The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1871-01-24
was an exceedingly bold and daring attempt;
and as the authors of 1t were caught they
should be made TO serve as warning.
Insurance Frauds and Failures.


Ing risks. This disaster, like the disasters
which recently be-ell the Great Western
Mutual and the Farmers and Mechanics, Of
New York, revives the distrust in fire and
life insurance accustomed in England last year
by the crushing failure of several great British
companies. The public mind in Great Britain is
still agitated by discussions which then arose
as to devising some means for protecting the
community by legislative Interference with the
insurance business. A bill was introduced
into the House Of Commons by the Right
Hon. Mr.. Cave, large portion of which was
described by the Chancellor Of the Exchequer,
Mr.. Lowe, as consisting in sort Of family
resemblance to the very stringent laws that
had been passed in the State Of Massachusetts. "
The failure of thu Monitor Mutual is tho
Massachusetts,, where, through the influence of
Mr.. Elizur Wright and other authorities on the
subject of Insurance, official inspection has
been reduced to what was considered an
almost perfect ard certainly an effective sys-
tenn. In the debate on the bill to which allu-
sion has been made the Chancellor of the Ex-
chequer also referred to the "despotic" con-
troll exercised in New York over the COM
panies, and to the testimony adduced ''that
those American Offices had certainly succeeded
In giving the greatest confidence in the system
Of life assurance which prevailed in" the United
States.
The important practical advantages Of the
''despotic" control referred to by Mr. Lowe
were conclusively shown by the prompt energy
with which Mr.. G. w. Miller, the able Super
intendent OF tie Insurance Department at
Albany, recently enforced to the great benefit
of policy holders, the supervision held over
the life assurance companies of New York
CITY. No sooner had the Great Western
Mutual become involved in financial difficulties
than it was compelled, under a decision of the
Superintendent and in accordance with the
strict law Of the State, to surrender the
management of its affairs. Mr.. Sidney Ash
more, editor of the Protector, an influential
journal devoted to insurance interests, says
that the failure of this company cannot be
attributed to any defect in the, system, but
rather, perhaps, to misnaaagement He adds
that its significance is in the exemplifcation 1t
affords of the admirable working of the law,
which, having carefully watched the Preserve
fund" In the hands Of the company. comes for
ward at once, when this is threatened with
encroachment, to protect the interests of the
assured
1t Is manifestly on a vigilant supervision Of
this ''reserve fund.-" aud on prompt interfer-
ence so soon as the discovery shall be made,
that 1t is in danger of being infrlnged upon,
either through mismanagement or through
dishonesty, that tle public can mainly rely as
both preventive and remedy against insurance
frauds and failures. The distrust which some
have expressed in fire and life insurance COM
panies on account Of the costly buildings
erected by them and Of the princely salaries
accorded to their chief officers is altogether
unfounded. Such palaces as the Equitable
Life Assurance Society and other great compa-
mics have lately built are not only architectu-
raj ornaments to the city, but are also very
xemunerative Investments The Equitable
Building, for instance, which cost . little.over
two millions, yields a yearly rental of more
than one hundred and twenty thousand dol
lars, beside leaving the Offices Of the company
rent free, thus making it equivalent to ten
per cent Investment. The kind of investments
In which alone the charter Of Anew York
company allows it to place its continually
acoruing funds is in itself valuable
NJ ~u.%v - -
which would not be acceptable to
the most careful investors, such, for
example, as 'bonds of the government and Of
the State in which the society resides. and
real estate within the State of New York, or
Immediate neighborhood of the city of New
York, either to bold in fee or to grant loans
upon The salaries paid to the principal
officers of the great New York companies COM
pare reasonably with those received by officers
of the great companies in England, where ex-
perience has established the fact that only
ample salaries can secure the requisite combi-
nation of the best executive talent and the
highest integrity. With such guarantees as we
have specified, with regular and frequent
sworn statements of the auditing committees,
with strict accountability on the part of the
officers for even minor outlays, with thorough
examinations on the part Of the State inspec-
tor, with the utmost vigilance over the condi-
iion of the reserve fund and with the rigid
enforcement Of all the provisions of the State
insurance laws, insurance frauds and failures
must henceforth be rare exceptions, which
only prove the rule that the Massachusetts
and New York companies are, for the most
part, worthy of the confidence enjoyed by
them throughout the country.
Personal Intelligence.
vtscOunt Treilhard the French Minister to WASH