The Montgomery advertiser., 1905-07-21
Will Investigate Affairs
 of Equitable.
THE GOVERNORS MESSAGE
All Insurance Companies to
 Scrutinized.
Organization Concerning Which So Many Scandals Have Arisen Will Head the List of
 Suspects.

New York July Ex-Governor Hig- gins sent to the State Legislature this its consideration the appointment of a joint committee to investigate the bus mess of life insurance companies as carried on in this State. In the Sem ate Senator Armstrong immediately in- troduced a concurrent resolution pro- viding for the appointment of special joint committee of three Senators and five Assemblymen to undertake the fn- vestigation.
 In calling the attention of the Lesis- lature to the insurance matter the Gov ernor says: The unfortunate scandals recently made public by the internal dissensions in the Equitable Life As- surance Society and by the comprehen- sive investigation of its affairs by the Superintendent of Insurance have not without just cause aroused feeling of intense alarm to thousands of our cft- izens who have invested their money in policies of life insurance and to the thousands of non-residents who have been taught to respect the New York companies as safe and secure. While the business of life insurance as at present conducted is subject to State supervision and regulation, for the pur- pose of guaranteeing solvency and the fulhllment of contracts on the part of the companies, 1t is evident that evils and abuses may exist under our law, that earnings which should be credited to the policyholders may be diverted to other purposes, that expense of op- cration may be extravagant and waste full, that unwise investments may be legally made and that trustees may deal indirectly with the trust funds for their personal advantage. That such condition of affairs can exist reflects discredit upon the State.
 Legislation Is no panacea for the ills of the body polite that rise from disordered moral sense. The multi plication of penal statutes does not . diminish the spirit of fawiessness, but is rather symptom Of It's growth. But 1t is apparent that our insurance law is in some particulars obsolescent and inadequate, and that the management of the funds of these great companies is not sufficiently safeguarded
 The States Duty.
 The State owes a duty to policy holders and heneficiaries beyond that of comparing assets and liabilities and permitting the companies to justify existence by the exhibition of a sat- isfactory balance sheet and the prompt payments of losses. Investments must be restricted, salaries must be limited to amounts bearing a closer relation to the commercial value of the ser vices rendered. trustees must be held to a strict accountability and the policyholders must he given an equal share in the government of the com panies. It may well be said that such an arbitrary remedy of dissolu- tion and receivership shall be made not only a penalty of insolvency. but also summary check upon solvent company when it becomes irredeema- bly the plaything of 1awless greed. The State cannot permit the subjects of its supervision to exist as licensed prodigals of other peoples money without becoming an accomplice to the offense.
 We cannot judge ali life insurance companies by the sins of one. We should not destroy the edifice to rid ourselves of the vermfn that invest 1t. nor should we kill the patient to stop the progress of the disease. A revision of our insurance law Is ne- cessary but 1t should be made with calmness, delibertian and intelli- gence and after careful study and in vestiyation."
 Speaking of Superintendent Hem dricks's investigations of the Equita- bIe, the governor says that within the scope of his authority and the limits of his time, the superintendent has performed his duty with impar- tial tnoroughness. Although he has informed me by reason of the stat utory limitations upon his inquisitorial powers and by reason of the magni- tude of the task imposed, he would welcome the aid of a legislative in vestigation committee. he is of the opinion that he with his staff of ex- perts and with the aarnority vested in him to conduct investigations at the expense of the companies examined was well qualified to collect all neces- sary evidence upon which to base new legislation and that no other investi- ration outside the codrts of justice was necessary or desirable, pending the investigation now being conduc- ted by him.
 Tt is, however. of rne highest im- portance that a revision of the in surance law should be enacted as promptly as is consistent with thorough knowledge of the subject. It is proper and necessary that the legislature should determine for itself how the information upon which to base such a revision may be best ob- tained If in its judgment an inves- tigation conducted by US own mem hers Is calculated to produce the most satisfactory results. such an investi- xation cannot too speedily be begun.
 Tn order that you may be free to consider and act upon the subject at this session, I. therefore, pursuant to the constitution. do hereby recommend for your consideration the question or the appointment of joint committee of inc Senate and Assembly with the usual powers of such committees to in- vestigate, after your adjournment, the operations of life insurance companies doing business In the State for the pur- pose of preparing and recommending 10 the next regular session of the Legis- lature such proposed legislation as may be adeouate and proper to restore pub lie confidence and to compel life in surance companies to conduct safe' honest and open business Tor the oene- fit of their policyholders
 ResolutiOn Adopted.
 Both Houses adopted in the afternoon the Armstrong insurance investigation resolution. It appropriates soo'ooo TOT the expenses of the investigation
 The Senate members of the commit tee will be Armstrong of Rochester, chairman. and Tully of Corning, Re publicans. and Riordan o. New fork