New-York tribune., 1878-01-05
INSURANCE WRECKERS METHODS.

lNct HANNE w MElI1ODS.
PROSPEROUS LIFE INSURANCE COMPANY WRECKED
BY THE RAPACITY AND MIsMANAGEMENT OF ITS
oFFICERs-THE CONNECTICUT VALLEY RAILROAD
FNTEBPRIsE-oRIGINAL SYSTEM OF BOOkKEIP-
ING-IMPORTAST TRANSACTIONS UNRECoRDED-
TUE CONNECTION OF ME5sRs. wIGGiN AND
PURBER.
lFRoM STAFF CORRESPONDENT OF TIE rRIBUSE.l
Hartford, Jan. 4.-The indictment of the
former officers OF the Charter Oak Life Insurance Com
pany by grand jury for conspiracy took the commI-
nifty by surprsethat say form Of the
proceedDg not the fact OF the p:osccui0p surprised
people. Indictment by grand jry is not usual In Con-
necticut all ordinary criminal proceedings originate III
information by the States Attorney, and go forward
without the intervention OF a grand jury, which
is only called in IN capital cases. In this
the relations OF the States Attorney, Mr.
HammcTsey, 80 the Charter OAK Company we're such
he hayn been of counsel for petitioners 10 investigate
its aliairs;hat 1t deemed proper TO proceed upon
the formal indictment of grand iuS rather than upon
q simple Information by prosecuting officer. The
port that the grand jury had been called in Wednes
day morning and that the judge had charged them upon
the law relating to conspiracy, circulated very speedily
| and created something OF sensation The
drift Of the charge and the purpose with which
the grand jury recalled, easily under
| stood aud from the moment it became generally
known that the grand jury had the ln hand not tho
slightest doubt was anywhere entertained Of the nnding
OF trlc bill against the persons named The severity
with which the NcwYork courts have pursued deIelict
insurance officials, and the sensitive condition of the
public mind with regard to the whole subject, induced
the belief that at some time and in way the men
who wrecked the Charter Oak would be brought 10 JUS
uce but how when, one knew. Enough had leaked
out in way and another since the investigation
began to satisfy everybody that under the rotten
ness of its management there was great crimnality
but open question whether not the processes
a and concealed
ton The States Attorney before stated was labor.
ing under the embarrassment Of having heretofore held
hostile attitude to the company whereby his action as
prosecuting officer, IL taken unadyisedy, was open TO
miscOnstruction and the Governor who was liable to be
called for acquisitions for the consprators out OF the
State was likewise embarrassed by The fact Of his having
been at time retained by the company counsel,
and having professional knowledge Of the companys
transactions. The finding OF indictment by grand
jury relieves the embarrassment Of these officials and
prevents any possible misconstrueoa OF their conduct
! or motives.
| ITS EARLY HISTORY.
The condition Of this great corporation the blindness
and folly OF one management the reckless dishonesty
and wickedness Of another. and the wel-meant and
earnest efforts 1t, OF another with ali its comp
cations aud hopes and discourage
mens have been long the sub OF public discussion
that may be amss 10 recall the history OF the COM
pany its salient features since its incorporation
l.
great corporations in its general characteristics went
up swimmngy its grew rich with rapidy aud
ease and their greed grew with their wealth to ques
tionable practices succeeded transactions indubably
dishonest; with these came the inevitable enangemens
and consequent struggles then the desperate cndeavors
of desperate to retrieve themselves, and in the end
disgrace and ruin. These are the rapidly succeeding
stages OF the progress OF the Charter Oak Life and its
managers from early small beginnings up to large and
dazzling success from the crown OF which IL went
down the sharp descent 10 bankruptcy IL serves TO
! point moral: perhaps It may adom tale. IL was
chartered in 1850 and of the first companies or
ganzed in state The original corporators under the
charter were Calvin Day. Ezra s. Hamilton, b. Powell,
| Samuel Colt Chauncey Howard, Noah Wheaton and
| Jumes G. Walkley. OF these only
mained in the management at the time OF tho
Furber transfer. ana this was Mr. james c. Walkley,
the Prosdena survival 1t wond appear, not OF the
htest II was organized on capital OF 100000 with
provision the charter limiting the dividends thereon
to per cent per The charter He'd for the pay
ment of 5 per cent at the time OF subscription and
more within twenty days. the remaining 90 yer cent be-
ing paid in the notes Of the subscribers To the stock with
approved security. As matter Oh act suppose there
WAS than 10 per cent paid uhouSh OF this
am not absolutely ccrtain-so that the actual capital
upon whca the company began business was $4,000
cash and $l.0,O00 in the notes OF stochhold-
crs. There no very great risk in
cured at the outset, bus the management
was in the hands OF men Of character and financial
standing, and had the confidence OF the community.
There were very large profits in the first few years OF
the companys existence, and nothing in the business to
excite the envy the specuator tile greed Of the ava
nc ous After few years it passed into the hands OF
different ser, and Mr.. Alfred Gil. believe, became pres
ident with board OF directors Under this regime
the company scarcely kept mp lis early reputation at
least its hold upon the confidence of the community dOcs
no; seem 10 have been 50 stgon under the first
a-crs TO this board there scc Cdcl the Walkey
agcment under which tho concern fist came 10 grief,
with Mr. James C. Walkey president, and Samuel H.
White as vice-president and treasurer
THE GREAT TEMPTATION.
Jp TO this time the stock had varied very little from
par or little above though sales few aIS quota
tions II is not easy to fix the precise time when
the profits OF the business managed by Walkcy and
White began to make the stock exceedingly valuable
IL was time during the ana was partly occ2
sloncd presume by the large increase in the revenues
OF Of the lie insurance companies at the North by
the lansing of policies held the south. Tie
Increase of profits Which, under the provision oi the
charter limiting dyidends 10 etcckl odes. rshifully
belonged TO the policy holic;s aI sioll lave been
apportioneG. excited e cupdiiy Of !ac managers They
could bear TO these large Of money 10 10
policy holders, who had done nO;lling FOR them
| cept contde in the companys promises, and the
| honesty OF its officers. # seemed TO them
that the credit earning such large profits belonged 20
the officers and stockholders. and tnat begyHry per
cenwhich, upon the basis 0t 10 pr cent pad H. was
actually SO per not sufficient compensation for
their large financial SKILL and for thu Use Of the ncstegg
OF capital Of $4,000 Then there came all sorts OF
lodges and subtertuges and whipping the dcyil round
the stump to eyadc the per cent restriction. and
give the stockholders tie money that belonged to the
There reports thai method taken
| for dividing up this surplus was 10y the appoint
meut of members Of the boari OF directors to