The news & observer., 1905-09-12
THE MORAL POINT OF VIEW.

the great life insurance companies of
New York has disclosed condition
of affairs that has shocked the public
conscience. We speak not of ex-
travaGance and big salaries, for there
is nothing dishonest about paying u
$25, 900 man salary of $1O0, 900
when it is known to the policy-holders
and the public, though the payment of
such salaries breeds spirit OF lavish
ness that BODIES no good for the frugal
man who makes sacrifice to Law up
something for wife and children when
he has passed away.
The disclosure that is most repre-
hcnsible is the sickening story told
by an affair of the New York Life
Insurance Company. Some years ago
Prussian imperial laws forbade insur-
ance companies of that kingdom to
invest in fluctuating securities or
stocks 1t was held that American
life insurance companies must COM
ply with the terms of the law or with
draw from the country. Rather than
American companies withdrew from
Prussia. The New York Life remain
ed and obtained big advertising there
from. Here is the evidence as told
Fby the New York correspondent of
the Washington Post
zone of the employees who drew
note running in the trust company,
II, lu fNf
$500 year. His note was for ST.
900 900. and was accepted by the trust
company at that amount. One of the
other employees who gave his note was
a clerk in the securities department.
Credit was given by the trust COM
pany for these notes in special ac-
count, which the New York Life
maintained in the company, amount
ing sometimes to as much as S1O,-
900. OO0.
"The Immediate cause for those
transactions was demand made by
the Prussian government that no in
dustrial stocks should appear in the
New York Life schedule of securities.
Only on the condition that the New
York Life would comply with this
law would the PrusSian government
allow the company to continue doing
business in that country. The fact OF
the Prussian governments stand was
widely known, and, according to the
testimony adduced. the company
would have had to sell the securities
at great loss if they had thrown
them on tho market in such large
blocks, for investors were aware of
the fact that it was compulsory on
the company to get rid of them. AS
it u.s. most of the securities, it was said
were sold at good figures.
1t is plain that this trick was re-
sorted to in order to evade the Prus-
sian law. That revelation will doubt
less cause tho Prussian government to
lose confidence in the men guilty of
the practice. Certainly the manipula-
ton is SO transparently tricky as to
shock the moral sense of the world.
If that legerdemaine and those loose
and devious methods were practised
to hold business in Prussia. what
other tortuous devices may not have
marked the management of the COM
pany?
OF all corporations, the insurance
company owes the highest moral OBJ
legations to the public. Men do not
put their money with insurance COM
panies as an investment. though some
companies argue that it is a good in
vestment. Any good business man
can make his money earn more than
any insurance company can earn for
him. He takes out insurance for pro-
lection and he wishes to feel perfectly
sure that if he dies at any moment
the money will go to the support of
his family. He prefers one per cent
with perfect safety to ten per cent
with a very moderate risk. There
fore the insurance official who uses
this sacred money for speculative pur-
poses is guilty of a wrong greater
than is practised by any other fidu-
ciarv officer.
But. let us not grow pessmistic.
The practice of "frenzied finance"
having reached its climax in the big
New York insurance companies, the
calcium light now thrown on their
operations will operate in three ways
profitable to the public:
/. The great companies will mend
their wavs.
3 The cost of life insurance will
be reduced
g. The public in most States will
give to small home companies, or
ganized upon sou I'D principles, the
bulk of their business.