Q. 1905? A. Yes.
Q. That was under an order of the State Insurance Depart-
ment, wasn't — I am now talking about the $51,000? A. We
paid that back immediately.
Q. Now, you are referring when you say you paid it back
immediately to the amount which was paid out of the company's
funds by this check of $51,836 dated March 4, 1904, to the
Gansevoort Bank? A. Yes, sir.
Q. And which was used to discharge your loan and Mr. Van
Schaick's ? A. Yes, sir.
Q. Now where is the entry of the payment of that money
back immediately? A. Well, I cannot tell you the entries, but
it was paid back immediately — ^paid back into the company —
you would not find it there at all.
O. It was not in the Gansevoort Bank? A. Had not anything
to do with the Gansevoort Bank.
Q. Mr. Van Schaick suggests it was paid back by the $50,000
that was voted ? A. That was what we used it for.
Q. Now did you get the $50,000 that was voted to you? A.
In no other way than to turn it over to the company.
Q. Did you get that money? A. I think we did.
Q. Did you give a check for it ? A.I think so.
Q. Will you show me the stub of the check drawn to the
company for it? A. I cannot do it. My impression is — of
course I am simply stating from memory — ^my impression is we
got a check, deposited it in joint account and then gave our
check against our joint account.
Q. You have your bank book here of the Life Association of
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America? A. They are all there; you can look them up as well as
we can. I don't remember it. I do not keep the books any more
than you do, but they are right there; I brought them all up
here.
Q. Can you point out such a check for $50,000? A. I don't
know whether I can or not; I don't know whether it is there.
Q. Won't you try? How many bank accounts were there at
that time in March, 1904? A. I think we had at least three, one
with the Gansevoort, one in the North American Trust Com-
pany and one in the Guaranty Trust Company.
Q. Will you let me have the check books of the account you
had in March, 1904, aside from the Gansevoort Bank? A. Mr.
Van Schaick may be right about that. He suggests that there
was a credit made in some way.
MR. VAN SCHAICK: Credit of $50,000.
Q. Exactly. You did not get the money? A. If we ever
handled the money it was simply done by checks, that is all.
Q. We want to get at what was done, was there a check or not
for $50,000? A. I don't know. I won't answer — that is I cannot
tell you. I will answer it if I can.
Q. Mr. Van Schaick says there was a check for the difference?
A. I expect Mr. Van Schaick knows as much about it as I do.
Q. Then according to Mr. Van Schaick's statement there
was a credit in favor of you of $50,000 against the compensa-
tion? A. I have no doubt of it.
O. Or for the compensation against the amount to which the
company was entitled? A. Yes.
Q. And as the amount paid by the insurance company upon
your loan was $51,836 and the amount credited to you was
$50,000 apparently it would have been for you to draw a check
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for the difference of $1,836 for the company ? A. That would be
the way it would be done.
MR. HUGHES: Now, can you give me the check?
Q. Well, now, about that time, that is March, 1904, you made
this loan, that is obtained this loan from the Citizens* Trust
Company of Paterson? A. Well, was it about that time ? Some
time later.
Q. April, 1904? A. Yes.
Q. Before we come to that why was it the other men who
were named in these preliminary resolutions of 1901 did not
share in the compensation ? A. They all resigned from the com-
pany.
Q. So that you and Mr. Van Schaick were the only persons
left who were embraced in the resolution? A. Exactly. They
offered to stay in and buy the stock at $20 a share. We thought
it ought to be sold at $30. We were willing to buy it at $30.
O. Then you resold the stock, didn't you — ^you didn't hold it
yourself? A. Some of it; we have got a great deal of it yet.
Q. You have sold a great deal for more than $30? A. Never
sold less than $40 a share.
Q. The transaction with the Citizens' Trust Company in or
about April, 1904, was what? A. Mr. Van Schaick and I bor-
rowed $10,000 and put up 500 shares of stock. We made two
deposits with the company of the company's funds.
Q. That is the Citizens' Trust Company? A. Yes. We put
$10,000 in the Savings Bank account and $5,000 in their regulai
current account, they paying us 3J per cent, on the savings
bank account.
Q. Why did you put $15,000 up with the Citizens' Trust Com-
pany of Paterson? A. For two reasons. One was we wanted
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to have a deposit in a bank in Paterson where we did a large
amount of business; the other was we wanted to borrow $10,000.
Q. That is you and Mr. Van Schaick wanted to borrow $10,-
000? A. Yes, sir, on our stock.
Q. As I understand you, Mr. Townsley, the Life Association
of America at the time you and Mr. Van Schaick borrowed
$10,000 from the Citizens' Trust Company, drew two checks,
one for $10,000 and one for $5,000, to the order of the Citizens'
Trust Company, which that company was to hold ? A. Yes, sir.
Q. In addition to the stock belonging to Mr. Van Schaick and
yourself? A. No, sir; we didn't do that. We drew two checks
in favor of the company. They deposited them and gave us
a book. Then we gave them one check for $10,000 and gave
^^em the savings bank book and we made the same agreement
^^ regard to that that we made in reference to the Gansevoort
v^&>7it ; the only difference was the Citizens' Trust Company rec-
^;^^/^i^ed that agreement and never used that check. When they
^.^^^^^ ordered by the Insurance Department of New Jersey to
^^^ the loan they notified us that we would have to pay the
loa-x-i. and the loan was called and we paid it and they handed us
^^^^'^ our check and our bank book. That is the only difference
"^^v^ ^en the two. One recognized the agreement and the other
did
^ But the agreement was in consideration of making a loan
, ^^*^ou and Mr. Van Schaick, the Citizens' Trust Company
'^ nld hold A. Keep on deposit $15,000.
A_ . To hold a certain check which the Life Association of
^ ^rica made to its order for $10,000? A. Exactly.
.w ^*^5^. And also the savings bank book representing a deposit of
j^ Life Association of America in its savings bank deposit of
^'^^rrvx)? A. No, sir, $10,000. It was the same thing.
^^. I thought it was one of $10,000 and one of $5,000? A,
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Testimony of Henry P, Townsley
The $5,000 was an open account; we could draw on it all we
wanted to. The $5,000 was a current account.
Q. Have you a copy of the letter of April 21st, 1904, to Henry
P. Bell of the Citizens' Trust Company of Paterson? A. No, I
did not know that I had written a letter to him.
Q. Is that a copy of the letter written by you to Mr. Bell in
connection with the loan (showing witness paper)? A. Yes,
I guess so. I did not remember that I had written the letter in
regard to that and could not find it.
MR. HUGHES: I offer these two letters of April 21st, 1904,
addressed by H. P. Townsley, President, to Henry F. Bell,
President of the Citizens' Trust Company of Paterson, New
Jersey.
(Papers marked in evidence Exhibit 747 and 748 and will be
found in the book of exhibits.)
Q. Those letters were written by you as President of the
Life Association of America? A. Yes, sir.
Q. And in the last letter the words "in payment of our loan
when called" referred to the loan made to yourself and Mr.
Van Schaick? A. Yes, sir.
Q. Now, were those loans paid? A. Yes, sir.
Q. Was that last check used by the Citizens' Trust Com-
pany drawn by the Society? A. No.
Q. Now, I call your attention to the entry of a check under
date of March 4th, 1904, on the stub of your check book with
the Gansevoort Bank, Exhibit 744 for identification to the order
of H. P. Townsley for $14,000? What was that for? A. I
don't remember.
Q. What consideration was there for the receipt of those
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Testimony of Henry P, Townsley
moneys? A. Evidently the company owed me the money or
they would not have drawn the check for it.
Q. How could they owe it to you? A. I do not know.
Q. Have you any idea of the transaction ? A. It might have
been some transaction whereby it was necessary to draw the
check in that way.
Q. That was March, 1904? A. Yes, sir.
Q. Have you no recollection of any transaction which en-
titled them to draw that check? A. I do not remember. It
was evidently an exchange of checks in some way, I think.
Q. And why do you say that, what evidence is there of that?
A. The company never paid me $14,000 at any one time.
Q. Then evidently you remember enough about it to know
that you did not get the money on that check? A. It might
have gone through my account in some way.
Q. Where is the check which was given in exchange? A. I
do not know, sir.
Q. Do you know anything about it? A. I know pretty
well there has been no money taken out of the Life Association
by me or by any one else that has not been properly accounted
for.
Q. That is a general statement. Can you tell me now what
that is for, specifically ? A. I cannot without going through —
I would have to talk to the treasurer.
Q. Here is a check dated March 31st, 1904, to the order of
Townsley & Van Schaick, on the stub of the company's check
book with the Gansevoort Bank, $9,560.40. A. $14,000 and
$9,000 would be $23,000 — ^just give me a piece of pencil and
paper. I think I know. Well, I will tell you. That comes
so close to it that I suppose I can account for it. We depos-
ited here to the credit of the Life Association $25,000. There
it is (indicating). That meant a deposit there by Townsley
& Van Schaick
Q. That is a check. A. I beg your pardon. That is a
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Testimony of Henry P. Townsley
check. I will tell you, we made a second loan with the Gansc-
voort Bank of $25,000 which I told you about a few minutes
ago.
Q. Yes. A. And that $25,000 was undoubtedly given to the
account of the Association in the Gansevoort Bank, and then
these chjecks were drawn to us as compensation for it.
Q. As compensation? A. It was — you will see that they
together make about $25,000. And we made the loan with
the Gansevoort Bank undoubtedly, as I remember it — I am not
stating accurately, but undoubtedly we made that loan with
the Gansevoort Bank. You take the $14,000 and you take the
$9,117 and you take the $1,836, the difference between that
and the $50,000 check, and it gives you $25,000.
Q. Well, but the $1,836 is what you should have paid the
Life Association, and not what they should have paid you.
A. It is undoubtedly in that account right there.
Q. Then the point you make is A. The point I make is
that that is the best way I can account for it just now. It
may not be correct.
Q. I want to work it out so there will be no mistake about
It. The Gansevoort Bank, I understand, made a loan of $25,-
000? A. Yes, sir.
Q. And that the Life Association of America got credit in
this account for the proceeds of the loan? A. Exactly.
Q. Then the Life Association of America gave you and Mr.
Van Schaick in these checks the amount of that $25,000 less
the $1,836 which you owed them on the amount of the previous
loan? A. That is undoubtedly true.
Q. With the Gansevoort Bank? A. That is undoubtedly
true.
Q. What was the security of this loan of $25,000 by the
Gansevoort Bank ? A. That was stock of the company.
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Testimony of Henry P. Townsley
Q. And did you place a check with the Gansevoort Bank of
$25,000? A. I do not think so.
Q. When that loan was paid, who paid it? A. Mr. Van
Schaick and H. P. Townsley.
Q. Individually? A. Yes, sir.
Q. Did the Life Association of America pay any of it? A.
No, sir.
Q. Why should it have gone through the Life Association?
A. Why, we evidently owed the money to the Life Association
and put that in when we borrowed that money.
Q. The Life Association gave the money to you? A. But I
do not know why I should have done it.
Q. Why should the Life Association in other words have
received $25,000 from the Gansevoort Bank and then paid over
this amount to you and Mr. Van Schaick? A. I do not know.
Q. Why should you not have arranged your matters with
the Gansevoort Bank? You do not know how it was done?
A. I don't know. It was done all right, but I don't know how
it was done. All of that account has been gone through with
by the Insurance Department thoroughly, and they checked
those accounts all up and found them correct.
Q. Taking this Gansevoort Bank account, I find under date
of September 20th, 1903, a check to W. H. Wiemer for a loan
on collateral $20,000. Who was W. H. Wiemer? A. W. H.
Wiemer was a wholesale boot and shoe man in Philadelphia.
Q. Is he connected with the Life Association of America?
A. He is a director.
Q. In any other way? A. That is all.
Q. What was the collateral for that loan? A. Bank stock
and bonds. You will see it in the Insurance Department re-
port you have before you. I may as well state here that the
loan has been paid off. It was paid off because we would not
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Testimony of Henry P. Townsley
reduce the interest below five per cent., and he wanted it at 4.
Q. Is he your father-in-law ? A. No, sir.
Q. Is he related to you in any way? A. Indirectly; his wife
is a cousin of mine, that is all.
Q. Now, it has been stated that the fifty thousand dollars
which you received as compensation has been returned to the
company? A. Yes, sir.
Q. That was pursuant to a report of the Insurance Depart-
ment this year? A. That was pursuant to the request of the
Insurance Department, yes, sir.
Q. Made at what time? A. Made about the first of the
year, along between January and March.
Q. In what form was that return? A. Cash.
Q. Or check, or which? A. I think it was by check, check
in our account.
Q. Where was it deposited? A. It was deposited in the
Guaranty Trust Company, March 29th, 1905.
Q. I am shown an entry of a deposit March 29th, 1905, of
$50,122.57. Your names are not mentioned nor is the charac-
ter of the deposit stated, but is the $50,000 a part of that? A.
I think it is. Is it on the 29th?
Q. March 29th, 1905? A. Yes, sir; the fifty thousand dol-
lars is a part of that deposit.
Q. Who is Wilson B. Brice? A. He is a lawyer.
Q. Is he connected with your company? A. Yes, sir.
Q. In what way ? A. He is a director and assistant counsel.
Q. Is he under salary from your company? A. A small
salary.
Q. Did you on August 28th, 1903, make a loan to him of ten
thousand dollars? A. Yes.
Q. What was the security? A. The security is — ^well, that
security that is here has been taken up, and that loan is paid
off.
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Testimony of Henry P. Townsley
Q. Paid off last December? A. Yes, sir.
Q. This was made about the time your stock company was
organized? A. Yes, sir; just before, I think.
Q. And the security was one hundred shares of Wheel With-
in^Wheel Company, 45 shares of patent Title Guaranty Com-
pany and 250 shares of the New York Sanitary Street Refuse
Receptacle Company? A. Since that loan has been paid off
and those securities taken up what is your object of reading
that, for the benefit of the press?
Q. My object is to show you made a loan on worthless col-
lateral. A. Was it worthless, if it is paid off.
Q. I do not think the collateral has improved? A. I think
the loan has improved.
Q. I do not care for any discussion with you Mr. Townsley.
We propose to find out what your transactions have been. A.
Yes, sir.
Q. Did you have any quotations on this collateral at the
time you made this loan? A. I was assured that it was good
security. ^
Q. Who assured you ? A. Mr. Van Schaick. . V! ^
Q. Any other information? A. No. ^
Q. Is Mr. Brice in Mr. Van Schaick's office? A. Yes, sir.
Q. You made a loan in December, 1903, to Mr. C. A. Allen
on 100 shares of the Gold Car Heating and Lighting Company?
A. Yes, sir.
Q. What was that? A. That was 100 shares of the Gold Car
Heating and Lighting Company.
Q. What was it worth ? A. $30,000.
Q. You made a loan on December 21st, 1903, to Henry P.
Townsley, secured by a mortgage on property in Sedalia, Mis-
souri ? A. Yes, sir.
Q. You were the Henry P. Townsley ? A. Yes, sir.
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Testimony of Henry P, Townsley
Q. What was the value of the property? A. The loan was
for $2,000, was it not ?
Q. Yes. A. $3,000 I sold it for, and those are the notes ; one
has been paid, and the other comes due in January.
Q. On December 21st, 1903, there is a loan to Henry P.
Townsley of $2,500 on 100 shares Toledo, St. Louis and West-
ern ; what is the value of that ? A. That is worth 59 to-day.
Q. What was the value at that time ? A. Well, I should say
it was worth $4,000.
Q. Who is William A. Cable ? A. He is an architect in New
York.
Q. On October 8th, 1904, there is a loan to Henry P. Towns-
ley of $5,000 on 300 shares of Toledo, St. Louis and Western. Is
that the same loan? A. The same loan.
Q. With an increase in collateral and amount? A. With an
increase in collateral and amount.
Q. Is that a statement of all the loans that have been made
by your company since its organization with the exception of
those now in force ? A. Yes, sir. That is my recollection of it.
That was gotten from the books.
MR. HUGHES: I offer it in evidence.
(Paper marked Exhibit 749.)
Q. This is a statement of the collateral loans now in force of
/our company? (Handing paper.) A. Yes, sir. There is one
there that has been paid off since that was made out.
MR. HUGHES : I offer that in evidence.
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Testimony of Henry P. Townsley
(Paper marked Exhibit 750.)
Q. Was Mr. Allen a Director of the company, whose name is
mentioned in this first sheet, Exhibit 749? A. He was at that
time.
Q. Is Sidney H. Salomon connected with your company?
A. No, sir.
Q. Is George C. Capron connected with your company? A.
He is an agent.
Q. What is the American Collectors' Company? A. Why,
that is a company which collects coins or stamps or something
of that kind. Those are a sort of mortgage bond on the com-
pany.
Q. Are there any quotations for them ? A. None at all, but
they are perfectly good. And that credit is one of the bonds
which matured and was paid.
Q. $100? A. Yes.
Q. Is this a list of your mortgage loans made by your com-
pany? A. Yes, sir.
MR. HUGHES: I offer that in evidence.
(Paper marked Exhibit 751.)
Q. Who of these parties are connected with the Life Asso-
ciation of America in any way? A. John Vincent is Treas-
urer. Wilson B. Brice is connected with it in Mr. Van
Schaick's office. That is all.
Q. Is Henry Van Schaick related to Mr. Van Schaick? A.
Father.
Q. Is James Glass in any way connected with the company?
A. No, sir.
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Testimony of Henry P. Totvnsley
Q. Is this a statement of the securities held by the Life As-
sociation of America, on December 7th, 1905? A. We fur-
nished you this, yes, sir.
MR. HUGHES: I offer that in evidence.
(Paper marked Exhibit No. 752.)
Q. Were you, or was any officer of your company, so far as you â–
know, interested in any of the purchases and sales? A. I know \
that none were.
Q. Or any of the mortgage transactions, or loans that have j
been mentioned other than as they appear to have been made by
the company? A. No. j
Q. Have you been a member in any syndicate participation ? A. j
No, sir. [
Q. Or has any officer of the company? A. No. !
Q. Have you made any political contributions? A. No. I
Q. For any campaigns, either National, local or State cam- |
paigns A. No. I
Q. (Handing paper.) Is this a statement of cash balances |
from August 7, 1903, to date? A. Yes, sir.
MR. HUGHES : I offer that in evidence.
(Paper marked Exhibit 753.)
Q. You have been asked to furnish a statement in reply to cer-
tain questions addressed you by the Committee. (Handing
paper.) Is this your answer and are the facts stated in it true?
A. Yes, sir.
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Testimony of Henry P, Toivnsley
^R. HUGHES: I offer it in evidence.
(^J^aper marked Exhibit 754.)
^i*. Hughes then read Exhibit No. 754.
\i. The Blue Book contains a statement that the expenses for
\904 were $190,000. Does that include the fifty thousand dollars
which had been paid to Mr. Van Schaick and yourself? A.
Yes, sir.
Q. And that has been omitted from the statement of expenses
"^rein, leaving the amount one hundred and forty thousand dol-
lars? A. Yes.
, y- Is this a specimen of agents' contract to which you referred
in your letter? A. Yes, sir.
MR. HUGHES : I will have that marked for identification.
(Paper marked Exhibit No. 755 for identification.)
MR. HUGHES : I will read upon the record so much as states
the compensation.
7. Commissions to be allowed to said party of the second
part under this contract shall be as follows :
On the cash of ordinary premiums on deferred dividend policies
issued for whole life or endowment assurance plan —
With a dividend period of twenty years, with not less than
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Testimony of Henry P. Townsley
twenty annual premiums, 50 per cent, for the first year of assur-
ance only, and 5 per cent, for second to tenth year of assur-
ance, inclusive.
With dividend period of twenty years: Ordinary life, 50 per
cent, first year, 5 per cent, second to tenth year.
Life, fifteen payments, 45 per cent, first year, 5 per cent, second
to tenth year.
Fifteen year endowment, 40 per cent, the first year, 5 per cent,
second to tenth year.
With dividend period of ten years ordinary life, 45 per cent,
the firit year, 5 per cent, second to tenth year.
Life, ten payments, 40 per cent, first year, 5 per cent, second
to tenth 3' car.
Ten year endowment, 35 per cent, first year, 5 per cent, second
to tenth year.
Non-deferred dividend.
If with continued premiums to death or not less than twenty
annual payments, 50 per cent, first year, 5 per cent, second to
tenth year.
If paid up by fifteen annual payments, 45 per cent, first year,
5 per cent, second to tenth year.
If paid up by ten annual payments, 40 per cent, first, 5 per
cent, second to tenth year.
Single premium payments, 5 per cent first year.
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Testimony of Henry P. Townsley
Extra premiums 2 1-2 per cent, first year and 2 1-2 per cent.
second to tenth year.
Special rates to be made for new forms of policies.
Q. Is this your signature, and do you send out this circular?
(Handing paper.) A. That is the secretar/s signature. I pre*
sume he sent that out.
Q. C. B. Townsley? A. Yes, sir.
Q. Is he a relative of yours? A. Yes, sir, a son.
Q. And these circulars have been quite freely distributed, have
they not ? A. Yes, sir.
Q. To whom are they sent? A. Let me look at them and maybe
I can tell you.
Q. I mean to what class of persons? A. I guess they are sent
^^ agents of life insurance companies.
Q- Of other companies? A. Yes.
^. That is the same thing without the name?
^-t^anding paper.)
^^•^■I OR. HUGHES : I will offer this in evidence.
^ ^^S^aper marked Exhibit 756.)
zr. Hughes then read Exhibit No. 756.
. ^ " "^^^ ^ ^ Is thi« the card which you sent out ? (Handing paper.)
^Xliat is the card which he sends out.
^^^ . Well, it is officially authorized by the company? A. Yes,
^^— ?IR. HUGHES: I offer it in evidence.
Paper marked Exhibit 757.)
Ir. Hughes read Exhibit No. 757.
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Testimony of Henry P. Townsley
Q. How many agents have you to whom you are paying 90
per cent, commissions? A. We do not pay any agent 90 per
cent, commission. It may amount to that the way we figure
that, but we do not pay it in commission. We pay a commission
of 50 per cent, and make allowances for certain purposes.
Q. What are they? A. That is to say, we make allowances
for renewals and they may amount in a brokerage contract to
90 per cent.
Q. Will you explain how you figure out the compensation you
will give in this circular, 90 per cent.? A. That would call for
fifty per cent, and forty per cent, against renewals, which would