New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1910-05-02

apparently. that the Messrs. Knabe
might borrow from such financial insu-
tutions for their individual purposes; the
writing OF bonds in excess of the 10
per cent limit required by the New York
law: the making Of collateral loans 10
friends and associates of the controlling
owners on inadequate security. and the
giving by the company of bonds guaran-
teeing the payment Of the promlssory
notes of the Messrs. hnabe. \ fragrant
case of the kind last mentioned was the
giving las August, OF bond of which
there is no proper record in the books of
tho company, and on which no premium
was paid, TO indemnify the Metropolitan
Trust Company. Of New York, on note
for $4,000. made by the Messrs. knabe
to the surety company and Endorsed by
the surety company without authority
and. apparently without consideration
For this transaction The trust company
received, In addition To IFS legitimate g
per cent discount. a bonus payment at
the rate of 10 per cent per annum, and
appears to have made little inquiry
either as TO the valiC:ty of the bond
which ii took or as to the authority of
the officers Of the surety company to in
dorse commercial paper o1 the companys
controlling owners"
Unpleasant Subject, Says Mr.. Chew.
General Brayton Ives, president Of the
Metropolitan Trust Company, refused to
comment upon the criticism by the In
surance Department, and Mr.. Chew,
when asked if he had any answer TO
make TO the criticism either of the trust
company or of himself personally, re-
piled:
II will not make any statement at all
about the matter until I see in print
what was given out and have oppor-
tunity 20 consult my lawyer, It IS d
very unpleasant subject
In his testimony before tho Superin-
tendent Mr.. Chew said that the amount
os tho bonus-S6 .a-ra-was just the
amount Knnbe offered but on being
asked whether the loan would have gone
through if the extra commission had
not been paid, he replied that it would
be difficult to answer the question, and
he stated that the bonus was part of
the consideration.
At the time the Sf15,00o loan was
made the Knabe brothers owed the
Metropolitan Trust Company about
100000 on stock Of the American Piano
Company as collateral, Mr.. Chew said.
and the suggestion that the loan be Sc
cured by q bond of the Surety company
was made by the Knabes. II was the
only time he ever took q surety bond
as security for q promissory note, he
said.
Since the Insurance Departments ex-
animation of the United Surety Com
pany was started, in February. 1910, the
company has been reorgunized and
Thomas H. Bowles has replaced the
Knabes as the controlling interest The
capital stock of the company has been
reduced from $4,000 to S250.0G0. and
il is understood that it will be reorgan-
lied by the Bowles interests and pro-
v.ded with the necessary working sur
plus
An April Is. 1910. Bowles sent out a
circular letter to all the stockholders of
the company offering TO buy their hold
ings at $50 a. share, and it is understood
that he now has under his control about
$3.50 of the 1000 shares which have
been issued
Some three hundred and fifty New
York City saloonkeepers are. vitality in
terested in the United Surety Company
on two grounds. The company has done
large business in this city on excise
bonds. and on this account the saloon
keepers were solicited some three years
ago to subscribe TO the stock Over
three hundred of them subscribed, most
" for one or two shares, and paid con-
siderably more than par for their stock,
and the present offer Of SO does not
strike them as being very attractive.