THE INSURANCE INVESTIGATION 467 



insurance is involved, but upon other subjects as well. It is 

 surplus that is being used to make and unmake political parties 

 and public men. More menacing than all else, perhaps, it is 

 the surplus which is being used as a compact money power in 

 the hands of five or six men to control the industries of the 

 country. 



Why did Mr. Ryan pay to James H.Hyde millions of dollars 

 for five hundred and two (502) shares of stock in the Equitable, 

 which under the charter can never pay in dividends to exceed 

 three thousand six hundred and forty ($3,640) dollars a year? 

 Why did Mr. George Gould and others offer fabulous prices for 

 this insignificant amount of stock? Simply because it would 

 give them control of the surplus. They did not expect to be 

 officers of the company. They expected, however, to elect 

 the officers of the company. Once elected, the officers would 

 have precisely the same power, and no more, that officers of 

 the purely mutual companies have. What matters it, then, 

 if the Equitable should be, as it is called, mutualized? The 

 policy holder would be in precisely the same position that he 

 now is in the Mutual, the New York Life and other purely mu- 

 tual companies. 



You may very properly ask at this point two pertinent 

 questions: First, how is it that insurance companies whose 

 charters require them to distribute the surplus annually or at 

 short periods among their policy holders, are able to accumu- 

 late and hold it indefinitely for the profit of their officers? 

 Second, how is it that in purely mutual companies where the 

 policy holders elect the officers each year, that the persons 

 who wrongfully withhold hundreds of millions of dollars from 

 the policy holders are continued in office? 



These two questions I purpose to answer in their order, 

 and the answers to these questions will, I am confident, suggest 

 the solution of this entire question. 



In the year 1877, a legislative investigation of insurance 

 companies took place in this city. The report of these pro- 

 ceedings has been printed, and to the facts contained in that 

 report, I shall have occasion to refer from time to time. I 

 think that it has been generally assumed that the scheme by 

 which policy holders have been defrauded out of their surplus 



