Wednesday, June 20, 2012

"Insurance Men, Past and Present": Grover Cleveland

May 1910, The International Insurance Encyclopedia, Vol. 1, "Insurance Men, Past and Present," edited by Isidore Singer, The American Encyclopedic Library Association, New York, page 156

CLEVELAND, GROVER: President of the United States, chairman of the Association of Life Insurance Presidents, trustee of the stock of the Equitable Life Assurance Society; born in Caldwell, N.J., March 18, 1837; died in Princeton, N.J., June 24, 1908.

Cleveland's relation to life insurance began on June 10, 1905, when he consented to become one of the three trustees of a majority of the stock of the Equitable Life Assurance Society after that stock had been transferred from James H. Hyde to Thomas F. Ryan. This transfer was made following the disclosure of internal dissensions in the management of the Equitable and a couple of months before a joint committee of the New York Legislature began an investigation of the New York life insurance companies generally. Cleveland's letter of acceptance shows the broad-minded spirit in which he entered upon this trust:

Princeton, June 10, 1905. Thomas F. Ryan, Esq.
Dear Sir: I have this morning received your letter asking me to act as one of the three trustees to hold the stock of the Equitable Life Assurance Society which has lately been acquired by you and certain associates, and to use the voting power of such stock in the selection of directors of said Society.

After a little reflection I have determined I ought to accept this service. I assume this duty upon the express condition that, so far as the trustees are to be vested with discretion in the selection of directors, they are to be absolutely free and undisturbed in the exercise of their judgment, and that, so far as they are to act formally in voting' for the directors conceded to policyholders, a fair and undoubted expression of policyholding choice will be forthcoming.

The very general anxiety aroused by the recent unhappy dissensions in the management of the Equitable Society furnishes proof of the near relationship of our people to life insurance. These dissensions have not only injured the fair fame of the company immediately affected, but have impaired popular faith and confidence in tne security of life insurance itself as a provision for those who in thousands of cases would be otherwise helpless against the afflictive visitations of fate.

The character of this business is such that those who manage and direct it are charged with a grave trust for those who, necessarily, must rely upon their fidelity. In those circumstances they have no right to regard the places they hold as ornamental, but rather as positions of work and duty and watchfulness.

Above all things, they have no right to deal with the interests intrusted to them in such a way as to subserve or to become confused or complicated with their personal transactions or ventures. While the hope that I might aid in improving the plight of the Equitable Society has led me to accept the trusteeship you tender, I cannot rid myself of the belief that what has overtaken this company is liable to happen to other insurance companies and fiduciary organizations as long as Inx ideas of responsibility in places of trust are tolerated by our people.

The high pressure of speculation, the madness of inordinate business scheming, and the chances taken in new and uncertain enterprises, are constantly present temptations, too often successful, in leading managers and directors away from scrupulous loyalty and fidelity to the interests of other:; confided to their care.

We can better afford to slacken our pace than to abandon our old, simple American standards of honesty; and we shall be safer if we regain our old habit of looking at the appropriation to personal uses of property and interests held in trust in the same light as other forms of stealing.

Yours very truly,
Grover Cleveland.
Cleveland's associates on the board of trustees of the Equitable stock were Morgan J. O'Brien, of New York, and George Westinghouse, of Pittsburg. Within a week after Cleveland's appointment the trustees met and began the vast labor of selecting the directors for the Equitable men who had the confidence of the policyholders and the people at large. In 1906, after much arduous labor, the mutualization of the Equitable was brought about, with an election by the policyholders provided for. Cleveland himself wrote the elaborate forms of the circulars which were sent to more than 350,000 policyholders and took a deep interest in all the other details. Returns were received from about 90,000 persons. All save about five per cent sent proxies and the trustees were thus empowered to vote for the policyholders. Cleveland acted as a trustee up to the time of his death. He also gave the benefit of his counsel to the Equitable on matters of general policy outside his immediate trusteeship.

In the latter part of 1905 he was appointed referee to determine disputes that might arise between the life insurance companies concerning the allowance by their respective agents of rebates on premium commissions. Cleveland thus expressed himself on the subject of rebating on December 19, 1905, just after his appointment as referee: "I believe this to be a vice that can have no place in well-conducted life insurance."

On January 31, 1907, Cleveland was chosen as chairman and counsel of the Association of Life Insurance Presidents. This body was organized on December 21, 1906, and he was its first chief executive officer, holding that position until his death. The Association, formed at a time when life insurance was still suffering from the reaction of 1905, has as its object the promotion of the welfare of policyholders and the advancement of the interests of life insurance generally. Economy and reduction of expenses in matters of general administration are sought through an interchange of views among the companies. Co-operation is given in the study of legislation and the presentation of grounds for the adoption or rejection bylegislative bodies of measures affecting the policyholders generally. It was upon such a constitution that Cleveland proceeded to devote his broad experience and knowledge and splendid reputation for integrity. The Association's membership represents companies holding more than two-thirds of the life insurance assets in the United States, and the influence he exerted contributed to the benefit of policyholders outside those immediate companies. That his heart was in this, his last earthly task, is shown by the deep sentiments expressed in his writings and addresses from time to time.

It was his delight to think of the millions of policies in force as affording evidence of fatherly love, brotherly affection and filial devotion. He saw in his connection with a business of such widespread influence and of such a beneficent character a possibility of rendering service greater in extent than could possibly be rendered by any public official other than perhaps the President of the United States himself.

Life insurance, extending into the homes of the majority of the people of our country, was in danger of being destroyed by unrestrained and unreasoning prejudice. But as he said: "American life insurance has just been subjected to the most trying tests in its entire history; and as an economic system, mathematically sound and of far-reaching beneficence, it stands before the country in a stronger position to-day than ever before." Life insurance management was being reformed and its comparatively few abuses were to be corrected. Cleveland was asked to assist in this work as a matter of duty and to such a call he had never refused to respond. But he approached the task solely from the standpoint of the policyholders' interests. To paraphrase his earlier expression he believed, "Insurance officers arc the servants of the policy.holders." As he said: "Life insurance has to do with the most sacred things that stir the human affection, and its management involves a higher duty and more constant devotion than we associate with a mere business enterprise."

Speaking to an assemblage of his associate executive officers he said: "You who manage life insurance companies cannot afford to risk weakness in a single one of its threads. Their disintegration through breaches of good faith, through broken promises or through delusive misrepresentation, means a loss of strength which no actuarial mystery or managerial calculation can repair. Nor can you, with any pretense of conscientious susceptibility, overlook the fact that, as a direct consequence of this popular conception of life . insurance and of your responsible connection with its management, your fellow citizens, whose confidence you have invited, have put upon you a trust, made sacred by the pathos of its purposes, and more unescapable in morals and good conscience than any that the law can create."

The respect and admiration which Cleveland had won in life insurance circles was convincingly shown on December 4, 1908, when the executive officers of companies from practically every state in the Union and from Canada as well took part in the memorial exercises held under the auspices of the Association of Life Insurance Presidents in New York. Seventy-five per cent of the policyholders of the United States were represented at this remarkable testimonial.

This is a list of Grover Cleveland's published contributions to insurance literature:

A brief in opposition to State Legislation limiting the compensation of officers of insurance companies, by Grover Cleveland, published March, 1907, by Association of Life Insurance Presidents.

"Compulsory Investment Legislation," a brief by Grover Cleveland, published April, 1907, by Association of Life Insurance Presidents.

Address at first annual meeting of Association of Life Insurance Presidents, by Grover Cleveland, December 6, 1907.

"Life Insurance and its Relationship to our People." an article by Grover Cleveland, published by The Spectator, April 23, 1908.

Report of the second annual meeting of Association of Life Insurance Presidents, December 4th and 5th, 1908, containing the proceedings of the memorial exercises in honor of the late Grover Cleveland. [With portrait.]


Who is Who in Insurance; Geo. F. Parker, 

Cleveland and the Insurance Crisis, in McClure's Magazine, June 1, 1909, Illustratedwith photograph, pp. 184.-191.


The American Encyclopedic Library Association herewith presents the first of the seven instalments of the International Insurance Encyclopedia, trusting that the untiring labor and disinterested zeal of the members of the Editorial and Advisory Boards will be appreciated by the insurance public in general and by the officers of the insurance companies in particular. They are the natural guardians of the higher interests of insurance among which the thorough systematization of the heretofore dispersed elements of insurance knowledge has undoubted claim to the front rank.

In January, 1906, Dr. Isidore Singer conceived the bold plan of continuing and completing on American soil the great pioneer encyclopedic work of the famous English historian of insurance, Cornelius Walford, who was forced by the inertia of the insurance men of his day to abandon the huge enterprise midway, leaving what he had accomplished as a mute reproach to his contemporaries. To the American insurance world, because of its prominent position in the international field of insurance, falls the lot of upholding the hands of the group of distinguished gentlemen who lent to the originator of the International Insurance Encyclopedia their advice and experience, and the authority of their names, so as to make of this undertaking, from its very start, not an individual enterprise, but a work representing the international interests of the insurance world.

We reserve the privilege to present, after the completion of the work, a detailed account of the four years' struggles of the Executive Committee of the Editorial Board. But we cannot, even now, refrain from extending our thanks to those gentlemen, who, in various capacities and at various critical moments of the work, lent to it their efficient help.

And now a few words of explanation concerning the make-up of the present, and the plans for the succeeding volumes.

Volume I, representing the first attempt at a complete international biographical dictionary of insurance, contains 3,256 sketches, representing 22 countries.

The portraits referred to will appear with the groups of photographs to accompany the histories of the companies in the successive volumes.

Volumes II and III, of 600 pages each, will contain, in alphabetical order, the history and technics of life insurance; Volumes IV and V, and Volumes VI and VII, of the same size and in the same arrangement, will be devoted to Fire and Marine, and to Casualty and Miscellaneous Insurance, respectively.

The history of every company will contain:

(1) The charter, either in its entirety, if of special historical value, or, at least, its essential parts.

(2) The enumeration of the most salient events, in chronological succession.

(3) Tables showing, from the year of foundation to the present, the financial development of the company. .

(4 and 5) Lists of principal officers, in chronological order, and territorial tables of the general agencies.

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