David graham Phillips CONTINUED
there were many objections to tontine policies. first and foremost, they
provided little or no value to customers who found the price of coverage
too high and therefore surrendered their coverage.
spoiled and incompetent son Hugo to succeed Westervelt, but
Armstrong soon is able to suspend Hugo from that position.
Meanwhile, Armstrong approaches Trafford, another of the
firm’s financial executives, and offers to join a plot that Trafford and the financier Atwater have put together to seize control
of the company from Fosdick.
Word of these financial issues gradually becomes public, and
the company’s policyholders form an investigative committee.
Despite Fosdick’s efforts to control the investigation through
political pressure, Armstrong succeeds in publicizing the manner in which Fosdick has profited from the company, and the
longtime executive is exposed in the newspapers.
Armstrong ultimately helps Fosdick retain his position in
exchange for de facto control of the company. With the help of
Neva (a friend of Trafford’s wife), he persuades Trafford and
Atwater to call off their own attempt to seize control. The company’s agents, who have lost power due to Armstrong’s reforms,
launch a proxy fight to remove Armstrong—a fight they seem
likely to win since they have the ability to vote on behalf of
many of the policyholders they represent. The fight is unsuccessful, however, and Armstrong survives.
The novel concludes with Armstrong enacting various
reforms at the company, including a significant increase to
policyholder dividends. He ultimately reconciles with Neva,
who now realizes that he is a noble person as well as an ambitious businessman.
In writing Light-Fingered Gentry, Phillips does not appear to
have performed his own investigations of the insurance business. Rather, he relied heavily on the efforts of a number of other
journalists, whose work received much attention in the years
before the novel was published.
Thomas Lawson, for example, was an investor and author
who published a book called Frenzied Finance in 1906. Concerned primarily with the financing of the Amalgamated Copper
Company (in which Lawson was an investor), the book also
deals with a variety of insurance issues, most notably the relation of insurance companies to the banks and trusts with which
they were closely linked.
Burton Hendrick was a journalist who devoted significant
time and attention to the insurance business, publishing a series
of articles called “The Story of Life Insurance” in McClure’s
magazine in 1906. These thoughtful and well-researched ar-
ticles traced the history of American life insurance from its
earliest days, focusing on the ways in which insurance compa-
nies appeared to profit at the expense of their policyholders,
while also presenting a clear and accurate explanation of the
mechanics of life insurance policies.
Scandals at the Equitable
The Equitable was founded by Henry B. Hyde in 1859. Hyde
was an immensely successful salesman, and the company grew
rapidly. By the end of the 19th century, it had over $1 billion of
insurance in force and assets of nearly $300 million. Much of
the business sold by the company consisted of tontine and semi-tontine policies. Tontine policies specified a tontine period of,
say, 20 years. Policyholders dying before that time received their
death benefit but no dividends. Policyholders lapsing before
that time received no dividends, death benefit, or nonforfeiture
value of any kind. Policyholders persisting beyond the tontine
period, however, received not only the dividends attributable
to their own policy but also a share of those attributable to others who had died or lapsed before the tontine period expired.
Semi-tontine policies were similar, except that they did pay a
cash surrender value to those who lapsed before the end of the
There were many objections to tontine policies. First and
foremost, they provided little or no value to customers who