5
is a H*pabllcaii affair. Such action would be
practically eijuivr.ler.t to support of Mr. Kelsey.
and juisr-t. leave a good opportunity for his
friends, if numerous enough, to cause a dead
lork.
Oovernor Iluphes said to-night that he could
ret tell definitely whether the matter would be
ready to submit to the Senate to-morrow. He
•wanted ti» give the Superintendent of Insurance
opportunity to present any answer he desired,
and whether the recoTr.n;e*''iat!on would go to
the Senate to-morrow would depend on how the
case developed. He said, however, that he was
desirous of closing the matter as s->on as pr.s
ell.l*.
MANY ATTEND HEARING.
When the Governor entered The large chamber
from an inner room precisely at 2:30 o'clock,
there was already a group of auditors waiting
expectantly. Senator Page, who. If any contest
results in the Senate, will lead the Hughes
forces, and Senator Cassldy, who may lead the
opposition, sat near the Governor. Senator
Raines, Senators Hooker and Franchot, both
personal friends of Mr. Kelsey; Assemblyman
Prentice, a member of the Armstrong commit
tee; Assemblyman Moreland. the majority lead
as;, and many other legislators were present, ai
«•«!! as scores of attaches of the various de
portments In the Capitol.
Superintendent Kelsey arose to greet the Gov
ernor, and then took a seat facing him. Brief!}
the Governor said that in view of the super-
Intendent's evident feeling that justice required
the consideration of [acts touching his adminis
tration, the best course would be to take testi
mony. Superintendent Kelsey asked if he might
have counsel. Governor Hughes replied that
counsel technically would have no standing, but
if any point came up that required such ad
vice, he would be glad to have Mr. Kelsey taka
advantage of such counsel. Then Superintend'
ent Kelsey asked how long the examination
would he. .
"The reason for my asking. Governor," he ex
plained, "was the unexpected suddenness, as
you might say, of being asked to come in, and
not knowing' the - ope of the examination
at all."
"I supposed you were at ell times ready to
Inform me," said the Governor. "I didn't sup
pose you would he In any respect taken by sur
prise.* I shall sndeavor to make the scope of
the Inquiry such as will be entirely proper."
"The surprise, Governor, If you will allow
me just a word, was not that you should ask
It. bat of the formal preparation of the exam
ination. My own idea has been that If we could
talk together over what the situation was I
could give you my ■:•-:' of it. and the situation
that I have been under to better advantage,
perhaps, than in ■ formal examination of this
character, but I am perfectly willing to abide
by your decision."
The Governor Hughes reiterated that since
so much discussion of the situation had re
sulted, ho thought it best to "pet at the facts
and put tin beyond the likelihood of dispute."
and administered the oath to Superintendent
Kelsey.
EXAMINATION OF MR. KELSEY.
The examination of Mr. Kelsey was then con
duct- by Governor Hughes, as follows:
Q. — Superintendent, -when did you assume
your office? A.— I think it was May 17.
Q. — In order tliat wo may properly understand
your attitude at that time, ma:.- I ask whether you
read the report of the legtslstive 1 ve»tlgs*lng com
mittee known as the Armstrong Committee? A.—
had, as it appeared in th«j newspapers.
Q.— l am not speaking of the rejxirts of the pro
ceedings from »im<s to time. 1 am speaking of the
report of the committee made to the Legislature.
A. — I remember reading a synopsis of it in the
jitpers. and also the pamphlet when lttwas Issued.
Q.— Wh*n did you road the pamphlet -1 assume
you mean the published report? A.— l couldn't give
the date.
y.— Was it before you became superintendent?
A.— l wouldn't be sure of ihat— that Is. In the final
official form In which it was printed.
After you became superintendent did you
read the report of the committee? A.— l hay« read
from time to time sections of it. 1 don't think I
ever rat down and read it from beginning to end.
Q.— When did you first begfn the consideration of ;
the rsport— that Is, you cay you read sections of it,
Wbei did you first A.— Why. as matters came |
up in the depart I have occasionally turned
*r.d read in relation to some company, cr some
thing of th«l kind.
. Q.— Did you never read the report consecutively
after you became superintendent. A. — I don't know
that I ever road it from beginning to end at one
tune, no.
Q. — How much did you ever read at one lime?
A.— l might tell if I had the report to ees some
companies: I should say fifteen or twenty pases,
possibly more-
O.— Aftei you took off.cc in May, IPO3, did TOO not !
take up that report for careful study to be advised j
•£ to the conditions which bad been disclosed? A. j
—I don't think I did speciScally.
Q.— Did you take up that part of the report which '
concerned the Insurance Department? A..-T have '
read thnt.
Q.— When d.". you first read It? A. — I couldn't say, :
Governor, whether It was at the time that it was
printed In the papers, or subsequently. I had the j
report on my revolving desk there and I have re
ferred to It frequently.
y. — When you became Superintendent of Insur
ance did you take up that part of th« report touch
ing the Insurance Department for study? A. — I
couldn't say that I did for study any more than
to read it from time to time as matters of Interest
cam* up.
Q.— You know what I mean, Mr. Superintendent;
when you took office did you take the report of the
committee for the : pose of .'i*'-«-i"alr.:n£ what
had been disclosed regarding insurance conditions
fo that you might be advised of your duty? A. — I
don't think that 1 did «ny more than r.« 1 told you.
1 had already read and there had been more or
I**? taik among the people Interested In public
affairs from time to time.
Q.— Was that all there was of It. of your con
sideration of that matter? A.— That is all beyond
reading It.
Q.— the way you have described? A.— At times,
yes.
<..> Were you advised when you took office, or
Shortly after, that very serious Irregularities In the
management of life insurance corporations had
been disclosed during the Investigation of the legis
lative committee? A.— Why, I knew in a general
way; yes, sir. There, was no specific time that I
bad any particular advice in relation to it.
MR. KJELSEY A BUSY MAN.
Q. — After you took office, did you endeavor to ac
quaint yourself with the character of the irregulari
ties which had been disclosed? A.— can't say
that I studied them out any more minutely than
I had already. I was a very busy man, Governor,
In the department.
Q.— You were aware, were you not. that there had
been a waste of tue money of the polleyholders in
the management, particularly of the three com
panies? A.— I had. yes.
D.— You were aware extravagant salaries had been
paid? A.— Yes.
Q.— That pernicious contracts had been allowed to
favor:- in certain instances that wore improper?
A.— Yes.
Q. — You were aware enormous money sums had
been disbursed on executive order without any
proper accounting-? a — Yee.
Q. — Yo'i were aware that the requirements of tha
Insurance Department Intended to furnish informs
tlcn as to the 'run* -!i'ns of the companies had
been evaded? A.— Yes.
Q. — Were you also aw.ir<« that there had been
•»xs.rr.lna;ior:« of these companies made by the In
sure n. • Department which nad failed to disclose
these Irregularities? A.— l w. s so advised by the
report.
Q. You read the part of the report that bore on
that. A.— l read the whole of the report at inter
val as I say.
Q.— When did you first become Informed that the
Insurance Department had conducted examinations
of the»e companies which had failed to disclose
these lrregularitiee? A. — I couldn't say the date.
About the time cf tho examination, the investigat
ing committee.
Q. — Then you already knew that when you took
office? A.- Certainly.
Q — Did you become aware of the fact that the
Kiuttable Life Assurance Society had been exam
ined by the department in 1902? A. — I wouldn't
remember the date. I knew they had been exam
ined.
Q. — Didn't you undertake to ascertain after you
became superintendent how late the examination
had been made of the Equitable prior to the time
which took place after the trouble between the
o23eer» and whether or not that examination had
disclosed any of the irregularities that existed?
A. — I don't know that I did.
Q. — Did you become awaro of the fact that the
Mutual Life Insurance Company bad been exam
ined by the department as late as 1903? V— 1
can't recall the date now. 1 knew they had Veen
examined; yes. sir.
. Well, did you know that they had teen ex
amined not long belore the investigation— within
two or tli-'-n years' A. — I don't remember the Uate
I remember your report recites at to each of the
three companies. I think, the eerli float es, etc. of
-the examination.
Q.— And you also became uware •" the fact that
the New York Life find •••!•. examined as late as
JIC4 by the Insurance Department? A.— i presume
1 aid; I don't recall th«! date now.
Now. you became aware that these examina
tions of the department had been conducted In a
manner which failed to lose— A.— Yes, sir.
W— these Irrf C!]jnri?ic.-s? A. — Yen. sir.
— And you knew that those charged with those
r*s«Unationi hnd be«-n grossly derelict In their
duty, hed they not? A.— So stated in the report
Q.— You knew that? That wan your own view?
A-— That we; my o»i vl«w; 1 had nothing to con
tradict it.
Q.— You kr»w jlmt If In 3ftO3. when the Mutual
whs Main those- charged with that duty had
properly perform**; It they would have disclosed
raany of rte irro'zularittr.i which shocked the puh-
Uc when they were hrouijrst to th« public attention'
A.— Possibly **>■*■.? ■■■'»' ♦ have; I don't know that
i couM pan tvitmuxt on It.
Well, you know, for exerrpl*. that they would
have disclosed th» cono'lti'in of th* accounts '-> th«
fupp!y <Jepnrtrren«- of thi» Mutual TAlt, don't you?
/..—I aboul< say t;.ey ought f.
Q.— And you know tb*y would bare 4i2e!o«ed the
r mount paid to Mr. McCurdy anC the clrcuxa-
MbbVsi 1 under which ti;o payment was mods? A.—
Well, I couldn't remember the facts In each tepa
: .'•■ case.
y.— You know that it would have disclosed the
relation ■■' Mr. Fields to the Mutual? A.— I should
Uiink it ought to.
-And ail his transactions? A.— Yes, sir.
W. — Now, did vu'i endeavor when you became Su
perintendent of* Insurance to determine or ascer
tain who was In n-apjiiSiblD charge of those exam
inations'.' A. -Well, i mi'» from the reports.
y.— What deputy hao charge of tn<-£e examina
tions? A.— Robert H. Hui.ter.
y.— And hat did you understand had be« Mr.
Hunter's function prior 10 the. time you became
superintendent? A.— That he was the head of the
N<"v,- York office.
t.>.— And as such had chars* of what? A.— Had
Charge of the examinations— in it is. in connection
with Mr. \'ai4<Jt-r;ioel.
<J.— i'ou understood that Mr. Vanderpo»l was
suujeet ;o his direction? A.— Well, not entirely,
hut that they were together.
y.— Didn't you understand that Mr. Hunter was
in autnority/in a. position to give Mr. Vanderpoel
Instructions as to the course ■! his examination .
A — V\YII. s;ot ilte to that extent, perhaps, but.
as 1 understand, he was the deputy in charge, but
in the examinations my understanding was Mr.
Vanderpoel, in the technical pun of it. was the
i'fponsible authority.
y— Did you read Mr. Hunter' examination or
testimony before the Armstrong committee. A.— 1
oi<i.
y— Were you not advised that Mr. Hunter had
Buthority, In the absence or the superintendent, to
direct the course of the examinations? A.— W ell, i
don't recall what he testified to in that respect
y.— Now, after you had become aware of the |r
lesiilarities that existed, and of tr.e course of the
examinations, and their failure to disclose the ex
isting conditions, did you regard Mr. Hunter as a
tit man to te Intrusted with that work? A.— Not
individuHllv by ;ni.«4-lf. no.
Well, what he was Intrusted with he was In
trusted with "individually by himself," wasn't he?
A.— Well, except we required him to report In de
tail and take Ills directions from Albany.
Q. — When did that occur? A.— That was done af
terwards, and after I came In
y.— Did you regard him as a fit man to have
charge of examinations in viev of the record that
was disclosed on the examination while he was
first deputy In New York? A.— Well, perhaps I ought
to Qualify it In that way; I regarded him as com
petent from hie experience and knowledge of the
details, but perhaps as not qualified to Ijko the «>ole
charge without responsibility to me.
Q. — Do you know how many years lie had been in
New York? A.— l do not know; I should say elghl
or nine— something like that.
Q. — Do you think that one lii charge of the ex
nminlnr worn lr New York who through a period
of years has permitted examinations to be con
ducted in such a manner that such gross irregulari
ties could exist without being brought to the atten
tion rough the examination of the public can be
regarded as a competent man? A.— l thought th»>
circumstance.' had changed decidedly from the
practices that prevailed prior to that date.
Q — What circumstances? A.— The results of the
investigation, the new statutes th^t were givei, and
the feneral straightening up of all the business
rifTalrn pertaining to live insurance companies.
y. — lou mean the companies were better n:an
aged? A. — No; 1 mean better )•■ hayed.
Q. — Wei', "better behaved." Mid you not under
stand that the very object of the examination h.->d
been in the past to secure proper publicity ;.•■. to
their conduct? A.-I understood that is v. ■„.- it
should have been. I thought it was omitteu.
Q. — Then you thought in case the insurance com
panies were better behaved ihEt you could regard
Mr. Hunter as competent? A. — No.
Q. — Well, what was your opinion as to his com
petency? A.— My opinion was that ho was quail
fled for all the technical work by rei m r. of his ac
quaintance; that when a duty was assigned to him
for a specific case he did it effectively and reported
Immediately; thr.t I kept In touch in regard to It
enough to bo confident that 1 was not being mis
led or
WHAT HAD TO BE DONE.
y— Was he any more fit after you became super-
Impudent thun he was In the past? A.— ! presume
r.nt. but he had had hi* attention called to what
had to be done.
— Are you not aware that the prior superintend
ents of insurance, although technical responsible
for the operation of the department, had been mis
led by their subordinates? A. Well, that was a
cor.cluFlon that the committee came to.
Q— Well, did you see any occasion to disagree
with it? A. Well, I don't know, Governor, that 1
<Ild, one way or the other.
Q. — In other words, with the many matters that
a superintendent must of necessity attend to from
time to time, it is absolutely necessary that h«
should have deputies and subordinates In whom
he can have confidence? A. — Precisely so.
0. — You know that It is Impossible to check up
the work of a man who Is in charge of examina
tions? A.— l do.
y.— ln any eft'ectivo way If he himself has a per
son upon whom he cannot rely? A. — I do.
y.— You knew that in the future It would be Im
possible for you to -heck Mr. Hunter's action In
any proper way — that you would ascertain that he
was doing: his duty, if in fact he hadn't? A.— Well.
I wouldn t say I knew It.
y. — In other words, you knew that you must first
satisfy yourself whether he was a man in whom
you were entitled to repose confidence? A. — Well.
partly that. I knew that 1 must have a qualified
man. and I didn't feel I should change until I had
some understudy or some competent man In his
place.
Well, before we com* to the question of mak
ing a change for convenience, you felt you could,
remembering you had all the results of the com
mittee before you and all the examinations of th«
committee that were — you could rely on Mr.
Hunter? A.— l thought I could under the different
circumstances tinder which he was at work for me.
Q — And these circumstances were your changed
instructions to him? A.— That and a personal 311
pervis'ori
Q. — Personal supervislcr. toy whom? A. — Well, his
frequent reports, nig inquiries by 'phone and other
wise M <■•• every dft»'.! which was to be transacted
gown there.
Q— But you hed to r«!y on the accuracy of the
rer^ortP? —Tee, sir.
Q.— lust as Superintended* Hendrlcks nnd Super
intendent Payn recommended in their reports?
A.— l think a little different.
Q. — Because it 'van a little more specific — — .
A. — Yes. sir, because he was In a different attitude
tn the insurance by reason of the Investigation.
y.— Your Idea was, disposing of Mr. Hunter's
relations to these examinations In the office, you
could properly maintain him in office, A. — I thought
I could to the advantage of "the department; yes,
sir.
Q. — Ar.d you mw no reqson tit rni>k» a change
until it ■»«». 'Well, did you Pee any reason to make
a chance? A. — T ' iii! expected to make a change.
y— Well, when? A.— T had expected to r*or
ranijie th« department, thereby doing away with
the first deputy.
KXPBCTED BBTTER CONDITIONS.
y.— Well, when did you cxi ect to make a change
In the personnel of the first demityship? A.— I
do 't know that I had a precise d;it*\ Governor. I
thought that as the Legislature met nnd as thn
business was straightened out we could get rid of
the delay and the flood of work that came with
the new law; that the Legislature- would p rfl^ld«
for a chief examiner and nn assistant examiner;
that I would dispense with the first deputy and
start In that way.
y. — Did you contemplate « diemlmial of Mr.
Hunter? A.— Well, with his withdraw! from the
service.
Q. — Did you contemplate his dismissal? a. — I
don't know as I did. I contemplated him being out
of the department.
Q.— Weil, as a result of the reorganization of It.
as I understand? A —Partly; It would reach that
result.
y.— Provided you had the action you contem-
Flated by the Legislature; otherwise not? A. — No.
think otherwise I should have arranged. Mr.
Hunter expressed to me himself his willingness to
withdraw.
y — When was that? A.— Well, it was along; in
th« mmi or fall.
y.— Of 1906? A.— Yes, sir. at the end of the fiscal
year In October I out off hlB allowance of $2,300. He
hod J6.000, and a commission allowed him of 12,800
for the expenses. In view of the action of the Leg
islature In the taking expense account off from
state officials generally, I made the same rule
down there, for both Mr. Vanderpoel and Mr Hun
ter, and it was in that connection that he sal 1
there wasn't enough in it for him and ha was ready
to go.
y.— Some time In October? A.— should say the
first -week, or such a matter.
Q.— And before that time had you said nothing to
him about going? Well, I think I had talked
With him before.
What was the situation he understood? A.—
Simply what we have been discussing—the up
heaval In the Insurance matters and the differences
In the opinion of tho people as to how it ought to
be conducted. Ho didn't want to be embarrassing
in*» in any way.
Q. — Did he voluntarily say this to you. or did you
speak to him about it In the first Instance? A.—
couldn't say. It came up In a talk.
Well, did you have any talk with him about
Hie difference of opinions that obtained with ref
erence to the management of the department?
A.— l have at different times.
y.— No; had you at that time or previous? A.— l
couldn't remember the date. I know Mr. Hunter
was very sure that his record was right; that ha
wasn't afraid of that, but he understood the feel
ing and the public sentiment as shown by the
press, etc.
Q.— Did he tell you he felt his record was right?
A.— Yes. sir; he said It was.
y.— What did you say to that? A.— l didn't know
as I made any direct reply.
Q.— When lie told you that he thought his record
was right and that he understood the feeling of
the press, did you tell him what you thought of
the course of the department in connection with
these examinations? A.— The prior ones?
Q.— You? A— l did not.
Q.—Well, when did you first ttate to Mr. Hunter,
if at all. your opinion of the prior examinations?
A.— l don't recall that l ever did in the way of
charging him with crime or anything of that kind.
y.— Oh. we are not talking about crime. A.— Well,
with laxness or remlssneee.
y.— Didn't you charge him with it? Only In
diHcussiriK the report; i think It comments upon
what we all recognized as the situation.
Q.— You. speak of "the situation." Do 1 under
stand you to refer to the troubled state of public,
opinion? A.— Possibly; yes, sir.
y.— l am Inquiring as to your own views. Didn't
you have decided views when you took office that
the department required overhauling, and that
those responsible for dereliction should be dis
missed? A.— l expected that they would be.
y.— Did you Include Mr. Hunter in that category?
A.— l expected in the reorganisation he would be
out.
Q.— To take place in the indefinite future? A.—
No; it was to take place as rapidly as could be
provided and with the work we were conducting
y.— Well, nine months have cone by now. Had
you prior to 'wo or three weeks ago* any definite
time fixed when It was to be completed? A —Yes
tlr.
Q.— When was it to he completed? A.— Anywhere
about the present time. I expected It would he In
the month of January.
Q.— ln that connection. In your talks with Mr.
Hunter, did you say anvthingr to him regarding
your opinion of his fitness for that position? A.—
No; the w*rk he did under me was done effectively,
as nearly as I could get at it.
Q — Was it your idea that you could deal with
him so far as you kept close trade of him, or that
you could put responsible matters in his charge
NEW-YORK DAILY TRIBUNE. TUESDAY. FEBRUARYJL9. JIOO7.
TRUSTEE. Do you
-wish to place prop
er ty in trust for the
benefitof someindiv id
ual or institution? ~ In
quire.
TKE9UITABLE
TRUST COMPANY
OF NEW YORK
1 lflrrn Nassau Street
Capital S 3.000.000
Surplus and Profits. 10.500.000
Interest allowed on dally balances,
subject to chaefc.
and tliat his record vra* such that you could l>"
s.itisflt-d with imp results? A.— Well. I did not reel,
Governor, that he Wai a man that I had got v
watch every second with the lino of his duty before
Mm. whether It was verifying a capital statement
or any one of the dozen things that he VI 1
charge of. He would ask In detail about it. lr he
would go to the bank or trust company he usea
to telephone stutlnjf hour he found those thins*
and n sk what should be done, and In thai way 1
felt we were getting along exceptionally well arm
propel . .
Q.— ln •' ■■• words, you do have confidence in in*
doing the work which you placed In his charge.
A.— Under those circumstances, yes, sir.
Q.— Did you retain him as first deputy" A.—
Well, ha has continued In that some position; yes.
■Jr.
Hunter still was In charge of the examining
work, Mr. Kelsey continued. He had worked In
connection with Vanderpoel, but he still had
the same authority ns ever. Just what that au
thority was Mr. kelsey did not know. He had
relied on Hunter's reports, be said, but had
them verified somewhat from other sources.
Q.— Did Mr. Hunter place in your hands any writ
ten resignation? A.— His talk with me was a verbal
one. He said he wanted me to understand 1 nail
his resignation, but I think lie told me on • <
subsequent vision he had sent a written resigna
tion up; I don't recall having- seen that.
Q.— When was that subsequent occasion" A.
Well, I should say it was sin January 1.
Q.— Have you talked with any one else with re
paid to the dismissal of Mr. Hunter? A.— I had. I
don't call It a dismissal, though, Governor. In re
gard to the change in the administration of the
New fork office.
Q. Well, then, aa 1 understand It. your plan wan
some reorganization whl n might abolish that posi
tion. A— Yes, sir.
Q.— And might relieve Mr. Hunter of hi* office; It
would be In the nature of a change in the depart
ment, rather than a dismissal of Mr. Hunter?
A.—! think the first deputy should be here in Al
bany, with the amount of work and responsibility,
lnsUHd of being In New York at the heart of the
examining Imreuu. ai d I thought of a substitution
from time in time as the business permitted, and
that the poiiip in of 1. ninn trained a little for It
would answer every purpose and would b» more
businesslike than to publicly dismiss or reprimand
or reduce him in the estimation of his friends by
that sort of a curt dismissal.
Then you thought he should not be publicly
reported or reprimanded? A.- No more than al
ready had been inflicted.
y.— What was the reason that led you to that
conclusion? A.— Well, it was a feeling of what was
ren«onable a : d rlsrht.
y.— You sympathised with him In his position?
A.— 1 don't know as you would call it sympathy,
I had consideration for him. In his general con
duct I haven't known of his being called dls
reputable lit all.
Q. — You desired then to save h'.m whatever odium
would attach to his dismissal fn m the Bervlce?
A.— l think there was no r«ason in my judgment
of Injecting Mr. Hunter In this case un long as I
could reach the result otherwise.
Q. — You thought you could reach that result In
time through ■*. reorganization of the depart)
A.— l thought the department needed a reorganiza
tion, and th.it was the tiTiderfstardlng of the com
mittee. 1 was iOl reorganising 'o p.»t rid of him.
Q.— You were not? A.— No. sir; I thought the
business was not In right shape. I think bo still.
Q.— So your way of getting; rid of Mr. Hunter was
to have a reorganization? A.— A reorganisation.
EFFORT MADE IN DECEMBER.
Mr. KelPf-y had been so busy, he said, that
not until December did he make any effort to
find a successor for Hunter.
Q.— Did It occur to you that It might be a anger
ous thing to rely upon the reports of one who had
been .-. charge of examinations for a period of
years, with the results shown by the Armstrong
committee's work. A -1 don't think I did. !
recognised the situation I re.oanired the «ief«c
tlv« work, but I felt that under the changed cir
cumstances 1 was getting faithful serrioa.
y.— Now, when you became superintendent, who
was the chief examiner? A.— Mr. Vander|K>«l.
y.— Was he continued by you iui chief examiner?
A.— He was.
Q.— Did you read Mr. Vanderpo*rs testimony be
fore the insurance committee? A.— l think I did
y.— Did you know that Mr. Vander) had had
personal charge of th« examination of the Mutual
I.lfe in 1S03? A—l did; ! don't remember the data
distinctly, but I remember he had charge of th«
examination. >
Q.— The last examination that la mentioned prior
to the meeting of ti.« Armstrong committee? A —
Yes.
y.— Did you '■ id his report of the results of that
examination? A.— I did. a» It is embodied lr, the
committee, report.
y.— Did you rend that after you be mm superin
tendent. A Yes
The Governor then read from the. Vanderpoel
report on the Mutual Life In 11MXI many flat
tering- reference! to the company's condition as
his examination had found it.
y. — And you were acquainted from the matters
brought out by the Armstrong Committee with the
actual condition of thins* in the Mutual l<lfe and
the nctuul state of Its bookkeeping? a. —An de
veloped later.
Q. — Now. after that did you regard Mr. Vimdar
poel as a fit man to have charge of the examination
Of life Insurance companies? A. — Well, I asked
him about that report, and hi* statement oi the
reason for Its bell in that form was that therw
was a strong contest between our state companies
and outsldi companies, and it was regarded 11 ■ >\.
proper thing to give them a complimentary silu-
Bion as to the details of their business. A great
deal of — -
Q.— Did you regard that as an Important rea
son? A. — Well, not entirely, and yet
Well, did you In part? A —No. but I could
see how it Influenced him. He mild something to
me In the same relation only a littla more bo than
Mr. Hunter, as to the work and his having had
thirty years' experience with (he department In
the ('xnnilnatUms that were pending.
y.— Did it occur to you that th< great experience
ho had had proved that he was dangerous? A.— I f»lt
that it was incumbent upon me to use much more
care, but 1 did not feel that I ought to dismiss a
man who knew how to do the work, and take the
chance of a new man that would have to be
broken In to some extent.
Q— You knew that thousands of voucher! have
to be examined? A.— Yes.
Q.— Ypu know it is absolutely impossible for you,
an superintendent, to check that work A.— l could
not do that; that Is true.
y. — You knew 11 was Impossible for a competent
and straightforward examiner to make a report
of the sort that Mr. V'anderooel made if he had
made a thorough examination of the books of the
Mutual Life, did not you? A.— 1 think It was lax;
yes.
Q.— One- of the Questions I want to get at from
you, Mr. Superintendent, Is whether you In fact
appreciated just what the situation was A. [
think I did. but 1 felt with him, as I said I felt
with Mr. Hunter, with the Investigation going on
we were getting behind In the office, and that until
1 could make different arrangements 1 was sar<«
to proceed with him.
GOVERNOR RECALLS PAYMENTS.
Bine- Vanderpoel'! position was In the com
petitive class the Governor said that Kelsey
should have asked the Civil Service Commission
for a list of eligible men. This had been under
consideration, but Mr. Kelsey asked for the ex
amination only a few weeks ago. The Governor
recalled the payment! made to President Mc-
Curdy*! son-in-law and son by the Mutual un«l
the Andrew C. Field affairs there, and asked if.
in view of these, Mr. Kelsey did not consider
Vaaderpoel's examination a farce. Mr. Kels'.-y
naid thai Mr. Vanderpoe] had told him he didn't
intentionally violate the law, and. he thougnt
that this was said in all sincerity. Then th*
Governor took up conditions In the New York
Life, until Mr. Kelsey said that Vanderpoel
either was "deceived or inefficient.'; Some of the
things brought out by the Armstrong commit
tee were not on the Insurance books, he had told
Mr. Kelsey. Yet. since ihat time. Kelsey went
on, Vanderpoel had been conducting Investiga
tions for the department until bis resignation,
With the same authority us before.
Didn't you f«?el when you became superin
tendent and unit- advised of then*; fact* that it
was your duty to dismiss Mr. Vanderpoel? a—l
thought that I should when the time cam*- us I
said, when I got familiar with the work and we
got rid of the load of nttra work and 1 had some
body to take his place.
y.— Did you think that you could rely upon him
at ail in examinations after the report of the com
mittee and the evidence stated as the basis for If
A.— 1 think I could. Governor, from the later
situation that I spoke of In regard to the other
matter.
Then you thought that he should be dis
missed was not becuwe you thcnmlit you could not
sufficiently rely upon him? A.— No.
Recently, Mr. Kelsey said, he had asked the
Civil Service Commission to hold an examina
tion for a man to take Vanderpnel's place; had
spoken to jnm» memhers of the commission
about It, and he himself had made Inquiries
about a man in Massachusetts and another In
Illinois Then the Governor asked if Mr. Kelsey
recalled a conversation with himself and Senator
Armstrong at the Bar Association last summer.
Mr. Kelsey said he did. but that he didn't re
member it distinctly.
y.— Do you recall Senator Armstrong saying: any
thing to you about the advisability of making
changes In the department? A.— I rememoer Arm
strong doing It, but i bad forgotten It was at that
meeting. , ,
i, Q.— Do you recall any other time when .t was
don.-- a"-- I can only remember on one occasion
having Senator Armstrong talk to me In relation
to those two men. . .
Q.— When was that? A— I wouldn't know. I nave
seen him so many times during the summer anU
Q.— What was it that was said to you? A.— He
said he thought that Mr. Hunter a:;d vanaer
poel had deceived the old man. I think, he ca led
him Senator Hendricks and that a great deal '';.
trouble had resulted to the department. SO Infj"
ho were in my position lie should be dispensing with
their services Just as soon as be could— 3->in?tnmt>
to that effect, any way. ". .
Q — Didn't he tell you that there should b * ■
. hange In respect to those men In the department.
In his judgment, lit the time of the conyersatlon
when I was present at the Bar Association ast
summer? A.— Well. I don't recall If >■•■ did: '
wouldn't say lie didn't; In fact, your recollection is
undoubtedly true. , . __
Q. — Don't yon remem.ber I supported yer> ,* :
phatically what Senator Armstrong said. -'A.— l
don't doubt thai you would, but I don 1 recall that
you actually did. . „ ,
' y._You had no doubt, did you. at that time .that
there was good reason for dispensing with then
services? A.— l though! there was sufficient. yes.
Taking up another line, Governor Hughes
brought out that Kelsey had not examined his
list of employes and knew nothing about Cun
ningham, the examiner summoned before the
Armstrong committee because of his connec
tions, who Is now at the New York office of the
department.
w 1 .,,, a 1 ou to be told thai • ■
had originally been put into the departmeni on im
leeommendatl • Andrew C. Kid. is and wno
during liis continuance In the departmeni ""equenuj
visited the supply departmeni ol • l> "';
II employed in the Insurance Department
a Why 1 probably would if 1 bad heard II m
that shape, it would depend ■ little on who n
would be, of course. „ _
i.j iiiiv. you formed any Judgment as to
work that Andrew C. Fields was engaged in A
Well, based on newspaper report and on tn
of t'.e committee, 1 should have, that Is, the legis
lative, you mean? „ .
Q Yon would consider It of consldtrable Impor
tance that there should be no avenue of ci niinuni
catlon between the department and Mr.
should you not? A Tes. There nev(
t!,,tt I km v. '
ADMITS STUDY 1 1 A T> NOT BEEN GREAT.
As tbe Governor went deeper and deeper Into
conditions brought 1 •
mittee. Mr. Kelsey'fl confusion became more
noticeable. He had not read much of . x
strong rcrmrt bearing or some of tbe tt »■
tricate financial transactions as to the loa
profits or losses from security deals; and hla
.study of tl.upe subjects in the departme
nol been great, he
"i haven't gone back In anj of the 1
administrations," said he
y. — Well, how could you ascertain whether your
department Is brought up to the proper grade of
efficiency if you made no effort to localize responsi
bilities for past misconduct or neglect? A.— Well.
I have the daily experience of the business that
we are transacting, and If I como upon Information
t) : nt looks like dereliction In the past I should « x
pect to follow It up.
Q. — You were uware that wns precisely the nt
tltude "' 'he former superintendent, who hadn't
the advantage of ;i legislative investigation to show
them the chance* Of their mistake? A.— l don't ex
pect to have any mun that is Inefficient or un
trustworthy, but 1 haven't had the ttm". Governor,
to go back and look Into all %>• details that wero
brought out on this Investigation.
<.< — Have you conducted any investigation in the
department for the purpose of ascertaining ju*t
what each man has don« in the past and who has
been negUctf ii t -nd who hns l>een Industrious nnd
faithful? A.— Not as to who has l>.-n neglectful,
particularly; I have had th« usual Inquiries an to
the different rooms, the different bureaus, th<- men
who are mnployed. tho work they were doiti^ In
syntemHtl7.!nsr und Improving it.
Q. — Didn't you realize when you took office that
the failure of the Insurance depaitnient by proper
publicity to prevent or to expose the conditions
that were shown to exist had amounted to a pub
lic scandal? A— Yes. sir.
y.— Didn't you realize thnt It was one of your
first duties to put thai department upon a proper
basis of efficiency to prevent any recurrence of
that. A.--I believe It Is. and to give full publicity
to all that th« statute requires,
y.— You understood thai It was essentln! that you
should, as they say. "clean house" lri the depart
ment? A.— Well, not in the sense of dismissing the
men that were necessary for the conduct of tho
dilly biiKir-.t'Sd In a bunch, or anything of that kind
If 1 found men Inefficient ir untrustworthy, I
should expect to dispense with th«-m.
HAD BEEN ONE OU TWO RESIGNATIONS.
Again the Governor took up the subject of tha
personnel of th« Insurance Department, nnd Mr.
Kelsey admitted that there had been one or two
resignations, not on his Initiative, some new
an put on and a few promotions. Then he
told of the many difficulties of his position, and
the volume or work that had confronted him
since he took office. The Governor said he
realised all this, and wanted », know If there
was anything else that Mr. Kelsey could say
about the situation. "You had a free hand,"
ha said.
"Well, I was hemmed In by the environment
or circumstances." said Kelsey.
After further interrogation, bringing out the
facts that Keefer, who held two Jobs at once,
had been placed In charge of the inspectors at
New York after Vanderpoe] resigned, tho Gov
ernor came to the canvass of votes after the
elections In the mutual companies. Mr. Kelsey
admitted that he had no mature plan for the
canvass of votes prior to the election. He ha;l
appointed inspectors and given them authority.
Q.— Now, in anticipation of the election. Uid you
give your attention to thn formulation of any plan
by which th« votes could be counted? A.— No that
occurred at or ui.oul ;ho time and since. I was
going to say nt me ■ me we went down prior to
the election ! had the counsel and the various
representative mon of each of tho fusion tlck-'t-".
the separate administration Jmd opposition tlok.-t*.
meet at my department, arul the matter was talked
over quite fully. There were various conflicting
notiotis. whether there ought to be forty or fifty,
which seemed to the majority an impossible num
ber to «<-t an] efficient action from, and 11 was
tlnally provided and n?;sented to that the five, with
the authority to employ assistants, would be HiifH
dent. Then, us it came to the plan, it was -I
don't know Just how it came out. but it wa«t
eventually suggested that two of tho best known
of the houses of accountants be asked to consult
anil advise with th« inspectors who should lie
appointed, and he employed tV thorn 'to perfect ;•
scheme that would be efficient, and thai course
was followed 1 haven't the names of tint houses,
an.l this same representative of each one ol th»
houses N In charge for each company.
y.— When dio you have nils meeting? A.- it waa
a day or two before the election or , 1 -,• the day
before; i am not sure; no. 1 think It was on tho
Friday or Saturday preceding.
what day was the election? A.— The election
wns Tuesday, 1 think
That was the IMb of December? A.— Yes.
y.— Prior to the loth of December did you have
any meeting for the. formulation of a plan? A.—
You mean of the inspectors?
y.— A canvass of the votes? A.— Tho inspector*
wt«re not appointed until that time.
y — When did you appoint th" Inspectors? A —l
think It was the Friday preceding the flection
y.— Didn't you think it a matter of 11 good deal
of importance, In view of the possibility of a very
larK« vote belli* cast, that .some plan should bo
matured of taking care of It in advance? A—l
did,
y— Why didn't you appoint your Inspectors ear-
Her? A.— Well. 1 haven't any reason loyond that
that seemed to me the appropriate time
Q.— You didn't up to that time make "any plan
yourself which could be submitted for their guid
ance? A. Oh, no.
Those admissions practically ended the hear
ing, save for one retort on the Governor's part.
As Mr. Kelsey was askini' about leave to sub
mit a brief, he used the phrase "an indictment
you are preparing against me."
"Now, Mr. Superintendent, there la no indict
ment against you." Interrupted the Governor.
"and there can be none except as the facts may
warrant, and tho sole object is to get out the
facts and not have the facts concealed under
any general and plausible statement, but to get
through a proper analysis the actual slate of
the case."
The following explanatory statement was given
out at the executive chamber prior to the hear
ing:
Governor Hughes to-day cent to Hon. Otto Kel
sey, Superintendent of Insurance, tho following
letter: ' b
"February 18, 19»7
"To Hon. Otto Kelsey, Superintendent of Insurance
Albany. New York '
"Dear Sir: In view of your request for a further
consideration of your administration of the office
of Superintendent of Insurance, and in accordance
with the statute authorising me, in my discretion
to take proofs, I hereby direct you to" appear and*
testify before me at the executive chamber on
thin 18th day of February. 1907, at half-past two
o'cl' in the afternoon Yours truly
"CHARLES K. HUGHKS.
"Governor."
Thin net lon is taken In pursuance of Section "2
of the Public Officers' law, which reads as follows
"Th« Governor, before making a recommenda
tion to the Senate for the removal of any officer
may, in his discretion, take proofs for the purpose
of determining whether such recommendation shall
be made."
Mr. Kelsey having requested a consideration of
his administration, Governor Hughes decided to
tak<* his testimony. The Governor is desirous that
there shall be no misapprehension about the farts
and believes that they can be best presented in this
manner.
The Spring shapes in
Knox Hats
will be presented for the
public's favorable con
sideration on Wednes
day, February Twentieth.
E. M. KNOX,
452 Fifth Avenue,
N. Y. City.
THE DAY JN ALBANY
Mr. Letchworth Thanks Legislature
for Naming Park After Him.
Albany, Feb. is -Governor Hughes's e.-an-i-,
nation of Superintendent Kel ■'■ and
. xpei tation that be would send to ti.
-night ;i recomniendatlon for his re
drew a large »tt< .ature, but
,n of the matter in ■
house.
Senator Cobb Introduced a resolution provid
ing for the .
igate the .
lation and iter than April
: .;■.-.:.
thereon nol later than January 15. 1008.
Apgar was
Inter
nal Affairs to report the West
bill, which pro\ Idea thai I t fut
oved hlghw
■ '..■ C-.mMN
■
••Whl : ally I 3iH In favor ol
,iil Mr. Apgar, "it .
reported until every one has I ring."
bill will probably be taken up by the
■
The Senate received a communication from
William i . yor Letchworth, expressing his ap
preciation <>f th«. action of the Legislature in
selecting the name "Letchworth Park" for the
great tract in Wyoming ■....1 Living coun
ties which he has stven to the state.
Accordinc to Assemblyman Merritt, the ex
pected "public utilities" bills to create a new
commission in place of the railroad and ru*
commissions, as recommended by Governor
Hughes, ma be Introduced within a day or two.
Assemblyman Foley, of Niagara. u>-niKht intro
duced a bill providing for a single railroad cum
missioner. to be elected by the people for a two
years" term and to replace the present board <>f
Vive commissioners. Ha would have SJvOtiJ sal
ury. with two deputies, practical railroad men.
at $5,000 each.
Senator Cobb has had his marriage license'
Mil amended by striking out the provision which
made It necessary to delay the marriage until
tlv« days after the license Is secured. The bill
now would permit tho ceremony to take place
at fince.
Lieutenant Governor Cnanler to-night ap
pointed Senators White. Fancher. Tully, Ram**
perger nnd Frawley a committee to niake ar
rur.gi"mpnts for an f-xerclse to honor the memory
of ex-Governor Hlggins.
FOR MILITIA INQUIRY.
Mr. Cuvillier Introduces Rt
Another of Thank* In Re ' • feller.
■
■
■ •• ■ nllltary
■
de, if fou I 1
up In 1
in>? the '■ . ■
•
M '."'■;-. 1 Intl .
asking
thanking M
for his '
ELECTION BILL HEARING PUT OFF
[By Telegraph to Th» Tribune 1
Albany, Feu. IS.— Assemblyman Mead. ( .f Al
bany, chairman of tho Assembly Judiciary Com
mittee, to-night put off for a week the hearinff
on the Page-Prentlsa Election bill, which was
to have been Riven to-morrow. Mr Mead took
this action because President Doollns of the
New York Hoard of Elections could not be
present morrow. _
sudden ; v cr< ated much
adverse comment, aa the Republicans of many
civic organisations in New York havo already
arrived In Albany for the hearing. Th
vhat Indignant ;it the postponement of tli»>
g, for whichc th<-\ say thei :.«. •■_,
slt\.
PLANS NEW FIVE-CENT FARE CASES.
Albany, Feb. I s Attorney General .1
Paul to-day that he was preparing a case
1 the Brooklyn Heights Railroad Com
pany in the hope of getting a straight !
favre from Brooklyn to Coney Isl.md.
The case resulting from the riots ■ year ago
and carried m> t.> the Court of Appeal* *as
decided against the pi 1 pie. The Attorn.",
era! baa further information "ii which t..
a Dew case, and said tv-day that he had hopes
of r« r 'ttin»; th" court to reverse Its former de
cision.
JACKSON'S APPLICATION DENIED.
Attorney General Jackson's application for the
appointment of a n Ivet {■■•>' the New fork Elec
trical Workers' Union was denied yesterday, with
110 <..sli, by Justice Giegertch, In the Supreme
Court. Leave waa (ranted In the decision, oowever
to renew the application, and .1 motion baa
made to have the case tried on March 7. the action
still continuing, aa well as the Injunction granted
by Justice Amend. The decision says:
The moving papers contain no statement except
on information and belief, without disclosing source
of grounds It is well settled that such pupers ar«
Insufficient."
The allegation waa that oeitaln officers of th«
union had wasted Us fun. is. Ht-njanun Patterson,
counsel tor the union, s.il.i that the officers under
oath had denied that any of the funds bad been
wasted, and sal, l that there vi as no merit In the
Attorney General*i application.
HEACOCK'S DEMURRAGE BILL OUT.
Albany, Feb. IS.— The Bwnsts itallruuds CMaasJttM
to-niKht reported favorably Senator Heacock'a so
called demurrage bill, which would compel rail
roads to furnish freight cars t>n demand and
would prevent discrimination in the treatment of
shippers.
OLIVER PUTS IN AN ICE BILL.
! Hv Talagtaßli to The THbun*. 1
Albnny. Keti. IS.- Minority Leader Oliver Intro
duced a bill to-night prohibiting the saka of ice
cut on the lluds-on River between Troy a.nd KeW
York except for mercantile purposes. ' This meas
ure,' said Mr. Oliver, "Is necessary, from a sani
tary standpoint, and if passed and strictly en
forced will save thousands of lives during th*
summer."
TO CURE A COLD IN ONE DAT
Take LAXATIVE) BROMO Quinine Tablets. Druggists
rotund money if it falU to cur*. B. W. GROVE'S «la
natur* 1* on eaa boa. aW.
In all "the dictionary there's but one
word to describe the Spring stock
of neglige shirts, we've just put on
sale.
Complete.
In patterns, materials and sizes.
Rogers, Peet & Company.
Three Broadway Stores.
258 842 1255
at at at
Warren st. 13th st. 32nd at
*" OTEWEET BREAD ~
A revolution and a revelation in bread
baking.
Health Food Co., 61 Fifth Avenue, N. Y.
Two choice grains blended in one de.
licious, nourishing loaf.
OTEWEET BREAD
81 Mt. Prospect Ay., Newark.
Water Filters and
Coolers
THE BEST KINDS
For Saie by
JEWIS &(?ONGEIt
1.10 and US «>•( 4-' i Street,
,11111 133 \Ve*t 4Mt M . Sew York.
BILL FOR WRECK INQUIRY,
Mr. JVainzcright Introduces Resolu
tion for Joint Commission.
Albany. Feb. IV— Assemblyman YV'ainwrisht
introduced a resolution to-night callin? for a
joint commission from the Senate and Assembly
to Investigate r-ithfr Independently or In con-
Junction with the State Board of Railroad Com
missionera the recent wreck on the NeT York
Central Railroad. The committee is to Investi
gate also the adequacy of the equipment u?ed
on electric roads and the regulations an T re "
cautions prescribed for the safety of the elec
tric trains. A report must be made by the com
mittee on or before April 1, with recommenda
tions. Th« committee may subptena witnesses,
compel *he> production of documents and eni
p!«>y counsel. Five thousand dollars is appro
priated to defray the expenat-s of the investiga
tion.
ght urged I
■
tits.
the <ii -
- actual
r this
' Rail-
Pt ar.d
MORGAN BACKS CANALi
Humor That lit find i . IV. M 1*
Are Behind ( Cod Enterprise.
■
1
It is planned to spe:;,l $20,000,000 on this
canal, which will be used in competition wltii
the one behind which. It is said, are th« Bel
mont interests. This latter company la knowa
as the Boston. Capo Cod and New York Canal
Company. The canal under consideration by th«
latter company will extend from Buzzard's Bay
t«> Barnstable Hay. and will cost about $1-.
000.000. The other route is from Fore River t>
Taunton FSay. William Barclay Parsons, th*
chief engineer of the Boston, Cape Cod and Ne^v
York Canal Company, has declared that tha
plan is entirely practicable, although it has been
said that the tide on one side rises hisher than
on the other.
There has been a move in Massachusetts to
kill the charter of the latter company, the re
sponsibility for which is laid at the door of th»
Morgan-Morse combination. Andrew J. Bailey.
an attorney, who appears in the canal plans,
refused to divulge the names of his retainer*
\\ hen asked whether lie represented the Mor
gan-Morse Interests he declined t.» say. Ther*
will be a hearing to-morrow before the Coni
mlttee on Public Lands at the t^tate House at
Boston, at which It is expected both side* will
be compelled to reveal just who they represent
In the mean time the Boston. Capo Cod ana
New York Canal Company has advertised for
bids and is K"in»r on with its plans. Tho plans ar*
on til*: at Mr. Parsons*a office at No. 6»» Wall
street. To-morrow there will also be on tile UMj
form of contract. A bond will be required witl>
every bid, the penalty for non-performance ot
the contract being toed at $TSO.OW>. The name
of Charles C. I>odge is signed to the advertise
ment as president of the company.
Charles W. Morse, just before starting en hi*
trip to Southern wat( on tho Havana, of the
Ward Line, which he took over last week, closed
a bargain for the purchase of the New Yorlc
and Porto Kiev.) Steamboat Company, tor which
The Tribune ten days ago reported him to be in
negotiation. The price paid is said to have
bees par for the bonds of the company IW
something above par for the stock. The New
York and Porto RJca Steamship Company oper
ates a line of passenger and freisht steamers
between New York and Porto Rico, an! New
Orleans and Porto Rico. Among its steasr.er*
are the Coamo. the Carolina, the Berwlnd, the
Fan Juan, the Ponce, the ArkaJla. the Pathfinder
and the S:mtur. <•.
The officers of the company are: President.
John B. Berwlnd: vice-president. E. J. lVrwind;
secretary. K. Kingsbury Curt treasurer anl
manager. Franklin D. Mooney. The directors
are the Messrs. Bersvind. Mr. Curtis. Henry I.
Booth, Gordon Macdonald, J. M Ceballos an>l
John H. flak*.
BILL FOR RAILROAD COMMISSIONER.
; By Telegraph to The Tribune.'
Albany. Feb. IS.— Assemblyman Foley intro
duced a bill to-night providing for a single rail
road commissioner. It provides that the tern*
of office of the present cpmmlsstoners shall ex-*
plre on December 31 and that at the general
election held th'.s year there shall be elected a
railroad commissioner who shall hold office until
January 1. 1911. At the general election in iol'>
and in each alternate year thereafter one shall
be elected for a term of two years. He » n *^
perform all of th© duties and be subject to tn«
same limitations a.« the former Board of Rai '*
road Commissioners. The new commission*"
shall appoint two deputies, who shall be PJJ^i
cal railroad men and receive, a salary of $5,»»"
each.