DIARY OF R. PEPPER, OUR IRASCIBLE AGENT. June 21st.-Had a hot time this morning with G. W. Solomon, who hesitated about taking a policy issued by the Equitable because he could get "cheaper" assurance elsewhere. After I got through with him he was glad to get the policy I offered him, and promised to take another in the autumn; so I may as well make a record of what I said to him. It may help me with some other blockheads later on: "You've got the wrong sow by the ear if you expect to get 'cheap' assurance out of me. I've got a reputation to protect. The assurance I sell is guaranteed-not only as to quantity, but as to quality. When you buy a cheap wagon and it goes to pieces, you usually get hurt. What is life assurance, anyway? Is it a venture-a peradventure? Is it an expectancy-a shadowy hope? Isn't it protection? And is protection good for anything that does not protect? "You can get along with cheap shoes. They may hurt your feet and make you lame, or they may wear out and put you to the expense of a new pair -but you can get a new pair. You can get along with a cheap, ill-fitting suit of 'hand-me-down' clothes, but they may cost you more than they are worth. In the first place, you may take cold, because they are not 'all wool,' and be laid up for. a week; or an important deal that you want to put through may fail because you look like a tramp; the other man may conclude that you would look more prosperous if you really represerted a good thing. Still, if you are a very shrewd man you can look shabby and be successful at the same time. But when you buy a life assurance policy it's different. You can't correct an error after you're dead. "For goodness sake, exercise a little plain, ordinary common sense! Get the best or go without. Invest with the Equitable-the strongest in the world-or else invest in some other way altogether and take your chances of dying. "Did you ever hear of the man who carried a long rope in his trunk, and whenever he went to a hotel tied it to the leg of his bed so that he could escape in case of fire? One night he thought the hotel was on fire and started down his rope, but it broke, and he was killed, although there wasn't any fire-it was a false alarm. It's better to trust your legs than a rope that is rotten or too short. "No! You don't want 'cheap' life assurance. Take the best or go without. But, at the same time, remember that a man situated as you are can't afford to go without." BROOKLYN AGENCY MEETING. On Tuesday, April 24, Manager C. J. Edwards gave a lunch and pow-wow to the Brooklyn branch agency force at the Crescent Club, Brooklyn. About thirty in all were present. Mr. C. J. Edwards presided, and had at his right and left, as guests of honor, Second Vice-President Tarbell and the Hon. John C. Eisele of the New Jersey agency. Manager Edwards gave a brief but most interesting talk, in which he thanked the "boys" for their continued and loyal support, and said that it was unnecessary to ask its continuance, as he knew he was sure of it. In conclusion he introduced Mr. Eisele, who, in his brief speech, held the attention of the audience from the start. He told what had been accomplished in the New Jersey agency, and said he had no doubt that in a few years the Brooklyn and New Jersey agencies would be running neck and neck. a sentiment which was re-echoed by al present. Brother Treadwell then read ar original poem, which is reproduced in another column, and introduced Mr. Tarbell, who received a royal reception. Most of our readers have heard one of G. E. T's. heart-to-heart talks, so it is unnecessary to say that he roused the greatest enthusiasm. At the end of his speech every one present promised to do their best to round out this year with a larger amount of business than ever before. Among those present were: C. H. Bradner, Arthur L. Burnham. Edward A. Beatty, Jennings DeWitt, Chas. Jerome Edwards, Bernard Ganz, James Gray. Walter M. Morgan, Edward L. McKenzie. William McCarthy. R. W. McCord, Charles E. Moore, William A. Persch, Isaac Reichmann, William H. Suydam, W. Nelson Seely. J. Parker Sloane. A. A. Treadwell, R. B. Trousdale, C. Whitbeck, H. M. Whitbeck and F. F. Edwards. Most people have erroneous ideas about "deferred dividends" and "deferred dividend policies," which are so fixed in their minds that, although the truth may be repeated over and over again, it makes no impression, but goes in at one ear and out at the other. The Hon. Edwin L. Scofield of Connecticut may be pointed to as furnishing a refreshing exception to this rule. In the last report issued by him as Insurance Commissioner of Connecticut, he frankly admits that investigation has shown him that certain preconceived ideas of his were erroneous. He has imbibed certain popular fallacies regarding the practise of the Mutual Life, the New York Life and the Equitable. He had supposed that these companies, at the end of every year, declared a dividend on each deferred policy (laying it aside to be paid later on), but Mr. Scofield's preconceived notion was erroneous, and as soon as he grasped the truth he frankly reversed his conclusions. The essential difference between the two policies is this: that the dividend on an annual dividend policy is declared at the end of the first year and at the end of each succeeding year. The dividend on a deferred dividend policy is not declared until the end of a period of years, usually twenty, but sometimes a shorter term. Mr. Scofield now admits this important distinction, and cites the three great companies as exemplifying it in their practise. In commenting on a previous discussion with two of the three companies he says: "The primal question involved in that discussion was whether the large amount returned [i. e., reported] by the companies, denominated by one 'Contingent Guarantee Fund' and by the other 'Surplus,' had in whole or in part by any action of the company been apportioned or otherwise placed to the credit of policyholders either individually or in classes." This question Mr. Scofield now answers correctly when he says: "I find that neither of the companies have, as to the sums reported in the annual statements, apportioned, appropriated or set aside any portion of the same to any policyholders or class of policyholders in any manner or form whereby it can be claimed that there is any present or future fixed liability on account of the same. . . No policyholder has any right or interest therein until the expiration of the distribution period, at which time his interest may be calculated upon the development of the business during the period of his membership and the then existing condition of the fund. If necessity requires, it is absolutely within the power of the officers to appropriate the entire fund for the protection and safeguarding of the institution." If this sensational statement startles the reader and arrests his attention, it will serve a good purpose; for nine-tenths of the policyholders and agents of the various companies are densely ignorant of the real quality of the surplus accumulated on deferred dividend policies. Mr. Scofield will have done the cause of life insurance a service, therefore, if he awakens some temporary alarm by the bald assertion that "it is absolutely within the power of the officers to appropriate the entire surplus fund for the protection and safe-guarding of the institution." What does this mean? If it is a truth, is it not an alarming truth, which should be referred to only in whispers? No! This fact is the glory and strength of those insurance companies whose management is most enlightened. It is the thing of all others which has made the deferred dividend form of policy the best of all life insurance contracts. Although the public may be ignorant of the fact, it has been the chief factor in making life insurance so mighty a power in the land. It is what has given the people confidence in it. It explains why men of wealth who do not "need" insurance are now investing large sums of money in it. When Mr. Scofield says that the whole surplus of a company may be appropriated to safe-guard the institution, he does not say that it must be so employed, or even that it is likely to be so employed. It does not follow, because the company has a surplus fund of fifty, or sixty, or seventy million dollars, which might, in case of necessity, be used to avert disaster, that the whole or any part of it is likely to be needed for such a purpose. On the contrary, the possession of so large a surplus insures the permanent stability of the company, and averts perils that otherwise might result in loss. Investors pay a higher price for stability than for any other quality which an investment possesses-and there is no form of investment in which stability is of so much importance as in life insurance. Therefore, it is well that our great companies are so conducted as to maintain a large surplus, thus heavily buttressing an already strong institution. It would be the greatest of calamities if the surplus accumulated by these companies on deferred dividend policies could be metamorphosed into a fixed liability, for then the fund instead of adding support to the company would be an additional weight of obligation. It is because this fund is surplus that it is of such incalculable value. But because it is surplus, and because it can be used to protect the interests of the company's policyholders, it does not follow that policyholders have any reason to expect consequent diminution in dividends. a Many a case might be cited where the captain of a ship has thrown a rich cargo overboard because the ship and the lives of the crew were of greater value than the cargo. But it does not follow from this that we should consider all cargoes in imminent peril. Nevertheless, it would be folly to put to sea with a cargo so fastened down that it could not be removed; for it is better to sacrifice the cargo than to lose the ship and the crew as well as its freight. Now, the surplus of a life insurance company is, so to speak, a rich cargo representing present wealth and future profit to the policyholders, and it is not to be despised because under a remote contingency it might have a secondary, but most important use, namely, to save something of far more value than itself, i. e., the integrity of the company and every one of its policy obligations. But observe that, as in the case of all illustrations, this parallel must not be pushed too far. The cargo can only save the ship by being sacrificed, whereas the surplus of a life insurance company may often in cases of peril be employed to avert disaster, and yet remain intact and be subsequently distributed to policyholders. This is a marvelous and admirable paradox-that the surplus may thus be used and yet saved. It is as though the cargo could be sacrificed to save the ship, and yet remain intact and be safely delivered at the end of the voyage, and sold for the enrichment of its owners. There is another fallacy so firmly fixed |