Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1903-08-25
The End of Objectionable In
surance Companies Invad-
ing Iowa, Seems Near
BRIEF HISTORY OF THEIR LIFE
When the Law Estopped Usury In the
Building and Loan Business, Pro-
moters of Schemes Connected With
That, Turned Their Attention to
Evadins Iowa Insurance Laws.

Des Moines Aug. 2o.-The sale of the
stock OF the Northwestern Life and
Savings company to a Minnesota In
surance company, and the plan to re-
tire the stock and close out the busi-
ness under the Iowa laws, came as no
surprise to the readers of the Times
Republican. and 1T is learned with not
a great amount of regret in any quar-
ter in the state of Iowa. The incident
marks the ending of business which
grew up in Iowa under the laws intend
ed for other purposes and which grew
out of the legal destruction of the build
ing and loan business in the state a few
business caused sharp controversy
in the legislature in 1883 and has ever
since been the cause OF some controver-
sy.
The readers of the mes-Repubican
have been we'll informed as to the pro-
gress of affairs In this connection. More
than a year ago there was given in
this correspondence the first letter Civ
ing something of the nature of this
business. AT that time there were five
Iowa companies engaged in writing this
form of investment certificates. To-
day, perhaps not directly because of the
exposures that have been made from
time to time, but certainly assisted ma
terially by this, there is only one. The
Security Life and Trust sold out to the
National Life and Trust before the lat
ter was transferred bodily to n Chicago
concern. The Mutual Life and Savings
has quite recently made a change in of
ficials and management and in policy
and some time ago pledged the state
auditor that Its business would hence
forth be confined 10 life insurance. The
American Life of this city, vas writing
some certificates of similar characte
but las. not written any sintfe tho first
of the ssar.
A ye;( ago this writer pointed out
that they business grew up to take the
place of!eertain forms of building and
loan business. The laws of Iowa had
been getting stricter In regard to build
ing and loan until at last it was impos-
anciers to make a fortune out of the
building and loan business. The laws
had stopped usury and left the building
and loan business so that it must be
conducted strictly for the benefit of
the shareholders. The promoters who
had hitherto turned their genius to
building and loan schemes conjured up
something to take it's place. They or
ganized under the insurance laws os-
tensibly to do insurance, but provided
the minimum of insurance and the
maximum of that which approached
most nearly to the building and loan
speculative system.
The plan is simple. The certificate
holder pays in $50 year on a $500 cer-
tificate and the company guarantees
return of the $500 paid in with accu-
mutations" The guarantee is only for
the return of the money. The customer
becomes such because of a showing
that he will make enormous profits.
In the literature first sent out by some
OF these companies the "accumulations"
were estimated to equal the face of the
bond, or that the person paying in
would get back 5000 for his $500. The
journals of the 2Sth general assembly
Will show that Governor Shaw, then a
director in one of these companies de-
Tended his connection with ii and show
ed that the business was perfectly legal
in Iowa.
About year ago the insurance COM
missioners Of Wisconsin and Minnesota
came here to examine the life ana
trust" companies, or sent experts. Th2
most thorough examination was made
by s. a. Wolfe, Of New York City. His
published reports created Il sensation.
The chief matters he found subject to
criticism in these companies, or some
OF them, We're:
Extravaganza in management and
enormous sums paid to agents, officers
and stockholders
That the policies We're being sold un-
der a Misrepresentation to the insured
and that the home offices were cogn,-
zant of it and responsible:
That the gross profits then shown
We're pitifully small and that If the pol
icy pursued was followed TO the end If
the ten year term the policy holders
would get very little above the return
of their money paid IN;
Ihat one company, at leaSt, Hlaue
statement under the oath of its officers
in which there was included under the
head of Agency and Management Ac'
count over $4,000 which was in fact
paid to stockholders;
That the secretary frankly admitted
that the sole purpose of making the
false entries was to keep from the pol
icy holders "a true knowledge of the
amounts paid stockholders.
The insurance commissioners of Min
nesota wrote sharp letter 10 the com
panies demanding that they modify
their method of doing business in that
state under penalty OF being shut OUT.
About this time eX-Secretary OF State
Dobson who had been nominally con-
nected with the National Life ana
Trust, pulled out and In signed letter
declared his belief the company would
not be able to pay over per cent div
idend on the 10-year bond. This would
be quite different from the 100 per
cent dividend promised. The oficecs
OF the Northwestern Life and Savings
promised the state auditor of 1owa
they would cease making extravagant