Omaha daily bee., 1905-09-13
Sensational Disclosures in Insurance InVes.
tigAtiOn At New York.
NEW YORK LIFE MANlPULATES SECURITIES
Bonds Sold and Bought Back Two Days
Later to Make Report Coed.
STATEMENT OF TREASURER RANDOLPH
Facts Finally Admitted After an Hours
Cross Examination.
STATEMENT OF TREASURER RANDOLPH
RELATIONS WITH TRUST COMPANY
Insurance Company Refuses to Make
Noans on Collateral, hut Makes
Practice of Loaning TO Trust
Company for This Purpose.

NEW YORK, Sept l2-seling $4,000 in
ponds one day and buying them back the
next, except one. a holiday intervening In
order to keep within statements made in
he New York Life insurance company's
oport to the superintendent of insurance,
vas the sensational disclosure made today
It the session OF the legislative insurance
investigating committee. The fact was
lrawn from Edmund d. Randolph. treasur-
OF the New York Life Insurance COM
any, ,ate in the day after Attorney Charles
= Hughes, of counsel to the committee,
,ad labored for more than an hour TO get
direct answer from Mr. Randolph to the
ireCt question.
The inquiry had dragged through mass
figures during almost the entire day,
iut It was not until the hour for ending
he session that the sensational feature
vas brought out.
Earlier in the day. Mr.. Randolph had
landed Mr. Hughes a schedule of syndi-
ate undertakings and transactions Of the
lew York Life for the last ten years. This
ltatement was to show a footnote to the
chedulo so stated, that the company had
participated in no syndicate transactions
hat had been closed out with n loss
Among these syndicate transactions was
he underwriting of the navigation syndi-
ate, or International Mercantile Marine.
Mr.. Hughes drew from the witness that
here was an aggregate Of 100000 paid
~ the New York Life to ]. p. Morgan &
20, on this Joint account" Mr.. Hughes
hen took up a sales item dated December
!. l9O9 OF $4,000 of International Mer-
antle Marine stock. Mr.. Randolph, reply
ng to Mr. Hughes, said this sale was made
j. p. Morgan & Co., and that a purchase
4 $4,000 was made on January 2, 1904
rom J. p. Morgan G. Co
After falling for some time to get a di-
ect answer, Mr.. Hughes finally asked Mr.
tandoloh:
'As a matter of fact there was report
the superintendent of insurance on De-
ember 81, 1902"
Yes"
Then. the sole purpose of the transac-
ION was that you might be able to tell
I'D Anpcrintendent OF insurance you held
'nly SS,2O0OOO of International Mercantile
Marine shares?"
The witness hesitated and tried to evade
direct answer, but Mr.. Hughes repeated
he question. until finally Mr.. Randolph
aid
Yes"
There was a momentary hush, followed
~ murmur of suppressed excitement.
stocks sold at a Loss.
Following up the navigation syndicate
ransactions, Mr.. Hughes referred to an
tenn on the schedule of syndicate transac-
ions under date of December 3O 1904 by
which $4,000 OF bonds were sold to j. s.
dorgan Co., of London, for $4,000. Mr..
randolph admitted that this was an out
light sale, and the loss of $4,000 was
harged of to the profit and loss account
DR.. Hughes left the point and took up the
Plafinng Of
'Nylic" with the New York Life Insurance
company. He got from the witness the ad-
mission that on April IL, 1904. sale of $5O,-
90 stock to "Nylic" was made.
Relations with y5ust Company.
The usefulness Of the New York Security
Trust company to the New York Life
anne out when It was testified that while
he Insurance company was not taking
ollateral loans. It made a practice Of lend
ug its money to the trust company which
made the loans.
Mr. Hughes took up the accounts of the
money deposited with the New York Sc
cdrity and Trus; company in 1902, which
was called account No. L. 1t ran from
S6''5O,OOO In May and June up to Sl2, asl, 900
in September and ended well over $4,000
900 IN December.
NOW" said Mr.. Hughes, why did you
York Security and Trust company In
Iuly, 1904 to $2.500OOO and keep il at that
even hgure to the end of the year? Your
balance at the beginning of 1904 was 5000 :
COR
Mr.. Randolph professed ignorance, the
mpossibility of remembering every trans
otion and interrupted again and again.
Mr.. Hughes begged the witness to re-
rain from general conversation" and re-
'eated the question Mr.. Randolph finally
aid;
There was a question at this time
whether our relations would continue with
the company. The consolidation Of the
New York Security and Trust company
Wag taking place at this time"
Nov, prior to the end OF 1901, the trus-
ees OF the New York Security and Trust
company held 5.OO6. that is a majority OF
he 1000 shares2'
Yes"
We'll. In March 1904, when the total
stock Of the company was increased 10
1000 shares. were the holding OF the trus-
.ees increasedg'
No"
Transfer of Deposits.
Witness was then led through the change
OF the name of the trust company and
admitted the three accounts with the old
company were closed and four opened with
the new one. When the money was with
drawn from the New York Security and
Trust company 1t was deposited with the
First National bank. This admission was
slicited from the witness after much pres
sure.
In reply as to interest paid by the vari-
Gus banks where the insurance company
had deposits, Mr., Randolph said all OF the
banks paid ? per cent except the Bank OF
Montreal. which paid "a per cent
In discussing the syndicate to handle the
New orleans railroad securities. which
transaction was closed out In 1904. Mr.
Randolph referred 10 receivership being
appointed. which was unforeseen by the
New York Life when the securities were
taken up. Witness also said that some
parties 70 the company who had expected to
join In handling the securities had failed