The Birmingham age-herald., 1905-02-19
SCANDALS GALORE IN LIE INSURANCE Lid Taken Off by Explosion in
 Equitable KESSLER WINS ON I. [. & l. Reported to Be Heaviest Winner on Recent yRse-eossip of Ala
 bama companles-Many
 Chicago MlllIonalres.
KESSLER WINS ON T. C. & l.
BY w. G. NICHOLAS.

New York, February 1S.-The sensation of the week has been the explosion in the Equitable Life Assurance society oc- casioned by the struggles of two rival factions, one fighting to retain control and the other to secure supremacy. The underlying importance of the incident lies in the fact that 1t has supplied eonfirma- tion of broadcast but previously unproven charges that the trustees of the great life insurance institutions had fallen Into the habit of using their quasi-public trusts as private snaps for personal financial advantage. Policy holders have for years noted with growing suspicion and uneasness the rapid rise to colossal wealth of individuals entrusted with the management of their funds, They have seen men become -millionaires on salaries no larger than those paid railroad officials. In their hearts they knew that this could only be done through the favor and cooperation of market leaders and banking interests in Wall street in return for friendly diversion of trust funds into mutually profitable fields,
 There pours into the treasuries of the three leading life insurance companies every year the neormous sum of $25O0 000,- 000 Their combined assets amount to about one and a quarter billion dollars
 ($1, ,260, ,000 000) At the date of the last of ficial report they had $75S 000,000 in stocks and bonds, of which more than 00O0, GOO
 was invested last year. They are a pow srful factor in the money market by req son of the fact that they have constantly
 on deposit in the New York banks be-
 tween $6O0O0, 900 and sS00Oo,O00
 The fortunes of the insurance compa-
 nies and those of the leading banks and trust companies are closely interwoven by a network of commingling directors,
 through whose influence the vast accu-
 mutations of the policy holders are em-
 ployed in the Notation of all manner of projects. Actual dishonesty on the part of the persons entrusted with the han
 ding of these funds has rarely been
 charged directly, but the critics allege callous and utter disregard of the propri-
 eties by the participation of trustees in the profits of underwriting and Notation, as well as in the organization of auxiliary institutions depending for profit on the
 use of trust moneys,
 The cash value attaching to the inside
 "pull' on life insurance funds finds sin
 kster illustration in the fact that a group
 of rich men offered James H. Hyde $5000,- 900 for $51 GOO in Equitable Life Assurance
 society stock which only pays dividend
 of per cent or $3750 year, an offer which was refused as insufficient. The Legitimate income on $5,000.0OO invested in safe bonds would be $2O0,O0O a year. The inference which can clearly be drawn from the offer and refusal of s5000.000 for
 s51 900 of insurance stock Is that the in-
 vestment is worth more than s200,0o0 a year to the young man whose father founded the cOmDanV.
 The scandal has uncovered many other phases of high finance which serve to call
 attention unpleasantly to the operations of rich men in Wall street who stand high in public esteem, on account of their
 prominence In the banking and social
 world. The lifting of the lid has allowed the escape of unwholesome stenches
 which are filling the nostrils of the entire public, and even though the quarrel be patched up In some way and the fighters separated the effects of the exhibit will be far-reaching. It may even lead ulti- mately to revolution in the management of life insurance funds and a closer rela- tionshp between the actual owners of these funds and their administration. The | many millions of dollars which find their way into the private pockets of individ- uals would. if legitimately conserved very greatly reduce the cost of insurance and l elevate the moral tone of the financial I district of New York.