The Waterbury Democrat., 1939-01-28


 The probe won Hughes the gov. ernorsnip of New York. The re- port of his fingings, published in 1906, filled ten volumes, but ap- parently they had little net effect. Early next month the SEC will open @ new insurance investiga- ton. But 1t will not disclose any essentially new conditions, even though 1t is the first ever to be made by the federal government. For 1t will show that the evils ex- posed by Hughes more than three decades ago are as rampant as ever.
 The SEC examiners have been using Hughes report as the text- book and bible of their own wo,k, and 1t has turned up hoards of pay dirt. Of all the sensations the SEC hearings will bring to light, most sensational will be the fact that the principal abuses Hughes uncovered in 1905-6 still exist today, and in exaggerated degree.
 GIGANTISM
 In his report, Hughes severely condemned the vast size of the leading insurance companies: "The business (of the Mutual, the Equitable, New York Life and Metropolitan Life compan!es) has grown beyond reasonable limits. Notwithstanding the fact that they have long since passed the point where further enlarge ment can benefit their policy holders, they have resor.ed to every effort to obtain new busi- ness, regardless of the expense which is reflected in diminish ing dividends Extravagant commissions have been paid and these have been supplle- mented by liberal bonuses and prizes Their member ship is so large and their re- sources so vast as to make the question of responsible control and conservative management one of extreme difficulty, and their magnitude if permitted to grow unrestricted w:ll soon be- come menace to the commun- ity."
 The SEC will submit the follow ing chart to show that despite Hughes grave warning issued B years ago, the companies have been allowed to increase in size many times over:
 1905 1888 Metropolitan
 $17s,429O15 $4,72o.o0 1000 Mutual 495,864,650 1,349, 100000 Equitable
 42s,o4s,ss7 2,los,ooo,ooo New York Life
 474,567.67S 2,520.0 900 AS a limitation on unsound growth, Hughes proposed that a maximum of $l50,000,000 a year be fixed for the writing of new insurance. The SEC will report wholesale disregard of this recom- mendation with these spectacular figures:
 In 1929 alone, the four companies |. wrote a total of over seven bil- lion dollars in new policies. Since 1907, Metropolitan has written in excess of $65 ,000, 900 ,000: Equitable more than 19 million; New York Life over IS billion; and the Mutual in excess of nine billion.
 SELF-PERPETUATING OFFICERS
 Another major Hughes con- demnation was the control of in- surance companies by a small group of insiders.
 While each of the above four companies are mutual companies and theoretically controlled by their millions of policyholdelrs. actually. he declared. the latter have nothing to say about man. agemenl. This is what Hughes charged:-
 notwithstanding their theoreti- cal rights, policyholders have had little or no voice m the man. agement. Entrenched behind proxies. easily collected by sub- servient agents and running for long periods. the officers of these companies have occupied un- assailable positions and have . been able to exercise despotic power.
 'The most fertile source of evils of administration has been ir- PQcfAnneihtIffu 0f Afftafo1 tarxxyav,