The Barre daily times. (Barre, Vt.) 1897-1959, 1914-05-27
TREASURER DEAVITT
GIVES HIS VERSION
Tells of Disagreement with Governor
Fletcher Regarding the Bond of the
Treasurer with Which Fletch-
er Found Fault.


which Governor Fletcher found fault to
the extent that he requested the treas
urer to secure new surety to safeguard
the state:
ITO the People of the State of Vermont: !:
while / have in mind the saying that
explanations of personal conduct are un-
necessary, for your friends do not re.
quire them and your enemies will not be-
lieve them, yet ! feel IL when the
character and motives of 4 pfblic official
are assailed that the people are entitled
TO know the facts on which insinuations
and inuendoes are made.
| His Excellency Governor Allen NJ
Fletcher sometime since saw fit to ad-
dress the honorable justices Of the SUI
preme court of this state and to submit
certain questions concerning the bond of
the state treasurer. As was then hold
ing that office it is plain that his state
ments suggesting that the treasurer by
misrepresentation and concealment of
material facts had fraudulently secured
his approval of the bond OF the treasurer
must refer to me.
| GAS soon as | was elected treasurer by
| the General Assembly in October, 1912. I
presented to Governor Fletcher for his
approval my official bond as state treas.
urer in the sum of 100000 with the
American Fidelity company of Mont
pelier as sole surety thereon. The bond
was in the form approved by Attorney
General Sargent in 1910 and the surety
was the same as approved by Governor
Mead for the preceding term.
CAS- the law provides that a domestic
surety company may act as surety on
the bond Of the state treasurer, and az
the American Fidelity company at that
time had an unimpaired capital stock OF
S750,000, | was very much surprised
when Governor Fletcher declined to ap-
prove 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 $4,000 was car
ried by the same company he felt that
the sum of 100000 was more than the
company ought to carry on that par
ticular bond. ] stated that two years
before the company had reinsured 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 S25.000. I
took the matter up with the company
officials and found that they had already
adopted the policy of limiting their LA
biity 10 loss on such bonds at $4,000
and had expected TO carry my bond at
larger net figure only because they had
carried the previous bond at larger |
figure, that the risk was at home, and |
that on the whole they felt warranted |
in the action they had proposed to take, |
but they readily acquiesced in the sug- |
gestion of the governor.
State Further Safeeuarded
Accordingly the company effected fur |
ther indemnity agreements so that the |
net amount for which the company |
might be liable when the bond was APP |
proved by Governor Fletcher was $685. |
900. We had several interviews about |
the matter, as the governor seemed re-
luctant to approve the bond. and dur
ing a period of four months the matter |
came up in one form or another until | /
had procured from my surety agree
ments of the reinsuring companies per
mitting the state OF Vermont to proceed
against the reinsuring companies direct.
~ in case the surety should become in
solvent when / might be in default.
These agreements were taken at my
suggestion to avoid an awkward situa-
tion which occurred in the state of New
York when depository bank and its
surety failed at the same time, and was
in accordance with procedure adopted
by the state of Tennessee in similar
case, and this information came to me
while | was performing my duties as in
surance commissioner. | am not able
to recall all of the matters discussed but
gave the governor the fullest informa-
tion concerning what / supposed to be
material facts and in a frank and direct
manner, and all ! can say is that what
ever statements ] made to him were
true. As to what inquiries he may have
made ! have no knowledge. but / as
sumed that during the four months he
was giving the matter such attention as
he supposed its Importance required, and
attempted to do everything he sug-
Iested should be done, and / suggested
such things as occurred to me as prop
sr to protect the interests of the state.
And / understood that the attorney gen
iIhi gave IHc UldNltI his tbDSluefdtlOn. / :
IN fact, at Governor Fletcher's request, +,
submitted the reinsurance agreements
10 Attorney General Brown for the lat
.er's consideration.
The Original Insuring Company. D
"At the time the bond was presented
or approval no question had arisen con-
,erning the solvency of the American Fl.
lelity company or of any of the reinsur-
ng companies. As | was continuously
with the session of the legisla-
ure from October until late in Febru-
lry and Immediately thereafter in the .
preparation and trial of the railroad APP y
,raisals before the board of appeals IL 7
vas not until April, 1913, that | had I
IN opportunity to examine into the af- /
airs of the American Fidelity company.
1t that time found that on account of :
arge losses accruing in the business of J
nsuring employers against injuries to l.
heir workmen that the stockholders of v
he company We're liable to suffer some q
oss on their investment, although the
interests of policyholders and creditors ]
we're not i'm jeopardy. advised my com
missioner. Hon. Guy w. Bailey, concern \
NC the situation, and was assured by :,
he company officials that the situation !
would be taken in hand, and / was fol- =
owing the situation when in July, 1918, =
Governor Fletcher called the insurance !"
a