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would ask him if he knows how much was paid in all in regard
to that lien bill, and how it was paid.
Q. What was the entire amount paid for counsel in regard
to the lien bill ? A. I cannot tell that, Mr. Hughes.
Q. What companies or institutions were interested in that?
A. All the titlf companies, some of the other life companies, and
some individuals.
Q. Who was the counsel that they employed? A. I don't
know. I can ascertain that for you.
Q. To whom did you pay the money, the $250 from your com-
pany ? A. To the organization, the Allied Real Estate Interests.
Q. No, that is in regard to the Mortgage Tax Bill. I am
referring to the payment of two hundred and fifty dollars in 1904,
in connection with the Hen bill ? A. Oh, that, we paid that to E.
C. Potter. He is not a lawyer, he is a well-to-do man here, a
large real estate man and operator.
Q. To E. C. Potter? A. Yes, sir.
Q. And did he engage the counsel ? A. I understand so ; yes.
Q. And you don't know who the counsel was? A. I do not.
Q. Or what the total amount was? A. No. I can ascertain
that if you wish.
THE CHAIRMAN: I wish you would. We would like to
know.
THE WITNESS: You would like to know, do I understand?
THE CHAIRMAN: Yes.
MR. HUGHES: Yes, we would like the information on that
point
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THE WITNESS: I will ascertain that.
BY THE CHAIRMAN:
Q. It is quite possible that you had a statement of some kind
showing what your proportion was before you paid it, did you
not, Mr. Doremus ? A. I doubt it. A meeting was held at the
office of one of the prominent real estate men downtown, and
we each subscribed a certain sum, and I subscribed two hundred
and fifty dollars.
Q. In advance of the introduction of the bill? A. Oh, no,
the bill was before the Committees and counsel had appeared be-
fore the Committees at that time.
BY MR. HUGHES:
Q. Will you state the circumstances under which you made
the payment. The meeting was called? A. Yes, I think at
Horace Ely's, or some other large downtown real estate firm,
which was attended by representatives of the companies, presi-
dents of savings banks and title companies were represented, and
a list was circulated to which I subscribed two hundred and fifty
dollars.
Q. Was the list circulated at that meeting? A. Yes, sir.
Q. What was the status of the bill at that time? A. I
think it was at the time that the Legislature had adjourned, leav-
ing a certain bill in the Governor's hands. He then, if my recol-
lection is right, called a special session, did he not ? Did not the
Governor call a special session?
Q. In 1904 — this was in 1904 you made the payment, I un-
derstand? A. Oh, yes, that is true.
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Q. Are you confusing the matter of the Allied Real Estate
Interests with the Mortgage Tax Bill ? A. I am now ; yes, sir.
Q. Was this meeting you referred to a moment ago a meeting
in 1904, in regard to the lien bill, or was it not in regard to the
Mortgage Tax Bill? A. The Mortgage Tax Bill.
Q. Put your mind back to 1904, in regard to the lien bill, what
was done or suggested as to the subscription ? A. There was no
meeting there.
Q. No meeting there ? A. No.
Q. And Mr. Potter communicated with you? A. Yes, sir.
Q. And was that before the bill was introduced? A. I could
not say that.
Q. You don't know as to that ? A. No.
Q. You don't know what the condition of the matter was ex-
cept that you were asked for two hundred and fifty dollars to-
ward the end of getting the law amended in this particular ? A.
I may have been asked for more, but that is the amount I sub-
scribed.
Q. Do you recollect whether you were asked for more? A.
No, I do not.
Q. You can get us information about that, I suppose? A.
What is that?
Q. You can get us information about that ? A. About the— —
Q. Of the total amount that was subscribed and who the coun-
sel were? A. I will try to, yes, sir.
Q. Now, the matter that you refer to was in April, 1905, when
there was a meeting downtown of a great many real estate peo-
ple, and a list was passed around to subscribe for the services of
counsel before the Committees of the Senate and Assembly, in
connection with the Mortgage Tax? A. Exactly.
Q. And what was the total amount that was obtained through
the subscriptions ? A. I think some twenty-thousand or twenty-
live thousand dollars.
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Testimony of Cornelius Doremus
Q. Twenty or twenty-five thousand? A. Nearly; that is my
recollection, I think.
Q. Who were the counsel? A. I don't know. They were
gentlemen who I did not know.
Q. Who arranged for their employment; who was the man,
or committee, that had the matter in charge and took the money
and handled it ? A. One of the members of the firm of Horace
Ely and Company, I think, was prominent in the matter. His
name I do not recall.
Q. With whom did you communicate in regard to the matter
of the contribution in connection with the Mortgage Tax Law,
who called the meeting? A. I think some hastily assembled
committee of some prominent real estate people downtown. I
was invited through Mr. A. L. Mordecai & Son.
Q. To whom did you send the five hundred dollars? I wish
you would look up the check for the five hundred dollars during
the recess hour, and give me the name of the man who got the
five hundred dollars in the one case, and the two hundred and
fifty dollars in the other case, and if you have any correspond-
ence relating to the matter, or can refresh your memory, we
should be glad to know what you can say on the subject? A.
Yes, I shall be glad to do it.
Q. With reference to both these matters, the lien matter and
the mortgage tax? A. Yes, with reference to the two hundred
and fifty dollars, I can tell you now it was E. Qinton Potter.
Q. E. Clifton Potter? A. Yes, and he is, as I say, a large real
estate man and dealer.
BY THE CHAIRMAN:
Q. That was the lien bill, we understand now? A, Yes.
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Testimony of Cornelius Doremus
Q. Did you state the name of the recipient of the money for
the Mortgage Tax Bill? A. That I cannot tell; someone, a
secretary of an association.
Q. Was the total twenty-five thousand dollars
BY MR. HUGHES:
Q. What did you say the total in the mortgage tax matter
was ? A. I think twenty thousand, or twenty-five thousand dol-
lars was raised.
Q. We would like to have you get the statement of the one
to whom you paid the money, and if you had a circular or cor-
respondence relating to it, we would be glad to have you bring
that down at half past two, at the afternoon session? A. Yes.
Q. It would appear by the blue book that your company has
had a constant increase in surplus — ^is that the fact? A, It is.
Q. What are your investments — ^what is the nature of your in-
vestments? A. Conservative securities, bonds and mortgages
on real estate.
Q. Have you found it necessary to watch the ticker to see
where you could make a profit on a turn in securities ? A. We
never do.
Q. What kind of securities have you invested in? A. Well,
Mr. Hughes, the best that we could find.
Q. What proportion of your assets do you invest in real
estate? A. Not in real estate.
Q. Well, in bonds and mortgages? A. Well, we have about
thirty-five million dollars of assets, and I think about eighteen
or nineteen million dollars is invested of that in bond and mort-
gage.
Q. Has that proportion obtained during the entire period of
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your history — have you invested a little more than half of
your assets in mortgages upon real estate ? A. Yes, we have.
Q. No^y, what has been your experience as to that class of
investrnent — do you find them highly speculative? A. We do
not ; we find them very stable, indeed.
Q. What has been your experience with regard to losses on
such investments? A. They have been very moderate.
Q. If you have men of sound business judgment you are able
to make a very safe investment in that class of securities? A.
Exactly.
Q. Now, what class of securities have you invested in apart
from mortgages upon real estate ? A. Oh, what we considered
first class railroad bonds.
Q. Bonds — railroad bonds ? A. Mostly, yes.
Q. What proportion of your thirty-five millions of assets is
invested in railroad bonds — ^have you got anything there which
would help you ? A. Yes, I have. Mr. Hughes, as between the
different kinds of securities, I would say that while investments
in real estate and bond mortgage are very stable and while our
experience has been very fortunate comparatively, still we have
a small loss ; while on the other hand in our negotiable securities
we have a great gain through our whole history.
Q. That being the case, why do you invest a large proportion
in real estate ? A. There is no chance for a gain in advancement
on bond and mortgage.
Q. Why do you invest so largely in bond and mortgage ? A.
Stability. There is a risk of loss in the other which we have
not experienced.
Q. While there is no chance for gain, a risk of loss is greatiy
diminished? A. Yes.
Q. And in an insurance company it is not necessary to have
a very large amount of your assets upon call? A. Well, to-day,
yes. We are all doing what we ought not to, Mr. Hughes.
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Q. What is that? A. That is an individual opinion. We are
giving the right to every policyholder of to-day to call upon us
at any time for almost the value of his policy as a loan. Under
those circumstances we must have quick assets. You under-
stand that was never necessary ten years ago.
Q. You think that policy of encouraging policyholders to take
loans should be abandoned? A. No, I do not say that; but
where every policyholder in case of panic can come down to us
and demand a loan for the amount of his reserve on the policy, *
we have got to be prepared to do something.
Q. You have been for forty years connected with the com-
pany. Is there any doubt whatever about the advantage of the
stability of investments in mortgages upon real estate ? A. We
could not meet these supposed demands on us in a case of a
panic if we had investments on bond and mortgage only.
Q. I mean in a large percentage of your assets being invested
in that form — is there any doubt of the advantage of it in the
standpoint of stability? A. No, none whatever, in stability,
surely.
Q. You have spoken of the risk of loss in connection with
securities. When is that risk most manifest — in times when
conditions are unsettled — panicky? A. Well, Mr. Hughes, of
course that does not aflfect the life insurance companies so much
because we under no circumstances being properly administered
can be compelled to sell in a panic.
Q. There is a risk of loss in connection with investment in
securities ? A. Oh, surely.
Q. As compared with real estate? A. Oh, certainly we have
had losses, but our gains much more than over-balance them.
Q. And that risk is much more apparent in troublous times
than in other times? A. Surely.
Q. So that the best safeguard against a great fluctuation in
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Testimony of Cornelius Doremus
your assets is to have a considerable amount invested upon bond
and mortgage upon real estate? A. Yes.
Q. Now will you tell me please what the amount of your in-
vestments in railroad bonds is at the present time? A. About
five millions of dollars.
Q. About five millions of dollars? A. Yes.
Q. What is the amount you have invested in securities all
told? A. $10,000,000.
Q. Ten millions of dollars? A. Yes.
Q. Do you invest in stocks ? A. We do i)Ot.
Q. Have you ever invested in stocks? A. Oh, we held one
little item some years ago. We bought, I think, some fifty
shares of bank stock and concluded afterward to clean it out
Q. Why did you conclude to clean out the bank stock? A
Because the German government did not allow us to carry
stocks; that is about it.
Q. But apart from bank stock you had not invested in stocks
when you were free to do so? A. No, never invested. We once
got some city railroad stock in satisfaction of a debt which we
sold at a handsome profit.
Q. So that you have $10,000,000 in securities and about eigh-
teen or nineteen millions in mortgages upon real estate; and
what are the rest of your investments? A. Real estate itself.
Q. What real estate do you own? A. More than I would
like to, Mr. Hughes, although it has decreased very much
of late. Our total holding of real estate is $3,111,069.37.
Q. Where is that real estate situated? A. Our home office
building here.
Q. What is the book value of your home office building? A.
$507731.
Q. What did it cost? A. It cost $462,500. I have declined
an oflfer of $1,350,000, Mr. Hughes, as an instance of investment.
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Testimony of Cornelius Doremui
Q. What are your other real estate holdings? A. St. Paul,
Minnesota, we have a building there.
Q. Office building? A. Yes, sir.
Q. What did it cost? A. The cost I haven't here. It cost
something more than that — ^we hold it at $700,000.
Q. You mark it down a little ? A. Yes, I think it cost about
$800,000.
Q. Go on. A. In Berlin, Germany, we have a building which
cost us $291,947, bought two years ago in place of one we sold
then at a profit of $300,000. And in Vienna, Austria, we have
a building which cost us $180,799.87. Then we have our fore-
closed real estate almost entirely in this dty, which I have gfiven
special attention to reducing the amount of the last few years.
At the end of 1901 it amounted to $1,337481 ; at the end of 1902,
$1,125,090; 1903, $981480, and 1904, $861,744, showing that
we have sold about half a million dollars of foreclosed real estate
in these four years, about 40 per cent, of the total holdings. That
comprises all the real estate.
Q. How many purchases of securities have you made this year
in this country? A. Four, I am sorry to say,
Q. What are they? A. They are $100,000— oh, no, I beg par-
don, no, only two; March 2y
Q. Amounting to how much? A. One for $50,000 and one
$100,000.
Q. How much did you make in 1904 in this country? A.
$200,000.
Q. How many? A. Two investments of $100,000 each.
Q. Then you make very few investments from time to time?
A. Yes; with the market as it is now.
Q. How much of your business do you do in Germany? A.
One-third.
Q. Do you do business in any other foreign country? A.
When I speak of Germany I mean all Europe.
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Q. Your headquarters are in Berlin? A. In Berlin.
Q. Have you ever had any trouble with the German govern-
ment? A. No, on the contrary they are very courteous and
obliging.
Q. Has your business in Germany been profitable? A. It
has in every respect, better than any business in this country,
costs less and stays better.
Q. Why is that ? A. Well, they have not been entirely edu-
cated up to our wild methods of doing business here.
Q. What are our wild methods of doing business? A. Oh,
paying too much for it, Mr. Hughes.
Q. Just explain that a little. We should be very glad to have
the benefit of your views upon that point. A. Well, we went to
Germany in 1868 *
Q. Just compare, if you will, for our illumination the methods
you employ in Germany and the methods you employ in New
York City? A. Well, the methods are not unlike, but the fig-
ures are very diflferent. For instance, commissions over there
are not graded on the percentage of the premium, but a smaller
percentage of the amount insured.
Q. So much per thousand? A. Yes. My actuary would
know that better.
Q. So much per thousand? A. Yes.
Q. Well, reducing them to amounts how do they compare
with the commissions paid here? A. I want to look that up,
Mr. Hughes. It is less, but growing constantly.
Q. To what extent is rebating prevalent over there? A. I
don*t think it is known at all.
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Q. Not known at all? A. I don't think so.
Q. It has not been carried over there, or what is the ex-
planation of it? A. I think it has not been carried over there.
Q. Is that indigenous A. To this country.
Q. To this country? A. Yes, I think so.
Q. What is the explanation of the growth of that evil in this
country? A. The desire to be at the head of the heap.
Q. Desire to be big? A. Yes.
Q. Get business on any terms? A. I don't think it was ever
as prevalent, Mr. Hughes, as it is to-day.
Q. Why can't it be stopped by a company that desires to stop
it? A. I don't see how.
Q. You mean they pay so much the agents can afford to do
it? A. Agents have got to do it in competition with agents of
the other concerns.
Q. He has got a commission out of which he can do it? A.
Yes; the other fellow cart get a bigger one probably.
Q. What do you insist on a return to the company of in
amount when the agent writes a policy — the net premium only ?
A. He makes his monthly report, deducting his commissions
and remitting the balance.
Q. So that he does not have to account to the company for
anything more than what remains of the premium after deduct-
ing his commissions? A. That is it.
Q. And you have no control over his use of that part of the
premium which he deducts, have you? A. No, none whatever.
Q. To what extent do you receive premium notes in payment
of premiums ? A. Not at all.
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Q. Not at all? A. Never.
Q. Why has not the competition forced you to take premium
notes? A. Well, because they are too risky.
Q. Because you won't take them? A. That is it.
Q. Then you in making an agent account do not accept from
him the policyholder's notes? A. Never in any case.
Q. He has to pay over the cash amount of the premium after
deducting his commissions ? A. That is it.
Q. And it is his own lookout if he takes a note? A. Certainly.
Q. Is that the practice generally with American companies?
A. I have no knowledge, Mr. Hughes.
Q. Now, what is the rate per thousand paid in Germany ? A.
Perhaps our actuary might
Q. Fifteen dollars per thousand; what is the average premium
per thousand of your company in New York? . A. About $40
I would say.
Q. And what are your rates of commission? A. Here?
Q. Yes. A. Our scale runs up to about 65.
Q. Sixty-five on the first year's business? A. Yes.
Q. Do you commute the renewal commissions ? A. No, not
commute them.
Q. I mean will you pay an agent in the first year in the way
of advances what you understand his renewals amount to? A.
No, we either pay him 65 with the renewal or a brokerage^
which would amount perhaps to 15 more. Of course the 65 I
am mentioning is the highest figure on ordinary life. It varies
according to the kind of policy; down to lo-year endowment it
would be about 35 or 40.
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Q. You pay a brokerage commission if men were willing to
put in the business on a brokerage basis? A. Yc«.
Q. And that would be what, your highest rate ? A. 75 or 80.
I think so. It is always graded. The figure I mentioned is the
highest possible figure.
Q. In Germany do they pay a renewal commission ? A. Yes.
Q. In addition to the $15 per thousand? A. Yes.
Q. What are the renewal commissions? A. Four per cent.
Q. For how long ? A. During the life of the policy.
Q. Four per cent of the premiums ? A. Of the premiums.
Q. Do the agents collect the renewal premiums? A. Yes.
Q. They collect them themselves? A. Yes.
Q. They are not paid direct to the company? A. Oh, no; they
collect them.
Q. That is a sort of collection fee of four per cent. ? A. Yes.
Q. Of the premiums? A. Of the premiums, yes.
Q. Is the average premitmi in Germany $40 a thousand or what
would correspond to that? A. I don't know whether there is
any difference
Q. One hundred and sixty marks? A. Our premiums are a
little higher in Germany.
Q. What are they in marks? A. Well, 24 cents to a mark —
how do yotfl^hink they compare — ^is that so Mr. Fuhrcr?
Q. You may adopt his answer, Mr. Doremus. A. About $44
per thousand — a little higher than here.
Q. About $44 per thousand? A. Yes.
Q. Then it is 35 per cent, practically that you pay in Germany
on the first year's premium as against 75 to 80 per cent, here on a
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brokerage basis? A. You are taking the commission there with
the renewal and here you are taking the brokerage.
Q. The fair way would be to compare 35 and 65 ? A. Yes.
Q. Thirty-five and four per cent, with sixty-five and seven and
one-half per cent. ? A. About that.
Q. Now, in what other respect do the operations in Germany
differ from those here? A. The business is much more stable;
they do not drop their policies.
Q. Is that a matter of temperament or due to the absence of
competition? A. Oh, temperament, I think.
Q. Is the competition pretty keen abroad? A. I think so, yes.
Q. But they are more inclined to retain what they have once
taken? A. Exactly.
Q. Than to change? A. Yes, yes.
Q. Do you give surrender values in Germany? A. Oh, yes.
Q. Is there as much of a temptation to a policyholder to sur-
render his policy and get the surrender value in cash and go into
some other company, as there is in New York? A. Quite as
much, I think.
Q. So it all comes down to a matter of temperament in that
respect? A. I think so, yes.
Q. In what other respect is there a difference? A. Well, on
the whole mortality is better.
Q. Mortality is better in Germany than in the United States
amongst selected risks? A. I am sure that has been our experi-
ence.
Q. Have you data which will show that? A. That is our
experience.
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Q. To what extent is the mortality better abroad than here?
A. Well, it is becoming about even now, Mr. Hughes; but from
the time we established our Berlin agency in 1868 up to the pres-
ent time our experience there has been better than ours here.
Q. You employ the same methods in the selection of risks there?
A. Oh, yes.
Q. As to examination and so forth ? A. Altogether the same,
yes.
Q. Now, do you really think that the mortality is in itself better
over there than it is here or is it because the crowding to get busi-
ness in this country results in a poorer selection of risks? A. No,
I do not think that, but I think that we get better medical service
in Germany than we do here in making examinations.
Q. Better medical service in examination ? A. Considering the
country.
Q. How many States do you do business in? A. Oh, in all —
practically in all.
Q. What proportion of your business is in the State of New
York? A. Eighty per cent., possibly — new business you mean?
Q. No, total business, taking it at the end of 1904, you had
about eight million dollars? A. Yes, sir — New York — yes.
Q. Out of a total of $104,000,000? A. Yes, sir.
Q. When did you begin to write industrial insurance? A. I
have to look this way for an answer, Mr. Hughes. I would say
about twenty-five years ago.
Q. What led you to adopt that method of insurance? A. Mr.
Hegeman and Mr. Dryden had just gone into it, and it seemed at-
tractive, as it is an excellent business if the whole force of such
staffs as Mr. Hegeman and Mr. Dryden have been g^ven to it.
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Q. Has it proved profitable to your company? A. We have
not lost anything, but as a side issue it cannot be worked.
Q. Have you a table of rates of your industrial business? A.
We have not, we have not done any business in twenty years.
Q. No industrial business? A. No.
Q. Then these policies you have? A. Are simply the hold-
overs — ^some remaining in force of the old.
Q. Of the old business? A. That is all.
Q. Do you make loans upon collateral frequently? A. Very
rarely.
Q. Have you made any since 1896? A. Only one, I thmk.
Q. What is the reason for not making them? A. Oh, they
are not attractive in any way as an investment. In the first place
it is only a temporary thing.
Q. Do you object to making temporary investments ? A. Yes,
as a rule.
Q. Why? A. Oh, take these loans for instance, the rate is
rarely more than you can get in a bank from a trust company, and
a great deal of trouble is connected with them, changes of se-