atement to the State
authorities set forth under oath that only seven per cent. had been paid
to stock-holders, all the rest of the profits being presumably divided
among the policy-holders. But now, when the light is let in upon this
company, it appears that it always paid its stock-holders eighteen to
twenty-eight per cent., and that while, of late years, only seven per
cent. was charged on the books, yet the money was paid just the same.
Then, too, lest the policy-holders should get too much profits to be
divided among them, princely salaries were paid to the officers and
agents, and upon these salaries annuities were predicated, which were
also commuted, capitalized, and surrendered to the company each year. I
hardly know how to characterize this scheme. It came out in the evidence
of an officer, who said he had $2,000 per annum, with an annuity of five
per cent. That sounds quite simple, and persons not fully informed on
the subject of life insurance would hesitate to expose their ignorance
by asking questions. The annuity turns out to be $100 per annum for
life, which at the time it is granted the company capitalized and
purchased back, paying about $1,000 therefor. But next year there is
another annuity for life granted, of the same amount, which is again
purchased, and so on continually. The effect is to add to the officers'
salaries, yearly, about fifty per cent., and at the same time conceal it
from the public, the State department, and the policy-holders. The
president's $17,500 thus became over $26,000, without attracting
attention. Besides, it helps demonstrate the scientific principles upon
which life insurance and life annuities are based, and by practically
illustrating to the managers themselves the potency of algebraic formula
in figuring large sums out of small, convinced them of the truth of the
arguments which they are to make to the agents, and the agents to the
public, by which the money is to be brought in to keep this fine system
going.

You will say that this is only one case, and that it is an exception,
and that companies honestly managed will not permit such things. I grant
you the latter part of your answer, but ask you to show me an honestly
managed company; I know but very few. It will be found, on
investigation, that these practices, or others quite as bad, flourish in
every company, in this State at least, with few exceptions.

Commuted commissions is another item under the thin disgui