The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1905-09-29
WASAFICUREHEAD
Jacob Ii. Schiff Tells of His Con-
nection With Equitable.
A Director While Not a Policy
Holder in Company.
HE OWNED NO STOCK.
Held a Few Shares Which Be-
Iohged to Hyde.
Was Troubled With Doubts on
Question of Propriety.

& Co, bankers of this city. and for
merly a director of the Equitable Life
Assurance society, was the first wit
ness called before the legislative in
vestigation committee today.
Mr.. Schiff said he had become a di-
rector of the Equitable society in the
latter part of 1893 or the first part of
1894.
His firm had had dealings with the
society for a quarter of a century prior
to that time.
The question of the propriety of the
firm of Kuhn, Loeb & Co. dealing with
the Equitable society occurred to him
and he took counsel on the matter and
was advised that there was nothing to
prevent his firm from properly MAIN
tanning such relations. He was a di-
rector of the society four or five years
before he became member of any
committee of it. Then he was made a
member of the financial committee.
Mr. Schiff stated that the position of
director in large corporations in New
ork, and he presumed elsewhere, was
negligible quantity If any executive
officer wished to conceal anything
from the directors he could easily do
SO and the director. under prevailing
conditions is poWerless~ to prevent any
irregularity.
Mr.. Schiff testified that the Equit-
able was in the hands of executive Of
ficers. and he had no way of knowing
more than these executive officers
chose to tell him.
He refused an election to the execu-
tive committee because of the relations
of his firm to the society This, wit
ness said, was because he thought it
would be improper for him as mem
ber of the executive committee to pass
upon any dealings his firm might have
with the society.
Hyde Drew the Dividends.
tn
qualified as a director by shares trans
ferred by Mr. Hyde Mr.. Hyde drew
the dividends on these shares. Mr..
Schiff received no beneficial results
to the trustees under the Ryan pur-
chase. Mr. Sef1if said that prior to
last February, he not a policy
holder in the Equitable and was not
in any different position from many
other directors. and held his position
at the request of Mr.. Hyde. He was
asked to become member of the fin
ancial committee so he could give his
judgment on some bond purchases. The
question of premiums did not occur to
him because the finance committee
does not decide the actual purchase,
but merely advises the sale or purchase
of securities. The value of his advice
in this regard witness said was the
same as a judge of a higher court be-
cause of his experience. His position
was not one of such Importance, he
his Judgment be followed. He could
not say it was a surprise to him to
fird that his position as a member of
the financial committee was perfume
tory.
A copy of the bylaws governing the
company was identified by Mr.. Schiff.
These bylaws provided for an auditing
committee of five directors, to pass on
all matters, thus depriving the finance
committee of much OF its power. A
list of five names was handed Mr..
Schiff but he was unable to say wheth-
er the men named on it composed the
committee. They were C. r. Alexander,
Valentine P. Snyder, Thomas D. Jor-
dan, w. H. Mcintyre and William AL
exander. Mr.. Hughes said this list was
handed him by an officer of the Equi-
table subject to correction. Witness
testified that the chairman of the fin
ance committee annually appointed the
members to audit the society's accounts
and report to the finance committee
and in that way attempted SuperviS-
ion of the society's funds.
Custom Outweighs Bylaws.
Mr.. Schiff said there was practically
no place for the finance committee as
the executive took the initiative in all
investments and there was an auditing
committee with powers eQualling the
finance committee.
do I understand" asked Mr..
Hughes, that in corporations custom
outweighs bylaws ?"
replied Mr.. Schiff.
Mr. Hughes stated that he found
that w. H. Mcintyre and T. D. Jordan,
members of the finance committee, had
reported to that company in 1904 that
they had examined the securities and
found them correct.
Mr. Schiff said they were appointed
by Mr.. Hyde, the chairman of the
committee.
Mr.. Hughes said: Nov, in consid-
Grafton of the facts that have been
found at this inquiry that the Equit-
able accounts were kept in the names
of parties to whom they did not be-
long that funds of the society were not
entered on its books. I want to find
out what supervision was exercised.
Now, / understand that the officers had
complete charge of the society, that
the finance committee dealt with the
/ investments and sales of securities only
after they had been made and that
with the important power to examine
| the accounts. the finance committee
did nothing but appoint two of the
executive officers to conduct the ex-
animation for them p?
1.-THE chairman in all companies ap-
points the b-committees,' replied
/ Mr. Schiff.
sChecks are not necessary if all men
are honest" said Mr.. Hughes.
i Il have always believed every man
honest until I found him different"
said Mr. Sclliff. This has always
been my theory
To question by Mr.. Hughes as to
whether he did not think there ought
to be more supervision of insurance
eo1nDanies, Mr.. Schiff said:
There is no doubt of it. but no law
can secure it. Do you expect every
1 director to have accountants at his dis
poSaI to- examine the accounts of every
| Mr.. Schiff said he understood that the
/ Equitab bic society was audited only by