Truth. [volume] (Salt Lake City, Utah) 1901-1908, 1905-09-30
INSURANCE INVESTIGATION.
(From Golfers Weekly

in favor of the smaller insurance COM
panies, though to what extent can not
be told. Years ago the dangers of un-
limited size were pointed out. In a
paper by an actuary read at the Con-
vention of Insurance Commissioners
of 1892, for example, it was argued
that the largest companies might
grow to such vast size that their as
sets and affairs could not be perfectly
managed by their officers, supervised
by their directors, and examined by
state insurance officials" And he,
like other prophets pointed out also
the moral temptation, increasing with
the size. Mr.. Hughes, pressing an Of
ficer of one big company about syn
dictate operations, received the reply
that they were necessary in order to
handle so much business. To the
paraphrase of Mr.. Hughes, that the
insurance companies fight for an
amount of business that will force
them to disregard the law, there was,
as there could be, no adequate reply.
These big companies have come to
be Indifferent to the permanence Of
the business written. The public has
been naturally hypnotized by figures.
The statement of an agent that his
company has hundreds of millions in
assets stops criticism, for "a billion OF
assets in force" must impress the un-
informed imagination. The policy
holder can hardly be expected to know
that under the law of legal reserve
each thousand dollars of insurance is
protected by a reserve, and that
therefore a company with $20,000,000
of insurance in force, and a reason
able surplus, is as sound as one with
many times that volume. The prin-
ciples of life insurance, however, will,
at the end of the present upheaval, be
better understood by the public than
they ever were before. A limitation
of the amount of insurance permitted
to one company is likely to be among
the many legal measures taken to
keep this vast and necessary business
from becoming dangerous to the pol
icy-holders, to other lines of enter
prise, and to the community.
,x ~
The worst prevailing evils brought
out in the legislative investigation of
insurance are two. Lobbying and
bribery, direct or indirect, are worse,
but they are not special to insurance,
constant, and closely interviewer with
the system. The two most demoraliZ-
ing practices are the participation of
insurance officers in syndicates and
the control exercised by international
bankers not only over insurance com.
panies, but over the whole financial
market, including the railways and
other large interests which issue
bonds. A railway wishes to sell bonds
direct to an insurance company An
intimation comes from the banking
houses that such procedure will be Sc
verely punished, and so great is the
power of these robber barons that
nobody dares refuse their rake-off
Morgan & Co., Kuhn, Loeb e Co.. and
Speyer e Co. thus boss the financial
world, with ruthless and ineXcusable
greed, and it would require a bold
railroad to defy their will The in
urance companies can secure the
most profitable investments only by
going into syndicates, most of which
are in close relation to these banks
The actual wrong, on the part of in
surance men, lies not in buying
through syndicates for their compa
MES, but in accepting allotments fol
themselves, thus reducing the amount
of a desirable investment granted tC
the company, and also reducing theil
ability to form entirely disinterestet
judgments in the company's behalf
Part of the syndicate evil can bt