The Topeka state journal., 1905-09-12
DUMMY BONDS.
1t Is Declared to Be Customary for
Insurance Companies to Carry Them.

New York, Sept. 12.-Inquiry into
the methods pursued by the chief in
Surance companies was resumed today
by the special legislative committee
appointed for that purpose at the spe-
cial session of the legislature last
spring. Today's session was the fourth
held by the committee and the inquiry
was resumed where it was broken off
by adjournment on Saturday, when E.
D. Randolph, treasurer of the New
York Life, explained the transactions
by which the New York Life disposed
of assets. objected to by the Prussian
government.
The examination of Edmund D.
Randolph, treasurer of the New York
Life, was resumed. The removal of
the preferred stock of the Chicago,
Milwaukee & st. Paul from the assets
of the company to satisfy the PruSSian
government, which was under consid-
Grafton at the last session, was again
taken I'D.
Mr.. Randolph testified Friday that
when the insurance company had to
turned over to the New York Trust
company as collateral for a loan for
which notes were given by George B.
Marshall, the colored messenger. en-
p1oyed by the company at $500 year.
The trust company was owned by Off
GERS of the insurance company. Chas.
E. Hughes, counsel for the investigat-
ing committee, endeavored today to
dSCeIIdlu VINO duInOIlZSQ l1S lIdIlSdC-
ton. Mr.. Randolph was asked to
point out in the finance committee of
the New York Life the record of the
sale of the stock. The company had
no record of any dummy" notes given
by Marshall or any other messenger
employed by the company.
Mr.. Randolph declared: 'It is a
recognized custom in financial con-
Germs to have dummy bonds. I am
sorry the name of George Marshall has
been brought into ridicule. On this
transaction we carried it along for the
company and made an additional
100000 for the policy holders"
The transfer of the Chicago &
Northwestern preferred stock from the
life insurance company to the trust
company which was also forced by the
Prussian government was also re-
viewed.
Mr.. Randolph said there was no reso-
luton on the books of the finance COM
mittee of the company referring to the
loan made to Marshall and another en-
ploye named Madison. He stated also
that he did not make any delivery of
such loans.
seYou kept control of the stock after it
went off your books so as to make any
profit?'
Yes
Taking up the non-ledger assets, Mr..
Randolph said they did not appear on
the ledger but a record was kept in
card index. A card for such index
showing the record and sale of 2,100
shares of Erie for $4,000 was in
troduced in evidence. This card, it was
brought out, was the only record kept
of this transaction. Cornelius G. White,
deputy auditor of New York Life, was
then called. He said the $210000 re-
ceived for the Erie stock was credited
to the financial or Hanover bank office
of the insurance company.
Mr. Randolph again on the stand said
that five thousand shares of Union Pa
cific railroad preferred stock which was
received as bonus for underwriting
never appeared as a ledger asset as it
cost nothing. He said that while the
stocks Objectionable to Prussia were
ostensiblv being sold off, no such steps
were taken in regard to Union Pacific.
The Union Pacific stock, Mr.. Randolph
said, was sold at different periods from
1899 to 1904
The question of syndicate operations
was then taken up. Mr.. Hughes drew
Mr. RandoIph's attention to the fact
that stocks received by the company as
a bonus for underwriting were recorded
in the card index as non-ledger assets,
appeared as an asset on the ledger. Mr..
Randolph did not know why this was
done. He presented Mr.. Hughes with a
pamphlet entitled Participation in syn
dicates by the New York Life Insur-
ance company for ten years past
The net profit to the New York Life
by this syndicate transactions in ten
years was stated in this paper have
been been s., ,399, ,695.
This was offered in evidence by Mr..
Hughes and was alleged to show New
York Life had made no syndicate trans
actions which had resulted in a loss.