Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1892-01-23
BIG INSURANCE TOYS.
Millions squandered by a New York
Company on Sky Scrapers,
PAYING DOUBLE THEIR VALUE
Gross Mismanagement As Shown by an Off
cia! State Report.
THOUSANDS SPENT on BLACKMAILERS

Insurance Department of the State of New
York of its examination into the condition
of the affairs of the New York Life In
surance Company was made public to-day
by Superintendent Pierce. Mr. Pierce pre-
sents summary of the result of the investi-
CATION made by his deputy, Michael Shan
non, with his own comments thereon. Fol-
lowing are the principal parts of Mr..
Pierce's statement:
The most satisfactory result appearing
in this report is the conclu-
sion reached that this great and
useful institution of our State
is, beyond all question, solvent, and is the
actual owner and possessor of surplus OF
available assets and property exceeding its
present liability by S6,03S, 1868 accrued
upon its general account, and Ss,61O, 539,5O
upon its tontine accumulation.
Paid Twice the Value of Buildings.
"The appraisals of the real estate and
mortgages owned by the company were
made in every case by competent authors
ties selected by myself after much care and
consideration, and full confidence may be
reposed in their fairness and accuracy.
'The actual cost of Holbrook Hall to the
Company was 81. .0O9, ,S66 g. while the actual
value thereof, as estimated by the appraiser
of the Department, did not exceed $3.50, 600.
''The account of the matter presented to
the Committee of Trustees leaves a strong
impression upon my mind that the interests
of the company were neglected and trified
with in its earlier history A careful con-
sideration of the facts leads me to state as
a conclusion that no reasonable excuse or
explanation has been offered to rebut the
charge of gross neglect and incompetency in
the management of this property, from
which resulted this great loss of over $780,
900 to the company in this single invest
ment.
Some Other Extravasant Structures.
There appears to have been a loss ofS2S3,-
994 in the Plaza Hotel investment, if we
assume that the apprasement was correct.
The home Office building, also, shows
large shrinkage in value as appraised by
Mr.. Coleman and noted in the report
'sThe real estate investments in Paris
which cost the company 81, 1O2,6O4 05, and
which the French Government values at
only $40. 400, and which the company's
own selected appraisers value at only $751;
200, furnish another instance of great
sl1rinkage in value, and apparently of great
extravaganza in the price paid for it. The
explanations offered are, in my opinion, in
sufficient to relieve the executive officers
from the charge of excessive expenditure
and bad Judgment
Under the headt of "Agency Manage
ment," Mr.. Shannon reviews fully the facts
relating to the accounts of the Spanish
American Department, L. c. Vanuexem &
Co. and S. L. Dinkelspiel. "After care
full reading and examination of this portion
4ha r fn he
that the facts presented by him clearly indi-
cate that state of affairs exists in the COM
pany's agency management calling for the
severest criticism and condemnation, and
which, if continued, must prove ruinous to
the company.
Analysis of the Company's Accounts.
According to the statement of the COM
pany's accountant, these three agencies are
indebted to the company in the following
amounts in round numbers to wit: Spanish
American Department, $500, 1000; L. C.
Vanuexem & Co., S570, 900; S. L. Dinkel-
spiel, S34S, 900, being upward of 81, 500, 900
by these three agents alone.
''Mr. Shannon presents facts that leave
no doubt IN my mind that several hundred
thousand dollars should be added to these
figures on account of large allowances i'm
properly made, and my review of the facts
convinces me that this whole agency bust
ness, in all its features and relations to the
company and the results therefrom, were
entirely in favor of the interests and profits
of the agents and against those of the COM
pany, ana the management were guilty of
gross neglect in their duties in permitting
such continuous deviations from ordinary
business rules to the great loss of the COM
pany.
1.-THE company owns real estate in the
r. Ill
Minnesota, Nebraska, and Montreal, Cam
ada; Paris, Berlin, Vienna, and Amster-
dam.
Money Sunk on Sky-Scrapers.
''The aggregate value of this real estate is
estimated at S14 ,000 Seventy-seyen
parcels of land are situated in the State of
New York, SO in New Jersey, 4 in Missouri,
4 in Minnesota, 9 in Nebraska and in each
of the foreign cities named.
'Within the past three years the company
has completed Office buildings in the follow |
ing cities and at the cost set opposite each,
as per Mr.. Van Vranken's report, viz: |
nneapolis, 81, ,067, ,O5O %; st. Paul. $780,
800 10; Kansas City, 81, 742, ,957 9S; Omaha, |
81 ,18S, ,091 Sc; Montreal: S79l, ,341 53. The |
net rentals from these buildings have not !
thus far brought in a fair return for the |
money invested, and there is no immediate |
prospect that they will prove as profitable |
as the investments of life insurance COM
panies should
The report of Mr.. Shannon, Deputy Su- |
perintendent of the Insurance Department, |
is dated New York, January 4, and in OPEN |
ing he SAYS: This examination was made |
June so, 1891, and on that date we find that |
its assets and liabilities were as follows:
Total assets, S12O, 10, 500; total liabilities,
S1O6, 002, Ola; gross surplus, S14,7Os,675."
Thousands Spent on BIackmsilers.
With Mr. Pierce's statement is the de-
tailed report of Mr.. Shannon, from which
the following is taken:
"Mr. Shannon considers seriatim the
charges made bv Mr. Banta, the deposed
cashier of the company. Mr.. Banta declared
that the company. has paid many thousands
of dollars in the shape of blackmail to pre-
vent exposure of charges of misconduct in
their management.
To this Mr.. Shannon replies: f'The truth |
of this charge is admitted by the officers.
Several thousand dollars were paid to one
Joseph Howard for the purpose of sup
pressing the publication of articles that he
had prepared attacking the management of
the company. Two other charges made by
Mr.. Banta were: ''The President has di-
rectsd the purchase and sale of millions Of
securities without the knowledge of the
Finance Committee, in some cases pur-
posely Withholding information of the in
tended sale because he knew it would be
objected to. He has directed the sale of
without tine consent of the FL
nance Committee, through one member of
the Finance Committee, with the agreement
hat the profit of the transaction should be
shared by said trustee
Mr.. Shannon is of the opinion that the