The Morris County chronicle. [volume] (Morristown, N.J.) 1877-1915, 1906-02-27
REPORT ON INSURANCE
Armstrong Committee Demands
Laws ReyoIutionizing Business.
DRASTIC REFORMS PROVIDED

Insurance--Law to Cancel All Proxies
Present Directors of Mutual Com
panies to Lose ofice Next Fan
when Election win Be Held.
Albany, N. Y.-Practically a com
plete reorganization Of the whole sys
fem of life insurance management il
recommended in the report Of the Arm
strong Committee, as submitted to th'
Legislature. The most drastic reform
if the Legislature acts upon the com
mittee's suggestions, will be a new
system of elections in the mutual com
panies which will discourage proxies
and will encourage policy holders to dc
their own voting for officers of theil
companies.
The committee recommends the can
collation. of all proxies now in exist
ence: that the terms of all directors
now holding Office shall expire on No
vember Is next, and that all annual
meetings which otherwise would be
held at an earlier date be postponed
until that time. Ballots shall be circu-
lated and policy holders shall be al
lowed to vote in person, by mail, or by
proxy.
Legislation to this effect would make
1t possible for policy holders of all the
mutual companies to elect complete
new Boards of Directors next fall In
cidentally the great number of New
York Life proxies that have been gath
cred by Thomas w. Lawson, of Bos-
ION, in his attempt to have Committee
Dc Governors get control Of that COM
pany, would be cancelled.
The report is voluminous, comprising
319 printed pages. Accompanying it
are eight drafts of bills for remedial
legislation, and the committee gave no.
tice Of the introduction of other bills as
seon as they can be prepared.
The remedial legislation recommend
ed, besides that pertaining to company
elections, includes the abolition of the
deferred dividend scheme, standard
policies prescribed by law. limitation
Of new Insurance. based on sliding
scale, publicity Of all facts pertaining
to a company's business regulation Of
the valuation of policies. surrender val
ues, surplus and expense accounts and
a general overhauling and regeneration
Of the State insurance Department,
which the committee declares has been
woefully derelict in it's duties.
Several penalties are prescribed in
the bills submitted for violatic.- of the
laws suggested and laws of the strict
ast nature are asked for to put an end
10 lobbying, the giving of campaign
contributions, syndicate operations,
speculation and loose expenditures.
In the matter of limiting invest
ments Of the funds of insurance COM
panies the committee recommends that
no investment in the stock of any cor
poration shall be permitted except in
public stocks of municipal corporations.
That investment in bonds secured to
the extent of lore than onesthird the
value of the entire security therefor by
the hypo thecation corporate stocks
shall be prohibited.
That no loans shall be made upon
stocks and bonds which are not the
subject of purchase under the forego-
Ing provisions.
That every company now owning
stocks or bonds of the prohibited
classes shall be required to dispose OF
them within five years of December 81,
1906.
That the statute shall forbid all syn
1icate participations, transactions for
purchase or sale on joint account and
he making of any agreement providing
that the company shall withhold from
sale any securities which it may own
Or acquire.
In its detailed report of the investi-
CATION of the companies the committee
says the accounts of the Mutual Life
Insurance Company should be thor
9ughly examined in order that the ex-
tent to which moneys have been mis-
applied and the responsibility for any
nisapplication which may be shown
may be determined.
Concerning the New York Life In
surance Company the committee found
that its transactions with Andrew
Hamilton showed abuses,
and that the statement sent from Paris
by Hamilton was without suitable
specifications.
In taking up the Equitable Life AS
surance Society the committee tells of
the discussions last February which
resulted in the reorganization of that
society and in the disclosures which
brought about the legislative inquiry.
The syndicate operations of the Equit-
able and James H. Hyde and the rela~
lions between the society and Kuhn,
Loeb y Go. as brought out in testimony
before the committee are referred to
at considerable length, as also is the
s50,000,000 Union Pacific pool under the
management of e. H. Hartman. Jacob
II. Schiff and James Stillman. Partici-
patton in this pool by the Equitable,
the committee holds, was clearly an inn
proper transaction for an insurance
company.
Former Governor Odelrs shipbuiid-
ing suit against the Mercantile Trust
Company, which was settled by that
company, is treated Of, the committee
holding that the circumstances of the
introduction of the Amber bill might
have been sufficient to induce that set
Element on the part of the officers Of the
trust company through fear that pro-
ceedings inimical to it's interests might
be taken if those who could initiate
them were not appeased.
The report contains full statement
of loans made to Il. II. Hartman and
Kuhn, Loeb q Co. by the Equitable.
Batteries Will March Across Rockies.
Two completely equipped batteries
OF the United States Army will start