Perth Amboy evening news., 1907-03-15
PRUDENTIAL'S
FUTURE ACTION

The bills for the reform of the in
surance business will be opposed by
the Prudential Insurance Company,
according to announcement by Rich
ard " Lindabury, who is the com
pany's general counsel The chief
objection seems to be TO the use of
the surplus for the benefit of the pol
icy holders, although the committee
makes this one of the strongest fea-
lures of the. report, and there was
trong testimony in favor of this plan
at the investigation. Insurance ex-
,erts generally agree that the sur
plus beyond the liabilities belong to
the policy holders, from whose ex-
,essive payments beyond the fair cost
Of insurance 1t was accumulated. AS
the insurance company is now con-
trolled by the Fidelity Company, by
he sale of the stock to that corpora
tion, which the Prudential directors
control, the real effect of giving the
surplus to the shareholders would be
to benefit the Fidelity, which now has
with the Prudential.
Insurance men generally aAree
that the surplus should go to the pol
icy holders, and that combinations
with other financial institutions
should be prevented, and it is believ-
ed that many of the Prudential's in
surance men take this view. 1t would
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Carter interests, which are largely
concerned in making the Prudential
feeder for their financial enterprises,
whereas the insurance men think the
business should be run with sole re-
gard to insurance progress. A des-
perate contest is anticipated at Tren-
ton regarding this reform, and if the
bills pass it is probable the independ-
ence of the Prudential will be as
sured, with its future devoted entire
ly to the insurance business.
Whether Mr.. Lindabury, as gen.
eral counsel of the company would
represent the McCarter financial or
the Prudential insurance interests
has been an interesting question, but
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present methods. Should the insur-
ance business be separated, it would
have as remarkable a career in the
future as in the past, it is believed, as
the prosperity of the company is very
great and by being devoted to the
insurance business alone, it would,
it is felt, become one of the most
en- fn1 toe i,,t 81 4 7
however, it remained connected with
the financial schemes. it would be
constantly embarrassed by legislative
attacks in all the state. Nor would
the financial institutions suffer, as
they are already on the firmest basis
and equal to all the regular business
they can do.
part of the report of the state
senate committee bearing upon this
question is as follows:
The assets of life insurance
company are trust funds, and the
management of such a company must
be deemed to be the management of a
great trust While it may be true. as
a strictly legal proposition, that the
obligations of the company to policy
holders are limited by the terms of
the written contracts or policies
which it issues, yet it Is not the whole
truth; and the Prudential company
itself has recognized that its obliga-
tlons, equity and good conscience, gol
further, for they state that they have
voluntarily divided up among policy
holders, in excess of its legal obliga-
tions, more than seven million dol
lars.
THE truth is that this vast accum-
luation of money, now amounting to
more than one hundred and twenty
five million dollars, was all contrib
uted by and in ethics all belongs to
the policy holders, after fair deduc-
tion for the expenses of operation and
a just and liberal return to the pro-
moters of the enterprise. When it is
considered that these policy holders
have reached the stupendous number
of six millions of persons, or about
three times the population of the
state of New Jersey, and that the
contracts with them are written con-
tracts prescribed and regulated by
the company itself, in which no ele-
ment of bargain or adjustment of
terms is possible on the part of the
insured, the parties no longer stand
in the relation of persons contracting
with each other on even terms, but
the company stands in the position of
administering a public trust of high
and is charged with the
duty Of administering it, not only
lawfully, but equitably, and in the
interest of the public The position
of the company is analogous to that
of great railroad company which is
sues millions of tickets to passengers
who will travel over their railroad.
These tickets are sometimes called
contracts, and the rights of the pas
senger are supposed to be defined by
them, but the better opinion is that
they are not contracts. but mere to-
kens indicating the right of the pas
senger to ride upon the public rail-