Year: 1878

THE ETNA LIFE.

 GOVERNORS VETO.

 To the Senate:

 I find myself constrained to return without approval to the house in which it originated bill entitled, "An act to amend the charter of the Etna Life Insurance Company, of Hart | ford, "and do so with statement of the req sons which have induced me to withhold my approval The capital stock of the .Etna | Life Insurance company is one hundred and | fifty thousand dollars, of which fifteen thous- and dollars was paid in in 1851, forty-ive thousand dollars in 1868, and forty-ive thou sand dollars in 1874, making one hundred and five thousand dollars all paid in cash. The balance, forty-fve thousand dollars, has been paid by the application of profits or dividends on stock notes. The dividends annually de- clared average, so nearly as can learn, about 75 per cent. on the capital actually paid in at the time of such dividends. The stock inter- est had at the last report, surplus of six hundred and thirty eight thousand three hun dred and twenty-one dollars. The bill propo- ses to authorize the increase the capital stock to seven hundred and fifty thousand dollars from present and future surplus or, in other words, a stock dividend of five hundred per cent. on the capital actually paid in, with proviso, by way of saving, that, for the future, or at least until further license can be Ob- tained from a future legislature for the Capi- taliZation of further surplus, no more than ten per cent per annum shall be paid on such in- creased stock-that is to say, that future divi

 dends shall not exceed 30 per cent. per annum on the whole amount of it's present nominal capital, or 75 per cent. annually on the entire amount of capital actually paid in.

 To all this there would be no objection. per haps if the corporation were an exclusively stock company, and we could be sure that the surplus on hand and tho dividends already paid had been actually and fairly earned. In this case 1 should make no objection to the | proposed capitalization.

 But this corporation, I beg the assembly to | remember is a mixed one-a stock and mutu-

 al company in one. Its principal business is a mutual business. Its principal assets belong, or should belong, to the mutual policy-holders. The principal duty of the state is to these pol | icy-holders, representing as they do sixty mil | lion dollars of risks. Yet no one of them is | allowed by the charter of this company or ever has been allowed, to have any control whatever in it's management, or in the appor- tionment of business, charges and profits be- tween the stock and mutual departments, or even to examine it's books and accounts. These policy-holders are utterly defranchised by law and the stockholders are made supreme mas ters of the situation, and sole judges between themselves and the excluded mutual policy holders. These things ought not to be. No man can be just judge in his own case. The temptation to wrong, doing is greater than any man can bear. What wonder that such i'm mense dividends have been annually made in the past that this little pocket of stock has now d surplus of nearly six hundred and fifty thousand dollars and that the shares of the company bear unheard of premiums whenever if ever, so rare a thing as sale takes place.

 What would be said of co-partnership in which every partner, save one, was excluded from management of the business, and that one permitted to fix his own salary at his own pleasure assign to himself and for his own ex- elusive use so much of the business as he pleased, and at the end of every year to levy contributions and apportion expenses and pro- fits between himself and the other partners at his own ungoverned will and discretion. whilst the excluded partners were denied not only all voice in the matter but the right also of exam ming the books. and even the poor privilege of dissolving the partnership. except upon the unconscionable condition of forfeiting their whole capital paid in and profits earned. BuI this is just what exists in the case of every mixed company in this state. Tony thinking it is scandalOusly unjust.

 This assembly has just plucked one of these companies out of the hands of it's stockholders. though the stock had just been placed in the control of a body of most reputable and trust ed business men, and turned over its assets tO the exclusive management of the policy-hold- cts Was this intended as an act of grace and partiality for a favored institution, or was it penalty and punishment fora great offender Nothing of the sort; but a too tardy act of jus tice to policy holders, whom the state had too long diSfranchised and suffered to be spoiled Of their rights.

 Why is it, beg again to ask, that by the second section of this bill the stockholders of the company, after having apportioned busi- ness and profits to suit themselves, are to be authorized forever hereafter to levy an addi- tional and forced contribution of nine thousand dollars, upon the mutual pOlicy-holders! lsit to legalize, by implication of law, what has annually been done ever since 1862? If there were no other possible objection than this one, should feel bound to return the bill.

 I am not sorry to have the opportunity of officially denouncing this whole system of mixed insurance, as bad in principle and worse in practice The evils are in the system itself, and bred of it. So long as the stock and mu- tual interests are suffered to co-exist in the same corporations, and exclusive membership and management is given to the one, so long that one will continue to eat into the other, and grow fat on it. 1 venture to say that large proportion of the best risks, now held lon the stock side were lured into the company by the promise of participation in profits, and being thus lured in, were afterwards, when the continuing annual premiums became irk- some or impossible, slid over to the stock side with the benefit of all their reserves, sn the hard bargain of surrender and paid-up pol icy.

 It is sometimes plausiblp argued that the stock element in a mutual lie company is necessary to stability of management and sue cess ill the business. This, in my judgment, is untrue. There is but one purely mutual company in the state. That is a monument of stability, prosperity, and wise management. Of the other companies one isa hopeless wreck in the hands of receiver another crippled and saved, if saved at all, so as by fire ; and a third is now under legislative investigation. It is also fact, so notorious that no maa can we'll be ignorant of it, that more than one | of the mixed life companies of this state have been sold out bodily from one set of managers | to another, by means of enormous premiums paid for the purchase of stock. These facts | do not support the argument above suggested. l I do not, therefore, yield my assent to 1t. In my judgment the whole system IS Viclous clear down to the roots It furnishes an easy onnortunitv to one class of men in corpora tion to prev in a thousand ways, without oo- servation on another class in the same cOrpor- ation. I cannot allow myself to assist in it's perpetuatiOn, recognition, or enlargement. Ex- CONCLUDED ON FOURTH PAeS.1