THE INSURANCE INVESTIGATION 471 



in this matter. In 1870 the surplus of the Equitable amounted 

 to only $408,434. This is the sum which would naturally be 

 accumulated under the plan of short period distribution then 

 in operation. 



In 1880, only eight years after the passage of this law, the 

 surplus had been multiplied to $6,555,654. 



In 1890 it had become $21,510,671. 



In 1900 it had become $65,923,573, while the divisible 

 surplus of the company, December 31, 1904, is reported by it as 

 being $78,944,061.31. 



I have now answered the first question and shown you 

 the origin of surplus accumulation and how it has been success- 

 fully carried forward to the present time. Large surplus accu- 

 mulations, as we have now seen, originated in no requirement 

 of the business, but in the selfish greed for personal gain of life 

 insurance officers. The fundamental law of the insurance 

 companies themselves had forbidden this accumulation. To 

 change the law, therefore, became the work of the unfaithful 

 officers. 



Here also is another milestone in the history of life insur- 

 ance. The ease with which these men were able to break down 

 the law protecting the surplus of the policy holder suggested to 

 them the possibilities in controlling legislation in other direc- 

 tions. We have heard in this insurance investigation that it 

 was necessary to maintain an insurance lobby because strike 

 legislators would blackmail the insurance companies otherwise. 

 Were the companies being blackmailed when they obtained 

 this first piece of legislation which has permitted the policy 

 holders to be robbed of more millions than can ever be known? 

 Were the companies being blackmailed when later, little by 

 little, they broke down the laws prescribing the securities in 

 which the policy holders' funds could be invested? Were the 

 insurance companies being blackmailed when, in 1890, section 

 56 of the present insurance law in this state was passed, for- 

 bidding the commencement of proceedings by injunction, or 

 for an accounting or for the appointment of a receiver against 

 an insurance company to be instituted by policy holders with- 

 out the consent of the attorney general? Is it because they 

 have been blackmailed that certain gentlemen find it convent 



