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


ent totals by equally capable and re-
sponsible men. The variation would
express no actual fluctuation in value,
but simply a difference III opin-
on. Which opinion might be for your
purpose most nearly correct, is again a
matter of opinion. While l concede
the wisdom in such investigations of
conservative view. and, under the pc
cullar circumstances surrounding our
request for 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
or 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
SociateS. 1t is possible that, III spite of
the peculiar character of this inveSti-
CATION, you would not have accepted
any word from me had the matter
rested there; but the superintendent of
ing not only the solvency. but the great
prosperity of the company as evidenced
in 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
called to many related facts
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. l 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 OH
the discussion of any of these matters,
ii is due to all parties to say the invest
ments are made only with the approval
OF the finance committee, consisting OF
u
member eX-ofticio.
Plaza Hotel-The report alleges loss
on this property of 1888, 1924. The su-
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-
rity 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, 5O0,-
600 was man eminently qualified TO
give an opinion on such 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-Th report al
leges loss on this property of 1851, 295.
its book value is S1.914, 295 and it enters
the superintendent report at 81. $50 OOO
10 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
\ DIRK 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. The official valuation
for the purpose of taxation of our home
office building is S1,050,G00; of the
Equitable home office building So, $780,
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,914, 900; home office of the Equitable
S15, 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 so per cent of it's book
value. As the gentleman who appraised
an appraisal of the value of the Euuita-
ble's home office building, we can hardly
draw conclusion from that basis, but,
figuring from the value placed upon it
by the assessors, its total value would
De, approximately, S7,600,0O0. if the
book value of our home office were ac-
cepted at par. L cite these figures as
strongly bringing out the truth of my
suggestion concerning opinions as to
real estate value. Every one is familiar
with the eminent success of the EQuita-
bic Lite Assurance society, and no one
would be so absurdly uDj ust to that
company as to allege a loss OH this one
parcel of real estate of S7,500,OOO, OF.
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 OH our
home Office building a 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-
tlonally well located. Any one who
knows anything about the history of
ASoi ColulO Values III NEW i OK IOr
twenty years will agree that there has
been during this period a heavy adj
vance in 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, s1,9l4, 900, was very con-
sentative figure.
Holbrook Hall (now called the Yosem-
TETON this item loss has been made.
Briefly the facts are these: In 1882 we
made 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-
structing engineer. He supplemented
his own knowledge by employing an
architect and the building was finished.