Newspaper cuttings, from the manuscript, MEGAdigital (MEGA² IV/19).1 Traducción al español
PROSECUTION OF THE “ALBERT” DIRECTORS.
On Saturday at the Marlborough-street Police-court, Dr. William Beattie, Mr. Peter Hood, Mr. A. R. Kirby, Mr. E. Vansittart Neale, Dr. Nicols, M. R. C. P., Vice-Admiral the Right Hon. Lord George Paulet, C. B., Mr. W. Page, Mr. T. Phillips, Mr. T. Stevenson, and Mr. Robert Whitworth, the directors and managing director of the Albert Life Assurance Company, appeared to answer a charge preferred against them by Mr. Lee and other shareholders of the company of “conspiring to defraud certain persons of divers sums of money between the years 1864 and 1869.”
Mr. Straight, instructed by Mr. A. J. Murray, appeared on behalf of the prosecutors; Mr. Milward, Q. C., Mr. Poland, Mr. Metcalfe, and Mr. Besley were the counsel present of behalf of the defendants.
Mr. Straight applied for an adjournment in order that he might have time to examine the books of the company, observing that he was desirous, before opening his case, of being in possession of that information, as he was very anxious to avoid casting any aspersions upon the gentlemen against whom the summonses had been granted.
The counsel on the other side objected to an adjournment, arguing that a charge had been made against their clients that could in no way be substantiated, and they trusted that the inquiry would be allowed to go on in the usual way.
Mr. Knox ruled that the case should go on, and
Mr. Straight proceeded to open his case. His only desire, he said, was to place the facts of the case as clearly as he could before his worship, and to enable him to come to a proper and just conclusion in the matter. He would ask him to say how far the directors ought to have been aware of the state of the affairs of the company, and if he could show that they allowed false reports to be issued, and that they paid dividends and bonuses out of imaginary capital, he submitted that they had been guilty of a great fraud upon the shareholders of this company. The company was established in 1838, but it did not assume its present title until 1863. The capital of the company was 500,000l., in 25,000 shares of 20l. each, all of which were allotted. In 1865 the defendants, with other persons who seemed to have subsequently withdrawn, were directors of the company, and on each share 3l. had been paid, and further sums at the desire of the shareholders. At the time of the crisis, in January, there was a sum of 321,989l. to be called up. The shareholders were to receive 5 per cent., and the profits were to be divided on a participatory system between the shareholders and the policy-holders. From 1838 to 1858 the profits were 29,808l. 14s. 3d.; from 1859 to 1861, 33,650l. 14s. 9d.; altogether 294,152l. 3s. 8d. had been paid for amalgamations, and form the time they were made losses seemed to have commenced, for from 1862 to 1866 the loss was 281,702l. 11s., and between that period there had been an amalgamation with the Western and Kent Assurance and the Indian. He would call attention to the fact that in 1865 the defendants were directors, and must and ought to have known that the company was insolvent. They had the accounts and the books before them, and continued paying bonuses; and he would ask his worship to say that this was done to make the company appear a good and sound concern: and this, he contended, was criminally wrong. From 1867 to 1868, 1,360,630l. 13s. 7d. was lost, and yet statements were put out calculated to induce the public to buy shares and become policy-holders. Even in January of the present year an advertisement in the papers stated the half-yearly dividend was in course of payment to shareholders; and he (the learned counsel) would say that it was not right to conceal from the shareholders and the public a true state of the company’s affairs. After stating that Mr. Lee, the prosecutor, bought his shares in February last, believing the company to be in a sound condition, he proceeded to comment upon the amalgamation that took place, to which he attributed much of the company’s misfortune, and afterwards read the report of the meeting of shareholders on the 30th of August, on which occasion Mr. Price made his statement of the affairs of the company. He concluded by calling upon the magistrate to send the case before a jury, allowing that he considered he (Mr. Straight) had made out a prima facie case; but, on the other hand, if the magistrate did not think so, no one would be more glad than he to see the case dismissed.
Edward Lee deposed—I live at 55, Lancaster-road, Notting-hill. I am a law student. In the early part of this year I had a few hundred pounds of my own, and I was desirous of investing that money. I looked about where best to invest it, and I saw advertisement in the Times newspaper.
Mr. Knox—What date is it?
Witness—13th of January, present year.
Examination continued—The advertisement declared that the half-yearly dividend was in course of payment. I also saw two reports of the Albert Assurance Company for 1865 and 1866. I made inquiries with regard to this company, and I was led to believe from reading the documents in question that I should receive a large amount of interest upon the capital invested. I gave instructions to Messrs. Smith to purchase 199 shares, for which I paid about 120l. I instructed Messrs. Smith to buy whenever they could get an opportunity. There were 30 or 40 shares for which I never got certificates; the company stopped before there was time to issue the certificates. After the purchase of these shares I made certain inquiries at the offices of the company in Waterloo-place, and from the information I got there I bought more shares, for which I received certificates after some considerable time. I first learnt that the company was in trouble either in July or August. I learnt it from the newspapers. I received a circular from the secretary of the company. I forget when I received it, but it is dated in August. On receiving this letter I attended the meeting of the shareholders on the 28th of August. It was held at the offices in Waterloo-place. Mr. Neale was in the chair; Mr. Kirby, the manager, was also there. I also saw Mr. Price there. I should not have invested my money if I had been aware that the company had been making a loss. I attended a second meeting at which Mr. Neale presided, but I don’t remember whether any other director was present. In consequence of advice tendered to me I went to the office of Mr. Price, the liquidator, yesterday week. I saw Mr. Price, but on the advice of Mr. Lewis I was not allowed to see the books. I have been in communication with Mr. Tarring and other shareholders.
Cross-examined by Mr. Metcalfe—My address is No. 55, Lancaster-row, and I am studying with Mr. Vallancey Lewis. I bought some of the shares at 5s. 6d., with 3l. paid, but I cannot give the number. I also bought other shares, for which I paid 28s. 6d. I do not know how much was paid up, but I should imagine that 10l. had been paid up on them. I mean to say that when I paid 5s. 6d. for shares on which 3l. had been paid, I believed that profits were made by the company. I knew that shares of companies had been much depreciated owing to the badness of trade and the great stoppages that took place years ago. Such shares when depreciated had never recovered their value, and I believed the Albert Company might be solvent.
Cross-examined by Mr. Poland—I hold about 240 shares. I cannot say how many on which 10l. has been paid, but certainly twenty or thirty. I did not examine the policies to see the nature of the contract between the company and the policy-holders. I made inquires at the company’s office, but I have never examined any policy.
Cross-examined by Mr. Besley—The number of shares which I bought for 123l. represent about 1,000l. I do not know the extent of my liability. They were 20l. shares, and my liability will go as far as that. I first saw Mr. Smith in reference to the purchase of Albert shares at the beginning of this year. I bought shares from February to June, seeing Mr. Smith from time to time, and talking matters over with him. I saw him sometimes two or three times a week. I had numerous transactions. I bought shares but I have not sold shares. The house in Lancaster-road is occupied by my father. He is not a monetary agent, nor has he an address in Cheapside. I have been studying for two years with Mr. Vallancey Lewis. I do not know any of the persons from whom the shares were bought. They are all strangers to me, and the transactions were through Mr. Smith. I did not pay as little as 4s. 4d. for any of the shares. I executed transfers, and except on one occasion I gave them to Mr. Smith to lodge at the office. I do not know whether Mr. Smith gave a lump sum for any parcel of shares. I really expected to get 5 per cent. on 1,000l. on my investment of 100l. I know that there are companies paying at that rate, taking into account the price of their shares in the market. I did not know the exact interest I should receive. I asked my broker to buy the shares, thinking at the time they were a good investment. I saw several documents and newspaper reports, one in the Times. In share brokers’ offices generally papers are lying about relating to companies. I saw reports of the Albert Company for 1865, 1866, and 1867 in Mr. Smith’s office before I gave him authority to buy shares. Mr. Smith is a client of Mr. Vallancey Lewis, and that is how I became acquainted with him. I did not give him orders to buy shares before I had seen documents, reports, and advertisements relating to the company. I saw the advertisement announcing that the dividend was to be paid in the Times and other papers. On looking at the “Directory” at the beginning of the year I saw the advertisement of the directors. From the fact of seeing the reports in Mr. Smith’s office I first thought of buying the shares. I will not swear to any report in particular, but I believe I saw the last report issued by the company in Mr. Smith’s office, and Mr. Smith was present. I did not myself get any documents of the kind. Those I produce I cannot say where they came from. I have some reports in my possession, but I cannot say where I got them from. I only know Mr. Tarring and Mr. Cottrell from having seen them at the meeting. With regard to the report read by Mr. Straight, that was the report of the meeting which was reported. I am the Lee mentioned in the reports. These shares were not the only investment I intended to make. I should have invested 300l. or 400l.
Mr. Poland—Have you the means of paying your liabilities?
Mr. Lee—That is not a question you should ask me.
Mr. Straight—There should be no concealment. Have you the means of paying your liability on these shares?
Mr. Lee—I am sorry to say I have not.
By Mr. Pools—I cannot identify any particular report. The report I saw was, I believe, the report issued in 1866, and presented to the meeting in 1867.
Mr. Straight—Whether or not you saw the reports in Smith’s office, you saw them before you bought the shares?
Mr. Lee—Mr. Smith is a client to the gentleman to whom I am articled, and I was continually in and out of his office, sometimes on legal business and sometimes about buying shares. Mr. Smith’s office is an ordinary shareholders’ office, with papers and reports lying about.
Samuel Lowell Price, provisional liquidator, deposed—I was first called in on the 13th of August. Mr. Kirby, jun., acted for some time as my provisional colleague. I obtained a great deal of information from him. He was perfectly well acquainted with the affairs of the company. I prepared the report that was read at the first meeting of the shareholders on the 28th day of August. I was present at that meeting. The report is made from the ledger and cash books and books in daily use. I should not necessarily have to refer to the minute-books. I find that the original report is substantially correct. The company was originally started in 1838, and it assumed its present title in 1863, and the capital was 500,000l. All those shares have been allotted. I believe. They are all 20l. shares, upon all of which 3l. has been paid, and some more. The total amount of capital now standing to the credit of the shareholders is 178,011l., which leaves the realisable amount of 325,989l., which might produce 150,000l. or more, and thus there was a deficiency of 971,837l. 2s. 2d. in August last. The deed of 1839 provided that there should be 5 per cent. paid to the shareholders and a proportion of the profits. From 1858, when the second deed was executed, down to the stoppage of the company, the interest has been paid, and in some instances the bonus. The last bonus was declared in 1862. Interest was paid to the shareholders in 1858 to the amount of 5,138l. 4s. 2d. No bonus was paid in that year. In 1859, 6,032l. 11s. 3d. was paid for interest. I am not sure if a bonus was paid. In 1860, 835l. was paid; in 1861, 9,759l. 2s. 9d.; in 1862, 12,607l. 10s. 7d.; the capital of course being increased year by year. In 1863, 23,530l. 7s. 3d.; in 1864, 12,610l. 10s. 7d.; in 1865, 9,556l. 1s. 6d.; in 1866, 13,625l. 9s.; in 1867, 9,641l. 15s. 3d.; in 1868, 9,059l. 1s. 5d. In January, 1869, other dividends were paid of 5 per cent., amounting to about 4,000l. Between 1859 and 1861 a profit was made of 54,235l. 19s. 7d. In September, 1860, the Medical Invalid and the Family Endowment were amalgamated. After enumerating the amounts given to the various societies for amalgamating, witness said that there had been a dead loss of 86,679l. between 1862 and 1866. Three other companies were amalgamated between 1862 and 1866. Was not aware that Mr. Vansittart Neale was a director of the Western.
Mr. Metcalfe—Is there any came whatever against my client?
Mr. Knox—I must let the case go on. I am slow to express an opinion, and I would rather not express any opinion at present.
Mr. Metcalfe—Although the examination of Mr. Price is not concluded, I shall ask leave to put one or two questions to him.
Mr. Knox—I am willing to allow anything reasonable in the anomalous position of this case, in which equity is law. I am simply expressing an opinion. I think the case ought to go on for the purpose of giving an opportunity of inspecting the books. I do not see how I can stop the case.
Mr. Metcalfe—I think, Mr. Price, you said there was a loss of about 1,000,000l. in 1869, and that 968,000l. of it arose from difference of valuation—the real loss was about 69,000l.?
Mr. Price—That is so, I believe.
Mr. Metcalfe—Then the million loss vanishes. You got all your information, I understand, from the books. The books, I understand, contain the most complete information on the subject. Whoever was paid to be shareholders, or for amalgamations, or to be directors, is there stated?
Mr. Price—It is.
Mr. Metcalfe—Do you find on examination of the books any trace of concealment on the part of the directors?
Mr. Price—Not the slightest.
Mr. Metcalfe—Or any tampering with the books or accounts?
Mr. Price—No.
Mr. Straight—No insinuation of the kind is intended.
Mr. Metcalfe—Still there is a strong insinuation when the directors are charged with conspiracy. You say, Mr. Price, you find not the slightest trace of fraud whatever in the dealings of the company?
Mr. Price—No.
Mr. Metcalfe—The directors must divide the 5 per cent. and the whole of the profits according to the original deed. The original deed was made by none by these gentlemen, and these gentlemen are compelled to carry out its provisions.
Mr. Price—I believe that to be so.
Mr. Metcalfe—They declare of 5 per cent. whether there are profits or no, according to the original deed, which is binding on these gentlemen.
Mr. Straight—That depends upon how you interpret the deed.
Mr. Metcalfe—Are the reports for 1865 and 1867 completely borne out by the books?
Mr. Price—Yes, as far as they go. I do not approve of all the accounts, but the figures are correct.
Mr. Poland—That is a debateable point about the accounts. No two accountants prepare accounts in the same way.
Mr. Price—That is so.
Mr. Poland—There is, in fact, legitimate ground for difference of opinion. Do you know how many shares the directors held?
Mr. Price—I cannot tell you the number of shares held by the directors. I heard it stated by the accountant that four or five of the directors held very large amounts.
Mr. Poland—We will have the exact number at the next examination.
Mr. Besley—I will reserve my cross-examination.
Mr. Knox—Do all these amalgamations represent loses?
Mr. Price—I cannot say. The accounts of these amalgamations are involved in other accounts.
Mr. Straight—I am quite willing to let the matter stand adjourned. I am particularly anxious to have an opportunity to look over the books, and to form an opinion how far these gentlemen are implicated in the charge. It may be that some of these gentlemen were not regularly in attendance, and did not give active supervision to the affairs of the company; and I shall be glad, therefore, to relieve those gentlemen from the responsible position in which they are placed. I do not wish to inflict unnecessary pain, should it be shown that they did not attend, and were not mixed up with the doings of the company.
Mr. Knox—I am bound to allow the case to go on as far as it can go on to-day. All must feel that it is much better the case should go on, as there is a great point at issue. I think it better that you should take 21 days’ adjournment.
Mr. Metcalfe—I should wish for as short a period as possible, and that the gentlemen should be selected against whom it is intended to proceed. One gentleman in particular is, I know, suffering under the greatest possible anxiety from the present position of matters.
After some consultation it was agreed that an order should be granted for an inspection of the books under an order of the Court of Chancery.
An understanding was eventually come to that the further proceedings should be adjourned for three weeks, the counsel for the prosecution intimating that he should have no objection to let the defendants go at large on their own recognizances.
Mr. Knox said he would take their own recognizances in a trifling amount, say 10l. each, and the proceedings were accordingly adjourned.
THE EUROPEAN ASSURANCE SOCIETY.
TO THE EDITOR OF THE DAILY NEWS.
SIR,—On Wednesday last I wrote you a letter, which you were good enough to publish, in which I told you my experience of life assurance as a transferred policy-holder in the European Society, the offer made me by the society to purchase my policy, and the refusal which was returned to my letter accepting their offer. This morning I received from the office the enclosed letter, accompanied by a cheque for the amount I had signified my willingness to accept. As this letter is in reply to the one you kindly published, I presume that the appearance of that letter in your columns brought it under the eye of some of the higher officials of the company, and that a letter which I wrote to the manager on the day before I wrote to you fell into the hands only of some assistants in the office. I need scarcely add that I had no hesitation in accepting the cheque and giving up my policy.—I am, &c., P. W. CLAYDEN. 13, Tavistock-square, W. C., Sept. 25.
“Surrender Department, London, Sept. 24, 1869. “P. W. Clayden, Esq., 13, Tavistock-square, W. C.
“SIR,—From a letter addressed by you to the Daily News, and published yesterday, I find that a mistake has been made by an assistant in this department in replying to your letter of the 18th inst., which I regret should have occurred. It is perfectly true that the directors have, for the present, while so much excitement exists in the assurance world, decided to offer no more quotations for the surrender of policies, but they never had the least intention of refusing to carry out a surrender in any case in which a price had been offered by the society. The senior of this department happens to be away on leave, and an assistant unfortunately placed your letter with some new applications for surrender, which caused you to receive a reply which was applicable only to these last-mentioned cases. I now hasten to correct the unfortunate error by enclosing a cheque for 30l. 18s. 3d., the amount (less loan and interest) agreed to be given for your policy. Please sign the receipt which you will find endorsed upon the policy sent herewith.—Yours faithfully,
SAMUEL YOUNGER, [Interim Head of Surrender Department.”]
THE ALBERT LIFE ASSURANCE COMPANY.
A meeting of shareholders in this company took place yesterday, at No. 7, Waterloo-place, pursuant to adjournment. The chair was taken by Mr. VANSITTART NEALE, who reminded the meeting, when opening the proceedings, that the recent decision of the Vice-Chancellor in favour of a compulsory winding up of the concern had removed the object for which the meeting had been summoned, namely, to consider the propriety of a voluntary winding up. He was glad, however, that the shareholders had attended, as the solicitor had some explanations to make which would be worthy their attention.
Mr. LEWIS said that the shareholders could now take no legal action in the matter stated in the circular, which circular was issued when the shareholders were competent to decide on the future fate of this undertaking. The resolution passed at the last meeting was simply that the company should be registered under the Act of 1862, with a view to a voluntary winding up, and that course might have been followed but for the strong and inflexible opposition of a large body of policy-holders. They were all familiar with the course of events, and the order of the Vice-Chancellor, which put a voluntary winding up out of the question. He deeply regretted that result, and also that more time had not been taken for reflection, and for arrangements for the transfer of the business. It was not perhaps yet impossible to take up the plan which he had recommended, acting under most eminent actuarian advice. It had been said that that plan of his was a shareholders’ scheme, and was proposed solely in the interest of the shareholders. He denied that in toto, although many shareholders approved of it; it was the result of anxious consideration, and was intended solely to make the best of the great disaster by which all, both policy and share holders, had suffered so seriously. It was said it was a shareholders’ scheme, because, although on the face of it clearing the entire capital of the company, it reserved a modicum of interest for them in the new company, should future transactions be profitable. The two gentlemen who had moved and seconded the opposing resolution did not condescend one word of argument, but contented themselves with stigmatising his plan as a shareholders’ scheme, whereas it was in fact a scheme for the benefit of the policy-holders, and an influential member of the policy-holders’ committee had since produced a precisely similar scheme, simply omitting the clause to which he had alluded. He had merely done as much as he could to prevent what was likely to happen now—namely, that every shareholder would have as much to pay as could be extracted from him, and every policy-holder would get as little as could possibly be arranged. He believed that if his plan had been accepted, it would have been the best for all parties concerned.
Mr. TARRLING asked whether an arrangement would yet be possible between shareholders and policy-holders for the reconstruction of the company?
Mr. LEWS would not say that such a thing was not still possible, but the chance was much more remote since the decision of the court. Mr. Price, the official liquidator, was endeavouring to make some arrangement with another office, and until the result was known it would be useless to stir further. Mr. Price would always be most happy to confer with both shareholders and policy-holders.
Mr. TARRLING then moved that a committee of seven shareholders be appointed to investigate, in co-operation with the official liquidator, the affairs of the company. He would suggest that the committee should consist of shareholders holding not less than fifty shares. He had a question to ask. It was stated at the last meeting that the secretary was not always present at the meetings of the directors. It was also stated that although he was not always present, all the minutes of the boards passed through his hands. He wanted to know whether such was the fact.
The SEORETARY thought there were certain minutes respecting amalgamation.
Mr. TARRLING was alluding to the general business of the company.
The SECRETARY said there had been meetings at which he was not present, and the minutes of which never passed through his hands.
Mr. TARRLING—Can you tell me whether the minutes were entered in any book which came into your keeping?
The SECRETARY—I am unable to answer that question.
Mr. TARRING—Then we are to understand that there were board meetings held of which you, as secretary, had no cognizance?
The SECRETARY—There were certain meetings regarding amalgamations of which I had no notice. (Hear, hear.)
Mr. BRADLEY—Was it not your duty to be present at all the board meetings?
The SECRETARY—That is a question which the board must answer.
Mr. BRADLEY—Why were you not there? You were paid to represent our interests, and I want to know why you were not there.
Mr. KIRBY—I know of no business of which the secretary had not cognizance. There might have been a meeting to talk over matters, but no steps of any importance were taken the absence of the secretary. The secretary had access to all the books of the company. Whilst I was manager either the secretary or myself was always present. I did not understand it to be customary that the secretary should be present at every meeting of the board.
Mr. BRADLEY remarked that 280,000l. of the shareholders’ money had been swallowed up in two years. Out of the 20,000l. contract debts were they to take the 14,000l. due to Mr. Kirby?
Mr. PRICE (official liquidator) said that Mr. Kirby not having drawn that amount of his commission, it remained a charge against the shareholders.
Mr. BRADLEY hoped that Mr. Kirby’s family would never claim the money. (Hear, hear.)
Some angry observations followed respecting the late Mr. Kirby (as to commission), and the balance-sheets which were produced in his time, at the close of which
The CHAIRMAN stated that he (Mr. Neale) did not come in until 1865, and then Mr. Kirby was entitled, by deed, to 4 per cent. commission on all the business of the company, and was appointed manager for life. That was the legal state of affairs, and with it he (Mr. Neale) could not interfere. Counsel’s opinion was taken as to whether the 4 per cent. commission extended to the policies of the amalgamated companies. Lord Cairns was of opinion that it did absolutely, and Sir Roundell Palmer thought it extended only to the policies which were endorsed by the Albert. When he came in there was 18,000l. due to Mr. Kirby as commission, and the sum was rapidly increasing. Mr. Kirby consented to abandon his commission for the future, provided the sum then due was guaranteed, and paid to him by instalments. He (Mr. Neale) thought that in acceding to that arrangement he had made an excellent bargain for the company.
A VOICE—But you (the company) were bankrupts then.
The CHAIRMAN proceeded to explain that the assets properly calculated would reach the amount which had been stated in the reports.
A VOICE—Where’s your reserve fund?
The OFFICIAL LIQUIDATOR—There is no reserve fund.
Mr. COTTRELL remarked that in 1866 the accumulated fund was set down at 647,000l.; but when Mr. Price came to examine the accounts he could find only 271,000l. He (Mr. Cottrell) wanted to know what became of the difference in so short an interval.
Mr. PRICE said that the figures of 1866 assumed that the balance-sheet was made out on a correct principle, which he did not admit, not assuming that the amount in 1866 would be as stated. But it assumed the sums paid to other companies to be good assets; and if those sums and a few other items were taken, they would account for the falling off. He believed that every sum expended, whether wisely or not, would be found fairly entered in the books.
The CHAIRMAN said that one of the Indian amalgamators had sent over 300,000l. That was not bad business.
After some further desultory conversation the resolution was altered, it being found impossible to get seven shareholders to act on the proposed committee. Three were substituted for seven, and the resolution in its amended form was carried. Messrs. Cottrell, Firmin, and Tarrling were nominated, with power to add to their number up to seven.
The proceedings terminated with a cordial vote of thanks to the chairman, directors, and official liquidators.
Yesterday at the Chancery Chambers, a summons was appointed to be heard, taken out by Mr. Edmands on the part of some policy-holders, to ask the approval of the chief clerk, Mr. Bloxam, to a scheme for the reconstruction of the Albert Life Assurance Company. It will be recollected that on Friday last Vice-Chancellor James made an order for the compulsory winding up of the company. Several parties connected with the winding up were present, Mr. Roberts (Messrs. Merriman), Mr. Gaskell (Brandon and Co.), and others. On the part of Mr. Edmands an application was made for an adjournment. It was stated that Messrs. Lewis, Munns, and Co. had given a consent to an adjournment, and Messrs. Ashurst and Morris, the solicitors for the company, had been served with notice. The chief clerk granted an adjournment for a week. It is expected that several new proposals will be put forth to take the case out of the Court of Chancery.
At the conclusion of the business at Chambers a gentleman addressing Mr. Bloxam, the chief clerk, said he was a policy-holder of 30 years’ standing. He wished to ask the chief clerk whether the order of the Vice-Chancellor affected the payment of his premium, and whether it was advisable that he should pay it. Mr. Bloxam said that he could not give any advice about the matter. A solicitor who was present said the official liquidator was in court. It was understood that the order of the Vice-Chancellor was that the premiums should be paid, and that credit should be given for such payment.
UNITED STATES’ DEBT.
TO THE EDITOR OF THE DAILY NEWS.
SIR,—I have received from the Hon. David A. Wells, Special Commissioner of Revenue for the United States, a letter, of which the enclosed is a copy. I shall feel obliged if you will insert the same in the Daily News.—I am, &c.,
THOMAS H. DUDLEY. United States’ Consulate, Tower-building South, Water-street, Liverpool, Sept. 16.
Treasury Department, Washington, August 19, 1869.
Dear Sir,—In answer to the inquiry in your note of the 6th as to the probable surplus revenue of the United States which can be made applicable during the current fiscal year for a further and continued reduction of the public debt, I will, in place of giving you a direct and specific opinion, ask your attention to the following figures:—The accounts of the Treasury for the fiscal year which ended on the 30th of June last have not yet been fully completed; but enough is at present known to make it certain that the excess of receipts over expenditures was at least 48,000,000 dols.; i.e., receipts, 371,000,000 dols.; expenditures, 323,000,000 dols. As no radical change in the laws imposing taxation or in the business of the country can be immediately anticipated, we are warranted in believing that the above surplus will at least be continued during the current year; and we therefore assume it as the basis of our estimate. To this amount must be added two specific items of expenditure provided for out of current receipts during the last fiscal year which will not be carried over into the present year, and must, therefore, be reckoned as a net gain to the treasury, viz.—18,000,000 dols. required to complete the payments for extra bounties; and 7,5000,000 dols. gold (equivalent to 9,5000,000 dols. currency) disbursed in payment of the Alaska purchase. The present annual elasticity of the revenue, or its increase from the increase of the country in wealth and population, will average at present 15,000,000 dols., while the gain from the rigid system of economy inaugurated by the present Administration, and from a more faithful collection of its taxes, will undoubtedly equal, and probably exceed, 30,000,000 dols. The sums of these several items will be found to be 120,000,000 dols., which approximately indicates the amount of surplus revenue which is likely to be placed at the disposal of the Treasury during the current fiscal year, and made applicable for the further reduction of the National Debt. It only remains for me to call your attention to the fact that an annual investment of 100,000,000 dols. at six per cent. in a sinking fund will extinguish the entire principal of our debut in less than 15 years; or if the contribution to the sinking fund be limited to 50,000,000 dols. per annum at six per cent. (and a smaller contribution than this is not in accordance with popular sentiment) the law will only be extended to 23 years; and between these periods you have, in my opinion, the exact time when the present public debt of the United States will be extinguished.—I am, yours most respectfully,
DAVID A. WELLS, United States’ Special Commissioner of Revenue. To Hon. Thomas H. Dudley, Consul of the United States, Liverpool.
THE ALBERT LIFE ASSURANCE COMPANY. ORDER FOR WINDING UP.
Vice-Chancellor James yesterday sat in Chambers, as the Vacation Judge, to hear the several petitions—five in number—presented to the Court of Chancery to wind up the affairs of the Albert Life Assurance Company. The matter would, according to practice, have been heard at the Chambers of the Chief Clerk, but it was represented that the Court could be the only place, from the crowd expected, to hear the case, and it was arranged that the hearing should take place therein. The case was appointed for eleven o’clock, and the court was densely thronged in a short time. His Honour appeared without his judicial costume, and some of the barristers who appeared robed had to divest themselves of their professional habiliments. In the place allotted to Queen’s Counsel appeared Mr. Karslake, Mr. Amphlett, Mr. Edlin, Mr. Webster, Mr. Milward, and Mr. T. Hughes; whilst at the outer bar in the case were Mr. N. Higgin, Mr. Cookson, Mr. Fisher, Mr. Cracknell, and many others.
It was 12 o’clock before the case was reached, the Vice-Chancellor taking the other applications before him, and soon after it was called on a barrister complained that he could not get a seat, and his Honour invited him within the bar, but he declined the invitation to sit with her Majesty’s counsel.
Mr. N. Higgin opened the first petition on the part of Mr. M’Lachlan, for a winding-up order, and wished to state what had been done since the petition had been presented. There were now five petitions before the Court. Meetings had taken place under its sanction, and all premiums paid had been kept separately. The learned counsel enumerated some figures, and said about 1,000l, per day was payable.
The Vice-Chancellor said the only question he had to deal with was whether there should be a winding-up order, and he thought it was the best course to be adopted. It had been stated that he had authorised meetings to be held, and that at an expense of 10,000l. He could only say he had done nothing of the kind.
Mr. Higgin assured the Court that the expense of the meetings had only been 25l.
Mr. Edlin asked to be heard on the case before a winding-up order was made.
The Vice-Chancellor said he would hear all, but it seemed plain that winding-up order was necessary, and the point was on whose petition it was to be granted. He had directed that a distinct account should be kept of the premiums paid in since the commencement of the proceedings, so that those who paid their money could have it returned intact without being sweated for costs or any other expenses.
Mr. T. Hughes, Q. C., with whom was Mr. Ince, appeared for policy-holders, and complained of Mr. Kirby.
Mr. Edlin, Q. C., also appeared for policy-holders, and urged that the first petition by Mr. M’Lachlan was in the interest of the company, and that the second was collusive with the first.
Mr. Amphlett, Q. C., (Mr. Joyce with him) represented numerous policy-holders on the petition of Mr. Wilson.
Mr. Karslake, Q. C., gave his adhesion to the first petition, or the first and second petition. They now all seemed agreed that there should be a winding-up order made; indeed, no other course was open, and the only question was on whose petition it should be granted.
Mr. Milward, Q. C., was for some Liverpool policy-holders.
Mr. Cookson represented the committee of the Indian shareholders, who were in a different position. He wished, in the event of a winding-up order, to leave notice of matters before the Chief Clerk.
After considerable discussion,
The Vice-Chancellor expressed himself of opinion that there must be a compulsory winding-up of the company, and that the best course would be, in order to meet the views of all parties—creditors, shareholders, and policy-holders—to appoint Mr. M’Lachlan, the first petitioner, and Mr. Wilson, for whom Mr. Amphlett appeared, and for other policy-holders to a large extent. Both the interests would be represented, and on those two petitions he should make the order. He had great pleasure in saying that not one farthing would be allowed as costs, except on those petitions and to the provisional liquidators.
The expression of this opinion as to costs caused a murmur of apparent satisfaction in court, and his Honour was understood to add that a public company was not to be considered as a carcase to be preyed upon.
Order made for winding up, with costs to the company and the others mentioned.
A summons, adjourned from Chambers, was afterwards heard, as to the withdrawal of Mr. Kirby from the post of joint provisional liquidator with Mr. Price, but the Vice-Chancellor said there was no pretext for assuming that Mr. Kirby could or would do anything wrong. It was stated by counsel that Mr. Kirby had resigned, and the Vice-Chancellor dismissed the summons with costs.
NEW MODE OF SWINDLING.
TO THE EDITOR OF THE DAILY NEWS.
SIR,—A new form of swindling has lately been adopted by a “City gentleman,” and that with considerable success. He is in the habit of driving about in a six-seated machine with a page boy, and making application for board and residence at respectable establishments in the West-end of London and Brighton. Being an adept at the business, plausible in his manners, and giving in an unintelligible manner great names as references, he soon effects an entrance. He is in the habit of paying for his first week’s board, and during that time he contrives to use the name and respectability of the house to obtain credit to a large extent in the surrounding neighbourhood. When he finds that it will be impossible for him to stay any longer in the boarding-house on account of his inability to pay and the dunning from tradesmen, he contrives some fine morning very early, before any of the inmates are stirring, to vacate his apartment, taking with him everything that he can conveniently carry away. This gentleman has victimised two respectable houses in this way during the past two months; and it is in order to prevent him from swindling others that I request the favour of this insertion in your columns—And remain, I regret to say,
ONE WHO HAS SUFFERED.
THE FAILURE OF OVEREND, GURNEY, AND COMPANY.
On Saturday, at the Mansion-house, before the Lord Mayer, Mr. E. Selby Campbell, barrister, made an application of behalf of Mr. Oswald Howell, of 39, King-street, Cheapside, at 11, St. Aubyn-road, Upper Norwood, for a summons against Mr. Richard Bridgman Barrow, of Sydnope-hall, Matlock, in the country of Derby, and of 53, Hans-place, Sloane-square, Chelsea, for having, on the 11th September, 1869, published in the daily newspapers a false and malicious libel, to the following effect:—“Overend, Gurney, and Co. (Limited).—Notice is hereby given, that Oswald Howell, late partner in the firm of Messrs. Walker, Raddall, Nux, and Howell, of 39, King-street, Cheapside, London, and now a bankrupt, was (by a resolution passed at a properly constituted meeting of the committee of the Shareholders’ Association for taking common law proceedings against the directors, Mr. Holm and Mr. O’Reilly assenting, and which resolution was subsequently duly confirmed) discharged from acting any longer for such committee, in consequence of his having withdrawn from the Bank of England, in conjunction with Adam Thom, several large sums of money belonging to, and without the consent of, such committee, that the said Oswald Howell had no authority, since his discharge, to issue circulars, or do any other act by or on behalf of the said committee.—(Signed) RICHARD B. BARROW, chairman.” Mr. Campbell went on to say that the deposition and information of Mr. Howell utterly denied that any such resolution was passed at a meeting of the Shareholders’ Association such as that described. He affirmed that such a resolution never could have been subsequently confirmed as alleged, seeing that it was never passed, and had it been so passed, no such meeting could whatever have been held of the committee. He further stated that only one sum was taken out of the Bank of England of 900l. 6s. 5d., and that withdrawal took place with the consent of the trustees of the Shareholders’ Association, and this sum of 900l. 6s. 5d., said to have been withheld without the consent of the trustees, was actually repaid to their account on Sept. 6, prior to publishing the libel complained of. The learned counsel maintained that Mr. Barrow had full cognisance of such repayment. He (Mr. Campbell) went on to say that the statement so advertised in widely-circulated journals was calculated to damage Mr. Howell in his commercial character as a man of honesty and integrity. Mr. Howell had no notice of his alleged discharge from the offices of secretary to the Shareholders’ Association, which he had held ever since the commencement of the criminal proceedings against the directors of Overend, Gurney, and Co. (Limited), now some three years ago. It was true that Mr. Howell had become bankrupt, but to a large extent his position had arisen from the fact of his having devoted almost the whole of his professional attention, with very slender remuneration, to the important and complicated affairs of Overend, Gurney, and Co. The allegations could only have been imported into the libel for the purpose of injuring his position in connection with the approaching trial of the directors of Overend, Gurney, and Co., who stand charged with conspiracy to defraud, &c. If the Lord Mayor should be pleased to grant the application Mr. Howell would be prepared with evidence in support.
Dr. Adam Thom, who appeared in person, applied for a summons on similar grounds.
The Lord Mayor granted the summonses, and appointed the hearing for Wednesday next at 12 o’clock.
THE ALBERT LIFE ASSURANCE COMPANY.
IMPORTANT PROCEEDINGS.
A meeting of the policy-holders of the above company was held yesterday afternoon, at the London Tavern, Bishopsgate-street, “for the purpose of considering the best mode of arranging the affairs of the company, and the plan proposed by the provisional official liquidators with reference thereto.” The meeting was convened by the liquidators, under an order of the Court of Chancery, dated the 14th of August. Lord WM. HAY was unanimously called to the chair, and sitting by his side were Mr. S. Lowell Price (provisional official liquidator), Mr. Kirby being absent; Mr. Morris (Messrs. Ashhurst, Morris, and Co.), and Mr. Lewis, solicitor to the liquidators.
The room was densely crowded, and it was computed that at least five or six hundred persons were present.
Before the business of the meeting commenced,
The CHAIRMAN observed, in reply to a question, that although no precautions had been taken at the door to exclude persons who were not policy-holders, he hoped none but policy-holders or their assignees would take any part in the proceedings.
The CHAIRMAN, in opening the proceedings, said, having been a policy-holder for many years, he was happy to place his services when asked to do so at the disposal of the meeting. His pecuniary interest was not very large, but after the failure of an institution of such magnitude it was, in his opinion, the duty of any man who had time at command to place his services at the disposal of his fellow-sufferers. (Cheers.) That was the only motive which had induced him to attend that meeting. The meeting was called, as they had been informed, in pursuance of an order made by the Vice-Chancellor’s Court, “for the purpose of considering the best mode of arranging the affairs of the company and the plan proposed by the provisional liquidators with reference thereto.” The first business before them was to consider the scheme referred to in the notice. It was perfectly true, and he dare say every person in that room was aware of the fact, that the liquidators had thought proper to withdraw that scheme. He did not wish or intend to anticipate the decision of the meeting, but he did not think it was anticipating it to say that he expected that scheme to be summarily and entirely rejected. (Loud cheers.) It had been practically withdrawn. (Mr. Lowell Price intimated his dissent from this statement.) He was corrected; it was not practically withdrawn, and he must therefore ask the meeting to listen to any remarks which the liquidator and other gentlemen who were in favour of that scheme might make. It would afterwards be the duty of the meeting to express its opinion, first with regard to the original scheme of the liquidators, and secondly with regard to any modified scheme which they might offer. He hoped the meeting would not enter into the previous management of the Albert Company, as it would be an utter waste of time to do so. The proper time for that would be when they had before them all the facts—(hear, hear)—and he was quite sure that any condemnation of the past, supposing condemnation to be deserved, would come with the greatest force when it was based upon a consideration of all the facts of the case. (Hear, hear.) After the scheme of the liquidators had been disposed of, the meeting would have to consider what was best to do under all the circumstances, or, to quote the words of the advertisement, “the best mode of arranging the affairs of the company.” As regarded that part of the business, he thought he was justified in assuming that the interests of the policy-holders and of the assignees of policy-holders were for all practical purposes identical. That being so, it followed that in this case, as in every other where action was necessary, union was strength, and that the converse was equally true; namely, that disunion was the source of weakness, and weakness meant nothing less than playing the game of those who had been most instrumental in bringing the institution into its present state. (Hear, hear.) There were only two courses open to the policy-holders of the Albert; one was reconstruction without liquidation; the other liquidation, which included the possibility of reconstruction; the term “reconstruction” including those schemes which had for their object the transfer of the business to any company that was willing to take it. If that classification were an accurate one, it must be perfectly unnecessary to point out that no scheme, whether it were for reconstruction or for any other purpose, could possibly be considered in a place or on an occasion like that. It was impossible to imagine any scheme so simple that its details would not require more attention than could be given to them by that meeting. An object like that could only be achieved through the appointment of a committee, and he was glad to find that one was to be proposed which would as far as possible represent the various interests of the whole body of policy-holders, whether they were in this country or in foreign countries. (Cheers.) He need not point out the enormous importance of appointing such a committee with care, as it would have to consider the various schemes originated, and, if the affair came to liquidation, would have to perform the important duty of recommending a liquidator to the Vice-Chancellor, and urging his Honour to appoint a person in whom the great body of the policy-holders could place entire confidence. The duty of the meeting was plain; it was to seek out as diligently as they could the best course that could be followed. He was afraid that the ruin which seemed to surround the Albert was due in a great measure to the confidence which was placed in persons who were scarcely worthy of it. (Cheers.) He would not permit himself to go into the question of the amount of blame which attached to different persons—first, because that would be to prejudge the question; and secondly, because it might lead him to use expressions which he would afterwards regret. He must, therefore, now ask them to devote themselves to the important question what was best to be done under the circumstances; and he hoped they would act so as to prevent any one from saying that they had, by want of decision, by vacillation, or by any other weakness, rather deserved than otherwise the misfortune which they had all so much cause to deplore. (Cheers.)
A GENTLEMAN, who, amid considerable noise, announced his name to be Joseph, here attempted to address the meeting, but after he had been vainly vociferating for some time,
THE CHAIRMAN called upon Mr. S. L. Price, the provisional liquidator present.
Mr. PRICE said he was exceedingly glad to have that opportunity of giving the policy-holders all the information in his power. In the investigation which he had made of the affairs of the company, he was, he could assure them, wholly uninfluenced by directors, manager, or any one else connected with the company. He had no communication with them, and he alone was responsible for the report which was issued—a report into which, in accordance with the chairman’s wish, he should then refrain from entering, though he would be happy to answer any questions relating to it. The immediate subject for consideration was the plan brought forward by the provisional liquidators. He desired at the earliest moment to say that that plan was never designed by the liquidators to be accepted as a whole by the policy-holders. (Hear, hear.) It was a plan which they were called upon to produce at very short notice indeed; for he need not tell them that the affairs of life assurance companies were not like those of other companies, their position being such as to render instant action absolutely necessary in a case of that kind. What they designed was not so much to indicate the precise mode in which that company might be recon-structed, if, it were reconstructed at all, as to point out the principles on which reconstruction might in their opinion be carried out with safety both to shareholders and policy-holders. That plan had been in print a long time, and it would scarcely be necessary for him to read it. Having read a great deal that had been written, and found a great deal of misapprehension about the design of that plan, he and two other gentlemen on the previous day prepared a memorandum on the subject, and he was sorry that it only appeared in some of the morning papers of that day. The object of those who issued that memorandum was not to enter into a discussion, but to sketch out a course, and he proposed to read that paper to the meeting. He should then sit down that he might have the advantage of hearing the various suggestions which might be made, and he hoped the meeting would afterwards listen to his friends Mr. Lewis and Mr. Morris.
Mr. J. CUNDY said they were met there to consider not the plan but the reconstruction policy.
Mr. PRICE said he wanted the policy-holders to consider what the plan was in principle, not what it was not, and he had seen indications that the matter was not properly understood. He wished the meeting to know exactly what the provisional liquidators meant. As regarded the reading of the memorandum which he had mentioned, he was entirely in the hands of the meeting. (Cries of “Read,” and counter cries of “Sit down.”)
Mr. W. PARKES observed that the meeting was called to hear what the policy-holders had to say, not what the liquidators had to say. (Hear, hear.)
Mr. JOSEPH here again insisted on his right to be heard, especially on the ground that he was in possession of the chair when Mr. Price was allowed to address the meeting.
The CHAIRMAN, however, took a show of hands on the question whether Mr. Price should be allowed to read the memorandum published in the Daily News of Thursday, and declared that there was a slight preponderance in favour of it. No sooner, however, had Mr. Price proceeded to act on this decision than he was met with impatient interruptions which drowned his voice, and he was soon obliged to give up the attempt to obtain a hearing.
Mr. JOSEPH then spoke amid great uproar. He wished, he said, to know who had taken their money. (A Voice—“Robbers.”)
THE CHAIRMAN hoped Mr. Joseph would speak to the purpose. (A Voice—“We want to know whom we shall hang.”) (Laughter.)
Mr. JOSEPH FREEMAN protested against such a course as that of Mr. Joseph being pursued. That was not an indignation meeting, but a business one. (Hear, hear.)
THE CHAIRMAN said he trusted the meeting would support him in calling upon Mr. Cundy, a gentleman who had paid great attention to the question, and who was a very large policy-holder, to move a resolution.
Mr. JOSEPH said he had himself a resolution to propose—(hear, hear)—his object being that officers of the company and others who had received large sums of money should not be allowed to go scot free. (Cheers.) He concluded by moving the following:—“That any committee of policy-holders that may be subsequently appointed be authorised to test the liability of the shareholders of amalgamated companies.”
Mr. W. T. GUYATT seconded the resolution.
Mr. LEWIS said the meeting had been convened to consider only two specific questions, and he thought it would be more respectful to the Court of Chancery if it confined itself to them. (Hear, hear.)
In response to an appeal from the chairman, Mr. Joseph then consented to withdraw his resolution till the close of the meeting, on the understanding that it would then be submitted from the chair to the meeting.
Mr. J. CUNDY said he would not detain the meeting long. They had, he observed, most of them read in the newspapers of that day a sort of apology which had been put forth by the liquidator and two other gentlemen. He called it a sort of apology, because it in no way touched the weak points in the scheme of the liquidators. Any one taking a common-sense view of the matter must have perceived that that scheme was put forward in the interest not of the policy-holders, but of the shareholders. (Hear, hear.) Believing that to be the case he would move—“That this meeting rejects the scheme put forward by the provisional liquidators for the reconstruction of the company, such a scheme being manifestly proposed in the interest of the shareholders, and antagonistic to those of the policy-holders.” (Hear, hear.)
Mr. OMMANEY, in seconding the resolution, said a friend of his had just received a letter from Berlin, in which it was stated that the Prussian Government had seized all the cash and property of the Albert Company in that city, and also the receipts sent out by the liquidators. He agreed with the mover of the resolution, that the scheme put forward was a scheme in the interests of the policy-holders. He had no wish to impute anything to Mr. Price or to his friend Mr. Morris. Mr. Morris’s legal talent was widely known, but they were all aware that even the most respectable solicitors were apt to adopt the views of their clients, and that gentleman might unwittingly have done so.
Mr. MURRAY regretted the absence of Mr. Kirby, because he had intended to put some practical questions to him with respect to the assets. Mr. Kirby ought to know what had become of the reserve fund, which in January, 1868, was stated to be still in existence. The speaker was entering into some items connected with the assets, when he was interrupted with exclamations that those were questions for a committee.
Mr. J. WYLD said, as a policy-holder for 1,000l., he wished to remark that Mr. Price, in making the proposal he had done, was simply acting officially and as a man of business, having no personal interest in the matter. They should do justice to that gentleman as they would to any other man in a similar position. Mr. Price had brought before them a scheme, and he merely asked the meeting to consider it. (“No, no”) He would move as an amendment, “That a committee be formed to represent and protect the policy-holders and annuitants, and to adopt such measures as they may consider best calculated to secure the same.” That committee would have power to examine Mr. Kirby and the directors and shareholders of the company, and to go into details connected with the past management; and he would ask the meeting as men of business not to pledge themselves to any course until the committee had reported. He spoke with some authority on that subject. In the case of the British Bank failure he was appointed representative of the debtors and creditors, and he succeeded in obtaining for the latter 16s. in the pound.
Mr. TARRING seconded the amendment.
The CHAIRMAN observed that practically the question then to be decided was whether the scheme of the liquidators should be rejected at once, or referred to a committee thereafter to be appointed, and requested that the speakers would apply their remarks to that question.
Mr. BASHFORD, who said he was a policy-holder of 20 years’ standing, said about two months ago he wrote to Mr. Easum, the secretary of the company, and to Dr. Beattie, one of the directors, to inquire why the shares had been sold at five or six shillings a share, and the answer he received from both was to the effect that the price of the shares was all a fallacy, and the concern was as good as gold. (Laughter.)
The CHAIRMAN begged the speaker to keep to the point.
Mr. BASHFORD contended that he was doing so. (Crises of “No.”) He added that within the last two years wealthy persons had transferred their shares to men of straw, and that in one instance some shares had been transferred to a schoolboy. From what Mr. Easum said to him, only three days ago, he felt sure that the policy-holders could not realise 200,000l. apart from the shares, and as the latter would not realise more than 50,000l., there would, it appeared, be only 250,000l. to form the basis of a new company.
Mr. MACKENZIE, who stated that he was a policy-holder for 8,000l., thought the wisest course was to appoint a central committee, bearing in mind in its selection that there might be many claims upon other companies which had amalgamated with the Albert.
Mr. HOWARD said it seemed to be the unanimous opinion that the ill-conceived scheme of the liquidators should be rejected at once. (Cries of “Yes, yes,” and “No, no.”) With few exceptions, he thought they were agreed that that scheme was a stupid one, so far as the interests of the fleeced policy-holders were concerned. (Cheers.) Let them have men to represent them who were entirely untainted by connection with the Albert Office; let them have a committee who would tell them candidly how far they had been swindled and by whom, and who would, at the proper time, place the delinquents at that bar where they must sooner or later appear. (Cheers.) He was happy to see that they had at last arrived at a point of concord, and with a view to their going before the Vice-Chancellor with the policy-holders’ view of this subject, he wished to move the following:—“That the plan proposed by the provisional official liquidators be rejected, and that in lieu thereof a committee of policy-holders be appointed to consider and determine, in conjunction with any provisional committees, the best mode of arranging the affairs of the company, and to report the same to a further meeting of policy-holders to be convened by such committee.” (Cheers.)
Mr. GEDGE having seconded the resolution,
Mr. CUNDY thereupon withdrew his resolution in favour of that of Mr. Howard.
The CHAIRMAN said before putting the resolution he would ask Mr. Price to offer any remarks which he might wish to make. (Loud cries of “No, no,” and “We won’t have him,” followed by great and continued uproar, in the midst of which Mr. Price spoke for two or three minutes without making his voice heard by the meeting. He then sat down.
Mr. LEWIS, who met with a similar reception, appealed to the meeting for a hearing on behalf of Mr. Morris and himself, on the ground that their names were appended to the memorandum which appeared in some of the morning papers of that day. He asked the policy-holders, he said, as a matter of business, and a matter of justice and propriety, to hear them in support of the paper which had been placed before them.
Mr. MORRIS rose amid similar impatience and interruption on the part of the meeting generally.
The CHAIRMAN entreated the meeting, on the principle of simple fairness, to listen to Mr. Morris.
Mr. MORRIS, in reply to a question, said that he was a policy-holder. All he wanted, he observed, was a patient hearing for a few minutes, having no wish to interfere with the decision of the meeting. He had had no connection with the Albert Company except as a policy-holder; but in consequence of his having had an experience which was perhaps second to that of no one, in rescuing large concerns like that from the miseries of liquidation, when the company stopped payment he was asked, not knowing a single officer of the company, whether he would apply the experience which he had gained in other cases to that one. (Cries of “Who sent for you?”) After Mr. Lewis had been instructed to present a petition he was sent for at the request of some of the principal shareholders to advise as to what was to be done. (Renewed uproar.) He claimed the right of a professional man to give independent advice when it was sought. Interruptions were continued for two or three minutes, when Mr. Morris resumed his seat.
Mr. Wyld’s amendment having, through the withdrawn of Mr. Cundy’s proposal, become an original resolution, the chairman then put it to the meeting, and it was carried, first as an amendment, and afterwards as a substantive motion, in the latter case unanimously, and amid immense cheering.
Dr. MORGAN, after congratulating the meeting that it had unmistakably condemned the scheme of the provisional official liquidators, moved, “That the following gentlemen be constituted the committee, with power to invite the co-operation of the provincial committees and to add to their number—Mr. J. D. Bell, representative of the policy-holders in Calcutta; Mr. James Bird, Mr. Joseph Bravo, Mr. James Cundy (Messrs. James Barber and Co., Leadenhall-street), General Cunningham, chairman of the London and Delhi Bank; Mr. P. H. Edlin, Q. C., Lord William Hay, Mr. J. H. Matthews, Mr. T. Webster, Q. C., Mr. Octavius Ommanney, and Mr. Howard, the mover of the resolution just adopted.
Mr. W. PARKES seconded the motion.
A long discussion ensued with regard to the merits and suitability of several gentlemen thus proposed, in the course of which there was a declaration on the part of those concerned, that their position was simply that of policy-holders.
Mr. EDLIN, Q. C., having been alluded to, said he recognised that the interests of the policy-holders were directly adverse to those of the shareholders. (Hear, hear.) He recognised most distinctly the absolute duty and necessity of bringing the directors of that most disastrous scheme to a strict and thorough account. (Loud cheers.) Further, he recognised the absolute necessity of committing that onerous duty to professional gentlemen, to be nominated by themselves—(hear, hear)—gentlemen who had had no connection, directly or indirectly, with the directors of the Albert company, and in whom, therefore, the policy-holders could repose unlimited confidence. That was a duty which they owed to themselves and to the windows and helpless orphans concerned; and he called upon the meeting to take care that the beginning of the proceedings did not tend to prevent their proper termination. (Cheers.)
In reply to a question,
The CHAIRMAN observed that the Western policy-holders were represented on the committee as nominated, adding that there were altogether 22 amalgamated offices, and that he had reason to think that the policy-holders were all fairly represented.
The following gentlemen were ultimately selected to form the committee: Mr. J. Bell, Mr. James Bird, Mr. J. Cundy, General Cunningham, Mr. Edlin, Q. C., Mr. J. H. Matthews, Mr. T. Webster, Q. C., Mr. O. Ommanney, and Lord William Hay.
The name of Mr. Howard was rejected, apparently on the ground that that gentleman was a lawyer; while Mr. Mackenzie, who had been proposed, declined to act.
Mr. BELL moved the following resolution:—“That, in the opinion of this meeting, the conduct of the proceedings consequent on the insolvency of the company should be entrusted to gentlemen to be nominated by the policy-holders, and not to those appointed by the directors, who have forfeited the confidence of the policy-holders.” He observed that the immediate cause of the failure of the company was the course pursued by the directors in withdrawing funds from India. A committee of policy-holders in India, not being satisfied with the explanations offered, on the 18th of June the manager, Mr. Kirby, and the directors, knowing that it was essential to keep matters quiet, telegraphed to Calcutta;—“London board will give all information to committee; therefore avoid meetings and publishings. To satisfy all parties a special and ample guarantee will be provided for all Indian policy-holders.” When questioned with regard to the state of the concern, two of the directors, Dr. Nicholl and Mr. Phillips, said it was perfectly solvent.
Mr. FERGUSON, who stated that he was a policy-holder for 3,500l. on the Indian register, in seconding the resolution, observed that when the directors were pressed as to the cause of the withdrawal of the funds from India, they said that since the mutiny of 1857 there had been great difficulty in getting English shareholders to allow funds to remain in India. (Laughter.)
The resolution was carried unanimously.
The resolution of Mr. Joseph was afterwards, in accordance with the understanding before mentioned, submitted to the meeting, and the result was its adoption.
On the motion of Mr. T. Webster, Q. C., thanks were voted to the chairman, and the meeting then separated, the proceedings having occupied upwards of three hours.
At a meeting of the committee of the Albert Assurance policy-holders at Manchester, on Wednesday afternoon, the following resolutions were passed:—“That this committee endorse the resolution passed at their first meeting, and recommend that strenuous efforts be made to get a first-class office to take the business of the Albert, or reconstruct the company under new management. That, if Mr. S. L. Price will act for the policy-holders, this committee have every confidence in him as liquidator, and are also of opinion that a gentleman in the provinces should be appointed to act with Mr. Price, and recommend Mr. David Chadwick, M. P., of Manchester and London.”
TO THE EDITOR OF THE DAILY NEWS.
SIR,—Upon my return from the continent, after nearly a month’s absence, I have become acquainted with the details of the deplorable collapse of this company, and have seen the observations thereon which have appeared in the papers. In some of these I find the amount of compensation which I received more than ten years since in connection with the transfer to this company of the business of the Bank of London Insurance Company commented upon. I shall feel obliged if you will allow me space in your columns for a brief statement of the facts, showing the only connection I ever had with the Albert. In 1853, whilst knowing nothing of insurance companies, I became acquainted with two of the directors of the then Anchor Insurance Company, and was induced by them to become a shareholder in that institution. Having, as the result of representations made to me, entire faith in its character, I took a leading part in the establishment of a branch office in the place where I then resided. Of this I was elected one of the local directors, the M. P. for the borough being its chairman. After some months of prosperity in our branch, rumours impeaching the soundness of the office were conveyed to us. The local shareholders elected a deputation to wait upon the board in London, to demand facilities for personal investigation. Of this deputation I was an active member, All were earnest practical men, but our actuarial knowledge was limited. We however discovered, and reported, what we considered to be errors of the gravest kind in the principles on which capital had been dealt with, annuities granted, and dividends paid, and that its general expenditure for the previous year had exceeded 50 per cent. of its income. After much deliberation it was determined by the shareholders that the company’s operations should be continued under altered conditions. Some of the old directors retired, and new directors and a new chairman were elected from amongst the principal shareholders. These gentlemen refused to take office unless I became its managing director. It appeared to me, and I was advised by my friends, that the active part I had taken in the establishment of the branch office held me morally bound to accept this post; and as the matter was urgent I did so immediately, without waiting to make arrangements for the abandonment of my own business.
By means of a call upon the shareholders, moneys refunded by the old directors, dividends withheld and fees relinquished, the most rigid economy in every department, and the most careful personal scrutiny of every important agency at home and abroad, and the creation of new ones on sound business principles, I succeeded, after three years of most arduous and onerous labour, with the help of a small but loyal staff, and the most generous support of my colleagues on the board, to so far improve the condition of the company as that its income had increased nearly threefold, whilst its gross expenses had fallen from 50 to 15 per cent. In 1857 proposals were made by the Bank of London Insurance Company for the amalgamation with it of the Anchor Insurance Company. No commission, compensation, or other payment was made to any person whatever in respect of it; but I received an appointment for a term of years, the details of which were unanimously approved by a general meeting of the shareholders of each company. The considerable success I had achieved, and the great sacrifices I had made to ensure it, appeared to me to have fairly won a special engagement. I had not long entered upon my new and wider field of operation, which presented also larger prospective advantages, when it was thought desirable that a proposal for the purchase of the Bank of London Insurance Company by the Albert Company (and not its amalgamation) should be accepted. It was in connection with this arrangement, which involved a surrender of the appointment I had obtained as before stated, that I received the compensation in question, which included also my services towards the disposal of the fire department of the business, and my visiting Canada and Newfoundland in connection therewith. All these engagements I faithfully fulfilled. Thus closed, more than ten years ago, my association with the Albert Company. I had previously no connection with it, or any of the companies with which it appears to have amalgamated, except as herein stated; nor have I had any since.—I am, &c.,
THOS. CAVE, M. P. London, Sept. 7.
TO THE EDITOR OF THE DAILY NEWS.
SIR,—The various nostrums suggested in your columns for retrieving the situation of this company appear to me either difficult or unfair. What I have to suggest is very simple, and, if practicable, quite fair. It is founded upon two suppositions. First, that share capital was only necessary to start the company has proved delusive as a security, and may be dispensed with by the policy-holders. Second, that if any society could get together such a constituency of lives at rates corresponding with their present ages, they would be a prosperous mutual office. I therefore suggest that the policy-holders should unite as a mutual assurance society, that all policies should be cancelled, and new policies issued, as at this time, for equal sums as in the old policies less any debt upon them, and at the higher rate chargeable for greater age of policy-holder, or for such lesser sum as the payment of the same amount of premium as formerly paid would insure at the increased age of the policy-holder. Supposing, as we may safely suppose, first, that there was a mortality causing 230,000.l of claims to be paid in the year (I see that it was 220,000l. by last report), and, second, that the original average age of entry was 35 only. Third, that the lives have been on an average ten years at risk, and that the average age of all the policy-holders is now 45. Then the whole policies reconstituted upon an addition of ten years to their premiums, by the Albert’s table of rates, would yield 310,000l. a year in premiums, to meet a mortality claim of 230,000l.—leaving a balance for management and accumulation of 80,000l. per annum. The management and commissions on new business should not exceed 25,000l. a year, which would still leave a balance of 55,000l. for accumulation. Let us suppose that any man wishes to start a new mutual assurance company, what better opportunity could he desire than a society of 20,000 lives (as the Albert must be), to start afresh, as a new society of lives from this date forward. But in order that this should be accomplished there should be no exclusion or selection of lives but all lives on the list willing to so associate themselves should be taken at the rates for present age, &c. As to the shareholders, they have now no interest except as debtors to the policy-holders, and it seems the height of impudence in them to pretend to manage the policy-holders’ affairs any longer. There has been long a dispute as to whether the advan-tages to policy-holders were greater under the mutual or proprietary principle. It is notorious that the capital of many of the proprietary offices is quite insufficient to be any security whatever—while, as in the case of the Albert, the direction being placed in the shareholders, and not generally amongst the policy-holders, the latter find themselves without organisation and without management at the very time when they most require it. As another proof of this delusion as to proprietary offices and the fancied security of their capital, I may point out that the Standard, for example, has 16,000,000l. assured, and its unpaid up capital is 380,000l. In the event of a disaster there, what would be the use of the capital? And yet the Standard is most deservedly esteemed one of our best offices, but it is really, and to all intents and purposes, a mutual office as far as the policies’ safety is considered. The true use of these small capitals was to start an office with—it was the can of water to make the pump suck—but if there should be a fire in the house, a squirt would be as useful to extinguish the flame as “the capital” of such offices to arrest destruction. To all intents and purposes successful proprietary life offices are merely mutual offices paying a tax to a few shareholders, and for all purposes of its future existence the Albert has no more occasion for the shareholders than a drowning man has for a handful of shot in his shoes.—I am, &c.,
LIFE ASSURANCE.
THE ALBERT LIFE ASSURANCE COMPANY.
TO LORD WILIAM HAY, CHAIRMAN OF THE ALBERT COMMITTEE OF ANNUITANTS AND POLICY-HOLDERS.
My Lord,—The questions for the consideration of the committee over which you preside, as representing the annuitants and policy-holders of the Albert Assurance Office, are:—1st. Ordinary liquidation under a winding-up order and distribution at some distant day of the residue of the assets saved from the wreck thereby created. 2nd. Re-construction as the means of preserving the interests, present and future, of the annuitants and policy-holders. 3rd. So-called amalgamation; that is transference as a whole, or in sections, to another office or other offices, which would be to the older and more questionable lives, the worst from of liquidation. Ordinary liquidation and re-construction are essentially distinct. Each has its peculiar difficulties. The liquidation of an insurance company has little analogy to the liquidation of a bank or ordinary commercial undertaking; it has a closer analogy to finance and railway companies. It is a case for the calm judgment of impartial and independent men, able to deal with the present emergency, and to investigate the past proceedings of the company to the fullest extent. But let not the annuitants and policy-holders be misled. The one question of to-day for them is by what means can the present value of their policies be best secured and maintained. The questions of to-morrow and for the future are what can be obtained from the shareholders and assets of the company. The keeping together the vast and valuable connection, the agencies and branches created at so great a cost (which have no value as an asset in a balance-sheet) may be the means, if properly worked, of covering the present anticipated loss on policies. The unanimity of the meeting for the appointment of a union committee of policy-holders to consider and confer upon the different plans submitted, and to communicate with the other committees is a hopeful and reviving symptom. This committee will be able to suggest the kind of liquidation essential to re-construction; to select from and on behalf of annuitants and policy-holders persons for the future management of the re-constructed office, and to submit the persons so selected to the annuitants and policy-holders for approval. This must be done without delay or the connections of the office will pass away. The Indian connection alone has been stated to send 20,000l. per annum of new business of good character. This being done and the plan of re-construction agreed upon, there may be inquiry to the fullest extent as to all questions who is responsible for the amalgamations—what resulting liabilities may still attach to those who betrayed their trust and transferred the policies to another company; whether the amalgamations have been profitable or not—what was the gain or loss due to each—questions beyond the powers and province of an accountant, and requiring the highest talent and closest investigation of experienced actuaries. The annuitants and policy-holders are interested in ascertaining their probable position under a well-devised scheme of reconstruction. The anticipated deficiency between the premiums to be hereafter received and the policies to be hereafter paid is said to be 1,100,000l., or over a million. This is swollen by a sum of say 800,000l. for the expenses and profits of the future office, that is to say 22½ per cent. has been taken from the future income, thus reducing the assets by that amount. This sum represents the loading on the premiums of the reconstructed office, which, if this be so, would start with 800,000l. to the good. The estimated loss on policies is put at an average of 20 per cent., or one-fifth; 100l. policies rank as 80l., 1,000l. as 800l. But can no portion of this deficiency be made good out of the 800,000l. and other profits which attend a business in full operation? Is it right to assume, as in some statements, that a breach of contract exists as to the policies in existence? The event anticipated by the policy, and the non-payment by the office, must occur before the claims for the return of all the premiums can be maintained. Such a claim is neither equitable nor legal: during the payment of the premiums, risks have been incurred, some of which have attached, and been discharged out of the premiums of the surviving members. What portion of such premiums may have improperly gone in dividends to the shareholders is a subject for inquiry hereafter. The effect of the discouraging statements is obvious, the alarm is not unnatural, coming as it does as a new calamity from a quarter least expected. The excitement has been great, but the office is not a wreck, and will only become one from mismanagement. Actuaries of great position have declared that the new office would be sound and strong by the adoption of some of the various plans suggested. The older policy-holders will have to submit to various degrees of reduction, but they are creditors on the assets, the assurance reserve, and the shareholders. The expenses of management may be enormously reduced. I am hopeful as to the result. Let not reasonable men throw away 15s. out of a sovereign, because they may some years hence lose 5s. The excitement is aggravated by the alarm of tearing the office to pieces by an ordinary winding up, in the confusion of which proceeding annuitants and policy-holders will loose all, and the system of life assurance receive a shock which is not warranted by the occasion. It is impossible under judicious and economical management that the future profits will not cover the average deduction of one-fifth. The interests of the policy-holders and shareholders are distinct and in some measure antagonistic, but they may be readjusted on an equitable basis, each giving strength to the other. To effect this, as your lordship said in opening the meeting at the London Tavern on Thursday last, it is the duty of all who may have time or ability to assist their fellow policy-holders.—Believing that this may be done.—I am, &c.,
THOMAS WEBSTER. 2, Great George-street, Westminster, S. W., Sept. 11.
TO THE EDITOR OF THE DAILY NEWS.
SIR,—There has been such a “swooping down” upon the carcase of the Albert, so many beaks have been publicly whetted, and so much natural, wild, and impracticable matter has been put forward on all sides, that men who really do know something of this and of kindred affairs have refrained from mixing themselves up in the crowd of impossible letter writers or the aspirants for equally visionary liquidatorships. As there is now a momentary lull in the air, permit me to address a few lines to you on this distressing, but not likely to remain singular, collapse. In limine I beg to say that my surprise has been awakened less by the disclosures which have been made public than by the suppression of matters which have long been subjects of common report in insurance circles. When the proper time arrives more may be said upon this point. My chief object in writing to you is to suggest a very obvious policy under the circumstances, which I have mentioned to a number of experienced men during the past ten days or more, and which I proceed to explain:
Let the business of the Albert be divided into sections in some such manner as below:—The Indian, the All England south of London and Bristol, the Midland Counties, the Northern Counties, the Scottish, the Irish and Welsh.
Let then, the business in each section be valued and separately dealt with. In this manner the entire business will be readily absorbed by six or nine good offices, and infinite time, money, labour, anxiety, and agitation saved. No one company can well take over so large a mass without, to a great extent, encumbering its neck with a millstone; and even if a sufficiently powerful office consent to take it, several considerations strongly present themselves:
First—Such a company would necessarily be able to dictate its own terms.
Second—Even if disposed to act with as much liberality as is consistent with bare prudence, it is evident that such a company would allow nothing, or next to nothing, for the connections, agencies, and organisations of the Albert (which would be of value to smaller offices), as it would, of necessity, be independent of such additions.
Now, by parcelling the business out, a much larger number of sound offices—unable to cope with the whole, but perfectly good for a part—would be available for treaty. Much better terms could be thus secured, and much valuable time and money saved, and many heartaches spared. These sections would, doubtless, greatly differ in value, and while some might be taken over at par, or even at a premium, others might be at an enormous discount. But these matters could be very easily adjusted by the application of the principles of strict, mutuality to all the policy holders. Thus, by spreading the loss equally and proportionately over all the policies, and requiring the purchasing companies to pay to a central fund (say the committee appointed yesterday) the value of the business of the better sections, including the value of the amounts which may (not necessarily will) have to be written off each policy in order to make up deficits on other sections, and which the committee, or the central fund, would hand to the purchasing companies of the less favoured sections—the gain all round would be enormous, and the individual loss comparatively insignificant, or, at all events, greatly minimized. In effect, the Central Committee would, if found necessary, after estimating the assets and receiving the offers of various companies, practically make a pro rata call upon the policy-holders—not by asking them to pay money, but by inviting them to assent to a certain slight reduction of their policies; and it is evident that incalculably less loss would be incurred under the method than under any other yet proposed. And if, when the policy-holders are all “housed” in good offices, the Committee realise further funds from the shareholders of the Albert proper and of the amalgamated companies, they could divide a rateable dividend to the policy-holders in compensation of the reductions, if any, on their policies. I earnestly recommend these suggestions to the consideration of all interested, and, if desired, and by your kind permission, I shall be glad to further elucidate them.—I am, &c.,
L. C. A. Falcon-court, 32, Fleet-street, London, E. C., Sept. 10.
TO THE EDITOR OF THE DAILY NEWS.
SIR,—So much misconception appears to exist in the minds of the policy-holders as to the measure of their claims against the office, that I trust you will be able to find space for the following extracts from Professor de Morgan’s valuable “Essay on Probabilities, and their application to Life Contingencies” (Longman and Co), which places the matter in a singularly clear light:—(Page 265) “Among the sources from which the insurance offices have drawn profit we must reckon lapsed policies. It has frequently happened that an individual assuring his life has continued his premium for a few years, and then allowed his policy to lapse to the office by non-payment. The office of course is benefited, but not as might be supposed by the total amount of the premiums paid. What it has received does not all become profit by the lapse of the policy, but only that portion by which the premium for the whole life exceeds that for a temporary assurance. Every premium paid by an insurer contains the consideration given for the chance of his dying in each and every subsequent year. If, then, he remain a member of the office and stand the risk of death during a certain number of years, all such part of the premium as was consideration for the risks of those years became due to the office, and was taken by the office as compensation for those risks, and cannot therefore be said to fall to it as profits upon the lapse of the policy. Two individuals, A and B, go to the same office on the same day, and assure their lives for the same sum each—A on his whole life. B for seven years only. A pays, say, 10l. premium, B 7l. At the end of seven years A allows his policy to lapse just at the time when B’s policy expires by its own construction. What does the office gain by the lapse? Evidently the temporary annuity of 3l. by which the premiums differ. Out of each 10l. paid by A, 7l. was not more than sufficient to pay his share of the claims which arose during the years he remained in the office; the remaining 3l. was a reserve for future years, which, on his declining to stand the risks of those years, becomes profit to the office. Perhaps no part of the subject is less understood than this. Persons having assured for their whole lives, and being desirous to discontinue, are surprised to find that they cannot get for their policies even as much as the premiums they have paid, to say nothing of interest. Each of them reasons thus: ‘Since I did not die, the office lost nothing by me, and as it turned out, ran no risk—Why, then, should they not restore me the premiums I have paid? To which it should be answered, ‘Because the risk which turned out favourably in your case, did not produce the same result in others, and it is the very essence of an assurance office that those who live pay for those who die. If you can induce the executors of those who have died during the time your policy existed to repay to the office what they have received from it with compound interest, then the office can repay you your premiums also with compound interest.” . . . The preface also contains the following passage, written in August, 1838, but of great value in 1869. After referring to the “puff” advertisements of rival blacking dealers, the Professor says:—“If there be in the country a person whose ambition it is to walk in the brightest boots to the cheapest assurance office he has my pity, for granting that he is ever able to settle where to send his servant, it remains a difficult question to what quarter he shall turn his own steps. The matter would be one of no great consequence if persons desiring to assure could at once be told to throw aside every prospectus which contains a ‘puff;’ but unfortunately this cannot be done, as there are offices which may be the most eligible which adopt this mode of advertising their claims. . . . Public ignorance of the principles of assurance is the thing to which these advertisements appeal. When it shall come to be clearly understood that in every office some must pay more than they receive in order that others may receive more than they pay, such attempts to promise the public a certainty of unusual profit will entirely cease.”
The work from which these extracts are taken is much too abstruse and mathematical, as a whole, for general circulation, but it would be of much advantage at the present time if the publishers would reprint separately in an accessible from the chapters “On the Nature of Insurance,” “On the Management of an Assurance Office,” and “On the Adjustment of the of the various Rights of the Members of an Assurance Office,” in a word, the nonmathematical portion of the book, which, emanating from so distinguished a scholar and so upright a man as the learned Professor, deservedly commands the respect of all interested in the matters with which it deals.—I am, &c.,
G. W. Sept. 9.
TO THE EDITOR OF THE DAILY NEWS.
SIR,—As one who has had a little experience in the liquidation of some of the gigantic failures of 1866, and who has also seen the beneficial working of those which have been resuscitated, permit me to offer a few suggestions to the policy-holders. I am not about to advocate the scheme put forward by the provisional liquidators, nor shall I enter upon any other scheme; but I propose to warn the policy-holders against being led by the nose by those whose only aim is to place themselves in the position of the present liquidators of the company and their professional advisers. I was rather surprised to learn from your report of yesterday’s meeting that men of business and men who have large interests at stake would not listen to anything emanating from Mr. Price or Mr. Morris. The questions at the present moment are—Whether there is to be a liquidation or a resuscitation, and what is best to be done to preserve the property and business of the company. I should like first to point out to policy-holders the results of liquidations. I believe with one exception only has any large liquidation succeeded in paying off the whole of its liabilities, and that was accomplished chiefly by means of calls on the shareholders. I should like to point out the cost of these liquidations, and then I would refer them to those cases where a resuscitation has been successful, the creditors have been paid in full and with interest, the costs of liquidation have been saved, the shareholders have not been called upon; and the concerns are now firm and doing good businesses; Mr. Morris was, I believe, the originator of the plan, and carried through successfully the resuscitation of these concerns even after such a course had been declared impossible; and he has received the thanks of all parties interested. The Manchester policy-holders set an example which I am sorry was not followed by the London ones—they did not pledge themselves to any scheme; but they listened to the professional gentlemen’s suggestions, and, whether practicable or impracticable, I have no doubt they will be carefully considered by the committee appointed; and they also nominated a second liquidator to be appointed if necessary. The policy-holders will do well, however, to follow this example. If they desire litigation, they will find no lack of professional gentlemen who will be ready to encourage this desire.—I am, &c.,
FREDERIC COKER. 32, Cheapside, Sept. 11.
TO THE EDITOR OF THE DAILY NEWS.
SIR,—I find that I made an important omission from my letter of yesterday. I should have mentioned that all claims and annuities payable by the new company were subjected to a deduction of 25 per cent., and that the expense of management varied with the income, the maximum being 20,000l. and the minimum about 9,000l. per annum—the balance of yearly receipts varying from 80,000l. to 25,000l. There seem to be but three possible ways of making the Albert solvent; any plan must be either one of these or a modification.
A present payment of such a sum as would provide for the deficiency in the Assurance Fund, nearly 1,000,000l. sterling. This is hopeless.
A pro rata reduction on actuarial principles of all the policies, so as to equalise the assets of the office with its reduced liabilities.
The danger in this is that the younger and healthier lives would withdraw. Some of your correspondents have already advised this.
- A deduction for a certain number of years from the claims against the company of such a percentage as would at the end of that term enable it to show 20s. in the pound.
It was this last plan the practicability of which I investigated, the result proving that 25 per cent. deduction is not sufficient.
Supposing all the assurers to consent to a reduction of say 40 per cent. form all claims for a period of ten years, the company would recover itself in that time. But would not the majority of the policy-holders think the remedy worse than the disease? It would give to the survivors their present policies in full, and the profit that might be derived from new business which the new company being solvent could then undertake.—I am, &c.,
WILLIAM KING. English and Scottish Law Life Assurance Office 12, Waterloo-place, London, Sept. 11.
TO THE EDITOR OF THE DAILY NEWS.
SIR,—I find the name of Mr. James Wyld as one of those selected at the meeting of policy-holders on the 9th inst. to represent the interests of the policy-holders. I should be glad to know that this gentleman is not one and the same with the Vice-President of the Central Gas Consumers’ Company, which has lately become celebrated through the embezzlements of Benjamin Higgs. If he be, I, for one, must be excused for saying that I object to my interests being represented by him. Are we not at the present moment reaping the fruits of our confidences in the late manager of the Albert, and might not the great loss suffered by the Gas Company have been saved had a little of that supervision generally expected from presidents and vice-presidents been exercised in the case of Benjamin Higgs?—I am, &c.,
A POLICY-HOLDER NOT PRESENT AT THE MEETING. Sept. 11.
FEW persons at all acquainted with rumours or the realities of insurance business were surprised to learn, as the pubic did by an advertisement which appeared in our columns yesterday, that another great Assurance Company could no longer keep its difficulties from the knowledge of the world. It was well known that the Albert was hardly likely to fall alone, but that other companies of somewhat similar history and constitution had been terribly shaken by its overthrow. Chief of these was the European, and the revelations made before the Vice-Chancellor yesterday, on the presentation of several petitions to wind up the Society, render it no longer wonderful that rumour had been so busy with its name. We need not assume that the statements made by Mr. KEKEWICH in support of his application are a complete account of its affairs, but the whole of the proceedings of yesterday can leave no doubt in the minds of the public that a failure, greater and more ruinous than that of the Albert, is imminent, if it has not actually taken place. The figures of what we believe is the last report issued by the Society have prepared us for much of the revelations of yesterday. The Society advertises a subscribed capital of 800,000l., but the share capital actually invested is only 159,019l. The invested funds are down for 755,100l., including the above-named share capital. The sums assured, with the bonuses, are stated at 11,276,600l., and the assets, therefore, represented only 6l. 13s. 11d. for every hundred pounds of prospective liability; or 1l. 3s. 9d. more than the Albert. Of course this prospective liability can never become actual till the premiums are all paid; but the amount which will become actual in the winding-up depends in some degree on the nature of the wind-up. If the policies are handed over to some other company the value of the premiums due on them can be set over against the prospective liability on them; but if it becomes a case of mere broken contract on the part of the Society, the greater portion of the premiums paid on every policy will have to be refunded to the policy-holders. What chance there is of doing this will be learned hereafter; but if the statements made yesterday before the Vice-Chancellor be at all complete, the condition of the Albert will hardly compare unfavourably with that of the European. It is, however, premature to discuss these matters on the very partial information which is before us. But even on the basis of Mr. KEKEWICH’S statement we see one hopeful sign. He, indeed, said that the call of 5s. per share, made during this summer, had been used to pay a debt to the bankers and a dividend to the shareholders, but he also said the call had produced 150,000l., and that five times as much remained unpaid on the shares. But even the 750,000l. which thus seems to be available is probably but a dividend on the vast indebtedness of the society, and there seems to be no probability that any successful resistance will be offered to the winding-up petitions. We shall, however, have the manager’s side of the question on Saturday week; and if there are any reassuring facts to detail, it is to be hoped that the directors will let the policy-holders and shareholders know them as soon as possible.
One very important feature of the European Society was its remarkably heterogeneous constitution. We have heard much of the amalgamations of the Albert, but the Albert is nothing in this respect to the European. Its manager, Mr. LAKE, was once hailed by one of its directors, Mr. BERMINGHAM, as “the great amalgamator,” and the Society itself is literally and actually the great amalgamation. The Albert absorbed ten Societies, and those ten Societies had previously absorbed twelve others, so that it formed an aggregate of twenty-three Companies. The European has absorbed eleven Societies, but one of those Societies—the British Nation—had previously absorbed as many as the Albert, so that the existing European is a great aggregation of thirty-four Companies. To describe these various amalgamations is like stating a puzzle. A correspondent tells us of his transference from the Diadem to the Anglo-Australian, from the Anglo-Australian to the British Provident; from the British Provident to the British Nation; and from the British Nation to the European. Other persons might tell as long a story under different titles. For example, the General Indemnity Company was formed in 1853; in 1857 it was amalgamated with the Commercial; in 1858, the Commercial was amalgamated with the English Widows’ Fund; in 1860 the English Widow’s Fund amalgamated with the British Nation, and in 1865 the British Nation amalgamated with the European. Even this all-absorbing European itself has undergone transmutation. The present Society was originally formed in 1853, and called the People’s Provident; in 1858 it absorbed the original European, which had been founded in 1819, and took its name; and on amalgamating with the British Nation in 1865 it took from that Society its manager, some of its directors, and many of its characteristics. All these aggregated Societies have, in fact, been running through a long cycle of change which now seems likely to end in dissolution. A number of Societies which could not stand alone united in little groups, hoping to stand together. Being even then too weak to bear the stress of life, they aggregated in larger bodies, and the British Nation and European were the result. Not even these aggregations gave them sufficient strength, and the two aggregates united to support each other. But the union which is strength is not the mere aggregation of weakness, and Societies which could not stand alone have failed to stand even by crowding together. The whole thirty-tour of which the European Society consisted have, therefore, followed the lead of the twenty-three which constituted the Albert, and gone to the Court of Chancery to ask for quiet dissolution and decent burial.
Quickly as this catastrophe has followed on the former, there is no necessity for panic or alarm. The insurance world is excited; great amalgamators are uneasy, and the shareholders of the fifty-seven Societies are alarmed, but the insuring public have small cause for fear. The well-established Societies, which have large invested funds, give small commission to agents, and have become what they are by a process of healthy growth, will not even feel the fall of those which can be shaken down. It is true that both the Albert and the European were large Societies—among the largest in the Kingdom. But their large size was the result of aggregation—not of growth. Their magnitude was not the result of one great success, but was the mere pilling together of a few small successes and a multitude of failures. Nothing is safer than a wisely-managed Life Assurance Society. The uncertainty of life is purely individual; in the mass all uncertainty disappears; and the business of assurance is one which compensates for individual uncertainty by the statistical certainties of society. Such a business can only possibly fail from miscalculation, mismanagement, or peculation. It will be for the policy-holders and share-holders of the European Company to inquire to which of these causes, or what other cause, is to be attributed its untimely end.
Now that the London meeting of Albert policy-holders has been held it may be hoped that the affairs of the Company will enter on another stage. Legislation by public meeting is always unsatisfactory, and this case has been no exception to the rule. A number of persons called together on a question which excites their feelings may demonstrate and denounce, but cannot deliberate. Such gatherings give needful vent to pent up feelings, but they add nothing to the wisdom and but little to the information which is needed for action. The London meeting was pretty much a reproduction of the chief provincial meetings. It was a gathering of victims, and the aggregate of their indignation was greater than the aggregate of their wisdom. Every man felt that he had been deceived, perhaps defrauded; and his demand was for a victim on whom to vent his anger. Provincial meetings had Mr. KIRBY, and were satisfied by an unanimous vote of want of confidence in him and in all connected with him; but Mr. KIRBY wisely retreated previous to the metropolitan meeting of yesterday, and there was nobody but Mr. PRICE to make a scapegoat of. So Mr. PRICE was put down. The meeting would not hear the memoranda of Mr. PRICE and the solicitors, would not let Mr. PRICE speak, but came to its resolution without a word from any of those who were prepared to defend the liquidator’s proposal for reconstruction. Now we grant that all this indignation is perfectly just, but it is only fair to Mr. PRICE and the solicitors who acted with him to remember that they are not its proper objects. They assure the policy-holders that they “had not the smallest connection (professional or otherwise) with the Company prior to its stoppage,” and their object has been to save the wreck from the wreckers, and make the best possible arrangement to prevent the calamity of breaking up. Nor does there seem to be any desire to force their scheme on the policy-holders. They have almost unanimously rejected it, and we have all along held that they would, and should, reject it, but there is no need to do so with indignation. Apart, however, from this very natural, but rather untimely, anger the meeting acted wisely enough. They were called together to consider the liquidator’s scheme, and to decide what course to take to defend their interests, and to arrange the concerns of the Company. Their eventual resolution, which was carried almost unanimously, was to reject the plan of the provisional liquidator, and in lieu thereof to appoint a committee to determine, in conjunction with the provincial committees, the best means of arranging the affairs of the Company and report to the policy-holders at a future meeting.
This resolution is a wise one, because it merely removes one scheme out of the way and leaves the ground open for the proposal of another. The policy-holders have now a central committee in London, prepared to co-operative with the committees formed in the large provincial towns, and together with them constituting a representative body having charge of their interests. This policy-holders’ parliament will at once supersede all the little cliques and parties which persons in pursuit of business have formed at their private offices. Hitherto the policy-holders have been an unorganized crowd, without a leader or a purpose, and a host of would-be leaders have offered to put themselves at is head; now the occupation of such gentlemen is gone, and any advice they may have to offer, any plans they may have to suggest, can be communicated to a representative body, which has ability to deliberate and power to decide. Of course, the usefulness of this body still depends in some degree on the allegiance it receives from those for whom it acts; but it is so obviously the wisdom of the policy-holders to act together that it is hardly possible to believe that any considerable section will be disposed to take independent courses. The feeling of all the meetings has been that expressed by Lord WILLIAM HAY yesterday, that their hope is in union. What the actual legal status of such a committee may be, how far it will have power to act, and what may be the effect of its action, remains to be seen. That it can organize the policy-holders into a new association, or make and receive proposals from other societies for taking over the policies, is obvious, but in either case each individual policy-holder will be at liberty to act on its suggestion or to reject its proposal. It is less certain how far it may be able to go in enforcing liability or bringing home responsibility for the mismanagement or the extravagance of the past. But this is not its present business. The question now is—What is to be done to save the business. The machine has stopped—can it be set going again? The vessel is upon the rocks—can it be got off and taken into harbour, there to be refitted and put under new guidance? Everybody agrees, or nearly everybody, that the worst thing which can be done is to break up, to let the Company drift into liquidation, and to sacrifice the business. The value of the business is the best asset of the business, but it is an asset which can only be realised by some method of keeping on the policies. The large annual income which arises from the premiums of the policy-holders is said by some persons to be nearly sufficient to meet all the claims under the policies as they become due, and the first question to be asked is whether the income can be continued and the polices preserved. The liquidator and the solicitors, in their memorandum, doubt whether a new company can be formed, except on some such terms as those which their scheme suggested. They are also doubtful whether any existing company will take over the business. But the duty of the committee will be to solve these doubts one way or other as speedily as possible; and they will do well to direct their whole attention to that object. It will be time to go back over the past when the future is provided for.
One or two matters which were mentioned at yesterday’s meeting require a word of comment. A distinct proposal was made to authorise the committee to test the liability of shareholders and the amalgamated companies, and it would probably have been carried had it not seemed to lie beyond the function of the meeting. The provisional liquidator had already, in the memorandum the meeting refused to hear read, explained that in all such cases the responsibility of such shareholders, if they have any, would have to be separately settled in each individual case. As to the general Albert shareholders, their liability is estimated at only 150,000l., and the liquidator very fairly pleads, not only as Portia pleads with Shylock, the blessedness of mercy, but, as a modern liquidator may more successfully plead with a modern creditor, he pleads that mercy is most profitable. A resolve to have the pound of flesh may even frustrate itself. Towards other parties no such consideration will be either profitable or wise. Some policy-holders yesterday asked for further information about the assets, but the provisional liquidator had already told them that one of the first duties of an official liquidator would be to investigate most strictly whether the payments made to amalgamators and others were legal, and whether those who have received enormous sums from the Company could be made to disgorge any portion of their spoil. But it is quite clear that the time for the discussion of these questions has not yet arrived. The step which has now been taken ought to carry the affairs of the Company out of the arena of excited discussion into that of cool inquiry. The policy-holders now know the worst—henceforth their prospects may begin to mend. The first thing to be done was to find a representative of their interest, and now that a representative body has been found, all that the policy-holders have to do is to give allegiance and confidence to it. The thing now to be done is for the committee to save the business, if they can, and they must do this in one of three ways. They must either re-organize the Company, or form the policy-holders into a new company, or get some other company to take over the business. Either way the policy-holders must lose something; but if neither of these plans be adopted, and there is a mere scramble for the assets, they may lose all.
Text according to MEGAdigital (Berlin-Brandenburgische Akademie der Wissenschaften), MEGA² IV/19, licence CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0/); the editorial apparatus of the MEGA is not reproduced. ↩