The Stark County Democrat. [volume] (Canton, Ohio) 1833-1912, 1905-09-12
HOW CLERKS COULD
BORROW MILLIONS
BIG SENSATION IN INSURANCE IN.
vEsTlGATIoN.
Relations OF New York Life With
Trust company-Millions Bor-
rowe6 by $500 Clerks.


Office were able to borrow $3,OOO,OOO,
and do 1t time and time again, in order
to conceal the fact that the company |
was carrying securities which it had
no business to carry and showed on It's
books as sold, and how the New YORK
Life kept large-sized string on trust
company which 1t appears to have sold,
were sensational FEATURES which
marked the third days session of the
legislative insurance investigation this
afternoon.
The sensational testimony was given
by Il. B. Randolph, treasurer of the
New York Life Co., in the course of a
gruelling examination by Charles E..
Hughes, chief counsel for the commit
tee. Mr.. Randolph was on the stand
all afternoon, and when the hearing
closed Mr.. Hughes had not finished his
examination. Senator Armstrong am
nounced, when adjournment was taxi
en-, that the next session of the COM
mittee will not be held until next
Tuesday morning.
Sensation followed sensation after
Mr.. Randolph took the stand. Mr..
Hughes took up the question of the re-
lations of the New York Life Co. to
the New York Security G. Trust Co.,
now the New York Trust Co., with
which the New York Life kept several
millions of dollars on deposit.
Five or six years ago the New York
Life had some difficulty with the Prus-
sian government and was debarred
! from doing business in Prussia, but
was readmitted on condition that 1t
would agree not to invest in certain
forms of securities, among which were
the stocks of industrial and mining cor
porations.
The New York Life owned large
block of stock in the New York Secur-
ity G. Trust Co., and this stock it de-
cided to SELL In order to get rid OF
the stock, the New York Life sold 1t
to a commission of trustees, consisting
of c. S. Fairchild and others, on GER
tain conditions, one of which was that
!, the trust should not expire till 1907, SO
that, while the stock appeared as sold
on the books of the New York Life Co.
It was in reality in the hands of trus-
tees chosen by that company.
! BY Mr.. Randolphs testimony 1t was
then shown that the New York Life
/, kept from S3,OOO,O00 to $10,00O,O00 OF
| deposit with the New York Security &
J Trust Co., and aided it in making
loans. Then esNew York Life goi
, interest on the money from the, trus
, company ~
{ Mr.. Randolph was induced to tel
l about certain loans obtained by clerks
in the New York Life Office. The sub
r stance of his testimony was that th'
e New York Life, under its agreemen
g with the Prussian government, had t
t get rid of certain industrial and othe
$ stocks barred in its agreement. Anon
them were certain United States Stee
securities, known as Carnegie bonds.
When the sale of these securities be
came imperative, the market was in n
shape to absorb them, and it woul
mean a big loss If they had been OF
: fered at the time. So, in order t
make it appear on the New York Lif
! books that the securities had been solo
they were transferred to the New Yor
= Security G. Trust Co. The latter, how
S ever, on it's books did not show an
o sale, but showed the money loaned
the New York Life Co.
- That a loan was made was admitte
), by Mr.. Randolph in statement ths
g two clerks in the New York Life offic,
) one of them getting a salary of $500
= year, borrowed $3,000,000 on their pei
sonal notes from the trust compan
e and secured by collateral consisting {
n railway bonds, which collateral We
g furnished by the New York Life G,
lie The names of these clerks were Natl
h ewson and Marshall. When asked no
1t much salary they got, he said he b.
le lieved Marshall's salary was $500
y year.
"An examination Of your book
l. then" said Mr. Hughes, would hay
ID shown that you did not own the Unite
IN States Steel bonds?"
rs "Yes," said Mr.. Randolph.
ID "But as a matter of fact" pursue
10 Mr.. Hughes, relentlessly, you own'
ID the bonds, although they appeared {
lie your books as sold?"
oO A relucanJ yes was Jne dHSWer'
a That there is possibility of Thom
Sc w. Lawson, the Boston financier beiI
Of invited to tell what he knows of Il
ne surance affairs at the present inqui
a. was rumored today,
. Senator w. w. Armstrong, chairmi
at of the committee, when asked about I
ne rumor, said: 1--WE have no present /
is tention of asking Mr.. Lawson here, b
. if we learn that his knowledge of 1
surance affairs might assist us, '
shall certainly request him to appear
For many months Mr., Lawson h
of been keeping up running attack I
,e the methods of life insurance comp
ct nies and has had several passages wi
8. Mr.. Mccall, the president of the NJ
| L "a ntEankc haMn hnnn