The Providence news. (Providence [R.I.]) 1891-1906, 1906-01-05
FULL PUBLICITY
IS ADVOCATED
Armstrong Committee Recon-
meNds Radical Changes.
UNIFORM SYSTEM OF AUDITS
Further Safeguards Against Forfeiture Of
Policies and Distribution Of Surplus
Among PoIlcyhoideY.
UNIFORM SYSTEM OF AUDITS

New York. Jan. Sit was learned to-
day on good authority that these are the
chief recommendations which the Arm
strong investigating committee believes
ought to be made TO the legislature
/. The policyholders have an effective
voice in the government of the COM
panies
2. That there be full publicity to the
pollcyholders in regard to the manage
ment OF the companies affairs.
8. That a uniform system OF audts and
accounts be prescribed by the state In
surance department.
4. That policies be limited to certain
standard forms.
5. That policies be safeguarded further
than at present against forfeiture.
6. That deferred dividend policies be
either prohibited or greatly restricted.
Z. That the companies be obliged 10
make an equitable distribution OF the
surplus TO policyholders at stated periods.
S. That the companies make larger in
vestments I'm real estate bonds and mort
cages.
9. That the control OF subsidiary COM
panies be prohibited.
TO- That investment in corporate bonds
be regulated so as to prevent speculation
enterprises
II. That deposits with or loans TO
moneyed corporations be suitably re-
stricted.
12 That the discretion OF the directors
be subject to judicial and administrative
review
SEVERAL WEEKS WORK.
There are. OF course, only the broad and
general lines along which the commit
tees report will be drawn. The filling in
OF the details and the working out or
the recommendations into practical form
will be "A matter Of several weeks worR
and one, too, which the committee may
not be able 10 carry through without
making changes i'm its original plans.
The opinion was eXr ressed today by
persons who heard OF the committees
conclusions that they were radical in
deed. The investments OF the life insur-
ance companies in banks and trust COM
panies was one OF the most important
subjects which came before the com
mittee in the course of Its public hearings.
Through its intimate relations with the
trust company the insurance company
was able, II was shown, 10 keep at its
disposal the yellow dog funds from
which improper payments were made
without becoming a matter OF record on
the trust companies, too. the life in
surance institutions were able TO make
fictitious sales and loans for the purpose
OF window dressing" at the close or the
year. Large sums OF money have been
kept on deposit in the trust companies
by the insurance companies at low rates
OF interest, and I'm nearly every one OF
the subsidiary Institutions Of the large in
surance companies the officers and di-
rectors OF the latter have been stock
holders.
PROFITABLE INVESTMENTS.
With the exception OF the officers and
trustees OF the New York Life, which
disposed of it's holdings In subsidiary
companies several years ago, all the in
surance witnesses before the Armstrong
committee maintained that the trust com
panies were the most profitable invest
ments the life institutions had The Mu-
tual Life's officers and directors declIred
that the trust companies were neces-
sary development Of modern insurance
conditions that the Mutual, for instance,
practically had to have some such in
stitution as a safe depository for its
funds. Since the present life insurance
scandal broke, though. both the Equitable
and the Mutual have decreased their de-
posits in the subsidiary institutions.
IF bill were passed prohibiting the
control by a life insurance company Of
any subsidiary there would have TO be
an adjustment of the stock interests I'm
at least the Mercantile Trust company
and the United States Mortgage and Trust
company. The Equitable Life owns ;na-
iority of the stock In the Mercantile Trust
and the Mutual Life majority Of the
United States Mortgage and Trust COM
pany Whether the committee has any
idea of taking into account also the hold
lngs OF individual officers and directors
in the subsidiary companies is not known,
but 1t is practically certain that recon-
mediation will be included in the report
TO the effect that insurance directors
should have no conflicting connections. II
the stock held by insurance officers and
directors Is taken into account I'm the
control Of a subsidiary institution the list
OF companies affected would be consider
ably larger.