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

Hi"ot hCOtSodilly VIC cN preSSeu III uiIlcr-
ent totals by equally capable and re-
| sponsible men. The variation would
| express no actual tluctuation in value,
but simply difference III opin-
on. Which opinion might be for your
! purpose most nearly correct, is again
matter of opinion. While | concede
| the wisdom in such investigations of a
| conservative view, and, under the pc
| culiar circumstances surrounding our
| request Tor this examination, the wis
| dom and necessity Of an ultra conServa-
tive view, | can not avoid the conclu-
Sion that, in these particular items, the
| opinion of the men who have planned
and directed the erection Of the
| great company. while they may
| be accepted as the utterances of
! special pleaderS, are worthy at least
OF consideration by You. | accept
| the aggregate financial findings of the
! Insurance department as constituting
an endorsement of the management Of
| this company at once satisfactory to
| You and creditab.e TO me and my as
! SoclateS. 1t is possible that, IN spite of
| the peculiar character of this inveSti-
! CATION, you would not have accepted
any word from me had the matter
! rested there; bat the Superintendent Of
| insurance has seen tit, after announc-
ing not only the sovency. but the great
| prosperity OF the company as evidenced
! III its gross surplus of nearly fifteen
million dollars. to take up and discuss
| certain items. and in doing SO has
| criticised the management of the COM
pany in these details very severely.
! This constitutes an added. and by
| itself sufficient reason why | should
! go with you over the ground traverSed
| by the insurance department., in
! order that your attention may be
which do not appear in the
report. The departments criticisms
cover several phases of management,
especially investments in real estate and
agency work. The criticisms OF real
| estate matters call attention to losses.
which may be divided into actual
| losses, which | admit, and losses theo-
reticdl, which arise from differences of
| opinion. | admit certain losses. which
L Will point out specifically with the
| attendant circumstances, and | raise
| the question of difference OF opinion as
! to the remainder. Before entering on
| the discussion Of any of these matters,
1t Is due to all parties to say the invest
ments are made only with the approval
| of the finance committee, consisting OF
| five members. and of which | am a
member eX-OfiiciO.
Plaza HOtel-The report alleges loss
| on this property of S2S3, 994. The SUI
perlntendent of Insurance uses this
language in connection:
in property of this character and Of
such great value the opinions of real es-
tate experts of equal ability and integ-
rlty often differ. and other able and con-
scIentiOuS appraisers might value this
property at higher figures, and even be-
You'd its cost" The gentleman who, by
direction of the superintendent of in
surance, valued this property at 50, 500,-
600 was a man eminently qualified to
give an opinion on such a question. But
it Is also fact that another gentleman
of equal ability and character within a
few weeks testified before the supreme
court of the state of New York that in
his Judgment the property at the present
is worth S3,000,000 From your point of
view. then, is it not fair to conclude
that the alleged loss may, after all, eX-
ist only as matter of opinion? But the
| case will bear one more comment. This
property is as finely located as any on
Manhattan island for hotel purposes,
and perhaps as finely as any hotel prop
erty in the United States. 1t is in the
line OF Increasing values, and, in my
| Judgment. will ultimately yield the
company large return on the original
investment.
Home Office Building-T report al
leges loss on this property of 1891 295,
its book value is S1.914, 235 and it enters
| the superintendent's report at 81, 55O, 900.
To Illustrate again how opinions vary as
to The value OF real estate, let us make
parallel between this property and
property of similar character in New
York and draw conclusion. Take the
value placed upon our home Office build
ing for the purpose Of taxation and
place it beside the same value OF the
Equitable Life Assurance society's home
| office building. Tie official valuation
for the purpose of taxation Of our home
office building is $780, COO; of the
Equitable home office building Sc, 500
600. A statement of the figures at
which each property was entered in the
assets of its respective company Dec.
! 81, 1890. is as follows:
The home Office of the New York Life,
Sl,9f4,0O0: home office of the Equitable
| Sl5, 100000. The departments estimate
OF the value of our property is, oprOXi-
mately, so per cent, while the associate
figures for the purposes of taxation are
little more than 80 per cent of its book
value. As the gentleman who appraised
our home Office building has never made
an appraisal of the value of the Euuita-
XIV
draw conclusion from that basis, but.
figuring from the value placed upon it
by the assessors, its total value would
De, approximately, S7,600,000. if the
book value of our home Office were ac-
cepted at par. l cite these figures as
strongly bringing out the truth of nv
suggestion concerning opinions as to
real estate value. Every one is familiar
with the eminent success of the Equita-
bic Llte Assurance society, and no one
would be SO absurdly unjust to that
company as to allege loss OH this one
parcel of real estate of S7,500,OO0, or.
indeed, any loss at all. From the policy
holders view, therefore, it is not wor-
thy of your consideration that in this
case, as III the matter of the Plaza hotel
the loss alleged is, after all, perhaps, Il
| matter of opinion. In fact, / could cite
you good authority OH real estate values
IN New York who will place on our
home Office building valuation in eX-
cess OF Its cost. There are many reasons
why this estimate would be conserva-
tive. In the first place, the real estate
was purchased in 1869, and is eXcep-
tlonaliy well located. Any one who
knows anything about the history of
real estate values in New York for
twenty years will agree that there has
been during this period a heavy adj
vance III this and all property similarly
situated. The building has not been
allowed to deteriorate in any particular
and it would seem that our statement of
actual cost, s1.914,0OO, was a very con-
sentative figure.
Holbrool1 Hall (now called the Yosem-
TETON this item loss has been made.
Briefly the facts are these: In 1882 we
made a loan on this property when in
course of construction, and after the
man to whom the loan had been made
spent not only his means, consider
able sum, but the money loaned him as
well, he failed and we were obliged to
foreclose. The cost of the property to
Us after forclosing was very little more
than the amount of the loan. The work
of completing the structure was then
placed in the hands of an eminent con.
sstructlng engineer. He supplemented
his own knowledge by employing all
architect and the buildinp was finic6od