The morning news. [volume] (Savannah, Ga.) 1887-1900, 1892-02-05

well known throughout Europe, to have
valuation made of our property.
This valuation was made with
the greatest care by two Of its
most experienced inspectors. aud their
findings. properly attested, were submitted
TO the superintendent OF insurance. He
preferred, however. inasmuch as he could
not procure in the limited time at our dis
posai an admission from the French govern
ment that its figures represented taxable
value only, to reject the figures offered and
in this way the estimate of the inspectors
exceeds the figures of the French governs
ment by 1858, 900 and the estimate of It's
prospective value, based on improvements
certain to be made by the city of
Paris. exceeds the figures adopted by the
superintendent by $685. 900. As l under
stand 1t, the variation in the superiu-
tendent'S figures from the probable value Of
this property is similar to the loss which
would appear if the home office building Of
the Equitable Life Assurance Society should
be entered in q schedule of It's assets at
IS, 500 900, its value for purposes Of taxa
ton, and not at Sl5 100000, its book value.
To place the property Of the Equitable in
schedule OF its assets at such total as to
show a loss Of gil, $40 600 would be so un-
just as TO become absurd. yet a similar
thing seems TO have been done in this case.
ON WESTERN BUILDINGS.
g. The report of the superintendent of in
surance values the office buildings recently
erected by US in Minneapolis, st. Paul,
Kansas City and Omaha at their costs to
toe company, but as his opinion of the wis
dom OF the investment seems to be uncer-
tain, as his language indicates there is no
immediate prospects thai they, the build
ings, will prove as profitable as the invest
ments of life insurance companies
should be. 1 desire to offer a word in
that connection. There are two reasons
why the immediate income from these
properties is smaller than we may
fairly expect to receive in the near future.
First, the buildings were begun under
normal conditions, but we're completed in
the midst of a period of business depression
in the four cities mentioned, and accord
inglY we have had ewer tenants and lower
rents than we may reasonably expect here
after. Second, the buildings were located
with view to the future development of
their respective cities. Any one who has
observed the rapid growth Of the west will
appreciate the necessity Of considering the
future even more than the present in the
location of All office building. Present
revenue was, therefore, not so much of a
consideration as that the building should
be so located that the future may tend con-
stantly to increase and not decrease the rent
producing power and value of the prop
critics You will understand, of course that
investments of this character are valuable,
because the element of risk in reinvestment
is practically eliminated. The money ex-
pended in this way is a fixed item for very
long period of years. The full wisdom or
folly of such a transaction is developed by
time. You will be interested to know,
however, that one OF these
buildings is already yielding US
fair return on the money invested, and
am further advised by competent authority
that since the date Of our purchase of the
real estate on which these buildings are
situated there has been net appreciation
in its selling value Of 100000, as shown by
appraisals made at the close Of 1890, and
by purchases of adjoining property since
made by other people. In entering these
properties on our books. and in submitting
our estimate of their value to the superin
tendent, which he accepted, we did not
take this evident increase into &C
count. AS evidence that the erection of
this class of western buildings was well
considered, | point you to the fact that the
investment was entered upon after discus
sion aud approval by the board Of trustees
1t is my theory that it is only fair to the
members OF a company like ours, the nat
ure Of whose business makes large accumu-
iations Of money necessary, that the money
TO be invested should go as far as practicable
to those sections of the country whence it
emanates. In this case a part of the money
received was invested amongst the people
who paid it. The only theory on which these
buildings can be rated as bad or even
doubtful investments is one which dis
credits the future growth of the western
| states. The report notices that las adj
vertisements of the company they the
buildings) no doubt have a considerable
value" This is eminently true, for the ter
ritory in which these buildings serve espec-
falIr foa fha do
states of Minnesota, North and South Da-
| kota, Montana Iowa, Nebraska, Kansas,
Missouri, Texas and Indian Territory. The
people Of these states have constant bust
| ness and social intercourse with ore or
more of the cities in which the buildings
have been placed. The buildings have,
therefore, become widely known; fer as the
superintendent report says: Each Of
them forms one of the attractions of the
| city in which it is located. Their influence
on the company's business is extremely i'm
portant. In 1886, the year before the build
| ings were begun, the aggregate new insur-
ance written by the company in the terri-
tory in question was SS,047,2 200. This ag-
gregate has steadily increased until for the
| year 1891 it amounts to S2S, 8o9 $50. which
| is the largest business that was secured in
that field during that year by any life in
surance company; and not only was the
| quantity of the business remarkable but its
quality was such as to make it most desira-
BILE in every way. Without the buildings it
is safe to say such results could not have
beea obtained.
l may add by way of general comment
on real estate matters that while the super
| intendent notices that the company owns
| 147 parcels of real estate and has 900 other
parcels under mortgage, and the fur Their
| fact that these properties are scattered not
only through many states of the country,
but over two continents, the nature of his
duties made it necessary perhaps to omit
comment on the real estate transactions in
whioh profits have been realized, and TO
confine himself practically to the four
parcels which he discusses, but your interests
reach further and you will naturally be
pleased to learn in this way not only the re-
| lation of the items criticised TO the COM
panys total holdings, but also the circum-
stances surrounding each case. II these
related facts tell you anything, it is the
| probable existence to-day of a surplus
largely in excess of the SIS, 100000. We all
accept the superintendent's figures, yet as
you and are peculiarly interested in the
whole case we are permitted between our
selves to view the possible effect of these
facts. Suppose, for example, that the
superintendent had accepted the
| well known opinion OF one
Of the heaviest holders of New York real
estate as to the value OF the Plaza hotel,
| 50, $50, 900, and that he had accepted the
value of our home office building on a
rental basis of per cent. net, and that
| he had accepted the inside figures OF the
| - Fla pafa, 90 H.