consin case is the only prominent case, the only one that has
involved any considerable amount, the only one that I recall.
I do not recall any others.
Q What amounts of money have you had to expend in con-
nection with examinations by State Departments? A. This ex-
amination by the Wisconsin Department was the most expensive
of any that we have had, and that involved $22,000. Aside
from that we have been examined, I think, only by the Depart-
ment of our State, and the cost has been quite nominal, quite
small. Perhaps we have had some minor examinations, but if
so I do not just now recall them.
Q. You have spoken of the litigations caused by the plan to
sell stock to the Fidelity Trust Company and to purchase its
stock. Was that not stimulated by the action of the Massa-
chusetts Commissioner? A. Possibly it was. The \Massa-
chusetts Commissioner wrote a letter at that time disapproving
the plan.
BY MR. WEMPLE:
Q. What* became of the Blair case? A. That was compro-
mised, and I think 25 per cent, of the claim was paid.
MR. LINDABURY: One-fifth.
THE WITNESS: Twenty per cent, of the claim was paid by
the different companies.
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Testimony of John F. Dry den
Q. Was a judgement first obtained in any court? A. It was
not, I think it was compromised.
BY THE CHAIRMAN :
Q. Did not the companies interested in the Blair case unite in
defence of the actions ? A. I presume they did, although I can-
not state authoritatively. We did not issue our policy direct
to Blair. We had re-insured another company to th^ extent of
one hundred thousand dollars, and therefore our action was
through that company, as they were primarily responsible.
Q. That is what made me wonder why your expense was so
great as twenty-five thousand dollars A. It does seem a large
item, and that I do not know about it We had simply to deal with
the other company, because we did not insure him direct.
Q. Evidently that did not cover the cost of the litigation, be-
cause that was only your share of it ? A. Evidently, that is right.
BY MR. ROGERS :
Q. What other company was that? A. The Mutual Life.
BY MR. HUGHES :
Q. What was the cause of the action of the Wisconsin Depart-
ment ? A. The Wisconsin Department having examined the Pru-
dential and we having thrown open every book and record and
paper in our office to them at the conclusion made a demand tipon
us for information which, in my judgment, strictly amounted to
an examination of both the Fidelity Trust Company and the
Union National Bank. I said to the Commissioner, The Union
National Bank was an institution incorporated under Federal
Law subject to Federal supervision, and whatever information
4850
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Testimony of John F. Dryden
the Coniptrollcr of the Currency chose to give him as to the con-
dition of that bank, he could so do, of course, but that I could
not and should not. I said to him, as to the Fidelity that it was
a State institution, was not within his jurisdiction, was not sub-
ject to his supervision, but that it was subject to the supervision
of the Insurance Department of the State of New Jersey. The
Insurance Department of the State of New Jersey had just then
completed an examination of the Fidelity and had announced its
condition entirely satisfactory. I declined to funnsh to the In-
surance Commissioner of Wisconsin the information he asked for
with reference to the Fidelity, but referred him to the Insurance
Department of the State of New Jersey. Upon that, he shortly
thereafter notified us that he should cancel our certificate of au-
thority to do business in that State, and upon that notification
we made the issue and went before the United States Circuit
Court as I have explained. The Court ruled in our favor, and
commanded him to reissue our certificate and not to interfere
with our business.
Q. You have been asked with regard to the syndicate participa-
tions of your company and its officers, and have presented to the
Committee a statement, is that a complete statement? (Handing
paper.) A. That is complete and accurate as I believe and know.
MR. HUGHES : I will read it in evidence :
"SYNDICATES.
"The company has never been a member of any syndicate formed
for the purchase, acquisition or underwriting of bonds, stocks or
other securities, nor has it ever entered into any syndicate agree-
ment relating either to the underwriting, purchasing or acquisi-
tiori of any securities, whatsoever, nor has the company ever pur-
chased or acquired any bonds, stocks or other securities from any
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Testimony of John F. Dryden
syndicate, of which any officer of the company was a member or in
which he was in any way interested."
Q. Has the Prudential Company been interested in any syndi-
cate where the participation was taken by the FideUty Trust Com-
pany? A. The Prudential Company has never been interested in
any syndicate whatever at any stage of the existence of any syn-
dicate.
Q. Whether the participation was in the name of any one?
A. In no respect.
BY MR. COX:
Q. Have any of the officers of the Prudential been interested
in any syndicate underwriting matters? A. Oh, the officers as
individuals have, but not in any matter with which the company
was connected.
BY MR. HUGHES :
Q. I understand your statement here to be that in no case where
any officer of your company has been interested in a syndicate has
the company directly or indirectly taken any securities from that
syndicate? A. That is correct.
Q. That is a complete and full statement ? A. That is correct.
Q. And there has been no cover of any such transaction by
the use of the name of any trust company or individual? A.
Absolutely not.
Q. Now, has your company, that is, the Prudential Company,
been interested in any joint account with any trust company;
broker, banker or other person for the purchase or sale of securi-
ties ? A. It has not.
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Testimony of John F, Dryden
Q. Has any officer of your company been interested in any
purchase or sale of securities by your company? A. It has not.
Q. Has any officer of the Prudential Company ever re^' , ^ any
commission upon the insurance written or any part of it? A.
The general insurance, the insurance that comes into the company
from the field, or otherwise, do you mean?
Q. In any way, has any officer of your company had a com-
mission arrangement? A. No, sir.
Q. Have you ever received a commission on any business by
the Prudential? A. No, sir, except I want to explain this.
About 1886, I think it was, we established a rule at the home
office, we established what we called the home office account, under
which any employee at the home office, whether he be an officer
or clerk, a man or woman, any one who was an employee in the
home office, if he took a policy on his own life, should receive a
commission on that policy ; but that is applicable to an entire class,
embracing everybody in the home office.
Q. Including the officers? A. Including the officers and em-
ployees.
Q. How was the rule promulgated ? A. I think by an execu-
tive order.
Q. It took formal shape? A. Yes.
Q. And so I suppose all the officers of the Prudential have
received commissions upon their own insurance? A. Under that
rule, and so have clerks.
Q. And all employees? A. Yes, sir.
Q. And have these commissions been the same as those ordi-
narily paid to an agent? A. Yes, sir.
Q. Have they been allowed in reduction of the premiums? A.
Well, they have been allowed when the premium was paid, they
were paid as a reduction of the premium at that time.
Q. And I suppose all have availed themselves of the rule ? A.
Yes, sir, a great many of them.
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Testimony of John F. Dryden
BY MR. COX:
Q y ? S / ) CA that indude renewal commissions? A. Yes, sir. We
justify that on the ground that that account was not subject to
any agency expense such as rent, unusual agency printing matter
or anything of that kind. It was free from expense and therefore
we based it on that ground.
BY MR. HUGHES:
Q. Have you any facilities for writing insurance that is offered
to you directly by the proposed policyholders? A. I do not think
we have. The volume of it, the amount of it, would be so in-
finitesimal that it would be a failure to attempt to do it, and it
would not justify the expense of maintaining a system for it.
Q. So if one were to come to your office in Newark, and offer
himself for insurance, you would turn him over to an agent of the
company ? A. Yes, sir, we would turn him over to an agent be-
cause if we did not we would have to get out sets of books and
keep them, and go through all the formalities that we do for an
agent, and as I say, the expense of doing it would not justify it,
the amount of business we would get would not justify the expense
of doing it.
Q. Is there any law against rebating in New Jersey? A. I
think not at present. I think there was at one time.
Q. Was it repealed? A. I think it was, yes, sir.
Q. When was it repealed? A. Do you remember when it was
repealed ?
MR. LINDABURY: The law is in force yet.
MR. HUGHES : Have you, Mr. Lindabury, a copy of the text
of the law ?
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Testimony of John F. Dryden
MR. LINDABURY : I can send it to you.
MR. HUGHES : I would be very glad to have it. Is it SHnilar
to the New York Law ?
MR. LINDABURY : No, not closely similar, it is on general
lines, but it is not the saine.
BY MR. WEMPLE:
Q. Was there any secrecy about that executive order about
commissions? A. No, not the slightest; every clerk around the
office knew it, and pains were taken to have them know it.
Q, Do you know of any company that has a similar order? A.
No, I do not know of any.
Q. Do you think the public generally understood that that was
issued? A. No question about it.
BY MR. HUGHES:
Q. Of course, the result was that the officers and employees
of your company got their insurance cheaper than other people?
A. No cheaper, of course, than an agent.
Q. Not cheaper, of course, than anybody who got it as cheap?
A. No.
Q. But cheaper than the general public? A. But the agent
who would write an application upon his own life would receive
and would be entitled to the commission.
Q. That has always been a rule of your company? A. Yes, sir.
Q. Is that a general rule among companies? A. As I am in-
formed, I believe it is.
Q. What is your rule in regard to the answers that come in
from advertisements by your company? A. We have a depart-
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Testimony of John F. Dryden
ment that looks after those answers. If a person shows an in-
terest in the company that department communicates with the
nearest agent or superintendent, as the case may be, furnishing
the name of the party to the agent or superintendent, with the
request that he should visit that party, and see if he is an insur-
able party, and if so, try to insure him.
Q. There is an additional question which it is my duty to ask
>ou, and that is whether in any campaign in which any officer
of the company has been interested directly or indirectly, any of
the company's money has been expended in any way to procure
his election? A. Not one cent.
Q. Or to aid in it ? A. Not one cent.
THE CHAIRMAN: The Committee will now take a recess
until 2 130 o'clock sharp this afternoon.
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AFTER RECESS.
JOHN F. DRYDEN resumed.
BY MR. HUGHES:
Q. There is something you desire to add I understand to what
was said in regard to commissions upon insurance? A. Yes, sir.
You were asking if any of the officers had ever received commis-
sions on business. I want to explain that we have a rule in our
office that the clerks in the employ of the company at the Home
Office may write applications and receive their commissions the
same as agents ; and some of the junior officers, under the opera-
tion of that rule, have availed themselves of the opportunity and
have done it. No executive officer has ever received any commis-
sion whatever so far as I know.
Q. Are you yourself insured in the Prudential ? A. Yes, sir.
Q. To what amount? A. I am insured in the Prudential for
$i5>500.
Q. And that is on the ordinary plan ? A. Yes, sir. $500 is on
the industrial plan.
Q. And what commissions do you receive on that insurance or
have you received ? A. I receive it on the industrial policy 25 per
cent, of the premium paid annually, that is usually paid weekly,
the premium on that kind of a policy ; I pay my premium annually
and receive 25 per cent, the same as anyone else employed in the
Home Office. And on the ordinary plan I receive 71-2 per cent.
Q. That is a renewal commission of 7 1-2 per cent.? A. Yes,
sir.
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Testimony of John F. Dryden
Q. What was the initial commission? A. In one case 45 per
cent, and in the other case 50 per cent., I believe.
Q. And the renewal commission is to continue how long? A. I
think it is not limited ; I do not remember that it is.
Q. And that is paid by the company or allowed in reduction of
premiums? A. Allowed when I pay my premiums, I get that in
reduction.
Q. Are you insured in any other insurance company ? A. Yes,
sir.
Q. In what company? A. I am insured in the Mutual Life and
in the Provident Life and Savings.
Q. To what amount? A. In the Provident Life and Savings I
have a policy of $10,000 and in the Mutual Life $5,000.
Q. And that is all? A. That is all.
Q. And have you received commissions upon either of those
policies? A. I have in the case of the Provident Life and Sav-
ings.
Q. To what amount? A. I think it is 7 1-2 per cent. — 5 per
cent., I think.
Q. What was the initial commission? A. I do not recall now.
It was the ordinary commission.
Q. When was it taken out? A. It was taken out, I suppose,
twelve or fifteen years ago.
Q. Have you received any* commissions directly oY indirectly on
the Mutual policy ? A. No, sir.
Q. You are not insured in the Equitable? A. No, sir.
Q. Have you a statement of the salaries paid to the executive
officers of your company ? A. I can give you all the chief ofl&cers
from memory.
Q. Very well. A. My salary is $65,000 a year. The salary of
the vice-president is $60,000 a year ; of the second vice-president
and general counsel $40,000 per year ; of the third vice-president
4858
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Testimony of John F. Dryden
$30,000 per year; the fourth vice-president and comptroller
$20,000 per year; of the counsel $16,000 per year. The secretary
is $10,000
MR. WARD: $12,000.
THE WITNESS:. $12,000.
Q. Has there been any change in those salaries in recent years?
A. No, sir.
Q. For how long has your salary been $65,000? A. I should
think seven or eight years. I can tell
Q. What was it previously? A. Before that it was $50,000.
Perhaps I had better get the paper and be accurate.
(Witness produces paper.)
Q. You have a statement of the salaries there? A. I have a
statement of the salaries of myself and the vice-president, second
vice-president and third vice-president. Not of the other officers
here.
Q. For a period of how long? A. From the organization of
the company in 1875 down to the present time.
MR. HUGHES: I oflfer that in evidence.
(Paper marked Exhibit 675.)
MR. HUGHES : This shows the following salaries paid to John
F. Dryden.
1875, October 13th, $100 per month to February, 1876.
1876 to 1878, inclusive, $1,800.
1879. $3,250.
1880 to 1884, $5,000, which salary was paid to Mr. Dryden as
president beginning May 25th, 1881. In addition to the $5,000
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Testimony of John P. Dryden
for 1884 there was paid an amount equal to 2 per cent, of the cash
savings of 1884, total payment not to exceed $10,000.
Q. What was meant by the cash saving ? A. Whatever we in-
creased the cash assets of the company, that is to say, the amount
left from the receipts after the disbursements had been paid.
MR- HUGHES : 1885, $5,000 and 5 per cent, of the cash sav-
ing, no limit.
1886 and 1887, the same.
1888, $5,000 and 5 per cent, of the cash savings until October
8th. Changed October 8th to flat salary of $20,000.
1889 and 1890, $20,000.
1891 and 1892, $30,000.
1893 to 1898, inclusive, $50,000.
1899 to 1905, inclusive, $65,000.
Q. You have never received any portion of the cash saving or
an> other amounts in addition to your salary than is stated there?
A. None whatever.
MR. HUGHES : Compensation to Leslie D. Ward:
1876, medical director, none.
1877 and 1878, the same.
1879, ^ medical director, $1,000 per year.
1880 to 1883, inclusive, $2/x)o per year.
1884, as first vice president and medical director, $4,000.
1885 to 1887, inclusive, $4,000 and 3 per cent, of the cash sav-
ings in each year.
1888, $4,000 and 3 per cent, of the cash savings, changed to a
flat salary of $15,000.
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^ Testimony of John F. Dryden
1889 and 1890, salary $15,000.
1891 and 1892, salary $25,000.
1893 to 1898, inclusive, salary $45,000.
1899 to 1905, inclusive, salary $60,000.
EDGAR B. WARD.
1875 to 1879, inclusive, attorney, no salary.
1880 to 1884, inclusive, counsel, $400 a year.
April 14th, 1884, changed to $1,500.
1885 to 1886, $5,000.
1887 and 1888, $6,000.
1889, $8,000.
1890, $10,000.
1891 and 1892, $15,000.
1893 to 1898, as second vice-president and counsel, $25,000.
1899 to 1905, inclusive, $40,000.
MR. COX : Mr. Hughes, in the testimony before recess there
was a very small item that appeared in the statement of legal ex-
penses as general counsel. I wondered at the time just what that
meant. It evidently did not include payments to the general coun-
sel of the corporation.
THE WITNESS: Oh, no.
Q. What was it for. Senator Dryden ? A. I do not recall now
what that particular item was.
BY MR. COX:
Q. From year to year. Senator, appeared comparatively small
Items designated as general counsel. A. Meaning by that counsel
that we called in from outside for special advice upon various sub-
jects, not the regular counsel of the company.
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Testimony of John F. Dryden
MR. HUGHES : Forrest F. Dryden's compensation is stated as
follows :
1883, appointed clerk at salary of $3.00 a week February 26th,
1883, and remained in office until June 13th, 1885. Salary at the
time of leaving $10 a week.
1888. Appointed Inspector October 4th, 1888, salary of $12
weekly increased January 7th, 1889, to $15.
Acting Superintendent at Elizabeth, January 28th, 1889; Super-
intendent April 1st, 1889, $25 weekly, increased August 2Sth, 1889,
to $30 a week.
1889. Assistant Secretary, $1,500.
1889. Appointed Secretary at the same salary.
1891 and 1892, Secretary, $5,000 a year.
1893 to 1898, inclusive, $10,000 a year.
1899 to 1903, inclusive, $20,000 a year.
Appointed third vice-president, and in 1904 salary fixed at
$25,000 a year and in 1905 at $30,000.
Q. You have referred to the general counsel fees which appear
in your statement of legal expenses to be small amounts from time
to time, but in 1904 amount to $28,000. What was that disburse-
ment for? A. That was the reduction following the Roebottom
suit in the Prudential-Fidelity matter.
Q. But this apparently was independent of the fees in litigation ?
A. I will have to look at my memorandum. In 1904, Mr.
Hughes ?
Q. Yes. A. Yes, sir. The general counsel fees were the settle-
ments with counsel, most all of it was for counsel fees in connec-
tion with that litigation which had taken place.
Q. Who was the counsel to whom that was paid ? A. Well, the
larger amount was paid to Mr. T. N. McCarter, who was then
Attorney-General of the State, but acted for us.
Q. Under the laws of the State of New Jersey the Attomey-
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Testimony of John F. Dryden
General is able to transact private business at the same time he was
Attomey-General ? A. I assume that is so.
Q. And while Mr. McCarter was Attomey-General he was act-
ing for you in this litigation ? A. Yes, sir.
Q. That is for the Prudential Company. And what amount of
the $28,000 was paid to him? A. $27,500. He had general
charge of that whole subject. I had consulted him a long time
before the matter matured or come to a head, and during its prog-
ress and during the litigation and after the litigation in connection
with proposed legislation in Massachusetts in particular and in
hearings before committees and the commissions, and Mr. Mc-
Carter was engaged for a long time in that service.
Q. He resigned as Attomey-General to become president of
the Public Service Corporation, did he not? A. No, sir; he re-
signed as Attorney-General to become general counsel of the Fidel-
ity Tmst Company, and he resigned as general counsel of the
Fidelity Trust Company to take the presidency of the Public Serv-
ice Corporation.
Q. And who succeeded him as Attorney-General ? A. His
brother Robert H.
Q. Robert H. McCarter? A. Robert H. McCarter.
Q. I wish you would take this list of securities owned by the
Prudential Insurance Company and read upon the record those
items which formed the underlying securities of the Public Service,
showing when they were obtained and the par and book value.
You will simply extract from the total of securities those that are
connected with the Public Service Corporation. If you have a
separate list it will be a convenience. (Paper produced.) If you
have it in condensed form I will put it in in that shape, making the
record complete. A. I have it showing the amount purchased and
the rate of interest realized on those securities.
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Testimony of John F. Dryden
MR. HUGHES: I offer it in evidence.
(Paper marked Exhibit 676, and read in evidence by Mr.
Hughes.)
Q. Are all the collateral loans which have been made to the
Public Service Corporation included upon this list of collateral
loans, which has been furnished the Committee by your com-
pany ? A. I believe that is so.
MR. HUGHES: I will have this first marked for identifica-
tion.
(Paper marked Exhibit No. 677 for identification.)
MR. HUGHES: I will read the following loans to the Pub-
lic Service Corporation:
PUBLIC SERVICE CORPORATION OF NEW JERSEY.
Rate : 4 per cent. Terms : on demand.
Date. Amount of loan.
December 29, 1903 $500,000
• May 19, 1904, payment in full 500,000
Same rate. Same terms.
December 29, 1903 500,000
May 19, 1904, payment in full 500,000
Same rate. Same terms.
December 29, 1903 500,000
May 19, 1904, payment in full 500,000
Same rate. Same terms.
December 29, 1903 500,000
May 19, 1904, payment in full 500,000
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Testimony of John F. Dryden
Same rate. Terms: six months.
May 24, 1904 500,000 .
November 22, 1904, payment in full 500,000 ^ :
Same rate. Same terms. *1
May 24, 1904 500,000
November 22, 1904, payment in full 500,000
Same rate. Same terms.
May 24, 1904 500,000
November 22, 1904, payment in full 500,000
Same rate. Same terms.
May 24, 1904 500,000
November 22, 1904, payment in full 500,000
Same rate. Terms: on demand.
October 31, 1904 1,000,000
November 25, 1904, payment in full 1,000,000
Q. I notice in the statement of collateral loans, loans from
time to time to members of your Board of Directors. Were
those loans made upon security containing an ample margin?
A. In every case.
Q. Were they loans for the benefit or interest of anyone
other than the persons here named ? A. No, sir.
Q. How are loans made by your company; that is to say,
what is the machinery for their authorization? A. We have a
Finance Committee which meets every week and goes over all
these names or applications for loans, but loans are not always
approved by the Finance Committee in advance ; they are made
by the executive officers in due course of business, and report-
ed to the Finance Committee.
Q. Who are the members of the Finance Committee? A. Mr.
Edgar B. Ward, Mr. Uzal H. McCarter, Mr. A. R. Kuser and
myself, ex-officio.
Q. Have you an Executive Committee? A. We have.
Q. Who are the members of the Executive Committee? A.
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Testimony of John F. Dry den
Mr. Jerome Taylor, Mr. Theodore C. Blanchard, Mr. Edgar B.
Ward and myself, ex-ofiicio.
Q. Do the members of your Board of Directors receive fees
for attending meetings ? A. Yes, sir.
Q. What amount? A. The members of the board receive for
attending board meetings twenty-five dollars; for attending com-