The Montgomery advertiser., 1905-09-30
Kuhn, Loeb and Company. bankers ot

| this city, and formerly a director of l the Equitable Life Assurance Society, was the first witness called before the ! legislative life insurance investigating committee today.
 Mir. Schfff said he had become a direc- Society in the latter part of 1898. or the first part of 1884 Ills firm had deal~ ings with the society for a quarter of d century prior to that time. The question of the propriety of the firm of Kuhn, Loeb & Company deal ing with the Equitable Society occur red to him and he took counsel upon the matter and was advised that there was nothing to prevent his firm from was a director Of the society four or five years before he became a member of any committee of 1t Then he was made a member of tho finance commit tee.
 Mir. schir stated that the position of director in large corporations In New York. and he presumed elsewhere, was q negligible quantity. If any executive officer wished to conceal anything from the directors he could easily do so and the director under prevailing condi- tfons. is poweriess to prevent any irreg- nlarfty.
 Mir. schiff testified that the Equitable was in the hands of the executive of- ficers and he had no way of knowing any more than these executive officers chose to tell him.
 ; He refused an election to the execu- tive committee because of the relations of his Arm to the society. This. witt ness said. was because he thought 1t would be improper for him as mem-' Der of the executive committee to pass upon any dealings his firm might have with the society,
 Up to "a recent time, Mir. Schiff was aualifed as q director by shares trans ferrad by MT. Hyde. kr. Hyde drew the dividends on these shares. Mr. schfff received no beneficial results from them. They were re- transferred to the trustees under the Ryan pur-s
 MT. schiff said that prior to last February he was not pofieyhulder in the Equitable. and was not in any diff ferert position from many other direc- tors. and held hIa position at the re- quest of MT. Hyde. He was asked to become a member of the finance com mitfee SO that he could give his JudE- nael,t on the securities the society pur- chased. The question Of prcpriaty did not occur to him on this point because the finance commtttee does not dscide the actual purchase. but merely ad-, viseS the sale or purchase of securities. The value of his advieA tn this regard. the witness said. wae he same " &: judge of higher court because of his experlence Hls positsan was not one of much lfnnortance, he stated he could not inssat that his Judgment be fQi- lowed He could not say it was < NAir~ prfse to him to find that hls position 1s a member of the finance Committee was perfunctorN
 A copy oE the by-iaws governing the rsnanee Committee was introduced and was identified by MT SehtK- These bye laws nrexlde for ~ asadAting conamttte@ og five directors 10 pass upon all mat- fera. thus deprfvifik the Finanes Conn niiltee Of much Of it's power, liat Of i've names was handed MT. schih. but he was unable to say whether tho men named on if cpnpoeeN khe cOmmsttee
 Mr. SchIn satd that tfsre was prac- ticaliv nc place for the Finance Com nitfees as the Executtve Cornmittse ans there was an auditing cornnfttee with 2owers eduailing those of the Fi- nance Eommittee.
 ssDo understand" asked Mir. Hughes, sthat in corporations custom outweighs by-lawsT
 s'In the Equitable. this was the case" replied Mir. SchiR.
 Mir. Hughes said: Now in eonstd- eration of the facts that have been developed at this inquiry that the Equitable accounts were kept in the names of parties to whom they did not belong, that funds of the society would not be entered upon It's books, want to hnd out what supervision was exercised Now, understand that the executive officers had complete charge of the so- ciety, 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 account, the Fi- nance Committee did nothing but ap- point two of the executive officers to conduct the examination for them."
 "The chairman in all committees ap- pointed the b-committees," replied MT Schiff.
 "Checks are not necessary If all men are honest" said MT. Hughes.
 q have always believed every man honest until I found him dishonest" said MT. Schiff. This has always been my theory and practice through life"
 In reply to a question by Mir. Hughes as to whether he did not think there ought to be more supervision of insur- ance companies, MT. Schiff said: There is no doubt of it. but no law can se-
 
 to have accountants at his disposal to examine the accounts at each bank, in- surance or trust company" MT. Schfn said he understood that the Equitable Society was audited only by two of It's executive oficers, Mir. Mcintyre and Mir. Jordan. and that Mfr. Hyde appoint ed them. Said MT. Schiff: Y think he made a mistake. because he actually kept a Board of Directors absolutely at the mercy of one man."
 His Business e Model.
 Mir Schiff said he would like to see an insurance company looked after as strictly as his own banking firm and its executive officers held to a strict as his own cashiers. During his connection with the society, Mir schiff said he never heard of the never brought to his attention that der an account ir which they did not belong.
 MT. Hughes asked him about cam paign contributions by the Equitable MT. Schin said in reply that Cornelius Bliss had told him that Mir. Hyde had contributed to the last cam paign, but he did not know whether 1t was the Society's money. Witness knew absolutely nothing as to how the money of the Society was used by the executive officers, unless they choose to inform the Finance Committee.
 Taking up the transactions of Kuhn, Loeb and Company with the Equitable, witness testified that the names of the firms who contemplated purchases un- der advisement were never mentioned