Fort Worth gazette. [volume] (Fort Worth, Tex.) 1891-1898, 1892-02-06

will notice that this debt does not represen
money which Brown has squandered or re
tanned for his own uses. He has simply
used the money 70 carry on company bust
ness II 1t should ever happen thai
Browns renewal commissions fail to canoe
the debt, the business has simply cost the
company what it cost Brown, and the com
pany has taken good care that the total
amount Of commissions and advance re-
ceived by Brown should never be sun
greater than the new business secured by
him was worth. The superintendent criti-
cises the agency of
IEssRs. l. C. yASUxEN ( co.
at Philadelphia, Pa, and alleges ! debt to
the company on account OF what he terms
extrayagant allowances of several hundred
thousand dollars. Referring to the illustra.
ton above Of the method in which a gen.
eral AGENTS business IS conducted. and the
manner in which an apparent debt might
be contracted, when I state that from 1881
20 1891, inclusive, this firm wrote business
aggregating Sls2. GOO, 600, q characterization
is offered you of how under the above prac-
tice large debt might appear to exist In
this particular agency, the advance contem-
plated IN our illustrations took on various
forms under various contracts, which, how
ever, were always subject TO our approval,
against the commissions earned and TO be
earned. The members of this firm drew
advances Tor living expenses as before
referred to, and advances on account were
made to some sub-agents. but, at no time
has the amount OF money advanced to L. C.
Vanuxen Il Co., exceeded the value OF their
entire business. Under this system of or
ganization it has been possible for a single
firm to handle a large territory, and by
creating renewal interest (in this case OF
very large proportious), we have avoided
frequent changes in general agents, and
how llrscre1v-
our business carried to other companies by
an agent whose interest in any given
policy ceased with the first year of its ex-
istence. In this way MeSsrS. l.. @. Van
uxem IL Co. have done for years larger
business than the entire new business of
several of the smaller life insurance COM
panies, and the largest business of any
single agency in the United States. 1t has
been done at not unreasonable expense,
and the cost of its procurement has been
included each year in the disbursements of
the company. The whole theory of this
organization and the purpose of the ad-
vance is, first to produce q large business,
and second, to create an incentive for the
general agent or manager TO procure bust
ness at the lowest possible cost, in order
that after period of years we may begin
TO realize return commensurate with the
work done. As the cost of the business is
charged OF each year it becomes necessary
to keep with the manager blotter or sub
ledger and the items are all brought for
ward from time TO time
OF course this, under the illustration,
would show that an Office doing so, 000.000
of new business a year, and for series of
years, large apparent debt, and tie super
intendent of insurance, instead of viewing
the business, as we have done, simply as
business paid for, decided to go into this
and spread before you the ap-
parent debt. 1t is of first importance that
you understand clearly that this money is
not due from L. c. Venuxem s. Co. In the
ordinary deception of the word debt"
it is due under the the terms of their con-
tract at such times as the com missions
earned on the business done will hquidate
the money advanced them time to time for
the conduct of the business. Tt has not
been squandered by them, not retained by
them. 1t has not benefited them person
ally and never can, until as stated, the
of their business have iquidated
all moneys drawn for every purpose under
the contract including advances and agency
expense of every kind. And here let me
call your attention to an extremely impor-
tant fact which applies to all discussions of
agency matters by the superintendent, and
which he forgot 20 mention, namely: that
these advances in every case were charged
to expenses in the company's books when
tile were UuduG, anu tUdb lIlS
pany has never counted them as part of
its assets of surplus.
The superintendent, therefore, instead of
the great difficulty, something
the company desired to conceal as he
states, practically set up an arbitrary stand
ard of what he thought our business ought
to cost in any given year, and charged up
IS debt, the difference between his opin-
ION and ours. 1t would be scarcely less I'M
NET fA "a apT1 haI ha oil
given year that the aggregate paid for the
account of the business for that year was
1ne or two millions too large, and in his re-
port had set this up as sum due from the
men to whom it was paid.
Right here 1 desire to state, and I sta te
t with all due respect for the opinion of
he official from whose conclusions differ,
hat in matters of this character the conclu-
'ions of men who have had thirty years ex-
Derience in this business as to the propriety
If paying g given sum for a given volume
If business (they alone being conversant
With all the surrounding circumstances and
are as likely to be correct,
n the interest of policy-holders, as the
opinion of gentleman, who, while emf
lently qualified for the duties of his Office,
,annot be credited with special knowledge |
n the particular interest now under dis-J
,ussion.
SPANIsH-AMERICAN DEPARTMENT.
The superintendent naturally treats at |
iome length the affairs of the Spanish |
American department. The invitation ex-
ended to him by our board of trustees to |
examine the condition of this company was |
,alled out chiefly by an incorrect and mis- |
eading statement relative to an alleged de- |
alcation by one of its managers, for which |
he company, it was stated, alone must /
suffer. 1 shall refer principally in the mat /
ers discussed by the superintendent |
Under this head, to this central aud to you, |
most important question, the fact that Mr. |
I. B1erzbacher, one of the managers at that |
ime of the Spanish-American department |
)ecame defaulter for large amount. The |
tatement as originally published, that Mr.. |
derZbacher defaulted direct to the COM
amy, was an error. Under the contract Z
which we had with the two managers of
he Spanish-American department each be-
anne responsible for the acts of both, and !
dr. Sanchez, the general manager at this
ime, and the manager of the Spanish
American department at the present time,
ccepted under the terms of his contract
I'LL responsibility for the Merzbacher
heritage. This shortage consists of two |
arts. A direct theft by Mr.. Merzbacher
rom Mr.. Sanchez Of S419, S22 go and S1I9,- II
%. 10, which was an overpayment by Mr. !
lerzoacher to the former general manager
I the Spanlsh-American department.
Since the date on which the accounts |
etermined, the item Of Sis, 059 10 has been |
reduced on the books of the
Ompany by accrued renewal commissions
etained by Mr.. Sanchez, and by him turned |
YER TO the company in cash. The larger I
pun rpnTpS the nonar ar,r1,-r,,,.;,+o7 |