The sun. [volume] (New York [N.Y.]) 1833-1916, 1905-09-09
THE n. Y. LIFE And PRUSSIA,
SOLD ALL ITS STOCKS WITH A
STRING ATTACHED.

InqulsitOr Hughes Brings Out That sales
to Subsidiary Trust Companies Weren't
Bona Ftde-Clerks signed Notes for
Big LOans-Syndicates Hero. Too.
The third meeting Of the Armstrong
insurance committee brought to light the
fact that the New York Life Insurance
Company has at various times transferred
blocks Of securities, aggregating several
millions Of dollars, to the New York So.
curity and Trust Company, now known
as the New York Trust Company, to en-
able It to conceal the ownership Of these
stocks in It's annual schedule Of assets.
The transaction took the form on the
trust company's books of loan to the
New York Life Insurance Company, tho
loan being secured by notes drawn by em-
ployees in the New York Life with the stock
as cola teral security. One of the en-
ployees who drew a note running to the
trust company, was a messenger who re-
ceived q salary of $500 a year. His note
was for 81 500 coo and was accepted by
the trust company.
One of the other employees who gave his
note was clerk in the securities depart
IneUt. NTtulU WdS given W VIC u uoe WIFI
pany for these notes in special account
which the New York Life maintained n
the company, amounting sometimes to
as much az $10,0OO,0 900.
The immediate cause OF these trans
actions was an agreement ma de with the
Prussian Government that no stocks should
appear in the New York Mfe's schedule OF
securities. Only on the condition that the
New York Life would comply with this
would the Prussian Government allow the
company to continue doing business in
that country. The Prussian Governments
stand was widely known, and according
to the testimony yesterday, the company
would have had to sell the securities at a
great loss IL they had thrown them on the
market in such large blocks. for investors
were aware Of the fact that it was COM
pulsory on the company to get rid Of them.
As it is most of the securities, 1t was said.
were sold at good figures
CONTROLS THE NEW YORK TRUST COMPANY.
While it has been represented that the New
York Life does not own any trust company
stock, it was shown yesterday that officers
Of the company, serving in an individual
capacity as trustees of nearly all Of the
New York Trust Company stock, actually
control that institution. 1t was shown
further that the New York Life has an
agreement with the syndicate owning the
trust company stock by which 1t has this
option OF buying back the stock after a
certain term Of years.
The trustees Of the trust company's
stock who control its voting power are
President John A. Mccall, president Of tn,
New York Life; George w. Perkins, first
vioe-president, and C. 8. Fairohild. A
majority Of the trustees constitutes
quorum Some of the New York Life trustees
are also owners of stock In the trust COM
pany.
Besides the $4,000 900 account which ths
New York Life carried In the old New York
Security and Trust Company it has carried
regularly in the institution three other
accounts, one of which has exceeded 81, OO0,-
900 most Of the time. The complete details
OF the development Of the trust company
were brought out at yesterdays bearing
1t was Edmund d. Randolph, treasurer
of the New York Life, who told the CONE
mittee of the company's relations with ths
trust company, including the loan trans
actions.
Charles E. Hughes; counsel for the In.
vestigating committee, questioned Mr..
Randolph about all OF the New York Life's
important accounts with the trust COM
pany from 1900 on. In 1900 It was shown
the insurance company bud three accounts
with the trust company. They were desig-
mated by numbers I. s. The first account
ranged in 1900 from 81 900 900 to IS, 900 900.
The other two were small, relatively.
Account No. was the New York LIES
general banking account, through which
1t collected it's money and paid for its
Investments. The two other accounts were
used for the payment OF insurance claims,
each, 1t was asserted, being employed for
a different class Of payments.
ACCOUNT NO. ~
InloO1the regular business account ranged
from S2,2l2, 900 to 81, 100000, and was sub
ject to large fluctuations. In that year .
new account. designated Account No. L
was opened by the New York Life. For
the first three months Of the year It shows
standing deposit Of 100000. The new
account Mr.. Randolph testified, was opened
as the result Of a special agreement between
the trust company and the New York
Life.
This agreement was that the life insur.
ance company was to get rate Of interest
on the deposit only u per cent. lower than
the rate which the trust company sue
ceeded In getting for its loans. The returns
from the account, it was said by the witness,
were never less than per cent. and they
have been as high as 81 per cent. After
the first three months in 1901 the account
began to grow. 1t rose to 38,2eA. 900 in
April; from that to y, 784, OH in May and then
to SO $4,000 in July. 1t dropped to $780,
0Go in August and at tho close Of the year
it stood at Se.sO5,OOO. For the first three
months of 1902 the deposit was sc. 900 900.
1t was in reply to questions concerning
the evenness of the cash balances in these
months that Mr. Randolph disclosed the
transactions which has enabled the New
York Life to wipe its stock holdings Oh it,
books. Among the stocks which the COM
pany was DESTROYS to dispose Of wore,
Mr.. Randolph said, about 5000 shares Of
Chicago and Northwestern preferred and
$500 shares of st. Paul preferred. The
company wanted to realize $3.50 share for
the Northwestern and $50 for the ST, Paul.