Evening star., 1909-06-29
j. S. TO BOND CLERKS.
Lawmakers Dissatisfied With
TrebIy Increased Rates.
COMMITTEE HAS HEARING
Plea of Justification Fails in Its Ap-
peal to Congress.
GOVERNMENT TO DO BUSINESS
Bill to Be introduced Providing
Fund to Be Contributed to by
Trusted Employees.

| Uncle Sam is going into, the bonding
and surety business.
| At least that is the way it looks just
now as result of the hearing today be-
fore the ex-officio appropriations commit
tee. at which twelve of eighteen or twenty
| bonding concerns doing business in the
United States were represented.
Ever since practically all the bonding
companies doing business in the United
States got together and trebled their
rates to government employees, beginning
with January i, 1909. the impression has
prevailed around the appropriate COM
mittee's headquarters that they are first
class pirates. The surety people went up
on the hill today in an effort to dispel
this idea.
Government to Go Into Business.
Present indications are that they didn't
| do it. The net result may be that the
government will esta blish reserve, made
| up of deductions from the salaries of o.
! ficials holding positions of financial trust,
| from which will be pair losses by en-
bezzlement, errors of judgment and the
like
1t would not only save the government
a bunch of trouble in making collections,
bonded officials. There would be no over
head charges and no big commissions for
getting the business
The representatives of the bonding COM
panieS who appeared today before Repre-
sentatives Tawney of Minnesota Smith
| of Iowa, Livingston of Georgia. Burleson
| of Texas and Keifer of Ohio didn't look
| like pirates-and they denied the charge,
too.
They didn't deny that they had put
| their heads together and boosted the
rates, but they insisted it was necessary.
Bartlett Makes Plea.
| ]. Kemp Bartlett of Baltimore. repre-
| senting four or five of the concerns,
pointed out that the bonding and surety
business In this country is yet In its
infancy. few of the companies having
been In existence for more than a decade.
and none of them over twenty-five years
old Consequently, he argued. these COM
panies were just getting down to business
and were just learning what rate was fair
| and reasonable.
| There had been price cutting and ruin
GUS competition, he said, which, If it had
| continued, would have put most OF the
| concerns out of business. So, for their
own salvation, they had come together
in close harmony and were prepared to
write a few sureties at three times the
| old rates. That was ALL
| Half to Get Business.
i
| Questions from Mr. Tawney drew forth
the admission that, of every premium re-
ceived on bond, 30 per cent went to
| getting business
| The agent got % per cent and % per
cent more could be charged to office rent
and expenses of various kinds.
| According to Mr.. Bartlett's statement,
| the bonding business isn't so wonderfully
attractive as an investment Thirty-fiye
millions of money are tied up in 1t in the
| United States, and yet several OF the
bonding concerns failed to pay dividends
| last year, while those that did paid 1t
not as direct result of premium earn
ings, but from the earnings of Invested
reserve.
lembeZzlements of government disbursing
officers, army and navy paymasters and
| the like, to show that the bonding OF
government employees wasn't all milk and
thoney. He also cited the Indian agent
class as illustrative of his claim that the
lcompanies weren't yet old enough to know
lust what sort of a price to charge for
| the various kinds of risk.
| Two Sides of Medal
| In the last ten years he said, his COM
pany. a Baltimore concern, had received
a bout $4,000 from premiums on the bonds
of Indian agents, and had expended
result Of losses something less than $500
This, he admitted, was grand. indeed.
/ But in the last thirty days his COM
| pany had been hit to the tune of $4,000
on an Indian agents bond which had
/ been written six years ago and which ex-
pired three years ago. although the agent
| himself hadn't wrongfully taken a cent
He had merely violated the letter OF the
/ law or regulation or treaty, or Whatever
| it was that prohibited an Indian agent 10
l
| The agent didn't profit, but the bad IN
| dians did. Although the bonding com
| pan had fought the case, the courts had
| allowed the $4,000.
| Anyhow the statute of limitations doesn't
| apply In the case of acts committed by
| government employees under bond, as the
| various companies are now learning TO
their sorrow. :
Bill to Be introduced.
| The members of the appropriations COM
| mittee present at the hearing didn't seem
violently impressed with the showing
made by the representatives. The result
| probably will be that at the next regular
session of Congress, beginning in Decem-
| ber Chairman Tawney of the appropria-
tions committee will bring in bill Great
ing a government bonding~res Then
the companies that have trebled their
rates can run away and play. SO far as
government business is concerned.
| The Canadian government bonds it's
own officials and employees, and with
great Success. too. There seems Mr.
Tawney and other believe. to be no good
reason why the United States government
should not follow suit.
| Incidentally, there was one bonding
man on hand today. Tompkins by name.
who is not I'm the combine. He repre-
sents the United States Fidelity OF New
| York
| The others tried to get him to agree to
the rate-trebling arrangement He would
not hear of it, He insisted he was salts
fed.
AS a result he has been sitting up
nights doing business ever since the in
creased rate went into effect He sat
around today among the representatives
of the combination companies looking as
sleek and as satisfied as the cat that got
the cream.