A Betrayal of Trust by L. A. S.

Review and Herald Publishing Association · Washington, D.C. · Oct 5, 1905

A Betrayal of Trust

By L. A. S.

The disclosures of “graft” in the manipulation of the assets of life insurance companies still come, and the end is not yet in sight. A Chicago telegram dated September 26 states the following:—

Investigation of the affairs of the Western Life Indemnity Company by a State examiner to-day brought to light facts tending to show that claims of perhaps thousands of policy-holders in assessment companies have been practically wiped out through company manipulation. Examiner Lucius Frouts discovered that twenty-eight small insurance companies have terminated their existence by merging into the Western Life Indemnity. “That means,” said the examiner, “that the policy-holders of the original companies have gone through a process which leaves them practically uninsured, although they are still paying their premiums, and have been doing so for years. This condition is not particularly the fault of the Western or other absorbing companies, for the absorption is done according to law.”

The New York World, comparing the Equitable Company of New York with some other leading insurance concerns upon which the lime-light has been recently turned, says:—

For years these insurance companies have been giving to the public what are now admitted to be false statements. The New York Life has been proclaiming that it owns no stocks of any kind. Its treasurer yesterday admitted that it had thousands of shares of speculative stocks, but it omitted them from its annual statements. It was also admitted that the company made fictitious loans to clerks to conceal stocks which it pretended to have disposed of, in order to meet the requirements of the Prussian insurance regulations. The Equitable is apparently no worse than its associates in the system. It almost shines by contrast. Its expenses of management are less and its dividends greater than either the Mutual or the New York.

The use by these companies of the policy-holders’ money to influence State and national elections, is about as far from the legitimate purposes of an insurance company as anything could well be, yet such use of their assets is shown to have been made by some, and probably by all, the leading companies.

The fact that no loss to policy-holders from this species of “graft” is yet apparent, does not afford any justification of it. Any business which is run on such lines is unsafe, and sooner or later must involve somebody in disaster. Disregard of justice, honesty, and truth never leads to safety. It is well to keep on the safe side. L. A. S.