The Jersey City news. (Jersey City [N.J.]) 1889-1906, 1891-05-06
BENEFIT SWINDLERS.
Colonel Harvey Proves They
Are Illegal, But Says He
Cannot Touch Them.
QUEER VIEW OF THE Law.
Judge Garrison of Camden, How
ever, Gives Them over to the
Grand Jury for Prosecution.
snecial 10 fhe Jersev citv Nelos.

ORANGE. May 6. 1891 have had long
and interesting interview with the State
Commissioner Of Banking and lnsur-
ance, Col. 6. b. NJ Harvey. the results of
which are printed below. The subject
which has attracted public attention far
aud wide has been the growth OF specula-
tive companies, masquerading under the
name of benevolent associations. That
they are fraudulent and speculative 10
the most reckless deGree has been shown
by the recent failure of some OF them and
by the inducements offered the credulous
by others The position OF the State au :
tLcrities toward these concerns Is mat
ter of large iinportance; but II Is also very
important that the differences between
them aud legitimate fraternd organiza.
tons should Dc clearly unuerstood. ana
that State action should be based upon
full knowledge of the question
The Commissioner was nr6t asked IN
reference TO the so-called beneficial orders,
OF which SO much Just complaint mas Deeh
made. He said
"AIl these companies which make a
pretense Of doing business IN compliance
with the laws Of New Jersey are incor-
Hporated under what Is known as the BEN
&esolent ana Charitable act. TINS act was
xdrawn Tor the purpose indicated by its
G.
clusive objects shall be to relieve or sup.
mort such of its members thereof, or sucn
persons as shall by sickness, casualty,
old age, or other cause be rendered in-
capable of attending TO their usual occu-
patton or calling, to discourage 1ntemper-
ance, etc. In other words, the business
OF all societies desiring TO extend aid to
Individual members was retricted TO BEN
evidence and charity pure aud simple.
But In 1889 a supplement TO this act was
a. -. rrtta ha n fFnI
for associations Incorporated under this
act to contract with their members to
nav oeath benefits according 10 the rules
and bylaws adopted by sucn association
This supplement certainly authorizes
species OF Insurance. upon the lives OF
mem bers, but it does not authorize any
society to establish agencies. or to reaon
out in any way to do regular lnsura nee
business with the public
N'Can you give su instance OF a society
which would serve as a type of those
which are not allowed to do business
under this act 2"
CLEAR EXAMPLE.
"a better instance OF tnIs class could
mot be desired than that afforded by the
one which collapsed in Philadelphia last
week. This society was called tue bsne-
fetal Order of Earnest Workers. IL was
incorporated under the Benevolent and
Charitable act Of this State, Tut its offices
were in PHILADELPHIA, and its officers
sre residents OF that city. Besides
maintaining an office there II established
agencies all over Pennyslvania and
throughout the so uthern section OF TINS
: State. have copy of its prospectus IN
my hand, and It IS simDly amazing that
anybody should have ever pub dollar
into the Golfers oil the men VINO Iounoea
the so-calleu organlzation. In THIS pros
pectus the cost is divided as followsi-
Entrance fee. 50; expense tax, 50; weekly
dues for thirteen weeks, S2 per week, go,
making total Of S36 to he paid in three
months, in return Tor which the inFes-
tors we've promised 500 In full at the end
of that time. The utter impossi blilty OF
accomplishing this feat should be appar-
ent TO any body. The only way in which
The promoters of such orders profess to
be able to bear out their promises IS by
The profits on lapses. That is, tney
argue that enough members VIII
fail to meet their assessments OF
q week, thereby losing the
amounts they nave put IN, to make good
the whole amounts promised TO those
who remain. There may be a remote
possibility of doing this by the long term
plan, but it is the heig ht of absuruity to
iusist that it eau be accomplished in
three months' orders Nlnety-nine one
hundredths OF those who invest in the
scheme at all certainly think they see
their way clear to pay the small sum re-
quired At the end of each week. The Or
afloat for short time by levying assess
ments upon new investors, but the crash
had to come eventually, and did come lu
this instance only few months after the
concern was Incorporated. The conse-
Quence is that those who.were persuaded
To become members will lose portion,
at least, of the money they invested
Now IL Is obvious that a scheme OF this
kind is not engineered for benevolent
or charitable purposes. IL Is nothing
more or less than an attempt to do an in-
dowmenL insurance business without
capital or standing Consequently 1t
should come under the operation of the
general insurance act and witain the
jurfsdit ton of the insurance depart
ment."
LESS IN NEW JERSEY THAN ELSEWHERE
s'How extensive has such business be-
come in this and other StatesY
II do not doubt tnat good deal of bus
mess of this character is done in this
State, although not nearly as much as in
New York, Pennsylvania or Massachu-
sets. In the last named State, in fact,
endowment insurance is authorized by
Law, and the orders, or societies, or what
ever they are called, are required to make
deposits with the Insurance Commis-
sioner for the benefit of their possible
creditors. There is very large number
of them in existence, and most of them
aim to reach out into other States. Some
doubtless have secured members in New
Jersey. but the most successful OF the
orders doing business here nave their
headquarters in Philadelphia. IL Is inn
possible. of course, to ascertain the num-
Der of people who have invested money
in this way, but the efforts Of the pro-
: moters have been SO persistant that 1t Is
doubtless quite large, especially in the
rural counties"
Has this State any law like that in
Massachusetts,"
"No All companies doing an insur-
ance business in this State are required tc
comply with the requirements OF the Gen
eral Insurance act, which forbids the
transaction OF business until "a capital OF
100000 has been paid in. OF course none
OF these orders fulfil this requirement
As said before, all of those Incorporated
in Ibis State are incorporated under the
Benevolent and Charitable act, from
which have just quoted"
Then they are doing an illegal busi-
nesss"
Law is AMPLE.
Certainly. the law is very explicit on
this point. IL reads as follows
1t shall be unlawful for any company.
corporation or association or for any
agent, solicitor. canyasser or other repre-
sentative to negotiate any contract OF in-
surance Of any kind, or sign, deliver or
transmit any policy, certificate of men,
bsfship or certificate of renewal, or re-
= ceiye cDy premium. com mission fee or