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

I
tain. As his language indicates, there IS
no immediate prospect that they 1.-THE build
ings) viii prove as profitable as the In
vestments of life insurance companies
should. I desire to offer word in that
connection. There are two reasons why
the immediate income from these proper
ties is smaller than we may flirly
expect to receive in the future. First,
the buildings were begun under normal
conditions, but were completed in the midst
of a period of business depression in the
four cities mentioned, and accordingly we
have had fewer tenants and lower rents
than we may reasonably expect hereafter.
Second, the buildings were located with q
view to future development of their respect
i've cities.
Anyone who has observed the rapid
growth Of the West will appreciate the ne
cessity of considering the future even more
than the present in the location of an Office
building. Present revenue was, therefore,
not so much of consideration as that the
building should be so located that the fut-
ure may tend constantly to increase and not
TO decrease the rent producing power and
value Of the properties. You viii under
stand. of course, that investments of this
character are valuable because the clement
OF risk IN reinyestment Is practically elinl-
mated. The money expended i'll this way
IS fixed item for a very long period OF
years. The full wisdom or folly OF such
transaction is developed only by time. You
will be interested to know, however, that
one Of these buildings is already yielding 10
US fair return on the money invested,
and 1 am further advised by compe
tent 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 $500, GOO.
as shown by appraisalS made at the close of
1850 and nv OurchaSa inf aliOipinO DPOnnrtV
since made by other people. In entering
these properties on our books and in sub
hitting our estimate of their value to the
superintendent, which he accepted, we did
not take this evident increase into account.
As evidence that the erection of this chain
of Western buildings was well considered,
point you to the fact that the investment
was entered upon after discussion and ap-
proval of the board OF trustees. 1t is my
theory that it is only fair to the members
of a company like this, the nature of whose
business makes large accumulations of
money necessary, that the money to be in
vested should go as far as practicable to
those sections or the countryawhence it en-
anates. In this case part of the money
received was invested among the people
who paid it. The only theory on which
these buildings can be rated as bad or even
doubtful investments is one which diScred-
its the future growth of the Western
states. The reports notice that s'as adver-
tisements Of the company, that they the
buildings) no doubt have considers
bic value" This is eminently true; the
territory in which these buildings serve
especially to advertise the company includes
the states of Minnesota, North and South
Dakota Montana, Iowa, Nebraska. Kansas,
Missouri, Texas an2the Indian Territory.
The people of these states have constant
business and social intercourse with one or
Of tla oft, ,r-1s .I, ho lN1ri1dipoc
have been placed. The buildings have,
therefore, become widely known, for as the
superintendent report says, "each of them
forms one of the attractions of the city in
which it is located. their influence upon the
company's business is extremely i'm
portant" In 1886, the year before the
buildings were begun, the aggregate new
insurance written by the company in the
territory in question was SS,047, 200. This
aggregate has steadily increased until for
the year 1891 it amounted to $2S, S69, $50,
which is the largest business that was Sc
cured in that field during that year by any
life insurance company, and not only was
the quantity of the business remarkable,
but its quality was such as to make it most
desirable in every way. Without the build
ings II is safe to say such results could not
have been obtained. 1 may say by way of
general comment on real estate matters,
that while the superintendent notices the
company owns 147 parcels of real estate and
has 500 under mortgage, and the further
fact that these properties are scattered, not
only through many states of this country, but
over two continents, the nature of his duties
made it necessary, perhaps, to omit CON-
menu on the real estate transactions in |
which profits have been realized, and to
confine himself practically TO the four par
GELS which he discusses, but your interests
reach further and you will naturally be |
- AL, a
relation of the items criticised to the COM |
pany's total holdings, but also the circum- |
stances surrounding each case. If these re-
lated facts tell you anything, 1t is the prob |
able existence to-day of surplus largely in |
excess of Sl5,000,000 We all accept the |
superintendent figures, yet as you and l |
are peculiarly interested in the whole case, |
we are permitted between ourselves 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 IN New York real es- |
tate as to the value of the Plaza hotel, |
g, $50, coo, and that he had accepted the |
value of our home Office building on a rental |
basis of per cent net, and that he had &C |
5epted the inside figures of the inspectors |
Of the Credit Eoncier as to the value of the |
Paris property, his net deductions on real |
estate, including his heavy deductions on |
hall, would have been only 1929
309 %. This alone would increase the sur |
plus $500, 900.
AGENCY MANAGEMENT
Under the head of agency management the !
superintendent of insurance says that funds |
If the company to the extent of hundreds |
If thousands of dollars have been advanced |
to these agents without interest and upon
security. To persons unfamiliar
with the life insurance business this state
nent would seem to indicate the worst pos
;ible management of our agency DEPART
nept The facts ought, therefore, to be
July explained. The general system upon
which advances have been made to agents
DIV this company and by other life insurance
may be illustrated as follows /
the figures used being merely illustrations, |
ind not the terms OF any actual existing
The company we will saw
enters into contract with Brown, who is
General agent for state, that he SHAH re-
,eive q commission of % per cent OF the |
first years premium on all policies placed
" him and q renewal commission of 5 per
.ent on each renewal premium paid on such
)olicles. Brown. of course, finds it neces-
AIRY to employ Jones and others as sub
gents, and he ordinarily pays them the %
,er cent commission allowed him by the
company on the first years pre-
NUNS. Brown relies upon his renewal
for his own compensa-
ion, but while he continues in active
ervice, he is frequently allowed to
raw on a fixed amount against commits
ions for his living expenses, such amount
eing regulated by the circumstance of the
ase AS competition increases. Brown
nds that in order TO retain Sub-Ageut