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►
"—I
2
J^
.£46-
*' I feel that the management of our life insur-
ance companies is in strong and dutiful hands ;
that American life insurance will live to bless
our people as long as American civilization lasts,
and will endure and grow as long as civilized
men, while living, take forethought of the event
of death."
"Those who control and manage life insurance
enterprises should be absolutely and disinterest-
edly devoted to the interests of the assured.
The relations between policyholders and their
companies should be friendly, trustful, and co-
operative. . . . With fairness and liberality
on the part of the companies, and an exact
understanding of what the policies mean on the
part of the assured, they ought to be friends,
with a mutual interest in everything that affects
the rights and fair treatment of the company.
This condition cannot exist if . . . policy-
holders are allowed to remain in slothful indif-
ference to the fact that unfairness to their
companies is unfairness to them, and that the
unjust taking of money by legislation or other-
wise from the funds which are held by their
companies in trust for them, cannot be regarded
otherwise than as a wrongful and unjust dimi-
nution of their individual savings or possessions.**
Grover Cleveland.
Governor Hughes has said of the new insur-
ance laws of the State of New York :
"These statutes were enacted after very careful
consideration . . . with the object of furnishing
more secure protection to the policyholders."
In reference to the restrictions of these laws
he has said :
" I would rather take insurance in a New York
company compelled to transact business under these
restrictions than in any company not so restricted ;
and I believe that will be the sentiment of the people
of these United States."
' ' I claim to be an insurance man, and I am
the kind of insurance man representing millions
who are largely dependent upon insurance for
the security of their homes. As a young man
I realized that there was only one way in which
a poor man without capital could protect his
family from the vicissitudes of fortune, and
make proper security against the day which
must come to us all ; and that was through life
insurance. And I have been adding to my
holdings in life insurance from that time to this.
If I were to die to-night the entire protection of
my family would to a very large extent consist
of life insurance policies."
CHARLES E. Hughes.
THE EQUITABLE SOCIETY'S
FIRST HALF-CENTURY
«
The First Fifty Years
OF
The Equitable
Life Assurance Society
of the United States
1859-1909
PAUL MORTON. President
June, 1909
COPYRIGHTED
by
The Equitable Life Assurance Society
of the United States
and Published in June,' 1909
for the information of
Policyholders
ENORAVeO AND PRINTEO BY
THE W. F. POWERS COMPANY
30-38 Ferry St., New York
o
PREFAC E
This volume does not contain
the biographies of the men who
organized and developed the
Equitable Life Assurance Society
of the United States. It is a history
of the company as distinguished
from the men who built it. The
scope of the book is explained in
' the first Chapter.
In
o
f
rl
I
-0
Qt
o>
to
^ 19881 6
" My advice to every man who has a policy in
a solvent company, is to hold fast to it.
"And it is my deliberate judgment that every
man, who needs insurance for the protection of
his family, should promptly avail himself of its
protection.
'* There are many business and professional
men in every community who are without capi-
tal, but whose income is sufficient to permit
them to protect those dependent on them in this
way. To such men life insurance is, in the
vast majority of cases, their only resource —
and it is a grave truth that if they neglect this
opportunity the chief injury will fall, not upon
them, or ujpon the companies, or upon the
community at large, but upon widows, orphans,
and aged men and women."
PAUL Morton.
CONTENTS
CHAPTER
PAGE
I.
Introductory
IS
II.
Organization
17
III.
Begins to do Business .
32
IV.
The First Decade
37
V.
When Ten Years Old .
44
VI.
The First Panic .
S4
VII.
When Twenty Years Old .
68
VIII.
Second Quarter-Century .
8s
IX.
Renaissance of Insurance ,
93
X.
1906, 1907, 1908
103
XI.
The Society in igog
•
III
XII.
The Future . . . .
«
119
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
CHARTER FILED MAY 10, 1859
CERTIFICATE OF AUTHORITY ISSUED
JULY 25, 1859
CERTIFICATE FILED JULY 26, 1859
Whereupon the Society was *^duly authorized
to commence the business of insurance as pro-
vided in its Charter.'*
OFFICE OPENED JULY 28, 1859
On which day the first policy was issued.
CHAPTER I
INTRODUCTORY
The reader who is in haste may skip this chapter and
turn to Chapter II where our history begins. But he will
not save time by so doing, for this introductory chapter
will give him the right point of view and facilitate his
progress.
History is largely taken up with biographies of men;
and when a comprehensive history of Life Insurance is
written it will have as much to do with men as with cor-
porations. But here we have space only for the briefest
outline of the development of a single company — The
Equitable Life Assurance Society of the United States.
The story of the men who built it and the credit they
deserve must be reserved for the future.
But in centering our attention on the company as dis-
tinguished from its makers we shall gain a certain ad-
vantage' we shall see more clearly that we are dealing
not with a "soulless corporation," but with a living or-
ganism — a company having character and individuality.
THE NAME GIVEN TO THE NEW COMPANY
But what is The Equitable Society? Its name is sig-
nificant : it was suggested by that of the "Old Equitable"
of London, the first company to establish the business of
life insurance on a scientific basis.* The name is also
suggestive of equity — fair dealing — a liberal policy of ad-
ministration. And the Society's history proves that it
has not belied its name. Finally, the choice of the
word "society" is significant: the Equitable is simply
an association of four hundred and thirty thousand
members, banded together for mutual advantage. It is
true that the organization is given corporate form and is
controlled by a charter and the insurance laws of the
*The "Old Equitable" is now 147 years of age.
15
State. But this is necessary to facilitate its business and
protect its members. — The interests of the company and
those of its members are identical.
What the Equitable was fifty years ago, what it is to-
day, and how its present position has been attained, the
following chapters will show. And incidentally the fact
will be revealed that the Equitable is not simply a con-
ventional example of a multitude of organizations all
substantially alike. It is in many respects unique. It
has blazed new paths; has been creative — inventive — at
times startling in its innovations. And herein lies the
chief interest in the narrative.
THREE PERIODS
The Society's history may be divided into three periods
of unequal length.
I
The first has been called "The Day of Small Things,"
when the struggle was mainly for existence and recog-
nition. This period was of short duration.
2
The second period, lasting for many years, has only
culminated recently — a constructive, aggressive, pic-
turesque period, remarkable for rapid growth.
3
The third period, inaugurated within the last few
years, may be expected to extend far into the future, and
may be described as a period of conservation of forces —
A period during which growth must be deliberate; for
the Society has reached an age when its old policies will
mature in great numbers, and when a large business will
be needed simply to fill up the gaps caused by these ma-
turities. Hereafter, as President Morton has wisely said,
"The effort must be not to make the Society the largest
company but the safest and the best/'
16
CHAPTER II
ORGANIZATION
Fifty years ago, on the i8th of April, 1859, twenty-two
representative business men met in the office of the Reso- .
lute Fire Insurance Company in the City of New York
to organize a new life insurance company.
The minutes of that gathering, inscribed in a great
volume bound in faded red leather, are the records of
the first formal meeting of the incorporators of The
Equitable Life Assurance Society of the United States.
PRELIMINARY WORK
Work of importance had already been done: These
twenty-two men, with twenty-eight others, had agreed
to serve as directors. Letters had been sent to thou-
sands of prominent citizens of New York, Boston and
Philadelphia, inviting them to insure, and a hundred or
more had promised to do so. On May ist, a small back
room on the second floor of a four-story building over
against Trinity Church-yard had been rented for an
office ;* and a sign much larger than this small room had
been placed across the front of the building, just above
the sign of another life insurance company. That other
company had been in successful operation for more than
sixteen years.
A motive, which did not appear on the surface,
prompted this selection of an office : the president of the
older organization had stated that there was no room
for another company; that within a year this infant en-
terprise would be knocking at the doors of his office and
asking to be taken in, and that those who had consented
to identify themselves with it would lose both money
and reputation. But the enterprise had not been pro-
jected without deliberation: the incorporators had satis-
•This building was at No. 98 Broadway. The lease was made with
James W. Wilson, for six months, at a rental of $450.
17
fied themselves that there was not only room for a new
company but that an opportunity existed for developing
and extending the business of life insurance along paths
that had hitherto remained untrodden. So they advanced
boldly ; and by opening an office in the building occupied
by the largest and most powerful American life insurance
company then in existence, they threw down an invisible
gauntlet, and issued a silent but significant challenge to
that company, as well as to the other companies then in
the field.
That first meeting was a memorable gathering. A
"declaration" was made ; and, as the record states.
<(i
It was proposed to organize the company upon the mutual
principle, and under the laws of the State of New York
which require that a paid-up capital of not less than $100,000
should be placed in the hands of the Comptroller of the State
before business could be commenced. In raising this capital
subscribers were informed that the Society intended to pay
only 7% per annum to stockholders, this being the interest
which the money might earn when invested; and all profits
arising from the business of the company were to go to the
credit of the insured."
A Charter was then adopted and recorded in the
Minute Book. This Charter provided that the corporate
powers of the company should be vested in a Board of
fifty- two men whose names were given.*
* Fifty qualified. Two (H. D. Newcomb and Ezra C. Read) declined
to serve. Geo. T. Adee was elected on July 27th, 1859, in Mr. New-
comb's place, and C. F. Park was elected in Mr. Read's place. But
the latter also failed to qualify, and, on September 14th, 1859, J. F.
de Navarro was elected to fill the vacancy. These two (Messrs. Adee
and Navarro) although not named in the Charter, thus became members
of the original Board.
The Charter stipulated that a majority of the Board should be resi-
dents of New York. As a matter of fact 35 were residents of this
State^ 8 of New England, 3 of Pennsylvania, 2 of New Jersey, and the
remaming 4 were Westerners.
Of the original Board none remain. Mr. Navarro, after a service of
fifty years, died in this City on February 2d, 1909. One member of the
first Board, B. F. Manierre, still survives, but in consequence of his
election to the Legislature he resigned from the Society on the nth of
April, i860.
18
ORIGINAL BOARD OF DIRECTORS
Wm. C. Alexander,
H. M. Alexander,
George T. Adee,
John Auchincloss,
Benjamin E. Bates,
James M. Beebe,
Thomas A. Biddle,
Robert Bliss,
Wm. T. Blodgett,
Henry V. Butler,
Francis B. Cooley,
Wayman Crow,
Thomas A. Cummins,
Henry Day,
S. Frothingham, Jr.,
Henry J. Gardner,
Dudley S. Gregory,
Henry B. Hyde,
James M. Halsted,
E. J. Hawley,
Irad Hawley,
Moses A. Hoppock,
Henry A. Hurlbut,
Henry H. Hyde,
J. L. Kennedy,
Edwd. W. Lambert,
Wm. G. Lambert,
Daniel D. Lord,
James Low,
B. F. Manierre,
Peter McMartin,
E. Spencer Miller,
John T. Moore,
Geo D. Morgan,
H. G. Marquand,
J. F. de Navarro,
Geo. T. Olyphant,
S. H. Phillips,
B. F. Randolph,
John Slade
Thos. U. Smith,
S. R. Spaulding,
Geo. H. Stuart,
Henry S. Terbell,
Dwight Townsend,
Alanson Trask,
William Walker,
W. Whitewright, Jr. ,
Wilmot Williams,
Alexander Young,
Henry Young,
Thos. S. Young.
The charter provided that each director should be "a
proprietor of at least five shares of the Capital Stock."*
It was also stipulated that under certain conditions
policyholders might be given the right to vote for
directors. The germ of very important action taken
nearly half a century later is to be found in this con-
cluding stipulation.
PRESERVING A MUTUAL ORGANIZATION
Some of the incorporators were dissatisfied with the
paragraph in the Charter limiting the dividend on the
Capital to 7 per cent, for all time ; so a meeting was held
on May 2d, to consider an amendment, under which it
was proposed to raise the dividend to 10 per cent. After
protracted discussion the proposed amendment was with-
drawn and the Charter remained unchanged.
*The Capital of $100,000 was divided into 1000 shares of $100 each,
and all (except a few shares taken by friends of the incorporators)
were subscribed for by the directors; some taking 5 shares, some 10,
and a few larger amounts. The largest subscription was for 80 shares
and the smallest for 3 shares. A great deal 01 hard work was needed
to place this stock, whose value depended altogether on the future suc-
cess of the infant enterprise.
19
On May loth, the Charter was filed in the Comptroller's
Office at Albany.
ORIGINAL OFFICERS
The original officers were named at a meeting of the
incorporators held on the 14th of July, as follows :
William C. Alexander, President.
Henry B. Hyde, Vice-President.
George W. Phillips, Actuary.
Edward P. Williams, Secretary.
Dr. Edward W. Lambert, Physician.
Dr. Willard Parker, Consulting Physician.
Daniel Lord, Counsel, Henry Day, Attorney.
THE PRESIDENT
William C. Alexander, who was born in Virginia, in
1806, was the second son of the Rev. Archibald Alex-
ander, D.D., of Princeton. He was graduated from
Princeton College in 1824, and subsequently entered
the legal profession. His abilities soon made him prom-
inent as a statesman and orator. He was elected to the
legislature of New Jersey in 1836; served for three terms
as President of the Senate of New Jersey; was nomi-
nated for Governor in 1859; was candidate for the Vice-
Presidency at the Charleston Convention, and was a dele-
gate from New Jersey to the Washington Peace Congress.
THE VICE-PRESIDENT
Henry Baldwin Hyde was born in the village of Cats-
kill, New York, on February 15th, 1834. He came to
New York in 1850, and finding no opening went to
Honesdale, Pennsylvania, where he remained for a few
months. Returning to New York he secured a clerkship
in a mercantile house. In 1852 he obtained a subordinate
position in the office of the Mutual Life Insurance Com-
pany, and later on became cashier of that company. This
office he resigned in 1859, when twenty-five years old, to
take the lead in founding the Equitable Society.
20
JSbjjJlllL (L, AImJIuuAm/-
He is described as being at that time, "of command-
ing presence, tall, strong of limb, with dark hair but clear
complexion, handsome in feature and singularly bright
and alert. His eyes, which were dark, and gleamed from
beneath heavy eyebrows, arrested instant attention, and
it is scarcely a figure of speech to say that they 'pierced
like a sword.'
f yy
The President of another company pictured him as
follows :
"The start of Mr. Hyde's life is the start of the Equitable
. . . . Seven years of preparation found him at twenty-
five tired of subalternism and ripe for leadership. Where-
upon he summoned into existence the Equitable. From the
moment of its birth he had a purpose in life — a distinct aim
that nothing ever daunted. The company began with a
volume of business he had personally solicited which would
be a handsome tribute to the brilliant field-men of to-day
.... In his onslaughts — and they were mighty when he
was aroused' — he wasn't satisfied to get up early in the morn-
ing for preparation; he was always up the day before.
When most men were considering when to begin he had it
done. His feet, in the earlier days especially, were always in
the stirrups.'*
One of Mr. Hyde's associates once said of him :
"I have never seen a man who could work as fast or as
hard. Not only could he accomplish more himself, but he
could get more work out of a greater number of people, at
one and the same time, than any man I have ever known.
"He had a sort of omnipresence, that seemed almost like
a hypnotic influence, which kept his associates and assistants
at concert pitch all the time.
"He was absolutely devoid of all false pride, never stopping
to consider whether a piece of work might be regarded as
beneath the dignity of the president of a great life insurance
company or not. If he felt that by undertaking it himself
the Society would be the gainer, he would undertake it. But
no one could reflect upon the dignity of the Society in his
23
presence with impunity. If its fair fame was assailed, his
righteous indignation was instantly roused, and when his
indignation was roused his action was swift and decisive."
And a competent authority has summed up his achieve-
ments in the following language :
"He was the greatest constructor and developer in the field
chosen by him for his work that has ever been known in this
country.
"He not only founded the company which he lived to see
surpass all others in strength and usefulness, but he inspired
others with his own zeal and enthusiasm, so that the under-
taking molded and brought to perfection by him should con-
tinue with ever-increasing force and effect for all time.
"He was not content with rearing an immense financial
corporation based on the soundest and most enduring prin-
ciples, but undertook and successfully wrought out a com-
plete revolution in the methods of the life insurance business,
eradicating evils which had become habitual in the craft, and
introducing reforms, all of which were so clearly equitable,
just, and popular that the example set by the Society has
become crystallized in the general practice of all companies
asking for the confidence of the public."*
THE ACTUARY
George W. Phillips was born at Salem, Massachusetts,
in 1827. He was graduated from Harvard College in
1847, became a civil engineer, and was subsequently
recommended by Professor Peirce of Harvard as emi-
nently fitted for the office of actuary of the Society. He
was one of the charter members of the Actuarial Society
of America, and served at one time ajs its vice-president.
He was recognized as one of the most distinguished
actuaries that this country has produced.
THE PHYSICIAN
Dr. Edward W. Lambert was born at Boston in 1831.
He was graduated from Yale College in the class of
*For further details regarding Mr. Hyde see page 89.
24
i854> and studied medicine under Dr. Willard Parker
of New York. He was a graduate of the College of
Physicians and Surgeons, and was connected with Belle-
vue Hospital when requested to take charge of the med-
ical department of the infant company. He was a man
of rigid integrity, combining a sweet and sunny dispo-
sition with great force of character. He quickly won the
respect and affection not only of his fellow officers but
of the agents, whom he was often forced to disappoint.
But they never questioned his integrity of purpose or
the justice of his rulings.
It was agreed that the salaries of the officers should,
during the Society's earlier years, be merely nominal ; and
the physician's compensation was to be limited to a fee
of $3 for each examination made (any excess over $1000,
however, to revert to the company). The consulting
physician, attorney and counsel, were to be paid only for
services rendered.
THE FIRST AGENTS
The first two agents authorized to represent the com-
pany were named at the meeting held on July 14th; one
to solicit business in New York, the other in Boston.
The latter, Henry H. Hyde, father of Henry B. Hyde,
was an insurance man of long experience, and many years
afterwards the son said of him, "In the beginning of our
enterprise I constantly consulted my father, and it was
to a large extent owing to his advice, based upon his
great experience, that no mistakes were made in our
early history." Henry H. Hyde was the most success-
ful solicitor of his day, and the large volume of business
transacted by him was of enormous value to the young
company.
ORGANIZATION COMPLETED
On July 25th a "Certificate of Authority'' was issued
by the Comptroller of the State, in which it was declared
25
that the Society, having complied with the law, would,
upon filing the said certificate in the County Clerk's Office
in the City of New York, be "duly authorized to com-
mence the business of insurance as provided in its
Charter." The certificate was accordingly filed on the
following day; and from that date, July 26th, 1859, the
corporate life of the Society begins.
On the afternoon of the same day the fallowing notice
appeared in the New York Evening Post:
"The Equitable Life Assurance Society of the United
States has completed the preliminaries of its organization,
and by announcement in to-day's paper informs the public
of its readiness to commence underwriting.
"This company has been built upon a sure foundation, as
indeed the names of its directors sufficiently indicate. The
Office of the Company for the present is at 98 Broadway, but
will soon be removed to the new building No. 92 Broadway.
"The officers of the company are gentlemen well known
in this City and are abundantly qualified for the positions
they are to fill.
"This is the first company that has been organized in this
Country within the past five years. There is an abundant
field for its operations."
FIRST directors' MEETING
On the following day (July 27th) the first formal
meeting of the Board was held. Twelve directors were
present, with the President in the Chair; the Secretary
serving for the first time as clerk of the Board.
At that meeting it was formally announced that the
Capital of $100,000 had been fully subscribed, had been
invested in United States securities, and had been de-
posited with the Comptroller at Albany.
By-Laws were then adopted, and a resolution was
passed ratifying the minutes of the meetings already held,
as well as all previous acts of the incorporators and
directors.
26
CHARACTER OF ORGANIZATION
Interesting reminiscences of this period are contained
in an official report made about ten years later. From
this report the following is quoted:
"The first step in the history of the Equitable was the adop-
tion of a plan of business. A number of systems which were
then more or less popular presented themselves for selection.
The note plan, offering a bid to the unthinking public, was
one of them. The mixed plan, by which the stockholders
would participate in some of the profits (which by an equi-
table distribution should go to the insured) was one of them.
The proprietary (or stock) plan by which all the profits of
the business would go to the stockholders, was one of them.
The directors, more mindful of the interests of those for
whose advantage the Society was incorporated than of a
large pecuniary benefit, and too solicitous as to the future
interests of the policyholders to yield to any of the popular
fallacies of the day, determined that the business should be
conducted upon the all cash basis, and that all profits should
go to the holders of policies in the company and not to the
stockholders; the stock capital having been made up only to
comply with the provisions of the Insurance Laws of the
State of New York, the object of the Equitable's projectors
being to make the company purely mutual."
CONSERVATISM
The note (or credit) plan was exceedingly popular,
and the incorporators of the Equitable showed backbone
in establishing the company on a strictly cash basis. The
same spirit was exhibited in their refusal to limit their
insurance to the lower "stock" rates then charged by
many large and flourishing companies in England and
elsewhere. Recognizing the greater security of the
mutual principle, and knowing that when the time should
come for dividends to be paid the temporary advantage
incident to the stock method would be overcome, they
shaped their plans accordingly, and then proceeded to
concentrate their efforts on the establishment of a firm
27
foundation, seeldng to conduct the affairs of the Society
with all possible energy, but at the same time with the
strictest caution and economy. And the early prosperity
of the Society was largely due to the modest and eco-
nomical basis on which its affairs were conducted. The
Actuary attended to all the necessary duties of the office,
keeping the books and answering the letters; the only
assistants being an errand boy at $1.50 a week, and an
outside copyist. Many important services were also
rendered gratuitously by the directors.
FIELD OF OPERATIONS
Before proceeding with our narrative it may not be
uninteresting to glance at the general conditions prevail-
ing at the time the Society was launched.
When the Equitable was established the total popula-
tion of New York, Harlem and Brooklyn was a little over
one million. To-day the population of Greater New
York is nearly four and a half millions.
At that time the city was chiefly below Madison Square,
although it was rapidly extending northward on the East
Side; and a fashionable settlement was springing up on
Murray Hill.
Workmen were digging and blasting above 59th Street
in the bare and rocky wilderness which a few years later
was developed into Central Park.
The Forty-Second Street Reservoir supplied all the
water that came into the city, and looked like an outlying
fortification, surrounded as it was by a waste of vacant
lots and stock-yards. The favorite promenade for chil-
dren and nurses was on top of the encircling walls of
the Reservoir, and on their way to it these children
passed a number of country residences whose gardens
fronted on the Avenue.
The Hippodrome, which had stood at the corner of
23d Street, had been pulled down to make way for the
Fifth Avenue Hotel.
28
There were a few horse-cars, but the business men
went to their offices in the heavy omnibuses that lum-
bered up and down Broadway in summer ; and patronized
in winter the open four-horse omnibus sleighs, filled with
straw, that replaced the omsnibuses.
Rents were low, supplies were cheap, and the cost of
living in New York was scarcely more than half what it
is to-day.
There were no high buildings, and the largest shop in
the City was that of A. T. Stewart, at the corner of
Broadway and Chambers Street.
Stenographers were not employed in business offices,
typewriting instruments and telephones had not been in-
troduced, and there were no passenger elevators in any
of the office buildings.
There were then only thirty-three States, and
many regions now thickly populated were wild and
undeveloped. The voyage from New York to Liverpool
in the small steamers of the Cunard and Collins Lines
usually took a fortnight, and the Atlantic Cable had not
been laid. It took nearly as long to go by rail from New
York to St. Louis as it now takes to get to San Francisco.
There were no trans-continental railways, and railroads
and teleg'raph lines extended only to important centres.
Now there are 220,000 miles of railroad in the United
States — nearly half the mileage of the world.
The great panic of 1857 was still fresh in the minds
of business men. Nor were the lessons taught by it dis-
regarded by the directors of the Equitable; for an early
circular contains the following comments on its ravages :
"The labors of a lifetime, round which clustered the fond-
est hopes and expectations were instantly destroyed — gigantic
estates were scattered as things of naught — ^the profoundest
wisdom of business men availed but little — all were swept
away in an unexpected moment, as the tornado with irre-
29
sistible force passed over us. The anxieties which naturally
occupied the minds of men after the panic had stripped them
of their property were greatly increased by the thought that
should they be called to die at that critical time their families
would be in a helpless state. As we are recovering from the
effects of the revulsion it becomes men of good judgment to
protect their wives and children from the results of similar
misfortune in the future. In view of the above facts every
man who is engaged in business and who knows that his
premature death might deprive his family of the comforts,
not to say the necessities of life, should accept the proffered
boon of life insurance."
The public at large knew little about life insurance, and
the representatives of the companies had to explain as
well as to persuade.
The aggregate results achieved up to that time by the
companies then doing an insurance business seem almost
insignificant to us to-day*; but the business was soon to
receive a wonderful impetus, and the Equitable was to
have a potent influence in its development.
*It has been estimated that at the time the Equitable was organized
the total amount of insurance in force in the United States did not ex-
ceed $180,000,000.
30
THE SOCIETY'S FIR!
CHAPTER III
THE SOCIETY BEGINS TO DO BUSINESS
The Society opened its doors to the public on July
28th, 1859. O^ th^t ^^y fourteen policies were issued,
covering $100,500 of insurance.
A NEW OFFICE
On December ist, the office of the Society was trans-
ferred to the new building, just completed, at 92 Broad-
way, where four rooms were occupied.
At a meeting of the Directors held on September 14th,
the seal of the Society was formally presented and
adopted, and an impression of it may be seen on the page
of the Minute Book containing the records of that meet-
ing.
On December 31st, the Society made its first report to
the new Insurance Department of the State of New
York which had just been established. This report
showed that the Outstanding Insurance had reached the
sum of $1,144,000 at the close of the year 1859.
The first directors' meeting in the new office was held
on January nth, i860. This was also the first "Annual
Meeting*," and the President, in his Report to the Board
said:
"A contract was made for these apartments before the
demolition of the building which occupied this site, at a rent
far below what they would have commanded at any time
since its completion. The lease was made with the estate of
the late John Suydam for ten years at $2500, and this lease
will doubtless be considered by the Board as of greatly in-
creasing value."
This report went on to show the care with which ex-
penditures had been made for fittings and furniture ; and
a stationer's bill of $1,600 (which was to be liquidated
32
gradually) was defended on the ground that some of
the supplies covered by it would never need to be re-
placed and that the rest would last for a long time.
It was stated that a number of policies for $10,000 had
been issued, but that in each case half the risk had been
reinsured, so as to make $5000 the Society's actual limit.
Up to that time most of the applications obtained had
been secured by the Vice-President and Mr. Henry H.
Hyde, supplemented by the efforts of the other officers and
directors.* It was reported at this meeting, however,
that the Vice-President had been travelling extensively
in the western towns, selecting agents and medical exam-
iners, and that several additional agencies had been
established in the East.
At the next meeting, held on the nth of April, i860,
the President said to the Board :
"When it is considered that up to this date no less than 412
policies have been issued (involving a risk of one million
and a half of dollars) and that so far no loss has been sus-
tained, we cannot but feel that the progress and success of
the Society have been eminently auspicious."
CANVASSING MATERIAL
The earlier canvassing documents of the Society were
brief circulars giving the names of officers and directors ;
eulogizing life insurance, and stating that the physician
would be in attendance at the office by day, and at his
residence by night.
Early in the year i860 the President announced that
30,000 copies of a carefully prepared pamphlet had been
issued, "whose cost had been defrayed by advertisements
bound up in the work."
This pamphlet had little to say about the Society
(whose financial statement was still a meagre exhibit as
*A special committee of the Board reported in January, 1863, that
of the nrst 800 policies issued by the Society, 160 had been secured by
Henry B. Hyde's personal solicitation.
34
compared with the reports of its older competitors) and
was taken up chiefly with general arguments in favor of
insurance, the opinions of influential writers, and advice
to those who had neglected to insure.
COMPETITION
When the Equitable Society opened its doors it came
into immediate competition with twenty-four older com-
panies. One of these, also a New York organization,
was more than sixteen years older than the Equitable,
with Outstanding Insurance of $37,000,000, Assets of
nearly $6,000,000, and an income of upwards of a million
and a quarter. It had reached, or was about to reach, the
magnitude of the largest British company then in exist-
ence ; and its Outstanding Insurance surpassed that of the
largest German company by about 57 per cent. The
second largest company was a Connecticut organization,
and was twelve years older than the Equitable, with Out-
standing Insurance of upwards of $22,000,000.
Six of these twenty-four companies were New York
organizations; twelve were companies of other States,
and six were British. There were other companies, but
none of them were as yet competing for business in New
York or Massachusetts.*
Of the eighteen American companies six have disap-
peared or have ceased to transact the business of life
insurance, and only twelve remain. The six British com-
panies have all disappeared or retired from the United
States.
OBSTACLES
But the young Society had other difficulties and per-
plexities to contend with. Buchanan was still President.
The long contest between the North and South had en-
tered upon a stage of extreme exasperation, and the
*As nearly as can be ascertained from the early records there were
thirty-two regular companies operating in the IJnited States when j^he
Equitable was organized. .>> '. ;',
> ' I 1 J ' t
35 ',•'>''
Republican Party (only consolidated by its defeat under
Fremont in 1856) was now encouraged by divisions
among the Democrats, and was concentrating its strength
for another decisive struggle. The whole Country was
agitated by the strife, and heavy clouds already portended
the storm which was close at hand. A new insurance
craft could hardly have been launched upon a darker or
more troubled sea. But at the end of the year 1859,
when the Society was only five months old, its Outstand-
ing Insurance exceeded that of three of the older com-
panies ; and in i860 it passed three others.
EARLY ECONOMIES
At a directors' meeting held on April nth, i860, the
President said :
"The first year of a company of this character is neces-
sarily a year of expense, but the officers of this Society have
labored to conduct its affairs with all the economy compatible
with the character of the institution. The heaviest liabilities
have now been paid. More than two thirds of the stationer's
bill mentioned in the last report has been settled, and it is
intended to liquidate the balance at an early date. Few bills
of any size are outstanding, and it is hoped that before the
next meeting no claims will remain against the Society other
than those for current expenses."
In August, i860, the Society employed its first clerk,*
all office work having been performed for more than a
year by the officers. Nor was it until January, i86i,§ that
a second clerk was brought into the office.
•James B. Loring, who later on became Registrar of the Society,
and was retired in 1903.
§The late Thomas D. Jordan, who became cashier, and subsequently
Comptroller of the Society.
• - * • » .
• • • ' 36
• k
CHAPTER IV
THE FIRST DECADE
The latter part of the year i860 was unfavorable for
business of all kinds on account of the intense excite-
ment preceding and following the election of President
Lincoln, and the secession, on December 20th, of the State
of South Carolina. Notwithstanding this, the Society
made some progress, and closed the year with $2,641,500
of Outstanding Insurance.
By that time it was represented by 229 agents, of
whom 45 were in New York and 184 in other States.
THE CIVIL WAR
More serious obstacles were encountered in 1861. Po-
litical excitement was at fever heat. Six other States fol-
lowed quickly the example of South Carolina. Five
seceded in January and one in February. Fort Sumter
was bombarded on April 12th, 1861, and the proclama-
tion of President Lincoln calling for 75,000 volunteers
was answered by the secession of the great border States
which had previously sought to bring about an amicable
adjustment. The Confederate Government was organ-
ized, and its seat was removed to Richmond, Virginia.
On the 2 1 St of July was fought the disastrous battle of
Bull Run, and it became necessary for the Government
to organize new armies.
EXTENSION OF THE SOCIETY'S OPERATIONS
The stagnation of business along the Northern Sea-
board and its absolute suspension in the South at that
time turned the attention of the directors to the West
and Northwest. At a meeting held on the loth of April,
the question of transacting business in California at reg-
ular rates was submitted to a committee for investigation ;
37
and authority was given to establish an agency in Wis-
consin, where a satisfactory representative had been
found. At about the same time an arrangement was
made with J. B. Bradley "to canvass the States of Maine
and New Hampshire, with the object of introducing the
operations of the Society in all parts of that desirable
territory."
Up to that time the Society had established no agencies
in the State of Pennsylvania. An oppressive law,
requiring every foreign company transacting business
there to have a paid-up capital of at least $200,000, had
stood in the way. But in 1862 the largely augmented
assets of the Society enabled it to begin active opera-
tions in Philadelphia and Pittsburg "under the guidance
of eminently qualified agents."
It was not possible to make rapid headway under the
conditions then prevailing. Some of the companies lost
ground, and the progress of the rest was slow. The
Equitable, however, reported a substantial increase in its
business ; and before the close of the year it was deemed
safe to increase the risk limit to $10,000.*
Notwithstanding the continuance of the Civil War the
Society made material advances in 1862 also. And on
the 14th of January, 1863, the President reported that
there were 380 agents in the field, and that the business
was well distributed throughout the Northern States.
At the end of the year the Outstanding Insurance
amounted to $9,260,450.
In 1864 the Society gained more than $7,000,000 of
insurance, and closed the year with Insurance In Force
of $16,564,700. Five years had elapsed since its first
report had been made to the New York Department. Its
advance during that period is illustrated by the follow-
ing figures :
*The practice of reinsuring a part of every risk above $5,000 was
thereupon discontinued.
38
' ' ■
FIVE YEAR'S GROWTH.
DATE
Dec. 31, 1859
i860
it
it
it
it
< <
1861
1862
1863
1864
ASSETS
$ 117,102
162,618
210,636
324,013
584,714
1,125,381
INCREASE OVER
PREVIOUS YEAR
$ 45,516
48,018
113,377
260,701
540,667
By that time the Society was far ahead of all younger
companies and had outrun many of its older competitors.
FIRST DIVIDEND TO POLICYHOLDERS
In January, 1865, the Society distributed a large pro-
portion of its accumulated surplus in its first dividend to
policyholders.
In establishing the practice of paying dividends at five
year intervals, it had imitated the older American com-
panies, whose practice had been based on that of the
English companies. Up to that time the practice of pay-
ing dividends annually had never been thought of. As
soon, however, as the Equitable had declared its first
quinquennial dividend, its most formidable competitor*
announced that in 1866 it would inaugurate the new prac-
tice of paying dividends annually.
This was a startling innovation, and came as a stag-
gering blow to the officers of the young Society, who in-
ferred that the measure had been decided upon by its
older competitor with the belief that the Equitable would
find it impossible to follow this lead so soon after dis-
tributing the greater part of its surplus, and that the
older company would monopolize the advantage of intro-
ducing a novelty. Many years after, in commenting on
*The company over whose offices the Society had established its head-
quarters in the beginning.
39
this critical moment in the Society's history, President
Hyde said:
"The first serious anxiety we had regarding our success
came immediately after the announcement of our first
quinquennial dividend. We had divided among our policy-
holders nearly all the surplus accumulated during the previous
five years. We had thus drained our coffers, and I need not
tell you that the actual surplus remaining was not very
large."
But as soon as the first annual dividend of the older
company had been actually declared the Equitable in-
serted advertisements in the papers announcing that
thereafter it would pay annual dividends to its policy-
holders.*
We quote again from President Hyde's reminiscences
of this episode :
"At this juncture the cholera, of which we had heard
rumblings along the horizon for a considerable period, began
to show itself in our midst. Mr. Phillips, the Actuary, as-
sured me that a vital error had been committed in agreeing
to pay dividends annually. He went so far as to advise a
public acknowledgment of our mistake by a retraction of our
dividend announcement. After a careful review of the situ-
ation I came to the conclusion that the danger of retreat was
greater than that of advance. I passed a summer of the
greatest anxiety, but contrary to our fears the mortality
among our policyholders was exceedingly light. ' '§
RAPID PROGRESS AFTER THE WAR
The Civil War came to an end early in 1865, but tran-
quility was not restored at once, for President Lincoln
•The Society's first annual dividend was declared on February ist, 1867.
§ Later experience has proved that a company doing a lar^e business
need have little fear of epidemics, (i) because local epidemics do not
materially affect the average experience of a company whose business
is widely distributed; (2) because a majority of those who die from
such plagues are not those who have the prudence or ability to insure,
and (3) because those who do insure usually avoid contagion by run-
ning away.
40
was assassinated at Ford's Theatre in Washington on
Good Friday, April 14th, 1865, and died a day later. The
consternation which followed, producing excitement and
apprehension in financial circles, seriously retarded the
restoration of normal conditions. But notwithstanding
these adverse circumstances the Society continued to
prosper; making, indeed, greater advances than ever
before.
When peace and tranquility were restored a thousand
industries sprang into existence, and the Society was
ready to take advantage of its opportunities. It had out-
run fourteen of its older competitors in volume of busi-
ness, and had left far behind every company younger
than itself. The progress of life insurance in the
United States had necessarily been seriously retarded
during the war, and encroachments had been made
upon the outstanding insurance of some of the older
companies through the lapsing of policies issued to
residents of Southern States; but recovery was prompt,
and the advancement from year to year thereafter was
rapid.
Two years later the Massachusetts Insurance Commis-
sioner inserted ,the following table in his annual report :
INCREASE IN OUTSTANDING INSURANCE
OF ALL COMPANIES TRANSACTING BUSINESS
IN MASSACHUSETTS
Increase in i860 $18,580,402
Increase in 1861 1,616,357
Increase in 1862 46,348,275
Increase in 1863 60,439,328
Increase in 1864 122,844,700
Increase in 1865 180,828,972
Increase in 1866 308,467,053
41
Commenting on these figures, illustrating the increase in
the business from year to year, the Commissioner said:
"Apart from the general arguments in favor of life insur-
ance, several circumstances have combined to give to the
system the rapid impulse and growth of the last few years.
The Civil War costing thousands of valuable and productive
lives and leaving desolate homes all over the land has made
death and the danger of leaving domestic interests unpro-
tected a present reality in every community. The close of
the war has inspired new confidence in the strength and
prominence of the National Government and in the stability
of all those institutions which flourish only in the presence
of established good order and commercial security. While
the cost of commodities and the market values of stocks and
investments have increased with a disordered currency the
price of life insurance has remained the same. ... A new
energy has also been infused into the management of the
companies."
At about the same time the Superintendent of the New
York Insurance Department gave the Equitable credit for
"marking and distinguishing the commencement of the
recent astonishing progress in the business of life insur-
ance," thus indicating that the Society had already had
a good deal to do with this "new infusion of energy."
Shortly before this the Superintendent had said:
"All institutions having for their object the encouragement
of saving by the masses are prompted by the dictates of
humanity as well as approved by the science of political econ-
omy, and should be encouraged and sustained by all enlight-
ened governments. No institution of this nature is more
beneficial than a well regulated and reliable insurance com-
pany. The solidity and consolidation of society is increased
and the State is strengthened by thus linking us more in-
timately and indissolubly with the present and succeeding
generations. The political sagacity of a Pitt and the practical
wisdom of a Franklin sanctioned the validity of this system
42
half a century ago, and the next half century is destined to
witness in this Country a glorious development of the theory
and practice of life insurance."
That this prophecy has been fulfilled the history of
the Equitable clearly illustrates.
INCREASE IN RISK LIMIT
In December, 1866, the Society took the lead in raising
the amount of insurance granted on a single life from
$10,000 to $25,000.*
The Outstanding Insurance of the Society passed the
$100,000,000 mark in 1868; and at the close of that year
it again took the lead by raising the limit on a single life
from $25,000 to $50,000. §
TENTH ANNIVERSARY
At a directors' meeting* held on the Tenth Anniversary
of the day on which the Society's first policy was issued,
the President said to the Board :
"Ten years ago in one small room, also occupied by others,
the President and Vice-President were laboring to lay the
foundations of this institution on salaries purely nominal,
but as much as the Society felt it could then afford. They
devoted themselves assiduously to the work. Ten years have
passed, and at the close of this first decade, the Assets of the
Society will reach, if not exceed, the sum of $10,000,000, a
success for which no parallel is to be found in the history of
insurance." t
*The Society's example was promptly followed by the other prominent
companies.
§In 1883 the limit was still further increased to $100,000. The limit
is now $200,000. In cases where larger risks are accepted the excess
over $200,000 is reinsured in other companies.
tOn December 31st, 1869, the Assets amounted to $10,510,824.
43
CHAPTER V
WHEN TEN YEARS OLD
More than once President Morton has made the pub-
He announcement that those who are now responsible for.
the administration of the Society's affairs are not am-
bitious to make it the largest company, but are anxious
that it shall be the safest and the best. When a company
has reached the first rank volume of business becomes
far less important than financial strength and successful
and economical administration.
At the present time the companies that are transact-
ing the largest volume of business are the "industrial"
companies, the majority of whose policies are very small
but whose transactions in tlie aggregate have become
very large. Formerly, however, the companies whose
annual transactions were the largest were those whose
business was done exclusively on the "ordinary" plan as
distinguished from the "industrial" plan. And to illus-
trate the rapid growth of the Equitable during its earlier
years, the following paragraph is quoted from a report
describing the situation at the close of 1869, when the
Society was ten years old:
"The Equitable was organized in 1859. ^^ i860, the official
reports showed it to be the 9th company in point of new busi-
ness for the year; in 1861 it was the 8th; in 1862 and 1863
the 7th; in 1864 and 1865 the 6th; in 1866 the 4th; in 1867
the 3rd ; in 1868 the 2nd, and in 1869 the first."
To this report was appended a table giving statistics
regarding fifty leading companies then transacting busi-
ness in the United States, the Equitable heading the list
with New Insurance for 1869 of $51,021,141, and Cash
Premium Receipts of $5,769,294. The companies then
standing second and third were both New York organi-
zations; the fourth was a New England company, while
the only Western company near the head of the list stood
seventh.
The Society's Outstanding Insurance at the end of the
year amounted to $134,223,861.
THE EQUITABLE BUILDING
•
The business of the Society increased so rapidly that
it outgrew its second office at No. 92 Broadway in a very
few years. Additional space was obtained by leasing por-
tions of Nos. 94 and 96 Broadway, but the new accom-
modations soon proved inadequate, and on December 16,
1865, when the Society was less than six years old, at a
special meeting of the Board, a committee was appointed
to consider the expediency of putting up a building. This
committee recommended the immediate purchase of a
site, and the early erection of a building.
45
At a meeting held to commemorate the Society's
Twenty-fifth Birthday the President commented on this
action as follows :
"That with assets of a million and a half at the time, and
an income of only $971,000, the Board should have taken the
responsibility of recommending the erection of a large build-
ing for the Society's offices, shows their faith in the future
progress and growth of the Society. And the step was a
wise one, for we were rapidly outgrowing the accommoda-
tions at our command, and on two occasions our office had
barely escaped destruction by fire, some of our valuable
papers, books, and documents having been injured and some
having been lost."
It was not until September i6th, 1867, however, that
the purchase of all the land for the original Equitable
Building was consummated.
At the Annual Meeting of the Board held on January
15th, 1868, authority was given for the construction of
the building in accordance with the plans of Messrs. Gil-
man and Kendall, with Geo. B. Post as consulting archi-
tect in matters of construction.
The original building, which occupied the southeast
corner of Broadway and Cedar Street, was completed
and thrown open on May ist, 1870. Fronj time to time
thereafter it was enlarged, and the whole structure was
completely remodeled and its height increased by several
stories, in 1887, under the direction of the distinguished
architect Geo. B. Post.
The entire block is now owned by the Society, and is
considered the most valuable plot of real-estate, controlled
by a single owner, in the City of New York.
In 1870 passenger elevators were used in a few hotels
and large stores; but the Equitable Building was the
first office building to introduce them. Real-estate men
sneered at the innovation. They asserted that men en-
gaged in important business enterprises — ^the men willing
47
to pay high rents — had never gone above the second floor
and could never be persuaded to do so ; that even lawyers
would refuse to ask their clients to go higher, and that
the experiment would prove a humiliating failure. Even
the directors of the Societv were reluctant to have the
experiment tried, and in the beginning stipulated that
only two elevators should be put in. But eight were
finally installed, and the upper floors of the building were
quickly rented to prominent law firms and corporations.
Thereupon the office buildings of New York began to
grow higher, and in building's old and new elevators were
quickly installed. A revolution in the construction of
office buildings followed, due altogether to the example
set by the Society. The Equitable Building, therefore,
may very properly be described as the parent of the mod-
ern "skyscraper," notwithstanding the fact that it is no
longer regarded as a high building, being in fact almost
hidden by the lofty modern structures that hem it in on
every side.* But for years it was the highest and most
conspicuous building in the City. It was one of the sights
of the town, and crowds of people went up in its ele-
vators to the tower on the roof, from which there was
then an uninterrupted view of the whole City and the
surrounding country.
The Equitable Building was erected long before mod-
ern steel construction had been introduced, and was con-
spicuous for its massive walls and broad foundations.
Hence it served as an object lesson — the stability of the
structure seeming to typify the future strength and mag-
nitude of the Society. The building was, consequently,
as valuable as an advertisement for the young company
as it was useful in furnishing commodious offices for the
transaction of its business. And it seems unfortunate
that the time must soon come when it must either be
remodeled or rebuilt. But the ground on which it
*See illustration on page 55.
49
stands, covering a full acre of land close to the money
center, is very valuable, and is capable of producing so
large an income if tharoug'hly developed that the Society
or some future owner will be forced to replace it with a
modern structure of appropriate height, wherein every
inch of space may be wisely economized.
OTHER BUILDINGS
In addition to the Equitable Building on Broadway the
Society owns another building in New York, which is
occupied by a large part of its working force, and is also
used for filing cabinets, card-indexes and the storage of
its books and vouchers. The Society also owns office
buildings in Boston and St. Louis.*
FOREIGN BUILDINGS
Handsome office buildings have been erected by the
Society in Berlin, Vienna, Madrid, Sidney and Mel-
bourne, and it owns the buildings containing its offices in
the City of Mexico, Santiago (Chile) and Paris. The
Paris office is in a building fronting on the Avenue
de rOpera.
For a number of years the Society has owned another
plot — one of the most valuable corners in Paris — on the
Place de TOpera, the Boulevard des Capucines, and the
Rue de la Paix. A modern building is now being erected
on this site, in order that the largest attainable income
may be secured from the investment.
FOREIGN AGENCIES
In 1867 the Society established an agency in Havana.
This was its first agency outside the United States. Dur-
ing the following year Canada was entered ; in 1869 an
*The income from the latter investment becoming inadequate, the
Society leased it to responsible parties for ninety-nine years, at a rental
which will yield an income of $50,000 per annum — a satisfactory return.
The lessees, moreover, have agreed to make improvements which will en-
hance the value of the property and the security of the transaction.
50
t EUUITABLB BUILDING
agency was established in London^ and in 1870 in Paris.
The business was extended to Germany and several other
Continental countries in 1871, Spain was entered at
about the same time, although a formal "concession"
was not issued by the Government until 1883.
The foreign business of the Society, aside from its
Canadian agencies, is now confined to the British Islands,
France, Belgium, Holland, Russia, Spain, Italy, South
Africa, Mexico, Cuba, and certain other central points in
Europe, in the Far East, in the West Indies, and in
South America.
"the keystone of the arch"
In December, 1870, a New York company was placed
in the hands of a receiver by the Insurance Department.
It was a small organization only five years old, but it was
the first failure in the State.
In January, 1871, another small company that had been
in operation for less than a year and a half gave evi-
dences of mismanagement. The Insurance Department
promptly instituted an examination which revealed the
fact that although it had started with a full paid-up cap-
ital of $125,000, it had spent within its brief career more
than $68,000 for advertising, printing and stationery alone ;
and that the assets remaining were scarcely sufficient
to reinsure its risks, leaving a large amount of miscella-
neous obligations unprovided for. That company was
also placed in the hands of a receiver and its insurance
was transferred to another New York company.
These failures are referred to, in passing, chiefly be-
cause they illustrate the fact that in life insurance as in
all other enterprises, "management is the keystone of
the arch,''* and incidentally to illustrate the advantage
which the Society enjoyed in having become firmly estab-
lished during the conservative and economical period ante-
dating the Civil War.
In this connection, the President, in one of his reports,
said:
"What have these new companies not had to contend with !
Salaries have increased in equal pace with the expense of
living. Even moderate talent, unacquainted with this par-
ticular business, has commanded a higher price than that paid
to experts before the war. In fine, every disbursement neces-
sary to the starting and carrying on of new projects has more
than doubled."
*See page 58.
53
CHAPTER VI
THE FIRST PANIC
The year 1873 was marked by one of the severest finan-
cial panics ever experienced in this Country.
It resulted from over-expansion, wasteful living, and
an inflated currency. The failure of Jay Cooke, promoter
of the Northern Pacific R. R. was fallowed by many
disasters. The New York Stock Exchange was closed
for ten days, and the whole country suffered. Severe
depression resulted, and continued for several years. In
1 88 1 the crops were poor, and in 1882 the crisis in France
had a disturbing influence. The United States success-
fully resisted these adverse influences until 1884, when,
as we shall see later on, the Society was called upon to
weather a second financial tornado.
But to return to the Panic of 1873 • There were many
failures in quick succession among banks and business
firms, and so widespread were the losses that confidence
almost ceased to exist. Hardly any of the great financial
institutions were thought to be certainly safe. But the
strength of well-established and soundly conducted life
insurance companies became clearly manifest. The strain
upon other financial institutions brought into strong re-
lief the special advantages enjoyed by life insurance com-
panies during such periods of excitement and disaster.
Not one of the well-established companies was even
embarrassed. The market value of their assets declined,
but as they were in receipt of cash incomes in excess of
their disbursements it was not necessary for them to
sacrifice any of their investments.
A ship is known to be seaworthy only after it has
proved its ability to weather the storm; and those who
have entrusted their savings to the Equitable may gain
more confidence and satisfaction by noting the behavior
of the Society during such periods of stress and strain,
than, perhaps, in any other way.
54
6. A .V
IjkM..
i .. >.
A A
1
For several years after this panic the insurance com-
panies suffered. Many policies were surrendered and
only a limited amount of new business was secured. The
Outstanding Insurance of the various companies showed
in the aggregate a falling off, but there was no diminu-
tion in their financial strength. Some companies that had
never attained a safe footing and had not been prudently
managed disappeared ; but it is not probable that the panic
had much to do with these failures except possibly to
accelerate them. The Society, however, continued to
advance, but its progress was somewhat retarded.
Only once in its history has the Equitable Society been
a borrower. That was during the panic of 1873. Several
large loans were negotiated with the New York branches
of certain foreign banking institutions, the Society giv-
ing as collateral security United States Government
Bonds. But this money was not borrowed to protect the
Society. It was obtained to aid in relieving the financial
strain, by anticipating the pa)mient of death claims and
endowments, and by making bond and mortgage loans on
favorable terms to its customers.
The following extracts are from the President's Report
submitted to the directors on October 22d, 1873 •
"The recent financial convulsion, while not without its
temporary embarrassment to us as to all others, has served
to demonstrate the security of a properly managed life insur-
ance society as a depository for savings both for the rich and
for the poor.
"The directors of the Equitable may justly feel satisfaction
that in the midst of one of the most trying emergencies which
has ever threatened the stability of American commerce and
industry, our Society stands as a solid rock in the midst of
an angry sea, the bulwark and support of those who cling
to it."
It was not long after this that the Hon. O. W. Chap-
man, then Superintendent of the New York Insurance
57
Department, said, in reference to the administration of
life insurance companies :
"No matter how the subject be approached, that word man-
agement is the keystone of the arch; not simply in the mat-
ter of investment, the selection of agents and medical exam-
iners, or in office requirements, but in ever)rthing pertaining
to the company's whole administration."
FIFTEENTH ANNIVERSARY
The President in a report submitted to the Board on
July 23rd, 1874, said :
"For fifteen years the Society has advanced steadily. So
regular has been our progress and so uniform our success that
those who have not known of anxious watching and of unre-
mitting toil may have attributed most of our good fortune to
some happy accident. But you who know the care with which
every point has been weighed and every step has been taken
may justly feel proud in looking upon the Equitable as it
stands to-day, a monument of steady labor and well directed
energy. We began with a subscribed capital of $100,000. Our
statement now shows, in addition to this capital, $25,000,000
of cash assets.'*
DEATH OF THE FIRST PRESIDENT
William C. Alexander, the first President of the
Society, died on August 23rd, 1874.
In speaking of him subsequently Mr. Hyde said:
"It was a most fortunate thing that Mr. William C. Alex-
ander was chosen the first president of the Society; and al-
though he never pretended to assume its active business man-
agement, still by his great influence and extended acquaint-
ance throughout the country the interests of the Society were
forwarded in various ways to an extent which would not
have been possible under any other circumstances.
"I know of but two persons who united with me in
the belief that our enterprise would certainly be a perma-
58
nent success. My father, Mr. Henry H. Hyde, was en-
thusiastic from the beginning, being the one most familiar
with my project; but his confidence was due in part to
parental affection and was not wholly founded upon impar-
tial judgment. The other, who never faltered for an instant
and over whose mind no shadow ever rested, was the first
president of the Society, who, captivated by the brilliancy
of our aims, was unshaken in the belief that our fondest
hopes would in the end be realized. My great incentive at
that time, which influenced me to work day and night, was
to sustain their opinion and justify them in their belief."
H. B. HYDE ELECTED PRESIDENT
At a special meeting^ of the Board held on September
2nd, Henry B. Hyde was elected president, and James
W. Alexander, vice-president.
VICE-PRESIDENT ALEXANDER
James W. Alexander, grandson of Professor Archi-
bald Alexander of Princeton, and a nephew of the first
president, was born at Princeton in 1839. He was grad-
uated from Princeton College in i860, and subsequently
became a Trustee of the university. He was admitted
to the bar in the early sixties, becoming a member of a
prominent New York firm with a large practice. In
1866 he was induced by Mr. Hyde to abandon the prac-
tice of his profession and accept the position of secretary
of the Equitable Society. He was elected to that office
by the Board on August 13th of that year, when the
Equitable was only seven years old.
Eighteen years later, when the Society was twenty-five
years old, Mr. Hyde said :
"I believe Mr. Alexander to be as well qualified as I am
to take charge of the executive duties of the Society. He
understands the insurance business as well as any man
living."
61
Both Mr. Hyde and Mr. Alexander were eminently
popular with the men in the field. Mr. Hyde was recog-
nized as a masterful leader, and inspired the utmost con-
fidence and enthusiasm. The agents were always ready
to follow wherever he saw fit to lead. They admired his
daring, and knew that the Society's great reforms would
never have been introduced but for his nerve and en-
terprise. When the company was young he was always
accessible to every visitor, and when it became neces-
sary to erect some barriers between the chief executive
and the public, the agents knew that he would always
give them an immediate hearing, and if necessary put on
his hat and go out with them into the field to help them
in their work.
Their loyalty to Mr. Alexander was due chiefly to
their confidence in his wisdom and justice, and their ap-
preciation of his consideration and never failing sympa-
thy. Long before his election to the vice-presidency he
had earned a high reputation among insurance men, and
was recognized as an authority in all questions relating
to the principles and practice of life insurance. His
characteristics were in strong contrast with those of Mr.
Hyde, whose energy and zeal sometimes got him into
hot water with those who obstructed measures taken
for the advancement of the Society's interests. And
for many years, during which they were associated to-
gether, Mr. Alexander's patience and unfailing courtesy
were of great value in making the rough places smooth.
At a later date, when elected to the presidency, he in-
formed the field forces that the hardest duty he ever
had to perform was to decline to grant the favors asked
by agents ; and he assured them that no request made in
good faith would ever be refused by him except from a
stern sense of duty. The sincerity of this assertion was
instantly recognized. Consequently whenever he was
forced to render an adverse decision his ruling was ac-
62
J^eh^ua.44}^&Jlt'«^.aK^€CU^-^
cepted in good part. Chesterfield once said of Marl-
borough that he could decline a request with more grace
than most men would have shown in granting it, and
a similar remark has often been made regarding Mr.
Alexander.
Thus the president and vice-president, so unlike in
personal characteristics, complemented each other, and
worked harmoniously together. And to these two leaders
is due the credit of making the Equitable familiar
throughout insurance circles as "The Agents' Com-
pany."
While still Vice-President the whole burden of the
management of the Society fell upon Mr. Alexander's
shoulders more than once when President Hyde's health
gave way. On one of these occasions he served as acting-
president for nearly a year while Mr. Hyde was on a
tour round the world.
ADVANCE AFTER THE PANIC
The effect of the panic of 1873 did not wear off for
several years, but at length the general business outlook
began to improve and the Society, which had made sub-
stantial gains in spite of heavy weather, began to advance
rapidly under the vigorous management of President
Hyde. In illustration of this, the following paragraphs
from his Report to the Board, of April 26th, 1876, are
quoted :
"One has only to examine with care the extent of the oper-
ations of the Society in the past while in its formative period,
and then with the eye of fancy to look from these into the fu-
ture to bring before the mind's eye a view of benefits conferred
upon the public almost too vast to be comprehended, and an
influence exerted throughout the World which can scarcely
be estimated. ... It is my deliberate conviction, after
making all allowance for the hard times we are likely to en-
65
counter before another seventeen years shall have rolled
round, that our Assets will be over $100,000,000 and our
Surplus will, I hope, exceed $10,000,000."
This prediction, which was deliberately based on ultra
conservative estimates, was much more than fulfilled;
for seventeen years from that date the Society's Assets
were upwards of $150,000,000, and the Surplus was
more than three times the sum predicted.
EXTRACTS FROM SUBSEQUENT REPORTS
"That which a community demands, and must have in life
insurance is first of all absolute security, and if a company is
not conducted in such a manner as to give greater security
for money invested in it than is given in ordinary ways it is
but a delusion and a snare to the public.
"It should be conducted so as to afford greater protection
to its patrons than can be afforded in any other financial in-
stitution.
"The chief danger to a life insurance company exists
during the first ten or fifteen years. If it can survive this
period with a large business and an ample surplus, which
taken together are evidences of good management, it can if
conducted with skill and honesty experience little danger in
carrying out its contracts."
"The foundation of this company being secure, we shall
build with care and of the best material, not doubting that
the edifice when crowned will sustain all the hopes that its
friends have entertained for it."
66
EQUITABLE BUILDING, BOSTON
CHAPTER VII
WHEN TWENTY YEARS OLD
In 1879 the Society reached its twentieth year, and at
the July Meeting of the Board the President said :
"In taking a retrospect of the last twenty years I find that
thirty-six life insurance companies besides the Equitable were
organized in the State of New York between 1859 and 1879.
Twenty-eight of these thirty-six companies have gone out of
existence from various causes, and there now remain only
eight besides the Equitable. On the ist of January 1879 the
Assets of these eight companies combined was $22,853,000,
while the Assets of the Equitable, which was organized within
the same period, were $34,217,730, being 40% more than the
combined Assets of the eight companies referred to."
At the close of that year the 20th Annual Statement
shofwed Assets of $37,366,842, a Surplus of $5,550,395,
an Income of $8,347,081 and Outstanding Insurance of
$162,357,715.
But how can this prosperity of the Equitable, in such
strong contrast with the adversity of some of its com-
petitors, be explained? Many reasons could be given.
One is that the Society was creative — sought to adapt
life insurance to the needs of the people — was not afraid
of innovation — was ready to take the initiative — was a
leader in reform. The following examples illustrate this
fact. But before citing them a few words of explanation
may not be amiss.
Life insurance owes its early development to Great
Britain. The first company to charge premium rates
graded according to age, and based on a mortality table,
was the "Old Equitable" of London. Prior to that time
life insurance had been oflfered by individuals and cor-
porations on a very haphazard and unscientific basis, and
very little benefit had resulted to the general public. But
68
the "Old Equitable" set an example which was quickly
followed. Many companies were organized in England,
and the business extended rapidly; but on the Continent
little encouragement was given to life insurance and the
few companies that were organized advanced slowly,
while in the United States little business was transacted
either by American or foreign companies until a third of
the 19th century had elapsed. But, as we have seen,
when the Equitable was launched in 1859 ^^ came into
competition with a number of companies that had al-
ready become firmly established. These had all been pat-
terned after the English companies, and had slavishly
followed all their customs, originating nothing and taking
no action suggesting American enterprise or "Yankee
ingenuity."
For a time the Equitable followed in the footsteps of
these older companies. But its officers and directors had
aims which were soon to bear fruit, as the following
official utterance of the President, made when the So-
ciety was five years old, clearly indicates.
"In inaugurating the business of this Society; in entering
upon a new and untried field of enterprise, we followed for a
time in the beaten track of those who had preceded us.
Forms, customs, principles, habits, were all borrowed. But
guided by the experience of the past, and judging so far as
we might of the probable future by a calm and anxious
survey of the field before us, we have from time to time
deviated from the old track and struck out new paths, our
course at times proving startling to those who clung with
obduracy to old habits, forms, and opinions. . . . But to
remain stationary; to adhere blindly to old dogmas, except
when founded on the certainty of mathematical science,
would be as irrational as to require the full grown man to
wear the habiliments in which he had been clad in infancy."
This statement was in part prophetic, for the Society's
greatest reforms, which subsequently revolutionized the
69
business in many important particulars, had none of them
been announced at that time.
FIRST REFORM — A SIMPLIFIED POLICY
The policy-contract offered by the Equitable in the
beginning was neither more liberal nor less liberal than
that offered by its older competitors. In the Society's
first contract it is stipulated that if any representations
contained in the application "forming the basis of the
contract" shall be found in any respect untrue, the com-
pany "shall cease to be liable for the payment of the sum
insured or any part thereof, and the policy shall cease,
and all payments made thereon shall be forfeited to the
company."
No grace was then allowed in the payment of pre-
miums, and, in the event of death, thfe insurance was not
to fall due "until sixty days after a fully authenticated
claim had been filed with the company." Moreover, the
policy was to be "null, void and of no effect" if the In-
sured, without consent, passed beyond the settled limits
of the United States or Canada, or visited those parts of
the United States lying West of the looth degree of West
Longitude, or (during the summer months) those parts
lying South of the southern boundaries of Virginia and
Kentucky. No voyages "on the high seas" could be
taken without written sanction; a long list of employ-
ments were prohibited, and the policy was to be for-
feited "if the insured should die by his own hand, or by
the hands of justice, or in, or in consequence of, a duel,
or of the violation of any law."
If the policy was not longer than a modern contract it
was because it contained none of the special benefits and
"options" which the insuring public now demand as a
matter of course. No surrender values were allowed;
annual dividends were unknown, and only one mode of
settlement at maturity was provided for.
71
As time passed, the insurance contracts of the various
companies were liberalized in some directions, but in
many respects they became more complicated and more
exacting in their terms. After a company had met de-
feat in the courts its lawyers were very likely to suggest
the insertion of a new clause in the policy to protect the
company subsequently. Thus insurance contracts be-
came long, obscure, and technical legal instruments. An-
other evil followed: Some of the companies adopted the
practice of employing "adjusters'* who were paid a per-
centage of the money saved. This resulted in contests or
compromises in many cases where full payment ought to
have been made.
These tendencies did not influence the practice of the
Equitable. The Society made it a rule from the begin-
ning to pay every r.easonable claim promptly and in full,
and from time to time simplified and liberalized the
policy-contract. But this, the Society's first great reform,
did not culminate until the lessons taught by the famous
"Dwight Case" had convinced the officers that more
definite action was needed.
In the year 1878 Col. Walton Dwight, a resident of
Binghamton, New York^ insured his life in a number of
companies, including the Equitable. Shortly thereafter his
death was announced. The Equitable, whose claim was for
$50,000 (a very large risk in those days) and one other
company, paid their policies promptly and in full. Nine-
teen other companies refused to pay. A suit was brought
by the widow against one of them, and the case was
decided in her favor. An appeal was taken, and the de-
cision of the lower court was reversed. After that, some
of the companies paid, others compromised their claims,
the rest continued the contest, and the case was in the
courts for a number of years.
The effect produced on the public mind by this and
other cases convinced the officers of the Equitable that,
72
BERLIN BUILDING
notwithstanding the Society's liberality and promptness,
its reputation would suffer for the sins of others if def-
inite action should be further delayed ; so on June 27th,
1879, the Society announced that thereafter all policies,
old as well as new, would become incontestable three
years from their date of issue.
This action was bitterly opposed by the other com-
panies for a time, but they were soon constrained to fol-
low the Equitable's example, and to-day this practice in-
augurated and introduced voluntarily by the Equitable
and adopted reluctantly by its competitors, has been em-
bodied in the insurance laws of the various States, and
must be followed by all companies.
The principle involved in snaking a contract incontest-
able was not altogether new, but the Equitable was the
first life insurance company in the United States to frame
its contracts so as to make them genuinely incontestable
after three years. It was also the first company to reduce
the period to two years, and took the lead in still further
reducing it to one year.*
All Equitable policies now became incontestable one
year from their date of issue. And here the Society
rests. To make a policy incontestable from the start
would invite fraud, and would give the company no op-
portunity to correct errors. The experiment has been
tried by more than one company only to be abandoned.
It is proper to note here that w^henever a death occurs
before a policy has completed its first year the Society
pays the claim as promptly as would be the case if the
contract had become incontestable, provided no attempt
has been made to defraud the company. The right to
delay payment is only exercised in cases where some ir-
regularity is manifest.
•The period was reduced to two years in i8S6 and to one year in
1892.
74
BUILDING IN V
SECOND REFORM — AN IMPROVED POLICY
The Society's second important reform was announced
before the first had reached the culminating point de-
scribed above.
Near the close of the year 1868 the Society announced
a new policy. This policy was a "deferred-dividend" con-
tract, and embodied several altogether novel features ; but
the deferring of dividends attracted so much notice that
the new characteristics received very little attention.
And even now, the significance of the action then taken
by the Society is not fully recognized by the public at
large.
This policy provided, in the first place, that the sur-
plus earned should be accumulated for a term of years
and then divided. But there was nothing novel in that:
the new characteristics were the following :
1. It was agreed that in each case the dividend, when
paid, should not be for an arbitrary amount, but should
be the policy's full share of the surplus earned. So lib-
eral a guarantee had never before been made.
2. It was agreed that when this dividend fell due, the
Insured might terminate the policy and withdraw the
entire "reserve," as well as his share of the surplus. And
this was not confined to endofwment contracts but was
extended to "ordinary life" policies. Thus the owner
was enabled to withdraw his entire equity in the
company during his lifetime and terminate his relations
with it, without penalty or sacrifice. This was an un-
heard of innovation. The companies had begun by that
time to grant surrender values, but under no circum-
stances had more than a part of the reserve been offered,
either in cash or in paid-up insurance, under "ordinary
life" policies thus terminated.
3. It was agreed that at the period of distribution the
policyholder should be given the choice of a variety of
"options" ; such as the contmuance of the original policy,
76
or the conversion of the policy into paid-up insurance, or
the substitution of a life annuity for the policy, or the
termination of the contract and the withdrawal of its
value in cash.*
These innovations were violently attacked by the com-
petitors of the Society; but, one by one, the prominent
companies followed its example. And it is an undoubted
fact that the elasticity and adaptability thus given to in-
surance contracts have h^d much to do with the rapid
djevelopment of life insurance throughout the United
States since then.
It may not be uninteresting at this point to quote a few
of the reasons given at that time for the introduction of
this new policy.
"Three criticisms have frequently been made regarding life
insurance as commonly practiced:
"i. Heavy profits are realized by the estates of those
policyholders who die early while the long-lived pay more
and receive less in proportion to their payments.
"2. An insurance policy upon the "ordinary life" plan
(which is the cheapest and therefore the only available
form for the masses) cannot be terminated without sac-
rifice until after the death of the Insured.
"3. Many persons, for trivial causes cease to pay their
premiums ; thus injuring the company, their fellow mem-
bers and their families.
"To remove even the slightest ground for such objections,
the Equitable Life Assurance Society has introduced a new
policy which offers as a reward for persistency, a dividend
which those who die or abandon their insurance prematurely
fail to obtain.
"This policy, even when taken on the cheapest form (pro-
viding for the payment of premiums for life) gives the In-
sured, at the end of a term of years, the choice of (a) con-
*This policy has been modified from time to time. All the features
referred to above were not included in the original form.
78
MELBOURNE BVILDIHC
tinuing the insurance, or (b) retiring on advantageous terms,
or (c) converting the insurance into an annuity."
Deferred-dividend policies are no longer issued, but
multitudes of such policies, issued in the past by the
prominent companies, are still in force and are gradually
maturing. No better policies exist, and they increase in
value as they grow older.
The practice of deferring the payment of dividends has
recently been criticised in certain quarters, but these
criticisms have been due largely to misapprehension.
It is true that dividends have been less than were
expected in the beginning, and certain critics have
jumped to the conclusion that this has been due to
m.ismanagement. As a matter of fact, the decline has
been due to natural causes outside of, and altogether be-
yond the control of, the companies ; such as the enormous
increase in taxes (which necessarily reduce the sur-
plus or dividend-fund), the reduction in interest on
investments, and the introduction into modern policy-con-
tracts of privileges and benefits which cost money to grant
but for which the companies have made no charge. Not-
withstanding this the returns have been favorable, al-
though less favorable than was hoped when the expecta-
tions for the future were based on the large profits real-
ized in the early days. By misinterpreting these facts a
certain class of agents have sought to profit by the cre-
dulity of the holders of deferred-dividend policies. But
when the owners have been induced to give up old con-
tracts of this character to take new policies of some other
kind, they have as a rule sacrificed their best interests and
sustained unnecessary losses. It is axiomatic that all
insurance on the "life" or "endowment" form, issued by
any responsible company (without regard to the manner
in which dividends are paid) increases in value as it
grows older, and cannot be exchanged for new insur-
ance without loss on the one hand and increased cost on
80
the other. Hence the older a policy grows the more
tenaciously should the owner hold fast to it if it is in a
responsible company.
While it is true that there have been differences of
opinion regarding the deferring of dividends, there is
but one opinion about the value of the guarantees and
"options," which first gave flexibility and adaptability to
insurance contracts; and which were originally intro-
duced by the Society into these deferred dividend-poli-
cies.
THIRD REFORM — IMMEDIATE PAYMENT
The Society's third great reform was announced on
January ist, 1881, and created a greater sensation than
those which had preceded it.
It was the offer to pay every incontestable policy im-
mediately upon receipt of due proof of the death of the
Insured. Shortly thereafter this offer was extended to
all policies — whether incontestable or not. Since then
the Society has paid all death claims practically on de-
mand: that is to say as soon as adequate claim papers are
received the Society's check is drawn and delivered or
forwarded to the beneficiary.
The novelty of this innovation was startling. Nothing
of the kind had before been dreamed of.
At first the reform was criticised. Those who were
ignorant of the years of preparation, and the adaptation
of means to the desired end, regarded the Society's course
as reckless; and competing companies looked askance at
the reform, or attacked it. But, as in the case of
previous innovations, opposition was soon broken down.
The companies, one by one, were forced to follow the
Equitable 's example ; and to-day it is the general practice
of all companies to pay their claims promptly. But no
other company is able to exhibit a record such as that of
the Equitable, whose claims are paid almost like sight-
81
drafts. There are occasional delays, but only in cases
where some irregularity appears, or where claimants are
themselves careless or dilatory.
During the last five years the Society's record has, on
the average, been as follows: Out of every loo death
claims paid in the United States and Canada 97 have been
paid within one day after the receipt of adequate "proofs
of death." The following table gives the record in per-
centages for each year separately:
1904 96%
1905 98%
1906 97%
1907 97%
1908 97%
To those who are only familiar with present methods
the full force of this revolutionary movement will not be
apparent. Its full significance is only seen when the
prompt service now rendered by insurance companies in
general is contrasted with the evils and irritating delays
of former years.
One of the strongest arguments in favor of life in-
surance has always been that a policy is designed to fur-
nish ready trvoney upon the death of the breadwinner,
for the protection of the estate and the support of the
family. But in old times this was an advantage in theory
only. In England, several months — often a full year —
elapsed before a claim was paid. When the Equitable
came upon the field some improvement had been made.
Some of the policies of the American companies con-
tained by that time a clause under which claims were to
be paid two months after all the papers in the case had
been filed and "accepted." But "acceptance" was often
long delayed. No effort was made by the companies to
pay promptly, and some of them saved a great deal in
interest on money thus withheld.
82
au
If it be true that, "He pays twice who pays quickly,"
then the Equitable has paid to its beneficiaries double the
sum represented by the figures measuring its disburse-
ments. And when we remember that it is ready money
that enables the executor to protect the assets of an
estate; and that it is immediately after the death of the
husband and father that the widow and her orphan chil-
dren need money for pressing wants, it will be seen that
this Equitable reform was one of the greatest practical
blessings ever applied to the practice of life insurance.
The development of life insurance owes more, per-
haps, to these three reforms than to all other improve-
ments put together. They were introduced voluntarily
by the Society, and adopted slowly and reluctantly by its
competitors. But (excepting the deferring of dividends)
all have now been incorporated, and made mandatory,
in the insurance laws of this and other States. And
they have been dwelt upon here because they illustrate
the character of the Equitable, and indicate that it de-
serves the public confidence which it has won by these
and other innovations, introduced for the protection and
benefit of its members.
FROM 1880 TO 1884
During this period of evolution the older and stronger
companies continued to prosper, while the companies that
had not succeeded in establishing themselves on a firm
foundation continued to disappear. Commenting on this,
the President said to the Board on the 28th of January,
1880:
"We may now hope that the business of life insurance has
settled down into its natural channel and that the speculative
era through which we have passed, and in which a swarm
of life insurance companies were organized, will not be re-
peated; as the establishment of a life insurance company on
a successful basis must now be regarded by our capitalists
as a most perilous undertaking. This business is preeminently
83
one requiring expert talent, and the failures that have taken
place in it may be attributed chiefly to the fact that the man-
agers although in many cases men of good business experi-
ence had little or no experience in this department."
President Garfield was assassinated on July 2nd, 1881,
but as it was believed at first that he would recover, and
as death did not intervene until two months later, the
panic which threatened was averted.
The Society prospered greatly during the early
Eighties, and the other companies benefited by the im-
provements in the practice of life insurance introduced
by the Society; but as the Equitable had taken the lead
it secured the chief advantage.
The next two years were prosperous, but 1884 was
characterized by great financial depression. It was a
year of strikes and many failures. Notwithstanding this
the life insurance companies continued to advance.
CHAPTER VIII
SECOND QUARTER CENTURY
During the year 1884 the Society celebrated its 25th
Birthday; and at the July Meeting of the Board the
President read a long and interesting report from which
we quote the following:
"... The Society has passed the period of childhood and
youth and the dangers incident thereto, and now may be con-
sidered as full grown and equipped for the proper discharge
of the duties for which it was created. . . . There are some
here to-day who will undoubtedly survive the next twenty-
five years, and meet to read the history of the first half cen-
tury of the Equitable. Let us hope that the results of the
twenty-five years upon which we have just entered will be as
satisfactory as those presented to you now, and that the
officers and directors then in charge of the institution will be
men wisely chosen whose fidelity and skill will be com-
mensurate with the great trust committed to their care."
The manner in which this hope has been realized the
concluding chapters of this history will show.
The following items from the 25th Annual Statement
show the Society's position on December 31, 1884: As-
sets $58,161,926, Surplus $10,483,617, Income $15,003-
480, Outstanding Insurance $309,409,171.
A SECOND PANIC
The second severe panic encountered by the Society
culminated during this anniversary year. It was pre-
cipitated by the failure of Grant and Ward, followed by
that of A. S. Hatch, president of the Stock Exchange,
and that of many other bankers and brokers. The Marine
Bank and the Metropolitan Bank closed their doors, and
many other financial institutions were ruined or seriously
crippled. But, "It's an ill wind that blows nobody any
good," and the Society made a number of good invest-
ments at very low figures, one of them of extraordinary
85
value. This was the building crwned and occupied by the
Metropolitan Bank, on the corner of Broadway and Pine
Street adjoining the Equitable's property; for the inter-
vening lots had been acquired, and the enlargement of
the Equitable Building was already projected.*
During that trying period the Society met the diffi-
culties that confronted it with the same efficiency that
had characterized its management during the panic of
1873; and while market values were rapidly tumbling,
the fact that the insurance offered by strong life insur-
ance companies is always unshrinkable — worth at such
times, as at all others, 100 cents on the dollar — was made
clearly manifest.
The depression which followed the panic of 1884
reached its lowest point in 1886.
On May ist, 1887, the Society took possession of the
new rooms added to its offices in the enlarged building,
which was completed during the following year.
During this period the Society made remarkable prog-
ress, but we can touch only upon incidents of importance,
in order that the Society as it stands to-day may be fit-
tingly depicted.
«
WHEN THIRTY YEARS OLD
The Society's Thirtieth Anniversary occurred in 1889,
and in September of that year the President said to the
directors :
"Thirty years ago we had upwards of 600 thousand dollars
of insurance in force; to-day we have upwards of 600 mil-
lions,
*In this connection President Hyde made the following prediction:
"The opportunity of purchasing the Metropolitan Bank Building at a
reasonable price was one not to be lost; for such an opportunity only
presented itself in consequence of an unexpected and unforseen combina-
tion of circumstances. The wisdom and full importance of this action
can only be thoroughly appreciated by looking into the future, and con-
templating the further growth of the Society, and the continuing exten-
sion of its business."
86
"Thirty years ago we held upwards of loo thousand dollars
of Assets; to-day we hold upwards of loo millions.
"Then we had little or no surplus; now we have between
20 and 25 millions. Then not one of our policies had matured
and not a single death claim had been paid; now we can
point to many thousands of beneficiaries who have been re-
lieved from want."
Later in the year he said:
"The Equitable has succeeded not because it has been so
guarded and restricted from without that it has been forced
to deal fairly with its patrons, but because it has sought to
give the utmost security, to confer the largest benefits, and to
sweep aside every cumbersome restriction. It is, therefore,
known as the originator of every important improvement in
the business."
And in commenting on the results achieved he said to
the agents :
"In thus extending the beneficent influence of life insur-
ance the agents of this Society have been eminently efficient
and successful. But this is far from being all the good accom-
plished by the Equitable, for the influence of its example and
the success attained through the reforms introduced by it
have stimulated other companies, and imitation of the plans
and methods of the Equitable have been found by them to be
an essential condition to success. Thus to the results achieved
by the Equitable directly is to be added the influence which it
has exerted indirectly upon life insurance at home and
abroad."
THE DEPRESSION OF 189O AND THE PANIC OF 1893
Another period of financial disturbance was encoun-
tered in 1890. The stringency in the money market be-
came so alarming that the Government was forced to
purchase bonds and to anticipate the payment of interest
in order to furnish relief. Late in the year the report
that a great English banking house was in financial diflS-
87
culties created alarm on both sides of the Atlantic and
resulted in serious financial disturbances and heavy busi-
ness depression which lasted during the two following
years and culminated in the memorable panic of 1893.
During this panic the Reading Railroad was seriously
embarrassed; the Cordage Trust collapsed; thirteen
Stock Exchange houses failed, and there were fifteen
thousand commercial failures.
Times were hard, but nevertheless the Equitable con-
tinued to advance, showing a steady increase in business
and financial strength. This is illustrated by the follow-
ing extract:
"The Society presents as the result of its transactions for
1893 advancement in every point affecting growth and ma-
terial prosperity, and this during a period of commercial
depression more severe than has been experienced within this
generation — a period of such general stagnation of business
and shrinkage in the valuations of all securities that only
those pursuing the most conservative methods have passed
through it unscathed."
As soon as the influence of the Panic of 1893 had worn
off, a long period of financial prosperity ensued, and the
Society's growth in magnitude and strength was con-
tinuous.
WHEN FORTY YEARS OLD
In 1899 the Society completed its fortieth year, and
celebrated the anniversary in July by holding a conven-
tion which was attended by five hundred of its agents.
The records of this convention are interesting, and have
already been published. The meetings held were char-
acterized by a deepseated spirit of enthusiasm; tem-
pered, however, by a feeling of profound regret; for
Henry B. Hyde, the founder of the Society, had died
only three months before.
88
DEATH OF PRESIDENT HYDE
Mr. Hyde's death occurred on May 2nd, 1899; and at
a special meeting of the Board, held on May loth, James
W. Alexander was elected president, and James H. Hyde,
son of the founder, vice-president.
No attempt has been made in these pages to give even
an outline of the career of Henry B. Hyde or of the
services rendered by him to the Equitable Society, but it
is fitting that the following testimony should be recorded
here. The first extract is from a series of resolutions
adopted by the Board of Directors immediately after his
death :
"Mr. Hyde was both conservative and adventurous. He
formed his plans with patience and care. He provided for
every possible contingency within the ken of human fore-
sight. Like every conqueror, he never doubted nor turned
back. He moved upon the lines laid out with such speed and
boldness as often to alarm his friends and associates. But
the plans which might have failed in weaker hands material-
ized as they had been arranged by this masterful genius. His
quickness in grasping a situation and his resourcefulness in
meeting it were invaluable in time of panic and financial re-
vulsions, of which so many and such disastrous ones hap-
pened during his career. Other companies might be crippled
or go under, but the Equitable always came out the richer.
He possessed the faculty of great leadership, the ability to
select the best men for his cabinet and as captains. His
judgment was faultless in choosing those who must be en-
trusted with great responsibilities. He was merciless to
failure, but generous to extravagance in recognition of signal
services. He bound able men to him and his company by a
personal loyalty and devotion which won from them far more
energetic and concentrated effort than money could buy.
Though in the prime of life and powers, and with a future
as full of possibilities as his past when he died, yet he was
already the foremost man of his profession, and the creator
of the most remarkably successful financial institution in the
world."
89
The following are from a series of resolutions adopted
by the agents of the Society:
"We need not refer to the masterly ability of Henry B.
Hyde, for the Equitable Society stands a living monument to
his memory.
"It is fitting, however, that we should record some sense of
the loss we have sustained by the death of one who justly
earned the name 'of friend of the agents, and who always
strove for their success. His ripe experience and constant
helpfulness in our ranks proved his claim to the title. Rec-
ognized as the most eminent of life insurance workers, he al-
ways kept in touch with us, even in our most remote fields of
labor. His personal magnetism, precept, and example, have
spurred many a disheartened agent to success."
The chief executive officers of four of the leading
companies gave the following testimony :
The president of the Mutual Life Insurance Company
said of the Society and of Mr. Hyde:
"This company in the short space of forty years, has be-
come one of the noblest monuments of wisdom, perseverance,
and permanent usefulness which modern civilization pos-
sesses. To the phosphorescent genius of Henry Baldwin
Hyde is due not only its conception, not only the unremitting,
intelligent, and impulsive labor with which it was established,
but the constant supervision of its affairs throughout its
history.
"Always surprising by the novelty of his methods, and in-
domitable in the vigor and mastery with which they were
prosecuted, his influence has been felt upon the business at
large in a degree second to none, and the vast changes which
its entire organization and management have undergone dur-
ing the last generation have resulted, in a degree which few
as yet appreciate, from innovations made by him.*'
The president of the New York Life Insurance Com-
pany said :
90
"By the standards used in judging men in this life, Henry
B. Hyde was without a peer in the profession which he hon-
ored by his unsurpassed ability."
The president of the Metropolitan said :
"He was a just antagonist, asking no odds beyond *fair
play/ I never heard from him a mean word about a rival.
"Verily, the man who could be the main instrumentality in
a creative work like this must have been of noble stature.
These things come not of themselves. They are wrought out
patiently and painfully. They are the products of deep
thought and heroic action. Mr. Hyde always did his own
thinking in the last analysis. He would seek advice, and he
always followed what a friend gave him — provided he agreed
with the friend ! But his course marked out, he hewed to the
line. He never faltered; he never feared. I rarely knew a
man with more sublime faith in himself. All his studying
and counseling and weighing and doubting were done before-
hand, and then, the purpose once formed, went on to frui-
tion. . . . He was an incarnate automobile; he could
charge himself from within himself, independent of exterior
forces. He needed no power-house ; he was his own dynamo.
His capacity for work was a marvel. He was a veritable gal-
vanic battery in breeches. ... I have not infrequently
been told of his practical help to one or another of his agents,
who, coming across a hard case, would make known the facts
to Mr. Hyde. Thereupon they would go together and Mr.
Hyde's persuasive powers would often secure the applica-
tion. . . .
"Surely one may as well try to stay Niagara as to thwart
the power of a character thus tireless in its industry, cease-
less in its energy, and boundless in its determination."
And the president of the Travellers said :
"Easily the foremost leader in the great work to which he
unreservedly devoted his life, he followed his own convic-
tions with a zeal and energy which were a constant challenge
to preexisting forces and methods. The anxiety of his friends
and the predictions of his competitors were constantly quick-
91
ened by the boldness of his assumptions and the rapidity of
his movements, until an abounding success compelled his
most formidable opponents to adopt similar methods.
"Everything which directly or indirectly touched his com-
pany with a rough hand at any point found the chief in
readiness with a vigorous and masterful defense. He seized
with a gigantic grasp large undertakings before which timid
men would quail, and he was fearless and prompt in their
execution.*'
President McKinley was shot on September 6th, 1901,
while attending the World's Fair at Buffalo, and died
eight days later. The tragedy caused profound agitation,
and again a panic was feared, but the Nation was in a
strong and prosperous condition, and confidence was soon
restored. Theodore Roosevelt assumed the presidential
chair, and the Society's steady advancement in financial
strength and business prosperity continued without in-
terruption during the three following years.
It may be thought that too much emphasis has here
been laid on the periods of financial disturbance en-
countered by the Society in its progress from the weak-
ness of infancy to the strength of maturity ; but the value
of such tests cannot be overestimated. They reveal not
only the fibre of the Society, but clearly demonstrate the
truth that a well established life insurance company with
an adequate surplus is the safest and best of depositories
for the savings of the people. And a necessary corollary
from this is that although insurance companies that are
weak or founded on unscientific principles, may succeed
in fufilling their obligations in prosperous times, the
strongest company is none too good during periods of
financial disaster when banks, trust companies, and busi-
ness enterprises are so often overwhelmed.
92
CHAPTER IX
RENAISSANCE OF LIFE INSURANCE
When a comprehensive history of American Life In-
surance is written a great deal of dramatic interest will
be crowded into the period covered by the first two years
of President Roosevelt's Second Administration (1905-6).
And it will then be seen that the history of life insurance
during that period was a mere episode in the broader
history of American commerce and finance. Here again
more interest will be centered upon the men identified
with the enterprises of the day, than upon the great or-
ganizations developed by them. But space is lacking here
to trace the progress of life insurance in general, or even
the details of the Equitable's history: we must be con-
tent with the briefest record of salient points.
It so happened that at that time the management of
great corporations of every kind had fallen under a tor-
rent of criticism, and at length attention was turned to
the great life insurance companies. This led to the ap-
pointment by the New York Legislature of an investigat-
ing committee composed of members of the Senate and
Assembly. This committee was charged with the duty
of examining the companies, studying life insurance
methods, and offering amendments to the insurance laws
of the State.
If this committee had not been restricted to an exam-
ination of the insurance companies and their administra-
tion, it would have become apparent that the evils com-
plained of were not peculiar to life insurance. On the
contrary, it would have been seen that most of them had
originated in financial and legislative circles, had ex-
tended to railroad corporations and industrial combina-
tions, and had finally involved insurance companies. But
as the committee was forced to abandon any line of in-
vestigation as soon as it passed outside the life insurance
93
field, many of the facts developed were misinterpreted for
a time by those who failed to look beneath the surface.
Moreover, this misapprehension was intensified by sen-
sational and extravagant articles published in certain of
the newspapers. The effect was unfortunate ; the policy-
holders of many strong companies became apprehensive,
and great numbers who were timid or misinformed sur-
rendered their policies, to the injury of the companies and
to their own serious detriment.
It cannot be denied that there had been grounds for
criticism : the race for business had led to extravagance ;
and to offset this extravagance some of the companies
had been tempted to make investmjents that were not of a
strictly conservative character. As a rule such invest-
ments had yielded liberal profits, thus increasing the re-
sources of these companies, but it was seen that they
were in some instances dangerous in their tendencies, and
might ultimately bring loss instead of gain. The wis-
dom of arresting such tendencies was, therefore, obvious.
But aside from considerations such as these, the investi-
gation showed that the insurance business of these com-
panies had been conducted on sound principles. Ade-
quate premium rates had been maintained; risks had
been selected with care ; the mortality experienced
had been normal ; maturing policies had been promptly
paid. In short, when the investigation was over, it
was seen that these great companies were not only
solvent but conspicuously prosperous, with large ac-
cumulations of surplus and with assets invested for the
most part in gilt-edged securities and first mortgages on
real-estate.
But we must revert to the history of the Society :
At a meeting of the Board held on February 8th, 1905,
it was proposed to extend to policyholders the right to
vote for directors. This led to discussion, and the situa-
94
tion was complicated by the opposition of certain minority
stockholders outside the company who had nothing to do
with its management.
Meanwhile the people insured in the various companies
all over the country had become apprehensive in conse-
quence of the inflammatory articles which appeared from
day to day in the newspapers. At length the flames thus
fanned gathered so much heat that a panic seemed im-
minent.
A number of the directors of the Equitable (as well as
those of other companies) resigned, and the outlook be-
came perplexing and discouraging. But in the case of
the Equitable a solution was soon found : a majority of
the capital of the Society was purchased by Mr. Thos.
F. Ryan, and immediately assigned to three trustees, Ex-
President Grover Qeveland, Judge Morgan J. O'Brien,
and Mr. George Westinghouse. These trustees were
charged with the duty of voting the stock in the interests
of policyholders, and of nominating representative policy-
holders to fill the vacancies in the Board. Bv this action
the threatened panic was averted. And the chair-
man of the Legislative Committee expressed the opinion
that a g'reat public service had been rendered by Mr.
Ryan, who had testified before the committee as follows:
"I had never had any connection with the three big insur-
ance companies except as a policyholder in each. I felt free
to act . . . This seemed to me to be a thing worth doing
. . . I determined never to exercise the voting power for
the purpose of electing directors for the company or for any
other purpose, and that I would select trustees of such high
character that their motives could not be questioned . . .
I have transferred the stock to these trustees. I have no
control over it. I looked upon the transaction for the good
of the community, and for the policyholders."
Mr. Cleveland's selfsacrifice and public spirit in as-
suming the grave responsibilities of a trusteeship under
95
the conditions then prevailing, and the noble work
which he subsequently did for the cause of life insurance,
fittingly crowned a long life of public service.
Concurrently with the appointment of these trustees
the Society created a new office — that of "Chairman of
the Board" — and on June 9th, 1905, Paul Morton was
chosen to fill that office, and was also elected a director.
Mr. Morton, who had gained a national reputation for
energy and executive ability in the management of great
railroad enterprizes, and had shown conspicuous efficiency
as Secretary of the Navy, had just resigned from Presi-
dent Roosevelt's cabinet.
Other directors, and several of the officers of the So-
ciety, including the president and vice-president, re-
signed ; and the Chairman of the Board was given a free
hand to reorganize the Company, and introduce such re-
forms and improvements in administration as were seen
to be needed.
On July 19th, 1905, William A Day, who had for
several years been '* Assistant to the Attorney General
of the United States,'* resigned that position to accept
the office of Comptroller of the Society, (succeeding
Thomas D. Jordan, since deceased). On March 31,
1906, he was elected Vice-President; and, on October
31, 1907, a director.
Immediately upon his appointment Mr. Morton brought
into the office two independent firms of public account-
ants who were instructed to make an exhaustive exam-
ination and report their findings. In his letter of ap-
pointment Mr. Morton said to these accountants:
"I want to know the exact condition of the Society. With
that end in view you will please make, jointly, an examina-
tion of the accounts of the Society. You will have access to
all books, papers and records.
96
-^.
^^^/-~
^
"I desire that your report should be as complete and as
exhaustive as possible."
He charged them to pay particular attention to the
ascertainment of facts upon many subjects, including the
following :
"The Society's annual expenses, including legal ex-
penses, advertising expenses, agency expenses, and cost of
securing business.
"The real estate investments of the company, including
in the case of each parcel the value at which it is carried
upon the books of the Society; the income it yields, and
the fair valuation of the property, whether above or below
the value at which it is carried upon the books of the
Society. (If necessary real estate experts may be em-
ployed in ascertaining the value and income of the real
estate, subject, of course, to my approval as to men and
terms.)
"The other investments of the Society ; their character
and the circumstances under which they have been made.
"The Society's surplus and the manner in which it is
carried upon the books of the Society.
"The methods of keeping the Society's accounts, and
the respects in which its accounting may be improved."
To this he added :
"The foregoing are not intended to limit the scope of
your inquiries which should be as broad as may be neces-
sary in order to ascertain the precise condition of the
affairs of the Society. I shall from time to time desig-
nate other subjects which seem to call for special investi-
gation . . .
"I suggest that each one of your firms place in charge
of this work one particular man with whom I may confer
from time to time."
This examination extended over a period of many
months, and has been characterized as the most search-
ing and minute examination ever made of a life insur-
ance company. The report covered every department of
the Society's business, and filled a large printed volume.
99
Every fiepartmcnt was inrcstigatei crcry investment
was scarching!y cxamfnetL and every asset was reap-
praf*erl on a rigidly conservative basis.
Sach an examination was necessarilv expensive, bat
it was worth far more than its cost. While it revealed
the financial strength and prosperous condition of the
Society more conspicuously than could have been secured
by any other means, it also suggested developments and
innovations- And measures were promptly taken to
effect improvements, increase earnings, and reduce ex-
penses. The various departments of the c^Bce were re-
organized; a modem system of accounting was intro-
duced ; the auditor's department was given new efficiency,
and the By-Laws were amended, introducing many new
safeguards, including a thorough readjustment of the
treasurer's department under which all financial trans-
actions are now protected by a new system of checks and
counterchecks.
Meanwhile Mr. Qeveland and his co-trustees had
opened communication with the policyholders through-
out the Gauntry, asking them to nominate representa-
tive policyholders to serve as directors. In acting upon
these nominations the trustees sought as far as possible
to select policyholders at central points throug'hout the
Gauntry.* Representative men, thus endorsed by their
fellow policyholders, were nominated by the trustees and
were duly elected members of the Board, which thus be-
came substantially a body of policyholder-directors.§
On July 26th Mr. Morton resigned the office of Chair-
man of the Board and was elected President ; whereupon
the office of chairman of the board, having served its pur-
pose, was abolished.
* Subject to the charter provision that a majority of the Board should
be residents of New York.
|See list of present Board of Directors, page 124.
100
• • • •
About a year after the appointment of the trustees;
namely on May 22d, 1906, Mr. Cleveland called attention
to the fact that the obstacles to the adoption of an
amended charter had been swept away by the new In-
surance Laws ; and in a letter to the President said :
"The Trustees have thus far acted upon the theory that
until a change in the law permitted an amendment of the
Charter, so that a majority of the directors could be elected
directly by the policyholders, they would provide the nearest
possible substitute therefor by bringing about the election of
a sufficient number of policyholders to give to the policyhold-
ers a majority of the entire Board through the action of the
Trustees, after such consultation with the policyholders at
large as was possible."
To this he added a recommendation that, "the Board
should proceed at once to adopt an amended charter."
Action was taken accordingly. An amended charter was
adopted,* filed, and approved by the Superintendent of
the Insurance Department. This Charter, under which
the Society is now acting, gives the policyholders the
right to vote for twenty-eight directors out of a total of
fifty-two, while the remaining twenty-four are nomi-
nated by the Trustees. But these twenty-four are also in
eflfect policyholder-directors, for the Trust Agreement
provides that these twenty-four shall be "lawfully eligible
persons elected by the Trustees in their sole discretion."
And, as we have seen, it has been the aim of the Trustees
to nominate representative policyholders to these offices
in all cases.
ASSOCIATION OF PRESIDENTS
In December, 1906, President Morton addressed a let-
ter to the presidents of all the prominent life insurance
companies in the United States, suggesting an organiza-
tion for the protection of life insurance interests. This
*0n June 20th, 1906.
101
proposal met with instant favor, and resulted in the or-
ganization of the Association of Life Insurance Presi-
dents established for the following purposes:
"To promote the welfare of policyholders.
To advance the interests of life insurance.
To promote economy and reduce expenses
in matters of general administration.
"To consider measures introduced in legislative bodies,
with a view to ascertaining and publicly presenting the
grounds which may exist for their adoption or rejection."
At a meeting of this Association, held on January 31st,
1907, it was announced that Mr. Cleveland had con-
sented to accept the position of chairman and counsel;
and in establishing and extending the usefulness of this
organization he has rendered services for which those
who are interested in the future development of Amer-
ican life insurance have every reason to be g'rateful.
At the first annual meeting of the Association, held
on December 6th, 1907, Mr. Cleveland said:
"The subject of life insurance in the United States presents
features of development and evolution which constitute it
one of the greatest wonders of our national advance-
ment.
"You who manage life insurance companies cannot afford
to risk weakness in a single one of its threads. Their disin-
tegration through breaches of good faith, through broken
promises or through delusive misrepresentation, means a loss
of strength which no actuarial mystery or managerial calcu-
lation can repair. ...
"It is unfortunate that this business phase of life insurance
management is not as well and as universally understood as
its more sentimental elements. It means steady, careful
work, free from all show or glitter; and yet without it, every
sentimental flower of life insurance would quickly fade, and
its structure of safety and defense would fall of its own
weight.'
a
102
CHAPTER X
1906, 1907, AND 1908
While the administration of the Society's affairs was
thus being reviewed and strengthened, general condi-
tions were improving. The Legislative Committee had
made its report, and the laws had been revised. Never-
theless, the agents of the various companies still found
it hard to write insurance. Sensational articles con-
BQUITABLE B
tinned to appear in certain of the papers ; the investiga-
tion of the Legislative Committee had revealed weakness
in two of the smaller companies ; the apprehension of the
public was by no means fully allayed ; and many agents,
seeing little prospect of immediate success, sought em-
ployment in other directions.
• Some of the new laws went into operation in 1906;
the rest on January ist, 1907. No one could tell at first
what effect they would have on the practice of life in-
surance, or on the agents' work, and an unsettled condi-
tion in the general business of the country increased the
difficulties of the situation. Notwithstanding this, the
outlook was more encouraging than it had been for sev-
eral years; for many genuine reforms had been intro-
duced ; more economical methods had been adopted ; and
the public, educated by the attention that had been
directed to the subject of life insurance, were found to
have acquired a more intelligent appreciation of its
merits, and a more enlightened desire to benefit by its
protection.
A distinct improvement was manifested during the
latter part of the year, and 1907 opened more auspiciously.
On January ist, 1907, old policy forms were aban-
doned, and "standard" contracts endorsed by the State,
were introduced. And this in itself was instrumental in
helping to restore public confidence in the institution of
life insurance. But the progress made by the agents
was still somewhat retarded, as they found it necessary
to adapt themselves to unfamiliar laws and altogether
new conditions. Moreover, towards the close of the year,
irregularities in the management of a group of banks,
and great stringency in the money market, created wide-
spread apprehension. Runs on prominent trust com-
panies and banks followed; the Knickerbocker Trust
Company was forced to close its doors temporarily, and
a number of failures ensued.
104
Those who had not seen the great panics of 1873 and
1893 called this the "Panic of 1907." And it really de-
served the title, although tlie crisis that threatened was
averted, and recovery was rapid. Nevertheless, values
were seriously affected, and it became almost impossible
to borrow money on the best securities, even at exorbitant
rates of interest.
Again the Society did public service, furnishing finan-
cial relief to thousands of people throughout the country,
by making loans to a large number of its policyholders
at 5 per cent, interest, on the sole security of their
policies.
Over $9,000,000 was thus advanced during the last
quarter of the year. In addition to this, many loans which
matured at that time and which under normal conditions
would have been repaid to the Society, were renewed.
This money stringency extended into 1908, and large
sums were advanced by the Society during that year
also. In the first quarter (in addition to the many old
loans renewed) new loans aggregating over $5,000,000
were made to policyholders.
These loans ranged from a few dollars in the smaller
cases to sums above $50,000 in the largest cases. They
were made to all sorts and conditions of men, from
laborers and small retail merchants, to prominent finan-
ciers, at a time when business men, and particularly
manufacturers with pay-rolls, found it almost impossible
to secure sufficient funds from their banks to meet cur-
rent obligations.
It is not to be inferred from all this that the Society
advocates the mortgaging of policies — the borrowing of
money by husbands and fathers from wives and chil-
dren. The fact that a policy may be used as collateral
security for a loan enables a man at times to save a
policy which might otherwise be lost, or to bridge over
105
J
ime temporary period of financial peril; but in general
e Society fully endorses what Mr. Cleveland has said
I this subject:
"A policy was made to hold. This loan system is not good,
it every policyholder think twice before he gives way to
e temptation of borrowing on his policy. Sometimes it can-
)t be avoided ; but often it can, if a man thinks twice. There
many a way to tide over a tight place without letting your
>licy get out of your hands."
But in spite of the depression following the panic, and
le excitement incident to a presidential election, the
iar 1908 proved far better fgr life insurance than 1907.
his is illustrated by the Society's experience. Its new
isiness, which had shown a decline in 1906, amounted
• $73,279,540 in 1907, and exhibited an increase of
iarly 25 per cent, in 1908, aggregating $91,262,101 for
lat year. Moreover, the expenses were less than for
le previous year, notwithstanding the larger amount of
isurance written. On the other hand, the terminations
ere nearly five millions less than in 1907.
Just here it may be stated that since 1905 there has
*en a steady decrease in expenses, in spite of the fact
lat the new laws have added much detail to the clerical
)utine, and notwithstanding the cost of installing an
itirely new system of accounting, and a thorough reor-
mization of the various departments of the office.
Larger earnings were also shown: the average gross
ite of interest realized in 1908 was 4.45%, as against
39% in 1907, 4.26% in 1906, 4.03% in 1905, and
90% in 1904.
The improvement for the year 1908 is further illus-
ated by the table at the end of this chapter, in which
nportant items from the 49th Annual Report are com-
ired with the same items in the report for the previous
sar.
106
The Society's 49th Annual Report contains a series of
interesting tables, illustrating the fact that under Presi-
dent Morton's administration the policy of management
inaugurated by him of investing the money received from
policyholders in the States from which that money has
been derived, has been successfully carried out. This is
not only shown by the permanent investments, but by
mortgage loans; and it may be stated, in passing, that
there has been an increase of over 58% in the percentage
of mortgage loans outside the State of New York since
1905. During the past year alone, there has been a re-
duction of over $4,000,000 in such loans outstanding in
the State of New York, while at the same time there has
been an increase of over $2,500,000 in the total of loans
outstanding.
This wide distribution is shown also by the Society's
annual disbursements for death claims, matured endow-
ments, policy-loans, and other payments in the various
States, which correspond very closely with the receipts
from those States.
Thus the erroneous belief that the money received
from policyholders is hoarded at headquarters is dis-
proved, and the fact that it is immediately put into cir-
culation all over the country is clearly shown.
Some of the old agents of the Society had retired in
1906 and 1907, but the large number of loyal repre-
sentatives who remained did noble work. Besides this,
the field forces were increased and strengthened by the
addition in 1908 of some twenty-five hundred new agents.
107
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109
■i ■a
CHAPTER XI
THE SOCIETY IN 1909
We now come to the Society's Jubilee Year — its Fiftieth
Anniversary. The Society's position to-day is shown
by the following comparison.
THE SOCIETY AT THE END OF THE FIRST
FIVE MONTHS OF ITS HISTORY
CONTRASTED WITH ITS POSITION
(a) at the end of its first Quarter Century
(b) at the end of its first Half Century
ITEMS
FROM
ANNUAL
REPORTS
Assets
1st YEAR
Dec. 31,
1859
. $ 117,102
Insurance Fund
and other
liabilities.
Surplus . . .
Paid Policy-
holders dur-
ing year . .
Dividends to
Policyhold-
ers, during
year. . . .
Dividends to
stockholders.
Outstanding
Insurance. . .
20,948
96,154
25th YEAR
Dec. 31,.
1884
$58,161,926
47,678,309
10,483,617
Nothing
None
None
1,144,000
7,194,787
1,850,145
7,000
309,409,171
50th YEAR
Dec. 31,
1908
$ 472,339,509
391,072,042
81,267,467
47,861,543
8,011,016
7,000
1,326,478,540
111
The figures in the last column of the foregoing table
are taken from the 49th Annual Statement, showing the
Society's condition at the end of 49 years and 5 months.
Further advances will be made before the Anniversary
date is reached on July 26th; and not until the 50th
Annual Statement is issued at the close of the vear will
these further advances be adequately shown.
Up to December 31st, 1908, the total sum returned to
policyholders amounted to $656,772,603 ; and this aggre-
gate will be materially increased before July 26th, 1909.
A large proportion of this sum has been paid to widows
and orphans; and $110,954,505 has been disbursed in
dividends alone. Besides this, the Society has on hand,
for future distribution among its policyholders, Assets
amounting to $472,339,509. Of this sum $384,152,880
constitutes the "Insurance Fund'" which (increased by
future premiums and interest) will pay all outstanding
policies as they mature. This Fund plus miscellaneous
obligations, makes the total liabilities $391,072,042. The
balance, amounting to $81,267,467, is the Surplus held
for future dividends and for the general protection of
members.
The aggregate paid in dividends to policyholders dur-
ing the last ten years is greater than that of any other
company. The record for the last five years is as follows :
dividends paid to policyholders
1904 $6,001,903
1905 6,709,003
1906 7,289,735
1907 7,508,776
1908 8,01 1,016
Total for five years $35,520,433
The sum set aside for 1909 is $10,003,000.
112
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MAGNITUDE OF THE SOCIETY
Some of the foregoing figures are so large that a more
definite impression of the magnitude of the Society's
business may perhaps be gathered from the following mis-
cellaneous facts:
GOVERNMENT
The affairs of the Society are conducted by a board of
fifty-two directors and a staff of executive officers.
The standing committees of the Board are as follows :
an Executive Committee, a Committee on Finance, a
Committee on Insurance and a Committee on Agencies.
Each important department of the business is in charge
of an executive officer or group of officers. Cabinet meet-
ings, at which the president presides, are frequently
held; and the various officers serve on committees
charged with the general supervision of the business,
the administration of the office, and the management of
the office force.
THE CENTRAL OFFICE
The executive offices are on the second and third floors
of the Equitable Building. A bureau of information,
in a central position, guides visitors to the various de-
partments. And any visitor passing from one depart-
ment to another will find that the Equitable is a complex
organism — more like a group of great corporations than
one company eng'aged in a single line of business; for
the Cashier's Department is like a great banking insti-
tution; the Real Estate Department like a great invest-
ment and mortgage company; the Finance Department
like a great trust company; the Security Department
like a safe deposit company; the Literary Department a
veritable publishing house, and the Supply Department a
storehouse, freight office, and stationery shop. A large
and important department, governed by executive
officers, is responsible for the agents and agencies.
114
The Actuary's Department has chiefly to do with in-
surance computations, the calculation of liabilities and
reserves, and the valuing of policies; the Auditor's De-
partment has charge of the books and accounts; the
Statistical Department compiles the figures that measure
the Society's progress, and illustrate its experience.
Another handles applications for insurance, and another
makes out the policy-contracts. The Medical Depart-
ment has charge of the examination of applicants and
applications, and the appointment and supervision of the
physicians employed at home and abroad. One depart-
ment prepares and issues the premium notices; another
the receipts given for payments made, and another has
charge of the dividends. Death claims and matured
policies are settled in one department; surrender values
in another, and policy-loans in a third.
Those having* charge of purchasing, printing, and ad-
vertising, have multifarious duties to perform. Esti-
mates for supplies to be furnished or work to be done
must be submitted and compared; and prospectuses, cir-
culars, leaflets, policy forms, blanks, letter heads, en-
velopes, notices, and receipts must be printed and dis-
tributed.
As the Society transacts business at important points
throughout the civilized World, experts in foreign cur-
rencies and the intricacies of foreign exchange are
needed; and policy-writers and translators familiar with
foreign languages are also required.
No payment in excess of $5^000 is made except under
the authority of the Board or the Executive Committee
acting for the Board. All payments are made through
the Treasurer's Department, and must be verified in the
Auditor's Department. No investment is made without
the unanimous approval of the Committee on Finance;
and all purchases and sales are reported to the Executive
Committee and thereafter to the Board of Directors.
115
The Society has one of the most complete and valuable
insurance libraries in existence. It also has a law library
for the convenience of the tenants of the Equitable
Building.
Upwards of looo persons are employed in the New
York offices of the Society, and in addition there are
about lOO engineers, janitors, elevator men, watchmen,
and cleaners.
In the Society's branch offices, besides the agents and
their assistants, 400 local cashiers, stenogfraphers, clerks
and errand boys are directly employed by the Society.
On the average, 3500 letters are received each day;
and, in addition to the many letters written by the officers
and by those in charge of the various departments, a
bureau for the handling of current correspondence keeps
a force of over thirty persons constantly busy, in read-
ing, writing, distributing and filing letters, and handling
the incoming and outgoing mails.
The letters containing checks, drafts and money-orders
are turned over to the Cashier, at whose window during
business hours there is a constant line of policyholders
and others, paying or receiving money over the counter.
The average daily receipts by the Cashier amount to
$50,000 — ^$30,000 in remittances and $20,000 over the
counter.
These statistics might be multiplied, but enough has
been said to give some idea of the magnitude of the
Society's operations.
COMPETING COMPANIES
Of the many regular life insurance companies organ-
ized from time to time in the United States there remain
in the business only about two hundred.
The record for the State of New York is as follows:
Fifty-eight companies have been organized. Some of
116
I
these have ceased to solicit insurance, some have retired
and reinsured their risks, some have failed, and only
thirteen remain in the field.
It is impossible to obtain accurate statistics regarding
the companies of other States that have passed away,
and it is still harder to obtain reliable data regarding fra-
ternal and assessment companies. Such organizations are
usually short lived, although the existence of some of
them has been prolonged by support from without, or by
reorganizing them on a regular basis.
The best life insurance company is the one whose
guarantees are surest, and whose strength is such that
it will prosper in times of stress and strain as certainly
as during periods of financial prosperity. The "cheap-
est" insurance is not often the best. Assessment com-
panies have failed because they have attempted the im-
possible task of granting insurance at less than cost.
And although companies organized on a scientific basis
have never failed when properly managed, many such
companies have failed in consequence of mismanage-
ment. Hence, "Management is the Keystone of the
Arch.'
THE AGENT
It is unfortunate, perhaps, that men do not go vol-
untarily to the insurance companies and apply for the
insurance which they need. But the habit of awaiting
the visit of the agent has become so firmly established
that the agent is absolutely essential to the efficient trans-
action of the insurance business.
The "Old Equitable'* of London, to which reference
has been made more than once, is a monument to the
strength and permanence of a life insurance company
founded on scientific principles. The value of the insur-
117
ance it offers is unquestioned, and its policyholders are
fortunate in their identification with it. But it has never
employed agents, and during the five years ending Dec.
31, 1907, its effort to give sheltering protection to widows
and orphans has been limited to an average annual out-
put of 262 policies, covering an annual average of
$1,335,375 of insurance. This is in strong contrast with
the record of the Equitable of New York, which, with the
co-operation of its agents, is now writing insurance at
the rate of $100,000,000 a year.* And it will be the aim
of the Equitable in the future, as in the past, to seek
as its representatives in the field, men of character, in-
telligence, and standing; in order that the company and
its members shall always be fittingly represented.
•The National Messenger has answered the question "Must the agent
goT" in the following witty parag^raphs:
"Yes — and he will continue to go; and where he goes danger will
decrease, distress disappear, and comfort will continue.
"He will go for the busy man who requires someone to interrupt him
and make him listen.
"He will continue to go to widows and families, and assist them to
prove their claims, and will carry the money to them, and will hear them
say: 'We wish you had made father take more.' And he will go to
the man whom he urged to take an endowment, and will pay him the
money and hear him say, 'I wish you had made me take more.'
"Yes, the life insurance agent must go; and for your sake we hope he
will go your way."
118
CHAPTER XII
THE FUTURE
In the light of the Equitable's past history, its present
strong position, and the general outlook, all signs point
to a prosperous future, and steadily increasing useful-
ness for the Society.
Life insurance is not a luxury. It is a necessity in
every civilized community. And its beneficent influence
will continue to spread with the advance of civilization.
Now that the policyholders of the Equitable Society
are learning that their interests and those of their com-
pany are identical — that, as a matter of fact, they consti-
tute the company — their intelligent co-operation will not
only result in advancing their individual interests, but
will also aid in increasing the efficiency of the Society.
There are many ways in which policyholders can thus
help both themselves and their company.
They can take new policies with it whenever they find
it expedient to increase the amount of the insurance they
carry; they can recommend it to friends whose families
need protection; they can exert their influence in behalf
of its agencies ; they can recommend competent men and
women to represent it as solicitors, and they can aid in
creating an intelligent public opinion in reference to tax-
ation and legislation. In this connection the following
extracts from a recent publication are quoted :
"How can ignorant and pernicious legislation be re-
strained ?
"This can only be accomplished through the stimulation
of intelligent public sentiment. Many of the laws enacted
by the various governments and States for the protection of
policyholders have done serious injury to those for whose
benefit they were enacted. Usually this has been due to the
119
ignorance of well-meaning legislators, who have labored
under the mistaken impression that the interests of the com-
pany are antagonistic to those of the policyholder.
"As regards taxation, it may be said that any government
that taxes thrift — that exacts a penalty from the man who
seeks to provide for those dependent on him — defeats its own
ends. Savings bank deposits should not be taxed, nor should
earnings deposited with the life insurance companies. And
if those who invest in life insurance are indifferent to this
truth because they think they escape injury because it is the
company that is taxed, they also reveal their ignorance. They
do not suffer directly but they do suffer indirectly. It is
quite possible that there are many men in the United States
who at this very moment are protesting with great heat
against the smallness of the dividends paid by the companies
in which they are insured, who have themselves been State
legislators and have voted for the passage of laws placing
heavy taxes on the premium receipts of the companies trans-
acting business in their States.
"It is important for the policyholders of all companies to
understand that if taxes are imposed dividends must suffer."
SECURITY THE FIRST CONSIDERATION
The policies issued by the Equitable Society are valu-
able:
First, because they grant insurance that insures — pro-
tection that protects;
Second, because each policy contains all the benefits
and "options'' that can properly be combined in a single
contract ;
Third, because every contract is drawn to conform to
the rigid provisions of the revised insurance laws of the
State of New York, and
Fourth, because policies and annuities are issued in
such a variety of forms that a selection can be made to
meet any conceivable need.
120
The breadwinner, for example, may make a contract
under which his wife or daughter, after his death, will
receive a fixed monthly income for life ; or he can secure
a policy which will provide for his family if he dies pre-
maturely ; or one which will aid in his own support dur-
ing his declining years. He can obtain a policy which
will protect mortgaged real-estate; the continuity of a
partnership; the permanence of a corporation, or the
future of any business enterprise. He can provide a fund
to start an infant son in business on coming of age, or
may accumulate a wedding portion for a daughter.
For some years the growing wealth of the United
States, and the steadily decreasing rate of interest ob-
tainable on investments, have caused the public to turn
their attention to life annuities, and they are becoming
more popular every day.
An invesment in an Equitable Annuity is practically as
safe as an investment in government bonds. Moreover,
if taken at any age over forty the annuity will yield from
twice to four times the income derived from government
bonds. Hence the Society's business in annuities is in-
creasing steadily.
A few only of the many ways in which modern life
insurance can be utilized have been stated here, but
prompt attention will always be given by the officers of
the Society to the inquiries of policyholders and others,
regarding the different policies issued or regarding any
other subjects relating to the business. Nor can it
be doubted that insurance will be adapted to new
purposes in the future, and that the Equitable will
continue to take the lead in genuine improvements and
innovations. Consequently, policyholders who wish to
increase their insurance will do well to obtain the
latest intelligence irom the Society or from its repre-
sentatives in the field.
121
CONCLUSION
And now this brief outline of the history of the
Equitable Society's First Half-Century may be appro-
priately brought to a close by paraphrasing the statement
made by the President to the Board of Directors on the
Society's 25th Anniversary:
It is not inconceivable that some of the younger
MEN NOW identified WITH THE MANAGEMENT MAY SUR-
VIVE THE NEXT FIFTY YEARS AND MEET TO READ THE HIS-
TORY OF THE First Century of the Equitable. Let us
HOPE THAT THE RESULTS OF THE FIFTY YEARS UPON
which we are now entering will BE AS SATISFACTORY
AS THOSE OF THE YEARS THAT HAVE PASSED; AND THAT
THE OFFICERS AND DIRECTORS THEN IN CHARGE OF THE
INSTITUTION WILL BE MEN WISELY CHOSEN, WHOSE
FIDELITY AND SKILL WILL BE COMMENSURATE WITH THE
GREAT TRUST COMMITTED TO THEIR CARE.
PUBLISHED BY
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
FOR THE INFORMATION OF
ITS POLICYHOLDERS
Vice-President :
WILLIAM A. DAY
Secretary :
WM. ALEXANDER
Treasurer :
C. E. PHELPS
President :
PAUL MORTON
Ins. Assist, to President :
H. L. ROSENFELD
Comptroller :
GERALD R. BROWN
Medical Directors :
F. C. WELLS, M. D.
T. H. ROCKWELL, M. D.
2d Vice-President :
G. T. WILSON
A ctuary :
J. G. VAN CISE
A uditor :
LEON O. FISHER
I
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
WAS ORGANIZED JULY 26, 1859
THE FIRST ANNUAL STATEMENT WAS FOR THE YEAR
ENDING DECEMBER 31, 1860
(Issued in 1861)
THE TWENTY-FIFTH ANNIVERSARY
WAS ON JULY 26, 1884
THE TWENTY- FIFTH ANNUAL STATEMENT WAS FOR
THE YEAR ENDING DECEMBER 31, 1884
(Issued in 1885)
THE FIFTIETH ANNIVERSARY WILL
BE ON JULY 26, 1909
THE FIFTIETH ANNUAL STATEMENT WILL BE FOR
THE YEAR ENDING DECEMBER 31, 1909
(And will be issued in 1910)
I
I
BOARD OF DIRECTORS
JUNE, 1909
PAUL MORTON, New York.
President of the Society.
CHARLES B. ALEXANDER, New York.
Counselor-at-Law.
JOHN N. BEACH, New York.
Vice-President TeflEt, Weller Co.
E. W. BLOOMINGDALE, New: York.
Director Phenix National Bank.
ABRAHAM BRITTIN, New Orleans.
V. P. Board of Liquidation, New Orleans City Debt.
T. DeWITT CUYLER, Philadelphia.
Counselor-at-Law.
WxM. A. DAY, New York.
Vice-President of Society.
JAMES B. PORGAN, Chicago.
President First National Bank.
THOMAS A. GILLESPIE, New York and Pittsburg.
President The T. A. Gillespie Company, Contractors.
ALEXANDER C. HUMPHREYS, New York.
President Stevens Institute.
BRADISH JOHNSON, New York.
President Estate of Bradish Johnson.
JOHN D. KERNAN, Utica, N. Y.
Counselor-at-Law.
ALVIN W. KRECH, New York.
President Equitable Trust Company.
CHARLES E. LITTLEPIELD, New York.
Counselor-at-Law.
JOHK T. M ANSON, New Haven, Conn.
President Yale National Bank.
ROBERT MATHER, New York.
Chairman Board, Westing-house Electric Co.
JOHN J. McCOOK, New York.
Counselor-at-Law.
WILLIS P. McCOOK, Pittsburg, Pa.
Counselor-at-Law.
JAMES McMAHON, Brooklyn, N. Y.
Ex-Pres. Emigrants Industrial Savings Bank.
DAVID H. MOPPAT, Denver, Col.
President Pirst National Bank.
EDWARD DR V. MORRELL, Philadelphia.
Counselor-at-Law.
LEVI P. MORTON, New York.
President Morton Trust Company.
Ex-Vice-President of the United States.
\
BOARD OF DIRECTORS
{ConitHued)
JOY MORTON, Chicago.
Merchant and Manufacturer.
ALFONSO DE NAVARRO, New York.
Vice-President Atlas Portland Cement Co.
LUDWIG NISSEN, New York.
Merchant and Importer.
EUGENIUS H. OUTERBRIDGE, New York.
Harvey & Outerbridg-e, Merchants.
Treas. Pantasote Leather Co.
WILLIAM E. PAINE, New York.
President Yellow Pine Company.
WALLACE L. PIERCE, Boston, Mass.
President S. S. Pierce Co. and Walworth Mfg. Co.
TOM RANDOLPH, St. Louis, Mo.
President Commonwealth Trust Company.
WM. C. REDFIELD, Brooklyn, N. Y.
Manufacturer.
E. W. ROBERTSON, Columbia, S. C.
President National Loan A Exchange Bank.
J. G. SCHMIDLAPP, Cincinnati, Ohio.
President Union Savings Bank & Trust Co.
V. P. SNYDER, New York.
President National Bank of Commerce.
THOMAS SPRATT, Ogdensburg, N. Y.
Counselor-at-Law.
J. EDWARD SWANSTROM, New York.
Counselor-at-Law.
GAGE E. TARBELL, New York.
President Garden City Estates.
EBEN B. THOMAS, New York and Pennsylvania.
President Lehigh Valley R. R. Co.
DANIEL A. TOMPKINS, Charlotte, N. C.
Manufacturer of cotton goods, cotton mill and cotton
oil machinery.
Sir WILLIAM C. VAN HORNE, Montreal.
Chairman Board of Directors Canadian Pacific Rail-
road Company.
GEORGE F. VIETOR, New York.
Commission Merchant.
WILLIAM WHITMAN, Boston, Mass.
Dry Goods Commission Merchant and Manufacturer.
GEORGE T. WILSON, New York.
Second Vice-President of the Society.
FRANK S. WITHERBEE, New York.
President Witherbee, Sherman & Co., iron ores.
CHARLES H. ZEHNDER, New York.
President Austen Coal & Coke Company.
" We must regard the past, but we must not
regard only the past. We must also think of
the future, and while we must learn by experi-
ence we cannot afford to pay heed merely to the
teachings of experience. The great preacher
Channing spoke with fine insight on this very
point: * It is possible to make experience too
much our guide. There are seasons in human
affairs, of inward and outward revolution, when
new depths seem to be broken up in the soul,
when new wants are unfolded in multitudes, and
a new and undefined good is thirsted for. These
are periods when the principles of experience
need to be modified, when hope and trust and
instinct claim a share with prudence in the
guidance of affairs, when in truth to dare is the
highest wisdom.' These sentences should be
carefully pondered by those men, often very
good men, who forget that constructive change
offers the best method of avoiding destructive
change; that reform is the antidote to revolution.' '
THEODORE Roosevelt.
• 1 1
1 1
•• The man who does not hope for better things
and does not believe that better things can be
brought about is not the man likely to bring
better things about. The spirit of hypercriti-
cism and the uncompromising attitude which will
not accept * some progress is better than none,'
the insistence upon the full realization of the
highest ideals and the rejection of any com-
promises which accomplish good are all likely
to retard progress. Constant criticism and con-
stant pessimism are productive of paralysis and
stagnation. No one who wishes to do anything
and bring about real reform should allow himself
to read from day to day editorials and other
printed articles the tone of which is pessimistic
and hypercritical, for nothing will so take out of
him the enthusiasm necessary to successful
effort as the reading of such matter."
William H. taft.
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