New-York tribune., 1910-04-12
REPORT OF Mr.. H0TCHKlSS
Text of Insurance Superintend-
ent's Statement to Governor.

Text of Insurance Superintend-
ents Statement TO Governor.
Albany. April 1.-THE following is the
fun text Of ;ne report Of Mr.. Hotchkiss'
Superintendent % Insurance, 20 Governor
Hughes:
on March Is 1910 p public Investigation
OF the EXPENSES OF insurance companies
from 1900 10 1919. inclusive, particularly ~
connection with legislation, was begun Al
the New York Offices of this department
The testimony and exhibits therein. To-
Ecther with a formal report, vii later s1e
transmitted 70 YOU. The character o. Ine
facts fez-eioped and the nature OF the dim
culties encountered IN conducting the IN
Ncstigation further seem 10 make II proper
that al this time lay before you the iol-
Ar examination OF the Phenix Insur-
snce Company of Brooklyn. begun last
October. brought 10 light a mass oi core
Kfsondpnce seeming 10 disclose an intimate
rels tiun between the president % that com
psny anG legislation affecting IRE insurance
compaulcs during the last decade. The
material thus revealed suggested an eN-
amino ton cf The books and records of sew
sIal other companies. and In January OF
fhi- wear such examination was ordered.
This examination showed that very cOnsiu-
ers bic sums OF rlohey had been PAID by
largc number - domestic FIRE insurance
comDauiCs and disbuTsed by or through n
the president OF the PheniE Company in
promoting OF retarding legislation.
- The facts thus developed formed basis
for fUrthcl inquiry. with the result that
on March Is. a public investigation. unoer
the authority conferred by StCuon 81 OF
the insurance law. was commenced. lnas-
much a. the expenses Of life insurance
companies ln connection with legislation
had been quite generally developed by the
legislative inNesuEauon OF 1900, IL was not
Thought either cNpeQlcnt or necessary 10
devote much time 10 an inquiry into the
disbursements of companies OF this char
acf-r Indeed with possibly a few eKcep-
trf.lr Grff.h
ments by lite companies which were not
brought out IN 1895 form q part OF the rec
ord % This investigation.
The lesut OF the investigation thus Tar
warrants the following statements
First Legislative expenditures IN New
NoTk bN insurance companies authorized TO
90 business ia this state were particularly
conspicuous ia the years 1901. 1903. 1904.
1906. 1905 and 1903. and notably significant
a. two three Of such years.
ScCOgd-These disbursements were made
taD by individual companies in connection
With legislation affecting such companies.
500 uN stn0lCates or companies, apparently
willing 10 90 the work for all. and tcD by
the New York Board OF Fire Underwriters,
= corporation supported by annual assess
Lscnts on practically all OF the companies
doinE business in New York. such assess
m"Tts being based Oh premium income. and
whose committee on laws and legislation Is
hy irs OWE laws charged with the respon-
BlullIty 81 watching over legislative affairs
Aggregate Expended.
llfU--l ne moneys SO PAID were ulSD0rSeu
for taD travelling expenses OF individuals
and DELEGATIONS tll annual and special re-
tanners OF regular counsel tCD sO-Called re
tanners of legislative lawyers. td) contribu-
lions 10 political committees, te) giiJs or
la1 1meutS TO men OF political prominence
t-uu influence, and - entertaining leGls-
latOrs and others, at times In a somew hs I
tavish manner. The aggregate Of dIsburse-
.ueUtS Of thls character. a. the record now
ftands-sUCh disbursements being largely
from IRE treasures OF ire insurance COM
-approNimates ana PROBABLY exceeds
Fourth-The disbursements for travelling
Expenses ana 10 counsel Tor services in the
preparation Of briefs and The presentation
81 arguments 10 legislative committees are.
Yet been possible 10 examine into certain
arge disbursements OF this kind. made
from lsJl to 1906 inclusive 10 regular cOun-
Eel resident ia New York city. The size.
Frequency and limited distribution OF paw
ments 10 sO-caIled lawyers and legislative
agents resident iu Albany are suspicious,
Hnd seem u call for further inquiry through
Fu invest cation OF broader range than is
possible under Section 80 Of the insurance
Jaw
Particularly is this true Of a fund OF SO
oso raised by four companies IN 1873; q fund
. of $1,000 raised and disbursed in 1904, and
funds Of $3.50 each diSbursed IN 1905 and
81 gS fy the New York Board OF Fire n
derWit'ers in lSl, and an auxiliary fund
Of &.oo raised by certain Of the companies
cOntributorN to that board IN the ame wear
> have been largely accounted for The facts
3 developed - 10 these various funds prove
that some cf the moneys went TO the Re
publican STATE Committee. iu recognition
of the interest Of certain mem bers II such
UmitteP the lime various bills were
paSSpd. some 10 r.rOnfnert foliffcfsre SOM
- past uenbers OF the Leg gslature. sup
pcseolv for influence. and a large portion
10 a legislative agent Formerly connect d
with the Insurance Department of The
State o. New York whose diSburCprr EMS
of such funds are sufficiently chara eterized
IN llS uNn SpOndCnce. bat " hose mem.
ory seems laUSed. whose books are am.
pareutly ncn-eNiStent. and an INSPECTION
y whose hank account has been denied
numerous Stems OF proof. however. War.
Iaur The Inference that some % the moneys
thus dlsI urSed went further than The uer-
reSeutatIVe of the Insurance interests.
F1fth-Seyeral witnesses offered proof a
direct propositions made by SO-Cailed lOhhv.
Este looking 20 the payment OF money ID
such persons that 81 might he by them dis
frihuted among members - past legislat-
ureS
ton ~ i-nos Tor The purpose OF contribut-
tug 20 the campaigns of legislative candi.
oates were also developed
seventh Much was also ELECTED as IN so.
called strike" bills. ssld the Iog-roIling ot
Hucr bills En- and out or committees re.
fronsINs to thc influence ~ lobbyists and
legislative agents. often. apparently thai
they might either prove their usefuInegs
dupes
Ei-hth-S Similarly numerous instances
evdruciug the holding up Of meritoriou,
bills and The threatened massage 81 l,sf
bills. UrfI The desired considerat lion -eacl, cd
th" bank accounts of the middle men, were
al I~0 developed
1n short. while absolute proof showing
flc transit of money from the bank account
~ an insurance company into the hands
~ Tho bank account ~ a legiSla or is lack.
LnG. fir record ~ the invest igatiou q S thus
far made up warrants the statement that
0'llIr the last decade. particularly i'm the
FIRST five wears ~ such decade a SA-sfefy, 81
riI killing and law getting has exist cd
which ie reTtrCach 10 the people OF Tho
Sfrfn. That such system existed prior 10
1900 IS also apparent from The facts deyll-
op'd u the Investigation.
D.I.T- rhe progress of the invest iyaffor
fE" chiff witness Frequently refused Il
answer questions. thereby making himself
public 0ficer~ law. He also served a no.
fice upon lis principal hank Of deposit
tra result ~ which was that such bank
cccIuru 20 produce "a transcript Of Dis &C.
count. which if had been Subpgnaed 70
produce. II was NOT thought essential 10
"r~' cation proper be- halted 20 compel ne
answering ~ questions and the production
OF books. NDT Is If c0lutei that under ex-
i~'iuc law such testimony and production
can be COMPELLED.
Difficulties Encountered.
a dficultv apparently insuuerable. has.
i.'Heters c"helop~Q. The books 81 the
HI.#riH iTSDrs nee tornBsug showed fla,
1Ion was p Hefnber o. the Insurance De
paIfrIcrf ~ this state such conuang rad
loaned him Sl3 90 on he collateral 0f 1O0
shares Of toe International Banking and
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