Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1914-05-28
STATE TREASU RER
DEAv|TT MAKES A
PUBLIC: c. STATEMENT
Explains His Position Regarding
the Validity and Sufficiency
of His Official Bond
His Action.

Montpelier May 27.-State Treasurer
Deavitt gave out to-day the following
statement concerning the matter of his
bond
To the People of the State of Vermont:
While 1 have in mind the saying that
explanations of personal conduct are un-
necessary, for your friends do not require
them and your enemies will not believe
them, yet feel when the character and
motives of a public official are assaled
that the people are entitled to know the
facts on which inslnuatons and innuen-
does are made.
are made,
His ExcellencY Governor Allen NJ.
Fletcher sometime since SOW fit to ad
dress the honorable Justices of the su
Dreme court of this state and to submit
certain questions concerning the bond OF
the State treasurer. AS I was then hold
ing that Office it is plain that his state
monts suggesting that the treasurer by
misrepresentation ana COncealment of ma
terial facts had frauduleHtlv secured his
approval Of the bond of the treasurer
must refer to me.
AS soon as l was elected treasurer oy
the General Assembly in October, 1912,
| presented to Governor Fletcher for his
approval M Official bond as State treas
urer in the sum Of s1O0,J0 with the Amer
lean Fidelity company CT Montpelier as
sole surety thereon. The bond was In the
form approved by Ettorney-General Sar-
gent in 1910 and the surety was the same
rs approved by Governor Mead for the
preceding term.
LIMIT OF $4,000
AS the law provides that a domestic
surety company may act as surety on
the bond of the State treasurer, and as
the American Fidelity company at that
time had an unimpaired capital stock of
$4,000, I was very much surprised when
Governor Fletcher declined to approve
the bond forthwith as Governor Mead
had done. In conversation about the
matter the Governor stated that he had
nothing against the company but in view
of the fact that the bond of the auditor
of accounts for s2o.o1 was carried by the
same company he felt that the sum of
100000 was more than the company
ought to carry on that particular bond.
] stated that two years before the COM
pany had rensured one-third of the
amount in another company and were
making like arrangements as to the bond
in question, and he said that he felt the
company ought to reinsure all excess of
liability above $25, 600 I took the matter
up with the company officials and found
that they had already adopted the policy
of limiting their liability to loss on such
bonds at s25 600 and had expected to carry
my bond at a larger net figure only be-
cause they had carried the previous bond
at a larger figure, that the risk was at
home, and that on the whole they felt
warranted in the action they had pro-
posed to take, but they readily acquiesced
in the suggestion of the Governor.
CONSULTS ATTORNEY GENERAL.
Accordingly the company effected fur
Their indemnity agreements so that the
net amount for which the company
might be liable when the bond was APP
proved by Governor Fletcher was $50 600.
We had several interviews about the
matter as the Governor seemed reluctant
to approve the bond. and during a per-
iod of four months the matter came up
in one form or another until | had pro-
cured from my surety agreements of the
reinSuring companies permitting the
State of Vermont to proceed against the
reinsuring companies directly in case the
surety should become insolvent when
might be in default, These agreements
We're taken at my suggestion to avoid
IN awkward situation which occurred In
he State Of New York when depository
bank and its surety failed at the same
tme, and was in accordance with a pro-
:edure adopted by the State Of Tennessee
N a similar case, and this information
came to me while I was performing my
luties as insurance commissioner. I an
not able to recall all of the matters dis
cussed but / gave the Governor the full
est information concerning what I sup.
posed to be material facts and in q
rank am direct manner, and all / car
say is that whatever statements I made
to him We're true. AS to what inquiries
he may have made I have no knowledge
but | assumed that during the foul
months h. was giving the matter such
attention as he supposed its importance
required and l attempted to do every
ming lie suggested could be done, ant
suggested such things as occurred t
me as proper to protect the interests o.
tho state. Ind ! understood that thu
aHorney-gcneral gave the matter hi
consideration, IN fact at Governor FLEET
>Atra request e.! submitted the reinsur
auCc Agreements to Attorney-Genera
E!' IN 70" :ne latter's consideration.
EyAMINED COMPANY.
IT che limo TIE bond WAS presented 70
approval no question had arisen concern
ing the sovency OF the American r'de.it,
company or of any Of the reinsurlnG com
1anics. AS ! Was continuously engage
with me session Of the Legislature fror
october ,nt.l !nte IN February and imme
a!atay thereafter In the preparation an
rial OF the railroad appraisals before tn
beard Of appeals, il not until April
7sl3 that had an opportunity TO exaHlin
into the affairs Of tho American Ffdellt
company. At that time ! found that o
account o. large losses acCruing in tn
business Of insurng employers agains
injuries to workmen that the stakeholder
Of the company were liable to suffer som
loss on their investment, although tn
interests Of pollcyholders and creditor
were not in jeopardy. / advised my com
missioner, the Hon. Guy w, Bailey, cor
corning the situation. and was assured b
the company officials that the stuatio
would be taken in hand, and / was follow
ing the situation when in July, 1913, Gov
ernor Fletcher called the insurance con
missiOners together and inquired for ir
formation. At the suggestion of NJ
Bailey we proceeded to make a thoroug
examination of the company, the last on
prior to that time having been made b
the insurance departments Of New Yorl
Massachusetts and Vermont in Januar
and February. 1872 In August 1913 IN