Evening star., 1939-08-25
Insurance Executive
Defends Loans Made
In Secretary's Name
Made on Adequate
Collateral, Burnett
Tells Probers
BY the Associated Press,

BY the Associated Press.
Paul NJ Burnett, chairman of the
board of the Monumental Life In
surance Co., defended vigorously to-
day loans he obtained from his own
company in the name of his s50-a-
week secretary, Miss Irene Realey.
Mr.. Burnett testified, in reply to
questions by Gerhard Gesell, coun-
sci for the Federal Monopoly Com
mittee, that he signed without read
ing a company financial report in
1888 which declared the concern had
made no loans to officers, directors
or stockholders.
Mr.. Geseu cited a statute of the
State of Indiana, where the Balti-
more company does some business,
making 1t misdemeanor for any
firm writing insurance in that State
to make loans to officers or directors.
rs it seriously contended here"
demanded Spencer Gordon, counsel
for Mr.. Burnett, that this gentle
man has violated the laws of In
diana?"
Chairman Garland S. Ferguson
interjected that he thought Mr.
Gesell was making no charge against
the insurance executive.
Mr.. Burnett said he was surprised
at what you are making out of this, y
inasmuch as the loans had been
made on adequate collateral and in
terest and principal had been paid
Aggregated 100000.
Testimony yesterday was to the
effect that the loans. which Mr.
Gesell SAID aggregated 100000, at
no one time exceeded s45,000, but
represented renewals. The loans
were made to Miss Realey for Mr..
Burnett, the woman secretary testi-
fed.
Joseph j. O'Connell, committee
member, questioned Mr.. Burnett
about the propriety of such loans,
lnasmuch, he said, as laws of many
States other than Maryland, make
them illegal.
The insurance executive said he
could see no difference between loans
to officers and directors and loans to
persons not connected with the COM
pany.
DO you think" asked Mr.. O'Con-
nell. that as a matter of public
policy legislation prohibiting loans
to officers and directors is unsound"
II an insurance company is run
honestly, I can see nothing wrong
with such loans" the witness re-
Piled. He pointed out that the loans
were repaid. said his company was
looking Tor investments and declared
ne could see no reason why his per-
sonal integrity should be subjected
10 attack because of the transac-
tions.
I've been subjected to a lot of
disagreeable and unfavorable adver-
tising IN this connection" Mr. Bur.
nett complained.
I think this committee should he
interested in the action OF the com.
pany IN filing false returns with
many State insurance departments y
Mr.. Geseil put in.
Will Be Careful, He SAYS.
Mr.. Burnett said the company
would be very careful in the future
about that.
When Representative Casey, Demo-
crat, of Massachusetts, COMMITTEES
member, said he thought loans such
as were being discussed constituted
dangerous public policy" Mr.. Bur
nett replied:
THAT has been very forcib,v
brought to my attention"
Miss Realey told the committee
Yesterday her applications for the
loans, sometimes accompanied by
more than $45,OOO in collateral
never had been questioned by COM
pany officials.
Explaining one transaction, she
said Mr.. Burnett, by whom she had
been employed for a number OF
years, simply asked me to sign the
note Tor him-I felt that the col.
lateral was there, I had confidence
In him and I did it."
Miss Realey said she had never
Questioned Mr.. Burnett's purpose in
obtaining the loans, and testified
sne did not know the company re-
port to the. Maryland State Insur-
ance Department indicated there
had been no loans made to stock
holders nf u,hipA r1,z