St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1892-02-03

'ho siHailer lire insurance companies,
anu the largest business of any single
agency III the United States. 1t has
peen done at Il not unreasonable eX-
pense, and the cost OF its procurement
mas been included each year in the dis
ourSementS OF the company. The whole
Iheory OF this organization, anG the
purpose or the advance, is, first, to pro-
duce large business, and, second, to
create All incentive for the general
agent or manager to procure business at
Inc lowest possible cost, in order that
aIter period OF years he may begin to
feailZe return commensurate with the
work done. AS the cost of the business
Is charged Off each year,it becomes nee
esSary 10 keep with the manager blot
ter or Subiedger, and the items are all
brought forward from time TO time. OF
cohrse this, under the illustration, would
Snow Tor an office doing twenty millions
Vi new business in year, and for
nericS OF years, large apparent debt;
ana the superintendent of insurance,
instead or viewing the business as we
nave done-aS simply business paid for
aec!ded tog into this subject and spread
LII is OF nrst Importance that you I'M
Gerstand clearly that this money is not
que from l.. &. VanuXem Il Co. in the
ordinary acceptance of the word
"Ncts ~ 10 QuG Tue leGI.lS VI
THEIR contract at such time as the COM
mission earned on the business done
VIII llquidate the money advanced from
time to time for the conduct of the bust
hess. 1t has not been squandered by
them nor retained by them. 1t has not
benefited them personally. and never
can until, as stated, the earnings of
their business have liquidated all
moneys drawn for every purpose I'M
der the contract, including advances
and agency expenses of every kind;
and here let me call your attention
to an extremely important fact,
of agency matters by the super
intendent, and which he forgot to
mention namely, that these advances IN
every ease were charged to expenses in
the company'S books when the advances
were made, and the company has never
counted them as part OF its assets or
surplus. The superintendent, there
Tore, instead of unearthing with great
difficulty something the company de-
sired to conceal, as he states, practically
set up an arbitrary standard of what he
thought our business ought to cost in
any given year, and charged up as
debt 5 the difference between his opinion
and ours. 1t would scarcely be less UNI
just to the company had he alleged in
any given year that the aggregate
paid for the account of the business
OF that year was one or two
millions too large, and in his report had
set this up as sum due from the men
to whom it was paid. Right here l de-
sire TO state that (and l state it with all
due respect for the opinion of the Off
cial, whose conclusions 1 defer to in
matters OF this character) the conclu-
slons Of men who have thirty years. eX-
perience in this business as to the pros
poets of paying given sum for given
volume of business (they alone being
conversant with all the surrounding
circumstances and contingencies are as
likely to be correct in the interests of
policy holders as the opinion OF a gen.
tleman who, while eminently qualified
forthe duties of his Office. cannot be
credited with special knowledge of the
particular interests now under dis
,cuSSiOn.
SpanisI-Anierican Department
The superintendent naturally treats
at some length the affairs of the Span
lsh-Amerlcan department. The invita-
ton extended to him by our board of
trustees to examine the condition of
this company was called out chiefly by
an incorrect and misleading statement
relative to an alleged defalcation by
one of its managers, for which the con-
pany, it was stated, alone must suffer.
. shall refer principally in the matters
discussed by the superintendent under
this head to its central and, to YOU. most
important questionable fact that j.
Merzbacher, one of the managers at
that time of the SpaniSh-American de-
partment, became a defaulter for a
large amount. The statement, as
originally published, that Mr. Merz-
bacher defaulted direct to the
company, was an error. Under
the contract which we had with the two
managers of the Spanish-American de-
partment, each became responsible for
the actions of both; and Mr. Sanchez,
the other general manager at this time,
and the manager of the Spanish-Amer-
lean department at the present time, ac-
cepted, under the terms of his contract,
full responsibility for the Merzbacher
shortage. This shortage consists of two
parts, direct theft by Mr.. MerZbacher
from Mr.. Sanchez of S4l9,S22. 92, and
Sl19,059. 10, which was an overDavment
by Mir. MerZbacher to the former gen
eral manager of the Spanish-American
department.. Since the date Oh which the
accounts were made up and the shortage
definitely determined, the item of S119,O5
has been considerably reduced on the
books of the company by accrued re-
newal commissions retained by Mr..
Sanchez and by him turned over to the
company in cash. The larger item, rep
resenting the money appropriated for
his personal use by Mr.. MerZl acher, has
been reduced since Dec. 81, 1899, by
S166, 50, leaving balance due Jan.
l, 1892, of S253. 151.O3. The actual net
profits for the year 1891 to this depart
ment have not been fully determined,
but its balance sheet shows that they
will not fall short of 100000. This
leaves the balance due the company OH
this account on this date sum but little
in excess of S150.000, for which the COM
pany also holds abundant security. The
superintendent closes his review of the
Spanish-American department with
these words:
From the foregoing facts we must
conclude that Sanchez and MerZbacher
were treated with degree of liberality
inconsistent with the best interests of
the company"
Y That conclusion is not correct. The
department has always been eminently
successful, and its business has been ob-
tanned at a normal cost.
Thirds. DinkelspieI,
the superintendent, expresses the opin-
ion that S. l.. Dinkelspiel was retained
too long as agent of the company. Mr..
DiHkelspiel secured for us a large
amount of desirable business. The men
whom he insured were among the
wealthiest and most influential in the
cities where he worked. 1t came to nv
knowledge, however, after time, that |
his business methods were objection |
able, and for that reason in the wear |
1889 his agency terminated. Mr.. Dink- |
elspieFs contract comes under the gen. |
eral illustration cited above, except that |
he was personal solicitor only, and |
many notifications were made to en-
able him to handle the peculiar class of
business which he wrote. Advances |
were made for the same purpose. 1t is |
probable, however. that, while there is |
today on our books large volume of |
business of the best quality written by |
MIR. Dinkelspiel, a reasonable renewal |
interest will not finally liquidate the
advances made and that this busipesc |