Thursday, August 11, 2011

Devil's Work.

March 14, 1874, The Daily Graphic, Page 99, Column 4, Letters From the People. A Life-Insurance-Policy Pawnbroker's Shop.


Can you give me some information regarding the "Traders' Deposit Company," which has an office at No. 85 Liberty street, and which advertises to "lend money on approved securities?" I am informed that the "company" has a merely nominal capital, and that it is made up principally of the controlling officers of a certain prominent life insurance company; also that the object for which the concern was established is to lend money on the pledges of polices issued by the aforesaid life insurance company. The charter of the latter prohibits the loaning of money on its own policies, and its officers take advantage of the necessities of policy-holders, who are forced to borrow on their policies by sending them to the Traders' Deposit Company. At first blush this may seem to be a fair and legitimate business. But I am told that the moneys advanced by the "deposit" company really belong to the life insurance company; that is to say, the insurance officers deposit their "trust funds" with the Traders' Deposit Company, and the officers of the latter use it in the manner above described. This kind of traffic is said to be very large, and its profits are enormous. Will you not investigate the matter and publish the facts?

New York, March 10.

[The above comes to us from a perfectly trustworthy source. Immediately on its receipt we sent a capable commissioner to the office of the Traders' Deposit Company to inquire concerning the charges of our correspondent. The replies of the officer in charge were evasive and unsatisfactory, and it was impossible to ascertain anything beyond these facts: That the Deposit Company was organized under a special charter, granted on April 19, 1871, authorising the Company "to receive or deposit on pledge or otherwise money, certificates, and evidence of debt or value, and contracts; also, to advance money, securities, and credit on the same at agreed rates of interest." A certificate of the payment of the capital stock of $50,000 in full was executed before Recorder Hackett January 6, 1878, bearing the signatures of George W. Campbell, Jr., President; Samuel Hatton, Secretary; Simeon Fitch, K. Boudinot Colt, and Joseph B. Lemaire, acting collectively as trustees of the corporation. February 1, 1878, a second certificate was executed setting forth that after legal notice—given in the most obscure daily newspaper in the city—the corporation had decided to increase the capital stock to $300,000, and that the said $300,000 was subscribed and paid in in cash to the treasurer of the society. Beyond the declaration that all the officers of the Traders' Deposit Society were stockholders, and that Mr. H. B. Hyde, Vice-President of the Equitable Life Assurance Society, was interested in the stock, Mr. Campbell H. Young, the present President, withheld information concerning the connection of the concern with any life insurance company. The refusal to give information regarding the character of the Company's business, or the manner of conducting it, certainly looks suspicious. It is this circumstance which determines us to pursue our investigation. We shall press our inquiries in other directions, and our readers shall know the result. Meanwhile we call upon all persons who have had dealings with the Traders' Deposit Company to give us a brief account of their experience. We do not want their names for publication—only as a guarantee for the correctness of their statements. If any life insurance policy-holders have pledged their policies to the Traders' Deposit Company, let them send us the number, date, and amount of their respective policies.--ED. THE DAILY GRAPHIC.]

March 19, 1874, The Daily Graphic, page 135, Column 2,The "Traders' Deposit Company. Is It a Life Insurance Policy Pawnbroker's Shop?

Further investigation of the organization of the Traders' Deposit Society, No. 85 Liberty street tends decidedly to strengthen the inference drawn by our correspondent in his communication of the 15th instant. The first name on the list of corporators in the charter of the Company is Sidney Ashmore. We have ascertained that Mr Ashmore was formerly established in Wall street as a mining stock operator, but having failed became a soliciting agent to the Equitable Life Assurance Society, from which position he passed to that of editor of the society paper, the Protector, and also managed the advertising department. Among the names of the signatures to the certificate of increase of capital stock that was filed at the County Clerk's office February 1, 1873, appears that of Theodore Weston. Mr. Weston was in the engineers' branch of the Croton Aqueduct Department when Mr. Craven controlled the Bureau, and afterwards took an office in the Equitable Building, thus coming into connection with the latter society, which employed him in certain engineering matters. A close business relation between Mr. Weston and Mr. H. B. Hyde, Vice-President of the Equitable, was the result, and the former now has charge of the works on the Equitable Building in course of construction in Boston, and is also one of the auditors of the Society.

The certificate of incorporation filed at the County Clerk's office January 6, 1872, is signed by George Wm. Campbell as President of the Traders' Deposit Society. Mr. Campbell is brother-in-law to Mr. Borrowe, Secretary to the Equitable Life Assurance Society.

Thus far inquiry has failed to develop that any of the corporators of the Traders' Deposit Society are individuals whose resources would enable them to secure a capital such as that claimed to have been paid up in full, and that several of their number are merely salaried employes of the Equitable Life Assurance Society, whose Vice- President, Mr. Hyde, is declared, by the President of the Traders' Deposit Society, to be a stockholder in the latter. The above facts by no means exhaust the information we have obtained, and when fully digested all that has come to our knowledge will be laid before our readers.

March 23, 1874, The Daily Graphic, Page 163, Columns 3 & 4, A Life-Insurance-Policy Pawnbroker's Shop-Speculating on the Necessities of Embarrassed Policy-Holders--Fifty Per Cent. Per Annum For Loans,

We publish below two letters selected from several which have been received at THE GRAPHIC office in response to our call for information respecting the Traders' Deposit Company at No. 87 Liberty street. There is no longer any doubt that the concern has been engaged in the abominable traffic of speculating on the necessities of embarrassed policy-holders. The rates of interest charged, if we may believe the statements of our correspondents, are hardly below the charges of the most unblushing pawnbroker, and, as every policy on which a loan is made has to be absolutely signed and transferred, the Traders' Deposit Company seems to be organized for nothing more nor less than the pawning of life insurance policies. To illustrate the modus operandi of the concern, let us suppose the case of a policy-holder in the Equitable Life Assurance Society. He has been insured for several years and has paid altogether the sum of $800 in annual premiums. He finds himself suddenly embarrassed and must raise a few hundred dollars to discharge a pressing indebtedness. A poor man, he has nothing which he can give as security except the policy on his life. In this emergency a friend tells him that he can go to the company which issued his policy and arrange for a loan. The suggestion is timely; it had not occurred to him. On visiting the magnificent offices of the company, he is politely informed that the company's charter forbids the making of loans on policies, but that the Traders' Deposit Company will probably accommodate him, and at the same time he receives a card containing the following:
87 Liberty street,
New York.
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.
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.

We have taken up this inquiry in the interest of life insurance policy-holders (of whom there are not less than 100,000 within twenty-five miles of the City Hall), and we intend to collect all the information that can be obtained regarding the nature and extent of the business, now openly practiced in this city, of loaning money upon life insurance policies. There may be other concerns similar to the Traders' Deposit Company, but it is due to the life insurance companies to say that that is the only one which is reported to us as having any connection with any particular life company. Doubtless the Traders Deposit Company loans on the policies of other companies than the Equitable; but that is a matter which the companies cannot prevent or even discountenance.

While we are pursuing our inquiries, we particularly desire all persons who have bad dealings with the Traders' Deposit Company to come forward and relate their experiences. Their names will be required only as a guanntee of good faith, and not in any case will they be divulged.

The following are two letters already received:
(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

"The story of the trust companies" by Edward Ten Broeck Perine, 1916, page 217

Equitable Trust Company of New York had been established in 1871 by a special act of the Legislature, under the name of the Traders' Deposit Company. This was changed in 1895 to the American Deposit & Loan Company. The principal business of the Company from that time until 1902 was that of making loans on life-insurance policies. The Company's affairs were managed largely by interests identified with the Equitable Life Assurance Society, the owner of a controlling stock interest. In 1902 the name was changed to the Equitable Trust Company of New York, and its field of activity was extended to include all banking and trust functions

Laws of the State of New York, Volume 2, Chap. 604. AN ACT to incorporate the Traders' Deposit Company. Passed April 19, 1871

Section 1. S. Ashmore, E. B. Colt, J. B. Le Mare, S. Hatton, Joseph Lyons, H. V. Butler, jr., Daniel Garrison, and their associates and successors are hereby constituted a body corporate and politic under the name corporate of the Traders' Deposit Company, and under that name may sue and be sued, plead and be impleaded, and by that name may exercise and enjoy all the rights and powers granted by this act.

May 24, 1896, New York Times, SIGNED BY THE GOVERNOR;

Measures Affecting New-York and Brooklyn Interests

ALBANY, May 23. -- Gov. Morton to-day announced the signing of thirty-eight bills, including the following: Mr. Husted's, extending the powers of the Traders' Deposit Company of New-York City...

Meanwhile, over at the New York Times...

April 6, 1877, New York Times, LIFE INSURANCE AFFAIRS.;
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.

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