when thi ny which i srrsae nt should ‘lve. P advice, and was ked, I tok the Mberty Me Tania bala “aovine ‘fave it, sometimes very forcibly. Q: That ta ‘when Matters came to your! attention, where you thought your ad- vice could be given? A. Yes, wir. Q. Amd would be of value? A, Of course, the sehen ent of the affairs of the soclet: in the hands of the! ficers. then do as they please. ‘{ have refused time and again to become a member of the Executive Committee of the Equitable because T ia not wish to sit in judgment on transactions in which py firm was in- terested. “As I have sald, the executive oMcers of a corporation in these days have ex- Clualve control. If they wisb to conceal anything wrong, they do go. The dl- Do you suppose the directors of corporations | \a executive of annene zon dno meen aad at to tell your ) Henry BH ae as the owner ihe fa aa, ae thone wie th 2 “ od iy to. Peale, “yOu would.” of “Gounee, ave gone i T am not @0 eee y time have gone én T could a market ana’ Dbuaht fi res of sock, Minot T ene nave and continued and I don't ae I emp at aT dou don't thin ik i vous Save noe sine tn " Could Have Put Him Out. ~ it if hi not ed, of Pe cout haveip even Vie r flection? / ae ‘could have put me out. ‘ag the same, in’ the Meal ned tw the control of we araclont ea | ‘But I want to add there is a Brent difference im resigning at reotors henr of things when it pleases the executive officers to tell them, “im the Equitable the control of the socitty was ex usively ia ‘by the executive officers: On Equitable Committees. " B3 jong. were you a@ director of Py Equlteole Life Scclety before ypu ‘Degame a member of any committee of “board? A, 1 can't Bay exactly, but even or oligiit yours, is ‘ wat it, Wi jas about veurd ago ne of its ‘earamittees? Baca alee , that. ‘or t ina mh ot that we e Finance Com. aber tated Prior w the time Whicl yin the , mennnes fe roto aE Ane mtly lot tim | m member of the Finance Com- mittee? A. I was asked to become member of the Finance Com- mittee, as it wanted my judgment on the purchase and anle by the society of cerfain securities, and in order that the officers of the soctety and the members of the Ezscuttye Committee could feel | free to advise with me as to se- curities the soctety intended to purchase, or had purchased, Q. They were already free to advise with you, were they not? A. They prob-| ably felt that if I was a member of the| ce committee and followed more closely the investments of the society they could better advise with me as to things, that should be sold, securities that uld sold and @eplaced by others, and in the making of invest- ments that were made. By-Laws Disregarded. Q. Now, when you first went on the as I understand it, t your duties were; did you take up. the question of the propriety of this custom of leaving the matter to the Committee on Accounts? A. T ald not. Q..Do I understand that It Is frequently the case that by-laws are disresarded by customs which spring up?" A..It te aif- flenlt to answer for others: apparently in the Envitable they have been. Q. You mean to say you (the Finance Committec) were there to heer only what had been done? A. That is cor- rect. Q.Well, It was not of very much im- rtance, was jt, really, that you should 2 there? A. Of course not, especially as I belie was the only member of the Finance Committee for a very con- viderable time. I believe for m time Mr. Cornelius M. Biles and I Srere the only members of the Finance Cemmittee who were not members of the Executive Committee, and afterward Mr. Bilas rorlgned and I rematn- ed the only member of the Finance Com- mittee that was not a member of the Ex- ecutive Committee., I called attention ft nnd eald prectically in the Finance Committee the Execu Committee was only to sit in Jadsment on itself and that ought to be chunged. and that the Ex- ecutive Committee ought to report directly to the committee, Q. Now, I understand that the fact of ‘the matter waa that the Executive Commities made and considered inves!- mabe etter ther had tham made. A. Trusted to Others. Q. Or dealt with sales of securitios, by way of approval after they had been completed. A. That was vided for by the bylaws nothing else. Q. And that with reference to the im- portant power of supervision, the accoun: which were under the bylaws in the coi mittee, the committee did nothing but have two of the executive officers them- selves that everything was all right. A. ‘The auditing ‘committee attended to it, end the special committee of thé finance committee, as you have ‘read to me, yes. Q. Yes. A. But as the position, Mr. Hughes, that important officials are hon- est men, the members of the finance com- mittee assumed that they were acting especially they could Q. Of course, checks are entirely un- necessary if all men act honestly? A, Those checks are e put into the hands of the deleg: e Auditng Commit- tee Is a committee appointed by the chairman. In every committee a chair- man appoints, as you know, a sub- committee, and you cannot suppose that men follow irregular practl As to this, I believe, and it h been my vvactice, belfeve, THAT EVERY MAN IN/THIS WORLD IS HONDST UNTIL I FIND OUT THAT HB HAS BEEN DISHONEST, AND IN GOING THROUGH THIS WORLD 1 DO NOT SUPPOSE THAT ANY MAN 18 DISHONEST UNTIL I FIND OUT THAT HE 18 NOT HONEST. THAT HAS BEEN MY) PRACTICE’ INDI- VIDUALLY, PRACTICE AS A DIRECTOR OF THR NOLITA: z ME, jin view of the fects been. brought ‘to lent ie it’ nox your opinion as a citixen that there should be a closer supervision of t actions of the executive omce surance’ companies? ‘A, I HAVE NO DOUBT AHOUT IT, BUT NO LAW WHICH YOU MAY FRAME AND WHICH THE LEGISLATURH OF THIS OR ANY OTHDR STATE MAY ENACT—NO LAW, HOWEVER CLOSE IT MAY BE, WILL PROTECT YOU AGAINST ACTION OR DISHON- BEST MBASURBS, Q. Do you think It is entirely hopeless to endeavor to haye supervision of the actions of the ex a ome: and condition of things In which they will lly responsible and held ac- The Superintendent of Insuranc: ‘This Siate pays the Superintendent Ai Nar Tes 4 Muary, tie jas a very int ition end he: is sub at ef accountants. Do you ¢: yeu racor y Aye every, Hise Be ‘finance ea Aesountinte Pale he gonontte, OF nieve that # oclety jurence, t hal Sard ny ately of AND HAS BEEN My |¥! to] ee te that? | SkKetched for The Evening World By T. E. Powers ecutive. they were exe ; 1 notice he: McIntyre and Mr. pose they were. Q. Well, who was the c The chairman of the mittee; I don't know chairman. I BELIEVE MR. HYDE Jordan. FINANCE COMMITTEB YEAKS. pon'r WAS ALL HYDE. ALL YDB AND ALEXA Q. Well, that gives point tion, Now, a moment 4 referring to a committee representing the Board < reporting, as I understand Board of Directors, and very estimable gentlemen? I take your word for hy that. they executive who was LIEVE THE CHAIRMAN THINK WAS MR. HYDE (LAU ft that were Mr. A. 1 sup- Who appoints them? hairman? A com- its + AND I DE oF or 1VER). NDE, to my ques- go you onal of Dire you, to the consisting of A. Yes,’ sir. Will Not Do It Again. Q. Now, did these gent! supervising | the ‘accountat ‘ocmmittee composed of tive officers themselves? cause the chairman ha lemen act in hrough some ex! A. Yes, the by right —was hiaprivilece—to appointthem he appointed thes: committee had abvat ft. You might immedlately to the ver: of the whole tr ayatem, You that Mr. Hyde owned of the stock. gentlemen, an directors Jo: ve the Equitable. SO W WE ALL 1 AND I DON'T THINK 1 1f#Ww THE SAME AGAIN, Why did they maxe a They made a miatake that directors in a soclety wh only by custom but act merey of one man At Mercy of One Q. Then you don’t think Bood thing for an Insuranc pany to be at the mercy AT any corporation to be at any one man. Q. In other words. in irresponalble power TION, IN ¥' NOTt A. TO A GREAT the manner elety Was Co! i? ras I know. cre Mr. Scluft profe norance of the famous $6 deg fund," and the Squ Kitxander Jordan ‘trust @. That never came attention mittee, of course, baye h sort? A. It hi not, x the clove-atter the Ine 3 was informed by ™ had made a ¢ Repub nm com but it was not fated was on his own accoun' the society, an I know, it wap not oount of the aoelety, and a fea kly 10" or society Kad heen SUMED THAT THBY ours i underst: nothing t anid You may @ mistake to become di ARN BY EXPERIENUE, SYSThM SUBJECT TO THE CONS! QUENCES OF THE SAME SYSTEM Q. Why do you say that, the management of an Insurance don’t think it Is a good t the mercy of @. Did yor take any mensure ata. je mens the as wel y botton nthe wh b a majority ay, «You you made cotorn of DID, BUT WILL FO: A Mr. Schiff? inista th nich ually Man. that ft is a mpany or com- of one man? ng for don't believe | f, fou 40 hat {s cor= EEN Li Q. Now you have explained it fully in w ducted? od hl 5.0000 ‘Hard und you w ng of chat pt that at + elvetion— Bites thar trthution paign Yund, whether tt tor for oat dd, an far for the a to wnecertain whether the funds of (he 1 AS. HAD when this ac: and t! ane naa be fy were | any] nov] s | don't Q. Well, ala tion that the 19? A. The T did not, Q. Wasn't the matter member en, nu Know of the contribu- able Society made In ple Socie.y in 19007 up in 18967 A of the Finance n for use In connection with Intiont A. L did not; never heard of it, @ Now, if Gen. tzgeraid was a loted by you, dol ut insu and pay him a premium— Paid His Premium. Q., That is a pertinent question. A. T think ft is. I have paid my pre- to cle cashier of the Equitabl urance Soclety and that 1s th vnee mins L nurse, in this particular mat- thinking of your position as r Fitz- wake some mon you would have t allotted that allot. | ‘aut able Itself, IC he had 2 A the Equit- rived the 1 i To tho ment requested. the proper applica est, that each Interest would proper propor ton, and as the rman of the Pinance Committee and he E tive Committee of the Equit- able scloty, he was charged with knowing what would be the proper pro- ded entirely ju the division? A, that you ¢ Ms falrness In making *8 garaing it? A. No. Considered Official. Q. Is it proper to say that you do not think that this request of James H. Hyde should be assented to unless the uitable Life Axgurance Boclety oft! ly requested T think that it us Vices ‘Prosident of the a request, such a she official letter: uitable soctety, signed: by ident, it would be sufti- banking-house; it should Mr. Hyde table wr Life mad ten reques of the E as i for wny Myde had au- ullot- - You think Mr, aisno Huuttabie 5 “tant the a de were very. much unite than ny would have we ident or -President. “President Gould divide A. ¥en, alr » Hugh @ You hardly mean that Mr. Hyde “Prosident of the Equitable, tor ex: ple, to himself? A, That would not right. tly. if Mr, Hy Conseque wally was embraced in the e individ. Vice presi reo + of that allot- A, You are perfectly correct, Not for Himself, did not quite golng to tuke a did ment? rstand re hin Q. BO you that he w v disclosures here w You never intentionally Hyde any personal participation. in syndicate ye did no Jou never supposed he wi he yde a ener baet you have minted. Q. We have © here, participations ‘obtained the division, of the allotment to James HL. Hyde ond assoclates, win your Q. Have you heard of any moneyn | 2 | being placed in the hands of any 1 cAll |“ANDY” HAMILTON, N.Y, LIFE AGENT, WORKED FOR THE EQUITABLE, TOO. Hamilton, legislative representative and, handler of the New York Life Insurance Company's “yellow-dog fund,” acted in the SAME C. AP. ACITY FOR THE EQUITABLE LIFE ASSURANC “Judge” Andrew This was brought out this : af yon at th sintive investiga- tion, when Alfred W. Maine, assistant auditor of the Equitable, was sworn a witnes: Maine said President Alexander of the Equitable had int duced Hamilton to him, and said they were to work in conjunct as far as possible. All told, in 1897, Hamilton received upward of $15,000 from the Equitable. |'rhe Union 7. cat erred stock by Kuhn, T v wold as | Union Pacific pr ‘ret ant was formed by u the purpose of getting |). t ato furnish It to th wald syndicate never made any profit o} | cat ha of the wyndi dicate? You have said It was to con centrate a holding of a lurge amou of stock. Do you mean by that to mal tain through such holding a the Union” Pacific Hughe Tao nat think that is a question I ought to an- swer, Well, you usat the <xpression 2 “concentrated” \holding? . Concen- trated holdings. ‘And I want to get at the pith of it A. Those intersted for their own con- venience desired to hold a large amoun of Union ific preferred stock wanted. sild something in vour state ort Mr. 4 statement” A. Yes, str Q. You refer to Edward H. Harriman? | kxomtnage A. They were not. Anven alr Q, ou never heard of an of them fe was at that time a director In A.” We assumed that they would divide ui Ulem ‘right Union Pacific Syndicate. Have so. Mot vod Gnderstand he o Hyde's signature? ined Mr, e. @. What, waa the purpose of this syn- ontrol of ‘a Let yhody who wants draw his own Infer- Harrimasy having cb- the, Roultnble TAfe Assurance Soclety? the News. ONE CENT. + Lyon's PERFECT Tooth Powder Cleanses and beautifies the teeth and purifies the breath, Used by people of refinement for over a quarter of a century, Yery convenient for tourists, PREPARED BY BA UE Lge DDE, PRICE pecial tor Saturday Only 5 Eye Glasses $1 imination of Eyes by Specialist: oar ewe, 2S ses ; OFFER IS ores. These At aS clalists onaree will, examine No matter lisse Will help eS a a eons | «ILE Ih tail ftv, AY. ih THC AV, bel. 8oIN & 86th Sis., N.Y. PAE. LRSM, be li & MoKISOn AVS, LY. Brooklyn Stores: £0 Fullon St., neor Rockwelt Place. (00 Brat), near Willoughby Av. §—To avold mistake, bring this 1B. MTH GS. y etO A. Yes, T believe ao TOR SDF Q. 7 another regard-| ine did. | BE which I desire to usk you, and that | Q. And Mr. Hvde agreed under th(s | — syndicate. You know "the matter. to | ‘0,t&ke & share of $2.50.007 A. He did. hich I refer. Have you the syndicate | @: Of the stock? A. Yes, sir, Tailor Shops: 110 Fifth Ave.’ Agreement, or & copy of it?) A. Mr,| @: You sald you did not Tegand a lite | Hughes, I’ want to say to you, it you insbrance ora: as : sp tletactory: will permit. me, es party Jn such transactions; why Leap tie Gn Reaae morse soe thar? A. Because’ In any decision una] INTEGRITY | syndicate ay would have reached—that woul ; : leans 1 ee ato oete re | Nave to go properly befors its directors | is the foundation stone of the better information than by. questions | and the life insurance company would ; and then ihoud| not be one part, but there are forty- | Atter! wish hing as to Union | nine—fifty-one—there would be fifty-one ferred ‘there nd t would not be well t has been some nle discuss’ unjust discus-|take fifty-one associates; every on unjust insinuatlon, would have to express his opinion sald in my testimony before | about It the Superintendent of Insurance, when] Q. You would prefer to have indtvia- he said Kuhn, Loeb & 0. sold $2,300,000, |uaist A. As far ax practleable, yes Q. Now, when Mr. F ek ty the Equitable Life, {it wae reported that Mr. liyde. would that that was a false report; that Kuhn, | furnish two millions and a half dol- | Loeb & Co, never had sold ‘any kind of lars? A. 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