New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1905-09-13
LOSSES IN INSURANCE DEALS.
MR. RANDOLPH, 1T HEARING, DENIES THEY UERE
IN SYNDICATE TRANSACTIONS
Stock Sold December 81 Repchosed January Closing of
Books for Report tt State Inspector

There was no lack OF interesting development
at the resumption OF the inquiry Of the Arm
etrong legislative committee into the methods
Of insurance corporations. For nearly six hours
Edmund D. Randolph. treasurer of the New
York Life Insurance Company. was on the
stand, and in his testimony many new facts
were obtained.
III Randolph testified that on one occasion
his company sold bonds worth $4,000 on the
last day of the year, just before submitting itt
annual report Of the State Insurance Depart
roent. and brought them back on the next bust
ness day at the same price. Equally interest
ing was MI. Randolph's description Of the bust
ness relations existing between the New-York
Life company and the New-York Security and
Trust Company. which resulted in the insurance
company taking over S4.o69.O0o venture OF
the trust company and suffering a net loss of
$4,000 thereby.
In the testimony yesterday the fact was es-
tablished that, while the company's tabulated
statement Of syndicate operations carried a foot
note declaring there had never been loss in
any one of them. none the less at least one
operation, that in international Mercantile
Marine, had resulted in a loss OF $4,000. The
point was also made by MIR. Hughes. that the
SI30o0000 balance kept by the insurance COM
pany on deposit with the New-York Security
and Trust Company employed in collateral
loans on stocks. form of loan consistently
avoided by the insurance company, and that
this balance was for several years kept at a
high figure expressly for this purpose
A mystifying system Of bookkeeping was
shown to have been used. It was developed that
practice made of entering all bonds re-
ceiVed in syndicate operations assets on the
ledger, but excluding all stock thus acquired
from the ledger until finally turned into money
I'd lTf baiT1 kent hxo of rd
catalogue. and the proceeds finally charged to
profit and loss. Other intricacies Of bookkeeping
we're revealed at every turn, and phrases such
as temporary loans. ''non-ledger assets" and
cross entries served to puzzle the inexperi-
enced.
The history Of yesterdays proceedings is en-
tirely contained in the testimony OF Mr.. Ran
dolph. At the outset Mr.. Randolph made an
tended statement justifying the so-called dunn
my bond" transaction, In which a 5000 clerk
handled stocks worth millions Mr.. Randolph
pointed out that this was a customary method
Of procedure in business circles. and that it in
this case justified its employment by resulting
profit to the policyholders. This explanation
and several others Mr.. Randolph offered In an
swer to various criticisms upon his company
which he steadily insisted was ready to furnish
all possible evidence to facilitate the inquiry.
CONTROLLED STOCK AFTER SALE
At the outset yesterday Mr.. Hughes ques-
toned Mr.. Randolph on several proceedings in
volved in the closing out Of the stock holdings
OF the New-York Life Company in compliance
with It's agreement with the Prussian govern
ment- These holdings included controlling in
terest in the New-York Security and Trust
Company and two large blocks of the preferred
stock Of the Chicago Milwaukee and St Paul
and
pany stock was disposed of by George W.
Perkins. Mr.. Randolph described Mr.. Perkins's
conduct of this business as mastery"
Mr. Hughes began, by reference TO printed
lists 70 attempt to show that the company was
not able to dispose Of its Northwestern stock
Mr. Randolph testified to a number Of discus
sions Of the finance committee on this subject
and finally to the passage of a resolution on De-
cenlber 30, authorizing him to dispose of the
stock This he did by transfer in blank and
the stock was subsequently delivered to the
New-York Security and Trust Company. Mr..
Hughes then brought out the fact that the in
surance company, although showing sale or
closing OUT Of this stock, actually held control
Of it until it was sold in May Of the following
year, when the resulting profit was entered in
the profit and loss column
did the Madison Marshall loan appear On
your bool1s?" Mr.. Randolph was asked
mo, because they were not employees of ours"
when you closed up the account at the end
Of December-and when I say you. I mean the
finance committee-you intended TO keep what
ever profit might be obtained by the disposition
Of the stock later on?" asked Mr.. Hughes.
Intend to keep-the finance committee keep"
exclaimed Mr.. Randolph in surprise
NO. 10; the company OF course" explained
Mr. Hughes
of course" answered the witness; 1.-The other
is just what the finance committee might have
done If IT had been built on these lines"
The next point Mr. Hughes turned to was that
Of ''non-ledger'' assets. Mr.. Randolph FASTENED
TO explain that he had used this term wrongly,
and that in previous testimony he had meant by
# unclaimed" assets. Mr.. Hughes then took
I'D example of unclaimed assets In this in
stance the unclaimed assets were 2.100 shares
Of Erie stock, received as bonus in a syndicate
operation. Mr.. Hughes showed a card, supplied
10y Mr. Randolph, bearing the record Of the sale
Of tsese shares. This record, Mr.. Randolph testi-
fed, was kept in a new system Of card catalogue
Tor this class Of securities. Cornelius c. White,
deputy auditor Of the New York Life, was called,
and testified about the card. He explained that
tonal Bank, referred to a transaction between
the main Office and the office OF the New-York
Life IN the Hanover Bank Building which kept
q separate account. He testified that as the
TUrKy MISTAKE