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A glimpse of New York from Trinity Church steeple. (1872) (NYPL)
When one considers that this settlement will end costly and troublesome litigation, much of which would result unfavorably to the society; allows the society to improve its buildings in New York and Boston, and thus take advantage of the steadily increasing values of this real estate, all without cost to the society, and at the same time puts it in position probably to gain millions by reason of readjustment---there can be but one conclusion, and that is that official approval should be given to the settlement and the same consummated at once.
When the question of injunction in the case of Hyde vs. The Equitable was decided by Judge Bischoff, the law governing the case was set forth which practically charged the defendant with the Turner loan liability of over $3,000,000. The statute of limitations had already run against the Directors, who had collusively fastened on the society the burdensome leases, when the action was commenced by the State.
There is no escape from them, and at the same time no affirmative relief against those who caused them can now be obtained. This being so, the same course to pursue is to permit the society to effect this settlement, whereby those liabilities can be avoided and practically accomplish all that could be gained in the suit by the State, if it were maintainable.
Under all of the facts and the circumstances, we therefore recommend to the Attorney General the discontinuance of the suit of the People of the State of New York against the Equitable et al., and to the Superintendent of Insurance that his approval be given to the proposed settlement as outlined.
TRADERS' DEPOSIT COMPANY,The office of the Traders' Deposit Company is conveniently located within a few steps of the Equitable's towering edifice, and thither our straitened applicant presses his foot steps. The attendant clerk receives him kindly, and, after a little hasty figuring informs him that the "surrender value" of his policy (that is, the amount which the company issuing it would pay for its surrender) is exactly $400, or one-half the sum total of all the premium payments. "Our rule," the clerk declares," is to loan seventy-five per cent. of the surrender value. We can let you have $300, less ten per cent, as our commission. Then for every month that you retain the money we shall charge $--- as interest, payable when the loan is taken up." The poor man, distressed for the want of money, is only too eager to accept the loan without noticing the hard conditions with which it is coupled. Neither does he notice the fact that he is required to sign a document absolutely alienating his interest is the policy. The foregoing, doubtless, will serve as a fair illustration of the experience which thousands of needy policy-holders have undergone during the past year. The loaning of money on life insurance policies, when effected under fair and honorable conditions, is perfectly proper, and oftentimes is of great benefit to policy-holders. But when it is coupled with the exaction of an enormous rate of interest, when it is carried out in such a way as to induce almost inevitably the forfeiture of policies without any adequate consideration for their surrender, and when the machinery for compassing these detestable objects is under the control and in the interest of two or three grasping life insurance officers, then the whole business is degraded to the meanest kind of pawnbroking and requires to be arrested by indictment.
87 Liberty street,
Money Advanced on Good Securities of Every Description.
Loans on Life Insurance Policies.
Seventy-five percent. of the surrender value loaned on life insurance policies in the best companies.
(To The Editor of The Graphic.)
I have read an article in your issue of Saturday last, headed "A Life Insurance Policy Pawnbroker's Shop," and as you ask for information relative to their method of transacting business, I send you these few lines.
Having had occasion to make use of some money, and not having anything to use as security, and seeing the advertisement of the Traders' Deposit Company on Liberty street, I took with me my life policy on the best company in New York. After I had made known my wants to the managers of the concern they produced some papers which had to be signed and sworn to. The signing of those papers completely transferred the policy to the officers of the concern in case of non-payment of the interest! The commission for obtaining the money was 10 per cent, cash, and 3% per cent, per month interest, or the sum total of $150 per year on a loan of $800. Now, Mr. Editor, what do you think of this? Is it lawful to clear $150 per annum interest on $800? If you require, I will at some time, when my convenience admits, call on you and have an interview on this subject.
A VICTIM TO SHYLOCKS. New York, March 30.
(To The Editor of the Graphic.)
I am glad to see that you are probing into the affairs of the Traders' Deposit Company for the benefit of the public. Some time since I received their card, with my full name and address. As I am a modest man it puzzled me then, and has often since been in my mind. How did they know me? It is clear now as the noonday sun, I am a policyholder in the Equitable Life Assurance Society. What more natural than that, the same people being interested in both concerns the books of one should be open to the other? Thank fortune, I am not so impecunious as to be obliged to spout my life policy, even with so good a concern as the "Trader's," though it is run on an "Equitable" basis.
New York, March 20. G. W. P. D
ALBANY, April 5. The Insurance Committee resumed its investigation at 9:30 this morning. Previous to the resumption of the testimony the committee went into executive session, and it is understood that Mr. Floyd Jones made a motion to discontinue the investigation and make a report. What the result of the motion was is unknown.
After the recess Theodore Weston testified that he was the architect of the Equitable Building; the work was commenced in May 1874, and was completed in July, 1876; the leases commenced in May, 1875; the original office of the Equitable was separated from the main building, and its completion was delayed; there is no restaurant in the building; Delmonico's adjoins it; the actual expense of putting up the main building was about $1,500,000, including the land; the additional building cost about $1,000,000; witness received a salary of $15,000 per year; the preliminary plans were drawn by Mr. Kendall; he had not completed the plans before the building was commenced; the internal arrangements were left entirely to the preliminary drawing; there was no percentage paid upon any of the material to my knowledge; blank ; furnished a statement of expenditures to the Building Committee of the Equitable at almost every meeting; Mr. Lambert was Chairman of this committee; they had meetings three times a week; the plans were submitted to them, and the contracts were made by witness; upon the larger contracts, bids were advertised for; all payments were made by approval of the committee; Silman & Cheney were the contractors for the stone; they bid $98,000, I think; it was the lowest bid of 17; it ran a little over $3 per cubic foot upon the granite actually furnished; the granite was measured by myself; no commission nor any consideration was paid on the contract; the contractor for the masonry work who cut the stone was T.T. Smith; his work was let in the same way at $18 per 1,000 foot of brick, and $9, or about that, for setting the granite; that included pay for everything; he was paid nothing more; no one else received any gratuity on account of the contract; he did the fire-proof wall in the interior and the plastering; for the first he received 40 or 50 cents, and for the last 42 cents, per square yard; Morton and Chesley did the carpenter work at about $65,000; no gratuity or commission was allowed anyone on any work; a number of contracts were made for the elevators, for the boilers, for the sub-cellar, for taking down the old building, and for other purposes; the entire work cost about $1,000,000, and upon it no bonus or commission was paid to any one; neither to officers, Directors, not any one else; the granite contractors furnished about $1,500 worth of work for Mr. Hyde's house on Long Island; Mr. Calvert Vaux was the architect of the house.
Thomas D. Jordan, ex-Controller of the Equitable Life Assurance Society, who was indicted for forgery a year ago because of his connection with the Equitable's "yellow dog fund," dropped dead on the downtown platform of the Wall Street Subway station yesterday afternoon. Mr. Jordon had lived in Englewood, N.J., for many years. He came into town yesterday to see some friends. He then called to see his son, Frank B. Jordan, who has a general fire insurance brokerage office in the Equitable Building. The younger Mr. Jordan accompanied his father to the entrance of the Subway station and then returned to his office.Armstrong Committee Testimony
The elder Mr. Jordan, after purchasing his ticket, was seen to walk up and down the platform several times. Suddenly he staggered back to the railing, and after leaning there for a second or two, fell to the ground. In the crowd on the platform was Dr. F.C. Wells of the Equitable. He recognized Mr. Jordan and telephoned to his son. Mr. Jordan's body was taken to the Church Street Police Station, and later to his home, at Englewood. Coroners' Physician Weston, who examined it before issuing a removal permit, found that the cause of death was heart trouble.
Mr. Jordan was 66 years old. He was born in New York City and entered the employ of the Equitable as errand boy when he was 17 years old. He afterward became a solicitor for the company and was promoted to one executive place after another. When the Armstrong Investigating Committee turned its attention to the Equitable, on Sept. 1, 1905, subpoena servers tried to find Mr. Jordan, who was then Controller of the society. He was never served.
His son, Frank D. Jordan, surprised the Investigating Committee and its counsel, now Gov. Hughes, by testifying on the stand a few months later that he did not know where his mother and father were, or whether they were dead or alive.
In May of last year the elder Mr. Jordan came out of his retirement voluntarily and pleaded not guilty to eighteen indictments for forgery in the third degree and one charging perjury, Mr. Jordan all the indictments having been found by the Special Life Insurance Grand Jury. Most of the forgery indictments grew out of so-called loans which Mr. Jordan, as Controller of the Equitable, made to various employes of Kuhn, Loeb & Co., These loans were put as bona fide loans on the Equitable books. But Kuhn, Loeb & Co. never received any money from them or deposited any securities with the Equitable as collateral.
Mr. Jordan is said to have made the entries or caused them to be made with a view to reducing the Equitable's actual bank balence in order to conceal the amount of policy holders' money lying idle in bank at a small rate of interest. The names of Louis A. Heinsheimer of Kuhn, Loeb & Co. appeared on the Kuhn, Loeb & Co. checks. Mr. Heinsheimer afterward denied Mr. Jordan's statements concerning his dealings with the firm. The perjury indictment was based on a false report which Mr. Jordan, as the Controller of the Equitable, was said to have made to the Insurance Department as to the transactions covered by the forgery indictments in May, 1907. Mr. Jordan was released in $10,000 bail for trial last October.
Besides his wife and son, Mr. Jordan leaves a daughter, Mrs. Edward D. O'Brien of New York City.
BY MR. HUGHES:What makes this level of non-compliance so frustrating is the several levels of investigation preceding the Armstrong hearing. You might think a spoiled punk nepotism beneficiary might get his act together--instead he reveals the real power dynamic. And the following story in the Times? Pure meaningless window-dressing. Get it now?
Q. Mr. Jordan have you learned of the whereabouts of your father since you were last on the stand? A. No, sir, I have not.
Q. Have you had any communication with him? A. No, sir.
Q. Or with your mother? A. I received a letter from my mother.
Q. Where was it from? A. I think if I am not mistaken, I think it was from Canada.
Q. What? A. Canada, I think.
Q. Did she say that your father was with her? A. Did not say anything about him.
Q. Have you any idea when he is coming back? A. I don't know.
Q. Do you keep a record of the amounts that you have received for placing fire insurance upon properties mortgaged to the Equitable? A. I have a record, yes, sir.
Q. Can you state approximately what that amount has been? A. No, sir; I never figured it out.
Q. Has anyone been interested with you in that business? A. No, sir.
Q. Has your father received any portion of the moneys that you have received for placing such fire insurance? A. Never.
Q. Any member of your family? A. None whatever.
Q. Has anyone connected with the Equitable Life Assurance Society received any portion of the moneys which you have had for placing fire insurance on properties mortgaged to the Equitable Life? A. Emphatically, no.
Q. How did it happen that this business was put in your hands? A. That I don't know, sir.
Q. Was it a surprise to you? A. Well, I guess so.
Q. When was it first placed in your hands? A. About five years ago.
Q. What had been your business previously? A. General fire insurance.
Q. General fire insurance? A. Yes, sir.
Q. Had you placed any fire insurance upon properties mortgaged to the Equitable before that time? A. I have placed them, yes, sir.
Q. But you did not have the entire business? A. No, sir; I have not the entire business now.
Q. You mean that there are still some old mortgages still outstanding where the mortgagors have the option to place it where they please? A. I don't know about that, sir.
Q. Don't you know that there is a clause in the mortgages of the Equitable for about the last five years to the effect that the Equitable has the the right to determine through whom the insurance shall be placed? A. I believe there is such a clause.
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Q. And you know that under that the Equitable requires that the policies of insurance should be placed through you? A. No, sir, they can place with whom they please.
Q. Don't you know that the Equitable refers persons who are placing fire insurance upon such properties to you? A. I do not, sir.
Q. How much fire insurance have you placed in the last year? A. That I don't know.
Q. Can you tell within a million dollars? A. I cannot, no, sir.
Q. Within five millions? A. No, sir.
Q. Within ten million dollars? A. No, sir, I could not.
Q. Well, you have placed fifty million dollars of insurance? A. I don't know, sir.
Q. Haven't the wildest idea? A. No, sir.
Q. I suppose you can get all that for us? A. I can get that if you wish, yes, sir.
Q. Has there been any change in the policy of the Equitable Life with regard to placing fire insurance through you within the last few months? A. I have placed some of their business to date, yes, sir.
Q. Are you still placing, that is the business of fire insurance upon properties mortgaged to the Equitable? A. Some of it, yes, sir.
Q. How much of it have you placed within the last two months? A. That I don't know.
Q. Have you any idea? A. No, sir.
Q. Have you any compensation from the Equitable? A. None whatever.
Q. What portion of your business is furnished by the Equitable in this manner? A. I don't know.
Q. Have you anv idea? A. No. sir.
Q. Have you any idea whether you have any business except that? A. I have, yes, sir.
Q. Does the Equitable furnish nine-tenths of the business that you have? A. It does not, no, sir.
Q. Will you give me a statement, please, showing what the amount of the business upon properties mortgaged to the Equitable has been during the past five years and the amounts that have been made from it? A. Yes, sir.
Q. What is your rent that you pay to the Equitable Life? A. Equitable Life?
Q. Yes. A. $60 a month.
Q. What offices do you occupy? A. I am on the seventh floor, room 23.
Q. Have you any compensation from the Equitable? A. None whatever.
Q. Never had? A. Never, no, sir.
Moses Tanenbaum of the insurance firm of I. Tanenbaum & Co., with offices in the Whitehall Building, Battery Place, sent yesterday to Chairman Henry C. Frick, of the investigating committee of Equitable Directors, a letter in which he called the committee's attention to an alleged practice in the society of inserting in its bond and mortgage forms a provision compelling the holder of the mortgage to procure his fire insurance through a broker of the Equitable's selection. Coupled with this information was the statement that a near relative of an officer of the society is the broker through whom the fire insurance on property mortgaged to the Equitable is placed.
Deputy Superindendent of Insurance Robert Hunter, with Congressman Driscoll of Syracuse, Superintendent Hendricks's personal counsel, yesterday took up the examination of William H. McIntyre, Fourth Vice President of the Equitable, who was once private secretary to the late Henry B. Hyde. Mr. McIntyre, was before the Deputy Superintendent all day. The Frick investigating committee also held a session yesterday in the Equitable Building.
In the Supreme Ciurt yesterday Justice Greenbaum reserved decision on the application of William McCulloh of Alexander & Green to vacate the order to show cause why James H. Hyde, James W. Alexander, and Gage E. Tarbell should not be examined before trial in the suit of Herbert E. Tull of Phildelphia to enforce a distribution of the Equitable's surplus. Yesterday's daily peace report, had it that William Nelson Cromwell had become one of the counsel representing President Alexander.
A second Equitable "yellow dog fund." apparently employed as a feeder for the famous "J. W. A. No. 3" account, was disclosed at the close of the session of the Armstrong insurance investigation yesterday, and so important did the record of this account, preserved in a private and unpretentious black book, seem to the members of the committee that they sat for an extra hour, while Henry Greaves, who was the apparent keeper of this account, testified to the history of this secret record, and incidental to the existence of an earlier secret fund known as the Marcellus Hartley account.
The second of the "yellow dog"accounts, that which occupied much of yesterday's session, was known as the "George H. Squire Trustee" fund, and was deposited with the Equitable Trust Company. In it were carried not a few of the profits made by the Equitable in various syndidate participations and not entered in any other place, and it was apparently subject to the direction of McIntyre, Jordan and Alexander. From this account sums aggregating $265,000 were transferred to the "J. W. A. No. 3 account." and to this account at its inception $55,000 from the Marcellus Hartley account was transferred.
Moreover, it was disclosed that this fund and the cash book for it were in the keeping of Thomas D. Jordan, the former controller of the Equitable, who was summarily dismissed by
Paul Morton for refusing to tell about the JAW No 3 account, and who has not yet been reached by the committee, which desires him to testify before the investigation closes.
In addition to a number of profits from syndicates in which the Equitable participated, which appear in this account, there are evidences of other syndicates in which the Equitable participated only through this fund and from which profits were directed thither instead of to regular accounts.
As to the uses to which this fund were put, and whether they were similar to the uses for which the New-York Life employed its "nonledger" accounts, such as campaign contributions and "Andy" Hamilton transactions, no evidence was adduced yesterday, but it was clear that Mr. Hughes believed he was following a "warm" trail, because of his refusal to leave it at the usual time of adjournment.
Hardly less interesting than the developments concerning the George H. Squire trustee fund were those regarding the syndicate operations of the Equitable through "George H. Squire and Associates," as well as "James H. Hyde and associates" and "Louis Fitzgerald and Associates." In previous testimony the fact had been shown that the Equitable not infrequently received its participation, not directly from syndicate managers, as is the usual proceeding, but through one of the "and associate" combinations of its officers.
Yesterday the fact was shown that not infrequently the whole burden of carrying the personal participation of the "and associates" —that is, of furnishing all the money— was performed by the Equitable, and that the "associates" figured only when the time for the division of profits arrived. Among those who profited in syndicates in which the Equitable participated were the following officers of the company: Senator Chauncey M. Depew; the president, James W. Alexander; the vice-president, James Hazen Hyde, and George H. Squire, of the private "trustee" account and of the various "associates" syndicates
Senator Depew participated in two syndicates, his interest aggregating $150,000. Moreover, in several of those transactions, notably in Chicago and Northwestern, profits apparently due the Equitable had, it seemed, vanished, to be found in some cases in the George H. Squire trustee
account and at other times not to be found at all.
That the Equitable, through Paul Morton, intended to seek civil action in the courts to recover interest wrhere loans had been carried for the officers of the company by the Equitable, was one of the suggestions contained in the testimony of Henry Rogers Winthrop. George H. Squire's successor as financial manager of the Equitable, who was on the stand most of yesterday's session.
ACCOUNTS BADLY TANGLED.
In relation to these syndicate participations through the medium of associates the hopeless, tangled condition of the Equitable records of these affairs was manifest from Mr. Winthrop's testimony. Time and again he testified that expert accountants were still endeavoring to trace the receipt or non-receipt of profits. Not infrequently his only means of showing that the Equitable had participated or was entitled to profits was through calls made on it by syndicate managers for its agreements. Following this up the present management of the Equitable had communicated with the syndicate managers, and from them learned the exact amount of the Equitable's participation and the amount of the profits which the managers had delivered to the company. Then the hunt for the account to which these profits had been transferred began. Sometimes they were found credited to profit and lose, sometimes embodied in the "George H. Squire Trustee" fund, and, in several cases not found at all.
Just how many items of "missing" profits were discovered was a matter of considerable doubt because of the entirely confused state of the Equitable books at the present time.
Two such items in Chicago and Northwestern aggregating $44,000 were disclosed, and items amounting to upward of $100,000 more, which might ultimately have to be placed in this category, were shown.
In view of Jacob H. Schiff's testimony regarding the relation of his firm to the Equitable in bond sales in syndicate agreements, interest was shown in the fact demonstrated yesterday that in several instances the Equitable had definitely paid checks directly to Kuhn. Loeb & Co.
A minor but amusing detail of Equitable management shown in yesterday's proceedings was a clerk loan, recalling the famous $1,000,000 transaction in the name of a $10 a week clerk disclosed in the New-York Life some time ago.
This transaction was for $626,090 in the name of Eugene Barrington, a $2,000 clerk. No record of the loan could be found on the books of the Equitable, and the obvious intention, as shown by the testimony, was to get this amount of the bonds of the Atlantic Coast Line off the books
of the society.
The Equitable Trust Company, which made the loan, charged interest on it, and the only evidence of the loan to be found by the Equitable was the request of the trust company in a letter for the payment of this interest.
Some suspicion was directed toward this transaction, as Mr. Barrington is the clerk who has charge of the advertising expenditures, and these items are being carefully scanned.
The testimony of Mr. Winthrop on the Equitable syndicate operations was not closed last night, nor was that of Henry Greaves, the keeper of the "George H. Squire Trustee" fund. Both will be recalled in the morning session today. The next witness to be called is Jacob H. Schiff. While the committee took no definite action on the point yesterday, both James McKeen, of counsel for the committee, and Ezra P. Prentice the secretary, agreed that both Senators Dryden, of New-Jersey, and Depew would be called. William A. Day. the new controller of the Equitable, and Senator Morgan G. Bulkeley president of the AEtna Life Insurance Company, of Connecticut, were in attendance yesterday.