The Washington times., 1913-01-03
INSURANCE EXPERT
SCORES COMPANY
IN HOUSE INQUIRY
Witness Critical of Stock
Selling Methods and Lit
erature' ofCapital Firms.
Continued from First PageO

yes
rhe expert said his figures showed
thar the Commercial had lost heavily
since its organization, so Tar as lts
actual Insurance operations were con-
cerned He said he had told members
of the firm of Tuttle Dudley & Wight
man that the purchase of real estate
which was included in the surplus ought
10 be submitted always TO microscopic
examination, as Il was customary with
q number of insurance concerns to puy
real estate and then inci1de II among
their assets at increased hgures.
Mr., Best also found fault with the
literature circulated by the First Ma
tional Company. He said he ouDted
the statement made TO prospective IN.
Vestors that mo similar opportunity
for investment existed among fnsur-
ance companies.
'sTbere have been at least 200 fire,
casualty, and life insurance companies
formed in the last two years; sald
stances I must doubt the truth OF the
First Nationals statement that the
opportunity they offer Is without
equal"
spondence with Mr.. Tuttle rega riding the
information he desired relative to the
Commercial and First National Com
panies, Mr.. Best detailed a conversation
he had in New York. with Mr.. Tuttle
and other. in o tober. =,
Suggested New Contract.
There were present Mr.. Tuttle. Mr..
Dudley. Mr.. Carusi, and Mr.. Tileston,
said the witness. 81 told them that
with the amount of subscriptions to the
stock of the First National and the
Commercial Companies there was op-
portunity to make a success Of the
companies, but that two or three things
would have to be done to secure the
confidence of the public.
First, 1 told them they would nave
to change the nature of the contracts
between the companies and Tuttle,
Dudley, and Wigbtman; second. that a
commission of ~ per cent for selling
stock, exclusive of the expenses. was
too high on a 100000 issue, and for
one years work. and that the entire ex-
pense ought not TO be more than 10 per
cent.
of the stock selling of the Com mercial
company and advised them to get rfc
OF him. He had been connected with
a number of unsavory schemes and L
felt his connection would reflect upon
this institution
Mr.. Best explained that the stock
of the Commercial company was sold
bytsolicitors; while that of the First
National was disposed of through the
stock did not go well when an at,
tempt was made to sell il by mail,
continued the witness,
The expert said that Tuttle. Dudley,
and Wightman had contracts with each
of the companies for selling stock, In
addition to contracts fer placing insur-
ance-that there were in reality four
contracts In existence:
Selling Expenses High.
Upon several occasions Mr.. Best testi-
fed that the organization and stock
sailing expenses of the two companies
were too high.
"Tuttle, Dudley, and Wightman did
not seem TO think their s15O, 900 organiza
ton fee was excessive" said the wit
ness, for they said they had made a
large amount of money by purchas ng
the Southern building for $l.5Oo,0OO when
IL was worth s2.000,000 and that, by
dividing the profits between the two
companies. the First National began
business with a large surplus.
81 told them that suspicion was al
ways liable to attach to plans for buy
ing property. and marking 1t up. and
that the transaction should be such as
TO stand microscopic examination"
Commenting on the now famous Ing
ham insurance report. Mr.. Best said he
the superintendent of insurance had
failed to comment on the large under
writing expenses of the Commercial.
1T was apparent to me, from a cur
sory examination, that the company
was running at a loss" explained Mr..
Best.
The company had run behind more
than its total premium income?'" suS-
gested Congressman Redfield.
YES" said the witness. who added
that his figures indicated the company
was about $4,000 behind in ten
months OF its existence.
Mr.. Best testified that he under
stood the First National company has
m s.fv 10
replies were received and that 25,000
subscriptions had been received
His Talk With Agent.
Tn January. 1872" continued Mr..
Best, Il D. Bentley called on me.
He said he was a special agent Of
the Commercial; and he asked me
what thought of il. / told him that
some of the statements in the cir
ctIlars were inaccurate; Some were
haIf statements and gave the wrong
impression. wrote him letter on
the subject, bat | cannot produce il
because Mr.. Ash, of the New York
postofflce. has il.
"Clares Tileston OF New York, had
been negotiating with the companies to
represent them. | suggested to him tha.
II seemed to be a promotion scheme,
but he said not, and that the expenses
of organization were not SO great as
they appeared.
Il could not get complete information
from the companies. and for number
OF months my report hung fire.
Believed In Honesty.
when | talked to officers Of the
companies last July | changed my opin-
ion 10 this extent: that whereas / had
at first looked upon the whole scheme
as a promoters proposition, felt then
that General Wynnc and other gentle
men associated With him really wanted
10 build UP permanent institution, but
] said some of their methods would
have TO be changed
THAT was last July you had that
opinion?' asked Mr.. Redfeld.
Yes" answered the witnes.
Mr. Best explained that in his num-
erous conferences with Mr.. Tuttle and
others come ted with the two COM
that the statements made IN selling the
stock were rather misleading, nor had
they convinced him. Best. to the con-
trary. Mr. Best said he had never re-
ceived all the information he desired
regarding the underwriting Of the COM
ponies, although he had waited for Il
from month TO month.
The earlier portions of Mr.. Bests
testimony were devoted to a recital of
his acquaintance with Mr.. Tuttle and
his associates in an insurance business
in Syracuse. and the inception Of the
plan to organize the First National and
Commercial companies.
At the outset of the hearing, Mr.
Csrusf announced that he desired TO
submit a qu2rtity of documentary
r. Il