Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-01-17

today in the insurance investigation in
the House District committee rooms. The
result was given by Lee Wolfe, an eX-
pert insurance accountant, called in de-
fense Of the companies.
The figures We're put down after most
strenuous bit of examination and cross
on the ground that the questions were
hypothetical and that no such conditions
existed: and Judge Prouty i'm return, aft
er having asked a few plain questions,
remarking that the result was as plain
as 10 cents dozen for eggs"
Favorable to Companies.
Whether or not another expert will
come along and figure that the loss men-
toned is entirely out of the question,
and that there was a big profit, seemed
entirely plausible after hearing the ma SIS
of figures that have been introduced into
the testimony by Mr. Wolfe. it was de-
clared. His testimony today and yester-
day has been favorable to the insurance
companies. with the exception of the loss
as figured out by him through Represent
ative Prouty's questions
The committee adjourned shortly be-
fore noon today. and will hold no fur
o'clock.
Asked as to Dividends.
Mr.. Carusi asked Mr.. Wolfe whether
two dividends i'm 1911 were not paid out
of earnings of the Commercial Fire In
surance Company, but did not wait for
an answer. as he explained he was going
into the question of the value of a going
would be the value of the surplus of the
assets Of the company minus all liabili-
ties at the close of 1911 if the company
had been liquidated.
Mr. Wolfe said that on the same basis
the company would have had $a6.sS5 sur
plus of assets December 81, 1910.
I'm 1911 the company took in 1000 a,
said m Mr.. Wolfe, and that deducted % from
the assets at the end OF the year would
leave Ss.oCo. and in addition they pais
Mr.. Wolfe figured that the Commercial
had surplus December II. 1910. of $35.
coo: took in 10000 the next year by the
sale of capital stock. $4,000 from
premium income and expended $153 600
had a $4,000 surplus: paid $1,000 i'm divi.
dends and later paid other dividends
amounting i'm total to $4,000.
. THAT earning from which the dividends
We're paid includes premium on stock?
asked Mr.. Redfeld.
Mr.. Wolfe contended that it was IRE.
spective of the stock premium.
isn't it fact that the dividends were
paid out Of premium on stock?'
Spar Over Point.
Mr.. Redfield and Mr.. Wolfe SPARED
over this point for several minutes. il
being evident that an accountant could
make the dividends come out of anything
he wanted. Mr.. Redfeld said:
IF you consider this as busines,
wound up and concluded. then the divi
dends would be paid out of surplus earn
inss, but as a going concern it was. as q
matter of fact, paid out of stock
premiums"
Mr.. Wolfe would not quite admit this
MI Carusi asked him if it was not im-
possible for any man to tell against what
part of a company's assets any particular
check was drawn.
NO" he answered.
Every time Mr. Wolfe would get the
answer straight on the record Mr. Red
field would go back to the $4,000 sur
plus and the 10000 taken s5e IN In, during the
Now. what was the surplus reckoned
on the same basis at the end Of the next
year?''
..Seventy-siX thousand dollars" was the
reply.
Liquidating Value.
1udge Prouty asked the witness about
the Iiuuidating value Of the assets jan
uary 1. 1911.
"Forty-six thousand eight hundred and
eirhty-five dollars" was the reply.
The witness said the value Of surplus
assets on December 81, 1911, on the same
basis was $1O0.042.
"what would be the value the first of
this year, leaving out Of consideration
the advance on real estate and premium
on stock sold. and leave out dividends
paid.'' asked Judge Prouty.
This was a hard question. Mr.. Wolfe
took several minutes to figure it out. His
result was a minus figure of $4,000
Il wanted to see what the operating
department of this company would do,
viewing the thing from your basis
Mr.. Wolfe objected very loudly to Rep
resentative Prouty's asking the question.
say wing the supposition was entirely out
of ali reason. Judge Prouty bade him
not to assume to make comments which
are in the province of the committee.
Right to Ask Questions.
You agree that 1 have a right to ask
questions said Judge Prouty.
"Oh, yes" said the witness. but sup
pose you had patient-and he was shot
and he was bleeding to death, and an
other fellow came along and gave up
some of his own blood. and the patient
lived, would any one have a right to ask
how long he would have lived if he
hadn't received that extra blood"
Yes" said Judge Prouty. ''but il
wanted to know how much blood my
patient had lost / would have a perfect
right to deduct the amount some one else
had given him."
They had a long argument. Judge
Prouty said the infusion of blood was
the premium on stock. His point was to
find out what the company had earned
not what it had accumulated by stock
sales, etc.
Takes Up Examination.
Mr.. Carusi took up the examination.
Under his questioning the minus figure
was 1000, which. said the witness,
had to be made good out of the pro-
ceeds of the sale Of stock at a premium"
Under rapid questioning a vast horde
of figures was let loose, SO that one could
hardly follow them Many changes in the
form of figuring were made. and finally
Judge Prouty asked Mr.. Wolfe to figure
out the liquidating value Of the CONNER
CONTINUED on Eighth Rage.)