Odell might resent such a statement as that, I do not know
whether he would or not, but I think that if I were in politics I
would try to get as many men of prominence as possible as
friends of mine.

Q. The testimony that you have referred to, that is your testi-
mony when you were on the stand before is as follows: **Q.
Were you concerned with any offer to Mr. Hyde for the purchase
of his stock," to which you answered "No, sir." A. Well, then
I was not. I ask you, don't you think I answered that question
properly ?

Q. Yes, I think you had in mind at that time offers to Mr.
Hyde. A. Yes. Hadn't you that in mind?

Q. Yes, I had, for I did not know anything about this Ryan
matter. A. I had not this matter of Ryan in mind there. I was
concentrating my mind on the thing you wanted to find out.



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Testimony of Edivard H, Ha/rriman

Q. "Vfou were following the line of my questions as to further
offers, and you did not have in mind the fact you had suggested
to VXr-. Ryan to take a part of the stock? A. Yes, in order to
safeg^XTsrd, as I thought, the situation.

Q* Then another question was asked, as follows: "Then you
at no time made any offer to acquire Mr. Hyde's stock? A. No,
sir/* "What is the explanation of that answer. A. Was not that
prec^<i^nt to the time that I afterward say that we came down
to tVi^ time of the Frick report.

S - I think it should be read with its context as follows : "Q.
It Vi3.s been stated here there was an offer; Mr. Hyde has said
ther^ -vvas an offer to Mr. Frick? A. That I don't know of, but
Mr. I-Iyde had told me himself that he had received several offers
for t\\^ purchase of his stock, and I asked him what he was
goin.^ to do and he said he would not sell it under any considera-
tion, and I encouraged him in that, and Mr. Frick came to me
and told me that he had heard also; then* I said to him that I
think: you ought to tell Mr. Hyde not to sell that stock to
anybody, and if he does he should not sell it without letting you
know, and I understood from Mr. Frick that that was what he
^^^- Q. Then you at no time made any effort to acquire Mr.
^y^G^s stock? A. No, sir. Q. And down to the time of the
report of the Frick committee you encouraged Mr. Hyde in his
retention of his stock? A. Yes. sir." A. Well, it seems to me

^^a.t all bears out properly.
/^' Qf course, the point is as to what you intended to say and
^ ^^c^n had in mind. At that time did you have in mind the
^^Titerview? A. Had not any thought of it at all, and I did

^^I^F>ose that you had any reference to the time that Mr.

^' ^^^ course I knew nothing about Ryan interviews at that
' ^Tici I was asking a blanket question, and you had in mind the
course of the examination. A. That is left all right.

V* ^ would like to have you state, Mr. Harriman, what steps

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you took to prevent legislation last winter in the direction of
mutualizing the Equitable — ^what sort of influences or sugges-
tions was there emanating from you which prevented the passage
of a bill to that effect, prevented the introduction of a bill to
that effect, was it introduction or passage — ^was it introduced?

THE CHAIRMAN : Introduction.

A. There was threatened introduction of bills from time to
time by what you might term the Alexander faction or the so-
called protective committee, and I had several communications
with some of the men at Albany — men with no interest in this
situation whatever, and unless it is particularly desired I would
a little rather not say it. If it bears on this situation at all

Q. It bears on this situation to this extent, that one of the
subjects of inquiry is the extent to which legislative action is
affected or not affected by persons interested directly or indi-
rectly in insurance companies, and I think it will be better for
you to state fully just what was done in regard to that, inasmuch
as the matter has been mentioned. A. Well, as I can recollect it
now — I have got to be a little careful about statements of this
kind

Q. Certainly. A. And you have to give me a little time about
it.

Q. Certainly, take your time, Mr. Harriman. A. The Equita-
ble Board of Directors had several meetings during the Alexan-
der-Hyde controversy, and I had been on one of the sub-com-
mittees and finally the second committee had been appointed,
the committee on which I was appointed — ^by the way, I would
like to say at that time Mr. Hyde offered to trustee his stock so
far as he could and put it out of his power to vote on it, just the
same as Mr. Ryan has, for five years, subject to the control of



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the JSoard of Trustees — ^he made that the sub-committee. I
think that is a matter of record.

Q- Yes. A. And finally the second sub-committee had made

a i"^<z:ommendation for mutualization and whatever the proper

"ictil^od of carrying out such a plan is, I don't remember, and I

don^ti: know just what it is, but some action had to be taken at

All>si.ny^ and it was put in the hands of some of the lawyers

to osi^xry out, and after agreeing — ^that is, the Alexander faction

•"^t^t^r agreeing to forward such action, I think it is by the State

Siix>^xintendent of Insurance and the Attorney General, is it

"^"t r^ Apparently some of the people, I think some of the laW'*

vers -who were interested on the Alexander side went to Albany

^^ ^''^^ and prevent it, and Mr. Piatt, representing the protective

^^^'^^x-nittee, went up there with a lot of affidavits, and tried to

^^^^P> the thing which had been agreed upon between the two

^^^i^ons in the board. I was not with either faction ; I was inde-

P^i^d^nt, and I think Mr. Root was there at that time at many

^^'"^^^^rences, and with other people at which he was present, in

'^ix^g to protect the situation against what we considered the

^^^Tx^^ssions of what we call the Alexander faction. I had the re-

^^^*^*^ from Albany telephoned to me, and followed the course

^*^^li the matter was pursuing, and had communication with

^ ^"^^ in a position to know, and asked them to inform me if any

^^"^^lin would be taken that would further the attempts of what

^^ ^^Xl the Alexander faction.

â– ^^ was telephoned to several times in confidence, and I do
'^^^^'^^ ^hink I ought to be called upon to state who they were.




,, Well, was any legislation introduced? A. I will tell you
^^<Vvately, if you want me to.

Q. It is of no interest to me personally. A. Then you can
see yourself.
Q. It is a matter of official action here. A. Whether I ought



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Testimony of Edward H, Harritnan

to state or not — I do not want to make sensational headlines for
newspapers.

Q. Was there any bill introduced ? A. No, sir.

Q. Relating to the Equitable ? A. I was informed that there
were several attempts to have bills introduced, sir.

Q. Did you request any one not to introduce a bill ? A. No,
sir.

Q. Did you deal with any person who so far as you knew in-
tended to introduce a bill ? A. No, sir.

Q. Did you deal with members of the Legislature ? A. How
do you mean, deal with them ? I did not deal with anybody.

Q. Did you take steps with members of the Legislature to
see that a bill should not be introduced? A. I took steps with
some members of the Legislature to let me know in case a bill
should be — an attempt should be made to introduce a bill.

BY THE CHAIRMAN :

Q. Your inquiries, Mr. Harriman, as I understand you, were
directed toward obtaining information and being apprised of
what was going on ? A. Yes, sir.

BY MR. HUGHES:

Q. Mr. Harriman, did you get any information that any bill
had been introduced ? A. No, sir.

Q. Or was to be introduced ? A. No, sir.

Q. In other words, did you take any steps through your com-
munications with those persons to whom you have referred, to
prevent the introduction of a measure ? A. I did not know of
any bill that was introduced, therefore I could not.

Q. It did not come to the point? A. It did not come to the
point of preventing anything.



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Q. Well, that is what I wanted to get at. Then your sugges-
tions -were wholly in the nature — or your interviews wholly in
the nature of inquiries as to whether legislation had been sug-
gested or bills introduced? A. If there should be any attempt
ma.cie to introduce bills, so that I might take steps if I thought
it desirable.

Q> . But you heard of no such attempt? A. No, sir.

<^ . So that you did not take any steps ? A. I did not take any
steps.

C>. It is thought that you should state with whom you had
those interviews. A. Or communications?

C 3 - Yes. A. Well, I would rather communicate with the par-
ties Themselves first.

Q- Well, that would hardly affect the decision of the com-
mittee? A. I will tell you or I will tell the chairman, and if
you think that I should do it I will do it, but I will not make
sensational headlines, as I said before, just for the purpose of
briiigrfj^g new names into it.

^^ ^rt3E CHAIRMAN :

y* ^^^either Mr. Hughes nor the Chairman wants to assume
^ ^''^crh responsibility. We are only seeking for facts. A. I
^^^^ think — if I thought it would bear on this situation in any
^vay Aiv-liatever, anything more than satisfying curiosity — I don't
mearx t:cD impute curiosity on your part. But I would do it willing-
ly* ^^^use I believe I could get the consent, and they would bear
"^^ ^^t in it.

^* \Ve feel that in matters of this kind involving this much
^ ^^ of subject, that the safer course is to have the utmost frank-
t\ess and publicity. A. That is what I am trying to do.

^- AVithout any kind of reservation, whether influences of the
\s^^ that the question suggested — ^but heretofore we have declined



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Testimony of Edward H. Harritnan

to be influenced by those considerations, and rather resolved in
favor of the greatest frankness, than to adopt any other course.
A. Then I will go so far as to say that I communicated with, per-
haps, two or three men at Albany, some members of the Legis-
lature and some not.

Q. We are conscious, Mr. Harriman, that such communications
are of daily occurrence to every man in the Legislature? A. I
dare say they are, but not from me.

Q. No, but we receive communications from our friends and
from those whom we know, and from those whom we don't
know, asking us about early information about legislation affect-
ing interests in which they are affected; it attracts no attention
and they are customarily replied to with gladness, of course, by
members of the Legislature. A. My statement to them was that
I feared an attempt would be made to have legislation passed
to further the interests of the factions who were trying to get
control of the Equitable, and that I wanted to be apprised of it.
Now, I will not, this morning, go further than that. I would
be very glad to do it if I — and I want personally to be relieved
of having to come here again, if I can — I will go so far as to
consult with Judge Lovett and Mr. Cravath, and if they think
I should do it, I will.

THE CHAIRMAN : I think you had better, Mr. Harriman, be-
cause we want to clear this matter up this morning.

The committee will stand in recess until this is over.

(After recess the committee reconvened.)

THE WITNESS : What is the question?

BY MR. HUGHES:

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Testimony of Edward H. Harriman

Q, ^^Vith whom you had these communications, or to whom you
addressed those inquiries. A. To the Speaker of the Assembly
and tla^ Governor.

BY TTME CHAIRMAN:
Q. "^cu mean Governor Higgins? A. Yes, sir.

BY :m:TI. HUGHES:

Q- And the late Speaker Nixon? A. Yes, sir.

Q- Did you suggest anjrthing to them as to their attitude in

the matter? A. No, sir.

Q- Or was it anything more than a mere inquiry for official

information? A. That is all, that they should, if anything came

to their notice, that they should let me know so that I could, if I

thoug^ht desirable, have some — ^be heard in the matter; not me

to be heard — ^that the people in the Equitable that were opposed

to the Alexander faction, might have an opportunity to be heard.

Q- But, as I understand it, you did not suggest, or request, or

\t\Utnate that either the Governor or the Speaker should take

any position or commit himself with reference to the matter, one

way or the other? A. No, sir.

y* You simply wanted to be advised? A. I wanted to be ad-
vised.

y* -^nd you never were advised because nqthing took place?
A. Nothing took place.

W- c>o that all that happened in effect was your request? A.
^y ''^quest that the situation should be so safeguarded that I
^^% t b^ informed in case any attempts were made.

vJ- Now, have you ever had anything else to do with insurance
legislation? A. No, sir.

Si* A.t any time? A. At no time. I will say this; I would



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Testimony of Edward H. Harriman

like to say, Mr. Chairman, that I regret to have to bring in espe-
cially Mr. Nixon's name, as he is not — as we all know he died.

THE CHAIRMAN : Mr. Harriman, I think all of us appreciate
what has actuated you ; we are only sorry you manifested reluct-
ance, because it gave it an air, perhaps, of mystery, that might
have excited undue suspicion. Upon the committee is Assembly-
man Rogers, who was the Republican Leader of the Assembly
during Speaker Nixon's speakership, and he personally knows
that such inquiries were of hourly occurrence during the session
of the Legislature — ^has himself received inquiries, and knows that
Speaker Nixon did get a great many such inquiries; they are
perfectly regular and perfectly proper, and no undue importance
attaches to them; and I know that every member of the Legis-
lature — from my service there — is in constant receipt of those
inquiries and that they attract no attention, and are in no way
to be criticized. The committee sympathizes, of course, with
your desire to not mention the name of a man who is dead, be-
cause it might attract some undue criticism.

MR. HARRIMAN : I only hope that my communications with
them will not be put on the same category as the general com-
munications they receive continually, because I was not in the
habit, and am not in the habit, of communicating with the mem-
bers of any legislative body to keep me informed. It is very
unusual, and it was only in the situation I found myself at that
time, that I appealed to what I considered the highest powers,
without mixing up with any of the every-day matters that might
come before the representatives there. And I would like now to
ask the press to spare those men and not to bring their names
into it ; in their headlines, I mean

THE CHAIRMAN : I think that the gentlemen of the Press

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Testimony of Henry Moir

understand, as we do, that there is no reason for criticism with
anything you have stated in any kind of way. We are very
glad we understand it fully, and we think it better so.

MR. HARRIMAN: Well, you know that most of the people
read h^^adlines and do not read the testimony through, and they
get th^rir impressions through the headlines, and there are head-
line rn^nufacturers in connection with the Press. May I be ex-
cused r*

TME: CHAIRMAN: Yes, sir.

MlTt. HARRIMAN: Thank you.

H:E1>IRY moir, resumed.

THE WITNESS: Before beginning, can I make one little
statement?

BY MR. HUGHES:

Q' Certainly. A. You asked me yesterday if the gain and loss
exhibits were correct for the last three years, and I answered
"^^ they were. That means reasonably correct.

^* You are referring to the last three years? A. 1901, 1902,
^903 HncJ 1904 — four years. That means reasonably correct, not
with ma.thematical precision.

Q- ^A/'hy are they not correct with mathematical precision?
^' ^^ca.use it is practically impossible to make those statements
correct i^ that way.

Q- Why is it impossible to make them up precisely? A. The

dements that enter into the calculation are so varied and peculiar

^4 there are changes take place — various changes take place dur-

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Testimony of Henry Moir

ing the year, and it makes it practically impossible to get absolute
accuracy in that statement.

Q. You have had for a considerable time an excess of expenses
over your loading. To what is that due? In fact, it appears
from the statement, Exhibit 709, that you have a loss on load-
ings since 1895? A. Yes.

Q. What is your explanation of that ? A. Largely owing to the
commissions which will be payable and general charges.

Q. Commissions to agents? A. Yes, the writing of new busi-
ness is an expensive matter.

Q. Why is it the expenses exceeded your loadings in 1904 by
so much larger an expense than they did in 1903? A. Because
the expenses for the year 1904 were heavier than they were in
1903.

Q. That is quite obvious, but why were they? A. I don't
know.

Q. Was there any particular class of expenses that were heav-
ier in 1904 than in 1903 ? A. I can't recollect any class.

Q. Are these papers that I now show you, giving the net load-
ings and the first year expenses, your calculations? A. Yes, sir.

Q. And they are complete and correct from the books of the
company? A. They are complete and correct in that way.

MR. HUGHES : I will read in evidence first the statement of
net loadings and first year's expenses.

Paper marked Exhibit No. 710 and read in evidence by Mr.
Hughes.

Q. Have you any loadings on the first year's premiums received
in those two years ? A. I have.

Q. Will you be good enough to state them? A. Loading on
first year's premiums received in 1903 were $543,704. Loadings
on first year's premiums received in 1904 were $504,613.

Q. Are you consulted with regard to the amount of expenses

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that can be properly incurred by your company in writing in-
sarance ? A. I am consulted in regard to agency commissions.

Q. Wliy is it, then, that the commissions are not fixed at
amounts which will enable you to keep within your loadings?
A. I think the commissions are fixed at amounts which enable us
to kee j> xvithin our loadings.

Q. Then what causes the excess of expenses over your load-
ings? «A. The statement you read contains a good many other
items c|taite apart from commissions.

Q. "VTt^s. A. It is largely shown in that statement.

Q. "VTes, but your medical fees, your agency supervision and
the oth^r items to which you have referred are hardly capable
of redxxction, are they? A. Well, I am not personally familiar
with the details of the amounts that go to make up those items
I cannot say, therefore, whether they are capable of reduction.

Q- 3I>o you include in the statement that you have given of
first yea,r*s expenses advances, bonuses and any part of the home
oflfice e:xpenses attributable to the first year's business? A. Of
matters of that kind I know nothing. These statements are taken
from our accounts.

Q- Yes, but what we wanted was a complete statement of the
°^st year's expenses. Now, there are in addition to commissions
Donuses paid to agents, are there not? A. I suppose so.

>=?- There are advances made to agents? A. Yes.

^- CDf course, you would recognize, as an actuary, that advances
made to agents are to be treated really as expenses of the business ?
^' Yes. With the details of the advances made to agents I am

^^^ familiar.

^- M'ho is responsible for the completeness of the list of ex-

P^^^es — that is what I want to get at — so we can compare your

^^penses with the loadings? A. This expense statement was made

^P at the particular request of the Wisconsin department. They
^^^d down certain lines on which we should go. The items are



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Testimony of Henry Moir

simply taken from our annual account and entered there. They
told us the lines to adopt in making up that statement.

Q. So when you were asked for your first year's expenses,
you took what you should to be reported to the Wisconsin depart-
ment, in accordance with their regulations? A. Yes.

Q. As your first year's expenses ? A. Yes.

Q. And, as a matter of fact, you have expenses properly applica-
ble to first year's business, and in addition to those that are in
this exhibit ? A. That is true, and there are some figures in this
exhibit which are ilot properly applicable to first year's busi-
ness.

Q. What are they? A. Take the item advertising and sta-
tionery, the entire advertising and stationery bill has gone in
there. There is no statement here for a proportion of home office
expenses. Part of the home office expenses are caused by writing
new business.

Q. You have said that you had something to do with fixing
the rate of commission. Is it a fact that in addition to the com-
missions paid, large amounts are paid to agencies in the way of
bonuses and special payments and advances, which go to swell
the first year's expenses? A. I think that likely, but I am not
familiar with the details of it.

Q. The point is, are the expenses kept within what the actuary
informs the management is the proper limit, or do they exceed
that limit? A. Well, I cannot say. I have been consulted to
say exactly what I considered the extreme limit of first year's ex-
pense should be.

Q. Have you any judgment upon that point — do you know now
what your company ought to spend to get new business — ^that is,
can afford to spend? A. I have always made the statement that
the endeavor should be made to bring the expenses under the
loadings.

Q. Yes. Now what has been done in the direction of economy

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Testimony of Henry Moir

in order to bring the expense within the loading? A. Well, mat-
ters of that kind I am scarcely familiar with.

Q. The net result is that you have been consulted to the extent
and have advised to the extent it would be better to keep within
the loading, and further than that you have not gone ? A. Yes,
sir, that is all.

Q. What is the percentage of loading? A. Perhaps I should
add I have also been asked to make a graded scale of commissions
applicable to different classes of policies, and that I have done.

Q. Did you fix that graded scale of commissions, in considera-
tion of other exp)enses of the company, on such a basis that the
company could keep within its loading? A. I did.

Q. Then why has the company not kept within its loadings?
A. That I cannot answer.

Q. Have they had in operation the scale of commissions which
you advise? A. I think so.

Q. Then there must have been other expenses which you did
not take into consideration which made the expenses excessive?
A. Yes.

Q. What class of expenses? A. Well, as I have already said,
I am not familiar with the details of expenses in that way.

Q. Are you familiar with the insurance history of the company
sufficient to tell us what sort of policies were originally issued?
A Yes.

Q. What were they? A. Originally in the first year or two
of the company there were a few industrial policies, I think, and
also almost entirely yearly renewable term policies from that time
until about 1896 or 1897.

Q. Yearly renewable term? A. Yes.

Q. You mean that in eflfect the company was upon a natural
premium basis? A. Yes.

Q. With the increasing cost of the insurance as the age ad-
vanced? A. Yes.



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increasing premiums paid by the insured? A.

tnpany successful upon that basis ? A. I would

as not successful.

he result at the end of this period to which you

x)ut 1896? A. Yes.

rience of the company had it made insurance

i made insurance gains, but the mortality at the

;en rising very steadily from I think about 1889

890 the mortality began to show signs of being

mulated by 1894 as would appear here a surplus
ch had fallen by the end of 1896 to $492,340.
hat it had accumulated a surplus to the end of

indicate that it had been successful? A. That
indicate success.

items or information have you which would indi-
? A. The growing mortality and the necessity
tniums.

. statement on that subject so that you can testify
le growing mortality? A. I have.
ive it please and the data — ^and the data you are

have taken from the policy histories ? A. From